PUBLIC DISCLOSURE COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION

Transcription

1 PUBLIC DISCLOSURE February 25, 2008 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Patriot Bank RSSD# Highway 51 North Millington, Tennessee Federal Reserve Bank of St. Louis P.O. Box 442 St. Louis, Missouri NOTE: This document is an evaluation of this institution s record of meeting the credit needs of its entire community, including low- and moderateincome neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of the institution. The rating assigned to this institution does not represent an analysis, conclusion, or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.

2 TABLE OF CONTENTS Institution s CRA Rating Scope of Examination..1 Description of Institution Description of Assessment Area.. 3 Conclusions with Respect to Performance Criteria.5 Appendix A: List of Census Tracts in Assessment Area...14 Appendix B: Glossary...16 Table of Contents

3 INSTITUTION S CRA RATING: This institution is rated SATISFACTORY. Overall, Patriot Bank meets the criteria for a satisfactory rating based upon an evaluation of the bank s overall lending performance. Analysis of the bank s lending activity revealed a reasonable geographic distribution of loans throughout the bank s assessment area. Borrower distribution analysis indicated adequate penetration among individuals of various income levels, including low- and moderate-income (LMI) levels, and among businesses of different sizes. The bank s loan-to-deposit (LTD) ratio is good given the bank s size, financial condition, and the credit needs of the assessment area. Lastly, a majority of the bank's loans and other lendingrelated activities are inside the bank's designated assessment area. SCOPE OF EXAMINATION The bank s Community Reinvestment Act (CRA) performance was evaluated using small bank examination procedures. The evaluation period was from the date of the bank s previous CRA evaluation on February 2, 2004 to February 25, Lending performance was evaluated using loans originated in 2006 and 2007, using residential real estate loans reported under the Home Mortgage Disclosure Act (HMDA) for 2006, and samples of secured motor vehicles and small business loans originated in These loan products were selected as they are representative of the bank s overall lending performance. The small bank performance standards consist of an analysis of the geographic distribution of loans, the distribution of lending by borrower income and business revenue, lending volume, the level of lending within the assessment area, and a review of any CRA-related complaints concerning the bank, all within the context of the bank s self-identified assessment area One community contact was completed as part of the examination, with input provided by two community contacts from recent examinations also being used. The information was obtained in order to help assess the local communities credit needs and how the financial institutions are helping meet these needs. DESCRIPTION OF INSTITUTION 1 Patriot Bank is a full-service, retail bank offering consumer and commercial loan and deposit products. The bank s branch network consists of six branches including the main office, located in Millington, Tennessee. The other branches are located in Barretville, Collierville, Covington, South Covington, and Atoka, Tennessee. Each of the branches except for Covington has driveup accessibility. The bank operates an automated teller machine (ATM) at each branch facility. In addition, the bank operates one stand-alone ATM in Shelby County and three stand-alone ATMs in Tipton County. Except for the main office in Millington, all of the ATMs are cashdispensing only. Four of the branches have been opened since the last examination in February, No branch offices or ATMs have been closed since the bank began operations in October 1 Any percentage row or column TOTAL figure displayed throughout this evaluation that does not equal exactly 100 percent is strictly due to rounding differences, which are considered immaterial to overall performance conclusions. 1

4 2002. The bank also operates loan production offices in Millington, Collierville and Atoka, Tennessee. The bank is majority owned (44.0 percent) by Security Bancorp of Tennessee, a six-bank holding company headquartered in Halls, Tennessee. The other five banks owned by the holding company are also located in Tennessee. Patriot Bank does not have any subsidiaries or other affiliated entities besides these sister banks. The bank has the ability to meet the credit needs of its assessment area based on the bank s asset size, financial condition, and other resources. As of December 31, 2007, the bank reported total assets of $169.3 million. As of the same date, gross loans and leases were $143.4 million (84.7 percent of total assets) and deposits totaled $148.2 million. The bank s loan portfolio composition by credit category is displayed in the following table. 2 Distribution of Total Loans Credit Product Type Amount in $000s Percentage of Total Loans Construction and Development $ 36, % Commercial Real Estate $ 23, % Multifamily Residential $ % 1-4 Family Residential - Revolving $ 11, % 1-4 Family Residential - Other $ 37, % Farmland $ 2, % Agricultural $ 1, % Commercial and Industrial $ 23, % Loans to Individuals $ 5, % Total Other Loans $ 1, % TOTAL Gross Loans $ 143, % As indicated in the table above, a significant portion of the bank s lending resources is directed to loans secured by1-4 family residential properties and loans for construction and development. 2 For purposes of this table, total loan information is derived from gross loans and leases data reported on the Consolidated Report of Condition and Income as of December 31,

