ADI helps a mortgage lender assess its CRA lending performance in the Midwest.

Assessing the Challenge

A large bank headquartered in the Midwest engaged ADI to evaluate its CRA lending performance in both its full- and limited-scope assessment areas. In a previous CRA performance evaluation, the bank received an overall CRA rating of Satisfactory, but with a warning about its lending and investment performance. In an effort to improve performance for its next evaluation, the bank needed to implement a program to pro-actively monitor CRA compliance, analyze favorable or unfavorable performance trends, and identify areas that required attention.

Designing the Approach

Working with our client, ADI developed a custom plan that involved:

  • Consolidating and aggregating data from the client’s LAR, the 2010 census, and the American Community Survey;
  • Profiling the assessment area based on demographic and socioeconomic characteristics;
  • Analyzing CRA lending performance versus demographic and peer benchmarks;
  • Identifying favorable and unfavorable multi-year trends in CRA performance; and
  • Mapping loan activity and branch locations in relation to census tracts by CRA income categories.

Implementing the Solution

ADI implemented the plan, which led to several key important changes and insights:

  • The bank substantially improved its penetration into low-income geographies from 2010 to 2012;
  • Changes in interest rates affected demand for refinance mortgages with implications for the bank’s business model and ability to penetrate target geographies;
  • The distribution of loans to low- and moderate-income (LMI) geographies and borrowers improved since the previous performance evaluation; and
  • The lender narrowed the gap in its CRA performance versus peer lenders.

The CRA consulting effort and resulting deliverables provided an effective solution that met the client’s need to monitor CRA performance and identify issues for timely corrective actions. This ongoing effort will be integral in communicating to CRA examiners the bank’s focus on CRA compliance and its commitment to the local community.


About the Author: Jonathon Neil

Jonathon is a Senior Consultant for ADI with expertise in Fair Lending compliance, CRA compliance, data mining, and geographic information systems. You can contact Jonathon at or 703.665.3707.

April 8th, 2015|