CRA - Community Contacts Part 1 PDF

XI. Community Reinvestment Act — Community Contacts Community Contacts Introduction This section provides information and procedures for conducting community contact interviews. It broadly addresses a wide variety of subjects to accommodate varying communities and types of institutions. As a result,...

XI. Community Reinvestment Act — Community Contacts Community Contacts Introduction This section provides information and procedures for conducting community contact interviews. It broadly addresses a wide variety of subjects to accommodate varying communities and types of institutions. As a result, it is NOT meant to be used in the order presented. Examiners should select those steps and procedures that apply to the unique circumstances of the institution and/or the community. Objectives The primary objectives of conducting interviews with local community contacts are to: Treatment of Confidential Information Confidentiality of Institution Records Examiners must maintain the confidentiality of any institution’s proprietary information. When making community contacts, the examiner should not reveal any confidential information obtained from the institution’s files or through discussions with management, or any conclusions drawn about the institution’s performance or CRA rating. Protection of Community Contacts Maintaining the confidentiality of the community contact’s identity, when requested to do so, is essential. Examiners must not reveal the name or other identifying information about a community contact to anyone outside the agency without the contact’s express permission, either written or verbal, to do so. Notwithstanding the confidentiality treatment, all community contact forms are shared with the federal financial regulatory agencies. • Gather information that might assist in the development of a community profile. • Determine opportunities for participation by financial institutions in helping to meet local credit needs. • Understand perceptions on the performance of financial institutions in helping meet local credit needs. Compliance Report of Examination and CRA Performance Evaluation • Provide a context on the community to assist in the evaluation of an institution’s CRA performance. Reporting CRA data General Guidelines Coverage and Frequency of Community Contacts Community contacts typically take the form of personal meetings. Telephone conversations or larger group meetings are permitted as necessary and appropriate. Information from community contacts made by other financial regulatory agencies is maintained in the FDIC’s Community Contact Database. In conjunction with each examination, the FDIC will conduct community contacts in the MSA, county or assessment area(s) that the financial institution in question is serving. Where possible, those community contacts should be conducted early in the examination to help to provide information on the community to assist the examiner in the evaluation of the performance context. Include in the Compliance Report of Examination and the CRA Performance Evaluation, as appropriate, a discussion of the number and kinds of CRA-related community contacts that were performed and relevant information obtained and used, if any, in the CRA evaluation. NOTE: Information should be factual. While opinions of contacts may be included when applicable, examiners should refrain from drawing conclusions or making judgments based solely on anecdotal evidence. Sharing Information Information Sharing Process The agencies routinely share information obtained during outreach contacts. Selection of Community Contacts Whenever community contacts are made, the examiner initiating the contact should complete the Community Contact Form in the Community Contact Database and submit it according to Regional Office Policy. The number and nature of contacts will depend upon a variety of factors, including the: Preparation for the Interview • Complexity of the community. Before conducting interviews, review relevant background information to identify additional areas of inquiry. • Size and type of the institution examined. • Amount and age of community driven information already available to the examiner. FDIC Consumer Compliance Examination Manual — June 2006 Adequate preparation for the interviews includes: • Reviewing information on the assessment area(s); • Selecting community contacts; and • Structuring the interview. XI–9.1 XI. Community Reinvestment Act — Community Contacts Review of Information on Assessment Area(s) • Commercial activity; and A review of all available background materials prior to the community contact process is vital in developing a working understanding of the community you are about to enter. The nature, extent and age of the information available prior to conducting community contacts influences your objectives for the community contact process. A well developed context also allows for more detailed and in-depth community contact interviews. • Economic and community development. A summary of such information may be available from the Community Affairs staff. 5. In addition, the examiner may wish to review previous community contacts for the locality including those from other regulatory agencies. The examiner should do the following: 6. If the examiner is reviewing an MSA, he or she should contact the city’s municipality and obtain a copy of its Consolidated Plan (“Conplans”). Conplans list the needs of an MSA as identified and prioritized by its officials. 1. Assess prevailing economic conditions and demographic characteristics within and near the assessment area(s). 7. The examiner may also consider obtaining public reports from Multiple Listings Services (MLS) and news articles on local development projects. Review Process This includes a review of available data on: Quantitative sources may include: • • Various population segments within the community; Feasibility studies; • Trends in migration; • Market analysis; and • Labor and employment characteristics; • • Comparisons to state and county/MSA data; and Commercial appraisal reports for local development projects. • Housing and real estate market statistics. 