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Minutes for August
To:
Members of the Board
From:
Office of the Secretary
7, 3,964
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.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Minutes of the Board of Governors of the Federal Reserve
System on Friday, August
7, 1964. The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman
Mills
Shepardson
Mitchell
Daane 1/
Mr. Kenyon, 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
Mr. Fauver, Assistant to the Board
Mr. Holland, Associate Director, Division
of Research and Statistics
Mr. Furth, Adviser, Division of International
Finance
Mr. Katz, Associate Adviser, Division of
International Finance
Mr. Spencer, General Assistant, Office of
the Secretary
Mr. Bernard, Economist, Division of Research
and Statistics
Mr. Baker, Economist, Division of International
Finance
Money market review.
There was distributed a table on money
market factors for the period January - August 1964, along with
a table summarizing monetary developments in the five weeks ended
August
5, 1964.
Mr. Bernard reported on developments in the Government securities
market, including Treasury financing operations, after which Mr. Holland
commented on bank reserves, bank credit, and the money supply.
then discussed foreign exchange market developments.
17- Withdrew from meeting at point indicated in minutes.
Mr. Baker
8/7/64
-2Following these reports, all members of the staff except Messrs.
Kenyon, Molony, Fauver, and Spencer withdrew from the meeting and the
following entered the room:
Hackley, General Counsel
Solomon, Director, Division of Examinations
O'Connell, Assistant General Counsel
Leavitt, Assistant Director, Division of Examinations
Via, Senior Attorney, Legal Division
Robinson, Attorney, Legal Division
McClintock, Supervisory Review Examiner, Division of
Examinations
Mr. Lyon, Review Examiner, Division of Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Banks of New York, Philadelphia, Cleveland, Richmond, St. Louis,
Minneapolis, Dallas, and San Francisco on August
6,
1964, 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.
Application of Provident Tradesmens Bank and Trust Company
(Items 1-4).
Pursuant to the decision reached at the Board meeting on
July 29, 1964, there had been distributed a proposed order and statement
reflecting approval of the application of Provident Tradesmens Bank and
Trust Company, Philadelphia, Pennsylvania, to merge with Second National
Bank of Philadelphia.
There had also been distributed drafts of a
dissenting statement by Governor Mills and one by Governors Robertson
and Mitchell.
As discussion opened, Mr. Hackley distributed a revision suggested
by the staff for that part of the draft majority
statement concerned with
2740
8/7/64
the management succession problem at Second National.
would place somewhat less emphasis on this factor.
The revision
It would, however,
retain the substance of the original draft in shorter form.
There followed a discussion of the suggested revision during
Which several changes in it and other sections of the majority statement,
including the summary and conclusion, were agreed upon.
The tenor of
the changes, taken as a whole, was in the direction of ascribing relatively more weight to factors such as added services to the Northeast
Philadelphia community than appeared from a reading of the original
draft.
In light of these changes, Governor Mitchell authorized minor
revisions in the Robertson-Mitchell dissenting statement.
Subject to incorporation of the aforementioned changes, the issuance of the order, statement, and dissenting statements was authorized.
Copies of the documents, as issued, are attached as Items 1 through
4.
Governor Daane and Messrs. Via and McClintock then withdrew
from the meeting.
Applications of Citizens and Southern Holding Company and Citizens
and Southern National Bank (Items 5 and 6).
Pursuant to the decision at
the meeting on July 27, 1964, there had been distributed drafts of an
order and statement reflecting approval of the applications of Citizens
and Southern Holding Company and The Citizens and Southern National Bank,
both of Savannah, Georgia, for the acquisition by Citizens and Southern
Holding Company of additional shares of American National Bank of Brunswick,
Brunswick, Georgia.
_j4..
8/7/64
The issuance of the order and statement was authorized, with
the understanding that they would not be issued until August 10, 1964.
Copies of the order and statement, as issued, are attached as Items
and
5
6.
