OCC and FDIC Propose Targeted Revisions to CRA Regulations

Summary

On July 31, 2026, the Office of the Comptroller of the Currency (the “OCC”) and the Federal Deposit Insurance Corporation (the “FDIC” and, together with the OCC, the “Agencies”) jointly issued a notice of proposed rulemaking (the “CRA Proposal”) that would amend their regulations implementing the Community Reinvestment Act (the “CRA”).[1] The Board of Governors of the Federal Reserve System (the “Board”) did not join the CRA Proposal.

The CRA Proposal would retain the structure of the CRA regulations currently applicable to OCC- and FDIC-supervised banks (the “Current CRA Rule”),[2] which are based principally on the interagency rules adopted in 1995, while making targeted changes. The Agencies state that the CRA Proposal is intended to better align with the statutory objective of encouraging banks to help meet the credit needs of their local communities, reduce unnecessary burden, and provide greater clarity regarding activities eligible for CRA consideration.

Among other changes, the CRA Proposal would increase the asset threshold for treatment as a large bank to more than $10 billion from $1.649 billion, establish a new “intermediate bank” category for banks generally having between $1 billion and $10 billion in assets, revise the manner in which retail lending is evaluated, eliminate consideration of deposit products under the large-bank service test and modify the standards governing community development activities, including grants and activities outside a bank’s assessment areas.

Comments on the CRA Proposal are due 60 days after publication in the Federal Register.

Background

The CRA was enacted in 1977 to encourage banks to help meet the credit needs of their communities, including low- and moderate-income (“LMI”) neighborhoods, consistent with the safe and sound operation of the institution.[3] The CRA requires each agency to prepare a written evaluation and take the institution’s record into account when evaluating certain applications, including applications to establish new branches and for certain mergers or acquisitions.

The Current CRA Rule is based principally on the interagency CRA regulations adopted in 1995. In October 2023, the OCC, FDIC and Board adopted regulations creating a substantially revised CRA framework (the “2023 CRA Rule”).[4] Several banking trade associations challenged the 2023 CRA Rule,[5] and, in March 2024, the U.S. District Court for the Northern District of Texas preliminarily enjoined its implementation before the 2023 CRA Rule went into effect.[6] The federal banking agencies have since continued to apply the Current CRA Rule as the regulations in effect when the injunction was issued.

In July 2025, the OCC, FDIC and Board proposed to rescind the enjoined 2023 CRA Rule and replace it with the Current CRA Rule, subject to limited technical and conforming amendments.[7] After considering comments and public feedback, the OCC and FDIC determined not to finalize that proposal and instead issued the CRA Proposal. The OCC and FDIC also moved to dismiss the federal banking agencies’ appeal of the preliminary injunction as to the OCC and FDIC,[8] which motion was granted,[9] and are seeking entry of final judgment against them in the litigation. The Board neither joined the motion for voluntary dismissal nor participated in the CRA Proposal, and it remains to be seen what steps it will take with respect to the appeal and the proposal to rescind the 2023 CRA Rule.

Key Aspects of the CRA Proposal

Retention of the Current Framework, Approach to Ratings and Assessment Area Definition

The CRA Proposal would retain much of the framework of the Current CRA Rule:

• Large banks would continue to be evaluated under separate lending, investment and service tests;
• Small banks would remain subject to a tailored lending test;
• A new category, “intermediate banks” (which would replace the Current CRA Rule’s intermediate small bank category), would be subject to the tailored lending test and a tailored community development test;
• Wholesale and limited purpose banks would remain eligible for evaluation under a separate community development test;[10] and
• Banks could continue to seek approval to be evaluated under a strategic plan.[11]

The CRA Proposal also would generally retain the Current CRA Rule’s approach to determining a bank’s overall CRA rating (i.e., “substantial noncompliance,” “needs to improve,” “satisfactory,” or “outstanding”). However, “[t]o better focus CRA examinations on lending performance for intermediate banks and to improve flexibility,” the Agencies propose to revise the criteria for assigning intermediate banks’ (currently referred to as intermediate small banks) ratings. Currently, an intermediate small bank must receive at least a “satisfactory” rating on both its lending test and community development test to receive an overall “satisfactory” rating.[12] The CRA Proposal would require only that an intermediate bank receive a “satisfactory” rating on the lending test in order to receive an overall “satisfactory” rating.[13]

The CRA Proposal also would retain the Current CRA Rule’s assessment area delineation framework, which generally requires a bank to delineate assessment areas consisting of geographic areas in which the bank has its main office, branches and deposit-taking ATMs, as well as surrounding geographies in which the bank has originated or purchased a substantial portion of its loans.[14] Unlike the 2023 CRA Rule,[15] the CRA Proposal would not require banks to define separate retail lending assessment areas based on lending conducted outside their facility-based assessment areas. The Agencies state that this approach reflects the CRA statute’s focus on the local communities in which a bank operates and maintains deposit-taking facilities.[16]

Revised Bank Size Categories

The CRA Proposal would revise the asset thresholds that determine the applicable performance tests. A “small bank” generally would be a bank with assets of $1 billion or less.[17] An “intermediate bank” generally would be a bank that is not a small bank and has assets of $10 billion or less.[18] A “large bank” generally would be a bank with more than $10 billion in assets.[19] In each case, the asset size would continue to be calculated based on a bank’s Call Report as of December 31 for the prior two calendar years, with the bank belonging to the lowest category that applied during either of those years.

Based on 2024 and 2025 year-end Call Report data, the Agencies estimate that approximately 636 of the approximately 3,577 banks they supervise for CRA purposes would fall within the proposed intermediate bank category[20] and that approximately 86 banks would be treated as large banks.[21]

The proposed $1 billion small bank threshold, increased from the $412 million threshold effective as of January 7, 2026,[22] would continue to be adjusted annually for inflation.[23] The CRA Proposal does not contemplate annual inflation adjustments to the $10 billion intermediate bank threshold. The Agencies request comment, however, on whether the upper threshold for intermediate banks should instead be approximately $3.252 billion, reflecting an inflation-adjusted version of the threshold used in a 2020 OCC CRA rule.[24] The Agencies also request comment on whether the intermediate bank category should instead be expanded to include banks with less than $30 billion in assets.[25]

Proposed Bank Categories

Revised Lending Tests

The CRA Proposal would revise several aspects of the lending tests applicable to large banks and small and intermediate banks, including the manner in which retail lending product lines are selected for evaluation. In particular, to reduce regulatory burden, the Agencies propose to limit the lending tests for retail products to a bank’s “major product lines,” which would include consumer, home mortgage, small business and small farm loans. To determine which retail lending products constitute a bank’s “major product lines,” the Agencies propose two options, on which they request feedback. The first option would determine a bank’s two largest product lines at the bank level (rather than for each assessment area) based on the average of (1) each product line’s share of the bank’s retail lending calculated using volume of loans and (2) its share calculated using number of loans.[26] If a bank makes loans in only one retail lending product line, the bank would be evaluated based only on that product line.[27] The second option would be applied at each assessment area and would be both qualitative and quantitative, determining major product lines based on the bank’s overall lending volume and business strategy, capacity to lend in the assessment area, and extent to which lending in the product line contributes to the bank’s record of meeting the assessment area’s credit needs.[28] Under either option, consumer lending would be considered a major product line if it constitutes a majority of the bank’s retail lending by both dollar amount and loan count, or otherwise at the bank’s option.

The Agencies note that, given the inclusion of consumer lending as a potential major product line, they are considering whether to eliminate the separate limited purpose bank category.[29] According to the CRA Proposal, limited purpose banks are evaluated separately under the Current CRA Rule because they only engage in consumer lending, which is largely not evaluated in the large bank tests under the Current CRA Rule.[30] Because the Agencies propose to include consumer lending as a potential “major product line,” they question whether there is a need for the separate limited purpose bank designation, although they acknowledge this would be a significant change for currently designated limited purpose banks and invite comment on the issue.[31]

The CRA Proposal also would provide criteria for when there is sufficient loan data to conduct a meaningful assessment of a bank’s lending performance in an assessment area. Under these criteria, 30 loans generally would be sufficient to conduct a meaningful assessment, although an agency would be permitted to evaluate fewer loans where it determines that a smaller number would still allow for a meaningful assessment.[32] If there is insufficient loan data to conduct a meaningful assessment in an assessment area, the CRA Proposal would assess a bank’s performance based on the performance criteria that may be meaningfully assessed or the performance context informing the bank’s lending in the assessment area.[33]

