On September 17, 2026, the Federal Deposit Insurance Corporation issued a notice of proposed rulemaking (the “Proposal”)[1] to modernize and reform its framework for reviewing transactions under the Bank Merger Act (the “BMA”).[2] The Proposal is intended to “improve the speed, certainty, and predictability of the FDIC’s bank merger framework,” assure that the FDIC’s review of merger transactions is “appropriately tailored to reflect the type, size, and complexity of the potential risks of a merger transaction,” and “result in a substantial and meaningful reduction in regulatory burden.”[3]

Tailored Filing Requirements and Processing Times

The Proposal would be most directly relevant to state nonmember banks considering acquiring insured depository institutions (“IDIs”) and IDIs considering mergers with noninsured institutions, which transactions would be subject to the FDIC’s approval under the BMA. The Proposal would define categories of merger transactions that would be subject to streamlined filing requirements and processing procedures and faster review timelines. In particular, certain de minimis merger transactions would be eligible for rapid processing, streamlined letter filing requirements, and deemed approval, and certain corporate reorganizations and other merger transactions involving eligible depository institutions would qualify for expedited processing. The remaining merger transactions generally would be subject to a 90-day standard processing period if the resulting institution would have less than $50 billion in assets, among other conditions, while all other transactions subject to standard processing generally would be subject to a 150-day processing period.

The Proposal would also narrow the circumstances in which the FDIC may remove a filing from expedited processing and reduce public notice requirements. In addition, the Proposal would clarify the scope of transactions deemed “mergers in substance” for purposes of the BMA and establish a new notice and non-objection process for certain significant asset transfers that do not constitute mergers under the BMA.

Revised Evaluation of the BMA Statutory Factors

The Proposal would codify a revised FDIC approach to evaluating the BMA’s statutory factors. The most significant changes relate to the competition factor. The initial Herfindahl-Hirschman Index (“HHI”) screen would be revised to treat the deposits of banks, thrifts and credit unions equally for purposes of market share calculations. Moreover, to account more fully for competition from institutions serving customers outside the geographic markets in which the institutions maintain physical branches, the screen would also allocate a “representative portion” of banks’ and thrifts’ “centrally booked deposits” across geographic markets nationwide based on population. In addition, the Proposal would codify a new competition safe harbor aligned with the initial screen HHI thresholds set forth in the 1995 Bank Merger Competitive Review Guidelines, below which the banking agencies generally presume a transaction is unlikely to raise significant competitive effects concerns that warrant further review.

The Proposal would also establish a new financial stability safe harbor, add “fair banking” considerations to the convenience and needs factor for transactions resulting in an institution with more than $50 billion in assets, and provide additional specificity regarding key considerations for the other statutory factors. Consistent with its agency-wide initiative to index dollar values in its regulations to maintain the chosen degree of tailoring over time, the FDIC would index the dollar thresholds in its proposed bank merger review regulations.

Implications

If adopted, the Proposal could materially reduce the time and uncertainty associated with many merger transactions requiring FDIC approval under the BMA.[4] The revised approach to evaluating the BMA statutory factors, including the codification of safe harbors and emphasis on taking into account remediation plans for identified supervisory weaknesses, is intended to increase the predictability of the FDIC’s evaluation of the BMA statutory factors and the likelihood of favorable findings with respect to certain factors. The revised competitive effects analysis is designed to be broadly favorable toward merger approval, but could make the safe harbor less attainable in certain limited circumstances. Relevant institutions may therefore want to review the prospective impact of the Proposal in relation to their specific deposit profile and the geographic markets in which they operate or wish to expand.

It remains to be seen whether the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, the two other federal banking regulators responsible for bank merger reviews where their supervised institutions are the resulting institutions, as well as the Department of Justice, which is responsible for reporting to the federal banking regulators on the competitive aspects of bank and bank holding company mergers, will also consider revisions to their relevant merger review policies and standards and whether any such revisions would align with the approaches in the Proposal. If the other agencies and the DOJ do follow the FDIC’s lead, bank merger activity could be meaningfully encouraged.

The FDIC is seeking comments on all aspects of the Proposal and has included more than 100 specific questions in the Proposal. Comments on the Proposal will be due on November 23, 2026.

Background

Mergers and acquisitions involving U.S. banks and their holding companies are subject to regulatory approval requirements under applicable federal, and in certain cases state, laws, including the BMA and the Bank Holding Company Act (the “BHCA”).[5]

The BMA prohibits an IDI from merging or consolidating with any other IDI, or acquiring the assets of, or assuming liability to pay any deposits made in, any other IDI, in each case, except with the prior written approval of the responsible agency.[6] The responsible agency is generally the primary federal banking regulator for the acquiring, assuming or resulting institution in such a transaction: (i) for state member banks, the Federal Reserve, (ii) for national banks and federal savings associations, the OCC, and (iii) for state nonmember insured banks and state savings associations, the FDIC.

The BMA also requires the FDIC’s prior written approval before any IDI may merge or consolidate with a noninsured institution, assume the liability to pay deposits or similar liabilities of a noninsured institution, or transfer assets to a noninsured institution in consideration of the assumption of liabilities for any portion of the deposits made in the IDI.[7]

In addition, because most U.S. banks are owned by bank holding companies, a bank merger typically involves a merger between bank holding companies and the acquisition of control of an IDI by a bank holding company, which requires the prior approval of the Federal Reserve pursuant to Section 3 of the BHCA.[8]

Both the BMA and the BHCA set forth a substantially similar set of statutory factors that the FDIC, Federal Reserve, and OCC must consider in determining whether to approve any merger transaction: (i) the transaction’s impact on competition; (ii) the financial and managerial resources and future prospects of the existing and proposed institutions; (iii) the convenience and needs of the community to be served; (iv) the institutions’ effectiveness in combating money laundering; and (v) the risk to the stability of the U.S. banking or financial system.[9]

Over the years, the FDIC, Federal Reserve, and OCC have issued numerous policy statements, manuals, guidelines, and supervisory letters, as well as published decisions on merger applications, that address how they consider these statutory factors. The DOJ has also issued merger guidelines and additional guidance addressing application of the generally applicable merger guidelines to the banking industry.[10]

