OCC to Remove Dedicated Supervision for Community Banks

The Office of the Comptroller of Currency (OCC) is set to implement an organizational restructuring that removes the division dedicated to supervising community banks.

Effective June 2, the regulator will combine the Midsize and Community Bank Supervision with the Large Bank Supervision function to create the Bank Supervision and Examination line of business.

Greg Coleman, who currently serves as senior deputy comptroller of Large Bank Supervision, will lead the newly formed Bank Supervision and Examination office. Meanwhile, Beverly Cole, who oversees Midsize and Community Bank Supervision, will retire after 43 years with the agency.

The OCC says the restructuring is designed to better address current challenges, streamline operations by aligning similar functions, and improve efficiency.

By blending the supervision of large, midsize, and community banks, the agency aims to enhance collaboration and more effectively respond to bank-specific or emerging issues.

However, the Independent Community Bankers of America (ICBA) has pushed back against the plan, urging the OCC to maintain a dedicated supervision framework for community banks and calling the merger "counterintuitive.”

With policymakers demanding stronger financial oversight, the ICBA argues it is counterintuitive to consolidate supervisory approaches for institutions with vastly different business models and risk profiles.

“This change marks a step in the wrong direction and contradicts the agency’s own stated commitment to tailoring supervision based on a bank’s size, complexity and risk profile — rather than applying a one-size-fits-all model,”  the group said.

It added that the removal of a dedicated supervision for community banks threatens to weaken the nuanced oversight that effective community bank supervision requires and undermines the tailored regulatory approach they rely on.

As a result, the group has urged the OCC to maintain a dedicated supervision framework for community banks, one that acknowledges their unique role, ensures balanced oversight, and safeguards the stability and choice they offer consumers and local economies.