[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR208.41]

[Page 238-239]
 
                       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 D--Prompt Corrective Action
 
Sec. 208.41  Definitions for purposes of this subpart.

    For purposes of this subpart, except as modified in this section or 
unless the context otherwise requires, the terms used have the same 
meanings as set forth in section 38 and section 3 of the FDI Act.
    (a) Control--(1) Control has the same meaning assigned to it in 
section 2 of the Bank Holding Company Act (12 U.S.C. 1841), and the term 
controlled shall be construed consistently with the term control.
    (2) Exclusion for fiduciary ownership. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares in a 
fiduciary capacity. Shares shall not be deemed to have been acquired in 
a fiduciary capacity if the acquiring insured depository institution or 
company has sole discretionary authority to exercise voting rights with 
respect to the shares.
    (3) Exclusion for debts previously contracted. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares acquired in 
securing or collecting a debt previously contracted in good faith, until 
two years after the date of acquisition. The two-year period may be 
extended at the discretion of the appropriate Federal banking agency for 
up to three one-year periods.
    (b) Controlling person means any person having control of an insured 
depository institution and any company controlled by that person.
    (c) Leverage ratio means the ratio of Tier 1 capital to average 
total consolidated assets, as calculated in accordance with the Board's 
Capital Adequacy Guidelines for State Member Banks: Tier 1 Leverage 
Measure (Appendix B to this part).
    (d) Management fee means any payment of money or provision of any 
other thing of value to a company or individual for the provision of 
management services or advice to the bank, or related overhead expenses, 
including payments related to supervisory, executive, managerial, or 
policy making functions, other than compensation to an individual in the 
individual's capacity as an officer or employee of the bank.
    (e) Risk-weighted assets means total weighted risk assets, as 
calculated in accordance with the Board's Capital Adequacy Guidelines 
for State Member Banks: Risk-Based Measure (Appendix A to this part).
    (f) Tangible equity means the amount of core capital elements as 
defined in the Board's Capital Adequacy Guidelines for State Member 
Banks: Risk-Based Measure (Appendix A to this part), plus the amount of 
outstanding cumulative perpetual preferred stock (including related 
surplus), minus all intangible assets except mortgage servicing assets 
to the extent that the Board determines that mortgage servicing assets 
may be included in calculating the bank's Tier 1 capital.
    (g) Tier 1 capital means the amount of Tier 1 capital as defined in 
the Board's Capital Adequacy Guidelines for State Member Banks: Risk-
Based Measure (Appendix A to this part).
    (h) Tier 1 risk-based capital ratio means the ratio of Tier 1 
capital to weighted risk assets, as calculated in accordance with the 
Board's Capital Adequacy Guidelines for State Member Banks: Risk-Based 
Measure (Appendix A to this part).
    (i) Total assets means quarterly average total assets as reported in 
a bank's Report of Condition and Income (Call Report), minus intangible 
assets as provided in the definition of tangible equity. At its 
discretion the Federal Reserve may calculate total assets using a bank's 
period-end assets rather than quarterly average assets.
    (j) Total risk-based capital ratio means the ratio of qualifying 
total capital to

[[Page 239]]

weighted risk assets, as calculated in accordance with the Board's 
Capital Adequacy Guidelines for State Member Banks: Risk-Based Measure 
(Appendix A to this part).

[63 FR 37652, July 13, 1998, as amended at 63 FR 42674, Aug. 10, 1998]