Within the past year our bank has established an indirect auto lending program. Our indirect lender, with 20-plus years of experience, informed us that his previous institution used to claim indirect auto loans for CRA credit, apparently if the borrower lived in an LMI tract.

Does anyone know if indirect auto loans are eligible to be claimed for CRA credit, and if so, what are the stipulations?

If relevant to the issue, we are an OCC-regulated bank with over $1 billion in assets.

Thanks!

Look at page 15 of A Guide to CRA Data Collection and Reporting https://www.ffiec.gov/cra/pdf/2015_CRA_Guide.pdf . It addresses consumer loans.

Thank you, Tennismom! I appreciate the guidance.

We are considering adding an employee that would be located in another state that concentrates on signing indirect dealers with the bank and originating loans from the area (there is a legitimate business case for bringing the employee on). We currently operate in 1 state. What CRA issues should I be on the lookout for? we will be monitoring the volume of loans and % outside of our current assessment areas as we currently do and make changes to our assessment area as needed based on the results. any input will be appreciated. Thanks

I am just curious. Is this employee going to be working out of their house? You are not establishing a LPO? Is your HR on board with this idea and can handle multiple state taxes, unemployment insurance payments, etc.?

All good questions. I believe they would be working from a home office which is not changing much from what most of us have done over the past year. I am assuming they will be driving around to the dealerships also for relationship building. We have a few commercial lenders in a city outside of our assessment area that are working from their home office as well. No new LPO that I know of. Not sure about HR, I am just researching the CRA aspect.

Well, I am not a CRA expert and there are better ones than me in the threads. I think you would just have to watch your inside/outside ratio.

Basically I was just more curious than anything as to how this would work. Can you really have a presence in another State like this without State regulatory approval? Just seems strange to me that this would be allowed otherwise why would a bank branch into or open LPOs in other States when they could just hire a string of loan officers to knock on doors?

I am not a CRA expert either and was thinking the same thing you are. As for the regulatory approval - I don't know the answer to that either without asking the regulators.

I'd watch the inside/outside ratio and the LMI/non-LMI comparison too. Depending on your dealership locations and your regulator, you might need to map dealership locations for redlining purposes.