lending. third, as a research institution, the federal reserve conducts and publishes analyses of the price data, and it encourages research by other parties as well. fourth, the federal reserve supports efforts by other organizations to use the hmda data to identify financial education and community development needs. the federal reserve also supports their efforts to respond to those needs. the board ’ s decision to collect price information as i have said, it is a board regulation, adopted under authority of hmda, that requires lenders to disclose loan - price data. i will now provide some background on the board ’ s decision to amend that regulation to include price data. advances in information processing technology have expanded access to credit and homeownership opportunities for consumers. in the past, individuals seeking credit to purchase a home, or seeking to borrow for some other reason, either did or did not meet the specific underwriting criteria for a particular loan product ; if they did, everyone paid about the same price for that product. today, in part because of advances in credit scoring and underwriting technology, lenders can price loans according to risk, charging different borrowers different prices on the basis of a borrower ’ s estimated creditworthiness. the enhanced ability of lenders to assess credit risk gave rise to a segment of the mortgage market often referred to as subprime lending. in the subprime market, higher - risk borrowers pay higher prices. subprime lending has grown rapidly, from less than 5 percent of all mortgage lending in 1994 to an estimated 20 percent in 2005, or over $ 600 billion. the wider range of loan pricing available in the subprime market helped to expand consumers ’ homeownership opportunities and to increase their access to home equity. but this same price variability has raised concerns about unequal treatment of borrowers. it also has raised concerns about whether certain loan terms and lending practices are appropriate, whether consumers have the ability and knowledge to shop for the most beneficial loan terms, and whether the subprime market is sufficiently competitive. the board responded to these concerns by amending regulation c, the regulation that implements hmda, to expand the available data on higher - priced lending. the data released by the ffiec in september 2005, which covered lending activity in 2004, contained the first loan - level information on loan pricing ever available to the general public. the data contain price information for loans whose prices exceeded thresholds set by the board. the thresholds were selected to target

the most part, community banks appear to be meeting their challenges. profits of smaller banks were considerably higher in 2011 than in the previous year, nonperforming assets were lower, provisions for loan losses fell appreciably, and capital ratios improved. outreach and communication with community banks as i noted, together with economic conditions, regulation and supervision are among the top concerns for community banks. in that regard, i think we would all agree that two - way communication between regulators and community banks is critical. banks need to understand supervisors ’ policies and expectations, but supervisors must also listen to and understand banks ’ concerns. bis central bankers ’ speeches at the federal reserve, we pursue our dialogue with community bankers through many channels. one important channel is the recently established community depository institutions advisory council ( cdiac ). 1 the council ’ s membership is drawn from smaller banks, credit unions, and savings associations. each of the 12 reserve banks around the country has a local advisory council, and one representative from each local council serves on the national council that meets with the board in washington twice a year. at a recent meeting, for example, one of our cdiac members asked us to be clearer about whether particular rules and guidance apply to community banks. having heard from this banker as well as others, we are now working to more explicitly indicate which banks will be affected when we issue new regulatory proposals, final rules, or regulatory guidance. although this change seems relatively simple, we hope it will help banks avoid allocating precious resources to poring over supervisory guidance that does not apply to them. in addition to the advisory council, the board last year established a supervision subcommittee on smaller regional and community banking. because of their professional backgrounds in community banking and bank supervision, i asked governors elizabeth duke and sarah bloom raskin to serve on this subcommittee. its primary role is to improve our understanding of community and regional banking conditions and to review policy proposals for their potential effect on the safety and soundness of, and the regulatory costs imposed on, community and regional institutions. 2 governors duke and raskin are also keenly interested in how our policies could affect the availability of credit to sound borrowers. we have other contacts with community banks that have proved valuable. for quite a few years, the reserve banks have maintained local training and outreach programs for banks. more recently, several of these programs have been expanded nationally. for example, the federal reserve bank of st. louis organizes national “ ask the fed ” calls to provide