CRA Quiz: Community Reinvestment Act Quizlet and Assessment Area

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Questions and Answers

What criteria do the Lending, Investment, and Service Tests cover?

Institutions that have received approval as wholesale or limited-purpose institutions

Institutions that meet large bank threshold criteria (correct)

Institutions that meet small bank threshold criteria

Institutions that have not been approved for evaluation under a strategic plan

Under what circumstances can examiners use economic and demographic data from one institution's examination for other institutions serving the same or similar assessment areas?

When the institutions are in the same market

When it is consistent with a complete and accurate assessment of performance (correct)

When requested by examination procedures

When it minimizes the burden imposed by the examination process

When can community contacts be combined to cover more than one institution in a given market?

When examiners exercise judgment and common sense

When covering more than one institution in a given market (correct)

When requested by the institutions

When institutions are similar in size

What should examiners do when an institution has analyzed its CRA performance?

Use those analyses after verifying their accuracy and reliability Signup and view all the answers

What should be ensured about community development loans, except for multifamily loans?

They have not been reported as HMDA, small business or farm, or consumer loans by the institution or an affiliate Signup and view all the answers

What should be reviewed to ensure the amount of the institution’s third party or affiliate lending?

Records provided to the institution by consortia or third parties or affiliates Signup and view all the answers

What information should be determined about community development loans?

(Excluding affiliate lending) the number, dollar amount, and percentage of the institution’s loans located within any of its assessment areas Signup and view all the answers

What should be ensured about community development loans to meet the definition of community development loans?

They benefit the institution’s assessment area(s) or a broader statewide or regional area that includes the institution’s assessment area(s) Signup and view all the answers

What type of loan data must large institutions collect and report?

Small business, small farm, and community development loan data Signup and view all the answers

What does the automated form of data collection allow examiners to do?

Conduct analysis before on-site examinations Signup and view all the answers

When can large institutions be examined under large institution examination procedures?

After at least one full year of data collection Signup and view all the answers

Under what conditions may any size institution opt to be examined as a large institution?

If it has collected and reported the required CRA loan data Signup and view all the answers

What factors are considered during examination under the Community Reinvestment Act (CRA)?

$Lending, investment, and service opportunities$ Signup and view all the answers

What is assessed particularly in low- and moderate-income areas during CRA examinations?

$Level of the institution’s lending, investment, and service activity$ Signup and view all the answers

What is taken into account during CRA examinations regarding different assessment areas?

Number of other institutions in different assessment areas and the importance of the institution in serving these areas Signup and view all the answers

What is considered regarding the institution’s CRA performance during examinations?

Comments and feedback from community groups and the public regarding the institution’s CRA performance Signup and view all the answers

What does the examination scope for large institutions involve?

Identifying assessment areas for a full scope review with specific criteria for interstate institutions Signup and view all the answers

What type of data is reviewed to obtain relevant demographic, economic, and loan data for each assessment area?

Data from standardized worksheets and agency sources Signup and view all the answers

What information is documented for use in evaluating the institution’s performance during examinations?

Performance context information, particularly community development needs and opportunities Signup and view all the answers

Who are contacted to update or supplement information during examinations under CRA?

Local community, governmental, or economic development representatives Signup and view all the answers

What is the assessment area for CRA evaluation?

The institution's main office, branches, and surrounding geographies where it originated or purchased a substantial portion of its loans Signup and view all the answers

What happens if the assessment area fails to comply with the criteria?

A revised assessment area is developed based on discussions with management Signup and view all the answers

What is reviewed to assess an institution’s CRA performance?

Performance evaluations and financial data of similarly situated institutions Signup and view all the answers

What should not account for more than the institution’s percentage share of the total loans originated by third parties or affiliates?

Large bank consortia or affiliate lending Signup and view all the answers

What does the lending test involve identifying for evaluation?

$HMDA$ and $CRA$ Disclosure Statements, interim $HMDA$ Loan Application Register, and any interim $CRA$ loan data Signup and view all the answers

What is evaluated when considering the volume of each type of loan made or purchased within the assessment area?

The institution’s resources, business strategy, and performance context Signup and view all the answers

What is reviewed to determine the reasonableness of an institution's geographic distribution of lending?

Analyses prepared by the institution for insight into its geographic distribution of lending Signup and view all the answers

When is an independent analysis of geographic distribution conducted?

As necessary to determine the extent to which the institution is serving geographies in each income category Signup and view all the answers

What is tested when verifying data collected and reported by an institution?

Sample loan files are tested to verify accuracy of data collected and reported by the institution, ensuring that affiliate loans are not double-counted and all consumer loans in a particular category are included when evaluated. Signup and view all the answers

What must align with an institution’s business strategy and safe banking practices in its assessment area?

Lending and community development opportunities Signup and view all the answers

What should not arbitrarily exclude any low- or moderate-income areas from the assessment area?

Both low- and moderate-income areas Signup and view all the answers

Study Notes

Community Reinvestment Act (CRA) Examination Criteria

The Community Reinvestment Act (CRA) examination process evaluates a financial institution's performance in meeting the credit needs of its entire community, including low- and moderate-income neighborhoods.
The assessment area for CRA evaluation includes the institution's main office, branches, and surrounding geographies where it originated or purchased a substantial portion of its loans.
The assessment area must consist only of whole census tracts and should not arbitrarily exclude any low- or moderate-income areas.
Performance evaluations and financial data of similarly situated institutions are reviewed to assess the institution’s CRA performance.
If the assessment area fails to comply with the criteria, a revised assessment area is developed based on discussions with management.
The institution’s lending and community development opportunities in its assessment area must align with its business strategy and safe and sound banking practices.
Large bank consortia or affiliate lending should not account for more than the institution’s percentage share of the total loans originated by the consortia, third parties, or affiliates.
The lending test involves identifying the institution’s loans to be evaluated, including HMDA and CRA Disclosure Statements, interim HMDA Loan Application Register, and any interim CRA loan data.
The volume of each type of loan made or purchased within the assessment area is identified and evaluated considering the institution’s resources, business strategy, and performance context.
Analyses prepared by the institution for insight into the reasonableness of its geographic distribution of lending are reviewed, and the accuracy of the data is tested.
An independent analysis of geographic distribution is conducted as necessary to determine the extent to which the institution is serving geographies in each income category.
Sample loan files are tested to verify the accuracy of data collected and reported by the institution, ensuring that affiliate loans are not double-counted and all consumer loans in a particular category are included when evaluated.

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Description

Test your knowledge about the criteria for delineating Community Reinvestment Act (CRA) assessment areas, including geographies based on the institution's presence and loan portfolio. This quiz covers the specific requirements and considerations involved in defining CRA assessment areas.

Community Reinvestment Act (CRA) Assessment Area Quiz