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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 27. 1965
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. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Goy. Maisel
•
Minutes of the Board of Governors of the Federal Reserve
System on Tuesday, July 27, 1965.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Daane
Maisel
Sherman, Secretary
Molony, Assistant to the Board
Fauver, Assistant to the Board
Hackley, General Counsel
Solomon, Director, Division of Examinations
Spencer, General Assistant, Office of the
Secretary
Mr. Young, Senior Attorney, Legal Division
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Circulated or distributed items.
The following items, copies
of which are attached to these minutes under the respective item
numbers indicated, were approved unanimously:
Item No.
Letter to Fidelity Bank and Trust Company, Houston,
Texas, approving the establishment of a branch in
the Humble Oil & Refining Company Building.
1
Letter to the Federal Reserve Bank of Kansas City
waiving the assessment of a penalty incurred by
Lawrence National Bank, Lawrence, Kansas, because
Of a deficiency in its required reserves.
2
Letter to The Kentucky Trust Company, Louisville,
Kentucky, granting its request for permission to
maintain reduced reserves.
3
Letter to Commercial Trust and Savings Bank, Mitchell,
South Dakota, approving the establishment of a branch
at 619 South Sanborn Street.
4
Application of State-Planters Bank (Items 5-8).
Pursuant to
the decision at the meeting on July 12, 1965, there had been distributed
t%)1
7/27/65
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a proposed order and statement reflecting approval of the application
of state-Planters Bank of Commerce and Trusts, Richmond, Virginia, to
merge with The Tr -County Bank, Mechanicsville, Virginia.
Also dis-
tributed were the dissenting statements of Governor Robertson and
Governors Mitchell and Maisel.
Following discussion during which certain changes in the
wording of the majority statement were agreed upon, the issuance of
the order and statement was authorized.
Copies of the order and state-
ment, the dissenting statement of Governor Robertson, and the dissenting
statement of Governors Mitchell and Maisel, in the form issued, are
attached as Items 5-8.
Bank holding company and merger applications.
Governor Daane
noted that there was circulating among the members of the Board for
their information a copy of a letter that had been sent on July 20,
1965, to Chairman Robertson of the Senate Banking and Currency Committee in response to a request for certain information regarding the
length of time involved in processing and acting on bank holding company
and merger applications.
Attached to the letter was a listing of applica-
tions that had been acted on by the Board during the period January 1,
1964, to July 20, 1965.
Governor Daane expressed some concern over the time lag shown
between receipt by the members of the Board of staff memoranda relating
to such applications and the date on which the Board's order on the
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7/27/65
application was issued.
In a number of cases in the listing provided
Chairman Robertson, as much as two months had elapsed between the time
the staff memorandum first reached the Board members and the applicant
was notified of the Board's decision.
Governor Daane felt that such a
time lapse placed the Board in a rather poor light and raised questions
as to its administrative procedures.
In the general discussion that followed it was brought out that
the listing had not specifically reflected the fact that there were
involved in the processing of applications certain aspects that occasionally resulted in a time lag between Board consideration of an
application and notification to the applicant of the Board's decision.
For example, after consideration by the Board of an application a certain
amount of time was needed for the preparation of a statement to reflect
the Board's decision, which statement, once drafted, was then considered
by the Board and its issuance authorized.
At the conclusion of further discussion, it was generally agreed
that there were certain problem areas in the processing of applications
Where some improvements might be effectuated, and it was understood in
this connection that the staff would bear in mind the Board's desire
that all applications be handled expeditiously.
The meeting then adjourned.
Secretary
BOARD OF GOVERNORS
Item No.
7/27/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20351
AOORESIO
orriciAL comne5pop4oENce
TO THE •OARO
July 27, 1965
Board of Directors,
Fidelity Bank and Trust Company,
Houston, Texas.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Fidelity Bank and
Trust Company, Houston, Texas, of a branch in the Humble
Oil & Refining Company Building, located on Milam Avenue
between Bell and Leeland Avenues, Houston, Texas, provided
the branch is established within six months from the date
of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
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.)
BOARD OF GOVERNORS
Item No. 2
7/27/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orricIAL CORRESPONDENCE
TO THE BOARD
July 27, 1965
Mr. John T. Boysen, Vice President,
Federal Reserve Bank of Kansas City,
Kansas City, Missouri 64106.
Dear Mr. Boysen:
This refers to your letter
the penalty of $1,476.00 incurred by
Lawrence, Kansas, on a deficiency in
the computation period ended July 7,
of July 13, 1965, regarding
the Lawrence National Bank,
its reserve account for
1965.
It is noted that (1) the deficiency resulted from a
by an employee who was providing vacation relief
error
clerical
for the regular bookkeeper, and (2) with the exception of one
small deficiency, the bank has not had any other deficiencies
over the past four years.
In the circumstances, the Board authorizes your Bank
to waive the assessment of the penalty of $1,476.00 for the
period ended July 7, 1965.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary
BOARD OF GOVERNORS
Item No. 3
7/27/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ACCIFICIIII OFFICIAL CO*ACUPONOENCE
TO THE 1110/1010
July 27, 1965
Board of Directors,
The Kentucky Trust Company,
Louisville, Kentucky.
Gentlemen:
With reference to your request submitted
through the Federal Reserve Bank of St. Louis, the
Board of Governors, acting under the provisions of
Section 19 of the Federal Reserve Act, grants permission to The Kentucky Trust Company to maintain the
same reserves against deposits as are required to be
maintained by nonreserve city banks, effective with
the first biweekly reserve computation period beginning after the date of this letter.
Your attention is called to the fact that
such permission is subject to revocation by the Board
of Governors.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
Item No. 4
7/27/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
A0011111M1
orriotAL
OONRCIIPONDIENCIC
TO THIC 1110ARD
July 27, 1965
Board of Directors,
Commercial Trust and Savings Bank,
Mitchell, South Dakota.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Commercial Trust and
Savings Bank, Mitchell, South Dakota, of a branch at 619
South Sanborn Street, Mitchell, South Dakota, provided the
branch is established within six months from the date of
this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
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.)
Item No. 5
7/27/65
UNITED STATES OF AMERICA
E SYSTEM
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERV
WASHINGTON, D.C.
In the Matter of the Application of
1
STATE PLANTERS BANK OF COMMERCE AND TRUSTS`
!c3r approval of merger with
4he Tri-County Bank
ORDER APPROVING MERGER OF BANKS
pursuant to the
There has come before the Board of Governors,
4nk Merger Act of 1960 (12 U.S.C. 1828(c)), an application by State.1)1-enters Bank of Commerce and Trusts, Richmond, Virginia, a State member
prior approval of the
bank Of the Federal Reserve System, for the Board's
Illerger of that bank and The Tri-County Bank, Mechanicsville, Virginia,
linder the charter and title of the former.
As an incident to the merger,
he four offices of The Tri-County Bank would become branches of the
tesulting bank.
by the
Notice of the proposed merger, in form approved
lac3a d, has been published pursuant to said Act.
the light of the
Upon consideration of all relevant material in
4eters set forth in said Act, including reports furnished by the Comptroller
cl the Currency, the Federal Deposit Insurance Corporation, and the
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Attorney General on the competitive factors involved in the proposed
tlerger,
IT IS HEREBY ORDERED, for the reasons set forth in the Board's
Statement of this date, that said application be and hereby is approved,
Provided that said merger shall not be consummated (a) within seven
calendar days after the date of this Order or (b) later than three months
alter said date.
Dated at Uashington, D. C., this 27th day of July, 1965.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Shepardson, and Daane.
Voting against this action:
Mitchell, and Maisel.
Governors Robertson,
(Signed)
Merritt Sherman
Merritt Sherman,
Secretary.
Item No. 6
7/27/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY STATE-PLANTERS BANK OF COMMERCE AND TRUSTS
FOR APPROVAL OF MERGER WITH
THE TRI-COUNTY BANK
STATEMENT
State-Planters Bank of Commerce and Trusts, Richmond, Virginia
'S tate-Planters"), with total deposits of $295 million, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the
d's prior approval of the merger of that bank and The Tr -County
Ile
811111c) Mechanicsville, Virginia ("Tr -County"), which has total deposits
1/ .
°f $11 million.— The banks would merge under the charter and title of
Sr4te-planters, a member of the Federal Reserve System.
the
Incident
to
merger, the four offices of Tr -County would become branches of the
resulting bank, increasing to 24 the offices of that bank.
Under the law, the Board is required to consider, as to each
Of
the banks involved, (1) its financial history and condition, (2) the
44quacy of its capital structure, (3) its future earnings prospects,
(4)
the general character of its management, (5) whether its corporate powers
4re consistent with the purposes of 12 U.S.C., Ch. 16 (the Federal Deposit
Insurance Act), (6) the convenience and needs of the community to be
ePosit figures are as of December 31, 1964.
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served, and (7) the effect of the transaction on competition (including
anY tendency toward monopoly).
The Board may not approve the proposed
merger unless, after considering all of these factors, it finds the
transaction to be in the public interest.
Banking, factors. - The financial history and the asset
condition of State-Planters and Tr -County are satisfactory.
State-
11-anters' capital structure is adequate, its earnings prospects are
favorable and its management is capable.
Consummation of the proposal would provide a basis for
proved earnings for what has been Tr -County, the earnings of which
have been considerably below the average for banks of comparable size
in the district; it would strengthen the management of Tr -County Bank;
and it would remedy Tri-County's capital position, which is below a
desirable level.
