Illinois Administrative Code › Title 38 - FINANCIAL INSTITUTIONS › Part 185 - CREDIT UNION COMMUNITY REINVESTMENT › Subpart C - RECORDS, REPORTING, AND DISCLOSURE REQUIREMENTS; EXAMINATIONS; ENFORCEMENT › Appendix A - Ratings

Current through Register Vol. 48, No. 28, July 12, 2024
a) Ratings in general.
1) In assigning a rating, the Secretary evaluates
				  a credit union's performance under the applicable performance criteria in this
				  Part, in accordance with Section 185.200, Section 185.210, and Section 185.280.
				  Notwithstanding any contrary provision in this Part, the Secretary may consider
				  as a basis to adjust a credit union's overall rating, the following:
A) Providing low-cost education loans to
				  low-income borrowers;
B) Activities in cooperation with Community
				  Development Financial Institutions, minority- or women-owned financial
				  institutions;
C) Certification as a Community Development
				  Financial Institution or designated as a Minority Depository Institution or
				  Low-Income Designated credit union;
D) The offering of Special Credit Programs;
				  and
E) The evidence of discriminatory or other illegal
				  credit practices.
2) A credit union's performance need not fit each
				  aspect of a particular rating profile in order to receive that rating, and
				  exceptionally strong performance with respect to some aspects may compensate
				  for weak performance in others. A credit union that does not have a community
				  common bond shall not be evaluated according to any criteria that references
				  geographies or geographic area. A credit union with a field of membership
				  consisting of multiple common bonds that includes community common bonds shall
				  not be evaluated according to any criteria that references geographies or
				  geographic area, except with respect to its community common bonds. A rating
				  shall take into consideration the credit union's defined membership by-law
				  provisions, as prescribed in
				  205 ILCS
				  305/15, and the lending and investment authority
				  restrictions and other limitations and restrictions under 205 ILCS 305. The
				  credit union's overall performance, however, must be consistent with safe and
				  sound banking practices and generally with the appropriate rating profile as
				  follows. A credit union will be evaluated by how it serves its assessment
				  field. A credit union's rating will not be negatively impacted by the
				  composition of its assessment field including without limitation the income and
				  geographic demographic data of borrowers in the assessment field so long as the
				  assessment field is delineated in accordance with Section 185.400.
3) The Secretary may take a credit union's lack of
				  previous experience with ILCRA examinations into account and the length of the
				  implementation period into consideration while assessing the performance of the
				  credit union during its first ILCRA examination.
b) Credit Unions evaluated under the Lending and Service
				  Tests.
1) Lending Performance Rating. The Secretary
				  assigns each credit union's lending performance one of the five following
				  ratings.
A) Outstanding. The Secretary rates a credit
				  union's lending performance "outstanding" if, in general, it
				  demonstrates:
i) Excellent responsiveness to credit needs in its
				  assessment field, taking into account the number and amount of home mortgage,
				  and consumer loans, if applicable, in its assessment field;
ii) An excellent geographic distribution of loans
				  in its assessment field, provided, however, a geographic analysis is relevant
				  in the context of the credit union's membership by-law provisions;
iii) An excellent distribution, particularly in
				  its assessment field, of loans among members of different income levels, given
				  the product lines offered by the credit union;
iv) An excellent record of serving the credit
				  needs of highly economically disadvantaged persons in its assessment field, and
				  low-income members, including loans and other efforts to assist existing low-
				  and moderate-income members to be able to remain in their neighborhoods,
				  consistent with safe and sound operations;
v) Extensive use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- and
				  moderate-income members or geographies;
vi) There is no evidence of loans that show an
				  undue concentration and a systematic pattern of lending resulting in the loss
				  of affordable housing units;
vii) An excellent record relative to fair lending
				  policies and practices; and
viii) It is a leader in making community
				  development loans.
