CRA Eligible: Understanding Community Reinvestment Act Eligibility Criteria

When banks evaluate where to direct their community investment dollars, one question rises to the top: Is this activity CRA eligible? Understanding what qualifies under the Community Reinvestment Act can mean the difference between regulatory success and missed opportunities to serve the communities that need support most.

Quick Answer: What Does “CRA Eligible” Mean?

CRA eligible refers to loans, investments, services, and geographic areas that qualify for Community Reinvestment Act consideration by federal banking agencies. These activities primarily benefit low and moderate income individuals, LMI census tracts, and certain distressed or underserved areas as defined by the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency.

Here’s what you need to know at a glance:

• CRA eligibility drives how banks are evaluated when they apply for new branches, mergers, or acquisitions
• Eligible activities must meet the credit needs of LMI communities through lending, investment, or services
• Financial literacy programs in schools can be structured to be CRA eligible when they primarily serve students and families from LMI areas
• CRA performance directly impacts an institution’s application for expansion and its reputation in local communities

Overview of the Community Reinvestment Act (CRA)

The Community Reinvestment Act CRA was enacted in 1977 to combat redlining and ensure depository institutions meet the credit needs of all neighborhoods they serve, including low and moderate income neighborhoods. Before CRA, many banks would collect deposits from entire community areas but refuse to lend back into those same neighborhoods—particularly communities of color and economically disadvantaged areas.

Today, three federal agencies share responsibility for CRA oversight. The Board of Governors of the Federal Reserve System examines state member banks. The Federal Deposit Insurance Corporation oversees state nonmember banks. The Office of the Comptroller of the Currency—often called the comptroller of the currency—regulates national banks and federal savings associations.

CRA applies specifically to insured depository institutions like commercial banks and savings associations. Independent mortgage companies and other nonbank lenders fall outside CRA requirements, though they may be subject to other fair lending regulations.

Key background facts include:

• CRA performance evaluations result in public ratings: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance
• These ratings are evaluated periodically and influence regulatory decisions on branch openings and mergers
• Major CRA regulations modernization occurred in 2023, with phased implementation through 2024-2026
• Banks must demonstrate consistent lending, investment, and service activities in their assessment areas

Who and What Can Be CRA Eligible?

CRA eligibility covers both geographic areas at the census tract level and specific activities that financial institutions undertake to support low and moderate income communities. An activity typically qualifies as CRA eligible when it meets specific criteria established by federal agencies.

An activity is usually CRA eligible if it:

• Primarily benefits LMI individuals or LMI areas
• Supports affordable housing, economic development, community services, or neighborhood revitalization
• Occurs within the bank’s assessment area or a broader region including that area
• Demonstrates a primary purpose aligned with community development goals

Concrete examples of CRA-eligible activities include:

• Small business loans originated in LMI tracts
• Mortgages to LMI borrowers purchasing their first homes
• Investments in Low-Income Housing Tax Credit projects
• Grants to community organizations providing services to underserved areas
• School-based financial literacy programs targeted to LMI students
• Bank staff volunteering their financial expertise at public schools with high free-and-reduced-lunch rates

CRA-Eligible Geographies and Tract Designations

CRA-eligible geographies are defined at the census tract level using data published by the Federal Financial Institutions Examination Council. Banks and community partners can access this data through the FFIEC’s CRA Geocoding/Mapping System to assess banks CRA performance opportunities.

Tract income level determination works as follows:

• Compare census tract Median Family Income to Area Median Family Income
• Less than 50% of AMFI equals low income designation
• 50-79% of AMFI equals moderate income designation
• 80-119% of AMFI equals middle income designation
• 120% or higher of AMFI equals upper income designation

The main CRA-eligible geographic categories include:

• LMI tracts: Census tracts where median family income falls below 80% of area median
• Distressed or underserved tracts: Certain nonmetropolitan middle-income tracts meeting specific criteria
• Disaster areas: Federally declared disaster zones during specified time windows

Current tract designations rely on decennial Census and American Community Survey data. Banks and nonprofits can identify eligible tracts by using the FFIEC CRA Geocoding/Mapping System, which provides a dropdown menu for selecting geographic parameters, and regulator-provided tract lists available on each agency’s CRA website.

