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Minutes for June 17, 1963
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
Minutes of a meeting of the available members of the
Board of Governors of the Federal Reserve System on Monday,
June 17, 1963.
The meeting was held in the Board Room at 10:00 a.m.
PRESENT:
Mr. Balderston, Vice Chairman
Mr. Mills
Mr. Shepardson
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Fauver, Assistant to the Board
Mr. Mattras, General Assistant, Office of
the Secretary
Messrs. Noyes, Koch, Williams, Dembitz,
Eckert, Freedman, Gehman, Partee,
Weiner, Wernick, and Yager of the
Division of Research and Statistics
Messrs. Furth, Hersey, Katz, Emery, Maroni,
Mills, Nettles, and Swerling, Mrs. Junz,
and Miss Logue of the Division of International Finance
Mr. Portsmore, Adviser, Bank of England
Economic review.
The staff of the Division of International
Finance commented on international financial conditions, with special
reference to the U. S. balance of payments, after which the staff of
the Division of Research and Statistics presented information relating
to the domestic economy.
Mr. Portsmore and all members of the Board's staff then
vithdrew except Messrs. Sherman, Kenyon, Fauver, Noyes, Dembitz, and
Mattras and the following entered the room:
Mr. Cardon, Legislative Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Hexter, Assistant General Counsel
6/17/63
-2Mr. Shay, Assistant General Counsel
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Hricko, Senior Attorney, Legal Division
The following actions were taken subject to ratification at
the next meeting of the Board at which a quorum was present:
Discount rates.
The establishment without change by the
Federal Reserve Banks of Cleveland, Richmond, Atlanta, St. Louis,
Minneapolis, and Dallas on June 13, 1963, of the rates on discounts
and advances in their existing schedules was approved unanimously,
vith the understanding that appropriate advice would be sent to those
Banks.
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 Irving International Financing
Corporation, New York, New York, amending
the Board's consent of February 26, 1963,
With respect to the purchase of shares
Of Pakistan Industrial Credit and Investment
Corporation, Karachi, Pakistan.
1
Letter to Genesee Merchants Bank & Trust
2
Company, Flint, Michigan, approving the
establishment of a branch in Grand Blanc
Township.
Letter to Citizens State Bank, Puyallup,
Washington, approving the establishment of
a branch in Pierce County.
3
_3_
6/17/63
Item No.
Letter to The Grant County State Bank,
Bayard, New Mexico, approving the
establishment of a branch in Silver City.
14.
Letter to Gulf Interstate Company, Houston,
Texas, granting a determination exempting
Lt from all holding company affiliate
requirements except those contained in
section 23A of the Federal Reserve Act.
5
Memorandum from Mr. Noyes dated June 12,
1963, with respect to the proposed publication by the Securities and Exchange Commission
of data from a recent System survey of banks'
methods and standards in making security loans.
6
The foregoing Item No.
6 was approved with the understanding
that the material to be prepared for the Securities and Exchange
Commission with a view to publication by that agency would be of a
factual character and so arranged as not to refer to the practices
Of any particular bank.
Report on competitive factors (San Francisco-Los Angeles,
California).
There had been distributed a draft of report to the
Comptroller of the Currency on the competitive factors involved in the
Proposed merger of Citizens National Bank, Los Angeles, California,
into Crocker-Anglo National Bank, San Francisco, California.
In discussion, Governor Mills called attention to the final
Paragraph of the proposed conclusion, which read as follows:
"There
is a heavy concentration of banking resources in California in a small
number of very large banks.
The proposed merger would further this
viewed
concentration significantly, and in this respect the proposal is
_14 _
6/17/63
as having an adverse effect on competition."
Governor Mills raised
the question whether the second half of the last sentence should not
be omitted.
He pointed out that in the State of California extensive
State-wide branch banking was an accomplished fact.
