If you make a loan to a business that constructs commercial properties, and you finance the commercial property, do you report on the address of the business or the commercial property? The construction business is located in our AA, while the commercial property is not.

In a similar vein, what if you grant a commercial mortgage to a company (not a contractor). The commercial property provides a dry cleaning business a community in the bank's AA. Do you report on the address of the business owner, or the commercial property? My instinct would say to report on the address of the commercial property because it is bringing in a needed business and it is the collateral for the loan. The business owner may be living in Beverley Hills and providing services to needy areas.

Some comments please.

Is there a difference between given

We have to go with the address on the loan system and since we are not the owner of that system, we are at the mercy of the lenders. But they have been advised that it is in the bank's interest to report loans in our AA, especially if they are in LTM areas. In the example you have used we most likely go off the property address because this is useful information for Concentration of Credit purposes (mitigating the risk of geographic loan concentrations). But in the example of residential construction (builders) we have to go with the business address and not hundreds of construction sites.

There are two choices of addresses you can use for CRA small business reporting: Either 1. The address where funds are used or 2. the business address. It is my understanding that you need to be consistent in how you do this and are not allowed to pick and choose on each loan in order to improve your results.

I geo-code all loans that would be reported on Call Report Schedule RC-C, Line 01e (secured by non-farm, non-residential property) by the address of the collateral property.

On loans that are general working capital, equipment purchase, A/R lines, or otherwise not secured by real estate, I geo-code by the business address.

Final thought, if your loan is secured by property under construction, then you cannot report it on your CRA register since it would be reported on the Call Report on line 01A of Schedule RC-C, and thus does not meet the definition of "small business loan."

Bonnie:
You are right, my fingers were moving faster than my brain.

Now I remember why I threw in the discussion trying to geocode construction loans. We were doing the qualified thrift lender test for December and in that calculation, a bank can get double credit for residential construction. I am having a bad day.

IF the loan is reportable (refer to Bonnie) then I would be geocoding the deal to the collateral for the second example, but for the contractor, I'd use his business address for any general financing provided to his business. Mostly for ease of data integrity. I don't like to see one borrower with 42 different addresses to verify during my data integrity phase.

Again that's all depending on if the deal is reportable. In the first example the more likely scenario would be the deal becoming reportable when the takeout financing is provided to the person or entity he's building the building for, not the original construction deal.

In the case of the dry cleaner...you used the term "home address". If he has an office within his home for legitamite business reasons, his home would be an acceptable reporting address, though personally I'd use the collateral address. During data integrity I'd check to see if the guy really had an office for the business within his home, or if he was just getting his mail there and the businesses offices were located in one of his many locations. If he really didn't have an office in his home for the business then the home address would not be an allowable address for reporting in any case.

A dry cleaner?...I'd be suprised if the home address was legit, but for perhaps a contractor, they often do their business out of the home. A doctor? It's probably an issue with a lazy lender and the doc asking his bills to be sent to his home verses his office. Lenders often find the words "MAILING" and "BUSINESS" address to be a confusing combination they just can't get past. (They also have trouble adding how many zeros it takes to be "OVER or UNDER" a million...but that's a different story)