What is the Community Reinvestment Act (CRA)?

The Community Reinvestment Act (CRA) is a federal law that encourages banks to meet the credit needs of all communities they serve, especially in low and moderate-income neighborhoods. Passed in 1977, it was designed to prevent discriminatory lending practices and ensure banks are helping to develop the communities where they operate. Banks receive CRA ratings based on their lending, investment, and service activities in these communities.

How could simplifying the CRA benefit banks?

Simplifying the Community Reinvestment Act could benefit banks by reducing compliance costs, paperwork, and administrative burdens. With clearer guidelines and streamlined requirements, banks could reallocate resources from regulatory compliance to actual lending and community development. This could potentially lead to increased profitability, more efficient operations, and greater lending capacity, which may ultimately benefit shareholders.

What are regional and community banks?

Regional and community banks are financial institutions that primarily serve specific geographic areas rather than operating nationwide. Community banks are typically smaller, locally owned institutions focused on providing traditional banking services to local residents and businesses. Regional banks are midsize institutions serving multiple communities across several states. Both types typically have strong ties to their communities, emphasize relationship banking, and play vital roles in local economic development.

What is dividend yield and why does it matter?

Dividend yield is the annual dividend payment divided by the current stock price, expressed as a percentage. For example, if a stock costs $100 and pays $3 in annual dividends, the dividend yield is 3%. This matters to investors because it represents a source of return independent of stock price changes. Many regional banks offer competitive dividend yields, providing investors with regular income while they hold the stock, which can be especially attractive during market downturns.

What does "Market Cap" mean?

Market capitalization (Market Cap) is the total value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of shares. It helps investors understand the company's size and classification: large-cap (over $10 billion), mid-cap ($2-10 billion), or small-cap (under $2 billion). For regional banks, market cap indicates their relative size in the banking sector and can reflect their geographic reach, lending capacity, and overall market presence.

15 handpicked stocks

Community Banking Catalyst

This carefully selected group of stocks features regional and community banks positioned to benefit from the FDIC's proposed simplification of the Community Reinvestment Act. Our professional analysts identified these financial institutions as potentially gaining from reduced regulatory burdens, which could boost lending capacity and shareholder value.

Han Tan | Market Analyst

Published on July 14

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

PNC Financial Services Group, Inc.

PNC

Current price

$198.44

PNC's strong regional focus and extensive community lending programs would become more efficient and less costly to manage under simplified CRA rules.

U.S. Bancorp

USB

Current price

$47.88

While a large national bank, U.S. Bancorp's significant regional presence means it would also benefit from streamlined CRA compliance across its exten...

While a large national bank, U.S. Bancorp's significant regional presence means it would also benefit from streamlined CRA compliance across its extensive operations.

Truist Financial Corp

TFC

Current price

$45.57

As a super-regional bank, Truist Financial would see significant operational efficiencies and reduced compliance costs from a less complex CRA framewo...

As a super-regional bank, Truist Financial would see significant operational efficiencies and reduced compliance costs from a less complex CRA framework.

KeyCorp.

KEY

Current price

$18.51

Fifth Third Bancorp

FITB

Current price

$44.22

M&T Bank Corporation

MTB

Current price

$195.63

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+8.49%

≈

About This Group of Stocks

Our Expert Thinking

The FDIC's proposal to modernize the Community Reinvestment Act represents a significant opportunity for regional banks. By reducing compliance costs and operational complexity, these changes could free up capital and directly enhance lending capacity, profitability, and ultimately shareholder value.

What You Need to Know

This collection focuses on traditional banking institutions that are vital to local economies. These companies provide essential commercial, real estate, and consumer lending services that support economic activity at the community level, making them uniquely positioned to benefit from regulatory simplification.

Why These Stocks

Our analysts specifically selected well-established regional and community banks with strong local networks and demonstrated commitment to community development. These institutions have the infrastructure and experience to capitalize on a simplified regulatory framework while continuing to serve their communities.

Group Performance Snapshot

8.51%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 8.51% over the next year.

12 of 15

Stocks Rated Buy by Analysts

12 of 15 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

📝

Regulatory Relief on the Horizon

The FDIC's proposed CRA simplification could be a game-changer for these banks, potentially reducing costs and freeing up capital that could flow directly to their bottom line and your returns.

🏦

Community Champions

These aren't just any banks—they're institutions with deep community roots and established lending networks, perfectly positioned to capitalize on regulatory changes while continuing to serve local economies.

💰

Dividend Potential

Many regional banks in this group offer attractive dividend yields, meaning you could benefit from both potential share price appreciation and regular income as they grow under simplified regulations.

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