Illinois Administrative Code › Title 38 - FINANCIAL INSTITUTIONS › Part 345 - BANK COMMUNITY REINVESTMENT › Subpart C - RECORDS, REPORTING, AND DISCLOSURE REQUIREMENTS; EXAMINATIONS › 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 bank's performance under the applicable performance criteria in this part, in
				  accordance with Sections 345.210 and 345.280. This includes consideration of
				  low-cost education loans provided to low-income borrowers activities in
				  cooperation with minority- or women-owned financial institutions and low-income
				  credit unions, and the offering of Special Credit Programs, as well as
				  adjustments on the basis of evidence of discriminatory or other illegal credit
				  practices.
2) A bank'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. The bank's overall performance, however, must
				  be consistent with safe and sound banking practices and generally with the
				  appropriate rating profile as follows.
b) Banks evaluated under the lending, investment, and service
				  tests.
1) Lending performance rating. The Secretary
				  assigns each bank's lending performance one of the five following
				  ratings.
A) Outstanding. The Secretary rates a bank's
				  lending performance "outstanding" if, in general, it demonstrates:
i) Excellent responsiveness to credit needs in its
				  assessment area, taking into account the number and amount of home mortgage,
				  small business, small farm, and consumer loans, if applicable, in its
				  assessment area;
ii) A substantial majority of its loans are made
				  in its assessment area;
iii) An excellent geographic distribution of loans
				  in its assessment area;
iv) An excellent distribution, particularly in its
				  assessment area, of loans among individuals of different income levels and
				  businesses (including farms) of different sizes, given the product lines
				  offered by the bank;
v) An excellent record of serving the credit needs
				  of highly economically disadvantaged areas in its assessment area, low-income
				  individuals, or businesses (including farms) with gross annual revenues of $1
				  million or less, consistent with safe and sound operations;
vi) Extensive use of innovative or flexible
				  lending practices in a safe and sound manner to address the credit needs of
				  low- or moderate-income individuals or geographies; and
vii) It is a leader in making community
				  development loans.
B) High satisfactory. The Secretary rates a bank's
				  lending performance "high satisfactory" if, in general, it demonstrates:
i) Good responsiveness to credit needs in its
				  assessment area, taking into account the number and amount of home mortgage,
				  small business, small farm, and consumer loans, if applicable, in its
				  assessment area;
ii) A high percentage of its loans are made in its
				  assessment area;
iii) A good geographic distribution of loans in
				  its assessment area;
iv) A good distribution, particularly in its
				  assessment area, of loans among individuals of different income levels and
				  businesses (including farms) of different sizes, given the product lines
				  offered by the bank;
v) A good record of serving the credit needs of
				  highly economically disadvantaged areas in its assessment area, low-income
				  individuals, or businesses (including farms) with gross annual revenues of $1
				  million or less, consistent with safe and sound operations;
vi) Use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- or
				  moderate-income individuals or geographies; and
vii) It has made a relatively high level of
				  community development loans.
C) Low satisfactory. The Secretary rates a bank's
				  lending performance "low satisfactory" if, in general, it demonstrates:
i) Adequate responsiveness to credit needs in its
				  assessment area, taking into account the number and amount of home mortgage,
				  small business, small farm, and consumer loans, if applicable, in its
				  assessment area;
ii) An adequate percentage of its loans are made
				  in its assessment area;
iii) An adequate geographic distribution of loans
				  in its assessment area;
iv) An adequate distribution, particularly in its
				  assessment area, of loans among individuals of different income levels and
				  businesses (including farms) of different sizes, given the product lines
				  offered by the bank;
v) An adequate record of serving the credit needs
				  of highly economically disadvantaged areas in its assessment area, low-income
				  individuals, or businesses (including farms) with gross annual revenues of $1
				  million or less, consistent with safe and sound operations;
vi) Limited use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- or
				  moderate-income individuals or geographies; and
vii) It has made an adequate level of community
				  development loans.
D) Needs to improve. The Secretary rates a bank's
				  lending performance "needs to improve" if, in general, it demonstrates:
i) Poor responsiveness to credit needs in its
				  assessment area, taking into account the number and amount of home mortgage,
				  small business, small farm, and consumer loans, if applicable, in its
				  assessment area;
ii) A small percentage of its loans are made in
				  its assessment area;
iii) A poor geographic distribution of loans,
				  particularly to low- or moderate-income geographies, in its assessment
				  area;
iv) A poor distribution, particularly in its
				  assessment area, of loans among individuals of different income levels and
				  businesses (including farms) of different sizes, given the product lines
				  offered by the bank;
v) A poor record of serving the credit needs of
				  highly economically disadvantaged areas in its assessment area, low-income
				  individuals, or businesses (including farms) with gross annual revenues of $1
				  million or less, consistent with safe and sound operations;
vi) Little use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- or
				  moderate-income individuals or geographies; and
vii) It has made a low level of community
				  development loans.
