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Minutes for
To:
Members of the Board
From:
Office of the Secretary
February 14, 1964.
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
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve
System on Friday, February 14, 1964.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mt.
Mr.
MX.
Mt.
Mr.
Mt.
Martin, Chairman
Mills
Robertson
Shepardson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Broida, Assistant Secretary
Noyes, Adviser to the Board
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Brill, Director, Division of Research
and Statistics
Holland, Associate Director, Division of
Research and Statistics
Koch, Associate Director, Division of
Research and Statistics
Furth, Adviser, Division of International
Finance
Sammons, Adviser, Division of International
Finance
Katz, Associate Adviser, Division of
International Finance
Morgan, Staff Assistant, Board Members'
Offices
Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Eckert, Chief, Banking Section, Division
of Research and Statistics
Bernard, Economist, Division of Research
and Statistics
Baker, Economist, Division of International
Finance
Goldstein, Economist, Division of
International Finance
Money market review.
Mr. Bernard reviewed developments in the
etove,,
flment securities market, following which Mr. Koch discussed current
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Federal Reserve Bank of St. Louis
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2/111164
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111°11eY market conditions and the course of selected monetary indicators
in recent months, in which connection he referred to a table that had
been distributed.
Mr. Goldstein commented on foreign exchange market
d.el'elopments and on the Euro-dollar market.
For purposes of today's
l'eview, there had also been distributed a summary of monetary developnients in the four-week period ended February 12, 1964.
All members of the staff who had been present except Messrs.
Sherman) Kenyon, Noyes, Cardon, Fauver, Brill, Holland, and Koch then
Vithdrew and the following entered the room:
Mr. Solomon, Director, Division of Examinations
Mr. Connell, Controller
Mr. Hexter, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Miss Hart, Senior Attorney, Legal Division
Mr. Hunter, Supervisory Review Examiner, Division
of Examinations
Discount rates.
The establishment without change by the Federal
le8e1.*Iie Banks of Cleveland, Richmond, Atlanta, Chicago, St. Louis,
141nneapo1i8, Kansas City, and Dallas on February 13, 1964, of the rates
04 di
scounts and advances in their existing schedules was approved
UTIOUs1y
with the understanding that appropriate advice would be
sent to
those Banks.
Report on competitive factors (Buffalo-Hamburg, New York).
There
14A,
.4
=V1
:1121e21 unanimously for transmittal to the Comptroller of the Currency
Et re
Port on the competitive factors involved in the proposed merger of
'
.14-es Bank of Erie County, Hamburg, New York, into Liberty National
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Federal Reserve Bank of St. Louis
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2/14/64
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Bank and Trust Company, Buffalo, New York.
The conclusion read as
r°13-ows:
The proposed merger would eliminate both direct and potential
competition between Liberty National and Peoples Bank, and reduce
alternative banking sources from three to two in the service area
Of the head office of Peoples Bank. It would further the concentration of banking resources on both a district-wide basis and in
the town of Hamburg area. The over-all effect on competition would
be adverse.
Seminar on monetary research (Item No. 1).
Attached as Item No. 1
is A
- copy of a memorandum from Mr. Brill dated February 12, 1964, regarding
413rOPOSai for an arrangement with the Social Science Research Council
her
ebY a group of monetary economists would take inventory of research on
the monetary process with a view to identifying deficiencies or gaps in
eurrent programs and stimulating inquiries in areas where research appeared
t° be lagging.
The question was whether the
Board would be willing to
131sQvide some of the financial support needed for such a project over the
eillst'ent year, with an estimate of something under $10,000 indicated. The
Board,
S offices would be offered as a central place for the meetings, with
1114cheon in the staff dining room.
After comments by Mr. Brill supplementing the memorandum, certain
Qillesti°ns concerning the project were raised, including the extent of
-elPation by members of the Board's staff that would be envisaged
th
-e appropriateness of holding the meetings in the Federal Reserve
'ng.
Mr. Brill indicated that general participation by only a very
e- number of the Board's staff was contemplated, although experts
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-4-
in specialized fields might be invited into meetings from time to time
to discuss current developments in their particular areas of interest.
As to the place of the meetings, it had been suggested to the Board's
Staff that meetings at the Board's offices would be convenient to the
ee°110mists in order to minimize expenses and tie in with other engageMerits that brought them to Washington from time to time.
As to the
question of need for involvement of the Social Science Research Council
in the project, it was considered that this might help to avoid any
°1'1ticism that the project was being dominated by the Federal Reserve.
At the conclusion of the discussion the project was approved in
1)rinciPle, and the staff was authorized to proceed with the necessary
'
e rl'angenlents.
This action by the Board constituted approval of unbudgeted
-4"— nditures within reasonable amount; that is, within the range of the
estimate mentioned in Mr. Brill's memorandum.
All of the members of the staff except Messrs. Sherman, Kenyon,
8°1°171°11/ Hexter, Shay, and Hunter and Miss Hart then withdrew from the
teeting.
Applications of Chemical Bank New York Trust Company (Items 2-8).
1111.
sUant to the decisions reached at the Board meeting on February
1964
4,
there had been distributed drafts of orders and statements reflecting
e‘14)r°1/a1 of the applications of Chemical Bank New York Trust Company, New
'York
'New York, (1) to acquire the assets of The Bensonhurst National Bank
or -0
"
- Jrooklyn in New York, Brooklyn, New York, and (2) to merge with The
National Bank of Mount Vernon, Mount Vernon, New York.
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Federal Reserve Bank of St. Louis
There had
471-i'
2/14/64
-5-
also been distributed drafts of dissenting statements by Governors
Robertson and
Daane on the Bensonhurst application and by Governor
Robertson on
the Mount Vernon application.
In discussion, several changes in the majority statements were
4gl'eed upon and Governors Robertson and Daane indicated that they were
'king certain revisions in their dissenting statements on the Bensonhurst
aPp1
ication.
Subject to incorporation of the aforementioned changes, the
issuance of the orders, statements, and dissenting statements was authorCopies of the documents, as issued, are attached as Items 2
through 8.
Directors' Day program.
Governors Mills, Shepardson, and Daane
named as a committee of the Board to work with the staff in formulatinD. the
program for newly-appointed Federal Reserve Bank and branch
(111.eetcrs to be held on Thursday, March 19, 1964, preceded by a dinner
on Wednesday, March 18.
Request of Pacific State Bank (Item No. 9).
Mr. Solomon reported
that
Pursuant to the understanding at yesterday's meeting he had discussed
Ifith
the
Vice President Galvin of the Federal Reserve Bank of San Francisco
l'equest of Pacific State Bank, Hawthorne, California, for approval
Ilticler section 24A of the Federal Reserve Act of a proposed investment
Y1,000 to purchase and convert land for additional parking facilities
a't the bank's main office.