B) High satisfactory. The Secretary rates a credit
				  union's lending performance "high satisfactory" if, in general, it
				  demonstrates:
i) Good responsiveness to credit needs in its
				  assessment field, taking into account the number and amount of home mortgage,
				  and consumer loans, if applicable, in its assessment field;
ii) A good geographic distribution of loans in its
				  assessment field, provided, however, a geographic analysis is relevant in the
				  context of the credit union's membership by-law provisions;
iii) A good distribution, particularly in its
				  assessment field, of loans among members of different income levels, given the
				  product lines offered by the credit union;
iv) A good record of serving the credit needs of
				  highly economically disadvantaged persons in its assessment field, and
				  low-income members, including loans and other efforts to assist existing low-
				  and moderate-income members to be able to remain in their neighborhoods,
				  consistent with safe and sound operations;
v) Use of innovative or flexible lending practices
				  in a safe and sound manner to address the credit needs of low- and
				  moderate-income members or geographies;
vi) There is no evidence of loans that show an
				  undue concentration and a systematic pattern of lending resulting in the loss
				  of affordable housing units;
vii) A good record relative to fair lending
				  policies and practices; and
viii) It has made a relatively high level of
				  community development loans.
C) Low satisfactory. The Secretary rates a credit
				  union's lending performance "low satisfactory" if, in general, it
				  demonstrates:
i) Adequate responsiveness to credit needs in its
				  assessment field, taking into account the number and amount of home mortgage,
				  and consumer loans, if applicable, in its assessment field;
ii) An adequate geographic distribution of loans
				  in its assessment field, provided, however, a geographic analysis is relevant
				  in the context of the credit union's membership by-law provisions;
iii) An adequate distribution, particularly in its
				  assessment field, of loans among members of different income levels, given the
				  product lines offered by the credit union;
iv) An adequate record of serving the credit needs
				  of highly economically disadvantaged persons in its assessment field, and
				  low-income members, including loans and other efforts to assist existing low-
				  and moderate-income members to be able to remain in their neighborhoods,
				  consistent with safe and sound operations;
v) Limited use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- and
				  moderate-income members or geographies;
vi) There is no evidence of loans that show an
				  undue concentration and a systematic pattern of lending resulting in the loss
				  of affordable housing units;
vii) An adequate record relative to fair lending
				  policies and practices; and
viii) It has made an adequate level of community
				  development loans.
D) Needs to improve. The Secretary rates a credit
				  union's lending performance "needs to improve" if, in general, it
				  demonstrates:
i) Poor responsiveness to credit needs in its
				  assessment field, taking into account the number and amount of home mortgage,
				  and consumer loans, if applicable, in its assessment field;
ii) A poor geographic distribution of loans,
				  particularly to low- and moderate-income geographies, in its assessment field,
				  provided, however, a geographic analysis is relevant in the context of the
				  credit union's membership by-law provisions;
iii) A poor distribution, particularly in its
				  assessment field, of loans among members of different income levels, given the
				  product lines offered by the credit union;
iv) A poor record of serving the credit needs of
				  highly economically disadvantaged persons in its assessment field, and
				  low-income members, including loans and other efforts to assist existing low-
				  and moderate-income members to be able to remain in their neighborhoods,
				  consistent with safe and sound operations;
v) Little use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- and
				  moderate-income members or geographies;
vi) There is possible evidence of loans that show
				  an undue concentration and a systematic pattern of lending resulting in the
				  loss of affordable housing units;
vii) A poor record relative to fair lending
				  policies and practices; and
viii) It has made a low level of community
				  development loans.
E) Substantial noncompliance. The Secretary rates
				  a credit union's lending performance as being in "substantial noncompliance"
				  if, in general, it demonstrates:
i) A very poor responsiveness to credit needs in
				  its assessment field, taking into account the number and amount of home
				  mortgage, and consumer loans, if applicable, in its assessment field;
ii) A very poor geographic distribution of loans,
				  particularly to low- and moderate-income geographies, in its assessment field,
				  provided, however, a geographic analysis is relevant in the context of the
				  credit union's membership by-law provisions;
iii) A very poor distribution, particularly in its
				  assessment field, of loans among members of different income levels, given the
				  product lines offered by the credit union;
iv) A very poor record of serving the credit needs
				  of highly economically disadvantaged persons in its assessment field, and
				  low-income members, including loans and other efforts to assist existing low-
				  and moderate-income members to be able to remain in their neighborhoods,
				  consistent with safe and sound operations;
v) No use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- and
				  moderate-income members or geographies;
vi) Origination of loans that show an undue
				  concentration and a systematic pattern of lending resulting in the loss of
				  affordable housing units;
vii) A very poor record relative to fair lending
				  policies and practices; and
viii) It has made few, if any, community
				  development loans.
2) Service performance rating. The Secretary
				  assigns each credit union's service performance one of the five following
				  ratings.
