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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF SUPERVISION

AND REGULATION

SR 21-21 

December 21, 2021 

TO THE OFFICER IN CHARGE OF SUPERVISION AND APPROPRIATE 

SUPERVISORY AND EXAMINATION STAFF AT EACH FEDERAL RESERVE BANK 

AND INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE

SUBJECT: Interagency Statement on the Community Bank Leverage Ratio Framework

Applicability: This letter applies to qualifying banking organizations with less than $10 billion in 

total consolidated assets supervised by the Federal Reserve.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance 

Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) today 

issued a statement to provide information on the use of the two-quarter grace period under the 

optional community bank leverage ratio framework. The community bank leverage ratio 

framework provides qualifying community banking organizations the option to calculate only a 

simple leverage ratio, rather than both risk-based and leverage-based measures of capital 

adequacy. Following the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the 

agencies temporarily lowered the framework’s community bank leverage ratio requirement to 

better allow community banking organizations to support households and businesses during the 

COVID-19 pandemic. 

The statement notes that beginning in the first quarter of 2022, the community bank 

leverage ratio requirement will revert to its original level of 9 percent. In addition, the statement 

discusses the availability of a two-quarter grace period that generally allows banking 

organizations additional time to build capital and manage their balance sheets to either remain in 

the framework or prepare to comply with risk-based capital requirements. The statement from 

the agencies does not alter any existing agency rules or regulations. 

Reserve Banks are asked to distribute this letter to the supervised organizations in their 

districts and to appropriate supervisory staff. Questions may be sent via the Board’s public 

website.1

Michael S. Gibson

Director

1 See http://www.federalreserve.gov/apps/contactus/feedback.aspx
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Division of 

Supervision and Regulation

Attachments:

• Interagency Statement on the Community Bank Leverage Ratio Framework
Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Office of the Comptroller of the Currency

Interagency Statement on the Community Bank Leverage Ratio Framework 

December 21, 2021 

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance 

Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) are 

issuing this statement to provide information and guidance on the use of the two-quarter grace 

period under the optional community bank leverage ratio framework when the temporary relief 

measures affecting the framework expire on December 31, 2021. A banking organization that 

elects the community bank leverage ratio framework when it submits its March 31, 2022, Call 

Report or Form FR Y–9C will be subject to the 9 percent community bank leverage ratio 

requirement and must use total consolidated assets as of the report date to determine eligibility.

1

 

The community bank leverage ratio framework includes a two-quarter grace period that 

generally allows banking organizations additional time to build capital and manage their balance 

sheets to either remain in the framework or prepare to comply with the generally applicable riskbased and leverage capital requirements (generally applicable rule).

2

 The agencies encourage 

affected banking organizations to communicate with their primary federal supervisor should they 

have any questions. 

Background 

The agencies adopted the community bank leverage ratio framework to provide a simple 

measure of capital adequacy for qualifying community banking organizations, consistent with 

the directive set forth in section 201 of the Economic Growth, Regulatory Relief, and Consumer 

Protection Act (2019 final rule).3 This optional framework is available to depository institutions 

and depository institution holding companies that have less than $10 billion in total consolidated 

assets and meet other qualifying criteria. A qualifying community banking organization that has 

elected the framework is not required to calculate and report risk-based capital. 

In 2020, the agencies issued a final rule4 that temporarily lowered the community bank leverage 

ratio requirement from 9 percent to 8 percent, consistent with section 4012 of the Coronavirus 

Aid, Relief, and Economic Security Act. The agencies also established a gradual transition back 

to the original 9 percent requirement consistent with the 2019 final rule. Pursuant to this

transition, in calendar year 2021, the community bank leverage ratio requirement increased to 8.5 

percent and beginning on January 1, 2022, will revert to 9 percent. 

