The CRA Exam Cycle From a Regulator’s Perspective

Your bank is steadfast in meeting the credit needs of all businesses both large and small in your communities. Your job is making sure you capture and identify all eligible community development activities going into a regulatory exam. But what about your regulator? Sometimes it’s helpful to consider the other side of the coin. This week’s article will outline the milestones regulators move through as they approach a Community Reinvestment Act (CRA) bank examination.  

Your regulatory agency has a flow to examination management following their respective examination procedures. Review your regulator’s exam procedures document based on your asset size to understand their step-by-step process and exam protocol. 

Here are the core elements [not exhaustive] that each regulator will go through during a CRA exam cycle. 

Notification. The agency publishes their next quarter exams. And soon after, a request letter will be sent to the bank. This is the official start to your CRA Exam!

Look Back. Your lead CRA examiner will start by looking at your bank’s past performance evaluations and any notes they may have made during your last exam based on your overall performance, your bank’s demographic data, and your business context. Various reports and worksheets will be reviewed to obtain performance context. 

Validate Data Integrity. Examiners will conduct a review of your data integrity. This includes loan data and community development loans, services and investments data. This ensures that the data you’ve collected and maintained can be relied upon to assess your lending performance. If you don’t pass this step, your examination will be delayed. 

Laptop with data table showing Geographic Distribution of Small Business Loans.

Analyze Assessment Area. Examiners will review your assessment areas to ensure compliance with the regulation. They will also ensure that your stated assessment areas do not reflect illegal discrimination or arbitrarily exclude any low- or moderate-income areas.

Analyze Loan Performance. Depending on the size of your bank, examiners will approach the review of your lending performance differently. Again, you can review the examination procedures for the exact scope. 

Keep in mind that there are several measures to determine if your bank is effectively meeting the credit needs of your community. This is the basis for the regulation. If you have limited time, this is the section you must pay attention to.

Analyze Community Development Loans, Services and Investments. As applicable, these elements are key to assessing your overall performance under the CRA. These elements are “weighted” along with your lending performance to draw conclusions on your overall performance under the CRA and your final CRA rating. 

Preliminary and Final Rating. Examiners will hold a preliminary meeting with bank management to discuss findings. They will also provide preliminary ratings that are subject to review and finalization within agency protocols. The CRA performance evaluation will be issued as the last step in the process and will show your final rating! 

Now that you have a regulatory perspective, next week we’ll cover a CRA Officer’s perspective as it relates to preparing for a CRA examination.


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Next month CRA Today will be hosting a CRA Exam Prep Workshop that will take a deeper dive into exam management. Stay tuned for more information!