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Financial Institution Letter
Regulatory Capital Rule: Capital Simplification for Qualifying Community Banking Organizations


The federal banking agencies jointly have issued a notice of proposed rulemaking (NPR or proposal) which would provide for an optional, simplified measure of capital adequacy for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act . The NPR will be published in the Federal Register with a 60-day comment period.

Statement of Applicability: This proposal is applicable to all FDIC-supervised institutions with less than $10 billion in total consolidated assets except for advanced approaches banking organizations.


  • The community bank leverage ratio (CBLR) would provide material regulatory relief to qualifying community banking organizations by providing the option to calculate a simple on-balance sheet leverage ratio to measure capital adequacy. Banks using the CBLR would complete a simpler reporting schedule, which the agencies intend to propose at a later date.
  • The CBLR would be calculated as the ratio of CBLR tangible equity, as defined in the proposal, divided by average total consolidated assets.
  • A qualifying community banking organization would be defined as having less than $10 billion in total consolidated assets and with limited amounts of off-balance sheet exposures, trading assets and liabilities, mortgage servicing assets, and temporary difference deferred tax assets (qualifying criteria).
  • A qualifying community banking organization may opt into the CBLR framework if its CBLR is greater than 9 percent.
  • A banking organization that opts into the CBLR (CBLR bank), and has a CBLR greater than 9 percent, would not be subject to other capital and leverage requirements and would be considered to have met the well-capitalized ratio requirements under the prompt corrective action (PCA) framework and the generally applicable capital requirements.
  • A CBLR bank that ceases to meet any qualifying criteria in a future period would have a grace period of two reporting periods to satisfy the CBLR qualifying criteria or comply with the generally applicable capital requirements.
  • For a CBLR bank whose CBLR falls to 9 percent or less, the proposal establishes additional CBLR levels as proxies for the existing capital ratios for the adequately capitalized, undercapitalized, and significantly undercapitalized PCA capital categories.


  • FDIC-supervised Institutions

Suggested Routing:

  • Chief Executive Officer
  • Chief Financial Officer
  • Chief Risk Officer

Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Additional Related Topics:

  • Capital Adequacy of FDIC-Supervised Institutions, 12 CFR Part 324 (Regulatory Capital Rules)
Last Updated: November 21, 2018