When it comes to CRA compliance and fair lending, two concepts often get mixed up: redlining analysis and assessment area mapping. While they are closely related, these concepts serve very different purposes.
Simply put, assessment area mapping defines where your bank is evaluated under the Community Reinvestment Act. Redlining analysis, on the other hand, evaluates how your bank is lending within (and sometimes beyond) those areas.
Confusing the two can lead to gaps in analysis, missed risks, or unnecessary concern during exam preparation.
The good news is that once you understand how these concepts fit together, it becomes much easier to evaluate your performance and tell a clear, accurate story to examiners.
What Is Redlining?
Before understanding redlining analysis, it’s important to understand redlining.
From a fair lending standpoint, redlining is the practice of denying, discouraging, or limiting credit access in neighborhoods because of the protected characteristics of its residents. In practice, this most commonly manifests as discrimination against majority-minority neighborhoods. The term originates from the 1930s, when the Home Owners’ Loan Corporation (HOLC) created literal maps to assess the risk of mortgage lending in different neighborhoods. These maps color coded neighborhoods by risk level: green for “best,” blue for “still desirable,” yellow for “definitely declining,” and red for “hazardous.”
Unfortunately, these “hazardous” areas were defined primarily by race. Areas with Black or mixed-race populations were marked in red, effectively cutting them off from homeownership opportunities for generations. Clearly, these discriminatory practices were problematic, and they laid the foundation for inequalities we still see today.
Fast forward nearly 100 years, and American communities look very different than they once did. According to U.S. Census projections, by 2050, the majority of the U.S. population will be people of color. Banks and credit unions must be prepared to serve diverse, multicultural, and multilingual markets. As communities grow more diverse, geographic lending patterns will inevitably receive greater scrutiny, and statistical disparities will become more visible to examiners and the public alike.
What Is Redlining Analysis?
So why analyze all this data?
To make sure your institution isn’t redlining, of course!
Diving into your bank’s lending patterns helps determine whether there are geographic areas where credit is not being offered or is significantly limited. This analysis is a key part of fair lending reviews and focuses on whether a bank is serving all communities equitably.
Rather than defining boundaries (which we’ll get into with assessment areas), redlining analysis looks at outcomes—specifically where loans are and are not being made. By analyzing geocoded and mapped data, banks and examiners can identify patterns across different neighborhoods, including low- and moderate-income (LMI) areas and majority-minority census tracts.
Redlining analysis typically involves:
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Mapping loan originations and applications
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Comparing activity across different geographies
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Layering demographic data, such as income levels or minority populations
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Identifying gaps, low-activity areas, or unusual patterns
It’s important to note that redlining analysis does not automatically indicate wrongdoing. Instead, it helps highlight areas that may require further review, explanation, or additional outreach.
In short, redlining analysis is about understanding how a bank is lending across its footprint, not just where it operates.
For a deeper dive into redlining analysis, check out this article.
Now let’s move on to CRA assessment areas.
What Are CRA Assessment Areas?
A CRA assessment area (AA) is the geographic region where a bank is expected to meet the credit needs of its communities. Regulators evaluate a bank’s lending, investments, and services within these boundaries to determine how well the institution is serving its market.
A bank’s assessment area must:
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Reflect where the bank has branches and deposit-taking ATMs
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Include the geographies where the bank makes a substantial portion of its loans
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Consist of whole geographies such as entire census tracts, counties, or MSAs (no partial geographies)
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Not reflect illegal discrimination or exclude low- or moderate-income (LMI) or majority-minority neighborhoods
In other words, a bank’s CRA assessment areas show where the bank does business and where regulators expect it to make an impact.
Why Map CRA Assessment Areas?
As you can probably guess, mapping your CRA assessment areas means taking these boundaries and placing them on an actual map.
Without mapping, these bank assessment areas would be pretty difficult to understand and visualize.
