Banking

Which $10B-$250B U.S. Banks Have the Thinnest CET1 Cushions?

By Deep Digital Ventures Editorial Team ·

Deep Digital Ventures publishes product education, research explainers, and data-driven articles related to its software tools. This article was prepared by our editorial team using the sources listed below and reviewed for factual accuracy before publication.

Short answer: at 2025-12-31, the thinnest reported CET1 cushions among active U.S. bank charters with $10 billion to $250 billion in assets belonged to Live Oak Banking Company at 10.46%, Associated Bank, National Association at 10.52%, and Simmons Bank at 10.56%. The bottom 15 ranged from 10.46% to 11.37%, versus a universe median of 13.10%.

This is an asset-defined bank-charter screen, not a list limited to traditional branch-led regional banking franchises. That distinction matters. Specialized institutions such as American Express National Bank and Sallie Mae Bank are included because they meet the asset-size and active-bank criteria, even though many readers would not describe them as regional banks in the everyday sense.

CET1, or common equity tier 1 capital, measures high-quality common equity against risk-weighted assets. It is useful because it shows how much loss-absorbing capital a bank reports against the regulator’s risk-adjusted view of its balance sheet. It is not a stand-alone safety score. The same 11% CET1 ratio can mean different things at a high-profit card bank, a commercial lender with rising nonperforming loans, or a bank digesting weak earnings.

The Answer: Bottom 15 by CET1

The table ranks the lowest CET1 ratios in the screened universe. Assets are in billions. RWA / assets means risk-weighted assets divided by total assets. The vs. median column shows how many basis points each bank sits below the 13.10% median CET1 ratio for the 133-bank universe.

Rank Bank State Assets ($B) CET1 Vs. Median RWA / Assets ROA NPL Ratio
1 Live Oak Banking Company NC 15.1 10.46% -264 bps 72.8% 0.82% 4.60%
2 Associated Bank, National Association WI 45.1 10.52% -258 bps 77.7% 1.10% 0.34%
3 Simmons Bank AR 24.5 10.56% -254 bps 81.9% -1.40% 0.65%
4 American Express National Bank UT 211.3 10.94% -216 bps 82.2% 3.89% 0.73%
5 First Horizon Bank TN 83.6 10.98% -212 bps 86.5% 1.35% 0.98%
6 Old National Bank IN 71.8 11.05% -205 bps 74.4% 1.16% 1.09%
7 Sallie Mae Bank UT 29.7 11.09% -201 bps 88.9% 2.90% 0.71%
8 Axos Bank CA 27.2 11.12% -198 bps 81.3% 1.77% 0.46%
9 Pinnacle Bank TN 57.6 11.13% -197 bps 80.6% 1.25% 0.35%
10 Stifel Bank and Trust MO 19.4 11.18% -192 bps 61.2% 1.82% 1.15%
11 Beacon Bank and Trust MA 23.2 11.22% -188 bps 79.6% 0.63% 0.85%
12 Apple Bank NY 19.2 11.30% -180 bps 67.9% 0.34% 0.54%
13 UMB Bank, National Association MO 72.8 11.34% -176 bps 68.2% 1.01% 0.43%
14 TowneBank VA 19.7 11.34% -176 bps 79.8% 0.90% 0.09%
15 First National Bank of Pennsylvania PA 50.0 11.37% -173 bps 75.5% 1.29% 0.33%

What the Ranking Actually Says

The lowest bank in this screen, Live Oak Banking Company, still reported a CET1 ratio 346 basis points above the common 7% reference point formed by the 4.5% CET1 minimum plus the 2.5% capital conservation buffer described in federal capital rules.[4][5] So the point is not that the bottom of this table is automatically distressed. The point is that these banks have less capital room than similarly sized peers.

That narrower room matters when three things happen at once: credit losses rise, earnings weaken, and risk-weighted assets grow faster than capital. A bank at 13.5% CET1 can absorb that combination with more flexibility than a bank near 10.5%. The weaker bank may still be sound, but management has fewer degrees of freedom for balance-sheet growth, acquisitions, buybacks, or dividend increases.

