The Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Federal Deposit Insurance Corporation (FDIC) yesterday jointly issued an interim final rule that doubles the asset threshold for qualifying small insured depository institutions (IDIs) to be eligible for an extended 18-month on-site examination cycle.

What Changed

Prior to this rule, only IDIs with less than $3 billion in total assets could qualify for an 18-month examination cycle in lieu of the standard annual examination. Effective immediately upon Federal Register publication, the threshold has been raised to less than $6 billion in total assets, implementing § 903 of the 21st Century ROAD to Housing Act, which became law on July 11, 2026.

The rule also makes parallel changes to the examination cycle regulations governing U.S. branches and agencies of foreign banks, consistent with the International Banking Act of 1978.

Who Qualifies

Expanded eligibility for the 18-month cycle does not apply automatically. To qualify, an IDI with less than $6 billion in total assets must also:

  • Be well capitalized under the prompt corrective action framework;
  • Have received a CAMELS management component rating of 1 or 2 at its most recent examination;
  • Have received at its most recent examination a composite rating of 1 or, if the IDI has $200 million or less in total assets, 1 or 2;
  • Not be subject to a formal enforcement proceeding or order; and
  • Not have undergone a change in control during the prior 12-month period.

Scope of Impact

The agencies estimate the rule will make approximately 188 additional banks, savings associations, and U.S. branches and agencies of foreign banks newly eligible for the extended cycle, bringing the total number of potentially qualifying institutions to approximately 4,016. Of the newly eligible institutions, 95 are supervised by the FDIC, 50 by the OCC, and 43 by the Federal Reserve.

Why It Matters

For qualifying institutions, the shift from a 12-month to an 18-month examination cycle reduces the frequency and associated burden of on-site examinations. Implementation costs are expected to be modest, primarily involving updates to compliance calendars and examination preparation schedules.

The agencies were clear that the rule does not limit their existing authority to examine any institution more frequently than every 18 months when circumstances warrant. Off-site monitoring, including Call Report-based analyses, will continue for all institutions in this asset range.

The rule was issued without prior notice and comment under a good cause finding, given that it implements a statutory mandate already in effect and provides burden relief rather than imposing new requirements. However, the agencies are accepting public comments for 30 days following Federal Register publication.