Risk Management Manual of Examination Policies - FDIC

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Table of Contents 99999 Examination Conclusions and Comments 1 Compliance with Enforcement Actions 8 Risk Management Assessment 9 Violations of Laws and Regulations 11 Information Technology Assessment 12 Fiduciary Activities Assessment 14 Examination Data and Ratios 16 Comparative Statements of Financial Condition 17 Loans and Lease Financing Receivables 18 Recapitulation of Securities 19 Items Subject to Adverse Classification 20 Items Listed for Special Mention 22 Analysis of Loans Subject to Adverse Classification 23 Analysis of Other Real Estate Owned Subject to Adverse Classification 24 Assets with Credit Data or Collateral Documentation Exceptions 25 Concentrations 26 Capital Calculations 27 Analysis of Earnings 28 Comparative Statements of Income and Changes in Equity Capital Accounts 29 Relationships with Affiliates and Holding Companies 30 Extensions of Credit to Directors/Trustees, Officers, Principal Shareholders, and Their Related Interests 31 Signatures of Directors/Trustees 32 All dollar amounts are reported in thousands, unless otherwise indicated.
Examination Conclusions and Comments 99999 Uniform Financial Institutions Rating System SUMMARY Current Exam Prior Exam Prior Exam Examination Start Date 08/01/2004 11/13/2003 / S 10/21/2002 Examination As Of Date 06/30/2004 09/30/2003 09/30/2002 Composite Rating 3 3 3 Component Ratings: Capital 3 2 2 Asset Quality 4 4 3 Management 3 3 3 Earnings 4 4 3 Liquidity 2 2 2 Sensitivity to Market Risk 2 2 2 Although improving, the bank remains in less than satisfactory condition. Asset quality is weak, earnings are poor, and management needs to make additional efforts to comply with the outstanding Memorandum of Understanding (MOU). Capital is less than satisfactory in relation to the present risk profile. Liquidity is satisfactory and the bank’s sensitivity to market risk is at manageable levels. MEMORANDUM OF UNDERSTANDING The bank entered into a MOU on July 31, 2003, based on the October 21, 2002, FDIC examination findings. Three of the six provisions of the MOU have not yet been fully satisfied, including an inadequate Allowance for Loan and Lease Losses (ALLL), significant errors in recent Reports of Condition and Income, and lack of documentation on credit extensions. Refer to the Compliance with Enforcement Actions page for additional details. ASSET QUALITY – 4 Asset quality remains weak and is the primary impediment to improvement in the bank’s overall condition. As reflected on the Examination Data and Ratios page, the volume of adversely classified items has decreased by 12 percent since the prior examination, with the volume of adversely classified loans dropping by 24 percent. Despite the decrease, adverse classifications still represent 84 percent of Tier 1 Capital and the ALLL, and the severity of classifications has increased significantly. In particular, $1,015M and $140M are presently adversely classified Loss and Doubtful, respectively. 1
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DSC Risk Management Manual of Exami
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INDEX Section 0.1 Policies, Procedu
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INDEX Section 0.1 Liquidity Managem
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INDEX Section 0.1 Introduction 14.1
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BASIC EXAMINATION CONCEPTS AND GUID
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CAPITAL Section 2.1 INTRODUCTION Pu
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CAPITAL Section 2.1 Interests in As
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CAPITAL Section 2.1 the holder prio
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CAPITAL Section 2.1 • Qualifying
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CAPITAL Section 2.1 application sub
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CAPITAL Section 2.1 may leave the b
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CAPITAL Section 2.1 procedures empl
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CAPITAL Section 2.1 growth and rema
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ASSET QUALITY Section 3.1 INTRODUCT
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LOANS Section 3.2 INTRODUCTION The
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LOANS Section 3.2 Qualifications of
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LOANS Section 3.2 to the ALLL), an
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LOANS Section 3.2 PORTFOLIO COMPOSI
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LOANS Section 3.2 • Require reaso
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LOANS Section 3.2 Internal Controls
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LOANS Section 3.2 continue to suppo
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LOANS Section 3.2 board of director
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LOANS Section 3.2 the institution's
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LOANS Section 3.2 such as for lives
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LOANS Section 3.2 Classification Gu
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LOANS Section 3.2 checks; terms in
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LOANS Section 3.2 • Sublicensee B
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LOANS Section 3.2 similar propertie
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LOANS Section 3.2 policies and proc
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LOANS Section 3.2 Moreover, since t
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LOANS Section 3.2 generally should
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LOANS Section 3.2 exercise control
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LOANS Section 3.2 Problems in this
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LOANS Section 3.2 that reveal other
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LOANS Section 3.2 Other loans of qu
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LOANS Section 3.2 be determined whe
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LOANS Section 3.2 time period elaps
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LOANS Section 3.2 individual apprai
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LOANS Section 3.2 controls over its
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LOANS Section 3.2 consistent with t
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LOANS Section 3.2 such funds, the m
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LOANS Section 3.2 security interest
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LOANS Section 3.2 unambiguous terms
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LOANS Section 3.2 Trustees are sele
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LOANS Section 3.2 be valid but cert
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LOANS Section 3.2 Overview of the S
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LOANS Section 3.2 Although some ins
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LOANS Section 3.2 • Portfolio gro
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LOANS Section 3.2 pricing decisions
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LOANS Section 3.2 trends, condition
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LOANS Section 3.2 provide additiona
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SECURITIES AND DERIVATIVES Section
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CASH AND DUE FROM BANKS Section 3.4
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CASH AND DUE FROM BANKS Section 3.4
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PREMISES AND EQUIPMENT Section 3.5
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PREMISES AND EQUIPMENT Section 3.5
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OTHER REAL ESTATE Section 3.6 Under
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OTHER ASSETS AND LIABILITIES Sectio
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OFF-BALANCE SHEET ACTIVITIES Sectio
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MANAGEMENT Section 4.1 INTRODUCTION
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MANAGEMENT Section 4.1 consequently
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MANAGEMENT Section 4.1 overdue, ren
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MANAGEMENT Section 4.1 money launde
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MANAGEMENT Section 4.1 management l
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MANAGEMENT Section 4.1 • An adequ
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MANAGEMENT Section 4.1 • Troubled
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MANAGEMENT Section 4.1 management i
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INTERNAL ROUTINE AND CONTROLS Secti
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RELATED ORGANIZATIONS Section 4.3
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RELATED ORGANIZATIONS Section 4.3 c
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RELATED ORGANIZATIONS Section 4.3 U
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RELATED ORGANIZATIONS Section 4.3 i
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RELATED ORGANIZATIONS Section 4.3 A
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RELATED ORGANIZATIONS Section 4.3 c
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RELATED ORGANIZATIONS Section 4.3 S
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RELATED ORGANIZATIONS Section 4.3 w
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RELATED ORGANIZATIONS Section 4.3 r
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RELATED ORGANIZATIONS Section 4.3 A
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FIDELITY AND OTHER INDEMNITY PROTEC
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VIOLATIONS OF LAWS AND REGULATIONS
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VIOLATIONS OF LAWS AND REGULATIONS
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MISCELLANEOUS BANKING ACTIVITIES Se
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EARNINGS Section 5.1 structure will
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EARNINGS Section 5.1 demand is low)
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EARNINGS Section 5.1 2. Certain dir
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EARNINGS Section 5.1 capital and al
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LIQUIDITY AND FUNDS MANAGEMENT Sect
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SENSITIVITY TO MARKET RISK Section
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BANK SECRECY ACT, ANTI-MONEY LAUNDE
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BANK FRAUD AND INSIDER ABUSE Sectio
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SUSPICIOUS ACTIVITY AND CRIMINAL VI
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INTERNATIONAL BANKING Section 11.1
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APPLICATIONS Section 12.1 Effective
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APPLICATIONS Section 12.1 for compa
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APPLICATIONS Section 12.1 be tantam
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APPLICATIONS Section 12.1 accept sh
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APPLICATIONS Section 12.1 consideri
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APPLICATIONS Section 12.1 accepted
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APPLICATIONS Section 12.1 The FDIC
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APPLICATIONS Section 12.1 employee
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APPLICATIONS Section 12.1 including
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APPLICATIONS Section 12.1 Branch cl
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APPLICATIONS Section 12.1 its accep
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APPLICATIONS Section 12.1 examinati
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MEMORANDUMS OF UNDERSTANDING Sectio
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CIVIL MONEY PENALTIES Section 14.1
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CMP MATRIX (Continued) Points Sugge
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FORMAL ADMINISTRATIVE ACTIONS Secti
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REPORT OF EXAMINATION INSTRUCTIONS
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Page 511 and 512: REPORT OF EXAMINATION INSTRUCTIONS
Page 561: BANK OF ANYTOWN ANYTOWN ANY COUNTY
Page 565 and 566: Examination Conclusions and Comment
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Page 573 and 574: Violations of Laws and Regulations
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Page 577 and 578: Fiduciary Activities Assessment (Co
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Page 583 and 584: Items Subject to Adverse Classifica
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Page 601 and 602: INTERNATIONAL REPORT PAGES AND WORK
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Revaluation and Income/Loss Analysi
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Policy and Procedures 99999 1. (a)
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Policy and Procedures (Continued) 9
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Audit and Internal Controls - Inter
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Parallel-Owned Banking Organization
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REPORT OF INVESTIGATION INSTRUCTION
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FDIC Report of Investigation THIS R
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Description of the Transaction INVE
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FINANCIAL HISTORY AND CONDITION Ass
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FINANCIAL HISTORY AND CONDITION (Co
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ADEQUACY OF THE CAPITAL STRUCTURE G
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ADEQUACY OF THE CAPITAL STRUCTURE (
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FUTURE EARNINGS PROSPECTS Assess th
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FUTURE EARNINGS PROSPECTS (Continue
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GENERAL CHARACTER OF THE MANAGEMENT
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IV. GENERAL CHARACTER OF THE MANAGE
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Interview Comments IV. GENERAL CHAR
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RISK TO THE FUNDS As a general matt
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VI. CONVENIENCE AND NEEDS OF THE CO
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OTHER PERTINENT INFORMATION If appl
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Source: Application for Federal Dep
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Service Continuity & Monitoring OTH
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