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Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 2, 1961
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.
Ohm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
t
Minutes of the Board of Governors of the Federal Reserve System
on Wednesday, August 2, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Mills
Shepardson
Mr. Kenyon, Assistant Secretary
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of
Examinations
Mr. Hooff, Assistant General Counsel
Mr. Hostrup, Assistant Director, Division
of Examinations
Mr. Smith, Assistant Director, Division of
Examinations
Mr. Spencer, General Assistant, Office of
the Secretary
Mr. Smith, Legal Assistant, Legal Division
Mr. Guth, Review Examiner, Division of
Examinations
Discount rates.
The establishment without change by the Federal
Reserve Bank of Atlanta on July 31, 1961, of the rates on discounts and
advances in its existing schedule was approved unanimously, with the
understanding that appropriate advice would be sent to that Bank.
Items circulated to the Board.
The following items, which had
been circulated to the Board and copies of which are attached to these
minutes under the respective item numbers indicated, were approved
unanimously:
Item No.
Letter to The First National Bank of Ipswich,
Ipswich, Massachusetts, approving its application
for fiduciary powers.
1
Ai11'
rN
8/2/61
-2Item No.
Letter to the Federal Reserve Bank of Kansas City
approving revisions of the minimums of Grade 1 in
the employees' salary structures at Kansas CityDenver, and Grades 1 and 2 at Oklahoma City-Omaha.
2
Letter to The First State Bank, Abilene, Texas,
approving an investment in bank premises.
3
Letter to Farmers State Bank & Trust Company, Cuero,
Texas, waiving the requirement of six months' notice
of withdrawal from membership in the Federal Reserve
System.
if
.P12port on competitive factors (Charlotte-Marion, North Carolina).
A draft of report to the Comptroller of the Currency on the competitive
factors involved in the proposed merger of The First National Bank of
Marion, Marion, North Carolina, into First Union National Bank of North
Carolina, Charlotte, North Carolina, had been distributed with a memorandum
from the Division of Examinations dated July 28, 1961.
The conclusion in
the report read as follows:
Applicant banks do not appear to be competitive to an
important degree and the effect on competition should not be
significant.
The proposed transaction is in furtherance of a trend in
North Carolina toward concentration of banking resources in a
few large banks.
The report was approved unanimously for transmission to the
Comptroller.
Report on competitive factors (Hollidaysburg-Williamsburg,
Pennsylvania).
A draft of report to the Federal Deposit Insurance Corpo-
ration on the competitive factors involved in the proposed purchase of
3H
8/2/61
-3-
assets and assumption of liabilities of First National Bank of Williamsburg,
Williamsburg, Pennsylvania, by Hollidaysburg Trust Cowpany, Hollidaysburg,
Pennsylvania, had been distributed with a memorandum from the Division of
Examinations dated July 25, 1961.
The report, in which the conclusion read as follows, was approved
unanimously for transmission to the Corporation:
The proposed purchase of assets and assumption of liabilities of First National Bank of Williamsburg, Williamsburg,
Pennsylvania, by Hollidaysburg Trust Company, Hollidaysburg,
Pennsylvania, would eliminate little competition between the
two institutions as little exists. Competitive effects of the
transaction would be limited very largely to the immediate
Williamsburg area where the remaining small bank would be
subject to increased competition.
Report on cowpetitive factors (Franklin, Illinois).
There had
been distributed, with a memorandum from the Division of Examinations
dated July 26, 1961, a draft of report to the Federal Deposit Insurance
Corporation regarding the competitive factors involved in the proposed
Purchase of assets and assumption of liabilities of Franklin State Bank,
Franklin, Illinois, by Franklin Bank, Franklin,Illinois.
The conclusion
in the report read as follows:
The proposed purchase of assets and assumption of
liabilities of Franklin State Bank by Franklin Bank should
not affect banking competition in the area.
The report was approved unanimously for transmission to the
Corporation.
Applications of The Atlantic National Bank of Jacksonville and
Atlantic Trust Company (Items
5 and 6). At the meeting on July 21, 1961,
8/2/61
the members of the Board present (Governors Balderston, Mills, Robertson,
and Shepardson) voted to approve applications under the Bank Holding Company
Act by The Atlantic National Bank of Jacksonville and Atlantic Trust Company,
both of Jacksonville, Florida, to acquire up to 39,400 of the 40,000 voting
shares of Lake Shore Atlantic Bank of Jacksonville, a proposed new bank.
