Executive Summary
On July 31, 2026, the Office of the Comptroller of the Currency (OCC) and the FDIC issued a joint notice of proposed rulemaking to amend their Community Reinvestment Act (CRA) regulations. The agencies stated that the proposal is intended to make substantive, technical, and procedural changes to refocus CRA supervision on the statutory objective of encouraging banks to help meet community credit needs. The agencies also seek to reduce unnecessary burden, particularly for community banks; provide greater clarity regarding CRA consideration; and tighten the treatment of community development grants.
The agencies describe the proposal as a targeted revision to the current framework, much of which generally dates back to the 1995 CRA rules. The proposal would raise CRA asset thresholds, place greater emphasis on lending activities, narrow the retail banking services considered in CRA evaluations to credit services, revise the treatment of community development grants and donations, and leave the current assessment-area framework largely unchanged. Unlike the broader geographic concepts introduced in the 2023 CRA modernization efforts, the proposal generally preserves the traditional assessment-area structure.
A notable interagency alignment issue is that the Federal Reserve Board (FRB) is not a party to this July 2026 proposal. The proposal states that any decisions about the FRB’s next steps with respect to the earlier rescission proposal rest exclusively with their Board of Governors. As a result, institutions should monitor whether the agencies ultimately converge on a common CRA framework or whether differences emerge across primary federal regulators. A similar divergence in timing occurred in the previous rule making process for the CRA, but eventually all agencies came together.
Background
Congress enacted the CRA in 1977 to encourage banks to help meet the credit needs of their communities. The current CRA framework is rooted largely in the agencies’ 1995 regulations, under which institutions are evaluated based on asset size and business model, including small bank standards; intermediate small and large bank lending, investment, and service tests; wholesale and limited-purpose bank tests; and strategic plans. Assessment areas are generally tied to a bank’s physical presence, deposit-taking ATMs, and lending footprint.
In 2023, the OCC, FDIC, and Federal Reserve adopted a major CRA modernization rule that would have introduced broader geographic evaluation concepts, including retail lending assessment areas and outside retail lending areas. Industry groups challenged the rule, and the U.S. District Court for the Northern District of Texas enjoined enforcement on March 29, 2024. As a result, the agencies continued applying the prior CRA framework.
In July 2025, the federal banking agencies proposed rescinding the 2023 rule and reinstating the regulations in effect as of March 29, 2024. After considering comments on the 2023 proposal, ongoing litigation, and supervisory experience, the OCC and FDIC elected not to finalize that proposal and instead issued the July 2026 proposal.
Key Provisions of the 2026 Proposal
Asset Threshold Changes
One of the proposal’s most significant changes is a substantial revision to CRA asset thresholds. The proposal would define small banks as institutions with less than $1 billion in assets, intermediate banks as institutions with assets between $1 billion and $10 billion, and large banks as institutions with more than $10 billion in assets. This would replace the current intermediate-small-bank framework with a significantly expanded intermediate-bank category.
The proposal would retain inflation-based adjustments to the small-bank asset threshold and discusses an alternative approach that would align the threshold with the Small Business Administration’s (SBA’s) small-bank size standard.
The agencies identify burden reduction as a central objective of the proposal. Institutions with $10 billion or less in assets generally would be subject to fewer CRA data collection, maintenance, and reporting obligations and would receive more flexible supervisory treatment. The agencies indicate that a significant number of institutions currently subject to more extensive CRA requirements would fall within the proposed intermediate-bank category.
Lending Test Changes
The proposal places greater emphasis on lending as the primary mechanism for meeting community credit needs. The agencies state that communities’ credit needs are most directly met through lending activities and explain that the proposal is intended to focus CRA evaluations more heavily on lending performance and activities with a connection to lending.
A central component of the proposal is adoption of a major product line framework. Rather than evaluating every lending product offered by a bank, examinations would focus on lending products that are material to the institution’s business model. The proposal generally would evaluate major product lines based on loan-volume and dollar-volume metrics and would limit examination attention for products that are insignificant or incidental to the institution’s overall lending profile. The proposal also clarifies when consumer lending would be considered a major product line and establishes minimum loan-volume expectations for meaningful evaluation.
The proposal does not eliminate investments or services from CRA evaluations. Large banks would continue to be evaluated under lending, investment, and service tests, while intermediate banks would continue to be evaluated under a lending and community development framework. The proposal clearly shifts the center of gravity of CRA examinations toward lending performance, reflecting the statute’s focus on ensuring that deposits gathered from a community are translated into credit opportunities within that community.
Community Development Changes
The proposal would substantially revise how community development activities are defined, evaluated, and documented.
Most notably, the agencies would establish a separate category for community development grants and donations. Under the proposal, grants would receive CRA consideration only if the funds are directly used by the recipient for a program, project, or initiative whose primary purpose is community development. For large banks, qualifying grants generally would need to be provided to recipients whose indirect costs for administering the grant do not exceed 15%, measured under federal grant-accounting standards or a comparable methodology. These requirements are intended to better ensure community development grants reach their intended communities and purposes.