The meeting then adjourned.
Secretary's Note: On August 6, 1964,
Governor Shepardson approved on behalf
of the Board the following items:
Letter to the Federal Reserve Bank of Cleveland (attached Item No. 7)
approving the designation of John A. Regel and Warren H. Frey as special
assistant examiners.
Letter to the Secretary of Agriculture requesting the loan of a
Systems analyst on a reimbursable basis for a period of six to eight
months to provide assistance in converting the processing of the Board's
Payroll to a computer operation.
Telegram to President Swan, Chairman of the Committee on Miscellaneous
Operations of the Conference of Presidents of the Federal Reserve Banks,
advising of the designation of Walter H. Young, Senior Attorney in the
Legal Division, to serve on an ad hoc subcommittee of Counsel regarding
negotiation of a contract with Brink's for currency shipments between
Washington and the Federal Reserve Banks.
Memoranda from the Division of Administrative Services recommending
the following actions relating to persons in that Division:
Salary increase
Margaret E. Jenkins, Cafeteria Helper, from $3,620 to $3,830 per
annum, with a change in title to Relief Cook, effective August 16, 1964.
Change in employment status
Marie Willard, Cafeteria Helper, from a when-actually-employed
basis ($1.80 an hour) to a full-time basis, with basic annual salary
at the rate of $3,305, effective August 16, 1964.
_
z
Assistant Secretary,/
2742
Item No. 1
8/7/64
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASEINGTON: D
C
In the Matter of the Application of
1
PROVIDENT TRADESMENS BANK
AND TRUST COMPANY
for approval of merger with
Second National Bank of Philadelphia t
ORDER APPROVING MERGER OF BANKS
There has come before the Board of Governors, pursuant to
the Bank Merger Act of 1960 (12 U.S.C. 1828(c))„ an application by
Provident Tradesmens Bank and Trust company, Philadelphia, Pennsylvqnia,
a State member bank of the Federal Reserve System, for the Board's prior
al:Troval of the merger of that bank and Second National Bank of
Philadelphia, Philadelphia, Pennsylvania, under the charter and title
of Provident Tradesmens Bank and Trust Company. As an incident to the
terger, the five offices of Second National Bank of Philadelphia
Would become branches of Provident Tradesmens Bank and Trust Company.
Notice of the proposed merger, in form approved by the Board, has
been published pursuant to said Act.
-2-
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,
and the Department of Justice on the competitive factors involved in
the proposed transaction,
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that said application be and hereby
is approved, provided that said merger 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
7th
day of August, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Shepardson, and Daane.
Voting against this action:
and Mitchell.
Governors Mills, Robertson,
(signed) Kenneth A. Kenyon
(sEAL)
Kenneth A. Kenyon,
Assistant Secretary.
2';44
BOARD OF GOVERNORS
Item No. 2
8/7/64
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY PROVIDENT TRADESMENS BANK AND TRUST COMPANY
FOR APPROVAL OF MERGER WITH
SECOND NATIONAL BANK OF PHILADELPHIA
STATEMENT
Provident Tradesmens Bank and Trust Company, Philadelphia,
Pennsylvania ("Provident"), with total deposits of $517 million, has
applied, pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1828(c)),
for the Board's prior approval of the merger of that bank and the
Second National Bank of Philadelphia, Philadelphia, Pennsylvania
1/
("Second National"), which has total deposits of $43 million.— The
banks would merge under the charter and name of Provident, a member
State bank of the Federal Reserve System.
Ls an incident to the merger,
the five offices of Second National would become branches of Provident,
2/
increasing the number of its approved offices to 31.—
Under the law, the Board is required to consider, as to each
of the banks involved, (1) its financial history and condition, (2) the
adequacy of its capital structure, (3) its future earnings prospects,
(4) the general character of its management, (5) whether its corporate
Powers are consistent with the purposes of 12 U.S.C., Ch. 16 (the Federal
1/ Deposit figures are as of December 20, 1963.
