The March 21, 2024, announcement that the prudential bank regulators have decided to postpone the scheduled April 1, “applicable” date for the Facility-based assessment areas, the new Public File section and the Public Notice Section provides some welcomed relief to bankers who have been inundated with a Tsunami of new or revised regulations in the last year. But there may be some confusion caused by the postponement of the implementation of the Facility-based assessment areas section of the new rule.
Bankers have been scrambling to get their public files in order so that they meet the anticipated implementation of the FBAAs by April 1. Although the FBAAs are essentially the same as the current CRA assessment areas that have been in effect for the history of the CRA, there is one very big change in the FBAA rules; the loss of the flexibility to configure an assessment area that reflects a market that a bank “reasonably can be expected to serve”. The new rule requires a so-called “large” bank to incorporate entire counties within each FBAA.
For the major banks this may not be a problem, but for banks in the $2 billion to $10 billion asset size range this can be a very big problem because they don’t necessarily have the service network to serve an entire county. I have written other articles about this issue, so I won’t dwell on it here. But suffice it to say that my company has been inundated with requests by banks to produce CRA assessment area maps that reflect adjustments they needed to meet the new requirements.
Now, with the postponement of the new FBAAs until January 1, 2026, many banks have assumed there is no need to update their CRA assessment area maps. But this is a big mistake. The reason is the implementation of the new Metropolitan Statistical Areas (“MSA”s) and Metropolitan Divisions (“MD”s) at the beginning of 2024. The changes in MSAs and MDs have a direct impact on census tract income classification. Consequently, every bank should be aware of how the new MSAs and MDs affected census tracts in their defined communities.
The pre-2024 assessment area maps may be out of date if there have been MSA and MD changes in your state. And, if there are changes to the tract income classifications in a bank’s CRA assessment area a bank will need to create new assessment area maps and insert the new maps in the bank’s public file by April 1. The April 1, annual public file update deadline has been in effect since 1995 so it is not something that pertained only to the new FBAAs.
So, while bankers are correct to be temporarily relieved about the postponement of the April 1, 2024, applicable dates for the new rule, they should not forget they still have an obligation to update their CRA public files for any changes affecting their CRA assessment areas. The new MSAs and MDs may very well have triggered changes in many banks’ assessment areas independent of the now postponed FBAAs. Every CRA officer should check to determine if any tracts in their assessment areas have been affected by the new MSAs and MDs – and if they have, a new CRA assessment area map must be inserted in their public files by April 1, this year.