Banker Outreach Program on the
Safety and Soundness Examination Process
On March 24, 1995, the FDIC announced a one-year informal outreach program designed to
solicit bankers' opinions and suggestions on how to improve the quality and efficiency of
the safety and soundness examination process. This effort is aimed at detecting and
changing aspects of the FDIC examination process that may be burdensome or inefficient.
Most of the approximately 3,500 FDIC-supervised commercial banks and savings banks
nationwide that are expected to undergo a safety and soundness examination within the
12-month period are being sent a three-page questionnaire along with their final
examination report. The questionnaire asks bankers opinions about such matters as: the
appropriateness and thoroughness of the examination procedures; the quality and
professionalism of the FDIC examination team; the usefulness of written and oral comments
in the examination report; and the size of the examination team and preference for having
other specialty examinations done separately or at the same time as the safety and
Of the 917 questionnaires sent during the March-July period, 455 or 49.6 percent were
returned by July 31, 1995. Of the 455 responses, 330 bankers or 73 percent identified
themselves and 209 provided written comments. While the voluntary and anonymous nature of
the responses means that the results do not constitute a scientifically valid survey, the
FDIC has found them to be enlightening and constructive. In particular, the 455
respondents felt as follows:
91% of the respondents agreed that pre-examination preparations and requests for
information made by examiners enabled the examination to be conducted in the most
efficient manner possible.
95% of the respondents agreed that examiners focused on the appropriate risk areas.
95% of the respondents agreed that examiners maintained adequate communication with
bank management throughout the examination.
96% agreed that examiners disclosed and discussed material supervisory concerns and
recommendations to senior bank officials during the examination.
74% of the respondents agreed that the examination length was appropriate.
97% of the respondents agreed that examiners acted professionally and responsively.
86% of the respondents agreed that the examination team was the appropriate size.
90% of the respondents agreed that examiners created as little disruption as possible
to daily operations.
93% of the respondents agreed that examiners appeared to be informed of banking issues
and adequately trained.
93% of the respondents agreed that oral examination findings and recommendations were
logically and clearly disseminated to senior bank officials.
75% of the respondents agreed that correspondence from the regional office was clear
and concise. However, 24% of the respondents gave no opinion on this statement.
93% of the respondents agreed that the examination report is in a logical and readable
91% of the respondents agreed that the examination report objectively documents the
institution's overall condition, risks and prospects.
93% of the respondents agreed that the examination report accurately reflects material
issues and recommendations.
93% of the respondents agreed that the examination report is consistent with the
preliminary findings disclosed to senior bank management at the end of the examination.
90% of the respondents agreed that the examination report documents and fairly
represents management's response to report findings.
93% of the respondents agreed that the examination report serves as an information
source for senior bank management.
Other Examination Issues
77% of the respondents do not prefer a larger examination team in order to shorten
65% of the respondents prefer having the compliance examination done at the same time
as the safety and soundness examination.
81% and 84% of the respondents, respectively, prefer having the in-house automation
facilities and trust department done at the same time as the safety and soundness
The physical limitation of space and support personnel were the primary reasons cited
by those respondents preferring a smaller examination team.
Overall, the FDIC is encouraged by the positive responses received and helpful comments
submitted. It is evident that many bankers took advantage of this opportunity to tell the
FDIC what was on their minds. Nevertheless, four areas where those who responded thought
that the FDIC could improve were:
to provide banks with more advance notice of upcoming examinations;
to be more sensitive to the number of examiners assigned to conduct examinations of
small, community-type banks with limited facilities;
to the extent practicable, to perform
more pre-examination functions outside of the bank; and
to shorten the length of time it takes to complete a safety and soundness examination.
In response to the comments, the FDIC's Division of Supervision (DOS) is taking the
Henceforth, with certain exceptions, examiners are to provide bankers with a minimum
two-week prior notice of an upcoming examination. This should provide bankers with the
time needed to prepare for an examination and to respond to examiners' pre-examination
requests for information.
DOS is conducting a complete review of its examination procedures for the purpose of
identifying those examination functions which can be performed outside of the bank. In
this way, the on-sight examination hours and burden on bankers should be reduced
DOS has established a goal to reduce total examination hours.
DOS field office supervisors have been instructed to carefully review their procedures
for scheduling examinations and for assigning examiners. The goal is to assign an
examination team that is no bigger than necessary to do the job in a compact, concerted
manner and to minimize, to the extent practicable, any disruption to the bank.
We encourage those bankers who receive a safety and soundness examination in the coming
months to complete the examination questionnaire that will accompany the examination
report. We ask, however, that bankers complete only one questionnaire per bank in order
that the responses accurately reflect the concerns raised. As the FDIC receives additional
feedback and identifies additional trends and actions that can be taken to improve the
examination process, you will be advised.
Nicholas J. Ketcha Jr.
Distribution: FDIC-Supervised Banks (Commercial and Savings)