Supervisory Spotlight

This publication offers observations by the Division Director of Financial Institution Supervision and Credit (FISC) on current banking and regulatory issues facing 12th District institutions.

2016

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September 2016: The Importance of Preparation

Posted September 21, 2016

This issue of Supervisory Spotlight draws an analogy between our Olympic athletes and bank leaders, highlighting the importance of preparation to help ensure world-class performance. Whether it’s the next economic cycle, loan concentrations, the ever-present threat of a cyberattack, or an unexpected liquidity need, we’ve found that bankers who are prepared to respond to multiple eventualities are the ones who can prevail over adversity and rise above the competition.

March 2016: Chip Cards, CECL, and More!

Posted March 4, 2016

This issue of Supervisory Spotlight highlights a variety of topics, ensuring that there is something relevant to every reader! The first topic discusses the U.S. migration toward EMV integrated chip cards for debit, credit, and prepaid transactions. A Community Banking Connections article provides good background on this initiative and discusses opportunities to reduce operational risk and fraud losses in card portfolios. The second topic provides perspectives on the Financial Accounting Standards Board’s proposal to change how the industry accounts for loan and lease losses, the Current Expected Credit Loss, or CECL, model. While everyone will learn much more once the standard is finalized, it is not too early to begin thinking now about the impact of this change on individual institutions. The final two topics highlight guidance and articles that provide timely reminders about two areas of supervisory concern: the importance of maintaining quality loan growth and managing commercial real estate lending concentrations and compliance with the new and legacy flood insurance rules.

2015

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November 2015: Assessing Risks to Financial Institutions

Posted November 30, 2015

This issue of Supervisory Spotlight looks at the results from a recent assessment of risks facing institutions in the 12th District. The three highest concerns—BSA/AML, cybersecurity, and interest rate risk—are unchanged since April. However, rapid loan growth and rising CRE concentrations are reemerging on our radar screens. In addition to urging bankers to revisit existing guidance on CRE concentrations, we also highlight recent discussions in Community Banking Connections on underwriting concessions, extended maturities, and other concerns that are linked to asset concentrations in community banks. Finally, we remind bankers that effective risk management also encompasses the identification, control, and mitigation of risks of new and existing products and services.

July 2015: Change Surrounds Us

Posted July 24, 2015

This issue of Supervisory Spotlight looks both inward and outward in discussing change. First, it provides background on the recent merger of Banking Supervision and Regulation and Credit Risk Management to form a new Division: Financial Institution Supervision and Credit, or FISC. Then, the lens focuses outward to consider topics such as post-crisis changes in approaches to supervision and regulation, the potential for positive changes in community bank net interest margins, the evolving virtual currency landscape and what it means for banks, and one facet of the CFPB’s rules affecting mortgage lending.

April 2015: The Importance of Communication

Posted April 14, 2015

This Supervisory Spotlight highlights BS&R’s commitment to effective communication with bankers, whether in person or through writings. It also discusses two recent articles of interest to community bankers regarding interest rate risk modeling and transitioning from a small to large institution under the Community Reinvestment Act.

2014

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December 2014: Growth and a Refocus on Operational Risks

Posted December 29, 2014

This Supervisory Spotlight highlights concerns with third-party vendor management and cybersecurity as banks refocus on operational risks in an improving economic and banking environment. It also reminds regulators and bankers of the lessons learned as the nation recovers from the financial crisis.

September 2014: Evolving Community Bank Supervision

Posted September 16, 2014

The latest Supervisory Spotlight highlights changes to the Fed’s community bank supervision program, risks of bank-owned life insurance, the accounting implications of improving asset quality, and cybersecurity.

June 2014: The Importance of BSA/AML Compliance

Posted June 5, 2014

This Supervisory Spotlight looks at BSA/AML risks and the impact weaknesses in this area can have on community banks. It also provides insight and resources on negative and zero provisions to the ALLL.

2013

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September 2013: Has the Liquidity Buildup Ended?

Posted September 12, 2013

After a look at banking conditions and the declining liquidity metrics in the 12th District, this issue of the Spotlight examines two issues of particular concern to bankers and regulators: interest rate risk and the impact of new capital rules recently announced by regulators.

June 2013: Banking Conditions Continue to Recover but Earnings Challenges are Real

Posted June 12, 2013

This issue of the Spotlight focuses on the importance of risk management in the context of earnings challenges banks face as the economic and banking recovery continues. We highlight vendor management, deposit advance products, and other new products and services that banks are looking to to help boost earnings.

March 2013: Banking Conditions: Solid Improvement, but Further to Go

Posted March 15, 2013

This issue of Supervisory Spotlight continues our analysis of the ongoing recovery in banking conditions in the Western United States. We remind readers of the importance of staying updated on the continuing regulatory changes in mortgage rules, the SAFE Act, and the use of credit rating agencies.

2012

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December 2012: Loan Growth is Accelerating

Posted December 17, 2012

This issue monitors the ongoing improvement in banking conditions in the 12th District, and reviews guidance on CRE concentrations, TDRs, and technology service providers.

Banking in an Evolving Regulatory Environment

Posted September 28, 2012

This issue highlights a few of the new rules and proposals being issued by federal regulatory agencies, and raises ongoing risks for community banks associated with mobile devices and vendor management.

Western Banking Conditions Continue Recovery

Posted June 1, 2012

Our quarterly newsletter highlights conditions in District banks and supervisors’ views of some of the important issues facing institutions. This issue looks at Q1 2012, important new regulatory guidance issued in 2012, and two recent communication initiatives–Ask the Fed and the Community Depository Institutions Advisory Council.

Banking Conditions Continue to Improve

Posted February 1, 2012

Our quarterly newsletter highlights conditions in District banks and supervisors views of some of the important issues facing institutions. This issue looks at Q4 2011, and important new regulatory guidance issued late last year and early 2012.