..?./ This total includes one branch of Provident not yet opened for
business.
-2-
Deposit Insurance Act), (6) the convenience and needs of the community
to be served, and (7) the eflect of the transaction on competition
(including any tendency toward monopoly).
The Board may not approve
the transaction unless, after considering all of these factors, it
finds the transaction to be in the public interest.
BankinA factors. - The financial histories of Provident and
Second National are satisfactory and each bank has a sound asset condition and an adequate capital structure. Provident has a satisfactory
earnings record and its future earnings prospects are favorable.
While
Second National's earnings have been generally satisfactory, its future
earnings prospects are less than favorable.
It has experienced a rate
Of grciwth in deposits and loans over the past six years that was greater
than the average for all Philadelphia banks, but its earnings growth
over that six-year period (10.5 per cent) was far less than the average.
Moreover, it has shown substantial year-to-year fluctuations in earnings, ranging from an increase of 13 per cent in one year to a decrease
Of 10.4 per cent in another.
The comparatively slow earnings growth
rate appears to be the result, in part, of an attempt by Second National
to provide, as do many of the other banks in its service area,'—
full
banking services through its branch offices and the failure to generate
a volume of business sufficient to make such operations profitable.
2/ The area from which a bank obtains 75 per cent or more of its
deposits of individuals, partnerships, and corporations ("IPC" deposits).
2746
Second National is faced with a serious management succession
problem.
A bank of Second National's size, and located as it is in a
large metropolitan area, would usually have no difficulty in coping
with the problem of management succession.
However, the problem faced
by Second National is unusually difficult in that it must replace most
of its key management group in the immediate future, including its
Chief executive, the next ranking officer, the third ranking officer,
and the manager of its largest branch.
In the context of relatively
unimpressive earnings prospects, these circumstances lend some support
for approval.
The management of Provident is capable and aggressive
and consummation of the proposed merger would solve Second National's
management problem.
The corporate powers of the two banks are not, and those of
the remaining bank would not be, inconsistent with the purposes of the
Federal Deposit Insurance Act.
Convenience and needs of the community. - The city of
Philadelphia (having boundaries coterminous with those of Philadelphia
County) and the three adjoining counties of Delaware, Montgomery, and
Bucks had a 1960 population exceeding 3.3 million.
Under Pennsylvania
law, a bank headquartered in Philadelphia, as are Provident and Second
National, may establish branches in any of these four counties.
Philadelphia is the fourth largest city in the United States,
serves as one of its major seaports, and has a broadly diversified
economy, including over 4,000 industrial establishments which, in 1961,
lr"1,4
r
f
e
-4-
employed more than 273,000 persons and produced goods valued in excess
of $5 billion.
During the period 1950 to 1960, the city of Philadelphia
had a 3.3 per cent decline in population, but the four-county area
realized a gain of 13.3 per cent.
The service area of Second National is the section of the
City of Philadelphia known as Northeast Philadelphia.
There are 22
major industrial concerns (i.e., those which employ over 100 persons)
in Northeast Philadelphia with a total employment of 14,000 persons.
Although the city suffered an over-all population decline from 1950 to
1960, the population of Northeast Philadelphia increased by 38.9 per
cent during this period.
Second National has only one office in that
Portion of Northeast Philadelphia which has the largest concentration
Of land available for industrial and re3idential growth and which is
experiencinft the greatest residential expansion of any area in Philadelphia.
Although it is located in the most rapidly growing section of
Philadelphia, Second National does not offer real estate construction
loans and several other services for which there is a demand.
This
appears to be the result, essentially, of Second National's lack of
aggressiveness which is manifested also, for example, by heavy reliance
upon purchases of loans from others.
There are about 50 banking offices serving Northeast
Philadelphia, including 26 offices of the larger Philadelphia banks,
and it appears that the banking services needed in the area are available through many of these sources.