(The bank had recently made an additional
Itille'8tment of approximately $14,500 in bank premises without obtaining
141-°r Board approval.)
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Federal Reserve Bank of St. Louis
479
2/14/64
-6Mr. Solomon said he had informed Vice President Galvin that the
I3foard was inclined to take a dim view of the request because of the
Illellter bank's unsatisfactory condition.
Mr. Galvin said the Reserve
nk had no strong feeling on the matter.
'
138
It thought the request could
be suPported in view of the relatively small contemplated expenditure,
bIlt it could appreciate the reasons for a decision by the Board not to
844)1'0Ve the request.
Mr. Solomon then distributed a draft of letter to
Pa.eillic State Bank that would express the Board's unwillingness to grant
4pior,
-`17a1 in view of the serious asset problems and unsatisfactory capital
1)°8ition of the member bank.
Governor Mills, who had not been present at yesterday's meeting,
()Illrilented that the bank would not be likely to go bad simply by investing
Illba4k premises. Unless a gross overexpenditure was involved, he would
be 1
nelined to think it rather petty to object to such a request. It
,
14.0111
aPPear that any objection should focus more on seeking improvement
lt the
bank's assets.
Mr. Solomon said that Governor Mills' comments reflected the
11° it'40
1 41 of the Division of Examinations, but he added that the Division
— no
Particular strong feeling about the matter.
Governor Robertson, who had suggested denial of the request at
y
e-,erA„
"Y s meeting, expressed the view that whenever a member bank was
operated as poorly as this one on almost every count, the supervise_
'Y authority should keep pressure on it constantly, and one way would
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Federal Reserve Bank of St. Louis
4SO
be to deny the current request. Approval might give the impression that
the Board condoned the bank's condition.
Actually, Pacific State Bank
1.4)u1ci not suffer from denial because it was understood that one of the
di
rectors would buy the property, if necessary, and hold it for the
benefit of the bank.
In the meantime, however, pressure would be kept
On the
directors to improve the bank's condition.
There followed comments by Mr. Solomon on the efforts being
e%erted by the Federal Reserve Bank and the State banking authorities
to cause the member bank to take corrective measures.
Mr. Hexter commented that, as he understood it, the main purpose
denYing the request would be to make the bank aware of the Board's
dissatisfaction with its condition.
Should such action be taken, the
letter from the Board to the bank might say that although the additional
4111°41A proposed to be invested in bank premises was not large, the Board
.4°1114. not
consider any further expenditure for such a purpose permissible
in view of the bank's unsatisfactory condition.
This might tend to drive
the Point home to the bank's directors.
After further discussion, the bank's request for permission to
1.111
t in bank premises was denied, with the understanding that the
letter
- advising the bank of such action would be along the lines mentioned
by ivir
Hex-ter and that no indication of consent would be included to the
e)cPehA
-Iture that had heretofore been made without prior Board approval.
A ce
PY of the letter sent to the bank is attached as Item No. 9.
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Federal Reserve Bank of St. Louis
2/14/64
-8The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board the following
items:
No
Letter to the Federal Reserve Bank of Philadelphia (attached Item
regarding its advice to the Board concerning the indebtedness
als three
members of the Bank's examining staff to a State member bank
a result of a recent merger.
Letter to the Federal Reserve Bank of Richmond (attached Item
approving the designation of six persons as special assistant
- iners.
No.
tv, Memoranda from appropriate individuals concerned recommending the
4-44)w1ng actions relating to the Board's staff:
-8.2.
121.)increases, effective February 16, 1964
Division
Basic annual salary
To
From
Research and Statistics
Carol.
lne H. Cagle, Economist
-garet R. Hauser, Statistical Assistant
j(change in title from Statistical Clerk-Typist)
:
xi
S. Nystrom, Economist
-arYne P. Reil, Economist
Examinations
Irvi
,
'
4 W. Robinson, Federal Reserve Examiner
$11,630
5,195
$11,960
5,490
9,530
8,690
9,810
9,250
9,980
5,585
5,990
3,725
5,010
3,830
5,170
8,410
Personnel Administration
knn
Raybold, Employment Technician
Administrative Services
tl u 4(utex,4
P.:vans, Cafeteria Helper
'
4 J. Finck, Utility Clerk
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Federal Reserve Bank of St. Louis
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2/14/64
.9.
.911-11iElle activity
Paul Gekker, Economist, Division of International Finance, to
leview a manuscript on the Soviet oil industry for Princeton University
rress.
Ree
stablishment of position
-----___
Se
Position of Research Assistant-Data Processing, Business Conditions
on of the Division of Research and Statistics.
'vC
Secreta y
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Federal Reserve Bank of St. Louis
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-
4_83
Item No.
BOARD OF GOVERNORS
1
2/14/64
Or THE
FEDERAL RESERVE SYSTEM
4
ce Correspondence
Board of
Governors
Date
Subject:
February 12, 1964
Seminar on Monetary Research
Several of the academic consultants who participated in the
aeminar
.
„
all
with the Board recently have suggested that the time is now
1401
:,iate for taking stock of the state of the "monetary art."
a4tgliani and Duesenberry, among others, feel that economists currently
the aged in empirical research on the monetary process--the response of
ilrveeconoiv to
changes in monetary policy--should meet together to take
rit°rY of work going on in this area at various university centers
and ,
elirr'n Government. The purpose of the meeting would be to appraise the
tionent state of monetary knowledge, to identify major gaps, duplicacier18) or inconsistencies in current research programs, to note deftfor cie8 in the available statistical and qualitative information needed
pliv Iluch investigations, and to stimulate inquiries in areas where emresearch is still lagging.
The group would operate under the sponsorship of the Social
Scie,
ialit';ce Research Council's Committee on Economic Stability. At least
ict "-Y the group would be sharply limited in size to permit unatrue.
1$08i::ured discussion and free-ranging thought, and to avoid the formal
i°n- taking" that inevitably ensues in large meetings. Ultimately,
'
it no
that'ght lead to another conference on monetary economics of the sort
Dues llas held in Pittsburgh two years ago. For the moment, however,
herrY and Modigliani would like to keep the size of the group
!
downe
L0 about a dozen economists representing leaders in empirical res
B in the monetary field. They have invited representation from
earch
the
beell °cIald's staff, in recognition of the pioneering work that we have
°-ng over the last few years.
here f
In some conversations with leaders of the group when they were
/tieth °r the academic consultants meeting, the question was raised as to
Port er the Board would be willing to provide some of the financial supia thneeded to operate such a project over the year. What is envisaged
111 meetings in 1964 of about two days a piece, plus some part'
title "
biblinelP--Presumably summer work by graduate students--in compiling
ticie
aPhies and assembling data and references from published arciene in the monetary field. Mr. Webbink, Vice President of the Social
$8,00nee Research Council, estimates the costs for the year at about
$9,000, of which the Social Science Research Council is in
ti-'311 to cover only $1,000 or $2,000 from its rather limited budget.
