Dear Banker,
On December 19, 2024 the agencies announced the new size thresholds to determine what asset size qualifies as a “small bank”, “intermediate-small bank”, and “large bank” for CRA purposes. The new size categories will apply for the year 2025. Banks that qualify as Intermediate-small banks are immediately subject to ISB examination standards for any CRA exams that commence after January 1, 2025. This makes it imperative for small banks that were approaching during 2024 the ISB size standard to engage in community development activities, even before they become an ISB because they will be expected to have engaged in community development activities for any ISB examinations. This may sound unfair (and it is) but it is the way regulators enforce this issue.
Banks that are qualified as large banks are not examined as large banks until the year in which they report their CRA lending as a large bank (this means a bank that becomes a large bank at the beginning of 2025 will not be subject to large bank exam standards until 2026, when they report their 2025 lending).
There frequently is confusion about the new size standards so we address the confusion and clarify the answer.
The new asset size standards for 2025 based on the 12/31/2024 asset sizes are as follows:
- Small banks are those with less than $402 million
- Intermediate-small banks are those with $402 million up to but less than $1.609 billion
- Large banks are those with $1.609 billion or more
During 2024 the asset size thresholds were
- Small banks are those with less than $391 million
- Intermediate-small banks are those with $391 million up to but less than $1.564 billion
- Large banks are those with $1.564 billion or more
Some bankers have misunderstood the asset size standards to mean that a bank that was above the size standard determined by asset size on 12/31/2023 and then again on 12/31/2024 would fall into that size category (small, ISB, or large). Based on this misunderstanding a bank that was $395 million on 12/31/2023 and then $410 million on 12/31/2024 would be considered to be an ISB because it was above the ISB threshold at year end in both years. However, that is incorrect. Under these circumstances the bank would be classified as a small bank.
The size category applied to a bank is determined by the latest size intervals based on the latest thresholds applied to the two previous years. In the example, the 2025 standards would be applied for both year ends 2023 and 2024. This means that the $402 million threshold must be crossed for both year end 2023 and year end 2024 for a bank to be recognized as an ISB. In the example, the bank was below the latest $402 million asset size threshold for year end 2023 (although it was above the $391 million threshold that year) and therefore would still be a small bank for the year 2025.
If you are approaching ISB size standards it behooves you to anticipate the dramatic implications for your CRA exam standards, specifically the requirements to pass the Community Development Test and to engage in qualified community development activities at least a year before you become an ISB.
