Federal Bank Regulatory Agencies Issue Final Rule to Simplify Capital Calculation for Community Banks — 2019-10-29

WASHINGTON— Federal bank regulatory agencies 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. To 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. In response to public comments and outreach, the final rule was modified from the November 2018 proposal to reduce compliance burden while maintaining safety and soundness for qualifying community banks. In particular, the community bank leverage ratio incorporates tier 1 capital as the numerator.