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Minutes for To: Members of the Board From: Office of the Secretary June 18, 1962. 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 141.th respect to any of the entries in this set of !alnutes in the record of policy actions required to De 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 V ele Secretary's Office. Otherwise, please initial 4 °' 11. If you were present at the meeting, your 4.nitials will indicate approval of the minutes. If You were not present, your initials will indicate (3114 that you have seen the minutes. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve System on Monday, June 18, 1962. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Molony, Assistant to the Board Cardon, Legislative Counsel Fauver, Assistant to the Board Hackley, General Counsel Noyes, Director, Division of Research and Statistics Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations O'Connell, Assistant General Counsel Thompson, Assistant Director, Division of Examinations Stephenson, Special Assistant, Division of Examinations Bakke, Senior Attorney, Legal Division Young, Senior Attorney, Legal Division McClintock, Supervisory Review Examiner, Division of Examinations Smith, Review Examiner, Division of Examinations .cjrculated or distributed items. The following items, which hari — be en circulated or distributed to the Board and copies of which are a. tte'ehed under the respective item numbers indicated, were approved r1111101-1Sly: ' 1.111e Item No. tette f 1 4 -0 The Merchants and Farmers Bank, ; Sttlith, toVirginia, approving its request 131.;?".111 ownership of formerly occupied bank -tses for a period of six months. ' 1 6/18/62 -2Item No. letter to Wells Fargo Bank, San Francisco, 2 a-l-ifornia, approving the establishment of !branch in the vicinity of Rosemont Plaza, ac ramento County. Letter to the Bureau of the Budget recomwending '. /131"oval of enrolled bill H. R. 10162, "To amend t e Bretton Woods Agreements Act to authorize T"e United. States to participate in loans to the : 11ternat10nal Monetary Fund to strengthen the Inte rnational monetary system." 3 Application of Hillsboro Bank and Savings Company (Items 4 and 5). 1114411ant to the decision reached at the meeting on June h 8, 1962, there 'een distributed drafts of an order and a statement reflecting .41)re'val of the application of The Hillsboro Bank and Savings Company, eb°ro, Ohio, to acquire the assets and assume the liabilities of Thee. 44. '"lzens Bank and Savings Company of Leesburg, Leesburg, Ohio, and, illcident thereto, to establish a branch at the location of the Leesburg bezlits No Objection being indicated, the issuance of the order and 1:#c4Ment was authorized. a.thed as Items 4 and 5, Copies of the order and statement are respectively. AUlication of Marine Midland Corporation. There had been cli8tl'iblited to the Board a memorandum from the Division of Examinations clated T__ `lune 15, 1962, presenting a procedural question with respect to the , gPPlication of Marine Midland Corporation to acquire the voting Share 8 of Security National Bank of Long Island, Huntington, New York. 6/18/62 -3- The memorandum noted that on May 4, 1962, the Comptroller of the Currency /ras advised regarding this application in accordance with the applicable 13rWisions of the Bank Holding Company Act. The Comptroller's letter to the Board recommending disapproval of the application was dated June 1962, and was received at the Board's offices on June 8. 5, Therefore, since the letter was not received until after the expiration of the 3°`claY period allowed under the Holding Company Act, it was not legally necessary for a hearing to be held on the application. Question was sed, in the circumstances, as to the Board's preference among three 11°88ible courses of action: (1) a formal hearing before a hearing /611111er; (2) an oral presentation before the Board; and (3) consideration bY the Board on the basis of memoranda prepared by the staff. It was the Division recommendation that an oral presentation be held. In commenting on the matter, Mr. Solomon noted that in a letter clated January 22, 1962, the Comptroller had expressed adverse views on the Marine Midland proposal along with certain other New York State 11034111g company and merger applications that were then pending. At that time the Marine Midland application had not yet been received by the Board. When it was received, the Comptroller's recommendation was l'cillested, but