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Federal

reserve

Bank

OF DALLAS

Dallas, Texas, June 15, 1960

New Law on Bank Mergers, Consolidations, Acquisitions of Assets,
and Assumptions of Deposit Liabilities
To All Banks in the
Eleventh Federal Reserve District:
On May 13, 1960, the President of the United States signed into law an act (Public Law
No. 86-463) amending section 18(c) of the Federal Deposit Insurance Act. That section, as
amended, prohibits the merger, consolidation, or acquisition of assets and assumption of
deposit liabilities, of federally insured banks without the prior written consent of the appropriate
Federal bank supervisory agency. If the acquiring, assuming, or resulting bank is to be a national
bank or a District of Columbia bank, approval must be obtained from the Comptroller of the Cur­
rency; if the acquiring, assuming, or resulting bank is to be a State member bank, approval must
be obtained from the Board of Governors of the Federal Reserve System; and if the acquiring,
assuming, or resulting bank is to be an insured nonmember State bank, approval must be obtained
from the Federal Deposit Insurance Corporation.
The appropriate supervisory agency is required to consider the following factors regarding
each bank involved: (1) its financial history and condition, (2) the adequacy of its capital struc­
ture, (3) its future earnings prospects, (4) the general character of its management, (5) the
convenience and needs of the community to be served, and (6) whether or not its corporate powers
are consistent with the purposes of the Federal Deposit Insurance Act. The agency is also required
to consider the effect of the transaction on competition, including any tendency toward monopoly.
In the interest of uniform standards, the new law provides for reports, to the appropriate super­
visory agency from the Attorney General and the other two agencies, on the competitive factors
involved. The appropriate agency may not approve any transaction unless, after considering all
seven factors, it finds the transaction to be in the public interest.
The full text of Public Law No. 86-463 is set forth on the reverse side of this circular.
Pending the formal adoption by the Board of Governors of a definitive form of application,
this Bank, upon request, will furnish a tentative form of application to State member banks for
use in applying through this Bank for the written consent of the Board of Governors under amended
section 18(c) of the Federal Deposit Insurance Act.
Additional copies of this circular will be furnished upon request.
Yours very truly,
Watrous H. Irons,
President

This publication was digitized and made available by the Federal Feserve Tank of Fallas' Historical F ibray (FedHistoy@ dalfrb.otg).
publication
Reserve Bank Dallas' Historical Library (FedHistory@dal.frb.org)

[P ublic L a w 86-463— 86th Congress]

[S. 1062]
[M ay 13, 1960]

AN ACT
To amend the Federal Deposit Insurance Act to require Federal approval for
mergers and consolidations of insured banks.

Be it enacted by the Senate and House of Representatives of the United States of America
in Congress assembled, That subsection (c) of section 18 of the Federal Deposit Insurance Act is
amended by striking out the third sentence and inserting in lieu thereof the following: “ No
insured bank shall merge or consolidate with any other insured bank or, either directly or in­
directly, acquire the assets of, or assume liability to pay any deposits made in, any other insured
bank without the prior written consent (i) of the Comptroller of the Currency if the acquiring,
assuming, or resulting bank is to be a national bank or a District bank, or (ii) of the Board o f
Governors of the Federal Reserve System if the acquiring, assuming, or resulting bank is to be
a State member bank (except a District bank), or (iii) of the Corporation if the acquiring, as­
suming, or resulting bank is to be a nonmember insured bank (except a District bank). Notice of
any proposed merger, consolidation, acquisition of assets, or assumption of liabilities, in a form
approved by the Comptroller, the Board, or the Corporation, as the case may be, shall (except in
a case where the furnishing of reports under the seventh sentence of this subsection is not re­
quired) be published, at appropriate intervals during a period (prior to the approval or dis­
approval of the transaction) at least as long as the period allowed under such sentence for
furnishing such reports, in a newspaper of general circulation in the community or communities
where the main offices of the banks involved are located (or, if there is no such newspaper in any
such community, then in the newspaper of general circulation published nearest thereto). In
granting or withholding consent under this subsection, the Comptroller, the Board, or the Corpo­
ration, as the case may be, shall consider the financial history and condition of each of the banks
involved, the adequacy of its capital structure, its future earnings prospects, the general character
of its management, the convenience and needs o f the community to be served, and whether or not
its corporate powers are consistent with the purposes of this Act. In the case of a merger, consoli­
dation, acquisition o f assets, or assumption of liabilities, the appropriate agency shall also take
into consideration the effect of the transaction on competition (including any tendency toward
monopoly), and shall not approve the transaction unless, after considering all of such factors, it
finds the transaction to be in the public interest. In the interests o f uniform standards, before
acting on a merger, consolidation, acquisition of assets, or assumption of liabilities under this
subsection, the agency (unless it finds that it must act immediately in order to prevent the prob­
able failure of one of the banks involved) shall request a report on the competitive factors in­
volved from the Attorney General and the other two banking agencies referred to in this sub­
section (which report shall be furnished within thirty calendar days of the date on which it is
requested, or within ten calendar days of such date if the requesting agency advises the Attorney
General and the other two banking agencies that an emergency exists requiring expeditious
action). The Comptroller, the Board, and the Corporation shall each include in its annual report
to the Congress a description of each merger, consolidation, acquisition of assets, or assumption
of liabilities approved by it during the period covered by the report, along with the following
information: the name and total resources of each bank involved; whether a report has been
submitted by the Attorney General hereunder, and, if so, a summary by the Attorney General of
the substance of such report; and a statement by the Comptroller, the Board, or the Corporation,
as the case may be, of the basis for its approval.”
Approved May 13, 1960.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102