Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

COMMUNITY REINVESTMENT ACT 

EXAMINATION PROCEDURES FOR SMALL INSTITUTIONS 

Examination Scope 

1. For institutions with more than one assessment area, identify assessment areas for full 

scope review. In making those selections, review prior CRA performance evaluations, 

available community contact materials, and reported lending data and demographic data 

on each assessment area. Consider factors such as: 

a. The lending opportunities in the different assessment areas; 

b. The level of the institution’s lending activity in the different assessment areas, 

including low- and moderate-income areas, designated disaster areas, or 

distressed or underserved nonmetropolitan middle-income geographies designated 

by the Agencies (Footnote 1. The Board of Governors of the Federal Reserve System, The Federal Deposit Insuran

Office of the Comptroller of the Currency) based on (a) rates of poverty, unemployment, and population 

loss or (b) population size, density, and dispersion;(Footnote 2. A list of distressed or underserved nonmetro

at www.ffiec.gov.) 

c. The number of other institutions in the different assessment areas and the 

importance of the institution under examination in serving the different areas, 

particularly any areas with relatively few other providers of financial services; 

d. The existence of apparent anomalies in the reported HMDA data for any 

particular assessment area(s); 

e. The length of time since the assessment area(s) was last examined using a full 

scope review; 

f. The institution’s prior CRA performance in different assessment areas; 

g. Examiners’ knowledge of the same or similar assessment areas; and 

h. Comments from the public regarding the institution’s CRA performance. 

2. For interstate institutions, a rating must be assigned for each state where the institution 

1 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

has a branch and for each multi-state MSA or metropolitan division (MD) where the 

institution has branches in two or more states that comprise that multi-state MSA/MD. 

Select one or more assessment areas in each state for examination using these procedures. 

Performance Context 

1. Review standardized worksheets and other agency information sources to obtain relevant 

demographic, economic and loan data, to the extent available, for each assessment area 

under review. 

2. Obtain for review the Consolidated Reports of Condition (Call Reports), Uniform Bank 

Performance Reports (UBPR), annual reports, supervisory reports, and prior CRA 

evaluations of the institution under examination. Review financial information and the 

prior CRA evaluations of institutions of similar size that serve the same or similar 

assessment area(s). 

3. Consider any information the institution may provide on its local community and 

economy, its business strategy, its lending capacity, or that otherwise assists in the 

evaluation of the institution. 

4. Review community contact forms prepared by the regulatory agencies to obtain 

information that assists in the evaluation of the institution. Contact local community, 

governmental or economic development representatives to update or supplement this 

information. Refer to the Community Contact Procedures for more detail. 

5. Review the institution’s public file for any comments received by the institution or the 

agency since the last CRA performance evaluation for information that assists in the 

evaluation of the institution. 

6. Document the performance context information gathered for use in evaluating the 

institution’s performance. 

Assessment Area 

1. Review the institution’s stated assessment area(s) to ensure that it: 

a. Consists of one or more MSAs/MDs or contiguous political subdivisions (e.g., 

counties, cities, or towns); 

2 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

b. Includes the geographies where the institution has its main office, branches, and 

deposit-taking ATMs, as well as the surrounding geographies in which the 

institution originated or purchased a substantial portion of its loans; 

c. Consists only of whole census tracts; 

d. Consists of separate delineations for areas that extend substantially across 

MSA/MD or state boundaries unless the assessment area is located in a multistate MSA/MD; 

e. Does not reflect illegal discrimination; and 

f. Does not arbitrarily exclude any low- or moderate-income area(s), taking into 

account the institution’s size, branching structure, and financial condition. 

2. If an institution's assessment area(s) does not coincide with the boundaries of an 

MSA/MD or political subdivision(s), assess whether the adjustments to the boundaries 

were made because the assessment area would otherwise be too large for the institution to 

reasonably serve, have an unusual configuration, or include significant geographic 

barriers. 

