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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 23, 1963
Attached is a copy of the minutes of the Board of Governors
of the Federal Reserve System on the above date.
It is proposed to place in the record of policy actions
required to be kept under the provisions of section 10 of the
Federal Reserve Act an entry covering the item in this set of
minutes commencing on the page and dealing with the subject
referred to below:
Page 11
Approval of a discount rate of 3-1/2 per
cent for the Federal Reserve Bank of
Atlanta.
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. King
Gov. Mitchell
„-
"4.1i •
,
Minutes of the Board of Governors of the Federal Reserve System on
The Board met in the Board Room at 10:00 a.m.
Tuesday, July 23, 1963.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Sherman, Secretary
Fauver, Assistant to the Board
Hackley, General Counsel
Kiley, Assistant Director, Division of
Bank Operations
Mr. Benner, Assistant Director, Division of
Examinations
Mr. Mattras, General Assistant, Office of the
Secretary
Miss Hart, Senior Attorney, Legal Division
Mr. Hricko, Senior Attorney, Legal Division
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Bank of Boston on July 22, 1963, 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.
Distributed item.
The following item, a copy of which is attached
to these minutes as Item No. 1, was approved unanimously:
Letter to Bank of Idaho, Boise, Idaho, approving
the establishment of a branch in Nampa and commenting on the need for further strengthening
the bank's capital position.
Report on competitive factors (Charlotte-Chapel Hill, North
DITaliall.
There had been distributed a draft of report to the Comp-
troller of the Currency on the competitive factors involved in the
Proposed merger of The Bank of Chapel Hill, Chapel Hill, North Carolina,
Into North Carolina National Bank, Charlotte, North Carolina.
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7/23/63
The report was approved unanimously for transmission to the
Comptroller; the conclusion read as follows:
A merger of North Carolina National Bank and The
Bank of Chapel Hill would eliminate present and potential
competition between them and would expose the remaining
Chapel Hill offices of a much smaller bank to the competitive abilities of a substantially larger regional banking
institution. The merger represents the continuance of a
trend in North Carolina toward concentration of banking
resources in a few large banks.
Application of Wilmington Trust Company (Items 2,
3, and 4).
Pursuant to the decision reached at the meeting on July 10, 1963, there
had been distributed a proposed order and supporting statement reflecting
the Board's approval of the application of Wilmington Trust Company,
Wilmington, Delaware, to acquire the assets and assume the liabilities
Of the Camden (Delaware) branch office of the Baltimore Trust Company,
Selbyville, Delaware.
There had also been distributed a dissenting
statement of Governor Robertson.
The issuance of the order and supporting statement was authorized
with the understanding that certain changes suggested by Governors
Balderston and Mills would be made in the wording of the statement.
Copies of the order and statement, as issued, are attached to these
minutes as Items 2 and
3; a copy of the dissenting statement of Governor
Robertson is attached as Item No. 4.
In connection with approval of the application, the Board had
also approved an additional investment of
$66,000
in bank premises.
7/23/63
-3-
Accordingly, the letter to Wilmington Trust Company transmitting the
order and statements contained the following paragraph:
The Board also approves, under section 24A of the
Federal Reserve Act, the increase in investment in bank
premises occasioned by consummation of the transaction
covered by the application in this matter.
Mr. Hricko then withdrew from the meeting.
Application of Bankers Trust Company.
There had been distributed
memoranda dated July 19, 1963, from the Division of Examinations and
the Legal Division, along with other pertinent papers, relating to the
aPplication of Bankers Trust Company, New York, New York, to purchase
the assets and assume the liabilities of The First National Bank of
Farmingdale, Farmingdale, New York.
The Division of Examinations
recommended approval of the application.
On April 30, 1963, the Comptroller of the Currency approved a
Proposal whereby First National Bank of Farmingdale, Farmingdale, New
York (a new bank in process of organization) was to purchase the assets
and assume the liabilities of The First National Bank of Farmingdale.
Under that proposal, the capital stock of the new bank would be owned
by BT New York Corporation, a wholly-owned affiliate of Bankers Trust
Company.
