Inter-agency statement on the community bank leverage ratio framework


Applicability: This letter applies to qualifying banking organizations with less than $ 10 billion in total consolidated assets overseen by the Federal Reserve.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (collectively, the agencies) today issued a statement providing information on the use of the period two-quarter grace period under the optional community bank leverage ratio framework. The community bank leverage ratio framework offers eligible community banking organizations the option of calculating only a simple leverage ratio, rather than both risk-based and leverage-based capital adequacy measures. As a result of the CARES (Coronavirus Aid, Relief, and Economic Security Act) law, agencies temporarily lowered the framework’s community banking leverage ratio requirement to better enable community banking organizations to support households and businesses during the COVID-19 pandemic.

The press release notes that from the first quarter of 2022, the leverage ratio requirement of community banks will return to its initial level of 9%. In addition, the statement discusses the availability of a two-quarter grace period that typically gives banking organizations additional time to build up capital and manage their balance sheets in order to stay within or prepare for. comply with risk-based capital requirements. The agency declaration does not change any existing agency rules or regulations.

Reserve banks are requested to distribute this letter to supervised organizations in their districts and to appropriate supervisory staff. Questions can be sent through the Commission’s public website.1

Warning

Board of Governors of the Federal Reserve System published this content on December 21, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on December 21, 2021 07:29:04 PM UTC.


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