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GIS Assessment Area Analysis

 

Building, defining and evaluating an istitution assessment area is crutial for CRA compliance. We integrate customer account data together with enhansed market data, into our GIS based analytics to help you understand who customers where are they located.

Integrated tracking systems GIS

A bank's assessment area should include the geographies in which the bank has its main office, its branches, and its deposit-taking ATM's, as well as the surrounding geographies in which the bank has originated or purchased a substantial portion of its loans. There are specific regulatory rules for defining an assessment area for CRA compliance. learn more

Several GIS based techniques can be used by financial institutions to determine the CRA assessment areas. They include but are not limited to: Thiessen polygons which evaluate areas based on office locations, the Huff Model, which calculates equal probability trade areas based on weighted variables, Threshold area analysis and others. Although you don’t need customer data to start, you do need to analyze your deposits and loans, which can be accomplished through geocoding your deposit and loan base. With the geocoded customer data, you will be able to measure the effectiveness of your assessment area by total originations, approvals versus denials, percent inside and outside the assessment area, distribution by low, moderate, middle and upper income defined census tracts, and much more.

The following summarizes four of the most common techniques use for defining the assessment area: 1) The simplest method is to define the assessment area as the MSA (metropolitan statistical area) in which the institution competes. Defining the MSA as the assessment is probably the most commonly used definition of the assessment area. On the plus side, this definition for an assessment area is easy to define, regulators are familiar with the use of the MSA, census data is readily available for the MSA at the tract level. On the downside, the area may be too large for the institution, the GAPs in the assessment area will be highlighted.

2) Selecting whole geopolitical areas such as cities and towns: Geo political doundaries to define the assessment area can be based on standard boundaries such as states, counties, cties and CDP and core-based statistical areas (CBSA). Individual trade areas are created for each unique geography (for example, each City boundary) that you select. When using tis technique you need to assure that you are not excluding any Low and Moderate income defined tracts (LMI). The advantage of this approach is that it is easier to manage, management can work with clearly define areas, you can easlity define the community groups involved with the assessment area.

In this example, the institution used the city boundaries to define the assesssment area.

Example - Geo Political Assessment Area

3) Another popular method is to use simple or data driven rings or buffers. Ring studies are the simplest and most widely used type of market area analysis. The concept of a simple ring is easily understood. Since a compliance person might not know what shape the assessment area should be, a simple circle could be used to begin the process of defineing the area. Many preliminary market studies begin with an analysis of 1-mile, 3-mile, and 5-mile rings

4) Drive time analysis for the account base. Utilizing GIS-based software, you can generate a drive-time study that uses actual street networks and approximate driving times. This particularly helpful because you would use your existing account-based as the foundation for the analysis. Drive time is easy for most people to understand and manage. Using the result of the analysis it is easy to back into the assessment area definition using any of the acceptable types.

Drive time Analysis can also be applied to branch analysis.

In this example, the institution was able to see and understand the assessment area was the major cities loacted in the north county. It used the city boundaries to define the assessment area and then generated the tract listings.

Example -Drive Time Assessment Area Set-up

In all of these efforts, the institution needs to take care to not to exclude and LMI tracts.

Integrated Tracking Systems is known for our Full Service GIS (geographic information systems) support and research.

The analysis and data enhancements we provide enables financial institutions to fully understand the dynamics of the geographic markets they serve. Integrated Tracking Systems can assist in developing these understandings and addressing the strategies and programs necessary to leverage the institutions position in the market and to take full advantage of your market dynamics.


Our services include, but are not limited to the following:
Highly Targeted Marketing - learn more Trade Area Analysis and Site Analysis
Compliance Branch deposit database analysis and Market Share statistics
CRA Small Business Lending & HMDA Geo Analysis learn more Market Area Diagnostics and Statistical Analysis combined with Customer Profiling


Key Benefits -Cost Effective -Subject Matter Experts - in both Compliance, Marketing and GIS -Reliable as Expeditious -Experienced


For more information contact Integrated Tracking Systems at (619) 579-9099 or sbouton@gisbanker.com

ITS - Integrated Tracking Systems - All maps and GIS analysis presented in this web site are produced with Maptitude GIS software, by Caliper. Maptitude is the most capable, and least expensive, full-featured mapping software available. Visit Maptitude for more inforation on their GIS software

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