Except as modified in this section
or unless the context otherwise requires, the terms used in this regulation
have the same meanings as set forth in the relevant statutes.
(a) Affiliate means any company that controls,
is controlled by, or is under common control with, another company.
(b) (1) Bank means—
(i) an insured bank as defined in section
3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)); or
(ii) an institution
organized under the laws of the United States which both—
(A) accepts demand deposits or deposits that the depositor may withdraw
by check or similar means for payment to third parties or others;
and
(B) is engaged in
the business of making commercial loans.
(2) “Bank”
does not include those institutions qualifying under the exceptions
listed in section 2(c)(2) of the BHC Act (12 U.S.C. 1841(c)(2)).
4-004
(c) (1) Bank holding company means any company (including a bank) that has direct or indirect
control of a bank, other than control that results from the ownership
or control of—
(i) voting securities held in good faith
in a fiduciary capacity (other than as provided in paragraphs (e)(2)(ii)
and (iii) of this section) without sole discretionary voting authority, or as
otherwise exempted under section 2(a)(5)(A) of the BHC Act;
(ii) voting securities
acquired and held only for a reasonable period of time in connection
with the underwriting of securities, as provided in section 2(a)(5)(B)
of the BHC Act;
(iii) voting rights to voting securities acquired for the sole purpose
and in the course of participating in a proxy solicitation, as provided
in section 2(a)(5)(C) of the BHC Act;
(iv) voting securities acquired in satisfaction
of debts previously contracted in good faith, as provided in section
2(a)(5)(D) of the BHC Act, if the securities are divested within two
years of acquisition (or such later period as the Board may permit
by order); or
(v)
voting securities of certain institutions owned by a thrift institution
or a trust company, as provided in sections 2(a)(5)(E) and (F) of
the BHC Act.
(2) Except for the purposes of section 225.4(b) of this subpart and
subpart E of this part, or as otherwise provided in this part, the
term “bank holding company” includes a foreign banking
organization. For the purposes of subpart B of this part, “bank
holding company” includes a foreign banking organization only
if it owns or controls a bank in the United States.
4-005
(d) (1) Company includes
any bank, corporation, general or limited partnership, association
or similar organization, business trust, or any other trust unless
by its terms it must terminate either within 25 years, or within 21
years and 10 months after the death of individuals living on the effective
date of the trust.
(2) “Company” does not include any organization, the
majority of the voting securities of which are owned by the United
States or any state.
(3) Testamentary trusts exempt. Unless
the Board finds that the trust is being operated as a business trust
or company, a trust is presumed not to be a company if the trust—
(i) terminates within 21 years and 10 months after the death of grantors
or beneficiaries of the trust living on the effective date of the
trustor within 25 years;
(ii) is a testamentary or inter vivos
trust established by an individual or individuals for the benefit
of natural persons (or trusts for the benefit of natural persons)
who are related by blood, marriage, or adoption;
(iii) contains only assets previously
owned by the individual or individuals who established the trust;
(iv) is not a Massachusetts
business trust; and
(v) does not issue shares, certificates, or any other evidence of
ownership.
(4) Qualified limited partnerships exempt. “Company” does not include a qualified limited partnership,
as defined in section 2(o)(10) of the BHC Act.
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(e) (1) Control of a
company means (except for the purposes of subpart E of this part)—
(i) ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of voting securities of the company,
directly or indirectly or acting through one or more other persons;
(ii) control in any
manner over the election of a majority of the directors, trustees,
or general partners (or individuals exercising similar functions)
of the company;
(iii) the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the company, as determined
by the Board after notice and opportunity for hearing in accordance
with section 225.31 of subpart D of this regulation; or
(iv) conditioning in any
manner the transfer of 25 percent or more of the outstanding shares
of any class of voting securities of a company upon the transfer of
25 percent or more of the outstanding shares of any class of voting
securities of another company.
4-007
(2) A company is deemed to control voting
securities or assets owned, controlled, or held, directly or indirectly:
(i) By the company, or by any subsidiary of the company;
(ii) That the company has
power to vote or to dispose of;
(iii) In a fiduciary capacity for the
benefit of the company or any of its subsidiaries;
(iv) In a fiduciary capacity (including
by pension and profit-sharing trusts) for the benefit of the shareholders,
members, or employees (or individuals serving in similar capacities)
of the company or any of its subsidiaries; or
(v) According to the standards under
section 225.9 of this part.
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(f) Foreign banking organization and qualifying foreign
banking organization have the same meanings as provided in section
211.21(n) and section 211.23 of the Board’s Regulation K (12
CFR 211.21(n) and 211.23).
