We are a community bank with a somewhat regional footprint with three assessment areas, one of which is the entire MSA in which we are headquartered. The MSA was recently updated and removed one of three counties it encompassed. We have a branch location in that county that does have some deposit and lending activity.

Can anyone advise what we should do? Do we remove the county and make it its own AA?

The CRA regulation does make it sound like we need to separate it.

12 CFR §228.41(e)(4)
(e) Limitations on the delineation of an assessment area. Each bank's assessment area(s):
[...]
(4) May not extend substantially beyond an MSA boundary or beyond a state boundary unless the assessment area is located in a multistate MSA. If a bank serves a geographic area that extends substantially beyond a state boundary, the bank shall delineate separate assessment areas for the areas in each state. If a bank serves a geographic area that extends substantially beyond an MSA boundary, the bank shall delineate separate assessment areas for the areas inside and outside the MSA.

Disclaimer: CRA is something I dabble in from time-to-time.

Just my thoughts - It is my understanding that you'll remove the county - since that county is no longer a part of that MSA, and then claim that county as a separate CRA Assessment area, since you have a branch there.

That was my thinking...

If the 3 counties are in the same CSA you can delineate one AA. However, examiners will break out your activity into 2 AA's based on the information you have provided. I can't emphasize too much how important your AA delineation is. Your AA is the basis of the "performance context" that is used to establish your performance standards (the tests are essentially the same- it's the performance standards that differ). Too many banks simply incorporate entire counties into their AA's without understanding how it may inflate performance expectations based on unrealistic AA's.