Community bank leverage ratio (CBLR): The community bank leverage ratio is an opt in framework that lets a qualifying bank under $10 billion meet one capital test instead of the full risk based regime.
How it is calculated
A bank that elects it has to keep a leverage ratio above 9%, hold under $10 billion in total assets, and stay inside limits on trading assets and off balance sheet exposure. In exchange it is deemed well capitalized and stops reporting risk based capital ratios and risk weighted assets altogether.
Formula
CBLR = tier 1 capital / average total assets, with a 9% threshold
How to read it
Roughly 44% of banks have elected it. The trade is simplicity for information: the election removes the reporting burden and removes the data with it, which is why any ratio with risk based capital in the denominator needs a stated fallback for those banks.
The common mistake. Treating a missing risk based capital ratio as a gap in the filing. For a CBLR bank there is nothing to report, so an analysis that silently drops those banks is describing the part of the industry that did not elect it.
Go deeper
- What is a good tier 1 leverage ratio?
- CRE concentration limits explained
- BankingLens pricing and what a subscription adds: percentile rank against the bank’s own FFIEC peer group, fourteen quarters of trend, and the flags an examiner reaches for first.
See also. Tier 1 leverage ratio, Tier 1 capital, Risk-weighted assets, CRE concentration, Well capitalized.
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