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Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 13, 1965
Attached is a copy of the minutes of the
m on
Board of Governors of the Federal Reserve Syste
the above date.
It is not proposed to include a statement
of
with respect to any of the entries in this set
to
red
minutes in the record of policy actions requi
al
Feder
be maintained pursuant to section 10 of the
Reserve Act.
Should you have any question with regard to
advise
the minutes, it will be appreciated if you will
al
e
initi
the Secretary's Office. Otherwise, pleas
your
below. If you were present at the meeting,
If
initials will indicate approval of the minutes.
ate
indic
you were not present, your initials will
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Minutes of the Board of Governors of the Federal Reserve
System on Friday, August 13, 1965.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Daane
Maisel
Mr. Bakke, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Noyes, Adviser to the Board
Mr. Molony, Assistant to the Board
Mrs. Semia, Technical Assistant, Office
of the Secretary
Staff Assistant, Board Members'
Morgan,
Mr.
Offices
Messrs. Brill, Holland, Partee, Bernard, and
Gramley of the Division of Research and
Statistics
Messrs. Hersey, Katz, Salmtons, Baker, and Gemmill
of the Division of International Finance
Mr. Furth, Consultant
Money market review.
Mr. Brill reported on the industrial
Production index, following which Mr. Bernard commented on developments
in the Government securities market, in which connection tables were
distributed relating to yields on U.S. Government securities and to
Perspective on the money market and on bank reserve utilization.
Mr.
Baker then discussed conditions in foreign exchange markets, with special
reference to recent pressures on the pound sterling, and Mr. Katz summarized his observations during his recent European trip, which included
a technical meeting at the Bank for International Settlements and visits
1n Germany and France.
-2-
8/13/65
All members of the staff except Messrs. Bakke, Noyes, and
Molony, and Mrs. Semia then withdrew and the following entered the
room:
Mr.
Mr.
Mr.
Mr.
Mr.
Solomon, Director, Division of Examinations
Hexter, Assistant General Counsel
Leavitt, Assistant Director, Division of Examinations
Via, Senior Attorney, Legal Division
Osborne, Chief, Consumer Credit and Finances Section,
Division of Research and Statistics
Discount rates.
The establishment without change by the
Federal Reserve Banks of Cleveland, Richmond, Atlanta, Chicago, Kansas
City, and Dallas on August 12, 1965, of the rates on discounts and
advances in their existing schedules was approved unanimously, with
the understanding that appropriate advice would be sent to those Banks.
Report on competitive factors (Roanoke-St. Paul, Virginia).
There had been distributed a draft of report to the Comptroller of the
Currency on the competitive factors involved in the proposed merger of
St. Paul National Bank, St. Paul, Virginia, into The First National
Exchange Bank of Virginia, Roanoke, Virginia.
Governor Shepardson observed that the information presented
banking
related principally to the competitive impact in terms of the
structure of the State and of the area surrounding St. Paul.
It seemed
to him that the proposed transaction was somewhat similar to others in
relatively
Which the larger bank, while not operating State-wide, had a
heavy concentration in one area.
Therefore he had asked the Division
y
of Examinations to assemble additional information focused especiall
8/13/65
-3-
on the southwestern part of Virginia, where First National Exchange
Bank operated its 28 offices.
Mr. Leavitt then discussed a table
Showing the banking structure of 27 counties and 7 cities in southwestern Virginia.
Governor Mitchell cited reasons why, in his view, the proposed
report lacked an adequate definition of the banking markets that should
be taken into consideration, and the ensuing discussion of the appropriate measure of banking markets resulted in several suggestions for
changes in the conclusion and in the text of the report, including
incorporation of some of the figures Mr. Leavitt had presented.
The
report was then approved for transmittal in a form in which the conclusion read as follows:
The proposed merger of St. Paul National Bank into
The First National Exchange Bank of Virginia, Roanoke,
would eliminate competition which exists between them.
It would expand Roanoke Bank's geographic coverage in
southwestern Virginia where, since 1960, Roanoke Bank
has absorbed 12 banks. The overall effect of the proposed transaction on competition would be adverse.