BY letter dated April 30, 1963, the Board expressed to Bankers
Trust company its view that the purchase by BT New York Corporation of
the stock of First National Bank of Farmingdale would involve Bankers
Trust Company in a violation of section 5136 of the Revised Statutes.
_1.
7/23/63
of Farmingdale
Subsequently, the application of First National Bank
ion
With the Comptroller had been withdrawn and the instant applicat
had been filed with the Board by Bankers Trust Company for outright
acquisition of The First National Bank of Farmingdale.
Deposit
The competitive factor report received from the Federal
proposed transaction
Insurance Corporation stated that the effect of the
on competition would not be unfavorable, but the report of the Department
Of Justice was adverse.
The Comptroller of the Currency had not yet
submitted a report.
According to the memorandum from the Legal Division, the proposed
le
acquisition of assets and assumption of liabilities might be vulnerab
to attack as a merger under section 7 of the Clayton Act, even though
it was technically not a merger.
Among the factors to be considered
g any
under the Bank Merger Act was the effect on competition, includin
tendency toward monopoly.
The proposed transaction would eliminate a
the service area,
small independent bank, the only one headquartered in
and place a large New York
City bank in possession of almost a third
of the service area deposits.
However, the number of banking offices
in the area would remain the same and the scope of services offered by
the office of First Farmingdale would improve.
A management succession
problem would also be solved.
the Division
Mr. Benner commented briefly on the memorandum from
Of Examinations and stated that the banking factors seemed to favor approval
7/23/63
-5-
of the application.
The First National Bank of Farmingdale was the
smallest bank in Nassau County (deposits $33,000,000) and was faced
with a management succession problem.
Although there were a number of
Other banks in the area, the growth of the community suggested that the
broader services of another large bank might be helpful.
At present
Bankers Trust had no branches in Nassau or Suffolk Counties (the service
area of First Farmingdale where it derived over 75 per cent of its
deposits), and Bankers Trust's nearest branch was about 20 miles from
Farmingdale.
Governor Mills stated that he would approve the application as
recommended by the Division of Examinations.
It was his view that the
service area of the Farmingdale bank (Nassau and Suffolk Counties) might
not be an appropriate dividing line in considering the overconcentration
Of banking facilities.
He felt that it was logical and useful to consider
a bank service area in relation to cities or sparsely settled communities,
but such a concept was not too meaningful in suburban areas where the
residents were very mobile and where there were many banking facilities
immediately adjacent to the service area.
Governor Mills then added
that the mere establishment of a branch of a large bank in a community
such as Farmingdale would not necessarily develop the overwhelming competition that might be expected.
Governor Robertson stated that he would
disapprove the application
small size of the Farmingdale bank
although, in view of the relatively
"Z:380
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7/23/63
and its lack of management succession, he could understand the position
taken by Governor Mills and the Division of Examinations.
However, it
was Governor Robertson's feeling that it was in the public interest to
have a larger number of banking institutions serve the needs of the
Public rather than to have banking centered in a few institutions.
He
expressed the view that with deposits of $33 million First Farmingdale
Should be able to obtain good replacement of management and that there
Was sufficient business to justify its independent operation.
Governor
Robertson noted that the bank had been operating profitably and he did
not feel it was unprogressive.
He then added that he would have been
more favorably inclined if a merger had been proposed with a small
banking institution rather than with Bankers Trust.
Governor Shepardson said that he would approve the application
based on the recommendation of the Division of Exam nations and the
Points mentioned by Governor Mills.
Chairman Martin and Governor Balderston stated that they would
also approve the application.
Thereupon, the application of Bankers Trust Company was approved,
Governor Robertson dissenting, with the understanding that an order and
statement reflecting this decision would be prepared for the Board's
consideration.
Mr. Benner and Miss Hart then withdrew from the meeting.
7/23/63
-7-
American Bankers Association letter on coin shortages.
There
had been distributed a memorandum from the Division of Bank Operations
datea July 22, 1963, with respect to a draft of letter that the American
Bankers Association proposed to send to all members of the Association
With regard to the problem of coin shortages.
Mr. Kiley said that in general the letter urged the commercial
banks to accelerate the return flow of coin to the Federal Reserve Banks
In order to make maximum use of the available supply.
The proposed letter
had been shown to the Board's staff as a matter of courtesy and to obtain
any views the Board might have on a proposed sentence in the letter that
would suggest that nonmember banks might be able to arrange with member
banks in their communities to return their excess coin (presumably at
System expense).
All Reserve Banks had been asked for their views on
that portion of the draft letter, and the Reserve Banks' replies generally
favored or did not object to the sending of the letter, although there
was some feeling that the sentence with regard to the return of coin by
nonmember banks might imply the provision of such banks with services
contrary to System policy.
Mr. Kiley felt that the letter might have some effect in helping
to alleviate the coin shortage problem, and he could see some reason
for sending it.
The letter might, of course, raise the question whether
nonmember banks could return excess coin at the System's expense, but
this would be a matter for consideration by the System either as an
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7/23/63
policy.
exception to present System policy or a change in that
He also
noted that the matter would be discussed at the forthcoming meeting of
the Presidents' Conference Subcommittee on Cash, Leased Wire and Sundry
Conference
Operations and that recommendations might then be made to the
in September.
During discussion, the suggestion was made that the problem of
coin shortages might last for an extended period of time and that the
of
absorption of the cost of servicing nonmember banks in the return
the
excess coin might be appropriate, with the understanding that
to
Privilege could be withdrawn in the future when the problem ceased
be pressing.
There was some feeling that nonmember banks might not be
dent
"willing to change their present habits of returning coin to correspon
banks in order to take advantage of the proposed service.
It was under-
stood, however, that this was a question to be considered in the light
Of any developments that might occur.
After further discussion, it was understood that the American
Bankers Association would be informed that the Board had no objection
to the sending of the proposed letter.
Federal Reserve motion picture.
Mr. Sherman informed the Board
that the new System motion picture had been completed and it was felt
that the Board might wish to view it.
sent to
Mr. Fauver stated that two prints of the film had been
for sale
each Reserve Bank and that additional prints would be available
7/23/63
but that the price had not yet been determined.
A bulk order would be
Placed and the cost per print would depend on the number of films ordered.
The Board then agreed to view the film at some suitable time on
July 24, 1963.
All of the members of the staff except Mr. Sherman then withdrew
from the meeting.
Supplemental retirement allowances for Reserve Bank Presidents.
At Chairman Martin's request Mr. Sherman reported that Mr. Schremp of
the House Banking and Currency Committee staff, who was assisting in
the review of certain work papers covering examinations of Federal Reserve
Banks, had noted a disbursement by the Federal Reserve Bank of Boston
to former President Erickson for a supplemental retirement payment and
had asked for an explanation of that item along with a statement of the
reasons why the Bank was making such payments.
Mr. Sherman noted that
Mr. Erickson had started receiving payments after his retirement on
February 28, 1961, under the contract entered into by the Boston Bank
On December
28, 1959,
with the approval of the Board of Governors, whereby
Mr. Erickson's regular retirement benefit from the Retirement System of
the Federal Reserve Banks would be supplemented by a direct payment by
the Federal Reserve Bank of Boston of an amount sufficient to provide a
total retirement payment equal to 40 per cent of his salary at the time
Of retirement.
Payments were also being made under other contracts entered
into with Messrs. Williams, Johns, and Peyton, former Presidents of the
2384
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7/23/63
Federal Reserve Bank of Philadelphia, St. Louis, and Minneapolis.
Contracts that would provide for supplemental payments had been entered
into by the New York, Cleveland, and Atlanta Reserve Banks with Messrs.
Hayes, Hickman, and Bryan, respectively, and could be expected to become
Operative at some future time.
The question presented was the extent
to which the Board felt it desirable to comply with Mr. Schremp's
request for information on the Boston Bank contract.
