Correspondent Concentration Risks, 23764-23771 [2010-10382]

Download as PDF mstockstill on DSKH9S0YB1PROD with NOTICES 23764 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 302–TV. Although the requirements were merged under the supporting statement, the forms themselves remained separate and only shared the same OMB control number. Since that time, we find that the merging of these requirements under one OMB control number is ineffective, causing delays in submissions to OMB for review, especially when the various requirements were revised by multiple and simultaneously adopted Commission actions. FCC Form 349 is used to apply for authority to construct a new FM translator or FM booster broadcast station, or to make changes in the existing facilities of such stations. Form 349’s Newspaper Notice (third party disclosure) requirement; 47 CFR 73.3580: Form 349 also contains a third party disclosure requirement, pursuant to 47 CFR 73.3580. This rule requires stations applying for a new broadcast station, or to make major changes to an existing station, to give local public notice of this filing in a newspaper of general circulation in the community in which the station is located. This local public notice must be completed within 30 days of the tendering of the application. This notice must be published at least twice a week for two consecutive weeks in a three-week period. In addition, a copy of this notice must be placed in the station’s public inspection file along with the application, pursuant to 47 CFR 73.3527. This recordkeeping information collection requirement is contained in OMB Control No. 3060– 0214, which covers 47 CFR 73.3527. OMB Control No.: 3060–0837. OMB Approval Date: 4/19/2010. Expiration Date: 4/30/2013. Title: Application for DTV Broadcast Station License, FCC Form 302–DTV. Form No.: FCC Form 302–DTV. Type of Review: Reinstatement without change of a previously approved collection. Number of Respondents/Responses: 300 respondents; 300 responses. Estimated Time per Response: 2 hours. Total Annual Burden: 600 hours. Total Annual Cost: $133,800. Obligation to Respond: Required to obtain or retain benefits. Statutory authority for this collection of information is contained in Sections 154(i), 303, and 308 of the Communications Act of 1934, as amended. Nature and Extent of Confidentiality: No need for confidentiality required with this information collection. Needs and Uses: The Commission requested and received from the Office VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 of Management and Budget (OMB) the reinstatement of OMB control number 3060–0837. In 2008, we merged the requirements that were previously under this OMB control number into an existing information collection, OMB control number 3060–0029, Application for TV Broadcast Station License, FCC Form 302–TV. Although the requirements were merged under the supporting statement, the forms themselves remained separate and only shared the same OMB control number. Since that time, we find the merging of these requirements under one OMB control number as ineffective causing delays for submission to OMB for review especially when the various requirements were revised by multiple Commission actions. Form 302–DTV is used by licensees and permittees of Digital TV (‘‘DTV’’) broadcast stations to obtain a new or modified station license and/or to notify the Commission of certain changes in the licensed facilities of those stations. It may be used: (1) To cover an authorized construction permit (or auxiliary antenna), provided that the facilities have been constructed in compliance with the provisions and conditions specified on the construction permit; or (2) to implement modifications to existing licenses as permitted by Section 73.1675(c) or 73.1690(c) of the Commission’s rules. Federal Communications Commission. Marlene H. Dortch, Secretary, Office of the Secretary, Office of Managing Director. [FR Doc. 2010–10410 Filed 5–3–10; 8:45 am] BILLING CODE 6712–01–P FEDERAL DEPOSIT INSURANCE CORPORATION FEDERAL RESERVE SYSTEM [Docket No. OP–1369] DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency [Docket ID OCC–2010–0016] DEPARTMENT OF THE TREASURY Office of Thrift Supervision [Docket ID OTS–2010–0013] Correspondent Concentration Risks AGENCY: Federal Deposit Insurance Corporation (FDIC); Board of Governors of the Federal Reserve System (Board), Office of the Comptroller of the PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 Currency, Treasury (OCC); and Office of Thrift Supervision, Treasury (OTS). ACTION: Final guidance. DATES: Effective upon publication in the Federal Register. SUMMARY: The FDIC, Board, OCC, and OTS (the Agencies) are issuing final guidance on Correspondent Concentration Risks (CCR Guidance). The CCR Guidance outlines the Agencies’ expectations for financial institutions to identify, monitor, and manage credit and funding concentrations to other institutions on a standalone and organization-wide basis, and to take into account exposures to the correspondents’ affiliates, as part of their prudent risk management practices. Institutions also should be aware of their affiliates’ exposures to correspondents as well as the correspondents’ subsidiaries and affiliates. In addition, the CCR Guidance addresses the Agencies’ expectations for financial institutions to perform appropriate due diligence on all credit exposures to and funding transactions with other financial institutions. FOR FURTHER INFORMATION CONTACT: FDIC: Beverlea S. Gardner, Senior Examination Specialist, Division of Supervision and Consumer Protection, (202) 898–3640; or Mark G. Flanigan, Counsel, Legal Division, (202) 898– 7426. Board: Barbara J. Bouchard, Associate Director, (202) 452–3072; or Craig A. Luke, Supervisory Financial Analyst, Supervisory Guidance and Procedures, (202) 452–6409. For users of Telecommunications Device for the Deaf (‘‘TDD’’) only, contact (202) 263–4869. OCC: Kerri R. Corn, Director, Market Risk, (202) 874–4364; or Russell E. Marchand, Technical Lead Expert, Market Risk, (202) 874–4456. OTS: Lori J. Quigley, Managing Director, Supervision, (202) 906–6265; or William J. Magrini, Senior Project Manager of Credit Policy, (202) 906– 5744. SUPPLEMENTARY INFORMATION: I. Background The Agencies developed the CCR Guidance to outline supervisory expectations for financial institutions1 to address correspondent concentration risks and to perform appropriate due diligence on credit exposures to and funding transactions with correspondents as part of their prudent 1 This guidance applies to all banks and their subsidiaries, bank holding companies and their nonbank subsidiaries, savings associations and their subsidiaries, and savings and loan holding companies and their subsidiaries. E:\FR\FM\04MYN1.SGM 04MYN1 mstockstill on DSKH9S0YB1PROD with NOTICES Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices risk management policies and procedures.2 Credit (asset) risk is the potential that an obligation will not be paid in a timely manner or in full. Credit concentration risk arises whenever an institution advances or commits a significant volume of funds to a correspondent, as the advancing institution’s assets are at risk of loss if the correspondent fails to repay. Funding (liability) concentration risk arises when an institution depends heavily on the liquidity provided by one particular correspondent or a limited number of correspondents to meet its funding needs. Funding concentration risk can create an immediate threat to an institution’s viability if the advancing correspondent suddenly reduces the institution’s access to liquid funds. For example, a correspondent might abruptly limit the availability of liquid funding sources as part of a prudent program for limiting credit exposure to one institution or organization or as required by regulation when the financial condition of the institution declines rapidly. The Agencies realize some concentrations arise from the need to meet certain business needs or purposes, such as maintaining large due from balances with a correspondent to facilitate account clearing activities. However, correspondent concentrations represent a lack of diversification that management should consider when formulating strategic plans and internal risk limits. The Agencies generally consider credit exposures arising from direct and indirect obligations in an amount equal to or greater than 25 percent of total capital3 as concentrations. Depending on its size and characteristics, a concentration of credit for a financial institution may represent a funding exposure to the correspondent. While the Agencies have not established a funding concentration threshold, the Agencies have seen instances where funding exposures of 5 percent of an institution’s total liabilities have posed an elevated risk to the recipient, particularly when aggregated with other similar sized funding concentrations. An example of how these interbank correspondent risks can become concentrated is illustrated below: Respondent Institution (RI) has $400 million in total assets and is well capitalized with $40 million (10 2 Unless otherwise indicated, references to ‘‘correspondent’’ include the correspondent’s holding company, subsidiaries, and affiliates. 3 For purposes of this guidance, the term ‘‘total capital’’ means the total risk-based capital as reported for commercial banks and thrifts in the Report of Condition and the Thrift Financial Report, respectively. VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 percent) of total capital. RI maintains $10 million in its due from account held at Correspondent Bank (CB) and sells $20 million in unsecured overnight Federal funds to CB. These relationships collectively result in RI having an aggregate risk exposure of 75 percent of its total capital to CB. CB, which has $2 billion in total assets, $1.8 billion in total liabilities, and is well capitalized with $200 million (10 percent) total capital, has a total of 20 respondent banks (RB) with the same credit exposures to CB as RI has to CB. The 20 RBs’ $600 million aggregate relationship represents one-third (33 percent) of CB’s total liabilities. These relationships create significant funding risk for CB if a few of the RBs withdraw their funds in close proximity of each other. These relationships also could threaten the viability of the 20 RBs. The loss of all or a significant portion of the RBs’ due from balances and the unsecured Federal funds sold to CB could deplete a significant portion of their capital bases, resulting in multiple institution failures. The RBs’ viability also could be jeopardized if CB, in turn, had sold a significant portion of the Federal funds from the RBs to another financial institution that abruptly fails. In addition, the financial institutions that rely on CB for account clearing services may find it difficult to quickly transfer processing services to another provider. Although these interbank exposures may comply with regulations governing individual relationships, collectively they pose significant correspondent concentration risks that need to be monitored and managed consistent with the institutions’ overall riskmanagement policies and procedures. Therefore, the Agencies published the proposed Correspondent Concentration Risks Guidance (Proposed Guidance) for comment and are now issuing the final CCR Guidance after consideration of the comments received on the Proposed Guidance. II. Overview of Public Comments The Agencies received 91 unique comments on the Proposed Guidance primarily from financial institutions and industry trade groups. In general, the commenters agreed with the fundamental principles underlying the CCR Guidance, but some responses characterized the CCR Guidance as excessive, unnecessarily complex, and burdensome. A number of institutions and industry trade groups also voiced concern that the