SR 21-21: Interagency Statement on the Community Bank Leverage Ratio Framework

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SR 21-21: Interagency Statement on the Community Bank Leverage Ratio Framework

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551

DIVISION OF SUPERVISION AND REGULATION

SR 21-21

December 21, 2021

TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL RESERVE BANK AND INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE

SUBJECT:

Interagency 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 supervised 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 to provide information on the use of the two-quarter grace period under the optional community bank leverage ratio framework. The community bank leverage ratio framework provides qualifying community banking organizations the option to calculate only a simple leverage ratio, rather than both risk-based and leverage-based measures of capital adequacy. Following the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the agencies temporarily lowered the framework’s community bank leverage ratio requirement to better allow community banking organizations to support households and businesses during the COVID-19 pandemic.

The statement notes that beginning in the first quarter of 2022, the community bank leverage ratio requirement will revert to its original level of 9 percent. In addition, the statement discusses the availability of a two-quarter grace period that generally allows banking organizations additional time to build capital and manage their balance sheets to either remain in the framework or prepare to comply with risk-based capital requirements. The statement from the agencies does not alter any existing agency rules or regulations.

Reserve Banks are asked to distribute this letter to the supervised organizations in their districts and to appropriate supervisory staff. Questions may be sent via the Board’s public website. 1

signed by Michael S. Gibson Director Division of Supervision and Regulation

Attachments:

Interagency Statement on the Community Bank Leverage Ratio Framework

Notes:

See http://www.federalreserve.gov/apps/contactus/feedback.aspx

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Last Update: December 21, 2021