Section 185.APPENDIX A Ratings

TITLE 38: FINANCIAL INSTITUTIONS

CHAPTER II: DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION

PART 185 CREDIT UNION COMMUNITY REINVESTMENT

SECTION 185.APPENDIX A RATINGS

Section 185.APPENDIX A   Ratings

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)         Optional

Elections. A small or intermediate credit union may elect to be assessed as

provided for in subsections (a)(1), (a)(2), or (a)(4) of Section 185.210 and,

if such election is made, shall be evaluated pursuant to those performance

standards.

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.