View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

F E D E R A L R E SE R V E BANK
O F N E W YO R K

/"Circular No. 39051
L October 6, 1952 J

MEMBERSHIP OF STATE BANKING INSTITUTIONS
IN THE FEDERAL RESERVE SYSTEM

Revision of Regulation H
To all Member Banks in the
Second Federal Reserve D istrict:

Enclosed is a copy of Regulation H o f the Board of Governors of the Federal Reserve
System, revised effective September 1, 1952.
The revision conforms the regulation to the amendments made by the A ct o f July 15,
1952 (Public Law 543, 82d Cong., 2d Sess.), to section 9 o f the Federal Reserve Act, as
amended, and to section 5155, subsection (c), o f the Revised Statutes, as amended. A copy
o f the new Act is printed on the back o f this circular.
The new A ct would permit a State bank to become a member o f the Federal Reserve
System when it has capital stock and surplus adequate in the judgment of the Board
o f Governors in relation to its assets and to its deposit liabilities, except that if the bank
does not have capital stock and surplus equal to that required fo r the establishment of
a national bank it must be approved fo r deposit insurance under the Federal Deposit
Insurance Act. The new A ct also eliminates the requirement that in order fo r a national
or State member bank to have an out-of-town branch it must have a capital stock o f at
least $500,000. Such a bank, however, must still have capital equal to the total amount
which would be required for the establishment of a national bank in each o f the various
places where its offices are located and must have the capital stock and surplus required
by State law in like circumstances. In addition, under the new Act a State member bank
may not reduce its capital stock or establish any new branch in the head office city without
the consent of the Board o f Governors.
Additional copies o f this circular and o f the revised regulation will be furnished
upon request.




A llan

S proul,

President.

( over)

Public Law 543 — 82d Congress
Chapter 753 — 2d Session
S. 2938
AN ACT
T o amend section 9 o f the Federal Reserve A ct, as amended, and section 5155 o f the Revised
Statutes, as amended, and fo r other purposes.

B e it enacted by the Senate and H ouse o f R epresentatives o f the United
States o f A m erica in Congress assembled, That the eleventh paragraph of
section 9 o f the Federal Reserve A ct, as amended (U . S. C., title 12, sec. 329),
is amended to read as follow s:
“ No applying bank shall be admitted to membership unless it possesses
capital stock and surplus which, in the judgm ent o f the B oard o f Governors o f the
Federal Reserve System, are adequate in relation to the character and condi­
tion o f its assets and to its existing and prospective deposit liabilities and other
corporate responsibilities: Provided, That no bank engaged in the business of
receiving deposits other than trust funds, which does not possess capital stock
and surplus in an amount equal to that which would be required fo r the estab­
lishment o f a national banking association in the place in which it is located,
shall be admitted to membership unless it is, or has been, approved fo r deposit
insurance under the Federal Deposit Insurance A ct. The capital stock o f a
State member bank shall not be reduced except with the prior consent o f the
B oard .”
S ec. 2. (a ) The third paragraph o f section 9 o f the Federal Reserve A ct,
as amended (U. S. C., title 12, sec. 321, third paragraph), is further amended
by adding at the end thereof a new sentence reading as fo llo w s : ‘ £The approval
o f the B oard shall likewise be obtained before any State member bank may
establish any new branch within the limits o f any such city, town, or village
(except within the D istrict o f C olu m b ia ).”




(b )
Subsection ( c ) o f section 5155 o f the Revised Statutes, as amended
(U. S. C., title 12, sec. 36 ( c ) ) , is further amended by changing the last sen­
tence o f such subsection to read as fo llo w s : ‘ ‘ E xcept as provided in the imme­
diately preceding sentence, no such association shall establish a branch outside
o f the city, town, or village in which it is situated unless it has a combined
capital stock and surplus equal to the combined amount o f capital stock and
surplus, if any, required b y the law o f the State in which such association is
situated fo r the establishment o f such branches by State banks, or, i f the law
o f such State requires only a minimum capital stock fo r the establishment o f
such branches b y State banks, unless such association has not less than an equal
amount o f capital stock.”
A pp roved July 15, 1952.

BOARD OF GOVERNORS

of the
F E D E R A L R E SE R V E SYSTEM

MEMBERSHIP OF STATE BANKING INSTI­
TUTIONS IN TH E FEDERAL
RESERVE SYSTEM

R E G U L A T IO N H
T h is R e g u la tio n as p r in t e d h e r e w it h is in th e
f o r m a s a m e n d e d , e ffe c t iv e S e p te m b e r 1, 1952.




INQUIRIES REGARDING THIS REGULATION




Any inquiry relating to this regu­
lation should be addressed to the
Federal Reserve Bank o f the district
in which the inquiry arises.

CONTENTS
Page
A

......................................................................................................

1

S ec.

1. D e f i n i t i o n s ..................................................................................................
( a ) State b a n k ......................................................................................
( b ) Mutual savings bank.....................................................................
( c ) B o a r d ..................................................................................................
( d ) Board o f d irectors.........................................................................
( e ) Federal Reserve Bank stock........................................................
( f ) Capital and capital stock............................................................

1
1
1
2
2
2
2

S ec .

2. E ligibility R eq u ire m e n ts .....................................................................

2

S ec .

3. I nsurance

D eposits ............................................................................

3

S ec .

4. A pplication for M e m b e r sh ip ..............................................................
( a ) State bank, other than a mutual savings b a n k ..................
( b ) Mutual savings bank.....................................................................
( c ) M utual savings bank which is not authorized to pur­
chase stock o f Federal Reserve Bank at time o f
admission ....................................................................................
( d ) Execution and filing o f app lication ........................................

3
3
4

5. A pproval of A pplic atio n .......................................................................
( a ) M atters given special consideration by B oa rd ....................
( b ) P rocedure fo r adm ission to m em bership a fte r approval
o f a p p lic a t io n ..............................................................................

4
4

S ec.

6. P rivileges

and

5

S ec .

7. C onditions

of

M e m b e r sh ip ...................................................................

6

S ec.

8. E s t a b l ish m e n t or M a in t e n a n c e of B r a n c h e s .........................
( a ) In g e n e r a l.........................................................................................
( b ) B ranches in the U nited S tates.................................................
( c ) A pplication fo r ap proval o f branches in United S t a t e s ..
( d) Foreign branches .........................................................................
( e ) A pplication fo r approval o f foreign bran ch es....................

7
7
8
9
10
1U

S ec.

9. P u blication of R eports of M ember B a n k s a n d T h eir
A ffilia tes .................................................................................................
( a ) R eports o f m em ber banks..........................................................
( b ) R eports o f affiliates.......................................................................

10
10
11

S ec. 10. V olu n tary W it h d r a w a l from F ederal R eserve S y s t e m -----( a ) General .............................................................................................
( b ) N otice o f intention o f w ith d raw al..........................................
( c ) Tim e and m ethod o f effectin g actual w ith d raw al................
( d ) W ithdraw al o f n otice...................................................................

12
12
12
13
13

Sec . 11. B oard F orms .............................................................................................

14

u t h o r it y

S ec .

for

R

e g u l a t io n




of

R equ irem en ts

of

M e m b e r sh ip .............................

