Changing Community Reinvestment Act rules mean that you should ask us to review your CRA strategy. The scope of our CRA examination covers the lending, investment, and service opportunities in the bank's assessment area. However, the predominate focus is on lending, since lending represents the thrust of the performance-based CRA regulations.

Our primary role is to provide information and assistance that will help your institution prepare for a CRA examination under the new rules. Working on-site, we will conduct the review as follows:

• TCA uses the latest CRA computer software to produce reports that are comparable to agency reports. Our CRA software capability can generate more than 100 reports and compare your results to peers or all HMDA reporters.

• One of our first tasks will be to review the assessment area that your institution has chosen. We will determine if the area consists of political subdivisions and refrains from excluding low-income census tracts. We will also determine if the assessment area adequately represents the bank's lending practices.
  
  
• We will then review the bank's lending activity back to the last CRA exam to determine how the institution may be rated on its lending activity. We will spend the majority of our analysis looking at lending activity. We will determine the percentage of qualifying loans inside and outside the assessment area and look at penetration by census tract. Going further, we will review census track penetration by geographies, such as low-, moderate-, middle-, or upper-income households. We will also look at loan distribution by borrower income based upon current HUD aggregate incomes.
  
  
• To test the bank's responsiveness to the credit needs of its community, we will conduct interviews with various community leaders to assess their perception of your bank's community lending and support activities. Examiners conduct similar interviews. It is critical that your Institution's management be aware of any negative perceptions in the community and be prepared to counteract any adverse comments or opinions in the community.

Performance context is another area addressed in the new CRA that we believe is important. The performance context identifies the following information:

• Demographic data
  
• Lending, investment, and service opportunities
  
• Product offerings
  
• Constraints, such as size and staff
  
• Competitive lending activity
  
• Other information deemed necessary
  

This context information combined with competitive lending data is critical in helping us reach a conclusion about the bank's performance under the new CRA.

• We will look at the institution's community involvement in lending programs, service and product innovation.
• All aspects of CRA activity that may be considered during an examination will be considered during our review.
• We will review the public file and signage to ensure compliance with the new rules.
• All existing programs and policies, including training programs, will be considered during the review, to ensure that there are guidelines and procedures in place to effectively meet the bank's CRA mandates.
• We will provide your institution with our opinion of its CRA performance rating under the new rules. Suggestions to enhance the existing CRA program will also be provided for management's consideration.

2846 N. Mildred Avenue, Suite 150 Chicago, Illinois 60657-5052 Tel: 800-934-REGS fax: 773-525-8507
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