Which CRA Evaluation Option is NOT Open to ABC Bank?
Question
ABC National Bank, an independent bank with $120 million in total assets located in a large urban area, is in the process of determining its option for its CRA evaluation. Which of the following options is NOT open to ABC Bank?
Answers
Explanations
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A. B. C. D.C
The Community Reinvestment Act (CRA) is a federal law that encourages banks and other financial institutions to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods. Banks are evaluated periodically under the CRA to determine if they are meeting their obligations to these communities.
In this scenario, ABC National Bank is determining its options for its CRA evaluation. The bank's total assets are $120 million, which puts it in the "intermediate small bank" category. Under the CRA, banks in this category have three options for their evaluation:
A. The small bank performance standard: Banks that have less than $1.487 billion in assets and meet certain criteria can choose to be evaluated under the small bank performance standard. This option includes a streamlined evaluation process that focuses on lending, investment, and service activities in the bank's assessment area.
B. The lending, investment, and service tests: Banks that do not qualify for the small bank performance standard must be evaluated under the lending, investment, and service tests. These tests evaluate the bank's lending, investment, and service activities in its assessment area.
C. The community development test: Banks that have a significant level of community development activity can choose to be evaluated under the community development test. This option evaluates the bank's community development loans, investments, and services, as well as its responsiveness to community development needs.
D. The strategic plan option: Banks that have a strategic plan that outlines how they will meet the credit needs of their assessment area can choose to be evaluated under the strategic plan option. This option allows banks to propose their own performance standards and metrics and requires the bank to regularly report on its progress.
Given these options, the answer to the question is D. The strategic plan option is not open to ABC Bank because this option is only available to banks that have assets of $1.487 billion or more. As an intermediate small bank with $120 million in assets, ABC Bank is not eligible for this option. Therefore, it must choose between the small bank performance standard, the lending, investment, and service tests, or the community development test for its CRA evaluation.
