Jennifer's Notes

Welcome to the summer 2012 edition of S&R Perspectives. Over the last several months, I have had the opportunity to talk with many of you. In March and April, we held two Community Banker Forums — one in Charleston, W.Va., and one in Baltimore, Md. It was terrific to hear what was on your mind and to be able to share some information on key regulatory issues. You can read more about the forums in this issue.

Many of you have asked about improving ratings. Actually, recent guidance (SR 12-4) describes the factors that the Federal Reserve System (FRS) will consider in evaluating whether to upgrade an institution's supervisory ratings. The guidance instructs examiners to look for demonstrated improvement in a bank’s financial condition and risk management processes and have an expectation that this improvement will be sustained as support for upgrade recommendations. In particular, the FRS will evaluate the strength of core financial components, overall risk management and board of director’s oversight in assessing whether an upgrade is warranted. We are beginning to implement this guidance in our District.

There is a new FRS newsletter on the horizon, which will be similar to — and serve as the safety and soundness counterpart to — the system’s Consumer Compliance Outlook publication. It will be geared toward community bankers and is expected to debut in the third quarter of this year. With the introduction of this new FRS publication, you will see some changes to our Fifth District newsletter in the near future — please stay tuned.

Now, on to the rest of this edition of S&R Perspectives. In this issue, we highlight a variety of financial industry topics, including the effects of the Dodd-Frank Act on community banks, the disposition of other real estate owned and Regulation W. We also cover our Healthy Bank Project, which examines how some banks maintained strong financial conditions over the recent downturn. We hope you find these topics useful and meaningful. Please complete our brief online survey to ensure that we are covering topics and issues that are important to you.


The analyses and conclusions set forth in this publication are those of the authors and do not necessarily indicate concurrence by the Board of Governors, the Federal Reserve Banks, or the members of their staffs. Although we strive to make the information in this publication as accurate as possible, it is made available for educational and informational purposes only. Accordingly, for purposes of determining compliance with any legal requirement, the statements and views expressed in this publication do not constitute an interpretation of any laws, rule or regulation by the Board or by the officials or employees of the Federal Reserve System.

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