Title of Report [omit “Audit of”]

February 2008 Report No. AUD-08-005 FDIC’s Consideration of Commercial Real Estate Concentration Risk in FDIC-Supervised Institutions AUDIT REPORT Contents Page 1BACKGROUND Increase in CRE Loan Concentrations 2 Interagency Guidance 3 DSC Guidance 4 4RESULTS OF AUDIT 5EXAMINATION PROCESS CONSIDERS INSTITUTION CRE RISK MANAGEMENT PRACTICES The PEP Memorandum 66 ROE Information on CRE Concentrations 6OPPORTUNITIES FOR IMPROVING CRE CONCENTRATION REPORTING AND TRACKING DSC Guidance on the Concentrations Page 7 CRE Concentrations in the Summary Analysis of Examination 8 Report (SAER) Recommendations for Improving CRE Concentration Reporting 10 and Tracking 10CORPORATION COMMENTS AND OIG EVALUATION APPENDICES 12 1: OBJECTIVE, SCOPE, AND METHODOLOGY 2: RISK MANAGEMENT EXAMINATION PROCESS 15 3: CORPORATION COMMENTS 16 4. MANAGEMENT RESPONSE TO RECOMMENDATIONS 18 TABLES 1: Percentage of FDIC-Supervised Institutions with CRE 2 Loans/Total Capital Ratios >300%, by FDIC Region 2: Number of FDIC-Supervised Institutions with CRE Loan 3 Concentrations 3: Concentrations Page and SAER for 48 Institutions 10 with Potentially Significant CRE Concentrations Report No. ...