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H.R. 4771 (115th): Small Bank Holding Company Relief Act of 2018

H.R. 4771 would require the Federal Reserve Board to apply its Small Bank Holding Company Policy Statement to banks and savings and loan holding companies with pro forma consolidated assets of less than $3 billion. The Small Bank Holding Company Policy Statement currently applies to bank holding companies with assets less than $1 billion.

The Federal Reserve Board (Board) subjects bank holding companies (BHCs) to consolidated, risk-based and leverage capital adequacy guidelines to ensure BHCs are able to serve as a source of strength for their insured depository subsidiaries. As part of these guidelines, the Board generally discourages the use of debt by the BHCs to finance the acquisition of banks or other companies; however, the Federal Reserve acknowledges that the transfer of ownership of small banks to small bank holding companies (SBHCs) often requires the use of acquisition debt.

As a result, in 1980, the Board created an exemption for qualifying SBHCs from the BHC capital guidelines – the Small Bank Holding Company Policy Statement.[2] The Policy Statement allows for the formation and expansion of SBHCs with debt levels that are higher than what would be permitted for larger BHCs. In 2015, the Board implemented Public Law 113-250, which raised the Small Bank Holding Company Policy Statement threshold at $1 billion as long as the BHC meets certain qualitative requirements.

The House voted on similar legislation in the 114th Congress, H.R. 3791, on April 14, 2016 by a vote of 247-171.

Last updated Feb 12, 2018. Source: Republican Policy Committee

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Feb 8, 2018.


Small Bank Holding Company Relief Act of 2018

(Sec. 2) This bill requires the Federal Reserve Board (FRB) to revise its Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (which allows smaller bank companies to have higher debt levels than are generally allowed). Specifically, the FRB must raise the consolidated asset threshold at which the statement applies from $1 billion to $3 billion.