A bank in Illinois now suffers a painful rating per OCC standards following the release of its latest performance reports.
The Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of July 1, 2024, through July 31, 2024.
The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings.
The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance.
Of the 27 evaluations made public this month, only one was rated substantial noncompliance, 20 were rated satisfactory, and six were rated outstanding.
The one bank rated substantial noncompliance is Ohio’s Lemon National Bank.
The major factors that supported this rating include:
- The bank’s quarterly average loan-to-deposit ratio (LTD) is unreasonable at 10.6 percent.
- Lending activity within the assessment area (AA) needs improvement. The bank originated six loans
in the AA during the three-year evaluation period. - The distribution of loans to borrowers of different income levels is very poor.
- Lemont did not receive any complaints regarding its CRA performance during the evaluation period.
“Considering the bank’s size, financial condition, and credit needs of the AA(s), the bank’s loan-to deposit ratio is unreasonable,” said the OCC report.
“The Lemont National Bank’s average LTD for the 16-quarter period since the preceding CRA evaluation was 10.6%.
The bank’s average LTD ratio ranged from a high of 11.0% to a low of 9.7%.
In comparison, the average LTD ratio for similarly sized financial institutions with assets less than $100 million was 77.8%.
The ratio ranged from a high of 116.2% and a low of 63.4%.”
Lemont is a nationally chartered bank headquartered in the village of Lemont, Illinois, located approximately 20 miles southwest of the city of Chicago.
Lemont is a wholly owned subsidiary of Lemont Bancorp Inc., a one-bank holding company also based in Lemont, Illinois.
As of December 31, 2023, Lemont reported total assets of $65.4 million, total deposits of $47.0 million, and tier 1 capital of $3.6 million.
The bank is a single state institution with five branch offices in Cook and Will counties.
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Also Read: The US Treasury Direct is Now Freezing Customer Accounts
Other Banking News Today
Massive US banks now prepare for millions to default according to Q2 reports, as institutions increase capital to cover insolvencies.
Big banks such as JPMorgan Chase, Bank of America and Wells Fargo are boosting their financial defenses as they prepare for customer inflow to dwindle, affecting the ability for the average American to pay their bills.
According to the latest Q2 2024 financial reports from major banks, they are significantly increasing the amount of capital they are setting aside to cover potential losses from rising credit card and loan defaults.
Collectively, these banks are allocating billions of dollars into emergency provisions and loan loss reserves to prepare for an anticipated increase in insolvencies and non-performing loans.
This reflects the banks’ growing concerns about the potential for a rise in credit card delinquencies and loan defaults in the coming months.
By bolstering their loss-absorbing capital buffers, the banks are attempting to proactively mitigate the financial risks posed by a potential surge in credit-related delinquencies and insolvencies.
This suggests the banks foresee a deterioration in consumer credit quality and are taking prudent steps to strengthen their balance sheets and resilience against such adverse credit trends.
The significant increase in these emergency loan loss provisions across the banking sector signals that the institutions are bracing for a potential economic downturn that could lead to a rise in loan defaults and credit-related write-offs.
This move underscores the banks’ efforts to position themselves to better withstand any upcoming challenges in the credit markets.
JPMorgan Chase is leading the way, increasing its provisions from $1.88 billion in the first quarter of this year to $3.05 billion – a $1.17 billion jump.
Meanwhile, Bank of America has set aside $1.5 billion, up from $1.3 billion in the previous quarter, and Wells Fargo set aside $1.24 billion, up from $938 million in the previous quarter.
The increasing balances show banks are anticipating increasing economic risk in the months ahead as commercial real estate flounders and as consumers pile up a whopping $1.02 trillion in credit card balances, according to TransUnion.
Delinquency rates across various types of debt are already on the rise, and the New York Federal Reserve says total US household debt hit $17.69 trillion in the first quarter of this year, an increase of $184 billion from the previous quarter.
The number includes mortgage balances, which rose by $190 billion to $12.44 trillion, and auto loans, which increased by $9 billion to $1.62 trillion.
Also Read: A Massive US Bank is Now Closing Credit Cards
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