Revised Scope of Service Test

In connection with the Agencies’ goal of better aligning to the CRA’s statutory mandate,[34] the CRA Proposal would limit the retail banking services criterion under the large bank service test to credit services.[35] It therefore would supersede existing interagency guidance to the extent that the guidance provides for consideration of deposit products.[36]

Clarifications Regarding Community Development Activities

To determine which loans, investments and services receive CRA credit as community development activities, the CRA Proposal would broadly retain the Current CRA Rule’s principal categories of community development: (1) affordable housing; (2) community services targeted to LMI individuals; (3) economic development that finances small businesses and small farms; and (4) activities that revitalize or stabilize LMI geographies, designated disaster areas, and distressed or underserved nonmetropolitan middle-income geographies.[37] However, in response to concerns with the Current CRA Rule, the CRA Proposal would further clarify and specify the applicable definitions and revise the standards and documentation applicable to qualifying activities.[38] Certain of these clarifications would codify guidance provided in the Interagency Questions and Answers on the CRA. For example, the CRA Proposal would codify the Interagency Questions and Answers’ standards for identifying distressed or underserved nonmetropolitan middle-income census tracts.[39] In addition, the CRA Proposal would clarify that affordable housing includes both subsidized and unsubsidized affordable housing and provide a standard for what qualifies as affordable,[40] provide a non-exhaustive list of community services (recharacterized as “civic assistance”),[41] define three categories of economic development activities[42] and add two additional targeted areas for revitalization and stabilization (Tribal and native lands and areas targeted by a government entity for redevelopment that qualify for significant economic incentives).[43]

The CRA Proposal would require the Agencies to each maintain an illustrative, non-exhaustive list of qualifying community development activities.[44] It also would establish an optional confirmation process under which a bank could seek an Agency determination that a particular loan, investment, grant or service qualifies for CRA consideration.[45] The appropriate Agency generally would communicate a response within 90 days after receiving the request, unless it notified the bank that additional time was needed.[46] A bank would not be required to obtain confirmation before undertaking an activity or making its own eligibility determination.[47]

Geographic Flexibility for Community Development Activities

The CRA Proposal would retain the ability of banks to receive consideration for certain community development activities outside their assessment areas, without requiring such activities in order to receive a “satisfactory” or “outstanding” rating. However, the CRA Proposal would condition that consideration on a bank first demonstrating an adequate level of community development activity within its assessment areas. The Agencies propose two options for determining whether that standard is satisfied.

Under the first option, a bank generally would become eligible to receive broader geographic consideration only if, for each year in the evaluation period, it met specified assessment-area activity thresholds based on percentage of the bank’s tier 1 capital.[48] A large bank would be required to devote at least 0.625% of tier 1 capital to community development loans and at least 0.625% to community development investments and grants within its assessment areas (with each assessment area assigned an individual threshold based on weighting) before being eligible to receive consideration for community development activities outside its assessment areas.[49] Intermediate, wholesale and limited purpose banks would be subject to a standard of 1.25% of tier 1 capital.[50] However, the appropriate Agency could determine, based on performance context, that a bank conducting a lesser amount of activity nonetheless qualifies for broader geographic consideration.[51]

Under the second option, the Agency would make a qualitative determination based on the dollar amount and responsiveness of the bank’s community development activities in the assessment area.[52] The standard would align with the level of performance that has historically been considered “low satisfactory” under the Current CRA Rule.[53] Under either the first or second option, if a bank has met the applicable standards in all assessment areas within a State or multistate metropolitan statistical area, it may receive consideration for community development activities outside of assessment areas in that State or multistate metropolitan statistical area, even if not all geographic flexibility standards in all assessment areas are met.[54]

Revised Criteria for Community Development Grants

The CRA Proposal would distinguish community development grants from community development investments[55] and require that grant proceeds are used for qualifying community development purposes.[56] To receive consideration for a community development grant, a large bank would be required to obtain a written commitment regarding the qualifying use of the proceeds and maintain documentation sufficient to establish the amount eligible for CRA consideration.[57] The CRA Proposal also would limit consideration for large banks to grants to recipients whose indirect costs for administering the grant or donation do not exceed 15%.[58] The CRA Proposal notes that, “[i]n the agencies’ experience, inefficient use of funds is most common in grants and donations, particularly because middlemen are more frequently relied upon to indirectly deploy funds. This results in increased indirect costs and less funds directly serving LMI individuals, LMI census tracts, small businesses, and small farms.”[59]

