Case Study: CRA Self-Assessment and Exam Preparation

Big Picture

Federal regulators generally examine institutions for their Community Reinvestment Act (CRA) performance every three-to-four years. Under the existing rule, the CRA performance evaluation consists of the lending, services, and investment tests, with each measuring the financial institution’s responsiveness to community needs relative to those areas. The overall CRA rating assigned by the examining agency is a critical measure of not only the institution’s investment in their communities, but also the institution’s ability to meet strategic objectives. Indeed, a poor overall CRA rating can bring with it heightened regulatory scrutiny, restrictions in strategic growth (e.g., mergers and acquisitions), and significant reputational risks. 

To prepare for these critical examinations, institutions take many measures including performing a CRA self-assessment. Performing a self-assessment entails performing the lending, services, and investment tests similar to how regulators would during an exam, analyzing data, and identifying gaps or areas for improvement ahead of the actual exam.  

CRA Self-Assessment and Exam Preparation

Client Scenario

A mid-sized bank operating in a multi-state regional area received notice that they were scheduled for a CRA exam in twelve months. To better understand their CRA performance during the totality of the scope period, the bank sought to perform a self-assessment. The bank entrusted Asurity Advisors and their seasoned professionals to execute an efficient process for evaluating CRA performance.

Asurity Solutions

Asurity Advisors leveraged the RiskExec software platform and resident CRA subject matter experts to facilitate the evaluation of the bank’s lending performance. Asurity Advisors similarly executed reviews of the service and investment tests while providing the bank with best practices for data collection and aggregation. This resulted in the delivery of value-added support in anticipation of the upcoming exam. Asurity Advisors completed the CRA self-assessment, provided performance conclusions and recommendations for future exam preparation, and gave the bank advice on strategic direction for any gaps identified.