Independent Banker - November 2022 - 37

an explosion in online banking and
development of quite large banks
that may have no physical offices at
all, " says Michael Marshall, director
of ICBA regulatory legal affairs. " A
different model is required to evaluate
today's banking environment for
CRA, as opposed to the branch-based
assessment model.
" When the OCC pursued CRA
rulemaking in 2020, " he continues,
" it was an attempt to make CRA
examination ratings more quantitative
and less qualitative, and to do a better
job of evaluating internet-based banks
and activities that banks do outside of
their assessment areas. Some of the
OCC's original provisions have been
preserved in the NPR. "
What CRA program changes might
community banks expect from the
NPR if it is finalized as is?
New CRA specifics
 Classification of banks by asset
thresholds. The proposed rule
raises the current asset thresholds
for the Small Bank category to $600
million, the Intermediate Small
Bank (ISB) category to $2 billion,
and the Large Bank category to
more than $10 billion. Also, small
banks and ISBs would have options
to retain the current applicable
test(s) or choose from other
designated test(s) for evaluation.
 Assessment area rules. Small
banks and ISBs would continue
to be allowed to delineate
assessment areas including the
portion of a county that the bank
can be reasonably expected to
serve, provided they continue to
include only whole census tracts.
Large banks would be required to
delineate assessment areas that
consist of one or more MSAs or
metropolitan divisions, or one or
more contiguous counties within an
MSA, a metropolitan division or the
nonmetropolitan area of a state.
 Out-of-area activities for CRA
performance. Community banks
have long recognized community
needs that may have been centered
outside of a delineated community
for CRA. The agencies' proposal
offers credit for qualifying
community development financing
and services activities conducted
beyond the boundaries of a bank's
facility-based assessment areas;
describes qualifying activities
eligible for CRA consideration; and
offers a process for banks to receive
a binding decision from regulators
about whether a prospective loan
or investment would be eligible for
CRA credit.
 Designated performance tests,
standards and ratings. The
proposal lays out the Small Bank
and ISB processes and options for
evaluating CRA performance as
stated above. It also designated the
performance testing framework for
Large Banks, Large Banks more
than $10 billion and banks using a
Strategic Plan.
 CRA ratings. The proposed
rating categories are stated as
" Outstanding, " " High Satisfactory, "
" Low Satisfactory, " " Needs
to Improve " and " Substantial
Noncompliance. " Further,
the proposal provides metrics
for calculating a bank's CRA
performance by a combined score
from evaluation tests.
 Retail Lending Test. Several
changes are proposed to the Retail
Lending Test, like inclusion of
credit cards and other consumer
loan categories and the approach
of the Retail Lending Test by
volume screening, geographic
distribution metrics to measure the
level of bank lending in low- and
moderate-income census tracts in
an assessment area, and lending
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Independent Banker - November 2022

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