4
4

5

R E G U L A T IO N H
A s a m e n d e d , e f fe c t iv e S e p te m b e r 1, 1952

MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM

A U T H O R IT Y

F O R R E G U L A T IO N

T h is reg u la tion is based upon and issu ed p u rsu a n t to p rovision s
o f section

9 o f th e F ed era l R eserve A c t and related p rov ision s

o f law.
S E C T IO N

1. D E F I N I T I O N S

F o r the p u rp oses o f th is reg u la tion —
(a ) T h e term “ State bank” m eans any bank o r tr u s t com pa n y
in corp ora ted u n der a special o r gen era l law o f a S tate o r under
a gen eral law f o r th e D istrict o f C olum bia, an y m utual savin gs
ban k (un less o th erw ise in d ica te d ), and a ny M orris Plan bank
o r oth er in corp ora ted b an k in g in stitu tion en ga ged

in sim ilar

bu sin ess.1
( b ) T h e term “ mutual savings bank” m ean s a bank w ith ou t
capital stock tra n s a ctin g a sav in gs bank bu sin ess, th e net earn ­
in g s o f w h ich in u re w h olly to th e benefit o f its d ep ositors a fte r
p a ym en t o f o b lig a tion s f o r any a dva n ces b y its org a n ize rs, and
in ad d ition th e re to inclu des a n y o th e r b a n k in g in stitu tion th e ca p ­
ital o f w h ich co n sists o f w eek ly o r o th e r tim e d ep osits w h ich are
se g reg a ted fr o m all o th e r d ep osits and are reg a rd ed as capital
sto ck f o r th e p u rp oses o f ta x a tio n and th e d ecla ra tion o f d iv i­
dends.

•U nder th e p r o v is io n s o f s e c tio n 19 o f th e F e d e ra l R e s e r v e A c t . n a tio n a l b a n k s o r b a n k s
o r g a n iz e d u n d e r loca l la w s, lo ca te d in A la s k a o r in a d e p e n d e n c y o r in s u la r p o s s e s s io n o r a n y
p a r t o f th e U n it e d S ta tes o u ts id e th e c o n t in e n t a l U n ite d S ta te s a r e n o t re q u ire d t o b e co m e
m em b ers o f th e F e d e ra l R e s e r v e S y s te m b u t m a y . w ith th e c o n s e n t o f th e B o a rd , b e co m e
m em b ers o f th e S ystem . H o w e v e r , t h is R e g u la tio n H is a p p lic a b le o n ly t o th e a d m is s io n o f
b a n k s e lig ib le f o r a d m is s io n t o m e m b e r s h ip u n d e r s e c tio n i) o f th e F e d e ra l R e s e r v e A c t a n d
d oes n o t c o v e r th e a d m is s io n o f b a n k s e lig ib le u n d e r s e c tio n 19 o f th e A c t . A n y b a n k d e s ir in g
t o be a d m itte d t o th e S y s te m u n d e r th e p r o v is io n s o f s e c tio n 19 sh o u ld c o m m u n ic a te w ith
th e F ed era l R e s e r v e B a n k w ith w h ich it d esires t o d o bu siness.




1

R E G U L A T IO N H

2

( c ) T h e term “ Board” m ean s th e B oard o f G o v e rn o rs o f th e
F ed era l R eserve System .
(d ) T h e term “ board of directors” m eans th e g o v e rn in g board
o f a ny in stitu tion p e r fo r m in g th e usual fu n c tio n s o f a b oard o f
d irectors.
( e ) T h e term “ F ed era l R eserve Bank stock” inclu des th e d e­
p o sit w h ich m a y be m ade w ith a F ederal R eserve B ank in lieu
o f a su b scrip tion f o r sto ck by a m utual sa v in gs bank w h ich is
n ot p erm itted to p u rch a se stock in a F ederal R eserve B ank,
unless o th erw ise indicated.
( / ) T h e term s “ capital” and “ capital stock” m ean com m on
sto ck , p referred stock , and legally issued cap ital n otes and d eb en ­
tu res purch ased b y th e R e con stru ction F in an ce C orp ora tion
w h ich m a y be con sid ered capital and cap ital stock f o r p urp oses
o f m em b ersh ip in th e Federal R eserve S ystem un der th e p ro v i­
sion s o f section 9 o f th e F ederal R eserve A ct.

S K C T IO N

2. E L I G I B I L I T Y

R E Q U IR E M E N T S

U n d er th e term s o f section 9 o f th e F ederal R e se rv e A c t , as
am en ded, to be eligib le f o r a d m ission to m em b ersh ip in th e
F ed era l R eserve S y stem —
(1 ) A S tate bank, oth er than a m utual sa v in gs bank, m ust
possess ca p ita l sto ck and surplus w h ich , in th e ju d g m e n t o f
th e B oard, are a deq u ate in rela tion to the ch a ra cte r and
con d ition o f its a ssets and to its e x is tin g and p ro sp e ctiv e
deposit lia bilities and oth er corp o ra te re s p o n sib ilitie s: P r o ­
d d e d , T h a t no bank en ga ged in th e business o f re ce iv in g
dep osits o th e r than tr u s t fu n d s, w h ich does n ot p osssess
capital s tock and su rplus in an a m ou n t equal to th a t w h ich
w ould be req u ired f o r th e esta b lish m en t o f a national ban k ­
in g a ssocia tion in th e p lace in w h ich it is located, shall be
ad m itted to m em b ersh ip unless it is, o r has been, app roved
fo r d eposit insuran ce un der th e Federal D ep osit Insurance
A ct.
(2 ) A m utual sa v in g s bank m u st p ossess su rp lu s and
u ndivided p rofits n ot less than the am ou nt o f ca p ita l requ ired
f o r th e org an iza tion o f a n ational bank in th e place w h ere
it is situated.
T h e m in im u m capital req u ired f o r th e o rg a n iza tion o f a na­
tional bank, re fe rre d to h erein b efore in co n n e ctio n w ith the




R E G U L A T IO N H

3

capital req u ired f o r a d m ission t o m em b ersh ip in th e F ed era l
R e serv e S ystem , is as fo llo w s :

I f loca ted in a c ity o r to w n w ith a p op u lation —

M inim um
C apital

N o t e x c e e d in g 6,000 in h a b ita n ts.............................................. $ 50,000
E x c e e d in g 6,000 bu t n ot e x c e e d in g 50,000 inh abitants....
100,000
E x c e e d in g 50,000 in h a bita n ts (e x ce p t as stated b elow )
200,000
In an o u tly in g d is trict o f a c ity w ith a p opu lation
e x ce e d in g 50,000 in h a b ita n ts; p rovid ed S tate law
p erm its org a n iza tion o f S ta te ban k s in su ch loca ­
tion w ith a ca p ita l o f $100,000 o r less................................
100,000
W ith certa in ex cep tion s n ot h ere applicable, a n ation al bank m u st
h ave su rplu s equal to 20 p er cen t o f its ca p ita l in o rd e r to c o m ­
m ence business.
S E C T IO N

3. I N S U R A N C E

OF

D E P O S IT S

A n y S tate ban k b e co m in g a m em b er o f th e F ederal R e se rv e
S y stem w h ich is en g a g ed in th e b u siness o f re c e iv in g d ep osits
o th e r th an tr u s t fu n d s and w h ich is n o t a t th e tim e an insured
ban k un der th e p rov ision s o f th e F ed era l D ep osit In su rance A ct,
w ill b ecom e an insu red bank under th e p rov isio n s o f th a t A c t on
th e d ate upon w h ich it becom es a m em b er o f the F ed era l R eserve
S y ste m .2 In th e ca se o f an insured ban k w h ich is ad m itted to
m em b ersh ip in th e F ed era l R eserve S ystem , th e bank will co n ­
tinue to be an insu red bank.
S E C T IO N 4. A P P L I C A T I O N

