CRA - Part 1 Flashcards
What is the purpose of the CRA? [XI. 1.1 Community Reinvestment Act]
The Community Reinvestment Act (CRA) is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate - income neighborhoods, consistent with safe and sound banking operations.
Implementing Regulations [XI. 1.1 Community Reinvestment Act]
- Enacted by Congress in 1977
- 12 USC 2901
- 12 CFR 25, 228, 345, and 563e
Revisions:
-1995 & 2005
Requirements of the CRA [XI. 1.1 Community Reinvestment Act]
The CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution’s application for deposit facilities, including mergers and acquisitions.
Who conducts CRA evaluations? [XI. 1.1 Community Reinvestment Act]
- the Board of Governors of the Federal Reserve System (FRB)
- the FDIC
- the OCC
For what types of institutions have the Agencies established interagency examination procedures? [XI. 1.1Community Reinvestment Act]
- Small institutions
- Intermediate Small Institutions
- Large Retail Institutions
- Limited Purpose and Wholesale Institutions
- Institutions under Strategic Plans
(January 1, 2022 Asset Thresholds) for a Small Institution [XI. 1.1 Community Reinvestment Act]
Bank had assets of less than $346 million as of December 31 of both previous calendar years - as of 12/2022; (used to be $330 million in 12/2021 and before)
(January 1, 2022) Asset Thresholds for an ISB [XI. 1.1 Community Reinvestment Act]
Bank had at least $346 million (and less than $1.384 billion) as of December 31 of both previous calendar years - as of 12/2022; (used to be $330 million and $1.322 billion in 12/2021 and before)
(January 1, 2022) Asset Thresholds for an a Large Institution [XI. 1.1 Community Reinvestment Act]
(January 1, 2022) Bank had total assets of at least $1.384 billion as of December 31 of both of the two prior calendar years; used to be $1.322 billion
What are the five performance criteria under a small bank lending test? [XI. 2.1 Community Reinvestment Act—Small Bank]
- the institution’s LTD ratio, adjusted for seasonal variation; and, as appropriate, other lending-related activities, such as secondary market participation, CD loans, or qualified investments
- The percentage of loans and other lending related activities located inside the institution’s AA AKA AA Concentration
- The distribution of lending among borrowers of different income levels and businesses and farms of different sizes AKA Borrower Profile
- The distribution of lending among geographies of different income levels
- The institution’s record of taking action, if warranted, in response to written complaints about its CRA performance
5.
Examination Scope - Ratings [XI. 2.1 Community Reinvestment Act—Small Bank]
Interstate institutions - a rating must be assigned for each state where the institution has a branch and for each multi-state MSA or MD where the institution has branches in two or more states that comprise that mutli-state MSA/MD; select one or more AAs in each state for examination using these procedures
Examination Procedures for Small Institutions - Examination Scope - More than One AA [XI. 2.1 Community Reinvestment Act—Small Bank]
2[Procedures] reflect the interagency examination procedures in their entirety
Identify AAs for full-scope review
-Review prior PEs
-Community contact interviews
-Reported lending and demographic data on each AA
-Consider the following factors:
–> A) Lending opportunities in the different AAs
–> B) The institution’s level of lending in the different AAs, including low- and mod - AAs, designated disaster areas, or distressed or underserved non-metropolitan middle-income geographies 3 A list of distressed or underserved nonmetropolitan middle-income geographies is available on the FFIEC web site at www.ffiec.gov; *by the Agencies 4Agencies - The Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, and The Office of the Comptroller of the Currency.
C) the number of other institutions in the different AAa
D) Abnormalities in the HMDA data
E) the length of time since the institution was examined using the full-scope review
E) the length of time since the institution was examined using the full-scope review
F) the institutions prior CRA performance in different AAs
G) Examiners’ knowledge of the same or similar AA’s
H) Comments from the public regarding the institutions CRA performance
Examination Procedures for Small Institutions - Examination Scope - Interstate Institutions [XI. 2.1 Community Reinvestment Act—Small Bank]
For interstate institutions, a rating must be assigned for
each state where the institution has a branch and for each multi-state metropolitan statistical area (MSA) or
metropolitan division (MD) where the institution has
branches in two or more states that comprise that multistate MSA/MD. Select one or more assessment areas in each state for examination using these procedures.
What are the steps to review performance context? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Review standardized worksheets and other agency information sources to obtain demographic, economic, and loan data, to the extent available, for each AA under review
- Obtain for review: Call Reports 5The Call Report and UBPR data for most FDIC financial institutions are
available through the FFIEC Central Data Repository’s Public Data Distribution web site at https://cdr.ffiec.gov/public., UBPRs, Annual Reports, Supervisory Reports, and prior CRA PEs 77 Prior CRA Performance Evaluations can be obtained from the regulator that conducted the previous CRA evaluation through their public websites. This would include the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Bank., of institutions of a similar size/that serve a similar AA - Review any information provided by the institution on its local community/economy, business strategy, lending capacity, or anything else
- Community Contacts
- Public File Review (i.e. comments)
- Document the performance context gathered for use in evaluating the institution’s performance
What is the first step in reviewing the AA? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Review the institution’s assessment area to ensure that:
a. Consists of one or more MSAs/MDs or contiguous political subdivisions (i.e. counties, cities, or towns)
b. Includes the geographies where the institution has its main office, branches, and deposit-taking ATMs, as well as the surrounding geographies in which the institution originated or purchased a substantial portion of its loans
c. Consists only of whole census tracts
d. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the AA is located in a multi-state MSA/MD
e. Does not reflect illegal discrimination
f. Does not arbitrarily exclude any low- or moderate - income areas, taking into account the institution’s size, branching structure, and financial condition
What is the second step in reviewing the AA? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If an institution’s AA(s) does not coincide with the boundaries of an MSA/MD or political subdivision, asses whether the adjustments to the boundaries were made because the AA would otherwise be too large for the institution to reasonable serve, have an unusual configuration, or include significant geographic barriers.
What is the third step in reviewing the AA? [XI. 2.1 Community Reinvestment Act—Small Bank]
If the AA fails to comply with the applicable criteria above, develop, based on discussions with management, a revised AA that complies with the criteria. Use this AA to evaluate the institution’s performance, but do not otherwise consider the revision in considering the institution’s rating.
