Following our recent Community Reinvestment Act webinar – CRA Compliance in the Modern Era: Expert Insights & Best Practices – we are pleased to share some key takeaways and calls to action to ensure firms can prepare promptly to meet the first round of new CRA final rule requirements on January 1, 2026.

Jointly issued in October 2023 by the Federal Reserve, FDIC, and OCC, the final rule, which strengthens and modernizes the Community Reinvestment Act regulations, seeks to expand access to credit, investment, and banking services among other key changes. 

Communication around the final rule will need to be timely and intentional as the changes impact multiple business lines throughout your organization. Ensure that all stakeholders understand how the bank’s responsibilities may affect the organization’s business plan or strategy, as well as their business line.

First, continue to socialize the CRA final rule at Compliance, CRA, and other Committee meetings as appropriate. Develop and implement a detailed action plan, including tentative effective dates, and assign accountability for key milestones such as the following:

• Remain abreast of new developments, including the outcome of the preliminary injunction and update your action plan and effective dates accordingly 
  
• Determine if your institution should opt into new tests or stay with the default tests:
  
  
  • Intermediate banks may choose between the current Intermediate Bank Community Development Test or the new Community Development Financing Test 
    
  • Small banks may choose between the current Lending Test or the new Retail Lending Test 
    
• Review assessment area definitions (i.e. Facility-Based, Retail Lending, Other Retail Lending) and determine all that may be applicable to your bank
  
  
  • Ensure each applicable area is delineated in accordance with the requirements
    
  • If modifications are needed, seek Board approval and document in Board meeting minutes 
    
• Identify your major product lines in each Facility-Based Assessment Area and Outside Retail Lending Area
  
• Determine any need to collect deposit, retail banking services and products, automobile lending, or other data
  
• Expand credit write-ups and educate lending personnel of the need to capture key community development qualification information from the outset
  
• Track and document community development activities as they occur; expand tracking to include:
  
  
  • Refinanced, renewed, or modified loans and investments
    
  • Outstanding CD loans and investments
    
  • Dollar amount allocations
    
  • Impact and responsive review factors
    
• Update your CRA self-assessment to include each test applicable to your institution and perform analyses consistent with the final rule
  
• Update and add the CRA Public File to the bank’s website.

The final rule will reshape the role and skillset required of the CRA Officer and support staff. Determine each party’s responsibilities and whether additional resources are needed. 

As you are discussing the final rule and its requirements with your colleagues, consider new skills needed to make the necessary changes to your bank’s CRA program, systems, monitoring and audit programs, data analytics, and training. Identify additional internal and external resources needed to effectuate change. 

Education and training on the final rule will need to be ongoing.  

Leverage existing resources and training (i.e., online, in-person, external), continuously educating key bank personnel on the final rule and its requirements. Once you update your CRA Program, policy, and procedures, educate all affected bank personnel to ensure ongoing compliance.

Educate the bank’s Board and senior management around the final rule and how it impacts your institution. Continuously apprise the Board and management of new CRA developments, mandatory compliance dates, and anticipated performance results under the final rule.        

Understand how the new definitions will affect your performance.

The final rule uses commons words and terms we are all accustomed to being defined in a certain way; however, the definitions may have been modified. Ensure personnel are familiar with and understand the final rule’s definitions. Key definitions should be incorporated into policies, procedures, and training. 


CONCLUSION

As we continue to navigate the final rule and determine the impact on data collection and reporting and performance results, strive for incremental advancement toward the new requirements. Also, focus on achieving strong results in your assessment areas. Continue discussing and socializing the final rule with key stakeholders and develop and implement a detailed action plan designed to yield the desired CRA rating.

Contact Capco’s Fair and Responsible Banking Practice if we can be of assistance with CRA Modernization, HMDA/CRA scrubs, statistical analyses, mapping, or ongoing monitoring.