Bank Safety & Soundness Advisor Executive intelligence on bank exams, enforcement and risk management

Regulators Zero in on Appraisal Review
January 30, 2012

As the regulators say, cash flow is king. And that makes collateral a secondary concern at best. But that doesn’t mean that regulators will go easy on your bank’s appraisal policy. In fact, as many banks are finding, examiners will expect all banks, no matter how small, to keep pace... Continued...

Indexed by: Exams/Enforcement | Market Risk | Regulation

New Law Prompts Investigation into Examiner Appraisal Practice
January 30, 2012

Do examiners overreach on appraisal assessments? Many banks suggest that some examiners do. Now, apparently, Congress seems to agree. Examiner treatment of appraisals ranks high on the list of concerns Congress has tasked the Government Accountability Office and the FDIC’s Inspector General... Continued...

Indexed by: Exams/Enforcement | Market Risk | Regulation

FDIC Clarifies TDR/Substandard Loan Designations
January 30, 2012

Troubled debt restructurings begin as impaired loans and examiners will consider them as such. Does that mean that examiners will also consider TDRs substandard forever? No, says the FDIC. Examiners don’t want those loans marked indefinitely, since that would disincline banks to make... Continued...

Indexed by: Accounting

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IRR, ALM Processes under Regulatory Scrutiny
January 23, 2012

Ever since the economic crisis hit, liquidity and capital have lived at the top of regulatory concern lists, but interest rate risk ranks high and it’s rising fast. Examiners are paying more attention to ALM models and interest rate risk management at banks of all sizes. All this attention,... Continued...

Indexed by: Asset Quality | Earnings | Exams/Enforcement | Regulation

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Examiners to Vet IRR Model Validation, Application
January 23, 2012

The FFIEC’s recent FAQ on interest rate risk pushes banks to go well beyond basic, rubber-stamp validation for outsourced ALM models. It’s not nearly enough for banks simply to know that their model works. Context matters. Examiners will want to know that your bank is using a functional... Continued...

Regulators Tie Examiner Training to IRR FAQ
January 23, 2012

You can expect a lot of interest in your bank’s interest rate risk management process come exam time. Why? Regulators have not only issued recent interest rate risk guidance to the industry, but they’ve also been busy training examiners to enforce regulatory IRR expectations. The OCC,... Continued...

Indexed by: Asset Quality | Earnings | Exams/Enforcement | Management | Regulation

Community Bank Examiners Should Have Local Market Knowledge, Fed Governor Says
January 16, 2012

Examiners should have an understanding of the local markets where a community bank operates before examining that bank. Federal Reserve Board governor Sarah Bloom Raskin made that case recently, arguing that since community banks make lending decisions based on their understanding of local markets... Continued...

Indexed by: Exams/Enforcement | Market Risk | Regulation

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Complication, Regulatory Demands Hinder Good Bank / Bad Bank Enabled Mergers
January 16, 2012

A number of bank holding companies have used good bank/bad bank models as a means to sell bank franchises. In short, the BHCs – as buyers or sellers – move the franchise’s troubled assets into a bad bank and then put the freshly cleansed bank franchise on the market. Why, with so... Continued...

Indexed by: Capital Adequacy | Exams/Enforcement | Management | Regulation

OCC Expands, Refines Credit Concentration Expectations
January 16, 2012

Regulators tend to shy away from specificity in guidance for fear of being too prescriptive. But for a lot of bankers, who would rather have a clear understanding of examiner demands before exam time, this tendency can be more frustrating than helpful. The OCC bucks this trend with its recent... Continued...

Indexed by: Asset Quality | Capital Adequacy | Exams/Enforcement | Regulation

FDIC Warns of Mobile Banking Risk
January 09, 2012

Banking regulators haven’t announced plans to offer specific guidance for mobile banking, but that hasn’t stopped one regulator from talking about it. The product is catching on among banks and could offer a potentially effective way to bring more unbanked consumers into mainstream... Continued...

Indexed by: Exams/Enforcement | Management | Market Risk | Regulation

FDIC Highlights SMS-based Mobile Banking Risk
January 09, 2012

Of the three channels for mobile banking delivery, SMS (or text-based) mobile banking is the riskiest, says the FDIC, which advises banks to “make reasonable efforts” to move customers away from SMS-based mobile banking. The key issue is encryption, which is not possible with SMS-based... Continued...

Indexed by: Exams/Enforcement | Management | Market Risk | Regulation

Board/Examiner Relationships Need to Improve in 2012, Experts Say
January 09, 2012

In the last few years, bank regulators have been looking hard at the role of the board. Regulators say that they’ve always considered the bank board as ultimately responsible for bank decisions and performance, but, as recent guidance and litigation show, regulators have intensified their... Continued...

Indexed by: Exams/Enforcement | Regulation

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Your ALLL methodology is under scrutiny like never before. Read the ALLL guidance that the Georgia Division of Banking gives its examiners.

If community banks don't start stress testing, regulators will come up with a solution that's even worse, argues the Conference of State Bank Supervisors.

FASB wants to change its accounting guidelines for troubled debt restructurings.

The banking regulators say FASB's mark-to-market accounting proposal is wrong, plus they want to change how banks calculate ALLL.

The IRS is scouring bank tax records to look at how you are treating non-performing loans, particularly accrued interest.

Examiners will be looking at your incentive pay arrangements as part of a safety and soundness exam, according to new guidance issued by all four banking regulators.

Regulators say that fair value gains from acquisitions can be blocked from use in capital calculations.

Regulators, examining the economic banking crisis, want banks to beef up their enterprise risk management processes.

Bank holding companies would lose the ability to count TruPS as Tier 1 Capital if the Collins Amendment to the Senate reform bill survives.

Examiners are increasingly demanding that banks reduce their CRE and ADC concentrations, referring to CRE guidance first issued in 2006.

The Labor Department's first-ever Administrator's Interpretation concluded that mortgage loan officers are entitled to overtime pay.

Regulators have issued correspondent concentration guidance, setting out ways banks should limit their exposures.