Commercial banks and savings associations reporting small business and small farm loans under the Community Reinvestment Act (CRA) grew the total dollar amount of loans originated by 1% and 3.4%, respectively, according to summary data released Thursday by the Federal Financial Institutions Examination Council (FFIEC).
In the aggregate, the FFIEC says, about 6.6 million small business loans (originations and purchases) totaling approximately $242 billion were reported in 2017. The total number of loans decreased by about 12%, while the number of loans originated increased by 1.5% from 2016. Regarding small farm loans, the number of originations increased by about 13% in 2017 from 2016.
The data report compiles information submitted by reporting institutions to the Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC).
For 2017, banks and savings associations with $1.226 billion or more in assets were obligated to report under CRA. Of the 718 lenders reporting, however, 177 were below that threshold; these institutions reported voluntarily or because they elected to be evaluated as a “large” institution during CRA examinations.
Below are additional findings, based on the FFIEC analysis of nationwide statistics:
General description of the 2017 data
- Analysis of data from Bank Call and Thrift Financial Reports indicates that CRA reporters account for about 72% of small business loans outstanding (by dollars) and about 30% of small farm loans outstanding (by dollars) at bank and thrift institutions.
- During 2017, banks and thrifts with assets of $1.226 billion or more (as of December 31, 2016) accounted for almost 97% (by dollars) of reported small business loan originations. The very largest institutions – 114 reporters with assets of $10 billion or more – accounted for about 69% of CRA reported small business loans originated in 2017 (by dollars).
- For small business loans, the maximum loan size reported is $1 million; for small farm loans, the maximum is $500,000. About 93% of the total number of small business loans and 80% of the small farm loans originated in 2017 were for amounts under $100,000; about 37% of the small business loan dollars and about 28% of the small farm loan dollars were extended through loans of less than $100,000.
Loans to smaller businesses and farms
- The CRA data include information about loans to businesses or farms with revenues of $1 million or less. Overall, about 52% of the number of reported small business loan originations (about 37% measured by dollar amount) and 58% of the number of reported small farm loan originations (about 70% measured by dollar amount) were extended to farms with revenues of $1 million or less.
Geographic distribution
- CRA performance assessments include an analysis of the distribution of small business and small farm loans (of all types) across census tracts grouped into four relative income categories: low-, moderate-, middle-, and upper-income. Overall, the distribution of the number and dollar amounts of small business loans across these categories largely parallels the distribution of population and businesses across these four income groups, although lending activity in upper-income areas exceeds the share of businesses and population in such areas.
- For example, low-income census tracts include about 7% and 6% of the population and businesses, respectively, and accounted for about 5% of the number and 6% of the total dollar amount of small business loans in 2017. Upper-income census tracts include about 28% of the population and about 31% of the businesses, and had about 39% of the number and 37% of the total dollar amount of small business loans in 2017.
Community development lending
- Among the 718 institutions reporting for 2017, 632 institutions reported community development lending activity. As in previous years, in 2017 lenders with assets that met or exceeded the mandatory reporting threshold (again, $1.226 billion in 2017) extended the vast majority of reported community development loans.
- Overall, all lenders reported over $96 billion in community development loans in 2017, little changed from the approximately $96 billion reported in 2016.
An FFIEC disclosure statement on the reported 2017 CRA data, in electronic form, is available for each reporting commercial bank and savings association, according to Thursday’s announcement. Also available are aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and non-metropolitan counties in the United States and its territories. The statements are available for public inspection on the FFIEC website at www.ffiec.gov/cra.