The resulting bank, which would be under the management of
State-Planters, would have a satisfactory asset condition, an adequate
earlital structure, and favorable earnings prospects.
Neither the corporate powers of the two existing banks, nor
those of
the resulting bank, are, or would be, inconsistent with the
Attrp
oses of 12 U.S.C., Ch. 16.
Convenience and needs of the communities. - State-Planters
°Derates its main office and nine branches in the City of Richmond,
fo
ur branches in adjoining Henrico County, and five branches and a
"ity about 25 miles to the south of Richmond in the Petersburg11(3Pel4e11 area.
-3-
In Hanover County to the north of Richmond are Tr -County's
nlain office at Mechanicsville and the bank's three branches at Doswell,
Hanover, and Beaverdam.
Mechanicsville is seven miles and the other
three municipalities are from 15 to 30 miles from downtown Richmond.
Effectuation of the proposal would affect primarily the banking needs
and convenience in Hanover County.
Mechanicsville is a suburb of Richmond and the center of
ae.veral new housing developments.
The small municipalities in which
'41-County's branches are located are dependent for economic support
14rg.ely from agricultural pursuits, although lumbering or wood
Processing and quarrying are also important.
Many of the residents
() Hanover County commute to employment in Richmond.
Since October 1963, Hanover County has been part of the
Ilichmond Standard Metropolitan Statistical Area ("RSMSA").
This is
indicative of the growth and development that is occurring in the
eQunty,
luring
The population of the area now comprising RSMSA increased
the decade ending in 1960 by 25 per cent, as did the population
°f Hanover County.
However, by mid -1964, the estimated population of
the County was 31,400, which represented an increase since 1960 of
°Iler 30 per cent.
Hanover County is traversed by important highways, including
the
new Interstate Route 95, connecting Richmond and the Washington,
'C., area.
1)1
Several businesses have recently expanded or are in
0s3 of establishing or expanding plants in Hanover County, and
2478
many requests to rezone land for industrial use are being processed by
the appropriate authority.
Tri-County's relatively low lending limit of about $79,000 has
been a restricting factor on its ability to serve credit needs in Hanover
County.
On several occasions, for example, Tr -County has had to partici
Pate or place elsewhere portions of loans that exceeded its loan limit,
time to
while other such loans to businesses in Hanover County have from
time been granted directly by larger banks in the Richmond area.
In addition to an increased lending limit of over $2 million,
now
consummation of the proposal would make available at the offices
offered by
°Perated by Tr -County the broad array of banking services
State-Planters, including trust appointments, construction financing,
loans,
dealer and accounts receivable financing, small business term
lock-box collection facilities, and loans for working capital and
equipment purchases to professional people.
ble
While offices of large Richmond banks are within reasona
proposal
driving distances of Tr -County offices, effectuation of the
would bring to the Hanover County banking offices now operated by Tr
County, aggressive and more forward-looking management policies.
This,
accessibility
together with the resultant increase in lending limits and
positive
of broader banking services at those offices, would make a
more
contribution towards providing in the County financial facilities
in keeping with the expansion and growth in progress in the area.
-5-
Competition. - The service area'—
of State-Planters comprises
the City of Richmond, Henrico County, and the Petersburg-Hopewell area,
while the service area of Tr -County is Hanover County.
seven miles
The nearest offices of the two banks are about
interapart, and offices of other commercial banks are located in the
vening area.
two
A close correspondent relationship exists between the
of loans
banks, and substantial differences exist between the classes
and deposits of the two institutions.
banks that
The existing competition between the participating
would be eliminated by consummation of the proposal is not significant.
the
Under State law, neither bank can establish de novo branches in
Other's service area, since the City of Richmond and Hanover County
are not contiguous.
Virginia
State-Planters, the third largest commercial bank in
and the second largest in the Richmond area, is a subsidiary of United
bank holding
Virginia Bankshares, Incorporated, the largest registered
company in the State.
of total deposits
If the proposal were effectuated, the shares
ry banks
cf the commercial banks in the State held by all of the subsidia
per cent), and
(3f United Virginia Bankshares, Incorporated (less than 12
increased by only
by State-Planters (less than 7 per cent) would be
nominal amounts, and State-Planters' share of total deposits of all
commercial banks in the service area of the resulting bank would be
increased by about 1 per cent to 30 per cent.
or more of its deposits
That area from which a bank obtains 75 per cent
°E individuals, partnerships, and corporations.
Tri-County's share of the total deposits of the three commercial
banks with offices in Hanover County is less than 40 per cent.
First and
ial bank-Merchants National Bank of Richmond--the State's largest commerc
bolds over 33 per cent of the deposits in the County at its branches at
respectively).
