CRA Data Integrity: What It Is and Why It Matters

Data collection, maintenance, and reporting are important aspects of financial institution evaluations under the Community Reinvestment Act (CRA). Financial institutions collect, maintain, and (depending on their size) report key data elements to the federal government related to its lending activities in meeting the credit needs of its community.

Your bank works hard to meet the credit needs of its small business and consumer clients. With CRA Modernization on the horizon and the impending expectation to meet elevated standards, accuracy and compliance have never been more important. Now is the perfect time to get back to the basics and best practices within your CRA program. Don’t let the lack of data integrity tarnish your bank’s hard work and reputation during these unknown times.  

Why does CRA data integrity matter?

The purpose of CRA data collection and reporting is to enable examiners and the public to evaluate whether a bank is helping to meet the credit needs of its communities through its small business, small farm, consumer, and home mortgage lending as applicable. 

Accurate data leads to accurate depictions of fair lending and CRA lending performance. Aggregate CRA data is released to the public once a year. Oftentimes, accurate data enables the bank to showcase its lending performance to many stakeholders, both internal and external to the bank. This includes executive management, the board of directors, and key lending areas of the bank. This also includes community-based organizations such as nonprofit organizations, local government, and philanthropic entities.

Your bank is subject to reputational risk when data integrity errors are present, which may lead to costly remediation and can erode consumer confidence. A lack of data integrity delays CRA examinations and triggers time-consuming scrubbing efforts, often requiring the support of outsourced and expensive consulting firms. 

What are the three most common challenges?

As you know, ensuring data integrity is a never-ending pursuit. Core systems change, people switch positions, humans make mistakes, etc. We have found that these three areas trip up even the most solid CRA programs:

1. Determining which commercial loan transactions are reportable or which ones are not reportable (based on Call Report Schedule RC-C etc.) and then capturing reportable loan data fields accurately.

2. Correctly identifying community development loans.

3. Correctly identifying loan types based on size and definition tests. 

To learn more about community development loans (including what they are and how to identify them), download this free PDF. These checklists will help you determine whether your loans count as community development loans or not (which, let’s face it, is difficult to know!). 

Download the checklist

What are the three most critical data elements? 

All key data fields are important to your bank, yet these three elements tend to pose the most regulatory risk to your bank and your CRA program:

Geocoding

To “geocode” a record means to assign the correct Metropolitan Statistical Area/Metropolitan Division (MSA/MD), State, County, and Census Tract combination for each reportable loan. The correct loan address must be identified, collected, and onboarded in the bank’s core system.

Loan Amount

The loan amount must be accurate, which seems straightforward until you consider refinances, renewals, credit line increases and decreases, inconsistency with rounding, and human inputting errors.

Gross Annual Revenue

Gross Annual Revenue is the dollar value of the total sales made in a year by a company before deductions/expenses. Recording Gross Annual Revenues is dependent on collecting accurate gross annual revenues (not net) and considering aggregate revenue of related entities. 

How can you track and report this data?

Knowing what CRA data integrity is and why it matters is only the first step. To have a robust CRA program, you need to track and report all your data. Many banks use messy spreadsheets to track this data, but is that really the best way?  

Kadince software makes it easy to track, manage, and report your CRA data. With Kadince, you can easily track your community development loans, investments, service hours, and more. The system automatically geocodes, so you don’t have to worry about searching for extra information. And when it’s time to report your data to board members or CRA examiners, Kadince’s report feature makes this process so much easier than wrestling with complicated spreadsheets. Build the reports examiners need directly in the software, plus share limited login access so examiners see only the data you want them to see. 

Want to learn how Kadince can help your bank track and report CRA data? Schedule a 30-minute demo.

Schedule Demo

Where can you learn more?  

Now that you understand data integrity a little bit better, you may be wondering where to learn more. To take an even deeper dive into core CRA concepts and collaborate with fellow CRA colleagues, consider joining the CRA Hub! 

Learn more here. 

None of Kadince, Inc., its affiliates, or its respective employees, directors, officers, and agents (collectively, “Kadince”) are responsible or liable for any content or information incorporated herein. Read full disclosure.

*This article was updated on July 31, 2024 to reflect CRA and data integrity changes.