What is the first step in the Loan-to-Deposit Analysis? [XI. 2.1 Community Reinvestment Act—Small Bank]
- From data contained in the Call Reports or UBPRs, calculate the average net LTD ratio since the LX by adding the quarterly net LTD ratios and dividing by the number of quarters
What is the second step in the Loan-to-Deposit Analysis? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Evaluate if the institution’s average net LTD ratio is reasonable in light of information from the performance context including, as applicable, the institution’s capacity to lend, the capacity of other similarly institution’s capacity to lend in the AAs, demographic and economic factors present in the AA, and the lending opportunities available in the institution’s AA
What is the third step in the Loan-to-Deposit Analysis? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If the average, net LTD does not appear reasonable in light of the performance context, consider the number and dollar volume of loans sold to the secondary market, or the innovativeness or complexity of CD loans or qualified investments to assess the extent to which these activities compensate for a low average net LTD ratio or supplement the institution’s lending performance as reflected in its LTD ratio
What is the fourth step in the Loan-to-Deposit Analysis? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Discuss the preliminary findings in this section with management.
What is the fifth step in the Loan-to-Deposit Analysis? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Summarize in workpapers conclusions regarding the institution’s low LTD ratio.
What is the first step in the comparison of Credit Extended Inside and Outside of the Assessment Area(s)? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If available, review HMDA data, automated loan reports, and any other reports that may have been generated by the institution to analyze the extent of lending inside and outside of the AAs. If a report generated by the institution is used, test the accuracy of the output.
What is the second step in the comparison of Credit Extended Inside and Outside of the Assessment Area(s)? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If If loan reports or data analyzing lending inside and
outside of the assessment area(s) are not available or
comprehensive, or if their accuracy cannot be verified,
use sampling guidelines to select a sample of loans
originated, purchased or committed to calculate the
percentage (by number and dollar amount) located within the assessment area(s).
What is the third step in the comparison of Credit Extended Inside and Outside of the Assessment Area(s)? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If the percentage of loans or other lending related
activities in the assessment area is less than a majority, then the institution does not meet the standards for “Satisfactory” under this performance criterion. In this case, consider information from the performance context, such as information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the
institution.
What is the fourth step in the comparison of Credit Extended Inside and Outside of the Assessment Area(s)? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Discuss preliminary findings with management
What is the fifth step in the comparison of Credit Extended Inside and Outside of the Assessment Area(s)? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Summarize in workpapers conclusions regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s).
Once the LTD ratio and AA Concentration performance criteria are analyzed, what is the first step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Determine if the number and income distribution of geographies in the AA(s) are sufficient for a meaningful analysis of the geographic distribution of the institution’s loans in its AA
What is the second step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If a geographic distribution analysis of the institution’s loans would be meaningful and the necessary geographic information (street address or census tract numbers) is collected by the institution in the ordinary course of business, determine the distribution of the institution’s loans in its AAs among low -, moderate -, middle -, and upper-income geographies. Where possible, use the same data used for the inside/outside analysis.
What is the third step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If a geographic distribution analysis of loans inside the AA is performed, identify groups of geographies, by income categories, in which there is little or no loan penetration. Note that institutions are not expected to loan in every geography.
What is the fourth step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- To the extent information about the borrower income (individuals) or revenues (businesses) is collected by the institution in the ordinary course of business, determine the distribution of loans inside the AA by borrower income and business revenues. Where possible, use the same data used for the inside/outside analysis.
What is the fifth step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Identify categories of borrowers by income or business revenue for which there is little or no loan penetration.
What is the sixth step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If an analysis of geographic distribution would not be meaningful or an analysis of borrower profile could not be performed, consider possible proxies to use for analysis of the institution’s distribution of credit: analyzing geographic distribution by street address rather than geography, or by using loan size as a proxy for income (think: loan size as a proxy for GAR for PPP loans) for borrower profile
What is the seventh step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If there are categories of low penetration (by income level of the tract or of the borrower), form conclusions about the reasons for that low penetration. Consider available information from the performance context, including:
a) Information about the institution’s size, branch network, financial condition, supervisory restrictions (if any), and prior CRA record
b) Information from discussions with management, loan officers, and members of the community
c) Information about economic conditions, especially inside of the AA (think: inability of SSB to lend)
d) Information about demographic or other characteristics of particular geographies that could affect loan demand, such as the existence of a prison or college
e) Information about other lenders serving the same or similar AAs
What is the eighth step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Discuss the preliminary findings in this section with management
What is the ninth step in analyzing the institution’s lending within its assessment area? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Summarize in workpapers conclusions about the geographic distribution of loans and the distribution of loans by borrower characteristics in the institution’s AA
What is the first step in the Review of Complaints? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Review all complaints relating to the institution’s CRA performance received by the institution (these should all be contained in the institution’s public file) and those that were received by its supervisory agency
What is the second step in the Review of Complaints? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If there were any complaints, review the institutions record of taking action, if warranted, in response to written complaints about its CRA performance.
What is the third step in the Review of Complaints? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If there were any complaints, discuss the preliminary findings in this section with management.
What is the fourth step in the Review of Complaints? [XI. 2.1 Community Reinvestment Act—Small Bank]
- If there were any complaints, summarize in workpapers conclusions regarding the institution’s record of taking action, if warranted, in response to written complaints in response to written complaints about its CRA performance. Include the total number of complaints and resolutions with examples that illustrate the nature, responsiveness to, and resolution of, the complaints.
What is the first step in reviewing Investments and Services (at the institution’s option) to Enhance a Satisfactory Rating [XI. 2.1 Community Reinvestment Act—Small Bank]
- If the institution chooses, review its performance in making qualified investments and providing branches and other and delivery systems that enhance credit availability in its AA. Performance with respect to qualified investments and services may be used to enhance an institution’s overall rating of “Satisfactory,” but cannot be used to lower a rating that otherwise would have been assigned.
What is the second step in reviewing Investments and Services (at the institution’s option) to Enhance a Satisfactory Rating [XI. 2.1 Community Reinvestment Act—Small Bank]
- To evaluate the institution’s performance in making qualified investments that enhance credit availability in the AA, consider:
a) the dollar amount of qualified investments, by type and location
b) the impact of those investments on the institution’s AA; and
c) the innovativeness or complexity of the investments
What is the first step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Group the analyses of AAs examined by MSA 8The reference to MSA may also reference MD and nonmetropolitan areas within each state that the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the AAs that are in that MSA.
