So I get we need to have CD loans and investments benefiting LMI individuals and communities. Within our assessment areas we have 31 census tracts. Within those tracts only 1 upper income, no lower income, 4 moderate income and the rest are middle. There is only one distressed area and no underserved areas. I understand we will have some LMI individuals within our AA's but probably not a significant number, must we extend those CD loans and investment outside our AA in order to meet CRA requirements?

I know the Fed reviews for loans in majority minority census tracts. Do you have any of those?

How do I determine that?

Use the FFIEC's census tool.

https://www.ffiec.gov/census/default.aspx

That will list out a county's tracts and give you tract minority percentage, distressed or under served, and income level. We pulled each of our tracts and kept them in our fair lending risk assessment for reference.

burke 116, I have used this site for everything except minority percentage. I'll go back and look closer. Thanks

To the best of my knowledge there is no mention in the CRA of race or ethnicity, with the exception of minority-owned financial institutions. When did the regulators begin looking at community development investments and lending in majority minority census tracts? Is it possible the FRB is looking at lending in majority minority tracts for Fair Lending and not CRA?

You may want to look at purchasing Investments and/or Lending initiatives that benefit a broader area that includes your Assessment Area if you are not able to find any opportunities strictly within your AA. However, you need to DOCUMENT your efforts to look for qualified investment and loans within your AA.

Tennismom, CRA is not color driven, you are correct. But it is also not color blind.

In a stereotypical manner, examiners will assume that if there is a minority area, those minorities likely make less money. Unfortunately, there is some truth to that based on the statistics I have seen. It's a reach, I'll give you that. But it wouldn't be the first time interpretations like this happen and there is little upside to contesting them.

And I agree with Princess, look outside but ensure you can show you've had nothing inside.

Is it safe to assume that you've also analyzed the adjacent tracts to your area and there is nothing there with regards to LMIs or investments?

In most CRA exams, regulators also look at fair lending. There is usually one sentence in the report saying that FL was reviewed with no exceptions. If there were FL issues, there is usually an accompanying rating downgrade.

While CRA focuses on low moderate income tracts and persons, ECOA and the FHAct focus on the prohibited basis. More frequently than not, majority minority tracks are reviewed for redlining rather than LMI tracts. Those can reflect many issues with race and ethnicity. Additionally, the ECOA and FHAct penalties are very onerous.

I recently attended a CRA Officer Interagency seminar, and high-minority census tracts (HMCTs) was one of their topics. The way they explained at the conference was that you should compare your Assessment Area to your Reasonably Expected Market Area (REMA) and ensure that you are not arbitrarily excluding any HMCTs. There were several examples that they went over. It seems as though Redlining is a hot topic over at the Federal Reserve.

Look for school bonds in those moderate tracts.

How do the agencies define a HMCT?

Any census tract that has 50% or more minority population according to the US Census.

HMCT = Majority- Minority

It depends on your regulator and the demographics of your areas. Some look at majority-minority (MMCT) where total minority population >50% of tract population. Some look at HMCT where minority population is >=80% of tract population. Others are focusing more on MBCT (black population is >50% of tract population), MHCT (Hispanic population is >50% tract population), or MBHCT (black+Hispanic population >50% of tract population).