5 As part of this evaluation under the CRA, the bank s performance was evaluated in relation to the performance of local competitors. Four financial institutions were identified as similarly situated peers, with asset sizes as of December 31, 2007, ranging from $123.5 million to $212.2 million. The bank received a satisfactory rating at its previous CRA evaluation conducted on February 4, 2004 by this Reserve Bank. The small bank examination procedures were also used during that examination. 3

6 DESCRIPTION OF ASSESSMENT AREA 3 The bank s assessment area is comprised of 38 census tracts contained in Shelby, Tipton, and Fayette counties: 19 (of a total of 216) census tracts in Shelby County, all 12 census tracts of Tipton County and all 7 census tracts of Tipton County. All three counties are part of the Memphis, Tennessee-Mississippi-Arkansas Metropolitan Statistical Area #32820 (Memphis MSA), which is located in the southwest corner of the state of Tennessee. (See Appendix A for additional details regarding the composition of the individual census tracts in the bank s assessment area.) The assessment area in Shelby County involves the urban census tracts on the fringe of the city of Memphis but does not include the downtown area. The census tracts in Tipton and Fayette County are suburban areas. The following table reflects the number and the population of the assessment area census tracts for each income category. 4 Assessment Area Geographical Information by Income Category 2000 Census Data Low- Moderate- Middle- Upper- TOTAL Assessment Area Census Tracts 0.0% 5.3% 63.2% 31.6% 100% Family Population 0 1,964 28,081 14,019 44, % 4.5% 63.7% 31.8% 100% The table above reveals that the assessment area contains no low-income census tracts. The largest portion of the bank s assessment area family population (63.7 percent) resides in middleincome census tracts. Of the two geographies designated as moderate-income, one is located within Shelby County, and the other is located in Tipton County. Based upon 2000 census data, the median family income for the assessment area was $55,115, while the median family income for the Memphis MSA was $46,771. Currently, the Department of Housing and Urban Development (HUD) estimates the 2007 Memphis MSA median family income to be $53,200, an estimated increase of 13.7 percent for the Memphis MSA. The following table displays population percentages of assessment area families by income level, as compared to the Memphis MSA family population as a whole. 3 Statistical/demographic information cited in this evaluation, unless otherwise stated, is taken from 2000 United States Census Bureau Data. 4 See the glossary in Appendix B for definitions of low-, moderate-, middle-, and upper income categories. 4

7 Assessment Area Family Population by Income Level 2000 Census Data Low- Moderate- Middle- Upper- TOTAL Assessment Area 7,049 6,178 9,050 21,787 44, % 14.0% 20.5% 49.4% 100% Memphis, TN-MS-AR 71,723 52,175 62, , ,589 MSA # % 16.6% 19.7% 40.9% 100% As indicated in the previous table, the assessment area is slightly more affluent than the Memphis MSA as a whole. The assessment area has lower percentages of LMI families and higher percentages of upper-income families as compared to the Memphis MSA. In addition, while the first table in this section indicates that the majority (63.7 percent) of the assessment area families reside in middle-income geographies, the table above reveals that a significant portion of assessment area families (30.0 percent) is considered LMI, regardless of the income category of the census tract in which they live. As indicated by median gross rent amount and by comparable affordability ratios, 5 housing affordability in the assessment area is very similar to that of the Memphis MSA. The 2000 median gross rent for the assessment area was $501 per month compared to $558 for the MSA. The assessment area affordability ratio as of 2000 was 40 percent compared to the MSA figure of 44 percent. Therefore, even though earlier income figures indicated the assessment area appears to be slightly more affluent than the Memphis MSA as a whole, housing costs are slightly higher in the assessment area, with rental housing, however, being relatively more affordable. The assessment area economy is diverse and is supported by a mixture of industries including the United States Government (military), technology, manufacturing, retail trade, and serviceoriented industries. Major employers in the assessment area include the United States Navy, Ingram Micro, Wal-Mart, Unilever, Quebecor World USA Inc., and Alpha Chemical. However, despite a seemingly strong employment base, assessment area employment levels have lagged, relative to regional unemployment data. As of December 2007, the Memphis MSA unemployment rate was 5.5 percent; with the unemployment rates for the counties in the bank s assessment area being 7.9 percent for Fayette County, 5.7 percent for Tipton County, and 5.3 percent for Shelby County. 6 One community contact interview was completed during this examination as part of this CRA evaluation process. The individual interviewed represented an economic development entity in Tipton County. Additionally, two community contacts completed during recent examinations in the Memphis MSA were reviewed to assist in obtaining an understanding of the assessment area. One of these contacts represented a community development group in Memphis, Tennessee. The 5 This figure is calculated by dividing the median household income by the median housing value; it represents the amount of single family, owner-occupied housing that a dollar of income can purchase for the median household in the geography. Values closer to 100 percent indicate greater affordability. 6 The unemployment rates for each county are not seasonally adjusted. 5

8 other contact was with an individual serving Fayette County as part of a university extension service. Each of the contacts categorized the assessment area economy as stable. Tipton County and Fayette County were noted to be more rural than Shelby County. The information obtained from the contacts in Tipton and Fayette County indicated that the level of opportunity for banks to participate in community development, outside of core banking services, is minimal. Many of the opportunities mentioned for community development in Shelby County were primarily in the downtown Memphis area, which is not included in the bank s assessment area. All of the contacts provided pertinent information regarding the credit needs of the assessment area s residents and businesses. These comments were useful in determining the context in which to evaluate the bank s performance for this assessment area.. CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA Patriot Bank meets the criteria for a satisfactory rating, based upon its lending performance as measured by the CRA small bank performance standards. As stated earlier, the bank s lending performance was based upon residential real estate loan information from 2006 HMDA data 6 and secured consumer motor vehicle loans and small business loans originated in These loan categories are considered the bank s primary lines of business, based upon lending volume by number and dollar amount. The CRA small bank performance standards evaluate the following five criteria as applicable: The geographic distribution of loans in the bank s assessment area. The distribution of loans by borrower income and business revenue. The bank s average LTD ratio. The bank s level of lending within the assessment area. A review of written CRA-related complaints. The remaining sections of this evaluation are based upon analyses of the bank s lending performance under these five performance criteria. GEOGRAPHIC DISTRIBUTION As noted in the description of the bank s assessment area, the bank s assessment area contains no low-income census tracts, 2 moderate-income census tracts, 24 middle-income census tracts, and 12 upper-income census tracts. The analysis in this section illustrates the distribution of the bank s loan activity across these geographies. 6 The HMDA loan category includes loans for the purpose of home purchase, refinancing, and home improvement. 7 Under CRA, a small business is considered to be one in which gross annual revenues for the preceding calendar year were $1 million or less. 6

