Today’s grim financial headlines come from the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC), who jointly announced the 2024 updated asset-size thresholds for defining ‘small bank’ and ‘intermediate small bank’ under their Community Reinvestment Act (CRA) regulations. This move, effective January 1, 2024, marks a critical adjustment in the financial landscape that will impact how institutions are evaluated for their community lending and investment practices.
Under the CRA regulations, financial institutions are assessed based on their asset size to determine the examination procedures they undergo. These assessments ensure that banks meet the credit needs of low- and moderate-income neighborhoods while maintaining safe and sound operations. The annual adjustments to these thresholds are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), reflecting inflation.
The CPI-W, which showed a 4.06 percent increase through November 2023, has led to new definitions for small banks and intermediate small banks. A ‘small bank’ is now defined as an institution with assets under $1.564 billion at the end of either of the last two calendar years. An ‘intermediate small bank’ falls between $391 million and $1.564 billion, based on the same criteria.
This annual update is crucial for financial institutions to understand their CRA obligations and ensure compliance with the evolving regulatory environment. The new thresholds provide a clearer picture of where banks stand in terms of asset size classification, directly influencing their CRA exams.
The updated thresholds are available here. It’s important to note that the October 2023 joint final rule, which strengthens and modernizes CRA regulations, will take effect on January 1, 2026. This landmark rule aims to enhance the effectiveness of the CRA in promoting access to credit for underserved communities.
For more information, contact Carroll Kim at the FDIC at 202-898-7389.
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