OCC Advances Priority of Reducing Regulatory Burden for Community Banks

WASHINGTON-The Office of the Comptroller of the Currency (OCC) continues to prioritize supervisory and regulatory reforms to reduce burden for community banks and support their role as drivers of economic growth.

Most community banks are well capitalized and well managed, conduct business in a safe and sound manner, and engage in low-risk activities. The OCC has taken actions to reaffirm its commitment to risk-based supervision and tailor its supervisory activities for community banks.

"Community banks are anchors of local economies, providing essential banking services and small business lending that helps power job creation," said Comptroller of the Currency Jonathan V. Gould. "The OCC has taken a range of actions to better tailor its supervision and provide meaningful reforms to community banks so they can continue to drive economic development in their local communities and the broader national economy."

For community banks, the OCC issued guidance in October that removed requirements for examination activities set by OCC policy-e.g., examination activities concerning Community Reinvestment Act (CRA) performance, fair lending, end-user derivatives, and trading. Instead, the guidance provided that the OCC will tailor its examination of a community bank's specific activities in light of the bank's size, complexity, and risk profile with heightened focus on material financial risks. This approach reduces supervisory burden, maintains the value of the federal charter, and preserves banks' safety and soundness while ensuring regulatory oversight does not distract banks from serving their communities. This guidance was effective January 1, 2026.

To implement the guidance, the OCC updated its policies and processes for CRA examination scheduling to provide discretion with respect to the examination frequency. Going forward, the OCC will schedule a community bank's CRA examination by considering the bank's size, risk profile, and complexity. For all other examination activities previously required by mere policy, the OCC is updating its examiner guidance to fully reflect its risk-based supervision principles and provide examiners with direction to guide the scope of examination activities.

To provide community banks with greater flexibility to use a simpler measure of capital adequacy and reduce regulatory burden, the OCC finalized a rule modifying the community bank leverage ratio (CBLR) framework. The framework simplifies capital calculations, shortens reporting schedules, and provides material regulatory relief while maintaining safety and soundness in the banking system. The vast majority of OCC supervised banks with assets under $10 billion qualify to elect the CBLR framework, making regulatory relief available to a meaningful number of banks.

As the OCC stated it planned to do in its October news release on community bank initiatives, the agency took the next step in refining model risk management guidance for all of the OCC's regulated institutions by updating the model risk management guidance for OCC-supervised institutions to clarify that model risk management practices should be risk-based, tailored, and commensurate with a banking organization's size, complexity, and extent of model use. The guidance does not set forth enforceable standards or prescriptive requirements. Models used by community banks are generally excluded from this guidance, as they are typically subject to internal risk management and governance practices appropriate for their size and risk profile, which makes excluding them consistent with a tailored supervisory approach.

To further reduce burden for community banks, the OCC requires its bank examiners to use a newly updated resource to narrow the scope and simplify bank information technology (BIT) and cybersecurity examinations in community banks. The OCC's approach to assess and improve cybersecurity preparedness reinforces a risk-based approach to supervision and improves the effectiveness and efficiency of BIT and cybersecurity examinations.

The OCC will continue to prioritize reforms to reduce regulatory burden on community banks and eliminate supervisory overreach, so community banks may better serve their customers and communities.

Related Links

• Bulletin 2025-24, "Examinations: Frequency and Scope for Community Banks"
• Bulletin 2026-15, "Community Bank Leverage Ratio: Final Rule"
• Bulletin 2026-13, "Model Risk Management: Revised Guidance"