Federal regulatory authorities have rated several banks in Ohio and Illinois poorly in terms of their Community Reinvestment Act (CRA) compliance.
The Office of the Comptroller of the Currency (OCC) has issued "needs to improve" Community Reinvestment Act (CRA) ratings to two financial institutions, First Federal Savings & Loan Association of Lorain in Ohio and United Trust Bank.
First Federal Savings & Loan Association of Lorain, with approximately $512 million in assets and seven branches, was evaluated during the period of May 2024. The evaluation highlighted concerns in the community development front, as the lender did not originate any community development loans within any assessment areas during the evaluation period. Despite offering various home lending products, including purchase, refinance, home improvement, construction loans, home equity lines of credit, and credit cards, the lack of community development loans negatively affected its overall ratings. However, the lender did make 10 community development donations during the evaluation period, totalling $13,000.
United Trust Bank, with approximately $168 million in assets and one branch, was evaluated between January 2020 and December 2022. The bank did not make any home mortgage loans to low- or moderate-income individuals during the evaluation period, and showed substandard distribution of loans to those of different income levels. Additionally, a majority of the bank's loans were outside its assessment area, and its borrower distribution was poor. The OCC did not review a sufficient number of loans by United Trust Bank in 2022 due to an insufficient number of loans, and in 2022, there was an insufficient number of loans by the bank for the regulator to review.
The CRA performance evaluation for United Trust Bank, dated June 2024, notes these issues and the need for improvement in its community development activities. The bank operates five loan production offices in Illinois, Florida, Ohio, and Tennessee.
Under the CRA, institutions are expected to meet the credit needs of low- and moderate-income (LMI) individuals and communities in their assessment areas. Loans and investments should support community development activities such as affordable housing, community services targeted to LMI individuals, economic development, and revitalization or stabilization of distressed or underserved areas. Banks are rated on their lending and community development activity, typically receiving ratings such as “Satisfactory” when they reasonably meet the above criteria considering their size, capacity, and local economic conditions.
Both First Federal Savings & Loan Association of Lorain and United Trust Bank have been asked to improve their community development activities to better serve LMI populations and distressed areas. They have been given a period to demonstrate improvement in their lending and community development practices.
First Federal Savings & Loan Association of Lorain, in addition to offering various home lending products, must focus on originating community development loans to improve its CRA ratings and better serve low-income communities within its assessment areas.
United Trust Bank, with substandard distribution of loans to different income levels and insufficient number of loans for review, needs to enhance its business strategies to meet the credit needs of low- and moderate-income individuals and communities, as per the Community Reinvestment Act.
%20compliance.){kind=link}