The Federal Deposit Insurance Corporation, together with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, issued a final rule revising the community bank leverage ratio (CBLR) framework to make the simplified leverage ratio option available to more qualifying community banking organizations and to reduce regulatory reporting burden. The changes lower the CBLR requirement from 9 percent to 8 percent and extend the grace period for temporary non-compliance from two quarters to four quarters, with an effective date of July 1, 2026. Under the revised framework, an organization that falls out of one or more qualifying criteria may remain in the CBLR framework during the four-quarter grace period if it maintains a leverage ratio above 7 percent, but must revert to the risk-based capital framework for the quarter in which it reports 7 percent or less. Use of the grace period is also constrained by a five-year lookback: an organization that has been in the grace period for eight or more of the previous twenty quarters cannot use the grace period in the current quarter. The rule retains the existing qualifying criteria, including the USD 10 billion total consolidated asset threshold, limits on off-balance sheet exposures and trading assets and liabilities, and exclusion of advanced approaches banking organizations. The agencies finalized the rule without change from the proposal issued in November 2025 and removed now-expired temporary CBLR provisions adopted during the COVID-19 period. Clarifying updates to Call Report and Form FR Y-9C instructions are expected to be addressed separately.
Federal Deposit Insurance Corporation 2026-04-23
US Federal Deposit Insurance Corporation joins OCC and Federal Reserve in finalizing 8 percent community bank leverage ratio and four-quarter grace period
The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Federal Reserve finalized revisions to the community bank leverage ratio framework, lowering the requirement from 9% to 8% and extending the grace period for temporary non-compliance from two to four quarters, effective July 1, 2026. Qualifying community banks may remain in the framework during the grace period if they keep a leverage ratio above 7%, subject to a five-year lookback, while existing eligibility criteria, including the USD 10 billion asset threshold and exclusions for advanced approaches institutions, remain.