Final Rule Adjusting and Indexing Certain Regulatory Thresholds

This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations

Federal Register

55789

Vol. 90, No. 231

Thursday, December 4, 2025

1 See, e.g., 12 CFR 337.12(b) (classifying

institutions with less than $3 billion in assets as

small for examination cycle purpose); 12 CFR 324.2

(providing definitions for Category II and III FDIC-

supervised institutions).

2 See, e.g., 12 CFR 329.3.

3 For example, for large financial institutions with

total assets of $100 billion or more, capital and

liquidity requirements increase in stringency based

on measures of size, cross-jurisdictional activity,

Continued

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Parts 303, 314, 335, 340, 347,

363, and 380

RIN 3064–AG15

Adjusting and Indexing Certain

Regulatory Thresholds

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Final rule.

SUMMARY: The Federal Deposit

Insurance Corporation (FDIC) is

adopting this final rule to amend certain

regulatory thresholds in the FDIC’s

regulations to reflect inflation.

Specifically, this final rule generally

updates such thresholds to reflect

inflation from the date of initial

implementation or the most recent

adjustment and provides for future

adjustments pursuant to an indexing

methodology. The changes set forth in

this final rule preserve the level of

certain thresholds set forth in the FDIC’s

regulations in real terms, thereby

avoiding the undesirable and

unintended outcome where the scope of

applicability for a regulatory

requirement changes due solely to

inflation rather than actual changes in

an institution’s size, risk profile, or level

of complexity.

DATES:

Effective date: The final rule is

effective January 1, 2026

e level of

certain thresholds set forth in the FDIC’s

regulations in real terms, thereby

avoiding the undesirable and

unintended outcome where the scope of

applicability for a regulatory

requirement changes due solely to

inflation rather than actual changes in

an institution’s size, risk profile, or level

of complexity.

DATES:

Effective date: The final rule is

effective January 1, 2026.

Applicability dates: An insured

depository institution (IDI) need not

comply with the applicable 12 CFR part

363 requirements in effect as of

December 31, 2025, if the IDI will not

be subject to such 12 CFR part 363

requirements under the updated

thresholds in effect as of January 1,

2026, as specified in this final rule.

FOR FURTHER INFORMATION CONTACT:

Andrew Carayiannis, Chief, Policy &

Risk Analytics Section; Bryan Jonasson,

Deputy Chief Accountant; Kimberly

Krizanovic, Senior Accounting Policy

Analyst; Keith Bergstresser, Senior

Policy Analyst; Lauren Brown, Senior

Policy and Risk Analyst; Jim Yu, Senior

Policy and Disclosure Analyst; Rachel

Romm-Nisson, Risk Analytics

Specialist, Capital Markets and

Accounting Policy Branch, Division of

Risk Management Supervision;

Christopher Blickley, Counsel, Legal

Division; Michelle Mire, Senior

Attorney, Legal Division; Robert Meiers,

Senior Attorney, Legal Division; Nathan

Raygor, Senior Attorney, Legal Division;

Ryan Tetrick, Deputy Director, Division

of Complex Institution Supervision and

Resolution; Alex Greenberg, Assistant

Director, Division of Resolutions and

Receiverships; capitalmarkets@fdic.gov,

on;

Christopher Blickley, Counsel, Legal

Division; Michelle Mire, Senior

Attorney, Legal Division; Robert Meiers,

Senior Attorney, Legal Division; Nathan

Raygor, Senior Attorney, Legal Division;

Ryan Tetrick, Deputy Director, Division

of Complex Institution Supervision and

Resolution; Alex Greenberg, Assistant

Director, Division of Resolutions and

Receiverships; capitalmarkets@fdic.gov,

(202) 898–6888; Federal Deposit

Insurance Corporation, 550 17th Street

NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

A. Background

B. Considerations and Policy Objectives for

Updating and Indexing Thresholds

C. Overview of the Proposal

II. Overview of Comments Received

A. In General

B. Expected Effects

C. Indexing Methodology

D. Effective Date

E. Other Comments

III. Final Rule and Discussion of Comments

A. Initial Updates

1. 12 CFR part 303 (Part 303)—Filing

Procedures

2. 12 CFR part 335 (Part 335)—Securities

of State Nonmember Banks and Savings

Associations

3. 12 CFR part 340 (Part 340)—Restrictions

on Sale of Assets of a Failed Institution

by the Federal Deposit Insurance

Corporation

4. 12 CFR part 347 (Part 347)—

International Banking

5. 12 CFR part 363 (Part 363)—Annual

Independent Audits and Reporting

Requirements

i. Background

ii. Overview of Proposed Asset Threshold

Updates in Part 363

iii. Comments on Part 363

iv. Response to Comments on Part 363

v. Final Rule

6. 12 CFR part 380 (Part 380)—Orderly

Liquidation Authority

7. Additional Thresholds

8. Effective Date of Initial Threshold

Updates

9. Alternatives for Threshold Application

B. Indexing Methodology for Future

Threshold Adjustments

1. Description of Proposed Methodology

i. Comments on the Proposed Methodology

ii. Response to Comments on the Proposed

Methodology

2. Alternatives to the Proposed Indexing

Methodology

i. Alternative Measures of Indexing: Other

Price Indices

ii. Alternative Measures of Indexing: Gross

Domestic Product

ii

or Threshold Application

B. Indexing Methodology for Future

Threshold Adjustments

1. Description of Proposed Methodology

i. Comments on the Proposed Methodology

ii. Response to Comments on the Proposed

Methodology

2. Alternatives to the Proposed Indexing

Methodology

i. Alternative Measures of Indexing: Other

Price Indices

ii. Alternative Measures of Indexing: Gross

Domestic Product

ii. Alternative Measures of Indexing: Other

Measures

iv. Adjustment Frequency Within the

Indexing Methodology

v. Degree of Automation in Indexing

3. Final Rule—Indexing Methodology

i. Indexing Methodology, In General

ii. Effective Date and Timing of Future

Adjustments

IV. Economic Analysis

A. Expected Scope of Impact

B. Estimates of the Number of Directly

Affected Entities

C. Costs and Benefits of the Final Rule

D. Overall Assessment

V. Administrative Law Matters

A. Administrative Procedure Act

B. Congressional Review Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act Analysis

E. Plain Language

F. Riegle Community Development and

Regulatory Improvement Act of 1994

G. Executive Orders 12866 and 13563

H. Executive Order 14192

I. Introduction

A. Background

Various regulations promulgated by

the FDIC use thresholds to determine

their scope of applicability. The most

common threshold is the amount of

total on-balance sheet assets of an

institution (measured in dollars), which

has long served as a proxy for an

institution’s size.1 In some cases, asset-

based thresholds are combined with

other thresholds to serve as proxies for

an institution’s risk profile or level of

complexity, such as the amount of off-

balance sheet exposures or cross-

jurisdictional activities.2 Combining

thresholds in this manner allows for a

regulatory framework that is tailored to

the risks presented by an individual

institution or categories of institutions.3

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00001

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD

he amount of off-

balance sheet exposures or cross-

jurisdictional activities.2 Combining

thresholds in this manner allows for a

regulatory framework that is tailored to

the risks presented by an individual

institution or categories of institutions.3

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00001

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55790

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

weighted short-term wholesale funding, nonbank

assets, and off-balance sheet exposure. See 12 CFR

252.5, 12 CFR 238.10.

4 5 U.S.C. 553(b), (c).

5 See, e.g., 12 U.S.C. 5365(i)(2)(A), which

generally requires financial companies to conduct

periodic stress tests if their total consolidated assets

are greater than $250 billion. Pursuant to this

statutory language, the FDIC’s regulations reiterate

this $250 billion threshold at 12 CFR 325.2(c).

6 12 U.S.C. 2901 et seq.

7 Specifically, this adjustment corresponds to the

average of the Consumer Price Index for Urban

Wage Earners and Clerical Workers, not seasonally

adjusted, for each 12-month period ending in

November, with rounding to the nearest million.

See Community Reinvestment Act Regulations

Asset-Size Thresholds, 89 FR 106480, 106481 (Dec.

30, 2024).

8 90 FR 35449 (July 28, 2025).

9 Certain thresholds under the proposal would be

updated initially to reflect other considerations. For

example, as discussed in section III.A.5 of this

SUPPLEMENTARY INFORMATION, the proposal would

initially update thresholds in 12 CFR part 363 to

help ensure sound financial management of the

institutions posing the greatest potential risk to the

Deposit Insurance Fund. 70 FR 71226, 71227 (Nov.

28, 2005).

10 The U.S. Bureau of Labor Statistics publishes

the CPI–W on a monthly basis. The CPI–W is used

to annually adjust benefits paid to Social Security

beneficiaries and Supplemental Security Income

recipients. U.S

12 CFR part 363 to

help ensure sound financial management of the

institutions posing the greatest potential risk to the

Deposit Insurance Fund. 70 FR 71226, 71227 (Nov.

28, 2005).

10 The U.S. Bureau of Labor Statistics publishes

the CPI–W on a monthly basis. The CPI–W is used

to annually adjust benefits paid to Social Security

beneficiaries and Supplemental Security Income

recipients. U.S. Social Security Administration, CPI

for Urban Wage Earners and Clerical Workers,

available at www.ssa.gov/oact/STATS/cpiw.html.

11 Any references to inflation in this final rule

refer to inflation as measured under the CPI–W,

unless specifically noted otherwise.

Additionally, while most thresholds set

a general level of applicability for a

regulation, in some instances,

thresholds establish exclusions, provide

for optionality, or tailor individual

requirements within a broad-based

regulation to the varying sizes, risk

profiles, and levels of complexity of in-

scope institutions.

Under the FDIC’s regulations, most

thresholds are static, with no

mechanism for periodic adjustments

over time. To change a static threshold,

the FDIC must, in general, provide

notice and seek comment on any such

change before it can be implemented as

final.4 Certain thresholds within the

FDIC’s regulations are required by

statute and therefore cannot be changed

without legislative amendments.5

The FDIC has occasionally revised

discretionary regulatory thresholds or

established a mechanism within a

regulation to allow for adjustments on a

periodic basis. For example, 12 CFR part

345, which implements the Community

Reinvestment Act,6 defines small and

intermediate-small banks by reference to

asset-size criteria expressed in dollar

amounts, which are adjusted annually

based on the year-to-year change in

inflation through a Federal Register

notice.7

B

established a mechanism within a

regulation to allow for adjustments on a

periodic basis. For example, 12 CFR part

345, which implements the Community

Reinvestment Act,6 defines small and

intermediate-small banks by reference to

asset-size criteria expressed in dollar

amounts, which are adjusted annually

based on the year-to-year change in

inflation through a Federal Register

notice.7

B. Considerations and Policy Objectives

for Updating and Indexing Thresholds

As discussed above, the use of

applicability thresholds allows the FDIC

to differentiate and tailor regulatory

requirements based on an institution’s

size, risk profile, and level of

complexity. However, static dollar-

based thresholds can lead to unintended

policy consequences if threshold levels

are not periodically updated or indexed

to inflation. For example, smaller and

mid-size institutions can become subject

to asset-based requirements originally

intended for relatively larger

institutions solely as a result of growth

in price levels, thereby increasing

burden for reasons unrelated to changes

in their inflation-adjusted size or risk

profile.

Modifications to regulatory thresholds

can be made in several ways in order to

help preserve their intended application

and policy objectives. A threshold may

be periodically updated through ad-hoc

review, for example, as a one-time

update without pre-determining any

additional, automatic future

adjustments. Such an approach would

help to preserve the threshold’s

intended application since it was first

implemented or most recently amended

but would not efficiently provide for

preservation of the intended threshold

level over time. Separately, a regulatory

threshold may be automatically adjusted

in future periods, for example, through

periodic adjustments using a pre-

determined indexing methodology

based on a certain factor, such as

inflation

’s

intended application since it was first

implemented or most recently amended

but would not efficiently provide for

preservation of the intended threshold

level over time. Separately, a regulatory

threshold may be automatically adjusted

in future periods, for example, through

periodic adjustments using a pre-

determined indexing methodology

based on a certain factor, such as

inflation. Automatic adjustments in this

way would more efficiently and

transparently preserve a threshold’s

intended application and maintain

alignment with intended policy

objectives over time. However, if not

properly structured for future periods,

index-based adjustments can lead to

unintended and undesirable outcomes.

For example, adjusting regulatory

thresholds too frequently and in the

absence of meaningful changes in the

chosen index can result in

inefficiencies, as institutions may incur

costs to frequently review their practices

to reflect adjusted thresholds. By

contrast, infrequent adjustments also

result in larger, less gradual adjustments

that can impair the certainty and

predictability of a regulatory framework

and create challenges for regulatory

compliance and balance sheet

management practices.

Properly structured, appropriately

sequenced and predictable threshold

adjustments promote consistent

application of regulatory requirements

over time and contribute to a more

durable regulatory framework. In

addition, such adjustments can enhance

transparency and certainty by providing

institutions with a pre-determined

schedule for future regulatory changes

and therefore allow for more enhanced

balance sheet management practices.

C

predictable threshold

adjustments promote consistent

application of regulatory requirements

over time and contribute to a more

durable regulatory framework. In

addition, such adjustments can enhance

transparency and certainty by providing

institutions with a pre-determined

schedule for future regulatory changes

and therefore allow for more enhanced

balance sheet management practices.

C. Overview of the Proposal

On July 28, 2025, the FDIC published

a notice of proposed rulemaking (the

proposal) in the Federal Register that

proposed to update and, in the future,

adjust certain regulatory thresholds in

the FDIC’s regulations to reflect

inflation and certain other

considerations.8 Under the proposal, the

FDIC would initially update such

thresholds to reflect historical inflation 9

(which would be measured as the

percentage change in the non-seasonally

adjusted Consumer Price Index for

Urban Wage Earners and Clerical

Workers (CPI–W)),10 generally based off

the date of initial implementation or the

most recent quantitative adjustment.

Additionally, the proposal would

implement an indexing methodology for

subsequent, periodic adjustments for

most thresholds that would be

effectuated automatically every two

consecutive years or during any

intervening year when the cumulative

change in CPI–W since the last

adjustment increases by more than 8

percent.11

The FDIC noted in the proposal that

the proposal was the first of a multi-

phase effort to reevaluate thresholds

within the FDIC’s regulations, and that

the FDIC expects to solicit comment on

one or more future proposals to update

and adjust additional thresholds

during any

intervening year when the cumulative

change in CPI–W since the last

adjustment increases by more than 8

percent.11

The FDIC noted in the proposal that

the proposal was the first of a multi-

phase effort to reevaluate thresholds

within the FDIC’s regulations, and that

the FDIC expects to solicit comment on

one or more future proposals to update

and adjust additional thresholds.

As discussed in the sections that

follow, the FDIC proposed to initially

update and thereafter periodically

adjust certain thresholds in the

following FDIC regulations:

• 12 CFR part 303—Filing Procedures

• 12 CFR part 335—Securities of

Nonmember Banks and State Savings

Associations

• 12 CFR part 340—Restrictions on Sale

of Assets of a Failed Institution by the

Federal Deposit Insurance

Corporation

• 12 CFR part 347—International

Banking

• 12 CFR part 363—Annual

Independent Audits and Reporting

Requirements

• 12 CFR part 380—Orderly Liquidation

Authority

II. Overview of Comments Received

A. In General

The FDIC received over 100 comment

letters on the proposal for updating and

indexing certain regulatory thresholds,

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00002

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55791

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

12 The FDIC, together with the Federal Financial

Institutions Examination Council, Office of the

Comptroller of Currency, and the Board of

Governors of the Federal Reserve System (FRB),

Continued

predominantly from community

banking institutions, but also from

industry and trade groups representing

the banking and financial services

industry, accounting firms, public

policy and public interest organizations,

financial services firms, a law firm, a

professional organization of financial

regulators, and individuals

Board of

Governors of the Federal Reserve System (FRB),

Continued

predominantly from community

banking institutions, but also from

industry and trade groups representing

the banking and financial services

industry, accounting firms, public

policy and public interest organizations,

financial services firms, a law firm, a

professional organization of financial

regulators, and individuals.

