119-s113

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 113 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 113

 To require the appropriate Federal banking agencies to establish a 3-
year phase-in period for de novo financial institutions to comply with 
 Federal capital standards, to provide relief for de novo rural 
 community banks, and for other purposes.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 January 16, 2025

Mrs. Hyde-Smith introduced the following bill; which was read twice and 
 referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

 A BILL

 To require the appropriate Federal banking agencies to establish a 3-
year phase-in period for de novo financial institutions to comply with 
 Federal capital standards, to provide relief for de novo rural 
 community banks, and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Promoting New Bank Formation Act of 
2025''.

SEC. 2. FINDINGS.

 The Congress finds the following:

    (1) Trends in bank closures and consolidation have left 
 many communities without access to banking services and 
 disproportionately impact underserved rural and urban 
 communities.

    (2) De novo bank formation has slowed significantly 
 following the financial crisis.

    (3) A November 2019 report by the Federal Reserve System 
 found that 44 counties in the United States were ``deeply 
 affected'' by trends in bank closures and consolidation, 
 meaning that the counties had fewer than 10 branches in 2012 
 and lost not less than 50 percent of them by 2017.

    (4) 89 percent of the deeply affected counties described in 
 paragraph

    (3) were rural.

    (5) Rural counties deeply affected by branch closures had 
 higher poverty rates and lower median incomes, and a higher 
 share of their population were African-American compared to all 
 rural communities.

SEC. 3. DEFINITIONS.

 In this Act:

    (1) Appropriate federal banking agency; depository 
 institution; depository institution holding company.--The terms 
 ``appropriate Federal banking agency'', ``depository 
 institution'', and ``depository institution holding company'' 
 have the meanings given those terms in 

section 3 of the Federal 
 Deposit Insurance Act (12 U.S.C. 1813).

    (2) Community bank leverage ratio.--The term ``Community 
 Bank Leverage Ratio'' has the meaning given that term under 
 

section 201

    (a) of the Economic Growth, Regulatory Relief, and 
 Consumer Protection Act (12 U.S.C. 5371 note).

    (3) Financial institution.--The term ``financial 
 institution'' means a depository institution or depository 
 institution holding company.

    (4) Rural community bank.--The term ``rural community 
 bank'' means a financial institution--
        (A) with total consolidated assets of less than 
 $10,000,000,000; and
        (B) located in a rural area, as defined in 

section 1026.35

    (b)

    (2)
            (iv) (A) of title 12, Code of Federal 
 Regulations, or any successor regulation.

SEC. 4. PHASE-IN OF CAPITAL STANDARDS.

 The appropriate Federal banking agencies shall issue rules that 
provide for a 3-year phase-in period for a financial institution to 
meet any Federal capital requirements that would otherwise be 
applicable to the financial institution, where the 3-year period begins 
on the date on which the deposit insurance that the financial 
institution has obtained from the Federal Deposit Insurance Corporation 
becomes effective.

SEC. 5. CHANGES TO BUSINESS PLANS.

    (a) In General.--During the 3-year period beginning on the date on 
which the deposit insurance that the financial institution has obtained 
from the Federal Deposit Insurance Corporation becomes effective, a 
financial institution may request to deviate from a business plan that 
has been approved by the appropriate Federal banking agency by 
submitting a request to the agency pursuant to this section.

    (b) Review of Changes.--An appropriate Federal banking agency 
shall, not later than the end of the 30-day period beginning on the 
receipt of a request under subsection

    (a) --

    (1) approve, conditionally approve, or deny the request; 
 and

    (2) notify the financial institution of the decision and, 
 if the agency denies the request--
        (A) provide the financial institution with the 
 reason for the denial; and
        (B) suggest changes to the request that, if 
 adopted, would allow the agency to approve the request.
            (c) Result of Failure To Act.--If an appropriate Federal banking 
agency fails to approve or deny a request within the 30-day period 
required under subsection

    (b) , the request shall be deemed to be 
approved.

SEC. 6. RURAL COMMUNITY BANK LEVERAGE RATIO.

    (a) In General.--During the 3-year period beginning on the date on 
which the deposit insurance that a rural community bank has obtained 
from the Federal Deposit Insurance Corporation becomes effective, the 
Community Bank Leverage Ratio for the rural community bank shall be 8 
percent.

    (b) Phase-In Authority.--The appropriate Federal banking agencies 
shall issue rules to phase-in the Community Bank Leverage Ratio 
described in subsection

    (a) with respect to a rural community bank by 
setting lower Community Bank Leverage Ratio percentages during the 
first 2 years of the 3-year period described in subsection

    (a) .

SEC. 7. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL SAVINGS ASSOCIATIONS.

 

Section 5
            (c) of the Home Owners' Loan Act (12 U.S.C. 1464
            (c) ) is 
amended--

    (1) in paragraph

    (1) , by adding at the end the following:
 ``
            (V) Agricultural loans.--Secured or unsecured 
 loans for agricultural purposes.''; and

    (2) in paragraph

    (2)
        (A) , by striking ``business, or 
 agricultural'' and inserting ``or business''.

SEC. 8. STUDY ON DE NOVO FINANCIAL INSTITUTIONS.

    (a) Study.--The appropriate Federal banking agencies shall, 
jointly, carry out a study on--

    (1) the principal causes for the low number of de novo 
 financial institutions in the 10-year period ending on the date 
 of enactment of this Act; and

    (2) ways to promote more de novo financial institutions in 
 areas currently underserved by financial institutions.

    (b) Report to Congress.--Not later than 1 year after the date of 
enactment of this Act, the appropriate Federal banking agencies shall, 
jointly, issue a report to Congress containing all findings and 
determinations made in carrying out the study required under subsection

    (a) .
 <all>