PUBLIC DISCLOSURE August 5, 2013 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Pacific Enterprise Bank RSSD # 3490871 17748 Sky Park Circle, Suite 100 Irvine, California 92614 Federal Reserve Bank of San Francisco 101 Market Street San Francisco, California 94105 NOTE: This document is an evaluation of this institution s record of meeting the credit needs of its entire community, including low and moderate income neighborhoods, consistent with the safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this 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.
TABLE OF CONTENTS INSTITUTION RATING... 1 Institution s Community Reinvestment Act (CRA) Rating... 1 INSTITUTION... 2 Description of Institution... 2 Description of Assessment Area... 3 Scope of Examination... 8 CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA... 9 Loan to Deposit Ratio... 9 Lending in Assessment Area... 9 Lending Distribution by Geography... 9 Lending Distribution by Business Revenue... 10 Response to Complaints... 11 Fair Lending or Other Illegal Practices Review... 11 GLOSSARY OF TERMS... 12 i
INSTITUTION RATING Institution s Community Reinvestment Act (CRA) Rating PACIFIC ENTERPRISE BANK is rated OUTSTANDING The major factors supporting the institution s rating include: Reasonable loan to deposit ratio; Majority of loans originated in the bank s assessment areas; Excellent geographic distribution of small business loans, with strong penetration in moderateincome census tracts; and Excellent distribution of small business loans by revenue size, including smaller dollar loans to small businesses with gross annual revenues of $1 million or less. 1
INSTITUTION Description of Institution Pacific Enterprise Bank (PEB) is headquartered in Irvine, California, with reported total assets of $316.7 million as of June 30, 2013. PEB commenced operations on April 30, 2007, and is wholly owned by Pacific Enterprise Bancorp. PEB operates one branch in the city of Irvine, California. PEB is a full service bank primarily specializing in lending to small and medium sized businesses. Commercial loan products include term loans, lines of credit, commercial real estate, and construction loans as well as federal and state government sponsored loans such as the Small Business Administration (SBA) 504 and 7(a) loans, and the California Capital Access Program for Small Businesses (CalCAP) 1 truck loans, term loans, and bridge loans. PEB has been a leading small business lender with regard to the foregoing government sponsored programs, and was ranked first 2 and third 3, respectively, in the state of California based upon CalCAP and SBA lending measures. PEB s participation in these programs equated to 72.1 percent of total loans as of June 30, 2013, with CalCAP and SBA loans representing 23.8 percent and 48.3 percent, respectively. PEB s consumer products, primarily offered on an accommodation basis to existing business clients, include real estate and installment loans as well as checking, savings, certificates of deposit, and money market and individual retirement accounts. Exhibit 1 below shows the bank s loan portfolio and commercial lending focus as stated in the June 30, 2013 Consolidated Reports of Condition and Income. EXHIBIT 1 LOANS AND LEASES AS OF JUNE 30, 2013 Loan Type $ ( 000s) % Commercial/Industrial & Non Farm Non Residential Real Estate 195,541 88.2 Secured by 1 4 Family Residential Real Estate 21,401 9.7 Construction & Land Development 4,622 2.1 Consumer Loans & Credit Cards 96 0.0 Total (Gross) 221,660 100.0 1 CalCAP is a California state sponsored program that encourages financial institutions to make loans to small businesses that fall outside of conventional underwriting standards. The program provides a form of loan portfolio insurance, which can give lenders up to 100 percent coverage on certain loan defaults, available at http://www.treasurer.ca.gov/cpcfa/calcap, (accessed July 25, 2013). 2 California Capital Access Program s Small Business Lender Contact Listing, available at: http://www.treasurer.ca.gov/cpcfa/calcap/sb/institutions.pdf, (accessed July 25, 2013). 3 U.S. Small Business Administration s Small Business Lending in California in 2012 report, available at: http://www.sba.gov/advocacy/7540/719311. 2
During the review period of July 1, 2011 to June 30, 2013, PEB did not face any legal or financial impediments preventing it from helping to meet the credit needs of its assessment area consistent with its business strategy, size, financial capacity, and local economic conditions. The prior CRA examination, conducted as of May 26, 2009, resulted in a satisfactory rating and was conducted by the Federal Reserve Bank of San Francisco using the Interagency Small Institution CRA Examination Procedures. Description of Assessment Area PEB s assessment area expanded from Orange County at the previous examination to include Los Angeles County. On a combined basis, the two counties compose the Los Angeles Long Beach Santa Ana Metropolitan Statistical Area (MSA) and the assessment area is defined as follows: Los Angeles County, which consists of Los Angeles County in its entirety and is also known as the Los Angeles Long Beach Glendale Metropolitan Division (MD); and Orange County, which consists of Orange County in its entirety and is also known as the Santa Ana Anaheim Irvine MD. With only one branch, PEB has a limited presence in a market with significant competition for deposit and loan products. As of June 30, 2012, PEB accounted for less than one percent of the share of deposits in this market, in which 155 FDIC insured institutions operated 2,481 offices with total deposits of over $343 billion. 4 In 2012, the market was also highly competitive for small business lending with 188 lenders reporting small business loans pursuant to the reporting requirements of the CRA. Exhibit 2 on the next page presents key demographic and business information used to help develop the performance context for the assessment area, based on 2000 U.S. Census and 2011 Dun & Bradstreet data. Exhibit 3 provides information from the 2010 U.S. Census and 2012 Dun & Bradstreet data. 4 Federal Deposit Insurance Corporation, Institution Directory, Summary of Deposits, June 30, 2012 (accessed July 26, 2013); available from http://www2.fdic/sod/index.asp. 3
Income Categories Tract Distribution EXHIBIT 2 ASSESSMENT AREA DEMOGRAPHICS LOS ANGELES ORANGE ASSESSMENT AREA 2000 CENSUS DATA Families by Tract Income Families < Poverty Level as % of Families by Tract Families by Family Income # % # % # % # % Low income 200 7.6 177,139 6.3 66,903 37.8 653,549 23.1 Moderate income 736 28.0 771,693 27.3 166,193 21.5 476,112 16.8 Middle income 766 29.1 870,585 30.8 86,855 10.0 514,488 18.2 Upper income 912 34.7 1,008,806 35.7 38,169 3.8 1,184,074 41.9 Tract not reported 17 0.6 0 0 0 0 0 0 Total AA 2,631 100.0 2,828,223 100.0 358,120 12.7 2,828,223 100.0 Income Categories Total Businesses by Tract Less Than or Equal to $1 Million Businesses by Tract & Revenue Size Greater than $1 Million Revenue Not Reported # % # % # % # % Low income 48,194 6.1 41,927 5.9 4,107 7.8 2,160 7.8 Moderate income 172,313 21.8 151,748 21.4 13,604 25.9 6,961 25 Middle income 230,947 29.2 206,738 29.1 15,740 29.9 8,469 30.5 Upper income 333,599 42.2 305,513 43 18,197 34.6 9,889 35.6 Tract not reported 5,726 0.7 4,456 0.6 952 1.8 318 1.1 Total AA 790,779 100.0 710,382 100.0 52,600 100.0 27,797 100.0 Percentage of Total Businesses 89.8 6.7 3.5 2004 Median Family Income Los Angeles County Orange County 2011 HUD Adjusted Median Family Income Los Angeles County Orange County $46,509 $64,321 $64,000 $84,200 2011 Median Housing Value 5 Los Angeles County Orange County 2011 Unemployment Rate 6 Los Angeles County Orange County $306,950 $484,630 12.3% 8.8% 5 California Association of Realtors, Historical Housing Data, available at: http://www.car.org/marketdata/data/housingdata/(accessed July 25, 2013). 6 U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics by County; available at: http://www.bls.gov/lau/, (accessed July 25, 2013). 4
Income Categories Tract Distribution EXHIBIT 3 ASSESSMENT AREA DEMOGRAPHICS LOS ANGELES ORANGE ASSESSMENT AREA 2010 CENSUS DATA Families by Tract Income Families < Poverty Level as % of Families by Tract Families by Family Income # % # % # % # % Low income 245 8.4 193,207 6.7 65,411 33.9 675,997 23.6 Moderate income 825 28.2 785,939 27.4 146,904 18.7 477,723 16.6 Middle income 819 28.0 830,882 29.0 71,840 8.6 519,167 18.1 Upper income 999 34.1 1,059,442 36.9 39,314 3.7 1,196,673 41.7 Tract not reported 41 1.4 90 0 0 0 0 0 Total AA 2,929 100.0 2,869,560 100.0 323,469 11.3 2,869,560 100.0 Income Categories Total Businesses by Tract Less Than or Equal to $1 Million Businesses by Tract & Revenue Size Greater than $1 Million Revenue Not Reported # % # % # % # % Low income 48,880 6.4 42,424 6.1 4,290 8.4 2,166 8.0 Moderate income 166,398 21.6 147,835 21.4 11,850 23.3 6,713 24.9 Middle income 214,257 27.9 191,146 27.7 15,268 30.0 7,843 29.1 Upper income 331,068 43.0 303,428 43.9 17,860 35.0 9,780 36.3 Tract not reported 8,524 1.1 6,391 0.9 1,691 3.3 442 1.6 Total AA 769,127 100.0 691,224 100.0 50,959 100.0 26,944 100.0 Percentage of Total Businesses 89.9 6.6 3.5 2010 Median Family Income Los Angeles County Orange County 2012 FFIEC Adjusted Median Family Income Los Angeles County Orange County Economic Conditions $61,622 $83,735 $64,800 $85,300 May 2013 Median Housing Value 7 Los Angeles County Orange County 2012 Unemployment Rate 8 Los Angeles County Orange County The Los Angeles Orange assessment area economy is large and diverse with each county sharing similarities as well as unique characteristics. $365,990 $655,630 10.9% 7.6% Los Angeles County s real gross domestic product grew at 1.8 percent through 2012 and was ranked 21st in the world. 9 The labor market within this county is driven by the major industry sectors of leisure and hospitality, transportation and trade, health care and social assistance, and professional services and 7 California Association of Realtors, Historical Housing Data, available at: http://www.car.org/marketdata/data/housingdata/(accessed July 25, 2013). 8 U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics by County; available at: http://www.bls.gov/lau/, (accessed July 25, 2013). 9 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2013, Pages 21 22; available at: http://laedc.org., (accessed July 26, 2013). 5
technology. 10 Major employers include, but are not limited to, Kaiser Permanente, University of California, Los Angeles, Northrop Grumman Corporation, University of Southern California, Target Corporation, Bank of America Corp., and The Boeing Company. 11 Los Angeles County also represents a major international trade entry point for the United States. The San Pedro Bay ports of Los Angeles and Long Beach are the two largest container ports in the nation 12 with two way trade totaling a record $403.4 billion in 2012. 13 The Los Angeles International Airport is one of the busiest air cargo terminals in the country, handling 1.9 million tons of total air cargo in 2012. 14 To the south of Los Angeles along the Pacific Coastline is Orange County, a hub for high tech and aerospace manufacturing, financial activities, and tourism. 15 The area has a large number of public and private employers, including Boeing Company, St. Joseph Health System, Kaiser Permanente, University of California at Irvine 16, and the Walt Disney Company. 17 While the large employers situated in the two county assessment area exert a significant influence on the current economy, small businesses (i.e., those with gross annual revenues of $1 million or less) remain a substantial majority of all businesses in the assessment area. As reflected in Exhibit 3, small businesses comprise approximately 90 percent of all businesses. Los Angeles and Orange counties have been affected by the Great Recession, though to differing degrees. Los Angeles County lagged neighboring counties in the recovery in from the economic downturn, but finally gained momentum in 2012 through the present. 18 Los Angeles County s unemployment rate has improved from a high of 13.3 percent in July 2010 to a low of 9.2 percent in May 2013 19, but remained above the state figures of 12.4 percent, and 8.6 percent 20, respectively. 10 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2013, Pages 31 32; available at: http://laedc.org., (accessed July 26, 2013). 11 Moody s Precis METRO, Los Angeles, April 2013. 12 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2013, Page 32; available at: http://laedc.org., (accessed July 26, 2013). 13 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2013, Page 77; available at: http://laedc.org., (accessed July 26, 2013). 14 Los Angeles International Airport, Economic Impact; available at http://www.lawa.org/welcome_lax.aspx?id=40., (accessed August 1, 2013). 15 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2013 2014 Mid Year Economic Forecast and Industry Outlook July 2013, Page 44; available at: http://laedc.org., (accessed July 26, 2013). 16 University of California at Irvine is home to the TechPortal Orange biomedical incubator which provides research and development space for startups and aids in the dissemination of commercial uses for intellectual property developed at the university. 17 Moody s Precis METRO, Santa Ana, April 2013. 18 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2012, Pages 30, 34 and 50; available at: http://laedc.org., (accessed July 26, 2013). 19 U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics by County, Not Seasonally Adjusted; available at: http://data.bls.gov/cgi bin/dsrv, (accessed July 24, 2013). 20 U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics by State, available at: http://data.bls.gov/cgibin/dsrv, (accessed July 24, 2013). 6
County nonfarm jobs rose 3.4 percent from 3.7 million in 2012 to 3.9 million in May 2013, the highest level since 2008. 21 These gains in employment occurred in almost all private sector industries, including leisure and hospitality, professional, scientific, and technical services, and health care and social assistance, and construction. 22 However, job losses in the manufacturing and government sectors continued into 2013. Orange County has experienced a faster recovery from the recession relative to Los Angeles County and the state. In September 2010, the county became the first metropolitan area in the state to post year over year job growth. 23 The county s unemployment rate peaked at 9.9 percent in March 2010 and fell to 5.5 percent in May 2013 24, remaining below the California figures of 12.4 percent and 8.6 percent 25, respectively. Similar to Los Angeles, Orange County nonfarm jobs grew from 1.3 million jobs in 2012 to 1.4 million positions in May 2013, an increase of 4.3 percent. 26 Employment increases were noted in all private sector industries, with the largest growth in construction, real estate, rental and leasing, finance and insurance information, professional, scientific and technical, and leisure and hospitality. 27 Public sector job losses occurred at the Federal government level. Credit Availability and Needs In recent years, access to credit for small businesses has been a constraint contributing to the slow recovery from the recession. State and federal banking regulators, as well as the White House, have urged financial institutions to extend credit to small businesses predicated on a comprehensive review of borrowers financial condition. 28 However, while loan officers report that demand for loans to businesses of all sizes has continued to strengthen, only modest fractions of financial institutions report having eased their credit standards in recent months. The increase in loan demand is in part attributable to increased investment in plan or equipment and the need to finance mergers and acquisitions. 29 21 California Employment Development Department, Industry Employment Data, Los Angeles Long Beach Glendale MD; available at: http://www.calmis.ca.gov/htmlfile/msa/lalb.htm (accessed August 2, 2013). 22 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Mid Year Economic Forecast and Industry Outlook July 2013, Page 31; available at: http://laedc.org., (accessed July 26, 2013). 23 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2012 2013 Economic Forecast and Industry Outlook February 2012, Page 49; available at: http://laedc.org., (accessed July 26, 2013). 24 U.S. Bureau of Labor Statistics, Labor Force Data by County, Not Seasonally Adjusted; available at: http:data.bls.gov/cgi bin/dsrv, (accessed July 24, 2013). 25 U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics by State, available at: http://data.bls.gov/cgibin/dsrv, (accessed July 24, 2013). 26 California Employment Development Department County Labor Force Data by Industry, Santa Ana Anaheim Irvine MD, available at: http://www.labormarketinfo.edd.ca.gov/lmid/employment_by_industry_data.html, (accessed August 2, 2013). 27 Los Angeles County Economic Development Corporation, Kyser Center for Economic Research, 2013 2014 Mid Year Economic Forecast and Industry Outlook July 2013, Page 47; available at: http://laedc.org., (accessed July 26, 2013). 28 The American Banker, February 8, 2010, Agencies Urge Loans to Small Businesses 29 Board of Governors of the Federal Reserve System, The January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices, January 2013, accessed at http://www.federalreserve.gov/boarddocs/snloansurvey/201302/default.htm 7
Despite the improvement in the economy and increased loan demand during the review period, community contacts indicated that small and medium sized businesses continued to struggle to obtain financing. Contacts stated that this is particularly true for those businesses that encountered difficulties during the Great Recession. Community contacts also noted that access to small business loans in amounts of $250 thousand and less are needed to help many firms recover financially. Scope of Examination The bank s CRA performance was evaluated using the Interagency Small Bank CRA Examination Procedures. The evaluation was based upon the following performance criteria: Loan volume in comparison to deposits (Loan to Deposit Ratio); Lending inside and outside the assessment area (Lending in Assessment Area); Dispersion of lending throughout the assessment area (Geographic Distribution of Loans); and Distribution of lending to businesses with different revenue sizes (Lending Distribution by Business Revenue). Responsiveness to consumer complaints was not evaluated as the bank did not receive any CRA related complaints during the review period. The evaluation was based on 714 small business loans originated by PEB from July 1, 2011 through June 30, 2013. All 714 loans were used in the evaluation of Lending in Assessment Area. Of this total, 394 loans extended within the bank s assessment area were used in the evaluation of Lending Distribution by Geography and Lending Distribution by Business Revenue. Home mortgage loans also were considered during the review, but this product did not influence the overall assessment due to limited volume. 8
CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA Loan-to-Deposit Ratio PEB s loan to deposit ratio is reasonable. Since the previous CRA evaluation conducted as of May 26, 2009, the average of PEB s quarterly loan to deposit ratio is 99.2 percent. This percentage exceeded the state average of 84.6 percent and the national peer average of 82.3 percent. Lending in Assessment Area A majority of PEB s loans were originated inside the bank s assessment area. As shown in Exhibit 4, the bank extended 55.2 percent of loans by number and 65.3 percent of loans by dollar volume. These lending levels support that PEB actively helped address credit needs within its local communities. EXHIBIT 4 LENDING INSIDE AND OUTSIDE THE ASSESSMENT AREA JULY 1, 2011 THROUGH JUNE 30, 2013 Inside Outside Loan Type $ $ # % % # % ( 000s) ( 000s) % Small Business 394 55.2 79,990 65.3 320 44.8 42,435 34.7 Total Business Related 394 55.2 79,990 65.3 320 44.8 42,435 34.7 HMDA Home Purchase 8 100.0 1,207 100.0 0 0.0 0 0.0 HMDA Refinance 1 33.3 449 55.2 2 66.7 365 44.8 Total HMDA Related 9 81.8 1,656 81.9 2 18.2 365 18.1 Total Loans 403 55.6 81,646 65.6 322 44.4 42,800 34.4 Lending Distribution by Geography The geographic distribution of small business loans is excellent. Overall, the distribution of small business lending compares favorably to the distribution of business entities and aggregate lending. Small business lending in moderate income census tracts was particularly strong and significantly exceeded the concentration of businesses and aggregate lending in 2011 and 2012. 9
Census Tract EXHIBIT 5 GEOGRAPHIC DISTRIBUTION OF SMALL BUSINESS LOANS Low Moderate Middle Upper # % # % # % # % 2011 Bank Lending 5 5.1 35 35.7 32 32.7 26 26.5 Aggregate Lending 13,847 4.4 58,034 18.4 86,017 27.2 158,125 50.0 Business Concentration 48,194 6.1 172,313 21.9 230,947 29.4 333,599 42.5 2012 Bank Lending 13 6.4 84 41.6 74 36.6 31 15.3 Aggregate Lending 17,782 5.2 61,750 17.9 91,269 26.5 173,244 50.4 Business Concentration 48,880 6.4 166,398 21.9 214,257 28.2 331,068 43.5 2013 30 Bank Lending 1 1.2 30 35.7 37 44.0 16 19.0 Aggregate Lending Business Concentration Lending Distribution by Business Revenue The level of lending to small businesses is excellent. The level of lending well exceeds the performance of aggregate lenders and reasonably compares to the concentration of small businesses. In addition, a credit need in the assessment area is loans in small dollar amounts, and over 65 percent of the bank s loans were under $250 thousand or less, with the majority of these being $100 thousand or less. Year Bank Lending # EXHIBIT 6 BUSINESS REVENUE DISTRIBUTION OF SMALL BUSINESS LOANS Lending to Businesses with Revenue <=$1 Million Businesses <=$1M in Revenue (%) Bank Lending (%) Aggregate Lending (%) Originations Regardless of Revenue Size by Loan Amount <=$100K (%) > $100K & <=$250K (%) >250K & <=$1M (%) 2011 98 60.2 89.8 46.4 48.0 17.3 34.7 2012 210 73.3 89.9 48.7 60.5 17.1 22.4 2013 86 69.8 62.8 11.6 25.6 30 2013 Aggregate Data and Dun & Bradstreet data not yet available. 10
Response to Complaints PEB did not receive any CRA related complaints during the review period. Consequently, the bank s performance in responding to complaints was not considered in evaluating CRA performance. Fair Lending or Other Illegal Practices Review Concurrent with this CRA evaluation, a review of the bank's compliance with consumer protection laws and regulations was conducted. No violations of the substantive provisions of anti discrimination, fair lending, or other illegal credit practice rules, laws or regulations were identified. 11
GLOSSARY OF TERMS 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 121.301) 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 (iii) Distressed or underserved nonmetropolitan 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 low and moderate income 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 always equals the number of families; however, a family household may also include non relatives 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). 12
Full scope review: Performance under the lending and community development 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, 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 applications, 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 refinancings 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 and community development 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. 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. 13
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 multistate 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 multistate metropolitan area, the institution will receive a rating for the multistate 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 either secured 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 nonmortgage, 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 more than 120 percent of the area median income, or a median family income that is more than 120 percent, in the case of a geography. 14