Community Bank Leverage Ratio (CBLR)
An optional, simplified capital framework for qualifying community banks: a bank that keeps its leverage ratio above the required level, 8% as of July 1, 2026, and meets the other criteria is deemed well capitalized without calculating risk-based capital ratios.
Leverage ratio = Tier 1 capital / Average total consolidated assets (net of deductions from tier 1 capital)
The CBLR framework lets a qualifying community bank skip the full risk-based capital calculations. A bank that elects the framework, keeps its leverage ratio above the required level and meets the other qualifying criteria is considered to meet the generally applicable risk-based and leverage capital requirements and is deemed well capitalized.
Changes that took effect July 1, 2026 lowered the required leverage ratio from above 9% to above 8% and extended the grace period from two quarters to four. During the grace period the leverage ratio must stay above 7%, and a bank can be in the grace period for no more than eight quarters in any five-year period.
To qualify, a bank needs under $10 billion in total consolidated assets, off-balance-sheet exposures of 25% or less of total consolidated assets, and trading assets plus trading liabilities of 5% or less. The July changes left those thresholds in place. This Week in Credit Risk, August 11, 2026 covers the July changes.
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