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! 398 S-154 BOARD O F G O V E R N O R S OF THE FEDERAL RESERVE SYSTEM WASHINGTON A D D R E I I OFFICIAL C O R R C a P O N D E N C C TO T H E I O A R D March 23, 1939 Dear S i r There have been forwarded t o you today under s e p a r a t e c o v e r the i n d i c a t e d number o f c o p i e s o f the s i x forms a t t a c h e d h e r e t o , f o r the use o f S t a t e bank members and t h e i r a f f i l i a t e s i n s u b m i t t i n g r e p o r t s a s o f the n e x t c a l l d a t e : Number o f copies Form Form F. R. 1 0 5 , Report of c o n d i t i o n o f S t a t e bank member. Form F. R. 105b (Schedule "0"), Loans and advances t o a f f i l i a t e s and i n v e s t m e n t s i n and l o a n s secured by o b l i g a t i o n s of a f f i l i a t e s . Form F. R. 1 0 5 e , P u b l i s h e r ' s copy of r e p o r t of c o n d i t i o n o f S t a t e bank member. Form F. R. 220, Report of a f f i l i a t e or h o l d i n g company affiliate. Form F. R. 220a, P u b l i s h e r ' s copy of r e p o r t of a f f i l i a t e o r h o l d i n g company a f f i l i a t e . Form F. R. 220b, I n s t r u c t i o n s f o r p r e p a r a t i o n o f r e p o r t s o f a f f i l i a t e s and h o l d i n g company a f f i l i a t e s . No change h a s been made i n any o f the forms e x c e p t form F. R. 1 0 5 e . On t h a t form a n o t a r y ' s j u r a t has been added f o l l o w i n g the s i g n a t u r e s o f the bank o f f i c e r s and d i r e c t o r s , a l s o f o l l o w i n g the c e r t i f i c a t e o f p u b l i c a t i o n on the r e v e r s e s i d e , w i t h a n o t e t o t h e e f f e c t t h a t t h e j u r a t need n o t be e x e c u t e d i f n o t r e q u i r e d by the S t a t e banking department. P r o v i s i o n h a s a l s o been made i n the c e r t i f i c a t e of p u b l i c a t i o n f o r the s i g n a t u r e o f e i t h e r an o f f i c e r of the bank or an o f f i c e r o f the newspaper. The e x e c u t i o n o f t h e -2- S-154 C e r t i f i c a t e of p u b l i c a t i o n by e i t h e r one may be a c c e p t e d by Federal Reserve banks. The changes on form F. R. 105e were made a t the s u g g e s t i o n o f a number of F e d e r a l Reserve banks, i n order t o f a c i l i t a t e the s i n g l e , j o i n t p u b l i c a t i o n of c o n d i t i o n r e p o r t s rendered by S t a t e bank members to t h e i r r e s p e c t i v e Federal Reserve banks and S t a t e banking departments. There i s e n c l o s e d a memorandum w i t h r e s p e c t t o t h e p r i n c i pal i t e m s t h a t were i n c o r r e c t l y r e p o r t e d i n the December 31, 1938, c a l l r e p o r t s of S t a t e bank members. .y y o u r s , L. P. Bethea, A s s i s t a n t Secretary Enclosures 7 TO THE PRESIDENTS OF ALL FEDERAL RESERVE BAMS S-154-a MEMORANDUM IN CONNECTION WITH CONDITION REPORTS OF STATE BANK MEMBERS March 25, 1959. S c h e d u l e A. "Loans and d i s c o u n t s " . Amounts r e p o r t e d a g a i n s t i t e m 5 , "Other l o a n s f o r the purpose of p u r c h a s i n g or c a r r y i n g s t o c k s , bonds, and o t h e r s e c u r i t i e s " , should i n c l u d e l o a n s made t o e n a b l e persons t o purchase s t o c k s , bonds and o t h e r s e c u r i t i e s , l o a n s f o r t h i s purpose t h a t have been renewed, and borrowings f o r t h e purpose of p r o v i d i n g funds t o pay o f f i n d e b t e d n e s s i n c u r r e d i n purchasing s e c u r i t i e s . I f a person borrows f o r b u s i n e s s purposes and u s e s s t o c k s , bonds or o t h e r s e c u r i t i e s a s c o l l a t e r a l , such l o a n s should be r e p o r t e d a g a i n s t item 1 , "Commercial and i n d u s t r i a l l o a n s " . S i m i l a r l y , borrowings f o r a g r i c u l t u r a l purposes should be r e p o r t e d a g a i n s t i t e m 2, "Agric u l t u r a l l o a n s " , even though secured by s t o c k s , bonds, or o t h e r s e c u r i t i e s . Loans t o i n d i v i d u a l s f o r t h e purpose o f e n a b l i n g them t o purchase household equipment or a u t o m o b i l e s , t o r e p a i r or r e p a i n t t h e i r homes, t o pay medical and e d u c a t i o n a l e x p e n s e s , t o p r o v i d e funds f o r v a c a t i o n , e t c . , should be r e p o r t e d a s "All o t h e r l o a n s " a g a i n s t i t e m 8 of the s c h e d u l e , even though secured by s t o c k s , bonds, or o t h e r s e c u r i t i e s . I f no i n f o r m a t i o n i s a v a i l a b l e a s to t h e purpose of a given loan that i s already outstanding, f o r the reason that the l o a n i s an o l d one or f o r some o t h e r r e a s o n , the l o a n may be presumed (even though secured by s t o c k s and bonds) t o be "comm e r c i a l and i n d u s t r i a l " i f t h e borrower i s a b u s i n e s s e n t e r p r i s e and " a g r i c u l t u r a l " i f t h e borrower i s a farmer. I f no informat i o n i s a v a i l a b l e a s t o t h e purpose o f a l o a n t o a borrower o t h e r than a b u s i n e s s e n t e r p r i s e , farmer, or bank, and t h e l o a n i s s e cured by s t o c k s and bonds, i t may be regarded a s h a v i n g been made f o r t h e purpose o f e n a b l i n g the borrower t o purchase or carry s t o c k s , bonds, and o t h e r s e c u r i t i e s . Schedule B. "Bonds. S t o c k s , and Other S e c u r i t i e s " . The o n l y s e c u r i t i e s now o u t s t a n d i n g which can p r o p e r l y be r e p o r t e d a g a i n s t i t e m 1 ( b ) ( 4 ) o f Schedule B a r e (1) n o t e s i s s u e d by t h e Commodity C r e d i t Corporation, (2) n o t e s i s s u e d by t h e United S t a t e s Housing A u t h o r i t y , and ( 5 ) Mutual Mortgage Insurance Fund debentures i s s u e d by the F e d e r a l Housing A d m i n i s t r a t i o n f o l l o w i n g f o r e c l o s u r e of i n s u r e d mortgages. The only s e c u r i t i e s now o u t s t a n d i n g which can p r o p e r l y be r e p o r t e d a g a i n s t item 5 ( a ) ( 5 ) o f Schedule B a r e d e b e n t u r e s of F e d e r a l Home Loan banks and n o t e s o f t h e F e d e r a l N a t i o n a l Mortgage Association. -2— S-154-a The amount r e p o r t e d a g a i n s t item 6 of Schedule B should be c o n s i s t e n t w i t h the f i g u r e s r e p o r t e d under item 1 ( b ) . Item 6 s h o u l d , t h e r e f o r e , i n c l u d e a l l o b l i g a t i o n s of the R e c o n s t r u c t i o n Finance Corporation a s shown a g a i n s t item 1 ( b ) ( 1 ) , a l l o b l i g a t i o n s o f t h e Commodity C r e d i t Corporation i n c l u d e d i n item 1 ( b ) ( 4 ) , and any Home Owners' Loan Corporation bonds and F e d e r a l Farm Mortgage Corporation bonds maturing i n 1 9 3 9 - 1 9 4 5 i n c l u d e d i n i t e m s 1 ( b ) ( 2 ) and 1 ( b ) ( 3 ) . The amount r e p o r t e d a g a i n s t item 7 should be c o n s i s t e n t with the f i g u r e s r e p o r t e d under i t e m 5 ( a ) . Item 7 s h o u l d , t h e r e f o r e , i n c l u d e a l l o b l i g a t i o n s of the Federal I n t e r m e d i a t e C r e d i t banks a s shown a g a i n s t item 5 ( a ) ( 2 ) , a l l debentures of F e d e r a l Home Loan Banks i n c l u d e d i n item 3 ( a ) ( 3 ) , and such o b l i g a t i o n s of t h e Federal N a t i o n a l Mortgage A s s o c i a t i o n i n c l u d e d i n item 3 ( a ) ( 3 ) a s mature i n 1959 - 1945. U n a l l o c a t e d v a l u a t i o n a l l o w a n c e s on l o a n s and i n v e s t ments. Allowances which have been s e t up a g a i n s t t o t a l l o a n s , t o t a l s e c u r i t i e s o r c e r t a i n groups o f l o a n s and s e c u r i t i e s , should be a l l o c a t e d on an approximate b a s i s , f o r t h e purpose o f t h e c o n d i t i o n r e p o r t , a g a i n s t t h e a p p r o p r i a t e items of S c h e d u l e s A and B. (See t h i r d paragraph on page 11 and second paragraph on page 14 o f i n s t r u c t i o n s , form F. R. 1 0 5 a . ) S t a t e bank members may, i f they w i s h , show i n p a r e n t h e s e s t o the l e f t of the extended f i g u r e s i n S c h e d u l e s A and B, the amounts of u n a l l o c a t e d r e s e r v e s deducted from the a p p l i c a b l e i t e m s i n t h e s c h e d u l e s . Memorandum item 52. "Secured and p r e f e r r e d l i a b i l i t i e s " . The f i g u r e s r e p o r t e d under item 52 should r e p r e s e n t the amounts of secured and p r e f e r r e d l i a b i l i t i e s , n o t t h e amounts of a s s e t s pledged a g a i n s t such l i a b i l i t i e s . A l l d e p o s i t s secured by pledged a s s e t s , i n c l u d i n g t h o s e s t a n d i n g t o the c r e d i t of t h e t r u s t department, should be r e p o r t e d a g a i n s t item 3 2 ( a ) .
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