State banks becoming members of the federal reserve must conform to the laws imposed upon national banks, which prohibit them from lending on or purchasing their own stock, and which relate to the withdrawal or impairment of their capital and to the payment of unearned dividends. Their officers and employees are subject to the national bank statutes covering penal offences. They are required to present to the federal reserve bank, not less than three times a year and on dates fixed by the Federal Reserve Board, reports of their condition and of the payment of dividends. They are also subject to examination made under direction of the board or of the reserve bank by examiners selected or approved by the board. In lieu of this, however, the reserve bank may accept the examinations made by the state authorities. The board may also order special examinations. The expenses for these various federal examinations are assessed upon the bank.
The Federal Reserve Board has power, after a hearing, to require any member to surrender its stock in the reserve bank and forfeit its membership, if the member fails to comply with the federal laws or regulations. A state member bank or trust company may withdraw its membership at will, after six months' notice of its intention has been filed with the board. The board deals with these applications for withdrawal in the order in which they are filed. After indebtedness to or from the reserve bank has been adjusted the withdrawing member is entitled to a refund of its subscription at par and to the repayment of its deposits with the reserve bank. Subject to the provisions of the Federal Reserve Act and to the regulations of the board, a state bank or trust company becoming a member retains its full charter and statutory rights as a state institution and may continue to exercise all the corporate powers granted by the state, except that no federal reserve bank is permitted to discount for such bank or trust company the paper of any one borrower who has borrowed from such bank or trust company in an amount greater than 10 per cent of its capital and surplus. The discount, however, of bills of exchange drawn against actually existing value and the discount of commercial or business paper actually owned by the person negotiating the same are not considered as borrowed money within the meaning of this clause. The reserve bank requires a signed statement from such member seeking to discount its paper, that it is not liable in excess of these amounts. Overcertification of checks by a state bank or trust company member is prohibited under penalty of forfeiture of membership.