محمد علي محمد القضاة
30-10-2003, 11:36 PM
********ation (توثيق) :
Work paper ********ation and support of conclusions should follow existing CBJ policy. The degree of ********ation and support should be commensurate with the risks evident.
********ary credit (تسهيلات موثقة، اعتمادات):
A ********ary credit is the written assurance of a bank on the instructions of the applicant (purchaser) to the beneficiary (seller) to pay a specific amount in the agreed currency provided the beneficiary submits ********s in conformity with the ********ary credit within the prescribed deadlines . See UCPDC Art. 2 .
Domestic settlement (تسويات محلية):
A settlement that takes place in one country in which both counterparties to the trade are located .
Domestic trade(تجارة أو تبادل محلي) :
A trade between counterparties located in the same country .
Dormitories (سكن طلاب) :
Housing facilities on the campus of a college or university reserved for students. A typical dormitory would include student rooms, bathrooms, common rooms, and possibly a cafeteria
Earnings(دخل) :
Inspected with respect to the ability to cover losses and provide for adequate capital; earnings trends; peer group comparisons; the quality and composition of net income; and the degree of reliance on interest-sensitive funds. The adequacy of provisions to the PDA, and the extent to which extraordinary items, securities transactions and tax effects contribute to net income, should also be assessed. Using the institution\'s data, determine if the institution is operating profitably. Analyze the quality of those earnings and review for reasonableness the projected earnings for the next calendar year. Review rate sensitivity data to determine the effect of rate changes on those projected earnings.
Earnings per share on common stock(EPS) (حصة السهم من الدخل):
Net income less preferred dividend requirement / No. of common shares outstanding, measures the past operating performance of a business .
Equity interest (حصة في راس المال) :
Means any ownership right or voting right with respect to a juridical person or undertaking .
Establishmeand Management (إنشاء و إدارة البنك)(Law, Sofia, April 1992):
1-The terms and procedures established by laws in force for particular forms of legal organizations shall likewise apply to the incorporation, management, transformation and liquidation of banks, unless otherwise provided by this law.
2-Shares issued by the bank, entitling to their holder to a vote, shall be registered , and entered in the shareholders\' register.
3-The Articles of Association of the bank shall also contain, in addition to the information required by the legislation relevant to its form of organization information on the banking transactions to be conducted, the authority to sign for and represent the bank, and the manner by which internal control will be exercised.
4-The bank shall be managed and represented jointly by at least two persons. They shall not delegate the entire management and representation of the bank to only one of them, but may authorize third persons to take individual actions.
5-a: The persons described in the preceding Article shall:
1-Reside permanently in the country.
2-have a university degree.
3-have the requisite professional experience in banking.
4-not have been convicted of a willful crime of a public character.
5-not have been members of an executive of controlling body, or members with unlimited liability in a firm which has been wound up due to insolvency, if creditors have not been paid.
6-not have been deprived of the right to hold positions of material responsibility.
7-not be spouses, or relatives, in direct or lateral lineage up to the second degree either to each other, or to another member of the Board or controlling body of the bank.
b: The persons not meeting the requirements of paragraph (a) shall be removed from office by a decision of the Central Bank unless the competent body dismisses them within two months following the written notice from the Central Bank.)
Eurobond (اسناد بعملة أجنبية):
A bond sold in a country other than the one in whose currency the bond is denominated .
Examination Objectives (أهداف الفحص):
The primary purpose of bank inspections are to maintain public confidence in the integrity of the banking system and in individual banks. Therefore the following objectives should be realized during on-site inspections:
1. To identify individual bank risk.
2. To apply consistent strategies to these banks.
3. To promote safety and soundness and compliance with laws and regulations.
4. To identify problems (matters requiring board attention) and require the bank to take corrective action.
Examination procedures (إجراءات الفحص):
1Examination planning (تخطيط الفحص): Before starting the examination, request necessary information from the bank by sending the Request Letter (see Appendix for example). Review the following ********s to identify any previous problems that require follow-up and to highlight any new noted deficiencies: Previous examination report; Last off-site analysis;
Correspondence file; Work papers from the previous examination; and, Audits. Prepare assignments for staff to ensure that functional areas of the bank are evaluated. Those plans should include time frames for completion. Prepare supplies and Work paper files to take to the bank for the examination.
