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C O P Y TR/ JSAMERICA CORP "'RATION San 1ranci seo , Cali ion da, August 17, 1939 Hon. Pros ton ualano, Comptroller o f tha Currency, Washington, D C. Dear Mr. Dslano* For your oomwnienee in replying, I am s&slosiqg a copy o f a le tte r daced July 18, 1939* addressed to you by Hr. B. B. Haciuau.~hton, President o f The First National Bank o f Portland, tooth er with a copy or Deputy Cangrtroller Upturn's reply o f August 5# 1939. Please note the fifth paragraph o f Mr. Upham's le t er i t which he refers to the "manner” in which the stock of The First Rational Hank is held. What Mr. Uphsm intended to say was, "By reason o f the fact that Transaraerica Corporation holds a majority of your capital stock, trie o liloe has no assurance tiiat the present management w ill continue undis turbs-! or that additional capital w ill be furnished should such request be made by this of lic e ." Whether or not Transaiaarlca Corporation is satisfied with the present jaanansment of 'Hie First National Bank of Portland is beside the point. There appears to us to be nothing either in the law or in the regulations prescribed by the Comptroller of the Currency or the Federal Reserve Board to indicate that befbre j?ranting pemi s to convert inde pendent banks into branches of a .national bank the Ccrrptroller's oliloe raust have assursnoe that the management o f a national bank w ill be conti aodj nor is t ere either in the law or in the re fla tio n s any requirer«nt that the Comptroller’ s o ffic e , befbre granting such permits, riust have assuranoe that additional capital w ill be furnished should such re quest be made by the Comptroller's o lilo e . The First National Bank o f Bortlsnd 1ms capital ana surplus greatly in excess of the requirements under Section 5138 U.S.P.S. so that assurance as to additional capital is not required at this time. The other assuranoe which Hr. Upham believes to be a "sin e qua non" cannot, o f course, be fbrthemlng, inasmuch as the stockholders o f a national bank are under neither the obligation nor the necessity to com mit themselves fbr a ll time, or for a period o f time, us to the eoriinuanoe o f the present iasna^«nent of a bank. Furthenoore, under the tenns o f our sgrsaMNHfe with the Federal Preserve Beard oonsusiaated at the tins Transaraerica Corporation applied for a penJit to vote the stock o f The First hat i anal Bank o f Portland, aw under- COPY TR A 1SAMERICA CORP RATION took to comply with certain requirements expressly B6t ibrth in the applica tion fbr the permit. Those requirements have been fu lly met by iransamerioa Corporation, said the la st examination report on live First National Dank of Portland by ihe Cociptroller*8 office indicates not only that i t is one o f the "cleanest" banks in the United States but that i t has a net sound capital of approximately $8#Q00#000 exclusive of $1,1*00,000 appreciation in its bond account. Under Section 5138 U .S.R .S., The First National Bank of Portland is required to maintain #2,250,000 in capital and $Jh50,000 in surplus, a total of ^2,700,000. The capital o f The First National Bank o f Portland is •^•OOOjOOO and the surplus $3,000,000, exclusive of other capital funds of *2,GOO,000 and bond appreciation o f #1,1)00,000, a total o f 10,200,000, or an excess o f 17#500,000 over the requirwraents o f Section 513®* vhe losses to be charged o ff at the la st examination aggregated only $80,800, while "doubtfuls* aggregated only $1|2 , 700. fif t y per oent of the "coubtfuls" and 100 per cent of the loss classification have been taken into consideration in arriving at the net sound capital of §8, 500, 000. May I ask you to be good enou$i to review Mr* Upham’ s decision in this raatter. If the decision stands, may 1 ask you also to explain exactly under what legal authority the branch permits which Mr. Mac^aur^hton has requested are being withheld. Very sincerely yours. John U. /rant. President.
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