Agencies Push to Bolster Community Banks with Leverage Ratio Relief

WASHINGTON – In a move aimed at strengthening the backbone of local economies, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) have jointly proposed changes to the community bank leverage ratio framework. The proposal seeks to reduce regulatory burden while maintaining strong capital requirements, providing greater flexibility for community banks.

The revised framework, first adopted in 2019, has been instrumental in simplifying regulatory capital requirements. Now, the agencies propose lowering the community bank leverage ratio requirement from nine percent to eight percent. Additionally, they are extending the grace period for non-compliance from two quarters to four quarters.

These changes are designed to recognize the unique business models and risk profiles of community banks. The proposal ensures that capital levels remain robust, consistent with safety and soundness standards. It also maintains a leverage ratio twice the minimum for non-opting banks.

The agencies assert their commitment to supporting community banks, crucial players in local economies. These modifications provide enhanced options for community banks to manage regulatory obligations while maintaining their ability to serve their communities effectively.

Comments on the proposal are due 60 days after publication in the Federal Register. The FDIC, FRB, and OCC have made contact information available for any inquiries or submissions.

RELATED: Felon Found Armed: WV Man Faces Decade-Plus in Prison