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Silver | CRA Exam Breakdown
 

Silver | CRA Exam Breakdown

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    Silver | CRA Exam Breakdown Silver | CRA Exam Breakdown Presentation Transcript

    • Breaking Down CRA Exams
    • Breaking Down the CRA ExamJosh Silver, Vice President of Research and Policy, NCRCApril 20, 2012
    • Breaking Down the CRA ExamFederal Agencies Conducting CRA Exams• Federal Reserve Board http://www.federalreserve.gov• Federal Deposit Insurance Corporation http://www.fdic.gov• Office of Thrift Supervision (ceased operations but still has exams onwepbage) http://www.ots.treas.gov• Office of the Comptroller of the Currency http://occ.gov• Federal Financial Institutions Examination Council http://www.ffiec.gov
    • Breaking Down the CRA ExamCRA Exams: Frequency & Ratings• CRA exams scrutinize banks about once every two yearsfor banks or thrifts with assets > $250 million. Once everyfour or five years for small banks with assets < $250 million• Banks and thrifts receive one of four grades: Outstanding,Satisfactory, Needs-to-Improve, and Substantial Non-Compliance• Possible Low- and High-Satisfactory Ratings forcomponent tests and geographical areas
    • Breaking Down the CRA ExamHow to Find Out About CRA Exams• Every 3 months, the federal agencies publish aschedule of CRA exams.• Obtain the schedule from the federal agencywebsites or from NCRC.• Locate regional office of agency conducting CRAexam – NCRC can help
    • Breaking Down the CRA ExamSmall Banks• Less than $250 million• Lending test only• Five factors including responses to publiccomplaints• No reporting of CRA data on small business orcommunity development lending
    • Breaking Down the CRA ExamIntermediate Small Banks• Banks and thrifts with assets between $250 millionand $1 billion.• Lending and community development (CD) test.• Not required to report CRA data on small businessor farm lending
    • Breaking Down the CRA ExamLarge Bank CRA Exams•Large bank exam – banks with assets above $1billion• Lending, investment, and service test.• Large banks must report CRA small business,farm and CD loan data.
    • Breaking Down the CRA ExamExams for Wholesale and LimitedPurpose Banks• Community Development Test• Strategic Plan – in lieu of regular exam, mostlyused by non-retail banks
    • Breaking Down the CRA ExamParameters for CRA Exams• Assessment Areas – Make sure do not excludeLMI areas• Affiliates – Bank can choose to include/excludeaffiliates• Performance context – make sure examinersadequately asses needs; don’t excuse poorperformance on poverty rates, or lack of investmentopportunities
    • Breaking Down the CRA ExamPerformance Measures• Do the measures fairly and rigorously measure performance?• Lending Test – Bank’s percent of loans to LMI compared to all lenders,as a group. Consistently above or below? OCC – Market share analysis– Bank’s share of loans in LMI market compared to bank’s overallmarket share• Investment Test – investments to Tier 1 capital or assets; in addition toquantitative measures, are investments innovative or responsive• Service Test – any quantitative information on number of bankaccounts; percent of branches in LMI neighborhoods compared to peersor demographics?
    • Breaking Down the CRA ExamWords Used by Examiners• Excellent - corresponds to Outstanding• Good – corresponds to High Satisfactory• Adequate – corresponds Low Satisfactory• Poor – corresponds to Needs to Improve• Very poor – corresponds to SubstantialNoncompliance
    • Breaking Down the CRA ExamWhy Being Active on CRA Exams is Important• CRA has leveraged trillions of dollars in loans, investments, andservices since 1977; studies have demonstrated positive impact inincreasing safe and sound loans and investments: Federal Reserve,Harvard University, NCRC• Comments on CRA exams can influence ratings overall or in one ormore geographical areas or component tests; lower ratings on any of theexam components are motivation for banks to improve• Merger application process – more likely bank will make reforms ormake a specific pledge if members of public comment; $180 billionCapital One pledge, for example.• On-going discussions with bank CRA officials in your community
    • THANK YOU!To follow up with the speaker:Josh Silver, Vice President of Research and PolicyNational Community Reinvestment Coalition202-464-2708 or jsilver@ncrc.orgPresentations will be available at www.ncrc.org/conferencebyApril 30, 2012