FDIC Releases Report on Its Examination Process
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After some community banks expressed concerns that FDIC examinations “were being conducted without clear standards or consistent application of agency policies and procedures, which could discourage business growth and responsible lending,” the FDIC conducted a report to review its examination process.
The FDIC reviewed examinations conducted over the past five years, ending December 31, 2011.
Major findings of the recently-released report include that timelines for report completion often lengthens as institution ratings worsen, and while community banks can challenge the FDIC’s findings, these challenges are rare and even more rarely sustained.
After completing its onsite work at a community bank or credit union, the FDIC generally takes between two and four weeks to submit an examination report for institutions rated one or two.
For institutions rated three, four, or five, the FDIC often takes anywhere from six to nine weeks.
This variance is attributed to “the additional complexity and volume of deficiencies associated with troubled institutions,” the intricacies required to validate a lower rating, and time spent with bank managers and other officials to come to a consensus before issuing a final report, according to the FDIC’s report.
Compliance reviews generally take about one month to complete after conducting onsite work, according to the report.
While the FDIC says it encourages questions throughout the examination process, institutions may request a formal review if they do not agree with the ultimate outcome of their examination report.
Over the five years reviewed, the FDIC received 41 requests for review. However, only one was sustained, and three were “partially sustained.”
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