Expanded Examination Cycle Eligibility: Interim Final Rule

Summary

The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have published an interagency interim final rule amending the regulations governing eligibility for the 18-month on-site examination cycle, pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act). The rule makes qualifying 1- and 2-rated national banks, federal savings associations, and federal branches and agencies (collectively, banks) with less than $3 billion in total assets eligible for an 18-month (rather than a 12-month) examination cycle.

Highlights

• Qualifying banks with less than $3 billion in total assets are now eligible for an 18-month examination cycle.
• The OCC retains the authority to examine a bank on-site more frequently, as the agency deems necessary or appropriate.

Background

Under the current version of 12 CFR 4, 18-month examination cycles are available only to qualifying banks with less than $1 billion in total assets. The OCC is revising its regulations to raise this threshold for 1- and 2-rated qualifying banks with less than $3 billion in total assets, consistent with the Economic Growth Act and section 7(c)(1)(C) of the International Banking Act of 1978. Other qualification criteria remain the same.

Specifically, to qualify for the extended 18-month examination cycle, a bank with less than $3 billion in total assets must be 1- or 2-rated, be well capitalized, not be subject to a formal enforcement proceeding or order from a federal banking agency, and not have experienced a change of control in the preceding 12-month period. Additionally, a national bank or federal savings association must have a management rating of 1 or 2 to qualify.

The OCC retains the authority to maintain the current 12-month on-site examination schedule for a bank, or adopt a more frequent schedule than every 18 months, if the agency determines it would be necessary or appropriate.

Further Information

Please contact Deborah Katz, Assistant Director, or Melissa Lisenbee, Senior Attorney, Legislative and Regulatory Activities Division, at (202) 649-5490; or Enice Thomas, Senior Advisor to Senior Deputy Comptroller, Midsize and Community Bank Supervision, at (202) 649-5420.

Bao Nguyen
Acting Senior Deputy Comptroller and Chief Counsel

Related Link

• “Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks”