OCC hands out 'needs to improve' CRA rating to Third FS&LA of Cleveland

The Office of the Comptroller of the Currency handed out a "needs to improve" Community Reinvestment Act rating to Third Federal Savings and Loan Association of Cleveland MHC.

Third FS&LA of Cleveland received "needs to improve" ratings on both its lending test and its investment test while receiving a "low satisfactory" rating on its service test. On the lending test, the regulator dinged the company for poor distribution of home mortgage loans across income levels. Specifically, the OCC found that 0.7% of the lender's home mortgage loans in Cleveland during 2015 and 2016 were in low-income Census tracts, compared to 5.7% of owner-occupied housing units in the assessment area being located in low-income tracts. The OCC found similarly poor distribution of home mortgage loans in some of the lender's other markets in Ohio and Florida.

On the investment test, the OCC found that the lender's responsiveness to the community development needs of the Cleveland market was poor. The OCC reported $14.3 million of qualified community development investments over the evaluation period, representing 1.53% of allocated Tier 1 capital. The regulator found that "none of the investments demonstrated innovation or complexity."

A "needs to improve" rating is the second-lowest rating a lender can receive, above "substantial noncompliance." Poor CRA ratings tend to limit a lender's ability to open new branches or pursue a merger.