In the last few months, there has been a great deal of discussion of the community reinvestment activities of banks as the Federal Reserve System’s Board of Governors, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) considered changes to the regulation covering the Community Reinvestment Act (CRA). A large part of the discussion was about how to examine smaller community banks, particularly those with assets over $250 million and under $1 billion.
This “conversation” started us thinking about how well Third District banks were doing in meeting their community reinvestment obligations. We knew that the very large banks had special units devoted entirely to community development lending, investment, and services, and they had outstanding CRA ratings. But what about banks that were not part of the top 50 nationally? Only a handful of the Third District’s 274 banks and thrifts are part of the largest 50.
What we discovered was a very interesting mix of banks with outstanding records of community involvement. Despite having fewer resources, all seemed admirable in their responsiveness to community needs. We chose to highlight seven “smaller” banks based on our review of CRA performance evaluations from 2003 and 2004. They represent a cross-section of banks, not necessarily the best of the best. They are a geographically diverse group, and their asset sizes range from $247 million to just over $2 billion. One is a wholesale bank, some are part of larger holding companies, and others are small community banks.
As you read the stories we have written about each bank, we hope that one of two things happens: Bankers, we hope you find some ideas that help you respond to community development needs in ways you had not previously considered. Community developers and government officials, we hope that you realize it doesn’t take a large bank to respond to local credit needs. Your community banks can also help.
In other news, the CRA regulation was changed in July by the Federal Reserve, the OCC, and the FDIC. Those changes, which are described in an article in this issue, concern a new category of intermediate small banks with new exam procedures and contain provisions related to distressed or underserved rural areas and designated disaster areas. The article includes a link to the Federal Register notice. The Office of Thrift Supervision (OTS) has not changed its regulation to match that of the other three supervisory agencies. Since 2004, the OTS defines a large bank for the purposes of the CRA exam as one having assets of $1 billion or more. All other thrifts are examined under the small bank test.