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#1727288 - 08/03/12 06:19 PM Whole county for assessment area
SUSANE1 Offline
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Right now we have 97 census tracts out of 371 in the county for our assessment area. Being it is so hard to get good loans, we have to take them when they come! Our office is in low to moderate area, but the customers are not borrowing money like they used to, plus it is getting harder to get them qualified! What is the thinking of taking in the entire county of 371 census tracts?
How is that "looked upon"?

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#1727297 - 08/03/12 06:27 PM Re: Whole county for assessment area SUSANE1
Pale Rider Offline
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Favorably by the regulators...they prefer whole geographies and a county being preferable in their eyes....
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#1727308 - 08/03/12 06:36 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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Originally Posted By: SUSANE1
Right now we have 97 census tracts out of 371 in the county for our assessment area. Being it is so hard to get good loans, we have to take them when they come! Our office is in low to moderate area, but the customers are not borrowing money like they used to, plus it is getting harder to get them qualified! What is the thinking of taking in the entire county of 371 census tracts?
How is that "looked upon"?

smile
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#1727311 - 08/03/12 06:40 PM Re: Whole county for assessment area SUSANE1
SUSANE1 Offline
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well that is good to know, I remember one exam where they critized the bank for wanting to take in the entire county. I feel that if we do take in the entire county in our assessment area, then we would be assurred of lending a majority of our loans in the assessment area.

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#1727364 - 08/03/12 07:14 PM Re: Whole county for assessment area SUSANE1
KPOC Offline
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Greater Boston Area
SUSANE: Yes, but you also must be reasonable able to serve your assessment area. Remember, you can easily be criticized for the areas in your AA you are NOT serving.

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#1727374 - 08/03/12 07:20 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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Right now, regulators are of the opinion that it is better to explain reasons why you are not serving all of the AA (tracts without loans) that to explain why you arbitrarily left some tracts out. There are exceptions to every rule of course, but unusually shaped AAs, AAs with no real explanation of why they are what they area are all red flags, especially when adjacent low/mod or minority areas are left out. That will get attention these days.
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#1727381 - 08/03/12 07:26 PM Re: Whole county for assessment area SUSANE1
KPOC Offline
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Good point Kathleen. I think it's just really important to document exactly how you arrived at your defined AA.

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#1727397 - 08/03/12 07:40 PM Re: Whole county for assessment area SUSANE1
SUSANE1 Offline
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While I have your attention ! I am using a little program (hope to get a more sophisticated one soon)to try to see if we are lending the majority in our assessment area, etc.. and our participations purc and sold - the clerk entered them into {other lines)... not small business..... we are lacking in our loans to small busines within our assessment area. Advise?

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#1727407 - 08/03/12 07:47 PM Re: Whole county for assessment area SUSANE1
KPOC Offline
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Not sure I understand. Are you ACTUALLY lacking in your SB lending or does it just appear that way because they were recorded incorrectly?

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#1727414 - 08/03/12 07:51 PM Re: Whole county for assessment area SUSANE1
SUSANE1 Offline
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And hopefully my last question, the census tract that your record is the address of the borrower UNLESS the collateral is real estate, then you use the census tract of the real estate?

thanks!!!

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#1727421 - 08/03/12 08:01 PM Re: Whole county for assessment area SUSANE1
SUSANE1 Offline
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well the little program , since we entered the participations into a category of "other lines" and not "Small business".. it looks like we are lacking in the area of small busines lending.. and yes, they are outside the area! ugh - being participations..

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#1727441 - 08/03/12 08:16 PM Re: Whole county for assessment area SUSANE1
KPOC Offline
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Greater Boston Area
We use the census tract where the loan proceeds are used.

Can you simply re-enter the SB loans on the correct lines?

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#1727478 - 08/03/12 09:13 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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For participations, look to the original size of the loan (and the collateral and purpose) to see if it qualified as a small business loan at the time it was originated by the bank that sold the participation to determine how to report, small business or other. Refer to the FAQs:

§ll.42(a)(2)—1: When an
institution purchases a small business
or small farm loan, in whole or in part,
which amount should the institution
collect and report—the original amount
of the loan or the amount at purchase?
A1. When collecting and reporting
information on purchased small
business and small farm loans,
including loan participations, an
institution collects and reports the
amount of the loan at origination, not at
the time of purchase. This is consistent
with the Call Report’s and TFR’s use of
the ‘‘original amount of the loan’’ to
determine whether a loan should be
reported as a ‘‘loan to a small business’’
or a ‘‘loan to a small farm’’ and in which
loan size category a loan should be
reported. When assessing the volume of
small business and small farm loan
purchases for purposes of evaluating
lending test performance under CRA,
however, examiners will evaluate an
institution’s activity based on the
amounts at purchase.
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#1727480 - 08/03/12 09:17 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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For geocoding, the bank can use the business address or the collateral address. It is up to the bank but consistency in reporting is the key. The CRA Guide and the FAQs provide instructions on the address to use (the FAQs tie this to the BSA requirement for a physical address, something I have been harping on to banks for quite some time.)

