Topic: Community Reinvestment Act (CRA)
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We are considering closing a couple of our branches for one afternoon a week. Are there any rules that would apply to a bank reducing its hours? We are running the change by our CRA officer.
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No, we are not aware of any laws or regulations that expressly address a reduction in branch hours. We do recommend checking your account agreements to ensure that they do not include relevant notification requirements. We also recommend posting advance notice of the changed hours in your main bank and branch lobbies, as well as…
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Our bank purchases receivables through a service offered by our core processor. We have an opportunity to purchase a large number of receivables from a single company, and we would like another financial institution to share the risk for this transaction. Can we enter into a participation agreement with a credit union, rather than a bank? We are considering a credit union located out of state.
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We are not aware of any state or federal law that would prohibit a bank from selling a loan participation interest to a credit union. Illinois state-chartered banks have the general authority for “buying and selling exchange and doing a general banking business.” Buying and selling loan participation interests are commonplace and universally viewed to…
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Our cash management department would like to offer a discount to a nonprofit organization with a mission consistent with the Community Reinvestment Act (CRA). Would we receive CRA credit under the large institution service test for providing discounted cash management services? We cannot find definitive guidance or precedent to make our case.
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As you noted, there is no definitive guidance on how discounted cash management services would be characterized in the context of a CRA regulatory evaluation. The service test is not a mathematical test and does not lend itself to an easy “cook book” approach. Here, you would have to show that by providing discounted cash…
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Our bank’s primary federal regulator is the FDIC. The FDIC’s Community Reinvestment Act (CRA) main office lobby notice must contain certain contact information for the Federal Reserve Bank of Chicago. Specifically, we must fill in the following blanks: “You may request from the (title of responsible official), Federal Reserve Bank of _______(address) an announcement of applications covered by the CRA filed by bank holding companies.” Our auditor provided names and contact information for two specific individuals from the Chicago Fed to fill in these blanks. However, we think that information is incorrect because the notice language seems to require only a title and address. Can you provide any guidance on this?
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Your CRA notice should identify the responsible official and address as “Officer in Charge of Supervision, Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604.” The federal banking agencies have released Interagency Guidance regarding the CRA public lobby notice. With regard to required contact information, the Interagency Guidance does not include any…
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We were recently acquired by a bank in Iowa. We want to decrease our drive-through and walk-up hours, but increase our lobby hours. We plan on posting advance notice of the change in our lobby. How many days’ notice should we provide? We asked the OCC, but we were informed to check state law.
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We are not aware of any laws that expressly address a change in bank hours, including the amount of customer notice to provide. We recommend that you check your account agreements to see if they include any relevant notification requirements. You also should consider updating relevant advertising, listings and other information to reflect the new…
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We opened two loan deposit offices (LPOs) this year. Should we include them in our CRA Public File as “branches opened”? The LPOs have not been authorized as branches.
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No, we do not believe that you should include the new LPOs with your list of new branches in your CRA public file. An LPO is not considered a branch under the CRA unless it has been authorized as a branch through the regulatory approval process. In addition, Regulation BB indicates that including information about…
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We have decided to reduce our bank’s lobby hours. Are there any notification requirements in Illinois that are required prior to this change?
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No, we are not aware of any laws that expressly address a reduction in branch hours. We do recommend that you check your account agreements to ensure that they do not include relevant notification requirements. We also recommend posting advance notice of the changed hours in your main bank and branch lobbies, as well as…
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We are considering originating a $6 million loan that meets the definition of a community development loan. If we sell $3 million of the loan to another bank as a participation, can we count the entire $6 million loan as a community development loan for Community Reinvestment Act (CRA) purposes? We are an intermediate small bank.
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No, the lead lender on a community development loan should report only the lender’s current interest in the loan for CRA purposes, without including any portions of the loan that have been sold to other institutions. The CRA regulations require banks to report the “aggregate number and aggregate amount” of its community development loans. Based…
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For CRA loan reporting purposes, if we have farm borrower who also has revenues from a side business, how should we treat the revenue from the side business for purposes of determining whether the borrower qualifies as a small farm or a small business?
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When determining whether the borrower qualifies as a small business or a small farm, the CRA rules state that you should consider only “the revenues that the bank considered in making its credit decision.” For example, if the borrower has a business and a farm, if the bank considered the borrower’s income from both businesses…
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What is the small farm revenue threshold for purposes of CRA reporting? Although we are not required to report on loans to small farms for CRA purposes, we are doing our own internal review.
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The revenue threshold for small farms (as well as small businesses) is $1 million in gross annual revenues, meaning that the CRA loan reporting requirements apply to loans made to businesses and farms with gross annual revenues of $1 million or less. For resources related to our guidance, please see below: FDIC CRA regulations —…