Highlight: New legislation broadens reciprocal deposit reporting guidelines

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• The 21st Century ROAD to Housing Act, effective July 11, 2026, amended the Federal Deposit Insurance Act’s brokered deposit reporting threshold for reciprocal deposits, replacing the previous flat cap with a higher, tiered calculation based on liability size. Additionally, eligibility was further expanded to include institutions with less than satisfactory (3-rated) composite ratings.^_
• More than half of community banking organizations (CBOs) use reciprocal networks to insure large deposits above the FDIC insurance limit, which can help preserve depositor relationships and stability.^_ Reciprocal use by CBOs surged in 2023 following significant liquidity stress in the industry, increasing 87 percent during the year, and has continued to grow.
• At June 30, 2026, approximately 7 percent of CBOs held reciprocal balances exceeding the prior cap. Under the new rule, less than 1 percent of CBOs would exceed the higher cap, and an estimated $24 billion in CBO reciprocal deposits would reclassify from brokered to non-brokered status as of June 30, 2026. Beyond the immediate reclassification of most existing brokered reciprocal deposits, the higher ceiling under the new rule provides banks with significantly greater capacity to expand non-brokered reciprocal deposit balances going forward.

Questions or comments? Please contact KC.SRM.SRA.CommunityBankingBulletin@kc.frb.org