3. If the assessment area(s) fails to comply with the applicable criteria described above, 

develop, based on discussions with management, a revised assessment area(s) that 

complies with the criteria. Use this assessment area(s) to evaluate the institution’s 

performance, but do not otherwise consider the revision in determining the institution’s 

rating. 

Performance Criteria 

Loan-to-Deposit Analysis 

1. From data contained in Call Reports or UBPRs, calculate the average loan-to-deposit 

ratio since the last examination by adding the quarterly loan-to-deposit ratios and 

dividing by the number of quarters. 

2. Evaluate whether the institution's average loan-to-deposit ratio is reasonable in light of 

information from the performance context including, as applicable, the institution's 

capacity to lend, the capacity of other similarly-situated institutions to lend in the 

assessment area(s), demographic and economic factors present in the assessment area(s), 

and the lending opportunities available in the institution's assessment area(s). 

3 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

3. If the loan to deposit ratio does not appear reasonable in light of the performance context, 

consider the number and the dollar volume of loans sold to the secondary market, or the 

innovativeness or complexity of community development loans and qualified investments 

to assess the extent to which these activities compensate for a low loan-to-deposit ratio or 

supplement the institution's lending performance as reflected in its loan-to-deposit ratio. 

4. Discuss the preliminary findings in this section with management. 

5. Summarize in workpapers conclusions regarding the institution's loan-to-deposit ratio. 

Comparison of Credit Extended Inside and Outside of the Assessment Area(s) 

1. If available, review HMDA data, automated loan reports, and any other reports that may 

have been generated by the institution to analyze the extent of lending inside and outside 

of the assessment area(s). If a report generated by the institution is used, test the 

accuracy of the output. 

2. If loan reports or data analyzing lending inside and outside of the assessment area(s) are 

not available or comprehensive, or if their accuracy cannot be verified, use sampling 

guidelines to select a sample of loans originated, purchased or committed to calculate the 

percentage (by number and dollar amount) located within the assessment area(s). 

3. If the percentage of loans or other lending related activities in the assessment area is less 

than a majority, then the institution does not meet the standards for “Satisfactory” under 

this performance criterion. In this case, consider information from the performance 

context, such as information about economic conditions, loan demand, the institution’s 

size, financial condition, branching network, and business strategies when determining 

the effect of not meeting the standards for satisfactory for this criterion on the overall 

rating for the institution. 

4. Discuss the preliminary findings in this section with management. 

5. Summarize in workpapers conclusions regarding the institution's level of lending or other 

lending related activities inside and outside of its assessment area(s). 

Distribution of Credit Within the Assessment Area(s) 

4 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

1. Determine whether the number and income distribution of geographies in the assessment 

area(s) are sufficient for a meaningful analysis of the geographic distribution of the 

institution’s loans in its assessment area(s). 

2. If a geographic distribution analysis of the institution’s loans would be meaningful and 

the necessary geographic information (street address or census tract numbers) is collected 

by the institution in the ordinary course of its business, determine the distribution of the 

institution’s loans in its assessment area(s) among low-, moderate-, middle-, and upperincome geographies. Where possible, use the same loan reports, loan data, or sample 

used to compare credit extended inside and outside the assessment area(s). 

3. If a geographic analysis of loans in the assessment area(s) is performed, identify groups 

of geographies, by income categories, in which there is little or no loan penetration. Note 

that institutions are not expected to lend in every geography. 

4. To the extent information about borrower income (individuals) or revenues (businesses) 

is collected by the institution in the ordinary course of its business, determine the 

distribution of loans in the assessment area(s) by borrower income and by business 

revenues. Where possible, use the same loan reports, loan data, or sample used to 

compare credit extended inside and outside the assessment area(s). 

5. Identify categories of borrowers by income or business revenue for which there is little or 

no loan penetration. 