While typically called “assessment area maps,” these maps aren’t only for assessment areas. In fact, most assessment area maps also include:
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AA boundaries
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Whole census tracts
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Key demographic overlays such as income levels or minority population percentages (optional)
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Branch and ATM locations
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Loan, investment, and service activities
Mapping CRA assessment areas helps CRA teams and examiners identify where the bank is doing well and where more work is still needed. It can also help identify patterns that may raise potential redlining concerns.
To learn more about mapping CRA assessment areas, check out this article.
And to learn about the common mapping mistakes you should avoid, check out this article.
Key Differences and How These Concepts Work Together
Now that you understand these two concepts, let’s take a closer look at how redlining analysis and assessment area mapping differ. While assessment area mapping and redlining analysis serve different purposes, they are closely connected and most effective when used together.
Mapping assessment areas:
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Defines geographic boundaries
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Is based on CRA requirements
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Focuses on where a bank operates
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Is structural and required
Redlining analysis:
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Evaluates lending patterns
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Is based on fair lending laws
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Focuses on how a bank is lending
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Is analytical and ongoing
Both are essential if you want strong, compliant CRA and fair lending efforts. Mapping assessment areas provides the structure, while redlining analysis provides insight into performance.
In practice, the process looks like this:
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Define your assessment areas using appropriate geographic boundaries
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Geocode and map your loans, services, and other activities
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Layer demographic data, such as income levels or minority populations
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Analyze patterns to identify gaps, concentrations, or inconsistencies
Together, these processes support stronger decision-making, better exam preparation, and a more complete understanding of your community impact.
What Examiners Look For
During exams, regulators evaluate both assessment area mapping and fair lending considerations—but in different ways.
At a high level, examiners are looking for:
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Reasonable assessment area delineation—Boundaries should reflect where the bank actually operates and should not exclude certain geographies without a clear rationale.
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Consistency with lending patterns—Lending activity should generally be comparable to the demographics of the defined assessment areas and peer lending activity in the same market.
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Evidence of analysis—Banks should be able to demonstrate that they are reviewing their data, identifying patterns, and understanding their performance.
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Awareness of potential gaps—Examiners expect banks to recognize areas where activity may be limited and be prepared to explain or address those gaps.
This doesn’t require perfect data, but it does require intentional, ongoing analysis supported by accurate mapping.
Tools That Help with Mapping and Analysis
The right tools can make it much easier to support both assessment area mapping and redlining analysis.
Many banks start with the FFIEC Geocoding Tool to verify census tract assignments and confirm geographic data. It’s a reliable baseline, but it’s designed for individual lookups and doesn’t support bulk processing or deeper analysis.
Some institutions also use mapping tools or census platforms to visualize geographic boundaries and demographic data. These tools can help with understanding patterns, but they often require manual effort to maintain.
To streamline the process, many banks use mapping software built for financial institutions, like Kadince. These tools allow banks to geocode data in bulk, layer activity and demographic data, and quickly identify patterns or inconsistencies.
Kadince geocoding and mapping software helps centralize this work by combining geocoding, mapping, and activity tracking in one place. This makes it easier to maintain accurate data, perform ongoing analysis, and stay prepared for exams.
With Kadince, you can:
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Upload any .csv file that contains addresses and geocode those addresses in bulk or batches
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Automatically populate FFIEC demographic data and census tracts
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Create interactive maps with census tract and demographic layers
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Filter maps by income levels, majority-minority census tracts, loan type, geography, and more
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Visualize patterns and see where your institution has made an impact
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Export maps and geocoded data so you can prepare for regulatory exams
To see how Kadince can make CRA assessment area mapping and redlining analysis easier for your team, schedule a demo.
*This article has been reviewed by Charles LeFevre, compliance expert and Kadince’s Director of Compliance Operations.
None of Kadince, Inc., its affiliates, or its respective employees, directors, officers, and agents (collectively, “Kadince”) are responsible or liable for any content or information incorporated herein. Read full disclosure.
