Reciprocal deposit limits are now tiered, and much higher for small banks
An FDIC interim final rule, effective 1 September 2026, replaces the old reciprocal deposit cap with tiered limits that start at 50 percent of a bank's first $1 billion of liabilities, with a $30 billion maximum. It implements the 21st Century ROAD to Housing Act.
Reciprocal deposits let a bank place a large customer's money across a network of other banks so the whole balance stays within deposit insurance limits, while the bank receives matching deposits back. Up to a cap, those deposits aren't treated as brokered. Congress raised that cap in the 21st Century ROAD to Housing Act, and on 1 September 2026 the FDIC published an interim final rule putting the change into its brokered deposit regulations (91 FR 56022, 12 CFR part 337).
The rule took effect on 1 September 2026. Comments were due by 1 October 2026.
The old cap and the new one
Until now, the exception covered reciprocal deposits up to "the lesser of $5 billion or 20 percent of the total liabilities of the agent institution."
The new cap is tiered by slices of the bank's total liabilities:
| Slice of total liabilities | Share that can be reciprocal deposits |
|---|---|
| Up to $1 billion | 50 percent |
| Over $1 billion, up to $10 billion | 40 percent |
| Over $10 billion, up to $96,333,333,333 | 30 percent |
Added up, the FDIC says "the maximum amount of reciprocal deposits allowed under the exception for any institution totals $30 billion."
Who qualifies
The exception is for an "agent institution," and the definition has conditions. The bank must be well capitalized, and the amended rule refers to an institution "assigned a CAMELS rating of 1, 2, or 3." A bank that takes in reciprocal deposits above its cap stops counting as an agent institution, and then "all of its reciprocal deposits must be reported as brokered deposits." Banks that aren't well capitalized are generally barred from accepting brokered deposits without a waiver.
What it could mean
For a community bank this is a large change. Take a bank with $800 million in total liabilities: under the old rule the cap was 20 percent, or $160 million; under the new one it's 50 percent, or $400 million. We think that gives smaller banks a real tool for keeping large commercial and municipal depositors who want their whole balance insured.
The catch is in the conditions. The higher cap only helps while the bank stays well capitalized and keeps a qualifying CAMELS rating. A bank that leans heavily on reciprocal deposits and then slips below either line could see those deposits reclassified as brokered all at once, at the moment it can least afford it. In our view, any bank planning to use much more of the new capacity should model that scenario in its contingency funding plan before it grows into the limit.
And check the math. Tiered caps are easy to botch in a spreadsheet, and going over costs you the whole exception, not just the excess.