(2) Provisions applicable to undercapitalized, significantly undercapitalized, and critically undercapitalized banks. Immediately upon receiving notice or being deemed to have notice, as provided in § 208.42 or § 208.44, that the bank is undercapitalized, significantly undercapitalized, or critically undercapitalized, the bank shall become subject to the provisions of section 38 of the FDI Act:

1. (i) Restricting payment of capital distributions and management fees (section 38(d));
2. (ii) Requiring that the Board monitor the condition of the bank (section 38(e)(1));
3. (iii) Requiring submission of a capital restoration plan within the schedule established in this subpart (section 38(e)(2));
4. (iv) Restricting the growth of the bank's assets (section 38(e)(3)); and
5. (v) Requiring prior approval of certain expansion proposals (section 3(e)(4)).

(4) Additional provisions applicable to critically undercapitalized banks. In addition to the provisions of section 38 of the FDI Act described in paragraphs (a)(2) and (a)(3) of this section, immediately upon receiving notice or being deemed to have notice, as provided in § 208.32, that the bank is critically undercapitalized, the bank shall become subject to the provisions of section 38 of the FDI Act:

1. (i) Restricting the activities of the bank (section 38(h)(1)); and
2. (ii) Restricting payments on subordinated debt of the bank (section 38(h)(2)).
3. (b) Discretionary supervisory actions. In taking any action under section 38 that is within the Board's discretion to take in connection with: A member bank that is deemed to be undercapitalized, significantly undercapitalized, or critically undercapitalized, or has been reclassified as undercapitalized, or significantly undercapitalized; an officer or director of such bank; or a company that controls such bank, the Board shall follow the procedures for issuing directives under 12 CFR 263.202 and 263.204, unless otherwise provided in section 38 or this subpart.