Federal regulators finalized the reduction of the community bank leverage ratio (CBLR) from 9% to 8%, effective July 1. The rule was adopted without dissent by the Federal Reserve, FDIC, and OCC. The agencies project that roughly 480 more banks will now qualify for the CBLR framework, expanding eligibility to 95% of community banks. The grace period for returning to compliance if a bank slips below the ratio was also extended from two quarters to four. The change was adopted unchanged from a November 2025 proposal.
One note of caution: advocacy group Better Markets argued the rule should have included conditions on how freed-up capital is used, warning that lower requirements without guardrails could invite private equity acquisition strategies. The agencies declined to adopt any such conditions.
What you should do: If your institution has not opted into the CBLR framework, now is a good time to revisit that decision. At 8%, the simplified framework becomes more attractive, particularly for banks whose risk-based capital calculations are straightforward. Review with your CFO and compliance team whether the CBLR saves you time and regulatory burden, and factor in the extended grace period as a new safety valve.
Joint press release: https://www.fdic.gov/news/press-releases/2026/agencies-finalize-changes-community-bank-leverage-ratio