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Minutes for June 26, 1964
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.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
2264
Minutes of the Board of Governors of the Federal Reserve
System on Friday, June 26, 1964.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Mills
Robertson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Bakke, Assistant Secretary
Fauver, Assistant to the Board
Brill, Director, Division of Research
and Statistics
Holland, Associate Director, Division
of Research and Statistics
Koch, Associate Director, Division of
Research and Statistics
Williams, Adviser, Division of Research
and Statistics
Furth, Adviser, Division of International
Finance
Sammons, Adviser, Division of International
Finance
Katz, Associate Adviser, Division of
International Finance
Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Eckert, Chief, Banking Section) Division
of Research and Statistics
Keir, Chief, Capital Markets Section,
Division of Research and Statistics
Beard, Economist, Division of Research
and Statistics
Baker, Economist, Division of International
Finance
Money market review.
Mr. Holland reviewed developments in bank
cl'edit and the money supply during June to date.
His comments also
t(41ched upon the money market and the Government securities market.
141'. Beard discussed changes in the maturity structure of the public debt
-
f'W +4.131.
6/26/64
-2-
between September 1960 and May 1964 and the implications of these changes
regarding future Treasury financing operations.
the situation in foreign exchange markets.
Mr. Baker summarized
Materials distributed to the
Board and referred to by the speakers during the course of their remarks
included a summary of monetary developments in the four weeks ended
June 24, 1964, and a table showing the maturity structure of the publicly
held marketable Federal debt.
Governor Daane also requested that a copy
Of Mr. Beard's remarks be prepared for each member of the Board and for
Possible distribution to interested persons on the Treasury Department
Staff.
All of the members of the staff who had been present except
Messrs. Sherman, Bakke, and Brill then withdrew from the meeting and
the following entered the room:
Mr. Connell, Controller
Mr. Hexter, Assistant General Counsel
Mr. Conkling, Assistant Director, Division of Bank
Operations
Mr. Leavitt, Assistant Director, Division of Examinations
Miss Hart, Senior Attorney, Legal Division
Mr. Hricko, Senior Attorney, Legal Division
Mr. McClintock, Supervisory Review Examiner, Division of
Examinations
Mr. Eggrtson, Supervisory Review Examiner, Division of
Examinations
Discount rates.
The establishment without change by tha Federal
-serve Bank of Minneapolis on June 24, 1964, and by the Federal Reserve
13ellks of New York, Cleveland, Richmond, Atlanta, St. Louis, and Dallas
°11. June 25, 1964, of the rates on discounts and advances in their
6/26/64
-3-
existing schedules was approved unanimously, with 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 Trust Company, New York, New York,
aPProving an investment in bank premises.
1
Letter to The Provident Bank, Cincinnati, Ohio, apProving the establishment of a branch at Springdale
Road and Colerain Avenue in Colerain Township,
114milton County.
2
Letter to New Jersey Bank and Trust Company, Clifton,
17eli Jersey, granting a further extension of time to
eoMply with a condition of membership.
3
,Letter to Tennessee Bank and Trust Company, Houston,
fexas, approving its application for membership in
the Federal Reserve System; letter to the Federal
Reserve Bank of Dallas with regard to compliance by
2nnessee Bank and Trust Company with certain regula10n5 and statutes.
'
.Letter to the Federal Reserve Bank of Atlanta approving
rl he appointment of Robert M. Stephenson as Vice Presi4ent in charge of Bank Examinations and the payment
'
!! salary to Mr. Stephenson and three other officers
rates fixed by the Bank's Board of Directors.
4-5
6
Report on competitive factors (Greenville-West Middlesex,
1 12.2,ylnall).
:4
There had been distributed a draft of report to the
ectiptroller of the Currency on the competitive factors involved in the
Proposed merger of The First National Bank of West Middlesex, West
141dd1esex, Pennsylvania, into First National Bank of Mercer County,
eenville, Pennsylvania.
'
41
i>i)Ct-4
4.=/(A)
6/26/64
-4Governor Mitchell observed that while he had no comment to make
regarding the proposed conclusion, he wondered why there had been no
reference in the body of the report to banks in Youngstown, Ohio.
In
his view, one of the factors in the merger proposals emanating from
this area of Pennsylvania was the desire of the absorbing banks to
Strengthen their competitive position on the periphery of Youngstown.