Accordingly, the staff was requested to prepare drafts of an order and
statement for review by the Board.
Pursuant to this understanding, such
drafts had been distributed with a memorandum from the Legal Division
dated July 28, 1961.
There being no objection, the issuance of the order and statement
was authorized.
Items
5
and
6,
Copies of the order and statement are attached hereto as
respectively.
Messrs. Hooff, Hostrup, Smith (Legal Assistant), and Guth withdrew
from the meeting at this point.
Report of examination of Federal Reserve Bank of St. Louis.
The
report of the examination of the Federal Reserve Bank of St. Louis made
by the Board's examining staff as of April 17, 1961, had been circulated
to the Board, along with the usual accompanying memoranda.
Mr. Smith having commented on matters disclosed by the examination,
there followed a discussion, at the instance of Governor Balderston, with
respect to the possible effect from the audit control standpoint of the
consolidation of the Bank's Accounting Department into the Data Processing
8/2/61
-5-
Department incident to the recent installation of an IBM Data Processing
System.
It was noted that similar procedures were likely to be adopted
at other Federal Reserve Banks.
The comments of Messrs. Solomon and Smith were to the effect that
the problem of audit control had been re-viewed with the General Auditor of
the St. Louis Bank by the Board's staff.
In discussing this matter with
him, he brought out that the Accounting Department, as formerly organized,
did not originate entries; to that extent the General Auditor felt that the
degree of risk was minimized.
In the circumstances, it was felt by the
Board's staff that it would be difficult to object to the arrangement.
Nevertheless, it was planned to have a member of the examining staff
devote particular attention to the matter as and when other Reserve Banks
proceeded along the same lines, in order to attempt to determine whether
any undue risks appeared to be involved.
On the basis of Mr. Smith's comments concerning the examination of
the St. Louis Bank, there was agreement that there were no matters appearing
to require Board action at this time.
Dates of oral presentations.
On the basis of the preferences of the
respective applicant banks, as stated following their receipt of the Board's
letters of July 28, 1961, it was understood that an oral presentation by the
State Bank of Albany, Albany, New York, concerning its proposed merger with
The Fort Plain National Bank would be heard by the Board on August 15, 1961,
8/2/61
-6-
and that an oral presentation by Manufacturers Trust Company, New York,
New York, concerning its proposed merger with The Hanover Bank would be
heard on September
6, 1961.
The meeting then adjourned.
Secretary's Notes: Pursuant to the procedure
approved by the Board on October 12, 1960,
relating to examinations of Edge Act corporations by examiners for the Federal Reserve
Banks of New York and Philadelphia, acting as
examiners for the Board of Governors, a letter
was sent today to the Federal Reserve Bank of
Boston authorizing a similar arrangement in
that District for examinations of Boston
Overseas Financial Corporation, Boston,
Massachusetts.
On August 1, 1961, Governor Shepardson approved
on behalf of the Board the following items:
Letter to the Federal Reserve Bank of St. Louis (attached Item No. 7)
approving the appointment of Ronald Wesley Wallace as assistant examiner.
Memoranda from appropriate individuals concerned recommending increases
in the basic annual salaries of the following persons on the Board's staff,
effective August 6, 1961:
Name and title
Division
Basic annual salary
To
From
Legal
Rufus S. Hill, Jr., Legal Assistant
$6,435
$6,600
4,145
6,180
6,18o
6,345
6,345
Research and Statistics
Sarah A. Foret, Statistical Clerk
Monica Jones, Statistical Assistant
Winofred Racz, Chart Machine Operator
4,250
I
8/2/61
f1.1..a.
Increases
Name and title
.
-7effective August 6, 1961 (continued)
Basic annual salary
From
To
Division
Bank Operations
Elizabeth I. Dietrich, Statistical Clerk
$4,145
$4,250
4,355
3,605
3,185
4,460
Administrative Services
Aubrey L. Simmons, Sergeant, Guard Force
Quincy W. Barnes, Mail Clerk
Edward D. Rogers, Messenger
Assistant Secretar
3,710
3,290
A '
)
4.
