Community Bank Leverage Ratio: Updated Community Bank Compliance Guide

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 agencies) are publishing revisions to the Community Bank Compliance Guide for the Community Bank Leverage Ratio (CBLR) framework. These changes incorporate revisions to the framework that became effective on July 1, 2026.

The CBLR framework provides a simple measure of capital adequacy for qualifying community banking organizations, consistent with section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. Depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a tier 1 leverage ratio of greater than 8 percent, are considered qualifying community banking organizations and are eligible to opt into the CBLR framework.

The compliance guide summarizes the CBLR framework. It does not carry the effect of law or regulation. In addition to referencing the compliance guide, community banking organizations should review the CBLR framework in the capital rule.

Highlights

In 2026, the agencies published revisions to the CBLR framework. These revisions, which became effective on July 1, 2026:

• lower 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. In 2019, the federal banking agencies issued a final rule establishing the CBLR framework, which became effective January 1, 2020.

Section 201(c) of the EGRRCPA provides that a qualifying community bank that opts into the CBLR framework and maintains a minimum leverage ratio as set by the federal banking agencies 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.

James M. Gallagher
Senior Deputy Comptroller and Chief National Bank Examiner

Related Link

• Community Bank Leverage Ratio Framework: Community Bank Compliance Guide (PDF)