I'm a little confused about assessment areas. Is each county within an MSA considered a separate assessment area? We consider five counties to be our assessment area. However, for two of the counties we are only taking some of the census tracts.

Your Getting it Right guide is a good source. That said, you can use partial counties and MSAs; BUT be prepared to defend why you are not using the entire county or MSA. Perhaps you have one small branch in an MSA and a very small market share, or one branch in the very corner of a county. Examiner will look at what you have selected to see that it makes sense, tracts selected must be contiguous and reasonabl---not just one here and one there. You would not be criticized for having limited coverage with a branch consisting of 2 tellers and 1 loan officer in, say Chicago.

I may not have made myself clear. I am not concerned about selecting certain tracts in a county. My question pertains to assessment areas in general. If we consider three whole counties and parts of two counties as our assessment area, do I design one assessment area with all the census tracts for all the counties or five different assessment areas?

If they are all in one MSA, use 1. If there are multiple MSAs, you may find it easiest to consider those parts of the MSAs separately.

It depends on how your branches are broken up. I have ten assessment areas, one large MSA and 9 areas that surround outerlying branches around the state. All together I have 112 census tracts to deal with in my chosen assessment areas.

If you are breaking up areas, be sure you have a good reason for it. I serve a huge state and can make a case for not serving the low income tracts between my branches due to remoteness.

Andy,

Finally got through to the CRA Hotline. You are correct - one MSA per assessment area is the rule.

Thanks everyone!

It can be smaller than an MSA, but not larger, as I understand it. You'll find that helpful on submissions as well.

Well that seems to fly in the face of what the regulations says. As long as you don't go beyond a CMSA a state boundary (unless you have a multi-state MSA), then you can have more than one MSA as long as they are next to each other.

§ 345.41 Assessment area delineation.

(c) Geographic area(s) for other banks. The assessment area(s) for a bank other than a wholesale or limited purpose bank must:
(1) Consist generally of one or more MSAs (using the MSA boundaries that were in effect as of January 1 of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns; and
(2) Include the geographies in which the bank has its main office, its branches, and its deposit-taking RSFs, as well as the surrounding geographies in which the bank has originated or purchased a substantial portion of its loans (including home mortgage loans, small business and small farm loans, and any other loans the bank chooses, such as those consumer loans on which the bank elects to have its performance assessed).
(d) Adjustments to geographic area(s). A bank may adjust the boundaries of its assessment area(s) to include only the portion of a political subdivision that it reasonably can be expected to serve. An adjustment is particularly appropriate in the case of an assessment area that otherwise would be extremely large, of unusual configuration, or divided by significant geographic barriers.
(e) Limitations on the delineation of an assessment area. Each bank's assessment area(s):
(1) Must consist only of whole geographies;
(2) May not reflect illegal discrimination;
(3) May not arbitrarily exclude low- or moderate-income geographies, taking into account the bank's size and financial condition; and
(4) May not extend substantially beyond a CMSA 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 a CMSA boundary, the bank shall delineate separate assessment areas for the areas inside and outside the CMSA.