Bank Analysis School eBook

Internal Use Only

Internal Use Only

Falling Below Well Capitalized is Bad!

Common Equity Tier 1 Capital Ratio

Prompt Corrective Action Category

Tier 1 Leverage Ratio

Tier 1 Capital Ratio

Total Capital Ratio

Well Capitalized

≥ 5%

≥ 6.5%

≥ 8%

≥ 10%

Adequately Capitalized*

≥ 4%

≥ 4.5%

≥ 6%

≥ 8%

Under Capitalized

< 4%

< 4.5%

< 6%

< 8%

Significantly Undercapitalized

< 3%

< 3%

< 4%

< 6%

Critically Undercapitalized

Tangible equity/Total assets ≤ 2%

*Adequately Capitalized = “Minimum” capital levels as set forth in Part 324 of the FDIC’s Rules and Regulations