To ignore the availability of banks in that city as an alternative
source of service, particularly for business customers, seemed to him
to leave the discussion of competitive factors incomplete.
He added
that this same consideration might apply equally to competition offered
by banks in other nearby Ohio towns.
Mr. Egertson commented that the
l'ederal Reserve Bank of Philadelphia had stated in its memorandum on
the application that Youngstown and the other locations referred to by
Governor Mitchell were not considered to be in the service area of the
banks involved in the proposed merger, and it was for this reason the
l'ePort did not include reference to such municipalities.
The report was thereupon approved unanimously for transmittal
to
the Comptroller.
The conclusion read as follows:
There is presently little competition between
First National Bank of Mercer County and The First
National Bank of West Middlesex due to the close
relationship which has existed between the two banks
for several years. Consummation of the transaction
would, however, eliminate forever any potential
for competition between these banks.
Mr. Egertson then withdrew from the meeting and Mr. Johnson,
ilreotor, Division of Personnel Administration, entered the room.
40,‘It)t)
6/26/64
-5Reprint of Board answers to Commission on Money and Credit.
There had been distributed a memorandum from Mr. Brill dated June 23,
1964, advising that a paperback reprint of Board responses to questions
posed by the Commission on Money and Credit, submitted in 1961, could
be obtained from the publishers, Prentice-Hall, Inc., at a price of
$1.75 per copy for a 1,000-copy lot.
It was also stated that while
1,000 copies would probably be more than the Board itself could use,
the Reserve Banks might want to participate in the order, and perMission was requested to inquire concerning their interest in doing
So. The memorandum noted that no provision for the expenditure in1101ved had been made in the 1964 Research budget.
In discussion, Governor Mitchell observed that certain of the
lloardts responses had been rendered obsolete by the passage of time,
bUt that on balance it would be desirable to have the material on
hand.
Chairman Martin expressed accord with this view.
In response
t° a question from Chairman Martin, Mr. Brill commented that it would
la°t be feasible to invest the staff time necessary to bring the obsolete
15°rtions up to date.
Governor Daane then stated that it would be helpful to have
the
Treasury Department's responses included in the reprint, and it
/14s the consensus that Mr. Brill should ascertain the additional cost
141/olved if this were to be done.
2269
6/26/64
-6Purchase of the reprints was thereupon approved unanimously,
With the understanding that inclusion of the Treasury Department responses would also be requested if the added cost was not excessive,
and the further understanding that participation of the Reserve Banks
U1 the purchase would be solicited.
Mr. Connell then withdrew from the meeting.
Application of Camden Trust Company (Items
7 and 8). There had
been distributed, with a memorandum from the Legal Division dated
JUne 24, 1964, a proposed order and revised statement reflecting the
130ardis decision on June 10, 1964, to deny the application of Camden
Trust Company, Camden, New Jersey, to merge with Merchantville National
13ank and Trust Company, Merchantville, New Jersey.
At the meeting on
allne 23, the Board had requested the staff to revise the statement to
l'eflect comments made during consideration thereof.
Following brief discussion, in which further changes in the
statement were agreed upon, issuance of the order and statement was
aUthorized.
to
Copies of the order and statement, as issued, are attached
these minutes as Items
7 and 8, respectively.
Miss Hart and Mr. McClintock then withdrew from the meeting.
Loans to dealers in Government obligations.
There had been
distributed a draft of letter to the Federal Reserve Bank of New York,
131'ePared by Messrs. Hexter and Hricko and dated June 23, 1964, reto a letter from that Reserve Bank dated May 19, 1964, in
22)
_7_
6/26/64
which the Board's advice was requested on a question involving section 19
Paragraph eight, of the Federal Reserve Act.
Under that statutory pro-
vision, a member bank was forbidden to "act as the medium or agent of
4nY nonbanking corporation...in making loans on the security of stocks,
bonds, and other investment securities to brokers or dealers in stocks,
bonds, and other investment securities", and the question was whether
such prohibition applied to situations in which a nonbanking corporation
Made a loan to a dealer in Government obligations upon the security of
such obligations. The proposed letter discussed the legislative history
Of the provision in question and related aids to interpretation, and
l'eached the conclusion that a loan of the type described would fall
l ithin the purview of the statutory prohibition.
