What Is a CRA “Needs to Improve” Rating?

The Community Reinvestment Act (CRA) requires federal bank regulators to evaluate how well banks serve the credit needs of the communities where they operate — including low- and moderate-income neighborhoods. Examiners assign one of four ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance.

A Needs to Improve rating is the second-lowest grade. As of the most recent examination data, 410 banks — about 2.2% of all rated institutions — currently hold this designation. An additional 36 banks (0.2%) carry the lowest rating, Substantial Noncompliance.

What examiners look for

CRA exams assess banks across three broad tests, which are weighted differently by bank size:

• Lending Test: Volume and geographic distribution of home mortgage, small business, and small farm loans, particularly in low- and moderate-income (LMI) areas
• Investment Test: Qualified investments such as LIHTC housing tax credits, CDFI fund investments, and community development loans
• Service Test: Retail branch and ATM accessibility in LMI communities, plus community development services

A Needs to Improve rating typically means the bank failed to meet the needs of its assessment area in multiple tests — for example, a low loan volume in LMI neighborhoods despite strong overall lending activity, or a pattern of branch closures in underserved communities.

Notable banks currently rated Needs to Improve

City National Bank — a $100B institution owned by RBC — received its Needs to Improve rating in March 2023 after a Federal Reserve examination found significant deficiencies in its lending to LMI communities and communities of color in Southern California. The case drew national attention and resulted in a consent order.

What happens after a Needs to Improve rating

A CRA rating below Satisfactory has real regulatory consequences:

• Regulators can deny or condition approval for mergers, acquisitions, and new branch openings
• The bank may be subject to enhanced supervision and required to submit a remediation plan
• A Substantial Noncompliance rating can trigger a formal enforcement action
• Community groups and advocacy organizations use low CRA ratings to challenge bank merger applications during the public comment period

Banks typically respond by increasing LMI lending commitments, making community development investments, or entering into voluntary CRA agreements with local organizations. A re-examination usually occurs within 1–3 years, depending on the bank's size and the regulator's schedule.

How exam schedules work

CRA examination frequency depends on bank size and prior rating. Large banks ($10B+) are typically examined every 2–3 years. Small banks (under $346M as of 2024) that received Outstanding or Satisfactory ratings may go 4–5 years between exams. Banks with low ratings are generally re-examined sooner.

This means some Needs to Improve ratings you see in the data are older — a bank may have received the rating in 2019 and not yet had a subsequent examination. Bank Scorer shows the exam date on every profile so you can assess how current the rating is.

The data behind these ratings

CRA ratings are published by the FFIEC — the Federal Financial Institutions Examination Council — which aggregates results from the three federal bank regulators: the OCC (which supervises national banks), the Federal Reserve (state member banks), and the FDIC (state non-member banks). The exam files are published in machine-readable form, which is what powers Bank Scorer's rating data.

Full CRA exam history — every rating back to the early 1990s — is available for all institutions on Bank Scorer, with links to the PDF evaluation documents where available.