TRUST Act Doubles Asset Threshold: Mid-Sized Banks Get Less Frequent FDIC Exams

The newly proposed Tailored Regulatory Updates for Supervisory Testing Act of 2025—the TRUST Act—is making a significant change to how the Federal Deposit Insurance Corporation (FDIC) watches over certain banks. If you’re a depositor or run a small business that relies on a local bank, this matters because it changes the frequency of regulatory checkups for a chunk of the banking sector.

The New Exam Schedule for Mid-Sized Banks

Right now, a bank that is considered “well-managed” only has to go through a full, on-site examination by the FDIC less often if its assets are under $3 billion. The TRUST Act is doubling that threshold, pushing the limit up to $6,000,000,000 (six billion dollars). This means banks with assets between $3 billion and $6 billion could now qualify for a reduced examination cycle, whereas before, they were subject to more frequent regulatory scrutiny (SEC. 2).

What This Means for the Balance Sheet

For the banks themselves, this is a clear win for the bottom line. Less frequent examinations mean lower compliance costs, reduced administrative burden, and fewer staff hours spent preparing for and hosting regulators. Think of it like getting your car inspected less often—it saves time and money, freeing up resources for other things, like perhaps better loan rates or higher savings yields. This regulatory break is specifically aimed at helping those mid-sized institutions that are already deemed "well-managed" by the FDIC.

Less Eyes on the Books: The Trade-Off

While the goal is to cut red tape for stable institutions, the practical reality is that doubling the threshold means a much larger pool of banks will now be subject to less frequent on-site oversight. If you’re a regular person with a checking account, you rely on the FDIC to catch problems early. When the frequency of those detailed, on-site exams drops, there’s an inherent risk that emerging issues—like poor lending practices or mismanagement—could go undetected for longer. The FDIC’s job is to ensure stability, and reducing their boots-on-the-ground presence for banks up to $6 billion shifts the balance of risk. While the bill assumes these banks are “well-managed,” the entire point of the examination is to verify that assumption continuously.

Who Benefits, and Who Bears the Risk?

The primary beneficiaries are the banks themselves, specifically those with assets just over the old $3 billion limit. They get regulatory relief, which could translate into more competitive operations. However, the risk is borne by the system generally, and by extension, depositors and the FDIC’s insurance fund. If a bank just under the $6 billion mark starts taking on too much risk, the delay between routine exams could mean the problem is far larger when regulators finally catch it. This move allows the FDIC to focus its limited resources on the largest, most systemically important institutions, but it also creates a wider gap in the supervisory net for the next tier down.