On August 12, 2026, the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) jointly proposed amendments to their Community Reinvestment Act (CRA) regulations codified at 12 CFR Parts 5, 24, 25, 35, 345, and 346. The proposal makes targeted changes to the existing 1995 CRA framework while maintaining continuity with the current regulatory structure.

10 Key Takeaways

The key takeaways from the proposed rules and identifies considerations for affected banks are summarized below:

  1. Increased Asset-Size Thresholds – Raises the small bank threshold to $1 billion and large bank threshold to $10 billion, with annual inflation adjustments, reducing regulatory burden for many institutions.
  2. Major Product Line Approach – Introduces a framework for evaluating retail lending in two of four product lines (home mortgage, small business, small farm, and consumer), with consumer lending qualifying only if it constitutes a majority of retail lending.
  3. Modified Rating Framework – Allows intermediate banks to achieve a satisfactory overall rating, even with weaker community development performance, if lending test performance is strong.
  4. Clarified CD Definitions – Provides clearer criteria for community development categories, expands economic development eligibility, and creates a separate definition for CD grants with a 15% indirect cost cap.
  5. Illustrative CD Activities List – Codifies a publicly available, agency-maintained list of qualifying and non-qualifying CD activities to promote transparency and consistency.
  6. CD Activity Confirmation Process – Establishes an optional 90-day agency review process for banks to confirm whether novel activities qualify for CRA consideration.
  7. Geographic Flexibility – Allows CD activities outside assessment areas if banks meet Tier 1 capital thresholds (0.625% for large banks; 1.25% for intermediate, wholesale, and limited purpose banks).
  8. Grandfathering Provision – Protects CRA consideration for CD activities that were eligible when conducted, even if eligibility criteria later change, preserving banks’ reliance interests.
  9. Enhanced Strategic Plans – Modifies strategic plan provisions to provide more meaningful preliminary guidance and substantive feedback, making this evaluation option more attractive.
  10. Significant Burden Reduction – Expected to reduce compliance burden by approximately 86% for FDIC-supervised intermediate banks, with net cost savings for small banks.

How We Got Here

In 2019, the agencies issued a joint notice of proposed rulemaking to update their CRA rules, and in 2020, finalized those rules (the “2020 CRA rules”). In 2021, the OCC rescinded the 2020 CRA rules and replaced them with rules based largely on the 1995 CRA framework. In 2022, the OCC, FDIC, and the Federal Reserve Board issued a joint notice of proposed rulemaking to modernize their CRA rules, which were finalized in 2023 (the “2023 CRA rules”).

The 2023 CRA rules were challenged in federal court, and the agencies were enjoined from enforcing them after the court concluded that plaintiffs had demonstrated a substantial likelihood of success on the merits of their claim that the agencies exceeded their statutory authority. To resolve the pending litigation, in 2025 the agencies proposed rescinding the 2023 CRA rules. The OCC and FDIC are now moving the District Court for entry of a final judgment against them. If entered as proposed, the judgment would declare that future CRA amendments may not be based on (1) an expansive view of “entire community” that assesses retail lending activities outside geographic areas where institutions maintain deposit-taking facilities, or (2) an expansive view of “credit needs” that assesses deposit products.

Against this backdrop, the OCC and FDIC are moving forward with a new rulemaking to refocus supervision on the statutory mandate—encouraging banks to meet the credit needs of their local communities—by increasing emphasis on lending and ensuring that community development activities benefit those communities.

How These Changes Impact Banks

1. Increased Asset-Size Thresholds with Annual Inflation Adjustments

The proposal raises the asset-size thresholds for determining bank classification with increased regulatory burdens when a bank moves from one size category to a larger one.

  • “Small bank” would be defined as a bank with assets of less than $1 billion (up from approximately $600 million currently).
  • “Intermediate bank” would be defined as a bank with assets of at least $1 billion but less than $10 billion (replacing the current “intermediate small bank” category).
  • “Large bank” would be defined as a bank with assets of $10 billion or more.

The thresholds would be adjusted annually based on the year-to-year change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), not seasonally adjusted, for each twelve-month period ending in November, rounded to the nearest million. This change would reclassify many current intermediate small banks as small banks, reducing their regulatory burden through fewer data collection, maintenance, and reporting requirements and removing the community development test. Alternatively, the agencies are considering aligning the small bank threshold with the SBA standard of $850 million, which would include approximately 4% fewer banks.

Why This Matters: Many banks currently approaching regulatory size thresholds may benefit from additional runway before becoming subject to more intensive CRA requirements. The annual inflation adjustment should also reduce the likelihood that banks are pushed into higher regulatory categories solely due to balance sheet growth caused by inflation, allowing management to focus resources on business strategy rather than compliance recalibration. Banks near the current $600 million threshold should model their projected asset growth against the new thresholds to determine whether reclassification timing will change and plan accordingly.

2. Major Product Line Approach

The agencies propose a major product line approach for all banks with two alternatives. Option 1 uses a quantitative, bank-level approach to evaluate retail lending in two of four product lines (home mortgage, small business, small farm, and consumer lending), which become the bank’s major product lines. Option 2 uses an assessment area-level approach that is both qualitative and quantitative, similar to the current methodology for small banks. Under either approach, consumer lending qualifies as a major product line only if it constitutes a majority of retail lending by both dollar amount and loan count, or at the bank’s option.

Why This Matters: The proposed approach could substantially affect how lending performance is evaluated and where banks focus compliance resources. Institutions should assess whether their primary lending activities align with the proposed major product line framework and consider how changes in product mix could influence examination outcomes over time. Banks with significant consumer lending portfolios should pay particular attention to the majority threshold requirement. For example, if consumer lending does not constitute a majority of retail lending by both dollar amount and loan count, it may not qualify as a major product line unless the bank affirmatively elects to include it.

3. Modified Rating Framework for Intermediate Banks

Under the current framework, an intermediate small bank must receive at least a “satisfactory” rating on both the small bank lending test and the community development (CD) test to receive an overall rating of “satisfactory.” The proposal would remove this limitation, allowing stronger performance on the lending test to compensate for weaker performance on the CD test. This change reflects the agencies’ broader objective of refocusing CRA performance evaluation on lending while continuing to recognize CD performance as a component of the overall evaluation.

Why This Matters: This change provides greater flexibility for intermediate banks by reducing the risk that a weaker community development performance score will independently prevent a satisfactory overall rating. Banks that may have historically struggled to identify sufficient qualifying CD activities in their assessment areas may find relief under this framework. However, institutions should not interpret this change as an invitation to abandon CD efforts entirely, as the agencies have signaled that CD performance remains a meaningful component of overall CRA evaluation.

4. Clarified Community Development Definitions

The proposal maintains the four broad categories of community development—(1) affordable housing, (2) community services, (3) economic development, and (4) revitalization and stabilization—but provides clearer and more objective criteria for each category. The proposed definition would codify several aspects of existing agency guidance in the Interagency Questions and Answers while also providing targeted expansions. For example, the economic development category would no longer require an activity to create, improve, or retain jobs for low- and moderate-income (LMI) individuals, and the revitalization and stabilization category would add Indian country and other Tribal and native lands as qualifying targeted geographic areas.

The proposal creates a separate definition for “community development grant,” removing grants from the scope of “CD investment.” The agencies note that grants and donations to non-profit entities may be susceptible to rent extraction, in which entities divert funds away from local communities, including LMI individuals, small businesses, and small farms. The new definition is designed to improve targeting and accountability and ensure that CRA-motivated grant funding is more closely tied to identifiable CD plans, projects, or initiatives. Additionally, indirect costs for administering the grant or donation cannot exceed 15%.

Why This Matters: Clearer and more objective eligibility standards should provide banks with greater certainty when structuring community development activities and investments. The expanded economic development and revitalization categories may create new opportunities for CRA credit, while the separate treatment of grants may require institutions to revisit grantmaking programs and documentation practices. Banks should review existing grant relationships to ensure compliance with the 15% indirect cost cap and evaluate whether current grant recipients can demonstrate the required connection to identifiable CD plans, projects, or initiatives.

5. Publicly Available Illustrative List of CD Activities

The proposal would codify the existence of a publicly available, non-exhaustive, illustrative list of examples of CD activities that qualify for consideration under the applicable CD test. Each agency would maintain its own list on its website and periodically update it. The illustrative list may include examples of activities that the agencies have determined are not CD activities. This “living list” is intended to promote transparency and consistency, provide banks with greater certainty, and help clarify the application of the CD definition.

Why This Matters: A publicly available list could significantly reduce ambiguity surrounding qualifying activities and facilitate more consistent examination outcomes. Banks may be able to develop community development pipelines with greater confidence, particularly when evaluating innovative or less traditional activities. The inclusion of activities that do not qualify may be equally valuable because institutions can avoid investing time and resources in initiatives that will not receive CRA consideration.

6. CD Activity Confirmation Process

The proposal establishes an optional confirmation process through which a bank may request agency review to confirm whether a loan, investment, grant, or service qualifies as a CD activity in a CRA examination. The agency would communicate a response within 90 days after receiving the request, unless additional time is needed. This process is intended primarily for novel potential CD activities that implicate significant legal or policy questions and would provide banks with greater certainty regarding whether specific activities would qualify.

Why This Matters: The confirmation process offers a valuable mechanism for reducing regulatory uncertainty before committing capital or resources to novel community development initiatives. Banks considering innovative products, partnerships, or investments may view this process as a way to obtain greater predictability regarding CRA treatment and examination credit. The 90-day response window provides a reasonable timeline for planning purposes, though banks should build additional buffer time into project schedules given the potential for agency extensions on complex requests.

7. Geographic Flexibility for CD Activities Outside Assessment Areas

The proposal would allow agencies to consider a bank’s CD activities that benefit areas outside of the bank’s assessment area(s), provided the bank meets applicable geographic flexibility standards. For large banks, the proposal would establish geographic flexibility standards of 0.625% of Tier 1 capital for CD loans and the same percentage for CD investments and grants collectively. For intermediate banks, wholesale banks, and limited purpose banks, the standard would be 1.25% of Tier 1 capital. This flexibility is intended to help address “CRA hotspots” (areas with significant competition for CRA activities) and “CRA deserts” (areas where banks engage in limited CRA activities).

Why This Matters: Institutions operating in highly competitive markets may gain additional flexibility to pursue impactful community development opportunities in areas with greater need. This change could help banks diversify CRA activities, improve deployment of community development capital, and alleviate pressure created by competition for a limited number of qualifying projects in traditional assessment areas. Banks in CRA hotspots should evaluate whether the Tier 1 capital thresholds (0.625% for large banks; 1.25% for intermediate, wholesale, and limited purpose banks) align with their current CD activity levels and consider whether geographic expansion would improve both CRA outcomes and community impact.

8. Grandfathering of Previously Eligible CD Activities

The proposal addresses consideration for any CD activity that was eligible for CRA consideration at the time the bank conducted it. If the agency later determines that an activity is not eligible, the bank will continue to receive consideration for the activity if (1) it was eligible at the time the bank conducted it and is being considered in the evaluation period in which it was conducted, or (2) it is a loan or investment that remains on the bank’s balance sheet. This provision recognizes banks’ reliance interests and codifies existing agency practice.

Why This Matters: This provision provides important protection for banks that reasonably relied on existing CRA guidance when undertaking community development activities. By preserving CRA consideration for previously qualifying loans and investments, the proposal reduces the risk that future interpretive changes could undermine the expected regulatory benefit of long-term commitments. Banks with multi-year CD investments or loans originated under prior guidance should document the eligibility criteria that applied at the time of origination to support continued CRA consideration if questions arise during future examinations.

9. Enhanced Strategic Plan Requirements

The proposal modifies strategic plan provisions to improve flexibility and clarity. The agencies would provide preliminary guidance on the adequacy of a proposed plan and be more forthcoming with substantive feedback. Banks evaluated under strategic plans would continue to have their performance assessed based on measurable goals specified in the plan, including any annual interim measurable goals. The agencies expect more banks may elect to be evaluated under a strategic plan as a result of these modifications, which are designed to provide greater flexibility in how banks demonstrate their CRA performance.

Why This Matters: More meaningful agency feedback and clearer expectations could make the strategic plan option more attractive, particularly for banks with unique business models or specialized market footprints. Institutions that have previously viewed the strategic plan process as cumbersome may wish to reevaluate whether a customized approach could better align with their CRA objectives. Community development financial institutions (CDFIs), banks serving rural or underserved markets, and institutions with nontraditional branch networks may find the strategic plan option particularly well-suited to demonstrating CRA performance in ways that standard evaluation criteria may not fully capture.

10. Significant Regulatory Burden Reduction

The proposal is expected to result in significant burden reduction, particularly for smaller institutions. For FDIC-supervised intermediate banks, including banks reclassified from large to intermediate, the FDIC estimates a decrease of approximately 114,775 annual burden hours (an 86% reduction). The agencies certify that the proposal would not have a significant economic impact on a substantial number of small entities and would result in net cost savings for small banks. The proposal would also allow banks that were devoting resources to prepare for the 2023 CRA rules (which were enjoined by court order) to redeploy those resources.

Why This Matters: The estimated 86% reduction in burden hours for intermediate banks represents a substantial shift in compliance expectations. Banks should consider how freed-up resources can be reallocated to lending activities, customer service, or other strategic priorities. Institutions that invested in systems and processes to comply with the 2023 CRA rules may be able to simplify or streamline those investments. For banks currently classified as large that may be reclassified as intermediate, the burden reduction could be even more significant, and management should begin evaluating which current compliance activities could be scaled back if the proposal is finalized.

Next Steps

Taken together, the proposal signals a shift toward a more streamlined and pragmatic CRA framework that emphasizes lending performance, provides greater regulatory certainty, and reduces compliance burden while preserving incentives for meaningful community development activities.

Although the proposal is not yet final, early preparation can reduce implementation risk and position banks to adapt more efficiently if the amendments are adopted substantially as proposed. Management should begin assessing strategic, operational, and governance implications rather than waiting for a final rule.

The proposal signals continued regulatory focus on measurable community reinvestment outcomes while seeking to address concerns raised regarding prior modernization efforts. Institutions should begin evaluating how the potential operational and strategic effects may materially affect their business model, particularly those that may be reclassified under the new asset-size thresholds. Banks can take the following steps now:

  • Evaluate how the proposed changes may affect assessment areas and CRA strategy.
  • Review current community development activities for continued eligibility and effectiveness.
  • Assess data collection, reporting, and technology capabilities.
  • Brief senior management and the board on potential impacts.
  • Consider submitting comments on provisions that may significantly affect operations or business strategy.

Comments on the proposed rule are due October 13, 2026.

For questions about the proposed CRA amendments or assistance with submitting comments, please contact the Community Banking team at Winthrop & Weinstine.

September 2, 2026