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OCC Bulletin 2020-87 | October 8, 2020

Regulatory Capital Rule: Eligible Retained Income


Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested Parties


On October 8, 2020, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) jointly issued a final rule that revises the definition of eligible retained income in the agencies' regulatory capital rule.1 The rule finalizes without changes an interim final rule that the agencies issued on March 20, 2020.2 The final rule is effective for banks3 January 1, 2021.

Note for Community Banks

This final rule applies to community banks except for qualifying community banking organizations electing to use the community bank leverage ratio framework.


Under the capital rule, if a bank's capital ratios fall within its buffer requirements, the maximum amount of capital distributions it can make is a function of its eligible retained income. The final rule revises the definition of eligible retained income to the greater of

  • a banking organization's net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, or
  • the average of a banking organization's net income over the preceding four quarters.

Further Information

Please contact Benjamin Pegg, Risk Expert for Capital and Regulatory Policy, (202) 649–6370; or Kevin Korzeniewski, Counsel, or Marta Stewart-Bates, Counsel, Chief Counsel's Office, (202) 649–5490.


Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Link

1 Refer to 12 CFR 3.11, "Capital conservation buffer and countercyclical capital buffer amount."

2 Refer to 85 Fed. Reg. 15909. The interim final rule went into effect March 20, 2020.

3 "Banks" refers to national banks and federal savings associations.