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#38514 - 10/23/02 07:51 PM Asset exam

Has anyone had an asset exam lately and if so what would be items of main concern to review prior to their coming.

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General Discussion
#38515 - 10/23/02 09:58 PM Re: Asset exam
Lestie G Offline

Power Poster
Joined: May 2002
Posts: 3,607
Near the Land of Enchantment
Meaning a safety and soundness exam or a trust exam?
Opinions my own.

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#38516 - 10/24/02 11:34 AM Re: Asset exam

safty and soundness

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#38517 - 10/24/02 12:38 PM Re: Asset exam
JulieB Offline
Junior Member
Joined: Apr 2002
Posts: 38
Because loans are usually the largest asset and the highest risk, greatest attention is usually given to this area. They will review over underwriting standards, documentation, real estate lending, appraisals, internal control, and internal audit procedures. They will also look at how the portfolio is managed. Examples: exception tracking, Board reporting, approval process, policies. Good luck.

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#38518 - 10/24/02 03:17 PM Re: Asset exam
Platinum Poster
Joined: Oct 2002
Posts: 524
Privacy is the big issue, along with BSA. Although these are compliance issues, they are on the safety and soundness exam. Of course, as stated above, the review of the loan portfolio is always and will always be the major risk assessment task.

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#38519 - 10/25/02 11:38 AM Re: Asset exam
AnonRegulator Offline
Gold Star
Joined: Mar 2002
Posts: 451
Everywhere, USA
Without knowing specifics about your institution, here are some hot buttons that examiners will look for in safety and soundness.

The first is internal controls and audit. They'll want to know what is done to test internal controls. They'll also want to know about the audit processes, both internal and external, in an effort to judge whether they are independent of the transactions that are audited, if the staff is competent and the audits are effective. This is particularly important since all the corporate scandals came to light. You will here examiners talk about corporate governance. That's the buzz phrase for how well management and the board do their jobs in protecting the bank through internal controls and audit.

The next hot button is new endeavors by the bank, whether that is a new product or expansion of an older one. Anything new will get pretty good scrutiny to see if the proper controls are in place and the bank has the expertise to administer whatever it is you are doing. If concerns are raised, they will delve into your due diligence or risk assessment process to see if they either exist or need improvement.

Another hot button is the last examination. The examiners will look to see if you followed through on their significant recommendations from the last exam. If you didn't, you might as well get out a red flag and wave it in the examiners' faces when they arrive.

Loans or, more broadly, asset quality is always a big deal, but how much time examiners spend on it depends on your internal risk identification system. If you have a fairly good system for identifying problem loans and internally classifying loans, examiners will generally test that system rather than go into a massive file review and reinvent the wheel.

These are a few of our favorite things! AR.

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#38520 - 10/25/02 04:08 PM Re: Asset exam
Walleye Woman Offline
Platinum Poster
Walleye Woman
Joined: Jul 2002
Posts: 832
Don't forget Asset/Liability Management and Interest Rate Risk. With rates down so low, examiners will want to know how your portfolio will look in a rising rate environment. If it ever happens!
Marilyn, CRCM

I'd rather be fishing.

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