For 2nd time this year, CRA rating of ‘substantial noncompliance’ reported for bank

First time in past 14 years more than one bank earned lowest rating in same year

For the second time this year – and only the sixth time in 14 years – a financial institution has received a rating of “substantial noncompliance” from the federal insurer of bank deposits for its fulfillment of rules implementing anti-redlining laws.

It’s also the first time in the past 14 years that more than one bank earned the low rating in the same year.

Reynolds State Bank of Reynolds, Ill., earned the lowest rating for compliance with Community Reinvestment Act (CRA) rules in December, the Federal Deposit Insurance Corp. (FDIC) said Wednesday in releasing results of the ratings issued by the agency at the end of last year.

The $106 million-in-assets bank, according to the FDIC, did not show any evidence of discriminatory or other illegal credit practices. However, the bank’s average loan-to-deposit ratio of 16.03% was “significantly lower than similarly-situated lenders in the area and indicates the bank is not adequately meeting the credit needs of its assessment area.” The agency said the ratio is poor given the bank’s size, financial condition, and assessment-area credit needs. “This criterion received the most weight in assigning the overall CRA rating,” the FDIC said.

Meanwhile, three other banks received ratings of “needs to improve” from the FDIC: Pearland State Bank of Pearland, Texas; Liberty Bank, Inc., of Salt Lake City; and Seattle Bank of Seattle, Wash.

Two banks received ratings of “outstanding” for compliance with CRA rules, the FDIC said: WesBanco Bank, Inc. of Wheeling, W.Va., and Alamosa State Bank of Alamosa, Colo.

The remaining 61 banks receiving ratings of “satisfactory,” according to the FDIC results.

FDIC Issues List of Banks Examined for CRA Compliance

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