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By Linda Ezuka | September 09, 2021 | 3 Minute Read

The 7 Steps Every Examiner Takes During a CRA Exam

CRA examiner taking notes during a CRA exam
Your bank is steadfast in meeting the credit needs of all businesses, both large and small, in your communities. Your job is to capture and identify all eligible community development activities going into a regulatory exam. But what about your examiner? Sometimes it’s helpful to consider the other side of the coin. This week’s article will outline the milestones examiners move through as they approach a Community Reinvestment Act (CRA) bank examination.  
Your regulatory agency has a flow to examination management following their respective examination procedures. Review your regulator's exam procedures document based on your asset size to understand their step-by-step process and exam protocol. 
Here are the core elements (not exhaustive) that each examiner will go through during a CRA exam cycle. 

1. Notify Bank 

The agency publishes their next quarter exams. And soon after, a request letter is sent to the bank. This is the official start of your CRA Exam!

2. Review Past Exams

Your lead CRA examiner will start by looking at your bank's past performance evaluations and any notes they may have made during your last exam. They do this review based on your overall performance, your bank’s demographic data, and your business context. Your examiner will also review various reports and worksheets to obtain performance context. 

3. Validate Data Integrity

Examiners will conduct a review of your data integrity. This includes data from your bank’s community development loans, services, and investments. This ensures that the data you’ve collected and maintained can be relied upon to assess your lending performance. If you don't pass this step, your examination will be delayed. 

4. Research Assessment Area

Examiners will review your assessment areas to ensure compliance with the regulation. They will also ensure that your stated assessment areas do not reflect illegal discrimination or arbitrarily exclude any low- or moderate-income areas.

5. Analyze Loan Performance

Depending on the size of your bank, examiners will approach the review of your lending performance differently. Again, you can review the examination procedures for the exact scope. 
Keep in mind that there are several measures that determine if your bank is effectively meeting the credit needs of its community. This is the basis for the regulation. If you have limited time, this is the section you must pay attention to.

6. Assess Community Development Loans, Services, and Investments 

Your bank’s community development loans, services, and investments are key to assessing your overall performance under the CRA. These elements are "weighted" along with your lending performance to draw conclusions on your overall performance under the CRA and decide your final CRA rating. 

7. Give Preliminary and Final Rating

Examiners will hold a preliminary meeting with bank management to discuss findings. They will also provide preliminary ratings that are subject to review and finalization within agency protocols. The CRA performance evaluation will be issued as the last step in the process and will show your final rating! 
Now that you have a regulatory perspective, check out the essential steps every CRA officer must follow to ensure a smooth CRA exam.

For more CRA training, check out our archived webinars. To streamline your CRA data collection, management, and reporting, check out Kadince or schedule a personalized demo.
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.

Linda Ezuka | Owner, CRA Today

With over 29 years of community development experience, with an emphasis in CRA, compliance, training, community development lending, and CDFI initiatives, Linda works with financial institutions to provide comprehensive CRA training, up-to-date resources, and proven strategies to remain compliant. She helps CRA professionals master the art of the CRA and transform communities through the power of economic development. To learn more about Linda & CRA Today, visit her website.

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