A new Community Reinvestment Act (CRA) framework is taking shape. On July 31, 2026, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a joint proposal to amend their CRA regulations (the "Proposed Rule"). While the proposal would largely keep the CRA framework that has historically governed examinations, it would reduce the number of banks that must collect CRA-related data, place more weight on lending, tighten the treatment of community development grants, and seek to make the strategic plan alternative more viable. Banks should determine how the proposal would change their evaluation category and consider using the comment period to address provisions that would materially affect their CRA programs.
Background
Community Reinvestment Act
Congress enacted the CRA in 1977 to encourage banks to help meet the credit needs of the communities in which they are chartered, consistent with the bank's safe and sound operations. The CRA requires the banking agencies to examine banks' records of meeting the credit needs of their entire community, including low- and moderate-income (LMI) neighborhoods. While not a fair lending law per se, the CRA is often discussed alongside fair lending laws because both focus on access to credit in historically underserved communities.
This has historically been accomplished through a performance assessment framework, which includes performance tests or standards the agencies use to evaluate a bank's CRA performance depending on its asset size or business strategy. Large banks (currently, those with assets greater than $1.649 billion at the end of both of the prior two calendar years) are evaluated under separate lending, investment, and service tests. The lending and service tests consider both retail and community development activities, and the investment test focuses on qualified investments. Large banks are required to provide annual reports that include data regarding various lending and community development activities. By contrast, small banks (currently, those with assets of less than $1.649 billion at the end of either of the prior two calendar years) are evaluated under a lending test and, for intermediate small banks, a community development test. Small banks are not required to maintain and report the data mentioned above unless they opt to be evaluated under the large bank lending test.
The testing framework is also geographic. A bank generally delineates assessment areas around its main office, branches, deposit-taking automated teller machines, and surrounding areas where it originates or purchases a substantial portion of its loans. Banks receive one of four CRA ratings, ranging from outstanding to substantial noncompliance. A weak rating can affect branching, merger, and other applications that require the regulator to consider CRA performance. CRA examination results are also made publicly available by the banking regulators.
The OCC, FDIC, and Federal Reserve issued a new CRA rule in October 2023, but a federal district court enjoined that rule before it took effect. At a high level, the 2023 CRA rule would have broadly reworked CRA examinations through new performance tests, metrics, and lending-based assessment areas. In March 2025, the banking regulators announced their intent to rescind the 2023 final rule.
Proposed Rule
The July 2026 proposed rule appears to represent regulators' revised approach to modernization of the CRA. Compared with the 2023 final rule, the current proposal largely retains the CRA's long-standing framework but raises the asset thresholds for the most demanding set of performance tests, places greater emphasis on lending, and reduces the data and examination requirements for many banks. This approach largely mirrors the current administration's emphasis on reforming fair lending rules, including fair lending-adjacent requirements, and streamlining compliance requirements for smaller banks and financial institutions.
Notably, the Federal Reserve did not join the new proposal. The Federal Reserve supervises state member banks—state-chartered banks that have applied for and been accepted to be part of the Federal Reserve System—for CRA compliance. This is not unprecedented: the OCC issued a standalone CRA final rule in 2020, which it subsequently rescinded.
Key Changes
The Proposed Rule would make many major changes that will affect covered banks, including the following.
Fewer banks would be subject to the most demanding CRA requirements
The Proposed Rule would substantially revise the asset size thresholds separating small, intermediate, and large banks. Under the proposal, these thresholds would generally be as follows:
- Small Banks: Under one option, less than $1 billion in total assets. Under a second option, under the total asset threshold below the Small Business Administration's (SBA) size standard for identifying small banks (currently $850 million)
- Intermediate Banks: Under the first option, between $1 billion and $10 billion. Under a second option, banks with less than $3.252 billion in total assets, which is based on the 2020 final rule mentioned above, adjusted for inflation
- Large Banks: Banks with more than $10 billion in total assets. The Proposed Rule also expressly requests comment on whether banks with less than $30 billion in assets should be treated as intermediate banks
Asset size would be based on the assets reported in a bank's Call Report at the end of the last two calendar years. Banks generally remain in the lower asset category if they qualified for that category in either of those two years. Note that the Proposed Rule expressly notes that the $850 million and $3.252 billion asset thresholds were each introduced as stand-alone alternatives to the current thresholds rather than paired together, although the regulators analyzed them as if they were paired together.
