The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Confidential
GROUP BANKING- IN THE UNITED STATES
1st edition - January 25, 1937
2nd edition - September 30, 1937
CONTENTS
Page
Siimmary
Definition
Development and Status
Recent Changes in Banking Groups
Regulation of Group Banking
Advantages and Disadvantages
1
1
2
3
4
4
Chapter X
Introduction
Characteristics of Group Banking
Scope and Limitations of Study
7
7
10
Chapter II
Origin and Development of Group Banking
Reasons for Formation of Groups
Federal Regulation of Group Banking
Procedure on Voting Permit Applications
State Laws with Regard to Bank Holding Companies
Ownership of Bank Stock "by Banks and Trust
Companies
12
14
17
22
25
Principal Groups - Organization anfl Operations
Organization of Groups
Relation of Holding Company to Subsidiary
Banks
Selected Principal Groups
Transamerica Corporation, San Francisco
Anglo National Corporation, San Francisco
First Security Corporation of Ogden
Northwest Bancorporation, Minneapolis
First Bank Stock Corporation, Minneapolis
Wisconsin Bank Shares Corporation, Milwaukee
BancOhio Corporation, Columbus, Ohio
Marine Midland Corporation, Buffalo
First National - Old Colony, Boston
Shawmut Association, Boston
Citizens and Southern National Bank, Savannah
Atlantic National Bank, Jacksonville
SO
30
Chapter III
27
33
36
36
45
47
50
54
58
62
65
68
71
73
76
Page
Chapter IV
Chapter V
Extent and Distribution of Group Banking;
Size of Banks in Groups
Size of Groups
Principal Banking Groups
Geographic Distribution of Group Banking
States in Which Branch Banking Is Prohibited
States Whose Banking Laws Contain No Provision
with Hespect to Branch Banking
States in Which Branch Banking Is Restricted
to the Head Office City or County
States in Which Branches May Be Established
Beyond the Head Office County But Not Throughout the State
States in Which State-wide Branch Banking Is
Permitted
Extent of Areas of Operation
Intrastate Group Systems - Number of Towns
and Counties Served
Interstate Group Systems - Number of Towns
and Counties Served
Size of Towns in Which Banking Groups Operate
Branch Banking Among Groups
Changes and Suspensions in .Banking Groups
Decrease in Groups, 1931-1936
Changes in Banks in Active Groups
Disposition of Banking Groups
Disposition of Banks in Dissolved Groups
Suspension of Group Banks and Dissolution of
Banking Groups
Disposition of Groups in Which Suspension
Occurred
Suspensions of Banks in Groups, 1930-1936
By Geographic Area
By States
By Years
By Class of Bank
By Size of Bank
Disposition of Suspended Banks
Suspension of Individual Bank Groups
Banco Kentucky - Caldwell - A. B. Banks Group
System
The Detroit Bankers Company
The Guardian Detroit Group, Inc.
79
80
83
83
85
89
90
91
92
94
95
97
97
98
101
103
104
105
107
108
110
111
112
112
113
115
116
117
119
120
120
121
124
Page
Chapter VI
Appendix I
Evaluation of Group Banking As a Type of Banking
Organization
Group Banking and Branch Banking Compared
Group Banking and Unit Banking Compared
Establishment of Multiple Office Systems
Management and Personnel
Improved Credit Facilities
Economies in Operation
Assistance to Banks in Emergencies
Disadvantages and Dangers of Group Banking
Difficulties of Supervision
Control Through Small Amount of Investment
Non-banking Affiliates of Bank Holding
Companies
Inferior to Branch Banking
127
127
132
133
134
134
136
137
138
139
141
142
143
Statistics of Group Banking
147
Number of Group Banks by Classes, Number of Group
Banks Operating Branches, Number of Branches by
Location, Number of States and Cities in Which
Operating, December 31, 1936
148
Loans and Investments, and Deposits of Group Banks
by Class of Banks, December 31, 1936
154
Number of Banks and Branches, and Amount of Loans
and Investments, and Deposits in Groups by States,
December 31, 1936
159
Number, Loans and Investments, and Deposits of
Group Banks Suspended 1930-1936, by Class of
Bank, and by States
162
Appendix II National and State Banks Members of the Federal Reserve System Which, According to Reports Received
by the Comptroller of tlie Currency and the Board
of Governors of the Federal Reserve System, were
Controlled on March 31, 1937, by "Holding Company
Affiliates" as Defined in Section 2 (c) of the
Banking Act of 1933, As"Amended
164
Appendix III GompUfltjoA Ol Federal msl Stfrte Ban&lng Xaw.a Sen
lating to the Acquisition of Bank or Trust Company
Stock by Banks and Trust Companies and Relating to
Bank Stock Holding Companies and Chain or Group
Banking
173
SUMMARY
Definition
Three methods may be distinguished "by which the same interests operate a hanking business at several different offices—branch, group,
and chain systems• The term group banking designates that type of
multiple office banking in which two or more independently incorporated
banks are owned or controlled by a corporation, business trust, association, or similar organization
The term chain banking, on the other hand,
designates that type of multiple office banking in which an individual or an
unincorporated group of individuals owns and controls a majority of the stock
of two or more banks* Both of these types of multiple office banking are
to be contrasted with branch banking, in which the various banking offices
are part of the same legal entity®
This study deals with group banking*
The structure and organization of banking groups in the United States
are exceedingly diverse*
The clearest cut type centers in a holding com-
pany which controls banks as well as a variety of other financial and business corporations through stock ownership*
The degree of control exercised
by the holding company over the subsidiary banks varies widely and most of
the groups, though not all, have been organized around a key bank®
Systems
which are included in the statistics are those with three or more banks controlled by (1) a "holding company affiliate" as defined in section 2(c) of
the Banking Act of 1933 a s amended 1/; (2) by a holding company which would
be a "holding company affiliate" if the Reconstruction Finance Corporation
did not own preferred stock in the subsidiary banks; and (3) what is re-
1/ This definition is quoted on p* 21#
~2 garded generally as a "bank group even though there is technically no
"holding company affiliate" as defined in section 2(c) of the Banking
Act of 1933.
Development and Status
A few examples of group hanking existed prior to 1920 hut its
major development occurred "between 1927 and 1930* an important proportion of the principal holding companies having "been incorporated
during this period. The development was associated with the general
business optimism and the amalgamation movement which characterized
the period. An important element was the desire to obtain the advantages of multiple office operation which could not "be developed in the
"branch form because of legal restrictions.
On December 31t 193& there we re 52 groups with 3 or more banks controlling U79 banks and 1,32.6 banking offices with $5t^50,000,000 of loans
and investments and
,000,000 of deposits. This represents 3*2 per-
cent of all commercial banks, 7 percent of banking offices and lU percent
of both loans and investments, and deposits of such banks. Most of the
group banks are of medium or large size. The proportion of banks in groups
which are small is much less than that for all commercial banks. Group
banks do not serve snail towns to the same relative extent as do unit
banks.
Eighteen of the principal groups control 333 hanks with $3,820,000*000 of loans and investments and $Uf830,000,000 of deposits, or
about 70 percent of the financial strength
of the 52 groups.
Most of the banking groups operate within a single State or, at
most, within the limits of the Federal Reserve district, but there are
H groups which operate in 2 Federal Reserve districts and 2 groups which
operate in 3 Federal Reserve districts. One group operates in a total
of 7 States and another group in 5 States.
The 52 bank groups controlled 69 branch operating banks with
branches on December 31, 193&. A large proportion of these branches is
accounted for by the Bank of America N. T. & S. A., belonging to the
Transamerica Corporation.
Recent Changes in Banking Groups
The short period since 1927 when the modern bank holding compaziy
emerged has been characterized by widespread difficulties for banks in
the United States, and the "banking groups were seriously affected by
these difficulties. Many changes took place during the period in the
number of active groups and in the number of banks in such groups. There
were also a number of suspensions of group banks.
Official statistics for groups separate from chains were first compiled for December
1931* when 97 groups controlling 97^ banks were
reported. From December J>19 1931
December 319 193& changes in the
number of active groups resulted from the addition of 9 groups and the
dissolution of 55 group systems because of suspension of constituent banks
because of conversion of banks into branches of other banks in the groups,
or for other reasons.
Important changes within the active groups which
are still in operation were due to conversions of some banks into branches
mergers between and among banks within groups, sales and disposition of
group banks to outsiders, and by suspensions of individual banks. Total
- '4 -
suspensions of all banks in groups during 1930-1934, inclusive, amounted
to 201. There were no suspensions of group hanks in 1935 0 T 1936®
Regulation of Group Banking
Federal regulation of group "banking was first attempted by the
Banking Act of 1933* Holding company affiliates are required to obtain voting permits from the Board of Governors of the Federal Reserve
System in order to vote the stock of member banks which they control.
The Board may grant or withhold voting permits as the public interest
may require and may revoke such permits in certain circumstances®
No
permit may bo granted except upon certain conditions prescribed by the
law and it is the Board's policy to prescribe additional conditions.
Experience has shown that such legislation is not wholly satisfactory.
The development of group banking has presented administrative problems to State authorities also and a few States in recent years have
adopted statutes attempting varying degrees of regulation of group banking and holding company affiliates. Thus far, however, the efforts of
most of the States to deal directly with group banking in this way have
not been extensive.
Advantages and Disadvantages
Although the modern bank holding company has existed as a recognized form of banking in the United States for only a decade, experience
with it thus far has brought out some advantages over unit banking but
relatively few advantages as compared with branch banking.
Some general
disadvantages and dangers are associated with the group form of operation. Evidence as to the disadvantages of group banking, as compared
- 5-
with "branch "banking is found in the opinions of the majority of group
"bankers themselves who have expressed themselves in recent years. It
appears from their statements that most of the group hankers in the
West and South would distinctly favor "branch "banking, if it were permitted "by law, while some of those in the East s^em more favorable to
group banking .
The proponents of group banking point out the following advantages
over unit banking:
1, Through group banking some of the benefits of
branch banking are provided in areas whore branches
are prohibited or limited by law and the establishment of branches is facilitated in States where they
are permitted*
2, Better trained, nore efficient, and abler
management of the constituent banks is nade possible
through the organization of groups.
3, Better credit facilities to the business community and more satisfactory diversification of loans and
investments are possible through group organizations,
H, Group banking provides nore adequate facilities
for formulating investment policies and for handling the
investments of the banks.
5. More adequate facilities for developing and handling
fiduciary banking services are made possible through groups
than are possible for the banks operating individually,
6. Many operating economies to the noriber banks are
possible through the group organizations that could not be
accomplished by the units individually*
7. Through their affiliation with groups, many of
the constituents obtained assistance during the banking
crisis and were aided and strengthened after the crisis,
and losses to their depositors were prevented.
- 6The principal disadvantages mid dangers that are felt to he inherent in group "banking nay be summarized as follows:
1. It is difficult to supervise and control the banks in
groups and the holding companies around which groups are organized.
2. The great amount of banking funds which may be controlled by a comparatively modest amount of investment in a
bank holding company is dangerous.
3* Opportunities for promotional profits to the organizers of bank stock holding companies may lead to unwholesome
developments.
U. Tendency of banking groups to acquire and operate
existing banks rather than to supply communities that are
without banking facilities with them by the establishment
of banks de novo, is an important shortcoming of the group
organizations.
5. The potential dangers that characterize the extensive
operations of holding companies in other fields of business
enterprise arc likewise present in bank holding companies.
6. A group system has an unfair advantage in expanding
multiple office operations because of capital requirements in
contrast with a national bank not affiliated with a group.
7. In branch banking the liabilities of every office are
legal liabilities of the entire organization, so that legally
the capital of the entire organization affords protection to all
creditors; whereas in group banking creditors of unit banks in the
group legally have recourse only to the capital of such banks.
Moreover, the amount which may legally bo loaned to single borrowers is smaller than would be the case in a branch banking
organization supported by a single capital structure.
CHAPITER I
INTRODUCTION
Characteristics of Group Banking
Group "banking and chain hanking are terms used to describe
types of multiple bank organizations that have been developed in
the United States whereby two or more corporately independent banks
are jointly owned or controlled®
In general, the term group banking
designates that type of multiple office banking in which too or more
independently incorporated banks are ovmed or controlled by a corporation, business trust,, association, or other similar organization*
The
term chain banking* on the other hand* designates that type of arrangement by w:iicli an individual or an unincorporated group of individuals owns
and controls a majority of the stock of two or more banks* Branch banking as a method of multiple office banking is in contrast with group
and chain banking since in a branch system there is but one legal
person of which the several offices are a part.
A detailed description of some of the characteristics and features of group banking was given by Lyman Et Wakefield in the following statement filed with the Banking and Currency Committee of
the House of Representatives in April 1930t regarding the operation
of the First Bank Stock Corporation of Minneapolis, of which he was
vice president.
- 7 -
"Group "banking is tho none that has cone into common
usago for this step in tho evolution of the American "banking system, which has developed, extensively in tho Worthwest, prompted "by a need to meet a definite change in economic conditions. G-roup "backing is not sin-ply chain "banking under .another name* Chains of "banks under connon ownership or common control, usually of a single individual, have
existed for generations, the majority stockholder or stockholders simply exercising t:at natural right to supervise the
operations of rail the corporations in which their holdings
represented controlling interests, Chain management generally reflected a single dominant individual• Group "banking, on
tho other hand, is the association of a number of corporatoly
independent institutions within a single holding company for
mutual advantages, the group "being "built around one or more
largo "banks of a territorial nat'ure and its management resting in the hands of tho banki :•:.:; interests of tho territory
served.!!
The banking groups which have developed in the United States have
followed no standard pattern.
ceedingly diverse.
Their structure and organization are ex-
Certain features, nore or less connon to all of the
groups although not necessarily found in each of them, are:
(l) a hold-
ing company affiliate which owns the stock of a number of individual
banks; (2) some centralized control or direction of the loans, investments, trust functions, and operating methods and policies of the banks
in the group; (3) supervision through reports and examinations of the
banks in the group by the holding company or its subsidiary service
organization, or by interlocking officers or directors; and (H) an exchange or sale of stock, whereby the shareholders of the banks in tho
group surrender their bank stock for shares in tho holding company or
for cash payment by the holding company.
The holding company affiliate is usually operated in connection
with a key bank.
In many groups the holding company was organized
originally by a majority of the stockholders of the key bank who o-x-
changed their stock of the key "bank for stock of the holding company.
In several groups the holding company was owned 'by the same stockholders
as those of the key "bank, eacn certit.icate of stock of the "bank "bearing
an endorsement representing pro rata ownership of the holding company.
In other groups the holding company was organized "by the stockholders of
the key "bank through the medium of trustees who held the stock of the
holding company for the "benefit of the stockholders of the key Dank.
In a few cases the key bank, usually a trust company, ov:nod the stock
control of the subsidiary banks, either directly or through a subsidiary
company.
In some instances the holding company itself is the dominant
force in the group.
In others the key bank is the dominating institu-
tion, the holding company bein/: largely a corporate en city through which
the key banl*: or its mnagonont controls the other banks in the group*
The croups vary as to tho degree of control that is exercised by the
holding company over the subsidiary hanks and as to the range of operations over which control is exorcised.
Group organizations control both
national and State banks, members of tho Federal Heserve System and
nonmembers, insured and noninsured banks, banks with branches and banks
without branches, city banks and country banks, banks with millions of
dollars of resources and banks with less than a hundred thousand dollars .
Business units other than commercial banks and trust companies
are included in or affiliated with group banking organizations in many
instances. They include investment trusts, insurance companies, realty
firms, safe deposit companies, building and loan associations, joint
stock land banks, and several other typos of business enterprises.
- 10 Scope and. Limitations of Study
This study attempts primarily to analyze group "banking as a part
of the banking structure of the United States at the present time# It
attempts to point out some of the principal features of the organization
and operation of the groups; to show the extent, distribution, and development of group banking; to review the changes and suspensions in
banking groups through 193&5
anci
t0 point out the principal advantages
and weaknesses of group banking as compared with unit banking and with
branch banking in the United States.
Systems which are included in the statistics are those with three
or more banks as of December 31, 1936, controlled by (1) a "holding company affiliate" as defined in section 2(c) of the Banking Act of I933
as amended; (2) by a holding company which would be a "holding company
affiliate" if the Reconstruction Finance Corporation did not own preferred stock in the subsidiary banks; and (3) what is regarded generally
as a bank group even though there is technically no "holding company
affiliate" as defined in section 2(c) of the Banking Act of 1933®
The
term "principal groups" is used to designate the larger and r.:orc important
groups in the various sections of the United States, as measured by the
number of banks and banking offices (banks and branches) and the amount
of loans and investments controlled by the group, that have been developed
for the primary purpose of providing banking services through the coordinated operation of a number of banks.
Banking chains are not included in the tabulations since satisfactory data relating to them are not available. A large amount of the data
relating to bank groups has been obtained from voting permit files of hold-
- 11 -
ing company affiliate groups*
Similar data relating to bank chains are
not available, since there are no provisions in the statutes giving the
Board any powers or responsibilities in connection with chain banks comparable to those in connection with group banks• Information or data relating to bank chains could be obtained only through questionnaires, a
careful survey of reports of examinations, and information obtained
through the Federal Reserve bankso
In view of the nature and purposes
of this study and the time element involved, no attempt has been made
to assemble data on chain banks•
The distinction between a chain and a group is not always clear and
in spocific instances the decision as to whether a number of banks operating under joint ownership or control should be classified as a group rather
than a chain v/as a close one®
CHAPTER U
ORIGIN AND DEVELOPMENT OP GROUP BANKING
The early development of group hanking is obscured because
of the failure of early records' to distinguish between group and
chain banking®
Banking literature indicates that group banking
was discussed to some extent as early as 1S92-1902 as a form of
banking but that bankers at that time felt that it would be opposed by the anti-trust spirit of the day. Chain banking, however, developed considerably in the two decades prior to 1920
and in some respects may be considered as the antecedent of group
banking®
A few examples of group banking appear to have existed
prior to 1920 tut extensive development was a product of the late
1920fs (1927 to 1930)®
I n tkls period financial companies were
developed on a broad scale in the field of banking to acquire control through stock ownership of corporately independent banking
institutions®
Many of the principal groups now in existence were
established during this period, as will be seen from Table 1, which
gives the dates of the organization of the bank holding companies
around which many of the principal groups have been organized®
- 12 -
- 13 Table 1 - Principal Bank Holding Companies and the
Dates of Their Incorporation
Date of
incorporation
Name
Trust Company of Georgia Associates, Atlanta
Atlantic Trust Company, Jacksonville 1/
First National Trustees, Louisville
Marine Bancorporation, Seattle
Citizens and Southern Holding Co», Savannah
Old Colony Trust Associates, Boston
Shawmut Association, Boston
First Security Corporation, Ogden
Transamerica Corporation, San Francisco
Anglo National Corporation, San Francisco
Northwest Bancorporation, Minneapolis
First Bank Stock Corporation, Minneapolis
First Securities Corporation of Syracuse
BancOhio Corporation, Columbus
Marine Midland Corporation, Buffalo
Wisconsin Barikshares Corporation, Milwaukee
Hamilton National Associates, Chattanoo^i
Florida National Group, Inc., Jacksonville 2/
July
24, 1922
1924
July
1, 1925
September 10, 1927
April
9» 192S
May
1928
21, 192S
May
June
15. 192S
October
li, 192S
December
192S
January
24, 1929
April
1, 1929
May
8, 1929
September 19, 1929
September 23, 1929
December
10, 1929
January
20, 1930
Id, 1932
June
1/ Incorporated September 15» 1908; began to function as holding company
in 192U.
2/ Organized to take over bank stock holdings of Almours Securities, Inc.,
which started acquisition of bank stocks in 193®*
An analysis as of December
193^ was the first made by the Fed-
eral Reserve System that distinguished between group banking and chain
banking*
At that time there were 97 groups of 3 or more banks operating
a total of 97S banks with $17,400,000,000 of loans and investments. Of
these 97 groups 3^ were described as leading examples of the group movement, each having 6 or more banks and $25,000,000 or more of loans and investments. A total of 67^ banks with $6,301,000,000 of loans and investments
was
included in these
groups. 3/
3/ As of December 31, I93I there were 176 chain banking systems with 3
or more banks operating a total of 90S banks with total loans and investments of $926,733,000.
~ 14 -
Seasons for Formation of Groups
Various reasons have he en suggested for the rapid development of
hanking groups . The reasons vary, however, among the different groups
and among the different men responsible for promoting and organizing
the groups®
Some groups may have been organized for one reason and
others may have been developed for a combination of several reasons®
In general, the reasons that appear to have been most important may be
summarized as follows:
(l) group "banking was a substitute for branch
banking where the latter was prohibited or limited; (2) the organization
of groups was in anticipation of and preparation for branch banking,
since it was believed at the time many of the groups were organized that
branches would be permitted later and that units brought into groups
could be converted into branches; (3) the organization of larger units
in banking comparable to the large units in business and industry was
necessary and group banking was thought to be a method by which such
larger banking units could be developed; and (4) there existed a desire
for promotional and speculative profits that characterized the period
1927~1929.
Group banking as a means of accomplishing some of the objectives
of branch banking and as preparation for the establishment of branches
seems to have been the most fundamental of these reasons®
Concentra-
tion of "banking resources into larger units in the United States by
the fusion of separate banking organizations under one corporate charter
as in other countries, particularly in Canada and England, generally had
been checked by tha restrictions against branch banking.
In the cities
- 15 -
it had "been possible to combine banks throu<gh the process of merger and
consolidation to meet the need for larger banking units demanded bygrowing industrial units. In the smaller centers this was more difficult; and in the country districts, especially where branch banking
was prohibited, it was not possible to merge banks located in different
towns and operate banking offices in each town* The group method was
found to be a way open for the development of large scale banking operations where branches were restricted, and the statistical record of the
development of banking groups through holding companies shows that the
greatest growth in the early years was in those States where restrictions on branch offices were more rigid*
banking groups as of December 31,
Statistical data available for
as shown in Table 2, indicate that
83^- of the 97^ banks in groups were in States where the establishment of
branches was prohibited entirely or restricted as to location*
Table 2 - Number of Banks in Groups
December 31, 1931
States classified according to law
regarding branch bankingState-wide branch banking permitted
Establishment of branches restricted
as to location
Establishment of branches prohibited
No provision in State law
Total
Number of
banks
46
329
UU5
9S
97S
Development of group banking, however, was not confined to States
where branch banking was restricted*
In some States groups were organ-
ized side by side with branch systems and in some instances banks operat-
- 16 -
ing "brandies were included in the groups* Nevertheless, the group movement appears to have "been most pronounced in areas where tranches were
restricted.
In States permitting branch "banking and where groups also operate
it appears that the holding companies did not always desire to convert
their hanks into branches immediately upon acquisition of control for
various reasons, among which were:
1. The necessity for more than 50 percent of the stock
to be voted before taking such action.
2.
The desire by the holding company affiliate not to
antagonize a large minority group of shareholders
by forcing the establishment of a branch bank.
3. Approval by the supervisory authorities is required
and in many cases examinations had to be made and
reports thereof studied both in the district and
Washington offices in th: case of a national bank
before such conversion was legally possible.
4. In many cases the establishment of branches has been
held up because of technicalities» inadequate
capital, failure to make all desired eliminations,
and many other reasons.
5. The value of a long established charter or a highly
esteemed name was a principal factor in delaying
conversion of banks into branches in a great
number of cases.
6. In many sections of the country unit "bankers have
waged relentless war upon branch "banking and in
order to avoid this opposition, as well as any
chance of loss of business or prestige, many
holding companies deferred organizing subsidiaries into branches until such anti-branch bank
agitation subsided.
Developments with reference to group banking from December 31» 1931
through December 3I1 193^ a r e discussed more fully in a later chapter in
this study, but it is of interest to comment at this point that the period
- 17 of growth and expansion reached a peak about 193® a n & thereafter the
group banking movement declined®
During the banking crisis many of the
groups were seriously affected and in many cases there were widespread
losses®
The period since that time has been characterized by the task
of rebuilding and reconstructing the banks included in the group movement as has been the case for banks in general•
Federal Regulation of .Group Banking
The growth of group banking in the 192Q!s, as thus described, presented important administrative problems to Federal banking authorities
and an active interest in its regulation was evident by the end of 1930®
As early as 19269 the Federal Reserve Board was concerned as to the extent of the development of chain and group banking, and "addressed a
letter to Congressman McFadden recommending that there be incorporated
in the pending McFadden bill certain provisions designed to
secure ade-
q-uate information regarding national and State member banks which are
closely related in management, operations, or interests to other banking
institutions and, in particular, to afford some check upon the abuses frequently occurring from chain banking®!1l/
These suggestions, however, were
not adopted by Congress®
Prior to 1930, the Comptroller of the Currency made but little comment concerning group banking in his annual reports. In his report for
1930, however, he pointed out that it was his view "what group banking
should be brought under the visitorial powers of the Federal Government
in those cases where membership in the group is composed in whole or in
part of national or State member banks of the Federal Reserve System" and
1/ Statement of Governor Roy A. Young of the Federal Reserve Board before
the Banking and Currency Comittee of the House of Representatives, U® S®
Congress, 71st, 2nd Session, Hearings under H® Res. lkl9 March IS, 1930,
VOJ.®
J.,
r a r t
H* «
PP®
^rHrd""^rjB
- IS said that legislation to this effect was necessary.
Members of Congress likewise began to express concern about the
development of bank holding companies toward the end of 1929 and four
bills were introduced in the House in January 193^ dealing with group
banking*
Two of these bills 1/ looked toward the control of groups and
two 2J proposed to dissolve the movement by one legislative device or
another*
On February 10, 1930» the Committee on Banking and Currency
of the House of Representatives was empowered uto make a study and investigate group, chain, and branch banking during the present session
of Congress*" 3/ Hearings were held by the House Committee from February to June 193^#
In the latter month Senator Glass introduced in the
Senate the first of a long series of bills which led up to the Banking
Act of 1933 and which included provisions relating to bank holding com-'
panies* like some of the House bills, the early versions of the Glass
bill looked in the direction of dissolving bank holding companies*
Later editions of the Glass bill, however, proposed regulation rather
than dissolution, and that introduced early in 1932 contained provisions
similar in their general nature to the onactment of June 16, 1933» known
as the Banking Act of 1933*
The Banking Act of 1933 recognized group banking and provided
for its partial regulation*
The Banking Act of 1935 contained certain
minor amendments but made no fundamental change in the legislation on
this subject*
1/ U. S. Congress, 71st, 2nd Session, H* R. 7966 and H* R* 8OO5.
2/ U* S* Congress, 71st, 2nd Session, H* R* 8367 and H. R* S366.
]J U* S* Congress, 71st, 2nd Session, Hearings under H* Res* 1*+1,
Vol 1, Part 1, p* 1*
- 19 -
To provide a means to regulate group "banking, section 51UU of the
Revised Statutes was amended to provide that stock of a national bank
controlled by a holding company affiliate shall not be voted unless such
organization first obtains a voting permit from the Board of Governors of
the Federal Reserve System. 1/
Section 9 of the Federal Reserve Act was
amended to require a State member bank affiliated with a holding company
affiliate to obtain and file with the Board an agreement that such organization shall be subject to the same conditions and limitations as are
applicable in the case of holding company affiliates of national banks
under section
Section 5 1 ^ provides that the Board may grant or withhold a voting
permit as the public interest may require. It further provides that in
acting upon an application for a permit ".•••the Board shall consider the financial condition
of the applicant, the general character of its management,
and the probable effect of the granting of such permit upon
the affairs of such bank, but no such permit shall be granted
except upon the following conditions:"
The conditions prescribed by the law arc designed (1) to authorize
the examination of the holding company affiliate, simultaneously with
banks affiliated with it, by examiners authorized to examine such banks;
(2) to authorize the examination of any bank controlled by the holding company affiliate, both individually and in conjunction with other such banks;
(3) to authorize a requirement that individual or consolidated statements
of condition of such banks be published; (4) to require that after June l6,
193S, the holding company affiliate possess and/or acquire out of earnings
a "reserve" of readily marketable assets and maintain such "reserve";
1/ Under an amendment contained in the Banking Act of 1935» n 0 voting
permit is necessary to vote in favor of placing a bank in liquidation
or action pertaining to liquidation*
- 20 -
(5) to mice officers, directors, agents and employees of the holding company affiliate subject to the same criminal penalties for false entries
as officers, directors, agents and employees of member banks; (6) to require the complete divorcement of the holding company affiliate from
"securities companies" within five years from the date of its application; and (7) to require the holding company affiliate to declare dividends only out of actual net earnings®
As to most of these matters, the
law requires that the holding company affiliate execute agreements when
it applies for a voting permit.
The law further provides that, after affording the holding company
affiliate an opportunity to be heard* the Board may revoke a voting permit if it shall appear that the holding company affiliate has violated any
of the provisions of the Banking Act of 1933 or of any agreement pursuant
to section 5144* Revocation of its voting permit subjects the holding
company affiliate to certain penalties®
Entirely apart from the provisions relating to voting permits,
section 23A of the Federal Reserve Act places certain restrictions
upon extensions of credit by a member bank to its holding company affiliate and upon the bank's investments in, or advances against, stock
or obligations of the holding company affiliate®
Also, other provisions
of law 1/ require national banks and State member banks to obtain and
file with the Comptroller of the Currency and the Board, respectively,
reports of their holding company affiliates as of the same call dates
as condition reports are rendered by the banks. Such reports must be
1/ Section 5211, Revised Statutes; section 9, Federal Reserve Act®
- 21 -
published by the banks in the same manner as their condition reports.
It will be noted that the law deals only with "holding company affiliates."
That term is defined 1/ as including
"••••any corporation, business trust, association, or other
similar organization "(1) Which owns or controls, directly or indirectly, either a majority of the shares of capital
stock of a member bank or more than 50 per centum of
the number of shares voted for the election of directors of any one bank at the preceding election, or
controls in any manner the election of a majority of
the directors of any one bank; or
"(2) For the benefit of whose shareholders or
members all or substantially all the capital stock
of a member bank is held by trustees.
"Notwithstanding the foregoing, the term 'holding company affiliate1 shall not include (except for
the purposes of section 23A of the Federal Bfeserve
Act, as amended) any corporation all of the stock of
which is owned by the United States, or any organization which is determined by the Board of Governors of
the Federal Reserve System not to be engaged, directly or in\H.rectly, as a business in holding the stock
of, or managing or controlling, banks, banking associations, savings banks, or trust companies."
The last paragraph of the definition was added by section 301
the
Banking Act of 1935» l n the light of experience in administering the law.
It made it clear that an organization such as the Reconstruction Finance
Corporation need not obtain a voting permit. However, its principal purpose was to provide a moans by which the voting permit requirements might
be made inapplicable to "accidental" holding company affiliates, organizations which came within the terms of the definition but not within its intent and purposes. As of December 3^t 193^, the Board had made the pretscribed determination with respect to 91 organizations, most of which had
previously applied for voting permits. While the facts have varied greatly,
1/ Section 2(c), Banking Act of 1933^
- 22 -
it may "be said that the basic consideration throughout has been whether
the organizations were engaged in group banking such as the law was intended to regulate*
Thus, in the groat majority of the cases the organi-
zation in question has controlled only one bank*
On July 6, 1937>
in
response to a request from Senator McAdoo, the
Comptroller of the Currency with the assistance of the Board of Governors
compiled a list of the national and State member banks which on March 31,
1937 wore controlled by "holding company affiliates" as defined in section 2(c) of the Banking Act of 1933$ as amended. This list is reproduced in Appendix II* It shows that there were 33 different holding
company affiliates, which controlled in the aggregate I73 national banks
and 22 State member banks*
The deposits of these banks on December 31,
1936 were respectively $2,581,835,000 and $1+19, 275,000*
The list in the
appendix shows that some of these holding company affiliates controlled
no more than one member bank each*
Procedure on Voting Permit Applications
Following the enactment of the Banking Act of 1933 > tho Board received
applications for voting permits from a large number of holding company affiliates*
In handling such applications th$ Board found it necessary to
adopt the practice of issuing limited voting permits from time to time in
many cases, deferring action concerning general voting permits pending the
development and analysis of information, the completion of reorganization
plans or the correction of -unsatisfactory conditions* 1/ A large per-
1/ A limited voting permit authorizes the voting of stock of a bank only
at a designated meeting or at a meeting or meetings held within a designated period of time and only for purposes stated in the permit, whereas
a general voting permit authorizes the voting of stock of a bank at all
meetings and for all purposes*
centage of the applications was
ing of general voting permits*
eventually disposed of without the grantWhile some general voting permits were
granted earlier, it was not until December 1335 that the issuance of such
permits to a substantial number of major holding company affiliates was
authorized*
Since the initial rush in 1933 a n & 193^t relatively few ap-
plications have been received*
It has been a common practice for the Board to authorize the issuance
of voting permitsp both limited and general, subject to conditions*
It
is now the Board's policy to require, as a condition to the issuance of
any general voting permit, that the holding company affiliate execute a
comprehensive standard agreement designed to require the maintenance of
a sound financial condition and proper policies and practices by the holding company affiliate and its affiliated banks during the life of the permit*
Tho agreement was prescribed in substantially its present form in
December 1935» prior to the issuance of general voting permits to the
major holding company affiliates*
By December 31, 193^§ the Board had received 199 applications for
voting permits*
Table 3 summarizes the disposition which has been made
of such applications*
Table 3 - Disposition of 199 Applications for Voting Permits
Received, June l6t 1933 to December 31, 193&
1. General voting permits authorized
a. General voting permits issued
32
b. General voting permits authorized but
not accepted by holding companies
J2
2» Issuance of general voting permits deferred
because of expected termination or unsatisfactory management or condition
3. Holding company affiliates judged by Board of
Governors not to be primarily in the business
of owning bank stocks or controlling banks
under authority of section 3OI» Banking Act
of 1935
Holding company affiliate status terminated
by liquidation, consolidation, merger, etc.
5» Holding company affiliate terminated by sale of
preferred stock
6. Holding company affiliate terminated by sale or
distribution of subsidiary bank stock previously
owned by holding company affiliate
7. Holding company affiliate terminated because applicant's minority holdings of subsidiary banks
ceased to be majority of stock voted at elections
S. Company deemed not to be holding company affiliate
by Board and/or application withdrawn
Total
37
7
73
36
19
17
2
g_
199
Experience has shown that the present legislation is not wholly satisfactory. The Board has the responsibility for granting voting permits,
but does not have sufficient authority to require the maintenance of satisfactory conditions in holding company affiliate groups after general voting
permits are issued, except as it retains control through the implied authority to require the execution of agreements as a condition to the issuance of such permits. Holding company affiliates are not required to apply
for voting permits or to accept such permits subject to conditions prescribed
25
"by the Board. While originally too hroad in some respects, the definition of "holding company affiliate" is too restricted in others®
It and
other provisions of the law relating to holding company affiliates are
ambiguous and difficult to interpret and apply*
The voting permit pro-
cedure is cumbersome and its administration tends to hog down in a maze
of necessary procedural detail and technical questions.
State Laws with Regard to Bank: Holding Companies 1/
The development of group "banking has presented administrative problems to State authorities also and a few States in recent years have
adopted statutes attempting varying degrees of regulation of group banking and holding company affiliates*
Thus far, however, most of the States
have oa&e no effort to deal directly with group banking in this way and the
effects of those that have adopted statutes have not been extensive*
Only in the following 5 cases do State laws appear to be designed
to prevent or restrict the control of banks by holding companies:
Mississippi
Prohibits formation of any corporation,
or the admission of any foreign corporation to do business in the State,
for the purpose of operating banks in
groups•
West Virginia
Prohibits holding of bank stock by a
corporation to perfect control of a
bank. (The ownership of bank stock
for investment purposes is not prohibited.)
New Jersey
Prohibits holding by a corporation of
more than 10fo of the stock of more
than 1 bank or trust conroanv.
1/ Discussion based on provisions of State banking laws without regard to
other provisions of State law* (See provisions in Appendix III compiled
as of June 1, 193^; a subsequent review indicated no alterations through
December 31t 193&0
- 26 -
Washington
Prohibits acquisition "by a corporation
organized or licensed to transact business in the State of more than one-fourth
of the stock of any bank or trust company.
Kentucky
Prohibits holding by any person of more than
one-half of the stock of any bank or trust
company.
In spite of the apparent intent of the law, there are some group
"banks in each of the above States except Mississippi and West Virginia.
In the latter State there are several banks subject to what might be interpreted as group control. It may be that control over the banks in such
States is held by a method not specifically prohibited by lav/.
The laws of the following 5 other States contain miscellaneous provisions designed to afford some measure of supervision of the operations
of bank holding companies or to control somewhat the relations between the
holding company and the controlled banks:
Indiana
Requires a holding company to obtain a voting permit, as the Federal statute does,
before it may vote the stock of controlled
banks.
Kansas
Authorizes the banking authorities to examine
any corporation holding as much as one-fourth
of the stock of any bank or trust company.
Arkansas
A person owning 50 percent of the capital stock
of three or more banks or trust companies may
not obtain loans from such institutions.
Oregon
Restricts dealing between bank holding companies
and their banking affiliates.
Wisconsin
Prohibits the holding of more than 10 percent of
the stock of any bank or trust company by any
corporation unless 75 percent of the stock of
both the corporation and the bank or trust company is voted in favor of such relationship.
A corporation controlling a majority of the stock
of any bank or trust company is subject to supervision and examination, must file reports, is
subject to double liability, and may be required
to correct unsound practices.
- 27 -
Wisconsin (Cont.)
When more than 10 percent of the stock
of a hank is controlled, "by another corporation, the hank may not establish a
receiving and paying station, the substantial equivalent of a branch office®
Minnesota law rocognizes the existence of group banking by prohibiting any bank from advertising in any way that it derives any financial
strength from association with any other bank or banks by way of a holding
company or other similar structure®
Pennsylvania recognizes the existence
of group banking by providing that any corporation owning bank stock may
vote the stock by its president®
Ho provision, however, for supervision
of holding companies exists in either of these States®
There appears to
be nothing in the laws of the other 36 States relating to the acquisition
of bank stock by holding companies or relating to chain or group banking®
Ownership of Bank Stock by Banks and Trust Companies 1/
The laws of some States also contain provisions with respect to the
acquisition of bank or trust company stock by banks and trust companies®
These provisions vary widely from State to State and are difficult to
summarize.
In general, it appears that commercial banks in approximately half
the States are prohibited from acquiring any bank or trust company stock
or are limited as to the amount that may be acquired; the laws of 19 other
States contain no provisions with respect to the acquisition of such stock
by commercial banks; and the laws of Arizona, New Jersey, Pennsylvania,
and South Carolina permit commercial banks to acquire such stock, apparently without limitation, although Arizona requires the approval of the Superintendent of Banks®
1/ Discussion based on provisions of State banking laws without regard to
other provisions of State law® (See provisions in Appendix III compiled
as of June 1, 193^; a subsequent review indicated no alterations through
December 31, 1936.)
- 2g ~
The laws of about half the States (though not always the same States
that impose similar restrictions on commercial banks) prohibit trust companies from acquiring bank or trust company stock or limit the amount that
may be acquired; the laws of 12 States apparently contain no provision with
respect to the acquisition of such stock by trust companies; and the laws
of Arizona, Arkansas, Colorado, Louisiana, Maryland, Michigan, Montana,
Nebraska, New Jersey, Ohio, Oklahoma, Pennsylvania, and Utah permit trust
companies to acquire such stock apparently without limitation, although
Arizona and Utah require the approval of the State banking department*
Insofar as State law is concerned, therefore, there is no reason why
trust companies in a number of States may not acquire control of banks and
operate group banking systems*
There are, in fact, a number of bank groups
that are headed by trust companies which own the controlling interest in
the stock of other banks©
There are also some groups which are headed
either by a national bank or by a State bank, which controls other banks
through trustees, subsidiaries or otherwise*
Table U classifies the States according to the type of provision in
their statutes with respect to the acquisition of bank or trust company
stock by commercial banks and by trust companies*
It does not show, how-
ever, the detailed provisions of the law in each State, such as the limitations on the acquisition of bank and trust company stock by commercial
banks or trust companies, etc* For such detailed provisions reference
should be had to the compilation of the laws of the individual States
and the District of Columbia, given in Appendix III, p. 173.
- 29 Table ^ - Summary of State Banking Laws Relating to Acquisition of Bank
or Trust Company Stock by Banks and Trust Companies
As of June 1, 193&
States which by statute
prohibit or limit acquisition of bank or trust
company stock by Trust
Commercial
banks
companies
Alabama
California
Colorado
Delaware
Florida
Georgia
Idaho
Indiana
Kansas
Mississippi
Montana
Nebraska
Nevada
New York
North Carolina
North Dakota
Oklahoma
Oregon
South Dakota
Texas
Utah
Virginia
Washington
West Virginia
Wyoming
Total - 25
Alabama
California
Delaware
Florida
Georgia
Idaho
Indiana
Kansas
Massachusetts
Mississippi
Missouri
Nevada
New Hampshire
New York
North Carolina
Oregon
South Carolina
South Dakota
Texas
Vermont
Virginia
Washington
West Virginia
Total - 23
States which by statute per- States w'hich do not have
mit acquisition of bank or
statutes as to the
trust company stock withacquisition of bank or
out limitation by trust company stock by Trust
Commercial
Commercial
Trust
banks
companies
banks
companies
Arizona
New Jersey
Pennsylvania
South Carolina
Total - k
Arizona
Arkansas
Connecticut
Arkansas
Colorado
Illinois
Louisiana
Iowa
Kentucky
Maryland
Michigan
Louisiana
Montana
Maine
Maryland
Nebraska
Massachusetts
New Jersey
Ohio
Michigan
Oklahoma
Minnesota
Pennsylvania Missouri
Utah
New Hampshire
New Mexico
Ohio
Rhode Island
Tennessee
Vermont
Wisconsin
Total - 13
Total - 19
Connecticut
Illinois
Iowa
Kentucky
Maine
Minnesota
New Mexico
North Dakota
Rhode Island
Tennessee
Wisconsin
Wyoming
Total - 12
CHAPTER III
PRINCIPAL GROUPS - ORGANIZATION AND OPERATIONS
Banking groups have been organized in different ways and exist today
in a variety of forms*
Their operations and policies also vary widely*
The purpose of this chapter is to present some of the general features of
the organization and operation of the principal groups, as well as a brief
case study of each of 12 selected principal groups*
Organization of Groups
In general, the principal groups now in existence were organized by
interests closely identified with one or more important or key banks in the
region where the group was established*
The groups were organized through
one or more holding companies affiliated with the sponsoring bank, such companies being necessary because of the legal restrictions against the holding
of bank stocks by other banks*
They were established in various ways*
In
some cases they were trust companies and in others they were companies organized under the general corporation laws directly for the purpose of acquiring and owning bank stocks*
An illustration of a group that was established by a bank through a
trust company is the Atlantic National Bank group of Jacksonville, and
examples of groups that were developed through a holding company organized
directly for the purpose of acquiring bank stocks by interests identified
with an important bank or banks are Marine Midland Corporation of Buffalo,
the First Bank Stock Corporation and the Northwest Bancorporation, both of
Minneapolis, the First Security Corporation of Ogden and the BancOhio Corporation of Columbus*
- 30 -
Several of the principal holding companies are organized under a State
of Delaware charter, while others are organized under a charter of the State
in which is located the head office of the group®
The articles of incorpor-
ation of the holding companies generally enumerate broad powers in addition
to the powers to acquire and hold stocks of banks®
Most of the holding com-
panies have issued only one class of stock and this usually has been stock
with a small or no par value®
Several have issued two types of common stock
and a few have issued both common and preferred stock.
Ownership and control of banks havo been brought about by holding companies in various ways. Many of the companies followed the policy of acquiring stock in the banks by exchanging their stock for that of the bank,
and others purchased it directly for cash. Some companies acquired stock
by a combination of these two methods*
Policies followed by the holding
companies have varied v;idely as to the proportion of stock of the subsidiary
banks which is acquired.
In some cases, as illustrated by Marine Midland
Corporation, BancOhio Corporation, First Bank Stock Corporation, and Transamerica Corporation, the policy has been to hold substantially all of the
stock, whereas the policies of other companies have not been so consistent.
Table 5 shows the percentage of shares of subsidiary banks which was
controlled by the holding company in the case of 10 of the principal groups
for which information was available as of December 31> 1935* It shows that
the proportion of the total common stock of all banks held by the holding
company ranged from 6k percent for the Florida National Group, Inc. to over
99 percent for the Transamerica Corporation.
For 5 of these groups the
proportion held by the holding company v/as over 92 percent, for 1 it was
88 percent, and for k it varied between &4 and ~(2 percent.
~ 32 Table 5 - Percentage of Total Shares of Common Stock
of Subsidiary Banks Controlled by Holding
Companies of 10 Principal Groups,
December 31, 1935
Name of group
Percentage of total shares
of common stock of all banks
controlled by holding company
First National - Old Colony, Boston
69,8
Shawmut Association, Boston
64.4
Marine Midland Corporation, Buffalo
98*0
BancOhio Corporation, Columbus
Citizens and Southern National Bank,
Savannah
S3. 3
Trust Company of Georgia, Atlanta
71*6
Florida National Group, Inc., Jacksonville
63.9
First Bank Stock Corporation, Minneapolis
9^*9
Northwest Bancorporation, Minneapolis 1/
93
Transamerica Corporation, San Francisco
99®^
1/ Statistics for the Northwest Bancorporation are as of September 30,
1936.
The group banking systems have been established almost entirely by
acquiring control of existing and not by organizing banks. In many instances, however, the groups have converted their existing "banks into
branches and in some instances have established branches de novo. In
fact, as is pointed out in detail in a later section of this memorandum,
one of the principal developments within certain groups since 1931 has
been the conversion of some of their banks into branches of key banks of
the region where the group is operating.
~ 33 The principal groups vary widely as to the number of banks included
in them and as to the extent of the area in which they operate* The
groups with the largest member of banks are the Northwest Bancorporation and the First Bank Stock Corporation of Minneapolis, with 9 2 and
78 banks respectively as of December
193&*
the group with the
largest number of banking offices is the Transamerica Corporation of
San Francisco which had 11 banks and
193&#
branches as of December 31*
The extent of the geographic area in which groups operate ranges
from that included within the immediate environs of the city of the head
office of the group to that embraced by 7 States and 3 Federal Reserve
districts* An example of group banking confined to the immediate environs
of the city where the head office is located is the ShaTnrrut Association
group of Boston*
Most of the banking offices operated by the First Nation-
al - Old Colony group of Boston are also within a short distance of the
head office of the group* Examples of regional group banking embracing
several States are the Northwest Bancorporation, operating in 3 Federal
Reserve districts, the First Bank Stock Corporation of Minneapolis and
the Transamerica Corporation*
Other groups operating in 2 Federal Re-
serve districts at the end of 193^ include Wisconsin Bankshares Corporation, Citizens and Southern National Bank of Savannah, First National
Trustees of Louisville, First Security Corporation of Ogden, and Rawlins
Securities Company of Salt Lake City.
Relation of Holding Company to Subsidiary Banks
Although banks in groups retain their identity and operate under
separate charters, most of the holding companies have developed definite
policies with reference to the administration and management of the sub-
sidiary banks*
When the groups were first organized, some of the holding
companies followed policies of leaving the administration and management
of the subsidiary hanks largely in the hands of local directors and officers,
hut in more recent years more of them have become active in the administration and management of their constituent banks*
In generalf the policies
of the groups at the present time vary from those where the management of
the subsidiary banks is directed to a large degree by the holding company
or its subsidiary company to those where the holding company is similar to
an investment trust, exercising very little active control over the operations of the banks*
In most of the principal groups the holding company
participates actively in the management of the subsidiary banks*
In some
of the smaller groups the holding company does not take an active part in
the management of tho subsidiary banks*
In cases where the holding company participates actively in the management of its subsidiary banks it does so in several different ways. In
some instances the holding company participates by appointing representatives to sorve as directors or officers of the subsidiary banks; in some
participation is through interlocking officers or directors, the president or a director, for example, of each bank being a director of the
holding company; in some it is done by having officers of tho holding
company attend the meetings of the board of directors of a subsidiary
bank or by having an official representative of the holding company act
in an advisory capacity to the board of directors of a subsidiary bank*
In addition to the policies with reference to management through
administrative personnel as thus described, close supervision of the
operations of subsidiary banks is exercised by some of the holding com-
~ 35 panies®
Some companies, however, attempt no supervision other than that
which is accomplished through administrative personnel selected or appointed "by the holding company®
In cases where supervision of operations
is exercised by the holding company the extent of such supervision and.
the method by which it is accomplished vary among the different groups®
Supervision appears to be limited in general to lending and investing
operations, although in a few instances it includes accounting and other
internal routine®
Through supervision of the subsidiary banks, operating
procedures are coordinated and standardized in some of the groups®
Super-
vision is accomplished by such companies as the Marine Midland Corporation,
the First Bank Stock Corporation, and the First Security Corporation through
subsidiary companies organized within the group to audit, examine and otherv/ise serve the different units; by other groups, such as the Atlantic National Bank group of Jacksonville, internal committees and officers of the holding company are relied on to examine and audit the different units; and by
still others, such as the Citizens and Southern National Bank of Savannah,
independent accountants are used to some extent®
Services rendered by the holding companies for members of the groups
other than those in connection with their supervisory activities often include the purchase and sale of securities, the holding companies acting as
agents for the banks, and the provision of legal counsel®
The key bank of
the group serves as correspondent for the affiliated banks®
Under the emergency conditions that prevailed generally at the time of
the banking holiday in 1933 a n & after, some of the holding companies rendered
important additional services®
They strengthened subsidiary banks in several
instances by contributing additional capital and assisted the banks in obtaining additional funds from the Reconstruction Finance Corporation®
They also
- 36 often aided members of the group to restore their portfolios to a sounder
"basis and to improve their position in other respects.
Selected Principal Groups
In the following pages some of the general features of the organization and operation of each of 12 of the principal groups are described in
order to illustrate in greater detail the nature and characteristics of
the groups that typify the group hanking movement in the United States.
It has been pointed out that the principal groups are the larger and more
important groups that have been developed for the primary purpose of providing banking services through the coordinated operation of a number of
banks. The principal groups were determined in general by the number of
banks and banking offices (banks and branches) and the amount of loans
and investments controlled by the group.
Transamerica Corporation. San Francisco
The Transamerica group was started earlier than most of the other
principal bank holding company groups and differs from them in several
respects. It was sponsored and developed by A. P. Giannini and others
identified with the Bank of Italy (now Bank of America National Trust
and Savings Association).
The Bank of Italy was incorporated in 1904 and beginning in 1909 for
many years established its own branches throughout the State of California. Until about 1921 or 1922 the principal method employed by the Bank
of Italy in building up its branch organization was that of buying up individual unit banks and merging them into the Bank of Italy as branches.
Under California law the bank v/as not permitted to purchase the stock of
another bank.. In the beginning the purchase of unit banks was effected
~ 37 through the principal officers of the Bank of Italy and later an affiliated
company, the Stockholders Auxiliary Corporation, was organized for this
purpose*
This company was incorporated under the laws of the State of
California on June 20, 1917 > and subsequent to that date it became the
purchaser of the banks intended to be converted into branches of the Bank
of Italy*
The name of the corporation was changed to National Bankitaly
Company early in 1927 and in 193®
Corporation of America*
was absorbed by the newly organized
Since the Bank of Italy was a member bank, the
permission of the Federal Boserve Board was required when a branch was
added by the bank*
This procedure, a relatively slow one, was in course
of time largely superseded in the program of expansion carried out by Mr*
Giannini and his associates by the method of using closely allied nonmember
banks to build up supplementary branch organizations and later merging them
into the Bank of Italy*
By the beginning of 1927 the Bank of Italy interests
had built up a large branch organization operated by the Bank of Italy and
by several nonmember State banks, the principal one being the Liberty Bank*
During the interval between January 1, 1927» and the coming into force of
the McFadden Act on February 25» 1927 9 a series of mergers was carried out
whereby the Bank of Italy increased its number of branches from 98 to 276*
It then had branches located in about I5O cities, towns and villages* A
few days later, on March 1, 1927$ the merged institution was converted into
a national bank under the name of Bank of Italy National Trust and Savings
Association*
The bank!s program of expansion did not stop here, however, but was
actively continued and through numerous mergers another controlled nonmember institution, Bank of America of California, was built up until at
the end of October 193® ^
was
operating l6l banking offices* On Novem-
- 38 -
ber 3, 1930 this institution was merged into the Bank of Italy N. T. and
S. A. under the name of Bank of America National Trust and Savings Association. Under the existing lav/, however, only SO of its tranches could
he taken over "by the national hank. Some of the remaining gl branches
were.merged with existing branches of the former Bank of Italy N. T» and
S. A., and the Bank of America, a nonmember State bank, was organized to
take over the other branches of the Bank of America of California, which
could not, under the terms of the McFadden Act, be brought into the Bank
of America N* I. and S. A. by the merger of November 3, 1930* Ey the
latter part of 193^ this nonmember State bank was operating JO branches.
In December 193^» probably as a result of the passing of the Banking Act
of 19331
^ its branches were merged into Bank of America N. T* and
S. A. and became branches of that institution.
In 1919 the Bancitaly Corporation was organized in New York by the
Giannini interests for the purpose of acquiring certain banks there and
bringing them under the same general control as the Bank of Italy in California. This company acquired controlling stock interest in Bank of America
N. A. in New York City and through its subsidiary, Americommercial Corporation, which was organized in California in 1923> it acquired certain banks
in California and later merged them into the Bank of Italy.
Transamerica Corporation was organized on October 11, 192S, -under
Delaware laws, and served to bring together for the first time the varied
and scattered Giannini interests into a single holding company. In 1930*
the corporation was organized along functional lines and one of its direct
subsidiaries, Transamerica Bank Holding Company (later Inter-imeriea Corporation) became the holding company of the stock of Bank of Italy (now
- 39 Bank of America N. T. and S. A.) and other hanks and for certain of the
auxiliary organizations of the hanks.
In I93I the Bank of America N. A.
in New York was sold to the National City Bank of New York and Transamerica
Corporation acquired in exchange a substantial minority interest in the latter institution. At that time Transamerica Corporation apparently abandoned,
at least temporarily, its plans for a branch banking system in New York*
In 193^ the Transamerica group entered the branch banking field in
Nevada through the purchase of the stock of the First National Bank in Reno.
Daring 193& it purchased
banks in California, which were merged into the
Bank of America National Trust and Savings Association, 3
Oregon, which
were merged into The First National Bank of Portland, and one in Nevada,
merged into the First National Bank in Reno, and acquired substantial interests in Central Bank of Oakland, California, the National Bank of Tacoma,
Washington, and several banks in Oregon which early in 1937 were merged into
The First National Bank of Portland.
By the end of 1936 the group operated U banks with branch systems extending over 3 States®
In California, the Bank of America N. T. and S# A.
and the Bank of America (California) operated H65 and 10 branches, respectively; in Oregon, The First National Bank of Portland operated 28 branches;
and in Nevada, the First National Bank in Reno operated 8 branches.
In ad-
dition to banks with branches, Transamerica Corporation controlled 2 small
nonmember State banks in California without branches, a joint stock land bank,
the Banca d1 America e dfItalia in Italy, and numerous nonbanking organizations, the more important ones being as follows:
- Uo Inters America Corporation which, in addition to serving as the holding company for the principal hanks in the group, owned controlling
stock interest in The First National Corporation of Portland, through
which it controlled The First National Bank of Portland and its wholly
owned subsidiary, the First Securities Company, engaged in the liquidation of charged off assets of the hank; the Corporation of America,
engaged solely in liquidating certain notes receivable and acting as
trustee under deeds of trust; and the General Metals Corporation, a
manufacturer of steel, iron and malleable castings;
Transamerica General Corporation, which acts as holding company for
insurance and other companies and owns controlling interest in the
2 small nonmember State banks; the Banca d1America e d!Italia, which
controlled 6 foreign corporations acting in the capacity of real estate
holding and service organizations; the Capital Company and California
Lands, Inc., formed for the purpose of holding and managing real estate
acquired from banks in the group; the California Joint Stock Land Bank;
the Occidental Life Insurance Company, licensed to do business in 26
States; the Pacific National Fire Insurance Company; the America &
Security Insurance Corporation, an insurance broker; the Bankamerica
Agricultural Credit Corporation, engaged in making loans on live stock;
and the Coast Service Company, which acts <as insurance manager and
counsellor for the group;
Inter-Continental Corporation, which is engaged in the purchasing,
selling and holding of securities for its own account and owns all
of the stock of 2 brokerage companies and the Coast Company (inactive);
Transamerica Service Corporation, which acts as the cash disbursing and
accounting agent for Transamerica Corporation and certain other companies in the group;
Bankamerica Company, which is an investment banker and securities dealer;
3ancamerica~Blair Corporation (N. T.)f investment banking and securities company, which owned 5 other securities companies, 2 of which were
inactive*
At the end of 193^ a total of 6 banks—3 national and 3 nonmember State
banks—with 5 H branches—was controlled by the group. The area of operations of the group covered 3 States. The group is also reported to have practical control of the Central Bank of Oakland, California, the National Bank
of Taeoma, Washington, and 3 snail national banks in Oregon. During 1937 the
- Hi -
group extended its operations into Arizona by the purchase of control of
the First National Bank of Arizona at Phoenix, The Phoenix National Bank
and the Phoenix Savings Bank and Trust Company.
