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Grow Shareholder Value: For Banks 5+ Years

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Consumer Compliance

When trying to increase shareholder value, banks should consider the following issues from a consumer compliance perspective.

Consumer Compliance Risk Management Program

As the bank grows in asset size, adds new products and services, and the business strategy becomes more complex, ensure that all elements of the consumer compliance risk management program develop accordingly. Increased complexity requires a more robust and formal program to ensure ongoing compliance with consumer laws and regulations. While portions of the program may be outsourced, overall responsibility for compliance remains with senior management and the board of directors.

New Products and Services

All documentation associated with new products or services should be reviewed for compliance with consumer laws and regulations prior to implementation. In addition, the board and senior management should also be aware of any additional operational, legal, or reputational risks associated with new products and, if necessary, take appropriate action to mitigate such risks.

Fair Lending Compliance

As the variety and complexity of credit offerings increase, an institution may find it advantageous to conduct self-tests or self-evaluations to measure or monitor compliance with the ECOA and Regulation B. In addition to mitigating risk, conducting reviews in accordance with the Interagency Fair Lending Examination procedures may qualify the bank for a streamlined examination process.

CRA Performance Evaluation

CRA regulations specify different examination procedures for banks based on their asset size. Monitor the transition from small bank (as of 1/1/08, less than $265 million in assets) to intermediate small bank ($265 million up to $1.061 billion), or from intermediate small bank to large bank ($1.061 billion or more in assets), since the tests are different. Also, as the institution expands its geographic footprint, the institution should monitor its assessment area compliance.