Banks cannot eliminate this risk of examiner criticism entirely, but steps can be taken to significantly reduce it, including good strategic planning. Other advantages of an informal plan over a formal one are that it does not have to be negotiated with members of the public, formally approved by regulators or made public. Drafting a Plan A CRA plan should be developed to align with the bank’s existing planning structure and culture. It should build on the bank’s identified strengths in its performance and aim to shore up any weak areas. The team assembled to draft the plan should be diverse and represent all areas of the bank that affect and touch on CRA performance. This brings the strengths and viewpoints of a variety of bank players into the process and helps get wide “buy-in” to the plan, an important element for its success. The plan also must be tailored to fit the CRA environment within which the bank operates — the size and CRA type of the bank (small, intermediate small, large retail, limited purpose or wholesale), past CRA performance of the bank, characteristics of the bank (culture, business lines, etc.) and local community conditions (employment and income levels, economic needs, etc.). This process will guide the bank in deciding how to address its CRA responsibilities. Elements of the CRA planning and management process include: • Setting clear, attainable goals for a “satisfactory” CRA rating, and more ambitious, stretch goals for an “outstanding” rating • Managing the information about the bank’s CRA performance (data revolving around the three key tests in the CRA examination scheme for large retail banks and thrifts: lending, investments and services), including analysis of that data to get a picture of the bank’s ongoing performance • Establishing and nurturing relationships with active community partners, with a positive approach to working together for the betterment of the local community Conclusion Banks can control their CRA destiny. However, to do so, the entire process must be managed proactively — plans drawn up, goals set, information managed and community partnerships nurtured. Dynamic, ongoing management of the entire CRA process, with appropriate accountability standards for all players, can yield positive results not only for banks but also for their communities. William J. Showalter, CRCM, CRP, is a senior consultant with Young & Associates Inc. (younginc.com), with over 40 years of experience in compliance consulting, advising and assisting financial institutions on consumer compliance and compliance management issues. He has also developed and conducted compliance training programs for individual banks and their trade associations and has authored or co-authored numerous compliance publications and articles. Bill can be reached at (330) 678-0524 or wshowalter@younginc.com. 13 In Touch
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