This being so, perhaps
merger applications of the kind under consideration should be viewed
somewhat differently, insofar as the competitive aspects were concerned,
from merger proposals in States where branch banking was in an incipient
stage and there might be more occasion to limit the degree of concentration.
Mr. Leavitt suggested that a matter of judgment was involved.
There were a number of alternative sources of banking services, with
keen competition throughout the State.
At the same time, the proposed
merger would further increase the heavy concentration of banking resources
that already existed.
Personally, he did not feel that the proposed
merger would have serious adverse effects on competition, and he noted
that the only adverse comment in the proposed report related to the
furtherance of the already heavy concentration of banking resources.
If
the second half of the last sentence in the conclusion were stricken,
attention still would have been called to the concentration of banking
resources, although without expressing the view that in this respect
the proposal would have an adverse effect on competition.
There followed further discussion about the banking situation
ia the State of California during which Governor Mills expressed the
thought that it would appear from the alignment of the leading banks
in the State that perhaps the present proposal, if consummated, would
6/17/63
-5-
be the last involving mergers between such banks.
Governors Shepardson
and Balderston expressed agreement with the suggestion of Governor Mills
regarding the conclusion of the report, Governor Balderston commenting
that he looked on the situation in California as probably having passed
the point of no return so far as the banking structure was concerned.
In the existing circumstances, he felt that it would be desirable to
have as many large banking organizations as possible that could compete
Vigorously against each other and the largest bank.
The report was then approved unanimously for transmission to
the Comptroller with the conclusion revised to read as follows:
Some competition exists between Crocker-Anglo National
Bank, San Francisco, and Citizens National Bank, Los Angeles
primarily for business of regional or national concerns as
well as for correspondent bank business.
The proposed transaction would unite the fifth and
eighth largest banks in the State of California, and the
resulting institution would have total deposits of approximately the same volume as that of the third largest bank
in the State. In addition, the resulting bank would have
offices in the northern, central and southern sections of the
State. The continuing bank would probably be a stronger
competitor for the other large California banks than is
Crocker or Citizens, individually, while it is not believed
the proposal would have serious adverse competitive effects
on any banks operating in the State.
There is a heavy concentration of banking resources
in California in a small number of very large banks. The
proposed merger would further this concentration significantly.
Report on competitive factors (Chambersburg, Pennsylvania).
There had been distributed a draft of report to the Comptroller of the
Currency on the competitive factors involved in the proposed merger
6/17/63
-6-
of The Valley National Bank of Chambersburg, Chambersburg, Pennsylvania,
into The National Bank of Chambersburg, Chambersburg, Pennsylvania.
After discussion, the report was approved unanimously for
transmission to the Comptroller with the understanding that the
conclusion would be revised slightly to read as follows:
The proposed merger of The Valley National Bank of
Chambersburg, Chambersburg, Pennsylvania, and The National
Bank of Chambersburg, Chambersburg, Pennsylvania, would
eliminate the very substantial amount of competition existing
between these two banks. It would also enable the resulting
institution to obtain a competitive advantage in Chambersburg
where it would hold about 57 per cent of the deposits of
individuals, partnerships and corporations; in Chambersburg
and environs it would operate six offices as compared to
four offices operated by its two Chambersburg competitors.
This significant alteration of the banking structure in
Chambersburg would threaten the ability of other local banks
to continue to offer effective competition and might also
have adverse effects on small banks in the area.
Report on competitive factors (Troy-Cohoes, New York).
There had been distributed a draft of report to the Comptroller of
the Currency on the competitive factors involved in the proposed
merger of The National Bank of Cohoes, Cohoes, New York, into The
Manufacturers National Bank of Troy, Troy, New York.
After discussion, the report was approved unanimously for
transmission to the Comptroller with the understanding that the
conclusion would read as follows:
The proposed merger would convert a relatively small
unaggressive bank to a branch of a larger and more vigorously
aggressive bank, and would result in more intensified banking
competition in the city of Cohoes without adverse effect on
other area banks. The transaction would add minimally to
the banking resources controlled by the Marine Midland Corporation, of which the resultant bank would be a subsidiary.
