In an interagency statement, Federal banking agencies provided information and guidance on the use of the two-quarter grace period under the optional community bank leverage ratio ("CBLR") framework once temporary relief measures expire on December 31, 2021.
The agencies specified that a banking organization electing the optional CBLR framework will be subject to the 9 percent CBLR requirement and must use total consolidated assets as of the report date to determine eligibility. The CBLR framework includes a two-quarter grace period allowing banking organizations extra time to build capital and manage their balance sheets to either remain in the framework or comply with the generally applicable risk-based and leverage capital requirements.
According to the statement, a banking organization may not be required to report a greater than 9 percent CBLR until the June 30, 2022, or September 30, 2022, regulatory filings, depending on whether a banking organization is currently in its grace period and when that grace period began. A banking organization in the CBLR framework must report a greater than 8 percent leverage ratio to use the two-quarter grace period starting on January 1, 2022. After the grace period, the banking organization must meet all qualifying requirements in order to remain in the framework.
Primary Sources
- Interagency Statement on the Community Bank Leverage Ratio Framework
- Interagency Statement on the Community Bank Leverage Ratio Framework
- Community Bank Compliance Guide
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