(g) Insured depository
institution includes an insured bank as defined in section 3(h)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)) and a savings
association.
(h) Lead insured depository institution means the largest insured depository institution controlled by the
bank holding company as of the quarter ending immediately prior to
the proposed filing, based on a comparison of the average total risk-weighted
assets controlled during the previous 12-month period be each insured
depository institution subsidiary of the holding company. For purposes
of this paragraph (h), for 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), average total risk-weighted assets equal
the qualifying community banking organization’s average total
consolidated assets (as used in section 217.12 of this chapter).
4-008.1
(i) Management official means any officer,
director (including honorary or advisory directors), partner, or trustee
of a bank or other company, or any employee of the bank or other company
with policymaking functions.
(j) Nonbank bank means any institution that—
(1) became a bank as a result of enactment
of the Competitive Equality Amendments of 1987 (Pub. L. No. 100-86),
on the date of enactment (August 10, 1987); and
(2) was not controlled by a bank holding
company on the day before the enactment of the Competitive Equality
Amendments of 1987 (August 9, 1987).
(k) Outstanding shares means any voting securities, but does
not include securities owned by the United States or by a company
wholly owned by the United States.
(l) Person includes an individual, bank, corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, or any other form of entity.
4-008.2
(m) Savings association means—
(1) any federal savings association or
federal savings bank;
(2) any building and loan association, savings and loan association,
homestead association, or cooperative bank if such association or
cooperative bank is a member of the Savings Association Insurance
Fund; and
(3) any savings
bank or cooperative which is deemed by the director of the Office
of Thrift Supervision to be a savings association under section 10(l) of the Home Owners’ Loan Act.
4-009
(n) Shareholder.
(1) Controlling shareholder means
a person that owns or controls, directly or indirectly, 25 percent
or more of any class of voting securities of a bank or other company.
(2) Principal shareholder means a person that owns or controls, directly or indirectly, 10
percent or more of any class of voting securities of a bank or other
company, or any person that the Board determines has the power, directly
or indirectly, to exercise a controlling influence over the management
or policies of a bank or other company.
(o) Subsidiary means a bank or other company that is controlled
by another company, and refers to a direct or indirect subsidiary
of a bank holding company. An indirect subsidiary is a bank or other
company that is controlled by a subsidiary of the bank holding company.
(p) United States means the United States
and includes any state of the United States, the District of Columbia,
any territory of the United States, Puerto Rico, Guam, American Samoa,
and the Virgin Islands.
4-010
(q) (1) Voting securities means shares of common or preferred stock,
general or limited partnership shares or interests, or similar interests
if the shares or interest, by statute, charter, or in any manner,
entitle the holder—
(i) to vote for or to select directors,
trustees, or partners (or persons exercising similar functions of
the issuing company); or
(ii) to vote on or to direct the conduct
of the operations or other significant policies of the issuing company.
(2) Nonvoting securities. Common shares, preferred
shares, limited partnership interests, limited liability company interests,
or similar interests are not voting securities if:
(i) Any
voting rights associated with the securities are limited solely to
the type customarily provided by statute with regard to matters that
would significantly and adversely affect the rights or preference
of the security, such as the issuance of additional amounts or classes
of senior securities, the modification of the terms of the security,
the dissolution of the issuing company, or the payment of dividends
by the issuing company when preferred dividends are in arrears;
(ii) The securities
represent an essentially passive investment or financing device and
do not otherwise provide the holder with control over the issuing
company; and
(iii)
The securities do not entitle the holder, by statute, charter, or
in any manner, to select or to vote for the selection of directors,
trustees, or partners (or persons exercising similar functions) of
the issuing company; except that limited partnership interests or
membership interests in limited liability companies are not voting
securities due to voting rights that are limited solely to voting
for the removal of a general partner or managing member (or persons
exercising similar functions at the company) for cause, to replace
a general partner or managing member (or persons exercising similar
functions at the company) due to incapacitation or following the removal
of such person, or to continue or dissolve the company after removal
of the general partner or managing member (or persons exercising similar
functions at the company).
(3) Class of
voting shares. Shares of stock issued by a single issuer are
deemed to be the same class of voting shares, regardless of differences
in dividend rights or liquidation preference, if the shares are voted
together as a single class on all matters for which the shares have
voting rights other than matters described in paragraph (o)(2)(i)
of this section that affect solely the rights or preferences of the
shares.
4-010.1
(r) Well
capitalized.
