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Examination Cycle:

Interim Final Rules on Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks

Risk Management Practices
September 7, 2018

Summary:

The FDIC and the other federal financial institution regulatory agencies have jointly adopted interim final rules (IFRs) permitting insured depository institutions (IDIs) with up to $3 billion in total assets, and that meet certain other criteria, to qualify for an 18-month on-site examination cycle. The implementation of these rules reduces regulatory burden on small, well-capitalized and well-managed institutions, while allowing the agencies to better focus supervisory resources on IDIs that may present supervisory concerns.

Statement of Applicability to Institutions with Total Assets Under $1 Billion: This Financial Institution Letter applies to FDIC-supervised financial institutions with total assets up to $1 billion.

Highlights:

  • On August 29, 2018, the FDIC and the other federal financial institution regulatory agencies jointly issued the attached IFRs implementing Section 210 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act). Comments on the IFR are due October 29, 2018.
  • The IFRs raise from $1 billion to $3 billion the total asset threshold below which an IDI may qualify for an 18-month (rather than 12-month) on-site safety-and-soundness examination cycle.
  • As authorized by the Economic Growth Act, the agencies have determined that it is consistent with safety-and-soundness principles to permit institutions falling within this expanded total asset threshold, that received a CAMELS composite rating of "1" or "2," and that meet certain other criteria, to qualify for an 18-month on-site examination cycle.
  • Other qualifying criteria include being well-capitalized, well-managed, not having undergone any change in control during the previous 12-month period, and not being subject to a formal enforcement proceeding or order.
  • The extended 18-month examination cycle applies similarly to qualifying U.S. branches or agencies of a foreign bank.
  • In all cases, the agencies reserve the right to examine more frequently if they deem it necessary.
  • This FIL rescinds and replaces FIL-02-2017 issued to announce the previous final rule under the same name.

Suggested Distribution:

  • FDIC-Supervised Financial Institutions (Commercial and Savings)

Suggested Routing:

  • Chief Executive Officer
  • Compliance Officer

Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).

Additional Related Topics:

  • FDIC Rules and Regulations, 12 CFR Parts 337 and 347
Attachment(s)
Interim Rule – Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks (See 83 FR 43961, August 29, 2018)

Last Updated: September 7, 2018