Maryland Legal Alert for Financial Services
OCC and FDIC Propose Significant Revisions to Community Reinvestment Act Regulations
On July 31, 2026, the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC") jointly issued a Notice of Proposed Rulemaking that would substantially revise the regulations implementing the Community Reinvestment Act ("CRA"). The proposal seeks to modernize the CRA framework, reduce regulatory burdens imposed on many community banks, and refocus examinations of financial institutions on lending activities that directly serve local communities, including strengthening requirements to ensure that community development grants reach the communities they are intended to benefit.
The Notice proposed the following changes to the CRA framework:
- Changes to the Asset Threshold: The proposal would significantly revise the asset thresholds used to classify financial institutions for CRA examinations. Under the proposed framework, the small financial institution threshold would increase from less than $412 million to less than $1 billion in assets. The intermediate financial institution category would expand to include institutions with assets between $1 billion and $10 billion. Lastly, financial institutions with more than $10 billion in assets would be classified as large financial institutions. These changes are intended to better reflect the current size and composition of today's banking industry.
- Greater Focus on Lending Performance: The proposal would place greater emphasis on evaluating a financial institution's primary retail lending activities. Examinations would focus on major product lines, including mortgage, small business, small farm, and, where applicable, consumer lending, regardless of the institution’s asset size. The proposal would also limit the retail service test to credit-related services by eliminating consideration of deposit services.
- Changes to Community Development Activities: The proposal would revise how community development activities are evaluated by creating separate categories for community development investments and grants and by establishing clearer criteria for eligibility requirements for each. It would also update the community development definitions by replacing the term "community services" with "civic assistance" and adopting more objective criteria for qualifying economic development activities. Additionally, certain community development grants would be subject to expanded documentation requirements to ensure the funds are used for qualifying purposes. For example, large financial institutions’ community development grants would be subject to a 15 percent cap on recipients' indirect costs and enhanced documentation requirements to ensure funds directly support qualifying purposes.
- Expanded Geographic Assessment Area: The proposal would permit financial institutions to receive CRA consideration for qualifying community development activities conducted outside their designated assessment areas, provided they first demonstrate that community development needs within their own assessment areas have been adequately addressed. The agencies propose both quantitative and qualitative standards for determining whether this requirement has been satisfied.
- Strategic Plan Option: The proposal would retain the CRA strategic plan option while streamlining the approval process. Financial institutions operating under a strategic plan would be required to establish measurable goals for lending, investments, and services. The proposal would clarify plan content requirements, modernize public input processes during plan development, and ensure compliance with new review procedures.
- Assessment Areas: The proposal would largely preserve the existing assessment area framework while providing additional clarification regarding how assessment areas should be delineated. It would also establish a specialized framework for military financial institutions, allowing qualifying institutions to designate the entire United States as a single assessment area to reflect their nationwide customer base.
- Data Collection and Reporting: The proposal would expand CRA data collection and reporting requirements for large financial institutions while reducing reporting requirements for small and intermediate financial institutions. In addition to continuing existing annual reporting obligations, financial institutions would be required to collect additional information regarding community development loans, investments, grants, and, where applicable, consumer lending. The proposal would also require expanded documentation for certain community development grants to promote greater transparency and consistency in CRA evaluations.
For more information concerning this topic, please contact Christopher R. Rahl or Peri L. Schuster.