F O R M E M B E R S H IP

(a )
S tate ban k, o th e r than a m utual sa v in g s bank.— A S tate
bank, o th e r th an a m utual sa v in g s bank, a p p ly in g f o r m e m b e r­
sh ip , shall m ake a p p lica tion on F orm F .R . 8 3 A to th e B oard f o r
an a m ou n t o f cap ital s tock in th e F ederal R eserve B an k o f its
d is trict equal to s ix p er cen t o f th e p aid-u p capital s to ck and
su rplu s o f th e a p p ly in g in stitu tion .
JIn th e c a se o f a S ta te b a n k w h ich is e n g a g e d in th e b u sin e ss o f r e c e iv in g d e p o s its o th e r
t h a n tr u st fu n d s a n d w h ic h a t th e tim e o f its a d m is s io n t o m e m b e r s h ip in th e F e d e ra l R e se rv e
S y s tem is n o t an in su re d b a n k , th e B o a rd is r e q u ir e d u n d e r th e p r o v is io n s o f s e c t io n s 4 a n d ti
o f th e F ed era l D e p o s it I n s u r a n c e A c t t o issu e a c e r tific a te t o th e F e d e ra l D e p o s it I n s u r a n c e
C o r p o r a t io n t o th e e ffe c t th at th e b a n k is a m e m b e r o f th e F e d e ra l R e s e r v e S ystem a n d th at
c o n s id e r a tio n h a s been g iv e n t o th e fin a n c ia l h is t o r y a n d c o n d it io n o f th e b a n k , th e a d e q u a cy
o f its c a p it a l s t r u c tu r e , its fu t u r e e a r n in g s p r o s p e c ts , th e g e n e r a l c h a r a c t e r o f its m a n a g e ­
m en t. th e c o n v e n ie n c e a n d n eed s o f th e c o m m u n it y t o be se r v e d b y th e b a n k , a n d w h e th e r
o r n o t its c o r p o r a t e p o w e r s a r e c o n s is t e n t w ith th e p u r p o s e s o f th e F e d e ra l D e p o s it I n s u r a n c e
A ct.




R E G U L A T IO N H

4

( b) Mutual savings bank.— A m utual sa v in gs bank a p p ly in g f o r
m em b ersh ip shall m ake a p p lica tion on F o rm F .R . 83B to the
B oard f o r an a m ou n t o f capital sto ck in th e F ed era l R eserve
B ank o f its d is trict equal to s ix -ten th s o f one p e r ce n t o f its tota l
d e p o s it lia bilities as sh ow n b y th e m ost recen t re p o rt o f e x a m ­
in a tion o f su ch in stitu tion p reced in g its a d m ission to m em b er­
sh ip , or, if su ch in stitu tion be n ot p erm itted b y th e law s under
w h ich it w a s org a n ized to p u rch a se stock in a F ed era l R eserve
B ank, on F orm F .R . 83C, f o r p erm ission to d ep osit w ith the
F ed era l R eserv e B ank an a m ou n t equal to th e a m ou n t w h ich
it w ou ld h ave been req u ired to p ay in on a ccou n t o f a s u b scrip ­
tion to capital stock.
(c) Mutual savings bank which is not authorized to purchase
stock of Federal Reserve Bank at time of admission.— I f a m u­
tual sa v in g s bank be ad m itted to m em b ersh ip on th e b a sis o f a
d e p o s it o f th e req u ired a m ou n t w ith th e F ederal R e se rv e Bank
in lieu o f p a ym en t upon capital s tock because th e law s under
w h ich su ch bank w a s org a n ized do n ot at th a t tim e au th orize
it t o p u rch a se sto ck in th e F ederal R eserv e B an k , it shall su b ­
scrib e on F o r m F .R . 83D f o r the a p p rop ria te a m ou n t o f stock
in th e F ed era l R eserv e B an k w h en ev er such law s are am ended
so as to au th orize it to p u rch a se s tock in a F ederal R e se rv e B an k .3
(d )

Execution and filing of application.— E ach

a pp lica tion

m ade under the p rov ision s o f th is section and th e e x h ib its re­
fe r r e d to in th e a p p lica tion blank shall be e x e cu te d and filed, in
d u p licate, w ith th e F ederal R eserv e B ank o f th e d is trict in w h ich
th e a p p ly in g bank is located.
S E C T IO N

(a )

5. A P P R O V A L

O F A P P L IC A T IO N

Matters given special consideration by Board.— In p assin g

upon an app lication , the fo llo w in g m a tters will be g iv e n special
con sid era tion .
(1 )

T h e financial h isto ry and con d ition o f th e a p p ly in g

bank and th e gen eral ch a ra cte r o f its m a n a g e m e n t;

aT h e F ed era l R e s e r v e A c t p r o v id e s th a t, if th e la w s u n d e r w h ich a n y s u ch s a v in g s ban k
w a s o r g a n iz e d be n o t am e n d e d a t th e fir s t session o f th e le g is la tu r e fo llo w in g th e a d m issio n
o f th e s a v in g s b a n k t o m e m b e rs h ip s o a s t o a u th o r iz e m u tu al s a v in g s b a n k s t o p u r c h a s e
F e d e ra l R e s e r v e B a n k s to c k , o r i f su ch la w s be s o a m e n d e d a n d th e b a n k fa il w ith in six
m o n t h s t h e r e a fte r t o p u r c h a s e s u ch s to c k , all o f its r ig h t s a n d p r iv ile g e s a s a m e m b e r ban k
s h all be f o r f e it e d a n d its m e m b e r s h ip in th e F e d e ra l R e s e rv e S y s te m shall be te r m in a te d
in th e m a n n e r p r e sc r ib e d in s e c tio n * o f th e F e d e ra l R e s e r v e A ct.
J




