Banking and Finance Law Daily Wrap Up, PRUDENTIAL REGULATION—Senate bill would increase asset threshold for 18-month bank examination cycle, (Feb 12, 2026)

By Charles A. Menke, J.D.

According to the sponsors, the bill “targets regulatory bottlenecks that subject low-risk community banks to unnecessarily frequent exams by federal banking regulators, diverting resources from serving their communities.”

Senators Andy Kim (D-N.J.) and Ted Budd (R-N.C.) have introduced legislation that would increase the asset threshold for institutions to qualify for an extended 18-month examination cycle. The Tailored Regulatory Updates for Supervisory Testing (TRUST) Act would increase the examination threshold for well-managed institutions from $3 billion to $6 billion in total assets to qualify for the extended 18-month exam cycle. According to the senators, the current threshold “has not kept pace with inflation, industry consolidation, or modern risk management practices.”

While increasing the examination threshold, the bill maintains existing safety and soundness requirements, allowing examiner resources to focus on riskier or larger institutions without weakening the oversight of smaller banks. The bill also makes conforming amendments to the Federal Deposit Insurance Act and provides greater flexibility to FDIC supervision.

The Independent Community Bankers of America (ICBA) expressed its support in a letter to the bill’s sponsors. “The TRUST Act is a good example of a regulatory threshold update that would promote a system of tiered regulation,” ICBA said in a released statement. “‘One-size-fits-all’” regulations—in examination and elsewhere—disproportionately burden community banks that don’t have dedicated legal and compliance departments and have smaller asset bases over which to spread compliance costs. Threshold updates such as this one provide meaningful relief and can be undertaken without compromising safety and soundness.”

The American Fintech Council also voiced its support. In a letter to Senate Banking Committee Chairman Tim Scott (R-S.C.) and Ranking Member Elizabeth Warren (D-Mass.), the organization said the “bill represents a meaningful step toward a more pragmatic and innovative regulatory framework.” According to the AFC, increasing the threshold is a “commonsense change [that] reflects how inflation and consolidation have reshaped the banking landscape over the past two decades.” The AFRC further noted that “[i]mportantly, the bill maintains all existing safety and soundness standards while freeing up supervisory capacity and reducing regulatory friction for well-managed institutions … [and] builds on existing statutory authority and longstanding bipartisan support for streamlining supervisory processes for low-risk banks.” The AFC “urge[d] the Senate Banking Committee to consider this important legislation as part of your broader agenda to strengthen oversight while promoting financial innovation and access.”

Companies: American Fintech Council; Independent Community Bankers of America

LegislativeActivity: BankingOperations CommunityDevelopment FinancialStability PrudentialRegulation