9 The following table displays the geographic distribution of the bank s 2006 HMDA data, in comparison to owner-occupied housing statistics for the different income categories in the assessment area. Distribution of Loans (Number and Dollar Volume in $000s) Inside Assessment Area by Income Level of Geography Loan Type Geography Income Classification Low- Moderate- Middle- Upper- TOTAL % 6.0% 60.8% 33.2% 100% 2006 HMDA $ - $ 3,459 $ 53,313 $ 36,635 $ 93,407 Owner Occupied Housing 0.0% 3.7% 57.1% 39.2% 100% 0.0% 3.5% 62.9% 33.6% 100% The analysis of HMDA data reflects reasonable performance under the CRA. The previous table shows that by the number of loans, the bank originated 6.0 percent of its 2006 HMDA reportable loans to individuals residing in moderate-income geographies. This percentage is greater than the 3.5 percent of owner-occupied housing units located in LMI geographies and used for comparison. The bank s lending in LMI areas is favorable compared to 2006 HMDA aggregate data, 8 which indicates that other lenders in the area made only 2.3 percent of their 2006 HMDA loans in LMI geographies. Consequently, the bank s geographic distribution of HMDA loans in the assessment area is slightly higher than that of their competitors in this market area. As with the bank s HMDA loan activity, the bank s geographic distribution of secured motor vehicle loans was also analyzed. The following table illustrates the geographic distribution of the bank s loan activity for this product, in comparison to household population percentages for the different income categories in the assessment area. 8 HMDA Aggregate Data represent all lending activity collected and reported under the HMDA for this assessment area, based upon all financial institutions required to report such data (less the subject bank if applicable). 7

10 Distribution of Loans (Number and Dollar Volume in $000s) Inside Assessment Area by Income Level of Geography Loan Type Geography Income Classification Low- Moderate- Middle- Upper- TOTAL % 8.9% 76.8% 14.3% 100% 2007 Motor Vehicle $ - $ 39 $ 415 $ 78 $ % 7.3% 78.0% 14.7% 100% Household Population 0.0% 5.5% 65.2% 29.4% 100% As displayed in the table above, the bank s motor vehicle lending to LMI borrowers is good. Of the 56 automobile loans reviewed for this analysis, 8.9 percent were made to LMI borrowers. In comparison, LMI households account for 5.5 percent of the assessment area population. Consequently, the geographic distribution of this loan product meets the standard for a favorable rating. Similar to the geographic distribution analysis conducted for HMDA and motor vehicle loans, the bank s geographic distribution of small business loans was also reviewed. The following table reflects the results of that analysis, along with estimated percentages of business institutions located in each income category used for comparison. 9 Distribution of Loans (Number and Dollar Volume in $000s) Inside Assessment Area by Income Level of Geography Geography Income Classification Loan Type TOTAL Low- Moderate- Middle- Upper Small Business Business Institutions % 10.0% 66.7% 23.3% 100% $ - $ 414 $ 2,946 $ 2,961 $ 6, % 6.5% 46.6% 46.8% 100% 0.0% 12.1% 51.6% 36.3% 100% Analysis of business lending activity revealed adequate lending performance by the bank, commensurate with figures used for comparison purposes. As displayed in the previous table, by number, 10.0 percent of business loans were made to businesses located in moderate-income geographies. This LMI lending level is in line with business geodemographic data, which estimate that 12.1 percent of assessment area businesses are located inside moderate-income geographies. Further, the bank s lending performance appears favorable in light of market 9 These statistics are derived from Business Geodemographic Data for the assessment area, as reported by Dun & Bradstreet for the year

