Review of the Supervision of Silvergate Bank

Develop and implement a plan for instructing Community Banking Organization and Regional Banking Organization examiners to take a forward-looking view of a bank’s risk profile and the possible and plausible outcomes of that risk profile when assigning CAMELS composite and component ratings, includinga. guidance for examiners on effectively balancing a bank’s financial results and condition with its risk profile when assigning CAMELS composite and component ratings, particularly for banks with concentrated business models susceptible to boom and bust cycles.b. guidance for examiners on circumstances that warrant a heightened sense of urgency to initiate CAMELS composite or component ratings downgrades, identify when a bank is exhibiting unsafe or unsound banking practices, or designate a bank as being in “troubled condition.”c. required training for examiners that reinforces the guidance developed as part of this recommendation, including scenarios that exemplify the challenges of assigning CAMELS composite and component ratings and the implications of potentially deferring composite or component ratings downgrades when a disconnect has developed between a bank’s financial condition and results and its escalating risk profile.

Develop a plan to minimize the time necessary to establish a new Regional Banking Organization central point of contact and supervisory team for Community Banking Organizations approaching the $10 billion asset size threshold.

Develop guidance for examiners on supervising banks projecting or experiencing rapid growth. The guidance should includea. parameters for identifying significant, rapid growth that may hinder a bank’s ability to operate in a safe and sound manner and parameters for identifying when a bank is growing in an unchecked manner based on conditions in the market that have surpassed management’s capability to effectively manage it.b. actions examiners should take as a bank projects or experiences such growth or in response to sustained, unchecked growth, including any expected escalations.c. actions examiners should take when supervising banks susceptible to volatile market conditions.

Update Supervision and Regulation Letter 02-9 to provide additional details on what may constitute a change in the general character of a state member bank’s business, including providing examiners with a variety of examples or scenarios that could help them to determine when a bank needs to file an application and receive approval from the Board under Regulation H.