Examiner-in-Charge School

Examiner-in-Charge School

August 5-9, 2024 Albuquerque, NM

@ www.csbs.org ♦ @csbsnews

CONFERENCE OF STATE BANK SUPERVISORS 1300 I Street NW / Suite 700 / Washington, DC 20005 / (202) 296-2840

August 5-9, 2024 Examiner-in-Charge School Albuquerque, NM

ATTENDEES Iowa Division of Banking Fay, Grant

grant.fay@idob.state.ia.us amy.fowler@idob.state.ia.us jon.mootz@idob.state.ia.us susan.vogel@idob.state.ia.us

Fowler, Amy

Mootz, Jonathon

Vogel, Susan

Kansas Office of the State Bank Commissioner Krieger, Madison

madison.krieger@osbckansas.org kasiah.rothchild@osbckansas.org byron.stout@osbckansas.org audrey.wertz@osbckansas.org

Rothchild, Kasiah Stout, Byron Wertz, Audrey

Maryland Office of Financial Regulation Grier, Corvette

corvette.grier@maryland.gov bryan.hannan@maryland.gov

Hannan, Bryan

New York State Department of Financial Services Levakova, Marina

marina.levakova@dfs.ny.gov michael.romano@dfs.ny.gov

Romano, Michael

North Carolina Office of Commissioner of Banks Dawson, Delicia

ddawson@nccob.gov

INSTRUCTORS Arkansas State Bank Department Bush, Gary

gbush@banking.state.ar.us

Nebraska Department of Banking and Finance Lindner, Michelle

michelle.lindner@nebraska.gov

Ohio Division of Financial Institutions Starr, Shaun

shaun.starr@com.ohio.gov

CSBS STAFF Hoyle, Katie

khoyle@csbs.org

Richardson, Amy Romano, Chris

arichardson@csbs.org cromano@csbs.org

Examiner-in-Charge School Albuquerque, NM August 5-9, 2024

DoubleTree by Hilton Albuquerque Downtown Meeting Room: Crystal I

Monday, August 5, 2024 7:30 am – 8:30 am

Registration & Breakfast Lounge 201 (Main Lobby)

Introduction

8:30 am – 9:30 am 9:30 am – 10:30 am 10:30 am – 11:00 am 11:00 am – 12:00 pm

Exam Management and Role as EIC

Break

Analyzing the M Component

12:00 pm – 1:30 pm

Lunch on your own

Analyzing the M Component Exercise

1:30 pm – 2:00 pm

Introduction to Case Study/ Agenda and Comment Writing Discussion

2:00 pm – 2:30 pm

BREAKOUT: Review Pre-Course Scope Memo Assignment / Distribute Materials Packet #2

2:30 pm – 4:30 pm

Adjourn

4:30 pm

Networking Reception Coral III Ballroom

5:30 pm – 7:30 pm

Tuesday, August 6, 2024 7:30 am – 8:30 am

Breakfast Lounge 201 (Main Lobby)

Icebreaker

8:30 am – 9:00 am

Rating the Composite and Exercise

9:00 am – 10:30 am

Independent Work Time

10:30 am – 11:30 am 11:30 am – 1:00 pm

Lunch on your own

BREAKOUT: Prepare for Meeting with Bank Management

1:00 pm – 1:45 pm

BREAKOUT: Meeting with Bank Management

1:45 pm – 3:15 pm 3:15 pm – 3:30 pm

Break

Conveying Exam Findings

3:30 pm – 4:30 pm

Adjourn

4:30 pm

Internal Use Only

Wednesday, August 7, 2024 7:30 am – 8:30 am

Breakfast Lounge 201 (Main Lobby)

