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These excerpts taken from the MBFI 10-K filed Feb 27, 2009. Prompt
Corrective Action. The Federal Deposit Insurance
Corporation Improvement Act of 1991, among other things, identifies five capital
categories for insured depository institutions (well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within these
categories. This act imposes progressively more restrictive
constraints on operations, management and capital distributions, depending on
the category in which an institution is classified. Failure to meet
the capital guidelines could also subject a banking institution to capital
raising requirements. An "undercapitalized" bank must develop a
capital restoration plan and its parent holding company must guarantee that
bank's compliance with the plan. The liability of the parent holding
company under any such guarantee is limited to the lesser of five percent of the
bank's assets at the time it became "undercapitalized" or the amount needed to
comply with the plan. Furthermore, in the event of the bankruptcy of
the parent holding company, such guarantee would take priority over the parent's
general unsecured creditors. In addition, the Federal Deposit
Insurance Corporation Improvement Act requires the various regulatory agencies
to prescribe certain non-capital standards for safety and soundness relating
generally to operations and management, asset quality and executive compensation
and permits regulatory action against a financial institution that does not meet
these standards.
The various federal regulatory agencies
have adopted substantially similar regulations that define the five capital
categories identified by the Federal Deposit Insurance Corporation Improvement
Act, using the total risk-based capital, Tier 1 risk-based capital and leverage
capital ratios as the relevant capital measures. These regulations
establish various degrees of corrective action to be taken when an institution
is considered undercapitalized. Under the regulations, a "well
capitalized" institution must have a Tier 1 risk-based capital ratio of at least
6%, a total risk-based capital ratio of at least 10% and a leverage ratio of at
least 5% and not be subject to a capital directive or order. An
institution is "adequately capitalized" if it has a Tier 1 risk-based capital
ratio of at least 4%, a total risk-based capital ratio of at least 8% and a
leverage ratio of at least 4% (3% in certain circumstances). An
institution is “undercapitalized” if it has a Tier 1 risk-based capital ratio of
less than 4%, a total risk-based capital ratio of less than 8% or a leverage
ratio of less than 4% (3% in certain circumstances). An institution
is "significantly undercapitalized" if it has a Tier 1 risk-based capital ratio
of less than 3%, a total risk-based capital ratio of less than 6% or a leverage
ratio of less than 3%. An institution is "critically
undercapitalized" if its tangible equity is equal to or less than 2% of total
assets. Generally, an institution may be reclassified in a lower
capitalization category if it is determined that the institution is in an unsafe
or unsound condition or engaged in an unsafe or unsound practice.
As of December 31, 2008, our subsidiary
bank met the requirements to be classified as “well-capitalized.”
Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within these categories. This act imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of five percent of the bank's assets at the time it became "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, the Federal Deposit Insurance Corporation Improvement Act requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet these standards. The various federal regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by the Federal Deposit Insurance Corporation Improvement Act, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. These regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under the regulations, a "well capitalized" institution must have a Tier 1 risk-based capital ratio of at least 6%, a total risk-based capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive or order. An institution is "adequately capitalized" if it has a Tier 1 risk-based capital ratio of at least 4%, a total risk-based capital ratio of at least 8% and a leverage ratio of at least 4% (3% in certain circumstances). An institution is “undercapitalized” if it has a Tier 1 risk-based capital ratio of less than 4%, a total risk-based capital ratio of less than 8% or a leverage ratio of less than 4% (3% in certain circumstances). An institution is "significantly undercapitalized" if it has a Tier 1 risk-based capital ratio of less than 3%, a total risk-based capital ratio of less than 6% or a leverage ratio of less than 3%. An institution is "critically undercapitalized" if its tangible equity is equal to or less than 2% of total assets. Generally, an institution may be reclassified in a lower capitalization category if it is determined that the institution is in an unsafe or unsound condition or engaged in an unsafe or unsound practice. As of December 31, 2008, our subsidiary bank met the requirements to be classified as “well-capitalized.” Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within these categories. This act imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of five percent of the bank's assets at the time it became "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, the Federal Deposit Insurance Corporation Improvement Act requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet these standards. The various federal regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by the Federal Deposit Insurance Corporation Improvement Act, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. These regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under the regulations, a "well capitalized" institution must have a Tier 1 risk-based capital ratio of at least 6%, a total risk-based capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive or order. An institution is "adequately capitalized" if it has a Tier 1 risk-based capital ratio of at least 4%, a total risk-based capital ratio of at least 8% and a leverage ratio of at least 4% (3% in certain circumstances). An institution is “undercapitalized” if it has a Tier 1 risk-based capital ratio of less than 4%, a total risk-based capital ratio of less than 8% or a leverage ratio of less than 4% (3% in certain circumstances). An institution is "significantly undercapitalized" if it has a Tier 1 risk-based capital ratio of less than 3%, a total risk-based capital ratio of less than 6% or a leverage ratio of less than 3%. An institution is "critically undercapitalized" if its tangible equity is equal to or less than 2% of total assets. Generally, an institution may be reclassified in a lower capitalization category if it is determined that the institution is in an unsafe or unsound condition or engaged in an unsafe or unsound practice. As of December 31, 2008, our subsidiary bank met the requirements to be classified as “well-capitalized.” These excerpts taken from the MBFI 10-K filed Feb 29, 2008. Prompt Corrective
