What Does the New Reciprocal Deposit Legislation Mean for U.S. Banks?

What the law changes 

The new law amends the Federal Deposit Insurance Act to expand the amount of a bank’s reciprocal deposits that can be classified as “nonbrokered,” a designation that generally reflects more stable, relationship-based funding.  

Under the previous framework, reciprocal deposits counted as nonbrokered were capped at the lesser of 20% of a bank’s total liabilities or $5 billion. This one-size-fits-all limit often constrained banks’ ability to fully leverage reciprocal deposits, even when those funds were tied to long-term customer relationships.  

The 21st Century ROAD to Housing Act replaces that flat cap with a cumulative, tiered model based on the amount of a bank’s liabilities. Under the new formula, reciprocal deposits can be excluded from brokered deposit treatment up to: 

• 50% of the first $1 billion in liabilities, plus 

• 40% of liabilities between $1 billion and $10 billion, plus 

• 30% of liabilities over $10 billion  

• With a cap of up to $30 billion that can be counted as nonbrokered 

For example, under the previous law, a bank with $1.5 billion in liabilities could count $300 million of reciprocal deposits as nonbrokered. The new law increases that number to $700 million. For a bank with $18 billion in liabilities, the amount of reciprocal deposits considered nonbrokered increases from $3.6 billion under the previous law to $6.5 billion now.  

Try this calculator for your bank’s specific numbers. 

Why reciprocal deposits matter 

Ever since IntraFi invented reciprocal deposits 25 years ago, reciprocal deposits have enabled banks to offer customers access to aggregate FDIC insurance on large balances—while maintaining a single banking relationship. When reciprocal deposits are placed across a network of participating banks in increments below the standard $250,000 insurance limit, the placing bank receives matching deposits back.  

For customers, this structure provides enhanced safety without operational complexity. For banks, it helps attract more large, stable deposits from businesses, municipalities, nonprofits, and high-net-worth individuals. 

Reciprocal deposits are particularly valuable because, as nonbrokered deposits, they behave more like “core” funding—sticky and relationship-driven—rather than rate-sensitive, brokered deposits. Policymakers and industry groups have increasingly recognized this distinction, especially after the bank failures of 2023 highlighted the risks associated with uninsured deposits.  

Impact on banks and communities 

By expanding the reciprocal deposit limit, the new law gives banks greater flexibility to strengthen their balance sheets and retain high-value customer relationships. In practical terms, a bank can now hold substantially larger volumes of reciprocal deposits as nonbrokered.  See more on this transformative law here.  

Deposit placement through IntraFi services is subject to the terms, conditions, and disclosures in applicable agreements. IntraFi is not an FDIC-insured bank, and deposit insurance covers the failure of an insured bank. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. Certain conditions must be satisfied with “pass-through” FDIC deposit insurance coverage to apply.