Pub. 10 2020-2021 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S November • December 2020 11 stress periods. TLAC buffer requirements were implemented to gradually limit institutions’ ability to make capital distri - butions under certain circumstances, thereby strengthening these institutions’ ability to continue lending and conducting other financial intermediation activities during stress periods. Institutions with a TLAC level that falls below the appli- cable minimum plus-buffer requirements face limitations on capital distributions in a manner designed to parallel the re- strictions on capital distributions under the capital rule. The maximum amount of capital distributions that a TLAC cov- ered company can make is limited as a percentage of its eligi - ble retained income, as defined in the TLAC rule. Before the issuance of the March 26, 2020, interim final rule, the TLAC rule generally defined eligible retained income as net income for the four calendar quarters preceding the current calendar quarter, based on the globally systematic important U.S. bank holding companies’ FR Y-9C, net of any distributions and associated tax effects not already reflected in net income. This final rule revised the definition to be: “(i) The eligible retained income of a global systemically important BHC is the greater of: (A) The global systemically important BHC’s net income, cal - culated per the instructions to the FR Y-9C, for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not al - ready reflected in net income; and (B) The average of the global systemically important BHC’s net income, calculated per the instructions to the FR Y-9C, for the four calendar quarters preceding.” These revised definitions of eligible retained income should allow institutions to gradually reduce distributions as they enter periods of stress and provide institutions with more substantial incentives to continue to lend and carry on other business functions. Although both interim final rules were effective as of the date they were published, the new final rule will be effective Jan. 1, 2021. n SBA 504 WE MAKE IT EASY LET OUR TEAM HELP YOU SECURE THE DEAL AND LOWER YOUR RISK • UP TO 90% OVERALL FINANCING • UP TO 25 YEAR TERM • FIXED-RATE PREFERREDLENDINGPARTNERS.COM | 303.861.4100 Leveraged financing and refinancing of owner occupied real estate and long-term equipment. Most for-profit small businesses eligible. SBA defines businesses with net profit after tax <$5.0 Million and tangible net worth <$15.0 Million as small. John S. Berteau serves as Associate General Counsel for Compli- ance Alliance. He has nearly fifteen years of combined experience in the financial services industry. At Hancock Whitney Bank, he worked in the field of environmental risk management and compliance (CERCLA/RCRA/Wetlands). At Alorica, the nation’s fastest-growing BPO, John worked in tandem with some of the largest banks in the U.S., helping to evaluate financial risks. He holds Bachelor’s and Master’s Degrees in History from the Uni- versity of New Orleans, a Juris Doctorate from Loyola University New Orleans and is a licensed attorney in the State of Louisiana. In addition to being one of our featured authors, John has recently taken over the editor role for C/A’s Access magazine. As a hotline advisor, John helps C/A members with a wide range of regulatory and compliance.