97-3460. Expanded Examination Cycle for Certain Small Insured Institutions

[Federal Register Volume 62, Number 29 (Wednesday, February 12, 1997)]
[Rules and Regulations]
[Pages 6449-6453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3460]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 4

[Docket No. 97-02]
RIN 1557-AB56

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulation H; Docket No. R-0957]

FEDERAL DEPOSIT INSURANCE CORPORATION

112 CFR Part 337

RIN 3064-AB90

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563

[Docket No. 96-114]
RIN 1550-AB02


Expanded Examination Cycle for Certain Small Insured Institutions

AGENCIES: Board of Governors of the Federal Reserve System, Office of 
the Comptroller of the Currency, Federal Deposit Insurance Corporation, 
and Office of Thrift Supervision.

ACTION: Interim rule with request for comment.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board), 
the Office of the Comptroller of the Currency (OCC), the Federal 
Deposit

[[Page 6450]]

Insurance Corporation (FDIC), and the Office of Thrift Supervision 
(OTS) (collectively, the Agencies) are issuing this joint interim rule 
with request for comment to implement section 306 of the Riegle 
Community Development and Regulatory Improvement Act of 1994 (CDRI), 
and section 2221 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA). CDRI section 306 and EGRPRA section 
2221 authorize the Agencies to increase the asset size of certain 
financial institutions that may be examined once in every 18-month 
period, rather than once in every 12-month period, from the current 
limit of $100 million to a revised limit of $250 million. This interim 
rule makes certain institutions that have $250 million or less in 
assets eligible for the 18-month examination schedule.
    Furthermore, section 2214 of EGRPRA amends the International 
Banking Act of 1978 and requires that each Federal branch or agency, 
and each State branch or agency, of a foreign bank be subject to on-
site examination by an appropriate Federal banking agency or State 
banking supervisor as frequently as would a national or a state bank, 
respectively, by the appropriate Federal banking agency. Certain issues 
are raised regarding the manner in which the criteria established by 
CDRI and EGRPRA for a national or state bank should be made applicable 
to U.S. branches and agencies of foreign banking organizations. The 
method(s) by which the criteria will be applied to such entities is 
currently being developed.

DATES: This interim rule is effective on February 12, 1997. Comments 
must be received by April 14, 1997.

ADDRESSES: Comments should be directed to:
    OCC: Communications Division, Office of the Comptroller of the 
Currency, 250 E Street S.W., Washington, D.C. 20219, Attention: Docket 
No. 97-02. Comments will be available for public inspection and 
photocopying at the same location. Comments may also be sent by 
facsimile transmission to [phone] or by electronic mail to 
[e-mail].
    Board: William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, D.C. 20551, and refer to Docket No. R-0957. Comments 
addressed to Mr. Wiles may also be delivered to the Board's mail room 
between 8:45 a.m. and 5:15 p.m., and to the security control room 
outside of those hours. Both the mail room and the security control 
room are accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, N.W. Comments may be inspected in 
room MP-500 between 9:00 a.m. and 5:00 p.m., except as provided in 
Section 261.8 of the Board's Rules Regarding the Availability of 
Information, 12 CFR 261.8.
    FDIC: Jerry L. Langley, Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, N.W., Washington, D.C. 20429. 
Comments may be hand delivered to room F-402, 1776 F Street, N.W., 
Washington, D.C. on business days between 8:30 a.m. and 5:00 p.m. 
Comments may be sent through facsimile to [phone] or by Internet 
to [e-mail]. Comments will be available for inspection at the 
FDIC Public Information Center, Room 100, 801 17th Street, N.W., 
Washington, D.C. on business days between 9:00 a.m. and 4:30 p.m.
    OTS: Manager, Dissemination Branch, Records Management and 
Information Policy, Office of Thrift Supervision, 1700 G Street, N.W., 
Washington, D.C. 20552, Attention Docket No. 96-114. These submissions 
may be hand-delivered to 1700 G Street, N.W., from 9:00 a.m. to 5:00 
p.m. on business days; they may be sent by facsimile transmission to 
FAX Number [phone]. Comments will be available for inspection at 
1700 G Street, N.W., from 9:00 a.m. until 4:00 p.m. on business days.