The members of the Board indicated that a full disclosure of
the existing contracts and of payments being made under four of them
Should be given to Mr. Schremp along with a brief statement of the
Purpose that the Reserve Banks and the Board had in mind in approving
such contracts.
It was understood that the Secretary would arrange
for the furnishing of such information.
Mr. Sherman then withdrew from the meeting and the Board went
into executive session.
Following the meeting the Secretary was informed
that during the executive session the Board took the following actions:
Appointment of Mr. Broida.
The Board approved the appointment
Of Arthur L. Broida, presently Chief of the Consumer Credit and Finances
Section, Division of Research and Statistics, as Assistant Secretary
Of the Board effective upon entrance on duty in that position sometime
during September 1963, with annual salary at the rate of $17,000 effective
when Mr. Broida assumes his duties as Assistant Secretary.
It was under-
stood that appropriate announcement of Mr. Broida's appointment would
be prepared and distributed at once.
7/23/63
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Designation of Governor Shepardson.
The Board vested in Governor
Shepardson for the year beginning August 1, 1963, the direction of its
Internal affairs that are of a managerial nature.
This meant that the
Directors of Divisions would continue to take up with him matters
Pertaining to Board personnel, budget, and housekeeping.
The Board as
a whole would continue to keep in touch with the operating problems of
the staff and would determine questions of policy.
The designation continued Governor Shepardson's authorization to
approve travel requests, in accordance with the provisions of the offical
travel regulations of the Board.
The action also continued Governor Shepardson's authorization
to approve on behalf of the Board (1) all proposed personnel actions
relating to Board employees other than members of the official staff;
and (2) the proposed appointment of examiners, assistant examiners, and
Special or special assistant examiners of the Federal Reserve Banks. It
continued to be the understanding that all approvals by Governor Shepardson
under the authorization of this paragraph would be entered in the minutes
as of the date of his approval.
The meeting then adjourned.
Secretary's Notes: A telegram was received today
from the Federal Reserve Bank of Atlanta stating
that the directors of that Bank had established,
subject to review and determination by the Board
of Governors, a rate of 3-1/2 per cent (rather
than 3 per cent) on discounts for and advances
to member banks under sections 13 and 13a of the
7/23/63
-12Federal Reserve Act, a rate of 4 per cent on
advances under section 10(b), and a rate of 5 per
cent on advances to individuals, partnerships, and
corporations other than member banks under the last
paragraph of section 13. Pursuant to the authorization given at the meeting on July 16, 1963, the
Secretary informed the Federal Reserve Bank of
Atlanta by telegram of the Board's approval of
the rates established by the Bank's directors,
effective July 24, 1963. A press statement was
issued at 4:00 p.m., EDT, all Reserve Banks and
branches were notified by telegram, and arrangements were made for publication of a notice in
the Federal Register.
Governor Shepardson approved on behalf of the
Board on July 22, 1963, the following items:
Letter to the Federal Reserve Bank of Philadelphia regarding
of Examinations
arrangements for the assignment to the Board's Division
Of William J. McCuen, Jr., an assistant examiner for that Bank, for a
19,
Period of approximately three months beginning on or about August
on,
Washingt
in
nt
assignme
his
during
that
nding
1963, with the understa
that
and
Examiner
Reserve
Federal
as
ed
Mr. McCuen would be designat
the Reserve Bank would absorb his salary and travel expenses.
5)
Letter to the Federal Reserve Bank of Richmond (attached Item No.
t
approving the designation of James E. Edwards as special assistan
examiner.
Governor Shepardson today approved on behalf
of the Board a memorandum from the Division
of Administrative Services recommending the
appointment of Bert Harvey as Cafeteria
Laborer in that Division, with basic annual
salary at the rate of $3,245, effective the
date of entrance upon duty.
,
c
C
Secidtar
Item No. 1
7/23/63
BOARD OF GOVERNORS
OF THE
4 AV
FEDERAL RESERVE SYSTEM
te,
WASHINGTON 25. D. C.
