GIS CRA Assessment Area Regulatory Guidelines

 

Building and evaluating an institution's assessment area is crucial for CRA compliance. We “integrate” customer and account data, application data and CRA investments together with enhanced market data, into our GIS-based analytics to help you understand who and where the customer is located. In addition, we help institutions build laser-focused marketing to ensure that the outreach includes all areas. This includes both deposits and loans and other activities.

These are the regulatory rules for defining an assessment area under the proposed OCC modernization for CRA compliance. The banking assessment ares are based on guidance provided in the OCC Bulletin 2020-99| November 9, 2020 - Community Reinvestment Act: Key Provisions of the June 2020 CRA Rule and Frequently Asked Questions. a link to the release is provided here - https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html Please review the OCC Bulletin. This page will be updated frequently as more details become available. Please check back frequently for more information.

The OCC, as proposed in the CRA modernization, requires that a bank’s assessment areas be at least a whole county or county equivalent, unlike the current framework which provides that banks may include only the portion of a political subdivision, such as a county, that it reasonably can be expected to serve.

Assessment areas are generally described for purposes of the final regulations as “each location where the bank maintains a main office, a branch, or a non-branch deposit-taking facility that is not an ATM as well as the surrounding locations in which the bank has originated or purchased a substantial portion of its qualifying retail loans.” Assessment areas must not reflect illegal discrimination and may not arbitrarily exclude low or moderate-income (LMI) census tracts.

Banks that will be evaluated under the general performance standards and GIS can help you understand all of your lending distributions, deposits and CRA activities.

The Retail lending distribution test details include:

The retail lending distribution test will be performed on a bank’s major retail lending product line (or lines if more than two retail lending product lines comprise more than 15 percent of a bank’s retail lending). Once a major retail lending product line is identified, the OCC will conduct the distribution test on an assessment area having at least 20 loans in each year of the evaluation period, represented by originations (purchased loans are not included in the retail lending distribution test). The tests will assess the number of qualifying retail loans in LMI geographies and to LMI individuals, CRA-eligible businesses, and CRA-eligible farms.

Geographic test. To determine if a bank is meeting the credit needs of its communities, the OCC will conduct a geographic test on the bank’s major product line or lines. The comparators are as follows:

  • mortgage – percent of owner-occupied housing units and the percent of peer mortgage loans in the assessment area’s LMI geographies (a bank’s lending in LMI geographies is specific to only LMI individuals and does not include loans made to middle- or upper-income borrowers);
  • small loan to a business (defined as a loan no greater than $1.6 million) – percent of businesses and the percent of peer business loans in the assessment area’s LMI geographies; and,
  • small loan to a farm (defined as a loan no greater than $1.6 million) – percent of farms and the percent of peer farm loans in the assessment area’s LMI geographies.
  • Borrower test. To determine if a bank is meeting the needs of LMI borrowers, the OCC will conduct a borrower test on the bank’s major product line or lines. The comparators are as follows:

  • mortgage – percent of LMI families and the percent of peer mortgage loans in the assessment area to LMI borrowers;
  • loans to CRA-eligible businesses – percent of CRA-eligible businesses (defined as having gross annual revenue no more than $1.6 million) and percent of peer loans in the assessment area to CRA-eligible businesses;
  • loans to CRA-eligible farms – percent of CRA-eligible farms (defined as having gross annual revenue no more than $1.6 million) and percent of peer loans in the assessment area to CRA-eligible farms; and,
  • consumer – percent of LMI households in the assessment area, defined as
  • A revolving credit plan, other than credit cards;
  • An automobile loan; or
  • Any other consumer loan, which is a loan to an individual for household, family, and other personal expenditures.
  • OCC Qualifying Activities

    OCC has established rules for defining criteria to qualify an activity or loan for favorable CRA consideration. Generally, that activity must “help meet the credit needs of a bank’s entire community, including LMI individuals and communities.” In general, this determination is made at the time that the activity is originated, made or conducted. Each type of activity will have its own set of criteria. For example, a home mortgage or consumer loan qualifies if it is made to a low- or moderate-income individual or family and a small loan to a business qualifies if the business is in a low- or moderate-income census tract. Community development loans, investments and services have specific qualification criteria for twelve supporting activities:

  • Affordable Housing;
  • Another bank’s community development loan, investment or service;
  • Community support services such as childcare, education, and health services that partially or primarily serve or assist low- or moderate-income individuals or families;
  • Economic development that provide financing or support for businesses or farms, such as job creation/retention for low- or moderate-income individuals or families;
  • Essential community facilities that partially or primarily serve low- or moderate-income individuals or families, low- or moderate-income census tracts, distressed areas, under-served areas, disaster areas, or Indian country (referenced herein as tribal and native lands);
  • Essential infrastructure that partially or primarily serves low- or moderate-income individuals or families, low- or moderate-income census tracts, distressed areas, under-served areas, disaster areas, or tribal and native lands;
  • A family farm’s purchase or lease of farmland, equipment or other farm-related inputs or receipt of technical assistance and supportive services for the family farm’s own production;
  • Federal, state, local or tribal government programs, projects or initiatives that partially or primarily serve low- or moderate-income individuals or families, or are consistent with government revitalization, stabilization or recovery plans for low- or moderate-income census tracts, distressed areas, under-served areas, disaster areas, or tribal and native lands;
  • Financial literacy programs or education or home buyer counseling;
  • Owner-occupied and rental housing development, construction, rehabilitation, improvement, or maintenance in tribal and native lands;
  • Qualified opportunity funds that benefit low- or moderate-income qualified opportunity zones; or
  • Other activities and ventures undertaken by a bank in cooperation with a minority depository institution, a women’s depository institution, a Community Development Financial Institution or a low-income credit union (if the activity meets certain specified conditions)
  • GIS software can help your institution understand partially fulfill compliance requirements for CRA and HMDA. Including: Importing deposit and loan data, HMDA LAR and CRA loan originations, other data bass that can be integrated such as business data, distressed census tracts, identifying low and moderate income tracts, planning areas unique to your markets, competitive data and locations, and more.

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


    For more information contact Integrated Tracking Systems at or sbouton@gisbanker.com

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