More small banks now qualify for an 18-month exam cycle
An interim final rule from the OCC, Federal Reserve and FDIC, effective 14 September 2026, doubles the asset threshold for the 18-month on-site exam cycle from under $3 billion to under $6 billion. The agencies estimate about 188 more banks qualify.
Most insured banks get a full-scope on-site examination every 12 months. Smaller, well-run banks can qualify for an 18-month cycle instead. Section 903 of the 21st Century ROAD to Housing Act, which became law on 11 July 2026, raised the size limit for that longer cycle, and on 14 September 2026 the three federal banking agencies published an interim final rule to put it into effect (91 FR 58009).
The rule took effect on 14 September 2026. Comments are due by 14 October 2026.
What changed
Before the change, only institutions with "under $3 billion in total assets" could qualify for the 18-month cycle. The rule amends each agency's regulation (12 CFR part 4 for the OCC, parts 208 and 211 for the Federal Reserve, and parts 337 and 347 for the FDIC) so that the test is now that the institution "has total assets of less than $6 billion."
The agencies estimate that "approximately 188" more banks and savings associations become eligible, bringing the total that may qualify, including some U.S. branches and agencies of foreign banks, to 4,016.
The other conditions still apply
Size is only one test. To qualify, an institution must also:
- be well capitalized;
- have a composite rating of "outstanding" or, under the rule, "good";
- be well managed, which the rule ties to a management component rating of 1 or 2;
- not be "subject to a formal enforcement proceeding or order"; and
- not have "undergone a change in control during the previous 12-month period."
An 18-month cycle is a maximum interval, and the agencies can still examine a bank sooner.
What it could mean
For banks between $3 billion and $6 billion this is good news, and what they mostly get back is time. If your compliance team is three people, an extra six months between first-day letters is a big deal.
The flip side is less obvious. A longer gap means a problem can run longer before anyone outside the bank notices. We'd lean harder on internal testing and board reporting in the off year, not less. Finding a broken overdraft fee calculation yourself is far cheaper than having an examiner find it eighteen months in.
Eligibility can also go away fast. Lose the management rating and you're back on 12 months. And if you're a $5.5 billion bank eyeing an acquisition, remember that crossing $6 billion ends the longer cycle too. That belongs in the deal model.