C•40
ADDRESS OFFICIAL CORRESPONDENCE
);1{F
TO THE BOARD
to
,
RtZel
July 23, 1963
Board of Directors,
Bank of Idaho,
Boise, Idaho.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Bank of
Idaho, Boise, Idaho, in the downtown business district
of Nampa, Idaho, provided the branch is established
within six months from the date of this letter.
The Board notes that Vice President Galvin of
the Federal Reserve Bank of San Francisco emphasized in
his letter to you of July 21 19631 the mad for further
strengthening the bank's capital position. The Board
strongly concurs in Vice President Galvin's comments in
this regard.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
4188
Item No. 2
7/23/63
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
sysm
WASHINGTON, D. C.
In the Matter of the Application of
IIILMINGTON TRUST COMPANY
for approval of acquisition of
assets of the Camden Office of
Baltimore Trust Company
•
ORDER APPROVING ACQUISITION OF BANK'S ASSETS
to
There has come before the Board of Governors, pursuant
the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), an application by
Wilmington Trust Company, Wilmington, relaware, a member bank of the
acquisi14'ederal Reserve System, for the Board's prior approval of its
Camden
tion of assets of and assumption of deposit liabilities in the
°ffice of Baltimore Trust Company, Selbyville, Delaware, and, as an
incident thereto, Wilmington Trust Company has applied, under section 9
°f the Federal Reserve Act, for the Board's prior approval of the establishment of a branch by that bank at the present location of the Camden
Company.
(L2fice (Camden, Delaware) of Baltimore Trust
Notice of the
,
14'°Posed acquisition of assets and assumption of deposit liabilities
in form approved by the Board of Governors, has been published pursuant
t° said Bank Merger Act.
238!
-2-
Upon consideration of all relevant material, including the
Ports furnished by the Comptroller of the Currency, the Federal
the
tsaP°sit Insurance Corporation, and the Department of Justice on
competitive factors involved in the proposed transaction,
the Board's
IT IS HEREBY ORDERED, for the reasons set forth in
Statement of this date, that said applications be and hereby are
approved, provided that said acquisition of assets and assumption of
Posit liabilities and establishment of a branch shall not be
e°nsummated (a) within seven calendar days following the date of this
Order,
or (b) later than three months after said date.
Dated at Washington, D. C., this 23rd day of July, 1963.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Mitchell.
Governors Balderston, Mills, Shepardson, and
Voting against this action:
Absent and not voting:
Governor Robertson,
Governor King.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
2390
Item No.
7/23/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION OF WILMINGTON TRUST COMPANY
FOR PRIOR APPROVAL OF ACQUISITION OF ASSETS OF
CAMDEN OFFICE OF BALTIMORE TRUST COMPANY
STATEMENT
Wilmington Trust Company, Wilmington, Delaware ("Wilmington
TI:1181:"), with deposits of about $351 million,* has applied pursuant
to the Bank Merger Act of 1960 (12 U.S3C. 1828(c)), for the Board's
Ptior approval of its acquisition of assets and assumption of the
deNsit liabilities of approximately $2.7 million* of the Camden
"fice of the .Baltimore Trust Company, Selbyville, Delaware
*
("Baltimore Trust"), with deposits of $14.9 million.
Incident to
441 application, Wilmington Trust also has applied, under section 9
of the Federal Reserve Act (12 U.S.C. 321), for the Board's prior
414/1.0val of the establishment of a branch in Camden, Delaware, at
the Present location of the Camden Office of Baltimore Trust. This
llould increase the number of offices operated by Wilmington Trust
fl*°111 15 to 16.
In addition, Wilmington Trust has received approval
to establish a branch at Dover, Delaware, which is not yet operative.
ePosit figures as of December 28, 1962.
3
k
-2-
Under the Act, the Board is required to consider, as to each
of the banks involved, (1) its financial history and condition, (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
ederal Deposit Insurance Act), (6) the convenience and needs of the
ccmmunity to be served, and (7) the effect of the transaction on
competition (including any tendency toward monopoly).
The Board
maY not approve the transaction unless, after considering all these
factors, it finds the transaction to be in the public interest.
