Final rules that permit extended, 18-month examination cycles for banks and thrifts with less than $3 billion in assets – up from the previous threshold of $1 billion – are scheduled to take effect Jan. 28, according to a Federal Register notice published Friday.
An estimated 430 additional banks could now qualify for the 18-month cycle under the rules, implemented under an Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155) amendment to the Federal Deposit Insurance Act (FDIA). The rules, published by the Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC), were finalized without revision from the interim rules issued in August. The revised rules increase the total number of institutions potentially eligible for the extended exam cycles to 4,706, the agencies said.
There are qualifiers other than asset size for the expanded exam cycle. Under the FDIA, as amended by EGRRCPA, bank and thrift regulators are authorized to extend the on-site examination cycle for an insured depository institution to at least once during an 18-month period (up from 12 months) if that 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.
An estimated 30 U.S. branches and agencies of foreign banks are also eligible for the extended exam cycle, the notice says.
Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks