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June 22, 1938

Appraisal of Bonds in Baa

appreciation nor depreciation in Group I
securities srill be sliosii iu tlie report. Heither **ill
"be ta!<con into account la figuring set sound capital of
the bank.
Group X securities are mrket&ble obligations
in nhXah the investment characteristic* are
not distinctly or predominantly speculative,
fhis group includes general a^rket obligations
in the four highest grades an^.-aerated securi^V7
ties of e .uiraleat value.
The securities in Group II
tl oe valued at the
anr&rage a&rket price for eighteen" ontiis just preceding
examination and fifty per cenj 1 ^* the net depreciation
net sound e&oital.
will 'be deducted in comput
Group II securities a
investsent character
general
four highest,
lent

se in which, the
are distinctly or
(his group includes
ns in grades below the
ted securities of

Present p r a c t i o ^ j i i l be contiaaed under which net
depreciation in th%K*$curltles in Group X X and Group IT
X
are classified as
Group III s4cu#lti*s:
IT securities:

arities in
Stoclts.

Present practice will be continued under which premims
on securities purchased at a premim wast be anortized.
Present practice of listing s l l securities and showing
their •book value will be contiaaed.




June 22, 1938

The treatment of Securities Profits in Bank: foaalmations.

Until losses have been wriftSET off and adequate reserves
established, the use of p r o f i t j ^ p a the sale of securities
for any purpose other than tb^M, will not be approred.
Preeeat practice willJ^eontiaaed under vhich estimated
losses oast ^e charged off^^^
Present practice vl£K«e continued under which the
establishment and mainte^^pe of adequate reserves* including
reserves against the seewAles account, are encouraged.
Present practiceVl^H be contiimed under which speculation in securities Jfrr criticised and penalized.




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