1. The Community Reinvestment Act
Building Michigan Communities Conference
April 29, 2019
Paul Ginger, District Community Affairs Officer
Office of the Comptroller of the Currency

2. Developing Bank Partnerships
Bank Motives for Partnerships:
Welfare of the community and the bank
Market Share
Income and profits
Risk Mitigation
Reputation
Community Reinvestment Act

3. CRA Basics – Obligations of Banks
The Community Reinvestment Act
Federal law passed in 1977 that encourages banks to meet the credit needs of the communities they’re chartered to serve
Including low- and moderate-income neighborhoods
Consistent with safety and soundness

4. CRA Basics – Bank Regulators
CRA applies to banks regulated by:
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Federal Reserve Banks

5. CRA Basics – Duties of Regulators
Congress directed regulators to …
Evaluate how well each bank meets the credit needs of its community, and assign one of these public ratings to every bank:
Outstanding
Satisfactory
Needs to Improve
Substantial Noncompliance

6. CRA Basics – Duties of Regulators
CRA also requires the regulators to:
Issue a public report containing the facts and data underlying each rating
Take a bank’s rating into account when reviewing certain applications from the bank
Encourage banks to help meet credit needs in their communities

7. Sizes of Banks Under CRA
Small Banks
TA <$321 million* (about 70% of all banks)
1 CRA test: Lending
Intermediate Small Banks (ISB)
$321 million - $1.284 billion* (20% - 25% of banks)
2 CRA tests: Lending + Community Development (CD)
Large Banks
> $1.284 billion* (5% - 10% of banks)
3 CRA tests: Lending + CD Investments + Services
*effective 1/1/2019: thresholds updated annually

8. CRA – Lending Evaluation
3 main concerns of all bankers monitoring their lending for CRA:
Activity – Is the bank actively lending?
Geography – Is the bank lending in its Assessment Area and in LMI areas in its AA?
Variety – Is the bank lending to borrowers with different incomes in its AA?

9. Small Bank CRA Exam Lending Test = 100% of rating Evaluation criteria:
Loan to deposit ratio
In / out ratio
Geographic distribution
Borrower distribution
Responses to complaints

10. Intermediate Small Bank CRA Exam
Community Development (CD) Test
Lending Test Criteria:
Loan to deposit ratio
In / out ratio
Borrower distribution
Geographic distribution
Responses to complaints
CD Loans
CD Investments
CD Services
Responsiveness to needs
The bank must be rated Satisfactory on both tests to be Satisfactory overall

11. Large Bank CRA Exam Lending Test Lending activity
Geographic distribution
Borrower distribution
CD Loans
Innovative & flexible lending practices
50% of rating
Investment Test
# and $ amount of CD Investments
Innovative, complex, responsive and whether generally available
25% of rating
Service Test
Retail services provided to people and areas with different income levels
CD services

12. Community Development under CRA
Affordable housing for low- and moderate-income persons
Community services targeted primarily to LMI persons
Economic development activities that help finance small businesses or farms or that provide job training
Revitalization or Stabilization activities in:
LMI census tracts
Underserved nonmetropolitan middle-income census tracts
Distressed nonmetropolitan middle-income census tracts
Certain designated disaster areas

13. Community Development Investments
Examples of CD investments include …
Donations to
Housing counseling agencies
Affordable housing developers
Small business development organizations
Workforce development programs
Homeless shelters
Food banks and soup kitchens
Battered women’s shelters
Alcohol and drug recovery centers
Youth programs targeted to LMI youths
Health care facilities that serve primarily LMI persons

14. Community Development Investments
Examples of CD Investments also include:
Funding a down payment assistance program
Investments in CDFIs
Investments in loan pools for LMI borrowers or small businesses
Deposits in Low Income Credit Unions
Low-Income Housing Tax Credits
Small Business Investment Companies

15. Community Development Services
Examples of retail CD Services include:
Providing credit counseling to LMI persons
Teaching a unit of a homebuyer counseling program
A school saving program for kids from LMI families
Providing credit-builder loans targeted to LMI persons
Providing responsible small-dollar loans

16. Community Development Services
Examples of CD Services to nonprofits include:
Participation in an IDA program
Service on a board or committee
Helping design a loan program
Assisting in marketing or fundraising
Providing technical skills such as human resources, IT, legal, or other expertise

17. Steps to Partnerships Understand CRA Understand the local market
Understand local banks
Identify your sources of influence
Talk with bankers

18. Concentric Circles of Opportunity
Actual Market Share
Market Share Available with Extra Effort
Labor Intensive but Bankable Deals
Deals Bankable if Enhanced
Universe of Economic Needs

19. CRA Modernization Timeline to today
March 22, EGRPRA Report to Congress
April 3, Treasury Department Recommendations
August 28, 2018 – OCC issues ANPR
November 19, end of 75-day comment period
Approximately 1,500 comments received
Comments on ANPR are being reviewed now
OCC Goal: pursue modernization with the other agencies
Watch for a proposed rule and comment period

20. CRA Resources FFIEC CRA Website OCC CRA Webpage
Exam Schedules, Procedures, Asset Size Thresholds, Link to Q&As
FFIEC CRA Ratings Search:
OCC CRA Webpage
Resources, Procedures, Examination schedule
OCC CRA Ratings Search:
OCC Community Affairs Publications

21. CRA Resources What is the Community Reinvestment Act?
The Small and Intermediate Small Bank CRA Examination
Leading Practices for Effective CRA Programs
CRA Community Development Defined

22. Contact Information
Contact Information: Paul Ginger, District Community Affairs Officer Office of the Comptroller of the Currency