Community Reinvestment Act and Small Banks Quiz

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Questions and Answers

What is considered in assessing an institution's community development performance?

The number of branches in high-income areas

The number and amount of community development loans and qualified investments (correct)

The institution's profit margin

The institution's advertising budget

What factors are considered in the responsiveness to community development opportunities?

Customer satisfaction survey results

Number of ATMs in urban areas

Results of assessment of community development needs and opportunities provided by the institution (correct)

Stock market performance

What is included in the extent of providing community development services?

Partnerships with high-end retailers

Provision and availability of services to low- and moderate-income people (correct)

Investment in luxury real estate

Exclusive services for high-income individuals

What should be done with the conclusions regarding an institution’s community development performance?

Summarize conclusions and retain in the work papers Signup and view all the answers

What should be included in the work papers when summarizing conclusions concerning the geographic distribution of loans and the distribution of loans by borrower characteristics?

Information about demographic characteristics that could affect loan demand Signup and view all the answers

When reviewing complaints relating to the institution’s CRA performance, what should be evaluated if there were any complaints?

The institution’s record of taking action in response to written complaints about its CRA performance Signup and view all the answers

What should be included in the work papers when summarizing conclusions regarding the institution’s record of taking action in response to written complaints about its CRA performance?

Total number of complaints and resolutions with examples illustrating nature, responsiveness, and resolution of complaints Signup and view all the answers

When should preliminary findings in the lending test section be discussed with management?

If there were any complaints received by the institution relating to its CRA performance Signup and view all the answers

How are ratings for Loan-to-Deposit Ratio determined?

Based on the reasonableness of the ratio given the institution's size, financial condition, and assessment area credit needs Signup and view all the answers

What does the Intermediate Small Institution Community Development Test assess?

An institution's community needs, engagement in community development activities, and strategic application of community development resources Signup and view all the answers

What is considered when reviewing the Geographic Distribution of Loans?

The dispersion of loans throughout the assessment area(s) Signup and view all the answers

How are ratings for Borrower’s Profile determined?

Based on the penetration of borrowers from different income levels and business sizes in the assessment area(s) Signup and view all the answers

What do examiners consider when assessing an institution's Community Development Test?

Assessment of community needs, along with information from community, government, civic, and other sources Signup and view all the answers

What is involved in verifying the qualification of community development loans and investments?

Reviewing records in case of participation in community development lending by consortia or third parties Signup and view all the answers

Study Notes

FDIC Community Reinvestment Act Intermediate Small Bank Ratings Matrix

The FDIC provides a matrix for Intermediate Small Bank CRA ratings based on various characteristics.
Loan-to-Deposit Ratio: Outstanding, Satisfactory, Needs to Improve, Substantial Noncompliance categories are based on the reasonableness of the ratio given the institution's size, financial condition, and assessment area credit needs.
Assessment Area(s) Concentration: Ratings are based on the majority of loans and lending activities within or outside the institution's assessment area(s).
Geographic Distribution of Loans: Ratings correspond to the dispersion of loans throughout the assessment area(s).
Borrower’s Profile: Ratings are based on the penetration of borrowers from different income levels and business sizes in the assessment area(s).
Response to Substantiated Complaints: Ratings reflect the institution's actions in response to complaints about its performance in meeting assessment area credit needs.
Intermediate Small Institution Community Development Test: It assesses an institution's community needs, engagement in community development activities, and strategic application of community development resources.
The test allows flexibility for intermediate small institutions to focus on meeting community needs through various activities.
Examiners consider assessment of community needs, along with information from community, government, civic, and other sources.
The process involves identifying and reviewing community development loans, qualified investments, and services, including those provided by affiliates or third parties.
It also includes verifying the qualification of community development loans and investments, and reviewing records in case of participation in community development lending by consortia or third parties.
Conclusions are formed based on the institution's capacity, constraints, and performance context review.

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Description

Test your knowledge on Community Reinvestment Act requirements for Intermediate Small Banks including the assessment of loan demand, borrower characteristics, and geographic distribution of loans.