Reciprocal Deposits Just Got a Bigger Seat at the Table
Reciprocal deposits help banks retain valuable customer relationships while providing access to expanded FDIC insurance coverage. Following enactment of the 21st Century ROAD to Housing Act on July 11, 2026, they may become an even more important funding tool.
For Call Report preparers, however, the change raises an immediate question: What does it mean for Schedules RC-E and RC-O?
A Quick Refresher
Suppose a customer deposits $1 million but wants insurance coverage beyond the standard FDIC limit. Through a deposit placement network, the bank places portions of the funds with other participating institutions and receives deposits from network banks in the same aggregate amount. Those incoming funds are reciprocal deposits.
The customer retains the relationship with the original bank, the funds may receive expanded insurance coverage, and the bank receives reciprocal funding. The next question is whether those deposits must be treated as brokered—and that is where the law has changed.
From a 20% Limit to a Tiered Calculation
Under the previous framework, qualifying reciprocal deposits could be excluded from brokered-deposit treatment up to the lesser of:
- $5 billion; or
- 20% of the bank’s total liabilities.
The Keeping Deposits Local provisions of the new law replace that framework with a graduated calculation based on total liabilities:
- 50% of liabilities up to $1 billion;
- 40% of liabilities between $1 billion and $10 billion; and
- 30% of liabilities above $10 billion.
The percentages apply cumulatively to the liabilities within each tier, not as one percentage applied to the bank’s entire liability balance.
A $3 Billion Example
Assume Bank ABC has $3 billion in total liabilities.
Under the old rule:
$3 billion × 20% = $600 million
Under the new tiered calculation:
- First $1 billion × 50% = $500 million
- Next $2 billion × 40% = $800 million
Total potential exception: $1.3 billion
Thus, the bank’s potential reciprocal-deposit exception increases from $600 million to $1.3 billion, assuming the deposits and the bank satisfy the remaining statutory requirements.
Expanded Eligibility
The law also expands which institutions may qualify as agent institutions. Previously, the framework generally required an institution’s most recent examination to reflect an outstanding or good composite condition, together with the applicable capital requirements.
The new law permits qualifying institutions with CAMELS composite ratings of 1, 2 or 3 to use the framework if they meet the remaining capital and supervisory conditions and are not subject to applicable enforcement actions or brokered-deposit restrictions.
What Call Report Preparers Should Do
Banks should monitor FDIC and FFIEC guidance and revised Call Report instructions implementing the statutory changes. Reciprocal deposits affect reporting in:
- Schedule RC-E: Deposit Liabilities; and
- Schedule RC-O: Other Data for Deposit Insurance and FICO Assessments.
The critical point is that total reciprocal deposits and reciprocal deposits treated as brokered deposits are not necessarily the same amount. The expanded exception may make that difference substantially larger.
Call Report preparers should not see “reciprocal” on a network report and automatically report the entire balance as brokered. Before filing, the bank should determine:
- Its total reciprocal-deposit balance;
- The amount qualifying for the statutory exception; and
- Any remaining amount that must be reported as brokered.
This analysis may require coordination among deposit operations, finance, the Call Report preparer and the deposit placement network provider. The bank should retain the network reports, eligibility analysis and tiered calculation supporting the reported amounts.
The Bottom Line
The new law significantly increases the potential reciprocal-deposit exception for many community and regional banks and expands the institutions that may qualify. That may make reciprocal-deposit networks more useful for retaining large deposit relationships and managing deposit-insurance concerns.
But the reporting principle remains unchanged: reciprocal does not automatically mean brokered. Banks must analyze and document the amount that qualifies for the exception before completing Schedules RC-E and RC-O.
