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#911333 - 02/27/08 05:08 PM Electing to be examined as Large Bank
Go Blue Offline
Junior Member
Joined: Apr 2005
Posts: 45
MI
Could anybody tell me the deadline for electing to be examined as a large bank?? Also, if we chose to be examined as a large bank, cause we are a small-intermediate, can we switch back the next reporting year??
Last edited by Compliance Newbee; 02/27/08 05:11 PM.
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#911363 - 02/27/08 05:32 PM Re: Electing to be examined as Large Bank Go Blue
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
You have to have submitted your CRA submission report due by 3/1 each year in order to maintain the option. Once you do not file you loose the option for good. Unless you reach large bank reporting requirements.
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#911682 - 02/27/08 08:41 PM Re: Electing to be examined as Large Bank Don_Narup
Len S Offline
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Joined: Oct 2004
Posts: 2,084
Connecticut
You don't have to make a decision about the examination standard until you are notified of your exam. At that time the EIC will ask you which standard you want to be examined under if you have been voluntarily filing your data. On the other hand, to preserve your election you must voluntarily file your data each year by March 1. If you are a conscientious CRA officer you should be collecting and monitoring your performance data anyways, so why not file.
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#912110 - 02/28/08 04:00 PM Re: Electing to be examined as Large Bank Len S
Don_Narup Offline

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Posts: 3,708
Las Vegas Nevada
Just to clarify a litte. The decision to be able to elect which examination process you want is made long before your examiner asks which option. Because if you do not collect data and file an annual CRA submission by March 1st of each year. You loose the option forever and will be examined as an ISB.

Yes you don't have to tell the examiner until he calls BUT you have no option if you have not submitted your data.

As I indicate previously You have to have submitted your CRA submission report due by 3/1 each year in order to maintain the option.
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#913696 - 03/03/08 04:37 PM Re: Electing to be examined as Large Bank Don_Narup
Rather be in Vegas Offline
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Joined: Oct 2005
Posts: 248
Florida
We were over a billion bank and now we are just below, at our previous examination we were already under a billion. Our OCC examiner began the examination as a large bank and told me that if during the process we would benefit more any other way, that could be changed.

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#917064 - 03/07/08 03:33 PM Re: Electing to be examined as Large Bank Rather be in Vegas
LostFan Offline
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Joined: Feb 2004
Posts: 119
New Jersey
We've just experienced the ISB examination and it did not go well with the community development portion of the examination.
Len S' advice to preserve the option to be examined as a large bank should be strongly considered by small community banks.

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#917084 - 03/07/08 03:45 PM Re: Electing to be examined as Large Bank LostFan
Anonymous
Unregistered

I agree with LostFan. The ISB exam was brutal.

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#919248 - 03/11/08 12:43 PM Re: Electing to be examined as Large Bank
MarieR Offline
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Joined: Nov 2005
Posts: 614
We are getting ready for our CRA exam and we had elected to be a large bank (we are an ISB). The EIC called and suggested that we reconsider this- basicly saying that the ISB was an easier exam. Any thoughts on this. We have not made a concrete decision yet.
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#919266 - 03/11/08 01:08 PM Re: Electing to be examined as Large Bank MarieR
Bullseye Offline
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Joined: Jan 2004
Posts: 968
We have been examined both as an ISB & a large bank and frankly, I didn't see much of a difference between the two other than not having to check data quality on small business/small farm loans. I thought they were both about the same. By the way - we are FDIC regulated.

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#919554 - 03/11/08 03:58 PM Re: Electing to be examined as Large Bank LostFan
AnonRegulator Offline
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AnonRegulator
Joined: Mar 2002
Posts: 451
Everywhere, USA
LostFan: It would be helpful for us to know specifically how your ISB exam didn't go well.

I understand the trepidation about ISB exams, what with the CD portion taking up 50% of the rating. However, these exams aren't terribly different from LB exams, which include CD components in each of the lending, services and investment tests. So the regulators have a 13 year history in dealing with CD issues as well as the all important contextual issues of a CRA exam.

I'm going to guess that what goes badly in ISB exams is that banks that were formerly small banks for CRA and didn't have to pay much attention to CD for CRA purposes, got caught off guard by what CD actually means in the ISB exam. And if that's the case, they would have also been caught off guard in a LB exam had they chosen that test.

My advice to banks is that at least two years prior to the projected crossing of a new CRA test threshold, contact your regulator. Ask to meet with them to discuss how life will change in the new CRA category, particularly as it relates to CD. This way, you'll go into the new category with eyes open. AR.

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#919862 - 03/11/08 06:38 PM Re: Electing to be examined as Large Bank AnonRegulator
MarieR Offline
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Joined: Nov 2005
Posts: 614
The one ISB exam that I have heard about that was not very good was from a small bank to ISB.
We had been a large bank for years and we are familar with the CD portion. Does anyone have experience from this perspective?
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#919876 - 03/11/08 06:41 PM Re: Electing to be examined as Large Bank MarieR
Mrs. Rizzo Offline
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Joined: Mar 2006
Posts: 10,392
Curled up by the fire...
We elected last time to be looked at as an ISB due to our low investment portfolio. It was our only saving grace having all of our CD stuff lumped into one.
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#920356 - 03/12/08 04:09 AM Re: Electing to be examined as Large Bank Mrs. Rizzo
Don_Narup Offline

Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
It was our experience in filing cra submissions for banks over the reporting asset size that MANY of these reporting banks had never reported cd activities and were no more pepared than anyone else. Of course some large banks had data to report but statistically they were less in number than regular banks that submited

The problem was further compounded when regulators advertised that becoming an ISB would eliminate there cra submission requirement completely and led banks to believe that internal tracking and analysis of data would be eliminated. Thus many said yeepee

These bank were shocked to find that the collection along with a special CD requirement required them to continue to collect and analyze data in order to meet examiners "We expect a bank to know and be able to tell it's story" And if a bank wanted to have the option of still being examined as a large bank because of their fear of not being able to meet the new CD lending regulations of an ISB. It still required them to make an annual CRA submission.

The politics of that is all under the bridge now and ISB's are having to live up to CD regulations that are difficult for them to implement. Could it be that those that are best at creative writting may be fareing best. Or "We expect a bank to know and be able to tell it's story" is not one of the banks best atributes? Because they do not realize that collection and analyzation of data is expexcted.

So if you collect the data and be prepared to support it by having a through understanding of the rules, you will most likely have no problems with the exam.

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#921363 - 03/12/08 07:54 PM Re: Electing to be examined as Large Bank Don_Narup
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 2,084
Connecticut
Let me put into numbers why the Large Bank PE is easier to pass than the ISB PE.

The Large Bank PE is based on a 24 point system. Of those points, 12 are for the lending test, 6 are for investment and 6 are for service. In order to earn a composite "satisfactory" PE a Large Bank needs to earn only 11 points. That means a strong performance on the Lending tests (say 10 or more points) would allow minimal or no performance on the Service and Investment tests for a bank to earn a composite "satisfactory" PE. Moreover, if you read the examiner manuals, you can see that a lack of community development lending will not detract from a Large Bank's points on the Lending Test. In reality, the "flexibility" that was touted as a selling point regarding CD activity to ISB's is inherent in the Large Bank standards too. So it is possible for a Large Bank to do little or nothing on CD investments and services and still survive the CRA PE. I am not suggesting that a Large Bank should be cavalier about CD activity; just that the standard is much lower (perhaps unintended).

Compare the foregoing with the requirement of "satisfactory" community development activity for an ISB to earn a composite "satisfactory" PE and you can see the advantage of being evaluated as a Large Bank. Community Development activity is much much more important to an ISB PE than it is to a Large Bank PE. Moreover, the lending tests are almost identical. So if a bank is doing its job and monitoring its CRA performance, why not voluntarily report the data and maintain the option to be examined as a Large Bank? If you have strong CD performance and have documented your community needs, then elect to be examined as an ISB. If not, then elect the Large Bank standard. Frankly, I see no advantage under any circumstances to being examined as an ISB in light of the foregoing considerations.
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