Pub. 2 2021 Issue 6

cbak.com 18 In Touch M any community banks “graduate” to a different level of scrutiny under the Community Reinvestment Act (CRA), either through organic growth or by acquiring other financial institutions. Most community banks are considered “small banks” under the CRA rules of the federal supervisory agencies because of their size. A “small bank” in 2021 is one that, as of Dec. 31 of the previous two calendar years (2019 and 2020), had total assets of less than $1.322 billion. An “intermediate small bank” is one with assets of at least $330 million but less than $1.322 billion. At some point, many of these banks grow to the point that they move up through the ranks to become “intermediate small banks” or “large banks” when they pass these dollar thresholds for two years in a row. The dollar thresholds are updated annually to adjust for changes in the Consumer Price Index. How to “graduate” A “small bank” can become an “intermediate small bank” by growing beyond the $330 million threshold – through natural growth in loans and deposits or by acquisition of either whole institutions or portfolios of their assets or liabilities. Similarly, an “intermediate small bank” can become a “large bank” by growing over the $1.322 billion threshold through organic increase in assets or by acquisition of additional institutions or assets. BY WILLIAM J. SHOWALTER, CRCM, CRPSENIOR CONSULTANT; YOUNG & ASSOCIATES, INC. Growing Up to Become a Larger Bank