2Loans (القروض): Obtain the reports management uses to supervise the loan portfolio, specifically: loan trial balances. Past due and nonaccrual reports. Problem loan lists. Concentration of credit reports. Insider loan lists. Overdraft list. Most recent Provision for doubtful accounts (PDA) analysis. Latest loan review report, including any responses from bank officers. Determine, during early discussions with management: How they administer the loan portfolio and monitor loan quality. Any significant changes in lending practices. Any external or internal factors that could affect loan quality (i.e., local industry reduction or expansion, lending staff changes, changes in credit concentrations). Read or brief minutes from the loan committee meetings to review the bank\'s lending practices. Commercial, Commercial Real Estate, and Agricultural Loans Use management reports to select a sample of at least 70 percent of the combined commercial loans. The inspector-in-charge (IIC) should choose the sample, using his/her discretion, from among the following: Loans on the problem list and loans previously classified, significant past dues, nonaccruals, troubled debt, and restructured loans. (Note: Loans that are not reviewed in detail should be discussed without preparing line sheets.) Insider loans. Large dollar/JD commercial loans. Significant concentrations. New loans. a. Perform credit analysis (complete line sheets; see Appendix for example) and loan discussion sufficient to determine a risk rating for each loan reviewed. This should include a review of related debt. ******** and support the reasons for each loan rating. Maintain a list of loans where the inspector and management\'s ability to rate the loan was impaired by lack of sufficient credit information. Determine if the number of exceptions adversely affects the quality of credit administration. Residential Real Estate and Consumer Loans Review and discuss past due loans with management (without preparing detailed line sheets). Classify those loans as appropriate under CBJ guidelines. Review overdrafts to determine which, if any, should be classified/charged off. Provision for doubtful accounts (PDA) Evaluate the method and reasonableness of management\'s estimate of the PDA balance. Determine if the PDA balance is adequate, based on: Reasonableness of management\'s process.
Findings from asset quality review. Provide management with a list of classified loans. Discuss findings with bank management.
Determine overall loan quality condition using the results from the above analysis. The conclusion should reflect: The level, distribution and severity of classified loans. The level and composition of nonaccrual and reduced rate loans. The quality of the bank\'s credit administration and lending practices. The bank\'s ability to recognize and collect problem credits. The adequacy of the PDA. Provide the IIC with brief conclusions concerning: Overall findings about loan quality.
Risks in this area, including unwarranted concentrations. Effectiveness of management supervision including management\'s ability to correct any noted fundamental problems. A strategy to address any noted weaknesses. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Prepare a loan quality comment for inclusion in the report of examination.
3Investments (الاستثمارات) : Obtain the following ********s: The investment trial balance. List of investments purchased and sold. Dealer confirmation tickets. The board-approved list of securities dealers. Review bank management or CBJ reports to evaluate investment yields and the effectiveness of investment strategies. Review the investment trial balance, off-balance sheet positions, list of purchases and sales over a reasonable time frame, and the dealer confirmation tickets. Determine:
Portfolio composition (i.e., types, derivatives, maturates, and concentrations of investments). If any issues in the portfolio are ineligible, have defaulted, or are below investment grade. If any investments are off-balance sheet instruments. (Note: If the bank has any off-balance sheet instruments that may be subject to unusual amounts of price volatility, expand the review to assess the risk or benefit they pose to the bank.). Discuss current investment strategies with management.
For those banks whose portfolio includes derivative inv, assess the risk of these investments by considering: The maturities of the assets. The volatility of cash flows. The carrying value of total derivatives relative to the bank\'s capital. The results of any interest rate sensitivity analysis in the bank\'s files. The current as well as potential impact of instrument volatility relative to the bank\'s capital and overall risk profile. Determine how management evaluates the degree of price sensitivity of the derivative investments. Consider whether management:
Relies on and understands stress tests supplied by outside sources.
Obtains price valuations from various firms to determine fair prices.
