
[Code of Federal Regulations]
[Title 12, Volume 1]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR3]

[Page 14-15]
 
                       TITLE 12--BANKS AND BANKING
 
   CHAPTER I--COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY
 
PART 3--MINIMUM CAPITAL RATIOS; ISSUANCE OF DIRECTIVES--Table of Contents
 
Subpart A--Authority and Definitions

Sec. 3.1  Authority.

    This part is issued under the authority of 12 U.S.C. 1 et seq., 93a, 
161, 1818, 3907 and 3909.

[59 FR 64563, Dec. 15, 1994]

Sec. 3.2  Definitions.

    For the purposes of this part:
    (a) Adjusted total assets means the average total assets figure 
required to be computed for and stated in a bank's most recent quarterly 
Consolidated Report of Condition and Income (Call Report) minus end-of-
quarter intangible assets and deferred tax assets that are deducted from 
Tier 1 capital. The OCC reserves the right to require a bank to compute 
and maintain its capital ratios on the basis of actual, rather than 
average, total assets when necessary to carry out the purposes of this 
part.
    (b) Bank means a national banking association or District of 
Columbia Bank.
    (c) Tier 1 capital means Tier 1 capital as determined according to 
section 2 of appendix A of this part, including the deductions described 
therein.
    (d) Tier 2 capital means Tier 2 capital as determined according to 
section 2 of appendix A of this part, including the limitations 
described therein.
    (e) Total capital means Total capital as determined according to 
section 1(25) and section 2 of appendix A of this part, including the 
deductions described therein.

[55 FR 38800, Sept. 21, 1990, as amended at 60 FR 7907, Feb. 10, 1995]

Sec. 3.3  Transitional rules.

    Intangible assets, other than mortgage servicing rights, purchased 
prior to April 15, 1985, and accounted for in accordance with the 
instruction of the OCC, need not be deducted from Tier 1 capital until 
December 31, 1992. However, when combined with other qualifying 
intangible assets, these intangibles may not exceed 25 percent of Tier 1 
capital. After December 31, 1992, only those intangible assets that meet 
the criteria contained in section 2(c)(2) of appendix A will not be 
deducted from Tier 1 capital.

[55 FR 38800, Sept. 21, 1990]

Sec. 3.4  Reservation of authority.

    (a) Deductions from capital. Notwithstanding the definitions of Tier 
1 capital and Tier 2 capital in Sec. 3.2 (c) and (d), the OCC may find 
that a newly developed or modified capital instrument constitutes Tier 1 
capital or Tier 2 capital, and may permit one or more banks to include 
all or a portion of funds obtained through such capital instruments as 
Tier 1 or Tier 2 capital, permanently or on a temporary basis, for the 
purposes of compliance with this part or for other purposes. Similarly, 
the OCC may find that a particular intangible asset, deferred tax asset 
or credit-enhancing interest-only strip need not be deducted from Tier 1 
or Tier 2 capital. Conversely, the OCC may find that a particular 
intangible asset, deferred tax asset, credit-enhancing interest-only 
strip or other Tier 1 or Tier 2 capital component has characteristics or 
terms that diminish its contribution to a bank's ability to absorb 
losses, and may require the deduction from Tier 1 or Tier 2 capital of 
all of the component or of a greater portion of the component than is 
otherwise required.
    (b) Risk weight categories. Notwithstanding the risk categories in 
sections 3 and 4 of appendix A to this part, the OCC will look to the 
substance of the transaction and may find that the assigned risk weight 
for any asset or the credit equivalent amount or credit conversion 
factor for any off-balance sheet item does not appropriately reflect the 
risks imposed on a bank and may require another risk weight, credit 
equivalent amount, or credit conversion factor that the OCC deems 
appropriate. Similarly, if no risk weight, credit equivalent amount, or 
credit conversion factor is specifically assigned, the OCC may assign 
any risk weight, credit equivalent amount, or credit conversion factor 
that the OCC deems appropriate. In making its determination, the OCC 
considers risks associated

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with the asset or off-balance sheet item as well as other relevant 
factors.

[55 FR 38800, Sept. 21, 1990, as amended at 66 FR 59630, Nov. 29, 2001]
