what does the tier 1 leverage ratio tell you 
the tier 1 leverage ratio was introduced by the basel iii accords an international regulatory banking treaty proposed by the basel committee on banking supervision in 2009 1 the ratio uses tier 1 capital to evaluate how leveraged a bank is in relation to its overall assets the higher the tier 1 leverage ratio is the higher the likelihood that the bank could withstand a negative shock to its balance sheet tier 1 capital is the core capital of a bank according to basel iii and consists of the most stable and liquid capital as well as the most effective at absorbing losses during a financial crisis or downturn the denominator in the tier 1 leverage ratio is a bank s total exposures which include its consolidated assets derivative exposure and certain off balance sheet exposures basel iii required banks to include off balance sheet exposures such as commitments to provide loans to third parties standby letters of credit sloc acceptances and trade letters of credit 2basel iii established a 3 minimum requirement for the tier 1 leverage ratio while it left open the possibility of increasing that threshold for certain systematically important financial institutions 3in 2014 the federal reserve the office of the comptroller of the currency occ and the federal deposit insurance corporation fdic released regulatory capital rules that imposed higher leverage ratios for banks of certain sizes effective as of jan 1 2018 bank holding companies with more than 700 billion in consolidated total assets or more than 10 trillion in assets under management must maintain an additional 2 buffer making their minimum tier 1 leverage ratios 5 4in addition if an insured depository institution is being covered by a corrective action framework meaning it demonstrated capital deficiencies in the past it must demonstrate at least a 6 tier 1 leverage ratio to be considered well capitalized real world example of the tier 1 leverage ratiobelow are the capital ratios taken from the financial statements of bank of america corporation bac as reported in the bank s q3 earnings report on oct 31 2018 