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Well, 2020 certainly threw us a curve ball and gave us much to consider in our personal lives as well as our banking lives. I don’t think anyone would consider 2020 a gift giving year….. or was it?
2020 actually was a significant year of gift giving from the regulators. In late 2019 we learned that the eligibility threshold for filing the reduced Form 051 was raised to $5 billion. Truly a gift for many institutions in 2020.
We also were given the gift of the Community Bank Leverage Ratio (CBLR) in 2020 with the added benefit of the drop in the minimum leverage ratio to 8% in order to reduce the effect COVID-19 may bring upon a bank’s capital ratios.
Even though these two areas are significant gifts from the regulators (in my opinion), I recently read that only two-fifths of the institutions that became eligible for the 051 Form when the threshold was raised to $5 billion took advantage of the reduce...
Well, you are not alone. Your Bank is likely feeling bloated after this unprecedented year of PPP loans and the excess liquidity that most banks have on their balance sheets.
To deal with the Bank’s bloating, the regulators have offered a solution. In acknowledgement of the bloating that has taken place this year, your Bank has been offered a hall-pass on reporting requirements that kick into play upon a bank reaching a new asset-based Call Report threshold. In addition, the FDICIA audit and certification requirements are also subject to the hall-pass if your Bank’s asset size as of January 1, 2020 was below the impact threshold for Part 363 of the FDI Act.
Keep in mind, you only get the hall-pass if your Bank’s balance sheet is inflated due to funding PPP loans or the money market mutual funds purchased as a result of participating in the FRB of Boston’s Money Market Mutual Fund Liquidity program.