The Proposal represents a substantial departure from the 2024 policy statement issued by the FDIC regarding its review of merger transactions. On September 17, 2024, the FDIC under prior leadership replaced its longstanding Statement of Policy on Bank Merger Transactions, which had been initially adopted in 1998 and most recently amended in 2008 (the “1998 Statement of Policy”), with a revised framework that signaled an intent to exercise a broader degree of discretion to deny various types of merger proposals and included a number of adverse presumptions (the “2024 Statement of Policy”).[11] The 2024 Statement of Policy adopted an expansive interpretation of the asset acquisitions constituting “mergers in substance,” required applicants to demonstrate that the institution resulting from a merger transaction would “better meet” the convenience and needs of the community to be served “than would occur absent the merger,” expressed a general expectation for public hearings to be held for certain larger transactions, and provided for heightened financial stability scrutiny of transactions resulting in institutions with at least $100 billion in assets.[12]

In 2025, the FDIC rescinded the 2024 Statement of Policy, citing concerns that it introduced uncertainty and subjectivity into the merger review process, and reinstated the 1998 Statement of Policy as an interim measure intended to restore a more familiar and predictable framework while the FDIC conducted a broader review.[13] The Proposal is the product of that review. If the Proposal is finalized, the FDIC expects to rescind the currently operative 1998 Statement of Policy and replace it with the new regulatory framework.[14]

Definition of “Merger Transaction”

Under the FDIC’s current regulations, the definition of “merger transaction” generally tracks the statutory language of the BMA describing the types of transactions subject to the FDIC’s prior approval under the BMA, as discussed above.

The Proposal would not alter the scope of transactions that the FDIC has treated as merger transactions subject to its prior approval under the BMA, but it would expressly provide that the definition of “merger transaction” includes a “merger in substance”[15] and would replace the FDIC’s current case-by-case, and expansive, determination of whether a transaction constitutes a “merger in substance” with a clear asset-based threshold. Specifically, the FDIC would define “merger in substance” to mean any transaction or series of transactions over a rolling 12-month period in which an IDI directly or indirectly acquires all or substantially all (i.e., at least 80%) of another institution’s assets.[16] The FDIC acknowledges that, as a practical matter, mergers in substance typically would be limited to acquisitions of assets by an IDI from a nonbank entity because comparable transactions by an IDI with another IDI nearly always involve a transfer of deposit liabilities, which alone would trigger application of the BMA.[17] If adopted, this revised approach could reduce the number of transactions that historically have been subjected to the BMA application process by the FDIC despite not being treated as mergers for state law purposes.

Tailored Merger Filing and Processing Framework

For transactions subject to FDIC approval under the BMA, Subpart D of 12 C.F.R. Part 303 currently governs the filing and processing procedures. The Proposal would reorganize this processing framework around three rapid, expedited, and standard processing tracks, with specified filing requirements, eligibility criteria, and processing periods for each. The revised framework would also limit the circumstances in which the FDIC may remove a filing from expedited processing and broadly reduce the public notice requirements. It would also clarify when a filing will be regarded as “substantially complete” for filings subject to the FDIC’s approval under the BMA. This revised framework, if adopted, would significantly reduce the processing time for applications, including reducing the “hold up” effect of certain protestants.

Rapid Processing for De Minimis Merger Transactions

The Proposal would create a new category of “de minimis merger transactions” eligible for streamlined letter filing and “rapid processing.” A transaction would qualify if:

• the assets being acquired are less than both the annually adjusted lower Hart-Scott-Rodino threshold (currently $133.9 million)[18] and 5% of the acquiring IDI’s assets; or
• the transaction is a corporate reorganization in which an IDI acquires one or more operating subsidiaries and its legal and financial risks are substantially identical before and after the transaction.[19]

In addition, each institution involved must, to the extent applicable: (i) have received an FDIC-assigned composite rating of 3 or better under the Uniform Financial Institutions Rating System (“UFIRS”) as a result of its most recent federal or state examination; (ii) have received a satisfactory or better Community Reinvestment Act (“CRA”) rating from its primary federal regulator at its most recent examination, if subject to CRA examination; (iii) have received a compliance rating of 1, 2, or 3 from its primary federal regulator at its most recent examination; (iv) be well-capitalized; and (v) not be subject to a cease-and-desist order, consent order, prompt corrective action directive, written agreement, memorandum of understanding, or other administrative agreement with its primary federal regulator or chartering authority.[20] The resulting institution must also be well-capitalized immediately following the transaction.[21]

A transaction satisfying these criteria may be submitted through a streamlined letter filing containing the transaction agreements and related corporate documents, recent financial information for the parties, pro forma financial information for the resulting institution, and confirmation of the required public notice.[22] A substantially complete letter filing for a de minimis merger transaction would, unless the DOJ objects on competition grounds within the statutory period, be deemed approved on the later of: (i) five business days after the FDIC receives a substantially complete filing; and (ii) five business days after the FDIC receives a competitive factors report confirming that the Attorney General does not object, the statutory review period expires without such a report, or any additional review period requested by the Attorney General ends.[23] Accordingly, a corporate reorganization that meets the criteria for a de minimis merger transaction would be deemed approved five business days after the FDIC receives a substantially complete filing, since such transactions do not involve the issuance of a competitive factors report by the DOJ.

Expedited Processing for Corporate Reorganizations That Are Not De Minimis Merger Transactions

The FDIC’s current regulations define a “corporate reorganization” as a merger transaction involving solely an IDI and one or more of its affiliates.[24] The Proposal would clarify that the affiliation must exist at the time of filing. A transaction therefore would not qualify as a corporate reorganization merely because the institutions became affiliated through a related contemporaneous holding company merger.

