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Federal Register / Vol. 86, No. 205 / Wednesday, October 27, 2021 / Rules and Regulations The purpose of the 30-day waiting period prescribed in APA section 553d3 is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. The FDIC believed that this waiting period would be unnecessary as the proposed rule, if codified, would likely lift burdens on FDIC-supervised institutions by allowing them to calculate the ratio of loans in excess of the supervisory LTV Limits without calculating tier 2 capital, and would also ensure that the approach is consistent, regardless of the institutions CBLR election status. Consequently, the FDIC believed it would have good cause for the final rule to become effective upon publication.
The FDIC did not receive any comment on whether good cause exists to waive the delayed effective date of the rule once finalized. However, because it is not possible to identify how many institutions have real estate loans that exceed the supervisory LTV
thresholds that would be directly implicated by either the current Real Estate Lending Standards or the revisions, the FDIC, after further consideration, has determined to implement a 30-day delayed effective date as provided in the APA.
Accordingly, all provisions of the final rule will be effective 30 days after publication in the Federal Register.
B. Regulatory Flexibility Act The Regulatory Flexibility Act RFA
generally requires that, in connection with a final rule, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the rule on small entities.11 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the rule.
The Small Business Administration SBA has defined small entities to include banking organizations with total assets of less than or equal to $600
million.12 Generally, the FDIC considers 11 5

U.S.C. 601 et seq.
SBA defines a small banking organization as having $600 million or less in assets, where a financial institutions assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. 13 CFR
121.201 n.8 2019. SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates. . . . 13 CFR 121.103a6
2019. Following these regulations, the FDIC uses a covered entitys affiliated and acquired assets, averaged over the preceding four quarters, to
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a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. For the reasons provided below, the FDIC
certifies that the final rule will not have a significant economic impact on a substantial number of small banking organizations. Accordingly, a regulatory flexibility analysis is not required.
As of March 31, 2021, the FDIC
supervised 3,215 institutions, of which 2,333 were small entities for purposes of the RFA.13 The effect of the revisions at an individual bank would depend on whether the amount of its current or future real estate loans with loan-tovalue ratios that exceed the supervisory LTV thresholds is greater than, or less than, the sum of its tier 1 capital and allowance or credit reserve in the case of CECL adopters for loan and lease losses. Allowance levels, credit reserves, and the volume of real estate loans and their loan to value ratios can vary considerably over time. Moreover, the FDIC does not have comprehensive information about the distribution of current loan to value ratios. For these reasons, it is not possible to identify how many institutions have real estate loans that exceed the supervisory LTV
thresholds that would be directly implicated by either the current Guidelines or the final revisions.
Currently, 2,210 small, FDIC
supervised institutions have total real estate loans that exceed the tier 1 capital plus allowance or reserve benchmark in the revisions and are thus potentially affected by the revisions depending on the distribution of their loan to value ratios. In comparison, 2,218 small, FDIC
supervised institutions have total real estate loans exceeding the current total capital benchmark and are thus potentially affected by the current Real Estate Lending Standards. As described in more detail below, the population of banks potentially subject to the Real Estate Lending Standards is therefore almost unchanged by these final revisions, and their substantive effects are likely to be minimal.14
The FDIC believes that a threshold of tier 1 capital plus an allowance for credit losses is consistent with the way the FDIC and institutions historically have applied the Real Estate Lending Standards. Also, the typical or median determine whether the covered entity is small for the purposes of RFA.
13 March 31, 2021, Call Report data.
14 Id.

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small, FDIC-supervised institution that had not elected the CBLR framework reported almost no difference between the amount of its allowance for credit losses and its tier 2 capital.15
Consequently, although the FDIC does not have information about the amount of real estate loans at each small institution that currently exceeds, or could exceed, the supervisory LTV
limits, the FDIC does not expect the final rule to have material effects on the safety-and-soundness of, or compliance costs incurred by, small FDICsupervised institutions. However, small institutions may have to incur some costs associated with making the necessary changes to their systems and processes in order to comply with the terms of the final rule. The FDIC
believes that any such costs are likely to be minimal given that all small institutions already calculate tier 1
capital and the allowance for credit losses and had been subject to the previous thresholds for many years before the changes in the capital rules.
Therefore, and based on the preceding discussion, the FDIC certifies that the final rule will not significantly affect a substantial number of small entities.
C. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995
PRA,16 the FDIC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currentlyvalid Office of Management and Budget OMB control number. The FDIC has reviewed this final rule and determined that it would not introduce any new or revise any collection of information pursuant to the PRA. Therefore, no submissions will be made to OMB with respect to this final rule.
D. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302a of the Riegle Community Development and Regulatory Improvement Act RCDRIA,17 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institution, each Federal banking agency must consider, consistent with principles of safety and 15 According to March 31, 2021, Call Report data, the median small, FDIC-supervised institution that had not elected the CBLR framework reported an allowance for credit losses or allowance for loan and lease losses if applicable that was $1,000 or about 0.17 percent greater than tier 2 capital.
16 44 U.S.C. 35013521.
17 12 U.S.C. 4802a.

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