Current through Reg. 49, No. 38; September 20, 2024
(a) The
Commissioner may increase or decrease the minimum capital requirement set forth
in this chapter upon written request by a savings association or by supervisory
directive if the Commissioner determines that:
(1) the savings association's failure to meet
the minimum capital requirement, if applicable, is not due to unsafe and
unsound practices in the conduct of the affairs of the savings association, a
violation of any provision of the certificate of formation or bylaws of the
savings association, or a violation of any law, rule, or supervisory action
applicable to the savings association or any condition that the Commissioner
has imposed on the savings association by written order or agreement;
(2) the savings association is well managed.
In determining whether the savings association is well managed, the
Commissioner may consider:
(A) management's
record of operating the savings association;
(B) management's record of compliance with
laws, regulations, directives, orders, and agreements;
(C) management's timely recognition and
correction of regulatory violations, unsafe and unsound practices, or other
weaknesses identified through the examination or supervisory process;
(D) management's ability to operate the
savings association in changing economic conditions; and
(E) such other factors as the Commissioner
may deem necessary to properly evaluate the quality of the savings
association's management; and
(3) the savings association has submitted a
plan acceptable to the Commissioner for restoring capital within a reasonable
period of time. Such plan must describe the means and schedule by which capital
will be increased. The plan must also specifically address restrictions on
dividend levels; compensation of directors, executive officers, or individuals
having a controlling interest; asset and liability growth; and payment for
services or products furnished by affiliated persons. The plan must provide for
improvement in the savings association's capital on a continuous or periodic
basis from earnings, capital infusions, liability and asset shrinkage, or any
combination thereof. A plan that projects no significant improvement in capital
until near the end of the waiver or variance period or that does not appear to
the Commissioner to be reasonably feasible will not be acceptable. The
Commissioner may require modification of the savings association's plan in
order for the institution to receive or to continue to receive such waiver or
variance.
(b) Progress
Reports. Any savings association which receives an increase or decrease of its
minimum capital requirement from the Commissioner must file quarterly progress
reports regarding compliance with its capital plan. The Commissioner may
require more frequent reports. Any contemplated action that would represent a
material variance from the plan that must be submitted to the Commissioner for
approval.
(c) With respect to the
granting of any waiver or variance of the minimum capital requirement, the
Commissioner may impose any condition, limitation, or restriction on such
increase or decrease as the Commissioner may deem necessary to ensure
compliance with law and regulations and to prevent unsafe and unsound
practices.
(d) The Commissioner may
withdraw or modify any increase or decrease granted pursuant to this section
if:
(1) the savings association fails to
comply with its capital plan;
(2)
the increase or decrease was granted contingent upon the occurrence of events
that do not subsequently occur;
(3)
the savings association undergoes a change of control or a material change in
management that was not approved by the Commissioner;
(4) the savings association engages in
practices inconsistent with achieving its minimum capital
requirement;
(5) information is
discovered that was not made available to the Commissioner at the time that the
increase or decrease was granted and that indicates that the increase or
decrease should not have been granted;
(6) the savings association engages in unsafe
and unsound practices, violates any provision of its certificate of formation
or bylaws, or violates any law, rule, or supervisory order applicable to the
savings association or any condition that the Commissioner has imposed upon the
savings association by written order or agreement; or
(7) the savings association fails to submit
the reports required by this section.
