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319 BOARD OF G O V E R N O R S OF THE ******* FEDERAL RESERVE SYSTEM WASHINGTON S-220 ADDRESS OFFICIAL TO THE CORRESPONDENCE BOARD May 29, 1940. Dear Sir: The form of memorandum to accompany applications for membership has been revised with a view to simplification. It will be appreciated if the memoranda submitted by the Reserve Banks with applications for membership are prepared in the revised form, as outlined in attached memorandum. Ten copies of the revised form are enclosed, and we shall be glad to furnish additional copies if desired. This supersedes letter X-7572 (Federal Reserve Loose-Leaf Service #3472). Very truly yours Chester Morrill Secretary. Enclosures. TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS 320 Exam 2. (Revised June 1940) GENERAL STYLE OF MEMORANDUM TO ACCOMPANY APPLICATIONS FOR MEMBERSHIP. Reasonable uniformity in the arrangement and form of memoranda forwarded by the Federal Reserve Banks covering applications for membership facilitates the handling of the applications at the Board. This outline is intended only to further such uniformity. It is not intended to limit the scope of information to be submitted, and each memorandum should contain the information appropriate for proper consideration of the application. It is requested that the memoranda be prepared on lettersize paper, that the textual matter be double-spaced, and that an original and three copies be forwarded. HEADING The name of the bank as given in the heading should be the correct legal title. It is important that membership records contain the correct corporate titles. Difficulties have occasionally arisen because of conflicts and uncertainties in this respect. It is requested, therefore, that care be exercised to see that the name of the bank as given in the heading of the memorandum and in Counsel's certificate on the application is, in fact, the full, complete and correct legal name of the bank. 1. CONDENSED STATSlfTOT fW CONDITION (Give date and source.) It is suggested that, where practicable, the statement be substantially in the form shown on the following page. 321 -2- Liabilities Assets V1 (It is suggested that figures be shown in even hundreds. In the case of the larger banks 000 may be omitted if desired.) U.S.Gov't securities Demand deposits Time deposits Public funds Other securities: Borrowed money Cash and bank balances Group 1 Group 2 Defaults Stocks Loans and discounts Bank premises F & i Other real estate (P.O.R.E. (R/E carried in (other accounts Other liabilities: Capital account: R.F.C. Preferred (a) Other Preferred (a) Common stock (b) Surplus Res. for contingenexes****** •••#••••• Und. profits Other segregations of capital account (itemized) Other assets (a) Indicate whether preferred stock or capital notes or debentures. Show also total amount at which preferred stock is retirable if that is in excess of par. (b) Show also total par amount if common stock is shown on the books of the bank and in the statement at less than par. 322 -32. SUMMARY OF EXAMINER'S CLASSIFICATIONS Below the schedule taken from, the report of examination show appreciation or depreciation in investment account based, on market quotations. 3. SUMMARY OF EARNINGS AMD DIVIDENDS Record for five years in the following form: 19-- 19— 19—— 19— 19-- Total current earnings Total current expenses Net current earnings Profits and recoveries Losses and depreciation Net before dividends Dividends and interest on capital: Preferred stock or capital notes or debentures Common stock (do not include stock dividends) Net additions to profits Comment on any unusual items of nonrecurring nature. If the bank has any preferred stock or debentures outstanding and dividends or interest thereon are not being currently paid, comment as to the situation and give amount of arrearages. 4. TREND OF DEPOSITS From the schedule on page 5 of the report of examination. S GENERAL INFORMATION Give population of city or town in which the bank is located and, where appropriate, the approximate population of the trade area served. 323 -4Include a brief discussion of the business activities of the town and community and of local conditions which have affected or may affect the condition or future prospects of the bank. Comment on the bank1s competitive position, giving names, locations and approximate deposit liabilities of competing banks and state whether banking facilities in the territory appear to be adequate or excessive. If the bank does a trust business, comment also on the competitive situation and local conditions affecting that phase of the business. 6. ORGANIZATION AMD HISTORY OP APPLICANT Include date institution was originally organized. If any reorganizations have been effected since 1930, give full information. If, in any such reorganization a deposit waiver was obtained, give total waived, amounts repaid, and prospects for further payments. Mention should also be made under this heading of any mergers or consolidations. If the bank was ever a member of the System, give period of membership and reasons for discontinuance of membership. 7. BRANCHES List any branches, branch offices, agencies or receiving sta~ tions. Give date of establishment of each office, the population of the town in which located and any other information deemed appropriate. 8. POWERS Enumerate powers, other than those usual to commercial banking, which the applicant is authorized to exercise under its charter or State laws. State whether or not bank is exercising any such powers. If any are exercised (other than trust powers, which will be discussed under Item 9), comment as to the situation, particularly as to the nature and extent of the activities and the effect upon the bank. 9. TRUST DEPARTMENT Comment as to trust powers authorized and those exercised and indicate size and importance of the department. Comment on the general condition of the department and the manner in which it is being operated. State whether any probable liabilities appear to have accrued against the institution as a result of its fiduciary activities. -5~ 10. 324 AFFILIATIONS If institution is controlled by a holding company, give name of company and discuss extent of its control and supervision over bank. If bank owns, controls or is closely affiliated in any way with other corporations, give such information regarding the nature of the affiliation and the effect of the affiliation upon the bank as is appropriate in the circumstances. 11. CHARACTER OF MANAGEMENT Discuss fully. Cover commercial and trust departments in separate discussions. Comment also on the ownership of the bank (unless ownership or control is by a holding company, in which event the discussion will be under Item 10). 12. SUMMART OF EXAMINER'S COMMENTS This should be a summary of the examiner's important comments. It is not necessary to copy verbatim the comments from the report of examination nor to refer to minor matters which have no real bearing on the condition of the bank or significance in consideration of the application. 13. COMMENTS OF OFFICER IN CHARGE OF THE BANK EXAMINATION DEPARTMENT (See Note at the end of the memorandum.) 14. KECOMKEmATION OF THE FEDERAL RESERVE BANK Include specific mention as to any special conditions recommended. If no special conditions are recommended, so state. 15. F.D.I.C. Refer to circular letters X-9647 and S-10 regarding clearance with the Supervising Examiner for the F.D.I.C. (Federal Reserve LooseLeaf Service #3476 and #3477.) SIGNATURE The memorandum should be signed by the Vice President in charge of the Bank Examination Department or some other senior officer. cate what Either the memorandum or the transmittal letter should indiofficers or committees concurred in the recommendation. 325 NOTE (Item 13) In passing upon an application the Board, as stated in Regulation H, gives special consideration to the following matters: (1) The financial history and condition of the applying bank and the general character of its management; (2) The adequacy of its capital structure and its future earnings prospects; (3) The convenience and needs of the community to be served by the bank; and (U\ Whether its corporate powers are consistent with the purposes of the Federal Reserve Act. The memorandum should include sufficient information regarding each of the above matters for proper consideration of the application. Any points not covered elsewhere in the memorandum should be covered under Item 13. On close questions the Reserve Bank officer should supplement with his own views the information and opinions set forth elsewhere in the memorandum.
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