Derlte—ists involved would be only for travel expenses for those particiIlsais tacking financing from other sources and for the graduate student
Nitt tance during the summer. No honorarium or fee will be paid to
Pants,
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Federal Reserve Bank of St. Louis
To:
Board of CoVernors
- 2 -
If the Board is willing to provide financial assistance for
the
venture, I recommend that it be in the form of a contract with
the
on
papers
of
series
a
tciel Science Research Council to produce
°
;
status of empirical research in monetary economics and on major data
u conceptual pcoblems calling for further exploration. Such an ar„nement would be simpler than if the Board had to reimburse particiWebbink
individually for its pro rata share of the costs. Mr.
mensums
the
but
shortly,
'Ll provide a more accurate cost estimate
tioned
the
of
scope
the
be
to
likely
above appear adequate for what is
°Ject this year. Also, if the Board is willing, I would like to offer
ourr offices as a central place for the meetings, in order to maximize
dining room
du 4 3teff participation, and to offer luncheon in the staff
.1-og the meetings.
the
Z
Our staff feels that this proposed venture could prove one
e
h
t
°f
art.
most rewarding offshoots of the academic consultant seminar
us rgemant initiated by the Board, It would be of immense help to
1,74'-11 focusing our own research program, both in avoiding duplication
as:n research efforts currently under way at the universities and in
:
to iring that our data-collection and analytic efforts will continue
4_ t'e
problems in monetary theory. Most
z addressed to the critical
ortant, it will permit us to "pick the brains" of the most prominent
e arY economists of our day and keep abreast of their research in
a,
vhie tatively inexpensive manner. I cannot think of any better way in
cureill men like Duesenberry, Tobin, Modigliani, Hickman, Christ, Meltzer,
workeY, Orcutt, and others could be brought into close and continuing
prove
pos ng relationship with our research staff. I hope it will
launch
to
needed
is
support
whatever
euj'ble for the Board to extend
it a venture.
,(49A6
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Federal Reserve Bank of St. Louis
485
Item No. 2
2/14/64
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
CHBUICAL BANK NEW YORK TRUST COMPANY
for
approval of acquisition of assets of
EensonhUrst National Bank of Brooklyn
in New York
ORDER APPROVING ACQUISITION OF BANN'S ASSETS
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
Chemical Bank New York Trust Company, New York, New York, a state member
bank of the Federal Reserve System, for the Board's prior approval
Of
its acquisition of assets and assumption of deposit liabilities of
The Bensonhurst National Bank of Brooklyn in New York, Brooklyn, New York,
and
, as an incident thereto, Chemical Bank New York Trust Company has
aPPlied, under section 9 of the Federal Reserve Act, for the Board's
Pri°r approval of the establishment by that bank of branches at the
lOcations of the main office and branch of The Bensonhurst National Bank
Of Brooklyn in New
York.
Notice of the proposed acquisition of assets
aild assumption of deposit liabilities, in form approved by the Board of
Covernors, has been published pursuant to said Bank Merger Act.
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Federal Reserve Bank of St. Louis
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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 Is Statement of this date, that said applications be and hereby
are approved, provided that said acquisition of assets and assumption
(4 deposit liabilities and establishment of branches shall not be
e°asummated (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 17th day of February, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, and Mitchell.
Voting against this action:
Governors Robertson and Deane.
(Sirme0) Merritt Sherman
1:erritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
L±87
Item No.
3
2/14/64
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY CHEMICAL BANK NEW YORK TRUST COMPANY
FOR APPROVAL OF ACQUISITION OF ASSETS OF
THE BENSONHURST NATIONAL BANK OF BROOKLYN IN NEW YORK
STATEMENT
Chemical Bank New York Trust Company, New York, New York
nriu
pursuant
'emical"), with deposits of over $4,558 million, has applied,
to the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the Board's
Dri°1" approval of its acquisition of assets and assumption of
cleDosit liabilities of The Bensonhurst National Bank of Brooklyn in
kw York, Brooklyn, New York ("Bensonhurst Bank"), with deposits of
ebon+
-' Y35 million.
Incident to the application, Chemical has also
EtP1)11ed, under section 9 of the Federal Reserve Act (12 U.S.C. 321),
r°11 the Board's prior approval of the establishment of branches at
the two locations of the offices of Bensonburst Bank, increasing the
111114ber of Chemical's presently operating domestic offices from 117
t° 119) and of its offices in the borough of Brooklyn from nine to
eleven.
Under the law, the Board is required to consider, as to
Q4e14 of the banks involved, (1) its financial history and condition,
*
41058 otherwise stated, deposit figures are as of December 20, 1963.
.the number of these offices would be increased to 123 when account is
alton of the 4 offices which will be acquired pursuant to the Board's
'
2rder of today's date approving the application by Chemical to merge
The First National Bank of Mount Vernon, Mount Vernon, New York.
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Federal Reserve Bank of St. Louis
(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 Deposit Insurance Act), (6) the convenience
Ind needs of the community to be served, and (7) the effect of the
tr
ansaction on competition (including any tendency toward monopoly).
The Board may not grant the application unless, after considering
all these factors, it finds the transaction to be in the public
in
terest.
Banking factors. - Both Chemical and Bensonhurst Bank
have
satisfactory financial histories.
Chemical is the fifth
largest bank in the United States and the fourth largest in
e1
York City.
The financial condition of Chemical is sound, its
earnings prospects are favorable, its capital structure is adequate,
and its management is competent.
Consummation of the proposed
ac quisition would not cause any unfovorable change in respect to any
°f these
factors.
Bensonhurst Bank is next to the smallest of the four
ecillnlereial banks operating entirely in Brooklyn, which range in
-pos.
xt size from $22,6 million to $113 million.*** The financial
cond.
on of Bensonhurst Bank is sound, ft has a strong capital
--,
ctr
cture, and its earnings have been congistently above average for
-Posit figures as of June 29, 1963.
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Federal Reserve Bank of St. Louis
Ur,j
banks of comparable size in the Second Federal Reserve District.
H
owever, the bank has bec,_1 operated virtually as a "one-man-bank"
nader the dominance of its precident, who is past normal retirement
age, and problems inherent in this type of management have emerged.
In
particular, the bank has concentrated under his guidance in a
8Pec1alized field of conuercial lending which requires close and .
esPeDially skilled supervision.
