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44. DRAFT OP REGULATIONS OF THE FEDERAL RESERVE BOARD, prescribing conditions under which State Banks and Trust Companies may subscribe to the stock a^d become members of Federal Reserve Banks. / J \ 1 , ■ Washington D. C. ~ 1914. REGULATION NO._________ Section 9 of. the Federal Reserve Act reads in part, as follows: •’Any hank incorporated by special law of any State, or ortfhnized under the general laws of any St^te of the United States, taay make application to the reserve bank organization committee, pending organization, and thereafter to the Federal Reserve Board for the right to subscribe to the atqck of the Federal Reserve bank organized or to be organised within the Federal Reserve district where the applicant is located. The organization committee or the Federal Reserve Board, under such rules and regulations as it may.prescribe, subject to the provisions of this sec tion, may permit the applying bank to become a stockholder in the Federal Reserve bank of the district in which the applying bank is located. When ever the organization committee or the Federal Reserve Board shall per mit the applying bank to become a stockholder in the.Federal Reserve Bank of the district, stock shall be issued and paid for under the rules and regulations in this Act provided for national banks which become stockholdere in Federal Reserve banks.1’ Pursuant to the provisions of this section, the Federal Reserve Board prescribes the following regulations and by-laws specifying the condi tions under which State banks and trust companies may become members of Federal Reserve banks. 2- AJPPLfCATION FOR STOCK. fl^gjBt - Any State Ijank pr try at company membership in a S,ederaJ.:^|servj|, bank uijdef the Pe^fral Reserve Act and. desiring |o subscni^p. to the capital stock of the Federal Reserve bank organized in the 'Which includes place of business of such $tat| bank qr Trust shall under authfpity of its Bpard of Director®, te b® evidenced by f peeper resolution of the Board, make application for .an amount of capital s | « ^ in such Federal Reserve bank equal to 6 per cent of the unimpaired «§pty»J stock and surplus ef such State bank pr Trust company. |bAs applif must be accompanied by a statement showing the asse^f and liabilities such State bank of Trust company listed on forma approve# by the F^d|»||a|- Up* serve Board. Th^ee forms wifi be furbished upon request by the Chairpan of the Board of |he Federal Reserve bank of the district in which the Apply ing bank is located. The Board of Directors or a committee composed of not less than five ' $■ . t* members of the Fe^pral Reserve Bank Board shall certify that in theif jOp,ini%n the assets listed i« the manner prescribed by thp Federal Reserve Board, represent actual existing values and that |n the opinion said Board ngne • f such assets are ca^jied at an excessive valuation .§n t^a bank. State banks and ^r^tf- companies shall af.no file with for membership copies kj| |bnif. charterf, with amendment8 * $ digest of showing the powers, (gjantef. by sueli charters and amendment^, classified to indicate: (a) Those powers wh|eh e#eh banks* and 4' companiej^ « and desire to continue tp $je?cif£ i.’b)'. Those powers which* while grftfcied> have n$t tajpn f 'V4 and 4'i v 3- 4 7 * which such hanks* and trust companies will not desire nor attempt te exer^ cise as aeabera of the Federal Reserve System. EXAMINATION. The Federal Reserve Board will in all cases require & Second - special examination of the applying bank by an examiner to be designated by the Federal Rasey-ve Board. ASSOCIATIONS ELIGIBLE FOR MEMBERSHIP Third -1 Only those banks which have an unimpaired capital sufficient to entitle them to-become national banking associations under the provisions of the National Bank Act shall be considered as eligible to membership in a Federal Reserve bank. In accordance with .section 5138, U. S - Revised Statutes, as amended by the act of March 14,'1900, State banks cr Trust companies in order to be eligible to membership must have unimpaired capital stock, as follows: In cities or towns of less than 3,000 inhabitants, $25,COO. In cities or towns of more than 3,000 inhabitants but less than 6,000 inhabitants, $50,000. In cities of more than 6,000 inh.-.bit^nts but less than 50,000 inhabitants, $100,000. v’ In cities of more than 5C,„0GO inhabitants, $200,000. * POWERS AND RESTRICTIONS. Fourth - State banks becoming members aa- sjieh under the provisions of Section 9 of the Federal Reserve Act and retaining their State charters shall be subject to the previsions cf section 9 and to such ether provi sions cf the Federal Reserve Act as are applicable thereto. State banks and Trust companies .ay continue to exercise those bankft ing cr trust company powers, granted teem by their Stats charters, when such powers are not in conflict with limitations imposed by the Federal Reserve Act. No power, however, granted by a state charter, which is not customarily exercised by a bank or trust company or which is not incident to the business of a bank or trust Company, shall be exercised by any association (incorporated