A) Outstanding. The Secretary rates a credit
				  union's service performance "outstanding" if, in general, the credit union
				  demonstrates:
i) Its service delivery systems are readily
				  accessible to members and geographies of different income levels in its
				  assessment field;
ii) To the extent changes have been made, its
				  record of opening and closing branches has improved the accessibility of its
				  delivery systems, particularly to low- and moderate-income members or in low-
				  and moderate-income geographies;
iii) Its services (including, where appropriate,
				  business hours) are tailored to the convenience and needs of its assessment
				  field, particularly low- and moderate-income members or in low- and
				  moderate-income geographies; and
iv) It is a leader in providing community
				  development services.
B) High satisfactory. The Secretary rates a credit
				  union's service performance "high satisfactory" if, in general, the credit
				  union demonstrates:
i) Its service delivery systems are accessible to
				  members and geographies of different income levels in its assessment
				  field;
ii) To the extent changes have been made, its
				  record of opening and closing branches has not adversely affected the
				  accessibility of its delivery systems, particularly to low- and moderate-income
				  members and in low- and moderate-income geographies;
iii) Its services (including, where appropriate,
				  business hours) do not vary in a way that inconveniences its assessment field,
				  particularly low- and moderate-income members and low- and moderate-income
				  geographies; and
iv) It provides a relatively high level of
				  community development services.
C) Low satisfactory. The Secretary rates a credit
				  union's service performance "low satisfactory" if, in general, the credit union
				  demonstrates:
i) Its service delivery systems are reasonably
				  accessible to members and geographies of different income levels in its
				  assessment area;
ii) To the extent changes have been made, its
				  record of opening and closing branches has generally not adversely affected the
				  accessibility of its delivery systems, particularly to low- and moderate-income
				  members and in low- and moderate-income geographies;
iii) Its services (including, where appropriate,
				  business hours) do not vary in a way that inconveniences its assessment field,
				  particularly low- and moderate-income members and low- and moderate-income
				  geographies; and
iv) It provides an adequate level of community
				  development services.
D) Needs to improve. The Secretary rates a credit
				  union's service performance "needs to improve" if, in general, the credit union
				  demonstrates:
i) Its service delivery systems are unreasonably
				  inaccessible to portions of its assessment field, particularly to low- and
				  moderate-income members or to low- and moderate-income geographies;
ii) To the extent changes have been made, its
				  record of opening and closing branches has adversely affected the accessibility
				  its delivery systems, particularly to low- and moderate- income members or in
				  low- and moderate-income geographies;
iii) Its services (including, where appropriate,
				  business hours) vary in a way that inconveniences its assessment field,
				  particularly low- and moderate-income members or low- and moderate-income
				  geographies; and
iv) It provides a limited level of community
				  development services.
E) Substantial noncompliance. The Secretary rates
				  a credit union's service performance as being in "substantial noncompliance"
				  if, in general, the credit union demonstrates:
i) Its service delivery systems are unreasonably
				  inaccessible to significant portions of its assessment field, particularly to
				  low- and moderate-income members or to low- and moderate-income
				  geographies;
ii) To the extent changes have been made, its
				  record of opening and closing branches has significantly adversely affected the
				  accessibility of its delivery systems, particularly to low- and moderate-income
				  members or in low- and moderate-income geographies;
iii) Its services (including, where appropriate,
				  business hours) vary in a way that significantly inconveniences its assessment
				  field, particularly low- and moderate-income members or low- and
				  moderate-income geographies; and
iv) It provides few, if any, community development
				  services.
c) Investment performance rating. The Secretary assigns each
				  credit union's investment performance one of the five following ratings.
1) Outstanding. The Secretary rates a credit
				  union's investment performance "outstanding" if, in general, it
				  demonstrates:
A) An excellent level of qualified investments,
				  particularly those that are not routinely provided by private investors, often
				  in a leadership position;
B) Extensive use of innovative or complex
				  qualified investments; and
C) Excellent responsiveness to credit and
				  community development needs.
2) High Satisfactory. The Secretary rates a credit
				  union's investment performance "high satisfactory" if, in general, it
				  demonstrates:
A) A significant level of qualified investments,
				  particularly those that are not routinely provided by private investors,
				  although rarely in a leadership position;
B) Significant use of innovative or complex
				  qualified investments; and
C) Good responsiveness to credit and community
				  development needs.
3) Low satisfactory. The Secretary rates a credit
				  union's investment performance "low satisfactory" if, in general, it
				  demonstrates:
A) An adequate level of qualified investments,
				  particularly those that are not routinely provided by private investors,
				  although rarely in a leadership position;
B) Occasional use of innovative or complex
				  qualified investments; and
C) Adequate responsiveness to credit and community
				  development needs.
