US: Regulatory agencies simplify capital calculation for community banks
US federal bank regulatory agencies have issued a final rule simplifying capital requirements for community banks by allowing them to adopt a simple leverage ratio to measure capital adequacy (leverage ratio framework).
The leverage ratio framework removes requirements for calculating and reporting risk-based capital ratios for a qualifying community bank that opts into the framework.
To qualify, a community bank must have less than $10 billion in total consolidated assets, limited amounts of off-balance-sheet exposures and trading assets and liabilities, and a leverage ratio greater than 9 percent.
The agencies estimate approximately 85 percent of community banks will qualify for the leverage ratio framework.
The framework will first be available for banking organizations to use in their March 31, 2020, Call Report or Form FR Y-9C, as applicable.
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