• Congress Enacts Bill to Increase Small Bank Holding Company Policy Statement Asset Threshold
  • February 19, 2015 | Author: Robert L. Carothers
  • Law Firm: Jones Walker LLP - Mobile Office
  • On December 11, both the U.S. House of Representatives and the U.S. Senate passed H.R. 3329, and the bill was signed into law by the President on December 18. The act increases the asset threshold with respect to the applicability of the Federal Reserve's Small Bank Holding Company Policy Statement ("SBHC Policy Statement") from $500 million to $1 billion, and also applies the SBHC Policy Statement to small savings and loan holding companies. It directs the Federal Reserve to take action to amend the SBHC Policy Statement within six months from the date of enactment.

    The act provides that the SBHC Policy Statement will apply to all bank holding companies and savings and loan holding companies that have pro forma consolidated assets of less than $1 billion and that (1) are not engaged in significant nonbanking activities, (2) do not conduct significant off-balance sheet activities, and (3) do not have a material amount of debt or equity securities outstanding that are registered with the Securities and Exchange Commission.

    Bank holding companies that are subject to the SBHC Policy Statement are exempt from the Federal Reserve's consolidated capital requirements. Also, the SBHC Policy Statement allows small bank holding companies to incur higher levels of debt when acquiring another financial institution than would be allowed for larger bank holding companies.

    The asset threshold was last increased in 2006. According to the Independent Community Bankers of America comment letter, increasing the asset threshold will benefit 515 bank and savings and loan holding companies.