WASHINGTON - The recently completed Community Reinvestment Act rules will not require banks to record the race and gender of every small business and farm borrower.

However, as of Jan. 1, 1996, banks with more than $250 million of assets will have to record the number and amount of small business and farm loans originated, their location by census tract or block numbering area, and whether the business or farm had $1 million or less in revenue.

The move to originations rather than loans outstanding, as proposed, gives a bank credit even if it later sells the loan.

For banks with less than $250 million of assets, examiners will simply review small business and farm originations.

Large banks will collect the data in aggregate form rather than loan by loan as required under the Home Mortgage Disclosure Act. Banks will turn the information over to regulators for the first time on March 1, 1997.

The final rules did shift a portion of the reporting burden from banks to regulators. Examiners will compile a bank's CRA disclosure statement, which will be placed in the bank's public file to detail its small business and farm lending.

For that file, a large bank also must keep a list of the areas its considers to be in its community as well as a map showing the boundaries of those areas.

Though bankers are glad they won't have to report borrowers' race and gender, the industry consensus is the remaining data collection requirements will still mean a lot of work.

"Every additional piece of information that has to be collected and reported involves a cost and a burden on the institutions that have to comply," said Steven Zeisel, senior counsel at the Consumer Bankers Association.

In addition, large banks must report - each March 1 starting in 1997 - the total amount and number of community development loans they either originated or purchased during the previous year.

Institutions also can opt to include consumer lending, such as automobile loans, in their CRA review. Those banks must report the amount of the loans, the borrower's address, and the borrower's gross annual income.

Finally, regulators amended HMDA to require banks to report the location of applications and originations of home mortgages made outside their assessment areas.

Banks are moving ahead to get in compliance. Software companies, expected to make a mint off the new requirements, also are gearing up.

Many big banks, anticipating the move, are already mapping, or geocoding, their small business loans.

Donald A. Mullane, Bank of America's executive vice president for corporate community development, said he has been using loan data for more than a year to track the bank's lending patterns.

Gathering the information is expensive, Mr. Mullane acknowledged, but the bank is using it to check market penetration and identify potential customers.

Many big banks claim it is unfair that their smaller competitors do not have to track small business and farm lending.

"We are asking less than 20% of the industry to report on loans for which the industry only has 30% of the market," said Mr. Mullane. "It is such a small sample that it will be misunderstood."

But small banks aren't celebrating their exemption.

Here in Washington, Kathy Curtis, compliance officer of $89 million- asset Century National Bank, said she is uncomfortable depending on examiners to the bank's small business and farm lending. Because it would be tough for Century to challenge an examiner's findings, Ms. Curtis is considering collecting the information anyway.

"It's the only way to maintain control," she said.

Although CRA rules - 22 months in the making - are finally out, one more data collection question remains.

The Federal Reserve Board has proposed amending Regulation B to allow lenders to voluntarily collect data on race, gender, and national origin. Some banks have argued that this power would help them prove compliance with the Equal Credit Opportunity Act. But others maintain it would just be another reporting burden that verifies nothing.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.