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Minutes of actions taken by the Board of Governors of the The Board Federal Reserve System on Thursday, December 10, 1953. met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Szymczak„ Acting Chairman Evans Vardaman Mills Robertson Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Mr. Thurston, Assistant to the Board Mr. Riefler, Assistant to the Chairman Mr. Thomas, Economic Adviser to the Board Mr. Vest, General Counsel Mr. Young, Director, Division of Research and Statistics tion Governor Robertson presented for consideration an applica by City Bank, Detroit, Michigan, submitted through the Federal Reserve in the vicinity of Bank of Chicago, for permission to establish a branch n. The recommendaGratiot Avenue and Eight Mile Road in Detroit, Michiga transmitted by Vice tion of the Reserve Bank, as stated in a memorandum 1953, was for favorable President Diercks with his letter of December 2, capital structure was inaction on the application, provided City Bankfs an amount not less than creased by the sale of additional capital stock in $750,000. tion was desired After stating that prompt action on the applica by the member bank because the site of the proposed branch was held in 209(; -2- 12/10/53 an estate involving eight heirs and a delay might interfere with the and said plans for the branch, Governor Robertson discussed the matter that the factors usually considered in connection with branch applicaitalized tions pointed to favorable action except for the bank's undercap position. He regarded $750,000 as the bare minimum of new capital which o-six ratio Should be injected and pointed out that to provide a one-t ion) the bank would between capital and risk assets (secondary computat n need approximately $2,166,000 additional capital. Governor Robertso the top managePointed out, on the other hand, that since a change in conservative ment of the bank was effected in July of this year, more that continued improvelending policies had been followed and it appeared expected. ment in the handling of the loan portfolio might be Taking all situation in Detroit, factors together, including the competitive banking Robertson felt that the prowhich is a branch banking community, Governor capital had been proPosed branch should not be approved until additional ent, and that the bank's vided, that $750,000 would be a minimum requirem larger amount of new capital management should be urged to provide a much . SO that the capital structure of the institution might be clearly adequate n In response to a question by Governor Mills, Governor Robertso stated establish the branch, so that apparently it would take several months to e that a condition requiring that the bank's capital structur must be inthe opening of the branch would creased by not less than $750,000 prior to allow time to accomplish the sale of additional capital stcck. ' 12/10/53 -3Following a discussion, unanimous approval was given to a letter to the Board of Directors of City Bank, for transmittal through the Federal Reserve Bank of Chicago, in the following form: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors approves the establishment and operation of a branch in the vicinity of Gratiot Avenue and Eight Mile Road in Detroit, Michigan, by City Bank, Detroit, Michigan, provided (a) that prior to opening of the branch the capital structure of City Bank is increased by not less than $750,000 through the sale of additional capital stock, and (b) the branch is established within six months after the date of this letter. The Board feels that the $750,000 of new capital funds to be provided is a bare minimum and that a much larger amount would seem to be needed to place the bank in a clearly adequate capital position. It is hoped that the management of the bank will make its plans for additional capital with that view in mind. There was a discussion of developments in the Government securities market, and of problems involved in the management of the System Open Market Account, during the course of which Governor Mills left the meeting to keep another appointment. . During At the conclusion of the discussion the meeting adjourned the day the following additional actions were taken by the Board with all of the members except Chairman Martin present: Minutes of actions taken by the Board of Governors of the Federal ly. Reserve System on December 92 1953, were approved unanimous _4- 12/10/53 al Reserve Bank Letter to Mr. Peterson, Vice President, Feder of St. Louis, reading as follows: ined in In accordance with the recommendation conta the ves appro Board the your letter of December 4, 1953, tant assis al speci a designation of Donald L. Henry as Louis. examiner for the Federal Reserve Bank of St. Approved unanimously. Trust & Savings Bank Letter to the Board of Directors, Security follows: of San Diego, San Diego, California, reading as Reserve The Board of Governors of the Federal ity Trust Secur the of n System approves the applicatio ornia, Calif o, Dieg & Savings Bank of San Diego, San h in branc a te opera for permission to establish and such ded provi , Vista, San Diego County, California from the date branch is established within six months of this letter. Approved unanimously, together with the following letter to Mr. Earhart, President of the San Francisco Reserve Bank: November 19, Reference is made to your letter of ity Trust & Secur 1953 2 transmitting the request of the ornia, for Calif o, Savings Bank of San Diego, San Dieg a branch lish estab reconsideration of its application to in Vista, California. of the informaAfter careful consideration of all application this to tion you have submitted with respect of the State that and and in view of your representations s for addiexist need Banking Department that a definite of Governors Board the a, tional banking facilities in Vist the enclosed in ated indic has approved the application as the of Security Directors letter addressed to the Board of rd this forwa e Pleas Trust & Savings Bank of San Diego. sed for your is enclo letter to the bank, a copy of which files. 2.1( 12/10/53 -5- It is understood that Counsel for the Reserve Bank steps will review and satisfy himself with respect to all taken in establishing this branch.
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