1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August...
Transcript of 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August...
![Page 1: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/1.jpg)
1
FDIC San Francisco Region Bankers’ Forum
Community Reinvestment Act –
Recent AmendmentsAugust 31, 2005
![Page 2: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/2.jpg)
2
Overview
Provide an overview of the Amendments
Provide tips on how to achieve your bank’s optimal CRA performance
Questions & Answers
![Page 3: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/3.jpg)
3
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
![Page 4: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/4.jpg)
4
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
![Page 5: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/5.jpg)
5
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
![Page 6: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/6.jpg)
6
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
![Page 7: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/7.jpg)
7
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
![Page 8: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/8.jpg)
8
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.
![Page 9: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/9.jpg)
9
Community Development
Important to identify and participate
Activities must have primary purpose
![Page 10: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/10.jpg)
10
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
![Page 11: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/11.jpg)
11
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
![Page 12: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/12.jpg)
12
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
![Page 13: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/13.jpg)
13
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
![Page 14: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/14.jpg)
14
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
![Page 15: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/15.jpg)
15
Performance Context (cont.)
Past performance Performance of similarly situated
lenders Written comments in bank’s Public
File Demographic Data
![Page 16: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/16.jpg)
16
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
![Page 17: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/17.jpg)
17
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
![Page 18: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/18.jpg)
18
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
![Page 19: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/19.jpg)
19
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
![Page 20: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/20.jpg)
20
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
![Page 21: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/21.jpg)
21
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
![Page 22: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/22.jpg)
22
Achieving Optimal CRA Performance (continued)
Partnership with Community Groups
Be proactive
![Page 23: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/23.jpg)
23
Achieving Optimal CRA Performance (continued)
Serving your community Expansion Plans Reputation Opportunities Increase profits
![Page 24: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/24.jpg)
24
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
![Page 25: 1 FDIC San Francisco Region Bankers’ Forum Community Reinvestment Act – Recent Amendments August 31, 2005.](https://reader030.fdocuments.in/reader030/viewer/2022032607/56649ece5503460f94bdb628/html5/thumbnails/25.jpg)
25