If the regulators' core proposal were to take effect, banks with between approximately $1.65 billion and $10 billion in assets would generally move from the large-bank framework to the intermediate-bank framework. They would no longer be subject to separate investment and service tests or the large-bank data reporting and maintenance requirements. Banks with between $412 million and $1 billion would move from the intermediate-small-bank framework to the small-bank framework and would no longer receive a separate community development test. These changes would significantly shift the number of banks subject to the most stringent performance tests under the CRA.
Assessment area determinations may change
While the Proposed Rule would not change the facility-based framework for determining a bank's assessment area, the banking regulators are considering three potential changes:
- Replacing the current rule that an assessment area may not extend "substantially beyond" a metropolitan statistical area (MSA) boundary with an absolute prohibition on extending beyond the boundary.
- Replacing or clarifying the current requirement to include surrounding census tracts where the bank originates or purchases a "substantial portion" of its loans, including through setting a quantitative threshold to indicate when the "substantial portion of its loans" standard is met or replacing the standard with a requirement to include all census tracts within a radius of the bank's main office, branches, deposit-taking ATMs, or remote service facilities.
- Requiring large banks to use whole counties or county equivalents as the smallest assessment-area building block, eliminating their current ability to delineate partial counties using selected census tracts.
Regulators would focus on an institution's core lending products
Most banks are evaluated under a lending test. Under the current rules, banking regulators generally evaluate home mortgage, small business, and small farm loans for large banks regardless of whether they are primary or non-primary product loans. Regulators may also evaluate banks on consumer lending, which can break down into multiple asset classes. Small and intermediate small banks are generally evaluated only with respect to retail lending categories that are considered major product lines.
Under the Proposed Rule, regulators would adopt a major product line approach for most banks. Notably, two approaches have been proposed. Under the first, the banking agencies would evaluate the largest two of the four retail lending product lines (i.e., home mortgage, small business, small farm, and consumer lending) based on loan count and dollar volume during the evaluation period. The two product lines evaluated would be considered the bank's major product lines.
Under the second proposed approach, the banking agencies would use an assessment area level approach that is both qualitative and quantitative to determine a bank's major product lines, which is similar to how regulators currently determine major product lines for small banks. A bank could have more or less than two major product lines. A determination of whether a product line is considered a major product line in an assessment area would be based on (i) the bank's overall lending volume and business strategy, (ii) the bank's capacity to lend in that assessment area, and (iii) the extent to which lending in the product line meaningfully contributes to the bank's record of meeting the credit needs in that assessment area.
In either case, consumer lending would be considered a major product line only if it constitutes more than 50 percent of the bank's retail lending by both dollar amount and loan count, or at the bank's option, given differences in data collection requirements for consumer lending for large banks.
Borrower distribution would be evaluated only within assessment areas
The Proposed Rule would remove language and supersede guidance permitting consideration of loans to LMI borrowers and small businesses or farms outside assessment areas after the bank adequately addresses assessment-area needs. Borrower distribution would be evaluated only within assessment areas.
"Meaningful assessment" standard for minimum loan volume
Banking regulators would consider 30 loans from a product line to be enough loans to perform a meaningful lending test analysis. However, if 30 loans are not available for any particular performance criterion, the Proposed Rule would allow examiners to consider less than 30 loans if a smaller number of loans would allow for a meaningful assessment. Where there is insufficient loan data to perform a meaningful assessment of a bank's lending performance for a performance criterion, the Proposed Rule would assess a bank's lending performance based on other performance criteria for which a meaningful assessment can be conducted or using other performance context factors.
The service test's range-of-services criterion would focus on credit products, not deposit products
Under the current CRA rules, regulators assess a bank's range of retail banking services as part of the services test. These services typically include services offered at a bank's branches, including their hours of operation, available loan and deposit products, transaction fees, and (where applicable) the difference in availability or cost of services at specific branches.
The Proposed Rule would limit the range-of-services criterion to credit services. Regulators would no longer consider deposit products, transaction fees, or related information concerning the costs and features of deposit products under that criterion.
Community development activities would face major changes
The Proposed Rule would revise both the types of activities that qualify as community development (CD) activities and how those activities receive CRA consideration. Among the most significant proposed changes are the following:
- Community development loans, investments, grants, and services would be separately defined. A community development loan would expressly include a legally binding commitment to lend. A retail loan generally could not also be considered a community development loan unless it finances a multifamily dwelling or is a low-cost education loan, although a loan that is not evaluated as part of a major product line could qualify if it otherwise meets the community development definition. The proposal would also replace "qualified investment" with "community development investment," treat grants separately from investments, and define a community development service as a volunteer service performed by a bank employee representing the bank that relates to financial services or the employee's area of expertise.
- Community development grants would be subject to new restrictions. A grant or donation would qualify only if the recipient directly uses it for a program, project, or initiative with a primary purpose of community development. For a large bank, the recipient's indirect costs for administering the grant generally could not exceed 15 percent of the grant or donation amount. Large banks would also have to maintain the recipient's written commitment regarding the use of the funds, an attestation regarding indirect costs, and supporting documentation that includes the recipient's IRS Form 990 and annual operating and program budgets. They would report the grant recipient, street address, and amount, and the OCC and FDIC stated that they expect to maintain a public database containing that information.
- The four existing categories of community development would be retained but defined in greater detail:
- Affordable housing: The Proposed Rule would expressly address subsidized multifamily housing and unsubsidized or naturally occurring affordable housing. Mixed-income subsidized housing generally would receive consideration on a pro rata basis, and affordability for naturally occurring affordable housing generally would be measured using rent equal to no more than 30 percent of a moderate-income renter's income.
- Civic assistance: The Proposed Rule would rename the current "community services" category as "civic assistance," provide a non-exhaustive list of qualifying activities, and expressly include low-cost education loans, workforce-development programs, and job-training programs (the latter two were previously considered economic development activities).
- Economic development: Qualifying financing generally would have to support a business or farm that meets specified SBA size standards or has gross annual revenues of $1 million or less and expand, improve, or preserve its productive capacity, physical presence, or employment base. Financing used primarily for ongoing operating liquidity would be excluded, as would financing reasonably likely to reduce employment. Technical assistance, support services, and activities conducted through specified government programs would also qualify. The proposal would eliminate the existing purpose test requiring banks to demonstrate job creation, retention, or improvement for LMI individuals or in LMI areas.
- Revitalization and stabilization: The proposal would retain LMI census tracts and distressed or underserved nonmetropolitan middle-income census tracts and add Indian country, other Tribal and native lands, and areas targeted by a government entity for redevelopment that qualify for significant economic incentives. Qualifying activities would include support for essential community facilities or infrastructure, activities consistent with a bona fide government revitalization or stabilization plan, activities that attract or retain a major employer creating long-term employment opportunities, and certain disaster-preparedness and disaster-recovery activities.
- The banking regulators would provide additional methods for determining whether an activity qualifies. Each agency would maintain and periodically update a public, non-exhaustive illustrative list that could include both qualifying and nonqualifying activities. Banks could also use an optional confirmation process to ask their regulator whether a particular loan, investment, grant, or service qualifies. The agency generally would respond within 90 days or notify the requester that additional time is needed.
- Prior-period activities and prior eligibility determinations would remain effective. The proposal would permit consideration of prior-period community development loans that remain on the bank's balance sheet, similar to the existing treatment of investments. It would also provide that an activity that was eligible when conducted would continue to receive consideration during the applicable evaluation period (or, for a loan or investment, while it remains on a bank's balance sheet).
- Assessment area allocations and weights would change. Under the Proposed Rule, regulators would allow banks to allocate CD activities that benefit or serve more than one assessment area to the assessment areas benefited or served based on documentation of the physical address of the recipient of the proceeds or by the weight assigned to each assessment area benefited or served by the activity. Weights would be assigned to assessment areas based on the proportion of deposits in the assessment area as determined by the Summary of Deposits survey data published by the FDIC or, at the bank's option, using another reasonable methodology approved by the appropriate regulatory agency. At a bank's option, the Proposed Rule would permit qualifying CD loans, investments, and grants outside a bank's assessment area to receive consideration at the State, multistate MSA, or bank level once the bank satisfies either proposed capital-based thresholds or a qualitative standard demonstrating adequate community development activity in the relevant assessment areas.
Compared with the current CRA rules, the Proposed Rule would establish more detailed eligibility, documentation, allocation, and geographic standards for CD activities. It would provide banks greater certainty through illustrative lists and advance eligibility confirmations, while imposing more prescriptive requirements—particularly for large-bank grants—and creating a structured pathway for receiving consideration for activities wholly outside a bank's assessment areas.