It also purchased "an
interest" in The First State Bank at Bremerton, Washington. The group
thus appears to be operating in 5 of the 7 States of the Twelfth Federal
Reserve District. The corporation also owned 10 percent of the stock of
the National City Bank of New York and about 12.5 percent of the stock of
the Commerce Trust Company of Kansas City, Missouri.
In July 1937 Transamerica Corporation distributed to its shareholders
approximately 5? percent of the stock of Bank of America N. T. and S. A.
This distribution, made apparently for the purpose of divesting itself of
technical control of the bank, leaves about i+2 percent of the stock of the
"bank in the control of the group. It has been reported that if plans under
consideration by officials of the group are carricd out Transamerica Corporation will divest itself of control of all banking institutions which
are members of the Federal Reserve System*
In partial compliance with the Banking Act of 1933* "u^cLer the provisions of which it mast divest itself of ownership, control and interest
in securities companies, Transamerica Corporation during January 1937 distributed to its shareholders the majority of its holdings of stock of
Bancamerica-Blair Corporation, leaving only lU#2 percent of the stock still
owned by the corporation.
Inter-America Corporation was dissolved on June 28,
1937> and on July 1, 1937> its assets were turned over to Transamerica Corporation.
- U2 ~
On December 31, 193b Transamerica Corporation was authorized to issue
50,000,000 shares of no par common stock and 23,181,56s share* were outstanding*
In July 1937 its authorized capital stock was changed to 25,-
000,000 shares of a par value of $2 per share, thereby reducing its issued
23,131,563 no par shares to 11,590,jSk shares of $2 par value*
The shares
are listed on the New York Stock Exchange and are widely held*
Stock of the Bank of America N. T* and S* A* was originally acquired
by Transamerica Corporation by the exchange of its shares for those of the
bank but the stock of the other banks in the group was generally acquired
by purchase*
The general policy of the group has been to acquire substantial-
ly all of the stock of the subsidiary banks*
In California the purchased
banks generally have been converted into branches of the Bank of America
N. T* and S* A* or the Bank of America (California), and in Oregon and
Nevada, where banks have recently been purchased, the purchased banks have
been converted into branches of the key bank of the State*
Management and supervision of the subsidiary banks by the holding company appear to have been accomplished mainly through the selection of their
directors and officers*
In a few instances steps have been taken by the
group to guarantee some of the assets of the Bank of America N* T* and S* A*
Transamerica Corporation and its affiliates have functioned primarily in the
establishment of branch banking systems in California and other western States*
An accompanying chart shows the location of hanks and branches controlled
by this system in the Twelfth Federal Reserve District*
The accompanying or-
ganization chart gives an indication of the complex relationship of the variety
of corporations included in the System*
- 43 -
TRANSAMERICA
CORPORATION
AREA OF OPERATION
- 44 -
TRANSAMERICA
CORPORATION
December 31,1936
I
INTER-AMERICA
CORPORATION
100%
BANK o r AMERICA
N.T.&S.A.
9965%
MERCHANTS NATL
REALTY CORP.
100%
DOWNTOWN
PROPERTIES, Inc.
100%
TRANSAMERICA
GENERAL
CORPORATION
100%
BANK OF LAKE
Lakeport.Cal.
68.14%
BANK OF AMERICA
California
CALIFORNIA JOINT
STOCK LAND BANK
FIRST NATIONAL BANK
IN RENO
99%
BANKAMERICA A&RICULT'L
CREDIT CORP.
100%
FIRST NATIONAL CORP.
OF PORTLAND
AMERICA & SECURITY
INSURANCE CORP.
FIRST NATIONAL BANK
OF PORTLAND
OCCIDENTAL LIFE
INSURANCE CO.
73.9%
100%,
CORPORATION
AMERICA
CALIFORNIA LANDS
Inc.
fO.7%
BANKAMERICA
COMPANY
100%
ASSOCIATED
AMERICAN
DISTRIBUTORS, Inc.
100%
6-FOREIGN
CORPORATIONS
100%,
COAST
COMPANY
100%
100%
PACIFIC NATIONAL
FIRE INSURANCE CO.
GENERAL METALS
CORPORATION
AMERICAN
BROKERAGE
Inc.
100%
TRANSAMERICA
SERVICE
CORPORATION
100%
too%
FIRST SECURITIES
COMPANY
100%
99-877°
5 SECURITIES
COMPANIES
(2-lnactiv«)
100%
95.85%
89-65%
98.997"
5095%
INTERCONTINENTAL
CORPORATION
100%
NORTHERN CALIFORNIA
BANK OF SAVINGS
Marijsvilie
BANCA d'AMERICA e
d'ITALY
Milan, Italy
I
BANC A M E R I C A - B L A I R
CORPORATION
(N.Y)
100%
100%
CAPITOL COMPANY
10070
COAST SERVICE
COMPANY
100%
Percentages signify the proportion of shares of each corporation
controlled by the Transamerica Corporation.
The various banks in the Transamerica group operated among them
511 branches, of which 465 were operated by the Bank of America N. T.
& S. A.
Transamerica Corporation is also reported to have had at the end
of 1936 practical control of the Central Bank of Oakland, California,
the National Bank of Tacoma, Washington, and three small national banks
in Oregon. The Corporation also owned 10 percent of the stock of the
National City Bank of New York and about 12.5 percent of the stock of
the Commerce Trust Company of Kansas City, Missouri.
Anglo National Corporation* San Francisco
This group includes two holding companies, the Consolidated Securities Company and the Anglo National Corporation of San Francisco. Consolidated Securities Company, now in liquidation, was organized October 29»
1917 under the laws of California and the Anglo National Corporation was
incorporated December U, I92S under the laws of Delaware. Both companies
were organized by the interests connected with The Anglo California Nation^al Bank of San Francisco (formerly Anglo and London Paris National Bank of
San Francisco).
Stock of the Consolidated Securities Company is held by
trustees for the benefit of the shareholders of the Anglo California National Bank and this company in turn owns practically all of the Class "B"
(voting, no par, common) stock of the Anglo National Corporation.
Anglo National Corporation owns the stock of the subsidiary banks of
this group*
Its authorized capital is as follows:
600,000 shares Class A, common, no par value, non-voting stock and
100,000 shares Class B, common, no par value, voting stock of which
the amounts outstanding are as follows:
215*507 shares Class A, common, no par value, non-voting stock and
100,000 shares Class B, common, no par value, voting stock.
The group consisted of 10 banks with IS branches-*^ national banks and
1 nonmember State bank, and 18 branches as of December 31, 1936., In addition, the group included a safe deposit company, an industrial company and
several investment and securities companies in liquidation. All of the
banks and their branches, except one bank in Washington, are located in
the northern and central parts of California, as is shown in the accompanying chart.
- 46 -
ANGLO NATIONAL CORPORATION, SAN FRANCISCO
AREA OF OPERATION
dicated,but location of a "branch or "branches is shown
only where the group does not operate a "bank.
-
kl
-
It appears to have been the policy of the corporation to acquire existing banks rather than to establish banks de novo and to acquire only a controlling interest in them, sometimes less than a majority of the stock outstanding.
It is also the policy of the corporation to convert its subsid-
iary hanks into branches as conditions warrant®
In fact it is said that
the plans of the group contemplate the conversion of all of its subsidiary
banks into branches of The Anglo California National Bank of San Francisco
and the eventual liquidation of the Corporation.
General supervision is exercised by the Corporation over the loan
policies, investments and operation methods of the subsidiary banks by
means of reports and through traveling representatives who inspect the
banks®
In general, the efforts of the holding companies thus far appear to
have centered largely in the acquisition of the subsidiary banks and the
conversion of them into branches of The Anglo California National Bank of
San Francisco.
First Security Corporation of Ogden
The First Security Corporation was organized as a Delaware corporation
June 15, 1928 by The J® M® and M® S® Browning Company and The Eccles Investment Company for the purpose of owning bank stock®
The authorized capital
is
40,000 shares preferred, par value $50, non-voting stock
360,000 shares Class A common, par value $10, non-voting stock
40 ,000 shares Class B common, par value $10, voting stock
of which the following was outstanding on September 30, 193&, the latest
date for which information is available:
222,133 shares Class A common, non-voting
20,000 shares Class B common, voting
The group comprised as of December 31, 1936 a total of 5 tanks and
22 branches—2 national banks, 1 State member bank, 2 nonmember State
banks*
Various companies, including 7 building and loan and real estate
companies, and 2 nonmember banks in liquidation were a part of the group*
The banks that formerly operated as units in Idaho have been consolidated
and are operated as a branch system*
all but two of the Utah banks*
A similar consolidation was made of
The area of operation of the group includes
3 States, as is shown on the accompanying chart *
Information is not available showing the methods of acquiring banks in
the early history of the group*
The recent acquisitions, however* have been
made by the holding company largely by cash purchase*
The holding company
owns practically all of the common stock of 2 of its 3 large banks, over
£0 percent of the common stock of its other large bank, practically all of
the stock of another bank, and over 72 percent of the common stock of its
smallest bank*
The holding company has a iaanagement subsidiary which exercises rather
complete supervision over the banks*
It examines each of them at least
annually and reviews dally and weekly statements from the banks*
Credit
policies are formulated by the management company and loans and investments
are supervised by it* The junior and executive officers of all banks are
employed only by sanction of the management company and other personnel
matters come under its review*
The management company does central pura
chasing for the banks and manages the insurance coverage* Advertising and
- 49 -
FIRST SECURITY CORPORATION OF OGDEN, 06DEN
AREA OF OPERATION
NUMBER OF BANKS
5
NUMBER OF BRANCHES
22
HEAD OFFICE CITY
OUTSIDE
1
21
SALT LAKE CITY F R. BRANCH TERRITORY (12TH
4 BANKS - 22 BRANCHES
OMAHA F.R.BRANCH TERRITORY (10 TH
DIST.)
DIST.) 1 BANK
WYOMING
x — x
X
X
X
UTAH
$
MAIN
OFFICE
%
BANKS
X
BRANCHES
Places where group operates a "banking office (December
Location of each bank in group is indicated, but the location of a branch
or branches is shown only where the group doe6 not operate a bank.
OF GROUP
~ 50
publicity are directed by the management company®
The services of the
management company are paid for by special charges against the banks®
Northwest Bancorporation« Minneapolis
The Northwest Bancorporation was organized January 2kt 1929 tinder
Delaware law by E® W
® Decker of The Northwestern National Bank of Minneapolis together with Mr. E. J® Weiser of She First National Bank and Trust
Company, Fargo, North Dakota, and Mr® Hanford MacNider of The First National Bank of Mason City, Iowa®
The Bancorporation has the usual broad powers
granted Delaware corporations to acquire and deal in the stocks of moneyed
financial institutions and investment corporations, to loan money to corporations acquired, and to organize corporate subsidiaries®
In general
the Bancorporation has limited its activities thus far to holding bank
stocks and the stocks of related financial institutions®
The authorized capital is 2,000,000 shares of no par common stock of
which l,5gU,S2*+ shares were outstanding and 9^,677 were in the treasury
on December 31, 1936®
About 350,000 shares were sold at public offering
and the other issued shares were exchanged for the stock of unit banks®
The holding company stock was-xh&nged from $50 par to no par value December 9, 1932®
The number of banks now in the group is smaller than at earlier periods
due to consolidations, conversions to branches, and voluntary liquidations®
On December 31, 1936 the group consisted of a total of 92 banks with IS
branches—57 national banks, 3 State member banks and 32 nonmember banks—
and several nonbanking units®
Some of the group banks located in South
Dakota have been consolidated and the absorbed units operated as branches®
- 5.1 The group operates in 7 States and 3 Federal Reserve districts. One of
the accompanying charts shows the location of hanks and branches while
another chart shows the interrelationship of a variety of corporations
dominated by the holding company. It controls more banks than any other
group®
Most of the banks were acquired by exchange of stock with the holding
company, but some of the bank shares were acquired by cash purchase®
The
general policy of the holding company has been to own as near all of the
stock of acquired banks as possible but this policy has not been followed
invariably. Of the 92 banks included in the group on December 31, 193&
the holding company owned the following proportion of common stock:
Proportion of common stock
held by Bancorporation
Number of
banks
90 percent and over
75 to 90 percent
50 to 75 percent
Under 50 percent
3S
33
IS
\
Total
92
Large amounts of preferred stock were sold to the Reconstruction
Finance Corporation by many of the banks in this group and this reduced the
relative equity of the holding company in them®
In many cases the amount
of preferred stock sold to tiu Reconstruction Finance Corporation exceeded
the amount of common stock held by the holding company.
The policy of trading holding company stock for bank shares together
with the public offering of some of the holding company stock has resulted
in a wide distribution. On January l6f 1937 there were 17t&62 shareholders
in the Northwest Bancorporation. The stock is listed on the Chicago Stock
~ 52 -
- 5*Exchange.
The holding company has an examination department for the subsidiary
banks which also reviews the examination reports of the public supervisory
authorities. In view of the extensive territory covered by the group the
area is divided into districts for administrative purposes. The supervisor
of each district oversees the banks in his territory and makes many policy
and operating decisions®
Personnel replacements except for clerical and
lower grades are usually made by the Bancorporation.
The holding company manages the investment accounts of the group units,
receives reports of credit extensions and supervises the credits of all
with the possible exception of a few of the large banks in the group.
The holding company contributed over $5,000,000 to subsidiary banks
and $7*000,000 to nonbanJdng subsidiaries daring the period of the banking
crisis (up to April 193^)• It also conducted negotiations with the Reconstruction Finance Corporation to secure added capital for the subsidiary
banks®
Through, its efforts in this manner and otherwise the group has been
successful in preventing losses to depositors, although the area in which
the group operates has suffered from many bank failures, droughts, etc®
First Bank Stock Corporation, Minneapolis
First Bank'Stock Corporation was organized April 1, 1929> as the First
Bank Stock Investment Company, a Delaware corporation. The name was changed
to the First Bank Stock Corporation, August 26, 1929*
It was organized by
the interests controlling the First National Bank of St. Paul and the First
National Bank and Trust Company of Minneapolis, respectively. A majority
of the stock of the Corporation was issued in exchange for the holdings of
~ 55
-
the stockholders of these two hanks. The reported purpose of the Corpora^*
tion was to meet the new competition given the two parent hanks through the
organization and development of the Northwest Bancorporation. The Corporation is given very hroad powers in its charter, but its activities appear to
be confined to holding stocks of subsidiary banks and affiliated companies®
Four million shares of $10 par value common stock are authorized and 3,125,~
Sll shares (including 90t553 shares in treasury) were outstanding as of
December 31, 1936. The par value was reduced from $25 to $10 on February
I93U (as of December 31, 1933), wlien
tlle v
alue of the stocks of the sub-
sidiary banks and companies was written down approximately $S5,S00,000®
From the point of view of number of banks controlled, the group is the
second largest that has been developed®
It includes as of December 31,
1936, 73 banks with 6 branches—59 national, 1 State member, and IS State
nonmember banks—operating throughout the Minneapolis Federal Reserve District, as is shown in the accompanying chart* Other active units included
in the group are a management company, an industrial finance company, and
miscellaneous companies holding real estate, liquidating assets of the
banks in the group and operating in other capacities®
First Bank Stock Corporation acquired control of its first 17 banks
by purchase of their stock for cash. Control of the others, including the
two key banks, was acquired largely through the exchange of stock of the
holding company for that of the banks®
The general policy of the Corpora-
tion appears to have been to obtain as much of the stock of the banks as
possible through the exchange of stock and to keep the former owners in-
~ 56 -
- 57 teres ted in the management and operation of such banks through their financial interest in the holding company®
The Corporation has acquired exist-
ing hanks rather than establish new banks®
In I93U, U banks in the State of
Michigan were merged into a national bank at the location of the key bank
of the area and branches were established in the other 3 towns*
In several
instances national banks in the group have been converted into nonmember
State banks for various reasons, among others to gain the advantages of
lower capital requirements under State laws®
Relations with the subsidiary banks in the group are handled in two
ways*
The First Service Corporation* a management company organized within
the group, supervises the activities of the units located outside the cities
of Minneapolis and St# Paul*
Within the cities each of the two key banks
supervises the units within its respective territory* Auditors of the ser~~
tice corporation and of the key banks make periodical examinations of the
banks in their respective jurisdictions. The holding company coordinates
the supervision through its executive officers*
Two of its senior officers
are the presidents of the two key banks and the president of the holding
company itself was formerly president of the Minneapolis key bank.
The services furnished subsidiary banks under ordinary conditions, in
addition to the periodical examinations thus described, include the install action of accounting systems, income tax services, purchasing and selling
securities and commercial paper, furnishing credit and statistical reports,
procuring insurance coverage, preparing advertisement and publicity, purchasing supplies, obtaining legal counsel in connection with important
litigation, and overseeing the affairs of the subsidiary banks and assist-
-
-
ing them with suggestions regarding loans, investments, and general operations. Under the emergency conditions of 1933 and 193^t the holding company aided the banks in a number of ways, including contributions of nearly
$9,000,000, the securing of assistance from the Reconstruction Finance Cor*.
poration, the closing or placing in liquidation of a number of unprofitable
banks, the strengthening of the management of the banks, and the rendering
of counsel and advice*
Service and management fees are collected by the First Service Corporation from the subsidiary banks for its services, and dividends are
paid by the banks to the holding company* Recently, however, but few of
the banks, except the two key banks, have been paying dividends, and the
holding company has been supported to a considerable extent by the two key
banks*
The group has continued in a strong financial condition because of
the financial strength of the two key banks*
Rather high prices are re-
ported to have been paid for the subsidiary banks; however, payment was
made principally in stock of the holding company and the resulting shrinkage in value of the stock of the banks is merely reflected in the value of
the holding company stock.
Wisconsin Bank Shares Corporation, Milwaukee
Wisconsin Bank Shares Corporation was organized December 10, 1929 under
the laws of Wisconsin by interests connected with the First Wisconsin National Bank of Milwaukee*
It was reported to have been organized for the pur-
pose of developing a group banking system in Wisconsin to meet the compe-
~ 59 -
tition of Minneapolis bank holding companies which were entering the territory of the key bank. The Corporation is given very broad powers in its
charter but its activities appear to have been confined chiefly to holding
bank stocks and supervising subsidiary banks®
value common stock are authorized and
ber 31, 193&J
a
Two million shares of no par
were outstanding as of Decent
large part of whichwas held by former stockholders of the
parent bank®
The group included as of December 31, 193&, 26 banks 2J with 12 branches-—
10 national1 1 State member, 5 State nonmember banks operating throughout the
State of Wisconsin, as is shown in the accompanying chart® Other active units
in the group includes 2 trust companies engaged primarily in trust business,
a mortgage company, an abstract and title guaranty company, numerous companies operating or liquidating real estate properties, 2 companies liquidating other assets of the group and 2 industrial units acquired by subsidiary banks in liquidation of loans®
Inactive units include 11 banks
and 3 companies in liquidation and a former securities company®
Most of the subsidiary banks, particularly those outside of Milwaukee,
were acquired through exchange of stock of the holding company for stock of
1/ Includes one trust company not in a general deposit businessf the t rust
deposits of which as well as some savings deposits are insured by the
Federal Deppsit Insurance Corporation® Excludes two other trust companies not in a general deposit business, trust deposits of which are
not insured®
- 60 ~
~ 6i -
the banks. Nearly all of those that were acquired through the purchase of
stock for cash were small institutions in Milwaukee which were later coi>verted into branches of the parent bank*
The policy of the Corporation ap-
pears to be to hold as much stock as possible of its subsidiary banks*
Supervision of the subsidiary banks is accomplished through visits
by the holding company*s representatives and auditors. Up until a few
years ago it appears to have been the policy of the holding company to
permit the subsidiary banks to operate and formulate policies fairly independently. More recently, however, it has participated more actively
in the management of the banks. At the present time the holding company
makes all purchases and sales of securities for the subsidiary banks, and
with the exception of the two largest banks, closely supervises their loaning activities by means of regulations, reports, etc. The holding company
also now maintains close supervision of the personnel in the subsidiary
banks. The First Wisconsin National Bank of Milwaukee apparently serves
as the principal correspondent to the other banks in the group.
The banking crisis of 1933 left the holding company in a very weakened
financial condition and since that- time one of its principal tasks has been
in aiding the rebuilding of the banks in the group. A policy was adopted
by the Corporation of merging unprofitable banks with others or selling
them to local interests. Late in 193^ 9 State nonmember bank subsidiaries
in Milwaukee were converted into branches of the key bank; in 1935 9 banks
were sold and 2 were merged; early in 193^ 2 more State nonmember banks
were sold*
The Corporation also made large cash contributions and secured
aid from the Reconstruction Finance Corporation for the subsidiary banks,
pledging practically its entire assets to guarantee the repayment of such
- 62
~
obligations to the Reconstruction Finance Corporation®
The Reconstruction
Finance Corporations purchase of preferred stock and debentures of sub~
si diary banks amounted to $13,000,000 and in addition the Reconstruction
Finance Corporation loaned the holding company $1+,600,000 for use in rehabilitating the banks of the group*
BancQhio Corporation, Columbus« Ohio
BancOhio Corporation was organized September 19, 1929> under the laws
of the State of Ohio, by H* P* Wolfe of Columbus and his associates for the
purpose of operating a holding company for banks*
The Corporation is em-
powered to acquire, own, pledge, or dispose of all forms of securities issued
by any bank or trust company or any affiliated organization; to own, buy, and
sell securities or investments which are legal investments for banks, savings
banks, or trust companies under the laws of Ohio; and to exercise all rights
and privileges incident to the ownership of these securities*
The original
capital was $5,000 consisting of 250 shares of $20 par value* As a result
of subsequent changes, 350,000 shares of $15 par value are now authorized;
5$+,312 shares (including 128 treasury shares) were outstanding as of May 2^,
1937#
The group included lU banks with 12 branches, as of December 31, 1936—
11 national and 3 State member banks—all located in county seats in Ohio,
as is shown in the accompanying chart* Negotiations for the control of
another national bank were being completed early in September 1937* The
group includes a real estate company which supervises all other real estate
carried by the banks*
A securities company formerly technically affiliated
-
67
~
- 6U -
with the group is now closely associated with the group "but not technically
affiliated. The group also owns an industrial hank.
The control of most of the banks of this group was acquired through
the exchange of shares of BancOhio Corporation for shares of the banks.
The group has been developed by acquiring existing banks rather than by
establishing banks de novo* the policy having been to acquire substantially
all the stock of the subsidiary banks.
BancOhio Corporation closely supervises the operations of the subsidiary banks through the use of operating budgets, examinations, and
standardized forms and accounting methods*
The Corporation has trained
and placed individuals as senior officers in certain of the banks. A
complete record is kept of the earning assets of each bank and operating
statements are prepared monthly. The local management of each of the subsidiary banks has only limited authority in making loans. Credit files
of all banks are held by the credit department of the Corporation, and
all loans are reviewed each month in conjunction with the executive or
loaning officers of each bank. An executive loan committee meets daily
to pass upon loans to $1,000 and over.
The Corporation has been designated as agent by the various banks with
authority to buy and sell all investment securities. Legal counsel is retained by the Corporation for the subsidiary banks. Insurance coverage is
supervised, advertising programs are prepared, and promotional activities
are directed by the Corporation.
During the emergency period in 1933 ^ ^ 1931+ none of the banks in the
BancOhio group issued preferred stock or capital notes or debentures, but
- 65 ~
the Corporation contributed substantial sums to the capital structures of
the banks during the period 193O to 1935*
Through these contributions the
Corporation appears to have prevented losses to depositors and aided its
banks during the banking crisis.
In general the group is closely coordinated and functions more in the
nature of a branch system than is usual in most bank groups—with the Ohio
National Bank as the key bank.
Marine Midland Corporation, Buffalo
Marine Midland Corporation was organized September 23, 1929* as a
Delaware corporation.
It was organized by interests identified with The
Marine Trust Company of Buffalo for the purpose of acquiring a group of
banks in New York State and operating them in a fashion similar to a system of branches.
Its certificate of incorporation contains the usual broad
powers granted Delaware corporations. Ten million shares of common stock
are authorized and 5*551f010 shares \?ere outstanding as of December 31,
1936. The shares outstanding have since been increased to 5,£314,510 by
shares issued in connection with the acquisition of stock of the First
National Bank tod Trust Company of Elmira and the First National of Elmira
Corporation and The Nyack National Bank and Trust Company and The Nyack
National Corporation. The par value of the shares is now $5* having been
reduced from $10 in February 193^*
As of December 31, 1936 the group included 18 banks with 63 branches—
3 national, S State member and J nonmember banks—located in New York State,
as shown in the accompanying chart. Other units included in the group were
Employees Service Corporation formed to assist officers and employees in the
-
66
~
MARINE MIDLAND CORPORATION, BUFFALO
AREA OF OPERATION
Places where group operates a banking office (December 31,1936). Location of each bank in group is indicated, but the location of a branch
or branches is shown only where the group does not operate a bank.
- 67-
group in the liquidation of their loans and to acquire stock of the Marine
Midland Corporation, a securities company functioning as an investment trust,
2 realty companies, 6 safe deposit companies, a wholesale and retail seeds
dealer, and a hank management and service organization for the hanks in the
group* Early in 1937 the Marine Midland Corporation acquired control of the
First National Bank and Trust Company of Elmira, First National of Elmira
Corporation and its 3 subsidiary banks, The Citizens National Bank of Waver~
ly, The First National Bank of Horseheads, and the Watkins State Bank at Watkins Glen, all in New York, and The Nyack National Bank and Trust Company
and its affiliate, the Nyack National Corporation, Nyack, New York* The
First National Bank of Horseheads was later merged into and made a branch
of the First National Bank and Trust Company of Elmira*
Marine Midland Corporation acquired control of the greater portion of
the banks of the group by the exchange of its stock for that of the bank,
some being acquired by direct purchase*
The policy of the Corporation is
to hold substantially all of the stock of the subsidiary banks, 96 percent
and 9^ percent, respectively, of the stock of the national and State banks
being owned as of December 31, 1936*
The policy of the Corporation is to
acquire existing banks rather than establish banks de novo*
Some of the
banks in and around Buffalo have been converted into branches of the Marine
Trust Company, the principal bank in the group*
Relations with the subsidiary banks in the group are handled by the
Marine Midland Group, Inc*, which functions as a management or service
organization for the banks*
Standard accounting and record systems have
been developed and installed in the banks by the service organization and
~ 6S -
each bank is required to make daily reports of its operations to the ftroup®
The Group examines the banks through its own examining and accounting staff
and maintains an investment department to study and analyze investments of
the banks and to advise them with reference to purchase and sale of securities®
It also maintains credit and loan departments and a trust department,
which act in an advisory capacity to the banks in the group, and a business
development department which concerns itself with new business and advertising activities of the banks®
In 1932, 1933 and 193^ the holding company aided in rebuilding the
capital structure of its subsidiary banks through substantial contributions
to the banks' capital and through assistance rendered in the sale of preferred stock and capital debentures to the Reconstruction Finance Corporation.
First National - Old Colony, Boston
Old Colony Trust Associates was organized May lU, 1928, under a declaration of trust subject to the laws of Massachusetts,
It was organized by
Old Colony Trust Company, prior to the affiliation of that organization with
First National Bank of Boston.
The shares of Old Colony Trust Associates
are widely distributed and have no vote, control and management of the
Associates being placed in trustees.
The original trustees were appointed
by Old Colony Trust Company and vacancies are filled by the surviving
trustees subject to the approval of the executive committee of Old Colony
Trust Company.
At the time that the Associates filed its application for
a voting permit the majority of trustees of the Associates were directors
of the First National Bank of Boston, but more recently this technical affiliation between the First National Bank of Boston and the Associates has
been terminated.
Under authority of section~j>01of
Banking Act of 1935
- 69
~
the Board of Governors found that the First National Bank of Boston was
not engaged directly or indirectly as a "business in holding the stock of,
or managing or controlling banks, banking associations, or trust companies
and therefore not a holding company affiliate of the Old Colony Trust Company*
This bank and its affiliated organization, the Old Colony Trust Com-
pany, were included in the group tabulations, however, because of their
close association with the banks technically affiliated with the Old
Colony Trust Associates.
Four hundred thousand non-voting no par value
trust shares were authorized and 37^,202 shares are outstanding.
The
group as of December 31* 193& included 13 banks with U5 branches—7 national
banks and 6 State member banks—most of the banks being located in the metropolitan area of Boston,
The group also includes 2 real estate companies and
a nanuf acturing company.
The accompanying chart
shovr, the location of bank-
ing offices.
The general policy of the Associates has been to acquire stock of existing banks by purchase.
In two instances groups of subsidiary banks have been
consolidated and branch offices established to take the place of the former
independent banks.
The First National Bank of Boston serves as the main de-
positary for the banks of the grcuo and renders various services to the
Associates.
No domination of the various banks in the group by the holding company
is apparent except in a recently consolidated national bank.
Representa-
tives of Old Colony Trust Associates act as advisers to the directors of
several of the banks, and it appears that First National Bank of Boston
supervises the operation of one of the national banks in the group.
During the emergency conditions of I933-I93U the Associates placed subordinated deposits in the subsidiary banks which needed strengthening.
tho deposits were used to pay for additional capital stock issued by the
banks.
Later
- 70 ~
FIRST NATIONAL - OLD COLONY, BOSTON
A R E A OF OPERATION
X
BRANCHES
Places where group operates a banking office (December 31,1936). Locao f e a c ^ tank i n group is indicated, but the location of a branch
or branches is shown only where the group does not operate a bank.
tion
- 71 Shawmut Association, Boston
The Shawmut Association was organized May 21, 192S as a voluntary association or trust under the laws of Massachusetts.
It was organized by The
National Shawmut Bank of Boston and the stock of" the Association was reserved
for the stockholders, officers and friends of this hank. The Association was
organized to operate as an investment trust and to acquire control of independent hanks for the National Shawmut Bank. One million shares of no par
value stock were authorized to he issued, of which Uoo ,000 shares (exclusive
of treasury shares) are outstanding.
The group included 7 hanks with 1J branches as of December 31* 193^—
H national banks, 1 State member and 2 State nonmember—located in the metropolitan area of Boston, as is shown in the accompanying chart. It also included 7 noribanking business units.
Shawmut Association acquired control of one of its subsidiary banks
through an exchange of shares of Shawmut Association for stock of that bank
and obtained controlling interest in the other banks apparently by purchase
of stock. Its policy appears to be to acquire only a sufficient amount of
the stock to constitute control and to allow minority stockholders to hold
a substantial interest and have a voice in the management. The amount of
the common stock of the banks held by the Association averaged 57 percent
for national banks and 6k percent for State banks.
Relations with other banks in the group are conducted principally by
the National Shawmut Bank. At least one officer or director of each bank
in the group is an officer or director of the parent bank. Supervision
of the subsidiary banks in the group is accomplished by visits to each bank
by an officer of the National Shawmut Bank once a week. Loans are reviewed
- 72 -
SHAWMUT ASSOCIATION, BOSTON
A R E A OF
OPERATION
places where the group operates a bank.
~ 73 "by this officer and. other activities of the bank are supervised in a
similar way®
In addition to supervising the activities of the banks in
this manner the National Shawmut Bank furnishes investment service, management counsel, legal counsel, benefits of cooperative buying of supplies,
advertising., and other services•
In general, the group is operated by the National Shawmut Bank (through
the Shawmut Association as a holding company), in a manner somewhat similar
to a branch system, in the metropolitan area of Boston.
Citizens and Southern National Bank, Savannah
The Citizens and Southern Holding Company was organized April 9, 1928
by The Citizens and Southern National Bank of Savannah, Georgia, for the
purpose of expanding its operations in Georgia and the Southeast. The
Citizens and Southern Bank of Savannah began a program of expansion in 1912
by acquiring a national bank in Augusta, Georgia,, which was converted into
the Augusta branch of the Citizens and Southern Bank. Other banks were acquired later and branches were established in 6 Georgia cities.
In 1927
the bank obtained a national charter and retained all of its branches but
it was then no longer legally permitted to establish branches in cities in
Georgia. All of the shares of the holding company are owned by the national bank as trustee for the benefit of its own shareholders. There are 100,000 shares of $10 par value holding company stock authorized, of which ^0,000
shares are outstanding. The holding company had an original paid-in surplus
of $1,500,000 which was reduced subsequently to $600,000 by charge-offs.
The group as of December 31> 193^ consisted of 3 national banks, including the key bank, 3 nonmember State banks in Georgia and 1 nonmember
State bank and a real estate company in South Carolina.
(One of the sub-
sidiary national banks has since been converted into a State nonmember in-
stitution.) The principal hank in the group had 9 branches in Georgia and
the South Carolina subsidiary had 3 branches in South Carolina, The accompanying chart shows the location of banking offices.
The holding company has followed the general policy of acquiring control of existing institutions by the direct purchase of stock and of obtaining substantial amounts of the outstanding stock of each of them. As of
December 31, 1936, 63 percent of the common stock of the subsidiary national
banks and 96 percent of the stock of the State banks were owned by the holding company.
The holding company has no separate management organization for serving
its banks. Audits are made by public accountants for the holding company.
Officers of the holding company mako frequent visits to tho banks for the
purpose of making inspections, maintaining standards of operations, etc.
The key bank has one direct representative on the directorate of each subsidiary bank and controls the selection of important officers. Tho holding company does not review all credits as a matter of rotitine supervision,
but it practically directs tho credit policies of the banks. Tho koy bank
manages and closely supervises the investment accounts of all banks in the
group.
In the past the key bank has used the facilities of the holding company
affiliate as a vehicle for the purpose of eliminating a large amount of l,Other
real estate" from its assets.
The holding company has strengthened the capital structure of several
of the banks by cash contributions and has assisted in recapitalizing and
in removing substandard assets from them.
- 75
~
CITIZENS AND SOUTHERN NATIONAL BANK
SAVANNAH
AREA OF OPERATION
N U M B E R OF B A N K S
N U M B E R OF B R A N C H E S
HEAD OFFICE CITY
OUTSIDE
7
12
3
9
ATLANTA F R. BANK TERRITORY (6 TH DTST.) 6 BANKS - 9 BRANCHES
RICHMOND F. R. BANK TERRITORY (5 I H DIST.) 1 BANK
1 BRANCH
CHARLOTTE F. R. BRANCH TERRITORY (5"TH DIST) 0 BANKS - Z BRANCHES
Places where group operates a banking office (December 31, 1936)• Location of each bank in group is indicated,but location of a branch or branches is shown
only where the group does not operate a bank.
- 76 A t l a n t i c N a t i o n a l Bank,
Jacksonville.
The A t l a n t i c N a t i o n a l B a n k was o r g a n i z e d J u l y 1903 and i n F e b r u a r y
I 9 3 U the A m e r i c a n T r u s t Company was merged w i t h i t .
The A t l a n t i c
Company was o r g a n i z e d September 15, 190S b u t d i d not b e g i n to
as a b a n k s t o c k h o l d i n g company u n t i l
Trust
function
The T r u s t Company h a d been
owned o r i g i n a l l y b y p e r s o n s c o n n e c t e d w i t h the A t l a n t i c N a t i o n a l B a n k h u t
i t was l a t e r s o l d to the s t o c k h o l d e r s o f t h e A t l a n t i c N a t i o n a l B a n k on
the b a s i s o f one s h a r e o f A t l a n t i c T r u s t Company s t o c k f o r e a c h t e n
of bank s t o c k .
The a u t h o r i z e d and o u t s t a n d i n g
shares
stock of the A t l a n t i c
Company c o n s i s t s o f 1 , 5 0 0 common s h a r e s , a n d 1 , 0 0 0 c u m u l a t i v e
Trust
non-voting
p r e f e r r e d s h a r e s b o t h of $100 p a r v a l u e .
The g r o u p c o n s i s t s o f 7 b a n k s — 6 n a t i o n a l b a n k s and 1 nonmember
b a n k — 2 nonnenber S t a t e b a n k s i n l i q u i d a t i o n ,
1 mortgage company i n
d a t i o n , and v a r i o u s mortgage b o n d and f i n a n c e companies not
affiliated,
State
liqui-
technically
i n c l u d i n g one company o r g a n i z e d to p u r c h a s e the p r e f e r r e d
o f the A t l a n t i c
T r u s t Company.
shown on the a c c o m p a n y i n g
A l l banks arc l o c a t e d i n F l o r i d a ,
as
stock
is
chart.
The b a n k s i n the g r o u p h a v e been a c q u i r e d t h r o u g h the p u r c h a s e of from
50 to 70 p e r c e n t o f the common s t o c k
The A t l a n t i c N a t i o n a l B a n k s u p e r v i s e s the l o a n and i n v e s t m e n t
c o n d u c t s a u d i t s o f the c o n t r o l l e d b a n k s , and r e q u i r e s d a i l y
them a s to l o a n s .
The c o n t r o l l e d b a n k s c o n s u l t
t e r s b u t have f i n a l r e s p o n s i b i l i t y
c o n t r o l o f the i n v e s t m e n t a c c o u n t s .
key bank.
statements
from
the k e y b a n k on c r e d i t
mat-
i n the making o f l o a n s .
The k e y b a n k h a s
E x e c u t i v e employees a r c s e l e c t e d b y the
Much o f the p u b l i c i t y and new b u s i n e s s p r o m o t i o n o f t h e g r o u p
c e n t r a l i z e d i n t h e key b a n k *
policies,
is
- 77 ~
ATLANTIC NATIONAL BANK
JACKSONVILLE
AREA OF OPERATION
1956).
Location of each bank in group is indicated.
The t r u s t " b u s i n e s s o f t h e g r o u p i s c e n t r a l i z e d i n t h e A t l a n t i c
Nation-
a l B a n k and one o f f i c e r i n each s u b s i d i a r y h a n k i s d e s i g n a t e d a t r u s t
o f t h e A t l a n t i c N a t i o n a l B a n k so t h a t complete t r u s t
each of the c o n t r o l l e d h a n k s .
officer
s e r v i c e i s rendered at
CHAPTER IV
EXTENT AND DISTRIBUTION OF GROUP BANKING
Group tanking includes banks of all classes and of all sizes and
has developed in practically every section of the country. It varies,
however, in the extent of its development in different areas and the
groups differ in the pattern of their organization and development.
On the basis of statistics as of December 31, 1936, there were 52
groups controlling U79 banks and 1,326 banking offices with $5,^50,000,000 of loans and investments and $6,^+0,000,000 of deposits. These
groups control 3.2 percent of all commercial banks and 7 percent of
the banking offices, which hold
percent of the loans and invest-
ments and nearly ik percent of the deposits of all banks in the United
States. Table 6 shows these figures in detail*
Table 6 - Banks in Groups and All Commercial Banks
December 31, 1936
Number
of
banks
All commercial banks
in the United States
Banks in 52 groups
Number of
banking
offices
1^,929
i J
Percentage of banks
in groups to total
banks
Loans
and
Deposits
investments
(in thousands of dollars)
is,157 $ 3S,90l+,029
^79
1,326
3.2
7.3
5 M * M 3
1H.0
$ U9,869,319
6,S4l,027
13.7
l/ This figure includes only incorporated commercial banks and excludes such institutions among others as trust companies without
deposits, industrial and Morris Plan banks, etc.
~
1 3
~
~ so Table 7 shows that national banks constitute a larger proportion
of the banks in groups than all of the other classes of banks combined.
Tabl* 7 - Classes of Banks in 52 Groups
December 31f 1936
Class of bank
National
State member
Nonmember insured
Nonmember non-insured
Number
of
banks
285
U3
I3S
13
Loans and
Deposits
investments
(in thousands of dollars)
$ 3*93^29
1,13^139
335^6
52,199
Total
U79
5^5^13
$ 5.062,937
l» 321,67^
W+,523
5M93
6,SUi,027
Size of Banks in Groups
Banks in groups vary in size from those with loss than $100,000 of
loans and investments to some of the largest in the country*
Chart 1
and table S show that ^0 percent of the group banks' have between $500,000
and $2,000,000 of loans and investments and that 3S percent of them have
$2,000,000 or mora. Loans and investments, and deposits, however, are
concentrated in the larger banks in the groups, 70 percent being in the
22 largest banks.
Only 6 percent of the group banks each had loans and investments of
less than $250,000, while 13 percent each had loans and investments in
excess of $10,000,000*
This is in contrast with the distribution of all
commercial banks as of December 31, 1935 which indicates that about ^0
percent of all such banks have loans and investments of less than $250,~
000 and less than 3 percent have loans and investments of more than
$10,000,000.
- 81
~
CHART 1
NUMBER OF BANKS IN 52GROUP SYSTEMS
BY S I Z E OF BANK
NUMBER
140
NUMBER
140
120
120
100
80
60
40
20
SIZE GROUPS
IN
UNDER
THOUSANDS 100
OF DOLLARS
Il_
nil
IIIsp^s
i
i
i
m
i
,1 l i m n
100
150
250
500
1,000
2,000
5,000
10,000
50,000
149
249
499
999
1,999
4,999
9,999
49,999
OVER
TO
TO
TO
TO
TO
TO
TO
TO
AND
Number of banks in 52 group systems as of December 51, 1936. Banks
are classified according to the amount of their loans and investments.
100
80
60
40
20
0
~ 82
-
Table 8 - Number of Banks in Groups, and. the Amount of their Loans
and Investments, and of Deposits, Classified by Size
December 31, 1936
Size group
Number Percent
Loans and
Percent Deposits Percent
loans and
of
of
investments
of
of
investments
(000 omitted
"banks total (000 omitted) total
total
(000 omitted)
Under $100
3
100 - 1U9
9
150 - 2U9
17
250 - 499
70
102
500 - 999
1,000 - 1,999
93
2,000 - 4,999
S3
5,000 - 9,999
38
10,000 - 49,999 42
50,000 and over 22
.6
1.9
3.6
14.6
21.3
19.4
17.3
7.9
s.s
4.6
479
100,0
Total
$
1S1
1,211
3,1+76
26,120
75,317
134,129
251,916
257,991
87^,673
3,833,399
5,45s,413
$
16.0
70,2
26s
1,737
4,g44
35,038
93,207
16s,^77
324,412
331,027
1,121,695
4,759,622
.1
•J
1.4
2.5
M
4.S
16.4
69.6
100 ,0
6,S4I,027
100.0
—
.1
•5
1.4
4.6
—
The 22 largest group banks, each having $50,000,000 or more of loans
and investments, are shown in Table 9*
Table 9 - 2 2 Largest Group Banks, December 31, 1936
Loans and investments
Deposits
(in thousands of dollars)
Bank of America N.T. & S.A.San Francisco
1,151,167
lf287,928
First National Bank, Boston
392,979
5^7,109
Union Trust Company, Pittsburgh.
310,755
295,509
Mellon National Bank, Pittsburgh
286,489
340,053
Anglo California Nat. Bank,San Francisco
160,893
207,954
First Wisconsin Nat. Bank, Milwaukee
155,125
203,576
Marine Trust Company, Buffalo
144,020
167,683
First Nat. Bank & Trust Co.,Minneapolis
110,746
1^3>723
National Shawmut Bank, Boston
110,186
lS0,2b4
Commerce Trust Co., Kansas City
107,422
175,886
Industrial Trust Company, Providence
100,259
120,743
First National Bank, St. Paul
92,9*9
135t9^7
Northwestern Nat.Bank & Trust Co.,Minneapolis
91>°50
122,202
Marine Midland Trust Company, New York City
90,458
109,217
First National Bank, Pittsburgh
76,88!
103,817
Farmers Deposit National Bank, Pittsburgh
76,608
94,462
Peoples-Pittsburgh Trust Co., Pittsburgh
74,182
94,549
First National Bank, Portland, Oregon
70,138
87,367
Citizens & Southern Nat. Bank, Savannah
60,926
SS,723
Republic National Bank, Dallas
5^t879
Ohio National Bank, Columbus
55>53°
68,624
National Bank of Commerce, Seattle
51,181
68,653
Bank
Total
3.233,399
4,759,622
~ S3
-
Size of Groups
From the point of view of the number of banks controlled the groups
vary in size considerably, as is shown in Table 10. Of the 52 groups
covered in this study, each consisting of 3 or more banks, 33 groups each
have from 3 to 5 banks, 8 each have from 6 to 9 banks, and 11 each have
10 or more banks. The group with the largest number of banks, the Northwest Bancorporation, consists of 92 banks and that with the second largest
number of banks, the First Bank Stock Corporation, is composed of
banks.
Table 10 - Group Systems Classified by Number of
Banks in System, December 31» 193&
Size classification
loans and
Number of Number of
Deposits
Number of "baiks
investments
"banks
groups
in each group
(in thousarids of dollars)
controlled
3
4
5
6
7
9
10
11
12
l4
16
IS
20
7S
92
Total
57
20
U5
IS
28
9
10
11
12
19
5
9
3
4
1
1
1
1
1
1
1
2
1
1
1
92
52
^79
i4
16
36
20
is
$ 523,150
137,326
S9U, 2l4
111,535
2^5,047
29,935
171,505
1,313,5^1
54,961
500,201
84,252
206,230
1+42,283
79,9^6
301,105
312,5S2
5^52,^13
$
681,^6
280,097
1,007,990
149,005
381,453
63,083
221,769
1,488,462
61,199
687,854
102,644
275,^32
518,223
100,886
4n,66o
409,769
6,8^1,027
Principal Banking Groups
Among the 52 groups there are IS that may be designated as the principal
examples of banking groups. ^
These IS groups control 333 banks with
1/ The term "principal groupsn is used to designate the large and important
groups, as measured by the number of banks and banking offices (banks
and branches) and the amount of loans and investments controlled by the
group, that have been developed for the primary purpose of providing
banking services through the coordinated operation of a number of banks.
~
sh
~
$3,S20,000,000 of loans and investments and
830,000,000 of deposits.
Table 11 lists the principal groups and shows the number of banks, branches,
and the amount of loans aid investments, and deposits controlled by each of
them, A list of the 3U other groups is given in Tables 1 and 2 of the
Appendix.
Table 11 - Principal Groups, December 31* 193&
Name of group and
location of head
office
Number
Number Loans and
Deposits
of
of
investments
banks (in thousands of dollars) branches
Transamerica Corp.,San Francisco
First National-Old Colony,Boston
Marine Midland Corporation,Buffalo
Northwest Bancorporation,Minneapolis
First Bank Stock Corp.,Minneapolis
Wisconsin Bank Shares Corp.,Milwaukee
Anglo National Corp.,San Francisco
Shawnut Association, Boston
BancOhio Corporation, Columbus
Citizens & Southern Nat.Bk.,Savannah
Hamilton National Bank,Chattanooga
First Trust & Deposit Co,Syracuse
Marine Bancorporation, Seattle
First Security Corp.of Ogden,Ogden
First Nat.Trustees, Louisville
Atlantic Nat. Bank, Jacksonville
Trust Co. of Georgia, Atlanta
Florida Nat.fooun.,Inc.Jacksonville
IS Principal groups
34 Other groups
52 All groups
11 $1,313,5^1
500,201
13
385.593
IS
312,5S2
92
301,105
73
206,S30
16
171,505
10
122,SS2
7
SU.252
l4
74,46s
7
56,690
IS
5^,961
12
4
52,715
5
46,099
6
4o,7S7
7
36,2^0
6
30,762
9
29,935
333
146
479
3»S21,l4S
1,637,265
5,45S,4i3
$ 1,4SS,462
6S7,S5'4
435,203
1+09,769
4u,66o
275,432
221,769
194,086
102,644
li3,44o
22,SOI
61,199
70,595
66,501
50,091
4,344
3,363
63,083
4,332,296
2,00s,731
6,s4i,027
511
45
63
18
6
12
IS
17
12
12
5
11
10
22
7
769
7S
S47
Comparison of the statistics of the principal groups with those of all
groups shows that the 333 "banks controlled "by the principal groups constitute
nearly JO percent of the total banks in groups and that these banks control
70 percent of the loans nnd investments, and deposits of banks in groups.
Some groups with large banks were not included among the principal groups
because they comprise a small number of banks or because they are not typical
of the group movement, for example, the Union Trust Company of Pittsburgh.
Geographic Distribution of Group Banking
Banks belonging to groups are located in many sections of the country.
Only sixteen States—Vermont in New England; Delaware, Maryland, District of
Columbia, Virginia, West Virginia, and North Carolina in the South Atlantic
division; Alabama, Mississippi, Arkansas, Louisiana, and Oklahoma in the
South Centrd division; Kansas in the West North Central division; Colorado,
New Mexico, and Arizona in the Mountain division—are without any reported
banks in groups of 3 o r ^ore.
States with the largest number of banks (20
or nore) in groups are Massachusetts, New York, Pennsylvania, Wisconsin,
Minnesota, North Dakota, Florida, Tennessee, Montaaa, and Washington. The
15 States where the proportion (more then 25 percent) of loans and investments controlled by banks in groups is largest are Massachusetts, Rhode
Island, Wisconsin, Minnesota, North Dakota, South Dakota, Georgia, Florida,
Tennessee, Montana, Idaho, Utsh , Nevada, Oregon, and California.
Table 12
shows in detail the number of bmks by States in groups and the number of
groups by States, and Table 13 shows the amount of loans and investments
and deposits of banks in groups by States.
Table 12 - Number of Banks in Groups and All Commercial Banks
by States and by Geographic Divisions
December 3 1 9 3 ^
State and geographic
division
New England
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
Total
Middle Atlantic
New York
New Jersey
Pennsylvania
Total
All
commer- Banks
in
cial
groups
banks
70
65
77
202
26
120
560
752
393
1,103
2,2Ug
21
Ratio of
banks in
groups to
all banks
4.3
6.2
1
1
10.4
11.5
2
1
1
T
4
67I
&
5.3
4o
S9
Number of
groups with
head office
in State
5
3
M
X o
S
lU
Table 12 - Number of Banks in Groups and All Commercial Banks by
States and by Geographic Divisions, December 31. 193& (Continued)
State and geographic
division
East North Central
Ohio
Indiana
Illinois
Michigan
Wisconsin
Total
West North Central
Minnesota
I owa
Missouri
North Dakota
South Dakota
Nebraska
Kansas
Total
All
Banks
commerin
cial
groups
banks
69S
502
882
U71
663
6gg
657
673
196
191
>+35
7p7
3*5^7
Ratio of
"banks in
groups to
all "banks
2.0
-
-
-
-
1
22
37
.2
1.2
86
5
7
27
15
10
12.5
.2
1.0
13.8
7.9
2.3
M
150
-
-
187
22
323
187
211
1^9
282
1SS
1,565
-
-
East South Central
Kentucky
Tennessee
Alabama
Mississippi
Total
k}k
315
218
208
1.175
West South Central
Arkansas
Louisiana
Oklahoma
Texas
Total
222
146
U03
882
1.653
-
1
2
3
2
-
1
X 2
1+6
119
53
52
151
hi
1
-
-
South Atlantic
Delaware
Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
Total
Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Number of
groups with
head office
in State
•m
•M
mm
-
-
9m
-
-
1
17
24
6
22
-
-
1
r'
6.0
1^.2
2.7
1.4
7.0
-
-
2
4
T
1
3
•Ml
-
23
2.4
T"
-
-
-
-
-
-
-
•M
10
10
1.1
26
7
3
21. s
13.2
5.2
-
-
-
-
-
-
-
2
1
-
- S7 Table 12 - If amber of Banks in Groups and All Commercial Banks
by States and by Geographic Divisions
December 31, 193& (Continued)
State and geographic
division
Ari zona
Utah
Nevada
Total
Pacific
Washington
Oregon
California
Total
UNITED STATES - Total
All
conmer** Banks
in
cial
groups
banks
Batio of
"banks in
groups to
all "banks
Numbor of
groups with,
head, office
in State
1*4
59
10
505
7
1
w
11.9
10.0
8.7
183
92
24
4
13.1
520
45
6.9
S.J
s
1^,929
479
3.2
52
^
3
T
-
Table 13 - loans and. Investments, and Deposits of All Commercial
Banks and of Banks in Groups, by States, December 31, 193^
(In thousands of dollars)
State and
geographic
division
Hew England
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
Total
Loans and
investments
All
Banks
commercial
in
banks
groups
130,954
75.1S1
106,246
Ratio of
banks in
Deposits
groups to
Banks
All
all commer- commercial
in
cial banks
banks
groups
(percent)
8,646
2,262
203,710
84,889
105,518
1.S75.367
307,130
548,393
mm
272,510
625,130
107,Wl
2,511,825
779,099
29,567
Ratio of
banks in
groups to
all commercial banks
(percent)
11,229
8,685
10.2
883,797
47.1
41.9
1£S,59S
5.5
6.6
34.2
3,125,007 1,058,487
Middle Atlantic
New York
11,651,684
New Jersey
1,411,172
Pennsylvania
4,012.266
Total
17,075,122
East North Central
Ohio
1,711.536
Indiana
597,444
Illinois
2,962,46s
Michigan
1,046,074
Wisconsin
6,93.574
Total
7,011,396
West North Central
Minnesota
679,563
Iowa
458,137
Missouri
1,005,527
North Dakota
57,766
South Dakota
67,263
236,510
Nebraska
267,055
Kansas
2,771,821
Total
South Atlantic
Delaware
l4l,959
Maryland
477,623
District of Col. 229,767
Virginia
442,205
West Virginia
214,359
North Carolina
291,138
South Carolina
97.305
Georgia
302,433
Florida
220.396
Total
2,417,185
14,308,513 533.481
1,736,292
77,773
4.702.310 ij.ig.g6o
20,747,115 1,730,114
471,445
60,366
988.942
1,520,753
2,218,409 102,644
803,031
4,033,028
7.662
1,430,468
863.966 284.117
97348,902 3 9 M 2 3
84,252
4.9
6,262
214.206
304,720
.b
JOsl
419,815
43,550
119,4oi
25.691
28,303
54,615
6l. 8
9.5
11.9
44.5
42.1
23.1
691,375
2C9
390,519 564,842
613,539 54,570
l,44i,4o6 196,165
71,639 32,709
9l,4s6 35,636
336,992 81,556
420.24.5
3,865,882 965,528
9.6
33.0
52,2
9.3
166,819
622,390
334,044
573,311
281,749
410,742
155,215
16,682
424,444 145,702
182,455
3.303.204 344,839
9,347
99.830
116.180
225,357
4.3
3.7
,2^.8
8.3
4.6
•5
32.9
63.4
8.9
13.6
45.7
39.0
24.2
25.0
10.7
34.3
10.4
- S9 Table 13 Loans and Investments, and Deposits of All Connercial Banks and
of Banks in Groups, "by States, December 31, 193& (Continued)
(In thousands of dollars)
State and
geographic
division
loans and
investments
Banks
All
in
conaercial
groups
"banks
East South Central
UOJS7
Kentuclsy
369,5^1
111,688
Tennessee
350,092
Alabama
199.^71
Mississippi
129.799
Total
1,043,903 152,475
West South Central
Arkansas
107,993
Louisiana
310,201
Oklahoma
282,733
871.446
Texas
Total
1,572,373
94.116
94,116
Ratio of
"banks in
Deposits
groups to
Banlcs
All
all conner- connercial
in
cial "banks
"banks
groups
(percent)
11.0
31.9
14.5
10.8
' 6.0
470,253
504,630
287,^51
205.403
1,467,637
50,091
10.7
160,304
31.3
210,395
3£l3
179,871
463,100
424,709
.1,^7,357
2,415,037
121.616
123,616
9.2
5.1
7^75
3S.53S
3,817
53.9
39.9
5.9
21,590
22.b07
221,027
5b.2
.70.6
23.4
111,109
91,906
ii^Qgy
1,732,598
24,6
32.2
40.4
38.3
6,841,027
13.7
Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Ari zona
Utah
Nevada
Total
91,630
52,095
65,110 24,864
38,364
2,195
203,808
32,763
52,096
].04,4i6 54,883
22.464 15.112
610,651 149,149
38.2
24! 4
138,210
96,692
64,443
331 Ml
53,709
76,383
145,060
32.011
943,991
Pacific
Washington
Oregon
California
Total
335,203 82,773
215,166 7^,355
3,^4^841.^84.241
3,884,753 1,541,369
24.7
34.6
452,32s
28^,341
38,904,029 5^58,413
14.0
TOTAL -
Eatio of
"banks in
groups to
all connercial "banlcs
(percent)
56.9
5.7
52.6
4
39.7
49,369,319
States in Which Branch Banking is Prohibited
At the end of 1936 there were 137 group banks in 5 of the 9 States in
which the establishment of branches is prohibited, distributed as follows:
- 30 ~
Minnesota
Florida
Texas
Nebraska
Missouri
S6
24
10
10
7
West Virginia
Illinois
Kansas
Colorado
Total
The Northwest Bancorporation controlled
0
0
0
0
137
of the group banks in
Minnesota and the First Bank Stock Corporation controlled 39®
these holding companies operate in several States.
Both of
In Florida 9 of the
24 group banks belonged to the Florida National (fcroup, Inc., 7
Atlantic National Bank, Jacksonville, Florida, and S to 2 other groups®
In Texas 5
^ q 10 group banks belonged to the Republic National Bank,
Dallas, and 5 to the Mercantile National Bank, Dallas.
In Nebraska 7 of
the 10 group banks belonged to the Northwest Bancorporation.
The con-
trolling interests in some of these cases, for example, the Florida National Group, Inc., and the Atlantic National Bank, both in Florida, have
indicated that they would turn the banks into branches if the State law
permit tecU
The laws of Kansas, in v/hich there are no group banks although branch
banking is prohibited, authorize the banking authorities to examine any
corporation holding as much as one-fourth of the stock of any bank or
trust company. This factor and the agitation of unit banks against both
branch and group banking may account for the fact that group banking has
had no development there. The laws of Colorado, where there also are no
group banks, appear to contain no provisions which might tend to prevent
the operation of group banking systems.
States Whose Banking Laws Contain No Provision with Respect to Branch- Banking
There wore 40 group banks at the end of 1936 in 4 of these States,
distributed as follows:
North Dakota
Kentucky
New Hampshire
27
6
4
Wyoming
Oklahoma
Total
3
0
Uo
~ 91
-
The 27 group "banks in Nor.th Dakota were all controlled "by the Northwest
Bancorporation and the First Bank: Stock Corporation*
Although there are no group hanks in Oklahoma, there appears to "be nothing
in the laws of the State that would prevent the development of group hanking*
There was in fact a fairly large group there "before the "banking holiday in
19331
l there is a "chain" of 7 "banks controlled "by Thurmond Brothers.
an(
The question may "be raised as to why chain hanking exists in some States
where no holding company affiliate groups exist and where there appears to he
nothing in the lav/s of the States that would prevent the development of group
banking*
The answer in some cases may be that the individual or individuals
who control the chain have no fear of double liability*
In the past some such
individuals have not possessed a great amount of assets subject to double
liability assessments*
Perhaps, also, the State laws do not impose double
liability. Another reason for chain banking is that some individuals desire
to dominate and perpetuate their individual names, which they feel would be
impossible under corporate ownership*
States in Which. Branch Banking is Restricted to the Head Office City or County
There were 69 group banks in 4 of these States distributed as follows:
Massachusetts
Tennessee
New Jersey
Georgia
Indiana
21
22
9
17
0
Delaware
Louisiana
Alabama
Total
0
0
0
69
In Massachusetts the First National-Old Colony, Boston, controlled 13
banks and the Shawmut Association 7»
In Tennessee the Hamilton National
Bank, Chattanooga, controlled 12 banks, besides 6 banks in Georgia, where
branches may be established only in the head office city. In New Jersey
the 9 banks belonged to 3 different groups.
~ 92
-
There appears to he nothing in the laws of Delaware, Louisiana and
Alabama, in which there are no group hanks, preventing the development of
group banking* A group of 7 banks in Alabama, headed by the First National
Bank of Birmingham, was converted into a branch system in 1935 upon the
enactment of enabling legislation.
In many of the States in the above classification as well as the ones
below the groups control banks which are dispersed over areas wider than
that permitted to branch systems under existing law.
States in Which Branches May Be Established Beyond the Head Office County
but Not Throughout the State
There were 1U7 group banks at the end of 1936 in 6 of these States,
distributed as follows:
New York
Pennsylvania
Wisconsin
Montana
Iowa
bo
1+0
22
2b
5
Ohio
Arkansas
Mississippi
New Mexico
Total
lk
0
0
0
7+7
In New York, where a State bank may establish branches only within the
banking district, as defined by statute, in which its head office is located,
there were 40 group banks, of which IS belonged to the Marine Midland Corporation and the remainder to b different groups. In Pennsylvania the 40 group
banks at the end of 1936 are accounted for principally by the Mellbank Corporation and Union Trust Company which controlled 25 banks. The status of the
Mellbank Corporation as a holding company affiliate lias since been terminated
by distribution of stock of the subsidiary banks to its own stockholders,
the Mellon interests.
Since the Corporation continues to dominate the banks,
it is still included in the tabulations. 7ive other groups in Pennsylvania
controlled a total of 15 banks at the end of 1936.
In Wisconsin l6 of
the 22 group banks belonged to the Wisconsin Bank Shares Corporation.
- 93 ~
In Montana the 2.6 group "banks all "belonged to the First Bank Stock Corporation and the Northwest Bancorporation*
"belonged to the BancOhio Corporation*
to the Northwest Bancorporation*
In Ohio all of the lb group hanks
In Iowa all of the 5 "banks belonged
The organization of the bank holdings of
the Toy family appears to fall on the border line between a personal trusteeship and a business trust but has been classed as a chain.
The existence of group banking systems in some of the States may be
explained partly by tho fact that the branch banking area, as defined by
State lav/Sf is .not sufficiently wide to permit the conversion of some of
the group banks into branches*
In New York, for example, some of the
banking districts fixed by statute are relatively small, comprising as
few as 3 or ^ counties, while the banks in the Marino Midland group are
located in a number of the banking districts*
In Montana the limitation
of the branch banking area to the head office county and adjoining counties,
and the further limitation that branches may bo established only upon consolidation of banks, have restricted the conversion of group banks into
branch systems*
In Wisconsin and Ohio the limitations of the branch banking
area effectively prevent the Wisconsin Bank Shares Corporation and BancOhio
Corporation, respectively, from converting some of their banks into branches*
The high capital requirements applicable to national banks establishing
branches outside of their head office cities also retard the conversion of
banks into branches®
Mississippi, which has no group banking, prohibits the incorporation
in the State, or admission to business in the State, of any corporation to
operate banks in groups or chains• Arkansas prohibits any person who owns
50 percent or more of the capital stock of three or more banks from borrowing from such banks*
There appears to be nothing in the laws of New Mexico
- 94
~
to prohibit the development of group hanking there.
States in Which State-wide Branch Banking is Permitted
There were g6 group hanks at the end of 1936 in States which permit
State-wide branch banking, distributed as follows:
Washington
California
South Dakota
Idaho
Utah
Nevada
Oregon
Maine
Rhode Island
2k
17
15
7
7
1
k
3
3
Connecticut
Michigan
Soiith Carolina
Arizona
Maryland
North Carolina
Vermont
Virginia
Total
3
1
1
0
0
0
0
0
86
These banks were distributed through 12 States and belonged to IB
different groups. The existence of group banks side by side with branch
banks in some of the States listed above is due in part to the fact that
legislation permitting State-wide branch banking was not enacted in some
of these States until 1933*
Since that time many of the banks belonging
to groups in these States ha/ve been converted into branches#
Certain
factors tend to postpone the conversion of group banks into branches# such
as minimum capital and other requirements made by supervisory authorities,
especially with respect to member banks; personnel problems; the desire of
the holding company to acquire additional stock of the controlled bank before converting it into a branch; the need of determining whether or not
the interests of the holding company would best be served by the conversion;
and the existence of strong anti-branch sentiment or desire to gradually
test the state of public feeling with respect to branch banking. The Northwest Bancorporation has converted several of its banks into branches in
South Dakota although the First Bank Stock Corporation has not as yet done so.
- 95 In summary, of the 479 hanks "belonging to groups at the end of 1936,
137 were located in 5 States in which the extension
of branch banking was prohibited;
4-0 in 4 States in which there is no statutory provision for the establishment of branches;
69 in 5 States in which the establishment of branches
is restricted to the head office city or county;
1^7 in 6 States in which branches may be established
beyond the limits of the head office county but
not throughout the State; and
S6 in 12 States in which State-wide branch banking
is permitted.
Extent of Areas of Operation
Banking groups operating at the present time may be divided into State
and regional systems. Forty-two groups operate banks within the limits of
a single State and 10 operate in more than one Statef
Forty-ftv;. operate
within the confines of a single Federal Reserve district, 5 operate in two
districts and 2 operate in three districts*
Table l4 shows the groups
classified by the number of States and the number of Federal Reserve
districts in which they operate and the number of banks and banking offices
operated by them.
Table l4 ~ Group Systems Classified by the Number of States and
Federal Reserve Districts in Which Their Banks Operate
December 31, 1936
Number of
Number of
Number Number Number F. R. dis- ITrumber Number Number
States in
of
of
of
of
of
of
tricts in
which group
banking
banking
groups banks
which group groups banks
operates banks
offices
offices operates
banks
1
2
3
5
7
Total
42
4
3
1
l
1
245
32
15
72
92
522
S4
110
52
^79
1,326
11
491
76
1
2
3
Total
45
3
2
• 3^3
1
>113
95
95
lis
479 1,326
- 96
~
Of the 10 groups operating in more than one State, k have hanks in
two States, 3 in three States, 1 in four States, 1 in five States, and 1
in seven States.
The two groups operating in 5 and 7 States respectively
are the First Bank Stock Corporation and the Northwest Bancorporation of
Minneapolis.
States in which these two groups have hanks and offices are
shown in the charts on pages 52 and 56 of this study.
Tahle 15 shows the different groups with 5 or more hanks which on
December 31» 193& were operating in more than one State, more than one
Federal Eeserve district or more than one Federal Eeserve bank or branch
territory.
Table 15 - Bank Groups With 5 or More Banks Which Were Operating
in More Than One State, More Than One Federal Eeserve District,
or More Than One Federal Eeserve Bank or Branch Territory
December 31, 1936
llame and location
of principal office
of group
ITunber of "banks in group Hunter of States,
federal Eeserve "bank
State Non- and branch terriNattories, and Federal
Total ional "bank rncn- Eeserve districts in
nei>- "ber which the group lias
"banks
bers banks banks or branches
States Terri- Distoriee tricts
Northwest Bancorporation,Minneapolis
First Bank Stoek Corp.,Minneapolis
Marine Midland Corp.,Buffalo
Hamilton Nat.Bank, Chattanooga
Wisconsin Bank Shares Corp.Milwaukee
BankOhio Corporation, Columbus
Transamerica Corp.,San Francisco
Anglo Nat. Corp., San Francisco
Eawlins Securities Co.,Salt Lake City
Citizens & Southern Nat.Bk.Savannah
First Nat. Trustees, Louisville
First Security Corp., Ogden
92
78
18
IS
16
11+
11
10
7
I
6
5
57
59
3
12
10
11
7
3
1
S
-
1
3
1
-
3
3
2
32
IS
7
6
5
3
1
1
-
2
1
1
2
7
5
1
2
1
l
2
3
2
1
3
k
2
2
3
2
2
3
2
2
2
2
2
3
1
1
1
2
1
1
1
2
2
2
2
"97
-
Intrastate Group Systems - Number of Towns and Counties Served
Table l6, giving the b2 intrastate groups classified according to
the number of towns and counties in which banking offices are operated
by then, shows that 7 o f the groups serve only 1 town each and that 35
others serve from 2 to 29 towns each. It shows also that the operations
of 16 groups are each limited to 1 county and that the others servo from
2 to 20 counties each.
Table l6 - Intrastate Group Systems Classified by the Number of To\?ns
and Counties in Which Their Banking Offices Operated
December 31» 193&
Nunber of towns
Nunber Hunber of ITunber Number Furiber
counties
in whichtenia-ITunl)er Number
of
of
of
of
of
of
in
which
ing offices
"banking
banking
operated
groups •banks offices "banking groups "banks offices
offices
operated
1
24
16
1
56
25
7
7s
2
6
28
2
IS
26
30
7
16
14
3
3
3
17
4
14
4
2
3
13
9
123
7
5
53
5
5
6
16
6
2
13
3
19
l
24
l
4
i4
7
7
7
6
g
1
2
s
17
29
33
1
11
1
14
9
9
9
3
0 r*
12
10
1
1
c.o
16
3
17
14
1
11
1
13
lU
26
3
2
16
12
20
1
15
81
37
16
l
28
13
i4
26
1
l4
l
58
19
13
20
24
21
1
l
13
SI
29
^
Total
42
245
491
Total
42
245
491
Interstate Group Systerns - Number of Towns and Counties Served
Table 17* classifying the 10 interstate group systems according to the
number of towns and counties in which banking offices are operated by them,
shows that 6 groups each have banking offices in from 3 to 19 towns, 1 in
25, 1 in 73f 1 i n 97»
1 in 3 H towns. It also shows that 6 of these
- 98' -
10 groups operate in from 3 to l6 counties each; that 1 operates in 22
counties, 1 in Gjt 1 in S31 a n & 1 i n &6 counties.
Table 1J - Interstate Group Systems Classified "by the Number of Towns
and Counties in Which Their Banking Offices Operated
December 31, 1936
Number
Number of towns Number Number of
of banking
of
in which banking
offices operated groups banks offices
3
6
8
13
18
19
25
73
97
311
1
1
1
1
1
1
1
1
1
1
3
3
7
7
10
IS
5
7S
92
11
8
6
8
19
28
23
27
84
110
522
Total
10
231+
835
Number of
Number
counties in Number Number
of
of
Of
which bankbanking
ing offices groups banks
offices
operated
14
lb
22
67
S3
86
1
1
1
1
1
1
1
1
1
1
3
3
7
7
10
18
5
73
11
92
8
6
8
19
28
23
27
84
522
110
Total
10
234
S35
3
5
7
!
1
Size of Towns in Which Banking Groups Operate
Table IS and Charts 2 and 3 show that the tendency of the groups is to
operate in towns of 1,000 population and over rather than in places of less
than lf000 population*
Hinety percent of the banks and 90 percent of the
branches operated by group systems are located in towns of 1,000 or over.
Branches operated by banks in groups are concentrated in large towns to a
greater extent than the banks, kb percent of them being in towns of 100,000
population and over*
-
99
~
CHART 2
DISTRIBUTION OF BANKS IN GROUP SYSTEMS
BY SIZE OF TOWN
NUMBER
90
POPULATION U N D E R
GROUPS
£50
TO
499
5,999
NUMBER
90
6000
10,000
25,000
TO
TO
TO
9,999
Z*t,999
50,000 lOQOOO 500.000
TO
TO
^9,999 99,999 H99,999
Number o f b a n k s i n 52 g r o u p s y s t e m s a s o f December 51, 1 9 3 6 .
a r e a r r a n g e d a c c o r d i n g t o the s i z e o f town i n which t h e y a r e
Banks
operated.
AND
OVER
- 100 ~
CHART 3
DISTRIBUTION OF BRANCHES IN GROUP SYSTEMS
BY SIZE OF TOWN
NUMBER
NUMBER
350
3 5 0
300
250
200
150
100
50
POPULATION U N D E R
GROUPS
£50
2 5
T 0°
499
500
1.000
2.500
3.000
5.000
6.000
10.000
TO
TO
TO
TO
TO
TO
TO
25,000 50,000
TO
TO
100.000 500.000
TO
AND
999
2,999
2,999
<f,999
5.999
9,999
24.999
49.999
99.999
499,999
OVER
Number o f b r a n c h e s o f b a n k s i n 52 g r o u p s y s t e m s a s o f December 5 1 , 1 9 5 6 .
B r a n c h e s a r e a r r a n g e d a c c o r d i n g t o the s i z e o f town i n which t h e y a r e l o c a t e d .
- 101 -
Table IS ~ Number of Banks and Branches in Groups
by Size of Town of Location
December 31, 1936
Population of town
Under 25O
250 - kss
500 - 999
1,000 - 2,1+99
2,500 - 2,999
3,000 - 4,999
5,000 - 5,999
6,000 - 9,999
10,000 - 24,999
25,000 - 49,999
50,000 - 99,999
100,000 - 499,999
500,000 and over
Total
I7un"ber of Uunber of
"banks
"branches
1
8
1.2
2.6
6.0
13.3
2.6
24
45
m
241
.2
1.7
7.7
12.9
5.0
9.?5 2
V
8.4
16.5
7.7
4.0
16.5
5.0
479
S47
100.0
100.0
V
62
24
44
4o
79
37
19
79
10
22
51
113
22
5S
16
55
56
Percent of total
Banks Branches
V
6.s
1.9
6.5
6.6
3.2
5.3
15*5
28.5
Branch Banking Among Groups
A considerable amount of branch banking exists among banking groups,
particularly among the principal groups. As shown in Table 19* 69 Of the
banks in groups operate SU7 branches» and U5 of the banks with branches
and 7^9 of the branches are in the principal groups.
Table 19 - Humber of Banks and Branches or Additional
Offices in Groups, December 3!, 1936
Banks
All (52) groups
479
18 principal
groups
333
34 other
groups
146
Banks Branches or
operating additional
"branches
offices
847
69
24
Total
"banking
officos
1.326
769
1,102
7S
224
Table 20 shows that 267 of the Skf "branches operated by banks in groups
are located in the city of the head office of the bank by which they are
operated and 5$0 are outside of the city of the head office* Of the 58O
- TO 2 ~
branches operated outside the city of the head office, Ubl are in counties
non-contiguous to the county of the head office, most of then "belonging to
hanks operating "branches on a State-wide "basis• Branches operated "by one
member of the Transamerica group in California, the Bank of America N. T#
and S# At, account for 3&0 of the branches that are in noncontiguous counties*
Table 20 - Location of Branches or Additional Offices
of Banks in Groups, December 31, 193&
All (52) groups
Number of branches or additional offices
In
Outside head office city
Total head
Head
NonContiguous
office Total office
contiguous
counties
city
coimty
counties
Sl+7 267
441
520
96
IS principal
groups
3!+ other
groups
Of tho
769
22b
7S
5U5
27
25
^33
35
16
11
S
branches among groups9 607 arc in States pemitting branches
on a State-wide basis and §27 are in States restricting branches as to location,
as is shown in Table 21. A few years ago most of the branches among groups
wore in States restricting branches as to location, Recent changes in laws
relating to the operation of branches have increased the number of States
permitting branches on a State-wide basis.
Some of these are States where
banks in groups operate branches. The change in the logal status of branch
banking partly accounts for tho fact that the largest proportion of branches
in groups is now in States permitting branches on a State-wide basis.
Table 21 - BanidLng Offices of Banks in Gro-ups, by Groups of States
December 31* 1936
States classified according to
law (June 1, 193&) regarding
branch banking
State-wide branch banking permitted
Branches limited as to location
Establishment of branches prohibited
No provision in lav/ regarding
branch banking
Total - All States
Number
Banks
Banks
operating Branch
offices
branches
86
216
137
sr
40
2
607
227
6
40
1
7
479
69
shj
Total
banking
offices
'693
y+3
1,326
- 103 CHAPTER V
CHANGES AND SUSPENSIONS I N BANKING GROUPS
During the decade 1927-1936 changes have taken place in the
number of active groups and within the groups themselves.
Among the
important changes has been the dissolution of many group systems because of suspensions of constituent banks, because of conversion of
the constituent banks into branches of other banks in the groups* or
for other reasons.
There also have been important changes within the
groups which are still in operation because of conversions of some
banks into branches* because of mergers between and among banks within
groups* because of sales and disposition of group brinks bo outsiders*
and occasionally because of suspensions.
Through these developments
some of the results of tho experience with group banking thus far are
revealed.
Data showing changes and suspensions for the entire period 19271936
not available.
Information for groups* as distinct from chai
was compiled by the Board of Governors of the Federal Reserve System
first as of December 31* 1931 and later for December 31* 1936.
Analys
of changes that occurred within tho groups between these "two dates pre
sents the important developments during the latter half of tho decade*
a period that was characterized by a series of unusual events in
banking.
Statistics of -roup bank suspensions arc available by years for
the 7 years 1930 to 1936 and will be used in that part of this chapter
dealing with suspensions.
Information as to suspensions prior to 1930
is not available separately for banks in groups as distinct from those
- 104 in chains, although it is believed that there wore few failures of
group banks prior to 1930.
Decrease in Groups, 1931-1936.
Between December 31 * 1931 -nd December ;}1, 1936, the number of
banking groups comprehended within the definition given in Chapter I } J
decreased from 97 to 52.
The character of this change is shown in Table 22,
Table 22 - Changes in the Number of Banking Groups
Between December 31* 1931
December 31, 1936
Banking groups, December 31* 1931
Humbor
97~~~
Banking groups as of December 31* 1931* dissolved,
decreased below defined size, or not considered
group for other reasons, 1932-1936
55
Banking groups operating both on December 31,
1931 and December 31, 1936
42
Banking group counted as one December 31, 1931
and counted as two groups December 31, 193&
1
Banking groups organised, increased, to defined size,
or now considered group 011 basis of new information, 1932-1936
"
~
9
Banking groups December 31* 1936
52
A larger proportion of the "leading groups," £./ than of the smaller
groups was in continuous operation between 1931 and 1936#
This is shown
by Table 23.
T/~Supra., p. 10.
H / Groups with six or more banks and loans and investments of over
~
1 2 5 * 0 0 0 , 0 0 0 as of December 31* 1931 •
- 105 Table 23 - Changes in Leading and Other Banking Groups
Between December 31* 1951
December 31* 1936
Leading
groups
Other
groups
Dotal
Banking groups, December 31* 1931
3k
63
97
Banking groups as of Dec. 31* 1931*
dissolved, decreased below defined
size, or not considered a banking
group for other reasons
lh
ill
55
22
U2
Banking groups operating both on Dec.
31, 1931
on December 31* 1936
Changes in Banks in Active Groups
The i|2 groups which were in operation both on December 31* 1931
and on December 31* 1936 wore operating 6ll banks on the first date and
ljlf-3 banks on the second date.
The changes in tho number of banks both
for leading groups and other groups are shown in Table 2I4.
Table 2^ - Changes in the Number of Banks Between December 31*
1931 and December 31* 1936 in l\2 Groups - 20 Leading
Groups and 22 Other Groups - Operating both on
December 31* 1931 ^nd December 31* 1936
20 Leading
groups
Number of active banks, Dec. 31* 1931
Decreases:
Suspensions
Conversions to branches
Mergers, absorptions, consolidations and
voluntary liquidations
Affiliation with groups terminated
Reclassification
Total decreases
509
-
83
ill
38
5
173
Increases; Banks acquired by groups
and suspended banks reopened
J3
Number of active banks Dec. 31* 1936
359
22 Other T|2 Total
groups
groups
102
611
3
5
0
88
8
5
1
22~
k3
6
195
h
27
8k
-7
55
kk3
- 106 ~
Forty-five percent of the gross decrease of hanks in these groups
was accounted for by the conversion of banks into branches.
Such con-
versions were concentrated in States which changed their laws since 1931
so as to allow the operation of banking branches or so as to extend the
areas in which branches could be organized.
The following groups which
were still, in operation in 1936 accounted for 69 of the 88 banks converted into branches.
Number of banks
converted into branches
during 1932-1936
20
13
First Security Corporation* Ogden* Utah
Wisconsin Bankshares Corporation* Milwaukee
N orthwest B anc o r p or a I i o n * M inneapolis
Anglo National Corporation* San Francisco
First National-Old Colony* Boston* Mass.
Marine Bancorporation* Seattle* Washington
114
9
7
6
Total
69
The 55 mergers* absorptions* consolidations* and voluntary liquidations* and the 1+3 terminations of affiliation with groups accounted for
most of the remaining decreases.
It appears that the mergers* absorptions*
and consolidations were usually undertaken to close out weak and unprofitable banks or to avoid having banks compete with each other In the
same
.or nearby towns* or to effect economies.
Withdrawals from the
groups resulted from sales or transfers to outsiders or from terminations
of affiliation not based on centralized stock control.
Most of the with-
drawals were from the two large Minneapolis groups* the Wisconsin
Bankshares Corporation* and the American National Bank group of Nashville*
Tennessee.
- 10? Dir/position of Banking Groups
Tho 55 groups disappeared front the statistical records of groups
operating 5 or more banks between December Jl, 1931 "-nd December ;}1, li)j>6
for a variety of reasons.
Some were dissolved because of insolvency of
the holding company, because of suspensions of controlled banks, or because the group banks were consolidated with a key bank and operated as
branches.
Others have been omitted from the current compilation because
they control less than three banks, or because the systems are no longer
considered groups on the basis of iiiiormation now available.
of a number of factors have operated in some cases,
Combinations
A classification of
reasons is presented in Table 25 which was compiled from the best in~
formation avallable•
Table 25 - Disposition of 55 Groups which Disappeared
from the Statistical Records Between December 31*
1931 and December 3 1 , 1 9 3 6
Leading
gr oups
Insolvency of holding company because of
suspensions of controlled banks
Dissolution of group due to conversions
of banks into branches
Reclassified as being not a group on the
basis of additional information
Dissolution of group
and sale of banks
Other
groups
7
Tccal
17
2h
5
12
17
2
5
7
-
7
7
hi
55
- 1C8 -
Disposition of Banks in Dissolved Groups
Of the 367 hanks controlled by the 55 groups which disappeared from
the group statistics between December, 1931 and December
1936, 190 were
eliminated directly or indirectly by suspensions, 12ii being suspended and
66 belonging to groups which wcro eliminated from the records because of
insolvency of the controlling organizations or because of suspension of
affiliated banks as is shown in Table 26.
In some cases, groups were
dissolved or went into receivership when leading banks or other banks in
the groups suspended.
In other cases the group is still in operation
with two banks but excluded from the statistics by definition.
Con-
versions to branches accounted for 100 other banks, 79 having been converted to branches in the period 1932-1936, and 21 having been controlled
by groups which in most instances were reduced below 5 banks by conversions
of other banks into branches.
There were 38 banks which were not in-
cluded in the December 31* 1936 statistics because of reclassification of
the groups on the basis of new information.
Of the other banks
were
merged, absorbed, consolidated or placed in voluntary liquidation or in
groups reduced to two by such changes and 28 banks were sold, otherwise
disposed of or removed from the group statistics for other reasons.
The 55 groups were composed of lij. groups which had been listed as
"leading groups" on December 31* 1931* and I4I other groups.
The 1U
"leading groups" controlled I65 banks and the hrl other groups controlled
202 banks.
- 109
-
Table 26 - Disposition of Banks in 55 Groups ^hich
Disappeared from the Statistical Records Between
December 31, 1931 a*id December 31* 1936
Disposition
Loading
groups
(ik)
Other
groups
(kD
Total
groups
(55)
Number of Banks
Suspensions* 1932-1936
Banks in group December 31* 1931 removed
from statistics by insolvency of controlling organization or suspension of
other banks
Conversion to branches* 1932-1936
Banks in group December 31* 1931 removed
from statistics by conversion of other
banks to branches
Mergers* absorptions* consolidations* and
voluntary liquidations
Banks in group December 31* 1931 removed
from statistics by mergers* absorptions*
etc.* of other banks
1/68
2/56
1/2/12k
38
28
66
lAj
2AA
36
1/2/7
— 79
6
2/15
2/21
2/w
19
1/32
17
17
11
11
27
38
3/202
I/367
Affiliation with group terminated
Banks in group December 31* 1931 removed
from statistics by termination of affiliation of other banks
Banks in group December 31> 1931 removed from
statistics by reclassification on the basis
of new information
11
Total
3/l65
l/ Fourteen banks in one group suspended and later reopened; 11 of these
~~
reopened banks were converted to branches and the other 3 were consolidated with other banks.
2/ Nine banks in one group suspended and later reopened; 8 of the reopened
banks were later converted to branches of the other reopened bank.
3/ Duplications indicated in notes l/ and 2/ are removed from the total.
Several groups in which conversion to branches accounted for the
dissolution of the group or its reduction below the size included in this
study are listed below:
- 110 ~
Number of banks
in group on
1*1931
P e o p l e s T r u s t and Guaranty C o . , H a c k e n s a c k , N . J .
H a r t f o r d C o n n e c t i c u t T r u s t C o . , H a r t f o r d , ^onn.
F i r s t N a t i o n a l Bank g r o u p , Birmingham, A l a .
F i r s t N a t i o n a l Bank group* S e a t t l e , Wash.
United S t a t e s N a t i o n a l Corp., P o r t l a n d , Ore.
W o r c e s t e r County Bank & T r u s t C o . , W o r c e s t e r , M a s s .
F i r s t N a t i o n a l I n v e s t m e n t C o . , B o i s e , Idaho
9
9
6
6
11
7
10
The last two banks listed above were converted into branch systems
partly incident to reorganization of constituent banks following suspension.
There were 10 o t h e r g r o u p s i n w h i c h c o n v e r s i o n s
of banks
into
b r a n c h e s d i s s o l v e d the group or r e d u c e d the number of banks below t h r e e .
S u s p e n s i o n o f Croup Banks and D i s s o l u t i o n o f B a n k i n g Croups
Out of the 127 suspensions in group banks v/!uch were i n existence
on December 31* 1931* 12U occurred in groups which disappeared from the
statistical records.
These suspensions were a major cause for the dis-
solution of 2b of the 55 groups but suspensions occurred in 6 other groups
or 30 altogether.
The other 25 groups did not have any suspended banks.
Selected groups which dissolved as a result of important bank suspensions
between December 31* 1931 and December 31* 1936 are included in the
following list:
T o t a l group banks
Croup banks suspended
December 31*1931
1932-1936
Loans and
L o a n s and
Number i n v e s t m e n t s
Number
investments
(000 omitted)
(OOP omitted)
D e t r o i t B a n k e r s Group, D e t r o i t
G u a r d i a n D e t r o i t U n i o n Group
F i n a n c i a l I n s t i t u t i o n ' s Group,
A u g u s t a , Maine
C e n t r a l R e p u b l i c Bank and
T r u s t Company, C h i c a g o
L a f a y e t t e S o u t h S i d e Bank &
T r u s t Company, S t . L o u i s
9
27
1513,572
333,769
6
16
$1420,190
12
79,871
9
63,306
10
183,602
7
13,677
5
32,795
h
25,230
196,595
- Ill These suspensions do net cover groups dissolved before December
319 1931* or banks suspended before that time in groups which existed
on and after that date.
Table 22 above shows that of the 52 groups which appeared in the
statistics for December 31* 1936, i|2 were listed on December 31* 1931*
one was added by dividing a group into two, and 9 other new ones were
added.
The latter were organized or converted from chains since December
31, 1931* and are included in the current list of groups because their
bank holdings were increased to three or more since December 31* 1931* or
are included in the current list on the basis of information not previously available.
Three of the 9 groups, The ITow Hampshire Banksharcs
Corporation, The Trust Company of New Jersey, and The Union Bond and
Mortgage Company of Fort Angeles, "'."ash., were organized since December 31*
1931*
Two of the other 6 groups were formerly designated as chains, and
four were not in the records in 1931•
Disposition of Groups in ^hich Suspension Occurred
The suspension of one or more banks in a group has not always involved the immediate dissolution of the group and some groups have survived to the present time in spite of suspensions of constituent units.
The 201 group banks which suspended 1930-1936 belonged to I4O groups.
of the ZiO groups had suspensions in more than one year.
Six
All of these 6
groups eventually dissolved although one group was finally liquidated as
late as 1936.
There were five other groups in operation on December 31*
1936 which owned banks that suspended 1930-1936*
- 112 Even when the dissolution of a group has "been forced by the
suspension of some banks within the group, the other banks often
have continued to operate with the sazie nanes or new ones, have
merged with other banks or been succeeded*
From the 24 groups
which were forced to dissolve primarily as a result of suspensions
there were 63 banks which were listed as members of these groups on
December 31, 1931 which were in active operation on December 31, 1936.
Suspensions of Banks in Groups* 1930-1936
In the period 1930—1933 there were 200 suspensions of banks
belonging to 39 groups. There was one suspension of a bank
belonging to a group in 193^
an
& none in 1935
or
1936 # These 201
suspensions of group banks during the seven years accounted for
$1,115,916,000 of loans and investments and $1,011,360,000 of
deposits*
By Geographic Area
Over one-half of the suspended group banks were located in
the East North Central and West South Central States. Suspensions
in the East North Central States accounted for almost two-thirds
of the loans and investments of all group banks which suspended*
This concentration is the result of two very large bank suspensions,
The First National Bank—Detroit, and the Guardian National Bank of
Cornercef Detroit, Michigan, which accounted for nearly one-half of
the loans and investments, and deposits of all group banks suspended
1930-1936*
It appears, however, that depositors in these banks will
recover a large proportion of their claims before the receiverships
are closed*
areas*
Table 27 shows group bank suspensions by geographic
- 113 Tabic 27 - Suspensions of Group Banks "by
Geographic Regions, 1930-1936 2j
Percent of total
Number of
Loans
and
U
u
E
l
Nurngroups
Loans and
DoDeposits ber investhor investments
involved
A
C
T
4*
CJ
J J v b l uo
ments
(000 omitted)
Suspended hanks
Region
Hew England
Middle Atlantic
East ITorth
Central
West Horth
Central
South Atlantic
East SouthCentral
Ytest South
Central
Mountain
Pacific
Total
21
1?
152,654
44,205
125.950 10.4
38,609
8.5
13.7
4.0
12.5
3.s
5
9
55
695,219
657,859
27.3
62.3
65.0
10
10
3
28,611
20,1+99
25.654
14,040
5.0
1.5
2.6
1.8
2.5
1.4
2
1
10
88,275
78,994
5.0
7*9
7»s
4
50
11
48,164
9,903
28,386
37,935 24.9
9,839
5.5
22,480 11.9
4.3
•9
2.5
3.8
1.0
2.2
5
2
6
201 1,115,916 1 ,011,360 100.0 100.0
100.0
2/ 4o
24
1/ Ho group hanks suspended in 1935 o r 193^•
2/ Suspensions occurred in the same group in two or more geographical
areas in some cases. The total eliminates the duplications.
By States
Tablo 28 below shows the six States in which the largest number of
group suspensions occurred. These six States accounted for almost 65
percent of all group bank suspensions during I93O-I936. The State in
which the greatest number of group suspensions occurred, Arkansas,
accounted for one-fifth of all the group banks suspensions*
-
Ilk
-
Table 28 - States Listed in Order of ITuinbor of Suspensions
of Group Banks I93O-I936
State
Total National Member Nonnenber
'I , ^
1
8
2
3
1
2
1
Arkansas
Michigan
Illinois
Washington
Massachusetts
Idaho
Total 6 States
23
13
18
10
11
128
_JL
_26
-
Total 20 other
States
73
_3l
6
201
57
12
Total suspensions
1+
i+o
18
16
10
tm
2
1+
3
j6
6
J i
132
Table 29 below lists the six States in which group suspensions
accounted for the largest amount of loans and investments*
The list
of six States includes three States also included in the preceding
table*
In the case of each State included in the following table, tho
large amounts involved grew out of the difficulties of one or two important groups&
Table 29 - States Listed in Order of Amount of Loans and
Investments of Group Banks Suspended
(in thousands of dollars)
State
Mentor
Total
National
Michigan
Massachusetts
Kentucky
Illinois
Maine
Indiana
622,133
8k,8k0
59,ISO
44,031
63,306
29,005
522,226
36,1+91
37,721
3,1+91
10,962
21,972
15,310
27,390
19,317
2,373
Total 6 States
902,5^5
633,1+63
65,390
193,692
Total 20 other
States
213,371
97,229
59,760
56,332
1,115,916
735.692
125,150
255,071+
Total
mm
Nonnenber
23,997
20,1+59
2,ll+2
32,717
52,31+1+
7,033
- 115 By Years
Table 30 shows the 201 suspensions of group "banks by years during
I93O-I936.
There were 91 in 1933 compared with 109 in the three
preceding years, ono in I93U, and nono in 1935 or 1936. The group
bank suspensions during the seven years involved $1,011,360,000
of deposits, over three quarters of which were accounted for in the
year 1933*
Table 3$ - Suspensions of Group Banks, by Yoars
1930-1936 U
Suspended banks
Year Num- loans and
Deposits
ber investments
(000 omil3 ted)
1930
1931
1932 ,
1933 &
193^
1935-36
Total
53 $
21
35
91
l
-
201
117,332
76,330
52,127
361 ,gi47
7,7SO
-
1,115,31.6
$
Percent of total
Num- Loans and
ber investments Soposits
10^,007 26.4
70,646 10.U
17.4
736,533 ^5.3
8,607
.5
-
1,011,360 100*0
10.5
6.9
V
17'Z
.7
-
100.0
10.3
7.0
3.9
7S.0
.8
100*0
Fiimber of
groups
involved
r
t>
7
9
29
1
3jbo
1/ Ho group banks suspended in 1935 o r 1936.
2/ Includes S banks with $13,610,000 of loans and investments and $9,1^1,~
000 of deposits which suspended between January 1, 1933 a n d March 15,
1933; ^ licensed banks with $26,870>000 of loans and investments and
$22,3^2,000 of deposits which suspended between March l6, 1933 and
December 31, 1933; ^ "banks with $700,760,000 of loans and investments
$650,300,000 of deposits not licensed following the holiday and subsequently placed in liquidation or receivership; and 33 banks with
$120,607,000 of loans and investments and $106,755,000 of deposits
not licensed by June 30, 1933 "but licensed at one time or another
after that date*
3/ Suspensions occurred in the sane group in two or more yoars in several
cases. The total eliminates the duplications*
- 116 -
By Glass of Bank:
Of the 201 group "banks which suspended during 193^193^ >
were nonnenber banks» .About two-thirds of the suspensions of national banks in groups occurred in 1933 anong banks which were not
licensed following the banking holiday. National banks accounted
for alnost JO percent of the deposits of all group banks which suspended, due to the two large national banks in Detroit.
Table yi ~ Suspensions of Group Banks
By Classes, 1930-1936 1/
Class of
bank
National
State Menber
Nonnenber
Total
Total
1930-193^
57
12
132
201
1930
1931
1932
1933
6
2
Jfi
53
7
2
12
21
6
1
23
35
33
i
91
1934
«M*
_1
1
Loans and Investments
(In thousands of dollars)
735.692
National
125,150
State Menber
255.P7i
Nonnenber
1,115,916
Total
53,365
33,100
30,867
117.332
40,636
11,020
25,174
76,230
15,353
2,373
33,3,^6
52,127
Sbl,S47
of dollars)
37,080
11,015
8,665
2,231
24,901
26,316
70,646
39,562
593,750
64,125
13Q,6£S
783,533
625,333
73,157
mm
7.730
7,730
Deposits
(In thousands
694,787
52,942
National
25,451
100,472
State Member
25,6l4
216,101
Nonnenber
104,007
Total
1,011,360
1/ No group banks suspended in 1935 o r 3-936•
•M
3,607
3,607
- 117 -
By Size of Bank
For the group hanks which suspended in 1930-193^ deposits
averaged $5,030,000, Of the 201 "banks 85, or 42 percent9 load
loans and investments of $1,000,000 or more.
Tho Banco Kentucky
Caldwell - A.B. Banks system suspensions in 193°» however, included
many small banks so that only 19 percent of the suspended group
banks in that year had loans and investments of $1,000,000 or more.
Tables 3^, 33f
3^ present details of group bank suspensions
by size of bank and by years.
Table 3?- - Suspensions of Group Banks, by Size of Loans
and Investments, I93O-I936 1/
Size group
Loans and
investments
(000 omitted)
Under $100
100 - 3.1+9
150 - 2U9
250 - U99
500 - 999
1,000 ~ 1,999
2,000 - 4,999
5,000 - 9,999
10,000 - 1+9,999
50,000 and over
Total
Suspended banks
Loans and
Number
investments
(000 omitted)
20
15
27
25
12
19
2
1,271
1,820
4,524
o,30S
23,977
39,314
76,941
33,646
336,471
489,644
201
1,115,916
24
3b
1/ !To group banks suspended durin.g 1935 or 1936.
Percent of total
Loans and
ilumber investments
10.0
11.4
11.9
16.9
13.4
12.4
6.0
9.5
1.0
.1
.2
.4
•7
2»2
3.5
6„9
7»5
34.6
100.0 100 oO
- IIS Table 33 - Number of Suspensions of Group Banks "by Size of
Loans and. Investments, and by Years
1930~193S U
Size group
Loans and
investments
(000 omitted)
Under $100
100 - 149
150 - 249
250 - 499
500 - 999
1,000 - 1,999
2,000 - 4,999
5,000 - 9,999
10,000 - 49,999
50,000 and over
Total
Total
1930
1931
1932
1933
20
15
11
g
10
6
8
2
3
l
l
2
2
3
3
4
9
5
6
3
6
3
8
14
i4
13
13
5
13
2
?
24
3^
27
25
12
19
2
201
-
5
-
3
7
3
3
1
-
—
—
—
53
21
35
1934
-
-
-
1
**
—
91
1
1/ Ho group tanks suspended in 1935 o r 1936.
Table 3^ *" Loans and Investments of Suspended Group
Banks "by Size of Loans and Investments and by
Years, 1930-1936 1/
(In thousands of dollars)
Size group
Loans and
investments
Total
Under $100
100 - 1U9
150 - 2U9
250 - i+99
500 - 999
1,000 - 1,999
2,000 - 4,999
5,000 - 9,999
10,000 - 49,999
596
1,271
961
1,820
2,111
4,524
2,184
8,308
23,977
5,^3
2,143
39,31^
76,941 6,940
83,646
;S6,471 96,934
t [•89,644
-
1930
1931
89
116
379
-
2,649
10,273
11,232
23,603
28,4g4
-
1932
145
415
509
1,399
6, 3 4R
7,204
18,052
18,058
-
1933
1934
44l
32s
1,525
4,725
9..520
19,629
40,717
34,205 7,780
261,953
489,644
50,000 and over
l , l l 5 , 9 l S 117,332
76,830
Total
1/ No group banks suspended in 1935 o r 193°•
52,127
SSl,S47 7,780
- 119 Disposition of Suspended Banks
Of the 201 group hanks which suspended 1930-1936, over half, or 108,
were reopened, succeeded by a new bank or taken over by another bank. Of
the other 93 banks, 21 were in liquidation, one was completely liquidated,
and the disposition of the remaining 71 I s unknown but it is presumed that
most of them are being liquidated as no further information is available
regarding them and they have not been reported as having reopened. Table
35 shows the disposition of the 20l suspended banks by years.
Table 35 - Disposition of Suspended G-roup Banks
by Years, 1930-1936 l/
Year of Total
Succeeded Taken over In process Complete- Disposition
suspen- suspen- Reopened
by another of liqui- ly licruiby
not
sion
bank
new ban1:
dnted
sions
dation
recorded
1930
53
22
1931
21
5
1932
35
13
1933
31
36
193U
1
Total
201
1
30
16
1
23
7
4
21
1
76
2U
g
1/ Ho group banks suspended in 1935 o r 1936.
21
21
1
71
-
-
120
Suspension of Individual
Bank Groups
A n e x a m i n a t i o n o f the f a c t s w i t h r e s p e c t t o a few i m p o r t a n t
i n w h i c h banks s u s p e n d e d w i l l
which the s u s p e n s i o n s
groups
serve to i l l u s t r a t e the circumstances
occurred.
M a t e r i a l presented i n the
under
following
p a r a g r a p h s w i t h r e s p e c t t o t h r e e c a s e s h a s been t a k e n f r o m p u b l i c
records;
Banco K e n t u c k y - C a l d w e l l - A . B . Banks Group S y s t e m
A• B. Banks o f L i t t l e R o c k , A r k a n s a s ,
i n t h r e e i n s u r a n c e companies
owned a c o n t r o l l i n g
and two p e r s o n a l h o l d i n g companies
u s e d t h e i n s u r a n c e companies as w e l l as h i s p e r s o n a l h o l d i n g
t o c a r r y t h e s t o c k of banks c o n t r o l l e d by him..
of the insurance
companies
participated
of s e v e r a l S t a t e s i n w h i c h t h e companies
t h e r e was a g e n e r a l agreement by t h e i n s u r a n c e
t h e bank s t o c k h o l d i n g s .
and
F o l l o w i n g an e x a m i n a t i o n
company i n t h e e a r l y p a r t o f 1928 w h i c h was
i n by r e p r e s e n t a t i v e s
interest
operated,
companies t o d i s p o s e
T h i s was n o t done b u t a c o n t r o l l i n g
i n the i n s u r a n c e companies was s o l d t o C a l d w e l l and Company o f
of
interest
Nashville,
T e n n e s s e e , and i t was a g r e e d t h a t t h e p u r c h a s e r m i g h t u s e a p a r t o f t h e
p u r c h a s e p r i c e t o remove u n d e s i r a b l e a s s e t s f r o m t h e i n s u r a n c e c ompan 3. e s *
The " u n d e s i r a b l e a s s e t s "
r e f e r r e d t o were bank s t o c k s *
I n the
p a r t of 1930 Roger C a l d w e l l exchanged p a r t o f t h e s t o c k o f h i s
C a l d w e l l and Company, f o r s t o c k o f t h e Banco K e n t u c k y o f
Kentucky.
The i n t e r - r e l a t i o n s
early
company,
Louisville,
among t h e s e g r o u p s y s t e m s a r e t o o
and c o m p l i c a t e d t o d e s c r i b e f u l l y i n a s h o r t
diverse
account.
On November 5, 1 9 3 0 , C a l d w e l l and Company was p l a c e d u n d e r t h e
con-
t r o l o f a committee o f N a s h v i l l e b a n k e r s and t h e s u b s i d i a r y b a n k s were
c l o s e d or t a k e n o v e r b y o t h e r i n t e r e s t s
soon a f t e r .
On November 1 7 ,
the A m e r i c a n Exchange T r u s t Company, l e a d i n g u n i t o f the A , B . Banks
1930
i n t e r e s t s , and the N a t i o n a l Bank o f K e n t u c k y , l e a d i n g u n i t of t h e
Kentucky group, c l o s e d .
The r e l a t e d u n i t s ,
i n s u r a n c e c o m p a n i e s , and
h o l d i n g c o m p a n i e s , were p l a c e d i n r e c e i v e r s h i p s
In all
Banco
shortly
thereafter.
o f t h e s e g r o u p s t h e most i m p o r t a n t cause o f w e a k n e s s was
e x p l o i t a t i o n b y the o w n e r s .
R o g e r C a l d w e l l expanded h i s
o p e r a t i o n s w i t h the funds c o n t r o l l e d by him.
A . B . Banks p a p e r was
p l a c e d i n most o f t h e u n i t banks c o n t r o l l e d b y h i m .
The N a t i o n a l
o f K e n t u c k y was d o m i n a t e d by James B . Brown who u s e d h i s
the bank t o f u r t h e r p r i v a t e b u s i n e s s
business
control
Bank
of
interests.
These s y s t e m s a c c o u n t e d f o r t h e s u s p e n s i o n o f 47 b a n k s
operating
8 b r a n c h e s and h a v i n g l o a n s and i n v e s t m e n t s o f $ 1 1 1 , 4 9 4 , 0 0 0 and d e p o s i t s
of
$99,686,000.
The D e t r o i t B a n k e r s
Company
The D e t r o i t B a n k e r s Company was o r g a n i z e d on J a n u a r y 8 , 1930
t h r e e months o f n e g o t i a t i o n s .
l a r g e D e t r o i t banks and a t r u s t
T h i s h o l d i n g company s t a r t e d w i t h
company.
four
Tho P e o p l e s Y'ayne County B a n k ,
The F i r s t N a t i o n a l B a n k , t h e Bank o f M i c h i g a n , t h e P e n i n s u l a r
Bank and t h e D e t r o i t T r u s t Company.
after
I n order to c e n t r a l i z e
State
management
d u r i n g t h e f o r m a t i v e p e r i o d t h e v o t i n g p r i v i l e g e was l i m i t e d t o 120
"trustee"
s h a r e s o f $10 p a r value" s t o c k w h i c h were h e l d b y t w e l v e men
d e s i g n a t e d i n the c o r p o r a t i o n c h a r t e r a s t r u s t e e s .
was l a t e r
This plan of
control
abandoned.
The group p l a n n e d t o c o v e r o n l y t h e D e t r o i t m e t r o p o l i t a n a r e a .
Several
banks i n s u r r o u n d i n g towns were a c q u i r e d where b r a n c h e s c o u l d n o t be
l i s h e d under t h e l a w .
The h o l d i n g company v e r y e a r l y i n c u r r e d
i n order to purchase p a r t i a l i n t e r e s t s
i n a number o f u p - S t a t e
estab-
indebtedness
banks.
- 122 These s t o c k s were a c q u i r e d by a s u b s i d i a r y , t h e F i r s t N a t i o n a l
Company,
w h i c h b e l i e v e d t h a t i t had r e c e i v e d a c o m m i s s i o n f o r s u c h p u r c h a s e s
the o r g a n i z e r s
of the D e t r o i t
B a n k e r s Company.
Although the
Bankers
Company was n o t bound l e g a l l y t o g u a r a n t e e t h e o b l i g a t i o n i n v o l v e d
such purchases,
i t d i d so and the r e s u l t i n g debt was a m a t t e r o f
tinued d i f f i c u l t y throughout the
by
in
con-
depression.
I n May 1 9 3 0 , the Bank o f M i c h i g a n and the P e n i n s u l a r S t a t e
Bank
were merged w i t h t h e P e o p l e s Wayne C o u n t y Bank, and on December
1 9 3 1 , t h o P e o p l e s Wayne C o u n t y Bank was merged w i t h t h e F i r s t
31,
National
Bank t o f o r m t h e F i r s t Wayne N a t i o n a l Bank o p e r a t i n g 179 b r a n c h e s .
O c t o b e r 8, 1 9 3 2 , t h e t i t l e
al Bank-Detroit.
o f t h i s b a n k was changed t o t h e F i r s t
On
Nation-
At the end o f 1932 t h e group o p e r a t e d the D e t r o i t
Trust
Company and s e v e r a l s m a l l s u b u r b a n b a n k s i n a d d i t i o n t o t h o k e y bank*
It
i s a p p a r e n t t h a t the owners d i d n o t i n t e n d t o o p e r a t e a n y t h i n g more t h a n
a m e t r o p o l i t a n bank s y s t e m .
The p u r c h a s e o f p a r t i a l
interest i n non-
s u b u r b a n banks was c o n s i d e r e d a m i s t a k e and n o t a p a r t o f t h e
group p l a n .
A t t h e S t o c k Exchange P r a c t i c e s h e a r i n g s
M r . E . D. S t a i r , p u b l i s h e r
o f t h e D e t r o i t Free P r e s s ,
i n 1933 and 1 9 3 4 ,
and p r e s i d e n t
t h e D e t r o i t B a n k e r s Company f o r a p e r i o d d e c l a r e d t h a t he was
t o g r o u p b a n k i n g and a l w a y s had b e e n . i /
regular
opposed
The group a t t e m p t e d t o
rational-
i z e the complicated branch l o c a t i o n problem i n the c i t y of D e t r o i t
had r e s u l t e d f r o m t h e merger o f the s e v e r a l f o r m e r l y competing
offices
which
banks.
D u r i n g 1932 t h e number o f b r a n c h e s was r e d u c e d f r o m 179 t o 1 4 7 .
original
of
The
competing banks w h i c h had composed the g r o u p had many b r a n c h
l o c a t e d i n t h e same n e i g h b o r h o o d ,
f r e q u e n t l y on the same
four-
corners.
1/ U. S . C o n g r e s s , S e n a t e Committee on B a n k i n g and C u r r e n c y , H e a r i n g s
~~ S t o c k Exchange P r a c t i c e s , , P'krt 11, p . 5 4 0 2 .
on
- 123 -
The holding company attempted to pay a stable dividend rate in
order to stabilize the market for its stock.
The maintenance of hold-
ing company dividends necessitated a maintenance of dividends by subsidiary units and in several cases this carried a dangerous reduction
of liquidity.
The credit practices and the efficiency of the loan of-
ficers were improved.
The time at which such improvements were initiated,
however, was too late to effect a full correction of undesirable conditions
which had formerly prevailed.
The consolidation of the large Detroit banks
revealed substantial loans to officers, directors, and their interests and
in many cases these loans were secured by holding company stock.
This con-
dition does not necessarily indicate that such credit extensions were made
after the formation of the holding company unit.
Many of the original
credit extensions may have been collateraled by unit bank stock which
was exchanged for holding company stock, and in other cases the holding
company stock may have been received as additional security on loans which
were made originally for other purposes and on other security.
Another
weakness of the loan portfolios was the excessive amount of real estate
paper.
The post-war development of Detroit real property was rapid and
spectacular.
A very large number of the Detroit fortunes were based
on real estate appreciation and it was only natural that the large banks
should be real estate minded.
The depression and the decline in busi-
ness activity were very severe and the market for Detroit real estate
was greatly depressed and disordered.
-
12k
-
There was a l a r g e s h r i n k a g e o f d e p o s i t s i n 1931, 1 9 3 2 , and 1933
up t o t h e b a n k i n g h o l i d a y , and a l t h o u g h the banks e n t e r e d t h e
depression
i n a r e a s o n a b l y l i q u i d p o s i t i o n , t h e y were u n a b l e t o p r e s e r v e t h i s
condi-
t i o n p a r t i c u l a r l y because of t h e l a r g e p r o p o r t i o n o f c a p i t a l and f i x e d
loans.
I n the r e h a b i l i t a t i o n p e r i o d f o l l o w i n g the b a n k i n g h o l i d a y the
F i r s t N a t i o n a l B a n k - D e t r o i t was not reopened, and t h e r e were 5 o t h e r
s u s p e n s i o n s w i t h i n the g r o u p .
was a p p o i n t e d i n A p r i l 1 9 3 3 .
A r e c e i v e r f o r the h o l d i n g company
The F i r s t N a t i o n a l B a n k - D e t r o i t had 147
b r a n c h e s , $ 3 7 9 , 7 8 8 , 0 0 0 o f l o a n s and i n v e s t m e n t s and $ 3 7 3 , 3 6 0 , 0 0 0
d e p o s i t s a t the t i m e of
of
suspension.
The G u a r d i a n D e t r o i t Group,
Inc.
The G u a r d i a n D e t r o i t Group, I n c . , was o r g a n i z e d May 1 0 , 1929 f o r
the p u r p o s e of owning and o p e r a t i n g two b a n k s , a t r u s t company,, and a
s e c u r i t y company, a l l l o c a t e d i n D e t r o i t .
The U n i o n Commerce C o r p o r a -
t i o n was formed a t about the same time f o r the p u r p o s e o f o p e r a t i n g a
bank and a t r u s t
company.
The two h o l d i n g companies merged on November
12, 1929 t o form the G u a r d i a n D e t r o i t U n i o n Group, I n c .
T h i s new b a n k -
i n g group s e t out i m m e d i a t e l y on a program of e x p a n s i o n and a c q u i r e d a
number o f s m a l l banks i n D e t r o i t
established.
suburbs i n w h i c h b r a n c h e s c o u l d n o t be
The group s e c u r e d s t o c k h o l d i n g s
i n e l e v e n southern M i c h i g a n
banks and t r u s t companies beyond t h e D e t r o i t u r b a n a r e a .
The banks
u s u a l l y were a c q u i r e d by an exchange of group s t o c k f o r bank s t o c k but
i n a few c a s e s bank s t o c k was p u r c h a s e d f o r c a s h .
to secure a l l
of the stock of c o n t r o l l e d banks.
The group attempted
At t h e end of 1930
the e x p a n s i o n p r o g r a m was h a l t e d because of u n c e r t a i n t i e s
caused by
- 125 tho d e p r e s s i o n .
The g r o u p h a d some h o l d i n g s
m i d - S t a t e "banks a t t h a t t i n e ,
i n each o f e i g h t
snail
i n a d d i t i o n to t h o s e m e n t i o n e d a b o v e .
The B a n k o f D e t r o i t was merged w i t h the G u a r d i a n D e t r o i t B a n k on
July i t
1 9 3 0 , and t h i s bank was merged w i t h the N a t i o n a l B a n k o f
Commerce on December 31, 1 9 3 1 to f o r m The G u a r d i a n N a t i o n a l B a n k o f
Commerce.
The two t r u s t
companies were merged i n t o t h e U n i o n G u a r -
d i a n T r u s t Company i n M a r c h 1 9 3 0 *
The h o l d i n g company e x a c t e d d i v i d e n d s from many o f i t s u n i t s
far
b e y o n d the l i m i t s of s a f e t y i n o r d e r to m a i n t a i n d i v i d e n d s on g r o u p
stock.
Many o f the b a n k s h a d l o a n e d s u b s t a n t i a l amounts t o
directors,
and t h e i r i n t e r e s t s .
volved in real estate loans.
officers,
Some o f the b a n k s were h e a v i l y
in-
The weakness o f l e n d i n g methods h a d u n -
d e s i r a b l e e f f e c t s on the l o a n p o r t f o l i o s o f some o f tho
controlled
b a n k s , w h i c h the h o l d i n g company a t t e m p t e d t o c o r r e c t .
The
h o w e v e r , p r e v e n t e d much accomplishment
in t h i s connection.
the g r o u p b a n k s s u f f e r e d d e p o s i t w i t h d r a w a l s b e c a u s e t h e
depression,
Many o f
declining
market f o r t h e s t o c k o f the h o l d i n g company r e d u c e d c o n f i d e n c e i n
the
banks.
B y December 31» 1932, the U n i o n G u a r d i a n T r u s t Company ^ a s i n an
u n s a t i s f a c t o r y p o s i t i o n and was l o s i n g d e p o s i t s r a p i d l y .
Negotiations
w i t h the R e c o n s t r u c t i o n F i n a n c e C o r p o r a t i o n f o r a s s i s t a n c e were n o t
s u c c e s s f u l and on
February lUf 1933» the M i c h i g a n b a n k i n g h o l i d a y
was d e c l a r e d i n o r d e r to a v o i d c l o s i n g the t r u s t company.
I n the
r e h a b i l i t a t i o n f o l l o w i n g the b a n k i n g h o l i d a y n e i t h e r o f t h e two
large
u n i t s o f the g r o u p , the G u a r d i a n N a t i o n a l B a n k o f Commerce and t h e
- 126 -
Union Guardian Trust was reopened.
There were lU other units which were
not promptly opened following the holiday*
the group holding company in April 1933•
group had 59 branches, $196,595*000 of
069,000 of deposits.
A receiver was appointed for
The l6 suspended hanks in this
loans and investments and $183*-
CHAPTER V I
EVALUATION OF GROUP BANKING AS A TYPE OF
BANKING- ORGANIZATION
Thus f a r
in this
s t u d y d e v e l o p m e n t s w i t h r e f e r e n c e t o group
banking
have been d i s c u s s e d w i t h o u t a t t e m p t i n g t o e v a l u a t e i t a s a t y p e o f
organization. ^This
disadvantages
c h a p t e r u n d e r t a k e s an a n a l y s i s
banking
of the advantages
and
o f g r o u p b a n k i n g a s an a l t e r n a t i v e t o b r a n c h b a n k i n g and t o
u n i t banking i n the United
States.
Group B a n k i n g ana Branch B a n k i n g
Compared
Group b a n k i n g h a s d e v e l o p e d l a r g e l y as a s u b s t i t u t e
for branch banking,
p a r t i c u l a r l y i n a r e a s where b r a n c h e s are p r o h i b i t e d or l i m i t e d by l a w .
It
a p p e a r s t o have few, i f a n y , a d v a n t a g e s , as compared w i t h b r a n c h b a n k i n g ,
i f r e s t r i c t e d t o t h e same a r e a s o f o p e r a t i o n as b r a n c h banking®
the p r i n c i p a l
advantages t h a t group banking i s
bank I n a g r o u p r e t a i n s
directors.
its
legal
One o f
s a i d t o have i s t h a t
i d e n t i t y and i t s
local
officers
I t i s f e l t t h a t t h r o u g h such l o c a l o f f i c e r s and
each
and
directors,
who may r e t a i n a g r e a t e r degree o f independence t h a n managers o f
branches,
more f a m i l i a r i t y and sympathy w i t h l o c a l p r o b l e m s c a n be m a i n t a i n e d .
Such a n a d v a n t a g e , h o w e v e r , i f i t
is
one, does n o t a l w a y s e x i s t ,
e x p e r i e n c e shows t h a t t h e g r o u p s s o o n e r o r l a t e r b r i n g t h e i r
banks u n d e r a s u b s t a n t i a l
when t h e g r o u p s were f i r s t
relatively little
degree o f c e n t r a l
control.
I n some
o r g a n i z e d , the h o l d i n g company
constituent
instances
exercised
c o n t r o l o v e r n e w l y a c q u i r e d b a n k s , b u t as time h a s
p a s s e d t h e t e n d e n c y seems t o have been f o r t h e degree o f c o n t r o l
the l o c a l b o a r d o f d i r e c t o r s t o d e c r e a s e and the degree o f
since
- 127 -
of
ccntral
- 12S control to increase.
When such a situation has heen reached, the hank in
the group is not much more than a branch, except that it may he more expensive to operate and the capital of all of the hanks in the group does
not serve as a protection to the depositors in any one hank®
Additional evidence that group hanking has few, if any, advantages
as compared with branch banking
is found in the opinions of a majority of
the group bankers themselves who have discussed the advantages of group banking, as compared with branch banking
cent years®
before Congressional committees in re-
These opinions are summarized as follows:
L. E » Wakefield, President, First National Bank of Minneapolis
"I recognize that in advocating state-wide branch banking
at this time, I am departing from opinions I expressed in my
testimony before the subcommittee a year ago® I admit that
frankly. We have learned by our experience of the last three
years how much more effective branch banking would be than
group banking. I do not think that a year ago the people
in the country districts were ready to accept branch banking, but this sentiment has undergone a great change, and
I am certain that the majority of these people are not only
no longer opposed to branch banking but anxiously hope that
it will be accomplished with the least possible delay.'1 1/
Mr® Wakefield also implied at the same time that he made this statement
that the group banking organization with which he is connected would be
willing to convert the banks of its group into branches if permitted by law.
Thomas R. Prestony President, Hamilton National Bank, Chattanooga, expressed the opinion that it will be
"....all right to abolish group banking" altogether if it
were possible to turn to branch banking. 2/
1/ U# S* Congress, 72nd, 1st Session, Senate hearings, S# *+115t March 1932,
P . 3^-1.
2/ Ibid., p. 327.
- 129 -
B . T . T r a f f o r d , V i c e C h a i r m a n , F i r s t N a t i o n a l Bank o f
Boston.
" M r . T r a f f o r d : . . . I do n o t t h i n k i t i s o p p o r t u n e t o
open the c o u n t r y to b r a n c h b a n k i n g on a l a r g e s c a l e ,
at t h e p r e s e n t t i m e . . . . I do n o t see any need f o r b r a n c h
b a n k i n g i n Nov/ E n g l a n d .
"The A c t i n g Chairman:
He ( C o m p t r o l l e r o f t h e C u r r e n c y )
speaks o f trade areas w h i c h . . . i s a p r e t t y i n d e f i n i t e
term.
I t m i g h t be a r a d i u s o f IOC m i l e s i n the E a s t
and a t h o u s a n d m i l e s i n the W e s t .
But whatever t h a t
m i g h t mean, b r a n c h b a n k i n g somewhat a l o n g t h e E n g l i s h
1 i n e , pe r h a p s .
"Mr. Trafford:
areas....
We would l i k e t h a t . . . . Y e s ,
i n trade
" I , p e r s o n a l l y would p r e f e r the b r a n c h - b a n k i n g
method ( o f b a n k i n g ) .
I t seems t o me t h e r e s p o n s i b i l i t y
i s more c e n t r a l i z e d ( t h a n i n g r o u p or c h a i n b a n k i n g ) 1 . J
W. R. M c Q u a i d , P r e s i d e n t , B a r n e t t N a t i o n a l B a n k ,
Jacksonville.
" H o l d i n g companies were c r e a t e d b e c a u s e F e d e r a l
law d i d n o t , and many s t a t e s do n o t , p e r m i t s t a t e - w i d e
branch banking.
" A s a bank hiaving a f f i l i a t e d b a n k s i n o u r S t a t e we
would welcome the o p p o r t u n i t y t o c o n v e r t t h e s e s e p a r a t e
a f f i l i a t e d b a n k s i n t o b r a n c h e s and f e e l t h a t o t h e r b a n k s
h a v i n g a f f i l i a t e d b a n k s w o u l d do l i k e w i s e .
" . . . M y p r e f e r e n c e . . . w o u l d be t o c o n f i n e i t
banking) to State l i m i t s . " 2/
(branch
1/ U . S . C o n g r e s s , 7 1 s t , 3d S e s s i o n , Senate h e a r i n g s , S . R e s . 7 1 , J a n u a r y
1931, pp. 243, 245, 246.
2 / U . S . C o n g r e s s , 7 2 n d , 1 s t S e s s i o n , Senate h e a r i n g s , S . 4 1 1 5 , March 1932,
p. 290.
- 13Q -
John E# O t t l e y , P r e s i d e n t , F i r s t N a t i o n a l Bank,
Atlanta.
ff
As between group banking and branch banking under
proper regulations, I have no hesitation in saying that
I advocate the latter," 1/
Gordon L# Groover, Vice President,Citizens i Southern National Bank,
Savannah.
"I do not mind telling you that I am in favor of
branch banking, under certain restrictions. I think
it ought to be worked out very carefully, however.M 2/
Robert 0. Lord, President, Guardian Detroit Union Group (suspended in
1933).
"Senator Couzens: Would you be willing to abandon group
banking if branch banking was permitted throughout the
State?
"Mr. Lord: Yes, sir, and we would put our banks into
one institution, a national bank," 3/
Several group bankers, however, have at one time or another expressed
the opinion that group banking offers advantages over branch banking,
The
opinions of these bankers are summarized as follows:
George F, Rand, President, Marine Trust Company, Buffalo, expressed
the opinion that the record made by group banks throughout the country has
demonstrated the economic soundness of the principle upon which they have
been organized and that it is doubtful if branch banking would be a satisfactory alternative, kf
J* Cameron Thomson, Vice President, Northwest Bancorporation,
Minneapolis*
1/ Ibid,, p. TL7«
g! U* St Congress, 72nd, 1 s t Session, House hearings, E.
(1021+1) 1 1 3 6 2 ,
March and April 1932.
3 / U» S, Congress, 72nd, 1st Session, Senate hearings, S, U115, March 1932,
P. 1 J U
y
> pp.
- 131 -
" M r . Thomson:
I t h i n k t h a t group h a n k i n g , owned by the
p u b l i c and o p e r a t e d by the l o c a l p e o p l e ,
v e r y much
p r e f e r a b l e t o a b r a n c h . • • s y s t e m owned by an i n d i v i d u a l
o r c o n t r o l l e d by one i n t e r e s t , w i t h o u t t h a t l o c a l
i n t e r e s t and management.
" S e n a t o r Norbeck:
You f e e l t h a t t h e b r a n c h - b a n k
w o u l d have t o o much o f a t e n d e n c y t o c e n t r a l i z e ?
tT
Mr• Thomsons
system
There a g a i n i t depends upon management...
" I n o u r s e c t i o n o f the c o u n t r y . . . w e t h i n k t h a t
group b a n k i n g i s p r e f e r a b l e to g e n e r a l b r a n c h b a n k i n g
in that t e r r i t o r y . " l /
Professor
Chapman, i n h i s a n a l y s i s
group b a n k i n g w i t h b r a n c h b a n k i n g ,
concludes that branch banking i s
of c h a i n and g r o u p b a n k i n g ,
i n the f o l l o w i n g s t a t e m e n t . 2 j <
s u p e r i o r i n most
compares
He
respects.
" T h e r e does n o t a p p e a r t o be any marked advantage i n a
group s y s t e m t h a t c o u l d n o t be a t t a i n e d by* b r a n c h b a n k i n g .
Of t h e t w o , b r a n c h b a n k i n g i s t h e more d e s i r a b l e from, a
s o c i a l p o i n t of v i e w f o r the r e a s o n t h a t a g r e a t e r degree
o f r e s p o n s i b i l i t y may be p l a c e d upon t h e management and t h e
b r a n c h e s may be more s u c c e s s f u l l y examined and s u p e r v i s e d .
There I s l e s s expense a t t a c h e d to the o p e r a t i o n of a b r a n c h
t h a n to a n i n d i v i d u a l bank under t h e group s y s t e m .
Capital
r e q u i r e m e n t s ma3r be more a c c u r a t e l y a d j u s t e d t o t h e needs
o f t h e community under b r a n c h b a n k i n g , t h u s r e n d e r i n g t h e
cost of banking s e r v i c e l e s s .
I n a group s y s t e m banks
w i l l be o p e r a t e d o n l y i n l o c a l i t i e s where p r o f i t s may be
made, and s i n c e the c o s t of o p e r a t i n g a bank i s g r e a t e r
t h a n o f a b r a n c h , t h e r e a r c l i k e l y t o be more b r a n c h e s
l/ U* 3® Congress, 71st, 3rd Session, Senate hearings, S« Res# 71» March
1931• P®
gj Chapman, John M# in Willis and Chapman, The, Banking, Situation, Ch# XVI,
p« 39I, Columbia University Press, New York, 193^*
- 132 e s t a b l i s h e d u n d e r b r a n c h s y s t e m s t h a n u n i t banks
u n d e r p*roup s y s t e m s .
I f t h i s be t r u e , b r a n c h
b a n k i n g w i l l p r o v i d e more b a n k i n g o f f i c e s w h i c h
w i l l r o a c h a l a r g e r number o f i n d i v i d u a l s or
communities
I n connection w i t h the f i n a l
t h e above s t a t e m e n t
it
as i n d i c a t e d i n Chapter
is
p o i n t made by p r o f e s s o r Chapman,
o f i n t e r e s t t o n o t e t h a t i n o n l y one
I I , has a p r i n c i p a l
b a n k i n g s e r v i c e s t o communities t h a t were w i t h o u t them.
subsidi-
B r a n c h e s , on t h e
o t h e r hand, have been e s t a b l i s h e d de n o v o i n many i n s t a n c e s t o
two-thirds
instance,
group e s t a b l i s h e d a
a r y do novo t o p r o v i d e b a n k i n g s e r v i c e s t o c o m m u n i t i e s .
in
provide
In fact,
nearly
o f t h e b r a n c h e s now i n o p e r a t i o n i n t h e U n i t e d S t a t e s were
e s t a b l i s h e d de n o v o .
Group B a n k i n g and U n i t B a n k i n g Compared
P r o p o n e n t s o f g r o u p b a n k i n g b e l i e v e t h a t i t has p r o n o u n c e d a d v a n tages over u n i t b a n k i n g .
may be summarized as
The ones t h a t f r e q u e n t l y have been p o i n t e d
follows:
1 . T h r o u g h group b a n k i n g sor.e o f the b e n e f i t s
o f b r a n c h b u n k i n g are p r o v i d e d i n a r e a s where b r a n c h e s
a r e p r o h i b i t e d o r l i m i t e d by lav/ and t h e e s t a b l i s h m e n t
o f b r a n c h e s i s f a c i l i t a t e d i n S t a t e s where t h e y a r e
permi t t e d .
2.
B e t t e r t r a i n e d , mere e f f i c i e n t and a b l e r
management o f t h e c o n s t i t u e n t banks i s made p o s s i b l e
through the o r g a n i z a t i o n of groups.
3 . More e f f i c i e n t c r e d i t f a c i l i t i e s f o r t h e b u s i n e s s community and more s a t i s f a c t o r y d i v e r s i f i c a t i o n o f
l o a n s and i n v e s t m e n t s a r e p o s s i b l e t h r o u g h g r o u p o r g a n i zations.
4.
Group b a n k i n g p r o v i d e s more adequate f a c i l i t i e s
f o r f o r m u l a t i n g investment p o l i c i e s and f o r h a n d l i n g tho
i n v e s t m e n t s o f the b a n k s .
out
- 133 -
5. More adequate f a c i l i t i e s f o r d e v e l o p i n g and h a n d l i n g
f i d u c i a r y b a n k i n g s e r v i c e s a r e made p o s s i b l e t h r o u g h g r o u p s
t h a n are p o s s i b l e f o r t h e banks o p e r a t i n g i n d i v i d u a l l y .
6 . Many o p e r a t i n g economies t o the member b a n k s a r e
p o s s i b l e t h r o u g h the group o r g a n i z a t i o n s t h a t c o u l d n o t be
a c c o m p l i s h e d by t h o u n i t s i n d i v i d u a l l y .
7. T h r o u g h t h e i r a f f i l i a t i o n w i t h g r o u p s , many o f t h e
c o n s t i t u e n t s o b t a i n e d a s s i s t a n c e d u r i n g the b a n k i n g c r i s i s
and were a i d e d and s t r e n g t h e n e d a f t e r t h e c r i s i s , and l o s s e s
t o t h e i r d e p o s i t o r s were p r e v e n t e d .
P e r h a p s the most i m p o r t a n t a d v a n t a g e w h i c h g r o u p b a n k i n g i s s a i d t o
have o v e r u n i t b a n k i n g i s t h a t i t
i s a means by w h i c h some o f the
results
ef b r a n c h b a n k i n g a r e g a i n e d i n a r e a s and under c i r c u m s t a n c e s where b r a n c h e s
are p r o h i b i t e d or l i m i t e d by l a w .
Evidence of t h i s
i s the f a c t t h a t
the
development of b a n k i n g g r o u p s o c c u r r e d l a r g e l y i n r e g i o n s who re b r a n c h e s
were p r o h i b i t e d or r e s t r i c t e d and i n t h e f a c t t h a t more r e c e n t l y , as
p e r t a i n i n g to the o p e r a t i o n o f b r a n c h e s i n t h o s e a r e a s have been
many o f t h e g r o u p s have c o n v e r t e d t h e i r b a n k s i n t o b r a n c h e s as
laws
liberalized,
conditions
warranted.
E s t a b 1 i s h m c n t of M u l t i p l e
Officc
Systcms
T h r o u g h t h e use o f the h o l d i n g company m u l t i p l e o f f i c e
o p e r a t e d n o t o n l y i n l o c a l i t i e s where b r a n c h e s are
systems
arc
prohibited e n t i r e l y
but also in wider areas than are accorded to branch systems in any case®
Examples of the use of group banking organizations to facilitate the
establishment of multiple office systems of an interstate character
are the Transamerica Corporation group of San Francisco, the Citizens
and Southern National Bank group of Savannah, the Northwest Bancorporation and the First Bank Stock Corporation of Minneapolis, Examples of
- 134 -
the use of group banking organizations to facilitate intrastate multiple office banking where branches are prohibited or restricted are
the Atlantic National Bank group of Jacksonville, Trust Company of
Georgia and the Wisconsin Bankshares Corporation*
Management and P e r s o n n e l
Under t h o p l a n of o r g a n i z a t i o n t h a t i s t y p i c a l among t h e
g r o u p s whereby e a c h b a n k i n g o f f i c e
unit, with i t s
local officers
principal
c o n t i n u e s t o o p e r a t e as a s e p a r a t e
legal
and d i r e c t o r s , b u t under the g e n e r a l
control
of the g r o u p , the b a n k s e n j o y t h e a d v i c e and c o u n s e l e f the b e t t e r
trained
and p r o f e s s i o n a l p e r s o n n e l o f the g r o u p .
the management of t h e s e p a r a t e b a n k s i s
I n t h i s way i t
manages the
executive o f f i c e r s
claimed
improved and g r e a t l y
I n some i n s t a n c e s , as p o i n t e d out i n a n e a r l i e r
the p r i n c i p a l
is
that
strengthened.
c h a p t e r , the group
appoints
o f tho c o n s t i t u e n t b a n k s and t h r o u g h them,
bank*
Improved C r e d i t
Facilities
Commenting on c r e d i t f a c i l i t i e s
under group b a n k i n g , M r ,
P r i c e , P r e s i d e n t of the M a r i n o B a n c o r p o r a t i o n , S e a t t l e ,
says,
Andrew
"Through
the medium of bank h o l d i n g companies, g r e a t e r m o b i l i t y o f commercial
i n g f u n d s c a n w i t h s a f e t y and p r o p r i e t y bo p r o v i d e d .
l a r g o f o r an i n d i v i d u a l b a n k ,
Desirable
loans,
can bo h a n d l e d by d i v i s i o n w i t h the
company and o t h e r members o f t h e g r o u p .
banktoo
holding
E x c e s s f u n d s o f one member b a n k
can be employed b y o t h e r member b a n k s w i t h a p r o f i t t o b o t h and b e n e f i t
to l a r g e worthy borrowers,T!
l/
1 / Quoted i n C a r t i n h o u r , G a i n e s T , , B r a n c h , Croup and C h a i n B a n k i n g , p ,
219,
- 135 -
Partly as a result of the shifting of funds, as thus indicated, as
well as for other reasons, a more satisfactory diversification of loans
may result to banks in groups, thus giving them another advantage over
unit banking.
It
I s contended t h a t more adequate f a c i l i t i e s
for handling
investments
are p r o v i d e d t h r o u g h group b a n k i n g because c o n n e c t i o n s w i t h a group p l a c e s
the s e r v i c e s o f the i n v e s t m e n t department of the p a r e n t bank o r
o r g a n i z a t i o n a t the d i s p o s a l of the a f f i l i a t e d b a n k s .
central
S u c h departments
are l a r g e r and b e t t e r equipped w i t h e x p e r t p e r s o n n e l t o a n a l y z e ,
buy and s e l l s e c u r i t i e s and t o f u r n i s h more s c i e n t i f i c
n e c t i o n w i t h investment p o r t f o l i o s
for themselves.
select,
s e r v i c e i n con-
t h a n the i n d i v i d u a l banks c o u l d p r o v i d e
I n fact, i n several
i n s t a n c e s , as p o i n t e d out i n an
e a r l i e r c h a p t e r , the p a r e n t bank or the c e n t r a l o r g a n i z a t i o n manages the
investment p o r t f o l i o s
of the s u b s i d i a r y b a n k s , p u r c h a s i n g and s e l l i n g the
secur i t ie s f o r them.
Another advantage over u n i t b a n k i n g t h a t group b a n k i n g i s
s a i d to o f f e r i s
i t s making a v a i l a b l e
improved and more complete
f o r t h e management of e s t a t e s and t r u s t s ; n o r I s t h i s
the l a r g e r c i t i e s ,
l/
study current conditions
facilities
s e r v i c e l i m i t e d to
The groups are i n a p o s i t i o n ( l ) . t o ' g a t h e r t o g e t h e r
o r g a n i z a t i o n of s p e c i a l i s t s
1 / I b i d , p. 226o
frequently
capable of managing e s t a t e s and t r u s t s ;
in various
industries
(2)
to
and g r o u p s o f i n d u s t r i e s a n d
an
- 136 -
to
d e t e r m i n e w h i c h appear t o be the more p r o m i s i n g ;
management and f i n a n c i a l s t r u c t u r e of the l e a d i n g
industries;
tries
companies i n
corporations
w i t h c a r e f u l a n a l y s i s of the l a t e s t
and t o change i n v e s t m e n t s
information.
the
different
and ( 4 ) t o watch f o r changes b o t h i n t h e c o n d i t i o n of
and of i n d i v i d u a l
Economies i n
(3) to analyze
indus-
in
accordance
l/
Operation
O p e r a t i n g economies are s a i d t o r e s u l t t o b a n k s i n g r o u p s t h r o u g h the
c e n t r a l i z e d p u r c h a s i n g of s e c u r i t i e s
and s u p p l i e s , p r e p a r i n g and h a n d l i n g
a d v e r t i s i n g programs, h a n d l i n g insurance of d i f f e r e n t k i n d s , bonding
employees end t h e i n t r o d u c t i o n o f u n i f o r m a c c o u n t i n g , e t c .
More
t o d a y , as p r e v i o u s l y p o i n t e d o u t , a r e h a n d l i n g t h e s e i t e m s f o r
members w i t h r e s u l t i n g e c o n o m i e s ,
of
groups
their
M r , George F . Rand, P r e s i d e n t o f t h e
M a r i n e M i d l a n d C o r p o r a t i o n , when t e s t i f y i n g b e f o r e t h e Committee on B a n k i n g
and C u r r e n c y o f t h e Eouse o f R e p r e s e n t a t i v e s
i n 1930, d i s c u s s e d the
economies t h a t had r e s u l t e d t o t h e b a n k s i n t h i s g r o u p t h r o u g h the
of the C o r p o r a t i o n , as
operation
follows:
" P e r h a p s i f I g i v e a case i n v o l v i n g one of our l a r g e r
b a n k s , a bank o f some $ 7 0 , 0 0 0 , 0 0 0 , where we are a b l e t o
e f f e c t a g r e a t many e c o n o m i e s , i t w i l l s e r v e t o i l l u s t r a t e
what I have i n mind,
" T h o s e economies are t o bo made, f i r s t , i n the r e n t a l s
t h a t b a n k has b e e n p a y i n g f o r s p a c e .
T h a t bank had s e v e r a l
unnecessary o f f i c e s .
I t had 11 b r a n c h e s , I b e l i e v e , and wo
a r e a b l e to show them how t h e y can e l i m i n a t e two o r t h r e e
o f thosc^ b r a n c h e s ,
i f ^ i d , pp. 2 2 6 - 7 /
2 / U . S . C o n g r e s s , 7 1 s t , 2nd S e s s i o n , House h e a r i n g s , I I . R e s , 1 4 1 , A p r i l 1 9 3 0 ,
pp. 1 2 0 7 - 1 2 0 8 .
- 137 -
,!
I n the scconci c a s e — t h a t same b a n k — i n c o n n e c t i o n w i t h
t h o amount of c a s h t h a t t h a t bank c a r r i e d i n i t s own v a u l t ,
we have been able to s a v e t h a t bank f o r t y o r f i f t y t h o u s a n d
d o l l a r s a y e a r , b y showing how s i m i l a r b a r k s , i n o u r g r o u p ,
operate w i t h l o s s cash i n t h e i r v a u l t .
I n other words, i t
does n o t m a t t e r t o a l o c a l bank w h e t h e r i t c a r r i e s c a s h i n
i t s v a u l t s or on d e p o s i t w i t h t h e F e d e r a l r e s e r v e b a n k .
The
t e l l e r s were d o i n g b u s i n e s s w i t h f i f t e e n o r e i g h t e e n t h o u s a n d
d o l l a r s i n t h e i r c a g e s , and we wore a b l e t o show t h o s e t e l l e r s
t h a t i n a n o t h e r bank of the same s i z e , the t e l l e r c o u l d do t h e
same amount o f b u s i n e s s w i t h $ 4 , 0 0 0 i n h i s c a g e , i f he w o u l d
use h i s head a l i t t l e .
We were a b l e t o cut down t h e c a s h
r e q u i r e m e n t s i n t h a t b a n k and g i v e the same s e r v i c e t o t h e
c u s t o m e r , I t h i n k a l m o s t t o t h e e x t e n t of $ 1 * 0 0 0 , 0 0 0 , i n t h e
aggregate.
Now, i f y o u f i g u r e 5 p e r cent on # 1 , 0 0 0 , 0 0 0 , i t
i s |50,000 a y e a r .
tf
We have dene t h a t i n a l l our b a n k s , and t h e s a v i n g h a s
n o t been s o much ir. the s m a l l e r b a n k s , b u t i n the l a r g e r b a n k s
i t i s q u i t e a g r o a t d e a l . We have done t h e same t h i n g i n p u r chasing.
" F o s t of t h e l i t t l e b a n k s , and l a r g e r o n e s , are t h o p r e y
o f e v e r y s a l e s m a n t h a t goes i n t o t h e i r town.
They w i l l buy
a d d i n g m a c h i n e s ; t h e y w i l l buy t y p e w r i t e r s ; t h e y w i l l buy
l e d g e r s , and a l i t t l e b a n k , w i t h t h r e e or f o u r m i l l i o n d o l l a r s
i n r e s o u r c e s , w i l l spend sometimes t h r e e o r f o u r t h o u s a n d
d o l l a r s a y e a r u n n e c e s s a r i l y i n d o o - d a d s t h a t p e o p l e come i n
and s e l l them. The s a v i n g s wo have made i n t h a t c o n n e c t i o n
are r e m a r k a b l e .
"We are a l s o showing t h o s e s m a l l e r b a n k s , and l a r g e r o n e s ,
t o o , t h a t are i n our g r o u p , t h a t , t h r o u g h c e r t a i n p h y s i c a l
changes i n t h e i r s e t u p of t h e i r bank i n s i d e , i n t h o way t h e y
h a n d l e t h e i r c o l l e c t i o n s and h a n d l e t h e i r i t e m s , t h e y can cut
down the number o f t h e i r e m p l o y e e s . Wo are t r y i n g t o i n c r e a s e
the s a l a r i e s of o u r employees and a t the same time i n c r e a s e
t h e i r e f f i c i e n c y and cut down, on the t o t a l s a l a r i e s . "
A s s i s t a n c e to Banks i n Emergencies
During tho banking c r i s i s
and t h e p e r i o d o f r e h a b i l i t a t i o n t h a t
a f t e r t h e c r i s i s , t h e r e were a number o f b a n k s t h a t f o u n d t h e i r
w i t h g r o u p s an i m p o r t a n t s o u r c e o f s t r e n g t h .
followed
affiliation
I n a few c a s e s , on t h e
other
h a n d , a f f i l i a t i o n w i t h g r o u p s was found n o t t o bo t o t h o a d v a n t a g e of t h e
c o n s t i t u e n t banks d u r i n g t h i s p e r i o d .
S e v e r a l of t h e p r i n c i p a l
has been d e s c r i b e d a l r e a d y i n C h a p t e r
I I , made e x t e n s i v e
the c a p i t a l
crisis
I n t h i s manner, s e v e r a l
to
D i s a d v a n t a g e s and D a n g e r s o f Group
Without such
depositors.
as compared w i t h
i s n o t w i t h o u t i t s d a n g e r s and d i s a d v a n t a g e s
w i t h branch banking.
The p r i n c i p a l
disadvantages
assistance,
Banking
A l t h o u g h g r o u p b a n k i n g has i m p o r t a n t a d v a n t a g e s
it
the
of t h o g r o u p s o b t a i n e d a s s i s t a n c e f r o m t h e
many o f t h o s e b a n k s would have s u s p e n d e d w i t h l o s s e s t o
in
comparison
anr' d a n g e r s t h a t are
t o bo i n h e r e n t i n g r o u p b a n k i n g may bo summarized as
contributions
I n a d d i t i o n t o a i d i n g them
Reconstruction Finance Corporation f o r t h e i r banks.
unit banking
as
and d e p o s i t a c c o u n t s o f t h e i r b a n k s t o s u p p o r t thorn d u r i n g
and t o r e h a b i l i t a t e thorn a f t e r w a r d s .
directly
groups,
follows:
1,
I t i s d i f f i c u l t t o s u p e r v i s e and c o n t r o l t h e b a n k s
i n g r o u p s and t h o h o l d i n g companies a r o u n d w h i c h
g r o u p s are o r g a n i z e d .
2,
The g r o a t amount o f b a n k i n g f u n d s w h i c h may bo
c o n t r o l l e d by a c o m p a r a t i v e l y modest amount o f
i n v e s t m e n t i n a bank h o l d i n g company i s d a n g e r o u s ,
3,
O p p o r t u n i t i e s f o r p r o m o t i o n a l p r o f i t s t o the o r g a n i z e r s
of bank s t o c k h o l d i n g companies may l o a d t o unwholesome
developments,
4,
Tendency o f b a n k i n g g r o u p s t o a c q u i r e and o p e r a t e
e x i s t i n g banks r a t h e r than t o s u p p l y communities t h a t
a r e w i t h o u t b a n k i n g f a c i l i t i e s w i t h them by t h o
e s t a b l i s h m e n t of b a n k s
n o v o , i s an i m p o r t a n t
s h o r t c o m i n g o f t h e group o r g a n i z a t i o n s .
felt
- 139 5»
The potential dangers that characterize the extensive operations of holding companies in other fields
of business enterprise are likewise present in hank:
holding companies.
6 . Group hanking, as compared with branch banking, is,
in general, an inferior form of multiple office
banking.
7«
A group system has an unfair advantage in expanding
multiple office operations in contrast with national
banks and with State banks,in many States, which are
not affiliated with a group.
Difficulties of Supervision
Supervision and control of banks in groups and of the holding
companies themselves are difficult for several reasons.
In order
to supervise effectively the banks in groups, simultaneous examinartions of the banks are advisable, if not essential.
Under the dual
banking system in the United States, however, it is difficult to
arrange for simultaneous examinations.
Almost all of the larger
groups include national banks, State member banks, State nonmember
banks, and in some cases, insured and non-insured nonmember banks.
To effect a joint simultaneous examination of such banks and to
effect a unified analysis of such examination, cooperation is required among all of the parties involved - Comptroller of the Currency , the Federal Reserve banks, the Federal Deposit Insurance
Corporation, and the State banking departments.
In addition, a
complete analysis of the affairs of a group should include an examination of the holding company and its non-banking subsidiaries.
Under prevailing conditions the task of organizing and conducting
an examination of a large group would bo practically impossible^
- 1U0 -
The problems t h u s a r i s i n g
i n connection w i t h the examination
the c o n s t i t u e n t banks of t h e g r o u p s were summarized by the
o f the C u r r e n c y i n h i s
Comptroller
s t a t e m e n t b e f o r e t h e Committee on B a n k i n g
C u r r e n c y of t h e House of
of
and
Representatives
• • . Where a g r o u p i s composed of b o t h S t a t e and
n a t i o n a l b a n k s , as we 11 as of o t h e r t y p e s of f i n a n c i a l
i n s t i t u t i o n s , i t beeom.es p r a c t i c a l l y i m p o s s i b l e f o r any
s u p e r v i s o r y government o f f i c i a l s t o a s c e r t a i n a u t h o r i t a t i v c l y and a c c u r a t e l y t h e f i n a n c i a l c o n d i t i o n of the
group as a w h o l e . .Each c o r p o r a t i o n i n the group i s an
i n d e p e n d e n t l e g a l e n t i t y , some r e s p o n s i b l e t o S t a t e
g o v e r n m e n t s , and some, t h a t i s , n a t i o n a l b a n k s , t o t h e
n a t i o n a l g o v e r n m e n t , w h i l e o t h e r S t a t e bank members o f
the F e d e r a l Reserve' S y s t e m arc r e s p o n s i b l e t o b o t h
S t a t e and n a t i o n a l , and t h i s c r e a t e s a s i t u a t i o n i n
which, the p u b l i c i s n o t s u f f i c i e n t l y p r o t e c t e d , i n s o f a r
as i t can be p r o t e c t e d by g o v e r n m e n t a l a u t h o r i t y , " k
The p r o b l e m of s u p e r v i s i n g bank s t o c k h o l d i n g companies
a s t i l l more d i f f i c u l t
t a s k t h a n t h a t of s u p e r v i s i n g t h e c o n s t i t u e n t
O n l y a few of t h e S t a t e s have attempted any c o n t r o l o f t h e s e
at a l l and t h e attempts of s e v e r a l of t h o s e are v e r y meagre.
the l i m i t e d s o v e r e i g n t y of i n d i v i d u a l S t a t e s
legislation ineffective,
across State boundaries,
them.
presents
corporations
In
r e n d e r s much o f the
i n cases where the h o l d i n g companies
addition,
State
operate
M o s t o f the S t a t e s have no l e g i s l a t i o n r<" gar d i n
As has been p o i n t e d out e a r l i e r
in this
s t u d y , an attempt was made
i n the B r n k i n g A c t o f 1933 t o c o n t r o l companies w h i c h h o l d s t o c k s
of
member banks of t h e F e d e r a l R e s e r v e S y s t e m by c o n d i t i o n i n g tho powers
1 7 U . S . C o n g r e s s , 7 1 s t , 2nd S e s s i o n , House h e a r i n g s H , R c s .
~~
F e b r u a r y 1 9 3 0 , p . 27.
banks.
141,
of
-
1-
such c o r p o r a t i o n s to vote the s t o c k of these banks.
s u c h r e g u l a t i o n has n o t b e e n w h o l l y
C o n t r o l T h r o u g h S m a l l Amount o f
Thus f a r ,
however,
successful.
Investment
The g r e a t amount o f b a n k i n g f u n d s w h i c h may be c o n t r o l l e d by a
c o m p a r a t i v e l y modest i n v e s t m e n t i n a bank i s a d a n g e r o f g r o u p
of c o n s i d e r a b l e magnitude.
Public
r e g u l a t i o n of the i n d i v i d u a l banks
n o t an adequate s a f e g u a r d t h a t t h i s f i n a n c i a l
improperly.
stock
has the d i s p o s i t i o n of f u n d s amounting t o s e v e r a l t i m e s h i s
holding
stock
is
l e v e r a g e w i l l n o t he u s e d
I n any u n i t bank t h e owner o f an e f f e c t i v e
When t h e e f f e c t i v e
banking
control
ownership.
c o n t r o l of a group of b a n k s i s v e s t e d i n a
company, w h i c h i n t u r n may be p a r t l y c a p i t a l i s e d by n o n - v o t i n g
s h a r e s , an e f f e c t i v e
s t o c k c o n t r o l of t h e h o l d i n g company a f f e c t s
d i s p o s i t i o n of f u n d s many t i m e s t h e o r i g i n a l
the
investment.
C l o s e l y r e l a t e d t o t h i s d a n g e r I s t h a t w h i c h i s made p o s s i b l e by t h e
opportunities
f o r p r o m o t i o n a l p r o f i t s t o the o r g a n i z e r s
h o l d i n g companies.
is
of bank
stock
I n the c a s e o f a g r e a t many u n i t b a n k s , the
stock
c l o s e l y h e l d and no p u b l i c market i s m a i n t a i n e d and i s n o t needed.
H o l d i n g c o m p a n i e s , however, o f t e n f i n a n c e t h e m s e l v e s t h r o u g h r e c o u r s e
to
t h e open market and many o f them have l i s t e d t h e i r s h a r e s on e x c h a n g e s
trading.
I n a d d i t i o n , the o r g a n i z e r s
and a c q u i r e b o n k s a t p r i c e s
capacity, particularly
s u c h as 1 9 2 8 - 1 9 2 9 ,
a r c sometimes e n c o u r a g e d t o
expand
out of l i n e w i t h a s s e t v a l u e s and e a r n i n g
i n p e r i o d s of s p e c u l a t i v e e n t h u s i a s m and
I n order to m a i n t a i n the p r i c e s
optimism,
of the h o l d i n g
company
s t o c k , tho p r o m o t e r s o f the g r o u p s o f t e n have a s t r o n g i n c e n t i v e t o use
for
- 142 -
t h e c r e d i t of c o n t r o l l e d b a n k s f o r l o a n s on h o l d i n g company s t o c k .
This
i s tantamount t o l o a n s by banks on t h e i r own s t o c k s , a p r a c t i c e w h i c h
b o t h i m p r o p e r and i l l e g a l .
The a c t i v c t r a d i n g i n h o l d i n g company
a l s o c a r r i e s the d a n g e r t h a t s h a r p market b r e a k s
of t h e c o n t r o l l e d
stocks
i n the p r i c e o f t h e
i n g company s t o c k may l e a d t o reduced c o n f i d e n c e of d e p o s i t o r s
hold-
i n the
safety
banks.
A n o t h e r u n s a t i s f a c t o r y f e a t u r e of g r o u p b a n k i n g t h a t e x p e r i e n c e
f a r has r e v e a l e d i s the f a i l u r e o f the g r o u p s t o p r o v i d e b a n k i n g
i n c o m m u n i t i e s w h i c h have been deprived, o f s u c h f a c i l i t i e s
sions.
is
thus
facilities
through
suspen-
I t has a l r e a d y b e e n p o i n t e d out t h a t v e r y few of t h e g r o u p s have
o r g a n i z e d b a n k s do n o v o , t h e i r p r e f e r e n c e b e i n g t o a c q u i r e and o p e r a t e
e x i s t i n g banks.
I n a few p l a c e s , h o w e v e r , whore b r a n c h e s a r e
by l a w , banks i n g r o u p s h a v e , I n s e v e r a l
instances,
authorized
established
branches
do n o v o .
Pen-bankingAffiliates
of B a n k H o l d i n g Companies
The v a r i o u s ways b y w h i c h bank s t o c k h o l d i n g companies may bo
u s e d by p r o m o t e r s and o r g a n i z e r s
Improperly
a r c comparable t o t h o s e t h a t a r e open t o
p r o m o t e r s and o r g a n i z e r s of h o l d i n g companies i n o t h e r f i e l d s
of
business.
The d i f f e r e n t w a y s , however, i n w h i c h t h e y may so bo u s e d c a n n o t be
v i s u a l i z e d e a s i l y i n advance.
It
s h o u l d bo p o i n t e d o u t ,
nevertheless,
t h a t t h e p o t e n t i a l d a n g e r s of b a n k s t o c k h o l d i n g companies a r e p e r h a p s
of g r e a t e r s o c i a l magnitude t h a n t h o s e of h o l d i n g companies i n o t h e r
of b u s i n e s s e n t e r p r i s e , because o f the p o s i t i o n and f u n c t i o n s
economic
organization.
fields
of banks
In
-
43 -
The possibilities of improper relationships between group banks and
other subsidiaries or affiliates of the holding company are also a source
of danger•
This was recognized by the Banking Act of 1933> which contem-
plated the ultimate discontinuance of the joint operation, either direct
or by way of a holding company, of member banks and securities companies.
Other forms of business enterprise, however, continue to be affiliated
either directly or indirectly with bank holding companies.
One or more
of the prominent bank holding companies, for example, are directly or
indirectly affiliated with a realty firm, coal company, industrial bank,
joint stock land bank, fire insurance company, life insurance company,
title insurance company, telephone company, railroad, manufacturing enterprise, etc®
Inferior to Branch Banking
A fundamental consideration with respect to group banking is that
it is an inferior form of multiple office banking when compared with
branch banking®
The control which may be exercised by the holding com-
pany over the individual banks for the purpose of promoting economical
operation and improving credit risks is much inferior to that which may be
exercised by a head office over branches.
The unit banks owned by a hold-
ing company are forced to maintain full staffs of officers and complete
boards of directors and they have all of the expenses of separate corporate maintenance®
The acquisition of a unit bank by a holding company will increase
the margin of safety to depositors of the unit bank only so far as the holding company improves management and contributes capital.
In most cases hold-
ing companies feel obliged to support the weaker group members in times of
- 144 -
distress*
Despite this fact, however, "banks belonging to groups have
been allowed to fail, and in some cases the weakness of some banks in
a group has carried down the whole group •
Finally, a group system has an unfair advantage in expanding multiple
office operations in contrast with a national bank not affiliated with a
group.
In States with a population of 1,000,000 or more, a national bank
cannot establish a branch outside its head office city unless it has a
capital of at least $500,000, but a group system can organize and operate
a new national bank similarly situated with a capital as low as $50,000*
It has been brought out that group banking is one of the alternatives to branch banking by which multiple office systems may be operated*
The widest.area recognized for branch operation in this country today is
State-wide*
The Northwest Bancorporation, however, controls banks in 3
Federal Reserve districts, Minneapolis, Kansas City, and Chicago, which
embrace all or part of l6 States with a population of 32 millions and
more than one-third of the total area of the United States*
It has been
suggested in various quarters that national banks should be authorized
to operate branch systems throughout a single Federal Reserve district*
If Congress wore ever to grant national banks branch banking powers so
broad and failed at the same time to curtail the bank holding company
movement, multiple office systems could easily become Nation-wide*
A3
indicated above, the Northwest Bancorporation could control a branch sys*
tem in each of 3 Federal Reserve districts in which it now operates banks
and might at the same time acquire other branch systems in each of the
other 9 Federal Reserve districts®
It may woll be argued that some of the unfavorable considerations with
respect to group banking are not the fault of group banking, that some of
them hold true also of branch and unit banking, and that legislation might
bo enacted correcting the defects of group banking.
For example, consolida-
tion of Federal supervision over banks would rectify one of the principal
evils of group banking, and Federal authorities might be given additional
power to supervise bank holding companies or regulate their operations
without regard to whether or not they choose to apply for voting permits*
The danger of overvaluing a bank is also present ?/hen one bank absorbs
another for the purpose of converting it into a branch.
The terms of such
mergers, however, either have to be approved by s u p e r v i s o r y authorities or
are more closely scrutinized by such authorities than the purchase of bank
stock by a holding company.
Improper relationships between banks and
affiliated organizations are not confined to group systems*. Even in the
case of a large unit bank or branch system a minority group may control
the bank if the stock of the bank is widely distributed.
I t may be con-
ceded that if adequate supervision and regulation have a s a l u t a r y effect on
the practices and soundness of unit banks and branch systems, the same thing
- ine -
c o u l d be a c h i e v e d w i t h r e s p e c t t o g r o u p b a n k i n g b y a p p r o p r i a t e
legislation.
The f a c t r e m a i n s , n e v e r t h e l e s s , t h a t under the e x i s t i n g l a w s and t h e
d i v i s i o n of r e s p o n s i b i l i t y
b a n k i n g i s a much l e s s
banking f a c i l i t i e s
f o r bank e x a m i n a t i o n and s u p e r v i s i o n ,
s a t i s f a c t o r y means of p r o v i d i n g m u l t i p l e
than branch banking.
existing
group
office
-
7
-
APPENDIX I
APPENDIX 1
Table 1 - Number of Group Banks by Classes, Number of Group Banks Operating Branches,
Number of Branches by Location, Number of States and Cities in Which Operating,
December 31, 1936
Number of group banks
Number Number Number Number
Number Number of branches
of
of
of
of
of
ITaNonmember
Head Con- HonStates To- ti di-State
cities
councities
counbanks To- Head of- tig- conties in ties ir
where tal a l memNot
in
in
opera- tal of- fice uous tigDt&oke
ber Ininfice coon- cani- uous whi ch which which whi ch
ting
are
sured sured b nanchcity ty ties coun- banks "banking banks baakirg
located
are- offices are offices
ties
es
lo- are lo- lo- are located
cated cated cated
New England
Eastern Trust & Banking
Me.
Co., Bangor
New Hampshire Bankshares,
Inc., Nashua
N. E.
First National-§)ld
Mass.
Colony, Boston
Shawmut Association,
Mass
Boston
Industrial Trust Co.,
Providence
R* I .
Bridgeport City Trust
Conn.
Co., Bridgeport
Middle Atlantic
Marine Midland Corp.,
Buffalo
N. Y.
First National Bk.& Tr.
Co., Elmira
N. Y.
Ogdensburg Trust Co.,
Ogdensburg
N. Y.
First Trust & Deposit Co.,
Syracuse
N. Y.
Banca Conmerciale
I tali ana, Milan, Italy N. Y.
Penna.
Mass.
Total for group
3
-
-
1
2
2
3
2
1
U
k
-
-
-
-
-
-
-
13
1
6
-
-
7
35
10
7
U
1
2
-
2
17 17
3
1
1
1
—
1
lU
3
-
-
3
-
1
18
3
g
b
1
U
3
l
-
5
3
1
12
5
l
-
-
-
-
-
-
-
i
-
3
b
1
2
u
k
2
2
i
-
-
12
19
5
-
-
-
7
7
5
5 0
1
5
k
5
2
3
2
10
2
k
1
1
-
-
-
3
3
1
1
9
63
52
0
5
-
18
29
12
16
-
1
3
2
1
-
-
U
5
1
j
x
1
-
-
-
-
-
-
-
5
5
2
2
6
-
11
11
-
-
12
12
5
5
1
l
l
3
1
1
1
1
1
1
3
fw 1
1
1
1
3
-
1
1
1
3
\
1
1
i
r
-
1
5
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
1
1
5
5
-
-
-
3
!
3
APPENDIX I
T a b l e 1 - Number o f Group Banks by C l a s s e s , Number o f Group B a n k s O p e r a t i n g B r a n c h e s ,
Number o f B r a n c h e s by L o c a t i o n , Number o f S t a t e s and C i t i e s i n Which O p e r a t i n g ,
December 31, 1936 ( C o n ' t )
xJumber of branches
Nuniber of group banks
Number
Nonmember Number
of
States
of
Head Con- Non- cities
where
To- Na- State
banks
in
Head of- tig- conbanks
tal tion- memNot opera- To- of- fice uous tig- whi ch
are
al ber
Inin- ting
tal fi ce com- coun-uous banks
located
city ty ties coun-• are
sured sured brandies
ties located
Trust Co.of N. J.,
Jersey City, N. J.
N. J.
Bank of Nut ley, Nut ley
N. J.
3
United States Trust Co.,
Paters on
N. J.
3
Citizens Trust Co.,
Clarion
Penna.
5
Monongahela Trust Co.,
Penna.
Homestead
3
Colonial Trust Co.,
Pittsburgh
Penna.
3
Mellbank Corp.,Pittsburgh Penna. 20
Peoples-Pittsburgh Trust
Co., Pittsburgh
Penna
3
Union Trust Co.,Pi ttsburgh Penna
5
East North Central
BancOhio Corp., Columbus
Phio
ih
Wisconsin Bankshares Corp.
Milwaukee
Wise. |16
West North Central
Bank Shares Corp-,
Minneapolis
Minn. j
3
I
-
-
3
-
2
1
-
-
-
-
3
-
k
-
1
-
2
-
1
8 ; 2
-
-
3
-
-
-
-
-
1
5
1
1
1
l
1
-
-
-
-
-
-
1
1
1
1
-
-
-
-
-
-
5
5
1
1
-
-
-
-
-
-
2
2
1
1
-
-
-
p
2
21
2
8
2
2
1
1
1
1
2
10
1
%
vx:
1
1
IT
1
1
-
1
-
-
-
2
-
k
1+
1
2
s
1
8
1
1
2
-
2
1
-
2
1
11
3
-
-
1
12 11
10
l
5
-
2
12 12
—
2
—
mm
1
dumber ITumb er dumber
of
of
of
cities coun- counties.in ties ir
in
which whi bh whi ch
b arikirg banks banking
offices. are offices
are loare lo- located cated cated
—
—
18
-
-
-
—
-
1
-
-
—
—
—
—
—
2
1
1
S
13
Ik
13
13
13
13
12
12
1
1
1
1
APPENDIX I_
Table 1 - Number of Group Banks by Classes, Number of Group Banks Operating Branches,
Number of Branches by Location, Number of States and Cities in Which Operating,
December 31, 1936
(Con*t)
Number of group hanks
Number
Nonmember Number
States
of
where To- Na- State
banks
Head
tal tion-memhanks
Not opera- To- ofare
al ber
Inin- ting
tal fice
located
sured sured branchcity
es
First Bank Stock Corp.,
Minneapolis
Minn.
Mich.
Mont.
N.D.
S.D.
Total for group
Northwest Bancorporation
Minneapolis
Minn.
Iowa
N.D.
S.D.
Nebr.
Wise.
Mon t.
Total for group
Commerce Trust Co.,
Kansas City
First National Bank
St. Joseph
Bankers Bond & Share Co.
Omaha
South Atlantic
Trust Co. of Georgia
Atlanta
39 28
1 1
lU
9
15 13
s
9
78 59
23
b
5
12
9
6
6
b
7
6 5
b
12
92 57
-
6
5
-
-
-
1
1
3
3
1
k
-
-
-
-
2
-
-
-
-
7
-
2
6
-
1
3
-
-
-
-
-
3
1
-
1
1
-
-
1
11
20
1
3
2
3
Mo.
k
-
1
3
Mo.
3
l
1
1
Nebr.
3
l
1
l
Ga.
6
5
1
-
Numb er Number Number Numb er
of
of
of
of
Head Con- Non- cities cities coun- counof— tig- con- in
ties in ties in
in
fi ew uous tig- whi ch whi ch whi ch which
C 01X1—coun-uous banks b ankLog-banks banking
ties coun- are
offices are
offices
ty
ties lo- are lo- lo- are located cated cated cated
i
—
2S
28
3
31
31
—
2
1
1
k
1
2
—
—
lb
Ik
lU
lk
lb
lH
15
15
9
9
9
9 iL
2
1
66
70
3
73
67 )Sj
-
—
-
-
-
-
3
—
—
-
—
-
—
-
37
-
—
-
—
ik
-
1
k
7
-
-
3
1
-
—
—
-
-
-
—
-
5
18
3
-
1
1
6
32
-
-
:
of branches
—
-
-
—
—
M>
k
7
k
12
37
k
31
31
k
6
5
6
12
82
12
21
5
6
12
97
12
6
5
5
12
75
12
17
5
5
12
8b
1
l
l
1
—
M
—
.„
1
l
1
1
_
2
2
2
2
-
6
6
6
6
-
-
-
-
-
APPENDIX I
T a b l e 1 - Number o f Group B a n k s b y C l a s s e s , Number o f Group B a n k s O p e r a t i n g B r a n c h e s ,
Number o f B r a n c h e s b y L o c a t i o n , Number o f S t a t e s a n d C i t i e s i n Which O p e r a t i n g ,
December 3 1 , 1936
(Con»t)
luniier c f group banks
Nonriember
Number
Nunber of branche s
1
Number
of
of
.Head Con- Non- c i t i e s
States
banks
in
Head of- t i g - conwhere
To- Na- ^ State
Hot opera— -To- o f - f i c e uous t i g - whi ch
banks
i n - ting
t a l tion- memt a l f i c e coun- coun- •uous banks
Int i e s coun- are
are
al
sured sured b ranchc i t y ty
ber
es
t i e s IQlocated
cated
Citizens & Southern
National Bank,Savannah
i
Ga.
S.C.
6
3
l
-7
Total for group
t
3
!
1
Fla.
;
Fla.
Fla.
Ky.
Tenn.
Ga.
Total for group
2
b
|
|
jl$
6 1!
!
!
i
1
!
3
12
3
1
i
j
3
10
2
1
i
i
2 !
i
1
i
!
2
!
5
1
2
j
|
:
i
;
—
!1 —
1
1
i
i
1
i
!
!
;
1i
i
1
i_
i
!
!
j
j
j
-
j
j -
_
:i
;
i
2
-
13
1 0
!
1 3
9
1
1
1
!
C
|
6
6
1
8
6
-
-
-
-
j -
1
6
-
-
5
5
5
2
2
l
1
5
D
5
5
5
I
1
1
f
U
6
-
1
j
!7
l
-
-
i
1
5
5
-
7
2
*-r
1
!
1
u
12
6
1 3
6
-
-
1
1
!
1 1
1
5
1 9
S
1
3
-
2
|n
1
-
2
11
1
11
<5
16
6
j
!
9
2
-
-
6
2
-
k
j
2
g
k
k
2
11
1
Tenn.
t
1
1
1
i
i
i
i
i
i
! 11
1
^
M
i
i
t
-
|
1
9
1
3
3
1
c
1
i
1
1
j j-x 1
5
i
i
i
-
_
__
1
I
|
:
1 0
1
1—•
i
0
6
9
i
!
|
i
M
-
7
—
i
1
j
-
i
l i s
-Tenn.
-
1
3
i
American National Bank
Nashville
Commerce Union Bank
Nashville
!
5
i
3
1
k
2
I
i
-
^
:
t
-
!
b
i
1
i
I
-
9
^
1
9
1
i
0
1
!
i
r
1
Fla.
4
i
i
1
1 !
3
I
Florida national*
Inc.,
Jacksonville
Atlantic National Bank
Jacksonville
Barnett National Bank
Jacksonville
First National Bank
Miami
East South Central
First National Trustees
Louisville
Hamilton National Bank
Chattanooga
Nu Tiber Number Number
of
of
of
c i t i e s coun- counin
t i e s in t i e s in
which whi ch whi ch
banking banks banking
offices are
offices
are lo- loare l o cated cated cated
APPENDIX I
T a b l e 1 - Number o f Group Banks by C l a s s e s , Number o f Group Banks O p e r a t i n g B r a n c h e s ,
Number o f B r a n c h e s by L o c a t i o n , Number o f S t a t e s and C i t i e s i n F n i c h O p e r a t i n g ,
December 31, 1936 ( C o n ' t )
States
State
whe re To- NaNotbanks
tal tion- me T i Ininare
ber
al
sured sured
located
West South Central
Mercantile National
Tex.
Bank, Dallas
Republic National Bank
Dallas
Tex.
Mountain
Vollmer Sec.Cc. ,Lemston Idaho
Wash.
Total for group
First Sec^Corp.,Ogden
Utah
Idaho
Wyo.
Total for group
Corporation of the President of the Church of
Jesus Christ of Latter
Day Saints, S. L. C.
Utah
Rawlins Sec.Co.,
Salt Lake CityUtah
Idaho
Wyo.
Total for group
j
i
5
I
1
1i
;;
! 2 !I
!l
i3
1
^
Il
1 l:
; 5 1!
i
i
1
•
1
3
3
-
2
1 !
— |1 1
- 1! 1 1
2 |
~
!
I
ij
\
!
!
11
1
1
i11
1
!
|
1
j
j
j
j
1 |
t
I
»
_
1
i
j
~
_
1
1
CD
1
i
!
1
4i
j
f
!
1
-
2
1
- 1 """
~
3
i
i
1
—
^ 1
i
-
-
<
1 i
;3 !
i
1 ! 1 j — i
;k ; 3
] 2
2
6
!j 7
i
of
banks
opera-: Totin.tal
branches
Head
office
city
Number jNumber
!
Number Number
of
of
of
of
Head Con- Non- cities cities coun- counof- tig- con- in
ties. iities i:
in
fi ce uous tig- whi ch whi ch which whi ch
coun- coun-uous banks banking banks banking
ties coun- are
office;
offices are
ty
are
loare lo- loties located cated cated cated
i
1 i
1 |;
1
2
- !
i
2
&
•dumber of branches
h-,*
Number of group banks
Nonmember
i
j
j
|-
1
j
|
-
{
1
i
|
3
|-
3
!
-
—
j1
j]ii
i 8 1I 1 !
lU 1 ~
! 22 | 1
i
i
1
1
I
i
1
3 !
I — | 3 i
!
3
3
6
k
11 !
- i
15
3
3
3
3
3
2
1
5
1
6
1
1
2
U>
1 r
5
2
9
15
! 1
| 25
2
1
1
u
1
1
!
"
i
j j!
1
-
-
-
-
-
-
-
1 j -
3
|
3
b
15
1
22
i
j
j
1
1
!
3
j
i
j
-
| ~
i
- j1
i
j
1
-
-
1
-
s - 1 ""**
—
-
i
-
i
I
1
-
i
i
1
-
i
-
I
|-
^
!
|
1
1
1
If
2
7
2
2
S
1
1
1
1
1
1+
k
2
2
7
7
APPENDIX I
T a b l e 1 - Number o f Groujj Banks by C l a s s e s , Number o f Group Banks O p e r a t i n g B r a n c h e s ,
Number o f B r a n c h e s by L o c a t i o n , Number o f S t a t e s and C i t i e s i n Which O p e r a t i n g ,
December 31, 193^ (Con»t)
Number of group banks
Nonmember
Number of branches
Number
Head
Numberi
cf
of
Head of- Con- Non- cities
States
banks 1 To- of- fice
con- in
To- NaNot
where
State
opera-| tal fi ce coun-fuous tig- whi ch
tal tion- membanks
city ty
In- incoun-uous banks
ting
are
sured sured braichal
ber
ties coun- are
located
ties loes
;.
cated
u
Pacific
Kali Inv. Co.,Carnation
Shareholders Fund,Everett
Coffman-Dobson, Chehalis
Union Bond & Mortgage Co,
Port Angeles
Marine Bancorp.,Seattle
Nat.Corp., San Francisco
Wash,.
Wash.
Wash.
Wash.
Wash.
Cal.
Wash.
Total for group
Transamerica Corp.,
San Francisco
Total for group
2
k
3
k
k
2
9
3
8
1
10
9
1
1
1
1
1
10 |
18 ?
2
9
3
l
J
1
5
3
4
5
4
1
1
1
3
4
9
3
12
17
2
3
l
IS
;
1
r
b
i
2 M
7
VJ1
( Vjsj
13
i
10
18
u
4
1
277
7
4
25
3
56
6
20
9
S3
7
14
!
Cal.
; 5 :
Nevada
1!
