CBLR Final Rule 2026: 8% Requirement & 4-Quarter Grace Period

Reference: FIL-19-2026 | Federal Register Document 2026-08298

Official publication: Read the FDIC’s FIL-19-2026 CBLR update.

Current status: The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation (FDIC) finalized the 2026 revisions to the Community Bank Leverage Ratio (CBLR) framework. The final rule was published in the Federal Register on April 29, 2026, and became effective July 1, 2026.

Quick Answer: What Changed in the 2026 CBLR Final Rule?

The 2026 CBLR final rule lowers the required leverage ratio from greater than 9 percent to greater than 8 percent and gives certain electing community banking organizations up to four consecutive quarters to return to compliance after temporarily failing a qualifying criterion. That grace period is available only when the organization maintains a leverage ratio greater than 7 percent and has not used the grace period for eight or more of the previous twenty quarters. In the agencies’ summary, this is a limit of eight quarters in the previous five-year period.

• Lower CBLR requirement: The operative requirement is now greater than 8 percent, effective July 1, 2026.
• Four-quarter grace period: An electing organization that temporarily fails one or more qualifying criteria may remain in the CBLR framework for up to four consecutive quarters while it returns to compliance or transitions to the risk-based capital framework, provided its leverage ratio stays above 7 percent.
• Seven-percent floor: An organization with a leverage ratio of 7 percent or less cannot use the grace period for that quarter and must comply with the applicable risk-based capital requirements.
• Twenty-quarter usage limit: An organization that has used the grace period for eight or more of the previous twenty quarters may not use it in the current quarter.
• Optional framework: The CBLR remains optional for qualifying community banking organizations; the final rule does not make every bank below $10 billion automatically eligible.

Who May Qualify for the CBLR Framework?

The revised framework is intended for depository institutions and depository institution holding companies that meet all of the qualifying criteria. The central size and simplicity criteria include:

• A leverage ratio greater than 8 percent.
• Less than $10 billion in total consolidated assets, calculated as average total consolidated assets under the applicable reporting instructions.
• Total off-balance-sheet exposures of 25 percent or less of total consolidated assets.
• Total trading assets plus trading liabilities of 5 percent or less of total consolidated assets.
• The organization is not a banking organization that is, or is a subsidiary of, a GSIB or Category II banking organization. The FDIC statement of applicability also describes the qualifying scope as institutions that are not advanced approaches banks.

These criteria are measured under the applicable capital rule and reporting instructions. A bank or holding company should confirm its own facts, regulator, reporting form, and organizational structure before treating the CBLR as available.

How the Revised Leverage Ratio Works

The CBLR is calculated as Tier 1 capital divided by average total consolidated assets. A qualifying organization that elects the optional framework and maintains a leverage ratio greater than 8 percent can satisfy the applicable risk-based and leverage capital requirements under the agencies’ capital rule. Insured depository institutions may also be treated as meeting the “well-capitalized” ratio requirements under the Prompt Corrective Action framework.

The revised framework does not eliminate the need for accurate regulatory reporting. The OCC’s July 2026 compliance guide explains that organizations opt into the CBLR by completing the associated reporting line items on the Call Report or Form FR Y-9C, as applicable. An organization may opt out by completing the applicable risk-based-capital reporting requirements, and it may later opt back in if it again meets the qualifying criteria.

What the Four-Quarter Grace Period Means

The grace period begins at the end of the calendar quarter in which an electing organization ceases to satisfy a qualifying criterion. During the grace period, the organization can work to restore all qualifying criteria or prepare to comply with the risk-based capital framework. It must maintain a leverage ratio greater than 7 percent to use the grace period.

The four-quarter period is not an unlimited reset. The organization cannot use the grace period in the current quarter if it has already used it for eight or more of the previous twenty quarters. The final rule also explains that the lookback considers prior grace-period usage even when the organization was not elected into the CBLR for every one of those quarters. A merger or acquisition can create a separate timing issue because an organization that ceases to qualify as a result of the transaction generally cannot use the grace period for the quarter in which the transaction occurs.

Practical Review Checklist for Community Bank Teams

1. Recalculate eligibility: Use current average total consolidated assets, off-balance-sheet exposures, trading assets and liabilities, organizational status, and leverage data.
2. Test the two capital thresholds: Track the greater-than-8-percent CBLR requirement separately from the greater-than-7-percent floor needed to use the grace period.
3. Reconstruct the twenty-quarter history: Document prior grace-period usage before relying on the four-quarter extension.
4. Review reporting controls: Confirm that Call Report or FR Y-9C line items, internal capital models, and board materials reflect the July 1, 2026 framework.
5. Plan for a transition: If the organization may fall to 7 percent or less, fail to restore the qualifying criteria, or complete a merger, prepare for the applicable risk-based capital calculations and reports.
6. Confirm with the primary regulator: The specific application depends on the organization’s charter, supervision, holding-company structure, and current regulatory data.

What This Update Does Not Decide

The CBLR is still optional, and eligibility is fact-specific. The revised compliance guide is an explanatory resource and does not itself carry the effect of law or regulation. Community banking organizations should review the applicable capital rule, reporting instructions, and official agency materials before changing an election, capital plan, or regulatory filing.

My Law Tampa publishes this memorandum for informational purposes only. It is not legal advice and does not create an attorney-client relationship. For a fact-specific review of a regulatory or banking matter, request a consultation.

Source Materials

• FDIC FIL-19-2026: Final Rule on Revisions to the CBLR Framework
• Federal Register Document 2026-08298: Regulatory Capital Rule—Community Bank Leverage Ratio Framework
• Public-inspection copy of the final CBLR rule
• OCC Bulletin 2026-34: Updated Community Bank Compliance Guide
• Community Bank Leverage Ratio Framework Compliance Guide, Revised July 2026
• Federal Reserve Regulatory Service Transmittal 545
• Regulator archive: FDIC memos
• Memo library: browse the full regulatory memo archive