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FDIC gives 'needs to improve' rating on State Bank of Brooks in CRA examinations

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FDIC gives 'needs to improve' rating on State Bank of Brooks in CRA examinations

The Federal Deposit Insurance Corp. gave a "needs to improve" rating to Corning, Iowa-based State Bank of Brooks in its Community Reinvestment Act examinations.

State Bank of Brooks garnered a "satisfactory" rating in its previous evaluation.

The current evaluation was made May 6 and the bank's previous examination was Dec. 9, 2013, according to the report by the FDIC.

The rating was driven by the community bank's "less than reasonable performance" under the loan-to-deposit ratio criterion. Even though State Bank of Brooks' assessment area concentration was reasonable, given a majority of the loans reviewed in 2017 and 2018 were in the assessment area, it still did not outweigh the poor loan-to-deposit ratio.

The FDIC noted that the bank's average ratio was 26.1% for the 22 quarters from Dec. 31, 2013, through March 31, 2019, which was lower than the 31.0% in its previous evaluation. The regulator wrote that the ratio "has steadily declined," from a high of 29.8% on Sept. 30, 2016, to a low of 21.3% as of March 31.

The regulator also said the bank's conservative underwriting policies and self-imposed lending limits, which were much lower than the legal lending limit, has hampered the bank's ability to serve the farm credit needs in the area, according to the report.

The Community Reinvestment Act mandates that banks should serve low- to moderate-income communities. Federal regulators areworking to release a major revision of the law, with Comptroller of the Currency Joseph Otting targeting the release of the rewrite for the end of September.

State Bank of Brooks did not respond to a request for comment from S&P Global Market Intelligence.