[House Report 119-202]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-202
======================================================================
SMALL BANK HOLDING COMPANY RELIEF ACT
_______
July 15, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 2835]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2835) to raise the consolidated assets threshold
under the small bank holding company policy statement, and for
other purposes, having considered the same, reports favorably
thereon with an amendment and recommends that the bill as
amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Committee Consideration.......................................... 3
Related Hearings................................................. 4
Committee Votes.................................................. 4
Performance Goals and Objectives................................. 7
Committee Cost Estimate.......................................... 7
New Budget Authority and CBO Cost Estimate....................... 7
Unfunded Mandates Statement...................................... 7
Earmark Statement................................................ 7
Federal Advisory Committee Act Statement......................... 7
Applicability to the Legislative Branch.......................... 8
Duplication of Federal Programs.................................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 8
Minority Views................................................... 9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Bank Holding Company Relief
Act''.
SEC. 2. CHANGES REQUIRED TO THE SMALL BANK HOLDING COMPANY AND SAVINGS
AND LOAN HOLDING COMPANY POLICY STATEMENT.
Not later than 180 days after the date of the enactment of this Act,
the Board of Governors of the Federal Reserve System shall revise
appendix C to part 225 of title 12, Code of Federal Regulations
(commonly known as the ``Small Bank Holding Company and Savings and
Loan Holding Company Policy Statement''), to raise the consolidated
asset threshold under that appendix to $25,000,000,000 for any bank
holding company or savings and loan holding company.
PURPOSE AND SUMMARY
H.R. 2835, the Small Bank Holding Company Relief Act, was
introduced on April 10, 2025, by Representative Byron Donalds
(FL-19). H.R. 2835 requires the Federal Reserve Board to raise
the consolidated asset threshold of the Small Bank Holding
Company and Savings and Loan Holding Company Policy Statement
(Policy Statement) from $3 billion to $25 billion. The bill
will provide sensible regulatory relief to make it easier for
smaller community banks to raise capital. The bill does not
change capital rules and regulations for subsidiary banks.
BACKGROUND AND NEED FOR LEGISLATION
The Policy Statement applies only to bank holding companies
(BHC) that (i) are not engaged in significant nonbanking
activities either directly or through a nonbank subsidiary;
(ii) do not conduct significant off-balance sheet activities;
and (iii) do not have a material amount of debt or equity
securities outstanding (other than preferred securities) that
are registered with the Securities and Exchange Commission. The
Policy Statement also applies to BHCs seeking to acquire an
additional bank or company, as well as to transactions
involving changes in control, stock redemption, or other
shareholder transactions, provided they meet these
qualifications.
The Policy Statement reflects the Federal Reserve's
recognition of the funding constraints faced by small BHCs when
seeking to finance their formation or growth through
acquisitions. Ordinarily, the Federal Reserve would be
reluctant to approve debt-financed startup or acquisition
transactions due to the risks that high debt-servicing costs
pose to solvency and liquidity. Excessive leverage may impair a
BHC's ability to serve as a ``source of strength'' for its
subsidiary banks. However, the Federal Reserve has acknowledged
that small BHCs typically face limited access to equity
financing in both public and private capital markets. As a
result, the use of debt financing is often necessary for these
institutions.
The Federal Reserve first adopted the Policy Statement in
1980. In 2015, it amended the asset-size threshold from $500
million to $1 billion, allowing more institutions to benefit
from its provisions. The threshold was further increased in
August 2018 to $3 billion. These adjustments reflected a
bipartisan effort to account for market changes and maintain
regulatory flexibility for small institutions.
Since 2018, the total value of assets held by U.S.
commercial banks has increased from $16.7 trillion to
approximately $23.8 trillion, a 42.5 percent rise. If the
Policy Statement's threshold had been adjusted in line with
this growth alone, the asset-size limit would now exceed $4.3
billion. This suggests that in real terms fewer BHCs qualify
for the Policy Statement's regulatory treatment over time.