Provident contends that, if the
-5-
application is approved, the resulting bank will offer a considerable
number of services not now offered by Second National:
construction
loans; a full range of business loans; investment and advisory services;
foreign trade financing and related services; accounting and electronic
data processing services; revolving personal credit; tuition loans; and
expanded trust services.
Consummation of the proposed merger will
Provide a more effective alternative source of complete and modern
banking services for the residents and businesses in Northeast
Philadelphia.
Competition.
Provident's main office is located in downtown
Philadelphia, approximately seven miles southwest of the main office of
Second National.
Although two of Provident's offices are located fairly
near two offices of Second National (i.e., about one half mile distant
in one case and about one and one-half miles in the other), there are
also located in the same vicinity intervening offices of competing
banks.
It does not appear that the merger would result in the elimina-
tion of any significant competition between these banks nor foreclose
any meaningful potential competition between them.
Second National's five offices represent about 10 per cent
of the banking offices operated by 11 banks serving Northeast
Philadelphia and its total deposits account for 11.2 per cent of the
dePosits held by all commercial banking offices serving this section
of the city.
If the proposed merger is consummated, the resulting bank
141-11 have 14 per cent of the offices and 14.6 per cent of the total
Posits of all commercial banks serving Northeast Philadelphia.
l'°;;A
A. j
-6-
As compared with other banks with offices in Northeast
Philadelphia, the resulting bank would be first in the area only in
consumer loans, which is the present ranking of Second National; third
in total loans; fourth in total deposits; and fifth in commercial
The loans and deposits of the resulting bank would trail by
loans.
substantial margins those of The First Pennsylvania Banking and Trust
Company and Girard Trust Bank in Northeast Philadelphia.
Of Provident's 26 offices, 15 (including one approved but
not yet opened) are located in Philadelphia, 5 in Delaware County, 4
in Hontgomery County, and 2 in Bucks County.
In the Philadelphia
four-county area, Provident is the fifth largest commercial bank in
terms of banking offices (7.3 per cent of the total), IPC deposits
(9.7 per cent), and loans (9.9 per cent).
Consummation of the proposed
merger would increase Provident's share of the banking offices by 1.5
Per cent, its share of IPC deposits by .9 per cent, and its share of
the loans held by all commercial banks in the four-county area by .7
per cent.
Provident would retain its ranking as the area's fifth
largest bank, being in terms of total deposits about 80 per cent as
large as the fourth ranking bank and just over one-half the size of the
largest bank.
The five largest banks in the Philadelphia four-county area
hold 75.9 per cent of the total deposits and 70.3 per cent of the total
loans.
The merger would increase these figures by .9 per cent and .7
Per cent, respectively. (Cf., United States v. Philadelphia National
374 U. S. 321, 364-365, 371-372)
2750
_7-
Summary and conclusion. - The proposed merger would not
potential
result in the elimination of any significant existing or
competition between the two banks involved, nor in any undue
concentration in banking resources.
The resulting bank would retain
its position as the fifth largest bank in the Philadelphia area, and
the increase in total deposits and loans held by the area's five
largest banks would be less than one per cent.
The merger would
Northeast
Provide expanded and more efficient banking services for
and
Philadelphia and would incidentally resolve the management
earnings problems of Second National.
would
Accordingly, the Board finds that the proposed merger
be in the public interest.
August 7, 1964.
k
OP.# r- A
0116
Item No.
DISSENTING SMTEEENT OF GOVERNOR MILLS
The proposed merger should be denied.
8/7/64
The trend toward
concentration of banking resources among a few large institutions in
the City of Philadelphia has reached a point where further mergers
Should not be permitted unless warranted by compelling reasons not
Present in the instant case.
The approval of the application by the majority of the Board
Will permit the elimination of a viable, competitive commercial banking
unit in Northeast Philadelphia, which is a growing and prosperous
section of the City of Philadelphia in which the Second National has
been established for a greet many years.
The fact that Second National
has not risen in competitive status with some of the other Philadelphia
commercial banks which hcve entered its trade area through the establishment of branches is not necessarily a fault of smaller size, but a
failure to grasp favorable opportunities for growth in the local area
Where the bank's operations are conducted.
Moreover, Second National
IS of a size able to compete effectively with the large Philadelphia
bank branches in its trade area which do not enjoy the advantage of
intimate home office contact with residences and industrial and business
entities situated in Northeast Philadelphia.
Furthermore, Second
National is large enough to attract the services of competent management
that should be willing to capitalize the advantages of the bank's home
location and clientele in a way that would produce an aggressive and
independent commercial banking unit in Northeast Philadelphia fully
capable of growing with the needs of the community.
3
r
4,
denied,
In concluding, as I do, that the application should be
full account has been taken of the Board's approval on December 13,
1963, of the merger of Fidelity-Philadelphia Trust Company and Liberty
Real Estate Bank and Trust Company, both of Philadelphia.
That merger
area of
combined the services of the participating banks over a broad
of services
metropolitan Philadelphia, thereby representing a dispersion
among the large banks in Philadelphia without an adverse effect by way
of limiting competition.
On the contrary, competition among the larger
adding
banks stood to be enhanced without at the same time significantly
to banking concentration.
In the case of the present application, the
bank
result will be the elimination of a sound, effective, independent
serving a broad area of greater Philadelphia and the accompanying
the
elimination of competition without any measurable addition to
to the
banking services of the area, which presently has easy access
services of large Philadelphia commercial banks.
will not
It is true that consummation of the present proposal
add very much to banking concentration in the Philadelphia area.
However,
the continued momentum which approval of the application will give to the
resources in
existing trend toward concentration of commercial banking
Philadelphia ought not to be encouraged.
That Second National sought to
offered a
auction off its property to the highest bidder and Provident
s in favor
very high purchase premium are not factors that lend themselve
of the application.
le)
e‘
In a situation such as this, as noted above, the application
should not be approved unless warranted by compelling reasons not
Present in the record of this case.
Accordingly, I would deny the application.
August 7 , 1964.
O
2';',
(34
Item No. 4
DISSENTING STATEMENT OF GOVERNORS ROBERTSON AND MITCHELL
8/7/64
While we a3:cee with certain of the points made by
Governor Mills in his dissenting statement, we wish to emphasize that,
in our view,the majority gives too great weight to solving Second
National's management succession problem, a problem which for a
$40 million institution in an area such as Philadelphia should be
Solved by the directors of the Bank.
All the additional services which it is alleged that
Provident will provide to the public in the area involved are already
available there through branches of other large banks; hence, the
convenience and needs of the community will not be improved by the
merger.
It must be remembered that there are people who prefer to do
business with a smaller bank.
They are not served by eliminating the
small bank and replacing it with a large one.
It is not only those
who need the services of a large bank with whom we should be concerned,
for they have ample sources of credit and specialized services.
It is
the general public whose interest it is our duty to safeguard within
the scope of the powers vested in us by law.
2755
-2-
The Second National is a viable, sound, highly rated,
well-capitalized, well-established bank whose deposits and loans have
increased 341.2 per cent and 66.5 per cent, respectively, during the
last six years.
While its earnings record over that period has been
Spotty, it has certainly not been poor; in fact, its earnings increased
in 1963 by 8.9 per cent.
This bank, which has been serving the public
well for many years, is now being abolished by virtue of a merger with
a half-billion dollar bank, which is only too willing to pay a very
handsome premium for the privilege of taking over its business and
eliminating it as a present and potential competitor for the banking
business in the area it has served.
We agree with Governor Hills that consummation of the merger
Will not be in the public interest and that, accordingly, the application should be denied.
August 7, 1964.
