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Minutes forDecember 21, 1964.
To:
Members of the Board
From:
Office of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
g
Minutes of the Board of Governors of the Federal Reserve System
On Monday,
December 21, 1964.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Balderston, Vice Chairman
Mills
Robertson
Mitchell
Daane
Mr. Sherman, Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Brill, Director, Division of Research and
Statistics
Mr. Solomon, Director, Division of Examinations
Mr. Holland, Associate Director, Division of
Research and Statistics
Mr. Koch, Associate Director, Division of Research
and Statistics
Mr. Partee, Adviser, Division of Research and
Statistics
Mr. Sammons, Adviser, Division of International
Finance
Mr. Reynolds, Associate Adviser, Division of
International Finance
Mr. Spencer, General Assistant, Office of the
Secretary
Mr. Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Mr. Eckert, Chief, Banking Section, Division of
Research and Statistics
Mr. Baker, Economist, Division of International
Finance
Mr. Furth, Consultant
Money market review.
There had been distributed tables afford-
Perspective on the money market for the period January-December 16,
1964, and perspective on bank reserve utilization for the period November
1963-December 16, 1964.
Mr e Axilrod commented on the Government securities market; Mr.
Roll
and reviewed recent monetary and banking data; and Mr. Baker dis-
cussed foreign exchange market developments.
12/21/64
-2-
Following discussion based on the foregoing presentation, Mr.
Young commented on the meeting he had recently attended of Working
party 3 of the Economic Policy Committee of the Organization for Economic
Cooperation and Development, which was held in Paris, France.
Governor
Daane then reported on the recent meeting of the deputies of the Group
°I Ten, which also was held in Paris.
All members of the staff who had been present except Messrs.
Sherman, Solomon, Partee, and Spencer then withdrew from the meeting
and the following entered the room:
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
O'Connell, Assistant General Counsel
Daniels, Assistant Director, Division of Bank Operations
Leavitt, Assistant Director, Division of Examinations
Egertson, Supervisory Review Examiner, Division of
Examinations
Mr. Donovan, Review Examiner, Division of Examinations
Mr. Smith, Review Examiner, Division of Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Reserve
The establishment without change by the Federal
Banks of New York, Philadelphia, Chicago, and San Francisco on
cember 17, 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.
Circulated items.
The following items, copies of which are
attached to these minutes under the respective item numbers indicated,
14ere aroved unanimously:
Item No.
11,rter to Fall River Trust Company, Fall River,
...ass achusetts, approving the establishment of
°' branch in Assonet.
1
12/21/64
-3Item No.
Letter to Manufacturers Hanover Trust Company,
New York, New York, approving the establishment
of a branch at 560 Washington Street, Borough of
Manhattan, for the limited purpose of conducting
the operations of its currency and coin wrapping
department.
2
Report on competitive factors (Ridgewood-Ramsey, New Jersey).
A report to the Comptroller of the Currency on the competitive factors
involved in the proposed merger of The First National Bank and Trust
CornPany of Ramsey, Ramsey, New Jersey, into Citizens First National
sank of Ridgewood, Ridgewood, New Jersey, was approved unanimously for
tr ansmittal to the Comptroller.
The conclusion read as follows:
The proposed merger of Citizens First National Bank of
Ridgewood and The First National Bank and Trust Company of
Ramsey would eliminate existing competition and potential
for keener competition between the two banks and increase
the concentration of banking resources in the relevant area.
The overall effect on competition would be adverse.
Mr. Egertson then withdrew from the meeting.
Applications of Valley Bancorporation (Items 3-6).
Pursuant
to the
action taken at the Board meeting on December 8, 1964, there had
been distributed drafts of two orders and a statement reflecting approval
°f the applications of Valley Bancorporation, Appleton, Wisconsin, to
acquire 80 per cent or more of the voting shares of Sherwood State Bank,
Sherwood
Also
Of
Wisconsin, and of Reedsville State Bank, Reedsville, Wisconsin.
distributed Pursuant to the action taken on December 8, was a draft
letter to be sent to the applicant emphasizing the need for improvement
12/21/64
-4-
in the capital structure and general liquidity position of its largest
subsidiary, Appleton State Bank, Appleton, Wisconsin.
After discussion the issuance of the two orders and statement
wasauthorized, along with the letter to Valley Bancorporation, subject
to editorial changes agreed upon.
Copies of the two orders and state-
ment, as issued, are attached as Items 3, 4, and 5, respectively.
A
copy of the letter to Valley Bancorporation, in the form sent, is
attached
as Item No. 6.
Messrs. O'Connell, Leavitt, Donovan, and Smith then withdrew
from the meeting.
First Plaza Company (Item No. 7).
4
There had been distributed
memorandum from the Division of Examinations dated December 16, 1964,
submitting a draft of letter to First Plaza Company, Lincoln, Nebraska,
granting a determination that the company was not a holding company
affiliate except for the purposes of section 23A of the Federal Reserve
Act.
Governor Robertson stated that he wished to be recorded as
disaPProving the requested determination.
Although this case fell with-
i' the Board's policy applicable to so-called one-bank cases, this was
4 situation where he doubted seriously that the ruling was appropriate.
Pir St
Plaza Company, located in Nebraska, had been set up primarily for
the purpose
of acquiring stock of a bank located in another State--in
Wes tminster, Colorado; a loan for purchasing the stock had been obtained
fl'c'm a bank in Denver.
While there was nothing illegal about such an
12/21/64
-5-
arrangement, he did not feel that this company should be exempted from
holding company affiliate requirements.
The letter to First Plaza Company was then approved, Governor
Robertson dissenting.
A copy of the letter is attached as Item No. 7.
Fallout shelters at branches of Atlanta Bank (Item No. 8).
At
the Board meeting on February 27, 1964, the Board approved a letter to
the Federal Reserve Bank of Atlanta interposing no objection to proceeding with projects for fallout shelter facilities at the head office and
the
Birmingham, Jacksonville, and Nashville Branches.
In a letter of July 23, 1964, from the Atlanta Bank, Board
a
pproval was requested to proceed with construction of fallout shelters
at the three aforementioned branch buildings on the basis of guaranteed
maximum costs obtained from selected contractors.
The guaranteed maximum
es timates were about 36 per cent higher than the estimated costs submitted
to the Board by the Bank in January 1964.
Because the present cost
estimates exceeded so greatly the original estimates and the expenditures authorized by the Board, the Bank felt that the figures should be
resubmitted before proceeding with construction.
A memorandum from the Division of Bank Operations dated December 16, 1964, regarding the guaranteed cost estimates had now been
distributed.
It discussed and presented figures comparing the former
estimated costs.
While the latest estimates exceeded by a little more
than one-third those furnished at the time the Board approved the shelter
eleitI!)
12/21/64
-6-
Projects, the original estimates had been made on a "cost-plus -fixedfee" basis, and the present estimates were on a "guaranteed not to
exceed cost" basis where the contractor would assume the risk if costs
should exceed the guaranteed maximum.
In addition, the projects in-
cluded work not exclusively related to providing shelter; the nature
of this work was described in the memorandum.
A draft of telegram to the Federal Reserve Bank of Atlanta
that would indicate Board approval of the Bank's proceeding with the
c°nstruction of the fallout shelter facilities on the basis of the
gu aranteed cost estimates, as described in the Bank's letter of July 23
and a supplemental letter of November 19, was attached to the memorandum
Of December 16.
In discussion, Mr. Farrell and Mr. Daniels responded to various
questions posed by members of the Board.
It was brought out that the
General Services Administration had scaled down the specifications for
fallout shelters in Government buildings and that the July request from
the Atlanta Bank had been held in order to obtain the scaled-down specifications.
When such specifications were obtained, the principal dif-
ference between those and the ones sent to the Reserve Banks with the
Board's letter of July 13, 1961, seemed to be that fallout shelters in
Government buildings, which would be open to the public, would be designed
for
a maximum of three days' use in place of 14; no provision would be
'de for
emergency stand-by electric power, and no provision would be
12/21/64
-7-
made for filtering the air other than that necessary for normal use
of the space.
In a letter of November 19, 1964, the Atlanta Reserve
Bank had expressed the opinion that rather than attempt to redesign
the fallout shelters in the light of the latest specifications of the
/3ffice of Civil Defense, the Bank would prefer to do nothing more at
the Nashville and Birmingham Branches than install emergency generators
and wiring to operate lights and elevators during power failures.
the
If
estimated cost of emergency power was excluded from the guaranteed
maximum costs of providing fallout shelter and emergency service, the
costs of shelters at the Birmingham, Nashville, and Jacksonville Branches
appeared to be comparable with costs at other Reserve Bank offices.
At the conclusion of discussion, Governor Mitchell stated that
he would not approve sending the proposed telegram to the Atlanta Bank.
To
him, the expenditures for the shelters that were contemplated were
e/ceessive and constituted a waste of money.
The telegram to the Federal Reserve Bank of Atlanta approving
construction of the shelter facilities was then approved, Governor
1/itchell dissenting.
A copy of the telegram is attached as Item No. 8.
Year-end closing entries (Item No. 9).
There had been distrib-
uted a memorandum from the Division of Bank Operations dated December 16,
1964, with regard to an attached statement showing the Federal Reserve
Ilanks t estimates of earnings and expenses in 1964, together with proP°8ed Year-end adjustments.
The reports received from the Banks indicated
1.
12/21/64
-8-
that no special charge-offs or other year-end adjustments requiring
Board
approval were contemplated.
On the basis of the estimates, net
earnings to the extent of about $55 million would have been transferred
to the surplus accounts to maintain the surplus of each Reserve Bank
at the level of subscribed capital stock.
However, in view of the action
taken by the Board at its meeting on December 16, 1964, the payments to
the Treasury as interest on Federal Reserve notes would be increased,
and each Reserve Bank would have charges to its surplus account in
amounts that would reduce that account to 100 per cent of paid-in capital.
There being no objection, it was understood that the Federal
Reserve Banks would be advised by telegram that the Board had noted
without objection the proposed 1964 year-end entries shown by the statements accompanying their respective communications, but with the understanding
that such entries would be revised to reflect the action
described in the Board's telegram of December 16, 1964, regarding the
surPlus accounts of the Reserve Banks and payments to the Treasury.
A
"
PY of the telegram sent to the Reserve Banks following today's meeting
is
attached as Item No. 9.
All members of the staff except Messrs. Sherman and Partee then
withdrew from the meeting.
Call report.
Governor Balderston reported on a telephone conver-
Sation between Chairman Barr of the Federal Deposit Insurance Corporation
and Governor Mills last Thursday regarding the year-end call on insured
12/21/64
-9-
banks, which was expected to be announced on January 6, 1965, calling
for reports of condition as of the close of business December 31, 1964.
Regulation F.
Governor Robertson reported on meetings held
With Chairman Barr and Director Randall of the Federal Deposit Insurance
Corporation since the Board's discussion of Regulation F, Securities
of Member State Banks, on December 17.
A number of details were com-
mented on by Mr. Partee, and Governor Robertson stated that agreement
had been reached on all points of difference discussed on December 17
and that he now expected the two agencies to issue virtually identical
regulations to become effective January 1, 1965.
The meeting then adjourned.
Secretary's Notes: Acting in the absence
of Governor Shepardson, Governor Robertson
approved on behalf of the Board on December 18,
1964, memoranda recommending the following actions
relating to the Board's staff:
4.2t40
2,11L
,111
Ruth E. Foster as Statistical Clerk, Division of Research and
!
tatistics, with basic annual salary at the rate of $4,630, effec'lye the date of entrance upon duty.
Carol Polievka, Clerk -Stenographer, Division of Research and
Str.
a
to
from $4,410 to $4,780 per annum,with a change in title
Stenographer,
'enographer, effective December 20, 1964.
Acting in the absence of Governor Shepardson,
Governor Robertson today approved on behalf
of the Board the following items:
12/21/64
-10-
Letter to the Presidents of all Federal Reserve Banks transTitting copies of the form (FR 107) to be used by State member banks
in submitting reports of income and dividends for the calendar year
1964.
Letter to the Securities and Exchange Commission (copy attached
as Item No. 10) requesting a three-month extension of the reimbursable
det311777717-Board of Thomas A. Sidman, Financial Accountant, Division
of Corporate Finance.
Memoranda recommending the following actions relating to the Board's
staff.
Reernthentfollo_L-nlnaternitle"e
Alton C. James as Statistical Clerk, Division of Research and
S atistics, with basic annual salary at the rate of $5,080, effecIve December 21, 1964, it being understood that Mrs. James would
,e on leave without pay for the period December 21, 1964, through
.qanuary 21, 1965.
•
Acce--„ptance of resignations
s, .Patricia J. Slovek, Statistical Clerk, Division of Research and
L atistics, effective at the close of business December 18, 1964.
James S. Nystrom, Economist, Division of Research and Statistics,
effect
lve at the close of business January 2, 1965.
Peter Gajewski, Economist, Division of Research and Statistics,
ef
fective at the close of business January 9, 1965.
Secretary
BOARD OF GOVERNORS
Item No. 1
12/21/64
OF THE
43%
tp•
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
. RESt •
December 21, 1964.
Board of Directors,
Fall River Trust Company,
Fall River, Massachusetts.
Gentlemen:
The Board of Governors pf the
System approves the estabReserve
Federal
lishment by Fall River Trust Company, Fall
River, Massachusetts, of a branch on the east
side of South Main Street in the village of
Assonet, Massachusetts, provided the branch
is established within six months from the date
of this letter.
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 branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
Item No. 2
12/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 21, 1964.
Board of Directors,
Manufacturers Hanover Trust
Company,
New York, New York,
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Manufacturers Hanover Trust Company, New York,
New Yorks of a branch at 560 Washington Street,
Borough of Manhattan, New York, New York, for the
limited purpose of conducting the operations of its
Currency and Coin Wrapping Department, 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.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
UNITED STATES OF AMERICA
Item No. 3
12/21/64
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
Os
In the Matter of the Application of
VALLEY BANCORPORATION,
APpieton, Wisconsin,
f°t' approval of the acquisition of voting
Shares of
Sherwood State Raul:, Sherwood,
Wi
sconsin.
