Community banks under $300 million in assets are evaluated during FDIC IT examinations based on documented governance, GLBA-aligned risk assessments, vendor risk management, access controls, and incident response testing. Examiners focus on evidence — not staffing size — and expect small banks to demonstrate structured cybersecurity oversight even without large internal IT departments.
The key point many small banks miss: FDIC expectations are based on risk and evidence, not headcount.
1. Governance and Oversight Controls
FDIC examiners expect every community bank—regardless of size—to demonstrate clear governance and accountability for IT and cybersecurity.
This includes:
- Board-approved IT and information security policies
- A clearly designated party responsible for security oversight
- Regular reporting to bank leadership or the board (often quarterly)
For banks without internal IT staff, examiners focus heavily on who owns the decisions. Outsourcing is acceptable, but responsibility cannot be outsourced. There must be a defined individual or role accountable for cybersecurity and compliance outcomes.
Common examiner concern:
Policies exist, but no evidence they were reviewed, approved, or enforced.
2. Risk Assessments and GLBA Alignment
Risk assessments are one of the most heavily scrutinized areas during FDIC exams.
Examiners typically expect:
- An annual IT risk assessment
- A cybersecurity risk assessment aligned to the GLBA Safeguards Rule
- Evidence that identified risks are reviewed, prioritized, and addressed
For community banks under $300M, this does not require enterprise-level tooling—but it does require documentation that shows:
- What risks exist
- How they were evaluated
- What actions were taken
Banks that cannot demonstrate follow-through on risk findings are far more likely to receive MRAs.
3. Access Controls and User Management
Access control failures are one of the most common issues cited in community bank exams.
FDIC examiners look for:
- Role-based access to systems and data
- Multi-factor authentication (MFA) for critical systems
- Documented user provisioning and termination procedures
- Periodic access reviews
Informal practices—such as shared credentials or undocumented access changes—are frequent red flags. Even small banks must be able to show that access is intentionally granted, reviewed, and revoked.
4. Vendor Management and Third-Party Risk
Most community banks rely heavily on third-party vendors, which makes vendor management a critical exam focus.
FDIC examiners typically expect:
- A complete vendor inventory
- Risk tiering (critical vs. non-critical vendors)
- Due diligence documentation for high-risk vendors
- Ongoing monitoring and contract oversight
Examiners are not looking for perfection, but they do expect consistency. Vendor risk should be evaluated across clear categories such as data access, system criticality, and regulatory impact.
Common failure point:
Banks rely on vendors but cannot explain how vendor risk is assessed or monitored.
5. Incident Response and Evidence of Testing
Every community bank is expected to have a written incident response plan, even if it has never experienced a breach.
FDIC examiners look for:
- A documented incident response plan
- Defined roles and escalation paths
- Evidence the plan has been reviewed and tested (often via tabletop exercises)
Testing does not need to be complex. Even a simulated walkthrough demonstrates maturity and preparedness. Banks that cannot show testing or review history are often cited for insufficient readiness.
Real-World Example
A community bank with approximately $180 million in assets and 22 employees entered an FDIC exam with limited internal IT resources. The bank had technical controls in place but lacked formal documentation, risk assessments, and vendor oversight records.
Within 90 days, the bank implemented structured governance, completed GLBA-aligned risk assessments, formalized vendor management, and tested its incident response plan. During examiner follow-up, the bank received no MRAs, and prior concerns were fully resolved.
Why Experience With Examiners Matters
Meeting FDIC expectations is not about installing tools—it is about understanding how examiners evaluate evidence.
With more than 25 years of experience working directly with:
- FDIC examiners
- Technology auditors
- Texas Department of Banking examiners
MatadorNet helps community banks translate regulatory expectations into practical, right-sized controls. We provide compliance-focused IT support and Virtual Information Security Officer (vISO) services designed specifically for banks under $300M that do not have internal IT staff.
If your bank is preparing for an upcoming exam—or remediating prior findings—the right structure can significantly reduce risk, cost, and stress.
Concerned about your next FDIC exam?
Schedule a compliance readiness review to identify gaps before examiners do.
FAQ
- Do FDIC examiners require a specific cybersecurity framework?
They typically expect controls aligned to recognized standards (commonly NIST-based), mapped into bank policy, testing, and evidence.
- How often should a community bank perform risk assessments?
At least annually, plus after major system changes, vendor changes, or security events.
- What’s the most common reason banks get MRAs related to IT/security?
Controls exist but the bank lacks documentation, testing records, or governance evidence.
- Can a small bank pass an exam without internal IT staff?
Yes—if accountability, documentation, and ongoing control testing are structured and repeatable.
Community banks across Texas — including institutions in Dallas, Houston, Austin, and North Texas — are increasingly evaluated on documentation maturity during FDIC IT examinations. Regardless of geographic location, regulators apply consistent oversight standards.
Talk to our team about an exam-readiness review
Check out our related blog: Can a Bank Meet GLBA Requirements Without Expanding Its IT Team?