The financial institution I work for just acquired a couple of banks in a different assessment area. A series of the acquired branches (located in upper income census tracts) are within a single MSA, so after looking at the lending data that is available for these branches, we have delineated an assessment area. Now the kicker, the acquired bank’s target client base are upper income, commercial customers. However, they were more than willing to accept these customers’ personal accounts. This results in little HMDA lending (primarily for investment purposes) and any conventional residential mortgage business was referred. The question is how can we serve the LMI individuals in the assessment area?

If conventional mortgages are referred, is this a mitigating factor? Also, there is a high poverty level in the MSA, would that be a mitigating factor? I truly want to serve all consumers at these new branches, but based on locale I cannot see LMI customers wanting to patronize these branches.

See if there are any loan funds you can participate in that will make consumer or small business loans in the low/mod tracts. Sometimes banks have formed a group for this purpose or a county economic development group will have a loan fund.

Also see if you can join in loan participations with other banks.

You can make grants and investments that benefit the LMI customers, perhaps put funds in a CDFI or other bank that targets those groups and earmark the funds for loans (perhaps mortgages) or provide services to help in those areas..all to compensate for not have branches convenient to these other areas.

Your questions are a bit confusing because it is not clear if your bank's lending strategy and focus are different from the banks you acquired. Is your market focus (small business, home mortgage, etc) the same as theirs? If your bank's business strategy is not to offer home mortgages (except incidentally) you are not required to do so by CRA. So I wouldn't be overly concerned about that aspect of your performance. That would put the burden of the lending test performance on your small business or small farm lending (assuming that is your market focus). A performance context factor is that the acquired bank's strategy may have been different from yours. Going forward if you are going to offer home mortgages you will have to develop a strategy to generate enough activity to LMI borrowers and in LMI areas. Do you know what the market-driven performance standards are for your newly defined AA(s)? What is the relative importance of home mortgage lending versus small business lending? Examiners will weigh the relative importance of loan types when rating your performance.

A good way to get insight into examiner expectations for your bank is to look at the market-reported activity of all reporting lenders inside your community. Not only does this help you determine performance standards it also shows you where to focus your marketing efforts to generate desired mortgage and/or small business lending activity.