[Code of Federal Regulations]
[Title 12, Volume 2, Parts 200 to 219]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR208.21]

[Page 170-171]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H)--Table of Contents
 
                    Subpart B--Investments and Loans
 
Sec. 208.21  Investments in premises and securities.

    (a) Investment in bank premises. No state member bank shall invest 
in bank premises, or in the stock, bonds, debentures, or other such 
obligations of any corporation holding the premises of such bank, or 
make loans to or upon the security of any such corporation unless:
    (1) The bank notifies the appropriate Reserve Bank at least fifteen 
days prior to such investment and has not received notice that the 
investment is subject to further review by the end of the fifteen day 
notice period;
    (2) The aggregate of all such investments and loans, together with 
the amount of any indebtedness incurred by any such corporation that is 
an affiliate of the bank (as defined in section 2 of the Banking Act of 
1933, as amended, 12 U.S.C. 221a), is less than or equal to the bank's 
perpetual preferred stock and related surplus plus common stock plus 
surplus, as those terms are defined in the FFIEC Consolidated Reports of 
Condition and Income; or
    (3)(i) The aggregate of all such investments and loans, together 
with the amount of any indebtedness incurred by any such corporation 
that is an affiliate of the bank, is less than or equal to 150 percent 
of the bank's perpetual preferred stock and related surplus plus common 
stock plus surplus, as those terms are defined in the FFIEC Consolidated 
Reports of Condition and Income; and
    (ii) The bank:
    (A) Has a CAMELS composite rating of 1 or 2 under the Uniform 
Interagency Bank Rating System \5\ (or an equivalent rating under a 
comparable rating system) as of the most recent examination of the bank; 
and
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    \5\ See FRRS 3-1575 for an explanation of the Uniform Interagency 
Bank Rating System. (For availability, see 12 CFR 261.10(f).)
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    (B) Is well capitalized and will continue to be well capitalized, in 
accordance with subpart D of this part, after the investment or loan.
    (b) Investments in securities. Member banks are subject to the same 
limitations and conditions with respect to purchasing, selling, 
underwriting, and holding investment securities and

[[Page 171]]

stocks as are national banks under 12 U.S.C. 24, para. 7th. To determine 
whether an obligation qualifies as an investment security for the 
purposes of 12 U.S.C. 24, para. 7th, and to calculate the limits with 
respect to the purchase of such obligations, a state member bank may 
look to part 1 of the rules of the Comptroller of the Currency (12 CFR 
part 1) and interpretations thereunder. A state member bank may consult 
the Board for a determination with respect to the application of 12 
U.S.C. 24, para. 7th, with respect to issues not addressed in 12 CFR 
part 1. The provisions of 12 CFR part 1 do not provide authority for a 
state member bank to purchase securities of a type or amount that the 
bank is not authorized to purchase under applicable state law.