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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

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 July 31, 2019


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 July 31, 2019.

2019: Two Requests for Review of Material Supervisory Determinations
Division Date Determination(s) Contested Decision
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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