Credit Evaluation School Dec 2022

Internal Use Only

AssetQuality Analyzing and Rating Asset Quality

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Internal Use Only

C A M E L S Asset quality (AQ) is one of the most critical areas in determining the overall condition of a bank. • The primary factor affecting overall asset quality is the quality of the loan portfolio and the credit administration program. • Loans typically comprise a majority of a bank’s assets and carry the greatest amount of risk to capital. • Securities, OREO, and other earning (or non) assets the institution may have on their books can also greatly affect AQ. Examiners should be diligent and focused when reviewing a bank’s assets, as they can significantly impact most other facts of bank operations.

*FDIC RMS Manual of Examination Policies

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