I am scheduled to begin a CRA exam for our bank next quarter and this will be my first time. The last person to do the audit is no longer with the Bank and left no procedures. I can follow their report but wonder when new statistics from the Census Bureau will be available. Are Bank's notified? For example the information in the old report for median family income from the Census Bureau is from 2000. I have done some research on the net but have not found anything more recent but want to make sure I am looking in the right place.

The Census is done every 10 years so that is the most current Census statistics available right now.

HUD Estimates MSA/MD Median Family Income Annually for CRA/HMDA reports and has recently released 2006 data.

2006 HUD Estimated MSA/MD Median Family Income

Thanks Rie. I have a couple of other questions. How are assessment areas determined? Are they set by Govt., the Regulators, or does the Bank determine it somehow? When are they changed or updated? If this is done outside the bank is there a website that updates AA's?

Yes the census data changes ever 10 years, However in 2004 substantial changes were made to the definitions of an MSA and across the US counties were added and deleted to many MSA's which changed the Median Family incomes used to calculate census tract income classification.

Your area could be one that changed and the median income figures and census tract classifications from the 2000 census may not be applicable.

You need to understand what the HUD Estimated Income is used for, as it is not the same as that used for tract income classifications.

Get a copy of the CRA Getting It Right book which can be downloaded from the FFIEC website. It will give you the requirements of establishing an assessment area. Assessment areas can be adjusted anytime.

You will need to know what constitutes a Small Business and a Small Farm loan. You need to determine the percent of the number of loans inside your assessment area.

Of extreme importance is if you are an ISB and have chosen to be examined as such. You will need a firm understanding of what a Community Development loan or activity is.

There is a lot to learn in a short period of time and the above is just part of it.

The bank sets its own Assessment Area. Generally they are only changed when you change service areas, as in opening or closing branches etc.

Click on this link and then go to section 345.41 and it will describe Assessment Area delineation for you.

FDIC Community Reinvestment Regulations

Some of the most important "performance context" data you can have is the CRA and HMDA loan data for your assessment area. This data is used to establish the performance benchmarks against which your bank is compared. If you wonder how examiners decide what percentage of loans you make should be in LMI tracts, one of the methods is to take the market "penetration rate" and compare it to the percentage of your loans in the AA LMI Tracts. If 15% of the HMDA reported mortgages in your AA are in the LMI Tracts and you have only 5%, then you need to understand why you compare so poorly to the market. This means having the data, anlalyzing it and understanding it. Aside from CRA implications, you may be missing a good opportunity in your market. By the way, this is also good market analysis too.

Also, in doing your analysis, you should separate low-income from moderate-income. Often times there are unique issues for each income category that will impact a bank's lending performance.