such recommendation was not received until after the ation of the 30-day period provided by law. ' el)il Therefore, a hearing - not legally required and the Board was faced with a procedural 1°n. ' If that decision Should be to hold an oral presentation, as 6/18/62 Ibecommended by the Division of Examinations, there would be a question Of timing because the application had not yet been acted upon by the New York State Banking Department. If the action at the State level 811°Iald be unfavorable, that would end the matter. The advantage in l'eaching a procedural decision at this time, as far as the Board was concerned, would be to avoid further delay by affording the applicant 0PPortunity to begin making preparations if the New York State decision should be favorable. Mr. Hackley reported that Counsel for Marine Midland had called 414 vithin the past few days and expressed a desire that there be some of public proceeding on this application. 44 Or Counsel indicated that presentation before the Board would be satisfactory from his talld,Point. He also indicated that a letter requesting a public Plic)ceeding would be written; that letter had not as yet been received, bit there would seem to be no reason for the Board to defer a procedural decision for that reason. The anticipated letter probably would also l'41se the question of exclusion from a public oral presentation of certain information regarding the management of Security National Bank. The Board some time ago, in reply to an inquiry from Marine Midland, 441 indicated that it would consider the exclusion of confidential 14-torMation in such regard from any public record. Mr. Hackley said he would agree with the Division of Examinations that an oral presentation would be desirable in this case, and preferable to a formal hearing before a hearing examiner. 4 .7',!• 6/18/62 -5There followed questions by Governor Mills relating to the advisability of announcing an oral presentation before the New York &tate authorities had reached a decision, his concern being that such action on the part of the Board might be interpreted as anticipating a ravorable decision on the part of the State, to the possible detriment c't relations between the Board and the State authorities. After discussion of this point, Chairman Martin suggested that the Board's staff might indicate informally to Counsel for Marine ilidiand that it would be the staff's recommendation to the Board that all or presentation be held if the State should act favorably on the 'Cation. Governor This might serve to avoid the problem envisaged by Mills, yet it would alert Marine Midland to begin preparing re'r an oral presentation and reduce the time that would need to be 81lien if an oral presentation should later be ordered. Similar advice e°41d be given to parties claiming to represent an independent committee el' stockholders of Security National Bank who had repeated their request .a rel' hearing in a telegram dated June 15, 1962. Governor Robertson then raised certain questions regarding the sulTi . clency of an oral presentation in the circumstances of this case. Alth°1-1* the Comptroller's letter had not been received quite within , the 1 on 'day limit, he asked whether it would seem desirable to stand that technicality in light of the provisions of the Bank Holding Compa 117 Act that required a hearing if the appropriate Federal or State 21 C4CA 6/18/62 -6- aulervisory authority--in this case the Comptroller—recommended unfavorably on an application. It could not be contended in this instance that the Comptroller's failure to respond within the 30-day limit would contribute to undue delay because the New York Statd authorities had not yet acted on the application. Governor Robertson inquired whether the Legal Division felt that an oral presentation would constitute compliance with the statutory requirement for a hearing. Mr. Hatkley replied to the effect that the statute was not sPeciric, merely requiring a hearing under certain conditions. Possibly 641 °ral presentation might be regarded as complying with the statute. R°Ireirer) the Administrative Procedure Act provides that in the case of a.lkY hearing required by statute, certain procedures shall be followed. case of this kind it would be preferable, in his opinion, to take the Position that no hearing was required by statute, in which event the Provisions of the Administrative Procedure Act would not be NNI4cable. In further discussion, Governor Mills commented that if an oral formal 