CRA Exams Can Be Pleasant!

The reports are coming in on some of the first compliance examinations under the new CRA regulation and examination procedures. Each agency - and a few banks - now have some experience with the process. Both examiners and the banks examined say the same thing: It was a fairly pleasant process. I would do it again.

It appears that of the banks that have been examined to date under the new rule most are earning a "Satisfactory" rating. Examiners stress, however, that the ratings do not reflect a give-away during the honeymoon period of the new procedures. The ratings reflect the fact that the banks examined are doing a good job of lending. Lending is what the rating depends on.

The really good news here is that "technical fouls" are not taking down banks. The regulatory agencies meant it when they wrote a rule that depends on results and not on technical accomplishments or process. Banks will not be written up or lose points for disagreements on the assessment area. If there are errors in the poster (or you don't have the new one up) the examiners will call your attention to it and ask that you correct it before they leave.

Even with this good news, it is not time to relax. We are very much in the early days of this process and there is much to be tested and learned. Keep in mind that not just banks but also the examiners are in learning mode. It is a good time to work together.

Examiners already have some advice for banks that are facing examinations. The most important thing a bank can do - in addition to lending in its community - is maintain a positive and constructive dialogue with the examination team.

When the examiner asks questions, the examiner is opening a discussion, not issuing a challenge. Your response, and your information about the bank and your community, can not only contribute to your rating, but may also contribute to the final design and workings of the examination process.

Another tip from examiners is to have information that they are likely to need or that you would like them to consider. The regulations do not require that small banks maintain such information.

Documentation requirements are out. However, information that you use about your customers and about your market will shorten the examination time and may help the examination results.

Finally, remember that the examiners are learning also. Be patient and gentle. The regulators would like this to be a constructive process - and maybe even a pleasant experience!

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 4, 2/96