Community Bank Leverage Ratio Final Rule Reduces Minimum Threshold to 8 Percent
Summary
The OCC, Federal Reserve, and FDIC jointly issued a final rule amending the Community Bank Leverage Ratio framework to reduce the minimum leverage ratio requirement from greater than 9 percent to greater than 8 percent, providing regulatory relief to qualifying community banks. The rule extends the grace period for banks temporarily failing to meet qualifying criteria to four quarters, provided they maintain a leverage ratio above 7 percent and do not exceed eight quarters of grace over a five-year period. Banks with leverage ratios at or below 7 percent must revert to applicable risk-based capital standards. The rule implements Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act and takes effect January 1, 2020.
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What changed
The final rule substantially revises the CBLR framework by lowering the minimum leverage ratio requirement from greater than 9 percent to greater than 8 percent, aligning with Section 201(c) of EGRRCPA which established the 8-10 percent range for well-capitalized status. The grace period for banks temporarily failing to meet CBLR criteria is expanded from an unspecified prior period to four consecutive quarters, provided the bank maintains a leverage ratio above 7 percent. A new cumulative limit of eight quarters of grace over any rolling five-year period is introduced. Banks whose leverage ratio falls to 7 percent or below must immediately comply with applicable risk-based capital standards. OCC Bulletin 2021-66 is rescinded.
Qualifying community banks with less than $10 billion in total consolidated assets that have opted into the CBLR framework should review their capital calculations to confirm the new 8 percent minimum applies to their next reporting period. Banks currently operating near the 9 percent threshold may have additional flexibility under the expanded grace period provisions. Compliance personnel should update internal capital monitoring procedures to track the new seven-percent grace-period floor and the five-year cumulative limit on grace-period usage.
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Apr 24, 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.
OCC Bulletin 2026-15 | April 23, 2026
Community Bank Leverage Ratio: Final Rule
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Summary
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 federal banking agencies) issued a final rule to relieve regulatory burden on certain qualifying community banks by revising the community bank leverage ratio (CBLR) framework.
This bulletin rescinds OCC Bulletin 2021-66, “Community Bank Leverage Ratio Framework: Interagency Statement.”
Note for Community Banks
The final rule applies to qualifying community banks with less than $10 billion in total consolidated assets that meet other prudential criteria and opt into the CBLR framework.
Highlights
The CBLR framework provides a simple measure of capital adequacy for certain community banks. In 2019, the federal banking agencies issued a final rule establishing the CBLR framework, which became effective January 1, 2020.
The final rule amends the CBLR framework to
- revise the minimum leverage ratio requirement from greater than 9 percent to greater than 8 percent;
- revise the “grace period” for a bank that elects to use the CBLR framework but temporarily fails to meet all of the qualifying criteria, including the leverage ratio requirement, to provide that
- the community bank will have four quarters to return to compliance, provided the community bank maintains a leverage ratio greater than 7 percent and does not exceed a limit of eight quarters in the grace period over a five-year period;
- a community bank that has a leverage ratio equal to or less than the grace period minimum of 7 percent will be required to comply with the applicable risk-based capital standards.
Background
The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) was enacted on May 24, 2018. Section 201 of the EGRRCPA, titled “Capital Simplification for Qualifying Community Banks,” directed each federal banking agency to develop a community bank leverage ratio for qualifying community banks, with qualifying criteria based on the bank’s risk profile.
Section 201(c) of the EGRRCPA provides that a qualifying community bank that opts into the CBLR framework and maintains a minimum leverage ratio of not less than 8 percent and not more than 10 percent will be considered to have met the generally applicable minimum capital requirements and the capital ratio requirements for the “well-capitalized” category under the Prompt Corrective Action framework.
Section 201(b) of the EGRRCPA further requires each federal banking agency to establish procedures for the treatment of a qualifying community bank whose leverage ratio falls below the CBLR requirement.
Further Information
Please contact Carl Kaminski, Assistant Director, Bank Advisory Group, Chief Counsel’s Office, at (202) 649-5490, or Benjamin Pegg, Technical Expert, Capital Policy, at (202) 649-6370.
Jonathan V. Gould
Comptroller of the Currency
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