The 2026 Asset Indexed Shift: A Little Breathing Room for the Rest of Us
Trying to keep a community bank compliant these days is like trying to hit a moving target while wearing a blindfold. For too long, we’ve watched our banks grow through hard-earned local success, only to be “rewarded” by hitting outdated asset ceilings that trigger a mountain of new paperwork. It’s a classic case of the regulatory “squeeze” where the rules haven’t reflected the actual economy we’re operating in.
The good news is that the Federal Reserve and the FDIC are finally clicking the “refresh” button. By applying the annual inflation adjustment based on the Consumer Price Index (CPI-W), they’re nudging the thresholds up for 2026. It’s not a total overhaul, but it’s a necessary acknowledgement that a $1 billion bank today isn’t the same animal it was a decade ago.
The New 2026 Numbers
Here is the breakdown of what constitutes a “small” vs. “intermediate” bank for the 2026 calendar year:
- Small Bank: Now defined as an institution with assets of less than $1.649 billion as of December 31 of either of the prior two years.
- Intermediate Small Bank (ISB): This now applies to banks with assets of at least $412 million (up from $402 million) and less than $1.649 billion.
Why This Matters to Your Shop
For those of you sitting right on the edge of these numbers, this is a massive win. We all know the “ISB jump” is where the paperwork really starts to pile up. By moving these thresholds up by 2.51%, the regulators are giving a few hundred institutions some much-needed “regulatory breathing room”.
Instead of spending six-figure sums on external audits and data-collection nightmares, you can keep that capital where it belongs: reinvested in your local neighbors and small businesses.
The “Barret Take” on the CRA Pause
You might recall the 2023 CRA “Modernization” rule that felt more like a “Complication” rule. As of right now, that final rule is still held up in litigation and is currently enjoined. My advice? Stick to the legacy CRA regulations for now. There is a proposal on the table to officially rescind that 2023 rule and replace it with the current standards we all already know, which is a total win for anyone who values their sanity.
At the end of the day, community banking isn’t about shuffling paper to satisfy a process-driven examiner. It’s about relationship-building and serving as a catalyst for your community. Whether you’re financing a $1,000 pipe wrench for a local plumber or a $20 million job creator, you’re the foundation of your community.
These new thresholds respect your ability to run your own shop without unnecessary interference. So, take a deep breath, update your strategic plan to reflect these new indexed numbers, and let’s get back to doing what we do best: growing our communities.
To read more on this from the Federal Register’s notice, click here..
Now, if you’ll excuse me, I’ve got a guitar that needs tuning and a Tennessee Volunteers bowl game I need to mentally prepare for.
— Byron
AI was used to assist in the drafting of this post