1)liesentation would accomplish essentially the same purposes as a hear ing before a hearing examiner, while avoiding the delay that would , be i 47aved in a forms] hearing, he found it difficult to believe that the Com ptroller would take exception. It appeared to the Governor that 4. oral 'he spirit of the statute would be observed by ordering an D''esentation. -• 6/18/62 Governor Robertson then commented that personally he would Prefer an oral presentation to a formal hearing, with the consumption °r time that the latter would involve. However, he thought it was not v°rth while to avoid a formal hearing if, by so doing, the Board would be likely to run into criticism on the ground that it had complied with the statute merely because the Comptroller's letter was not filed vithin the 30-day limit. Mr. Hackley pointed out that if this was regarded as a case "there the statute required a hearing, the Board had already violated the statute, which makes it mandatory upon the Board to follow a certain 13r(3eedure when an adverse recomuendation is received from the Comptroller or the State authority, as the case may be, within the 30-day limit. 14 such event, the Board must forthwith give the applicant notice. 11, 'within three days, the Board must set the date for commencement or n hearing, and actually commence the hearing not less than 10 nor raolie than 30 days after the notice to the applicant. Following additional discussion of the circumstances of the ea.8e/ Governor Robertson said that if the Legal Division and the Board Ifel'e satisfied that the Board would not unnecessarily be running the riat Of criticism for failure to abide by the statute, he would go 4-1°11g with an oral presentation. However, he raised the question Vilether it would not be desirable for the Board to take action today stat; 41-g that before any decision was reached by the Board on the a t.4‘.. !f, • 6/18/62 -8- 412dcation, there would be an oral presentation at which interested Parties would be given an opportunity to express themselves. tot This would indicate what decision might be reached by the State, but it would /311re notice to everyone concerned that there would be an oral presentation b f the Board took any action on the application. Chairman Martin commented that in considering such a procedure, the Points raised previously by Governor Mills also should be taken 114° account. He was inclined to question whether there was any e°11113e111ng reason for taking formal action with regard to an oral Presentation at this time. An indication could be given to Marine Miciland informally by the staff that would be sufficient to suggest to Maxine that it should be prepared for an oral presentation, but the Boav need not commit itself in advance of the State action on the matter. The Chairman asked Governor Mills whether such a procedure °lila meet his point, and the latter replied in the affirmative. 1ng1y, Governor Robertson's reservations having been noted, it Vas -2gl'2S1 to proceed in such manner. lir. Stephenson then withdrew. There ttplication of First Wisconsin Bankshares (Item No. 6).: had been txam. Division of distributed to the Board a memorandum from the Illations dated June 15, 1962, presenting a procedural question with ret, .vQct to the application of First Wisconsin Bankshares Corporation, 6/18/62 -9- Milwaukee, Wisconsin, to acquire 80 per cent or more of the shares of Merichazts & Savings Bank, Janesville, Wisconsin. This application was Illed with the Board on April 2, 1962, and notice of its receipt was transmitted to the Wisconsin Commissioner of Banks on April 5, 1962. In a letter dated May 25, 1962, the Commissioner recommended denial of the aPPlication. Since the Commissioner exceeded the 30 days allowed bY statute for filing his reply, no hearing was legally required on the aPPlication. As among a formal hearing before a hearing examiner, an oral presentation before the Board, and consideration of the matter by the Board solely on the basis of memoranda from the staff, the Division c)t i.xarainations recommended that an oral presentation be ordered. In commenting on the matter, Mr. Solomon noted that if the Boerd. oral should decide to follow the Division recommendation and hold an presentation, no question of timing would be involved because there was no provision in Wisconsin law for action by the State on an etPlaication of this kind. Governor Robertson noted that the statements of the proponents anclthe State Commissioner regarding this application seemed to indicate a di sParity of understanding as to the facts, which would suggest a torlaze 1 hearing before a hearing examiner. Unless the right of crosse%ami ning witnesses was afforded, he did not see how the Board could obtain a satisfactory record on which to base its findings on the aPPlication. 