CRA: An Examiner's Perspective
Reviewing Community Development Activities for the Four Ws


Douglas Yarwood

This article is part of a series on CRA best practices from an examiner’s perspective. Although this column focuses on CRA best practices for financial institutions, the content may provide insights to community development organizations working with financial institutions to meet credit and community development needs. As a disclaimer, this series is only meant to represent best practices; financial institutions should consider the information presented in context of the requirements or guidance of their primary regulator and the business needs of their financial institution.

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:

  • Affordable housing for low- and moderate-income (LMI) individuals
  • Community services targeted to LMI individuals
  • Activities that promote economic development by financing small businesses and small farms
  • Activities that revitalize or stabilize LMI geographies, distressed or underserved nonmetropolitan middle-income geographies, or designated disaster areas
  • Loans, investments and services that support, enable or facilitate Neighborhood Stabilization Program-eligible activities in communities affected by high levels of foreclosures and designated as target areas in plans approved by the U.S. Department of Housing and Urban Development

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.

Douglas Yarwood is a senior examiner at the Federal Reserve Bank of St. Louis.


  1. CRA Q&A disaster areas §___ .12(g)(4)(ii) [ back to text ]
  2. CRA Q&A distressed and underserved areas §___.12(g)(4)(iii) [ back to text ]