1 Consistent with the CBLR framework, an electing banking organization must report a leverage ratio level that 

exceeds the framework’s leverage ratio requirement to qualify for the framework. Similarly, an electing banking 

organization in the grace period must report a leverage ratio level that exceeds the minimum leverage ratio 

requirement for the grace period. 2 12 CFR 3 (OCC); 12 CFR 217 (Board); and 12 CFR 324 (FDIC). 3 84 FR 61776 (November 13, 2019). 4 85 FR 22924 (April 23, 2020) and 85 FR 22930 (April 23, 2020), as finalized at 85 FR 64003 (October 9, 2020). 
2 

In 2020, the agencies also issued an interim final rule that permitted banking organizations with 

under $10 billion in total consolidated assets as of December 31, 2019, to use asset data as of 

December 31, 2019, to determine certain regulatory asset thresholds, including eligibility for the 

community bank leverage ratio framework during calendar years 2020 and 2021.5 This interim 

final rule expires on December 31, 2021. Starting on January 1, 2022, banking organizations 

must use total consolidated assets as of the report date to determine eligibility for the community 

bank leverage ratio framework.6 

Two-Quarter Grace Period

The community bank leverage ratio framework includes a two-quarter grace period during which 

a qualifying community banking organization that elects the framework and temporarily fails to 

meet any of the qualifying criteria generally would still be deemed to satisfy the minimum 

requirements of the agencies’ capital rule. Under the framework, a qualifying community 

banking organization satisfies the capital ratio requirements to be “well capitalized” so long as 

the banking organization’s leverage ratio falls no more than 1 percentage point below the 

applicable community bank leverage ratio requirement. At the end of the grace period, the 

banking organization must meet all qualifying criteria to remain in the community bank leverage 

ratio framework or must comply with the generally applicable rule and the associated reporting 

requirements. 

Starting on January 1, 2022, a qualifying community banking organization will be subject to a 

leverage ratio requirement of 8 percent in order to use the two-quarter grace period.7 At the end 

of the two-quarter grace period, the banking organization must meet all the qualifying criteria to 

remain in the community bank leverage ratio framework, including less than $10 billion in total 

consolidated assets as of the end of the most recent calendar quarter and a community bank 

leverage ratio requirement of 9 percent. A community banking organization that does not meet 

all the qualifying criteria at the end of the grace period must comply with the generally 

applicable rule and associated reporting requirements. For example, a banking organization that 

reported under the community bank leverage ratio framework as of December 31, 2021, and met 

the 8.5 percent leverage ratio requirement and all other qualifying criteria as of December 31, 

2021,8

 would not have to meet the 9 percent leverage ratio requirement until its September 30, 

2022 Call Report or Form Y-9C submission in order to remain eligible for the framework.

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5 85 FR 77345 (December 2, 2020).

6 For example, a banking organization that meets the framework’s size qualifying criteria and all other qualifying

criteria based on its December 31, 2021 Call Report or Form FR Y-9C submission and does not meet the size

criteria in its March 31, 2022 regulatory filing would have until the September 30, 2022 regulatory filing (i.e. by 

utilizing the two-quarter grace period) to meet all qualifying criteria to remain eligible for the framework. 7 For the December 31, 2021 Call Report or Form FR Y-9C submission, the grace period minimum leverage ratio

requirement will be 7.5 percent.

8 A banking organization whose eligibility for the framework was based on December 31, 2019, total consolidated 

assets, not current total consolidated assets, would not have been considered to be in the grace period as of 

December 31, 2021 even though its current consolidated assets as of December 31, 2021 may have exceeded $10 

billion.

9 In this example, the banking organization would be required to meet the 8 percent leverage ratio requirement 

during the grace period (i.e. for the March 31, 2022 and June 30, 2022 Call Report or Form FR Y-9C submission) in 
3 

As applicable, community banking organizations that have elected the community bank leverage 

ratio framework may use the two-quarter grace period included in the framework, and any that 

do will not be viewed negatively in the examination process due solely to use of the grace period. 

Related Links

• Regulatory Capital Rule: Capital Simplification for Qualifying Community Banking 

Organizations (PDF)

• Community Bank Compliance Guide (PDF)

• Regulatory Capital Rule: Temporary Changes to and Transition for the Community Bank 

Leverage Ratio Framework (PDF)

order to remain in the framework. A banking organization that began its grace period with its September 30, 2021

regulatory filing or would begin its grace period with its December 31, 2021 regulatory filing must meet a leverage 

ratio requirement of 9 percent in its March 31, 2022 or June 30, 2022 regulatory filing, respectively, to remain in the 

framework.