FOR FURTHER INFORMATION CONTACT:
    OCC: Lawrence W. Morris, National Bank Examiner, Examination 
Process [phone]; Ronald Schneck, Director, Special Supervision, 
[phone]; or Mark Tenhundfeld, Assistant Director, Legislative 
and Regulatory Activities, [phone]; Timothy M. Sullivan, 
Director, International Banking and Finance, [phone].
    Board: Jack P. Jennings, II, Assistant Director, [phone], 
William H. Tiernay, Senior Financial Analyst, [phone], Betsy 
Cross, Manager, Division of Banking Supervision and Regulation, or Greg 
Baer, Managing Senior Counsel, [phone], Legal Division.
    FDIC: Mark A. Mellon, Counsel, Regulation and Legislation section 
[phone], Legal Division, or Robert W. Walsh, Manager, Planning 
and Program Development section [phone], Division of 
Supervision, or international contact: Karen M. Walter, Review Examiner 
[phone], Division of Supervision, Federal Deposit Insurance 
Corporation, 550 17th Street, N.W., Washington, D.C. 20429.
    OTS: Scott M. Albinson, Special Assistant to the Executive 
Director, Supervision, [phone]; or Ellen J. Sazzman, Counsel 
(Banking and Finance), Regulations and Legislation Division, Office of 
the Chief Counsel, [phone].

SUPPLEMENTARY INFORMATION:

Background

    Section 111 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991, Public Law 102-242, 105 Stat. 2236 (1991) (12 
U.S.C. 1820(d)), established a requirement that each appropriate 
Federal banking agency conduct a full-scope on-site examination of each 
insured depository institution that it supervises at least once during 
each 12-month period.1 It allowed an exception, however, for 
certain small insured depository institutions that are well managed and 
well capitalized, permitting such institutions to be examined once 
during each 18-month period. To qualify, an institution was required to 
have $100 million or less in total assets and its composite condition 
must have been found to be outstanding (rated 1 under the Uniform 
Financial Institutions Rating System (UFIRS)) at its most recent 
examination. In addition, qualifying institutions must not have 
experienced a change in control during the previous 12-month period in 
which a full scope examination would have been required by 12 U.S.C. 
1820(d).
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    \1\ Section 111 amended section 10 of the Federal Deposit 
Insurance Act (the FDI Act) by adding a new subsection (d), codified 
at 12 U.S.C. 1820(d).
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    In 1994, Congress amended this provision to expand the availability 
of an 18-month examination cycle to a broader number of small 
institutions. CDRI section 306, Public Law 103-325, 108 Stat. 2160 
(1994), amended section 10(d)(4) of the FDI Act to increase to $250 
million the total-asset size of institutions rated outstanding (UFIRS 
1) that could be examined on an 18-month cycle. CDRI section 306 also 
added a provision permitting an 18-month cycle for institutions rated 
satisfactory (UFIRS 2) at their most recent examination, provided they 
did not exceed $100 million in total assets. CDRI also authorized the 
Agencies to increase that $100 million threshold to $175 million 
beginning on September 23, 1996. CDRI further requires that to qualify 
for the expanded examination cycle, the insured institutions not be 
subject to a formal enforcement proceeding or order, and that they meet 
all the other criteria of section 10(d) of the FDI Act, which were not 
changed by CDRI. These criteria require that an institution: (1) Be

[[Page 6451]]

well capitalized; (2) be well managed; and (3) must not have 
experienced a change in control during the previous 12-month period.
    EGRPRA section 2221 provides that, at any time after September 23, 
1996, the Agencies, in their discretion, may increase to $250 million 
the maximum asset size of UFIRS 2-rated institutions eligible for 
examination on an 18-month cycle. CDRI requires that the Agencies 
implement this provision by regulation and that they first determine 
that the increased amount is consistent with the principles of safety 
and soundness for insured depository institutions. (12 U.S.C. 
1820(d)(10)).
    The International Banking Act of 1978 (the IBA), as amended by the 
Foreign Bank Supervision Enhancement Act of 1991, requires an 
examination of each U.S. branch or agency of a foreign bank once during 
each 12-month period. 12 U.S.C. 3105(c)(1)(C). EGRPRA section 2214 
amended the IBA to provide that each Federal or State branch or agency 
of a foreign bank shall be subject to on-site examination by an 
appropriate Federal or State banking agency as frequently as would a 
national or state bank, respectively, by the appropriate Federal 
banking agency. Consequently, U.S. branches or agencies of foreign 
banks are eligible for the 18-month cycle provided that they meet the 
qualifying criteria outlined above. The method by which these 
qualifying criteria should be applied to Federal and State branches and 
agencies is currently under consideration. The Board, the OCC and the 
FDIC request comment regarding application of these criteria to U.S. 
branches and agencies of foreign banks.
    The Agencies have determined that increasing the size limitation of 
UFIRS 2-rated institutions that are eligible for an 18-month cycle is 
generally consistent with the safety and soundness of insured 
depository institutions assuming the absence of other risk factors. A 
longer examination cycle permits the Agencies to focus their resources 
on the segments of the banking and thrift industry that present the 
most immediate supervisory concern, while concomitantly reducing the 
regulatory burden on smaller, well-run institutions that do not pose an 
equivalent level of supervisory concerns. In lieu of the more frequent 
examinations that would otherwise be conducted for these institutions 
once in every 12-month period, the Agencies rely upon off-site 
monitoring tools to identify potential problems in smaller, well-
managed institutions that present low levels of risk. Moreover, neither 
the statute nor the regulation limits, and the Agencies therefore 
retain, the authority to examine an insured depository institution more 
frequently. The Agencies that supervise state-chartered insured 
institutions also recognize that flexibility must be made available in 
the implementation of this regulation to accommodate requirements for 
annual examinations by various states.

Description of the Interim Rule

    This interim rule makes eligible for an 18-month examination 
schedule an institution that: (1) Has total assets of $250 million or 
less; (2) is well capitalized; (3) is well managed; (4) received a 
UFIRS rating of 1 or 2 at its most recent examination; (5) is not 
subject to a formal enforcement proceeding or order; and (6) has not 
experienced a change in control during the previous 12-month period. 
This interim rule increases the number of institutions eligible for an 
18-month examination cycle by about 1,087 institutions (300 national 
banks, 497 nonmember banks, 105 state member banks, and 185 savings 
associations), thereby reducing the regulatory burdens attendant to the 
examination process for those institutions and freeing additional 
supervisory resources to focus on higher-risk institutions. Off-site 
monitoring and the discretionary ability to examine institutions more 
frequently minimizes the supervisory risks of the less-frequent 
examinations. Furthermore, the supervisory emphasis that the Agencies 
are placing on risk management assessment provides reasonable assurance 
that a ``well managed'' institution has been evaluated on its ability 
to identify and monitor risk, and to deal effectively with changes in 
its environment that may occur between examinations.
    The Agencies find good cause for issuing this interim rule without 
prior notice and the opportunity for comment and for dispensing with 
the 30-day delayed effective date ordinarily prescribed by the 
Administrative Procedure Act, 5 U.S.C. 551 et seq. (the APA). This 
interim rule confers a benefit on certain small insured depository 
institutions by reducing the frequency of, and therefore the regulatory 
burden associated with, on-site examinations. Making the 18-month 
examination cycle effective immediately will maximize the benefit of 
this burden reduction by enabling the Agencies to incorporate 
immediately the revised examination schedule into their planning for 
1997. Conversely, this interim rule does not increase the frequency of 
examination or otherwise increase the regulatory burden for any insured 
depository institution. Thus, those institutions that are not eligible 
for the exemption from the statutorily prescribed 12-month examination 
cycle are not adversely affected by the interim rule. Under these 
circumstances, the Agencies conclude that prior notice and comment 
procedures are unnecessary and would be contrary to the public 
interest. 5 U.S.C. 553(b)(B).
    In addition, the Agencies have determined that, under the APA, 
examination schedules are a matter of internal agency procedure. See 
Donovan v. Wollaston Alloys, Inc., 695 F.2d 1, 9 (1st Cir. 1982). 
Determining when an insured financial institution is to be examined is 
based, in part, on examiner availability, the Agencies' need to plan 
examiner time in advance, and other issues relevant to the internal 
operations of the Agencies. This interim rule is a matter of internal 
agency procedure rather than a rule of substantive effect on bank 
activities and authority. Therefore, this interim rule is exempt from 
the APA's public notice requirement. 5 U.S.C. 553(b)(3)(A).
    The Agencies are nonetheless interested in the views of the public 
and are therefore requesting comment on this interim rule, as well as 
how the qualifying criteria should be applied to the U.S. branches and 
agencies of foreign banks. An interim rule for each agency is set out 
below.

Regulatory Flexibility Act

    An initial regulatory flexibility analysis under the Regulatory 
Flexibility Act (the RFA) is only required whenever an agency is 
required to publish a general notice of proposed rulemaking for any 
proposed rule. 5 U.S.C. 603. As noted previously, the Agencies have 
determined that is not necessary to publish a notice of proposed 
rulemaking for this rule. Accordingly, an initial regulatory 
flexibility analysis is not required.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506), the Agencies have determined that no collections of information 
pursuant to the Paperwork Reduction Act are contained in this interim 
rule.

OCC and OTS Executive Order 12866 Statement

    The OCC and OTS have each independently determined that this 
interim rule with request for comment is not a significant regulatory 
action under Executive Order 12866.

OCC and OTS Unfunded Mandates Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public

[[Page 6452]]

Law 104-4, 109 Stat. 48 (March 22, 1995) (Unfunded Mandates Act), 
requires that an agency prepare a budgetary impact statement before 
promulgating a rule that includes a Federal mandate that may result in 
the expenditure by state, local, and tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. If a budgetary impact statement is required, section 205 of the 
Unfunded Mandates Act also requires an agency to identify and consider 
a reasonable number of regulatory alternatives before promulgating a 
rule.
    Because the OCC and OTS have each independently determined that 
this interim rule will not result in expenditures by state, local, and 
tribal governments, in the aggregate, or by the private sector, of more 
than $100 million in any one year, the OCC and OTS have not prepared a 
budgetary impact statement or specifically addressed the regulatory 
alternatives considered. Nevertheless, as discussed in the preamble, 
this interim rule will have the effect of reducing regulatory burden on 
certain institutions.

List of Subjects

12 CFR Part 4

    Freedom of information, Organization and functions (Government 
agencies), Reporting and recordkeeping requirements.

12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Crime, Currency, Federal Reserve System, Flood insurance, 
Mortgages, Reporting and recordkeeping requirements, Safety and 
soundness, Securities.

12 CFR Part 337

    Banks, banking, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 563

    Accounting, Advertising, Crime, Currency, Investments, Reporting 
and recordkeeping requirements, Savings associations, Securities, 
Surety bonds.

Office of the Comptroller of the Currency

12 CFR CHAPTER I

Authority and Issuance

    For the reasons set forth in the joint preamble, part 4 of chapter 
I of title 12 of the Code of Federal Regulations is amended as follows:

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF 
INFORMATION, CONTRACTING OUTREACH PROGRAM

    1. The authority citation for part 4 is revised to read as follows:

    Authority: 12 U.S.C. 93a. Subpart A also issued under 5 U.S.C. 
552; 12 U.S.C. 481, 1820(d). Subpart B also issued under 5 U.S.C. 
552; E.O. 12600 (3 CFR, 1987 Comp., p. 235). Subpart C also issued 
under 5 U.S.C. 301, 552; 12 U.S.C. 481, 482, 1821(o), 1821(t); 18 
U.S.C. 641, 1905, 1906; 31 U.S.C. 9701. Subpart D also issued under 
12 U.S.C. 1833e.

    2. In Subpart A, a new Sec. 4.6 is added to read as follows:


Sec. 4.6  Frequency of examination

    (a) General. The OCC examines national banks pursuant to authority 
conferred by 12 U.S.C. 481 and the requirements of 12 U.S.C. 1820(d). 
The OCC is required to conduct a full-scope, on-site examination of 
every national bank at least once during each 12-month period.
    (b) 18-month rule for certain small institutions. The OCC may 
conduct a full-scope, on-site examination at least once during each 18-
month period, rather than each 12-month period as provided in paragraph 
(a) of this section, if the following conditions are satisfied:
    (1) The national bank has total assets of $250 million or less;
    (2) The national bank is well capitalized as defined in 12 CFR part 
6;
    (3) At its most recent examination, the OCC found the national bank 
to be well managed;
    (4) At its most recent examination, the OCC determined that the 
national bank was in outstanding or good condition, that is, it 
received a composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System (Copies are available at the addresses 
specified in Sec. 4.14 of this chapter);
    (5) The national bank currently is not subject to a formal 
enforcement proceeding or order by the FDIC, OCC, or Federal Reserve 
Board; and
    (6) No person acquired control of the national bank during the 
preceding 12-month period in which a full-scope on-site examination 
would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the OCC to examine any national bank as 
frequently as the agency deems necessary.

    Dated: December 23, 1996.
Eugene A. Ludwig,
Comptroller of the Currency.

Federal Reserve System

12 CFR CHAPTER II

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board amends 
part 208 of chapter II of title 12 of the Code of Federal Regulations 
as follows:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

    1. The authority citation for part 208 is revised to read as 
follows:

    Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d, 461, 
481-486, 601, 611, 1814, 1820(d)(8), 1823(j), 1828(o), 1831o, 1831p-
1, 3105, 3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 78l(b), 
78l(g), 78l(i), 78o-4(c)(5), 78q, 78q-1 and 78w; 31 U.S.C. 5318; 42 
U.S.C. 4012a, 4104a, 4104b, 4106 and 4128.

    2. In Subpart A, a new Sec. 208.26 is added to read as follows:


Sec. 208.26  Frequency of examination.

    (a) General. The Federal Reserve examines insured member banks 
pursuant to authority conferred by 12 U.S.C. 325 and the requirements 
of 12 U.S.C. 1820(d). The Federal Reserve is required to conduct a 
full-scope, on-site examination of every insured member bank at least 
once during each 12-month period.
    (b) 18-month rule for certain small institutions. The Federal 
Reserve may conduct a full-scope, on-site examination at least once 
during each 18-month period, rather than each 12-month period as 
provided in paragraph (a) of this section, if the following conditions 
are satisfied:
    (1) The insured member bank has total assets of $250 million or 
less;
    (2) The insured member bank is well capitalized as defined in 
subpart B of this part (Sec. 208.33);
    (3) At its most recent examination, the Federal Reserve found the 
insured member bank to be well managed;
    (4) At its most recent examination, the Federal Reserve determined 
that the insured member bank was in outstanding or good condition, that 
is, it received a composite rating of 1 or 2 under the Uniform 
Financial Institutions Rating System (Copies are available at the 
address specified in Sec. 216.6 of this chapter);
    (5) The insured member bank currently is not subject to a formal 
enforcement proceeding or order by the

[[Page 6453]]

FDIC, OCC, or Federal Reserve Board; and
    (6) No person acquired control of the insured member bank during 
the preceding 12-month period in which a full-scope on-site examination 
would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the Federal Reserve to examine any 
insured member bank as frequently as the agency deems necessary.

    By order of the Board of Governors of the Federal Reserve 
System, January 23, 1997.
William W. Wiles,
 Secretary of the Board.

