Each month, the FDIC and OCC each release a list of banks that have been evaluated under the Community Reinvestment Act (CRA). This information is extremely valuable to CRA officers as one of the best ways to understand the CRA requirements for a financial institution is to read the performance evaluations of other financial institutions of the same regulator.
OCC List of July 2018 CRA Evaluations
The OCC list of CRA evaluations included a total of 40 banks. Ten of these banks were rated Outstanding, while the remaining 30 were rated satisfactory. Of the ten outstanding ratings, three were from large banks, one from an intermediate-small bank, and three from a small bank. The list also contained two outstanding ratings for wholesale banks and one outstanding rating for a bank operating under a CRA strategic plan.
FDIC List of July 2018 CRA Evaluations
The FDIC list of CRA evaluations include a total of 82 banks reviewed for CRA performance. Of these, six banks received an outstanding rating, while three banks received a need to improve rating, and one bank was rated substantial non-compliance.
Interesting FDIC performance evaluations include:
Reynolds State Bank, Reynolds, IL. This small bank of 103.3 million in total assets received their 10th straight substantial non-compliance rating since 2006. This appears to be a result of their extremely low average quarterly loan-to-deposit ratio of 11.22 percent which results from total loans of only 10.9 million compared to their total securities of $85.3 million. The performance evaluation also notes that the 7 employee, one branch bank that was founded in 1888, installed a night drop in 2009, added an ATM and drive-up in 2013, added an informational website in 2015, and began offering transactional internet banking to customers in 2017, though the bank does not actively promote this service to customers and only has 61 customers currently using this service.
Horizon Bank, Waverly Nebraska. This small bank of 276.4 million of total assets operates four service locations. It appears that the main reason for a less than satisfactory performance rating resulted from a substantial majority of loans being originated outside of the bank’s assessment areas “reflecting less than reasonable performance.” For example, only 3% of construction and development loans (by dollar amount) were originated inside the assessment area. In addition, 97.6% of total home loans (by dollar amount) were originated outside of the bank’s assessment area. The main reason for this appears to be the bank’s unique lending model where their primary focus is offering low-income housing tax credit (LIHTC) housing projects. The bank has no control over the location of the LIHTC housing projects, so most are outside of their defined assessment area. In addition, the bank often sells a portion of the LIHTC loans to affiliated financial institutions due to lending limit restrictions. Furthermore, the bank purchases participations from these affiliated institutions, which are also outside of the bank’s assessment area.
The list of OCC banks reviewed for CRA compliance can be found here.
The list of FDIC banks reviewed for CRA compliance can be found here.