Also known as core capital. Tier 1 capital is generally defined as a bank's common equity (together with additional paid-in capital and retained earnings) and noncumulative perpetual preferred stock minus goodwill. For US bank holding companies (but not depository institutions), cumulative perpetual preferred stock and trust preferred securities also have been considered Tier 1 capital. However, with the passage of Section 171 of the Dodd-Frank Act, these instruments will no longer be treated as Tier 1 capital (see Practice Note, Summary of the Dodd-Frank Act: Bank Capital (Collins Amendment)). As the highest quality capital, Tier 1 capital's essential purpose is to be able to absorb losses on a "going concern" basis. For more information on Tier 1 capital and bank capital requirements, see Practice Note, Basel III: overview and Article, Basel III: Overview and Implementation in the US.