By, Elva Coffey-Sears
In March 2016, the three prudential regulators published a revision to eligibility for an expanded examination cycle. Under the Federal Deposit Insurance Act (FDI Act), federal banking agencies are required to conduct a full-scope, on-site examination of supervised institutions at least once every 12 months. The FDI Act permits the agencies to extend the examination cycle to 18 months for institutions that meet certain criteria.
The revision raises the asset-size threshold from under $500 million to under $1 billion, but retains the remaining criteria unchanged. Each agency also retains the right to maintain the 12-month cycle, or implement a schedule of less than 18 months, as it deems necessary or appropriate. Specifically, to be considered for the expanded 18-month examination cycle, an institution must:
- Be well capitalized
- Have a management component rating of 1 or 2, and a CAMELS composite rating of 1 or 2
- Not be subject to a formal enforcement action
- Not have experienced a change of control in the preceding 12 months.
Please visit the below links to view each agency’s announcement:
- FDIC: https://fdic.gov/news/news/financial/2016/fil16017.html
- FRB: http://www.federalreserve.gov/bankinforeg/srletters/sr1606.pdf
- OCC: http://www.occ.gov/news-issuances/bulletins/2016/bulletin-2016-12.html
Questions? That’s what we’re here for. Contact an ABS representative at (405) 607-7000.