Icebreaker

8:30 am – 9:00 am

Board Meetings, Joint Examinations, and Enforcement Actions

9:00 am – 10:30 am

Exit Meeting and Writing Assignment Discussion

10:30 am – 11:00 am

11:00 am – 12:30 pm

Lunch on your own

Meeting with Supervisor/ Individual Prep Time Refer to schedule

12:30 pm – 4:30 pm

Adjourn

4:30 pm

Thursday, August 8, 2024 7:30 am – 8:30 am

Breakfast Lounge 201 (Main Lobby)

Exit Meetings Refer to schedule Lunch on your own Exit Meetings Refer to schedule

8:30 am – 11:45 am

11:45 am – 1:00 pm 1:00 pm – 4:30 pm

Adjourn

4:30 pm

Friday, August 9, 2024 7:30 am – 8:30 am

Breakfast Lounge 201 (Main Lobby)

Icebreaker

8:30 am – 9:00 am

Exit Meetings Recap

9:00 am – 9:30 am

Effective Virtual Meetings Academic Challenge Review

9:30 am – 10:30 am 10:30 am – 11:30 am

Adjourn

11:30 am

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Examiner-in-Charge School August 5-9, 2024

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Schedule Monday: • Registration/Breakfast – 7:30 AM - 8:30 AM

• School – 8:30 AM - 4:30 PM • Reception – 5:30 – 7:30 PM Tuesday – Thursday: • Breakfast – 7:30 AM - 8:30 AM • School – 8:30 AM - 4:30 PM Friday: • Breakfast – 7:30 AM - 8:30 AM • School – 8:30 AM – 11:00 AM

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Consumer Finance Team Supervisor

Instructors

Gary Bush

Michelle Lindner

Shuan Starr

Learning and Development Specialist Ohio Division of Financial Institutions

Review Examiner Nebraska Department of Banking and Finance

Assistant Deputy Commissioner Arkansas State Bank Department

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Introductions

NAME

AGENCY/STATE

HOW LONG HAVE YOU BEEN AN EXAMINER? WHAT IS YOUR AREA OF FOCUS?

WHAT IS ONE THING YOU HOPE TO LEARN THIS WEEK?

ONE FUN FACT ABOUT YOURSELF

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Exam Management and Your Role as EIC

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Pre Planning

Examination Follow-up

Pre-Exam Week

EIC

Board Meeting

Exam Weeks

Writing the Report of Examination

Exit Meeting

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Pre-Planning

Initial Contact with Management • Introduction •Sooner rather than later

Familiarize Yourself with the Bank •Internal and external documents •Conversations with examiners and bank management

Identify Key Risk Areas. •Draw conclusions on risks,

examination strategy, and assignments

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Pre-Planning Continued

Requesting Examination Information • Draw conclusions on risks, examination strategy, and assignments

Determine Staffing • Subject matter experts •Sufficient to complete a timely examination

Creation of Scope Memo

•Varies by department • At a minimum, should cover •Institutional overview •Risk assessment •Discussions with Management •Prior examination findings •Financial analysis • Assignments/logistics

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Pre-Exam Week

•Communicate with your exam team.

Communicate

•Organize your materials.

Organize

•Check your request list and follow-up •Complete as much exam work as possible.

Check

Complete

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Exam Weeks Encourage Communication • Open communication with management • Regular discussions with exam team to keep them on track • Keep your supervisor informed • Meetings, meetings, meetings Time Management • Maintain lists to keep on track • Allows you to organize thoughts for management discussions • Ensures potential issues are brought to resolution

• Serves as source for structuring exit meeting • Acts as reminder for items that need completed

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Exam Weeks - Continued Conduct Meetings • First day • Fact-finding • Director’s conferences

•Update •Wrap up •Exit

Complete Your Assignments. • Management component • Other areas • Develop overall conclusions

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Exit Meeting Exit Meeting

Develop formal agenda.

Ensure your supervisor is in agreement with all conclusions.

Be prepared.

NO SURPRISES.

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Writing the Report of Examination

Review/edit comments from other examiners. 1

Complete additional report pages. 2

3

Be mindful of writing tips from your department. 4

Ensure ratings and conclusions are supported and accurate.

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Board Meeting

Formal written agenda.

Outline of significant items.

Communicate and know your audience.

Preparation.

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Examination Follow-Up

• Level of involvement may vary • Review examination responses • Provide feedback to examiners

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Meetings – A Big Waste of Time?

_______ people present Wrong

No real _p _u _r p_ _o _s e_

Ambiguous _________ objectives

Agenda isn’t _______ followed

People aren’t ________ prepared

No _______ agenda

________ people present Too many

No ______ / ________ results decisions

Starting/ Ending ______ Late

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Time Management Assessment Rating Scale: 0 Never 1 Seldom 2 Sometimes 3 Often 4 Always

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Questions?

Analyzing the M Component C A M E L S

Analyzing the “M” Component

Most important part of your analysis Management consists of Board and Executive Management

The Glue that ties it all together

In-Class Exercises

Management / Board The management assessment includes

The board of directors is the source of all

an analysis of the board of directors.

authority and responsibility.

Responsible for: • Formation of sound polices and objectives of the bank • Effective supervision of its affairs, and • Promotion of its welfare.

Management / Board

Various laws govern the election of board members and also govern transactions between board members and the institution

Directors should have ideas of their own and express them

Directors should have sufficient time to fulfill their responsibilities

Directors should be free of financial difficulties and possess personal integrity

Management / Board

A primary duty of a board is to select and appoint executive officers who are qualified to administer the bank’s affairs effectively and soundly.

Directors should avoid self-serving practices and conflicts of interest and place performance of their duties over personal concerns.

The board should ensure adequate MIS is in place to provide the board with accurate and sufficient reports to know bank’s condition.

Management / Board Ensure appropriate internal control system and adequate auditing program is in place Supervision by directors does not mean the board is performing management tasks Directors can be held personably liable for: • Breach of trust • Negligence which causes loss • Misappropriation of bank assets • Dereliction of Duty • Failure to maintain reasonable supervision over the activities and affairs of the bank, its officers and employees

Senior Management

Risk – the potential for loss or gain resulting from a specific action

Risk is okay.

Must learn and evaluate management’s view of risk.

Does management understand the risk they are taking and what could go wrong?

Management must identify, measure, monitor and control risk.

Do they have the balance sheet to take on this level of risk?

Component Rating Definitions

The capability of the board of directors and management, in their respective roles, to identify, measure, monitor, and control the risks of an institution’s activities and to ensure a financial institution’s safe, sound, and efficient operation in compliance with applicable laws and regulations is reflected in this rating.

Component Rating Definitions (cont.)

• Active oversight by the board of directors and management; • Competent personnel; • Adequate policies, processes, and controls taking into consideration the size and sophistication of the institution; • Maintenance of an appropriate audit program and internal control environment; and • Effective risk monitoring and management information systems.

Sound management practices are demonstrated by :

Component Rating Definitions (cont.)

Level and quality of oversight and support of all activities.

Ability to plan for, and respond to, risks that may arise from changing business conditions or the initiation of new activities or products.

The Management rating is based on an assessment of the following factors:

The adequacy of, and conformance with, internal policies and controls addressing operations and significant risks.

The accuracy, timeliness, and effectiveness of management information and risk monitoring systems appropriate for the institution’s size, complexity, and risk profile

Component Rating Definitions (cont.) Assessment factors continued: The adequacy of audits and internal controls. Compliance with laws and regulations.

Responsiveness to recommendations from auditors and supervisory authorities.

Managementdepth and succession.

Extent that the board and management is affected by, or susceptible to, dominant influence or concentration of authority. Reasonableness of compensation policies and avoidance of self-dealing.

Demonstrated willingness to serve the legitimate banking needs of the community.

The overall performance of the institution and its risk profile.

Component Rating Definitions (cont.)

