Risk Management Manual of Examination Policies - FDIC

REPORT OF EXAMINATION INSTRUCTIONS Section 16.1
• Include overdrafts of borrowers with adversely classified loans in the same general comment and in outstanding
debt recaps.
• If an adversely classified asset has been partially charged off prior to the asset review date, note the amount of
the charge-off.
• When applicable, state whether an asset was adversely classified at the previous regulatory examination. If the
asset has been adversely classified for two or more consecutive examinations, so state. Keep in mind the
following when a previously classified asset is again listed for classification: If the fundamental deficiencies
have not materially changed, and if the examiner believes that management and the Board are sufficiently
familiar with these weaknesses and are taking all feasible steps to improve or collect the asset, there may well
be little merit in preparing a full-scope write-up, even if the dollar amount is significant. In such cases, an
abbreviated narrative, or a simple listing of name and amount, may be sufficient.
• State if the loan is identified on the institution's internal watch list. If internally identified, indicate the internal
rating (if applicable).
• Include any past-due (30 days or more) or nonaccrual status of an asset. However, there may be instances when
it would be pertinent to disclose the status of a loan where payment is less than 30 days delinquent.
• If a loan has had numerous extensions or rewrites, so state.
Miscellaneous
• When loans and other assets are adversely classified as a result of alleged fraud, embezzlement, or other
dishonest conduct, state the facts that support the adverse classification. However, do not suggest any possible
criminal intent or conduct.
• Adversely classified assets of consolidated subsidiaries should be clearly distinguished, when write-ups or lists
are included in the Report, from institution-only classified assets.
Report of Examination Instructions (12-04) 16.1-30 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation