John Erwin

This comment addresses Questions 1, 2, 3, and 11 of the FFIEC request for comment on the proposed Uniform Financial Institutions Rating System (UFIRS) revisions (Docket OCC-2026-0562). A full empirical analysis, including methodology, statistical tests, tables, and inference boundaries, is provided in the attached document. The analysis uses publicly available FFIEC Call Report data covering U.S. commercial banks from 2001 through 2026. The dataset does not include confidential supervisory information, CAMELS ratings, or examination findings. The findings therefore should be viewed as complementary to, rather than substitutes for, information available to supervisory examiners. The central observation is that institution-specific behavior through economic cycles is persistent, measurable, and contains information not captured by current-state measures alone. Four findings are particularly relevant to the proposal: 1. Institution-specific capital-ratio trajectories exhibit persistent behavior across economic environments and carry substantial out-of-sample predictive information beyond peer-relative current-state measures. 2. This persistence becomes more pronounced during monetary tightening, precisely when differentiated institutional responses become most consequential. 3. Net interest margin responses diverge substantially across institutions during rate transitions, with the widening concentrated among small and mid-sized institutions. 4. Deposit repricing behavior is persistent across rate cycles, indicating that it reflects durable institution-specific balance-sheet and funding characteristics rather than temporary cyclical reactions. The proposed revisions distinguish between financial condition and risk profile as separate dimensions of institutional assessment. Risk profile is a broad supervisory concept encompassing exposures, vulnerabilities, funding structure, business model characteristics, and institutional behavior through economic cycles. The evidence presented here suggests that longitudinal institutional trajectory is one measurable, public-data-based indicator of that broader concept and carries information beyond current financial condition measures alone. The findings are therefore consistent with the proposition that financial condition and risk profile contain partially non-overlapping information and that each contributes information the other does not fully capture. The analysis does not address the Management component, compliance domain ratings, supervisory judgment, or the appropriate weighting of current condition versus risk profile in composite rating determinations, as those questions are structurally outside the reach of public Call Report data. The attached document also includes a methodological observation regarding longitudinal comparability. If the revised UFIRS framework materially changes composite rating practices, post-revision ratings may not be directly comparable to ratings assigned under the current framework, creating challenges analogous to those introduced by the CECL accounting transition. The agencies may wish to consider a clearly identified effective date and a formal statement regarding cross-era comparability. The attached document provides complete empirical results, statistical methodology, pre-registration references, and inference boundaries.