Banking factors. -
The financial condition and management
Of Wilmington Trust are satisfactory, its capital structure is
adequate, and it has a good earnings record.
Continuance of these
attributes would not be adversely affected by the proposed transac-
tione
Baltimore Trust also has a satisfactory financial condition
44d an adequate capital structure.
The bank is managed by capable
Personnel and its over-all earnings are satisfactory.
Off •
lee, however, has a poor earnings record.
The Camden
Its ratio of net profits
to total assets for 1962 was only 40 per cent of the average for banks
with C comparable volume of deposits in the Third Federal Reserve
strict.
This is attributable, at least in large measure, to the
Conservative policy under which the branch is operated.
For example,
the branch operates under the supervision of 10 directors who meet
2392
-3-
loan-amount
biweekly to pass on loan applications under restrictive
limitations noted below.
The branch has no officer authorized to
grant loans.
miles
The main office of Baltimore Trust is located 52
southeast of the Camden Office.
The Camden Office faces keen
competition from several progressively managed banking offices in
the Camden-Dover area, which is becoming more industrialized and
less dependent on agriculture.
Management of Baltimore Trust has
indicated that it does not believe it to be expedient for that
relatively small bank, which serves primarily the southern, agricultural part of the State, to continue to operate the Camden Office;
any
and there is no evidence that Baltimore Trust contemplates
Changes in its management policy for its Camden Office.
Wilmington Trust, with
Under the progressive management of
developing
its greater experience in servicing needs of the kinds
in the Camden-Dover area, it is expected that the Camden Office would
become a more efficient and economic operation.
of 12 U.S.C., Ch. 16,
No inconsistency with the purposes
is
indicated.
Camden
Convenience and needs of the communities. - The
0 fice of Baltimore Trust is the only banking facility in Camden
(1960 population 1,125), which is centrally located in Kent County
the capital
411°ut four miles south of Dover (1960 population 7,250),
°f Delaware and the seat of the County.
The area between Camden
and Dover is substantially settled residentially, and the town of
est of
WYoming (1960 population 1,170 lies only ono mile northw
area, the
Camden and is essentially a part of the Camden-Dover
total population of which exceeds 20,000.
The proposed transaction
Camden-Dover
affects only the banking needs and convenience of the
area.
-Dover area has
Since the end of World War II, the Camden
nment to an area
been changing from an essentially agricultural enviro
of growing population and industrialization.
area has about doubled in the past decade.
The population of the
Evidencing the area's
a plant
industrial growth, a nationally-known company is constructing
(34 the southern outskirts of Dover which will employ between 1,200
and 1,700 local residents.
its community as an
While the Camden Office has served
essentially agricultural one fairly well, it operates under restricapplicable in branch
tive policies and procedures not ordinarily
°Perations.
a management-imposed
Among other things, the branch has
on
0
limitation of $10,000 on unsecured loans and a $25,00 limit
00 and
secured loans as compared to the legal lending limit of $220,0
$550,000, respectively.
installIn addition, the branch offers no
on real estate
Ment lending or trust services, limits mortgage loans
are not
to maturities of 10 to 12 years, and interest rates on loans
prevented it
flexible. The conservative operation of the branch has
credit.
f em satisfying frequent requests for bank services and
The
-5-
tnes of service and credit increasingly required by the changing and
eXpanding Camden-Dover area are more comprehensive than Baltimore
Trust is prepared to make available at its Camden Office.
In the Camden-Dover area are one relatively small bank and
five offices of four larger banks in addition to the Camden Office of
41timore Trust.
Consummation of the transaction, however, would
r°4
'ke available in Camden the branch of a large commercial bank at
Ilhich there would be more conveniently available to the residents
°f the town and its immediate vicinity a full line of consumer loans,
home mortgages with maturities extending to 20 years, a loan limit in
eXcess of $3 million, flexible interest rates geared to type, size,
and quality of
the loan, and facilities of a large, competently
Inarlaged trust department.
More generally, consummation of the trans-
also would make the Camden Office a convenient alternative
source of a full range of commercial banking and trust services which
14/41d be expected to contribute to the growth and expansion of the
e4mden-Dover area.
