Agencies propose lowering community bank leverage ratio framework

Federal banking regulators issued a proposed rule to reduce the Community Bank Leverage Ratio requirement to 8% from the current 9%. The proposal would also extend the grace period, from two quarters to four quarters, for a community bank that opts into the framework and falls out of compliance to come back into compliance.

By incorporating these changes, the revisions would reduce regulatory burden and provide community banks with greater flexibility and optionality in their capital management approach. The proposal reflects a deeper understanding of the unique business models, risk profiles, and operational realities of community banks.

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