*
BOARD OF GOVERNORS
OF THE
Item No. 1
8/2/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
August
2,
1961
Board of Directors,
The First National Bank of Ipswich,
Ipswich, Massachusetts,
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to your application for fiduciary
powers and grants The First National Bank of Ipswich authority
to act, when not in contravention of State or local 11w, as
trustee, executor, administrator, registrlr of stocks and
bonds, guardian of estates, assignee, receiver, committee of
estates of lunatics, or in any other fiduciary capacity in
which State banks, trust companies, or other corporations
which come into competition with national banks are permitted
to act under the laws of the State of Massachusetts. The
exercise of such rights shall be subject to the provisions
of Section 11(k) of the Federal Reserve Act and Regulation F
of the Board of Governors of the Federal Reserve System,
A formal certificate indicating the fiduciary
powers that your bank is now authorized to exercise will be
forwarded in due course.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary,
2f;45
BOARD OF GOVERNORS
OF THE
0: A.
.
.
0'A
0fi' p.
044
Item No. 2
8/2/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
'
1
c:
44g. M5.5\
0044***
August 2, 1961
CONFIDENTIAL (FR)
Mr. Willard Edwards,
Director of Personnel,
Federal Reserve Bank
of Kansas City,
Kansas City 6, Missouri.
Dear Mr. Edwards:
The Board of Governors approves the revisions in the
minimums of Grade 1 in the Kansas City-Denver employee structure
and in Grades 1 and 2 in the Oklahoma City-Omaha structure,
effective September 1, 1961, in accordance with the action
taken by the Board of Directors, as reported in your letter of
July 19.
The Board's records are being amended to reflect
these changes in the grade ranges as follows:
Grade
Minimum
Maximum
Kansas City-Denver
1
$2,400
$3,000
Oklahoma City-Omaha
1
2
2,400
2,400
2,940
3,180
Very truly yours,
(Signed) Kenneth
. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
;
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
3
8/2/61
WASHINGTON 25. O. C.
ADDRE•1111 arriciAL CORRL•PONOCNCIE
TO THE BOARD
August 2, 1961
Board of Directors,
The First State Bank,
Abilene, Texas.
Gentlemen:
Pursuant to your request submitted through the Federal
Reserve Bank of Dallas, the Board of Governors of the Federal
Reserve System approves, under the provisions of Section 24A of
the Federal Reserve Act, an additional investment by The First
State Bank, Abilene, Texas, of 0217,479.16 in bank premises.
It is understood that the construction program is now
complete and is represented on the books of the bank in the form
of a mortgage payable in the original amount of 000,000, and
in the bank premises account at 025,000 with a special.depreciation reserve of 0.0,000 applicable thereto. Your attention is
invited to the letter from the Board of Governors of the Federal
Reserve System dated January 20, 1960, in which your bank was
granted permission to invest $1,063,400 in b4nking premises with
the express provision " • . . that not more than 4500,000 of the
cost of these premises will be capitalized on the books of the
bank." The approval granted herein is with the understanding
that the previous proviso be =plied with not later than
December 31, 1961.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
4
8/2/61
WASHINGTON VS, D. C.
ADDRICSO OFFICIAL CORREISPONDIENCE
TO THC BOARD
August 2, 1961
Board of Directors,
Farmers State Bank& Trust Company,
Cuero, Texas.
Gentlemen;
The Federal Reserve Bank of Dallas has forwarded to the
Board of Governors your resolution dated June 13, 1961, signify'nu your intention to withdraw from membership in the Federal
Reserve System, and your letter dated June 283 1961, requesting
waiver of the six months' notice of such withdrawal and setting
forth the reason for withdrawal.
In accordance with your request, the Board of Governors
waives the requirement of six months' notice of withdrawal.
Upon surrender to the Federal Reserve Bank of Dallas of the
Federal Reserve Bank stock issued to your institution, such stock
will be canceled and appropriate refund will be made thereon.
Under the provisions of Section 10(c) of the Board's Regulation H
your institution may accomplish termination of its membership at
any time within eight months from the date the notice of intention
to withdraw from membership was given.
It is requested that the certificate of membership be
returned to the Federal Reserve Bank of Dallas.
