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Minutes for
To:
February 27, 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.
Chin. Martin
Gov. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
rue'
Minutes of the Board of Governors of the Federal Reserve System
on Monday, February 27, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak 1/
—
Mills
Robertson
Shepardson
King
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Hackley, General Counsel
Noyes, Director, Division of Research and
Statistics
Farrell, Director, Division of Bank Operations
Masters, Associate Director, Division of
Examinations
Hexter, Assistant General Counsel
Furth, Adviser, Division of International
Finance
Daniels, Assistant Director, Division of
Bank Operations
Nelson, Assistant Director, Division of
Examinations
Goodman, Assistant Director, Division of
Examinations
Landry, Assistant to the Secretary
Potter, Legal Assistant
Items distributed to the Board.
beefl
The following items, which had
distributed to the Board and copies of which are attached to these
tilintztes under the respective item numbers indicated, were approved
141animous1y:
Item No.
tett
to Chase International Investment Corporation,
York City, extending to February 1, 1962, the time
I, hin which further investment may be made in Arcturus
estment & Development, Ltd., Montreal, Canada.
-T7--Wi
-
thdrew from meeting at point indicated in minutes.
1
2/27/61
-2Item No.
Letter to Chase International Investment Corporation,
2
New York City, granting consent to that Corporation
and/or Arcturus Investment & Development, Ltd., to
exercise an option to purchase not more than 5 per
cent of the shares of B. F. Goodrich Iran S. A.,
Tehran, Iran.
With respect to Item No. 2, Governor Robertson raised a question
concerning the indicated unwillingness of Chase International Investment
Corporation to mske a loan to B. F. Goodrich Iran S. A. unless it was
6iven an option to acquire shares of the borrower.
Mr. Furth replied
that since loans to firms in less developed countries carry a certain
118k, it is customary to seek to improve the return anticipated from them
bY Providing for the possibility of a capital gain, which in this case
l'7011111 result should the shares of B. F. Goodrich Iran S. A. rise in value
b5r an amount in excess of the option price.
He noted that this was in
keePing with the practice followed by the International Finance Corporation.
Hexter pointed out that Regulation K contemplates that financing
Corporations may purchase stock whether or not any loan is made.
Messrs. Goodman and Furth then withdrew from the meeting.
Report on competitive factors (Chicago, Illinois).
There had
been distributed under date of February 21, 1961, copies of a draft of
report
to the Comptroller of the Currency on the competitive factors
inlrolved in the proposed merger of City National Bank and Trust Company,
eilicago, Illinois, into Continental Illinois National Bank and Trust
C°14)8215r, also of Chicago.
731
2/27/61
-3Following a discussion during which certain changes were agreed
14)04, the report was approved unanimously in the form containing the
following conclusion:
The proposed merger of the second and sixth largest
banks in the area would substantially lessen both existing
and potential competition. As both banks serve similar
Clientele, the elimination of the smaller bank would remove
an alternative source of competitive credit and deposit
facilities as well as terminate its future capability for
growth and enhanced competitive capacity. The competitive
position of the applicant, already one of two dominant banks
in the city, would be strengthened. As a consequence the
preservation of effective competition in the area would be
more difficult.
Applications of Liberty Bank of Buffalo (Item No. 3).
There
haa been distributed under date of February 23, 1961, a memorandum from
the Division of Examinations recommending, as had the Federal Reserve Bank
Ilew York, approval of the merger of two banks (The National Bank of
?redonia, Fredonia, New York, and Erie County Trust Company, East Aurora,
4e14 York) into The Liberty Bank of Buffalo, Buffalo, New York, and the
°Peration of branches by the resulting bank (Liberty Bank and Trust
C°41PanY) at the present head office and one branch location of The
Ilational Bank of Fredonia and at the present hena office location of
CoUnty
Trust Company.
The Comptroller of the Currency and the
ecleral Deposit Insurance Corporation had concluded in each instance that
the
Proposed transaction would not have an adverse effect on competition.
The Department of Justice stated, with respect to the proposed merger of
The National Bank of Fredonia into The Liberty Bank of Buffalo, that the
732
2/27/61
addition of the relatively small resources of the former to those of the
latter would not appear to affect banking competition adversely in the
'Iffalo service area.
However, the entry of an additional large banking
°rganization into the service area of the merging bank might endanger
the ability of the remaining independent bank to compete effectively with
branches of three much larger banking institutions.
With respect to the
Proposed merger of Erie County Trust Company into The Liberty Bank of
13utfalo, the Department stated that although the proposed merger would
11°t appear to have a substantial impact on banking competition in the
service area of the acquiring bank, in the service area of the merging
be
the effect of the merger would be to replace an effective independent
ba4k with a branch of a much larger institution to compete with a branch
Of the largest bank in western New York.
This development, it was
slIggested, might add to the competitive handicaps of two smaller banks
14 nearby towns.
After consideration of all available information, including the
13481s for approval suggested by the Division of Examinations, a letter
t0 The Liberty Bank of Buffalo consenting to the proposed mergers and
843Pr°ving the operation of branches incident to the mergers was approved
Iltlarlimously.
A copy of the letter is attached as Item No. 3.
&121_lication of First Virginia Corporation (Item No.
4).
At its
ileeting on February 23, 1961, the Board approved, with Governor King
abstaining, an application by The First Virginia Corporation, Arlington,
733
2/27/61
Virginia, for prior approval, pursuant to section 3(a)(2) of the Bank
R°1ding Company Act of 1956, of the acquisition of 4,o.80 or more shares
of the 8,000 voting shares of Falls Church Bank, Falls Church, Virginia.
Pursuant to the foregoing action, the staff was instructed to prepare
for subsequent consideration by the Board drafts of an order and an
accompanying statement.
Reference had been made at the February 23
meeting to an agreement entered into between The First Virginia Corporation
and the two principal officers of Falls Church Bank on October 11, 19601
relative to continuation of the services of those officers and lifetime
PaYments to them and their widows.
The officers were to exert "their
lest efforts to obtain offers from other stockholders of Bank to sell
their shares to First Virginia if requested so to do by First Virginia...".
It Was understood at the February 23 meeting that a study would be made
by
the staff as to whether bank holding companies should be put on notice
that in the future the Board would require evidence of full disclosure
or such agreements to Fill stockholders.
Governor Robertson said that since last Thursday's meeting he
had reviewed the agreement in question.
This agreement called for First
Viqinia to vote its controlling shares of stock (assuming Board approval
Of
its application) to provide among other things for retention of the
t14° °fficers as consultants to the bank on a salary basis for the
lierrlainder of their lives regardless of any physical disability that they
'
night be suffering at the time, and also for specified monthly payments
OLJL
2/27/61
-6-
to their widows.
Governor Robertson noted that if existence of the
contracts with these men had been made known to the other stockholders
Of Palls Church Bank, he would have had no objection to the agreement.
On the other hand, since the file on this matter did not show whether
there had been such disclosure, he thought it desirable to ask First
/111‘ginia to clarify the point.
He believed the Board would be placed in
°4 awkward position should it announce approval of the application without
haviag this information in hand.
There ensued a discussion as to the alternative courses of action
the Board might pursue should First Virginia Corporation state that the
4Creement had not been disclosed to other stockholders of the bank.
It
/gas Pointed out by Mr. Hexter that if the Board were informed by First
Viqinia that there had been no disclosure of the agreement, it could,
lf it felt strongly enough, reverse its position and turn down the
aPPlication on that basis and in the light of such other considerations
a8 might be deemed pertinent.
°r the
If the Board saw fit to let its approval
application stand, nevertheless it could, if it so desired, bring
'314 in its statement on the matter that despite the undisclosed agreement
the,
uenefits to be derived from acquisition by the holding company of
the stock of the Falls Church Bank were regarded as sufficient to justify
atIProval of the application.
In this connection Governor Szymczak pointed out that the
41431J-cation had been approved by the Board on February 23 and the staff
2/27/61
-7-
had been requested to prepare drafts of an order and statement reflecting
such approval.
This action had been taken with the understanding that in
order to determine what policy should be followed in future cases, the
Board's staff would study the question of requiring full disclosure.
It was understood that the staff's recommendations would be presented
for the Board's consideration, and that the Board would then decide
whether all bank holding companies should be put on notice.
Governor Mills expressed the opinion that on the basis stated by
Governor Szymczak the Board might with some reason let its favorable
decision on the current application stand.
As Governor Szymczak had
Dointed out, such a procedure would contemplate that the Board would
f°110w through on the general problem to determine whether, with respect
to future applications, all bank holding companies should in some manner
he put on notice that applications would be subject to criticism unless
there was full disclosure to shareholders of any agreements entered into
by the
holding company in connection with its approach to the bank proposed
to be
acquired.