The question was
l'eserved,however, whether the activities of banks in connection with
alleh loans would be such as to constitute them "the medium or agent" of
the lending corporation.
Governor Daane observed that, apart from the legal question
1411°1ved, the Board's position on this matter could have serious im1)J-1-cat10ns in regurd to the current and wide-spread practice of dealers
Government securities utilizing corporate funds to meet their financing
Ileecls, particularly in regard to underwriting.
Were this source of funds
t° be precluded, there could be a detrimental impact on the Government
eettrities market.
Mr. Hexter pointed out that the proposed interpretation would not
1)1'eelude underwriters from making borrowing arrangements with corporations,
22ot 1
6/26/64
-8-
so long as the transactions were not "arranged" with a bank acting as the
medium or agent of the lending corporation.
Governor Daane commented that the question in issue was important,
and he suggested that further consideration of the draft letter be deferred until Monday, June 29, in order to allow more time for reflection.
Governor Robertson concurred in this suggestion, and it was thereupon
!grat that the discussion would be resumed at the Board meeting on the
date indicated.
The meeting then adjourned.
Secretary's Notes: Acting in the absence
of Governor Shepardson, Governor Robertson
approved on behalf of the Board on June 25,
1964, memoranda recommending the following
actions relating to the Board's staff:
APPointments
Lyle E. Gramley as Senior Economist, Division of Research and
Liatistics, with basic annual salary at the rate of $17,210, effective
'he date of entrance upon duty.
,, Judith A. Ziobro as Research Assistant, Division of Research and
catistics, with basic annual salary at the rate of $6,575, effective
'
41e date of entrance upon duty.
'
Allen F. Goodfellow as Review Examiner, Division of Examinations,
basic annual salary at the rate of $12,110, effective the date of
1,• rance upon duty, with the understanding that he would be reimbursed
'•
Francisco, California, to the Washington,
u. moving expenses from San
./ area, including transportation and per diem while in travel status.
1,14.L
Kate Mogerman as Draftsman-Trainee, Division of Data Processing,
basic annual salary at the rate of $3,8801 effective the date of
'41trance upon duty.
•
6/26/64
Acceptance of resignation
Judith M. Golodner„ Secretary, Office of the Secretary, effective
t the close of business July 6, 1964.
Acting in the absence of Governor Shepardson„
Governor Robertson today approved on behalf
of the Board a memorandum from the Division
of International Finance recommending the
appointment of Christine A. Cushman as Clerk
in that Division, with basic annual salary
at the rate of $4,3551 effective the date of
entrance upon duty.
BOARD OF GOVERNORS
Item No. 1
6/26/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 261 1964.
Board of Directors,
Irving Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves, under the provisions of Section 24A of,
the Federal Reserve Act, an investment in bank premises
by Irving Trust Company of not to exceed $22,760,000, for
the purpose of construction and renovation of main office
and branch facilities in the next five years. It is
understood that this amount includes $8.8 million in
additional advances by your bank to One Wall Street
Corporation, a wholly owned subsidiary, 12,700,000
covering alteration costs for tenants, and $5,000,000
in additional mortgage notes of the subsidiary, all to
be used in the construction and alteration of main office
Premises. Also included is $6,260,000 in leasehold
improvements for new branches.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
274
BOARD OF GOVERNORS
Item No. 2
6/26/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS arriciAL CORRESPONDENCE
TO THE BOARD
June 26, 1964.
Board of Directors,
The Provident Bank,
Cincinnati, Ohio.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
The Provident Bank, Cincinnati, Ohio, of a branch
in a shopping center to be located at the southwest corner of Springdale Road and Colerain
Avenue in an unincorporated area of Colerain
Township, Hamilton County, Ohio, provided the
branch is established within 18 months from the
date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
that the
(The letter to the Reserve Bank stated
extension
six-month
Board also had approved a
branch;
of the period allowed to establish the
requested,
be
and that if an extension should
the procedure prescribed in the Board's letter
followed.)
of November 9, 1962 (S-1846), should ,be
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM
3
6/26/64
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 26, 1964.
Board of Directors,
New Jersey Bank and Trust Company,
Clifton, New Jersey.
