a. Ratings, in general. In assigning a rating, the Board evaluates a bank’s performance
under the applicable performance criteria in this part, pursuant to
sections 228.21 and 228.28. The agency calculates an overall performance
score for each state and multistate MSA, as applicable pursuant to
section 228.28(c), and for the institution. The Board 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 section 228.28(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 Board also considers any evidence of discriminatory
or other illegal credit practices pursuant to section 228.28(d) and
the bank’s past performance pursuant to section 228.28(e).
b. Large bank ratings at
the state, multistate MSA, and institution levels.Subject to
paragraph g of this appendix, the Board combines a large bank’s
performance scores for its state, multistate MSA, or institution-level
performance under the Retail Lending Test in section 228.22, Retail
Services and Products Test in section 228.23, Community Development
Financing Test in section 228.24, and Community Development Services
Test in section 228.25 to determine the bank’s rating in each
state or multistate MSA, as applicable pursuant to section 228.28(c),
and for the institution.
1. The Board 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
Board 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 Board 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 Board 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
section 228.28(c), and for the institution.
i. The Board weights
the performance scores as follows: Retail Lending Test (50 percent)
and Community Development Financing Test (50 percent). The Board 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 Board 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 Board may adjust
an intermediate bank’s institution rating where the bank has
requested and received sufficient additional consideration pursuant
to section 228.30(b)(2) and (3).
2. Intermediate banks evaluated pursuant
to the Retail Lending Test and the Intermediate Bank Community Development
Test in section 228.30(a)(2). The Board 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 section 228.30(a)(2) to determine
the bank’s rating in each state or multistate MSA, as applicable
pursuant to section 228.28(c), and for the institution.
i. The Board
weights the performance scores as follows: Retail Lending Test (50
percent) and Intermediate Bank Community Development Test (50 percent).
The Board 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 Board
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 Board may adjust an intermediate
bank’s institution rating where the bank has requested and received
sufficient additional consideration pursuant to section 228.30(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 section 228.22. The Board determines a small bank’s rating for each state
or multistate MSA, as applicable pursuant to section 228.28(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 Board 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 Board may adjust a small bank’s institution rating
where the bank has requested and received sufficient additional consideration
pursuant to section 228.29(b)(2) and (3).
2. Ratings for small banks evaluated
under the Small Bank Lending Test pursuant to section 228.29(a)(2). The Board assigns a rating for small banks evaluated under the Small
Bank Lending Test pursuant to section 228.29(a)(2) as provided in
appendix E to this part.
e. Limited purpose banks.The Board determines a limited purpose bank’s rating for each
state or multistate MSA, as applicable pursuant to section 228.28(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 Board 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 Board may adjust a limited purpose
bank’s institution rating where the bank has requested and received
sufficient additional consideration pursuant to section 228.26(b)(2).
f. Ratings for banks operating
under an approved strategic plan. The Board evaluates the performance
of a bank operating under an approved plan consistent with the rating
methodology that is specified in the plan pursuant to section 228.27(g)(6).
The Board 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 section 228.51(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 Board 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 section 228.22, Retail Services and Products Test in section 228.23,
Community Development Financing Test in section 228.24, and Community
Development Services Test in section 228.25.
The Board 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 Board 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 Board 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 section 228.22 as provided
in appendix C to this part.
