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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 23, 1959
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, if you
were present at the meeting, please initial in
column A below to indicate that you approve the
minutes. If you were not present, please initial
in column B below to indicate that you have seen
the minutes.
Ohm. Martin
Gov, Szymczak
Gov. Mills
Gov. Robertson
Gov, Balderston
Gov, Shepardson
Gov. King
2(;5
Minutes of the Board of Governors of the Federal Reserve System on
, July 23, 1959.
711111713
'PRESENT:
Mt.
Mt.
Mt.
Mr.
Mt.
Mr.
Mt.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
King
Sherman, Secretary
Kenyon, Assistant Secretary
Solomon, Assistant General Counsel
Hexter, Assistant General Counsel
O'Connell, Assistant General Counsel
Nelson, Assistant Director, Division of
Examinations
Mr. Benner, Assistant Director, Division of
Examinations
Mt.
Mt.
Mt.
Mt.
Mr.
Mt.
Mr. Carl H. Morgenstern, President, and Mr. Siegel W. Juaa, a
clirector and Counsel,of Old Kent Bank and Trust Company, Grand Rapids,
Michigan, also were present.
Meeting with Old Kent representatives.
Pursuant to arrangements
1111de at their request, Messrs. Morgenstern and Judd were present to discuss
chan,
i'ses in the branch operations of Old Kent Bank and Trust Company since
its inerger last year with The Peoples National Bank, and the position of
°34 Kent as compared with that of other banks in Grand Rapids.
Mr. Morgenstern introduced his comments by noting that it had
beeh
aPProximately one year since the Board denied the application of
ICent to
operate seven offices of Peoples as branches following the
Illellger of
the two institutions.
trletitS
In the ensuing period, he said, develop-
had unfolded somewhat differently than might have been anticipated
7/23/59
-2-
hen the application was before the Board, and he and Mr. Judd would
like to review those developments.
Turning first to the trend of operations of Grand Rapids banks,
Mr. Morgenstern stated that total deposits had increased from $770
million to $810 million, or about 5 per cent, from the June 1958 call
date to the June
call date in 1959. In citing these figures, he was
using total deposits of the Michigan National Bank rather than the
dePosits of its branch in Grand Rapids, since the deposits of the
b anch were not available to him. In this period of approximately one
Year, depots of Old Kent increased from $227 million to $231 million,
a Percentage
increase of about 1.8, which meant that its deposit growth
had been lower
percentagewise than that of any of the other three banks
perattrig offices in Grand Rapids.
Old Kent's percentage of total
415"its had dropped from 29.5 to 28.6, while the percentages of each
ot tbe three other banks had increased moderately. These figures, Mr.
1444‘ganstern suggested, tended to indicate that the merger of Old Kent
4134 Peoples had
had little effect on the competitive situation.
Mr. Morgenstern recalled that prior to the merger Old Kent was
°Pel
'
ating 21 offices, while Peoples was operating 7 offices. He then
l'elatad haw certain offices of Old Kent and Peoples had been consolidatea and how certain branch quarters formerly operated by Peoples had
been
taken over by a competing Grand Rapids bank (Central Bank) so as
7/23/59
-3-
to furnish competition to Old Kent at those locations.
The directors
°I' Old Kent were reported to have agreed to consolidate the head office
Of Old Kent with the former head office of Peoples, although it had not
been decided which of the two locations would continue to be used as the
head office.
The net result of changes already made and others currently
under consideration would be that Old Kent was likely, within the relatively near future, to have in operation about the same number of offices
48 it had in operation prior to the merger with Peoples.
This statement
el3PerentlY did not take into account, however, a branch that Old Kent had
btained permission to open prior to the merger, and which was now in
ellion, or a branch not yet opened that Old Kent recently obtained
°.Pelc
'
Iperalission to operate in the Town of Cascade.
Mr. Morgenstern indicated that Old Kent desired particularly to
e°4t1nue to operate two branches known as the Wealthy-Lake and the Rogers
Rei6hts offices, formerly branches of Peoples National Bank.
The former
Ported to service a well-developed business area, and competition
II afforded by a nearby office of the Union National Bank.