R E G U L A T IO N H

5

(2 ) T h e a d eq u acy o f its ca p ita l stru ctu re in rela tion to
th e ch a ra cte r and con d ition o f its a ssets and to its e x is tin g
and p rosp ectiv e d ep osit lia b ilities and o th e r co rp o ra te re ­
s p o n s ib ilitie s ; and its fu tu re ea rn in g s p ro s p e c ts ;
(3 ) T h e con v en ien ce and needs o f th e co m m u n ity to be
served b y th e b a n k ; and
(4 ) W h e th e r its corp o ra te p ow ers are con sisten t w ith the
p u rp oses o f th e F ed era l R eserve A ct.
(b)
Procedure for admission to membership after approval of
application.— I f an a p p ly in g bank co n fo rm s to all th e req u ire­
m en ts o f the F ed era l R eserve A c t and th is re g u la tio n and is
o th erw ise qualified f o r m em b ersh ip , its ap p lica tion w ill be ap­
p roved s u b je c t to su ch con d ition s as m a y be p re scrib e d pursuan t
to th e p rov ision s o f th e F ed era l R eserv e A c t. W h en th e co n d i­
tion s p rescrib ed have been a ccep ted b y th e a p p ly in g ban k, it
sh ould p ay to th e F ed era l R eserv e B an k o f its d is trict o n e -h a lf
o f th e a m ou n t o f its su b scrip tion and, u pon re ce ip t o f advice
fr o m th e F ederal R eserve B an k as to th e req u ired am ou n t, oneh a lf o f one p er cen t o f its paid-u p su b scrip tio n fo r each m onth
f r o m th e p eriod o f th e last d ivid en d .4 T h e re m a in in g h a lf o f the
b a n k ’s su b scrip tion shall be s u b je c t to call w h en deem ed n eces­
sa ry b y th e B oard. T h e b a n k ’s m em b ersh ip in th e F ed era l R e ­
serve S y stem shall b ecom e e ffe c tiv e on th e date as o f w h ich a
ce rtifica te o f Stock o f th e F ederal R eserv e B an k is issued to it
p u rsua n t to its ap p lica tion f o r m em b ersh ip or, in th e case o f a
m utual sa v in g s bank w h ich is n ot a u th orized to su b scrib e fo r
s tock , on th e d ate as o f w h ich a certifica te re p re se n tin g th e a c­
cep ta n ce o f a d ep osit w ith th e F ederal R eserve B an k in place
o f a p a ym en t on a ccou n t o f a su b scrip tion to s to ck is issued to it
p u rsua n t to its a p p lica tion f o r m em bersh ip.
S E C T IO N

6. P R I V I L E G E S A N D

R E Q U IR E M E N T S O F

M E M B E R S H IP

E v e r y S ta te bank w h ile a m em b er o f th e F ederal R eserve
S y stem —
(a )
Shall retain its fu ll ch a rte r and s ta tu to ry rig h ts s u b je c t
to th e p rov ision s o f th e F ederal R eserv e A c t and o th e r A c ts o f
C on gress a pp licable to m em b er S tate banks, to th e reg u la tion s
o f th e B oard m ade pursuan t to law , and to the co n d ition s p re-

■•In th e c a s e o f a m u tu al s a v in g s b an k w h ich is n o t p e r m itte d b y th e la w s u n d e r w h ic h it
it w a s o r g a n iz e d t o p u r c h a s e s to c k in a F e d e ra l R e s e r v e B a n k , it sh a ll d e p o s it w it h th e
F ed era l R e s e r v e B a n k an a m o u n t e qu a l t o th e a m o u n t w h ic h it w o u ld h a ve b e e n r e q u ire d to
p a y in o n a c c o u n t o f a s u b s c r ip tio n t o c a p it a l sto ck .




R E G U L A T IO N H

6

scrib ed b y th e B oard and a g reed to b y su ch bank p rio r to its
a d m is s io n ;
( b ) Shall e n jo y all th e p riv ileg es and ob se rv e all th e re q u ire ­
m en ts o f th e F ed era l R e se rv e A c t and o th e r A c ts o f C on gress
a p p lica b le to m em b er S tate banks and o f th e re g u la tio n s o f th e
B oa rd m a de p u rsu a n t t o law w h ich a re a pp licable to m em b er
S ta te b a n k s;
( c ) Shall com p ly at all tim es w ith a n y and all co n d itio n s o f
m em b ersh ip p rescrib ed b y th e B oard in co n n e ctio n w ith th e ad­
m ission o f su ch bank to m em b ersh ip in th e F ed era l R eserve
S y s te m ; and
( d ) Shall n ot red u ce its ca p ita l sto ck e x c e p t w ith th e p rio r
co n sen t o f th e B o a rd .5
S E C T IO N 7. C O N D I T I O N S O F M E M B E R S H I P

P u rsu a n t to th e a u th o rity con ta ined in th e first p a ra g ra p h o f
section 9 o f th e F ed era l R eserve A c t, w h ich a u th orizes th e B oard
to p erm it a p p ly in g S tate banks to b ecom e m em b ers o f th e F ed ­
eral R eserve S ystem “ s u b je c t to th e p rov isio n s o f th is A c t and
to su ch con d ition s as it m a y p rescrib e p u rsu a n t th e re to ,” th e
B oard , e x c e p t as h e re in a fte r stated, w ill p re scrib e th e fo llo w in g
co n d itio n s o f m em b ersh ip f o r ea ch S tate bank h e re a fte r a p p ly ­
in g f o r a d m ission to th e F ed era l R eserve S ystem , and, in a d d i­
tion , su ch o th e r con d ition s as m a y be con sid ered n e ce ssa ry or
ad visab le in th e p a rticu la r case—
1.
S u ch ban k a t all tim es shall co n d u ct its b u sin ess and
ex ercise its p ow e rs w ith due reg a rd to th e s a fe ty o f its de­
p ositors, and, e x ce p t w ith th e perm ission o f th e B oard o f
G ov ern ors o f th e F ed era l R eserve S ystem , such ban k shall
n ot cau se o r p erm it an y ch a n g e to be m ade in th e gen eral
ch a ra cte r o f its b u siness o r in th e scop e o f th e co rp o ra te
p ow ers ex ercised b y it at th e tim e o f a dm ission to m e m b e r­
sh ip .8

“T h is a p p lie s t o c a p it a l s to ck o f all cla s se s a n d t o c a p it a l n o te s a n d d e b e n tu re s le ga lly
issu ed a n d p u r c h a s e d by the R e c o n s t r u c t io n F in a n ce C o r p o r a t io n w h ic h , u n d e r th e F ed era l
R e s e r v e A c t . a r e c o n s id e r e d a s c a p it a l sto ck f o r p u r p o s e s o f m e m b e r s h ip .
• F or m a n y y e a r s, th e B o a rd p r e s c r ib e d , a s s ta n d a rd c o n d it io n s o f m e m b e r s h ip , a c o n d it io n
w h ic h , in g e n e r a l, p r o h ib ite d b a n k s fro m e n g a g in g a s a b u sin e ss in th e sale o f real esta te
lo a n s t o th e p u b lic a n d c e r ta in c o n d it io n s r e la tin g t o th e e x e r c is e o f t r u s t p o w e r s , in c lu d in g
o n e w h ic h p r o h ib ite d s e lf-d e a lin g in th e in v e s tm e n t o f tr u s t fu n d s. T h e e lim in a tio n o f these
c o n d it io n s a s s ta n d a r d c o n d it io n s o f m e m b e r s h ip do e s n o t r e fle ct a n y c h a n g e in th e B o a r d 's
p o s it io n a s t o th e u n d e sir a b ility o f th e p r a c t ic e s fo r m e r ly p r o h ib ite d b y s u ch c o n d it io n s ; a n d
a t t e n t io n is called t o th e fa c t t h a t e n g a g in g a s a b u sin ess in th e sale o f real esta te lo a n s t o
th e p u b lic o r fa ilin g t o c o n d u c t t r u s t b u sin e ss in a c c o r d a n c e w ith th e a p p lic a b le S ta te la w s
a n il s o u n d p r in c ip le s o f tru st a d m in is tr a t io n m ay c o n s titu te u n s a fe o r u n s o u n d p r a c t ic e s and
v io la te c o n d it io n n u m bered 1.




