(a) General. The Federal Reserve examines insured member banks pursuant to authority
conferred by 12 U.S.C. 325 and the requirements of 12 U.S.C. 1820(d).
The Federal Reserve is required to conduct a full-scope, on-site examination
of every insured member bank at least once during each 12-month period.
(b) 18-month rule for certain small
institutions. The Federal Reserve may conduct a full-scope, on-site
examination of an insured member bank at least once during each 18-month
period, rather than each 12-month period as provided in paragraph
(a) of this section, if the following conditions are satisfied:
(1) the bank has total assets
of less than $3 billion;
(2) the
bank is well capitalized as defined in subpart D of this part (section
208.43);
(3) at the most recent
examination conducted by either the Federal Reserve or applicable
state banking agency, the Federal Reserve—
(i) assigned the bank a rating of 1
or 2 for management as part of the bank’s rating under the Uniform
Financial Institutions Rating System (commonly referred to as CAMELS);
and
(ii) assigned the bank a
composite CAMELS rating of 1 or 2 under the Uniform Financial Institutions
Rating System;
(4)
the bank currently is not subject to a formal enforcement proceeding
or order by the Federal Reserve or the FDIC; and
(5) no person acquired control of the bank
during the preceding 12-month period in which a full-scope examination
would have been required but for this paragraph (b).
(c) Authority to conduct more frequent
examinations. This section does not limit the authority of the
Federal Reserve to examine any member bank as frequently as the agency
deems necessary.
(d) (1)
Except as provided in paragraph (c) of this section, from December
2, 2020, through December 31, 2021, for purposes of determining eligibility
for the extended examination cycle described in paragraph (b) of this section,
the total assets of a member bank shall be determined based on the
lesser of:
(i) The
assets of the member bank as of December 31, 2019; and
(ii) The assets of the member bank as
of the end of the most recent calendar quarter.
(2) Nothing in paragraph (d)(1) of this
section limits the authority of the Federal Reserve to examine any
member bank as frequently as the agency deems necessary pursuant to
paragraph (c) of this section.
