CRA Compliance and Reporting for Banks (2026)

The Community Reinvestment Act (12 U.S.C. § 2901) requires banks to meet the credit needs of their entire communities, including low- and moderate-income (LMI) neighborhoods. CRA examinations evaluate whether you're actually doing this - and the evidence requirements go far beyond filing data. You need documented lending patterns, qualified investment records, service delivery analysis, and community development activity logs that prove ongoing commitment, not just end-of-cycle reporting.

The 2024 CRA final rule (effective April 1, 2024, with phased implementation through 2026) significantly changes evaluation methods, assessment areas, and data requirements. If your CRA reporting still reflects pre-rule processes, you're behind.

Key Takeaways:

• CRA examinations evaluate three tests: lending, investment, and service (for large banks) or a streamlined evaluation for small/intermediate banks
• The 2024 final rule introduces retail lending assessment areas based on where you lend, not just where branches are located
• Data collection and reporting requirements expand significantly under the new framework
• Community development activities must be documented at the time they occur, not reconstructed before exams

CRA Examination Framework: Which Test Applies to You

Your CRA evaluation method depends on your asset size. The thresholds under the 2024 final rule:

Note: These thresholds are adjusted annually. The $600 million and $2 billion figures are approximate and based on the rule's initial thresholds.

Small Bank Evaluation

Small banks are evaluated primarily on their lending record. The evaluation considers:

• Loan-to-deposit ratio relative to peer institutions
• Percentage of loans inside vs. outside assessment area
• Lending distribution among borrowers of different income levels
• Geographic distribution of loans within the assessment area
• Response to CRA-related complaints

Small banks may opt into the full large bank evaluation if they want credit for investment and service activities.

Intermediate Bank Evaluation

Intermediate banks receive the small bank lending evaluation plus a community development test that evaluates:

• Community development loans
• Qualified investments
• Community development services
• The responsiveness and innovativeness of activities

Large Bank Evaluation (Three Tests)

Large banks are evaluated on:

1. Lending Test (50% of rating weight under the 2024 rule)
2. Investment Test (not separately weighted in the same way under the new framework)
3. Service Test (evaluates retail and community development services)

The 2024 rule introduces new Retail Lending Assessment Areas and metrics-based evaluation that fundamentally change how performance is measured.

The CRA Lending Test: What Examiners Measure

The lending test evaluates whether you're meeting credit needs across your assessment areas with a focus on LMI borrowers and geographies.

Data Requirements

Banks must collect and report data on:

• Home mortgage loans - HMDA Loan Application Register (LAR) data, which most banks already collect
• Small business loans - Originations and purchases of loans with original amounts of $1 million or less to businesses with gross annual revenues of $1 million or less
• Small farm loans - Originations and purchases of loans to farms with gross annual revenues of $1 million or less
• Community development loans - Loans with a primary purpose of community development

Under the 2024 rule, data collection expands to include:

• Auto loans (for large banks)
• Closed-end home mortgage loans and open-end lines of credit analyzed separately
• Lending in new "Retail Lending Assessment Areas" based on concentrations of home mortgage and small business/farm lending outside traditional assessment areas

Lending Distribution Analysis

Examiners compare your lending to demographic data:

Borrower income distribution:

• What percentage of your loans went to LMI borrowers?
• How does this compare to the percentage of LMI families in your assessment area?
• How does this compare to peer institution performance?

Geographic distribution:

• What percentage of loans were originated in LMI census tracts?
• How does this compare to the percentage of owner-occupied units or businesses in LMI tracts?
• Are there gaps in geographic coverage?

Lending gaps:

• Are there areas within your assessment area where you have no or minimal lending?
• Can you explain gaps with legitimate business factors (e.g., no eligible properties, declining markets)?

