FDIC San Francisco Region Bankers’ Forum
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Transcript of FDIC San Francisco Region Bankers’ Forum
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FDIC San Francisco Region Bankers’ Forum
Community Reinvestment Act –
Recent AmendmentsAugust 31, 2005
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Overview
Provide an overview of the Amendments
Provide tips on how to achieve your bank’s optimal CRA performance
Questions & Answers
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Amendments
1) Increased small bank threshold2) New category: Intermediate Small
Banks3) Expanded definition of “Community
Development”4) Clarified the effects of discriminatory
or certain credit practices on CRA rating
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Existing CRA Tests Small Banks – TA less than $250M
Streamlined lending test Large Banks – TA > $250M
Includes small banks affiliated w/holding co. exceeding $1B in TA
3 part Test – Lending, Investments, & Services
Collected and reported data on small business and small farm loans
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New CRA Tests Small Banks – No change Intermediate Small Banks – New Test
TA $250M to $1 billion Subject to small bank streamlined lending test
and new flexible community development test No collection of data for small business/farm
loans Large Banks – over $1 billion
No change
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Intermediate Small Banks Two Separately Rated Tests
Must receive Satisfactory in both tests New Flexible Community
Development Test Innovative and Complexity
Asset Size based on Changes to CPI
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Intermediate Small Banks
Not required to collect and report small business and small farm loans
Not required to collect and report location of HMDA loans outside MSA
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HMDA Data An important note for HMDA
reporters:
The collection of borrower’s race, ethnicity, gender, and income are still required for loans made outside an MSA.
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Community Development
Important to identify and participate
Activities must have primary purpose
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Community Development – Existing Rules Primary Purpose:
Affordable housing Community services targeted to
LMI individuals Activities that promoted
economic development Activities that revitalize or
stabilize LMI geographies
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Community Development (expanded) Revitalize and Stabilize Revisions
to Include: Distressed or Underserved non-MSA
middle income rural areas Disaster areas to be eligible
FFIEC to publish eligible areas Expanded definition is responsive
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Discriminatory or Illegal Credit Practices Could Adversely Impact CRA
Rating Evidence of Discrimination Illegal Referral Violating Section 8
RESPA TIL Concerning Right of Rescission Unfair or Deceptive Practices violating
Section 5 of FTC
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Discriminatory or Illegal Credit Practices (continued) Compliance Management System
may be impacted Bank’s policies/practices Consumers being harmed Management’s corrective actions Historical performance
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Performance Context Opportunities in assessment area
for lending, investments & services Bank’s product offerings and
business strategy Bank’s capacity & constraints
Size Financial condition Economic climate Safety & Soundness limitations
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Performance Context (cont.) Past performance Performance of similarly situated
lenders Written comments in bank’s Public
File Demographic Data
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Achieving Optimal CRA Performance Only 15% are rated
Outstanding Review your assessment
area boundaries New branches or office Changes in product mix Review in light of 2000
census tract designations
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Achieving Optimal CRA Performance (continued)
Review your lending distribution Make sure majority of lending is
within assessment area Review those areas outside the
assessment area
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Achieving Optimal CRA Performance (continued)
Establish and communicate goals for CRA performance Are we striving for an Outstanding?
Help examiners understand your area and “performance context” You know your market better than
examiners Explain anomalies and unique
characteristics of your assessment area
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Achieving Optimal CRA Performance (continued) Ensure your organization understands the
definition of community development Remember – activities must meet definition
and primary purpose Develop a mechanism to identify & track
community development activities Don’t get credit if you don’t provide for
examiners to review Missed or forgotten
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Achieving Optimal CRA Performance (continued) Promote strong HMDA & CRA (if
applicable) loan data integrity Potential civil money penalties Affect compliance management system Strong controls and audit
Determine how much community development activity is enough? Every institution is different Compare to performance context Compare to similarly situated banks in
your market
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Achieving Optimal CRA Performance (continued)
Measure your bank against similarly situated banks and the market Review banks w/Outstanding CRA rating
Ensure that your fair lending program and credit practices are in order
Consider CRA implications for opening and closing offices
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Achieving Optimal CRA Performance (continued) Partnership with Community
Groups Be proactive
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Achieving Optimal CRA Performance (continued)
Serving your community Expansion Plans Reputation Opportunities Increase profits
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Resources Joint Final Rule:
http://www.fdic.gov/news/news/financial/2005/fil7905.html CRA Exam Procedures
http://www.ffiec.gov/cra/exam_overview.htm Need Help?
Jimmy Nguyen ([email protected]) or (415) 808-8071
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