In addition, a substantial fraction
Of the bank's deposits are directly attributable1,:o his relationships
71-th certain customers of the bank.
The prospects of developing from the bank's present staff
successor management of comparable ability are not favorable, and
efforts to recruit and retain successor executive personnel have
be Qz1
unsatisfactory. Thus, upon the president's withdrawal from
active participation in the bank's affairs, certain problems of
SuPetvision can be anticipated, and it appears probable that the
bant,
llould lose at least part of the deposits he has attracted to
It
Particularly those of customers who no longer reside or conduct
thei
t business in the Bensonhurst and Flatbush areas served by the
bank's two
offices.
In the circumstances, it seems probable that a
sill°0ther transition can be effected through the presence of competent
8uccess0r management supplied by Chemical.
There is no indication that the corporate powers of
the
banks are, or would be, inconsistent with 12 U.S.C., Ch. 16.
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Federal Reserve Bank of St. Louis
490
Convenience and needs of the communities. - The effect of
the
Proposed acquisition on banking convenience and needs would
be limited almost entirely to the borough of Brooklyn which is one of
five boroughs comprising the City of New York.
Brooklyn is situated at the southwest end of Long Island,
covers an area of 76 square miles, has 33 miles of waterfront, and
is connected with Manhattan by bridges and a vehicular tunnel.
In
1957) Kings County (the boundaries of which are coterminous with the
borough of Brooklyn) ranked seventh among the leading industrial
counties of the United States.
stable.
Its industries are diversified and
The most populous of New York City's boroughs, Brooklyn has
34 Per cent of the city's population, and is served (or will shortly
be served) by about 121 offices of fifteen commercial banks, 64
°"ices of savings banks, and numerous offices of other financial
institutions.
The economic prospects of Brooklyn are favorable.
Brooklyn is comprised of many sections, which typically
are
separate and distinct trading areas.
Bensonhurst Bank has its
rriain office in the Bensonhurst section of Brooklyn, and operates its
Oril
branch in the Flatbush section, and the two offices are 4.65
miles apart.
The Bensonhurst section is densely populated with more
than
175,000 inhabitants, of which three-quarters live in one or
t14°-fa11ily homes.
There are numerous small and medium-size retail
t°res and service enterprises in the area, and a number of small
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Federal Reserve Bank of St. Louis
491
-5manufacturing concerns.
Within a radius of four blocks of
13en80nhurst Bank's main office there are two other commercial
batlking offices (branches of Chase Manhattan Bank and Bankers
Irust Company),
two savings banks, and one savings and loan
488°eiation.
The population of Flatbush is over 240,000, and it contains
Miat h
become a major Brooklyn shopping center, which also is
Patr
°Ilized by residents of other boroughs, particularly Queens.
**411hurst Bank's branch is on Flatbush Avenue, which is lined
Lth retail
shops and other business establishments.
Within a
f°11rh,
-,ock radius of the office there are three other commercial
1)4,4
m8 offices (two of Manufacturers Hanover Trust Compant and one
(4 Pi r
*--8t
National City Bank), three savings banks, and one savings
kid 1
°an association.
Practically all sections of Brooklyn are served by
tiraer
LI8
financial institutions, including nine offices of Chemical.
-etlrest Chemical office is .9 miles from the head office of
"nurst Bank.
re arded
doe.,
Whether the community to be served should be
as Flatbush and Bensonhurst or as the whole of Brooklyn, it
not appear that the acquiring bank would supply any significant
4rvice
which is not already provided by existing banking and credit
However, it is expected that consummation of the proposal
ould m
aks available at the offices now operated by Bensonhurst Bank
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Federal Reserve Bank of St. Louis
-6.
/lot only trust services and a greatly increased lending limit but,
according to the application, a greater variety of installment loan
8Qrvices, a broader range of real estate and home improvcment loans,
aad the benefits of Chemical's international department.
To the extent that customers of Densonhurst Bnrk would
exPosed to the disadvantages of uncrtainty or hesitant policies
a period of transitiOn following the retirement of the bank's
41 esident, the community which embraces these customers would benefit
'
blr the kind of transition which the proposal in question would make
13°Bsible.
Competition. -
As was stated above, Chemical, while fourth
14 rank by number of offices among the banks represented in Brooklyn,
(Mal
n
l..acturers Hanover Trust Company, for example, has 45 Brooklyn
c)tticcs), has nine offices in the borough.
The proposed acquisition
11.11 not alter that rank.
Competition among commercial banks in the area is vigorous,
114c1 the more specialized financial institutions, like mutual
841/-14gs banks and savings and lottn associations, compete intensively
with
°no another and with the commcrcial banks. It is not believed
that th
--e substitution of branches of Chemical for the offices of the
33Q430ni1urst
Brink will altar the competitive picture in the borough,
()11 ellQn in the two local areas involved, to any significant extent.
As for direct competition between Bensonhurst Bark and
eliQnlicall while the former draws accounts from the major portion of
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Federal Reserve Bank of St. Louis
493
-7boroegh which lies outside the direct trading areas of its two
"ces, and to that extent is in competition with Chemical as well
Ilith every other bank represented in Brooklyn, there is little
4110 office-to-office competition between the two banks,
The
Ilearest Offices of the two banks, as previously noted, are nine
tetths
a mile apart.
In many contexts, one mile of separation
"°111d uot significantly diminish direct competition.
In an area as
(71 11.1031
eLY settled as Brooklyn, however, where practicable travel is
'Y ou foot or by subway, a potential cuEtomer is not likely to go
a
that -1
stance to find an alternative banking office, if he has other,
Ilearb
Y sources of banking services available.
the two
In the case of each
offices of Bensonhurst Bank there are several other banking
s
nearby.
With about 11.5 per cent of area deposits and 117 of the
' banking offices, Chemical is the fourth largest bank in
11"ork City. Some 86 of these offices and $1.5 billion in deposits
h4ve
been acquired through three mergers during the past ten years.
414'roval of
the present application, and of the concurrent application
f°t
Illerger
with The First Naticnal Bank of Mount Vernon in an Order
() the Board of today e s date, will not change Chemical's rank as to
%Gaits, but will place it in third position as to area offices,
f4r behind Chase Manhattan Bank with 127, and Manufacturers
444°.trer Trust Company with 140.
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Federal Reserve Bank of St. Louis
494
present
that consummation of the
However, it does not appear
P1e130
ree of concentration of
sals would significantly increase the deg
important New York City
bli*ing resources in the hands of the more
In
banks either in Brooklyn or in the Mount Vernon-Pelham area.
e in
ween fifth and sixth plac
131(/klYn, Chemical now appears to be bet
deP0
number of offices, far
8it size, and is tied for fourth place by
City
Company and First National
behind 11
-oth Manufacturers Hanover Trust
will
Bara, ln
is consummated, Chemical
each respect. After the proposal
or banking
osits of commercial banks
dep
of
h
tent
a
n
tha
less
have
still
orous ccmpotitive
shculd result in the vig
°ffices in
Brooklyn, and no change
r
Chemical, like every othe
As for Westchester, while
crosses the county line,
414 Y,:ark City bank, competes for business which
itable on-the-spot market.
