Number of Banks Eligible for Longer Exam Cycle Increases

On February 19, 2016, Federal bank regulators unveiled an interim final rule increasing the number of small banks and savings associations eligible for a less-stringent 18-month examination cycle.

The intentions of this rule change are to reduce regulatory compliance costs for smaller institutions and still maintain safety and soundness protections.  A statement by the Fed noted that the changes would allow an additional 617 banks to qualify for the less-frequent examination schedule, bringing the total number of banks under the 18-month cycle to “nearly 5,000.”  Additionally, 26 U.S. branches and agencies of foreign banks would also qualify for the rule change. 

Previously, banks with less than $500 million in total assess could be eligible for the extended 18-month examination cycle; however, under the interim final rules, qualifying well-capitalized and well-managed banks and savings associations with less than $1 billion in total assets may now be eligible.  The changes may also apply to qualifying well-capitalized and well-managed U.S. branches and agencies of foreign banks with less than $1 billion in total assets. 

The agencies will accept comments on the change for 60 days.   

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