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/6
Minutes for August 19, 1963
To:
Members of the Board
From:
Office Of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
Ot'
2795
Minutes of the Board of Governors of the Federal Reserve System
Orj
Monday, August 19, 1963.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell 1/
Mr.
Mr.
Mr.
Mr.
Kenyon, Assistant Secretary
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Mattras, General Assistant, Office
of the Secretary
Messrs. Noyes, Brill, Garfield, Williams,
Altmann, Gehman, Keir, Partee, Swindler,
and Trueblood of the Division of Research
and Statistics
Messrs. Sammons, Gekker, Gemmill, Kaufman, Klein,
Maroni, and Nettles of the Division of
International Finance
Economic review.
The Division of International Finance corn-
On international financial conditions, with special reference
to
he U. S. balance of payments, after which the Division of Research
411cl St
atistics presented information relating to the domestic economy.
All members of the staff then withdrew except Messrs. Kenyon,
P411\rer,
Noyes, and Mattras and the following entered the room:
Mr.
Mr.
Mr.
Mr.
Hackley, General Counsel
O'Connell, Assistant General Counsel
Shay, Assistant General Counsel
Goodman, Assistant Director, Division
of Examinations
Mr. Leavitt, Assistant Director, Division
of Examinations
tered meeting at point indicated in minutes.
2796
8/19/63
-2Miss Hart, Senior Attorney, Legal Division
Mr. Young, Senior Attorney, Legal Division
Circulated items.
The following items, copies of which are
attached to these minutes under the respective item numbers indicated,
liere aPproved unanimously:
Item No.
utters to United States Trust Company of New
11°17k, New York, New York, approving and reserving
241e8 for proposed foreign banking and financing
\.orporations.
1-2
Letter to Bankers Trust Company, New York, New York,
ol l/roving the establishment of a branch in Rockville
ritre, Nassau County.
3
tiZtter to
Clark State Bank, Clark, New Jersey, approving
L4e establishment of a branch at Westfield Avenue and
'-ncoln Boulevard.
14
tetter to
Provident Tradesmens Bank and Trust Company,
ot ladelphia, Pennsylvania, approving the establishment
branch at Marshall and Carwithan Streets.
5
Lett
re r to The Richland Trust Company, Mansfield, Ohio,
1:cling an investment in bank premises in excess of
t):1.
'ank's capital stock.
tette
Alab r to Peoples Bank & Trust Company, Montgomery,
approving the establishment of a branch in
t
Rorest Hills Shopping Center on the Atlanta Highway.
6
7
In connection with Item No. 3, Mr. Leavitt noted that Franklin
°nal Bank, Mineola, New York, had filed a suit in the Supreme Court
t°1
' he
State of New York to prevent Bankers Trust Company from estab118h;
41Ig a branch in Rockville Centre pursuant to authorization obtained
2797
8/19/63
-3-
the State banking authorities.
Mr. Hackley expressed the opinion
that the institution of the suit in no way blocked action on the branch
application as far as the Board was concerned, and Mr. Leavitt stated
that the Division of Examinations continued to recommend approval of
the application.
Application of Wells Fargo Bank (Items 8 and 9).
Pursuant to
the decision reached at the meeting on August 8, 1963, there had been
distributed a proposed order and statement reflecting the Board's approval
nia, to merge
Or the application of Wells Fargo Bank, San Francisco, Califor
th State Center Bank, Fresno, California.
that
After discussion, during which Governor Robertson noted
he b
"ad not participated in the decision on this matter, the issuance of
the order and statement was authorized, with the understanding that the
suggested at
statement would be revised to reflect certain minor changes
this meeting. Copies of the order and statement, as issued, are attached
4 Items 8 and 9.
Mr. Goodman and Miss Hart then withdrew from the meeting.
No. 10).
Eligibility for service as Class B director (Item
l'her'e had been distributed a memorandum from the Legal Division dated
Reserve
41.4tst 13, 1963, submitting a draft of letter to all Federal
tam,
with regard to service of officers of insurance companies and
4NingS
and loan associations as Class B directors.
2798
8/19/63
-4Mr. Hackley, in commenting on the matter, noted that at the
rneeting on November
8, 1962, reference was made to a question that
halibeen raised with regard to whether a person whose sole occupation
%las that of an officer of an insurance company was eligible to serve
48 a Class B director of the Federal Reserve Bank of San Francisco.
light of the circumstances of that particular case, the Board raised
4° objection.
However, it reaffirmed a 1925 interpretation that a person
.411°Se sole occupation was that of an officer of an insurance company
'448 not eligible for election as a Class B director.
In accordance with the understanding reached at the November
8,
1962) meeting, the staff had drafted the proposed letter to the Reserve
Ilahk
—44e reaffirming the Board's position on this question and requesting
'
t a sufficient statement be included in circular letters announcing
the
r°1‘4
affiliations
he c'ming elections of directors to apprise member banks of
thai.
'would make individuals ineligible for election as Class B directors.
The memorandum noted that member banks are apprised of statutory
131'43'11810ns regarding eligibility by means of a footnote in the form
1etter
elections
prescribed by the Board for use in announcing forthcoming
or
clirectors. The footnote also refers to the Board's 1915 resolution
directors. Since
rding the holding of political or public office by
1959
excluded
however, reference to the 1925 interpretation had been
trot,
the form letter because it had been considered impractical to
tor,4.