The comments received generally

expressed support for the proposal, in

particular comments received from

community banking institutions.

Commenters generally supported the

proposed updates to certain regulatory

thresholds, with many indicating such

updates would provide a meaningful

benefit through reduced regulatory

burden. In addition, many commenters

supported the proposed indexing

methodology to adjust thresholds

according to changes in inflation in

future periods. While some commenters

advocated for changes to specific

aspects of the proposed indexing

methodology, many were supportive of

a mechanism to adjust thresholds in

future periods generally.

The majority of the comments

pertained to part 363 thresholds with

most commenters generally supportive

of the proposed updates to those

thresholds, indicating the proposed

changes would result in material cost

savings to their institutions and allow

for more efficient use of bank resources.

A summary of comments related to part

363 thresholds is provided in section

III.A.5 of this SUPPLEMENTARY

INFORMATION, below.

Commenters also expressed a view

that the proposed updates would not

come at the expense of safety and

soundness, as increases in asset size

have primarily been a result of factors

such as inflation, industry changes, and

a pandemic-related surge in deposits,

rather than material changes in risk

profile and complexity of activities.

Several commenters requested that

considerations be made regarding

timing, including the effective date and

retroactive application.

B

expense of safety and

soundness, as increases in asset size

have primarily been a result of factors

such as inflation, industry changes, and

a pandemic-related surge in deposits,

rather than material changes in risk

profile and complexity of activities.

Several commenters requested that

considerations be made regarding

timing, including the effective date and

retroactive application.

B. Expected Effects

In general, many commenters

indicated the proposal would positively

affect their institutions or the banking

industry broadly. Many commenters

indicated that cost savings from reduced

12 CFR part 363 compliance costs

would be reinvested into innovation,

technology, lending to the local

community, and customer experience.

Some commenters stated that failing to

index thresholds would constrain

intuitions’ strategic growth decisions

and would allow regulatory

requirements to extend far beyond their

original policy scope. One commenter

asserted that updating and indexing

thresholds reduces regulatory burden on

smaller institutions while allowing

supervisory focus to remain on larger,

systemically significant entities.

Commenters also expressed the view

that thresholds included in the proposal

are no longer reflective of economic

conditions and providing for updates

and indexing would ensure thresholds

evolve with economic growth. One

commenter noted that adjustments to

various thresholds, when viewed in

aggregate, can have a deregulatory effect

on the banking industry by loosening

reporting requirements and protections

that control risk.

C. Indexing Methodology

Many commenters supported the

proposed indexing methodology and

expressed support for subsequent,

periodic threshold adjustments that

occur automatically. However, some

commenters stated that automatic

adjustments to thresholds would be

complex and unpredictable and could

create burden on banks when designing,

implementing, and maintaining internal

control frameworks

ndexing Methodology

Many commenters supported the

proposed indexing methodology and

expressed support for subsequent,

periodic threshold adjustments that

occur automatically. However, some

commenters stated that automatic

adjustments to thresholds would be

complex and unpredictable and could

create burden on banks when designing,

implementing, and maintaining internal

control frameworks. One commenter

stated that automatically indexing

thresholds erodes transparency and

makes it difficult to predict in advance

whether an IDI will cross the threshold

in the following year.

Comments were mixed as to whether

to use CPI–W as the reference index

under the proposed indexing

methodology. A few commenters

supported the FDIC applying the same

methodology when updating and

adjusting thresholds across its

regulations, while others suggested

alternatives to CPI–W, including

nominal GDP, banking industry assets,

or an approach that would tailor the

reference index by threshold type.

These commenters suggested using CPI–

W for consumer-facing monetary

thresholds, and nominal GDP for asset-

based thresholds. Many of these

commenters also noted that the

proposed updated thresholds are lower

than they would otherwise be if

adjusted using growth in GDP as a basis

for adjustments. One commenter

suggested that thresholds should be

raised beyond the rate of inflation, as

the number of banks has declined and

new bank formations have been low.

Additionally, one commenter suggested

that thresholds should be adjusted for

periods of deflation.

Comments related to an alternative

approach discussed in the proposal that

allowed for future adjustments only at

pre-determined levels (i.e., a milestone

approach) were mixed, with

commenters offering diverging

perspectives about whether this

approach would provide regulatory

certainty.

D

dditionally, one commenter suggested

that thresholds should be adjusted for

periods of deflation.

Comments related to an alternative

approach discussed in the proposal that

allowed for future adjustments only at

pre-determined levels (i.e., a milestone

approach) were mixed, with

commenters offering diverging

perspectives about whether this

approach would provide regulatory

certainty.

D. Effective Date

Under the proposal, initial updates

would become effective, consistent with

applicable law, at the beginning of the

first calendar quarter following adoption

of the final rule. Several commenters

generally requested more time to

comply with the proposed threshold

changes, while others more specifically

recommended a transitional process.

Additionally, some commenters

requested clarity regarding transition

timelines.

Several commenters recommended a

specific effective date of January 1,

2025, for the proposed changes, to allow

for retroactive application of the

updated thresholds. Some commenters

suggested that the rule be effective

immediately, while one commenter

proposed the rule be delayed until

January 1, 2027. A number of

commenters also suggested that the

FDIC determine whether institutions

have crossed thresholds by evaluating

an institution’s assets over a period of

time, such as over several quarters or

over several years.

E. Other Comments

Some commenters recommended

application of the proposal to additional

thresholds. For example, commenters

recommended updates and adjustments

to thresholds such as the qualifying

equity interest of national bank directors

threshold, appraisal thresholds for real

estate properties, the Community

Reinvestment Act intermediate-small

bank threshold, bank holding company

thresholds, currency transaction

reporting thresholds, Dodd-Frank Act’s

Durbin Amendment threshold, and

thresholds used to determine

applicability of regulatory capital and

liquidity requirements

ing

equity interest of national bank directors

threshold, appraisal thresholds for real

estate properties, the Community

Reinvestment Act intermediate-small

bank threshold, bank holding company

thresholds, currency transaction

reporting thresholds, Dodd-Frank Act’s

Durbin Amendment threshold, and

thresholds used to determine

applicability of regulatory capital and

liquidity requirements. These

commenters requested the FDIC

coordinate with the other Federal

banking agencies to update additional

thresholds that do not appear only

within FDIC regulations, as well as

coordinate with Congress to update

statutory thresholds.

Comments regarding 12 CFR part 363

thresholds were also received as part of

the regulatory review being conducted

pursuant to the Economic Growth and

Regulatory Paperwork Reduction Act of

1996 (EGRPRA).12 Comments included

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00003

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55792

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

commenced a review under the Economic Growth

and Regulatory Paperwork Reduction Act of 1996

in 2024 to solicit feedback from the public on

potentially outdated or otherwise unnecessary

regulatory requirements. The FDIC has reviewed

and considered those comments received pursuant

to the EGRPRA review that relate to the thresholds

considered within this rulemaking.

13 As discussed in section III.A.5 of this

SUPPLEMENTARY INFORMATION, the initial updates to

thresholds in 12 CFR part 363 support a key

underlying objective of the regulation, while

maintaining consistency with the historical scope of

applicability and reducing burden for smaller

institutions. In addition, one threshold under 12

CFR part 363 that is intended to align to listing

standards of the national securities exchanges is not

subject to the proposed indexing methodology.

14 12 U.S.C. 1829

12 CFR part 363 support a key

underlying objective of the regulation, while

maintaining consistency with the historical scope of

applicability and reducing burden for smaller

institutions. In addition, one threshold under 12

CFR part 363 that is intended to align to listing

standards of the national securities exchanges is not

subject to the proposed indexing methodology.

14 12 U.S.C. 1829.

15 Note that 12 CFR 303.227 contains 3 different

dollar thresholds setting forth different de minimis

exceptions. The $2,000 or less threshold for bad

checks set forth in 12 CFR 303.227(b)(2)(i) is set by

statute (12 U.S.C. 1829(c)(3)(C)) and is therefore not

within the FDIC’s discretion to adjust and not

included in this final rule.

16 Additional criteria that must be met are set

forth in 12 CFR 303.227(b)(3).

17 For example, in 2018, the FDIC broadened the

application of the de minimis exception to filing an

application due to the minor nature of the offenses

and the low risk that the covered party would pose

to an IDI based on the conviction or program entry.

By modifying these provisions, the FDIC stated it

believed that there would be a reduction in the

submission of applications where approval has

been granted by virtue of the de minimis offenses

exceptions to filing in the policy statement. 83 FR

38143 (Aug. 3, 2018).

18 For example, changes to the de minimis

exception in the final rule published in 2020 would

have reduced past applications by approximately 20

percent. Fact Sheet: FDIC Issues Rule on Section 19

of the Federal Deposit Insurance Act (July 2020),

available at https://www.fdic.gov/news/section19-7-

24-20.pdf.

19 The non-seasonally adjusted CPI–W increased

by approximately 38 percent since the $2,500 de

minimis threshold was set in 2012 and

approximately 23 percent since the $1,000 de

minimis threshold was set in 2020

proximately 20

percent. Fact Sheet: FDIC Issues Rule on Section 19

of the Federal Deposit Insurance Act (July 2020),

available at https://www.fdic.gov/news/section19-7-

24-20.pdf.

19 The non-seasonally adjusted CPI–W increased

by approximately 38 percent since the $2,500 de

minimis threshold was set in 2012 and

approximately 23 percent since the $1,000 de

minimis threshold was set in 2020.

recommendations to raise the

requirement regarding audited financial

statements from $500 million to $1

billion and the internal control over

financial reporting (ICFR) requirement

from $1 billion to $2.5 billion or $10

billion. Additionally, these comments

indicated that the Federal Deposit

Insurance Corporation Improvement Act

(FDICIA) audit and reporting

requirements are costly and burdensome

for small community banks, and that it

is difficult for small, rural banks to

comply with audit committee

composition requirements. Several

commenters suggested tailoring

regulatory thresholds by distinguishing

banks by asset size, and three comments

submitted under the EGRPRA review

expressed support for amending 12 CFR

part 363 thresholds.

III. Final Rule and Discussion of

Comments

The FDIC carefully considered all

comments received and is finalizing the

threshold updates and indexing

methodology for future adjustments

generally as proposed. Except as

otherwise provided,13 the final rule

updates the thresholds described below

to reflect historical inflation and

indexes most of these thresholds to

account for future inflation. The FDIC is

changing the effective date of future

threshold adjustments as discussed in

more detail below, as compared to the

proposal. Additionally, the FDIC is

providing that certain IDIs may be

exempted from requirements under 12

CFR part 363 as it relates to future

threshold adjustments, as described

below.

A

ion and

indexes most of these thresholds to

account for future inflation. The FDIC is

changing the effective date of future

threshold adjustments as discussed in

more detail below, as compared to the

proposal. Additionally, the FDIC is

providing that certain IDIs may be

exempted from requirements under 12

CFR part 363 as it relates to future

threshold adjustments, as described

below.

A. Initial Updates

While many commenters were

supportive of the policy objectives of

the proposal, some expressed

reservations related to updating

thresholds without reassessing their

original policy designs. While these

commenters supported updating

thresholds included in the proposal

generally, they expressed concern that

the proposed updates would

inadvertently perpetuate outdated or

arbitrary policy design choices without

reassessing their basis. As explained in

the proposal, the FDIC sought to update

thresholds according to changes in

inflation since their implementation or

most recent adjustment, while also

considering policy objectives and

intended application. For example, the

proposed updates to certain thresholds

under 12 CFR part 363 reflected other

considerations to help ensure sound

financial management of the institutions

posing the greatest potential risk to the

Deposit Insurance Fund (DIF). As

discussed below, the final rule adopts

the initial update approach set forth in

the proposal.

1

ing policy objectives and

intended application. For example, the

proposed updates to certain thresholds

under 12 CFR part 363 reflected other

considerations to help ensure sound

financial management of the institutions

posing the greatest potential risk to the

Deposit Insurance Fund (DIF). As

discussed below, the final rule adopts

the initial update approach set forth in

the proposal.

1. 12 CFR Part 303 (Part 303)—Filing

Procedures

Section 19 of the FDI Act (section 19)

prohibits, without the prior written

consent of the FDIC, a person convicted

of any criminal offense involving

dishonesty, breach of trust, or money

laundering, or who has entered into a

pretrial diversion or similar program in

connection with a prosecution for such

an offense (collectively, covered

offenses), from becoming or continuing

to serve as an institution-affiliated

party.14 Subpart L of part 303 of the

FDIC’s regulations implements section

19 and includes separate $2,500 and

$1,000 de minimis thresholds for certain

offenses that are excluded from the

scope of section 19 and for which no

section 19 application is required.15

Specifically, under 12 CFR 303.227,

the requirements of section 19 do not

apply to covered offenses where the

individual could have been sentenced to

a term of confinement in a correctional

facility of three years or less and/or a

fine of $2,500 or less, and that meet the

additional criteria set forth in that

section

pe of section 19 and for which no

section 19 application is required.15

Specifically, under 12 CFR 303.227,

the requirements of section 19 do not

apply to covered offenses where the

individual could have been sentenced to

a term of confinement in a correctional

facility of three years or less and/or a

fine of $2,500 or less, and that meet the

additional criteria set forth in that

section. In addition, the requirements of

section 19 do not apply to ‘‘small dollar,

simple theft,’’ which includes, among

other requirements, the simple theft of

goods, services, or currency (or other

monetary instrument) if the value of the

currency, goods, or services involved

has a value of $1,000 or less.16

For purposes of implementing section

19, an ongoing, significant objective of

the FDIC has been to establish criteria

for the de minimis exception framework

such that it applies to offenses that are

relatively minor in nature and help to

ensure that prior conduct of the covered

party would pose low risk to an IDI.

Over time, the FDIC has expanded the

scope of the de minimis framework

based on historical analysis that showed

the FDIC routinely approved section 19

applications involving minor offenses.17

Every expansion of the de minimis

framework ultimately provided

additional relief to potential applicants

without undermining the purpose of

section 19 or causing undue risk to an

institution or the DIF.18 Under the

proposal, the $2,500 and $1,000 de

minimis thresholds would be updated to

$3,500 and $1,225, respectively, to

reflect inflation since these thresholds

were previously set.19

The FDIC received several comments

related to these proposed changes. One

commenter supported adjusting the part

303 threshold as described in the

proposal because consumer-facing

thresholds are more appropriately tied

to consumer inflation and CPI–W

indexes (in contrast to other thresholds

for which the commenter argued that a

different methodology would be more

appropriate)

sly set.19

The FDIC received several comments

related to these proposed changes. One

commenter supported adjusting the part

303 threshold as described in the

proposal because consumer-facing

thresholds are more appropriately tied

to consumer inflation and CPI–W

indexes (in contrast to other thresholds

for which the commenter argued that a

different methodology would be more

appropriate).

After considering the comments

received, the FDIC is finalizing the

proposed updates to the de minimis

thresholds, without change. The

updates in the final rule help preserve

the intended level of these thresholds in

real terms while providing meaningful

relief from barriers to employment

opportunities, consistent with the

purpose of section 19 and prior

amendments to the de minimis

exception framework.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00004

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55793

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

20 12 CFR part 335.

21 12 CFR 335.801(d).

22 44 FR 33077, 33079 (June 8, 1979).

23 62 FR 6852, 6855 (Feb. 14, 1997).

24 If indexed to inflation since the FDIC’s most

recent consideration of the indebtedness of

management disclosure provisions in 1997, the $5

million threshold would be $9.9 million.

25 12 CFR 340.1(b).

26 12 CFR 340.4(a)(1).

27 12 CFR 340.4(c).

28 12 CFR 340.2(h).

29 65 FR 14816, 14818 (Mar. 20, 2000).

