09/23/26

The FDIC has proposed a comprehensive overhaul of its bank merger review process aimed at providing greater certainty, reducing regulatory burden, and modernizing how the agency evaluates competition and community impact. For Ohio banks, the proposal offers the prospect of more predictable decisions and streamlined applications, while also addressing concerns OBL has raised about credit unions purchasing banks.

A central feature of the proposal is a more disciplined review timeline. The FDIC would generally have 21 days to notify an applicant that a filing is incomplete and explain what additional information is needed. Without that notification, the filing would be deemed substantially complete. Applications subject to standard processing would generally receive a written determination within 90 days after receipt of a substantially complete filing, subject to specified exceptions. These changes would help banks plan transactions with greater confidence and reduce uncertainty surrounding the application process.

The proposal also would create a streamlined path for qualifying small transactions and certain internal reorganizations. These “de minimis” transactions would use a simpler letter filing and could receive deemed approval after applicable review periods. Eligibility would depend on the transaction’s size or structure, the institutions’ supervisory standing, and the resulting institution’s capitalization. The FDIC also proposes limiting the circumstances in which an otherwise eligible application could be removed from expedited processing. An adverse comment or CRA protest would not automatically trigger that result.

Another significant change would modernize how the FDIC measures competition. The agency would include credit union shares and account for certain centrally booked deposits in its initial market concentration analysis, better reflecting the institutions competing for customers today. The proposal also establishes competitive safe harbors for qualifying transactions. For community banks, particularly those operating in concentrated local markets, a more complete picture of competition could help prevent traditional market calculations from overstating a merger’s competitive impact.

Alongside those procedural improvements, the proposal would codify how the FDIC evaluates financial and managerial resources, future prospects, community convenience and needs, financial stability, and anti-money-laundering effectiveness. That would give applicants greater visibility into the standards governing a decision.

The community-impact provisions are particularly relevant to OBL’s advocacy surrounding Interra Credit Union’s proposed acquisition of The Hicksville Bank. The proposed regulatory text specifically requires consideration of reductions in products and services when a credit union acquires a bank. Its accompanying explanation makes clear that such reductions would be viewed negatively when evaluating the community’s convenience and needs.

That approach reflects concerns OBL raised directly with the FDIC. Our Hicksville comments emphasized that a credit union acquisition can disrupt public deposit relationships and remove CRA accountability. Although the proposal does not expressly identify public deposits, its treatment of lost services provides a framework for weighing the loss of a local public depository. OBL believes an acquisition that leaves local governments with fewer banking options deserves close scrutiny.

The proposal also retains consideration of applicable CRA records, although it would not extend CRA requirements to credit unions. OBL will continue emphasizing that voluntary commitments to serve a community do not replace public examinations and enforceable reinvestment obligations.

Taken together, the proposal presents an opportunity to improve the merger process for Ohio banks while strengthening consideration of the consequences when a bank leaves the banking system. OBL’s priority is a predictable, efficient review framework that also meaningfully accounts for lost services and community accountability.