Determine the level of liquidity provided by the investment portfolio by considering: The percent of securities pledged. The maturity distribution and average life of the investment portfolio. The amount of securities \"held for investment\" and \"held for trading.\" Determine if management used appropriate accounting treatment for investment securities. Determine if the bank trades securities and has established and uses appropriate accounting treatment and controls. Review credit information for new out-of-area, non-rated securities and industrial development revenue bonds. Determine if the bank is dealing with brokers other than those on its approved list. Discuss, with management, the reasons for any change in brokers. Investments Conclusions
Provide the inspector evaluating asset quality with a list of classified investments, and the inspector evaluating funds management with a summary of investment portfolio analysis. Evaluate the investment portfolio using the results from the above analysis. The evaluation should reflect: The quality of the investment portfolio. The liquidity offered by the portfolio. Interest rate risk inherent in the portfolio. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Provide management with a list of classified investments. Discuss findings with management. Prepare an investment comment for inclusion in the report of examination.
4Other real estate (ore) / other assets (الموجودات الأخرى): Obtain lists of the following items: Other real estate. Repossessed assets. Determine whether the bank has applied proper accounting treatment, based on a sample of ORE. Classify ORE appropriately per CBJ guidelines. Determine, based on the list of repossessed assets, which items should be classified and whether they involve any loss. Provide the inspector evaluating asset quality with a list of classified assets. Provide management with a list of classified assets. Discuss findings with bank management.
Prepare an other assets comment for inclusion in the report of examination.
5Overall asset quality conclusions (تقييم عام لجودة الموجودات): Determine overall asset quality condition using the results from the above analyses. The conclusion should reflect: The level, distribution and severity of classified assets.
The level and composition of nonaccrual and reduced rate assets.
The quality of the bank\'s credit administration and lending practices.
The bank\'s ability to recognize and collect problem credits. The adequacy of the PDA. Provide the IIC with brief conclusions concerning: Overall findings about asset quality. Risks in this area, including unwarranted concentrations. Effectiveness of management supervision including management\'s ability to correct any noted fundamental problems. A strategy to address any noted weaknesses.
Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Discuss findings with management.
Prepare an asset quality comment for inclusion in the report of examination.
6Liquidity/funds management (إدارة السيولة): Obtain the following items: Most recent reports used to monitor and manage interest rate risk. Most recent liquidity reports. Any CBJ reports that assess liquidity/funds management of the bank. Review those reports to evaluate management\'s effectiveness in controlling interest rate risk and liquidity risk. Consider trends in: Asset/liability mix. Net interest margin.
Dependence on volatile liabilities. Borrowings. Discuss, with management, strategies used to manage interest rate risk. Determine how the bank achieves desired mix and maturities of assets and liabilities. Consider the following: Competitive pressures in the local market.
Maturity matching through normal runoff and reinvestment.
Asset or liability purchases or sales. Investment portfolio composition. Pricing of loans and deposits. Existence of off-balance sheet items. Determine how management and the board measure interest rate risk (gap, earnings at risk, equity at risk). Determine if they:
Have board-approved limits. Operate in conformity with the limits.
Have flexibility to adjust asset/liability mix to reduce interest rate risk.
Determine if management has planned properly for liquidity needs and whether the bank has adequate sources of funds to meet anticipated or potential needs. Liquidity Conclusions Determine liquidity adequacy using the results from the above analysis. The conclusion should reflect:
Volatility of deposits. Reliance on interest-sensitive funds and the frequency and level of borrowings. The bank\'s technical competence to structure its asset/liability mix. The availability of assets that are readily convertible into cash. The bank\'s access to money markets or other ready sources of cash. Effectiveness of the bank\'s asset/liability management strategies.
7Earnings (الدخل): Obtain the following ********s: Most current balance sheet and income statement. Most recent budget, variance reports, and related items. Most recent annual and quarterly reports. Review the latest off-site review of earnings. Analyze current earnings composition and trends. Note, particularly, trends in core earnings, net interest margins, noninterest income and expenses, loan loss provisions, off-balance sheet items, and changes in balance sheet composition. Additionally, determine the root cause(s) of any negative trends and the impact of nonrecurring items. Review the bank\'s budget and other reports that management and the board use to monitor earnings performance. Compare actual earnings to budget and peer group performance. Discuss earnings trends and variances with management. Coordinate discussions with those performing other functional areas.
