a. Small banks evaluated
under the small bank performance evaluation.
1. Small Bank Lending Test conclusions. Unless a small bank opts to be evaluated pursuant to the Retail
Lending Test in section 228.22, the Board assigns conclusions for
a small bank’s performance pursuant to the Small Bank Lending
Test in section 228.29(a)(2) for each facility-based assessment area,
in each state or multistate MSA, as applicable pursuant to section
228.28(c), and for the institution of “Outstanding,” “Satisfactory,”
“Needs to Improve,” or “Substantial Noncompliance.”
i. Eligibility for a “Satisfactory” Small Bank Lending
Test conclusion. The Board assigns a small bank’s performance
pursuant to the Small Bank Lending Test a conclusion of “Satisfactory”
if, in general, the bank demonstrates:
A. A reasonable loan-to-deposit
ratio (considering seasonal variations) given the bank’s size,
financial condition, the credit needs of its facility-based assessment
areas, and taking into account, as appropriate, other lending-related
activities such as loan originations for sale to the secondary markets,
community development loans, and community development investments;
B. A majority of its loans
and, as appropriate, other lending-related activities, are in its
facility-based assessment areas;
C. A distribution of retail lending to and,
as appropriate, other lending-related activities for individuals of
different income levels (including low- and moderate-income individuals)
and businesses and farms of different sizes that is reasonable given
the demographics of the bank’s facility-based assessment areas;
D. A reasonable geographic
distribution of loans among census tracts of different income levels
in the bank’s facility-based assessment areas; and
E. A record of taking appropriate
action, when warranted, in response to written complaints, if any,
about the bank’s performance in helping to meet the credit needs
of its facility-based assessment areas.
ii. Eligibility for an “Outstanding”
Small Bank Lending Test conclusion. A small bank that meets each
of the standards for a “Satisfactory” conclusion under
this paragraph a.1.ii. and exceeds some or all of those standards
may warrant consideration for a lending evaluation conclusion of “Outstanding.”
iii. “Needs
to Improve” or “Substantial Noncompliance” Small
Bank Lending Test conclusions. A small bank may also receive a
lending evaluation conclusion of “Needs to Improve” or
“Substantial Noncompliance” depending on the degree to
which its performance has failed to meet the standard for a “Satisfactory”
conclusion.
2. Small bank ratings. Unless a small bank opts to be evaluated
pursuant to the Retail Lending Test in section 228.22, the Board determines
a small bank’s rating for each state and multistate MSA, as
applicable pursuant to section 228.28(c), and for the institution
based on its Small Bank Lending Test conclusions at the state, multistate
MSA, and institution level, respectively.
i. The Board assigns
a rating based on the lending evaluation conclusion according to the
category of the conclusion assigned: “Outstanding,” “Satisfactory,”
“Needs to Improve,” or “Substantial Noncompliance.”
ii. The Board may adjust
a small bank’s institution rating where the bank has requested
and received sufficient additional consideration pursuant to section
228.29(b)(1) and (3).
iii. The Board also considers any evidence of discriminatory or other
illegal credit practices pursuant to section 228.28(d) and the bank’s
past performance pursuant to section 228.28(e).
3. The Board assigns a rating
for small banks evaluated pursuant to the Retail Lending Test in section
228.22 as provided in appendix D to this part.
b. Intermediate banks evaluated
pursuant to the Intermediate Bank Community Development Test in section
228.30. Unless a small bank opts to be evaluated pursuant to
the Retail Lending Test in section 228.22, the Board assigns conclusions
for a small bank’s performance pursuant to the Small Bank Lending
Test in section 228.29(a)(2) for each facility-based assessment area,
in each state or multistate MSA, as applicable pursuant to section
228.28(c), and for the institution of “Outstanding,” “Satisfactory,”
“Needs to Improve,” or “Substantial Noncompliance.”
1. Intermediate Bank Community Development
Test conclusions.
i. Eligibility for a “Satisfactory”
Intermediate Bank Community Development Test conclusion. The Board
assigns an intermediate bank’s community development performance
a “Low Satisfactory” conclusion if the bank demonstrates
adequate responsiveness, and a “High Satisfactory” conclusion
if the bank demonstrates good responsiveness, to the community development
needs of its facility-based assessment areas and, as applicable, nationwide
area through community development loans, community development investments,
and community development services. The adequacy of the bank’s
response will depend on its capacity for such community development
activities, the need for such community development activities, and
the availability of community development opportunities.
ii. Eligibility for an
“Outstanding” Intermediate Bank Community Development
Test conclusion. The Board assigns an intermediate bank’s
community development performance an “Outstanding” conclusion
if the bank demonstrates excellent responsiveness to community development
needs in its facility-based assessment areas and, as applicable, nationwide
area through community development loans, community development investments,
and community development services. The adequacy of the bank’s
response will depend on its capacity for such community development
activities, the need for such community development activities, and
the availability of community development opportunities.
iii. “Needs to
Improve” or “Substantial Noncompliance” Intermediate
Bank Community Development Test conclusions. The Board assigns
an intermediate bank’s community development performance a “Needs
to Improve” or “Substantial Noncompliance” conclusion
depending on the degree to which its performance has failed to meet
the standards for a “Satisfactory” conclusion.
2. Intermediate bank
ratings. The Board rates an intermediate bank’s performance
as provided in appendix D to this part.
