Our bank has a CRA In-Out ratio under 50%. We had a CRA exam a few months ago, but have not received our rating yet. Before they issue the rating, I would like to give the examiners some examples of other institutions that have had In-Out ratios under 50% but still received "Satisfactory" ratings. I have given them one such example, but would like to give them more.

Does anyone work at, or know of, an institution that received a "Satifactory" with an In-Out ratio under 50%? Thank you!

A client of mine (ISB) received a satisfactory with aggregate in/out over the exam period <50%; the rating was satisfactory because the in/out steadily improved over the exam period, reaching > 50% for the final year due to improvements made by the bank.

Does your ratio trend upward or are there any other compensating factors?

I have one client who passed with a ratio below 20% but it was a battle royale with the OCC examiners!! (they now are in trouble for other reasons). I also know of another bank that passed with a ratio less than 50% but they are OTS-regulated and the OTS is perhaps the least demanding of the agencies. If you would like the specifics pm me and I will let you know the details. Which agency is conducting your CRA PE?

We are an ISB, and are almost exclusively a residential mortgage lender that sells 90% of our originations on the secondary market. We have an upward trending ratio over the last 7 quarters. The most recent quarter-end we have data for shows 46% (by dollar amount) of our loans originated in our AA and 37% (by number of loans) in our AA. Our AA is comprised of the highest cost-of-living counties in WA state, which explains the difference in the two percentages.

I conducted an in-depth analysis of deposits originated from within our AA, and since our previous CRA exam we have loaned out $8.50 in loans within our AA for every $1.00 in deposits that originated within our AA. We have a mortgage loan market share of approximately 3% for our AA, and a deposit market share of about 0.5% for our AA. The examiners have been provided with a copy of these analyses.

There are other mitigating circumstances, but these are the most significant.

Our Community Development lending could be better, but we have only made 4 commercial loans in the last year, and made the purposeful decision to re-focus our Community Development resources to Community Development investments to compensate for the low level of CD loans. Current CD assets total over 1% of total assets.

The examiners are citing no other CRA or Fair Lending criticisms or recommendations at this exam. However, they are saying that the fact that our In/Out ratio is under 50% will most likely result in a Needs-to-Improve CRA rating overall.

Any CRA PE's that are out there, regardless of regulating agency, would be good proof to show the examiners that other governing bodies recognize that circumstances exist that allow for a Satisfactory rating even if the In/Out ratio is under 50%.

Any information would be helpful in our struggle over this issue.

If I understand your post correctly it sounds like you have originated 8.5 times as many loans as deposits within your AA. Moreover, your market share of the mortgage market is 6 times your market share for deposits and you are not funding your lending activity primarily from deposits, but rather from sales into the secondary market (in other words, you aren't taking funds out of your community and lending them elsewhere). The CRA examination manual instructs examiners to put lending performance into perspective by comparing market rank and market share for deposits to market rank and market share for loans.



Do you know your market rank as a provider of mortgages in your AA? That also could be a big help to demonstrate you not only are meeting the need for credit services in your market, you also are a leading provider of such credit. With the market share you quoted you probably are in the top 5% of mortgage lenders in your market. In other words, you are more than merely meeting the need for credit services you are a leading provider of credit in your Assessment Area. Leadership is a factor in CRA ratings too.

Your CRA examiners remind me of a mother-in-law joke. MIL buys her Son-in-law two sweaters for his birthday. A couple of weeks later, she calls to say she would like to stop by to see her grandkids.

The SIL dutifully puts on one of the sweaters for the visit. When he answers the door, his mother-in-law looks at him and says "So what...., you didn't like the other sweater?"