Hi All,

What is the difference between geographic and borrower distibution?

I have two tables that have these two types of information contained within them. I am not 100% sure what the tables are telling me.

You loan money in census tracts that are classed as low, moderate, middle and high income. That is the geography. All parameters being the same, you should be making loans in your AA census tracts on an equal basis, regardless of what type of census tract it is (low, moderate, middle or high). Of course, the parameters are not the same in each census tract, so you have to develop a story as to why you make more loans in one census tract versus another. This is the performance context.

You also can slice and dice your lending by the income of the borrower. This is the borrower distribution. Again, if everything was equal (which it is not), you should be making as many loans to low-income borrowers as high-income borrowers. Your performance context will explain the differences in borrowing patterns.

So, your bank will be judged on lending in LMI areas or geographies, as well as lending to LMI individuals.

And if you're looking at business lending, then your borrower distribution is between small and large businesses. If you are a CRA reporter, you are including that information in your LR submission.

If you are not a CRA reporter, then you will need to go to your loan files to determine if you have obtained the Gross Annual Revenue in your credit approval.

Or hopefully you were running reports anyway.

Thank you that was very useful.