Three federal banking agencies issued interagency rules that will expand the number of small banks and savings associations that qualify for an extended 18-month examination cycle.
The rules, which were finalized by the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency, will lower the costs of regulatory compliance for smaller institutions by extending examination cycles by 50 percent.
The rules came into effect on Feb. 29 as a part of the Fixing America’s Surface Transportation Act (FAST Act), in accordance with the interim final rules adopted by the three banking agencies, and were adopted without change on Monday.
Under earlier rules, only institutions with less than $500 million in total assets were eligible for the longer examination cycle. The issuing of the final rules will effectively double the limit, permitting well-capitalized institutions with less than $1 billion in total assets to qualify for the 18-month cycle. This alteration increases the number of eligible banking institutions by approximately 15 percent, adding more than 600 banks and savings associations to the list of qualifying institutions for a new total of approximately 4,800.
In addition, 30 U.S. branches of foreign banks may also qualify under the new rules, raising the total of foreign institutions to 89.