credit and funding thresholds in the CCR Guidance would be applied as ‘‘hard caps’’ rather than as indicators of potentially heightened PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 23765 risk. A few commenters noted that a 5 percent funding threshold was vague and lacked sufficient discussion on relevant issues, such as the type, term and nature of some funding sources. Other commenters raised concerns the CCR Guidance would effectively amend the Board’s Regulation F (Regulation F).4 The Agencies requested comment on all aspects of the Proposed Guidance. The Agencies also specifically requested comment on: • The appropriateness of aggregating all credit and funding exposures that an institution or its organization has advanced or committed to another financial institution or its correspondents when calculating concentrations, and whether some types of advances or commitments should be excluded. • The types of factors institutions should consider when assessing correspondents’ financial condition. • The need to establish internal limits as well as ranges or tolerances for each factor being monitored. • The types of actions that should be considered for contingency planning and the timeframes for implementing those actions to ensure concentrations that meet or exceed organizations’ established internal limits, ranges, or tolerances are reduced in an orderly manner. • The operational issues the Agencies should consider when issuing the final CCR Guidance, such as the single excess balance account limitation.5 In response to the Agencies’ specific questions, many commenters responded that the CCR Guidance needed to be flexible, providing financial institutions latitude in establishing relationships with correspondents that are appropriate with the institutions’ individual risk management practices and business needs. Almost all of the commenters asked the Agencies to clarify the types of loan participations to be included when calculating credit exposures. Further, many commenters supported using Regulation F’s specified factors for assessing institutions’ financial condition and timeframes for contingency plans. Several commenters also suggested that the Agencies should exclude transactions from the credit and funding concentration calculations when these 4 12 CFR part 206. excess balance account (EBA) is an account held at a Federal Reserve Bank that is established for purposes of maintaining the excess balances of one or more eligible institutions through an agent. Under the terms of an EBA agreement, an eligible institution is permitted to participate in one EBA at a Federal Reserve Bank. 5 An E:\FR\FM\04MYN1.SGM 04MYN1 23766 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices transactions would have a nominal effect on the calculations, especially when the recordkeeping and cost of tracking complex exposures outweighed the benefit of obtaining this information. Many commenters also raised concerns that the calculation of credit and funding exposures on both a gross and net basis created significant additional burden on financial institutions. Some commenters suggested that the Agencies should provide a detailed example of how to calculate credit and funding exposures. Further, many commenters also strongly supported the use of multiple excess balance accounts. A small number of commenters stressed that the Agencies need to apply the CCR Guidance uniformly to all financial institutions engaged in correspondent banking services to ensure that smaller scale correspondents are not placed at a competitive disadvantage to large institutions due to a perception of large institutions being ‘‘too big to fail’’ or having government support. In addition, a few commenters asked the Agencies to make the CCR Guidance effective 90 days after its issuance to provide institutions with time to implement any additional procedures that might be needed to ensure compliance. The following discussion summarizes how the Agencies addressed these issues in the CCR Guidance. III. Revisions to the CCR Guidance The Agencies made a number of changes to the Proposed Guidance to respond to comments and to provide additional clarity in the CCR Guidance. mstockstill on DSKH9S0YB1PROD with NOTICES Scope of the CCR Guidance The Agencies revised the CCR Guidance to state that it does not supplant or amend Regulation F, but provides supervisory guidance on correspondent concentration risks. The CCR Guidance clarifies that financial institutions should consider taking actions beyond the minimum requirements established in Regulation F to identify, monitor, and manage correspondent concentration risks in a safe and sound manner, especially when there are rapid changes in market conditions or in a correspondent’s financial condition. The revised CCR Guidance also specifies that the credit and funding thresholds are not ‘‘hard caps’’ or firm limits, but are indicators that a financial institution has concentration risk with a correspondent. In addition, the Agencies modified the credit concentration threshold calculation to reflect positions as a percentage of total capital rather than VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 tier 1 capital. This revision provides consistency with Regulation F. Identifying, Calculating, and Monitoring Correspondent Concentrations The CCR Guidance clarifies that for risk management purposes, institutions should identify correspondent credit and funding concentrations to assist management in assessing how significant economic events or abrupt deterioration in a correspondent’s risk profile might affect their financial condition.6 In responses to commenters’ concerns, the Agencies maintained supervisory flexibility, as the CCR Guidance clarifies that each financial institution should establish appropriate internal parameters (such as information, ratios, trends or other factors) commensurate with the nature, size, and risk characteristics of their correspondent concentrations. An institution’s internal parameters should: • Detail the information, ratios, or trends that will be reviewed for each correspondent on an ongoing basis, • Instruct management to conduct comprehensive assessments of correspondent concentrations that consider its internal parameters, and • Revise the frequency of correspondent concentration reviews when appropriate. The Agencies also clarified the types of loan participations to be included when calculating credit exposures. The Agencies did not exclude transactions that may have a nominal effect from either the credit or funding concentration calculations to ensure consistency with Regulation F. The Agencies maintained their expectation that, as part of prudent risk management, institutions should calculate their credit and funding exposures with a correspondent on both a gross and net basis. While institutions already calculate their exposures on a net basis, the benefit of management being aware of the institution’s overall risk position with a correspondent on a gross basis outweighs the potential burden of conducting a secondary set of calculations to ascertain the institution’s aggregate exposure. Further, the CCR Guidance includes examples on the method for calculating credit and funding exposures on a standalone and 6 Financial institutions should identify and monitor all direct or indirect relationships with their correspondents. Institutions should take into account exposures of their affiliates to correspondents, and how those relationships may affect the institution’s exposure. While each financial institution is responsible for monitoring its own credit and funding exposures, institution holding companies should manage the organization’s concentration risk on a consolidated basis. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 on an organization-wide basis for illustrative purposes only in response to some commenters’ requests for examples. Other Commenter Issues The Agencies appreciate the concern of commenters who remarked that failure to apply the CCR Guidance uniformly to all financial institutions engaged in correspondent banking services could cause smaller scale correspondents to be placed at a competitive disadvantage to large institutions due to a perception of large institutions being ‘‘too big to fail’’ or having government support. The Agencies are working together to ensure that the CCR Guidance is applied uniformly to all financial institutions engaged in correspondent banking services. Further, since institutions already have policies and procedures for identifying, monitoring, and managing credit and funding concentrations on a net basis, the Agencies decided not to delay the effective date of the CCR Guidance. In addition, when the Board authorized Federal Reserve Banks to offer excess balance accounts, the Board stated that it would re-evaluate the continuing need for those accounts when more normal market functioning resumes. 74 FR 25,626 (May 29, 2009). The Board will consider these comments within the context of such a re-evaluation. IV. Text of Final CCR Guidance and Illustrations in Appendix A and Appendix B The text of the final CCR Guidance and the illustrations in Appendix A and Appendix B follows: Correspondent Concentration Risks A financial institution’s 7 relationship with a correspondent 8 may result in credit (asset) and funding (liability) concentrations. On the asset side, a credit concentration represents a significant volume of credit exposure that a financial institution has advanced or committed to a correspondent. On the liability side, a funding concentration exists when an institution depends on one or a few correspondents for a 7 This guidance applies to all banks and their subsidiaries, bank holding companies and their nonbank subsidiaries, savings associations and their subsidiaries, and savings and loan holding companies and their subsidiaries. 8 Unless the context indicates otherwise, references to ‘‘correspondent’’ include the correspondent’s holding company, subsidiaries, and affiliates. A correspondent relationship results when a financial organization provides another financial organization a variety of deposit, lending, or other services. E:\FR\FM\04MYN1.SGM 04MYN1 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices disproportionate share of its total funding. The Agencies 9 realize some concentrations meet certain business needs or purposes, such as a concentration arising from the need to maintain large ‘‘due from’’ balances to facilitate account clearing activities. However, correspondent concentrations represent a lack of diversification, which adds a dimension of risk that management should consider when formulating strategic plans and internal risk limits. The Agencies have generally considered credit exposures greater than 25 percent of total capital 10 as concentrations. While the Agencies have not established a liability concentration threshold, the Agencies have seen instances where funding exposures as low as 5 percent of an institution’s total liabilities have posed an elevated liquidity risk to the recipient institution. These levels of credit and funding exposures are not firm limits, but indicate an institution has concentration risk with a correspondent. Such relationships warrant robust risk management practices, particularly when aggregated with other similarly sized funding concentrations, in addition to meeting the minimum regulatory requirements specified in applicable regulations. Financial institutions should identify, monitor, and manage both asset and liability correspondent concentrations and implement procedures to perform appropriate due diligence on all credit exposures to and funding transactions with correspondents, as part of their overall risk management policies and procedures. This guidance does not supplant or amend applicable regulations such as the Board’s Limitations on Interbank Liabilities (Regulation F).11 This guidance clarifies that financial institutions should consider taking actions beyond the minimum requirements established in Regulation F to identify, monitor, and manage correspondent concentration risks, especially when there are rapid changes in market conditions or in a mstockstill on DSKH9S0YB1PROD with NOTICES 9 The Agencies consist of the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (Board), Office of the Comptroller of the Currency, Treasury (OCC), and Office of Thrift Supervision, Treasury (OTS) (collectively, the Agencies). 