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Financial Services Law Insights and Observations

FDIC issues 2022 Supervisory Insights

Bank Regulatory Federal Issues FDIC Supervision Commercial Lending

On August 3, the FDIC released its summer 2022 issue of Supervisory Insights, which contains an article discussing financial performance and examination observations about commercial real estate (CRE) lending risk management practices and an article describing the application of capital, investment, and financial reporting requirements for the issuance of and investment in subordinated debt. The article, Commercial Real Estate: An Update on Bank Lending Amid the Evolving Pandemic Backdrop, discusses the financial performance of banks concentrated in CRE lending as well as examination observations about CRE lending risk management practices. The article also describes the FDIC’s forward-looking supervisory focus for banks with significant exposure in this sector. The FDIC noted that inflation, rising interest rates, and supply chain challenges are possible determinants of increased risk. The article, Subordinated Debt: Issuance and Investment Considerations, “is intended to help financial institutions better understand the applicable capital, investment, and financial reporting requirements for the issuance of and investment in subordinated debt.” According to the FDIC, a key takeaway of Subordinated Debt Investments is that “[i]nstitutions may generally only purchase investment grade subordinated debt securities that are permissible investments for national banks.”

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