"
It was
84€%ested that the
closing of this branch would reduce competition and
give
Ullion a virtual monopoly on business in the area unless the Central
Larik
should obtain permission to operate a branch in the vicinity. The
brarieh
in Rogers Heights was reported to serve a substantial business
grottr,
and a rapidly growing residential area that had been without
gt,t
7/23/59
•
-4-
blanking services until Peoples established the branch about three years
At present, the closest banking facility was a branch of Union,
about 1-1/2 miles distant from the branch of Old Kent.
Furthermore, at
the beginning of 1959 this area bad become incorporated, which was inte
rpreted by Old Kent to mean, under State law, that if Old Kent were
c°mPelled to close the existing branch it would be prohibited from going
Into the area to establish a branch de novo.
In summarizing their comments, Messrs. Morgenstern and Judd
l'equested that the Board review the situation in the light of develop1Q1ellts during the past year and perhaps make a new appraisal.
They then
l esloonded to questions regarding the location of Old Kent branches and
'
13161218 for consolidation of Old Kent offices and former offices of Peoples
14 the downtown area.
the
During this discussion, Governor Robertson raised
question whether there would be a legal basis for the Board, after
having made its original decision, now to permit Old Kent to operate a
bl'a/lch in the Rogers Heights area that had since been incorporated.
The
le.1511e8 were to the effect that it was thought any legal obstacles could
be overcome if the Board, upon reconsideration of the matter, should take
4 f4vorable view policywise with respect to operation of the Rogers Heights
There followed additional discussion with respect to the trend
dePosits of Old Kent, including both demand and time deposits, after
7/23/59
-5-
which Messrs. Morgenstern and Judd reiterated their request that the
Board reexamine the situation on the basis of developments that had
occurred
over the past year.
Messrs. Morgenstern and Judd then withdrew from the meeting,
as did Mr. O'Connell.
Discount rates.
The establishment without change by the Federal
Reserve Bank of San Francisco on July 22,
1959, of the rates on discounts
aria advances in its existing schedule was approved unanimously, with the
Understanding that appropriate advice would be sent to the Bank.
Items circulated to the Board.
The following items, which had
been circulated to the members of the Board and copies of which are
attached to these minutes under the respective item numbers indicated,
aPproved unanimously:
Item No.
Letter to the Mechanics and Farmers' Bank of Albany,
bl,banY, New York, approving the establishment of a
-6/x/ch in the Stuyvesant Plaza Shopping Center.
Letter to
the Lincoln Rochester Trust Company,
liochA„
- ery New York, approving the establishment
Of "
a
branch in Macedon.
Lett
er to the
Federal Reserve Bank of Chicago
'
legard*
s , lng the interpretation of "carrying" under
ee4"on 221.3(b)(1) of Regulation U.
Lett
ir to the Security State Bank, Pearsall, Texas,
vaive
vi„ 4g the requirement of six months' notice of
,
%.adra
SYstem.1gal from membership in the Federal Reserve
1
2
3
4
7/23/59
-6Item No.
Letter to the Comptroller of the Currency
5
recommending unfavorably with regard to an
aPPlication to organize a national bank at
Silsbee, Texas.
Messrs. Leavitt and Thompson, Supervisory Review Examiners,
Division of Examinations, entered the room at this point.
Continental Bank and Trust Company (Item No. 6).
There had
been circulated to the members of the Board a memorandum from the
sion of Examinations dated July 21 1959, summarizing information
received from the Federal Reserve Bank of San Francisco concerning the
Statils of loans to members of the family of President Cosgriff of The
C°4tinental Bank and Trust Company, Salt Lake City, Utah, as disclosed
by the examination of the bank as of May 25, 1959. Borrowings of Mr.
C°sgriff's mother had been eliminated during the examination and the
bc)rrowings of
Mr. Cosgriff's wife reduced to $150,000.
The memorandum
e)cipressed agreement with the position proposed to be taken by the San
Ill'ellcisco Reserve Bank that the outstandiag unsecured loan to President
ec)sgriffts wire
should be eliminated or adequately secured and that any
future
borrowings by the Cosgriff family should be on an adequately
sectlred basis or, if unsecured, supported by a satisfactory financial
statement and placed under a definite liquidation program. However,
the memor
um also suggested that it would be advisable to refrain
tl‘ct te.king a position at this time that might make it difficult to
7/23/59
-7-
avoid a section
30 proceeding.
Submitted with the memorandum was a draft
Of letter
to the Federal Reserve Bank of San Francisco which indicated
that it would be the preference of the Board to defer a decision
until
all facts were
available for consideration regarding the final outcome.
With reference to the oral arguments heard yesterday by the
11°ard in connection with the capital
aaequacy proceeding involving
Continental, Governor Mills noted that Counsel for Respondent, after
reiterating the construction of the law urged by Continental, concluded
with a
declaration that the Board's approach should not have been under
sectl°11.
9 of the Federal Reserve Act but under section 30 of the Banking
Act °f 1933.
t4eties
Governor Mills said he regarded this as a diversionary
He felt a section 30 proceeding should be avoided, and he had
Seat a memorandum to the Legal Division
outlining his reasoning at
greater length.
Governors Shepardson and Balderston raised the question whether
a 13°rtion of the
language found in the memorandum from the Division of
caminations should not be substituted for the concluding paragraph in
the Proposed
letter to the San Francisco Reserve Bank since it would
41315ear to state
the Board's position more specifically. After discussion of
thi,
" Possibility, it
was agreed that the letter should be left in the
tO,n1
of the draft submitted to
the Board but not sent until it was disellsee,, .
with Reserve Bank President Mangels, when he was in
Washington
7/23/59
-8-
next week, in order to make sure that the language of the letter would
create no misunderstanding with regard to the Board's position.
Secretary's Note: When Mr. Mangels was in the
Board's building on July 27, 1959, the matter
was discussed with him and he was shown the
letter proposed to be sent to the Reserve Bank.
Mr. Mangels expressed general agreement with
the position taken in the memorandum from the
Division of Examinations and indicated that the
letter would be understood by the Reserve Bank
in that context. Accordingly, the letter was
sent to the Reserve Bank on July 29, 1959, in
the form approved by the Board. A copy is
attached as Item No. 6.
_21tizens and Southern applications (Item No. 7). In accordance
With the
understanding at the meeting on June 23, 1959, there had been
a notice of tentative decision regarding the applications of
Citizens and Southern National Bank and Citizens and Southern Holding
C°11113anY, both of Savannah, Georgia, for prior approval under section 3(a)
cif the Bank Holding Company Act to acquire 2,500 of the outstanding
\rot"ng
shares of American National Bank of Brunswick, Brunswick Georgia.
No
e°mments having been received following publication of the notice
cn
be
tentative decision, it was now proposed that an order and statement
.1..
'sued approving the proposed acquisition of shares.
A draft of
'lift. 4.
-11"-ng opinion by Governors Robertson and King had been distributed
to the
Board prior to this meeting.
After a brief discussion, the applications of Citizens and
8°11thern
National Bank and Citizens and Southern Holding Company were
7/23/59
-9-
sPproved, Chairman Martin and Governors Balderston, Szymczak, Mills,
and Shepardson voting for approval while Governors Robertson and King
voted for denial.
Attached under Item No. 7 are copies of the order,
the statement of the Board, and the dissenting statement of Governors
Robertson
aria King.
These documents were the subject of a press
statement released on the afternoon of July 23, 1959.
The meeting then adjourned.
Secretary's Notes: Governor Shepardson
approved on behalf of the Board on July 22,
1959, the following items:
a
to the Federal Reserve Bank of Philadelphia (attached
N
Icem Letter
74---7.--11 approving the appointment of William J. McCuen, Jr., as
sslstant examiner.
4
Letter to the Federal Reserve Bank of Atlanta (attached Item No. 9)
EtsPr°ving the designation of Warren A. Seeley, Jr., and James D. Murphy
sPecial assistant examiners.
se_. Memorandum dated June 30, 1959, from the Division of Administrative
ices recommending the transfer of Richard J. Michel, Laborer, to the
j
po4
ition of Supply Clerk, Division of Administrative Services, with an
;
111
Of—ease in salary from $3,340 to $3,635 per annum, effective the date
entrance upon his new duties.
Governor Shepardson today approved on behalf of the
Board a letter to the Federal Reserve Bank of Atlanta
(attached Item No. 10) approving the appointment of
Alton Donald Sands as assistant examiner.
Governor Shepardson noted today on behalf of the
Board the retirement, effective August 1, 1959, of
Charles N. Griffin, Supervisory Review Examiner,
Division of Examinations.
