OCC Updates Exam Policies to Reduce Burdens for Community Banks

In bulletins updating examination procedures, the Office of the Comptroller of the Currency ("OCC") "eliminate[d] mandatory examination activities not required by statute or regulation to reduce supervisory burden for community banks." 

In the first bulletin, the OCC announced that, effective January 1, 2026, the OCC will eliminate non-statutory mandatory examination policies to better align with a flexible, risk-based approach that gives examiners greater discretion and relies more on quarterly monitoring and bank-provided information. In the second bulletin, the OCC stated that it will replace the procedures in the Retail Nondeposit Investment Products booklet with the core assessment standards from the Community Bank Supervision booklet to streamline oversight and reflect community banks’ more limited investment offerings.

In an additional bulletin, the OCC clarified model risk management expectations for community banks, correcting prior misinterpretations of guidance and emphasized that supervisory practices should be flexible and risk-based rather than prescriptive. The OCC confirmed that community banks are not required to conduct annual model validations, and that examiners will not criticize banks solely for validation frequency if their approach is appropriate to their risk profile. The OCC described the bulletin as the first step in a broader review of its model risk management framework for banks of all sizes.