# FDIC FIL-54-2025: Final Rule Adjusting and Indexing Certain Regulatory Thresholds > Federal · Agency guidance · In force URL: https://www.frixlaw.com/law-library/statutes/FDIC_FIL25054 ## Section - **Citation:** FDIC FIL-54-2025 - **Heading:** Final Rule Adjusting and Indexing Certain Regulatory Thresholds - **Jurisdiction:** Federal - **Kind:** Agency guidance - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** FDIC Financial Institution Letters / Final Rule Adjusting and Indexing Certain Regulatory Thresholds ## Text 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 c [Text truncated at 120,000 characters. The full text is on the page linked above.] ## Nearby sections - [FDIC FIL-1-2002 FOREIGN ASSETS CONTROL ACT](https://www.frixlaw.com/law-library/statutes/FDIC_FIL02001.md) - [FDIC FIL-1-2010 Employee Compensation Advance Notice of Proposed Rulemaking](https://www.frixlaw.com/law-library/statutes/FDIC_FIL10001.md) - [FDIC FIL-1-2015 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL15001.md) - [FDIC FIL-1-2018 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL18001.md) - [FDIC FIL-1-2024 Consolidated Reports of Condition and Income for Fourth Quarter 2023](https://www.frixlaw.com/law-library/statutes/FDIC_FIL24001.md) - [FDIC FIL-2-2019 DEPOSITORY INSTITUTION REPORTS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL19002.md) - [FDIC FIL-2-2020 Consolidated Reports of Condition and Income for Fourth Quarter 2019](https://www.frixlaw.com/law-library/statutes/FDIC_FIL20002.md) - [FDIC FIL-3-2017 Community Banking Conference 2016 Highlights](https://www.frixlaw.com/law-library/statutes/FDIC_FIL17003.md) - [FDIC FIL-4-2015 The FDIC Launches Web Page to Support Marketing of Failing Financial Institutions](https://www.frixlaw.com/law-library/statutes/FDIC_FIL15004.md) - [FDIC FIL-4-2018 Revisions to the Consolidated Reports of Condition and Income (Call Report) for March and June 2018](https://www.frixlaw.com/law-library/statutes/FDIC_FIL18004.md) - [FDIC FIL-4-2019 Banker Webinar: Update on the Standardized Export of Imaged Loan Documents Initiative](https://www.frixlaw.com/law-library/statutes/FDIC_FIL19004.md) - [FDIC FIL-4-2021 Revised Guidelines for Appeals of Material Supervisory Determinations](https://www.frixlaw.com/law-library/statutes/FDIC_FIL21004.md) - [FDIC FIL-4-2023 Guidance to Help Financial Institutions and Facilitate Recovery in Areas of California Affected by Severe Winter Storms, Flooding, Landslides and Mudslides](https://www.frixlaw.com/law-library/statutes/FDIC_FIL23004.md) - [FDIC FIL-4-2025 FDIC Statement of Policy on Bank Merger Transactions](https://www.frixlaw.com/law-library/statutes/FDIC_FIL25004.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FDIC_FIL25054. Check the current official text before relying on it. Not legal advice.