What is the second step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Summarize conclusions about the institution’s performance in each MSA and the nonmetropolitan portion of each state in which an AA received a full-scope review. If two or more AAs in an MSA or in a nonmetropolitan portion of a state received full scope reviews, weigh the different AAs considering such factors as:
a) The significance of the institution’s activities in each compared to the institution’s overall activities
b) The lending opportunities in each
c) The importance of the institution in providing loans to each
d) Demographic and economic conditions in each.
What is the third step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- For AAs in MSAs and nonmetropolitan areas that were not examined using the full scope procedures, consider facts and data related to the institution’s lending to ensure that performance in those AAs is is not inconsistent (is consistent) based on the AAs that received full scope examinations
What is the fourth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- For institutions only operating in one multi-state MSA or one state, assign one of the four preliminary ratings - Satisfactory, Outstanding, Needs to Improve, and Substantial Noncompliance - in accordance with step 6 below. To determine the relative significance of each MSA and nonmetropolitan area to the institution’s preliminary rating, consider:
a) the significance of the institution’s activities in each compared to the institution’s overall activities
b) the lending opportunities in each
c) the importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each
d) Demographic and economic conditions in each
What is the fifth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- For other institutions, assign one of the four preliminary ratings - Satisfactory, Outstanding, Needs to Improve, and Substantial Noncompliance - for each state in which the institution has at least one branch and for each multi-state MSA in which the institution has branches in two or more states in accordance with step #6 below. To determine the relative significance of each MSA and the nonmetropolitan area on the institution’s preliminary rating, consider:
What is the sixth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- Consult the small institution’s ratings matrix and information in workpapers to assign a preliminary rating of:
a) Satisfactory - If the institution’s performance meets each of the standards for a satisfactory rating or if the exceptionally strong performance with respect to to some of the standards compensates for weak performance in others
b) Needs to Improve or Substantial Noncompliance - if the institution’s performance fails to meet the standards for satisfactory performance. Whether a rating is needs to improve or substantial noncompliance will depend upon the degree to which the institution’s performance has failed to meet the standards for a satisfactory rating, or:
c) Outstanding - if the institution meets the rating descriptions and standards for each of the five criteria, and materially exceeds the standards for Satisfactory for some or all of the criteria to the extent that an outstanding rating is warranted, or if the institution’s performance with respect to the five core criteria generally exceeds “Satisfactory” and its performance in making qualified investments and providing branches and other services and delivery systems in the assessment area(s) supplement its performance under the five core criteria sufficiently to warrant an overall rating of “Outstanding”
What is the seventh step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
- For an institution with branches in more than one state or multistate MSA, assign a preliminary rating to the institution as a whole taking into account the institution’s record in different states and multistate MSAs by considering:
a) the significance of the institution’s activities in each compared to the institution’s overall activities
b) the lending opportunities in each
c) the importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each
d) Demographic and economic conditions in each
d)
What is the eight step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
Review the results of the most recent compliance
examination and determine whether evidence of
discriminatory or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s overall CRA rating or, if applicable, its CRA rating in any state or multi-state MSA. 9 “Evidence of discriminatory or other illegal credit practices” includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection
Act; (c) Violations of section 5 of the Federal Trade Commission Act;
(d)Violations of section 8 of the Real Estate Settlement Procedures Act; and
(e) Violations of the Truth in Lending Act regarding a consumer’s right of
rescission. If evidence of
discrimination or other illegal credit practices in any
geography by the institution, or in any assessment area
by any affiliate whose loans have been considered as part
of the institution’s lending performance, was found,
consider:
a. The nature, extent, and strength of the evidence of
the practices;
b. The policies and procedures that the institution (or
affiliate, as applicable) has in place to prevent the
practices;
c. Any corrective action the institution (or affiliate, as
applicable) has taken, or has committed to take,
including voluntary corrective action resulting from
self-assessment; and
d. Any other relevant information
What is the ninth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
Assign a final rating for the institution as a whole and, if
applicable, each state in which the institution has at least
one branch and each multi-state MSA in which it has
branches in two or more states, considering:
a. The institution’s preliminary rating; and
b. Any evidence of discriminatory or other illegal
credit practices (see #8 above).
What is the tenth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
Discuss conclusions with management
What is the eleventh step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
Write an evaluation of the institution’s performance for
the examination report and the public evaluation.
What is the twelfth step in determining a small institution’s rating? [XI. 2.1 Community Reinvestment Act—Small Bank]
Prepare recommendations for a supervisory strategy and for matters that require attention or follow-up activities.
What is the first step in the review of the public file checklist? [XI. 2.1 Community Reinvestment Act—Small Bank]
- There is no need to review each branch or each complete
public file during every examination. In determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file
requirements, and any other relevant information.
What is the second step in the review of the public file checklist? [XI. 2.1 Community Reinvestment Act—Small Bank]
- In any review of the public file undertaken, determine, as needed, whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each state, and the public file available in the main office and in a branch in each state contains:
a. All written comments from the public relating to the
institution’s CRA performance and responses to
them for the current and preceding two calendar
years (except those that reflect adversely on the good name or reputation of any persons other than the institution;
b. The institution’s most recent CRA Public
Performance Evaluation;
c. A map of each assessment area showing its
boundaries and, on the map or in a separate list,
the geographies contained within the
assessment area;
d. A list of the institution’s branches, branches
opened and closed during the current and each
of the prior two calendar years,
e. The HMDA Disclosure Statement for the prior
two calendar years, if applicable;
f. The institution’s loan-to-deposit ratio for each
quarter of the prior calendar year;
g. A quarterly report of the institution’s
efforts to improve its record if it received a
less than satisfactory rating during its most
recent CRA examination; and
h. A list of services (loan and deposit products
and transaction fees generally offered, and
hours of operation at the institution’s
branches), including a description of any
material differences in the availability or cost
of services among locations.
What is the third step in the review of the public file checklist? [XI. 2.1 Community Reinvestment Act—Small Bank]
- In any branch review undertaken, determine whether
the branch provides the most recent public evaluation
and a list of services available at the branch or a
description of material differences from the services
generally available at the institution’s other branches.