2. Assess infrastructural and geographic characteristics within the assessment area(s). This includes a review of: • Maps; • Natural areas; • Major thoroughfares; • Access to public transportation; • Locations of low- and moderate-income census tracts; • Names of specific low- and moderate-income neighborhoods; and • Proximity of the assessment area(s) to military bases, airport facilities, and metropolitan centers. TIP: Internal mapping software, information from the financial institution, and information from local planning, transportation, economic development or real estate boards are good sources for possible information. 3. Assess distribution and availability of branch and ATM services especially with regard to low-income areas within the community. Include a review of check cashing facilities, if possible. TIP: Internal mapping software, if available, can allow the examiner to map these locations. 4. Assess, to the extent information is available, local development issues and priorities in the areas of: • Affordable housing; XI–9.2 TIP: State or local economic development agencies, utility companies, real estate organizations, and universities present in the immediate or surrounding area are often good sources for such material. Refer to the topic “Identify Potential Community Contacts” for additional potential sources for these types of material. 8. Determine the priorities of the community and the opportunities for financial institutions to participate with local governmental and non-profit organizations in the areas of: • Affordable housing; • Small business/farm development; and • Economic and community development. 9. Review the number and nature of government agencies, non-profit and neighborhood organizations that provide programs and resources to the assessment area(s) for these purposes. TIP: Sources of information for this step include prior community contacts in the area, information on local programs from the institution, and discussions with appropriate agency staff. 10. Based upon information reviewed above, identify areas that require further inquiry through the community contacts process. For example: • Are there any significant conflicting pieces of information that may require further investigation in the contact interviews? FDIC Consumer Compliance Examination Manual — June 2006 XI. Community Reinvestment Act — Community Contacts • Are there any pieces of quantitative information, such as housing and rental values, that are considerably outdated and need to be verified in the contact interviews? • Does the data suggest particular areas of “need” in affordable housing, such as housing rehabilitation, multifamily development or single family home purchase that you can investigate further and verify through the contact interviews? Or alternatively, are needs for specific areas of the population, such as housing for the elderly, still unclear and therefore require further study through the contact interviews? • Does the data suggest particular areas of need in services such as ATMs, branches, bilingual services that can be investigated further and verified through the contact interviews? • Does the review identify organizations or projects requiring additional information? Identify Potential Community Contacts This section discusses the number and types of community contacts that should be made during an examination. It also identifies potential community contacts and provides guidance on the sources of information that are available from them. TIP: Examiners may wish to initially consult or -select organizations on the telephone to determine which can best comment on particular issues 3. Consider the following factors when determining the appropriate number of contacts to make: • • • The nature of any information provided by the institution including information that specifies credit, service or community development needs in the institution’s assessment area(s); The nature of public comments including information that specifies credit, service or community development needs in the institution’s assessment area(s); The amount of community contact information available from other examinations conducted for this area, both in number and substance, and the date the information was gathered; FDIC Consumer Compliance Examination Manual — June 2006 • The characteristics of the institution examined. Organization Types Grassroots Community Groups Grassroots groups are formed when concerned individuals come together to solve common problems. Groups whose primary aim is to further the objectives of low-income residents are of particular interest. These groups can be difficult to identify because they tend to be smaller neighborhood groups and may not have readily recognizable names. However, they will often share the following characteristics: • Low-income representation is evident in policy and implementation aspects of the organization. This may be evident at the board level, in the committee structure, or the day-to-day management; • Input from low-income residents is clearly sought in functional/program aspects and, information distribution to low-income individuals is a priority. Examples of this include door-to-door surveys and frequent neighborhood meetings; and • Low-income individuals are encouraged or empowered to solve problems collectively. Identification Process 2. Consider the nature of the information you are seeking to complete your analysis of the assessment area(s) and the purpose of the organizations in the assessment area(s). The complexity of the community including the size of its population, its geographic breadth, and the diversity of its population; and NOTE: Time constraints can limit the number of contacts that the examiner is able to conduct. Number and Type of Contacts 1. Select contacts that can best provide information on the assessment area(s). • Grassroots community groups include the following types of organizations: • Churches; • Block clubs; • Tenants association; • Low-income advocacy groups; • Housing or credit counseling programs; • Senior citizen groups; • Shelter providers; • Health clinics; and • Community network/collaborative groups. The following types of information are available from these sources: • Development priorities and concerns of the local low-income populations; • Available development programs and resources; XI–9.3