#15: Community Development Loans.... How Much Is Enough?

Regulators are currently revisiting the way they define a community development loan (CDL) through CRA modernization efforts. So until there is more regulatory certainty, how do you determine how many CDL qualified loans are enough? While you can’t guarantee anything during the iterative swirl of CRA reform, this episode aims to give you a good idea of reasonable targets when executive management asks “how much is enough.” Here’s where you should start:• Look at your performance year-over-year to benchmark against your own performance. Specifically, review the following: (1) Year-over-year community development loan volume (# and $ amount) in each assessment area and/or rolled up overall. (2) CDLs as a percentage of total loans and total assets. This will help you compare your CDLs against your loans and assets growth. • Benchmark yourself against similarly situated competitors. To do this, download your competitors’ performance evaluations and disclosure statements. Do this for 2-3 similarly situated banks. Quotes• “As you know, we’re in the middle of regulatory change, and while some of the core concepts are being revisited, it’s very important to know where you stand today: how much is enough?” (1:22-1:33)• “You can benchmark yourself against similarly situated organizations, similarly situated banks. You can actually download their performance evaluations, and even though it’ll be a little bit dated, you know that we don’t have huge swings year over year. So, we can make some general and sound conclusions about their performance to then look at our performance in context.” (2:35-3:03)LinksCRA Today Website: https://cratoday.com/ To join the waitlist for our upcoming Community Development Loan Workshop: www.cratoday.com/waitlistTo sign up for our free course: https://hub.cratoday.com/freecourseFor more information on the CRA Hub, a membership for bankers to connect, inspire, and master the art of CRA: https://cratoday.com/hub/ Copyright © 2021 by CRA Today LLC(No claim to original U.S. government material)All rights reserved. No part of this podcast may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.This podcast is a periodic publication of CRA Today LLC and is intended to notify and inspire recipients of new developments in the Community Reinvestment Act. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.Podcast production and show notes provided by FIRESIDE Marketing: https://meetfireside.com/podcast-production-service/