PART 6—PROMPT CORRECTIVE ACTION Authority: 12 U.S.C. 93a, 1831o, 5412(b)(2)(B). Source: 78 FR 62275, Oct. 11, 2013, unless otherwise noted. Subpart A—Capital Categories § 6.1 Authority, purpose, scope, other supervisory authority, disclosure of capital categories, and transition procedures. (a) Authority. (b) Purpose. (c) Scope. (d) Other supervisory authority. (e) Disclosure of capital categories. (f) Transition procedures. (2) Timing. [78 FR 62275, Oct. 11, 2013, as amended at 84 FR 56374, Oct. 22, 2019] § 6.2 Definitions. For purposes of this subpart, except as modified in this section or unless the context otherwise requires, the terms used have the same meanings as set forth in section 38 and section 3 of the FDI Act. Advanced approaches national bank or advanced approaches Federal savings association Common equity tier 1 capital Common equity tier 1 risk-based capital ratio Control. Control (2) Exclusion for fiduciary ownership. (3) Exclusion for debts previously contracted. Controlling person Federal savings association Leverage ratio Management fee National bank Supplementary leverage ratio Tangible equity Tier 1 capital Tier 1 risk-based capital ratio Total assets Total leverage exposure Total risk-based capital ratio Total risk-weighted assets [78 FR 62275, Oct. 11, 2013, as amended at 84 FR 56374, Oct. 22, 2019] § 6.3 Notice of capital category. (a) Effective date of determination of capital category. (b) Notice of capital category. (1) A Consolidated Reports of Condition and Income (Call Report) is required to be filed with the OCC; (2) A final report of examination is delivered to the national bank or Federal savings association; or (3) Written notice is provided by the OCC to the national bank or Federal savings association of its capital category for purposes of section 38 of the FDI Act and this part or that the national bank's or Federal savings association's capital category has changed pursuant to paragraph (c) of this section, or § 6.4(e) and subpart M of part 19 of this chapter. (c) Adjustments to reported capital levels and capital category Notice of adjustment by national bank or Federal savings association. (2) Determination to change capital category. [78 FR 62275, Oct. 11, 2013, as amended at 88 FR 89842, Dec. 28, 2023] § 6.4 Capital measures and capital categories. (a) Capital measures. (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; (iv) The Leverage Measure: (A) The leverage ratio; and (B) With respect to an advanced approaches national bank or Federal Savings association, or a Category III OCC-regulated institution, the supplementary leverage ratio; and (2) For a qualifying community banking organization (as defined in § 3.12 of this chapter), that has elected to use the community bank leverage ratio framework (as defined in § 3.12 of this chapter), the leverage ratio calculated in accordance with § 3.12(b) of this chapter is used to determine the well capitalized capital category under paragraph (b)(1)(i) (A) through (D) of this section. (b) Capital categories. (1)(i) Well capitalized if: (A) Total Risk-Based Capital Measure: The national bank or Federal savings association has a total risk-based capital ratio of 10.0 percent or greater; (B) Tier 1 Risk-Based Capital Measure: The national bank or Federal savings association has a tier 1 risk-based capital ratio of 8.0 percent or greater; (C) Common Equity Tier 1 Capital Measure: The national bank or Federal savings association has a common equity tier 1 risk-based capital ratio of 6.5 percent or greater; (D) Leverage Measure: The national bank or Federal savings association has a leverage ratio of 5.0 percent or greater; and (E) The national bank or Federal savings association is not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by the OCC pursuant to section 8 of the FDI Act, the International Lending Supervision Act of 1983 (12 U.S.C. 3907), the Home Owners' Loan Act (12 U.S.C. 1464(t)(6)(A)(ii)), or section 38 of the FDI Act, or any regulation thereunder, to meet and maintain a specific capital level for any capital measure. (ii) Qualifying community banking organization: A qualifying community banking organization, as defined under § 3.12 of this chapter, that has elected to use the community bank leverage ratio framework under § 3.12 of this chapter, shall be considered to have met the capital ratio requirements for the well capitalized capital category in paragraph (b)(1)(i) (A) through (D) of this section. (2) Adequately capitalized (i) Total Risk-Based Capital Measure: the national bank or Federal savings association has a total risk-based capital ratio of 8.0 percent or greater; (ii) Tier 1 Risk-Based Capital Measure: the national bank or Federal savings association has a tier 1 risk-based capital ratio of 6.0 percent or greater; (iii) Common Equity Tier 1 Capital Measure: the national bank or Federal savings association has a common equity tier 1 risk-based capital ratio of 4.5 percent or greater; (iv) Leverage Measure: (A) The national bank or Federal savings association has a leverage ratio of 4.0 percent or greater; and (B) With respect to an advanced approaches or Category III national bank or advanced approaches or Category III Federal savings association, the national bank or Federal savings association has a supplementary leverage ratio of 3.0 percent or greater; and (v) The national bank or Federal savings association does not meet the definition of a “well capitalized” national bank or Federal savings association. (3) Undercapitalized (i) Total Risk-Based Capital Measure: the national bank or Federal savings association has a total risk-based capital ratio of less than 8.0 percent; (ii) Tier 1 Risk-Based Capital Measure: the national bank or Federal savings association has a tier 1 risk-based capital ratio of less than 6.0 percent; (iii) Common Equity Tier 1 Capital Measure: the national bank or Federal savings association has a common equity tier 1 risk-based capital ratio of less than 4.5 percent; or (iv) Leverage Measure: (A) The national bank or Federal savings association has a leverage ratio of less than 4.0 percent; or (B) With respect to an advanced approaches or Category III national bank or advanced approaches or Category III Federal savings association, on January 1, 2018, and thereafter, the national bank or Federal savings association has a supplementary leverage ratio of less than 3.0 percent. (4) Significantly undercapitalized (i) Total Risk-Based Capital Measure: the national bank or Federal savings association has a total risk-based capital ratio of less than 6.0 percent; (ii) Tier 1 Risk-Based Capital Measure: the national bank or Federal savings association has a tier 1 risk-based capital ratio of less than 4.0 percent; (iii) Common Equity Tier 1 Capital Measure: the national bank or Federal savings association has a common equity tier 1 risk-based capital ratio of less than 3.0 percent; or (iv) Leverage Ratio: the national bank or Federal savings association has a leverage ratio of less than 3.0 percent. (5) Critically undercapitalized (c) Capital categories for insured Federal branches. (1) Well capitalized (i) Maintains the pledge of assets required under 12 CFR 347.209; and (ii) Maintains the eligible assets prescribed under 12 CFR 347.210 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 § 28.15 of this chapter, or to comply with asset maintenance requirements pursuant to § 28.20 of this chapter; or (B) The FDIC to pledge additional assets pursuant to 12 CFR 347.209 or to maintain a higher ratio of eligible assets pursuant to 12 CFR 347.210. (2) Adequately capitalized (i) Maintains the pledge of assets prescribed under 12 CFR 347.209; (ii) Maintains the eligible assets prescribed under 12 CFR 347.210 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 Federal branch. (3) Undercapitalized (i) Fails to maintain the pledge of assets required under 12 CFR 347.209; or (ii) Fails to maintain the eligible assets prescribed under 12 CFR 347.210 at 106 percent or more of the preceding quarter's average book value of the insured branch's third-party liabilities. (4) Significantly undercapitalized (5) Critically undercapitalized (d) Reclassification based on supervisory criteria other than capital. (1) Unsafe or unsound condition. (2) Unsafe or unsound practice. [78 FR 62275, Oct. 11, 2013, as amended at 79 FR 24539, May 1, 2014; 84 FR 61794, Nov. 13, 2019; 85 FR 10968, Feb. 26, 2020; 85 FR 32989, June 1, 2020; 88 FR 89842, Dec. 28, 2023; 90 FR 55288, Dec. 1, 2025] § 6.5 Capital restoration plan. (a) Schedule for filing plan In general. (2) Additional capital restoration plans. (b) Contents of plan. (c) Review of capital restoration plans. (d) Disapproval of capital restoration plan. (e) Failure to submit a capital restoration plan. (f) Failure to implement a capital restoration plan. (g) Amendment of capital restoration plan. (h) Notice to FDIC. (i) Performance guarantee by companies that control a national bank or Federal savings association Limitation on liability Amount limitation. (A) An amount equal to 5.0 percent of the national bank's or Federal savings association's total assets at the time the national bank or Federal savings association was notified or deemed to have notice that the national bank or Federal savings association was undercapitalized; or (B) The amount necessary to restore the relevant capital measures of the national bank or Federal savings association to the levels required for the national bank or Federal savings association to be classified as adequately capitalized, as those capital measures and levels are defined at the time that the national bank or Federal savings association initially fails to comply with a capital restoration plan under this subpart. (ii) Limit on duration. (iii) Collection on guarantee. (2) Failure to provide guarantee. (3) Failure to perform guarantee. (j) Enforcement of capital restoration plan. [78 FR 62275, Oct. 11, 2013, as amended at 88 FR 89842, Dec. 28, 2023] § 6.6 Mandatory and discretionary supervisory actions. (a) Mandatory supervisory actions Provisions applicable to all national banks and Federal savings associations. (2) Provisions applicable to undercapitalized, significantly undercapitalized, and critically undercapitalized national banks or Federal savings associations. (i) Restricting payment of distributions and management fees (section 38(d)); (ii) Requiring that the OCC monitor the condition of the national bank or Federal savings association (section 38(e)(1)); (iii) Requiring submission of a capital restoration plan within the schedule established in this subpart (section 38(e)(2)); (iv) Restricting the growth of the national bank's or Federal savings association's assets (section 38(e)(3)); and (v) Requiring prior approval of certain expansion proposals (section 38(e)(4)). (3) Additional provisions applicable to significantly undercapitalized, and critically undercapitalized national banks or Federal savings associations. (4) Additional provisions applicable to critically undercapitalized national banks or Federal savings associations. (i) Restricting the activities of the national bank or Federal savings association (section 38 (h)(1)); and (ii) Restricting payments on subordinated debt of the national bank or Federal savings association (section 38 (h)(2)). (b) Discretionary supervisory actions. [78 FR 62275, Oct. 11, 2013, as amended at 88 FR 89842, Dec. 28, 2023] Subpart B—Directives To Take Prompt Corrective Action § 6.20 Scope. The rules and procedures set forth in this subpart apply to insured national banks, insured Federal branches, Federal savings associations, and senior executive officers and directors of national banks and Federal savings associations that are subject to the provisions of section 38 of the Federal Deposit Insurance Act (section 38) and subpart A of this part. § 6.21 Notice of intent to issue a directive. (a) Notice of intent to issue a directive In general. (2) Immediate issuance of final directive. (b) Contents of notice. (1) A statement of the national bank's or Federal savings association's capital measures and capital levels; (2) A description of the restrictions, prohibitions or affirmative actions that the OCC proposes to impose or require; (3) The proposed date when such restrictions or prohibitions would be effective or the proposed date for completion of such affirmative actions; and (4) The date by which the national bank or Federal savings association subject to the directive may file with the OCC a written response to the notice. § 6.22 Response to notice. (a) Time for response. (b) Content of response. (1) An explanation why the action proposed by the OCC is not an appropriate exercise of discretion under section 38; (2) Any recommended modification of the proposed directive; and (3) Any other relevant information, mitigating circumstances, documentation, or other evidence in support of the position of the national bank or Federal savings association regarding the proposed directive. (c) Failure to file response. § 6.23 Decision and issuance of a prompt corrective action directive. (a) OCC consideration of response. (1) Issue the directive as proposed or in modified form; (2) Determine not to issue the directive and so notify the national bank or Federal savings association; or (3) Seek additional information or clarification of the response from the national bank or Federal savings association, or any other relevant source. (b) [Reserved] § 6.24 Request for modification or rescission of directive. Any national bank or Federal savings association that is subject to a directive under this subpart may, upon a change in circumstances, request in writing that the OCC reconsider the terms of the directive, and may propose that the directive be rescinded or modified. Unless otherwise ordered by the OCC, the directive shall continue in place while such request is pending before the OCC. § 6.25 Enforcement of directive. (a) Judicial remedies. (b) Administrative remedies. (c) Other enforcement action.