2?56
Item No.
UNITED STATES OF AMERICA
8/7/64
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Applications of
CITIZENS AND SOUTHERN HOLDING COMPANY and
THE CITIZENS AND SOUTHERN NATIONAL BANK
Lot approval of the acquisition by
Citizens and Southern Holding Company of
voting stock of American National Bank of
Brunswick, Brunswick, Georgia
01.
ORDER APPROVING APPLICATIONS UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1842(a)(2)) and section 2224(a)(2) of Federal Reserve Regulation Y
(12 CFR 222.4(a)(2)), applications on behalf of Citizens and Southern
Holding Company and The Citizens and Southern National Bank, both of
Savannah, Georgia, for the Board's prior approval of acquisition by
Citizens and Southern Holding Company of voting shares of American
National Bank of Brunswick, Brunswick, Georgia.
As required by section 3(h) of the Act, the Board notified
the Comptroller of the Currency of receipt of the applications and
tequested his views and recommendation.
The Comptroller recommended
5
27'7
-2.
approval of the applications.
Notice of receipt of the applications
was published in the Federal Register on July 7, 1964 (29 Federal
Register 8503), which provided an opportunity for submission of comments and views regarding the applications.
Time for filing such
comments and views has expired and all comments and views filed with
the Board have been considered by it.
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that said applications be and hereby
are approved, provided that the acquisition so approved 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 10th day of August, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Robertson, Shepardson,
and Mitchell.
Absent and not voting:
Governor Daane.
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(SEAL)
2758
Item No.
BOARD OF GOVERNORS
6
8/7/64
OF THE
FEDERAL RESERVE SYSTEM
APPLICATIONS BY CITIZENS AND SOUTHERN HOLDING COMPANY AND THE CITIZENS
AND SOUTHERN NATIONAL BANK, BOTH OF SAVANNAH, GEORGIA, FOR APPROVAL
OF THE ACQUISITION OF SHARES OF AMERICAN NATIONAL BANK OF BRUNSWICK,
BRUNSWICK, GEORGIA
STATEMENT
Citizens and Southern Holding Company ("Citizens") and
The Citizens and Southern National Bank ("National"), both registered bank
holding companies of Savannah, Georgia, have applied, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 ("the Act"), for
Prior approval of Citizens' acquisition of 806 shares of the voting
stock of the American National Bank of Brunswick ("American"), Brunswick,
Georgia.
Views and recommendation of the supervisory authority. Pursuant to section 3(b) of the Act, notice of receipt of the applications was sent to the Comptroller of the Currency, who recommended
aPProval of the applications.
Statutory factors. -
Section 3(c) of the Act requires the
Board to take into consideration the following five factors in acting
on these applications:
(1) the financial history and condition of
the holding companies and the banks concerned; (2) their prospects;
(3) the character of their management; (4) the convenience, needs, and
-2-
2759
welfare of the communities and the area concerned; and (5) whether of
not the effect of the acquisition would be to expand the size or extent
of the bank holding company systems involved beyond limits consistent
With adequate and sound banking, the public interest, and the preservation of competition in the field of banking.
Applicants and their proposal. - Citizens is a bank holding
company under section 2(a)(1) of the Act because of its ownership of
more than 25 per cent of the stock of each of eight banks located in
the State of Georgia.
National is a bank holding company as defined in
section 2(a)(3) of the Act, since all of the outstanding shares of
Citizens are held by trustees for the benefit of the shareholders of
National.
Citizens and National, therefore, are bank holding companies
controlling the same subsidiary banks.
Citizens presently owns 10.08 per cent of the stock of American.
APplicants seek Board approval of Citizens' acquisition of its pro rata
Share (806 shares) of 8,000 shares of $10.00 par value stock which
American proposes to offer on or about September 1, 1964, to shareholders
Of record on August 15, 1964. The offering is to be by subscription
warrants in the proportion of one share of new stock for each four outstanding shares.
