The Federal Reserve Board, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.
According to a joint release from the agencies: “Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks and savings associations.”
The threshold adjustments are based on the change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for each 12-month period ending in November, with rounding to the nearest million. For the period ending in November 2015, the CPI-W had a 0.42 percent decrease.
Under the adjustment, "small bank" or "small savings association" means an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $1.216 billion. "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $304 million as of December 31 of both of the prior two calendar years, and less than $1.216 billion as of December 31 of either of the prior two calendar years.
The agencies will post a list of the current and historical asset-size thresholds on the website of the Federal Financial Institutions Examination Council (http://www.ffiec.gov/cra).
The 0.42 percent decrease in the CPI-W also was used for asset thresholds under Regulation C and Regulation Z, the implementing regulations for the Home Mortgage Disclosure Act (HMDA) and the Truth in Lending Act (TILA) respectively.
HMDA requires the Consumer Financial Protection Bureau (CFPB) to adjust the asset-size exemption threshold for reporting banks, savings associations and credit unions yearly based on the annual percentage change in the average of the CPI-W.
According to the CFPB’s final rule and official commentary: “The exemption threshold will remain at $44 million. This amendment is based on the 0.4 percent decrease in the average of the CPI-W for the 12-month period ending in November 2015. Therefore, banks, savings associations and credit unions with assets of $44 million or less as of Dec. 31, 2015, are exempt from collecting data in 2016.”
The CFPB also issued a final rule adjusting the asset-size threshold for certain creditors to qualify for an exemption from the requirement to establish an escrow account for a higher-priced mortgage loan under Regulation Z, which implements TILA.
According to the final rule and official interpretation: “The exemption threshold is adjusted to decrease to $2.052 billion from $2.060 billion. The adjustment is based on the 0.4 percent decrease in the average of the CPI-W for the12-month period ending in November 2015.
“Therefore, creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of Dec. 31, 2015, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2016. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1, 2017.
“The adjustment to the escrows exemption asset-size threshold will also decrease a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy 2all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages.”
These final rules are effective Jan. 1, 2016.