A corporate reorganization that does not qualify as de minimis would receive expedited processing if the resulting institution would be well-capitalized and either:

• all parties received an FDIC-assigned UFIRS composite rating of 3 or better at their most recent federal or state examination, to the extent applicable; or
• the assets being acquired do not exceed 25% of the acquirer’s assets as reported in its Call Report for the immediately preceding quarter, and the acquirer would be an “eligible depository institution.”[25]

The FDIC generally would be required to act by the later of: (i) 30 days after receiving a substantially complete filing; and (ii) for certain interstate transactions, five business days after receiving confirmation that the applicant has satisfied the applicable host-state filing requirements.[26]

Expedited Processing for Eligible Depository Institutions Engaging in Merger Transactions That Are Not Corporate Reorganizations or De Minimis Merger Transactions

The FDIC’s current regulations provide expedited processing if the resulting institution would be well-capitalized and either: (i) all parties are eligible depository institutions; or (ii) the acquirer is an eligible depository institution and the assets being acquired do not exceed 10% of its assets.[27] For merger transactions involving eligible depository institutions that do not qualify for the new de minimis or corporate-reorganization processing procedures, the Proposal would retain this framework but increase the asset threshold from 10% to 25%.[28]

The Proposal would otherwise largely retain the existing expedited processing framework for eligible depository institutions. Unless the DOJ objects on competition grounds within the applicable statutory period, the FDIC would be required to act by the latest of: (i) 45 days after receiving a “substantially complete” filing (as discussed below); (ii) 10 days after the final required notice publication; (iii) five business days after receiving a competitive factors report confirming that the DOJ does not object, or after the statutory review period expires without a report; and (iv) for certain interstate transactions, five business days after receiving the required confirmation that the applicant has satisfied the applicable host-state filing requirements.[29]

Standard Processing

Transactions that do not qualify for “rapid processing” or “expedited processing” would be placed into one of two “standard” processing categories:

• The FDIC would be required to act within 90 days after receiving a substantially complete filing if the resulting institution would have less than $50 billion in assets, authority to act on the filing is delegated to FDIC staff rather than reserved to the FDIC Board,[30] and consummation would not depend on action by another federal regulator. Because many bank mergers occur in connection with a related bank holding company transaction requiring Federal Reserve approval under Section 3 of the BHCA, the requirement that consummation not depend on action by another federal regulator could exclude a significant portion of merger transactions from the 90-day processing category.[31] The FDIC could extend the 90-day period for up to 90 additional days due to “extenuating circumstances, such as significant credit or liquidity issues due to accounting errors affecting one of the institutions involved in the merger transactions.”[32]
• For all other transactions subject to standard processing, the FDIC would be required to act within 150 days after receiving a substantially complete filing. The FDIC could extend that period by up to 120 additional days—to a total of 270 days—due to extenuating circumstances.[33]

The FDIC would be required to provide the applicant with a specific reason for an extension. The Proposal states that an extension should not be based on “internal delays within the FDIC’s control,” “for example, due to the FDIC’s workload.”[34]

A separate processing timetable would continue to apply to filings by state savings associations, consistent with the Home Owners’ Loan Act. For a merger filing by a state savings association that does not qualify for “rapid processing” or “expedited processing,” the FDIC must act within 60 days after receiving a substantially complete filing, subject to a possible 30-day extension for materially inaccurate or incomplete information.[35]

Removal from Expedited Processing

The Proposal would limit the FDIC’s discretion to remove filings from expedited processing based on adverse public comments or CRA protests. An adverse comment would support removal only if it is supported by the supervisory record or other available information and warrants additional investigation or review.[36] A CRA protest similarly would have to raise a significant CRA concern, be supported by the available record, and warrant further investigation or review.[37] The Proposal would also codify that “[t]he FDIC expects the removal of a filing from expedited processing to be rare” and that “[t]he filing of an adverse comment or CRA protest shall not automatically remove a filing from expedited processing.”[38] This represents a substantial departure from historical policy at all three agencies and could result in a significant acceleration of regulatory action and reduce the hold-up power of certain protestants.[39]

Notably, these revisions would apply to all filings subject to removal from expedited processing under Part 303 of the FDIC’s regulations, not only merger filings.[40] Part 303 also governs other filings subject to public notice requirements and evaluation of CRA performance, including filings relating to, among other matters, deposit insurance, the establishment and relocation of domestic branches and offices, and changes in bank control.[41]

“Substantially Complete” Determination

The FDIC’s current regulations do not define a “substantially complete” filing or establish a deadline for determining whether a filing is complete or substantially complete. The Proposal would clarify when a filing is substantially complete—and therefore when the applicable processing period begins—by defining the term to mean that the FDIC has received sufficient information to evaluate and make a determination on the statutory factors and confirm that the applicant has complied with its obligations under applicable law.[42]

The Proposal would also establish a defined process for making that determination. The FDIC would be required to identify missing information in writing within 21 days after receiving a filing; otherwise, the filing would be deemed substantially complete as of the date received.[43] Where the FDIC notifies an applicant that its filing is not substantially complete, the applicant would have 30 days from receipt of such notification to provide the requested information.[44] If the applicant fails to furnish the requested information within that timeframe, the FDIC may return the filing as incomplete without rendering a decision.[45] An applicant is allowed to resubmit a filing that is returned.

Public Notice Requirements

The FDIC’s current regulations generally require an applicant to publish notice of a proposed merger transaction in a newspaper of general circulation on at least three occasions at approximately equal intervals, with the final publication occurring approximately 25 days after the first publication.[46] Public comments generally must be received within 30 days after the first publication.[47] The Proposal would retain the public notice requirement pursuant to the BMA but reduce the required number of publications and tailor the comment period to the type of transaction:

• For a transaction that is not a corporate reorganization, notice would be published twice—once as close as practicable to the filing date, but no more than five days before filing, and again approximately 20 days later. The 30-day comment period would remain unchanged.[48]
• For a corporate reorganization, notice would be published once. The comment period would be reduced from 30 days to 15 days unless the transaction also qualifies as de minimis.
• A de minimis merger transaction would remain subject to the applicable publication requirement, but the Proposal would eliminate the public comment period.[49]
• For a transaction requiring expedited action because of an emergency, the Proposal would reduce the publication requirement from twice to once while retaining the 10-day comment period. The existing exception from publication for transactions involving a probable failure would remain unchanged.[50]