-'40te all Board interpretations.
As a result of recent questions,
2999
8/19/63
-5-
11°Irever, the Legal Division now proposed to restore the reference to the
1925 interpretation, along with reference to the non-eligibility of
'
1`etisons whose sole occupation is that of officer of a savings and loan
488(Iciation, as stated in a 1939 interpretation of the Board.
In discussion of the rationale underlying the Board's position,
1** Rackley noted that persons engaged in the insurance and savings and
1°all fields are generally regarded as representing the field of lending,
Class B directors are to be selected from among persons engaged
14 'c)mmerce, agriculture, or industry and therefore represent essentially
th- I
nterests of borrowers.
After further discussion, the letter was approved unanimously.
A
coPY is attached to these minutes as Item No. 10.
Mr. Young then withdrew and the following members of the staff
entered the
room*
Mr. Cardon, Legislative Counsel
Mr. Johnson, Director, Division of Personnel Administration
Mr. Sprecher, Assistant Director, Division of Personnel
Administration
Interagency exchange of views on merger applications. There
b
een distributed a memorandum from the Division of Examinations
AllgUSt 16, 1963, with regard to a proposal for exchange of staff
vieve
on merger applications.
or the
According to the memorandum, Mr. Leavitt and representatives
Federal Deposit Insurance Corporation had attended a meeting on
2800
8/19/63
-6-
gust 13, 1963, that was called by the Department of Justice to discuss
the Possibility of holding meetings of representatives of the Justice
tePartment and the Federal bank supervisory agencies to exchange views
(In Pending bank mergers.
The proposed meetings would be held, at the
NAlest of any participating agency, prior to the time reports on
c°114:etitive factors were submitted to the agency that was to act on a
Pending merger.
The Comptroller of the Currency was invited to the
Plielirainary meeting, but did not choose to have his Office participate.
Mr. Leavitt indicated that he saw certain advantages and certain
'Qvantages in holding such meetings.
Their purpose would appear
e°4sistent with the objective of the Bank Merger Act to achieve greater
11111T°rm1ty of approach to bank merger cases. This might not necessarily
eoh.
about from the proposed meetings, but possibly an improved interagency
1411e
'
erstanding would develop that would naturally lead to a more uniform
al41110ach-
As to possible disadvantages, the Comptroller of the Currency
11°t Plan to have his Office participate.
Also, the Board conceivably
b4ight be
criticized for entering into an agreement for interagency disNas4
't°11 Prior to the time action was taken on merger applications. Fur-
the
it was possible that some one of the participating agencies might
tl'Yt
° Influence unduly the views of the staff members of other agencies,
'41311 this seemed rather doubtful because any such attempts probably
/(111.14
lead to discontinuation of the meetings. Should such meetings be
it would probably be desirable if discussion of pending applications
2801
8/19/63
-7-
l'as limited to an exchange of factual information; for example,
azsistance to the Department of Justice in determining pertinent
nial'ket or competitive areas.
If the meetings could be limited to
e4eh8nging facts on specific cases and exchanging views on a general
basis, there probably would be benefits.
On balance, Mr. Leavitt
e°rIcluded that the potential advantages probably outweighed the inherent
cilsadvantages.
°II a trial
It was his recommendation that the meetings be held
basis, subject to the understanding that they could be
citse ontinued at any time.
Governor Mills said he detected more disadvantages than advante€ea in the proposal, which he thought presented long-range problems
r°z% the
Federal Reserve System and its independence.
In the area of
1)r°eessing bank merger applications the Justice Department might be
cleac
ribed as functioning in a consultant capacity, since it was not a
(iezi .
slon-making agency, and admission of the Department to meetings
where
there would be a general exchange of views could lead to the
tment's obtaining a dominant role.
His greatest concern was that
sote
°Ile of the agencies engaging in the proposed meetings was going to
cl()411„
&late and was going to color the thinking of the other agencies.
?Iirthp.
-r/
staff discussions in such meetings might tend to jell agency
thinly
lng on specific cases.
If the Board, for example, thereafter
-ned the recommendation of its staff on any such case, questions
kght -e
raised.
2802
8/19/63
-8Governor Robertson expressed the view that there should be
as full and complete interagency discussion and disclosure of facts
48 Possfble.
However, he questioned staff participation in meetings
the kind proposed, which would be held before the Board's staff
484 made a recommendation to the Board.
The Board should have the
bellerit of independent staff views, not influenced by the views of any
0ther
agency.
So far as pending merger applications were concerned, he
814ggested the possibility that representatives of the decision-making
alleY might exclude themselves from the interagency meeting; once a
(leeision had been reached, however, he saw no objection to staff disQ11881011 at interagency meetings concerning the particular case.
charged
Governor Robertson commented further that if an agency
th making a report on competitive factors needed information from
the
Board or another banking agency, that should not be precluded.
"er, staff members of the Board who were charged with formulating
4 reCOMMerldatiOn
done so
to the Board on a particular case should have
bet°
re participating in interagency meetings at which that case was
After consideration of these points and questions related to
g, in view of the requirement that competitive factor reports be
to bring
Illiitted within 30 days, Chairman Martin said he would like
°Izt tha- he
Orrick the
had expressed to Assistant Attorney General
s°11a1 view that there should be some mechanism for interagency
2803
8/19/63
-9-
%Irmultation.