Evaluate the adequacy of earnings to support any debt service.
Review the dividend paying capacity based on earnings stream.
Project the current year\'s net income, adjusting for the results of the current examination. Earnings Conclusions Determine the adequacy of earnings using the results from the above analysis. It should reflect:
Quality and composition of net income. The bank\'s sustained ability to cover losses and provide for adequate capital. Earnings trends.
Peer group comparisons.
8Capital (راس المال): Obtain the following ********s: The bank\'s current risk-based capital computation. A list of shareholders and ownership.
Review past off-site CBJ reviews of capital and the bank\'s risk-based capital calculations to identify trends in ratios. Determine any limitations on capital levels and discuss these with inspectors performing other functional areas. Compare the bank\'s ratiowith those of peer banks if this data is available. Evaluate the impact of any trends in asset quality, growth, earnings, off-balance sheet activities, and interest rate risk on future capital adequacy. Evaluate dividend payments in view of the bank\'s capital needs. Determine controlling ownership. Adjust total capital based on the results of the asset quality evaluation.
Determine capital adequacy based on the bank\'s present condition and future plans. Capital Conclusions Determine capital adequacy using the results from the above analysis. The conclusion should reflect:
Asset quality. Interest rate risk. Earnings quality. The bank\'s growth, plans, and prospects. Management strength. Capital ratios, both absolute and relative to peer banks if peer data is available. Off-balance sheet activities. Financial performance conclusions Provide the IIC with brief conclusions concerning: The overall findings in the area. The effectiveness of management supervision. Risk/s in the area. Evaluate management\'s ability to correct any noted fundamental problems. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Develop a strategy to address significant bank weaknesses and discuss with the supervisory office. Discuss findings with management. Prepare a brief comment for inclusion in the report of examination
Work paper ********ation and support of conclusions should follow existing CBJ policy. The degree of ********ation and support should be commensurate with the risks evident.
********ary credit (تسهيلات موثقة، اعتمادات):
A ********ary credit is the written assurance of a bank on the instructions of the applicant (purchaser) to the beneficiary (seller) to pay a specific amount in the agreed currency provided the beneficiary submits ********s in conformity with the ********ary credit within the prescribed deadlines . See UCPDC Art. 2 .
Domestic settlement (تسويات محلية):
A settlement that takes place in one country in which both counterparties to the trade are located .
Domestic trade(تجارة أو تبادل محلي) :
A trade between counterparties located in the same country .
Dormitories (سكن طلاب) :
Housing facilities on the campus of a college or university reserved for students. A typical dormitory would include student rooms, bathrooms, common rooms, and possibly a cafeteria
Earnings(دخل) :
Inspected with respect to the ability to cover losses and provide for adequate capital; earnings trends; peer group comparisons; the quality and composition of net income; and the degree of reliance on interest-sensitive funds. The adequacy of provisions to the PDA, and the extent to which extraordinary items, securities transactions and tax effects contribute to net income, should also be assessed. Using the institution\'s data, determine if the institution is operating profitably. Analyze the quality of those earnings and review for reasonableness the projected earnings for the next calendar year. Review rate sensitivity data to determine the effect of rate changes on those projected earnings.
Earnings per share on common stock(EPS) (حصة السهم من الدخل):
Net income less preferred dividend requirement / No. of common shares outstanding, measures the past operating performance of a business .
Equity interest (حصة في راس المال) :
Means any ownership right or voting right with respect to a juridical person or undertaking .
Establishmeand Management (إنشاء و إدارة البنك)(Law, Sofia, April 1992):
1-The terms and procedures established by laws in force for particular forms of legal organizations shall likewise apply to the incorporation, management, transformation and liquidation of banks, unless otherwise provided by this law.
2-Shares issued by the bank, entitling to their holder to a vote, shall be registered , and entered in the shareholders\' register.
3-The Articles of Association of the bank shall also contain, in addition to the information required by the legislation relevant to its form of organization information on the banking transactions to be conducted, the authority to sign for and represent the bank, and the manner by which internal control will be exercised.
