H.R. 478 — Promoting New Bank Formation Act

This section directs the federal banking agencies to issue rules providing a 3-year phase-in period for a depository institution or depository institution holding company to meet applicable federal capital requirements (i.e., standards ensuring sufficient loss-absorbing capital), beginning on the date the institution or its depository institution subsidiary becomes insured.

This section authorizes an insured depository institution, or its depository institution holding company, during the three-year period beginning on the date it becomes insured to request a deviation from its approved business plan from the appropriate Federal banking agency. The agency must approve, conditionally approve, or deny the request by the end of the 30-day period after receipt—including, for denials, the reason and suggested changes—and a failure to act deems the request approved.

This section establishes a Community Bank Leverage Ratio (CBLR) of 8% for rural depository institutions during the three-year period beginning on the date they become insured depository institutions. (The CBLR, established under the Economic Growth, Regulatory Relief, and Consumer Protection Act, allows qualifying depository institutions with assets under $10 billion to meet capital requirements using a simple tangible equity-to-average total consolidated assets ratio—generally 9% to be well capitalized—in lieu of risk-based capital requirements; a rural depository institution has total consolidated assets under $10 billion and is located in a rural area, per 12 CFR 1026.35(b)(iv)(A).) The section further directs the federal banking agencies to issue rules phasing in the CBLR by setting lower percentages during the first two years of the period.

This section expands the lending authority of Federal savings associations by (1) adding agricultural loans (i.e., secured or unsecured loans for agricultural purposes) as a permissible category under 12 U.S.C. 1464(c)(1), and (2) removing agricultural loans from the list of loans subject to limits in 12 U.S.C. 1464(c)(2)(A) (from "business, or agricultural" to "or business"). (Thus, Federal savings associations—federally chartered thrift institutions regulated by the Comptroller of the Currency and traditionally focused on housing finance—may now make agricultural loans without prior quantitative restrictions.)

This section directs the Federal banking agencies to jointly conduct a study on (1) the principal causes for the low number of de novo insured depository institutions (i.e., newly chartered banks and thrifts) in the 10-year period ending on the date of enactment of this Act and (2) ways to promote more such institutions in areas currently underserved by insured depository institutions. The agencies must submit a report to Congress containing all findings and determinations within one year of enactment.

This section defines the terms *appropriate Federal banking agency*, *depository institution*, *depository institution holding company*, *Federal banking agency*, and *insured depository institution* as having the same meanings given those terms, respectively, in section 3 of the Federal Deposit Insurance Act.