(a) Small bank performance evaluation—(1) In general. The FDIC evaluates a small bank's record of helping to meet the credit needs of its entire community pursuant to the Small Bank Lending Test as provided in paragraph (a)(2) of this section, unless the small bank opts to be evaluated pursuant to the Retail Lending Test in § 345.22.
(2) Small Bank Lending Test. A small bank's retail lending performance is evaluated pursuant to the following criteria:
(i) The bank's loan-to-deposit ratio, adjusted for seasonal variation, and, as appropriate, other retail and community development lending-related activities, such as loan originations for sale to the secondary markets, community development loans, or community development investments;
(ii) The percentage of loans and, as appropriate, other retail and community development lending-related activities located in the bank's facility-based assessment areas;
(iii) The bank's record of lending to and, as appropriate, engaging in other retail and community development lending-related activities for borrowers of different income levels and businesses and farms of different sizes;
(iv) The geographic distribution of the bank's loans; and
(v) The bank's record of taking action, if warranted, in response to written complaints about its performance in helping to meet credit needs in its facility-based assessment areas.
(b) Additional consideration—(1) Small banks evaluated pursuant to the Small Bank Lending Test. The FDIC may adjust a small bank rating from “Satisfactory” to “Outstanding” at the institution level where the bank requests and receives additional consideration for the following activities, without regard to whether the activity is in one or more of the bank's facility-based assessment areas, as applicable:
(i) Making community development investments;
(ii) Providing community development services; and
(iii) Providing branches and other services, digital delivery systems and other delivery systems, and deposit products responsive to the needs of low- and moderate-income individuals, families, or households, residents of low- and moderate-income census tracts, small businesses, and small farms.
(2) Small banks that opt to be evaluated pursuant to the Retail Lending Test in § 345.22. The FDIC may adjust a small bank rating from “Satisfactory” to “Outstanding” at the institution level where the bank requests and receives additional consideration for activities that would qualify pursuant to the Retail Services and Products Test in § 345.23, the Community Development Financing Test in § 345.24, or the Community Development Services Test in § 345.25.
(3) Additional consideration for activities with MDIs, WDIs, and LICUs, and for providing low-cost education loans. Notwithstanding paragraphs (b)(1) and (2) of this section, a small bank may request and receive additional consideration at the institution level for activities with MDIs, WDIs, and LICUs pursuant to 12 U.S.C. 2903(b) and 2907(a) and for providing low-cost education loans to low-income borrowers pursuant to 12 U.S.C. 2903(d), regardless of the small bank's overall institution rating.
(c) Small bank performance conclusions and ratings—(1) Conclusions. Except for a small bank that opts to be evaluated pursuant to the Retail Lending Test in § 345.22, the FDIC assigns conclusions for the performance of a small bank evaluated under this section as provided in appendix E to this part. If a bank opts to be evaluated pursuant to the Retail Lending Test, the FDIC assigns conclusions for the bank's Retail Lending Test performance as provided in appendix C to this part. In assigning conclusions for a small bank, the FDIC may consider performance context information as provided in § 345.21(d).
(2) Ratings. For a small bank evaluated under the Small Bank Lending Test, the FDIC rates the bank's performance under this section as provided in appendix E to this part. If a small bank opts to be evaluated under the Retail Lending Test in § 345.22, the FDIC rates the performance of a small bank as provided in appendix D to this part.