---
kind: "section"
citation: "12 C.F.R. § 324.403"
title: "12"
number: "324.403"
heading: "Capital measures and capital category definitions."
url: "https://uscodex.org/cfr/12/324.403"
---

# §324.403. Capital measures and capital category definitions.

- (a) **Capital measures.**
  - (1) **For purposes of section 38 of the FDI Act and this subpart H, 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 FDIC-supervised institutions or Category III FDIC-supervised institution, the supplementary leverage ratio.
  - (2) For a qualifying community banking organization (as defined under [§ 324.12](/cfr/12/324.12.md)), that has elected to use the community bank leverage ratio framework (as defined under [§ 324.12](/cfr/12/324.12.md)), the leverage ratio calculated in accordance with [§ 324.12(b)](/cfr/12/324.12.md?p=b) is used to determine the well capitalized capital category under [paragraph (b)(1)(i)(A) through (D)](#b-1-i-A..b-1-i-D) of this section.
- (b) **Capital categories.** For purposes of section 38 of the FDI Act and this subpart, an FDIC-supervised institution shall be deemed to be:
  - (1)
    - (i) “Well capitalized” if:
      - (A) **Total Risk-Based Capital Measure—** The FDIC-supervised institution has a total risk-based capital ratio of 10.0 percent or greater; and
      - (B) **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
      - (C) **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
      - (D) The FDIC-supervised institution has a leverage ratio of 5.0 percent or greater; and
      - (E) 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](/usc/12/1818.md)), the International Lending Supervision Act of 1983 ([12 U.S.C. 3907](/usc/12/3907.md)), or the Home Owners' Loan Act ([12 U.S.C. 1464(t)(6)(A)(ii)](/usc/12/1464.md?p=t-6-A-ii)), or section 38 of the FDI Act ([12 U.S.C. 1831o](/usc/12/1831o.md)), or any regulation thereunder, to meet and maintain a specific capital level for any capital measure.
    - (ii) A qualifying community banking organization, as defined under [§ 324.12](/cfr/12/324.12.md), that has elected to use the community bank leverage ratio framework under [§ 324.12](/cfr/12/324.12.md) shall be considered to have met the capital ratio requirements for the well capitalized capital category in [paragraphs (b)(1)(i)(A) through (D)](#b-1-i-A..b-1-i-D) of this section.
  - (2) “Adequately capitalized” if it:
    - (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 6.0 percent or greater; and
    - (iii) Has a common equity tier 1 capital ratio of 4.5 percent or greater; and
    - (iv) Has a leverage ratio of 4.0 percent or greater; and
    - (v) **Does not meet the definition of “well capitalized” in this section.**
    - (vi) 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)](#b-2-i..b-2-v) of this section and has a supplementary leverage ratio of 3.0 percent or greater, as calculated in accordance with [§ 324.10](/cfr/12/324.10.md).
  - (3) “Undercapitalized” if it:
    - (i) Has a total risk-based capital ratio that is less than 8.0 percent; or
    - (ii) Has a Tier 1 risk-based capital ratio that is less than 6.0 percent; or
    - (iii) Has a common equity tier 1 capital ratio that is less than 4.5 percent; or
    - (iv) Has a leverage ratio that is less than 4.0 percent.
    - (v) 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](/cfr/12/324.10.md).
  - (4) “Significantly undercapitalized” if it 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 4.0 percent; or
    - (iii) A common equity tier 1 capital ratio that is less than 3.0 percent; or
    - (iv) A leverage ratio that is less than 3.0 percent.
  - (5) “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.
- (c) **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:
  - (1) “Well capitalized” if the insured branch:
    - (i) Maintains the pledge of assets required under [§ 347.209](/cfr/12/347.209.md) of this chapter; and
    - (ii) Maintains the eligible assets prescribed under [§ 347.210](/cfr/12/347.210.md) 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
    - (iii) **Has not received written notification from—**
      - (A) The OCC to increase its capital equivalency deposit pursuant to [12 CFR 28.15](/cfr/12/28.15.md), or to comply with asset maintenance requirements pursuant to [12 CFR 28.20](/cfr/12/28.20.md); or
      - (B) The FDIC to pledge additional assets pursuant to [§ 347.209](/cfr/12/347.209.md) of this chapter or to maintain a higher ratio of eligible assets pursuant to [§ 347.210](/cfr/12/347.210.md) of this chapter.
  - (2) “Adequately capitalized” if the insured branch:
    - (i) Maintains the pledge of assets required under [§ 347.209](/cfr/12/347.209.md) of this chapter; and
    - (ii) Maintains the eligible assets prescribed under [§ 347.210](/cfr/12/347.210.md) 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
    - (iii) **Does not meet the definition of a well capitalized insured branch.**
  - (3) “Undercapitalized” if the insured branch:
    - (i) Fails to maintain the pledge of assets required under [§ 347.209](/cfr/12/347.209.md) of this chapter; or
    - (ii) Fails to maintain the eligible assets prescribed under [§ 347.210](/cfr/12/347.210.md) of this chapter at 106 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
  - (4) “Significantly undercapitalized” if it fails to maintain the eligible assets prescribed under [§ 347.210](/cfr/12/347.210.md) of this chapter at 104 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
  - (5) “Critically undercapitalized” if it fails to maintain the eligible assets prescribed under [§ 347.210](/cfr/12/347.210.md) of this chapter at 102 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities.
- (d) **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:
  - (1) **Unsafe or unsound condition.** The FDIC has determined, after notice and opportunity for hearing pursuant to [§ 308.202(a)](/cfr/12/308.202.md?p=a) of this chapter, that the FDIC-supervised institution is in unsafe or unsound condition; or
  - (2) **Unsafe or unsound practice.** The FDIC has determined, after notice and opportunity for hearing pursuant to [§ 308.202(a)](/cfr/12/308.202.md?p=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

[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]