Purpose
Evaluate a single bank activity against Community Reinvestment Act criteria and return a defensible classification — whether it qualifies, which test it counts under, its precise category, and the documentation needed to support it at exam. Eliminates guesswork and inconsistent coding that surfaces as findings during CRA performance evaluations.
When to Use
Invoke this skill when the user asks to:
- Determine whether a specific loan, investment, grant, or service is CRA-eligible
- Classify a community development loan, investment, or service into the correct category
- Decide which CRA test an activity should count under (Lending, Investment, or Service)
- Assess whether a donation or grant qualifies as a community development activity
- Validate the community development purpose of an activity before submission
- Check whether an activity meets the geographic or income-targeting requirements
Inputs Required
Before starting, collect:
- Activity type: Loan, investment, grant/donation, or service
- Description: What the activity funds or provides, in 2–4 sentences
- Dollar amount: Face value or committed amount
- Beneficiary/recipient: Who or what organization receives the funds or service
- Geography: Census tract, county, or assessment area where the benefit lands (if known)
- Income/targeting details: Income level of the beneficiary population, tract income designation, or size of the business (if applicable)
- Bank size/exam type: Large, Intermediate Small, or Small bank — determines which tests apply
If geography or income data is missing, classify conditionally and flag exactly which data point must be confirmed to finalize the determination. Base classifications on the interagency CRA regulations and the FFIEC Interagency Questions & Answers guidance.
Instructions
Step 1: Determine the Applicable Test Framework
Establish which CRA tests apply based on bank size:
- Large bank: Lending Test, Investment Test, Service Test all apply
- Intermediate Small bank: Lending Test and a combined Community Development Test
- Small bank: Lending Test only, with optional community development consideration Note which framework governs the rest of the analysis.
Step 2: Screen for CRA Consideration at All
Not every activity counts. Confirm the activity is one the regulation recognizes:
- Retail loans (home mortgage, small business, small farm, consumer) — count under the Lending Test if within the assessment area and properly reported
- Community development (CD) loans, qualified investments, and CD services — count if they meet a qualifying CD purpose
- If the activity is a routine operating expense, a standard commercial loan with no CD purpose, or a marketing sponsorship with no community benefit — flag as Not CRA-eligible and stop.
Step 3: Test for a Qualifying Community Development Purpose
An activity qualifies as community development only if its primary purpose is one of the following (cite the specific one):
- Affordable housing for low- or moderate-income (LMI) individuals
- Community services targeted to LMI individuals
- Economic development by financing small businesses or small farms (meeting size + purpose test)
- Revitalization or stabilization of LMI geographies, designated disaster areas, distressed/underserved nonmetropolitan middle-income geographies Apply the primary purpose test: a majority of dollars or beneficiaries must serve the qualifying purpose, or the activity must be structured with an express, documented bona fide intent to serve it.
Step 4: Verify Geographic and Income Targeting
Confirm the benefit reaches the right place or people:
- Geography: Is the activity within the bank's assessment area, the broader statewide/regional area that includes the AA, or a nationwide fund with AA benefit? Note the level.
- Income designation: Is the census tract low-, moderate-, middle-, or upper-income? Use LMI = ≤80% of area median income.
- Beneficiary income: For services and housing, confirm the population served is majority LMI.
- Business size: For economic development, confirm gross annual revenue thresholds and job-creation or SBA-eligibility criteria are met.
Step 5: Assign the Category and Subcategory
Map the activity to its final classification:
- Test: Lending / Investment / Service (or CD Test for ISB)
- Type: Retail loan / CD loan / Qualified investment / CD service / Grant or donation
- CD purpose: Affordable housing / Community services / Economic development / Revitalization-stabilization
- Consideration level: Full / Partial / Conditional / Not eligible
Step 6: Specify Required Documentation
List the exact evidence needed to defend this classification at exam:
- Source documenting the primary purpose (loan memo, grant agreement, program description)
- Geographic proof (address, census tract, AA map reference)
- Income/targeting proof (income verification, tract income data, revenue documentation)
- For services: hours donated, staff role, and financial-expertise nexus
- Any conditional data points still outstanding
Step 7: Render the Determination
State the final classification plainly and directly. If conditional, state the single fact that would flip it and how.
Output Format
- Structure: Sequenced analysis with a bolded final determination block at the top for quick reference, followed by the reasoning trail
- Length: 500–800 words
- Format: Structured document — determination block, then labeled analysis sections, then a documentation checklist
- Sections: Determination Summary → Applicable Test Framework → Community Development Purpose → Geographic & Income Targeting → Category Assignment → Required Documentation → Notes/Caveats
- Tone: Compliance specialist — precise, regulation-grounded, decisive; cite the specific qualifying purpose rather than gesturing at "community benefit"
Quality Checklist
Before delivering output, verify:
- [ ] A single, explicit determination is stated (Eligible / Conditional / Not eligible) — no hedging
- [ ] The specific CD purpose is named from the four qualifying categories, not left generic
- [ ] The applicable test (Lending / Investment / Service / CD) is assigned and matches bank size
- [ ] LMI or geographic targeting is confirmed against the ≤80% AMI standard or tract designation
- [ ] The documentation checklist lists concrete, exam-defensible evidence for each claim
- [ ] Any missing input is flagged as a named data point, with the impact on the classification stated
Notes
- The primary purpose test is where most classifications succeed or fail — if the majority-of-dollars threshold isn't met, look for documented express bona fide intent before disqualifying.
- Retail loans within the assessment area count under the Lending Test automatically once reported; do not double-count them as CD loans.
- A single activity occasionally supports more than one purpose — assign the primary one and note the secondary, but never claim credit under two tests for the same dollars.
- Sponsorships and donations with promotional intent frequently fail the CD purpose test even when the recipient is a nonprofit — scrutinize the primary purpose, not the recipient's tax status.
- This classification supports internal coding decisions; material or novel activities should still be confirmed against current FFIEC guidance and, where warranted, with the primary regulator.
How to use this skill
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- Drag this file into a new chat, or copy and paste its contents
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