'uo it has scarcely entered the prof
in that
end home office protection
l
wil
non
Ver
nt
Mou
o
it
ng
int
Acinlitti
ices
eity, and
genuine range of banking cho
give the opportunity for a
144ate there.
to enter the local market.
e
acquisition would have advers
It does not appear that the
d in Brooklyn,
e4ect8 on the other three commercial banks headquartere
Bank,
rapidly than Bensonhurst
411 of
Ilhich have been growing more
tIQ8
been functioning.
e in which they have
Pite the vigorous competitive climat
proposed
Effectuation of the
Summary and conclusion. probable
tran
through a period of
age
pass
e
tat
ili
fac
d
n
woul
ctio
4a
d broaden the
ktainty in prospect for Bensonhurst Bank, and woul
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Federal Reserve Bank of St. Louis
„
Of banking services that have been availabl* to the customers
or that bank
The effect on existing competition in the communities
e°11cerned will be minimal, and in the Boardfs jugment no significant
irlerOn
-8.Q in concentration of control of banking resources in those
Unities would result.
Accordingly, although the application presents a
eks,,
clacstion, the Board finds that the proposed acquisition of
e4Qts and assumption of deposit liabilities would be in the public
liaterest.
17
1964.
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Federal Reserve Bank of St. Louis
496
Item No.
4
2/14/64
DISSENTING STATEMENT OF GOVERNOR ROBERTSON
Less than a year ago, the Board approved Chemical's
l'8erption of a bank in Rockville Cente, Lon Island.
In my
Qenting Statement, I pointed out that if the Board continued to
DetMit such acquisitions, involving premiums
such as the one in that
ease
) Qiich had no more
to justify them than that one "then the
c°11tin
-111ng trend toward concentration of banking power in large banks,
Etble t
Pay a price that cannot be resisted, will result in the early
demis
e of all independent banks in Nassau County - indeed, all indektIc1(
banks throughout the country that are so located as to
attr'aCt
the covetous eye of expansion-minded institutions."
1963 Federal
4serlle Bulletin
737•
Since then, we have come a long way down that road.
the
Now
sme giant institution again stands before us, asking this
t irtie
that
I.7e approve its acquisition, at an irresistible price, of
°Ile but
two prime mall banks.
It should be noted that, whatever
e -rged as to the management succession problem in either bank,
°
'
era en which I will dwell further, both enjoy an exemplary
1111Qr17.1
-"sory rating.
Nor is the disappearance of a $35 million or a $50 million bank
t'atter
11Q11
of small concern, to be brushed away as unimportant - even in the
metropolitan area.
It is vital for the future of our economic system,
tanks equality of opportunity high on its scale of values, that the
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Federal Reserve Bank of St. Louis
497
c()/jetrY be served by relatively small as well as relatively large
The number of smaller banks in the New York metrcpolitan
11411k8+
41:
"is steadily declining.
In many parts of that area there are
lie Offices of mailer banks at all, and whether they like it or
tot)
people are obliged to do business with a big one.
For the
14)eal businessman, whose business future may depend en the
—4Ligent support of his banker, the substitution of a branch
katiager
(especially one who is obliged to operate
under an
lqera
-°nel book of rules promulgated in the finaacial distrf.ct
°f New York City) for the local banker who knew his customers'
'needs and credit-worthiness, and who operated on the basis
Of
hi
8 c)!In independent judgment, could result in disaster.
It may be argued that the Board should approve a merger
4151ic-F4
-40n in order to permit stockholders of smaller banks to
'
11,4N4
cl4te their investment when they want to (which is, in substance,
tilaat
`-e Board is doing here), unless the Board finds the transaction
to t,
-e contrary to the public interest. Such a contention would rest
°11 a
alse Premise. The Board is not deciding whether stockholders
shaal
1)4111;4
be Permitted to liquidate their investment in the business of
it is deciding whether they shall be permitted to accept a
4Pecif.
le offer for their stock and merge their bank with another named
bitk.
almost all cases, if stockholders genuinely desire to
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Federal Reserve Bank of St. Louis
498
.3.
nate their investment, a feasible route is usually available 111111c Stock can be sold to others than a large expansion-minded
bank that
seeks to absorb smaller ones. To approach ar. application
as 4,
4-c the choice were between approving this particular offer and
lOck4
'
44g
the stockholder into his investment forever is to give an
into1
erable advantage to big banks like Chemical, which can always
c4itbid smaller prospective purchasers.
The premiums being paid for the stock of the banks Chemical
sQeks to absorb in the present cases are large, indeed.
On the basis
c4thQ December 31, 1963 market value of the Chemical stock being
Q)1111ged for that of the Bensonhurst Bank, the premium equals
9.4 PQr cent of Bensonhurst i s total deposits, and exceeds its total
riet
ngs
for the past five years.
(In the case of the Mount Vernon
"a comparable basis, the premium equals the same percentage
c4 48 total deposits, and exceeds its combined net earnings for the
114t
81.%
years.)
That shareholder can resist such a price for his
t()Q1e:,
It must not be overlooked that we are passing here on
13lications to
merge banks, not unregulated nonbank businesses,
that
Congress has deliberately and specifically directed the
r1°C to approve an application unless a positive finding is made
tilq the transaction would be in the public interest.
In my Dissenting
44till"t in the natter of the Application of Liberty Bank and Trust
e°tillIallY) 1963 Federal Reserve Bulletin 14, I pointed out that:
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Federal Reserve Bank of St. Louis
499
"The Bank Merger Act was intended by Congress to
(1.t"-t bank mergers inimical to a competitive banking
sYstem. The steady reduction, through mergers, in the
n'eaPeer of unit banks, and the conseqle:It elimination
of competition were compelling consideraticas that
Prompted ena:tment of the law, and the inadequacies
ot then existing law with respect to the competiti.ve
factor in bank absorption(' was emphasized repeatedly
&ring Congress' consideration of the Act. (Senate
1.--sPort No, 196, April 17, 1959, pp. 8, 14; House
ReDort No. 1416, March 23, 1960, pp. 3-5) In the
11°rds of Senator Robertson, Chairman of the Senate
_ommittee on Banking and Currency, the Act 'seeks
c- make mergers of banks more difficult.' (105
C°11g. Record, Part 6, p. 8131)
* *
history reveal
legislative
its
"The statute and
tbal: Congress intended to make approval of a bank
Inarger dependent on a positive shoving that the
interest would be benefited and rejected the
P41losohy that doubts should be resolved in favor
87!ch mergers. The burden was placed on the
F°P0nents of a merger to show that it would promote
Pnb?ic Inzerest. (House Report No. 1416,
"roll
23, 1960, pp. 11-12; Senate Report No. 196,
4
PTil 17, 1959, pp. 19-21; 106 Cong. Record, Part 6,
P. 7258, Part 8, p. 9712)"
1
If this is a correct view of the purpose of the law as
r(.11,,eal
ed by its 1egislat4ve history (I think it is, and no one has
114dertaken
to dispute it), these cases have been decided erroneously.
