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Federal Register / Vol. 86, No. 153 / Thursday, August 12, 2021 / Notices declared a National Emergency concerning the COVID19 pandemic.
The next day, the FDIC Chairman issued a mandatory telework order for all employees, consistent with the FDICs Continuity of Operations Plan and its continued balancing of risks and mitigations under the FDIC Pandemic Influenza Plan. This telework order provided, among other things, that unless otherwise directed, all examination activity of FDIC-supervised institutions to be conducted off-site.
By leveraging prior efforts and existing technology systems, examiners have continued the FDIC examination program despite pandemic conditions.
In light of the experience of the last year, and as we look ahead, the FDIC
wants to leverage what worked well in the off-site examination context to see what lessons we can learn about streamlining and improving the efficiency and efficacy of our examinations as we plan for future examinations.

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Off-Site/On-Site Procedures Prior to the pandemic, the FDIC
established the following instructions for examiners regarding expectations for off-site and on-site examination activities. The FDIC is the in the process of reviewing those instructions and identifying opportunities to enhance them by incorporating lessons learned from the pandemic.
Safety and Soundness Each safety and soundness examination has an on-site component, consistent with the requirements of Section 10d of the Federal Deposit Insurance Act. Per the FDICs Risk Management Supervision RMS Manual of Examination Policies, Section 21.1
Examination Planning,2 during the examination planning stage, the FDIC
Examiner-in-Charge EIC is expected to identify examination activities that are appropriate for off-site review and those that are better suited for on-site review after considering the institutions business model, risk profile, and complexity.
The determination of the extent of offsite or on-site for each examination activity depends, in part, on the type and extent of electronic information available and whether the activity requires interaction with institution personnel.
Examiners are encouraged to conduct a number of activities off-site, such as:
Reviewing historical financial and supervisory data and performing initial 2 https www.fdic.gov/regulations/safety/

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analysis of capital, earnings, liquidity, and sensitivity to market risk; and Reviewing the institutions written policies and procedures.
Regarding credit review, examiners may conduct the following types of actions off-site:
Reviewing loan policies; and Reviewing performance report ratio data and management reports.
Examiners are currently expected to conduct certain activities on-site:
Conducting in-depth discussions with management, including exit meetings; and Observing and assessing institution operations and internal controls.
Consumer Compliance and CRA
FDIC compliance and CRA
examinations primarily involve three stages: pre-examination planning;
review and analysis, both off-site and on-site; and communicating findings to institution management. Preexamination planning is generally completed off-site in advance of the examination start date.
The extent to which consumer compliance and CRA examinations are conducted off-site varies. Examiners generally consider conducting certain examination activities off-site to promote efficient and effective examinations, and to minimize disruptions to an institutions normal business activities; other examination activities are more efficiently and effectively conducted on-site. For example, consumer compliance staff have found that, generally, it is more efficient to perform robust transaction testing on-site. In addition, consistent and open communication benefits from in-person meetings with institution management.

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regarding the FDICs supervisory approach to examinations during the pandemic, including the impact of offsite activities on institution operations, the effectiveness of technology used to carry out off-site activities, and the effectiveness of communication methods used to support off-site activities. Specifically, the FDIC is seeking comment on what worked well in the off-site examination context to inform plans for future examinations, consistent with applicable law and the purpose of examinations.
The FDIC encourages comments from financial institutions for which the FDIC
is the primary regulator. The FDIC also welcomes comments from other interested members of the public, including, but not limited to, other financial institutions or companies, individual depositors and consumers, consumer groups, trade associations, and others.
Suggested Topics for Commenters On-Site and Off-Site Activities 1. In your experience, what FDIC
examination activities have been best adapted to completion on an off-site basis? Please explain, including why these activities are performed best or are most effective using an off-site approach.
2. In your experience, what FDIC
examination activities have not been as well suited to completion on an off-site basis? Please explain, including why these activities are best suited for completion on or are most effective using an on-site approach.
3. What criteria are useful in determining FDIC examination activities best suited for completion on either an off-site or on-site basis? Please explain.

FDIC Use of Technology
Use of Technology
The FDIC regularly evaluates and implements technology and process changes to improve regulatory effectiveness and efficiency. Some examples of technology improvements include:
File exchange: The FDIC has many systems that permit financial institutions to provide electronic documents to the FDIC on a secure basis.
Interactive software: The FDIC has been able to leverage technology to collaborate during examinations with other regulators as well as bankers.

4. In your experience, what FDIC
technologies used in conjunction with off-site examination activities have worked well? Please explain.
5. In your experience, what FDIC
technologies used in conjunction with off-site examination activities could be improved? Please explain.
6. What new or emerging technologies would support additional off-site examination activities? Please explain, including any potential impediments to adoption or deployment.

Request for Comments From Interested Parties The FDIC is issuing this RFI seeking feedback and comments from FDICsupervised financial institutions
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Communication Methods 7. What communication methods used during FDIC off-site examinations worked well? Please explain.
8. What communication methods used during FDIC off-site examinations could be improved? Please explain.

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