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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

Supervisory Policy and Guidance Topics

Asset Quality

The asset quality reflects the quantity of existing and potential credit risk associated with the loan and investment portfolios, other real estate owned, and other assets, as well as off-balance sheet transactions. An examiner's evaluation of asset quality should consider the adequacy of the allowance for loan and lease losses and weigh the exposure to counterparty, issuer, or borrower default under actual or implied contractual agreements. All other risks that may affect the value or marketability of an institution's assets, including, but not limited to, operating, market, reputation, strategic, or compliance risks should also be considered. (SR 96-38)
Sections on this page:
 

Policy Letters

Asset Quality

SR 13-3
Interagency Guidance on Leveraged Lending
SR 12-10 / CA 12-9
Questions and Answers for Federal Reserve-Regulated Institutions Related to the Management of Other Real Estate Owned (OREO)
SR 12-5/CA 12-3
Policy Statement on Rental of Residential Other Real Estate Owned (OREO) Properties
SR 11-15
Disposal of Problem Assets through Exchanges
SR 04-9
Revised Uniform Agreement on the Classification of Assets and Appraisal of Securities Held by Banks and Thrifts
SR 00-8 (SUP)
Revised Uniform Retail Credit Classification and Account Management Policy
SR 99-25 (SUP)
Minimum Documentation Standards for Loan Line Sheets
SR 99-24 (SUP)
Loan Write-Up Standards for Assets Criticized During Examinations
SR 96-38 (SUP)
Uniform Financial Institutions Rating System
SR 93-30 (FIS)
Interagency Policy Statements on Supervisory Initiatives Released Today
SR 92-2
Treatment of Value Impaired Classifications for Asset Quality Purposes
 

Manual References

  • Bank Holding Company Supervision Manual
    • Section 2065.2, "Determining an Adequate Level for the Allowance for Loan and Lease Losses (Accounting, Reporting, and Disclosure Issues)"
    • Section 2065.3, "Maintenance of an Appropriate Allowance for Loan and Lease Losses (Accounting, Reporting, and Disclosure Issues)"
    • Section 2065.4, "ALLL Methodologies and Documentation (Accounting, Reporting, and Disclosure Issues)"
    • Section 4020.2, "Banks: Asset Quality"
    • Section 4060.1, "Consolidated (Asset Quality)"
  • Commercial Bank Examination Manual
    • Section 2020.1, "Investment Securities and End-User Activities" (see Table entitled, "General Debt Security Classification Guidelines")
    • Section 2040.1, "Loan Portfolio Management"
    • Section 2060.1, "Classification of Credits"
    • Section 2200.1, "Other Real Estate Owned"
Last update: March 21, 2013