Attention is invited to the fact that if your bank is
desirous of continuing deposit insurance after withdrawal from
membership in the Federal Reserve System, it will be necessary
that application be made to the Federal Deposit Insurance Corporation.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
if•-•
Item No. 5
8/2/61
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDE/AL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the 1-Ipplications of
THE ATIz.NTIC NATION:I B'NK OF
JACKSONVILLE PD ATLANTIC TRUST
COMPANY
1
For prior approval of acquisition of
1
voting shares of the Lake Shore Atlantic
Bank, Jacksonville, Florida
__________________________________ j.
ORDER APPROVEG APPLIC—TIONS UNDER
BANK HOLDING COMPANY ACT
There having come before the Board of Governors pursuant
to section 3(a)(2) of
the Bank Holding Company Act of 1956
(12 USC 18)2) and
section 4(a)(2) of the Board's Regulation Y
(12 CFR 2
22.4(a)(2)), applications by The Atlantic National Bank of
Jacksonville and Atlantic Trust Company, both of Jacksonville,
Florida, for the Board's prior approval of the acquisition of up to
39,400 of the 40,000 shares of a proposed bank, the Lake Shore
Atlantic Bank, Jacksonville, Florida;
a Notice of Receipt
of Applications having been published in the Federal Register on
May 9, 1961 (26 Federal Register 4006) I,hich provided interested
Persons an opportunity to submit comments and views regarding
the proposed acquisition;
and the time for filing such comments and
views having expired and no such comments cr views having been filed;
t
-91T IS HEREBY ORDERED, for the reasons set fcrth in the
Boardts Statement of this date that the said applications be and
hereby are granted, and the acquisition by The Atlantic National
Bank of Jacksonville and Atlantic Trust Company of up to 39,400
of the 40,000 shares of Lake Shore Atlantic Bank, Jacksonville,
Florida is hereby approved, provided that such acquisibion is
completed within three months from the date hereof.
Dated at Washington, D.C. this 2nd day of August, 1961.
By order of the Board of Governors.
Voting for this action: Governors Balderston, Mills,
Robertson, and Shepardson.
Absent and not voting:
Governor King.
Chairman Martin and
(Signed)Kenneth 4. Kenyon
Kenneth R. Kenyon,
Assistant Secretary.
(SEAL)
21;50
BOARD OF GOVERNORS
Item No. 6
8/2/61
OF THE
FEDERAL RESERVE SYSTEll
• APPLICATIONS BY THE ATLANTIC NATIONAL BANK OF JACKSONVILLE
AND ATLANTIC TRUST COMPANY FOR PRIOR APPROVAL OF THE ACQUISITION
OF THE SHARES OF LAKE SHORE ATLANTIC BANK, JACKSONVILLE, FLORIDA
STATETENT
The Atlantic National Bank of Jacksonville and Atlantic
Trust Company, both of Jacksonville, Florida ("Apnlicants"), have
applied pursuant to section 3(a)(2) of the Bank Holding Company
Act of 1956 ("the Act"), for the Board's prior approval of the
acquisition of up to 39,400 of the 40,000 shares of a proposed new
bank, the Lake Shore Atlantic Bank, Jacksonville, Florida ("Bank").
Both of the Applicants are registered bank holding companies; Atlantic
Trust Company (which is not a bank) directly owns a controlling interest
in eight banks, and
all of its outstanding stock is held by trustees
for the benefit of the shareholders of The Atlantic National Bank of
Jacksonville.
Views and recommendations of the supervisory authorities. One of the Applicant companies is a national bank. The proposed
bank to be acquired is to be a State bank. Pursuant to section 3(b)
of the Act, notice of
the application was given to, and views and
recommendations requested of, both the Comptroller of the Currency
and the State Commissioner of Banking of the State of Florida. Both
recommended approval of the applications.
-2Statutory factors, - Section 3(c) of the Act requires the
Board to take into consideration the following five factors: (1) the
financial history and condition of the holding companies and bank
concerned; (2) their prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the communities and the
area concerned; and (5) whether or not the effect of the acquisition
would be to expand the size or extent of the bank holding company
System involved beyond limits consistent with adequate and sound
banking, the public interest, and the preservation of competition in
the field of banking.
