34 MARCH / APRIL 2017 fact that, while larger banks have resources to develop, fund or purchase technology, collaboration is a useful tool for community banks to reduce costs, better serve customers and reach new markets. Expanding the scope of technology within an institution must come with the proper corporate governance. From the RFI results, IT risk management has been a focus in 75 percent of examinations and is the only CAMELS+ area in which respondents received higher criticism in 2016 YTD than in 2015. Banker feedback on how the process is conducted ranges from “smooth” to “grueling.” FinPro’s experience aligns with a less emotional response, in which one banker reported examiners were “extremely thorough.” Vital in preparing for an IT examination are to understand the components of an IT exam request well ahead of when the examiners send the letter, utilize the FFIEC Cybersecurity Assessment Tool guidelines on a quarterly basis, and follow proper third-party risk management practices outlined in FIL-44-2008. Stop waiting to engage with regulators only during examinations. Despite overall lower level of criticisms, 18 percent of institutions providing feedback were not satisfied with the results of their examinations. There are lessons to be drawn from these institutions’ experiences. Not surprisingly, the percentage of respondents dissatisfied with the results of their examinations increases to 28 percent when the examiner-in-charge (EIC) has been supervising bank examinations less than three years, and decreases to 15 percent when the EIC has more than 10 years of experience. In the words of a respondent: “Younger examiners are much more concerned about details than intent and safety and soundness.” However, this may be misleading. The true root of the issue lies with the fact that respondents are six times more likely to be satisfied with their examination results when they report that the “examiner was knowledgeable about [their] institution.” Additionally more than 50 percent of those dissatisfied reported that there were “points in the final exam findings which came as a surprise to the institution.” Areas which came as a surprise include: • “Restating call report based on the recognition of credit losses” • “Appraisal process issues” • “Concerns that directors have delegated the loan approval function to management” • “Higher standard, since we were approaching a key asset level.” These findings indicate that the best way to be satisfied with your examination results is to engage in open dialog with examiners, both during and outside of examination periods. The added benefit is that, even though the EIC’s experience is a factor outside of the bank’s control, effects of inexperience should be somewhat mitigated with regular communication. FinPro has FEATURE Michael A. Renninger Principal (317) 695‐7939 mrenninger@renningerllc.com Securities offered through Ausdal Financial Partners, Inc., 5187 Utica Ridge Road Davenport, IA, 52807 (563)326‐2064 Member: FINRA, SIPC. Renninger & Associates, LLC and Ausdal Financial Partners, Inc. are independently owned and operated. www.renningerllc.com "For an ObjecƟve Assessment of Your Challenges and Professional ExecuƟon of Your OpportuniƟes" Buy‐Side and Sell‐side Representa�on involving whole banks, branches, and non‐bank affiliates Stock Liquidity, Capital Development, and Strategic Planning Stock Valua�ons and Fairness Opinions CPA‐trained and CFO‐experienced Indiana professionals serving Indiana banks. Our services include:
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