FDIC Final Rule: Higher FDICIA Thresholds & Inflation Indexing
On November 25, 2025, the FDIC issued a final rule adjusting and indexing key regulatory thresholds across FDIC regulations, including the high-impact triggers in 12 CFR Part 363 (FDICIA). The intent is straightforward, modernizing asset thresholds that have become outdated due to institution growth and inflation and reduce compliance burden where the risk profile does not warrant the prior level of requirement.
For many insured depository institutions, especially those near the previous asset triggers, this rule meaningfully changes audit, internal control, and audit committee requirements and expectations.
The Part 363 changes that matter most:
General FDICIA applicability threshold moves up to $1 billion. The total asset threshold that triggers Part 363 annual independent audit and reporting requirements increases from $500 million to $1 billion. Institutions under $1B in total assets will no longer be pulled into Part 363 solely because they crossed the prior inflation-dated threshold.
ICFR requirements move up to $5 billion. The threshold for management’s annual Internal Control over Financial Reporting (ICFR) assessment and the auditor’s ICFR attestation increases from $1 billion to $5 billion. Institutions between $1 and $5 billion remain subject to Part 363 in general but will not be required to complete ICFR assessments or obtain auditor attestations under Part 363 until they cross $5B.
Audit committee thresholds shift upward. Minimum audit committee requirements previously tied to the $500M and $1B bands move to higher asset ranges. The lower band is now aligned to banks between $1B and $5B, and the upper band to banks at $5B or more. This reduces governance and composition mandates for institutions that are no longer in the revised ranges.
Additional audit committee requirements move to $5 billion. The trigger for the additional audit committee standards increases from $3 billion to $5 billion, further narrowing the group of banks required to meet the most prescriptive governance provisions.
Director independence compensation standard increases. The compensation threshold for a director to be considered independent of management rises from $100,000 to $120,000, aligning with broader market standards.
Automatic inflation indexing going forward
To avoid future threshold creep, the FDIC also adopted an ongoing indexing framework. Thresholds covered by the final rule will be adjusted automatically every two years based on cumulative consumer price index for urban wage earners and clerical workers (CPI-W) inflation. If cumulative CPI-W increases more than 8 percent between cycles, the FDIC may adjust earlier. Practically, this means asset triggers should remain aligned with real economic scale rather than slowly drifting downward in real terms.
Effective date and who feels this first
The rule is effective January 1, 2026. However, institutions may apply the revised asset thresholds for fiscal year 2025, provided they do not exceed the new thresholds in either 2025 or 2026. If an institution remains below the revised triggers for both years, Part 363 requirements tied to the former thresholds would not apply to fiscal years beginning after December 31, 2024.
Banks most affected, and those most likely to consider early adoption, fall into two groups. Institutions between $500M and $1B may exit Part 363 coverage entirely. Institutions between $500M and $1B may exit Part 363 coverage entirely, including for fiscal year 2025 if they elect early adoption and remain below the revised thresholds in both 2025 and 2026. Banks above $5B will continue to follow the full Part 363 framework.
Even where ICFR attestation is no longer required by rule, safety and soundness expectations, examiner focus, counterparties, and boards will still expect disciplined financial reporting and internal controls.
Institutions that exceed the revised thresholds in either 2025 or 2026 would remain subject to the applicable Part 363 requirements for the relevant fiscal years.
What banks should do now
Reconfirm your Part 363 status for 2025 and 2026. Use year-end and projected asset levels to determine whether you qualify for early adoption in 2025 and whether you will remain below the revised thresholds through 2026. Document this conclusion for management and the board.
Right-size your controls program instead of dismantling it. Many banks will use this change to refocus testing on the highest-risk areas while moving lower-risk processes to rotational coverage.
Align early with your external auditors. If your audit approach leveraged Part 363, but your institution qualifies for early adoption of the revised thresholds, ICFR scope, timing, and fees may shift for 2025 and 2026 audit work.
Check for non-FDICIA audit requirements. Holding company expectations, state regulators, debt covenants, FHLB programs, and major counterparties may still require audited statements or specific control evidence.
Update governance documentation where needed. If revised thresholds change audit committee composition requirements, confirm how charters, independence conclusions, and oversight cadence will adjust.
How CSH can help
CSH’s Financial Institutions team supports banks with the exact intersection this rule affects, regulatory compliance, right-sized internal controls, audit readiness, and governance support. We can help you determine applicability under the new thresholds, redesign an examiner-ready ICFR program scaled to your risk profile, coordinate efficiently with external auditors, and build a forward view of how inflation indexing and growth strategy may affect requirements in the coming years.
If you want a fast, practical view of what this final rule changes for your bank in 2026, including audit scope, controls expectations, and governance impacts, CSH is ready to help.
Connect with CSH’s Financial Institutions team to schedule a Part 363 impact review and build a right-sized compliance plan for the year ahead.
Zachary Dotzauer
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