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Transparency & Accountability - Bank Examinations: Requests for Review of Material Supervisory Determinations

Requests for Review of Material Supervisory Determinations
Decisions Issued from January 1, 2018 to April 30, 2024


On July 18, 2017, the FDIC Board of Directors adopted revised Guidelines for Appeals of Material Supervisory Determinations, which included certain reporting requirements for requests for review of material supervisory determinations that are acted on by the applicable division director. The table below provides detailed information on the requests for review decisions issued between January 1, 2018, and April 30, 2024.

2024: Five Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Depositor and Consumer Protection 4/5/2024 Compliance rating and assessment of Compliance Management System. The Director reviewed the request and determined that the rating of “4” was appropriate and consistent with the Uniform Interagency Consumer Compliance Rating System, the FDIC’s Consumer Compliance Examination Manual, and regulatory guidance. The Director also determined that the Bank’s request for the FDIC to conduct a new examination was not warranted as the rating assigned in the 2022 Report of Examination was accurate.
Division of Depositor and Consumer Protection 2/20/2024 Apparent violations of Section 5 of the Federal Trade Commission Act for unfair or deceptive acts or practices (UDAP) and the FDIC’s consideration of a formal enforcement action for the UDAP violations. The Director determined that the Banks’ request for review of the UDAP violations through the FDIC’s supervisory appeals process cannot move forward at this time. The FDIC notified the Bank that the FDIC was reviewing the facts and circumstances to determine if a Civil Money Penalty was merited for the UDAP violations. This notification of a potential enforcement action temporarily suspended the Banks’ right to appeal the facts and circumstances forming the basis for the potential action, including the underlying apparent violations.
Division of Risk Management Supervision 2/15/2024 Asset Quality rating and Matter Requing Board Attention concerning commercial real estate concentration risk management. The Director determined the assigned Asset Quality rating and the Matter Requing Board Attention concerning commercial real estate concentration risk management were appropriate.
Division of Depositor and Consumer Protection 1/16/2024 Apparent violation of the Fair Housing Act (FHA) related to lending activities. The Director determined there was insufficient evidence to support the FHA violation. As such, the bank’s Report of Examination and CRA Performance Evaluation will be updated to remove the violation.
Division of Risk Management Supervision 1/3/2024 Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk Component ratings and Composite rating. The Director agreed to change the Asset Quality rating; however, the ratings for Capital, Management, Earnings, Liquidity, Sensitivity to Market Risk, and the Composite rating were deemed appropriate.

2023: Six Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Depositor and Consumer Protection 12/19/2023 Review of the Community Reinvestment Act (CRA) rating. The Director responded to the request for review by sending a letter which indicated that the disputed CRA rating is being vacated and the Region will withdraw the CRA Performance Evaluation and assign a CRA rating after completion of additional analysis of 2021 small business lending data.
Division of Depositor and Consumer Protection 11/13/2023 Review of determinations set forth in Report of Examination and CRA PE. The Director responded to the request for review by sending a letter which indicated that because the FDIC issued a Notice of Charges, the bank may contest any material supervisory determinations through the administrative enforcement process.
Division of Risk Management Supervision 10/2/2023 Re-classification of Held-to-Maturity securities portfolio as Available-for-Sale. The Director concurred with the examination determination.
Division of Risk Management Supervision 9/28/2023 Management rating. The Director concurred with the assigned Management rating.
Division of Risk Management Supervision 9/8/2023 Management rating, level of fulfillment of Consent Order and Matters Requiring Board Attention, and apparent violations of the Bank Secrecy Act. The Director concurred with each of the examination findings.
Division of Risk Management Supervision 5/26/2023 Apparent violation of Federal Reserve Board Regulation O. The Director concurred with the citation of the apparent violation.

2022: Five Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Depositor and Consumer Protection 12/29/2022 Community Reinvestment Act (CRA) rating. The Director decided that because there are several outstanding fair lending issues still under review, the disputed CRA rating was vacated and the CRA Performance Evaluation was withdrawn. A CRA rating will be assigned upon completion of the fair lending reviews initiated during the Consumer Compliance and CRA examination.
Division of Risk Management Supervision 11/23/2022 Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk Ratings; Composite Rating; and proposed Consent Order. The Director agreed to change the ratings assigned to Asset Quality, Management, and Liquidity; however, the ratings for Capital, Earnings, Sensitivity to Market Risk, and the Composite rating were deemed appropriate. The bank was also notified that under the guidelines for Appeals of Material Supervisory Determinations, institutions may not appeal formal enforcement actions.
Division of Risk Management Supervision 11/14/2022 Apparent violations of Section 23A of the Federal Reserve Act. The Director concluded that the two related entities are not affiliates per Section 23A; therefore, the apparent violations were deleted from the Report of Examination.
Division of Risk Management Supervision 09/8/2022 Determination that deposits associated with certain broker dealer sweep accounts are brokered deposits. The Director concurred with the original determination.
Division of Risk Management Supervision 07/18/2022 Apparent violation of Section 23B of the Federal Reserve Act. The Director concurred with the citation of the apparent violation.
2021: Three Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Risk Management Supervision 10/22/2021 Loss classification associated with an overdraft. The request was not eligible for review under the Guidelines for Appeals of Material Supervisory Determinations because of the materiality threshold.
Division of Risk Management Supervision 07/08/2021 Sensitivity to Market Risk Component Rating. The Director concurred with the component rating assigned.
Division of Risk Management Supervision 06/11/2021 Apparent violation of Federal Reserve Board Regulation O. The Director concurred with the citation of the apparent violation.
2020: Three Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Risk Management Supervision 10/27/2020 Management Rating. The Director concurred with the rating assigned to Management.
Division of Risk Management Supervision 06/23/2020 Management Rating and Dominant Official. The Director concurred with the rating assigned to Management. The reference to an insider as a dominant official is not considered a material supervisory determination.
Division of Risk Management Supervision 05/21/2020 Capital Rating, Asset Quality Rating, Management Rating, Liquidity Rating, Sensitivity to Market Risk Rating, and proposed Memorandum of Understanding. The Director concurred with the ratings assigned to Capital, Asset Quality, Management, Liquidity, Sensitivity to Market Risk, and the proposal to enter into a Memorandum of Understanding.

2019: Five Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Risk Management Supervision 11/06/2019 Accounting for Sale of Other Real Estate The Director concurred with the material supervisory determination that there is insufficient support to report the transfer of the Other Real Estate property as a sale.
Division of Risk Management Supervision 09/30/2019 Capital Rating, Asset Quality Rating, and Management Rating The Director concurred with the ratings assigned to Capital, Asset Quality, and Management.
Division of Depositor and Consumer Protection 09/17/2019 Violation Related to Unfair or Deceptive Acts or Practices (UDAP) The Director concluded that the Bank's Consumer Survey does not provide a basis to overturn the Section 5 violations described in the 2017 Examination Report. The Director further concluded that the Bank's Consumer Compliance rating will remain unchanged.
Division of Depositor and Consumer Protection 06/17/2019 Consumer Compliance Rating, Community Reinvestment Act Performance Rating, and Violation Related to Unfair or Deceptive Acts or Practices (UDAP) The Director concurred with the Consumer Compliance rating and the UDAP violation, and the downgrade of the CRA rating. Based on the facts and circumstances, the bank's Compliance Management System was inadequate overall, and the evidence in the examination record supported the citation of the UDAP violation. Based on the violations identified during the time period of the CRA evaluation and other factors, the downgrade of the CRA rating was warranted. While not raised in the request for review, the Director determined the underlying CRA performance justified a higher rating than assigned during the evaluation and adjusted the rating accordingly.
Division of Depositor and Consumer Protection 04/19/2019 Community Reinvestment Act (CRA) Performance Rating The Director concurred with the "Needs to Improve" rating. Based upon the facts and circumstances presented, the bank did not meet the needs of the communities it serves sufficient to merit a "Satisfactory" CRA rating.

2018: Nine Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
Division of Risk Management Supervision 12/20/2018 Accounting and risk-weighting for multi-family loan participations acquired by the bank. The Director concurred with the original determination that the bank's transfers of multi-family loan participations do not qualify for sale accounting treatment under generally accepted accounting principles.  However, the Director determined that the bank has a reasonable basis for assigning a 20 percent risk weight to its multi-family loan exposures that are conditionally guaranteed by a U.S. government agency.
Division of Risk Management Supervision 12/11/2018 Capital, Management, Earnings, Liquidity, and Sensitivity ratings and Composite rating. The Director determined that the assigned ratings were appropriate.  The bank had a high risk profile with low capital, concentrated assets, high levels of non-core funding, poor earnings, and weak board oversight.  The balance sheet structure created significant interest rate risk that contributed to the bank's compressed net interest margin. 
Division of Risk Management Supervision 08/10/2018 Liquidity rating. The Director concurred with the assigned Liquidity rating.  Contributing factors included declining on-balance sheet liquidity and increasing reliance on potentially volatile funding, combined with risk management practices that need improvement.
Division of Risk Management Supervision 08/02/2018 Capital, Management, Earnings, Liquidity, and Sensitivity ratings and Composite rating. The Director determined that the assigned ratings were appropriate.  The bank had a high risk profile with low capital, concentrated assets, high levels of non-core funding, poor earnings, and weak board oversight.  The balance sheet structure created significant interest rate risk that contributed to the bank's compressed net interest margin. 
Division of Risk Management Supervision 07/31/2018 Capital and Liquidity ratings. The Director determined that the Capital and Liquidity ratings should be upgraded.  The bank had experienced considerable planned growth in recent years; however, the overall capital position remained adequate.  Although the growth had increased the bank's liquidity risk profile, balance sheet liquidity and available borrowing capacity appeared sufficient in relation to expected funding needs.  Recommendations made to improve the bank's funds management policies and procedures would be monitored during the regular supervision program.  
Division of Risk Management Supervision 07/10/2018 Determination that deposits associated with prepaid debit cards are brokered deposits. Based on the facts and circumstances presented, deposits tied to prepaid debit cards facilitated by a third party were determined to be brokered deposits.
Division of Risk Management Supervision 07/10/2018 Management rating and apparent violations of Part 326 and Part 353 of the FDIC Rules and Regulations. The Director concurred with the assigned Management rating and determined that the apparent violations were supported.  The bank had been unprofitable for an extended period of time, reflecting the inadequate strategic direction and oversight provided by the board, insufficient emphasis on asset quality, and weak budgeting and expense controls.
Division of Risk Management Supervision 06/04/2018 Management and Liquidity ratings. Determination that deposits from homeowners associations and deposits associated with prepaid debit cards are brokered deposits. Characterization of the chief executive officer as a dominant official. The Director determined that the Management component rating should be upgraded because although the board and senior management have not fully addressed persistent risk management issues, these deficiencies do not appear to threaten the viability of the Bank at this time. The Director determined the assigned Liquidity rating was appropriate and concluded that homeowners association deposits should not be reported as brokered deposits if they are acquired directly from the association. Based upon the facts and circumstances presented, deposits tied to prepaid debit cards facilitated by a third party were determined to be brokered deposits. The Director determined that the record supported the determination of a dominant officer as described by the FDIC's Risk Management Manual of Examination Policies.
Division of Risk Management Supervision 02/26/2018 Classification of two credits from the August 2017 Shared National Credit (SNC) Review and Appeal Program, including the nonaccrual treatment of one of the credits. The Director determined that numerous well-defined weaknesses supported the assigned adverse classifications. Recent operating results, as well as projections for revenues, income, and cash flow, reflected inadequate repayment capacity in light of the borrowers' debt positions. Secondary repayment sources and related support were also not sufficient to change the assigned adverse classifications.

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