Independent Banker - February 2022 - 43

sheets. In addition to the 9% CBLR
benchmark, community banks will
soon be required to use recent and
deposit-heavy call report data to
calculate Federal Deposit Insurance
Corporation Improvement Act
(FDICIA) asset thresholds. This will
force many of them to comply with
onerous regulatory audit and reporting
requirements even though they did not
seek to grow their deposit bases.
Staving off economic contraction
ICBA recognizes the strain this
sudden and persistent increase in
deposits will place on community
banks, just as Congress did when
it wrote the CARES Act. Extended
temporary relief from the 9% CBLR
and the FDICIA audit and reporting
requirements is urgently needed to
stave off a contraction in lending in
support of local communities.
ICBA has been working with its
partners and communicating with
legislators and regulators to make
it known that without the relief,
community banks will be forced to
curtail their small business lending
in 2022 to comply with the higher
9% CBLR. Cash and cash-equivalent
balances at community banks have
more than doubled from about
$352 billion to about $749 billion
between year-end 2019 and Sept. 30,
2021. Community banks have been
fl ooded with more deposits than they
Extended temporary
relief from the 9%
CBLR and the FDICIA
audit and reporting
requirements is
urgently needed to
stave off a contraction
in lending in support of
local communities.
can put to productive use in funding
loans, and this has driven down their
leverage ratios.
In December 2021, ICBA cosigned
a letter from 44 state banking
associations asking for a minimum
one-year extension of the agencies'
temporary asset threshold relief
measures to allow deposit runoff to
take eff ect and for deposits to return
to normalized, pre-pandemic levels.
The letter shares the association's
united opposition to an " unnecessary,
unfair and unjustifi ably costly
regulatory treatment. "
ICBA also issued a national press
release shortly before Christmas,
with ICBA president and CEO
Rebeca Romero Rainey warning
that banking regulators' decision to
resume a 9% CBLR at the beginning
of 2022 " penalizes community banks
for supporting local communities
throughout the pandemic. " She
added, " Because deposit levels remain
elevated due to emergency stimulus
payments, reintroducing the 9% CBLR
will harm community bank smallbusiness
lending in the middle of a
global health crisis. "
In its release, ICBA asked regulators
to extend the 8.5% CBLR requirement,
raise audit and reporting requirement
asset thresholds and provide extra
fl exibility given the long-lasting
impact of COVID-19 relief eff orts on
community bank capital levels.
" Extending this much-needed relief
would allow community banks to
continue operating without concerns
about decreases in their required
regulatory capital ratios to the
benefi t of the local customers and
communities they have served so well
during this ongoing pandemic, " the
release stated.
Members of Congress and
regulators have been open to the
message. Responding to a letter
from ICBA, FDIC chairman Jelena
McWilliams, who leaves her position
on Feb. 4, wrote that her agency was
exploring whether to extend audit
and reporting relief while it engages
other regulators on additional
CBLR fl exibility.
How you can speak out
ICBA will continue to push for relief from the 9% CBLR and the
FDICIA asset thresholds. We encourage community bankers to
join the eff ort to urge the banking agencies to extend temporary
pandemic relief measures through 2022 to accommodate
persistently elevated deposit levels caused by stimulus payments.
Meanwhile, ICBA continues to
support the Community Bank Relief
Act (H.R. 6145) introduced by Rep.
Tracey Mann (R-Kan.), which would
allow regulators to implement a CBLR
of 8% to 8.5% through 2024. 
Jenna Burke (jenna.burke@icba.org)
is ICBA senior regulatory counsel
independentbanker.org Q 43
http://www.independentbanker.org
Independent Banker - February 2022

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