CRA Assessment Area

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    I am new to CRA and trying to figure out how I am supposed to define our assessment area. We use Questsoft from Compliance Relief. We have only our county defined as our assessment area because we have 4 branches but they are all in the same county. We have made loans in some of the adjacent counties, but not all. We have even begun to make loans in an adjacent state as well due to the local tie of the borrower. Our bank policy states we may do this. We are seeing a shift in our ratio of loans inside vs outside our assessment area since only our county is defined. Would it reflect negatively on us if we included the adjacent counties as our assessment area ? If we can do this would we need to include all the adjacent counties or only the counties where we have made loans? Can we consider our trade area as our assessment area?


    This questions has a few complications.

    1. You indicate you are new to CRA. Is your bank new? Has the assessment area already been defined and established by your BOD? Are you needing to make adjustments for growth? Changing markets? Or are you traying to establish an FBAA under the new rules? What is your bank size?
    2. Making loans in other counties is not reason enough to make adjustments to your AA. Consideration needs to be given to:
    a. The percentage of loans out side your Bank defined AA. Is it significant enough to adjust the boundaries? If you are starting to see more than 25-30% outside your AA then you are going to need to make an adjustment.
    b. Are any of the counties that are adjacent/contiguous LMI? if they are you will definitely want to include those. If they are not, you will want to understand why loans are being made there and if it appears you only services Moderate and High net worth areas.
    c. If you are intermediate or Small can your bank reasonably serve these new areas?
    3. You can only create an assessment area if: the geographic area that can reasonably be served by each of a bank’s locations, including its main office, any branches, and deposit-taking ATMs. It has to have a deposit taking facility in it. I’m not sure that would be true of a trade area.

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