Banking in the Ninth

Strategies for Effective Management of Community Development Activities

Consumer Affairs Update - June 2017

Tait Berg | Senior Examiner

Published June 30, 2017  | June 2017 issue

Effectively identifying, tracking and documenting Community Reinvestment Act (CRA) community development activities can provide multiple benefits to a bank. First, effectively managing community development activities can help ensure that the bank maintains satisfactory or outstanding CRA performance between exams, particularly for banks subject to community development obligations as intermediate-small or large CRA banks.1

This is important because the frequency of CRA evaluations for state member banks can range from one to five years, depending primarily on the bank’s asset size and CRA and compliance ratings.2 Many things can occur at a bank or in the bank’s community between exams—significant changes in bank staff or management, a shift in business strategy or economic changes that affect the bank’s assessment areas—that can be difficult to recall later.

Second, effectively and proactively managing community development activities can help streamline the CRA examination for the bank. Banks that have effective processes for CRA community development activities tend to require less follow-up from examiners, which helps the timing and overall effectiveness of the exam. This article provides an overview of strong practices for managing community development activities. It also discusses how the bank can use its community development activity data to help oversee its own CRA performance.

Managing community development activities effectively


Identifying community development activities should be a bankwide process that includes, at a minimum, the compliance, lending, marketing, accounting and human resources departments. A good first step in improving the process is to provide CRA training to all bank staff so that everyone has a basic understanding of what could be considered a qualified community development activity. Staff should also have a basic understanding of the bank’s assessment areas and the applicability of CRA to specific geographies or characteristics of areas.

For example, a good understanding of CRA’s requirements and specific assessment area knowledge can help lenders identify potential community development loans early in the origination process and document needed CRA information for future reference purposes. Likewise, staff volunteering at a community event or organization may recognize that the activity has a community development purpose and submit the activity to the CRA officer for review.

CRA officers may want to develop other forms, guides or checklists to help bank staff identify and self-report potential community development activities. CRA officers may also benefit from attending loan or investment committee meetings to help identify loans and investments that have a qualified community development purpose.3


Recent examinations show that sufficiently documenting community development activities is challenging for banks. Documentation for these activities should include at least the following information to help support that the activities qualify as community development under CRA:

  • Date and dollar amount of the community development loan/renewal or investment and the time frame for a community development service.
  • Name, address and location of the borrower and/or organization benefiting from the activity.
  • Name of the assessment area or region in which the activity occurred.
  • Community development category (such as affordable housing for low- and moderate-income (LMI) individuals)4
    and a description of how the activity meets the community development criteria.
  • Additional supporting documents that help show that the activity occurred during the CRA evaluation period and has a qualified community development purpose, such as copies of the loan note, credit approval memo, loan agreement, investment prospectus, letters, investment agreements and the organization’s purpose, including showing that the organization primarily serves LMI individuals if relevant for that activity.

It can be difficult to determine whether an organization primarily serves LMI individuals, especially for smaller organizations. Usually, this information is not readily available on an organization’s website, so banks will need to take additional steps to obtain the information. Often, the organizations are willing to provide the information when asked. The Interagency Questions and Answers Regarding Community Reinvestment5 include additional examples of ways to determine whether an organization primarily serves LMI individuals.


Many banks that effectively track community development activities have a centralized process to maintain supporting documentation and to record and organize community development activities. Maintaining documentation centrally helps the CRA officer review the community development activity information and supporting documentation to ensure that it meets regulatory requirements. Many banks use a spreadsheet to track community development activities, while others use more sophisticated databases. Regardless of the method, the tracking should allow staff to create useful reports, lists or charts detailing CRA activity.

The bank’s CRA officer may find it helpful to generate community development activity reports for analysis. Useful reports could include the following:

  • Bankwide or assessment area–specific community development activity reports.
  • Community development activity trend reports by year, assessment area or region.
  • Community development activities by organization.
  • Quarterly, semi-annual or annual reports detailing the bank’s community development activities.

This list includes just a few of the types of reports that CRA officers can create using the information collected. Having these reports can help the CRA officer analyze and evaluate how effectively the bank’s CRA performance meets intended goals and strategies and compares with previous CRA performance.

CRA self-evaluation

Having detailed information about the bank’s CRA activities allows bank management to make timely decisions regarding its CRA performance and helps ensure that the bank maintains at least a satisfactory rating. It also makes CRA performance more predictable. With internal monitoring, bank management can assess CRA performance on an ongoing basis and modify its CRA strategy before the examination if needed. Banks with this information are also better able to assess and explain their level of community development activities in the bank’s assessment areas. For example, if community development opportunities are limited in an assessment area, it is helpful to provide examiners with this information, particularly if the bank has fewer community development activities in this assessment area.

Resource materials

Several Consumer Compliance Outlook articles and Outlook Live webinars discuss CRA-related topics, including the following:


1 See Regulation BB, section 228.21 and Interagency CRA Examination Procedures,

2 Consumer Affairs Letter 13-20 discusses the Federal Reserve System’s compliance and CRA examination frequency guidelines,

3 See definition of community development in Regulation BB, section 228.12(g).

4 See Regulation BB, section 228.12(g)(1).