1. Community Reinvestment Act Kevin Grace, Director of National Programs Cheryl Brenn, Director of International Programs

2. Agenda What is CRA What CRA is not CRA Enforcement How HOBY qualifies for CRA How to get started Part 1 Part 2 Part 3 Final Thoughts 2015 Training Institute2

3. What is CRA? Community Reinvestment Act

4. What is CRA? Community Reinvestment Act Federal legislation intended to encourage depository institutions (banks) to help meet the credit needs of the communities in which they operate. Targets low and moderate income neighborhoods Very complex regulations enacted by Congress in 1977 (12 U.S.C. 2901) Compliance closely monitored by regulators and examiners CRA was amended to include credit unions 2015 Training Institute4

5. What is CRA? cont’d Regulators check to make sure banks are meeting credit need of communities: Are banking institutions extending credit to low/moderate income neighborhoods in communities in which they serve? Are banking institutions supporting affordable housing, small businesses, community development projects, and consumer credit needs? 2015 Training Institute5

6. What CRA is Not A regulation governing non-profits A regulation requiring bank intuitions to give to non-profits A government program A school scholarship program Associated with HOBY cooperating organizations 2015 Training Institute6

7. CRA Enforcement The federal banking agencies enforce the CRA by examining the CRA record of a bank, issuing a written report with a rating, and taking the bank’s CRA record into account when considering the bank’s application to expand its business. Why is this important to know? To be a trusted investment, HOBY sites that seek CRA funds will need to maintain their collected data and return any unused/unapplied funds. 2015 Training Institute7

8. How HOBY Qualifies for CRA Community Reinvestment Act

9. How HOBY qualifies for CRA HOBY qualifies for CRA by meeting the Investment Test. HOBY can identify schools in a given state that qualify under CRA standards based on criteria that federal regulators have suggested by providing scholarships to schools in low/moderate income neighborhoods. Example: In California a school will qualify for direct sponsorship if it is either located in a low or moderate income Census Tract or the student population has at least 50% participation in the California State Meal Assistance Program. This requirement differs from state to state. Check your state regulations. All sponsorships for this CRA program will be earmarked and 100% of the funds will be directly applied to support the student attending the Leadership Seminar from the CRA qualified school. Therefore, 100% of a banks investment will qualify under CRA examination standards. 2015 Training Institute9

10. How HOBY qualifies for CRA, cont’d HOBY qualifies for CRA by meeting the Service Test. There are two different ways for institutions to gain CRA credit on the Service Test: 1.In 1998, HOBY launched the Leadership for Service program as a component of the Leadership Seminars. The program is part of HOBY's commitment to the Presidents' Summit for America's Future. Through Leadership for Service, HOBY provides young people with the tools and training necessary to successfully complete 100 hours of volunteer service in their local communities. There is opportunity for the Sponsor to assist the student after they have attended the Leadership Seminar to help them identify community organizations to serve out their 100 hours of community service. 2.Additionally, part of the HOBY program is for students to take what they learned at the Leadership Seminar and go back to school and present a one-day CLeW workshop along the same lines to other students within their school. The Sponsor will be able to assist in offering their financial expertise on a panel as well as helping to coordinate the financial aspects of putting on the seminars. 2015 Training Institute10

11. How to get started Community Reinvestment Act

12. Part 1 – Qualifying the Schools for CRA Refer to the CRA Step by Step Guide on HOBY Online to complete these tasks: 1)Create a database of schools 2)Look at the regulatory sites below and find your local State offices that can help give clear direction on how to qualify a school as low to moderate income for CRA purposes in your state. www.ffiec.gov www.fdic.gov www.bog.frb.fed.us www.occ.treas.gov www.ots.treas.gov 3)Look up the Income Tract for the school’s neighborhood 4)Look up the school’s Free/Reduced Lunch Program participation % 5) Filter the results 2015 Training Institute12

13. Part 2 – Finding the Banks and Credit Unions Refer to the CRA Step by Step Guide on HOBY Online to complete these tasks: 1)Create a database of banks and credit unions in the HOBY Affiliate’s site / state. 2)Research each bank and credit union to determine which counties they do business in. 3)Research each bank and credit union to determine if the bank has a formal grant process 4)Filter the results to reveal which banks and credit unions will accept a written request. Note: Large banks, such as Bank of America, will require a formal grant application to give CRA dollars to a qualifying organization. 2015 Training Institute13

14. Part 3 – Organize the Mailing Materials Review the CRA Templates on HOBY Online. All needed materials are included to complete a CRA mailing. 1)The Cover Letter – introduction to the bank 2)HOBY and CRA FAQs – confirms how HOBY meets the CRA tests 3)CRA Qualified Sponsorship Opportunities – suggests sponsorship levels 4)Additional information for Sponsorships – gives the CRA need by county 5)CRA School List – list of every CRA school by county 6)L4S Highlights – demonstrates a return on investment (optional) Refer to the CRA Step by Step Guide to complete the above tasks. 2015 Training Institute14

15. Final Thoughts While this seems like a lot of work, it can be shared between volunteers and simultaneously recorded in Google Drive Review the CRA Q & A on HOBY Online Focus on Smaller and Regional banks. Follow-up with the CRA officer at the bank. Several states have CRA laws that are modeled on the federal law and may carry additional requirements. Make sure to check with your state regulators on definitions for low/moderate income families. Nationally chartered financial institutions such as national banks are often exempt from state laws in which they have a branch if the state laws conflicts with the federal laws. Banks can use grants to comply with CRA laws and may require a formal grant application. 2015 Training Institute15