[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: 12CFR209.4]

[Page 310-311]
 
                       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. 209.4  Amounts and payments.

    (a) Amount of subscription. The total subscription of a member bank 
(other than a mutual savings bank) shall equal six percent of its 
capital and surplus. Whenever any member bank (other than a mutual 
savings bank) experiences a cumulative increase or decrease in capital 
and surplus requiring a change in excess of the lesser of 15 percent or 
100 shares of its Reserve Bank capital stock, it shall file with the 
appropriate Reserve Bank an application for issue or cancellation of 
Reserve Bank capital stock in order to adjust its Reserve Bank capital 
stock subscription to equal six percent of the member bank's capital and 
surplus. Such application shall be filed promptly after the first report 
of condition that reflects the increase or decrease occasioning the 
adjustment. In addition, every member bank shall file an application for 
issue or cancellation of Reserve Bank capital stock if needed in order 
to adjust its Reserve Bank capital stock subscription to equal six 
percent of the member bank's capital and surplus as shown on its report 
of condition as of December 31 of each year promptly after filing such 
report.
    (b) Capital Stock and Surplus defined. Capital stock and surplus of 
a member bank means the paid-in capital stock \4\ and paid-in surplus of 
the bank, less any deficit in the aggregate of its retained earnings, 
gains (losses) on available for sale securities, and foreign currency 
translation accounts, all as shown on the bank's most recent report of 
condition. Paid-in capital stock and paid-in surplus of a bank in 
organization means the amount which is to be paid in at the time the 
bank commences business.
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    \4\ Capital stock includes common stock and preferred stock 
(including sinking fund preferred stock).
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    (c) Mutual savings banks. The total subscription of a member bank 
that is a mutual savings bank shall equal six-tenths of 1 percent of its 
total deposit liabilities as shown on its most recent report of 
condition. Whenever any member bank that is a mutual savings bank 
experiences a cumulative increase or decrease in total deposit 
liabilities as shown on its most recent report of condition requiring a 
change in its holding of Reserve Bank stock in excess of the lesser of 
15 percent or 100 shares, it shall file with the appropriate Reserve 
Bank an application for issue or cancellation of Reserve Bank capital 
stock in order to adjust its Reserve Bank capital stock subscription to 
equal six-tenths of 1 percent of the member bank's total deposit 
liabilities. Such application shall be filed promptly after the first 
report of condition that reflects the increase or decrease occasioning 
the adjustment. In addition, every member bank that is a mutual savings 
bank shall file an application for issue or cancellation of Reserve Bank 
capital stock if needed in order to adjust its Reserve Bank capital 
stock subscription to equal six-tenths of 1 percent of its total deposit 
liabilities as shown on its report of condition as of December 31 of 
each year promptly after filing such report. A mutual savings bank that 
is applying for or has a deposit with the appropriate Reserve Bank in 
lieu of Reserve Bank capital stock shall file for acceptance or 
adjustment of its deposit in a like manner.
    (d) Payment for subscriptions. Upon approval by the Reserve Bank of 
an application for capital stock (or for a deposit in lieu thereof), the 
applying bank shall pay the Reserve Bank one-half of the subscription 
amount plus accrued dividends. For purposes of this part, dividends 
shall accrue at the rate of one half of one percent per month

[[Page 311]]

calculated on the basis of a 360-day year of twelve 30-day months. Upon 
payment (and in the case of a national banks in organization or state 
nonmember bank converting into a national bank, upon authorization or 
approval by the Comptroller of the Currency), the Reserve Bank shall 
issue the appropriate number of shares by crediting the bank with the 
appropriate number of shares on its books. In the case of a mutual 
savings bank not authorized to purchase Reserve Bank stock, the Reserve 
Bank will accept the deposit or addition to the deposit in place of 
issuing shares. The remaining half of the subscription or additional 
subscription (including subscriptions for deposits or additions to 
deposits) shall be subject to call by the Board.
    (e) Payment for cancellations. (1) Upon approval of an application 
for cancellation of Reserve Bank capital stock, or (in the case of 
involuntary termination of membership) upon the effective date of 
cancellation specified in Sec. 209.3(c)(3), the Reserve Bank shall 
reduce the bank's shareholding on the Reserve Bank's books by the number 
of shares required to be canceled and shall pay therefor a sum equal to 
the cash subscription paid on the canceled stock plus accrued dividends 
(at the rate specified in paragraph (d) of this section), such sum not 
to exceed the book value of the stock.\5\
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    \5\ Under sections 6 and 9(10) of the Act, a Reserve Bank is under 
no obligation to pay unearned accrued dividends on redemption of its 
capital stock from an insolvent member bank for which a receiver has 
been appointed or from state member banks on voluntary withdrawal from 
or involuntary termination of membership.
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    (2) In the case of any cancellation of Reserve Bank stock under this 
Part, the Reserve Bank may first apply such sum to any liability of the 
bank to the Reserve Bank and pay over the remainder to the bank (or 
receiver or conservator, as appropriate).