(a) Capital measures.
(1) For purposes of
section 38 of the FDI Act and this subpart, the relevant capital measures
are:
(i) Total Risk-Based
Capital Measure: The total risk-based capital ratio;
(ii) Tier 1 Risk-Based Capital Measure:
The tier 1 risk-based capital ratio;
(iii) Common Equity Tier 1 Capital Measure:
The common equity tier 1 risk-based capital ratio; and
(iv) Leverage Measure:
(A) The leverage ratio; and
(B) With respect to an advanced approaches
bank, on January 1, 2018, and thereafter, the supplementary leverage
ratio.
(C) With respect to any bank
that is a subsidiary (as defined in section 217.2 of this chapter)
of a global systemically important BHC, on January 1, 2018, and thereafter,
the supplementary leverage ratio.
(2) For a qualifying community banking
organization (as defined in section 217.12 of this chapter), that
has elected to use the community bank leverage ratio framework (as
defined in section 217.12 of this chapter), the leverage ratio calculated
in accordance with section 217.12(b) of this chapter is used to determine
the well capitalized capital category under paragraph (b)(1)(i)(A)
through (D) of this section.
(b) Capital categories. For purposes of section
38 of the FDI Act and this subpart, a member bank is deemed to be:
(1) (i)
“Well capitalized” if:
(A) Total Risk-Based Capital Measure: The bank has a total risk-based
capital ratio of 10.0 percent or greater; and
(B) Tier 1 Risk-Based Capital Measure: The
bank has a tier 1 risk-based capital ratio of 8.0 percent or greater;
and
(C) Common Equity Tier 1 Capital
Measure: The bank has a common equity tier 1 risk-based capital ratio
of 6.5 percent or greater; and
(D)
Leverage Measure:
(1) The bank has a leverage ratio
of 5.0 percent or greater; and
(2) Beginning on January 1, 2018, with respect to any bank that
is a subsidiary of a global systemically important BHC under the definition
of “subsidiary” in section 217.2 of this chapter, the bank has a supplementary
leverage ratio of 6.0 percent or greater; and
(E) The bank is not subject to any written
agreement, order, capital directive, or prompt corrective action directive
issued by the Board pursuant to section 8 of the FDI Act, the International
Lending Supervision Act of 1983 (12 U.S.C. 3907), or section 38 of
the FDI Act, or any regulation thereunder, to meet and maintain a specific
capital level for any capital measure.
(ii) A qualifying community banking
organization, as defined in section 217.12 of this chapter, that has
elected to use the community bank leverage ratio framework under section
217.12 of this chapter, shall be considered to have met the capital
ratio requirements for the well capitalized capital category in paragraph
(b)(1)(i)(A) through (D) of this section.
(2) “Adequately capitalized” if:
(i) Total Risk-Based Capital Measure:
the bank has a total risk-based capital ratio of 8.0 percent or greater;
(ii) Tier 1 Risk-Based Capital
Measure: the bank has a tier 1 risk-based capital ratio of 6.0 percent
or greater;
(iii) Common Equity
Tier 1 Capital Measure: the bank has a common equity tier 1 risk-based
capital ratio of 4.5 percent or greater;
(iv) Leverage Measure:
(A) The bank has a leverage ratio of 4.0
percent or greater; and
(B) With respect
to an advanced approaches bank or bank that is a Category III Board-regulated
institution (as defined in section 217.2 of this chapter), the bank
has a supplementary leverage ratio of 3.0 percent or greater; and
(v) The bank does
not meet the definition of a “well capitalized” bank.
(3) “Undercapitalized” if:
(i) Total Risk-Based Capital Measure:
the bank has a total risk-based capital ratio of less than 8.0 percent;
(ii) Tier 1 Risk-Based Capital
Measure: the bank has a tier 1 risk-based capital ratio of less than
6.0 percent;
(iii) Common Equity
Tier 1 Capital Measure: the bank has a common equity tier 1 risk-based
capital ratio of less than 4.5 percent; or
(iv) Leverage Measure:
(A) The bank has a leverage ratio of less
than 4.0 percent; or
(B) With respect
to an advanced approaches bank or bank that is a Category III Board-regulated
institution (as defined in section 217.2 of this chapter), the bank
has a supplementary leverage ratio of less than 3.0 percent.
(4) “Significantly undercapitalized”
if:
(i) Total Risk-Based
Capital Measure: the bank has a total risk-based capital ratio of
less than 6.0 percent;
(ii) Tier
1 Risk-Based Capital Measure: the bank has a tier 1 risk-based capital
ratio of less than 4.0 percent;
(iii) Common Equity Tier 1 Capital Measure: the bank has a common
equity tier 1 risk-based capital ratio of less than 3.0 percent; or
(iv) Leverage Measure: the bank
has a leverage ratio of less than 3.0 percent.
(5) “Critically undercapitalized” if the
bank has a ratio of tangible equity to total assets that is equal
to or less than 2.0 percent.
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(c) Reclassification based on supervisory criteria other than capital. The Board may reclassify a well-capitalized member bank as adequately
capitalized and may require an adequately capitalized or an undercapitalized
state member bank to comply with certain mandatory or discretionary
supervisory actions as if the bank were in the next lower capital
category (except that the Board may not reclassify a significantly
undercapitalized bank as critically undercapitalized) (each of these
actions are hereinafter referred to generally as “reclassifications”)
in the following circumstances:
(1) Unsafe or
unsound condition. The Board has determined, after notice and
opportunity for hearing pursuant to 12 CFR 263.203 of this chapter,
that the bank is in unsafe or unsound condition; or
(2) Unsafe or
unsound practice. The Board has determined, after notice and
opportunity for hearing pursuant to 12 CFR 263.203, that, in the most
recent examination of the bank, the bank received and has not corrected,
a less-than-satisfactory rating for any of the categories of asset
quality, management, earnings, liquidity, or sensitivity to market
risk.
