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FEDERAL RESERVE BOARD WASHINGTON X-9418 ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD January 6, 1936. SUBJECT: Eligibility for membership of State banks which have issued deferred certificates to depositors. Dear Sir: As you know, the Board has heretofore had under consideration the question whether State banks which have issued to certain depositors certificates which are payable after· other claims of depositors and other creditors shall have been provided for but whlch are payable before thG payment of any dividends or distribution of any assets of the bank to its stockholders are eligihle for admission to membership ln the FedPral Reserve System. In this connection, please see Board's letter of September 21, 1933 (X-7598). The Board recently had occasion to reconsider this question on the basis of an application for membership ·vvhere the bank involved had issued and outstanding certificates of the kind described above, and admitted the bank to membt~rship subject to the following condi- tion, among others: 18. Such bank shall stamp, as soon as practicable, in legible form on each certificate for stock of the bank outst.s.nding, and, so long as the legend referred to below is applicable, shall sthmp in legible form on each certificate issued upon transfer or in lieu of the certificates new outstanding a legend reading substantially a::; follows: 39 -~- X-9418 Before any dividend or distributicn of any kind or character is rnnde to stockholders as such, the outstandinc; C£::rtificates of Be:neficial Interest issued by the bank to depositors who waived the p£Jyment of a part of their :h~posi ts at the time of the reorganizHt.Lon of the bank in 193~ pursuant to a Depositor·s Agreement, a copy of which is on file with the must be paid. (In the event that shareholders of the bsnk fail or refuse to surrender their stock certificates for the purpcE.e of enabling th.:~ bank tc place thereon the legend referred to in the foregoing condition numbered 18, this condition will bE: considered as having been cumplied ·:iith by the inclusion in each published st!;.tement of condition of the bank of appre;pria.te information showing the relatiun of the rights of the holde,rs of outstanding Certificbtes of Beneficial Interest to the; rights of stockhclders.) It is the vie-:: of the Board that, in acting on applications for membership, any oblir.;fltivn of a bank en cortificutes of the kind ref~rred to above should nvt be included in determining ;·:heth<::r or net the capital of the bank is impairt::d. Accordingly, you are advised of the action 'i:hich v:us recently taken by the Board fer your guidance in connection with any similar cases which may arise in your district. Very truly yuurs, Chester Morrill, Secretar;;r. TO ALL FE.DERAi, hEEEhVE J:.GENTS.
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