Hawaii Administrative Rules
Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Chapter 27 - SUPERVISORY AND ENFORCEMENT ACTION RELATING TO HAWAII FINANCIAL INSTITUTIONS
Subchapter 2 - BASIS FOR SUPERVISORY AND ENFORCEMENT ACTION
Section 16-27-10 - Unsafe or unsound condition
Universal Citation: HI Admin Rules 16-27-10
Current through August, 2024
(a) An unsafe or unsound condition of an institution depends upon an analysis of virtually every aspect of the institution's operation. The institution's capital position, asset condition, management, earnings posture, liquidity position, and sensitivity to market risk shall be carefully evaluated. An institution's condition need not deteriorate to a point where it is on the brink of insolvency before its condition may be found to be unsafe or unsound.
(b) Although not an all-inclusive list, the following are examples of unsafe or unsound conditions:
(1) Maintenance of unduly low net interest
margins;
(2) Excessive overhead
expenses;
(3) Excessive volume of
loans subject to adverse classification;
(4) Excessive net loan losses;
(5) Excessive volume of overdue
loans;
(6) Excessive volume of
nonearning assets; or
(7) Excessive
large liability dependence.
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