Friday, March 24, 2023

Agencies release thresholds for CRA regulations

The Federal Reserve Board and the FDIC announced in mid-December the 2023 updated asset-size thresholds used to define “small bank” and “intermediate small bank” under their Community Reinvestment Act regulations.

Annual adjustments to these asset-size thresholds are based on the average change in the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is a measure of inflation.

As a result of the 8.60% increase in the CPI–W for the period ending in November 2022, the definitions of small and intermediate small banks for CRA examinations will change as follows:

Small bank means an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $1.503 billion.

Intermediate small bank means a small institution with assets of at least $376 million as of Dec. 31 of both of the prior two calendar years and less than $1.503 billion as of Dec. 31 of either of the prior two calendar years.

The CRA regulations establish the framework and criteria by which the relevant agencies assess a financial institution’s record of helping to meet the credit needs of its community, including low- and moderate-income neighborhoods, consistent with safe and sound operations. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification.

For example, banks meeting the small and intermediate small bank asset–size thresholds are not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as a large bank. These asset-size thresholds are effective Jan. 1, 2023.

A list of the current and historical asset-size thresholds is available at www.ffiec.gov/cra.