--- title: "Community Bank Leverage Ratio: definition, formula, and thresholds" description: "The Community Bank Leverage Ratio (CBLR) is a simplified capital framework available to US community banks under $10B in assets. Banks that opt in and maintain a CBLR above 8% (9% before July 1, 2026) are deemed well-capitalized without computing the full set of risk-based capital ratios." canonical_url: https://www.bankregreports.com/glossary/community-bank-leverage-ratio/ source: BankRegReports category: "Capital" units: "%" schedule: "Schedule RC-R Part I" --- # Community Bank Leverage Ratio > The Community Bank Leverage Ratio (CBLR) is a simplified capital framework available to US community banks under $10B in assets. Banks that opt in and maintain a CBLR above 8% (9% before July 1, 2026) are deemed well-capitalized without computing the full set of risk-based capital ratios. ## Formula ``` CBLR = Tier 1 Capital / Average Total Consolidated Assets ``` Identical numerator and denominator to the Tier 1 leverage ratio. The CBLR's distinction is regulatory: opt-in banks bypass the full Basel III risk-weighting and capital ratio calculations and report only a single number. ## Why it matters Created by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, finalized in late 2019 and effective January 1, 2020, the CBLR removed thousands of pages of risk-weighting calculations from small-bank quarterly reporting. Roughly 40% of eligible community banks elect into CBLR each quarter. When a bank opts in, its CET1 / Tier 1 / Total RBC ratios are blank on the call report. ## How to read it Since July 1, 2026, a CBLR opt-in bank must keep its leverage ratio above 8% to retain well-capitalized status; the requirement was 9% before that date, so earlier quarters are judged against 9%. A bank that slips below 8% but stays above 7% has a grace period of up to four quarters (no more than eight quarters in any five-year period) to restore it; at 7% or below there is no grace period and the bank must return to the full risk-based framework. Banks reporting CBLR above 10-11% have a meaningful cushion. ## Thresholds | Range | Reading | What it means | |---|---|---| | ≥ 11% | Strong | Well above the opt-in minimum. | | 8–11% | Adequate | Meets the 8% well-capitalized threshold (9% before July 1, 2026). | | 7–8% | Grace period | Up to four quarters to restore 8%. | | ≤ 7% | Opt-out forced | No grace period; the bank must revert to the full risk-based framework. | ## Worked example A typical $1.5B Midwest community bank with $135M of Tier 1 capital and $1.42B of average assets would report a CBLR of 9.5%, comfortably above the 8% requirement. Its CET1, Tier 1 RBC, and Total RBC columns on the call report appear as null. ## Questions ### Which banks can elect CBLR? Banks under $10B in consolidated assets, with limited trading assets and limited off-balance-sheet exposures, and that meet the 8% leverage threshold (9% before July 1, 2026). ### Why are CET1 and Tier 1 RBC ratios missing for some banks? Because the bank opted into CBLR. Once elected, the full risk-based ratios are not computed or reported until the bank opts out. ### Is CBLR strictly safer than the full risk-based framework? No, CBLR ignores asset risk weights entirely. A CBLR-elected bank with concentrated CRE or construction exposure could be riskier than its leverage number suggests; analysts should still look at concentration ratios separately. ## Sources - Final rule: Regulatory Capital Rule, Community Bank Leverage Ratio Framework (Federal Register doc. 2026-08298, April 29, 2026; effective July 1, 2026) - [12 CFR §324.12: Federal Deposit Insurance Corporation CBLR rule (8% from July 1, 2026, per final rule FR 2026-08298)](https://www.ecfr.gov/current/title-12/part-324) - [FFIEC Call Report Schedule RC-R Part I: CBLR election flag](https://www.ffiec.gov/sites/default/files/data/reporting-forms/FFIEC031_FFIEC041_202606_i.pdf) (PDF) ## Related metrics - [Tier 1 Leverage Ratio](https://www.bankregreports.com/glossary/leverage-ratio/): The tier 1 leverage ratio is a bank's tier 1 capital divided by its average total consolidated assets. Unlike the risk-based ratios it gives every asset the same weight, so it caps how far a bank can stretch its balance sheet whatever the asset mix. - [Common Equity Tier 1 Capital Ratio](https://www.bankregreports.com/glossary/cet1-ratio/): The CET1 ratio is a bank's common equity tier 1 capital divided by its risk-weighted assets. It measures the bank's highest-quality capital (common stock and surplus, retained earnings and, for banks that have not opted out, accumulated other comprehensive income, less regulatory deductions) against its risk-weighted assets. It is the most-watched single capital indicator in US bank supervision after the 2013 Basel III reforms. - [Tier 1 Risk-Based Capital Ratio](https://www.bankregreports.com/glossary/tier1-rbc/): The Tier 1 Risk-Based Capital ratio measures a bank's Tier 1 capital (CET1 plus Additional Tier 1 instruments) against its risk-weighted assets. It is the broader of the two Tier-1 capital measures and is still the headline capital metric for most banking comparisons. - [Total Risk-Based Capital Ratio](https://www.bankregreports.com/glossary/total-rbc/): The total risk-based capital ratio is a bank's total regulatory capital (tier 1 plus tier 2) divided by its risk-weighted assets. US rules require at least 8%, 10% to be well capitalized, and 10.5% including the capital conservation buffer. ## About this document This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL. Markdown twins are published for editorial content only. Institution data pages do not have them. For data at scale use the API, which is documented at https://www.bankregreports.com/api/ and specified at https://www.bankregreports.com/openapi.json. It returns typed JSON with explicit units and periods, and one call replaces hundreds of page fetches. ## Sitemap - [Glossary](https://www.bankregreports.com/glossary/): every metric, with formula and thresholds - [Blog](https://www.bankregreports.com/blog/): analysis and explainers - [API documentation](https://www.bankregreports.com/api/): the programmatic way to get this data - [XML sitemap](https://www.bankregreports.com/sitemap.xml): the complete crawlable index