Final Rule Lowers Community Bank Leverage Ratio to 8%, Extends Grace Period to Four Quarters
Summary
The FDIC, Federal Reserve Board, and OCC jointly finalized a rule lowering the community bank leverage ratio from 9% to 8% and extending the grace period from 2 quarters to 4 quarters for community banks that temporarily fall out of compliance. The final rule, adopted without change from the November 2025 proposal, takes effect July 1, 2026, and continues to allow community banks to use a simpler leverage ratio measure instead of calculating risk-based capital ratios.
“The final rule takes into account the unique business models and risk profiles of community banks.”
Community banks that have previously opted out of the CBLR framework due to the 9% threshold may now qualify under the new 8% requirement and should reassess whether opt-in remains viable under updated capital projections. Institutions already subject to CBLR requirements should update compliance policies to reflect the four-quarter grace period and confirm reporting systems are configured for the new thresholds ahead of the July 1, 2026 effective date.
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What changed
The final rule modifies the Community Bank Leverage Ratio framework by reducing the minimum ratio requirement from 9% to 8%, which expands the population of community banks eligible to opt into the simplified framework. It also doubles the grace period for banks temporarily out of compliance from two to four consecutive quarters, providing greater operational flexibility while maintaining a capital requirement significantly above the standard leverage ratio applicable to other banks.
Community banks currently near the 9% threshold should evaluate whether the lower 8% threshold creates new opt-in opportunities, and those already in the framework should confirm their capital planning assumptions reflect the extended four-quarter grace period. The July 1, 2026 effective date gives affected institutions approximately two months to update internal policies before the changes take effect.
Archived snapshot
Apr 23, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
News Release 2026-30 | April 23, 2026
Agencies Finalize Changes to Community Bank Leverage Ratio
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Joint Release
Federal Deposit Insurance Corporation
Federal Reserve Board
Office of the Comptroller of the Currency
The federal bank regulatory agencies today jointly finalized a rule to modify the community bank leverage ratio consistent with existing statutory authority. This change will provide community banks with greater flexibility to use a simpler measure of capital adequacy and reduce regulatory burden. The final rule takes into account the unique business models and risk profiles of community banks.
The final rule is being adopted without change from the proposal issued in November 2025. The rule will lower the community bank leverage ratio from nine percent to eight percent, which will provide more flexibility for community banks to opt into the framework. The final rule also extends the grace period from two quarters to four quarters for a community bank that temporarily falls out of compliance. The framework continues to simplify regulatory capital requirements for community banks by allowing them to adopt a relatively simple leverage ratio to measure capital adequacy, rather than calculating and reporting risk-based capital ratios.
Community banks that opt into the framework will be subject to a capital requirement that continues to promote safety and soundness. Under the framework, banks must maintain a leverage ratio that is significantly higher than the leverage ratio standard otherwise applicable to community banks.
The changes will take effect on July 1, 2026.
Related Link
- Attachment (PDF)
Media Contacts
FDIC
Julianne Fisher Breitbeil
(202) 240-3042
FRB
Samuel Wayt
(202) 452-2955
OCC
Monica McCoy
(202) 649-6870
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