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Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations
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feedback from minority depository institutions to assess the effectiveness of the FDICs technical assistance, outreach, and training/education efforts and the MDI program in general. The FDIC will track instances of technical assistance, outreach, and training and education and solicit feedback on the effectiveness of these activities by administering periodic surveys and holding discussions with bank management.
Examinations All insured institutions must be operated in a safe and sound manner, in accordance with FDICs regulations.
Likewise, all examinations must be conducted within the parameters of FDIC exam policies and should consistently measure the risk an institution poses to the FDICs deposit insurance fund. Notwithstanding, and consistent with the Uniform Financial Institutions Rating System UFIRS and the Uniform Interagency Consumer Compliance Rating System UICCR, examiners are expected to recognize the distinctive characteristics and differences in core objectives of each financial institution and to consider those unique factors when evaluating an institutions financial condition and risk management practices.
Under the UFIRS and UICCR, each financial institution is assigned a composite rating based on an evaluation of specific components, which are also rated. For UFIRS, these component ratings reflect an institutions capital adequacy, asset quality, management capabilities, earnings sufficiency, liquidity position, and sensitivity to market risk commonly referred to as the CAMELS ratings. Likewise, the UICCR
is organized under broad components that assess the institutions board and management oversight, compliance program, violations of law, and consumer harm. The uniform rating systems and evaluation and rating criteria are specific to the examination types performed. Further, the assignment of the rating is based solely on the subject institutions individual performance under the specific components.
Management practices, particularly as they relate to risk management, vary considerably among financial institutions depending on size and sophistication, the nature and complexity of business activities, and risk profile. Each institution must properly manage risks and have appropriate policies, processes, or practices in place that management follows and uses. Activities undertaken in a less complex institution engaging in
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less sophisticated risk-taking activities may need only basic management and control systems compared to the detailed and formalized systems and controls used for the broader and more complex range of activities undertaken at a larger and more complex institution.
Peer comparison data are not included in the rating systems. The principal reason is to avoid over reliance on statistical comparisons to justify the component rating being assigned. Avoiding such overreliance is very important when evaluating minority depository institutions due to their unique characteristics. For example, many minority depository institutions were established to serve an otherwise under-served market. High profitability may not be as essential to the organizers and shareholders of the institution. Instead, community development, improving consumer services, and promoting banking services to the unbanked or underbanked segment of its community may drive many of the organizations decisions. The UFIRS allows for consideration of the characteristics by considering not only the level of an institutions earnings, but also the trend and stability of earnings, the ability to provide for adequate capital, the quality and sources of earnings, and the adequacy of budgeting systems.
Examiners are instructed to consider all relevant factors when assigning a component rating. The rating systems are designed to reflect an assessment of the individual institution, including its size and sophistication, the nature and complexity of its business activities, and risk profile.
Failing Institutions The FDIC will attempt to preserve the minority character of failing institutions during the resolution process. In the event of a potential failure of a minority depository institution, the Division of Resolutions and Receiverships will contact all minority depository institutions nationwide that qualify to bid on failing institutions. The Division of Resolutions and Receiverships will solicit qualified minority depository institutions interest in the failing institution, discuss the bidding process, and offer to provide technical assistance regarding completion of the bid forms.
In addition, the Division of Resolutions and Receiverships, with assistance from the Office of Minority and Women Inclusion, will maintain a list of minority individuals and nonbank entities that have expressed an interest in acquiring failing minority depository institutions and have been pre-approved
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by the Division of Risk Management Supervision and the chartering authority for access to the FDICs virtual data room for online due diligence.
Internet Site The FDIC will maintain a website to promote the MDI program. Among other things, the website will describe the tools and resources available under the program. The website will include the name, phone number, and email address of the national director, each regional coordinator, and additional staff. The website will also contain links to the list of minority depository institutions, pertinent trade associations, and other federal agency programs. The FDIC will also explore the feasibility and usefulness of posting other items to the page, such as statistical information and comparative data for minority depository institutions. Visitors will have the opportunity to provide feedback regarding the FDICs program and the usefulness of the website.
IV. Administrative Law Matters The Paperwork Reduction Act of 1995
PRA 7 states that no agency may conduct or sponsor, and no respondent is required to respond to, an information collection unless it displays a currently valid Office of Management and Budget OMB control number.
The Statement of Policy Regarding Minority Depository Institutions does not create any new or revise any existing information collections pursuant to the PRA. Rather, any reporting, recordkeeping, or disclosure activities mentioned in the Statement of Policy Regarding Minority Depository Institutions are usual and customary and should occur in the normal course of business as defined in the PRA.8
Consequently, no submissions will be made to the OMB for review. No comments were received regarding PRA
or other burdens.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on June 15, 2021.
James P. Sheesley, Assistant Executive Secretary.
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U.S.C. 3501, et seq.
CFR 1320.3b2.

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