6. If an analysis of the distribution of loans among geographies of different income levels 

would not be meaningful (e.g., very few geographies in the assessment area(s)) or an 

analysis of lending to borrowers of different income or revenues could not be performed 

(e.g., income data are not collected for certain loans), consider possible proxies to use for 

analysis of the institution’s distribution of credit. Possibilities include analyzing 

geographic distribution by street address rather than geography (if data are available and 

the analysis would be meaningful) or analyzing the distribution by loan size as a proxy 

for income or revenues of the borrower. 

7. If there are categories of low penetration, form conclusions about the reasons for that low 

penetration. Consider available information from the performance context, including: 

a. Information about the institution’s size, branch network, financial condition, 

supervisory restrictions (if any) and prior CRA record; 

b. Information from discussions with management, loan officers, and members of 

5 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

the community; 

c. Information about economic conditions, particularly in the assessment area(s); 

d. Information about demographic or other characteristics of particular geographies 

that could affect loan demand, such as the existence of a prison or college; and 

e. Information about other lenders serving the same or similar assessment area(s). 

8. Discuss the preliminary findings in this section with management. 

9. Summarize in workpapers conclusions concerning the geographic distribution of loans 

and the distribution of loans by borrower characteristics in the institution’s assessment 

area(s). 

Review of Complaints 

1. Review all complaints relating to the institution's CRA performance received by the 

institution (these should all be contained in the institution's public file) and those that 

were received by its supervisory agency. 

2. If there were any complaints, evaluate the institution's record of taking action, if 

warranted, in response to written complaints about its CRA performance. 

3. If there were any complaints, discuss the preliminary findings in this section with 

management. 

4. If there were any complaints, summarize in workpapers conclusions regarding the 

institution's record of taking action, if warranted, in response to written complaints about 

its CRA performance. Include the total number of complaints and resolutions with 

examples that illustrate the nature, responsiveness to, and resolution of, the complaints. 

Investments and Services (at the institution’s option to enhance a “Satisfactory” rating) 

1. If the institution chooses, review its performance in making qualified investments and 

providing branches and other services and delivery systems that enhance credit 

availability in its assessment area(s). Performance with respect to qualified investments 

and services may be used to enhance an institution’s overall rating of “Satisfactory”, but 

cannot be used to lower a rating that otherwise would have been assigned. 

6 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

2. To evaluate the institution's performance in making qualified investments that enhance 

credit availability in its assessment area(s), consider: 

a. The dollar amount of qualified investments, by type and location; 

b. The impact of those investments on the institution's assessment area(s); and 

c. The innovativeness or complexity of the investments. 

3. To evaluate the institution's record of providing branches and other services and delivery 

systems that enhance credit availability in its assessment area(s), consider: 

a. The number of branches and ATMs located in the institution's assessment area(s); 

b. The number of branches and ATMs located within, or that are readily accessible 

to, low- and moderate-income geographies compared to those located in, or 

readily accessible to middle- and upper-income geographies; 

c. The type and level of service(s) offered at branches and ATMs and alternative 

delivery systems; and 

d. The institution’s record of opening and closing branches. 

Ratings 

1. Group the analyses of the assessment areas examined by MSA (Footnote 3. The reference to MSA may also reference MD) and nonmetropolitan 

areas within each state where the institution has branches. If an institution has branches 

in two or more states of a multi-state MSA, group the assessment areas that are in that 

MSA. 

2. Summarize conclusions about the institution’s performance in each MSA and the 

nonmetropolitan portion of each state in which an assessment area received a full scope 

review. If two or more assessment areas in an MSA or in the nonmetropolitan portion of 

a state received full scope reviews, weigh the different assessment areas considering such 

factors as: 

a. The significance of the institution’s activities in each compared to the institution’s 

overall activities; 

7 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

b. The lending opportunities in each; 

c. The importance of the institution in providing loans to each, particularly in light 

of the number of other institutions and the extent of their activities in each; and 

d. Demographic and economic conditions in each. 

