A general description of the regulation, by section, follows.

Subpart A--General Membership and Branching Requirements

Section 208.2 Definitions
Defines key terms used in the regulation.

Section 208.3 Application and conditions for membership in the Federal Reserve System
Stipulates that state banks applying for membership and stock in the Federal Reserve System must do so with the appropriate Reserve Bank. Also lists the factors considered in approving applications for membership as well as conditions for ongoing membership in the System.

Section 208.4 Capital adequacy
States that a bank's capital must be adequate in relation to the character and condition of its assets and to its existing and prospective liabilities and other corporate responsibilities. Also sets standards and guidelines for evaluating the capital adequacy of a member bank.

Section 208.5 Dividends and other distributions
Restricts a bank from paying out dividends and other distributions if it is not adequately capitalized, and imposes other restrictions on dividends.

Section 208.6 Establishment and maintenance of branches
Outlines the application procedures and factors to be considered in approving the application if a state member bank wishes to establish a branch or branches.

Section 208.7 Prohibition against use of interstate branches primarily for deposit production
States that the Federal Reserve System will look at a bank's loan-to-deposit ratio and, as needed, will review the bank's loan portfolio to determine whether the bank is reasonably helping to meet the credit needs of the communities in the states in which the bank has established branches.

Subpart B--Investments and Loans

Section 208.20 Authority, purpose, and scope
Describes the investment limitations on member banks as well as the lending limitations in areas having special flood hazards and the requirements for issuing letters of credit and acceptances.

Section 208.21 Investments in premises and securities
Limits the ability of banks to invest in bank premises as well as in stocks, bonds, debentures, or other such obligations of any corporation holding the premises of the bank. Member banks are also subject to the same limitations and conditions as national banks with respect to purchasing, selling, underwriting, and holding investment securities and stock.

Section 208.22 Community development and public-welfare investments
Establishes criteria for allowable investments in entities specializing in community development or public welfare.

Section 208.23 Agricultural loan loss amortization
No longer in effect.

Section 208.24 Letters of credit and acceptances
States that standby letters of credit and ineligible acceptances count toward member banks' statutory lending limits, with some exceptions.

Section 208.25 Loans in areas having special flood hazards
Applies to loans secured by buildings or mobile homes located or to be located in areas determined by the director of the Federal Emergency Management Agency to have special flood hazards. In general, a member bank is prohibited from making, extending, increasing, or renewing any such loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.

This subpart also describes the reporting requirements imposed on member banks whose own securities are subject to registration under the Act.

Subpart D--Prompt Corrective Action
(Sections 208.40--208.45)

Defines capital measures and capital levels that are used for determining supervisory actions for insured depository institutions that are not adequately capitalized. Depending on its total Tier 1 risk-based capital ratios, its Tier 1 leverage ratio, and, in certain circumstances, its condition or practices, a state member bank may be deemed to be

• Well capitalized
• Adequately capitalized
• Undercapitalized
• Significantly undercapitalized, or
• Critically undercapitalized.

This subpart also establishes procedures for the submission and review of capital restoration plans and describes mandatory and discretionary supervisory actions under section 38 of the Federal Deposit Insurance Act.

Subpart E--Real Estate Lending and Appraisal Standards
(Sections 208.50--208.51)

Requires state member banks to adopt and maintain written policies that establish limits and standards for extensions of credit that are secured by liens on or interests in real estate. The policies must be consistent with safe and sound banking practices and must be reviewed and approved by the bank's board of directors at least annually.

Subpart F--Miscellaneous Requirements
(Sections 208.60--208.64)

Describes a member bank's obligation to implement security procedures to

• Discourage certain crimes (previously required under a separate regulation that implemented the Bank Protection Act)
• File suspicious-activity reports
• Comply with the Bank Secrecy Act's requirements for reporting and recordkeeping of currency and foreign transactions.

This subpart also describes the examination schedule for certain small insured member banks.

Subpart G--Financial Subsidiaries of State Member Banks
(Sections 208.71--208.77)

Subpart H--Consumer Protection in Sales of Insurance
(Sections 208.81--208.86; Appendix A)

Subpart I--Interpretations
(Sections 208.100--208.101)

Presents the official interpretations of the regulation.

Appendix A Capital adequacy guidelines for state member banks; risk-based measure

Appendix B Capital adequacy guidelines for state member banks; tier 1 leverage measure

Appendix C Interagency guidelines for real estate lending policies

Appendix D-1 Interagency guidelines establishing standards for safety and soundness

Appendix D-2 Interagency guidelines establishing standards for safeguarding consumer information   Small-entity compliance guide

Appendix E Capital adequacy guidelines for state member banks; market risk measure