1 State briefly in a footnote the basis for determining the amounts shown in this column. If market value is determined on any basis other than market quotation at balance sheet date, explain. Stock of the Federal Reserve Bank should be valued at book value for purposes of this Schedule. SCHEDULE III.-Loans 1 1. Real estate loans (include only loans secured primarily by real estate): a. Construction and land development. b. Secured by farmland (including farm residential and other improvements). c. Secured by 1-4 family residential properties: (1) Insured by FHA or guaranteed by VA. (2) Conventional. e. Secured by nonfarm nonresidential properties. 2. Loans to financial institutions: a. To real estate investment trusts and mortgage companies. b. To domestic commercial banks. c. To banks in foreign countries. d. To other depository institutions (Mutual Savings Banks, Savings and Loan Associations, Credit Unions) e. To other financial institutions. 3. Loans for purchasing or carrying securities (secured or unsecured): a. To brokers and dealers in securities. b. Other loans for purchasing or carrying securities. 4. Loans to farmers (except loans secured primarily by real estate; include loans for households and personal expenditures). 5. Commercial and industrial loans (except those secured primarily by real estate). 6. Loans to individuals for household, family, and other personal expenditures (include purchased paper): a. To purchase private passenger automobiles on installment basis. b. Credit cards and related plans: (1) Retail (charge account) credit card plans. (2) Check credit and revolving credit plans. c. To purchase other retail consumer goods on installment basis: (2) Other retail consumer goods (exclude credit cards and related plans). d. Installment loans to repair and modernize residential property. e. Other installment loans for household, family, and other personal expenditures. f. Single-payment loans for household, family, and other personal expenditures. 7. All other loans. 8. Total loans, Gross (sum of Items 1 through 7). 9. Less: Unearned income on loans. 10. Total loans. 1 Detailed instructions for the preparation of this schedule are contained within the Instructions for Preparation of Consolidated Reports of Condition and Reports of Income by National Banking Associations, revised March 1976. SCHEDULE IV.—Bank premises, equipment, furniture, and fixtures 1 If impractical to consolidate foreign branch and foreign subsidiary bank premises and equipment in accordance with the breakdown required by this schedule, a separate caption stating the total amount of all such property may be inserted. Such action should be explained in a footnote. State briefly in a footnote the basis of determining the amounts in this column if different than historical cost. 3 If provision for depreciation and amortization is credited in the books directly to the asset accounts, the amount for the last fiscal year shall be stated in an explanatory footnote. The nature and amount of significant additions (other than provisions for depreciation and amortization) and deductions shall be stated in an explanatory footnote. 5 Show in a footnote totals (corresponding to the 1st 2 columns) representing amounts reported for Federal income tax purposes. SCHEDULE V.-Investments in, dividend income from, and share in earnings or losses of unconsolidated subsidiaries and associated companies 3 Equity shall include advances reported in preceding column to the extent recoverable. In a footnote state as to any dividends other than cash, the basis on which they have been reported as income. Also, if any such dividend received has been credited to income in an amount differing from that charged to surplus and/or undivided profits by the disbursing subsidiary, state the amount of such difference and explain. Those foreign investments, the enumeration of which would be detrimental to the bank, may be grouped. 1 Do not include any entries pertaining to reserve accounts established by segregation of the bank's undivided profits account. 2 Describe briefly in a footnote any such additions. Describe briefly in a footnote the basis used in determining the amount accumulated in the reserve at the end of the period. 4 Indicate in a footnote whether the bank's reserve for bad debts computed for Federal income tax return purposes is at the maximum allowable pursuant to Treasury tax formula. In addition, set forth a summary reconciliation of any material difference between the reserve for possible loan losses reported herein and the reserve for bad debts computed for Federal income tax purposes. SCHEDULE VIII.-Deposits in domestic offices1 Deposits 1. Deposits of individuals, partnerships, corporations: a. Individuals and nonprofit organizations. b. Corporations and other profit organizations. c. Total, (sum of 1a and 1b). d. Mutual savings banks.. e. Deposits accumulated for payment of personal loans.. f. Total.. 2. Deposits of U.S. Government. 3. Deposits of States and political subdivisions. 4. Deposits of foreign governments and official institutions, central banks, and international institutions. 5. Deposits of commercial banks in the United States. 6. Deposits of banks in foreign countries, including balances of foreign branches of other American banks.. 1 Detailed instructions for the preparation of this schedule are contained within the "Instructions for Preparation of Consolidated Reports of Condition and Reports of Income by National Banking Associations," revised March 1976. 1 Sources and applications of funds shall be shown separately by amounts when they exceed 5 pct of the average of total funds provided during the reported periods. 