3. For assessment areas in MSAs and nonmetropolitan areas that were not examined using 

the full scope procedures, consider facts and data related to the institution’s lending to 

ensure that performance in those assessment areas is not inconsistent with the 

conclusions based on the assessment areas that received full scope examinations. 

4. For institutions operating in only one multi-state MSA or one state, assign one of the four 

preliminary ratings -- “Satisfactory”, “Outstanding”, “Needs to Improve”, and 

“Substantial Noncompliance” -- in accordance with step 6 below. To determine the 

relative significance of each MSA and nonmetropolitan area to the institution’s 

preliminary rating, consider: 

a. The significance of the institution’s activities in each compared to the institution’s 

overall activities; 

b. The lending opportunities in each; 

c. The importance of the institution in providing loans to each, particularly in light 

of the number of other institutions and the extent of their activities in each; and 

d. Demographic and economic conditions in each. 

5. For other institutions, assign one of the four preliminary ratings – “Satisfactory”, 

“Outstanding”, “Needs to Improve”, and “Substantial Noncompliance” -- for each state in 

which the institution has at least one branch and for each multi-state MSA in which the 

institution has branches in two or more states in accordance with step #6 below. To 

determine the relative significance of each MSA and the nonmetropolitan area on the 

institution’s preliminary state rating, consider: 

a. The significance of the institution’s activities in each compared to the institution’s 

overall activities; 

b. The lending opportunities in each; 

8 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

c. The importance of the institution in providing loans to each, particularly in light 

of the number of other institutions and the extent of their activities in each; and 

d. Demographic and economic conditions in each. 

6. Consult the Small Institution Ratings Matrix and information in workpapers to assign a 

preliminary rating of: 

a. “Satisfactory” if the institution’s performance meets each of the standards for a 

satisfactory rating or if exceptionally strong performance with respect to some of 

the standards compensates for weak performance in others; 

b. "Needs to Improve" or "Substantial Noncompliance" if the institution's 

performance fails to meet the standards for "Satisfactory" performance. Whether 

a rating is "Needs to Improve" or "Substantial Noncompliance" will depend upon 

the degree to which the institution's performance has failed to meet the standards 

for a "Satisfactory" rating; or 

c. "Outstanding" if the institution meets the rating descriptions and standards for 

“Satisfactory” for each of the five core criteria, and materially exceeds the 

standards for “Satisfactory” in some or all of the criteria to the extent that an 

outstanding rating is warranted, or if the institution's performance with respect to 

the five core criteria generally exceeds “Satisfactory” and its performance in 

making qualified investments and providing branches and other services and 

delivery systems in the assessment area(s) supplement its performance under the 

five core criteria sufficiently to warrant an overall rating of “Outstanding”. 

7. For an institution with branches in more than one state or multi-state MSA, assign a 

preliminary rating to the institution as a whole taking into account the institution’s record 

in different states or multi-state MSAs by considering: 

a. The significance of the institution’s activities in each compared to the institution’s 

overall activities; 

b. The lending opportunities in each; 

c. The importance of the institution in providing loans to each, particularly in light 

of the number of other institutions and the extent of their activities in each; and 

d. Demographic and economic conditions in each. 

9 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

8. Review the results of the most recent compliance examination and determine whether 

evidence of discriminatory or other illegal credit practices that violate an applicable law, 

rule, or regulation should lower the institution’s overall CRA rating or, if applicable, its 

CRA rating in any state or multi-state MSA. (Footnote 4. “Evidence of discriminatory or other illegal credit practices” 

against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair 

Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the 

Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) 

Violations of the Truth in Lending Act regarding a consumer’s right of rescission.) If evidence of discrimination or other 

illegal credit practices in any geography by the institution, or in any assessment area by 

any affiliate whose loans have been considered as part of the institution’s lending 

performance, was found, consider: 

a. The nature, extent, and strength of the evidence of the practices; 

b. The policies and procedures that the institution (or affiliate, as applicable) has in 

place to prevent the practices; 

c. Any corrective action the institution (or affiliate, as applicable) has taken, or has 

committed to take, including voluntary corrective action resulting from selfassessment; and 

d. Any other relevant information. 

