GeoDataVision's Len Suzio will take one question monthly at random as part of GDV's CRA Learning Center.So register today and submit your question for the chance to have it answered by an expert.
Submitted by admin on Fri, 07/17/2009 - 6:16pm
Turning your CRA Program from a Cost Center into a Profit Center.
The Community Reinvestment Act requires banks to “meet the need for credit services” within their market; to act as financial intermediaries and lend money to the communities they serve.
The major source of income for banks is the interest revenue generated by the loans they make, and CRA gives banks the responsibility of marketing loan services to all segments of the community. Not only is this good banking, it is profitable banking.
So why do many bankers have a negative perception of CRA?
Submitted by admin on Sun, 07/19/2009 - 5:27pm
How can I expand my loan portfolios in today's very competitive markets?
Many community bankers complain about the limited opportunities to lend in their communities, but more often than not, these lenders don't have the documented market data they need to know their market. A successful road map to expanded lending begins with an analysis of your starting point. To get to where you want to go, you must identify where you are at the beginning.
Any successful marketing program therefore, starts with the analysis of the loan market in your community. In particular, a successful loan marketing program will have two essential elements:
Submitted by admin on Sun, 07/19/2009 - 5:29pm
Is there an advantage to tracking the performance of non-reported loans under CRA?
There can be a significant advantage to collecting and tracking your non-reportable loans under CRA because the Act allows you to elect to include your non-reported loans in your CRA Performance Evaluation. Furthermore, your lending can be broken down by portfolio type and you can selectively choose which portfolios to include in your Performance Evaluation. This is a no-lose proposition.
Submitted by admin on Sun, 07/19/2009 - 4:54pm
How can I minimize reporting errors under CRA?
One way to minimize reporting errors is to coordinate with your bank's chief financial offer, or whoever prepares the Call Report. You should be reporting loans defined as "small business loans" in the Call Report. The Call Report is a "static" report, i.e., a snapshot of loans outstanding at a moment in time, while the CRA loan register is a "dynamic" report, i.e., a history of loans made over a period of time. This means you can't reconcile the two reports. Nevertheless, your bank must have a means for tracking and identifying loans to be reported as small business loans in the Call Report.
Submitted by admin on Sun, 07/19/2009 - 5:36pm
Can CRA really help my bank earn more profits?
Yes, astute bankers know that CRA does provide plenty of significant profit opportunities! One of the best opportunities relates to mortgage lending in so-called LMI Areas
and to LMI Applicants.
High profit margins and very competitive interest rates are possible simultaneously because there are funding sources willing to buy these mortgages with subsidized rates. Major money center banks covet these mortgages and have been known to pay surprising premiums for portfolios of LMI mortgages.