2 Historically, this statement has been prepared primarily from a comparison of period-end balances. The bank may, at its option, prepare this statement using average daily balances for changes in asset and liability accounts. If the use of the average daily balance method results in the presentation of data which materially differ from those which would have been shown if the period-end method had been used, such differences shall be disclosed in a note to the financial statements. [41 FR 44829, Oct. 12, 1976] INTERPRETATIONS § 11.101 Interpretation of definition of "officer." (a) Section 11.2(o) defines the term "officer" to mean any person who occupies one or more of certain enumerated positions in a national or District bank "and any other person who participates in major policy-making functions of the bank." Among the positions so enumerated is that of "Vice President", but it is also provided that a person bearing the title of "Vice President" who does not "participate in major policy-making functions of the bank" is not an officer for the purposes of this Part 11. (b) All persons holding any position enumerated in § 11.2(o), except those holding a position as "Vice President" are officers for purposes of this Part 11 regardless of whether they participate in major policy-making functions. The second sentence of § 11.2(o), which provides that certain persons are not officers If they do not participate in major policymaking functions, applies only to persons with the title of "Vice President". § 11.102 Disclosure of loans to "insiders." (a) This interpretation sets forth the position of the Comptroller of the Currency with respect to disclosures of loans to "insiders"-that is, officers, directors, and persons holding more than 10 percent of the bank's stock-in management proxy statements furnished in accordance with the requirements of §§ 11.5 and 11.51 (Form F-5). This interpretation is also applicable to disclosure of such transactions under comparable provisions relating to registration of bank securities (§ 11.41; Form F-1) under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 787). (b) Item 7(f) of Form F-5 and Item 13(a) of Form F-1 in effect require a description of any material1 interest of any insider or any of his "associates"2 in any rnaterial transaction to which the bank was, or is to be, a party. These items contain a number of specific exemptive in 1"The term 'material', when used to qualify a requirement for furnishing of information as to any subject, limits the information required to those matters as to which an average prudent investor ought reasonably to be informed before buying or selling the security registered." (§ 11.2(n).) 2 "The term 'associate', when used to indicate a relationship with any person, means (1) any corporation or organization (other than the bank or a majority-owned subsidiary of the bank) of which such person is an officer or partner or is, directly or indirectly, either alone or together with one or more members of his immediate family, the beneficial owner of 10 percent or more of any class of equity securities, (2) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as a trustee or in a similar fiduciary capacity, and (3) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of the bank or any of its parents or subsidiaries." (§ 11.2(d).) structions-for example, no disclosure is required where the only interlock is that a director of a bank is a director and/or officer of another corporation that is a party to the transaction. Generally, these items require disclosure of loans to a corporate borrower only where insiders, individually or with members of their immediate families' own at least 10 percent of the borrower's outstanding stock. (c) The Comptroller of the Currency does not regard loans and other extensions of credit by a registrant bank in the ordinary course of its business as "material" for the purposes of this part (and therefore required to be disclosed unless otherwise specifically exempted by the instructions in these Items) if such loans (1) are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other than insiders, (2) at no time aggregate more than 10 percent of the equity capital accounts of the bank or $10 million, whichever is less, and (3) do not involve more than the normal risk of collectibility or present other unfavorable features. (d) If extensions of credit to a particular insider and/or his associates are not individually "material" as defined in the preceding paragraph, the instructions to these items nevertheless require disclosure of aggregate extensions of credit to all insiders as a group if such aggregate amount exceeds 20 percent of the bank's equity capital accounts, regardless of the fact that such extensions of credit may have been made in the ordinary course of the bank's business. Thus, the overall effect of these items is to require disclosure in at least three situations: (1) The amount and the name of the insider must be disclosed where loans to such insider and/or his associates are "material" because their total amount exceeds the lesser of 10 percent of equity capital or $10 million; (2) The amount and the name of the insider must be disclosed as to any loans in excess of $40,000 which were made 3 "The term 'immediate family' includes a person's (1) spouse; (2) son, daughter, and descendant of either; (3) father, mother, and ancestor of either; (4) stepson and stepdaughter; and (5) stepfather and stepmother. For the purpose of determining whether any