Can someone provide clarification on what will be expected of small banks?

Keep in mind that this is only a proposal (from just the FDIC & OCC) at this point, so there are likely to be changes once a final rule is release (if there ever is one). Here are some threads from earlier this year that explain some of the challenges/changes of the CRA proposal:

https://www.bankersonline.com/forum...aking-is-radical-complicated#Post2227906
https://www.bankersonline.com/forum...nk-comments-could-be-problem#Post2231573
https://www.bankersonline.com/forum...ak-now-or-forever-hold-your-peace#UNREAD

Small banks will be redefined to mean banks of $500 million or less. ISB's will be eliminated and any bank with assets over $500 million will be deemed a "large" bank subject to the new tests.

The newly defined small banks can still operate under the current tests, but they will be subject to the new Assessment Area rules and they will be required to geocode their deposits accordingly. The FDIC estimates that small banks will incur about $95K of additional expenses yearly.

The NPR is very poorly drafted, incompletely thought out and is extremely complicated. I've written extensively about this topic and submitted more than 100 pages of commentary and documents to the Agencies.

The OCC has dropped the other shoe. See this thread https://www.bankersonline.com/forum/ubbthreads.php/topics/2237005

The OCC CRA train left the station today, but the FDIC wasn't on board. So far, the rule only impacts national banks and federal savings associations.