A rating of 1 indicates performance by management and the board of directors and strong risk management practices relative to the institution’s size, complexity, and risk profile. All significant risks are consistently and effectively identified, measured, monitored, and controlled. Management and the board have demonstrated the ability to promptly and successfully address existing and potential problems and risks.

Component Rating Definitions (cont.)

A rating of 2 indicates management and board performance and risk management practices relative to the institution’s size, complexity, and risk profile. Minor weaknesses may exist, but are not material to the safety and soundness of the institution and are being addressed. In general, significant risks and problems are effectively identified, measured, monitored, and controlled.

Component Rating Definitions (cont.)

A rating of 3 indicates management and board performance that or risk management practices that are less than satisfactory given the nature of the institution’s activities. The capabilities of management or the board of directors may be insufficien t for the type, size, or condition of the institution. Problems and significant risks may be inadequately identified, measured, monitored, or controlled.

Component Rating Definitions (cont.) Common characteristics of “3” rated M Components: • Poor financial performance • Heightened risk profile • Weak risk management practices • Elevated AQ concerns (rising, high levels of adversely classified) • Gaps in management • Repeat examination findings • Multiple violations / contraventions • Questions as to the sufficiency of staffing • Dominant member of management • Lack of reliability in financial reporting • Noncompliance with an outstanding supervisory action • Absence of meeting minute documentation on discussions of significant risks

Component Rating Definitions (cont.)

A rating of 4 indicates management and board performance or risk management practices that are inadequate considering the nature of an institution’s activities. The level of problems and risk exposure is excessive . Problems and significant risks are inadequately identified, measured, monitored, or controlled and require immediate action by the board and management to preserve the soundness of the institution . Replacing or strengthening management or the board may be necessary.

Component Rating Definitions (cont.) A rating of 5 indicates management and board performance or risk management practices. Management and the board of directors have not demonstrated the ability to correct problems and implement appropriate risk management practices. Problems and significant risks are inadequately identified, measured, monitored, or controlled and now threaten the continued viability of the institution. Replacing or strengthening management or the board of directors is necessary .

In-Class Exercise

Analyze the presented information and assess the M Component area. See handouts

• Institution A • Institution B • Institution C • Institution D • Institution E

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Examiner-in-Charge School Case Study Introduction

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Case Study Key Notables:

Friday August 9

Monday August 5

Tuesday August 6

Wednesday August 7

Thursday August 8

•30-minute one on-one with “Supervisor” • Independent Work Time

•Exit Meeting

•Review

•Review Scope Memos, Distribute Packet #2 • Independent Work Time

• Independent Work time •Meet with “Bank

• Presentation and observe •Send Exit Agenda to Katie prior to presentation • Management comment due by end of day

Management”

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Case Study Key Notables: Feedback provided on: • Scoping Exercise • Meeting with “Bank Management” • Meeting with “Supervisor” • Exit Meeting Agenda • Exit Meeting Presentation • Written Management Component Comment • Overall Participation

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Agendas & Management Comments

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Exit Meeting Agenda

Clear identification of risk or finding.

Summarize the area.

Use of tables.

Consistent wording.

Mindful of your audience.

Consider your order.

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Section Heading

If numbers are in the table, do not need to state again in the bullet points.

Use of key words.

Entire section / component summarized in five bullet points.

Clear distinction of what the findings are, and consistent wording, using action word for findings.

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Your meeting agenda is due prior to your meeting date/time

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Management Comment Strong introductory sentence.

Focus on the risk level and trend, and specific findings.

Order your findings.

Support your rating.

Consistent wording.

Written for layperson.

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Management - 2 The bank’s management and the bank’s board is rated a 2. In addition, oversight remains strong. Despite tightening liquidity and capital positions the overall financial condition remains satisfactory and risk management practices are good given the risk profile of the institution. The bank’s board and the bank’s committee meetings are well attended; however, enhancements to Asset Liability Committee (ALCO) minutes and audit committee oversight are noted below. The bank’s strategic planning process is formal with XYZ and Associates, Inc. engaged to aid in the most recent plan. Earnings are satisfactory with net income totaling $1,245,642, an ROAA of 0.48% and a NIM of 3.12%, both aligned with the peer group levels. Capital, as noted has tightened with a leverage ratio of 7.07 percent. This is due to capital levels declining by $1.3 million since the prior examination. Additionally, we believe the audit and internal control environment is sound and prior examination findings have been appropriately addressed. Findings detailed below warrant attention.

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Your Management comment is due by Thursday, August 8 th at 5:00 PM local time

Reminder: Include your assigned Management rating and be sure your comment supports it.

Rating the Composite

Rating Definitions

Composite Rating

Changing Composite Ratings

Composite Rating Definition

• Managerial • Operational • Financial • Compliance

Careful evaluation of performance

• Capital adequacy • Asset quality • Management capability • Earnings quantity and quality • Adequacy of liquidity • Sensitivity to market risk

Key components to assess an institution’s financial condition and operations

Composite Rating Definition

Composite Rating 1 Financial institutions in this group are sound in every respect and generally have components rated 1 or 2 . Any weaknesses are minor and can be handled in a routine manner by the board of directors and management. These financial institutions are the most capable of withstanding the vagaries of business conditions and are resistant to outside influences such as economic instability in their trade area. These financial institutions are in substantial compliance with laws and regulations. As a result, these financial institutions exhibit the strongest performance and risk management practices relative to the institution’s size, complexity, and risk profile, and give no cause for supervisory concern .

Composite Rating Definition Composite Rating 2

Financial institutions in this group are fundamentally sound . For a financial institution to receive this rating, generally no component rating should be more severe than 3 . Only moderate weaknesses are present and are well within the board of directors’ and management’s capabilities and willingness to correct. These financial institutions are stable and are capable of withstanding business fluctuations. These financial institutions are in substantial compliance with laws and regulations. Overall risk management practices are satisfactory relative to the institution’s size, complexity, and risk profile. There are no material supervisory concerns and, as a result, the supervisory response is informal and limited.

Composite Rating Definition

Composite Rating 3 Financial institutions in this group exhibit some degree of supervisory concern in one or more of the component areas. These financial institutions exhibit a combination of weaknesses that may range from moderate to severe ; however, the magnitude of the deficiencies generally will not cause a component to be rated more severely than 4 . Management may lack the ability or willingness to effectively address weaknesses within appropriate time frames. Financial institutions in this group generally are less capable of withstanding business fluctuations and are more vulnerable to outside influences than those institutions rated a composite 1 or 2. Additionally, these financial institutions may be in significant noncompliance with laws and regulations. Risk management practices may be less than satisfactory relative to the institution’s size, complexity, and risk profile. These financial institutions require more than normal supervision, which may include formal or informal enforcement actions . Failure appears unlikely , however, given the overall strength and financial capacity of these institutions.

Composite Rating Definition

Composite Rating 4 Financial institutions in this group generally exhibit unsafe and unsound practices or conditions . There are serious financial or managerial deficiencies that result in unsatisfactory performance. The problems range from severe to critically deficient . The weaknesses and problems are not being satisfactorily addressed or resolved by the board of directors and management. Financial institutions in this group generally are not capable of withstanding business fluctuations. There may be significant noncompliance with laws and regulations. Risk management practices are generally unacceptable relative to the institution’s size, complexity, and risk profile. Close supervisory attention is required, which means, in most cases, formal enforcement action is necessary to address the problems. Institutions in this group pose a risk to the deposit insurance fund . Failure is a distinct possibility if the problems and weaknesses are not satisfactorily addressed and resolved.