6/17/63
-7Application of Bank of Virginia (Items 7, 8
and 9).
Pursuant
to the decision reached at the meeting on June 11, 1963, there had been
distributed a proposed order and statement reflecting the Board's approval
Of the application of The Bank of Virginia, Richmond, Virginia, to
merge with The Bank of Henrico, Sandston, Virginia.
The issuance of the order and statement was authorized; copies
Of the documents, as issued, are attached to these minutes as Items 7
and 8.
Also attached, as Item No. 9, is a copy of the transmittal
letter to Bank of Virginia.
Report on S. 1642.
There had been distributed a draft of letter
to Chairman Robertson of the Senate Committee on Banking and Currency
reporting on S. 1642, a bill to amend the Securities Act of 1933 and
the Securities Exchange Act of 1934.
In preliminary discussion it was noted that Chairman Martin
had been requested to testify before the Committee with respect to
this proposed legislation on June 24, 1963.
Governor Balderston commented on the desirability of consistency
between the letter report and the testimony. This suggested to him the
Possibility of abbreviating the letter so as simply to express agreement
with the extension of reporting requirements, proxy rules, and "insider
trading" provisions of the Securities Exchange Act of 1934 to certain
companies, including banks, whose securities are traded over the counter
and to indicate that the Board considered it inadvisable for these
Provisions to be administered--in the case of banks--by an agency other
el A
-8-
6/17/63
than the Securities and Exchange Commission.
This would leave for
the Chairman's testimony a more detailed exposition of position on
the provisions of the bill that, in the case of banks, would place
administration with the Comptroller of the Currency in respect to
national banks, the Board with respect to State member banks, and the
Federal Deposit Insurance Corporation with respect to nonmember insured
banks, upon the request of any of those agencies.
Since it was
understood by Mr. Cardon that it would be satisfactory to the Committee
if the Board's letter report were sent on Wednesday, June 19, Governor
Balderston suggested that a revised draft of letter along the lines
he had mentioned be prepared for consideration at the Board meeting
on Wednesday.
After discussion it was agreed to follow the procedure suggested
by Governor Balderston.
During the discussion, however, Governor Mills
commented that he saw no reason to change his position, as expressed
Previously in connection with discussion of this proposed legislation,
that the Securities and Exchange Commission, as the administering agency,
Should have the permissive right to delegate its authority to the bank
sUPervisory agencies under whatever formula for the collection of
Information the Commission might prescribe.
Governor Mills also made
he comment that the sending of the proposed letter, as drafted, would
have the effect of indicating that the Securities and Exchange Commission
/ras in error in its legislative approach and would make it difficult for
the bank supervisory agencies to sit down and agree on a general formula
_9_
6/17/63
for the collection of information that would be mutually acceptable.
He felt that the letter would arouse antagonism on the part of the
Other bank supervisory agencies, and possibly also on the part of
the Securities and Exchange Commission.
The meeting then adjourned.
Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson
approved on behalf of the Board on June 13,
1963, the following actions relating to the
Board's staff:
Ointments
George R. Hall as Economist, Division of Research and Statistics,
vith basic annual salary at the rate of $12,845, effective the date of
entrance upon duty.
Patricia Ernestine Gardosik as Clerk-Stenographer, Division of
Personnel Administration, with basic annual salary at the rate of
$4,030, effective the date of entrance upon duty.
Park O. Showalter as Electrician-Operating Engineer, Division
or Administrative Services, with basic annual salary at the rate of
$6,386, effective the date of entrance upon duty.
Salary increase
_
Douglas L. Orre, Assistant Federal Reserve Examiner, Division
uf Examinations, from $6,650 to $7,125 per annum, effective June 23,
1963,
Acceptance of resignation
Barbara A. Kraft, Clerk-Stenographer, Division of Personnel
Administration, effective at the close of business June 28, 1963.
