When did life become so complicated? I found myself pondering this question last weekend as I drove each of our four children to different activities in different locations. When the kids were little, I naively assumed that life would become simpler as they became more independent. If anything, the opposite has proven true. Of course, that concept doesn’t apply only to children. With the increasing advancements in technology enhancing efficiency and accessibility, it would seem that our lives should be less busy and stressful. Instead, the increased accessibility has become a trap, making us feel as though we are always on call.
Similarly, life within financial institutions never seems to get easier. As technology advances and more cutting-edge services are provided to customers, the number of risks that must be accounted for increases. Outside rule makers create new regulations, such as CECL, that require collection of additional data and overhauls of existing processes and calculations. Greater accessibility has allowed non-banking companies to enter the financial services arena, increasing consumer expectations and creating additional competition.
This isn’t meant to be a depressing blog, however. Amid all the complications and stress that work and life bring, I find it increasingly valuable to focus on and celebrate the simple things. Sometimes those simple things come from unexpected sources. This past summer I was asked to fill in as a speaker at a banking convention in Wyoming. At first, I wasn’t thrilled about the assignment. The travel and preparation seemed like an additional complication, but it turned out to be an unexpected blessing. In between the work obligations, I ended up spending two relaxing nights in Yellowstone National Park during a period of perfect weather. The chance to unplug in a beautiful setting ended up being just what I needed.
In early November, community banks received some simplification from a very unexpected source — regulators! The regulators issued Financial Institution Letter (FIL) 66-2019, creating the new Community Bank Leverage Ratio (CBLR). This FIL represents a rare instance of regulators making life simpler for most banks with less than $10 billion in total assets and a CBLR ratio of greater than 9%. The CBLR ratio is a new regulatory capital ratio and is calculated as CBLR tangible equity (total equity capital less AOCI, carry forward deferred tax assets and intangible assets) divided by average total consolidated assets. If the requirements are met, the Bank is considered “well capitalized” and does not need to calculate any of the current regulatory capital ratios. This new calculation is expected to reduce the time and complexity necessary for completing call report Schedule RC-R.
So, take a few minutes and appreciate this new rule that will make completing the call report just a little easier. And who knows, if regulators are now doing things that make life simpler, maybe there is hope for other areas in our life too!