23 Questions
What does the Community Reinvestment Act require large banks to report on?
The number and dollar amount of multifamily loans in each geography compared to the number of multifamily structures in each geography
When might an examiner analyze a large bank's performance compared to other lenders for home mortgage loans?
If there are groups of contiguous geographies with low penetration of loans
What do examiners consider when determining if an analysis of a bank’s performance compared to other lenders would provide insight into its lack of performance in certain areas?
The number and dollar amount of home purchase, home refinancing, and home improvement loans compared to the number of one-to-four family owner-occupied units in each geography
What does the Community Reinvestment Act require large banks to determine regarding lending activity for each income category?
Whether any gaps exist in lending activity for each income category
What is a key factor considered in the lending distribution analysis?
Borrower characteristics
What is one of the aspects evaluated in the review of community development loans?
Extent, innovativeness, and complexity
What is a focus of the evaluation of support for organizations or activities within the assessment area?
Financial support for community projects
What is a part of the examination process for large banks under the CRA?
Consideration of anomalies in assessment area data
What is considered when assessing innovative loan products for low- and moderate-income individuals?
Flexibility of terms
What is a focus when evaluating the institution's low penetration in certain areas?
Institution's branch locations
What is reviewed in terms of action taken to address disparities?
Institution's analyses offered and action taken
What is discussed with management as part of the examination process?
Extent of compliance with applicable regulations
What does the Investment Test involve?
Identifying qualified investments in the institution's portfolio
What is a key consideration in the Service Test for retail banking services?
The institution's responsiveness to community development needs and opportunities
What does the evaluation process involve?
Discussing preliminary findings with management and summarizing conclusions
What does the Service Test for retail banking services assess?
The degree to which investments serve low- and moderate-income areas or individuals
What is emphasized in evaluating investment performance?
Using information obtained in the performance context procedures
What is considered in assessing community development lending opportunities?
The number and amount of community development loans in assessment area(s) and broader area(s)
What does the analysis include when evaluating retail banking services?
Determining the distribution of the institution’s branches among different income geographies in the assessment area(s)
What is involved in preparing comments for the performance evaluation and compliance examination report?
Providing detailed instructions for addressing community development activities
What is a key aspect considered in evaluating investment performance?
Innovativeness, complexity, and responsiveness to available opportunities
What does the Investment Test involve considering?
Grants and donations for community development purposes
What is emphasized when evaluating investment performance?
Considering community needs and institutional capacity
Study Notes
Community Reinvestment Act and FDIC Compliance Examination
- The text provides guidance for evaluating an institution's lending performance under the Community Reinvestment Act (CRA).
- It emphasizes assessing community development lending opportunities, including the number and amount of community development loans in the assessment area(s) and the broader statewide or regional area.
- The evaluation also considers the geographical distribution, borrower characteristics, and the use of innovative or flexible lending practices.
- The Investment Test involves identifying qualified investments in the institution's portfolio or its affiliate's portfolio, evaluating their benefit to assessment areas, and considering grants and donations for community development purposes.
- The assessment also examines the extent to which investments enhance the institution’s performance.
- The evaluation process involves discussing preliminary findings with management and summarizing conclusions about the institution’s investment performance.
- It emphasizes the number and amount of qualified investments, their innovativeness, complexity, and responsiveness to available opportunities.
- The Service Test for retail banking services involves assessing the degree to which investments serve low- and moderate-income areas or individuals, designated disaster areas, or distressed nonmetropolitan middle-income geographies.
- The analysis includes determining the distribution of the institution’s branches among different income geographies in the assessment area(s) and evaluating banking services offered.
- The institution's responsiveness to community development needs and opportunities is a key consideration in the Service Test.
- The text provides detailed instructions for preparing comments for the performance evaluation and the compliance examination report, including guidance on addressing community development activities.
- It emphasizes the importance of evaluating investment performance using information obtained in the performance context procedures, considering community needs and institutional capacity.
Test your knowledge on the Community Reinvestment Act (CRA) requirements for large banks. Assess your understanding of reported loans made in different income geographies, multifamily loans, and small business and farm loans.
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