US Regulators Lower Community Bank Leverage Ratio to Ease Compliance Burden

The community bank leverage ratio, or CBLR, was established under the US Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. It allows eligible community banks with less than $10 billion in consolidated assets to use a single leverage ratio instead of complex risk-weighted capital calculations, reducing reporting costs for smaller institutions while preserving their lending capacity.

The Federal Deposit Insurance Corporation, Federal Reserve and Office of the Comptroller of the Currency finalized the new rule on April 23, 2026, with an effective date of July 1. The CBLR threshold will fall to 8% from 9%, while the grace period for banks that temporarily cease to qualify will be extended to four quarters from two. Banks may use the grace period for no more than eight quarters in any 20-quarter period, and those whose leverage ratio falls below 7% will be ineligible.