---
kind: "section"
citation: "12 U.S.C. § 4614"
title: "12"
title_heading: "Banks and Banking"
number: "4614"
heading: "Capital classifications"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/4614"
units:
  - "Chapter 46 — Government Sponsored Enterprises"
  - "Subchapter II — Required Capital Levels for Regulated Entities, Special Enforcement Powers, and Reviews of Assets and Liabilities"
---

# §4614. Capital classifications

- (a) **Enterprises—** For purposes of this subchapter, the [Director](/usc/12/4502.md?p=9) shall classify the [enterprises](/usc/12/4502.md?p=10) according to the following capital classifications:
  - (1) **Adequately capitalized—** An [enterprise](/usc/12/4502.md?p=10) shall be classified as adequately capitalized if the [enterprise](/usc/12/4502.md?p=10)—
    - (A) maintains an amount of [total capital](/usc/12/4502.md?p=23) that is equal to or exceeds the risk-based capital level established for the [enterprise](/usc/12/4502.md?p=10) under [section 4611 of this title](/usc/12/4611.md); and
    - (B) maintains an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the minimum capital level established for the [enterprise](/usc/12/4502.md?p=10) under [section 4612 of this title](/usc/12/4612.md).
  - (2) **Undercapitalized—** An [enterprise](/usc/12/4502.md?p=10) shall be classified as undercapitalized if—
    - (A) the [enterprise](/usc/12/4502.md?p=10)—
      - (i) does not maintain an amount of [total capital](/usc/12/4502.md?p=23) that is equal to or exceeds the risk-based capital level established for the [enterprise](/usc/12/4502.md?p=10); and
      - (ii) maintains an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the minimum capital level established for the [enterprise](/usc/12/4502.md?p=10); or
    - (B) the [enterprise](/usc/12/4502.md?p=10) is otherwise classified as undercapitalized under [subsection (b)(1)](#b-1) of this section.
  - (3) **Significantly undercapitalized—** An [enterprise](/usc/12/4502.md?p=10) shall be classified as significantly undercapitalized if—
    - (A) the [enterprise](/usc/12/4502.md?p=10)—
      - (i) does not maintain an amount of [total capital](/usc/12/4502.md?p=23) that is equal to or exceeds the risk-based capital level established for the [enterprise](/usc/12/4502.md?p=10);
      - (ii) does not maintain an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the minimum capital level established for the [enterprise](/usc/12/4502.md?p=10); and
      - (iii) maintains an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the critical capital level established for the [enterprise](/usc/12/4502.md?p=10) under [section 4613 of this title](/usc/12/4613.md); or
    - (B) the [enterprise](/usc/12/4502.md?p=10) is otherwise classified as significantly undercapitalized under [subsection (b)(2)](#b-2) of this section or [section 4615(b) of this title](/usc/12/4615.md?p=b).
  - (4) **Critically undercapitalized—** An [enterprise](/usc/12/4502.md?p=10) shall be classified as critically undercapitalized if—
    - (A) the [enterprise](/usc/12/4502.md?p=10)—
      - (i) does not maintain an amount of [total capital](/usc/12/4502.md?p=23) that is equal to or exceeds the risk-based capital level established for the [enterprise](/usc/12/4502.md?p=10); and
      - (ii) does not maintain an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the critical capital level for the [enterprise](/usc/12/4502.md?p=10); or
    - (B) is otherwise classified as critically undercapitalized under subsection (b)(3) of this section or [section 4616(b)(5)](/usc/12/4616.md?p=b-5)[^1] of this title.
- (b) **Federal Home Loan Banks—**
  - (1) **Establishment and criteria—** For purposes of this subchapter, the [Director](/usc/12/4502.md?p=9) shall, by regulation—
    - (A) establish the capital classifications specified under [paragraph (2)](#b-2) for the Federal Home Loan Banks;
    - (B) establish criteria for each such capital classification based on the amount and types of capital held by a bank and the risk-based, minimum, and critical capital levels for the banks and taking due consideration of the capital classifications established under [subsection (a)](#a) for the [enterprises](/usc/12/4502.md?p=10), with such modifications as the [Director](/usc/12/4502.md?p=9) determines to be appropriate to reflect the difference in operations between the banks and the [enterprises](/usc/12/4502.md?p=10); and
    - (C) shall classify the Federal Home Loan Banks according to such capital classifications.
  - (2) **Classifications—** The capital classifications specified under this paragraph are—
    - (A) adequately capitalized;
    - (B) undercapitalized;
    - (C) significantly undercapitalized; and
    - (D) critically undercapitalized.
- (c) **Discretionary classification—**
  - (1) **Grounds for reclassification—** The [Director](/usc/12/4502.md?p=9) may reclassify a [regulated entity](/usc/12/4502.md?p=20) under [paragraph (2)](#c-2) if—
    - (A) at any time, the [Director](/usc/12/4502.md?p=9) determines in writing that the [regulated entity](/usc/12/4502.md?p=20) is engaging in conduct that could result in a rapid depletion of core or [total capital](/usc/12/4502.md?p=23) or the value of collateral pledged as security has decreased significantly or that the value of the property subject to [mortgages](/usc/12/1707.md?p=a) held by the [regulated entity](/usc/12/4502.md?p=20) (or securitized in the case of an [enterprise](/usc/12/4502.md?p=10)) has decreased significantly;
    - (B) after notice and an opportunity for hearing, the [Director](/usc/12/4502.md?p=9) determines that the [regulated entity](/usc/12/4502.md?p=20) is in an unsafe or unsound condition; or
    - (C) pursuant to [section 4631(b) of this title](/usc/12/4631.md?p=b), the [Director](/usc/12/4502.md?p=9) deems the [regulated entity](/usc/12/4502.md?p=20) to be engaging in an unsafe or unsound practice.
  - (2) **Reclassification—** In addition to any other action authorized under this chapter, including the reclassification of a [regulated entity](/usc/12/4502.md?p=20) for any reason not specified in this subsection, if the [Director](/usc/12/4502.md?p=9) takes any action described in [paragraph (1)](#c-1), the [Director](/usc/12/4502.md?p=9) may classify a [regulated entity](/usc/12/4502.md?p=20)—
    - (A) as undercapitalized, if the [regulated entity](/usc/12/4502.md?p=20) is otherwise classified as adequately capitalized;
    - (B) as significantly undercapitalized, if the [regulated entity](/usc/12/4502.md?p=20) is otherwise classified as undercapitalized; and
    - (C) as critically undercapitalized, if the [regulated entity](/usc/12/4502.md?p=20) is otherwise classified as significantly undercapitalized.
- (d) **Quarterly determination—** The [Director](/usc/12/4502.md?p=9) shall determine the capital classification of the [regulated entities](/usc/12/4502.md?p=20) for purposes of this subchapter on not less than a quarterly basis (and as appropriate under [subsection (c)](#c)).
- (e) **Restriction on capital distributions—**
  - (1) **In general—** A [regulated entity](/usc/12/4502.md?p=20) shall make no [capital distribution](/usc/12/4502.md?p=5-A) if, after making the distribution, the [regulated entity](/usc/12/4502.md?p=20) would be undercapitalized.
  - (2) **Exception—** Notwithstanding [paragraph (1)](#e-1), the [Director](/usc/12/4502.md?p=9) may permit a [regulated entity](/usc/12/4502.md?p=20), to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition—
    - (A) is made in connection with the issuance of additional shares or obligations of the [regulated entity](/usc/12/4502.md?p=20) in at least an equivalent amount; and
    - (B) will reduce the financial obligations of the [regulated entity](/usc/12/4502.md?p=20) or otherwise improve the financial condition of the entity.
- (f) **Implementation—** Notwithstanding any other provision of this section, during the period beginning on October 28, 1992, and ending upon the effective date of [section 4615 of this title](/usc/12/4615.md) (as provided in [section 4615(c)](/usc/12/4615.md?p=c)[^1] of this title), an [enterprise](/usc/12/4502.md?p=10) shall be classified as adequately capitalized if the [enterprise](/usc/12/4502.md?p=10) maintains an amount of [core capital](/usc/12/4502.md?p=7) that is equal to or exceeds the minimum capital level for the [enterprise](/usc/12/4502.md?p=10) under [section 4612 of this title](/usc/12/4612.md).

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 102–550, title XIII, § 1364, Oct. 28, 1992, 106 Stat. 3976; Pub. L. 110–289, div. A, title I, §§ 1142(a), 1161(a)(3), July 30, 2008, 122 Stat. 2730, 2779.)

## Notes

### Editorial Notes

### References in Text

Section 4616(b)(5) of this title, referred to in subsec. (a)(4)(B), was redesignated section 4616(b)(6) of this title by Pub. L. 110–289, div. A, title I, § 1144(5)(D), July 30, 2008, 122 Stat. 2733.

This chapter, referred to in subsec. (c)(2), was in the original “this title”, meaning title XIII of Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables.

Section 4615(c) of this title, referred to in subsec. (f), was repealed and a new section 4615(c) was added by Pub. L. 110–289, div. A, title I, § 1143(6), July 30, 2008, 122 Stat. 2734. The new section 4615(c) does not relate to effective date.

### Amendments

2008—Subsec. (a). Pub. L. 110–289, § 1142(a)(1), substituted “Enterprises” for “In general” in heading.

Subsec. (b). Pub. L. 110–289, § 1142(a)(4), added subsec. (b) and struck out former subsec. (b) which related to discretionary classification.

Subsec. (c). Pub. L. 110–289, § 1161(a)(3), which directed amendment of subsec. (c) by striking out the last sentence, was not executed as the probable intent of Congress. The amendment was probably intended to strike out the last sentence of former subsec. (c), now subsec. (d), as it existed prior to being struck out by Pub. L. 110–289, § 1142(a)(2)(C). See below.

Pub. L. 110–289, § 1142(a)(3), (4), added subsec. (c) and redesignated former subsec. (c) as (d).

Pub. L. 110–289, § 1142(a)(2)(C), struck out last sentence which read as follows: “The first such determination shall be made during the 3-month period beginning on the appointment of the Director.”

Pub. L. 110–289, § 1142(a)(2)(A), (B), substituted “regulated entities” for “enterprises” and “subsection (c)” for “subsection (b)”.

Subsec. (d). Pub. L. 110–289, § 1142(a)(3), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (f).

Subsec. (e). Pub. L. 110–289, § 1142(a)(5), added subsec. (e).

Subsec. (f). Pub. L. 110–289, § 1142(a)(3), redesignated subsec. (d) as (f).

### Statutory Notes and Related Subsidiaries

### Regulations

Pub. L. 110–289, div. A, title I, § 1142(b), July 30, 2008, 122 Stat. 2732, provided that: “Not later than the expiration of the 180-day period beginning on the date of enactment of this Act [July 30, 2008], the Director of the Federal Housing Finance Agency shall issue regulations to carry out section 1364(b) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C. 4614(b)] (as added by this section), relating to capital classifications for the Federal Home Loan Banks.”