The most important reading habit is to translate RWA density into plain English. RWA density is the amount of risk-weighted assets per dollar of total assets. Higher density usually means the asset mix receives heavier regulatory risk weights, so the CET1 denominator is larger. That is why American Express National Bank, Sallie Mae Bank, First Horizon Bank, Axos Bank, and Pinnacle Bank can sit near the bottom of the CET1 ranking while looking very different from one another on profitability and credit quality.

Four Patterns in the Bottom Tier

1. Thin CET1 plus visible credit pressure. Live Oak is the clearest example. Its 10.46% CET1 ratio is the lowest in the screen, and its 4.60% NPL ratio is far above the rest of the table. That combination deserves a different level of follow-up than a low CET1 ratio paired with clean credit metrics. The key question is whether reserves, charge-off trends, collateral values, and future earnings can absorb the existing problem-loan book without forcing capital actions.

2. Thin CET1 plus weak earnings. Simmons Bank shows a different warning pattern: 10.56% CET1 and negative ROA. A credit-quality problem is one way to pressure capital; weak profitability is another. If losses persist, retained earnings stop replenishing CET1. In that case, even a moderate NPL ratio can become more important because the bank has less internal capital generation to offset future provisions or balance-sheet growth.

3. Thin CET1 with strong profitability and high RWA density. American Express National Bank and Sallie Mae Bank are not traditional regional-bank stories. They sit low in the CET1 table partly because their business models carry high risk-weighted asset intensity. Their ROA figures, 3.89% and 2.90%, respectively, show why a simple lowest-CET1 list can mislead if it is treated as a distress screen. High returns can rebuild capital quickly, but the same model can also be more sensitive to consumer-credit turns.

4. Thin but currently orderly commercial-bank profiles. Associated Bank, Pinnacle Bank, First National Bank of Pennsylvania, UMB Bank, and TowneBank show lower CET1 without the same obvious earnings or NPL red flag in this table. For those banks, the follow-up question is not simply safety. It is capital strategy: are risk-weighted assets growing faster than retained earnings, is management running closer to target capital, and would a tougher credit cycle force a change in payout or growth plans?

How to Use This Screen

Use the ranking as a triage tool, not a verdict. A practical review starts with three cuts:

  • Capital gap: how far below the median is the bank, and is the gap widening over several quarters?
  • Capital pressure: is low CET1 paired with weak ROA, rising NPLs, higher charge-offs, or rapid RWA growth?
  • Business model: is the bank a traditional commercial lender, a card bank, a student-loan specialist, a digital bank, a trust bank, or something else?

The last point is especially important for searchers looking for regional banks. If your definition of regional bank means a branch-led commercial franchise serving local and middle-market customers, then American Express National Bank and Sallie Mae Bank should be separated from the traditional regional-bank subset. They are valid in an asset-defined bank-charter universe, but they answer a different strategic question.

For a deeper internal workflow, compare each bank against peers in Compare and test downside capital sensitivity in Stress Test. The ranking identifies where to look first; the follow-up work decides whether the low CET1 ratio is intentional, temporary, or a sign of compounding pressure.

