Agencies Expand Banks Qualifying for 18-Month Exam Cycle

Federal banking agencies (Federal Reserve Board, FDIC and OCC) recently issued interim final rules increasing the number of insured depository institutions (IDIs) and U.S. branches and agencies of foreign banks eligible for an 18-month onsite examination cycle.

As the regulators explained in a joint news release, the interim final rules are being issued pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted on May 24, 2018.  Under the rules, qualifying IDIs—generally those that are well capitalized and well managed—with less than $3 billion in total assets are eligible for an 18-month examination cycle.  Previously, only IDIs with less than $1 billion in total assets were eligible for the extended examination cycle.  Qualifying U.S. branches and agencies of foreign banks are also eligible for the extended examination cycle under parallel changes to the agencies’ regulations.

The agencies estimate that the higher threshold may increase the number of qualifying IDIs by approximately 420 to approximately 4,798 and boost the number of U.S. branches and agencies of foreign banks by approximately 33.

The interim final rules went into effect on August 29, 2018.  Comments on the rules must be received by October 29, 2018.  Details may be found here.