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
seeti°n 3(a)(2) of the Bank Holding Company Act of 1956 (12 U.S C.
1842(a)(2)) and section 222.4(a)(2) of Federal Reserve Regulation Y
(12 CFR 222.4(a)(2))
, an application by Valley Bancorporation,
APPleton, Wisconsin, a registered bank holding company, for the Board's
Prior
approval of the acquisition of 80 per cent or more of the voting
8441'es of Sherwood State Bank, Sherwood, Wisconsin.
As required by section 3(b) of the Act, the Board notified
the Commissioner of Banks for the State of Wisconsin of receipt of
the application and requested his views and recommendation. No views
or
recommendation were submitted by the Commissioner.
e
-2-
Notice of Receipt oE Application was published in the
Federal Register
on, July 11, 1964 (29 F. R. 9518), which provided an
°PPortunity for the filing of comments and views regarding the proPosed acquisition, and the time for filing such comments and views has
exPired and all comments and views filed with the Board have been
co
nsidered by it.
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that the said application be and hereby
is 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 21st day of December, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, Mitchell, and Daane.
Voting against this action:
Governor Robertson.
(Signed)
(SEAL)
Aerritt Sherman
Merritt Sherman,
Secretary.
Item No. 4
12/21/64
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
VAALLEY BANCORPORATION,
-Ppleton, Wisconsin,
r.aPproval of the acquisition of
shares of Reedsville State Bank,
‘‘eedsviii_
e Wisconsin.
ORDER APPROVING APPLICATION 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 1T
-*S.C. 1842(a)(2)) and section 222.4(a)(2) of Federal Reserve
Y (12 CFR 222.4(a)(2)), an application by Valley
tatle
°I'Poration, Appleton, Wisconsin, a registered bank holding company,
tOr
ziore
the Board's prior approval of the acquisition of 80 per cent or
of the voting shares of Reedsville State Bank, Reedsville, Wisconsin.
As required by section 3(b) of the Act, the Board notified the
C rmit
"toner of Banks for the State of Wisconsin of receipt of the applitatiOn and requested his views and recommendation. The Commissioner
dvit, ,
'len that he would not interpose objection to approval of the
PPlication.
4479
Notice of Receipt of Application was published in the Federal
4gister on August 27, 1964 (29 F. R. 12057), which provided an opportuIlitY for the filing of comments and views regarding the proposed
acquisition, and the 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 the said application be and hereby is
aPproved, provided that the acquisition so approved shall not be conallnItilated (a) within seven calendar days after the date of this Order
(b) later than three months after said date.
Dated at Washington, D. C., this 21st day of December, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, Mitchell,
and Daane.
Voting against this action:
Governor Robertson.
(Signed)
Merritt Sherman
Merritt Sherman,
Secretary.
0
BOARD OF GOVERNORS
Item No. 5
12/21/64
OF THE
FEDERAL RESERVE SYSTEM
A APPLICATIONS BY
VALLEY BANCORPORATION, APPLETON, WISCONSIN, FOR
iaWOVAL OF ACQUISITION OF SHARES OF SHERWOOD
STATE BANK, SHERWOOD,
IIISCONSIN, AND OF REEDSVILLE STATE BANK, REEDSVILLE, WISCONSIN
STATEMENT
Valley Bancorporation, Appleton, Wisconsin ("Applicant"),
4
registered bank holding company, has filed with the Board,
pursuant
t° section 3(a)(2) of the
Bank Holding Company Act of 1956 ("the Act"),
two
applications, one for approval of the acquisition of 80 per cent
Qt mere of the
outstanding voting shares of Sherwood State Bank,
4'erwood, Wisconsin, and one for approval of the acquisition of 80 per
t Or more of the outstanding voting shares of Reedsville State Bank,
Reedsville, Wisconsin.
8APPl
icant's
Hereinafter, the aforementioned banks, as well
present subsidiaries, are sometimes referred to in-
y as "Bank", and in combination as "Banks".
Inasmuch as data bearing on Applicant's financial history
4N1 co
ndition, prospects, and management are equally applicable to both
LI)plications, simultaneous determination by the Board of the to appliations was
considered appropriate. While separate Orders effecting
the toard,s
_
determinations accompany this Statement, the findings, conclus.
lons, and reasoning of the
Board in respect to each of the aPPlitqions are
combined in this Statement.
Vi
d_a_gLalmacjat_L0
=_af
Smpervisory Authoritx
Pursuant to section 3(b) of the Act, the Commissioner of Banks
the
State of Wisconsin was asked for his views and recommendation
4481
-2-
On each of the applications.
The Commissioner submitted no views or
'cecommendation regarding the Sherwood State Bank proposal.
In respect
to Applicant's proposed acquisition of the Reedsville State Bank, the
C°mIllissioner advised that he would not interpose objection to
APPlicant's
proposal.
