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By Jaidyn Crookston | August 03, 2021 | 13 Minute Read

The Outstanding CRA Rating: How To Get It And Why You Should

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The ideas in this article came from our webinar with Janice DeLima from Norway Savings Bank. You can access the webinar recording here
Many banks are happy with a Satisfactory CRA rating. In fact, many banks don’t even try to get an Outstanding rating because they think that getting an Outstanding is too hard, too expensive, or comes with no benefits. 
This isn’t true. 
There are many reasons to go for an Outstanding rating. In this article, you’ll learn why you should and where to start. 

Why get an Outstanding CRA rating?


Favorable regulatory treatment 


As a bank, it’s important to keep your regulators happy. When you earn an Outstanding rating, you’re showing regulators that your bank is dedicated to serving the community. This clear dedication often leads to favorable treatment from your regulatory agencies. This comes in handy for brand operations, future acquisitions, and adding business lines. 

It builds momentum 


Having an Outstanding rating can build momentum in the marketplace. If you struggle to find organizations to partner with or you wish it were easier to identify potential opportunities, having a high CRA rating can help. 
When nonprofits, organizations, or businesses see that your bank is involved in the community and has put in the work to earn an Outstanding rating, they are more likely to seek you out and ask for loans, investments, or services. 
This makes it easier for your bank to continue providing the necessary loans, investments, and services for your next CRA exam. Business is always easier when other people seek you out and make it easy to work with them. 
This momentum may be gradual, but your Outstanding rating will create a ripple effect and bring more people to your bank. 

Employee job satisfaction and retention


When you provide employees with a purpose, they’re more likely to be satisfied with their jobs and stick around. Having an Outstanding CRA rating is a great way to give your employees a purpose. CRA is all about community development and helping those in need. Employees love to see their company involved in the community, and an Outstanding rating is kind of like you earned an award for being so involved. 
Most employees are going to resonate with that and view your bank favorably. This helps raise their job satisfaction and makes them want to stick around. And that’s exactly what you want. 

Why settle for second place? 


Most people want to win. So why would you settle for a second place Satisfactory when you can have a first place Outstanding? Yes, it may take more effort and dedication on your part, but at the end of the day, earning an Outstanding CRA rating is going to be well worth it. 
There isn’t one big thing that will get you to an Outstanding rating, but many small things working together. When you put in the time and dedication it takes to get an Outstanding rating, your CRA program will grow, and so will your bank.  

Where to start


Look at what other banks are doing


The first step to getting an Outstanding rating is to figure out what works for other banks. Look at what other banks are doing, how they’re involved in the community, and how they approach their CRA program. You can likely find a lot of great ideas that will up your own game. 
You aren’t in competition with other banks. You should support each others’ CRA programs and share ideas between institutions. That’s why talking to other CRA officers or paying attention to other programs is such a crucial part of getting your own bank to the Outstanding rating. 
Here are a few examples of banks killing it with their CRA programs: 

Look at your community


Now it’s time to look at your community. Pay attention to what nonprofits and organizations are out there. What are the highest needs in your community? Who are the key advocates with whom you can build relationships? 
Also pay attention to the community development loans, investments, and services your program has been involved with in the past. Are there any gaps in your lending? Identifying these gaps can help you determine where to focus your efforts in the future. 
Make sure you understand what counts as a qualifying loan. Determining which loans qualify under the CRA can be a tricky process, but if you use the resources you have (including other CRA officers and online articles), you’ll get the hang of quickly and correctly identifying qualifying loans. The more qualifying loans you give, the higher your chances of getting an Outstanding CRA rating. 
Once you’ve looked at other CRA programs and at your community, it’s time to look inside your own bank. Take the ideas you’ve collected and implement them. Your CRA program will grow and you’ll likely find yourself closer to your Outstanding goal. 

Figure out where employees are volunteering and why


As mentioned above, it’s important that your employees see your bank serving their community. One great way to show employees that you care and to find new nonprofits to partner with is by figuring out where employees themselves are volunteering. 
Chances are that some of your employees spend a portion of their free time volunteering at various nonprofit organizations. Ask employees where they volunteer and why they feel strongly about that organization. Your bank can then support these nonprofits and earn CRA credit, helping you get closer to that Outstanding rating. 
By uncovering these existing links in your community, you’ll be setting yourself up for success down the road. 

