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Agencies simplify community bank capital requirements
The Federal Reserve Board, FDIC, and OCC announced Tuesday morning they have finalized a rule that simplifies capital requirements for community banks by allowing them to adopt a simple leverage ratio to measure capital adequacy. The community bank leverage ratio framework removes requirements for calculating and reporting risk-based capital ratios for a qualifying community bank that opts into the framework. o qualify for the framework, a community bank must have less than $10 billion in total consolidated assets, limited amounts of off-balance-sheet exposures and trading assets and liabilities, and a leverage ratio greater than 9 percent. This rule becomes effective January 1, 2020.
The agencies also finalized a rule to allow non-advanced approaches banks, including community banks, to elect to adopt simplifying changes to the capital rule beginning on January 1, 2020, a quarter earlier than the mandatory compliance date of April 1, 2020. The agencies issued the simplifying changes in July 2019.