Community Reinvestment Act for Large Banks Quiz

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Questions and Answers

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 (correct)

The total number of loans issued by the bank

The profitability of each loan category in relation to the institution’s business strategies

The average credit score of loan recipients

When might an examiner analyze a large bank's performance compared to other lenders for home mortgage loans?

If there are no gaps in lending activity for each income category

If the bank's reported loan category is unrelated to its business strategies

If the bank has a high number of home improvement loans

If there are groups of contiguous geographies with low penetration of loans (correct)

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 total assets of the bank

The number of employees in each branch

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 (correct)

The number of ATMs per capita 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 Signup and view all the answers

What is a key factor considered in the lending distribution analysis?

Borrower characteristics Signup and view all the answers

What is one of the aspects evaluated in the review of community development loans?

Extent, innovativeness, and complexity Signup and view all the answers

What is a focus of the evaluation of support for organizations or activities within the assessment area?

Financial support for community projects Signup and view all the answers

What is a part of the examination process for large banks under the CRA?

Consideration of anomalies in assessment area data Signup and view all the answers

What is considered when assessing innovative loan products for low- and moderate-income individuals?

Flexibility of terms Signup and view all the answers

What is a focus when evaluating the institution's low penetration in certain areas?

Institution's branch locations Signup and view all the answers

What is reviewed in terms of action taken to address disparities?

Institution's analyses offered and action taken Signup and view all the answers

What is discussed with management as part of the examination process?

Extent of compliance with applicable regulations Signup and view all the answers

What does the Investment Test involve?

Identifying qualified investments in the institution's portfolio Signup and view all the answers

What is a key consideration in the Service Test for retail banking services?

The institution's responsiveness to community development needs and opportunities Signup and view all the answers

What does the evaluation process involve?

Discussing preliminary findings with management and summarizing conclusions Signup and view all the answers

What does the Service Test for retail banking services assess?

The degree to which investments serve low- and moderate-income areas or individuals Signup and view all the answers

What is emphasized in evaluating investment performance?

Using information obtained in the performance context procedures Signup and view all the answers

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) Signup and view all the answers

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) Signup and view all the answers

What is involved in preparing comments for the performance evaluation and compliance examination report?

Providing detailed instructions for addressing community development activities Signup and view all the answers

What is a key aspect considered in evaluating investment performance?

Innovativeness, complexity, and responsiveness to available opportunities Signup and view all the answers

What does the Investment Test involve considering?

Grants and donations for community development purposes Signup and view all the answers

What is emphasized when evaluating investment performance?

Considering community needs and institutional capacity Signup and view all the answers

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.

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Description

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.