What does the Public Notice review entail? [XI. 2.1 Community Reinvestment Act—Small Bank]
Determine that the appropriate CRA public notice is
displayed as required by § 345.44 and Appendix B.
What is the outstanding rating description for the LTD ratio for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The loan-to-deposit ratio is more than reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the satisfactory rating description for the LTD ratio for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The loan-to-deposit ratio is reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the needs to improve rating description for the LTD ratio for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The loan-to-deposit ratio is less than reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the substantial noncompliance rating description for the LTD ratio for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The loan-to-deposit ratio is unreasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the outstanding rating description for assessment area concentration for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
A substantial majority of loans and other lending related activities are in the institution’s assessment area(s).
What is the satisfactory rating description for assessment area concentration for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
A majority of loans and other lending related activities are in the institution’s assessment area(s).
What is the needs to improve rating description for assessment area concentration for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
A majority of loans and other lending related activities are outside the institution’s assessment area(s)
What is the needs to improve rating description for assessment area concentration for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
other lending related activities are outside the institution’s assessment area(s) A substantial majority of loans and other lending related activities are outside the institution’s assessment area(s)
What is the outstanding rating description for geographic distribution for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The geographic distribution of loans reflects excellent dispersion throughout the assessment area(s).
What is the satisfactory rating description for geographic distribution for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The geographic distribution of loans reflects reasonable dispersion throughout the assessment area(s).
What is the needs to improve rating description for geographic distribution for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The geographic distribution of loans reflects poor dispersion throughout the assessment area(s).
What is the substantial noncompliance rating description for geographic distribution for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The geographic distribution of loans reflects very poor dispersion throughout the assessment area(s).
What is the outstanding rating description for borrower’s profile for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The distribution of borrowers reflects, given the demographics of the assessment area(s), excellent penetration among individuals of different income levels (including low- and moderate- income) and businesses of different sizes.
What is the satisfactory rating description for borrower’s profile for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The distribution of borrowers reflects, given the demographics of the assessment area(s), reasonable penetration among individuals of different income levels (including low- and moderate- income) and businesses of different sizes.
What is the needs to improve rating description for borrower’s profile for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The distribution of borrowers reflects, given the demographics of the assessment area(s), poor penetration among individuals of different income levels (including low- and moderateincome) and businesses of different sizes.
What is the substantial noncompliance rating description for borrower’s profile for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The distribution of borrowers reflects, given the demographics of the assessment area(s), very poor penetration among individuals of different income levels (including low- and moderateincome) and businesses of different sizes.
What is the outstanding rating description for response to substantiated consumer complaints for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The institution has taken noteworthy, creative action in response to substantiated complaints about its performance in meeting assessment area credit needs.
What is the satisfactory rating description for response to substantiated consumer complaints for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The institution has taken appropriate action in response to substantiated complaints about its performance in meeting assessment area credit needs.
What is the needs to improve rating description for response to substantiated consumer complaints for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The institution has taken inadequate action in response to substantiated complaints about its performance in meeting assessment area credit needs.
What is the substantial noncompliance rating description for response to substantiated consumer complaints for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The institution is unresponsive to substantiated complaints about its performance in meeting assessment area credit needs.
What is the outstanding rating description for investments for a Small Institution? [XI. 2.1 Community Reinvestment Act—Small Bank]
The institution’s investment record enhances credit availability in its assessment area.
When were amendments made to CRA regulations? [XI. 3.1 Community Reinvestment Act—ISB]
July 19, 2005, the FDIC, FRB, and OCC jointly approved amendments to the CRA regulations which took effect on September 1, 2005. Among the revisions to the regulations, “intermediate small banks” are defined under §345.12 (u) These banks are evaluated under two tests: the small bank lending test and a community development test.
Are ISBs required to collect and report CRA Loan data for small business, small farm, and CD loans? [XI. 3.1 Community Reinvestment Act—ISB]
No, intermediate small institutions are not required to collect and report CRA loan data for small business, small farm, and community development loans. . Nevertheless, the CRA regulations continue to allow small institutions, including intermediate small institutions, to opt for an evaluation under the (large bank) lending, investment, and service tests,
provided the data is collected and reported.
What should examiners review under the lending test for ISBs? [XI. 3.1 Community Reinvestment Act—ISB]
To evaluate the distribution of loans under intermediate small bank procedures, examiners should review loan files, bank reports, or any other information or analyses a bank may provide.
What should examiners review under the CD test (to evaluate CD loans, investments, and services) for ISBs? [XI. 3.1 Community Reinvestment Act—ISB]
To evaluate community development loans,
investments, and services under the intermediate small bank community development test, examiners will review (1) any information a bank may provide, including the results of any assessment of community development needs or opportunities if conducted by the bank, and (2) performance context information obtained by examiners from community, government, civic or other sources.
What information should be incorporated into all ISB
public evaluations, as applicable? #1 [XI. 3.1 Community Reinvestment Act—ISB]
- The total number and dollar amount of community
development loans, qualified investments, and community development services, including:
a. The total number and dollar amount of community
development activities on an annual basis, and
b. Complete listings of loans, investments, and services or consistent summary listings (by category such as affordable housing, economic development, etc.) of community development activities.
3.
What information should be incorporated into all ISB
public evaluations, as applicable? #2 [XI. 3.1 Community Reinvestment Act—ISB]
- A determination of the opportunity and need for
community development activities, including:
a. Information on any self-assessment performed by the bank,
b. Information from the examiner’s assessment
based, for example, on review of current
economic and demographic conditions, and
c. Activities of similarly situated banks based, for
example, on review of recent public evaluations
and information obtained from community
contacts.
What information should be incorporated into all ISB public evaluations, as applicable? #3 [XI. 3.1 Community Reinvestment Act—ISB]
An analysis of the institution’s capacity to meet the
community development needs of the assessment area(s),
including the use of quantitative performance measures
such as:
a. The ratio of community development loans to net loans,
b. The ratio of community development investments to total investments or total assets, and
c. Any other performance ratios which support the
analysis.
How do you determine the scope of an ISB review (in general/as required)? [XI. 3.1 Community Reinvestment Act—ISB]
For institutions (interstate and intrastate) with more than one assessment area, identify assessment areas for a full scope review. A full scope review is accomplished when examiners complete all of the procedures for an assessment area. For interstate institutions, a minimum of one assessment area from each state, and a minimum of one assessment area from each multistate MSA/MD, must be reviewed using the full scope examination procedures.
