EM-1.3 Financial Institution Rating System
EM-1.3 Category: General Information Topic: Financial Institution Rating System Published: 2/13/2020 Introduction Most financial institutions are categorized and rated by their respective regulators through the Uniform Financial Institutions Rating System. This system has been modified to reflect the non-depository nature of Farm Credit System (System) institutions and adopted by the Farm Credit Administration (FCA or Agency) to evaluate and categorize the safety and soundness of System institutions on an ongoing, uniform, and comprehensive basis. FCA’s Financial Institution Rating System (FIRS), as outlined in FCA Board Policy Statement 72, provides valuable information to the Agency for assessing risk and allocating resources based on the safety and soundness of regulated institutions. As such, it is a key component of the Agency’s risk assessment process. The FIRS also provides an effective mechanism for identifying problem or deteriorating institutions, categorizing institutions with deficiencies in particular component areas, and communicating the overall condition of the System to internal and external stakeholders. This section of the Examination Manual provides an overview of the FIRS process and describes the general factors considered in assigning institution ratings. Refer to the FIRS Guide in Attachment 1 for a detailed description of the factors and criteria used in assigning ratings. Overview Although each institution has its own examination and supervisory issues and concerns, the FIRS is structured to provide a consistent rating system for all significant financial, asset quality, and management factors. Under the FIRS, each institution is assigned composite and component ratings based on an evaluation and rating of six essential components of an institution’s financial condition and operations.
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