On July 30, 2026, the federal banking agencies issued a revised compliance guide intended to help community banking organizations understand the final rule modifying the CBLR framework. The updated guide is intended to help community banking organizations understand the revisions to the optional CBLR framework that went into effect July 1, 2026.
Why it Matters?
The federal banking agencies remain committed to helping community banking organizations address their challenges and have taken several actions to reduce regulatory burden and tailor supervisory activities. A qualifying organization that elects the CBLR framework and remains above the applicable threshold is considered to meet the generally applicable risk-based and leverage capital requirements, including the well-capitalized standard under prompt corrective action rules.
The main components and requirements of the CBLR framework are as follows:
Qualifying Criteria
The framework is optional. A community banking organization must satisfy each qualifying criterion and make the election through the applicable regulatory report.
| Leverage Ratio | Greater than 8 percent |
| Total Consolidated Assets | Less than $10 billion |
| Off-Balance-Sheet Exposures | 25 percent or less of total consolidated assets |
| Trading Assets plus Trading Liabilities | 5 percent or less of total consolidated assets |
| Organization Status | Not an institution that is, or is a subsidiary of, a Global Systemically Important Bank (G-SIB) or a Category II banking organization |
Grace Period
The revised framework provides additional time for certain electing organizations to return to compliance, but the availability of the grace period depends on the leverage ratio, prior use, and the reason qualification was lost.
| Leverage Ratio > 7 percent | A four-quarter grace period may be available to regain qualifying status or transition to the risk-based capital framework. |
| Leverage Ratio < 7 percent | Immediate compliance with the applicable risk-based capital framework is required. |
| Limitations | The grace period cannot be used after 8 or more grace-period quarters in the prior 20 quarters, and it is not available when qualification is lost because of a merger or acquisition. |
Quarter-End Focus
These changes broaden potential access the CBLR framework and provide a longer transition window. Eligibility and grace-period limits still require careful, quarter-by-quarter monitoring.
- Recalculate: Recalculate the leverage ratio and all qualifying metrics using quarter-end regulatory reporting data.
- Look-Back: Track grace-period use across the rolling prior 20 quarters.
- Plan Early: If qualification is at risk, assess the reporting and capital implications before quarter-end filings.
- Document: Retain support for the election, calculations, judgments, and resulting reporting treatment.
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.
