Category Archives:FDIC

FDIC's Advisory Committee on Community Banking Scheduled to Meet

The Federal Deposit Insurance Corporation (FDIC) has announced that its Advisory Committee on Community Banking will meet on Friday, July 10. Staff will provide an update on a number of issues, including examination frequency and offsite monitoring; call report streamlining; the cybersecurity assessment tool; and recent rulemakings. There also will be discussions about high volatility commercial real estate loans and review of banking regulations under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA).

The meeting is open to the public and will be held from 9:00 a.m. to 3:00 p.m. EDT in the FDIC Board Room on the sixth floor of FDIC headquarters located at 550 17th Street, NW, Washington, D.C. The meeting also will be webcast live. The agenda for the meeting and a link to the webcast are available at

Cybersecurity Assessment Tool Released

The FDIC & FFIEC have released a Cybersecurity Assessment Tool to help financial institutions with less than $1 Billion in total assets identify their cybersecurity risks and determine their preparedness. The Assessment provides a repeatable and measurable process for financial institutions to measure their cybersecurity preparedness over time.

The Assessment consists of two parts: Inherent Risk Profile and Cybersecurity Maturity. The Inherent Risk Profile identifies the institution’s inherent risk before implementing controls. The Cybersecurity Maturity includes domains, assessment factors, components, and individual declarative statements across five maturity levels to identify specific controls and practices that are in place. While management can determine the institution’s maturity level in each domain, the Assessment is not designed to identify an overall cybersecurity maturity level. To complete the Assessment, management first assesses the institution’s inherent risk profile based on five categories: 1.)Technologies and Connection Types 2.) Delivery Channels 3.) Online/Mobile Products and Technology Services 4.) Organizational Characteristics 5.) External Threats. Management then evaluates the institution’s Cybersecurity Maturity level for each of five domains: 1.) Cyber Risk Management and Oversight 2.) Threat Intelligence and Collaboration 3.) Cybersecurity Controls 4.) External Dependency Management 5.) Cyber Incident Management and Resilience.

Learn More About the Cybersecurity Assessment Tool

FFIEC Cybersecurity Assessment Tool Presentation View Slides (PDF) | View Video

The FDIC encourages institutions to comment on the usability of the Cybersecurity Assessment Tool, including the estimated number of hours required to complete the Assessment, through a forthcoming Federal Register Notice. FDIC-supervised institutions may direct questions on the FFIEC Cybersecurity Assessment Tool through

Regulatory Capital Rule's FAQs Released

Financial Institutions are accountable for complex risk-based regulatory capital rules. Some may use internal risk management models approved by the relevant regulator while others must use standardized rules set out in the regulations. On April 6th, The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (the agencies), issued FAQs for clarification for regulated institutions about the agencies’ regulatory capital rule. The FAQ topics included, but are not limited to:

  • The definition of capital,
  • High-volatility commercial real estate (HVCRE) exposures,
  • Real estate and off-balance-sheet exposures,
  • Equity exposures to investment funds,
  • Qualifying central counterparty, and
  • Credit valuation adjustment.

Reserve Banks are asked to distribute the FAQs to the state member banks, bank holding companies, and relevant savings and loan holding companies in their districts and to appropriate supervision staff.  As the agencies anticipate issuing additional FAQs in response to questions from institutions, the Federal Reserve will periodically update the FAQ document.

Technical Assistance to Meet Regulatory Requirements

Today, the FDIC released it’s third video developed to assist bank employees in meeting regulatory requirements. These videos address compliance with certain mortgage rules issued by the Consumer Financial Protection Bureau (CFPB). The first video, released on November 19, 2014, covered the Ability to Repay and Qualified Mortgage Rule. The second video, released on January 27, 2015, covered the Loan Officer Compensation Rule. The third video, released today, covers the Mortgage Servicing Rules. The three technical assistance videos are intended for compliance officers and staff responsible for ensuring the bank’s mortgage lending and servicing operations comply with CFPB rules.

The FDIC’s technical assistance videos and additional information can be accessed atL

FDIC Issues Statement on Providing Bank Services

On January 28, 2015, the FDIC issued a Statement on Providing Banking Services to encourage institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers. The FDIC noted that individual customers within broader customer categories present varying degrees of risk, and some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act (BSA). The FDIC released the statement to announce that financial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customer operating in compliance with applicable state and federal law. Further, the FDIC believes when an institution follows existing guidance and establishes and maintains an appropriate risk-based program, the institution will be well-positioned to appropriately manage customer accounts, while generally detecting and deterring illicit financial transactions.