R E G U L A T IO N H

7

2.
T h e n et ca p ita l and su rp lu s fu n d s o f su ch ban k shall be
a deq u ate in rela tion to th e ch a ra cte r and co n d itio n o f its
a ssets and to its d ep osit lia b ilities and o th e r co rp o ra te re ­
spon sib ilities.
T h e a cq u isition b y a m em b er S tate bank o f th e a sse ts o f an­
o th e r in stitu tio n th ro u g h m erg er, con solid ation , o r p u rch a se m a y
re su lt in a ch a n g e in th e gen eral ch a ra cte r o f its b u siness o r in
th e scop e o f its corp ora te p ow ers w ith in th e m ea n in g o f co n d i­
tio n n u m bered 1, and i f a t a ny tim e a ban k s u b je c t to su ch co n ­
d ition a n ticip a tes m a k in g a n y su ch a cq u isition a detailed rep ort
s e ttin g fo r t h all th e fa c ts in con n ection w ith th e tra n sa ctio n shall
be m ade p rom p tly to th e F ed era l R eserv e B an k o f th e d istrict
in w h ich su ch ban k is located.
I f a t a n y tim e, in th e lig h t o f all th e circu m sta n ces, th e a g g r e ­
g a te a m ou n t o f a m em b er S tate ban k ’s n et ca p ita l and surplus
fu n d s a pp ears to be inadequate, th e bank, w ith in such period
as shall be deem ed b y the B oard to be rea son ab le f o r th is p u r­
p ose, shall in crease th e a m ou n t th e r e o f to an a m ou n t w h ich in
th e ju d g m e n t o f th e B oard shall be a dequ ate in rela tion to th e
ch a ra cte r and con d ition o f its a ssets and to its d ep osit liabilities
and o th e r corp o ra te resp on sibilities.
S E C T IO N 8. E S T A B L I S H M E N T O R M A I N T E N A N C E O F B R A N C H E S

(a )
In gen eral.— E v e r y S tate ban k w h ich is o r h e re a fte r be­
com es a m em b er o f th e F ed era l R eserv e S y stem is s u b je c t to the
p rov ision s o f section 9 o f th e F ederal R eserve A c t re la tin g to the
e sta b lish m en t and m a in ten ance o f b ra n ch es7 in th e U nited States
o r in a d epen d en cy o r insu lar p ossession th e r e o f o r in a fo re ig n
co u n try . U nder th e p rov ision s o f section 9, m em b er S tate banks
e sta b lish in g and op e ra tin g bran ch es in th e U nited S tates beyon d
th e corp o ra te lim its o f th e city , tow n , o r villag e in w h ich the
p aren t bank is situ a ted m u st co n fo rm to th e sam e term s, co n d i­
tio n s, lim itation s, and restriction s as a re applicable to th e e sta b ­
lish m en t o f b ra n ch es b y n ational banks under th e p rovision s o f
section 5155 o f th e R evised S ta tu tes o f th e U nited S tates rela t­
in g to th e esta b lish m en t o f bran ch es in th e U nited States, ex cep t
th a t th e a p p rov a l o f an y su ch bran ch es m u st be obtain ed fro m
th e B oard ra th e r th an fro m th e C om p troller o f th e C u rren cy.

’ S e c tio n 5155 o f th e R e v is e d S ta tu te s o f th e U n ite d S ta te s p r o v id e s t h a t : “ ( f ) T h e te rm
'b r a n c h ' a s u sed in th is s e c tio n shall be held t o in clu d e a n y b r a n c h b a n k , b r a n c h office, b r a n c h
a g e n c y , a d d itio n a l office, o r a n y b r a n c h p la c e o f b u sin e ss lo ca te d in a n y S ta te o r t e r rito r y
o f th e U n ited S ta tes o r in th e D is tr ic t o f C o lu m b ia a t w h ich d e p o s its a r e rece iv e d , o r ch eck s
p a id , o r m on ey le n t.”




R E G U L A T IO N H

8

T h e a pp roval o f th e B oard m u st lik ew ise be ob tain ed b e fo r e an y
m em b er S ta te bank esta b lish es an y b ra n ch a ft e r J u ly 15, 1952,
w ith in th e co rp o ra te lim its o f th e city , tow n , o r villag e in w h ich
th e p aren t bank is situ a ted (e x ce p t w ith in th e D istrict o f C o­
lu m b ia ). U nder th e p rov ision s o f section 9, m em b er S tate banks
e sta b lish in g and op e ra tin g b ra n ch es in a depen d en cy o r insular
p o ssession o f th e U n ited S ta tes o r in a fo r e ig n co u n try m u st
co n fo r m to th e term s, con d ition s, lim itation s, and re strictio n s
con ta in ed in section 25 o f th e F ederal R eserve A c t re la tin g to the
esta b lish m en t b y n ation al banks o f bran ch es in su ch places.

(6) Branches in the United States.—
1. B e fo r e a m em b er S tate bank esta b lish es a b ra n ch (e x ­
ce p t w ith in th e D istrict o f C o lu m b ia ), it m u st ob tain th e
a pp rov al o f th e B oard.
2. B e fo r e a n y n on m em b er S tate bank h a v in g a branch or
b ra n ch es estab lish ed a fte r F eb ru a ry 25, 1927, b eyon d th e
corp ora te lim its o f th e c ity , tow n , o r villag e in w h ich th e
bank is situ ated is ad m itted to m em b ersh ip in th e F ederal
R eserv e S ystem , it m u st ob tain th e a pp rov al o f th e B oard
fo r the reten tion o f su ch branches.
3. A m em b er S tate bank loca ted in a S tate w h ich by
statu te law p erm its th e m a in ten ance o f b ra n ch es w ith in
cou n ty o r g r e a te r lim its m a y, w ith th e a pp roval o f th e B oard,
estab lish and op era te, w ith ou t reg a rd to th e capital req u ire­
m en ts o f section 5155 o f th e R evised S ta tu tes, a seasonal
a g e n cy in any re so rt com m u n ity w ith in th e lim its o f th e
cou n ty in w h ich the m ain office o f su ch bank is loca ted f o r
th e p urp ose o f re ce iv in g and p a y in g o u t d ep osits, issu in g
and ca s h in g ch eck s and d ra fts , and d o in g b u sin ess in cid en t
th ereto, if no bank is loca ted and d oin g b u siness in th e place
w h ere th e p rop osed a g e n cy is to be lo c a te d ; and an y p erm it
issued fo r th e esta b lish m en t o f such an a g e n cy shall be
rev ok ed upon the op en in g o f a S tate o r n ation al bank in th e
com m u n ity w h ere th e a g e n cy is located.
4. E x c e p t as stated in th e im m ed ia tely p re ce d in g p a ra ­
gra p h , in o rd er f o r a m em b er S tate bank to esta b lish a
b ra n ch b eyon d th e corp o ra te lim its o f th e c ity , tow n , or
villag e in w h ich it is situ ated , th e a g g r e g a te capital stock
o f th e m em b er S tate bank and its bran ch es shall at no tim e
be less than th e a g g r e g a te m in im u m cap ital s to ck req u ired
b y law f o r th e esta b lish m en t o f an equal n u m ber o f n ational




