CRA Modernization Rule, Part I: What You Need to Know
Written by: Bill Dolan, CMB, AMP
To spare you from reading and memorizing the almost 1500 pages of the CRA Final Rule, which goes into effect April 1, 2024, listed below are the key updates in the CRA modernization final rule issued by the FDIC, OCC, and the Federal Reserve:
Changes in asset size for small, intermediate, and large banks.
Clarification of the investments and loans that count as CRA activities.
Expansion of assessment areas beyond a bank’s facility-based assessment area under certain conditions.
Under the final rule, these agencies changed the asset-size for banks’ CRA requirements which provided regulatory relief for approximately 800 smaller institutions while simultaneously imposing new requirements on intermediate and larger banks.
Banks must comply withal the rule’s provisions by January 1, 2026 (aside from certain requirements that take effect January 1, 2027).
The thresholds for banks have been broken out by asset-size as follows:
“Smaller” banks are identified as those with less than $600 million in assets. Previously, small banks had been defined as banks with less than $376 million in assets.
“Intermediate” banks are now identified as those over $600 million in assets but less than $2 billion in assets. Previously, a bank with more than $1.5 billion in assets had been considered a large bank.
“Large” banks have now been defined as having assets with more than $2 billion which is an increase from the current benchmark of $1.5 billion. And for those banks that have assets exceeding $10 billion, additional data requirements have been instituted.
No matter what threshold you are at today, your bank should be instituting a regulatory change management strategy as you continue to grow your institution. Smaller and intermediate banks need to proactively plan for more stringent CRA requirements as you grow into these thresholds. All banks must focus their attention on compliance and risk management as part of your growth strategy to avoid finding yourself subject to regulations that you cannot placate.
If you aren’t sure how to begin your regulatory change management strategy, or have concerns over your next upcoming CRA exam, feeling not as prepared as you should be, now is the time to contact Spillane Consulting Associates to help guide you through on a path to a CRA strategy that will demonstrate to examiners, the accountability and responsibility you and your bank have taken for CRA compliance. Contact Bill Dolan, Director, at (617) 694-2617 or by email at: Wdolan@scapartnering.com to begin managing your CRA strategy today!
Stay tunes for Next Week as we dive into why the Agencies updated the CRA Regulations as well as the Expansion of the CRA Assessment Areas.