30 As discussed in more detail below, part 340,

including the ‘‘substantial loss’’ provisions and the

$50,000 threshold, was the model for and is

intended to match the substantially similar

provisions applicable to FDIC-covered financial

company asset sales under 12 CFR 380.13. See 80

FR 22886 (Apr. 24, 2015) (explaining that, because

of the substantially similar language in the statutes

authorizing the respective rules, part 340 served as

a model for the development of the rules at 12 CFR

380.13.)

hreshold, was the model for and is

intended to match the substantially similar

provisions applicable to FDIC-covered financial

company asset sales under 12 CFR 380.13. See 80

FR 22886 (Apr. 24, 2015) (explaining that, because

of the substantially similar language in the statutes

authorizing the respective rules, part 340 served as

a model for the development of the rules at 12 CFR

380.13.). See also, id., at 80 FR 22887 (describing

the updates to part 340 made to ensure consistency

between part 340 and 12 CFR 380.13).

31 The Purchaser Eligibility Certification form,

available at https://www.fdic.gov/asset-sales/

purchaser-eligibility-certification-pec.pdf.

32 If indexed to inflation since the FDIC

established the ‘‘substantial loss’’ threshold in 2000,

the $50,000 threshold would be $92,666. This

updated threshold of $100,000 approximates

inflation adjustments.

33 63 FR 17056 (Apr. 8, 1998).

2. 12 CFR Part 335 (Part 335)—

Securities of State Nonmember Banks

and Savings Associations

Part 335 of the FDIC’s regulations

provides securities registration,

recordkeeping, and disclosure

requirements for State nonmember

banks and State savings associations

with one or more classes of securities

required to be registered under section

12 of the Securities Exchange Act of

1934 (Exchange Act), as amended.20

Section 335.801 requires those State

nonmember banks and State savings

associations to disclose any extensions

of credit to insiders that are in excess of

10 percent of the capital account of an

institution or $5 million, whichever is

less.21 The FDIC set the $5 million

threshold in 1979, stating that the prior

threshold of $10 million was too high to

allow for meaningful disclosure.22 The

FDIC revisited this amount in 1997 and

determined at the time that the overall

benefit to the banking industry resulting

from continuation of the FDIC’s

historical disclosure requirements under

part 335, including the $5 million

threshold, was in the public interest and

appropriate for pr

ating that the prior

threshold of $10 million was too high to

allow for meaningful disclosure.22 The

FDIC revisited this amount in 1997 and

determined at the time that the overall

benefit to the banking industry resulting

from continuation of the FDIC’s

historical disclosure requirements under

part 335, including the $5 million

threshold, was in the public interest and

appropriate for protection of investors.23

The proposal would update the $5

million threshold to $10 million to

reflect inflation since the FDIC’s most

recent consideration of the threshold.24

The FDIC received one comment

related to this proposed change. This

commenter stated that loosening

standards, including the threshold for

having to report to the FDIC loans made

by banks to insiders, can increase

aggregate risk. The commenter

recommended that the FDIC monitor

and report on the actual impact that

comes from adjusting regulatory

thresholds so that additional changes

can be made if needed.

The final rule adopts the $10 million

threshold for 12 CFR 335.801, as

proposed. The final rule preserves the

level of this threshold in real terms and

helps avoid increases in the number of

credit extensions that must be reported

to the FDIC due solely to inflation rather

than actual changes in the level of risk

associated with such transactions.

3. 12 CFR Part 340 (Part 340)—

Restrictions on Sale of Assets of a Failed

Institution by the Federal Deposit

Insurance Corporation

Part 340 of the FDIC’s regulations sets

forth restrictions on the FDIC’s sale of

failed IDI assets to individuals or

entities that improperly profited from,

or engaged in, wrongdoing at the

expense of a failed IDI or, that seriously

mismanaged a failed IDI.25 Among other

restrictions, part 340 prohibits a person

from acquiring any assets of a failed IDI

if the person or its associated person has

caused a substantial loss to that failed

institution 26 or has demonstrated a

pattern or practice causing a substantial

loss to one or more fa

from,

or engaged in, wrongdoing at the

expense of a failed IDI or, that seriously

mismanaged a failed IDI.25 Among other

restrictions, part 340 prohibits a person

from acquiring any assets of a failed IDI

if the person or its associated person has

caused a substantial loss to that failed

institution 26 or has demonstrated a

pattern or practice causing a substantial

loss to one or more failed institutions.27

Part 340 defines ‘‘substantial loss’’ to

include multiple types of loss that all

use a threshold of $50,000 for purposes

of determining whether the losses are

‘‘substantial.’’ 28 The FDIC added part

340 to the FDIC’s regulations in 2000.29

Subsequent updates to part 340 have not

substantively modified the ‘‘substantial

loss’’ definition or the $50,000

threshold.30 The substantial loss

provisions and the $50,000 threshold

are also included in the FDIC’s

Purchaser Eligibility Certification form,

which is required under part 340 for all

prospective purchasers of failed IDI

assets.31 The FDIC proposed to revise

the ‘‘substantial loss’’ threshold in part

340 by updating the existing threshold

from $50,000 to $100,000 to reflect

inflation since the threshold was added

to part 340.32

The FDIC is adopting the approach

taken in the proposed rule, without

change. Updating the threshold for

‘‘substantial loss’’ to reflect inflation

preserves the level of the threshold in

real terms, while allowing more

prospective purchasers to make offers to

buy failed IDI assets. The FDIC expects

this update to improve competition for

the prices paid for failed IDI assets.

4

rt 340.32

The FDIC is adopting the approach

taken in the proposed rule, without

change. Updating the threshold for

‘‘substantial loss’’ to reflect inflation

preserves the level of the threshold in

real terms, while allowing more

prospective purchasers to make offers to

buy failed IDI assets. The FDIC expects

this update to improve competition for

the prices paid for failed IDI assets.

4. 12 CFR Part 347 (Part 347)—

International Banking

The FDIC issued a final rule in 1998

amending its international banking

regulations and consolidating them into

part 347.33 Subpart A to part 347, which

implements sections 18(d) and 18(l) of

the FDI Act, sets forth the requirements

for insured State nonmember bank

investments in foreign organizations,

permissible foreign financial activities,

loans or extensions of credit to or for the

account of foreign organizations, and

the FDIC’s related recordkeeping,

supervision, and approval requirements.

Subpart A also addresses permissible

activities for foreign branches of insured

State nonmember banks.

Under subpart A of part 347, a State

nonmember bank may hold an equity

interest in one or more foreign

organizations that underwrite, deal, or

distribute equity securities outside of

the United States, subject to certain

limitations. Two of those limitations

include dollar-based thresholds. First,

12 CFR 347.111(a) provides that the

aggregate underwriting commitments by

foreign organizations for the securities

of a single entity, taken together with

underwriting commitments by any

affiliate of the State nonmember bank

under the authority of 12 CFR 211.10(b),

may not exceed the lesser of $60 million

or 25 percent of the State nonmember

bank’s Tier 1 capital

based thresholds. First,

12 CFR 347.111(a) provides that the

aggregate underwriting commitments by

foreign organizations for the securities

of a single entity, taken together with

underwriting commitments by any

affiliate of the State nonmember bank

under the authority of 12 CFR 211.10(b),

may not exceed the lesser of $60 million

or 25 percent of the State nonmember

bank’s Tier 1 capital. Second, 12 CFR

347.111(b) provides that the equity

securities of any single entity held for

distribution or dealing by the foreign

organizations, taken together with

equity securities held for distribution or

dealing by any affiliate of the insured

State nonmember bank under the

authority of 12 CFR 211.10, must not

exceed the lesser of $30 million or 5

percent of the insured State nonmember

bank’s Tier 1 capital, subject to certain

other requirements.

The dollar-based thresholds under

subpart A of part 347 were established

in 1998 and have not since been

updated. To preserve the level of these

thresholds in real terms, the proposal

would revise these dollar limits on

aggregate underwriting commitments

and on equity securities held for

distribution or dealing to $120 million

and $60 million, respectively, to

approximate inflation adjustments since

1998.

The FDIC received several comments

related to the proposed changes. One

commenter expressed support for

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00005

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

ities held for

distribution or dealing to $120 million

and $60 million, respectively, to

approximate inflation adjustments since

1998.

The FDIC received several comments

related to the proposed changes. One

commenter expressed support for

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00005

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55794

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

34 12 U.S.C. 1831m.

35 Consistent with the statute, the FDIC consulted

with the other Federal banking agencies about

updating these thresholds and the methodology to

adjust affected thresholds in the future.

36 The requirements under part 363 are set forth

in 12 CFR 363.2 and 363.4(a). Part 363 also contains

audit committee composition requirements and

other reporting and notice requirements. Further,

public companies may have additional

requirements under the Sarbanes-Oxley Act of

2002.

37 See 12 CFR 363.2(b)(3), 363.3(b), and 363.4(a).

38 70 FR 71226, 71227 (Nov. 28, 2005).

39 58 FR 31332, 31333 (June 2, 1993).

40 Id.

41 70 FR 71227.

42 Id.

43 Id.

44 74 FR 35726 (July 20, 2009).

45 85 FR 67427 (Oct. 23, 2020). In 2020, the FDIC

adopted an interim final rule allowing IDIs to use

total consolidated assets as of December 31, 2019,

for purposes of the asset thresholds in part 363 for

fiscal years ending in 2021.

46 In total, the FDIC is updating 24 regulatory

asset thresholds in part 363. Several of these asset

thresholds are similar and are repeated throughout

part 363 pertaining to the general requirements of

part 363, as well as to the holding company

requirements of part 363 (for IDIs that are

subsidiaries of holding companies), and audit

committee composition requirements.

47 70 FR 71226, 71227.

raising the dollar limits in part 347,

stating that increasing the thresholds

would enable IDIs to provide more

services internationally and compete

with non-U.S

ning to the general requirements of

part 363, as well as to the holding company

requirements of part 363 (for IDIs that are

subsidiaries of holding companies), and audit

committee composition requirements.

47 70 FR 71226, 71227.

raising the dollar limits in part 347,

stating that increasing the thresholds

would enable IDIs to provide more

services internationally and compete

with non-U.S. banks, which would help

support the competitive position of U.S.

institutions internationally.

Additionally, one commenter agreed

with recognizing inflation within part

347 but noted that adjustments can have

a deregulatory effect on the banking

industry.

After considering comments received,

the FDIC is adopting the proposed

changes to part 347 without change. By

updating these thresholds, the final rule

preserves their levels in real terms and

supports the ability of insured State

nonmember banks to compete

internationally, consistent with policy

objectives of part 347.

5. 12 CFR Part 363 (Part 363)—Annual

Independent Audits and Reporting

Requirements

i. Background

Section 112 of the FDICIA added

section 36, ‘‘Early Identification of

Needed Improvements in Financial

Management,’’ to the FDI Act.34 Section

36 generally subjects IDIs above a

certain asset size threshold to an annual

independent audit, assessment of the

effectiveness of internal control over

financial reporting (ICFR), and

compliance with designated laws and

regulations, as well as related reporting

requirements. Section 36 also includes

requirements for audit committees of

these IDIs

Management,’’ to the FDI Act.34 Section

36 generally subjects IDIs above a

certain asset size threshold to an annual

independent audit, assessment of the

effectiveness of internal control over

financial reporting (ICFR), and

compliance with designated laws and

regulations, as well as related reporting

requirements. Section 36 also includes

requirements for audit committees of

these IDIs. Section 36 grants the FDIC

discretion to set the asset size threshold

for compliance with these requirements,

but it also provides that the threshold

shall not be less than $150 million.35

Part 363 of the FDIC’s regulations

implements section 36 and requires any

IDI with total consolidated assets of

$500 million or more at the beginning

of its fiscal year to submit to the FDIC

and other appropriate Federal and State

supervisory agencies an annual report

(Part 363 Annual Report) comprised of

audited comparative financial

statements, the independent public

accountant’s report thereon, a

management report containing a

statement of management’s

responsibilities, and an assessment by

management of compliance with

applicable laws and regulations.36 The

Part 363 Annual Report for an IDI with

$1 billion or more in total consolidated

assets must also include an assessment

by management of the effectiveness of

ICFR (within the management report)

and the independent public

accountant’s attestation report on

ICFR.37 From 1993, the year that the

ICFR threshold was implemented at

$500 million, to 2005, the FDIC did not

adjust this threshold. In 2005, the ICFR

threshold was increased from $500

million to $1 billion.38

When the FDIC initially implemented

part 363 in 1993, use of a $500 million

asset threshold captured approximately

1,000 IDIs (out of approximately 14,000)

holding 75 percent of U.S

FR.37 From 1993, the year that the

ICFR threshold was implemented at

$500 million, to 2005, the FDIC did not

adjust this threshold. In 2005, the ICFR

threshold was increased from $500

million to $1 billion.38

When the FDIC initially implemented

part 363 in 1993, use of a $500 million

asset threshold captured approximately

1,000 IDIs (out of approximately 14,000)

holding 75 percent of U.S. banking

assets, while exempting approximately

two-thirds of IDIs that would have been

subject to part 363 under a $150 million

threshold.39 In addition, at the time of

initial implementation, more than 96

percent of these covered institutions

reported that they were subject to an

annual audit by an independent public

accountant at the IDI or parent company

level. The initial scope of application

for part 363 was intended to help ensure

sound financial management of the

institutions posing the greatest potential

risk to the DIF.40 The 2005 amendment

to the ICFR threshold in part 363

reflected a recognition that compliance

with the audit and reporting

requirements had become more

burdensome and costly, particularly for

smaller nonpublic institutions.41 In

addition, due to consolidation in the

banking and thrift industry and the

effects of inflation, the scope of

applicability for part 363 had increased

to cover more than 1,150 (out of 8,900)

IDIs, representing approximately 90

percent of industry assets.42 Following

the 2005 amendment, about 600 of the

largest IDIs with approximately 86

percent of industry assets continued to

be covered by the ICFR requirements of

part 363. This change was intended to

achieve meaningful burden reduction in

a manner consistent with safety and

soundness.43 Subsequent amendments

to part 363 in 2009 44 and 2020 45 did

not result in permanent changes to the

regulatory asset thresholds.

ii. Overview of Proposed Asset

Threshold Updates in Part 363

Many of the dollar-based thresholds

in part 363 have been in place for more

than 30 years

hange was intended to

achieve meaningful burden reduction in

a manner consistent with safety and

soundness.43 Subsequent amendments

to part 363 in 2009 44 and 2020 45 did

not result in permanent changes to the

regulatory asset thresholds.

ii. Overview of Proposed Asset

Threshold Updates in Part 363

Many of the dollar-based thresholds

in part 363 have been in place for more

than 30 years. The proposal would

increase the applicability asset

threshold from $500 million to $1

billion and the ICFR asset threshold

from $1 billion to $5 billion.

Additionally, the FDIC proposed to

increase the threshold related to

minimum audit committee requirements

for IDIs from the range of $500 million

to less than $1 billion in total assets to

the range of $1 billion to less than $5

billion in total assets, as well as the

threshold of $1 billion or more in total

assets to $5 billion or more. The FDIC

also proposed to increase the threshold

related to additional audit committee

requirements from $3 billion to $5

billion.46 Use of these proposed

thresholds would help support a key

underlying objective of part 363—that

is, achieving sound financial

management at IDIs posing the greatest

risk to the DIF 47—and maintain

consistency with the historical scope of

applicability according to several

metrics. The proposed $1 billion and $5

billion thresholds cover institutions

holding approximately 95 and 89

percent of industry assets, respectively.