10 For purposes of this guidance, the term ‘‘total capital’’ means the total risk-based capital as reported for commercial banks and thrifts in the Report of Condition and the Thrift Financial Report, respectively. 11 12 CFR part 206. All depository institutions insured by the FDIC are subject to Regulation F. VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 correspondent’s financial condition, in order to maintain risk management practices consistent with safe and sound operations. 23767 Identifying Correspondent Concentrations Institutions should implement procedures for identifying correspondent concentrations. For prudent risk management purposes, these procedures should encompass the totality of the institutions’ aggregate credit and funding concentrations to each correspondent on a standalone basis, as well as taking into account exposures to each correspondent organization as a whole.12 In addition, the institution should be aware of exposures of its affiliates to the correspondent and its affiliates. Credit Concentrations Credit concentrations can arise from a variety of assets and activities. For example, an institution could have due from bank accounts, Federal funds sold on a principal basis, and direct or indirect loans to or investments in a correspondent. In identifying credit concentrations for risk management purposes, institutions should aggregate all exposures, including, but not limited to: • Due from bank accounts (demand deposit accounts (DDA) and certificates of deposit (CD)), • Federal funds sold on a principal basis, • The over-collateralized amount on repurchase agreements, • The under-collateralized portion of reverse repurchase agreements, • Net current credit exposure on derivatives contracts, • Unrealized gains on unsettled securities transactions, • Direct or indirect loans to or for the benefit of the correspondent,13 and • Investments, such as trust preferred securities, subordinated debt, and stock purchases, in the correspondent. funding exposure for the correspondent. The primary risk of a funding concentration is that an institution will have to replace those advances on short notice. This risk may be more pronounced if the funds are credit sensitive, or if the financial condition of the party advancing the funds has deteriorated. The percentage of liabilities or other measurements that may constitute a concentration of funding is likely to vary depending on the type and maturity of the funding, and the structure of the recipient’s sources of funds. For example, a concentration in overnight unsecured funding from one source might raise different concentration issues and concerns than unsecured term funding, assuming compliance with covenants and diversification with short and long-term maturities. Similarly, concerns arising from concentrations in long-term unsecured funding typically increase as these instruments near maturity. Calculating Credit and Funding Concentrations When identifying credit and funding concentrations for risk management purposes, institutions should calculate both gross and net exposures to the correspondent on a standalone basis and on a correspondent organization-wide basis as part of their prudent risk management practices. Exposures are reduced to net positions to the extent that the transactions are secured by the net realizable proceeds from readily marketable collateral or are covered by valid and enforceable netting agreements. Appendix A, Calculating Correspondent Exposures, contains examples, which are provided for illustrative purposes only. Funding Concentrations Depending on its size and characteristics, a concentration of credit for a financial institution may be a 12 Financial institutions should identify and monitor all direct or indirect relationships with their correspondents. Institutions should take into account exposures of their affiliates to correspondents, and how those relationships may affect the institution’s exposure. While each financial institution is responsible for monitoring its own credit and funding exposures, institution holding companies, if any, should manage the organization’s concentration risk on a consolidated basis. 13 Exclude loan participations purchased without recourse from a correspondent, its holding company, or an affiliate. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 Monitoring Correspondent Relationships Prudent management of correspondent concentration risks includes establishing and maintaining written policies and procedures to prevent excessive exposure to any correspondent in relation to the correspondent’s financial condition. For risk management purposes, institutions’ procedures and frequency for monitoring correspondent relationships may be more or less aggressive depending on the nature, size, and risk of the exposure. In monitoring correspondent relationships for risk-management purposes, institutions should specify internal parameters relative to what information, ratios, or trends will be reviewed for each correspondent on an ongoing basis. In addition to a E:\FR\FM\04MYN1.SGM 04MYN1 23768 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices correspondent’s capital, level of problem loans, and earnings, institutions may want to monitor other factors, which could include, but are not limited to: • Deteriorating trends in capital or asset quality. • Reaching certain target ratios established by management, e.g., aggregate of nonaccrual and past due loans and leases as a percentage of gross loans and leases. • Increasing level of other real estate owned. • Attaining internally specified levels of volatile funding sources such as large CDs or brokered deposits. • Experiencing a downgrade in its credit rating, if publicly traded. • Being placed under a public enforcement action. For prudent risk management purposes, institutions should implement procedures that ensure ongoing, timely reviews of correspondent relationships. Institutions should use these reviews to conduct comprehensive assessments that consider their internal parameters and are commensurate with the nature, size, and risk of their exposure. Institutions should increase the frequency of their internal reviews when appropriate, as even well capitalized institutions can experience rapid deterioration in their financial condition, especially in economic downturns. Institutions’ procedures also should establish documentation requirements for the reviews conducted. In addition, the procedures should specify when relationships that meet or exceed internal criteria are to be brought to the attention of the board of directors or the appropriate management committee. Managing Correspondent Concentrations Institutions should establish prudent internal concentration limits, as well as ranges or tolerances for each factor being monitored for each correspondent. Institutions should develop plans for managing risk when these internal limits, ranges or tolerances are met or exceeded, either on an individual or collective basis. Contingency plans should provide a variety of actions that can be considered relative to changes in the correspondent’s financial condition. However, contingency plans should not rely on temporary deposit insurance programs for mitigating concentration risk. Prudent risk management of correspondent concentration risks should include procedures that provide for orderly reductions of correspondent concentrations that exceed internal parameters over a reasonable timeframe that is commensurate with the size, type, and volatility of the risk in the exposure. Such actions could include, but are not limited to: • Reducing the volume of uncollateralized/uninsured funds. • Transferring excess funds to other correspondents after conducting appropriate reviews of their financial condition. • Requiring the correspondent to serve as agent rather than as principal for Federal funds sold. • Establishing limits on asset and liability purchases from and investments in correspondents. • Specifying reasonable timeframes to meet targeted reduction goals for different types of exposures. Examiners will review correspondent relationships during examinations to ascertain whether an institution’s policies and procedures appropriately identify and monitor correspondent concentrations. Examiners also will review the adequacy and reasonableness of institutions’ contingency plans to manage correspondent concentrations. Performing Appropriate Due Diligence Financial institutions that maintain credit exposures in or provide funding to other financial institutions should have effective risk management programs for these activities. For this purpose, credit or funding exposures may include, but are not limited to, due from bank accounts, Federal funds sold as principal, direct or indirect loans (including participations and syndications), and trust preferred securities, subordinated debt, and stock purchases of the correspondent. An institution that maintains or contemplates entering into any credit or funding transactions with another financial institution should have written investment, lending, and funding policies and procedures, including appropriate limits, that govern these activities. In addition, these procedures should ensure the institution conducts an independent analysis of credit transactions prior to committing to engage in the transactions. The terms for all such credit and funding transactions should strictly be on an arm’s length basis, conform to sound investment, lending, and funding practices, and avoid potential conflicts of interest. Appendix A Calculating Respondent Credit Exposures on an Organization-Wide Basis Respondent Bank’s Gross Credit Exposure to a Correspondent, its Holding Company and Affiliates mstockstill on DSKH9S0YB1PROD with NOTICES 50,000,000 1,000,000 1,000,000 500,000 51,500,000 2,500,000 3,750,000 250,000 4,500,000 2,500,000 117,500,000 100,000,000 118% Due from DDA with correspondent. Due from DDA with correspondent’s two affiliated insured depository institutions (IDIs). CDs issued by correspondent bank. CDs issued by one of correspondent’s two affiliated IDIs. Federal funds sold to correspondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Reverse Repurchase agreements. Net current credit exposure on derivatives.1 Direct and indirect loans to or for benefit of a correspondent, its holding company, or affiliates. Investments in the correspondent, its holding company, or affiliates Gross Credit Exposure. Total Capital. Gross Credit Concentration. Respondent Bank’s Net Credit Exposure to a Correspondent, its Holding Company and Affiliates 17,850,000 500,000 750,000 250,000 VerDate Mar<15>2010 Due Due CDs CDs from DDA (less checks/cash not available for withdrawal & federal deposit insurance (FDI)).2 from DDA with correspondent’s two affiliated IDIs (less FDI).2 issued by correspondent bank (less FDI). issued by one of correspondent’s two affiliated IDIs (less FDI). 18:58 May 03, 2010 Jkt 220001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\04MYN1.SGM 04MYN1 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 51,500,000 2,500,000 100,000 23769 Federal funds sold on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Under-collateralized amount on reverse repurchase agreements (less the current market value of government securities or readily marketable collateral pledged).3 Uncollateralized net current derivative position.1 Direct and indirect loans to or for benefit of a correspondent, its holding company, or affiliates. Investments in the correspondent, its holding company, or affiliates. 