FDIC Final Rule Adjusts and Indexes Regulatory Thresholds

The FDIC has finalized a rule that provides burden relief for community banks through an increase of certain regulatory thresholds.

In under a minute

On Nov. 25, 2025, the Federal Deposit Insurance Corp. (FDIC) board of directors issued a final rule, “Adjusting and Indexing Certain Regulatory Thresholds.”
The final rule updates certain regulatory thresholds to reflect historical inflation, including thresholds related to annual independent audits and reporting requirements under 12 Code of Federal Regulations (CFR) Part 363. The rule also calls for future threshold adjustments based on an indexing methodology.
12 CFR 363, which regulates Sec. 112 of the FDIC Improvement Act (FDICIA) is amended, in part, as follows:

The general scope of insured depository institutions (IDIs) subject to Part 363.1(a) is increased from $500 million of assets to $1 billion.
The requirement for IDIs to have an audit committee comprising outside directors is raised from $500 million in total assets to $1 billion.
Part 363.3(b), which stipulates when an IDI is required to have an audit of its internal control over financial reporting (ICFR), is amended to increase the threshold for compliance from $1 billion of total assets to $5 billion.
Part 363.5(b), which adds additional audit committee governance requirements, now applies when an IDI exceeds $5 billion (up from $3 billion).
The thresholds continue to be measured using total assets as of the beginning of the fiscal year and will be indexed to inflation, generally measured every two years. The final rule does not allow for downward indexing – only upward.

If an IDI will no longer be subject to Part 363 requirements under the updated thresholds in effect as of Jan. 1, 2026, the final rule provides immediate regulatory relief by clarifying that such an institution is not required to comply for any open fiscal year prior to the effective date of the final rule.

Breaking it down

On Nov. 25, 2025, the FDIC board of directors approved issuance of the final rule “Adjusting and Indexing Certain Regulatory Thresholds.” The final rule generally is consistent with the provisions included in the proposed rule issued earlier in 2025.

Scope

The final rule adjusts the asset thresholds for compliance with seven rules and regulations, one of which is 12 CFR 363. This regulation codifies the requirements for compliance with Sec. 112 of the FDICIA, which requires IDIs to receive an audit of their financial statements and/or an audit of their ICFR based on certain asset thresholds being met. Since 2005, the threshold for an IDI’s independent audit of its financial statements has been set at $500 million in total assets, and the threshold for an audit of the IDI’s ICFR has been set at $1 billion in total assets, both measured as of the first day of the fiscal year.

Crowe observation: General instructions to the Federal Reserve’s FR Y-6, “Annual Report of Holding Companies,” highlight that a bank holding company with total consolidated assets of $500 million or more must have an annual audit of its consolidated financial statements by an independent public accountant. For purposes of the audit requirement, an institution’s total assets are measured as of the beginning of its fiscal year.

The law also imposes compliance requirements on audit committees of IDIs based on the total assets of the IDI. The final rule increases these thresholds and indexes them to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), assessed generally every two years. As such, these thresholds will be dynamic rather than static going forward.

Citation	Requirement	Current threshold	Threshold as finalized
363.1(a)	Annual reporting	$500 million	$1 billion
363.2(b)(3) & 363.3(b)	ICFR	$1 billion	$5 billion
363.5(a)(2)	Audit committee composition – from board of directors	$500 million	$1 billion
363.5(a)(1)	Audit committee composition – outside directors independent of management	$1 billion	$5 billion
363.5(b)	Audit committee composition of large institutions At least two members with “banking or related financial management expertise” Access to its own outside counsel No large customers of the institution	$3 billion	$5 billion

Indexing

The final rule introduces an indexing feature to the asset thresholds impacted. Under the rule:

The impacted thresholds are adjusted at the end of every consecutive two-year period based on the cumulative percent change of the nonseasonally adjusted CPI-W since the effective date of the final rule.
If, however, the cumulative percentage change in the nonseasonally adjusted CPI-W during any intervening calendar year since the most recent adjustment exceeds 8%, then the thresholds subject to the indexing methodology will be adjusted during the first quarter of the following calendar year.
The FDIC generally will announce threshold adjustments pursuant to the indexing methodology by publishing a final rule in the Federal Register.

Under the indexing methodology, the FDIC would not lower thresholds in any given year to reflect periods of deflation. A period of deflation would 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.

Crowe observation: Under the final rule, IDIs will need to consider both their projected asset growth and the CPI-W as they plan for ongoing compliance with the FDICIA. As the thresholds for FDICIA compliance are now dynamic, IDIs that are currently in scope of the compliance requirements of 12 CFR 363 might be exempt from those requirements in the future, even in situations where the IDI’s assets increase.

Effective date

The thresholds adjusted by the final rule become effective on the first day of the calendar quarter that begins on or after the date on which the regulations are published in final form. However, IDIs that will not be required to comply with certain provisions of Part 363 once the final rule becomes effective (Jan. 1, 2026) are not required to comply with these provisions in the current fiscal year (Dec. 31, 2025).

Crowe observation: Crowe expects the final rule to be published to the Federal Register in December 2025 and be effective on Jan. 1, 2026. IDIs will use the thresholds in the final rule to determine compliance with Sec. 112 of the FDICIA for the subsequent reporting year (generally the first day of an IDI’s reporting year). If the IDI is below the revised thresholds at the measurement date on or after Jan. 1, 2026, the IDI is permitted to comply with the amended rules in the reporting period prior to that measurement date.

Next steps

IDIs will need to evaluate the impact to their compliance requirements under the FDICIA and determine what changes, if any, may be made to internal audit plans, internal control testing, and other compliance requirements affected by the final rule.

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