How do the factors which Congress directed us to consider
baiatice
°ut in the two cases before the Board? The majority leans
1114tIlia:
Y on the management succession problem in each case; it is
441 that management is aging, and that replacements have not been
the
Assuming this is true, I cannot view the situation with
81e8ta‘'ItY as does the majority.
4i1
igent
To me, it is inconceivable that
A-1
search would not provide successor management for two
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Federal Reserve Bank of St. Louis
r".., I CI
-5inst
itutions with deposits of $35 and $50 million.
To say otherwise
is t
° give an invincible argument to every bank of comparable size
it1 the
country whose shareholders want to exchange their shares at
advantasieous ratio for the more readily marketable stock of a
la
rger
bank.
It need only wait, making no more than token efforts
to r,
'cruit successors, until top management approaches retirement age,
then
A
uiscreetly place itself on the block.
Since no successor
tnalla enlent is ht view, the supervisor will find itself compelled by
tile Precedents of these and other decisions to approve the result
°fthe
auction.
It cannot seriously be urged that the needs or the
'tivetlience of the communities involved in the two cases before the
1l be better served when Chemical has branches at the offices
the banks
to be acquired. I am not impressed by the fact that
444
additional services will be offered. All of these, and indeed
411 t1- e
services which a big bank is peculiarly fitted to offer are
4°14
readqr available in the communities, as the majority points out.
eala be
argued with a good deal more force that the acquisitions
1111 ill fact lessen community convenience, since the advantages
by a
"4red
ttltreasirl
smaller bank - advantages which the substantial and
number of customers in each case evidently value 1111 disaPPear.
So much for the factors alleged to favor approval.
What
4 the
actors against it?
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Federal Reserve Bank of St. Louis
As the majority admits, there is existing
501
-6el/rVetition between the banks involved which will be eliminated.
This
itself should be enough to condemn the proposals, under the
statut_ y
ur mandate, in the absence of counterbalancing favorable factors.
What of the acquiring bank?
In 1953, Chemical had 22
ces and $1,675 million in deposits.
When it filed the applications
4°14before the Board, it had 116 offices and $4,407 million in deposits.
4111°8t, only five of the 94 new offices and $1,231 million of the
$2,732
million increase in deposits were the result of normal growth.
r
est were acquired by mergers. Indeed, even these figures overstet
e the normal growth of Chemical, since some of the increases
O11d
fallen to the share of acquired banks - except for the
NIrop
c—r race in the New York area. Chemical itself, in 1954,
et)titr•
lbuted substantially to getting that race under way when it
4sorbA
e1/4, the Corn Exchange Bank and Trust Company.
act,
As a matter of
Chemical is one of the banks 'which Congress had specifically
ti Zit
When it passed the Bank Merger Act.
(See Senate Report No. 196,
At+
17
'1959, p. 12)
Should
Clearly Congress intended that the Board
exercise particular care in reviewing applications by the
tfth
largest bank in the United States to expand further still by
the tri
erger route.
In these cases, approval will eliminate two sound, profitable,
litirtt'sized institutions with no offsetting benefits to the public, and
1111
con
inue
141441
the trend toward fewer and fewer, larger and larger banks
e"gress intended to control.
41'141eations
should be disapproved.
411111t*Y 17, 1964.
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Federal Reserve Bank of St. Louis
Consequently, I believe these
502
Item No.
5
2/14/64
DISSENTING STATEUENT OF GOVERNOR DAANE
I disagree with the view of the majority that this application
should
be approved.
I do not think that consummation of the proposal
afford positive advantages to the public sufficient to offset
the
un avoidable diminution of competition which will result, particularly
Vj
17 of the size of the acquiring bank and the increasing concen-
trati
On in the New York City market.
s°41tion
If it proved true that no other
to the management successicn problem in the bank could be
4v10Ped,
the possibility of a more acceptable merger at a later
date wow
la
C)tq the
not be foreclosed.
For the present, I do not conclude
record before the Board that the problem is sufficiently
cutQ
tiOt
-u re quire, or to justify, this further concentration and I do
belie_ e
v approval would be in the public interest.
Accordingly, I would disapprove the application.
, 1964.
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Federal Reserve Bank of St. Louis
5(K,
Item No.
6
2/14/64
UNITED STATES OF AMERICA
SYSTEM
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL DESERVE
WASHINGTON, D. C.
14 the Matter of the Application of
—CAL BANK NEW YORK TRUST COMPANY
for
aPProval of merger with
4r8t National Bank of Mount Vernon
ORDER APPROVING HERGER OF BANKS
pursuant to the
There has come before the Board of Governors,
ilaCk Merger Act of 1960(1 2 U.S.C. 1898(c)), an application by Chemical
11 111.;
bank of
'
New York Trust Company, New York, New York, a State member
the p
approval of the merger
ederal Reserve System, for the Board's prior
Ot th
at
Vernon,
bank and The First National Bank of Mount Vernon, Mount
IleT4
under the charter and title of the former.
As an incident to
First National Bank
the IlletCer, the main office and three branches of The
Ofm
°lint
'ecn1PanN,.
h44
Trust
Vernon would become branches of Chemical Bank New York
approved by the Board,
Notice of the proposed merger, in form
een published pursuant to said Act.
the light of
Upon consideration of all relevant material in
the f
furnished by the
actors set forth in said Act, including reports
'Pttni
Corporation,
-,Jer of the Currency, the Federal Deposit Insurance
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-244 the
Department of Justice on the competitive factors involved in
the „
vroposed merger,
IT IS HEREBY ORDERED, for the reasons set forth in the
4ardtS
Statement of this date, that said application be and hereby
PProved, provided that said merger shall not be consummated
(i)
thin seven calendar days after the date of this Order or
(b) later
than three months after said date.
Dated at Washington, D. C., this 177:11 day of February, 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.
ir-aee) Mcvrin Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
505
Item No.