Bank Regulators Release Public Section of Resolution Plans

Yesterday, the Federal Reserve and the FDIC issued a joint press release making available the public sections of resolution plans of firms with less than $100 billion in qualifying nonbank assets.  Each plan, commonly known as a living will, must describe the company’s strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company. These plans must include both public and confidential sections.

Companies subject to the rule are required to file their resolution plans on a staggered schedule. The largest bank holding companies are required to submit their plans on or before July 1 each year. Nonbank financial companies that are designated by FSOC also must submit on or before July 1. All other firms generally are required to submit their plans on or before December 31 each year.

The public portions of these “living wills” are available on the Federal Reserve and FDIC websites.

Agencies Propose Rule for Loans in Flood Areas

On October 30, The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), the Farm Credit Administration (FCA), and the National Credit Union Administration (NCUA) (collectively, the Agencies) issued a proposed rule to amend their regulations regarding loans located in special flood hazard areas to implement certain provisions of the Homeowner Flood Insurance Affordability Act of 2014. Specifically, the proposed rule would establish requirements in connection with the escrow of flood insurance payments;  provide certain borrowers with the option to escrow flood insurance premiums and fees; and eliminate the HFIAA requirement “to purchase flood insurance for a structure that is part of a residential property located in a special flood hazard area if that structure is detached from the primary residential structure and does not also serve as a residence.” Comments on the proposed rule are due by December 29, 2014.

FDIC Guidance for Subchapter S Banks

The FDIC, yesterday afternoon, issued guidance outlining the circumstances under which the Agency would approve an S corporation bank’s request for relief from the dividend restrictions imposed under the Basel III capital conservation buffer. Exceptions will generally be granted to 1- and 2- rated banks which are adequately capitalized and are not subject to a written supervisory directive. While the guidance only applies to capital conservation buffer considerations, it does recognize that there may be other circumstances such as a bank returning to a healthy condition that might present circumstances where a dividend exception could be granted. The Agency noted that it does not expect the concern to be an issue for some time as a result of the three year phase-in through 2019. We are pleased that the FDIC recognizes the unique circumstances under which S corporation banks operate and hope this guidance will result in greater recognition and willingness by the Agencies to consider case by case dividend approvals to pay taxes in a broader set of circumstances, beyond the capital conservation buffer issue. Importantly, the Agency recognizes that the ability to pay dividends is a crucial element of an S corporation bank’s capital access strategy.  A more detailed description of the issuance follows.

Financial Institution Letter (“FIL”) 40-2014, issued by the FDIC, provides detail on the considerations for approving exceptions from the capital conservation buffer dividend restrictions as contemplated by 12 CFR 324.11(a)(4)(iv). The FIL was issued in response to broad-based industry concern about the ability of S corporation bank shareholders to satisfy their tax liability under dividend payout restrictions imposed by the capital conservation buffer.

Under the Basel III capital rules, a capital conservation buffer – measured as a percentage of a bank’s risk-based based capital ratio above the minimum requirements – serves to limit the amount dividends a bank can pay when the capital ratios fall below the buffer. Beginning in 2016, the capital conservation buffer will be phased-in over three years to a maximum buffer of 2.5% above minimum requirements, effective in 2019. If a bank’s risk-based capital ratio is greater than 2.5% above the minimum requirements, no dividend payout restrictions are imposed. As the capital ratio falls below this buffer, dividends are limited to between 20% and 60% of eligible retained income and bank’s with capital ratios that are not 0.625% above the minimum requirements may not pay any dividends.

These dividend payout restrictions have a unique effect on S corporation banks, where income, and thus tax liability, is passed through to its shareholders. Most S corporation shareholders rely on distributions from the corporation to satisfy this tax liability. The dividend payout restrictions imposed by Basel III can impair bank shareholders’ ability to pay the tax due by creating a situation in which S corporation bank shareholder recognize income from the S corporation, but regulatory restrictions prohibit a corresponding distribution to the shareholder.

