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373 FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO the federal reserve board X-9571 November 26, 1935. SUBJECT: Instructions relating to the checking and handling of applications for issuance and cancelation of Federal Reserve bank stock. Dear Sir: In connection with the revised procedure of handling applications for the issuance and cancelation of Federal Reserve bank stock as contemplated by Regulation I, Revised, Effective January 1, 1936, such applications should no longer be sent to the Board for approval, and Federal Reserve bank stock may be issued and canceled by Federal Reserve banks as soon as the appropriate applications are found to be in proper form and are approved by the Federal Reserve Agent, except in the case of applications of State banks for admission to membership or notices of intention to withdraw from membership. For guidance in this connection, the follow- ing instructions are set forth covering the principal points to be kept in mind in the checking and handling of applications and related matters. 1. Care should be exercised to see that all such applications are properly executed by persons duly authorized, that the figures of capital and surplus appear to be correct according to available data, that the number of shares of Federal Reserve bank stock which the applying bank is required to hole, subscribe for or surrender has been correctly computed, and that the application conforms in all respects to the provisions of the law and the Board's regulations and rulings. 374 - 2 - X-9371 The capital and surplus of national banks as shorn in applications should be checked against the notices received from the Comptroller's office and against condition reports. The capital structure in the case of State member banks, and total deposit liabilities in the c&sei of mutual savings banks, should be checked against reports of condition and other available data, 2. If there be any doubt whether an application is properly executed, or as to the number of shares of Federal Reserve bank stock which the applying bank is required to hold, subscribe for or surrender, the matter should be taken up with counsel for the Federal Reserve bank and, if necessary, the question should be referred to the Board. 3. In connection with the organization of national banks, the Comptroller of the Currency should be advised direct by telegraph by the Federal Reserve Agent as soon as an application for the issuance of Federal Reserve bank stock has been found to be in proper form and the required payment has been received on the bank's subscription to Federal Reserve bank stock. This advice should be given by using the new code word "NARRATEMENT", the meaning of which will be as follows: "Application for Federal Reserve bank stock to be issued to the organizing national bank hereafter named has been found to be in proper form and approved by the Federal Reserve Agent, the required payment has been received on the applicant's subscription for the number of shares of Federal Reserve bank stock hereafter shown, and such 375 - 3 - X-9571 stock will be Issued to the organizing national bank as of the date on which it is authorized by your office to commence business: (name and location of organizing national bank, and number of shares of Federal Reserve bank stock applied for)*" Upon the issuance of Federal Reserve bank stock to a newly organized national bank, the Board should be advised thereof by telegraph by the Federal Reserve Agent, using the new code word "NxtmaTEMILL", the meaning of which will be as follows: "Federal Reserve bank stock has been issued as of the date hereafter shown to the following newly organized national bank: (give date of the stock certificate and name and location of organizing national bank)." 4. Upon cancelation of a member bank's entire holdings of Federal Reserve bank stock and cessation of its membership, the Board should be advised by telegraph by the Federal Reserve Agent, using, as at present, code word "NAVIFQRM", the meaning of which will hereafter be as follows: "Refund of capital stock payments was made on the date hereafter shown on account of cessation of membership of the following named bank: (date of cancelation of Federal Reserve bank stock and name and location of the b a n k ) . 376 - * - X-9371 5. Whenever a State member bank has been placed in the hands of a conservator or other State official acting in a capacity similar to that of conservator, it may wish to file a notice of intention to voluntarily withdraw from membership in the Federal Reserve System in the manner provided in section 9 of the Federal Reserve Act, as amended, and the Board's Regulation H, and request the Board to permit withdrawal immediately, waiving the six months' notice. In any such case the conservator must join in such notice of intention to withdraw and request for waiver. Upon receipt of advice that you have received such notice and request for waiver and that your counsel is satisfied as to the legal aspects of such notice and request for waiver, together with your recommendation in the matter, the Board will take action as soon as possible. 6. As soon as practicable after February 1 and August 1, respectively, of each year, each member bank's required holdings of Federal Reserve bank stock should be computed by the Federal Reserve Agent on the basis of its latest condition report. If the computation shows that its holdings of Federal Reserve bank stock are either greater or less than the amount required by law, the bank should be requested to file an application for an adjustment in its holdings of Federal Reserve bank stock. More frequent adjustments may be required in the event of substantial changes in a member bank's capital and surplus. Adjustments at the request of a member bank may, of course, be made at any time that it changes the amount of its aggregate capital and surplus. 377 X-937-1 7, It will no longer be necessary to furnish the Comptroller of the Currency semi-annual certificates of increases and decreases of Federal Reserve bank stock on Forms 58 and 59. In lieu thereof, please furnish a report to the Board as of the end of June and December of each year showing the following information: 1. Number of shares of Federal Reserve bank stock outstanding at beginning of the semi-annual period _ 2. Number of shares issued during the period to (a) New member banks (b) Existing member banks (c) Total issued 3. Number of shares of Federal Reserve bank stock canceled during the period on account of (a) Cessations of membership (b) Surrender of stock by continuing member banks (c) Total canceled 4« Number of shares of Federal Reserve bank stock outstanding at end of semi-annual period 5* Number of member banks at end of semi-annual period National banks State banks (a) Active , (b) Inactive (banking operations discontinued) _____________ In connection with items 2(a) and 5(a) above, please attach a list showing the name and location of each bank, number of shares issued or canceled, and date issued or canceled. The figures reported against 378 X-9571 — 6 — items 2(b) and 5(b) should represent the number of shares of stock i issued and canceled, respectively, pursuant to applications on Forms 56 and 56a; they should not include stock certificates issued in exchange for stock certificates canceled. In support of item 5b, please show the name and location of each bank, the date on which banking operations were discontinued, the date placed in liquidation or in the hands of a receiver, if this has been done, and the status of the application for cancelation of Federal Reserve bank stock if filed. Very truly yours Chester Morrill Secretary. TO ALL FEDERAL RESERVE AGENTS.
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