In the new Interagency Q's & A's (FIL-23-2006), in the section on "Small Bank Performance Standards", the first question asks, "When evaluating a small or intermediate small bank's performance, will examiners consider, at the institution's request, retail and community development loans originated or purchased by affiliates, qualified investments made by affiliates, or community development services provided by affiliates?" The initial answer is "Yes." However, it goes on to say, "Examiners will not include affiliate lending in calculating the percentage of loans and, as appropriate, other lending-related activities located in a bank's assessment area."

How will credit be given then for affiliate lending if not in calculating the percentage of loans in the bank's AA?

One is relating including "Community Development" activities of the affiliate, and the other is relating to the actual number of loans the institution originated itself. That number is then used in any calculation of the institutions cra performance.

So if my small bank elects to receive credit for community development loans made by our affiliate within our assessment area, will those loans, in addition to the bank's CD loans, be "credited" or used in the calculation?

No, Community Development loans of the affiliate can only be counted with community development loans of the institution. They are not used for anything else but community development.

Loans of the affiliate are not used in CRA analysis calculations, like the number, and percentage, of loans originated inside the assessment area. CRA Analysis only uses the loans the institution itself originated. Anything the affiliate did is not included

Okay. Just to make sure I understand, if my bank is examined under an approved Strategic Plan, the CD loans of our affiliates can be counted along with the bank's CD loans when considering progress made against the CD lending goals. Is this correct?

Mitzi A small bank exam, and an exam with a Stratigic Plan are a little different.

Did the bank make a joint Stratigic Plan with the affliate?

No. It is a non-bank affiliate.