Some CRA experts believe that “bigger is better” when it comes to assessment
areas. If you designate the entire MSA as your assessment area, you cannot be
criticized for arbitrarily leaving LMI or significantly minority-populated areas
out. That said, if your bank cannot service the entire area and/or is not making
loans throughout the area, it would be preferable to scale back to an area that
is more easily managed by the bank. There is no “one size fits all” rule on this
subject, so you will need to look carefully at your data and at the geographies
surrounding your branches in designating your assessment areas.
While your assessment area is your main geographic focus, all signs point to
a new term you’ll be hearing at your next CRA exam—REMA or Reasonably
Expected Market Area. REMA is where your bank has actually marketed and
provided credit and where it could be reasonably expected to have marketed
and provided credit. Some important things to note:
1. A REMA is not necessarily the same as your assessment area.
2. Your regulator will define your REMA.
3. REMA is used to evaluate redlining risk, so be prepared to document/
defend your lending efforts.
Be creative about your branch network, and don’t be afraid to suggest that
you try new alternatives to reach the community. Some innovative branching
ideas include branches located in coffee shops or non-profit centers or high
schools. Rather than be daunted by the “no,” focus your mind on thinking,
“not now”. An idea that was once described as “crazy” may become adopted
and be proven very successful in the future.
Technology and the CRA
“New technology is not good or evil in and of itself.
It’s all about how people choose to use it.”
We now have readily available hand-held computer devices that allow you
to conduct a variety of transactions from anywhere you are located with an
As broadband technology becomes more available throughout the coun-
try—including those living in rural and lower income communities—we
are seeing a real shift in banking behavior. Once it was necessary to go into
a branch to deposit a paycheck or to cash a check, but now there are many
other options available that result in fewer trips to the bank. In addition,
Federal Reserve surveys have
found that customers across
all income levels are now using
smart phones meaning there
is opportunity to reach new
consumers by investing in
your digital presence. 2 Times
are changing and the bank-
ing industry must continue
to evolve to stay competitive.
Banks may also want to
consider partnering with Fin-Techs. A new partner could
help make smaller dollar
business loans more profitably by eliminating some of
the paper pushing and adopting automated decisioning. If
your institution incorporates
a Fin Tech’s services, be certain that you document how it will impact LMI
and/or significantly minority populations. However, be sure to properly
vet your vendor as you would any other third party for the bank. In today’s
regulatory environment, there is high expectation for appropriate vendor
management, and the need to protect customer privacy.
Highlight products and programs that you’ve developed that incorporate
innovative technology to benefit LMI consumers and entrepreneurs. Don’t
be afraid to toot your own horn and to offer accolades and stories about how
these products or services have made banking easier or more accessible for
your customers—particularly, if the impact is beneficial to LMI customers
or provides enhanced service in LMI neighborhoods.
Be creative about your branch network, and don’t be afraid to suggest
that you try new alternatives to reaching the community. Some innovative
branching ideas include branches located in coffee shops or non-profit centers
or high schools. Ideas that don’t always seem good now can be innovative
and proven successful in the future.
“Weather is always unrehearsed.” —Marty Rubin
There’s no denying that Mother Nature can be destructive. The CRA acknowledges this fact and expands the definition of community development
to include assistance in designated disaster areas, regardless of whether or
not the affected area is in a low- or moderate-income (LMI) area. For more
information on this topic, see page 24 for the article entitled Extending a
Helping Hand, by Brian Waters.
Going Forward—Preparation is Key
“Be Prepared” —The Scout Motto
The best way to counteract uncertainly is to be prepared. First, arm yourselves
with knowledge. The CRA Q&As provide the best resource for interpreting
the CRA. For example, they clearly set forth that activities are considered
to promote economic development if they support permanent job creation,
retention and or improvement in area targeted for redevelopment by Federal,
state, local or tribal governments. Changes in deductions arising from the
Tax Cuts and Jobs Act have been predicted to curb corporate incentives to
Income as of MSA Median
(# of Tracts in Range)
≥ 120% (147)
80% < 120% (185)
50% < 80% (114)
0.01% < 50% ( 37)
All Others ( 1)
Statistical Areas (MSAs)