I had forgotten how much kids can focus on the number of Christmas presents they get. This year my little grandson reminded me of the numbers game. Every time he came over to our house, he would count the number of presents under the tree. He would sort them out and stack them and count them again and again, as if he expected the number to grow each time he counted them.
He worried about how many presents his sister had, too, and would stack her presents in a separate pile and count them as well, or at least try to count them before she could knock them down. Obviously, she was still too young to worry about the numbers game.
During one of the counting sessions, my grandson exclaimed, “Oh no!” I thought maybe he had broken something, but when I asked him what was wrong, he said, “My dad doesn’t have very many presents.” He was worried about the number of presents, and here I had only focused on the dollar amount of presents. Kids don’t care about the dollar value of presents; only the quantity matters.
This is similar to how examiners focus on lending activity for the Community Reinvestment Act (CRA). They sort and count and stack up those loan numbers just like my grandson did with his presents. Examiners want to make sure everyone gets their fair share of loans and will count the number of loans made to low- and moderate-income areas within the CRA assessment area and compare the number of loans made within the CRA assessment area to those made outside the assessment area. Although examiners also look at the dollar amount of loans, the number of loans is emphasized. A comparison may be made of your institution’s lending activity with the lending activity of your peers. There is no magic number of loans needed to achieve at least a satisfactory rating; rather, a performance context analysis will be prepared using relevant demographic, economic and loan data based on the institution’s CRA assessment area.
Now that 2018 is over, do you know what your loan numbers look like for the year? How do you compare with your peers, or how will your data compare when analyzed under a performance context review? If you’re not sure, Wipfli can help. We can assist with a CRA assessment or even prepare a CRA performance context analysis similar to that of the examiner’s analysis. Let us help make sure your numbers will stack up, so you don’t have any “Oh no!” moments like my grandson.