The Federal Reserve Board, together with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, issued a final rule revising the community bank leverage ratio (CBLR) framework to expand community banks’ ability to use a simplified capital measure instead of risk-based capital ratios. The rule, adopted without change from the November 2025 proposal, lowers the CBLR threshold from 9% to 8% and extends the grace period for a community bank that temporarily falls out of compliance from two quarters to four quarters. Community banks that opt into the framework must still maintain a leverage ratio that is significantly higher than the leverage ratio standard otherwise applicable to community banks. The changes take effect on July 1, 2026.
Federal Reserve Board, FDIC and OCC finalize rule lowering the community bank leverage ratio to 8%
The Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency issued a final rule revising the community bank leverage ratio framework to expand use of a simplified capital measure instead of risk-based capital ratios. Adopted as proposed in November 2025, the rule lowers the leverage ratio threshold from 9% to 8% and extends the non-compliance grace period from two to four quarters, while still requiring a ratio significantly above the standard for community banks.