Action. The Federal Deposit Insurance Corporation Improvement
Act of 1991, among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within these
categories. This act imposes progressively more restrictive
constraints on operations, management and capital distributions, depending on
the category in which an institution is classified. Failure to meet
the capital guidelines could also subject a banking institution to capital
raising requirements. An "undercapitalized" bank must develop a
capital restoration plan and its parent holding company must guarantee that
bank's compliance with the plan. The liability of the parent holding
company under any such guarantee is limited to the lesser of five percent of the
bank's assets at the time it became "undercapitalized" or the amount needed to
comply with the plan. Furthermore, in the event of the bankruptcy of
the parent holding company, such guarantee would take priority over the parent's
general unsecured creditors. In addition, the Federal Deposit
Insurance Corporation Improvement Act requires the various regulatory agencies
to prescribe certain non-capital standards for safety and soundness relating
generally to operations and management, asset quality and executive compensation
and permits regulatory action against a financial institution that does not meet
these standards.
The various federal regulatory agencies
have adopted substantially similar regulations that define the five capital
categories identified by the Federal Deposit Insurance Corporation Improvement
Act, using the total risk-based capital, Tier 1 risk-based capital and leverage
capital ratios as the relevant capital measures. These regulations
establish various degrees of corrective action to be taken when an institution
is considered undercapitalized. Under the regulations, a "well
capitalized" institution must have a Tier 1 risk-based capital ratio of at least
6%, a total risk-based capital ratio of at least 10% and a leverage ratio of at
least 5% and not be subject to a capital directive or order. An
institution is "adequately capitalized" if it has a Tier 1 risk-based capital
ratio of at least 4%, a total risk-based capital ratio of at least 8% and a
leverage ratio of at least 4% (3% in certain circumstances). An
institution is “undercapitalized” if it has a Tier 1 risk-based capital ratio of
less than 4%, a total risk-based capital ratio of less than 8% or a leverage
ratio of less than 4% (3% in certain circumstances). An institution
is "significantly undercapitalized" if it has a Tier 1 risk-based capital ratio
of less than 3%, a total risk-based capital ratio of less than 6% or a leverage
ratio of less than 3%. An institution is "critically
undercapitalized" if its tangible equity is equal to or less than 2% of total
assets. Generally, an institution may be reclassified in a lower
capitalization category if it is determined that the institution is in an unsafe
or unsound condition or engaged in an unsafe or unsound practice.
As of December 31, 2007, our subsidiary
bank met the requirements to be classified as “well-capitalized.”
Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991, among other things, identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within these categories. This act imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of five percent of the bank's assets at the time it became "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, the Federal Deposit Insurance Corporation Improvement Act requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet these standards. The various federal regulatory agencies have adopted substantially similar regulations that define the five capital categories identified by the Federal Deposit Insurance Corporation Improvement Act, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures. These regulations establish various degrees of corrective action to be taken when an institution is considered undercapitalized. Under the regulations, a "well capitalized" institution must have a Tier 1 risk-based capital ratio of at least 6%, a total risk-based capital ratio of at least 10% and a leverage ratio of at least 5% and not be subject to a capital directive or order. An institution is "adequately capitalized" if it has a Tier 1 risk-based capital ratio of at least 4%, a total risk-based capital ratio of at least 8% and a leverage ratio of at least 4% (3% in certain circumstances). An institution is “undercapitalized” if it has a Tier 1 risk-based capital ratio of less than 4%, a total risk-based capital ratio of less than 8% or a leverage ratio of less than 4% (3% in certain circumstances). An institution is "significantly undercapitalized" if it has a Tier 1 risk-based capital ratio of less than 3%, a total risk-based capital ratio of less than 6% or a leverage ratio of less than 3%. An institution is "critically undercapitalized" if its tangible equity is equal to or less than 2% of total assets. Generally, an institution may be reclassified in a lower capitalization category if it is determined that the institution is in an unsafe or unsound condition or engaged in an unsafe or unsound practice. As of December 31, 2007, our subsidiary bank met the requirements to be classified as “well-capitalized.” | EXCERPTS ON THIS PAGE:
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