Raising the threshold would maintain the relative definition of
a ``small'' BHC in the context of broader asset growth and
inflation across the banking sector.
COMMITTEE CONSIDERATION
119TH CONGRESS
On April 10, 2025, Representative Byron Donalds introduced
H.R. 2835, the Small Bank Holding Company Relief Act, with
Representatives Mike Haridopolos (R-FL) and Frank Lucas (R-OK)
as original cosponsors. Representatives Troy Downing (R-MT),
Andy Barr (R-KY), Monica De La Cruz (R-TX), and Pete Sessions
(R-TX) were added subsequently as cosponsors. The bill was
referred solely to the Committee on Financial Services. The
bill was attached to the February 5, 2025, hearing titled
``Making Community Banking Great Again.''
On June 10, 2025, the Committee on Financial Services met
in open session to consider, among others, H.R. 2835. The
Committee ordered H.R. 2835, as amended, to be reported
favorably to the House of Representatives.
118TH CONGRESS
On June 23, 2023, Representative Alexander Mooney (R-WV)
introduced H.R. 4346, the Small Bank Holding Company Relief Act
of 2023, with Representatives Barr, Donalds, De La Cruz, Andrew
Ogles (R-TN), and Zach Nunn (R-IA) as original cosponsors.
Representatives Blaine Luetkemeyer (R-MO), Roger Williams (R-
TX), and French Hill (R-AR) were added subsequently as
cosponsors. This bill is an earlier iteration of H.R. 2835. The
bill was referred solely to the Committee on Financial
Services. H.R. 4346 was incorporated as a title under H.R.
8337, the Bank Resilience and Regulatory Improvement Act. On
May 16, 2024, H.R. 8337 was ordered to be reported favorably by
the Committee by a vote of 24 yeas and 22 nays.
115TH CONGRESS
On January 11, 2018, Representative Mia Love (R-UT)
introduced H.R. 4771, the Small Bank Holding Company Relief Act
of 2018, with Representatives Josh Gottheimer (D-NJ) and
Gregory Meeks (D-NY) as original cosponsors. This bill is an
earlier iteration of H.R. 2835. The bill was referred solely to
the Committee on Financial Services. On January 18, 2018, the
Committee on Financial Services ordered H.R. 4771 to be
favorably reported to the House of Representatives by a
recorded vote of 41 yeas and 14 nays. On February 8, 2018, the
House passed H.R. 4771 by a recorded vote of 280 yeas and 139
nays. It was received in the Senate and referred to the Senate
Committee on Banking, Housing, and Urban Affairs. A similar
provision was included in S.2155, the Economic Growth,
Regulatory Relief, and Consumer Protection Act which became
Public Law 115--174 on May 24, 2018.
RELATED HEARINGS
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 2835:
The Committee on Financial Services held a February 5,
2025, hearing titled ``Making Community Banking Great Again.''
A discussion draft version of the bill was attached to the
hearing. The following witnesses testified at the hearing: Ms.
Cathy Owen, Executive Chairman, Eagle Bank & Trust Company; Ms.
Susannah Marshall, Bank Commissioner, Arkansas State Bank
Department; Ms. Rebeca Romero Rainey, President & CEO,
Independent Community Bankers of America; Mr. Patrick J.
Kennedy Jr., Founding Partner, Kennedy Sutherland, LLP; and Ms.
Mitria Spotser, Vice President, Federal Policy, Center for
Responsible Lending.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
On June 10, 2025, the Committee ordered H.R. 2835, as
amended, to be reported favorably to the House by a recorded
vote of 30 yeas and 20 nays, a quorum being present. (Record
Vote No. FC-135).
The Committee considered the following amendments to H.R.
2835:
Representative Donalds offered an amendment
in the nature of a substitute, which made minor edits
and technical changes. This amendment was adopted by a
voice vote.
Representative Bill Foster (D-IL) offered an
amendment (No. 2), designated AMENDHR2835_3. This
amendment would reduce the consolidated asset threshold
under the Federal Reserve's Small Bank Holding Company
and Savings and Loan Holding Company Policy Statement
to $4 billion, down from $25 billion as proposed in the
bill. It would also require GAO to submit a report
within 18 months evaluating the effectiveness of the
threshold, including its impact on competition,
consumer benefits, and the safety and soundness of bank
holding companies. This amendment failed by a recorded
vote of 19 yeas and 29 nays, a quorum being present.
(Record Vote No. FC-134).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 2835 is to require
the Federal Reserve Board to raise the consolidated asset
threshold of the Policy Statement from $3 billion to $25
billion, to provide sensible regulatory relief to make it
easier for smaller community banks to raise capital.
COMMITTEE COST ESTIMATE
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 2835. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
NEW BUDGET AUTHORITY AND CBO COST ESTIMATE
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairman of the Committee shall cause such estimate
to be printed in the Congressional Record upon its receipt by
the Committee.
UNFUNDED MANDATES STATEMENT
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Committee will adopt the estimate once
it has been prepared by the Director.
EARMARK STATEMENT
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the resolution and states that the provisions
of the bill do not contain any congressional earmarks, limited
tax benefits, or limited tariff benefits within the meaning of
the rule.
FEDERAL ADVISORY COMMITTEE ACT STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO THE LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 provides the short title is the ``Small Bank
Holding Company Relief Act.''
Section 2. Changes required to the small bank holding company and
savings and loan holding company policy statement
Section 2 requires that, not later than 180 days after the
date of enactment, the Board of Governors of the Federal
Reserve System revise appendix C to part 225 of title 12, Code
of Federal Regulations, to raise the consolidated asset
threshold to $25,000,000,000 for any bank holding company or
savings and loan holding company.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 2835 does not repeal or amend any section of a
statute. Therefore, the Office of Legislative Counsel did not
prepare the report required under clause 3(e) of rule XIII of
the House of Representatives.
MINORITY VIEWS
H.R. 2835 would significantly increase the consolidated
asset threshold from $3 billion to $25 billion for bank holding
companies (BHCs) and savings and loan holding companies (SLHCs)
to be eligible for the Federal Reserve's Small Bank Holding
Company and Savings and Loan Holding Company Policy Statement.
This statement exempts small BHCs and SLHCs from consolidated
risk-based capital and leverage requirements, reduces reporting
requirements, expedites bank mergers, and allows them to have
higher debt flexibility to finance bank acquisitions. While
Congress has updated this threshold from time to time, most
recently in 2018 by increasing the threshold from $1 billion to
$3 billion, H.R. 2835 would significantly increase the
threshold by 833% and be a major rollback, exempting 98% of all
BHCs and SLHCs including numerous mid-sized banks that have
different risk profiles compared to much smaller community
banks.
The Federal Reserve's Small Bank Holding Company and
Savings and Loan Holding Company Policy Statement was first
implemented by the Fed in 1980. It was originally designed to
help the smallest BHCs with less than $150 million in assets
($618 million in today's dollars)\1\ that had less access to
equity financing than larger institutions to take on more debt
to help finance a bank acquisition. Congress increased the $150
million threshold to $500 million in 2006, added SLHCs and
increased the threshold to $1 billion in 2015, and raised the
threshold to $3 billion in 2018 ($3.8 billion in today's
dollars), where it stands today.
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\1\Staff utilized U.S. Bureau of Labor Statistics' CPI Inflation
Calculator for inflation-adjusted figures in this section.
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Under the policy statement, small BHCs and SLHCs may
qualify if they have fewer than $3 billion in total assets and
don't engage in significant nonbanking activities, off-balance-
sheet activities, or have material amounts of SEC-registered
debt or equity securities (excluding trust preferred
securities, or TruPS). They are allowed to use up to 75% debt
for acquisitions provided the BHC would reduce the debt to 30%
or less of equity in 12 years and retire the debt in 25
years.\2\ (BHC debt generally is limited to 30% of equity.)\3\
While this policy statement primarily applies to the formation
of small BHCs, it also applies to existing small BHCs that wish
to acquire an additional bank or company and to transactions
involving changes in control, stock redemptions, or other
shareholder transactions.\4\ In addition to debt flexibility,
BHCs and SLHCs that qualify are exempt from consolidated risk-
based and leverage capital rules, provided the subsidiary
depository institution is well-capitalized.\5\ They also have
less frequent reporting requirements, filing reports semi-
annually instead of quarterly, and the reports are
significantly less detailed, in part because the holding
companies are not subject to capital requirements.\6\
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\2\Appendix C to part 225 of title 12, Code of Federal Regulations.
Also see CRS, Over the Line: Asset Thresholds in Bank Regulation (May
3, 2021), and Jones Day, The Fed's Small BHC Policy Statement--
Regulatory Relief for Bank Growth and Acquisitions (Aug. 17, 2017),
which indicated increasing the threshold above $1 billion may have
diminishing returns given securities-related exceptions.
\3\Id.
\4\Id.
\5\This exemption is provided by Section 171 of Dodd-Frank
(referred to as the ``Collins Amendment''), which exempts small BHCs
covered by the policy statement from having to meet the same capital
requirements at the holding company level that depository subsidiaries
face. See CRS, Over the Line: Asset Thresholds in Bank Regulation (May
3, 2021).
\6\Federal Reserve Bank of Minneapolis, Small Bank Holding Company
Policy Statement Revisions (Jun. 16, 2015).
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There have been a variety of proposed adjustments that the
House has considered the last decade. After Congress raised the
threshold from $500 million to $1 billion in 2015, House
Republicans sought to increase the $1 billion threshold to $5
billion in 2016.\7\ That bill passed the House by a vote of
247-171. The Obama Administration issued a Statement of
Administration Policy (SAP) with a veto threat opposing the
bill, explaining, ``[T]his piece of legislation [is] an attempt
to allow large banks to evade specific minimum leverage and
risk-based capital requirements. These limitations were put in
place to ensure that banks remain sound and able to serve their
customers. Community banks with $1 to $5 billion in assets
already have sufficient access to capital markets and as a
group are exhibiting health and resilience. Raising the
threshold to exempt banks with over $1 billion from important
minimum leverage and capital requirements would do little more
than encourage banks to take on debt, endangering their
soundness and potentially depriving their customers of much
needed banking services should the bank fail.''\8\
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\7\H.R. 3791 (114th), Small Bank Holding Company Relief (Love).
\8\Obama White House, Statement of Administration Policy, H.R.
3791--Raise the Consolidated Assets Threshold under the Small Bank
Holding Company Policy Statement (Apr. 12, 2016).
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In 2017, Trump's Treasury Department issued a
recommendation to raise the threshold to $2 billion.\9\ House
Republicans instead proposed a much bigger increase to $10
billion as part of a major financial deregulatory bill, which
passed the House but with all Democrats opposing the bill.\10\
In 2018, House Republicans proposed to raise the threshold to
$3 billion as a standalone bill,\11\ which the House passed by
a vote of 280-139. This change was included in S. 2155 (115th),
the Economic Growth, Regulatory Relief, and Consumer Protection
Act (Crapo), which was signed into law by President Trump.\12\
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\9\Treasury, A Financial System That Creates Economic Opportunities
Banks and Credit Unions (June 2017).
\10\H.R. 10 (115th), the Financial Choice Act (Hensarling).
\11\H.R. 4771 (115th), Small Bank Holding Company Relief Act of
2018 (Love).
\12\P.L. 115-174.
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There has not been evidence presented to Congress thus far
to justify raising this particular threshold to $25 billion.
Chairman Hill's community bank agenda simply suggested that,
``The consolidated asset threshold under the Small Bank Holding
Company Policy Statement should be raised to allow more
community banks to grow using certain debt financing,'' but it
did not specify a new threshold or cite any studies to justify
this change.\13\ Earlier this year, House Republicans posted a
discussion draft of Rep. Donalds' bill that proposed raising
the threshold to $10 billion, instead of $25 billion, that was
considered as part of a hearing on community banking.\14\
Despite having several bank industry witnesses testify, the
proposal was not discussed and none of the witnesses provided a
rationale to explain why increasing this threshold to $10
billion, let alone $25 billion, would be justified.\15\ The
proposal also was not discussed at a recent Financial
Institutions Subcommittee hearing that focused on bank mergers.
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\13\Rep. French Hill (R-AR), Rep. Hill Outlines Principles to Make
Banking Great Again (Nov. 14, 2024).
\14\FSC hearing, Make Community Banking Great Again (Feb. 5, 2025).
\15\Id.
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Increasing this threshold by 833% from $3 billion to $25
billion would expand the scope to cover roughly 98% of all BHCs
and SLHCs,\16\ which includes numerous mid-sized banks that
have different risk profiles than much smaller banks. For
example, some mid-sized banks have major exposures to
commercial real estate (CRE) that has raised some concerns.\17\
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\16\See Fed, Annual Report--Supervision and Regulation (2023) and
FFIEC, Large Holding Companies (Dec. 31, 2024).
\17\CRS, Commercial Real Estate and the Banking Sector (Sep. 12,
2024).
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It would be prudent to gather more data and analysis to
consider what adjustments, if any, should be made. One approach
would be to make an adjustment based on inflation, which would
be roughly $3.8 billion today, and to study the issue further.
Rep. Bill Foster (D-IL), Ranking Member of the Financial
Institutions Subcommittee, offered such an amendment that
Republicans rejected that would increase the threshold to $4
billion, and require the Government Accountability Office (GAO)
to do an impact study that would give Congress more data and
analysis to help explore legislative options to make the
eligibility criteria more dynamic and the policy statement more
effective in a way that supports community banks and the
communities they serve in a safe and sound manner.
Congress might also consider utilizing a more nuanced
definition to support smaller banks, instead of a simple asset
threshold, as Better Markets suggested more generally in
response to Chairman Hill's community bank agenda.\18\ This
could include or utilizing FDIC's definition of a community
bank that goes beyond asset size and considers factors like a
bank's lending and deposit-gathering activities, its geographic
focus, and its overall relationship with the community,\19\ or
considering if the institution receives high exam ratings.
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\18\Better Markets, Community Banks Are Vital to Main Street
Families and Businesses, Congress Should Reconsider Priorities to Help
Them (Apr. 1, 2025). For analysis of various bank threshold, see CRS,
Over the Line: Asset Thresholds in Bank Regulation (May 3, 2021).
\19\FDIC, Community Banking Studies--2012 and 2020 (accessed Jun.
7, 2025).
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While there may be some benefits with adjusting the
threshold, there are risks too, given the reduced reporting and
exemptions from certain capital requirements, among other
factors. The change could result in more situations in which a
BHC get into financial trouble with knock-on impacts to its
subsidiary bank. After all, the Fed acknowledged in its Policy
Statement that ``The Board believes that a high level of debt
at the parent holding company impairs the ability of a bank
holding company to provide financial assistance to its
subsidiary bank(s) and, in some cases, the servicing
requirements on such debt may be a significant drain on the
resources of the bank(s).''\20\ Several consumer groups oppose
the bill, including Americans for Financial Reform and Public
Citizen.
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\20\Appendix C to part 225 of title 12, Code of Federal
Regulations.
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For these reasons, we oppose H.R. 2835.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Gregory W. Meeks,
Al Green,
Emanuel Cleaver, II,
Bill Foster,
Joyce Beatty,
Juan Vargas,
Rashida Tlaib,
Sylvia R. Garcia,
Nikema Williams,
Members of Congress.
[all]