In addition, the proposed increase in the

applicability threshold from $500

million to $1 billion would result in

approximately the same number of

institutions being subject to part 363

(approximately 1,000 institutions) in

2025 as were subject to the regulation in

1993 (at its inception) and in 2005

(when the threshold for the ICFR

requirements was amended), while

removing nearly 800 institutions from

the general scope of applicability for

part 363

d from $500

million to $1 billion would result in

approximately the same number of

institutions being subject to part 363

(approximately 1,000 institutions) in

2025 as were subject to the regulation in

1993 (at its inception) and in 2005

(when the threshold for the ICFR

requirements was amended), while

removing nearly 800 institutions from

the general scope of applicability for

part 363. Similarly, the proposed

increase in the ICFR threshold from $1

billion to $5 billion would be generally

consistent with the historical

application of such requirements (to

approximately 7 percent of institutions)

at the time of initial implementation

and under the 2005 amendment. The

thresholds set forth in the proposed rule

also would achieve meaningful burden

reduction for the smallest institutions,

which would be removed from the

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00006

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55795

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

48 See e.g., AL Code 5–2A–22 (2024); CA Fin Code

502 (2024); Conn. Gen. Stat 36a–86; and Ga. Comp.

R. & Regs. R. 80–1–14–.01.

49 Sarbanes-Oxley Act of 2002, Public Law 107–

204, 116 Stat. 745 (2002).

50 Call Report Data, March 31, 2025. The level of

audit work performed on an institution is reported

in the March Call Report each year and can be

found online M.1 in the Memorandum to Schedule

RC

e e.g., AL Code 5–2A–22 (2024); CA Fin Code

502 (2024); Conn. Gen. Stat 36a–86; and Ga. Comp.

R. & Regs. R. 80–1–14–.01.

49 Sarbanes-Oxley Act of 2002, Public Law 107–

204, 116 Stat. 745 (2002).

50 Call Report Data, March 31, 2025. The level of

audit work performed on an institution is reported

in the March Call Report each year and can be

found online M.1 in the Memorandum to Schedule

RC.

51 The threshold describes situations where the

director has received, or has an immediate family

member who has received, during any twelve-

month period within the last three years, more than

$100,000 in direct and indirect compensation from

the institution, its subsidiaries, and its affiliates for

consulting, advisory, or other services other than

director and committee fees and pension or other

forms of deferred compensation for prior service

(provided such compensation is not contingent in

any way on continued service).

52 See 12 CFR part 363, appendix A, paragraph

28.

53 Nasdaq Stock Market Rules, Rule 5605(a)(2);

New York Stock Exchange Listed Company Manual,

section 303A.02(b)(ii).

scope of applicability for reporting

requirements and internal control

assessments. Furthermore, experience

has demonstrated that smaller

community institutions, particularly

those in rural areas, have had difficulty

complying with the audit committee

composition requirements. Specifically,

these institutions frequently report that

it is increasingly difficult to attract and

retain individuals who are willing and

capable of serving as a member of an

audit committee, thereby making

compliance with the audit committee

composition requirements of part 363

challenging

in rural areas, have had difficulty

complying with the audit committee

composition requirements. Specifically,

these institutions frequently report that

it is increasingly difficult to attract and

retain individuals who are willing and

capable of serving as a member of an

audit committee, thereby making

compliance with the audit committee

composition requirements of part 363

challenging. Irrespective of the changes

to part 363 thresholds, IDIs may still be

required to have an audit and assess

internal controls over financial

reporting by their respective States if the

institution is State chartered.48

Additionally, IDIs that are public

companies or subsidiaries of public

companies that file annual and other

periodic reports as required by the

Sarbanes-Oxley Act of 2002 are required

to have an audit and assess internal

controls over financial reporting.49 As of

March 31, 2025, approximately 52

percent of institutions not subject to

part 363 still obtained an audit.50

The FDIC also proposed an increase to

the $100,000 compensation threshold

under part 363 related to the

determination of whether a director is

considered ‘‘independent of

management.’’ 51 Paragraph 28 in

appendix A to part 363, ‘‘Independent

of Management’’ Considerations, sets

forth the criteria a board of directors

should consider when determining the

independence of an outside director for

audit committee purposes. The

independence criteria under part 363,

including the $100,000 compensation

threshold, are intended to be consistent

with those provided under the listing

standards of national securities

exchanges while providing some

flexibility for smaller nonpublic

institutions.52

The FDIC implemented the $100,000

threshold under part 363 in 2009

f an outside director for

audit committee purposes. The

independence criteria under part 363,

including the $100,000 compensation

threshold, are intended to be consistent

with those provided under the listing

standards of national securities

exchanges while providing some

flexibility for smaller nonpublic

institutions.52

The FDIC implemented the $100,000

threshold under part 363 in 2009. Since

that time, the parallel threshold under

the listing standards of national

securities exchanges has been raised to

$120,000.53 Accordingly, the FDIC

proposed increasing the $100,000

compensation threshold under part 363

to $120,00 to realign it with the parallel

threshold set forth in listing standards.

This revision also would address the

potential unintended outcome where a

director could be considered

‘‘independent of management’’ for

purposes of listing standards while at

the same time being considered ‘‘not

independent of management’’ for

purposes of part 363.

In contrast to the other part 363

thresholds in the proposed rule that are

subject to automatic adjustments in the

future, the $120,000 compensation

threshold would not be subject to the

proposed indexing methodology

described in section III.B of this

SUPPLEMENTARY INFORMATION as it is

intended to align with parallel

thresholds under listing standards,

which are not subject to an indexing

methodology. The FDIC proposed to

adjust this threshold in the future to

maintain alignment with parallel

thresholds in the listing standards of the

national securities exchanges.

iii. Comments on Part 363

The part 363 suggestions most

frequently raised by commenters

centered on the proposed updated asset

threshold for the independent audit

requirement, the proposed updated

asset threshold for ICFR, the effective

date for the updated thresholds, and the

application of thresholds using average

asset balances as opposed to point-in-

time asset balances

s exchanges.

iii. Comments on Part 363

The part 363 suggestions most

frequently raised by commenters

centered on the proposed updated asset

threshold for the independent audit

requirement, the proposed updated

asset threshold for ICFR, the effective

date for the updated thresholds, and the

application of thresholds using average

asset balances as opposed to point-in-

time asset balances. Many commenters

noted the proposed changes would

substantially reduce costs and

regulatory burden, particularly for

smaller institutions. For example,

updating the thresholds for audit,

internal control, audit committee

composition, and related reporting

requirements would alleviate

meaningful challenges for smaller

institutions that have become scoped

into part 363. Commenters also

indicated the proposal would reduce

burden associated with finding qualified

individuals to serve on an audit

committee, particularly for institutions

in rural areas.

Many commenters were supportive of

increasing the audit requirement and

ICFR thresholds. Several commenters

suggested increasing the $500 million

asset threshold for the audit

requirement to an amount other than $1

billion as proposed. Many of these

commenters recommended specific

asset thresholds for the part 363 audit

requirement, with ranges from $2 billion

to $10 billion. One commenter

suggested a threshold as low as $750

million, while another commenter

suggested a threshold as high as $15

billion. In addition to the asset

threshold for the audit requirement,

numerous commenters suggested raising

the existing $1 billion asset threshold

for ICFR to $10 billion instead of $5

billion as proposed. One commenter

suggested eliminating the requirement

to file financial statements under certain

circumstances.

Commenters advocating for higher

thresholds than those set forth in the

proposal emphasized the cost and

burden that audit and ICFR

requirements impose on community

banks

raising

the existing $1 billion asset threshold

for ICFR to $10 billion instead of $5

billion as proposed. One commenter

suggested eliminating the requirement

to file financial statements under certain

circumstances.

Commenters advocating for higher

thresholds than those set forth in the

proposal emphasized the cost and

burden that audit and ICFR

requirements impose on community

banks. Such commenters requested that

such burdens be shifted away from

smaller institutions and towards larger

institutions that pose more significant

risks to the banking system, particularly

with respect to the ICFR requirements.

Conversely, some commenters

objected to the proposed increase in the

independent audit requirement from

$500 million to $1 billion and the ICFR

requirement from $1 billion to $5 billion

on the basis that it could lead to

unreliable information in the

Consolidated Reports of Condition and

Income (Call Report) for those

institutions without an independent

audit requirement.

Several commenters made suggestions

regarding the effective date for the

updated thresholds. These commenters

generally advocated for a retroactive

effective date to provide immediate

burden relief for institutions with

consolidated total assets below the

updated thresholds.

A number of commenters also

suggested that the FDIC determine

whether institutions have crossed

thresholds by evaluating an institution’s

assets over a period of time, such as

over several quarters or over several

years. These commenters emphasized

that evaluating assets over a period of

time (as opposed to a single point in

time) would allow for smoother

transition runways and thereby reduce

cliff effects for institutions as they cross

asset thresholds and become subject to

additional requirements under part 363

itution’s

assets over a period of time, such as

over several quarters or over several

years. These commenters emphasized

that evaluating assets over a period of

time (as opposed to a single point in

time) would allow for smoother

transition runways and thereby reduce

cliff effects for institutions as they cross

asset thresholds and become subject to

additional requirements under part 363.

One commenter requested additional

guidance on how to apply updated

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00007

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55796

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

thresholds to IDI subsidiaries of bank

holding companies (BHCs) with

consolidated assets over $10 billion,

where the IDI’s consolidated assets are

below that threshold. Additionally, one

commenter recommended that 12 CFR

363.3(f) be amended to remove the

requirement to comply with the

independence standards of the

Securities and Exchange Commission

(SEC) and Public Company Accounting

Oversight Board.

iv. Response to Comments on Part 363

Some commenters advocated for an

increase in the audit requirement

threshold to an amount greater than the

proposed threshold of $1 billion.

However, the $1 billion threshold

would meaningfully reduce burden for

community banks, while preserving the

objective of the underlying statute, i.e.,

ensuring early identification of needed

improvements in financial management

among institutions originally intended

to be covered by part 363, on the basis

of both the number of IDIs and portion

of total industry assets.

As noted above, increasing thresholds

as proposed would result in realigning

industry coverage with policy objectives

while providing meaningful burden

reduction for community banks. Most

notably, increasing the audit threshold

would result in approximately 780

fewer institutions being subject to audit

requirements under part 363

h the number of IDIs and portion

of total industry assets.

As noted above, increasing thresholds

as proposed would result in realigning

industry coverage with policy objectives

while providing meaningful burden

reduction for community banks. Most

notably, increasing the audit threshold

would result in approximately 780

fewer institutions being subject to audit

requirements under part 363. In terms of

burden reduction, raising the ICFR

threshold from $1 billion to $5 billion

would result in more than 700

institutions no longer having to satisfy

the ICFR requirements under part 363.

Based on the importance of

independent audits in identifying

weaknesses in internal controls for

financial reporting and the reliance on

such reporting for prudential standards

such as regulatory capital and liquidity,

the final rule does not adopt higher

thresholds than those proposed. The

FDIC and other Federal banking

agencies rely upon financial information

to evaluate the condition of IDIs, and

the independent audit requirement in

part 363 helps to ensure the accuracy

and integrity of such information.

Independent audits also help to identify

weaknesses in internal control over

financial reporting and risk management

at institutions and reinforce corrective

measures, thus complementing

supervisory efforts in contributing to the

safety and soundness of IDIs. The final

rule’s updates to the thresholds balance

burden reduction with threshold levels

that are appropriate for requiring

compliance with part 363, as they are

consistent with those used for purposes

of its initial implementation in both the

number of institutions and portion of

industry assets covered by the

regulation.

v. Final Rule

As discussed above, the FDIC has

considered the comments received on

its proposed amendments to part 363

and is finalizing the updates to these

thresholds as proposed

uiring

compliance with part 363, as they are

consistent with those used for purposes

of its initial implementation in both the

number of institutions and portion of

industry assets covered by the

regulation.

v. Final Rule

As discussed above, the FDIC has

considered the comments received on

its proposed amendments to part 363

and is finalizing the updates to these

thresholds as proposed. However, as

described in more detail in sections

III.A.8 and III.B.3.ii of this

SUPPLEMENTARY INFORMATION, the FDIC

is allowing flexibility with respect to

compliance with part 363 in certain,

specified circumstances.

The final rule updates the

applicability asset threshold in part 363

from $500 million to $1 billion and the

ICFR asset threshold from $1 billion to

$5 billion. Additionally, the final rule

increases the threshold related to

minimum audit committee requirements

for IDIs from the range of $500 million

to less than $1 billion in total assets to

the range of $1 billion to less than $5

billion in total assets, as well as the

threshold of $1 billion or more in total

assets to $5 billion or more. The final

rule also increases the threshold related

to additional audit committee

requirements from $3 billion to also $5

billion. Additionally, the final rule

updates the compensation threshold in

part 363 related to the determination of

whether a director is considered

‘‘independent of management’’ from

$100,000 to $120,000.

TABLE 1—UPDATED PART 363 THRESHOLDS

Table 1—Part 363 updated thresholds

Citation

Threshold as of January 1, 2025

Updated threshold

363.1(a) ................................................................................

$500 million ..........................................................................

$1 billion.

363.2(b)(3) ............................................................................

1 billion .................................................................................

5 billion

Updated threshold

363.1(a) ................................................................................

$500 million ..........................................................................

$1 billion.

363.2(b)(3) ............................................................................

1 billion .................................................................................

5 billion.

363.3(b) ................................................................................

1 billion .................................................................................

5 billion.

363.4(a)(2) ............................................................................

1 billion .................................................................................

5 billion.

363.4(c)(3) ............................................................................

1 billion .................................................................................

5 billion.

363.5(a)(1) ............................................................................

1 billion .................................................................................

5 billion.

363.5(a)(2) ............................................................................

500 million ............................................................................

1 billion.

363.5(a)(2) ............................................................................

1 billion .................................................................................

5 billion.

363.5(b) ................................................................................

3 billion .................................................................................

5 billion.

Guideline 8A .........................................................................

1 billion .................................................................................

5 billion.

Guideline 8A ........................................................................

...................

3 billion .................................................................................

5 billion.

Guideline 8A .........................................................................

1 billion .................................................................................

5 billion.

Guideline 8A .........................................................................

1 billion .................................................................................

5 billion.

Guideline 10 .........................................................................

1 billion .................................................................................

5 billion.

Guideline 18A .......................................................................

1 billion .................................................................................

5 billion.

Guideline 27 .........................................................................

1 billion .................................................................................

5 billion.

Guideline 27 .........................................................................

500 million ............................................................................

1 billion.

Guideline 27 .........................................................................

1 billion .................................................................................

5 billion.

Guideline 28(b)(4) .................................................................

100 thousand ........................................................................

120 thousand.54

Guideline 30(b) .....................................................................

1 billion .................................................................................

5 billion.

Guideline 30(c) .....................................................................

500 million ............................................................................

1 billion

........

120 thousand.54

Guideline 30(b) .....................................................................

1 billion .................................................................................

5 billion.

Guideline 30(c) .....................................................................

500 million ............................................................................

1 billion.

Guideline 30(c) .....................................................................

1 billion .................................................................................

5 billion.

Guideline 35(a) .....................................................................

500 million ............................................................................

1 billion.

Guideline 35(b) .....................................................................

1 billion .................................................................................

5 billion.

Guideline 35(c) .....................................................................

3 billion .................................................................................

5 billion.

Appendix B item 2(b) ............................................................

1 billion .................................................................................

5 billion.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00008

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

................................................

5 billion.

Appendix B item 2(b) ............................................................

1 billion .................................................................................

5 billion.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00008

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55797

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

54 As discussed above, the final rule also raises

the threshold set forth in Guideline 28(b)(4) from

$100,000 to $120,000. This threshold was intended

to align with the listing standards of national

securities exchanges for purposes of making

director independence determinations.

55 Title II of the Dodd-Frank Wall Street Reform

and Consumer Protection Act (Dodd-Frank Act)

section 201, et seq., 12 U.S.C. 5381, et seq.

56 See Dodd-Frank Act section 202(a), 12 U.S.C.

5382(a) (describing the process for the Secretary of

the Treasury to appoint the FDIC as receiver for a

covered financial company and commence orderly

liquidation of the covered financial company); see

also 12 CFR 380.1.

57 12 CFR 380.13(a)(1).

58 12 CFR 380.13(a)(2)(i).

59 12 CFR 380.13(c)(1)(i). Section 380.13 defines

material participation in a transaction that caused

substantial loss to a covered financial company in

12 CFR 380.13(c)(2).

60 12 CFR 380.13(c)(3).

