Expanded Examination Cycle Eligibility: Interim Final Rule

Summary

The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have published an interagency interim final rule amending the regulations governing eligibility for the 18-month on-site examination cycle, pursuant to the 21st Century ROAD to Housing Act. The rule makes qualifying 1- and 2-rated national banks, federal savings associations, and federal branches and agencies (collectively, banks) with less than $6 billion in total assets eligible for an 18-month, rather than 12-month, examination cycle.

Highlights

• Qualifying banks with less than $6 billion in total assets are now eligible for an 18-month examination cycle.
• The OCC retains the authority to examine a bank on-site as frequently as the agency deems necessary.

Background

Before the interim final rule, 18-month examination cycles were available only to qualifying 1- and 2-rated banks with less than $3 billion in total assets. Through the interim final rule, the OCC revised 12 CFR 4 to raise the threshold for qualifying 1- and 2-rated banks with less than $6 billion in total assets, consistent with the 21st Century ROAD to Housing Act and section 7(c)(1)(C) of the International Banking Act of 1978. Other qualification criteria remained the same.

Specifically, to qualify for the extended 18-month examination cycle, a bank with less than $6 billion in total assets must be 1- or 2-rated, be well capitalized, not be subject to a formal enforcement proceeding or order from a federal banking agency, and not have experienced a change of control in the preceding 12-month period. Additionally, a national bank or federal savings association must have a management rating of 1 or 2 to qualify.

The OCC retains the authority to maintain the current 12-month on-site examination schedule for a bank, or adopt a more frequent schedule, if the agency deems it necessary.

Further Information

Please contact Kimberly Folk Pratt, Acting Assistant Director; Daniel Amodeo, Counsel; or Will Binkley, Counsel, Chief Counsel's Office, at (202) 649-5490.

Adam J. Cohen
Senior Deputy Comptroller and Chief Counsel

Related Link

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