CRA Self-Assessments: Why You Need One and Where To Start

Are you ready for your next CRA exam? If you’re like most CRA professionals, preparing for a CRA exam is a never-ending process. One way to make this process a little more manageable is by creating a CRA self-assessment. Most CRA officers find that once they create a CRA self-assessment and commit to keeping it up to date, it can be a powerful tool to ensure a smooth exam experience for all stakeholders. 

What is a CRA self-assessment?

A CRA self-assessment is a document that summarizes a bank’s performance under the Community Reinvestment Act regulation during a specific time period. Performance is measured over a span of an exam cycle, which is typically 2-3 years. The document highlights key programs, retail distribution of products and services, and lending, service, and investment performance in the communities in which the bank serves.

Why it’s important to conduct a CRA self-assessment

Conducting a CRA self-assessment ensures that you’re prepared to report your CRA progress to examiners. If you don’t put the work in upfront, you’re leaving it up to your examiners to figure out what your bank has done for its community. Examiners have limited time and resources to consider your bank’s performance in the community, and having a self-assessment will make sure that you get the credit you deserve. 

You know your CRA program best: the communities you serve, their challenges, their credit needs, and the impact your CRA program has forged over the past few years. A CRA self-assessment is your opportunity to tell your bank’s CRA story. This gives you, your bank’s leadership team, and your CRA examiners confidence that your bank is on track for the CRA rating you’re aiming for.  

A CRA self-assessment may be the most important tool you have in your CRA toolbox. Not only can it give you a good idea of what your examiners will find during your next CRA evaluation, but it can help you better understand your bank’s demographic profile and how your bank’s products meet the needs of the community. It’s a living document you can use to strengthen your program by identifying areas of potential weaknesses and by sharing your findings with your bank’s management team. 

Although no agency requires a CRA self-assessment, the FDIC recommends performing CRA self-assessments to “review adequacy of Assessment Area, review your bank’s data, review your competitor’s data, and track progress.” Learn more about what the FDIC recommends here: The Community Reinvestment Act

Where should you start? 

You should start where your CRA examiner starts. An examiner will start by looking at your bank’s past Performance Evaluations and any notes they may have made during your last exam. You should start there too. Then collect internal and external data, such as internal strategies and CRA plans, HMDA data, performance evaluations of peer banks, and national statistics. Refresh yourself on your regulator’s exam processes and protocols. You can find links to each regulator’s exam processes here: CRA Examinations.

All this research will help you analyze your bank’s CRA program. It’s important to be familiar with how your bank and others have performed in the past and the current regulations because this should guide your future CRA program and your self-assessment.

What should your CRA self-assessment look like? 

Since you aren’t required to create CRA self-assessments, there is no one format that is best. However, there are three general types of self-assessments that banks tend to use. Banks tend to use either a “lite” version that gets straight to the point, a “targeted” version focusing on an in-depth key performance measure, or a “comprehensive” analysis of a bank’s CRA program. There is no right or wrong type of CRA self-assessment; it all depends on bank strategy, CRA leadership cycle, and program maturity. 

Lite self-assessment:

A lite self-assessment can be as simple as a 1-3 page executive-level assessment highlighting key programs and the top 2-4 performance elements you’re proud of.  A lite self-assessment is useful for new CRA Officers or banks without an existing self-assessment. It provides a high-level view of your program to guide your CRA examiners. 

Targeted self-assessment:

If you know of performance gaps in your CRA program, a targeted self-assessment can help take control of your CRA story and guide how you address these gaps. Include performance tables and analysis in your performance context to show that you have identified weak spots and have a plan to move forward. It’s important to give examiners confidence in your CRA program, and you can do this by being proactive in identifying and sharing how you are moving forward. 

Comprehensive self-assessment: 

A comprehensive self-assessment is ideal for more mature CRA programs with dedicated and experienced CRA professionals.  In this type of assessment, you’ll look at everything your CRA examiner will look at. It’s an opportunity to showcase your performance, provide performance context to address gaps, and highlight your bank’s response.  

Next steps

Preparing a self-assessment takes time, but the time invested yields a healthy return. When you put time into a CRA self-assessment, you’re telling your examiners, “We are confident. We are proactive. We know our communities. We run a professional CRA program. We have a presumptive rating in mind.”

The benefits don’t stop at your CRA exam. Share your CRA self-assessment internally with your board, executive leadership, key business units, and your CRA Committee to keep them informed of your progress and build a culture of compliance at your bank. Use your findings to mature and improve your CRA program over time.