Separately, the FDIC is considering, and seeking comment on, whether to define “newspaper of general circulation” as “a publicly available medium of communication reasonably calculated to provide notice to members of the community.”[51] Under this alternative, which is not included in the proposed regulatory text, an applicant could be permitted to publish notice only once if it remains publicly available throughout the applicable publication or comment period.[52] The definition would apply to all filings under Part 303 requiring publication in a newspaper of general circulation, not only merger filings.[53]

Significant Asset Transfers

The Proposal would establish a new notice and non-objection process for certain significant asset transfers. A “significant asset transfer” would be defined as a transaction or series of transactions by an FDIC-supervised institution with the same or affiliated counterparties over a rolling 12-month period that increases the institution’s assets by at least 25% but does not otherwise constitute a merger transaction.[54] This notice and non-objection framework would not apply to transactions that are otherwise subject to FDIC approval or filing requirements.

In evaluating the notice relating to a significant asset transfer, the FDIC would consider the capital level of the resulting institution, the transaction’s conformity with applicable law, the transaction’s purpose, and the transaction’s effect on safety and soundness.[55] The FDIC would be required to issue a decision within 30 days after receiving the notice unless it notifies the applicant that an extension is necessary due to extenuating circumstances and describes in the notice the extenuating circumstances with specificity.[56] Under the Proposal, the FDIC may extend the processing period once by up to 60 additional days, for a maximum review period of 90 days.[57] No public notice, public comment, or hearing procedures would apply to a significant asset transfer notice, which would be deemed approved if the FDIC does not act within the applicable 30- or 90-day period.[58]

The proposed requirements have some similarity to the OCC’s substantial asset change framework, which requires a national bank or federal savings association to obtain prior OCC approval for specified asset changes, including acquisitions or expansions planned to increase the institution’s size by more than 25% in a one-year period.[59] The two frameworks would use similar core review factors, although the FDIC framework would operate through notice and non-objection and provide for deemed approval, rather than requiring affirmative prior approval.[60]

Revised Evaluation of the BMA Statutory Factors

The Proposal would codify the standards and considerations the FDIC uses to evaluate the statutory factors under the BMA in a new Section 333.5 of its regulations, in contrast to the historical approach of addressing them principally through the agency’s Statement of Policy and other agency practices. Fundamentally, the proposed framework would direct the FDIC to: (i) tailor its review to the structure, scale, and materiality of the transaction; (ii) place greater emphasis on the attributes of the resulting institution and the transaction’s cumulative benefits and impact; and (iii) give particular consideration to thoughtfully tailored plans, supported by reasoned metrics and realistic timelines, to timely remediate unresolved deficiencies identified in the supervisory records of the institutions involved.

The Proposal’s most significant substantive changes relate to the competition, financial stability, and convenience and needs factors, as discussed below. The revised competition analysis would incorporate the deposits of all banks and thrifts and credit union shares, as well as “representative portions” of “centrally booked” deposits into the initial HHI screen and establish a safe harbor consistent with the HHI thresholds in the 1995 Bank Merger Competitive Review Guidelines. The Proposal would also establish a financial stability safe harbor and add “fair banking” considerations to the convenience and needs analysis for transactions resulting in an institution with more than $50 billion in assets. Other provisions would provide additional detail regarding the FDIC’s consideration of the financial and managerial resources and anti-money laundering (“AML”) statutory factors, including its approach toward evaluating the resulting institution’s financial resources and ability to integrate the transaction.

The enhanced degree of consideration that would be given to remediation plans under the Proposal could have significant implications for applicants with unresolved weaknesses that have been identified under the supervisory process. The Proposal stresses that in evaluating any of the statutory factors, the FDIC could find favorably despite an identified weakness if the applicant presents an effective remediation plan. The FDIC observes that such plans should be “thoughtful” and “tailored” and based on “reasoned metrics and realistic timelines.”[61] The FDIC would retain discretion, however, to make an unfavorable finding or deny a filing where it views the proposed remediation as inadequate.

Competition

Before acting on a merger transaction, the BMA generally requires the responsible agency to request a report from the DOJ on the transaction’s competitive effects.[62] That requirement does not apply if the transaction involves solely an IDI and one or more of its affiliates or if the agency determines that immediate action is necessary to prevent the probable failure of an institution involved in the transaction.[63] The BMA also prohibits approval of a transaction that would result in a monopoly or may substantially lessen competition, unless the latter effects are clearly outweighed in the public interest by the transaction’s probable benefits in meeting the convenience and needs of the community.[64]

Within this statutory framework, the Proposal would change the FDIC’s treatment of thrift deposits and credit union shares, essentially treating banks, thrifts, and credit unions equally for purposes of the initial HHI screen. The FDIC would include all deposits of bank and thrift branches located in the relevant geographic market, eliminating its current practice of presumptively weighting thrift deposits at 50%, and would now include credit union shares in the initial HHI calculation as well.[65] These changes generally would make it easier for banks to merge in markets with a significant thrift or credit union presence.

Another significant change responds to the FDIC’s observation that “technological innovations such as the internet and mobile phones . . . allow banks and nonbanks to offer products and services nationwide much more easily than in the past.”[66] Under the current frameworks used by the DOJ and the federal banking agencies, the set of competitors that are assigned market shares for the purpose of performing HHI analysis with respect to a local geographic market is generally limited to institutions with a physical branch in that market.[67] The Proposal recognizes that in the modern-day economy customers often obtain banking services from competitors without a local branch and that many banks and thrifts maintain “centrally booked” deposits that “are associated with depositors who may be living anywhere in the country.”[68]

