The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have published an interagency interim final rule amending the regulations governing eligibility for the 18-month on-site examination cycle. The change, announced in OCC Bulletin 2026-45 on September 10, 2026, makes qualifying 1- and 2-rated national banks, federal savings associations, and federal branches and agencies with less than $6 billion in total assets eligible for an 18-month examination cycle rather than the standard 12-month cycle. The rule is issued pursuant to the 21st Century ROAD to Housing Act and is applicable to all community banks, making it a material operational shift for a broad segment of the banking sector.
The mechanics of the rule are straightforward but consequential. Before the interim final rule, 18-month examination cycles were available only to qualifying 1- and 2-rated banks with less than $3 billion in total assets. Through the interim final rule, the OCC revised 12 CFR 4 to raise that threshold to less than $6 billion in total assets, consistent with the 21st Century ROAD to Housing Act and section 7(c)(1)(C) of the International Banking Act of 1978. Other qualification criteria remained unchanged. To qualify, a bank with less than $6 billion in total assets must be 1- or 2-rated, be well capitalized, not be subject to a formal enforcement proceeding or order from a federal banking agency, and not have experienced a change of control in the preceding 12-month period. Additionally, a national bank or federal savings association must have a management rating of 1 or 2 to qualify.
The source evidence is a primary regulatory bulletin from the OCC, read in full, and it carries the authority of an official interagency action. The bulletin explicitly states that the OCC retains the authority to maintain the current 12-month on-site examination schedule for a bank, or adopt a more frequent schedule, if the agency deems it necessary. This preservation of supervisory discretion is an important qualifier: the expanded eligibility does not guarantee an 18-month cycle for every qualifying institution. The bulletin also identifies the relevant OCC contacts for further inquiry, including Kimberly Folk Pratt, Acting Assistant Director, and counsel in the Chief Counsel's Office, signaling that the agency anticipates operational questions from affected institutions.
The sector implications are most direct for community banks and mid-sized institutions that fall between the old $3 billion threshold and the new $6 billion threshold. For these banks, the rule reduces the frequency of full-scope on-site examinations, potentially lowering compliance burdens and allowing management to allocate more resources to lending and other core activities. The change aligns with the housing-focused legislative intent of the 21st Century ROAD to Housing Act, though the bulletin does not provide data on how many institutions will newly qualify or quantify the expected cost savings. The interagency nature of the rule—spanning the OCC, Federal Reserve, and FDIC—means the change applies consistently across federal banking supervisors, reducing regulatory fragmentation for institutions that might otherwise face different examination schedules depending on their charter type.
Several limitations and unknowns remain. The bulletin does not specify an effective date for the interim final rule, nor does it indicate whether a comment period will follow or whether the rule will be finalized without further modification. It also does not provide estimates of the number of banks that will move from a 12-month to an 18-month cycle, nor does it address how the change interacts with other supervisory processes such as targeted examinations or off-site monitoring. What to watch next is whether the agencies issue additional guidance on implementation, whether any banks between $3 billion and $6 billion in assets are nonetheless kept on a 12-month schedule under the OCC's retained authority, and whether the interim final rule is followed by a final rule that adjusts any of the qualification criteria.