Provident Beats Regulators to the Punch

When it comes to compliance risk management, it's better to be proactive. That's the philosophy of Jeffrey Robb, vice president of fair lending and HMDA Home Mortgage Disclosure Act officer at Provident Bank, Cincinnati.

"The idea of waiting for the Federal Reserve Bank and their team of regulators to come in and analyze your performance every two years is not beneficial to the bank," said Robb. "It's impossible to steer the organization based on our lending performance."

In order to provide executives with regularly scheduled updates on what segments of the community are being served and whether fair lending practices are being employed, the $20 billion bank installed two software products, CRA Wiz and Fair Lending Wiz, from PCi, Boston. The products allow Provident, which has 78 branches in Ohio, Kentucky and Florida, to examine residential property, commercial buildings and auto loans as well as home equity loans.

CRA Wiz is an intuitive software tool that enables financial institutions to collect, report and analyze HMDA and CRA data. Executives can quickly view lending and demographic information in tables, graphs or maps.

Furthermore, the software alerts where the bank may not be filling its Community Reinvestment Act (CRA) requirements.

Fair Lending Wiz is a statistical tool combining risk assessment, comparative file, and regression-based analysis on loan portfolios, enabling banks to pinpoint inconsistent lending decisions and pricing disparities.

This software can also be used as a front-line second review process to detect potential discrimination prior to the denial of a loan.

Now, Provident Bank can assess its performance independently of regulators, and much more cost-effectively than by hiring outside auditors; Robb is the only person using both software programs.

The PCi products are PC-based, hence easy to use and install, Robb said. PCi guarantees the accuracy of geocoding data, which maps street addresses to a database, and which needs to be attached to each loan. And the software is updated twice a year.

Built-in edit checks provide pinpoint accuracy. For example, if someone who earns one thousand dollars a month were granted a million dollar loan, the software would flag it.

Provident has been impressed with PCi's responsiveness. When the bank discovered that its Windows NT operating system wasn't compatible with CRA Wiz, PCi immediately sent a laptop containing a revised version of the software-in time for the bank to meet a government compliance deadline.

"Once the company determined there was a glitch in the software, it rewrote the code and now it works fine on Windows NT," Robb said.