Appendix D to Part 345 - —Ratings

Appendix D to Part 345—Ratings

a. Ratings, in general. In assigning a rating, the FDIC evaluates a bank's performance under the applicable performance criteria in this part, pursuant to §§ 345.21 and 345.28. The agency calculates an overall performance score for each State and multistate MSA, as applicable pursuant to § 345.28(c), and for the institution. The FDIC assigns a rating of “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance” for the bank's performance in each State and multistate MSA, as applicable pursuant to § 345.28(c), and for the institution that is nearest to the overall performance score, as follows:

Performance score	Rating
8.5 or more	Outstanding.
4.5 or more but less than 8.5	Satisfactory.
1.5 or more but less than 4.5	Needs to Improve.
Less than 1.5	Substantial Noncompliance.

The FDIC also considers any evidence of discriminatory or other illegal credit practices pursuant to § 345.28(d) and the bank's past performance pursuant to § 345.28(e).

b. Large bank ratings at the State, multistate MSA, and institution levels. Subject to paragraph g of this appendix, the FDIC combines a large bank's performance scores for its State, multistate MSA, or institution-level performance under the Retail Lending Test in § 345.22, Retail Services and Products Test in § 345.23, Community Development Financing Test in § 345.24, and Community Development Services Test in § 345.25 to determine the bank's rating in each State or multistate MSA, as applicable pursuant to § 345.28(c), and for the institution.

1. The FDIC weights the performance scores as follows: Retail Lending Test (40 percent); Retail Services and Products Test (10 percent); Community Development Financing Test (40 percent); and Community Development Services Test (10 percent). The FDIC multiplies each of these weights by the bank's performance score on the respective performance test, and then adds the resulting values together to develop a State, multistate MSA, or institution-level performance score.

2. The FDIC assigns a rating corresponding with the rating category that is nearest to the State, multistate MSA, or institution performance score using the table in paragraph a of this appendix.

Example D-1: A large bank received the following performance scores and conclusions in a State:

• On the Retail Lending Test, the bank received a 7.3 performance score and a corresponding conclusion of “High Satisfactory;”

• On the Retail Services and Products Test, the bank received a 6.0 performance score and a corresponding conclusion of “Low Satisfactory;”

• On the Community Development Financing Test, the bank received a 5.7 performance score and a corresponding conclusion of “Low Satisfactory;” and

• On the Community Development Services Test, the bank received a 3.0 performance score and a corresponding conclusion of “Needs to Improve.”

Calculating weights:

• For the Retail Lending Test, the weight is 40 percent (or 0.4);

• For the Retail Services and Products Test, the weight is 10 percent (or 0.1);

• For the Community Development Financing Test, the weight is 40 percent (or 0.4); and

• For the Community Development Services Test, the weight is 10 percent (or 0.1).

State Performance Score: Based on the illustration in this example D-1, the bank's State performance score is 6.1.

(0.4 weight × 7.3 performance score on the Retail Lending Test = 2.92) + (0.1 weight × 6.0 performance score on the Retail Services and Products Test = 0.6) + (0.4 weight × 5.7 performance score on the Community Development Financing Test = 2.28) + (0.1 weight × 3.0 performance score on the Community Development Services Test = 0.3).

State Rating: A State performance score of 6.1 is greater than 4.5 but less than 8.5, resulting in a rating of “Satisfactory.”

c. Intermediate bank ratings.

1. Intermediate banks evaluated pursuant to the Retail Lending Test and the Community Development Financing Test. Subject to paragraph g of this appendix, the FDIC combines an intermediate bank's performance scores for its State, multistate MSA, or institution performance under the Retail Lending Test and the Community Development Financing Test to determine the bank's rating in each State or multistate MSA, as applicable pursuant to § 345.28(c), and for the institution.

i. The FDIC weights the performance scores as follows: Retail Lending Test (50 percent) and Community Development Financing Test (50 percent). The FDIC multiplies each of these weights by the bank's corresponding performance score on the respective performance test, and then adds the resulting values together to develop a State, multistate MSA, or institution performance score.

ii. The FDIC assigns a rating corresponding with the rating category that is nearest to the State, multistate MSA, or institution performance score, using the table in paragraph a of this appendix.

iii. The FDIC may adjust an intermediate bank's institution rating where the bank has requested and received sufficient additional consideration pursuant to § 345.30(b)(2) and (3).

2. Intermediate banks evaluated pursuant to the Retail Lending Test and the Intermediate Bank Community Development Test in § 345.30(a)(2). The FDIC combines an intermediate bank's performance scores for its State, multistate MSA, or institution conclusions under the Retail Lending Test and the Intermediate Bank Community Development Test in § 345.30(a)(2) to determine the bank's rating in each State or multistate MSA, as applicable pursuant to § 345.28(c), and for the institution.

i. The FDIC weights the performance scores as follows: Retail Lending Test (50 percent) and Intermediate Bank Community Development Test (50 percent). The FDIC multiplies each of these weights by the bank's corresponding performance score on the respective performance test, and then adds the resulting values together to develop a State, multistate MSA, or institution performance score. For purposes of this paragraph c.2.i, the performance score for the Intermediate Bank Community Development Test corresponds to the conclusion assigned, as follows:

Conclusion	Performance score
Outstanding	10
High Satisfactory	7
Low Satisfactory	6
Needs to Improve	3
Substantial Noncompliance	0

ii. The FDIC assigns a rating corresponding with the rating category that is nearest to the State, multistate MSA, or institution performance score using the table in paragraph a of this appendix.

iii. The FDIC may adjust an intermediate bank's institution rating where the bank has requested and received sufficient additional consideration pursuant to § 345.30(b)(1) and (3).

d. Small bank ratings.

1. Ratings for small banks that opt to be evaluated pursuant to the Retail Lending Test in § 345.22. The FDIC determines a small bank's rating for each State or multistate MSA, as applicable pursuant to § 345.28(c), and for the institution based on the performance score for its Retail Lending Test conclusions for the State, multistate MSA or institution, respectively.

i. The FDIC assigns a rating corresponding with the rating category that is nearest to the State, multistate MSA, or institution performance score using the table in paragraph a of this appendix.

ii. The FDIC may adjust a small bank's institution rating where the bank has requested and received sufficient additional consideration pursuant to § 345.29(b)(2) and (3).

2. Ratings for small banks evaluated under the Small Bank Lending Test pursuant to § 345.29(a)(2). The FDIC assigns a rating for small banks evaluated under the Small Bank Lending Test pursuant to § 345.29(a)(2) as provided in appendix E to this part.

e. Limited purpose banks. The FDIC determines a limited purpose bank's rating for each State or multistate MSA, as applicable pursuant to § 345.28(c), and for the institution based on the performance score for its Community Development Financing Test for Limited Purpose Banks conclusion for the State, multistate MSA, or the institution, respectively.

1. The FDIC assigns a rating corresponding with the rating category that is nearest to the State, multistate MSA, or institution performance score, respectively, using the table in paragraph a of this appendix.

2. The FDIC may adjust a limited purpose bank's institution rating where the bank has requested and received sufficient additional consideration pursuant to § 345.26(b)(2).

f. Ratings for banks operating under an approved strategic plan. The FDIC evaluates the performance of a bank operating under an approved plan consistent with the rating methodology that is specified in the plan pursuant to § 345.27(g)(6). The FDIC assigns a rating according to the category assigned under the rating methodology specified in the plan: “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.”

g. Minimum performance test conclusion requirements.

1. Retail Lending Test minimum conclusion. An intermediate bank or a large bank must receive at least a “Low Satisfactory” Retail Lending Test conclusion at, respectively, the State, multistate MSA, or institution level to receive an overall State, multistate MSA, or institution rating of “Satisfactory” or “Outstanding.”

2. Minimum of “low satisfactory” overall conclusion for 60 percent of facility-based assessment areas and retail lending assessment areas.

i. Except as provided in § 345.51(e), a large bank with a combined total of 10 or more facility-based assessment areas and retail lending assessment areas in any State, multistate MSA, or for the institution, as applicable, may not receive a rating of “Satisfactory” or “Outstanding” in that State, multistate MSA, or for the institution unless the bank received an overall conclusion of at least “Low Satisfactory” in 60 percent or more of the total number of its facility-based assessment areas and retail lending assessment areas in that State or multistate MSA or for the institution, as applicable.

ii. Overall conclusion in facility-based assessment areas and retail lending assessment areas. For purposes of the requirement in paragraph g.2 of this appendix:

A. The FDIC calculates an overall conclusion in a facility-based assessment area by combining a large bank's performance scores for its conclusions in the facility-based assessment area pursuant to the Retail Lending Test in § 345.22, Retail Services and Products Test in § 345.23, Community Development Financing Test in § 345.24, and Community Development Services Test in § 345.25.

The FDIC weights the performance scores as follows: Retail Lending Test (40 percent); Retail Services and Products Test (10 percent); Community Development Financing Test (40 percent); and Community Development Services Test (10 percent). The FDIC multiplies each of these weights by the bank's performance score on the respective performance test, and then adds the resulting values together to develop a facility-based assessment area performance score.

The FDIC assigns a conclusion corresponding with the conclusion category that is nearest to the performance score, as follows:

Performance score	Conclusion
8.5 or more	Outstanding.
6.5 or more but less than 8.5	High Satisfactory.
4.5 or more but less than 6.5	Low Satisfactory.
1.5 or more but less than 4.5	Needs to Improve.
Less than 1.5	Substantial Noncompliance.

B. An overall conclusion in a retail lending assessment area is the retail lending assessment area conclusion assigned pursuant to the Retail Lending Test in § 345.22 as provided in appendix C to this part.