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FDIC Issues Interim 18-Month Exam Cycle Rule for Small Banks

several-banksIn an effort to help community banks and thrifts with their examination timelines, the Federal Deposit Insurance Corp., (FDIC) has approved an interim final rule to allow more established small institutions to qualify for the 18-month exam cycle.

In a meeting this morning with its Board of Directors, the FDIC revised the previous requirements for the 18-month exam cycle of less than $500 million in assets to offer companies with less than $1 billion in assets the same time frame.

Congress provided the expanded authority as part of the highway bill that was signed into in December 2015.

Comptroller of Currency Thomas J. Curry  refereed to the unrevised rule as "unnecessary and overly burdensome," and says that the rule  struck him as "an area where we could offer meaningful regulatory relief to a large group of community banks and thrifts with very little safety and soundness risk."

He continued, "While the 18-month cycle will reduce the burden on well-managed community banks and thrifts, it will also allow the federal banking agencies to focus our supervisory resources on those institutions that need it most—those that present capital, managerial, or other issues of significant supervisory concern. I’m pleased to vote for it today... I have signed an identical rule on behalf of the OCC that will apply to national banks and federal savings associations."

The FDIC's decision will leave credit unions as the only federally regulated depository institution subject to a strict, 12-month exam cycle at the federal level.

National Association Federal Credit Union (NAFCU) President and CEO Dan Berger said in response to FDIC’s Board of Directors meeting calling on the National Credit Union Association (NCUA) to extend their exam cycle for credit unions.

“Given the recent FDIC action to allow certain banks an 18-month exam cycle, NAFCU again calls upon the NCUA to lengthen the exam cycle for healthy, well-run credit unions,” Berger said. “Credit unions did not cause the financial crisis, are in extremely sound shape as an industry and do not need the additional burden of more-frequent exams. Lengthening the cycle will also save NCUA resources for credit unions that are facing challenges and need more oversight. We appreciate that the NCUA has indicated it is open to an 18-month exam cycle, and we urge the agency to approve this much-needed relief for credit unions as soon as possible.”


Click here to view the proposed rule.

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