Analyzing the Community Bank Leverage Ratio, Accessible Data

Figure 1. Community Bank CBLR Eligibility (Percent)

Figure 1 provides a waterfall of the number of eligible community banks, as each eligibility criterion is added. It starts with a 100 percent block that represents the sample of 5,382 community banks. Then, following the figure, 4,699 (87 percent of) community banks meet the leverage ratio requirements, 4,586 (85 percent of) community banks also meet the off balance sheet criteria, and 4,581 (85 percent of) community banks also meet the non-advanced approaches and trading exposure criterion.

Sources: Q2 2019 FR Y-9C, FFIEC Call Reports, NBER, and author’s analysis

*This sample includes depository institution holding companies (FR Y-9C) and depository institutions (Call Report).

**Off balance sheet exposure less than 25 percent of total consolidated assets.

***Trading assets plus trading liabilities less than 5 percent of total consolidated assets and not a subsidiary or affiliate of an advanced approaches bank.

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Figure 2. CBLR Eligibility Over Time

Figure 2 shows two lines over time, from 1996 to 2020. The first line shows the percentage of banks with assets less than $10 billion. This line starts at 99 percent, then slowly and steadily dips down to around 95 percent in 2020. The second line shows percentage of banks with Tier 1 leverage ratio greater than 9 percent. It generally increases in the period from 2000 to 2008, at which point it declines sharply. During this time period it peaks at just over 60 percent. Then it continues to increase until it reaches around 85 percent in 2020.

Sources: FFIEC Call Reports, FR Y-9C, NBER, and authors’ analysis

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Figure 3. CBLR Stringency Over Time

Figure 3 shows two lines over time, from 1996 to 2020. The first line shows the stringency of the 9 percent Tier 1 leverage ratio. It remains above 90 percent, and relatively constant throughout the graph. The second line shows the stringency of the 5 percent Tier 1 leverage ratio. It stays below 25 percent, dipping in the 2008 recession to around 10 percent and peaking in 1996 and 2013 at around 23 percent.

Sources: FFIEC 031 Call Reports, FR Y-9C, NBER, and authors’ analysis

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Figure 4. Structure of Capital Impact Analysis

Figure 4 shows that, in the CBLR more stringent column, banks have less excess capital under the CBLR framework, when compared to the generally applicable rule. In the CBLR less stringent column, banks have the same amount of excess capital in both the generally applicable rule and the CBLR framework. However, decreases in the required capital bar result in the creation of a new red bar, called capital release.

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Last Update: May 26, 2020