In response to a question, Mr. Hackley noted that the fundamental
gtlestion was whether lack of disclosure was a relevant consideration in
Iseachtng a decision on the current application.
He felt that it might
be s° construed if in the Board's judgment the approach followed by
Pirs4
'Virginia Corporation was such as to reflect on the integrity or
ethic
s of the management of the holding company.
However, since this
•*"ic
I00
-8-
2/27/61
would involve questioning the integrity of the management, it seemed to
him that the Board would want to be sure that it was on fairly sound
ground.
A denial of the application on the basis of lack of full
disclosure might, of course, be attacked by First Virginia as improper.
Without seeming to condone the transaction in question, he felt that it
would be desirable to think the matter through carefully in the light of
Practices followed by holding companies generally, and perhaps by banks
involved in merger transactions, in giving indications of continued
ealPloyment of the principal officers or shareholders of banks sought to
be acquired.
It might be difficult to draw lines of distinction between
such practices and the agreement entered into in the instant case.
After further discussion, the suggestion was made that it should
be
Possible to find out quickly from First Virginia Corporation whether
there was any legal or practical necessity for consummation of the proposed
Etcquisition of shares of the Falls Church Bank by the end of this month.
It was further suggested that it should be possible to obtain from First
Virginia Corporation without too much delay a letter which would clarify
whether the existence and terms of the agreement entered into between
st Virginia and the two officers of the Falls Church Bank had been
disclosed to the other shareholders of the bank.
It was agreed to proceed in such manner, with the understanding
that the drafts of order and accompanying statement carrying out the
decision reached on the First Virginia case at the February 23 meeting
I
2/27/61
-9-
would be submitted to the Board promptly for consideration in the light
of such additional information as might be obtained from the applicant
holding company.
Secretary's Note: A copy of the letter sent
to The First Virginia Corporation pursuant to
this action is attached as Item No. 4.
Messrs. Fauver, Masters, Hexter, Nelson, and Potter then withfrom the meeting.
Fixed asset and depreciation accounting at Federal Reserve Banks.
A memorandum from the Division of Bank Operations dated January 131 1961,
had been distributed to the Board on the subject of fixed asset and
depreciation accounting at the Federal Reserve Banks.
Reference was
Tiede in the memorandum to the studies and discussions engaged in during
'
the past year and a half by the Board, its staff, the Presidents' Conference,
44d Price Waterhouse & Co., with regard to depreciation on buildings and
'
fixed machinery and equipment at the Banks and related accounting procedures.
Att
achments included a memornndum summarizing the steps taken in consideration
clf the matter and a letter dated December
7, 1960, from Price Waterhouse
t esPonding to the Board's October 20 request for comment on the August 19,
'
1960) proposal of the Committee on Collections and Accounting of the
Plsesidents' Conference, which had been approved by the Presidents and
discussed with the Board at the joint meeting on September 13.
According
to this proposal, the annual depreciation rate would be reduced from 2
to 1-1/2 per cent on buildings and from 10 to 5 per cent on fixed machinery
y
t11,
2/27/61
-10-
and equipment.
Also, supplementary fixed machinery and equipment accounts
'would be established.
The December 7 letter from Price Waterhouse
(1) reiterated the accounting firm's earlier opinion that if the net
took value of Reserve Bank properties was not brought into line with the
useful lira of such properties by revaluations, anything else that might
or might not be done with respect to property accounting would be of
little consequence; (2) stated that by and large all of the formal
Proposals that had emerged from discussions of this matter had outlined
acceptable methods of accounting for Reserve Bank property; and (3) suggested that if the most recent proposal were adopted it would be desirable,
ill lieu of establishing supplementary fixed machinery and equipment accounts,
to segregate property additions by year of acquisition or to establish
some similar procedure so that depreciation would not be recorded on
fixed machinery and equipment over a period of less than 20 years.
The
tIvision of Bank Operations submitted with its memorandum of January 13
4
drof letter to the Presidents of the Reserve Banks that would state
that the Board had authorized the Division to revise existing Accounting
1411411a1 instructions "along the lines" of the recommendations approved by
the Presidents and the suggestion of Price Waterhouse.