The Chairman added that if agencies charged with respon-
sibilities in common fields were not able to sit dawn together and
cliscusa mutual problems, he did not know haw it would be possible to
c45.4Lin adequate coordination.
His thought had been that it might be
ilsigUl to arrange interagency meetings simply to discuss procedural
PrOblems. He questioned whether interagency meetings at the Board
1 would be appropriate, but he thought that such meetings at the
"
4
Inatf level might be profitable, subject to the understanding that the
Plillel-Pals would not relinquish any authority to overrule the staff at
Nrtime.
Mr. O'Connell referred to the frequency of occasions when
11141tice Department representatives had sought and obtained factual
illtcftation from the Board's staff relating to pending cases.
He also
11-45eatd that if it became known in a given case that representatives
()lithe banking agencies pro the Justice Department had met and discussed
tile ease prior to the time it was acted upon, an implication might be
°114101 that there had in fact been a procedure going further than
14teragency coordination.
Chairman Martin then commented that perhaps the only feasible
a.1)131'°Itch would be to hold interagency staff meetings after decisions
otl
articular cases had been made, although this would not meet corn1t the problem of coordination among the agencies, following
1/140,
4 Governor Robertson offered the suggestion that a procedure might
2804
8/19/63
-10-
be worked out whereby members of the Board's staff who participated
14 interagency meetings on specific pending cases would be excluded
tr°14
participating in recommendations to the Board on such cases.
advantages and administrative complications involved in such a
Procedure were commented upon, after which Governor Balderston referred
to
recent speech in which Mr. Orrick had indicated that participants
ill ossible merger transactions could visit the Justice Department for
aavance consultation.
Using the situation in the Philadelphia area by
Of illustration, Governor Balderston raised the question whether
the Justice Department would at that stage have available to it a
Burricient knowledge of complex competitive factors in the area
c°4cer4ed to afford a basis for encouraging or discouraging the prospec
tt
"aPPlicants.
After additional discussion along the lines indicated by the
tore
g°14 comments, Chairman Martin expressed the view that the Board,
448*
general principle, should not put itself in the position of appear-
11
"0 be stand-offish when anybody wanted to discuss a problem. He
Volo.
-141 not like to see the Board get into a posture of aloofness. The
411
Should, make its own decisions, of course, but it should be willing
to
°oPerate whenever possible.
Pursuant to a suggestion by the Chairman, it was then agreed,
ght of the points raised at this meeting, to table the question
or the
Proposed interagency staff meetings. It was understood that
2805
8/19/63
-11-
Leavitt would advise the Justice Department informally that the
1/°41rdhad not yet decided whether it could participate in such meetings
"he basis that had been suggested.
Governor Mitchell joined the meeting at this point.
Analysis of competitive factor reports (Item No. 11).
There
been distributed a memorandum from the Division of Examinations
c141ted August 13, 1963, in connection with an oral request from the House
411king and Currency Committee for an analysis of competitive factor
l'ellcirts submitted by the Board to the Comptroller of the Currency for
the Period from November 16, 1961, to the present time.
The Division
(If xe-rainations had reviewed all such competitive factor reports and in
118ting attached to the memorandum indicated its views on whether the
te
4c)r of each report was that the effect on competition would be not
a4verse, slightly adverse, moderately adverse, or substantially adverse.
(ire
'
rt of letter that would transmit the listing to the Committee
vas
Ilhmitted with the memorandum.
Mr. Con said that it was his understanding that the summary
the
the c
competitive factor reports would be published in the record of
ommittee's recent hearings on Conflict of Federal and State Banking
Lava.
Similar listings had already been furnished by the Federal Deposit
'flee Corporation and the Department of Justice.
During discussion, it was noted that, as set forth in the draft
6re.
nsmittal letter, the advisory reports on competitive factors are
28i
a/19/63
-12-
aubtitted without regard to the banking factors involved and therefore
(1° Ilat constitute a recommendation for approval or disapproval, a fact
ften overlooked.
It was also pointed out that because of the many
Q°171131ex considerations involved in these reports, any classification
c°11clusions into a limited number of categories was necessarily
sc)ttlevhat arbitrary and could be misleading.
Mr. Hackley brought out that if, in rendering competitive factor
Ni)(3rts in the past, the Board had reached agreement in each report as
to
"ether the over-all effect of the transaction on competition would
be, f_
example, slightly adverse or moderately adverse, there would
be h
"° Problem in furnishing the information requested by the Banking
However, the listing proposed to be trans411(1 CulirencY Committee.
kttted
vould suggest the general tenor of each report on the basis of
(leter
raination by the Board's staff.
This troubled him somewhat.
On
the other hand, similar listings had already been furnished by the
?'clera.0.
Ir the
Deposit Insurance Corporation and the Department of Justice.
Board's transmittal letter made it clear that the listing
Nriectecl no more than an appraisal of the tenor of the reports by the
staff, it was difficult for him to see how the Board could
4t1'°11g-1-Y refuse to comply with the request.
Governor Balderston commented that his initial reaction to the
Ise
the to
had been negative.
In preparing its competitive factor reports,
"d had spent considerable time in arriving at language on which
2807
8/19/63
-13-
the xieubers of the Board could agree in each case, and it had seemed
t°41111 doubtful whether the tenor of the reports could effectively be
c4egorized in the manner that had been suggested.
However, after
848.15"z1ng the listing that had been prepared by the staff, his views
%/elle less strong.
Beyond that, he had concluded that the Board's
111141111es in its competitive factor reports left something to be
cleelred in that often they were not sufficiently clear cut, and this
el5111,1
'
4 be subject to some criticism.
Governor Mills indicated that he would be inclined to transmit
the
isting with the suggested letter of explanation, but Governor
11(*ev.4.
son expressed a degree of reluctance on the ground that he doubted
%thethel,
,u11 agreement could be reached on the labels attached to the
l'eS15ective reports by the staff and also on the ground that the Board
laot Obliged by statute to go further than to give its views on the
Petitive factors involved in a proposed merger.
The Board had given
the othp,
--r agencies the benefit of its views, as determined by the members
or th
e 130ard in considering the various merger applications, and had
t"e discharged its responsibility under the statute. He agreed,
hwell
that in the future the Board should endeavor to do a better job
e't1)1aining the substance of its views.
Governor Shepardson indicated that he would be inclined to
tre4
or 8hlit the listing, realizing the difficulties involved. Upon review
the cases concerned, it appeared to him that while there might have
2808
8/19/63
beeri some
differences of opinion within the Board, there would not have
been too many deviations case-by-case from the classifications that the
stIlif had assigned.
He did not believe there was enough jeopardy in-
7°111ed to refuse the request.
Governor Mitchell expressed concurrence in the view that the
13°ard was
vulnerable to some criticism for having been a bit ambiguous
14 s°Me of its competitive factor reports.
148.
issue of the present request.
14 the
He would not be inclined to
He then suggested certain changes
Proposed letter of transmittal to make it clear that the classifica-
t411/4 in the listing had been assigned by members of the staff and not
by
Board.
The changes suggested by Governor Mitchell were received
ravo
rably by the other members of the Board, Governor Robertson commentig t
ha-while he would be willing to endorse the competency of the staff
ttiellthers who had worked on the listing, he would not want to indicate
that
the classification of the respective reports had been reviewed in
ct411 and
agreed upon by the Board itself.
In further discussion, Governor Mills expressed agreement with
the t
hought that the Board's competitive factor reports should set
th
--e Board's position clearly.
However, it should be borne in
1 that the
'
4141
competitive factor was only one of several factors that
Islon-making agency had to consider in deciding a merger application.
A
"aziger was that the competitive factor could be raised to a level
2809
8/19/63
-15-
tatout of context with a balanced decision, and the decision reached
1.41.10. agency on a particular case might appear inappropriate based on
knowledge of the competitive factor alone.
The sending of the listing of competitive factor reports to
the
RoUse Banking and Currency Committee was then approved, along with
4**arlaraittal letter to Chairman Pathan in the form attached as Item No. 11.
The meeting then adjourned.
Secretary's Note: Pursuant to the recommendation contained in a memorandum from
the Division of Data Processing, Governor
Shepardson today approved on behalf of
the Board the appointment of Frank Miller
as Operator, Tabulating Equipment (Trainee),
Division of Data Processing, with basic
annual salary at the rate of $4,030, effective the date of entrance upon duty.
Assistant Secretary
2810
Item No. 1
BOARD OF GOVERNORS
8/19/63
OF THE
FEDERAL. RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 19, 1963
lir. Hoyt Ammidon,
Chairman of
the Board,
United States Trust Company
, of New York,
45 Wall Street,
New York 5, New York.
Ilear Mr, Ammidon:
In accordance with the request contained in an application,
signed by you and other prospective shareholders, under date of
ilY 8, 1963, for approval and reservation of the name of a corporatu
j
f °II to be organized for the purpose of engaging in international or
f reign banking pursuant to Section 25(a) of the Federal Reserve Act,
.
ire Board of Governors has approved the name "United International
s nking Corporation" and this name will be reserved for a period of
!
clx months. It is understood that the Home Office of the proposed
°rPoration will be located at 45 Wall Street, New York 5, New York.
You will understand that this approval and reservation of
does not constitute the approval of the organization of a
Poration and upon receipt of the proposed articles of association,
tiganization certificate, and other relevant information, considera"will be given to those aspects of the matter.
nanie
Z
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2811
Item No. 2
8/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE °CARD
August 19, 1963
(
1,
1 ' Hoyt Ammidon,
',"airman of the Board,
united States Trust Company
Lic Of New York,
h;)
- Wall
Street,
"47 York
5, New York.
near Mr. Ammidon:
In accordance with the request contained in an application,
sigfled
by you and other prospective shareholders, under date of
,1116
°3 1963, for approval and reservation of the name of a corporabe organized for the purpose of engaging in international or
4,cjgrl financial operations (other than banking) pursuant to
41 25(a) of the Federal Reserve Act, the Board of Governors
has"
am 'aPProved the name "United International Financing Corporation"
tirldethis name will be reserved for a period of six months. It is
4, rstood that the Home Office of the proposed corporation will be
‘-ated at
45 Wall Street, New York 5, New York.
You will understand that this approval and reservation of
eorp does not constitute the approval of the organization of a
org:,5atiorl and upon receipt of the proposed articles of association,
tion'tzation certificate, and other relevant information, consideraill be given to those aspects of the matter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2812
Item No.
