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4000 - Advisory Opinions

An Insured Depository Institution May Disclose Its Prompt Corrective Action Capital Category to Depositors


January 5, 1993

Claude A. Rollin, Counsel

This is in response to your letter, dated November 20, 1992, inquiring about the FDIC's position with regard to disclosure of capital information by insured depository institutions.

As you know, effective December 19, 1992, every FDIC-insured depository institution was deemed to be within one of five capital categories for purposes of the prompt corrective action ("PCA") rules: (1) well-capitalized; (2) adequately capitalized; (3) undercapitalized; (4) significantly undercapitalized; or (5) critically undercapitalized.

Section 325.101(e) of the FDIC's regulations, 12 C.F.R. 325.101(e), provides as follows:

The assignment of a bank or insured branch under this subpart within a particular capital category is for purposes of implementing and applying the provisions of section 38. Unless permitted by the FDIC or otherwise required by law, no bank may state in any advertisement or promotional material its capital category under this subpart or that the FDIC or any other federal banking agency has assigned the bank to a particular capital category.

As noted above, the FDIC's regulation prohibits an insured bank or insured branch of a foreign bank from stating its PCA capital category in any advertising or promotional material. However, in my opinion, disclosure of an institution's capital category to an individual depositor so that the depositor can make a decision about depositing funds in the institution, would not violate the above-quoted prohibition against utilizing one's capital category for advertising or promotional purposes. Moreover, the regulation does not prohibit an institution from disclosing its total risk-based capital, tier 1 risk-based capital and leverage capital numbers to an individual depositor.

Although the FDIC's regulations only apply to state-chartered nonmember banks and state-licensed insured branches of foreign banks, the Office of Thrift Supervision ("OTS") has adopted comparable regulations for the institutions they supervise. You may wish to contact the OTS to obtain their interpretation of the advertising provision in their PCA regulations.

There is no other written FDIC policy or regulation (which would have to be adopted by our Board of Directors) which prohibits the disclosure of capital information by any insured depository institution. Accordingly, I hope that this staff interpretation is sufficient for your purposes.

If you have any further questions, please contact me at (202) 898-3985.

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