50,000 4,500,000 2,500,000 80,500,000 100,000,000 81% Net Credit Exposure. Total Capital. Net Credit Concentration. Note: Respondent Bank has $1 billion in Total Assets, 10% Total Capital, and 90% Total Liabilities and Correspondent Bank has $1.5 billion in Total Assets, 10% Total Capital, and 90% Total Liabilities. Calculating Correspondent Funding Exposures on an Organization-Wide Basis Correspondent Bank’s Gross Funding Exposure to a Respondent Bank 50,000,000 1,000,000 1,000,000 500,000 51,500,000 2,500,000 1,000,000 107,500,000 1,350,000,000 7.96% Due to DDA with respondent. Correspondent’s two affiliated IDIs’ Due to DDA with respondent. CDs sold to respondent bank. CDs sold to respondent from one of correspondent’s two affiliated IDIs. Federal funds purchased from respondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Repurchase Agreements. Gross Funding Exposure. Total Liabilities. Gross Funding Concentration. Correspondent Bank’s Net Funding Exposure to a Respondent, its Holding Company and Affiliates 17,850,000 500,000 750,000 250,000 51,500,000 2,500,000 150,000 73,500,000 1,350,000,000 5.44% Due to DDA with respondent (less checks and cash not available for withdrawal and FDI).2 Correspondent’s two affiliated IDIs’ Due to DDA with respondent (less FDI).2 CDs sold to correspondent (less FDI). One of correspondent’s two affiliated IDIs’ CDs sold to respondent (less FDI).2 Federal funds purchased from respondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Under-collateralized amount of repurchase agreements relative to the current market value of government securities or readily marketable collateral pledged.3 Net Funding Exposure. Total Liabilities. Net Funding Concentration. 1 There are 5 derivative contracts with a mark-to-market fair value position as follows: Contract 1 (100), Contract 2 +400, Contract 3 (50), Contract 4 +150, and Contract 5 (150). Collateral is 200, resulting in an uncollateralized position of 50. 2 While temporary deposit insurance programs may provide certain transaction accounts higher levels of federal deposit insurance coverage, institutions should not rely on such programs for mitigating concentration risk. 3 Government securities means obligations of, or obligations fully guaranteed as to principal and interest by, the U.S. government or any department, agency, bureau, board, commission, or establishment of the United States, or any corporation wholly owned, directly or indirectly, by the United States. Appendix B mstockstill on DSKH9S0YB1PROD with NOTICES Calculating Respondent Credit Exposures on a Correspondent Only Basis RESPONDENT BANK’S GROSS CREDIT EXPOSURE TO A CORRESPONDENT 50,000,000 0 1,000,000 0 51,500,000 0 3,750,000 VerDate Mar<15>2010 Due from DDA with correspondent. Due from DDA with correspondent’s two affiliated insured depository institutions (IDIs). CDs issued by correspondent bank. CDs issued by one of correspondent’s two affiliated IDIs. Federal funds sold to correspondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Reverse Repurchase agreements. 18:58 May 03, 2010 Jkt 220001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\04MYN1.SGM 04MYN1 23770 250,000 4,500,000 2,500,000 113,500,000 100,000,000 114% Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices Net current credit exposure on derivatives.1 Direct and indirect loans to or for benefit of a correspondent, its holding company, or affiliates. Investments in the correspondent, its holding company, or affiliates. Gross Credit Exposure. Total Capital. Gross Credit Concentration. Respondent Bank’s Net Credit Exposure to a Correspondent 17,850,000 0 750,000 0 51,500,000 0 100,000 50,000 4,500,000 2,500,000 77,250,000 100,000,000 77% Due from DDA (less checks/cash not available for withdrawal and federal deposit insurance (FDI)).2 Due from DDA with correspondent’s two affiliated IDIs (less FDI).2 CDs issued by correspondent bank (less FDI). CDs issued by one of correspondent’s two affiliated IDIs (less FDI). Federal funds sold on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Under-collateralized amount on reverse repurchase agreements (less the current market value of government securities or readily marketable collateral pledged).3 Uncollateralized net current derivative position.1 Direct and indirect loans to or for benefit of a correspondent, its holding company, or affiliates. Investments in the correspondent, its holding company, or affiliates. Net Credit Exposure. Total Capital. Net Credit Concentration. Note: Respondent Bank has $1 billion in Total Assets, 10% Total Capital, and 90% Total Liabilities and Correspondent Bank has $1.5 billion in Total Assets, 10% Total Capital, and 90% Total Liabilities. Calculating Respondent Funding Exposures on a Correspondent Only Basis Correspondent Bank’s Gross Funding Exposure to a Respondent 50,000,000 0 1,000,000 0 51,500,000 0 1,000,000 103,500,000 1,350,000,000 7.67% Due to DDA with respondent. Correspondent’s two affiliated IDIs’ Due to DDA with respondent. CDs sold to respondent bank. CDs sold to respondent from one of correspondent’s two affiliated IDIs. Federal funds purchased from respondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Repurchase agreements. Gross Funding Exposure. Total Liabilities. Gross Funding Concentration. Correspondent Bank’s Net Funding Exposure to a Respondent 17,850,000 0 750,000 0 51,500,000 0 100,000 mstockstill on DSKH9S0YB1PROD with NOTICES 70,200,000 1,350,000,000 5.20% Due to DDA with respondent (less checks and cash not available for withdrawal and FDI).2 Correspondent’s two affiliated IDIs’ Due to DDA with respondent (less FDI).2 CDs sold to correspondent (less FDI). One of correspondent’s two affiliated IDIs’ CDs sold to respondent (less FDI).2 Federal funds purchased from respondent on a principal basis. Federal funds sold to correspondent’s affiliated IDIs on a principal basis. Under-collateralized amount on repurchase agreements (less the current market value of government securities or readily marketable collateral pledged).3 Net Funding Exposure. Total Liabilities. Net Funding Concentration. 1 There are 5 derivative contracts with a mark-to-market fair value position as follows: Contract 1 (100), Contract 2 +400, Contract 3 (50), Contract 4 +150, and Contract 5 (150). Collateral is 200, resulting in an uncollateralized position of 50. 2 While temporary deposit insurance programs may provide certain transaction accounts higher levels of federal deposit insurance coverage, institutions should not rely on such programs for mitigating concentration risk. 3 Government securities means obligations of, or obligations fully guaranteed as to principal and interest by, the U.S. government or any department, agency, bureau, board, commission, or establishment of the United States, or any corporation wholly owned, directly or indirectly, by the United States. VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\04MYN1.SGM 04MYN1 23771 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices Dated at Washington, DC, the 27th day of April 2010. By order of the Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. By order of the Board of Governors of the Federal Reserve System. Jennifer J. Johnson, Secretary of the Board. John C. Dugan, Comptroller of the Currency. Dated: April 9, 2010. By the Office of Thrift Supervision. John E. Bowman, Acting Director. BILLING CODE 6714–01–P, 6210–01–P, 4810–33–P, 6720–01–P to obtain a copy of the data collection plans and draft instruments, e-mail paperwork@hrsa.gov or call the HRSA Reports Clearance Officer at (301) 443– 1129. Comments are invited on: (a) The proposed collection of information for the proper performance of the functions of the agency; (b) the accuracy of the agency’s estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. DEPARTMENT OF HEALTH AND HUMAN SERVICES Proposed Project: Children’s Hospital Graduate Medical Education Payment Program (CHGME PP) Annual Report (OMB No. 0915–0313)—Extension [FR Doc. 2010–10382 Filed 5–3–10; 8:45 am] Health Resources and Services Administration Agency Information Collection Activities: Proposed Collection: Comment Request In compliance with the requirement for opportunity for public comment on proposed data collection projects (section 3506(c)(2)(A) of Title 44, United States Code, as amended by the Paperwork Reduction Act of 1995, Pub. L. 104–13), the Health Resources and Services Administration (HRSA) publishes periodic summaries of proposed projects being developed for submission to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995. To request more information on the proposed project or The CHGME PP was enacted by Public Law 106–129 to provide Federal support for graduate medical education (GME) to freestanding children’s hospitals, similar to Medicare GME support received by other, nonchildren’s hospitals. The legislation indicates that eligible children’s hospitals will receive payments for both direct and indirect medical education. Direct payments are designed to offset the expenses associated with operating approved graduate medical residency training programs and indirect payments are designed to compensate hospitals for expenses associated with the treatment of more severely ill patients and the additional costs relating to teaching residents in such programs. Number of respondents Form name Responses per respondent Total number of responses The CHGME PP program was reauthorized for a period of five years in October 2006 by Public Law 109–307. The reauthorizing legislation requires that participating children’s hospitals provide information about their residency training programs in an annual report that will be an addendum to the hospitals’ annual applications for funds. Data are required to be collected on the (1) Types of training programs that the hospital provided for residents such as general pediatrics, internal medicine/ pediatrics, and pediatric subspecialties including both medical subspecialties certified and non-medical subspecialties; (2) the number of training positions for residents, the number of such positions recruited to fill, and the number of positions filled; (3) the types of training that the hospital provided for residents related to the health care needs of difference populations such as children who are underserved for reasons of family income or geographic location, including rural and urban areas; (4) changes in residency training including changes in curricula, training experiences, and types of training programs, and benefits that have resulted from such changes and changes for purposed of training residents in the measurement and improvement and the quality and safety of patient care; (5) and the numbers of residents (disaggregated by specialty and subspecialty) who completed training in the academic year and care for children within the borders of the service area of the hospital or within the borders of the State in which the hospital is located. The estimated annual burden is as follows: Hours per response Total burden hours Wage rate ($/hr.) Total hour cost 57 1 57 10.0 570.0 56.38 32,136.60 57 1 57 74.8 4263.6 56.38 240,381.76 Total .................................................. mstockstill on DSKH9S0YB1PROD with NOTICES Screening Instrument ............................... (HRSA 100–1) .......................................... Annual Report: Hospital and ProgramLevel Information .................................. (HRSA 100–2 and 3) ............................... 57 .................... 57 84.8 4833.6 56.38 272,518.36 VerDate Mar<15>2010 18:58 May 03, 2010 Jkt 220001 PO 00000 Frm 00108 Fmt 4703 Sfmt 9990 E:\FR\FM\04MYN1.SGM 04MYN1

Agencies

[Federal Register Volume 75, Number 85 (Tuesday, May 4, 2010)]
[Notices]
[Pages 23764-23771]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-10382]


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FEDERAL DEPOSIT INSURANCE CORPORATION

FEDERAL RESERVE SYSTEM

[Docket No. OP-1369]

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

[Docket ID OCC-2010-0016]

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

[Docket ID OTS-2010-0013]


Correspondent Concentration Risks

AGENCY: Federal Deposit Insurance Corporation (FDIC); Board of 
Governors of the Federal Reserve System (Board), Office of the 
Comptroller of the Currency, Treasury (OCC); and Office of Thrift 
Supervision, Treasury (OTS).

ACTION: Final guidance.

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DATES: Effective upon publication in the Federal Register.

SUMMARY: The FDIC, Board, OCC, and OTS (the Agencies) are issuing final 
guidance on Correspondent Concentration Risks (CCR Guidance). The CCR 
Guidance outlines the Agencies' expectations for financial institutions 
to identify, monitor, and manage credit and funding concentrations to 
other institutions on a standalone and organization-wide basis, and to 
take into account exposures to the correspondents' affiliates, as part 
of their prudent risk management practices. Institutions also should be 
aware of their affiliates' exposures to correspondents as well as the 
correspondents' subsidiaries and affiliates. In addition, the CCR 
Guidance addresses the Agencies' expectations for financial 
institutions to perform appropriate due diligence on all credit 
exposures to and funding transactions with other financial 
institutions.

FOR FURTHER INFORMATION CONTACT: FDIC: Beverlea S. Gardner, Senior 
Examination Specialist, Division of Supervision and Consumer 
Protection, (202) 898-3640; or Mark G. Flanigan, Counsel, Legal 
Division, (202) 898-7426.
    Board: Barbara J. Bouchard, Associate Director, (202) 452-3072; or 
Craig A. Luke, Supervisory Financial Analyst, Supervisory Guidance and 
Procedures, (202) 452-6409. For users of Telecommunications Device for 
the Deaf (``TDD'') only, contact (202) 263-4869.
    OCC: Kerri R. Corn, Director, Market Risk, (202) 874-4364; or 
Russell E. Marchand, Technical Lead Expert, Market Risk, (202) 874-
4456.
    OTS: Lori J. Quigley, Managing Director, Supervision, (202) 906-
6265; or William J. Magrini, Senior Project Manager of Credit Policy, 
(202) 906-5744.

SUPPLEMENTARY INFORMATION:

I. Background

    The Agencies developed the CCR Guidance to outline supervisory 
expectations for financial institutions\1\ to address correspondent 
concentration risks and to perform appropriate due diligence on credit 
exposures to and funding transactions with correspondents as part of 
their prudent

[[Page 23765]]

risk management policies and procedures.\2\ Credit (asset) risk is the 
potential that an obligation will not be paid in a timely manner or in 
full. Credit concentration risk arises whenever an institution advances 
or commits a significant volume of funds to a correspondent, as the 
advancing institution's assets are at risk of loss if the correspondent 
fails to repay.
---------------------------------------------------------------------------

    \1\ This guidance applies to all banks and their subsidiaries, 
bank holding companies and their nonbank subsidiaries, savings 
associations and their subsidiaries, and savings and loan holding 
companies and their subsidiaries.
    \2\ Unless otherwise indicated, references to ``correspondent'' 
include the correspondent's holding company, subsidiaries, and 
affiliates.
---------------------------------------------------------------------------

    Funding (liability) concentration risk arises when an institution 
depends heavily on the liquidity provided by one particular 
correspondent or a limited number of correspondents to meet its funding 
needs. Funding concentration risk can create an immediate threat to an 
institution's viability if the advancing correspondent suddenly reduces 
the institution's access to liquid funds. For example, a correspondent 
might abruptly limit the availability of liquid funding sources as part 
of a prudent program for limiting credit exposure to one institution or 
organization or as required by regulation when the financial condition 
of the institution declines rapidly. The Agencies realize some 
concentrations arise from the need to meet certain business needs or 
purposes, such as maintaining large due from balances with a 
correspondent to facilitate account clearing activities. However, 
correspondent concentrations represent a lack of diversification that 
management should consider when formulating strategic plans and 
internal risk limits.
    The Agencies generally consider credit exposures arising from 
direct and indirect obligations in an amount equal to or greater than 
25 percent of total capital\3\ as concentrations. Depending on its size 
and characteristics, a concentration of credit for a financial 
institution may represent a funding exposure to the correspondent. 
While the Agencies have not established a funding concentration 
threshold, the Agencies have seen instances where funding exposures of 
5 percent of an institution's total liabilities have posed an elevated 
risk to the recipient, particularly when aggregated with other similar 
sized funding concentrations. An example of how these interbank 
correspondent risks can become concentrated is illustrated below:
---------------------------------------------------------------------------

    \3\ For purposes of this guidance, the term ``total capital'' 
means the total risk-based capital as reported for commercial banks 
and thrifts in the Report of Condition and the Thrift Financial 
Report, respectively.
---------------------------------------------------------------------------

    Respondent Institution (RI) has $400 million in total assets and is 
well capitalized with $40 million (10 percent) of total capital. RI 
maintains $10 million in its due from account held at Correspondent 
Bank (CB) and sells $20 million in unsecured overnight Federal funds to 
CB. These relationships collectively result in RI having an aggregate 
risk exposure of 75 percent of its total capital to CB. CB, which has 
$2 billion in total assets, $1.8 billion in total liabilities, and is 
well capitalized with $200 million (10 percent) total capital, has a 
total of 20 respondent banks (RB) with the same credit exposures to CB 
as RI has to CB. The 20 RBs' $600 million aggregate relationship 
represents one-third (33 percent) of CB's total liabilities. These 
relationships create significant funding risk for CB if a few of the 
RBs withdraw their funds in close proximity of each other.
    These relationships also could threaten the viability of the 20 
RBs. The loss of all or a significant portion of the RBs' due from 
balances and the unsecured Federal funds sold to CB could deplete a 
significant portion of their capital bases, resulting in multiple 
institution failures. The RBs' viability also could be jeopardized if 
CB, in turn, had sold a significant portion of the Federal funds from 
the RBs to another financial institution that abruptly fails. In 
addition, the financial institutions that rely on CB for account 
clearing services may find it difficult to quickly transfer processing 
services to another provider.
    Although these interbank exposures may comply with regulations 
governing individual relationships, collectively they pose significant 
correspondent concentration risks that need to be monitored and managed 
consistent with the institutions' overall risk-management policies and 
procedures. Therefore, the Agencies published the proposed 
Correspondent Concentration Risks Guidance (Proposed Guidance) for 
comment and are now issuing the final CCR Guidance after consideration 
of the comments received on the Proposed Guidance.

II. Overview of Public Comments

    The Agencies received 91 unique comments on the Proposed Guidance 
primarily from financial institutions and industry trade groups. In 
general, the commenters agreed with the fundamental principles 
underlying the CCR Guidance, but some responses characterized the CCR 
Guidance as excessive, unnecessarily complex, and burdensome. A number 
of institutions and industry trade groups also voiced concern that the 
credit and funding thresholds in the CCR Guidance would be applied as 
``hard caps'' rather than as indicators of potentially heightened risk. 
A few commenters noted that a 5 percent funding threshold was vague and 
lacked sufficient discussion on relevant issues, such as the type, term 
and nature of some funding sources. Other commenters raised concerns 
the CCR Guidance would effectively amend the Board's Regulation F 
(Regulation F).\4\
---------------------------------------------------------------------------

    \4\ 12 CFR part 206.
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    The Agencies requested comment on all aspects of the Proposed 
Guidance. The Agencies also specifically requested comment on:
     The appropriateness of aggregating all credit and funding 
exposures that an institution or its organization has advanced or 
committed to another financial institution or its correspondents when 
calculating concentrations, and whether some types of advances or 
commitments should be excluded.
     The types of factors institutions should consider when 
assessing correspondents' financial condition.
     The need to establish internal limits as well as ranges or 
tolerances for each factor being monitored.
     The types of actions that should be considered for 
contingency planning and the timeframes for implementing those actions 
to ensure concentrations that meet or exceed organizations' established 
internal limits, ranges, or tolerances are reduced in an orderly 
manner.
     The operational issues the Agencies should consider when 
issuing the final CCR Guidance, such as the single excess balance 
account limitation.\5\
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    \5\ An excess balance account (EBA) is an account held at a 
Federal Reserve Bank that is established for purposes of maintaining 
the excess balances of one or more eligible institutions through an 
agent. Under the terms of an EBA agreement, an eligible institution 
is permitted to participate in one EBA at a Federal Reserve Bank.
---------------------------------------------------------------------------

    In response to the Agencies' specific questions, many commenters 
responded that the CCR Guidance needed to be flexible, providing 
financial institutions latitude in establishing relationships with 
correspondents that are appropriate with the institutions' individual 
risk management practices and business needs. Almost all of the 
commenters asked the Agencies to clarify the types of loan 
participations to be included when calculating credit exposures. 
Further, many commenters supported using Regulation F's specified 
factors for assessing institutions' financial condition and timeframes 
for contingency plans.
    Several commenters also suggested that the Agencies should exclude 
transactions from the credit and funding concentration calculations 
when these

[[Page 23766]]

transactions would have a nominal effect on the calculations, 
especially when the recordkeeping and cost of tracking complex 
exposures outweighed the benefit of obtaining this information. Many 
commenters also raised concerns that the calculation of credit and 
funding exposures on both a gross and net basis created significant 
additional burden on financial institutions. Some commenters suggested 
that the Agencies should provide a detailed example of how to calculate 
credit and funding exposures. Further, many commenters also strongly 
supported the use of multiple excess balance accounts.
    A small number of commenters stressed that the Agencies need to 
apply the CCR Guidance uniformly to all financial institutions engaged 
in correspondent banking services to ensure that smaller scale 
correspondents are not placed at a competitive disadvantage to large 
institutions due to a perception of large institutions being ``too big 
to fail'' or having government support. In addition, a few commenters 
asked the Agencies to make the CCR Guidance effective 90 days after its 
issuance to provide institutions with time to implement any additional 
procedures that might be needed to ensure compliance. The following 
discussion summarizes how the Agencies addressed these issues in the 
CCR Guidance.

III. Revisions to the CCR Guidance

    The Agencies made a number of changes to the Proposed Guidance to 
respond to comments and to provide additional clarity in the CCR 
Guidance.

Scope of the CCR Guidance

    The Agencies revised the CCR Guidance to state that it does not 
supplant or amend Regulation F, but provides supervisory guidance on 
correspondent concentration risks. The CCR Guidance clarifies that 
financial institutions should consider taking actions beyond the 
minimum requirements established in Regulation F to identify, monitor, 
and manage correspondent concentration risks in a safe and sound 
manner, especially when there are rapid changes in market conditions or 
in a correspondent's financial condition. The revised CCR Guidance also 
specifies that the credit and funding thresholds are not ``hard caps'' 
or firm limits, but are indicators that a financial institution has 
concentration risk with a correspondent. In addition, the Agencies 
modified the credit concentration threshold calculation to reflect 
positions as a percentage of total capital rather than tier 1 capital. 
This revision provides consistency with Regulation F.

Identifying, Calculating, and Monitoring Correspondent Concentrations

    The CCR Guidance clarifies that for risk management purposes, 
institutions should identify correspondent credit and funding 
concentrations to assist management in assessing how significant 
economic events or abrupt deterioration in a correspondent's risk 
profile might affect their financial condition.\6\ In responses to 
commenters' concerns, the Agencies maintained supervisory flexibility, 
as the CCR Guidance clarifies that each financial institution should 
establish appropriate internal parameters (such as information, ratios, 
trends or other factors) commensurate with the nature, size, and risk 
characteristics of their correspondent concentrations. An institution's 
internal parameters should:
---------------------------------------------------------------------------

    \6\ Financial institutions should identify and monitor all 
direct or indirect relationships with their correspondents. 
Institutions should take into account exposures of their affiliates 
to correspondents, and how those relationships may affect the 
institution's exposure. While each financial institution is 
responsible for monitoring its own credit and funding exposures, 
institution holding companies should manage the organization's 
concentration risk on a consolidated basis.
---------------------------------------------------------------------------

     Detail the information, ratios, or trends that will be 
reviewed for each correspondent on an ongoing basis,
     Instruct management to conduct comprehensive assessments 
of correspondent concentrations that consider its internal parameters, 
and
     Revise the frequency of correspondent concentration 
reviews when appropriate.
    The Agencies also clarified the types of loan participations to be 
included when calculating credit exposures. The Agencies did not 
exclude transactions that may have a nominal effect from either the 
credit or funding concentration calculations to ensure consistency with 
Regulation F.
    The Agencies maintained their expectation that, as part of prudent 
risk management, institutions should calculate their credit and funding 
exposures with a correspondent on both a gross and net basis. While 
institutions already calculate their exposures on a net basis, the 
benefit of management being aware of the institution's overall risk 
position with a correspondent on a gross basis outweighs the potential 
burden of conducting a secondary set of calculations to ascertain the 
institution's aggregate exposure. Further, the CCR Guidance includes 
examples on the method for calculating credit and funding exposures on 
a standalone and on an organization-wide basis for illustrative 
purposes only in response to some commenters' requests for examples.

Other Commenter Issues

    The Agencies appreciate the concern of commenters who remarked that 
failure to apply the CCR Guidance uniformly to all financial 
institutions engaged in correspondent banking services could cause 
smaller scale correspondents to be placed at a competitive disadvantage 
to large institutions due to a perception of large institutions being 
``too big to fail'' or having government support. The Agencies are 
working together to ensure that the CCR Guidance is applied uniformly 
to all financial institutions engaged in correspondent banking 
services. Further, since institutions already have policies and 
procedures for identifying, monitoring, and managing credit and funding 
concentrations on a net basis, the Agencies decided not to delay the 
effective date of the CCR Guidance. In addition, when the Board 
authorized Federal Reserve Banks to offer excess balance accounts, the 
Board stated that it would re-evaluate the continuing need for those 
accounts when more normal market functioning resumes. 74 FR 25,626 (May 
29, 2009). The Board will consider these comments within the context of 
such a re-evaluation.

IV. Text of Final CCR Guidance and Illustrations in Appendix A and 
Appendix B

    The text of the final CCR Guidance and the illustrations in 
Appendix A and Appendix B follows:

Correspondent Concentration Risks

    A financial institution's \7\ relationship with a correspondent \8\ 
may result in credit (asset) and funding (liability) concentrations. On 
the asset side, a credit concentration represents a significant volume 
of credit exposure that a financial institution has advanced or 
committed to a correspondent. On the liability side, a funding 
concentration exists when an institution depends on one or a few 
correspondents for a

[[Page 23767]]

disproportionate share of its total funding.
---------------------------------------------------------------------------

    \7\ This guidance applies to all banks and their subsidiaries, 
bank holding companies and their nonbank subsidiaries, savings 
associations and their subsidiaries, and savings and loan holding 
companies and their subsidiaries.
    \8\ Unless the context indicates otherwise, references to 
``correspondent'' include the correspondent's holding company, 
subsidiaries, and affiliates. A correspondent relationship results 
when a financial organization provides another financial 
organization a variety of deposit, lending, or other services.
---------------------------------------------------------------------------

    The Agencies \9\ realize some concentrations meet certain business 
needs or purposes, such as a concentration arising from the need to 
maintain large ``due from'' balances to facilitate account clearing 
activities. However, correspondent concentrations represent a lack of 
diversification, which adds a dimension of risk that management should 
consider when formulating strategic plans and internal risk limits.
---------------------------------------------------------------------------

    \9\ The Agencies consist of the Federal Deposit Insurance 
Corporation (FDIC), Board of Governors of the Federal Reserve System 
(Board), Office of the Comptroller of the Currency, Treasury (OCC), 
and Office of Thrift Supervision, Treasury (OTS) (collectively, the 
Agencies).
---------------------------------------------------------------------------

    The Agencies have generally considered credit exposures greater 
than 25 percent of total capital \10\ as concentrations. While the 
Agencies have not established a liability concentration threshold, the 
Agencies have seen instances where funding exposures as low as 5 
percent of an institution's total liabilities have posed an elevated 
liquidity risk to the recipient institution.
---------------------------------------------------------------------------

    \10\ For purposes of this guidance, the term ``total capital'' 
means the total risk-based capital as reported for commercial banks 
and thrifts in the Report of Condition and the Thrift Financial 
Report, respectively.
---------------------------------------------------------------------------

