I have been told that we need to change our assessment area and that we are no longer allowed to take partial counties. This is a result of CFPB and two recent findings in which the CFPB fined two financial institutions for not taking an entire county. Is this true?
Is it still acceptable to take partial counties?

For CRA, It is acceptable to take partial counties if the bank can justify its decision on why it cannot take the entire county, and how it determined the area it chose. Regulators do feel that it is best to take a full county (unless the country is extraordinarily large) because it is much easier to justify why the bank is not lending in every tract (barring redlining of course) than it is to explain why a bank could not take the entire county.

If the county is not extremely large, usually a bank can take the entire county. Every situation is different, of course, and we do not know the details of the CFPB cases. Perhaps the banks had no justification for partial counties.

The CFPB does not examine for CRA, so it is possible that these were fair lending cases.

Thanks. We have one branch in a one county so we took that whole county and then we took partial of three other counties because surround the one county that we took as a whole. We think this makes sense because we took whole towns within the county versus the whole county.

We have another branch that is across the state and we ended up taking partial counties there within a ten mile radius of the branch. The branch is in a competitive market, our one location and there is no way given the market we could serve the whole county

Not knowing the individual counties, it is hard to give an opinion.

Are these partial counties within an MSA or non-MSA counties?

Partial counties within MSA counties

Sorry, Meant to say tracts within MSA counties.

Okay. Thanks. I was curious about the ability to move county to county. If contiguous within MSA, that is fine, assuming you can justify your partial counties. As I mentioned, if the counties are not extremely large, examiners do prefer full counties so the bank must be able to articulate how it arrived at its decision on the AA.

Not only does the Regulation explicitly allow the inclusion of partial counties (see §.41 and the related Q&A's), the annual national CRA database actually is structured to distinguish counties that are partially within a bank's assessment area(s) from those that are completely within a bank's assessment area. So the Regulation permits it and many banks that report their CRA activity practice it.

I find that where banks go astray is creating unusual configurations within counties such as winding all around to carve out some small piece, or lopping off large sections of mostly low/moderate tracts, or taking a partial county in a very small county.

Len & Kathleen,
Thank you both. This additional insight is very helpful.

Piggybacking on Kathleen and Len

We had lived in Jacksonville (Duval County, FL) The county is large at 918 square miles, and you could drive in a straight line for over 50 miles and not leave the county. I was 1 bank branch CRA officer and we claimed only those full tracts within 5 miles of the branch.

The part banks struggle with is where to end. Tracts don't always go in a nice straight line. And that is where banks can go astray. If you can determine whole towns/municipalities within that space and determine a border that follows as best you can (it won't always be exact because town borders and tracts do not always coincide exactly) without cutting off low/mod or even high minority, that is best.

What should not be done is doing this without any knowledge of the tract income or the population demographics of the tracts being excluded. There is one county in California in which if you followed a particular town border exactly you would enter a particular tract that extends hundreds of miles to the east in desert.

The bank needs to know what it is doing.