Develop a realistic plan


While paying attention to other banks, your community, and your employees can set your CRA program up for success, expecting too much from your program or setting too high of expectations will only set you up for disappointment. 
You need to develop a realistic plan. One of the best ways to keep your plan realistic is by following the SMART method. This method states that your goals need to be Specific, Measurable, Achievable, Relevant, and Time-bound. 
So no, you can’t expect to take your bank from a Needs to Improve to an Outstanding right away. But you can expect to make significant progress and prepare your CRA program for future success. If you recently received a Satisfactory rating, then developing a realistic plan may get you to an Outstanding.
You should also develop your future targets and identify any barriers that may be in your way. If you know that your bank has struggled to score well on the investments test, take some extra time to plan your strategy and identify your ideal targets. This will help you stay on track and keep this issue top of mind. Make sure that any targets you identify are quantifiable and achievable. Don’t set crazy hard targets that ensure you disappoint. 

Advocate for an Outstanding rating


When aiming for an Outstanding CRA rating, advocacy is key. If nobody in your bank knows about your goals, then they can’t help you. By advocating for an Outstanding rating, you’ll ensure that others in your bank know about your plans and know how to help you achieve them. 
Advocating for an Outstanding may mean dispelling the myth that an Outstanding rating is difficult, expensive, or useless. None of these are true, and it’s up to you to show your colleagues why. You should definitely spend time talking to your CRA committee. When on board with your plan, this committee becomes your best cheerleaders and can really push you towards success. 

Stay focused


Getting an Outstanding rating doesn’t need to be crazy expensive. The main thing it takes is focus. You need to be focused on your goals and dedicated to making them happen. Without your focus, nothing will get done and you won’t get an Outstanding on your next CRA exam. This certainly doesn’t mean that you’ve failed, just that you didn’t quite make it. 
So long as you’re focused, dedicated, have a solid plan, and follow through, getting an Outstanding CRA rating should be a no-brainer. 

Engage with other departments


You don’t have to run your CRA program alone. While sometimes it may feel like you’re a one-person army, this isn’t true. You should engage with the other departments at your bank that contribute even indirectly to your CRA program. 
When you engage with these departments, you’ll build relationships and awareness of your program. For example, you should work closely with your bank’s lending department because lenders can help you identify potential community development loans. These extra loans then bring you closer to an Outstanding rating.  

Provide regular updates


You should also provide regular updates to contributing departments. This helps you to align the purpose of the CRA with the work. When you report to the lending department on the loans they’ve helped identify, they’ll see their work in action and will be more likely to reach out in the future with more potential loans. 
This also keeps the whole bank involved with your work. The more people you have watching out for ways to get CRA credit, the better. When you provide updates and show them how they’ve impacted the CRA program, you can continue to foster these relationships and grow your program. 

Focus on the outcome


Numbers are not the end-all-be-all. You should focus more on the outcome of your CRA efforts than on the specific numbers. Not only will this keep you sane, but it will ensure that you aren’t so focused on something that doesn’t really matter that you miss the big picture. Because the big picture is how well your bank has met the credit needs of your community. It’s not necessarily how many loans you’ve given, how many investments you’ve made, or how many services you’ve sponsored. The big picture is how much of an impact you’ve had in your community. 

Create a CRA target plan


Everything is easier when you have a specific plan. By creating a CRA target plan, you can clearly see what your goals are and where you’re at in achieving them. Without a written plan, your targets and ideas are likely to get lost in the weeds and never come to fruition. With a plan, you can stay ahead of the game and constantly work closer to that Outstanding rating. And the sooner you write your goals down, the more likely you are to achieve them. 

Use Kadince to track and manage your CRA program


Getting an Outstanding CRA rating isn’t going to be easy. But it will be especially difficult if you spend most of your time tracking your CRA data on spreadsheets. 
Kadince makes it easier to get an Outstanding CRA rating. Instead of manually tracking your data and trying to build goals based on incomplete or separated data, you can automatically track and manage your CRA program with Kadince. This means that all of your data will be in one place, easily viewable, trackable, and manageable. 
To learn more about how Kadince can help you on your way to an Outstanding CRA rating, schedule a personalized demo

To learn more about how to get an Outstanding CRA rating and why you should, check out our webinar recording.

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.

Jaidyn Crookston | Content Manager, Kadince

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