Applications of Citizens Trust and Savings Bank (Items 1 and 2).
There had been distributed drafts of an order and statement reflecting
the Board's approval on July 28, 1965, of the applications of Citizens
Trust and Savings Bank, South Haven, Michigan, to consolidate with The
Fruit Growers State Bank of Saugatuck, Mich., Saugatuck, Michigan, and
to acquire the assets and assume the liabilities of The Old State Bank,
Pennville, Michigan.
8/13/65
-4The issuance of the order and statement was authorized.
Copies
of the documents are attached as Items 1 and 2.
Request by House Banking and Currency Committee (Item No. 3).
There had been distributed a draft of letter to Chairman Patman of the
House Committee on Banking and Currency that would respond to a telephone
request by the Committee's staff for a list of the major finance companies
included in the sample being used in the current survey of finance companies.
During a discussion relating to matters such as the composition
of the list and the likelihood of changes in the course of experience,
certain changes in the draft letter were agreed upon, after which the
letter was approved unanimously in the form attached as Item No. 3.
The meeting then adjourned.
Secretary's Note: Governor Shepardson
today approved on behalf of the Board
the following items:
Memoranda recommending the following actions relating to the
Board's staff:
Salar
increases
effective Au ust 15
Name and title
1965
Division
Basic annual salary
To
From
Research and Statistics
Clayton Gehman, Chief, Business Conditions
Section
Mercy M. Heath, Statistical Clerk
Paul R. Schweitzer, Economist
Neva G. Van Peski, Economist
$19,880
$20,450
4,140
10,250
9,240
4,275
10,605
9,535
6,850
7,050
Bank Operations
Doris V. Bubb, Analyst
8/13/65
Salar
increases
-5effective Au ust 15
1965 (continued)
Division
Name and title
Basic annual salary
To
From
Examinations
Judith A. Thomas, Special Assistant Federal
Reserve Examiner
Allen Goodfellow, Review Examiner
John A. Treimann, Federal Reserve Examiner
$ 5,380
$ 5,825
12,495
10,605
12,915
10,960
12,025
7,250
12,380
7,450
7,093
4,326
3,500
7,467
4,555
3,615
6,245
6,650
4,480
10,960
4,325
4,630
11,315
4,473
Personnel Administration
June E. Burns, Administrative Assistant
Gena Gander, Employee Relations Technician
Administrative Services
John P. Fling, Sr., Operator, Offset Press
James T. Jones, Operator, Mimeograph
Opal I. O'Dell, Charwoman
Data Processing
Robert H. Craft, Digital Computer Systems
Operator
Janet M. Davison, Draftsman
Donald B. Fitzhugh, Data Processing Planner
Daviette Hill Stansbury, Digital Computer
Programmer (half-time)
..ie septance of resignations
John H. Wood, Economist, Division of Research and Statistics,
effective at the close of business August 13, 1965.
on,
Verna Taylor, Stenographer, Division of Personnel Administrati
effective at the close of business August 13, 1965.
Memorandum from Governor Daane dated August 11, 1965, recommending
Club
Payment by the Board of the cost of a small dinner at the Cosmos
the
Group
of
Deputies
the
on July 20, 1965, in honor of the Chairman of
of Ten.
kciAg 6.Balta._
Assistant Secretary
2686
UNITED STATES OF AMERICA
Item No. 1
8/13/65
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
Se
1
In the Matter of the Applications of
1
1
CITIZENS TRUST AND SAVINGS BANK
for approval of consolidation with
The Fruit Growers State Bank of
Saugatuck, Mich., and
for approval of acquisition of assets of
The Old State Bank
1
1
1
1
fa.
ORDER APPROVING CONSOLIDATION OF BANKS
AND ACQUISITION OF BANK'S ASSETS
the
There has come before the Board of Governors, pursuant to
Bank Merger Act of 1960 (12 U.S.C. 1828(c)), applications by Citizens
of
Trust and Savings Bank, South Haven, Michigan, a State member bank
the Federal Reserve System, for the Board's prior approval of:
(1) the
consolidation of that bank and The Fruit Growers State Bank of Saugatuck,
Mich., Saugatuck, Michigan, under the charter and name of the applicant
k
(as an incident to the transaction, the sole office of the Saugatuc
bank would become a branch of the applicant bank), (2) its acquisition
of the assets and assumption of the liabilities of The Old State Bank,
ennville, Michigan.
