How Will I Be Supervised?



The Federal Reserve System’s supervisory program for state chartered member banks is tailored to the size, condition and complexity of the organization. The frequency of examinations will depend on the asset size of the bank and the prior examination rating.

Safety and Soundness, Information Technology and Fiduciary Examinations

In most cases, Federal Reserve Bank examiners conduct integrated examinations of a state member bank’s safety and soundness, information technology activities, and fiduciary operations. The following table summarizes the mandates for integrated examination schedules.

 

Examination Schedule1

Total Asset Size of the State Member Bank (SMB)2

Composite CAMELS rating of “1” or “2”from the last examination

Composite CAMELS rating of "3" from the last examination

Composite CAMELS rating of “4” or “5” from the last examination

$0 to less than $1 billion

Full-scope on-site exam every 18 months, provided:

  • SMB is well capitalized;
  • SMB received a CAMELS composite rating of “1” or “2” and a management component rating of “1” or “2” at the most recent Federal Reserve or applicable state banking agency examination;
  • SMB not subject to a formal enforcement proceeding or order by Federal Reserve or FDIC; and
  • No person acquired control of the SMB during the preceding 12- month period in which a full-scope exam would have been required but for the 18-month exam cycle

Otherwise, full-scope exam every 12 months.

May be eligible for alternate-year examination program (AEP).3

Full-scope on-site exam every 12 months conducted by the Federal Reserve or jointly with the relevant state banking agency.

A targeted exam conducted by the Federal Reserve or jointly with the state banking agency is also required annually for deteriorating institutions.4

Two exams are required every 12 months. One of the two exams must be a full-scope exam.

Both exams must be conducted by the Federal Reserve or jointly with the relevant state banking agency.

$1-$10 billion

Full-scope on-site exam every 12 months. May be eligible for AEP.

Greater than $10 billion and less than $50 billion

Full-scope on-site exam every 12 months. Some SMBs rated CAMELS composite “1” and “2” may be eligible for an AEP. The SMB is subject to continuous monitoring, and exam activities are intensified based on the severity of issues at the bank.

$50 billion and above

Full-scope on-site exam every 12 months. The full-scope exam must be led by the Federal Reserve and may be joint with the relevant state banking agency. The SMB is subject to continuous monitoring, and exam activities are intensified based on the severity of issues at the bank.

1This table provides a brief summary of examination (exam) frequency requirements for SMBs.  See the Federal Reserve Board’s Regulation H, (12 CFR      208.64(b)), and Section 1000.1 of the Commercial Bank Examination Manual for more information on SMB exam frequency and coordination requirements.

2Exams of SMBs with more than $10 billion are typically integrated into the consolidated supervision program at the bank holding company.

3AEPs generally allow exams conducted in alternating years or alternating 18-month periods, as appropriate, to be conducted with the state banking agency along  with Federal Reserve examiner presence.  AEPs are implemented on a state-by-state basis.  Consult the appropriate Reserve Bank for further information  regarding eligibility and availability of an AEP in a particular state.

4The Federal Reserve typically identifies deteriorating banks through off-site surveillance information. See Section 1020.1 of the Commercial Bank Examination  Manual for more information.

Compliance/Community Reinvestment Act Examination

As shown in the table below, the frequency of consumer compliance and Community Reinvestment Act (CRA) examinations depends on the previous examination ratings and the asset size of the institution.  For institutions with at least a satisfactory rating, the frequency of examination is directed by the Community Reinvestment Act. The CRA and compliance examinations are conducted simultaneously.

Small Bank Frequency*
 

Compliance Rating

CRA Rating

Next Compliance Examination

Next CRA Examination

1 or 2

Outstanding

No sooner than 60 months

No sooner than 60 months

1 or 2

Satisfactory

No sooner than 48 months

No sooner than 48 months

1 or 2

Needs to Improve or Substantial Noncompliance

No sooner than 48 months

12 months

3, 4 or 5

Outstanding

12 months

No sooner than 60 months

3, 4 or 5

Satisfactory

12 months

No sooner than 48 months

3, 4 or 5

Needs to Improve or Substantial Noncompliance

12 months

12 months

* A small bank is defined as a bank with less than $280 million in assets.


Large Bank Frequency*
 

Compliance Rating

CRA Rating

Next Compliance Examination

Next CRA Examination

1 or 2

Outstanding or Satisfactory

24 months

24 months

1 or 2

Needs to Improve or Substantial Noncompliance

24 months

12 months

3, 4 or 5

Outstanding or Satisfactory

12 months

24 months

3, 4 or 5

Needs to Improve or Substantial Noncompliance

12 months

12 months

* A large bank is defined as a bank with $280 million or more in assets for both of the previous two year-ends.

Learn More...

  • SR 00-3 Information technology examination frequency.
  • SR 01-5 Examination of fiduciary activities.
  • SR 16-6 Updates to the Expanded Examination Cycle for Certain State Member Banks and U.S. Branches and Agencies of Foreign Banking Organizations.