OCC Bulletins And Proposed Rules Provide Relief For Community Banks And Preview Potentially Broader Changes

On October 6, 2025, the Office of the Comptroller of the Currency (OCC) released three bulletins and two proposed rules directed at lessening the regulatory and supervisory burden on community banks (those with up to $30 billion in assets). The OCC's actions deliver on commitments made by the banking regulators in 2025 to tailor regulation and supervision to account for the risks applicable to, and activities undertaken by, community banks. They follow similar actions taken by the Federal Deposit Insurance Corporation (FDIC) in July to propose updates to regulatory thresholds to reflect historical inflation, as well as multiple bills introduced in the House of Representatives and Senate to tailor regulatory actions, adjust the community bank leverage ratio, facilitate funding sources relied on by community banks, and promote participation by community banks in bank mergers and acquisitions of failed banks.

The OCC's three bulletins address the following:

Removal of fixed examination activities set by OCC policy. The OCC is required by statute to perform an onsite examination of a bank once in each supervisory cycle—generally, every 12 months, with the cycle extended to every 18 months for certain well capitalized small institutions. Beginning January 1, 2026, the OCC will tailor these exams based on the community bank's size, complexity, and risk profile, with particular focus on material financial risks, rather than conducting routine assessments set at a fixed frequency by OCC policy. The bulletin sets out in an appendix the specific activities that will no longer be required simply to comply with OCC policy, such as policy requirements for a fair lending risk assessment each cycle and transaction testing for flood insurance coverage every three cycles. Rather than relying on policy mandated examination cycles, examiners will instead conduct examination activities that are appropriate given the institution's risk profile. The OCC also indicated examiners will rely on quarterly monitoring activities and bank-provided reports and reassess the necessity and manner of certain data-collection activities for community banks.

Use of Community Bank Supervision booklet instead of Retail Nondeposit Investment Products (RNDIP) booklet to examine RNDIP activities. Currently, OCC examiners use the RNDIP booklet of the Comptroller's Handbook to examine RNDIP programs at banks of all sizes. These programs generally involve bank employees, or employees of an affiliated or nonaffiliated broker-dealer through a referral or networking arrangement with the bank, recommending or selling products with an investment component that are not insured by the Federal Deposit Insurance Corporation to retail customers. The RNDIP booklet is 179 pages long and was updated in June 2024 to reflect the Securities and Exchange Commission's Regulation Best Interest applicable to broker-dealers. The OCC noted that the procedures and risk management practices in the RNDIP booklet are unnecessarily burdensome for community banks, which tend to have more limited RNDIP offerings. While RNDIP offerings remain subject to compliance with all applicable legal requirements, the OCC stated that it will no longer examine community bank's direct or indirect RNDIP offerings using RNDIP standards and procedures. The OCC also indicated it will reassess the expectations and procedures set forth in RNDIP booklet more generally for a broader range of banks.

Clarification that model risk activities should be tailored rather than conducted annually. The OCC stated that model risk management practices at community banks should be tailored based on the bank's risk exposures and business activities, as well as the complexity and extent of its model use. Under the bulletin, if a bank makes a reasonable determination using these factors, it will not be subject to negative supervisory feedback based solely on the frequency or scope of the community bank's model validation practices. The OCC clarified its prior model risk management guidance was not intended to impose a requirement for an annual full model validation on community banks, although in practice, smaller, less complex banks have implemented this type of routine. As in the RNDIP bulletin, the OCC stated it is considering other steps to increase flexibility and reduce burden in model risk management more generally.

The OCC's two proposed rules address the following:

Rescission of Fair Housing Home Loan Data System regulation (12 C.F.R. Part 27¹). The OCC is proposing to rescind this 1979 regulation because it imposes data collection and recordkeeping requirements on national banks that are largely duplicative of, and at times conflict with, requirements under other federal law, including the Home Mortgage Disclosure Act (HMDA) and its implementing Regulation C and the Equal Credit Opportunity Act (ECOA) and its implementing Regulation B. The OCC further indicated rescission is justified because the regulation treats national banks differently from other regulated institutions, which are not subject to an additional layer of requirements, and the limited purposes for which examiners use the data in assessing fair lending risk can be satisfied using ECOA and the Fair Housing Act.

Expansion of expedited and streamlined procedures to community banks. This proposed rule would create a new category of "covered community bank or covered community savings association," which is broadly defined as a well capitalized institution that (i) has less than $30 billion in total assets, (ii) is unaffiliated with any depository institution or foreign bank above that size, and (iii) is not subject to certain enforcement actions requiring improvement of its financial condition. Community banks meeting these requirements would qualify for certain expedited or streamlined filing procedures for specific types of applications or approvals that are currently only available to banks meeting a higher bar—either banks that are both well capitalized and well managed or that have achieved the supervisory ratings necessary to qualify as an "eligible bank" under the OCC's regulations.

Among the expedited or streamlined procedures for which a covered community bank would qualify if the rule is finalized as proposed are:²

• Expedited review of an application to establish a full-service national bank sponsored by a bank holding company whose lead depository institution is a covered community bank under 12 C.F.R. § 5.20(j);
• Expedited review of applications for establishment or relocation of a branch, or relocation of a main office, by a covered community bank under 12 C.F.R. § 5.30(f)(6) and 12 C.F.R. § 5.40(c)(4);
• Use of a streamlined application form under 12 C.F.R. § 5.33(j) for business combinations involving an acquisition by a covered community bank that would result in a national bank with less than $30 billion in total assets;
• Use of an after-the-fact notice, instead of submission of an application, for a covered community bank's acquisition of an operating subsidiary, or engagement in new activity in an existing operating subsidiary, and for certain non-controlling investments by a covered community bank under 12 C.F.R. § 5.34(f)(2), and 12 C.F.R. § 5.36(e) and (h)(1), if the other requirements in the regulation are met; and
• Expedited review of applications for a change in permanent capital by a covered community bank under 12 C.F.R. § 5.46(i)(2).

The proposed rule also would add a definition of what "significant" means in the context of a supervisory, Community Reinvestment Act, or compliance concern raised by an adverse comment to a filing, which would warrant the OCC removing the filing from the expedited review process. That definition would clarify that a concern is "significant" if the facts are previously unknown to the OCC and, if proven accurate, would support denial of the filing.

The OCC requested comments on areas in which it may seek to provide further relief in any final rule, including:

• The asset threshold the OCC should use for a covered community bank and covered community savings association. The proposed threshold of under $30 billion in total assets aligns with the threshold for the OCC's newly announced Community Bank group for supervision purposes and is higher than the community bank threshold used for other federal regulations—for example, the less than $10 billion threshold used to determine banks eligible for the simplified capital requirements under the Community Bank Leverage Ratio framework.
• Whether the OCC should aggregate affiliated depository institutions or aggregate a national bank with its holding company for purposes of assessing whether a bank is within the threshold.
  • Whether any of the OCC's underlying expedited or streamlined procedures should be amended in a way that would provide broader relief beyond community banks, including to (i) provide a shorter expedited review period for national bank branching applications, (ii) eliminate filing requirements for national bank operating subsidiaries and non-controlling and pass-through investments, and (iii) reduce filing requirements for changes in national bank capital, to the extent permitted by applicable statutes.

Footnotes

1. The OCC's Part 27 applies to all national banks.

2. Although this article focuses on the proposed relief for covered community banks, the proposed rule includes equivalent or similar procedures for covered community savings associations.

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