Risk Management Manual of Examination Policies - FDIC

REPORT OF EXAMINATION INSTRUCTIONS Section 16.1
PURPOSE
CONFIDENTIAL – SUPERVISORY SECTION
The purpose of this page is to communicate information of interest primarily to supervisory agencies, and should not
be duplicative of information contained in the open section of the Report. Use descriptive subheadings to separate
subjects and improve readability.
MANDATORY COMMENTS
Institution Control and Relationships – Unless discussed in the open section of the Report, concisely identify the
individual(s) or interest(s) who control the institution. Also identify relevant subsidiaries and affiliates if not
discussed in the open section. Such information is important in tracking chain bank organizations and updating
bank holding company structure.
Interpret the word "controlled" broadly for purpose of this comment. Control may exist in the form of an individual
or group, through stock ownership, or other means. Depending upon the situation, ownership of varying
percentages of stock may result in control. In a mutual institution, effective control may exist in the form of the
Board, a committee thereof, or even a dominant individual. A concentration of decision-making power and/or a lack
of supervisory oversight and accountability are keys to determining control and the extent of that control.
References: Change in Bank Control - Section 7(j) of the FDI Act
Statement of Policy on Changes in Control in Insured Nonmember Banks
Examination Scope – Prepare a post-examination comment addressing any significant deviations between projected
and actual hours (greater than 15 percent deviation), examination scope, and examination procedures. If no
significant variances occurred in these areas, provide a sentence such as: “There were no significant variances
between projected and actual examination hours, examination scope, and examination procedures.”
BSA Scope – Include a brief comment stating the scope of the BSA review, procedures performed. Include the time
period for which FinCEN CTR filing data was compared to bank records, and identify the individuals with whom
BSA review findings were discussed. It would also be helpful to state the current examination’s BSA Sharp
number. If the bank’s policy allows for numbered accounts, the BSA Scope comment should indicate their
existence, so that these high risk accounts can be reviewed at every examination.
Loan Penetration – Include the following:
• Asset review date
• Number of relationships reviewed
• Dollar volume of credit extensions reviewed/percent of total credit extensions
• Dollar volume of non-homogenous credit extensions reviewed/percentage of total non-homogenous credit
extensions (See Transmittal #2002-018, dated 3/26/02, titled “Loan Penetration Ratio”)
• Credit extension cutoff review point (if applicable)
The loan penetration comment can include a breakdown of loans by major loan type, location, officer, or other
information, as appropriate.
Note: This information can be effectively presented in chart form.
Director Involvement – Prepare a brief statement summarizing the extent of Director participation during the
examination process.
DSC Risk Management Manual of Examination Policies 16.1-59 Report of Examination Instructions (12-04)
Federal Deposit Insurance Corporation