Is there guidance regarding the percent of assets that a bank should have in community investments (grants, donations, equity investment, etc.)?

No, this is another of the really grey areas.

What I did was to pull the PEs for all of my competitors and see what ratios they had during their last review. I even got lucky and one of the exams noted that Twenty four FDIC large bank CRA evaluations were conducted in my state in the past several years. Out of the 24 banks; the highest ratio for outstanding qualified security investments as a percentage of total investments ratios was 4.82%, the lowest was 1.73%. I had to calculate the ratio of qualified security investments to assets myself and charted them all compared to my own.

Even so, it is very subjective. There were two banks with the exact same ratios and no distinctive differences in investments, one received a High Sat and one received a Low Sat. Now you do have to read what the investments were. One bank did not do so well even though their ratios were high because only 2% of the investments were in their area.

Do a search on this subject and you'll find many posts on the question. You'll also see me answer, many times, that there is no set figure to shoot for

But, you should start thinking in terms of capacity as you go forward, verses asset size. This is how your examiners are told to think about investments, so we should jump on that band wagon as well.

Capacity is determined by looking to Net Tier One Capital. You could be a very large bank with very low NTO and as such, you would be unable to invest a great deal into CRA qualified programs, or any other investments. Your examiner would not expect you to have huge investment figures if your NTO was low.

In determining a goal you should look to other issues as well. Capacity is number one, then move to opportunity. What is out there for you? Can you easily put together a CRA portfolio, or do you struggle (as I do) due to lack of opportunity? If it's the later, you need to spend significant time explaining that struggle and your attempts to secure reasonable investment numbers. In my case, I have HUGE capacity for a bank of my size (nearly 4 times that of other banks of my size) but very little opportunity. I document every bond offering from local housing agencies, all tax credit opportunities, etc., and explain the "why" if I didn't get into the purchase (ie another bank snapped it up first). Then you need to look to your peers. What are they doing in terms of investments and how does their capacity affect this?

I track most OCC regulated banks who have an Outstanding rating overall and a high sat in investments. I document their total investments (from exam figures only) in comparison to their NTO. I also track their CD Lending figures in comparison to NTO. I use this figure to establish a "hoped for" goal, and then factor in my opportunity.

It's not an easy figure to come up with as you can see I shoot for 25% of NTO in CD lending for an exam period, and 5% NOT in CD investments. 5% is VERY LOW. The average is about 8% but the number vary siginficantly, so I try to factor in that opportunity issue. I also shoot for 2% of my total to come from "innovative and complex" investments, which count for more than your standard Fannie Mae investment.

I track the CD lending because this is the figure I use to offset my lower investment figure. I estimate that with 25% NTO in CD lending I can garner an Outstanding in the lending test and the 5% will get me to a High Sat in investments IF I can include the innovative stuff

This works for me, but I do caution you. This has to be specific to your institution and your region. 5% is pretty low, but my capacity is huge, so I have that to factor in. My opportunity is even lower, so this figure sells with the OCC, but this might not be the case for you. It's unfortunately time to get out your pencil and an excel spread sheet and get to work

Oh and if this hasn't confused you much....I add another step and forecast out my NTO figures at least three years in advance THAT!!! Is a challenge, but I been coming within a ten or twenty million each quarter