The Office of the Comptroller of the Currency (OCC) has announced a broad package of measures intended to reduce regulatory burdens on community banks, defined as institutions with up to $30 billion in assets. These initiatives reflect the agency’s ongoing commitment to scale oversight in a way that emphasizes core safety and soundness risks while allowing for examiner discretion. From the perspective of those of us working with community banks, these changes represent a meaningful shift toward risk-based supervision and a more practical compliance environment.
Key Changes from the OCC
Risk-Based Examination Framework
Effective January 1, 2026, the OCC will eliminate non-statutory, policy-based exam requirements. Examiners will instead tailor the frequency and scope of reviews to each institution’s size, complexity, and risk profile. This means more flexibility in testing, reduced sampling, and greater reliance on bank-prepared reports. Enforcement and follow-up will still apply where violations or material issues arise.
Simplified Oversight of Investment Products
Community banks selling nondeposit investment products such as mutual funds or annuities will no longer be subject to the OCC’s detailed RNDIP handbook. Instead, examiners will apply more general supervisory guidance, a recognition that the prior approach was overly complex for smaller institutions.
Model Validation Relief
Annual validations of risk management and capital models are no longer mandatory. Community banks can now set validation schedules based on their size, activities, and risk exposures without fear of supervisory criticism solely for less frequent testing. This should help institutions allocate resources more effectively while still maintaining sound governance.
Proposed Elimination of Fair Housing Data Rule
The OCC has proposed repealing the Fair Housing Home Loan Data System, which it described as obsolete, duplicative, and inconsistent with other reporting requirements. According to the agency, removal of the rule will not hinder its ability to monitor housing discrimination.
Streamlined Licensing Approvals
The OCC is also seeking public comment on a rule to grant qualifying community banks access to fast-track approvals for mergers, reorganizations, and other corporate actions. Banks with strong compliance records would benefit from shorter approval timelines and reduced filing burdens.
Ongoing Initiatives
In addition to these announcements, the OCC continues to work on adjustments to the Community Bank Leverage Ratio framework and a simplified process for community banks to comply with the Community Reinvestment Act.
What This Means for Community Banks
These developments underscore the OCC’s focus on reducing compliance costs and tailoring oversight for community institutions. The changes should ease administrative strain and allow community banks to direct more attention toward serving customers and managing material risks.
At the same time, institutions should remain mindful that not all agencies are moving in lockstep. The Federal Reserve and FDIC have not yet provided equivalent relief in every area, and banks with multi-agency oversight should stay attentive to potential differences in supervisory expectations.
As these regulatory reforms continue to evolve, The Bonadio Group remains the go-to resource for community banks seeking clarity and guidance. Our financial services team is closely monitoring these developments and is ready to assist clients in understanding the implications for their operations, compliance programs, and strategic planning.
If you need further guidance or have any questions, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