Community Development Loans

Community development loans count toward CRA when their primary purpose is:

• Affordable housing for LMI individuals
• Community services targeted to LMI individuals
• Economic development (financing small businesses or farms)
• Revitalization or stabilization of LMI geographies, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies

Documentation requirement: Each community development loan must include documentation of the qualifying purpose. "We believe this loan supports economic development" won't survive examination. You need specific documentation: number of jobs created, income levels served, geographic targeting, or housing affordability analysis.

The CRA Investment Test

The investment test evaluates qualified investments that benefit your assessment area. Qualified investments include:

• Investments in Community Development Financial Institutions (CDFIs)
• Low-Income Housing Tax Credits (LIHTC)
• New Markets Tax Credits (NMTC)
• Municipal bonds supporting community development
• Grants and donations to organizations serving LMI communities
• Investments in Small Business Investment Companies (SBICs)
• Mortgage-backed securities with qualifying characteristics

What Counts and What Doesn't

Counts as qualified investment:

• LIHTC equity investment in a project within your assessment area
• Grant to a nonprofit providing financial literacy education to LMI individuals
• Investment in a CDFI that lends to small businesses in LMI areas
• Deposit in a minority depository institution (MDI)

Doesn't count:

• General charitable donations without a community development nexus
• Investments outside your assessment area (with limited exceptions)
• Political contributions
• Standard business investments without community development purpose

Documentation Standards

For each qualified investment, maintain:

• Investment date and amount
• Recipient organization and its qualifying purpose
• Geographic area served
• How the investment benefits LMI individuals or areas
• Ongoing commitment documentation (for multi-year investments)

Examiners will sample investments and verify the community development nexus. Documentation must be created when the investment is made, not assembled during exam prep. If you can't demonstrate the qualifying purpose with contemporaneous documentation, the investment won't receive CRA credit.

The CRA Service Test

The service test evaluates retail banking services and community development services.

Retail Services

Examiners review:

• Branch distribution - Are branches accessible to LMI geographies? How does your branch network serve different income areas?
• Branch openings and closings - Have branch changes disproportionately affected LMI areas?
• Services and hours - Are products and banking hours comparable across branches in different income geographies?
• Alternative delivery systems - Do ATMs, mobile banking, or online services extend access to LMI communities?

Community Development Services

Community development services that receive CRA credit include:

• Financial education programs for LMI individuals
• Homebuyer counseling
• Small business technical assistance
• Board service with organizations serving LMI communities
• Pro bono financial services to community development organizations

Documentation per activity:

• Date and hours committed
• Organization served and its qualifying purpose
• Specific service provided
• Geographic area and population served
• Employee(s) involved

2024 CRA Final Rule: What's Changed

The 2024 final rule (89 FR 6574) introduces significant changes with phased implementation. Key changes relevant to reporting:

Retail Lending Assessment Areas

Banks with assets over $2 billion must delineate new Retail Lending Assessment Areas (RLAAs) based on where they actually lend, not just where they have branches. If you have significant lending concentrations in MSAs outside your branch footprint, those areas become assessment areas for CRA evaluation.

This is the single biggest change. Banks that originated mortgages or small business loans in concentrated areas outside their traditional assessment areas will now be evaluated on CRA performance in those areas.

Metrics-Based Evaluation

The new rule introduces quantitative benchmarks and thresholds for the lending test, replacing the more subjective evaluation that characterized prior exams. Performance is measured against:

• Community benchmarks - Based on aggregate lending by all lenders in the assessment area
• Market benchmarks - Based on demographic data for the assessment area

Specific thresholds determine whether performance is "Outstanding," "High Satisfactory," "Low Satisfactory," or "Needs to Improve."

Expanded Data Collection

Large banks must collect and report:

• Small business and small farm lending data (already required for many, but with new data fields)
• Deposit data by assessment area
• Auto lending data
• Digital delivery system data

Community Development Definitions

The final rule clarifies and in some cases expands what qualifies as community development:

• Affordable housing activities now include a broader range of activities
• Activities benefiting Native Land Areas are explicitly included
• Climate resiliency activities in LMI areas may qualify
• Financial literacy activities receive expanded recognition

Building Your CRA Reporting Process

CRA compliance isn't a year-end reporting exercise. It's an ongoing process of documenting lending decisions, tracking community development activities, and maintaining evidence of assessment area commitment.

Ongoing Data Collection

• Loan geocoding - Every origination mapped to census tract for geographic analysis
• Borrower income documentation - Income relative to area median income for distribution analysis
• Business revenue data - Gross annual revenue for small business loan classification
• Community development logging - Activities recorded as they happen with qualifying documentation

Quarterly Review

Don't wait for the exam cycle to evaluate CRA performance:

• Review lending distribution against assessment area demographics
• Identify geographic or borrower-income gaps
• Evaluate community development pipeline
• Assess whether investment commitments are on track
• Document any branch changes and their LMI impact analysis

Exam Preparation

CRA examination requests typically include:

• HMDA LAR data for the evaluation period
• Small business and farm loan data
• List of community development loans with qualifying documentation
• List of qualified investments with supporting documentation
• Community development services log with hours and qualifying purposes
• Assessment area delineation with supporting analysis
• Branch distribution analysis with LMI geography mapping

Tracking CRA Activities at Scale

The volume of documentation required for a CRA examination is substantial. A bank with 20 community development loans, 50 qualified investments, and 200 community development service entries needs qualifying documentation for each - with evidence created at the time of the activity, not assembled before the exam.

Manual tracking in spreadsheets works until the examiner asks for supporting documentation on investment #37 and nobody can find the original community development purpose analysis. CRA reporting requires a system that captures qualifying documentation at the time of activity, maintains it through the evaluation cycle, and exports it in a format examiners can consume.

Canarie tracks CRA activities as part of your broader compliance workflow. Community development loans are tagged at origination with qualifying purpose documentation. Investment records include the community development nexus analysis. Service activities are logged with hours, purpose, and geographic data. When the CRA exam arrives, evidence packages assemble automatically from documentation captured throughout the evaluation period.

See how banks track CRA activities and generate exam-ready reports →

Frequently Asked Questions

How often do CRA examinations occur?

CRA examination frequency varies by asset size and prior rating. Banks with "Outstanding" or "Satisfactory" ratings and assets under $750 million may go 5 years between exams. Larger banks are typically examined every 2-3 years. Banks with "Needs to Improve" or "Substantial Noncompliance" ratings are examined more frequently. Your primary regulator (OCC, FDIC, or Federal Reserve) determines the schedule.

Can we get CRA credit for activities outside our assessment area?

Under the 2024 final rule, the treatment of activities outside assessment areas has changed. Large banks now have Retail Lending Assessment Areas based on lending concentrations. Community development activities outside assessment areas can receive credit in certain circumstances - particularly for nationwide or regional activities and activities in CRA deserts (areas not served by any bank's assessment area). The specifics depend on your asset size and evaluation method.

What happens if we receive a "Needs to Improve" CRA rating?

A "Needs to Improve" rating triggers regulatory consequences. It can affect your ability to open branches, acquire other banks, or engage in other activities requiring regulatory approval. Regulators may impose CRA plans or conditions on future applications. More practically, it signals to examiners that your next examination will receive heightened scrutiny. The reputational impact with community organizations and local governments can also affect business relationships.

How do we document community development service hours?

Each service entry should include: the employee name, date, hours spent, organization served, the organization's qualifying purpose (with evidence), specific service provided, and the geographic area served. Employee self-reporting is acceptable if verified. Board memberships should include meeting attendance records and documentation of the organization's community development mission.

Does the 2024 CRA rule affect small banks?

Small banks (under $600 million in assets) are largely unaffected by the new rule. The small bank evaluation framework remains substantially the same. Small banks may voluntarily opt into the new large bank evaluation methods if they want credit for investment and service activities. The primary impact on small banks is the updated assessment area delineation provisions and updated community development definitions.