E) Substantial noncompliance. The Secretary rates
				  a bank's lending performance as being in "substantial noncompliance" if, in
				  general, it demonstrates:
i) A very poor responsiveness to credit needs in
				  its assessment area, taking into account the number and amount of home
				  mortgage, small business, small farm, and consumer loans, if applicable, in its
				  assessment area;
ii) A very small percentage of its loans are made
				  in its assessment area;
iii) A very poor geographic distribution of loans,
				  particularly to low- or moderate-income geographies, in its assessment
				  area;
iv) A very poor distribution, particularly in its
				  assessment area, of loans among individuals of different income levels and
				  businesses (including farms) of different sizes, given the product lines
				  offered by the bank;
v) A very poor record of serving the credit needs
				  of highly economically disadvantaged areas in its assessment area, low-income
				  individuals, or businesses (including farms) with gross annual revenues of $1
				  million or less, consistent with safe and sound operations;
vi) No use of innovative or flexible lending
				  practices in a safe and sound manner to address the credit needs of low- or
				  moderate-income individuals or geographies; and
vii) It has made few, if any, community
				  development loans.
2) Investment performance rating. The Secretary
				  assigns each bank's investment performance one of the five following
				  ratings:
A) Outstanding. The Secretary rates a bank's
				  investment performance "outstanding" if, in general, it demonstrates:
i) An excellent level of qualified investments,
				  particularly those that are not routinely provided by private investors, often
				  in a leadership position;
ii) Extensive use of innovative or complex
				  qualified investments; and
iii) Excellent responsiveness to credit and
				  community development needs.
B) High satisfactory. The Secretary rates a bank's
				  investment performance "high satisfactory" if, in general, it
				  demonstrates:
i) A significant level of qualified investments,
				  particularly those that are not routinely provided by private investors,
				  occasionally in a leadership position;
ii) Significant use of innovative or complex
				  qualified investments; and
iii) Good responsiveness to credit and community
				  development needs.
C) Low satisfactory. The Secretary rates a bank's
				  investment performance "low satisfactory" if, in general, it
				  demonstrates:
i) An adequate level of qualified investments,
				  particularly those that are not routinely provided by private investors,
				  although rarely in a leadership position;
ii) Occasional use of innovative or complex
				  qualified investments; and
iii) Adequate responsiveness to credit and
				  community development needs.
D) Needs to improve. The Secretary rates a bank's
				  investment performance "needs to improve" if, in general, it
				  demonstrates:
i) A poor level of qualified investments,
				  particularly those that are not routinely provided by private investors;
ii) Rare use of innovative or complex qualified
				  investments; and
iii) Poor responsiveness to credit and community
				  development needs.
E) Substantial noncompliance. The Secretary rates
				  a bank's investment performance as being in "substantial noncompliance" if, in
				  general, it demonstrates:
i) Few, if any, qualified investments,
				  particularly those that are not routinely provided by private investors;
ii) No use of innovative or complex qualified
				  investments; and
iii) Very poor responsiveness to credit and
				  community development needs.
3) Service performance rating. The Secretary
				  assigns each bank's service performance one of the five following
				  ratings.
A) Outstanding. The Secretary rates a bank's
				  service performance "outstanding" if, in general, the bank demonstrates:
i) Its service delivery systems are readily
				  accessible to geographies and individuals of different income levels in its
				  assessment area;
ii) To the extent changes have been made, its
				  record of opening and closing branches has improved the accessibility of its
				  delivery systems, particularly in low- or moderate-income geographies or to
				  low- or moderate-income individuals;
iii) Its services (including, where appropriate,
				  business hours) are tailored to the convenience and needs of its assessment
				  area, particularly low- or moderate-income geographies or low- or
				  moderate-income individuals; and
iv) It is a leader in providing community
				  development services.
B) High satisfactory. The Secretary rates a bank's
				  service performance "high satisfactory" if, in general, the bank
				  demonstrates:
i) Its service delivery systems are accessible to
				  geographies and individuals of different income levels in its assessment
				  area;
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 in low- and moderate-income
				  geographies and to low- and moderate-income individuals;
iii) Its services (including, where appropriate,
				  business hours) do not vary in a way that inconveniences its assessment area,
				  particularly low- and moderate-income geographies and low- and moderate-income
				  individuals; and
iv) It provides a relatively high level of
				  community development services.
C) Low satisfactory. The Secretary rates a bank's
				  service performance "low satisfactory" if, in general, the bank
				  demonstrates:
i) Its service delivery systems are reasonably
				  accessible to geographies and individuals 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 in low- and moderate-income
				  geographies and to low- and moderate-income individuals;
iii) Its services (including, where appropriate,
				  business hours) do not vary in a way that inconveniences its assessment area,
				  particularly low- and moderate-income geographies and low- and moderate-income
				  individuals; and
iv) It provides an adequate level of community
				  development services.
D) Needs to improve. The Secretary rates a bank's
				  service performance "needs to improve" if, in general, the bank
				  demonstrates:
i) Its service delivery systems are unreasonably
				  inaccessible to portions of its assessment area, particularly to low- or
				  moderate-income geographies or to low- or moderate-income individuals;
ii) To the extent changes have been made, its
				  record of opening and closing branches has adversely affected the accessibility
				  its delivery systems, particularly in low- or moderate-income geographies or to
				  low- or moderate-income individuals;
iii) Its services (including, where appropriate,
				  business hours) vary in a way that inconveniences its assessment area,
				  particularly low- or moderate-income geographies or low- or moderate-income
				  individuals; and
iv) It provides a limited level of community
				  development services.