Composite Rating Definition

Composite Rating 5 Financial institutions in this group exhibit extremely unsafe and unsound practices or conditions; exhibit a critically deficient performance ; often contain inadequate risk management practices relative to the institution’s size, complexity, and risk profile; and are of the greatest supervisory concern . The volume and severity of problems are beyond management’s ability or willingness to control or correct . Immediate outside financial or other assistance is needed in order for the financial institution to be viable. Ongoing supervisory attention is necessary. Institutions in this group pose a significant risk to the deposit insurance fund and failure is highly probable .

Changing Composite Ratings

• Internal and external parties Communication

• Be thorough • Expect questions

Analysis

• Based on the analysis • Needed for ALL conclusions

Support

• Cannot over-communicate Communication

Questions

What are some tips/tricks for keeping everything organized during the exam process?

What are some best practices for bringing findings together at the end of the exam for both the exit meeting and report?

Questions?

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Conveying Examination Findings

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Conveying Examination Findings

VERBAL

WRITTEN

Exit Meeting

Examination Report

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Exit Meeting

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EXIT MEETING

Be Prepared!!!

As EIC you should be able to discuss the issues and conclusions in each area as if you had reviewed it yourself.

Final meeting to conclude all examination findings and discuss preliminary ratings.

Typically, management will dictate the attendees from the bank.

DO NOT schedule an Exit Meeting before you are ready.

Be Prepared.

Be Prepared.

Be Prepared.

4

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Purpose of the Exit Meeting

Provide closure to exam

Obtain verification of examination facts

Inform management of items included in the Report of Examination

Alert management to other items

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Exit Meeting Tone and Format

Meeting tone should be:

Consistent with the tone used in the Report of Examination

Consistent with management discussions

Consistent with the materiality of exam findings

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Meeting Agendas

What is your agency requirement?

•Follow Protocol

•Material Findings/Violations •Key Support •Other Notables

Include:

Do Not Include:

• Surprises!!!

•Vary by state and federal agency •Concise and lack clutter •Spelling and Grammar

Agenda Formats

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Additional Handouts

Requirements Vary Ratings Definitions Regulations, FILs, State Laws Ratio Tables Check with Federal Counterpart if Joint Exam

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Exit Meeting – Discussion Only Items

• Less critical findings • Best practices • Items easily corrected during the examination • Minor policy items • Proactive practices for risks that have yet to arise • Prior poor practices that have been corrected

EIC must distinguish between discussion only topics and reportable issues.

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Subsequent Events

Inform bank management of any changes to component ratings, the composite rating or reportable findings

Exit Meeting

Document the Exit Meeting discussion

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Tips for a Successful Exit Meeting

Communication Know the content Okay to disagree? Stay professional

No surprises Transparency Don’t go alone Review expectations/next steps

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Tips for Delivering Difficult Messages

Practice your comments Visualize and rehearse Allows other to help Gain familiarity with audience/setting Take deep breaths Realize most of the nerves do not show Communicate more, not less Standard introductory statement

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Writing the Examination Report

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Ensure Consistency

Appropriate Tone

Prioritize Risk/Materiality

Appropriate Formatting

Report Writing Objectives

Use of Numbers and Capitalization

Acronyms

Word Choice/Be Concise

Management Responses

Additional Notes

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Punctuation of bulleted items

Bullet symbols should all match

should be consistent

ENSURING CONSISTENCY

Reflect dates consistently in body of report

Use consistent date format in charts and graphs

Formatting for titles / subtitles should be consistent

Grammar and punctuation

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Tone

Consistent with management discussions held during the examination.

Commensurate with weaknesses reported.

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•Highlight critical findings •Focus on driver issues/concerns •Avoid “extra” or filler information that is not relevant to overall conclusions

Prioritize Risk / Materiality

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What is the default font for your agency?

Spacing. Single? Double?

Alignment

Formatting of tables/graphs

Spacing after a period

Shading?