R E G U L A T IO N H

9

b a n k in g a ssocia tion s situ a ted in th e va rio u s p laces w h ere
such m em b er S tate bank and its b ra n ch es are situ a te d .8
5. A m em b er S tate bank m a y n o t estab lish a b ra n ch be­
y on d th e corp o ra te lim its o f th e c ity , tow n , o r villag e in
w h ich it is situ ated unless su ch esta b lish m en t and op era tion
a re at th e tim e au th orized to S ta te banks b y th e statu te
law o f th e S tate in q u estion b y lan gu a ge specifically g ra n tin g
such a u th o rity a ffirm atively and n ot m e re ly b y im plication
o r recog n ition .
6. A n y m em b er S tate bank w h ich , on F e b ru a ry 25, 1927,
had estab lish ed and w as a ctu a lly op e ra tin g a branch o r
b ra n ch es in c o n fo r m ity w ith the S tate law is p erm itted to
reta in and op era te th e sam e w h ile rem a in in g a m em b er o f
th e F ed era l R eserv e S ystem , reg a rd less o f th e loca tion o f
su ch branch o r branch es.
7. T h e rem ova l o f a branch o f a m em b er S ta te bank fro m
one tow n to a n oth er tow n con stitu tes th e esta b lish m en t o f a
branch in su ch o th e r tow n and, a cco rd in g ly , req u ires the
a pproval o f th e B oard. T h e rem oval o f a b ra n ch o f a m em ber
State bank fr o m one loca tion in a to w n to a n oth er location
in the sam e to w n w ill req u ire the a p p ro v a l o f the B o a rd if
th e circu m sta n ces o f th e rem ova l are su ch th a t th e e ffe ct
th e r e o f is to co n stitu te th e estab lish m en t o f a n ew branch
as d istin g u ish ed fr o m the m ere reloca tion o f an e x is tin g
b ra n ch in th e im m edia te n eig h b orh ood w ith o u t a ffe ctin g the
n ature o f its busines o r cu stom ers served .
( c) Application for approval of branches in United States.—
A n y m em b er S tate bank d esirin g to estab lish a branch should
su bm it a req u est f o r the a pp roval b y th e B oard o f a ny such
branch to th e F ed era l R eserve B ank o f th e d is trict in w h ich the
bank is located. A n y n on m em b er S tate bank a p p ly in g f o r m em ­
b ersh ip and d esirin g to retain a ny b ra n ch establish ed a fte r F e b ­
ru a ry 25, 1927, b eyon d th e corp ora te lim its o f th e c ity , tow n ,
o r villag e in w h ich th e bank is situ a ted sh ould su b m it a sim ilar
req u est. A n y su ch req u est sh ould be a ccom pa n ied b y a d vice as
to th e scop e o f the fu n ctio n s and th e ch a ra cte r o f th e business

•The r e q u ir e m e n t o f th is p a r a g r a p h is m e t i f th e a g g r e g a t e c a p it a l s to ck o f a m e m b e r
S ta te b a n k h a v in g b r a n c h e s is n o t less th a n th e to ta l a m o u n t o f c a p it a l s to ck w h ich w ould
b e r e q u ire d f o r th e e s ta b lis h m e n t o f o n e n a tio n a l b a n k in e a ch o f th e pla ce s in w h ic h th e
h ea d office a n d b r a n c h e s o f th e m e m b e r S ta te b a n k a r e lo ca te d , ir r e s p e c tiv e o f th e n u m b e r o f
offices w h ich th e b a n k m a y h a v e in a n y such p la c e . T h e r e a r e n o a d d itio n a l c a p it a l r e q u ir e ­
m e n ts f o r a d d itio n a l b r a n c h e s w ith in th e c it y . t o w n , o r v illa g e in w h ic h th e h ead office is
loca ted .




R E G U L A T IO N H

10

w h ich are o r w ill be p e rfo rm e d b y th e b ra n ch and detailed in ­
fo r m a tio n r e g a r d in g th e p o licy fo llo w e d o r p rop osed to be f o l ­
low ed w ith r e fe r e n c e to su p ervision o f th e b ra n ch b y th e head
o ffice ; and th e ban k m a y be req u ired in a n y ca se to fu r n is h
add ition al in fo rm a tio n w h ich w ill be h elp fu l to th e B oard in
d e te rm in in g w h eth er to a p p rov e su ch req u est.
( d ) F o r e ig n b ra n ch es.— B e fo r e a m em b er S tate bank e sta b ­
lish es a b ra n ch in a fo r e ig n co u n try , o r d ep en d en cy o r insular
p ossession o f th e U nited S ta tes, it m u st h ave a cap ital and su r­
plus o f $1,000,000 o r m ore and ob ta in th e a pp rov al o f th e B oard.
( e ) A p p lica tion f o r a p p rov a l o f fo re ig n b ra n ch es.— A n y m em ­
b er S ta te bank d esirin g to estab lish such a b ra n ch and a n y n on ­
m em b er S tate bank a p p ly in g f o r m em b ersh fp and d e sirin g to
re ta in a ny su ch b ra n ch esta b lish ed a fte r F e b ru a ry 25, 1927,
sh ou ld su b m it a req u est f o r th e a pp rov al b y th e B o a rd o f an y
su ch b ra n ch to th e F ed era l R eserv e B an k o f th e d is trict in w h ich
th e ban k is loca ted . A n y su ch req u est sh ou ld be a ccom p a n ied b y
a d v ice as to th e scop e o f th e fu n c tio n s and th e ch a ra cte r o f th e
b u sin ess w h ich are o r w ill be p e rfo rm e d b y th e b ra n ch and de­
ta iled in fo rm a tio n re g a r d in g th e p o licy fo llo w e d o r p ro p o se d to
be fo llo w e d w ith refe re n ce to su p ervision o f th e b ra n ch b y the
h ead o ffic e ; and th e ban k m a y be req u ired in a n y case to fu rn is h
a dd ition al in fo rm a tio n w h ich w ill be h elp fu l to th e B o a rd in
d eterm in in g w h eth er to a p p rov e su ch requ est.
S E C T IO N 9. P U B L I C A T I O N O F R E P O R T S O F M E M B E R
A N D T H E IR A F F IL IA T E S 9

BANKS

(a )
R e p o rts o f m em b er banks.— E a ch re p o rt o f con d ition m ade
b y a m em b er S tate bank, w h ich is req u ired to be m a de to the
F ed era l R eserve B an k o f its d is trict as o f call d ates fixed b y the
B oa rd o f G ov ern ors o f th e F ed era l R ese rv e S ystem , shall be
publish ed by such m em b er bank w ith in tw e n ty d a y s fr o m the
date th e call th e r e fo r is issued.
T h e rep ort shall be p rin ted in a n ew spa p er p u b lish ed in the
place w h ere th e bank is loca ted or, i f th e re be n o n ew spa p er
“U n d e r th e p r o v is io n s o f s e c tio n 9 o f th e F e d e ra l R e s e r v e A c t . r e p o r t s o f c o n d it io n o f
m e m b e r S ta te b a n k s w h ic h , u n d e r th a t s e c tio n , m u s t b e m a d e t o th e r e s p e c t iv e F ed era l
R e se r v e B a n k s o n ca ll d ates fix e d b y th e B o a r d o f G o v e rn o rs o f th e F e d e ra l R e s e r v e S ystem
“ shall be p u b lish ed b y th e r e p o r t in g b a n k s in su ch m a n n e r a n d in a c c o r d a n c e w ith such
r e g u la tio n s a s th e sa id B o a rd m ay p r e s c r ib e ” .
S e c tio n 9 a lso p r o v id e s th a t th e r e p o r t s o f affilia tes o f a m e m b e r S ta te b a n k w h ic h a r e
r e q u ire d b y th a t s e c tio n t o be fu r n is h e d t o th e r e s p e c t iv e F e d e ra l R e s e r v e B a n k s “ shall be
p u b lish ed b y th e b a n k u n d e r th e sa m e c o n d it io n s as g o v e r n its o w n c o n d it io n r e p o r t s " . T h e
te r m " a ffilia t e s ” , as u sed in th is p r o v is io n o f s e c tio n 9, u n d e r th e e x p r e s s te r m s o f th a t
s e c t io n , in clu d es “ h o ld in g c o m p a n y affilia tes a s w ell as o t h e r affilia tes” , b u t a m e m b e r S ta te
b a n k is n o t req u ired t o fu r n is h t o a F e d e ra l R e s e rv e B ank th e r e p o r t o f a n affilia te d m e m b e r
ban k.