OkY
7/23/59
-10The attached letter (Item No. 11) relating to
a Government employee parking survey was sent
today to the Bureau of the Budget following
approval by Governor Shepardson.
Seerret4ry
BOARD OF GOVERNORS
OF THE
Item No. 1
7/23/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
mat
TO THE BOARD.
Board of Directors,
Mechanics and Farmers' Bank of Albany,
Albany, New York.
Gentlemen
Pursuant to your request submitted through the
Federal Reserve Bank of New York, the Board of Governors
approves the establishment of a branch in the Stuyvesant
Plaza Shopping Center, Western Avenue and Fuller Road,
Town of Guilderland, Albany County, New York, by Mechanics
and Farmers' Bank of Albany, Albany, New York.
This approval is given provided the branch is
established within six months from the date of this
letter and formal approval of State authorities is
effective at the time the branch is established.
Very tray yours,
(3
Kemit
A.
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 2
7/23/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 23,
1959
Board of Directors,
Lincoln Rochester Trust Company,
Rochester, New York.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of New York, the Board of
Governors approves the establishment of a branch at
81 Main Street, Village of Macedon, Wayne County,
New York, by Lincoln Rochester Trust Company, Rochester,
New York. This approval is given provided the branch
is established within six months from the date of this
letter and formal approval of State authorities is
effective at the time the branch is established.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No.
3
7/23/59
ADDRESS OrrICIAL CORRESPONDENCE
TO THE BOARD
July
23, 1959
Mr, Paul C.
Hodge, Vice President,
General Counsel and Secretary,
Federal Reserve Bank of Chicago,
Chicago 90,
Illinois.
Dear Mr. Hodge:
This is in reply to your letter of July 6, 1959, enclosing
Photostatic copy of a letter dated July 1, 1959 to Mr. Lamphere of
the Detroit
Branch from the Manufacturers National Bank of Detroit
with
t
i
two questions relating to situations involving the interpreta°11 of "carrying" under section 221.3(b)(1) of Regulation U.
a
In the first situation mentioned in the letter to Mr. Lamphere,
the h
uank prior to June 15, 1959, made loans secured by listed stocks
w4e not for "carrying" under the restricted definition then in
t,ect, apparently because the purpose of the loans was not "to enable
borrower
to reduce or retire indebtedness which was originally
chcurred to purchase" stocks registered on a national securities extiahge. The bank states that if the loans were made at the present
however, they might be covered by the amended section 221.3(h)(1).
.
hero,
or the The bank asks, in effect, whether such a loan, which would
Purpose of "carrying" a registered stock under the amended
Itak lsion, became a regulated loan on June 15, 1959. The Board has
eo2n the position that the original purpose for which a loan is made
ap"Linues to be controlling during the life of the loan. It would
tirar, therefore, that when the Board amended section 221.3(b)(1),
nal Pr°vision regarded "carrying", all outstanding loans whose origiof
would have met the amended definition came within the scope
the
lend
e regulation. For this reason, it will be necessary for the hank's
l
lng officer, in the event of substitution or withdrawal of colemiencial,
ater
new borrowing, or the like, after the effective date of the
been ment to Regulation U, to determine whether the loan would have
and tf°r "carrying" under the provisions of the amended section 221.3(b)(1)
affi
aPply the provisions of the regulation if his determination is
respect ve. Of course, a bank does not have to take any action with
to such a loan until there is some such change in the amount
Of
the
e loan or its
collateral.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Paul C. Hodge
-2-
In the second situation, customers have had listed stock
?n deposit with the bank as collateral for a number of years, and
nave borrowed from time to time on that collateral without ever
(41n1ng the stock free of any lien for a continuous period of as much
one Year. The bank asks whether there is a presumption that a
an made on the security of the stock after June 15, 1959, is for
!arrying the
stock. It is believed that such a presumption is
fequired by the explicit language of the regulation, as interpreted
ln the Board's letter S-1700 of June 9, 1959.
r2
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
2ti
BOARD OF GOVERNORS
oilitte*g4
44,400cov*
11
OF THE
)1(-
FEDERAL RESERVE SYSTEM
Item No.
7/23/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 23, 1959
Board of Directors,
Security State Bank,
P
earsall, Texas.
