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Regulators expand 18-month exam cycle for more community banks
The interim final rule lifts the asset threshold for eligible institutions to $6 billion and keeps offsite monitoring in place between exams.
Federal bank regulatory agencies issued an interim final rule that increases the number of community banks eligible for an 18-month on-site exam cycle, aiming to reduce supervisory burden for small, low-risk institutions.
The change follows the 21st Century ROAD to Housing Act, which raised the total asset threshold from $3 billion to $6 billion for certain supervised institutions to qualify for the extended cycle.
The rule extends the on-site exam cycle for eligible small, non-complex firms from 12 months to 18 months, while requiring institutions to meet criteria such as being well managed and well capitalized. Regulators said the extended cycle applies to small banks with relatively low-risk profiles, but that offsite monitoring between scheduled exams will continue.
The interim final rule also makes parallel adjustments for the on-site examination cycle for U.S. branches and agencies of foreign banks. The rule is effective immediately upon publication in the Federal Register, with comments accepted for 30 days.