The Community Reinvestment Act (CRA) is a federal law enacted in 1977 that encourages federally insured banks and thrifts to help meet the credit needs of their entire community, including low- and moderate-income neighborhoods. The Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) are the three federal bank regulatory agencies responsible for enforcing the CRA.
Key Facts
- The Office of the Comptroller of the Currency (OCC) conducts CRA examinations every 48 months.
- The CRA regulations were revised in 1995 to focus more on performance rather than process, and different evaluation tests were established for different types of institutions.
- The CRA examination process encourages public involvement and input, and the agencies are required to publish a quarterly schedule of upcoming examinations.
- The federal banking agencies use a uniform four-tiered rating system to assess CRA performance, and since July 1, 1990, the agencies must make each institution’s CRA rating and evaluation available to the public.
Frequency of CRA Evaluations
The OCC conducts CRA examinations of national banks every 48 months. This examination cycle is mandated by the Gramm-Leach-Bliley Act of 1999. However, there is an extended examination cycle for smaller banks with assets of $250 million or less. These banks are examined no sooner than 60 months after their most recent examination if they have an outstanding CRA rating, and no sooner than 48 months after their most recent examination if they have a satisfactory CRA rating.
Revised CRA Regulations
In 1995, the CRA regulations were revised to focus more on performance rather than process. Different evaluation tests were established for different types of institutions, including large institutions, small institutions, wholesale and limited purpose institutions. The revised regulations also encouraged public involvement and input into the examination process.
Public Participation and Access to Ratings and Public Evaluations
To promote public involvement and input, the revised CRA regulations require the agencies to publish a quarterly schedule of upcoming examinations. The agencies are also required to make each institution’s CRA rating and evaluation available to the public. The CRA performance rating does not reflect on an institution’s financial condition, but rather on how well it is meeting its responsibilities under the CRA.
Uniform Four-Tiered Rating System
The federal banking agencies use a uniform four-tiered rating system to assess CRA performance:
- Outstanding
- Satisfactory
- Needs to Improve
- Substantial Noncompliance
Interstate banks receive an overall rating as well as an evaluation based on their CRA performance in each state and metropolitan statistical area in which they have branches.
Sources
- Office of the Comptroller of the Currency: Community Reinvestment Act (CRA) Questions and Answers for Bank Customers
- Federal Deposit Insurance Corporation: What is a Performance Evaluation?
- Office of the Comptroller of the Currency: Community Reinvestment Act (CRA) Evaluations Coming Due
FAQs
How often do federal examiners perform CRA evaluations?
The OCC conducts CRA examinations of national banks every 48 months. Smaller banks with assets of $250 million or less have an extended examination cycle: no sooner than 60 months after their most recent examination for banks with an outstanding CRA rating, and no sooner than 48 months after their most recent examination for banks with a satisfactory CRA rating.
What is the purpose of CRA evaluations?
CRA evaluations assess a financial institution’s record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods.
Who conducts CRA evaluations?
The three federal bank regulatory agencies responsible for enforcing the CRA are the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC).
What is the impact of a CRA evaluation on a financial institution?
A financial institution’s CRA rating can affect its ability to open new branches, merge with other institutions, and engage in other corporate activities.
How can the public participate in the CRA evaluation process?
The public can participate in the CRA evaluation process by submitting comments about a bank’s performance under the CR The agencies are required to consider all public comments received before the close of the CRA evaluation.
How can I find out when a bank is scheduled for a CRA evaluation?
The OCC publishes a quarterly schedule of upcoming CRA evaluations.
Where can I find a bank’s CRA rating and evaluation?
You can search the CRA Database for a bank’s CRA evaluations and ratings.
What is the difference between a CRA rating and a CRA evaluation?
A CRA rating is a summary of a bank’s overall performance under the CRA, while a CRA evaluation is a detailed report that provides the facts, data, and analyses supporting the rating.