R E G U L A T IO N H

11

pu blish ed in th e place w h ere th e bank is loca ted , th en in a n ew s­
p ap er p u b lish ed in th e sam e o r in an a d jo in in g co u n ty and in
gen eral circu la tion in th e place w h ere th e bank is loca ted . The
term “ n ew sp a p er” , f o r th e p u rp ose o f th is reg u la tion , m ean s a
p u b lication w ith a gen eral circu la tion p u blish ed n ot less f r e ­
q u en tly th a n once a w eek, one o f th e p rim a ry fu n ctio n s o f w h ich
is th e d issem in a tion o f n ew s o f gen eral interest.
T h e co p y o f th e re p o r t fo r th e use o f th e p rin te r f o r p u b lication
sh ou ld be p repared on the fo rm supplied or a u th orized f o r the
p u rp ose b y th e F ed era l R eserve B ank. T h e p u blish ed in fo rm a tio n
shall a gree in e v e ry resp ect w ith th a t sh ow n on the fa c e o f th e
con d ition rep ort ren d ered to th e F ed era l R e se rv e B ank, ex ce p t
th a t a n y item f o r w h ich no a m ou nt is rep o rte d m a y be om itted
in th e publish ed statem en t. A ll sig n a tu res shall be the sam e in
th e publish ed statem en t as in th e origin a l re p o rt su bm itted to
the F ederal R eserve B ank, but th e sig n a tu re s m a y be ty p ew ritten
o r oth erw ise cop ied on th e rep ort f o r p u blication .
A co p y o f th e p rinted re p o rt shall be su bm itted to th e F ederal
R eserve B ank a tta ch ed to th e certifica te on th e fo r m supplied
o r a u th orized f o r th e p u rp ose b y th e F ed era l R eserve Bank.

( b)
Reports of affiliates.1 — E a ch re p o rt o f an affiliate o f a
0
m em b er S tate ban k, in clu d in g a h old in g com p a n y affiliate, shall
be publish ed at th e sam e tim e and in th e sam e n ew spa p er as the
affiliated b a n k ’s ow n con d ition rep ort su bm itted to th e F ederal
R eserve B ank, unless an exten sion o f tim e f o r su bm ission o f the
re p ort o f th e affiliate has been g ra n ted un der a u th o rity o f the
B oard o f G ov ern ors o f th e F ederal R eserve S ystem . W h en such
e xten sion o f tim e has been gra n ted , th e re p o rt o f th e affiliate
m u st be su bm itted and publish ed b e fo r e the e x p ira tio n o f such
exten d ed p eriod in th e sam e n ew spap er as th e con d ition rep ort
o f th e bank w as published.
T h e co p y o f the rep ort f o r th e use o f the p rin ter fo r p ublication
should be p rep ared on F orm F .R . 220a. T h e publish ed in fo rm a tio n
shall a gree in e v e ry resp ect w ith th a t sh ow n on th e fa c e o f the
re p o r t o f th e affiliate fu rn ish ed to th e F ederal R eserve Bank by
th e affiliated m em b er bank, ex cep t th a t an y item a p p ea rin g under
’ "S e c tio n 21 o f th e F e d e ra l R e s e r v e A c t , a m o n g o th e r th in g s , p r o v id e s a s fo llo w s : “ W h e n ­
e v e r m e m b e r b a n k s a r e re q u ire d t o o b ta in r e p o r ts fr o m affilia tes, o r w h e n e v e r affilia tes o f
m e m b e r b a n k s a r e r e q u ire d t o s u b m it t o e x a m in a t io n , th e B o a rd o f G o v e rn o rs o f th e F ed era l
R e se rv e S ystem o r th e C o m p tr o lle r o f th e C u r r e n c y , as th e c a s e m a y be. m a y w a iv e such
r e q u ir e m e n ts w ith r e s p e c t to a n y such r e p o r t o r e x a m in a t io n o f a n y affilia te i f in th e ju d g ­
m e n t o f th e sa id B o a rd o r C o m p tr o lle r , re s p e c tiv e ly , such r e p o r t o r e x a m in a t io n is not
n e c e s s a r y t o d is c lo s e fu lly th e r e la tio n s b e tw e e n such affilia te a n d s u ch ban k a n d th e e ffe ct
t h e r e o f u p o n th e a ffa ir s o f s u ch b a n k .” T h e r e fo r e , o f c o u r s e , in a n y c a s e w h e r e th t B o a rd
o f G o v e rn o rs w a iv es th e filin g o f a r e p o r t o f an a ffilia te o f a m e m b e r S ta te ban k , n o p u b lic a ­
tio n o f a r e p o r t o f su ch a ffilia te is re q u ire d .




R E G U L A T IO N H

12

th e ca p tion “ F in an cia l rela tion s w ith b a n k ” a g a in st w h ich the
w o rd “ n on e” a pp ears on th e rep ort fu rn ish e d to th e F ed era l
R e serv e B an k m a y be om itted in th e p ublish ed sta tem en t o f the
affiliate, p rovid ed th a t i f th e w ord “ n on e” is sh ow n a g a in st all
o f th e item s a p p ea rin g un der such ca p tion in th e re p o rt fu rn ish e d
to th e F ederal R e se rv e B an k th e ca p tion “ F in an cial rela tion s
w ith b a n k ” shall a pp ear in th e p u blish ed sta tem en t fo llo w e d by
th e w ord “ n on e.” A ll sig n a tu res shall be th e sam e in th e p u blish ed
s ta tem en t as in th e origin a l rep ort su bm itted to th e F ederal
R e se rv e B ank, b u t th e sig n a tu res m a y be ty p e w ritte n o r o th e r­
w ise cop ied on th e re p o rt f o r p u blication .
A co p y o f th e p rin ted rep ort shall be su bm itted to th e F ederal
R e serv e B an k a tta ch ed to th e certifica te on F o rm F .R . 220a.
S E C T IO N

10..

