Pub. 10 2019 Issue 4

www.wvbankers.org 8 West Virginia Banker How Does the New Leverage Ratio Framework Affect Your Community Bank? By Steve Gum, Arnett Carbis Toothman, LLP O n September 17, 2019, the Federal Deposit Insurance Corporation (FDIC) issued its final rule creating the community bank leverage ratio (CBLR) framework. The optional CBLR framework is directed by section 201 of the Economic Growth, Regulatory Relief and Consumer Protection Act. The framework simplifies the measure of capital adequacy for qualifying community banking organizations. An organization must qualify to utilize the framework. For qualifying organizations that opt-in, the CBLR framework removes the calculation and reporting requirements for risk-based capital ratios since they are considered to have met well-capitalized ratio requirements, which are dictated by the Federal Deposit Insurance Act’s section 38. To qualify for the optional CBLR framework, the following criteria are from the FDIC’s Fact Sheet: Overview of the Community Bank Leverage Ratio Framework dated Sept. 17, 2019: Steve Gum is a Manager with Arnett Carbis Toothman LLP, located in the Charleston, West Virginia office. A Certified Public Accountant, Mr. Gum has over 17 years of experience in public and industry accounting. Mr. Gum can be contacted at 800-642-3601or through email: steve.gum@actcpas.com. If an organization qualifies and has elect- ed the simplified CBLR framework but does not expect to meet the aforemen- tioned criteria due to a business com- bination, what should it do? Pro forma capital ratios should be provided to its regulator as part of its merger applica- tion. Additionally, the organization must comply with the appropriate rules for the regulatory reporting period in which the transaction is completed. A qualifying organization may opt into or out of the CBLR framework at any time and regard- less of the reason. The organization’s no- tification of election should be through its Call Report or Form Y-9C. The final rule is effective at the beginning of 2020 and could be reflected in call reports filed for March 31, 2020. The fact sheet, Overview of the Com- munity Bank Leverage Ratio Framework, summarizing the applicability and re- quirements of the CBLR framework, as well as what to do when the institution does not meet the requirements in a given period is located on the FDIC’s Community Banking Initiative website, https://www.fdic.gov/regulations/re- sources/cbi/cblr-facts.pdf.  w does the new leverage ratio fram work affect yo r community bank? September 17, 2019, the Federal Deposit Insurance Corporation (FDIC) issued its final rule creating community bank leverage ratio (CBLR) framework. The optional CBLR framework is directed y ion 201 of the Ec nomic Growth, Re ulatory Relief and Cons mer Protection Act. The framework plifies the measure of capital adequacy for qualifying co munity banking organizations. An anization must qualify to utilize the framework. For qualifying organizations that opt-in, the CBLR mework removes the calculation and reporting requirements for risk-based capital ratios since they are sidered to have met well-capitalized ratio requirements, which are dictated by the Federal Deposit urance Act’s section 38. To qualify for the optional CBLR framework, the following criteria are from the C’s Fact Sheet: Overview of the Community Bank Leverage Ratio Framework dated September 17, 9: n organization qualifies and has elected the simplified CBLR framework but does not expect to meet aforementioned criteria due to a business combination what should it do? Pro forma capital ratios uld be provided to its regulator as part of its merger application. Additionally, the organization must mply with the appropriate rules for the regulatory reporting period in which the transaction is completed. does the new leverage ratio framework affect your com unity bank? eptember 17, 2019, the Fed ral Deposit Insurance Corporation (FDIC) issued i s final rule creati g m unity bank leverage ratio (CBLR) framework. The optional CBLR ramework is directed by n 201 of the Economic Growth, Regul tory Reli f and Consumer Protection Act. The f amework fies the me sure of capital adequacy for qualifying com unity banking organizations. An zation must qualify to utilize the framework. For qualify ng organizations that opt-in, the CBLR work removes the calculation and reporting requirements for risk-based capital ratios ince they are der d to have met well-capitalized ratio requirements, which are dicta ed by the Fed ral Deposit nce Act’s ection 38. To qualify for the optional CBLR framework, the foll wing criteria re from the s Fact Sheet: Overview of the Com unity Bank Lev rage Ratio Framework dated September 17, rganization qualifies and has el cted the simplified CBLR framework but does not expect to meet orementioned criteria due to a business combination what should it do? Pro f rma capital ratios d be provide to its regulator as part of its merger application. Additionally, the organization must y with t e appropriate rules for the r gulatory reporting period in which t e transaction is complet d.