Dividing evaluations into separate retail and community development tests is important. First, evaluating all retail banks under a stand-alone retail test is important to stay true to the CRA’s core focus on providing credit in underserved communities in an assessment area.
In contrast, an approach that combines all activity together runs the risk of encouraging some institutions to meet expectations primarily through a few large community development loans or investments rather than meeting local needs. Second, having separate tests ensures that expectations are tailored for banks of different sizes and business models.