Agencies Finalize Community Bank Leverage Ratio Rule
Summary
The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency jointly finalized a rule modifying the Community Bank Leverage Ratio framework, lowering the ratio requirement from nine percent to eight percent and extending the grace period from two quarters to four quarters for community banks temporarily out of compliance. The final rule, adopted without change from the November 2025 proposal, takes effect July 1, 2026, providing community banks greater flexibility to use a simpler capital adequacy measure.
“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 have previously been deterred from opting into the CBLR framework by the nine percent threshold should reassess whether the new eight percent ratio makes participation viable. Banks with volatile earnings or seasonal capital fluctuations may particularly benefit from the extended four-quarter grace period.
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What changed
The final rule modifies the Community Bank Leverage Ratio framework by reducing the leverage ratio requirement from nine percent to eight percent and increasing the grace period for temporary non-compliance from two quarters to four quarters. Community banks opting into the framework must maintain a leverage ratio significantly higher than the standard applicable to non-participating community banks, continuing to promote safety and soundness while simplifying capital reporting.\n\nCommunity banks currently near the nine percent threshold or those with variable capital positions should evaluate whether the revised framework better suits their business model. Banks opting into the CBLR framework are no longer required to calculate and report risk-based capital ratios, which may reduce regulatory burden. Banks should update capital monitoring systems ahead of the July 1, 2026 effective date to ensure continued compliance under the modified framework.
Archived snapshot
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.
Agencies Finalize Changes to Community Bank Leverage Ratio
Joint Release
Federal Deposit Insurance Corporation
Federal Reserve Board
Office of the Comptroller of the Currency
April 23, 2026 WASHINGTON – 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.
Attachment(s)
Revisions to the Community Bank Leverage Ratio Framework Final Rule
Contact(s)
FDIC: Julianne Fisher Breitbeil, (202) 240-3042 FRB: Samuel Wayt, (202) 452-2955 OCC: Monica McCoy, (202) 649-6870
Last Updated: April 23, 2026
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