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February 9, 2026

Contributors: Alicia Prichard, CPA, Kevin Frank, CPA

For more than three decades,ÌýtheÌýFederalÌýDepositÌýInsuranceÌýCorporationÌýImprovement Act (FDICIA)Ìý—Ìýwhich includes 12 CFR Part 363,Ìýthe regulation thatÌýdictatesÌýhow large insured depositoryÌýinstitutions must comply with audit and reporting mandatesÌý—Ìýhas been in place to addressÌýthe savings and loan crisis of theÌý1980s.ÌýTheÌýFDICÌýrecentlyÌýupdatedÌýparts of theÌýActÌýwithÌýmany of theseÌýchangesÌý²ú±ð²Ô±ð´Ú¾±³Ù¾±²Ô²µÌý²õ³¾²¹±ô±ô±ð°ùÌý¾±²Ô²õ³Ù¾±³Ù³Ü³Ù¾±´Ç²Ô²õ.

New FDICIA RequirementsÌýfor 2026

OnÌýNov.Ìý25, 2025, the FDIC adopted amendments toÌýFDICIA,ÌýraisingÌýtotalÌýasset thresholds forÌýboardÌýaudit committeeÌýcomposition,Ìýindependent audits, and other reportingÌýobligations, therebyÌýreducingÌýcompliance burdens for smaller and mid-size institutions. Effective Jan.Ìý1, 2026,Ìýthe new total asset thresholds and corresponding requirementsÌýare as follows:Ìý

For institutions withÌý$1 billionÌýtoÌý$5 billionÌýin total assets:Ìý

• All audit committee members must be outside directors,ÌýaÌýmajorityÌýof whichÌýmust be independent of management.Ìý
• Mandatory independent external audit of financial statements.Ìý
• Management must attest to the effectiveness ofÌýinternalÌýcontrolsÌýincluding those critical to the bank’s operations and risk profile, IT systems,Ìýand fraud prevention.Ìý

For institutions with overÌý$5 billionÌýin total assets:Ìý

• MandatoryÌýInternalÌýControl overÌýFinancialÌýReporting (ICFR) assessmentsÌýand external auditor attestation.Ìý
• All audit committee members must be independentÌýoutsideÌýdirectors.Ìý
• Audit committeesÌýmustÌýinclude members with banking or relatedÌýfinancial managementÌýexpertise, have access to outside counsel, and not include anyÌýof the institution’sÌýlarge customers.Ìý

Which InstitutionsÌýdoÌýthe FDICIA ChangesÌýImpact?

Although theÌýrecent FDICIAÌýchanges removedÌýnearly 800Ìýinstitutions from theÌýgeneralÌýscope ofÌýapplicability forÌýPart 363,ÌýtheÌýregulationÌýcontinuesÌýto cover financialÌýinstitutionsÌýholdingÌýapproximately 95ÌýpercentÌýof industry assets.ÌýBanks with total assets that fluctuate around theÌý$1ÌýbillionÌýandÌý$5 billionÌýthresholds must closelyÌýmonitorÌýtheir total assetsÌýto plan to meet the different requirements.Ìý

The changesÌýto Part 363ÌýalsoÌýallowÌýfor future adjustments toÌýthe newÌýthresholds based on inflation.ÌýTheÌýlimits will be reviewed and potentially updated every two yearsÌýor, ifÌýinflation exceeds 8 percent in a single year,Ìýsooner.ÌýThe first planned update isÌýanticipatedÌýto be effective October 2027.Ìý

Benefits of FDICIA UpdatesÌý

Since these updatesÌýaddress outdated fixed-dollar thresholds that subjected smaller banks to requirements meant for largerÌýones,Ìýsmaller institutionsÌýshouldÌýexperience anÌýeasingÌýof financial reporting burdens that may free up resources and funding for other uses,Ìýsuch as investments in innovation, customer experience technology,ÌýandÌýfraud prevention.ÌýÌý

The updatesÌýalsoÌýrepresentÌýan opportunity to fully reassessÌýoverall riskÌýprofiles,Ìýinternal controls,Ìýand compliance efforts.Ìý

Moreover,Ìýeven thoughÌýtheÌýFDICIA updates have removed theÌýrequirement forÌýindependent external financial statement audits forÌýbanksÌýwithÌýunder $1 billion in assets, audit committees may choose toÌýcontinueÌýthese audits forÌýstrategicÌýplanningÌýpurposes andÌýgrowth projections,Ìýas well asÌýto inform decisions aboutÌýpotential acquisitions.Ìý

Finally, audit committees may find it easier to recruit members because the compensation threshold thatÌýdeterminesÌýwhether a director is independent of management increased from $100,000 to $120,000.Ìý

OurÌýteam members areÌýexperts at interpretingÌýtheseÌýandÌýotherÌýcomplianceÌýand regulatoryÌýchangesÌýandÌýassistingÌýfinancial institutions in evaluating and adjustingÌýinternal controls and compliance effortsÌýfor effective governance that supportsÌýlong-term growth objectives.ÌýFor personalizedÌýguidanceÌýand recommendationsÌýspecific to your financial institution, contactÌýKevin Frank, CPA,ÌýatÌý[email protected]ÌýorÌý989.799.9580,Ìýor Alicia Prichard, CPA, atÌý[email protected]ÌýorÌý734.302.4142.Ìý