The Federal Reserve has widened access to an 18-month bank exam cycle for qualifying state member banks and certain U.S. offices of foreign banks. The change raises the asset ceiling from $3 billion to $6 billion and reflects a rule that took effect on September 14, 2026.

What the Federal Reserve changed

In supervisory letter SR 26-8, published October 14, the Federal Reserve said qualifying institutions may move from annual full-scope on-site examinations to an 18-month cycle. Congress raised the statutory asset threshold through Section 903 of the 21st Century ROAD to Housing Act, and the Fed amended Regulations H and K alongside similar changes by the OCC and FDIC.

The longer cycle is available to state member banks with less than $6 billion in assets that are well capitalized, hold CAMELS management and composite ratings of 1 or 2, face no formal enforcement order and have not undergone a recent change in control. The criteria keep the relief focused on institutions regulators judge to be in sound condition.

Foreign-bank branches face parallel tests

U.S. branches and agencies of foreign banks below the same $6 billion threshold can also qualify. They need a ROCA composite rating of 1 or 2 and must meet specified capital or eligible-asset tests, including consolidated Tier 1 and total risk-based capital ratios of at least 6% and 10%, respectively, under one route.

The Fed can still shorten the cycle if surveillance signals deterioration or if a branch’s importance within a foreign bank’s U.S. operations calls for closer review. Bank Secrecy Act and anti-money-laundering program reviews will continue at each safety-and-soundness examination.

Why the change matters for regional banks

A longer cycle can reduce the frequency of resource-intensive on-site reviews for qualifying smaller banks without eliminating supervision. The shift follows other active scrutiny of bank conduct, including the OCC’s recent debanking report, while investors continue to track economic signals in the Fed Beige Book and changing liquidity conditions described in the Fed’s semiliquid-funds research.

The practical effect will vary by institution because the $6 billion ceiling is only the first screen. Supervisory ratings, capital strength and enforcement history still determine whether a bank receives the 18-month schedule.

Sharron Kendi is a seasoned crypto market analyst and writer with over three years of experience decoding blockchain trends, price movements, and market dynamics. She holds a Bachelor’s Degree in Commerce (Finance) from Kenyatta University, blending a solid academic foundation with a sharp eye for technical analysis and a deep understanding of on-chain data. Her work delivers clear, data-driven insights that empower investors to navigate the fast-evolving digital asset space with confidence.