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V61
Minutes for July 27, 1962
To:
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. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
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Federal Reserve Bank of St. Louis
I
Minutes of the Board of Governors of the Federal Reserve
System on Friday, July 27, 1962.
The Board met in the Board Room at
10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Koch, Adviser, Division of Research
and Statistics
Mr. Brill, Associate Adviser, Division of
Research and Statistics
Mr. Mattras, General Assistant, Office of
the Secretary
Mr. Eckert, Chief, Banking Section, Division
of Research and Statistics
Mr. Yager, Chief, Government Finance Section,
Division of Research and Statistics
Mr. Keir, Senior Economist, Division of Research
and Statistics
Money market review.
Mr. Keir distributed and commented on a
table relating to dealer operations in Treasury bills during the month
°I* July in 1960, 1961, mi. 1962.
He also discussed the terms of the
and developments in
eUrrent Treasury refinancing, announced yesterday,
the Government securities market.
Mr. Eckert distributed and commented
°r1 tables relating to time and savings deposits, real estate loans,
and holdings of "other" securities of weekly reporting member banks during
the period from December 27, 1961, to July 11, 1962. He also discussed
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Federal Reserve Bank of St. Louis
-2-
7/27/62
the bank credit situation, the money supply, and recent developments
in deposits and reserves.
All staff members except Messrs. Sherman, Kenyon, Young, Molony,
Pauver, and Mattras then withdrew from the meeting and the following
entered the room:
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Farrell, Director, Division of Bank
Operations
Mr. Johnson, Director, Division of Personnel
Administration
Mr. Hooff, Assistant General Counsel
Mr. Daniels, Assistant Director, Division of
Bank Operations
Mr. McClintock, Supervisory Review Examiner,
Division of Examinations
Discount rates. The establishment without change by the Federal
Reserve Banks of New York, Cleveland, Richmond, St. Louis, Minneapolis,
kansas City, and Dallas on July 26, 1962, of the rates on discounts and
advances in their existing schedules was approved unanimously, with the
understanding that appropriate advice you'd be sent to those Banks.
Circulated or distributed items.
The following items, which
44a been circulated or distributed to the Board and copies of which are
attached to these minutes under the respective item numbers indicated,
Ilere approved unanimously:
Item No.
utter to The Peoples National Bank of Laconia,
Laconia, New Hampshire, approving its supplemental
aPPlication for fiduciary powers.
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Federal Reserve Bank of St. Louis
1
7/27/62
-3Item No.
Letter to First Bank & Trust Co. of South
Miami, South Miami, Florida, approving the
aPPlication for fiduciary powers made by
that bank on behalf of First National Bank
Of South Miami, effective upon consummation
Of the proposed conversion.
2
Letter to Central National Bank, Canajoharie,
New York, regarding (1) whether the bank is
Permitted under its national bank charter to
execute fiduciary appointments in the Commonwealth of Massachusetts, and (2) whether the
bank would be violating any portion of Regulation F by accepting appointment as guardian of
an infant's property while one of its directors
IletS as guardian of the infant's person.
3
Letter to the Federal Reserve Bank of Cleveland
)Proving the appointment of Walter A. Thorn as
Alternate Assistant Federal Reserve Agent.
4
Letter to Hawthorne Bank of Wheaton, Wheaton,
5
Illinois, approving its application for member844 in the Federal Reserve System.
Letter to Chemical Bank New York Trust Company,
New York, New York, approving the establishment
Of a branch in Great Neck, Town of North Hempstead.
6
Letter to Marine Midland Trust Company of Southern
7
New York, Elmira, New York, approving the establishtent of a branch in the Vestal Plaza Shopping Center,
Town of Vestal.
Letter to The Bank of New York, New York, New York,
4PProving the establishment of a branch at 51 West
524d Street, Borough of Manhattan.
8
Letter to State Bank of Albany, Albany, New York,
aPproving the establishment of a branch at 25 New
9
Scotland Avenue.
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Federal Reserve Bank of St. Louis
7/27/62
-4Item No.
Letter to Union Bank and Trust Company, Kokomo,
Indiana, approving the establishment of a branch
at 405 Southway Boulevard East.
10
Letter to the Federal Reserve Bank of St. Louis
interposing no objection to the Bank's negotiating
for the acquisition of a proposed new building site
for the Little Rock Branch and authorizing its
PUrchase.
11
Approval of the letter to the Federal Reserve Bank of St. Louis
to negotiate for and acquire a new building site for the Little Rock
ranch (Item No. 11) was preceded by a general discussion of previous
Plans to remodel and add to the present building, along with reasons
NillY the directors of the St. Louis Bank had concluded that the erection
°f a new building would be preferable.
Question was raised regarding the possibility of postponing
pending the appointment of a new President of the Bank.
However,
noted that the current request related only to the acquisition
°f the site and not to actual building plans, and that presumably there
41 some risk that nndue delay might endanger the acquisition of the
'
%4
Proposed site.
During the discussion, several members of the Board expressed
the view that on the basis of experience it was generally more advantageous
fl'oal the standpoint of efficiency of operations to construct new branch
buildings than to remodel older buildings extensively.
Report on competitive factors (Moorestown-Mount Holly, New
There had been distributed a draft of report to the Federal
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Federal Reserve Bank of St. Louis
7/27/62
-5-
Deposit Insurance Corporation on the competitive factors involved
in the proposed merger of The Farmers' Trust Company, Mount Holly,
New Jersey, with and into Burlington County Trust Company, Moorestown,
New Jersey.
After a brief discussion, the report was approved unanimously
for transmission to the Federal Deposit Insurance Corporation subject
to deletion from the conclusion of certain material regarded as unnecesFlarY.
The conclusion of the report, as transmitted, read as follows:
The proposal would create a banking institution with
total resources of some $34.2 million, which would rank
first in size in Burlington County. The Mechanics National
Bank of Burlington with total resources of $30.8 million,
would rank second in the county and Union National Bank
and Trust Company, Mount Holly, with total resources of
$17.4 million, would rank third. It would reduce the
number of unit banks by one but would not reduce the number
of banking offices in Burlington County or Mount Holly.
The proposal would not result in a substantial reduction
of competition or a tendency toward monopoly.
McClintock
Messrs. Molony, Fauver, Farrell, Hooff, Daniels, and
then withdrew from the meeting.
Officer salaries at Dallas Reserve Bank (Item No. 12).
There
had been circulated a letter dated July 13, 1962, from the President of
the Federal Reserve Bank of Dallas, along with a memorandum from the
for
Personnel Division dated July 18, 1962, regarding the Bank's request
rate of $13,000 per year to
4PProva1 of the payment of salary at the
the rate of $10,300 per year
j* Z. Rowe as Director of Research and at
to Leon W. Cowan as Assistant Vice President, both effective August 1,
1962, these rates having been fixed by the Board of Directors.
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Federal Reserve Bank of St. Louis
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7/27/62
It was noted that Mr. Rowe apparently would perform in a more
Junior capacity than might be suggested by the title of Director of
Research.
After some discussion of the circumstances involved, it was
agreed to defer action on the request with respect to Mr. Rowe until
Governor Shepardson had had an opportunity to review the matter with
President Irons of the Dallas Bank.
The payment of salary to Mr. Cowan
at the proposed rate was approved unanimously.
Secretary's Note: Pursuant to the
foregoing understanding, Governor
Shepardson discussed the situation
with President Irons. On the basis
of this discussion, and after checking
with the other members of the Board,
Governor Shepardson informed the
Secretary that the salary rate proposed for Mr. Rowe as Director of
Research had been approved unanimously.
A copy of the letter sent to the
Federal Reserve Bank of Dallas following
receipt of this advice from Governor
Shepardson is attached as Item No. 12.
Trip to Latin America.
Governor Robertson noted that he was
Planning to visit the central banks of certain Latin American countries
later this year, and he requested that Reed J. Irvine, Chief of the Asia,
Africa, and Latin American Section in the Division of International
be authorized to accompany him on the trip.
Without objection,the proposed travel by Mr. Irvine was
aUthorized.
Mr. Young and Mr. Mattras then withdrew from the meeting.
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Federal Reserve Bank of St. Louis
-7-
7/27/62
First Bancorporation of Florida (Items 13-16).
At its meeting
on June 25, 1962, the Board (with Governors Mills and Shepardson
dissenting) voted to deny the application of First Bancorporation of
Florida, Inc., Orlando, Florida, for permission to become a bank holding
company by acquiring the majority of the stock of each of four national
banks.
There had now been distributed a draft of statement in support
Of the Board's decision, along with a dissenting statement by Governor
Shepardson.
In discussion of the proposed majority statement, Governor
ing
Mitchell suggested the deletion of certain material therein describ
the effect of "favorable" findings, in connection with a holding company
aPPlication, with respect to the financial history and condition of the
and
Proposed holding company and the banks concerned, their prospects,
the character of their management. The deletion was suggested on the
of
ground that it was not necessary to include this material in support
the decision on this particular application. The deletion of certain other
Inaterial of similar vein appearing at another place in the draft statethe same basis.
likewise was suggested by Governor Mitchell on
agreement was expressed
After consideration of these suggestions,
reference had been made.
llith the deletion of the material to which
nt were of
Other suggestions for changes in the draft stateme
44 editorial character, and agreement was reached on certain minor
revisions.
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Federal Reserve Bank of St. Louis
-8-
7/27/62
Subject to the agreed upon changes being made, the issuance
of the statement was authorized, along with an appropriate order
reflecting the Board's decision on the application, the dissenting
statement of Governor Shepardson, and a dissenting statement by
Governor Mills, the release of the documents to be made at such time
as the statement by Governor Mills had become available.
Secretary's Note: Pursuant to the
foregoing understanaing, the order,
majority statement, dissenting statement
by Governor Shepardson, and a dissenting
statement by Governor Mills were issued
on July 30, 1962, Copies of the several
documents are attached as Items 13 through
16.
Processing of applications.
Chairman Martin noted that several
Members of the Congress had called his attention to a "60-day rule"
l'ePortedly followed by the Comptroller of the Currency, which was said
to mean that the Comptroller undertook to render a decision on all bank
Merger applications within a period of not more than 60 days.
The
Chairman also noted that the Congressional reaction to the "rule"
rePortedly followed by the Comptroller was favorable, and he added that
04e Congressman had raised the question of possible legislation that
%1041d require decisions on merger, and presumably holding company,
6q5Plications to be announced within a specified period of time.
While
it did not appear that the suggestion with respect to legislation was
€ 1110ig to be pursued, at least for the present, Chairman Martin commented
°
that the Board should be aware of the situation and have it in mind in
coanection with the processing of applications.
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Federal Reserve Bank of St. Louis
7/27/62
Eurodollar meeting.
Chairman Martin referred to a letter
addressed to him under date of July 12, 1962, by President Holtrop of
the Bank for International Settlements inviting the Federal Reserve
System to participate in a meeting of experts to be held in October
for discussion of the Eurodollar market.
There was agreement with Chairman Martin's suggestion that
it would be desirable if the Federal Reserve were to be represented
riot only by persons from the Board's staff and the New York Reserve
13ank but also by a person from some other Reserve Bank.
It was under-
stood that Mr. Young would endeavor to locate an appropriate person
*cm' a Reserve Bank other than New York and that Chairman Martin would
advise President Holtrop to the effect that the Federal Reserve would
Illan to be represented at the meeting on the basis indicated.
All of the members of the staff except Messrs. Sherman and
Johnson then withdrew from the meeting.
Report to Civil Service Commission.
Unanimous approval was given
to the transmittal of a letter to the Civil Service Commission submitting,
14 cooperation with a study being made by the Commission at the request
Of the President's Committee on Equal Employment Opportunity concerning
Pederal civilian employment of selected minority groups, information
Narding the employment of persons in such minority groups by the Board
Of Governors.
The meeting then adjourned.
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Federal Reserve Bank of St. Louis
Sfif
-10-
7/27/62
Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson
approved on behalf of the Board July 26,
1962, the following actions relating to the
Board's staff:
APpointment
Helen M. Bennett as Secretary in the Division of Bank Operations,
vita basic annual salary at the rate of $5,335, effective the date of
entrance upon duty.
Transfer
in the
y
Jane C. Charuhas, from the position of Utilit Clerk
!?ivision of Administrative Services to the position of Training
lechnician in the Division of Examinations, with no change in basic
annual salary at the rate of $4,84o, effective August 19, 1962.
Acceptance of resignation
ch and Statistics,
Arnold Katz, Economist, Division of Resear
effective at the close of business July 31, 1962.
Availability for military service
for active
Issuance of a certificate of immediate availability
in the
er
ant
Examin
Review
Assist
Noory,
r4ilitary service of George G.
,
Force
Air
States
the
United
in
r
office
)ivision of Examinations and an
',
underthe
,
with
zation
full
mobili
or
Ieservel in the event of partial
'
discretion
standing the certificate may be withdrawn at the Board's
has been
ncy
an
emerge
unless
Force,
4130n 60-day notice to the Air
the
ss.
by
Congre
ed
declar
1)r0claimed by the President or
Governor Shepardson today approved
on behalf of the Board a letter to
the Federal Reserve Bank of New York
(attached Item No. li) approving the
and
appointment of H. John Pastorelle
ers.
examin
ant
assist
Robert Sommer as
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
7/27/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE °CARO
July 27, 1962
Board of Directors,
The Peoples National Bank of Laconia,
Laconia, New Hampshire.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to your supplemental application for
fiduciary powers and grants The Peoples National Bank of Laconia
authority to act, in a fiduciary capacity, as custodian and
agent. The rights so granted may be exercised only to the
extent that State banks, trust companies, or other corporations
which come into competition with national banks are permitted
to act under State or local law. The exercise of such rights
also shall be subject to the provisions of Section 11(k) of
the Federal Reserve Act and Regulation F of the Board of Governors
of the Federal Reserve System.
In addition to the fiduciary powers herein authorized,
the bank was granted authority, on June 12, 1923, to act as
trustee and registrar of stocks and bonds, and was granted
supplemental authority, on December 11, 1950, to act as executor.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
..00SItlittn,0
Item No. 2
7/27/62
OF THE
t
f
001001,,,*4
%
Sr
FEDERAL RESERVE SYSTEM
It
'rti
40
WASHINGTON 25, D. C.
*
'4
4
41 4
0
ADORESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1962
Board of Directors,
First Bank & Trust Co. of South Miami,
South Miami, Florida.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to the application for permission to
e ercise fiduciary powers made by First Bank & Trust Co. of South
14mi, on behalf of First National Bank of South Miami, South
1:
:
Florida, the national bank into which it is to be converted,
and grants such national bank authority, efYective if and when the
Proposed conversion is consummated, to act, when not in contravention
°f State or local law, as trustee, executor, administrator, re0.strar
°f stocks and bonds, guardian of estates, assignee, receiver, com11.1ittee of estates of lunatics, or in any other fiduciary capacity
In Which State banks, trust companies, or other corporations which
come into competition with national banks are permitted to act
under the laws of the State of Florida. The exercise of such rights
be subject to the provisions of Section 11(k) of the Federal
;eserve Act and Regulation F of the Board of Governors of the
ederal Reserve System.
After the conversion becomes effective and the Comptroller
°f the Currency authorizes the national bank to commence business,
ll°11 are requested to have the board of directors of First National
Y
t nk of South Miami adopt a resolution ratifying your application
:
Permission to exercise fiduciar:r powers, and a certified copy
th resolution 600 adopted should be forwarded to the Federal
wh:erVe Dank of Atlanta for transmittal to the Board for its records,
to fl a copy of tsuch revolution has been received by the Board, a
rmal certificate indicAting the fiduciary powers that the national
wink is authorized to wmrcize will be forwarded.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael)
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item NO. 3
7/27/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 272 1962
Mr. Kenneth G. Warner,
Cashier and Trust Officer,
Central National Bank,
Canajoharie, New York.
Dear Mr. Warner:
This refers to your letter of July 10, 1962, inquiring
(1) whether Central National Bank is permitted under its national
bank charter to execute fiduciary appointments in the Commonwealth
Of Massachusetts, and (2) whether Central National would be violating any portion of Regulation F by accepting appointment as guardian
Of an infant's property while one of its directors acts as guardian
Of the infant's person.
The Board has frequently expressed the opinion that a
national bank which has received permission to exercise fiduciary
Powers under the provisions of the Federal Reserve Act may, without
Other authority, exercise the powers granted not only in the State
in which the bank is located but also in any other State or Commonwealth the laws of which do not prohibit the exercise of those
Powers by banks located in other States. The statement to this
effect, which is published in the Federal Reserve Bulletin for
JulY 19212 at page 816, still reflects the opinion of the Board
Of Governors.
As Central National Bank has been granted the right to
exercise fiduciary powers, it may do so in Massachusetts provided
the bank conforms to the laws, if any, of that Commonwealth which
relate to the exercise of fiduciary powers by a foreign corporation.
In answer to your second question, no provision of
tegulation F would prevent the bank from accepting an appointment
.;° serve as guardian of an infant's property while one of the
'ireetors serves as guardian of the infant's person. Of course,
,e_are should be exercised to ascertain that appropriate legal steps
"ave been taken with respect to the resignation of the present
tlardian of the infant's property and the appointment of the bank
14 his stead.
I
Very truly yours,
(Signed) Merritt Sherman
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Federal Reserve Bank of St. Louis
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
40140*q,1
OF THE
40W iikk.,"9„
/`
\A‘
V)
cv4
\\A
Item NO, 4
7/27/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
+).t?
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
t,,A kite
4.1
July 27, 1962
Joseph B. Hall,
(leral Reserve Agent,
(teral deserve Bank of Cleveland,
'eve1and 1, Ohio.
1)(41'lir. Hall:
In accordance with the request contained in your letter of July 16,
1962
as
--e Board of Governors approves the appointment of Hr. Walter A. Thorn
the
ele!uternate Assistant Federal Reserve Agent at the Federal Reserve Bank of
'
fel-and to succeed Mr. Edison F. Peck.
will
This approval is given with the understanding that Mr. Thorn
—
e
l
the
and
Board
of
Agent
Governors
Reserve
Federal
the
Y
responsible
to
tk
tor
or d,"e proper performance of his duties, except that, during the absence
re sability of the Federal Reserve Agent or a vacancy in that office, his
qrnsibility will be to the Assistant Federal Reserve Agent and the Board
''overnors.
beQ i
A .
When not engagea in the performance of his duties as Alternate
418t
4
4 ant Federal Reserve Agent, Mr. Thorn may, with the approval of the
11,1111 Reserve Agent and the President, perform such work for the Bank as
*
be inconsistent with his duties as Alternate Assistant Federal Reserve
641tnot
tatee
It will be appreciated if Mr. Thorn is fully informed of the imporA erit, Of his responsibilities as a member of the staff of the Federal Reserve
411k ,and the need for maintenance of independence from the operations of the
ln the
discharge of these responsibilities.
Please have Mr. Thorn execute the usual Oath of Office which should
bet-4te'rwarded to the Board of Governors along with notification of the effective
or his appointment.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman)
Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
oizttritr il.4
' •4,
Item No. 5
OF THE
a4000Qpk *ia
7,1
FEDERAL RESERVE SYSTEM
7/27/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1962
Hoard of Directors,
Hawthorne Bank of Wheaton,
Ilheaton, Illinois.
Gentlemen:
The Board of Governors of the Federal Reserve System
I..,
15a Proves the application of Hawthorne Bank of Wheaton, Wheaton,
_4-11nois, for stock in the Federal Reserve Bank of Chicago, subject
Lo the numbered conditions hereinafter set forth:
1. Such bank at all times shall conduct its business and
exercise its powers with due regard to the safety of
its depositors, and, except with the permission of
the Board of Governors of the Federal Reserve System,
such bank shall not cause or permit any change to be
made in the general character of its business or in
the scope of the corporate powers exercised by it at
the time of admission to membership.
2. The net capital and surplus funds of such bank shall
be adequate in relation to the character and condition
of its assets and to its deposit liabilities and other
corporate responsibilities.
In connection with the foregoing conditions of membership,
rlartic
u ar attention is called to the provisions of the Board's
RA
H, regarding membership of State banking institutions in
tiLle Federal Reserve System, with especial reference to Section 208.7
ereof. A copy of the regulation is enclosed.
It is noted that under authority granted by the State of
nois the bank may accept and execute trusts upon compliance with
utory requirements that securities be deposited with the Auditor
tlic Accounts; however, the bank has not qualified for such
t47st activity. Should the bank at any future time desire to broaden
exe scope of its corporate activities or exercise any powers not
114"eised at the time of admission to membership it will be necessary,
to'er condition of membership numbered 1, to obtain permission of the
4rd of Governors.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Hawthorne Bank of Wheaton
-2-
s
If at any time a change in or amendment to the bank'
ve
Bank,
Reser
al
Feder
Charter is made, the bank should advise the
order that it may
fUrnishing copies of any documents involved, in
be determined whether such change affects in any way the bank's
status as a member of the Federal Reserve System.
contained in
Acceptance of the conditions of membership
by the Board
this letter should be evidenced by a resolution adopted
copy of
fied
Of Directors and spread upon its minutes, and a certi
Bank.
ve
Reser
such resolution should be filed with the Federal
Arrangements will thereupon be made to accept payment for an approthe deposit
Priate amount of Federal Reserve Bank stock, to accept
priate amount
appro
Of the required reserve balance, and to issue the
Of Federal Reserve Bank stock to the bank.
in the
The time within which admission to membership
plished
accom
be
Federal Reserve System in the manner described may
bank
the
s
unles
is limited to 30 days from the date of this letter,
the
When
applies to the Board and obtains an extension of time.
ied
Jolcard is advised that all of the requirements have been compl
stock
Bank
with and that the appropriate amount of Federal Reserve
has been issued to the bank, the Board will forward to the bank a
ve System.
formal certificate of membership in the Federal Reser
you will find
The Board of Governors sincerely hopes that
with the
ions
relat
riembership in the System beneficial and your
ve Bank
Reser
al
Feder
4?serve Bank pleasant. The officers of the
ips with
ionsh
relat
your
be glad to assist you in establishing
reprewith
ss
discu
the Federal Reserve System and at any time to
the
System
of
ces
servi
sentatives of your bank means for making the
1710st useful to you.
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Enclosure.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No.
OF THE
6
7/27/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1962
Board of Directors,
Chemical Bank New York Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Chemical
Bank New York Trust Company at 410-420 Northern Boulevard,
Great Neck (Unincorporated area), Town of North Hempstead,
Nassau County, New York, provided the branch is established
within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
244 r
BOARD OF GOVERNORS
Item NO. 7
OF THE
FEDERAL RESERVE SYSTEM
7/27/62
WASHINGTON 25, D. C.
ADDRESS OFTICIAL CORRESPONDENCE
TO THE BOARD
Jay 27, 1962
Board of Directors,
Marine Midland Trust Company
of Southern New York,
Elmira, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by the
Marine Midland Trust Company of Southern New York in the
Vestal Plaza Shopping Center, 4700 Vestal Parkway East,
in an unincorporated portion of the Town of Vestal, Broome
County, New York, provided the branch is established within
one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
/
BOARD OF GOVERNORS
Item No. 8
OF THE
FEDERAL RESERVE SYSTEM
7/27/62
WASHINGTON 25, O. C.
AD
RESS OFFICIAL CORRESPONDENCE
TO THE SOARD
July 27, 1962
Board of Directors,
The Bank of New York,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch at 51 West
52nd Street, Borough of Manhattan, New York, New York,
by The Bank of New York, provided the branch is established by December 31, 1964.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No, 9
OF THE
7/27/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25. 0. C.
A
ontss
FFICIAL CORRESPONOENCE
TO THE BOARD
July
$ 1962
Board of Directors,
State Bank of Albany,
Albany, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment of an in-town branch by State Bank
of Albany at 25 New Scotland Avenue, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
E10ARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 10
7/27/62
WASHINGTON 25. O. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
July 27, 1962
Board of Directors,
Union Rank and Trust Company,
Kokomo, Indiana.
Gentlemen:
The Board of Governors of the Federal Reserve
System aPnroves the establishment of an in-town branch
by Union Bank and Trust Company at 405 Southway Boulevard East, provided the branch is established within
one year from the date of this letter.
Very truly ours
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
,
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 11
7/27/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1962
Mr. Darryl R. Francis,
First Vice President,
Federal Reserve Bank of St. Louis,
P. 0. Box 442,
St. Louis 66, Missouri.
Dear Mr. Francis:
This refers to your letter of July 6, 1962,
requesting favorable consideration by the Board of
Governors to the erection of a totally new building for
the Little Rock Branch and authorization to negotiate
for and purchase the property described in your letter.
The Board will interpose no objection to
your Bank's negotiating for the acquisition of the
proposed new building site and authorizes its purchase
at a price of approximately $625,000.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
(
BOARD OF GOVERNORS
Item No. 12
7/Z//62
OF THE
4,0
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
it, id
'l 4444.*
July 27, 1962
Mr. Uatrous H. Irons, President,
lederal Reserve Bank of Dallas,
Dallas 2, Texas.
Dear Er. Irons:
The Board of Governors approves the payment of salaries
to the following officers of the Federal Reserve :Bank of Dallas,
?ffective August 1 through December 31, 1962, at the rates
Indicated, which are the rates fixed by your Board of Directors,
48 reported in your letter of July 13.
