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Microcap & Penny Stocks : PanAmerican BanCorp (PABN)
PABN 0.000010000.0%Mar 7 3:00 PM EST
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To: Lucky Charm who wrote (29314)3/18/1999 12:57:00 PM
From: wonk  Read Replies (2) of 43774
 
2. Leverage Ratio Standard
The agencies use uniform leverage ratio standards for purposes of the capital ratio thresholds used in defining the prompt corrective action (PCA) categories under section 38 of the Federal Deposit Insurance Act (FDIA). Institutions, other than CAMEL-1 rated institutions, must satisfy a leverage ratio standard requiring institutions to have Tier 1 (core) capital equal to four percent of assets to be adequately capitalized for purposes of the prompt corrective action system. The leverage ratio standard for CAMEL-1 rated institutions only requires them to have Tier 1 (core) capital equal to three percent of assets, although most CAMEL-1 rated institutions exceed this requirement by a wide margin. The leverage ratio requirements in the banking agencies' capital regulations mirror those in their PCA regulations.

Although the OTS capital rule continues to contain a three percent leverage ratio requirement, the four percent leverage ratio requirement to be ''adequately capitalized'' for PCA purposes is, in effect, the controlling standard for thrifts.

access.gpo.gov

For example, if one has 100 million in loans outstanding (assets to a bank or thrift), it must have $4 million of "real" capital.

One of many criteria, but the capital requirements can be the most onerous since capital has to increase simultaneously and commeasurately to the asset base.

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