Capital – FDIC TE (Technical Evaluation): Concepts, Requirements & Exam Guide
What are the capital requirements for a well-capitalized institution under the PCA categories?
(Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- >= 10%
T1 RBC- >= 8%
CET1 RBC- >= 6.5%
T1LC ratio- >= 5%
What are the capital requirements for an adequately-capitalized institution under the PCA
categories? (Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- >= 8%
T1 RBC- >= 6%
CET1 RBC- >= 4.5%
T1LC ratio- >= 4%
What are the capital requirements of an undercapitalized institution under the PCA categories?
(Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- < 8%
T1 RBC- < 6%
CET1 RBC- < 4.5%
T1LC ratio- < 4%
What are the capital requirements of a significantly undercapitalized institution under the PCA
categories? (Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- < 6%
T1 RBC- < 4%
CET1 RBC- < 3%
T1LC ratio- < 3%
What are the capital requirements of a critically undercapitalized institution under the PCA
categories? - correct answer ✔✔Tangible equity/ATA <=2%
, How do you calculate tangible equity capital? - correct answer ✔✔TEC= (T1C + Perpetual
preferred stock in T2) / average total assets
If a bank has a leverage ratio of 9%, a RBC ratio of 11%, and T1 and CET1 RBC ratio of 8.5%;
however, is under a capital maintenance provision, what PCA category is the bank in? - correct
answer ✔✔Adequately Capitalized due to capital maintenance provision.
If a bank has a leverage ratio of 8%, a total RBC ratio of 5.5%, and T1 and CET1 RBC ratio of
4.5%, what PCA category is the bank in? - correct answer ✔✔Significantly under capitalized
If a bank has a leverage ratio of 4%, a total RBC ratio of 9%, and T1 and CET1 RBC ratio of 5%,
what PCA category is the bank in? - correct answer ✔✔Adequately Capitalized
What are Undercapitalized banks required to submit? - correct answer ✔✔A capital restoration
plan.
Who must guarantee compliance with a capital restoration plan? - correct answer ✔✔The
holding company
What allows an institution not meeting the minimum leverage ratio to be deemed unsafe and
unsound (if no written agreement or plan is in place? - correct answer ✔✔Section 8 of the FDIC
act & Section 324.4(b)
An institution may be deemed unsafe or unsound if they do not meet the minimum leverage
ratio requirements, unless: - correct answer ✔✔1- it enters into and is in compliance with a
written agreement; or,
2- submitted and is in compliance with a plan to increase the ratio
What are the capital requirements for a well-capitalized institution under the PCA categories?
(Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- >= 10%
T1 RBC- >= 8%
CET1 RBC- >= 6.5%
T1LC ratio- >= 5%
What are the capital requirements for an adequately-capitalized institution under the PCA
categories? (Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- >= 8%
T1 RBC- >= 6%
CET1 RBC- >= 4.5%
T1LC ratio- >= 4%
What are the capital requirements of an undercapitalized institution under the PCA categories?
(Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- < 8%
T1 RBC- < 6%
CET1 RBC- < 4.5%
T1LC ratio- < 4%
What are the capital requirements of a significantly undercapitalized institution under the PCA
categories? (Total RBC, T1 RBC, CET1 RBC, T1LC ratios) - correct answer ✔✔Total RBC- < 6%
T1 RBC- < 4%
CET1 RBC- < 3%
T1LC ratio- < 3%
What are the capital requirements of a critically undercapitalized institution under the PCA
categories? - correct answer ✔✔Tangible equity/ATA <=2%
, How do you calculate tangible equity capital? - correct answer ✔✔TEC= (T1C + Perpetual
preferred stock in T2) / average total assets
If a bank has a leverage ratio of 9%, a RBC ratio of 11%, and T1 and CET1 RBC ratio of 8.5%;
however, is under a capital maintenance provision, what PCA category is the bank in? - correct
answer ✔✔Adequately Capitalized due to capital maintenance provision.
If a bank has a leverage ratio of 8%, a total RBC ratio of 5.5%, and T1 and CET1 RBC ratio of
4.5%, what PCA category is the bank in? - correct answer ✔✔Significantly under capitalized
If a bank has a leverage ratio of 4%, a total RBC ratio of 9%, and T1 and CET1 RBC ratio of 5%,
what PCA category is the bank in? - correct answer ✔✔Adequately Capitalized
What are Undercapitalized banks required to submit? - correct answer ✔✔A capital restoration
plan.
Who must guarantee compliance with a capital restoration plan? - correct answer ✔✔The
holding company
What allows an institution not meeting the minimum leverage ratio to be deemed unsafe and
unsound (if no written agreement or plan is in place? - correct answer ✔✔Section 8 of the FDIC
act & Section 324.4(b)
An institution may be deemed unsafe or unsound if they do not meet the minimum leverage
ratio requirements, unless: - correct answer ✔✔1- it enters into and is in compliance with a
written agreement; or,
2- submitted and is in compliance with a plan to increase the ratio
