Banks in Ohio and Illinois receive lower ratings on Community Reinvestment Actperformance assessments by the Office of the Comptroller of the Currency
In a recent evaluation, the Office of the Comptroller of the Currency (OCC) has issued a "needs to improve" rating under the Community Reinvestment Act (CRA) for both Ohio-based First Federal Savings & Loan Association of Lorain and United Trust Bank.
First Federal, with approximately $512 million in assets and seven branches, primarily engages in the origination of 1-4 family residential mortgage loans. During the evaluation period covering January 2021 to December 2023, the lender did not originate any community development loans within any assessment areas. The OCC's evaluation, dated May 2024, specifically criticised First Federal for demonstrating poor responsiveness to community development needs.
On the other hand, United Trust Bank, with about $168 million in assets, operates with one branch and five loan production offices. The bank's main focus is on residential real estate loans and deposit products. However, the OCC found substandard distribution of loans to different income levels within United Trust Bank. In addition, the bank did not originate any community development loans during the evaluation period covering January 2020 to December 2022, and in 2022, they made an insufficient number of loans for the regulator to review.
Under the CRA, community development loans and investments must meet specific requirements and expectations, including qualified activities that support community development, responsiveness to local needs and bank capacity, and reasonable distribution within assessment areas.
First Federal made 10 community development donations during the evaluation period that totaled $13,000, benefiting low- and moderate-income individuals and households, affordable housing, and revitalization or stabilization in low-income areas. United Trust Bank, meanwhile, did not make any home mortgage loans to low- or moderate-income individuals between 2020 and 2021.
It's important to note that neither First Federal nor United Trust Bank immediately responded to requests for comment.
First Federal also owns a nonbank real estate management company, Lake Erie Financial Services. The loan production offices of United Trust Bank are located in Illinois, Florida, Ohio, and Tennessee, and serve the entire country.
The OCC also issued a "needs to improve" CRA rating to Palos Heights, Illinois-based United Trust Bank.
The CRA is a crucial tool for ensuring banks meet the credit needs of their communities, particularly for low- and moderate-income individuals and areas. Banks are evaluated on their record of meeting these needs within their assessment areas through both Lending Tests and Community Development (CD) Tests. The OCC's evaluations aim to encourage banks to invest in their communities and promote economic growth and development.
The community development loans that First Federal Savings & Loan Association of Lorain and United Trust Bank failed to originate may have hindered their ability to meet the expectations set by the Community Reinvestment Act (CRA), which is essential for ensuring that banks invest in their communities and promote economic growth and development. The lack of distribution of loans to different income levels in banking and insurance sectors, such as demonstrated by United Trust Bank, could potentially impact their future business opportunities within finance and the broader industry.
