Summary
The Federal Deposit Insurance Corporation (FDIC) has proposed significant changes to its bank merger review processes, including the creation of a new rapid review track for “de minimis” merger transactions. The proposed review track for "de minimis" merger transactions would apply to the acquisitions of small banks, and those banks are concentrated in small, mostly rural counties where one branch can consist of a large share of the local banking market. Under the proposal, the public would have no chance to comment before a deal is approved. This analysis measures what is at stake if the branches of those banks close after an acquisition.
Key Findings
- 530 FDIC-supervised banks hold $133.9 million or less in assets. Under the proposal, the FDIC could approve their acquisition as part of a de minimis merger transaction in the absence of any comment period.
- Those banks run 901 full-service branches in 558 counties.
- If every one of those branches closed, 112 counties in 22 states would lose at least 30% of their bank branches. That is one in five of the 558 counties. 58 would lose half or more, and 11 would lose every branch.
- Most of the 112 counties are rural: 87% under the FDIC’s floated definition of rural and 79% under a narrower one.
- Between 117 and 197 of the 901 branches (13% to 22%) are the last bank within two miles (urban) or 10 miles (rural). Closing them would create new banking deserts.
- These are exposure measures, not forecasts. They show what could be lost if an acquirer closed every branch.
Terms Used in This Article
- De minimis merger. Under the FDIC proposal, it is a deal in which the assets acquired are below $133.9 million (the 2026 Hart-Scott-Rodino threshold) and below 5% of the buyer’s assets. The proposal would let these deals seek approval by a letter filing with no comment period. The proposal sets out other criteria for this type of merger transaction; it allows for “deemed approval” in as little as 5 days from filing of a substantially complete application. [See 91 Fed. Reg. 60196, 60199; 60201; 60206-60207 (proposed Sept. 22, 2026).]
- Eligible bank. An FDIC-supervised bank with $133.9 million or less in assets. These are the banks a buyer could acquire in a de minimis transaction subject to the rapid review track.
- Full-service branch. A bank office that takes deposits and makes loans. Branches of every FDIC-insured bank are counted, regardless of the bank’s primary regulator.
- Banking desert. Here, an eligible bank’s branch that has no office of a different bank within two miles (urban) or 10 miles (rural). These distances are NCRC screening choices, not FDIC standards.
- Two definitions of rural. The proposal asks how to define rural (Question 109) but adopts no definition, so results are shown under both. Standard A is the definition the FDIC floated in the proposal: a county outside a metropolitan statistical area (91 Fed. Reg.60196, 60217). Standard B is narrower: a county outside any metropolitan or micropolitan area, with a branch counted as urban if it sits inside a 2020 Census Urban Area.
How Many Banks and Branches Are Exposed
The 530 eligible banks make up about 20% of banks the FDIC supervises. They are small, but together they cover a wide map. Their 901 branches spread across 558 counties, so the proposed change in the merger rules could reach communities in nearly every part of the country.
Counties That Could Lose Branches
A branch closure takes a bigger share out of a county that has few branches to begin with, so we measured each county’s exposure as a share of its branches. For each county, we divided the full-service branches of eligible banks by all full-service branches in the county. We counted all banks, regardless of the regulator that holds supervisory authority. Take a county with six branches, two of them owned by eligible banks. If both closed, the county could lose one-third of its branches. Because the measure is a share, a county with few branches can reach a high share quickly.
We then counted counties at several cutoffs. A cutoff is the smallest share of a county’s branches that eligible banks must hold for the county to be counted. At a cutoff of 30%, 112 of the 558 counties with an eligible bank branch are counted, and they are in 22 states. Those counties could lose at least 30% of their branches.
Chart 1 shows the count at each cutoff. A higher cutoff counts fewer counties. Fifty-eight counties could lose half or more of their branches. Lowering the cutoff to one-fifth brings the count to 198.
Small counties drive the count. Ninety-five of the 112 counties have six or fewer branches in total, and 39 reach the 30% mark because of a single eligible branch. Eleven counties could lose every branch. This matters because in a county with one or two banks, a branch closure leaves residents and small businesses with no local lender. Table 2 gives exact counts and the rural split under each definition.
Where the Counties Are
The counties that could lose the most are spread across 22 states, but a few states stand out. Kansas has 16 of the 112, more than any other state. North Dakota has 12 and Minnesota has 11. Together, those three states account for about a third of the total. Several other states have only one or two. Chart 2 is an interactive map. Choose a cutoff and the map shows which states and counties could lose at least that share of their branches.
New Banking Deserts
A second way to measure potential harm flowing from bank branch closures is increased distance between bank branches. We tested each of the 901 eligible branches one at a time to determine whether any office of a different bank lies within two miles for an urban branch or 10 miles for a rural one. If none does, closing the branch would create a banking desert. Banks in the same holding company did not count as alternatives. Other eligible banks did count, because each branch was tested alone.
Between 117 and 197 of the 901 branches (13% to 22%) would be the last bank in their area, depending on how rural is defined. Chart 3 splits the total into urban and rural branches under each definition.
The totals differ because Standard A treats every branch in a metropolitan county as urban and applies the two-mile test. That covers 327 branches, and 105 of them (32%) are flagged because their closure would result in a potential bank desert. Under Standard B, only 266 branches are urban, and 8 of them (3%) are flagged. For rural branches, the different definitions lead to similar results. Under Standard A, 92 of 574 rural branches (16%) are flagged. Under Standard B, 109 of 635 (17%) are flagged. The impact of rural bank closures would be significant.
Using either standard, the nearest other bank branch is a median of about 13 miles away, and the farthest is 61.7 miles.
Whether most new deserts are rural depends on the definition. Under Standard B, 109 of 117 (93%) are rural. Under Standard A, 92 of 197 (47%) are rural, because the two-mile test inside metropolitan counties adds many urban cases.
Four states hold about half of the flagged branches under each definition. Kansas, North Dakota, Iowa and Minnesota hold 91 of the 197 under Standard A. North Dakota, Kansas, Oklahoma and Minnesota hold 64 of the 117 under Standard B.
Conclusion
The FDIC’s proposal would fast-track merger transactions involving small banks, including by eliminating opportunities for communities to provide input on the proposed transactions. As highlighted above, should those mergers cause the closing of the banks’ branches, the end result could be banking deserts and the loss of critical banking services for rural communities.