Strategic Plan

The CRA Proposal includes changes to the strategic plan evaluation option “to provide clarity, introduce greater transparency with respect to the agencies’ supervisory expectations for strategic plans, and improve the strategic plan approval and amendment processes.”[60] To improve the strategic plan process, the CRA Proposal would clarify and simplify procedures for strategic plans,[61] permit banks to seek preliminary agency feedback on draft strategic plans[62] and require the appropriate agency to provide written notice as to whether a submitted strategic plan is technically complete.[63] A technically complete plan generally would be deemed approved if the agency did not act within 60 calendar days after providing notice that the plan was technically complete, unless the review period were extended for good cause.[64]

With respect to the content of strategic plans, the CRA Proposal would clarify that a plan’s measurable goals must have both a performance measure (e.g., percentage, number or dollar amount) and a performance level (i.e., the specific value a performance measure is compared to).[65] The CRA Proposal would also require a bank to provide its rationale and support for the specified measurable goals.[66]

Discriminatory or Other Illegal Credit Practices

The CRA Proposal also would revise the circumstances in which discriminatory or other illegal credit practices may adversely affect a bank’s CRA evaluation.[67] The Agencies are considering two options intended to “appropriately focus the scope” of credit practices considered.[68] Under the first option, the Agencies would consider only a violation of law, rule or regulation cited in a public enforcement action by a Federal or State agency or in a judicial order to which a Federal or State agency is a party.[69] Under the second option, which, according to the CRA Proposal, would generally codify current practice,[70] the Agencies would also consider nonpublic enforcement actions.[71]

Public File and Other Public Information Requirements

The CRA Proposal would modernize the public file requirements by requiring a bank to make its public file available on the bank’s website,[72] or a website maintained on its behalf, rather than maintaining physical copies at its main office and branches.[73] It also would make certain other changes to the information required to be included in the public file, including revising the required list of services generally offered at branches to cover “credit products” rather than “loan and deposit products.”[74]

Observations and Implications

One of the Agencies’ stated goals of the proposal is to “better align with the statutory mandate.”[75] As held by the U.S. District Court for the Northern District of Texas in the challenge to the 2023 CRA Rule, the CRA does not authorize the federal banking agencies to examine banks’ CRA performance with respect to deposit products.[76] The CRA Proposal therefore makes a number of changes, discussed above, to eliminate consideration of deposit products and to further focus on lending. In addition, the Agencies note that their motion seeking the entry of final judgment against them in the 2023 CRA Rule litigation includes a proposed order that future amendments to the Agencies’ CRA regulations “could neither be based on (1) an expansive view of ‘entire community’ that provides for or permits the assessment of regulated institutions’ retail lending activities outside the geographic areas where they operate and maintain deposit-taking facilities; nor (2) an expansive view of ‘credit needs’ that provides for or permits the assessment of regulated institutions’ deposit products.”[77]

The proposed revisions to the asset thresholds would significantly reduce the burden of the CRA examination framework for OCC- and FDIC-supervised banks in the new “intermediate” category. Banks with assets above the current large bank threshold of $1.649 billion but not exceeding $10 billion would become intermediate banks and would no longer be subject to the large bank investment and service tests or the related large bank data collection, maintenance and reporting requirements. Based on the figures provided in the CRA Proposal, if the new size thresholds are adopted, the percentage of banks subject to the CRA that are large banks would decrease from 13.4% to 2.4%. Banks near the proposed thresholds would need to evaluate the timing provisions of the thresholds.

The CRA Proposal also would require banks to reassess certain aspects of their CRA programs and examination preparation. Large banks would need to consider the proposed major product line methodologies. Banks that make community development grants would need to review commitments, due diligence and documentation regarding the use of grant proceeds. Banks seeking consideration for community development activities outside their assessment areas also would need to evaluate whether their assessment-area community development activities would satisfy the proposed quantitative or qualitative standards for broader geographic consideration.

As noted above, the Board did not participate in the CRA Proposal, which raises the possibility that different CRA regulations and examination expectations could apply to banks supervised by different federal banking agencies. If the CRA requirements applicable to state member banks differ meaningfully from those applicable to other insured depository institutions, those differences could become a factor for consideration in the choice between a national and state charter and, for a state-chartered bank, membership in the Federal Reserve System.