4-The bank shall be managed and represented jointly by at least two persons. They shall not delegate the entire management and representation of the bank to only one of them, but may authorize third persons to take individual actions.
5-a: The persons described in the preceding Article shall:
1-Reside permanently in the country.
2-have a university degree.
3-have the requisite professional experience in banking.
4-not have been convicted of a willful crime of a public character.
5-not have been members of an executive of controlling body, or members with unlimited liability in a firm which has been wound up due to insolvency, if creditors have not been paid.
6-not have been deprived of the right to hold positions of material responsibility.
7-not be spouses, or relatives, in direct or lateral lineage up to the second degree either to each other, or to another member of the Board or controlling body of the bank.
b: The persons not meeting the requirements of paragraph (a) shall be removed from office by a decision of the Central Bank unless the competent body dismisses them within two months following the written notice from the Central Bank.)
Eurobond (اسناد بعملة أجنبية):
A bond sold in a country other than the one in whose currency the bond is denominated .
Examination Objectives (أهداف الفحص):
The primary purpose of bank inspections are to maintain public confidence in the integrity of the banking system and in individual banks. Therefore the following objectives should be realized during on-site inspections:
1. To identify individual bank risk.
2. To apply consistent strategies to these banks.
3. To promote safety and soundness and compliance with laws and regulations.
4. To identify problems (matters requiring board attention) and require the bank to take corrective action.
Examination procedures (إجراءات الفحص):
1Examination planning (تخطيط الفحص): Before starting the examination, request necessary information from the bank by sending the Request Letter (see Appendix for example). Review the following ********s to identify any previous problems that require follow-up and to highlight any new noted deficiencies: Previous examination report; Last off-site analysis;
Correspondence file; Work papers from the previous examination; and, Audits. Prepare assignments for staff to ensure that functional areas of the bank are evaluated. Those plans should include time frames for completion. Prepare supplies and Work paper files to take to the bank for the examination.
2Loans (القروض): Obtain the reports management uses to supervise the loan portfolio, specifically: loan trial balances. Past due and nonaccrual reports. Problem loan lists. Concentration of credit reports. Insider loan lists. Overdraft list. Most recent Provision for doubtful accounts (PDA) analysis. Latest loan review report, including any responses from bank officers. Determine, during early discussions with management: How they administer the loan portfolio and monitor loan quality. Any significant changes in lending practices. Any external or internal factors that could affect loan quality (i.e., local industry reduction or expansion, lending staff changes, changes in credit concentrations). Read or brief minutes from the loan committee meetings to review the bank\'s lending practices. Commercial, Commercial Real Estate, and Agricultural Loans Use management reports to select a sample of at least 70 percent of the combined commercial loans. The inspector-in-charge (IIC) should choose the sample, using his/her discretion, from among the following: Loans on the problem list and loans previously classified, significant past dues, nonaccruals, troubled debt, and restructured loans. (Note: Loans that are not reviewed in detail should be discussed without preparing line sheets.) Insider loans. Large dollar/JD commercial loans. Significant concentrations. New loans. a. Perform credit analysis (complete line sheets; see Appendix for example) and loan discussion sufficient to determine a risk rating for each loan reviewed. This should include a review of related debt. ******** and support the reasons for each loan rating. Maintain a list of loans where the inspector and management\'s ability to rate the loan was impaired by lack of sufficient credit information. Determine if the number of exceptions adversely affects the quality of credit administration. Residential Real Estate and Consumer Loans Review and discuss past due loans with management (without preparing detailed line sheets). Classify those loans as appropriate under CBJ guidelines. Review overdrafts to determine which, if any, should be classified/charged off. Provision for doubtful accounts (PDA) Evaluate the method and reasonableness of management\'s estimate of the PDA balance. Determine if the PDA balance is adequate, based on: Reasonableness of management\'s process.
Findings from asset quality review. Provide management with a list of classified loans. Discuss findings with bank management.
