We are an intermediate small bank for CRA.

We do not collect or report our small business loan data.

Is there any advantage or disadvantage from this process?

Thanks!

When we were ISB, we collected the information but didn't report. We reviewed for CD loans and loan distribution, in/out ratio, etc.

Currently an ISB. We input revenues and the source doc in our core to allow for analysis. Prior to this, our analysis software guesstimated our small business loans by dollar amount. We're not far from exceeding the ISB thresshold. Examiners strongly recommended we start inputting revenues during our last CRA exam.

This is a no brainer.

Every FDIC insured bank is accountable to meet its CRA obligation to "meet the credit needs of the community" whether they are a reporting bank or a non-reporter. What kind of person would want to be held accountable without knowing the data that is used to measure their accountability? A masochist or someone who doesn't understand what is involved here!

Any responsible and sane person should want to know if the data tells them their bank is fulfilling or failing to fulfill its CRA responsibilities. You can't do this without collecting the information and evaluating it - or you could wait for an examiner to ask you questions you can't answer because you don't have the data and don't even know the answers. What kind of impression do you think that gives an examiner?

If you are a non-reporter and haven't collected the data examiners will do a sampling of your lending activities and form their judgment about your bank's performance based on that sampling. you could get lucky and the sampling will be favorable. Or you could get unlucky and the data would make you look bad. In this latter case you wouldn't know if the unfavorable sampling is accurate or not. Do you want to be in that position?

I not only recommend to my clients that they voluntarily collect their annual CRA data, but they also report the activity. Why? Because for ISB's there is a significant benefit; they preserve their elective to be examined under the Large bank standards rather than the ISB standards. This is a very big option to preserve because the ISB exam standards are much more demanding regarding community development requirements. If your bank has marginal CD activity, or you are not sure, it would be better to be examined under the large bank standards, ceteris paribus. Not only that, but many community banks are leaders lending in their communities and won't be recognized as such if they don't report their lending activity. The only time you shouldn't voluntarily report your data is if it makes you look bad!

This does not require expensive software. The FFIEC offers free CRA software that can be used to collect and edit check your CRA small business and small farm and CD lending. You won't have to report it, although I would recommend you do so for the aforementioned reasons. So the cost for software is zero. For most non-reporters you are talking about 2 or 3 loans per week, so the data entry time costs are minimal.

The bottom line is every bank, particularly ISB's, should be voluntarily reporting their CRA lending annually. BTW, the reporting exemption is about to become worthless anyway because the implementation of Dodd-Frank section 1071 will mandate almost every bank (and non-bank financial services firm) must report under that to be issue regulation which will have far more onerous data reporting requirements So fasten your seatbelts, the ride is about to get a lot bumpier, especially for non-reporters.

I always collected and reported at my old bank which was an ISB. As Len said, you really don't want to be subject to the luck of the draw when it comes to the examiner using just a sample of your loans. I think it made the examiners very happy to have access to the data that way. They even had side conversations with me about which exam (ISB or Large) would be best for us each time around. They were only able to do this because I had the data all ready to review.

Plus as an ISB you are able to count more loans toward community development than a large bank can. You should be looking at every loan anyway, to see which ones are CD. This method got me an outstanding two exams in a row!