CRA investments are the loans, equity stakes, grants, deposits, and other financial commitments that banks make in community development to satisfy the Community Reinvestment Act, the 1977 federal law that requires insured depository institutions to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods.1FDIC. Community Reinvestment Act (CRA) Federal banking regulators evaluate these investments when they rate a bank’s CRA performance and when they decide whether to approve mergers, new branches, and other applications.2FFIEC. Community Reinvestment Act Tax credit deals, particularly the Low-Income Housing Tax Credit, dominate the market, but the category is broader than that.
What Qualifies as a CRA Investment
Under the regulations, a qualifying investment is a lawful investment, deposit, membership share, grant, or donation whose primary purpose is community development.3Federal Reserve Bank of San Francisco. CRA Handbook Community development itself is defined around four goals: affordable housing for low- and moderate-income individuals, community services targeted to those populations, economic development through small-business and small-farm financing, and revitalization of distressed or underserved areas.4Federal Reserve Bank of New York. CRA Fact Sheet
Examiners weigh four things when they look at a bank’s investments: the dollar amount, how innovative or complex the deals are, how well they respond to local credit needs, and how much they fill gaps other private investors leave behind.3Federal Reserve Bank of San Francisco. CRA Handbook Before committing capital, banks can also consult the OCC’s illustrative list of qualifying activities.5OCC. CRA Qualifying Activities Confirmation Request
Tax Credit Deals: The Dominant Category
Low-Income Housing Tax Credits
LIHTC is the single largest driver of CRA investment activity. Established in 1986, the program is the federal government’s primary tool for pulling private equity into affordable rental housing, and banks are its main investors. The appeal is a mix of real estate expertise, CRA obligation, and low risk: the cumulative foreclosure rate for LIHTC properties placed in service between 1997 and 2010 was 0.57%.6OCC. Community Developments Insights
Banks invest either directly, by partnering with a developer and taking an ownership stake, or through equity syndication, where an intermediary assembles a fund of multiple projects and sells shares.3Federal Reserve Bank of San Francisco. CRA Handbook Investors typically hold a 99.99% interest in the project partnership and claim federal tax credits annually over ten years, plus pass-through depreciation.6OCC. Community Developments Insights
The market is large. In 2024, roughly $28.9 billion in investor equity was committed to housing tax credit funds and direct investments, up 7.6% from the prior year.7CohnReznick. 2024 LIHTC Equity Market Volume Survey Bank investors accounted for about 80% of that equity. Median net equity prices in 2024 sat near 87 cents per credit dollar, down slightly from 89 cents in 2022.8Tax Credit Advisor. Housing Tax Credit Monitor Industry sources describe the CRA as the “primary driver of equity investment in affordable housing,” which means shifts in CRA rules or enforcement move LIHTC pricing directly.
New Markets Tax Credits
The New Markets Tax Credit pushes investment into low-income urban and rural areas through Community Development Entities. A qualified equity investment in a CDE earns a federal tax credit worth 39% of the investment, claimed over seven years. Projects must sit in census tracts with a poverty rate of at least 20%, or with a median household income at or below 80% of the area or state median.3Federal Reserve Bank of San Francisco. CRA Handbook
The most common bank structure is a tiered leveraged deal, about 41% of NMTC investments, in which the bank lends to an investor partnership that combines the loan with equity to make a larger qualified equity investment. The bank earns interest rather than the credit itself, at a loan-to-value ratio that reduces its risk.3Federal Reserve Bank of San Francisco. CRA Handbook
Historic Tax Credits
Rehabilitation of buildings on the National Register of Historic Places qualifies for a 20% federal tax credit, and pre-1936 buildings may qualify for a 10% credit. Banks often layer historic credits with LIHTC or NMTC in a single project to strengthen both returns and CRA performance. State historic credits can lower rehab costs further.3Federal Reserve Bank of San Francisco. CRA Handbook
CDFIs and Mission-Driven Intermediaries
Community Development Financial Institutions are the other major vehicle. Federal regulators presume that any loan, service, or investment involving a CDFI that finances small businesses or small farms promotes economic development, and therefore qualifies as community development.9Federal Reserve. Overview of Community Development Financial Institutions Banks support CDFIs through direct loans, equity investments, grants, deposits in CDFI-depository institutions, equity-equivalent investments (long-term subordinated debt that functions like equity), loan pool participation, and technical assistance like board service or shared underwriting.10Federal Reserve Bank of New York. Strategies for Community Banks
In New York, the state Department of Financial Services has extended presumptive CRA credit to transactions with CDFIs whose federal certification has temporarily lapsed, as long as the CDFI attests that it has applied for recertification and maintains a community development mission.11New York DFS. CRA Credit for CDFI Investment
Other Qualifying Investments
Mortgage-Backed Securities, Bonds, and Related Instruments
Beyond tax credits and CDFIs, banks earn CRA credit through targeted mortgage-backed securities where the underlying mortgages serve low- and moderate-income borrowers, private activity bonds for affordable housing or infrastructure, community development venture capital, and municipal bonds funding projects in low-income neighborhoods.4Federal Reserve Bank of New York. CRA Fact Sheet3Federal Reserve Bank of San Francisco. CRA Handbook
Opportunity Zones
Since October 2020, OCC regulations have explicitly recognized investments in Qualified Opportunity Funds benefiting low- and moderate-income opportunity zones as qualifying CRA activities. About 8,700 designated opportunity zones cover 12% of census tracts nationwide. Banks can invest directly in QOFs, lend to projects inside zones, broker transactions, or serve as fund managers. National banks making these investments under their public welfare investment authority must keep aggregate public welfare investments below 15% of capital and surplus.12OCC. Opportunity Zones and CRA
Renewable Energy and Essential Infrastructure
Renewable energy projects can qualify as essential infrastructure. The OCC’s illustrative list includes financing for community-wide solar-plus-storage systems that reduce utility costs in affordable housing complexes, and public welfare investments in solar facilities that use federal renewable energy tax credits and provide reduced-cost electricity to low-income census tracts.13OCC. CRA Illustrative List of Qualifying Activities
Naturally Occurring Affordable Housing
Preservation of unsubsidized affordable housing, sometimes called NOAH, is CRA-eligible when properly documented. Banks earn credit by sponsoring mission-driven REITs focused on preservation, investing in CDFIs that acquire affordable properties, extending predevelopment financing, or buying tax-exempt bonds for preservation projects.14OCC. Community Developments Investments
How Banks Build a CRA Investment Portfolio
Banks rarely rely on a single deal type. Most build portfolios that blend tax credit deals, CDFI partnerships, and other instruments across their assessment areas. When an individual investment falls short of internal return thresholds, banks combine it with other products and services to reach what regulators call a “blended rate of return.” CDFI partnerships carry additional weight because they supply the “innovative and complex” characteristics examiners specifically reward.3Federal Reserve Bank of San Francisco. CRA Handbook
Public-private partnerships are increasingly common, bringing banks, CDFIs, government agencies, and philanthropic funders together to combine specialized financing with technical assistance. Banks can also use strategic CRA plans, formal plans negotiated with regulators, to tailor investment approaches to their specific business models.15Federal Reserve Bank of Atlanta. Building Stronger Communities: The Power of CRA and Public-Private Partnerships
Ratings and Why They Matter
Banks receive CRA performance ratings on a four-tier scale: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance.16OCC. CRA Questions and Answers Anything below Satisfactory creates real problems. The Federal Reserve has called less-than-satisfactory ratings “formidable and often insurmountable” obstacles to approval of mergers and branch applications.17Federal Reserve. CRA and Consumer Protection Denials become public. Three agencies share enforcement responsibility: the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board.18OCC. Community Reinvestment Act All CRA evaluations are available in a public database maintained by the OCC.
Where the Rules Stand Now
On October 24, 2023, the three banking agencies issued a joint final rule to modernize CRA regulations for the first time in nearly three decades. The overhaul would have created a new Community Development Financing Test combining loans and investments into a single metric worth 40% of a large bank’s overall rating, added an investments-to-deposits metric for banks over $10 billion, created an “impact factor” recognizing LIHTC and NMTC contributions, and expanded qualifying activities to include NOAH with rents at or below 30% of 80% of area median income.19FDIC. Interagency Overview of CRA Final Rule
The rule never took effect. On March 29, 2024, the U.S. District Court for the Northern District of Texas issued a preliminary injunction in Texas Bankers Association v. Office of the Comptroller of the Currency, halting the rule nationwide.20OCC. OCC Bulletin 2025-18 The plaintiffs, a coalition including the Texas Bankers Association, the American Bankers Association, the U.S. Chamber of Commerce, and the Independent Community Bankers of America, challenged the agencies’ statutory authority to impose the framework.21U.S. Chamber of Commerce. Texas Bankers v. Board of Governors
On March 28, 2025, the three agencies announced their intent to rescind the 2023 rule and reinstate the 1995 CRA regulations.22OCC. OCC Bulletin 2025-5 In July 2025 they issued a joint notice of proposed rulemaking to do so, with a 30-day comment period. As of mid-2026, the OCC continues to assess bank CRA performance under the 1995/2021 framework, and the 2023 rule remains under injunction.20OCC. OCC Bulletin 2025-18 The LIHTC equity market has flagged the injunction and potential rescission as risk factors, given how central CRA demand is to bank participation in affordable housing.8Tax Credit Advisor. Housing Tax Credit Monitor
A Note on the Company Called CRA Investments LLC
Searchers occasionally land on this topic looking for a specific firm. CRA Investments LLC is a Missouri limited liability company founded in 2008 that operates as a tax credit syndicator, unrelated to the CRA regulatory concept beyond the shared acronym. The firm was created after major LIHTC buyers including Freddie Mac, Fannie Mae, Bank of America, Citibank, and AIG pulled back during the financial crisis. Based in Poplar Bluff, Missouri, and owned by Stephen Holden, it uses a syndication model that enlists community and state banks and other corporations to invest in LIHTC equity funds.23CRA Investments. About CRA Investments Holden has reported closing more than $2 billion in affordable housing developments across Missouri, Illinois, Indiana, Tennessee, Kentucky, Arkansas, Mississippi, Kansas, Oklahoma, and Texas.24CRA Investments. CRA Investments Advisors