Gentlemen:
The Federal Reserve Bank of Dallas has forwarded
to the
Board of Governors your letter of June 23, 1959, and
,
4!companying resolution signifying your intention to
withw from membership in the Federa
l Reserve System and
gequesting waiver of six months
' notice of such withdrawal.
In accordance with your request, the Board of
Governors waives the requirement of six months' notice
of
t
hdrawal. Upon surrender to the Federal Reserve Bank
Dallas of the Federal Reserve Bank stock issued to
",".,
1-11* institution, such stock will be canceled
and approt:r;Late refund
will be made thereon. Under the provisions
Section 10(c) of the Board's Regulation H, as amended
_effective
September 1, 1952, your institution may accomt1sh
termination of its membership at any time within
,Iht months from the date the
notice of intention to
hdraw from membership was
given.
n
It is requested that the certificate of memberShip b
di
e
to the Federal Reserve Bank of Dallas for
8P(Isition.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
4
t;
BOARD OF GOVERNORS
g.
OF THE
41) al 01' tiit4.*4
FEDERAL RESERVE SYSTEM
"
4
a 4.
Item No. 5
7/23/59
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 23, 1959
C
omptroller of the Currency,
Treasury Department,
Washington
25, D. C.
Attention Mr. G. W. Garwood,
Deputy Comptroller of the Currency.
Dear Mr, Comptroller:
Reference is made to a letter from your office dated
March 24, 1959/ enclosing copies of an application to organize
i national bank at Silsbee, Texas, and requesting a recommendacm as to whether or not the application should be approved.
'
Z
A report of investigation of the application made by
examiner for the Federal Reserve Bank of Dallas indicates
capital structure of $300,000 would be provided instead
of
:1 the $200,000 shown in the application. This revised capital
';'ructure would appear to be adequate. However, prospects for
atisfactory
earnings are not favorable in view of the projected
m lume of loans and deposits, arrangements for proposed manageant are not entirely satisfactory, and the need for an additional
:
mmsrcial bank in the area is not apparent at this time. AccordglY, the Board of Governors does not feel justified in recommending
approval of the application.
an
r!
The Board's Division of Examinations will be glad to
die
„cues any aspects of this case with representatives of your
'
lice if you so desire.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Sec.retrry.
BOARD OF GOVERNORS
e0c0401,4,
00"
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
7/23/59
WASHINGTON 25, D. C.
a
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
trit.0
'4404t;01.4*
July 29, 1959
C°NFIDENTIAL (F.R.
N. Mangels, President,
'cetera". Reserve Bank
of San Francisco,
Sari Francisco
20, California.
bear Mr.
Mangels:
Reference is made to your letter of June 23, 1959, sub'
information concerning the indebtedness of the Cosgriff
to The Continental Bank and Trust Company, Salt Lake City,
lettsThe Board would concur in your view that your transmittal
th_ r should state the Enid Cosgriff loan should be eliminated from
V
c:.esets
of the bank or be adequately secured to correct the adverse
:111:tle
oto
iLig the examination report. It is the Board's view that
by the Cosgriff family should be on an adequately
eetred basis
or, if unsecured, supported by a satisfactory financial
enlent, and with a definite liquidation program.
gr,,
The Board has noted the comments in the concluding para(let1-su or Your letter. It would be the preference of the Board to
er its
cola„,
decision in this matter until all facts are available for
it :Icicration respecting the final outcome. It will be appreciated
"
4 will keep the Board informed of the situation.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth AA Kenyon,
Assistant Secretary.
UNITED STATES OF AMERICA
Item No.