APPROPRIATE FORMATTING

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Rounding

Use of “M” or “MM” vs “k” or whole numbers

Decimal places for ratios

Use of Numbers

Spelling out vs reflecting numbers

“percent” or %?

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Ratio names

Policy references (titles vs general reference)

References to board/committees

Common missteps: “GAP” is not an acronym and should not be capitalized “PATRIOT” Act is an acronym and should be capitalized

Capitalization

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Define

Reconcile

Not Necessary

Should define acronyms

Reconcile the use of acronyms and make sure they flow throughout the report

Do not need to identify/define an acronym that will not be used again.

Acronyms

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Word Choice – Things to Consider

• Use of the term “the bank” or “the bank’s” is usually not necessary. • Instead of “The bank’s ROAA…”, simply use “The ROAA…”

Bank/Bank’s

• “Considered” implies indecision • Instead of “Earnings are considered strong.” Use “Earnings are strong.”

Considered

• Use of the term “formally” or “formal” is typically not needed. • Instead of “Develop a formal policy on…”, simply state “Develop a policy on…”

Formally/Formal

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WORD CHOICE

• Use of “currently” is typically not necessary. • If referring to current numbers or ratios just leave it out of your sentence.

Currently

• Avoid use of “has” or “have” before verbs. o Both interest income and non-interest income as a percentage of average assets have declined… o The level of past due loans has decreased since… o Management has corrected all prior examination findings…

Have / Has

• Often overstated throughout. No need to reference in every CELS component write up. • Other options: • “As of the financial date…” • “Through the third quarter…”

Financial Date

• “in order to” vs. “to” • “on an annual basis” vs. “annually” • “in a timely manner” vs. “timely” or “promptly” • “in the process of” vs. “is” or “are”

General Wordiness

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Management Responses • Include in the report? • Ensure accuracy • Consider obtaining in writing

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Additional Notes

Avoid use of abbreviations or contractions.

Do not use first or second person in the report. “We feel”; “I found”; etc.

Bank is singular and requires a singular pronoun = “its”.

Ensure the use of the correct citations for any violations. Double check.

Verify names and titles of anyone noted in the report.

Be mindful of overusing the same word in a sentence, paragraph or throughout.

Run spell and grammar check. Read the ROE prior to submitting.

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Conveying Examination Findings

WRITTEN REPORT

EXIT MEETING

Open Discussion

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Board Meetings, Joint Examinations and Enforcement Actions

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Board Meetings Know your audience / Be Prepared • Many aren’t bankers and probably won’t understand our daily language High points / Significant Issues • Don’t get bogged down in too much detail unless it is the main issue • Practice – Vet out your thoughts with co-workers • You are your office. Don’t pass the buck. You most likely will not be alone • Your supervisors might have things to say. Have a plan worked out before hand

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Board Meetings - Continued

Other thoughts or experiences?

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Joint Examinations More frequent now:

• Banks over 3 Billion in assets

• Problem banks or bank’s with identified issues

• Just to coordinate resources

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Your role as EIC • Early communication in planning • Which agency is the lead for processing?

• It is and should be a joint process • Coordinate staffing and resources • Should make it as seamless as possible for the institution • Remember both agencies will have bosses that have questions or want to be informed

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Your Role - Continued • Contact and meetings with bank management shouldn’t be conducted alone • Avoid disclosing conclusions with management until things have been vetted

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Enforcement Actions What is an enforcement action?

Why do bank regulators use them?

