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Big Changes for CRA Assessment Areas

Our bank has several assessment areas that include partial counties. The counties are large and the bank does not feel it can serve the entire county. Will we be able to continue with this practice under the proposed CRA rule?

No. Under the proposal, a county would be the smallest element of an assessment area, unlike the current rule which views a census tract as the smallest element of an assessment area and allows counties to be divided. Of course, banks continue to need to explain their performance context and can explain why they do not lend in all areas of a county (some areas may have low or no population, there may not be a need for home mortgages, it may be located far from any offices with bank staff). This is a topic that needs clarification should this proposal be finalized as proposed.
The geographic assessment area will be referred to as a facility based assessment area under the rule as proposed.
Additionally, a bank that receives more than 50% of its retail deposits from outside of its facility based assessment areas must consider those deposits to determine if a deposit based assessment area or areas must be created. The proposal states:
“A bank that receives 50 percent or more of its retail domestic deposits from geographic areas outside of its facility-based assessment areas must delineate separate, non-overlapping assessment areas in the smallest geographic area where it receives 5 percent or more of its retail domestic deposits.”
There are additional restrictions regarding how often an assessment area can be updated, which needs clarification.
Learn more about Kathleen Blanchard’s webinar CRA Modernization Proposal Review

First published on 02/09/2020

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