Independent Banker - September 2023 - 59

Use available resources
Community banks should pay
close attention to their regulator's
examination procedures for similarsized
institutions, says Brian Holland,
partner at Lathrop GPM LLP and
leader of the law firm's financial
services practice group. These
procedures are generally published on
the agency's website, but community
banks can also reach out to their
regulator directly. Management or
compliance should go through these
procedures carefully so they know
what is going to be analyzed and
where they may be deficient.
For CRA compliance, as an
example, community bankers
can visit the Federal Financial
Institutions Examination Council's
website to see examination
procedures and public evaluations of
other banks their size.
" CRA compliance can seem
daunting to community banks, but
this helps them see up front what
regulators are going to be looking
for, " Holland says.
It's not all about the thresholds
Thresholds are important, but
it's easy for community banks to
become so focused on the regulatory
requirements they can't see the forest
for the trees.
There's no regulation, for
example, that says at $250 million
in assets you should have X number
of compliance personnel, and at
$300 million you should have Y.
" You have to check the box and
devote the resources to checking the
box, but it's also worth pulling back
and using thresholds as a guideline as
to what the bank should look like at
the next level, " said Peter Weinstock,
partner with Hunton Andrews
Kurth LLP in Dallas and co-practice
group leader of the firm's financial
institutions section.
This means benchmarking against
well-run institutions of similar sizes
and seeking input from industry
experts and regulators about holistic
issues, so community banks can
better understand how to prepare for
their future needs. 
Cheryl Winokur Munk is a writer in
New Jersey.
From the end of 2019 to the start of 2022, the total deposits of all U.S. commercial banks
grew by nearly $5 trillion, due in part to unprecedented balance sheet growth and ongoing
consolidation. This has propelled some community banks into a new Community Reinvestment
Act (CRA) asset-size category sooner than expected.
The latest asset-based adjustments took effect Jan. 1. For community banks, this means
understanding the new asset definitions that could apply to them.
* Small bank: Under the
new rules, a " small
bank " is one that, as
of Dec. 31 of either of
the prior two calendar
years, had assets of
less than $1.503 billion.
The previous small
bank threshold was
$1.384 billion.
* Intermediate small
bank: An " intermediate
small bank " is one
with assets of at least
$376 million as of Dec. 31
of both of the prior two
calendar years and less
than $1.503 billion as of
Dec. 31 of either of the
prior two calendar years.
The previous threshold
was $346 million.
* Large bank: " Large
banks, " meanwhile, are
those with assets of at
least $1.503 billion as of
Dec. 31 of both of the
prior two calendar years.
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Independent Banker - September 2023

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