On June 14, 1963, Governor Shepardson
approved on behalf of the Board the
following items:
6/17/63
-10-
Letter to the Federal Reserve Bank of Cleveland (attached
Item No. 10) approving the appointment of Jerry Robert Pfeifer as
assistant examiner.
Memorandum from the Division of Administrative Services recommending the appointment of Peter P. Devaney as General Mechanic-Operating
Engineer in that Division, on a temporary basis for a period of about
three months, with basic annual salary at the rate of $5,845, effective
the date of entrance upon duty.
Memorandum from the Division of Administrative Services recommending the appointment of John H. McDonald as Guard in that Division, with
basic annual salary at the rate of $3,560, effective the date of
entrance upon duty.
On June 14, 1963, Governor Shepardson noted
on behalf of the Board a memorandum advising
that application for retirement had been filed
by Elsie N. Carrick, Assistant Supervisor,
Stenographic Section, Office of the Secretary,
effective July 1, 1963.
Governor Shepardson today approved on behalf
of the Board the request contained in a memorandum dated June 11, 1963, from Mr. Harris,
Coordinator, Office of Defense Planning, for
approval of an overexpenditure of $10,500 in
the Contractual Professional Services Account
of that Office's 1963 budget to cover the
cost of an unanticipated volume of security
clearances for Federal Reserve Bank personnel.
0.?
Item No. 1
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 17, 1963
Irving International Financing Corporation,
One Wall Street,
New York 15, New York.
Gentlemen:
This will acknowledge your letter of May 8, 1963,
referring to the Board's letter of February 26, 1963, granting
consent to Irving International Financing Corporation to purchase and hold 104,000 ordinary shares, par value Rupees 10
each, of Pakistan Industrial Credit and Investment Corporation,
Karachi, Pakistan, at a cost not to exceed 1JS0214,000 (equivalent).
In line with your request and on the basis of the information furnished, the Board's consent of February 26, 1963, is amended
by changing the wording in the first paragraph from fla cost not to
exceed US$214,000 (equivalent)" to tra cost of V44,998.43 plus
approximately US$3,700 to be paid as a transfer tax".
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
1r-4
'11.
Item No. 2
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 17, 1963
Board of Directors,
Genesee Merchants Bank & Trust Co.,
Flint, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
the establishment by Genesee Merchants
approves
System
Flint, Michigan, of a branch at the
Co.,
Bank & Trust
the intersection of Dort Highway
of
corner
southwest
and South Saginaw Road
Extension
Highway
Dort
and
Road, Grand Blanc TownHill
East
to
through
extending
ship, Genesee County, Michigan, 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.
(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.)
51:V.1
Item No.
3
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 17, 1963
Board of Directors,
Citizens State Bank,
Puyallup, Washington.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Citizens
State Bank, Puyallup, Washington, in the vicinity of Airport
and Canyon Roads in an unincorporated area of Pierce County,
Washington, 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.
(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.)
¶94()
Item No.
BOARD OF GOVERNORS
4
6/17/63
OF THE
K\‘‘t,:•
•
,•
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 17, 1963
Board of Directors,
The Grant County State Bank,
Bayard, New Mexico.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment of a branch in the vicinity of the intersection of 12th and Grant Streets, Silver City, New Mexico, by The
Grant County State Bank, Bayard, New Mexico, provided the branch is
established within one year from the date of this letter.
It is understood that prior to establishment of the branch
capital funds will be increased by not less than $200,000 through
the sale of new stock and that common capital stock will be increased
to at least $150,000 to comply with Federal statutes.
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.)
Item No.
5
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 18, 1963
Mr- Hy Byrd, President,
Gulf Interstate Company,
Houston, Texas.
Dear Mr. Byrd:
This refers to the request contained in your letter of
April 29, 1963, submitted to the Federal Reserve Bank of Dallas, for
a determination by the Board of Governors of the Federal Reserve System
as to the status of Gulf Interstate Company as a holding company affiliate.
From the information presented, the Board understands that
Gulf Interstate Company owns producing oil and gas properties in
several States, and, through a wholly-owned subsidiary, is engaged in
the design, engineering, and supervision of construction of pipe line
sYstems and related facilities; that the Company is a holding company
affiliate by reason of the fact that it owns 53,000 of the 105,000
outstanding shares of stock of Central National Bank of Houston, Houston,
Texas; and that the Company does not, directly or indirectly, own or
control any stock of, or manage or control, any other banking institution.
In view of these facts) the Board has determined that Gulf
Interstate Company is not engaged, directly or indirectly, as a business
in holding the stock of, or managing or controlling, banks, banking
associations, savings banks, or trust companies within the meaning of
section 2(c) of the Banking Act of 1933 (12 U.S.C. 221a); and, accordingly, the Company is not deemed to be a holding company affiliate
except for the purposes of section 23A of the Federal Reserve Act, and
does not need a voting permit from the Board of Governors in order to
vote the bank stock which it owns.
If, however, the facts should at any time indicate that Gulf
Interstate Company might be deemed to be so engaged, this matter should
again be submitted to the Board. The Board reserves the right to
rescind this determination and make further determination of this matter
at any time on the basis of the then existing facts. Particularly,
1942
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
1.1r. Hy Byrd
-2-
should future acquisitions by or activities of the Company result in
its attaining a position whereby. the Board may deem desirable a
determination that the Company is engaged as a business in the holding
of bank stock, or the managing or controlling of banks, the determination herein granted may be rescinded.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Item No. 6
MEMORANDUM
6/17/63
June 12, 1963
TO:
Board of Governors
FROM: Guy E. Noyes
SUBJECT: Methods and Standards in
Making Security Loans: Publishing
Data from Survey.
The Board may recall that in December 1962, a series of
questions concerning banks' methods and standards in making
security loans was asked of a sample of 31 banks by the Federal
Reserve Banks. Apart from the desirability of such information
in connection with the administering of Regulation U, the Securities
and Exchange Commission had made a request for it in connection with
their Special Study of the Securities Markets.
It is now indicated that the Commission would like to
publish these reports as an exhibit to .the report of their special
study, of which the chapter on security credit is now being drafted
by the SEC staff. It seems to us quite feasible to edit the replies
so that no individual respondent bank could be identified, and on
this basis, I see no reason why we should not agree to publication
by the Securities and Exchange Commission.
Unless there is some objection, therefore, I propose to
send an appropriately edited version to the SEC with an indication
that there is no objection to their publiphing it.
Item NO.
UNITED STATES OF AMERICA
7
6/17/63
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASEICGTON, D. C.
In the Matter of the Application of
TBE BANK OF VIRGINIA
!;3r approvq1 of merger with
The Bank of Henricc
ORDER APPROVING MERGER OF BANKS
There has come before the Board of Governors, pursuant to the
411k Merger Act of 1960 (12 M.G. 1823(0), an application by The Bank
Of Virginia, Richmond, Virginia, a State member bank of the Federal
Reserve System, for the Board's prior approval of the merger of that
bank and The Bank of Henrico, Sandston, Virginia, under the charter
and title of the former.
As an incident to the merger, the three
°Ifices of The Bank of Honrico and an additional office, which has
13Qen approved but not yet opened for business, would become branches
Of The Bank of Virginian
Notice of the proposed merger, in form
al/proved by the Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the factors set forth in said Act, including reports furnished by the
Cernptroller of the Currency, the Federal Deposit Insurance Corporation,
and the Department of Justice on the competitive factors involved in
the proposed merger,
1.945
-2-
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
tenths after said date.
Dated at Washington, D. C., this 17th day of June, 1963.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, King,
and Mitchell.
Absent and not voting:
Governor Robertson.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
•
Item No.
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY THE BANK OF VIRGINIA
FOR PRIOR APPROVAL OF MERCER WITH
THE BANK OF HENRICO
STATEMENT
mia Bank"),
The Bank of Virginia, Richmond, Virginia ("Virg3
with deposits of $159 million as of December 31, 1932, has applied,
), for the
pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1023(c)
Board's prior approval of the merger of that bank and The Bank of
s of
Ronrico, Sandston, Virginia ("Henrico Bank"), with deposit
$4.2 million as or the same date, under the charter and title of
Virginia Bank.
g
The proposal contemplates that the three existin
been apoffices of Henrico Bank and an additional office, which has
of the
proved but not yet opened for business, would become branches
tesulting bank, increasing the number of offices of Virginia Bank
from 22 to 26.
r, as to
Under the Act, the Board is required to conside
each of the banks involved, (1) its financial history and condition,
(2) the adequacy of its capital structure, (3) its future earnings
(5) whether
Prospects, (4) the general character of its management,
its corporate powers are consistent with the purposes of 12 U.S.C.,
convenience and
Ch- 16 (the Federal Deposit Insurance Act), (3) the
8
1947
-2-
needs of the community 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 histories of Virginia Bank
and Henrico Bank are satisfactory.
Both banks also have satisfactory
asset conditions, and this should be true of the resulting bank.
The
capital structure of the resulting bank will continue to reflect a
teed for some strengthening.
The net current earnings of Henrico Bank
are above average for banks of comparable size in the Fifth Federal
1"eserve District.
Although Virginia Bank's net current earnings are
below average, increased automation and other operating economies are
e%Pected to provide a basis for improved earnings.
Henrico Bank, which began operations on April 15, 1957, was
(3tganized with the understanding at the time that it would be merged
with Virginia Bank after operating for at least five years, the period
necessary
under then existing State law.
Under an amendment to the law,
effective
eliminated.
June 29, 1952, the prescribed waiting period was
Virginia Standard Corporation, then an affiliate of Virginia
13ank, on February 2, 1961, acquired a two-thirds stock interest in
Renrico Bank,
When Virginia Commonwealth Corporation, a bank holding
company, was established in 1962 (Federal Reserve Bulletin, 1962,
194A
-3-
P. 1442), one of the subsidiary banks was Bank of Virginia.
The
holding company thereby ecquired control of Virginia Standard CorporaThereafter, all of the stock of Henrico Bank, except for
qualifying shares sold to bank directors under repurchase agreements,
was acquired by Virginia Commonwealth Corporation.
Virginia Bank was primarily responsible for securing for
Renrico Bank its chief executive officer.
The other two full-time
active officers of the bank were supplied from the staff of Virginia
Bank.
Present management of Henrico Bank is satisfactory, and this
Would hold true for the resulting bank, Virginia Bank being adequately
staffed with competent personnel in both junior and senior positions.
No inconsistency with the purposes of 12 U.S.C., Cll. 16 is
i
ndicated.
Convenience and needs of the communities. - Virginia Bank
operates its main office and 13 branches in the Richmond metropolitan
area, 3 branches in the city of Norfolk, and 1 branch each in the
cities of Newport News, Petersburg, Portsmouth, and Roanoke.
On May 24,
1963, the Board announced its approval of the merger of Virginia Bank
and The Farmers Bank of Dinwiddie, Dinwiddie, Virginia, which is to be
operated as a branch of Virginia Bank.
Consummation of the proposed
merger would have little effect on the convenience and needs of
Richmond or the other communities now being served by Virginia Bank.
The main office of Henrico Bank is located at Sandston,
Virginia, approximately seven miles east of Richmond.
Its two
-4are situated
operating branches and the approved additional branch
just outside the city of Richmond in the eastern section of Henrico
County (population 117,339).
The areas served by the bank are pre-
commercialization
dominantly residential and agricultural, although
in the Sandston vicinity is progressing.