Annual
3alary
Title
Name
J. Z. Rowe
Leon 14, Cc4an
Director of Research
Assistant Vice President
$13,000
10,300
Very truly yours,
•
(Signed) l*rritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
Item NO. 13
7/27/62
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
WI*
In the Matter of the Application of
FrliST BANCORPORATION OF FLORIDA, INC.,
for permission to become a bank
holding company by acquiring stock of
four banks in Florida
ORDER DENYING APPLICATION
UNDER BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
section 3(a)(1) of the Bank Holding Company Act of 1956 (12 USC 1842)
44d section 222.4(a)(1) of Federal Reserve Regulation Y (12 CFR
222.4(a)(1)), an application on behalf of First Bancorporation of
Illorida, Inc., Orlando, Florida, for the Board's prior approval of
e'etion whereby First Bancorporation of Florida, Inc., would become a
13411k holding company through acquisition of not less than 51 per cent
Of the voting shares of The Barnett National Bank of Jacksonville,
jacksonville, Florida, The First National Bank of Miami, Miami, Florida,
Me First National
Bank at Orlando, Orlando, Florida, and The Exchange
114tiohal Bank of Tampa, Tampa, Florida.
A Notice of Receipt of Application was published in the
l'edQral Register on December 12, 1961 (26 Federal Register 11881),
vhim„
'" Provided an opportunity for submission of comments and views
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Federal Reserve Bank of St. Louis
-2-
regarding the proposed acquisitioas, and the time for filing such
Qxlments and views has expired and all comments and views filed with
The Board have been considered by it.
IT IS ORDERED, for the reasons set forth in the Board's
Statement of this date, that said application be and hereby is denied.
Dated at Washington, D. C., this 30th day of July, 1962.
By oraer of the Board of Governors.
Voting for this action: Chairman Nartin, and
Governors Balderston, Robertson, King, and Mitchell.
Voting against this action:
Governors Mills and Shepardson.
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(Seal)
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Federal Reserve Bank of St. Louis
Item No. 14
7/27/62
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSIVA
A, INC.
APPLICATION BY FIRST BANCORPORATION OF FLORID
Y
G
COMPAN
HOLDIN
BANK
A
FOR PERMISSION TO BECOME
STATEMENT
orporation"),
first Bancozporation of Florida, Inc. ("Banc
Bank Holding Company
44 applied to the Board of Governors, under the
a bank holding
Act of 1956 ("the Act"), for permission to become
of each of four banks
company by acquiring the majority of the stock
1c3catad respectively in four major cities of Florida: Jacksonville, Miami,
011411401 and Tampa.
ed
In determining whether to approve the propos
(Illisitions, the Board is required by section 3(c) of the Act (12 U.S.C.
s: (1) the finan1842) to take into consideration the following factor
cial history and condition of the proposed holding company and the banks
concerned; (2) their prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the communities and the areas
c°4Qerned; and (5) whether the effect of such acquisition or merger or
of the bank holding
e°48°1idati011 would be to expand the size or extent
consistent with adequate and sound
c(31111°c-tY system involved beyond limits
preservation of competition in the
114flking, the public interest, and the
rield of banking.
enced a
a
Over the past 20 years the State of Florid has experi
l'elative population growth greater than that of any other State, moving
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Federal Reserve Bank of St. Louis
-2-
from 27th place in 1940, with a population of less than two million, to
1°th place in 1960, with a present population in excess of five million.
because the larger part of the State is a peninsula, certain aspects of
the economy of Florida, including the banking industry, in some respects
are less subject to out-of-State competition than is the case with
respect to many States that are not so separated, in some measure, by
natural geographical features from the main land mass of the continental
United States.
This is applicable, in varying degrees, to the four cities
Principally involved in this proposed holding company system.
Miami, Tampa, Jacksonville, and Orlando respectively rank first,
eacond, third; and fifth in size among the cities of Florida. (The
rcurth is St. Petersburg, which is part of the Tampa/St. Petersburg
nletropolitan area.) Jacksonville is the center of the principal urban
4rea of northeastern Florida; Miami is in the southern portion of the
Sta'te; Orlando is in the east-central area; and the Tampa/St. Petersburg
is the chief urban center
tlietroPolitan area, in the west-central section,
cif the Gulf Coast of the State.
The four banks proposed to be controlled by the holding company
Etre
of substantial size, all of them ranking among the ten largest banks
Plorida and among the three largest in their respective metropolltan
84'eas.
The total resources of the four, at the end of 1961, were in the
neighborhood of $800 million, of which about half are resources of the
?I-1'st National Bank of Miami, the largest bank in the State.
The remainder
4re distributed among The Barnett National Bank of Jacksonville, The
"lange National Bank of Tampa, and The First National Bank of Orlando.
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Federal Reserve Bank of St. Louis
-3in Florida are prohibited by law from establishing branches, and
consequently each of the four banks maintains only one office. Exist"affiliate" relationships would be continued between The Exchange
114-tional Bank of Tampa and a smaller bank, and between The First
tiational Bank at Orlando and three smaller banks.
If the proposed holding company system were established, it
/4Qu1d be the largest of three major groups of banks operating in Florida.
The e:1st),:; gl-caL)s are the so-called Atlantic Group, the major bank
( 1,71.1.ich is The At1antio National Bank of Jacksonville, and the Florida
liational Group, the lar,s*est bank of which is the Florida National Bank
Jacksonville.
The At2antic Group (a bank holding company registered
1146-er the Act) as of September 27, 1961, included nine banks with total
clePosits eceeding $300 million, approximately
O
7 per cent of the deposits
411 banks in the State. The Florida National Group is controlled by
tI tstees of a trust created by the late Alfred I. du Pont and is not a
l'egi.ltered bank holding company. The latter group included 29 banks
1112; in cxcess of $500 million of deposits, approximately 11 per cent
'
(3t 4.11 ban:: deposits in Florida.
The four banks that would form the
ed Bincornoration group held almost
tha,•-
$600 million, somewhat less
per cent of bank deposits in the State, and in the four metro-
population) they held
1"lan arcas (wIch 50 per cent of the State's
„
ecr cent of dcrosf.to.
effective, shares of capital
If Bancorporation's plan becomes
to
t.4Q
stockholders of
ck of that hcldf.ng company would be offered to all
aOr ban%s proposed to be controlled, in exchange for their shares
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Federal Reserve Bank of St. Louis
in those banks.
Bancorporation wishes to acquire substantially all of
the stock of the four banks, and the plan would not be consummated
Unless at least a majority of the stock of each was exchanged by stockholders for shares of the holding company.
Views and recommendations of the Comptroller of the Currency.
All of the banks to be acquired in this case are national banks.
Accordingly, pursuant to the requirement of section 3(b) of the Act,
the Comptroller of the Currency was asked to submit his views and recomMeadations with respect to the pending application. The Comptroller
stated that he had "no objection to approval of the application upon its
Merits".
Financial history and condition, prospects, and management. -
financial history and condition of the four banks are good and the
1111:tial financial condition of Bancorporation, under the plan, would be
1.14-sfactory.
The prospects of the holding company and the constituent
'4As are favorable.
Bancorporation would have twelve directors; each of the four
ccnstituent banks would be represented on the board by three persons
heretafore closely related to its affairs.
The men designated as pro-
ketive officers of the holding company are experienced and capable
bahh.
„Qrs.
the
There appear to be no unsatisfactory aspects with respect to
character of the prospective management of Bancorporation.
Like-
each of the banks has capable management.
Convenience, needs, and welfare of the communities and the
concerned.
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Federal Reserve Bank of St. Louis
Bancorporation's application for the Board's approval
.5_
of the formation of the proposed holding company system rests chicfly
°4 considerations relating to the fourth statutory factor.
The aye:1i-
catl0a emphasizes Florida's rapid population growth in recent deca;s1
the distinctive economies of the areas in which
e four banks are
located, and the character and importance of those cities, both individually and as major urban centers of the State.
It is also pointed
out that Florida has fewer banking offices, in proportion to population,
thoz any other State) and that businesses locat:Id in the Sixth Federal
Reserve District (which includes Florida as well as other States)
Obly borrow a larger aggregate amount from banks in other districts
t4e41 Sixth District banks lend to businesses.
On the basis of such
'
ata, Bancorporation expresses the view "that banking
as not kept pace,
011 the whole, with the general growth and develo7nent of Florida, and
this despite the tremendous increase in the number of banking units and
14 the resources of the individual banks."
It is also contended that the establishment and operation of
the
Proposed holding company would result in improvement and expansion
Ol.138.1111
: services, improvement of access to equity capital, facilitating
the
Placement of larger loans, and providing for emergencies. Services
that
Bancorporation contends would be improved and expanded are enumer-
4ted as including investment, investment advice, trust service, lending
tl.tivities, foreign departments, assisting municipalities, and providing
4er—
vl.ces to the subsidiary banks.
Since the four proposed subsidiary banks already are in good
Q(4 1,
4tion, are capably managed, and compete strongly with other banks,
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Federal Reserve Bank of St. Louis
-6Itatever advantages might flow from establishment of the proposed holding
company system must be found mainly in prospective benefits to the convenience, needs, and welfare of the relevant communities and areas. As
Previously mentioned, the application of Bancorporation enumerates a
number of fields of banking service and activity, and alleges generally
that the ownership of the four banks by the proposed holding company
17°111d yield benefits with respect to each.
There is little or no evidence that any of the four banks is
11°t Performing in a satisfactory manner in any of these fields as an
irldependent institution, and there is a lack of concrete evidence that
11°111d justify the Board in concluding that the formation of the proposed
h°1ding company system would materially contribute to the general conneeds, or welfare of the cities and areas served by the four
15841ke.
This is true also of such contentions as that Bancorporation
e°1-11d more readily and conveniently obtain capital funds for subsidiary
1344ke than could the banks acting independently. Even assuming that
the equity capital market could be tapped somewhat more readily by a
holding company representing a group of banks, it does not appear that
the banks here involved are not in a position to obtain capital for
thenleelves conveniently and effectively.
Neither is there convincing
(4113'Port in the record for Bancorporation's contention that the formation
c311 the holding company group would yield substantial benefits through
l'4e1litating group loans to Florida customers whose credit requirements
eeeed the legal lending limits of the respective subsidiary banks.
?()r these purposes, we cannot disregard the facilities that are available
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Federal Reserve Bank of St. Louis
t
-7through the highly developed structure of correspondent banking that
characterizes the American commercial banking system.
Bancorporation
Itself concedes that each of the four proposed subsidiary banks has
(1°11e an excellent job of keeping up with the need for improved banking
services in the communities involved.
In these respects, the instant case is broadly comparable to
the situation in Matter of Morgan New York State Corporation, and reference is made to the Board's Statement in the latter case.
See 48 Federal
.
...2
ulletin 567 Way 1962), particularly page 574.
1 )
11-Z2:22
The Board finds that the record does not justify the conclusion
that the establishment of the proposed holding company would have a
ignificantly favorable effect upon the convenience, needs, or welfare
or the
communities or areas concerned.
Effect on adequate and sound banking, public interest, and
Co
tjon.
the
—
The fifth statutory factor, previously cited, requires
Board to consider whether the size and extent of the proposed
holr4
and sound
--ng company system would be consistent with adequate
ba.rop,
the public interest, and the preservation of competition in
the field of banking. As the foregoing discussion indicates, this factor
18 a'leo involved to some extent in evaluating a proposal under one or
11/c*e of the other factors prescribed by the Act.
The proposal in this case, if consummated, would result in
the
creation of a holding company system that would be exceptional, and
14Some respects without parallel, from the viewpoint of concentration
or
control of the largest banks in a particular State. This would be
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Federal Reserve Bank of St. Louis
-.8true not only with respect to Bancorporation itself but also with respect
to the extent to which the largest banks in Florida would be units in
group banking organizations.
Of the eight largest banks in the State,
IVar would be subsidiaries of Bancorporation, including three of the six
banks in Florida that hold more than f:,100 million of deposits.
The three
II14ior banking groups in the State would control five of the six banks
that hold $100 million or more of deposits.
The degree of group banking concentration would be particularly
ttriking in
Jacksonville, one of the two chief financial centers of the
State. If the proposed holding company system were established, the
three largest banks in that city would be units in major banking groups,
klci. those
83
three banks held, as of September 27, 1961, approximately
Per cent of the banking deposits in the Jacksonville metropolitan area.
The Present relationship of The Barnett National Bank of Jacksonville
171th four smaller banks is of relatively slight significance from the
lilewpoint of banking concentration, in contrast to Bancorporation's pro11°88.1 to unite Barnett with outstanding banks in Miami, Orlando, and the
rall1Pa/St. Petersburg metropolitan area.
In its decision in Northvrest Bancorporation v. Board of
kr-2.?"11prs of the Federal Reserve System (June 13, 1962), the United
4-ates Court of
Appeals for the Eighth Circuit stated that "concentratic3n of control has the natural and inherent effect of lessening competit104" and that this tended to be true even where control of banks was
clleentrated in more than one group system.
'
The court emphasized
(711"ing Senate Report No. 1095, 84th Congress, on the bill that became
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Federal Reserve Bank of St. Louis
9J-4,
_9_
the Bank Holding Company Act) that the law requires this Board to aim
6/t "the prevention of undue concentration of control in the banking
rield to the detriment of public interest and the encouragement of competition in banking". Accordingly, the Board is concerned not only with
DroPosed concentration of several of the largest banks in Florida under
Elancorporation control, but also with the fact that, if the proposal is
cElzried out, most of the largest banks in the State will be controlled
/3r one or another of the three major banking groups.
With respect to competition among the four proposed subsidiary
1)4113) the
record before the Board presents a complicated picture.
As
13411eorporation points out, each of these banks serves a separate and
nct primary service area (in this case, the area from which the
tli
deriv-s at least
75 per cent of its business and personal deposits).
however, Bancorporation estimates that almost 10 per cent of all loans
to
Florida borrowers, and almost 12 per cent of all such industrial and
e(ftlercial loans, made by the four banks originate from counties other
tiaan the counties in which these banks are located.
The record supports
the inference that the four banks do compete with each other for loans,
1414eu1arly loans to medium-sized business borrowers in the State.
Borrowers of large size ordinarily have relatively ready access
to
solarces of credit outside of the State in which they are located, and
the
small borrower is generally limited, as a practical matter, to local
km,
'ces of credit. A large number of business borrowers between these
el'414171es are in a position to seek credit from larger banks located in
Part of the State but not so readily from out-of-State sources.
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Federal Reserve Bank of St. Louis
dr)
(-3171
-.10-
Banking competition for business of the latter category is not to be
Measured by the extent to which such borrowers in the central part of
the State, for example, actually borrow from banks located in cities
811ch as Jacksonville and Miami.
effective force.
Potential competition also can be an
The amounts lent, the interest rates exacted, and the
services rendered to borrowers by a bank in one city may be significantly
itlfluenced by the fact that, if the customer is not satisfied, similar
2acilities are available to him in banks in other cities, to which
° clinarily he would not turn for such accommodation.
Potential competi-
tIon of this character among Bancorporation's proposed subsidiary banks
,
48cessarily would be diminished, if not entirely eliminated if all of
thc)se banks became units of the same holding company system.
of the
Of particular importance in this case is the effect
°1:osed holding company formation on competition in Florida for corre'
k
41°°11dent banking business - that is, the business of performing services
r°r other banks and holding interbank deposits.
These activities are
44 important part of the business of the proposed subsidiary banks in
jacksonville, Miami, and Tampa; in those banks the deposits of other
banks constitute from about 17 per cent to 19 per cent of total deposits.
48 Of September 27, 1961, the deposits of banks held by those three
11'°11Dosed subsidiaries amounted respectively to $22 million, e,:,11.8 million,
1111c1 `49 million, which together constituted about
35 per cent of all
interbank deposits held by banks in the State of Florida.
Although these
al e not especially large amounts or proportions of interbank deposits
'
t° he held by major banks in metropolitan areas, they indicate the
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Federal Reserve Bank of St. Louis
(
999
+
-11-
imPortance of competition for correspondent bank business in connection
with the pending proposal.
To some extent, correspondent bank business is necessarily
the object of competition between banks situated in the same locality
rather than between banks in widely separated cities.
For example, a
bank in a smaller community in Florida, or a bank of any size in another
State that maintains correspondent relationships in Florida, may be under
economic compulsion to select and retain a correspondent bank in
Jacksonville to perform customary correspondent bank services with
l'esPect to transactions in and around that metropolitan area.
Competi-
ti°n for such business could take place only between banks in Jacksonville
Itself.
However, to an important degree correspondent bank business is
40t so limited geographically, and substantially equivalent services
rcIr correspondent banks can be performed by a bank in Jacksonville, Miami,
ol" Tampa with equal facility.
Banks in these and other commercial
enters of Florida actually do compete vigorously for correspondent
blleiness of this character. Since the proposed subsidiary banks in
j4e1tsonvil1e, Miami, and Tampa are among the five leading correspondent
banks of the State, measured by volume of interbank deposits, concentrat104 or control of those banks in the hands of Bancorporation would
'Ilbstantially diminish correspondent banking competition.
The signifi-
e4tIce of this effect of the proposed acquisitions becomes even more
41414rent when it is borne in mind that not more than ten or twelve banks
111 the entire State are serious competitors in this major category of
'tlking business.
be
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Federal Reserve Bank of St. Louis
-12-
In addition to these effects on competition between the
ProPosed subsidiary banks themselves, the concentration in a single
CoMpany of control over those banks could have an adverse effect on
the general competitive situation regarding correspondent banking in
F
lorida.
Among relatively large and aggressive banks competing for the
business of sophisticated customers such as other banks, small advantages can be decisive.
Without the benefit of centralized control,
13ancorporation's proposed subsidiary banks already hold almost twice as
MIlai of the correspondent bank deposits in Florida as does either of
tile existing major banking groups in that State (the figures as of
September 27, 1961, were $92 million, $54 million, and
*53 million).
It those banks, already so strongly entrenched, were in a position to
Otter, in a single package, correspondent banking services covering all
tour of the State's largest metropolitan areas, it is probable that the
e°mPetitive ability of the remaining major correspondent banks would be
aeriously diminished.
In two important respects, therefore, consummation
°2 Bancorporation's proposal would produce a holding company system of
alleh size and extent as to jeopardize the preservation of competition in
the correspondent banking field and the public interest in the maintenance
(3t strong competition.
For the reasons stated, the Board finds that formation of the
111'3 0sed holding company system would involve, to an undesirable degree,
(11/1centration of control over major banks in the State of Florida as
\lel? as substantial lessening of the vigor of banking competition among
the large banks in that State, particularly with respect to business
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Federal Reserve Bank of St. Louis
-13-
loans and correspondent banking.
These adverse effects, the Board
finds, clearly outweigh whatever relatively minor prospective benefits
flay be offered by the proposal relating to the convenience, needs, and
welfare of the communities and areas concerned.
Conclusion. -
On the basis of all the relevant facts as
contained in the record before the Board and in the light of the factors
Set
forth in section 3(c) of the Act and the underlying purposes of the
Act, it is the Board's judgment that the transaction here proposed
14°uld not be consistent with the public interest and that the application
should therefore be denied.
