In banking, CRA stands for the Community Reinvestment Act, a 1977 federal law that requires banks to help meet the credit needs of the communities where they take deposits, including low- and moderate-income neighborhoods. Regulators grade each bank on that record, publish the results, and use the grade when deciding whether to approve mergers, acquisitions, and new branches.
Why the Law Exists
Banks benefit from federally insured deposits, a form of public trust. In exchange, Congress decided banks should lend and invest in the communities that supply those deposits rather than take money from a neighborhood and direct credit somewhere else. The statute, codified at 12 U.S.C. 2901, puts it plainly: 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
In practice, that means offering mortgages, small business loans, and other credit products across a bank’s service area, not just in wealthier tracts. The law also says lending must stay “consistent with the safe and sound operation” of the institution, so regulators aren’t pushing banks into risky loans that could threaten depositors’ money. There are no lending quotas. Instead, each federal banking agency evaluates a bank’s record during regular examinations and issues a public rating.
Which Banks the CRA Covers
The CRA applies to insured depository institutions: national banks, federal savings associations, and state-chartered banks whose deposits carry federal insurance.2Office of the Law Revision Counsel. 12 USC 2902 – Definitions3eCFR. 12 CFR Part 345 – Community Reinvestment
Two categories of lender you might expect to be covered are not. Credit unions fall outside the CRA because they answer to the National Credit Union Administration and are insured through a separate fund. Non-bank mortgage companies — including online-only lenders — aren’t depository institutions at all, so the statute doesn’t reach them. If you’re comparing a bank and a credit union, only the bank has a CRA rating.
Bank size affects how the evaluation works. Small banks get a streamlined review focused on lending. Intermediate banks add a community development component. Large banks face the fullest set of performance tests. The dollar thresholds separating those categories adjust each year for inflation.4Federal Register. Community Reinvestment Act Regulations Asset-Size Thresholds
What Regulators Actually Measure
Nearly every bank is graded on a Retail Lending Test. Examiners look at where the bank’s home mortgages, small business loans, small farm loans, and multifamily loans went — whether they reached low- and moderate-income census tracts, low- and moderate-income borrowers, and small businesses and farms below certain revenue thresholds.5eCFR. 12 CFR 228.22 – Retail Lending Test
Large banks also face a Community Development Financing Test, which measures the dollar volume of community development loans and investments (affordable housing, economic development, community facilities) against the deposits the bank holds in each area, then benchmarks that ratio against peers.3eCFR. 12 CFR Part 345 – Community Reinvestment That test carries 40 percent of a large bank’s overall rating. A separate Retail Services and Products Test examines branch and ATM locations, digital delivery, and whether the bank offers products like affordable checking or small-dollar loans.
Each bank defines “facility-based assessment areas” covering the counties where it has a main office, branch, or deposit-taking facility, plus surrounding counties where it lends heavily.6eCFR. 12 CFR 228.16 – Facility-Based Assessment Areas Under the updated rules, banks that originate a large volume of loans outside their branch footprint also get “retail lending assessment areas” in those regions, so online lending is evaluated too.7Federal Register. Community Reinvestment Act
The Four Ratings and Why They Matter
Federal law sets four possible ratings:
- Outstanding — the bank exceeds expectations for meeting community credit needs.
- Satisfactory — the bank consistently meets its obligations.
- Needs to Improve — the bank is falling short.
- Substantial Noncompliance — the bank is significantly failing.
Regulators publish a written evaluation for each exam, with a public section that states the rating and explains the findings by assessment area.8Office of the Law Revision Counsel. 12 USC 2906 – Written Evaluations Ratings have been publicly disclosed since July 1, 1990.
A poor rating is not just embarrassing. When a bank applies to merge with or acquire another institution, regulators review its CRA record as part of that decision. A rating of Needs to Improve or Substantial Noncompliance raises supervisory concerns that make approval unlikely until the deficiency is fixed.9Legal Information Institute (LII) / Cornell Law School. Policy Statement Regarding Statutory Factors Under the Bank Merger Act The same is true for opening new branches. Deals have been delayed and abandoned over CRA ratings. Banks with a poor rating also get examined every 12 months instead of on the longer cycles available to banks rated Satisfactory or Outstanding.10Federal Reserve. Consumer Compliance and Community Reinvestment Act Examination Mandates
Who Enforces It
Three federal agencies share CRA enforcement, and which one supervises a given bank depends on how the bank is chartered:
- The Office of the Comptroller of the Currency (OCC) supervises national banks and federal savings associations.
- The Federal Reserve Board supervises state-chartered banks that are members of the Federal Reserve System.
- The Federal Deposit Insurance Corporation (FDIC) supervises state-chartered banks that are not members of the Federal Reserve System.
All three apply the same statutory standards, though each publishes its own implementing regulations.11Federal Reserve Board. Community Reinvestment Act – Federal Banking Regulators for the CRA The Federal Financial Institutions Examination Council coordinates across the agencies and maintains the public ratings database.12eCFR. 12 CFR 25.42 – Data Collection, Reporting, and Disclosure
How You Can Look Up a Rating or Weigh In
You can search any bank’s current CRA rating through the FFIEC’s online tool.13Federal Financial Institutions Examination Council. CRA Rating Search Frequently Asked Questions You can also submit written comments about a bank’s performance directly to the bank, to its supervising agency, or, for nationally chartered banks, by emailing 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.
Every bank must maintain a public CRA file — on paper or online — containing written public comments received during the current year and prior two calendar years, the bank’s responses, and a list of branches opened or closed.15Federal Deposit Insurance Corporation. Community Reinvestment Act Supplemental Rule Banks with websites must post the file there. That’s where you can see whether a given bank is expanding or contracting its presence in your community.
The 2023 Overhaul and the 2026 Rollout
In October 2023, federal regulators finalized the most significant update to CRA regulations since the law was passed, aimed at accounting for online banking, mobile lending, and other shifts in how banks serve customers. The rules took effect on a staggered schedule. Provisions similar to the prior framework — assessment area delineation, the effect of ratings on applications, public file requirements, and public engagement standards — went into force on April 1, 2024. The remaining substantive provisions, including the new performance tests, apply starting January 1, 2026. Certain data reporting requirements follow on January 1, 2027.
The change with the widest practical reach is the new retail lending assessment area. Under the old framework, a bank was evaluated only in the areas around its physical branches, so a bank could gather deposits online from across the country while being graded on lending in only a handful of locations. The updated rules close that gap by requiring evaluation wherever a bank originates a significant volume of loans.7Federal Register. Community Reinvestment Act