(a) Mandatory supervisory actions.
(1) Provisions
applicable to all banks. All state member banks are subject to
the restrictions contained in section 38(d) of the FDI Act on payment
of capital distributions and management fees.
(2) Provisions
applicable to undercapitalized, significantly undercapitalized, and
critically undercapitalized banks. Immediately upon receiving
notice or being deemed to have notice, as provided in section 208.42
or section 208.44 of this subpart, that the bank is undercapitalized,
significantly undercapitalized, or critically undercapitalized, the
bank shall become subject to the provisions of section 38 of the FDI
Act—
(i) restricting payment of capital distributions
and management fees (section 38(d));
(ii) requiring that the Board monitor
the condition of the bank (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 bank’s assets (section 38(e)(3)); and
(v) requiring prior approval of certain
expansion proposals (section 38(e)(4)).
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(3) Additional
provisions applicable to significantly undercapitalize and critically
undercapitalized banks. In addition to the provisions of section
38 of the FDI Act described in paragraph (a)(2) of this section, immediately
upon receiving notice or being deemed to have notice, as provided
in section 208.42 or section 208.44, that the bank is significantly
undercapitalized, or critically undercapitalized, or that the bank
is subject to the provisions applicable to institutions that are significantly
undercapitalized because the bank failed to submit or implement in
any material respect an acceptable capital-restoration plan, the bank
shall become subject to the provisions of section 38 of the FDI Act
that restrict compensation paid to senior executive officers of the
institution (section 38(f)(4)).
(4) Additional
provisions applicable to critically undercapitalized banks. In
addition to the provisions of section 38 of the FDI Act described
in paragraphs (a)(2) and (a)(3) of this section, immediately upon
receiving notice or being deemed to have notice, as provided in section
208.32, that the bank is critically undercapitalized, the bank shall
become subject to the provisions of section 38 of the FDI Act—
(i) restricting the activities of the bank (section 38(h)(1)); and
(ii) restricting payments
on subordinated debt of the bank (section 38(h)(2)).
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(b) Discretionary supervisory
actions. In taking any action under section 38 that is within
the Board’s discretion to take in connection with (1) a state member
bank that is deemed to be undercapitalized, significantly undercapitalized,
or critically undercapitalized, or has been reclassified as undercapitalized,
or significantly undercapitalized; (2) an officer or director of such
bank; or (3) a company that controls such bank, the Board shall follow
the procedures for issuing directives under 12 CFR 263.202 and 263.204,
unless otherwise provided in section 38 or this subpart.