E) Substantial noncompliance. The Secretary rates
				  a bank's service performance as being in "substantial noncompliance" if, in
				  general, the bank demonstrates:
i) Its service delivery systems are unreasonably
				  inaccessible to significant portions of its assessment area, particularly to
				  low- or moderate-income geographies or to low- or moderate-income
				  individuals;
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 in low- or moderate-income
				  geographies or to low- or moderate-income individuals;
iii) Its services (including, where appropriate,
				  business hours) vary in a way that significantly inconveniences its assessment
				  area, particularly low- or moderate-income geographies or low- or
				  moderate-income individuals; and
iv) It provides few, if any, community development
				  services.
c) Wholesale or limited purpose banks. The Secretary assigns
				  each wholesale or limited purpose bank's community development performance one
				  of the four following ratings.
1) Outstanding. The Secretary rates a wholesale or
				  limited purpose bank'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 area.
2) Satisfactory. The Secretary rates a wholesale
				  or limited purpose bank'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 area.
3) Needs to improve. The Secretary rates a
				  wholesale or limited purpose bank'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 area.
4) Substantial noncompliance. The Secretary rates
				  a wholesale or limited purpose bank'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 area.
d) Banks evaluated under the small bank performance standards
				  -
1) Lending test ratings.
A) Eligibility for a satisfactory lending test
				  rating. The Secretary rates a small bank's lending performance "satisfactory"
				  if, in general, the bank demonstrates:
i) A reasonable loan-to-deposit ratio (considering
				  seasonal variations) given the bank's size, financial condition, the credit
				  needs of its assessment area, and taking into account, as appropriate, other
				  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 area;
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
				  bank's assessment area;
iv) A record of taking appropriate action, when
				  warranted, in response to written complaints, if any, about the bank's
				  performance in helping to meet the credit needs of its assessment area;
				  and
v) A reasonable geographic distribution of loans
				  given the bank's assessment area.
B) Eligibility for an "outstanding" lending test
				  rating. A small bank that meets each of the standards for a "satisfactory"
				  rating under this subsection and exceeds some or all of those standards may
				  warrant consideration for a lending test rating of "outstanding."
C) Needs to improve or substantial noncompliance
				  ratings. A small bank may also receive a lending test rating of "needs to
				  improve" or "substantial noncompliance depending on the degree to which its
				  performance has failed to meet the standard for a "satisfactory" rating.
2) Community development test ratings for
				  intermediate small banks.
A) Eligibility for a satisfactory community
				  development test rating. The Secretary rates an intermediate small bank's
				  community development performance "satisfactory" if the bank demonstrates
				  adequate responsiveness to the community development needs of its assessment
				  area through community development loans, qualified investments, and community
				  development services. The adequacy of the bank's response will depend on its
				  capacity for such community development activities, its assessment area's need
				  for such community development activities, and the availability of such
				  opportunities for community development in the bank's assessment area.
B) Eligibility for an outstanding community
				  development test rating. The Secretary rates an intermediate small bank's
				  community development performance "outstanding" if the bank demonstrates
				  excellent responsiveness to community development needs in its assessment area
				  through community development loans, qualified investments, and community
				  development services, as appropriate, considering the bank's capacity and the
				  need and availability of such opportunities for community development in the
				  bank's assessment area.
C) Needs to improve or substantial noncompliance
				  ratings. An intermediate small bank 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) Overall rating.
A) Eligibility for a satisfactory overall rating.
				  No intermediate small bank may receive an assigned overall rating of
				  "satisfactory" unless it receives a rating of a least "satisfactory" on both
				  the lending test and the community development test.
B) Eligibility for an outstanding overall
				  rating.
i) An intermediate small bank that receives an
				  "outstanding" rating on one test and at least "satisfactory" on the other test
				  may receive an assigned overall rating of "outstanding."
ii) A small bank that is not an intermediate small
				  bank 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
				  bank's performance is "outstanding," the Secretary considers the extent to
				  which the bank 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 area.
C) Needs to improve or substantial noncompliance
				  overall ratings. A small bank 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.
e) 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 bank's assessment area.
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 bank operating under an approved plan to determine if the bank has met its
				  plan goals:
A) If the bank substantially achieves its plan
				  goals for a satisfactory rating, the Secretary will rate the bank's performance
				  under the plan as "satisfactory."
B) If the bank exceeds its plan goals for a
				  satisfactory rating and substantially achieves its plan goals for an
				  outstanding rating, the Secretary will rate the bank's performance under the
				  plan as "outstanding."
C) If the bank fails to meet substantially its
				  plan goals for a satisfactory rating, the Secretary will rate the bank as
				  either "needs to improve" or "substantial noncompliance," depending on the
				  extent to which it falls short of its plan goals, unless the bank elected in
				  its plan to be rated otherwise, as provided in Section
				  345.270(f)(4).