WASHINGTON - For proof that banks really can win appeals of Community Reinvestment Act exam ratings, look no farther than West View Savings Bank.
West View, a $239 million-asset bank in Pittsburgh, won its appeal at the Federal Deposit Insurance Corp. to upgrade its CRA rating from "needs to improve" to "satisfactory."
In granting the appeal, the FDIC reversed decisions by one of its examiners and its New York regional office.
James G. Orie, lawyer for West View, said the "somewhat surprising" reversal shows that the FDIC is serious about its new appeal guidelines, which took effect last December.
"It does uphold the integrity of the new system," Mr. Orie said. "I think its a tough choice for banks to make. Do you inhibit and question your examiners? On the other hand, you have to give banks the idea that this is a fair process."
Paul L. Sachtleben, director of the FDIC's division of compliance and consumer affairs, said the reversal is not unheard of, and neither is an appeals process at the FDIC. He said an informal appeal system existed long before last December.
"It's been part of our process for a long time," Mr. Sachtleben said. "It was formalized in December, but it has always been there. Bankers are definitely taking advantage of it."
Mr. Orie said the agency was unfairly judging the small bank, located in an area where he said 85% to 90% of loans are made by larger banks. He said the bank won its appeal by providing additional demographic and economic information to clarify its position. Apparently, that was good enough for the agency.
"In general terms, it was very difficult to compete," Mr. Orie said. "The results, in terms of penetrating the market for loans in the delineated community, were not that good. But we showed that they had put out the effort, meeting with local groups, helping education, and putting on seminars."
West View president Robert Sinewe said he was surprised by the reversal but was confident his bank had in fact earned a satisfactory rating, as it consistently had in the past.
"We've always gotten very good marks from regulators and examiners," Mr. Sinewe said. "We felt we were deserving of at least a satisfactory rating."
Mr. Sachtleben said the new CRA rules, which kick in Jan. 1 for small banks like West View, will focus exams more on results than process, which will not make things tougher on other banks trying to appeal ratings in the future.