Gentlemen:
Pursuant to condition of membership numbered 3,
New Jersey Bank and Trust Company agreed, within a period
not to exceed three years, to dispose of all corporate
stock owned at the time of admission to membership in
June 1958. The Board of Governors subsequently extended
this period to June 20, 1964. In accordance with the
request contained in your letter of June 4, 1964, and
after considering the circumstances with respect to the
further retention of this corporate stock, the Board
extends until June 20, 1965, the time within which your
bank may comply with membership condition numbered 3.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Item No. Ii.
BOARD OF GOVERNORS
6/26/64
OF THE
cch,•
f-N70,•.
Ag, 0 •
•••-‘
\‘
•e:1
• •
" •
f,d
tt
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
. REsESL.•
June 26, 1964.
Board of Directors,
Tennessee Bank and Trust Company,
licwston, Texas.
Gentlemen:
System
The Board of Governors of the Federal Reserve
Company,
Trust
and
a pproves the application of the Tennessee Bank
Dallas,
of
Bank
Houston, Texas, for stock in the Federal Reserve
.
forth
set
subject to the numbered conditions hereinafter
Such bank at all times shall conduct its
business and exercise its powers with due
regard to the safety of its depositors,
and, except with the permission of the
ve
Board of Governors of the Federal Reser
or
System, such bank shall not cause
general
permit any change to be made in the
scope
the
character of its business or in
it at
of the corporate powers exercised by
.
rship
the time of admission to membe
2.
of such
The net capital and surplus funds
to the
ion
bank shall be adequate in relat
s and
asset
character and condition of its
corpoother
to its deposit liabilities and
rate responsibilities.
oing conditions of membership,
In connection with the foreg
r ticular attention is called to the provisions of the Board's
State banking institutions in
gulation H, regarding membership of
ence to Section 208.7
tinle Federal Reserve System, with especial refer
enclosed.
ereof. A copy of the regulation is
V
j
e
22'
Tennessee Bank and Trust Company
- 2
It appears that the bank possesses the power "to issue and
sell, for cash or an installment basis, investment certificates."
Attention is invited to the fact that if the bank should desire to
e xercise any powers not actually exercised at the time of admission
to membership, it will be necessary under condition of membership
numbered 1 to obtain the permission of the Board of Governors before
e xercising them. In this connection, the Board understands that there
has been no change in the scope of the corporate powers exercised by
the bank since the date of its application for membership.
If at any time a change in or amendment to the bank's
charter is made, the bank should advise the Federal Reserve Bank,
it may
tirnishing copies of any documents involved, in order that
bank's
the
way
be determined whether such change affects in any
status as a member of the Federal Reserve System.
d in
Acceptance of the conditions of membership containe
board
the
by
adopted
this letter should be evidenced by a resolution
be
should
°f directors, and a certified copy of such resolution
Arrangement:. will
ansmitted to the Federal Reserve Bank of Dallas.
amount of
ate
tiereupon be made to accept payment for an appropri
rederal Reserve Bank stock, to accept the deposit of the required
f:eaerve balance, and to issue the appropriate amount of Federal
4eserve Bank stock to the bank.
in the
The time within which admission to membership
shed
accompli
Federal Reserve System in the manner described may be
the
bank
unless
limited to 30 days from the date of this letter,
the
When
:PPlies to the Board and obtains an extension of time.
17ard is advised that all of the requirements have been complied
Bank stock
and that the appropriate amount of Federal Reserve
bank a
has
the
to
'as been issued to the bank, the Board will forward
System.
Reserve
formal certificate of membership in the Federal
that you will find
The Board of Governors sincerely hopes
11!mbership in the System beneficial and your relations with the
151
'serve Bank pleasant. The officers of the Federal Reserve Bank
Tennessee Bank and Trust Company
- 3
Will be glad to assist you in establishing your relationships with
the Federal Reserve System and at any time to discuss with representatives of your bank means for making the services of the System
most useful to you.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Enclosure.
f'te
e<mv ilia'
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM
.
5
6/26/64
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 26, 1964.
Mr. Watrous H. Irons, President,
Federal Reserve Bank of Dallas,
Dallas, Texas. 75222
Dear Mr. Irons:
The Board of Governors of the Federal Reserve System
approves the application of the Tennessee Bank and Trust Company,
Houston, Texas, for membership in the Federal Reserve System,
subject to the conditions prescribed in the enclosed letter, which
You are requested to forward to the board of directors of the
institution. Two copies of such letter are also enclosed, one of
Which is for your files and the other of which you are requested
to forward to the Banking Commissioner of Texas for his information.