4) 6/18/62 -10Mr. Solomon replied that although sharp differences of opinion e)zisted, he did not believe that they went to the facts of the case, but rather that they related to interpretation of the facts. cir cumstances In the he did not feel that the Board would be appreciably better off if it held a formal hearing instead of an oral presentation. In essence, matters of judgment and opinion based on the facts were il1v°1ved, and he thought an oral presentation would serve to get at the issues as well as a formal hearing. Mr. Hackley said he had assumed, like Mr. Solomon, that the Maln issues in this case revolved around interpretation of the facts rather than the facts themselves. In the past a forma.] hearing had be favored in cases where the facts appeared to be in dispute or here a number of objections by banks or others had been filed. After further discussion, the Chairman turned to the members °Irthe Board, and Governor Mills expressed agreement with the staff Illendation on procedure. " 11 He felt that an oral presentation would " lice to sift out all of the information that the Board would need, ciliarly since the Board had examined the Wisconsin banking aitAlation so thoroughly in previous cases. Governor Shepardson commented that his preference would be for art 0,, ‘"L'I- presentation if the Legal Division was satisfied that the Board not be running afoul of statutory requirements by not ordering a formal hearing. t 6/18/62 -11Mr. Hackley responded to a question from the Chair by saying that he did not think the Board would run afoul of statutory requirements bY ordering an oral presentation. He thought there was even less cillestion on this point than in the Marine Midland case, just discussed hY the Board. He added that even in circumstances where a hearing was recillired by statute, conceivably an oral presentation might be held to e°34V-1-Ywith the statute. However, if a hearing was regarded as required bY statute, that would mean that the provisions of the Administrative ?r(Deeclure Act relating to statutory hearings would be applicable. In response to a question from Governor Robertson, Mr. O'Connell 8a44 that in the case of a statutory hearing, as opposed to the usual olse*J- Presentation, the principal procedural distinctions would relate to the receipt of evidence. An opportunity would be afforded for erts-examination of witnesses by counsel for the applicant and objectors. A-180 1 Provision would be made for the submission of certain briefs Withjfl specified periods of time. Mr. Hackley noted that if there was a statutory hearing, the -would be compelled to consider the application solely on the basie. Of the hearing record. In the case of an oral presentation, the t1'84script of the presentation was regarded as merely one part of the elatire record. At the conclusion of additional discussion, it was agreed to order an oral presentation before the Board on a date mutually convenient 6/18/62 -12- to the Board and the applicant, and the staff was authorized to work out the necessary arrangements. A copy of the order subsequently ismmd pursuant to this action is attached as Item No. 6. Messrs. O'Connell, Thompson, Bakke, and Smith then withdrew. Application of Asbury Park and Ocean Grave Bank. On May 25, 1962) the Board heard an oral presentation on the application of 48b1117 Park and Ocean Grove Bank, Asbury Park, New Jersey, to merge 1thThe Central Jersey Bank and Trust Company of Freehold, Freehold, 144 Jersey. menicTandum There had been distributed, under date of June 6, 1962, from the Division of Examinations discussing the material 811bIllitted at the oral presentation. The Division continued to recommend ciente' of the application. Following comments by Mx. McClintock, Governor Balderston 111(1 red how much importance the Division of Examinations attached to the a rgument, that a complementary arrangement was involved in the tlerEer, Mr. Solomon replied that the Division did not consider this arirh, --uLtunt too persuasive. The principal argument along those lines a4lialleed by the banks seeking to merge was that an increased lending 11Mit Would be desirable. However, the actual degree of benefit to the Q4'ea from an increased lending limit seemed open to question. In the el"T of the Board's staff, the increased limit would not greatly ethaz ce the present ability of the constituent banks to serve the 7" 4 6/18/62 -13- Park area. Admittedly, there might be a number of additional ellEmers that the resulting bank could serve without participation of lOans) but that seemed a relatively slight advantage to the public itterest compared with the reduction of competition that would result trcm the merger. Governor Balderston then inquired as to the staff views regarding the aPPropriate area of competition to be considered in this case. Mr. Solomon replied that in any case where there was heavy king concentration in a particular area, that could be watered dawn 157' enlarging the area of competition. It seemed to the Division of Z%allirlatlons • that the enlarged area of competition suggested by the 8.PPlican4. banks was not reasonable. The area within a two-mile radius or 48131-117 Park was used by the other Federal banking agencies and by the Partment of Justice in submitting their reports on competitive tactc)rs to the Board. 11'4° the picture. Outside that area, other banks began to come Even so, there was still a heavy concentration Irithin the six-mile radius suggested by the applicant banks. The Chairman then turned to the members of the Board for their and Governor Mills said he concurred in the recommendation of the t. TLSion tho%t or the of Examinations that the application be denied. He there was clear evidence that approval, in the circumstances ease, would be contrary to the principles of the Bank Merger Act. h he , u3.d mentioned previously, he felt the Board should be careful not e 6/18/62 -14- t° Inat too much emphasis on benefits alleged from an expanded lending eal3acitY• Ca 8.0 Safety of deposits was the first consideration, with lending a weak second, especially in an area like the one under &Lscalssion where there were already banks of substantial size. In altlost any case, one would find some company or industry that had °1111 0wn local credit facilities. One or two accounts could be important t° a bank, but they were not usually as important to success and growth °ne was sometimes led to believe. It was the ability of the bank to clar deposits out of the whole trade area that counted more heavily. Other members of the Board also having indicated that they c°1Ielaxred with the recommendation of the Division of Examinations, the aPPlication was denied by unanimous vote, with the understanding that t , it_ e Legal Division would draft an order and statement for the 1)°41"cl's consideration. Messrs. Young and McClintock then withdrew and Mr. Harris, e°°rElinator of Defense Planning, entered the room. New Orleans Branch building _project. Mr. Farrell reported on a. PcItential problem that had arisen in connection with the New Orleans s-41 building project. The Board had received a letter from 00/10.,, c'essman Boggs of Louisiana transmitting, with a request for cont,4, ''qeration, a letter from the owner of premises abutting the proposed new ' ranch building who complained that the Reserve Bank claimed the itht to come into his property and demolish one wall of his building c • 6/18/62 -15- tO the height of three stories, which would present him with a serious The Congressman's letter had been forwarded to President Bryan 131.°blem• °I* the Federal Reserve Bank of Atlanta, and in turn to the New Orleans 131Mr1ch and the attorney representing it in connection with the building isls°ject, with the result that there had been a suggestion from the 3tt°111eY for a conference between Congressman Boggs and the parties at interest. However, the Congressman's office had advised that he was Ilot inclined toward such a meeting. Mr. Farrell then described further the situation that gave rise to the problem, the legal rights apparently available to the Reserve 11411kUnder Louisiana law, and the possibility of some compromise scaUtions He expressed some apprehension that if the Reserve Bank stcl°d firmly on its legal rights, adverse consequences from a public l'elations Standpoint might result. After some discussion of the problem described by Mr. Farrell, Che.i Illan Martin expressed the view that there would seem to be little 11°111t in the Board's taking a position on the matter, at least at this time. He suggested that President Bryan be asked informally to do Vhatertrwp. was possible to work the matter out in some way that would be tively satisfactory to the parties concerned, with the understanding that, Lille matter could be brought back to the Board, if necessary, should ric) reasonable solution be found. It was agreed to proceed in the manner suggested by the Chairman. '21 6/18/6e -16The meeting then recessed and the Board reconvened at 2:30 p.m. .41th Chairman Martin and Governors Balderston, Mills, Robertson, and NTardson present. In addition, Professor Dan McGill of the Wharton 8°1001 of Finance, University of Pennsylvania, was present. Retirement System. It was reported to the Secretary that, r°11°Idng preliminary comments by Professor McGill as to the nature of the Retirement System of the Federal Reserve Banks, the Board (a) Professor McGill to make further study and inform the Board °t various phases of the Retirement System, and (b) agreed that Mx. ''LL-Iton, Chairman of the Conference of Presidents of the Federal leserye Banks, should be informed that the Board would defer acting on 1114ti°ns that had been presented by a memorandum accompanying a letter tr°1"r. Fulton dated May 31, 1962, in which Mr. Raton had requested 44 inf°rmal expression of the Board's views prior to the meeting of the Nstees 1962 14.013 Of the Retirement System to be held on Wednesday, June 20, In taking this action, it was understood that Governor Mills initiate arrangements for Professor McGill to meet with the 44.11;utal,- and representatives of the Retirement Committee. Secretary's Note: Subsequently, the Secretary was informed that the Board met with Mr. Fulton on June 19, 1962, to apprise him of the arrangements made by the Board for a study of the Retirement System by Professor McGill and also to inform him of reasons why the Board would defer responding to the request contained in his letter of May 31, 1962. 21 9f 6/18/62 -17The meeting then adjourned. Secretary's Note: Pursuant to the recommendation contained in a memorandum from the Division of Research and Statistics, Governor Shepardson today approved on behalf of the Board acceptance of the resignation of Marjorie Hollingshead, Secretary in that Division, effective at the close of business June 20, 1962. w440 Secr6ta 2200 BOARD OF GOVERNORS OF THE Item No. 1 FEDERAL RESERVE SYSTEM 6/18/62 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE 'TO THE BOARD June 18, 1962. Hoard of Directors, The Merchants and Farmers Bank, Smithfield, Virginia. G entlemen: The Board of Governors of the Federal Reserve %tem grants permission to The Merchants and Farmers Bank to retain its ownership of formerly occupied bank premises for a period of six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 2201 BOARD OF GOVERNORS OF THE Item No. 2 6/18/62 FEDERAL RESERVE SYSTEM WASHINGTON 25, 0. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 18, 1962. Board of Directors, Wells Fargo Bank, San Francisco, California. Gentlemen: The Board of Governors of the Federal Reserve System aPProves the establishment of a branch by Wells Fargo Bank in the vicinity of Rosemont Plaza on Middle Jackson Road )low known as Kiefer Road), between Manlove and Mayhew Roads, ( :acramento County, California, provided the branch is esablished within one year from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 6/18/62 WASHINGTON 4A itkg11:, OFFICE OF THE CHAIRMAN 0o4q40) June 18, 1962. Ph41, --Allip S. Hughes, Assistant Director for b Legislative Reference, cutive Office of the President, o,itireau of the Budget, "hington 25, D. C. Attentioa Mrs. Garziglia. ear Mr. Hughes; communication This is to advise, in response to your of jun that recommends Governors the 1, e 15, 1962, that the Board of amend "To 10162, the uresident approve the enrolled bill, H. R. States United to -retton Woods Agreements Act to authorize the Fund to Monetary International the Par to , st ticipate in loans 'engthen the international monetary system." Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. 