The banking agencies' December 16, 2016 action did not create the expanded small-bank examination cycle for the first time. The Office of the Comptroller of the Currency, Federal Reserve Board and FDIC adopted their February interim final rules without change. The final document set January 17, 2017 as its effective date, but that date does not describe the beginning of the interim policy. [2016-30133][2016-03877]

The February 29 publication supplies the missing chronology. Its interim final rules took effect that day and requested public comments by April 29. A request for comments therefore coexisted with an effective rule. Describing the February action as only a proposal would erase the difference between this process and a proposal that imposes no operative requirements. [2016-30133][2016-03877]

The substantive change expanded eligibility for an 18-month, full-scope on-site examination cycle from qualifying institutions below $500 million in assets to qualifying institutions below $1 billion. Generally, the institutions must be well capitalized and well managed, and other capital, managerial and supervisory criteria apply. Less than $1 billion is a strict threshold, not an inclusive upper endpoint. [2016-30133][2016-03877]

The agencies retain off-site monitoring and authority to examine institutions more frequently when necessary or appropriate. Thus, eligibility does not promise exactly 18 months between every regulatory contact. The two publications establish the policy's sequence and scope within one rulemaking chain. They do not independently establish lower costs, stronger competition or better protection for depositors following the change. [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