Discussion Board

OCC 2011-48 - Concentrations of Credit: Revised Booklet

2011-12-14T15:48:27-06:00

The Office of the Comptroller of the Currency (OCC) recently revised the electronic version of the “Concentrations of Credit” booklet of the Comptroller’s Handbook, which replaces a similarly titled booklet issued in March 1990. Concurrently, OCC Bulletin 95-7 (February 9, 1995), “Concentrations of Credit,” is rescinded. That bulletin directs that all reports of examination (ROE) include a page detailing all concentrations of credit. Guidance contained in this booklet directs examiners to include a page in each ROE that lists concentrations posing a challenge to management or presenting unusual or significant risk to banks or federal savings associations (collectively, banks).
http://occ.gov/publications/publications-by-type/comptrollers-handbook/Concentration-HB-Final.pdf

This booklet provides updated guidance and examination procedures used in the supervision of banks. The major revisions to this booklet include the following:
• Expanded framework for identifying potential credit concentrations.
• Enhanced definition of a credit concentration to encourage consideration of more than just the dollar amount of exposure.
• Renewed emphasis on stress testing as a tool to identify and quantify credit concentration risks.

In accordance with the OCC’s supervision-by-risk approach, examiners will exercise judgment when determining which of the procedures in this booklet are appropriate for a particular bank based on the risk profile and the quality of its risk management system. Examiners will supplement the procedures in this booklet, as needed, with expanded procedures found in other examination guidance or booklets of the Comptroller’s Handbook.

Any questions regarding this booklet should be directed to the Commercial Credit Policy Division at (202) 874-4564.

FDIC Winter 2011 Issue of Supervisory Insights

2011-12-14T15:45:32-06:00

On December 14, 2011, the FDIC released the Winter 2011 issue of Supervisory Insights. This issue is now available on http://www.fdic.gov at:

http://www.fdic.gov/regulations/examinations/supervisory/insights/index.html.

This issue of Supervisory Insights features two articles of critical interest to examiners, bankers, and supervisors. One provides information for bankers that will help strengthen a financial institution’s real estate appraisal and valuation program. The second discusses strategies for mitigating risks arising from mobile banking.

Comments about articles in this issue and suggestions for topics for future issues can be sent to SupervisoryJournal at fdic dot gov or to Managing Editor Kim Lowry at klowry at fdic dot gov.

FIL-73-2011: Consolidated Reports of Condition and Income December 9, 2011

2011-12-10T11:38:11-06:00

Summary: The Federal Financial Institutions Examination Council (FFIEC) has approved proposed revisions to the Consolidated Reports of Condition and Income (Call Report) for implementation in 2012. The FDIC and the other banking agencies invite depository institutions and others to review and comment on the proposal by January 20, 2012. As discussed in FIL-72-2011, dated December 7, 2011, the proposed new Call Report items would be added to the report beginning June 30, 2012, except for two proposed revisions that would take effect when savings associations start filing the Call Report as of the March 31, 2012, report date. Proposed revisions to certain Call Report instructions would take effect March 31, 2012.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions. Institutions under $1 billion in total assets would not be required to complete some of the proposed new Call Report items.

OCC to fully integrate the Office of Thrift Supervision (OTS) policy guidance

2011-12-08T15:49:08-06:00

Description: Supervisory Policy Integration Process

Purpose:
This bulletin outlines the process that the Office of the Comptroller of the Currency (OCC) intends to follow to fully integrate the Office of Thrift Supervision (OTS) policy guidance documents (guidance) into a common set of supervisory policies that applies to both national banks and federal savings associations.

Overview:
Pursuant to title III of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, all functions of OTS relating to federal savings associations and the rulemaking authority of the OTS relating to all federal savings associations were transferred to the OCC on July 21, 2011 (transfer date). As a result, the OCC assumed the responsibility for the ongoing supervision, examination, and regulation of federal savings associations. The legislation continues all OTS orders, resolutions, determinations, agreements, regulations, interpretive rules, other interpretations, guidelines, procedures, and other advisory materials in effect the day before the transfer date. The legislation allows the OCC to administer these documents with respect to federal savings associations, until the documents are modified, terminated, set aside, or superseded by the OCC, by a court, or by operation of law.

On July 21, 2011, the OCC issued an interim final rule with request for comments that republished, with nomenclature and other technical changes, the OTS regulations formerly found in chapter V of title 12 of the Code of Federal Regulations. These republished regulations became effective on July 21, 2011, and will be codified in chapter I at parts 100 through 197.1
The OCC is embarking on a comprehensive rulemaking project to integrate, when possible, these former OTS rules with OCC rules applicable to national banks. Concurrently, the OCC has begun the integration of the more than 1,000 supervisory policies of the former OTS into the OCC policy framework. The goal is to produce a consistent supervisory approach and integrated policy platform for national banks and federal savings associations, while recognizing differences anchored in statute.

Process:
The OCC is committed to evaluating former OTS guidance thoughtfully, to addressing common supervisory issues consistently, and to accommodating regulatory and statutory differences appropriately. The OCC’s intent is to integrate OCC and OTS guidance as quickly and accurately as possible and in an orderly and transparent manner that minimizes burden to national banks, federal savings associations, and OCC examination staff. To achieve this objective, the OCC will group, to the extent possible, rescission notifications and other announcements related to the integration of OTS guidance, according to the two-phased process outlined in the following paragraphs. Particular topics or issues, however, may warrant immediate action and, therefore, will be addressed separately.

Phase I: This phase involves rescinding a significant number of documents. The documents rescinded in this phase will include OTS documents that
• transmitted or summarized rules, interagency guidance, or Examination Handbook sections (not the conveyed guidance or rule itself);2
• are no longer useful because of the elimination of the OTS or the passage of time; and/or
• duplicate existing OCC guidance.

Additionally, the OCC will rescind outdated guidance issued to national banks.

OCC bulletins will announce these rescissions. To minimize confusion, documents will be watermarked as rescinded on the OCC Web site or former OTS Web site, as applicable.

Phase II: This phase focuses on guidance that requires further review, substantive revision, or combination or is considered unique to federal savings associations. Guidance that is linked to regulatory or statutory requirements will be coordinated closely with the concurrent integration of OCC and former OTS regulations. In many cases, guidance cannot be revised or combined until the revisions to the rules on which the guidance is based have been finalized. Prioritization of the work will be influenced by feedback from the OCC’s supervision staff as it encounters policy differences in the day-to-day supervision of national banks and federal savings associations.

Former OTS policies and guidance remain applicable to federal savings associations until rescinded, superseded, or revised. In some cases, the OCC may amend an OTS rule, policy, or practice that is cross-referenced in more than one document or affects only a portion of a document. If overlapping guidance exists, any guidance or regulation issued by the OCC after July 21, 2011, that specifically includes federal savings associations in its scope, will prevail. If a document has not been rescinded, but a portion of the content no longer applies, the superseded portion will be grayed out electronically. Users should check the OCC Web site for current versions of all guidance.

For further information, contact the Operational Risk Division at (202) 874-5190.

Comptroller of the Currency Announces Fees for Year 2012

2011-12-05T13:29:07-06:00

Date: December 1, 2011

Description: Year 2012 Fee Structure

SUMMARY
The purpose of this issuance is to inform all national banks, federal savings associations, and federal branches and agencies of fees charged by the Office of the Comptroller of the Currency (OCC) for year 2012. This bulletin is effective January 1, 2012.

OCC 2011-46

OCC Proposes Rule to Remove References to Credit Ratings and Guidance on Due Diligence Requirements in Determining Whether Investment Securities Are E

2011-11-29T11:51:35-06:00

The Office of the Comptroller of the Currency (OCC) proposed a rule to remove references to credit ratings from various OCC regulations and related guidance today to assist national banks and federal savings associations in meeting due diligence requirements in assessing credit risk for portfolio investments.

The proposed rule and guidance was published in the Federal Register. Comments may be submitted through December 29, 2011.

Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires federal agencies to review regulations that require the use of an assessment of creditworthiness of a security or money market instrument and any references to, or requirements in, those regulations regarding credit ratings. Section 939A then requires the federal agencies to modify the regulations identified during the review to substitute any references to, or requirements of, reliance on credit ratings with such standards of creditworthiness that each agency determines to be appropriate.

The proposed OCC rule would remove references to credit ratings in the OCC’s non-capital regulations. In particular, the OCC proposes to amend the definition of “investment grade” in 12 CFR Part 1 to no longer reference credit ratings. In addition to following the standard under the proposed rule, national banks and federal savings associations would be expected to continue to maintain appropriate ongoing reviews of their investment portfolios to verify that they meet safety and soundness requirements appropriate for the institution’s risk profile and for the size and complexity of the portfolios.
The proposed guida
nce clarifies steps national banks should take to demonstrate they have properly verified their investments meet the newly established credit quality standards under 12 CFR Part 1 and steps national banks and federal savings associations should take to demonstrate they met due diligence requirements when purchasing investment securities and conducting ongoing reviews of their investment portfolios. Additionally, when purchasing corporate debt securities, federal savings associations will need to follow requirements to be established by the Federal Deposit Insurance Corporation pursuant to 12 U.S.C. 1831e(d) (as amended by section 939(a)(2) of the Dodd-Frank Act).

Kristie Elmquist Named FDIC Regional Director

2011-11-29T11:49:38-06:00

The FDIC last week named Kristie Elmquist as Regional Director for the Dallas Regional Office.

Kristie has been acting in this position since March of 2010. Formerly, she served as Deputy Regional Director in Dallas for Risk Management in 2008. Kristie holds commissions in both Risk Management and Compliance, has served the Corporation in Dallas, New York, Kansas City and in the Washington Office. During her 22 year FDIC career, she has held several management positions, including Acting Associate Director for Compliance Examination Support, Assistant Regional Director, Corporate University Chair for Consumer Protection and Risk Management, and Field Supervisor.

Congratulations!