What is the first step in identifying assessment areas for full-scope reviews? [XI. 3.1 Community Reinvestment Act—ISB]
To identify assessment areas for full scope review, review prior CRA performance evaluations, available community contact materials, and reported lending data and demographic data on each assessment area. Consider factors such as:
a. The retail lending and community development
opportunities in the different assessment areas,
particularly areas where the need for credit and
community development activities is significant;
b. The level of the institution’s activity in the different
assessment areas, including in low- and moderate income areas, designated disaster areas, or distressed or underserved non-metropolitan middle-income geographies designated by the Agencies based on (a) rates of poverty, unemployment, and population loss or (b) population size, density, and dispersion;
c. The number of other institutions in the different
assessment areas and the importance of the institution under examination in serving the different areas, particularly any areas with h relatively few other providers of financial services;
d. The existence of apparent anomalies in the reported data for any particular assessment area(s);
e. The length of time since the assessment area(s) was last examined using a full scope review;
f. The institution’s prior CRA performance in different
assessment areas;
g. Examiners’ knowledge of the same or similar
assessment areas; and
h. Comments from the public regarding the institution’s CRA performance.
What is the second step in identifying assessment areas for full-scope reviews? [XI. 3.1 Community Reinvestment Act—ISB]
Select one or more assessment areas in each state, and one or more assessment areas in any multi-state MSA, for examination using these procedures. This is required because for interstate institutions, a rating must be assigned for each state where the institution has a branch and for each multi-state MSA/MD where the institution has branches in two or more states that comprise that MSA/MD.
What is the first step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
Review standardized worksheets and other agency
information sources to obtain relevant demographic,
economic, and loan data, to the extent available, for each assessment area under review.
What is the second step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
Obtain for review the Consolidated Reports of Condition (Call Reports), Uniform Bank Performance Reports (UBPRs), annual reports, supervisory reports, and prior CRA evaluations of the institution under examination to help understand the institution’s ability and capacity, including any limitations imposed by size, financial condition, or statutory, regulatory, economic or other constraints, to respond to safe and sound opportunities in the assessment area(s) for retail loans, and community development loans, qualified investments and community development services.
What is the third step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
Discuss with the institution, and consider, any information the institution may provide about its local community and economy, including community development needs and opportunities, its business strategy, its lending capacity, or information that otherwise assists in the evaluation of the
institution
What is the fourth step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
Review community contact forms prepared by the
regulatory agencies to obtain information that assists in
the evaluation of the institution. Contact local community, governmental or economic development representatives to update or supplement this information. Refer to the Community Contact Procedures for more detail.
What is the fifth step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
- Review any comments received by the institution or the agency since the last CRA examination.
What is the sixth step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
- By reviewing the public evaluations and other financial data, determine whether any similarly situated
institutions (in terms of size, financial condition,
product offerings, and business strategy) serve the
same or similar assessment area(s) and would provide
relevant and accurate information for evaluating the
institution’s CRA performance. Consider, for example,
whether the information could help identify:
a) Lending and community development opportunities
available in the institution’s assessment area(s) that
are compatible with the institution’s business strategy
and consistent with safe and sound banking practices;
b) Constraints affecting the opportunities to make safe and sound retail loans, community development loans, qualified investments, and community development services compatible with the institution’s business
c) Successful CRA-related product offerings or activities utilized by other lenders serving the same or similar assessment area(s).
strategy in the assessment area(s); and
d) Document the performance context information,
particularly community development needs and
opportunities, gathered for use in evaluating the
institution’s performance.
What is the seventh step in reviewing an institution’s performance context? [XI. 3.1 Community Reinvestment Act—ISB]
Document the performance context information,
particularly community development needs and
opportunities, gathered for use in evaluating the
institution’s performance.
What is the first step in reviewing an ISB’s assessment area? [XI. 3.1 Community Reinvestment Act—ISB]
- Review the institution’s stated assessment areas(s) to ensure that it:
a. Consists of one or more MSAs/MDs or contiguous
political subdivisions (e.g., counties, cities, or towns);
b. Includes the geographies where the institution has its
main office, branches, and deposit-taking ATMs, as
well as the surrounding geographies in which the
institution originated or purchased a substantial
portion of its loans;
c. Consists only of whole census tracts;
d. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is located in a multistate MSA/MD;
e. Does not reflect illegal discrimination; and
f. Does not arbitrarily exclude any low- or moderate income area(s), taking into account the institution’s size, branching structure, and financial condition.
What is the second step in reviewing an ISB’s assessment area? [XI. 3.1 Community Reinvestment Act—ISB]
- If an institution’s assessment area(s) does not coincide with the boundaries of an MSA/MD or political
subdivision(s), assess whether the adjustments to the
boundaries were made because the assessment area
would otherwise be too large for the institution to
reasonably serve, have an unusual configuration, or
include significant geographic barriers
What is the third step in reviewing an ISB’s assessment area? [XI. 3.1 Community Reinvestment Act—ISB]
If the assessment area(s) fails to comply with the
applicable criteria described above, develop, based on
discussions with management, a revised assessment
area(s) that complies with the criteria. Use this
assessment area(s) to evaluate the institution’s
performance, but do not otherwise consider the
revision in determining the institution’s rating.
After determining the scope (assessment area(s) for review) & performance context, what do you do?
After determining the scope (assessment area(s) for review) & performance context, perform the lending test (see criteria in flashcards).
What is the first ISB lending test performance criteria? [XI. 3.1 Community Reinvestment Act—ISB]
- the Loan to Deposit (ratio) Analysis
What is the first step in the loan to deposit analysis? [XI. 3.1 Community Reinvestment Act—ISB]
- From data contained in Call Reports or UBPRs, calculate the average loan-to-deposit ratio since the last examination by adding the quarterly loan-to-deposit ratios and dividing by the number of quarters.
What is the second step in the loan to deposit analysis? [XI. 3.1 Community Reinvestment Act—ISB]
- Evaluate whether the institution’s average loan-to-deposit ratio is reasonable in light of information from the performance context including, as applicable, the
institution’s capacity to lend, the capacity of other
similarly situated institutions to lend in the assessment area(s), demographic and economic factors present in the assessment area(s), and the lending opportunities available in the institution’s assessment area(s).
What is the third step in the loan to deposit analysis? [XI. 3.1 Community Reinvestment Act—ISB]
- If the loan-to-deposit ratio does not appear reasonable in light of the performance context, consider whether the number and the dollar amount of loans sold to the secondary market compensate for a low loan-to-deposit ratio or supplement the institution’s lending performance.
What is the fourth step in the loan to deposit analysis? [XI. 3.1 Community Reinvestment Act—ISB]
- Summarize in work papers conclusions regarding the
institution’s loan-to-deposit ratio.
What is the second ISB lending test performance criteria? [XI. 3.1 Community Reinvestment Act—ISB]
The second ISB lending test performance criteria is the comparison of credit extended inside and outside of the assessment area (inside/outside analysis AKA AA Concentration).
What is the first step in the the comparison of credit extended inside and outside of the assessment area (inside/outside analysis AKA AA Concentration)? [XI. 3.1 Community Reinvestment Act—ISB]
If available, review HMDA data, automated loan reports, - think - CRA Wiz Table - and any other reports that may have been generated by the institution to analyze the extent of lending inside and outside of the assessment area(s). If a report generated by the institution is used, test the accuracy of the output.
What is the second step in the the comparison of credit extended inside and outside of the assessment area (inside/outside analysis AKA AA Concentration)? [XI. 3.1 Community Reinvestment Act—ISB]
If loan reports or data analyzing lending inside and outside of the assessment area(s) are not available or
comprehensive, or if their accuracy cannot be verified, use sampling guidelines to select a sample of loans originated, purchased or committed to calculate the percentage (by number and dollar volume) located within the assessment area(s).
What is the third step in the the comparison of credit extended inside and outside of the assessment area (inside/outside analysis AKA AA Concentration)? [XI. 3.1 Community Reinvestment Act—ISB]
- If the percentage of loans or other lending related
activities in the assessment area is less than a majority, then the institution does not meet the standards for “Satisfactory” under this performance criterion. In this case, consider information from the performance context, such as information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the
institution.
What is the fourth step in the the comparison of credit extended inside and outside of the assessment area (inside/outside analysis AKA AA Concentration)? [XI. 3.1 Community Reinvestment Act—ISB]
- Summarize in work papers conclusions regarding the
institution’s level of lending or other lending related
activities inside and outside of its assessment area(s).
What is the third lending test criteria? [XI. 3.1 Community Reinvestment Act—ISB]
Distribution of Credit within the Assessment Area(s)
What is the third lending test criteria broken into (two sub-criteria).
A. Geographic Distribution
B. Borrower Profile
What is the first step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
Determine whether the number and income distribution of geographies in the assessment area(s) are sufficient for a meaningful analysis of the geographic distribution of the institution’s loans in its assessment area(s).
What is the second step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
If a geographic distribution analysis of the institution’s
loans would be meaningful and the necessary geographic information (street address or census tract number) is collected by the institution in the ordinary course of its business [and geocode, or we can], determine the distribution of the institution’s
loans in its assessment area(s) among low-, moderate-, middle-, and upper-income geographies. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the assessment area.
area(s).
What is the third step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
If a geographic analysis of loans in the assessment area(s) is performed, identify groups of geographies, by income categories, in which there is little or no loan penetration. Note that institutions are not expected to lend in every geography.
What is the fourth step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
To the extent information about borrower income
(individuals) or revenues (businesses) is collected by the institution in the ordinary course of its business, determine the distribution of loans in the assessment area(s) by borrower income and by business revenues. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the
assessment area(s).
What is the fifth step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
- Identify categories of borrowers by income or business revenue for which there is little or no loan penetration.
What is the sixth step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
- If an analysis of the distribution of loans among
geographies of different income levels would not be
meaningful (e.g., very few geographies in the assessment area(s)) or an analysis of lending to borrowers of different income or revenues could not be performed (e.g., income data are not collected for certain loans), consider possible proxies to use for analysis of the institution’s distribution of credit. Possibilities include analyzing geographic distribution by street address rather than geography (if data
are available and the analysis would be meaningful) or analyzing the distribution by loan size as a proxy for
income or revenue of the borrower.
What is the seventh step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
- If there are categories of low penetration, form
conclusions about the reasons for that low penetration.
Consider available information from the performance
context, including:
a) Information about the institution’s size, branch
network, financial condition, supervisory restrictions
(if any) and prior CRA record;
b) Information from discussions with management, loan
officers, and members of the community;
c) Information about economic conditions, particularly
in the assessment area(s);
d) Information about demographic or other
characteristics of particular geographies that could
affect loan demand, such as the existence of a prison
or college; and
e) Information about other lenders serving the same or similar assessment area(s).
What is the eighth step in the Distribution of Credit within the Assessment Area(s) [XI. 3.1 Community Reinvestment Act—ISB]
8. Summarize in work papers conclusions concerning the geographic distribution of loans and the distribution of loans by borrower characteristics in the institution’s assessment area(s).
What is the fourth lending test criteria? [XI. 3.1 Community Reinvestment Act—ISB]
Review of Complaints
What are the steps in a review of the institution’s complaints [XI. 3.1 Community Reinvestment Act—ISB]?
- Review all complaints relating to the institution’s CRA
performance received by the institution (these should all be contained in the institution’s public file) and those that were received by its supervisory agency. - If there were any complaints, evaluate the institution’s record of taking action, if warranted, in response to written complaints about its CRA performance.
- If there were any complaints, discuss the preliminary
findings in this section with management. - If there were any complaints, summarize in work papers conclusions regarding the institution’s record of taking action, if warranted, in response to written complaints about its CRA performance. Include the total number of complaints and resolutions with examples that illustrate the nature, responsiveness to, and resolution of, the complaints.
- Discuss the preliminary findings in the lending test
section with management.
What is the description of an Outstanding LTD for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The loan-to-deposit ratio is more than reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the description of a Satisfactory LTD for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The loan-to-deposit ratio is reasonable (considering seasonal variations and taking into account lending
related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the description of a Need to Improve LTD for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The loan-to-deposit ratio is less than reasonable
(considering seasonal variations and taking into account lending related activities) given the institution’s size,
financial condition, and assessment area credit
needs.
What is the description of a Substantial Noncompliance for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The loan-to-deposit ratio is unreasonable (considering seasonal variations and taking into account lending
related activities) given the institution’s size, financial condition, and assessment area credit needs.
