Appendix E to Part 25 - —Small Bank and Savings Association and Intermediate Bank and Savings Association Performance Evaluation Conclusions and Ratings

Appendix E to Part 25—XXX

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Link to an amendment published at

25—Small Bank and Savings Association and Intermediate Bank and Savings Association Performance Evaluation Conclusions and Ratings

a. Small banks or savings associations evaluated under the small bank or savings association performance evaluation.

1. Small Bank and Savings Association Lending Test conclusions. Unless a small bank or savings association opts to be evaluated pursuant to the Retail Lending Test in § 25.22, the appropriate Federal banking agency assigns conclusions for a small bank's or savings association's performance pursuant to the Small Bank and Savings Association Lending Test in § 25.29(a)(2) for each facility-based assessment area, in each State or multistate MSA, as applicable pursuant to § 25.28(c), and for the institution of “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.”

i. Eligibility for a “Satisfactory” Small Bank and Savings Association Lending Test conclusion. The appropriate Federal banking agency assigns a small bank's or savings association's performance pursuant to the Small Bank and Savings Association Lending Test a conclusion of “Satisfactory” if, in general, the bank or savings association demonstrates:

A. A reasonable loan-to-deposit ratio (considering seasonal variations) given the bank's or savings association'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 or savings association's facility-based assessment areas;

D. A reasonable geographic distribution of loans among census tracts of different income levels in the bank's or savings association'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 or savings association's performance in helping to meet the credit needs of its facility-based assessment areas.

ii. Eligibility for an “Outstanding” Small Bank and Savings Association Lending Test conclusion. A small bank or savings association 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 and Savings Association Lending Test conclusions. A small bank or savings association 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 or savings association ratings. Unless a small bank or savings association opts to be evaluated pursuant to the Retail Lending Test in § 25.22, the appropriate Federal banking agency determines a small bank's or savings association's rating for each State and multistate MSA, as applicable pursuant to § 25.28(c), and for the institution based on its Small Bank and Savings Association Lending Test conclusions at the State, multistate MSA, and institution level, respectively.

i. The appropriate Federal banking agency 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 appropriate Federal banking agency may adjust a small bank's or savings association's institution rating where the bank or savings association has requested and received sufficient additional consideration pursuant to § 25.29(b)(1) and (3).

iii. The appropriate Federal banking agency also considers any evidence of discriminatory or other illegal credit practices pursuant to § 25.28(d) and the bank's or savings association's past performance pursuant to § 25.28(e).

3. The appropriate Federal banking agency assigns a rating for small banks or savings associations evaluated pursuant to the Retail Lending Test in § 25.22 as provided in appendix D to this part.

b. Intermediate banks or savings associations evaluated pursuant to the Intermediate Bank and Savings Association Community Development Test in § 25.30. Unless an intermediate bank or savings association opts to be evaluated pursuant to the Community Development Financing Test in § 25.24, the appropriate Federal banking agency assigns conclusions for an intermediate bank's or savings association's performance pursuant to the Intermediate Bank and Savings Association Community Development Test in § 25.30 for each State and multistate MSA, as applicable pursuant to § 25.28(c), and for the institution of “Outstanding,” “High Satisfactory,” “Low Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.”

1. Intermediate Bank and Savings Association Community Development Test conclusions.

i. Eligibility for a “Satisfactory” Intermediate Bank and Savings Association Community Development Test conclusion. The appropriate Federal banking agency assigns an intermediate bank's or savings association's community development performance a “Low Satisfactory” conclusion if the bank or savings association demonstrates adequate responsiveness, and a “High Satisfactory” conclusion if the bank or savings association 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 or savings association'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 and Savings Association Community Development Test conclusion. The appropriate Federal banking agency assigns an intermediate bank's or savings association's community development performance an “Outstanding” conclusion if the bank or savings association 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 or savings association'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 and Savings Association Community Development Test conclusions. The appropriate Federal banking agency assigns an intermediate bank's or savings association'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 or savings association ratings. The appropriate Federal banking agency rates an intermediate bank's or savings association's performance as provided in appendix D to this part.

[89 FR 7165, Feb. 1, 2024

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Cross Reference

Link to an amendment published

, as amended at 89 FR 7171, Feb. 1, 2024

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