9. Assign a final rating for the institution as a whole and, if applicable, each state in which 

the institution has at least one branch and each multi-state MSA in which it has branches 

in two or more states, considering: 

a. The institution’s preliminary rating; and 

b. Any evidence of discriminatory or other illegal credit practices (see #8 above). 

10. Discuss conclusions with management. 

11. Write an evaluation of the institution’s performance for the examination report and the 

public evaluation. 

12. Prepare recommendations for a supervisory strategy and for matters that require attention 

or follow-up activities. 

10 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

Public File Checklist 

1. There is no need to review each branch or each complete public file during every 

examination. In determining the extent to which the institution’s public files should be 

reviewed, consider the institution’s record of compliance with the public file 

requirements in previous examinations, its branching structure and changes to it since its 

last examination, complaints about the institution’s compliance with the public file 

requirements, and any other relevant information. 

2. In any review of the public file undertaken, determine, as needed, whether branches 

display an accurate public notice in their lobbies, a complete public file is available in the 

institution’s main office and at least one branch in each state, and the public file available 

in the main office and in a branch in each state contains: 

a. All written comments from the public relating to the institution's CRA 

performance and responses to them for the current and preceding two calendar 

years (except those that reflect adversely on the good name or reputation of any 

persons other than the institution); 

b. The institution's most recent CRA Public Performance Evaluation; 

c. A map of each assessment area showing its boundaries and, on the map or in a 

separate list, the geographies contained within the assessment area; 

d. A list of the institution's branches, branches opened and closed during the current 

and each of the prior two calendar years, and their street addresses and 

geographies; 

e. The HMDA Disclosure Statement for the prior two calendar years, if applicable; 

f. The institution's loan-to-deposit ratio for each quarter of the prior calendar year; 

g. A quarterly report of the institution's efforts to improve its record if it received a 

less than satisfactory rating during its most recent CRA examination; and 

h. A list of services (loan and deposit products and transaction fees generally 

offered, and hours of operation at the institution’s branches), including a 

description of any material differences in the availability or cost of services 

among locations. 

3. In any branch review undertaken, determine whether the branch provides the most recent 

11 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

public evaluation and a list of services available at the branch or a description of material 

differences from the services generally available at the institution’s other branches. 

12 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

CRA RATINGS MATRIX - SMALL INSTITUTIONS 

CHARACTERISTIC column heading OUTSTANDING column heading SATISFACTORY column heading NEEDS TO IMPROVE column heading SUBSTANTIAL NONCOMPLIANCE column heading 

Loan-to-deposit ratio 

OUTSTANDING 

Loan-to-deposit ratio -

The loan-to-deposit ratio is more than 

reasonable (considering seasonal 

variations and taking into account 

lending related activities) given the 

institution’s size, financial condition, 

and assessment area credit needs. 

SATISFACTORY -

Loan-to-deposit ratio 

The loan-to-deposit ratio is 

reasonable (considering seasonal 

variations and taking into account 

lending related activities) given the 

institution’s size, financial 

condition, and assessment area 

credit needs. 

NEEDS TO IMPROVE -

Loan-to-deposit ratio 

The loan-to-deposit ratio is less than 

reasonable (considering seasonal 

variations and taking into account 

lending related activities) given the 

institution’s size, financial condition, 

and assessment area credit needs. 

SUBSTANTIAL NONCOMPLIANCE -

Loan-to-deposit ratio 

The loan-to-deposit ratio is unreasonable (considering 

seasonal variations and taking into account lending 

related activities) given the institution’s size, financial 

condition, and assessment area credit needs. Assessment area(s) 

concentration 

OUTSTANDING -

Assessment area(s) 

concentration 

A substantial majority of loans and 

other lending related activities are in the 

institution’s assessment area(s). 

