Community Needs Assessment Reports
A Community Needs Assessment is a market study conducted to help a bank identify and understand the need for financial services and community development within its Assessment Area. It is not required by regulation. As explained in Federal Register /Vol. 71, No. 47 / Friday, March 10, 2006 /Notices 12429:
The Agencies do not intend that intermediate small banks prepare a particular ‘‘needs assessment’’ solely for purposes of its CRA evaluation under the community development test. If intermediate small banks prepare business plans and market analyses that reflect community needs and opportunities, they may rely on such information, as well as other currently available information, when assessing community development needs in their assessment areas.
One advantage of developing a Community Needs Assessment is that it will paint a picture of the “Performance Context” which is the basis for establishing performance standards applied under the various tests administered in a CRA Performance Evaluation. Even more importantly, as stated in the Federal Register a bank “may rely on such information (emphasis added) . . . when assessing community development needs in their assessment areas.” Community Development activity and performance standards are some of the most vague areas within CRA. So a Community Needs Assessment will help to clarify the facts and performance standards pertaining to this very important issue.
A Community Needs Assessment will include several important elements:
- Local HMDA and Small Business loan market activity that establish the need for credit services and the competitive structure of the market
- Interviews with community organizations to determine community development needs and opportunities for community development lending, investing and services
- Population demographics including race, ethnicity and income
- Business demographics including the number and size of local businesses and the distribution among industries according to SIC code
- Housing demographics including CHAS data (Comprehensive Housing Affordability Survey compiled by HUD)
The very nature of a Community Needs Assessment lends itself to potential use in a bank’s market analysis and strategy as well as providing CRA compliance benefits. GeoDataVision’s Community Needs Assessment Package contains all of the foregoing plus market maps and an Executive Synopsis that summarizes the findings in the various reports and studies.