The CRA regulations are in the throes of tremendous change. Each of the regulatory agencies is in a different place in the revision process. All banks will continue to follow the current rulers for the foreseeable future.
Currently, every bank (small, intermediate small or large) needs to identify and document its community development (CD) activities in order to achieve the best possible CRA rating. Volume and distribution of loans are the primary factors that determine a bank’s overall CRA rating. A bank can achieve a great rating without any CD activities, but the likelihood of an outstanding or satisfactory rating increases with the volume of CD activities. While CD activities are not the primary factor in determining the overall rating many banks spend a disproportionate amount of time identifying and documenting CD activities.
The regulations and interpretations that define what qualifies as a CD activity are complex. In some cases an activity that appears to be an obvious example of a CD activity may not qualify as a result of a small exception in the rules. It is not uncommon for an activity that does qualify as a CD activity to go without credit due to failure to document the activity and bring it to the attention of the examiner.
Recently the regulators pronounced that COVID-19-related activities are eligible for community development credit. The credit is not automatic, the activity must be properly documented.
The failure to achieve a Satisfactory or Outstanding CRA rating can increase the difficulty in getting various applications approved by your federal regulator. A lower rating results in additional work to restore the rating. This program provides the information needed to assure proper credit is given for CD activities thereby assuring a higher rating and limiting the additional burden of a lower rating. Also:
- The detailed manual is a great desktop reference; and
- The presenter has decades of experience with this topic.
- Recent revisions to the definition of “community development” including why the reference to the Neighborhood Stabilization Program was eliminated and the impact of that action;
- The importance of CD activities for small, intermediate small and large banks;
- Which loans receive CD credit;
- Which qualified investments receive CD credit;
- Which services receive CD credit;
- The consideration given to CD activities that occur within and outside of your assessment area;
- The concept of affordable housing for low- or moderate-income housing;
- Which communities services are targeted to low- or moderate-income individuals;
- Which activities promote economic development by financing businesses and farms that meet certain size eligibility standards;
- Which activities earn credit for revitalizing or stabilizing certain areas; and
- Much more.