Oregon : 4
vTash. ! 1 I
11 i
Sebastopol National Sec.,
CO., Sebastopol
Cal.
UNITED STATES TOTAL
5
5
Uuriber F a t h e r Number
of
of
of
cities co-un- c o u n ties in t i e s i n
in
whi ch whi ch w h i c h
b antingbanks b a n k i n g
offices
offices are
are l o are lo- located cated c a t e d
1
1
4
l
7
3
1
l
l
6
! 46
i 7 t i
; 28 | 7
I 1
5 U
I
!
1267
1
1
1
62 |367
3 ! 2
l | 19
3
66
;33S
10
2
311
1 43
i 96
j44i
I 418
I 834
l
1
l
1
3:
479 : 285
^3
13 s
13
69
84j
• 333
| 475
1
APPENDIX I
T a b l e 2 - L o a n s a n d I n v e s t m e n t s , and D e p o s i t s o f Group B a n k s by C l a s s o f B a n k s , December 31,1936(Con't)
( I n thousands of d o l l a r s )
States
Loans
where
and
investments
banks
are
Total
memb e r
-located
New
State
National
Deposits
Nonrne^b e r
Insured N o t
Nonmember
Total
:National S t a t e
insured
member
Bank & Banking
Co.,
New H a m p s h i r e
Inc.,
First
Bankshares,
Nashua
Association,Boston
Industrial
Trust
City
Tr.
Midland
Nat.Bk.&
Elmira
Ogdensburg
Tr.
500,201
^35,^63
Mass
122,SS2
115,050
E.
I.
107,bbk
Conn.
29,567
Trust
Trust
& Deposit
Commerciale
Milan,
100,259
3,527
2,701
-
!
8,685 j
8 , 0&5
6s?7,S5U i
628,026
128,598 :
Total
United States
Paterson
Co.
J e r s e y
29,567
-
-
-
36,172
of
N.
1
3,555
120,7U3
3,177
j1
2gU,2U7
64,
563 '
435,203
;
-
;i
36,17s
. 36,480329,239 67,700
N.Y.
1M5 1 *
1N . Y .
5,226
N.Y.
5^,961
3,926
N.Y.
10,Sll
-
-
10,811
-
12,520
-
3,6^6
-
-
3,646
-
.3,190
-
2,097
-
1,857
-
-
1,857
16,55^
-
17,567
-
-
17,567
35,09^
1,689
-
-
b/07k
-
10,U59
-
~
1^,351
503
-
-
398
-
16.S82
16,27s
6o4
962 |
3,866
7,677
1,020
i
>+7.211
3,824
61,199
>,137
-
-
6,254
403
-
53,015
4,O47
-
for
group
N u t ley-
2,097
l6,55U
N .J.
3,960
N •J •
15,079
-
^1,327
-
1,^76
4,6s2
2,4s4
W
3,003
1> 6 7 9
Co.,
i
-
15,079
-
l6,o4i
1
Y*
N.
J.
-
Ul,327
57,050
-
1
1
M
4r
J
on
1,73^
Italiana
Trust
City
4,678
Co.,
Italy
Nutley,
59,S2S
194,0s6| 185,857
365,593
Mass.
of
-
N.Y.
Pa.
Trust
4,24?
!
770
-
Co.
Syracuse
Bank
-
-
-
Co.,
Ogdensburg
Banca
Mass.
11,229
7,857
-
j
Corp.,
Buffalo
First
8,2o2
I
!
Atlantic
Marine
First
3,262
789
1
Co.,
Bridgeport
Middle
-
Co.,
Providence
Bridgeport
-
Colony,
Boston
Shawmut
8,6ho
H.
N.
National-Old
1s
;
Maine
Bangor
Not
insured
i
1
England
Eastern
]E n s u r e d
12,520
-
3,190
-
-
_
i6,oUi
-
5?,050
-
Table
2 - Loans and Investments,
APPENDIX I
and D e p o s i t s of Group Banks by C l a s s
( I n thousands of d o l l a r s )
States
where
banks
Loans
are
located
Total
C i t i z e n s Trust Co.,
Penna.
Clarion
Monongahela Tr.
Co.,
Penna.
Homestead
Colonial Trust Co.,
Penna.
Pittsburgh
Kellhank Corporation,
Pittsburgh
Penna.
Peoples-Pittsburgh Tr.Co.,
Pittsburgh
Penna*
Union Trust Co.,
Pittsburgh
Penna*
E a s t N o r t h Central
BancOhio Corporation
Carp.,
Milwaukee
-
2,300
;
-
;
6,5^9
i
1,206
1,727125,^28 i
70,025
79,9^6
i
70,£81175,954
152,235
709,915
54,252
1j
!
|
205,830
Wise.
Minneapolis
Bank S t o c k
Minneapolis
Minn. j
u,566 !
Corp.,
2 U o , l l U
Minn.
Mich.
6,262
35,680
Vont.
N.D.
S.D.
Total
for
12,087
6,956
301,105
group
3 53,0971 ; 3 D , 7 5 5
i
-
;
'
i
79,460
^,792;
jj
;
192,946! 5 , 0 2 9 i
-
1 3b,0o3
3,515
i
I1
231.50S :
6,262!
26,34s j
11,7221
-
7, £09
i
-
1,051
-
3.527
5,079
-
-
j
1
2,267
35,707
]
|
1
£9,571
305 I
402
-
5.452 1
!
!
j
f
-
'
133,393 s
I
i
f
i
1,221j
434,515
6,8^1
15,4C4
660
295,509
1[
97,005 |!
i
1
2 5 2 , 5 2 3 !!
f.
i1
i1
j•1
:i
I
'
2 , 1 7 2 !1
;
j 325,453 i[
i
!
-
7,U6S
-
-
1,0^7
10,03^
-
-
131,930;
-
i
!
5,579 !
i
-
6,007: 10,8U2
5,312 :1
1 4 , .?'/ j
i
1
2,523
1
761,954
j ,
5,324 j 4 n ,
1
-
1 0 3 , £ 1 7 ;j 9 6 , 9 2 7 |
327,59b
316, S 4 c
7,662 • 7,o6?
52,3^2 j 3 2 , - 4 3
«
Nonme:a b e r
! Not
member JInsured insured
j
200,744
i 275,^32
1
1,529
-
7,605
2,775
1 0 2 , rokk
-
2,255
6,554!
222,454|
10,243
iI
!
!
i
2,613
—, 11; 100,hi 6^
£,097
1
State
National
5,136
i
9 64
West North Central
Bank S h a r e s C o r p . ,
First
Total
|
;
28,^21
(Con't)
I
i
2,91b
1936
Deposits
Honmemb e r
Insured
Not
insured
State
member
2,1*14
9,^65
December 3 1 ,
Investments
National
b j i b
Ohio
Columbus
Wisconsin Bankshares
and
of Banks,
|
_
-
1,523
-
U.753
6,195
>
!
|
-
12,402jI
11
—
12,U02
1.SS7
-
i
kB2
-
|
7,132
^77
f
j
it
0,673
APPENDIX I
Table 2 - Loans and Inve st me nts, and D e p o s i t s o f Group Banks b y C l a s s of Banks, December 31, 1936 ( C o n ' t )
( I n thousands of d o l l a r s )
States
where
banks
are
located
Northwest Bancorparation
Minneap olis
Minn.
Iowa
N.Dak.
S.Dak.
Nebr.
Wise.
Mont.
Total for group
Loans and Investments
Total
175,135
^3,550
13,60H
21,3^7
35,161
7,376
16,^09
312,582
Deposits
Nonmember
Not
j State
National 'member Insured .insured
1,9^9 11,261
1,1^2
161,925
42,408
13,1^8
21,3^7
3^,325
6,709
5,264
285,186
-
-
U56
-
-
-
-
-
776
667
-
—
7,513 3,632
9,462 17,93*+
-
Total
230,403
5^,570
17,305
27,032
49,641
8,685
22,133
409,769
Nonmember
Not
State
insured
'
:National •member Insured
1
„!
214,763
53,108
16,810
27,032
2,31^
-
!
j
48,700
7,967
13.323!
1,462
495
-
9U1
71s
6,957 10,769
375,337 13,083
4,407
21,349
375,886
4,920
-
-
-
-
Commerce. Trust Co.,
Kansas City
First Iktional Bank
St. Joseph
Bankers Bond & Share Co.,
Omaha
South Atlantic
Trust Co. of Georgia
Atlanta
Citizens & Southern Nat*l Bk.
Savannah
Mo.
109,678
Mo.
9,723
Atlantic National Bank
Jacksonville
Barnett National Bank
Jacksonville
First National Bank
Miami
107,42?
2,256
2,577
497
4,521
Nebr.
19,^
IS, 647
Ga.
30,762
14,966 15,796
Ga.
S.C.
65,121
64,107
-
-
-
-
-
180,806
2,625
-
15.359
8,060
4,236
3,063
310
-
31,915
30,806
681
428
-
-
-
43,363
20,602 22,761
-
-
I,0l4
9,347
-
-
93,520
-
-
-
3,238
-
10,361
-
-
4,lg9
-
63,083
93,520
55,^88
-
29,935
£+,107
25,746
96,758
16,682
113,440
Fla.
36,2^0
35,222
-
4is
-
54,344
53,584
-
760
-
Fla.
22,36s
22,368
-
-
—
27,846
27,846
—
-
-
Fla.
27,637
26,385
37,182
35,596
9,3^7
7U,U68
Total for group
Florida National, Inc.Jacks.
-
Fla.
1,252
-
-
16,682
19,920
7,595
1,536
-
j1
M
C|T
AFPMBIB I
T a b l e 2 - Loans and I n v e s t m e n t s , and D e p o s i t s o f Group B a n k s b y C l a s s o f B a n k s , December 31, 1936 ( c o n ' t )
( I n thousands o f d o l l a r s )
States
where
banks
are
located
last South Central
First National-Trustees
Louisville
Hamilton National feank,
Chattanooga
Loans and Investments
Total
Ky.
Ho,757
27,721 9,^70
3,596
-
50,091
1+0,629
Tenn.
Ga.
52,7*3
3.3*7
51,532
l,U6l
52,993
1,211
2 ,4c~
-
77,439
5,581
82,801
76,067
2,57*+
7S,64I
—
—
39,585
35,853
-
1,133
-
55,551
54,321
Tenn®
is,959
5,152
-
13,807
-
27,314
9,606
5 , 3 3 5
-
*,127
-
1.372
3.0*7
-
—
-
1,230
-
1
-
17.702
—
M
vjl
1
Texas
2^,391
Texas
SS,725
Idaho
Wash«
4,539
367
U,QO6
Utah
Idaho
Wyoming
26,734
is,434
931
46,099
21,967
207
6 5 , 6 9 3
4,423
-
2,217
-
29,977
27,158
C\J
Total for group
-
Tenn.
Total for group
First Sec. Corp.,Ogden
Total
Deposits
i
Nonmember
:National State
Not
memb er Insured insured
j
Total for group
Aisericaft Satienal Group
Nashville
Commerce Union Bank
Nashville
West South Central
Mercantile National Bank
Dallas
Republic National Bank
Dallas
Mountain
Vollmer Sec, Co.,
Lewiston
Nonmember
Not
National State
member insured i.nsured
2,57*
4,032
-
93,639
87,992
-
5,6U7
116
367
Us3
-
5,092
5lU
6,606
5,93^
-
-
-
4,423
-
25,ICC
—
IST434
-
25,'ico 1S7434
i
-
1.631+
—
•
-
36,603
28,206
1,692
66,501
-
-
5,93*
-
3*,352
—
-
2Sf206
-
15s
51*
672
-
—
2,251
1,692
3^.35? 26,206 3*9*3
-
!
~
APPENDIX I
Table 2 - Loans and Investments, and D e p o s i t s o f Group Banks by C l a s s o f Banks, December 31, 1936 ( C o n ' t )
( I n thousands of d o l l a r s )
States
Loans and Investments
Deposits
where
Nonmember
Nonmeniber
banks
State
Not
State
Not
are
Total
Total
Nationil member Insured insured
National member Insured insured
located
Corp. of the Pres. of the Chur ch of Je sus Christ
19,847
of Latter Day Saints, S.L.C. Utah
Rawlins Sec.Co.,S.L.C.
Utah
2,302
::idaho
1,891.
1,264
Wyo.
Total for group
11/457
icific
Hall Investment Co.,
Carnation
Coffman-Dobson Inv. Co.,
Chehali s
Shareholders Fund
Everett
Union Bond & Mortgage Co.,
Port Angeles
Marine Bancorporation,
Seattle
Angle National Corp.
San Francisco
TOTAL-UNITED STATES
12,426
-
-
-
318
-
-
-
-
-
318
-
31,764
13,223
4,240
2,125
19,588
14,903
13,223
3,551
2,125
18,899
973j
-
-
973
-
1,151
-
Wash.
1,817®
-
-
1,817
-
3,129
-
Wash.
10,803
2,506
-
14,109
11,172
8,297
W a sh.
2,7661
2,714
-
52
-
3,5^7
3,477
Wash.
52,715;
52,479
-
236
-
70,595
166,619
-
219,985
1.7S4
Cjalif.
Wash.
170,39^
1,111
171,505
Calif.
Nevada
Oregon
Wash •
Total for group
Sebastopol National Sec.Corp.
2,070
Wash*
Total for group
Transamerica Corp.
San Francisco
5,351
8,302
1,573
1,264
11,139
Wash.
1,111
167,730
3,775
-
-
-
3,775
1,211,853 1,151,167 29,920
15,112
15,112
74,355
74,355
12,221
12,221
1 , 3 1 3 * 5 ^ i252,855 29,920
1,994
791
-
221,769
30,766
22,607
30,766
1,203
5,458,413 3 >93 6,429 U3U39 335,646
-
689
-
689
-
1,151
-
3,129
-
2,937
214,564
1,734
216,34s
—
5 >21
-
22,607
-
4o,on
-
-
-
214
747
6,S4I,027
-
-
-
52,199
-
70,321
-
1,929
-
-
70
91,906
91,906
16,280
16,280
1,488,462 1,413,721
-
14,089
-
-
1,357,669 1,287,928
-
2,772
-
— H1
VJ
O
_ 1
—
5,^21
-
29,730
-
-
-
-
-
-
-
—
29,730
1,182
-
4o,on
5,062,937 1321,674 4O4,523
-
51,893
APPENDIXII(Cont.)
Table 3 - Number of B a n k s and Branches, and Amount of Loans and Investments, and Deposits in Groups by S t a t e s
December 31. 1936
*
Loans & investments
Number of branches
Deposits
Number of banks
Banks
Banks
Banks
Banks
All
All
All
All
commercial
in
commercial
in
in
commercial
in
commercial
banks
groups
groups
banks
groups
groups
banks
banks
.New England
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
560
70
65
77
202
26
120
34
Middle Atlantic
New York
New Jersey
Pennsylvania
2.2U6
89
HO
East North Central
Ohio
Indiana
Illinois
Michigan
Wisconsin
3,156
603
22
VTest North Central
Minnesota
Iowa
Missouri
North Dakota
South Dakota
Nebraska
Kansas
3.547
6S£
657
673
150
So
752
393
1,103
693
502
862
U71
196
191
U35
4
21
3
3
1
4o
37
14
232
58
2
12
112
38
10
SO
3
S2C
b09
119
92
105
S2
475
27
12
169
-
52
1
-
5
7
27
15
10
-
106,246
-
62
1,41+0,1+76
l4
1
1+36,1+58
10
13
272,51c
7.011,396
1,711,536
597,444
2,962,46s
1,046,074
693,874
1
3
12
166
21
6
6
139
-
-
-
-
-
-
625,180
107,444
29,567
105,51s
1,875,367
307,130
5^2,353
17,075.122 1,520,753 20.747.115
471,445 14,305,513
11,651,684
6c,36b 1,736,292
1,1+11,172
4,012,266
985,942 4,702,310
-
l46
ICS
19
2
(In thousands of dollars)
2.511,825
779,099 | 3.125,007 1.068.487
8,646
11,225
203,710
180,95*+
8, 685
S4,S39
S,262
75«181
2.771,821
679 , 563
458,137
1,005,527
57,766
67,263
23b,51C
267,055
15
-
707
1
304,720
84,252
-
-
6,262
2l4,2Cb
691.375
419,815
^3,550
119,401
25,691
28,303
5^,615
9.34c.902
2,213,409
803,031
4,033,028
-
283,797
128,598
36,17s
1.730,114
533,^1
77,773
l,HS,c6o
354.423
102,644
-
-
1,430,46s
363,566
7,662
254,117
3,565,882
290,519
613,5S9
?o5.52£
564,842
54,570
156,165
l,44i,4o6
71,639
9l,4s6
336,958
420,245
32,709
35,6s6
81,556
APPENDIX I_
T a b l e 3 - Number o f Banks and Branches, and Amount o f Loans and I n v e s t m e n t s , and D e p o s i t s i n Groups by S t a t e s
December 31, 1936 ( C o n ! t )
Loans & Invest-nents
JJuriber of branches
Deposits
Banks
All
All
Banks
T3anks
All
commercial
in
commercial
in
cOTr'ercial
in
tanks
groups
banks
groups
— tanks
groups
(in thousan ds of dollai•s)
32S
12
2.417.185
225.357! 3.303.204
3**,839
166,819
12
141,959
477,623
76
622,390
334,044
30
229,767
62
442,205
573,311
281,749
2
Tf
214,359
410,742
101
291,138
22
lo,Sg2
9,347:
3
97,305
155,215
302,433
424,444
1*5,702
99,830
23
9
220,396
116,180
334,490
182,U55
Number of banks
Banks
All
in
commercial
groups
Banks
South Atlantic
Delaware
Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida
1,565
H6
187
22
323
187
211
1*9
2S2
158
East South ^Central
Kentucky
Tennessee
Alabama
Mississippi
1.175
West South Central
Arkansas
Louisiana
Oklahoma
Texas
1,663
222
1*6
H03
S82
Mountain
Montana
Idaho
Wyoming
Colorado
New Mexico
Ari zona
Utah
Nevada
315
218
208
605
119
53
58
151
*1
1*
59
10
-
-
-
-
-
-
1
17
24
*
-
-
-
-
-
-
2S
6
22
138
22
47
21
42
—
61
9
52
10
-
34
7
27
—
-
-
-
-
10
-
-
..
44
26
7
3
-
7
1
1
7a...
33
32
17
-
-
-
-
5
24
10
S
-
-
9
7
l,04g,903
369,541
350,092
I
199,471
129,799
152.475
4C,7S7
111,688
1,572.373
107,993
310,201
252,733
571,446
94.116
610.651
91,630
65,110
33,364
203,808
32,763
52,0?6
104,Hi6
22,464
-
-
-
94,116
149.149
52,095
24,s64
2,195
—
-
54,883
15,112
1.467.637
470,253
504,630
287,351
2C-5.403
210,395 ,».
50,091 g^
lbO,30* 1
2,415.037
179,871
463,100
424,709
1,3^7,357
123,6l6
943.qqi
138,210
96,692
64,443
337,483
53,709
76,383
145,060
32,011
-
—
—
—
123,616
221,027
74,475
38,538
3,817
—
—
—
81,590
22,607
APPEIOIX I
Table 3 - Number o f 3anks and Branches, and Amount of Loans and Investments, and D e p o s i t s i n Groups by S t a t e s
December 31, 1936 ( C o n ' t )
t
aii,
1
••
,
,,,
Number of banks
Banks
All
in
commercial
groups
banks
Pacific
Washington
Oregon
California
TOTAL - UNITED STATES
Number of branches
Banks
All
in
commercial
groups
banks
520
183
92
2^5
45
24
4
17
929
45
49
835
12
28
^95
14,929
479
3,228
847
Loans and Investments
Deposi ts
Banks
Banks
All
All
in
in
commercial
commercial
groups
£rouos
banks
banks
(In thousan.is of dollars)
4,652.544
1,782,593
U52,32S
111,109
335,203
S2,773
2£5,S4l
31,500
215,166
7^,355
3.33Ms4
1,324,24I
3,9^,375
1,579,583
3S,9CU,029
5.^52,^13
49,569,319
6,s4i r 027
APPENDIX i
T a b l e 4 - Number, Loans and I n v e s t m e n t s , and D e p o s i t s o f Group B a n k s Suspended 193^-1936, by C l a s s of Bank,
and by S t a t e s 1/
r o f anks
State
Total National rnerrifc erUoimeniber
N u m b
Alabama
Arizona
Arkansas
California
Colorado
Connecti cat
Delaware
Dist. of Col.
Florida
Georgia
I daho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Ne hraska
N evada
New Hampshire
4
n
42
1
0
1
0
0
0
0
11
19
s
5
0
3
5
9
0
10
28
1
1
4
C
Loans and Investments
Deposits
j
State
State
Total National member ITo:rr.e~;.or
Total National Tie-rib e rNonmember
(In thousands of dollars)
: E94
854
1,115 j
1,115
j
11,242 11,661
2b,2Cl
285
13,723 12,179 I 23,192
239
2S4
254
310
310
e
1
1
4o
1
1
3
2
2
1
s
16
o
5
(
5,903
44,rsi
25,005
3.1&3
6,737
<3,491
21,972
2,279
2,873
3,166
32,717
7,033
3,is6
3,839
25,142
1:, 452
2,726
6,74s
3,510
l4,no5
5^,035
13,s4s
37.S3C
23 6
10,27S
14,2^5
12,261
1,996
1,351
34,865
77,666 33,055
609,235 515,o44
ISC
1,5c6
l,6c-S
22,74s
0,327
26,752
10,741
17,£55
b2,c5C
ISC'
1
2
2
1
1
l
2
7
55,150
21,105
63,306
37,721
360
10,562
19,317
is,sc5
2,142
1,936
52, 344
4
2
2
4
is
l
s4,s4c
622,133
195
1,657
25,23c
3O,451
522,526
27,25c
i5,3ic
2C.455
£3,997
155
1,GO7
5,523
15,707
&
i
2
2
2,275
3,369
3,369
r>
Q
0
1
2,231
16,421
3,091
23,001
5,^77
2,726
APPENDIX I
T a b l e 4 - Number, Loans and I n v e s t m e n t s , and D e p o s i t s o f Group Banks Suspended 1930-1936, by C l a s s o f Bank,
and by S t a t e s l /
(Con!t)
Number of Banks
State
Total National member Norrnember
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Khode Island *
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
TOTAL-UNITED
STATES
\J
3
0
ii
l
c
0
3
5
3
0
2
0
2
0
i 0
1
1
1 n
l
IS
n
2
1
10
1
1
3
l
17,809
6,376
1
2
1
2
1
2
1
1
1
g
10
10,634
6,376
7.175
85s
3,095
13,662
152
1,706
10,992
1,28b
18,299
18,299
26,113
12,91+6
1,139
1,139
24,981
18,892
706
103
2,670
13,167 j
6,089
15,o4o
4,780
9,674
4,780
895
2,727
10,849
105
1,384
8,396
12,77*+
12,774
22,459
12,579
862
862
19,1+69
l4,c6o
Nonmerrib er
8,9ol
5,366
1,249
750
94
2,453
1
9,880
5,409
c
0
201
57
12
132
No group banks suspended in 1935 o r 193&*
Loans and Investments
Deposits
State
State
Total National Tie mber ITonmernber
Total National nerrier
(in thousands of dollars)
2U5
9,2C6
8,191
s.558
367
1,115,916 735,692 125,150
255,07^ 1,011,360
694,737 100,472
216• >
101
- 16U -
APPENDIX II
- 165 NATIONAL AND STATE BANKS MEMBERS OF THE FEDERAL RESERVE SYSTEM
WHICH, ACCORDING TO REPORTS RECEIVED BY THE COMPTROLLER OF
THE CURRENCY AND THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM, WERE CONTROLLED ON MARCH 31, 1937, BY
"HOLDING COMPANY AFFILIATES" AS DEFINED IN SECTION
2(c) OF THE BANKING ACT OF I933, AS AMENDED
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
banks
Capital stock of
bank outstanding
Aggregate Number
par
of
value ]J shares
Anglo National Corp., San Francisco, Calif®
First National Bank, Fairfield, Calif.
$50,000
Bank of Suisun, N.A., Suisun City, Calif.
100,000
First National Bank, Weed, Calif.
50,000
Winters National Bank, Winters, Calif.
50,000
First National Bank, Yreka, Calif.
50,000
First National Bank, Longview, Wash.
(P)19,680
100,000
Inter-America Corp., San Francisco, Calif.
Bank of America, N.T. & S.A., San Francisco, Calif.
First National Bank, Reno, Nevada
First National Bank, Portland, Ore.
50,000,000 2,000,000
500,000
5,000
2,500,000
25,000
Sevastopol National Securities Company,
Sevastopol, Calif.
Sevastopol National Bank, Sevastopol, Chlif.
Atlantic Trust Company, Jacksonville, Fla.
First Atlantic National Bank, Daytona
Beach, Fla.
First National Bank, Gainesville, Fla.
Palatka Atlantic National Bank, Palatka,
Fla.
Sanford Atlantic National Bank, Sanford,
Fla.
West Palm Beach National Bank, West
Palm Beach, Fla,
298
895-5/6
450
1.37^
S97
782
1,993,084.83
4,950
10,35s
75,000
750
100,000
100,000
1,000
1,000
592-1520
100,000
1,000
685
100,000
1,000
724
200,000
2,000
1,566
Barnett National Securities Corporation,
Jacksonville, Fla.
50,000
Barnet National Bank, Avon Park, Fla.
50,000
Barnett National Bank, Cocoa, Fla.
100,000
Barnett National Bank, DeLand, Fla.
Barnett National Bank, Ft. Lauderdale, Fla „ 100,000
St. Augustine National Bank, St. Augustine »
(?) 100,000
Fla.
100,000
500
1,000
500
2,000
2,000
246
1,000
Number of shares of
capital stock owned
or controlled by
holding company
affiliate
700
500
500
1,000
1,000
449
4oo
897
510
1,000
1,000
1,000
566
- 166 APPENDIX I I
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
hanks
(Cont.)
Capital stock of
bank out standing
Aggregate Number
par
of
value 1] shares
Florida National Group, Inc., Jacksonville,Fla»
Florida National Bank, Bartow, Fla,
$100,000
Florida National Bank, Jacksonville, Fla.
1,500,000
Florida National Bank, Lakeland, Fla.
100,000
Florida National Bank & Trust Co., Miami,Fla.
400,000
Florida National Bank, Ocala, Fla.
75,000
Florida National Bank, St. Petersburg, Fla*
200,000
Trust Company of Georgia Associates, Atlanta* Ga.
National Exchange Bank, Augusta, Ga.
Fourth National Bank, Columbus, Ga.
First National Bank & Trust Co., Macon, Ga.
First National Bank, Home, Ga®
Liberty National Bank & Trust Coa, Savannah,
Ga.
4,000
60,000
4,000
16,000
750
8,000
400,000
300,000
500,000
150,000
4,000
3,000
50,000
1,500
500,000
5,000
Citizens & Southern Holding Company, Savannah,Ga.
Albany Exchange National Bank, Albany, Ga.
(P)46,375
100,000
Number of shares
of capital stock
owned or controlled by holding company
affiliate,
3,400
11,495
3,200
i4,goo
r 595
6,200
2,919
1,234
42,729-1^.6
950
31832
4oo
1,000
855-1/3
824
150,000
1,500
Trustees Under Agreement Dated January 31, 1919,
As Amended July 30, 1920, and January 26, 1923,
With Reference to Stocks in the Citizens Union
National Bank of Louisville and Fidelity and Columbia Trust Company, both of Louisville, Louisville, Ky.
Citizens Union National Bank, Louisville, Ky® 1,000,000
10,000
9,870
250
750
10,000
1,000
9,000
1,000
202
6S9
9 >810
9
9,000
562
2,250
l,46i
LaGrange National Bank, LaGrange, Ga.
Trustees Under Trust Agreement with Beforeneo
to Stock of the First National Bank of Louisville,
Ky. and Other Corporations, Dated July 1, I925,
Louisville, Ky.
(P)25,000
Boyle Bank & Trust Co., Danville, Ky.
75 ,000
1,000,000
First National Bank, Louisville, Ky*
(P)100,000
Kentucky Title Trust Co., Louisville, Ky,
900,000
100,000
First National Bank, Nicholasville, Ky.
Madison-Southern National Bank & Trust
225,000
Co., Richmond, Ky.
- 167 APPENDIX II (Cont.)
Name and principal office of
holding company affiliate,
and (indented) namo and location of controlled member
banks
Old Colony Trust Associates, Boston, Mass.
Monotomy Trust Co., Arlington, Mass
Norfolk County Trust Co., Brookline, Mass.
Harvard Trust Co., Cambridge, Mass.
Concord National Bank, Concord, Mass.
Middlesex County National Bank, Everett,
Mass.
Appleton National Bank, Lowell, Mass.
First National Bank, Mansfield, Mass.
Newton Trust Co., Newton, Mass.
Union Market National Bank, Watertown, Mass.
Winchester Trust Co., Winchester, Mass.
Capital s tock of
bank outstanding
Aggregato
par
value 1/
Number
of
shares
Number of shares
of capital stock
owned or controlled by holding company
affiliate
300,000
1,000,000
1,000,000
100,000
30,000
100,000
50,000
2,000
19,726
500,000
300,000
100,000
1,080,000
500,000
100,000
50,000
3,000
10,000
108,000
50,000
10,000
^1,165.9062
2,428
3,348
300,000
150,000
(PA)298,500
(FB)150,000
100,000
125,000
Winchester National Bank, Winchester, Mass.
30,000
1,500
19,900
19,700
760
6,000
4,000
1,250
4,800
2,188
3,000
2,635.3
Shawmut Association, Boston, Mass.
County Bank & Trust Co., Cambridge, Mass.
Needham National Bank, Needham, Mass.
Merchants National Bank, Salem, Mass.
Bank Shares Corporation, Minneapolis, Minn*
Marquette National Bank, Minneapolis, Minn.
(P)94,250
300,000
.rst Bank Stock Corporation, Minneapolis, Minn •
National Metals Bank, Hancock, Mich.
500,000
Freeborn County National Bank, Albert Lea,
100,000
Minn.
50,000
Farmers National Bank, Alexandria, Minn.
200,000
First National Bank, Austin, Minn.
First & Farmers National Bank, Blue Earth,
50,000
Minn.
100
First National Bank, Brainerd, Minn.
r000
Minnesota National Bank, East Grand Forks, Minn. 50,000
50,000
First National Bank, Fairmont, Minn.
25,000
First National Bank, Graceville, Minn.
35,000
First National Bank, Heron Lake.yMinn.
Farmers & Merchants National Bank, Ivanhoe,
25,000
Minn.
100,000
American National Bank, Little Falls, Minn.
50,000
Luverne National Bank, Luvernc, Minn.
150,000
First National Bank, Mankato, Minn.
First National Bank & Trust Co., Minneapolis,
6,000,000
Minn.
81,282
25,309
1,010
81,761
33,041
8,515
835
5,000
• 4,900
1,000
500
2,000
950
450
1,910
500
1,000
500
500
250
350
446-2/3
920
440
450
225
300
250
5,000
500
1,500
3.167
300,000
295,499
225
450
1,450
APPENDIX I I
Name and. principal office of
holding company affiliate,
and (indented) name and location of controlled member
banks
(Cont.)
Capital stock of
bank outstanding
Aggregate Number
par
of
value 1/ shares
Bloomington-Lake National Bank, Minneapolis,
Minn.
$100,000
Minnehaha National Bank, Minneapolis, Minn*
100,000
Farmers & Merchants National Bank, Minneota,
Minn.
60,000
Northfield National Bank & Trust Co., North50,000
field, Minn.
100,000
First National Bank, Owatonna, Minn.
50,000
Pipestone National Bank, Pipestone, Minn.
200,000
First National Bank, Rochester, Minn.
First National Bank, St. Paul, Minn.
6,000,000
50,000
Merchants National Bank, Sauk Centre, Minn.
50,000
First National Bank, Spring Valley, Minn.
50,000
Farmers National Bank, Waseca, Minn.
50,000
First National Bank, Wheaton, Minn.
Security National Bank, Willmar, Minn.
100,000
50,000
First National Bank, ffindom, Minn.
200,000
Midland National Bank, Billings, Mont.
150,000
iCoaaacrcial' .National Bank, jjjo.zena.n, Mont.
600,000
Metal3 Bank & Trust Co., Butte, Mont.
600,000
First National Bank, Great Falls, Mont.
Montana National Bank, Havre, Mont.
50,000
First National Bank & Trust Co., Helena, Mont. 600,000
100,000
National Bank of Lewistown, Lewistorm, Mont.
100,000
National Park Bank, Livingston, Mont.
100,000
First National Bank, Miles City, Mont®
200,000
Western Mont. National Bank, Missoula, Mont.
250,000
First National Bank, Bismarck, N. D.
50,000
First National Bank, Cooperstown, N. D.
Merchants National Bank & Trust Co., Fargo,N.D . 150,000
25,000
First National Bank, Glen Ullin, N. D .
125,000
Red River National Bank, Grand Forks, N. D.
30,000
First National Bank, Hebron, N. D.
100,000
National Bank of Jamestown, Jamestown, N. D.
25,000
First National Bank, Lidgerwood, N« D.
100,000
Union National Bank, Minot, N. D.
50,000
First National Bank, Valley City, N. D,
Aberdeen National Bank & Trust Co., Aberdeen,
100,000
S. D.
25,000
Clark County National Bank, Clark, S. D.
50,000
First National Bank, Highmore, S. D.
125,000
First National Bank, Huron, S. D.
50,000
First National Bank, Lemmon, S. D.
50,000
First National Bank, Miller, S. D.
Citizens National Bank & Trust Co., Sioux
100,000
Falls, S. D.
75,000
First National Bank, Vermillion, S. D.
Number of shares
of capital stock
owned or controlled by holding company
affiliate
1,000
1,000
930
920
600
540
500
1,000
2,000
2,000
60,000
500
500
500
500
1,000
500
2,000
1,500
6,000
6,000
500
6,000
1,000
1,000
1,000
2,000
2,500
2,000
6,000
250
5,000
300
4,000
250
1,000
2,000
450
950
1,S00
1,910
53,219
450
440
460
450
950
434-2/3
1,950
1,450
5,930
5 >930
44o
5,930
950
950
946-2/3
1,950
2,440
1,800
5,4OS
225
4,600
203
3,760
225
930
1,800
1,000
250
500
1,250
500
500
920
225
450
1,200
450
450
1,000
750
950
670
APPENDIX I I
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
banks
Northwest Bancorporation, Minneapolis, Minn,
First National Bank, Denison, Iowa
First National Bank, Mason City, Iowa
Live Stock National Bank, Sioux City, Iowa
(Cont.)
Capital stock of
bank outstanding
Aggregate
par
value 1/
Number
of
shares
$100,000
(p)250,000
3^0,000
1,000
2,500
3.500
(P)148,000
1,480
250,000 2,500
First & American National Bank, Duluth, Minn. 2,000,000 20,000
Security National Bank & Trust Co., Faribault, Minn.
150,000
Fergus Falls National Bank & Trust Co.,
100,000
Fergus Falls, Iv'inn.
50,000
Hastings National Bank, Hastings, Minn.
Security National Bank, Hopkins, Minn.
50,000
75,000
Northwestern National Bank, Litchfield, Minn.
(p)lUs,750
National Citizens Bank, Mankato, Minn.
200,000
Third Northwestern National Bank, Minnea100,000
polis, Minn.
Fourth Northwestern National Bank, Minneapolis, Minn.
125,000
Fifth Northwestern National Bank, Minnea100,000
polis, Minn.
Midland National Bank & Trust Co., Minnea(p)390,000
polis, Minn.
600,000
Northwestern National Bank & Trust Co.,
Minneapolis, Minn.
First National Bank, Moorhead, Minn.
Security Bank & Trust Co., Owatonna, Minn.
First National Bank, Red Wing, Minn.
Stock Yards National Bank, South St. Paul,
Minn.
First National Bank, Two Harbors, Minn.
First National Bank, Winona, Minn.
(p)29,750
70,000
(P)50,000
250,000
62,500
(p)75,000
350,000
150,000
United States National Bank, Omaha, Nebr,
Dakota National Bank & Trust Co., Bismarck,
IT. D.
(p)75,000
3,410
—
2,430
19,741-2/3
1,381-1/4
930
290
1,487-1/2
2,000
—
1,000
1,250
2b0
690
1,940
900
1,177-1/2
1,000
940
3.900
—
6,000
5,7S4
5,000,000 50,000
100,000
100,000
86s
—
1,000
500
500
750
(P)2,500,000 25,000
200,000
Great Falls National Bank, Great Falls, Mont.
50,000
Continental National Bank, Harlowton, Mont,
(p)97,000
First National Bank, Fairbury, Nebr.
Hastings National Bank, Hastings, Nebr.
1,500
Number of shares
of capital stock
owned or controlled by holding company
affiliate
1,000
1,000
297-1/2
700
500
2,500
—
48,660-3/4
930
920
—
610
—
2,450
625
448-3/4
3,500
2,000
3,336-2/3
1,907
750
500
970
1,500
750
—
440
—
1,442-1/2
—
1,000
1,100,000 11,000
940
10,830
1,000
900
100,000
100,000
-
170 -
APPENDIX I I
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
banks
(Cont.)
Capital stock of
bank outstanding
Aggregate Number
par
of
value 1/ shares
Northwest Bancorporation, Minneapolis»
Minn*, continued
Grafton National Bank, Grafton, N. D.
American National Bank, Valley City, N. D.
Number of shares
of capital stock
owned or controlled by holding company
affiliate
Citizens National Bank, Wahpoton, N. D,
First Citizens National Bank, Watertown, S.D®
National Bank of LaCrosse, LaCrosse, Wise.
75,000
(P)14,000
50,000
75,000
150,000
400,000
750
l4o
500
750
1,500
4,000
440
650
1,260
3>659
Albert M. Keller, F. August Luyties, Carl IF. G.
Meyor, James J. Mullen, and Edgar M. Quceny,
Trustees, St. Louis, Mo,
Mercantile-Commerce National Bank, St. Louis,
Ko.
350,000
3.500
3,357
Excelsior Realty Company, Butte, Mont.
Miners National Bank, Butte, Mont.
100,000
1,000
514
35,000
350
255
(P)25,000
60,000
100,000
(p)100,000
100,000
50,000
250
600
1,000
1,000
1,000
5,000
Bankers Bond & Share Company, Omaha, Nebr.
Washington County Bank, Blair, Nebr.
New Hampshire Bankshares, Inc., Nashua, 11. H.
First National Bank, Derry, IT. H.
Rockingham National Bank, Exeter, II. H.
Indian Head National Bank, Nashua, IT. H.
Wilton National Bank, Wilton, N. H.
Marine Midland Corporation, Jersey City, N. J.
500,000
10,0G0
Marine Midland Trust Co., Binghamton, N. Y.
Marine Trust Co., Buffalo, IT. Y.
8,000,000 250,000
(D)2,000,000
Union Trust Company, Endicott, IT. Y.
100,000
10,000
Y/orkers Trust Co., Johnson City, N. Y.
200,000
8,000
Niagara County National Bank & Trust Co.,
Lockport, IT. Y.
500,000
20,000
Peoples Trust Co., Malone, IT. Y.
200,000 20,000
Marine Midland Trust Co., New York, N. Y.
5,000,000 500,000
Power City Trust Co., Niagara Falls, IT. Y.
2,000,000 160,000
First & Second National Bank & Trust Co.,
Oswego, IT. Y.
400,000 16,000
Manufacturers National Bank & Trust Co.,
Troy, N. Y.
(p)400,000 16,000
1,000,000 40,000
Northern New York Trust Co., Watertown, N.Y.
500,000
20,000
—
(D)280,000
—
700
—
315
599
501
2,890
9,630
247,890
—
9,011
7,53*+
19,266
18,667
496,555
156,59s
15,080
38,7^7
19,113
-
171 -
APPENDIX I I
(Cont.)
Capital stock of
bank outstanding
Aggregate Number
par
of
value 1/
shares
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
"banks
First National of Elmira Corporation, Elmira,
N. Y.
First National Bank, Horseheads, N. Y,
Watkins State Bank, Watkins Glen, N. Y.
Citizens National Bank, Waverly, N. Y.
$75»ooo
50,000
100,000
First Securities Corp., Syracuse, II. Y.
First National Bank, Earlville, N. Y.
(PA)25,000
(PB)50,000
50,000
(PA)37.500
(PB)50,000
62,500
First National Bank, Waterloo, N. Y.
BancOhio Corporation, Columbus, Ohio
Union National Bank, Cadiz, Ohio
200,000
First National Bank, Chillicothe, Ohio
300,000
Ohio National Bank, Columbus, Ohio
4,000,000
Fifth Ave® Savings Bank, Columbus, Ohio
200,000
Commercial National Bank, Coshocton, Ohio
150,000
Delaware County National Bank, Delaware, Ohio 100,000
Madison National Bank, London, Ohio
60,000
First National Bank, Marysville, Ohio
75,000
Licking County Bank, Newark, Ohio
200,000
Perry County Bank, New Lexington, Ohio
75(000
National Bank of Portsmouth, Portsmouth, Ohio 200,000
First National Bank & Trust Co., Springfield,
Ohio
1,000,000
First National Bank, Washington Court House,
Ohio
100,000
Citizens National Bank, Zanosvillo, Ohio
400,000
750
1,000
Number of shares
of capital stock
owned or controlled by holding company
affiliate
3 so
750
2,000
1,001
1,000
1,000
1,000
960
676
7.500
5,000
6,250
8,000
4.S50
5,034-3/s
10,000
7,065.3
2,684
192.315
1,884
1,232
S19
540
670
1,909
679
8,621
10,000
9,749
3,000
200,000
2,000
1,500
1,000
600
750
2,000
750
1,000
4,000
899
3,766
United States National Corporation, Portland,
Orb.
Clark County National Bank, Vancouver, fash.
100,000
1,000
930
Hr.nilton National Associates, Inc., Chattanooga,
Tennessee
First National Bank, Harrimn, Tenn.
First National Bank, Lenoir City, Tenn.
First National Bank, Loudon, Tenn.
First National Bank, Pikevilie, Tenn.
First National Bank, South Pittshurg, Tenn.
100,000
100,000
50,000
30,000
100,000
1,000
2 ,000
500
300
1 ,000
590
1,088
253
163
625
300,000
(D)250,000
3,000
1,410
American Investment Company, Ogdcn, Utah
Commercial Security Bank, Ogden, Utah
-
172
APPENDIX I I
Name and principal office of
holding company affiliate,
and (indented) name and location of controlled member
banks
-
(Cont.)
Capital stock of
bank outstanding
Aggregate
par
value 1/
Number
of
shares
Number of shares
of capital stock
owned or controlled by holding company
affiliate
Rawlins Securities Company, Salt Lake City,
Utah
First National Bank, Caldwell, Idaho
Hailey National Baric, Hailey, Idaho
$100,000
50,000
1,000
500
First Security Corporation of Ogden, Ogden,
Utah
First National Bank, Salt Lake City, Utah
750,000
7,500
Shareholders Fund of the First National Bank
of Everett, Washington, Crosby, Moody,
Norway, Trustees, Everett, Wksh.
First National Bank, Snohomish, Wash®
50,000
500
11+5
100,000
1,000
609
250
207
Union Bond & Mortgage Co., Port Angeles,
Washington
First National Bank, Port Angeles, Wash*
Marine Bancorporation, Seattle, Wash.
First National Bank, Cosmopolis, Wash.
First National Bank, Mt. Vernon, Wash,
National Bank of Commerce, Seattle, Wash,
Old National Corporation, Spokane, Wash.
First National Bank, Spokane, Wash,
Old National Bank & Union Trust Co.,
Spokane, Wash.
Wisconsin Bankshares Corp., Milwaukee, Wise,
Badger State Bank, Milwaukee, Wise.
25,000
100,000
619
393
6,62g.l232
2,500,000
1,000
100,000
99,120
(p)150,000
34g,l00
3,000
6,962
4,620
(p) 450,000
550,000
4,500
5,500
5,379
200,000
(D)300,000
2,000
1,952
572
1J The amount of capital stock shown represents connon stock unless otherwise indicated, The letter "P" preceding an amount denotes preferred stock; "PA" denotes preferred "A" stock; "PB" denotes preferred "B" stock, and "D" denotes
capital notes or debentures.
-
173 -
APPENDIX III
L-477
COMPILATION OF FEDERAL AND STATE BAr;KH<G LAWS
RELATING TO THE
A C Q U I S I T I O N OF L M i : OK TEUST COIv'PAM STOCK
BY BAEKS AND TRUST COMPANIES
AND KELATING TO
BA^:K STOCK HOLDING COi'iP&iJIBk
AND
CHAIN OR GROUP BANKING
L-477
FOREWORD
The f o l l o w i n g c o m p i l a t i o n o f S t a t e and F e d e r a l l a w s a s o f Jxme
1 , 1936, p r e p a r e d i n the o f f i c e o f C o u n s e l o f the B o a r a o f G o v e r n o r s
of
the F e d e r a l R e s e r v e S y s t e m , w i t h the a s s i s t a n c e o f the c o u n s e l o f the F e d e r a l R e s e r v e b a n k s , r e l a t e s t o p r o v i s i o n s w i t h r e s p e c t t o the
acquisition
o f bank o r t r u s t company s t o c k by banks and t r u s t c o m p a n i e s , and w i t h
r e s p e c t t o bank s t o c k h o l d i n g companies and c h a i n or g r o u p b a n k i n g .
compilation includes a l l
of tho F e d e r a l l a w s on the s u b j e c t b u t the
t i o n o f the c o m p i l a t i o n c o v e r i n g the S t a t e l a w s i s
The
por-
b a s e d e n t i r e l y u p o n the
s t a t u t e s a s c o n t a i n e d i n t h e b a n k i n g l a w s and does n o t r e p r e s e n t a
search
o f t h e g e n e r a l c o r p o r a t i o n l a w s o f the S t a t e s .
relating
The S t a t e s t a t u t e s
e x p r e s s l y t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by banJfcs and
t r u s t companies have been c i t e d wherever s u c h e x i s t ;
any s u c h s t a t u t e , p r o v i s i o n s
o f t h e S t a t e b a n k i n g law d e a l i n g
w i t h the a c q u i s i t i o n of corporate
p a n i e s have been
but i n the absence
stocks generally
of
specifically
by banks ana t r u s t com-
included.
When a p r o v i s i o n i s f o l l o w e d by two c i t a t i o n s ,
the f i r s t
refers
t o a pamphlet e d i t i o n of the b a n k i n g l a w s , and the second r e f e r s t o an o f ficial
e d i t i o n o f the l a w s .
There i s o n l y one c i t a t i o n f o l l o w i n g e a c h F e d -
e r a l s t a t u t e , and where the p r o v i s i o n o f S t c t e law was n o t i n c l u d e d i n
pamphlet e d i t i o n , o n l y the o f f A c i n i c i t a t i o n i s
the
given.
T h i s c o m p i l a t i o n c o v e r s o n l y i n v e s t m e n t s of a b a n k ' s o r t r u s t
p a n y 1 s own f u n d s .
I t cioes n o t c o v e r t h e a c q u i s i t i o n o f i t s own s t o c k ,
i n m u n i c i p a l or o t h e r p u b l i c c o r p o r a t i o n s , F e d e r a l reserve b a n k s ,
s a f e d e p o s i t c o m p a n i e s , or s i m i l a r i n s t i t u t i e n s
respects with
the b u s i n e s s o f
banking.
stock
joint
s t o c k l a n e b a n k s , c o r p o r a t i o n s engaged p r i n c i p a l iy i n f o r e i g n b a n k i n g
ations,
com-
oper-
e f f i l i a t e d i n some
T A B L E
OF
C O N T E N T S
L-477
Page
Summary - ~ - - ~ - ~ - - ~ - - - - - - ~
- - - - - F e d e r a l Law - - - - - - - - - - - - - - - - - - - ~ - S t a t e Law
Alabama - - - - - - - - - - - - - ~ - - - - - - Arizona - - - - - - - - - - - - - - - - - - - - - - Arkansas
- - - - ~ ~ - ~ ~ - - - - - - - - - - California
~
—
Colorado
- - - - - - - - - - - - ~ ~
Connecticut - - - - - - - - - - - - - - ~ - - ~
Delaware - - - --- - - - ~ ~
- - ~ - ~
~ - - D i s t r i c t of Columbia
- - ~
... Florida
~
~ _
Georgia - - - - - - - - - - - - - - - - - - - - Idaho
- - - - - - Illinois
Indiana
Iowa - ~~ - ~ ~ - - ~ - - - - ~ ~ - - - ~ ~ - - ~
Kansas - - - - - - - - - - - - - - - - - - - Kentucky
- ~ ~ ~
Louisiana
Maine
Maryland - - - - - - - - - - - - - - - - - - ....
Massachusetts ~ .. - - - ~ - 5
Michigan
•••• - Minnesota - - - - - - - - - - - - - - 5
Mississippi
- - - Missouri
- - - - - - - ~
Montana
- - - - - - - - - - - - - - - - - - - N e b r a s k a - ---- - - - - - - - - - ... - - - ~ - - - Nevada - - - -- _ ... ...
New Hampshire - - - - - - - ~ - - - - - - - - - - New1 J e r s e y - - - - - - - ~
- - - - - - - - - New Mexico » - - - - - - - - - - - - - - - Mew Y o r k
North Carolina - - N o r t h Dakota
Ohio - ... _ _ - - _
Oklahoma
... - - - - - Oregon
_ - - _ _ Pennsylvania
- - - -- - - - - - - - - - - - - - Rhode I s l a n d
- - - - - - - - - - - - - - - - - South Carolina
- - - - - - - - - - - - - S o u t h Dakota
Tennessee ~ ~ ~ - ~ - - - - - ~
- ~ - ~
Texas
Utah - _ Vermont - - - - - - - - - - - - - - - - - - - - Virginia
Washington
.. _ .
.
West V i r g i n i a - - Wisconsin - - Wyoming
... ~
±
1
10
11
12
12
14
15
17
18
19
19
20
21
22
26
26
28
28
29
£1
5
55
5
56
57
38
59
40
41
45
45
46
48
50
51
52
53
56
57
59
60
61
62
65
64
65
66
67
69
71
-1-
L-477
SUMMARY OF STATE BANKING- LAVS RELATING TO ACQUIS.ITIOM OF BANK
" OR TRUST COMPArTx STOCK'bi BANKS AND TRUST COMPANIES
States having l e g i s l a t i o n
Commercial B a n k s
Alabama ( l ) (2)
A r i z o n a (5)
C a l i f o r n i a (4)
Delaware (1)
#New J e r s e y
Pennsylvan.la (14)
---South C a r o l i n a
Texas ( I )
*West V i r g i n i a (2)
T r u s t Companies
(S)
Alabama ( l ) (2)
A r i z o n a (5)
#Arkansas
C a l i f o r n i a (4)
--"Colorado
Delaware ( 1 )
F l o r i d a (7)
Kansas (2)
^Louisiana
-^•Maryland
M a s s a c h u s e t t s (.1) (£)
•*Michig&n
M i s s o u r i (1) ( 9 )
^Montana
^Nebraska (10)
•-New Hampshire (2.)
--New J e r s e y
-Ohio
^Oklahoma
P enn s y I v a n i a ( 1 4 )
S o u t h C a r o l i n a (1} ( 9 )
Texas ( l )
Utah (13)
Vermont (11)
^ e s i V i r g i n i a (2) (6)
T o t a l - 25
Total
(
(1)
(2)
(5)
(4)
permitting a c q u i s i t i o n
by:
Savings
Banks
A r i z o n a (5)
C a l i f o r n i a (4)
Connecticut (11)(12)
Delaware (1)
Florida
^Louisiana
Maine (5)
M a s s a c h u s e t t s (8)
New Hampshire ( 1 1 ) ( 1 2 )
Rhode I s l a n d ( 1 1 ) (12)
-*South C a r o l i n a
Vermont ( 1 1 )
*West V i r g i n i a (2) (6)
Total -
15
I n d i c a t e s statute permitting a c q u i s i t i o n of
corporate stock g e n e r a l l y — n o s t a t u t e spe~ .
c i f i e a i l y p e r m i t t i n g a c q u i s i t i o n o f bank o r
t r u s t company s t o c k . )
Amount of s t o c k i n o t h e r b a n k s . l i m i t e d .
L i m i t e d amount may be i n v e s t e d .
P u r c h a s e must be a p p r o v e d by s u p e r i n t e n d e n t o f b a n k s .
L i m i t e d amount may be i n v e s t e d i n s t o c k o f one C o a l f o r n i a t r u s t company i n
same c o u n t y .
(5) L i m i t e d amount may be i n v e s t e d i n l i m i t e d amount o f s t o c k o f c e r t a i n b a n k s .
( 6 ) P e r m i s s i o n o n l y g r a n t e d to b a n k i n g i n s t i t u t i o n s a u t h o r i z e d t o engage i n
b u s i n e s s o f t r u s t company,
(7) Apparent c o n f l i c t i n laws; another p r o v i s i o n o r o a i b i t s purchase of corporate
stocks.
-ii-
L-477
(8) L i m i t e d amount may be i n v e s t e d i n l i m i t e d amount of s t o c k of c e r t a i n t r u s t
companies and c e r t a i n n a t i o n a l banks•
(9) L i m i t a t i o n does n o t a p p l y to o w n e r s h i p of s t o c k o f one bank or one c o r p o r a t i o n o r g a n i s e d f o r p r i n c i p a l purpose o f r e c e i v i n g s a v i n g s .
(10) S t o c k o f a n o t h e r t r u s t company and c o r p o r a t i o n s n o t p a y i n g d i v i d e n d s may n o t
be p u r c h a s e d .
(11) L i m i t e d amount may be i n v e s t e d i n l i m i t e d amount of s t o c k s o f c e r t a i n banks
and t r u s t companies.
(12) S a v i n g s departments of banks and t r u s t companies i n c l u d e d .
(15) P u r c h a s e of bank s t o c k must be a p p r o v e d by c o m m i s s i o n e r of b a n k s .
(14) O n l y s t o c k of banks and t r u s t companies i n c o r p o r a t e d I n P e n n s y l v a n i a may be
acquired.
S t a t e s h a v i n g l e g i s l a t i o n p r o h i b i t i n g a c q u i s i t i o n by;
Commercial Banks
T r u s t Companies
Savings
Colorado
Florida
Georgia
Idaho
Indiana
Kansas
Mississippi
Montana
Nebraska
Nevada
New Y o r k (5)
north Carolina
n o r t h Dakota
Oklahoma
Oregon
S o u t h DakotaUtah
Virginia
'Washington
V;: voming
Florida (l)
Georgia
Idaho
ib I n d i a n a
Mississippi
Nevada
-y- New Y o r k ( 5 ) ( 6 )
N o r t h C a r o l i n a (5)
Oregon
S o u t h Dakota
-X- V i r g i n i a
7/ashington
Georgia (2)
laaho
Kansas
Mississippi
•x- Montana
Nevada
North C a r o l i n a
N o r t h Dakota
Ohio ( 4 )
Oregon
-;f P e n n s y l v a n i a
•>f Texas
if Utah
Virginia
Washington
->f W i s c o n s i n
••if Wyoming
T o t a l - 20
T o t a l - .12
Banks
T o t a l - 17
( ^ I n d i c a t e s s t a t u t e p r o h i b i t i n g a c q u i s i t i o n of c o r p o r a t e s t o c k generally—no s t a t u t e s p e c i f i c a l l y p r o h i b i t i n a c q u i s i t i o n o f bank o r
t r u s t company s t o c k . )
(1) A p p a r e n t c o n f l i c t o f le.irs} a n o t h e r p r o v i s i o n p e r m i t s p u r c h a s e o f
stocks.
(2) P r o h i b i t i o n does n o t a p p l y to s a v i n g s banks d o i n g o n l y a s a v i n g s
( 5 ) Does n o t i n c l u d u t r u s t companies n o t r e c e i v i n g money on d e p o s i t .
( 4 ) A c q u i s i t i o n of s t o c k o f oanas and t r u s t comcan;,e,:. i n o t h e r S t a t e s
not p r o h i b i t e d .
( 5 ) L i m i t e d amount of c o r p o r a t e s t o c k s upon s p e c i f i c authorization, o f
Board.
(6) L i m i t e d amount may be i n v e s t e d i n s t o c k o f bank or t r u s t company
under l a w s of a f o r e i g n c o u n t r y .
corporate
business.
apparently
Banking
organised
-iii-
States having no legislation
L-477
to a-CL.uisl.ticn by;
Commercial Banks
Trust Companies
Savings Bank;
Arkansas
Connecticut
Illinois
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New Hampshire
New Mexico
Ohio (5)
Rhode Island
Tennessee
Vermont
Wisconsin
Connecticut (£)
Illinois
Iowa
Kentucky
Maine (l)
Minnesota
New Mexico
North Dakota
Rhode Island (i)(£)
Tennessee
Wisconsin
Wye rung
Alabama
Arkansas
Colorado
Illinois
Indiana
IoT a
Kentucky
Maryland
Michigan
Minnesota
Missouri
Nebraska
New J'ersey
New Mexico
New York (4)
Oklahoma
Sou til Dakota
Tennessee
Total - 19
Total - .12
Total - 18
(1) Bank stock is actually acquired under authority to hold,
property.
(2) Limited investments by savings departments of" banks and
permitted.
(5) Although no statute specifically authorizes acquisition
is a statute limitin >• the amount of stock whi cji may bo
(4) Stock of any trust company owned by at least 20 savings
chased.
and enjoy personal
trust companies
of stocks, there
held.
banks may be pur-
L-477
FEDERAL LAW
Acquisition of stocks by 'banks and trust companiess
" -x* * The b u s i n e s s o f d e a l i n g i n s e c u r i t i e s and s t o c k by
the ( n a t i o n a l banking)
and s e l l i n g
a s s o c i a t i o n s h a l l be l i m i t e d to
such s e c u r i t i e s
purchasing
ano s t o c k w i t h o u t r e c o u r s e ,
solely
upon
the o r d e r , and f o r the a c c o u n t o f , c u s t o m e r s , and i n no c a s e f o r
own a c c o u n t , and the a s s o c i a t i o n s h a l l n o t u n d e r w r i t e any i s s u e
s e c u r i t i e s or s t o c k ;
Except as h e r e i n a f t e r p r o v i d e d or
of
otherwise
p e r m i t t e d by l a w , n o t h i n g h e r e i n c o n t a i n e d s h a l l a u t h o r i z e the
c h a s e by the a s s o c i a t i o n f o r i t s own a c c o u n t o f any s h a r e s of
o f any c o r p o r a t i o n . * *
its
purstock
( F e d e r a l Reserve A c t , 1955, p. 174;
5 1 5 6 , S e v e n t h , R e v i s e d S t a t u t e s of the U n i t e d
States)
" S t a t e member b a n k s s h a l l be s u b j e c t to the same
and c o n d i t i o n s w i t h r e s p e c t t o t h e p u r c h a s i n g ,
selling,
limitations
underwriting,
and h o l d i n g of i n v e s t m e n t s e c u r i t i e s and s t o c k a s are a p p l i c a b l e
the c a s e o f n a t i o n a l banks u n a e r p a r a g r a p h
o f the R e v i s e d S t a t u t e s 3
Sec. 9, P a r .
It
a s amended."
f
Seventhr
( F e d e r a l R e s e r v e A c t , .1.955,
19)
t i o n " e n g a g e d i n the b u s i n e s s o f i s s u i n g , u n a e r w r i t i n g ,
tion,
in
o f s e c t i o n 5136
s h a l l be u n l a w f u l f o r any c o r p o r a t i o n or s i m i l a r
distributing,
Sec.
a t w h o l e s a l e or r e t a i l ,
s t o c k s * " --
or other s e c u r i t i e s ,
organisa-
selling,
or t h r o u g h s y n d i c a t e
or
participa-
t o engage a t the same ti.ae t o
any e x t e n t w h a t e v e r i n the b u s i n e s s o f r e c e i v i n g d e p o s i t s
subject
check o r t o repayment upon p r e s e n t a t i o n o f a p a s s b o o k , c e r t i f i c a t e
to
of
deposit,
or o t h e r e v i d e n c e o f a e b t , or upon r e q u e s t of the d e p o s i t o r s
* *
( F e d e r a l R e s e r v e Act, 1955, p. 1 5 9 ; S e c , 2 1 ( e ) B a n k i n g A c t o f
-2-
L- 477
1 9 3 5 , June 1 6 , 1 9 3 5 , a s amended by a c t o f A u g u s t 25,
H o l d i n g Company
n
1955)
Affiliates:
I n a l l elections of d i r e c t o r s ,
each shareholder
shall
have the r i g h t t o v o t e the number o f s h a r e s owned by him f o r
many p e r s o n s a s t h e r e a r e d i r e c t o r s
to be e l e c t e d , or to
as
cumulate
s u c h s h a r e s and g i v e one c a n d i d a t e a s many v o t e s a s the number o f
d i r e c t o r s m u l t i p l i e d by t h e number o f h i s
to d i s t r i b u t e
shares s h a l l equal,
or
them on t h e same p r i n c i p l e among a s many c a n d i d a t e s
a s he s h a l l t h i n k f i t ;
ings of shareholders,
and i n d e c i d i n g a l l o t h e r q u e s t i o n s a t meete a c h s h a r e h o l d e r s h a l l be e n t i t l e d to one
v o t e on e a c h s h a r e o f s t o c k h e l d by him; e x c e p t t h a t ( i )
this
n o t be c o n s t r u e d a s l i m i t i n g the v o t i n g r i g h t s o f h o l d e r s o f
f e r r e d s t o c k u n d e r the terms and p r o v i s i o n s
of a r t i c l e s of
shall
pre-
associa-
t i o n , o r amendments t h e r e t o , adopted p u r s u a n t t o the p r o v i s i o n s
of
s e c t i o n 302 ( a ) o f the Emergency B a n k i n g and Bank C o n s e r v a t i o n A c t ,
a p p r o v e d M a r c h 9 , 1 9 3 3 , a s amended, (<:) i n t h e e l e c t i o n o f
tors,
direc-
s h a r e s o f i t s own s t o c k h e l d by a n a t i o n a l bank a s s o l e
t e e , whether r e g i s t e r e d i n i t s own name a s s u c h t r u s t e e o r i n
name o f i t s
trusthe
nominee, s h a l l n o t be v o t e d by the r e g i s t e r e d owner
u n l e s s u n d e r the terms o f t h e t r u s t
the manner i n w h i c h s u c h s h a r e s
s h a l l be v o t e d may be d e t e r m i n e d by a d o n o r o r b e n e f i c i a r y o f
the
t r u s t and u n l e s s s u c h d o n o r o r b e n e f i c i a r y a c t u a l l y d i r e c t s how
s u c h s h a r e s s h a l l be v o t e d ,
(3) shares of i t s
own s t o c k h e l d by a
n a t i o n a l bank and one o r more p e r s o n s a s t r u s t e e s may be v o t e d by
L-477
other person or persons, as trustees, in the same manner as if he
or they were the sole trustee, and (4) shares controlled by any
holding company affiliate of a national bank shall not be voted
unless such holding company affiliate shall have first obtained
a voting permit as hereinafter provided, which permit is in force
at the time such shares are voted, but such holding company affiliate may, without obtaining such permit, vote in favor of placing
the association in voluntary liquidation or taking any other action
pertaining to the voluntary liquidation of such association.
Share-
holders may vote by proxies duly authorized in writing; but no officer, clerk, teller, or bookkeeper of such bank shall act as proxy;
and no shareholder whose liability is past due and unpaid shall
be allowed to vote.
Whenever shares of stock cannot be voted by
reason of being held by the bank as sole trustee, such shares shall
be excluded in determining whether matters voted upon by the shareholders were adopted by the requisite percentage of shares.
"For the purposes of this section shares shall be deemed
to be controlled by a holding company affiliate if they are owned
or controlled directly or indirectly by such holding company affiliate, or held by any trustee for the benefit of the shareholders or
members thereof.
"Any such holding company affiliate may make application
to the Board of Governors of the Federal Reserve System for a voting
permit entitling it to vote the stock controlled by it at any or all
m e e t i n g s o f s h a r e h o l d e r s o f s u c h bank or a u t h o r i z i n g the t r u s t e e
or
t r u s t e e s h o l d i n g the s t o c k f o r i t s b e n e f i t o r f o r the b e n e f i t o f
its
s h a r e h o l d e r s so t o v o t e the same.
e r a l R e s e r v e S y s t e m may, i n i t s
Trie B o a r d o f G o v e r n o r s o f the F e d -
d i s c r e t i o n , g r a n t or w i t h h o l d
p e r m i t a s the p u b l i c i n t e r e s t may r e q u i r e .
such
In a c t i n g u p o n s u c h a p p l i c a -
t i o n , the B o a r d s h a l l c o n s i d e r the f i n a n c i a l
c o n d i t i o n of the
appli-
c a n t , the g e n e r a l c h a r a c t e r o f i t s management, and the p r o b a b l e
effect
o f the g r a n t i n g o f s u c h p e r m i t u p o n the a f f a i r s o f s u c h bank, b u t 110
s u c h p e r m i t s h a l l be g r a n t e d e x c e p t upon the f o l l o w i n g
ff
( a ) E v e r y s u c h h o l d i n g company a f f i l i a t e
a p p l i c a t i o n f o r such permit,
agree ( l )
conditions:
shall,
i n m a k i n g the
to r e c e i v e , on d a t e s
identical
w i t h t h o s e f i x e d f o r the e x a m i n a t i o n o f b a n k s w i t h w h i c h i t
is
affili-
a t e d , e x a m i n e r s d u l y a u t h o r i s e d to examine s u c h b a n k s , who s h a l l make
s u c h e x a m i n a t i o n s o f s u c h h o l d i n g company a f f i l i a t e a s s h a l l be n e c e s s a r y to d i s c l o s e f u l l y the r e l a t i o n s between s u c h banks and s u c h h o l d i n g company a f f i l i a t e and t h e e f f e c t of s u c h r e l a t i o n s upon t h e
o f s u c h b a n k s , s u c h e x a m i n a t i o n s to bo a t the e x p e n s e o f the
company a f f i l i a t e
so e x a m i n e d ;
affairs
holding
(£) t h a t the r e p o r t s o f s u c h e x a m i n e r s
s h a l l c o n t a i n s u c h i n f o r m a t i o n a s s h a l l be n e c e s s a r y t o d i s c l o s e
fully
the r e l a t i o n s between s u c h a f f i l i a t e and s u c h b a n k s arid t h e e f f e c t
s u c h r e l a t i o n s u p o n the a f f a i r s
of such b a n k s ;
of
(3) t h a t s u c h e x a m i n e r s
may examine each bank owned o r c o n t r o l l e d by the h o l d i n g company
affili-
a t e , b o t h i n d i v i d u a l l y and I n c o n j u n c t i o n w i t h o t h e r banks owned o r
c o n t r o l l e d by s u c h h o l o i n g company a f f i l i a t e ;
and ( 4 )
that
publication
L-v.7?
-5-
o f i n d i v i d u a l o r c o n s o l i d a t e d s t a t e m e n t s o f c o n d i t i o n o f s u c h banks
may be r e q u i r e d ;
,!
(b) A f t e r f i v e y e a r s a f t e r the enactment o f the B a n k i n g A c t
o f 1 9 5 3 , e v e r y s u c h h o l d i n g company a f f i l i a t e
s h a l l c o n t i n u e to p o s s e s s d u r i n g the l i f e
(l)
shall possess,
and
o f s u c h p e r m i t , f r e e and
c l e a r of any l i e n , p l e d g e , or h y p o t h e c a t i o n o f any n a t u r e ,
readily
m a r k e t a b l e a s s e t s o t h e r t h a n bank s t o c k i n an amount n o t l e s s t h a n 12
p e r centum of the a g g r e g a t e p a r v a l u e o f a l l bank s t o c k s c o n t r o l l e d by
s u c h h o l d i n g company a f f i l i a t e , w h i c h amount s h a l l be i n c r e a s e d by n o t
l e s s t h a n 2 per centum p e r annum o f s u c h a g g r e g a t e p a r v a l u e u n t i l
a s s e t s s h a l l amount t o 25 p e r centum o f the a g g r e g a t e p a r v a l u e
s u c h bank s t o c k s ; arid (2)
s h a l l r e i n v e s t i n r e a d i l y marketable
such
of
assets
o t h e r t h a n bank s t o c k a l l n e t e a r n i n g s o v e r and above 6 p e r centum p e r
annum on the book v a l u e o f i t s own s h a r e s o u t s t a n d i n g u n t i l
such
a s s e t s s h a l l amount t o s u c h 25 per centum o f the a g g r e g a t e p a r v a l u e
o f a l l bant: s t o c k s c o n t r o l l e d by
it;
" ( c ) N o t w i t h s t a n d i n g the f o r e g o i n g p r o v i s i o n s o f t h i s
section,
a f t e r f i v e y e a r s a f t e r the enactment of the B a n k i n g A c t o f 1933,
(1)
any s u c h h o l d i n g company a f f i l i a t e the s h a r e h o l d e r s o r members o f
w h i c h s h a l l be i n d i v i d u a l l y and s e v e r a l l y l i a b l e i n p r o p o r t i o n to the
number o f s h a r e s o f s u c h h o l d i n g company a f f i l i a t e h e l d by them r e s p e c tively,
i n a d d i t i o n t o amounts i n v e s t e d t h e r e i n , f o r a l l
liability
imposed on s u c h h o l d i n g company a f f i l i a t e
statutory
by r e a s o n of
its
c o n t r o l o f s h a r e s o f s t o c k o f b a n k s , s h a l l be r e q u i r e d o n l y to e s t a b l i s h and m a i n t a i n o u t o f n e t e a r n i n g s o v e r and above 6 p e r centum p e r
L-47.7
-6-
annum on the book value o f i t s own s h a r e s o u t s t a n d i n g a r e s e r v e o f
readily
marketable a s s e t s i n an amount o f n o t l e s s t h a n 12 per centum
of the a g g r e g a t e p a r v a l u e of bank s t o c k s c o n t r o l l e d by i t ,
and (2)
the a s s e t s r e q u i r e d by t h i s s e c t i o n to be p o s s e s s e d by s u c h h o l d i n g
company a f f i l i a t e may be u s e d by i t f o r replacement of c a p i t a l
in
banks a f f i l i a t e d w i t h i t and f o r l o s s e s i n c u r r e d i n s u c h b a n k s , but
any d e f i c i e n c y i n s u c h a s s e t s r e s u l t i n g from s u c h u s e s h a l l be made
up w i t h i n s u c h p e r i o d a s the Board o f G o v e r n o r s o f the F e d e r a l R e s e r v e
System may by r e g u l a t i o n p r e s c r i b e .and the p r o v i s i o n s o f t h i s
sub-
s e c t i o n , i n s t e a d o f s u b s e c t i o n ( b ) , s h a l l a p p l y to a l l h o l d i n g company a f f i l i a t e s w i t h r e s p e c t to any s h a r e s o f bank s t o c k owned o r
c o n t r o l l e d by them a s to w h i c h t h e r e i s no s t a t u t o r y l i a b i l i t y
imposed
upon the h o l d e r s o f s u c h bank s t o c k ;
M
( d ) E v e r y o f f i c e r , d i r e c t o r , a g e n t , and employee o f e v e r y
s u c h h o l d i n g company a f f i l i a t e
s h a l l be subject; to the same p e n a l t i e s
f o r f a l s e e n t r i e s i n any book, r e p o r t , o r statement of s u c h h o l d i n g
company a f f i l i a t e a s a r e a p p l i c a b l e to o f f i c e r s , d i r e c t o r s ,
agents,
and employees of member banks under s e c t i o n 5209 o f the R e v i s e d
Stat-
u t e s , a s amended (IJ. S . C . , t i t l e 12, s e c , 5 9 2 ) ; and
" ( e ) E v e r y s u c h h o l d i n g company a f f i l i a t e
shall^ in i t s
t i o n f o r s u c h v o t i n g p e r m i t , (1) show t h a t i t does not own,
applica-
control,
or have any i n t e r e s t i n , and i s n o t p a r t i c i p a t i n g i n the management
or d i r e c t i o n of,any c o r p o r a t i o n ,
business t r u s t , a s s o c i a t i o n , or other
s i m i l a r o r g a n i s a t i o n formed f o r the purpose o f , or engaged
principally
i n , the i s s u e ,
flotation,
underwriting, public sale, or
distribution,
at wholesale o r r e t a i l or through syndicate p a r t i c i p a t i o n of
b o n d s , d e b e n t u r e s , n o t e s , o r o t h e r s e c u r i t i e s o f any s o r t
r e f e r r e d to a s " s e c u r i t i e s company")J
(hereinafter
( 2 ) a g r e e t h a t d u r i n g the
t h a t the p e r m i t r e m a i n s i n f o r c e i t w i l l n o t a c q u i r e any
c o n t r o l , o r i n t e r e s t i n any such s e c u r i t i e s
the management o r d i r e c t i o n t h e r e o f ;
stocks,
ownership,
company o r p a r t i c i p a t e
(3) agree that i f ,
in
a t the time
o f f i l i n g the a p p l i c a t i o n f o r s u c h p e r m i t , i t owns, c o n t r o l s ,
an i n t e r e s t i n , o r i s
period
or has
p a r t i c i p a t i n g i n t h e management o r d i r e c t i o n
any s u c h s e c u r i t i e s company, i t w i l l , w i t h i n f i v e y e a r s a f t e r
f i l i n g of such a p p l i c a t i o n ,
divest i t s e l f
of i t s ownership,
and i n t e r e s t i n s u c h s e c u r i t i e s company and w i l l c e a s e
of,
the
control,
participating
i n the management o r d i r e c t i o n t h e r e o f , and w i l l n o t t h e r e a f t e r ,
during
the p e r i o d t h a t t h o p e r m i t r e m a i n s i n f o r c e , a c q u i r e any f u r t h e r
owner-
ship,
c o n t r o l , o r i n t e r e s t i n any s u c h s e c u r i t i e s
company o r
partici-
p a t e i n the management o r d i r e c t i o n t h e r e o f ; and (4) a g r e e t h a t
f o r t h i t w i l l d e c l a r e d i v i d e n d s o n l y out o f a c t u a l n e t
"If
a t any time i t
s h a l l appear to
thence-
earnings•
the B o a r d o f G o v e r n o r s
the F e d e r a l R e s e r v e System t h a t any h o l d i n g company a f f i l i a t e
of
has
v i o l a t e d any o f t h e p r o v i s i o n s o f the B a n k i n g A c t o f 193b o r o f any
agreement made p u r s u a n t to t h i s
s e c t i o n , the B o a r d o f G o v e r n o r s o f
the
F e d e r a l R e s e r v e System may, I n i t s d i s c r e t i o n , r e v o k e any s u c h v o t i n g
permit a f t e r g i v i n g s i x t y daysf
n o t i c e by r e g i s t e r e d m a i l o f i t s
t i o n to the h o l d i n g company a f f i l i a t e
inten-
and a f f o r d i n g i t a n o p p o r t u n i t y
-8-t o be h e a r d .
L-477
Whenever the B o a r d o f G o v e r n o r s o f the F e d e r a l
Reserve
System s h a l l have r e v o k e d any s u c h v o t i n g p e r m i t , no n a t i o n a l b a n k
whose s t o c k i s
mit i s
c o n t r o l l e d by t h e h o l d i n g company a f f i l i a t e whose p e r -
so r e v o k e d s h a l l r e c e i v e d e p o s i t s o f p u b l i c moneys o f t h e U n i t e d
S t a t e s , n o r s h a l l any s u c h n a t i o n a l bank pay a n y f u r t h e r d i v i d e n d
s u c h h o l d i n g company a f f i l i a t e u p o n any s h a r e s o f s u c h bank
by s u c h h o l d i n g company
controlled
affiliate,
"Whenever the B o a r d o f G o v e r n o r s o f t h o F e d e r a l R e s e r v e
s h a l l have r e v o k e d any v o t i n g p e r m i t a s h e r e i n b e f o r e p r o v i d e d ,
rights, privileges,
to
System
the
and f r a n c h i s e s o f any or a l l n a t i o n a l b a n k s
the
s t o c k o f w h i c h i s c o n t r o l l e d by s u c h h o l d i n g company a f f i l i a t e
shall,
i n the d i s c r e t i o n o f the B o a r d o f G o v e r n o r s o f the F e d e r a l R e s e r v e
Sys-
tem, bo s u b j e c t to f o r f e i t u r e i n a c c o r d a n c e w i t h s e c t i o n 2 o f the F e d e r a l R e s e r v e A c t , a s amended."
(Federal Reserve Act, 1935, p.
S e c . 5144, R e v i s e d S t a t u t e s o f t h e U n i t e d
"(c)
The term
"(l)
States)
' h o l d i n g company a f f i l i a t e '
corporation, business trust,
association,
178;
shall include
or other s i m i l a r
W h i c h owns o r c o n t r o l s , d i r e c t l y
or i n d i r e c t l y ,
any
organization—
either a
m a j o r i t y o f t h e s h a r e s o f c a p i t a l s t o c k o f a member bank o r more t h a n
50 per centum o f t h e number o f s h a r e s v o t e d f o r the e l e c t i o n of
t o r s of any one bank a t the p r e c e d i n g e l e c t i o n ,
direc-
or c o n t r o l s i n any
manner t h e e l e c t i o n o f a m a j o r i t y o f the d i r e c t o r s o f any one bank;
"(2)
F o r the b e n e f i t o f v;hose s h a r e h o l d e r s o r members a l l
or
or
s u b s t a n t i a l l y a l l t h e c a p i t a l s t o c k o f a member bank i s h e l d by t r u s t e e s .
-9" N o t w i t h s t a n d i n g the f o r e g o i n g , the term
affiliate'
' h o l d i n g company
s h a l l n o t i n c l u d e (except f o r the p u r p o s e s o f s e c t i o n 23A
o f the f e d e r a l R e s e r v e Act, a s amended) any c o r p o r a t i o n a l l o f the
stock
o f w h i c h i s owned by the U n i t e d S t a t e s , o r any o r g a n i z a t i o n w h i c h i s
d e t e r m i n e d by the B o a r d o f Governors of the F e d e r a l R e s e r v e
n o t to be engaged, d i r e c t l y or i n d i r e c t l y ,
the s t o c k o f , o r managing o r c o n t r o l l i n g ,
System
as a b u s i n e s s i n h o l d i n g
banks, banking
s a v i n g s banks, or t r u s t c o m p a n i e s ( F e d e r a l
associations,
Reserve A c t ,
1955,
p . 156; S e c . 2 ( c ) , B a n k i n g A c t o f 1 9 3 5 , June 16, 1933, a s amended by
A c t o f A u g . 23, 1955)
" E a c h S t a t e member bank a f f i l i a t e d with a h o l d i n g company
a t e s h a l l o b t a i n from s u c h h o l d i n g company a f f i l i a t e ,
vri.th.in such time
a s the B o a r d o f G o v e r n o r s of the F e d e r a l R e s e r v e System s h a l l
a n agreement t h a t s u c h h o l d i n g company a f f i l i a t e
affili-
prescribe,
s h a l l be s u b j e c t to
the same c o n d i t i o n s and. l i m i t a t i o n s a s a r e a p p l i c a b l e under
section
5144 o f the R e v i s e d S t a t u t e s , a s amended, i n the case o f h o l d i n g company a f f i l i a t e s o f n a t i o n a l b a n k s .
A copy o f each s u c h agreement
shall
be f i l e d w i t h the B o a r d o f G o v e r n o r s o f the F e d e r a l R e s e r v e System•
Upon the f a i l u r e o f a S t a t e member bank a f f i l i a t e d w i t h a h o l d i n g company a f f i l i a t e to o b t a i n s u c h an agreement w i t h i n the time so p r e s c r i b e d , the Board of G o v e r n o r s of the F e d e r a l R e s e r v e System s h a l l
re-
q u i r e s u c h bank to s u r r e n d e r i t s s t o c k i n the F e d e r a l r e s e r v e bank and
t o f o r f e i t a l l r i g h t s and p r i v i l e g e s o f membership i n t h e F e d e r a l R e s e r v e
System a s p r o v i d e d i n t h i s s e c t i o n .
Whenever the B o a r d o f G o v e r n o r s
o f the F e d e r a l R e s e r v e System s h a l l have r e v o k e d the v o t i n g
o f any s u c h h o l d i n g company a f f i l i a t e ,
permit
the B o a r d o f G o v e r n o r s of the
F e d e r a l R e s e r v e System may, i n i t s d i s c r e t i o n , r e q u i r e any or
all
S t a t e member banks a f f i l i a t e d w i t h s u c h h o l d i n g company a f f i l i a t e
to
s u r r e n d e r t h e i r s t o c k i n the F e d e r a l r e s e r v e bank ana to f o r f e i t
all
r i g h t s and p r i v i l e g e s o f membership i n the F e d e r a l R e s e r v e System a s
provided i n t h i s section.
(Federal Reserve A c t , 1955, Sec. 9, P a r .
21)
STATE BAR
ah AI"•> Ai v i A
Acquisition of stocks by banks arid trust companicis;
" C o r p o r a t i o n s formed f o r the p u r p o s e of c a r r y i n g on the b u s i n e s s
o f b a n k i n g and t r u s t companies d o i n g a b a n k i n b u s i n e s s ,
and s e l l
stocks, * * * , "
C i v i l Code of
may
( S e e . 6 5 6 5 , B a n k i n g Laws, 1 3 5 5 ; S e c .
buy
6565,
Ala.;
"No bank s h a l l
s u b s c r i b e f o r or own e x c e e d i n g t e n per c e n t o f
the c a p i t a l s t o c k of any o t h e r bank, or i n v e s t or have i n v e s t e d an
amount exceeding i n the a g g r e g a t e 25 per cent o f i t s own p a i d - i n
capital
s t o c k i n the c a p i t a l s t o c k of any o t h e r bank or b a n k s .
acquir-
Any bank
i n g c a p i t a l s t o c k i n any o t h e r bank i n the u s u a l c o u r s e o f
business
i n payment o f an i n d e b t e d n e s s owin : . to i t , must s e l l s u c h p o r t i o n o f
s a i d s t o c k as I s i n e x c e s s of the amount which i t i s p e r m i t t e d t o h o l d
end own a s h e r e i n p r o v i d e d w i t h i n one y e a r from the time the samo
acquired."
is
( S e c . 6 5 5 5 , B a n k i n g Laws, 1955; S e c . 6 5 5 5 , C i v i l Coda of
-11-
L-477
" A l l C o r p o r a t i o n s o r g a n i s e d and o p e r a t i n g a s t r u s t
shall * *
companies
* be amenable to the g e n e r a l b a n k i n g laws of the S t a t e
f a r a s s a i d laws are a p p l i c a b l e to t r u s t companies * *
inso-
(Sec. 6588,
B a n k i n g Laws, 1955; S e c . 6 5 8 8 , C i v i l Code of A l a . )
H o l d i n g companies and c h a i n or group bankingx
There are no p r o v i s i o n s
i n the b a n k i n g laws of t h i s S t a t e
relat-
i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g comp a n i e s or r e l a t i n g to c h a i n or group b a n k i n g .
ARIZONA
A c q u i s i t i o n of s t o c k s bv banks and t r u s t
companies:
"No bank, t r u s t company, o r l o a n a s s o c i a t i o n , may p u r c h a s e , own,
h o l d , o r s e l l or o t h e r w i s e d i s p o s e o f the s h a r e s o f the c a p i t a l
o f any o t h e r c o r p o r a t i o n , u n l e s s ,
stock
such purchase s h a l l be a u t h o r i z e d by
the e x e c u t i v e committee or approved by the b o a r d of d i r e c t o r s ; and i f
the p u r c h a s e
i s of s t o c k i n a bank the a p p r o v a l o f s a i d p u r c h a s e must
a l s o be had from the s u p e r i n t e n d e n t , * *
.
(Sec.
Ch. 8 3 , Laws o f
1955, amending S e c . 224, Ch. 8 , Rev, Code o f 1928)
"Bank"
defined:
The term " b a n k "
and t r u s t companies.
s h a l l i n c l u d e commercial b a n k s , s a v i n g s banks
( S e c . 1 , Ch. 97, Laws of 1 3 5 5 , amending S e c .
C h . 8 , Rev. Code o f 1928)
H o l d i n g companies and c h a i n or group
banking:
There are no provisions in the banking laws of this State
203,
L-477
r e l a t i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
companies or r e l a t i n g to c h a i n or group b a n k i n g .
ARKANSAS
A c q u i s i t i o n of s t o c k s by b a n k s a.nd t r u s t
companies:
Banks are p e r m i t t e d to a c q u i r e c e r t a i n s p e c i f i e d t y p e s o f
b u t n e i t h e r bank or t r u s t company s t o c k n o r c o r p o r a t e s t o c k s
are included i n t h i s p e r m i s s i o n .
stock,
generally
( S e e s . 108, 109, B a n k i n g Laws,
1931;
Act 496 o f 1 9 2 1 , S e c . G, and A c t 559 o f 19.19, S e c . 5)
T r u s t companies a r e a u t h o r i s e d " t o buy anc s e l l a l l k i n d s
* * * s t o c k s and o t h e r i n v e s t m e n t s e c u r i t i e s . "
of
( S e c . 165, B a n k i n g Laws,
1951; A c t o f April 1 5 , 1905, S e c . 2. as amended by S e c . 1 0 , A c t 627 o f
1925.)
C h a i n or group b a n k i n g ;
A statute prohibits loans
to person owning 50 ^er cent o f
"capi-
t a l s t o c k of t h r e e or more banks and or t r u s t companies, t h u s form Lug a
c h a i n or group o f banks ana or t r u s t companies" by such banks or
companies.
( S e c . 55, Hamming Laws, 1951; A c t 252 oi 1951, Sec*
trust
5)
CALIFORNIA
A c q u l s i o i o n of s t o c k s by bariKS arid t r u s t
companies;
"No bonk s h a l l , * * * purchase or I n v e s t
i n the c a p i t a l
stock
of any c o r p o r a t i o n u n l e s s the p u r c h a s e or a c q u i s i t i o n of such c a p i t a l
s t o c k s h a l l bo n e c e s s a r y to prevent l o s s to the bank on an o b l i g a t i o n
owned or on a debt p r e v i o u s l y c o n t r a c t e d I n gooo. f a i t h .
Any c a p i t a l
s t o c k so p u r c h a s e d or a c q u i r e d s h a l l be s o l d by such bank w i t h i n
six
-13--
L-477
months t h e r e a f t e r i f i t can be s o l d f o r the amount of the c l a i m of
such bank a g a i n s t i t ; and a l l c a p i t a l s t o c k thus p u r c h a s e d or a c q u i r e d
must be s o l d f o r the b e s t p r i c e o b t a i n a b l e by s a i d bank w i t h i n
three
y e a r s a f t e r s u c h p u r c h a s e or a c q u i s i t i o n u n l e s s the s u p e r i n t e n d e n t
banks s h a l l extend the time of i t s
of
s a l e f o r a p e r i o d n o t to exceed two
years.
"Any bank, w i t h the p r e v i o u s w r i t t e n c o n s e n t o f the
superin-
t e n d e n t of b a n k s , may p u r c h a s e or o t h e r w i s e a c q u i r e and h o l d the whole
or any p a r t of the c a p i t a l s t o c k of n o t more t h a n one t r u s t company
o r g a n i z e d and e x i s t i n g under the l a w s of t h i s s t a t e , and d o i n g
business
i n the same county i n which the p r i n c i p a l p l a c e of b u s i n e s s of
such
bank I s l o c a t e d ; p r o v i d e d 9
however, t h a t n o t more t h a n an amount e q u a l
t o t w e n t y - f i v e per centum of the c a p i t a l and s u r p l u s of any such bank
may be a t any one time i n v e s t e d i n the c a p i t a l s t o c k of such t r u s t
pany or such o t h e r c o r p o r a t i o n ; and p r o v i d e d , f u r t h e r ,
com-
t h a t no such
t r u s t company s h a l l engage i n or combine the b u s i n e s s of a commercial
bank o r a s a v i n g s bank or a t i t l e i n s u r a n c e company."
ing Laws, 1355; S e c . 57, A r t . I , B;„nk A c t of
(Cec. 57, B a n k -
Calif.)
A l t h o u g h s a v i n g s banks a r e s p e c i f i c a l l y a u t h o r i s e d to p u r c h a s e
" b o n d s or s t o c k s " o f c e r t a i n jvublic c o r p o r a t i o n s ,
(Sec. 61, Banking
Laws, I S 5 5 ; S e c . 5 1 , A r t . I I ,
they are n o t
Bank Act of C a l i f . )
i z e d t o a c q u i r e bank or t r u s t company s t o c k c r c o r p o r a t e s t o c k s
authorgener-
a l l y except .m so f a r a s t h e y are a u t h o r i z e d to do so by the m-ovisions
f o u n d i n s e c t i o n 57 quoted above.
A l t h o u g h t r u s t companies a r e a u t h o r i s e d , to i n v e s t t h e i r
capi-
t a l and s u r p l u s " i n accordance w i t h the p r o v i s i o n s of t h i s a c t ,
relative
to the i n v e s t m e n t or l o a n o f f u n d s d e p o s i t e d w i t h s a v i n g s b a n k s "
(Sec.
1 0 5 , B a n k i n g haws, 1955 > S e c . 1 0 5 , A r t . I V , Bank A c t of C a l i f . ) ,
which
i n c l u d e s the r i g h t to i n v e s t s u c h f u n d s i n " b o n d s or s t o c k s " o f
tain public corporations,
cer-
t r u s t companies a r e n o i a u t h o r i z e d t o a c q u i r e
bank o r t r u s t company s t o c k o r c o r p o r a t e s t o c k s g e n e r a l l y except i n so
f a r a s they a r e a u t h o r i z e d so to do by the p r o v i s i o n s f o u n d i n
section
37 quoted above.
"Bank"
defined:
"The word
1
bank 1 as u s e d i n t h i s a c t s h a l l be c o n s t r u e d to mean
any i n c o r p o r a t e d b a n k i n g i n s t i t u t i o n which sha 1.1 have been i n c o r p o r a t e d
to conduct the b u s i n e s s of r e c e i v i n g money on d e p o s i t , or
a t r u s t b u s i n e s s as herein defined.
following classes:
Trust companies."
A c t of
*
(a) S a v i n g s b a n k s j
transacting
Banks are d i v i d e d i n t o the
(b) Commercial b a n k s ; and ( c )
( S e c . 2 , B a n k i n g Laws, 1955; S e c . 2 , A r t . I ,
Bank
Calif.)
H o l d i n g companies^ and c h a i n or aroup b a n k i n g ;
There are no p r o v i s i o n s i n the b a n k i n g laws of t h i s S t a t e
relat-
i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n ; comp a n i e s o r r e l a t i n g t o c h a i n or group b a n k i n g .
COLORADO
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
companies:
ho oaak shall purchase the "stock of any other corporation,
-15-
L-v.7?
except s u c h a s i t may n e c e s s a r i l y a c q u i r e in the p r o t e c t i o n o r
f a c t i o n of p r e v i o u s l y e x i s t i n g l o a n s made in good f a i t h a c q u i r e d s h a l l be s o l a by the oenk w i t h i n
satis-
Any s t o c k so
three y e a r s , and sooner
if
i t can be done w i t h o u t i m p a i r i n g , the b a n k 1 s i n v e s t m e n t i n the
same."
( S e c . 32, B a n k i n g Laws, 1923; S e c , 2583, Comp. Laws of C o l o . ,
1921)
T r u s t companies a r e a u t h o r i z e d
stocks."
:i
to p u r c h a s e , i n v e s t i n and
( S e c . 128, B a n k i n g Laws, 1928; See* 2766, Comp. Laws o f
sell
Colo.,
1921)
H o l d i n g companies and c h a i n or group b a n k i n g ;
There a r e no p r o v i s i o n s i n the b a n k i n g laws o f t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
companies or r e l a t i n g to c h a i n or g r o u p b a n k i n g •
CONNECTICUT
A c q u i s i t i o n of s t o c k s by banks arid t r u s t
companiess
" S a v i n g s banks may i n v e s t i n the c a p i t a l .atock o f any bank o f
d e p o s i t and. d i s c o u n t o r
t r u s t company of e e p o s i t ane d i s c o u n t ,
located
i n t h i s s t a t e , or i n the ciby o f n'ew Y o r k , i n the s t a t e o f Lew Y o r k ,
i n the c i t y of B o s t o n In the s t a t e of
Philadelphia
foassachuoeVos,
or I:, the c i t y
or
of
i.n the s t a t e o f Pennsylvania, and i n the c a p i t a l s t o c k o f
any such banlc or t r u s t company, th--; o w i e r s h i p o f which c a r r i e s w i t h
by i n d o r s e m e n t on the s t o c k c e r t i f i c a t e ,
d e p o s i t r e c e i p t or other
it
evi-
dence of o w n e r s h i p of s t o c k i n such tank or t r u s t company, o w n e r s h i p of
a beneficial interest
i n the c a p i t a l s t o c k of an -if f i l i a t e d
corporation
engaged i n the s a l e o f , or i n v e s t m e n t I n , s t o c k s ana s e c u r i t i e s ,
v i d e d (a) t h a t the combined c a p i t a l ,
pro-
s u r p l u s a-no uri0.ivj.a0G p r o f i t s
of
-16--
L-477
any s u c h bank or t r u s t company .Locotec i n s a i d c i t y o f New Y o r k ,
or P h i l a d e l p h i a
s h a l l be a t l e a s t t e n m i x l i o n c e l l a r s , t-nd (b) t h a t
combined c a p i t a l ,
s u r p l u s and u n d i v i d e d p r o f i t s o f any s u c h bank
t r u s t company l o c a t e d i n t h i s
lars.
Boston
or
s t a t e s h a l l be a t l e a s t two m i l l i o n
No s a v i n g s bank s h a l l h o l d , by way of i n v e s t m e n t and a s
the
dol-
secur-
i t y f o r l o a n s ; more t h a n ten per c e n t of i t s d e p o s i t s ana s u r p l u s
in
the s t o c k s of s u c h b a n k s and t r u s t c o m p a n i e s , n o r more than one and o n e half
p e r c e n t o f s u c h d e p o s i t s and s u r p l u s , n o r more t h a n one h u n d r e d
t h o u s a n d d o l l a r s o f o a r v a l u e i n , n o r more t h a n o n e - q u a r t e r o f t h e
capi-
t a l s t o c k o f , a n y s u c h bank o r t r u s t company, e x c e p t (a) i f any two o r
more s u c h banks or t r u s t companies merge o r c o n s o l i d a t e ,
bank h o l d i n g c a p i t a l
stitutions,
any
savings
stock i n e i t h e r or a l l of such c o n s o l i d a t i n g
in-
e i t h e r b y way o f .Investment or a s s e c u r i t y f o r l o a n s , may
r e t a i n i t s r e s u l t a n t h o l d i n g s i n the s t o c k o f the c o n s o l i d a t e d
corpora-
t i o n , and (b) the s t o c k s of any s u c h banics and t r u s t companies h e l d by
way o f i n v e s t m e n t o r a s s e c u r i t y f o r l o a n s on A--r.il 1 , 1 9 5 1 , may be r e tained.
F o r the p u r p o s e of c o m p u t i n g the p e r c e n t a g e l i m i t a t i o n
scribed in this
section,
the s t o c k o f any s u c h bank or t r u s t
pre-
company
h e l d by way of i n v e s t m e n t s h a l l be f i g u r e d a t c o s t , and the s t o c k
any
of
s u c h bank or t r u s t company h e l d a s s e c u r i t y f o r l o a n s s h a l l be
u r e d a t n o t to exceed the amount loan-en t h e r e o n . f f
(Sec. 5995(26)
figp.
35,
B a n k i n g Laws, 1 9 5 5 ; S e c . 5 9 9 5 ( 2 6 ) , S e n , S t a t o . of C o n n . , a s amended
(1951)
by S e c .
1492c)
" A l l b a n k s and t r u s t companies ma in to in l a g o s/ v i r - g s
or s o l i c i t i n g or r e c e i v i n g d e p o s i t s as s a v i n g s ,
department,
shall invest a l l
such
-17--
L-477
d e p o s i t s so r e c e i v e d , a c c o r d i n g to the r e q u i r e m e n t s of the
statutes
c o n c e r n i n g the i n v e s t m e n t of d e p o s i t s i n s a v i n g s b a n k s ; * *
(Sec.
3908, p, 52, B a n k i n g Laws, 1955; S e c . 5908, Gen. S t a t s , o f Conn.)
H o l d i n g companies arid c h a i n or group banking;%
There are no p r o v i s i o n s i n the b a n k i n g l a w s of t h i s S t a t e
relat-
i n g to the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g comp a n i e s or r e l a t i n g t o c h a i n or group b a n k i n g .
DELAWARE
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
"No bank or t r u s t company s h a l l h o l a more than ten per cent o f
the c a p i t a l s t o c k of any o t h e r bank or t r u s t company."
( B a n k i n g Laws,
1 3 5 6 , p. 7 6 ; Laws of Delaware, V o l . 58, P a r t I I , Ch. 9 5 , S e c .
"Bank"
21.)
defined:
The term " b a n k " a s u s e d i n the above quoted p r o v i s i o n " s h a l l be
deemed t o comprehend e v e r y bank and e v e r y c o r p o r a t i o n c o n d u c t i n g a banki n g b u s i n e s s o f any Kind or plan ( e x c e p t b a n k i n g a s s o c i a t i o n s
organized
under the a u t h o r i t y of the U n i t e d S t a t e s and commonly known as N a t i o n a l
B a n k s ) whose p r i n c i p a l p l a c e of b u s i n e s s i s i n t h i s S t a t e ; * *
( 3 a n k i n g Laws, 1956, p. 56; Laws of Delaware, V o l . 52, P a r t I I ,
"
Ch. 1 0 5 ,
S e c . 1)
oOo
"Mo bank or t r u s t company s h a l l h o l d more t h a n ten per c e n t of
the c a p i t a l s t o c k o f any o t h e r bank or t r u s t company."
1956, p. 102; Laws o f Delaware, V o l . 58, P a r t I I ,
( B a n k i n g Laws,
Ch. 9 4 , S e c .
29.)
"Bank"
defined;
The p r o v i s i o n l a s t above quoted " s h a l l n o t be deemed t o a p p l y
t o ( 1 ) c o r p o r a t i o n s w i t h o u t c a p i t a l s t o c k a o i n a u s a v i n g s bank
busi-
n e s s and ( 2 ) N a t i o n a l B a n k s ; and the term " b a n k " o r " b a n k s " a s u s e d
t h i s A c t s h a l l n o t be deemed t o i n c l u d e
Banks."
II,
s u c h S a v i n g s Bank or N a t i o n a l
( B a n k i n g L a w s , 1 9 3 8 , p . 8 8 ; Laws o f D e l a w a r e , V o l . 58,
Ch. 9 4 , S e c .
in
Part
I)
H o l d i n g companies and c h a i n o r g r o u p
T h e r e a r e no p r o v i s i o n s
banking:
i n the b a n k i n g l a w s of t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k b y h o l d i n g
companies o r r e l a t i n g t o c h a i n o r g r o u p
banking.
D I S T R I C T OF CGUa-BIA
A c q u i s i t i o n of s t o c k s by b a n k s and
"It
trustcompaniest
s h a l l n e t be l a w f u l f o r any company ( b a n k i n g
corporation)
t o u s e a n y o f t h e i r f u n a s i n trie p u r c h a s e of a n y s t o c k i n any o t h e r
corporation."
( T i t l e 5 , Ch, 9 , S e c . 2 7 8 , Coae o f Laws o f D i s t . o f
There are no p r o v i s i o n s
relating specifically
i n the l a w s o f the D i s t r i c t
of
Columbia
t o the a c q u i s i t i o n of bank o r t r u s t company
o r t o the a c q u i s i t i o n o f c o r p o r a t e s t o c k s g e n e r a l l y
by t r u s t
Col.)
stock
companies.
H o l d i n g companies and c h a i n or group b a n t i n g 2
There a r e no p r o v i s i o n s i n the b a n k i n g l a w s o f the D i s t r i c t
of
C o l u m b i a r e l a t i n g t o the a c q u i s i t i o n o f bank o r t r u s t company s t o c k by
h o l d i n g companies o r r e l a t i n g t o c h a i n o r g r o u p
banking.
L-477
IMS1IM
A c q u i s i t i o n of stocks by banks and, trust companies;
S a v i n g s banks may i n v e s t t h e i r c a p i t a l and d e p o s i t s ana income
aerived therefrom
11
i n the s t o c k of any bank i n c o r p o r a t e d under the a u -
t h o r i t y of t h i s S t a t e , o r the s t o c k of any b a n k i n g a s s o c i a t i o n
p o r a t e d under the a u t h o r i t y of the U n i t e a S t a t e s * *
(2753) B a n k i n g Laws, 1 9 5 5 ; Ch. 5864, A c t s o f 1 8 8 9 , S e c .
M
-- - v i t
incor-
( S e c . 4179
41j
s h a l l be u n l a w f u l f o r any bank or t r u s t company o r -
g a n i z e d under the laws of t h i s S t a t e and d o i n g b u s i n e s s i n t h i s
State,
to d i r e c t l y or i n d i r e c t l y i n v e s t any of the f u n d s of s a i a bank or
t r u s t company i n s t o c k of any i n c o r p o r a t e d company i n t h i s S t a t e
elsewhere * * * n
or
( S e c . 4152, B a n k i n g Laws, 1955; Ch. 7 2 6 9 , A c t s of
1 9 1 7 , S e c . 2, a s amended by Ch. 15576, Acts o f 1 9 2 S , S e c . 11)
E v e r y t r u s t company i s a u t h o r i s e
sell stocks."
" t o p u r c h a s e , i n v e s t i n and
( S e c . 4 1 8 5 , B a n k i n g Laws, 1955; Ch. 6 4 2 5 , A c t s o f 1 9 1 5 ,
S e c . 1 , amended by Ch. 7 2 6 6 , A c t s o f 1917, S e c .
a s amended by Ch.
15576, A c t s of 1929, S e c . 27)
(Note a p p a r e n t c o n f l i c t of s t a t u t e s r e f e r r e d to above)
H o l d i n g companies and c h a i n or group b a n k i n g :
There are no p r o v i s i o n s i n the b a n k i n g l a w s o f t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k bv h o r d i n g
companies or r e l a t i n g t o c h a i n or group b a n k i n g .
GEORGIA
Acquisition of stocks by banks and trust companies;
"No bank shall subscribe for, purchase or hold stock in any
-20-o t h e r bank
L-477
u n l e s s t h e same s h a l l have been t r a n s f e r r e d t o i t
in
s a t i s f a c t i o n o f a debt p r e v i o u s l y c o n t r a c t e d or s n a i l have been p u r c h a s e d a t a s a l e under a power c o n t a i n e d i n a n o t e o r o t h e r
instrument
by w h i c h i t was p l e d g e d t o the bank or u n d e r a judgment or decree
i t s f a v o r , and a l l
in
s u c h s t o c k s h a l l be d i s p o s e d o f by the bank w i t h i n
s i x m o n t h s , u n l e s s the S u p e r i n t e n d e n t of B a n k s s h a l l e x t e n d the time
f o r a good c a u s e shown.
N o t h i n g i n s e c t i o n i s t o be c o n s t r u e d a s
a p p l y i n g to s a v i n g s b a n k s d o i n g a s a v i n g s b u s i n e s s o n l y .
(Sec.
2 5 , A r t . X I X , p . 7 7 , B a n k i n g L a w s , 1955$ S e c . 1 5 - 2 0 2 5 , Code o f 1955)
"Bank"
defined;
The term " b a n k "
s h a l l include incorporated banks,
savings
b a n k s , b a n k i n g c o m p a n i e s , t r u s t companies and o t h e r c o r p o r a t i o n s
ing a banking business I n t h i s State.
Laws, 1 9 5 5 j A c t o f A u g u s t 1 6 ,
(Sec. 1, A r t .
I , p. 1,
do-
Banking
1919)
H o l d i n g companies and c h a i n or g r o u p bar,king:
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
l a t i n g to the a c q u i s i t i o n of Dank or t r u s t company s t o c k by
re-
holding
companies or r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
IDAHO
A c q u i s i t i o n ox s t o c k s by b a n k s and t r u s t
"No bank s h a l l
bank w h e r e v e r o r g a n i s e d ,
companies:
* p u r c h a s e any *
- *
s h a r e s o f any
other
or s i t u a t e d , * * * u n l e s s s u c h s e c u r i t y
or
p u r c h a s e s h a . l l be n e c e s s a r y t o p r e v e n t l o s s upon a debt p r e v i o u s l y
t r a c t e d i n good f a i t h | and s t o c k so p u r c h a s e d or a c q u i r e d s h a l l
con-
within
-21-
L-477
s i x months f r o m the date o f a c q u i r e m e n t he s o l d or d i s p o s e d o f a t
lic
or p r i v a t e
s a l e ; a f t e r the e x p i r a t i o n of s i x months a n y s u c h
s h a l l n o t be c o n s i d e r e d a s a p a r t o f t h e a s s e t s o f s u c h bank• M
2 5 - 6 0 1 , B a n k i n g L a w s , 1 9 5 5 ; S e c . 2 5 - 6 0 1 , I d a h o Code,
"Bank"
pubstock
(Sec.
Annotated)
defined;
"The word ' B a n k 1
as used i n t h i s act,
mean a n y i n c o r p o r a t e d bank or i n s t i t u t i o n
s h a l l be c o n s t r u e d
to
(except n a t i o n a l banks)
which
s h a l l have been . i n c o r p o r a t e d t o c o n d u c t t h e b u s i n e s s o f r e c e i v i n g money
on d e p o s i t o r t r a n s a c t i n g a t r u s t b u s i n e s s a s h e r e i n a e f i a e d , and
be c o n s t r u e d t o I n c l u d e a n y i n d i v i d u a l ,
copartnership,
or
shall
unincorporated
a s s o c i a t i o n engaged i n t h e b a n k i n g b u s i n e s s a s h e r e i n d e f i n e d , * *
" B a n k s a r e d i v i d e d i n t o the f o l l o w i n g c l a s s e s :
Banks,
( b ) Commercial B a n k s ,
(c) T r u s t Companies."
B a n k i n g L a w s , 1 9 5 5 ; S e c . 25-j.OS,
*
(a)
Savings
(Sec.
25-102,
I d a h o Code A n n o t a t e d )
H o l d i n g companies and c h a i n or a r o u p banking%
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g t o t h e a c q u i s i t i o n o f bank o r t r u s t company s t o c k b y h o l d i n g
panies or r e l a t i n g to chain or group
relatcom-
hanking.
j- 1j i j 1 j' '.J LC
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
There a r e no p r o v i s i o n s
i n g t o the a c q u i s i t i o n
i n the b a n k i n g l a w s o f t h i s S t a t e
of bank o r t r u s t company s t o c k o r c o r p o r a t e
g e n e r a l l y by b a n k s and t r u s t
companies.
F o l d i n g companies ana c h a i n or g r o u p
companiesi
bankingj
There are no provisions in the banking laws of this State
relatstocks
relating
to the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
companies or r e l a t i n g t o c h a i n or group b a r k i n g *
INDIANA
Acquisition of stocks bp banks and trust companies:
" E x c e p t as i n t h i s a c t o t h e r w i s e p r o v i d e d or o t h e r w i s e
permitted
by law, n o t h i n g h e r e i n c o n t a i n e d s h a l l a u t h o r i z e the p u r c h a s e by any
bank or t r u s t company o f any s h a r e o f s t o c k o f any c o r p o r a t i o n . "
bank or t r u s t company s t o c k n o r c o r p o r a t e s t o c k s g e n e r a l l y a r e
by any o t h e r p r o v i s i o n o f the b a n k i n g l a w s .
Neither
excepted
( S e c . 1 7 3 , p. 9 3 , B u n k i n g
Laws, 1935; 1955 A c t s o f I n d i a n a , p. 176, as amended by A c t s o f 1935, p.
51)
S a v i n g s banks are a u t h o r i z e d t o i n v e s t i n c e r t a i n t y p e s of
but n e i t h e r bank or t r u s t company s t o c k n o r c o r p o r a t e s t o c k s
are i n c l u d e d .
stocks
generally
( S e c . 19, p. 215, B a n k i n g Laws, 1935; 1955 A c t a of
Indiana
a s amended by A c t s o f 1955, p. 35P)
H o i d i n g company
affiliatess
" S e c . 226.
article,
The term ' h o l d i n g company a f f i l i a t e , 1
a s used, i n
s h a l l i n c l u d e any c o r p o r a t i o n , b u s i n e s s t r u s t , a s s o c i a t i o n ,
this
or
other simi1a a o i g a n i z a t i o n s
"(a)
\7hich owns o r c o n t r o l s , d i r e c t l y or i n d i r e c t l y , e i t h e r a
m a j o r i t y of the s h a r e s of the c a p i t a l s t o c k o f a bank or t r u s t
company,
or more t h a n f i f t y per cent of the number of s h a r e s v o t e d f o r the
t i o n of d i r e c t o r s o f s u c h bank or t r u s t company a:t the p r e c e d i n g
or c o n t r o l s ,
i n any manner, the e l e c t i o n of a m a j o r i t y o f the
elecelection
directors
o f s u c h bank or t r u s t company] or
"(b)
substantially
h e l d by
F o r the b e n e f i t o f whose s h a r e h o l d e r s o r members a l l ,
all,
The s h a r e s c o n t r o l l e d by any h o l d i n g company
of any bank or t r u s t company s h a l l n o t be v o t e d a t any
o f d i r e c t o r s o r i n d e c i d i n g any q u e s t i o n a t any m e e t i n g of
unless
is
trustees.
" S e c . 227.
filiate
the c a p i t a l s t o c k of a bank or t r u s t company
or
s u c h h o l d i n g company a f f i l i a t e
af-
election
shareholders
s h a l l f i r s t have o b t a i n e d a v o t -
i n g p e r m i t , a s h e r e i n a f t e r p r o v i d e d , w h i c h p e r m i t s h a l l be i n f o r c e
the time s u c h s h a r e s are v o t e d .
S h a r e h o l d e r s may v o t e by p r o x i e s ,
p r o v i d e d i n s e c t i o n 9G o f t h i s a c t , b u t no o f f i c e r ,
clerk, teller
at
as
or
b o o k k e e p e r of s u c h bank or t r u s t company s h a l l a c t a s p r o x y ; and no
s h a r e h o l d e r whose l i a b i l i t y ,
a s a s h a r e h o l d e r or b o r r o w e r ,
and u n p a i d s h a l l be a l l o w e d t o v o t e .
t r o l l e d by a h o l d i n g company
affiliate
S h a r e s s h a l l be deemed t o be c o n if
they a r e owned o r
d i r e c t l y or i n d i r e c t l y by s u c h h o l d i n g company a f f i l i a t e ,
t r u s t e e f o r the b e n e f i t o f the s h a r e h o l d e r s o r members
" S e c . 223.
i s p a s t due
controlled
o r h e l d by any
thereof.
Any s u c h h o l d i n g company a f f i l i a t e may make
t i o n to the department f o r a v o t i n g p e r m i t e n t i t l i n g
applica-
i t to c a s t one
v o t e a t a l l e l e c t i o n s o f d i r e c t o r s o f s u c h bank o r t r u s t company on each
s h a r e of s t o c k o f s u c h bank o r t r u s t company c o n t r o l l e d by i t .
The d e -
p a r t m e n t may, i n i t s d i s c r e t i o n . , g r a n t or w i t h h o l d s u c h p e r m i t , a s
the
public
de-
i n t e r e s t may r e q u i r e „
I n a c t i n g upon s u c h a p p l i c a t i o n ,
the
p a r t m e n t s h a l l c o n s i d e r the f i n a n c i a l c o n d i t i o n o f the a p p l i c a n t ,
general character
of i t s management, axe. the p r o b a b l e e f f e c t o f
the
the
g r a n t i n g of s u c h p e r m i t upon the a f f a i r s
o f s u c h bank o r t r u s t
company,
but no s u c h p e r m i t s h a l l be g r a n t e d e x c e p t upon the c o n d i t i o n s
a f t e r enumerated i n s e c t i o n s 229 :> 250 and 2 5 1 o f t h i s
,!
Sec. 229.
E v e r y h o l d i n g company a f f i l i a t e
a p p l i c a t i o n f o r a v o t i n g permit, agree ( l )
act.
shall,
is affiliated,
i n making any
t o r e c e i v e , on d a y s
w i t h t h o s e f i x e d f o r the e x a m i n a t i o n of the banks or t r u s t
with which i t
herein-
.identical
companies
e x a m i n e r s d u l y a u t h o r i z e d t o examine
such
b a n k s o r t r u s t c o m p a n i e s , who s h a l l make s u c h e x a m i n a t i o n s o f s u c h h o l d i n g company a f f i l i a t e
as s h a l l be n e c e s s a r y
to d i s c l o s e f u l l y the
rela-
t i o n s between s u c h banks o r t r u s t companies and s u c h h o l d i n g company
filiate,
and the e f f e c t of s u c h r e l a t i o n s upon the a f f a i r s o f
such
banks or t r u s t companies,
s u c h e x a m i n a t i o n s t o be a t the expense o f
h o l d i n g company a f f i l i a t e
so examined;
examiners
(2)
t h a t the r e p o r t s o f
between such a f f i l i a t e
b a n k s or t r u s t c o m p a n i e s ;
dis-
and s u c h b a n k s o r
c o m p a n i e s , and the e f f e c t of s u c h r e l a t i o n s upon the a f f a i r s
the
such
s h a l l c o n t a i n s u c h i n f o r m a t i o n a s s h a l l be n e c e s s a r y t o
c l o s e f u l l y the r e l a t i o n s
af-
of
trust
such
( 3 ) t h a t s u c h e x a m i n e r s may examine each bank
o r t r u s t company t h e n owned o r c o n t r o l l e d by t h e h o l d i n g company a f filiate,
b o t h i n d i v i d u a l l y and i n c o n j u n c t i o n w i t h o t h e r b a n k s o r
trust
companies owned or c o n t r o l l e d by s u c h h o l d i n g company a f f i l i a t e ;
and
(4)
condi-
t h a t p u b l i c a t i o n o f i n d i v i d u a l or c o n s o l i d a t e d
statements of
t i o n may be r e q u i r e d .
" S e c . 250.
pany a f f i l i a t e
the l i f e
(l)
A f t e r t h i s a c t t a k e s e f f e c t , e v e r y s u c h h o l d i n g coms h a l l p o s s e s s , and s h a l l c o n t i n u e t o p o s s e s s
o f the v o t i n g p e r m i t , f r e e ana c t e a r of l i e n ,
pledge or
during
-25--
L-477
h y p o t h e c a t i o n o f any n a t u r e , r e a d i l y m a r k e t a b l e a s s e t s , o t h e r
bank or t r u s t company s t o c k ,
than
i n an amount n o t l e s s t h a n t w e l v e
c e n t of the a g g r e g a t e par v a l u e of a l l bank ana t r u s t company
c o n t r o l l e d by s u c h h o l d i n g company a f f i l i a t e ,
per
stocks
w h i c h amount s h a l l be
i n c r e a s e d by n o t l e s s t h a n two per c e n t per annum o f s u c h a g g r e g a t e
par v a l u e u n t i l
such a s s e t s
s h a l l amount t o t w e n t y - f i v e per c e n t o f
the a g g r e g a t e p a r v a l u e o f s u c h bank and t r u s t company s t o c k ; and (2)
shall reinvest,
i n r e a d i l y marketable a s s e t s ,
o t h e r t h a n bank or
trust
company s t o c k , a l l n e t e a r n i n g s o v e r and above s i x per c e n t p e r annum
on the book v a l u e o f i t s own s h a r e s o u t s t a n d i n g u n t i l
such a s s e t s
amount t o t w e n t y - f i v e per c e n t of the a g g r e g a t e p a r v a l u e o f a l l
and t r u s t company s t o c k s c o n t r o l l e d by
" S e c . 251.
bank
it.
N o t w i t h s t a n d i n g the p r o v i s i o n s of s e c t i o n 250 o f
t h i s act, a f t e r t h i s act takes e f f e c t ,
filiate,
shall
(l)
a n y s u c h h o l d i n g company
the s h a r e h o l d e r s or members o f w h i c h s h a l l be i n d i v i d u a l l y
afor
s e v e r a l l y " l i a b l e , i n p r o p o r t i o n t o the number o f s h a r e s o f s u c h h o l d i n g
company a f f i l i a t e h e l d by them, r e s p e c t i v e l y ,
invested therein, for a l l
constitutional
i n a d d i t i o n t o amounts
and s t a t u t o r y l i a b i l i t y
p o s e d on s u c h h o l d i n g company a f f i l i a t e by r e a s o n of i t s
s h a r e s o f s t o c k o f b a n k s and t r u s t c o m p a n i e s ,
control
imof
s h a l l be r e q u i r e d o n l y
e s t a b l i s h and. m a i n t a i n , o u t o f n e t e a r n i n g s , o v e r and above s i x
per
c e n t per annum on the book v a l u e of i t s
a re-
own s h a r e s o u t s t a n d i n g ,
s e r v e o f r e a d i l y m a r k e t a b l e a s s e t s i n an amount n o t l e s s t h a n t w e l v e
per c e n t o f the a g g r e g a t e p a r v a l u e o f bank o r t r u s t company
stocks
to
-26-c o n t r o l l e d by i t ;
and ( 2 )
L-477
the a s s e t s r e q u i r e d by t h i s
s e c t i o n to be
p o s s e s s e d by s u c h h o l d i n g company a f f i l i a t e may be u s e d by i t f o r
the
r e p l a c e m e n t o f c a p i t a l i n b a n k s or t r u s t companies a f f i l i a t e d w i t h
it
and f o r l o s s e s i n c u r r e d i n s u c h b a n k s o r t r u s t c o m p a n i e s , b u t any d e f i c i e n c y i n s u c h a s s e t s r e s u l t i n g from s u c h u s e s h a l l be made up w i t h in
s u c h p e r i o d a s the department may by . r e g u l a t i o n p r e s c r i b e . "
(Sees.
2 2 6 - 2 3 1 , pp. 1 2 0 - 1 2 2 , B a n k i n g L a w s , 1935; A c t s o f 1 9 3 3 , p . 176)
IOWA
A c q u i s i t i o n o f s t o c k s by b a n k s and t r u s t
Banks,
companies:
t r u s t companies and s a v i n g s b a n k s are a u t h o r i z e d t o
v e s t t h e i r c a p i t a l and d e p o s i t s i n . c e r t a i n l i s t e d
i n c l u d e bank or
t r u s t company s t o c k or c o r p o r a t e
in-
s t o c k s w h i c h do n o t
stocks generally.
(Sees.
9 1 8 3 , 9 1 8 5 - c l , B a n k i n g Laws, 1 9 3 4 ; Ch. 4 1 3 , Iowa Laws)
H o l d i n g companies and c h a i n or o;roup b a n k i n g ;
There are no p r o v i s i o n s
i n the b a n k i n g laws of t h i s S t a t e
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
p a n i e s o r r e l a t i n g t o c h a i n or g r o u p
relatcom-
banking.
KANSAS
A c q u i s i t i o n of s t o c k s by b a n k s and t r u s t
companies:
Mo bank s h a l l " i n v e s t a n y o f i t s f u n a s i n the s t o c k o f a n y o t h e r
bank o r c o r p o r a t i o n " .
( S e c . 38, B a n k i n g Laws, 1 9 3 5 ; S e c . 9 - 1 1 1 ,
S t a t s . K a n s a s , 1 9 2 3 , a s amended by S e s s i o n Laws f o r 1953 ( S p e c i a l
s i o n ) , Ch.
27)
Rev.
Ses-
-27--
L-477
T r u s t companies a r e a u t h o r i s e d t o "buy ana s e l l a l l k i n d s
" s e c u r i t i e s ana s t o c k s :
P r o v i d e d , T h a t the t o t a l i n v e s t m e n t of a n y
s u c h t r u s t company i n bank s t o c k s h a l l a t no time exceed one
i t s paid-up capital
fourth
P r o v i d e d , That the t o t a l investment i n
bank
s t o c k h e l d by any t r u s t company i n e x c e s s o f one f o u r t h o f i t s
t a l s h a l l be d i s p o s e d o f w i t h i n two y e a r s from the p a s s a g e of
act."
sas,
of
capithis
( S e c . 1 4 7 , B a n k i n g Laws, 1 9 5 5 ; S e c , 1 7 - 2 0 0 2 , R e v . S t a t s .
Kan-
192b)
"Banking business"
defined-
"Any i n d i v i d u a l ,
f i r m or c o r p o r a t i o n who s h a l l r e c e i v e money
on d e p o s i t , whether on c e r t i f i c a t e s
or s u b j e c t t o c h e c k , o r s h a l l
c e i v e money f o r w h i c h i t i s s u e s i t s
check, d r a f t , b i l l
o f exchange
other evidence of indebtedness f o r which i t charges a f e e ,
considered
rioing
provisions
of t h i s a c t
Rev. S t a t s .
Holding
or
s h a l l be
a b a n k i n g b u s i n e s s , ana s h a l l be amenable; t o a l l
."
re-
( S e c . 51, Banking Laws, 1955; Sec.
the
9-15C,
1923)
companies:
The bank c o m m i s s i o n e r i s a u t h o r i z e d t o make e x a m i n a t i o n o f
any
i n v e s t m e n t o r h o l d i n g company o r c o r p o r a t i o n a f f i l i a t e d w i t h any bank
o r t r u s t company.
( S e c . 95, Banking Laws, 1955; Sec. 9 - 1 2 5 - a ,
Supp. to Rev. S t a t s . ,
1925)
The bank c o m m i s s i o n e r i s a u t h o r i z e d to examine any
ship,
1955
c o r p o r a t i o n or a s s o c i a t i o n ,
copartner-
d o m e s t i c o r f o r e i g n , h o l d i n g as much
a s 25 per c e n t of t h e c a p i t a l s t o c k of any bank or t r u s t company d o i n g
business in Kansas.
S u p p . to R e v . S t a t s . ,
( S e c . 94, Banking Laws, 1935; Sec. 9-125b,
1935
1923)
KENTUCKY
A c q u i s i t i o n of s t o c k s by b a n k s and t r u s t
companies:
There a r e no p r o v i s i o n s i n the b a n k i n g l a w s o f t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k o r c o r p o r a t e
g e n e r a l l y by b a n k s or t r u s t
stocks
companies.
Chain banking:
No " p e r s o n
s h a l l " d i r e c t l y or i n d i r e c t l y ,
t h a n o n e - h a l f of the c a p i t a l
stock"
sive of stock held as c o l l a t e r a l ;
h o l d o r own more
o f a bank o r t r u s t company
"exclu-
P r o v i d e d , however, t h a t there
be no l i m i t a t i o n on the amount of the c a p i t a l
stock"
shall
o f a bank or
trust
company " w h i c h may be h e l d o r owned by the U n i t e d S t a t e s of A m e r i c a o r
by a c o r p o r a t i o n , a m a j o r i t y of the s t o c k of w h i c h c o r p o r a t i o n i s
o r h e l d by the U n i t e d S t a t e s o f A m e r i c a . "
(Sees. 581, 609,
L a w s , 1 9 5 2 , a s amended by Ch. 1 5 , p . 28, K e n t u c k y A c t s ,
owned
Banking
1954)
LOUISIANA
A c q u i s i t i o n o f s t o c k s by b a n k s and t r u s t
companies:
There a r e two s t a t u t e s i n the b a n k i n g l a w s o f t h i s S t a t e
i n g f o r the o r g a n i z a t i o n o f b a n k s and t r u s t c o m p a n i e s .
p r o v i d e s f o r the o r g a n i z a t i o n
One
provid-
statute
of b a n k i n g a s s o c i a t i o n s and s a v i n g s
banks
b u t c o n t a i n s no p r o v i s i o n s r e l a t i n g to the a c q u i s i t i o n o f bank and
t r u s t company s t o c k or c o r p o r a t e
stocks generally
by b a n k s and
savings
-29--
banks.
L-477
The o t h e r s t a t u t e p r o v i d e s f o r the o r g a n i z a t i o n o f
s a f e d e p o s i t and t r u s t b a n k s " and a u t h o r i z e s
s u c h banks to
"savings,
"receive,
h o l d , p u r c h a s e , a c q u i r e and c o n v e y , by and under t h e i r c o r p o r a t e name,
s u c h p r o p e r t y , r e a l and p e r s o n a l , i n c l u d i n g b o n d s , s t o c k s and
t i e s o f the U n i t e d S t a t e s ,
corporation,
securi-
o r o f any of the U n i t e d S t a t e s , o r o f any
b o a r d o r b o d y , p u b l i c or p r i v a t e t h e r e o f , a s may be n e c e s -
s a r y , p r o p e r o r c o n v e n i e n t t o the o b j e c t s o f t h e a s s o c i a t i o n ,
exercise,
i n r e l a t i o n t h e r e t o , a l l the d i r e c t and i n c i d e n t a l r i g h t s
ownership."
A c t 45 o f
and to
( S e c . 1 - S e c o n d , p . 34, b a n k i n g t a w s , 1 9 5 2 ; S e c .
of
1-Second,
1902)
H o l d i n g c o m p a n i e s and c h a i n or g r o u p b a n k i n g s
T h e r e a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
p a n i e s o r r e l a t i n g to c h a i n or g r o u p
com-
banking.
MAINE
Acquisition
of bank s t o c k s by banks and t r u s t
S a v i n g s b a n k s ana i n s t i t u t i o n s
f u n d s " i n the c a p i t a l
der t h e l a w s of t h i s
for
companies:
s a v i n g s may i n v e s t
their
s t o c k of any bank i n t h i s s t a t e i n c o r p o r a t e d
s t a t e o r the U n i t e d S t a t e s , and i n the
un-
capital
s t o c k o f any bank i n any o f the o t h e r s t a t e s o f hew E n g l a n d or i n
s t a t e o f hew Y o r k i n c o r p o r a t e d u n d e r the l a w s o f any o f t h o s e
the
states
or the U n i t e d S t a t e s and l o c a t e d i n a c i t y h a v i n g p o p u l a t i o n o f n o t
l e s s t h a n 2 5 0 , 0 0 0 ; p r o v i d e d , t h a t any s u c h bank l o c a t e d o u t s i d e o f
s t a t e s h a l l be a member of the F e d e r a l R e s e r v e Bank S y s t e m and
this
shall
have a c a p i t a l and u n d i v i d e d p r o f i t s o f n o t l e s s t h a n
H
$10,000,000.M
A s a v i n g s hank s h a l l n o t h e r e a f t e r a c q u i r e bank s t o c k ,
by way o f i n v e s t m e n t and a s s e c u r i t y f o r
I t s present holdings,
both
l o a n s , which, together
s h a l l be i n e x c e s s o f 7 o f
with
i t s deposit;
nor
s h a l l h e r e a f t e r a c q u i r e s t o c k i n any one bank w h i c h , t o g e t h e r w i t h
present holdings
s h a l l have a book v a l u e o f more t h a n 1% o f i t s
p o s i t s ; n o r s h a l l h e r e a f t e r a c q u i r e bank s t o c k w h i c h , t o g e t h e r
i t s present holdings,
its
dewith
s h a l l exceed 10% o f the c a p i t a l o f any one bank, 5T
( S e c . 2 7 - X X , B a n k i n g l a w s , 1 9 3 5 ; S e c , 2 7 - X X , Ch. 5 7 , R e v . S t a t s ,
of
Maine)
T r u s t companies a r e a u t h o r i z e d t o
f?
h o l d and e n j o y a l l
t a t e , r e a l , p e r s o n a l , and mixed, a s may be o b t a i n e d by the
of i t s c a p i t a l
its
such e s -
investment
s t o c k or a n y o t h e r moneys ano. f u n d s t h a t may come i n t o
p o s s e s s i o n i n the c o u r s e o f i t s b u s i n e s s and d e a l i n g s , and the same
s e l l , g r a n t , and d i s p o s e o f ; * * *
61, Ch. 57, Rev. S t a t s ,
of Maine)
(Sec. 61, Banking Laws, 1935;
While t h i s i s not a s p e c i f i c
o f power t o p u r c h a s e bank s t o c k s , i t
i s understood that, i n
t r u s t c o m p a n i e s p u r c h a s e and h o l d s t o c k s ,
Savings banks, i n s t i t u t i o n s for
grant
practice,
i n c l u d i n g bank s t o c k s ,
p a r e n t l y w i t h o u t o b j e c t i o n by the S t a t e b a n k i n g
ap-
authorities.
s a v i n g s ana t r u s t
companies
"may a c q u i r e and h o l d s t o c k s , b o n d s , and o t h e r s e c u r i t i e s n o t
author-
i s e d by l a w , h e r e a f t e r a c q u i r e d i n s e t t l e m e n t s ana r e o r g a n i z a t i o n s
a c c e p t e d t o reduce o r a v o i d l o s s on d e f a u l t e d l o a n s and
h e l d by s a i d b a n k s ,
institutions,
Sec.
and
investments
a s s o c i a t i o n and t r u s t c o m p a n i e s , and
-51--
L-477
may c o n t i n u e t o h o l d s u c h s t o c k s , b o n d s , and o t h e r s e c u r i t i e s
f o r e so a c q u i r e d , and a l l o t h e r i n v e s t m e n t s l a w f u l l y
hereto-
a c q u i r e d , and
shall
n o t be o b l i g e d t o s e l l or d i s p o s e o f the same e x c e p t a t s u c h time and
i n s u c h manner a s w i l l p r e v e n t u n n e c e s s a r y l o s s o r embarrassment t o
b u s i n e s s of the b a n k , i n s t i t u t i o n ,
the
a s s o c i a t i o n or t r u s t company".
(Sec.
2 8 , B a n k i n g L a w s , 1 9 3 5 ; S e c . 2 8 , Ch. 5 7 , R e v . S t a t s , o f M a i n e )
H o l d i n g companies and c h a i n or g r o u p
T h e r e a r e no p r o v i s i o n s
banking;
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
p a n i e s or r e l a t i n g t o c h a i n or g r o u p
relatcom-
banking.
MARYLAND
A c q u i s i t i o n of s t o c k s b y banks and t r u s t
companies:
There are no p r o v i s i o n s i n the b a n k i n g l a w s o f t h i s
state
for
the a c q u i s i t i o n o f bank or t r u s t , company s t o c k o r c o r p o r a t e s t o c k s
e r a l l y by b a n k s , b u t t r u s t companies a r e a u t h o r i z e d t o p u r c h a s e ,
i n ana s e l l
"stocks, b i l l s
securities."
gen-
invest
of e x c h a n g e , bonds and m o r t g a g e s and o t h e r
( S e c . 4 6 , N i n t h , B a n k i n g L a w s , 1955; Laws o f 1 9 1 0 , Ch*
219, S e c . 4 5 , as amended by Laws of 1 9 1 8 , Ch. 53, Laws o f 1 9 2 0 ,
Ch.
2 6 8 , S e c . 4 6 , Laws o f 1 9 2 4 , Ch. 4 5 0 , and Laws o f 1 9 3 1 , Ch. 4 2 9 ,
Sec.
46)
Affiliates
"It
of "banking i n s t i t u t i o n "
s h a l l be u n l a w f u l f o r any b a n k i n g i n s t i t u t i o n d o i n g
ness under t h i s A r t i c l e
l i e d c o r p o r a t i o n or
prohibited:
t o have any a f f i l i a t e ,
corporations.
affiliates
busi-
or c l o s e l y
al-
"The terms
used i n t h i s
business,
'affiliate1
and
f
closely allied corporation'
s e c t i o n s h a l l he c o n s t r u e d t o i n c l u d e any
trust, association,
Owns or c o n t r o l s ,
corporation,
or other s i m i l a r o r g a n i s a t i o n which a
b a n k i n g I n s t i t u t i o n c o n t r o l s by one of the f o l l o w i n g
"(1)
as
methods:
d i r e c t l y or i n d i r e c t l y ,
either a major-
i t y o f the v o t i n g s h a r e s o r more t h a n 50 p e r centum o f the number o f
s h a r e s v o t e d f o r the e l e c t i o n of i t s d i r e c t o r s ,
sons e x e r c i s i n g
t r u s t e e s , or other
s i m i l a r f u n c t i o n s a t the p r e c e d i n g e l e c t i o n , o r
con-
t r o l s i n any manner the e l e c t i o n o f a m a j o r i t y o f i t s d i r e c t o r s ,
t e e s or o t h e r p e r s o n s e x e r c i s i n g
"(2)
similar functions;
C o n t r o l s , d i r e c t l y or i n d i r e c t l y ,
trus-
or
through stock
o r i n any o t h e r manner, by the s h a r e h o l d e r s o f s u c h b a n k i n g
who own or c o n t r o l e i t h e r a m a j o r i t y
per
ownership
institutio
of the s h a r e s of s u c h b a n k i n g
in-
s t i t u t i o n or more t h a n 50 p e r centum o f the number o f s h a r e s v o t e d f o r
the e l e c t i o n of d i r e c t o r s o f such, b a n k i n g i n s t i t u t i o n a t the
election,
preceding
or by t r u s t e e s f o r the b e n e f i t o f the s h a r e h o l d e r s o f any
such banking
institution.
" P r o v i d e d , however, t h a t n o t h i n g i n t h i s A c t s h a l l a f f e c t
d i s t u r b any such a f f i l i a t e
or c l o s e l y a l l i e d c o r p o r a t i o n e x i s t i n g
or
at
the time o f the p a s s a g e o f t h i s a c t , and p r o v i d e d f u r t h e r t h a t a B a n k ing Institution,
f o r r e o r g a n i z a t i o n p u r p o s e s and w i t h the c o n s e n t
the Bank C o m m i s s i o n e r may c r e a t e ana have an a f f i l i a t e
lied
or c l o s e l y
of
al-
corporation.
"The Bank Commissioner shall have the same rights and powers
-216--
L-477
t o examine i n t o the a f f a i r s o f a l l e x i s t i n g a f f i l i a t e s
ana c l o s e l y
l i e d b a n k i n g i n s t i t u t i o n s a s he h a s a s t o b a n k i n g i n s t i t u t i o n s
al-
when-
e v e r he s h a l l deem s u c h e x a m i n a t i o n d e s i r a b l e or n e c e s s a r y , and f o r
m a k i n g s u c h e x a m i n a t i o n s he s h a l l c h a r g e the same f e e s a s f o r
ing banking i n s t i t u t i o n s . "
examin-
( S e c . 55A, B a n k i n g L a w s , 1 9 5 5 ; Laws o f
1 9 5 5 , Ch. 491)
H o l d i n g companies and c h a i n o r g r o u p b a n k i n g ;
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
re-
l a t i n g t o t h e a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
companies o r r e l a t i n g t o c h a i n or g r o u p
banking.
MASSACHUSETTS
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
S a v i n g s b a n k s may i n v e s t t h e i r d e p o s i t s and income
derived
t h e r e f r o m " i n the s t o c k of a t r u s t company i n c o r p o r a t e d u n d e r the l a w s
o f and d o i n g b u s i n e s s w i t h i n t h i s commonwealth, o r i n the s t o c k o f a
n a t i o n a l b a n k i n g a s s o c i a t i o n l o c a t e d i n the New E n g l a n d S t a t e s and i n c o r p o r a t e d u n d e r the a u t h o r i t y o f t h e U n i t e d S t a t e s , w h i c h h a s
paid
d i v i d e n d s o f n o t l e s s t h a n f o u r per c e n t t h e r e o n i n c a s h i n each o f
the
f i v e y e a r s n e x t p r e c e d i n g the date o f s u c h i n v e s t m e n t and t h e amount o f
whose s u r p l u s i s a t l e a s t e q u a l to f i f t y
a s a v i n g s bank s h a l l n o t h o l d ,
per c e n t o f i t s
capital;
Doth by way o f i n v e s t m e n t and a s
but
securi-
t y f o r l o a n s , more t h a n t w e n t y - f i v e per c e n t of t h e s t o c k o f a n y one
such company or a s s o c i a t i o n n o r s h a l l i t h o l d by way o f i n v e s t m e n t
o f s u c h companies and a s s o c i a t i o n s h a v i n g an a g g r e g a t e i n i t i a l
cost
stock
in
e x c e s s of f i f t e e n per cent of the d e p o s i t s
of
such s a v i n g s bank,
s t o c k o f a n y one s u c h company o r a s s o c i a t i o n h a v i n g an i n i t i a l
i n e x c e s s o f one p e r c e n t o f t h e d e p o s i t s a f o r e s a i d ,
ciations
t h e amount o f
cost
except that
the e v e n t o f t h e c o n s o l i d a t i o n o r m e r g e r of s u c h c o m p a n i e s
t i o n s o r o f one o r more o f
or
or
in
associa-
s u c h c o m p a n i e s w i t h one o r more s u c h
s t o c k o f the c o n s o l i d a t e d o r a b s o r b i n g
asso-
company
o r a s s o c i a t i o n w h i c h may be h e l d u n d e r a u t h o r i t y h e r e o f may be i n
c e s s o f one p e r c e n t b u t n o t i n e x c e s s o f two p e r c e n t o f t h e
aforesaid,
p r o v i d e d the s t o c k
o f the c o n s o l i d a t i n g
so h e l a i s
ex-
deposits
a c q u i r e d i n exchange f o r
or merging companies or a s s o c i a t i o n s which
stock
is
owned b y s u c h s a v i n g s bank a t t h e t i m e o f c o n s o l i d a t i o n o r m e r g e r •11
(Sec.
5 4 , S e v e n t h , C h . 1 6 8 , S a v i n g s Bank L a w s ,
C h . 1 6 8 , G e n e r a l Laws o f
ho t r u s t
the c a p i t a l
ciation,
company » s h a l l i n v e s t
i n more t h a n t e n p e r c e n t
except w i t h the w r i t t e n a p p r o v a l of
more t h a n t e n p e r c e n t of t h e c a p i t a l
investments
i n the c a p i t a l
t i o n a l banking a s s o c i a t i o n . ,
tions having transferable
'-ha
sh- a
stock of t r u s t
, exceed the t o t a l
shall
of i t s
the
in
ag-
companies,
na-
associa-
capital
and
a s amended b y
20)
H o l d i n g companies and c h a i n , or group
asso-
corporation
or v o l u n t a r y
( S e c . 4 5 , C h . V7V.9 G e n e r a l Laws o f m a s s . ,
A c t s of 1954, Ch. 549, Sec.
shares, nor
corporations
banking
of
the c o m m i s s i o n e r ,
s t o c k of any o t h e r
or v o l u n t a r y a s s o c i a t i o n having t r a n s f e r a b l e
gregate of i t s
Seventh,
ivlass.)
s t o c k o f a n y o t h e r t r u s t company o r n a t i o n a l
nor,
surplus.n
1955; Sec. 54,
banking:
There are no provisions in the banking laws of this State
-55-
L-477
r e l a t i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
companies or r e l a t i n g to c h a i n o r g r o u p
banking.
MICHIGAN
A c q u i s i t i o n of s t o c k s by banks and t r u s t
There a r e no p r o v i s i o n s
companies:
i n the b a n k i n g l a w s o f t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by banks
t r u s t companies or t o c o r p o r a t e s t o c k s g e n e r a l l y by
or
banks.
Any t r u s t company " s h a l l have power i n and by i t s
corporate
name to t a k e , r e c e i v e and. h o l d , and r e p a y , r e c o n v e y and d i s p o s e o f
any
e f f e c t s and p r o p e r t y , b o t h r e a l and p e r s o n a l , w h i c h may be g r a n t e d ,
m i t t e d , t r a n s f e r r e d or conveyed t o i t , w i t h i t s
c o n s e n t , * * *•ff
com-
(Bank-
i n g Laws, 1 9 5 6 , S e c . 1 4 9 , p. 815 S e c . 1 2 0 1 6 , 1955 S u p p . to Comp. Laws
o f 1 9 2 9 , p . 885)
The c a p i t a l
by the d i r e c t o r s
s t o c k and a s s e t s o f any t r u s t company may be
of s u c h company " i n
as they may deem p r o p e r . "
s u c h r e a l or p e r s o n a l
( B a n k i n g Laws, 1 9 3 6 , S e c .
1 2 0 2 0 , Comp. Laws o f 19::9, p .
invested
securities
1.52, p . 8 5 ;
Sec.
4264)
H o l d i n g companies and c h a i n or g r o u p b a n k i n g :
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
p a n i e s or r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
MINNESOTA
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
There are no provisions in the banking laws of this State
com-
r e l a t i n g t o the a c q u i s i t i o n 01 bank or t r u s t comoaay s t o c k or
rate
stocks generally
Holding
by banks or t r u s t
corpo-
companies.
companies:
"No such f i n a n c i a l
institution
shall directly,
indirectly
or
by i n f e r e n c e o f any k i n a d i s p l a y , r e p r e s e n t , h o l d o u t o r o t h e r w i s e ad
v e r t i s e as i t s
c a p i t a l , r e s o u r c e s , a s s e t s or f i n a n c i a l
a b i l i t y or a v a i l a b i l i t y
any o t h e r f i n a n c i a l
s t r e n g t h or
t h e r e f o r any c a p i t a l , r e s o u r c e s or a s s e t s
i n s t i t u t i o n or i n s t i t u t i o n s ,
whether o r n o t
of
such
o t h e r f i n a n c i a l i n s t i t u t i o n or i n s t i t u t i o n s a r e i n any way c o n n e c t e d
w i t h such f i n a n c i a l i n s t i t u t i o n
t h r o u g h or by way of a h o l d i n g company
or o t h e r c o r p o r a t i o n or s i m i l a r
s t r u c t u r e ; n o r s h a l l any s u c h f i n a n -
cial
institution,
the c a p i t a l
s t o c k of w h i c h i s
i n whole or i n
part
c o n t r o l l e d or owned by any s u c h h o l d i n g company, o t h e r c o r p o r a t i o n
d i s p l a y , r e p r e s e n t , h o l d o u t or o t h e r w i s e
or
similar
structure,
that i t
i s a f f i l i a t e d w i t h or h a s any o t h e r c o n n e c t i o n w i t h s u c h com-
p a n y , c o r p o r a t i o n or s i m i l a r
actually exists; * * * . "
advertise
s t r u c t u r e other than t h a t which t r u l y
and
( B a n k i n g L a w s , 1 9 3 5 , p. 1 1 ; S e c . 7 3 5 7 , Mason
S t a t s . , 1 9 2 7 , as amended by i<aws o f 1 9 5 1 ,
Ch.
560)
MISSISSIPPI
A c q u i s i t i o n of s t o c k s by b a n k s and t r u s t
companies:
"No p a r t o f the s t o c k o f any bank e x c e p t r e g i o n a l r e s e r v e
s h a l l be owned by a s t a t e b a n k .
I n c a s e s where s u c h s t o c k i s
taken as
c o l l a t e r a l and the p u r c h a s e t h e r e o f s h a i l be n e c e s s a r y t o p r e v e n t
upon a debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h ,
then i n such
bank
loss
cases
s u c h s t o c k s h a l l be s o l d by the bank w i t h i n t w e l v e months from the
time i t was a c q u i r e d , u n l e s s the c o n s e n t o f the s t a t e c o m p t r o l l e r
obtained i n w r i t i n g extending such p e r i o d .
t i o n by any bank s h a l l
charter."
A v i o l a t i o n of t h i s
is
sec-
s u b j e c t i t t o l i q u i d a t i o n and f o r f e i t u r e
of
( S e c . 5 5 , B a n k i n g Laws, 1 9 3 6 ; Ch. 1 4 6 , Laws o f 1 9 3 4 ,
as
amended by Ch. 1 6 5 , Laws of 1956)
"Bank"
defineds
"Whenever the word
T
bank T
i s u s e d i n any s t a t u t e u n l e s s
the
c o n t e x t c l e a r l y shows t h a t i t i s i n t e n d e d t o be l i m i t e d i n i t s
applica-
t i o n to a p a r t i c u l a r
com-
panies,
c h a r a c t e r of bank, i t
shall include trust
s a v i n g s b a n k s , b r a n c h e s o f b a n k s and t r u s t c o m p a n i e s , and
other i n s t i t u t i o n s
s u b j e c t t o the p r o v i s i o n s
of t h i s c h a p t e r . * *
all
*"
( S e c . 2, B a n k i n g L a w s , 1 9 5 6 ; Ch. 1 4 6 , Laws o f 1954)
Chain
banking:
"No c o r p o r a t i o n s h a l l be formed u n d e r the l a w s o f t h i s
state,
n o r s h a l l any f o r e i g n c o r p o r a t i o n be a d m i t t e d t o do b u s i n e s s i n
state,
if,
this
i n any s u c h i n s t a n c e any o b j e c t , p u r p o s e , or power o f
c o r p o r a t i o n be?
d i r e c t l y or i n d i r e c t l y ,
the o r g a n i s a t i o n ,
ownership,
o r o p e r a t i o n o f banks i n g r o u p s or c h a i n s , or i n s y s t e m s commonly
f e r r e d to as group banking systems or chain banking systems.
( S e c . 7 2 , B a n k i n g L a w s , 1 9 5 6 ; Ch. 1 4 6 , Laws o f
*
1954)
MISSOURI
A c q u i s i t i o n o f s t o c k s b y b a n k s and t r u s t
such
companies:
There are no provisions in the banking laws of this State
re-
-58--
L-477
r e l a t i n g to the a c q u i s i t i o n o f bank or t r u s t company s t o c k o r
corpo-
r a t e s t o c k s g e n e r a l l y by b a n k s .
A t r u s t company s h a l l n o t " p u r c h a s e or c o n t i n u e to h o l d
o f a n o t h e r bank o r t r u s t company i f
v e s t m e n t the t o t a l
stock
by s u c h p u r c h a s e o r c o n t i n u e d
in-
s t o c k o f s u c h o t h e r bank or t r u s t company owned and
h e l d by i t a s c o l l a t e r a l w i l l exceed f i f t e e n per centum o f the
stock
of s u c h o t h e r bank or t r u s t company: p r o v i d e d , however, t h a t t h i s
t a t i o n s h a l l not apply *
its
-x- t o the o w n e r s h i p by s u c h t r u s t company o r
s t o c k h o l d e r s of a p a r t or a l l of the c a p i t a l
s t o c k of one bank
o r g a n i z e d under the l a w s of the U n i t e d S t a t e s or o f t h i s
s t a t e , nor
the o w n e r s h i p o f a p a r t o r a l l o f the c a p i t a l of one c o r p o r a t i o n ,
i z e d u n d e r the l a w s o f t h i s
s t a t e , f o r the p r i n c i p a l p u r p o s e o f
i n g s a v i n g s d e p o s i t s * * * n o r t o the c o n t i n u e d o w n e r s h i p o f
lawfully acquired prior
limi-
to
organ-
receiv-
stocks
to the f i r s t day of J a n u a r y , A . D. 1 3 1 5 . "
(Sec.
5429 ( 9 ) , B a n k i n g L a w s , 1929; S e c . 5429 (9) R e v . S t a t s , o f Mo., 1 9 2 9 ,
a s amended by 1955 S e s s i o n L a w s , p .
H o l d i n g companies and c h a i n o r g r o u p
There a r e no p r o v i s i o n s
532)
banking;
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
p a n i e s o r r e l a t i n g t o c h a i n or g r o u p
relatcom-
banking.
MONTANA
Requisition of stocks by banks and trust companies:
"No commercial or savings bank shall purchase or invest its capital or suplus, or money of its depositors, or any part of either, in the
-59--
L-477
c a p i t a l s t o c k o f any c o r p o r a t i o n , u n l e s s t h e p u r c h a s e o r
of such c a p i t a l
acquisition
s t o c k s h a l l be n e c e s s a r y to p r e v e n t l o s s t o the bank
on a debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h .
Any c a p i t a l
stock
so
p u r c h a s e d or a c q u i r e d s h a l l be s o l d by s u c h bank w i t h i n s i x months
thereafter,
if
i t can be s o l d f o r the amount of the c l a i m o f s u c h bank
against i t ;
and a l l
capital
s t o c k t h u s p u r c h a s e d or a c q u i r e d must be
s o l d f o r the b e s t p r i c e o b t a i n a b l e by s a i d bank w i t h i n one y e a r
such p u r c h a s e or a c q u i s i t i o n . n
6 0 1 4 . 4 3 , K e v . Codes o f M o n t . ,
( S e c . 39, B a n k i n g L a w s , 1 3 5 5 ;
after
Sec.
1935)
T r u s t companies a r e a u t h o r i z e d
n
t o buy ana s e l l * * *
stocks,"
and the b o a r d of D i r e c t o r s o f s u c h companies a r e a u t h o r i s e d t o make
v e s t m e n t s o f c a p i t a l and a s s e t s , and of f u n d s a c c u m u l a t e d by
businesses,
i n c l u d i n g money, d e p o s i t s , or any p a r t t h e r e o f ,
and b o n d s of c o r p o r a t i o n s . "
(Sees. 4 ( c ) ( 8 ) ,
in-
their
in
"stocks
2 6 , B a n k i n g Laws.; 1 9 3 5 ;
S e e s . 6 0 1 4 . 6 ( 8 ) , 6 0 1 4 . 5 0 , -lev. Cooes o f i-or;t., 1955)
H o l d i n g companies ana c h a i n or g r o u p
There a r e no p r o v i s i o n s
banking:
i n the b a n k i n g l a w s o f t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
NEBRASKA
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
"No c o r p o r a t i o n t r a n s a c t i n g a b a n k i n g b u s i n e s s
shall
> - * be
the p u r c h a s e r or h o l d e r of * * * the s h a r e s o f any c o r p o r a t i o n ,
such s e c u r i t y or purchase s h a l l
be n e c e s s a r y
unless
t o p r e v e n t l o s s upon a
-40-
L-477
debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h ;
and s u c h s t o c k so
purchased
or a c q u i r e d s h a l l , w i t h i n s i x months from the time o f i t s p u r c h a s e be
s o l d or d i s p o s e d of a t p u b l i c or p r i v a t e s a l e ; o r i n d e f a u l t
thereof,
a r e c e i v e r may be a p p o i n t e d t o c l o s e up the b u s i n e s s o f the bank:
Pro-
v i d e d , i n no c a s e s h a l l the amount of s t o c k
cent
o f the p a i d - u p c a p i t a l of s u c h bank. ? f
so h e l d exceed t e n per
( S e c . 8 - 1 5 7 , B a n k i n g L a w s , 1955 ,
S e c . 8 - 1 5 7 , 1929 Comp. S t a t s , o f N e b . )
C e r t a i n i n v e s t m e n t s o f the l o a n a b l e f u n d s o f s a v i n g s b a n k s
a u t h o r i z e d b u t n e i t h e r bank n o r t r u s t company s t o c k n o r c o r p o r a t e
g e n e r a l l y a r e i n c l u d e d among s u c h i n v e s t m e n t s .
1 9 5 5 ; S e c . 8 - 1 5 5 , 1929 Comp. S t a t s ,
stocks
(Sec. 8 - 1 5 5 , Banking Laws,
of N e b . )
T r u s t companies a r e a u t h o r i z e d to b u y , h o l d , own ana s e l l
e x c e p t " s t o c k s o f any c o r p o r a t i o n
t h a t have n o t e a r n e d a n n u a l
stock,
dividends
o f a t l e a s t f o u r per c e n t per annum f o r a t l e a s t t h r e e y e a r s j u s t
t o t h e d a t e o f s u c h p u r c h a s e and s t o c k o f a n y c o r p o r a t i o n
under t h i s a r t i c l e . "
Comp,
Stats,
are
prior
organized
( S e c . 8 - 2 0 6 , B a n k i n g Laws, 1 9 5 5 ; S e c . 8 - 2 0 6 ,
1929
of tie b•)
H o l d i n g companies and c h a i n or group b a n k i n g :
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
p a n i e s or r e l a t i n g t o c h a i n or g r o u p
relatcom-
banking.
NEVADA
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companiest
"No bank shall * * * invest any of its fun as in the stock of
-41--
L-477
any bank or t r u s t company or c o r p o r a t i o n , * * * n o r be the
purchaser
or h o l d e r of any s u c h s h a r e s , u n l e s s s u c h s e c u r i t y or p u r c h a s e
shall
be n e c e s s a r y t o p r e v e n t l o s s upon a debt p r e v i o u s l y c o n t r a c t e d i n good
faith,
and s t o c k so p u r c h a s e d or a c q u i r e d s h a l l , w i t h i n t w e l v e months
f r o m the time o f i t s p u r c h a s e , be s o l d o r d i s p o s e d of a t p u b l i c
private
s a l e ; a f t e r the e x p i r a t i o n of t w e l v e months any s u c h s t o c k
n o t be c o n s i d e r e d a s p a r t of the a s s e t s o f any bank o r t r u s t
-x- -x-
or
shall
company;
( S e c . 1 5 , B a n k i n g L a w s , 1955; S e c . 1 3 , Ch. 1 9 0 , Nevada Laws,
1933)
"Bank"
defined:
The word " b a n k " i n c l u d e s b a n k s , s a v i n g s banks and t r u s t
panies.
com-
( S e c . 8 7 , B a n k i n g L a w s , 1955; S e c , 8 7 , Ch. 1 9 0 , Nevada L a w s ,
1933)
H o l d i n g companies and c h a i n o r g r o u p b a n k i n g :
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s o f t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n o f bank o r t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
NEW HAMPSHIRE
Acquisition
of s t o c k s bv^ b a n k s and t r u s t
companies:
T r u s t companies a r e a u t h o r i z e d and empowered " t o n e g o t i a t e ,
chase and s e l l
s t o c k s , bonds and o t h e r e v i d e n c e s o f d e b t . "
(Sec.
pur-
31,
Ch. 2 6 5 , B a n k i n g La.ws, 1 9 5 5 ; S e c . 51, Ch. 2 6 5 , P u b . Laws of New Hamp.)
T r u s t companies s h a l l n o t " p u r c h a s e o r h o l d , by way o f
invest-
ment, the s t o c k s and bonds o f any c o r p o r a t i o n t o an amount i n e x c e s s
* *
t e n p e r c e n t " o f t h e i r c a p i t a l s t o c k a c t u a l l y p a i d i n and
of
surplus.
-42--
L-477
( S e c . 3 7 , Ch. 2 6 5 , B a n k i n g L a w s , 1 9 5 5 ; S e c . 5 7 , Ch. 2 6 5 , P u b . Laws o f
New Hamp.)
S a v i n g s b a n k s and s a v i n g s d e p a r t m e n t s o f banks and t r u s t
p a n i e s may i n v e s t i n the " c a p i t a l
* * and the c a p i t a l
s t o c k of any b a n k i n g or t r u s t
comcompany
s t o c k o f any n a t i o n a l banic l o c a t e d i n t h i s
state;
b u t the amount o f s u c h s t o c k * # * h e l d by any s a v i n g s bank a s an
ment and as c o l l a t e r a l f o r l o a n s
total capital
s h a l l n o t exceed one f o u r t h o f
invest-
the
s t o c k * * * o f s u c h b a n k i n g o r t r u s t company * * *
or
n a t i o n a l b a n k , and n o t e x c e e d i n g t e n p e r c e n t of the d e p o s i t s s h a l l be
so i n v e s t e d . "
( S e c . 1 2 - X V I , Ch. 2 6 2 , B a n k i n g Laws, 1 9 5 5 ; S e c .
12-XVI,
Ch. 2 6 2 , P u b . Laws o f New Kamp.)
S a v i n g s b a n k s and s a v i n g s d e p a r t m e n t s o f b a n k s ana t r u s t
p a n i e s may i n v e s t i n the " s t o c k of any n a t i o n a l bank o r t r u s t
com-
company
l o c a t e d i n the New E n g l a n d s t a t e s o u t s i d e o f Hew H a m p s h i r e , o r i n the
s t a t e o f New Y o r k ; b u t n o t e x c e e d i n :3 t e n per c e n t of t h e d e p o s i t s o f a
s a v i n g s bank s h a l l be i n v e s t e d i n s u c h s t o c k .
The amount of s u c h
w h i c h may be h e l d by any s a v i n g s bank a s i n v e s t m e n t and a s
collateral
s e c u r i t y f o r l o a n s s h a l l n o t exceed t e n p e r cent o f the t o t a l
s t o c k o f s u c h n a t i o n a l bank or t r u s t company."
Banking Laws, 1955; Sec. I 2 - X V I I ,
capital
( S e c . 1 2 - X V I I , Ch.
* * >- p u r c h a s e or h o l e , b o t h by way o f i n v e s t m e n t and s e c u r i t y
the s t o c k and bonds of any c o r p o r a t i o n t o an amount i n
o f " f i v e percent of i t s d e p o s i t s .
262,
Ch. 2 6 2 , P u b . Laws o f New Hamp.)
"No s a v i n g s bank or s a v i n g s department of a t r u s t company
loans,
stock
(Sec.
shall
for
excess
16, Ch. 2 6 0 , B a n k i n g L a w s ,
-226--
L-477
1 9 5 5 ; S e c . 1 6 , Ch. 2 6 0 , Pub, Laws o f hew Hamp.)
There a r e a l s o a d d i t i o n a l
provisions restricting
investments
by s a v i n g s b a n k s and s a v i n g s d e p a r t m e n t s o f b a n k s and t r u s t
w h i c h may a p p l y to i n v e s t m e n t s i n s t o c k s .
companies
( S e e s . 8 , 1 4 , 1 5 , Ch.
262,
B a n k i n g L a w s , 1 9 5 5 ; S e e s . 8 , 1 4 , 1 5 , Ch. 2 6 2 , P u b . Laws o f New Hamp.)
H o l d i n g companies and c h a i n or g r o u p
banking:
There are no p r o v i s i o n s i n the b a n k i n g l a w s of t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n o f Dank or t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g t o c h a i n or g r o u p
banking.
NEW JERSEY
A c q u i s i t i o n of s t o c k s by b a n k s and t r u s t
Banks (other than s a v i n g s banks)
companies:
are a u t h o r i z e d to
i n v e s t i n and s e l l s t o c k s of c o r p o r a t i o n s . "
1 9 3 5 , p. 29; S e c . 1 7 - 6 d ( l ) ,
"purchase,
( S e c . 6 A ( 5 ) , B a n k i n g Laws,
Comp. S t a t s . , 1950 S u p p . )
T r u s t companies a r e a u t h o r i z e d " t o p u r c h a s e , i n v e s t i n and
s t o c k s * * % and o t h e r s e c u r i t i e s . "
(Sec. 6 ( 1 0 ) , Banking Laws,
p . 7 2 ; S e c . 6 ( 1 0 ) , Comp. S c a t s . , 1 9 1 0 , V o l . I V , p .
p a n i e s or corporate
1955,
5657)
S a v i n g s banks are a u t h o r i z e d to i n v e s t i n o n l y c e r t a i n
t y p e s o f bonds and s e c u r i t i e s ;
listed
b u t the s t o c k of b a n k s and t r u s t
s t o c k s g e n e r a l l y are not i n c l u d e d i n t h i s
com-
list,
( S e c . 55, S a v i n g s Bank Laws, 1 9 3 5 ; S e c . 55, Comp. S t a t s . , 1910 V o l .
p . 4 7 0 4 , a s amended by Ch. 1 6 7 , Laws o f 1 9 5 1 , p .
Holding
sell
IV,
525)
companies:
"Any corporation,
other than c o r p o r a t i o n s
specifically
exempted
-44-from the p r o v i s i o n s
L-477
of t h i s a c t , w h i c h now or h e r e a f t e r owns more t h a n
t e n per centum o f the number o f s h a r e s of the c a p i t a l s t o c k new o r
h e r e a f t e r a t any time i s s u e d and o u t s t a n d i n g o f any bank or t r u s t
pany o r n a t i o n a l b a n k , now o r h e r e a f t e r d o i n g b u s i n e s s
In t h i s
com-
State,
s h a l l n o t p u r c h a s e more t h a n t e n p e r centum o f the number o f s h a r e s
of
c a p i t a l s t o c k a t any time i s s u e d and o u t s t a n d i n g o f any o t h e r bank o r
t r u s t company o r n a t i o n a l b a n k , now or h e r e a f t e r d o i n g b u s i n e s s i n
this
State."
The s h a r e s o f bank or t r u s t company s t o c k now or
hereafter
owned, by any s u c h c o r p o r a t i o n must be r e g i s t e r e d on t h e b o o k s o f
the
bank or t r u s t company i n the name of the c o r p o r a t i o n , and c e r t a i n
p o r t s must be f u r n i s h e d by the c o r p o r a t i o n
to t h e bank or t r u s t
pany b e f o r e the s t o c k of s u c h bank o r t r u s t company may be
i n t o the name of the c o r p o r a t i o n ,
by the c o r p o r a t i o n ,
t i o n on s u c h s t o c k .
"The p r o v i s i o n s
com-
transferred
and b e f o r e s u c h s t o c k may be v o t e d
or b e f o r e d i v i d e n d s w i l l be p a i d t o the
Provision
re-
corpora-
i s a l s o made f o r e n f o r c i n . t h e s e
of t h i s a c t and the p e n a l t i e s t h e r e o f
n o t a p p l y t o the f o l l o w i n g c o r p o r a t i o n s ,
viz.;
laws.
shall
B a n k s and t r u s t
com-
p a n i e s o r g a n i z e d under the l a w s o f t h i s S t a t e and n a t i o n a l b a n k s
doing
b u s i n e s s i n t h i s S t a t e , n o r t o s u c h b a n k s , t r u s t companies and n a t i o n a l
banks while a c t i n g i n a f i d u c i a r y
c a p a c i t y r e p r e s e n t i n g any
individual
o r i n d i v i d u a l s o r t h e e s t a t e o f any i n d i v i d u a l ; n o r to any o t h e r
p o r a t i o n the e n t i r e c a p i t a l s t o c k of w h i c h i s
f o r the s h a r e h o l d e r s
owned by or h e l d i n
of any bank o r t r u s t company o r g a n i z e d u n d e r
l a w s o f t h i s S t a t e , or any n a t i o n a l bank d o i n g b u s i n e s s i n t h i s
cortrust
the
State,
-45--
L-477
i n the same r e l a t i v e p r o p o r t i o n a s the s t o c k h e l d i n s a i d oank,
company o r n a t i o n a l b a n k . "
4 7 - 5 a , Comp. S t a t s . ,
(Banking Laws, 1955, pp. 185-191;
trust
Sec.
1950 S u p p . )
NEW MEXICO
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
There a r e no p r o v i s i o n s
lating
specifically
or corporate
companies:
i n the b a n k i n g l a w s of t h i s S b a t e
re-
to t h e a c q u i s i t i o n o f bank or t r u s t company
s t o c k s g e n e r a l l y by b a n k s and t r u s t companj.es.
However,
t r u s t companies a r e a u t h o r i z e d t o p u r c h a s e , i n v e s t i n and s e l l
k i n d s of investment s e c u r i t i e s .
stock
ail
( S e c . SO, S e v e n t h , B a n k i n g L a w s ,
S e c . 1 3 - 5 0 5 , New Mex. S t a t s . A n n . , 1929)
k i t h r e f e r e n c e to
1953;
commercial
b a n k s , the law p r o v i d e s t h a t " n o bank s h a l l a t any time have
invested
more t h a n t h i r t y per c e n t o f i t s u n i m p a i r e d c a p i t a l and s u r p l u s i n
n o t e s , bonds o r o t h e r s e c u r i t i e s o f any p e r s o n , f i r m o r
( S e c . 56, B a n k i n g L a w s ,
"Savings deposits
corporation."
1955; S e c . 1 5 - 1 5 7 , New Mex. S t a t s . A n n . ,
s h a l l n o t be l o a n e d or i n v e s t e d e x c e p t "
c e r t a i n l i s t e d t y p e s o f s e c u r i t i e s and n e i t h e r
relat-
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
1929)
banking$
i n the b a n k i n g l a w s of t h i s S t a t e
panies or r e l a t i n g to chain or group
trust
list.
( S e c . 5 6 , B a n k i n g L a w s , 1935, S e c . 1 5 - 2 0 1 , New Mex. S t a t e . A n n . ,
T h e r e a r e no p r o v i s i o n s
1929)
in
s t o c k s of b a n k s o r
companies n o r c o r p o r a t e s t o c k s g e n e r a l l y a r e i n d u c e d i n s u c h
H o l d i n g companies and c h a i n o r g r o u p
the
banking.
com-
(The s t a t u t e s q u o t e d oelow wore amended e f f e c t i v e June 4 ,
.1906, and r e p r e s e n t the law a s o f t h a t date r a t h e r t h a n
June 1 , 1 9 5 8 , a s s t a t e d i n the f o r e w o r d t o t h i s c o m p i l a tion)
A c q u i s i t i o n of s t o c k s by banks and t r u s t
A bank " s h a l l n o t
*
companies2
i n v e s t i n and h o l d f o r i t s own a c c o u n t
the s t o c k o f any c o r p o r a t i o n , p r o v i d e d , however, t h a t a bank may t o
e x t e n t of ten per centum o f i t s c a p i t a l and s u r p l u s p u r c h a s e ,
h o l d and own. and e x e r c i s e I n r e s p e c t t h e r e o f a l l the r i g h t s ,
and p r i v i l e g e s a p p l i c a b l e t o the o w n e r s h i p o f , c a p i t a l
the
the
acquire,
powers
stock of each of
following:
( a ) D i s c o u n t C o r p o r a t i o n of ^ew Y o r k ;
(b) Bank f o r I n f c e r n a t i o n a l
Settlements;
( c ) Any o t h e r c o r p o r a t i o n i n the s t o c k o f w h i c h i n v e s t m e n t
Is
s p e c i f i c a l l y a u t h o r i s e d by t h i s c h a p t e r or by r e s o l u t i o n of the b a n k i n g
b o a r d upon a t w o - t h i r d s v o t e o f a l l . i t s
"Nothing contained i n t h i s
h i b i t the a c q u i s i t i o n
members,
s u b d i v i s i o n s h a l l be deemed t o
of s t o c k by a bank i n s e t t l e m e n t or r e d u c t i o n
a l o a n , or advance o f c r e d i t o r i n exchange f o r an i n v e s t m e n t
a c q u i s i t i o n of s t o c k i s f o u n d n e c e s s a r y i n o r d e r t o m i n i m i s e o r
l o s s i n c o n n e c t i o n w i t h any s u c h l o a n , advance o f c r e d i t or
avoid
for
A bank may
w i s e c o n t i n u e to h o l d any s t o c k h e l d by i t on may e l e v e n t h ,
such
investment
S t o c k so a c q u i r e d h e r e t o f o r e or h e r e a f t e r may be h e l d
s u c h p e r i o d a s the b o a r d o f d i r e c t o r s deems a d v i s a b l e .
of
previously
made i n good f a i t h and I n the o r d i n a r y c o u r s e o f b u s i n e s s , where
so made.
pro-
like-
nineteen
hundred t h i r t y - f o u r . "
( C h . 8 5 8 , Laws of 1 9 5 6 , S e c . 1 , amending Ch.
569, Laws of 1 9 1 4 , S e c . 1 0 8 ( 2 ) , a s amended by Ch. 5 0 2 , Laws o f 1 9 3 4 )
A t r u s t company " s h a l l n o t i n v e s t i n and h o l d f o r i t s
own a c -
c o u n t the s t o c k of any c o r p o r a t i o n p r o v i d e d , however, t h a t a t r u s t
pany may t o the e x t e n t o f t e n per centum o f i t s c a p i t a l and
com-
surplus
p u r c h a s e , a c q u i r e , h o l d and own and e x e r c i s e i n r e s p e c t t h e r e o f a l i
rights,
powers and p r i v i l e g e s a p p l i c a b l e to the o w n e r s h i p of
stock of" certain l i s t e d corporations,
including a banking
capital
corporation
o r t r u s t company o r g a n i z e d u n d e r the l a w s o f any f o r e i g n c o u n t r y ,
" a n y o t h e r c o r p o r a t i o n i n the s t o c k of w h i c h i n v e s t m e n t i s
the
and
specifically
a u t h o r i z e d by t h i s c h a p t e r o r by r e s o l u t i o n o f the b a n k i n g b o a r d upon
a t w o - t h i r d s vote of a l l i t s
members.
"Nothing contained i n t h i s
subdivision
s h a l l be deemed to
pro-
h i b i t the a c q u i s i t i o n o f s t o c k by a t r u s t company i n s e t t l e m e n t o r
reduc
t i o n o f a l o a n , o r advance of c r e d i t or i n exchange f o r an i n v e s t m e n t
p r e v i o u s l y made i n good f a i t h and i n the o r d i n a r y c o u r s e o f
business,
where s u c h a c q u i s i t i o n of s t o c k i s f o u n d n e c e s s a r y i n o r o e r to m i n i m i z e
o r a v o i d l o s s i n c o n n e c t i o n w i t h a n y such l o a n , advance o f c r e d i t
i n v e s t m e n t so made.
or
S t o c k so a c q u i r e d h e r e t o f o r e o r h e r e a f t e r may be
h e l d f o r s u c h p e r i o d a s the b o a r d o f d i r e c t o r s deems a d v i s a b l e .
A
t r u s t company may l i k e w i s e c o n t i n u e to h o l d any s t o c k h e l d by i t
on
May e l e v e n t h , n i n e t e e n h u n d r e d t h i r t y - f o u r . "
(Ch. 8 5 8 , Laws of
1956,
S e c , 4 , amending Ch. 369, Laws of 191.4, S e c . 1 9 0 ( 9 ) , a s amended)
S a v i n g s banks are a u t h o r i z e d to i n v e s t i n c e r t a i n l i s t e d
o f s t o c k s b u t bank and t r u s t company s t o c k or c o r p o r a t e
stocks
types
generally
-48are not i n c l u d e d i n such l i s t .
L—477
( S e c . 259, B a n k i n g Laws, 1935;
Sec.
239, Ch. 3 6 9 , Laws of 1 9 1 4 , a s amended)
" A s a v i n g s bank may a l s o a c q u i r e , r e c e i v e ,
hold stocks, bonds, notes,
exchange
and/or
s e c u r i t i e s or o t h e r p r o p e r t y , r e a l o r
s o n a l , o f any d e s c r i p t i o n w h a t s o e v e r , h e r e t o f o r e o r h e r e a f t e r
or exchanged i n s e t t l e m e n t s o r r e o r g a n i z a t i o n s
indebtedness,
or d e f a u l t e d s e c u r i t i e s . "
acquired
e f f e c t e d to secure
c o n t i n u e i n e f f e c t f o r a p e r i o d of 5 y e a r s f r o m May 1 1 ,
"The b a n k i n g b o a r d may s p e c i f i c a l l y
company # *
is,
or i s
banks of t h i s
state, * *
all
1934)
stock, c a p i t a l notes
o f the s t o c k o f w h i c h
to be owned by n o t l e s s t h a n twenty
*.!t
to
a u t h o r i z e s a v i n g s b a n k s (.1)
to s u b s c r i b e to and p u r c h a s e and hold, c a p i t a l
*
loans,
(Sec. 239-b, banking Laws,
1 9 3 5 ; added to Ch. 3 6 9 , Laws of 1 9 1 4 , by Ch. 4 9 3 , Laws o f 1 9 3 4 ,
d e b e n t u r e s o f any t r u s t company
per-
and
trust
savings
(Sec. 2 3 8 ( 1 4 ) , Banking Laws, 1935;
added
t o Ch. 3 6 9 , Laws of 1 9 1 4 , by Ch. 2 5 5 , Laws o f 1 9 3 4 , a s amended by Ch.
6 8 7 , Laws of
1935)
H o l d i n g companies and c h a i n or g r o u p b a n k i n g ;
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g t o c h a i n or g r o u p
banking.
