Answer:
When establishing your assessment area, CRA requires you to use political or geographic boundaries. If there are no such boundaries for you to use, there are two choices. You can limit your assessment area to your current counties with lending outside the assessment area, or you can include the entire counties for the area you are expanding into. Either way, you will have to do some expllaining of the relationship between lending patterns and the assessment area.
Presumably, your bank is growing. Entering a new market is always awkward under the CRA rules. There is no fixed rule on how much of your lending must be inside the assessment area. The important issue is that you have a sound and persuasive business explanation for your lending relative to the assessment area. I generally recommend leaving the assessment area at its current lines with a business explanation of how the bank is growing and continues to grow. You should also be able to show efforts and plans for meeting all credit needs in your growth area. This should also be tied to the bank's strategic plan. If you have remaining doubts, ask your examiner's advice and document what he or she says.
First published on BankersOnline.com 3/26/07
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