Memorandum

Summary:
Approximately 510 banks will be reassigned to different peer groups after changes to metropolitan statistical area (MSA) code definitions are incorporated in the December 31, 2006 Uniform Bank Performance Report (UBPR). The UBPR uses MSA codes along with other criteria to define the peer groups that support much of the statistical analysis found in that report. When this change is implemented, peer group criteria will be brought into conformance with current MSA definitions. As a result the impacted banks should be compared to the performance of a representative peer group.

Background:
The MSA code is used along with asset size and number of branches to assign banks to peer groups within the UBPR. If a bank is located within a county assigned an MSA code then it is placed in an urban peer group, otherwise it is placed in a rural peer group. For a listing of all peer groups and identifying criteria please see the Technical Information section of the UBPR Users Guide http://www.ffiec.gov/ubprguide.htm.

The MSA and other related codes maintained by The U.S. Office of Management and Budget (OMB) underwent a significant revision. Several counties once considered to be rural were assigned an MSA code. OMB also refined the MSA definition by adding a new concept, the micropolitan statistical area. OMB then shifted some counties from metropolitan status to micropolitan statistical areas. OMB uses geographic, economic and population data to determine the proper statistical area code assignment. Please refer to the following website for information about how statistical areas are defined: http://www.census.gov/population/www/estimates/metrodef.html

Impact on UBPR:
Approximately 510 banks will be retroactively reassigned to new UBPR peer groups. Just over 450 banks will move from rural to urban peer groups as a result of counties being redefined as metropolitan areas. Slightly over 50 banks will shift from urban to rural peer groups as a result of counties being determined to be a micropolitan statistical area. And 2 banks will move from an urban to a rural peer group because the county no longer met the definition of a metropolitan area. Please see the following spreadsheet for a detailed list of banks changing peer groups: Banks Reassigned to New Peer Groups.xls

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