What is the description of an Outstanding AA Concentration for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
A substantial majority of loans and other lending related
activities are in the institution’s assessment area(s).
What is the description of a Satisfactory AA Concentration for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
A majority of loans and other lending related activities are in the institution’s assessment area(s).
What is the description of a Needs to Improve AA Concentration for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
A majority of loans and other lending related
activities are outside the institution’s assessment
area(s).
What is the description of Substantial Noncompliance for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
A substantial majority of loans and other lending related
activities are outside the institution’s assessment area(s)
What is the description of an Outstanding Geographic Distribution for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The geographic distribution of loans reflects excellent
dispersion throughout the assessment area(s).
What is the description of a Satisfactory Geographic Distribution for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The geographic distribution of loans reflects reasonable
dispersion throughout the assessment area(s).
What is the description of a Needs to Improve Geographic Distribution for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The geographic distribution of loans reflects poor dispersion throughout the assessment area(s).
What is the description of a Substantial Noncompliance for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The geographic distribution of loans reflects very poor
dispersion throughout the assessment area(s)
What is the description of an Outstanding Borrower’s Profile for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The distribution of borrowers reflects,
given the demographics of the assessment area(s), excellent penetration among individuals of different income levels (including low- and
moderate-income) and businesses of different
sizes.
What is the description of a Satisfactory Borrower’s Profile for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The distribution of borrowers reflects, given the
demographics of the assessment area(s), reasonable penetration among individuals of different income levels (including low- and moderate-income) and
businesses of different sizes.
What is the description of a Needs to Improve Borrower’s Profile for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The distribution of borrowers reflects,
given the demographics of the assessment area(s),
poor penetration among individuals of different income levels (including low- and moderate-income) and businesses of different sizes.
What is the description of a Substantial Noncompliance for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The distribution of borrowers reflects,
given the demographics of the assessment area(s),
very poor penetration among individuals of
different income levels (including low- and
moderate-income) and businesses of different
sizes
What is the description of an Outstanding Response to Substantiated Complaints for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The institution has taken noteworthy, creative action in
response to substantiated complaints about its performance in meeting assessment
area credit needs.
What is the description of a Satisfactory Response to Substantiated Complaints for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The institution has taken appropriate action in response to substantiated complaints about its performance in
meeting assessment area credit needs.
What is the description of a Needs to Improve Response to Substantiated Complaints for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The institution has taken inadequate action in response to substantiated complaints about its performance in
meeting assessment area credit needs.
What is the description of a Substantial Noncompliance Response to Substantiated Complaints for an ISB? [XI. 3.1 Community Reinvestment Act—ISB]?
The institution is unresponsive to substantiated
complaints about its performance in meeting assessment area credit needs.
What is the description of an ISB CD Test [XI. 3.1 Community Reinvestment Act—ISB]
An institution should appropriately assess the needs in its community, engage in different types of community development activities based on those needs and the institution’s capacities, and take reasonable steps to apply its community development resources strategically to meet those
needs. The flexibility inherent in the community development test allows intermediate small institutions to focus on meeting the substance of community needs through these activities. Examiners will consider the results of any assessment by the institution of community needs along with information from community, government, civic, and other sources to gain a working knowledge of community needs.
What is the first step in the CD test? [XI. 3.1 Community Reinvestment Act—ISB]
- Identify the number and amount of the institution’s
community development loans, qualified
investments, and community development services.
Obtain this information through discussions with
management, HMDA data collected by the
institution, as applicable; investment portfolios; any
other relevant financial records; and materials
available to the public. Include, at the institution’s
option:
a. Community development loans, qualified investments, and community development services provided by affiliates, if they are not claimed by any other institution; and
b. Community development lending by consortia or third parties.
What is the second step in the CD test? [XI. 3.1 Community Reinvestment Act—ISB]
- Review community development loans, qualified
investments, and community development services to verify that they qualify as community development.
What is the third step in the CD test? [XI. 3.1 Community Reinvestment Act—ISB]
- If the institution participates in community development lending by consortia or third parties, or claims activities provided by affiliates, review records provided to the institution by the consortia or third parties or affiliates to ensure that the community development loans claimed by the institution do not account for more than the institution’s share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.
What is the fourth step in the CD test? [XI. 3.1 Community Reinvestment Act—ISB]
- Considering the institution’s capacity and constraints and other information obtained through the performance context review, form conclusions about:
a. The number and amount of community development
loans and qualified investments;
b. The extent to which the institution provides
community development services, including the
provision and availability of services to low- and
moderate-income people, including through branches and other facilities in low- and moderate-income areas;
c. The responsiveness to the opportunities for
community development lending, qualified
investments, and community development services,
considering:
1) The results of any assessment of community
development needs and opportunities provided by
the institution;
2) The examiner’s review of performance context
information from community, government, civic,
and other sources; and
3) Whether the amount and combination of
community development loans, qualified
investments, and community development
services, along with their qualitative aspects, are
responsive to community needs and opportunities.
What is the fifth step in the CD test? [XI. 3.1 Community Reinvestment Act—ISB]
- Summarize conclusions regarding the institution’s
community development performance and retain in
the work papers.
What is the Outstanding rating in the CD Test Rating Matrix? [XI. 3.1 Community Reinvestment Act—ISB]
The institution’s community development performance demonstrates excellent responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development
services, as appropriate, considering the institution’s
capacity and the need and availability of such
opportunities for community development in the
institution’s assessment area(s)
What is the Satisfactory rating in the CD Test Rating Matrix? [XI. 3.1 Community Reinvestment Act—ISB]
The institution’s community development performance demonstrates adequate responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development
services, as appropriate, considering the institution’s
capacity and the need and availability of such
opportunities for community development in the
institution’s assessment area(s).
What is the Needs to Improve rating in the CD Test Rating Matrix? [XI. 3.1 Community Reinvestment Act—ISB]
The institution’s community development performance demonstrates poor responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development
services, as appropriate, considering the institution’s
capacity and the need and availability of such
opportunities for community development in the institution’s assessment area(s).
What is the Substantial Noncompliance rating in the CD Test Rating Matrix? [XI. 3.1 Community Reinvestment Act—ISB]
The institution’s community development performance demonstrates very poor responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development
services, as appropriate, considering the institution’s
capacity and the need and availability of such
opportunities for community development in the
institution’s assessment area(s).
