[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Rules and Regulations]
[Pages 5303-5304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00776]



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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 324

RIN 3064-AE91


Regulatory Capital Rule: Capital Simplification for Qualifying 
Community Banking Organizations; Corrections

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Correcting amendments.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is correcting 
an interagency final rule that appeared in the Federal Register on 
Wednesday, November 13, 2019, regarding Capital Simplification for 
Qualifying Community Banking Organizations. These corrections are 
necessary to standardize the language in the FDIC regulations with the 
regulations of the other agencies that issued the final rule.

DATES: Effective January 30, 2020.

FOR FURTHER INFORMATION CONTACT: FDIC: Benedetto Bosco, Chief, Capital 
Policy Section, [email protected]; Stephanie Lorek, Senior Capital 
Markets Policy Analyst, [email protected]; Dushan Gorechan, Financial 
Analyst, [email protected]; Kyle McCormick, Financial Analyst, 
[email protected]; Capital Markets Branch, Division of Risk 
Management Supervision, (202) 898-6888; or Michael Phillips, Counsel, 
[email protected]; Catherine Wood, Counsel, [email protected]; 
Supervision Branch, Legal Division, Federal Deposit Insurance 
Corporation, 550 17th Street NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION: On November 13, 2019, the Office of the 
Comptroller of the Currency (OCC), Board of Governors of the Federal 
Reserve System (Board), and the FDIC (collectively, the agencies) 
published a final rule ``Regulatory Capital Rule: Capital 
Simplification for Qualifying Community Banking Organizations.'' \1\ 
The final rule provides for a simple measure of capital adequacy for 
certain community banking organizations, consistent with section 201 of 
the Economic Growth, Regulatory Relief, and Consumer Protection Act. 
Under the final rule, depository institutions and depository 
institution holding companies that have less than $10 billion in total 
consolidated assets and meet other qualifying criteria, including a 
leverage ratio of greater than 9 percent, will be eligible to opt into 
the community bank leverage ratio framework. Instruction 61 of the 
Federal Register document resulted in the amendment of the entirety of 
paragraph (b) of 12 CFR 324.403, rather than modifying only Sec.  
324.403(b)(1), consistent with the intent of the agencies. Therefore, 
for the reasons set out in the preamble of the Federal Register 
document for the November 13, 2019, final rule and in this document, 
the FDIC hereby makes the following correcting amendments to 12 CFR 
324.403(b).
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    \1\ 84 FR 61776 (Nov. 13, 2019).
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List of Subjects in 12 CFR Part 324

    Administrative practice and procedure, Banks, Banking, Capital 
adequacy, Reporting and recordkeeping requirements, State non-member 
banks, Savings associations.

    Therefore, for the reasons set out in the preamble, the FDIC hereby 
makes the following correcting amendments to 12 CFR part 324:

PART 324--CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS

0
1. The authority citation for part 324 continues to read as follows:

    Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233, 
105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 
105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 
2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, 
as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 
note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note).


0
2. Section 324.403(b) is revised as follows:


Sec.  324.403  Capital measures and capital category definitions.

* * * * *
    (b) Capital categories. For purposes of section 38 of the FDI Act 
and this subpart, an FDIC-supervised institution shall be deemed to be:
    (1)(i) ``Well capitalized'' if:
    (A) Total Risk-Based Capital Measure: The FDIC-supervised 
institution has a total risk-based capital ratio of 10.0 percent or 
greater; and
    (B) Tier 1 Risk-Based Capital Measure: The FDIC-supervised 
institution has a tier 1 risk-based capital ratio of 8.0 percent or 
greater; and
    (C) Common Equity Tier 1 Capital Measure: The FDIC-supervised 
institution has a common equity tier 1 risk-based capital ratio of 6.5 
percent or greater; and
    (D) The FDIC-supervised institution has a leverage ratio of 5.0 
percent or greater; and
    (E) The FDIC-supervised institution is not subject to any written 
agreement, order, capital directive, or prompt corrective action 
directive issued by the FDIC pursuant to section 8 of the FDI Act (12 
U.S.C. 1818), the International Lending Supervision Act of 1983 (12 
U.S.C. 3907), or the Home Owners' Loan Act (12 U.S.C. 
1464(t)(6)(A)(ii)), or section 38 of the FDI Act (12 U.S.C. 1831o), or 
any regulation thereunder, to meet and maintain a specific capital 
level for any capital measure.
    (ii) Beginning on January 1, 2018 and thereafter, an FDIC-
supervised institution that is a subsidiary of a covered BHC will be 
deemed to be well capitalized if the FDIC-supervised institution 
satisfies paragraphs (b)(1)(i)(A) through (E) of this section and has a 
supplementary leverage ratio of 6.0 percent or greater. For purposes of 
this paragraph (b)(1)(ii), a covered BHC means a U.S. top-tier bank 
holding company with more than $700 billion in total assets as reported 
on the company's most recent Consolidated Financial Statement for Bank 
Holding Companies (Form FR Y-9C) or more than $10 trillion in assets 
under custody as reported on the company's most recent Banking 
Organization Systemic Risk Report (Form FR Y-15).
    (iii) A qualifying community banking organization, as defined under 
Sec.  324.12, that has elected to use the community bank leverage ratio 
framework under Sec.  324.12 shall be considered to have met the 
capital ratio requirements for the well capitalized capital category in 
paragraph (b)(1)(i)(A) through (D) of this section.
    (2) ``Adequately capitalized'' if it:
    (i) Has a total risk-based capital ratio of 8.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 6.0 percent or 
greater; and
    (iii) Has a common equity tier 1 capital ratio of 4.5 percent or 
greater; and
    (iv) Has a leverage ratio of 4.0 percent or greater; and
    (v) Does not meet the definition of ``well capitalized'' in this 
section.
    (vi) Beginning January 1, 2018, an advanced approaches FDIC-
supervised institution will be deemed to be ``adequately capitalized'' 
if it satisfies paragraphs (b)(2)(i) through (v) of this section and 
has a supplementary leverage ratio of 3.0 percent or greater, as 
calculated in accordance with Sec.  324.11.
    (3) ``Undercapitalized'' if it:
    (i) Has a total risk-based capital ratio that is less than 8.0 
percent; or

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    (ii) Has a Tier 1 risk-based capital ratio that is less than 6.0 
percent; or
    (iii) Has a common equity tier 1 capital ratio that is less than 
4.5 percent; or
    (iv) Has a leverage ratio that is less than 4.0 percent.
    (v) Beginning January 1, 2018, an advanced approaches FDIC-
supervised institution will be deemed to be ``undercapitalized'' if it 
has a supplementary leverage ratio of less than 3.0 percent, as 
calculated in accordance with Sec.  324.11.
    (4) ``Significantly undercapitalized'' if it has:
    (i) A total risk-based capital ratio that is less than 6.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 4.0 
percent; or
    (iii) A common equity tier 1 capital ratio that is less than 3.0 
percent; or
    (iv) A leverage ratio that is less than 3.0 percent.
    (5) ``Critically undercapitalized'' if the insured depository 
institution has a ratio of tangible equity to total assets that is 
equal to or less than 2.0 percent.
* * * * *

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on January 14, 2020.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2020-00776 Filed 1-29-20; 8:45 am]
BILLING CODE 6714-01-P