Proposed Changes to CAMELS Rating System 

Federal regulators are proposing to make changes to the CAMELS rating system to emphasize “material financial risks” over concerns related to policies, procedures and documentation. The regulators said these changes would better reflect the issues most likely to affect a financial institution’s safety and soundness. Comments must be received by August 17.

New Executive Orders

President Donald Trump has signed an executive order directing regulators to provide guidance to financial institutions on identifying suspicious activity allegedly tied to individuals in the country illegally, and to potentially strengthen customer due diligence requirements. He also signed a separate order asking the Federal Reserve to explore expanding its payment accounts and payment services to nonbank financial institutions. 

HomeTrust Named to 2026 KBW Bank Honor Roll and Forbes’ 2026 List of America’s Best Banks

HomeTrust Bancshares, Inc., the holding company of HomeTrust Bank, announced it has been named to the 2026 KBW Bank Honor Roll for the second consecutive year. Only 6% of eligible banks were selected—representing 17 financial institutions—based on best-in-class earnings growth over the past 10 years.

The Bank was also recently recognized on Forbes’ 2026 list of America’s Best Banks, which ranks the top 100 banks based on key metrics measuring growth, credit quality, profitability and stock performance. This is the third consecutive year HomeTrust has been recognized on the list.

In addition, HomeTrust earned a spot on American Banker’s Best Banks to Work For for the second straight year and was recognized as a Best Place to Work by Best Companies Group in all five states it serves.

Senate Bill 595 Conference Report

Following intensive negotiations between NC House and NC Senate leaders, a compromise committee substitute for Senate Bill 595 (Various Revenue Law Changes) has been placed on the House and Senate calendars for a vote on Tuesday, June 2. The 58-page bill features tax updates to align state law with federal standards, alongside significant updates directly affecting North Carolina banks and credit unions.

[Full Report]

Housing Affordability

Governor Josh Stein has signed an executive order directing state agencies to coordinate efforts to expand housing supply and affordability across North Carolina. Officials cited projections showing the state could face a shortage of more than 750,000 housing units by 2029.

Pictured: Governor Josh Stein

General Assembly Makes Steady Progress

The General Assembly convened its 2026 short session back in late April and there has been slow and steady progress since then. Attached is our current Bill Tracker, which shows the status of bills that we have been following since the start of the biennium in January 2025 and the newer bills filed this year.

Notable recent legislative activity has predominantly been on proposed amendments to the NC Constitution.

House Banking Bills

The House Financial Services Committee has advanced six new bills of interest to our industry. Visit the NCBA website for the full report on H.R. 8278, H.R. 2978, H.R. 2152, H.R. 4801, H.R. 5396, and H.R. 8671.

[Full Report]

‘Skinny’ Fed Master Accounts

The Federal Reserve has issued a proposal to establish a payment account category that certain financial institutions could use for the limited purpose of clearing and settling payments. Payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances held at a Reserve Bank, and would only have access to payment services with automated controls to prevent overdrafts. 

FDIC Study of 2023 Bank Failures

The FDIC has released an analysis of the 2023 spring bank failures (of Silicon Valley Bank, Signature Bank, and First Republic Bank), finding that depositors with “substantial” uninsured funds were far more likely to run during the stress than insured retail depositors. 

Federal Preemption of State Interest-on-Escrow Laws

The OCC has finalized two rules to clarify that national banks are exempt from state laws regulating real estate escrow accounts. The first rule codifies longstanding powers of national banks and federal savings associations to establish or maintain real estate lending escrow accounts and to exercise flexibility in making business judgments as to the terms and conditions of such accounts, including whether to offer any compensation paid to customers or to assess any related fees.

The second rule states that federal law preempts state laws that eliminate national banks’ and federal savings associations’ flexibility to decide whether and to what extent to pay interest or other compensation on funds placed in real estate escrow accounts, or assess fees in connection with such accounts.

FDIC Signage Q&As

The FDIC has updated the Q&As for its signage and advertising requirements to reflect recent changes to the regulation. 

Congressional Activity

On Wednesday, the House Financial Services Subcommittee on Digital Assets held a hearing on bank-fintech collaborations.

On Thursday, the Subcommittee on National Security and Illicit Finance scheduled a hearing on modernizing the Bank Secrecy Act.

CLARITY Act Advances through Senate Banking Committee

At the end of last week, the Senate Banking Committee voted 15-9 to advance H.R. 3633 – the Digital Asset Market Clarity Act (CLARITY Act) – a market structure bill for digital assets. In the revised bill, arguably the most consequential provision is Section 404, which bars rewards on idle balances of stablecoins that closely resemble bank deposits.

Pictured: Sen. Tim Scott

Section 404 is intended to ban covered parties from paying any form of interest or yield “on a payment stablecoin balance in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” However, in its current form, the section has exceptions that contradict the stated intent and appear instead to allow rewards to scale based on duration and balance size, which appear to allow incentives to operate like interest on deposit accounts.

Senate Banking Committee Chairman Tim Scott (R-SC) blocked amendments that would have further restricted stablecoin yields and banned elected officials and their families from issuing or profiting from digital assets.

Crypto ATMs

The largest operator of Bitcoin kiosks in the nation – Bitcoin Depot – is shutting down amid increased regulatory scrutiny of the role of crypto ATMs in facilitating scams. The states of Indiana and Tennessee have enacted bans on the operation of crypto ATMs, while numerous other states have added protections.

The Office of the Attorney General for the District of Columbia filed suit in September 2025 against one of the crypto ATM operators. Among the allegations in the lawsuit is that 93% of deposits to Athena Bitcoin were from scams targeting seniors and other vulnerable adults, and that the operator profited from illegal, hidden fees.

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United Community Banks Declares $0.25 Quarterly Dividend

United Community Banks, Inc. (NYSE:UCB) announced today that its Board of Directors approved a quarterly cash dividend of $0.25 per share on the company’s common stock. The dividend is payable on July 3, 2026, to shareholders of record as of June 15, 2026, according to a press release statement.

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