7
2/14/64
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY CHEMICAL BANK NEW YORK TRUST COMPANY
FOR APPROVAL OF MERCER WITH
THE FIRST NATIONAL BANK OF MOUNT VERNON
STATEMENT
Chemical Bank New York Trust Company, New York, New York
(4Chemieal“), with deposits of $4,558* million, has applied, pursuant
to
the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the Board's
approval of its merger with The First National Bank of
Iount
Vernon, Mount Vernon, New York ("First National") with deposits
cjE $48.8* m
illion, Under the charter and title of Chemical.
As an
incident to the merger, four offices of First National would become
11144ches of
Chemical, increasing the number of its domestic offices now
incqletion from 117 to 121**.
Under the law, the Board is required to consider, as to each
t
he banks
involved, (1) its financial history and condition,
() the
adequacy of its capital structure, (3) its future earnings
prosp
ects, (4) the general character of its management, (5) whether
Its c
orpora_e
u powers are consistent with the purposes of 12 U.S.C.,
kess
1"It The
otherwise stated, deposit figures are as of December 20, 1963.
umber of these offices would be increased to 123 when account is
take
Ordell of the 2 offices which will be acquired pursuant to the Board's
acctjof today's date approving the application by Chemical to
of t117e assets and assume liabilities of The Bensonhurst National Bank
t°°klyn in New York, Brooklyn, New York.
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Federal Reserve Bank of St. Louis
16 (the Federal Deposit Insurance Act), (6) the convenience and
"of the comnunity to be served, and (7) the effect of the
tS
S
action on competition (including any tendency toward monopoly).
11* 10arci- may not approve the transaction unless, after considering
thes'e factors, it finds the transaction to be in the public
tlatQrest.
Banking factors.
The finaacial history of both Chemical
a.11
ilist National is satisfactory.
Chemical is the fifth largest
batk
in the United States and the fourth largest in New York City.
fin
allcial condition is sound, its earnings prospects are favorable,
Its
al4tal structure is adequate, and its management is competent.
It is
rl°1; expected that these favorable attributes would be adversely
by consummation of the proposed merger.
First National, chartered in 1389, has been operated since
tzlter
Of the century by the family which still holds a stock
QSt r
epresenting effective control of the bank.
Its financial
(311clition ,s
4 sound and its capital structure adequate.
However,
Qllaanagement is competent, and earnings prospects generally favorable,
Qert
:
k.o 11/ asllects of the bank's present posture led to the present
With a concept of banking formed in a more spacious era,
tit to follow practices which were appropriate then, but are
tban
adequate now, executive management of the bank has aged
'claPting to a changing community environment.
:
:1it l °11t °
Each of the
kl.neipal figures in management is now over seventy years of age.
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Federal Reserve Bank of St. Louis
507
—311° 131..eParation has been made for management succession, and there are
no
e"obabie replacements in the present organization. With the
c°11t1'0
of an estate
11ing stock interest involved in the administration
the death within the past year of the former president, it is
e-LY that efforts to recruit successor management would be successful.
heorA
acute at
"LulaY, the management succession problem, while not
could become so at any time. In the context of the failure
s
" e--n.
management to compete aggressively with The County Trust
Cotrptl,,
--LY.("County Trust"), the largest Westchester County bank, and
48Aite the
ot
Protection enjoyed because of the "home office" feature
Nev York
State law (which prevents establishment of de novo branches
14
lit Vernon of banks headquartered elsewhere), unresolved management
41leees810r1 might well lead to declining profitability of the bank.
There is no indication that the corporate powers of the
e/ or would be, inconsistent with 12 U.S.C., Ch. 16.
Convenience end needs of the communities. - The effect of
the
11()sed acquisition would be felt in that portion of the southern
:
vi Westchester County, comprising the city of Mount Vernon and
4
litlges of Pelham, North Pelham, and Pelham Manor, which are
ttrQd
bY First National.
Mount Vernon covers a land area of 4.1 square miles, and
t4 thrf,
e villages which lie adjacent to it on the eastern side of
'
k.ttEte c
on River, cover an area of some 2.5 square miles.
The two
ollt'incd are bounded on the south by Bronx County, on the west by the city
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Federal Reserve Bank of St. Louis
508
-4Of yo
IlKers, on the north by the town of Eastchester, and on the east
bth
City of New Rochelle.
While Westchester County increased in population by 29.5
kr
cent during the decade from 1950 to 1960, the service area of
Pir
National, a well-established, older community, grew by only
6,3
Per cent during the same period.
the
The character of the population
area, however, has been changing.
Although the Pelhams, by
arld
4rge, still retain their character of middle and upper income
Sidential suburbs, Mount Vernon and to some extent Pelham Manor
have
Increasingly attracted manufacturing and wholesale establishments.
hiPPi„
'
4 1 is
Crtek
a vital county industry, with Mount Vernon's Eastchester
II
arbor the third largest oil port in the country.
The population density in Mount Vernon, in 1962, was
ovQr 18
500 to the square mile, as against 10,400 for the neighboring
qty of
Yonkers and 1,900 for the County as a whole.
4 P4rt
Moreover, as
the developmental picture, the percentage of lower-income,
gle.c
ot
°liar residents in Mount Vernon has been rising, while the percentage
()1Ler occupied dwelling units is lower than that in Yonkers and
,alde
t'ablY lower than that in New Rochelle or in the county as a
Ne.
llount Vernon is served by the main office and one of the
bt
44Q1les
°f First National, and by four branches of The County Trust
toh
ich were acquired by merger with two local banks, one in
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,
1A6 and
otti„
"e
one in 1952.
The Pelhams, which are not covered by home
protection, are served only by two branches of First National,
8.1t11°1401 approval has been given for the establishment of a branch
e4"4111 bY The Chase Manhattan Bank. Outside the service area of
4rst M,4+4
but reasonably close to it, are three additional
bratch
e8 of County Trust, four offices of other banks headquartered
1.11 /4e
stchester„ and three branches of New York City banks.
In view of the presence of County Trust, as well as other
%e8 no
-.4 competing financial institutions in the service area, and
ot otti
es of other banks just outside the area, the banking needs
the
'.urnmunity are not going unserved at the present time. However,
stprA Of
services offered by First National has been limited in
0, ktzbe
'
1 of important respects. The legal loan limit of the bank is
,
$300)00,
v) and from the record it appears that some customers of the
1)1bit
havC
credit requirements in excess of that limit. Requests in
t1leltk
al number for letters of credit, foreign collections, and
e have been referred by the brink to Chemical, its New York
earn- „
Nor does First National provide corporate trust
' As the commercial community in Mount Vernon grows, it can
tolt1
(1)ected
that the need for larger lines of credit, foreign services,
-ate
bkk
Lzust services, and other facilities which the resulting
1
earl ,
"e expected to provide, will increase correspondingly.
