In banking, CRA stands for the Community Reinvestment Act, a federal law passed in 1977 that requires banks to help meet the credit needs of the communities where they take deposits, including low- and moderate-income neighborhoods.1Office of the Law Revision Counsel. 12 USC 2901 – Congressional Findings and Statement of Purpose Regulators grade each covered bank on how well it does this, publish the result, and use it when the bank asks permission to merge, acquire another institution, or open new branches.
Why Congress Passed It
Banks benefit from federally insured deposits, a form of public trust. In exchange, Congress decided banks should lend and invest in the places their depositors live rather than take money from one community and direct credit elsewhere. The statute puts this bluntly: banks have a “continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.”1Office of the Law Revision Counsel. 12 USC 2901 – Congressional Findings and Statement of Purpose
The law stops short of setting lending quotas. It also tells regulators that lending must stay “consistent with the safe and sound operation” of the bank, so no one is being pushed to make risky loans that would endanger depositors’ money.
What the Law Requires in Practice
In practical terms, the CRA pushes banks to offer mortgages, small business loans, small farm loans, and other credit throughout their service areas rather than only in wealthier parts of town. It also pushes banks to invest in community development projects such as affordable housing, economic development, and community facilities. And it looks at whether everyday banking services, including branches, ATMs, and digital tools, actually reach lower-income neighborhoods and customers.
None of this is enforced through fines on individual loans. It is enforced through examinations and the rating that comes out of them.
Which Banks Are Covered
The CRA applies to insured depository institutions: national banks, federal savings associations, and state-chartered banks whose deposits are federally insured.2Office of the Law Revision Counsel. 12 USC 2902 – Definitions3eCFR. 12 CFR Part 345 – Community Reinvestment
It does not apply to credit unions, which are overseen by the National Credit Union Administration and insured through a separate fund. It also does not apply to non-bank mortgage lenders, including online-only mortgage companies, because they are not depository institutions. If you are evaluating a credit union or a non-bank lender, there is no CRA rating to look up.
Within the covered banks, size matters. For 2026, a small bank has assets under $1.649 billion, an intermediate bank has at least $412 million but under $1.649 billion, and a large bank has $1.649 billion or more.4Federal Register. Community Reinvestment Act Regulations Asset-Size Thresholds Small banks get a streamlined review. Large banks face the most detailed one.
How Regulators Measure Compliance
Each bank must define the geographic areas where it will be evaluated. These “facility-based assessment areas” cover every county where the bank has a main office, branch, or deposit-taking facility, plus surrounding counties where it does meaningful lending.5eCFR. 12 CFR 228.16 – Facility-Based Assessment Areas Under the updated rules, banks with heavy online lending may also be measured in “retail lending assessment areas” far from any branch.6Federal Register. Community Reinvestment Act
Within those areas, examiners run several tests. The Retail Lending Test, which applies to nearly every bank, looks at where home, small business, small farm, and multifamily loans are going, both by geography and by borrower income.7eCFR. 12 CFR 228.22 – Retail Lending Test For large banks, a Community Development Financing Test compares the dollar volume of community development loans and investments to the deposits the bank holds in each area, and it drives 40 percent of the overall rating.3eCFR. 12 CFR Part 345 – Community Reinvestment A Retail Services and Products Test looks at branches, ATMs, digital delivery, and whether the bank offers responsive products such as affordable checking or small-dollar loans.
The Four Ratings
Every examination ends in one of four ratings set by statute:
- Outstanding — exceeds expectations.
- Satisfactory — consistently meets its obligations.
- Needs to Improve — falling short.
- Substantial Noncompliance — significantly failing.
Regulators must prepare a written evaluation with a public section explaining the rating and the facts behind it, broken out by assessment area.8Office of the Law Revision Counsel. 12 USC 2906 – Written Evaluations Ratings have been public since July 1, 1990, and you can look up any bank through the FFIEC’s online search tool.9Federal Financial Institutions Examination Council. CRA Rating Search Frequently Asked Questions
Why the Rating Matters
A poor rating is not just embarrassing. When a bank asks regulators for permission to merge with or acquire another bank, its CRA record is part of the review, and a rating of Needs to Improve or Substantial Noncompliance makes approval unlikely until the bank fixes the problem.10Legal Information Institute (LII) / Cornell Law School. Policy Statement Regarding Statutory Factors Under the Bank Merger Act The same applies to opening new branches. Deals have been delayed or abandoned over CRA problems.
Banks with below-satisfactory ratings also get examined more often: every 12 months, regardless of asset size. Banks with Outstanding or Satisfactory ratings go longer between exams, with the exact interval depending on their size.11Federal Reserve. Consumer Compliance and Community Reinvestment Act Examination Mandates
Who Enforces the CRA
Three federal banking agencies share enforcement, and which one supervises a given bank depends on its charter:
- Office of the Comptroller of the Currency (OCC) — national banks and federal savings associations.
- Federal Reserve Board — state-chartered banks that are members of the Federal Reserve System.
- Federal Deposit Insurance Corporation (FDIC) — state-chartered banks that are not Federal Reserve members.
All three apply the same statutory standards and publish their own implementing regulations.12Federal Reserve Board. Community Reinvestment Act – Federal Banking Regulators for the CRA The FFIEC coordinates across them and maintains the public ratings database.13eCFR. 12 CFR 25.42 – Data Collection, Reporting, and Disclosure
How the Public Can Weigh In
Community members have a formal role in the process. You can send written comments on a bank’s performance to the bank itself, to its supervising agency, or, for nationally chartered banks, to CRAComments@occ.treas.gov.14Office of the Comptroller of the Currency (OCC). Community Reinvestment Act Questions and Answers for Bank Customers Comments received before an examination closes are considered by regulators.
Each bank also has to keep a public CRA file with written public comments from the current and two prior calendar years, any responses the bank made, and a list of branches opened or closed in that window. Banks with websites must post the file online.15Federal Deposit Insurance Corporation. Community Reinvestment Act Supplemental Rule
The 2023 Overhaul and the 2026 Changes
In October 2023, federal regulators finalized the biggest update to CRA regulations since the law was enacted, aimed at accounting for online banking and mobile lending. The new rules phase in on a staggered schedule:
- April 1, 2024 — provisions close to the prior rules: assessment area delineation, the effect of ratings on applications, public file requirements, and public engagement.
- January 1, 2026 — the new performance tests and evaluation frameworks.
- January 1, 2027 — certain data reporting requirements.
The practical shift is largest for banks that lend heavily online. Under the old framework, a bank was graded only in the areas around its physical branches, so a bank could gather deposits nationwide while being measured in just a few places. The new retail lending assessment area concept extends evaluation to wherever a bank originates a significant volume of loans.6Federal Register. Community Reinvestment Act