One in Five Banks Get Top CRA Grade in 2018

Only five of the state's ten biggest banks were rated outstanding by regulators

January 16, 2019 - Of the 82 Community Reinvestment Act ratings awarded to Massachusetts banks during 2018, sixteen (19.5%) were “Outstanding", according to a report issued today by the Massachusetts Affordable Housing Alliance (MAHA). This is a dramatic increase from the share of “Outstanding” ratings in the previous three years (7%, 10%, and 12%). This share is approaching the level in the 2011-2013 period, when more than 20% of all ratings were “Outstanding,” although it is still well below the level in the 2005-2007 period, when over 30% of all ratings were “Outstanding.” 

The report was prepared for MAHA by Jim Campen, Professor Emeritus of Economics at the University of Massachusetts at Boston and a long-time member of MAHA's Board of Directors.

MAHA's twenty-eighth annual report lists the CRA ratings assessed to all Massachusetts banks, credit unions, and mortgage companies and evaluates the performance of the three federal regulators and the Massachusetts Division of Banks in reviewing bank performance in meeting community needs.

Only five of the state’s ten biggest banks were rated “Outstanding” in their most recent CRA exams: State Street (#1), Citizens (#3), TD Bank (#5), Eastern (#6), and Boston Private (#10).  Until four years ago, it was routine for all ten of the biggest banks to have ratings of “Outstanding.”  Then the number of “Outstanding” ratings among the top ten banks fell to eight at the end of 2014, seven at the end of 2015, eight at the end of 2016, and five at the end of 2017.  Bank of America (#2), Santander (#4), First Republic (#7), Rockland Trust (#8) and Berkshire Bank (#9) have most recent ratings of “Satisfactory.” Banks are ranked by total in-state deposits as reported by the FDIC for mid-2018.

The Division of Banks remains far from compliance with its stated policy of examining each licensed mortgage lender (LML) “at least once every 48 months. Of the 86 currently-licensed LMLs that were qualified for coverage under the state’s CRA for Mortgage Lenders regulation by reporting 50 or more Massachusetts loans in both 2016 and 2017 HMDA data, only 48 (55.8% of the total) have received a CRA rating within the last four years.  Twelve additional lenders (14.0%) received ratings in 2014 or earlier and 26 lenders (30.2%) have never received a CRA rating. Maintaining compliance with its stated policy would require approximately twenty ratings per year, the Division is now close to that pace by awarding eighteen ratings in 2018.