II-12 Examination and Visitation Frequency

The FDIC conducts examinations of institutions it supervises at intervals established by FDIC policy. Generally, newly chartered insured institutions or institutions that changed charters and are newly supervised by the FDIC receive a visitation within the first 12 months of operation/conversion and a full-scope examination within the first 24 months. To foster open dialogue and early communication during the initial stage of operations as a FDIC-supervised institution, the institution’s supervisory region will arrange an introductory meeting with management prior to the initial visitation. After the first examination, the institution will follow the applicable Examination Frequency Schedule. The FDIC will conduct examinations at other institutions at intervals outlined in the Examination Frequency Schedule that sets examination intervals by an institution’s total asset size and the ratings assigned during the most recent Consumer Compliance examination and Community Reinvestment Act (CRA) evaluation.

When scheduling an examination, the objectives are to: 

• Target examinations and supervisory efforts where risk of consumer harm is greatest;
• Allocate appropriate examination resources; and
• Conduct concurrent examinations, when requested by the bank, if practical.

Examination and Visitation Frequency

The Initial Examination Frequency Schedule for newly chartered insured institutions and charter conversions is set forth below in Table 1. Examination Frequency Schedules, based on an institution’s total assets from the two previous year-end Call Reports, are set forth below in Tables 2-4. Table 2 applies if an institution’s total assets are $350 million or less for either of the two previous year-end Call Reports. Table 3 applies if an institution’s total assets are $3 billion or less for either of the two previous year-end Call Reports and total assets are over $350 million for both of the two previous year-end Call Reports. Table 4 applies if an institution’s total assets are over $3 billion for both of the two previous year-end Call Reports.

As set forth in Tables 2-4, institutions will generally be on an examination cycle of 66-78 months, 54-66 months, or 24-36 months, depending on their asset size. Examination cycles are based on the date of the last joint Consumer Compliance examination/CRA evaluation. For institutions with a “3”, “4” or “5” Consumer Compliance rating and a CRA rating of “Needs to Improve” or “Substantial Noncompliance”, the joint examination cycle will be shorter (either 1-12 months or 12-24 months).

The examination cycle will not reset if there is an intervening supervisory activity (such as a Consumer Compliance-Only examination, CRA-only evaluation, or visitation). For example, a $2 billion institution falls under Table 3 and will have a 54-66 month joint Consumer Compliance examination/CRA evaluation cycle. If the bank receives a “3” Consumer Compliance rating and a “Satisfactory” CRA rating, the institution will have a Compliance Only examination between 12-24 months. If the institution receives another “3” (or “4” or “5”), at that Consumer Compliance Only examination, it will have another Consumer Compliance Only examination between the next 12-24 months. Regardless of the rating at the Compliance Only examination, the next joint Consumer Compliance examination/CRA evaluation will be 54-66 months from the last joint Consumer Compliance examination/CRA evaluation and not 54-66 months from the Compliance Only examination.

For institutions on an examination cycle of 66-78 months or 54-66 months, with no targeted Consumer Compliance examination or CRA evaluation, examiners will conduct a mid-point risk analysis of the institution and determine if an intervening supervisory activity, such as a targeted visitation, is needed. Examiners will conduct an intervening supervisory activity only when there is sufficient, articulable reason why such review cannot wait until the next regularly scheduled joint examination. Typically, Consumer Compliance and CRA ratings will not change at a visitation, but if the visitation results in a rating change, the Examination Frequency Schedule noted below will still apply. The FDIC may also schedule joint Consumer Compliance examinations/CRA evaluations earlier than the standard schedule, when warranted, dependent upon supervisory concerns or other factors, though such deviations are expected to be rare.

Adversely rated institutions (institutions not rated a “1” or “2” for Consumer Compliance and “Outstanding” or “Satisfactory” or CRA) will encounter more frequent supervisory activities (examination, evaluation, or visitation). Such activities will not reset the examination cycle. However, for institutions that have been adversely rated during the examination cycle, the next regular joint Consumer Compliance examination/CRA evaluation may be scheduled earlier, as appropriate, for supervisory efficiency.

Under the Gramm-Leach-Bliley Act, a financial institution with aggregate assets of $250 million or less may be subject to more or less frequent CRA evaluations because of a determination of “reasonable cause.” Some examples of when an evaluation may be more frequent include where significant fair lending violations were identified during a Consumer Compliance-only examination that would affect overall CRA performance, or receipt of credible complaints indicating deterioration in an institution’s CRA performance. Some examples of when an evaluation may be delayed include when an affiliated institution requests to be examined concurrently, or where an institution is under new data collection or reporting requirements.

Concurrent Examinations

The FDIC conducts concurrent Consumer Compliance/CRA, risk management, and specialty examinations to accommodate the preferences of the bank, unless doing so would be impractical or inefficient. Examinations of banks subject to Consumer Financial Protection Bureau (CFPB) supervision will be coordinated with the requirements of Section 1025(e) of the Dodd-Frank Act.

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