    These levels of credit and funding exposures are not firm limits, 
but indicate an institution has concentration risk with a 
correspondent. Such relationships warrant robust risk management 
practices, particularly when aggregated with other similarly sized 
funding concentrations, in addition to meeting the minimum regulatory 
requirements specified in applicable regulations. Financial 
institutions should identify, monitor, and manage both asset and 
liability correspondent concentrations and implement procedures to 
perform appropriate due diligence on all credit exposures to and 
funding transactions with correspondents, as part of their overall risk 
management policies and procedures.
    This guidance does not supplant or amend applicable regulations 
such as the Board's Limitations on Interbank Liabilities (Regulation 
F).\11\ This guidance clarifies that financial institutions should 
consider taking actions beyond the minimum requirements established in 
Regulation F to identify, monitor, and manage correspondent 
concentration risks, especially when there are rapid changes in market 
conditions or in a correspondent's financial condition, in order to 
maintain risk management practices consistent with safe and sound 
operations.
---------------------------------------------------------------------------

    \11\ 12 CFR part 206. All depository institutions insured by the 
FDIC are subject to Regulation F.
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Identifying Correspondent Concentrations
    Institutions should implement procedures for identifying 
correspondent concentrations. For prudent risk management purposes, 
these procedures should encompass the totality of the institutions' 
aggregate credit and funding concentrations to each correspondent on a 
standalone basis, as well as taking into account exposures to each 
correspondent organization as a whole.\12\ In addition, the institution 
should be aware of exposures of its affiliates to the correspondent and 
its affiliates.
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    \12\ Financial institutions should identify and monitor all 
direct or indirect relationships with their correspondents. 
Institutions should take into account exposures of their affiliates 
to correspondents, and how those relationships may affect the 
institution's exposure. While each financial institution is 
responsible for monitoring its own credit and funding exposures, 
institution holding companies, if any, should manage the 
organization's concentration risk on a consolidated basis.
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Credit Concentrations
    Credit concentrations can arise from a variety of assets and 
activities. For example, an institution could have due from bank 
accounts, Federal funds sold on a principal basis, and direct or 
indirect loans to or investments in a correspondent. In identifying 
credit concentrations for risk management purposes, institutions should 
aggregate all exposures, including, but not limited to:
     Due from bank accounts (demand deposit accounts (DDA) and 
certificates of deposit (CD)),
     Federal funds sold on a principal basis,
     The over-collateralized amount on repurchase agreements,
     The under-collateralized portion of reverse repurchase 
agreements,
     Net current credit exposure on derivatives contracts,
     Unrealized gains on unsettled securities transactions,
     Direct or indirect loans to or for the benefit of the 
correspondent,\13\ and
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    \13\ Exclude loan participations purchased without recourse from 
a correspondent, its holding company, or an affiliate.
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     Investments, such as trust preferred securities, 
subordinated debt, and stock purchases, in the correspondent.
Funding Concentrations
    Depending on its size and characteristics, a concentration of 
credit for a financial institution may be a funding exposure for the 
correspondent. The primary risk of a funding concentration is that an 
institution will have to replace those advances on short notice. This 
risk may be more pronounced if the funds are credit sensitive, or if 
the financial condition of the party advancing the funds has 
deteriorated.
    The percentage of liabilities or other measurements that may 
constitute a concentration of funding is likely to vary depending on 
the type and maturity of the funding, and the structure of the 
recipient's sources of funds. For example, a concentration in overnight 
unsecured funding from one source might raise different concentration 
issues and concerns than unsecured term funding, assuming compliance 
with covenants and diversification with short and long-term maturities. 
Similarly, concerns arising from concentrations in long-term unsecured 
funding typically increase as these instruments near maturity.
Calculating Credit and Funding Concentrations
    When identifying credit and funding concentrations for risk 
management purposes, institutions should calculate both gross and net 
exposures to the correspondent on a standalone basis and on a 
correspondent organization-wide basis as part of their prudent risk 
management practices. Exposures are reduced to net positions to the 
extent that the transactions are secured by the net realizable proceeds 
from readily marketable collateral or are covered by valid and 
enforceable netting agreements. Appendix A, Calculating Correspondent 
Exposures, contains examples, which are provided for illustrative 
purposes only.
Monitoring Correspondent Relationships
    Prudent management of correspondent concentration risks includes 
establishing and maintaining written policies and procedures to prevent 
excessive exposure to any correspondent in relation to the 
correspondent's financial condition. For risk management purposes, 
institutions' procedures and frequency for monitoring correspondent 
relationships may be more or less aggressive depending on the nature, 
size, and risk of the exposure.
    In monitoring correspondent relationships for risk-management 
purposes, institutions should specify internal parameters relative to 
what information, ratios, or trends will be reviewed for each 
correspondent on an ongoing basis. In addition to a

[[Page 23768]]

correspondent's capital, level of problem loans, and earnings, 
institutions may want to monitor other factors, which could include, 
but are not limited to:
     Deteriorating trends in capital or asset quality.
     Reaching certain target ratios established by management, 
e.g., aggregate of nonaccrual and past due loans and leases as a 
percentage of gross loans and leases.
     Increasing level of other real estate owned.
     Attaining internally specified levels of volatile funding 
sources such as large CDs or brokered deposits.
     Experiencing a downgrade in its credit rating, if publicly 
traded.
     Being placed under a public enforcement action.
    For prudent risk management purposes, institutions should implement 
procedures that ensure ongoing, timely reviews of correspondent 
relationships. Institutions should use these reviews to conduct 
comprehensive assessments that consider their internal parameters and 
are commensurate with the nature, size, and risk of their exposure. 
Institutions should increase the frequency of their internal reviews 
when appropriate, as even well capitalized institutions can experience 
rapid deterioration in their financial condition, especially in 
economic downturns.
    Institutions' procedures also should establish documentation 
requirements for the reviews conducted. In addition, the procedures 
should specify when relationships that meet or exceed internal criteria 
are to be brought to the attention of the board of directors or the 
appropriate management committee.
Managing Correspondent Concentrations
    Institutions should establish prudent internal concentration 
limits, as well as ranges or tolerances for each factor being monitored 
for each correspondent. Institutions should develop plans for managing 
risk when these internal limits, ranges or tolerances are met or 
exceeded, either on an individual or collective basis. Contingency 
plans should provide a variety of actions that can be considered 
relative to changes in the correspondent's financial condition. 
However, contingency plans should not rely on temporary deposit 
insurance programs for mitigating concentration risk.
    Prudent risk management of correspondent concentration risks should 
include procedures that provide for orderly reductions of correspondent 
concentrations that exceed internal parameters over a reasonable 
timeframe that is commensurate with the size, type, and volatility of 
the risk in the exposure. Such actions could include, but are not 
limited to:
     Reducing the volume of uncollateralized/uninsured funds.
     Transferring excess funds to other correspondents after 
conducting appropriate reviews of their financial condition.
     Requiring the correspondent to serve as agent rather than 
as principal for Federal funds sold.
     Establishing limits on asset and liability purchases from 
and investments in correspondents.
     Specifying reasonable timeframes to meet targeted 
reduction goals for different types of exposures.
    Examiners will review correspondent relationships during 
examinations to ascertain whether an institution's policies and 
procedures appropriately identify and monitor correspondent 
concentrations. Examiners also will review the adequacy and 
reasonableness of institutions' contingency plans to manage 
correspondent concentrations.
Performing Appropriate Due Diligence
    Financial institutions that maintain credit exposures in or provide 
funding to other financial institutions should have effective risk 
management programs for these activities. For this purpose, credit or 
funding exposures may include, but are not limited to, due from bank 
accounts, Federal funds sold as principal, direct or indirect loans 
(including participations and syndications), and trust preferred 
securities, subordinated debt, and stock purchases of the 
correspondent.
    An institution that maintains or contemplates entering into any 
credit or funding transactions with another financial institution 
should have written investment, lending, and funding policies and 
procedures, including appropriate limits, that govern these activities. 
In addition, these procedures should ensure the institution conducts an 
independent analysis of credit transactions prior to committing to 
engage in the transactions. The terms for all such credit and funding 
transactions should strictly be on an arm's length basis, conform to 
sound investment, lending, and funding practices, and avoid potential 
conflicts of interest.

Appendix A

Calculating Respondent Credit Exposures on an Organization-Wide Basis

 
 Respondent Bank's Gross Credit Exposure to a Correspondent, its Holding
                         Company and Affiliates
------------------------------------------------------------------------
    50,000,000  Due from DDA with correspondent.
     1,000,000  Due from DDA with correspondent's two affiliated insured
                 depository institutions (IDIs).
     1,000,000  CDs issued by correspondent bank.
       500,000  CDs issued by one of correspondent's two affiliated
                 IDIs.
    51,500,000  Federal funds sold to correspondent on a principal
                 basis.
     2,500,000  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
     3,750,000  Reverse Repurchase agreements.
       250,000  Net current credit exposure on derivatives.\1\
     4,500,000  Direct and indirect loans to or for benefit of a
                 correspondent, its holding company, or affiliates.
     2,500,000  Investments in the correspondent, its holding company,
                 or affiliates
---------------
   117,500,000  Gross Credit Exposure.
   100,000,000  Total Capital.
          118%  Gross Credit Concentration.
------------------------------------------------------------------------
  Respondent Bank's Net Credit Exposure to a Correspondent, its Holding
                         Company and Affiliates
------------------------------------------------------------------------
    17,850,000  Due from DDA (less checks/cash not available for
                 withdrawal & federal deposit insurance (FDI)).\2\
       500,000  Due from DDA with correspondent's two affiliated IDIs
                 (less FDI).\2\
       750,000  CDs issued by correspondent bank (less FDI).
       250,000  CDs issued by one of correspondent's two affiliated IDIs
                 (less FDI).