Citizens' acquisition of 806 shares will result in
its ownership of just slightly less than the 10.08 per cent of the
outstanding stock of American which it now owns.
Financial history and condition, prospects)and manaRement
°I the Applicants and the Bank. - Citizens' eight majority-owned banks
°Perate ten banking offices in eight communities with combined deposits
-o
-3-
at December 20, 1963, of $98 million.
Between year-end 1958 and March
1964, Citizens' capital structure was increased by $4.9 million, of
which $3.9 million was derived from retained earnings.
Period, Citizens paid $450,000 in dividends.
During the same
At April 15, 1964,11
National, with its head office in Savannah and its center of operations
in Atlanta, operated 45 offices with combined deposits of $644 million.
Between year-end 1958 and April 15, 1964, National's deposits increased
by $157 million.
American operates its head office and one branch in Brunswick,
the county seat of Glynn County, and a branch in Jesup, the county seat
of Wayne County, and holds deposits of $21 million.
It appears that the financial history and condition and the
Prospects of Applicants and American are satisfactory, a situation that
Would be consistent with approval of the proposed acquisition.
The
managements of Citizens, National, and American are considered satisfactory and no changes in management are contemplated as an incident of the
Proposed acquisition.
Convenience, needs, and welfare of the community and the area
concerned. American.
The city of Brunswick is the area principally served by
Brunswick, located in southeast Georgia on the Atlantic Ocean,
about 75 miles southwest of Savannah, has a population of about 21,500.
Glynn County, with a population of about 42,000, has three banks operating six banking offices.
Three of these are American's offices, including
the branch office in Jesup (Wayne County) 40 miles northwest of Brunswick.
a/ Unless otherwise indicated, all banking data noted are as of this date.
2761
-4-
It is the Board's opinion that the convenience, needs, and welfare of
the Brunswick area will not be directly affected by consummation of
Applicants' proposal, inasmuch as Citizens' exercise of its stock
warrants will result merely in maintenance of its proportionate ownership of American's stock.
Indirectly, of course, Citizens' acquisition
for cash of 306 additional shares of American's stock will contributc
to American's increased capital position, and to the resulting increase
in its lending limit.
This result is consistent with approval of these
applications.
Effect of proposed acquisition on adequate and sound banking,
ppblic interest, and banking competition. -
Inasmuch as Applicants'
Proposal will serve merely to assure Citizens' retention of its present
Percentage of stock ownership in American, the proposed transaction
Would have no significant effect on existing competition.
Competition
between American and the other banking offices of Applicants' group is
negligible and this situation would not be altered by the stock acquisition proposed.
Since American does not propose to establish additional
Offices as a result of its capital increase, or to increase the present
range of banking services offered, the Board concludes that Applicants'
Proposal will have no effect on American's competitors in the Brunswick
and Jesup areas.
Conclusion. -
On the basis of all the relevant facts as
contained in the record before the Board, and in the light of the
factors set forth in section 3(c) of the Act, it is the Board's judgment
that the proposed acquisition would be consistent with the public interest
1.101 that the applications should therefore be approved.
August 10, 1964.
IZ.
1
71;41
4
2
BOARD OF GOVERNORS
Item No.
OF THE
7
8/7/64
FEDERAL RESERVE SYSTEM
WASHINGTON. D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August
7, 1964.
Mr. Paul C. Stetzelberger, Vice President,
Federal Reserve Bank of Cleveland,
Cleveland, Ohio. 44101
Dear Mr. Stetzelberger:
In accordance with the request contained
in your letter of July 31, 1964, the Board approves
the designation of John A. Regel and Warren H. Frey
as special assistant examiners for the Federal
Reserve Bank of Cleveland for the purpose of participating in examinations of State member banks.
The authorizations heretofore given your
Bank to designate Messrs. Regel and Frey as special
assistant examiners are hereby canceled.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER