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On October 6, the Office of the Comptroller of the Currency (OCC) announced new guidance eliminating policy-based examination requirements for community banks that are not mandated by statute or regulation. Effective January 1, 2026, the revisions aim to reduce supervisory burden while maintaining risk-based oversight under section 8 of the Federal Deposit Insurance Act.
The OCC explained that the revised framework will allow examiners to tailor examination scope and frequency to each bank's size, complexity, and risk profile, replacing fixed procedural requirements with a more flexible supervisory process.
The guidance introduces several key changes for community bank supervision:
- Eliminates non-statutory examination mandates. Examiners will no longer be required to complete OCC policy-based activities such as flood-insurance transaction testing or fair-lending risk assessments on a recurring schedule.
- Refocuses supervision on material financial risks. The OCC directed examiners to concentrate on capital, liquidity, earnings, and credit exposures that pose the greatest risk to a bank's safety and soundness.
- Relies on quarterly monitoring and bank-provided reports. Examiners will use off-site analysis and bank-generated reports to monitor financial trends and identify emerging risks between on-site exams.
- Reassesses data-collection programs. The OCC is reviewing tools such as the Money Laundering Risk System and Interest Rate Risk Survey to determine whether data requests can be reduced or simplified.
Putting It Into Practice: The OCC's new approach represents a significant shift toward more tailored, risk-based supervision for community banks. Community banks are likely to experience fewer mandatory reviews and less examiner-driven data collection as the agency continues to align oversight with material financial risk.
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