11 performance for the assessment area. Year 2006 CRA Aggregate Data 10 indicate that of all small business loans made by other lenders within the assessment area, only 9.4 percent of the loans were located in LMI geographies. Lastly, under this performance criterion, the bank s loan activity penetration throughout the assessment area was good. As indicated by loan data reviewed, the bank had loan activity within all 38 census tracts in the assessment area, including both moderate-income census tracts. In summary, the bank s overall geographic distribution of loans meets the standard for satisfactory performance under this evaluation criterion. LENDING TO BORROWERS OF DIFFERENT INCOME LEVELS AND TO BUSINESSES OF DIFFERENT SIZES In addition to the bank s geographic distribution of lending activity, the small bank performance standards also evaluate the bank s lending to borrowers of various income levels and to businesses of varying revenue sizes. Special emphasis is placed on loans originated to LMI individuals and to small businesses. Borrowers are classified into low-, moderate-, middle- or upper income categories by comparing the borrowers income to HUD s 2007 estimated family income of $53,200 for the Memphis MSA. Businesses are classified according to those having gross annual revenues of $1 million or less and those with revenues greater than $1 million. The table on the following page displays the distribution of 2006 HMDA loans by income level of the borrower, in relation to the percentages of families categorized by income category. Distribution of Loans (Number and Dollar Volume in $000s) Inside Assessment Area by Income Level of Borrower Borrower Income Classification Loan Type TOTAL Low- Moderate- Middle- Upper- Unknown % 15.2% 22.9% 51.6% 3.2% 100% 2006 HMDA $ 2,923 $ 9,760 $ 18,047 $ 59,556 $ 3,121 $ 93, % 10.4% 19.3% 63.8% 3.3% 100% Family Population 16.0% 14.0% 20.5% 49.4% 0.0% 100% The bank extended 22.4 percent of its 2006 HMDA loans to LMI borrowers. This percentage is lower than the LMI population in the assessment area, which is 30.0 percent. However, when compared to 2006 HMDA aggregate data, which indicate only 13.9 percent of all HMDA loans were made to LMI applicants, the bank s performance appears more favorable. Overall, this level of performance, while low, is still considered to be adequate. 10 CRA Aggregate Data represent all lending activity collected and reported under the CRA for this assessment area, based upon all financial institutions required to report such data (less the subject bank if applicable). 9

12 As with the bank s HMDA loan activity, the bank s borrower distribution of motor vehicle loans was also analyzed, as is displayed by borrower income category in the following table. Distribution of Loans (Number and Dollar Volume) Inside Assessment Area by Income Level of Borrower Loan Type 2007 Motor Vehicle Household Population Borrower Income Classification Low- Moderate- Middle- Upper- TOTAL % 26.8% 25.0% 30.4% 100% $ 59 $ 116 $ 116 $ 241 $ % 21.8% 21.8% 45.3% 100% 18.2% 13.1% 16.7% 52.0% 100% As displayed in the table above, the bank s motor vehicle lending to LMI borrowers appears good. Of the 56 automobile loans reviewed for this analysis, 44.7 percent were made to LMI borrowers. In comparison, LMI households account for 32.9 percent of the assessment area population. Consequently, the borrower distribution of this loan product meets the standard for satisfactory performance. As with the borrower distribution analysis conducted for HMDA loans and secured motor vehicle loans, the bank s distribution of loans to businesses of various sizes was also reviewed. The following table reflects the bank s distribution of business loans by gross annual revenue and loan amount. Gross Revenue Lending Distribution by Business Revenue Level Loan Origination Amount (in $000s) <$100 >$100<$250 >$250<$1,000 TOTAL $1 Million or Less 61.7% 16.7% 3.3% 81.7% Greater Than $ Million 1.7% 11.7% 5.0% 18.3% TOTAL % 28.3% 8.3% 100% Based on this analysis of business loans, the bank s performance in this area is considered favorable and meets the credit needs of small businesses. Dun & Bradstreet geodemographic 10

13 data for 2007 indicate that 89.8 percent of business institutions inside the assessment area are small businesses. The above table demonstrates that 49 of 60 business loans reviewed (81.7 percent) were made to businesses with gross annual revenues of $1 million or less. The bank s level of business lending (81.7 percent) substantially exceeds the 2006 CRA aggregate data percentages, which shows that for all CRA reporters, only 37.2 percent of their loans were made to small businesses. In addition, 63.3 percent of the bank s business loans were extended to small businesses in amounts of $100,000 or less. This activity further indicates the bank s willingness to meet the credit needs of small businesses. Overall, based on the distribution of the bank s HMDA loans, motor vehicle secured loans, and small business loans, the bank meets the standard for satisfactory performance under the borrower distribution criterion. 11

