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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