2025 Community Reinvestment Act Performance Evaluations

This year, RiskExec has been taking a closer look at Community Reinvestment Act (CRA) exam schedules and performance evaluation results. This month, the RiskExec CRA team is diving into recently issued CRA Performance Evaluations and sharing our insights on the CRA regulation and CRA compliance.

While the regulators continue to actively publish CRA exams, a notable trend in reports released by the Office of the Comptroller of the Currency (OCC) during April - May 2025 is the increase in Outstanding ratings compared to the same period in 2024.

Key Themes in Outstanding Large Bank CRA Performance Evaluations

To understand the drivers behind these improved ratings, we analyzed recently released Outstanding rated large bank Performance Evaluations from the OCC, and identified several key themes:

• Lending Test Performance is Paramount: Achieving an Outstanding Lending Test rating remains a strong predictor of an Outstanding overall CRA rating. While strong performance in the Investment and Service Tests is important, the Lending Test, which evaluates a bank's lending activity, is weighted heavily and consistently plays a decisive role in the overall outcome.  
• Community Responsiveness is Key: Demonstrating a strong understanding of and responsiveness to community credit needs is a critical factor in achieving high CRA ratings. Recent performance evaluations indicate that examiners place significant weight on how effectively banks identify and address the specific needs of their assessment areas.  
• Highlighting Product Innovation and Flexibility: Examiners are increasingly recognizing and rewarding banks that offer innovative and flexible lending products tailored to specific community needs. Performance evaluations often include detailed summaries of these programs, along with data on the number and dollar amount of loans originated under them.  
• Community Development Lending Impact: A high volume of community development (CD) lending, even if not particularly complex, continues to contribute significantly to positive Lending Test conclusions. Examiners are carefully evaluating the responsiveness of CD loans to identified community needs.  
• Housing Affordability Takes Center Stage: Recent performance evaluations demonstrate a heightened focus on housing affordability. Examiners often include detailed calculations to assess affordability within the assessment area, and these findings significantly influence overall conclusions.  

The OCC's recent CRA performance evaluations offer valuable insights for institutions seeking to improve their CRA performance and achieve higher ratings. By prioritizing community responsiveness, strategically employing innovative lending practices, and focusing on addressing critical needs like housing affordability, banks can better position themselves for success in CRA evaluations. 

Institutions should make a practice of reviewing performance evaluations for their regulator and institution size to better understand how best to position their performance in relation to community needs and opportunities.

Key Capabilities to Look for in Modern CRA Software Solutions

To effectively implement the strategies highlighted in recent CRA performance evaluations and achieve desired ratings in the future, financial institutions need robust tools for data analysis, performance tracking, and reporting. There are a variety of solutions available to choose from, although not all vendors or products provide a comprehensive solution for managing CRA compliance. Key capabilities to look for in a solution include:

• Data Analysis and Mapping: Institutions will need robust data analysis and mapping capabilities when it comes to CRA needs. RiskExec enables institutions to analyze their lending, investment, and service data in the context of community demographics, identifying opportunities to better serve LMI areas and individuals. The software's mapping capabilities facilitate the visualization of branch distribution, lending patterns, and community needs.
• Performance Tracking: Measuring progress against key CRA metrics is key for institutions. RiskExec’s CRA module, for example, allows for ongoing monitoring of CRA performance against key metrics, helping institutions to proactively identify areas for improvement and track progress towards their goals.
• Reporting and Documentation: Report and document preparation can represent a significant time investment for institutions. RiskExec’s software streamlines the preparation of CRA reports and documentation, ensuring accuracy and compliance with regulatory requirements.
• Product Innovation and Analysis: Community needs change constantly, and leading institutions must innovate to stay ahead. RiskExec’s CRA software can assist in analyzing the impact and effectiveness of innovative lending products, allowing institutions to refine their offerings and demonstrate their responsiveness to community needs.
• Housing Affordability Tools: Ask if your preferred vendor includes housing reporting in their solution. RiskExec’s platform includes reports to analyze housing affordability data, enabling banks to better understand this critical factor in their assessment areas and tailor their lending strategies accordingly.

By leveraging RiskExec's capabilities, financial institutions can gain a deeper understanding of their CRA performance, optimize their community reinvestment strategies, and effectively demonstrate their commitment to serving the credit needs of all segments of their communities.

By Sarah Brons, Product Leader, CRA & 1071 SBL Products

Sarah Brons is Product Leader, CRA & 1071 SBL Products for RiskExec, Inc. Sarah brings in-depth community development and CRA compliance expertise developed through experience in bank examining, bank CRA program development, and industry engagement.

Sarah joined RiskExec from American Express where she served in the American Express National Bank Center for Community Development as Director leading the CRA Grant and Service Programs. She previously held Community Development Officer and CRA Officer positions in two other large banks.

Prior to joining her roles in banks, Sarah served as a bank examiner with the Office of the Comptroller of the Currency where her responsibilities included conducting CRA exams for banks of all sizes. Sarah earned her BSBA from the University of Nebraska at Omaha.