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192. national banks actfng as r & C T T O R , TRUSTEE, REGISTRAR, ETC. Regulation H - Subdivision 5 - Examinations, 1 - Examiners appbinted by the Comptroller of the Currency or designated by the Federal Reserve Board will here after be instructed to make thorough and complete audits of the cash securities, accounts, and investments of the. trust department of every bank at the same tine that ex amination is mad© of the banking department. 2 - Regulations provide - that a - Every National Bank permitted tc act under this section shall establish a separate Trust Depart ment, and shall place such department under the management of an officer or officers, whose duties shall be prescribed by the beard of directors of the bank. b - The funds, securities and investments in each trust, shall be separate and distinct from the general funds. 1 - Apart and distinct one from another. 2 - Ledgers and books with.trust department records shall be entirely separate and apart from the ether bocks and records of the Bank - Trustee - Personal Trusts National Banks must account for a - All securities received b - Funds received, invested and distributed c - Income received and distributed. It may be necessary to examine the trustideed to ascertain the powers of National Banks in making distribution of invest ment funds. Investment of Trust Funds a - Nay be provided for in the trust instrument it self b - State law may specify the securities In which ' trust funds should be invested. c - The trust instrument may leave the investment of funds to the judgment of the trustee, d - All securities purchased by the trustee should be listed by the examiner and comments made as to the' character of the investments which are purchased. It would be '.veil in this connection to have a com- v £ 291 EJittee Of directors designated to act as a committee cat trust funds. All trust funds should be kept invested in order to net a reasonable return* All secui*ities, mortgagee and real estate owned by or purchased for trust estates should be held or registered in the name of the National bank as trustee or exenutor or guardian as tne case may be in order that the securities may not be be confused with those owned by the institution itself. Records Securities held for each Trust shoulube kept in separate en velopes. Records should be kept in a Personal Trust book of all funds and securities received at the time each trust is undertaken, and all subsequent transactions should be listed in detail. The record should also give a short digest of the powers granted by the Trust in order that ready reference may be mad®. Sue cut or or ..dmjnistrator ~ Retailed record should be kept of securities and funds re ceived, of deposit of funds, investments made, whether under authority of law or by direction of the Court. The examination Of records should be similar to that of personal trusts. Escrows Securities held under escrow agreements should be checked and accounted for. Corporation Accounts - Trustee of Bond Issue - Registrar of Bond Issue Often ti-■ injtitutJon acts ae trafter ..rd rc&ictrt.v if transfer agjnt of bond icouo, The* institution should have in its possession the original norL.go or trust indenture, and cc.ro should bo taken to ooo that it has boon duly admitted to record in the proper court. Records should show what properties the trust deeds cover, and whether a mortgage is an open or closed one. If a cold&teral trust mortgage, the underlying trust securities should be accounted for. The trust deed should be examined to see if the bank is acting within its powers. Sinking Fund Provision Securities held for sinking funds should be checked and accounted for. In case of a discrepancy a statement should be sent to the corporation for comparison. The examiner should insist upon proper records being kept in order to facilitate the examination. Registrar of Stock Issues It will be ■necessary for the examiner ttf see 1 - That proper records are Kept' of all stock regis tered by the bank 2 - That proper care is exercised in the issue of new stock 3 — That no new stock ie registered unless the old can celled stock certificates are exhibited to the Registrar. Securities held for Safe Keeping Millions of dollars of securities are held by National Banks for account of and subject to instructions of customers. These securities should be checked in the same manner as per sonal trusts. a - Bank records should show the securities the bank is holding and for which account These accounts should be carefully checked and verified at least once each year. Examination »f a Trust Department of a National Bank The examination of a Trust Department is generally similar to that of a regular bank examination. The safes containing the securities should be sealed - Cash and all other accounts should be verified. Securities held for personal trusts, es.tates, under escrow agreement or for safe keeping,' should be counted and compared with records - Minutes of meeting of Trust Investment Committee or of the Board of Directors .vith respect to the investment of Trust Funds should be react In examination of Corporate Bond issues - all bonds re ceived, delivered and cancelled should be accounted for Underlying securities and collateral should be counted and compared with records - 4 293 Suggestion l^r Torn - BALANCE SHEET Assets Investments - Per&onai Trusts Cash on hand Cash on deposit - own bank Cash on deposit - other institutions Other assets Total SINKING' FUND Investments : Cash for account : Total Liabilities Trust Estates Principal Accounts Income Accounts Advance to Trusts Other Liabilities Total Sinking Fund Total Sworn Statement of Condition On this ______ _____ ____ day of __ __ __________ 191 , personally appeared _______ ___;______ _____ Trust Officer of the _____ ______ _______ ___ __ National 3ank of _______ and made oath, that, to the best of his knowledge and belief, the foregoing statement includes every asset and liability of the trust department of said bank, ana is true and correct in all respects. S u gge stio n s fo r Separate Forms Form BALANCE SHEET - (More complete form) Resources : Investments, U „ S. Bonds Municipal and Stats Bonds Railroad Bonds Miscellaneous Securities Real Estate Owned Real Estate 1st. Mortgages Loans - Collateral Unsecured Cash on hand Cash cn deposit with Bank " " " " ether institutions Sinking Fund Investments Other Assets Total Liabilities Trust Accounts Principal Account Income Account Sinking Fund Other liabilities Total 6 Schedule - 295 ihvestmehts pehsos .il thdsts descriptions of Security Hate Par Value Book Value Heal Estate - If-subject to prior lien - State amount ITote *• If investments are unusual ascertain from trust agreement what classes of investment it authorizes. tr us t d e p a r t i s n t Personal Trusts I. What officers have been designated by the Board of Directors to act as trtfst officers? II. What officers and employees having access tp vaults or safes where trust securities are kept?I V . III. Has the Board of Directors appointed a committee on investment of Trust Funds? Names of members. IV. Are all new investments and investment changes re ported to and approved by the Board of Directors? V. What is the general character of the investment made? VI. Are securities checked from time to time? Schedule p e r s o n a l trusts Number of Trust Name Principal Investments Cash Income Remarks 7 Schedule - CORPORATE TRUSTS Description Bond Rate Maturity Bonds - certified Uncertified Cancelled Total received from issuing corporations Collateral Security if any TRUST DEPARTMENT Corporate Trusts, Etc. 1. Were corporate trust indentures approved By Counsel for tank, "before acceptance? 2; Were all Bonds, stocks and underlying securi ties counted and compared with records? Registrar of Stock Issues. 3/31/15 1. Are proper records kept *f all stock regis tered by the bank? 2, Is proper care ezercised in the issue of new stock? 296
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