14 LOAN-TO-DEPOSIT (LTD) RATIO One indication of the bank s overall level of lending activity is its LTD ratio. The following table 11 displays the bank s average LTD ratio 12 in comparison to the LTD ratio of four regional competitors for the same period of time. Loan-to-Deposit Ratio Analysis Name Asset Size Headquarters Average LTD Ratio Patriot Bank $ 169,305 Millington, Tennessee 94.5% Regional Bank Competitors $ 128,535 Cordova, Tennessee 91.8% $ 212,163 Moscow, Tennessee 101.1% $ 191,650 Somerville, Tennessee 70.0% $ 123,520 Memphis, Tennessee 63.1% Based upon data displayed in the previous table, the bank s level of lending indicates good responsiveness to assessment area credit needs. For the last sixteen quarters, the bank s LTD ratio ranged from a low of 78.2 percent to a high of percent. In comparison, the bank s performance is greater than all but one of the bank s regional competitors, which had average LTD ratios from 63.1 percent to percent. Therefore, in light of data from local competitors as displayed in the table above, the bank s average LTD ratio meets the standards for satisfactory performance under this criterion. LENDING IN THE ASSESSMENT AREA For the loan activity reviewed as part of this evaluation, the following table displays the number and dollar volume of loans originated inside the bank s assessment area. 11 Asset size figures in this table represent total assets as of December 31, 2007 (in $000s). 12 The average LTD ratio represents a 16-quarter average, starting with the first quarter of

15 Lending Inside and Outside of Assessment Area Loan Type 2006 HMDA 2007 Motor Vehicle 2007 Small Business TOTAL Inside Assessment Area Outside Assessment Area TOTAL % 33.4% 100% $ 93,407 $ 36,168 $ 129, % 27.9% 100% % 15.2% 100% $ 532 $ 106 $ % 16.6% 100% % 14.3% 100% $ 6,321 $ 2,243 $ 8, % 26.2% 100% , % 30.9% 100% $ 100,260 $ 38,517 $ 138, % 27.8% 100% The previous table demonstrates that a majority of loans were extended to borrowers residing inside the bank s assessment area, for all loan categories reviewed. In total, the bank made 69.1 percent by number and 72.2 percent by dollar volume of its total loans within the assessment area. Therefore, the bank s lending practices under this performance criterion meet the standard for satisfactory performance. REVIEW OF COMPLAINTS No CRA related complaints were received for this institution during the time frame used for this evaluation (February 2, 2004 to February 25, 2008). ADDITIONAL INFORMATION During the Consumer Affairs Examination conducted concurrently with this CRA evaluation, a fair lending analysis was performed to assess the bank s compliance under Regulation B (Equal Credit Opportunity) and the Fair Housing Act. The analysis concluded that the bank is in compliance with the substantive provisions of the antidiscrimination laws and regulations for the products and services reviewed. 13

16 Appendix A County List of Census Tracts in Patriot Bank s Assessment Area Census Tract Census Tract MSA Number Income Category Contains Bank Office Shelby Moderate No Tipton Moderate Yes 13 Fayette Middle No Fayette Middle No Fayette Middle No Fayette Middle No Fayette Middle No Fayette Middle No Fayette Middle No Shelby Middle No Shelby Middle No Shelby Middle No Shelby Middle No Shelby Middle Yes Shelby Middle No Shelby Middle No Tipton Middle No Tipton Middle No Tipton Middle Yes Tipton Middle No Tipton Middle No Tipton Middle No Tipton Middle No Tipton Middle No Tipton Middle No Tipton Middle No Shelby Upper Yes Shelby Upper No Shelby Upper No Shelby Upper No Shelby Upper No Shelby Upper No Shelby Upper No Shelby Upper No 13 This census tract contains two branch offices with cash-only ATMs. 14

17 Appendix A County Census Tract Number Census Tract Income Category MSA Contains Bank Office Shelby Upper Yes Shelby Upper No Shelby Upper No Tipton Upper No 15