Statutor
Factors
In respect to each of the applications, section 3(c) of
the Act requires the Board to take into consideration the following
"factors:
4
(1) the financial history and condition of the holding
e°mPanY and the banks concerned; (2) their prospects; (3) the character
Of their
management; (4) the convenience, needs, and welfare of the
com
munities and area concerned; and (5) whether the effect of the
Proposed acquisition would be to expand the size or extent of the
batik holding company system involved beyond limits consistent with
adequ ate
Of
and sound banking, the public interest, and the preservation
competition in the field of banking.
Binancial Histor
Banks
Concerned
Condition
and Pros ects of A nlicant and the
Applicant has a relatively recent history, having been
°t'ganized in May 1962, and became a bank holding company in March
1963
3 with the acquisition of a majority of the voting shares of
the f
ollowing three banks located in Wisconsin: Appleton State Bank
and Northern State Bank, both located in Appleton, a community
Situ ated
in the east-central part of the State, about 30 miles
southw
-est of Green Bay, and Bank of Black Creek, located about
-3-16 miles
north of Appleton in the Village of Black Creek,
Since
APPlicant's investment in its subsidiary banks has
constituted and
continues
to represent virtually its total assets, appraisal of
Applicant's financial condition and prospects must
reflect a similar
aPPraisal in respect to the banks it presently owns and the
banks it
131)P0ses to acquire.
Appleton State Bank ccmmenced operation in 1911.
Its
53 Years of operation are considered to have been financially sound.
1/
At June 30,
1964,— Appleton State Bank held total deposits of
$31
million, an increase from $18 million at year-end 1956 and of
$26rnillion at year-end 1961.
The evidence before the Board reflects
that the Bank's financial condition and prospects are reasonably
scitisfactory.
The financial history of Bank of Black Creek is con-
ed to be
satisfactory.
Since 1903, it has served the Village of
//lack cre —t
ei and the immediately surrounding agricultural area.
Bank's
Po
4 sits have increased from approximately $1 million at year-end 1956
t° sii8htlY less than $2 million.
Despite Bank's lack of rapid growth
tts capita-1 structure appears strong, and
its general condition and
h°sPects
satisfactory.
Northern State Bank was opened for business in
j4IluarY 1963, and holds total deposits of slightly more than $2.5 million,
l'he
bank's growth in deposits and
loans has exceeded projections made
its first
two years of operation. The prospects of this bank are
tn ,
—"gered
satisfactory.
1/
,is U41e ss otherwise indicated, banking data used
herein are as of
-4-
In view of the financial history, condition, and prospects
of each
of Applicant's existing subsidiary banks, Applicant's condition and prospects are considered to be reasonably satisfactory.
Sherwood State Bank. - Sherwood State Bank (total deposits
S2.5 million) opened for business in 1914 in the Village of Sherwood,
Proximately 13 miles southeast of Appleton. It has had only a
m°derate growth rate, due principally to the fact that Calumet
C°11ntY, in which Bank is located, has no large cities or industries
and little growth potential.
Bank's asset position is considered
'114 and its general financial condition reasonably satisfactory.
8°1
besPite Bank's limited growth potential, its prospects appear fairly
Satisfactory.
In the Board's judgment, Applicant's ownership and
°Paration of Bank would offer more aggressive, experienced management,
l'esIllting in asset investments that would better Bank's prospects
and a
) s hereafter discussed, in loan policies calculated to serve
better the particular needs of Bank's service area.
Reedsville State Bank. - In nearly all respects, the Board's
fore,„,
't-4-ng findings and conclusions regarding the financial history,
c(Indition, and prospects of Sherwood State Bank are applicable also
to
e Reedsville State Bank. Bank, located in the Village of
Ileed
sville in western Hanitowoc County, approximately 27 miles
13°4theast of Appleton
has offered general banking services to an
essenti
-ally agricultural community since 1906.
Bank's rate of growth
-5_
has been moderate, its total deposits amounting to $2.3 million.
48 in the case of Sherwood State Bank, while Bank's financ
ial history,
conditio
n, and prospects are considered to be reasonably satisfactory,
torttinuation of its conservative operational policies offers little
Po
tential for increased growth rate.
The more aggressive
competitive
11°1i-cies likely to result from Applicant's ownership afford, in the
lioard s
judgment, considerably better prospects for Bank.
11
9aElt of Applicant and the Banks
Applicant's management is considered to be capable and
satis
factory.
This conclusion, premised in part upon the generally
satisfactory asset condition of each of Applicant's subsidiary
banks,
is.
uuPPorted by evidence of the rapid and sound growth of Northern
State
Bank,
i the most recently opened of Applicant's banks.
The management of Sherwood State Bank, although conservative,
is,
'
cinsidered to be satisfactory. However, its chief execut
ive
, now over 80 years of age and the owner of more than 50 per cent
ta
nk's outstanding voting shares, has made known his intention to
Seli
his interest in Bank and retire.
While management succession does
141t4PParently constitute a critical problem for Bank, no provision has
beet
illade for executive management succession. Nor may it be lightly
assu_
'ed that competent operat
ing management can be acquired for a bank
-6with $2 million in total deposits in a community as small as
Sherl,mod.
Even assuming the agailability of competent management, it
cannot be further assumed that such executive replacement would
assure the type of management that Applicant's ownership and control
aPPear to offer.
Inasmuch as infusion of more aggressive management
tato Bank appears to have direct bearing upon both Bank's prospects
fc
'
t an improved earnings position and its potential for developing a
loan program geared to handling demands for larger lines of credit
such) for example, as those associated with the large farm co-operatives
in Bank's primary service area, the likelihood that Applicant would
ace
°mPlish these results through its ownership and operation of Bank
c°11stitutes a consideration favorable to approval of the application.
Reedsville State Bank's management, like that of Sherwood
Stat
a Bank, is viewed as satisfactory, albeit conservative.
Although
41)1'
lcant's chairman of the board and its president hold, respectively,
'f
the ,
ame positions with Bank, it is apparent that Bank's conservative
°Peating policies
reflect in large measure the influence exercised by
1144kl a Vice president and cashier, who is also a principal stockholder
tt
ank. Considerations paralleling those discussed above in respect
to st.
"erwood State Bank's management situation exist as to Reedsville
State
Dank. Its vice president and cashier has announced his in'Llon to retire in the immediate future.
1.110_
While the aforementioned
widuals who serve as chairman and president of both Applicant and
taro.
could effectively act in securing replacement management for Bank,
4486
-7-
the receptiveness of any prospective replacements would appear
substantially more assured where the position is proffered by Applicant
as Bank's owner rather than by officers and minority shareholders of
Bank,
In sum, the foregoing findings and conclusions relating to
the management factor weigh somewhat toward approval of the pending
0Pp1
ications.
Co,
L.tvenience Needs
and Welfare of the Communities and Areas Concerned
Sherwood State Bank is located in the Village of Sherwood,
umet County, in the heart of an agricultural area. Bank's primary
2/
service area
comprises the Village of Sherwood, with a population of
bc)ut 400, and the area surrounding the village within a radius of two
to ic)ur miles.
The primary service area has an estimated population
about 2,000, has no major industries located therein, and contains
40 other banking offices.
Reedsville State Bank is located in the Village of Reedsville,
vtaratowoc County, also an agricultural area. Reedsville State Bank's
3/
Pri
comprises the Village of Reedsville and the
merY service area
8/41.0unding area within a radius of about four miles.
O
The population
Reedsville is about 830 and that of Bank's primary service area
430
111 2,600.
As in the case of the Sherwood State Bank, Reedsville
de -e area from which Applicant estimates 83 per cent of the Bank's
erPosits of individuals, partnerships, and corporations ("IPC deposits")
nate.
I;pThe area from which Applicant estimates 80 per cent of the Bank's
dePosits originate.
-8-
State Bank's primary service area has no industrial concerns and has no
°tiller bank located therein.
virtually
In support of each application, Applicant has asserted
identical resulting benefits and advantages.
In the main, these benefits
ate asserted to be the assistance that Applicant's farm loan officers can
8ive to each of the Banks in respect to farm loan demands too large for
the Banks to handle alone; the assistance Applicant can lend in respect to
c°14rIercial and installment loan requirements of the respective Banks; the
l'endition of corporate fiduciary and investment guidance services; and the
ilistitution of internal audit procedures in each of the Banks.
In neither application before the Board does Applicant establish
ellunserved need for either the banking services it asserts will be made
al4lilable by Applicant, or for any other major banking service normally
tequired by customers in areas the size and nature involved in these
allqications.
Should such needs arise, it appears to the Board that
4101 1
eton is sufficiently near the service area of each Bank as to consttt
-‘e a reasonably convenient source of most such services. A significant
eltc, .
ePtion to this conclusion relates to Applicant's proposal regarding
'stance in respect to large farm credit demands arising In the
e(Inlunities served by the Banks.
The increase in the nuMber of
4488
-9-
ly
credit requests associated with consolidations of smaller
farms into larger co-operative units requires experienced judgment which
POPlicant's officers appear particularly qualified to render.
The
easurance of qualified advice and related assistance in this field that
is offered by Applicant's ownership of Sherwood State Bank and Reedsville
State Bank constitutes a consideration supporting approval of the applieations.
