Ratings
1 – Group the analyses of the assessment areas examined by MSA[1] and nonmetropolitan areas within each state where the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the assessment areas that are in that MSA.
2 – Summarize conclusions about the institution’s performance in each MSA and the nonmetropolitan portion of each state in which an assessment area received a full scope review. If two or more assessment areas in an MSA or in the nonmetropolitan portion of a state received full scope reviews, weigh the different assessment areas considering such factors as:
a – The significance of the institution’s activities in each compared to the institution’s overall activities;
b – The lending opportunities in each;
c – The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
d – Demographic and economic conditions in each.
3 – For assessment areas in MSAs and nonmetropolitan areas that were not examined using the full scope procedures, consider facts and data related to the institution’s lending to ensure that performance in those assessment areas is not inconsistent with the conclusions based on the assessment areas that received full scope examinations.
4 – For institutions operating in only one multi-state MSA or one state, assign one of the four preliminary ratings — “Satisfactory”, “Outstanding”, “Needs to Improve”, and “Substantial Noncompliance” — in accordance with step 6 below. To determine the relative significance of each MSA and nonmetropolitan area to the institution’s preliminary rating, consider:
a – The significance of the institution’s activities in each compared to the institution’s overall activities;
b – The lending opportunities in each;
c – The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
d – Demographic and economic conditions in each.
5 – For other institutions, assign one of the four preliminary ratings – “Satisfactory”, “Outstanding”, “Needs to Improve”, and “Substantial Noncompliance” — for each state in which the institution has at least one branch and for each multi-state MSA in which the institution has branches in two or more states in accordance with step #6 below. To determine the relative significance of each MSA and the nonmetropolitan area on the institution’s preliminary state rating, consider:
a – The significance of the institution’s activities in each compared to the institution’s overall activities;
b – The lending opportunities in each;
c – The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
d – Demographic and economic conditions in each.
6 – Consult the Small Institution Ratings Matrix and information in workpapers to assign a preliminary rating of:
a – “Satisfactory” if the institution’s performance meets each of the standards for a satisfactory rating or if exceptionally strong performance with respect to some of the standards compensates for weak performance in others;
b – “Needs to Improve” or “Substantial Noncompliance” if the institution’s performance fails to meet the standards for “Satisfactory” performance. Whether a rating is “Needs to Improve” or “Substantial Noncompliance” will depend upon the degree to which the institution’s performance has failed to meet the standards for a “Satisfactory” rating; or
c – “Outstanding” if the institution meets the rating descriptions and standards for “Satisfactory” for each of the five core criteria, and materially exceeds the standards for “Satisfactory” in some or all of the criteria to the extent that an outstanding rating is warranted, or if the institution’s performance with respect to the five core criteria generally exceeds “Satisfactory” and its performance in making qualified investments and providing branches and other services and delivery systems in the assessment area(s) supplement its performance under the five core criteria sufficiently to warrant an overall rating of “Outstanding”.
7 – For an institution with branches in more than one state or multi-state MSA, assign a preliminary rating to the institution as a whole taking into account the institution’s record in different states or multi-state MSAs by considering:
a – The significance of the institution’s activities in each compared to the institution’s overall activities;
b – The lending opportunities in each;
c – The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
d – Demographic and economic conditions in each.
8 – Review the results of the most recent compliance examination and determine whether evidence of discriminatory or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s overall CRA rating or, if applicable, its CRA rating in any state or multi-state MSA.[2] If evidence of discrimination or other illegal credit practices in any geography by the institution, or in any assessment area by any affiliate whose loans have been considered as part of the institution’s lending performance, was found, consider:
a – The nature, extent, and strength of the evidence of the practices;
b – The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
c – Any corrective action the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
d – Any other relevant information.
9 – Assign a final rating for the institution as a whole and, if applicable, each state in which the institution has at least one branch and each multi-state MSA in which it has branches in two or more states, considering:
a – The institution’s preliminary rating; and
b – Any evidence of discriminatory or other illegal credit practices (see #8 above).
10 – Discuss conclusions with management.
11 – Write an evaluation of the institution’s performance for the examination report and the public evaluation.
12 – Prepare recommendations for a supervisory strategy and for matters that require attention or follow-up activities.
[1] The reference to MSA may also reference MD
[2] “Evidence of discriminatory or other illegal credit practices” includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) Violations of the Truth in Lending Act regarding a consumer’s right of rescission.
SOURCE: Small Institutions CRA Examinations Procedures | OCC, FRB, FDIC and OTS | July 2007