Future prospects are con-
expansion of the
sidered to be exceptionally good with the continued
City of Richmond, and the existing trend to locate business, as well
as residential developments, outside the corporate limits of the city.
available a
Customers of Henrico Bank would have directly
more complete range of banking services than those previously available at its offices, such as trust services, vacation savings,
PRA Title I loans, charge plan, and personal money orders.
This would
be a beneficial factor in an area increasing in commercial importance.
these
Competition. - Due to the close relationship between
tIlo banks, and the administrative and operational assistance given
exists
Henrico Bank by Virginia Bank, little, if any, competition
between them.
result
No change in the control or ownership would
from the merger.
State and
Virginia Bank is the fifth largest bank in the
holds four per cent of total bank deposits in Virginia.
It is not
the dominant bank in any area in which it operates.
of total
The merger would increase Virginia Bank's share
its rank would
dePosits in the State by only one-tenth of one per cent and
be unchanged.
Thus, the resources to be gained would be too small to
in the
alter its competitive position in the State, as a whole, or
-5-
Primary areas it now serves.
Since both banks are owned by Virginia
Commonwealth Corporation, as previously noted, the proposed merger
would increase neither the size nor the area representation of the
holding company.
All of Henrico Bank's offices are within 10 miles of
downtown Richmond which contains the head offices of 6 banks, excluding Virginia Bank.
A branch office of First & Merchants National Bank,
the largest bank in Virginia, is located one and one-fourth miles
West of Henrico Bank's Mechanicsville Pike office.
In addition to that of other banks, competition is provided
by a number of nonbanking financial institutions.
Summary and conclusion. - The proposed merger would unite
two banks which are subsidiaries of a bank holding company, otherwise
closely related, and between which there is no significant competitione
The merger would increase efficiency and provide additional
services in the area served by Henrico Bank.
Accordingly, the Board finds that the proposed merger would
be in the public interest.
June 17, 1963.
Item No.
9
6/17/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
re7.'
w'
WASHINGTON 25, El. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 17, 1963.
REGISTERED - RETURN
RECEIPT REQUESTED
The Bank of Virginia,
Eighth and M4in Streets,
Richmond, Virginia.
Gentlemen:
application,
The Board of Governors has approved the
the
Under the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for
,
Henrico
of
Board's prior consent to the merger of The Bank
Sandston, Virginia, into The Bank of Virginia, Richmond, Virginia.
the
Enclosed are the Board's Order of this date,
action.
this
accompanying Statement, and the press release on
regarding
As indicated in its letter of May 24, 1963,
the merger of your bank and The Farmers Bank of Dinwiddie,
Dlnwiddie, Virginia, the Board wishes to emphasize the need for
strengthening of your bank's capital position. The proposed adctive step;
dition of $1,500,000 to capital structure is a constru
ent to
suffici
however, the Board does not believe that it is
bring your capital to a desirable level.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Enclosures
BOARD OF GOVERNORS
Item No. 10
6/17/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
F.*
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
''St.REst
'..•••
June 17, 1963
AIR —
----4f41,
C°NFIDENTIAL
FR
Paul C. Stetzelberger, Vice President,
'gderal Reserve Bank of Cleveland,
-i-eveland 1,
Ohio.
ear Mr. Stetzelberger:
In accordance with the request contained in your letter
Jerry Robert
pfe.'"e 7, 1963, the Board approves the appointment of
el lfer as an assistant examiner for the Federal Reserve Bank of
eveland. Please advise the effective date of the appointment.
0
It is noted that Mr. Pfeifer is indebted to The First
Natio
the
Boa nal City Bank of Alliance, Alliance, Ohio. Accordingly,
the
with
given
is
Pfeifer
Mr.
of
appointment
undrd i s approval of the
of
„ eratanding that he will not participate in any examination
bank until his indebtedness has been liquidated.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER