§4614 Capital Classifications

Summary

The Director must put each regulated enterprise and Federal Home Loan Bank into one of four capital classes based on how much total capital and core capital it has compared to numbers set in other rules. The Director also must make rules for how the banks are classified, taking account of differences between banks and enterprises, and must check and decide the classifications at least every three months. Adequately capitalized: total capital is at or above the risk-based capital level (see section 4611) and core capital is at or above the minimum level (see section 4612). Undercapitalized: total capital is below the risk-based level but core capital still meets the minimum, or the Director otherwise so classifies. Significantly undercapitalized: both total and core capital are below the required levels but core still meets the critical level (see section 4613), or the Director otherwise so classifies. Critically undercapitalized: total capital is below the risk-based level and core capital is below the critical level, or the Director otherwise so classifies. The Director may move an entity down a class if capital could be quickly lost, collateral or mortgaged property value falls a lot, after notice and a hearing finds unsafe or unsound conditions, or under section 4631(b). A regulated entity must not make a capital distribution if that would leave it undercapitalized, except the Director may allow certain buybacks or redemptions when matched by equal new issuance and when they improve the entity’s financial position. Between October 28, 1992, and the effective date of section 4615, an enterprise is adequately capitalized if its core capital meets the minimum under section 4612.