Not only would such service result in a more assured and
ItIrnediate source of large farm credit in both Banks, but it would likely
act
as a stimulus in developing in the Banks a more aggressive type of
°Peration resulting in benefit to the communities served.
tgl!7::::dAlu_112:1:7 Adequate and Sound Banking, Public
and Bankin Com etition
At present, Applicant's system is comprised of three banks,
all
located in or relatively near Appleton, in Outagamie County, with
ceakned total deposits of $35.5 million.
Applicant is, and with
41equisition of both Sherwood State Bank and Reedsville State Bank
140t11d continue to be, the smallest of five bank holding companies
head quartered in the State of Wisconsin.
Applicant's banks are the
°qv h
-enk holding company subsidiaries located in Outagamie County,
41th
°ugh National Manufacturers Bank of Neenah (a subsidiary of
The li•
arine Corporation, Milwaukee, a registered bank holding company)
14th
deposits of $21 million, is located some eight miles south of
-10*
APPleton in Winnebago County and competes in the Appleton area.
No
bank holding company subsidiaries are located in either Calumet or
Reedsville
lianitowoc Counties, the situs of Sherwood State Bank and
State
Bank
respectively.
represent
The combined deposits held by Applicant's banks
ess than 1 per cent of the deposits held by all banks in the State.
.10
Consummation of the two proposed acquisitions would increase by only
the
Percentage of such deposits held by Applicant's banks.
Considering
q single area the areas served, respectively, by Applicant's subState Bank, it is
sicliaries and by Sherwood State Bank and Reedsville
fo
d that 31 banks (37 banking offices) are located or compete
the
1963) of
and held aggregate deposits (at December 20,
$247 million.
State
Reedsville
Acquisition of both Sherwood State Bank and
(24%) of
Bank by Applicant would result in its control of nine
stated
the 37 banking offices, and about $40 million (16%) of the
ag2Xegate deposits. Such control by Applicant would not represent a
domi
'lance in any of the areas concerned inimical to continued sound
banki
g or to the public interest.
State
Of Applicant's present subsidiary banks, only Appleton
Bank.
competes With either Sherwood State Bank or Reedsville State
Ari ins.
loan portfolio
lgnificant portion of Appleton State Bank's total
o i
61nates in the primary service area of each of the Banks. Three of
She
l'ood State Bank's loans, representing less than 1 per cent of its
total
Bank's head-office
1°ans outstanding, originated in Appleton State
4490
There is no evidence of any existing competition
Primary service area.
for deposits.
mot
Consummation of Applicant's proposals, therefore, would
result in elimination of meaningful existing competition or, in view
°1.the size of the Banks involved, the distances separating them, and
the characteristics of the area involved, of significant potential
com
petition.
As earlier stated, Sherwood State Bank and Reedsville State
134k are the only banks located in their respective primary service
area
out
located
However, each faces competition from a number of banks
such areas.
Nine banks, five of which are larger than Sherwood
State Bank in terms of total deposits held, compete for business
O11.8nating in the latter Bank's primary service area.
Six banks, three
q them larger than Reedsville State Bank in total deposits held,
e°14Pete within Reedsville State Bank's primary service area.
There is
4° teason to believe that the present level of competition between
She
twood State Bank and its competitors, and Reedsville State Bank and
c
°mPetitors, would be affected significantly by consummation of
APP1
icant's proposals.
The potential for growth in either of the
osed subsidiary banks is limited by the population and trade
'
ilircl
°Ilarac
is
teristics of the areas. Applicant's operation of the Banks
not
likely to affect adversely their respective competitors.
Nor, in the Board's judgment, will the public interest be
4dve
tselY affected by Applicant's acquisition of Banks since, as
-12-
earlier identified, there will remain an adequate number of reasonably
a
ccessible alternative sources of banking services.
Premised on the
foregoing findings, the Board concludes that consummation of Applicant's
Proposals will not expand the size or extent of Applicant's system
80 as to be inconsistent with adequate and sound banking, the public
irlterest, or the preservation of banking competition.
On the basis of all the relevant facts as contained in the
records 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 proP°sed acquisitions would be consistent with the public interest and
th t. the applications should, therefore, be approved.
becember 21, 1964.
(44q
BOARD OF GOVERNORS
.....
00V Gov ,
Item No. 6
12/21/64
OF THE
+%
tr.*
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
LREstt.
•
TO THE BOARD
December 21, 1964,
AIR MAIL - REGISTERED
tETURN RECEIPT REQUESTED
Valley Bancorporation,
221 West College Avenue,
Appleton, Wisconsin.
Gentlemen:
The Board of Governors has approved the applications of
alley Bancorporation for permission to acquire 80 per cent or
!?re of the voting shares of Sherwood State Bank, Sherwood,
nsconsin, and of Reedsville State Bank, Reedsville, Wisconsin.
the Board's Orders, accompanying Statement, and press release
are enclosed.
