Chris Cole: Unfinished business


Lackluster call report and capital plans need a grassroots jolt.

By Chris Cole, ICBA

While much of the ICBA-advocated S.2155 regulatory relief law has proceeded in due course, two key provisions remain very much unfinished business. Regulators have released disappointing proposals to implement provisions of the Economic Growth, Regulatory Relief, and Consumer Protection Act requiring a short-form call report and simplifying capital requirements for community banks.

With regulators requesting feedback on both proposals, ICBA is encouraging community bankers to weigh in and support needed updates. Here’s a look at the proposals and how community bankers can help improve them.

Short-form shenanigans

S.2155 requires regulators to institute a short-form call report in the first and third quarters for banks with less than $5 billion in assets, reflecting a policy long advocated by ICBA. Unfortunately for community banks, federal regulators’ proposed rule barely moves the needle in reducing unnecessary reporting burdens.

Rather than offering significant reporting relief, the agency plan would merely reduce some of the items on the FFIEC 051 Call Report that need to be filed every quarter. The items that could be reported semi-annually and not every quarter include information concerning troubled debt restructurings and fiduciary assets, as well as the risk-weighting of various types of assets under Basel III.

Quick stat


Messages community bankers sent to Congress supporting the passage of S.2155

When it passed the regulatory relief law, Congress intended for the banking agencies to establish a new short-form call report that would significantly reduce the reporting burden for community banks for the first and third quarters of each year. Unfortunately, the agencies are proposing to merely reduce a few items on the existing 051 Call Report or eliminate those items that generally do not apply to most community banks. ICBA is disappointed that regulators would use the law to continue eliminating the reporting fields that community banks rarely use anyway.

“Congress and the president have recognized the reporting burden associated with the call report and identified the solution to bring community banks the relief they so desperately need,” ICBA president and CEO Rebeca Romero Rainey said upon release of the proposal. “It is now incumbent upon the regulators to enact comprehensive and meaningful reporting relief, as policymakers intended.”

To strengthen their proposal, ICBA is calling on the agencies to limit short-form reporting to the balance sheet, income statement and statement of changes in shareholders’ equity without any other supporting schedules. If we truly want to free up community bank resources to serve customers and promote economic growth in local communities, this is the way to do it.

Political capital

While the call report plan promises insignificant regulatory relief, the FDIC’s proposal to exempt community banks from risk-based capital requirements will needlessly leave out many institutions.

S.2155 requires the banking agencies to develop a community bank leverage ratio of between 8 and 10 percent. Banks with less than $10 billion in assets that meet the leverage ratio will be considered well capitalized and exempt from all risk-based capital requirements, including the Basel III capital rules. This is another longtime ICBA priority.

However, the agency’s proposed community bank leverage ratio of 9 percent would unnecessarily leave out more than 600 community banks that would be eligible if it were set at 8 percent. Once again, the agencies are being exceedingly stingy as they implement important parts of the relief law.

ICBA is advocating an 8 percent threshold. That would be more than the 5 percent leverage ratio requirement currently required of all well-capitalized banks and significantly higher than this year’s requirement of 7 percent common equity over total risk-based assets, which includes the capital buffer.

“ICBA and the nation’s community banks have long called for meaningful relief from the overly complex Basel III capital standards,” Romero Rainey said in response. “Federal regulators should use the opportunity Congress provided with the passage of S.2155 to complete this objective.”

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. An 8 percent threshold is more than suitable.

How to help

Community bankers can use ICBA’s Be Heard grassroots action center to call on regulators to provide more meaningful relief. With draft comment letters that community bankers can customize to reflect their personal experiences, we can work together to hold the regulators’ feet to the fire and maximize the benefit of these policies to community banks and Main Street communities nationwide.

Chris Cole ( is ICBA executive vice president and senior regulatory counsel