5 Keys To Preparing for a CRA Exam

Are you prepared for your CRA Exam with the recent OCC changes?

In December of 2021, the OCC rescinded the June 2020 CRA rule and replaced it with an amended rule that took effect January 1, 2022. This exam will be different than those in the past. This could make for a daunting examination of your company.

Cra Exam Preparation

What is the CRA Examination?

Congress enacted the Community Reinvestment Act (CRA) to help meet the credit needs of entire communities, including low- and moderate-income neighborhoods. It requires each federal bank regulatory agency to assess each federally insured institution’s record of helping to meet the credit needs of its entire community, consistent with safe and sound lending.

CRA regulations have been revised to put greater emphasis on performance instead of process, and to establish different evaluation tests for different sizes of institutions: large institutions, small institutions, wholesale, and limited purpose institutions.

Get Prepared for Your CRA Exam with Five Keys Steps

While preparing for a CRA Exam, there are many things an institution can do to get prepared. Here are five quick things you can do to ensure your team is prepared.

Be Familiar With the Types of Performance Tests Applicable to Your Institution

Small Institutions will take part in the Lending Test. The Intermediate-Small Institutions will take part in the Lending Test as well as the Community Development Test. The Large Institutions will take part in the Lending test, Community Development Test, and the Service Test.

Review Any Previous CRA Performance Evaluations of Your Institution

Review your institution’s most recent consumer compliance examination report. Be aware of any identified or potential issues relating to discriminatory or illegal credit practices in any geography or assessment area that could impact that institution’s CRA performance evaluation.

Conduct Your Own Analysis

Examiners will be using both data that is obtained from your institution about loan, investment, and services activity (as applicable), as well as external information from government and public sources about the community and your competitors. Regardless of the size of your institution, you will want to be prepared with advance analysis of available information about:

  • Your institution’s geographic distribution of loans
  • Concentration of loans made by your institution within your assessment area
  • Customer complaint data
  • Economic and demographic data about your local communities

Be Prepared for the Future

If your institution is currently a small or intermediate-small institution that is on the verge of growing into a larger institution, start preparing for the next phase of your CRA journey, which will require more and different reporting and performance expectations. If you are a large institution, focus on what improvements you can make.

Document Performance

As part of evaluating an institution’s performance context, examiners will consider any information the institution may provide about its local community and economy. This is your institution’s opportunity to present information that will show how it is making loans, qualified investments, and/or qualified services that support the community.

Be prepared by knowing how your institution stands. It will lead to a smoother process with less stress. And that is a very good thing!

Training Resources to Prepare for your CRA Examination

While these five steps can help you be prepared, a CRA examination is critical to your institution’s bottom line. Ensuring your team has the proper training can make the difference between passing or failing. Here are some trainings that you can add to your program to ensure your success!

Join us for a live webinar March 16 to see what regulations have changed for the CRA Exam.  This webinar outlines the CRA exam process for large, intermediate-small, and small banks and savings associations along with the basic structure of the performance evaluation, the rating system, and how examiners communicate findings.

Webinar: CRA Review and Update

In addition, our compliance and professional development course catalog includes the Exam Management Series. This series is designed to provide an overview of the financial institution’s regulatory examination procedures and processes. It outlines the different types of exams, as well as the importance of planning, preparation, and management of an exam. The series includes:

  • CRA Exam Management – E3 (45m) – Outlines the CRA exam process that applies to large, intermediate-small, and small banks and savings associations along with the basic structure of the Performance Evaluation, the rating system, and how examiners communicate findings.
  • BSA/AML Exam Management – E3 (30m) – An overview of the Bank Secrecy Act (BSA) exam process. It discusses the components of a sound BSA program, preventative measures, and preparation and management of an exam.
  • Fair Lending Exam Management – E3 (45m)-An overview of the Fair Lending exam process. It discusses the components of a fair lending program, UDAAP considerations, and how to properly prepare and manage a fair lending exam.
  • General Exam Management – E3 (60m) -A general overview of a financial institution exam. It covers important considerations in the preparation and management of an exam to help ensure a constructive process for your institution.

Contact a sales rep today for more information on these, or any of our courses.

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By |2022-06-13T08:19:19-06:00March 15th, 2022|Financial Services, Mortgage|Comments Off on 5 Keys To Preparing for a CRA Exam