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631 Minutes for To: Members of the Board From: Office of the Secretary December 20, 1965 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 lainutes 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 minutes, it will be appreciated if you will advise the s b ecretary's Office. Otherwise, please initial .e1c14- If you were present at the meeting, your xnitials will indicate approval of the minutes. If Y°11. were not present, your initials will indicate °IllY that you have seen the minutes. the Chm. Martin Gov. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Gov. Daane Gov. Maisel Minutes of the Board of Governors of the Federal Reserve System "Monday, December 20, 1965. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Robertson Shepardson Mitchell Daane Maisel Sherman, Secretary Kenyon, Assistant Secretary Holland, Adviser to the Board Solomon, Adviser to the Board Molony, Assistant to the Board Cardon, Legislative Counsel Fauver, Assistant to the Board Hackley, General Counsel Brill, Director, Division of Research and Statistics Mr. Farrell, Director, Division of Bank Operations Mr. Solomon, Director, Division of Examinations Mr. Hexter, Associate General Counsel Messrs. Shay and Hooff, Assistant General Counsel Mr. Koch, Deputy Director, Division of Research and Statistics Mr. Partee, Associate Director, Division of Research and Statistics Mr. Dembitz, Associate Adviser, Division of Research and Statistics Mr. Leavitt, Assistant Director, Division of Examinations Mrs. Semia, Technical Assistant, Office of the Secretary Mr. Morgan, Staff Assistant, Board Members' Offices Mr. Heyde, Attorney, Legal Division Mr. Eckert, Chief, Banking Section, Division of Research and Statistics Messrs. Egertson, Maguire, and McClintock, Supervisory Review Examiners, Division of Examinations Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Circulated items. attached Iler'e a The following items, copies of which are to these minutes under the respective item numbers indicated, roved unanimously: d ' 12/20/65 -2Item No. Letter to Marine Midland Grace Trust Company ! ,c) New York, New York, approving the establishof a branch at East Bay Avenue and Whittier Street, Borough of The Bronx. Letter to The Bank of Virginia, Richmond, Virginia, all2roving the establishment of branches at (1) ' n uge Road, new extension of Parham Road, and the Rell location of Quioccasin Road, and (2) Parham Road and Broad Street Road (U.S. Route 250), both 1 2 i 44 RenriC0 County. lipplication of Fidelity Bank. At the meeting on December 15, 1965, the Board discussed the application of Fidelity Bank, Beverly iiiS, California, to merge South Bay Bank, Manhattan Beach, California Certs. in questions were raised with respect to the condition of the aPPlic ant bank, including the amount of classified loans shown in the tflOSt recent eat report of examination, and also as to the qualifications of Lua nagement. Action was deferred pending the obtaining of additional inforinnt.. -Lion, 1,65 There had now been distributed a memorandum dated December 20, in which the Division of Examinations reported supplemental f rmation obtained by Chief Examiner Jamison of the Federal Reserve 411k of San Francisco during a visit to the applicant bank, at which he reviewed the classified loans and met with several officers, 411 0f whom Were also directors. The facts reported indicated either clirellt or prospective improvement in the areas of loan portfolio, -14idity, earnings, and management. 12/2 0/65 Mr. Solomon commented on the supplemental information that had been submitted. There appeared to be progress in reducing the volume of classified loans, and management showed understanding of the bank's specialized real estate lending activities. Management Proposed to hold the bank's loan-deposit ratio to no more than 65 Per cent, which happened to be the average for all member banks in October 1965. E After reviewing the supplemental information, the u unations Department of the Federal Reserve Bank of San Francisco and the Board's Division of Examinations found somewhat firmer support for approval of the application and were inclined to have greater con- ideacein the ability of the applicant's management to deal with the balik's specialized operating situation. In response to an inquiry, Mr. Solomon indicated that Mr. Jaw._ 4..lun's report had been given in the form of a telephone conversation 'supplemented by a telegram containing a progress report on the "uvement in reducing classified assets. Governor Daane remarked that even though Fidelity Bank did riot ee m to be in as questionable condition as had appeared earlier, it //as not clear to him what positive grounds justified the merger. S°10mon replied that some basis might be found in the convenience and needs factor and in the increased diversification of business. latter point was especially important to Fidelity Bank because of it8 sPecialized type of operations. The merger would about double I 'k 12/20/65 -4FidelitY's portfolio of consumer loans, thus providing some offset to the rather volatile type of business reflected in the bank's real estate loan activity. After further discussion, Governor Robertson said that he Would approve the application on the basis of the recommendation of the Federal Reserve Bank of San Francisco. He would tell the Reserve sank ' however, that the record raised a question whether Fidelity 8atik Was sufficiently free from problems to warrant its expansion though merger, that approval was being given on the strength of the 13 Aeserve Bank's recommendation, and consequently that special s4Pervisory care should be exercised. Governor Shepardson noted that Governor Robertson appeared to co_ "template that such comments would be included in a letter to the Reserve Bank rather than in the published statement concerning the merger application. He then inquired whether it would not be desirable to have the Reserve Bank put in writing what had been P°tted in Mr. Jamison's telephone conversation. Governor Robertson agreed that it would seem appropriate to have d written statement from the Reserve Bank for the record. Mr. Shay referred to the statutory requirement that the basis PProval of each merger be published in the Board's Annual Report, and ' 0 the fact that the Board had been in the custom of describing the ba sls for approval in its statements on merger applications. 42‘.1: 12/20/65 -5- During an ensuing discussion of the point raised by Mr. Shay, c°mment was made that the ultimate responsibility for approval of a merger rested with the Board, regardless of what reliance was placed 011 the findings of the Reserve Bank concerned. It was noted that the statement issued in this case could indicate that the Board had had g°rd for such matters as the applicant bank's proposals to improve its capital position and to effect operating economies. Governor Robertson stated that he wished to make it clear that he regarded the total record of this case as including the rePort received at this meeting, the purport of which was that the Pro blems in regard to the applicant bank were not so significant as W OUld appear from the original record. He would like to make the Reserve Bank aware that the record was being read in that light. Governor Shepardson said that he agreed essentially with GcNer or Robertson's views. Although Mr. Shay had raised an appro- e question, it seemed to him that it would be in order to indicate t letter to the Reserve Bank that while the Board had approved uterg With the it would expect the Reserve Bank to keep in close touch progress made by the applicant bank. Governor Mitchell commented that to him the corporate interest 14a5 primarily involved in this case, that is, the benefit that the stockholders of the two banks would gain from the merger. On that arouild he would approve, since the public interest would not appear to be offended by the transaction. 4 12/20/65 -6Governor Daane remarked that although there were aspects of the case he disliked, on balance he would approve, with the expectatien that the caveats outlined by Governor Robertson would be included in the letter to the Federal Reserve Bank of San Francisco. Governors Maisel and Balderston also indicated that they would approve. The application of Fidelity Bank to merge South Bay Bank was there uPon approved unanimously. It was understood that an order and atement reflecting this decision would be prepared for the Board's COlv, eratien, along with a letter to the San Francisco Reserve Bank. Appointment of director. Inquiries regarding two persons who had been suggested for appointment to fill a vacancy in the directorate °f the Baltimore Branch of the Federal Reserve Bank of Richmond had disclosed that they were not available to serve in such capacity. The Board therefore agreed that it should be ascertained through the Chairman of the Richmond Reserve Bank whether Arnold J. Kleff, Jr., , American Smelting & Refining Company, Baltimore, Maryland, \I°1141 accept appointment, if tendered, as a director of the Baltimore 4411ch for the unexpired portion of the term ending December 31, 1966, it14 the understanding that if it were found that he would accept, the I'Pointment would be made. Secretary's Note: It having been ascertained that Mr. Kleff would accept the appointment, if tendered, an appointment telegram was sent to him on December 22, 1965. 12/2 0/65 -7- Messrs. Shay, Morgan, Heyde, Egertson, Maguire, and McClintock the Withdrew from the meeting. 212posals relating to Regulations Q and D. On several occasions, Most recently on December 17, 1965, the Board had discussed various Proposes 1 for amendments to Regulation Q, Payment of Interest on beP°sits, and Regulation D, Reserves of Member Banks. Subsequent to the discussion on December 17, there had been distributed a memorandum Of the same date with which Mr. Hackley submitted draft notices of Proposed rule making, for possible publication in the Federal Register, regarding (1) amendments to Regulations Q and D to cover promissory riot es of member banks, (2) an amendment to Regulation Q to eliminate the Provision for payment of a time deposit before maturity "in emer gencies," and (3) a draft alternative amendment with regard to the Payment of time deposits before maturity; the alternative would Payment before maturity if the depositor forfeited all accrued inter eSt on the amount withdrawn. At the beginning of today's discussion Mr. Hackley suggested that it might be helpful to review briefly the various proposals the toard had been considering, not all of which had the same purposes. On beceMber 17 the Board had requested the preparation of drafts that would 41Plement two pr oposals--first, to bring promissory notes within the definition of deposits in Regulations Q and D, and second, to restrict payment () ttme deposits before maturity. An alternative to the latter f 12/20/65 -8- PtoPosal would be to permit payment before maturity but with forfeiture Of interest on the amount withdrawn, which meant that in some cases a deduction from principal might be required if the bank had previously Paid any interest. During other recent discussions the Board had also c(Insidered a proposal to redefine time deposits in Regulations Q and D s° as to limit them to deposits having a single specified maturity, with no provision for automatic renewal, and a proposal for graduated reserve requirements on demand deposits. On December 17 Governor Robert. Lson had suggested a further proposal with respect to reserve lkl4rements, namely, that on time deposits on which a bank by contract agreed to pay a rate of interest greater than 4 per cent there be Prescribed a higher reserve requirement than against time deposits bearing a rate no higher than the 4 per cent permissible for savings deP°sits. According to Mr. Hackley's understanding, an objective of some Of th e Proposed amendments was to prevent or retard an undue shift of ugs funds to commercial banks from savings and loan associations. A related objective was to discourage the spread of issuance of so-called avirigs certificates or savings bonds, which in effect could be used to take the place of regular savings deposits. He did not believe, for t'eas°ns which he outlined, that the proposals for restricting payment Of time deposits before maturity would have a great deal of effect in l'Qtar ding a shifting of funds from savings and loan associations. ,•1 0 4 •-• % 12/20/65 The imposition of a higher reserve requirement on time deposits could have some deterrent effect; it could make banks more reluctant to issue savings certificates on a wholesale scale in lieu of accepting l'egular savings deposits. Governor Maisel referred to a provision of the draft amendment that would prohibit the payment of a time deposit before maturity. This Provision would indicate that a member bank (as at present) ecluld make a loan to a depositor upon the security of his time deposit Provided the rate of interest on the loan was not less than 2 per cent Per an “num in excess of the rate of interest on the time deposit. He said he had had the impression that the discussion on December 17 also dealt with the inclusion in Regulation Q of a statement on usu Mr. Hackley responded that that possibility had been considered. 414ever, since an interpretation on this subject had been published in the pederal Reserve Bulletin in April of this year, it was felt that if an Y question of that kind should be raised the answer lay in the PUblished statement or a further interpretation. The April interpretation . indicated that if State law fixed 6 per cent as the maximum rate o Ilterest on loans and a member bank was paying 4.5 per cent on a title , uePosit, the bank (pursuant to section 217.4(e) of Regulation Q) Could not make a loan on the security of the time deposit unless it Qher ged 6.5 per cent, which would violate State law; however, the bank el ' ' 1 ' 12/20/65 -10- and its depositor by agreement could reduce the rate of interest paid On the deposit from 4.5 to 4 per cent, whereupon the bank could make a lOar, u on the time deposit at 6 per cent. The Legal Division felt that such an interpretation might be too complex for inclusion in 4 fo otnote in the regulation. Governor Maisel then asked about the period of interest that it was contemplated would be lost under the alternative draft of amendment permitting payment of time deposits before maturity only with f orfeiture of interest. Mr. Hackley said the Legal Division had had in mind forfeiture Of 01 . interest from the date of deposit. Forfeiture of interest only from, say, the previous quarterly interest payment date would 4412, a very great deterrent to withdrawal. Governor Mitchell expressed the view at this point that since the Board was taking steps to obtain information regarding the use being made by banks of their increased interest-rate latitude, it l'nuld be inadvisable to take any action on time deposits at the PteSent time. Governor Maisel believed the Board should have a staff study Of the objectives of the proposed amendments and their implications Ict the credit structure of the country. Governor Balderston then requested that, in order to focus the di `'Is cussion, Mr. Hackley divide according to their objectives the five Pr ePosals he had mentioned. 12/20/65 -11- Mr. Hackley expressed the view that the promissory note measure Should be considered by itself, since it did not appear to have the Same objectives as the other proposals. Several of the other proposals 14ere aPparently directed primarily at meeting the complaints of the savings and loan industry by retarding an undue shift of funds from savings and loan associations to banks, or at discouraging an untoward shift of funds from savings accounts in banks to technical time deposits. A third category would be the proposal for establishing graduated reserve requirements on demand deposits. Accordingly, Governor Balderston suggested that the Board dispose Of the Promissory notes matter first. The discussion that followed included suggestions for phrase010& of the explanatory statement that would be published with the draft a mendment in the Federal Register and consideration of the clues- tion 'when promissory notes issued by banks would become subject to the Pr °vis' ions of the amendment, if it was finally adopted. All members of the Board except Governor Maisel then indicated that th eY would favor sending the proposed amendment to the Federal -er to be published for comment. Governor Maisel said that he did 1113t believe promissory notes were being issued for the purpose of evading the requirements of Regulation Q. He thought they were a form of debt different from a deposit and were therefore not properly to be Q°11sidered as an evasive device. 12/20/65 -12- The discussion turned to the timing of publication and it was bruught out that there was a question as to the extent to which, and in what terms, the actions being considered by the Board should be made known by Governor Balderston at a committee meeting he was to• attend this afternoon. (The committee was a variant, through temporary expansion to include representation of the Treasury DepartProper, of the interagency Coordinating Committee in the bank suPervisory area.) Governor Balderston observed that the committee already knew that the Board had communicated with member banks to seek information °LI the extent to which banks were availing themselves of the increased latituA u.e provided by the recent increase in the maximum rate of interest Yab e on time deposits. He asked if it would not be in order for to r report to the committee that the Board was about to publish in the ederal Register the draft of amendment affecting promissory notes. mi 'gut inform the committee also that the Board was studying a reviSion If the definition of time deposits to distinguish more clearly ( betw -en passbook savings deposits and time deposits, but that a con- " 1 would be deferred pending the results of the current survey of eh anges in time and savings deposit rates. In a discussion of various considerations bearing upon the 14e io n presented by Governor Balderston, Governor Mitchell remarked that , -Lt Would not be desirable to place the Board in the position of 4.4 4 .1( 12/20/65 -13seeming to say that it wanted to blunt the competitiveness of the king system, if that competitiveness was soundly based. Governor Balderston commented that Chairman Randall of the Fede ral Deposit Insurance Corporation had expressed concern as to Possible imprudence on the part of banks. He (Governor Balderston) had responded that the Board was equally concerned about imprudent ba nking. The request for information as to current changes in bank interest rate practices was an effort to explore the question of Poss. Ible imprudence. Governor Shepardson observed that if the concern of the ederal Deposit Insurance Corporation related principally to small t1411k8) it might be noted that most of such banks were outside the 8 latel4 and would not be affected by changes in Federal Reserve regulations. Governor Daane said that, the promissory notes matter having bee'n disposed of, he shared Governor Mitchell's view that the Board sh'id defer action on the other proposals until the information that had been requested could be studied. He (Governor Daane) did 4nt f _, eel that it would be appropriate to tinker with reserve requireat the present moment, and did not think it would be particularly 4tlitful to discuss possible changes. Governor Maisel said that he had thought a part of the Board's n centered on the question whether the issuance of negotiable tit 12/20/65 -14- certificates of deposit had introduced an unstable element into the Monetary system. He believed the Board ought to have a rather care- statement from the staff on the implications for the monetary sYstem of the different steps being considered. Governor Mitchell j°ined in the request that the staff prepare a paper specifically addressed to the question of stability. After further discussion Governor Robertson said that, since it w the aS obvious the Board would not take action today, other than on Promissory notes, he would like to have from the staff a memo- randum covering four items. had in His basic premise was that the Board a mistake in attempting to differentiate between savings 41)0sit5 and time certificates insofar as ceiling rates of interest concerned. However, he thought the Board should be in the best Position possible to justify its action and present some rational basis for so differentiating. When the survey information currently being solicited was received and analyzed, he hoped the Board would con— °I.der prompt action on these four items as a package: (1) to limit time certificates to a specified maturity with no automatic z‘"ewal, as suggested in one alternative of Mr. Hackley's memorandum etsecember 9, 1965; (2) to prohibit the payment of any time certificate before maturity, other than in emergency cases, except with a forfeiture C/f li interest for some specified period as a penalty for early with(3) ( to increase from 4 to 5 per cent the reserve requirement 12/20/65 -15- °4 time certificates of deposit on which a rate of interest of more than 4 per cent was paid; (4) to adopt a graduated scale of reserve requirements as follows: for the first $2 million of demand deposits, 7 Per cent; up to $125 million, 12 per cent; and over $125 million, 17'5 Per cent. He would also like to have an analysis of the result if a 10 per cent requirement were used from $2 million to $75 million and a 12. 5 per cent requirement from $75 million to $200 million or s°111e higher figure. in the This would provide four steps instead of three graduated scale. Governor Mitchell commented that he too would like to see a 8Ystem — of graduated reserve requirements adopted, based on firm recominendations from the staff, but there were an infinite number of plans that could be devised. Accordingly, he thought it was necessary to ' i ve the staff some guidelines. It seemed to him, as one guideline, that requirement of 7 per cent should be provided for some group Of batiks. It would seem necessary also to say something about the t°tal amount of reserves to be released, and something about the ttlirritirn requirement. 441t that He would not object to the maximum of 17.5 per Governor Robertson had suggested, although he would prefer 17 Per cent. In response to a staff inquiry as to how important it would be to m. . 'inimize the number of banks that would have increases in their erv_ r equirements, Governor Robertson observed that the plan to 4 • • 12/20/65 -16- vhich he had referred reduced the incidence as low as any plan he had seen, Governor Maisel expressed the view that the Board should really be a sking the staff about the advantages and disadvantages in the use by b anks of different types of techniques for the attraction of savings, and f r a judgment on the liquidity considerations involved. Governor Robertson replied that, although he recognized the dir ability of proceeding from the general to the specific, he would 111)I: *want the specific excluded. Governor Shepardson said that he thought a first step should be evaluate the information resulting from the current survey, and then to " await the staff studies that had been suggested. Today's disenso; ' -upn would not seem to point to any specific action at this time. Governor Balderston remarked that hearings might be held ea lY in 1966 at the behest of the savings and loan industry. Under c'rMal conditions he would favor Governor Robertson's suggestion that the , 150ard develop a package, but the period ahead might not be normal. 4 QrdinglY, it might be prudent to move forward most promptly on Cover 11°r Robertson's first two items, so that the Board could be pre13ed t0 act when the information came in from the current survey. mmediate problem was whether to inform the interagency committee this afternoon that the Board was studying a number of actions that be taken after the facts were at hand. 12/20/65 -17- Governor Robertson suggested informing the committee that the Board was considering various proposals but had not yet come to conclusions. However, Governor Mitchell expressed the view that it Ile'uld be unwise to reveal at this time anything other than the move the Board proposed to announce (on promissory notes). The needs of the in teragency committee could be served adequately by saying that ' 4hen the survey information was available the Board would tell the c°Iftittee what action, if any, was in prospect. Governor Daane agreed. Question again was raised as to what would be the Board's iriteat On making the provisions of the promissory note amendment effect' lve if it should be finally adopted. art One suggestion was that ann onneement by the Board at the time of sending the proposed 4rnerld1ent to the Federal Register for publication for comment 14licate that the provisions of the amendment would apply to all r eceived from the sale of promissory notes after the date of stiell announcement. Another suggestion was that the provisions of the 'Inelidment be made applicable only to funds received beginning with effective date of the amendment. It was left that the question 141411d be studied further by the staff, and it was understood that °I)l'ernor Balderston would not refer to this particular question in his l'emarks to the interagency committee this afternoon. The meeting then adjourned. 