61 12 CFR 380.13(b)(6).

62 79 FR 20762, 20766–20767 (Apr. 14, 2014).

63 See id. at 79 FR 20762 (explaining that the 12

CFR 380.13 final rule is modeled after the FDIC’s

regulation at 12 CFR part 340 because the relevant

statutory provisions share substantially similar

statutory language.).

64 Restrictions on Sale of Assets of a Financial

Institution by the Federal Deposit Insurance

Corporations, 80 FR 22886, 22886–22887 (Apr. 24,

2015) and 12 CFR 380.13

).

63 See id. at 79 FR 20762 (explaining that the 12

CFR 380.13 final rule is modeled after the FDIC’s

regulation at 12 CFR part 340 because the relevant

statutory provisions share substantially similar

statutory language.).

64 Restrictions on Sale of Assets of a Financial

Institution by the Federal Deposit Insurance

Corporations, 80 FR 22886, 22886–22887 (Apr. 24,

2015) and 12 CFR 380.13.

65 If indexed to inflation since the FDIC

established the ‘‘substantial loss’’ threshold in 2000,

the $50,000 threshold would be $92,666. The

updated threshold of $100,000 approximates

inflation adjustments.

66 Consistent with title II of the Dodd-Frank Act,

the FDIC consulted with the Financial Stability

Oversight Council in updating this threshold.

67 Section 36(j) of the FDI Act, 12 U.S.C. 1831m(j).

6. 12 CFR Part 380 (Part 380)—Orderly

Liquidation Authority

Part 380 of the FDIC’s regulations

implements the FDIC’s orderly

liquidation authority,55 which applies

once the FDIC has been appointed

receiver for a covered financial

company.56 Similar to the provisions

regarding the sale and purchase of failed

IDI asset sales under part 340, 12 CFR

380.13 of the FDIC’s regulations sets

forth restrictions on the FDIC’s sale of

failed covered financial company assets

to individuals or entities that

improperly profited from or engaged in

wrongdoing at the expense of a covered

financial company or seriously

mismanaged a covered financial

company.57 The restrictions under 12

CFR 380.13 apply to the sale and

purchase of covered financial company

assets in the FDIC’s capacity as receiver

for a covered financial company or in its

corporate capacity.58

Among other restrictions, 12 CFR

380.13 prohibits a person from

acquiring assets of a covered financial

company from the FDIC if the person or

its associated person has caused a

substantial loss to a covered financial

company 59 or has demonstrated a

pattern or practice causing a substantial

loss to one or more covered financial

companies.60

cial company or in its

corporate capacity.58

Among other restrictions, 12 CFR

380.13 prohibits a person from

acquiring assets of a covered financial

company from the FDIC if the person or

its associated person has caused a

substantial loss to a covered financial

company 59 or has demonstrated a

pattern or practice causing a substantial

loss to one or more covered financial

companies.60 As in part 340, 12 CFR

380.13 defines ‘‘substantial loss’’ to

include multiple types of loss that all

use a threshold of $50,000 to establish

the losses as ‘‘substantial.’’ 61

The FDIC added 12 CFR 380.13 to the

FDIC’s regulations in 2014.62 From

inception, the FDIC has explicitly

implemented the requirements in 12

CFR 380.13, including the ‘‘substantial

loss’’ provisions and threshold, in a

manner consistent with the restrictions

related to failed IDI asset sales under

part 340.63 Previous revisions to part

340 were also specifically intended to

align the requirements in part 340 and

12 CFR 380.13.64

Under the proposal, the ‘‘substantial

loss’’ threshold in 12 CFR 380.13 would

be raised from $50,000 to $100,000 to

reflect inflation since the threshold was

adopted.65

One commenter acknowledged the

proposed update to the thresholds in

part 380 as part of a broader comment

on the general deregulatory effects of the

proposal. In consideration of the

comment received, the FDIC is adopting

the approach taken in the proposed rule,

without change.66 Updating the

threshold for ‘‘substantial loss’’ to

reflect inflation preserves the level of

the threshold in real terms and

maintains consistency between the

‘‘substantial loss’’ provisions in part 340

and 12 CFR 380.13. The FDIC expects

this update to improve competition for

sales of covered financial company

assets or the prices paid for those assets.

7

roposed rule,

without change.66 Updating the

threshold for ‘‘substantial loss’’ to

reflect inflation preserves the level of

the threshold in real terms and

maintains consistency between the

‘‘substantial loss’’ provisions in part 340

and 12 CFR 380.13. The FDIC expects

this update to improve competition for

sales of covered financial company

assets or the prices paid for those assets.

7. Additional Thresholds

As described above, the FDIC received

several comments advocating for the

FDIC to pursue updates and adjustments

to thresholds that were not included in

the proposal, such as those that are

statutory or do not only appear within

regulations issued only by the FDIC.

The thresholds referenced within these

comments were outside the scope of the

proposal and therefore are not being

considered as part of this final rule.

8. Effective Date of Initial Threshold

Updates

The FDIC received several comments

related to the effective date or the

applicability date of the proposal. Some

commenters requested retroactive

applicability of the rule, while others

requested immediate effectiveness. The

final rule provides for an effective date

of January 1, 2026.

With respect to part 363, the final rule

clarifies that IDIs that have prospective

filing and compliance requirements

based on thresholds in place in 2025,

but will no longer be subject to such

requirements as a result of the updated

thresholds that will be in effect as of

January 1, 2026, are no longer required

to comply with such part 363

requirements.

The amendments to part 363 do not

relieve public companies or subsidiaries

of public companies of their obligation

to comply with the internal control

assessment requirements imposed by

section 404 of the Sarbanes-Oxley Act in

accordance with the effective dates for

compliance set forth in the SEC’s

implementing rules.

9

are no longer required

to comply with such part 363

requirements.

The amendments to part 363 do not

relieve public companies or subsidiaries

of public companies of their obligation

to comply with the internal control

assessment requirements imposed by

section 404 of the Sarbanes-Oxley Act in

accordance with the effective dates for

compliance set forth in the SEC’s

implementing rules.

9. Alternatives for Threshold

Application

As described above, several

commenters suggested alternatives for

how thresholds could be applied, such

as by applying thresholds based on an

average of multiple periods or only after

crossing a threshold over consecutive

periods. For example, some commenters

suggested that thresholds should be

effective for an institution only after the

institution crosses the thresholds for

two consecutive year-end dates or that

assets should be averaged over four

consecutive quarters for purposes of

determining whether a threshold is

effective for a particular institution.

The thresholds included in the

proposal would generally apply to an

institution based on the size of the

institution at a point-in-time, rather

than over a period of time. Under the

proposal, the FDIC intended to update

the dollar amount of specific thresholds,

but not necessarily the method used to

determine whether a threshold is

effective for an individual institution,

which is set forth in the current

regulations. If a future proposal were to

update a threshold for which

applicability would be measured over a

period of time, it may be appropriate to

allow for that determination method to

continue to be in effect, inclusive of any

updates to the threshold dollar amount,

consistent with the applicable law

hold is

effective for an individual institution,

which is set forth in the current

regulations. If a future proposal were to

update a threshold for which

applicability would be measured over a

period of time, it may be appropriate to

allow for that determination method to

continue to be in effect, inclusive of any

updates to the threshold dollar amount,

consistent with the applicable law.

Further, as it relates to part 363, section

36 of the FDI Act exempts small IDIs

based on the value of their assets ‘‘as of

the beginning of [their] fiscal year.’’ 67

The final rule adopts the proposed

point-in-time method for determining

the applicability of the thresholds

included in the rule.

Some commenters also suggested an

approach that would tailor the reference

index by threshold type, for example by

applying CPI–W to consumer-facing

monetary thresholds and nominal GDP

for asset-based thresholds. As further

discussed below, while tailoring the

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00009

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55798

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

68 Any periods of deflation would be reflected in

future threshold increases, as threshold adjustments

in the future would be based on the positive net

cumulative change in CPI–W.

69 For example, a threshold that would otherwise

be calculated as $5.964 million would be rounded

to $6.0 million, or the nearest $0.1 million.

70 This process to adjust numerical thresholds in

the Code of Federal Regulations is similar to the

process utilized in the Community Reinvestment

Act in which the FDIC and FRB publish a final rule

without notice and comment.

71 For example, the proposal provided that an

adjusted threshold that is calculated based on

inflation through the end of 2027 would be

published during the first quarter of 2028 and

would become effective on April 1, 2028

de of Federal Regulations is similar to the

process utilized in the Community Reinvestment

Act in which the FDIC and FRB publish a final rule

without notice and comment.

71 For example, the proposal provided that an

adjusted threshold that is calculated based on

inflation through the end of 2027 would be

published during the first quarter of 2028 and

would become effective on April 1, 2028.

application of a reference index by

threshold type may present the

advantages described by commenters, it

would increase complexity across

thresholds included under FDIC

regulations. The final rule promotes

consistency across FDIC regulations by

applying threshold updates and

adjustments using a single reference

index.

B. Indexing Methodology for Future

Threshold Adjustments

Under the proposal, the FDIC would

implement an indexing methodology

that reflects inflation to make future

automatic adjustments to most

thresholds discussed above. A

discussion of the proposal, comments

received, and the final rule is provided

below.

1. Description of Proposed Methodology

Under the proposal, the FDIC would

generally adjust the dollar thresholds

described in section III.A of this

SUPPLEMENTARY INFORMATION at the end

of every consecutive two-year period

based on the cumulative percent change

of the non-seasonally adjusted CPI–W

since the effective date of the final rule.

This two-year period was intended to

provide an appropriate cadence for

capturing meaningful changes in

inflation on a timely basis while

balancing the frequency with which

thresholds are adjusted. To address the

possibility of periods of significant

inflation, the FDIC further proposed that

thresholds subject to the indexing

methodology would also be adjusted if

the cumulative percent change in the

non-seasonally adjusted CPI–W were to

exceed 8 percent during any intervening

year since the most recent adjustment

sis while

balancing the frequency with which

thresholds are adjusted. To address the

possibility of periods of significant

inflation, the FDIC further proposed that

thresholds subject to the indexing

methodology would also be adjusted if

the cumulative percent change in the

non-seasonally adjusted CPI–W were to

exceed 8 percent during any intervening

year since the most recent adjustment.

By allowing thresholds to be adjusted

on an interim basis to reflect periods of

significant inflation, the proposal sought

to address the possibility that periods of

significant inflation may cause

thresholds to decrease substantially in

real terms before adjustments occur

under the two-year cadence.

Under the proposal, the FDIC would

not lower thresholds in any given year

to reflect periods of deflation.68

Additionally, thresholds adjusted under

the proposed indexing methodology

would be rounded based on the size of

the threshold (e.g., billions, millions,

thousands), generally, to the nearest two

significant digits, as appropriate.69 The

proposal also provided that prior to

rounding, all adjusted thresholds would

be calculated based on the cumulative

percent change of the non-seasonally

adjusted CPI–W since the effective date

of the final rule in order to ensure that

any distortions due to rounding or non-

adjustments for deflation do not carry

forward to future adjustments.

To effectuate threshold changes under

the proposal, the FDIC would announce

threshold adjustments pursuant to the

indexing methodology by publishing

subsequent final rules in the Federal

Register. Such final rules would not be

subject to notice and comment and

would amend the Code of Federal

Regulations to reflect the adjusted

numerical threshold.70 Further, while

the FDIC would intend to publish a final

rule in the Federal Register for each

adjustment, the proposal noted that

adjustments would occur even in the

absence of a publication in the Federal

Register

e Federal

Register. Such final rules would not be

subject to notice and comment and

would amend the Code of Federal

Regulations to reflect the adjusted

numerical threshold.70 Further, while

the FDIC would intend to publish a final

rule in the Federal Register for each

adjustment, the proposal noted that

adjustments would occur even in the

absence of a publication in the Federal

Register. Under the proposal, adjusted

thresholds would be effective on April

1 of the year during which the

adjustment occurs.71

i. Comments on the Proposed

Methodology

Many commenters agreed with the

proposed indexing methodology and

supported subsequent, periodic,

automatic threshold adjustments.

Additionally, many commenters agreed

with the policy objectives to preserve

threshold levels in real terms by

periodically adjusting thresholds to

reflect inflation.

However, some commenters stated

that automatic adjustments to the

thresholds would be complex and

unpredictable and could create burden

on banks when designing,

implementing, and maintaining an

internal control framework. One

commenter suggested consideration of

broader measures of bank complexity

beyond asset size when adjusting

thresholds, such as business line and

geographic scope, and further suggested

the indexing methodology should lower

thresholds to account for deflation,

consistent with raising thresholds to

account for inflation.

ii. Response to Comments on the

Proposed Methodology

As described in section I of this

SUPPLEMENTARY INFORMATION, the

proposed indexing methodology is

intended to avoid situations where an

institution becomes subject to

additional or more stringent regulatory

requirements due solely to inflation

rather than actual changes in the

institution’s size, risk profile, or level of

complexity. When developing the

proposed indexing methodology, the

FDIC sought to balance predictability of

future adjustments with the potential

burden associated with tracking and

planning for such changes

tution becomes subject to

additional or more stringent regulatory

requirements due solely to inflation

rather than actual changes in the

institution’s size, risk profile, or level of

complexity. When developing the

proposed indexing methodology, the

FDIC sought to balance predictability of

future adjustments with the potential

burden associated with tracking and

planning for such changes. For example,

as discussed further below, adjustment

frequencies longer than the proposed

two-year cadence could lessen the

burden involved with tracking threshold

changes, as it would result in fewer

adjustments and potentially improve an

institution’s ability to plan for and

manage its regulatory compliance

obligations. However, prolonged

adjustments also increase the likelihood

that a banking organization will cross

thresholds between adjustments due to

inflation and therefore could

compromise the overarching policy

objectives of the proposal. The two-year

cadence was intended to reflect

meaningful changes in inflation while

balancing any potential burden resulting

from tracking and planning for

threshold adjustments over time.

Additionally, the proposal intended

to update and adjust the dollar amount

of specific thresholds to reflect inflation,

but not necessarily the mechanism to

determine how a threshold applies to an

individual institution, which is set forth

in the current regulations. Accordingly,

the FDIC did not consider additional

measures of complexity, such as

business line or geographic scope, to

determine threshold adjustments, which

go beyond the scope of the proposal to

reflect inflation across certain static,

dollar-based thresholds. Lastly, to avoid

increased burden for reasons unrelated

to changes in inflation-adjusted size or

risk profile, and given that periods of

deflation have been rare in modern

times, the final rule does not reduce

thresholds during periods of deflation

etermine threshold adjustments, which

go beyond the scope of the proposal to

reflect inflation across certain static,

dollar-based thresholds. Lastly, to avoid

increased burden for reasons unrelated

to changes in inflation-adjusted size or

risk profile, and given that periods of

deflation have been rare in modern

times, the final rule does not reduce

thresholds during periods of deflation.

However, any period of deflation would

nonetheless be reflected in future

threshold increases, as in such a

scenario thresholds would not increase

until the net cumulative change in CPI–

W turns positive. In the event that the

U.S. economy was to experience a

period of sustained deflation, the FDIC

may consider revisiting the proposed

indexing methodology.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00010

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55799

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

72 See § 345.12(u)(2) of appendix G to 12 CFR part

345; see also 12 CFR 1003.2(g)(1)(i); 20 CFR

404.272.

73 U.S. Bureau of Labor Statistics, Table 1.1.5.

Gross Domestic Product, line 1, available at https://

apps.bea.gov/iTable/?reqid=19&step=2&isuri=

1&categories=survey.

74 Changes in GDP (sometimes referred to as

changes in nominal GDP) can be broken down into

changes in prices inflation plus changes in real

economic output (real GDP).

75 Federal Reserve Bank of St. Louis, Gross

Domestic Product, available at https://

fred.stlouisfed.org/series/NA000334Q; see also,

Federal Reserve Bank of St. Louis, Consumer Price

Index for All Urban Wage Earners and Clerical

Workers: All Items in U.S. City Average, available

at https://fred.stlouisfed.org/series/CWUR0000SA0.

76 For example, the FDIC has used a definition of

‘‘community banking organization’’ as part of

research efforts. See https://www.fdic.gov/

community-banking-research-program/community-

banking-studies.

2

erve Bank of St. Louis, Consumer Price

Index for All Urban Wage Earners and Clerical

Workers: All Items in U.S. City Average, available

at https://fred.stlouisfed.org/series/CWUR0000SA0.

76 For example, the FDIC has used a definition of

‘‘community banking organization’’ as part of

research efforts. See https://www.fdic.gov/

community-banking-research-program/community-

banking-studies.

2. Alternatives to the Proposed Indexing

Methodology

i. Alternative Measures of Indexing:

Other Price Indices

The FDIC proposed using the non-

seasonally adjusted CPI–W as its

inflation measure for updating and

indexing thresholds, but also considered

the seasonally-adjusted CPI–W series as

well as other price indices such as the

Consumer Price Index for All Urban

Consumers (CPI–U), Chained CPI–U (C–

CPI–U), Producer Price Index (PPI),

Personal Consumption Expenditures

Price Index (PCEPI), and Gross Domestic

Purchases Price Index (GDPPI).

Commenters did not address the

alternative price indices to measure

inflation for purposes of the proposed

indexing methodology.

As noted in the proposal, an

advantage of using the CPI–W for

updating and indexing thresholds

within FDIC regulations is that the CPI–

W is already commonly used for this

purpose, including by the FDIC and

other Federal agencies, such as the

Social Security Administration for

calculating benefit payments,72 while

the alternatives are less frequently used

for updating regulations and may be less

familiar to the public. Additionally, as

noted in the proposal, the non-

seasonally adjusted CPI–W series

reflects longer-term changes in inflation,

which supports the purpose of updating

and indexing thresholds within FDIC

regulations.

ii. Alternative Measures of Indexing:

Gross Domestic Product (GDP)

In addition to consumer price indices,

the proposal considered use of other

types of indices to update and index the

regulatory thresholds subject to the

proposal

onally adjusted CPI–W series

reflects longer-term changes in inflation,

which supports the purpose of updating

and indexing thresholds within FDIC

regulations.

ii. Alternative Measures of Indexing:

Gross Domestic Product (GDP)

In addition to consumer price indices,

the proposal considered use of other

types of indices to update and index the

regulatory thresholds subject to the

proposal. For example, the BEA

publishes a GDP data series on a

quarterly basis, which measures

aggregate U.S. economic activity.73

Historically, the U.S. economy has

expanded in real terms (outside of

recessions), which means the (nominal)

GDP index has typically increased at a

faster rate than the consumer price

indices discussed above.74 As discussed

in the proposal, U.S. nominal GDP has

increased by 299 percent over the past

three decades, compared to a 111

percent increase in the CPI–W over the

same period.75 Therefore, if GDP were

used as the basis for updating and

indexing thresholds within FDIC

regulations, such thresholds would

likely increase at a faster rate than under

the proposal.

Some commenters supported the use

of nominal GDP instead of CPI–W to

index thresholds. Several of these

commenters indicated that indexing

asset-based thresholds to nominal GDP

would help to ensure that asset-based

thresholds remain proportionate to the

size of the broader economy, while

another commenter added that banking

industry deposits and assets are driven

by economic activity, monetary policy,

and the money supply, and as such,

GDP is a better measure of bank

expansion than CPI–W. Some

commenters added that indexing

methodologies should be tailored to the

threshold, such as using nominal GDP

to index asset thresholds based on size

or risk-based measures and using CPI–

W or similar price indices to index

consumer-facing thresholds and other

thresholds that are less sensitive to the

impact of overall growth in the

economy

etter measure of bank

expansion than CPI–W. Some

commenters added that indexing

methodologies should be tailored to the

threshold, such as using nominal GDP

to index asset thresholds based on size

or risk-based measures and using CPI–

W or similar price indices to index

consumer-facing thresholds and other

thresholds that are less sensitive to the

impact of overall growth in the

economy. Commenters also noted that

thresholds are lower than they would

otherwise be if updated and indexed

using growth in GDP as a basis for

adjustments.

While financial activity is closely

related to broader macroeconomic

activity and tends to grow together with

the economy, using inflation as a basis

for updating and indexing thresholds

within FDIC regulations would

specifically target consumer price levels

to ensure dollar thresholds remain

relatively consistent over time in real

terms. Many commenters agreed with

the indexing methodology, as proposed,

including the use of consumer price

inflation to index thresholds across

FDIC regulations. As noted above,

adjusting thresholds based on consumer

prices is a common practice already in

use by the FDIC and other Federal

agencies. In addition, use of a single

index to adjust thresholds across FDIC

regulations would promote consistency

and reduce burden from tracking

threshold changes.

The FDIC recognizes that the banking

industry will generally grow alongside

the broader economy. However, the

final rule uses CPI–W as the basis for

indexing thresholds, consistent with the

proposal. As stated in the proposal,

there are several downsides to using

GDP for threshold adjustments. GDP is

subject to business cycle fluctuations

that may not always correspond with

price level changes, such as in a

‘‘stagflationary’’ environment where

stagnant economic growth occurs

simultaneously with inflation.

Relatedly, GDP in certain cases may

grow fast for a period of years, followed

by a downturn marked by slow or

negative growth

wnsides to using

GDP for threshold adjustments. GDP is

subject to business cycle fluctuations

that may not always correspond with

price level changes, such as in a

‘‘stagflationary’’ environment where

stagnant economic growth occurs

simultaneously with inflation.

Relatedly, GDP in certain cases may

grow fast for a period of years, followed

by a downturn marked by slow or

negative growth. Additionally, GDP is a

lagging indicator that is frequently

revised, which may limit the accuracy

and durability of threshold adjustments.

Finally, the intent behind many rules

that use asset-based thresholds is to

target banks of a certain size, rather than

a size relative to the broader economy;

thus, if the banking industry is growing

quickly in real terms alongside a rapidly

growing economy, banks are still

growing for purposes of the relevant

regulations. The FDIC recognizes

adjusting thresholds using certain

alternative measures, such as GDP, may

produce higher threshold levels relative

to using CPI–W. However, when

evaluating various alternatives, the FDIC

primarily considered their alignment

with the overall policy objectives of the

proposal, rather than targeting a

particular threshold level.

iii. Alternative Measures of Indexing:

Other Measures

The proposal also considered and

requested comments about updating and

indexing thresholds within FDIC

regulations using measures of growth in

banking or financial sectors. Several

commenters supported use of a banking

industry growth measure to index

thresholds. One commenter stated that

use of the actual growth rate in total

banking industry assets would be a

more direct measure to index asset-

based thresholds and, similarly, growth

in deposits would be logical for

thresholds tied to deposits. Another

commenter indicated growth of banking

industry assets is a more appropriate

measure to index thresholds and would

be more representative of the

commensurate risk to the DIF and

overall banking industry

total

banking industry assets would be a

more direct measure to index asset-

based thresholds and, similarly, growth

in deposits would be logical for

thresholds tied to deposits. Another

commenter indicated growth of banking

industry assets is a more appropriate

measure to index thresholds and would

be more representative of the

commensurate risk to the DIF and

overall banking industry. Another

commenter suggested consideration of

broader measures of bank complexity

beyond asset size, such as the definition

of community banking organizations

that has been used by FDIC for other

purposes.76

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00011

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55800

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

While using banking industry assets

as a measure may align threshold levels

with changes in the banking industry

broadly, it may also result in threshold

adjustments that are influenced by

factors unrelated to policy objectives of

particular FDIC regulations. For

example, threshold adjustments using

growth in the size of the banking

industry or financial sector may be

overly influenced by a subset of

institutions (for example, large banking

organizations) and therefore may not

always be representative of, or broadly

consistent with, changes occurring

across banks of different size ranges.

Additionally, as discussed in the

proposal, using growth in the size of the

banking industry or financial sector

would have disadvantages, including

that (1) many thresholds are intended to

apply to banks of a certain size, not

necessarily a fixed proportion of the

industry; (2) certain thresholds,

including several as part of this

proposal, are set at levels that are

unrelated to asset size; and (3) these

measures could reflect real growth and

actual changes in risk profile, as

opposed to capturing inflation alone

antages, including

that (1) many thresholds are intended to

apply to banks of a certain size, not

necessarily a fixed proportion of the

industry; (2) certain thresholds,

including several as part of this

proposal, are set at levels that are

unrelated to asset size; and (3) these

measures could reflect real growth and

actual changes in risk profile, as

opposed to capturing inflation alone.

Compensating for these disadvantages

by adding additional conditions to the

methodology would be relatively more

complex and less transparent to banks

and market participants compared to

using inflation as a basis for threshold

adjustments.

iv. Adjustment Frequency Within the

Indexing Methodology

As discussed above, under the

proposal, thresholds would generally be

adjusted every two years or if the

cumulative change in non-seasonally

adjusted CPI–W exceeded 8 percent

during any intervening year since the

most recent adjustment.

Some commenters preferred more

frequent indexing for certain

regulations, such as annually, while

other commenters recommended a

longer adjustment cadence, such as

every three or five years. One

commenter suggested that adjusting real

estate appraisal thresholds on an annual

basis would be commensurate with the

original appraisal thresholds and

regulatory risk tolerances that were

established by the regulators.

Commenters supporting a longer

adjustment cadence indicated that using

a two-year cadence would take

considerable regulatory resources and

add uncertainty for banks as inflation

fluctuates over time.

The proposal considered various

other adjustment frequencies, including

quarterly, semi-annually, annually,

every 3 years, and every 5 years. For

most of the indexing options, including

for the CPI–W, an adjustment frequency

as short as monthly would be feasible

based on data availability. As noted in

the proposal, thresholds updated after a

shorter adjustment period (e.g.,

quarterly) would more frequently reflect

changes in inflation

frequencies, including

quarterly, semi-annually, annually,

every 3 years, and every 5 years. For

most of the indexing options, including

for the CPI–W, an adjustment frequency

as short as monthly would be feasible

based on data availability. As noted in

the proposal, thresholds updated after a

shorter adjustment period (e.g.,

quarterly) would more frequently reflect

changes in inflation. A shorter

adjustment period would also reduce

the number of institutions that cross a

threshold between adjustments solely

based on growth consistent with

consumer prices. A disadvantage of

shorter update frequencies is that it may

require institutions to more routinely

update systems and compliance

programs to reflect more frequently

adjusted thresholds, relative to longer

adjustment frequencies. Longer

adjustment frequencies (e.g., every 3

years, every 5 years) generally have the

opposite advantages and disadvantages

as compared to the shorter adjustment

frequencies. Longer adjustment

frequencies would lessen the burden

involved with tracking threshold

changes. However, prolonged

adjustments may not sufficiently

mitigate the potential for a threshold

level to change, in real terms, during the

time period between adjustments. Such

an approach could therefore heighten

the potential for banking organizations

to cross thresholds between adjustments

solely due to inflation.

The final rule adopts a two-year

period for measuring inflation, as

proposed, which is intended to provide

an appropriate cadence for capturing

meaningful changes in inflation on a

timely basis while balancing the

frequency in which thresholds would be

amended. Additionally, by providing for

adjustments in intervening years where

inflation exceeds 8 percent, the proposal

would help mitigate the potential for

institutions to cross one or more

thresholds when inflation increases

significantly during a two-year period

for capturing

meaningful changes in inflation on a

timely basis while balancing the

frequency in which thresholds would be

amended. Additionally, by providing for

adjustments in intervening years where

inflation exceeds 8 percent, the proposal

would help mitigate the potential for

institutions to cross one or more

thresholds when inflation increases

significantly during a two-year period.

In the event thresholds were increased

in two consecutive years due to

inflation exceeding 8 percent, the

adjustment period would reset, and the

next increase would occur after two

years, unless inflation exceeded 8

percent again the following year.

The proposal also considered, but the

final rule does not adopt, an alternative

approach that would adjust thresholds

annually based on the change in

inflation only if an inflation-adjusted

threshold reaches a pre-determined

level (i.e., a milestone approach). Under

this alternative, for each regulatory

threshold, the FDIC would calculate a

potential adjusted threshold based on

CPI–W measured at the end of each year

relative to when a threshold was last

adjusted. However, a threshold would

only be adjusted higher if the potential

adjusted threshold exceeded a certain

milestone amount.

One commenter favored the proposed

two-year cadence over the milestone

approach, while another commenter

favored the automated approach

alternative discussed in the proposal

relative to the milestone approach.

Some commenters supported the

milestone approach, stating that it

allows threshold adjustments to reflect

a material change as a result of inflation,

supports transparency, would be more

predictable for community banks, and

allows them to plan ahead for

approaching thresholds that trigger new

regulatory requirements. One of these

commenters also suggested further

exploration of the advantages and

disadvantages of the milestone

approach

stating that it

allows threshold adjustments to reflect

a material change as a result of inflation,

supports transparency, would be more

predictable for community banks, and

allows them to plan ahead for

approaching thresholds that trigger new

regulatory requirements. One of these

commenters also suggested further

exploration of the advantages and

disadvantages of the milestone

approach.

The milestone approach would

provide only for material threshold

changes and could support transparency

and predictability in future threshold

amounts as each milestone would be

known in advance. However, the

milestone approach may lead to

uncertainty in timing, as it may be

challenging for the public to track when

increases in inflation will trigger the

next milestone for each threshold.

Relative to an approach with a pre-

determined adjustment schedule, the

milestone approach would present

regulatory compliance planning and

management challenges associated with

tracking inflation on an ongoing basis,

as well as planning for, and managing

to, adjustments, which would likely

occur at inconsistent frequencies. By

contrast, under the final rule,

adjustments would be known ahead of

time and be made pursuant to an

established periodic cadence, which

would be expected to simplify planning

for, and management of, future

threshold adjustments.

v. Degree of Automation in Indexing

The proposal provided that the FDIC

would, every two years, publish a

Federal Register notice announcing

threshold adjustments based on a pre-

determined indexing methodology. The

FDIC considered an alternative that

would enhance the degree of

automation by directly incorporating the

indexing calculation into each

regulatory threshold. Under this

approach, a threshold would be defined

within regulation as a starting value

multiplied by an index value such as

the CPI–W, and the threshold would be

automatically adjusted with each update

in the index

ethodology. The

FDIC considered an alternative that

would enhance the degree of

automation by directly incorporating the

indexing calculation into each

regulatory threshold. Under this

approach, a threshold would be defined

within regulation as a starting value

multiplied by an index value such as

the CPI–W, and the threshold would be

automatically adjusted with each update

in the index. The proposal discussed

using this same approach while

adhering to the timing in the proposal,

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00012

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55801

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

in which the threshold would increase

every two years and would be rounded.

The FDIC also considered posting the

thresholds on its website and notifying

institutions and the public when they

are increased.

Some commenters supported the use

of automatic adjustments to index the

thresholds generally, though they did

not refer specifically to the direct

referencing of an index as described

above. One commenter suggested that

automatic adjustments offer

transparency and predictability,

reducing administrative burden for both

banks and regulators. Other commenters

indicated that automatic adjustments

help ensure that community banks are

not unfairly burdened by preventing

thresholds from remaining artificially

low and imposing undue burden on

banks that present low risk to the

financial system.

As described in the proposal, the

direct reference approach would have

the advantage of enhancing the

automation, which could help

contribute to a relatively more

streamlined adjustment process.

However, this approach may be less

clear for members of the public or

regulated entities. Additionally, while

the FDIC could post the thresholds on

its website, the revised threshold

amounts would not be codified in the

Code of Federal Regulations

proach would have

the advantage of enhancing the

automation, which could help

contribute to a relatively more

streamlined adjustment process.

However, this approach may be less

clear for members of the public or

regulated entities. Additionally, while

the FDIC could post the thresholds on

its website, the revised threshold

amounts would not be codified in the

Code of Federal Regulations. On

balance, the approach set forth in the

proposal would provide relatively more

transparency and facilitate compliance

with the requirements included in the

proposal when compared to the direct

reference approach.

3. Final Rule—Indexing Methodology

i. Indexing Methodology, In General

The FDIC has carefully considered all

comments received and is finalizing the

indexing methodology for future

threshold adjustments as proposed, with

a modification to the effective date of

future adjustments, as discussed in

section III.B.3.ii of this SUPPLEMENTARY

INFORMATION. Generally, the FDIC will

adjust the dollar thresholds described in

section III.A of this SUPPLEMENTARY

INFORMATION at the end of every

consecutive two-year period based on

the cumulative percent change of the

non-seasonally adjusted CPI–W since

the effective date of the final rule.

As discussed above, the FDIC

recognizes there may be certain

advantages of alternative approaches to

periodically adjust thresholds, as

described by commenters. However, the

final rule provides for a consistent and

predictable approach that specifically

targets price levels to ensure dollar

thresholds remain relatively consistent,

in real terms, over time. The indexing

methodology included in the final rule

enhances transparency and certainty by

providing institutions with a pre-

determined schedule for future

threshold changes. Further, these

automatic adjustments will help

preserve thresholds’ intended scope of

application and their alignment with

intended policy objectives over time

emain relatively consistent,

in real terms, over time. The indexing

methodology included in the final rule

enhances transparency and certainty by

providing institutions with a pre-

determined schedule for future

threshold changes. Further, these

automatic adjustments will help

preserve thresholds’ intended scope of

application and their alignment with

intended policy objectives over time.

Accordingly, the indexing methodology

contributes to a more durable regulatory

framework while avoiding the

undesirable and unintended outcome

where the scope of applicability for a

regulatory requirement changes over

time due solely to inflation.

ii. Effective Date and Timing of Future

Adjustments

In a change from the proposal, which

provided for an April 1 effective date for

future threshold adjustments, the final

rule provides that such adjustments will

take effect on October 1. This change is

intended to align the effective date with

the start date of fiscal years for the

majority of IDIs, most of which have

fiscal years beginning on October 1 or

January 1. The final rule also includes

a provision that expressly permits an

IDI’s appropriate Federal banking

agency to exercise discretion to provide

exemptive relief to an IDI whose asset

size is likely to be below a relevant

threshold following a forthcoming

threshold adjustment that is scheduled

to occur during the IDI’s current fiscal

year.

Part 363 measures the total

consolidated assets of an IDI as of the

beginning of its fiscal year to determine

the applicability of filing and other

compliance requirements under part

363, and IDIs have adopted a variety of

dates as the start of their fiscal years. As

a result, adjusting thresholds as of any

specific date would impact IDIs

differently, depending on the start of the

IDI’s fiscal year

asures the total

consolidated assets of an IDI as of the

beginning of its fiscal year to determine

the applicability of filing and other

compliance requirements under part

363, and IDIs have adopted a variety of

dates as the start of their fiscal years. As

a result, adjusting thresholds as of any

specific date would impact IDIs

differently, depending on the start of the

IDI’s fiscal year. For example, if the rule

used January 1 as the date for threshold

adjustments, an IDI with a fiscal year

beginning on October 1 would

immediately commence or continue

certain part 363 compliance obligations

as of that date, even though the IDI may

be removed from the scope of such

requirements for future fiscal years

when the applicability threshold is

adjusted a few months later in January.

If an IDI expects to be subject to part 363

requirements as of the start of the fiscal

year, the IDI may begin work to engage

with an independent public accountant,

to establish and/or maintain an

adequate internal control structure and

procedures over financial reporting, and

to comply with audit committee

composition requirements.

The final rule adopts two

modifications to reduce the potential for

undue compliance burden resulting

from the beginning of an IDI’s fiscal year

not coinciding with the effective date of

a future threshold adjustment. First, the

final rule adopts an October 1 effective

date for future threshold adjustments to

coincide as closely as possible with the

fiscal years of the majority of IDIs.

Second, if an IDI likely will no longer

be subject to a part 363 requirement as

a result of a threshold adjustment that

is scheduled to occur during the IDI’s

current fiscal year, the final rule

includes a provision that expressly

permits the IDI’s appropriate Federal

banking agency to exercise discretion to

provide exemptive relief to the IDI

th the

fiscal years of the majority of IDIs.

Second, if an IDI likely will no longer

be subject to a part 363 requirement as

a result of a threshold adjustment that

is scheduled to occur during the IDI’s

current fiscal year, the final rule

includes a provision that expressly

permits the IDI’s appropriate Federal

banking agency to exercise discretion to

provide exemptive relief to the IDI.

While policy considerations related to

part 363 motivated the FDIC to change

the effective date of future part 363

adjustments, the FDIC has decided, for

simplicity, to make future adjustments

for all thresholds in this final rule

effective as of October 1 in the

applicable year.

The FDIC is also finalizing a two-year

period as the default period for future

adjustments and is selecting the CPI–W

data series as close to the adjustment

date as possible. The first future

adjustment will be effective on October

1, 2027, using the CPI–W data through

August 30, 2027, relative to the baseline.

Future adjustments after October 1,

2027, will be made as of October 1 on

a two-year cadence, with the target

threshold being calculated based on

cumulative CPI–W data through August

of the year in which the adjustment is

made, relative to the same initial

baseline.

IV. Economic Analysis

The final rule updates certain dollar

thresholds within the FDIC’s regulations

to account for the effects of inflation

since the thresholds were first

implemented or most recently amended.

It also establishes an indexing

methodology to preserve these

thresholds in real terms going forward.

To estimate the expected scope,

benefits, and costs of each amendment,

the FDIC compared projected outcomes

under the final rule to a baseline

scenario defined by the dollar

thresholds in the FDIC’s current

regulations.

A

the thresholds were first

implemented or most recently amended.

It also establishes an indexing

methodology to preserve these

thresholds in real terms going forward.

To estimate the expected scope,

benefits, and costs of each amendment,

the FDIC compared projected outcomes

under the final rule to a baseline

scenario defined by the dollar

thresholds in the FDIC’s current

regulations.

A. Expected Scope of Impact

The final rule is expected to affect

IDIs of varying sizes and business

models, as well as individuals and

entities that interact with the FDIC in

applications, filings, or asset

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00013

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55802

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

77 Unless otherwise specified, counts of IDIs are

taken from Reports of Condition and Income (Call

Report) data for the quarter ending June 30, 2025.

78 Section 12(b) or 12(g), 15 U.S.C. 78l(b), (g).

79 Part 363 requires any IDI with total

consolidated assets of $500 million or more at the

beginning of its fiscal year to comply with the

requirements therein. Therefore, the FDIC uses data

as of the quarter ending December 31, 2024, for

purposes of estimating the effects of the final rule

on IDIs subject to part 363.

transactions. To assess the expected

scope, this analysis considers all

relevant regulations and financial

conditions data for all IDIs as of the

quarter ending June 30, 2025.

Specifically: 77

• Part 303 (Filing Procedures):

Applies broadly to IDIs and other

entities submitting applications or

filings to the FDIC. As of June 30, 2025,

there were 4,430 IDIs. The FDIC lacks

data on the number of non-IDI

applicants

expected

scope, this analysis considers all

relevant regulations and financial

conditions data for all IDIs as of the

quarter ending June 30, 2025.

Specifically: 77

• Part 303 (Filing Procedures):

Applies broadly to IDIs and other

entities submitting applications or

filings to the FDIC. As of June 30, 2025,

there were 4,430 IDIs. The FDIC lacks

data on the number of non-IDI

applicants.

• Part 335 (Securities of State

Nonmember Banks and Savings

Associations): Applies to State

nonmember banks and State savings

associations with one or more classes of

securities required to be registered

under section 12 of the Exchange Act.78

As of June 30, 2025, the FDIC supervises

2,808 IDIs that could potentially fall

within the scope of this threshold

update.

• Part 340 (Restrictions on Sale of

Assets of a Failed Institution by the

Federal Deposit Insurance Corporation):

Applies to persons (both individuals

and entities) seeking to purchase assets

of failed IDIs in FDIC conservatorship or

receivership. Based on counts of

submissions from 2019 through 2023,

the FDIC estimates approximately 140

applicants may file part 340 Purchaser

Eligibility Certifications (PEC340)

annually.

• Part 347 (International Banking):

Subpart A to part 347 applies to insured

State nonmember banks and their

foreign branches. As of June 30, 2025,

there were 30 IDIs with foreign

subsidiaries, of which five are State

nonmember banks subject to Subpart A

to part 347.

• Part 363 (Annual Independent

Audits and Reporting Requirements):

May apply to all IDIs, but with

requirements for IDIs that hold total

consolidated assets in excess of $500

million and vary by asset size.79 As of

December 31, 2024, there were 4,496

IDIs, of which 1,802 have total

consolidated assets in excess of $500

million.

• Part 380 (Orderly Liquidation

Authority): Applies to persons seeking

to purchase assets of failed covered

financial companies in FDIC

receivership under the Orderly

Liquidation Authority

total

consolidated assets in excess of $500

million and vary by asset size.79 As of

December 31, 2024, there were 4,496

IDIs, of which 1,802 have total

consolidated assets in excess of $500

million.

• Part 380 (Orderly Liquidation

Authority): Applies to persons seeking

to purchase assets of failed covered

financial companies in FDIC

receivership under the Orderly

Liquidation Authority. Based on counts

of submissions from 2021 through 2023,

the FDIC estimates approximately 66

applicants may file part 380 Purchaser

Eligibility Certification (PEC380)

annually.

B. Estimates of the Number of Directly

Affected Entities

This section provides the FDIC’s

estimates of the number of institutions

and other entities that may be directly

affected by the threshold updates under

the final rule. Table 2 summarizes the

estimated changes in covered entities

relative to current regulations. These

estimates rely on available supervisory

and application data, historical filing

volumes, and conservative assumptions.

Across all parts of the FDIC’s

regulations, the threshold updates in the

final rule are expected to reduce the

number of institutions subject to certain

compliance obligations under parts 303,

335, and 363, and increase the number

of entities eligible to engage in specific

activities under parts 340 and 380. The

largest numerical change in impacted

entities will occur under part 363,

where higher asset thresholds are

expected to reduce the applicable

regulatory requirements on several

hundred IDIs.

TABLE 2—SUMMARY OF ESTIMATED CHANGES IN THE NUMBER OF COVERED ENTITIES

FDIC Regulation or process

12 CFR §

Current regulations

(baseline)

Updated regulations

(final rule)

Net effect

on

number of

covered

entities *

(final

rule—

baseline)

Threshold

Covered

entities

Threshold

Covered

entities

Part 303—Filing Procedures

§ 303.227(a)(2) & (b)(3)(i) .....

$2,500/$1,000 .......................

5 $3,500/$1,225 ......................

ER OF COVERED ENTITIES

FDIC Regulation or process

12 CFR §

Current regulations

(baseline)

Updated regulations

(final rule)

Net effect

on

number of

covered

entities *

(final

rule—

baseline)

Threshold

Covered

entities

Threshold

Covered

entities

Part 303—Filing Procedures

§ 303.227(a)(2) & (b)(3)(i) .....

$2,500/$1,000 .......................

5 $3,500/$1,225 .......................

4/3

¥1/¥2

Part 335—Securities of State

Nonmember Banks and

Savings Associations.

§ 335.801(d) ..........................

>10% of the equity capital

accounts or $5 million.

9 >10% of the equity capital

accounts or $10 million.

9

0

Part 340—Restrictions on

Sale of Assets of a Failed

Institution by the FDIC.

§ 340.2(h) ..............................

$50,000 .................................

140 $100,000 ...............................

280

140

Part 347—International Bank-

ing.

§ 347.111(a)(1) ......................

$60 million; 25% of bank’s

Tier 1 capital.

5 $120 million ...........................

5

0

§ 347.111(b)(1) ......................

$30 million; 5% of bank’s Tier

1 capital.

5 $60 million .............................

5

0

Part 363—Annual Inde-

pendent Audits and Report-

ing Requirements.

§ 363.1(a) ..............................

§ 363.2(b)(3) ..........................

§ 363.3(b) ..............................

$500 million or more .............

$1 billion or more ..................

$1 billion or more ..................

1,802

1,024

1,024

$1 billion or more ..................

$5 billion or more ..................

$5 billion or more ..................

1,024

297

297

¥778

¥727

¥727

§ 363.5(a)(2) ..........................

$500 million or more but less

than $1 billion.

778 $1 billion or more but less

than $5 billion.

727

¥51

§ 363.5(a)(1) ..........................

$1 billion or more ..................

1,024 $5 billion or more ..................

297

¥727

§ 363.5(b) ..............................

More than $3 billion ..............

420 More than $5 billion .............

§ 363.5(a)(2) ..........................

$500 million or more but less

than $1 billion.

778 $1 billion or more but less

than $5 billion.

727

¥51

§ 363.5(a)(1) ..........................

$1 billion or more ..................

1,024 $5 billion or more ..................

297

¥727

§ 363.5(b) ..............................

More than $3 billion ..............

420 More than $5 billion ..............

297

¥123

Guideline 28(a)(4) .................

$100,000 ...............................

1,802 $120,000 ...............................

1,802

0

Part 380—Orderly Liquidation

Authority.

§ 380.13(b)(6) ........................

$50,000 .................................

66 $100,000 ...............................

132

66

* Positive values represent an increase in the number of covered entities attributable to the updated thresholds and negative values represent a decrease in the

number of covered entities.

Source: FDIC calculations.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00014

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55803

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

80 Section 19 of the FDI Act was significantly

amended in December of 2022 by the Fair Hiring

in Banking Act. See Public Law 117–263, 136 Stat.

2395, 3411. In a change from the proposal, for

purposes of this estimation, the FDIC counts section

19 applications from January 1, 2023, through June

30, 2025, or approximately 2.5 years, for a more

accurate depiction of the current rate of

applications under the baseline. There were 13 total

applications over this time period. 13 applications/

2.5 years ≈ 5 section 19 applications annually.

81 The final rule does not change the parallel

threshold of 10 percent of equity capital.

82 List of FDIC-Supervised Banks Filing under the

Exchange Act, available at https://www.fdic.gov/

analysis/list-fdic-supervised-banks-filing-under-

securities-exchange-act.

83 See, e.g., 12 CFR 363.1

applications over this time period. 13 applications/

2.5 years ≈ 5 section 19 applications annually.

81 The final rule does not change the parallel

threshold of 10 percent of equity capital.

82 List of FDIC-Supervised Banks Filing under the

Exchange Act, available at https://www.fdic.gov/

analysis/list-fdic-supervised-banks-filing-under-

securities-exchange-act.

83 See, e.g., 12 CFR 363.1.

84 For 12 CFR 363.2(b)(3), this threshold is

referenced in part 363, appendix A, paragraphs 8A

and 10, as well as part 363, appendix B, paragraph

2(b). For 12 CFR 363.3(b), this threshold is

referenced in part 363, appendix A, paragraph 18A,

as well as part 363, appendix B, paragraph 2(b).

85 These thresholds are referenced in part 363,

appendix A, paragraphs 27, 30(b), 30(c), 35(a), and

35(b). The 778 IDIs currently subject to 12 CFR

363.5(a)(2) would no longer be subject to these

requirements, whereas the 727 IDIs with total assets

between $1 billion and $5 billion would now be

subject to the requirements under 12 CFR

363.5(a)(2). Therefore, the FDIC estimates 1,505 IDIs

would be affected by this change.

86 This threshold is referenced in part 363,

appendix A, paragraph 35(c).

87 The FDIC does not have the data necessary to

estimate the number of potential directors of IDI

audit committees that this update would affect.

88 The estimates of PEC submissions under part

380 are predicated upon a potential invocation of

the Orderly Liquidation Authority. Office of

Management and Budget, Information Collection

List, Covered Financial Company Asset Sales

Prospective Purchaser Eligibility Certification,

available at https://www.reginfo.gov/public/do/

PRAICList?ref_nbr=202311-3064-003.

Part 303—Filing Procedures

Section 303.227 establishes de

minimis thresholds for covered offenses

under which a convicted person would

not be required to submit a section 19

application. The current thresholds are

$2,500 and $1,000, which the final rule

increases to $3,500 and $1,225,

respectively

cation,

available at https://www.reginfo.gov/public/do/

PRAICList?ref_nbr=202311-3064-003.

Part 303—Filing Procedures

Section 303.227 establishes de

minimis thresholds for covered offenses

under which a convicted person would

not be required to submit a section 19

application. The current thresholds are

$2,500 and $1,000, which the final rule

increases to $3,500 and $1,225,

respectively. From the beginning of

2023 through the first half of 2025, the

FDIC received an average of five section

19 applications annually.80 Because

applications can be submitted by both

IDIs and individuals, and detailed

attribution is unavailable, the FDIC

conservatively assumes each application

represents a unique IDI. Assuming the

number of section 19 applications

declines in proportion to the percentage

increases in the applicable thresholds—

40 percent for the general de minimis

threshold and 22.5 percent for the

small-dollar theft threshold—the

number of annual applications is

expected to decline to approximately

four and three, respectively.

Part 335—Securities of State

Nonmember Banks and Savings

Associations

Section 335.801 requires disclosure of

extensions of credit to insiders in excess

of certain thresholds. The final rule

raises the current threshold of $5

million to $10 million.81 The FDIC

identified nine IDIs 82 that are subject to

the requirements under the Exchange

Act and are therefore potentially

affected. Because data on insider

indebtedness are unavailable, the FDIC

conservatively assumes all nine IDIs

could be affected, though the actual

number may be smaller. Raising this

threshold could reduce the number of

required insider loan disclosures for

affected IDIs, although the extent of

these reductions may vary according to

each IDI’s characteristics

nd are therefore potentially

affected. Because data on insider

indebtedness are unavailable, the FDIC

conservatively assumes all nine IDIs

could be affected, though the actual

number may be smaller. Raising this

threshold could reduce the number of

required insider loan disclosures for

affected IDIs, although the extent of

these reductions may vary according to

each IDI’s characteristics.

Part 340—Restrictions on Sale of Assets

of a Failed Institution by the Federal

Deposit Insurance Corporation

Section 340 restricts certain

individuals and entities from

purchasing failed-bank assets if they

caused a ‘‘substantial loss’’ to an

institution. The final rule raises the

minimum threshold for ‘‘substantial

loss’’ from $50,000 to $100,000. Based

on historical annual PEC340

submissions from 2019 through 2023,

the FDIC estimates approximately 140

submissions annually under the

baseline. The volume of submissions in

future periods depends on financial and

economic conditions and the volume

and characteristics of failed bank assets,

among other conditions, all of which are

difficult to predict. For analytical

purposes, the FDIC assumes that the 100

percent increase in the threshold

corresponds to a proportional increase

in submissions as a result of the final

rule, yielding an estimate of 280 unique

entities annually. The FDIC

acknowledges uncertainty regarding the

degree to which the updated threshold

will change the volume of submissions.

Part 347—International Banking

Section 347.111 establishes maximum

thresholds for (a) aggregate underwriting

commitments and (b) the equity

securities held for distribution and

dealing by foreign organizations held by

insured State nonmember banks. The

final rule doubles the current limits of

$60 million and $30 million to $120

million and $60 million, respectively

volume of submissions.

Part 347—International Banking

Section 347.111 establishes maximum

thresholds for (a) aggregate underwriting

commitments and (b) the equity

securities held for distribution and

dealing by foreign organizations held by

insured State nonmember banks. The

final rule doubles the current limits of

$60 million and $30 million to $120

million and $60 million, respectively.

Based on data from the Federal

Financial Institutions Examination

Council ’s National Information Center

(NIC), the FDIC identified 30 IDIs with

foreign subsidiaries, of which five are

State nonmember banks subject to part

347. Given information gaps on business

activity, the FDIC conservatively

assumes all five banks would be

affected.

Part 363—Annual Independent Audits

and Reporting Requirements

Part 363 contains multiple dollar

value thresholds tied to an IDI’s total

consolidated assets as of the beginning

of an IDI’s most recent fiscal year 83 and

one threshold related to compensation.

Specifically, the final rule:

• Updates the general applicability

threshold from $500 million to $1

billion in total assets, removing 778 IDIs

from the scope of 12 CFR 363.1(a).

• Updates the total assets thresholds

related to ICFR assessment from $1

billion or more to $5 billion or more,

removing 727 IDIs from the scope of 12

CFR 363.2(b)(3) and 12 CFR 363.3(b).84

• Updates the applicable thresholds

for minimum audit committee

requirements under 12 CFR 363.5(a)(2)

for IDIs between $500 million to $1

billion in total assets to IDIs between $1

billion to $5 billion, removing a net of

51 IDIs from scope; and under 12 CFR

363.5(a)(1) for IDIs between $1 billion

and $5 billion in total assets, removing

727 IDIs from scope.85

• Updates the $3 billion threshold for

additional audit committee

requirements to $5 billion, removing

123 IDIs from the scope of 12 CFR

363.5(b).86

• Updates the $100,000 compensation

threshold for independent directors

under Guideline 28(a)(4) to $120,000.87

Part 380—Or

nder 12 CFR

363.5(a)(1) for IDIs between $1 billion

and $5 billion in total assets, removing

727 IDIs from scope.85

• Updates the $3 billion threshold for

additional audit committee

requirements to $5 billion, removing

123 IDIs from the scope of 12 CFR

363.5(b).86

• Updates the $100,000 compensation

threshold for independent directors

under Guideline 28(a)(4) to $120,000.87

Part 380—Orderly Liquidation

Authority

Part 380 restricts persons who

participated in a transaction that caused

a substantial loss to a covered financial

company under part 380 from acquiring

any assets of a covered financial

company under part 380. The final rule

raises the minimum threshold of a

‘‘substantial loss’’ from $50,000 to

$100,000. As previously discussed, the

FDIC would receive PECs under part

380 only if it has been appointed

receiver for a covered financial

company. Based on internal data, the

FDIC estimates 66 PEC submissions

annually under the baseline.88 The

volume of submissions in future periods

depends on financial and economic

conditions and the volume and

characteristics of failed bank assets,

among other conditions, all of which are

difficult to predict. For analytical

purposes, the FDIC assumes that the 100

percent increase in the threshold

corresponds to a proportional increase

in submissions as a result of the final

rule, yielding an estimate of 132 unique

entities annually. The FDIC

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00015

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

t. For analytical

purposes, the FDIC assumes that the 100

percent increase in the threshold

corresponds to a proportional increase

in submissions as a result of the final

rule, yielding an estimate of 132 unique

entities annually. The FDIC

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00015

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55804

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

89 The dollar value threshold under 12 CFR part

363, appendix A, paragraph 28(b)(4), pertaining to

independence of management is not scheduled to

be periodically adjusted for inflation under the final

rule. This threshold was initially adopted to follow

the parallel threshold under the listing standards of

national securities exchanges. Therefore, the

revision under the final rule to increase this

threshold from $100,000 to $120,000 brings it into

alignment with these parallel thresholds. See

Nasdaq Stock Market Rules, Rule 5605(a)(2),

‘‘Definition of Independence;’’ New York Stock

Exchange Listed Company Manual, section

303A.02(b)(ii), ‘‘Independence Tests.’’

acknowledges uncertainty regarding the

degree to which the updated threshold

will change the volume of submissions.

Indexing Methodology

The final rule also implements an

indexing methodology that reflects

inflation to make future automatic

adjustments to most thresholds

discussed above.89 The FDIC does not

have the information necessary to

precisely estimate the number of entities

that will be affected by future

adjustments to these dollar thresholds

due to changes in inflation. However,

since the indexing methodology under

the final rule aligns these dollar

thresholds with their real values over

time, it will help ensure the number of

entities subject to the affected

regulations remains consistent with the

original policy intent.

C

stimate the number of entities

that will be affected by future

adjustments to these dollar thresholds

due to changes in inflation. However,

since the indexing methodology under

the final rule aligns these dollar

thresholds with their real values over

time, it will help ensure the number of

entities subject to the affected

regulations remains consistent with the

original policy intent.

C. Costs and Benefits of the Final Rule

The threshold updates in the final

rule are intended to help preserve

certain threshold levels in the FDIC’s

regulations in real terms to help

maintain their intended application and

policy objectives. The FDIC expects that

the overall effect will reduce

unnecessary compliance burden for

IDIs, other financial institutions, and

certain persons.

Part 303—Filing Procedures

Updating de minimis thresholds is

expected to reduce the number of

section 19 applications by an estimated

one and two annually. This would

lower compliance costs for affected IDIs

and individuals and potentially provide

more flexibility in hiring. Updating this

threshold would reduce the number of

individuals screened through the

section 19 process. The FDIC does not

have the information necessary to fully

quantify such effects but concludes that

the aggregate cost savings associated

with this change would be relatively

minor.

Part 335—Securities of State

Nonmember Banks and Savings

Associations

Updating the materiality threshold for

insider credit disclosures from $5

million to $10 million would likely

reduce the number of disclosures for the

estimated nine affected IDIs. This

change would modestly reduce

compliance costs while better aligning

reporting requirements with the

threshold level related to insider

indebtedness in real terms. Although

fewer transactions would meet the

disclosure threshold, the FDIC expects

that transparency into insider

relationships of supervisory concern

would be preserved

of disclosures for the

estimated nine affected IDIs. This

change would modestly reduce

compliance costs while better aligning

reporting requirements with the

threshold level related to insider

indebtedness in real terms. Although

fewer transactions would meet the

disclosure threshold, the FDIC expects

that transparency into insider

relationships of supervisory concern

would be preserved. Overall, the FDIC

views this as a modest refinement that

reduces unnecessary reporting without

diminishing oversight effectiveness.

Part 340—Restrictions on Sale of Assets

of a Failed Institution by the Federal

Deposit Insurance Corporation

Updating the minimum threshold for

‘‘substantial loss’’ from $50,000 to

$100,000 is expected to allow for more

individuals and entities to be eligible to

purchase assets from failed institutions,

increasing competition and potentially

raising bid prices. This would benefit

the DIF by improving recoveries. A

potential cost is a modest increase in the

risk of sales to less-qualified buyers, but

oversight processes remain in place to

mitigate this risk.

Part 347—International Banking

Updating underwriting and dealing

limits for foreign subsidiaries may

permit State nonmember banks to

engage in larger or more complex cross-

border transactions and improve

competitiveness with foreign

institutions. These actions may then

result in additional compliance

obligations for the State nonmember

bank from foreign regulatory regimes.

However, these costs are expected to be

modest relative to the institutions’

overall operating expenses and are

likely to be one-time or short-term in

nature, reflecting transitional

adjustments rather than ongoing

burdens. Moreover, because

participation in such activities remains

discretionary and market-driven, IDIs

are likely to undertake them only when

the expected returns outweigh these

rather incremental compliance costs

odest relative to the institutions’

overall operating expenses and are

likely to be one-time or short-term in

nature, reflecting transitional

adjustments rather than ongoing

burdens. Moreover, because

participation in such activities remains

discretionary and market-driven, IDIs

are likely to undertake them only when

the expected returns outweigh these

rather incremental compliance costs.

Part 363—Annual Independent Audits

and Reporting Requirements

The most substantial effects of the

final rule are associated with part 363,

where updated asset thresholds are

expected to significantly reduce the

number of IDIs subject to independent

audit and reporting requirements.

Approximately 778 IDIs with assets

between $500 million and $1 billion,

727 IDIs with assets between $1 billion

and $5 billion, and 123 IDIs with assets

between $3 billion to $5 billion would

see reduced compliance obligations.

These changes would lower audit-

related costs and help preserve certain

threshold levels in the FDIC’s

regulations in real terms to help

maintain their intended application and

policy objectives. While fewer mid-

sized IDIs would be subject to audit and

reporting requirements, oversight of the

largest and most complex institutions

would remain unchanged. Additionally,

to the extent that the appropriate

Federal banking agency exercises its

discretion to provide exemptive relief to

IDIs, as described above, such relief may

further attenuate compliance costs. The

FDIC does not expect these cost savings

to be outweighed by any significant

increase in the risk profile of IDIs

generally or any expected losses to the

DIF. As discussed above, the largest IDIs

would see no change in requirements.

Due to the tailored and measured

approach taken to the update of

thresholds contained in part 363, the

FDIC concludes these changes do not

significantly increase risk to the DIF

t these cost savings

to be outweighed by any significant

increase in the risk profile of IDIs

generally or any expected losses to the

DIF. As discussed above, the largest IDIs

would see no change in requirements.

Due to the tailored and measured

approach taken to the update of

thresholds contained in part 363, the

FDIC concludes these changes do not

significantly increase risk to the DIF.

Part 380—Orderly Liquidation

Authority

As with part 340, updating the

minimum threshold for ‘‘substantial

loss’’ under part 380 would expand

eligibility, increasing the number of

bidders for failed covered financial

company assets. This could improve

asset recovery values. A potential cost is

the inclusion of some less-qualified

buyers, though oversight mechanisms

are expected to limit this risk.

D. Overall Assessment

Across all parts of the FDIC’s

regulations, the threshold updates

provided by the final rule are expected

to reduce compliance obligations for

many smaller institutions while

expanding eligibility for certain

activities under parts 340 and 380.

Table 2 shows that the largest scope of

affected entities arises from the

amendments to part 363, where the final

rule would result in hundreds of IDIs no

longer expected to be subject to

enhanced audit and ICFR requirements.

Overall, the FDIC expects the changes to

result in reductions in regulatory

burden.

The final rule is expected to yield

positive net benefits by:

• Reducing compliance burden for

hundreds of smaller and mid-sized IDIs.

• Helping preserve threshold levels in

the FDIC’s regulations in real terms to

help maintain their intended

application and policy objectives.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00016

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

sitive net benefits by:

• Reducing compliance burden for

hundreds of smaller and mid-sized IDIs.

• Helping preserve threshold levels in

the FDIC’s regulations in real terms to

help maintain their intended

application and policy objectives.

VerDate Sep<11>2014

15:53 Dec 03, 2025

Jkt 268001

PO 00000

Frm 00016

Fmt 4700

Sfmt 4700

E:\FR\FM\04DER1.SGM

04DER1

khammond on DSK9W7S144PROD with RULES

55805

Federal Register / Vol. 90, No. 231 / Thursday, December 4, 2025 / Rules and Regulations

90 5 U.S.C. 553(d).

91 5 U.S.C. 804(2).

92 5 U.S.C. 801(a)(3).

93 5 U.S.C. 801(a)(1).

94 44 U.S.C. 3501 through 3521.

95 44 U.S.C. 3507(d).

96 5 CFR 1320.11.

97 FDIC Application Pursuant to Section 19 of the

Federal Deposit Insurance Act, OMB No. 3064–

0018, available at https://www.reginfo.gov/public/

do/PRAViewICR?ref_nbr=202407-3064-005.

98 5 CFR 1320.5(g).

• Enhancing market participation in

asset sales, which could improve

recoveries to the DIF.

Any potential costs, such as marginal

reductions in the frequency of reporting

or supervisory review, are expected to

be limited in scope and outweighed by

the benefits of restoring and preserving

threshold levels with their intended

application.

V. Administrative Law Matters

A. Administrative Procedure Act

The Administrative Procedure Act

(APA) requires an agency to publish a

substantive rule not less than 30 days

before its effective date, except when an

agency otherwise publishes in the final

rule good cause for providing for an

earlier effective date.90 The FDIC finds

that there is good cause to dispense with

the 30-day delayed effective date

generally prescribed by the APA for this

final rule.

The final rule updates for inflation the

dollar thresholds used to determine the

applicability

This text is long and has been trimmed here. Open the source document for the complete record.