Overview of Joint Statement
On October 5, 2026, the Board of Governors of the Federal Reserve System, together with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, issued a joint statement focused on community banks' engagement with core service providers. The agencies aim to clarify the factors they consider when making supervisory allocation decisions concerning the core providers servicing community banking organizations (CBOs).
Supervisory Allocation and Enforcement Context
The statement emphasizes that supervisory and examination authorities will evaluate these third-party engagements as part of their oversight. Agencies may initiate supervisory or enforcement actions under their statutory powers when warranted. This underscores heightened regulator focus on the risk and control frameworks community banks maintain with their core service providers.
Distribution and Availability
The Federal Reserve has instructed Reserve Banks to circulate this guidance within their districts to all Federal Reserve-supervised institutions and relevant supervisory personnel. Additionally, questions regarding the statement may be submitted through the Federal Reserve Board's public website, supporting transparent communication channels.
Implications for Compliance and Supervision
While the statement does not impose new regulatory mandates or detailed supervisory expectations, it signals that the agencies will closely monitor community banks' relationships with their core providers. Compliance and risk management functions should be aware of this supervisory lens, particularly regarding how the agencies allocate oversight resources and potential enforcement considerations. However, the statement itself does not specify changes to compliance requirements or testing protocols.