What is expected of the BOD or committee of the BOD with regards to CRA?

Someone once told me under the current rules, there are no expectations. I don't know that I can buy that.
Shouldn't there be some oversight?

Dawnie - I would love your input. Thanks

Reg BB expects at a minimum each reporting bank's BOD to "review each CRA statement at least annually and shall act upon any material change made in the interim at its first regular meeting after the change. Such actions shall be noted in its minutes."
CRA is an important regulation with significant implications for any bank. Board involvement is essential and should include at least one outside board member on the CRA Committee which should meet Quarterly to review performance. Examiners not only look at results, they look at the compliance "process" and expect Board involvement in CRA. The Board on many community banks is intended to represent the community as well as depositors (or shareholders in a stock bank) and so its participation (beyond the annual review) in the CRA process is critical.

Len S,

Thanks for the information.

Quote:

---

review each CRA statement at least annually

---

What CRA Statement - I thought CRA Statements went by the wayside years ago

Those were my thoughts also.

My tattered and frayed hard copy of Reg BB (12 CFR 228)shows the quote regarding board involvement in section 228.4, subsections (a) and (d). The rest of the section explains what is included in the CRA statement. Online versions of Reg BB don't show this section. Effectively the CRA statement refers to the elements in the public file. Frankly, I can't imagine that the BOD wouldn't be involved in monitoring a bank's performance under a major banking regulation whether officially required or not.

The previous response was from me. For some reason BOL signed me out while I was composing the response.

I don't think that anyone is saying that the BOD should not be actively involved and informed regarding CRA. But I have been in a number of banks recently that have been spending a lot of time trying to comply with the old CRA Statement requirements and it is pretty much a waste of time. It's not what you say anymore it is what you do that counts.

I am with you guys. I thought the CRA Statement went the way of the old reg. Looks like Len's old book needs replaced.

Speaking as a former Bank President and Board Member IMO the BOD MUST have a working knowledge of CRA and Fair Lending. They don't have to know all the nity grity details but should expect to receive regular reports of where the bank stands with regard to any issue or problems regarding CRA performance.

I would also include in the marketing plan the banks plan to be inclussive, and increase market share in LMI area. The progress of which is also reported. Its a good idea to have a CRA Committe comprised of one or more directors.

The BOD are not hands on guys, but as being a director or Executive officer puts personal fortunes on the line, Compliance is an area the directors should most deffinately be up to speed on. With the board involved it becomes a lot easier to get the budget and management support necessay to run a successful and happy compliance operation. It also makes examiners a lot happier.

As a former president the last thing I wanted was a suprise comment in an exit interview from an examiner on something I had no idea about. It also makes it real tough to explain to the board. So to me officer and BOD involvement is a key to the successs of a bank.

The CRA regulation has no actual requirement for Board review of anything. However, a Board would be foolish not to require management to present a review of the Bank's performance for CRA. Small Banks could probably do this once a year. Large Banks should have at least semi-annually or quarterly review in each Performance Test.

If management does not keep the Board informed of what is happening in CRA performance (just as they would want a report of how the loan portfolio is performing), then they could be in a nasty surprise during a CRA exam.

Len - I think you need to throw away your tattered and frayed hard copy because you are looking at the prior version of the regulation. Reg BB was updated in 1995 and the requirement for a CRA statement was eliminated along with "Delineated Community" and "12 Assessment Factors".

Sorry for the slow reply anon. Vacation, then illness has kept me from the office for a few weeks (and on Wednesday I take another little vacation to go fishing LOL but we won't mention that to management...I'm hoping they forgot) heh heh

Anyhoo, In the reg there is no specific requirement for board involvement, but in all practicle matters you need to have some. First and foremost, if you have an assesement area, someone needs to be radifying it don't they? This seems to be a board level item at minimum. Also, the Sunshine Act needs to be carefully reviewed by the board as they are directly involved and must report if there is a need.

We do not have a CRA committee at my bank on a management level (I am a firm believe that the idea of a CRA committee belongs in a CRAC pipe) But, we do have a CRA Board committee (love the acronym huh?) We meet quarterly or so (it really works out to be about 3 times a year) and I'm in contact with the board members usually monthly. I report all developments in our CRA policy (there is not a requirement for a policy but I have a very detailed one anyhoo, which the OCC loves) as well as any assessment area changes, progress to goal, etc., in a cumulative report (from beginning of exam period to end). I annually prepare a full on PE of the bank for their review, and we go over this carefully. My experience with other banks tells me that this is a pretty standard practice (the board level involvement that I have) for banks with strong ratings. In talking with the many many banks I do, I find that the ones with little to no involvement on the board level, have relatively low ratings. That makes sense. No board involvement, no board support right?

So the long and short of it is....as Don mentioned quarterly at least meetings are a good idea. An annual sumamry of the bank's status is also a good thing, especially if you're any good at it LOL (I do not sugar coat the bank's standing in these meetings!) BUT do remember that at exam time, all of the reports produced for this group will be reviewed by your examiner so be accurate, but careful in your assessments. I never lie, but I have cautioned a "needs to improve" rating in one area with a quick, WE MUST FIX THIS BY...date so the next report can cover the "fix" and show our focus. On a personal level, I find that the regular meetings do a great deal of good for me when I need something from our board. It's hard to refuse my sunny smile when I ask for new staff but if the board has no idea who you are...or what you do, your smile can't haunt them now can it?