CRA Donation

We were just examined for CRA (FRB). One comment our examiner said was that we could not donate enough money to make a difference (in our score). I'm sure that each bank will be different according to asset size and the amount of funds available for investment depending on your loan portfolio. You may want to check with your examiner and obtain their opinion on the donation and whether or not it will benefit your bank in the overall scheme of things.

Question concerning CRA donations...... I am new to the CRA arena as far as being the person responsible for deciding if a loan/donation/investment is CRA reportable or not. If we make donations to a volunteer fire department in a high income census tract, but the volunteer fire department goes on calls to individuals in low/moderate income neighborhoods would this donation be CRA reportable?

And what documentation would I need for the file?

Thanks,

My guess on the fire department is no. I recently tried to get CD credit for a loan to buy a new fire truck in an actual mod income tract and could not get credit for that. (we were an ISB)

Interesting......

From a CRA PE, an FDIC regulated bank was given Community Development lending credit for the following:
"The bank originated a $50,025 loan to a fire department in XXXXX County. Loan proceeds were used to purchase a fire truck. The fire department is located in and serves a moderate-income census tract."

Very interesting Tennismom. We've never gotten credit for any work with a fire department regardless of the income level of the tract served.

Now I understand why the regulators no longer elaborate on exactly what type of activity they gave a bank credit for in the CRA PEs. We keep an arsenal of CRA PEs in our files, in the case an examiner questions why we think an activity qualifies we point to a PE where credit was given.

I do the same thing Tennis. I've got them saved by the "activity" the other bank received consideration for.

However the OCC is headed towards more consistent CRA exams according to their recent exam announcement.

I have received similar credit for similar activities in our distressed/underserved counties.

One more example from a CRA PE:

"The bank originated a $1.8 million loan to a township to fund a bond issue that will allow for the construction of a new fire house and the purchase of a new tanker truck and other equipment. The township is located within distressed middle-income census tract due to high ratios of poverty."

well GRRRRRRRRRR! SO much for my fire truck...but happy for others to get the credit...that we all should get in these cases!

Even if you find examples in the PEs of other banks, it may not sway your examiner because they can just come back with the attitude of "It doesn't matter what OTHER examiners gave credit for in the past, we're not giving your bank credit for it now."

When the ANPR comes out, I'm thinking of writing in a comment letter that the agencies need to have a CRA "clearing" panel where banks can submit their CD loans, services, investment and donations either before they are made or perhaps on a quarterly basis, and the panel will either "green-light" or "red-light" to indicate the item qualifies or does not qualify for CD.

Then come exam time, no more wasted time and effort in trying to convince those examiners with an attitude that your CD loans, services, investment and donations qualify.

Sure - I can hear all kinds of arguments from the agencies as to why they can't do that, and every argument falls on its face because the agencies actually DO do that - except they wait until the "gotcha" moment of an exam.

I like Princess Romeo's comment! We need consistency and fairness across all regulatory agencies!!

CD Loans are also difficult to come by. I'm sure all banks make plenty of loans under $1MM that would fall under the CD definition, but because they're not multi-family they cannot be counted.