It appears further that First National makes few, if any,
1°ans on residential properties,that it has discouraged special
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Federal Reserve Bank of St. Louis
510
-6-
elle4ilag accounts, and that its interest in consumer installment
leak
ng has been limited.
It can be expected that the banking convenience of
(listota„
-'s in First National's service area would be better served
th
e eroposal were to be consummated. A wider choice of alternative
sollre
eS of
banking services would follow removal of "home office"
itection. for Mount Vernon.
The nearest office of Chemical bank to any
CoMpetition.
ot4e
e °f First National is in the Bronx, 2.7 miles south of the
bank's Pelham Manor branch.
Chemical has one branch in
tche
Ster County, in the town of Eastchester, 4.4 miles north.
It Is
evident from the record that there is some direct competition
bctli
ec14 the two banks.
As indicated above, the competition offered by First
44tiolaa.,
4
tt
to other banks, generally, has been limited.
Despite the
-a of the "home office" rule, it has failed to place branches
4Qstr
cl--e locations which it might well have served, and has left
411St to vim
'
the race by default. Management has not kept pace
'
-,anging character of the community.
-k4Qtiti
Handicapped by the
170 disadvantage at which it now finds itself, by the age and
kozre
future
ssivo bent of top management, and. by uncertainties as to
av„
.‘,Q1,4111
P of much of its stock, the bank has little chance of recouping
t
t.11 0
tPoti-Livo position. The proposed merger seems to offer the most
ote.b1
Prospect for reviving competition in the area.
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Federal Reserve Bank of St. Louis
511
-7With about 11.5 per cent of area deposits and 117 of the
4eats banking offices, Chemical is the fourth largest bank in New York
CitY. 0
s'orle
86 of these offices and $1.5 billion in deposits have been
%1114.through three mergers during the past ten years.
Approval
e Present application, and of the concurrent application to
Ntlir
e assets and assume liabilities of The Bensonhurst National
Iietk
c4 Brooklyn in New York in an Order of the Board of today's date,
viaa
uot change Chemical's rank as to deposits, but will place it in
thirA
'Position as to area offices, not far behind Chase Manhattan Bank
)",.7
and Manufacturers Hancver Trust Company with 140.
However, it does not appear that consummation of the present
mvsal
'LS would significantly increase the degree of banking concentration
-ther Brooklyn or in the Mount Vernon-Pelham area. In Brooklyn,
cal now appears to be in fifth or sixth place in deposit size,
44d.
8 tied for fourth place by number of offices, far behind both
actUrers Hanover Trust Company and First National City Bank in each
N3Qet,
-4 After the proposal is consummated) Chemical will still have
le
4 tha„
-- a tenth of deposits of commercial banks or banking offices in
trookl
and no change should result in the vigorous competitive climate
1)014%
d in the Board's Statement accompanying its Order mentioned
AS for Westchester, while Chemical, like every other New York
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Federal Reserve Bank of St. Louis
512
-8competes for business which crosses the county line,
41t11Q1"to it has scarcely entered the profitable on-the-spot marlzet.
41141ttillg it into Mount Vernon will end home office protection in
1
/
t4tcitY, and give the opportunity for a genuine range of banking
cli°1eQs to enter the local market.
Summary and conclusion. - Consummation of the proposal
1
bQl()I'e the Board will avert the very real possibility of a serious
1414(Qtlient succession problem at First National, and provide a second
°r a full range of banking services to a community whose
"
lk)Illi
ilktkrs laave
had to go outside its boundaries for a genuine alternative
*4t/IQ Principal bank now established there.
In addition, the merger
1113. reMove home office protection from the city of Mount Vernon,
11(114.1ttille the almost certain entry of additional banks to create a
11Qa'41111Y competitive climate.
Accordingly, the Board finds that the proposed merger would
the
public interest.
17, 1961+.
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Federal Reserve Bank of St. Louis
513
Item No, 8
2/14/64
DISSENTING STATEMENT OF GOVERNOR ROBERTSON
For the reasons expressed in my Dissenting Statement to the
E°4-rcits decision of today's date on an application by Chemical to
lientrt
e the assets of The Bensonhurst National Bank of Brooklyn in
4111
I would disapprove the application.
4
17, 1964.
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Federal Reserve Bank of St. Louis
Item No. 9
BOARD OF GOVERNORS
2/14/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDREBB OFFICIAL CORREBPONDENCE
TO THE BOARD
February 14, 1964
Board of Directors,
Pacific State Bank,
Hawthorne, California.
Gentlemen:
This refers to the request by your bank for
ePProval by the Board of Governors of the Federal Reserve
System, under Section 24A of the Federal Reserve Act,
°f a proposed investment of $21,000 in bank premises
bY the bank to purchase and convert land for additional
Parking facilities at the bankts main office.
Although the amount involved is relatively
small, in view of the conditions found in the recent
examination of Pacific State Bank by the Federal Reserve
Bank of San Francisco, including serious asset problems
and an unsatisfactory capital position, the Board is
unwilling to grant approval at this time for the proPosed additional investment in bank premises.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
515
BOARD OF GOVERNORS
Item No. 10
2/14/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 14, 1964.
Joseph R. Campbell, Vice President,
bedera]. Reserve Bank of Philadelphia,
hiladelphia, Pennsylvania 19101.
'
Dear Mr. Campbell:
10, 1964,
Reference is made to your letter of February
,
11o
(1 -t
Fondots and N. J. D'Antonio
- 4ng that Assistant Examiners C. L.
'
ed to FidelityExaminer V. H. Shumaker have become indebt
d adelphia Trust Company, Philadelphia, Pennsylvania, a State
:
n and
vsnlber bank, as a result of the recent merger of that institutio
ylPenns
ia,
vge Liberty Real Estate Bank and Trust Company, Philadelph
nia, the original nonmember bank lender.
Fondots and Shumaker
It is noted that Messrs. D'Antonio,
nation of Fidelityph, not be permitted to participate in any exami
"lladelphia Trust Company until the indebtedness has been liquidated.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
516
Item No.
BOARD OF GOVERNORS
11
2/14/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
February 14, 1964.
Mr. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond, Virginia. 23213
Dear Mr. Nosker:
ined in your
In accordance with the request conta
the designation
ves
appro
Board
the
,
letter of February 7, 1964
examiners
of the following employees as special assistant
purpose of
the
for
ond
Richm
of
for the Federal Reserve Bank
State member banks:
Participating in examinations of
William T. Cunningham, Jr.
Raymond L. Cawthon, Jr.
Dennis R. Shupe
Sommerville Wickham, Jr.
J. Thoms Huntley, Jr.
R. Wayne Stancil
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
@FedFRASER