Comparison of Credit Extended Inside and Outside of the Assessment Area(s)
1 – If available, review HMDA data, automated loan reports, and any other reports that may have been generated by the institution to analyze the extent of lending inside and outside of the assessment area(s). If a report generated by the institution is used, test the accuracy of the output.
2 – If loan reports or data analyzing lending inside and outside of the assessment area(s) are not available or comprehensive, or if their accuracy cannot be verified, use sampling guidelines to select a sample of loans originated, purchased or committed to calculate the percentage (by number and dollar amount) located within the assessment area(s).
3 – If the percentage of loans or other lending related activities in the assessment area is less than a majority, then the institution does not meet the standards for “Satisfactory” under this performance criterion. In this case, consider information from the performance context, such as information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the institution.
4 – Discuss the preliminary findings in this section with management.
5 – Summarize in workpapers conclusions regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s).
SOURCE: Small institution CRA Examination Procedures | OCC, FRB, FDIC and OTS | July 2007