- There is no competition between Baltimore
Tr-U8
I
Camden Office and any office of Wilmington Trust.
Wilmington
list3 with most of its offices in New Castle County, has no office
4e4ter to Camden than its branch at Milford, which is 17 miles
s°utheast of Camden on the boundary between Kent County and Sussex
e°1111tY.
The operations of the Milford branch are oriented primarily
t°14ard the latter County.
2395
-6potential competition
The proposal would eliminate some
branch which Wilmington
between the Camden Office and the de novo
, but which is
Trust was recently authorized to establish at Dover
11°t yet in operation.
would be limited
This potential competition
by the fact that a branch of Delaware's third largest commercial bank
i8
the proposed site of the
situated between the Camden Office and
de novo branch.
ces available at the
In addition, the banking servi
the full range of comCamden Office are markedly more limited than
of Wilmington Trust.
mercial banking service available at branches
n
With 69 per cent of its total deposits in time deposits, the Camde
°ffice may be likened to a savings bank.
Although in existence for
deposits of
60 years, the Camden Office has the smallest total
any of the seven banking offices in the Camden-Dover area.
rcial bank, Wilmington
Although Delaware's largest comme
n-Dover area
Trust has not heretofore been represented in the Camde
competitors have five offices.
which its three principal state-wide
d banking office
The acquisition by Wilmington Trust of an establishe
in Camden would intensify banking competition in the Camden-Dover
banking structure of Delaware.
area, and bring better balance to the
the relatively
Consummation of the transaction would bring
small bank in Wyoming into competition with Wilmington Trust for
the first time.
ed its
The Wyoming bank, however, has demonstrat
branches of the larger banks
ability to compete successfully with
not be
already in the Camden-Dover area and, therefore, would
eXpected to be adversely affected by the proposal.
239(;
7-
The four largest banks in Delaware held 69 per cent of
the total banking offices and 89 per cent of the total commercial
bank deposits of the State as of December 28, 1962.
Wilmington
Trust was the largest with 20 per cent of the total banking offices
and 43 per cent of total deposits as of the same date.
Such concen-
tration of banking resources is obviously high, even after taking
into account questions that may properly be noted as to whether the
State is the most appropriate area to be considered.
Through the
subject acquisition, Wilmington Trust's share of the total deposits
tr.E commercial banks in Delaware would be increased by .3 per cent.
the degree of concentration is an important consideration,
the Board concludes that this slight degree of increase does not
require denial of the application in view of all the present circumstances, including the fact that only one branch and not an entire
bank is being absorbed.
Summary and conclusion. - Substitution of a branch of
Wilmington Trust, the largest commercial bank in Delaware, for the
unaggressive, limited-service branch of Baltimore Trust in Camden,
14clu1d provide better banking services in Camden and contribute
beneficially to the changing and expanding Camden-Dover area.
No
Present competition exists between the Camden Office and Wilmington
Ttust, and the potential competition between them which may be
eliminated would not be significant.
Wilmington Trust, which would
4CqUire .3 per cent of the total deposits of commercial banks in
2397
Delaware, would be enabled to compete for the first time in the
Camden-Dover area with the other three largest Delaware banks
competing on a state-wide basis.
to
Accordingly, the Board finds the proposed transaction
be in the public interest.
ly 23, 1963.
*
•
2
IC IIC,
DISSENTING STATEMENT OF GOVERNOR ROBERTSON
Item No. 4
7/23/63
case seems
The Board's approval of the application in this
virtually to ignore the fact that "the increases in the sizes of the
largest banks, particularly those which have grown through mergers"
were a major concern of the Congress in enacting the statute.
Rept. No. 1416, March 23,
(S. Rep. No. 196, April 17, 1959, p. 8; H.
in this matter
1960) P. 5) The views of the majority of the Board
Prompt me to observe, as I did In the matter of the a plication of
12=all_sLmerger with The First
.
