[Code of Federal Regulations]
[Title 12, Volume 2, Parts 200 to 219]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR208.43]

[Page 191-192]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H)--Table of Contents
 
                   Subpart D--Prompt Corrective Action
 
Sec. 208.43  Capital measures and capital category definitions.

    (a) Capital measures. For purposes of section 38 and this subpart, 
the relevant capital measures are:
    (1) The total risk-based capital ratio;
    (2) The Tier 1 risk-based capital ratio; and
    (3) The leverage ratio.
    (b) Capital categories. For purposes of section 38 and this subpart, 
a member bank is deemed to be:
    (1) ``Well capitalized'' if the bank:
    (i) Has a total risk-based capital ratio of 10.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 6.0 percent or 
greater; and
    (iii) Has a leverage ratio of 5.0 percent or greater; and
    (iv) 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.
    (2) ``Adequately capitalized'' if the bank:
    (i) Has a total risk-based capital ratio of 8.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 4.0 percent or 
greater; and
    (iii) Has:
    (A) A leverage ratio of 4.0 percent or greater; or
    (B) A leverage ratio of 3.0 percent or greater if the bank is rated 
composite 1 under the CAMELS rating system in the most recent 
examination of the bank and is not experiencing or anticipating 
significant growth; and
    (iv) Does not meet the definition of a ``well capitalized'' bank.
    (3) ``Undercapitalized'' if the bank has:
    (i) A total risk-based capital ratio that is less than 8.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 4.0 
percent; or
    (iii) Except as provided in paragraph (b)(2)(iii)(B) of this 
section, has a leverage ratio that is less than 4.0 percent; or
    (iv) A leverage ratio that is less than 3.0 percent, if the bank is 
rated composite 1 under the CAMELS rating system in the most recent 
examination of the bank and is not experiencing or anticipating 
significant growth.
    (4) ``Significantly undercapitalized'' if the bank has:
    (i) A total risk-based capital ratio that is less than 6.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 3.0 
percent; or

[[Page 192]]

    (iii) A leverage ratio that is 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.
    (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 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, 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.