How Are Banks Evaluated Under the CRA?

Getting a CRA rating isn't like getting a credit score — there's no formula that spits out a number. Examiners spend days or weeks at a bank reviewing loan data, community development activities, and branch access. Here's what they're looking for.

One framework, three exam types

The CRA examination framework isn't one-size-fits-all. Regulators use different evaluation methods depending on the bank's size:

• Large banks (assets over $1.564 billion) — evaluated on the Lending Test, Investment Test, and Service Test separately, each weighted.
• Intermediate small banks ($391 million to $1.564 billion) — evaluated on the Lending Test plus a Community Development Test.
• Small banks (under $391 million) — a streamlined examination focused primarily on lending performance.

Note: The asset thresholds above are adjusted annually for inflation. Dollar figures are approximate as of 2025.

The Lending Test

The Lending Test is the most heavily weighted component — it accounts for roughly 50% of a large bank's overall CRA rating. Examiners analyze:

• Home mortgage loans — what share go to low- and moderate-income (LMI) borrowers and LMI census tracts?
• Small business and small farm loans — are they being made in LMI areas? To businesses with revenues under $1 million?
• Community development loans — loans specifically for affordable housing, economic development, or community services in LMI areas.
• Innovative or flexible lending — does the bank offer products specifically designed to serve LMI borrowers?

Examiners compare the bank's performance to its peers and to demographics of its assessment area. A bank operating in a majority-LMI city is held to higher expectations than one in an affluent suburb.

The Investment Test

The Investment Test accounts for roughly 25% of a large bank's overall rating. It evaluates the bank's qualifying investments — financial contributions that support community development:

• Investments in Low-Income Housing Tax Credit (LIHTC) projects
• Investments in Community Development Financial Institutions (CDFIs)
• Donations to organizations providing affordable housing or job training in LMI areas
• Equity investments in small businesses in distressed areas

Examiners look at both the dollar amount and the responsiveness to community needs. A large investment in a single project may count for less than a diverse portfolio of investments targeting multiple community needs.

The Service Test

The Service Test (roughly 25% weight) examines whether the bank's retail services are accessible to LMI individuals and communities:

• Branch distribution — are branches located in or near LMI census tracts? Are hours convenient for working families?
• ATM and digital access — do LMI customers have access to fee-free ATMs and online banking?
• Low-cost products — does the bank offer checking accounts designed for unbanked or underbanked individuals?
• Community development services — do bank employees provide financial literacy training or volunteer with community organizations?

What is an "assessment area"?

A bank's CRA obligations are geographic. Each bank designates one or more assessment areas — typically the communities around its branches and deposit-taking ATMs. Examiners evaluate the bank's performance within those boundaries.

This is why a national bank might receive different component ratings in different cities — a branch network that serves LMI communities well in one market might underperform in another.

How the final rating is determined

For large banks, the examiner combines scores on the three tests to arrive at an overall rating. There is no rigid formula — examiner judgment plays a significant role. A bank that earns Outstanding on the Lending Test but Needs to Improve on Service may still receive a Satisfactory overall if the lending performance is sufficiently strong.

The examiner also considers whether the bank has any evidence of discriminatory or illegal credit practices — those can cap the overall rating at Needs to Improve or lower, regardless of how well the bank scored on individual tests.

The written examination report

After an examination, the regulator publishes a written Performance Evaluation report. These reports can run 20–100+ pages and include detailed analysis of the bank's lending patterns, community development activities, and areas for improvement. For many banks examined after 2005, BankScorer links directly to the official PDF.