The government is doing a booming business with a lending analysis product.
Over the past three years, the Federal Home Loan Bank of Atlanta's CRA Geographics has attracted about 250 financial institutions.
The product generates reports that help institutions analyze lending patterns and learn the credit needs of potential customers.
These reports assist banks in Community Reinvestment Act and fair- lending compliance. They also help an institution compare its performance to that of competitors.
The Home Loan Bank, using Home Mortgage Disclosure Act data and software developed by Claritas, an Alexandria, Va.-based consulting firm, crunches the information and delivers it to bank customers in color-coded reports.
Customers use those reports to demonstrate compliance to examiners.
"We use it to show to examiners, and they like it," said Michael P. Gavin, president of Atlantic Federal Savings Bank, Baltimore. "It's been a great benefit," said Mr. Gavin, whose bank has been using the product for three years and received an "outstanding" rating on its last CRA exam.
Richard G. Fritz, vice president of the Atlanta Home Loan Bank, said he started selling the product because he thought the industry needed some community reinvestment education.
"I saw that banks did not know much about their markets," said Mr. Fritz, who has been an economist with the home loan bank for seven years.
Bankers also like the price - about $1,000 for an annual analysis - a tab much lower than private-sector companies companies charge for compliance products.
But the product is also different than those sold by most of these companies.
For example, Dallas-based Centrax sells fair lending software. The Home Loan bank just sells the reports its software produces.
Likewise, Financial Modeling Concepts in New York uses the same data to do sophisticated analyses on lending patterns. The Home Loan bank refrains from giving clients advice.
The product's customers have an average asset size of $420 million. But client institutions run the gamut from $23 million to $7 billion.
Mr. Fritz said he found that some bankers relied too much on the "thud" factor - the weight of a CRA file heavy with reports on meetings with community groups and other nonlending activities.
Other banks, he said, are doing a great lending job but don't get good ratings because they don't show examiners how many loans have been made in low-income and moderate-income areas.
"You should treat the examiner like a customer and show him what he wants," Mr. Fritz said.
Mr. Fritz and Stella Lang, associate economist at the Atlanta Home Loan Bank, started developing CRA Geographics in 1990. The bank's board of directors said the product could be sold if its costs could be covered.
When the reports became a success, Mr. Fritz tried to enlist other home loan banks to copy the software and market the reports to banks and thrifts across the country.
While most banks in the system liked the product, they didn't want to devote staff or resources to selling it, he said.
So Home Loan banks in cities such as Boston, Chicago, and Pittsburgh now pay the Atlanta bank $5,000 a year to market CRA Geographics to their members.
Mr. Fritz said that while it has made about $200,000 on CRA Geographics, the Atlanta bank basically just tries to break even. Four people work full time on the product, and Mr. Fritz and Ms. Lang devote a portion of their time.