FRB Issues Guidance Concerning What a Banking Organization with $10 Billion or Less in Assets Needs to Do to See Its Supervisory Ratings Upgraded

The FRB issued guidance (the “Guidance,” SR 12-4) to advise community banking organizations (those with consolidated assets of $10 billion or less) of the factors considered by the FRB in determining whether to upgrade the supervisory ratings of a banking organization.  Under the Guidance, the FRB will look for “a demonstrated improvement” in the banking organization’s financial condition and risk management practices, and whether such improvements are sustainable.  In addition, the FRB said that it will assess the quality of the oversight provided by the banking organization’s board of directors and whether the board of directors actively engages in the process of correcting deficiencies.