With regard to every geographic market in the United States, the Proposal would seek to reflect the competitive presence of institutions that operate nationwide through non-branch channels by allocating to each local market a proportion of the total amount of “centrally booked” deposits outstanding in the United States that corresponds to a given local market’s share of the total U.S. population.[69] Although the inclusion of such deposits will tend to reduce the market share of regional and community banks operating in the same markets as nationwide banks that centrally book deposits elsewhere, the ultimate quantitative effect of this change on HHI calculations will depend significantly on the individual market structure and how broadly the term “centrally booked deposits” will be construed. The proposed rule text states only that the term “centrally booked deposits” “means deposits that are recorded at a central office and not attributed to a branch based on the location of the depositor.”[70] FDIC Chairman Hill’s statement accompanying the Proposal noted that the term “would generally include, for example, deposits placed at banks by fintech companies and various other third parties.”[71]

The Proposal specifically requests comment on its “proposed methodology” on these issues.[72] As a general matter, the FDIC expects the proposed changes to “reduc[e] concentration in a relevant geographic market” by newly assigning market share in each geographic market to banks and thrifts that have historically been assigned no market share under the current analytical framework.[73]

The Proposal would also formalize aspects of the FDIC’s current competition analysis while adding a new regulatory safe harbor based on the initial HHI screen, as discussed below. It would define the relevant geographic market by reference to the Federal Reserve banking markets applicable to the parties at the time of filing.[74] If the Federal Reserve has not defined a relevant market, the market generally would consist of each county in which both parties have branches, subject to adjustments reflecting how customers obtain banking products and services.[75]

The Proposal would establish an express, codified safe harbor consistent with the 1,800/200 HHI thresholds set forth in the 1995 Bank Merger Competitive Review Guidelines for use as an initial screening measure. The proposed safe harbor would be more definitive, however. The 1995 Guidelines state that the banking agencies are “unlikely to further review” a transaction that falls below the HHI thresholds used in the initial screen, suggesting a presumptive rather than conclusive safe harbor.[76] By contrast, the Proposal would provide that, absent an objection from DOJ, the FDIC may not deny a transaction on competition grounds if: (i) the post-transaction HHI is 1,800 or less in each relevant geographic market; or (ii) the post-transaction HHI exceeds 1,800 but the transaction increases the HHI by fewer than 200 points.[77] The practical significance of this more definitive safe harbor may be limited, however, as transactions falling below these thresholds only rarely raise competition concerns with the banking agencies or the DOJ. A corporate reorganization would qualify for the safe harbor separately, without regard to the HHI thresholds.[78]

For transactions that do not qualify for the safe harbor, the Proposal would require the FDIC to consider alternative geographic market definitions, whether the initial HHI screen accurately reflects the transaction’s competitive effects, and any verifiable, merger-specific procompetitive effects.[79] The Proposal states that the FDIC would give particular emphasis to such effects in merger transactions involving rural areas.[80] Failure to qualify for the safe harbor therefore would not, by itself, establish that a transaction is impermissibly anticompetitive.

Separately, the FDIC is seeking comment on a potential competition safe harbor for transactions in rural markets and potential methods for incorporating deposits gathered by online banks, fintechs, and other nonbank competitors into the HHI analysis.[81]

Financial Stability

The BMA requires the FDIC to consider the risk a transaction poses to the stability of the U.S. banking or financial system,[82]and the FDIC currently evaluates that risk using quantitative and qualitative measures of the resulting institution’s systemic footprint.[83] The Proposal would establish a more defined framework for that analysis, including a new safe harbor and a balancing test for transactions that do not qualify for it.

Under the proposed safe harbor, the FDIC would conclude that a transaction does not raise financial stability concerns if any one of the conditions is satisfied:

• the resulting institution would not be a: (i) subsidiary of a U.S. global systemically important bank holding company (as defined in 12 C.F.R. § 252.5(b)); (ii) a Category II or Category III FDIC-supervised institution (as defined in 12 C.F.R. § 324.2);[84] or (iii) a Category IV banking organization (as defined in 12 C.F.R. 252.5(e));
• the target is an IDI with less than $20 billion in assets;
• the transaction is a domestic corporate reorganization involving entities that have been affiliates for more than 12 months and a target with less than $20 billion in assets;[85] or
• the transaction is a de minimis merger transaction.[86]

A transaction that does not qualify for the safe harbor would instead be evaluated under a balancing test. The FDIC would consider: (i) the systemic importance of the resulting institution; (ii) the change in the applicant’s systemic profile as a result of the transaction; and (iii) the extent to which the transaction would support financial stability, including by preventing the failure of a financially weak institution.[87] Failure to qualify for the safe harbor would not create a presumption against approval.

Fair Banking

The Proposal would add “fair banking” considerations to the FDIC’s evaluation of the convenience and needs of the community factor for mergers resulting in an institution with more than $50 billion in assets. With regard to transactions of that size, the Proposal states that the FDIC would review the parties’ supervisory records to determine whether either party has “treated existing or potential customers less favorably than other existing or potential customers based on political, social, cultural, or religious considerations rather than individualized, objective, and risk-based analysis.”[88] The FDIC would also consider any plans to remediate identified fair banking concerns.[89]

This addition follows significant attention to “debanking” by the White House. Executive Order 14331 directed the federal banking regulators to address “politicized or unlawful debanking,” including by removing references to reputation risk from supervisory materials and identifying institutions with policies or practices that encouraged such debanking.[90] The FDIC and OCC have since codified the removal of reputation risk from their supervisory programs and prohibited agency actions that encourage institutions to restrict financial services based on political, social, cultural, or religious considerations or politically disfavored but lawful business activities.[91] The Proposal would incorporate that broader policy focus into the FDIC’s merger review process through the convenience and needs statutory factor.[92]

Indexing of Dollar-Based Thresholds

Consistent with the FDIC’s stated objective of calibrating merger review requirements to an institution’s size, risk profile, and complexity, the Proposal would index dollar-based thresholds used both in the merger processing rules and in the standards for evaluating the statutory factors. Specifically, the Proposal would index: (i) the $50 billion resulting institution threshold for the FDIC’s 90-day standard processing track under the BMA; (ii) the $50 billion resulting institution threshold for the proposed fair banking review under the convenience and needs factor; (iii) the $20 billion target institution threshold under the proposed financial stability safe harbor; and (iv) the separate $20 billion target institution threshold for qualifying corporate reorganizations under the proposed financial stability safe harbor.[93] The thresholds would first be adjusted on October 1, 2029, and biennially thereafter based on changes in the non-seasonally adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) (subject to early adjustment if CPI-W inflation exceeds 8% over the 12-month period ending on August 30 since the last adjustment).[94] The FDIC explains that indexing would prevent smaller and mid-size institutions from becoming subject to requirements intended for relatively larger institutions solely because of inflation.[95]

Key Takeaways

The Proposal would create a more structured and rules-based FDIC merger-review framework that reduces regulatory processing timelines, creates greater predictability as to outcomes, and reduces regulatory friction. De minimis merger transactions, corporate reorganizations, and a broader range of transactions involving eligible depository institutions would benefit from shorter and more predictable processing timeframes. Larger or more complex transactions would remain subject to significant substantive review but generally would receive defined processing periods, although those periods could be extended and would not provide for deemed approval.

The proposed changes to the statutory factor analysis could also affect the scope and outcomes of the FDIC’s substantive review. Transactions within the proposed competition or financial stability safe harbors could avoid more extensive analysis under those factors, and the express consideration of remediation plans could support favorable findings notwithstanding identified supervisory deficiencies. At the same time, however, the new fair banking consideration would introduce an additional area of scrutiny for transactions resulting in an institution with more than $50 billion in assets.

Although the FDIC believes its proposed initial HHI screen “would have the effect of reducing concentration in a relevant geographic market because it would also incorporate additional categories of deposits,”[96] the practical effects of the initial HHI screen on particular merger transactions may vary depending on the markets and institutions involved and, importantly, how the changes with regard to the treatment of “centrally booked deposits” are implemented in practice. Treating bank, thrift, and credit union deposits more equally generally could make bank mergers easier in markets with a significant thrift or credit union presence. Similarly, allocating centrally booked deposits across geographic markets generally should reduce measured concentration across most geographies and could reduce the market share attributed to an institution in the market where those deposits currently are booked. The effects on a particular transaction could be mixed, however, because the allocation could assign additional market share to one or both merger parties in other relevant markets.

Parties contemplating future transactions that could be subject to FDIC review should therefore consider undertaking steps to assess the applicable processing track and safe harbors, model the proposed treatment of their deposit profile, and identify supervisory deficiencies or fair banking concerns that could affect the statutory factor analysis.

Separately, institutions contemplating substantial asset acquisitions will need to consider the applicability of the proposed notice and non-objection framework for significant asset transfers even where a transaction does not otherwise constitute a merger transaction.

Although the Proposal demonstrates the FDIC’s commitment to modernize and reform its approach to bank merger review, its direct effect will be limited to merger transactions subject to the FDIC’s approval under the BMA. Accordingly, the ultimate impact will be dependent on whether the Proposal serves as a template against which the Federal Reserve, the OCC, or DOJ may revisit their own bank merger review policies and guidance and whether any such broader interagency review of merger policy could lead to alignment along the substantive lines indicated by the Proposal.

ENDNOTES

[1] FDIC, Notice of Proposed Rulemaking: Merger Transactions (Sept. 17, 2026), available at: https://www.fdic.gov/board/notice-proposed-rulemaking-merger-transactions.pdf. The Proposal was published in the Federal Register on September 22, 2026. See91 Fed. Reg. 60,196 (Sept. 22, 2026). Unless otherwise indicated, citations to the Proposal refer to the pagination of the September 17, 2026 FDIC version. See also FDIC, FDIC Issues Proposal on Bank Merger Transactions (Sept. 17, 2026), available at: https://www.fdic.gov/news/financial-institution-letters/2026/fdic-issues-proposal-bank-merger-transactions.

[2] 12 U.S.C. §1828(c).

[3] Proposal at 8.

[4] In his statement accompanying the release of the Proposal, FDIC Chairman Travis Hill noted that “the merger review process has often taken far too long” but “the FDIC has taken a number of steps internally to substantially improve the timeliness of applications,” as seen in recent trends for the FDIC’s application processing timelines: the FDIC “averaged 107 days from receipt to final action in 2023 and 2024; this number was reduced to 80 in 2025 and stands at 64 year-to-date in 2026.” Chairman Hill stressed that a significant aim of the Proposal is to make these recent improvements in review processing times more durable for the future by “codifying a series of timelines for processing different types of merger applications.” Chairman Travis Hill, Statement by Chairman Travis Hill on the Proposed Rule Regarding Bank Merger Transactions (Sept. 17, 2026), available at: https://www.fdic.gov/news/speeches/2026/statement-chairman-travis-hill-proposed-rule-regarding-bank-merger-transactions.

[5] 12 U.S.C. § 1841, et seq.

[6] See 12 U.S.C. § 1828(c)(2).

[7] See 12 U.S.C. § 1828(c)(1).

[8] See 12 U.S.C. § 1842(a).

[9] See 12 U.S.C. §§ 1828(c)(5), (11); 12 U.S.C. § 1842(c).

[10] See U.S. Dep’t of Justice, 2024 Banking Addendum to 2023 Merger Guidelines (Sept. 17, 2024), available at: https://www.justice.gov/atr/media/1368576/dl; see also Sullivan & Cromwell LLP, Coordinated DoJ, FDIC and OCC Final Actions on Bank Merger Policy (Sept. 18, 2024), available at: https://www.sullcrom.com/SullivanCromwell/_Assets/PDFs/Memos/Coordinated-DoJ-FDIC-OCC-Final-Actions-Bank-Merger-Policy.pdf.

[11] See our publications dated March 21, 2024 and September 18, 2024 for further description and analysis with respect to the 2024 Statement of Policy.

[12] FDIC, Final Statement of Policy on Bank Merger Transactions, 89 Fed. Reg. 79,125 (Sept. 27, 2024).

[13] See FDIC, Statement of Policy on Bank Merger Transactions, 90 Fed. Reg. 29,413 (July 3, 2025).

[14] Proposal at 10.

[15] Such transactions are often referred to as “de facto” mergers under state law.

