Purchase Seasoned Loans Outside AA

The Agencies consider in their CRA evaluation both originations and purchases of loans. So theoretically, purchases of small business loans outside of the assessment area would be detrimental to the lending test, under an intermediate small bank evaluation.

However, if the institution selling the loan had it in its books for over a year, and now a different institution buys it, and the loan is outside the assessment area, would that purchase be considered in the CRA evaluation? I wasn’t able to find such exception, but I am wondering if a seasoned loan would be counted/evaluated the same as a spanking new loan.

I am trying to understand if buying “seasoned” small business loans outside the assessment area would have a negative impact on the lending test for an intermediate small bank.

It doesn't matter how long the other bank has owned the loan. The loan is being purchased and reported on your call report (and reported for CRA) that year.

The loan will adversely affect your in/out percentage. If the loans are to small businesses or LMI tracts it helps those areas. You should analyze your data and determine how it will affect your LR.

Good luck.

Thank you