A depositor hearing that a small bank may go longer between examinations needs to know what remains in place. On December 16, 2016, the federal banking agencies finalized an expanded 18-month examination cycle for qualifying institutions with less than $1 billion in assets. The change concerns full-scope, on-site examinations, not an exemption from supervision. [2016-30133][2016-03877]

The Office of the Comptroller of the Currency, Federal Reserve Board and FDIC adopted their earlier interim rules without change. Those rules had taken effect on February 29, 2016, while inviting comments by April 29. December was therefore the finalization of an operating policy, not the moment when banks first became eligible for the expanded cycle. The final rules specify January 17, 2017 for effectiveness. [2016-30133][2016-03877]

Condition matters alongside size. The framework generally concerns well-capitalized, well-managed institutions, subject to other supervisory criteria. The agencies also retain off-site monitoring and the ability to examine more frequently when necessary or appropriate. A bank below the asset threshold cannot treat the number alone as permission to avoid scrutiny, and customers should not read 18 months as a guaranteed interval without regulatory attention. [2016-30133][2016-03877]

The public-interest trade-off is how to reduce examination burden without weakening the protection that supervision is meant to provide. These documents show the conditions chosen to manage that trade-off; they do not prove that customers became safer or that service improved. They are two stages of the same agency process, rather than independent assessments of any bank's performance. [2016-30133][2016-03877]

Source documents

  1. Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Bankshttps://www.govinfo.gov/content/pkg/FR-2016-12-16/html/2016-30133.htm
  2. Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Bankshttps://www.govinfo.gov/content/pkg/FR-2016-02-29/html/2016-03877.htm