Ashland and Montpelier (16 and 22 miles to the north of Richmond,
The Hanover National Bank of Ashland holds over 27 per cent of such deposits.
In the section of Henrico County bordering on the southern portion of
the
Hanover County are the offices of several banks, one of which is
Mechanicsville Pike branch of The Bank of Virginia, the fifth largest bank
in the State, two miles from Tr -County's main office.
tion
Consummation of the proposal would provide increased competi
in Hanover County for First and Merchants National Bank of Richmond, State?lanters
established
principal competition. Hanover National Bank is well
in the County, and is competing successfully with the Ashland branch of
First and Merchants.
The proposal, if consummated, would not appear to
as an
affect adversely the ability of Hanover National Bank to continue
effective competitor in the County; nor would it appear that any other
bank would be adversely affected.
of StateSummary and conclusion. - The substitution of branches
of
planters for the offices of Tr -County would not increase concentration
tion
banking resources by more than a minimal amount, and the existing competi
that would be eliminated is not significant. At the same time, it would
bility to expanded
Ptovide increased banking accommodations and accessi
the
banking services, under aggressive management, more consonant with
rapid development and growth of Hanover County, now barred to de novo
ranching by Richmond banks. On balance, the weight of the various
considerations in this case is favorable.
Accordingly, the Board finds that the proposed merger would
be in the public interest.
.July 270 1965:
42
Item No. 7
7/27/65
DISSENTING STATEMENT OF GOVERNOR ROBERTSON
bank
I can see little excuse for permitting the second largest
in Richmond to substitute four of its branches for the four offices of The
banks now
Tr -County Bank, thus eliminating one of the two independent
Richmond, and
operating in Hanover County, in the suburban periphery of
of two
compelling the only remaining small bank to compete with branches
tanch larger banks instead of only one.
applicant
The present and potential future competition between the
and The Tri-County Bank obviously will be eliminated, which - under the
statute - must be considered an adverse factor.
This adverse factor is not offset by the banking convenience
and needs factor.
Evidence has not been submitted that even suggests
that convenient banking services for Hanover County are not now being
suPPlied or will not be in the future.
Those few businesses whose credit
tequirements may exceed the capacity of The Tr -County Bank now have
convenient access to offices of some of the largest banks in the State.
The applicant itself has a branch office located only seven miles from
The Tr -County Bank's head office and is in a position to readily extend
its services within Hanover County.
The Tr -County Bank is a small, strong, independent institution.
Its growth in the past ten years has been excellent.
Over this period its
POs its have increased by 160 per cent and its loans by 270 per cent.
With
f°11r offices strategically distributed, it is providing and can continue
to
people
provide the type of banking services evidently preferred by many
M
-2-
in the county.
far greater than
Its growth, percentage-wise, has been
has not as yet experienced a
that of the population of an area which
minantly agricultural economy.
fundamental change in its predo
While there
provide management succession and
is some need for The Tr -County Bank to
meeting of these needs should not
to strengthen its capital structure, the
for a bank located so near a large
Present a serious problem - especially
metropolitan area
deprive the public of the
The consummation of this merger will
, viable, independent bank,
facilities and services of a small, local
interest. In addition, the
Which in itself is contrary to the public
es under control of the largest
merger will bring four more banking offic
thus furthering the trend
bank holding company in the Stqte of Virginia,
in holding companies.
toward concentration of banking resources
This
gh mergers by holding
concentration is being accomplished largely throu
positions to pay fat premiums
company controlled banks which are in
banks cannot be expected to resist.
Which the shareholders of the acquired
has, by this route, acquired
Over the past ten years this very applicant
with total deposits representing
eight banking offices and two facilities
the end of 1964.
ever 16 per cent of its deposit volume as of
It now
in the Richmond -Petersburg-Hopewell
holds 29 per cent of the total deposits
and other mergers, that area now finds
service area. A3 a result of these
banking resources concentrated in only
itself with over 60 per cent of its
d be avoided.
two banks, and further concen'zraticn shoul
I would deny the application.
27, 1965.
Item No,
7/27/65
DISSENTING STATEMENT OF GOVERNOR MITCHELL AND GOVERNOR MAISEL
We concur in the dissent of Governor Robertson except as to his
strictures on the size and growth of the holding company in the State of
Virginia.
While we believe United Virginia Bankshares, Incorporated,
through State-Planters is as dominant in the Richmond metropolitan area
as it should be permitted to become via mergers, we see no effects hcstile
to the public interest to permitting the holding company access to banking markets in Virginia it does not now serve--quite to the contrary.
State-wide biking is permitted in Virginia and under this policy we
believe the benefits of competition are most likely to be achieved if
the larger banks and holding companies have moderate positions in several
communicies rather than a dominant role in a few.
July 27, 1965.
@FedFRASER