FRB: Consumer Affairs Letter CA 05 - 5 - Interagency Intermediate Small Bank Examination Procedures

On July 19, 2005, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (the agencies) revised their Community Reinvestment Act regulations. Among the revisions to the regulation is a new test, the community development test for intermediate small banks. Intermediate small banks are small banks with assets of at least $250 million as of December 31 of both of the prior two calendar years and less than $1 billion as of December 31 of either of the prior two calendar years. These banks will be examined under the existing small bank lending test and the new community development test for intermediate small banks. The agencies have adopted the attached joint interagency examination procedures for intermediate small banks. The revisions to the CRA regulation and the new examination procedures are effective September 1, 2005.

Intermediate small banks are not required to collect and report CRA loan data for small business, small farm, and community development loans. These institutions may stop collecting CRA loan data on September 1, 2005. Any CRA loan data collected prior to September 1, 2005, would not be reported to the agencies. Banks may retain data collected in 2005, at their option, for internal tracking, analysis, or planning purposes. As a result, to evaluate the distribution of loans, examiners will review loan files, bank reports, and any other bank information or analyses. In addition, to evaluate community development loans, qualified investments, and community development services, examiners will review any information banks may provide, including the results of any assessment of community development needs and opportunities, and performance context information obtained by examiners from community, government, civic, and other sources. The CRA regulation continues, however, to allow small banks, including intermediate small banks, to opt for examination as a large bank under the lending, investment, and service test.

Additional information about the revised CRA regulation can be found in the Board's press release and the new regulation, which can be found at: http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050719/.

If you have any questions, please contact Suzanne Killian, Assistant Director, Consumer Compliance Supervision (202-452-2090) or Beverly Smith, Manager, Applications and Special Projects Section (202-452-5291).