12/20/65 -18Secretary's Note: Governor Shepardson today approved on behalf of the Board memoranda recommending the following actions relating to the Board's staff: AP " °isft2 t—T2P-S. Mary Jenkins as Cafeteria Helper, Division of Administrative Services 1"1-,L1 basic annual salary at the rate of $3,507, effective the date of entra duty. upon nee Transfer 0. Gordo n B. Grimwood, from the position of Chief, Liaison Office, -ce of Defense Planning, to the position of Assistant to the Director, biv: ,ic)n of International Finance, with no change in basic annual salary at Itts "e rate of $18,825, effective January 2, 1966. SalaiflEease c„ Mercy M. Heath, Statistical Clerk, Division of Research and Statisti -) from $4,429 to $4,797 per annum, effective January 2, 1966. Meritorious salary increases, effective January 2, 1966 Name and title Division Basic annual salary To From Office of the Secretary Nar , Ruterle Eaton, General Assistant Franta, Supervisor, Minutes Indexing ItaTtld R eference Unit taret J. Moister, Supervisor, Subject Files $ 8,495 7,718 $ 8,749 7,925 7,511 7,718 19,415 14,685 13,815 13,815 12,945 12,945 11,723 5,523 20,005 15,120 14,250 14,250 13,380 13,380 12,091 5,694 Research and Statistics Plieter M. Keir, Chief, Capital Markets Section tletiard N. Freedman, Economist and R. V. Bernard, Economist -4abeth B. Sette, Chief, Economic Editing P, IIad R. Fry, Economist -1"riKlin V. Walker, Economist Vi;° °- Peterson, Economist 'ginia Ann Callahan, Secretary 4 4 et 12/20/65 Meritorious -19salary increases Name and title continued) Division Basic annual salary From To International Finance G° " 011 B. Grimwood, Chief, Liaison Office, of Defense Planning 1/ j°,s_emaxY A. Darlington, Economist Oh A. Marlin, Economist $18,825 $19,415 7,479 7,733 7,733 7,987 6,036 6,207 13,380 5,702 13,815 5,894 7,479 7,733 5,269 3,507 5,409 3,626 Jnse h .1)4 13'' 11* HoYle, Supervisor, Payroll and -,abursing 7,925 8,132 Data Processing bar tellPe Yla t. PPer, Chart Machine Operator Perats o !illat, Digital Computer Systems ° `vtithrvr, A. Jackson, Statistical Assistant 5,352 6,207 5,523 6,378 6,662 6,854 a Office Bank Operations 1141.Y Frances Gifford, Statistical Assistant Examinations Alle , " F. Xendall Goodfellow, Review Examiner -" R. Free, Digital Computer Programmer Personnel Administration Glenn L. Hogle, Personnel Technician Administrative Services .ii°31a Buckley, Telephone Operator 'nvair Dingle, Messenger-Driver Office of the Controller Secretary Title, effective January 2, 1966, Assistant to the Director, "ion of International Finance. BOARD OF GOVERNORS OF THE Item No. 1 12/20/65 FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551 ADDRESS arriciAL CORRESPONDENCE TO THE BOARD December 20, 1965 Board of Directors, Marine Midland Grace Trust Company of New York, New York, New York. G entlemen: The Board of Governors of the Federal Reserve SYstem approves the establishment by Marine Midland Grace irrust Company of New York, New York, New York, of a branch the southeast corner of the intersection of East Bay ftvenue and Whittier Street, Borough of The Bronx, New York, ilew York, provided the branch is established within one Year from the date of this letter. Very truly yours, (Signed) Karl E. Bakke Karl E. Bakke, Assistant Secretary. (Theletter to the Reserve Bank stated that the Board also had approved a six—month extension °f the period allowed to establish the branch; d that if an extension should be requested, 'fle procedure prescribed in the Board's letter of November 9, 1962 (S-1846), should be followed.) n it i Item No. 2 12/20/65 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS orriciAL CORRESPONDENCE TO THE MORRO December 20, 1965 Board of Directors, The Bank of Virginia, Richmond, Virginia. Gentlemen: The Board of Governors of the Federal Reserve SYstem approves the establishment by The Bank of Virginia, Richmond, Virginia, of two branches in Henrico County, Virginia; one at the intersection of Ridge Road, new extension of Parham Road, and the new location of Quioccasin Road, and the other at the intersection of Parham Road and Broad Street Road (U.S. Route 250), provided the branches are established within one year from the date of this letter. It is the Board's understanding that consideration is being given to means to strengthen your bank's somewhat less than satisfactory capital position. Very truly yours, (Signed) Karl E. Bakke Karl E. Bakke, 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 branches; 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.)
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