We are a small bank and anticipate a CRA exam this year. I'm working on looking at our loans to determine how we may rate. I'm using the small bank examination procedures, but need some help. I'm confused and need clarification on some things. Is this correct:

1) We need to determine how many loans we've made within our assessment area as a percentage and how many loans we've made outside of our AA.
2) Loans we include for CRA purposes are - small business (under $1 million), small farm (under $500K), community development, and HMDA.
3) Community development loans may be over $1 million if it is to develop the community such as an apartment complex, hospital, etc.

I am understanding this correctly? I'm new to CRA so I'm not 100% sure I get it. Thanks!

If you are a small bank you don't have to worry about community development. That comes into play when you become an ISB (actually the year before). Essentially you are correct about the loan types (except they include $1 million and $500K). They also will examine the geographic distribution of your loans within your AA and the distribution among borrowers of different income levels and businesses with GAR of $1 Mil or less and over $1 Mil. Finally, your loan to deposit ratios will be examined for reasonableness.

I'm happy to hear the community development loans will not come into play! So I can eliminate any loan that exceeds the $1 million and $500K threshold (for small business and small farm)? But will need to look at how much revenue the business and farm had? I'm concerned that we may have too many loans outside of our AA, I'm assuming that would be an issue for examiners.

That could be a very big issue!

Thanks for your help!