On March 21, 2024, the federal banking agencies adopted a supplemental interim final rule to change applicability dates of the facility-based assessment area and public file provisions to January 1, 2026. As a result, the applicability dates discussed below have been superseded. The agencies also adopted technical amendments confirming that banks may continue to use the CRA Notice in the agencies’ legacy CRA regulations until January 1, 2026.
On April 1, 2024, the interagency Community Reinvestment Act (“CRA”) final rule of October 2023 is scheduled to take effect. Covington summarized the final rule here. While most of the final rule’s operative provisions apply beginning as of January 1, 2026, banks should be aware that two new substantive requirements are set to apply as of April 1, 2024:
- Posting public file to website. First, banks will be required to comply with the final rule’s revised requirements for CRA public files as of April 1, 2024. Notably, these requirements include that a bank post its public file to its website, and update certain aspects of the public file on a quarterly basis thereafter.
- Delineating facility-based assessment areas at the county (or larger) level. Second, as of April 1, 2024, the final rule’s revised requirements for delineating facility-based assessment areas take effect. Under these requirements, each facility-based assessment area of a large bank must consist of a single metropolitan-statistical area (“MSA”), one or more contiguous counties within an MSA, or one or more contiguous counties within the nonmetropolitan area of a state. Large banks will no longer be permitted to delineate facility-based assessment areas that are smaller than a county; only intermediate and small banks will be able to do this under appropriate circumstances. The federal banking agencies have not addressed numerous interpretive issues relating to this change, including whether and how banks’ assessment areas will change for purposes of CRA examinations that encompass performance periods that include the year 2024, and which banks will be affected.
Other sections of the final rule, including sections 31 (Effect of CRA performance on applications), 44 (Public notice by banks), 45 (Publication of planned examination schedule), and 46 (Public engagement) become applicable April 1, 2024, but do not impose new, substantive obligations on banks. The federal banking agencies clarified in a recent webinar that while the new public notice section becomes applicable April 1, 2024, banks will not need to use the revised public notice set forth in Appendix F of the final rule until January 1, 2026. Until then, banks may continue to use the public notice language found in the existing CRA rules.
In February 2024, several industry associations filed a lawsuit against the federal banking agencies in the United States District Court for the Northern District of Texas challenging the legality of the final rule and seeking a preliminary injunction to stay the implementation of the rule pending a decision on the merits. While the plaintiffs have requested that the court enjoin and set aside the entirety of the final rule – including the provisions that take effect April 1st of this year – banks should be prepared to comply with those provisions given the uncertainty of whether the court will rule on the plaintiffs’ motion for a preliminary injunction prior to April 1st. The federal banking agencies currently have a deadline of March 8, 2024 to respond to the plaintiffs’ motion for a preliminary injunction, and the plaintiffs are scheduled to reply by March 22, 2024.
Covington’s Financial Services Group has deep experience advising banks of all sizes with CRA compliance.
For further information on the final rule, please contact the lawyers listed.
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