Subsidiaries

The treatment of subsidiaries in the Reports of Condition and Income depends upon the
degree of ownership held by the reporting bank.
A majority-owned subsidiary of the reporting bank is a subsidiary in which the parent bank directly or indirectly owns more than 50 percent of the outstanding voting stock.
A significant subsidiary of the reporting bank is a majority-owned subsidiary that meets any one or more of the following tests:
(1) The bank’s direct and indirect investment in and advances to the subsidiary equals five percent or more of the total equity capital of the parent bank.
NOTE: For the purposes of this test, the amount of direct and indirect investments and advances is either (a) the amount carried on the books of the parent bank or (b) the parent’s proportionate share in the total equity capital of the subsidiary, whichever is greater.
(2) The parent bank’s proportional share (based on equity ownership) of the subsidiary’s gross operating income or revenue amounts to five percent or more of the gross operating income or revenue of the consolidated parent bank.
(3) The subsidiary’s income or loss before income taxes amounts to five percent or more of the parent bank’s income or loss before income taxes.
(4) The subsidiary is, in turn, the parent of one or more subsidiaries which, when consolidated with the subsidiary, constitute a significant subsidiary as defined in one or more of the above tests.
An associated company is a corporation in which the bank, directly or indirectly, owns 20 to 50 percent of the outstanding voting stock and over which the bank exercises significant influence. This 20 to 50 percent ownership is presumed to carry “significant” influence unless the bank can demonstrate the contrary to the satisfaction of the appropriate federal supervisory authority.
A corporate joint venture is a corporation owned and operated by a group of banks or other businesses (“joint venturers”), no one of which has a majority interest, as a separate and specific business or project for the mutual benefit of the joint venturers. Each joint venturer may participate, directly or indirectly, in the management of the joint venture. An entity that is a majority-owned subsidiary of one of the joint venturers is not a corporate joint venture.
The equity ownership in majority-owned subsidiaries that are not consolidated on the Reports of Condition and Income (in accordance with the guidance in the General Instructions on the Scope of the “Consolidated Bank” Required to be Reported in the Submitted Reports) and in associated companies is accounted for using the equity method of accounting and is reported in Schedule RC, item 8, “Investments in unconsolidated subsidiaries and associated companies,” or item 9,

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