FDIC proposes updated guidance on bank mergers

The FDIC proposed revisions to its statement of policy, or SOP, on bank merger transactions incorporating ICBA-advocated provisions.

Background: The revisions are designed to reflect legislative and other developments that have occurred since the SOP was last amended in 2008. The revised SOP describes the types of applications subject to FDIC approval, addresses each statutory factor, and highlights relevant matters and considerations, such as related statutes pertaining to interstate mergers.

Details: The proposed revisions incorporate a number of recommendations ICBA provided in its comment letter responding to the FDIC’s 2022 request for information on revising the SOP. For instance, the SOP says:

Mergers resulting in institutions over $100 billion in assets—which ICBA flagged in its comment letter—should be subject to heightened scrutiny but should not be presumed to be anticompetitive so long as the bank has a traditional community bank business model.
Mergers resulting in institutions that are nonbanks or not traditional community banks—including credit unions and industrial loan companies—are subject to the same statutory factors as other merger applications.
The FDIC’s Washington Office or board of directors reserve authority to act on merger applications that do not involve traditional community banks and overrule decisions from the agency’s regional offices, which could improve scrutiny of credit union acquisitions of community banks.

ICBA View: In a comment letter to the FDIC last year, ICBA laid out its plan for revising merger policies, including faster reviews of community bank mergers and incorporating credit unions into the Herfindahl-Hirschman Index. In a separate 2023 and 2022 comment letter to the DOJ, ICBA said the department should consider competition from credit unions and nonbanks when evaluating bank mergers.

Comment Deadline: The FDIC encouraged comments on the proposal within 60 days of publication in the Federal Register.