Updated December 5, 2025: The FDIC has finalized the rule updating FDICIA thresholds. Read our blog here for more details.
Could FDICIA thresholds get an update for the first time in nearly 30 years? A notice of proposed rulemaking that would update certain regulatory thresholds to reflect historical inflation has been approved by the Federal Deposit Insurance Corporation (FDIC) Board of Directors. This proposal would specifically impact thresholds under 12 CFR part 363, otherwise known as FDICIA, which governs annual independent audits and reporting requirements for insured depository institutions.
The proposal aims to adjust those thresholds in the future based on a proposed indexing methodology. Ultimately, this change is expected to provide a more durable framework that preserves certain regulatory thresholds, sidestepping unintended or undesirable policy consequences.
What’s Changing Under the New Proposed FIDCIA Rule?
The changes from the proposed rule would potentially remove nearly 800 institutions from Part 363’s scope while providing coverage to approximately 95% of industry assets. FDICIA thresholds will increase across the board:
- General Applicability Threshold – Increases from $500 million to $1 billion in total assets.
- Threshold for Internal Control over Financial Reporting (ICFR) Assessments – Increases from $1 billion to $5 billion.
- Director Independence Compensation Threshold – Several will increase from $1 or $3 billion to $5 billion.
- Future threshold adjustments – Could take place under an indexing methodology that hasn’t been determined yet.
FDIC Reasoning Behind FDICIA Proposal
According to the FDIC, there are two main reasons why they’ve proposed revisions:
- Adjusting for Inflation – Most FDICIA thresholds haven’t changed to reflect inflation or industry consolidation over the last 30 years.
- Reducing Burdensome Requirements – Certain institutions, particularly smaller ones and those in rural areas, have struggled to meet audit committee composition and ICFR requirements. The proposal would, in theory, be able to ease the burdens experienced by these entities while still promoting safe and sound practices.
Next Steps
Smaller financial institutions, those with assets below the newly proposed thresholds, could see lower compliance costs and fewer reporting obligations. Although these institutions stand to benefit from eased regulations, the benefit should still be evaluated against any risk mitigation strategies your institution already has in place.
Larger institutions who are above the new thresholds would still be subject to the same ICFR and audit requirements to ensure financial transparency and maintain strong risk management strategies. Audit committee members, meanwhile, may benefit from reduced recruitment needs, particularly those in smaller markets.
The FDIC is seeking public comments on the proposal, including answers to the following questions:
- When should the proposed rule be made effective?
- What are the benefits of the various proposed indexing methodologies to adjust reporting thresholds in the future?
- What are some potential unintended consequences of divergence from regulatory frameworks such as FNMA, HUD, the Federal Reserve and state bank regulatory requirements?
- Do the new thresholds strike the right balance between regulatory burden reduction and ensuring risk mitigation?
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