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hR 609 P 4el?' 1(1/59 Minutes for To: February 15, 1961 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. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Intht Minutes of the Board of Governors of the Federal Reserve System on Wednesday, February 15, 1961. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Miss Carmichael, Assistant Secretary Mr. Fauver, Assistant to the Board Mr. Hackley, General Counsel Mr. Solomon, Director, Division of Examinations Mr. Hexter, Assistant General Counsel Mr. Hooff, Assistant General Counsel Mr. Hostrup, Assistant Director, Division of Examinations Mr. Nelson, Assistant Director, Division of Examinations Mr. Goodman, Assistant Director, Division of Examinations Mr. Bass, Assistant Controller Mr. Leavitt, Supervisory Review Examiner, Division of Examinations Discount rates. The establishment without change by the Federal Reserve Bank of Minneapolis on February 14, 1961, of the rates on discounts and advances in its existing schedule was approved unanimously, 'with the understanding that appropriate advice would be sent to that Bank. E2port on competitive factors (Goldsboro, Greensboro, and Slithil.North n Carolinalt There had been distributed to the Board Copies of a draft of report to the Federal Deposit Insurance Corporation °n the competitive factors involved in a proposed merger of American Bank, Goldsboro, North Carolina, and Mid-Carolina Industrial Bank, Greensboro, 2/15/61 -2.- North Carolina, with and into First-Citizens Bank & Trust Company, Smithfield, North Carolina. The report concluded as follows: The proposed merger of American into First-Citizens would have the effect of locating an additional major bank in the City of Goldsboro and Wayne County, presently served by two major banks having 74.2 per cent of county deposits. There would be no reduction in the number of banking offices. An increase in competition, rather than a decrease, should result from the transaction. . The proposed merger of Mid-Carolina Industrial into First-Citizens represents a move into new territory for First-Citizens and the conversion of a specialized, and noncompetitive, bank to a branch of the third largest commercial bank in the State. Such conversion should Operate to increase competition in the area involved. The proposed transactions are in furtherance of a trend in North Carolina toward concentration of bank resources in a comparatively few large banks. Reference was made in the report and the accompanying memorandum frc)m the Division of Examinations to the fact that First-Citizens Bank & Illust Company apparently became a bank holding company about December 1959 through the acquisition of some 79 per cent of the outstanding shares of 'lid-Carolina Industrial Bank by one of its wholly-owned subsidiaries. At that time First-Citizens already owned indirectly a majority of the shares °i* American Bank, Goldsboro. First-Citizens did not request the Board's Permission to become a bank holding company, pursuant to section 3(a)(1) of the Bank Holding Company Act, nor had the bank registered as a bank 41ding company pursuant to section 5. After discussion, the report on competitive factors was approved unanimously for transmittal to the Federal Deposit Insurance Corporation. 5S6 _3_ 2/15/61 In addition, it was understood that the Division of Examinations would request the Federal Reserve Bank of Richmond to make an investigation Of the apparent violation of the Bank Holding Company Act by First Citizens Bank & Trust Company. Eaport on competitive factors (Waterville, Minnesota). There had been distributed to the Board copies of a draft of report to the Federal Deposit Insurance Corporation on the competitive factors involved in the proposed purchase of assets and assumption of liabilities of Security State Bank of Waterville by Citizens State Bank of Waterville, 134°th of Waterville, Minnesota. The report concluded as follows: While the proposed purchase and assumption would eliminate one banking outlet, the effect on competition would be negligible as this was eliminated when Mr. Zachman became owner of both banks. The resulting bank with its greater resources and expanded banking services should benefit customers of both Citizens and Security Banks. No objection being indicated, the report was approved unanimously for transmittal to the Federal Deposit Insurance Corporation. Application of Montgomery County Bank and Trust Company Item No. 1). At the Board meeting on February 10, 1961, consideration was given to an application by Montgomery County Bank and Trust Company, Nollristown, Pennsylvania, for permission to merge with The National Bank and Trust Company of Spring City, Spring City, Pennsylvania, under the Charter and title of the applicant bank, and to operate branches at the 1°cati0n5 of the head office and branch of the Spring City bank. Pursuant tO discussion at that meeting, there had been distributed to the members r-, 2/15/61 -4- cf the Board a supplemental memorandum from the Division of Examinations dated February 14, 1961, giving detailed information regarding banking °ffices, including branches of Philadelphia banks, in the area served by the applicant bank. A map of the area showing the available banking facilities was submitted with the memorandum. Governor Mills commented that the additional information was useful to him and that in his opinion it supported the original recommendation of the Division of Examinations that the merger be approved. He expressed the view that it would be helpful to the Board to have information of this kind when considering other difficult merger ap plications. On the basis of the additional information, the members of the Board were of the opinion that the application should be approved. question was raised as to whether the matter should be held over for G°vernor Robertson's return in view of the questions he had raised during the or discussion of the application. However, since the supplemental " 111 1°randum furnished by the Division of Examinations had supplied the a'ciclitional data requested at the February 10 meeting and the questions discussed at that time appeared to have been resolved, the letter to 11°11tgomery County Bank and Trust Company consenting to the merger and aPProving the operation of branches was approved unanimously. A copy of the letter is attached as Item No. 1. Messrs. Molony, Assistant to the Board, and Sammons and Furth, Advisers, Division of International Finance, entered the room at this point. 2/15/61 -5Items distributed to the Board. The following items, which had been distributed to the Board and copies of which are attached to these in-Mutes under the respective item numbers indicated, were approved unanimously: Item No. etter to Chemical Bank New York Trust Company, New York City, authorizing the organization of a Ici°rPoration under section 25(a) of the Federal seserve Act, to be known as Chemical International .anking Corporation, for the purpose of engaging in int ernational or foreign banking. 2 Letter to Chairman Robertson of the Senate Committee 3 T1 Banking and Currency transmitting copies of (a) ,fie report of audit of the Board's accounts for 1960; .ktil?) financial statements as at December 31, 1960: (c) ' le report on scope of examination of financial sttatements; and (d) the auditorst letter of sransmittal. (With a similar letter to Chairman Pence of the House Committee on Banking and Currency.) With reference to Item No, 2, Governor Balderston referred to a illatter that would be coming before the Board shortly, involving the moving to Bermuda at the first of this year of the office of Chemical Overseas Pin ance Corporation (a Panamanian subsidiary of Chemical International Pin ance, Ltd., which is wholly owned by Chemical Bank New York Trust C°111PanY). He questioned whether this change without the Boardts approval e°r1atituted sufficient reason for deferring action on the current application. Rowe ver, following comments by Messrs. Goodman and Hexter, it was agreed that there would seem to be no reason to defer granting the preliminary Permit requested by Chemical Bank New York Trust Company. 2/15/61 -6Messrs. Hooff, Nelson, Bass, and Leavitt then withdrew from the meeting, North Shore Bank, Miami Beach, Florida. Mr. Solomon reported that he had received a telephone call from Mr. Patterson, First Vice President and General Counsel, Federal Reserve Bank of Atlanta, who advised that a letter from Federal Deposit Insurance Corporation Examiner Lindsey requested permission to retain in his custody for an additional 30 days the examination reports of North Shore Bank, Miami Beach, Florida, 14hich he received January 18, 1961. The reports had been requested by the DePartment of Justice for review by the United States Attorney in Miami in connection with the preparation of a case involving certain directors and officers of the member bank, and in a letter dated January 11, 1961, the Board authorized the Federal Reserve Bank of Atlanta to send the reports to Examiner Lindsey. It was the recommendation of Mr. Solomon that the request be granted, notwithstanding the fact that it had been received from Mr. Lindsey rather than through the Department of Justice. Pursuant to Mr. Solomon's recommendation, it was agreed to grant the request. In accordance with this action, a telegram was sent to Mris Patterson authorizing him to inform Examiner Lindsey that he would be Permitted to retain the examination reports for an additional 30 days subject to the conditions expressed in the Board's letter of January 11, 1961, to the Federal Deposit Insurance Corporation and in the terms of the letter of instruction sent to Mr. Lindsey under date of January 16, 1961, Gut) 2/l5/61 by -7- President Bryan of the Federal Reserve Bank of Atlanta. The meeting then adjourned. Secretary's Note: Pursuant to the recommendation contained in a memorandum from the Division of Administrative Services, Governor Balderston, acting in the absence of Governor Shepardson, today approved on behPlf of the Board an additional advance of sick leave for Lettie Reddick, Charwoman in that Division, for the period February 16 through February 21, 1961. BOARD OF GOVERNORS Kt,'ett**'4 te*tki, OF THE `tv4 , FEDERAL RESERVE SYSTEM Item No. 1 2/15/61 WASHINGTON 25, D. C. 4 ADDRESS OFFICIAL CORRESPONDENCE Nut * TO THE BOARD February 15, 1961 Board of Directors, Montgomery County Bank and Trust Company, Norristown, Pennsylvania. Gentlemen: The Board of Governors of the Federal Reserve SYstem, after consideration of all factors set forth in section 18(c) of the Federal Deposit Insurance Act, hereby consents to the merger of The National Bank and Trust Company of Spring City, Spring City, Pennsylvania, into and with Montgomery County Bank and Trust Company, Norristown, Pennsylvania, under the charter and title of the latter as such merger is considered to be in the public interest. The Board of Governors also approves the operation of branches by the resulting bank at Bridge Street and Schuylkill Road, East Vincent Township, Chester County, Pennsylvania, (Spring City P.O.), and 53-55 Main Street, Spring City, Chester County, Pennsylvania. This approval is given provided: (1) the proposed merger is effected within six months from the date of this letter and substantially in accordance with the Agreement Of Merger approved by the board of directors of both banks on October 27, 1960, and (2) shares of stock acquired from dissenting stockholders are disposed of within six months from the date of acquisition. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 62 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 2/15/61 ADDRESS orriciAL CORRESPONDENCE TO THE BOARD February 15, 1961 Mr, Clinton C. Johnson, Executive Vice President, Chemical Bank New York Trust Company, 165 Broadway, New York is, New York. Dear Mr. Johnson: The Board of Governors has approved the Articles o,r Association and the Organization Certificate, dated , December 6, 1960, of Chemical International Banking CorP°ration, and there is enclosed a preliminary permit authorizing that Corporation to exercise such of the Powers ers conferred by Section 25(a) of the Federal Reserve organization. A t as are incidental and preliminary to its ,,s_ you are aware, the Corporation may not exercise any of e other powers conferred by Section 25(a) until it has r ueceived a final permit from the Board authorizing it gtnerally to commence business. The steps which must be 'ken prior to issuance of a final permit are enumerated 111 Section 211.3(c) of the Boardts Regulation K. 7 Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. Enclosure Cit)3 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Preliminary Permit IT IS HEREBY CERTIFIED that the Board of Governors Of the Federal Reserve System, pursuant to authority vested it it by Section 25(a) of the Federal Reserve Act, as amended, has this day approved the Articles of Association and Organization Certificate, dated December 6, 1960, of CHEMICAL INTERNATI AL BANKING CORPORATION duly filed with said Board of Gcliernors, and that CHEMICAL INTERNATIONAL BANKING CORPORATION is authorized to exercise such of the powers conferred upon it bY said Section 25(a) as are incidental and preliminary to its cl'gstization pending the issuance by the Board of Governors of the Federal Reserve System of a final permit generally to comIllence business in accordance with the provisions of said Section 25(a) and the rules and regulations of the Board of Gove rnors of the Federal Reserve System issued pursuant thereto. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (aRAL) By (Signed) Elizabeth L. Carmichael Assistant Secretary otitteitt), _ BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 4 't. ,N t) ea 43 2/15/61 WASHINGTON *0Alet .>'4 4 .ii.ttoi4.a. OFFICE OF THE CHAIRMAN February 15, 1961. The Honorable A. Willis Robertson, Chairman, Committee on Banking and Currency, United States Senate, Washington 25, D. C. Dear Mr. Chairman: In accordance with the practice followed for the past several years, there is enclosed a copy of the audit report made by the firm of public accountants that audited the accounts of the Board of Governors of the Federal Reserve System for the year ended December 31, 1960. In addition to the report and financial statements as at December 31, 1960, there is included a copy of the report on the scope of examination of financial statements, as well as a copy of the letter of transmittal dated February 13, 1961. Sincerely yours, (Signed) Wm. McC. Martin, Jr. WM. McC. Martin, Jr. Enclosures 3
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