(a) Small bank performance evaluation.
(1) In general. The Board evaluates a small bank’s record of helping to meet
the credit needs of its entire community pursuant to the Small Bank
Lending Test as provided in paragraph (a)(2) of this section, unless
the small bank opts to be evaluated pursuant to the Retail Lending
Test in section 228.22.
(2) Small Bank Lending Test. A small
bank’s retail lending performance is evaluated pursuant to the
following criteria:
(i) The bank’s loan-to-deposit
ratio, adjusted for seasonal variation, and, as appropriate, other
retail and community development lending-related activities, such
as loan originations for sale to the secondary markets, community
development loans, or community development investments;
(ii) The percentage of loans
and, as appropriate, other retail and community development lending-related
activities located in the bank’s facility-based assessment areas;
(iii) The bank’s
record of lending to and, as appropriate, engaging in other retail
and community development lending-related activities for borrowers
of different income levels and businesses and farms of different sizes;
(iv) The geographic
distribution of the bank’s loans; and
(v) The bank’s record of taking
action, if warranted, in response to written complaints about its
performance in helping to meet credit needs in its facility-based
assessment areas.
(b) Additional consideration.
(1) Small banks
evaluated pursuant to the Small Bank Lending Test. The Board
may adjust a small bank rating from “Satisfactory” to
“Outstanding” at the institution level where the bank
requests and receives additional consideration for the following activities,
without regard to whether the activity is in one or more of the bank’s
facility-based assessment areas, as applicable:
(i) Making
community development investments;
(ii) Providing community development
services; and
(iii)
Providing branches and other services, digital delivery systems and
other delivery systems, and deposit products responsive to the needs
of low- and moderate-income individuals, families, or households,
residents of low- and moderate-income census tracts, small businesses,
and small farms.
(2) Small banks
that opt to be evaluated pursuant to the Retail Lending Test in section
228.22. The Board may adjust a small bank rating from “Satisfactory”
to “Outstanding” at the institution level where the bank
requests and receives additional consideration for activities that
would qualify pursuant to the Retail Services and Products Test in
section 228.23, the Community Development Financing Test in section
228.24, or the Community Development Services Test in section 228.25.
(3) Additional consideration for activities with
MDIs, WDIs, and LICUs, and for providing low-cost education loans. Notwithstanding paragraphs (b)(1) and (2) of this section, a small
bank may request and receive additional consideration at the institution
level for activities with MDIs, WDIs, and LICUs pursuant to 12 U.S.C.
2903(b) and 2907(a) and for providing low-cost education loans to
low-income borrowers pursuant to 12 U.S.C. 2903(d), regardless of
the small bank’s overall institution rating.
(c) Small bank performance conclusions
and ratings.
(1) Conclusions. Except for a small bank that opts to be evaluated pursuant to the
Retail Lending Test in section 228.22, the Board assigns conclusions
for the performance of a small bank evaluated under this section as
provided in appendix E to this part. If a bank opts to be evaluated
pursuant to the Retail Lending Test, the Board assigns conclusions
for the bank’s Retail Lending Test performance as provided in
appendix C to this part. In assigning conclusions for a small bank,
the Board may consider performance context information as provided
in section 228.21(d).
(2) Ratings. For a small bank evaluated
under the Small Bank Lending Test, the Board rates the bank’s
performance under this section as provided in appendix E to this part.
If a small bank opts to be evaluated under the Retail Lending Test
in section 228.22, the Board rates the performance of a small bank
as provided in appendix D to this part.