Discussion. - The 17 commercial banks in Duval County (in
which Jacksonville is located) hold total deposits of $662 million
as of December 31, 1960. Applicants' group of banks includes four
of these, with total deposits of $236 million.
The largest of these
four banks is The Atlantic National Bank of Jacksonville, with total
deposits of $209 million.
Bank would be located in a suburban area about two miles
southwest of the city limits of Jacksonville, at the intersection of
Harlow and Blanding Boulevards, and
8110PPing center.
.4 mile
south of a fairly large
Bank's anticipated primary service area has a
Population estimated at 20,000 to 30,000. The area has no industry,
but Population growth has been pronounced in recent years and may be
expected to continue in the forseeable future.
At present, there is
-'3no bank located within Bank's anticipated primary service area.
two banks closest to Bank's proposed site are about 4.5 and
distant.
5
The
miles
Of Applicants' banks, The Atlantic National Bank of
Jacksonville is the closest to the proposed location of Bank. It is
approximately 8 miles away.
The financial history and condition, prospects, and
management of the Applicants are satisfactory. The prospects and
Proposed management of Bank are also satisfactory; since Bank has
not yet been established financial history and condition are not
,
relevant factors with respect to it.
Relative to the fourth statutory factor, while the need
for a bank in the area is not deemed urgent, it is felt that a need
is sufficiently evidenced and that the convenience and welfare of
the area concerned
would be benefited to an extent which would support
approval under this factor.
The proposed acquisition would give the Applicants' group
5
of the 18 banks (27.8 per cent) in the metropolitan area of
Jacksonville (Duval County).
It does not appear that the acquisition
Would increase substantially Applicants' present control of banking
resources nor strengthen significantly their competitive ability.
The banks in Applicants' holding company system held approximately
32 Per cent of the deposits of individuals, partnerships, and cornorations (upC deposits") of all banks in Duval County, compared with
about 29 per cent held by the Florida National Group (not a bank
holding company as defined in the Act), 23 per cent by the Barnett
National Bank of Jacksonville and the subsidiary banks of the
affiliated Barnett National Securities Corporation (a registered bank
holding company), and 16 per cent by all other banks.
If Bank's
anticipated deposits at the end of three years of operation should
consist entirely of IPC deposits
and should be added to Applicants'
Yearend 1960 totals, Applicants' proportion of the total of such
deposits held by Duval County banks would increase by only 1 percentage
Point,
In the Board's opinion, under Applicants' control Lake Shore
would be operated soundly,
and the establishment of the bank would not
produce an overbanked situation in the area.
Neither does it appear
that the proposed acquisition would exnand the size of the Applicants/
System beyond limits consistent with adequate and sound banking, the
public interest, and the preservation of competition in the field
of banking.
It is the judgment of the Board, based on the relevant
facts considered in the light of the general nurnoses of the Act and
the factors
enumerated in section 3(c) thereof, that the nronosed
acquisition would be consistent with the statutory objectives and
the public
interest, and that the application should be approved.
August 2, 1961.
BOARD OF GOVERNORS
ii{otittrh,
OF THE
*4'1 CO COV *4
* 0 _ - ,...t0,
,•:
,
FEDERAL RESERVE SYSTEM
tl
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*4:'''(4,e„,-
WASHINGTON 25. D. C.
0
-,.0
Item No.
7
8/2/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
i*0044***
August 2, 1961
CONFIDENTIAL (FR)
Mr. George E. Kroner,
Vice President,
Federal Reserve Bank of St. Louis,
P. 0. Box 442,
St. Louis 66, Missouri.
Dear Mr. Kroner:
In accordance with the request contained in your
letter of July 26, 1961, the Board approves the appointment
of Ronald Wesley Wallace as an assistant examiner for the
Federal Reserve Bank of St. Louis. Please advise us if the
appointment is not made effective August 16, as planned.
It is noted that Mr. Wallace is indebted to Monroe
National Bank of Columbia, Columbia, Illinois, in the amount
of $33 and to Bank of St. Louis, St. Louis, Missouri, a nonmember bank, in the amount of $1,286.48. Accordingly, the
Board's approval of the appointment of Mr. Wallace is given
with the understanding that he will not participate in any
examinations of these banks until his indebtedness thereto
has been liquidated.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER