Appendix A to Part 25 - Small Bank, Intermediate Bank, Wholesale Bank, and Limited Purpose Bank Ratings
12:1.0.1.1.22.6.28.6.6 : Appendix A
Appendix A to Part 25 - Small Bank, Intermediate Bank, Wholesale
Bank, and Limited Purpose Bank Ratings
(a) Ratings in general - (1) In assigning a rating, the
OCC evaluates a small bank's, intermediate bank's, wholesale
bank's, or limited purpose bank's performance under the applicable
performance criteria in § 25.14 and § 25.15, adjusting for
performance context in § 25.16 and consideration of any evidence of
discriminatory and illegal credit practices as described in §
25.17. This includes consideration of low-cost education loans
provided to low-income borrowers and activities in cooperation with
minority depository institutions, women's depository institutions,
and low-income credit unions.
(2) A bank's performance need not fit each aspect of a
particular rating profile in order to receive that rating, and
exceptionally strong performance with respect to some aspects may
compensate for weak performance in others. The bank's overall
performance, however, must be consistent with safe and sound
banking practices and generally with the appropriate rating profile
as follows.
(b) Banks evaluated under the small bank and intermediate
bank performance standards - (1) Lending test ratings -
(i) Eligibility for a satisfactory lending test rating. The
OCC rates a small bank's or intermediate bank's lending performance
“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 assessment area(s), and taking into account, as
appropriate, other retail and community development lending-related
activities such as loan originations for sale to the secondary
markets and community development loans and community development
investments;
(B) A majority of its loans and, as appropriate, other retail
and community development lending-related activities, are in its
assessment area;
(C) A distribution of loans to and, as appropriate, other retail
and community development 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
assessment area(s);
(D) 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 assessment
area(s); and
(E) A reasonable geographic distribution of loans given the
bank's assessment area(s).
(ii) Eligibility for an “outstanding” lending test
rating. A small bank or intermediate bank that meets each of
the standards for a “satisfactory” rating under this paragraph and
exceeds some or all of those standards may warrant consideration
for a lending test rating of “outstanding.”
(iii) Needs to improve or substantial noncompliance
ratings. A small bank or intermediate bank may also receive a
lending test rating of “needs to improve” or “substantial
noncompliance” depending on the degree to which its performance has
failed to meet the standard for a “satisfactory” rating.
(2) Community development test ratings for intermediate
banks - (i) Eligibility for a satisfactory community
development test rating. The OCC rates an intermediate bank's
community development performance “satisfactory” if the bank
demonstrates adequate responsiveness to the community development
needs of its assessment area(s) 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, its assessment
area's need for such community development activities, and the
availability of such opportunities for community development in the
bank's assessment area(s).
(ii) Eligibility for an outstanding community development
test rating. The OCC rates an intermediate bank's community
development performance “outstanding” if the bank demonstrates
excellent responsiveness to community development needs in its
assessment area(s) through community development loans, community
development investments, and community development services, as
appropriate, considering the bank's capacity and the need and
availability of such opportunities for community development in the
bank's assessment area(s).
(iii) Needs to improve or substantial noncompliance
ratings. An intermediate bank may also receive a community
development test rating of “needs to improve” or “substantial
noncompliance” depending on the degree to which its performance has
failed to meet the standards for a “satisfactory” rating.
(3) Bank rating - (i) Eligibility for a satisfactory
rating. No intermediate bank may receive an assigned rating of
“satisfactory” unless it receives a rating of at least
“satisfactory” on both the lending test and the community
development test.
(ii) Eligibility for an outstanding rating - (A) An
intermediate bank that receives an “outstanding” rating on one test
and at least a “satisfactory” on the other test may receive rating
of “outstanding.”
(B) A small bank that meets each of the standards for a
“satisfactory” rating under the lending test and exceeds some or
all of those standards may warrant consideration for an assigned
rating of “outstanding.” In assessing whether a bank's performance
is “outstanding,” the OCC considers the extent to which the bank
exceeds each of the performance standards for a “satisfactory”
rating and its performance in making community development
investments and its performance in providing branches and other
services and delivery systems that enhance credit availability in
its assessment area(s).
(iii) Needs to improve or substantial noncompliance overall
ratings. A small bank or intermediate bank may also receive a
rating of “needs to improve” or “substantial noncompliance”
assigned rating depending on the degree to which its performance
has failed to meet the standards for a “satisfactory” rating.
(c) Banks evaluated under the wholesale and limited purpose
bank performance standards. The OCC assigns each wholesale or
limited purpose bank's performance one of the four following
ratings.
(1) Outstanding. The OCC rates a wholesale or limited
purpose bank's performance “outstanding” if, in general, it
demonstrates:
(i) A high level of community development loans, community
development services, or community development investments,
particularly investments that are not routinely provided by private
investors;
(ii) Extensive use of innovative or complex community
development loans, community development investments, or community
development services; and
(iii) Excellent responsiveness to credit and community
development needs in its assessment area(s).
(2) Satisfactory. The OCC rates a wholesale or limited
purpose bank's performance “satisfactory” if, in general, it
demonstrates:
(i) An adequate level of community development loans, community
development services, or community development investments,
particularly investments that are not routinely provided by private
investors;
(ii) Occasional use of innovative or complex community
development loans, community development investments, or community
development services; and
(iii) Adequate responsiveness to credit and community
development needs in its assessment area(s).
(3) Needs to improve. The OCC rates a wholesale or
limited purpose bank's performance as “needs to improve” if, in
general, it demonstrates:
(i) A poor level of community development loans, community
development services, or community development investments,
particularly investments that are not routinely provided by private
investors;
(ii) Rare use of innovative or complex community development
loans, community development investments, or community development
services; and
(iii) Poor responsiveness to credit and community development
needs in its assessment area(s).
(4) Substantial noncompliance. The OCC rates a wholesale
or limited purpose bank's performance in “substantial
noncompliance” if, in general, it demonstrates:
(i) Few, if any, community development loans, community
development services, or community development investments,
particularly investments that are not routinely provided by private
investors;
(ii) No use of innovative or complex qualified community
development loans, community development investments, or community
development services; and
(iii) Very poor responsiveness to credit and community
development needs in its assessment area(s).
[85 FR 34808, June 5, 2020]