Summary:

The Summer 2022 issue of Supervisory Insights features two articles of interest to examiners, bankers and supervisors. One article highlights financial performance in the wake of the pandemic of banks concentrated in commercial real estate (CRE) lending as well as examination observations about CRE lending risk management practices. The second article is intended to help financial institutions better understand the applicable capital, investment, and financial reporting requirements for the issuance of and investment in subordinated debt.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised financial institutions.

Highlights:

• Although the economic effects of the pandemic appear to be easing, the impacts, including on the commercial real estate (CRE) sector, may be lasting, may have exacerbated existing secular trends, or both. “Commercial Real Estate: An Update on Bank Lending Amid the Evolving Pandemic Backdrop” highlights the financial performance of banks concentrated in CRE lending as well as examination observations about CRE lending risk management practices. The article also describes the FDIC’s forward-looking supervisory focus for banks with significant exposure in this sector.
• Banking organizations continue to issue subordinated debt to meet regulatory capital and funding objectives, and a number of insured depository institutions have invested in the subordinated debt of other institutions. “Subordinated Debt: Issuance and Investment Considerations” is intended to help financial institutions better understand the applicable capital, investment, and financial reporting requirements for the issuance of and investment in subordinated debt. The article also describes the treatment of subordinated debt for deposit insurance assessment purposes.
• The Regulatory and Supervisory Roundup provides an overview of recently released regulations and other items of interest.
• Suggestions for article topics and requests for permission to reprint articles should be emailed to supervisoryjournal@fdic.gov. Requests for print copies should be emailed to publicinfo@fdic.gov.