NORTH CAROLINA
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
companies:
"No bank s h a l l make any i n v e s t m e n t i n the c a p i t a ] , s t o c k o f anyo t h e r s t a t e o r n a t i o n a l bank;
P r o v i d e d , t h a t n o t h i n g h e r e i n s h a l l be
c o n s t r u e d to p r e v e n t t h e s u b s c r i b i n g t o or p u r c h a s i n g o f the
capital
-49-stock of *
L-477
central reserve banks, having a c a p i t a l
t h a n one m i l l i o n d o l l a r s ,
by b a n k s d o i n g b u s i n e s s u n a e r t h i s
upon s u c h terms a s may be a g r e e d u p o n .
reserve
per c e n t of
s t o c k o f s u c h bank s h a l l be owned by o t h e r b a n k s .
ment o f a n y bank i n the c a p i t a l
chapter,
To c o n s t i t u t e a c e n t r a l
bank a s c o n t e m p l a t e d by t h i s c h a p t e r , a t l e a s t f i f t y
capital
s t o c k o f more
The
the
invest-
s t o c k of s u c h c e n t r a l r e s e r v e bank # - #
s h a l l a t no time exceed t e n p e r c e n t o f the p a i d - i n c a p i t a l and permanent
s u r p l u s o f the bank making the same,
ho bank s h a l l i n v e s t more t h a n
f i f t y p e r c e n t o f i t s permanent s u r p l u s i n the s t o c k s o f o t h e r
rations,
firms,
partnership,
or c o m p a n i e s , u n l e s s
c h a s e d t o p r o t e c t the bank from l o s s .
corpo-
such stock I s
Any s t o c k s owned or
pur-
hereafter
a c q u i r e d i n e x c e s s o f the l i m i t a t i o n s h e r e i n imposed s h a l l be
disposed
o f a t p u b l i c o r p r i v a t e s a l e w i t h i n s i x months a f t e r t h e d a t e o f
acquir-
i n g the same, and i f n o t so d i s p o s e d of s h a l l be c h a r g e d to p r o f i t
and
l o s s a c c o u n t , and no l o n g e r c a r r i e d on the b o o k s a s an a s s e t .
limit
The
o f time i n w h i c h s u c h s t o c k s s h a l l be d i s p o s e d o f o r charged, o f f
the
b o o k s o f the bank may be e x t e n d e d by the c o m m i s s i o n e r o f b a n k s i f
h i s judgment i t
i s f o r the b e s t i n t e r e s t of the bank t h a t s u c h
be g r a n t e d ; * *
extension
( S e c . 2 2 0 ( c ) , B a n k i n g L a w s , 1 9 3 5 ; Ch. 4 , S e c .
28,
Laws o f 1 9 2 1 , a s amended by Ch. 2 4 5 , S e c . 5, Laws o f 1 9 5 1 , and Ch.
81,
S e c . 3, Laws o f
"Bank"
.
in
1935)
defined:
"The term
partnership,
1
bank 1 s h a l l be c o n s t r u e d t o mean any
f i r m , or .individual r e c e i v i n g ,
soliciting,
corporation,
or
accepting
-50--
L-477
money or its e q u i v a l e n t on d e p o s i t a s a b u s i n e s s :
.Provided, however,
t h i s d e f i n i t i o n s h a l l n o t be c o n s t r u e d to i n c l u d e b u i l d i n g and l o a n
s o c i a t i o n s , M o r r i s p l a n c o m p a n i e s , i n d u s t r i a l banks or t r u s t
n o t r e c e i v i n g money on deposit."
as-
companies
( S e c . 2 1 6 ( a ) , B a n k i n g L a w s , 19555
Ch. 4 , S e c . 1, Laws o f 192.1, a s amended by Ch. 47, S e c . 1, Laws of 1927 j
and Ch. 245, S e c . 5, Laws of 1951)
H o l d i n g companies and c h a i n o r group b a n k i n g ;
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s
state
i n g to the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
relatcom-
p a n i e s or r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
NORTH DAKOTA
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
companies;
No bank s h a l l " i n v e s t any o f i t s a s s e t s or f u n d s i n the
o f any c o r p o r a t i o n , bank * *
stock
( S e c . 5 5 , B a n k i n g Laws, 1955, p .
55;
Sec * 55, Ch. 96, S e s s i o n Laws of 1951)
" E v e r y c o r p o r a t i o n o r g a n i z e d under the laws of t h i s S t a t e
state banking a s s o c i a t i o n s
for
or s a v i n g s b a n k s , and c o r p o r a t i o n s o r
other
a s s o c i a t i o n s e x c e p t i n g n a t i o n a l b a n k s and t r u s t c o m p a n i e s , whose
busi-
n e s s i n whole or i n p a r t c o n s i s t s of the t a k i n g o f money on d e p o s i t
s h a l l be h e l d and a r e h e r e b y d e c l a r e d to be s t a t e b a n k i n g
associations,
and a s t h u s d e f i n e d s h a l l be s u b j e c t to the p r o v i s i o n s o f t h i s
Act."
( S e c . 6 , B a n k i n g L a w s , 1 9 5 5 , p. 16; S e c . 6 , Ch. 9 6 , S e s s i o n Laws o f
1931)
S a v i n g s b a n k s " s h a l l be s u b j e c t to and g o v e r n e d by a l l
the
-51-provisions of t h i s act. M
L-477
(Sec. 4 9 ( 1 ) , Banking Laws, 1955, p. 87;
4 9 ( 1 ) , Ch. 9 6 , S e s s i o n Laws of
Sec.
1951)
Holding: companies and c h a i n or g r o u p
T h e r e a r e no p r o v i s i o n s
banking;
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
p a n i e s o r r e l a t i n g to c h a i n or g r o u p
relat
com-
banking.
OHIO
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
companies:
A bank i s s p e c i f i c a l l y a u t h o r i z e d t o p u r c h a s e and I n v e s t i n
t a i n k i n d s of s t o c k s b u t n o t of the k i n d s c o n t e m p l a t e d by t h i s
( S e e s . 7 1 0 - 5 and 7 1 0 - l l l a ,
Gen. Code of O h i o )
ing provision:
B a n k i n g Laws, 1 9 5 5 ; S e e s . 7 1 0 - 5 ,
digest.
710-llla,
However, l a w s o f t h i s S t a t e a l s o c o n t a i n the
follow
" N o t more t h a n twenty per c e n t o f the c a p i t a l and
p l u s o f a bank d o i n g b u s i n e s s u n d e r t h i s c h a r t e r
i n v e s t e d i n any one s t o c k * * *
S e c . 7 1 0 - 1 2 1 , Gen. Coae o f
??
(chapter)
sur-
s h a l l be •
(Sec. 710-121, Banking Laws,
1955;
Ohio)
"A s a v i n g s bank ( i n c l u d i n g m u t u a l s a v i n g s b a n k s ) may i n v e s t
funds
its
in:
!,
(b) S t o c k s of c o m p a n i e s , upon w h i c h o r the c o n s t i t u e n t
p a n i e s c o m p r i s i n g the same, d i v i d e n d s have been earned and p a i d
comfor
f i v e c o n s e c u t i v e y e a r s n e x t p r i o r t o the i n v e s t m e n t and s t o c k s o f
p a n i e s t a k e n on a r e f i n a n c i n g p l a n i n v o l v i n g an o r i g i n a l
com-
investment,
w h i c h was l e g a l a t tho time i t was made, p r o v i d e d , e v e r y s u c h
cer
investmen
-52--
L-477
s h a l l be a u t h o r i z e d by an a f f i r m a t i v e v o t e of a m a j o r i t y o f the b o a r d o f
d i r e c t o r s of such s a v i n g s
bank.
"No p u r c h a s e or i n v e s t m e n t s h a l l be made i n the s t o c k o f any o t h e r
c o r p o r a t i o n o r g a n i z e d or d o i n g b u s i n e s s under the p r o v i s i o n s
of
section
7 1 0 - 4 1 or s e c t i o n 710-180 (commercial bank, s a v i n g s bank, t r u s t
company,
s p e c i a l p l a n bank or c o m b i n a t i o n of two o r more t h e r e o f )
General
o f the
Code or o f t h e n a t i o n a l b a n k i n g a c t of the U n i t e d S t a t e s . "
(Sees.
140 and 7 1 0 ~ 1 4 8 d , B a n k i n g Laws, 1 9 5 5 ; S e c . 7 1 0 - 1 4 0 and 7 i 0 ~ 1 4 8 d ,
710-
Gen.
Code o f O h i o )
"A t r u s t company may i n v e s t i n
* *
s t o c k s and b o n a s of
corpora-
t i o n s when a u t h o r i z e d by the a f f i r m a t i v e v o t e o f the b o a r d of d i r e c t o r s
o f the e x e c u t i v e committee of s u c h t r u s t company."
(Sec. 710-166,
or
Bank-
i n g L a w s , 1 9 5 5 ; S e c . 7 1 0 - 1 6 6 , Gen. Code o f O h i o )
H o l d i n g companies and c h a i n or g r o u p
banking:
There are no p r o v i s i o n s i n the ban i c i n g l a w s of t h i s S t a t e
i n g t o t h e a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
relatcompanies
o r r e l a t i n g to c h a i n o r g r o u p b a n k i n g .
OKLAHOMA
A c q u i s i t i o n of s t o c k s by b a n k s and, t r u s t
companiess
"No bank s h a l l * * * i n v e s t any of i t s
o t h e r bank o r c o r p o r a t i o n ,
9155 O k l a . S t a t s . ,
*
f u n d s i n the s t o c k o f
(Sec. 11, Banking Laws, 1926;
any
Sec.
1951)
T r u s t companies a r e a u t h o r i z e d " t o buy end s e l l * * * a l l k i n d s
* * *
s t o c k s and o t h e r i n v e s t m e n t s e c u r i t i e s , "
(Sec. 119, N i n t h ,
of
Banking
-53-Laws, 1 9 2 6 ; S e c - 9206, G k l a . S t a t s . ,
L-477
1951}
Holding: companies and, chain, or group b a n k i n g ;
There are no p r o v i s i o n s
i n the b a n k i n g laws of t h i s S t a t e
relat-
i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g to c h a i n or g r o u p b a n k i n g «
OREGON
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
" H e r e a f t e r no bank or t r u s t company s h a l l i n v e s t any o f i t s
s e t s i n the c a p i t a l s t o c k of any o t h e r c o r p o r a t i o n except * * * i n
s t o c k a s it may a c q u i r e or p u r c h a s e to save l o s s on a p r e e x i s t i n g
such s t o c k t o be s o l d , however, w i t h i n 12 months o f the date
*
"
such
debt;
acquired
or p u r c h a s e d , or w i t h i n such f u r t h e r time a s may be g r a n t e d by the
i n t e n d e n t of b a n k s ; *
as-
super-
( S e c . 1 2 , Ch. 227, 1 9 3 5 , Laws, amen a in g
S e c . 2 2 - 9 1 1 , Oregon Code o f 1950)
"Upon the w r i t t e n a p p l i c a t i o n of the b o a r d of d i r e c t o r s
filed
w i t h the s u p e r i n t e n d e n t of banks and s u b j e c t t o h i s w r i t t e n a p p r o v a l and
i n a c c o r d a n c e w i t h s u c h f u r t h e r i n s t r u c t i o n s and l i m i t a t i o n s a s he may
prescribe,"
any bank or t r u s t company whose d e p o s i t s a r e or h e r e a f t e r
may be i n s u r e d , i n whole or i n p a r t , by the government of the U n i t e d
States
11
may c a r r y f u l l y p a i d up and n o n a s s e s s a b l e c a p i t a l s t o c k o f any
o t h e r c o r p o r a t i o n a s an a s s e t ,
(l)
provided:
That s u c h s t o c k s s h a l l be a c q u i r e d f o r the purpose of
e n i n g the b a n k 1 s o r t r u s t company's c a p i t a l s t r u c t u r e o r the
of u n d e s i r a b l e
assets;
strength-
elimination
-54(2)
L-477
That the a g g r e g a t e amount of such s t o c k s c a r r i e d on the
books a s an a s s e t s h a l l n o t be i n e x c e s s of 20 per centum o f the b a n k 1 s
or t r u s t company 1 s u n i m p a i r e d c a p i t a l and
(5)
That such bank or t r u s t company s h a l l n o t t h e r e a f t e r make
a l o a n , d i r e c t l y or i n d i r e c t l y ,
ligation is fully
(4)
surplus;
to any s u c h c o r p o r a t i o n u n i o s s the o b -
secured;
That s u c h s t o c k may be h e l d f o r such p e r i o d a s the
super-
i n t e n d e n t of banks may d e t e r m i n e , but i n no event l o n g e r t h a n t h a t
pro-
v i d e d by law f o r the h o l d i n g of r e a l e s t a t e , o t h e r t h a n b a n k i n g p r e m i s e s ;
(5)
The.t the book v a l u e of s u c h a s s e t s h a l l be a m o r t i s e d i n the
same manner a s p r o v i d e d by law f o r the r e d u c t i o n of the book v a l u e o f
r e a l e s t a t e o t h e r than b a n k i n g
premises.
"The p r o v i s i o n s of t h i s s e c t i o n s h a l l n o t be a p p l i c a b l e
s t o c k t h a t may be a c q u i r e d by s u c h bank or t r u s t company i n
to any
connection
w i t h the i n s u r a n c e of d e p o s i t s , or i n c o n n e c t i o n w i t h s t o c k t h a t may be
p u r c h a s e d a s a p a r t o f any t r a n s a c t i o n whereby any such' bank or
trust
company s h a l l borrow from the U n i t e d S t a t e s or any agency t h e r e o f
i n s t r u m e n t a l i t y c r e a t e d t h e r e b y n o r s h a l l the p r o v i s i o n s o f t h i s
or
sec-
t i o n r e p e a l or i n any way l i m i t o r m o a i f y tne p r o v i s i o n s o f ch&ptcr
Oregon Laws, 1 9 5 5 , second s p e c i a l s e s s i o n , "
authorizing
69,
banks and
t r u s t companies to s u b s c r i b e to the c a p i t a l s t o c k of the F e a e r a l Dep o s i t Insurance Corporation.
( S e c . 7 , Ch. 57, 1955 Amendments t o Oregon
Cede of 1 9 5 0 , S e c . 2 2 - 5 2 0 7 , 1955 Supplement to Oregon Code o f 195; J)
" A s s e t s of the s - . v i n g s department ..f any s a v i n g s bank or o f any
bank or t r u s t company m a i n 1 t u n i n g a s a v i n g s department may be i n v e s t e d
-55--
L-477
i n ! ! c e r t a i n l i s t e d " c l a s s e s o f s e c u r i t i e s , and n o t o t h e r w i s e , "
n e i t h e r bank or t r u s t company s t o c k nor c o r p o r a t e s t o c k s
are i n c l u d e d i n such l i s t .
( S e c . 2 , Ch. 6 7 , 1955 Laws,
but
generally
Second
S p e c i a l S e s s i o n , amending S e c . 2 2 - 1 1 0 9 , Oregon Coae of 1950)
"Bank"
defined:
"The word
1
bank, 1 a s u s e d i n t h i s a c t ,
s h a l l be c o n s t r u e d t o
mean any i n c o r p o r a t e d b a n k i n g i n s t i t u t i o n which s h a l l have been
p o r a t e d to conduct the b u s i n e s s o f r e c e i v i n g money on d e p o s i t ,
t r a n s a c t i n g a t r u s t b u s i n e s s as h e r e i n d e f i n e d .
v i d e d i n t o the f o l l o w i n g
* *
incoror
Banks are
di-
classes:
(a) Commercial b a n k s ;
(b) S a v i n g s
banks.
(c) T r u s t companies."
( S e c . 2 2 - 1 0 2 , B a n k i n g Laws, 1 9 5 0 ;
Sec.
2 2 - 1 0 2 , Oregon Code of 1950)
Holding
companies:
Any c o r p o r a t i o n o r g a n i s e d i n t h i s s t a t e , or licensee to do b u s i -
n e s s h e r e i n may own, h o l d or c o n t r o l the s t o c k of any bank or t r u s t
pany but w h i l e so owning, h o l d i n g or c o n t r o l l i n g such s t o c k the
poration i s
(l)
s u b j e c t to the f o l l o w i n g
It
cor-
restrictions:
s h a l l n o t borrow money or o t h e r w i s e s e c u r e
credit
d i r e c t l y or I n d i r e c t l y , from s u c h b a n k or t r u s t company,
the l o a n or c r e d i t i s a d e q u a t e l y s e c u r e d by c o l l a t e r a l
unless
other
than s t o c k or e v i d e n c e s of i n d e b t e d n e s s of any c o r p o r a t i o n w h i c h
it
controls.
com-
-56(2)
It
1,-477
s h a l l n o t s e l l any s t o c k , s e c u r i t i e s or o t h e r
dences of i n d e b t e d n e s s of any o t h e r c o r p o r a t i o n which i t
trols,
evi-
con-
to or t h r o u g h the bank or t r u s t company i n which i t owns
or h o l d s s t o c k ; n o r can i t u s e s u c h bank or t r u s t company as an
a g e n t f o r the p u r p o s e of s e l l i n g or o t h e r w i s e d i s p o s i n g of
s t o c k , s e c u r i t i e s or o t h e r e v i d e n c e s o f i n d e b t e d n e s s
without
f i r s t o b t a i n i n g p e r m i s s i o n from the Oregon C o r p o r a t i o n
(5)
It
s h a l l n o t c a r r y a s an a s s e t any expenses
t o o r g a n i z a t i o n or t o the s a l e of s t o c k a f t e r
Commissioner.
incident
organization.
P e n a l t i e s a r e p r e s c r i b e d f o r v i o l a t i o n s of t h i s a c t by
r a t i o n s or t h e i r o f f i c e r s
or employees.
such
corpo-
(Ch. 4 4 4 , Oregon Laws 1 9 2 9 ,
p. 6 7 1 ; S e e s . 2 5 - 5 0 1 t o 2 5 - 5 0 7 , Oregon Lode 1950)
PENNSYLVANIA
A c q u i s i t i o n of s t o c k s by banks ana t r u s t
companies:
"Any bank or bank ana t r u s t company may p u r c h a s e or i n v e s t
in
the s h a r e s o f a * * * n a t i o n a l b a n k i n g a s s o c i a t i o n , or any bank, bank
and t r u s t company, or t r u s t company, i n c o r p o r a t e d under the l a w s o f
t h i s Commonwealth, * *
( A c t No. 169 of June 21, 1 9 5 5 , P . L .
amending S e c . 1009, B a n k i n g Code of 1955, Act Mo. 112
1955, P. L,
582,
o f May 1 5 ,
624)
No s a v i n g s bank s h a l l p u r c h a s e or " i n v e s t i n the s h a r e s o f
t a l of any c o r p o r a t i o n w h a t s o e v e r , * *
capi-
( A c t of May 1 5 , 1 9 5 5 , P . L .
6 2 4 , S e e s . 1 2 0 8 - B , 1209, as amended by Act No. 140 o f June 11, 1 9 5 5 , p .
L.
506)
Holding
companies:
" A n i n c o r p o r a t e d i n s t i t u t i o n or any o t h e r c o r p o r a t i o n owning
s h a r e s i n a bank, a bank and t r u s t company, or a t r u s t company, o r
an i n c o r p o r a t e d i n s t i t u t i o n owning s h a r e s i n any o t h e r
may v o t e them by i t s p r e s i d e n t * * *
."
corporation,
( S e c . 6 0 S , B a n k i n g Laws, 193a;
S e c . 6 0 8 , B a n k i n g Code of 1 9 5 5 , A c t h o . 112 o f May 1 5 , 1 9 5 3 , P . L . 624)
RHODE ISLAND
A c q u i s i t i o n o f s t o c k s by banks and t r u s t
companies:
" A l l d e p o s i t s i n s a v i n g s banks and i n the s a v i n g s or
participa-
t i o n departments o f , or received, a s s a v i n g s d e p o s i t s or on p a r t i c i p a t i o n by banks and t r u s t companies, and i n the c a s e of s a v i n g s
banks
the income d e r i v e d from i n v e s t m e n t s h e i a , h e r e a f t e r r e c e i v e d s h a l l be
i n v e s t e d o n l y as f o l l o w s :
" I n the c a p i t a l
s t o c k of any bank or t r u s t company
incorporated
under the l a w s of any of the New E n g l a n d s t a t e s , or of the s t a t e o f New
Y o r k , or of any n a t i o n a l b a n k i n g a s s o c i a t i o n d o i n g b u s i n e s s i n any o f
s a i d s t a t e s " or " i n the c a p i t a l s t o c k of any bank or t r u s t company i n c o r p o r a t e d under the laws of any o t h e r s t a t e and d o i n g b u s i n e s s i n any
o t h e r s t a t e , or of any n a t i o n a l b a n k i n g a s s o c i a t i o n d o i n g b u s i n e s s
such o t h e r s t a t e , i f
such c o r p o r a t i o n i s a member of the f e d e r a l
in
reserve
system, and. has a p r i n c i p a l o f f i c e l o c a t e d i n a c i t y of a t l e a s t two
hundred t h o u s a n d i n h a b i t a n t s ,
a c c o r d i n g to the most r e c e n t U n i t e d
c e n s u s , and h a s an a g g r e g a t e c a p i t a l ,
States
s u r p l u s and undivided, p r o f i t s
of
-241--
L-477
a t l e a s t $ 5 , 0 0 0 , 0 0 0 , and h a s been i n a c t i v e b u s i n e s s f o r a t .Least t e n
y e a r s n e x t p r e c e d i n g the date o f i n v e s t m e n t , i n c l u d i n g i n the
t i o n of s a i d t e n y e a r s , i f
computa-
s u c h c o r p o r a t i o n r e s u l t s from a c o n s o l i d a -
t i o n o f two or more s u c h c o r p o r a t i o n s ,
the time d u r i n g w h i c h any c o n -
s t i t u e n t c o r p o r a t i o n h a s been i n a c t i v e b u s i n e s s . "
However, a
"sav-
i n g s bank or t r u s t company s h a l l n o t h o l d , e i t h e r f o r i n v e s t m e n t o r a s
s e c u r i t y f o r l o a n s o r f o r b o t h i n v e s t m e n t and s e c u r i t y ,
o f more t h a n t w e n t y - f i v e per centum o f I t s
deposits in"
s a v i n g s ond
an a g g r e g a t e
participation
s u c h s t o c k s " a t t h e i r p a r v a l u e , n o r more t h a t n t h r e e
centum of such d e p o s i t s i n the c a p i t a l
s t o c k of a n y one s u c h
corpora-
t i o n a t i t s p a r v a l u e , n o r more t h a n o n e - q u a r t e r o f the c a p i t a l
o f any one s u c h c o r p o r a t i o n . "
(Sec. 1, Clause V I I ,
Laws, 1 9 5 4 ; Ch. 2 7 2 , S e c . 1 , Gen. Laws o f R . I . ,
1 9 2 7 , Ch*
Ch. 2 7 2 ,
per-
stock
Banking
a s amended by P . L
1054)
W h i l e t h e r e a r e no o t h e r p r o v i s i o n s i n the b a n k i n g l a w s o f
S t a t e r e l a t i n g t o t h e a c q u i s i t i o n o f bank or t r u s t company s t o c k o r
p o r a t e s t o c k s g e n e r a l l y by b a n k s and t r u s t c o m p a n i e s , a t r u s t
i s a u t h o r i z e d to " i n v e s t i t s
such bonds, o b l i g a t i o n s ,
or m i x e d , a s
may deem p r u d e n t , s u b j e c t , however, t o any dutj.es, r e s t r i c t i o n s ,
limitations
imposed by the p r o v i s i o n s
of t h i s t i t l e . "
cor-
company
c a p i t a l s t o c k ana moneys i n i t s h a n a s
or p r o p e r t y , r e a l , p e r s o n a l ,
this
in
it
or
(Sec. 4(a),
Ch.
271, B a n k i n g Laws, 1 9 5 4 ; Sec. 4 ( a ) , Ch. 2 7 1 , Gen. Laws of R . I . )
While
t h i s d o e s n o t appear t o be a s p e c i f i c g r a n t of power t o p u r c h a s e
bank
stocks, i t i s understood that,
hold stocks,
in practice,
t r u s t companies p u r c h a s e and
i n c l u d i n g bank s t o c k s , a p p a r e n t l y w i t h o u t o b j e c t i o n by the
-59-State banking
L-477
authorities.
H o l d i n g companies and c h a i n or g r o u p b a n k i n g :
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s of t h i s S t a t e
relat-
i n g t o the a c q u i s i t i o n o f bank o r t r u s t company s t o c k by h o l d i n g companies or r e l a t i n g to c h a i n or group banking.
SOUTH CAROLINA
A c q u i s i t i o n o f s t o c k s by b a n k s and t r u s t
companies:
E v e r y c o r p o r a t i o n , o r g a n i z e d f o r any p u r p o s e o r p u r p o s e s
e v e r , i s a u t h o r i z e d to a c q u i r e " s h a r e s o f s t o c k i n o t h e r
whatso-
corporations,
p o s s e s s i n g the same powers i n s u c h r e s p e c t s a s i n d i v i d u a l s now e n j o y , "
(Nos. 1 , 1 0 , B a n k i n g L a w s , 1 9 5 0 ; S e e s . 7 7 2 6 , 7 7 4 5 , C i v i l Code o f
1952)
" E v e r y b a n k i n g c o r p o r a t i o n may d e a l i n # - - p u b l i c and o t h e r
securities,
and s t o c k s o f o t h e r c o r p o r a t i o n s ; *
hold such *
** may p u r c h a s e and
p e r s o n a l p r o p e r t y , a s may be c o n v e y e d to i t
to
secure
d e b t s t o the c o r p o r a t i o n , * # * and a s may be deemed n e c e s s a r y o r
con-
v e n i e n t f o r the t r a n s a c t i o n o f i t s b u s i n e s s , and may s e l l and d i s p o s e
o f the same a t p l e a s u r e ; # *
."
(No. 7 1 , B a n k i n g L a w s , 1 9 5 0 ;
Sec.
7 8 6 2 , C i v i l Code o f 1932)
T r u s t companies a r e a u t h o r i z e d to " b u y , *
a l l k i n d s of * #
# i n v e s t i n and
s t o c k s or o t h e r i n v e s t m e n t s e c u r i t i e s . "
(No,
sell
591(10),
B a n k i n g L a w s , 1950; S e c . 7 8 8 6 ( 1 0 ) , C i v i l Code o f 1932)
The law p r o v i d e s t h a t t r u s t companies " s h a l l n o t make any l o a n
s e c u r e d by the s t o c k o f a n o t h e r bank or t r u s t company i f
o f s u c h l o a n the t o t a l
by the making
s t o c k o f s u c h bank or t r u s t company and h e l d a s
-60--
L-477
c o l l a t e r a l s e c u r i t y by i t w i l l exceed f i f t e e n p e r centum (15%) o f the
t o t a l c a p i t a l s t o c k of s u c h bank or t r u s t company,"
i n g Laws, 1950; S e c . 7 8 8 9 ( 2 ) , C i v i l Code of 1952)
(No. 5 9 4 ( 2 ) ,
Bank-
However, a n o t h e r
pro-
v i s i o n p r o v i d e s t h a t a t r u s t company s h a l l n o t " p u r c h a s e or c o n t i n u e
h o l d s t o c k o f a n o t h e r bank or t r u s t company i f by s u c h p u r c h a s e o r
to
con-
t i n u e d i n v e s t m e n t the t o t a l s t o c k o f s u c h o t h e r bank or t r u s t
company
owned or h e l d by i t a s c o l l a t e r a l w i l l exceed t w e n t y - f i v e per
centum
(25%) o f the s t o c k o f s u c h o t h e r bank o r t r u s t company; P r o v i d e d ,
How-
e v e r , t h a t t h i s l i m i t a t i o n s h a l l n o t a p p l y t o t h e owner s h i p * *
of
a p a r t o r a l l o f the c a p i t a l s t o c k o f one bank o r g a n i z e d u n d e r
the
l a w s of the U n i t e d S t a t e s or of t h i s S t a t e , n o r t o the o w n e r s h i p o f a
p a r t o r a l l of t h e c a p i t a l o f one c o r p o r a t i o n ,
o r g a n i z e d under
the
l a w s o f t h i s S t a t e , f o r the p r i n c i p a l p u r p o s e o f r e c e i v i n g s a v i n g s
posits * * *
Code o f
"
(No. 394 ( 7 ) , B a n k i n g L a w s , 1930 j S e c . 7 8 8 9 ( 6 ) ,
de-
Civil
1932)
H o l d i n g companies and c h a i n . o r g r o u p b a n k i n g ;
There a r e no p r o v i s i o n s
i n the b a n k i n g l a w s o f t h i s S t a t e
i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
relatcom-
p a n i e s o r r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
SOUTH DAKOTA
A c q u i s i t i o n of s t o c k s by banks and t r u s t
No bank s h a l l
companies:
" i n v e s t any o f i t s f u n d s i n the s t o c k o f any o t h e r
bank or c o r p o r a t i o n , * * * n o r be the p u r c h a s e r or h o l d e r o f any
such
s h a r e s u n l e s s s u c h s e c u r i t y or p u r c h a s e s h a l l be n e c e s s a r y to p r e v e n t
l o s s upon a debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h ;
s t o c k so p u r -
c h a s e d o r a c q u i r e d s h a l l , w i t h i n s i x months of the time of i t s
c h a s e , be s o l d or d i s p o s e d o f a t p u b l i c o r p r i v a t e
s a l e ; and a f t e r
the e x p i r a t i o n of s i x months any s u c h s t o c k s h a l l n o t be
??
a s p a r t of the a s s e t s o f such bank, * *
pur-
considered
(Sec. 8983, Banking Laws,
1 9 3 2 ; S e c , 8 9 8 3 , Comp. Laws of 1929)
No t r u s t company s h a l l " i n v e s t any o f i t s f u n d s i n the
o f a n y o t h e r t r u s t company or c o r p o r a t i o n ,
o r h o l d e r o f any s h a r e s u n l e s s
* * n o r be t h e
stock
purchaser
s u c h s e c u r i t y o r p u r c h a s e s h a l l be
n e c e s s a r y t o p r e v e n t l o s s upon a debt p r e v i o u s l y c o n t r a c t e d i n g o o d
faith;
and s t o c k so p u r c h a s e d or a c q u i r e d s h a l l , w i t h i n s i x months
the time o f i t s p u r c h a s e , be s o l d or disposed, o f a t p u b l i c o r
of
private
s a l e ; and a f t e r the e x p i r a t i o n of s i x months any s u c h s t o c k s h a l l
not
be c o n s i d e r e d as a p a r t of the a s s e t s o f any t r u s t company;
u
* *
( S e c . 9 0 5 0 , B a n k i n g L a w s , 1.932; S e c . 9 0 5 0 , Comp. Laws of 1929)
H o l d i n g companies and c h a i n or g r o u p
banking:
There are no p r o v i s i o n s i n the b a n x i n g l a w s of t h i s S t a t e
l a t i n g t o the a c q u i s i t i o n o f bank or t r u s t company s t o c k by
re-
holding
companies or r e l a t i n g t o c h a i n o r g r o u p b a n k i n g .
TENNESSEE
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companiess
There a r e no p r o v i s i o n s i n the b a n k i n g . l a w s
of t h i s S t a t e
l a t i n g t o the a c q u i s i t i o n of bank o r t r u s t company s t o c k o r
s t o c k s g e n e r a l l y by banks c r t r u s t
companies.
re-
corporate
Holding companies and chair: or group banking;
There are no p r o v i s i o n s i n the b a n k i n g l a w s of t h i s S t a t e
re-
l a t i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g comp a n i e s or r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
TEXAS
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
Banks and t r u s t companies are a u t h o r i s e d " t o p u r c h a s e ,
i n •>"'
and s e l l
s t o c k s * * * and o t h e r s e c u r i t i e s . "
(Art.
invest
596(9),
Ch. 3, B a n k i n g Laws, 1953; A r t . 5 9 6 ( 9 ) , R e v . S t a t s , o f 1925)
S a v i n g s banks a r e a u t h o r i z e d to i n v e s t i n c e r t a i n
listed
" c l a s s e s of s e c u r i t i e s , and n o t o t h e r w i s e " but n e i t h e r bank or
trust
company s t o c k n o r c o r p o r a t e s t o c k s g e n e r a l l y are i n c l u d e d i n s u c h
list.
( A r t . 4 1 6 , Ch. 4 , B a n k i n g Laws, 1935; A r t , 4.1C, R e v . S t a t s , o f 1925,
as
amended)
" E v e r y t r u s t company o r g a n i z e d under the l a w s of the S t a t e w i t h
a c a p i t a l of n o t l e s s than f i v e hundred t h o u s a n d d o l l a r s s h a l l
have the power * * * to p u r c h a s e and s e l l * * *
ties * * *
•"
s t o c k s , bonus,
*
*
securi-
( A r t . 1515, Ch. 6 , B a n k i n g Laws, 1 9 5 5 ; A c t s o f 3 r d C a l l e d
S e s s i o n of 1920)
!,
I t s h a l l be u n l a w f u l f o r any S t a t e bank or bank and. t r u s t com-
pany to own more t h a n ten per cent of the c a p i t a l
s t o c k of any o t h e r
b a n k i n g c o r p o r a t i o n , or t o make a l o a n s e c u r e d by trie s t o c k of any o t h e r
banking corporation,
i f by the making of ouch l o a n the t o t a l s t o c k o f
s u c h o t h e r b a n k i n g c o r p o r a t i o n h e l d by i t a s c o l l a t e r a l w i l l
exceed,
-246--
L-477
i n the a g g r e g a t e , t e n per c e n t o f the c a p i t a l s t o c k of s u c h o t h e r
ing corporation,
u n l e s s the ownership, o r the t a k i n g of a g r e a t e r
c e n t a g e of s u c h c a p i t a l
stock as c o l l a t e r a l
v e n t l o s s upon a debt p r e v i o u s l y
e x c e s s so t a k e n a s c o l l a t e r a l
bankper-
s h a l l be n e c e s s a r y to
c o n t r a c t e d i n good f a i t h ;
pre-
and any
such
or owned by s u c h bank s h a l l n o t be h e l d
a s c o l l a t e r a l n o r owned by i t f o r a l o n g e r p e r i o d t h a n s i x
months."
( A r t . 5 1 5 , Ch. 6 , B a n k i n g L a w s , 1955; A c t s o f 1 9 0 9 , 2d C a l l e d
Session)
H o l d i n g companies and c h a i n o r g r o u p b a n k i n g ;
There a r e no p r o v i s i o n s i n the h a n k i n g laws of t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
companies or r e l a t i n g t o c h a i n or g r o u p
banking.
UTAH
A c q u i s i t i o n of s t o c k s by banks and t r u s t
companies:
A bank i s n o t a u t h o r i z e d , t o a c q u i r e bank or t r u s t company
stock
o r c o r p o r a t e s t o c k s g e n e r a l l y , u n l e s s " a c q u i r e d by s u c h bank i n
satis-
f a c t i o n of o r on a c c o u n t o f d e b t s p r e v i o u s l y c o n t r a c t e d i n the
course
of i t s b u s i n e s s . "
Stats,
( S e c . 7 - 5 - 5 5 ^ B a n k i n g L a w s , 1935; S e c , 7-5-55., R e v .
o f U t a h , 1 9 5 5 , a s amended by Ch. 1 2 , Laws of 1955)
" A l l the * * * g e n e r a l r e s t r i c t i o n s
and l i m i t a t i o n s ,
provided
f o r i n t h i s c h a p t e r •and a p p l y i n g t o the c o r p o r a t i o n s o r g a n i z e d and
r e g u l a t e d h e r e u n d e r , u n d e r the g e n e r a l d e s i g n a t i o n
1
banks1
s h a l l be u n -
d e r s t o o d and c o n s t r u e d t o a p p l y t o and g o v e r n commercial b a n k s and s a v i n g s b a n k s , and t h o s e c o m b i n i n g b o t h of s u c h b r a n c h e s of the b a n k i n g
business."
( S e c . 7 - 5 - 2 , B a n k i n g Laws, 1 9 5 5 ; S e c . 7 - 5 - 2 , R e v .
Stats.)
-64--
L-477
" A n y l o a n and t r u s t c o r p o r a t i o n may p u r c h a s e , own, h o l d and
s e l l or o t h e r w i s e d i s p o s e o f s h a r e s of s t o c k o f any o t h e r
corporation;
p r o v i d e d , t h a t s u c h p u r c h a s e i s a u t h o r i s e d by the b o a r d of
directors,
and, i n case the p u r c h a s e i s o f s t o c k of any b a n k , the p u r c h a s e must
be a p p r o v e d by the bank c o m m i s s i o n e r .
Laws, 1 9 5 5 ; S e c . 7 - 4 - 7 , R e v .
* *
"
(Sec. 7-4-7,. Banking
Stats.)
H o l d i n g companies and c h a i n or g r o u p b a n k i n g s
There are no p r o v i s i o n s i n the b a n k i n g l a w s o f t h i s S t a t e
i n g to the a c q u i s i t i o n o f bank or t r u s t company s t o c k by h o l d i n g
relatcom-
p a n i e s o r r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
VERMONT
A c q u i s i t i o n of s t o c k s
by b a n k s and t r u s t
companies:
The a s s e t s o f " b a n k s " may be i n v e s t e d " i n the s t o c k o f any n a t i o n a l bank i n the New E n g l a n d s t a t e s or the S t a t e o f New Y o r k , o r
in
the s t o c k o f a n y b a n k i n g a s s o c i a t i o n or t r u s t company i n c o r p o r a t e d u n der the a u t h o r i t y o f and l o c a t e d i n s u c h s t a t e s , o r i n the s t o c k o f any
bank i n c o r p o r a t e d under the a u t h o r i t y o f and l o c a t e d i n s u c h s t a t e s ,
or
i n the s t o c k of any bank i n c o r p o r a t e d u n d e r the a u t h o r i t y o f and l o c a t e d
i n the D o m i n i o n o f Canada; b u t a bank s h a l l n o t h o l d bank s t o c k b o t h by
the way of i n v e s t m e n t and a s s e c u r i t y f o r l o a n s i n e x c e s s o f ten per
c e n t of i t s a s s e t s , n o r , i n any one b a n k , more t h a n f i v e per c e n t o f
i t s assets,
or more than one h u n d r e d t h o u s a n d d o l l a r s ,
p e r c e n t of the c a p i t a l
s t o c k of any one b a n k . "
i n g L a w s , 1954; S e c . 6 7 0 6 - V I
o r more t h a n
(Sec. 670S-VI
( a ) , Ch. 2 7 2 , P u b . Laws o f
Vt.)
(a),
ten
Bank-
-65"Bank"
L-477
defined:
" 1 Bank1
s h a l l r e f e r t o and i n c l u d e s a v i n g s b a n k s , s a v i n g
t u t i o n s and s a v i n g s banks and t r u s t c o m p a n i e s , commonly known a s
companies; * * *
2 7 2 , P u b . Laws o f
. 11
institrust
(Sec. 6664, Banking Laws, 1954; Sec. 6664,
Ch.
Vt.)
H o l d i n g companies and c h a i n o r g r o u p
There a r e no p r o v i s i o n s
banking:
i n the b a n k i n g l a w s o f t h i s S t a t e
re-
l a t i n g t o the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g
com-
p a n i e s o r r e l a t i n g t o c h a i n or g r o u p b a n k i n g .
VIRGINIA
A c q u i s i t i o n o f s t o c k s by b a n k s and, t r u s t
companies:
" N o r s h a l l any bank i n v e s t any of i t s f u n d s i n the s h a r e s
the common s t o c k , o r i t s e q u i v a l e n t ,
o f any o t h e r c o r p o r a t i o n ,
except
s u c h s h a r e s o f s t o c k a s n a t i o n a l b a n k s a r e p e r m i t t e d to p u r c h a s e
t h e i r own a c c o u n t , * * *
this provision
of
for
s h a l l n o t , however,
p r e v e n t any
bank from a c q u i r i n g any s u c h s t o c k , * * * t o p r o t e c t i t s e l f
o r any f u n d
i n i t s c u s t o d y o r p o s s e s s i o n a g a i n s t l o s s from d e b t s t h e r e t o f o r e
con-
t r a c t e d " n o r f r o m a c q u i r i n g - s t o c k ox a b u i l d i n g c o r p o r a t i o n o r an
c u l t u r a l c r e d i t c o r p o r a t i o n " p r o v i d e d the t o t a l amount o f s u c h
s h a l l n o t exceed twenty p e r centum of the amount o f the c a p i t a l
agri-
stock
stock
o f s u c h bank a c t u a l l y p a i d i n and u n i m p a i r e d , p l u s the amount o f i t s
un-
impaired s u r p l u s fund."
1928,
( S e c . 4 1 4 9 ( 1 5 ) , B a n k i n g Laws, 1 9 5 6 ; A c t s o f
pp. 1 5 1 5 , 1 5 1 4 , a s amended b y A c t s o f 1 9 5 6 , p.
"The word
1
150)
bank1 wherever it shall appear in this act, shall
-66-i n c l u d e banks
of d e p o s i t and d i s c o u n t ,
L-477
savings banks, savings
s a v i n g s i n s t i t u t i o n s and t r u s t companies * *
f!
societie
(Sec. 4 1 4 9 ( 1 ) ,
Bank-
i n g Laws, 1936} A c t s of 1 9 2 8 , p . 1308, a s amended by A c t s o f 1 9 3 6 , p.
124)
H o l d i n g companies and c h a i n or g r o u p b a n k i n g °
There a r e n o p r o v i s i o n s i n the b a n k i n g laws of t h i s S t a t e
rela
i n g to the a c q u i s i t i o n of bank or t r u s t company s t o c k by h o l d i n g comp a n i e s or r e l a t i n g to c h a i n or g r o u p b a n k i n g .
WASHINGTON
A c q u i s i t i o n o f s t o c k s by b a n k s , a n d t r u s t
companies:
No bank or t r u s t company s h a l l "be the p u r c h a s e r or h o l d e r
any * * * s h a r e s ' 1 o f any o t h e r b a n k , t r u s t company or n a t i o n a l
association "unless
of
banking
such * * * p u r c h a s e s h a l l be necessary to p r e v e n t
l o s s upon a debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h ;
i n which case
the s t o c k so p u r c h a s e d or a c q u i r e d s h a l l be s o l d " or d i s p o s e d of w i t h in
two y e a r s .
" N o r s h a l l any s u c h c o r p o r a t i o n
s u b s c r i b e 1 or or
pur-
chase the s t o c k of any o t h e r bank or t r u s t company o r a n a t i o n a l b a n k ing association * *
3243, Rem. Comp.
* ."
( S e c . 9, Ch. 42, Laws o f 1 9 3 5 , amending S e c .
Stats.)
"A mutual s a v i n g s bank s h a l l have the power to i n v e s t i t s
i n the manner h e r e i n a f t e r i n t h i s a c t s p e c i f i e d and n o t o t h e r w i s e "
fund
but
n e i t h e r bank or t r u s t company s t o c k s n o r c o r p o r a t e s t o c k s g e n e r a l l y o.r
so s p e c i f i e d .
103)
( S e c . 156, B a n k i n g Laws, 1929; Ch. 7 4 , Lows of 1929, p.
-67"Bank"
L-477
defined;
t!
1
The term
bank 1 where u s e d i n t h i s a c t , u n l e s s a d i f f e r e n t
meaning a p p e a r s from the c o n t e x t , means any c o r p o r a t i o n o r g a n i z e d u n d e r
the l a w s of t h i s
s t a t e engaged i n b a n k i n g , o t h e r t h a n a t r u s t
o r a mutual s a v i n g s
company
bank.
-if -x- -if -if -if -if -if -if -if -x- -if -if -if *
11
posits
The term ' s a v i n g s bank 1
s h a l l include
( a ) amy bank whose d e -
s h a l l be l i m i t e d e x c l u s i v e l y t o s a v i n g s a c c o u n t s , and (b)
department o f any bank or t r u s t company t h a t a c c e p t s , o r o f f e r s
accept, deposits f o r
s a v i n g s accounts i n accordance w i t h the
of t h i s act r e l a t i v e
to segregated s a v i n g s . "
1 9 5 5 , amending S e c . 5 2 2 1 , Rem. Comp.
Holding
the
to
provisions
( S e c . 2 , Ch. 4 2 , Laws o f
Stats.)
companies;
" A c o r p o r a t i o n o r a s s o c i a t i o n o r g a n i z e d u n d e r the l a w s o f
s t a t e , o r l i c e n s e d t o t r a n s a c t b u s i n e s s i n the s t a t e ,
this
s h a l l not here-
a f t e r a c q u i r e any s h a r e s o f s t o c k o f any t x n k , t r u s t company o r n a t i o n a l b a n k i n g a s s o c i a t i o n w h i c h , i n the a g g r e g a t e , e n a b l e i t to ovm,
h o l d or c o n t r o l more t h a n t w e n t y - f i v e per centum o f the c a p i t a l
stock
o f s u c h b a n k , t r u s t company or n a t i o n a l b a n k i n g a s s o c i a t i o n : * * *
( A d d i n g S e c . 5 2 4 5 - 1 , t o Rem. Comp. S t a t s . ;
."
S e c . 1 0 , Ch. 4 2 , Laws o f
1955)
WEST V I R G I N I A
A c q u i s i t i o n of s t o c k s
by banks and t r u s t
companiesz
"Every banking institution organized under the provisions of
t h i s c h a p t e r and a u t h o r i z e d to engage i n the b u s i n e s s o f a t r u s t
company
s h a l l have and e x e r c i s e the f o l l o w i n g powerss
hold,
s e l l and d e a l i n
->f * -x- . "
*
* * *
(d) To b u y ,
the s t o c k s o r bonds of any b u s i n e s s
( S e c . 7 ( d ) , B a n k i n g L a w s , 1 9 5 1 ; Ch. 51, A r t .
corporation;
4, Sec.
5129,
a. V a . Code of 1952)
"The t o t a l l i a b i l i t i e s
corporation
to any b a n x i n g i n s i t u t i o n
o f any * *
i n c l u d i n g i n the l i a b i l i t i e s , o f any c o r p o r a t i o n
i n v e s t m e n t by s u c h b a n k i n g i n s t i t u t i o n i n the s t o c k o f s u c h
* * *
."
( A c t o f F e b . 2 5 , 1 9 5 5 , Laws of
"Banking I n s t i t u t i o n s "
1
"The term
c h a r t e r e d wider
institution:
defined.:
oanking i n s t i t u t i o n 1
s h a l l include every
company
t h i s c h a p t e r and a u t h o r i z e d to do b u s i n e s s I n the
wiah
t o engage i n the b a n k i n g b u s i n e s s a s d e f i n e d I n s e c t i o n s
hereof,
s i x and s e v e n
and e v e r y s u c h company c h a r t e r e d u n d e r tra
more o f the f o l l o w i n g words i n d i c a t i v e
i z e d to conduct, namely,
or
'trust
1
sank,1
!
of
provisions
company.!"
one o r
tho b u s i n e s s w a x h i t
bar.Icing company, !
(Sac,
T
State
authority
s h a l l h a v e , a s a p a r t o f i t s c o r p o r a t e name o r t i t l e ,
' s a v i n g s bank, T
amend-
1952)
o f West V i r g i n i a u n d e r t h e p r o v i s i o n s o f t h i s a r t i c l e ,
of t h i s a r t i c l e ;
stock,
1.955, R e g u l a r S e s s i o n ,
i n g S e c . 5200, Ch. 31, A r t . 8 , W. V a . Couo af
an
corporation
s h a l l a t no time exceed t e n p e r c e n t o f the u n i m p a i r e d c a p i t a l
i n c l u d i n g d e b e n t u r e s and s u r p l u s fund, of s u c h b a n k i n g
*
banking
Is
author'
association,!
1, B a n k i n g La-,/, 1951;
Sec.
5 1 2 5 , Ch. 3 1 , A r t . 4 , W. Va. Code o f 1352)
Holding
companies:
"It shall be unlawful for any person to purchase una hold stock
-69--
L-477
i n any b a n k i n g i n s t i t u t i o n o r g a n i z e d o r a u t h o r i z e d t o t r a n s a c t
h e r e u n d e r f o r the p u r p o s e o f s e l l i n g , n e g o t i a t i n g o r t r a d i n g
business
participa-
t i o n i n the o w n e r s h i p t h e r e o f e i t h e r f o r the p u r p o s e o f p e r f e c t i n g
t r o l o f one or more s u c h b a n k i n g i n s t i t u t i o n s
or f o r
the p u r p o s e o f
d u c i n g o t h e r p e r s o n s , f i r m s or c o r p o r a t i o n s or the g e n e r a l p u b l i c
become p a r t i c i p a t i n g owners t h e r e i n .
the
for
( S e c . 38, B a n k i n g haws, 1951$ Ch. 5 1 , A r t .
S e c . 5220, W. V a . Code o f
in-
to
Nothing herein s h a l l prevent
o w n e r s h i p o f s t o c k i n any s u c h b a n k i n g i n s t i t u t i o n by any p e r s o n
investment purposes.,f
con-
3,
1952)
WISCONSIN
A c q u i s i t i o n of s t o c k s by banks and t r u s t
There a r e no p r o v i s i o n s
cept the f o l l o w i n g ,
i n the b a n k i n g laws of t h i s s t a t e ,
r e l a t i n g t o the a c q u i s i t i o n o f bank or t r u s t
pany s t o c k or c o r p o r a t e
n
s t o c k s g e n e r a l l y by banks o r t r a c t
No mutual s a v i n g s
bank s h a l l i n v e s t any p a r t of
i n the s t o c k of any c o r p o r a t i o n *
1 9 3 5 ; Ch. 2 2 2 , W i s . S t a t s . ,
2 4 5 , Laws of
companiest
* *
.H
(Se-.„.
1 2 2 . 1 6 ,
ex-
com-
companies.
Its
deposits
B a n k i n g
Laws,
a s amended by c h . 2 7 , Laws o f 1 9 5 1 , and Ch.
1955)
Any t r u s t company
11
s h a l l havo power, i n and by i t s
corporate
name, t o t a k e , r e c e i v e , h o i a , pay f o r , r e c o n v e y , and a .in-pose of any
f e c t s and p r o p e r t y , r e a l o r p e r s o n a l ,
transferred,
r v «ich ma^ be
committed,
o r conveyed t o i t w i t h i t s c o n s e n t , upon any t e r m s
( S e c . 2 2 5 , 0 5 ( 6 ) , B a n k i n g Laws, 1955$ Ch. 225, W i s .
granted,
Stats.)
ef-
* *
,11
-70-Holding
L-477
companies:
"Any domestic c o r p o r a t i o n ,
investment t r u s t ,
or o t h e r form o f
t r u s t w h i c h s h a l l own, h o l d or i n any manner c o n t r o l a m a j o r i t y o f
the
s t o c k i n a s t a t e bank or t r u s t company s h a l l be deemed t o be engaged
i n the b u s i n e s s o f b a n k i n g and s h a l l be s u b j e c t t o t h e s u p e r v i s i o n
the s t a t e b a n k i n g d e p a r t m e n t . * *
* "
'There a r e a l s o p r o v i s i o n s
q u i r i n g s u c h h o l d i n g companies t o f i l e r e p o r t s o f f i n a n c i a l
of
re-
condition
w i t h c o m m i s s i o n e r o f b a n k i n g ; p r o v i d i n g f o r e x a m i n a t i o n s o f ouch h o l d i n g companies b y the b a n k i n g a u t h o r i t i e s ;
authorizing
such
authorities
t o r e q u i r e t h e c o r r e c t i o n of u n s o u n d p r a c t i c e s o f s u c h h o l d i n g comp a n i e s ; and s u b j e c t i n g s u c h h o l d i n g companies t o d o u b l e l i a b i l i t y
the bank o r t r u s t company s t o c k owned.
1 9 3 5 ; Ch. 2 2 1 , W i s . S t a t s . ,
on
( S e c . 2 2 1 . 5 6 , Banking Laws,
a s amended by Ch. 3 9 3 , Laws o f 1955)
"No bank when more t h a n ten per c e n t o f the s t o c k i.s owned,
h e l d o r c o n t r o l l e d by any c o r p o r a t i o n , o r by an a s s o c i a t i o n ,
t r u s t or o t h e r f o r m of t r u s t or by a c h a i n bank or h o m i n g
investment
company,
s h a l l be p e r m i t t e d t o e s t a b l i s h a r e c e i v i n g and p a y i n g s t a t i o n . "
(Sec.
2 2 1 . 2 5 5 ( 5 ) , B a n k i n g Las?s, 1 9 3 5 ; Ch. 221, W i s . S t a t s . , a s amended by
Ch, 2 1 5 , Laws of 1 9 3 5 )
" A n y c o r p o r a t i o n o r g a n i z e d under c n a p t e r 180 o f the
statutes
may s u b s c r i b e f o r , and t a k e o r • h o l d s t o c k i n a n y o t h e r c o r p o r a t i o n
cept as h e r e i n p r o v i d e d .
The c o n s i d e r a t i o n f o r
ex-
s u c h p u r c h a s e may be
p a i d i n the s t o c k o r b o n d s , or b o t h , o f the p u r c h a s i n g company; b u t no
c o r p o r a t i o n o r g a n i z e d u n d e r c h a p t e r 180 o f t h e s t a t u t e s mov
for,
subscribe
t a k e or h o l d more t h a n t e n oer c e n t of t h e c a p i t a l s t o c k o f
any
-71s t a t e bank o r t r u s t company, u n l e s s
of both corporations
L-477
s e v e n t y - f i v e p e r c e n t o f the
s h a l l vote i n favor thereof at a meeting
stock
especially
c a l l e d f o r t h a t p u r p o s e , b u t no s t a t e bank o r t r u s t company may v o t e
t o a u t h o r i z e a f o r e i g n c o r p o r a t i o n to p u r c h a s e s t o c k i n s u c h bank o r
t r u s t company u n l e s s
articles
s u c h f o r e i g n c o r p o r a t i o n s h a l l have f i l e d
of i n c o r p o r a t i o n w i t h the s e c r e t a r y o f s t a t e and i s
Its
authorized
t o do b u s i n e s s i n W i s c o n s i n a s p r o v i d e d i n s e c t i o n 2 2 6 . 0 2 o f the
utes."
( S e c . 1 8 2 . 0 1 ( 3 ) , Laws r e l a t i n g t o b a n k s and. h o l d i n g
a s amended by Ch. 4 4 5 , Laws o f 1 9 2 9 )
stat-
companies,
(Ch. 180 r e f e r r e d t o above
pro-
v i d e s f o r the o r g a n i z a t i o n o f d o m e s t i c c o r p o r a t i o n s , b u t banks and
t r u s t companies a r e o r g a n i z e d u n d e r C h a p t e r s 2 2 1 , 222 and 223 o f
the
Wisconsin statutes.
for
S e c . 2 2 6 . 0 2 a l s o r e f e r r e d t o above p r o v i d e s
the a d m i s s i o n o f f o r e i g n c o r p o r a t i o n s t o t r a n s a c t b u s i n e s s i n
S t a t e of
the
bisconsin)
WYOMING
A c q u i s i t i o n of s t o c k s by b a n k s and t r u s t
companies:
" H e r e a f t e r no s t a t e bank s h a l l i n v e s t any o f i t s a s s e t s i n the
capital
s t o c k of any o t h e r c o r p o r a t i o n *
- *
e x c e p t s u c h a s i t may a c -
q u i r e o r p u r c h a s e t o save a l o s s on a p r e - e x i s t i n g d e b t , and s t o c k s
so
a c q u i r e d or p u r c h a s e d s h a l l be s o l d w i t h i n t w e l v e months from t h o date
a c q u i r e d or p u r c h a s e d ; provided., t h a t a f u r t h e r
the S t a t e E x a m i n e r . "
time may be g r a n t e d by
( S e c . 1 0 - 1 5 5 , B a n k i n g Laws, 1955; S e c .
10-155,
1'g/o. R e v . S t a t s •, 1931)
There are no provisions in the banking laws of this State
-72-relating specifically
L-477
t o the a c q u i s i t i o n o f bank o r t r u s t company
o r c o r p o r a t e s t o c k s g e n e r a l l y by t r u s t
"Bank"
stock
companies.
defined:
" E v e r y b a n k , banker or c o r p o r a t i o n i n t h i s
i n g b u s i n e s s u n d e r the p r o v i s i o n s
a s t a t e bank; * * *
llyo. R e v . S t a t s . ,
of t h i s c h a p t e r ,
state doing a banks h a l l be known a s
(Sec. 1 0 - 1 0 5 , Banking Laws, 1955; Sec.
10-105,
1931)
" A n y p e r s o n , f i r m or c o r p o r a t i o n ( e x c e p t n a t i o n a l b a n k s )
i n g a p l a c e of b u s i n e s s w i t h i n t h i s
hav-
s t a t e where c r e d i t s are opened by
the d e p o s i t o r c o l l e c t i o n of money o r c u r r e n c y o r n e g o t i a b l e paper
j e c t t o be p a i d o r r e m i t t e d upon d r a f t , r e c e i p t , c h e c k , or o r d e r ,
be r e g a r d e d a s a bank or b a n k e r , and a s d o i n g a b a n k i n g b u s i n e s s
the p r o v i s i o n s
of t h i s c h a p t e r . "
S e c *. 1 0 - 1 1 0 , Wyo. R e v . S t a t s . ,
(Sec. 10-110, Banking Laws,
shall
under
1955;
1951)
H o l d i n g companies and c h a i n or g r o u p
There a r e no p r o v i s i o n s
sub-
banking:
i n the b a n g i n g l a w s of t h i s S t a t e
relat-
i n g t o t h e a c q u i s i t i o n o f bank o r t r u s t company s t o c k by h o l d i n g comp a n i e s o r r e l a t i n g t o c h a i n or g r o u p
banking.
@FedFRASER