has anyone from an ISB bank developed such an animal? Attended yesterday's session on CRA sponsored by BOL with Jack Holzknecht. Looking for a starting point or any tips and tricks out there to putting something together. We struggle for CD opportunities as it is and now they want a business plan for something we can't seem to achieve??

Was developing a Community Development Plan a requirement by the regulation or just a suggestion?

The regulation says the regulatory agencies "expect" an assessment done in the manner of a business or marketing plan. However, the revised Q&A states that a plan is not required. At the CRA Conference sponsored by the SF FRB the agencies' representatives stated that a formal plan is not required, but at the same time documentation about the performance context should be done. Over and over again, the regulators stated that an institution should be able to present its "story" to the examiners and they emphasized that a self-assessment program was highly desirable, but not mandatory.
IMO, an ISB should have some form of documentation regarding the performance context since it is risking its entire CRA PE on the CD test. If the examiners uncover CD opportunities that you were not aware of, you would be at risk for criticism. But if you have the documentation to back up your assessment you are in a much stronger position to defend your record. Put yourself in the shoes of the examiner. A bank has few if any CD activities and maintains that there are no CD opportunities in the AA, but has no documentation to support its position. You speak to community organizations that say they never had contact with the bank and there have been opportunities. Are you likely to give this bank a "satisfactory" rating for CD activities? Prudence would suggest that a documented assessment should be developed and maintained. If my job depended on it, there would be no doubt I would make certain I documented my performance, wouldn't you?

If you have questions or concerns about CD opportunities, you should contact your examiner-in-charge and/or the banking agency's community affairs officers. They can provide information and assistance on identifying needs and opportunities within a bank's assessment area(s) relating to community development and general banking needs.

thanks for the replies to everyone who posted. I checked with external compliance counsel who overwhelmingly said that Jack's interpretation was just that...his own. Nowhere in the preamble or the reg does it say a written community development business plan is a mandate. Of course our CRA policy states that board and management will strive to seek out CD opportunities and ensure that it's community needs are being met. Beyond that, I'm not sure where the mandate/requirement exists.

The formal plan was an initial requirement that has been dropped. However, (informally) you will be expected to know your community and its needs and will be asked about them. You no longer have to write a formal needs assessment, but you will be expected to verbalize what they are.

If a staff person says low income housing and you say there is no low income housing need, and the examiner has information that there is a need, its an indication the bank does not have a handle on community needs. If the bank has no understanding then it cannot be meeting the needs of its community.

This is a very subjective examination, and if you cannot supply good information you are going to be at the mercy of the examiners subjectivity.

To quote from the FRB Community Development Conference. "We expect banks to know their story and be able to tell it"

Forget whether a formal written plan is required or not. Prudence would suggest that, since the entire PE hangs in the balance, some sort of documented assessment of the area's community development needs and opportunities should be developed and maintained. Too many banks run their CRA programs by the seat of their pants. If I were the CRA officer I would not feel comfortable without a well-documented assessment of the community development situation in my assessment area. If you like living with anxiety, then skip the needs assessment and hope you have a very friendly and tolerant examiner who will take your word for it. Personally, I don't think a well-documented assessment is that difficult or expensive. Once the initial assessment is done, maintaining it should be less time-consuming than initiating it. Psychologically, I also think it would be very helpful to demonstrate a good faith effort. Examiners are likely to be more understanding with bankers who demonstrate they take CRA seriously, rather than those who treat it casually and informally.