The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FED ER A L RESERVE BANK OF DALLAS DALLAS, TEXAS 75222 Circular No. 70-282 November 20, 1970 REPRINT OF REGULATION I To All Member Banks in the Eleventh Federal Reserve District: Enclosed is the new larger size reprint of Regulation I, as amended effective February 1, 1963. There have been no amendments issued since that time. The small size Regulation I should be removed from your binder and may be destroyed. Yours very truly, P. E. Coldwell President Enclosure This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM ISSUE AND CANCELLATION OF CAPITAL STOCK OF FEDERAL RESERVE BANKS REGULATION I (12 C F R 209) A s am ended effective February 1, 1963 ** Any inquiry relating to this regulation should be addressed to the Fed eral Reserve Bank of the Federal Reserve district in which the inquiry arises. CONTENTS Page S e c . 2 0 9 .1 — N a t io n a l Bank in P rocess O r g a n i z a t i o n ...................... of S e c . 2 0 9 .9 — O t h e r C l o s e d N ................................................... S e c . 2 0 9 .3 — I n c r e a s e or C a p it a l S e c . 2 0 9 .4 — I n c r e a s e p o s it s Ba Sec. 2 0 9 .5 — M Sec. 209.6 — n k erger D ecrease B a n k s .............................................. 6 4 S e c . 2 0 9 .1 0 — O t h e r C l o s e d S t a t e M e m b e r B a n k s ................................. 6 of orSu r p l u s or D ecrease Sec. 2 0 9 .1 1 — V o l u n t a r y W 4 of D e 4 or 5 C o n v e r s io n of N a t io n a l .. Bank from M it h d r a w a l e m b e r s h ip 6 S e c . 2 0 9 .1 2 — I n v o l u n t a r y T e r m i n a t i o n M u t u a l S a v in g s ................................................. by C o n s o lid a tio n a t io n a l 3 S e c . 2 0 9 .2 — S t a t e B a n k B e c o m i n g M e m ber Page 5 of M e m b e rs h ip ................... 7 S e c . 2 0 9 .1 3 — C a n c e l l a t i o n o f O l d a n d Issu e o f N e w S to c k C e r tific a te ...................................... 7 S e c . 2 0 9 .7 — I n s o l v e n c y .......................................... 5 Se c . 2 0 9 .1 4 — F o r m s .............................................. 7 Sec . 2 0 9 .8 — V o l u n t a r y 6 Statutory A p p e n .............................................. 8 L i q u i d a t i o n ____ d ix REGULATION I (12 CFR 209) As amended effective February 1, 1963 ISSUE AND CANCELLATION OF CAPITAL STOCK OF FEDERAL RESERVE BANKS* SECTION 209.1— NATIONAL BANK IN PROCESS OF ORGANIZATION Each national bank,1 while in process of or ganization,2 shall file with the Federal Reserve Bank of its district an application on Form FR 30, and each nonmember State bank converting into a national bank,3 shall file an application on * T his text corresponds to the C o de o f F ed eral R egu lations, T itle 12, C h a p te r II, P a rt 209, cited as 12 C F R 209. T he w ord “this P a r t” , as used herein, m ean R egu latio n I. 1 U n d er the provisions o f section 19 o f the F ederal Reserve A ct (12 U.S.C. 4 6 6 ), n atio n al ban ks lo cated in a dependency or in sular possession o r any p a rt o f the U nited States outside of the States of th e U n ited States an d the D istrict o f C o lum bia are n o t req u ired to becom e m em bers of the F ed eral R eserve System b u t m ay, with the consent o f th e B oard, becom e m em bers o f th e System. A ny such b a n k desiring to be ad m itted to the System u n d er the provisions o f section 19 should com m unicate w ith the F ed eral Reserve B ank w ith w hich it desires to d o business. 2 A new natio nal b a n k with n o capital o r b o a rd o f di recto rs w hich is organized by the F ed eral D eposit In su r ance C o rp o ratio n p u rsu an t to th e provisions o f section 1 1 (h ) of the F ed eral D eposit In su ran ce A ct (12 U.S.C. 1821(h)), should n o t apply fo r stock o f the F ed eral R e serve B ank of its district until it is in process o f o rgani zatio n as a n ation al b an k with capital p u rsu an t to the provisions of section 11 (k ) o f the F ed eral D ep o sit In surance A ct (12 U .S.C. 1 8 2 1 (k )). 3 W henever a State m em ber b a n k is converted into a n atio n al b a n k u nd er section 5154 o f the Revised S tatutes (12 U.S.C. 35), it m ay co ntin u e to ho ld as a n ation al b an k its shares of F ed eral R eserve B an k stock previously h eld as a State m em b er b an k . If th e aggregate am o u n t of its cap ital and surplus is increased o r decreased, the n atio n al b a n k shall file an app lication o n F o rm 56, as p rov ided in § 209.3, fo r ad ditional shares o f F ed eral R e serve B an k stock o r fo r can cellation o f F ed eral R eserve Form 30a, for an amount of capital stock of the Federal Reserve Bank of its district equal to six per cent of the paid-up4 capital and surplus of such national bank. If the application is found to be in proper form it will be approved by the Fed eral Reserve Bank effective if and when the Comp troller of the Currency issues to such bank his certificate of authority to commence business. Upon approval, the applying bank shall there upon 5 pay the Federal Reserve Bank of its district one-half of the amount of its subscription and, upon receipt of advice from the Federal Reserve Bank as to the required amount, one-half of one per cent of its paid-up subscription for each month from the period of the last dividend, and upon receipt of the payment for Federal Reserve Bank B ank stock. T he certificate of stock issued in th e n am e of the S tate m em ber b a n k shall be su rren d ered an d can celed, an d a new certificate will be issued in lieu th ereo f in the n am e of the n atio nal b ank, as p rovided in § 209.13. 4 S ubscriptions to the capital stock of th e F ed eral R e serve B ank m ust be m ade in a n am o u n t at least equal to six p er cent of the am o u n t o f th e capital an d surplus o f the applying b a n k w hich is to be p aid in a t the tim e the C om p troller o f the C u rren cy authorizes it to com m ence business. In ord er to avoid th e necessity o f m aking applications fo r additio nal stock in the F ed eral Reserve Bank, as addition al instalm ents of the cap ital an d surplus of the applying b an k are p aid in, ap p lication m ay be m ade fo r stock in the F ederal Reserve B an k in an am ou n t equal to six per cent o f th e auth o rized cap ital o f the applying bank, plus six per cen t of th e am o u n t o f surplus, if any, w hich the subscribers to the capital o f the apply ing b a n k have agreed to p ay in. 5 P ay m en t m ay b e m ade, if desired, a t any tim e p rio r to ap p ro v al of th e application. §§ 2 0 9 .1 -2 0 9 .4 stock the Federal Reserve Bank will issue a re ceipt therefor, place the amount in a suspense account, and notify the Comptroller of the Cur rency that it has been received. When the Comp troller of the Currency issues his certificate of authority to commence business the Federal Re serve Bank will issue a stock certificate as of the date upon which the bank opens for business. The remaining half of the subscription of the applying bank will be subject to call when deemed necessary by the Board of Governors of the Fed eral Reserve System. SECTION 209.2— STATE BANK BECOMING MEMBER Any State bank, Morris Plan bank, or mutual savings bank, desiring to become a member of the Federal Reserve System shall make application as provided in Part 208 of this chapter (Regula tion FI) and, when such application has been approved by the Board of Governors of the Fed eral Reserve System and all applicable require ments have been complied with, the Federal Re serve Bank will issue an appropriate certificate of Federal Reserve Bank stock as provided in § 208.5(b) of this chapter. SECTION 209.3— INCREASE OR DECREASE OF CAPITAL OR SURPLUS Whenever any member bank increases or de creases the aggregate amount of its paid-up capital and surplus,6 it shall file with the Federal Reserve Bank of its district an application on Form FR 56 for such additional amount or for the cancellation of such amount, as the case may be, of the capital stock of the Federal Reserve Bank of its district as may be necessary to make its total subscription to Federal Reserve Bank stock equal to six per cent of its combined capital and surplus. After a If a member bank sets up a reserve for dividends pay able in common stock, such reserve will be regarded as surplus for the purpose of determining the amount of Federal Reserve Bank stock which the bank is required to hold, provided such reserve is established pursuant to a resolution of the board of directors, will become a part of the permanent capital of the bank, and will not be used for any other purpose than the payment of dividends in common stock. REGULATION I an application for additional Federal Reserve Bank stock has been approved by the Federal Reserve Bank, the applying member bank shall pay to the Federal Reserve Bank of its district one-half of its additional subscription, plus one-half of one per cent a month from the period of the last divi dend on such Federal Reserve Bank stock, where upon the appropriate certificate of stock will be issued by the Federal Reserve Bank. The remain ing half of such additional subscription will be subject to call when deemed necessary by the Board of Governors of the Federal Reserve Sys tem. After an application for cancellation of Fed eral Reserve Bank stock has been approved, the Federal Reserve Bank will accept and cancel the stock which the applying bank is required to sur render, and will pay to the member bank a sum equal to all cash paid subscriptions made on the stock canceled plus one-half of one per cent a month from the period of the last dividend, not to exceed the book value thereof. SECTION 209.4— INCREASE OR DECREASE OF DEPOSITS BY MUTUAL SAVINGS BANK Whenever, as shown by the last report of condi tion as of a date preceding January 1 or July 1 of each year, the total deposit liabilities of a m u tual savings bank which is a member of the Fed eral Reserve System have increased or decreased since the last adjustment of its holdings of Federal Reserve Bank stock, the bank shall file with the Federal Reserve Bank of its district an application on Form FR 56a for such additional amount or for the cancellation of such amount, as the case may be, of Federal Reserve Bank stock of its dis trict as may be necessary to make its total sub scription to Federal Reserve Bank stock equal to six-tenths of one per cent of its total deposit lia bilities as shown by such last report of condition, and Federal Reserve Bank stock will be issued or canceled in the manner described in § 209.3. In the case of any mutual savings bank which is not permitted by the laws under which it was orga nized to purchase stock in the Federal Reserve Bank and has a deposit with the Federal Reserve Bank in lieu of such subscription, such deposit will be adjusted in the same m anner as subscrip tions for stock. REGULATION I SECTION 209.5— M ERGER OR CONSOLIDATION (a) Whenever two or more member banks merge or consolidate and such action results in the merged or consolidated bank acquiring by operation of law 7 the Federal Reserve Bank stock owned by the other bank or banks, and which also results in the merged or consolidated bank having an aggregate capital and surplus in excess of, or less than, the aggregate capital and surplus of the merging or consolidating member banks, such merged or consolidated bank shall, as provided in § 209.3, file with the Federal Reserve Bank of its district an application on Form FR 56 for such additional amount, or for the cancellation of such amount, as the case may be, of Federal Reserve Bank stock of its district as may be necessary to make its total subscription to Federal Reserve Bank stock equal to six per cent of its combined capital and surplus. In any such case, the merged or consolidated bank shall surrender to the Fed eral Reserve Bank the certificates of Federal Re serve Bank stock held by the merged or con solidated bank and a new certificate will be issued as provided in § 209.13(b). (b) Whenever a member bank merges or con solidates with a nonmember bank, under the char ter of the latter bank, an application on Form FR 86a shall be filed with the Federal Reserve 7 Section 5 o f the F ed eral R eserve A ct provides th at “ S hares of the cap ital stock o f F ed eral Reserve B anks ow ned by m em ber b an ks shall n o t be tran sferred o r hy po th ecated .” T his provision prevents a tran sfer o f F ed eral Reserve B ank stock by purchase, b u t does n o t prevent a tran sfer by operatio n of law. W here one m em b er b an k purchases all o r a substantial p o rtio n o f th e assets of an o th er m em ber b an k , th e latter being placed in liquida tion, it is necessary fo r the liquidating b an k to su rren der its F ed eral Reserve B ank stock, as provided in § 209.8, and fo r the p urchasing bank, if its capital an d surplus is increased o r decreased, to adjust its holdings of F ederal Reserve B ank stock as p rovided in § 209.3. If th e assets an d obligations o f a m erging o r consoli dating m em ber b a n k are tran sferred to a m erged o r co n solidated m em ber b a n k by o p eration o f law, no b an k being placed in liquidation, th e m erged or consolidated b a n k becom es the ow ner of the F ed eral Reserve B ank stock of th e m erging o r consolidating b an k as so o n as the m erger o r consolidation takes effect, an d a new certificate representing F ed eral R eserve B ank stock will b e issued as pro v id ed in § 2 0 9 .1 3 (b ). M ergers o r consolidations u n d er the acts o f Congress providing fo r th e m erger o r co n solidation o f n atio n al banking associations (12 U.S.C. 215, 21 5 a) m eet all of these conditions. §§ 2 0 9 .5 -2 0 9 .7 Bank for cancellation of Federal Reserve Bank