(1)
Bank holding
company. In the case of a bank holding company,
1 “well capitalized” means
that—(i) on a consolidated basis, the bank holding company maintains a
total risk-based capital ratio of 10.0 percent or greater, as defined
in 12 CFR 217.10;
(ii) on a consolidated basis, the bank holding company maintains
a tier 1 risk based capital ratio of 6.0 percent or greater, as defined
in 12 CFR 217.10; and
(iii) the bank holding company is not subject to any written agreement,
order, capital directive, or prompt-corrective-action directive issued
by the Board to meet and maintain a specific capital level for any capital
measure.
(2) Insured and uninsured depository institution.
(i) Insured
depository institution. In the case of an insured depository
institution, “well capitalized” means that the institution
has and maintains at least the capital levels required to be well
capitalized under the capital adequacy regulations or guidelines applicable
to the institution that have been adopted by the appropriate federal
banking agency for the institution under section 38 of the Federal
Deposit Insurance Act (12 U.S.C. 1831o).
(ii) Uninsured
depository institution. In the case of a depository institution
the deposits of which are not insured by the Federal Deposit Insurance
Corporation, “well capitalized” means that the institution
has and maintains at least the capital levels required for an insured
depository institution to be well capitalized.
(3) Foreign banks.
(i) Standards
applied. For purposes of determining whether a foreign banking
organization qualifies under paragraph (r)(1) of this section—
(A) a foreign banking organization whose home-country supervisor,
as defined in section 211.21 of the Board’s Regulation K (12
CFR 211.21), has adopted capital standards consistent in all respects
with the Capital Accord of the Basel Committee on Banking Supervision
(Basel Accord) may calculate its capital ratios under the home-country
standard; and
(B) a foreign
banking organization whose home-country supervisor has not adopted
capital standards consistent in all respects with the Basel Accord
shall obtain a determination from the Board that its capital is equivalent
to the capital that would be required of a U.S. banking organization
under paragraph (r)(1) of this section.
(ii) Branches and agencies. For purposes of determining, under paragraph
(r)(1) of this section, whether a branch or agency of a foreign banking
organization is well capitalized, the branch or agency shall be deemed
to have the same capital ratios as the foreign banking organization.
(4) Notwithstaning
paragraphs (r)(1) through (3) of this section:
(i) A bank
holding company 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) is well capitalized if it satisfies the requirements
of paragraph (r)(1)(iii) of this section.
(ii) A depository institution 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) is
well capitalized.
4-010.2
(s) Well managed.
(1) In general. Except as otherwise provided in this part, a company or depository
institution is well managed if—
(i) at its most recent
inspection or examination or subsequent review by the appropriate
federal banking agency for the company or institution (or the appropriate
state banking agency in an examination described in section 10(d)
of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)), the company
or institution received—
(A) at least a satisfactory composite
rating; and
(B) at least
a satisfactory rating for management, if such a rating is given.
(ii)
In the case of a company or depository institution that has not received
an inspection or examination rating, the Board has determined, after
a review of the managerial and other resources of the company or depository
institution and after consulting with the appropriate federal and
state banking agencies, as applicable, for the company or institution,
that the company or institution is well managed.
(2) Merged depository institutions.
(i) Merger involving well-managed institutions. A depository institution that results from the merger of two or
more depository institutions that are well managed shall be considered
to be well managed unless the Board determines otherwise after consulting
with the appropriate federal and state banking agencies, as applicable,
for each depository institution involved in the merger.
(ii) Merger involving a poorly rated institution. A depository institution that results from the merger of a depository
institution that is well managed with one or more depository institutions
that are not well managed or have not been examined shall be considered
to be well managed if the Board determines, after a review of the
managerial and other resources of the resulting depository institution
and after consulting with the appropriate federal and state banking
agencies for the institutions involved in the merger, as applicable,
that the resulting institution is well managed.
(3) Foreign banking organizations. Except as otherwise provided
in this part, a foreign banking organization is considered well managed
if the combined operations of the foreign banking organization in
the United States have received at least a satisfactory composite
rating at the most recent annual assessment.
(t) Depository institution. For purposes of this part, the term “depository institution”
has the same meaning as in section 3(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(c)).
(u) Voting percentage. For purposes of this
part, the percentage of a class of a company’s voting securities
controlled by a person is the greater of:
(1) The quotient, expressed as a percentage,
of the number of shares of the class of voting securities controlled
by the person, divided by the number of shares of the class of voting
securities that are issued and outstanding, both as adjusted by section
225.9 of this part; and
(2) The quotient, expressed as a percentage, of the number of votes
that may be cast by the person on the voting securities controlled
by the person, divided by the total votes that are legally entitled
to be cast by the issued and outstanding shares of the class of voting
securities, both as adjusted by section 225.9 of this part.
