Banker

Eastern Bank has received the highest possible grade for its performance under the Community Reinvestment Act.

The Massachusetts Division of Banks and the Federal Deposit Insurance Corporation announced this month that it had rated Eastern outstanding on its ability to meet the credit needs of the communities in which the bank operates, including low- and moderate-income neighborhoods. Only a handful of the state’s financial institutions receive outstanding on an annual basis – only five received an outstanding grade in 2017, the most outstanding grades financial institutions in the state have received since 2014.

The Massachusetts DOB and FDIC grades financial institutions on three main areas: lending, investment and service. There are five different levels of grading for each category, from substantial noncompliance, the worst grade, all the way up to outstanding. Financial institutions under $1 billion in assets are examined once every 18 months, while banks over $1 billion assets are supposed to be examined every 12 months, although examination schedules can vary depending on how busy agencies might be in any given year.

According to the joint report, Eastern Bank originated 6,859 small business loans, totaling approximately $991 million, and 5,281 home mortgage loans, totaling approximately $1.4 billion, inside its combined assessment area.

“Overall, the bank consistently exceeded aggregate performance and demographics in 2015 and 2016,” the report said. “Considering the highly competitive market, the relatively limited number of businesses in low- and moderate-income census tracts, and the market share rankings, the bank’s distribution of loans reflects excellent penetration throughout the combined assessment area.”

The agencies were impressed with Eastern’s ability to originate micro-loans. Of the bank’s 2015 and 2016 small business loans originated, nearly 53 percent, or 4,097 loans, were loan amounts under $50,000.

Eastern Bank also ranked 12th of 369 lenders that originated or purchased a home mortgage loan to a low-income borrower within the combined assessment area in 2015. A low-income family in the combined assessment area, earning on average less than $41,571, would unlikely qualify for a mortgage under conventional underwriting standards, considering the median housing value of $392,147.

Other areas the bank thrived in were utilizing innovative and flexible lending programs sponsored by the U.S. Small Business Administration, housing partnership organizations and other federal loan program, as well as community development lending.

Eastern Bank last year made loans to finance an affordable housing project in Raynham, a nonprofit community development corporation in Lawrence and a nonprofit in New Hampshire that helps low-income families and seniors in manufactured housing communities acquire the land they occupy to operate their own cooperatives.