On December 19, the Federal Deposit Insurance Corporation (FDIC) published the latest edition of its Supervisory Insights journal. The three major topics covered are listed below: 

• “Industry Trends Highlight Importance of Effective Interest-Rate Risk Management” looks at how changes in the banking industry’s asset mix and funding profile have led to increased interest-rate risk (IRR) exposure. The article highlights supervisory expectations for IRR management and suggests strategies banks can use to assess and mitigate this exposure.

• “Lending Trends: Results from the FDIC’s Credit and Consumer Products/Services Survey” shares recent survey results relating to loan growth, credit underwriting, factors influencing banks’ ability and willingness to lend, and use of loan workouts.

• “The New Basel III Definition of Capital: Understanding the Deductions for Investments in Unconsolidated Financial Institutions” discusses how the new regulatory capital rules require a deduction from capital, under certain circumstances, for a portion of a bank’s investments in the capital of unconsolidated financial institutions. This article provides examples of how to calculate the deduction.

The Supervisory Insights journal may be accessed here.