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#2133251 - 06/06/17 08:10 PM Large Bank CD Loan Amount
TMatt87 Offline
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TMatt87
Joined: May 2011
Posts: 1,984
Idaho
We just became a large bank this year. For large banks, do only loans greater than $1 million receive consideration as community development loans? We do a lot of loans under 1MM that qualified when we were ISB. Will these just be regular small business loans now?
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All opinions are my own, not my employer's

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CRA
#2133282 - 06/07/17 12:26 PM Re: Large Bank CD Loan Amount TMatt87
Tennismom Offline
Platinum Poster
Tennismom
Joined: Jan 2004
Posts: 778
I’m not familiar with which loans qualify as CDL under ISB, however as a Large Bank some loans under $1,000,000 can be a CDL.

Think about:
• Non-real estate secured loans to non-profits that have a community development purpose,
• Construction loans in any amount – these are not CRA small business reportable. Look at the CT geography and if applicable will the construction have a stabilizing effect on the CT. Does the end result of the construction create permanent jobs for LMI individuals? Will those living in the CT patronize the business in question?
• Loans to municipalities for purchase of public service vehicles, etc. Again look at the CT geography and ask yourself if this helps meet essential community needs. Does this help attract new or retain existing businesses and residents? If the majority of geographies served are not LMI, then no CDL credit.

Familiarize yourself with the CALL Report and those items that are and are not CRA Small Business reportable, then look at the outliers. Also, read similarly situated bank's CRA PEs which may give you a sense on what regulators are looking for with regards to CDL.

This document from the OCC may help you determine what is qualified and what is not. https://www.occ.treas.gov/topics/community-affairs/publications/fact-sheets/fact-sheet-cra-loans.pdf

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#2133656 - 06/09/17 04:01 AM Re: Large Bank CD Loan Amount TMatt87
Reads Regs Offline
Diamond Poster
Joined: Nov 2004
Posts: 2,307
In addition to Tennismom's suggestions look at the FFIEC CRA Guide beginning on page 8 for a discussion of CDLs. https://www.ffiec.gov/cra/pdf/2015_CRA_Guide.pdf

See the interagency q&a's on CRA. https://www.gpo.gov/fdsys/pkg/FR-2016-07-25/pdf/2016-16693.pdf

See this 2/2016 FRB Outlook Live webinar on CRA Community Development. https://consumercomplianceoutlook.org/outlook-live/2016/cra-community-development-examiner-insights/

The OCC recently told us they do not recognize the formula the FRB references for affordable housing on slide 6 of the webinar materials. Some of our loans were in low/mod tracts in urban enterprise zones. We were getting credit for revitalizing and stabilizing the area. Make sure you give the examiner documentation to support the community development purpose.
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Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.

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#2134166 - 06/13/17 08:02 PM Re: Large Bank CD Loan Amount TMatt87
CaseyJones Offline
Member
CaseyJones
Joined: Apr 2015
Posts: 79
Another thing to consider for a large bank (from another large bank), is to ensure that what you report for CD credit has not already been reported for your required small business/small farm data transmission. But if you are already eliminating loans secured by real estate under 1mil. then you should be okay.

Just got through our exam and had more than several CD credits well under 1mil. One thing to remember when identifying CD credits is how well are you serving your assessment area?

ex. Yes you did several million dollars in CD credits, but only 2 loans in the area?

When it comes the final public evaluation a greater number of CD loans in your AA plays a lot better than just a high dollar amount to one or two loans.

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#2134177 - 06/13/17 09:26 PM Re: Large Bank CD Loan Amount TMatt87
TMatt87 Offline
Diamond Poster
TMatt87
Joined: May 2011
Posts: 1,984
Idaho
My problem is most of our CD loans also qualify as small business, and as an ISB we could count them as CD, but it sounds like I can't do that as a large bank.
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All opinions are my own, not my employer's

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#2134220 - 06/14/17 01:09 PM Re: Large Bank CD Loan Amount TMatt87
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
As a large bank you cannot bring those small business loans in as CD. You can point them out but that is it. If you have loans outside of small business, such as non real estate secured loans to not for profits that qualify as CD, the loan can be below $1 MM>
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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