BOARD OF GOVERNORS
3
8/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
1
August 19, 1963
Board of Directors,
Bankers Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment of a branch at 299-301-303 Sunrise
Highway, Incorporated Village of Rockville Centre, Nassau County,
New York, by Bankers Trust Company, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board also had
approved a six-month extension of the period allowed to establish
the branch; and that if an extension should be requested, the
Procedure prescribed in the Board's letter of November 9, 1962
(S-1846), Should be followed.)
281
Item No. 4
BOARD OF GOVERNORS
8/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 19, 1963
Board of Directors,
Clark State Bank,
Clark, New Jersey.
Gentlemen:
The Board of Governors of the Federal Reserve System
aPproves the establishment by Clark State Bank, Clark, New
Jersey, of a branch at the northeast corner of the intersection
°f Westfield Avenue and Lincoln Boulevard, Clark, Union County,
New Jersey, provided the branch is established within one year
from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary. •
(The letter to the Reserve Bank stated that the Board also had
aPProved a six-month extension of the period allowed to establish
the branch; and that if an extension should be requested, the
Procedure prescribed in the Board's letter of November 9, 1962
(8-1846), should be followed.)
t
Item No.
BOARD OF GOVERNORS
5
8/.19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 19, 1963
Board of Directors,
Provident Tradesmens Bank and
Trust Company,
Philadelphia, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Provident Tradesmens Bank and Trust Company,
Philadelphia, Pennsylvania, of a branch at the
intersection of Marshall Street and Carwithan
Street, Philadelphia, Pennsylvania, provided
the branch is established within one year from
the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (5-1846), should be followed.)
2815
BOARD OF GOVERNORS
Item No.
6
8/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO Tt-4E BOARD
August 19, 1963
hoard of
Directors,
!he Richland
Trust Company,
'anafield, Ohio.
"`Lernell:
The Board of Governors has received the request of your
ba
Ilk for
permission to carry investment in bank premises in an
410
unt in
excess of the bank's capital stock.
The Board understands that during 1962 your bank's whollytort subsidiary, The Richland Building Corporation, increased the
iojage against its real estate by $300,000, which amount resulted
tednes r bank's direct and indirect investment in bank premises and
irideu
aroo.
on such premises being in excess of the bank's capital
The
Board
further understands that at about the same time,
he
to„:'Ichland Building Corporation paid a cash dividend of $250,000
'
le bank in order to augment the bank's capital structure.
Since the Board's prior approval of this transaction, as
Nitern
(kat Plated by section 24A of the Federal Reserve Act, was not
the tiled, the Board is not authorized to give that approval. Moreover,
the Oard does not believe that funds realized by a debt incurred by
Nhtal'It's wholly-owned subsidiary which, under certain circumstances,
the b result in liability to the bank, is a desirable means for augmenting
1417i,reailk's capital structure, and in this case, is comparable to a
aotIrld uP in the book value of bank premises - a practice not considered
corre accounting procedure. However, the Board will not insist upon any
the ketive
action by the bank, in view of the satisfactory condition of
atociut41.1k, the relatively moderate amount of the excess over capital
' and its temporary duration.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2816
Item No.
BOARD OF GOVERNORS
7
8/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
August 19, 1963
Board of Directors,
Peoples Bank & Trust Company,
Montgomery, Alabama.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by Peoples
Bank & Trust Company, Montgomery, Alabama, of a
branch in Forest Hills Shopping Center on the
Atlanta Highway, within the city limits of Montgomery,
provided the branch is established within one year
from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (s-1846), should be followed.)
2817
UNITED STATES OF AMERICA
Item No.
8/19/63
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
III the Matter of the Application of
14I'S FARGO BANK
!clr approval
of merger with
tate
'
Center Bank
ORDER APPROVING MERGER OF BANKS
There has come before the Board of Governors, pursuant to the
1 m
-erger Act of 1960 (12 U.S.C. 1828(c)), an application by Wells
41"ao
-anK, San Francisco, California, a State member bank of the Fed-
Reserve System, for the Board's prior approval of the merger of
that b
ank and State Center Bank, Fresno, California, under the charter
411d
title of the former.
As an incident to the merger, the six offices
(5f tat-e
Center Bank would be operated as branches of Wells Fargo Bank.
%tic
e °f the proposed merger, in form approved by the Board, has been
klisheri
- pursuant to said Act.
Upon consideration of all relevant material in the light of
the ,c
'actors set
forth in said Act, including reports furnished by the
eeL1116,
-011er of the Currency, the Federal Deposit Insurance Corporation,
"
a th
e Department of Justice on the competitive factors involved in
the
Pt
oposed merger,
8
281_8
-2-
IT IS HEREBY ORDERED, for the reasons set forth in the
toard I s
Statement of this date, that said application be and hereby
18 approved, provided that said merger shall not be consummated
(4) within seven calendar days after the date of this Order or
(b) later
than three months a2ter said date.
Dated at Washington, D. C., this 19th day of August, 1963.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, and Mitchell.
Absent and not voting:
Governors Robertson and King.
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2819
BOARD OF GOVERNORS
Item No.
9
8/19/63
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY WELLS FARGO BANK FOR APPROVAL
OF MERGER WITH STATE CENTER BANK
STATEMENT
Fargo"),
Wells Fargo Bat*, San Francisco, California ("Wells
d
*With .
