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Report Fraud, Waste, or Abuse
October 1, 2014–March 31, 2015
Section 38(k) of the Federal Deposit Insurance Act, as amended, requires that the IG of the appropriate federal banking agency complete a review of the agency's supervision of a failed institution and issue a report within six months of notification from the FDIC OIG that the projected loss to the DIF is material. Under section 38(k), a material loss to the DIF is defined as an estimated loss in excess of $150 million for the period January 1, 2012, through December 31, 2013; for all such losses occurring on or after January 1, 2014, the materiality threshold is $50 million.
The material loss review provisions of section 38(k) require that the IG do the following:
We did not conduct any material loss reviews during this reporting period.
The Federal Deposit Insurance Act, as amended, requires the IG of the appropriate federal banking agency to report, on a semiannual basis, certain information on financial institutions that incurred nonmaterial losses to the DIF and that failed during the respective six-month period.
When bank failures result in nonmaterial losses to the DIF, the IG is required to determine (1) the grounds identified by the federal banking agency or the state bank supervisor for appointing the FDIC as receiver and (2) whether the losses to the DIF present unusual circumstances that would warrant an in-depth review. Generally, the in-depth review process is the same as that for material loss reviews, but in-depth reviews are not subject to the six-month reporting deadline.
The IG must semiannually report the dates when each such review and report will be completed. If an in-depth review is not warranted, the IG is required to provide an explanation of this determination. In general, we consider a loss to the DIF to present unusual circumstances if the conditions associated with the bank's deterioration, ultimate closure, and supervision were not addressed in any of our prior bank failure reports or involved potentially fraudulent activity.
During this semiannual period, there was one failed state member bank with losses to the DIF that did not meet the materiality threshold to require a material loss review. We determined that the circumstances of this bank failure warrant an in-depth review.
|State member bank||Location||Asset size (millions)||DIF projected loss (millions)||Closure date||OIG summary of state's grounds for receivership||OIG determination|
|NBRS Financial Bank||Rising Sun, MD||$188.2||$24.3||10/17/2014||Unsafe and unsound condition.||Circumstances warrant an in-depth review.|
During this reporting period, we also completed our in-depth review of the failure of Waccamaw Bank (see "Review of the Failure of Waccamaw Bank" on page 11).