The OCC, the Federal Reserve and the FDIC have adopted a final rule that codifies temporary changes to changes to the community bank leverage ratio and addresses the transition process for banks using the CBLR framework. The agencies introduced these changes previously in two April interim final rules.
Under the final rule, the CBLR will remain at 8% through the end of 2020. Community banks that have a leverage ratio of 8% or greater and meet certain other criteria may elect to use the CBLR framework. Beginning in 2021, the CBLR will increase to 8.5% for the calendar year. Community banks will have until Jan. 1, 2022, before the leverage ratio requirement to use the CBLR framework will return to 9%.
The final rule also maintains a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than one percentage point below the applicable CBLR requirement. The rule takes effect 30 days after publication in the Federal Register.