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 8% (9% before July 1, 2026) are deemed well-capitalized without computing the full set of risk-based capital ratios.
How is CBLR calculated?
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 does CBLR matter?
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 do you interpret CBLR?
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.
What is a good CBLR?
| Range | Label | Interpretation |
|---|---|---|
| ≥ 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
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 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)
- FFIEC Call Report Schedule RC-R Part I: CBLR election flag
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