stock held by the member bank. Upon approval of such application, the Federal Reserve Bank will cancel such stock as of the date the merger or consolidation takes effect, and will adjust ac counts by applying to an y , indebtedness of the merging or consolidating bank to such Federal Reserve Bank all cash paid subscriptions made on the stock canceled plus one-half of one per cent a month from the period of the last dividend, not to exceed the book value thereof, and the re mainder, if any, will be paid to the merged or consolidated bank. SECTION 209.6— CONVERSION OF NATIONAL BANK Whenever a national bank converts into a non member State bank, an application on Form FR 86b shall be filed with the Federal Reserve Bank for cancellation of Federal Reserve Bank stock held by the national bank. Upon approval of such application, the Federal Reserve Bank will can cel such stock as of the date the conversion takes effect, and will adjust accounts in the manner de scribed in § 209.5(b). SECTION 209.7— INSOLVENCY Whenever a member bank is declared insolvent and a receiver8 appointed, the receiver shall, within three months from the date of his appoint ment, file with the Federal Reserve Bank of the district an application on Form FR 87 for can cellation of Federal Reserve Bank stock held by the insolvent member bank. If the receiver fails to make application within the time specified, the board of directors of the Federal Reserve Bank will either issue an order to cancel such stock, or, if the circumstances warrant it, grant the receiver additional time in which to file an application. Upon approval of such application or upon issu ance of such order, the Federal Reserve Bank will cancel such stock as of the date of such approval or order and will adjust accounts in the manner described in § 209.5(b). 8 T h e term “receiver” includes any person, com m ission, o r o th er agency charged by law with the du ty o f winding up th e affairs o f the bank. §§ 2 0 9 .8 -2 0 9 .1 1 REGULATION I SECTION 209.8— VOLUNTARY LIQUIDATION SECTION 209.10— OTHER CLOSED STATE MEMBER BANKS Whenever a member bank goes into voluntary liquidation, as, for example, upon sale of assets to another bank, the liquidating agent or some other person or persons duly authorized by the stockholders or board of directors to act on behalf of the bank shall, within three months from the date of the vote to place the bank in voluntary liquidation, file with the Federal Reserve Bank of the district an application on Form FR 86 for cancellation of Federal Reserve Bank stock held by the liquidating member bank. If such applica tion is not filed within the time specified, the board of directors of the Federal Reserve Bank will either issue an order to cancel such stock, or, if the circumstances warrant it, grant additional time in which to file an application. Upon ap proval of such application, or upon issuance of such order, the Federal Reserve Bank will cancel such stock as of the date of such approval or order and will adjust accounts between the liqui dating member bank and the Federal Reserve Bank in the manner described in § 209.5(b). Whenever a State member bank ceases to exer cise banking functions without being placed in liquidation in accordance with the laws of the State in which it is located and without a receiver9 appointed for it, and such bank has not within sixty days of the cessation of banking functions applied for withdrawal from membership in the Federal Reserve System as provided in Part 208 of this chapter (Regulation H), the Federal Re serve Bank of the district in which such State member bank is located will furnish the Board of Governors of the Federal Reserve System with full information with reference to the facts involved in the case and with a definite recommendation as to whether the Board should require the State member bank to surrender its Federal Reserve Bank stock and terminate all rights and privileges of membership in the Federal Reserve System. Upon receipt of this advice, if termination of membership of the State member bank appears desirable, the Board will give the member bank notice of the date upon which a hearing will be held to determine whether its membership should be terminated. If, after such hearing, the mem bership of a State bank is terminated, the Board will direct the Federal Reserve Bank of the Fed eral Reserve district in which the member bank is located to cancel the Federal Reserve Bank stock as of the date of termination of membership and adjust accounts in the manner described in § 209.5(b). SECTION 209.9— OTHER CLOSED NATIONAL BANKS (a) Whenever a national bank which has not gone into liquidation as provided in section 5220 of the Revised Statutes of the United States (12 U.S.C. 181), and for which a receiver has not been appointed, discontinues its banking opera tions for a period of sixty days, the Federal Re serve Bank will report the facts to the Comptrol ler of the Currency with a statement of reasons why a receiver should be appointed for the na tional bank. If such receiver is appointed, the procedure prescribed in § 209.7 for cancellation of Federal Reserve Bank stock held by the na tional bank shall be followed. (b) Whenever a national bank has been placed in the hands of a conservator, the procedure pre scribed in § 209.7 for cancellation of Federal Reserve Bank stock held by such bank shall be followed; provided a certificate is furnished by the Comptroller of the Currency to the effect that the conservator has been authorized to apply for can cellation of Federal Reserve Bank stock, and that the bank is to be liquidated and is not to be per mitted to resume business or to reorganize. SECTION 209.11— VOLUNTARY W ITHDRAW AL FROM MEMBERSHIP Any State member bank desiring to withdraw from membership in the Federal Reserve System shall follow the procedure set forth in Part 208 of this chapter (Regulation H), and when all applicable requirements of § 208.10 have been complied with the Federal Reserve Bank will can cel the Federal Reserve Bank stock held by the member bank as of the date of withdrawal from membership and will adjust accounts in the m an ner described in § 209.5(b). 9 T h e term “receiver” includes any person,, com m ission, o r o th er agency charged by law w ith th e duty o f w inding up the affairs of th e bank. REGULATION I SECTION 209.12— INVOLUNTARY TERM INATION OF MEMBERSHIP Any State member bank whose membership has been terminated for failure to comply with the provisions of the Federal Reserve Act or regula tions of the Board of Governors of the Federal Reserve System shall surrender its Federal Re serve Bank stock as of the date membership is terminated and accounts will be adjusted in the manner described in § 209.5(b). SECTION 209.13— CANCELLATION OF OLD AN D ISSUE OF NEW STOCK CERTIFICATE (a) Whenever a member bank changes its name it shall surrender to the Federal Reserve Bank the certificate of Federal Reserve Bank stock which was issued to it under its old name. If the Federal Reserve Bank has or is furnished with proof of the change of name, it will cancel the certificate so surrendered and will issue in lieu thereof to and in the name of the member bank surrendering it a new certificate for the number of shares represented by the certificate so sur rendered. (b) If a member bank has filed an application for an increase or decrease in its holdings of Federal Reserve Bank stock pursuant to the pro visions of § 209.3, or has acquired the Federal Reserve Bank stock from another bank by virtue of a merger or consolidation of the kind described in § 209.5(a), it shall surrender the stock certifi cate previously issued to it and the certificate representing any stock so acquired, and the Fed §§ 2 0 9 .1 2 -2 0 9 .1 4 eral Reserve Bank will issue a new certificate for the number of shares represented by the surren dered certificate or certificates decreased by the number of shares canceled or increased by the number of additional shares to be issued. (c) In order to provide a convenient means for identifying shares of Federal Reserve Bank stock purchased and paid for prior to March 28, 1942, as to which dividends are not subject to Federal taxation, the Federal Reserve Bank will endorse on the back of the stock certificate an appropriate notation setting forth the number of shares repre sented which were purchased and paid for prior to March 28, 1942, and the number of shares purchased and paid for on or after that date. In lieu of issuing a single certificate, the Federal Re serve Bank may issue two certificates to each member bank holding both classes of stock, one representing stock purchased and paid for prior to March 28, 1942, and the other representing stock purchased and paid for on or after that date, in which case the former will be endorsed to read: “This certificate represents shares of Fed eral Reserve Bank stock which were purchased and paid for prior to March 28, 1942.” No en dorsement will be necessary on the latter certifi cate. SECTION 209.14— FORMS All forms referred to in this Part and all such forms as they may be amended from time to time shall be a part of the regulation contained in this Part. STATUTORY APPENDIX