CRA-Eligible Activities: Lending, Investment, and Services

For larger banks, CRA exams evaluate three traditional tests: the Lending Test, Investment Test, and Service Test. Each test examines how well institutions serve their communities through different types of activities. Smaller banks may be evaluated primarily under the Lending Test, with optional community development consideration based on asset size thresholds set annually by federal reserve board guidelines.

The evaluation process considers an insured depository institution’s record of helping banks meet the credit needs of their communities through multiple channels. Sound banking operations require balancing profitability with community responsibility.

CRA-Eligible Services (Including Financial Literacy in Schools)

Community development services must be related to the institution’s provision of financial services and primarily benefit LMI individuals or LMI communities. This is where partnership opportunities with schools become particularly valuable.

Concrete examples of CRA-eligible services include:

• Bank officers serving on the board or finance committee of a nonprofit running after-school financial literacy clubs in an LMI school district
• Staff teaching quarterly budgeting and savings workshops to high school seniors at Title I schools
• Volunteers providing free tax preparation through the IRS’s Volunteer Income Tax Assistance program
• Branch managers participating in homebuyer education seminars at community centers

Sponsoring financial literacy programs at schools represents one of the most impactful CRA-eligible service strategies available. When banks partner with elementary, middle, and high schools serving high percentages of students who qualify for free or reduced-price lunch, they create lasting community benefit while earning CRA credit.

Example of CRA Eligible K12 School Financial Literacy Programs being sponsored by Banks and Credit Unions:

• PersonalFinanceLab: Money management, budgeting, and investing games.

Example of CRA Eligible Community College/University School Financial Literacy Programs:

• StockTrak: Financial Literacy and Investing Simulation used by over 1,000 universities.

To support CRA credit for educational initiatives, banks should track:

• Total volunteer hours and staff roles
• Number of students reached per program
• Pre/post assessment results demonstrating learning outcomes
• Geographic data confirming schools serve LMI populations

CRA-Eligible Lending

Lending typically carries the most heavily weighted component of CRA exams. To encourage depository institutions to serve all segments of their communities, examiners review lending patterns in key areas including home mortgage, small business, and consumer loans.

Specific loan types that often receive CRA credit include:

• Home mortgage loans to LMI borrowers or in LMI tracts (example: a 30-year fixed-rate mortgage to a first-time homebuyer with income at 60% of AMFI)
• Small business and small farm loans in LMI or distressed tracts
• Community development loans to nonprofit developers of affordable rental housing
• Small-dollar consumer loans that provide alternatives to predatory lending in LMI areas

Loan-level CRA data may be reportable for certain institutions under HMDA and CRA data collection rules. This data helps regulators assess how well banks meet the credit needs of their assessment areas.

CRA-Eligible Investments

CRA-eligible investments support community development through equity investments, grants, and qualified deposits. These investments help encourage financial institutions to deploy capital in ways that benefit underserved communities.

Common CRA-eligible investment vehicles include:

• Deposits in certified CDFI banks or credit unions serving rural distressed counties
• Equity in LIHTC projects creating affordable units restricted to households at or below 60% of AMI
• Grants to nonprofits delivering financial education in public school districts where most students come from LMI families
• Investments in New Markets Tax Credit funds serving qualifying tracts
• Municipal bond purchases financing LMI housing or schools in underserved areas

Documentation should clearly tie each investment to community development purposes defined in CRA regulations. Banks should maintain records showing how investments contribute to community stability and access to services.

Determining If a Census Tract or Activity Is CRA Eligible

CRA eligibility isn’t intuitive—institutions must verify geographic and activity eligibility using official tools and accessible documentation. CRA requires careful attention to detail when coding activities for credit.

To check if a tract is CRA eligible:

1. Access the FFIEC CRA Geocoding/Mapping System online
2. Enter a specific address or census tract number in the search field
3. Review the income category displayed in results
4. Check whether the tract is designated distressed, underserved, or in a disaster area for the relevant exam period
5. Document findings for your records

To evaluate whether an activity qualifies:

1. Confirm that primary beneficiaries are LMI individuals or located in LMI areas
2. Verify the activity fits a community development purpose (affordable housing, community services, economic development, or revitalization)
3. Ensure the activity occurs in or benefits the bank’s assessment area
4. Review any available guidance from your office or examiner communications

Banks should develop internal CRA eligibility checklists to complete before coding activities—especially for newer initiatives like school-based financial education programs where eligibility criteria may be less familiar to staff.

Documenting CRA-Eligible Activities and Hours

Federal agencies expect clear documentation to support any claim that a loan, investment, or service qualifies as CRA eligible. Without proper records, even genuinely impactful activities may not receive appropriate credit during examinations.

Core documentation elements include:

• Description of the activity and its financial nature
• Identification of beneficiaries with income or tract data where possible
• Dates, locations, and responsible staff members
• Evidence of impact such as number of LMI participants served
• Connection to community development purposes

Banks often use specialized CRA management systems or spreadsheets to track community development service hours. These tools help ensure consistent data collection across the institution.

Best practices for documenting school-based financial literacy programs:

• Maintain memoranda of understanding with participating school districts
• Track class rosters and student participation counts by session
• Administer pre/post assessment tools to demonstrate learning outcomes
• Capture written feedback from teachers and administrators
• Document school demographic data confirming LMI focus
• Photograph program activities (with appropriate permissions)

Why CRA Eligibility Matters for Banks and Communities

CRA-eligible activity levels and quality directly influence a bank’s CRA exam rating. This record affects approval for branch openings, mergers, and acquisitions—making CRA compliance a business imperative, not just a regulatory checkbox.

Community benefits from robust CRA activity include:

• Expanded access to credit for LMI households previously underserved by institutions
• Support for small business development in underserved areas
• Stronger financial capability through education, particularly when banks sponsor financial literacy programs in local schools
• Investment in affordable housing that stabilizes neighborhoods
• Access to deposit facilities and banking services in communities that might otherwise lack them

Well-designed CRA-eligible initiatives align business objectives with community outcomes. A bank that builds relationships with students today may serve those same individuals as future customers. Financial literacy education creates informed borrowers who make sound decisions—benefiting both the community and lending institutions.

Reputational benefits matter too. A strong CRA record enhances trust with community organizations, school districts, and local governments. These partnerships often create additional lending and service opportunities that support low and moderate income families across the entire community.

Getting Started: Building a CRA-Eligible Strategy (With a Focus on Financial Literacy)

Institutions can take intentional steps to design programs that maximize CRA credit while delivering meaningful community impact. The process starts with understanding current activities and identifying gaps.

Strategic steps to strengthen CRA eligibility:

• Map current lending, investment, and service activities to CRA categories
• Identify gaps in LMI outreach, especially opportunities in local schools
• Review assessment area demographics to prioritize partnering with high-need communities
• Set measurable goals tied to CRA exam timelines

Form or strengthen relationships with key partners:

• Public school districts and charter schools serving large LMI populations
• Nonprofits specializing in youth financial education
• CDFIs and community organizations that can help reach families
• Local chambers of commerce in moderate income neighborhoods

Launch or expand school-based financial literacy initiatives:

• Develop multi-week curricula for grades 8-12 covering budgeting, credit, and student loans
• Organize annual “money skills” days at middle and high schools
• Sponsor teacher training to integrate financial topics into math or social studies classes
• Create age-appropriate programs for elementary students introducing savings concepts

Formalize CRA governance within your institution:

• Designate a CRA officer or committee with clear accountability
• Establish measurable annual goals (example: reach 500 LMI students per year)
• Review results quarterly and adjust strategies before exam dates
• Maintain expertise through ongoing training on evolving CRA requirements

Key Takeaways on CRA Eligibility

Understanding what qualifies as CRA eligible helps banks serve communities effectively while meeting regulatory expectations. Here are the essential points to remember:

• CRA eligible refers to geographies and activities that qualify for CRA consideration because they benefit LMI people or designated areas
• Banks must verify eligibility using official FFIEC data and clear community development criteria
• Lending, investments, and services can all be CRA eligible when structured correctly and well documented
• School-based financial literacy programs serving LMI students represent a highly effective, CRA-eligible strategy
• CRA compliance delivers mutual benefits—helping institutions grow while strengthening local communities

Sponsoring robust financial literacy programs in schools is more than a compliance strategy. It’s an investment in the financial capability of the next generation, creating informed consumers who understand credit, savings, and sound financial decision-making.

Stay current with evolving CRA regulations and local needs. Use eligibility rules as a framework for creativity rather than a limitation. The institutions that thrive under CRA are those that view community development as integral to their mission—not just a box to check during the evaluation process.