On December 10, 2015, the US Federal Reserve Board issued an SR Letter regarding enhancements to its safety-and-soundness surveillance program for state member banks and top-tier bank and saving and loan holding companies. The Federal Reserve Board noted that it has focused on making its supervision framework more forward-looking and data-driven. In light of these goals, two key improvements to the program noted in the supervisory letter include: (i) new risk classification algorithms intended to provide examiners with early signs of an institution’s risk tendencies; and (ii) an early-warning model for holding companies that pairs with the existing early-warning model for financial deficiencies at state member banks. The Federal Reserve Board also issued guidance regarding specific metrics, procedures, and write-up requirements used to monitor state member banks and holding companies.
Supervision and Regulation Letter 15-16 Letter is available at: http://www.federalreserve.gov/bankinforeg/srletters/sr1516.pdf and the attachment to the letter is available at: http://www.federalreserve.gov/bankinforeg/srletters/sr1516a1.pdf.