Comments due late April on FDIC proposed assessment rule change for CBLR banks

Proposal would treat CBLR banks as ‘small’ banks

A December proposal to revise the federal bank deposit insurance agency’s assessment rules to factor in a simpler capital framework for community banks is slated for publication in the Federal Register Friday with a comment period set to end on or about April 22.

The Federal Deposit Insurance Corp. (FDIC) proposed rule would apply the community bank leverage ratio (CBLR) framework being created under last year’s regulatory relief law to the deposit insurance assessment system.

A proposal to create a new CBLR framework was proposed jointly last year by the FDIC, the Board of Governors of the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC) to address a requirement of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). The FDIC’s proposed assessment rule would assess all banks that elect to use the CBLR framework as small banks.

Through amendments to the assessment regulations and corresponding changes to the call report, CBLR banks would have the option of using either CBLR tangible equity or tier 1 capital for their assessment base calculation, and using either the CBLR or the tier 1 leverage ratio for the leverage ratio that the FDIC uses to calculate an established small bank’s assessment rate.

FDIC says the proposal also would clarify that a CBLR bank that meets the definition of a custodial bank would have no change to its custodial bank deduction or reporting items required to calculate the deduction; and the assessment regulations would continue to reference the prompt corrective action (PCA) regulations for the definitions of capital categories used in the deposit insurance assessment system, with technical amendments to align with the CBLR proposed rule.

The FDIC plans to provide, via its website, a tool that estimates deposit insurance assessment amounts under the proposal.

Reg lookup: Assessments

RR: Proposal to apply CBLR framework to deposit insurance assessments noted in new FDIC letter (Feb. 5, 2019)