Institutions supervised by the federal insurer of bank deposits will be able to use the same method to calculate the ratio of loans in excess of the supervisory loan-to-value (LTV) limits regardless of their community bank leverage ratio (CBLR) election status under a final rule approved Thursday, the agency said in a Financial Institution Letter (FIL).
The Federal Deposit Insurance Corp. (FDIC) said its board revised the Interagency Guidelines for Real Estate Lending Policies, Appendix A to Subpart A of the FDIC’s real estate lending standards regulation, so that all FDIC-supervised institutions calculate the ratio of loans in excess of the supervisory LTV limits using tier 1 capital plus the appropriate allowance for credit losses in the denominator.
The agency said the rule, unchanged from a June proposal, will allow a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at FDIC-supervised institutions and avoid any regulatory burden that could arise if an institution later opts to switch between different capital frameworks.
The rule is set to take effect Nov. 26.
Reg lookup: Real Estate Lending Standards