TMIB Lite: Agencies Propose New Leverage Ratio for Community Banks

By: Sharon J. Lorman
Jeffrey P. Marsico
Richard B. Trauger, Jr.
Kyle L. Kuster

Podcast Show Notes:

Our This Month In Banking (TMIB) podcast features discussion with colleagues and other industry thought leaders on interesting banking news that happened this month. TMIB will be available on the last Wednesday of every month here, and on Apple and Droid podcast apps for your listening enjoyment. Join us on your commute, at your desk or at home.

Topic: Agencies Propose New Leverage Ratio for Community Banks
Start time: 1:27
Three federal banking agencies invited public comment on a proposal that would simplify regulatory capital requirements for qualifying community banks as required under the regulatory relief law enacted in May by giving them an option to calculate a simple leverage ratio, rather than multiple measures of capital adequacy. In a joint press release on November 21, it stated that “under the proposal, a community banking organization would be eligible to elect the community bank leverage ratio framework if it has less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9 percent. A qualifying community banking organization that has chosen the proposed framework would not be required to calculate the existing risk-based and leverage capital requirements. A firm would also be considered to have met the capital ratio requirements to be well capitalized for the agencies’ prompt corrective action rules provided it has a community bank leverage ratio greater than 9 percent.” Is the 9% threshold too high?

Watch for episode 36 of This Month in Banking to be released on Wednesday, December 26, 2018 and a new episode on the last Wednesday of every month.

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