Summary

Situation Overview: The 21st Century ROAD to Housing Act passed the Senate 85-5 on June 22, 2026, and the House 358-32 the following day. President Trump declined to sign or veto the bill, and it became law without his signature at midnight on July 11, 2026, after the Constitution’s 10-day presentment window lapsed. Within the Act is Title IX, “Strengthening Community Banks’ Role in Housing,” which contains nine provisions addressing examination cycles, brokered deposits, capital phase-ins, and de novo formation, all specific to community banks.

What: Community banks and their holding companies gain targeted relief across deposit classification, examinations, capital requirements, and chartering, with several provisions requiring regulators to report back to Congress on implementation.

Who: Depository institutions generally under $10 billion in assets; federal credit unions; and prospective de novo applicants.

When: Now. The Act is law as of July 11, 2026. Individual provisions carry their own effective dates and agency reporting deadlines, discussed below.

In Depth

Title IX arrives after the bill spent nearly a year moving through both chambers: the Senate passed an earlier version 89-10 in March, the House passed its own version 396-13 in May, and the two chambers reconciled a final compromise text in June. The Act’s Title IX provisions were among the least contested pieces of the package; unlike the institutional-investor and zoning provisions that consumed most of the floor debate, the community bank title moved through committee with bipartisan sponsorship.

Brokered Deposits

Brokered deposits are deposits obtained, either directly or indirectly, through a third party. The Federal Deposit Insurance Commission (FDIC) does not generally prohibit the use of brokered deposits for funding or make these deposits ineligible for federal insurance. However, brokered deposits could increase an institution’s deposit insurance assessment rate, and supervisors generally treat brokered deposits as noncore, less stable funding. Moreover, FDIC regulations impose progressively more severe restrictions on brokered deposits as the receiving depository institution’s capital condition deteriorates.[1]

Two provisions of the Act amend Section 29 of the Federal Deposit Insurance Act with respect to the calculation of brokered deposits:

• Custodial deposits (funds placed by trustees or plan administrators on behalf of a third party) are not considered brokered deposits for well managed and well capitalized institutions under $10 billion in assets, as long as those custodial deposits do not exceed 20% of an institution’s total liabilities. A companion restriction caps the interest rate an institution may pay on custodial deposits accepted while not well capitalized, tying the rate to prevailing local or national levels.
• Reciprocal deposits (deposits received by a depository institution other than the one where the deposits were originally placed, generally by means of a deposit placement network) are not considered brokered deposits up to a limit based on total liabilities: 50% of liabilities up to $1 billion, 40% of liabilities between $1 billion and $10 billion, and 30% of liabilities between $10 billion and approximately $96.3 billion. The FDIC, in consultation with the Federal Reserve Board, must complete a study of reciprocal-deposit performance since 2018 and report to Congress within six months.

These changes narrow the set of liabilities that are considered brokered deposits and therefore subject to FDIC restrictions. Because these changes are codified in statute, future amendments to the brokered deposit rules must conform with these statutory provisions.[2] Attempts to reform the liquidity framework for large banks may also be affected by these changes, as brokered deposits flow through the denominator of the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

Examination Cycles

The Act increases the asset threshold for the 18-month (rather than 12-month) examination cycle from $3 billion to $6 billion, potentially extending eligibility to roughly 200 additional institutions.[3]

This change expands the pool of institutions eligible for less frequent full-scope on-site exams but does not disturb the requirement that a qualifying institution also be well capitalized and well managed. Regulators retain discretion to examine more frequently where warranted.

Capital Phase-In Pilot and De Novo Streamlining

Federal banking agencies may establish a pilot program allowing qualifying community banks and holding companies (under $10 billion in combined assets, insured between January 1, 2026 and December 31, 2028) to phase in federal capital requirements over two years, with the ability to request changes to their approved business plans during that window.

The agencies are separately directed to streamline the de novo application process, including by assigning caseworkers to applicants and facilitating mentorship arrangements with recently chartered institutions, and to review capital-raising restrictions affecting non-accredited investors, reporting to Congress annually for five years.

Remaining Provisions

Title IX also establishes a revised meeting schedule for federal credit union boards tied to supervisory ratings, ranging from monthly for newly chartered or lower-rated credit unions to six times a year for well-rated ones; new reporting requirements when the FDIC invokes the systemic risk exception (Government of Accountability Office reports at 60 and 240 days after the determination, agency reports at 90 and 270 days); a Treasury-administered mentor-protégé program connecting large financial institutions with small and rural institutions (with required annual outreach events and periodic reporting to Congress) to promote the readiness of small institutions to act as financial agents for the government; and a required study on the condition of rural depository institutions and credit unions, due to Congress within one year.

Affirmation of the Administration’s Forward-Looking Regulatory Agenda

Before the Act’s passage, the White House and policymakers had already championed regulatory relief for community banks.

For example, White House Executive Order 14393 had established reducing regulatory burden on community banks a policy of the United States. Treasury Secretary Scott Bessent had raised concerns about the loss of more than 45% of community banks since 2010 and stated that Treasury intends to drive more tailored regulation toward the community bank model. Federal Reserve Vice Chair for Supervision Michelle Bowman had argued that tailoring regulations to the size of banks is in the Federal Reserve’s statutory mandate. Comptroller of the Currency Jonathan Gould had testified about changes the Office of the Comptroller of the Currency (OCC) has made to address the declining number of community banks, while the federal banking agencies had collectively finalized a rule to modify the Community Bank Leverage Ratio threshold from 9% to 8%.

The banking provisions of the Act not only complement the regulatory relief the White House, Treasury, and the federal banking agencies have facilitated to date, but also signal the importance of community banking relief as a bipartisan issue to lawmakers.

Put Patomak’s Expertise to Work

Patomak advises community banks, holding companies, and de novo applicants navigating supervisory and regulatory changes at the federal banking agencies. Patomak’s team includes former senior officials from the Federal Reserve Board, OCC, FDIC, and Treasury. To learn more about how Patomak can support your strategic and compliance goals as these provisions take effect, please contact Mona Elliot at melliot@patomak.com, David Hou at dhou@patomak.com, or Andrew Grub at agrub@patomak.com.

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[1] Internal FDIC research and external academic research show a correlation between levels of brokered deposits and probability of bank failure. Under Section 29 of the Federal Deposit Insurance Act, the FDIC restricts less than well capitalized insured depository institutions from accepting brokered deposits, and even adequately capitalized depository institutions must apply for a waiver before accepting such deposits.

[2] Recall, for example, the 2024 notice of proposed rulemaking on brokered deposits that sought to broaden the definition of “deposit broker” and narrow the scope of exceptions. Although that proposal was subsequently withdrawn, it appears that its terms do not violate the brokered deposit provisions of the Act.

[3] Estimates derived from March 31, 2026, Call Report data for domestically chartered commercial banks. These estimates reflect institutions with consolidated assets between $3 billion and $6 billion and do not reflect capital adequacy or supervisory ratings.