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The FDIC adopted a final rule that will apply the community bank leverage ratio ("CBLR") framework to the deposit insurance assessment system.
According to the FDIC, the final rule will:
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amend the definition of "small institution" to include any bank that uses the CBLR framework, even if the assessment regulations would otherwise classify the bank as a "large institution";
- clarify that a bank with assets between $5 billion and $10 billion electing to use the CBLR framework cannot request treatment as a large bank for deposit insurance assessments;
- make technical amendments to the assessment regulations to ensure that the definitions of capital categories used in the deposit insurance assessment system continue to reference the prompt corrective action regulations;
- clarify that if a bank elects to use the CBLR framework and meets the definition of a "custodial bank" it will not experience any change in the reporting requirements that are necessary to calculate and receive the custodial bank deduction; and
- maintain the current assessment methodologies for small and large institutions.
The FDIC noted that several changes proposed in the February 2019 notice of proposed rulemaking will not be adopted because the CBLR framework in the final rule has made the proposed changes unnecessary. Those proposed changes include, among others, amendments regarding the definitions of "tangible equity" and "community bank leverage ratio."
The final rule will become effective on January 1, 2020.
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