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CRA, Fair Lending Compliance Remain Essential in Mergers

2 min read
Feb 17, 2015

Mergers and acquisitions have always drawn attention to the importance of Fair Lending and Community Reinvestment Act (CRA) compliance. Compliance-related questions may lead to delays in growth plans. Keep reading for 5 CRA compliance best practices.


In general, our experience has shown that success in consumer compliance relies on: a strong compliance culture, a proactive compliance program, empathy for the needs of the market, and appreciation for the unique political environment. In particular, we've seen that the Community Reinvestment Act (CRA) requires the most strategy and sensitivity.

Recent merger activity has sparked controversy and refocused attention on the importance of CRA and Fair Lending compliance to growth plans. Concerns about the strength of an institution's Fair Lending and CRA compliance programs can slow or even derail merger plans.

A prominent recent example is the proposed CIT-OneWest Bank merger. The media tends to focus on the political controversy surrounding the merger, particularly concerns raised by community activist groups.

In the proposed CIT-OneWest Bank merger, the Federal Reserve Board has decided to hold public meeting in which supporters and opponents can voice their CRA-related comments. 

While there’s no consensus about how significantly this public hearing may impact plans, the debate showcases the importance of CRA compliance to banks, regulators, and community activist groups.

Other recent partnerships have faced similar hurdles. M&T Bank’s proposed acquisition of Hudson City Bancorp remains stalled for compliance issues, and BB&T’s plans to acquire branches from Banco Popular continue to face CRA-related criticism. 

There's a delicate balance between technical consumer compliance and the softer side of compliance that is unique for each institution. For financial institutions that embrace best practices, the odds of compliance success increase.

Regardless of your financial institution’s growth plans (whether organic growth and/or M&A), a strong CRA compliance program is an essential component of your growth strategy.

5 CRA Compliance Best Practices

The Community Reinvestment Act was originally designed to ensure that banks met the credit needs of their community, including low- and moderate-income communities in a way that is safe, sound, fair and unbiased. Here are five best practices we recommend, not only for the health of your institution, but in the event of growth and future partnerships:

  1. Performance Context: Start by understanding you institution’s unique business model and assessment areas.
  2. Strategy: Develop a CRA strategy and determine CRA goals in response to your understanding of your bank’s unique business.
  3. Training: Maintain a general CRA training program for all employees, because CRA (like all compliance) is a team sport.
  4. Monitoring: Monitor your CRA performance regularly to identify weaknesses early.
  5. Evaluation: Review and discuss monitored data and performance to evaluate your goals versus your results.

Also note that redlining and reverse redlining continue to be very hot topics, so pay attention any red flags that indicate redlining risk. 

TRUPOINT Viewpoint: Our goal is always to support financial institutions. From that perspective, we know that growth plans need to incorporate a sound CRA compliance program.

CRA compliance success is achieved with planning, monitoring and evaluation. Best practice organizations will align their products and services to their community’s needs. They also tend to offer general compliance training and support a strong compliance culture from the top down.

At TRUPOINT, we specialize in CRA compliance. We’d love to be part of your next compliance conversation – just get in touch to find out how we can help.

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