Community banks may notice changes in future exam reports following a recent FDIC final rule that eliminates Matters Requiring Board Attention (MRBAs) and Supervisory Recommendations (SRs). The FDIC has also indicated that a large majority of existing supervisory criticisms do not meet the new standards and will be closed, or in some cases have already been closed, as regulators transition to a revised exam framework.

The changes result from a final rule issued jointly by the FDIC and OCC that establishes new standards for unsafe or unsound practices and for issuing Matters Requiring Attention (MRAs). The rule is intended to focus exam findings on issues that present meaningful risk to an institution or involve actual violations of banking laws or regulations.

For community banks, this could result in fewer exam findings tied solely to policies, procedures, or documentation issues that do not present meaningful risk to the institution. Instead, examiners are expected to place greater emphasis on issues that could have a meaningful impact on the bank and on violations of law. The FDIC will review existing MRBAs and SRs and either convert them to MRAs or close them if they do not meet the new standards.

These changes are not limited to safety and soundness exams. In conjunction with the final rule, the FDIC updated portions of its Consumer Compliance Exam Manual, including sections related to exam documentation, appeals, HMDA, and small-dollar lending. The updates indicate that the revised framework may also affect how consumer compliance findings are communicated and addressed during FDIC exams.

Banks should not interpret this change as a reduction in regulatory expectations. Banks remain responsible for complying with applicable laws and regulations and correcting issues identified during exams, but management should pay attention to how these changes are implemented during future exams, particularly if the institution has existing MRBAs, SRs, or other open exam findings.

You can read more about the final rule here.

You can read the redline of the updated Consumer Compliance Exam Manual here.

CCI suggests sharing this information with senior management and the board of directors. If you have any questions regarding this information, you can contact us via inquiries@completecompli.com.