For the purpose of this part, the following
definitions apply unless otherwise specified:
(a) Affiliate means any company of which a member bank is a subsidiary or any
other subsidiary of that company.
(b) Company means
any corporation, partnership, trust (business or otherwise), association,
joint venture, pool syndicate, sole proprietorship, unincorporated
organization, or any other form of business entity not specifically
listed herein. However, the term does not include —
(1) an insured depository institution (as
defined in 12 U.S.C. 1813) or
(2)
a corporation the majority of the shares of which are owned by the
United States or by any state.
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(c) (1) Control of a company or
bank means that a person directly or indirectly, or acting through
or in concert with one or more persons—
(i) owns, controls, or has the power
to vote 25 percent or more of any class of voting securities of the
company or bank;
(ii) controls
in any manner the election of a majority of the directors of the company
or bank; or
(iii) has the power
to exercise a controlling influence over the management or policies
of the company or bank.
(2) A person is presumed to have control, including the power to
exercise a controlling influence over the management or policies,
of a company or bank if —
(i) the person is—
(A) an executive officer or director of
the company or bank and
(B) directly
or indirectly owns, controls, or has the power to vote more than 10
percent of any class of voting securities of the company or bank;
or
(ii) (A) the person directly or indirectly owns, controls, or has
the power to vote more than 10 percent of any class of voting securities
of the company or bank, and
(B) no
other person owns, controls, or has the power to vote a greater percentage
of that class of voting securities.
(3) An individual is not considered
to have control, including the power to exercise a controlling influence
over the management or policies, of a company or bank solely by virtue
of the individual’s position as an officer or director of the company
or bank.
(4) A person may rebut
a presumption established by paragraph (c)(2) of this section by submitting
to the appropriate federal banking agency (as defined in 12 U.S.C.
1813(q)) written materials that, in the agency’s judgment, demonstrate
an absence of control.
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(d) (1) Director of a company
or bank means any director of the company or bank, whether or not
receiving compensation. An advisory director is not considered a director
if the advisory director—
(i) is not elected by the shareholders
of the company or bank,
(ii)
is not authorized to vote on matters before the board of directors,
and
(iii) provides solely general
policy advice to the board of directors.
(2) Extensions of credit to a director
of an affiliate of a bank are not subject to sections 215.4, 215.6,
and 215.8 if—
(i)
the director of the affiliate is excluded, by resolution of the board
of directors or by the bylaws of the bank, from participation in major
policymaking functions of the bank, and the director does not actually
participate in such functions;
(ii) the affiliate does not control the bank;
(iii) as determined annually, the assets
of the affiliate do not constitute more than 10 percent of the consolidated
assets of the company that—
(A) controls the bank; and
(B) is
not controlled by any other company; and
(iv) the director of the affiliate is
not otherwise subject to sections 215.4, 215.6, and 215.8.
(3) For purposes of paragraph (d)(2)(i)
of this section, a resolution of the board of directors or a corporate
bylaw may—
(i) include
the director (by name or by title) in a list of persons excluded from
participation in such functions; or
(ii) not include the director in a list of persons authorized (by
name or by title) to participate in such functions.
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(e) (1)
Executive
officer of a company or bank means a person who participates or
has authority to participate (other than in the capacity of a director)
in major policymaking functions of the company or bank, whether or
not the officer has an official title, the title designates the officer
an assistant, or the officer is serving without salary or other
compensation
1 The
chairman of the board, the president, every vice president, the cashier,
the secretary, and the treasurer of a company or bank are considered
executive officers, unless the officer is excluded, by resolution
of the board of directors or by the bylaws of the bank or company,
from participation (other than in the capacity of a director) in major
policymaking functions of the bank or company, and the officer does
not actually participate therein.
(2) Extensions of credit to an executive officer of an affiliate
of a bank are not subject to sections 215.4, 215.6, and 215.8 if—
(i) the executive officer
is excluded, by resolution of the board of directors or by the bylaws
of the bank, from participation in major policymaking functions of
the bank, and the executive officer does not actually participate
in such functions;
(ii) the affiliate
does not control the bank;
(iii)
as determined annually, the assets of the affiliate do not constitute
more than 10 percent of the consolidated assets of the company that—
(A) controls the bank;
and
(B) is not controlled by any other
company; and
(iv)
the executive officer of the affiliate is not otherwise subject to
sections 215.4, 215.6, and 215.8.
(3) For purposes of paragraphs (e)(1) and
(e)(2)(i) of this section, a resolution of the board of directors
or a corporate bylaw may—
(i) include the executive officer (by
name or by title) in a list of persons excluded from participation
in such functions; or
(ii) not
include the executive officer in a list of persons authorized (by
name or by title) to participate in such functions.
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(f) Foreign bank has the meaning given in 12 U.S.C. 3101(7).
(g) Immediate family means the spouse of an individual,
the individual’s minor children, and any of the individual’s children
(including adults) residing in the individual’s home.
(h) Insider means an executive officer, director, or principal shareholder,
and includes any related interest of such a person.
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(i)
Lending limit. The lending limit for a
member bank is an amount equal to the limit of loans to a single borrower
established by section 5200 of the Revised Statutes,
2 12 U.S.C. 84. This amount is 15 percent
of the bank’s unimpaired capital and unimpaired surplus in the case
of loans that are not fully secured, and an additional 10 percent
of the bank’s unimpaired capital and unimpaired surplus in the case
of loans that are fully secured by readily marketable collateral having
a market value, as determined by reliable and continuously available
price quotations, at least equal to the amount of the loan. The lending
limit also includes any higher amounts that are permitted by section
5200 of the Revised Statutes for the types of obligations listed therein
as exceptions to the limit. A member bank’s unimpaired capital and
unimpaired surplus equals:
(1) the bank’s tier 1 and tier 2 capital included in the bank’s risk-based
capital under the capital rule of the appropriate Federal banking
agency, based on the bank’s most recent consolidated report of condition
filed under 12 U.S.C. 1817(a)(3); and
(2) the balance of the bank’s allowance for loan and lease losses
or adjusted allowance for credit losses, as applicable, not included
in the bank’s tier 2 capital for purposes of the calculation of risk-based
capital under the capital rule of the appropriate Federal banking
agency, based on the bank’s most recent consolidated reports of condition
filed under 12 U.S.C. 1817(a)(3).
(3) Notwithstanding
paragraphs (i)(1) and (2) of this section, for a member bank that
is a qualifying community banking organization (as defined in section
217.12 of this chapter) that is subject to the community bank leverage
ratio framework (as defined in section 217.12 of this chapter), unimpaired
capital and unimpaired surplus equals tier 1 capital (as defined in
section 217.12 of this chapter and calculated in accordance with section
217.12(b) of this chapter) plus allowances for loan and lease losses
or adjusted allowance for credit losses, as applicable.
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(j) Member
bank means any banking institution that is a member of the Federal
Reserve System, including any subsidiary of a member bank. The term
does not include any foreign bank that maintains a branch in the United
States, whether or not the branch is insured (within the meaning of
12 U.S.C. 1813(s)) and regardless of the operation of 12 U.S.C. 1813(h)
and 12 U.S.C. 1828(j)(3)(B).
(k) Pay an overdraft on an
account means to pay an amount upon the order of an account holder
in excess of funds on deposit in the account.
(l) Person means an individual or a company.
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(m) (1) Principal shareholder means a person (other than an insured bank) that directly or indirectly,
or acting through or in concert with one or more persons, owns, controls,
or has the power to vote more than 10 percent of any class of voting
securities of a member bank or company. Shares owned or controlled
by a member of an individual’s immediate family are considered to
be held by the individual.
(2) A
principal shareholder of a member bank does not include a company
of which a member bank is a subsidiary.
(n) Related
interest of a person means—
(1) a company that is controlled by that
person or
(2) a political or campaign
committee that is controlled by that person or the funds or services
of which will benefit that person.
(o) Subsidiary has the meaning given in 12 U.S.C. 1841(d), but does not include
a subsidiary of a member bank.