of the foregoing relationships exist, a legally adopted child shall be considered a child by blood." (§ 11.2 (k).) at preferential rates, or which were otherwise made out of the ordinary course of business, or which involve more than a normal risk, even if such loans do not exceed 10 percent of equity capital; (3) The amount must be disclosed where all loans to insiders and/or their associates in the aggregate exceed 20 percent of equity capital. (e) In aggregating any loan amounts for purposes of these items, transactions which are required to be reported pursuant to any other provisions of such items or which are exempted by any such provisions, need not be included. (f) It should also be noted that item 7(e) of Form F-5 requires disclosure of any liability to the bank that appears to have arisen under section 16 of the Securities Exchange Act of 1934 (15 U.S.C. 78p) as a result of "insider" transactions in the bank's stock (or other equity security). [40 FR 30039, July 17, 1975; 40 FR 32735, Aug. 4, 1975, as amended at 41 FR 44835, Oct. 12, 1976] § 11.103 Interpretation of definitions of “affiliate,” “majority-owned subsidiary," "parent" and "subsidiary.” In determining whether a person is an "affiliate" or "parent" of a bank or whether a bank is a "subsidiary" or "majority-owned subsidiary” of a person within the meaning of those terms as defined in § 11.2, voting securities of the bank held by a corporation all of the stock of which is directly owned by the United States Government shall not be taken into consideration. transactions qualify for special tax treatment under the Internal Revenue Code of 1954, as amended, and regulations promulgated thereunder: Provided, That the following conditions are met: (a) Application for approval shall be made to the Comptroller of the Currency, Washington, D.C. 20220, in the form of a letter accompanied by the following information: (1) Description of all material provisions of the plan. (2) Proposed notice of shareholders' meeting, proxy and proxy statement. (3) Number of shares of authorized but unissued stock to be allocated to the plan. (4) Proposed amendments to articles of association creating authorized but unissued stock and eliminating preemptive rights as to the shares reserved under the plan; (b) The plan is administered by & committee, none of whose members may participate in the plan; (c) The number of shares allocable to any person under the plan is reasonable in relation to the purpose of the plan and the needs of the bank; and (d) In the case of a stock option plan, the number of shares subject to the plan is not unreasonable in relation to the bank's capital structure and anticipated growth. § 13.2 Source of shares. Shares issued to employees pursuant to this part may be authorized but unissued stock which has been authorized by stockholders in accordance with the procedures outlined in Part 14 of this chapter. § 13.3 Terms and procedures. (a) Employee stock option and stock purchase plans or agreements may provide that options may be exercisable or that shares may be purchased on any business day. Stock certificates representing the shares purchased pursuant to the exercise of options may be validly issued to such purchasers upon receipt of the purchase price. (b) The increase in capital represented by stock certificates issued pursuant to this section will not be applicable, however, for the purposes of permitted investment in banking premises, 12 U.S.C. 371d, permitted indebtedness, 12 U.S.C. 82, lending limits, 12 U.S.C. 84, branches, 12 U.S.C. 36 and other like purposes, until a notarized notice speci fying the amount paid into the bank therefor, shall be executed by the prestdent, vice president or cashier of the bank and filed with the Regional Administrator of National Banks, and until the Comptroller's Certificate has been obtained specifying the amount of such increase of capital stock, and his approval thereof, and that it has been duly paid in as part of the capital of such association. PART 14- CHANGES IN CAPITAL STRUCTURE Sec. 14.2 Authorized but unissued stock. 14.3 Stock dividends. 14.4 Preferred stock. 14.5 Capital debentures. AUTHORITY: The provisions of this Part 14 issued under R.S. 324 et seq., as amended; 12 U.S.O. 1 et seq. SOURCE: The provisions of this Part 14 appear at 31 FR 6954, May 12, 1966, unless otherwise noted. § 14.2 Authorized but unissued stock. (a) Any national banking association, with the approval of the Comptroller and by vote of stockholders owning twothirds of the stock of the bank entitled to vote, may authorize an increase in the common stock of the bank in the category of authorized but unissued stock, except that the approval of the Comptroller shall not be required where the resulting amount of common stock in the category of authorized but unissued stock will satisfy either of the following criteria: (1) Where the resulting total amount of authorized but unissued stock will be free of preemptive rights of shareholders and will not exceed 25 percent of the currently issued and outstanding stock. The 25 percent limitation may be calculated without regard to authorized but unissued stock which is specifically designated as being reserved for issuance in connection with employee stock option plans, employee stock purchase plans, employee bonus plans, or other similar programs: Provided, That such plan has been approved by the Comptroller of the Currency, and shares held for the purpose of satisfying the requirements of convertible capital notes or convertible preferred stock subject to the Comptroller's approval of the converti |