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BO RD OF GOVERNORS

OF THE

FEDER L

RESERVE

SYSTEM

W SHINGTON

s-6oo

82

DDRESS OFFICI L CORRESPON DENCE

T

T H E B O R D

December

18,

1942•

Dear

Sir :

There

are

being

forwarded

to

you

t o d ~ y

under

sepa

rate cover the indicated

number of copies of the following

forms,

a copy of

each

of which

is

attached

h e ~ e t o

for

the

use of State bank members in submitting reports of earnings

and

dividends for

the

calendar

year 1942:

Number of

copies

Form F R 107 (Revised November 1942), Report of

earnings and

d i v i d e n d s ~ ~ a l e n d a r year 1942.

Form

F R ~

107a

(Revised

December

1942), I n s t r u ~ -

t ions for the preparation of reports

of

earnings and

dividends by State

bank members

of the Federa.l Reserve System.

There

are

also enclosed three copies

of

a memorandum

(s-6ooa) which contains comments regarding the

revised

form

of

earnings

and dividends

report tha t

should

be incorporated,

to the extent you think i t desirable to

do so,

in

your l t t r

transmitting the above forms to

the

State bank members; and

three

copies

of a memorandum

(s-600b)

which

contains sugges

t ions pertaining

to the

handling

of

the

reports

by

the

Fed-

eral

Reserve Banks ·

Enclosures

Very t ruly yours,

L

P Bethea,

A sistant

S e c r e t a r y ~

T

THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS

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SUGGESTED COMMENTS 'I'O

BE

INCLUDED IN FEDERAL } l l i S E ~ W Z

: 3 A E t ~

LB'l l'EqS

SENDING EJI31HNGS AND DIVIDEHDS REPOR r

FORMS

1 0

S rA rE:

BANK

V..El.:BERS

IN

D E C I ~ ~ i B E R

1942

l i The fonn of report has been

revised

and considerably s implif ied ,

par t icular ly

in Sections

2

and

3. The revisions are

the

resul t

of effor ts

to brini;; about greater uniformity

in

forms of earnings and cti·.ddend.s repor ts ,

provide an inlproved form

of

repor t ,

and to reduce

the

burden of

bank

reporting.

2. The Board of Governors of the Federal

Reserve

System a.nd the

Federal

Deposit Insurance Corporation

have adopted substant ia l ly ident ical

forms of oa.rnings and dividends repor ts ,

and the

Comptroller of

the

Currency

has

adopted

an

ident ical itQmirs.tion of

earnings,

expenses,

losses ,

rc•

coverius,

and

prof i ts .

3.

The National Association of·

oup·arvisors

of State Banks has recom-

mended that

State

banking

departments use.

in so far as possible , a f o:rm

of

earnings

and

dividends repor t l ike

tho.t

adopted by the Federal

Reserve System

and the

Federal

Deposit

Insurance

Corporation,

and t is expected

tha t most

of them wil l do so. ~ ~ ~ e s t Sta.te b ~ : m k s , thon•foN, wil l rondor the sama form

of

r ~ p o r t

to both Fvdoral and State ·nanking

authori

t i o s .

4.

D8tailfJd

inst ruct ions

ht:..ve

boon providod for

t u

gutc.ancG of

Stc.t0 bank mombors in prvpuring

the i r

n::ports •

Thuso

inst ruct ions

should

be

ca.rofully

raad boi'oro

proparo.tion of th•) roport is br,;gun, and. they should be

prosorvod

for futuru usc.

5 In Section 1 tho principal r::Jvisions n.rG as follows

f

Item l c ) , ' 'Sorvico charges and

oth:;r

foes

on

bunk's

l o a n s ~ ,

has

boon o.ddGd.

I f

tho

r0port ing

bank's ro-

oords do

not

permit the detcrminCLtion

of

th0

actual

amount

of such

i n c o m ~ . > ,

the

amount

roportod

agair,_st

th is

i

tum may bc.l ostimat0d ( in

so

fur t<s the

yoe

r

1942

is

concerned).

Normal or r0curring depreoiution on banking house,

furni

u r · ; ~

ond f ixtures ,

h ~ r u t o f o r < ) not

sGgrE:g£\ted

from

oxtre ordinary lossus and d e p r ~ J C i ~ t i o n

churges

on r:c:al estf;.to, is now

to

b,J shown sepctrut,,ly in

current

operating

oxpens.:,;s •

Taxes on

net

income:;, h · ~ r u t o f ' o r , _ : included in current

oxponsos, u.re now to bo

s h o v < ' r ~

s0para.tely ~ ~ s a . : i . n s t

it<;;m 7 o s a d{lduction from Profits

b3foru

income

taxus •

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s 6oOa

84

Dividc;nds

declared,

f o : r m , : ~ r l y shown in

Section

2 n.s

a che..rgu a.so..inst undivided prof i ts aro now to b0

shown o . g ~ t i n s t t0m

9 in

Section 1 c.s c d:::Jduction

from

not

profi t s

1

r,.nd

11

Not

p:rofi

ts

c.d t•.::r

di

vid nds

11

&I'G thon to bu carriCdd for We..rd

to

S•c;ctior: 2

 

Chanr;os

in

Cc.pitr l Accounts .

6. Section

2

has b ~ ~ n

c o m p l ~ t o l y

revised. Hurotoforu th i s soc

t ion cQllod

for

t h · ~

gross nmounts of

a l l transfe;rs to

D.nd

from surplus

reserves

for

conting..::ncivs, rosurves

f'or d i v i d c : n d ~ >

e;tc., in Ci.ddi

t ion

to

the.; •unow1ts of

assossmnnts rodu.ction

of co.pi tr..l not r..::paid

to she,roholdcrs

dividends p ~ i d utc.

In

r0visod

~ a c t i o n

2f

a l l dobits

Qnd cr0dits r ~ p r ~ -

scmting

r.1or Jly trr,nsf(.;rs from onu ce..pi tc l c.ccount to

c,noth0r

hr v;_; b;;on

:::limint..tod, th.JNby

groo.tly

simplifying th i s

soctiou of

th8 r::;pcrt. All

t h r ~ t

is

lOW

required

is

th<)

ruporting

of

trD.nsc.ctions

thc.t

rosul

t

e i

h-:.:r

in o.n increase;, or a v c r l r . ~ s u in th8 of a l l

capi

tc.l

c..ccounts,

7.

SectJon

3

l ikewise has been radically c h a n g e d ~ Heretofore,

banks were required to

show

in this sect ion the to ta l

p ro f i t s assessments,

contribution:;, e t c since the organization of the

bank,

together

with

the a.istr ibution

thereof .

1'his inform&:cion

has been

coupletely eliminated.

All tha t

is

now

required

i s

tha t the banks show, as

of

the beginning and

end

of the

report

p ~ 1 r i o d the

balance in

each

capi ta l

account. '£his in ..

formation ma;y

be readily

taken from

the

bank's

books •

8, Only calendar-year to ta l s are to be reported in the current

report•

An

inttJrim semi-annual

report

perhaps

i:: :.

condensed

form,

nay

be

required

a.t tho

end

of June •

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s

.

ooob

BUGGES'.i:'IOllS

IN CONNECTI<,.;·N

WITH

HANDLING AND BXAMINi:..TION OF

S'l'ATE B <

lm

1 v L ~ W J t ~ H i

WINGS i ~ N D

DIVIDENDS

RSPORTS BY

FEDERAL RESERVE BANKS

December

1942

85

copy

of

the Federal

Reserve Bank's

l e t t0 r

to

Sta te bank

r:tem-

bors trE:.nsmi t t ing tha blcmk

forms

should

d

furnishr;;d to the

Board of

G o v o r n o l ~ s

as soon as prac t icab le and

a

copy of the' l o t tu r and aecompany•

ing

forms

should be sen-e

-co

tho banking d r ~ p a r t m o n t or

uach

Stat:::: which

l i e s in

tho Federal

ResarvG

d i s t r i c t

Whun

r'.Jports on

lt'orm F.H.

107 hav0

b0<m f i l ed wii:.h the F0deral

Rusurvc Banks thoy should be careful ly

checked

and any necessary correc

t ions

obtained

t

i f

practicablf;J, boforo th6y

a n

forwardo<i

to

t h ~ ·

Board

of

Governors.

Corr;.:ctions

should be clear ly shown on the copir s forwarded

to th:, Board, with

an

indica t ion o1' th.::; u.uthority

for

tho correc t ion in

cluding thu

iu i

t ia . ls

of cho pc.;rson a.t

th .. Fod' 'ral R . : ~ s o r v c

Bunk who mb.kes

thum. Whon

necossary to

c la r i fy thu oorruct ions • a

copy

of 'the pert inent

correa}Jondenco

should b,;

fll.rnishDd th<:: Board f

f

th0 obtainint: of correc

t ions i s lik..:1ly to dulay the ·transmi t ta . l of' sny

reports

to th<1

Board

bGyond throe

w o ~ k s from th..;

olos:J

o£'

th ;

roport

p<-,riod,

such

rupor t s

to

gether with pert inont oorrespondonco

or notes

of o u t s t n n d i n ~ correspondence,

shoulu bo forvmrd,;;d to

t h ~

: b o ~ r d , to be followed l a te r

by

appropriato

a . d v i c ~

of

corroct ions,

Tho roports should

bo

examined to sec t h t ~ among othDr th ings--

'£h-.; h-.:Jading o f tho roport und r.:Jquircd sigrw tu re o.rc

compl;;to;

All

footings

o.ro correc t ;

Amounts r.;;portod agains t c;o.ch i t<Jm in

Section

1 do

not appoti.r to be obviously inconsishmt vii

th

th0

amounts shovm on

p r ~ c o d i n E rCJport

(

s) for

compr.l.ro..blu

p ~ 1 r i o d s ;

Othor

c u r r ~ m t opcn, t ing o&rnings , Other curront

operat ing

cxpons0s

 

R;covuriGs

c..nd

p:rofi t s -

..

All

othor , c

nd

Losses o.nd chf.,rg0..-offs- ...;.ll othsr

11

.to

prop;:rly it•..'nlizcd;

Tho munb.)r of' off'icor3 u.ncl <:Jmploy.::;.;,s o.s shown

against

itoms

2(a) and

2(b) a p p e ~ r s

to be s u b s t ~ n t i a l l y

c o n ~

po.ro.bl8

with

prior r ~ p o r t s ;

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s 6oob

..2 .

The net

chungo in total dupita l o.ccounts shown

o . g ~ · i n s t

i turn 14, Section 2, agroos

with

thd dii .f cronco bGtwOclr

th0

·totals sho·wn

in

th.:;

f irs t

and second columns o

Soction

3;

Increas1;7s and decr<.:>ases in

oapital

in Sootion ar.:.·

r e f l v t ~ d

in

corresponding entri..;s

in

Section 2;

All

items

in

the

f i r s t

column of Section 3 agree

with corresponding

items

o the

report of

earnings

and dividends

for

the same date;

The

amoWlts shown in both columns of Section

3

agree .-d th corresp,mding i terns

or

combinations of

items)

in

condition

reports,

F orm

F.R.

105,

i f

such

reports

are

ren<iered

as

of the

same

dc.tes.

t

is

desirable that ,

in

so fa:r as practicable, examination

of

and corrGsponderrce

with the State

bank membE;Jrs

pertaininb to capital

accounts,

as

shown in earnings e.nd di1/idends

reports

and condition re•

ports

, be conducted

at

the s a r ~ ~ e time •

86