PUBLIC DISCLOSURE May 20, 2019 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Continental National Bank Charter Number 16325 1801 SW First Street Miami, FL 33135 Office of the Comptroller of the Currency Miami Field Office 9850 NW 41st Street, Suite 260 Miami, FL 33178 NOTE: This document is an evaluation of this institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, and should not be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion, or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution. Charter Number: 16325 Table of Contents Overall CRA Rating……...……………………………………………………………….. 1 Description of Institution………….……………………………………………………… 2 Scope of the Evaluation……………………………………………………………………2 Discriminatory or Other Illegal Credit Practices Review………………………..……….. 3 State Rating…….………………………………………………………………………... 4 State of Florida………………..………………………………………………. 4 Appendix A: Scope of Examination………….…………………………………………A-1 Appendix B: Summary of MMSA and State Ratings…………………………………...B-1 Appendix C: Definitions and Common Abbreviations………………………………….C-1 Appendix D: Tables of Performance Data………………………………………………D-1 i Charter Number: 16325 Overall CRA Rating Institution’s CRA Rating: This institution is rated Outstanding The lending test is rated: Outstanding The community development test is rated: Outstanding The major factors that support this rating include: The Lending Test rating is based on the excellent distribution of loans in low- and moderate-income (LMI) geographies, a reasonable distribution of lending among businesses of different sizes, a substantial majority of loans purchased or originated are in the assessment area (AA), and a reasonable loan-to-deposit (LTD) ratio. The Community Development (CD) Test rating is based on the excellent responsiveness to CD needs in the AA through CD lending, qualified investments, and CD services in the AA. Loan-to-Deposit Ratio Considering the Bank’s size, financial condition, and credit needs of the AA, the Bank’s LTD ratio is reasonable. The LTD ratio is calculated on a bank-wide basis. The average quarterly LTD ratio for the Bank during the evaluation period was 69.8 percent. The quarterly average LTD ratio for three banks similar in size was 97.7 percent with the LTD ratio ranging from a high of 105.4 percent to a low of 88.8 percent. The Bank’s LTD ratio has been historically lower due to a strong deposit base. Peer banks used in the analysis reported total assets less than $500 million and had a strategic focus on small business lending. The banks included two banks in Miami-Dade County (Executive National Bank and Eastern National Bank), and one bank in Palm Beach County (Legacy Bank of Florida). Lending in Assessment Area A substantial majority of the Bank’s loans are inside its AA. The Bank originated and purchased 97.5 percent of its total loans inside the Bank’s AA during the evaluation period. This analysis is performed at the bank, rather than the AA, level. This conclusion is based on a random sample of 40 business loans that were originated in 2016, 2017 and 2018. The following table depicts the Bank’s lending in the AA during the evaluation period. Lending Inside and Outside of the Assessment Area Number of Loans Dollar Amount of Loans $(000s) Loan Category Total Total Inside Outside Inside Outside # $(000s) # % # % $ % $ % Small Business 39 97.5 1 2.5 40 14,101 97.0 443 3.0 14,544 Total 39 97.5 1 2.5 40 14,101 97.0 443 3.0 14,544 1 Charter Number: 16325 Description of Institution Continental National Bank (CNB) is a minority-owned intrastate commercial bank established in 1974 and headquartered in Miami, Florida in the Little Havana neighborhood. The Bank was the first Cuban-American community bank established in the United States. CNB is owned by Continental Bancorporation, a one-bank holding company also headquartered in Miami with consolidated assets of $464.5 million. As of December 31, 2018, the Bank had total assets of $464.5 million, total loans of $342.3 million, total deposits of $390.6 million, and tier one capital of $37.8 million. Total loans represent approximately 73.7 percent of assets. CNB’s loan portfolio is comprised of commercial real estate loans (61.5 percent), commercial and industrial loans (3.2 percent), residential mortgage loans (29.0 percent), and consumer loans (6.3 percent). Multifamily housing represents 12.2 percent of total loans. CNB offers a wide variety of deposit and loan products, as detailed in the Bank’s Public File. The Bank’s primary business strategy includes commercial lending, with a focus on real estate development. During the evaluation period, CNB operated six banking offices within Miami-Dade County that include automated teller machines (ATMs). The Bank closed one branch in an upper income geography in 2016 leaving two branches in moderate-income geographies and three branches in middle-income