We are a two-bank holding company, and we are considering a merger that would change our CRA classification from a small bank to an intermediate small bank. Our total assets would remain under $500 million after the merger. Are there any other regulatory implications besides CRA classification that we should be aware of? We use the FFIEC 051 for our Call Report, and the merger will not result in us crossing the $1 billion asset threshold. Both banks are HMDA reporters, and all of our customer forms and agreements are already identical.

We are not aware of any other regulatory impact that might result from increasing your bank’s asset size to a level that remains under $500 million.

As you noted, your bank will continue to use the FFIEC 051 Call Report for banks with domestic offices only and total assets less than $1 billion. Your bank also will continue to be eligible for the expanded 18-month examination cycle for qualifying depository institutions with less than $3 billion in total assets. The small lender exception (for institutions with assets under $1 billion) under the FDIC’s flood insurance rules also will remain applicable. For Qualified Mortgage (QM) purposes, your bank will be considered a “small creditor” if, in the prior calendar year, it and its affiliates had assets below $2 billion and together originated no more than 2,000 first-lien covered transactions, not including loans kept in your portfolio.

While this list is not exhaustive, we believe that the merged bank generally will have the same regulatory responsibilities as the current banks have, with the exception of your CRA examination.

For resources related to our guidance, please see:

Regulation BB, 12 CFR 345.12(u) (“Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.252 billion. Intermediate small bank means a small bank with assets of at least $313 million as of December 31 of both of the prior two calendar years and less than $1.252 billion as of December 31 of either of the prior two calendar years.”)

FFIEC Call Report Instructions (FFIEC 051), page 2 (September 2018) (“Institutions with domestic offices only and total assets less than $1 billion, excluding those that are advanced approaches institutions for regulatory capital purposes, are eligible to file the FFIEC 051 Call Report. An institution’s total assets are measured as of June 30 each year to determine the institution’s eligibility to file the FFIEC 051 beginning in March of the following year.”)

FDIC Lending Limits, 12 CFR 337.12(b)(1) (“The FDIC may conduct a full-scope, on-site examination of an insured state nonmember bank or insured State savings association at least once during each 18-month period, rather than each 12-month period as provided in paragraph (a) of this section, if the following conditions are satisfied: . . . The institution has total assets of less than $3 billion. . . ”)

FDIC Flood Insurance Rules, 12 CFR 339.5(3)(a) (“An FDIC-supervised institution shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. . . .”)

FDIC Flood Insurance Rules, 12 CFR 339.5(c)(1) (“Small lender exception — (1) Qualification. Except as may be required under applicable State law, paragraphs (a), (b) and (d) of this section do not apply to an FDIC-supervised institution: (i) That has total assets of less than $1 billion as of December 31 of either of the two prior calendar years; and (ii) On or before July 6, 2012: (A) Was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of any loan secured by residential improved real estate or a mobile home; and (B) Did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for any loans secured by residential improved real estate or a mobile home.”)

Regulation Z, 12 CFR 1026.43(e)(5)(i)(D) (The small creditor portfolio QM provisions define a “small creditor” as satisfying “the requirements stated in § 1026.35(b)(2)(iii)(B) and (C)” — having less than $2 billion in assets and originating no more than 2,000 first-lien covered transactions that subsequently were sold over the last calendar year.)