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Volume 6, Issue 3, 2006   Federal Reserve Bank of Dallas

Keeping Up with CRA Regulation Changes

New CRA Changes in Effect

In August 2005, a joint ruling by the Federal Reserve Board of Governors, [1] Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency made several changes to the rules implementing the Community Reinvestment Act (CRA).

The CRA was enacted by Congress in 1977 to prevent redlining and encourage banks to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound operations.

The key changes, which became effective September 1, 2005, raise the small bank asset-size threshold and expand the definition of community development that applies to all banks. The changes are intended to reduce regulatory burden while making CRA evaluations more effective in encouraging banks to meet community development needs.

Thrifts regulated by the Office of Thrift Supervision are not a part of this ruling, although the asset threshold for small banks did change. [2]

Small Bank Definition and Requirements

The small bank asset-size threshold now includes banks with assets under $1 billion, without regard to holding company affiliation. A new category of small banks, the Intermediate Small Bank, was created for banks between $250 million and $1 billion in asset size.

Intermediate Small Banks, like all small banks, are not required to collect and report CRA loan data. However, examiners will continue to evaluate bank lending activity in CRA examinations of these banks and disclose results in the public evaluation.

The new exam methods for the Intermediate Small Banks are posted on the Federal Financial Institutions Examination Council's web site.[3] The procedures incorporate the lending test for small banks and add a new community development test.

  • The Small Bank lending test includes loan-to-deposit analysis, comparison of lending inside and outside the bank's assessment area, borrower income and geographic distribution of credit, and response to consumer complaints.
  • The Community Development test includes number and amount of community development loans and qualified investments, extent of community development services, and responsiveness of loans, investments and services to identified community development needs and opportunities.

Expansion of Community Development Definition

The August 2005 changes also include a revised definition of community development that has been expanded to include not only activities that revitalize or stabilize low- to moderate-income geographies but also activities that revitalize or stabilize...

  • distressed or underserved nonmetropolitan middle-income geographies designated by the Federal Reserve Bank, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, or
  • designated disaster areas.

Banks may choose to continue to be examined as a large bank if their assets are moving near the $1 billion threshold. Small banks will also need to start preparing for the Intermediate Small Bank category if they are approaching the $250 million mark. Both thresholds have transition time frames of two consecutive year-ends as the trigger for collection and preparation. Get more information at the FFIEC web site, www.ffiec.gov/cra/default.htm Off-site page.


  1. Intermediate Small Institution Examination Procedures, Federal Reserve Board, www.federalreserve.gov/boarddocs/caletters/2006/0609/CA06-9Attach5.pdf PDF document.
  2. Federal Register, Vol. 71, No. 70, April 12, 2006, www.ots.treas.gov/docs/7/73302.pdf PDF document.
  3. CRA Examinations, FFIEC www.ffiec.gov/cra/examinations.htm Off-site page.

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e-Perspectives, Volume 6, Issue 3, 2006

Federal Reserve Bank of Dallas Off-site page
Community Development Office Send an e-mail
P.O. Box 655906, Dallas, Texas 75265-5906
Gloria Vasquez Brown Send an e-mail
Vice President
    Alfreda B. Norman Send an e-mail
Assistant Vice President and Community Development Officer
Jackie Hoyer Send an e-mail
Houston Branch
Senior Community Development Advisor
    Julie Gunter Send an e-mail
Community Development Specialist
Wenhua Di Send an e-mail
Community Development Economist
    Elizabeth Sobel Send an e-mail
Community Development Specialist
Roy Lopez Send an e-mail
Community Development Specialist
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.

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