geographies. There are no legal or other factors that impede the Bank's ability to meet the credit needs in its AA. The Bank’s rating at its preceding CRA examination, dated May 2, 2016, was “Outstanding”. CNB has designated Miami-Dade County as its AA. This AA, which is equivalent to Metropolitan Division (MD) 33124, meets the requirements of the CRA regulation and does not arbitrarily exclude LMI geographies. MD 33124 is part of the Metropolitan Statistical Area (MSA) 33100 Miami-Fort Lauderdale-West Palm Beach that includes Miami-Dade, Broward, and Palm Beach Counties. Scope of the Evaluation Evaluation Period/Products Evaluated We evaluated the CRA performance of CNB using Intermediate Small Bank performance criteria. Our evaluation covered the period from May 2, 2016, through December 31, 2018. We focused on lending activity from January 1, 2016, through December 31, 2018, for analysis purposes. The Bank’s strategic focus is business lending. Consistent with the Bank’s primary lending focus, small loans to businesses were sampled. Home mortgage lending is not a primary product for the Bank and is mostly investor properties or accommodation loans, and these loans were not included in our analysis. Selection of Areas for Full-Scope Review In each state where the Bank has an office, one or more of AAs within that state was selected for a full- scope review. For purposes of this evaluation, Bank delineated AAs located within the same metropolitan statistical area (MSA), multistate metropolitan statistical area (MMSA), or combined statistical area (CSA) are combined and evaluated as a single AA. Similarly, Bank delineated non-MSA AAs within the same state are combined and evaluated as a single area. These combined AAs may be 2 Charter Number: 16325 evaluated as full- or limited-scope. Refer to the “Scope” section under each State Rating for details regarding how full-scope AAs were selected. Refer to appendix A, Scope of Examination, for a list of full- and limited-scope AAs. Ratings The Bank’s overall rating is a blend of the state ratings, and where applicable, multistate ratings. CNB has one AA and one primary product that received consideration. The MMSA rating and state ratings are based on performance in all bank AAs. Refer to the “Scope” section under each state and MMSA Rating section for details regarding how the areas were weighted in arriving at the respective ratings. Discriminatory or Other Illegal Credit Practices Review Pursuant to 12 CFR 25.28(c) or 195.28(c), respectively, in determining a national bank’s or federal savings association’s (collectively, bank) CRA rating, the OCC considers evidence of discriminatory or other illegal credit practices in any geography by the Bank, or in any AA by an affiliate whose loans have been considered as part of the Bank’s lending performance. As part of this evaluation process, the OCC consults with other federal agencies with responsibility for compliance with the relevant laws and regulations, including the U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the Bureau of Consumer Financial Protection, as applicable. The OCC has not identified that this institution has engaged in discriminatory or other illegal credit practices that require consideration in this evaluation. The OCC will consider any information that this institution engaged in discriminatory or other illegal credit practices, identified by or provided to the OCC before the end of the institution’s next performance evaluation in that subsequent evaluation, even if the information concerns activities that occurred during the evaluation period addressed in this performance evaluation. 3 Charter Number: 16325 State Rating State of Florida CRA rating for the State of Florida1: Outstanding The Lending Test is rated: Outstanding The Community Development Test is rated: Outstanding The major factors that support this rating include: The geographic distribution of loans exhibits an excellent distribution of loans in LMI geographies, The distribution of loans among businesses of different sizes is reasonable, A substantial majority of loan originations are within the Bank’s AA, The Bank’s loan-to-deposit ratio was reasonable over the evaluation period, and The responsiveness to CD needs in the AA through CD lending, qualified investments, and CD services in the AA is excellent. Description of Institution’s Operations in Florida The Bank operates in one AA in the State of Florida as described in the Description of the Institution and the Scope of Evaluation sections of this Performance Evaluation. The Bank’s primary business focus is business lending. The Bank’s competitors include other local community banks in its markets and some of the largest banks that have a nationwide footprint as well as credit unions and nonbank financial entities that compete for residential and business loans.