Demystifying CRA : Leveraging Banking Partnerships

Transcript:Demystifying CRA : Leveraging Banking Partnerships:
Demystifying CRA : Leveraging Banking Partnerships What Will We Cover Today? What is CRA? Why is CRA Important? How is CRA Measured? Community Development Purpose What Banks Are Looking For … Examples of Impactful Partnerships Be Flexible Enough to Pivot Essentials of Leveraging Bank Partnership Presenters: Victor M. Ramirez VP / CRA Officer Cesar Trelles VP / Community Development Officer What is CRA? Purpose of Community Reinvestment Act Encourages banks to help meet the credit and deposit needs of the communities in which they do business in, including low- and moderate-income (LMI) geographies, individuals, small businesses, consistent with safe and sound banking operations Regulates and measures how well banks respond to these needs by providing loans, investments and services within the banks Assessment Areas Requires banks to provide and disclose certain information to the public as part of the CRA Public File Why is CRA Important? A CRA Performance Evaluation (PE) is the process used by regulators to assess the Bank’s response to community needs under the CRA. The results of the PE are factored into applications to open a branch, merge with another institution. The Banks CRA Rating is the only regulatory rating that is public. CRA Regulators include: FDIC (non-Federal Reserve member state chartered banks) Federal Reserve Bank (state chartered member banks) Office of the Comptroller of the Currency (national charter banks) The Bank’s CRA Plan includes a Community Needs Assessment to determine the primary needs of the communities and residents where the Bank conducts business, and drives CRA activities The CRA Plan includes qualitative input from community-based organizations through surveys and interviews Quantitative data such as demographics and economic trends is also used to identify focus areas How is CRA Measured? Banks are evaluated using three Performance Tests: Lending (50%) Service (25%) Investment (25%) The CRA Regulators provide one of Four Ratings: Outstanding Satisfactory Needs to Improve Substantial Noncompliance Community Development Purpose To be qualified for CRA: Lending, service and investments activities must have the following PRIMARY PURPOSE of Community Development (CD) “Hooks”: Community services targeted to LMI individuals (education, childcare, health, social services); Affordable housing (including multifamily rental housing) for low- and moderate-income (“LMI”) individuals; Economic development providing financing to small businesses or farms (includes job creation or retention for LMI individuals or in LMI areas; Activities that revitalize or stabilize LMI geographies, designated disaster areas, or designated distressed / underserved middle income areas What determines