It is noted that the bank's attention has been called to
Violations of Regulations Q and R, and the Board understands that
these violations will be corrected prior to the time the bank becomes a member of the Federal Reserve System. It is also noted
that the bank has made loans which would have been violations of
Sections 11(m) and 23A had the bank been a member bank. The Board
understands that these loans will be reduced to amounts conforming
to the limitations of the statutes.
Very truly yours,
(Signed)
Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
BOARD OF GOVERNOR
Item No.
OF THE
6
6/26/64
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 26, 1964.
CONFIDENTIAL (FR)
Mr. Harold T. Patterson,
rirst Vice President and
General Counsel,
Pederal Reserve Bank of Atlanta,
Atlanta, Georgia 30303.
-De r
Mr. Patterson:
the appointment of Robert M.
The Board of Governors approves
Examinations at the Federal
Stephenson as Vice President in charge of Bank
Re
serve Bank of Atlanta, effective July 1, 1964.
payment of salaries to the officers
The Board also approves the
through December 31, 1964, at rates
Sled below for the Period July 1, 1964
Directors as reported in your letter
ot7dicated, which are those fixed by your
June 15, 1964.
Title
NQme
Robert M. Step
George Sheffer
J. Lyle Hardin
4. M. Davis
nson
Vice President
Chief Examiner and
Assistant Vice President
Assistant Chief Examiner
Assistant Cashier
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Annual
Salary
$17,000
16,000
14,750
16,000
2281
Item No.
UNITED STATES CF AMERICA
7
6/26/64
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
CAMDEN TRUST COMPANY
for approval of merger with
kterchantville National Bank and
Trust Company
APPROVAL
ORDER DENYING APPLICATION FOR
BANNS
OF MERGER OF
Governors, pursuant to
There has come before the Board of
application by
the Bank Merger Act of 1960 (12 U.S.C. 1823(c)), an
member bank of the
Camden Trust Company, Camden, New Jersey, a State
approval of the merger
Federal Reserve System, for the Board's prior
Of that bank with Merchantville National Bank and Trust Company,
Merchantville, New Jersey, under the charter and title of the former.
As an incident to the merger, the main office and branch of
Ilerchantville National Bank and Trust Company would be operated as
branches of Camden Trust Company.
Notice of the proposed merger, in
pursuant to said Act.
1c)rm approved by the Board, has been published
material in the light of
Upon consideration of all relevant
the
g reports furnished by the
factors set forth in said Act, includin
2282
-2_
t Insurance Corporation,
Comptroller of the Currency, the Federal Deposi
in
and the Department of Justice on the competitive factors involved
the proposed merger,
s set forth in the
IT IS HEREBY ORDERED, for the reason
application be and hereby
Board's Statement of this date, that said
is denied.
of June, 1964.
Dated at Washington, D. C., this 26th day
By order of the Board of Governors.
Mills, Robertson,
Voting for this action: Governors
Shepardson, Ditchell, and Daane.
and
Absent and not voting: Chairman Martin
Vice Chairman Balderston.
(siLned) Merritt Sherman
Merritt Sherman,
Secretary.
228,3
Item No.
8
6/26/64
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION OF CAMDEN TRUST COMPANY
FOR APPROVAL OF MERGER WITH
MERCHANTVILLE NATIONAL BANK AND TRUST COMPANY
STATEMENT
Camden Trust Company, Camden, New Jersey ("Camden Trust"),
1/
vith deposits of $193 million—, has applied, pursuant to the Bank
Merger Act of 1960 (12 U.S.C. 1828(c)), for the Board's prior approval
of the merger of that bank and the Merchantville National Bank and
Trust Company, Merchantville, New Jersey ("Merchantville Bank"), with
1/
dePosits of $16 million
under the charter and title of Camden
Trust.
The proposal contemplates that the two offices of Merchantville
Bank would be operated as branches of Camden Trust
increasing the
'lumber of its offices to seventeen.
Under the Act, the Board is required to consider, as to
each of the banks involved, (1) its financial history and condition,
(2) the adequacy of its capital structure, (3) its future earnings
Pt.°8Pects, (4) the general character of its management, (5) whether its
corporate powers are consistent with the purposes of 12 U.S.C., Ch. 16
(the Federal Deposit Insurance Act), (6) the convenience and needs of
the community to be served, and (7) the effect of the transaction on
"s of December 20, 1963.
'
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.
Bankincr, factors. - Camden Trust and Merchantville Bank have
The asset condition of each is
satisfactory financial histories.
sound and they have adequate capital structul7es.
Were the merger to
be consummated, these attributes would characterize the resulting bank
also.
Camden Trust has a satisfactory earnings record and its
earnings prospects are favorable.
Although the net earnings of
Merchantville Bank declined for 1963, its earnings record in general has
been good.
During the period 1955 to 1963 the bank's total deposits
increased by over 85 per cent, and its loans by 123 per cent.
b ranch was opened in June 1963.
Its only
Prospects for the foreseeable future
are that the bank will continue as a profitable organization.
The
earnings prospects for the resulting bank would also be favorable.
The management of Merchantville Bank is satisfactory, if
less aggressive than that of Camden Trust.
The bank's chief
executive officer, who is past normal retirement age and has been the
(ibminant influence in management, desires to be relieved of his present
'Qs1)onsibi1ities with the bank.
It appears that the bank has mot recruited
er trained successor management.
Nonetheless, in view of the bank's size
4116 location and the aggregate compensation of that officer, it should
be
Possible to find a successor by means other than merger, and no
e\fidence is presented in the application to support a contrary conclusion.
-.3..
There is no indication that the corporate powers are or
llould be inconsistent with 12 U.S.C., Ch, 16.
Convenience and needs of the communities to be served. - The City
°f Camden, in Camden County, is located directly across the Delaware
4ver from Philadelphia, Pennsylvania.
The population of the city
Ilaa about 117,000 in 1960, reflecting a decrease of almost 6 per cent
since 1950, while that of the county exceeded 392,000, reflecting an
increase of over 30 per cent.
Camden County is one of New Jersey's
Inajor industrial areas.
The Borough (i.e., village) of Merchantville, also in Camden
Connty, comprises an area of slightly more than one square mile, situated
about three miles from Camden.
Merchantville is chiefly residential,
'any of its residents being employed in Camden.
Merchantville's popula-
tion ,
or over 4,000 in 1960 reflected a slight decline over the past
clecade.
Unlike most of the area surrounding it, Merchantville has
vi
ztually no vacant land.
Under New Jersey law, banks may establish branches only in
the county of their head offices; but a bank may not establish a de
4°1/0 branch in any political subdivision where the main office or
br
allch of another bank is located. There are already banking offices
i4
virtually all the political subdivisions in Camden County, and
ilet'chantville Bank would be able to obtain a branch in any adjoining
blutlicipality only by merging with an existing bank.
No bank outside
chantville can establish a branch within that borough except by
tatger.
•
22Si)
-4-
Camden County is served by nine banks, of which two, Camden
)
Trust and First Camden National Bank and Trust Company ("First Camden")
2/
together have about 75 per cent of total IPC deposits— and 82 per
cent of total loans and discounts of all banks in the county.
The
remaining banks range in size from Haddonfield National Bank, with
$44 million of deposits,down to Delaware Valley National Bank of
Cherry Hill, with $3 million.
In addition, the application states that
distance across
several banks in Burlington County, some only a short
the county line from Merchantville, and in Gloucester County, southeast
Qf Camden County, also serve, to some extent, the convenience and needs
°f the communities concerned.
The Borough of Merchantville has only two banking offices.
Pirst Camden has a nearby office which serves that general area from
l'hich the bulk of Merchantville Bank's loans and deposits are obtained.
Pirst Camden has two additional offices, and Camden Trust has one
(Iffice,located outside that area but nearby and conveniently available
to it.
nce and needs
The effect of the merger on banking convenie
14/Quid be limited almost entirely to Merchantville.
While the
lierchantville bank does not offer banking services such as corporate
nt loans, or
ttust services, dealer loans, certain types of instalme
84fe deposit boxes at the present branch office, and has a lending limit
() $100,000, there is little indication of a demand for such banking
services or a larger lending limit in Merchantville.
All the services
-eposits of individuals, partnerships, and corporations.
-5-
and facilities not now available within the Borough of Merchantville
Ilhich would be offered by the resulting bank are already available
at easily accessible offices of larger banks, particularly the three
erfices of First Camden and the office of Camden Trust located within,
3/
Merchantville Bank. Nor
0r on the perimeter of, the service area of
are the convenience and needs of the Merchantviile community such as to
require the presence of a larger bank in the borough.
in Camden
Competition. - Camden Trust is the largest bank
C°unty.
lies within the
The entire service area of Merchantville Bank
direct competition between the
sErviee area of Camden Trust, and there is
tI•l° banks.
than a mile from
One office of Camden Trust is little more
an Office of Nerchantville Bank.
Consummation of the merger would
eliminate that competition.
consummation of the proposed
The application contends that
Trust and First
tr ansaction would increase competition between Camden
Camden.
since representation of
To some extent this would be the case,
where First Camden's offices
Camden Trust would be increased in an area
are clustered.
that because of the
The application also urges
described above,
t'e8trictions imposed by New Jersey law that are
ilerehantville Bank is "locked into" its present competitive position.
Ihis 2LS- accurate only in the sense that except
by merging, Eerchantville
134nk is not likely to grow into a major competitive factor in the county
through establishment of additional offices.
Scate law protects the
or more of its IPC
d 'ae area from which a bank obtains 75 per cent
eP°sits.
299
-6-
competitive position of that bank in the area in which it now functions,
and there is no reason to anticipate that it will not continue to
enjoy a healthy growth as an independent local institution.
Nor would
aPProval of the proposal result in there being two competitive banks
in lierchantville.
The borough would remain exc7_usive territory of
a single bank.
Any increased competition between the two large banks which
Plight result from consummation of the proposed merger is more than outby the increase in the already high degree of concentration of
banking resources in Camden County which would clearly ensue.
At
Present, Camden Trust holds over 42 per cent of IPC deposits and over
Per cent of loans of banks headquartered in the county, and operates
fifte-en of the forty-six banking offices in the county.
If the merger
re consummated, these percentages would increase to 46 and 49,
res
of forty-six.
Peccively, and the number of offices to seventeen out
The two largest banks in the County, Camden Trust and First
deposits and 82 per cent of
C'4111den, together hold 75 per cent of IPC
leans of banks headquartered in the county and operate 63 per cent of the
barv.4
flg offices of all banks in Camden County.
If the proposed merger
consummated, these two banks combined would hold 79 per cent of
operate 67 per cent of
the IPC deposits, 84 per cent of the loans, and
the
uankin L, offices in the county.
Of the six other banks headquartered
th
e county, none would hold as much as 10 per cent of the county's
1PC ,1
'ePosits or loans.
-7-
While indicating Camden County as the service area of the
resulting bank, the application also includes banks in nearby areas
of Burlington and Gloucester Counties, as mentioned above, in measuring
the share of banking business of banks operating throughout the service
area of Camden Trust.
Even if this approach were justified, it remains
true that a substantial existing degree of concentration of banking
re
sources would be increased by the proposed merger.
Thus, Camden
Trust and First Camden together have about 65 per cent of IPC deposits
44d 73 per cent of loans of all banks in the extended area of service.
After consummation of the proposed merger, these percentages would be
about 68 and 75, respectively.
Thus, even on the basis of a market
diluted by the Burlington and Gloucester banks which the applicant
143uld include, the figures on concentration are not reduced sufficiently
t° alter this important aspect of the competitive picture.
proposed
Summary and conclusion. - Consummation of the
would eliminate a healthy and growing bank in direct competiti°fl with Camden Trust and increase the already high degree of
corIcentration of banking resources in the area served by the two banks.
4either the management factor nor the convenience and needs of the
of the
141.1riumities concerned adds any significant weight for approval
411P11.cation. While effectuation of the proposal would tend to increase
corn
Petition between the larger banks already competing in the
torh„
—"unity concerned, and although the possibility of banks branching
Net
4.4
either in or out of the Borough of Merchantville is severely limited
by State
do not appear to
law, except by merger, these considerations
the Board sufficient to outweigh the adverse competitive considerations
in this case.
Accordingly, the Board is unable to find that the proposed
taerger
would be in the public interest.
June 26, 1964.
@FedFRASER