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COPY
FEDERAL RES-EffTE & M . OF
JRAliCISCO
A p r i l £ 9 , 1940
Mr. A. J . Mulroney,
D e p u t y C o m p t r o l l e r o f t h e Currency,
W a s h i n g t o n , D. C.
Deer M r .
Mulroneyi
A t a meeting t h i s a f t e r n o o n o f t h e Comaittet< t o Appraise the
B a n k i n g Premises of t h e Benl: o f America
T . & 3 . A . , M r . Wright expressed
some u n c e r t a i n t y a <3 to" the method of d e t e r m i n i n g t h e f a i r value a t t h e time
o f a c q u i s i t i o n , of a ' b u i l d i n g v;hich
purchased without buying t h e s t o c k
o r the business o f the i n s t i t u t i o n which
housed t h e r e i n , An axamp1©
w i l l b e found i n the case o f t h e premises housing t h e C a l i f o r n i a - M o n t g o m e r y
Branch o f t h e Bank o f America
T.
S. A .
The b u i l d i n g o r i g i n a l l y was constructed by t h e American N a t i o n a l
Bank. U l t i m a t e l y , i t passed t o t h e ownership o f t h e Americ&n T r u s t Company
o f San F r t u c i s c o , the main o f f i c e o f which was across the s t r e e t .
I n the
course o f c o n s o l i d a t i n g t h e business o f t h e e x t i n g u i s h e d American B*mk \ * i t h
t h e American T r u s t Company, t h e l o c a t i o n a t C a l i f o r n i a and Montgomery S t r e e t s
was l e f t v a c a n t . I r e c o i l v e r y w e l l t h e n e g o t i a t i o n s between P r e s i d e n t John
Druam o f t h e American T r u s t Company sua Mr« A* P* O i a n n i n l , Chairman o f t h e
A d v i s o r y Committee of t h e Bank o f I t a l y , K . T . k 3 . A . I t was a l i v e l y contest
between two v e r y a s t u t e t r a d e r s .
A c c o r d i n g t o t h e d i s c u s s i o n s * e had i n M r . F o l g e r ' s o f f i c e w i t h
M e s s r s . Layman end S t e i n m e y e r , Wednesday e v e n i n g , F e b r u a r y £ 8 , i t mas
a g r e e d t h a t t h e p r i c e a c t u a l l y p a i d f o r a b u i l d i n g t s a s e p a r a t e u n i t and
n o t i n c o n n e c t i o n w i t h t h e p u r c h a s e o f a bank s h o u l d be r e g a r d e d a s t h e
f a i r v a l u e o f t h e p r o p e r t y . Therefore, i n d e t e r m i n i n g t h e present v a l u e ,
t h e Committee must 3 t a r t w i t h t h e p u r c h a s e p r i c e and f i x tlifa p r e s e n t book
v a l u e b y a d d i n g ony e x p e n d i t u r e s subsequent t o a c q u i s i t i o n f o u n d by t h e
Committee t o have been a p p r o p r i a t e l y c a p i t a l i z e d , and d e d u c t i n g t h e a p p r o p r i a t e amount o f d e p r e c i a t i o n a t t h e r a t e a l l o w e d by t h e Bureau o f I n t e r n a l
Revenue f o r e a c h y e a r o f o w n e r s h i p *
You may r e c a l l t h a t t h e m o r n i n g a f t e r t h e e v e n i n g s e s s i o n w i t h
M e s s r s . L e y a a n and S t e i n m e y e r , I d i c t a t e d an o u t l i n e o f o u r u n d e r s t a n d i n g ,
t h e s u b s t e n c e o f w h i c h was e x p r e s s e d i n P a r a g r a p h 5 o f t h e A g r e e m e n t .
I
f o u n d among my f i l e s a r o u g h d r a f t o f t h e o u t l i n e , w h i c h I e n c l o s e *
I
s h a l l v e r y much a p p r e c i a t e y o u r r e v i e w i n g i t , a n d , a f t a r c o n f e r e n c e w i t h
£ r . F o l g e r and M r . D r o i b e l b i s , l e t t i n g me know w h e t h e r P a r a g r a p h 4 o f
t h e e n c l o s u r e agrees w i t h your u n d e r s t a n d i n g , end w h e t h e r t h e purchase
p r i c e o f t h e A m e r i c a n Bonk B u i l d i n g i s t h e p r o p e r b a s i s f o r d e t e r m i n i n g
the f a i r value at t h e t i t 4 of a c q u i s i t i o n .
Please r e p l y
by4iaall.
Yours v e r y
(Signed)
Ira
truly,
Clerk
llrat
Vice President.
Enclocure
http://fraser.stlouisfed.org/
Cci M e s s r s . W r i g h t , F u n s t e n , West, D r e i b e l b i e , and F o l g e r .
Federal Reserve Bank of St. Louis
Efeixk o f America
Ifcn; In.-
T. &
a*
Premises
Method o f I > e t e r a i n i n g O r i g i n a l
Cleans A c q u i r e d
1.
Construction
Cost
o f BarJ:ln,- P r y a j s e s
A c t u a l c o s t o f l a n d a n d C03t
improvements
of
P u r c h a s e o f s t o c k w i t h o u t exami n a t i o n . and a p p r a i s e m e n t of
assets*
Amount c a r r i e d on books o f s e l l e r ,
except
{ n ) Where e x t r a o r d i n a r y d e p r e c i e t i o n
has been t a k e n by s e l l e r ;
( b ) ¥»here r e v i i l u a t i o n hes b e e n j u s t i f i e d by e x t r a o r d i n a r y u n e a r n e d
increment;
i n w h i c h event o r i g i n a l cost t o s e l l e r ,
l e s s reasonable d e p r e c i a t i o n s h a l l be
c o n s i d e r e d t o be c o s t ; p r o v i d e d t b a t
whenever n e g o t i a t i o n s have been e i ; t e r e d
i n t o w i t h a u n i t e d group of m i n o r i t y
s t o c k h o l d e r s i n which appraisement o f
a s s e t s has e n t e r e d i n t o t h e
rice fixed
f o r m i n o r i t y s h a r e s R u l e No* 7 w i l l
apply.
3.
Purchase o f u l t i m a t e c o n t r o l o f
stock a f t e r n e g o t i a t i o n s ana
examination o f a s s e t s *
Amount s e t t l e d upon e s t h e v a l u e o f t h e
banking premise i n e f f e c t i n g s a l e .
4.
Purchase o f a b u i l d i n g a s e sepa- Amount o f purchase p r i e ® .
r a t e u n i t whether or not o t h e r
assets are involved*
A l l p r o p e r t i e s t o show d e p r e c i a t i o n from the time of
c o n s t r u c t i o n by Bank o f America o r by any o f t h e
T / A banks o r companies, o r f r o m t h e time a c n u i r e d *
@FedFRASER