This Week in Credit Risk: A CRA Overhaul, Ag Lending, and a New CBLR Guide
The OCC and FDIC propose new CRA size tiers at $1 billion and $10 billion, community bank ag lending keeps growing, and the community bank leverage ratio drops to 8%.
On July 31 the OCC and FDIC proposed a major overhaul of CRA regulations that largely date to 1995, setting small banks at under $1 billion in assets, intermediate banks at $1 billion to $10 billion, and large banks at over $10 billion. Community bank ag lending grew through the first quarter, and regulators released an updated Community Bank Leverage Ratio guide.
What Are the New CRA Bank Size Thresholds?
On July 31 the OCC and FDIC proposed significantly amending CRA regulations that largely date to 1995. The proposal would define small banks as under $1 billion in assets, intermediate banks as $1 billion to $10 billion, and large banks as over $10 billion. Today intermediate small bank status starts at $412 million and large bank status at $1.649 billion.
For many community banks, that could mean a simpler evaluation framework and less regulatory burden, and banks of $10 billion or less would no longer collect and report CRA data. The proposal comes from the OCC and FDIC only, so it would not change CRA rules for Fed-supervised state member banks. Review it now and plan for the comment period.
Community Bank Ag Lending Grew in the First Quarter
New St. Louis Fed data shows agricultural lending at community banks remained strong in the first quarter of 2026: outstanding ag loans reached $162.6 billion, up 4.6% from a year earlier. But first-quarter Federal Reserve surveys of ag lenders in five districts found that declines in loan repayment rates picked up slightly.
Rising operating loan balances while farm income falls can signal carryover debt rather than strength. For ag credits, watch working capital, carryover debt, crop versus livestock exposure, and the borrower’s ability to absorb a weaker year, not just this season’s volume.
An Updated CBLR Compliance Guide
The Federal Reserve, FDIC and OCC released an updated compliance guide for the Community Bank Leverage Ratio framework, reflecting changes that took effect July 1. The required leverage ratio dropped from above 9% to above 8%, and the grace period grew from two quarters to four.
During the grace period the leverage ratio must stay above 7%, and a bank can be in the grace period for no more than eight quarters in any five-year period. Institutions that use the CBLR, or that may now qualify, should review the guide and confirm eligibility under the new criteria.
Sources
- OCC Bulletin 2026-35: CRA proposal
- FDIC FIL-44-2026: FDIC and OCC seek comment on CRA proposal
- St. Louis Fed: Agricultural Lending by Community Banks Remained Strong in Q1
- Kansas City Fed: Continued Resilience in Farmland Values (five-district ag credit survey, Q1)
- FDIC FIL-43-2026: Community Bank Leverage Ratio compliance guide
- OCC Bulletin 2026-34: Community Bank Leverage Ratio
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What is the Community Bank Leverage Ratio?
The Community Bank Leverage Ratio (CBLR) is an optional, simplified capital framework for qualifying community banks. A bank that keeps its leverage ratio above the required level, now 8%, and meets the other eligibility criteria is considered to satisfy the generally applicable risk-based capital requirements and is deemed well capitalized.
How would the CRA proposal change the definition of a small bank?
Small banks would be under $1 billion in assets, intermediate banks $1 billion to $10 billion, and large banks over $10 billion. Banks with $10 billion or less would also drop CRA data collection and reporting. Today intermediate small bank status starts at $412 million and large bank status at $1.649 billion.
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Last updated August 11, 2026.