For large banks, the grant changes could require updates to grant due diligence, recipient certifications, agreement language, and documentation practices, particularly for grants made through intermediaries or organizations with higher administrative costs. The proposal would also create new documentation and reporting expectations for large banks seeking CRA consideration for community development grants. Large banks generally would need to obtain recipient commitments regarding the use of grant funds, maintain documentation supporting compliance with the proposal’s indirect-cost requirements, and retain supporting records. The proposal also would require reporting of certain grant information, increasing the importance of grant governance, due diligence, and record keeping practices.
The proposal would also revise several key community development definitions. Affordable housing criteria would be updated, community services would be renamed civic assistance, economic development standards would become more objective and tied more directly to business-size criteria, and revitalization and stabilization activities would be expanded to include additional infrastructure, redevelopment, disaster recovery, and Tribal-community activities.
In addition, the agencies would maintain examples of qualifying and nonqualifying activities and establish an optional process through which institutions may seek confirmation that a particular community development activity qualifies for CRA consideration. This proposed change could help reduce subjectivity in the current regulatory process. The proposal also clarifies how institutions may receive CRA consideration for qualifying community development activities outside their assessment areas while continuing to emphasize the importance of serving local community development needs.
Other Operational Changes
Retail Services
The proposal would narrow the retail services evaluation by focusing on credit services. Deposit products and deposit services would no longer be considered as part of the retail-services criterion. Importantly, the proposal does not state that deposits are irrelevant to CRA. Rather, it removes deposit services from this aspect of the CRA evaluation framework while continuing to focus the criterion on credit-related services.
Strategic Plans
The proposal would revise and clarify strategic plan requirements, including plan content, measurable goals, approval standards, amendment procedures, and public participation requirements. The agencies intend for these changes to make strategic plans a more practical option for institutions whose business models may not fit neatly within traditional CRA examination methodologies.
Data Collection, Maintenance, & Reporting
Consistent with the proposal’s burden-reduction objectives, institutions with $10 billion or less in assets generally would be subject to fewer CRA reporting obligations. Large banks, however, would continue to be subject to more extensive data collection and reporting expectations. Institutions should pay particular attention to reporting requirements involving community development loans, investments, grants, major product lines, and grant documentation.
Public File & Public Notice Modernization
The proposal would modernize CRA disclosure requirements by shifting public-file obligations toward website-based availability. Banks generally would maintain public CRA information online and provide notices directing customers to those resources, reducing reliance on physical branch files as the primary method of public disclosure.
What Stays the Same
The proposal retains the basic CRA statutory purpose: encouraging banks to help meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods, consistent with safe and sound operations.
The core evaluation architecture largely remains in place. Banks would continue to be evaluated based on asset size and business model, and large banks would continue to be subject to lending, investment, and service tests. Intermediate banks would continue to have a lending and community development framework, and small banks would continue to receive a more streamlined evaluation.
The assessment-area framework is largely unchanged. The proposal does not create the broader geographic structure reflected in the 2023 final rule and does not establish deposit-gathering-based assessment areas.
Alternative evaluation options remain available. Banks may continue to seek evaluation under a strategic plan, and wholesale and limited-purpose bank treatment remains part of the framework.
CRA ratings, public performance evaluations, and the general relevance of CRA performance to certain applications involving deposit facilities remain part of the CRA regime.
Implications for Banks
For community banks, the proposal is largely burden-reducing. Institutions below the proposed $1 billion small-bank threshold would generally be evaluated under the small bank framework and would no longer be subject to the intermediate-bank community development test. Banks at or below $10 billion would also generally avoid the data collection, maintenance, and reporting requirements applicable to large banks.
For regional banks, the implications depend heavily on asset size and business model. Banks between $1 billion and $10 billion would generally fall into the proposed intermediate category, while institutions above $10 billion would remain large banks. Regional institutions should evaluate whether the proposed thresholds would change their examination methodology, data obligations, and CRA program governance.
For large banks, the proposal is less about eliminating CRA obligations and more about changing emphasis and documentation for grants and investments. Large banks would remain subject to lending, investment, and service tests, but should review retail services, major lending product lines, community development grants, indirect-cost documentation, and how community development activities are tracked and supported.
What Banks Should Do Now
Banks should continue operating under the current CRA framework while the proposal moves through the notice-and-comment process. The proposal is not yet final and could change before adoption.
Now is a good time for institutions to evaluate how the proposed changes could affect their CRA program. Banks should determine whether the revised asset thresholds would place them in a different examination category and assess the resulting impact on compliance, reporting, and governance requirements.
Institutions should also review their retail services and lending activities through the proposal’s stronger lending-focused lens. In addition, banks should inventory community development grants and donations, evaluate existing documentation practices, and identify any recipients that could present indirect-cost or eligibility challenges if the proposal is finalized as written.
Bottom Line
The proposal moves away from many of the concepts embedded in the 2023 modernization effort, but it does not reinvent CRA. Instead, the OCC and FDIC are proposing targeted changes that place greater emphasis on lending, reduce burden for many smaller institutions, narrow the retail-services evaluation, and impose more structured requirements around community development grants.
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