--Posits of $2,806 million,* has applied, pursuant to the Bank
lierger Act of
approval
1960 (12 U.S.C. 1023(c)), for the Board's prior
it
merger with State Center Bank, Fresno, California ("State
3
Cent
.ern%
—.
)2 with deposits of $26.3 million,* under the charter and title
°ftha,
- tomer.
The proposal contemplates that the SiN offices of
State ‘
,enter would become branches of the resulting bank.
Of
The number
Off.
lees operated by Wells Fargo as of June 30, 1953, was 158.
Under the Act, the Board is required to consider, as to each
of th
the
e banks involved, (1) its financial history and condition, (2)
dequac
Y of its capital structure, (3) its future earnings prospects,
(4)
"a general character of its management, (5) whether its corporate
DoIle
8
are consistent with the purposes of 12 U.S.C., Ch. 16 (the Federal
b,
-nsurance Act), (6) the convenience and needs of the community
44)Sit T
.
Dos
it flgures are as of December 20, 1962.
2820
-2..
tobe served, and (7) the effect of the transaction on competition
(itto
-aiding any tendency toward monopoly). The Board may not approve
the transaction unless, after considering all these factors, it finds
the t
ransaction to be in the public interest.
Fargo
Banking factors. - The financial history of both Wells
St 4-
Center is satisfactory.
The financial condition and capital
satisfactory.
atIlletUre of each is adequate, and their managements are
which has
v'r, State Center faces a management succession problem,
1113VeNrrs
I'Lrerl rise to the application.
which
Wells Fargo traces its ancestry to two California banks
part
founded in the 1800/s, and has grown to its present size in
the
assumed
result of a number of mergers and consolidations. It
its
v4'ssent name on January 30, 1962. In terms of deposits, Wells
?az,"
'
t() is the third largest bank in California, with 9.9 per cent of
total
commercial bank deposits in the State, which approval of the
1%).1
Wells
cation would increase to 10 per cent. The operations of
krg
ca°havs been confined to the northern and central portion of the
hate..
and in the twenty-three counties in which it has been functioning,
the b
tIllk has about 24 per cent of total IPC** deposits held by com-
ttlie-a- banks.
Its prospects are considered. favorable.
Ccnsura.
t4atio
40f the proposed merger would give it about 5 per cent of total
%rape
'reial bank deposits in Fresno County and would not cause any
,,,
11111%401,
the
specified by
change in respect to the first four factors
Agealk Merger Act.
sits of individuals, partnerships, and corporations.
2821
-3-
State Center was founded in 1955.
Its president, the dominant
influence in all bank matters since that time, is well past normal
tet4ellient age and in poor health. He expects to retire within a year.
Des,,4
y'te repeated efforts by the bank, it has been unable to find a
suitabi
'e successor.
The search has been complicated by the fact that the
bank aohieved its present growth principally through his abilities and
influence.
The greater part of its business has been done with large
tolPelercial customers, unusual for a bank of this size, particularly one
located in an area served by branches of several very large banks.
is
It
tilled with some force by Wells Fargo that much of the deposit and
1
b48iness attracted by State Center's president will be lost, retardle
88 of the choice of his successor, unless State Center is taken
bY a
bank equipped to furnish the type of services which larger
elers require. Accordingly, while prospects of the merged institut441
are
favorable, it seems likely that State Center would lose a significant
amount 04 business were the application to be denied.
There is no indication that the corporate powers of Wells
Stete Center, or the resulting bank are, or would be, incon-
8iste
nt With
tora
12 U.S.C., Ch. 16.
a few
Convenience and needs of the communities. - Aside from
et8 02 Wells Fargo, San Francisco exporters who deal in agri-
that c
believed
products from the San Joaquin Valley area, it is not
°Ils ummation of the proposed merger would have any appreciable
2822
-4effect on the convenience and needs of any communities now served by
Fargo.
The city of Fresno, with a population of 134,000, is located
illthe San Joaquin Valley, geographically at the center of California,
411cIlt 185 miles from San Francisco and 219 miles from Los Angeles.
he
ccnmty of Fresno leads the United States in value of agricultural
k'c)(illetion, its principal crops including grapes, cotton, peaches, and
e'll'alfa• Related warehousing and food processing industries, as well
Ets r1.1
"-orersified manufacturing, are also important to the economy of the
area,
Other banks serving Fresno County include Bank of Tokyo of
allt°1111-lay San Francisco, with total deposits of $77 million, and
:
Iltral Valley National Bank of Oakland, with total deposits of $144
On, each having one branch in the county. In addition, there are
39 1)
ranches of five Los Angeles and San Francisco banks ranging in size
trot t
ank of America, NT&SA, San Francisco ("Bank of America"), which
has t
(4a1 deposits of $11,569 million, to First Western Bank and Trust
44Y, Los Angeles, with total deposits of $580 million. Bank of
All*rica is the largest bank serving the county, having 21 of the 49
1444fle
offices and 59.2 per cent of the deposits of the banking offices
"Ile county.
One of State Center's branches) together with the main office,
la
4'()eated in the city of Fresno. Another is in Clovis, about two
rPt4e
11°1-th of the city limits.
