Agencies issue joint proposal on community bank leverage ratio for qualifying organizations

Agency Rule-Making & Guidance FDIC OCC Federal Reserve Community Banks EGRRCPA

On November 21, the Federal Reserve Board, FDIC, and OCC jointly announced a proposed rule to simplify capital requirements for qualifying community banking organizations that opt into the community bank leverage ratio framework. Among other criteria, qualifying organizations must have “less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9 percent.” FDIC FIL-77-2018 provides an overview of the proposed regulation amendments—required under Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act—which would allow qualifying organizations to satisfy (i) generally applicable leverage and risk-based capital requirements; (ii) the prompt corrective action framework’s well-capitalized ratio requirements; and (iii) any other generally applicable capital and leverage requirements. Comments will be due 60 days after publication in the Federal Register.