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Types of Enforcement Actions • Informal vs. Formal • Typically joint actions • Contents:

• Identifies parties to the document • References a specific examination • Requires signatures of the directors • Sets time frames for initiating change • Usually requires updated to the regulators

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Informal Actions

Regulatory Letter

Board Resolution

Memorandum of Understanding (MOU)

Section 39 of the FDIC Act (FDIC)

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Formal Actions Written Agreement

• Issued to state member banks • Signed by Regulators and Board

Consent Order (C & D)

• Issued to state member and non-member banks • Signed by Regulators and Board • Requires bank to immediately stop inappropriate action or implement affirmative action

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Formal Action – continued Capital component will likely need to address Prompt Corrective Action (PCA) • If bank doesn’t consent there would be a hearing with a Administrative Law Judge • Capital Directives • Removal of Officers and/or Directors • Civil Money Penalties (CMPs) • Termination of Insurance • There are many specific limitations that occur when a PCA capital category drops

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Examiner-in-Charge School Effective Virtual Meetings

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Session Learning Objective: • Learn tips for conducting virtual meetings.

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1. Agenda

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2. Introductions

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3. Prepare

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4. Minimize Distractions

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5. Technology

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6. Etiquette

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7. Close the Meeting

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Questions

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Conclusion

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Instructor Feedback

Students and their supervisors will receive an instructor feedback form next week.

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Interested in more learning opportunities?

Calendar of Events

https://www.csbs.org/examiner-learning-roadmaps Learning Roadmaps

www.csbs.org/calendar-events

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Feedback Survey Please remember to complete the short feedback survey!

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Thank you, Instructors!!

Learning Roadmaps

The CSBS Learning Roadmaps are tools to help guide examiners through their learning journey by identifying skill gaps and training opportunities. These tools can also help examiners determine what training is needed to earn formal certification. Available Learning Roadmaps Bank Safety & Soundness Examiners BSA/AML Examiners IT/Cybersecurity Examiners

Developing the Workforce of Tomorrow One of the CSBS strategies is to contribute to innovative learning solutions and develop capabilities that enhance examiner skillsets and promote networked supervision resulting in a high performing, collaborative, and trusted state regulatory workforce.

Money Service Business (MSB) Examiners Mortgage/Non-Depository Examiners Trust Examiners

LearningRoadmaps@csbs.org www.csbs.org/examiner-learning-roadmaps

CSBS Accreditation

CSBS Certification The CSBS Examiner Certification Program recognizes the professionalism and unique skillsets of state regulators and is open to all who meet the education and experience qualifications for a credential. 31 Certification Credentials Safety & Soundness

The CSBS Accreditation Program evaluates state bank, mortgage and money transmitter regulatory agencies against standards set forth by a committee of state regulators. Benefits of Accreditation

Developing the Workforce of Tomorrow One of the CSBS strategies is to contribute to innovative learning solutions and develop capabilities that enhance examiner skillsets and promote networked supervision resulting in a high performing, collaborative, and trusted state regulatory workforce.

Creates Supervision Framework Promotes Process Standardization Builds Trust Improves Information Sharing Keeps States Accountable Recognizes Agencies Performance

Mortgage Licensing Trust IT & Cybersecurity Data Analytics Training

certification@csbs.org csbs.org/examiner-certification

accreditation@csbs.org csbs.org/department-accreditation

Education or training which has been determined to be essential in maintaining and enhancing skills or knowledge necessary for the performance of a job for which the certification is required. Continuing Education Classifications Core Education, training, or other activities which has been determined will enhance skills or knowledge necessary to effectively work as an examiner or regulator including but not limited to soft skills, technical trainings, providing on the-job training, participating on CSBS committees. Training completed as part of employment or general interests but does not directly contribute to the proficiency of the certification maintained. General courses will not count toward continuing education. General Elective

Providing a Path

Certification can assist agencies in developing the workforce of tomorrow by providing a framework for career progression and professional development.

Continuing education to take state regulators to the next level.

Training directors decide what their examiners need Tie in training to certifications Certification as a measure for career progression

Acquiring and maintaining a CSBS Certification gives regulators the opportunity to advance their career along a well-defined career path, encourages knowledge and skills development and recognizes and rewards achievement.

Training Directors will be able to identify courses that align with an examiners credential, maintaining the education and career path provided by their agency in combination with a CSBS certification. Program Improvements