On January 29, the Board of Governors of the Federal Reserve System (Board) invited public comment on a proposed rule to expand the applicability of the Board’s Small Bank Holding Company Policy Statement (Policy Statement) for small bank holding companies as well as certain savings and loan holding companies. Additionally, the Board announced reduced reporting requirements for certain bank holding companies and savings and loan holding companies.

The Policy Statement “facilitates the transfer of ownership of small community banks by allowing their holding companies to operate with higher levels of debt than would otherwise be permitted.” Institutions subject to the Policy Statement are not subject to the Board’s regulatory capital requirements. Currently, bank holding companies with less than $500 million in total consolidated assets may be subject to the Policy Statement. Eligible firms must also meet certain qualitative requirements with respect to nonbanking activities, off-balance sheet activities, and publicly-registered debt and equity. The proposed rule allows bank holding companies and savings and loan holding companies with less than $1 billion in total consolidated assets that meet the qualitative requirements to qualify.

The Board also adopted an interim final rule to exclude from the Board’s regulatory capital requirements savings and loan holding companies with less than $500 million in total consolidated assets that meet the qualitative requirements in the Policy Statement. Bank holding companies with less than $500 million in total consolidated assets that meet the qualitative requirements in the Policy Statement are already excluded from the Board’s regulatory capital requirements.

The proposed rule and interim final rule would implement a law passed by the US Congress in December 2014. Comments on the proposal and interim final rule will be accepted through March 4.

In addition, the Board has taken steps to relieve regulatory reporting burden for bank holding companies and savings and loan holding companies that have less than $1 billion in total consolidated assets and meet the qualitative requirements of the Policy Statement. The Board has proposed to eliminate quarterly consolidated financial reporting requirements (FR Y-9C) for these institutions, and instead require parent-only financial statements (FR Y-9SP). The proposal would also eliminate regulatory capital reporting for savings and loan holding companies with less than $500 million in total consolidated assets from the FR Y-9SP. The Board has filed a request with the Office of Management and Budget to make these changes effective on March 31, while it completes the notice and comment process.

Comments on the regulatory reporting changes will be accepted for 60 days after publication. Access to the proposed rule and the interim final rule may be gained by clicking here.