Methodology and Field Mapping

  • Data date: 2025-12-31, the latest quarter for which DDV’s normalized bank-charter database had the detailed Call Report fields needed for this ranking when the post was prepared. This does not mean no newer preliminary filings exist; it means this was the latest fully loaded quarter for this specific screen.
  • Source dataset: public U.S. Call Report data distributed through the FFIEC Central Data Repository and mapped through DDV’s local bank-level database.[1]
  • Level of analysis: bank charter, not bank holding company. Holding-company FR Y-9C capital ratios can differ from the insured-bank Call Report view because they consolidate different legal entities and activities.
  • Population: active U.S. bank charters with total assets of at least $10 billion and not more than $250 billion at 2025-12-31.
  • Coverage: 138 bank charters met the activity and asset-size screen. 133 had usable CET1 ratio data and were ranked. Five were excluded because the reported CET1 ratio field was blank or not usable in the public Call Report extract loaded for this quarter; DDV did not impute missing CET1 from holding-company filings or back-solve it from component fields.
  • CET1 ratio: Schedule RC-R, Part I, common equity tier 1 capital ratio, using the current-form CET1 ratio field mapped to code P793 where applicable.[2][3]
  • Risk-weighted assets: Schedule RC-R standardized total risk-weighted assets, using the current-form RWA field mapped to code A223 where applicable.
  • Total assets: Schedule RC total assets, code 2170, using the consolidated or domestic reporting prefix carried by the filer.
  • RWA / assets: standardized total risk-weighted assets divided by total assets.
  • ROA: net income from Schedule RI divided by average assets, using the normalized DDV quarter-end profitability calculation.
  • NPL ratio: nonaccrual loans and leases plus loans and leases 90 days or more past due and still accruing, divided by total loans and leases. The underlying Call Report mnemonics are mapped from RC-N and RC-C fields including 1403, 1407, and 2122 where applicable.[3]
  • Ranking rule: banks were ordered from lowest to highest CET1 ratio. Ties were broken by larger total assets first.

Bottom Line

The banks with the thinnest CET1 cushions in this asset-defined screen are not automatically the riskiest banks in the country. They are the banks with the least reported common-equity capital relative to risk-weighted assets inside the $10 billion to $250 billion charter-level universe.

The useful insight is in the combinations. Low CET1 plus high NPLs points to credit-loss absorption. Low CET1 plus negative ROA points to weak capital generation. Low CET1 plus high ROA and high RWA density may point to a profitable but capital-intensive business model. Treating those cases as the same would be the analytical mistake.

FAQ

Why are American Express National Bank and Sallie Mae Bank included?

They are included because this screen is based on active U.S. bank charters with $10 billion to $250 billion in assets and available CET1 data. It is not limited to traditional regional commercial banks. Readers who want a stricter regional-bank peer group should exclude specialized card, student-lending, trust, and other monoline institutions before making franchise comparisons.

How is CET1 different from the leverage ratio?

CET1 is measured against risk-weighted assets, so the denominator changes with the regulatory risk weight of the bank’s assets. The leverage ratio is measured against average assets without the same risk-weighting approach. CET1 is better for risk-sensitive capital analysis; leverage ratio is better for a simpler balance-sheet capital check.

Does low CET1 still matter if ROA is strong?

Yes, but it means something different. Strong ROA can rebuild capital through retained earnings, so a profitable high-RWA bank may be less concerning than a low-profit bank with the same CET1 ratio. The risk is that credit losses, loan growth, or capital distributions can consume that earnings advantage.

Is 10.5% CET1 close to a regulatory minimum?

Not in the simple risk-based framework. The common reference point is 7%, made up of the 4.5% CET1 minimum plus the 2.5% capital conservation buffer. But regulatory comfort and market comfort are not identical. A bank can be above minimums and still have less flexibility than peers.

Can CET1 alone identify an unsafe bank?

No. CET1 is a strong first screen because it focuses on high-quality capital, but it does not directly measure liquidity, uninsured deposit concentration, unrealized securities losses, reserve adequacy, or future credit migration. It should be paired with profitability, asset quality, funding, and stress testing.

Sources

  1. https://cdr.ffiec.gov/public/ – FFIEC Central Data Repository Public Data Distribution site for public Call Report access and downloads.
  2. https://www.ffiec.gov/resources/reporting-forms/ffiec041 – FFIEC 041 current report forms and instructions, including Schedule RC and Schedule RC-R references.
  3. https://www.federalreserve.gov/apps/mdrm/data-dictionary – Federal Reserve Micro Data Reference Manual data dictionary for Call Report mnemonics.
  4. https://www.law.cornell.edu/cfr/text/12/217.10 – 12 CFR 217.10 minimum capital requirements, including the 4.5% CET1 minimum for Board-regulated institutions.
  5. https://www.law.cornell.edu/cfr/text/12/217.11 – 12 CFR 217.11 capital conservation buffer and related distribution limitations.