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#1494658 - 01/13/11 05:14 PM Help Needed ASAP
BNKO Offline
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Joined: Sep 2009
Posts: 213
I have been assigned the task of quantifying what the Bank needs to do in the lending test and community development test (we are an ISB) to ensure a satisfactory rating. Are there any hard and fast rules as to what amount of the bank's lending should be done in low and moderate income geographies, number and dollar amount of community development loans, number and dollar amount of qualified investments, etc. It has been my experience that CRA exams are subjective, but management wants numbers nailed down. Any guidance is appreciated.

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#1494666 - 01/13/11 05:16 PM Re: Help Needed ASAP BNKO
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
The best thing to do is to:

determine the needs in your community as part of your performance context
review exam reports of peer ISB banks in your region to see what they did and the ratings received.

I like to make a chart of each bank and break out CD loans, services, investments. That will give you a good idea of how the exainers in your area view things and allow you to set goals and a method to achieve those goals.

Consider asset size, product set, etc. when making your comparisons.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1494712 - 01/13/11 05:36 PM Re: Help Needed ASAP Kathleen O. Blanchard
Kelsey D Offline
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Joined: Aug 2006
Posts: 516
Ohio
As far as lending to LMI people and in LMI areas, it's good to look at the demographics in your area. If 10% of the households in your assessment area are considered LMI, you would strive to have at least 10% of your household loans to LMI people. Similarly, if 10% of the households in your assessment area are located in LMI census tracts, hopefully 10% of your loans are in those census tracts.

I use demographic data regarding the geographic distribution of small businesses, small farms, owner-occupied units, and households, to analyze the geographic distribution of our small business loans, small farm loans, mortgage loans, and consumer loans, respectively. Here I'm analyzing the location of our customers, regardless of their borrower characteristics.

Similarly, I compare the demographic data of our customers to that of the entire assessment area to analyze who we are lending to, regardless of where they are located.
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Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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#1494725 - 01/13/11 05:51 PM Re: Help Needed ASAP Kelsey D
Len S Offline
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Joined: Oct 2004
Posts: 1,982
Connecticut
As Kelsey has stated examiners use demographic data to compute your performance standards. They also use the reported lending experience of lenders reporting under HMDA and CRA to compute "penetration rates" in the LMI tracts and to LMI borrowers and very small businesses. It is relatively easy to compute quantitative performance standards. You can get the information for free from the FFIEC (although the formatting is not the best) or from commercial sources such as GeoDataVision.
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CRA Exam Preparation, CRA Performance Evaluations, Key Performance Benchmarks, & maps

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#1494798 - 01/13/11 06:40 PM Re: Help Needed ASAP Len S
BNKO Offline
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Joined: Sep 2009
Posts: 213
Len S,

Where on the FFIEC website would I look for this information?

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#1494849 - 01/13/11 07:05 PM Re: Help Needed ASAP BNKO
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 1,982
Connecticut
CRA data products
HMDA data products
Census data
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CRA Exam Preparation, CRA Performance Evaluations, Key Performance Benchmarks, & maps

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#1498926 - 01/21/11 11:39 PM Re: Help Needed ASAP Kathleen O. Blanchard
Newbie06 Offline
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Joined: Mar 2006
Posts: 663
Does one review other institutions through their performance evaluation?

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#1498927 - 01/21/11 11:43 PM Re: Help Needed ASAP Newbie06
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
Yes, you can review other banks' performance evaluations and see how they were rated, and how they performed in each category with actual #s (loans, investments, services).
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1499016 - 01/24/11 02:22 PM Re: Help Needed ASAP Newbie06
Kelsey D Offline
Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
Originally Posted By: Lis
Does one review other institutions through their performance evaluation?


Yes, but I ususally just end up frustrated when I see that the competition down the street receives better ratings with a fraction of the effort we put forth. We'd be outstanding if we were examined like them.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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#1499024 - 01/24/11 02:27 PM Re: Help Needed ASAP Kelsey D
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
I always also include in my chart who the regulator is, when the exam occurred, etc. Showing the ratings (by the same regulator particularly) can help with your own rating. The chart is part of your package for the regulators.

I would want to know why the difference in ratings for a similar size bank, similar product set, same region, same or better effort, etc.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1499037 - 01/24/11 02:41 PM Re: Help Needed ASAP Kathleen O. Blanchard
Kelsey D Offline
Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
I will have to do that next time. Here's my case in point...

Them:
$2 billion in assets
lending data comparable
no CD loans
$250 thousand CD investments
reasonable CD services

Us:
$750 million in assets
lending data comparable
$7.9 million CD loans
$2.4 million CD investments
reasonable CD services

We both received a high satisfactory in lending, low in investments, and they received a high in services while we had a low. Unacceptable, given the fact that they are more than twice our size and in the same markets.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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#1499047 - 01/24/11 02:46 PM Re: Help Needed ASAP Kelsey D
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
By showing a comparison and documenting everything elaborately, a bank I worked with went from Needs Improvement (and a threat to continue that rating) to overall high satisfactory and outstanding in investments.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1499054 - 01/24/11 02:55 PM Re: Help Needed ASAP Kathleen O. Blanchard
Kelsey D Offline
Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
Unfortunately, both of our PEs were published at the same time, so it wasn't until after the fact that I realized how differently we were examined. I will definitely be more prepared next time with peer data.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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#1499056 - 01/24/11 02:56 PM Re: Help Needed ASAP Kelsey D
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
That is a shame and very annoying!
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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