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803 FEDERAL RESERVE BOARD WASHINGTON Oct.ober 30, 2.'):2), ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD SUBJECT: X-3872 Condition of Membership No. 18. Dear Sir: The Federal Reserve Board • w·hen approving the application for membership of a. Sta.te ba.nking institution, which a.t the time of appl ica.tion ha.s insufficient ca.pital to entitle it to become a. national banking associa.tion in the place where it is loca.ted, but which is eligible for membership under the terms of the Federal Reserve Act, a.s amended by the Act of Ma.rch 4, 1923, will impose in all cases the following condition: (18) Tha.t, as provided in the Federal Reserve :Board 1 s Regulation H, series of 1923, the bank shall increase its paid-up and unimpa.ired capita~ within five yea.:rs after" the approval of its application by the Fede.ral Reserve Board to $ For the purpose of providing for such increase, the bank .shall set aside each year in a fund exclusively a.p:plicable to such capital incr-ease not less than fifty pe:r:' cent of its net ea.rnings for the preceding year priOX" to the pa.yment of dividends, and i f such net earnings exceed twelve per cent of the pa.id-up ca.pital of the bank, then all net ea.rnings in excess of six per cent of the pa.id-up capital shall be caxried to such fund, until such fund amounts to $ Whenever such fund shall amount to $ , or at such other t irr..e a.s the Fed e ra.l Reserve Boa:rd may require, such fund or as rru.ch the:reof a.s may be necessa:ry sha.ll be converted into ca.pita.l by a. stock dividend o:r used in any othe:r lli9.nner pe:rmi tted by Sta.te la.w to increase the capital of the bank to the raquirad aimunt. Such inc:tea.se in ca.pital may be providM in whole or in pa.rt by the sale 6f additional stock... Provided, that nothing herein contained shall be construed a.s :requi:dng tha bank to violate any provision of the law of the Sta.te in which it is located. In telegra.phic communica.tions this condition will be J'efe:r.red to as No· 18 and should be included as such under the code word "AJ•che:ry". Very t:ruly yours, Wa.lter L. Eddy, Seer<::: taxy. TO ALL F. R. AGENTS
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