[[Page 23769]]

 
    51,500,000  Federal funds sold on a principal basis.
     2,500,000  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
       100,000  Under-collateralized amount on reverse repurchase
                 agreements (less the current market value of government
                 securities or readily marketable collateral
                 pledged).\3\
        50,000  Uncollateralized net current derivative position.\1\
     4,500,000  Direct and indirect loans to or for benefit of a
                 correspondent, its holding company, or affiliates.
     2,500,000  Investments in the correspondent, its holding company,
                 or affiliates.
---------------
    80,500,000  Net Credit Exposure.
   100,000,000  Total Capital.
           81%  Net Credit Concentration.
------------------------------------------------------------------------
Note: Respondent Bank has $1 billion in Total Assets, 10% Total Capital,
  and 90% Total Liabilities and Correspondent Bank has $1.5 billion in
  Total Assets, 10% Total Capital, and 90% Total Liabilities.

Calculating Correspondent Funding Exposures on an Organization-Wide 
Basis

 
    Correspondent Bank's Gross Funding Exposure to a Respondent Bank
------------------------------------------------------------------------
    50,000,000  Due to DDA with respondent.
     1,000,000  Correspondent's two affiliated IDIs' Due to DDA with
                 respondent.
     1,000,000  CDs sold to respondent bank.
       500,000  CDs sold to respondent from one of correspondent's two
                 affiliated IDIs.
    51,500,000  Federal funds purchased from respondent on a principal
                 basis.
     2,500,000  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
     1,000,000  Repurchase Agreements.
---------------
   107,500,000  Gross Funding Exposure.
 1,350,000,000  Total Liabilities.
         7.96%  Gross Funding Concentration.
------------------------------------------------------------------------
 Correspondent Bank's Net Funding Exposure to a Respondent, its Holding
                         Company and Affiliates
------------------------------------------------------------------------
    17,850,000  Due to DDA with respondent (less checks and cash not
                 available for withdrawal and FDI).\2\
       500,000  Correspondent's two affiliated IDIs' Due to DDA with
                 respondent (less FDI).\2\
       750,000  CDs sold to correspondent (less FDI).
       250,000  One of correspondent's two affiliated IDIs' CDs sold to
                 respondent (less FDI).\2\
    51,500,000  Federal funds purchased from respondent on a principal
                 basis.
     2,500,000  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
       150,000  Under-collateralized amount of repurchase agreements
                 relative to the current market value of government
                 securities or readily marketable collateral pledged.\3\
---------------
    73,500,000  Net Funding Exposure.
 1,350,000,000  Total Liabilities.
         5.44%  Net Funding Concentration.
------------------------------------------------------------------------
\1\ There are 5 derivative contracts with a mark-to-market fair value
  position as follows: Contract 1 (100), Contract 2 +400, Contract 3
  (50), Contract 4 +150, and Contract 5 (150). Collateral is 200,
  resulting in an uncollateralized position of 50.
\2\ While temporary deposit insurance programs may provide certain
  transaction accounts higher levels of federal deposit insurance
  coverage, institutions should not rely on such programs for mitigating
  concentration risk.
\3\ Government securities means obligations of, or obligations fully
  guaranteed as to principal and interest by, the U.S. government or any
  department, agency, bureau, board, commission, or establishment of the
  United States, or any corporation wholly owned, directly or
  indirectly, by the United States.

Appendix B

Calculating Respondent Credit Exposures on a Correspondent Only Basis

 
       Respondent Bank's Gross Credit Exposure to a Correspondent
------------------------------------------------------------------------
    50,000,000  Due from DDA with correspondent.
             0  Due from DDA with correspondent's two affiliated insured
                 depository institutions (IDIs).
     1,000,000  CDs issued by correspondent bank.
             0  CDs issued by one of correspondent's two affiliated
                 IDIs.
    51,500,000  Federal funds sold to correspondent on a principal
                 basis.
             0  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
     3,750,000  Reverse Repurchase agreements.

[[Page 23770]]

 
       250,000  Net current credit exposure on derivatives.\1\
     4,500,000  Direct and indirect loans to or for benefit of a
                 correspondent, its holding company, or affiliates.
     2,500,000  Investments in the correspondent, its holding company,
                 or affiliates.
---------------
   113,500,000  Gross Credit Exposure.
   100,000,000  Total Capital.
          114%  Gross Credit Concentration.
------------------------------------------------------------------------
        Respondent Bank's Net Credit Exposure to a Correspondent
------------------------------------------------------------------------
    17,850,000  Due from DDA (less checks/cash not available for
                 withdrawal and federal deposit insurance (FDI)).\2\
             0  Due from DDA with correspondent's two affiliated IDIs
                 (less FDI).\2\
       750,000  CDs issued by correspondent bank (less FDI).
             0  CDs issued by one of correspondent's two affiliated IDIs
                 (less FDI).
    51,500,000  Federal funds sold on a principal basis.
             0  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
       100,000  Under-collateralized amount on reverse repurchase
                 agreements (less the current market value of government
                 securities or readily marketable collateral
                 pledged).\3\
        50,000  Uncollateralized net current derivative position.\1\
     4,500,000  Direct and indirect loans to or for benefit of a
                 correspondent, its holding company, or affiliates.
     2,500,000  Investments in the correspondent, its holding company,
                 or affiliates.
---------------
    77,250,000  Net Credit Exposure.
   100,000,000  Total Capital.
           77%  Net Credit Concentration.
------------------------------------------------------------------------


    Note: Respondent Bank has $1 billion in Total Assets, 10% Total 
Capital, and 90% Total Liabilities and Correspondent Bank has $1.5 
billion in Total Assets, 10% Total Capital, and 90% Total 
Liabilities.

Calculating Respondent Funding Exposures on a Correspondent Only Basis

 
       Correspondent Bank's Gross Funding Exposure to a Respondent
------------------------------------------------------------------------
    50,000,000  Due to DDA with respondent.
             0  Correspondent's two affiliated IDIs' Due to DDA with
                 respondent.
     1,000,000  CDs sold to respondent bank.
             0  CDs sold to respondent from one of correspondent's two
                 affiliated IDIs.
    51,500,000  Federal funds purchased from respondent on a principal
                 basis.
             0  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
     1,000,000  Repurchase agreements.
---------------
   103,500,000  Gross Funding Exposure.
 1,350,000,000  Total Liabilities.
         7.67%  Gross Funding Concentration.
------------------------------------------------------------------------
        Correspondent Bank's Net Funding Exposure to a Respondent
------------------------------------------------------------------------
    17,850,000  Due to DDA with respondent (less checks and cash not
                 available for withdrawal and FDI).\2\
             0  Correspondent's two affiliated IDIs' Due to DDA with
                 respondent (less FDI).\2\
       750,000  CDs sold to correspondent (less FDI).
             0  One of correspondent's two affiliated IDIs' CDs sold to
                 respondent (less FDI).\2\
    51,500,000  Federal funds purchased from respondent on a principal
                 basis.
             0  Federal funds sold to correspondent's affiliated IDIs on
                 a principal basis.
       100,000  Under-collateralized amount on repurchase agreements
                 (less the current market value of government securities
                 or readily marketable collateral pledged).\3\
---------------
    70,200,000  Net Funding Exposure.
 1,350,000,000  Total Liabilities.
         5.20%  Net Funding Concentration.
------------------------------------------------------------------------
\1\ There are 5 derivative contracts with a mark-to-market fair value
  position as follows: Contract 1 (100), Contract 2 +400, Contract 3
  (50), Contract 4 +150, and Contract 5 (150). Collateral is 200,
  resulting in an uncollateralized position of 50.
\2\ While temporary deposit insurance programs may provide certain
  transaction accounts higher levels of federal deposit insurance
  coverage, institutions should not rely on such programs for mitigating
  concentration risk.
\3\ Government securities means obligations of, or obligations fully
  guaranteed as to principal and interest by, the U.S. government or any
  department, agency, bureau, board, commission, or establishment of the
  United States, or any corporation wholly owned, directly or
  indirectly, by the United States.



[[Page 23771]]

    Dated at Washington, DC, the 27th day of April 2010.

    By order of the Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
    By order of the Board of Governors of the Federal Reserve 
System.
Jennifer J. Johnson,
Secretary of the Board.
John C. Dugan,
Comptroller of the Currency.
    Dated: April 9, 2010.

    By the Office of Thrift Supervision.
John E. Bowman,
Acting Director.

[FR Doc. 2010-10382 Filed 5-3-10; 8:45 am]
BILLING CODE 6714-01-P, 6210-01-P, 4810-33-P, 6720-01-P