July 30, 1962
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Federal Reserve Bank of St. Louis
9QC)r)
"
Item NO. 15
7/27/62
DISSENTING STATEIEET OF GOVERNOR MILLS
The rapid growth that the State of Florida has experienced,
both economically and populat!onwise, is clearly and correctly brought
°tit in the Statement of the majority of the members of the Board which
d.enies approval of the subject application.
In the face of these growth
factors, denial of the application seemingly is based on the position
that the State of Florida should not be regarded as a single economic unit
entitled to a range of commercial banking facilities in keeping both with
Its separate and national importance in the galaxy of the States of the
geographically distinct
Union, but instead should be fragmented into
lly selfcomPartments, each of which should be deemed to be financia
of its existing corn811fricient as regards the availability and adequacy
banking facilities.
The arguments for confining commercial
banking growth in the State of Florida, which prohibits branch banking,
to arbitrarily delimited areas might pass muster if it could be demonal banking organizations,
trated that the existing groupings of commerci
the Florida National Group, or
tia141e1Y, the so-called Atlantic Group and
Inc., as a new
the creation of the First Bancorporation of Florida,
gr011Ping would be detrimental to the public interest.
That is not the
ease.
Statement, approval of the
As also brought out in the majority
grouping of commercial
4DD1ication would do no more than produce a third
batks which would hold less than 13 per cent of bank deposits in the
a State-wide
State and could in no way be regarded as representing
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Federal Reserve Bank of St. Louis
-2-
concentration in and control over financial resources that would be
contrary either to the letter or the spirit of the Bank Holding Company
Act of 1956.
In fact, broader inter-group banking competition might be
expected to flow out of the operations of the proposed First Bancorpora
tion of Florida, Inc., that would help to stimulate economic development
throughout the State of Florida.
That is so because more active
competition would result between relative equals, as regards the three
consequentially the
groupings of commercial banks, without reducing
.
Dublic's choice of alternative commercial banking facilities
Whatever
l'ancied disadvantages might arise from centralizing the direction of the
consolidated into the subject
grc3n10 of commercial banks proposed to be
baalk holding company, and thereby substituting unified for separate
direction of the individual banks, are more than balanced by the advantages of pooling the managerial and financial resources of the separate
hanks involved so that in toto, or in part, they may be brought to bear
effectively and constructively on the activities in most need of their
118e.
financial background against
In the light of the economic and
lihich the proposed First Bancorporation of Florida, Inc., would operate,
the convenience, needs, and welfare of the communities and the areas
(311cerned would surely be well served under the consolidated guidance
"bankers of proven competence.
Considering the large number of
irklePendent commercial banks serving the State of Florida, there are no
(l'olarlds for fearing that a newly created bank holding company, such as
that proposed, would unduly reduce the public's choice of alternative
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Federal Reserve Bank of St. Louis
0
9f,Qctil
-3..
banking facilities, or that interbank depository relationships would
be shifted to the disadvantage of the public interest.
For that matter,
the part played by correspondent bank relationships in the structure
of commercial banking in the State of Florida, and in its financial
development, has been exaggerated in the majority Statement. Although
interbank deposits can be an important segment of a bank's loanable
resources, they are secondary to the deposits that are originated within
the trade area served and which are its lifeblood and the denominator
or the scope of its credit-serving capacity.
A rearrangement of inter-
la4rlit depository relationships might very well follow establishment of
the proposed First Bancorporation of Florida, Inc., but, even though
its component banks might experience a reduction in this category of
their deposits, the totals of such deposits and their availability as
eredit resources would merely be redistributed in their locations without
ahY
change in their over-all usefulness as banking resources.
The application should be approved.
auly 30, 1962
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Federal Reserve Bank of St. Louis
9
Item No. 16
7/27/62
DISSENTING STATELENT OF GOVERNOR SHEPARDSOU
Admittedly, this is a close case as shown in the record.
The first three factors are not adv:3rse although they do not lend
strong support to approval.
As to the fifth factor, the distance
(96 to 350 miles) between the primary service areas of the proposed
subsidiaries would seem to preclude the possibility of significant
Present or potential competition between them except for medium-size
local areas,
borrowers whose credit needs exceed the resources of their
Yet are too small to seek accommodation in the national market.
In
the field of interbank deposits, it seems probable that most country
banks would be apt to carry accounts in at least three of the cities
that the competition for
concerned (Jacksonville, Miami and Tampa) and
these accounts would be between banks in each city rather than between
cities.
The record in this case seems to support this conclusion.
It is true that the proposed organization would be the
largest banking organization in the State, accounting for approximately
26 per cent of total commercial bank deposits in the four-county area
in the
involved and somewhat less than 13 per cent of total deposits
offices in the four-county area
State, with 4.7 per cent of the banking
and 1.3 per cent of offices in the State, or 27 per cent, 13.2 per cent,
9.4
small affiliates
per cent and 2.6 per cent respectively if the four
°f the proposed subsidiary banks are included.
However, the size of
tly adverse to
the proposed organization is not considered sufficien
offset the potential contribution to the convenience, needs and welfare
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Federal Reserve Bank of St. Louis
of the area to be served.
As the record shows, Florida is one of the
c
fastest growing areas in the country, both in population and economi
needs
development, and it would seem reasonable to expect that credit
are expanding in proportion.
The record further shows that the banking community in
of banking offices
Florida has not kept pace in size of banks or number
with this growth and that the aggregate deposits of the subsidiary
banks of the applicant would be less than those of the largest banks
than Florida.
in a number of States with smaller population
Since
convenient credit sources are a significant factor in economic growth
ly being met by
°f an area and since larger credit needs are current
al contribution
Out-of-State sources, it is my opinion that the potenti
tO the convenience, needs and welfare of the State outweighs the
Potential diminution of competition.
make exaggerated or
The fact that the applicant does not
served or convenience to be prodogmatic claims as to the needs to be
evidences a sound and
vided by a new and as yet untried organization
conservative approach rather than any lack of need for the expanded
services that could be supplied.
J111Y 30, 1962
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Federal Reserve Bank of St. Louis
I would approve the application.
BOARD OF GOVERNORS
wit
r a
e ING01,..*904,
OF THE
FEDERAL RESERVE SYSTEM
Item No. 17
7/27/62
WASHINGTON 25. D. C.
0
ADDRESS OFFICIAL CORRESPONDENCE
,
TO TNE BOARD
t'ati
4
Itiacto-
041
*444***
July 270 1962
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Crosse:
In accordance with the request contained in your
letter of July 23, 1962, the Board approves the appointment
of H. John Pastorelle and Robert Sommer as assistant examiners
for the Federal Reserve Bank of New York. Please advise the
effective dates of the appointments.
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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