The remaining three are in Kingsburg,
11/kAlt 2n
--miles, San Joaquin, about 30 miles, and Huron, about 48 miles
t4
e southeast of Fresno.
Offices of Bank of America provide a
2823
-541(31.ca of banking facilities in Clovis and in Kingsburg, but the
office in
alternative source of services to State Center's
tie4reSt
•loaquin is 15 miles and to its Huron office is 10 miles distant.
r
ecent years, the number of farms in Fresno County has declined and
thetr
average size increased substantially, giving rise to a need for
amounts of agricultural credit, beyond the lending limit of
1Ner
State
Center.
Nor is the bank equipped to supply the specialized
services needed by farmer customers in the communities served by its
Injection of a large bank better equipped to compete for
btailches.
tilts ,o
usiness will provide the communities with an alternative in partieto _r
to Bank of America, which has held the largest share of agrieultutal business in the county.
The banking needs in the city of Fresno are being served by
Office
8
C4ite
of one medium size and five big banks, in addition to State
r and the small First National Bank of Fresno, so that the entrance
Of
ther large California bank would not significantly improve service
the
community as a whole.
Nevertheless, the banking needs and con-
of that part of the public which has been served by State
eellter Would probably be served better by a large bank than by a local
134111( o
perating on a reduced scale.
There is also reported to be a growing demand for trust
41„vi.
ces in the Fresno area, a report which is substantiated by the
t4et
that
Crocker-Anglo National Bank of San Francisco has recently
4tabli
-shed a trust department in its Fresno offices, and that Wells
282(1
-5..
hr
0, without functioning in the area, now has 22 trust accounts with
trlaggregate carry4ng-of almost $3 million where trustors or
.
J tclaries reside in Fresno County.
State Center does not have a
department although the customers which it attracts tend typically
g4
s"`i'e use of trust services, and the trust department of Wells Fargo
1)1141 meet the needs and convenience of these customers.
Competition. - There is relatively little direct competition
bet17„
"en State Center and Wells Fargo. Their nearest offices are
Ss zil
es apart. A survey of more important common customers of the
t14° ba
-44s indicated little common business.
A survey of deposit or
1.0an
accounts in amounts of $1,030 or more at State Center whose address
ea Of record were In counties served by Wells Fargo offices, and
)1'resPondin3 survey on a selective basis by Wells Fargo of deposit
am
°an accounts with addresses of record in Fresno County, showed
44111
amounts of business of each bank originating in the other's
territory.
The two banks have had a close correspondent relationship,
but lass of a
potential customer of the size of State Center would
ttc)t materia/
ly affect the regional market for correspondent banking
busitlesse
California banking is highly concentrated, with the nine
1 a St banks
no
in the State holding about Od per cent of total commercial
b4
d
in
-the
P°sits and operating approximately 83 per cent of banking offices
State.
About 40 per cent of total bank deposits in the State
2825
-7ate held by Bank of America. !Jells Fargo, while third in size, falls
14to
a group of banks whose shcres range from two to about fourteen
"
P cent. During the calendar years 1960, 1961, and 1932, there has
1)14
a reversal in California of the trend toward fewer banks, and the
total number in the State has climbed from 115 to 129.
New charters
14e granted during that period to 28 banks, while 14 lost their indent identity through merger, or discontinued operations.
In recent years savings and loan associations have grown
iliCalifornia at a rate greatly exceeding that of commercial banks.
Such
countY,
associations operate a total of nine offices in Fresno
with total withdrawable balances, as of December 31, 1961,
°f q20
- million, an increase of 377 per cent over December 31, 1956.
t!ital
the
1°ans of these institutions increased 372 per cent during
sat,
,--year period. Accordingly, it appears that as to savings
"
4 e fo.-1
slier
es and real estate mortgages, these associations provide keen
total)
etition to the commercial banks in the county.
'
Summary and conclusion. - The management succession
151131e.al at State Center, which threatens to affect its continued
-Pment along the path marked out in the seven years of the
existence, would be resolved by merger of that bank with one
eq4iDn A
to continue in the same direction. The convenience and
4e4
be ,r8 Of the clientele which State Center has chosen to serve would
toleilitated by effectuation of the proposal, and in at least two
'
l here its branches are located, the resulting bank would
282.3.
.
offe
4. services needed by the communities which are not presently
avail
s Efta,e there (although conveniently available in other communities
4ithi
n driving distance).
Relatively little competition between the
banks would be eliminated, and the degree of banking concentration
c
allfornia would not be sigaificantly increased by consummation of
the
Proposed merger.
Accordingly, the Board finds that the proposed merger would
he public interest.
4811st 19, 1963.
282'7
S-1886
Item No. 10
8/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 19, 1963.
bear sir:
Reserve
1144k dire In connection with the 1962 elections of Federal
losu
a fire
of
president
ctors, question was raised whether the
Of j
anee company was eligible to serve as a Class B director in view
direue Provision of section 4 of the Federal Reserve Act that Class B
agrict°rs "shall be actively engaged in their district in commerce,
culture or some other industrial pursuit."
sole 0
In 1925, the Board took the position that a person whose
tiot ei ccuPation is that of an officer of a life insurance company is
actil,:iigible for election as a Class B director "because (a) he is not
kirs'71Y engaged in 'commerce, agriculture or some other industrial
4seuriti within the meaning of that language as used in the Federal
4rsove Act and (b) it is contrary to the policy of Congress for a
Permirl so closely identified with the financial interests to be
(P,R tted to serve as a Class B director of a Federal Reserve Bank."