3 UNITED STATES OF AMERICA Item No. 6/18/62 BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. Oft the Matter matter of the Application of IIIEHILLSBORO BANK AND SAVINGS COMPANY for N approval of acquisition of assets of Cltizens Bank and Savings Company o •`8131,1r0. ORDER APPROVING ACQUISITION OF BANK'S ASSETS There has come before the Board of Governors, pursuant to the sank Merger Act of 1960 (12 U.S.C. 1828(c)), an application by The Hillsboro Bank and Savings Company, Hillsboro, Ohio, a member bank the Federal Reserve System, for the Board's prior consent to its a.clilisiti°11 of the assets and assumption of the liabilities of The 4tizens Bank and Savings Company of Leesburg, Leesburg, Ohio, and, 4 - incident thereto, The Hillsboro Bank and Savings Company has P11:11ieci ) under section 9 of the Federal Reserve Act, for the Board's Prior the aPProval of the establishment of a branch by that bank at 1c'eatio 4 of The Citizens Bank and Savings Company of Leesburg. proposed Pursuant to the Bank Merger Act, notice of the approved altiOn of assets and assumption of liabilities, in form 4 'III ' 1111 • the Board of Governors, has been published, and reports on the earriPetitive factors involved in the proposed transaction have been sued by the Comptroller of the Currency, the Federal Deposit Insuran oe Corporation, and the Department of Justice and have been conby the Board. IT IS ORDERED, for the reasons set forth in the Boardts State nient of this date, that said applications be, and hereby are 4Pirce4_ ' ed, provided that the capital stock of The Hillsboro Bank and 41,14 C°MPaRY is increased as required by law before the date of the establi , 4-snment of said branch, and provided further that said acquisition ot sets and assumption of liabilities and establishment of said branch zhaii not be consummated (a) sooner than seven calendar days after the date or this Order or (b) later than three months after said date. Dated at Washington, D. C., this 18th day of June, 1962. BY order of the Board of Governors. Voting for this action: Chairman Martin, and Governors Balderston, Mills, Robertson, and Shepardson. Absent and not voting: Governors King and Mitchell. (Signed) Merritt Sherman Merritt Sherman, Secretary. (stAL) BOARD OF GOVERNORS OF THE Item No. 5 6/18/62 FEDERAL RESERVE SYSTEM APPLICATION OF THE HILLSBORO BANK AND SAVINGS COMPANY FOR APPROVAL OF ACQUISITION OF THE ASSETS OF THE CITIZENS BANK AND SAVINGS COMPANY OF LEES BURG STATEMENT The Hillsboro Bank and Savings Company, Hillsboro, Ohio boro Bank") 011.) *. /1)ber 31, with deposits of approximately $2.8 million as 1961, has applied, pursuant to the Bank Merger Act of 960 (1 2 U.S.C. 1828(c)), for the Board's prior approval of its acquisitiot or the assets and assumption of the liabilities of The Citizens Banat and savings Company of Leesburg, Leesburg, Ohio ("Leesburg Bank"), th de , Aa„, fj°3its of approximately $2.25 million as of December 31, 1961. -.1 incident to the foregoing, Hillsboro Bank has made application, tizider secti°n 9 of the Federal Reserve Act, for the Board's prior approval t°r the establishment of a branch at the location of Leesburg Bank. (1) Under the Bank Merger Act, the Board is required to consider the p. ' Inancial history and condition of each of the banks involved, (2) the „, ' 4equaoY of its capital structure, (3) its future earnings prostS (4) the general character of its management, (5) whether its °I‘P°t'ate powers are consistent with the purposes of 12 U.S.C., Ch. 16 e (th 4:ederal Deposit Insurance Act), (6) the convenience and needs of : th c()nit'lurlities to be served, and (7) the effect of the transaction on ..rtipetiition (including any tendency toward monopoly). The Board may not -.2-. approve tt the transaction unless, after considering all of these factors, nus the transaction to be in the public interest. Banking factors. - The capital structure and financial condition (Itboth banks are satisfactory, although in the event the transaction C°1181111Mated, the resulting bank must increase its capital as required briall Prior to the establishment of the proposed Leesburg branch. 1117°P°3ed The transaction would have the effect of adding management strength allci a basis for improved earning power to what has been the operation of the Leesburg Bank, whose earnings have been below the average of similar 84e banks in the Fourth Federal Reserve District. There is no indication that t• he Powers exercised by the banks involved are or would be incon34tarit with the purposes of 12 U.S.C., Ch. 16. Convenience and needs of the communities. - Hillsboro, Ohio „ (11°PullOfl about 5,500), the seat of Highland County, is situated in aolithweatern Ohio aoout 55 miles northeast of Cincinnati in a predomi- t tlY agricultural area, although some small industries provide employ• At t• or a substantial number of people. Leesburg, Ohio (population , is located 11 miles north of Hillsboro and is the shopping °Irel' 90)• for People in the immediate area. 4.rvice 1 °11 4kt.s Although as a result of the proposed transaction no new 8 Would be offered by the continuing institution, the general of Hillsboro Bank would be increased from $25,000 to $40,000. erease would provide more adequate accommodations for certain 97 . 