FDIC finalizes changes to capital rules

The FDIC has announced it has finalized a rule that introduces an optional simplified measure of capital adequacy for qualifying community banking organizations (i.e., the community bank leverage ratio (CBLR) framework), as required by the Economic Growth, Regulatory Relief and Consumer Protection Act. The CBLR framework is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9 percent, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. the CBLR framework will be available for banks to use in their March 31, 2020, Call Report.

The FDIC also finalized a rule that permits non-advanced approaches banking organizations to use the simpler regulatory capital requirements for mortgage-servicing assets, certain deferred tax assets arising from temporary differences, investments in the capital of unconsolidated financial institutions, and minority interest when measuring their tier 1 capital as of January 1, 2020. Banking organizations may use this new measure of tier 1 capital under the CBLR framework.

In addition, the FDIC finalized a rule that makes technical changes to incorporate the CBLR framework into the deposit insurance assessment system. A bank that uses the CBLR framework will not have any changes to how its assessment rate is calculated.

The agency also posted a Fact Sheet with an overview of the Community Bank Leverage Ration (CBLR) Framework.