As an incident to the latter transaction, the
a pplicant has applied, under section 9 of the Federal Reserve Act, for the
-2-
80erdls prior approval of the establishment of a branch at the location
of the sole office of the Fennville bank.
Notices of the proposed
Consolidation and the proposed acquisition of assets and assumption of
liabilities, in form approved by the Board, have been published pursuant
to the Bank Merger Act.
Upon consideration of all relevant material in the light of
the factors set forth in said Act, including reports furnished by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
11(1 the Attorney General on the competitive factors involved in the
Proposed transactions,
IT IS HEREBY ORDERED, for the reasons set forth in the
8"rd's Statement of this date, that said applications be and hereby are
4Proved, provided that the transactions shall not be consummated (a) within
seven calendar days after the date of this Order or (b) later than three
months after said date.
Dated at Washington, D. C., this 13th day of August, 1965.
By order of the Board of Governors.
Voting for this action:
Unanimous, with all members present.
(Signed)
Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
,
4.'3471'3
Item No. 2
8/13/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY CITIZENS TRUST AND SAVINGS BANK FOR APPROVAL OF
CONSOLIDATION WITH THE FRUIT GROWERS STATE BIM, SAUGATUCK, MICH.,
AND ACQUISITION OF ASSETS OF THE OLD STATE BANK
STATEMENT
Citizens Trust and Savings Bank, South Haven, Michigan ("South
Reven Bank"), with total deposits of about $19 million, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 5 1828(c)), for the
4ard's prior approval of its consolidation with The Fruit Growers State
13ank of Saugatuck, Mich., Saugatuck, Michigan ("Saugatuck Bank"), and of
it8 acquisition of the assets and assumption of the liabilities of The
014 State Bank, Fennville, Michigan ("Fennville Bank"), with deposits of
1/
--‘ 4 million and $2 million, respectively.— As an incident to the
tl'"IIILsaction, the offices of Saugatuck Bank and Fennville Bank would
1)Q onle branches of South Haven Bank, increasing the number of its offices
fleorn 2 to
4.
Under the law, the Board is required to consider, as to each of
tile banks involved, (1) its financial history and condition, (2) the adequacy
c)t its capital structure, (3) its future earnings prospects, (4) the general
ucposit figures are as of December 31, 1964.
'0,19
-2character of its management, (5) whether its corporate powers are consistent
vith the purposes of 12 U.S.C., Chapter 16 (the Federal Deposit Insurance
(6) the convenience and needs of the community to be served, and (7) the
effect of the transaction on competition (including any tendency toward
111°11°1'01Y).
ina
The Board may not approve the transactions unless, after consider-
all of these factors, it finds the transactions to be in the public
interest.
Banking factors. - The financial histories of the proponent
condition
banks are satisfactory, and each bank has a satisfactory asset
Cnd an adequate capital structure.
South Haven Bank has a good earnings
t'ecord and favorable future earnings prospects; the earnings record and
future earnings prospects of Fennville Bank are satisfactory.
The earnings
Of 0
prospects appear
oaugatuck have been only fair and its future earnings
to be unfavorable.
The death of the senior executive officer of Saugatuck
13°111- has resulted in a management succession problem that is made more
difficult by the bank's earnings problem.
The president of Fennville Bank,
illness and will not
nmily-owned institution, recently suffered a serious
'
t unit.
tasume the responsibility of operating the bank as an independen
depth.
rilnagement of South Haven Bank is strong and has adequate
to
The
In addition
a sound asset condition,
capable management, the resulting bank would have
44adequate capital structure,and good future earnings prospects.
of the banks
There is no indication that the corporate powers
Chapter 16.
4 e, or would be, inconsistent with the purposes of 12 U.S.C.,
1.47 Cis()
_3_
Convenience and needs of the communities. - South Haven,
n, about
nichigan, is located on the eastern shore of Lake flichiga
40 miles west of Kalamazoo, and has a population of slightly over
6)000.
agriculture,
The area's economy is dependent on local industry,
and summer resort business.
