By the Division of Banks

The Depository Institution Supervision (DIS) Section is charged with overseeing the Safety and Soundness examinations and Compliance and Community Reinvestment Act (CRA) examinations of banks and credit unions chartered in Massachusetts. The DIS Section also oversees Mortgage Lender Community Investment (MLCI) examinations as well as the Division's outreach and foreclosure monitoring efforts. The MLCI examination schedule and ratings are public information.

Bank and credit union safety and soundness examinations are conducted in order to maintain public confidence in the Massachusetts banking industry as a whole and in individual banks and credit unions. The Division's safety and soundness examinations make use of Generally Accepted Accounting Principles and the Federal Financial Institutions Examination Council's Uniform Financial Institutions Rating System. Accordingly, institutions are rated from 1 to 5 (1 being the strongest). Individual ratings are assigned to six key performance areas identified by the acronym "CAMELS": Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Sensitivity. From these individual ratings an overall or composite rating is determined. Other areas of operation are also reviewed during the examination, including information technology, Bank Secrecy Act compliance, and the bank's trust department, when applicable.

Banks and credit unions chartered in Massachusetts are also subject to Consumer Compliance examinations. The Consumer Compliance examination includes a review of compliance with the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, and other consumer protection and fair lending laws and regulations, including the CRA.

The CRA examination ensures that financial institutions are meeting the credit needs of the communities which they serve, including low and moderate-income areas, consistent with safe and sound banking practices. Massachusetts is one of several states which has its own CRA statute (M.G.L. c. 167, § 14) and regulation (209 CMR 46.00). In addition, Massachusetts is currently the only state which examines all state-chartered credit unions for compliance with CRA. The Division utilizes certain performance tests and standards to evaluate CRA performance. These include the lending, investment, and service tests for large institutions; the community development test for wholesale or limited purpose institutions; the small institution performance standards; the strategic plan; and credit union performance standards. In addition, the Division will examine institutions for evidence of discriminatory lending practices. Through this fair lending examination process, the Division will evaluate whether credit applicants were treated differently than other applicants due to race, color, religion, national origin, ethnic origin, sex, marital status, age, sexual orientation, physical impairment, or because all or part of an applicant's income derives from a public assistance program, or because of the location of the property. Based on its performance, an institution is assigned one of five ratings: Outstanding, High Satisfactory, Satisfactory, Needs to Improve, or Substantial Noncompliance. These rating are public information. In addition, in evaluating an institution's performance, the Division will prepare a Public Evaluation statement that provides a narrative description of the institution's CRA performance. Institutions are required to maintain a copy of the public evaluation in their public information file and to make the evaluation available upon request. The ratings and Public Evaluations are available by clicking here.

The DIS Section also includes an Outreach Unit that is responsible for conducting outreach efforts to educate Massachusetts consumers regarding credit and basic banking services, and administering the regional Mortgage Review Boards and Small Loan Review Boards. The DIS Section also oversees the development and maintenance of a foreclosure database that includes information on all preliminary Right to Cure or foreclosure filing notices and all final foreclosure sale information. Click here for a link to the Division's foreclosure resources.