At the request of the Chairman, Mr. Farrell reviewed the several
8tePs in the recent consideration of the question of fixed asset and
clePreciation accounting, noting in his remarks that the history of the
1113ject went back to discussion of reserves for contingencies of the
i'vdr.r 0,1
2/27/61
-11-
Reserve Banks in 1959, at which time question was raised whether the
Reserve Banks needed to continue charging depreciation.
He recalled that
the Subcommittee on Accounting of the Conference of Presidents rendered
an initial report on the subject in November 1959 and that Mr. Theodore
Herz of Price Waterhouse & Co. reported orally on the subject at a
m eeting of the Board on December 17, 1959.
Subsequently, Mr. Farrell
said, the subject was reassigned to the Subcommittee on Accounting, and
the Board authorized the Division of Bank Operations to work with Price
Waterhouse & Co. in developing new procedures.
There followed a letter
rePort from Price Waterhouse, a proposal by the Subcommittee on Accounting,
a compromise proposal by Mr. Farrell, and finally the proposal of the
Committee on Collections and Accounting.
It was evident, Mr. Farrell said, that Price Waterhouse attached
central significance to the view that if the net book value of Reserve
13a4k properties was not brought into line with the useful life of such
13r°Perties through revaluation, proposals such as those which had emerged
*°111 consideration of this matter by the Conference of Presidents would
11°t be of great consequence.
However, the Reserve Bank Presidents were
lltlanimously opposed to revaluations of this kind, particularly because
14 'llost instances this apparently would result in the writing up of
°.ssets-
on
Accordingly, the recommendations made by the Committee
ection5 and Accounting were viewed rather passively by Price Waterhouse.
74()
2/27/61
-12There followed a discussion based on comments by Mr. Farrell
concerning the principal features of the proposal of the Committee on
Collections and Accounting, along with the effects of revising the
accounting procedures along those lines.
In this connection, comments
were made on the reasons that might be cited for and against reducing
the current depreciation rates on buildings and on fixed machinery and
ecillipment, including the effect of such a change on the payments made by
the Federal Reserve Banks to the Treasury.
In response to questions, Mr.
Farrell and Mr. Daniels indicated that the Division of Bank Operations
had do strong feeling for or against adoption of the recommendations of
the Committee on Collections and Accounting.
They pointed out, however,
that the adoption of such recommendations would not accomplish too much
in the way of simplification of accounting procedures, which was an
ellginal objective of the study of fixed asset and depreciation accounting
at the Federal Reserve Banks.
They expressed agreement with the suggestion
°r Price Waterhouse that, if the Committee proposal were adopted, it would
he desirable, in lieu of establishing supplementary fixed machinery and
ec1-11-1-Pment accounts, to segregate property additions by year of acquisition
to establish some similar procedure so that depreciation would not be
Ilecorded on fixed machinery and equipment over a period of less than 20
Further, if the Committee proposal should be adopted, they felt
it lgould be desirable to provide some latitude for the Division of Bank
°Perations in revising the instructions contained in the Accounting Manual.
#
-13-
2/27/61
The question of the depreciation rates that would be most appropriate
was believed to involve essentially a policy determination.
A lengthy discussion ensued, the essential question being whether
the recommendations of the Committee on Collection and Accounting appeared
to offer sufficient advantages, in comparison with current accounting
Procedures, to warrant making the changes incident to their adoption.
Some of the members of the Board were inclined to the view that any
advantages would be of such minor consequence that the Board would be
'ranted in making a decision to maintain the status quo.
It was noted
that the Board's records would reflect the fact that the accounting
Procedures had been the subject of exhaustive review, but that it had
riot been possible to achieve agreement within the System on any procedures
substantially different from those currently in effect.
Other members
of the Board suggested that the amount of work that had gone into the
review of accounting procedures might make a decision to maintain the
status quo questionable.
It was pointed out that although Price Waterhouse
ePParently was not enthusiastic about the current proposal, nevertheless
the accounting firm had indicated that in general the procedures recommended
by the Committee on Collections and Accounting would involve acceptable
Illethods of accounting for the property of the Reserve Banks.
In the
elroumstances, and since the current proposal appeared to introduce some
1111Provements, even though modest in nature, these members of the Board
felt that there was something to be said for accepting the proposal.
2/27/61
Question was raised regarding the possibility of further consultation by the Board with Price Waterhouse, but it was brought out that
the views of the accounting firm appeared to be fairly evident and that
it seemed doUbtful whether much would be gained from additional discussion.
It was brought out that, having received the opinions of the
accounting firm, the Reserve Banks, and its awn staff, the determination
of the instructions that should be included in the Accounting Manual was
a matter within the Board's province.
Thus, it was suggested, at this
Point the appropriate procedure might be for the Board to exert leadership
in the determination of such procedures as in its judgment would be most
setiafactory, rather than to attempt to effect a compromise of the various
views that had been expressed.
Question was raised whether the Division
Bank Operations, if it were making its awn recommendations, as
contrasted with endeavoring to reach a solution on a compromise basis,
110111d propose procedures substantially along the lines suggested by Price
Waterhouse, and Mr. Farrell indicated that he thought such would be the
.
Case
Governor Mills then commented that before the Board took action
/41th regard to the proposal of the Committee on Collections and Accounting,
it might be desirable to request the Division of Bank Operations to
sUbmit to the Board for review a plan based essentially on the Price
Waterhouse suggestions, and it was agreed that this would be done.
During the discussion of the foregoing topic Governor Szymczak
/lithdrew from the meeting.
2/27/61
-15Chairman Martin referred
Negotiable time deposit certificates.
to inquiries he had received over the weekend concerning various aspects
Of the plan announced recently by several New York City banks to issue
negotiable time deposit certificates to corporations and to make a
market for those certificates.
In this connection, Governor Mills expressed the view that the
banks were embarking on an inadvisable course.
The issuance of the
certificates appeared to him to be in conflict with the principle that
should guide the maintenance of savings deposits; namely, that such
deposits should represent funds attracted to a bank pending their use
for some other form of investment.
The New York City banks, he suggested,
/4ere offering an instrument that represented a participation in the
whcae complex of assets of the issuing bank.
From the standpoint of
bank supervision, as distinguished from such questions as might fall
14itbin the purview of the Securities and Exchange Commission, he noted
that the time certificates were to be issued in large denominations, far
in excess of the insurance provided by the Federal Deposit Insurance
corporation.
Chairman Martin said he had had in mind that the Board should
discuss such considerations and that, if there was no objection, such a
discussion would be held at tomorrow's meeting.
All of the members of the staff then withdrew and the Board
into executive session.
74,1
2/27/61
-16Foreign travel by Mr. Hersey.
The Secretary was informed by
Governor Shepardson that during the executive session the Board gave
consideration to a memorandum dated February 23, 1961, from Mr. Marget,
Director, Division of International Finance, recommending that Mr.
RerseY, Adviser in that Division, be authorized to make a six-week trip
to Europe for the purpose of attending a special meeting of economists
of central banks to be held in Basle, Switzerland/ March 11-13, 1961,
in connection with the regular monthly meeting of the Bank for International
Settlements and also for the purpose of visiting a number of the European
central banks for discussion of matters of current interest with the
economists of those banks.
Governor Shepardson stated that the Board had
4%P.1.7221TA Mr. MArget's recommendation.
Also, the New York Reserve Bank
had indicated its intention to have a member of its staff attend the
m eeting of central bank economists in Bade, and no objection was interPosed by the Board.
The meeting then adjourned.
Secretary's Note: Pursuant to the recommendation contained in a memorandum from the
Division of Examinations dated February 21,
1961, Governor Shepardson today approved on
behalf of the Board the transfer of Jeannette
Samlyo from the position of Clerk-Stenographer
in the Division of Personnel Administration to
the position of Stenographer in the Division•
of Examinations, with no change in her basic
annual salary at the rate of $3,9700 effective
the date she assumes her new duties.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 1
2/27/61
ADORESS OFFICIAL
CORRESPONDENCE
TO THE BOARD
February 271 1961
Chase International Investment Corporation,
18 Pine Street,
New York 5, New York.
Gentlemen:
Reference is made to your letter of January 20)
1961) transmitted through the Federal Reserve Bank of New
York, regarding the Board's letters of February 21, 1957,
February 19, 1958, February 2, 1959, and February 1, 1960,
Which authorized your Corporation, subject to various conditions, to make further investment in Arcturus Investment
(11 Development, Ltd., Montreal, Canada (in form of stock or
Obligations), up to an amount which, with the existing inveStment, would not exceed US$7,500,000.
In accordance with your request and on the basis
Of the information furnished, the Board extends to
February 1, 1962, the time within which such investment
may be made.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 2
2/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
February 27, 1961
Chase International Investment Corporation,
18 Pine Street,
New York 5, New York.
G
entlemen:
In accordance with the request contained in your letter of
Ncember 7, 1960, transmitted through the Federal Reserve Bank of
'York, and on the basis of the information furnished, the Board
n4 G
overnors grants its consent for Chase International Investment
'iTirPoration ("CIIC") and/or Arcturus Investment &Development, Ltd.
I.ircturus"),
t
Montreal, Canada, to exercise an option to purchase and
:L
L 4A. not to exceed 5 per cent of the presently outstanding ordinary
:es of B. F. Goodrich Iran S. Ite, Tehran, Iran, at a cost of approxi111"
et
a/
19
!
41 US$126,000, such consent to remain in effect until December 31,
It is requested that you furnish the Board of Governors
thr^.1 _ ,,,Agn the Federal Reserve Bank of New York, pertinent details regard
0
the investment as outlined in condition nunbered (1) of the general
u°11sent granted to your Corporation on January 200 1960.
The Board's consent is granted upon condition that CIIC and
!
returue shall dispose of their holdings of stock of the Iranian
1PanY, as promptly as practicable, in the event that the Iranian
:
0,!T!..n,Y should at any time (1) engage in issuing, underwriting, selling
Qlstributing securities in the United States; (2) engage in the
conerel business of buying or selling goods, wares, merchandise, or
tiriTlAcdities in the United States or transact any business in the
States except such as is incidental to its international or
t,12ign business; or (3) conduct its operations in a manner which, in
;
1 1 Judgment of the Board of Governors of ,the Federal Reserve System,
r_ inconsistent with Section 25(a) of the Federal Reserve Act or
'Igulations thereunder.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
747
BOARD OF GOVERNORS
ottiltt**4
OF THE
'
'ii , , ,, , 000.
0
"
"
,i,;.%Olt;
AP
FEDERAL RESERVE SYSTEM
Item No.
2/27/61
WASHINGTON 25. D. C.
4
4
Vitel
i,4k
4;l
44444*
ADDRESS OFFICIAL CORRESPONDENC
E
TO THE BOARD
February 27, 1961
Beard of Directors,
The Liberty Bank of Buffalo,
424 nain Street,
B uffalo, New
York.
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 merger of
the Erie County
Trust Company, East Aurora, New York, and merger
f The National Bank of Fredonia, Fredonia, New York, into The
".- -berty Bank of Buffalo, under the charter of the latter bank
and
with a change of title to Liberty Bank and Trust Company upon
erger of Erie County Trust Company, as such mergers are believed
be in the public interest.
Z
The Board of Governors also approves the operation of
br
anches by The Liberty Bank of Buffalo at the following locations:
East Aurora Branch, 670 Main Street, East Aurora, New York
Fredonia Branch, 2 West Main Street, Fredonia, New York
Brocton Branch, 1 West Main Street, Brocton, New York
This approval is given provided the transactions are
,
Q ummated within six months from the date of this letter sub—
in accordance with the Plans of Merger submitted with
'
8l app ications, and shares of stock acquired from dissenting
"areholders are disposed of within three months of acquisition.
COno
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
3
BOARD OF GOVERNORS
OF THE
44q10"q
*
'
4
FEDERAL RESERVE SYSTEM
4
Item No.
4
2/27/61
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
•
TO THE BOARD
February 27, 1961
Mr. Edwin T. Holland, President,
The First Virginia Corporation,
2924 Columbia Pike,
Arlington 4, Virginia.
bear Mr. Holland:
In connection with your Corporation's application for
aPProval of the acquisition of shares of Falls Church Bank, the
Board has given consideration to the agreement entered into on
October 11, 1960, between the Corporation and Messrs. Shreve and
Walker (Exhibit C(4)).
The Corporation is requested to supplement the information
heretofore submitted by advising the Board whether the existence
or this agreement, and its terms, have been disclosed to the present
shareholders of Falls Church Bank. The Board also requests to be
advised as to the nature of any negotiations that have taken place
with said shareholders relating to the sale of their stock to the
C°rPoration, as well as any arrangements in the nature of options to
1?urchase, escrow agreements, or the like, that have been entered
iato with them. Needless to say, the Board would welcome any additional information or comments that would contribute to its full
Understanding of this matter.
Upon receipt of this information, it is hoped that the
aPPlication can be acted upon promptly.
Very truly yours,
uv
Merritt Sherma
Secretary.
@FedFRASER