FIL-40-20-14 explains that in certain circumstances an exception from the capital conservation buffer and dividend payout restrictions is available where (i) the circumstances warrant the payment of dividends, (ii) such payment is not contrary to the purpose of the rule, and (iii) the payment would not impair the safety and soundness of the bank. The FDIC emphasizes that this inquiry will be based on the particular facts and circumstances of each bank making a request. The FIL goes on to describe four factors that will be considered in each request for an exception from the rules:

1.   Is the S corporation requesting a dividend of no more than 40%  of net income?
2.   Does the requesting S corporation believe the dividend payment is necessary to allow the shareholders of the bank to pay income taxes associated with their pass-through share of the institution’s earnings?
3.   Is the requesting S corporation bank rated 1 or 2 under the Uniform Financial Institutions Rating System and not subject to a written supervisory directive?
4.   Is the requesting S corporation bank at least adequately capitalized, and would it remain adequately capitalized after the requested dividend?

The FIL goes on to describe how it will evaluate each of these factors and states that generally, request for an exemption to allow a dividend to S corporation bank shareholders to satisfy their tax liability will be granted where the above-described factors have been met by the requesting bank.

For further information, see the full text of FIL-40-2014 and the accompanying press release. If you have any questions regarding the FIL or implementation of the capital conservation buffer, please contact us at (210) 228-9500.

Model Approaches to Community Bank/CDFI Partnerships Webinar

The FDIC’s Division of Depositor and Consumer Protection (DCP) Community Affairs Branch will host a webinar on Model Approaches to Community Bank/CDFI Partnerships on July 31, 2014, from 2:00 p.m. to 3:30 p.m. (EDT). FDIC staff will provide an overview of a resource guide, Strategies for Community Banks to Develop Partnerships with CDFIs, designed to help community banks identify and evaluate opportunities to collaborate with CDFIs. The webinar also will include presentations on model bank/CDFI partnerships and an overview of U.S. Department of the Treasury programs that can potentially support bank/CDFI partnerships.

Statement of Applicability to Institutions Under $1 Billion in Total Assets


The webinar will inform community banks of strategies to meet community credit needs in low- and moderate-income communities and receive Community Reinvestment Act (CRA) consideration through collaborations with CDFIs.

The webinar will be held on Thursday, July 31, 2014, from 2:00 p.m. to 3:30 p.m. EDT.

CDFIs are specialized financial institutions that provide financial products and services to underserved markets. The webinar is a follow-up to the release of the FDIC’s resource guide Strategies for Community Banks to Develop Partnerships with CDFIs. The webinar will include an overview of the resource guide. Bank officials representing Community Savings Bank, Chicago, IL; The Bank of Tampa, Tampa, FL; and Eastern Bank, Boston, MA—banks that were featured in the resource guide—will discuss their approaches to working with CDFIs. A representative from the U.S. Department of Treasury’s CDFI Fund also will review their programs that can potentially support partnership activities.

The session is free but registration is required. Institutions must register by July 28. Click here to register.

Contact: Jo Ann Wilkerson, SSenior Community Affairs Specialist, Division of Depositor and Consumer Protection, at or (703) 254-0482 or FDIC Outreach. and Program Development Section at

Who Can Buy a Failed Bank?

The Federal Deposit Insurance Corporation (FDIC) adopted a final rule on April 14, 2014 to implement section 210(r) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the final rule individuals or entities that have, or may have, contributed to the failure of a “covered financial company” cannot buy a covered financial company’s assets from the FDIC. The final rule establishes a self-certification process that is a prerequisite to the purchase of assets of a covered financial company from the FDIC.

With one exception, the final rule is unchanged from the proposed rule. Language is added to require that a prospective purchaser certify that a sale of assets of a covered financial company by the FDIC is not structured to circumvent section 210(r) or the final rule. The final rule is distinct because it would apply to sales of covered financial company assets by the FDIC and not to sales of failed insured depository institution assets. The final rule addresses the statutory prohibitions contained in section 210(r). It does not address other restrictions on sales of assets. For instance, the final rule does not address purchaser restrictions imposed by 12 CFR part 366 (“Minimum Standards of Integrity and Fitness for an FDIC Contractor”) and 5 CFR part 3201 (“Supplemental Standards of Ethical Conduct for Employees of the Federal Deposit Insurance Corporation”). Further, the final rule is separate and apart from any policy that the FDIC has, or may adopt or amend, regarding collection of amounts owed by obligors to a failed insured depository institution or a covered financial company. The focus of a collection policy is to encourage delinquent obligors to promptly repay or settle obligations, which is outside the scope of section 210(r) and the final rule.