The Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued a joint proposal to revise the community bank leverage ratio framework, aiming to reduce compliance burden and give community banks more flexibility in managing capital while retaining strong prudential safeguards. The community bank leverage ratio, introduced in 2019, allows eligible community banks to opt into a simplified leverage ratio approach and avoid calculating and reporting risk-based capital ratios. The proposal would lower the required ratio to 8 percent from 9 percent and extend the grace period for banks that fall out of compliance from two quarters to four quarters. The agencies also stated that the framework would continue to require capital consistent with safety and soundness and comparable to, or higher than, risk-based requirements, while keeping the leverage ratio at double the minimum applicable to community banks that do not opt in. Comments are due 60 days after the proposal is published in the Federal Register.
Federal Reserve Board 2025-11-25
US Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency propose cutting the community bank leverage ratio to 8 percent
The Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency proposed revisions to the community bank leverage ratio framework to reduce compliance burdens and enhance capital management flexibility. The proposal suggests lowering the required ratio from 9% to 8% and extending the non-compliance grace period from two to four quarters. The framework will maintain capital requirements consistent with safety and soundness, comparable to or exceeding risk-based standards.