More banks soon eligible for 18-month exam cycle; OCC issues bulletin

A rule that, as of Jan. 28, is expected to make more than 400 additional banks potentially eligible for the 18-month, on-site examination cycle is highlighted in a bulletin issued Thursday to banking institutions supervised by the Office of the Comptroller of the Currency (OCC).

OCC issued the final rule in December jointly with the Federal Reserve Board and Federal Deposit Insurance Corp. (FDIC). Adopted unchanged from the agencies’ interim rule in August, the measure implements a provision of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155) that raises the asset size of banks eligible for an 18-month rather than a 12-month exam cycle from less than $1 billion to less than $3 billion.

OCC notes in its bulletin (Bulletin 2019-3) that, to qualify for the expanded exam cycle, a national bank, federal savings association, or federal branch or agency of a foreign bank must:

  • have an exam rating of 1 or 2 and a management rating of 1 or 2;
  • be well-capitalized;
  • not be subject to a formal enforcement proceeding or order from a federal banking agency; and
  • not have experienced a change in control in the preceding 12-month period.

“The OCC retains the authority to examine a bank on-site more frequently, as the agency deems necessary or appropriate,” the bulletin states.

The final rule was published in the Dec. 28 Federal Register.

OCC Bulletin 2019-3

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