CRA Performance Evaluation Assessment

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Questions and Answers

What type of tests are intermediate small banks evaluated under?

Small business lending test and small farm lending test

Large bank lending test and investment test

Small bank lending test and community development test (correct)

Service test and community development test

What type of loans are intermediate small institutions not required to collect and report CRA loan data for?

Home mortgage, auto, and personal loans

Small business, small farm, and community development loans (correct)

Student loans, commercial real estate loans, and construction loans

Credit card, payday, and installment loans

What data are small institutions, including intermediate small institutions, allowed to collect and report for evaluation under the large bank tests?

(community) lending, investment, and service tests

(large bank) lending, investment, and service tests (correct)

(intermediate bank) lending, investment, and service tests

(small bank) lending, investment, and service tests

What sources do examiners review to obtain performance context information for evaluating community development loans under the intermediate small bank community development test?

Community, government, civic or other sources Signup and view all the answers

What is the consequence if the percentage of loans or other lending related activities in the assessment area is less than a majority?

The institution does not meet the standards for 'Satisfactory' under this performance criterion. Signup and view all the answers

What should be considered when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the institution?

Information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies. Signup and view all the answers

What should be used as a proxy for income or revenue of the borrower if an analysis of lending to borrowers of different income or revenues could not be performed?

Analyzing geographic distribution by street address rather than geography (if data are available and meaningful). Signup and view all the answers

What should be done if there are categories of low penetration?

Form conclusions about the reasons for that low penetration. Signup and view all the answers

What should be summarized in work papers regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s)?

Conclusions regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s). Signup and view all the answers

What should be considered when forming conclusions about low penetration categories?

Information from discussions with management, loan officers, and members of the community; Information about economic conditions, particularly in the assessment area(s); Information about the institution’s size, branch network, financial condition, supervisory restrictions (if any) and prior CRA record. Signup and view all the answers

What should be used as a proxy for income or revenue of borrowers if income data are not collected for certain loans?

Analyzing distribution by loan size as a proxy for income or revenue of borrowers. Signup and view all the answers

What should institutions do if loan reports or data analyzing lending inside and outside of the assessment area(s) are not available or comprehensive?

Use sampling guidelines to select a sample of loans originated, purchased or committed to calculate the percentage located within the assessment area(s). Signup and view all the answers

What is one of the criteria for evaluating an institution's CRA performance?

Reviewing public evaluations and financial data Signup and view all the answers

What should be documented as part of evaluating an institution's CRA performance?

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

How can an institution ensure compliance with specific criteria related to assessment area(s)?

Reviewing the institution’s stated assessment area(s) Signup and view all the answers

What is used to calculate the average loan-to-deposit ratio for evaluating CRA performance?

$Loan-to-deposit ratio from Call Reports or UBPRs$ Signup and view all the answers

What should be considered when evaluating an institution’s loan-to-deposit ratio?

$Performance context and lending opportunities$ Signup and view all the answers

What should be analyzed to understand the distribution of an institution’s loans in its assessment area(s) among income geographies?

$HMDA data and other reports$ Signup and view all the answers

What should be reviewed to analyze the extent of lending inside and outside assessment area(s)?

$HMDA data and other reports$ Signup and view all the answers

What should be done if the boundaries of assessment area(s) do not comply with criteria?

Assessing adjustments to the boundaries of assessment area(s) Signup and view all the answers

What is important when summarizing conclusions regarding the institution’s loan-to-deposit ratio in work papers?

Consideration of performance context and lending opportunities Signup and view all the answers

How can an institution evaluate its loan-to-deposit ratio in light of performance context and lending opportunities?

By analyzing distribution of loans in its assessment area(s) among income geographies Signup and view all the answers

What should be considered when assessing adjustments to the boundaries of assessment area(s)?

Community development needs and opportunities Signup and view all the answers

What factors are considered for full scope review in institutions with more than one assessment area?

Prior CRA performance evaluations, community contact materials, and lending and demographic data Signup and view all the answers

What does the ratio of community development loans to net loans take into account?

The level of institution's activity in different assessment areas Signup and view all the answers

What is reviewed for community development activities?

Detailed listings of loans, investments, and services Signup and view all the answers

What is considered when determining the type of examination procedures?

The asset threshold Signup and view all the answers

What must be reviewed for interstate institutions?

A minimum of one assessment area from each state and multi-state MSA/MD Signup and view all the answers

What does the examination consider in addition to standardized worksheets and Call Reports?

UBPRs, annual reports, and prior CRA evaluations Signup and view all the answers

What is reviewed to understand an institution's capacity and limitations in responding to opportunities in assessment areas?

Discussions with the institution Signup and view all the answers

What does the performance context include?

Reviewing standardized worksheets, Call Reports, UBPRs, annual reports, and prior CRA evaluations Signup and view all the answers

What is taken into account when considering anomalies in reported data?

Length of time since last examination. Signup and view all the answers

What is a factor considered for community development activities?

The need, opportunity, and level of institution's activity in different assessment areas. Signup and view all the answers

Study Notes

Community Development Capacity Assessment for Financial Institutions

Examination scope includes full scope review for institutions with more than one assessment area
Factors considered for full scope review include prior CRA performance evaluations, community contact materials, and lending and demographic data
Criteria used to determine the type of examination procedures depend on the asset threshold
Factors considered for community development activities include the need, opportunity, and level of institution's activity in different assessment areas
Detailed listings of loans, investments, and services are reviewed for community development activities
The ratio of community development loans to net loans is considered, as well as the number of institutions serving different areas
Anomalies in reported data and length of time since last examination are also taken into account
Performance context includes reviewing standardized worksheets, Call Reports, UBPRs, annual reports, and prior CRA evaluations
Discussions with the institution are held to understand its capacity and limitations in responding to opportunities in assessment areas
Community contact forms and comments received since the last CRA examination are reviewed
A minimum of one assessment area from each state and multi-state MSA/MD must be reviewed for interstate institutions
The examination also considers factors such as the institution's prior CRA performance, examiners' knowledge of assessment areas, and public comments on the institution's CRA performance

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Test your knowledge of evaluating CRA performance and identifying similar institutions for assessment purposes based on size, financial condition, and business strategy.