[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR209.3]

[Page 309-310]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 209--ISSUE AND CANCELLATION OF FEDERAL RESERVE BANK CAPITAL STOCK (REGULATION I)--Table of Contents
 
Sec. 209.3  Cancellation of Reserve Bank stock.

    (a) Application for cancellation. Any bank that desires to withdraw 
from membership in the Federal Reserve System, voluntarily liquidates or 
ceases business, is merged or consolidated into a nonmember bank, or is 
involuntarily liquidated by a receiver or conservator or otherwise, 
shall promptly file with its Reserve Bank an application for 
cancellation of all its Reserve Bank stock (or withdrawal of its 
deposit, as the case may be) and payment therefor in accordance with 
Sec. 209.4.
    (b) Involuntary termination of membership. If an application is not 
filed promptly after a cessation of business by a state member bank, a 
vote to place a member bank in voluntary liquidation, or the appointment 
of a receiver for (or a determination to liquidate the bank by a 
conservator of) a member bank, the Board may, after notice and an 
opportunity for hearing where required under Section 9(9) of the Federal 
Reserve Act (12 U.S.C. 327), order the membership of the bank terminated 
and all of its Reserve Bank stock canceled.
    (c) Effective date of cancellation. Cancellation in whole of a 
bank's Reserve Bank capital stock shall be effective, in the case of:
    (1) Voluntary withdrawal from membership by a state bank, as of the 
date of such withdrawal;
    (2) Merger into, consolidation with, or (for a national bank) 
conversion into, a State nonmember bank, as of the effective date of the 
merger, consolidation, or conversion; and
    (3) Involuntary termination of membership, as of the date the Board 
issues the order of termination.
    (d) Exchange of stock on merger or change in location. (1) Merger of 
member banks in the same Federal Reserve District. Upon a merger or 
consolidation of member banks located in the same Federal Reserve 
District, the Reserve Bank shall cancel the shares of the nonsurviving 
bank (or in the case of a mutual savings bank not authorized to purchase 
Reserve Bank stock, shall credit the deposit to the account of the 
surviving bank) and shall credit the appropriate number of shares on its 
books to (or in the case of a mutual savings bank not authorized to 
purchase Reserve Bank stock, shall accept an appropriate increase in the 
deposit of) the surviving bank, subject to paragraph (e)(2) of 
Sec. 209.4.
    (2) Change of location or merger of member banks in different 
Federal Reserve Districts. Upon a determination under paragraph (c)(2) 
of Sec. 209.2 that a member bank is located in a Federal Reserve 
District other than the District of the Reserve Bank of which it is a 
member, or upon a merger or consolidation of member banks located in 
different Federal Reserve Districts,--
    (i) The Reserve Bank of the member bank's former District, or of the 
nonsurviving member bank, shall cancel the bank's shares and transfer 
the amount paid in for those shares, plus accrued dividends (at the rate 
specified in paragraph (d) of Sec. 209.4) and subject to paragraph 
(e)(2) of Sec. 209.4 (or, in the case of a mutual savings bank member 
not authorized to purchase Federal Reserve Bank stock, the amount of its 
deposit, adjusted in a like manner), to

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the Reserve Bank of the bank's new District or of the surviving bank; 
and
    (ii) The Reserve Bank of the member bank's new District or of the 
surviving bank shall issue the appropriate number of shares by crediting 
the bank with the appropriate number of shares on its books (or, in the 
case of a mutual savings bank, by accepting the deposit or an 
appropriate increase in the deposit).
    (e) Voluntary withdrawal. Any bank withdrawing voluntarily from 
membership shall give 6 months written notice, and shall not cause the 
withdrawal of more than 25 percent of any Reserve Bank's capital stock 
in any calendar year, unless the Board waives these requirements.