ICBA Statement on Community Bank Leverage Ratio

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Washington, D.C (Nov. 20, 2018)—Independent Community Bankers of America® (ICBA) President and CEO Rebeca Romero Rainey today issued the following statement on today’s proposed rule to reform capital requirements for community banks. The proposed rule would implement a provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) requiring regulators to develop a leverage ratio of between 8 and 10 percent that banks with less than $10 billion in assets must meet to be exempt from risk-based capital requirements.

“ICBA is disappointed that regulators have proposed capital standards that are higher than necessary for Main Street community banks. Today’s proposal establishing a 9 percent leverage ratio unnecessarily leaves out more than 600 community banks that would be eligible if it were set at 8 percent, as authorized by Congress.

“As an ardent proponent of strong minimum capital levels for all banks, ICBA supports an 8 percent community bank leverage ratio. This would be well over the 5 percent leverage ratio requirement currently required of all well-capitalized banks and significantly higher than next year’s requirement of 7 percent common equity over total risk-based assets, which includes the capital buffer.

“Community banks did not cause the financial crisis of 2008-2009. Their simplified balance sheets, conservative lending, and common-sense underwriting shield their regulatory capital from the kinds of losses incurred by the largest and riskiest financial institutions.

“ICBA and the nation’s community banks have long called for meaningful relief from the overly complex Basel III capital standards. Federal regulators should use the opportunity Congress provided with the passage of S. 2155 to complete this objective. We look forward to continuing to work with policymakers on this important policy.”

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 52,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 760,000 Americans and are the only physical banking presence in one in five U.S. counties. Holding more than $4.9 trillion in assets, $3.9 trillion in deposits, and $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.