CRA Data Review Timeframes and Sampling Guidelines

Question 1

What size banks are required to collect and report CRA data?

Answer 1

Large institutions are required to collect and report CRA data, whereas small institutions (including intermediate small banks) are not required to collect data for CRA evaluation purposes.

In addition, certain institutions are required to collect
and report home mortgage loans for purposes of the Home Mortgage Disclosure Act (HMDA). Other institutions may choose to provide data regarding their loans, including the census tract locations and borrower incomes or business revenues, similar to the data requirement for large institutions and HMDA reporters.

Question 2

For banks that Collect and Report HMDA and CRA Data, what must examiners do before using the data?

Answer 2

Examiners must validate the accuracy of the data. Including a HMDA validation (using HMDA validation procedures) and for other CRA data, examiners should validate the necessary fields needed for CRA analysis.

Question 3

What data fields are necessary to validate for CRA analysis? (4)

Answer 3

HMDA data using HMDA procedures

CRA data (Small business, consumer, or small farm) including:

• Loan type
• Loan amt
• location
• income/revenue

Question 4

For bank’s that collect/report data, what years should be analyzed?

Any exceptions?

What data should be presented?

Answer 4

If loan data is considered accurate, all collected/reported data for each full calendar year since the previous CRA examination should be analyzed. This includes the year of the last examination.

Exception for Small banks operating on a 48-72 month evaluation cycle. In this instance examiners should analyze the most recent two full calendar years of HMDA and/or collected CRA data.

At a minimum examiners should present the latest full calendar year of data for which aggregate data is available. Presentation of additional years may be useful to support conclusions and should be considered if ratings are borderline, unfavorable, if there are anomalies between years, complaints, or upon bank request.

Question 5

In what situations would it be appropriate to evaluates partial calendar year data?

Answer 5

It would only be appropriate to analyze partial calendar year data when there is a short evaluation cycle, such as a previous adverse CRA rating or a de novo institution. In these cases, a separate analysis should
be conducted for each partial year.

Question 6

Even though each AA must be analyzed separately, in what cases can multiple AAs be combined in the PE for presentation purposes? (2)

Answer 6

In instances where two or more AAs consist of non-contiguous (not connected) portions in the Non MSA area of one State and no anomalies are present.

In cases where there are multiple AAs in the same MSA or CSA.

Question 7

For banks that do not collect and Report HMDA or CRA Data, what must examiners do before using the data?

Answer 7

For institutions where data is not collected for a particular product under review sampling must be performed.

Question 8

For bank’s that don’t collect/report data, what years should be analyzed?

What years should be presented?

Answer 8

For institutions where data is not collected for a particular product under review and sampling must be performed, the analysis should cover the lending activity in the previous full calendar year that is prior to the start of the examination. Reasons to analyze and present additional years of data are a borderline
overall rating, a significant overall ratings change, an
unfavorable rating at any level, or CRA complaints. In addition, examiners should confirm with bank management that a one-year sample of a loan product would be representative of the entire evaluation period. In cases where more than one year will be analyzed, a separate analysis should be conducted
for each year.

Question 9

What exceptions exist to presenting and analyzing data by a full calendar year for bank’s that don’t collect or report CRA data?

Answer 9

Exceptions may exist to analyzing data by full calendar year, particularly for institutions that purge their loan system of paid off loans. In situations where the paid off loans are purged and using the previous full calendar year data would not capture the bank’s actual lending performance, a universe comprised of the most recent 12 months may be appropriate.

Question 10

What timeframes should be analyzed and presented for Community Development data?

Answer 10

Community development data (loans, investments, and services) should be reviewed for the entire CRA evaluation cycle.

Question 11

What is the process for validating Community Development Data?

Answer 11

The extent of validation that the activities qualify will depend on the number of activities. With large volumes, often the process of validation will include reviewing the process the bank goes through to qualify a particular activity and validating a sample following the CRA Sample Size table. If the number of activities is smaller, often the entire universe should be reviewed to ensure the activities qualify as community development.

Question 12

Are Small Institutions and ISBs required to collect HMDA and CRA data?

Answer 12

Neither area required to collect small business or small farm data.

Some banks will still collected HMDA data, but not all collect or report.

Question 13

What method should examiners use to evaluate CRA or HMDA data for bank’s that do not collect or report?

Answer 13

Examiners should use sampling to draw conclusions from a random sub set up a universe for each loan type and apply such conclusions to the population as a whole.

