Interagency Final Rule on Revisions to the Community Bank Leverage Ratio (CBLR) Framework
On April 23, 2026, the federal banking agencies jointly adopted a final rule modifying the Community Bank Leverage Ratio (CBLR) framework. The rule, which is effective July 1, 2026, implements revisions intended to expand access to the CBLR framework while preserving capital safeguards. Key provisions include the following:
Reduced CBLR Requirement
The rule decreases the CBLR requirement from 9 percent to 8 percent, allowing more community banks to participate in the framework.
Longer Grace Period
Institutions that temporarily fail to meet one or more CBLR qualifying requirements may remain in the framework for up to four consecutive quarters, compared to the prior two‑quarter limit, as long as their leverage ratio stays above 7 percent. Institutions with leverage at or below 7 percent must immediately transition back to the risk‑based capital framework.
Grace Period Cap
Application of the extended grace period is capped at eight quarters within a five‑year period, a measure intended to prevent repeated use in lieu of meeting ongoing capital requirements and to support long‑term capital planning.
Scope and Eligibility
The CBLR framework continues to be available to banks and holding companies with total
consolidated assets below $10 billion that elect into the framework and satisfy existing criteria related to off‑balance‑sheet exposures, trading activity, and exclusion from the advanced approaches capital rules.
At S.R. Snodgrass, we are committed to community banks. Our firm’s size and volume of work enable us to provide you with industry specialists. Our team of professionals can help you assess the impact of these changes and develop strategies for the future.
