TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK
This SR letter amends guidance presented in SR 85-28, "Examination
Frequency and Communicating with Directors," and supersedes guidance provided in SR
88-12, "Meetings with Boards of Directors of Troubled Small Bank Holding Companies." Meetings with Directors of Shell Bank Holding Companies with Less Than $500 million in Assets
SR 85-28 specifies that a meeting should generally be held with the board of
directors at the conclusion of any full-scope examination or inspection in which a state
member bank is rated CAMEL composite 4 or 5 or a bank holding company (BHC) is rated
BOPEC composite 4 or 5. In addition, it specifies that a meeting should also be held if an
organization is rated composite 3 and its condition is deteriorating or has shown little
improvement since a prior examination/inspection in which it was rated composite 3.
SR 88-12 authorizes an exception to this general policy by delineating
conditions under which a meeting need not be held with the directors of shell BHCs with
less than $150 million in assets that are rated BOPEC composite 4 or 5. This SR letter
extends this exception to all shell BHCS with less than $500 million in assets that are rated BOPEC composite 3, 4, or 5 and updates the
conditions listed in SR 88-12.
Specifically, a meeting with the board of directors need not be held after an
inspection that results in a BOPEC composite rating of 3, 4, or 5 for a shell BHC with less
than $500 million in assets if all of the following conditions are met:
(a) a meeting was held when the BHC was first downgraded to a BOPEC
composite rating of 3, 4, or 5;
(b) the examination of the subsidiary bank(s) revealed no significant deterioration
since the prior meeting;
(c) no significant violations were revealed by the inspection of the BHC; and
(d) the BHC is in compliance with any informal or formal enforcement actions.
Participation of Reserve Bank Officers in Meetings with Directors
Under current guidance, members of the Reserve Banks' official staffs are
expected to represent the Federal Reserve at meetings with the directors of banks and
bank holding companies. This SR letter amends this guidance to grant Reserve Banks the
discretion to have senior examination staff represent the Reserve Bank in meetings with
the directors of banks and bank holding companies with less than $500 million in assets.
Reserve Banks are further authorized to conduct conference calls with
directors in place of on-site meetings for BHCs with less than $500 million in assets, when
considered appropriate and if an on-site meeting was held following the previous
inspection.
Participation of Reserve Bank Presidents in Meetings with Directors
Under current guidance, Reserve Bank Presidents are expected to participate
in meetings with directors of the largest multinational and regional organizations that are
rated BOPEC composite 3, 4, or 5. This SR letter amends that guidance to grant Reserve
Banks the discretion to determine the circumstances under which the participation of
Reserve Bank Presidents is appropriate and necessary.
If you have any questions regarding the changes discussed above, please
contact Mr. Kevin Bertsch (202/452-5265).
Deputy Director
Cross-Reference: SR 85-28
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