§324.403. Capital measures and capital category definitions.
12 C.F.R. § 324.403
Capital measures.
For purposes of section 38 of the FDI Act and this subpart H, the relevant capital measures are—
Total Risk-Based Capital Measure— The total risk-based capital ratio;
Tier 1 Risk-Based Capital Measure— The tier 1 risk-based capital ratio;
Common Equity Tier 1 Capital Measure— The common equity tier 1 risk-based capital ratio; and
Leverage Measure—
The leverage ratio; and
With respect to an advanced approaches FDIC-supervised institutions or Category III FDIC-supervised institution, the supplementary leverage ratio.
For a qualifying community banking organization (as defined under § 324.12), that has elected to use the community bank leverage ratio framework (as defined under § 324.12), the leverage ratio calculated in accordance with § 324.12(b) is used to determine the well capitalized capital category under paragraph (b)(1)(i)(A) through (D) of this section.
Capital categories. For purposes of section 38 of the FDI Act and this subpart, an FDIC-supervised institution shall be deemed to be:
“Well capitalized” if:
Total Risk-Based Capital Measure— The FDIC-supervised institution has a total risk-based capital ratio of 10.0 percent or greater; and
Tier 1 Risk-Based Capital Measure— The FDIC-supervised institution has a tier 1 risk-based capital ratio of 8.0 percent or greater; and
Common Equity Tier 1 Capital Measure— The FDIC-supervised institution has a common equity tier 1 risk-based capital ratio of 6.5 percent or greater; and
The FDIC-supervised institution has a leverage ratio of 5.0 percent or greater; and
The FDIC-supervised institution is not subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the FDIC pursuant to section 8 of the FDI Act (12 U.S.C. 1818), the International Lending Supervision Act of 1983 (12 U.S.C. 3907), or the Home Owners' Loan Act (12 U.S.C. 1464(t)(6)(A)(ii)), or section 38 of the FDI Act (12 U.S.C. 1831o), or any regulation thereunder, to meet and maintain a specific capital level for any capital measure.
A qualifying community banking organization, as defined under § 324.12, that has elected to use the community bank leverage ratio framework under § 324.12 shall be considered to have met the capital ratio requirements for the well capitalized capital category in paragraphs (b)(1)(i)(A) through (D) of this section.
“Adequately capitalized” if it:
Has a total risk-based capital ratio of 8.0 percent or greater; and
Has a Tier 1 risk-based capital ratio of 6.0 percent or greater; and
Has a common equity tier 1 capital ratio of 4.5 percent or greater; and
Has a leverage ratio of 4.0 percent or greater; and
Does not meet the definition of “well capitalized” in this section.
An advanced approaches or Category III FDIC-supervised institution will be deemed to be “adequately capitalized” if it satisfies paragraphs (b)(2)(i) through (v) of this section and has a supplementary leverage ratio of 3.0 percent or greater, as calculated in accordance with § 324.10.
“Undercapitalized” if it:
Has a total risk-based capital ratio that is less than 8.0 percent; or
Has a Tier 1 risk-based capital ratio that is less than 6.0 percent; or
Has a common equity tier 1 capital ratio that is less than 4.5 percent; or
Has a leverage ratio that is less than 4.0 percent.
An advanced approaches or Category III FDIC-supervised institution will be deemed to be “undercapitalized” if it has a supplementary leverage ratio of less than 3.0 percent, as calculated in accordance with § 324.10.
“Significantly undercapitalized” if it has:
A total risk-based capital ratio that is less than 6.0 percent; or
A Tier 1 risk-based capital ratio that is less than 4.0 percent; or
A common equity tier 1 capital ratio that is less than 3.0 percent; or
A leverage ratio that is less than 3.0 percent.
“Critically undercapitalized” if the insured depository institution has a ratio of tangible equity to total assets that is equal to or less than 2.0 percent.
Capital categories for insured branches of foreign banks. For purposes of the provisions of section 38 of the FDI Act and this subpart H, an insured branch of a foreign bank shall be deemed to be:
“Well capitalized” if the insured branch:
Maintains the pledge of assets required under § 347.209 of this chapter; and
Maintains the eligible assets prescribed under § 347.210 of this chapter at 108 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities; and
Has not received written notification from—
The OCC to increase its capital equivalency deposit pursuant to 12 CFR 28.15, or to comply with asset maintenance requirements pursuant to 12 CFR 28.20; or
The FDIC to pledge additional assets pursuant to § 347.209 of this chapter or to maintain a higher ratio of eligible assets pursuant to § 347.210 of this chapter.
“Adequately capitalized” if the insured branch:
Maintains the pledge of assets required under § 347.209 of this chapter; and
Maintains the eligible assets prescribed under § 347.210 of this chapter at 106 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities; and
Does not meet the definition of a well capitalized insured branch.
“Undercapitalized” if the insured branch:
Fails to maintain the pledge of assets required under § 347.209 of this chapter; or
Fails to maintain the eligible assets prescribed under § 347.210 of this chapter at 106 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
“Significantly undercapitalized” if it fails to maintain the eligible assets prescribed under § 347.210 of this chapter at 104 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
“Critically undercapitalized” if it fails to maintain the eligible assets prescribed under § 347.210 of this chapter at 102 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
Reclassifications based on supervisory criteria other than capital. The FDIC may reclassify a well capitalized FDIC-supervised institution as adequately capitalized and may require an adequately capitalized FDIC-supervised institution or an undercapitalized FDIC-supervised institution to comply with certain mandatory or discretionary supervisory actions as if the FDIC-supervised institution were in the next lower capital category (except that the FDIC may not reclassify a significantly undercapitalized FDIC-supervised institution as critically undercapitalized) (each of these actions are hereinafter referred to generally as “reclassifications”) in the following circumstances:
Unsafe or unsound condition. The FDIC has determined, after notice and opportunity for hearing pursuant to § 308.202(a) of this chapter, that the FDIC-supervised institution is in unsafe or unsound condition; or
Unsafe or unsound practice. The FDIC has determined, after notice and opportunity for hearing pursuant to § 308.202(a) of this chapter, that, in the most recent examination of the FDIC-supervised institution, the FDIC-supervised institution received and has not corrected a less-than-satisfactory rating for any of the categories of asset quality, management, earnings, or liquidity.
Notes, amendments, and revision history
Amendments
[81 FR 22173, Apr. 15, 2016, as amended at 79 FR 24541, May 1, 2014; 83 FR 17617, Apr. 23, 2018; 84 FR 61803, Nov. 13, 2019; 85 FR 5303, Jan. 30, 2020; 85 FR 32990, June 1, 2020; 85 FR 74259, Nov. 20, 2020; 90 FR 55292, Dec. 1, 2025]
Authority
Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note), Pub. L. 115-174; section 4014 § 201, Pub. L. 116-136, 134 Stat. 281 (15 U.S.C. 9052).
Source
Source: 78 FR 55471, Sept. 10, 2013, unless otherwise noted.
Amendments
[81 FR 22173, Apr. 15, 2016, as amended at 79 FR 24541, May 1, 2014; 83 FR 17617, Apr. 23, 2018; 84 FR 61803, Nov. 13, 2019; 85 FR 5303, Jan. 30, 2020; 85 FR 32990, June 1, 2020; 85 FR 74259, Nov. 20, 2020; 90 FR 55292, Dec. 1, 2025]