Just as in other areas of examination, periodic review and monitoring of CRA community development activities makes sense. It allows an institution to gauge its current level of performance and adjust as necessary to achieve its CRA goals at the next evaluation. Successful community development programs include periodic reviews and monitoring of activities to ensure they address what I term the Four Ws (Who, Where, When and Why).
Proactive processes begin with clearly identifying the “who” and “where” of the activity and how these factors were considered according to the five CRA community development purposes:
The review of “when” is important to ensure the activity benefits the assessment area during the evaluation period. Clear identification of “when” helps examiners determine the responsiveness of activities in consideration of related performance context regarding significant needs of the assessment area. Additionally, time limits on disaster areas1 and criteria for distressed and underserved nonmetropolitan middle-income areas2 should be considered to ensure new activities will still qualify. Similarly, review of “when” helps these institutions identify the impact of maturing qualified investments in consideration of their CRA investment goals.
Lastly, the monitoring process should ensure documentation clearly captures “why” the activity was considered responsive, innovative and/or flexible in meeting the specified needs of the assessment area at the time of occurrence. By performing periodic monitoring of activities for “why,” institutions are more successful in capturing essential supportive details of the activity that were not captured at the time of occurrence. The periodic monitoring of documentation alleviates the frustrations associated with changes in key players (e.g., loan officers or intermediaries) and website addresses that are relied on for information.