What is the first step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Group the analyses of the assessment areas examined by MSA and non-MSA areas within each state where the institution has branches. If an institution has
branches in two or more states of a multi-state MSA,
group the assessment areas that are in that MSA.
What is the second step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Summarize conclusions about the institution’s
performance in each MSA and the non-MSA portion of each state in which an assessment area received a full scope review. If two or more assessment areas in an MSA or in the non-MSA portion of a state received full scope reviews, weigh the different assessment areas considering such factors as:
a. The significance of the institution’s activities in
each compared to the institution’s overall activities;
b. The retail lending and community development opportunities in each;
c. The importance of the institution in providing loans
and community development activities to each, particularly in light of the number of other
institutions and the extent of their activities in each;
and
d. Demographic and economic conditions in each
What is the third step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- For assessment areas in MSAs and non-MSA areas that were not examined using these procedures, consider facts and data related to the institution’s lending and community development activities to ensure that performance in those assessment areas is not inconsistent with the conclusions based on the
assessment areas which received full scope reviews
What is the fourth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- For institutions operating in only one multi-state MSA
or one state, assign one of the four preliminary ratings –
“Satisfactory,” “Outstanding,” “Needs to Improve,” or
“Substantial Noncompliance”—in accordance with step
6 below. To determine the relative significance of each
MSA and non-MSA area to the institution’s preliminary
rating, consider:
a. The significance of the institution’s activities in each
compared to the institution’s overall activities
b. The retail lending and community
development opportunities in each;
c. The importance of the institution to each,
particularly in light of the number of other
institutions and the extent of their activities in each;
and
d. Demographic and economic conditions in each.
What is the firth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
For other institutions, assign one of the four preliminary
ratings—“Satisfactory,” “Outstanding,” “Needs to
Improve,” or “Substantial Noncompliance”—for each state in which the institution has at least one branch and
for each multi-state MSA in which the institution has
branches in two or more states in accordance with step #6
below. To determine the relative significance of each
MSA and the non-MSA area on the institution’s
preliminary state rating, consider:
a. The significance of the institution’s activities in
each compared to the institution’s overall activities;
b. The retail lending and community
development opportunities in each;
c. The importance of the institution in each,
particularly in light of the number of other
institutions and the extent of their activities in each;
and
d. Demographic and economic conditions in each
What is the sixth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
“Satisfactory” if the institution’s performance is
rated as “Satisfactory” in each test.
b. “Needs to Improve” or “Substantial
Noncompliance,” depending upon the degree to
which the institution’s performance has failed to
meet the standards for a “Satisfactory” rating on a
test; or
c. “Outstanding” if the institution is rated an
”Outstanding” on both tests; or “Outstanding” on
one test and the extent to which the institution meets
or exceeds the “Satisfactory” criteria on the other
test.
What is the seventh step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
For an institution with branches in more than one state or
multi-state MSA, assign a preliminary rating to the
institution as a whole taking into account the institution’s
record in different states or multi-state MSAs by
considering:
a. The significance of the institution’s activities in
each compared to the institution’s overall activities;
b. The retail lending and community
development opportunities in each;
c. The importance of the institution in providing loans
to each, particularly in light of the number of other
institutions and the extent of their activities in each;
and
d. Demographic and economic conditions in each.
What is the eighth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Review the results of the most recent compliance
examination and determine whether evidence of
discriminatory or other illegal credit practices should
lower the institution’s overall CRA rating or, if
applicable, its CRA rating in any state or multi-state
MSA. If evidence of discrimination or other illegal credit
practices in any geography by the institution, or in any
assessment area by any affiliate whose loans were
XI. Community Reinvestment Act — Intermediate Small Bank
FDIC Consumer Compliance Examination Manual — September 2015 XI–3.9
considered as part of the institution’s lending
performance, was found, consider:
a. The nature, extent, and strength of the evidence of
the practices;
b. The policies and procedures that the institution
(or affiliate, as applicable) has in place to prevent
the practices;
c. Any corrective action that the institution (or
affiliate, as applicable) has taken, or has committed
to take, including voluntary corrective action
resulting from self-assessment; a
What is the ninth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
Assign a final rating for the institution as a whole and,
if applicable, each state in which the institution has at
least one branch and each multi-state MSA in which it
has branches in two or more states, considering:
a. The institution’s preliminary rating; and
b. Any evidence of discriminatory or other illegal
credit practices.
What is the tenth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Discuss conclusions with management.
What is the eleventh step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Write an evaluation of the institution’s performance
for the examination report and the public evaluation.
What is the twelfth step in determining the overall ISB Rating? [XI. 3.1 Community Reinvestment Act—ISB]
- Prepare recommendations for a supervisory strategy and for matters that require attention or follow-up activities.
What is the first step in the public file checklist review? [XI. 3.1 Community Reinvestment Act—ISB]
- There is no need to review each branch or each
complete public file during every examination. In
determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file requirements, and any other relevant information.
What is the second step in the public file checklist review? [XI. 3.1 Community Reinvestment Act—ISB]
- In any review of the public file undertaken, determine whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each
state, and the public file(s) in the main office and in each state contain:
a. All written comments from the public relating to the
institution’s CRA performance and any responses to
them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
b. The institution’s most recent CRA Performance
Evaluation;
c. A map of each assessment area showing its
boundaries and, on the map or in a separate list, the
geographies contained within the assessment area;
d. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, their street addresses and geographies;
e. A list of services (loan and deposit products and
transaction fees generally offered, and hours of
operation at the institution’s branches), including a
description of any material differences in the
availability or cost of services between those
locations;
f. The institution’s loan-to-deposit ratio for each quarter of the prior calendar year;
g. A quarterly report of the institution’s efforts to
improve its record if it received a less than
satisfactory rating during its most recent CRA
examination; and
h. HMDA Disclosure Statements
for the prior two calendar years for the institution and
for each non-depository affiliate the institution has
elected to include in assessment of its CRA record, if
applicable.
What is the third step in the public file checklist review? [XI. 3.1 Community Reinvestment Act—ISB]
- In any branch review undertaken, determine whether
the branch provides the most recent public evaluation
and a list of services generally available at its branches
and a description of any material differences in the
availability or cost of services at the branch (or a list of
services available at the branch).