[16] Proposal at 127. The FDIC considered adopting a factors-based approach modeled on the state law “de facto merger” doctrine but declined to do so because the doctrine varies across jurisdictions and its application can be subjective, opting instead for the proposed quantitative threshold. Id. at 27-28.

[17] Id. at 27-28.

[18] The Hart-Scott-Rodino Act uses lower and upper size-of-transaction thresholds in determining whether an acquisition is subject to premerger notification requirements. See 15 U.S.C. § 18a(a)(2)(A)–(B). See Revised Jurisdictional Thresholds for Section 7A of the Clayton Act, 91 Fed. Reg. 2,133, 2,134 (Jan. 16, 2026).

[19] Proposal at 26-27.

[20] Proposal at 23. The FDIC states that these criteria are consistent with its definition of an “eligible depository institution” in 12 C.F.R. § 303.2(r), except that the proposed criteria would expand the permissible ratings to include institutions with UFIRS composite and compliance ratings of 3. An “eligible depository institution” means a depository institution that meets the following criteria: (i) received an FDIC-assigned UFIRS composite rating of 1 or 2 at its most recent federal or state examination; (ii) received a satisfactory or better CRA rating at its most recent examination, if subject to CRA examination; (iii) received a compliance rating of 1 or 2 at its most recent examination; (iv) is well-capitalized; and (v) is not subject to a cease-and-desist order, consent order, prompt corrective action directive, written agreement, memorandum of understanding, or other administrative agreement with its primary federal regulator or chartering authority. 12 C.F.R. § 303.2(r). A number of other regulatory approval requirements require a composite (and sometimes management and capital) ratings of 2 or better. See, e.g.,12 C.F.R. §§ 5.3, 5.33(i)–(j) (conditioning expedited OCC processing for certain business combinations on “eligible” status, which requires composite and consumer-compliance ratings of 1 or 2 and well-capitalized status); id. §§ 225.2(r)–(s), 225.14(c); 12 U.S.C. § 1841(o)(9)(A) (conditioning expedited Federal Reserve processing for certain bank acquisitions on well-capitalized and well-managed status, with well-managed status requiring a CAMELS composite rating of 1 or 2 and at least a satisfactory management rating). It remains to be seen whether the FDIC’s proposal of a 3 rating here is intended to be specific to this test or signifies a broader trend.

[21] Proposal at 12.

[22] Id. at 133.

[23] Id. at 43.

[24] 12 C.F.R. § 303.61(b).

[25] Proposal at 48. See n.20 for the definition of “eligible depository institution,” which is based on the criteria in 12 C.F.R. § 303.2(r).

[26] Proposal at 49.

[27] 12 C.F.R. § 303.64(a)(4).

[28] Proposal at 51-52.

[29] Id. at 135-36.

[30] Under the FDIC’s current delegations, staff may approve most merger filings. The FDIC Board retains authority, however, to deny a merger filing and to approve a transaction that would result in an industrial bank or industrial loan company or cause an institution to become a member of a parallel-owned banking organization (“PBO”). A PBO generally is a structure in which a U.S. depository institution and a foreign bank are controlled by the same person or group, but neither institution is a subsidiary of the other and the organization is not controlled by a bank holding company or savings and loan holding company. Accordingly, a transaction falling within either approval category—or a filing that the FDIC determines should be denied—would not qualify for the proposed 90-day processing category. See FDIC, Delegations of Authority for Filings 11-12, available at: https://www.fdic.gov/regulations/laws/matrix/delegations-filings.pdf; Board of Governors of the Federal Reserve System et al., Joint Agency Statement on Parallel-Owned Banking Organizations 1–2 (Apr. 23, 2002), available at: https://www.federalreserve.gov/boarddocs/press/General/2002/20020423/attachment.pdf.

[31] See 12 U.S.C. § 1842(a).

[32] Proposal at 54.

[33] Id. at 155.

[34] Id. at 54.

[35] Id. at 137.

[36] Id. at 46.

[37] Id.

[38] Id. at 124.

[39] Federal Reserve officials had previously identified the delays associated with the treatment of adverse comments. SeeMichelle W. Bowman, Governor, Board of Governors of the Federal Reserve System, Brief Remarks on the Economy and Accountability in Supervision, Applications, and Regulation (Feb. 17, 2025), available at: https://www.federalreserve.gov/newsevents/speech/bowman20250217a.htm (noting that adverse comments can substantially delay applications by removing them from delegated processing and questioning that result where comments lack factual support).

[40] Proposal at 124.

[41] 12 C.F.R. pt. 303, subpts. B–C, E–M.

[42] Proposal at 128.

[43] Id. at 41.

[44] Proposal at 132.

[45] Id. at 41.

[46] 12 C.F.R. § 303.65(a).

[47] Id. § 303.65(d). The Proposal would retain the existing extension process without modification. The FDIC may extend or reopen the comment period if required information is not timely made available to the public, a requester demonstrates that additional time is necessary to develop potentially material factual information, or the FDIC determines that other good cause exists. 12 C.F.R. § 303.9(b)(2).

[48] Proposal at 57.

[49] Id. at 62.

[50] Id. at 60.

[51] Id. at 58.

[52] Id.

[53] Id.

[54] Id. at 111-12.

[55] Id. at 141.

[56] Id. at 64.

[57] Id.

[58] Id. at 65-66.

[59] See Proposal at 63–65; 12 C.F.R. § 5.53(b).

[60] See 12 C.F.R. § 5.53(d).

[61] Proposal at 70.

[62] 12 U.S.C. §1828(c)(4)(A)(i).

[63] Id. § 1828(c)(4)(C).

[64] Id. § 1828(c)(5).

[65] Proposal at 148-49. Where only some of a credit union’s branches are within the relevant geographic market, the FDIC would estimate the credit union’s shares in that market by dividing its total shares by its total number of branches and multiplying the result by the number of branches located in the market, using the most recent NCUA Call Report data. Id. at 78.

[66] Id. at 5.

[67] DOJ, Bank Merger Competitive Review — Introduction And Overview (1995), available at:https://www.justice.gov/archives/atr/bank-merger-competitive-review-introduction-and-overview-1995 (“1995 Guidelines”).

