June 25, 2022

Volume XII, Number 176

Advertisement
Advertisement

June 24, 2022

Subscribe to Latest Legal News and Analysis

June 23, 2022

Subscribe to Latest Legal News and Analysis

June 22, 2022

Subscribe to Latest Legal News and Analysis

Temporary Regulatory Relief: Community Bank Leverage Ratio Set At 8%

On April 6, 2020, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (collectively, the “federal banking agencies”) announced the issuance of two interim final rules to provide temporary relief to community banks.  The federal banking agencies acted to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which requires the federal banking agencies to temporarily lower the community bank leverage ratio (“CBLR”) to eight percent (8%).

The two rules will modify the CBLR framework so that:

  • beginning in the second quarter 2020 and until the end of the year, a qualifying community bank that has a leverage ratio of eight percent (8%) or greater and meets certain other criteria may elect to use the CBLR framework; and

  • qualifying community banks will have until January 1, 2022, before the CBLR is re-established at nine percent (9%).

These interim final rules apply to qualifying community banks with less than $10 billion in total consolidated assets that meet other prudential criteria and choose to opt into the CBLR framework.

In a joint press release, the federal banking agencies stated that the temporary relief “will allow community banking organizations to focus on supporting lending to creditworthy households and businesses given the recent strains on the U.S. economy caused by the coronavirus.”

Further information about the newly issued rules is available here.

© 2022 Vedder PriceNational Law Review, Volume X, Number 98
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

James M. Kane, Vedder Price Law Firm, Finance Attorney
Shareholder

James M. Kane joined Vedder Price in 1993 as a shareholder and is a member of the firm’s Financial Institutions Group. From 1981 until joining Vedder Price, he was the district counsel in Chicago for the Office of the Comptroller of the Currency. As the chief legal officer for the Six-State Central District (Illinois, Wisconsin, Michigan, Ohio, Indiana and Kentucky), he was responsible for providing legal and policy advice to the Deputy Comptroller and the 500 examiners of the Central District. In this capacity, he authored opinions on a wide variety of banking law issues and represented...

312-609-7533
Daniel C. McKay, Vedder Price Law Firm, Financial Attorney
Shareholder

Daniel C. McKay, II concentrates his practice in the representation of financial institutions and corporations and their officers, directors and shareholders in connection with mergers and acquisitions, securities offerings, corporate finance, corporate governance and regulatory and compliance matters.  He has been involved in more than 150 bank or thrift  mergers and acquisitions/securities offerings, with aggregate consideration of these deals totaling over $50 billion.

312-609-7762
James W. Morrissey, Vedder Price Law Firm, Finance Attorney
Shareholder

James W. Morrissey is a shareholder and a member of the firm’s Financial Institutions Group and Finance and Transactions Group.

 

312-609-7717
Jennifer King, corporate, capital markets, securities, attorney, Vedder Price,
Shareholder

Jennifer Durham King joined Vedder Price’s Chicago office in 1997 as a member of the firm’s Corporate and Capital Markets practice areas. She concentrates her practice in capital markets and corporate securities transactions, with a specific focus on financial institutions. Ms. King regularly represents issuers and underwriters in a broad range of capital markets transactions, including public and private debt and equity offerings, trust preferred offerings, mergers and acquisitions, and capital planning and formation.

312-609-7835
Juan M. Arciniegas, Vedder Price, derivatives, structured products and futures
Shareholder

Juan M. Arciniegas is a Shareholder at Vedder Price and a member of the Investment Services group in the firm’s Chicago office.

Mr. Arciniegas works primarily as a derivatives lawyer and has significant experience in the market for over-the-counter (OTC) derivatives, structured products and futures. He advises on every stage throughout the life cycle of a derivatives transaction, from conducting pre-trade regulatory due diligence to negotiating transactional documentation and advising on post-trade reporting and recordkeeping obligations. This...

312-609-7655
Advertisement
Advertisement
Advertisement