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FDIC – Supervisory Insights, December 2013

FDIC – Supervisory Insights, December 2013. Vol. 10, Issue 2 Winter 2013.  “Supervisory Insights is published by the FDIC’s Division of Risk Management Supervision to promote sound principles and practices for bank supervision. Articles in the Winter 2013 issue include:

  • Industry Trends Highlight Importance of Effective Interest-Rate Risk Management - During the recent sustained low interest rate environment, the banking industry’s asset mix and funding profile have shifted. This article looks at how these changes appear to have resulted in increased interest-rate risk (IRR) exposure. The article also highlights supervisory expectations for IRR management and suggests strategies financial institutions can use to assess and mitigate this exposure.
  • Lending Trends: Results from the FDIC’s Credit and Consumer Products/Services Survey - Completed by FDIC examiners at the conclusion of each risk management examination, the Credit and Consumer Products/Services Survey gathers examiner insights on underwriting practices, new and evolving banking activities and products, commercial real estate market conditions, and funding practices. This article shares recent Survey results with a focus on lending activity including trends in underwriting, factors influencing banks’ ability and willingness to lend, use of loan workouts, and loan growth trends across the country.
  • The New Basel III Definition of Capital: Understanding the Deductions for Investments in Unconsolidated Financial Institutions - The new regulatory capital rules require a deduction from capital, under certain circumstances, for a portion of a bank’s investments in the capital of unconsolidated financial institutions. This article, which is part of the FDIC’s ongoing efforts to assist banks in understanding the new rule, provides examples that show the mechanics of the calculation.”

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