Rules allowing 18-month exam cycles for banks under $3 billion are final

Rules permitting qualifying banks with less than $3 billion in total assets for the longer, 18-month examination cycle have moved from “interim” to “final” rule status, the federal banking agencies said Friday.

The agencies – Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC) – published interim rules in August regarding the expanded eligibility for the longer exam cycle under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). According to Friday’s notice, some 430 additional banks (based on the latest data, the agencies note) could now qualify for the 18-month cycle because of EGRRCPA; that pushes the total potentially eligible to 4,706.

The agencies, in Friday’s announcement, said they have adopted the interim rules in final form, with no changes. The final rules are effective 30 days after publication in the Federal Register.

The regulators note that, with the EGRRCPA rule changes, they are authorized to extend the on-site examination cycle for an insured deposit institution to at least once during an 18-month period if the institution:

  • has total assets of less than $3 billion;
  • is well capitalized (according to prompt corrective action rules);
  • was found, at its most recent examination, to be well managed (that is, received a management component rating of “outstanding” or “good”) and to have a composite condition of “outstanding” or, in the case of an IDI with total assets of not more than $200 million, “outstanding” or “good”;
  • is not subject to a formal enforcement proceeding or order by the FDIC or its appropriate federal banking agency; and
  • has not undergone a change in control during the previous 12-month period in which a full-scope, on-site examination otherwise would have been required.

The final rules provide the same eligibility for the longer exam cycle for an estimated 30 U.S. branches and agencies of foreign banks, the agencies said.

The Fed, FDIC, and OCC issued a joint release on the final rules; FDIC additionally released a Financial Institution Letter (FIL-89-2018) to FDIC-supervised banks and thrifts.

Joint agencies notice

Joint notice in Federal Register

FDIC FIL-89-2018

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