Fed Bank Threshold Hike to $150B: First Horizon, UMB and Piper Sandler

The Federal Reserve plans to raise its bank oversight thresholds, lifting the $100 billion asset line that triggers stricter supervision to about $150 billion and the $700 billion line to about $1 trillion, Reuters reported on September 25, 2026, citing people familiar with the matter.[1] The first effect may fall on mid-size banks just below $100 billion that have held back from large acquisitions because of that line.

What Reuters reported

According to the report, the proposal is due later in 2026.[1][2] US banks with $50 billion to $700 billion in assets completed only 33 acquisitions in the past decade, and seven last year.[1] Among banks Reuters named as likely beneficiaries, U.S. Bancorp (USB) rose 1.6% that day, Capital One (COF) 1.8%, Western Alliance (WAL) 1.8%, Zions (ZION) 1.6% and Pinnacle (PNFP) 1.2%, while the regional bank ETF rose 0.8% and the S&P 500 ETF 0.5%.[1][3]

How the Fed's bank size categories work

Since 2019, the Fed has supervised banks in size tiers, with more rules for bigger banks. Banks above $100 billion fall into "Category IV" and face the Fed's supervisory stress test, a capital buffer set from the test results, a capital plan and liquidity stress tests.[2] PYMNTS reported that banks above the thresholds spend tens of millions of dollars a year on compliance staff, risk systems and regulatory infrastructure.[2]

The other issue is AOCI, the paper losses on a bank's bonds after rates rise. Under capital rules now in progress, crossing $100 billion may require counting them in regulatory capital, lowering capital ratios.[8] "Category II" banks, those above $700 billion, must count AOCI in capital and follow full liquidity rules.[12]

A bank with just over $80 billion in assets that buys a $20 billion peer moves straight into Category IV.

From a higher threshold to bank M&A advisory fees

First, with the line at about $150 billion, banks with $70 billion to $100 billion in assets gain about $50 billion of room to grow, and a whole-bank acquisition no longer immediately brings the compliance cost and capital step.[1][4]

Second, banks with $10 billion to $60 billion in assets gain more potential buyers, and the number of deals could exceed last year's seven.[1]

Third, larger and more frequent deals could bring more advisory fees to the investment banks that arrange them, plus balance-sheet restructuring trades at closing.[9][10]

At the top end, U.S. Bancorp has $725.9 billion in assets, already above the $700 billion line, and Category II is determined by four-quarter average assets; Capital One has $673.8 billion, about $26 billion below the line.[4][12][13] With the threshold at about $1 trillion, neither would move into Category II.[1]

Companies that could be affected

First Horizon (FHN) is a regional bank with $84.4 billion in assets at the end of the second quarter.[4] In July 2025 its CEO already linked M&A to looser thresholds, and in October the CEO said the "bright line around $100 billion" seems "a little less bright and potentially can be moved up over time."[6][5] If the line moves to about $150 billion, its acquisition headroom could grow from about $16 billion of assets to about $66 billion, and it would not have to recognize about $0.85 billion of AOCI losses immediately on crossing.[4]

At an assumed $50 million a year of compliance cost, the saving is about 3.7% of annualized pretax income.[4] At roughly 3% organic growth, First Horizon would take about five years to reach $100 billion, so the saving depends on whether it makes a deal. The stock rose 1.2% on September 25 to close at $23.46, is up 2.8% over the past year, and has a market cap of about $11.1 billion.[3]

UMB Financial (UMBF) is a regional bank that previously acquired Heartland, with $72.3 billion in assets at the end of the second quarter.[4] In January 2026, management said, "we would be wary of transactions that would put us close to the $100 billion mark."[7] In April, the CFO said the new capital rules were a net positive overall and that "the negative is just the inclusion of AOCI."[8]

At about $150 billion, the targets UMB could consider may grow from about $25 billion of assets to about $75 billion. At an assumed $50 million a year of compliance cost, the saving is about 3.6% of annualized pretax income, also dependent on a deal.[4] The stock rose 0.6% on September 25 to close at $135.82, is up 14.9% over the past year, and has a market cap of about $10.3 billion.[3]

Piper Sandler (PIPR) is an investment bank that ranked as the number one adviser in US bank M&A by both announced transaction count and deal value in the first half of 2026.[9] In July, management said "large-scale M&A activity continued to be lacking."[9] Its advisory revenue in the first half of 2026 was $525.2 million.[11]

By estimate, bank M&A advisory is about a tenth of Piper's revenue, or about $190 million. If the new rule adds 3 to 5 mid-size and large bank deals a year, Piper could gain $15 million to $50 million of revenue and $8 million to $25 million of pretax profit, about 2% to 6% of annualized pretax income.[11][4] Fees are paid at closing, so the revenue effect may not appear until the second half of 2027. The stock rose 1.8% on September 25 to close at $72.34, is down 17.5% over the past year, and has a market cap of about $5.1 billion.[3]

What to watch

First, the proposal: check whether the thresholds are about $150 billion and about $1 trillion, and whether AOCI inclusion and supervisory stress tests move up with the lower line.[1][2] A comment period follows, and a final rule most likely comes in 2027.

Next, October third-quarter calls: First Horizon on October 15, UMB on October 27 and Piper Sandler on October 30. Watch whether UMB drops its concern about getting "close to the $100 billion mark," whether First Horizon gives M&A more priority, and whether Piper describes a growing bank M&A pipeline.[5][7][9] Then watch for a whole-bank deal by a sub-$100 billion bank that takes the combined company past $100 billion, and for Piper's advisory revenue in Q4 2026 through Q2 2027 running ahead of the first-half pace.[11]

The chain breaks if the proposal keeps stress tests or AOCI inclusion at $100 billion and relaxes only minor requirements; it slips past mid-2027 or arrives with new constraints; or no bank under $100 billion announces a deal crossing the line within 12 months. The Fed also resumed rate hikes in September. If deals are held back by bank valuations and bond losses rather than regulation, Piper's bank M&A advisory revenue could stay flat.

This only helps you find overlooked transmission chains. It is not a stock recommendation.

Sources

[1] Reuters (via Spokesman-Review) · 2026-09-25 · US Fed plans to raise bank oversight thresholds, sources say · https://www.spokesman.com/stories/2026/sep/25/us-fed-plans-to-raise-bank-oversight-thresholds-so/ [2] PYMNTS · 2026-09-25 · Fed prepares to lift thresholds that trigger stricter bank oversight · https://www.pymnts.com/legal/bank-regulation/2026/fed-prepares-to-lift-thresholds-that-trigger-stricter-bank-oversight/ [3] Drillr · 2026-09-25 · Daily closes, volume, period returns and market cap [4] Drillr · 2026-06-30 · Q2 2026 financials (assets, AOCI, equity, revenue, pretax income) [5] Drillr · 2025-10-15 · First Horizon Q3 2025 call summary [6] Drillr · 2025-07-16 · First Horizon Q2 2025 call summary [7] Drillr · 2026-01-28 · UMB Financial Q4 2025 call summary [8] Drillr · 2026-04-29 · UMB Financial Q1 2026 call summary [9] Drillr · 2026-07-30 · Piper Sandler Q2 2026 call summary [10] Drillr · 2026-05-01 · Piper Sandler Q1 2026 call summary [11] Piper Sandler · 2026-08-05 · Q2 2026 10-Q (advisory services revenue) [12] Drillr · 2026-04-16 · U.S. Bancorp Q1 2026 call summary [13] Drillr · 2026-04-21 · Capital One Q1 2026 call summary