Banking and Finance Law Daily Wrap Up, DEPOSIT INSURANCE—FDIC finalizes rule on deposit insurance coverage, (Mar 20, 2026)

By Donielle Tigay Stutland, J.D.

Under the amended rule, all branches of U.S. chartered banks in the Freely Associated States, would be insured by the FDIC.

The Federal Deposit Insurance Corporation has announced it is adopting the final rule clarifying FDIC deposit insurance coverage for branches of U.S.-chartered insured depository institutions located in the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau (collectively known as the Freely Associated States), whether operating presently or in the future. The rule specifically amends 12 CFR 330.3(e)(3)) to clarify and expand FDIC deposit insurance coverage for branches of U.S.-chartered insured depository institutions located in the Freely Associated States. The final rule is set for publication in the Federal Register on March 23, 2026, and will be effective as of April 22, 2026.

The final rule will ensure that deposits in these branches qualify for FDIC insurance when they are “dually payable” (payable both at the foreign branch and at an office in the United States, and carried on the U.S. books of the bank). The FDIC indicated that the final rule will “better achieve the FDIC’s intent to align its deposit insurance regulations with the historical availability of FDIC deposit insurance in the Freely Associated States.” The final rule also puts U.S. IDIs on equal footing with IDIs chartered by the Freely Associated States. Further, the FDIC believes that removing a limitation that may have served as a barrier to entry will support a competitive banking environment in the Freely Associated States. As of the quarter ending June 30, 2025, there are eight branches operated in the Freely Associated States by three U.S. IDIs. In total, these branches have approximately $803.47 million in deposits. The FDIC also noted that given the very small size of the Freely Associated States relative to the U.S. population and economy, and the preexisting availability of deposit insurance for IDIs operating in the Freely Associated States, the final rule is expected to have a de minimis impact on the Deposit Insurance Fund.

Changes to the interim final rule. This final rule follows an interim final rule which had been released with request for comment in August 2024. The interim final rule limited coverage to the legacy branches of U.S. IDIs in order to align deposit insurance coverage with the coverage provided historically for U.S. banks operating in the Freely Associated States. In response to the one comment received to the interim rule, the final rule will remove the reference to “legacy branches” in the FDIC’s regulations, which restricted coverage only to "legacy branches" (those already operating as of August 9, 2024). Under the amended rule, all branches of U.S. chartered banks in the Freely Associated States, whether present or future, would be insured by the FDIC. As a result, dually payable deposits of these branches would be insured by the FDIC.

RegulatoryActivity: BankingOperations DepositInsurance