Determine overall loan quality condition using the results from the above analysis. The conclusion should reflect: The level, distribution and severity of classified loans. The level and composition of nonaccrual and reduced rate loans. The quality of the bank\'s credit administration and lending practices. The bank\'s ability to recognize and collect problem credits. The adequacy of the PDA. Provide the IIC with brief conclusions concerning: Overall findings about loan quality.
Risks in this area, including unwarranted concentrations. Effectiveness of management supervision including management\'s ability to correct any noted fundamental problems. A strategy to address any noted weaknesses. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Prepare a loan quality comment for inclusion in the report of examination.
3Investments (الاستثمارات) : Obtain the following ********s: The investment trial balance. List of investments purchased and sold. Dealer confirmation tickets. The board-approved list of securities dealers. Review bank management or CBJ reports to evaluate investment yields and the effectiveness of investment strategies. Review the investment trial balance, off-balance sheet positions, list of purchases and sales over a reasonable time frame, and the dealer confirmation tickets. Determine:
Portfolio composition (i.e., types, derivatives, maturates, and concentrations of investments). If any issues in the portfolio are ineligible, have defaulted, or are below investment grade. If any investments are off-balance sheet instruments. (Note: If the bank has any off-balance sheet instruments that may be subject to unusual amounts of price volatility, expand the review to assess the risk or benefit they pose to the bank.). Discuss current investment strategies with management.
For those banks whose portfolio includes derivative inv, assess the risk of these investments by considering: The maturities of the assets. The volatility of cash flows. The carrying value of total derivatives relative to the bank\'s capital. The results of any interest rate sensitivity analysis in the bank\'s files. The current as well as potential impact of instrument volatility relative to the bank\'s capital and overall risk profile. Determine how management evaluates the degree of price sensitivity of the derivative investments. Consider whether management:
Relies on and understands stress tests supplied by outside sources.
Obtains price valuations from various firms to determine fair prices.
Determine the level of liquidity provided by the investment portfolio by considering: The percent of securities pledged. The maturity distribution and average life of the investment portfolio. The amount of securities \"held for investment\" and \"held for trading.\" Determine if management used appropriate accounting treatment for investment securities. Determine if the bank trades securities and has established and uses appropriate accounting treatment and controls. Review credit information for new out-of-area, non-rated securities and industrial development revenue bonds. Determine if the bank is dealing with brokers other than those on its approved list. Discuss, with management, the reasons for any change in brokers. Investments Conclusions
Provide the inspector evaluating asset quality with a list of classified investments, and the inspector evaluating funds management with a summary of investment portfolio analysis. Evaluate the investment portfolio using the results from the above analysis. The evaluation should reflect: The quality of the investment portfolio. The liquidity offered by the portfolio. Interest rate risk inherent in the portfolio. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Provide management with a list of classified investments. Discuss findings with management. Prepare an investment comment for inclusion in the report of examination.
4Other real estate (ore) / other assets (الموجودات الأخرى): Obtain lists of the following items: Other real estate. Repossessed assets. Determine whether the bank has applied proper accounting treatment, based on a sample of ORE. Classify ORE appropriately per CBJ guidelines. Determine, based on the list of repossessed assets, which items should be classified and whether they involve any loss. Provide the inspector evaluating asset quality with a list of classified assets. Provide management with a list of classified assets. Discuss findings with bank management.
Prepare an other assets comment for inclusion in the report of examination.
5Overall asset quality conclusions (تقييم عام لجودة الموجودات): Determine overall asset quality condition using the results from the above analyses. The conclusion should reflect: The level, distribution and severity of classified assets.
The level and composition of nonaccrual and reduced rate assets.
The quality of the bank\'s credit administration and lending practices.
The bank\'s ability to recognize and collect problem credits. The adequacy of the PDA. Provide the IIC with brief conclusions concerning: Overall findings about asset quality. Risks in this area, including unwarranted concentrations. Effectiveness of management supervision including management\'s ability to correct any noted fundamental problems. A strategy to address any noted weaknesses.
Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Discuss findings with management.
Prepare an asset quality comment for inclusion in the report of examination.
6Liquidity/funds management (إدارة السيولة): Obtain the following items: Most recent reports used to monitor and manage interest rate risk. Most recent liquidity reports. Any CBJ reports that assess liquidity/funds management of the bank. Review those reports to evaluate management\'s effectiveness in controlling interest rate risk and liquidity risk. Consider trends in: Asset/liability mix. Net interest margin.
Dependence on volatile liabilities. Borrowings. Discuss, with management, strategies used to manage interest rate risk. Determine how the bank achieves desired mix and maturities of assets and liabilities. Consider the following: Competitive pressures in the local market.
Maturity matching through normal runoff and reinvestment.
Asset or liability purchases or sales. Investment portfolio composition. Pricing of loans and deposits. Existence of off-balance sheet items. Determine how management and the board measure interest rate risk (gap, earnings at risk, equity at risk). Determine if they:
Have board-approved limits. Operate in conformity with the limits.
Have flexibility to adjust asset/liability mix to reduce interest rate risk.
Determine if management has planned properly for liquidity needs and whether the bank has adequate sources of funds to meet anticipated or potential needs. Liquidity Conclusions Determine liquidity adequacy using the results from the above analysis. The conclusion should reflect:
Volatility of deposits. Reliance on interest-sensitive funds and the frequency and level of borrowings. The bank\'s technical competence to structure its asset/liability mix. The availability of assets that are readily convertible into cash. The bank\'s access to money markets or other ready sources of cash. Effectiveness of the bank\'s asset/liability management strategies.
7Earnings (الدخل): Obtain the following ********s: Most current balance sheet and income statement. Most recent budget, variance reports, and related items. Most recent annual and quarterly reports. Review the latest off-site review of earnings. Analyze current earnings composition and trends. Note, particularly, trends in core earnings, net interest margins, noninterest income and expenses, loan loss provisions, off-balance sheet items, and changes in balance sheet composition. Additionally, determine the root cause(s) of any negative trends and the impact of nonrecurring items. Review the bank\'s budget and other reports that management and the board use to monitor earnings performance. Compare actual earnings to budget and peer group performance. Discuss earnings trends and variances with management. Coordinate discussions with those performing other functional areas.
Evaluate the adequacy of earnings to support any debt service.
Review the dividend paying capacity based on earnings stream.
Project the current year\'s net income, adjusting for the results of the current examination. Earnings Conclusions Determine the adequacy of earnings using the results from the above analysis. It should reflect:
Quality and composition of net income. The bank\'s sustained ability to cover losses and provide for adequate capital. Earnings trends.
Peer group comparisons.
8Capital (راس المال): Obtain the following ********s: The bank\'s current risk-based capital computation. A list of shareholders and ownership.
Review past off-site CBJ reviews of capital and the bank\'s risk-based capital calculations to identify trends in ratios. Determine any limitations on capital levels and discuss these with inspectors performing other functional areas. Compare the bank\'s ratiowith those of peer banks if this data is available. Evaluate the impact of any trends in asset quality, growth, earnings, off-balance sheet activities, and interest rate risk on future capital adequacy. Evaluate dividend payments in view of the bank\'s capital needs. Determine controlling ownership. Adjust total capital based on the results of the asset quality evaluation.
Determine capital adequacy based on the bank\'s present condition and future plans. Capital Conclusions Determine capital adequacy using the results from the above analysis. The conclusion should reflect:
Asset quality. Interest rate risk. Earnings quality. The bank\'s growth, plans, and prospects. Management strength. Capital ratios, both absolute and relative to peer banks if peer data is available. Off-balance sheet activities. Financial performance conclusions Provide the IIC with brief conclusions concerning: The overall findings in the area. The effectiveness of management supervision. Risk/s in the area. Evaluate management\'s ability to correct any noted fundamental problems. Determine, in consultation with the IIC, if the risks identified are significant enough to merit bringing them to the board\'s attention in the report of examination. If so, prepare items for inclusion under the heading Matters Requiring Board Attention. MRBA should cover bank practices that: Deviate from sound fundamental principles and are likely to result in financial deterioration if not addressed. Result in substantive noncompliance with laws. Develop a strategy to address significant bank weaknesses and discuss with the supervisory office. Discuss findings with management. Prepare a brief comment for inclusion in the report of examination