As a result of regulations recently adopted, banks with less
than $10 billion in consolidated assets are now subject to a new
simplified leverage capital ratio regulatory scheme, should they
elect to be covered by the new Rules. New community bank capital
requirements became effective on January 1, 2020, including the
election a bank has to make to opt-in to these new Rules. A
decision to opt-in to the new leverage capital framework will
permit banks to forego the calculation and compliance costs and
expenses with existing regulatory risk-based capital rules,
provided that they maintain a 9% Tier 1 Leverage Ratio.
Background
The calculation and preparation of capital ratios for community
bank regulatory purposes has always been overly complicated,
somewhat arcane, and subject to industry criticism. Congress
recognized this in 2018 when it passed and President Trump signed
the Economic Growth, Regulatory Relief and Consumer Protection Act,
which directed the federal