In connection with the provisions of
requiring that the acquisitions be consummated
months from the dates of the Orders, advice of
.anmmation of both acquisitions should be given
ederal Reserve Bank of Chicago.
the Board's Orders
no later than three
the fact of conin writing to the
The Statement accompanying the Board's Orders approving
Bancorporation's acquisition of Sherwood State Bank and Reedsville
?tate Bank concludes that the financial condition and prospects of
',1_43Pleton State Bank are "reasonably satisfactory". This conclusion
'_las been premised primarily on the reasonably sound asset condition
:f the Bank and should not be read as reflecting satisfaction with
iither the Bank's capital structure or liquidity position. Rather,
is the Board's judgment that Immediate and continuing attention
ould be given by Valley Bancorporation to improvement in the
aPital structure and liquidity position of the Appleton State Bank.
r
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
E4closures
BOARD OF GOVERNORS
Item No. 7
12/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 21, 1964.
Mr. Gene C. Eaton, President,
First Plaza Company,
714 Stuart Building,
Lincoln, Nebraska.
Dear Mr. Eaton:
This refers to the request contained in your undated
letter, submitted through the Federal Reserve Bank of Kansas
City, for a determination by the Board of Governors of the
Federal Reserve System as to the status of First Plaza Company
as a holding company affiliate.
From the information presented, the Board understands
that First Plaza Company is a holding company affiliate by reason
of the fact that it owns 17,630 (85.67) of the 20,600 outstanding shares of stock of the First National Bank, Westminster,
Westminster, Colorado; and that it does not, directly or indirectly,
own or control any stock of, or manage or control, any other
banking institution.
In view of these facts, the Board has determined that
First Plaza Company is not engaged, directly or indirectly, as
a business in holding the stock of, or managing or controlling
banks, banking associations, savings banks, or trust companies
Within the meaning of section 2(c) of the Banking Act of 1933
(12 U.S.C. 221a); and, accordingly, it is not deemed to be a
holding company affiliate except for the purposes of Section 23A
of the Federal Reserve Act and does not need a voting permit from
the Board of Governors in order to vote the bank stock which it
OWns.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Gene C. Eaton
-2-
If, however, the facts should at any time indicate that
First Plaza Company might be deemed to be so engaged, this matter
Should again be submitted to the Board. The Board reserves the
right to rescind this determination and make further determination
of this matter at any time on the basis of the then existing facts,
including additional acquisitions of bank stocks even though not
constituting control.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
4/19
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 8
12/21/64
December 21, 1964
BRYAN ATLANTA
Board approves
your Bank's proceeding with construction of fallout
shelter facilities at the Birmingham, Jacksonville, and Nashville
Br
anches, as described in Mr. Patterson's letters of July 23 and
November 19, 1964, and authorizes expenditures of not to exceed
$108,979 at
Birmingham, $67,231 at Jacksonville, and $95,702 at
liashville for these projects, which represent increases of $29,279,
$17,831 and $25,202 over the authorizations contained in the Board's
letter of
February 27, 1964.
(Signed) Merritt Sherman
SHERMAN
TELEGRAM
Item No. 9
12/21/64
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
December 21, 1964
To 'IRE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
Board has considered and notes without objection proposed
Ye
Ll'-end closing entries of your Bank as shown by statement accombut with understanding that such entries
will be revised to reflect action described in Board telegram of
becember 16 concerning payments to U.S. Treasury and surplus accounts
°I Reserve
Banks.
(Signed) Merritt Sherman
SHERMAN
(a)
December 8 letter from Mr. Latham
4stun
New
York
iphia
December 4 letter from Mr. Niles
December 3 letter from Mr. Wilgus
Cleveland
December 10 letter from Mr. Clouse
Ilichrnond
Your December 10 letter
Atlanta
December 11 letter from Mr. Patterson
Chicno
December 3 letter from Mr. Jones
St
'Louis
December 4 letter from Mr. Wotawa
MinfleaPolis
December 3 letter from Mr. 02Brien
443as City
December 9 letter from Mr. Andrews
December 10 letter from Mr. Murff
Rrancisc
o
December 10 letter from Mr. Martens
BOARD OF GOVERNORS
Item No. 10
12/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 21, 1964
Honorable Manuel F. Cohen,
Chairman,
Securities and Exchange Commission,
Washington, D. C. 20549.
Dear Mr. Cohen:
With reference to my letter dated September 18, 1964,
the Board would appreciate your consideration of a three-month
extension of the reimbursable detail of Mr. Thomas A. Sidman,
Financial Accountant, Division of Corporate Finance, to assist
the Board in connection with its new responsibilities under the
recent amendment to the Securities Exchange Act of 1934.
As was previously mentioned as a possibility, the
Project in which Mr. Sidman is participating will not be comPleted by the time his present detail expires, but we have
reason to believe it can be concluded within three months with
his continued assistance.
The Board appreciates the Commission's helpfulness
and hopes the requested extension will be favorably considered.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER