FDIC Finalizes Rules to Simplify Capital Calculation for Qualifying Community Banking Organizations

Orrick - Finance 20/20
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On September 17, the Federal Deposit Insurance Corporation (FDIC) finalized a rule that introduces an optional community bank leverage ratio (CBLR) framework for measuring capital adequacy of qualifying community banking organizations. In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9 percent, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital. Release. Final Rule.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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