Federal Deposit Insurance Corporation

12 CFR CHAPTER III

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Directors of the FDIC amends part 337 of chapter III of title 12 of the 
Code of Federal Regulations to read as follows:

PART 337--UNSAFE AND UNSOUND BANKING PRACTICES

    1. The authority citation for part 337 is revised to read as 
follows:

    Authority: 12 U.S.C. 375a(4), 375b, 1816, 1818(a), 1818(b), 
1819, 1820(d)(10), 1821(f), 1828(j)(2), 1831f, 1831f-1.

    2. A new Sec. 337.12 is added to read as follows:


Sec. 337.12  Frequency of examination.

    (a) General. The Federal Deposit Insurance Corporation examines 
insured state nonmember banks pursuant to authority conferred by 
section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820). The 
FDIC is required to conduct a full-scope, on-site examination of every 
insured state nonmember bank at least once during each 12-month period.
    (b) 18-month rule for certain small institutions. The FDIC may 
conduct a full-scope, on-site examination at least once during each 18-
month period, rather than each 12-month period as provided in paragraph 
(a) of this section, if the following conditions are satisfied:
    (1) The insured state nonmember bank has total assets of $250 
million or less;
    (2) The insured state nonmember bank is well capitalized as defined 
in 12 CFR 325.103(b)(1);
    (3) At its most recent examination, the FDIC found the insured 
state nonmember bank to be well managed;
    (4) At its most recent examination, the FDIC determined that the 
insured state nonmember bank was in outstanding or good condition, that 
is, it received a composite rating of 1 or 2 under the Uniform 
Financial Institutions Rating System (Copies are available at the 
addresses specified in Sec. 309.4 of this chapter);
    (5) The insured state nonmember bank currently is not subject to a 
formal enforcement proceeding or order by the FDIC, OCC, or Federal 
Reserve Board; and
    (6) No person acquired control of the insured state nonmember bank 
during the preceding 12-month period in which a full-scope on-site 
examination would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the FDIC to examine any insured state 
nonmember bank as frequently as the agency deems necessary.

    By order of the Board of Directors.

    Dated at Washington, DC, this 21st day of January, 1997.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.

Office of Thrift Supervision

12 CFR CHAPTER V

Authority and Issuance

    For the reasons set forth in the joint preamble, the OTS amends 
part 563 of Chapter V of title 12 of the Code of Federal Regulations as 
follows:

PART 563--OPERATIONS

    1. The authority citation for part 563 is revised to read as 
follows:

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1820, 1828, 3806; 42 U.S.C. 4106.

    2. Sec. 563.171 is added to read as follows:


Sec. 563.171  Frequency of examination.

    (a) General. The OTS examines savings associations pursuant to 
authority conferred by 12 U.S.C. 1463 and the requirements of 12 U.S.C. 
1820(d). The OTS is required to conduct a full-scope, on-site 
examination of every savings association at least once during each 12-
month period.
    (b) 18-month rule for certain small institutions. The OTS may 
conduct a full-scope, on-site examination at least once during each 18-
month period, rather than each 12-month period as provided in paragraph 
(a) of this section, if the following conditions are satisfied:
    (1) The savings association has total assets of $250 million or 
less;
    (2) The savings association is well capitalized as defined in 12 
CFR 565.4;
    (3) At its most recent examination, the OTS found the savings 
association to be well managed;
    (4) At its most recent examination, the OTS determined that the 
savings association was in outstanding or good condition, that is, it 
received a composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System (Copies are available at the addresses 
specified in Sec. 516.1 of this chapter);
    (5) The savings association currently is not subject to a formal 
enforcement proceeding or order; and
    (6) No person acquired control of the savings association during 
the preceding 12-month period in which a full-scope on-site examination 
would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the OTS to examine any savings 
association as frequently as the agency deems necessary.

    Dated: November 20, 1996.

    By the Office of Thrift Supervision.
Nicolas P. Retsinas,
Director.
[FR Doc. 97-3460 Filed 2-11-97; 8:45 am]
BILLING CODES 4810-33-P 6210-01-P 6714-01-P 6720-01-P