This includes for large institutions that don’t collect consumer loan data, as long as consumer lending makes up a substantial portion of the lending portfolio (over 50%).

Question 14

What should examiners do in instances where the collected data is invalid and the bank is unable to correct the data prior to the examination?

Answer 14

Examiners should sample to evaluate the bank’s CRA performance. Specifically the most recent two full calendar years.

Question 15

What should examiners determine prior to selecting a sample? (3)

Answer 15

• The major product lines from which to sample
• The total number of loans in the universe for each product category, by year.
• The number of loans to be sampled for each year (using the sample size table)

Question 16

What factors should examiners take into account when determining the major product lines to sample? (3)

Answer 16

• total volume of lending
• business strategy
• areas of expertise

Question 17

What is the definition of a universe of loans?

Answer 17

The universe of loans is defined as the total number of loans, both originated and purchased by the institution in a calendar year, for a major product category. This should include outstanding and paid-off loans, including renewals. The definition of the loan category should dictate the universe of that lending product (i.e., small business loans are $1 million
or less).

Question 18

At what level should sampling be conducted at?

Product level, AA level, test level, bank level, branch level.

Answer 18

Generally, sampling should be conducted at the institution level and not for each assessment area.

Question 19

Using the Sample size table, what factors are used to determine the Sample size? (2)

Answer 19

• Number of originations or purchases

- Precision level (5 or10%)

Question 20

What Sample size would be selected if the bank had less than or equal to 30 originations or purchases?

5 and 10% level

Answer 20

5%: entire universe

10% entire universe

Question 21

What sample size would be selected if the bank had between 31-50 originations or purchases?

5 and 10% level

Answer 21

5%:42 or entire universe if less than sample size

10%: 30

Question 22

What sample size would be selected if the bank had between 51-75 originations or purchases?

5 and 10% level

Answer 22

5%: 59 or entire universe if less than sample size

10%: 36

Question 23

What sample size would be selected if the bank had between 76-100 originations or purchases?

5 and 10% level

Answer 23

5%:73

10%: 41

Question 24

What sample size would be selected if the bank had between 101-150 originations or purchases?

5 and 10% level

Answer 24

5%:97

10%: 47

Question 25

What sample size would be selected if the bank had between 151-200 originations or purchases?

5 and 10% level

Answer 25

5%: 115

10%: 51

Question 26

What sample size would be selected if the bank had between 201-300 originations or purchases?

5 and 10% level

Answer 26

5%: 143

10%: 55

Question 27

What sample size would be selected if the bank had between 301-400 originations or purchases?

5 and 10% level

Answer 27

5%:162

10%: 58

Question 28

What sample size would be selected if the bank had between 401-500 originations or purchases?

5 and 10% level

Answer 28

5%: 176

10%: 60

Question 29

What sample size would be selected if the bank had between 501-1000 originations or purchases?

5 and 10% level

Answer 29

5%: 213

10%: 63

Question 30

What sample size would be selected if the bank over 1000 originations or purchases?

5 and 10% level

Answer 30

5%: 257

10%: 67

Question 31

Initially, what precision level should examiners select for sample size and why?

Answer 31

10% precision, because this means there is a 90% chance that the results from the sample will be within 10 percentage points of the true proportion for the criteria evaluated.

Question 32

Are examiners allowed to select a larger sample size than indicated in the table, why?

Answer 32

Yes.

For loan products requiring further investigation or greater scrutiny for any reason, a larger sample may be necessary because
examiners may need results with a higher degree of reliability.

Additionally, examiners may select larger samples for bank’s with multiple AAs to avoid the result that only a few loans are selected from certain AAs in the sample. (increase precision level here or select a sample for each AA at 10% level)

Examples of circumstances when increased sample
sizes should be chosen include: the receipt of CRA comments or complaints or if management states the selected sample is not indicative of its true lending performance.

Examiners should use their judgment to determine which sample size to use based on the initial scoping of the examination and subsequent
findings onsite.

Question 33

Where should examiners select the loan sample from?

Answer 33

The bank’s electronic data download or loan trial.

examiners should not let bank management select the sample. And should employ random sample selection rather than Judgement selection to avoid bias in the results.

Question 34

What data should be collected when sampling?

Answer 34

At minimum:

• Internal loan ID number
• Loan type
• Loan dollar amount
• Location (if CT is unavailible get address and geocode)
• for Home Mortgage and consumer, the borrower income used to approve the loan
• for small business and small farm, the gross annual revenues.