4) Needs to improve. The Secretary rates a credit
				  union's investment performance "needs to improve" if, in general, it
				  demonstrates:
A) A poor level of qualified investments,
				  particularly those that are not routinely provided by private investors;
B) Rare use of innovative or complex qualified
				  investments; and
C) Poor responsiveness to credit and community
				  development needs.
5) Substantial noncompliance. The Secretary rates
				  a credit union's investment performance as being in "substantial noncompliance"
				  if, in general, it demonstrates:
A) Few, if any, qualified investments,
				  particularly those that are not routinely provided by private investors;
B) No use of innovative or complex qualified
				  investments; and
C) Very poor responsiveness to credit and
				  community development needs.
d) Wholesale or limited purpose credit unions. The Secretary
				  assigns each wholesale or limited purpose credit union's community development
				  performance one of the four following ratings.
1) Outstanding. The Secretary rates a wholesale or
				  limited purpose credit union's community development performance "outstanding"
				  if, in general, it demonstrates:
A) A high level of community development loans,
				  community development services, or qualified investments, particularly
				  investments that are not routinely provided by private investors;
B) Extensive use of innovative or complex
				  qualified investments, community development loans, or community development
				  services; and
C) Excellent responsiveness to credit and
				  community development needs in its assessment field.
2) Satisfactory. The Secretary rates a wholesale
				  or limited purpose credit union's community development performance
				  "satisfactory" if, in general, it demonstrates:
A) An adequate level of community development
				  loans, community development services, or qualified investments, particularly
				  investments that are not routinely provided by private investors;
B) Occasional use of innovative or complex
				  qualified investments, community development loans, or community development
				  services; and
C) Adequate responsiveness to credit and community
				  development needs in its assessment field.
3) Needs to improve. The Secretary rates a
				  wholesale or limited purpose credit union's community development performance
				  as "needs to improve" if, in general, it demonstrates:
A) A poor level of community development loans,
				  community development services, or qualified investments, particularly
				  investments that are not routinely provided by private investors;
B) Rare use of innovative or complex qualified
				  investments, community development loans, or community development services;
				  and
C) Poor responsiveness to credit and community
				  development needs in its assessment field.
4) Substantial noncompliance. The Secretary rates
				  a wholesale or limited purpose credit union's community development performance
				  in "substantial noncompliance" if, in general, it demonstrates:
A) Few, if any, community development loans,
				  community development services, or qualified investments, particularly
				  investments that are not routinely provided by private investors;
B) No use of innovative or complex qualified
				  investments, community development loans, or community development services;
				  and
C) Very poor responsiveness to credit and
				  community development needs in its assessment field.
e) Credit Unions evaluated under the small credit union and
				  intermediate small credit union performance standards.
1) Lending test ratings for small credit unions
				  and intermediate small credit unions.
A) Eligibility for a satisfactory rating. The
				  Secretary rates a small credit union or intermediate small credit union's
				  performance "satisfactory" if, in general, the credit union
				  demonstrates:
i) A reasonable loan-to-share ratio (considering
				  seasonal variations) given the credit union's size, financial condition, the
				  credit needs of its assessment field, and taking into account, as appropriate,
				  lending-related activities such as loan originations for sale to the secondary
				  markets and community development loans and qualified investments;
ii) A majority of its loans and, as appropriate,
				  other lending-related activities are in its assessment field;
iii) A distribution of loans 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
				  credit union's assessment field;
iv) A record of taking appropriate action, as
				  warranted, in response to written complaints, if any, about the credit union's
				  performance in helping to meet the credit needs of its assessment field and
				  reasonable performance with regard to fair lending policies and practices;
				  and
v) A reasonable geographic distribution of loans
				  given the credit union's assessment field.
B) Eligibility for an outstanding rating. A small
				  credit union or intermediate small credit union that meets each of the
				  standards for a "satisfactory" rating under this paragraph and exceeds some or
				  all of those standards may warrant consideration for an overall rating of
				  "outstanding."
C) Needs to improve or substantial noncompliance
				  ratings. A small credit union or intermediate small credit union also may
				  receive a rating of "needs to improve" or "substantial noncompliance" depending
				  on the degree to which its performance has failed to meet the standards for a
				  "satisfactory" rating.