18 Appendix B GLOSSARY Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Census tract: A small subdivision of metropolitan and other densely populated counties. Census tract boundaries do not cross county lines; however, they may cross the boundaries of metropolitan statistical areas. Census tracts usually have between 2,500 and 8,000 persons, and their physical size varies widely depending upon population density. Census tracts are designed to be homogeneous with respect to population characteristics, economic status, and living conditions to allow for statistical comparisons. Community development: All Agencies have adopted the following language. Affordable housing (including multifamily rental housing) for low- or moderate-income individuals; community services targeted to low- or moderate-income individuals; activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration s Development Company or Small Business Investment Company programs (13 CFR ) or have gross annual revenues of $1 million or less; or, activities that revitalize or stabilize low- or moderate-income geographies. Effective September 1, 2005, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have adopted the following additional language as part of the revitalize or stabilize definition of community development. Activities that revitalize or stabilize- (i) Low-or moderate-income geographies; (ii) Designated disaster areas; or (ii) Distressed or underserved non-metropolitan middle-income geographies designated by the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on- a. Rates of poverty, unemployment, and population loss; or b. Population size, density, and dispersion. Activities that revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of LMI individuals. Consumer loan(s): A loan(s) to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. This definition includes the following categories: motor vehicle loans, credit card loans, home equity loans, other secured consumer loans, and other unsecured consumer loans. Family: Includes a householder and one or more other persons living in the same household who are related to the householder by birth, marriage, or adoption. The number of family households 16

19 Appendix B always equals the number of families; however, a family household may also include nonrelatives living with the family. Families are classified by type as either a married-couple family or other family, which is further classified into male householder (a family with a male householder and no wife present) or female householder (a family with a female householder and no husband present). Full-scope review: Performance under the Lending, Investment, and Service Tests is analyzed considering performance context, quantitative factors (for example, geographic distribution, borrower distribution, and total number and dollar amount of investments), and qualitative factors (for example, innovativeness, complexity, and responsiveness). Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census. Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders that do business or have banking offices in a metropolitan statistical area to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and the income of applicants, the amount of loan requested, and the disposition of the application (for example, approved, denied, and withdrawn). Home mortgage loans: Includes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes and refinancing of home improvement and home purchase loans. Household: Includes all persons occupying a housing unit. Persons not living in households are classified as living in group quarters. In 100 percent tabulations, the count of households always equals the count of occupied housing units. Limited-scope review: Performance under the Lending, Investment, and Service Tests is analyzed using only quantitative factors (for example, geographic distribution, borrower distribution, total number and dollar amount of investments and branch distribution). Low-income: Individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography. Market share: The number of loans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Metropolitan area (MA): A metropolitan statistical area (MSA) or a metropolitan division (MD) as defined by the Office of Management and Budget. A MSA is a core area containing at least one urbanized area of 50,000 or more inhabitants, together with adjacent communities having a high degree of economic and social integration with that core. A MD is a division of a MSA based on specific criteria including commuting patterns. Only a MSA that has a population of at least 2.5 million may be divided into MDs. 17

20 Appendix B Middle-income: Individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 percent and less than 120 percent, in the case of a geography. Moderate-income: Individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 percent and less than 80 percent, in the case of a geography. Multifamily: Refers to a residential structure that contains five or more units. Other products: Includes any unreported optional category of loans for which the institution collects and maintains data for consideration during a CRA examination. Examples of such activity include consumer loans and other loan data an institution may provide concerning its lending performance. Owner-occupied units: Includes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged. Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share, or grant that has as its primary purpose community development. Rated area: A rated area is a state or multi-state metropolitan area. For an institution with domestic branches in only one state, the institution s CRA rating would be the state rating. If an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. If an institution maintains domestic branches in two or more states within a multi-state metropolitan area, the institution will receive a rating for the multi-state metropolitan area. Small loan(s) to business (es): A loan included in 'loans to small businesses' as defined in the Consolidated Report of Condition and Income (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are secured either by nonfarm or nonresidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as "small business loans" if the loans are reported on the TFR as non-mortgage, commercial loans. Small loan(s) to farm(s): A loan included in loans to small farms as defined in the instructions for preparation of the Consolidated Report of Condition and Income (Call Report). These loans have original amounts of $500,000 or less and are either secured by farmland, or are classified as loans to finance agricultural production and other loans to farmers. Upper-income: Individual income that is 120 percent or more of the area median income, or a median family income that is 120 percent or more, in the case of a geography. 18