Examiners Hitting up Well Capitalized BHCs, Banks for Capital Plans
February 06, 2012

Banks deep into PCA territory, or those heading there fast, expect to have to draft a capital plan. But healthier financial institutions, too? It’s true. Turning to more “forward looking” risk indicators and still very much concerned about capital, the examiners have been pushing... Continued...

Indexed by: Capital Adequacy | Exams/Enforcement | Regulation

Forward-Looking Exams and Risk Management
February 06, 2012

In the aftermath of the recession, banking regulators have spent a lot of time reevaluating the metrics and methods they use to judge the soundness of banks. This has resulted in a major philosophical shift. Regulators are less enamored of elements like minimum capital ratios, which are more a... Continued...

Indexed by: Exams/Enforcement | Regulation | Risk Reporting

Big Bank Stress Test Requirements Leading Indicator for Small Banks
February 06, 2012

Dodd Frank demands and the regulators deliver. Over the last several weeks, the Federal Reserve, the FDIC and the OCC all released proposed guidance for big bank stress testing – even as they continue to discuss stress testing’s value for banks of all sizes. The proposed guidance, per... Continued...

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

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

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

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

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