Loan Location
Prudent banking practices dictate that an institution know the location of its customers and loan collateral. Therefore, institutions typically will know the actual location of their borrowers or loan collateral beyond an address consisting only of a post office box.

Many borrowers have street addresses in addition to post office box numbers or rural route and box numbers. Institutions should ask their borrowers to provide the street address of the main business facility or farm or the location where the loan proceeds otherwise will be applied. Moreover, in many cases in which the borrower’s address consists only of a rural route number or post office box, the institution knows the location (i.e., the census tract) of the borrower or loan collateral.

Once the institution has this information, it should assign a census tract to that location (geocode) and report that information as required under the regulations.

If the institution cannot determine the borrower’s street address, and does not know the census tract it should report the borrower’s state, county, MSA/MD, if applicable, and “NA,” for “not available,” in lieu of a census tract.
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www.kaybeescomplianceinsights.com

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#1736137 - 08/29/12 02:12 PM Re: Whole county for assessment area SUSANE1
*W*W* Offline
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Should the board annually approve the assessment area determination method the bank uses? Would senior management approval be sufficient?
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#1736315 - 08/29/12 05:44 PM Re: Whole county for assessment area SUSANE1
CRAatBOK Offline

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WW I am not sure any bank I've been affiliated with has even gone that far up. Usually it is the compliance/CRA group that decides and trains the loan department on what they expect of them. After all, CRA compliance has the end use of the data so they should get to make the rules. The loan dept and Sr. mgmt could care less. Besides if left to Sr Mgmt, they might say to use the address that makes the bank look the best, which would be a nightmare. (spoken from experience with a bank that did this)
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#1736482 - 08/29/12 11:37 PM Re: Whole county for assessment area *W*W*
Kathleen O. Blanchard Offline

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Originally Posted By: *W*W*
Should the board annually approve the assessment area determination method the bank uses? Would senior management approval be sufficient?


There is no requirement for board approval. I think they should be well informed, of course. I do work with some banks that must have board approval. Given the fair lending implications, I do think detailed information should be provided. There is a lot of risk to the bank these days.
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#1736516 - 08/30/12 11:23 AM Re: Whole county for assessment area SUSANE1
KPOC Offline
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Greater Boston Area
Our President is very involved and committed to CRA and is kept informed about the AA and lending inside and outside of it. He doesn't get involved with defining it, that's the job of the CRA Officer (who reports directly to the President. As for Board involvement, there is none in defining the AA.

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#1740215 - 09/12/12 05:40 PM Re: Whole county for assessment area SUSANE1
CRAatBOK Offline

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Further South than I wanna be.
Besides, if you get board input you will probably be hearing such things as "We don't want to include XYZ county, there are too many poor people there". Yes, I actually heard that from a board member when discussing CRA AAs. Granted it was back in the 90s when board members were much less informed. laugh smirk NOT!!!
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#1740234 - 09/12/12 05:49 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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I hope the CRA Officer is not deciding upon an AA in a vacuum without input from management. The bank has to deliver loans, investments and services once that AA is determined. If there is no plan, then the bank is merely hoping it will be successful.

The AA should not be set only by looking at what has been done in the past but by what can be done in the future.

If the CRA Officer cannot or does not educate the Board and management on the importance of the assessment area, they will learn the very very hard way.
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www.kaybeescomplianceinsights.com

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#1741625 - 09/18/12 02:11 PM Re: Whole county for assessment area SUSANE1
ahkcompliance Offline
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Midwest
Our AA consists of whole counties. Is there a way to get what tracts are within the county without looking at the map?

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#1741662 - 09/18/12 02:56 PM Re: Whole county for assessment area SUSANE1
Kathleen O. Blanchard Offline

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You can look up all tracts in your counties and everything about those tracts at the FFIEC site:

http://www.ffiec.gov/census/default.aspx
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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