Community Bank Leverage Ratio (CBLR): The 8% Election

The Community Bank Leverage Ratio, or CBLR, is an optional capital framework that lets a qualifying community bank prove it is well capitalized with one number instead of the full risk-weighted capital calculation. A bank that elects it and keeps its leverage ratio above the CBLR threshold is deemed to meet the generally applicable capital requirements and to be well capitalized, and does not have to compute risk-based ratios at all. Under a 2026 final rule effective July 1, 2026, the requirement is a leverage ratio greater than 8%, lowered from the 9% that had applied since 2022.

For a small bank with a plain balance sheet, that is a real reduction in reporting work. For anyone reading a bank’s capital, it changes what you will and will not find on the call report.

What Is the Community Bank Leverage Ratio?

The CBLR framework came out of the 2018 regulatory relief law and took effect in the first quarter of 2020. The idea is simple: the smallest, least complex banks were spending real effort computing risk-weighted capital ratios that, for their balance sheets, almost never bound. So the regulators offered a trade. A qualifying bank can elect the CBLR, report a single leverage ratio, and if that ratio stays above the threshold, it is treated as well capitalized and as satisfying the risk-based requirements without calculating them.

The ratio itself is the tier 1 leverage ratio: tier 1 capital divided by average total consolidated assets. It is not risk-weighted. A dollar of Treasury securities and a dollar of commercial real estate count the same in the denominator, which is exactly why the framework only suits banks whose risk profile is straightforward enough that a non-risk-weighted measure is a fair read.

Who Qualifies to Elect the CBLR?

A bank has to be a “qualifying community banking organization” to elect the framework. The core conditions:

• Total consolidated assets under $10 billion.
• Not an advanced approaches institution for regulatory capital.
• Limited trading activity and off-balance-sheet exposure. The framework caps trading assets and liabilities, and off-balance-sheet exposures, at set shares of total assets, so a bank with a large derivatives book or heavy off-balance-sheet activity does not qualify.

The exact sublimits for trading and off-balance-sheet exposure are set in the rule, so a bank near those lines should confirm against the current text rather than assume. But the headline gate is the $10 billion asset ceiling plus a plain balance sheet.

Election is optional. A qualifying bank can decline the CBLR and keep reporting risk-weighted ratios if it prefers, and many do, usually because their holding company or their own analysis wants the risk-based detail.

The 2026 Change: From 9% to 8%

The CBLR threshold has moved before. It launched at 9%, was temporarily lowered to 8% in 2020 under pandemic relief, stepped to 8.5% in 2021, and returned to 9% in 2022. In 2026, the federal banking agencies issued a final rule lowering it again, this time so that the requirement is a leverage ratio greater than 8%, consistent with the lower bound set in section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The rule took effect July 1, 2026. (Sources: FDIC Financial Institution Letter on the CBLR final rule; Federal Register, Regulatory Capital Rule: Community Bank Leverage Ratio Framework; OCC Bulletin 2026-15; FDIC press release, Agencies Finalize Changes to Community Bank Leverage Ratio.)

The same rule changed the grace period, and that second change matters as much as the headline number. A bank whose leverage ratio slips below the threshold now has four quarters to return to compliance rather than two, and stays treated as well capitalized during that window provided its leverage ratio stays above 7%. Use of the grace period is capped at eight quarters within any five-year period. OCC Bulletin 2026-15 also rescinds OCC Bulletin 2021-66, the prior interagency statement on the framework.

Together the two changes do three things. They let banks that sat just under 9% now qualify, they give banks already in the framework more headroom above the line, and they roughly double the time a bank has to rebuild before it must return to the full risk-based framework.

What the Election Trades Away, and What It Means for Reading a Bank

The CBLR is a convenience, and like most conveniences it costs some information. A bank that elects the framework generally stops reporting the risk-weighted ratios: the common equity tier 1 (CET1) ratio, the tier 1 risk-based ratio, and the total risk-based ratio. So when you pull up a CBLR bank and find those fields blank, that is not missing data or a weak disclosure. It is the framework working as intended. The bank is reporting the one ratio the framework requires.

This creates a practical wrinkle for anyone comparing banks. A CBLR electer and a non-electer of the same size are not reporting the same set of capital ratios, so a naive side-by-side on CET1 will show a hole for the CBLR bank that has nothing to do with its actual capital strength. The honest comparison uses the leverage ratio, which both banks report, and treats a CBLR bank’s election as a fact about its reporting, not a red flag.

For the bank’s condition, the read is straightforward: a CBLR bank above the threshold is well capitalized by rule. The election tells you the bank is small and simple enough to use the framework and chose to. It does not, by itself, tell you anything is wrong or right beyond that.

Finding the CBLR Status and Leverage Ratio for Any Bank

Whether a bank elects the CBLR, and where its leverage ratio sits relative to the 8% threshold, both come straight from the call report. BankRegReports reports every bank’s leverage ratio with quarterly history and shows it against peers, so you can see which banks run close to the line and which carry a wide cushion, without hand-reconciling the difference between CBLR electers and risk-based filers.

See banks ranked by leverage ratio →

This article is for informational purposes only and is not investment or regulatory advice. Capital rules change; confirm current thresholds and eligibility against the agencies’ rule text before relying on them.

---

Frequently Asked Questions

What is the Community Bank Leverage Ratio? The Community Bank Leverage Ratio (CBLR) is an optional capital framework that lets a qualifying bank under $10 billion in assets prove it is well capitalized using a single tier 1 leverage ratio, instead of computing risk-weighted capital ratios. A bank that elects it and stays above the CBLR threshold is deemed to meet the generally applicable capital requirements.

What is the current CBLR threshold? Under a 2026 final rule, the CBLR threshold is 8%, lowered from the 9% that had applied since 2022. A qualifying bank that elects the framework and keeps its leverage ratio above 8% is treated as well capitalized without calculating risk-based ratios. The rule took effect July 1, 2026 and also extended the grace period for a bank that slips below the threshold from two quarters to four.

Who qualifies for the CBLR framework? A qualifying community banking organization must have under $10 billion in total consolidated assets, not be an advanced approaches institution, and keep its trading activity and off-balance-sheet exposures within the limits set in the rule. Election is optional; a qualifying bank can choose to keep reporting risk-weighted ratios instead.

Why did the CBLR threshold change to 8%? The federal banking agencies issued a 2026 final rule lowering the threshold from 9% to 8% to expand the number of community banks eligible to use the simplified framework and to give banks already in it more headroom above the line.

Why are a bank’s CET1 and risk-based ratios blank? A bank that elects the CBLR framework generally stops reporting the risk-weighted ratios, including CET1 and the tier 1 and total risk-based ratios, because it is only required to report the leverage ratio. A blank in those fields for a CBLR bank reflects its election, not missing data or weak capital.

Does electing the CBLR mean a bank is weaker? No. Electing the CBLR signals that a bank is small and simple enough to use the framework and chose to reduce its reporting burden. A CBLR bank above the threshold is well capitalized by rule; the election is a reporting choice, not a measure of weakness.