II
119THCONGRESS
1
STSESSION 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
JANUARY16, 2025
Mrs. H
YDE-SMITHintroduced 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 es-
tablish 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 Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Promoting New Bank 4
Formation Act of 2025’’. 5
SEC. 2. FINDINGS. 6
The Congress finds the following: 7
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(1) Trends in bank closures and consolidation 1
have left many communities without access to bank-2
ing services and disproportionately impact under-3
served rural and urban communities. 4
(2) De novo bank formation has slowed signifi-5
cantly following the financial crisis. 6
(3) A November 2019 report by the Federal 7
Reserve System found that 44 counties in the 8
United States were ‘‘deeply affected’’ by trends in 9
bank closures and consolidation, meaning that the 10
counties had fewer than 10 branches in 2012 and 11
lost not less than 50 percent of them by 2017. 12
(4) 89 percent of the deeply affected counties 13
described in paragraph (3) were rural. 14
(5) Rural counties deeply affected by branch 15
closures had higher poverty rates and lower median 16
incomes, and a higher share of their population were 17
African-American compared to all rural commu-18
nities. 19
SEC. 3. DEFINITIONS. 20
In this Act: 21
(1) A
PPROPRIATE FEDERAL BANKING AGENCY ; 22
DEPOSITORY INSTITUTION ; DEPOSITORY INSTITU -23
TION HOLDING COMPANY .—The terms ‘‘appropriate 24
Federal banking agency’’, ‘‘depository institution’’, 25
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and ‘‘depository institution holding company’’ have 1
the meanings given those terms in section 3 of the 2
Federal Deposit Insurance Act (12 U.S.C. 1813). 3
(2) C
OMMUNITY BANK LEVERAGE RATIO .—The 4
term ‘‘Community Bank Leverage Ratio’’ has the 5
meaning given that term under section 201(a) of the 6
Economic Growth, Regulatory Relief, and Consumer 7
Protection Act (12 U.S.C. 5371 note). 8
(3) F
INANCIAL INSTITUTION.—The term ‘‘fi-9
nancial institution’’ means a depository institution 10
or depository institution holding company. 11
(4) R
URAL COMMUNITY BANK .—The term 12
‘‘rural community bank’’ means a financial institu-13
tion— 14
(A) with total consolidated assets of less 15
than $10,000,000,000; and 16
(B) located in a rural area, as defined in 17
section 1026.35(b)(2)(iv)(A) of title 12, Code of 18
Federal Regulations, or any successor regula-19
tion. 20
SEC. 4. PHASE-IN OF CAPITAL STANDARDS. 21
The appropriate Federal banking agencies shall issue 22
rules that provide for a 3-year phase-in period for a finan-23
cial institution to meet any Federal capital requirements 24
that would otherwise be applicable to the financial institu-25
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tion, where the 3-year period begins on the date on which 1
the deposit insurance that the financial institution has ob-2
tained from the Federal Deposit Insurance Corporation 3
becomes effective. 4
SEC. 5. CHANGES TO BUSINESS PLANS. 5
(a) I
NGENERAL.—During the 3-year period begin-6
ning on the date on which the deposit insurance that the 7
financial institution has obtained from the Federal De-8
posit Insurance Corporation becomes effective, a financial 9
institution may request to deviate from a business plan 10
that has been approved by the appropriate Federal bank-11
ing agency by submitting a request to the agency pursuant 12
to this section. 13
(b) R
EVIEW OFCHANGES.—An appropriate Federal 14
banking agency shall, not later than the end of the 30- 15
day period beginning on the receipt of a request under 16
subsection (a)— 17
(1) approve, conditionally approve, or deny the 18
request; and 19
(2) notify the financial institution of the deci-20
sion and, if the agency denies the request— 21
(A) provide the financial institution with 22
the reason for the denial; and 23
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(B) suggest changes to the request that, if 1
adopted, would allow the agency to approve the 2
request. 3
(c) R
ESULT OFFAILURETOACT.—If an appropriate 4
Federal banking agency fails to approve or deny a request 5
within the 30-day period required under subsection (b), 6
the request shall be deemed to be approved. 7
SEC. 6. RURAL COMMUNITY BANK LEVERAGE RATIO. 8
(a) I
NGENERAL.—During the 3-year period begin-9
ning on the date on which the deposit insurance that a 10
rural community bank has obtained from the Federal De-11
posit Insurance Corporation becomes effective, the Com-12
munity Bank Leverage Ratio for the rural community 13
bank shall be 8 percent. 14
(b) P
HASE-INAUTHORITY.—The appropriate Fed-15
eral banking agencies shall issue rules to phase-in the 16
Community Bank Leverage Ratio described in subsection 17
(a) with respect to a rural community bank by setting 18
lower Community Bank Leverage Ratio percentages dur-19
ing the first 2 years of the 3-year period described in sub-20
section (a). 21
SEC. 7. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL 22
SAVINGS ASSOCIATIONS. 23
Section 5(c) of the Home Owners’ Loan Act (12 24
U.S.C. 1464(c)) is amended— 25
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(1) in paragraph (1), by adding at the end the 1
following: 2
‘‘(V) A
GRICULTURAL LOANS .—Secured or 3
unsecured loans for agricultural purposes.’’; and 4
(2) in paragraph (2)(A), by striking ‘‘business, 5
or agricultural’’ and inserting ‘‘or business’’. 6
SEC. 8. STUDY ON DE NOVO FINANCIAL INSTITUTIONS. 7
(a) S
TUDY.—The appropriate Federal banking agen-8
cies shall, jointly, carry out a study on— 9
(1) the principal causes for the low number of 10
de novo financial institutions in the 10-year period 11
ending on the date of enactment of this Act; and 12
(2) ways to promote more de novo financial in-13
stitutions in areas currently underserved by financial 14
institutions. 15
(b) R
EPORT TOCONGRESS.—Not later than 1 year 16
after the date of enactment of this Act, the appropriate 17
Federal banking agencies shall, jointly, issue a report to 18
Congress containing all findings and determinations made 19
in carrying out the study required under subsection (a). 20
Æ
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