7
7/23/59
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
1 In
the Matter of the Applications of
CITIZENS AND SOUTHERN NATIONAL BANK
and
' CITIZENS AND SOUTHERN HOLDING COMPANY
for prior approval of acquisition of
voting shares of American National
Bank of Brunswick, Brunswick, Georgia
•••••
••IN
ORDER APPROVING APPLICATIONS
UNDER BANK HOLDING COMPANY ACT
There having come before the Board of Governors pursuant
to section
3(a)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843) and
section 4(a)(2) of the Board's Regulation Y (12 CFR
applications on behalf of Citizens and Southern
National
Bank and Citizens and Southern Holding Company, whose
respective principal office is in Savannah, Georgia, for the Board's
Pri°1" approval of the acquisition of 2,500 of the outstanding voting
shares of American National Bank of Brunswick, Brunswick, Georgia;
a Notice of Tentative Decision referring to a Tentative Statement
said applications having been published in the Federal Register
on June 30, 1959
(24 F.R. 5319); the said Notice having provided
interested persons an opportunity, before issuance of the Board's
final order, to file objections or comments upon the facts stated
-2-
and the reasons indicated in the Tentative Statement; and the time
for filing such objections and comments having expired and no such
objections or comments having been filed;
IT IS HEREBY ORDERED, for the reasons set forth in the
Beard's Statement of this date, that the said applications be and
hereby are granted and the acquisition by Citizens and Southern
National Bank and Citizens and Southern Holding Company of 2,500 of the
outstanding voting shares of American National Bank of Brunswick,
Brunswick, Georgia, is hereby approved, provided that such acquisition
is completed within three months from the date hereof, and that no
action be taken by Citizens and Southern National Bank or
Citizens
and Southern Holding Company that will result in the termination of
the corporate existence of American National Bank of Brunswick as a
separate functioning banking institution until after 60 days following
the date of this Order.
Dated at Washington, D. C., this 23rd day of July, 1959.
By order of the Board of Governors.
Voting for this action: Chairman Martin, Vice
Chairman Balderston, and Governors Szymczak,
Mills and Shepardson.
Voting against this action:
and King.
Governors Robertson
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(s'eiAL)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY CITIZENS AND SOUTHERN NATIONAL BANK AND CITIZENS
AND SOUTHERN HOLDING COMPANY FOR PRIOR APPROVAL OF ACQUISITION OF
VOTING SHARES OF AMERICAN NATIONAL BANK OF BRUNSWICK, GEORGIA
STATEMENT
Citizens and Southern National Banks Savannah: Georgia
("National"), and Citizens and Southern Holding Company
Savannah,
Gec'gj-a ("Ctilen.).9 both of which are bank holding companiess
have applied, pursuant to setion 3(a)(2) of the Bank Holding
Conpany Act of 1956 ('the
),P
fox the Board's prior approval
of Citizen2g auisition of 29500 of the 20,000 outstanding voting
8hare'0 of American National Bank of Brunnwl,c,k,s, Brunswick, Georgia.
Views and reommendationa of the Comptroller of the
Curro.
„..12c....
As required by s c;tion 3(b) of the Act, the Board gave
11°t1
c'e of the applications to the Comptroller af the Currenv.
The
Comptrcller recommended that the applications be approved by the
Board.
Stt:Lo:V factor*. - Section 3(c) of the Act require3
- -
the Board to take into consideration the following five factorag
(1) the financial history and condition of the holding company and
banv
concerned (2) their prospects (3) the character of their
inanagement
tie
(4) the
convenienz,Le
need3p and welfare of the communi-
and the area concerned; and (5) whether or not the effect of the
"quisition would be to expand the size or extent of the bank holding
.;$
,44,1/4
-2compav system involved beyond limits consistent with adequate
end sound banking, the public interest, and the preservation of
competition in the field of banking.
Discussion. - Citizens is a bank holding company under
section ?(a)M of the Act because of its ownership of more than
25 Per cent (in fact, a large majority) of the stock of each of
10 banks, with deposits ranging from $2.5 million to $27.4 million,
and aggregating over $100million„ located in 10 communities in
Geor-i_
8 ao
National, a bank with its head office in Savannah,
Georgi,
a
and its center of operations in Atlanta, operates 12
offices holding aggregate deposits of $470 million.
holding company
It is a bank
as defined in section 2(a)(3) of the Act, since
all of the outstanding shares of Citizens are held by trustees for
the benefit of the shareholders of National,
American National Bank, with deposits of $12.2 million,
•
has its head office in Brunswick, the county seat of Glynn County,
and a bl'aneh offlae in Jesup, the county seat of Wayne County,
It appears that the financial history and condition, the
Pr°-sPec'tss and the management of American and the two holding
•
Parlles are satiofactory and would not be adversely affeated by
the
Proposed acquisition.
The City of Brunswick (population about 20700) is served
.1:3Y thn,
•-e
hank, and th,ere 113 one other bank In Glynn County*
Wayne County hae two banking offL(,es, both in Jesup- one of them
beillg a branch af American. American holds about one-third of all bank
deposits in Glynn County and a majority of the deposte in Wlayne
C°44tyo
I L
The Brunswick and Jesup offices of American are about
77 miles and
66 miles, respectively, southwest of Savannah, the
location of the nearest banking offices of the Citizens and Southern
group.
Existing competition between American and the banking
offices of the group is negligible, and this situation would not
be changed by the proposed stock acquisition.
It is to be noted
that the proposed acquisition involves only 12-1/2 per cent of the
outstanding stock of American, so that American will not become a
subsidiary" of the holding companies; subsidiary status, under
sections 2(d)(1) and 2(d)(3) of the Act, is based on ownership of
25 Per
cent or more of the voting shares of the bank concerned.
In the opinion of the Board, the proposed transaction
140U1d not have any significant effect on the convenience, needs,
and welfare of the communities and the area concerned, and would
not expand the Citizens and Southern holding company system beyond
liMits consistent with adequate and sound banking, the public
interest,
and the preservation of competition in the field of banking.
Conclusion. - The above views were incorporated in the
Tentative Staterent issued in connection with the Notice of Tentative
heision
(24
published in the
P.a. 5319),
Federal Register on June 30, 1959
affording interested persons an opportunity to
slIbmit comments on or objections to the Board's proposed action, and
n° such comments or objections were received within the period specifled for their submission.
. "r'"•71("P
,4,0 .110,
Viewing the relevant facts in the light of the general
Purposes of the Act and the factors enumerated in section 3(c),
it is the judgment of the Board that the proposed acquisition would
not be inconsistent with the statutory objectives and the public
interest and that, accordingly, the applications should be approved.
It is so ordered.
JulY 231 1959.
4 r c**4
14 ir
Dissenting Statement of Governors Robertson and King
Section 3(a)(2) of the Bank Holding Company Act permits
a holding company to acquire, without Board approval, up to 5 per
cent of the voting shares of additional banks.
Congress' view that acquisition of more than
5
This reflects
per cent of a bank's
stock cannot be regarded as an insignificant acquisition; that is
the reason why, under the kct, such an acquisition may not be consummated without the Board's approval.
We believe that approval of an application to purchase
more than 5 per cent of the stock of an additional bank must be
based on evidence that the public interest will be better served
by such
acquisition,
It is not contended by the applicants, in this case, that
the Proposed acquisition will have any favorable effect on the convenience,
needs, or welfare of the community or area concerned. It
is true that the transaction will not increase the number of statut°rY "subsidiaries" in the Citizens and Southern holding company
8Y3tern
but this does not mean that the sphere of influence of the
holding companies will not be expanded, We believe that it will be.
The absence of prospective benefits that would justify the
acquisition gives this matter importance that reaches beyond the
mediate transaction. We are concerned lest approval in this case
establish a general principle that a holding company can acquire
°'''stantial minority interests in any banks that are not in direct
eQmPetition with banks that are already members of its system*
)
T.
-2-
In view of the Board's decision in this case, it is difficult to
see how any such application could hereafter be denied without
making an arbitrary distinction from this case.
As previously indicated, the acquisition will expand
the holding companies' sphere of influence.
In the absence of
evidence that the transaction would contribute to the convenience,
needs, or welfare of the community or area, it is our judgment
that such expansion would not be consistent with the purposes of
the Bank Holding Company Act or with the public interest in the
of banking.
should be denied.
Therefore, we conclude that the applications
BOARD OF GOVERNORS
OF THE
Item No. 8
FEDERAL RESERVE SYSTEM
7/23/59
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 22, 1959
Mr. Joseph R.
Campbell, Vice President,
Federal Reserve Bank of Philadelphia
,
Philadelphia
1, Pennsylvania.
Dear Mr. Campbell:
In accordance with the request contained in your
letter of July 20, 1959,
the Board approves the appointment
(
2! William J.
McCuen, Jr., as an assistant examiner for the
Federal Reserve Bank of Philadelphia
. Please advise the
Board if the appointment
is not made effective September 1,
1959, as planned.
It is noted that Mr. McCuen is the son of the
Auditor of the Girard Trust Corn
Exchange Bank, Philadelphia,
Pennsylvania a
State member bank. Accordingly, the Board's
approval is
given with the understanding that he will not
participa
te in any examination of the Girard Trust Corn
xchange Bank as long as his father
is an officer of that
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
40\411044
41'44
0C°40P; 4
.
714
(4)
io,„N
OF THE
FEDERAL RESERVE SYSTEM
Item No.
1,4
r' 6*
C?
9
7/23/59
WASHINGTON 25. D. C.
ADDRESS orFictat. CORRESPONDENCE
tftst4
*4 koo*
TO THE BOARD
*ti
July 22,
1959
Mr. Geo. W. Sheffer, Jr.,
Chief Examiner,
Federal Reserve Bank of Atlanta,
Atlanta 3, Georgia.
Dear hr. Sheffer:
In accordance with the request contained
in your letter of July 17, 1959, the Board approves
the designation of Warren A. Seeley, Jr. and James D.
Mhrphy as special assistant examiners for the Federal
Reserve Bank of Atlanta, for the purpose of partici—
pating in the examination of State member banks only.
The name of Robert P. Maynard has been
deleted from-the list of special assistant examiners.
Very truly yours,
(Signed.) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 10
7/23/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 23, 1959
PSIETE
:NlaLitla/
11r. J. E. Denmark, Vice President,
Federal Reserve Bank of Atlanta,
Atlanta 3, Georgia.
Dear Mr. Denmark:
In accordance with the request contained in your
letter of July 16, 1959, as amended by your telegram of
JulY 21, the Board approves the appointment of Alton Donald
Sands as an assistant examiner for the Federal Reserve Bank
of Atlanta. Please advise as to the date on which the
aPpointment is
made effective.
It is noted that Mr. Sands is indebted to First
Farmers and Merchants National Bank of Columbia, Columbia,
I
tie_lines3ee, in the amount of approximately $700. Accordingly,
12
uZici :lt,
7
n7proval of the appointment is given with the
that he will not participate in any examination
or that bank while indebted
to it, and that his indebtedness
will be placed on a regular reduction basis.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 11
7/23/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 23, 1959
of the Budget,
tt164, Executive Office Building,
l''
81u-ligton 25, D.
C.
Gentlemen:
datedj , Pursuant to Paragraph 3 of Bureau of the Budget Bulletin No. 60-1
ri
ulY 6, 1959, this report is submitted providing answers to the vachlete_,questions concerned with the Government employee parking survey conu on July
21, 1959:
.a. Personnel problems. - There is no evidence that parking
m J-4flculties in the area pose such personnel problems
as recruitents turnover, or absenteeism at the Board's offices.
pr
bs hailEnment of Government parking spaces. - The Board's
wh?PertY, acquired in 1935, included in addition to the square on
1313 -1-ch the
Board's building is located, a portion of the vacant
anrk lying immediately north of the building site between 20th
1St Streets on C Street. Since occupancy of the building in
193-,
fo r, this parcel of Board property has been used as a parking lot
an
'employees' cars. An employee desiring parking space submits
ca aPPropriate application. Since the lot is currently filled to
,1;acitY, the application is held on a waiting list until a va0,
A-t7°Y occurs through personnel separations or for other reasons.
yo,Present there are 13 applications for parking permits on the
-4-ting list.
trat4 c- Car ools. - The Board's Division of Personnel Adminisin -Lon assists new employees in securing rides to work by arrangth
:contacts with
other employees residing in, or traveling through,
are 3441s general area in which the new employee lives. Employees
ett,allowed the use of a bulletin board which is accessible to all
to``'tf members for the purposes of posting notices to request rides
arld from work and for arranging car pools.
d. Official cars. (1) Five (5) parking spaces are currently reserved
for parking official cars.
(2) Five are needed for this purpose.
Bureau of the
Budget
(3)
e.
-2-
The number of spaces mentioned above
is adequate.
Official visitors' cars. (1) No specific parking spaces are reserved for official visitors' cars. On infrequent occasions
when it is necessary to provide parking space for
official visitors' cars, the five spaces normally
assigned to the Board's official cars are made
available for the purpose. The Board's official
cars are generally operated during normal business
hours, and at intervals when they are not in use
they are temporarily parked in restricted areas
on the premises on those occasions when it is
necessary to accommodate official visitors' cars.
(2) As noted above, no specific number regularly
required for this purpose.
(3) No additional spaces required for this purpose.
Very truly yours,
Merritt SheiiianP
Secretary.
@FedFRASER