REGULATION I STATUTORY APPENDIX SECTION 2 OF THE FEDERAL RESERVE ACT Section 2 provides in part as follows: 1 1. Establishment of reserve cities and districts Sec. 2. * * * Every national bank in any State shall, upon commencing business or within ninety days after admisison into the Union of the State in which it is located, become a member bank of the Federal Reserve System by subscribing and paying for stock in the Federal Reserve bank of its district in accordance with the provisions of this Act and shall thereupon be an insured bank under the Federal Deposit Insurance Act, and failure to do so shall subject such bank to the penalty provided by the sixth paragraph of this section. [U. S. C., title 12, sec. 222.] 4 = * * * * 3. Subscription to stock by national banks Under regulations to be prescribed by the or ganization committee, every national banking asso ciation in the United States is hereby required, and every eligible bank in the United States and every trust company within the District of Colum bia, is hereby authorized to signify in writing, within sixty days after the passage of this Act, its acceptance of the terms and provisions hereof. When the organization committee shall have des ignated the cities in which Federal reserve banks are to be organized, and fixed the geographical limits of the Federal reserve districts, every na tional banking association within that district shall be required within thirty days after notice from the organization committee, to subscribe to the capital stock of such Federal reserve bank in a sum equal to six per centum of the paid-up capital stock and surplus of such bank, one-sixth of the subscription to be payable on call of the organi zation committee or of the Board of Governors of the Federal Reserve System, one-sixth within three months and one-sixth within six months thereafter, and the remainder of the subscription, or any part thereof, shall be subject to call when deemed necessary by the Board of Governors of the Federal Reserve System, said payments to be in gold or gold certificates. [U. S. C., title 12, sec. 282.] * * * * * 1 P arag ra p h n u m b ers an d cap tion s have been add ed to facilitate reference. 12. Transfer of stock The Board of Governors of the Federal Reserve System is hereby empowered to adopt and promul gate rules and regulations governing the transfers of said stock. [U. S. C., title 12, sec. 286.] * * * * * SECTION 5 OF THE FEDERAL RESERVE ACT Section 5 provides as follows: 1. Amount of shares; increase and decrease of capital; surrender and cancellation of stock Sec. 5. The capital stock of each Federal reserve bank shall be divided into shares of $100 each. The outstanding capital stock shall be increased from time to time as member banks increase their capital stock and surplus or as additional banks become members, and may be decreased as mem ber banks reduce their capital stock or surplus or cease to be members. Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated. When a member bank increases its capital stock or sur plus, it shall thereupon subscribe for an additional amount of capital stock of the Federal reserve bank of its district equal to six per centum of the said increase, one-half of said subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at any time after the organization thereof must subscribe for an amount of the capi tal stock of the Federal reserve bank equal to six per centum of the paid-up capital stock and sur plus of said applicant bank, paying therefor its par value plus one-half of one per centum a month from the period of the last dividend. When a member bank reduces its capital stock or surplus it shall surrender a proportionate amount of its hold ings in the capital stock of said Federal Reserve bank. Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the basis of 6 per centum of its paidup capital stock and surplus shall surrender such excess stock. When a member bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and be released from its stock subscription not previously called. In any such case the shares sur rendered shall be canceled and the member bank STATUTORY APPENDIX REGULATION I shall receive in payment therefor, under regula tions to be prescribed by the Board of Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and one-half of 1 per centum a month from the period of the last dividend, not to exceed the book value thereof, less any liability of such member bank to the Federal Reserve bank. [U. S. C., title 12, sec. 287.] SECTION 6 OF THE FEDERAL RESERVE ACT Section 6 provides as follows: 1. Insolvency of member banks Sec. 6. If any member bank shall be declared insolvent and a receiver appointed therefor, the stock held by it in said Federal reserve bank shall be canceled, without impairment of its liability, and all cash-paid subscriptions on said stock, with one-half of 1 per centum per month from the period of last dividend, if earned, not to exceed the book value thereof, shall be first applied to all debts of the insolvent member bank to the Federal reserve bank, and the balance, if any, shall be paid to the receiver of the insolvent bank. [U. S. C., title 12, sec. 288.] 2. National bank discontinuing banking operations If any national bank which has not gone into liquidation as provided in section 5220 of the Revised Statutes (United States Code, title 12, section 181) and for which a receiver has not already been appointed for other lawful cause, shall discontinue its banking operations for a period of sixty days the Comptroller of the Cur rency may, if he deems it advisable, appoint a receiver for such bank. The stock held by the said national bank in the Federal reserve bank of its district shall thereupon be canceled and said national bank shall receive in payment therefor, under regulations to be prescribed by the Board of Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares canceled and one-half of 1 per centum a month from the period of the last dividend, if earned, not to exceed the book value thereof, less any liability of such national bank to the Federal reserve bank. [U. S. C., title 12, sec. 288.] SECTION 9 OF THE FEDERAL RESERVE ACT Section 9 provides in part as follows: 1. Applications for membership by State banks Sec. 9. Any bank incorporated by special law of any State, or organized under the general laws of any State or of the United States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a member of the Federal Reserve Sys tem, may make application to the Board of Gov ernors of the Federal reserve system, under such rules and regulations as it may prescribe, for the right to subscribe to the stock of the Federal re serve bank organized within the district in which the applying bank is located. Such application shall be for the same amount of stock that the applying bank would be required to subscribe to as a national bank. For the purposes of member ship of any such bank the terms “capital” and “capital stock” shall include the amount of out standing capital notes and debentures legally issued by the applying bank and purchased by the Re construction Finance Corporation. The Board of Governors of the Federal Reserve System, subject to the provisions of this Act and to such condi tions as it may prescribe pursuant thereto may permit the applying bank to become a stockholder of such Federal reserve bank. [U. S. C., # title 12, sec. ## * 321.] H 1 5. Payment of subscription Whenever the Board of Governors of the Fed eral Reserve System shall permit the applying bank to become a stockholder in the Federal re serve bank of the district its stock subscription shall be payable on call of the Board of Gover nors of the Federal Reserve System, and stock issued to it shall be held subject to the provisions of this Act. [U. S. C., title 12, sec. :]s s]e 323.] sk ifc 9. Forfeiture of membership If at any time it shall appear to the Board of Governors of the Federal Reserve System that a member bank has failed to comply with the pro visions of this section or the regulations of the Board of Governors of the Federal Reserve Sys tem made pursuant thereto, or has ceased to exer cise banking functions without a receiver or liqui dating agent having been appointed therefor, it STATUTORY APPENDIX shall be within the power of the board after hear ing to require such bank to surrender its stock in the Federal reserve bank and to forfeit all rights and privileges of membership.* * * [U. S. C., title 12, sec. 327.] 10. Voluntary withdrawal from membership Any State bank or trust company desiring to withdraw from membership in a Federal reserve bank may do so, after six months’ written notice shall have been filed with the Board of Governors of the Federal Reserve System, upon the surrender and cancellation of all of its holdings of capital stock in the Federal reserve bank: Provided, That the Board of Governors of the Federal Reserve System, in its discretion and subject to such con ditions as it may prescribe, may waive such six months’ notice in individual cases and may permit any such State bank or trust company to with draw from membership in a Federal reserve bank prior to the expiration of six months from the date of the written notice of its intention to withdraw: Provided, however, That no Federal reserve bank shall, except under express authority of the Board of Governors of the Federal Reserve System, can cel within the same calendar year more than twenty-five per centum of its capital stock for the purpose of effecting voluntary withdrawals during that year. All such applications shall be dealt with in the order in which they are filed with the board. Whenever a member bank shall surrender its stock holdings in a Federal reserve bank, or shall be ordered to do so by the Board of Governors of the Federal Reserve System, under authority of law, all of its rights and privileges as a member bank shall thereupon cease and determine, and after due provision has been made for any indebt edness due or to become due to the Federal Re serve bank it shall be entitled to a refund of its cash subscription with interest at the rate of onehalf of one per centum per month from date of last dividend, if earned, the amount refunded in no event to exceed the book value of the stock at that time, and shall likewise be entitled to repay ment of deposits and of any other balance due from the Federal reserve bank. [U. S. C., title 12, sec. 328.] sfc % 16. Admission to membership of mutual savings banks Any mutual savings bank having no capital REGULATION I stock (including any other banking institution the capital of which consists of weekly or other time deposits which are segregated from all other deposits and are regarded as capital stock for the purposes of taxation and the declaration of divi dends), but having surplus and undivided profits not less than the amount of capital required for the organization of a national bank in the same place, may apply for and be admitted to mem bership in the Federal Reserve System in the same manner and subject to the same provisions of law as State banks and trust companies, except that any such savings banks shall subscribe for capital stock of the Federal reserve bank in an amount equal to six-tenths of 1 per centum of its total deposit liabilities as shown by the most recent report of examination of such savings bank pre ceding its admission to membership. Thereafter such subscription shall be adjusted semiannually on the same percentage basis in accordance with rules and regulations prescribed by the Board of Governors of the Federal Reserve System. If any such mutual savings bank applying for member ship is not permitted by the laws under which it was organized to purchase stock in a Federal re serve bank, it shall, upon admission to the system, deposit with the Federal reserve bank an amount equal to the amount which it would have been re quired to pay in on account of a subscription to capital stock. Thereafter such deposit shall be adjusted semiannually in the same manner as sub scriptions for stock. Such deposits shall be subject to the same conditions with respect to repayment as amounts paid upon subscriptions to capital stock by other member banks and the Federal reserve bank shall pay interest thereon at the same rate as dividends are actually paid on outstanding shares of stock of such Federal reserve bank. If the laws under which any such savings bank was organized be amended so as to authorize mutual savings banks to subscribe for Federal reserve bank stock, such savings bank shall thereupon sub scribe for the appropriate amount of stock in the Federal reserve bank, and the deposit hereinbefore provided for in lieu of payment upon capital stock shall be applied upon such subscription. If the laws under which any such savings bank was organized be not amended at the next session of the legis lature following the admission of such savings bank to membership so as to authorize mutual STATUTORY APPENDIX REGULATION I savings banks to purchase Federal reserve bank stock, or if such laws be so amended and such bank fail within six months thereafter to purchase such stock, all of its rights and privileges as a member bank shall be forfeited and its member ship in the Federal Reserve System shall be termi nated in the manner prescribed elsewhere in this section with respect to State member banks and trust companies. Each such mutual savings bank shall comply with all the provisions of law appli cable to State member banks and trust companies, with the regulations of the Board of Governors of the Federal Reserve System and with the con ditions of membership prescribed for such savings bank at the time of admission to membership, ex cept as otherwise hereinbefore provided with re spect to capital stock. [U . S. C„ title 12, sec. 333.] * * * * *