[68] Proposal at 79.

[69] Proposal at 149.

[70] Id. at 125.

[71] Chairman Travis Hill, Statement by Chairman Travis Hill on the Proposed Rule Regarding Bank Merger Transactions, at 2 n.4 (Sept. 17, 2026), available at: https://www.fdic.gov/news/speeches/2026/statement-chairman-travis-hill-proposed-rule-regarding-bank-merger-transactions.

[72] Proposal at 81.

[73] Id. at 80.

[74] Id. at 74.

[75] Id.

[76] 1995 Guidelines § 1.

[77] Proposal at 83.

[78] Id.

[79] Id. at 86. Whether and in what circumstances a bank regulator could approve a merger that has anticompetitive effects in view of other beneficial effects is a complicated issue. In both the BMA and the BHCA, Congress granted regulators the authority to approve an otherwise anticompetitive transaction if it would serve “the convenience and needs of the community.” 12 U.S.C. §§ 1828(c)(5), 1842(c)(2). Parts of the legislative history suggest that management succession problems and overbanking in small towns could provide grounds for invoking that exception. See, e.g., Amend the Bank Merger Act of 1960: Hearings on S. 1698 Before the Subcomm. on Financial Institutions of the S. Comm. on Banking & Currency, 89th Cong. (1965) (testimony of Harry J. Harding) (quoting a prior Senate committee report identifying inadequate provision for management succession and circumstances in which banks in an overbanked small town are compelled to engage in unsound competitive practices as situations in which a merger could serve the public interest notwithstanding a substantial lessening of competition). But in practice, bank regulators have rarely invoked this “convenience and needs” exception.

[80] Proposal at 87.

[81] Id. at 81-83.

[82] See 12 U.S.C. § 1828(c)(5).

[83] Proposal at 96.

[84] Category II and Category III FDIC-supervised institutions refer to (i) FDIC-supervised institutions that are not subsidiaries of depository institution holding companies and that meet the applicable asset and activity thresholds to be Category II and Category III banking organizations, respectively, and (ii) FDIC-supervised institutions that are consolidated subsidiaries of Category II and Category III banking organizations, respectively. The categories of banking organizations refer to the risk-based categories established by the Federal Reserve and FDIC for determining the applicability of regulatory capital and liquidity requirements as set forth in 12 C.F.R. §§ 252.5 and 324.2, respectively.

[85] The thresholds proposed by the FDIC are different from the thresholds set by the Federal Reserve with respect to its review of the financial stability factor under the BMA and the BHCA. In prior approval orders, the Federal Reserve has presumed that a proposal that involves an acquisition of less than $10 billion in assets or that results in a firm with less than $100 billion in total consolidated assets will not pose significant risks to the financial stability of the United States, absent evidence that the transaction would result in a significant increase in interconnectedness, complexity, cross-border activities or other risk factors. See, e.g., Board Order Approving the Merger of Bank Holding Companies, CBTX, Inc. (Sept. 14, 2022) (“CBTX Order”); Board Order Approving the Merger of Bank Holding Companies, BB&T Corporation (Nov. 19, 2019) (“BB&T Order”); Board Order Approving the Merger of Bank Holding Companies, People’s United Financial (Mar. 16, 2017) (“People’s United Order”). Each of these Section 3 orders, among various others, cites to the Federal Reserve’s order approving Capital One Financial Corporation’s acquisition of ING Direct FSB (February 14, 2012).

[86] Proposal at 152-53.

[87] Id. at 100-01.

[88] Id. at 151.

[89] Id. at 94.

[90] Exec. Order No. 14,331, 90 Fed. Reg. 38,925, 38,926–27 (Aug. 12, 2025); see also Sullivan & Cromwell LLP, President Trump Issues Executive Order on ‘Politicized or Unlawful Debanking’ (Aug. 7, 2025), available at:https://www.sullcrom.com/insights/memo/2025/August/President-Trump-Issues-Executive-Order-Politicized-Unlawful-Debanking. Even prior to the issuance of Executive Order 14331, the FDIC, Federal Reserve, and OCC announced that reputation risk would no longer be a component of their supervisory programs. Press Release, Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks (Jun. 23, 2025), available at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250623a.htm; Letter from Acting FDIC Chairman Travis Hill to Representative Dan Meuser (Mar. 24, 2025), available at: https://mailing.sullivanandcromwell.com/32/4324/uploads/fdic-lttr-on-reputational-risk.pdf; Press Release, OCC Ceases Examinations for Reputation Risk (Mar. 20, 2025), available at: https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-21.html.

[91] See Prohibition on the Use of Reputation Risk by Regulators, 91 Fed. Reg. 18,279 (Apr. 10, 2026); see also OCC, Preliminary Findings from the OCC’s Review of Large Banks’ Debanking Activities (Dec. 2025), available at: https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-123a.pdf.

[92] The OCC has already announced that it would consider debanking issues in its review of licensing filings, including business combination filings. See OCC Bulletin 2025-22 (Sep. 8, 2025), available at: https://www.occ.gov/news-issuances/bulletins/2025/bulletin-2025-22.html. In a recent OCC order approving a bank merger, the acquiring bank made a representation that it would not restrict access to, or modify the conditions of, a banking product or service unless the decision was based on an individualized, objective, and risk-based analysis and was not based primarily on environmental, social impact, or reputation risk attributable to the customer, activity, or transaction. See OCC, Letter Approving the Application by PNC Bank, National Association to Merge FirstBank with and into PNC Bank, National Association, OCC Control No. 2025-Combination-343202, at 2–3 (Dec. 12, 2025), available at: https://www.occ.gov/topics/charters-and-licensing/digital-assets-licensing-applications/pnc-bank.pdf.

[93] Proposal at 102, 146.

[94] Id. at 142-44.

[95] Id. at 102.

[96] Id. at 80.

This post is based on a Sullivan & Cromwell LLP memorandum, “FDIC Issues Proposal to Modernize and Reform Its Approach to Bank Merger Review,” dated September 22, 2026, and available here.