under the laws of u.ny state) comes a member of the Federal Reserve System. which be The Reserve Board reserves to itself the determination as to whether these unusual powers are ad missible and consistent. The applying bank must file with its application as an exhibit a statement showing powers granted to it by its State charter and those powers which it desires and intends to exercise. INVESTMENTS BY STATE BANKS AND TRUST COMPANIES. Pifth - Inasmuch as the Federal Reserve Act limits the amount to be loaned to any one person, firm or corporation by a State bank as a member of the Federal Reserve System but does not specifically prescribe the class and character of investments to be made, such banks or trust companies may invest in or make loans on real estate or other investments within the limitations prescribed by the laws of the State within which such bank or trust company is located, provided, such ihvestments are so made that in due course of business they may fully protect be liquidated for an amount which will the creditors andstockholders of such associations, and no such association will be permitted to become or continue a member of the Federal Reserve System if in the judgment of the Federal Reserve Board m an undue proportion of its resources are carried in such long time ana 5 non-liquid investments in such -proportion as to endanger the liquid conditions or the solvency of such association or to cause an impairment of its capital, and tho character of all such investments will be taken into consideration in determining the value at which they may be c.rried on tho books of the associ„tion. CONVERTED STATE BANKS AND TRUST COMPANIES. Sixth * Whenever a Stj.te bank or Trust company.shall become converted into a national bank under the provisions of Section 8 of tho Federal Re/ ■ serve Act, it shall, at the s-me time that it filos its organization cer tificate with the Comptroller of the Currency, execute and file with the Federal Reserve bank of its district an application for an amount of _ stock equal to six per" cent of its unimpaired capital and surplus, If such bank or trust company desires to act as trustee, executor, adminis trator or registrar of stock and bonds, its application for stock in tho Federal Roscrvo bank shall be accompanist! by an application to tho Federal Reserve Board for permission to exercise these powers. Seventh - Whenever a State bank or trust company with established branches shall make application for conversion into a national bank and shall desire to retain such branches, such State bank or trust company shall comply with section 5155, U. S. Revised Statutes, which reads as follows: "It shall be lawful for any bank or banking association organized under State laws, and having branches, tho capital being joint and assignor to and used by the mother-bank and branches in definite proportions, to become q. 'national banking association in conformity with existing laws, -nd to retain ..nd keep in oper„tion its branches, or such one or more of them as it may elect to retain; tho amount of tho circulation redeemable at the parent-bunk, and each branchy to be regulated by the amount of capital assigned to and used by each." E.ighth *- State banks or Trust companies applying for membership in the Federal Reserve System under section 8 of the Federal Reserve Act by conversion into national banking associations, or applying- for membership under section 9 U3 State banks will, if otherwise found to be eligible, be given a reasonable time within which to adjust the loans and investments of such banks to conform to the requirements of the Federal Reserve Act and other laws of the United States applicable thereto. Any bank applying for membership and having loans to any one person, firm or corporation in excess of the limit allowed by tljo Federal Reserve Act or other loans and investments prohibited by such act shall, before being admitted to member ship, give satisfactory assurance to the Committee or to the Federal Reserve Eoard that such loans and investments will be eliminated or made to conform to the provisions of the Federal Reserve Act and other applicable laws not later than . The condition of the applying' bank or trust ootapany and the general nature of its business will be considered by the Federal Reserve Board in each case in determining whether such banks shall be admitted to membershipNinth - All applications must be addressed to the Federal Reserve Board but must be forwarded to the Chairman of the Board of tho Federal Re servo bank of the district in which the applying bank is located, who -will submit the matter to the Board of Directors of the Federal Reserve Bank of the District and in turn transmit it to the Federal Reserve Board with his recommendation and .that of the Board of Directors of the Reserve Bank. 5 1 7 - A Tenth - Tho Federal Reserve Board will from time ,to ‘time make awch amendments and adopt and publish such additional regulations and Tpry^laws as may be deemed necessary and advisable. FEDERAL RESERVE BOARD BY Governor. Secretary.I I November 13, 1914.
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