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Federal Register: Federal Reserve Board, FDIC and OCC Modify Community Bank Leverage Ratio

A final rule adopted by the Federal Reserve Board, the FDIC, and the OCC, which makes permanent two interim rules (see previous coverage) to provide relief as to the community bank leverage ratio, was published in the Federal Register. The final rule goes into effect on November 9, 2020.

As previously covered, the final rule will:

  • allow community banking organizations that have a leverage ratio of 8 percent or more, and that meet certain other criteria, to use the community bank leverage ratio framework in the second quarter of 2020;

  • implement a two-quarter grace period for certain community banking organizations that have a leverage ratio of less than 8 percent but maintain one of no less than 7 percent;

  • transition the community bank leverage ratio from 8 percent at the beginning of the second quarter of 2020 to 8.5 percent through calendar year 2021 and then to 9 percent afterward; and

  • continue to provide a two-quarter grace period to a qualifying community banking organization, if its leverage ratio falls no more than 1 percent below a given ratio requirement.

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Community Banks
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