21thar____IkandTrust carlEm1,911
41
-1-41
National Bank of Batavia, 1963 Federal Reserve Bulletin, page 17, that
"To hold, in these circumstances, that the transaction is
in the public interest (as the majority does) leaves the
statute without any real meaning or effect and makes it
an instrument conducive to further concentration of banking resources rather than an effective regulation to curb
mergers and thereby counter the trend toward concentration
of banking resources, which occasioned enactment of the
statute."
Wilmington Trust, which holds 45 per cent of the total
Irt deposits of all commercial banks in Delaware, is more than twice
the size of the second largest commercial bank in the State.
During
the Past 12 years, 10 of the 15 offices now operated by the bank were
4equired by it through merger with eight commercial banks scattered
throughout Delaware's three counties.
Half of these mergers have
been consummated in the past four years.
yet
The way is now clear for Wilmington Trust to acquire
the fact
another established banking office, and this notwithstanding
that the bank recently received approval for a de novo branch which,
when establish...d, will be located in Dover less than four miles
from the Camden Office being acquired from Baltimore Trust.
The
competition that would have existed between the latter office and the
de novo branch thus dies aborting, as Wilmington Trust further
autments its dominance in the highly concentrated Delaware commercial
banking structure in which the four largest banks - which compete on
a State-wide basis - operate 69 per cent of the total banking offices
and hold 89 per cent of the total deposits.
Of the remaining
16 banks in Delaware, none holds more than two per cent of the total
deposits.
The number of commercial banking offices in Delaware has
declined over 52 per cent: since 1957.
In my view, considerations such as those just discussed
l'equire the disapproval of an application under the Bank Merger Act
unless offset by reasons for approval very much more persuasive than
anything that I have been able to discover in the record of this case.
The acquisition which the Board has approved does not
involve a "problem bank" nor is it a "rescue operation".
Baltimore
Trust is a viable institution, whose Camden Office - despite its
Overly conservative operation - obviously fulfills certain banking
needs in the Camden area, as evidenced by the continuing, although
modest, deposit growth.
In view of the increased industrialization
and population growth that is occurring in the Camden-Dover area,
am completely unconvinced that the Camden Office of Baltimore Trust
need find itself without benefits from the area's favorable economic
Prospects.
2400
-.3..
It may well be that the Camden Office might be more
of a larger
efficiently or otherwise better operated as the branch
bank.
Trust
The transaction obviously would afford to Wilmington
ample opportunity to preserve its dominance over the other three
large Delaware banks, each of which has already established offices
in the Camden-Dover area.
It is recognized also that the proposal
share
would not eliminate an independent bank as such, and that the
of the State's total bank deposits of the Camden Office is only
.3 per cant.
Regardless of the weight to which such points as these might
be entitled in other situations, they are far overshadowed here by
the critical degree of dominance and concentration already existing
in the banking structure in the State of Delaware.
In any event, there
is no evidence in the record that the banking needs and convenience
of the Camden-Dover area are not now being adequately met by conveniently located alternative sources of banking services of varying
of the area will not
Sizes, or that the banking needs and convenience
be adequately fulfilled in the absence of the transfer of the Camden
0 fice of Baltimore Trust to Wilmington Trust.
in
In my view, a consideration of the factors enumerated
the Bank Merger Act does not warrant a finding that the transaction
is in the public interest, and I would, therefore, disapprove the
aPPlication.
July 23, 1963.
F;1
Item No.
BOARD OF GOVERNORS
5
7/23/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
RESt
•••••••
July 23, 1963
CONFIDENTIAL (FR)
Mr. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond 13, Virginia.
Dear Mr. Nosker:
in your
In accordance with the request contained
nation of
desig
the
ves
appro
letter of July 15, 1963, the Board
the
for
ner
exami
tant
James E. Edwards as a special assis
ipartic
of
e
purpos
the
Federal Reserve Bank of Richmond for
of
Bank
t
excep
banks
r
membe
pating in examinations of State
Virginia.
Powhatan, Incorporated, Powhatan,
your bank to
The authorization heretofore given
ner is hereby
exami
tant
assis
al
designate Mr. Edwards as a speci
canceled.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER