We need to update our AA since we're building new branches. In some cases, we will expand our current AA and in other cases, we will have to add a new AA.

If we expand or add a new AA in 8/06, are loans that originated in 1/06-7/06 that fall in the expanded or new AA allowed to be counted in the in/out of AA ratio at year end? Or, since the loans were originated prior to 8/06, are they considered outside the AA?

Thanks.

They will be included in your new assessmenet area.

Thanks for your help.

Don - Can you provide any specific cite in the CRA that reflects your answer. CRA is new to me and this is one of the questions that I have been asked. Any additional help would be appreciated

Don - Can you provide any specific cite in the CRA that reflects your answer. CRA is new to me and this is one of the questions that I have been asked. Any additional help would be appreciated.

Thanks.

It would be very difficult to analyze any data for the year based on having different assessment areas during the year. Breaking the data down by different assessment areas during the year would be a costly process that would serve no useful statistical purpose.

Saying that the banks inside/outside ratio was xx% from Jan to Aug and yy% from Sept to Dec is not how it works.
We have to realize that this whole CRA/HMDA thing is not an exact science. But we all need to follow along some guidelines so that there is some parity of data. What the assessment area is at the end of the year is parity enough.

Take a look at the regulations for mergers and acquisitions. There are guide lines on who reports what. In some cases a bank may have loans that originated outside an existing assessment area. Because of a merger or acquisition those loans may become located in an expanded assessment area due to that merger or acquisition. They will then be reported as inside the assessment area for the year.

Don, Would it be safe to say that your assessment area is defined each year when you send in your submission. The submissions asks for a list of tracts that make up your AA. So you have than established your AA for that year.

Yes and No, You can change your assessment area at any time during the year. There is no time frame or limitation on when or how often. As a bank adds branches, merges, and expands it can change the assessment area to match the expansion. Its just that what ever you have on 12/31 is what you will be reporting for the year.

You may find during the year that the bank started marketing loans in an area outside the existing AA to the point the it has dropped the inside/outside ratio down to 49%. (Thats one reason a periodic analysis of the portfolio needs to be done)

You need to make some serious decisions about expanding the AA. Then rerun the data to see what the new inside/outside ratio is. These kinds of adjustments should not be left to year end. Its the periodic monitoring and adjustments during the year that keep you out of trouble.

You are far to busy at year end to be dealing with AA changes.