Circular
1999 Community Reinvestment Act Data on Small Business, Small Farm, & Community Development Lending
September 6, 2000
Circular No. 11270

To the Chief Executive Officers of all State Member Banks in the Second Federal Reserve District:

The Federal Financial Institutions Examination Council (FFIEC) has made the following statement:

The FFIEC has announced the availability of data on small business, small farm, and community development lending reported by commercial banks and savings associations (including savings banks and savings and loan associations) under the Community Reinvestment Act (CRA) regulations.

As revised in 1995, the regulations that implement the CRA generally require the reporting of data on these types of lending by independent commercial banks and savings associations having total assets of $250 million or more, and by commercial banks and savings associations of any size if owned by a holding company having assets of $1 billion or more. Analysis of Call Report and Thrift Financial Report data indicates that reporting institutions account for about three-quarters of the small business loans and one-quarter of the small farm loans extended by all commercial banks and savings associations.

From the data reported, the FFIEC prepares a disclosure statement, in electronic form, for each reporting commercial bank and savings association. The FFIEC also prepares aggregate reports for each of the metropolitan statistical areas and each of the non-metropolitan counties in the United States and its territories.

The small business and small farm lending data reported under the CRA regulations are more limited than the data reported on home mortgage lending under the Home Mortgage Disclosure Act (HMDA). The CRA data include information only on loans originated or purchased, not on applications that are turned down or withdrawn by the applicant. Unlike HMDA data, the CRA data do not include information about applicant income, sex, or racial or ethnic background, although the CRA data do indicate whether a loan is extended to a borrower with annual revenues of $1 million or less. The CRA data are not reported application-by-application as HMDA data are, rather, the CRA data are aggregated into three loan size categories and then reported at the census tract level.

The 1999 CRA data reflect originations and purchases of small business and small farm loans from 1,911 institutions, including 1,450 commercial banks and 461 savings associations (see attached fact sheet and related tables). A total of 3.3 million small business loans, totaling $175 billion, and 221,000 small farm loans, totaling $12 billion, were reported for 1999. The level of lending activity for small businesses and small farms for 1999 is higher than the level reported for 1998. Lending activity for reported small business loans increased in both the number (20 percent) and the dollar amount (8 percent), from 1998 to 1999. In 1999, lending for small farms rose by approximately 7 percent from 1998, measured both by number of loans and dollar amount.

Measured by number of loans, 60 percent of the small business loans and 91 percent of small farm loans reported for 1999 were extended to borrowers with revenues of $1 million or less. For small business loans, this proportion is up from 55 percent in 1998. The vast majority (about 88 percent, by number of loans) of reported small business and small farm loans extended in 1999 were for amounts under $100,000. Small business loans were heavily concentrated in central city and suburban areas, as are both the U.S. population and U.S. businesses. Small farm loans were heavily concentrated in rural areas.

The variation in small business lending among census tracts grouped into income categories generally parallels the distribution of the population and businesses among these categories. Most small farm loans are made in rural areas regardless of income. In 1999, lending to small businesses in low- and moderate-income areas increased from 1998. However, the proportion of such lending in low- and moderate-income areas declined from 1998 to 1999, when compared with the proportion of lending in middle- and upper-income areas, falling 8 percent when measured by dollar amount, and 2 percent when measured by the number of loans.

In 1999, commercial banks and savings associations reported community development lending that totaled $17.1 billion, representing an increase from 1998 of 19 percent by number of loans, and 6 percent by dollar amount.

A community development loan has as its primary purpose affordable housing for low- or moderate-income individuals, community services targeted to these individuals, activities that promote economic development by financing small businesses or small farms, or activities that revitalize or stabilize low- or moderate-income neighborhoods. Community development loans are not otherwise reported for CRA purposes as small business or small farm loans, or as home mortgage loans under HMDA (except for multifamily dwelling loans reported under HMDA).

The FFIEC has distributed aggregate disclosure statements to central depositories throughout the nation, where they are available for public inspection. An order form for CRA data and related items, with descriptions of the various reports and formats is available. Central depository locations, and an order form for other data available from the FFIEC (including data on home mortgage loans, reported under HMDA), can be found at the FFIEC web site (www.ffiec.gov/cra/.

The Fact Sheet on FFIEC 1999 CRA data (with tables) is available.  Questions may be directed, at this Bank, to Janice A. Oser, Bank Supervision Officer, Legal and Compliance Risk Department.