WASHINGTON—The federal banking agencies said they have increased the number of small banks and savings associations eligible for an 18-month examination cycle rather than a 12-month cycle.
The changes are intended to reduce regulatory compliance costs for smaller institutions, while still maintaining safety and soundness protections, according to the Fed, the FDIC and the OCC, which issued a joint statement.
“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 for an 18-month examination cycle,” the regulators said. “Previously, firms with less than $500 million in total assets could be eligible for the extended examination cycle. The examination cycle 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 regulators said an institution is considered to be well-capitalized and well-managed if it has a composite rating of 1 or 2—the top ratings in the 5-point scale indicating the safety and soundness of a bank or savings association.
The rules increase the number of institutions that may qualify for an 18-month examination cycle by approximately 617, to nearly 5,000 banks and savings associations. In addition, the rules increase the number of U.S. branches and agencies of foreign banks that may qualify for an 18-month examination cycle by 26 branches and agencies, to a total of 89.