VOLUNTARY

W IT H D R A W A L

FROM

FEDERAL

RESERVE

SYSTEM

(a ) General.— A n y sta te bank d esirin g to w ith d ra w fr o m m em ­
b e rsh ip in a F ed era l R eserv e B an k m a y d o so a fte r s ix m o n th s ’
w ritte n n otice h as been filed w ith th e B o a r d ;1 and th e B oard,
1
in its d iscretion , m a y w a iv e su ch six m o n th s’ n o tice in a n y in­
d ivid u al case and m a y p erm it such bank to w ith d ra w fr o m m em ­
b ersh ip in a F ederal R eserv e B ank, s u b je c t to su ch co n d ition s
a s th e B oard m a y p rescrib e, p rio r to th e e x p ira tio n o f s ix m on th s
fr o m th e date o f th e w ritte n n otice o f its in ten tion to w ith d raw .
( b ) Notice of intention of withdrawal.— A n y S tate bank de­
s irin g to w ith d ra w fr o m m em b ersh ip in a F ed era l R e se rv e B an k
should s ig n ify its in ten tion to do so, w ith th e rea son s th e re fo r ,
in a letter add ressed t o th e B oard and m ailed to th e F ederal
R e serv e B ank o f w h ich su ch bank is a m em b er. A n y su ch bank
d e sirin g to w ith d ra w fr o m m em b ersh ip p rio r to th e e x p ira tio n
o f s ix m on th s fr o m th e d ate o f w ritte n n o tice o f its in tention
to w ith d ra w sh ould so state in th e letter s ig n ify in g its in ten tion
to w ith d ra w and sh ou ld sta te th e rea son f o r its d esire t o w ith ­
d ra w p rio r to th e ex p ira tio n o f s ix m onth s.
E v e r y n otice o f in tention o f a bank to w ith d ra w fr o m m em ­
b ersh ip in th e F ed era l R eserv e S y stem and e v e ry a p p lica tion fo r
th e w a iv er o f su ch n otice sh ould be a ccom pa n ied b y a certified
co p y o f a resolu tion duly a dop ted b y th e b oard o f d ire cto rs o f
su ch ban k a u th orizin g th e w ith d ra w a l o f su ch ban k fr o m m em -

" U n d e r s p e c ific p r o v is io n s o f s e c tio n 9 o f th e F e d e ra l R e s e rv e A c t . h o w e v e r , n o F e d e ra l
R e s e r v e B a n k shall, e x c e p t u p o n e x p r e s s a u th o r ity o f th e B o a rd , c a n c e l w ith in th e sam e
c a le n d a r y e a r m o r e th a n t w e n ty -fiv e p e r c e n t o f its c a p it a l s to c k f o r th e p u r p o s e o f e ffe c t in g
v o lu n t a r y w ith d r a w a ls d u r in g t h a t y e a r . A ll a p p lic a t io n s f o r v o lu n t a r y w ith d r a w a ls a r e
r e q u ire d b y th e law t o be d e a lt w ith in th e o r d e r in w h ich th e y a r e filed w it h th e B o a rd .




R E G U L A T IO N H

13

b e rsh ip in th e F ed era l R eserve S ystem and a u th o riz in g a certa in
officer o r ce rta in officers o f su ch bank to file su ch n o tice o r a p ­
p lica tion , to su rren d er f o r can cellation th e F ederal R e se rv e B ank
s to ck held b y su ch bank, to receiv e and re ce ip t f o r a n y m on eys
o r o th e r p ro p e rty due to su ch bank fr o m th e F ed era l R eserve
B an k and to d o such o th e r th in g s as m a y be n e ce ssa ry to e ffe c t
th e w ith d ra w a l o f su ch bank fr o m m em b ersh ip in th e F ederal
R e serv e S ystem .
N otice o f in ten tion to w ith d ra w o r ap p lica tion f o r w a iv er o f
s ix m o n th s ’ n otice o f in tention to w ith d ra w b y a n y bank w h ich
is in th e han ds o f a co n s e rv a to r o r o th e r S tate official a ctin g in
a ca p a city sim ila r to th a t o f a co n s e rv a to r sh ould be accom pan ied
b y a d vice fr o m th e co n s e rv a to r o r o th e r su ch S tate official th a t he
jo in s in such n o tice o r app lication .
( c ) Time and method of effecting actual withdrawal.— U pon
th e ex p ira tio n o f six m on th s a fte r n otice o f in ten tion to w ith ­
d ra w o r upon th e w a iv in g o f su ch s ix m o n th s ’ n o tice b y the
B oard , such bank m a y su rren d er its sto ck and its ce rtifica te o f
m e m b ersh ip to th e F ederal R eserve B an k and req u est th a t sam e
be canceled and th a t all a m ou nts due to it fr o m th e F ederal
R eserve B ank be re fu n d e d .12 U nless w ith d ra w a l is th u s effected
w ith in eig h t m on th s a fte r n otice o f inten tion to w ith d ra w is first
g iven , o r unless th e ban k req u ests and th e B oard g ra n ts an e x ­
te n sion o f tim e, su ch bank will be presu m ed to have abandoned
its in ten tion o f w ith d ra w in g fr o m m em b ersh ip and will n ot be
p erm itted to w ith d ra w w ith ou t a gain g iv in g s ix m o n th s ’ w ritten
n o tice o r o b ta in in g th e w a iv er o f such n otice.
( d ) W ithdrawal o f notice.— A n y ban k w h ich has g iv e n n otice
o f its in ten tion t o w ith d ra w fr o m m em b ersh ip in a F ed era l R e­
serve B an k m a y w ith d ra w such n otice a t a n y tim e b e fo r e its

UA b a n k 's w ith d r a w a l fr o m m e m b e r s h ip in th e F e d e ra l R e s e r v e S y s te m is e ffe c tiv e o n the
d a te o n w h ich th e F ed e ra l R e s e r v e B a n k s to c k held b y it is du ly c a n ce le d . U n til such stock
has been c a n celed , s u ch b a n k re m a in s a m e m b e r o f th e F e d e ra l R e s e rv e S y ste m , is e n titled
t o all th e p r iv ile g e s o f m e m b e r s h ip , a n d is re q u ire d t o c o m p ly w it h all p r o v is io n s o f law
a n d all r e g u la tio n s o f th e B o a rd p e r t a in in g t o m e m b e r b a n k s a n d w it h all c o n d it io n s o f
m e m b e r s h ip a p p lic a b le t o it. U p o n th e c a n c e lla t io n o f s u ch s to c k , all r ig h t s a n d p r iv ile g e s o f
su ch b a n k as a m e m b e r b a n k shall te r m in a te .
U p o n th e c a n c e lla t io n o f s u ch s t o c k , a n d a f t e r d u e p r o v is io n has been m a d e f o r a n y
in d eb ted n ess d u e o r t o b e c o m e due t o th e F e d e ra l R e s e r v e B a n k , s u ch b a n k shall be e n title d
t o a r e fu n d o f its c a s h p a id s u b s c r ip tio n w ith in te re s t a t th e r a t e o f o n e - h a lf o f o n e p e r c e n t
p e r m o n th f r o m th e d a te o f la s t d iv id e n d , th e a m o u n t re fu n d e d in n o e v e n t t o e x c e e d th e
b o o k v a lu e o f th e s to c k a t t h a t tim e , a n d shall lik e w is e be e n title d t o th e r e p a y m e n t o f
d e p o s its a n d o f a n y o th e r b a la n c e due fr o m th e F e d e ra l R e s e r v e B ank.




14

R E G U L A T IO N H

stock has been canceled and upon doing so may remain a member
of the Federal Reserve System. The notice rescinding the former
notice should be accompanied by a certified copy of an appropriate
resolution duly adopted by the board of directors of the bank.
S E C TIO N 11. B O A R D FORMS

All forms referred to in this regulation and all such forms as
they may be amended from time to time shall be a part of this
regulation.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102