What To Do Now That CRA Regulatory Change Has Arrived

Whether you like it or not, Community Reinvestment Act (CRA) regulatory change is here. 

Unless you’re near retirement age and can say, “I’m out,” the new CRA rules are likely to bring more pressure to your department and make your job a lot more challenging. 

While we don’t know exactly how these new rules will affect banks, we do know that you’ll likely be stuck tracking even more data, building more partnerships, and conducting more data analytics. All of this may mean that you need a bigger budget or more help from team members. Scary, we know. 

The more you start preparing for the change now, the better off you’ll be when 2026 comes and you have to start following them. Here are some steps you can take to make sure you’re as prepared as possible. 

Finish strong

Just because a new CRA rule dropped doesn’t mean you can stop what you’re doing now. In fact, this new rule won’t take full effect until January 1, 2026 (at least that’s what they’re saying right now). That’s a long ways away! This means you’ll likely go through at least one more CRA exam under the current regulations. 

You should create a CRA plan spanning the rest of your current evaluation period. Do a self-assessment. Evaluate your performance. Do everything you need to do to keep up the momentum and finish strong. The more solid your CRA program now, the better off you’ll be under the new regulations. 

Analyze your data tracking system

If there’s one thing we know after reading the new CRA rules, it’s that you’re going to have to track a lot of data, especially if you have assets over $10 billion dollars. (Feel free to pause here and scream for a moment.) Community development services, loans, investments, and maybe even deposits!  

Chances are you already track at least some of these data points. Great start! But just because you’re tracking them now doesn’t mean it’s easy. 

Now is a great time to look at the data tracking systems you use and decide if these systems are going to cut it going forward. And if you’re still using paper and binders to track your CRA data, please stop…

Spreadsheets are at least better than that, but may not be robust enough to hold up under new CRA rules. If you plan to use spreadsheets for the foreseeable future, take some time now to audit and reduce the effort they take to manage and update. 

If your institution is Large or you have over $10 billion dollars in assets, then spreadsheets are so a thing of the past. There’s no way you can keep up with all the services, donations, loans, investments, and volunteer hours that come through your door. Unless you aren’t a fan of food or sleep, that is. 

It’s time to start looking for software that can take your data tracking system from difficult and time-consuming to fast and easy. Personally, we think Kadince is pretty great… 

Educate your team members and leadership

Your coworkers and leadership team aren’t nearly as involved in the CRA world as you. They may know that CRA regulatory change is happening, but they probably don’t know any specifics or what it means for your institution (heck, you barely know, and you only fell asleep once while skimming the almost 1500-page CRA rule). 

But your coworkers and leadership team need to know what’s coming. You can’t do everything alone, and they can be a great resource to turn to—if they know what’s going on. 

Here are some ideas on how to educate your team members:

• Hold a periodic meeting with CRA updates and news 

• Present the new CRA rule to your board of directors and executive management

• Have an open question policy and keep reminding your team members to reach out to you when they don’t understand something

• Share monthly high points and low points related to your CRA program and ask team members to do the same

• Send them to resources such as A Bankers Quick Reference Guide to the CRA, CRA Today, and Kadince webinars 

• Find the CRA support systems you need and start gaining your board’s approval

With a little preparation and training, your team members can become valuable assets to help you with the coming CRA reform. We could all use that extra boost!

Prepare to ask for a larger budget

Chances are you’re already working with a pretty tight CRA budget. Heck, you barely have the budget to track what’s necessary now, much less what you’ll have to do when the new CRA regulations take effect. Bottom line, you’re going to need a larger budget.

Instead of being caught unprepared when the change comes, start preparing to ask for this larger budget now. This will likely take some time and effort, so it’s a great time to start. 

You may need a larger budget for:

• Additional compliance and CRA staff, including data analysts

• Project management systems

• Professional development training programs (conferences, roundtables, webinars, etc)

• Software to track and manage CRA data

• And more

Asking for more money in your CRA budget can be daunting, and you may not have the support you need right now. But that’s okay! You’re here to play the long game, and getting this support is a great first step. 

Improve your CD loan mining process

Mining for CD loans can be a difficult, time-consuming process, especially if you don’t have a system set to reduce the number of loans to review. Take a good look at your current process and brainstorm ways to improve it. 

If you don’t spend much time mining for CD loans and are still getting the loans you need, great! If you don’t spend time mining for loans and aren’t getting the loans you need, it’s time to start seeking them out. Your CRA program is largely built on the loans your institution gives, and you’re a crucial part of receiving credit for those loans. 

To improve your loan mining process, try getting help from a team member or automating part of the process. The less manual work you have to do, the better. 

Explore an MDI, CDFI, or LICU partnership

Believe it or not, partnering with another financial institution can actually boost your CRA program and help close lending performance gaps. Minority Depository Institutions (MDIs), Community Development Financial Institutions (CDFIs), and Low-Income Credit Unions (LICUs) are all great options. 

In fact, partnering with these types of institutions is strongly emphasized in the new CRA rule. The rule states that a new category of “community development” will comprise activities with MDIs, WDIs, LICUs, or CDFIs. The work you do with these financial institutions will factor into your overall CRA rating and may determine whether your bank is meeting the credit needs of its community. Clearly, building partnerships with these institutions is important.

As you know, building partnerships can take time. Now is your chance to explore a partnership and gather data. With the new CRA regulations, you’ll need ideas in your pocket so you can pivot more quickly. 

Check out this recorded Kadince webinar to learn more about partnering with an MDI. 

Recruit some help

If you’re a CRA team of one, this step is especially important. You can’t do this work alone, and you shouldn’t have to. Recruiting some help will give you more time to focus on serving the community and less time to worry about tracking the data. This help can come from other departments in your bank, and now is the time to start reaching out. 

This help may also come in the form of a new team member willing and ready to take on this enormous task. (Wouldn’t that be nice?) But more likely, you’ll have to find this help through your own ingenuity. Maybe you’ll try begging on your hands and knees hoping somebody takes pity and offers to help out. Or, you know, you could just use Kadince… 

See what Kadince has to offer

Kadince software can help track, manage, and report your community development activities. No more spreadsheets. No more binders. Kadince keeps your data in one place and makes building reports as easy as clicking a few buttons. 

Kadince helps you:

• Mine for community development loans

• Track investments

• Geocode service activities

• Monitor your relationship with community partners, nonprofits, MDIs, and more

• Report employee volunteer hours

Tracking all this data will be crucial now that the new rule has passed. And you can avoid a lot of the extra pressure when you partner with Kadince. 

Schedule a demo to learn how Kadince makes it easy to track your data and what we’re doing to prepare our software for regulatory change. Future you will thank you.

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*This article has been peer-reviewed by Linda Ezuka, CRA expert and owner of CRA Today. 

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.