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Appeal of Public Comment Section of CRA Report (Third Quarter 1995)


A formal appeal was received requesting changes to the public comment section of the Community Reinvestment Act (CRA) examination report. The bank did not appeal the "Needs to Improve" rating. Management argued that the comments under Assessment Factor C stating that the Board of Directors had not provided a methodology for self-assessment were incorrect. Management also contended that the issue of self-assessment was not mentioned by the OCC prior to the bank's receipt of the report of examination and the formal board meeting, the bank's letter cited the following as evidence that a self-assessment program was in effect:

  • The bank's records reflect that the internal auditor of the bank holding company performed a self-assessment in 1993.
  • In 1994, the bank holding company's Audit Review Committee (ARC) retained an external audit firm to perform a compliance examination including a review of CRA compliance.
  • The bank collected the necessary data to track its loan application, declination, and origination records during the years 1993 and 1994.
  • In 1994, the bank's auditor periodically reported the status of CRA mapping developments to the ARC. The bank's chairman of the board regularly attends ARC meetings, and several other board members are also members of the committee.


This is the second consecutive "Needs to Improve" CRA rating for the bank, the bank is owned by a two-bank holding company. The ARC of the holding company has regularly discussed CRA activities during meetings, as noted in the minutes. Three of the five members of the ARC are directors of the bank, and the chairman of the bank attends the meetings regularly. However, minutes of the bank's board of directors meeting do not incorporate the CRA discussions held by the Audit Review Committee.

The OCC supervisory office accurately stated that the bank is a separate legal entity from the holding company. Its directors must ensure that they actively and effectively monitor the banks CRA performance and that the bank's board minutes document that performance.

The Ombudsman reviewed the information submitted by the bank and the OCC. The bank's answers to the CRA questionnaire submitted before the examination reflect that the bank had taken several steps to complete a self-assessment: (1) In January 1993 and January 1994, the bank conducted assessments to determine the credit needs of the delineated community; (2) geocoded loan data were prepared in 1993 and 1994; and (3) color-coded mapping of the loan data was being processed in 1994. The previous CRA report of examination reflected that the board had designed a number of reasonable written programs to guide the bank's CRA process; however, the programs had not been fully implemented. The report of examination also showed that the bank had made a geographic analysis of its lending patterns.

The external audit firm retained by the bank in 1994 stated in its report that the auditors did not see evidence of a self-assessment being performed internally or by an outside entity other than the OCC. The report goes on to state that the consultant was told that geocoded loan data were in the possession of an outside group for the purpose of analysis and mapping.

During the most current examination, the OCC completed the bank's assessment of lending performance using the geocoded loan distribution data that had been collected by the bank. Management committed to completing a self-assessment with 90 days.


The Ombudsman found that there was sufficient information indicating that the board of directors did have a program to assess how the bank was meeting the purpose of the CRA. Four of the six bank board members are regularly involved in the bank holding company's Audit Review Committee, which had discussed CRA self-assessment activities and provided for external reviews. These discussions, however, had not been entered into the bank's board minutes. The bank had spent resources to gather geocoded loan distribution information but analysis of the data was delayed because of problems with mapping software.

The Ombudsman agrees that the bank's self-assessment had not been fine-tuned and completed at the time of the report of examination. Nevertheless, the board did have a program and had started a self-assessment; in the future, such self-assessment activities should be documented in the bank's board minutes. The OCC supervisory office will modify the comments under Assessment Factor C in the public section of the report of examination to reflect that the board had initiated but not completed a self-assessment.