Strategic plans would become more important
While the current CRA rules allow a bank to elect evaluation under an approved strategic plan, the agencies acknowledge that the option has been underused. The Proposed Rule attempts to make this a more attractive option for banks by clarifying the requirements for a complete strategic plan. Among other things:
- A technically complete plan would have to describe the bank, plan scope and term, covered assessment areas, performance context, public-participation efforts, and measurable goals. The plan would address all three performance categories, emphasize lending unless a different emphasis is justified, and explain any category for which it omits measurable goals.
- Covered assessment areas would have to be described using whole geographic areas, such as an MSA, metropolitan division, contiguous counties, or contiguous census tracts.
- Each measurable goal would need a quantifiable performance measure and a specified performance level, together with the bank's rationale and support. Multiyear plans would retain annual interim goals and could add separate goals covering the entire plan term.
Banks could obtain prefiling agency feedback on both the sufficiency of the draft and the merits of proposed measurable goals, rather than being limited to procedural guidance. This would help banks determine that a strategic plan meets regulators' expectations before submitting it.
Plans generally would be submitted 90 calendar days before the proposed effective date, although regulators may accept shorter periods in some cases. After receiving a strategic plan, the relevant banking agency would issue a technical-completeness or deficiency notice, and the 60-day approval period would begin once the plan is technically complete. Approved plans would be posted publicly.
Performance would be assessed over the entire plan term, with annual interim goals considered as part of that overall assessment rather than as standalone evaluation periods. If a bank misses one or more "outstanding" goals, the relevant regulator could consider community development activities not tied to a plan goal in determining whether the outstanding goals were substantially met. If the bank does not substantially meet its "satisfactory" goals, the agency would automatically evaluate it under the otherwise applicable standard tests instead. The agencies request comment on whether this fallback should instead be elective.
While banks would continue having to conduct informal outreach and a newspaper-based 30-day formal comment period, regulators would also post the draft plan on their websites. Banks would no longer have to make the draft available at every office in the covered assessment areas.
Limited-purpose bank treatment could change
In the Proposed Rule, the OCC and FDIC state that they are considering whether to eliminate the category of limited purpose banks (i.e., banks that offer only a narrow product line, such as credit cards or motor vehicle loans). This would not cover banks that are not in the business of offering loans to retail customers (i.e., wholesale banks). If the limited-purpose-bank category were eliminated, affected consumer lenders could instead be evaluated under the performance tests applicable to their asset category, including evaluation of consumer lending when it is a major product line.
Practical Impact of the Proposed Changes
Although the Proposed Rule is not final and contains several alternative approaches, banks can begin by determining how they would be classified under each proposed asset-threshold option. That analysis should identify the resulting performance tests, data obligations, and community development requirements. Banks near a proposed threshold will also want to consider anticipated asset growth because classification generally would depend on year-end Call Report assets over two consecutive years.
Banks should also model how the proposed lending-test changes would apply to their portfolios. This includes identifying the product lines that would be evaluated under each proposed major-product-line methodology, determining whether sufficient loan volume exists for a meaningful assessment in each assessment area, and evaluating how the assessment-area alternatives would affect current delineations. Banks that receive meaningful CRA consideration for retail lending outside their assessment areas should separately assess the effect of limiting borrower-distribution analysis to loans within those areas.
Community development programs will require a different review. Banks should inventory existing loans, investments, grants, and services under the proposed definitions and determine whether current documentation would support CRA consideration. In particular, large banks should identify grants involving intermediaries, significant indirect costs, or recipients that may be unable to provide the proposed attestations and financial information. Banks may also wish to evaluate whether the proposed geographic-flexibility provisions would support activities outside their assessment areas.
Finally, banks whose business models do not align well with the standard tests should consider whether the revised strategic-plan process could provide a more suitable evaluation framework. Banks should also identify the proposed alternatives that would materially affect their CRA programs and consider addressing those issues during the comment period.
Conclusion
The Proposed Rule would preserve much of the CRA's long-standing framework while materially changing which banks are subject to its most demanding requirements and how regulators evaluate lending, services, community development activities, and strategic plans. Banks should assess how the changes would affect their current CRA obligations, identify provisions that may require changes to existing programs, and consider commenting on the alternatives that would have the greatest operational or strategic impact.