Capital
Community Bank Leverage Ratio
Also known as CBLR
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 9% are deemed well-capitalized without computing the full set of risk-based capital ratios.
Formula
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 and finalized in 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 interpret
A CBLR opt-in bank must maintain at least 9.0% to retain well-capitalized status. The grace-period rules let a bank fall to 8.0% for up to two quarters while it remediates. Banks reporting CBLR above 11-12% have a meaningful cushion; CBLR is uncorrelated with bank risk profile within that comfortable band.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| ≥ 11% | Strong | Well above the opt-in minimum. |
| 9–11% | Adequate | Meets well-capitalized threshold. |
| 8–9% | Grace period | Two-quarter window to restore 9%. |
| < 8% | Opt-out forced | Bank must revert to full risk-based framework. |
Worked example
Frequently asked
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 9% leverage threshold.
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 9% leverage number suggests; analysts should still look at concentration ratios separately.
Sources
- 12 CFR §324.12 — Federal Deposit Insurance Corporation CBLR rule
- FFIEC Call Report Schedule RC-R Part I — CBLR election flag
See CBLR across 4,335 US banks
BankRegReports ranks every FDIC-insured institution by CBLR, refreshed quarterly within 48 hours of FFIEC release.