#3095)
Although the Supreme Court of the United States in 1944, in
INted
geld „States v. Southeastern Underwriters Association, 322 U.S. 533,
'
uat the insurance business constitutes "commerce" within the
Illeani
Narl
? °f the commerce clause of the Constitution, the Board does not
qt6 that decision as necessarily requiring the same interpretation
Provision of section 4 of the Federal Reserve Act here in ques:
tiorl
%ritr Ia any event, the Board continues to feel that it would be
qfie
:
rY to the policy of Congress reflected by that provision for
s °f insurance companies to be permitted to serve as Class B
diteej
mentioned
has
,,rs of Federal Reserve Banks_
l affi()
For these reasons, the Board
qove —rried the position taken by it in the 1925 interpretation
2828
S-1886
-2-
When the procedure and forms for election of Class A and
Class
D directors were revised in 1959, the form of letter announcing
a
forrthcoming
election (F.R.L.S. #3110, Exhibit A) omitted from a
as tn°te a reference to the 1925 interpretation of the Board as well
ota reference to an interpretation with respect to the ineligibility
e national
bank examiners to serve as Reserve Bank directors. The
of
these references, however, was not intended to indicate
411881011
vasersal of those interpretations. They were omitted only because it
refe"t considered practicable to attempt to include in the footnote
.ences to all interpretations of the Board regarding eligibility
ofAr
,l
rectors.
e°41Pan.Since the question regarding service of officers of insurance
it 14 les as Class B directors continues to arise from time to time,
tgith°uld seem desirable to advise member banks of the Board's position
ferthresPect to this question in connection with announcements of
"miag elections. Similarly, it would seem desirable to apprise
assoer banks as to the ineligibility of officers of savings and loan
fre ciations to serve as Class B directors, a question that also
quelitlY arises.
the la
Accordingly, in order to avoid possible misunderstanding,
cokti st Paragraph of the footnote in the letter announcing a forthfoilog election (Exhibit A) should be expanded by the addition of the
of thlqing sentence: "Under interpretations of the Board of Governors
ofe
„Pederal Reserve System, a person whose sole occupation is that
is
cer of an insurance company or of a savings and loan association
eligible for election as a Class B director of a Federal Reserve
Very truly yours,
Kenneth A. Kenyon,
Assistant Secretary.
TI'M PRESIDENTS OF ALL FEDERAL RESERVE BANKS
2829
BOARD OF GOVERNORS
OF THE
Item No. 11
8/19/63
FEDERAL RESERVE SYSTEM
WASH IN GTO N
OFFICE OF THE CHAIRMAN
August 19, 1963
1be Honorable Wright Patman, Chairman,
,
c)mmittee on Banking and Currency,
'louse of Representatives
Washington 25, D. C.
I3ear Mr. Chairman:
orally by
This refers to your request, transmitted
listing of
a
for
14r. Poston, General Counsel of your Committee,
Governors
of
Board
eses after November 16, 1961, in which the
lela
the Compto
1960
tr8 made reports under the Bank Merger Act of
d in
involve
s
rae°11er of the Currency on the competitive factor
in
ion
indicat
otirgers pending before the Comptroller, with an
Board's
the
r or two words of the general tenor of each of
ePorts.
'
this listing
We understand that you desire to publish
of Federal
ct
he record of your Committee's hearings on confli
furbeen
have
:?(1 State banking laws and that similar listings
Attorney
the
and
tion
rushed by the Federal Deposit Insurance Corpora
that
ood
underst
also
tOeral with respect to their reports. It is
carry
will
rated
incorpo
these listings will be
the table in which
facte: "Advisory reports on the competitive
footno
wing
()110
to;.
the
which
s
factor
banking
,are submitted without regard to the
Co
his
at
g
arrivin
in
r
conside
de-Ptroller of the Currency had to
listed in this sched4ision to approve or disapprove the mergere
may not be
adverse
as
ed
describ
co_ e. Thus, an advisory report
trued as indicating a recommendation for disapproval of the
flier
Board believes
a er by the reporting agency or agencies." The
!
thr
misunderan explanation of this kind is essential to help avoid
Stand
s,
factor
competitive
A4, ing as to the nature of the reports on
whether
to
as
ndation
the"clugh the reports do not constitute a recomme
et.. Particular merger should be approved or disapproved, this fact is
'en overlooked.
a listing of this
There is another danger, however, that
kiOd 1,74-4.41 be misunderstood. Any attempt to classify these reports
tilt() -1
ry and
%a four or five categories is necessarily somewhat arbitra reports
these
into
The considerations that enter
aree misleading.
conflicting, and there are a number
Of ic°mplex and to some extent
degree that
the netances that cannot be exactly quantified to the
Proposed classification would suggest.
2830
Honorable Wright Patman
-2-
The Board has not reviewed its advisory reports with the
oPtier;r1sed classification in mind, but has asked knowledgeable members
staff, in whose judgment we have confidence, to do so. They
have
Prepared the enclosed list in compliance with your request.
Sincerely yours,
(Signed) Wt. McC. Martin, Jr.
Wm. McC. Martin, Jr.
thelosure
@FedFRASER