What determines the validity of determining a bank's CRA assessment area?

The validity of determining a bank's Community Reinvestment Act (CRA) assessment area is primarily influenced by geographic and political factors. Under the CRA, a bank is required to define its assessment area based on the areas where it has its main office, branches, and deposit-taking ATMs, as well as any surrounding areas that are tied to the bank's lending activities. This consideration ensures that the assessment area reflects the local communities that the bank serves.

Geographic factors include the physical locations of the bank's branches and the types of communities they serve, which can encompass urban, suburban, and rural areas. Political factors can also play a significant role, as the regulatory landscape and local governance may impact how lending practices and community needs are perceived and evaluated.

While market capital analysis, customer demand surveys, and economic activity levels can provide additional insights into the bank's performance and community needs, they do not directly dictate what constitutes the assessment area itself. The CRA primarily focuses on geographic and political boundaries to ensure that the banks are serving the communities in which they operate in a fair and equitable manner.