Banking Agencies Adopt Community Bank Leverage Ratio Rules
In October 2019, the Federal Reserve, OCC and FDIC finalized a rule that simplifies capital requirements for certain community banking organizations, consistent with section 201 of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, by allowing qualifying community banking organizations to adopt a simple leverage ratio to measure capital adequacy. To qualify for the simplified framework, a depository institution or depository institution holding company 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 (equal to tier 1 capital divided by average total consolidated assets) greater than 9%.