1E7 Ss concerns in Hillsboro and for many cattle feeders in the areas LiltetA , the present customers of Leesburg Bank would benefit by the creased Bank's lending limit of the resulting institution (Leesburg Presero, limit is $15,000). In addition, the proposed transaction would "suit•n with 1- Providing the residents of Leesburg and the nearby area ba uc, ir "g facility under the management of Hillsboro Bank which could • thelr tAto credit needs more adequately than has Leesburg Bank. between the Competition. — There is only limited competition banks 8 Leesburg Involved. There may be some slight competition between 44d tqo larger banks in Washington Courthouse, situated 16 miles 4c1rith or Leesburg. Hillsboro Bank's chief competition is with two lrger b nk 4 a --s Hillsboro; in the event the proposed transaction is colisurnma ted, the three banks in Hillsboro mould be approximately the sarae et ze* There is also limited competition between the Hillsboro Bank b azzi a ank in Lynchburg, Ohio (12 miles northwest of Hillsboro). Leesbur 4 bank located at Greenfield, Ohio, nine miles east of g (deposits about $4.4 million), and a branch of a Wilmington, bank nine (deposits about $11.3 million) located in New Vienna, we kiles st of Leesburg, are in competition with Leesburg Bank. To some e, Aterrt, the establishment of a branch of Hillsboro Bank in Leesburg, , .41 'tell q Leesburg Bank, would tend to stimulate this competition. The acquisition of the assets of Leesburg Bank by Hillsboro Bank ri ot, service area of adversely affect any of the banks in the th 1.N1ting bank, and in certain sections of the service area of the e°rtinb. -ang institution competition should be stimulated. Summary and conclusion. - The proposed acquisition would eli,,4 'kulate little competition, since competition between the two banks irtvolv ed is nominal. The proposed acquisition should not adversely "feet any of the banks that compete in the service area of the resultand in certain sections of such service area competition should ,. be sti mulateu The banking factors support approval of the proposed he(Msiti°n, and customers of both Hillsboro Bank and Leesburg Bank would ‘.11efit fr the increased lending limit of the continuing institution. C4stomers in Leesburg would be provided with a banking facility that coladaerve their credit needs more adequately than is being done at 'esent time. the Pl Accordingly, the Board finds the proposed transaction to be 41the Public interest. "1 1962. , UNITED STATES OF AMERICA Item No. 6 6/18/62 BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. .4 . 4. 411. the ---------------- Matter of the Application of Z .RST WISCONSIN BANKSHARES CORPORATION, Ilaukee, Wisconsin 14 silent to Section 3 of the '4111c Holding Company Act of 1956 „,. ORDER FOR PUBLIC PROCEEDING The Board of Governors has pending before it an application tiled "-ir First Wisconsin Bankshares Corporation, Milwaukee, Wisconsin, Parau ant to section 3(a)(2) of the Bank Holding Company Act of 1956, N. pri °r aPproval of the Bnard of the acquisition by. Applicant of N3 1, ' er cent or more of the voting shares of Merchants 8c Savings Bank, Jatesv ills, Wisconsin. Notice of the Board's receipt of this application 1.1ae Pub]i --shed in the Federal Register affording interested persons an °4°rtuni+-"J to submit written views and comments regarding the application. It now appears to the Board to be in the interest of the DUblic 'as well as the Applicant, to afford further opportunity for the cl§ress of views and opinions by interested persons in a public proteecti„ 4'g before the Board. Accordingly, IT? -2IT IS HEREBY ORDERED, that a public proceeding before the Board be held commencing at 10 a.m. on August 7, 1962, at the offices Of the B oof Governors, Washington, D. C. IT IS FURTHER ORDERED, that any person desiring to express orall Y a view or opinion on the application before the Board should with the Secretary of the Board, 20th and Constitution Avenue, 3 Washington 25, D. C., on or before July 24, 1962, a written relative thereto, setting forth therein a general statement Of the nature of the views he wishes to express. Persons submitting etIch re quests will be notified of the Board's decision thereon. Dated at Washington, D. C., this 20th day of June, 1962. BY order of the Board of Governors. (Signed) Merritt Sherman Merritt Sherman, Secretary. (sEAL) f