Computation of regulatory capital ratios. A System institution's regulatory capital ratios are determined on the basis of the financial statements of the institution prepared in accordance with GAAP using average daily balances for the most recent 3 months.

Minimum capital requirements. A System institution must maintain the following minimum capital ratios:

A common equity tier 1 (CET1) capital ratio of 4.5 percent.

A tier 1 capital ratio of 6 percent.

A total capital ratio of 8 percent.

A tier 1 leverage ratio of 4 percent, of which at least 1.5 percent must be composed of URE and URE equivalents.

[Reserved]

A permanent capital ratio of 7 percent.

Capital ratio calculations. A System institution's regulatory capital ratios are as follows:

CET1 capital ratio. A System institution's CET1 capital ratio is the ratio of the System institution's CET1 capital to total risk-weighted assets;

Tier 1 capital ratio. A System institution's tier 1 capital ratio is the ratio of the System institution's tier 1 capital to total risk-weighted assets;

Total capital ratio. A System institution's total capital ratio is the ratio of the System institution's total (tier 1 and tier 2) capital to total risk-weighted assets; and

Tier 1 leverage ratio. A System institution's leverage ratio is the ratio of the institution's tier 1 capital to the institution's average total consolidated assets as reported on the institution's Call Report minus amounts deducted from tier 1 capital under §§ 628.22(a) and (c) and 628.23.

Permanent capital ratio. A System institution's permanent capital ratio is the ratio of the institution's permanent capital to its total risk-adjusted asset base as reported on the institution's Call Report, calculated in accordance with the regulations in part 615, subpart H, of this chapter.

[Reserved]

Capital adequacy. (1) Notwithstanding the minimum requirements in this part, a System institution must maintain capital commensurate with the level and nature of all risks to which the System institution is exposed. FCA may evaluate a System institution's capital adequacy and require the institution to maintain higher minimum regulatory capital ratios using the factors listed in § 615.5350 of this chapter.

A System institution must have a process for assessing its overall capital adequacy in relation to its risk profile and a comprehensive strategy for maintaining an appropriate level of capital under § 615.5200 of this chapter.