Bloomingdale, llichigan, the site of South
on
Raven Bank's branch, is 19 miles east of South Haven and has a populati
of about 500; its economy is almost entirely dependent on agriculture.
Saucatuck is 20 miles north of South Haven and has a population of
about 900; although there is some local industry, its economy is
largely dependent on summer tourism and agriculture.
Fennville (population
southeast of
700) is 18 miles northeast of South Haven and 10 miles
.
augatuck.
agriculture.
The local economy is principally dependent on
offices
South Haven Bank would make available through the
range of
11°I1 operated by Saugatuck Bank and Fennville Bank a broader
South
banking services than is presently provided there. Among others,
of its agricultural
Il ven Bank would provide trust services and the services
l aPresentative.
'
the banking
The most significant and immediate benefit for
where,
Public would appear to be in the area now served by Fennville Bank
the bank's
because of the restrictive and nonprogressive policies of
not being adequately
Mnnagement, the routine banking needs of many people are
met.
Haven Bank resultFurther, the increased single loan limit of South
some benefit
from the consolidation with Saugatuck Bank would be of
for each of the communities involved.
-42/
of South Haven Bank
Competition. - The service area
uck Bank and Fennville
overlaps slightly the service areas of Saugat
service area of
Bank, and the town of Fennville lies within the
Saugatuck Bank.
million) and
A relatively large (deposits of $31
recently established a branch
aggressive bank headquartered in Zeeland
Hamilton
in Douglas, 2 miles south of Saugatuck, and has a branch at
on the periphery of Saugatuck Bank's service area.
There are offices
Bank, in
of three commercial banks, all larger than South Haven
two much larger Kalamazoo
Holland, 11 miles north of Saugatuck, and
million, respectively)
banks (total deposits of $126 million and $86
Offices
have branches in Allegan, 15 miles southeast of Fennville.
banks surround
of these and other competing, or potentially competing,
the combined service areas of the proponent banks.
Although the pro-
competition
Posed transactions would eliminate a small amount of
t holdings of
between the banks involved and increase the deposi
appear that banking
South Haven Bank by about $8 million, it does not
comp etition in the relevant area would be adversely affected; indeed,
it seems probable that banking competition would be enhanced in the
long run.
more of its
V The area from which a bank derives 75 per cent or
.
ations
corpor
and
,
deposits of individuals, partnerships
192
-5-
Summary and conclusion. - The proposed transactions would
uot adversely affect any bank, but potentially more effective competition for the larger banks in the relevant area would result.
South Haven Bank would provide expanded banking services
which would be of some benefit to the banking public in Saugatuck and
of significant benefit to customers of Fennville Bank. Further, the
Proposed transactions would resolve the management succession problems
at Fennville Bank and at Saugatuck Bank, where the problem appears to
be more significant.
Accordingly, the Board finds that the proposed transactions
would be in the public interest.
August 13, 1965.
Item No. 3
8/13/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE VICE CI-4A,FIMAN
August 18, 1965.
The Honorable Wright Patman,
House of Representatives,
20515
Washington, D. C.
Dear Mr. Patman:
of selected
There is forwarded herewith a card index
the request
at
d
prepare
have
major finance companies, which we
companies
the
are
These
of Mr. Stephen Kennedy of your staff.
for our
using
are
we
sample
now included in the large-company
.
summer
this
es
Quinquennial Survey of Finance Compani
800,
This group of firms, numbering approximately
hold
believe
to
consists mainly of companies we have reason
to
Survey
the
expect
receivables of $1 million or more. We
it
and
class,
size
this
find a few additional companies in
have dropped out
will probably show that some of those listed
r, it will be
Howeve
etc.
ty,
through merger, declining activi
sort will
this
of
s
finding
several months before the Survey
list.
revised
a
be complete enough to yield
Sincerely yours,
(Signed) C. C. Balderston
C. Canby Balderston,
Vice Chairman.
Enclosure.
@FedFRASER