SATISFACTORY -

Assessment area(s) 

concentration 

A majority of loans and other 

lending related activities are in the 

institution’s assessment area(s). 

NEEDS TO IMPROVE -Assessment area(s) 

concentration 

A majority of loans and other lending 

related activities are outside the 

institution’s assessment area(s). 

SUBSTANTIAL NONCOMPLIANCE -

Assessment area(s) 

concentration 

A substantial majority of loans and other lending 

related activities are outside the institution’s assessment 

area(s). 

Geographic distribution of 

loans 

OUTSTANDING 

The geographic distribution of loans 

reflects excellent dispersion throughout 

the assessment area(s). 

SATISFACTORY 

The geographic distribution of loans 

reflects reasonable dispersion 

throughout the assessment area(s). 

NEEDS TO IMPROVE 

The geographic distribution of loans 

reflects poor dispersion throughout 

the assessment area(s). 

SUBSTANTIAL NONCOMPLIANCE 

The geographic distribution of loans reflects very poor 

dispersion throughout the assessment area(s). 

Borrower’s profile 

OUTSTANDING -

Borrower’s profile 

The distribution of borrowers reflects, 

given the demographics of the 

assessment area(s), excellent 

penetration among individuals of 

different income levels (including lowand moderate-income) and businesses 

of different sizes. 

SATISFACTORY -

Borrower’s profile 

The distribution of borrowers 

reflects, given the demographics of 

the assessment area(s), reasonable 

penetration among individuals of 

different income levels (including 

low- and moderate-income) and 

businesses of different sizes. 

NEEDS TO IMPROVE -

Borrower’s profile 

The distribution of borrowers 

reflects, given the demographics of 

the assessment area(s), poor 

penetration among individuals of 

different income levels (including 

low- and moderate-income) and 

businesses of different sizes. 

SUBSTANTIAL NONCOMPLIANCE -

Borrower’s profile 

The distribution of borrowers reflects, given the 

demographics of the assessment area(s), very poor 

penetration among individuals of different income 

levels (including low- and moderate-income) and 

businesses of different sizes. 

Response to substantiated 

complaints 

OUTSTANDING -

Response to substantiated 

complaints 

The institution has taken noteworthy, 

creative action in response to 

substantiated complaints about its 

performance in meeting assessment area 

credit needs. 

SATISFACTORY -

Response to substantiated 

complaints 

The institution has taken appropriate 

action in response to substantiated 

complaints about its performance in 

meeting assessment area credit 

needs. 

NEEDS TO IMPROVE -

Response to substantiated 

complaints 

The institution has taken inadequate 

action in response to substantiated 

complaints about its performance in 

meeting assessment area credit needs. 

SUBSTANTIAL NONCOMPLIANCE -

Response to substantiated 

complaints 

The institution is unresponsive to substantiated 

complaints about its performance in meeting 

assessment area credit needs. Investments 

OUTSTANDING -

Investments 

The institution’s investment record 

enhances credit availability in its 

assessment area. 

SATISFACTORY -

Investments 

N/A 

NEEDS TO IMPROVE -

Investments 

N/A 

SUBSTANTIAL NONCOMPLIANCE -

Investments 

N/A 

Services 

OUTSTANDING -

Services 

The institution’s record of providing 

branches, ATMs, loan production 

offices, and/or other services and 

delivery systems enhances credit 

availability in its assessment area(s). 

SATISFACTORY -

Services 

N/A 

NEEDS TO IMPROVE -

Services 

N/A 

SUBSTANTIAL NONCOMPLIANCE -

Services 

N/A 

13 
Small Institution CRA Examination Procedures 

OCC, FRB, FDIC February 2006 

14