US banking regulators expand eligibility for extended exam cycles

Federal banking regulators have announced an interim final rule to expand the number of community banks eligible for an extended 18-month examination cycle. The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are raising the asset threshold for certain low-risk institutions from $3 billion to $6 billion.

This change implements provisions from the 21st Century ROAD to Housing Act. The extended cycle is intended for well-rated institutions that are considered well managed and well capitalized. Regulators noted that the move aims to reduce the time and resources qualifying low-risk institutions must devote to the examination process, though they will continue offsite monitoring between scheduled exams.

The rule becomes effective 30 days after its publication in the Federal Register. The American Bankers Association commended the decision, stating it tailors supervision to ensure smaller banks face oversight appropriate to their size and risk profile.