frsbog_mim_v52_0319.pdf

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BOARD OF G O V E R N O R S O F T H E

FEDERAL RESERVE SYSTEM W A S H I N G T O N

319

S-220

A D D R E S S O F F I C I A L C O R R E S P O N D E N C E T O T H E B O A R D

May 29, 1940.

Dear Sir:

The form of memorandum to accompany applica-

tions for membership has been revised with a view to

simplification. It will be appreciated if the memoranda

submitted by the Reserve Banks with applications for mem-

bership are prepared in the revised form, as outlined in

attached memorandum. Ten copies of the revised form are

enclosed, and we shall be glad to furnish additional cop-

ies if desired.

This supersedes letter X-7572 (Federal Reserve

Loose-Leaf Service #3472).

Very truly yours

Chester Morrill Secretary.

Enclosures.

TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

320

Exam 2. (Revised June 1940)

GENERAL STYLE OF MEMORANDUM TO ACCOMPANY APPLICATIONS FOR MEMBERSHIP.

Reasonable uniformity in the arrangement and form of memoranda forwarded by the Federal Reserve Banks covering appli-cations for membership facilitates the handling of the applica-tions at the Board. This outline is intended only to further such uniformity. It is not intended to limit the scope of in-formation to be submitted, and each memorandum should contain the information appropriate for proper consideration of the ap-plication.

It is requested that the memoranda be prepared on letter-size paper, that the textual matter be double-spaced, and that an original and three copies be forwarded.

HEADING

The name of the bank as given in the heading should be the correct legal title.

It is important that membership records contain the cor-rect corporate titles. Difficulties have occasionally arisen be-cause of conflicts and uncertainties in this respect. It is requested, therefore, that care be exercised to see that the name of the bank as given in the heading of the memorandum and in Counsel's certificate on the application is, in fact, the full, complete and correct legal name of the bank.

1. CONDENSED STATSlfTOT fW CONDITION (Give date and source.)

It is suggested that, where practicable, the statement be substantially in the form shown on the following page.


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Assets V 1

Liabilities (It is suggested that figures be shown in even hundreds. In the case of the larger banks 000 may be omitted if desired.)

Cash and bank balances

U.S.Gov't securities

Other securities:

Group 1 Group 2 Defaults Stocks

Loans and discounts

Bank premises F & i Other real estate

(P.O.R.E. (R/E carried in (other accounts

Demand deposits Time deposits Public funds

Borrowed money

Other liabilities:

Capital account:

R.F.C. Preferred (a) Other Preferred (a) Common stock (b) Surplus Res. for contin-genexes****** •••#•••••

Und. profits Other segrega-tions of cap-ital account (itemized)

Other assets

(a) Indicate whether preferred stock or capital notes or debentures. Show also total amount at which preferred stock is retirable if that is in excess of par.

(b) Show also total par amount if common stock is shown on the books of the bank and in the statement at less than par.


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2. SUMMARY OF EXAMINER'S CLASSIFICATIONS

Below the schedule taken from, the report of examination show ap-preciation or depreciation in investment account based, on market quotations.

3. SUMMARY OF EARNINGS AMD DIVIDENDS

Record for five years in the following form:

19-- 19— 19—— 19— 19--

Total current earnings

Total current expenses

Net current earnings

Profits and recoveries

Losses and depreciation

Net before dividends

Dividends and interest on capital: Preferred stock or capital notes or debentures

Common stock (do not include stock div-idends)

Net additions to profits

Comment on any unusual items of nonrecurring nature. If the bank has any preferred stock or debentures outstanding and dividends or interest thereon are not being currently paid, comment as to the situation and give amount of arrearages.

4. TREND OF DEPOSITS

From the schedule on page 5 of the report of examination.

S GENERAL INFORMATION

Give population of city or town in which the bank is located and, where appropriate, the approximate population of the trade area served.


323

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Include a brief discussion of the business activities of the town and community and of local conditions which have affected or may affect the condition or future prospects of the bank.

Comment on the bank1s competitive position, giving names, lo-cations and approximate deposit liabilities of competing banks and state whether banking facilities in the territory appear to be adequate or excessive.

If the bank does a trust business, comment also on the compet-itive situation and local conditions affecting that phase of the busi-ness.

6. ORGANIZATION AMD HISTORY OP APPLICANT

Include date institution was originally organized. If any re-organizations have been effected since 1930, give full information. If, in any such reorganization a deposit waiver was obtained, give total waived, amounts repaid, and prospects for further payments. Mention should also be made under this heading of any mergers or consolidations.

If the bank was ever a member of the System, give period of membership and reasons for discontinuance of membership.

7. BRANCHES

List any branches, branch offices, agencies or receiving sta~ tions. Give date of establishment of each office, the population of the town in which located and any other information deemed appropriate.

8. POWERS

Enumerate powers, other than those usual to commercial banking, which the applicant is authorized to exercise under its charter or State laws. State whether or not bank is exercising any such powers. If any are exercised (other than trust powers, which will be discussed under Item 9), comment as to the situation, particularly as to the nature and extent of the activities and the effect upon the bank.

9. TRUST DEPARTMENT

Comment as to trust powers authorized and those exercised and indicate size and importance of the department. Comment on the general condition of the department and the manner in which it is being operated. State whether any probable liabilities appear to have accrued against the institution as a result of its fiduciary activities.


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10. AFFILIATIONS

If institution is controlled by a holding company, give name of company and discuss extent of its control and supervision over bank. If bank owns, controls or is closely affiliated in any way with other corporations, give such information regarding the nature of the affili-ation and the effect of the affiliation upon the bank as is appropriate in the circumstances.

11. CHARACTER OF MANAGEMENT

Discuss fully. Cover commercial and trust departments in sep-arate discussions. Comment also on the ownership of the bank (unless ownership or control is by a holding company, in which event the dis-cussion will be under Item 10).

12. SUMMART OF EXAMINER'S COMMENTS

This should be a summary of the examiner's important comments. It is not necessary to copy verbatim the comments from the report of ex-amination nor to refer to minor matters which have no real bearing on the condition of the bank or significance in consideration of the appli-cation.

13. COMMENTS OF OFFICER IN CHARGE OF THE BANK EXAMINATION DEPARTMENT

(See Note at the end of the memorandum.)

14. KECOMKEmATION OF THE FEDERAL RESERVE BANK

Include specific mention as to any special conditions recom-mended. If no special conditions are recommended, so state.

15. F.D.I.C.

Refer to circular letters X-9647 and S-10 regarding clearance with the Supervising Examiner for the F.D.I.C. (Federal Reserve Loose-Leaf Service #3476 and #3477.)

SIGNATURE

The memorandum should be signed by the Vice President in charge of the Bank Examination Department or some other senior officer.

Either the memorandum or the transmittal letter should indi-cate what officers or committees concurred in the recommendation.


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NOTE (Item 13)

In passing upon an application the Board, as stated in Regu-lation H, gives special consideration to the following matters:

(1) The financial history and condition of the applying bank and the general character of its management;

(2) The adequacy of its capital structure and its future earn-ings prospects;

(3) The convenience and needs of the community to be served by the bank; and

(U\ Whether its corporate powers are consistent with the pur-poses of the Federal Reserve Act.

The memorandum should include sufficient information regarding each of the above matters for proper consideration of the application. Any points not covered elsewhere in the memorandum should be covered under Item 13. On close questions the Reserve Bank officer should sup-plement with his own views the information and opinions set forth else-where in the memorandum.


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