2) Community Development Test Ratings for
				  Intermediate Small Credit Unions
A) Eligibility for a Satisfactory Community
				  Development Test Rating. The Secretary rates an intermediate small credit
				  union's community development performance "satisfactory" if the credit union
				  demonstrates adequate responsiveness to the community development needs of its
				  assessment field through community development loans, qualified investments,
				  and community development services. The adequacy of the credit union's response
				  will depend on its capacity for such community development activities, its
				  assessment field's need for such community development activities, and the
				  availability of such opportunities for community development in the credit
				  union's assessment field.
B) Eligibility for an Outstanding Community
				  Development Test Rating. The Secretary rates an intermediate small credit
				  union's community development performance "outstanding" if the credit union
				  demonstrates excellent responsiveness to community development needs in its
				  assessment field through community development loans, qualified investments,
				  and community development services, as appropriate, considering the credit
				  union's capacity and the need and availability of such opportunities for
				  community development in the credit union's assessment field.
C) Needs to Improve or Substantial Noncompliance
				  Ratings. An intermediate small credit union may also receive a community
				  development test rating of "needs to improve" or "substantial noncompliance"
				  depending on the degree to which its performance has failed to meet the
				  standards for a "satisfactory" rating
3) Service test rating for credit unions that are
				  intermediate small credit unions: A credit union that is an intermediate small
				  credit union will be rated under the service test in accordance with subsection
				  (b)(2) of 185.APPENDIX A (Ratings).
f) Overall rating
1) Eligibility for a satisfactory overall rating.
				  No intermediate small credit union may receive an assigned overall rating of
				  "satisfactory" unless it receives a rating of at least "satisfactory" on both
				  the lending test and community development test.
2) Eligibility for an outstanding overall
				  rating.
A) An intermediate small credit union that
				  receives an "outstanding" rating on one test and at least "satisfactory" on the
				  other test may receive an assigned overall rating of "outstanding".
B) A small credit union that meets each of the
				  standards for a "satisfactory" rating under the lending test and exceeds some
				  or all of those standards may warrant consideration for an overall rating of
				  "outstanding". In assessing whether a credit union's performance is
				  "outstanding", the Secretary considers the extent to which the credit union
				  exceeds each of the performance standards for a "satisfactory" rating and its
				  performance in making qualified investments and its performance in providing
				  branches and other services and delivery systems that enhance credit
				  availability in its assessment field.
3) Needs to improve or substantial noncompliance
				  overall rating. A small credit union may also receive a rating of "needs to
				  improve" or "substantial noncompliance" depending on the degree to which its
				  performance has failed to meet the standards for a "satisfactory"
				  rating.
g) Strategic plan assessment and rating
1) Satisfactory goals. The Secretary approves as
				  "satisfactory" measurable goals that adequately help to meet the credit needs
				  of the credit union's assessment field.
2) Outstanding goals. If the plan identifies a
				  separate group of measurable goals that substantially exceed the levels
				  approved as "satisfactory", the Secretary will approve those goals as
				  "outstanding".
3) Rating. The Secretary assesses the performance
				  of a credit union operating under an approved plan to determine if the credit
				  union has met its plan goals:
A) If the credit union substantially achieves its
				  plan goals for a satisfactory rating, the Secretary will rate the credit
				  union's performance under the plan as "satisfactory".
B) If the credit union exceeds its plan goals for
				  a satisfactory rating and substantially achieves its plan goals for an
				  outstanding rating, the Secretary will rate the credit union's performance
				  under the plan as "outstanding".
C) If the credit union fails to meet substantially
				  its plan goals for a satisfactory rating, the Secretary will rate the credit
				  union as either "needs to improve" or "substantial noncompliance", depending on
				  the extent to which it falls short of its plan goals, unless the credit union
				  elected in its plan to be rated otherwise, as provided in Section
				  185.270(f)(4).
h) Other eligible criteria for an outstanding rating. A
				  credit union that achieves at least a "satisfactory" rating under the lending
				  and service tests may warrant consideration for an overall rating of
				  "outstanding". In assessing whether a credit union 's performance is
				  "outstanding", the Secretary will also consider the credit union's performance
				  in making qualified investments and community development loans to the extent
				  authorized under law.
i) Component test ratings. The Secretary may develop, by
				  written policy or directive, a matrix system which sets forth the methodology
				  for aggregating a credit union's scores on the lending, service, and investment
				  tests to arrive at an assigned rating.