Making CRA Strategic Plans Work: A Framework for Meaningful Community Reinvestment

Making CRA Strategic Plans Work:

A Framework for Meaningful Community Reinvestment

March 2026

Purpose of the Community Reinvestment Act (CRA)

The Community Reinvestment Act (CRA), enacted in 1977, requires banks to meet the credit needs of their communities, including low- and moderate-income (LMI) neighborhoods. Congress designed the CRA to combat discriminatory lending practices, such as redlining, and ensure that banks meet their obligation to serve the communities in which they operate. Federal banking regulators—the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC)—evaluate institutions’ records of community lending and assign performance ratings that can affect merger and acquisition approvals, branch applications, and overall regulatory standing.

CRA regulations establish five methods for evaluating how banks meet community credit needs, one of which is the strategic plan. Banks may elect this option with regulatory approval by replacing standard CRA tests with tailored performance goals developed through community consultation and public comment.

What is a CRA Strategic Plan?

A CRA strategic plan allows a bank to propose its own measurable goals for CRA responsibilities to meet community credit needs in lieu of being evaluated under the standard lending, investment, and service tests. Under the CRA regulations (12 CFR § 25.27, 228.27, and 345.27), an institution may develop and submit a strategic plan to its primary federal regulator for approval. If approved, the plan serves as the bank’s CRA evaluation framework for a defined period of typically three to five years.

The strategic plan option is intended to provide institutions with additional flexibility and clarity in how they demonstrate their CRA compliance. Specifically, a well-designed strategic plan can:

Create advance agreement on performance standards among regulators, institutions, and communities;
Allow customization to align with the bank’s unique business model, geographic footprint, and assessment area characteristics; and
Ensure accountability through measurable, transparent performance standards that are subject to public comment and regulatory oversight.

Regulatory Requirements

The regulatory framework for CRA strategic plans is set forth in 12 CFR § 25.27, 228.27 and 345.27, which establishes the specific content, process, and approval requirements that institutions must satisfy.

Plan Content and Scope

An institution’s strategic plan must include:

Measurable annual goals for helping to meet credit needs in each assessment area, particularly for low- and moderate-income geographies and individuals;
An evaluation period not exceeding five years;
Performance context factors, including community needs, the bank’s capacity and constraints, product offerings, and prior performance;
Defined assessment areas, including geographies where the institution maintains its main office, branches, and deposit-taking remote service facilities; and
Goals specific to each assessment area covered by the plan.

Public Participation

An important component of drafting a strategic plan is the requirement that the process includes opportunity for a public review and comment period. As part of this requirement, the bank must:

Formally solicit public comment on the draft plan for at least 30 days before submission;
Provide the plan to the public upon request;
Document how public feedback was considered; and
Submit all public comments to the bank’s CRA regulator along with the plan and the bank’s written response.

Regulatory Approval Process

When reviewing a CRA strategic plan, regulators will evaluate whether:

Goals are “measurable”;
The measurable goals adequately meet a community’s credit needs;
The plan demonstrates that goals will result in a performance rated Satisfactory or better; and that
The plan meets the minimum standards of specificity and measurability.

Transparency and Plan Duration

Once the strategic plan is approved, the institution must comply with several ongoing obligations. For the duration of the plan, the plan must:

Be made available to the public for the entire evaluation period;
Remain in effect for the specified period unless terminated by the institution or modified by the bank’s CRA regulator due to changed circumstances; and must be
Subject to any material amendments to the same public comment and regulatory approval process as the initial submission.

Limitations of the Strategic Plan Process

The strategic plan framework is flexible enough for institutions to tailor CRA goals to their community’s needs. However, several structural weaknesses undermine its effectiveness in driving meaningful community reinvestment:

Insufficient Community Engagement: Many institutions finalize key plan decisions before the mandated 30-day public comment period and limit outreach to newspaper notices, undermining the community’s ability to participate and influence the process. Without proactive engagement — such as community meetings or partnerships with local organizations — the process fails to capture genuine input or build trust between banks and stakeholders. At a minimum, banks should post draft strategic plans on their websites to facilitate public participation, complementing the newspaper notice requirement. No regulatory restrictions prevent banks from taking additional steps to solicit public input.
Minimal or Non-Ambitious Goals: Some plans set targets that merely match historical lending levels or include only minimal increases, allowing institutions to achieve Satisfactory ratings without providing additional benefit to LMI communities. This reduces the strategic plan to a compliance exercise rather than a genuine commitment to community reinvestment. As banks grow in asset size, plan targets — expressed as a percentage of assets or tier 1 capital — should remain constant and not decline.
Lack of Transparency in Goal Justification: Many plans neither disclose how goals were set nor justify their appropriateness for community needs. Without baseline data, market analysis, or peer comparisons, stakeholders cannot evaluate whether goals are ambitious or inadequate, which prevents accountability and makes it difficult to identify which plans are truly effective.
Plans Limited to Single City or MSA: Under the 1995 CRA regulations, banks are only evaluated in markets where they maintain physical headquarters, branches, or deposit-taking ATMs. Some online banks use this outdated rule to avoid CRA review in most markets they serve. Strategic plans that confine goal setting to a single city or metropolitan statistical area (MSA) for nationally operating banks undermine the CRA’s core purpose of ensuring banks meet the credit needs across all of the markets they are permitted to serve.

Components of a Strong CRA Strategic Plan

Institutions committed to meaningful community reinvestment should incorporate the following components into their strategic plans:

1. Robust, Inclusive Community Input
Institutions must engage communities early and often in the planning process, not just during the mandated 30-day comment period. Effective community engagement includes:

Early outreach to community-based organizations (CBOs) by engaging housing advocates, economic development nonprofits, civil rights organizations, and small business associations early on to ensure plan goals reflect on-the-ground expertise on community credit needs.
Treating the public comment period as a relationship‑building opportunity that will strengthen community trust and expand the bank’s client base.
Sharing a draft plan before the formal comment window opens. Giving community stakeholders an early look fosters stronger collaboration, reduces surprises, and helps the bank incorporate community‑identified needs well in advance, ultimately strengthening both the plan and its credibility.
Embracing transparency by posting the draft plan on the bank’s website during the comment period. Instead of relying solely on the bare‑minimum newspaper notice, which satisfies the regulatory requirement but rarely generates substantive community feedback, post the full strategic plan online and actively circulate the link to community partners, coalitions, and stakeholders during the comment period to encourage real engagement.
Public meetings or listening sessions where public forums are conducted during accessible times at convenient locations where community members can share their concerns and priorities.
Clear documentation of feedback, including a public summary showing how community feedback shaped the plan and explaining why certain suggestions were not incorporated.

2. Measurable Goals with Year-Over-Year Improvement
Strong plans include measurable, time-bound goals anchored to the baseline performance from the preceding three years with the inclusion of annual targets for each year. Goals must demonstrate improvement over prior performance, not simply maintenance of historical levels. Ambitious targets represent increases of 25% or more above baseline, while remaining realistic given institutional capacity and market conditions. This transparency and commitment to annual targets allows stakeholders to verify that goals represent genuine increases in community investment. These goals, depending on an institution’s business models, should include:

Increases in Mortgage Lending to LMI Borrowers: Targets must specify the number and dollar volume of home purchase, home improvement, or refinance loans to LMI borrowers and census tracts. Goals should also describe percentages of loans to LMI borrowers and census tracts with comparisons to peer institutions of similar loan volume.
Small Business Lending Growth Targets: Expand lending to small businesses located in LMI communities as well as tracking loan volume, number of borrowers, and loan sizes. Goals should also describe percentages of loans to small businesses with revenues under $1 million and in LMI tracts, with comparisons to peer institutions and demographic benchmarks.
Community Development Loans and Investments (CDLI): Satisfactory goals should be tied to annualized community development financing as a share of total assets benchmarked against peers. Outstanding goals should achieve ratios of annualized community development compared to assets that surpass most if not all peers. To satisfy this requirement, most Outstanding goals for community development loans and investments should exceed 1% of total assets per year. Banks should also document how their community development activities are particularly responsive to the specific needs of each assessment area.
Community Development Services: Community development services are usually expressed as number of staff hours. A baseline of recent past performance as well as annual goals should be presented. Banks should establish subgoals based on community feedback and identify priority services, such as housing counseling or small business technical assistance. Subgoals for these services should be presented.
Disaggregated Reporting: Plans should include annual milestones for interim assessment and course correction, with goals being disaggregated by assessment area, product type, and borrower characteristics to ensure equitable performance across the institution’s footprint.
Performance Ratings: Satisfactory ratings should reflect performance that compares favorably to peers, while Outstanding ratings must be reserved for performance that genuinely surpasses most peer institutions.

3. Prioritizing Staff That Reflect Communities Served
Banks with strong CRA outcomes prioritize staffing models that reflect the communities they serve. Effective community lending requires institutional knowledge, cultural competency, and trusted relationships. Plans should include commitments that materially improve credit availability and consumer trust, such as:

- Hiring loan officers from LMI or minority communities;
- Deploying loan officers in underserved areas; and
- Providing cultural competence or language access training.

4. Creation of a Community Advisory Council
Institutions should establish an advisory council composed of community development experts, housing practitioners, civil rights advocates, and consumer organizations. Advisory councils should:

Guide implementation of the strategic plan;
Monitor progress between annual reports;
Strengthen relationships with local stakeholders; and
Increase transparency and public accountability.

Effective community advisory councils require structural authority and institutional access. Members must receive regular performance data, participate in strategic planning discussions before decisions are finalized, and maintain direct communication with executive leadership, allowing the council to provide informed guidance rather than reactive commentary.

Council membership should reflect the institution’s full geographic footprint and community development priorities that draws from housing advocates, small business representatives, CDFIs, and civil rights organizations across both urban and rural areas. As members often volunteer their time and expertise free of charge, institutions should provide reasonable compensation, cover travel and meeting expenses, and offer staff support.

Conclusion

CRA strategic plans offer a path for institutions to tailor their community investment responsibilities in a transparent and accountable manner. When designed with strong community input and substantive, measurable goals, strategic plans can materially improve lending and investment in underserved communities. NCRC brings extensive experience in both the drafting and implementation of CRA strategic plans, and we welcome the opportunity to work with institutions to develop strategies that prioritize the needs of their communities.