Maybe it is because it is Friday, however I am having a difficult time grasping what is and what is not included for CRA Reporting. I have read EVERY prior BOL thread regarding this subject and the CALL Report instructions and glossary (definitions) but I am now in a fog.

The primary issue is that my financial institution’s Schedule RC-C is derived from Fed Class Codes only; not taking in consideration collateral, therefore a lot of reclassification goes on. Based on that statement (Fed Class Codes ONLY) all loans to a non-profit would be report on Line 9 (b) of the CALL Report. – NOT CRA SMALL BUSINESS REPORTABLE, however I know that is not correct.

Could someone help me with the following scenarios to ensure I am thinking correctly? All of the loans are to the same non-profit. Thanks.

$300,000 Construction Loan to a Church (non-profit) to build a Sanctuary – Line 1 A. of the CALL Report – NOT CRA SMALL BUSINESS REPORTABLE

$300,000 Loan to a Church (non-profit) to purchase a Sanctuary and collateralized by the same (Collateral Value = $250,000) – Line 1 E of the CALL Report - CRA SMALL BUSINESS REPORTABLE

$300,000 Line of Credit to a Church (non-profit) secured by the church’s parsonage (1-4 Family) – Line 1 C. (2) of the CALL Report - NOT CRA SMALL BUSINESS REPORTABLE

$300,000 Line of Credit to a Church (non-profit) in which $160,000 lien is taken on the Sanctuary as abundance of caution. – Line 1 E of the Call Report - CRA SMALL BUSINESS REPORTABLE

$300,000 Line of Credit to a Church (non-profit) in which $140,000 lien is taken on the Sanctuary as abundance of caution. - Line 9 (b) of the CALL Report. NOT CRA SMALL BUSINESS REPORTABLE

$300,000 Unsecured Line of Credit to a Church (non-profit) – Line 9 (b) of the CALL Report. – NOT CRA SMALL BUSINESS REPORTABLE

Sounds like you have it pretty much under wraps tennismom. Be careful with the 'abudance of caution' though. Go over the new call report instructions how to determine is a loan is primarily secured by real estate to make sure that your loan falls where you think it should.

Other than with the AOC, I always go by this rule:

If the loan is to a non-profit, it is not reportable as a small business loan UNLESS the collateral is commercial real estate. It makes it easier for me think of it that way rather than think of is would be included/excluded.

AND

Not reportable if the collateral is commercial real estate and loan amount greater than $1 million.

I think I've got it.

Well yes, there's that $1MM thing.

Thanks for the guidance. Enjoy your weekend.

You've got it!

OK, I think I messed this up re: Abundance of Caution. Please help me understand this. Thanks.

A lien on real estate that is greater than 50% of collateral value and that is taken in an abundance of caution is NOT A LOAN SECURED BY REAL ESTATE and therefore would not be reportable (for a non-profit entity). Your first example should say primarily secured by real estate and NOT taken in an abundance of caution. I missed that. It is hard to grasp because there is no logic...the loan is a business purpose loan, reportability simply revolves around call report definitions.

From the call report definition of Loans Secured by Real Estate (in the Glossary part of the instructions) - the Glossary goes on to provide examples of situations:

Loan Secured by Real Estate: For purposes of these reports, a loan secured by real estate is a loan secured wholly or substantially by a lien or liens on real property for which the lien or liens are central to the extension of the credit – that is, the borrower would not have been extended credit in the same amount or on terms as favorable without the lien or liens on real property. To be considered wholly or substantially secured by a lien or liens on real property, the estimated value of the real estate collateral (after deducting any more senior liens held by others) must be greater than 50 percent of the principal amount of the loan at origination.

A loan satisfying the criteria above, except a loan to a state or political subdivision in the U.S., is to be reported as a loan secured by real estate in Schedule RC-C, part I, item 1, and related items in the Reports of Condition and Income, (1) regardless of whether the loan is secured by a first or a junior lien; (2) regardless of the department within the bank or bank subsidiary that made the loan; (3) regardless of how the loan is categorized in the bank’s records; (4) and regardless of the purpose of the financing.

Only in a transaction where a lien or liens on real property (with an estimated collateral value greater than 50 percent of the loan’s principal amount at origination) have been taken as collateral solely through an abundance of caution and where the loan terms as a consequence have not been made more favorable than they would have been in the absence of the lien or liens, would the loan not be considered a loan secured by real estate for purposes of the Reports of Condition and Income.

In addition, when a loan is partially secured by a lien or liens on real property, but the estimated value of the real estate collateral (after deducting any more senior liens held by others) is 50 percent or less of the principal amount of the loan at origination, the loan should not be categorized as a loan secured by real estate. Instead, the loan should be reported in one of the other loan categories used in these reports based on the purpose of the loan