FDIC Basic Concepts
When are insured branches of foreign banks to be examined? - ✔️✔️• Required to be
examined every 12 months under section 10(d) of the FDI Act
• Section 347.214 specifies that domestic branches of foreign banks may be considered
for 18 month exam cycle, if:
o TA of $1 billion or less
o ROCA supervisory rating of 1 or 2 at most recent exam
o Not subject to a formal enforcement action
o Has not undergone a change in control during preceding 12-month period
o Have Tier 1 and TRBC ratios of at least 6% and 10%
o Have maintained on a daily basis eligible assets in an amount of not less than 108%
of the preceding qtr average 3rd party liabilities, with sufficient liquidity
• Additional factors, including certain discretionary standards outlined in Section
347.214(b)(2)
When may examination intervals be extended to 18 months? - ✔️✔️Annual
examination intervals may be extended to 18 months under the following conditions:
1. Total Assets of $1 billion or less
2. Well Capitalized as defined in Section 324.403(b)(1) of FDIC Rules and Regs
3. Management rating of 1 or 2 at most recent exam
4. Composite 1 or 2
a. 3 rated can be 18 months if:
i. Stable and improving
ii. Rating is confirmed by an offsite review
iii. No other adverse trends are noted
5. Bank is not currently subject to a formal enforcement action
6. No person acquired control of the bank during the preceding 12-month period in
which a full-scope exam would have been required
What is UFIRS and what is its purpose?, - ✔️✔️UFIRS is the Uniform Financial
Institution Rating System. Its purpose is to:
• Ensure that all banks are evaluated in a comprehensive and uniform manner
• Assist in identifying problem or deteriorating banks
• Categorize institutions with deficiencies in particular component areas
• Assist congress in following S &S trends and assess the strength and soundness of
the financial industry
• Assist the agencies in fulfilling their collective mission of maintaining stability and
public confidence in the nation's financial system
What is the rationale of bank examinations? * - ✔️✔️1. Maintain Public Confidence
2. Safeguarding the DIF
, 3. Identifying undue risk & weak risk management practices
4. Evaluating adherence to laws and regulations
5. Identifying the cause and severity of problems
What gives examiners power to examine banks? - ✔️✔️Sections 10(b) and (c) of the
FDI Act empower examiners to make a thorough examination of all of the affairs of a
bank.
How should ratings be disclosed to management? - ✔️✔️Discuss recommended
component and composite ratings with senior management within close proximity to
examination conclusion.
• Explain tentative and subject to RD approval
• Discuss ratings for a 3 rated bank with the RO
• Quality of management is often the single most important element
• Discuss factors considered
• Not numerical average
• Confidentiality of Part 309
What does the examination letter for troubled institutions communicate? - ✔️✔️•
Should be delivered by the FS during the exit meeting or earlier for newly assigned
composite 3 ratings or worse
• Should convey the expectation that management stabilize and strengthen the
condition
• They are required to obtain a non-objection from RD to materially change balance
sheet composition, such as significantly increasing total assets or volatile funding
sources
What are the examination priorities and frequency schedules? - ✔️✔️• Priority is the
effective surveillance and supervision of banks requiring special supervisory attention.
• Section 337.12, which implements Section 10(d) of the FDI Act, requires a full-scope
onsite examination of every insured state nonmember bank at least once during each
12-month period.
When are Alternate Examinations acceptable? - ✔️✔️• Examinations may be
conducted in alternate 12 (or 18) month periods if the FDIC determines that a full-scope,
onsite examination completed by the appropriate State supervisory authority during the
interim period is acceptable.
• Alternate examinations should be accepted only for the following institutions:
o Composite 1- or 2-rated
o Stable & improving composite 3-rated if the composite rating is confirmed by SCOR
o No adverse trends are noted from other available information
When are insured branches of foreign banks to be examined? - ✔️✔️• Required to be
examined every 12 months under section 10(d) of the FDI Act
• Section 347.214 specifies that domestic branches of foreign banks may be considered
for 18 month exam cycle, if:
o TA of $1 billion or less
o ROCA supervisory rating of 1 or 2 at most recent exam
o Not subject to a formal enforcement action
o Has not undergone a change in control during preceding 12-month period
o Have Tier 1 and TRBC ratios of at least 6% and 10%
o Have maintained on a daily basis eligible assets in an amount of not less than 108%
of the preceding qtr average 3rd party liabilities, with sufficient liquidity
• Additional factors, including certain discretionary standards outlined in Section
347.214(b)(2)
When may examination intervals be extended to 18 months? - ✔️✔️Annual
examination intervals may be extended to 18 months under the following conditions:
1. Total Assets of $1 billion or less
2. Well Capitalized as defined in Section 324.403(b)(1) of FDIC Rules and Regs
3. Management rating of 1 or 2 at most recent exam
4. Composite 1 or 2
a. 3 rated can be 18 months if:
i. Stable and improving
ii. Rating is confirmed by an offsite review
iii. No other adverse trends are noted
5. Bank is not currently subject to a formal enforcement action
6. No person acquired control of the bank during the preceding 12-month period in
which a full-scope exam would have been required
What is UFIRS and what is its purpose?, - ✔️✔️UFIRS is the Uniform Financial
Institution Rating System. Its purpose is to:
• Ensure that all banks are evaluated in a comprehensive and uniform manner
• Assist in identifying problem or deteriorating banks
• Categorize institutions with deficiencies in particular component areas
• Assist congress in following S &S trends and assess the strength and soundness of
the financial industry
• Assist the agencies in fulfilling their collective mission of maintaining stability and
public confidence in the nation's financial system
What is the rationale of bank examinations? * - ✔️✔️1. Maintain Public Confidence
2. Safeguarding the DIF
, 3. Identifying undue risk & weak risk management practices
4. Evaluating adherence to laws and regulations
5. Identifying the cause and severity of problems
What gives examiners power to examine banks? - ✔️✔️Sections 10(b) and (c) of the
FDI Act empower examiners to make a thorough examination of all of the affairs of a
bank.
How should ratings be disclosed to management? - ✔️✔️Discuss recommended
component and composite ratings with senior management within close proximity to
examination conclusion.
• Explain tentative and subject to RD approval
• Discuss ratings for a 3 rated bank with the RO
• Quality of management is often the single most important element
• Discuss factors considered
• Not numerical average
• Confidentiality of Part 309
What does the examination letter for troubled institutions communicate? - ✔️✔️•
Should be delivered by the FS during the exit meeting or earlier for newly assigned
composite 3 ratings or worse
• Should convey the expectation that management stabilize and strengthen the
condition
• They are required to obtain a non-objection from RD to materially change balance
sheet composition, such as significantly increasing total assets or volatile funding
sources
What are the examination priorities and frequency schedules? - ✔️✔️• Priority is the
effective surveillance and supervision of banks requiring special supervisory attention.
• Section 337.12, which implements Section 10(d) of the FDI Act, requires a full-scope
onsite examination of every insured state nonmember bank at least once during each
12-month period.
When are Alternate Examinations acceptable? - ✔️✔️• Examinations may be
conducted in alternate 12 (or 18) month periods if the FDIC determines that a full-scope,
onsite examination completed by the appropriate State supervisory authority during the
interim period is acceptable.
• Alternate examinations should be accepted only for the following institutions:
o Composite 1- or 2-rated
o Stable & improving composite 3-rated if the composite rating is confirmed by SCOR
o No adverse trends are noted from other available information
