Sometimes I just need a reality check...

There's nothing in a CRA large bank exam that looks at either the amount or number of loans over $1 million, or the in/out ratio of these loans compared to small business loans. Because these loans are not reported, essentially these loans don't exist from a CRA point of view, and their volume/size doesn't affect the exam results. Setting aside the concept that some of them may qualify as CD loans. Correct?

We have a middle market lender doing large loans outside our AA, and I'm just making sure that's not a issue. Would I have to include the area he is focusing on in our REMA?

REMA is a Fair Lending term more than anything, and generally determined by regulators based on marketing, originations, branching, etc. Their consideration is customarily housing related in majority minority tracts. If the lender is concentrating on non-mm tracts to the exclusion of mm tracts in close proximity, there could be an issue.

The size of the loan matters only with respect to small business and small farm loans. However, there is no size limit on HMDA-reported loans and on CD loans. If a bank is extending a relatively large volume of residential mortgages outside its AA it could be a problem regarding the adequacy of its AA lending.

These are only business loan

The AA ratio is computed by loan portfolio. So if you have large number or value of small business loans outside the AA and your ratio is depressed to less than 50% you will not get a satisfactory rating on the AA ratio test which usually is a big problem because it is an indicator of lending adequacy.

I think you miss the point of my question. These are loans to businesses where the loan size is over $1 million...so they are not reported as small business loans.
SO unless the loan happens to be claimed as CD loans, my thought is the location (in/out) has no effect on a CRA exam and I don't need to be that concerned if a certain lender happens to be doing a large # and $ of these large loans outside the AA because these loans will never be looked at during any exam.

Does your examiner not require a report of all portfolio loans to use for their reviews?

The examiners look at small business loans and not large (>$1 Mil) business loans. The only way the large loans are counted is if they are CD loans. The AA ratio applies only to small business loans, small farm loans and HMDA-reported mortgages plus any other loans you volunteer to be included in your CRA exam (assuming the loans have been edit checked and the data integrity is established). CD loans are not part of that AA Ratio calculation although you won't get credit for any outside your AA until you have established that you have extended a satisfactory volume inside your AA.