HAR §16-26-7. Uniform financial institutions rating system

(a) The division adopts the "Uniform Financial Institutions Rating System" (UFIRS), which was issued and recommended by the Federal Financial Institutions Examination Council. The rating system reflects in a comprehensive and uniform fashion an institution's financial condition, compliance with laws and regulations, and overall operating soundness. Its primary purpose is to help identify those institutions whose financial, operating, or compliance weaknesses require special supervisory attention or warrant a higher than normal degree of supervisory concern. (b) The uniform rating of institutions will ensure that: (1) The degree of supervisory attention and the type of supervisory response are based upon the severity and nature of an institution's problems; (2) Supervisory attention and action are, to the extent possible, administered uniformly and consistently, regardless of the type of institution or the identity of the regulatory agency; and (3) Appropriate supervisory action is taken to address those institutions whose problems entail the greatest potential for hardship or inconvenience to depositors, borrowers, or the public; or those institutions whose potential weaknesses would most seriously disrupt the proper and efficient functioning of the financial system. (c) In accordance with the UFIRS, each institution shall be assigned a uniform composite rating based on an evaluation of pertinent financial and operational standards, criteria, and principles. This overall rating is expressed through use of a numerical scale of "1" through "5" in ascending order of supervisory concern. Thus, "1" represents the highest rating and, consequently, the lowest level of supervisory concern; "5" represents the lowest rating and, therefore, the highest degree of supervisory concern. The uniform composite rating and individual component ratings shall be contained in the report of examination and shall be deemed confidential, pursuant to section 412:2-104, HRS. [Eff 8/13/87; am and comp 1/27/01] (Auth: HRS §§412:2-104, 412:2-107, 412:2-200) (Imp: HRS §§412:2-100, 412:2-104, 412:2-200, 412:2-201, 412:12-108) 26-6 §16-26-14 §16-26-8 Rating system for a nondepository financial services loan company. (a) In assigning a composite rating to a nondepository financial services loan company, the UFIRS adopted in section 16-26-7 shall not be used. In lieu thereof, the division shall evaluate and weigh several factors, including the nature and extent of present compliance by the institution with consumer credit law and other Hawaii statutes, the commitment of management to compliance and its ability and willingness to take the necessary steps to assure compliance, and the adequacy of operating systems, including internal procedures, controls, and audit activities designed to ensure compliance on a routine and consistent basis. This evaluation system of a nondepository financial services loan company shall be called the Nondepository Rating System ("NRS"). The assignment of the composite compliance rating may incorporate other factors that impact significantly on the overall effectiveness of an institution’s compliance efforts. (b) Each nondepository institution shall be assigned a composite rating based on an evaluation of pertinent compliance standards, criteria, and principles. This overall rating is expressed through use of a numerical scale of "1" through "5" in ascending order of supervisory concern. Thus, "1" represents the highest rating and, consequently, the lowest level of supervisory concern; "5" represents the lowest rating and, therefore, the highest degree of supervisory concern. The composite rating and individual component ratings shall be contained in the report of examination and shall be deemed confidential, pursuant to section 412:2-104, HRS. [Eff and comp 1/27/01] (Auth: HRS §§412:2-104, 412:2-107, 412:2-200) (Imp: HRS §§412:2-104, 412:2-200) SUBCHAPTER 2 EXAMINATION FREQUENCY