FDIC Finalizes New FDICIA Thresholds for 2026 – How Institutions of all Asset Sizes Can Prepare

The amendments to 12 CFR Part 363 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) have been officially adopted by the Federal Deposit Insurance Corporation (FDIC). The amendments will be effective January 1, 2026. The update impacts the regulatory thresholds governing audit and reporting requirements. While this modernization of the rules offers relief to smaller and mid-sized institutions, maintaining strong, effective internal controls is essential for institutions of all asset sizes.

The final rule provides immediate relief for insured depository institutions (IDIs) that won’t be subject to the requirements under the new thresholds effective January 1, 2026.  Meaning those IDIs won’t need to comply with the applicable Part 363 requirements that remain in effect on December 31, 2025.

Updated FDICIA Asset Thresholds for Audit Requirements

The asset size thresholds for certain audit requirements represent the most significant change:

  • Independent external financial statement audits previously had an asset threshold greater than $500 million. This threshold increases to greater than $1 billion.
  • Independent external testing of FDICIA controls previously had an asset threshold of greater than $1 billion. This threshold increases to greater than $5 billion.

Please note that the updated thresholds will be evaluated and adjusted every two years based on changes in the non-seasonally adjusted Consumer Price Index for Uban Wage Earners and Clerical Workers (CPI-W). If CPI-W exceeds 8%, they’ll be adjusted before the two-year mark. The first future adjustment is expected to be effective October 1, 2027.

Additional changes include:

  • Increases in asset size thresholds for certain audit committee composition requirements, potentially easing the recruitment challenges in smaller markets.
  • The director independence compensation threshold increases to $120,000 from $100,000

Implications for Regional and Community Banks’ Internal Control Environment

Although small to mid-size financial institutions can expect relief, it’s important to maintain strong internal controls. They’re an essential foundation to the safety and soundness of any financial institution, regardless of size. Effective control environments empower institutions to use them strategically for growth and resilience.

Your response to these updated regulations will naturally reflect your institution’s size and structure, but don’t miss this opportunity to strategically re-evaluate and redirect your institution’s overall risk and internal controls framework.

Other Considerations

While part 363 has increased the audit requirement thresholds, there still exists an audit requirement for holding companies over $500 million as part of the Federal Reserve Board reporting requirements for the Y-6. In addition, the Department of Housing and Urban Development and Federal Housing Administration compliance audits will be impacted by this change as their definition of large and supervised lenders is based on the FDICIA threshold.

Strategic Planning & Growth

Does your institution’s overall strategy include plans to grow, make acquisitions or be acquired? This could impact regulatory requirements. If you made previous investments to establish strong internal control and governance structures, use them as a foundation for institutional resilience and regulatory confidence.  Also consider how compliance and documentation responsibilities for management and those charged with governance will need to adjust to continue maintaining an effective internal control environment.  Finally, make sure to assess the impact on your institutions risk assessment and internal audit functions.

Remember that thresholds will be evaluated every two years based on CPI-W changes. Make sure your long-term plans acknowledge this.

Anders Banking and Financial Institutions advisors can help maintain strong internal controls that protect the safety and soundness of your institution. From outsourced FDICIA testing to complete compliance audits, our advisors work closely with clients to overcome regulatory hurdles. Learn how, and the associated price, by requesting a meeting with an advisor below.

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