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Minutes for
To:
Members of the Board
From:
Office of the Secretary
March 12, 1965.
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Minutes of the Board of Governors of the Federal Reserve
System on Friday, March 12, 1965.
The Board met in the Board Room
at 9:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Robertson, Acting Chairman
Shepardson
Mitchell
Daane
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Noyes, Adviser to the Board
Mr. Fauver, Assistant to the Board
Mr. Holland, Associate Director, Division of
Research and Statistics
Mr. Koch, Associate Director, Division of
Research and Statistics
Mr. Partee, Adviser, Division of Research
and Statistics
Mr. Solomon, Adviser, Division of Research
and Statistics
Mr. Sammons, Adviser, Division of International
Finance
Mr. Katz, Adviser, Division of International
Finance
General Assistant, Office of the
Spencer,
Mr.
Secretary
Mr. Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Mr. Eckert, Chief, Banking Section, Division of
Research and Statistics
Mr. Baker, Economist, Division of International
Finance
Mr. Furth, Consultant
Money market review.
There were distributed tables presenting
data on interest rates in expansionary periods, the money market, and
bank reserve utilization.
Mr. Axilrod discussed developments in the Government securities
market, following which he commented on interest rate behavior during
3/12/65
-2-
expansionary periods, his analysis being related to the distributed
tables.
Mr. Baker then reported on recent foreign exchange market
developments.
Following discussion based on the review, all members of the
staff except Messrs. Sherman, Kenyon, Fauver, and Spencer withdrew
from the meeting and the following entered the room:
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
Solomon, Director, Division of Examinations
Johnson, Director, Division of Personnel Administration
Hexter, Assistant General Counsel
Shay, Assistant General Counsel
Daniels, Assistant Director, Division of Bank
Operations
Mr. Leavitt, Assistant Director, Division of Examinations
Messrs. Plotkin and Via, Senior Attorneys, Legal Division
Messrs. Egertson and McClintock, Supervisory Review Examiners
Division of Examinations
Mr. Sidman, Financial Accountant, Securities and Exchange
Commission (on loan to the Board)
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Banks of Cleveland, Richmond, Atlanta, Chicago, St. Louis,
Ilinneapolis, Kansas City, and Dallas on March 11, 1965, of the rates
on discounts and advances in their existing schedules was approved
unanimously, with the understanding that appropriate advice would be
sent to those Banks.
Circulated items.
at
The following items, copies of which are
tached to these minutes under the respective item numbers indicated,
were a
roved unanimously:
t 74.
3/12/65
-3Item No.
Letter to Piedmont Trust Bank, Martinsville, Virginia,
approving the establishment of a branch in Patrick
Henry Mall.
1
Letter to Columbus Bank and Trust Company, Columbus,
Georgia, approving the establishment of a branch at
Buena Vista Road and Tennessee Drive.
2
Letter to Wells Fargo Bank, San Francisco, California,
approving the establishment of a branch in Fresno.
Letter to Union Bank, Los Angeles, California, approving
the establishment of a branch in San Diego.
4
Letter to The Merchants and Farmers Bank, Smithfield,
Virginia, approving an investment in bank premises.
5
Letter to Columbus Bank and Trust Company, Columbus,
Georgia, approving an investment in bank premises.
6
Letter to Columbus Junction State Bank, Columbus Junction,
Iowa, approving an investment in bank premises.
7
Letter to the Federal Deposit Insurance Corporation
regarding the application of Dauphin Deposit Trust Company,
Harrisburg, Pennsylvania, for continuation of deposit
insurance after withdrawal from membership in the Federal
Reserve System.
8
Letter to The Citizens Bank and Trust Company, Washington,
Indiana, waiving the requirement of six months' notice
Of withdrawal from membership in the Federal Reserve System.
9
Letter to the Federal Reserve Bank of Richmond approving
appointment of J. H. Wyatt as Federal Reserve Agent's
;
e presentative for the sole purpose of custody of Federal
eserve notes stored at cash agent banks.
10
Letter to the Federal Reserve Bank of Richmond approving
use of an annual rate of 10 per cent for depreciating
Lne building at Ninth and Franklin Streets purchased by
the
Bank in January 1965.
11
Mr. Johnson then withdrew from the meeting.
L
3/12/65
-4Report on competitive factors (Boston, Massachusetts).
A
report to the Comptroller of the Currency on the competitive factors
involved in the proposed consolidation of Congress National Bank of
Boston, Boston, Massachusetts, and The National Shawmut Bank of Boston,
Boston, Massachusetts, was approved unanimously for transmittal to
the Comptroller.
The conclusion read as follows:
The proposed consolidation of Congress National Bank of
Boston and The National Shawmut Bank of Boston would have no
effect on competition.
Report on competitive factors (Valley Falls, Kansas).
A
report to the Federal Deposit Insurance Corporation on the competitive
factors involved in the proposed consolidation of Kendall State Bank,
Valley Falls, Kansas, and The Citizens State Bank, Valley Falls,
Kansas, was approved unanimously for transmittal to the Corporation.
The conclusion read as follows:
Kendall State Bank and The Citizens State Bank are the
only banks located in Valley Falls, and it appears substantial
competition has existed between them. Recently, the president
of Kendall State Bank purchased controlling interest in Citizens
State Bank. While the competition now existing between the
banks is limited, consummation of the transaction would eliminate permanently any potential competition between them should
the close relationship be terminated.
Application of City Bank and Trust Company (Items 12-14).
l'ursuant to the decision reached at the meeting on February 24, 1965,
there had been distributed a proposed order and statement reflecting
approval of the application of The City Bank and Trust Company,
3/ 12/65
-5-
Milwaukee, Wisconsin, to acquire the assets of American State Bank,
Milwaukee.
(The name of the resulting bank would be American City
Bank and Trust Company.)
There also had been distributed a dissenting
statement by Governor Mitchell with which Governor Robertson concurred.
During discussion of the majority statement, certain changes
were agreed upon.
The changes expanded the summary and conclusion
in the direction of emphasizing the benefits to the community seen
by the majority in the improved and additional banking services that
reportedly would be made available.
Subject to the incorporation of the changes agreed upon, the
issuance of the order, statement, and dissenting statement was authorized.
Copies of the documents, as issued, are attached as Items 12 through 14.
Messrs. Shay, Via, Egertson, and McClintock then withdrew from
the meeting.
Registration statement of Chase Manhattan Bank (Items 15 and 16).
There had been distributed a memorandum from the Legal Division dated
March 8, 1965, discussing a request by The Chase Manhattan Bank, New
York, New York, and by the New York Stock Exchange for acceleration
of the effective date for registration of Chase's capital stock on the
Exchange.
Section 12(d) of the Securities Exchange Act of 1934 provides,
111 effect, that a registration statement filed pursuant to section 12(b)
shall become effective 30 days after the receipt of certification from
3/12/65
-6-
a national securities exchange that such exchange has approved the
securities covered by the registration statement for listing and
registration or within such shorter period of time as the Board may
determine.
A telegram had been received on February 26, 1965, from
the New York Stock Exchange stating that the capital stock of Chase
Manhattan Bank had been approved for listing and registration.
The Legal Division memorandum stated that the staff had
reviewed the registration statement filed February 26, 1965, as
amended March 4, 1965, and believed that it substantially complied
with the disclosure requirements of the Securities Exchange Act and
the Board's Regulation
F, Securities of Member State Banks.
Since
fairly adequate financial and other information concerning Chase
Manhattan Bank was available to the financial community through its
annual reports to stockholders and in various financial reporting
services prior to the filing of the registration statement, and a
Period of nearly three weeks would have elapsed from the date of
filing until the date trading commenced, the staff recommended that
the Board grant the request for acceleration.
Drafts of an order
declaring registration effective immediately, and of a press statement,
were attached to the memorandum.
Following discussion, the proposed order was approved
unanimously, along with issuance of the press statement.
Copies of
the order and press statement, as issued, are attached as Items 15
and 16
_
3/12/65
-7Messrs. Hexter, Plotkin, and Sidman then withdrew from the
meeting.
Cincinnati Branch building.
Mr. Farrell reported a telephone
call of March 10, 1965, from Chairman Hall and President Hickman of
the Federal Reserve Bank of Cleveland with regard to a site for a
new Cincinnati Branch building.
In a letter of February 25, 1965, to the Cleveland Bank, the
Board had expressed the view that a site containing about 58,000 square
feet would not provide adequately for future expansion and suggested
that consideration be given to the possible acquisition of certain adjacent property.
Mr. Farrell noted that the additional property now being considered by the Reserve Bank consisted of two parcels, one of which was
Occupied by a four-story building in poor condition, the other parcel
was occupied by the Mercantile Library Building, which was in fair
condition.
In the plans that had been censidered up to this time,
neither of the buildings was to have been razed as part of the Redevelopment Program.
The City of Cincinnati now proposed to include one of the
Properties in
the program, and Chairman Hall had stated that the Bank
felt the two
the
for
sites afforded the best expansion possibilities.
However,
One property was to be offered to building and loan associations
construction of an office.
Neither ChaiLman Hall nor President
RickEllan felt that it would be particularly desirable to have a building
3/1 2/65
-8-
and loan association as an abutting neighbor to the new Federal Reserve
building.
While it was believed that the City could be persuaded to
give up the building and loan proposal, there would probably be insistence on immediate use of the property.
In discussions of this matter,
the suggestion had been made that the property might be acquired by
the Reserve Bank with the understanding that the Bank would erect on
it a building that would be sufficient to house for 10 or 15 years a
restaurant that was being displaced by another part of the Redevelopment Program.
Chairman Hall and President Hickman had asked for the
Board's reaction to such a proposition if the arrangement included a
firm provision for terminating the restaurant's lease within 10 or 15
Years at the Reserve Bank's option.
At the conclusion of a general discussion of the information
Presented by Mr. Farrell, it was understood that the Cleveland Bank
Would be advised informally that there was a disinclination on the part
of some members of the Board who were present today to regard favorably
4
Proposition whereby a building would be erected on the proposed site
for lease, and that it continued to be the view that property should
be acquired affording between 75,000 and 95,000 square feet of space.
It was also understood that the matter would be considered further by
the Board next Monday.
Service of staff on Presidents' Conference subcommittees.
Fol-
1°wing discussion, it was understood that the Chairman of the Presidents'
Co nference would be advised that the Board had no objection to the
3/12/65
-9-
continued service of various members of its staff as associates of
particular subcommittees of the Conference, but that if any changes
in or additions to the present list of associates should be involved,
such matters would be taken up by the Board for approval of the proposed designations.
The meeting then adjourned.
Secretary's Notes: Letters were sent today to
First National City Bank, New York, New York,
acknowledging receipt of notice of its intent
to establish the following foreign branches:
(1) an additional branch in Belgium, to be
located in Antwerp; (2) an additional branch
in the Dominican Republic, to be located in
Santo Domingo; and (3) an additional branch
in Kuala Lumpur, Malaysia, to be located on
Ampang Road. Each of the letters contained
the following paragraph: "It is understood,
based on a letter dated March 1, 1965, from
Mr. Carl W. Desch, Cashier, First National
City Bank, that First National City Bank confirms its pledge to cooperate in the voluntary
foreign credit restraint program instituted by
the Administration and to use every reasonable
effort to maintain outstanding credits to foreigners during 1965 at a level not exceeding
5 per cent above the December 31, 1964, outstandings. With respect to the establishment
of foreign branches, funds to be invested
(whether in the form of allocated capital,
advances, and fixed assets and equipment)
should be counted as part of the 5 per cent
target."
Acting in the absence of Governor Shepardson,
Governor Robertson approved on behalf of the
Board on March 11, 1965, a letter to the Federal Reserve Bank of Minneapolis (attached
Item No. 17) approving the appointment of
Marvin L. Knoff as assistant examiner.
3/12/65
-10Governor Shepardson today approved on behalf
of the Board the following items:
Letter to the Federal Reserve Bank of Kansas City (attached Item
No. 18) approving the appointment of Hugh Gordon Hueftle as assistant
examiner.
Memorandum from the Division of Examinations dated March 2, 1965,
requesting that the Board authorize payment of the cost of a dinner
at the Shoreham Hotel on April 21, 1965, in connection with the Conference of General Auditors of the Federal Reserve Banks to be held
April 21-23. In this connection Governor Shepardson also approved a
list of 49 persons to be invited to the dinner.
Memoranda recommending the following actions relating to the
Board's staff:
4222intmtat
Lovair Dingle as Messenger, Division of Administrative Services,
with basic annual salary at the rate of $3,385, effective the date of
entrance
upon duty.
Salar
increase
Mary Ellen Miller, Stenographer, Division of Examinations, from
$4,005 to $4,480 per annum, effective March 14, 1965.
Seer
!
-35S
Item No. 1
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS orriciAL. CORRCBPONDCHDC
TO THE BOARD
March 12, 1965
Board of Directors,
Piedmont Trust Bank,
Martinsville, Virginia.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by
Piedmont Trust Banks, Martinsville, Virginia, in Patrick
Henry Mall located at the intersection of East Church
Street and Booker Road, Martinsville, Virginia, provided
the branch is established within six months from the
date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board also
had approved a six-month extension of the period allowed
to establish the branch; and that if an extension should
be requested, the procedure prescribed in the Board's
letter of November 9, 1962 (S-1846), should be followed.)
M59
Item No. 2
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orricim. CORRESPONDENCE
TO THE BOARD
March 17, 1965
Board of Directors,
Columbus Bank and Trust Company,
Columbus, Georgia.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Columbus Bank and Trust Company, Columbus, Georgia,
of a branch at the intersection of Buena Vista
Road and Tennessee Drive, Columbus, Georgia, provided the branch is established within one year
from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
allowed to establish the branch; and that if an
extension should be requested, the procedure prescribed
in the Board's letter of November 9, 1962 (S-1846), should
be followed.)
Item No. 3
BOARD Or GOVERNORS
3/12/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20553
ADORES'S arriciAL OORAEISPONOENCE
TO THE GOAN°
March 12
1965..
Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the federal Reserve
System approves the establishment by Wells Fargo Bank,
San Francisco, California, of a branch in the vicinity
of the intersection of Divisadero, Angul, and East Tulare
Streets, Fresno, California, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
allowed to establish the branch; and that if an extension
should be requested, the procedure prescribed in the
Board's letter of November 9, 1962 (S-18,46), should be
followed.)
Item No. 4
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1965
Board of Directors,
Union Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Union Bank, Los Angeles, California, of a branch
in the downtown business district of San Diego,
Californi, provided the branch is established
within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Ar;sistant 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
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
ADOCCIS• OrriCHAI. OCIN*CUPONIDCHOC
TO THC COACCI
March 12, 1965
Board of Directors,
The Merchants and Farmers Bank,
Smithfield, Virginia.
Gentlemen:
Pursuant to the provisions of Section
24A of the Federal Reserve Act, the Board of
Governors of the Federal Reserve System approves
an investment in bank premises of $8,500 by The
Merchants and Farmers Bank, Smithfield, Virginia,
for the purchase of one of the lots on which the
bank building is located.
Very truly yours,
(Signed) Karl E. Bakke
Karl E Bakke
Assistant Secretary.
Item No. 6
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE EICIARD
March 12, 1965
Board of Directors,
Columbus Bank and Trust Company,
Columbus, Georgia.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves, under the provisions of Section 24A of
the Federal Reserve Act, an indirect investment in bank
premises of $1,170,000 by Columbus Bank and Trust Company,
Columbus, Georgia, for construction of banking quarters
for three branches.
It is understood that the premises for the
three branches will be owned by the bank's wholly-owned
affiliate, CB & T Real Estate Company, and that the
$1,170,000 represents an investment of $300,000 by the
bank in the capital stock of the affiliate, and $870,000
in funds to be borrowed by the affiliate from a source
other than the subject bank.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
•
Item No. 7
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, CI. C. 20551
ADORE'S ornmAL OOPMEOPONOIENOE
TO THE BOARD
March 12, 1965
Board of Directors,
Columbus Junction State Bank,
Columbus Junction, Iowa.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves, under the provisions of
Section 214 of the Federal Reserve Act, an investment in bank premises of not to exceed S105,000
by Columbus Junction State Bank, Columbus Junction,
Iowa, for the expansion of banking quarters.
Very, truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Item No. 8
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orrociaa. CORRCIIIPONOCHCC
TO THC "MARI)
March 12, 1965.
Honorable Joeeph W. Barr, Chairman,
Federal Deposit Insurance Corporation,
20429
Washington, D. C.
Dear Mr. Barr:
Reference is made to your letter of
February 17, 1965, concerning the application of
Dauphin Deposit Trust Company, Harrisburg, Pennsylvania, for continuance of deposit insurance
after withdrawal from membership in the Federal
Reserve System. Your letter also notes the proposed merger of Dauphin Deposit Trust Company
with Lemoyne Trust Company, Lemoyne, Pennsylvania,
a State member bank.
There have been no corrective programs
urged upon the above-mentioned banks, or agreed to
by them, which have not been fully consummated, and
there are no such programs that the Board would
advise be incorporated as conditions of admitting
the applicant bank to membership in the Corporation
as a nonmember of the Federal Reserve System.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
SW;
Item No. 9
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1965
Board of Directors,
The Citizens Bank and Trust Company,
Washington, Indiana:
Gentlemen:
The Federal Reserve Bank of St. Louis has forwarded to
the Board of Governors your letter dated February 15, 1965,
together with the accompanying resolution signifying your intention to withdraw from membership in the Federal Reserve System
and requesting waiver of the six months' notice of such withdrawal.
In accordance with your request, the Board of Governors
waives the requirement of six months' notice of withdrawal. Upon
surrender to the Federal Reserve Bank of St. Louis of the Federal
Reserve Bank stock issued to your institution, such stock will be
canceled and appropriate refund will be made thereon. Under the
provisions of Section 208.10(c) of the Board's Regulation H, your
institution may accomplish termination of its membership at any
time within eight months from the date the notice of intention to
withdraw from membership was given.
It is requested that the certificate of membership be
returned to the Federal Reserve Bank of St. Louis.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
S.67
Item No. 10
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orricsAL CORRESPONDENCE
TO THE BOARD
March 12, 1965
Mr. Edwin Hyde,
Federal Reserve Agent,
Federal Reserve Bank of Richmond,
Richmond, Virginia. 23213.
Dear Mr. Hyde:
As requested in your letter of March 1, 1965,
the Board of 6overnors approves the appointment of Mr. J. H.
Wyatt, Assistant Cashier, Bank and Public Relations Department, to succeed Mr. J. Lander Allin, Jr. as Federal Reserve
A,
,
:,entts Representative for the sole purpose of custody of
Federal Reserve notes stored at Cash Agent Banks.
Please have Mr. Wyatt execute the usual Oath of
Office which should be forwarded to the Board of Governors
along with notification of the effective date of his
appointment.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
,Secretary.
Item No. 11
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
March 12, 1965
Mr. Edward A. Wayne, President,
Federal Reserve Bank of Richmond,
Richmond, Virginia. 23213
Dear Mr. Wayne:
This refers to your letter of February 3, 1965, about
allocation of the cost of the "Goldberg property" (817-821 East
Franklin Street) purchased by the Federal Reserve Bank of Richmond
On January 28, 1965, and the rate of depreciation on the building.
Your Bank proposes to allocate 36 per cent of the purchase
Price of the property to "Land" and 64 per cent to "Buildings," on
the basis of the appraisal made last August, and to make no separate
allocation to "Fixed machinery and equipment." This appears to be
appropriate.
It is noted that the Bank desires to depreciate the combined
Buildings" account at a rate of 10 per cent per annum, as is being
done with the adjacent "W. J. Driver property." In the circumstances,
the Board approves an annual depreciation rate of 10 per cent for this
Purpose.
It
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
'
Item No. 12
3/12/65
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
1
TRE CITY BANK AND TRUST COMPANY
1
fcr approval of acquisition of assets of
A merican State Bank
1
1
ORDER APPROVING ACQUISITION OF BANK'S ASSETS
There has come before the Board of Governors, pursuant to the
Bank Merger Act of 1960 (12 U.S.C. 1828(c)), an application by The City
nk
and Trust Company, Milwaukee, Wisconsin, which, under the new name
American City Bank & Trust Company, is to be a State member bank of the
Pederal Reserve System, for the Board's prior approval of its acquisition
assets and assumption of deposit liabilities of American State Bank,
Ililwaukee, Wisconsin.
Notice of the proposed acquisition of assets and
ssumption of deposit liabilities, in form approved 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
ComPtroller of the Currency, the Federal Deposit Insurance Corporation,
4nd the Department of Justice on the competitive factors involved in the
P °Posed transaction,
-2-
IT IS HEREBY ORDERED, for the reasons eet forth in the
Board's statement of this date, that said application be and hereby is
aPProved, provided that said acquisition of assets and assumption of
daPosit liabilities shall not be consummated (a) within seven calendar
daYa after the date of this Order, or (b) later than three months after
said date.
Dated at Washington, D. C., this 12th day of March, 1965.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, and Daane.
Voting against this action:
and Mitchell.
Governors Robertson
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
Item No. 13
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY THE CITY BANK AND TRUST COMPANY
FOR APPROVAL OF ACQUISITION OF ASSETS OF
AMERICAN STATE BANK
STATEMENT
The City Bank and Trust Company, Milwaukee, Wisconsin
("CitY Bank"), with total deposits of $35.6 million, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the
oard's prior approval of its acquisition of the assets and assumpt
ion
of the liabilit
ies of American State Bank, Milwaukee, Wisconsin, which
has total deposits of $44.8 million
]
) Neither bank has any branches.
1410n consummation of the transaction, the banking office
of City Bank
I/°uld be closed,
since its operation as a branch 'would be prohibited
by state
law. The name of City Bank would be changed to American City
4flk and Trust Company, and it would be a State member bank
of the
Paderal Reserve System.
Under the law, the Board is required to consider, as to each
Of
the banks involved, (1) its financial history and condition, (2) the
4cluacY of its capital structure, (3) its future earnings prospects,
(4) the general character of its management, (5) whether its corpora
te
P°Wers are consistent with the purposes of
12 U.S.C., Ch. 16 (the
ede
tal Deposit Insurance Act), (6) the convenience and needs
of the
e"sit figures are as of June 30, 1964.
-2community 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 of these
factors, it finds the transaction to be in the public interest.
Banking factors. - The financial histories of City Bank and
American State Bank are satisfactory, and City Bank has a generally
satisfactory asset condition and an adequate capital structure.
The
capital structure of American State Bank is reasonably satisfactory, and
although its asset condition reflects a sizable aggregate of relatively
high-risk loans, the bank has a good over-all loss experience.
American
State Bank's earnings record is good, and its future earnings prospects
are reasonably favorable.
The earnings record of City Bank is less than
satisfactory, and its future earnings prospects are no
better than fair.
A factor of considerable significance in this respect is that City Bank,
1°cated in an area which now consists largely of merchandising and light
manufacturing establishments, operates, and has traditionally operated,
as a "retail" institution catering mainly to the banking needs of
ind
ividuals.
The management of City Bank, although presently lacking in
dePth, is experienced and capable.
1111°-esale"
app
American State Bank, basically a
institution, is managed fairly satisfactorily although,
rently as a result in part of the necessity that it compete with
Tlinch larger banks, its policies are aggressive and liberal.
The manage-
Ment of the acquiring bank would be composed of the managing officers of
the
Proponent banks.
-3-
acquiring
The capital structure and asset condition of the
bank would be reasonably satisfactory and its earnings prospects favorable.
the banks
There is no evidence that the corporate powers of
are, or would be, inconsistent with the purposes of 12 U.S.C., Ch. 16.
Bank and
Convenience and needs of the communities. - City
of the
American State Bank are located one block apart in the center
downtown business district of Milwaukee, Milwaukee County, Wisconsin.
Milwaukee, which is situated on the west shore of Lake Michigan, is a
diversified industrial center and serves as an important port.
The
the total populaPopulation of Milwaukee is about 741,000 persons, and
tion of Milwaukee County exceeds one million.
offices, in
There are 39 commercial banks, with 55 banking
Milwaukee County, virtually all of which are located in the city of
2/
Ililwaukee or within its metropolitan area.-- Fourteen of these banks,
Ilith a total of 27 offices, are subsidiaries of one or another of three
bank holding companies and hold, altogether, 76 per cent of the total
.
deposits of all commercial banks in Milwaukee County
The head offices
c) each of the largest banks owned by these holding companies are
located within one block of the offices of City Bank and American State
sank.
convenience of
It is not alleged that the banking needs and
the community are not being adequately met.
However, the proposed
Zi S tate law now prohibits the establishment of branch banking offices.
A
approved but
tiohtew bank, to be located in downtown Milwaukee, has been
Yet opened for business.
-4-
improved
would result in a bank generally capable of providing
and expanded services and, more particularly, with a lending limit 80 per
cent greater than the present limit of the larger of the proponent banks.
The acquiring bank, with the improved and additional services contemplated
by the proposal, would benefit the community in that it would constitute
an alternative source of relatively full banking services.
essentially
Competitloa.- City Bank and American State Bank have
3/
as the area
identical service areas,— which may be approximately defined
Both banks, however,
within a six-mile radius of downtown Milwaukee.
secure some business from throughout the Milwaukee metropolitan area.
4 the proposed acquisition were consummated, the acquiring bank would
ial
hold 4,3 per cent of total deposits held by the present 24 commerc
banks located in the service area, as defined above, and 4.1 per cent
°f such deposits held by all commercial banks in Milwaukee County.
markets of the
Despite the virtually coterminous geographical
tion
Pt°Ponent banks, there is a relatively limited amount of competi
e%isting between them because City Bank provides banking services printo
iPally for individuals, whereas American State Bank caters mainly
the banking needs of business establishments.
If operated as independent
ills titutions, some potential for further competition between these banks
IllaY exist in that each could attempt to add to its principal range of
services the services now provided by the other.
However, the extent to
c The area from which a bank obtains 75 per cent or more of its deposits
-3/
Individuals, partnerships, and corporations.
'
_5..
sound
Ilhich such competition might be developed, with due regard for
b anking practices, appears greatly limited under the circumstances. •
result in the
Although the proposed acquisition would
larger
elimination of one banking office, the acquiring bank, with its
be
capital base and with certain economies available to it, would
effectiveness than either
Pable of significantly greater competitive
"
°f the proponent banks alone.
The proposed transaction would not
d, would have the potential
adversely affect any other bank and, indee
n in the Milwaukee
for enhancing somewhat the level of banking competitio
area.
ring bank, with the
Summary and conclusion. - The acqui
would constitute an
Contemplated improved and additional services,
the
lternative source of relatively full banking services for
e°nIrnunitY.
for banking competition
At the same time, the consequences
14°111d not be adverse, but potentially beneficial.
sition appears to be that
The net effect of the proposed acqui
potentially a more
the acquiring bank would have the advantage of being
redound to the general
viab le and effective competitor, which would
hen
area affected.
efit of the banking public in the
the proposed acquisition of
Accordingly, the Board finds that
in the public interest.
4s8ets and assumption of liabilities would be
March 12,
1965.
(-3
Item No. 14
3/12/65
DISSENTING STATEMENT OF GOVERNOR MITCHELL
WITH WHICH GOVERNOR ROBERTSON CONCURS
The record in this case clearly establishes that in the
judgment of the applicant and other stockholding interests, consummation
of the proposed acquisition will be to their private corporate advantage.
There is no basis in the record to dispute this judgment.
The
record is not so clear, however, as to the consequences for the public
i
nterest.
The applicant contends that the acquiring bank will have the
competitive capability to divert business from the "Big Three" banks in
Ililwaukee by offering a more complete line of banking services and a
higher loan limit for larger businesses than heretofore available at
either of the participating banks.
The application lists forty-odd
c°1"Porations which maintain headquarters or large plants in Milwaukee but
14111-Oh do not have accounts with either of the banks.
From the public
Point of view, however, there is much more concern that small and mediumsized businesses have adequate access to bank credit.
Companies as large
as most of those on the list submitted have scores of credit alternatives
/lith banks, insurance companies, and even in the capital market.
companies have a very limited number of credit alternatives.
Small
Under this
Pc1/°sal, the smaller concerns in the downtown area of Milwaukee would
halle One less alternative, and the interest of the acquiring bank would
be shifted to a more affluent clientele. Rather than adding to the
ecInvenience and needs of the residents of the immediate area, the proposed
t%saction is likely to have the reverse effect.
r
-2-
The competitive factor is alleged to be favorable because the
acquiring bank will be larger.
With this argument, every proposal that
results in a larger bank could be supported as furthering competition.
The ultimate result of a merger policy based on this premise would be to
make every bank as large as any other.
It is also said that one of the participating banks is a
vholesale" bank and the other a "retail" bank and that, therefore, they
are not competitive.
There appears a measure of truth in this generali-
4tion because one bank has more of its total deposits in savings accounts
and the time accounts in the other bank are predominantly certificates of
clePosit.
One bank has almost no consumer credit paper, whereas in the
Other such loans are over 17 per cent of total net loans and discounts.
13/It the record appears also to show the consumer credit paper is largely
gerterated by the bank's customers rather than the bank.
In short, the
banks are somewhat different because of differences in some of their
tust"lers. However, it is possible to point up similarities too--namely,
lr
the relative size of their portfolios of commercial and industrial
loans
2 tax exempt securiies, and mortgages.
Clearly, each competes with
the other, and other banks in the area, for time and demand deposits, and
the
Proposed acquisition will leave elle less competitor in the immediate
etvice area.
Two new banking offices are coming into the immediate area,
the
area's largest bank is relocating one of its offices to a site in
the A
'ountown area, and a newly organized bank is to be located in downt°114
Milwaukee.
These specific, concrete expressions of judgment that
78
-3the area is not overbanked undermine the contention that the proposed
transaction is necessary to the growth and survival of both or either
ef the participating banks.
be approved because
I conclude that the application should not
add to
effectuation of the proposal will lessen competition, it will not
sustaining
the public's convenience or accommodation, and there is no
Justification in the banking factors.
This judgment may be temporarily
ed, but that
hostile to the corporate interests of the two banks involv
Concern should not be paramount to the public interest.
liarch 12, 1965.
Item No. 15
3/12/65
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.
ORDER DECLARING REGISTRATION
EFFECTIVE PURSUANT TO
SECTION 12(d) OF THE SECURITTE.
EXCHANGE ACT OF 1934.
In the Matter of the
Registration Statement of
THE CHASE MANHATTAN BANK
There has come before the Board of Governors a registration
statement of The Chase Manhattan Bank, New York, New York, a member
State bank of the Federal Reserve System, for registration of its
Capital Stock, $12.50 par value, on the New York Stock Exchange.
The
registration statement was filed with the Board and the New York Stock
Exchange on February 26, 1965, pursuant to section 12(b), (c), and (d)
°f the Securities Exchange Act of 1934 ("Act"), and Federal Reserve
Regulation F, "Securities of Member State Banks", adopted pursuant to
section 12(i) of the Act.
Amendment No. 1 to the registration statement
14as filed on March 4, 1965.
The New York Stock Exchange certified to the Board on
ebruary 26, 1965, that said Capital Stock has been approved by said
Exchange for listing and registration.
Under section 12(d) of the Act,
l'egistration would become effective 30 days after the date of receipt
of such certification, unless the Board prescribes an earlier effective
SSC
-2-
date.
Exchange have
The Chase Manhattan Bank and the New York Stock
ve date of registration.
requested the Board to accelerate the effecti
including the
Upon consideration of all the circumstances,
tion concerning the bank
availability of financial and other informa
Prior to the filing of the registration statement,
Stock,
IT IS HEREBY ORDERED that registration of the Capital
effective
par value, of The Chase Manhattan Bank shall become
immediately on the New York Stock Exchange.
Dated at Washington, D. C., this 12th day of March, 1965.
By order of the Board of Governors.
Voting for this action:
Hitchell,and Daane.
Absent and not voting:
Governors Robertson, Shepardson,
Chairman Martin
and Governor Balderston.
(SEAL)
erritt perman,
Secretary.
Item No. 16
3/12/65
For immediate release.
March 12, 1965.
The Board of Governors of the Federal Reserve System
today issued an order declaring effective immediately the registration
of the capital stock of The Chase Manhattan Bank on the New York
Stock Exchange. This action clears the way for trading in Chase
stock on the Exchange.
The 1964 amendments to the Securities Exchange Act
01 1934 transferred from the Securities and Exchange Commission to
the Federal bank supervisory agencies, administration of "disclosure"
Provisions of the 1934 Act with respect to securities of banks. Effective
January 1, 1965, the Board of Governors adopted a new Regulation F,
governing the application of the 1934 Act to securities of StateChartered banks that are members of the Federal Reserve System.
Chase's registration statement, which was received on
February 26, was the first to be filed with the Board. Under the terms
°f the 1934 Act, registration would have become effective 30 days after
February 26, when the Board received certification from the Exchange
that the securities had been approved for listing, unless the Board
Prescribed an earlier date. Both Chase and the Exchange requested
he Board to accelerate the effective date of the registration. In view
f the fact that financial and other information concerning Chase was
SQ9
available to the investing public prior to the filing of the registration
Statement, the Board ordered registration of Chase stock effective
today.
Copies of Chase's registration statement are available
for public inspection at the Board's offices in Washington, the New
York Stock Exchange, and at each Federal Reserve Bank.
A copy of the Board's Order is attached.
Attachment.
)f.„)0")
Item No. 17
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1965
Mr. R. K. Grobel, Vice President,
Federal Reserve Bank of Minneapolis,
55440
Minneapolis, Minnesota.
Dear Mr. Grobel:
In accordance with the request contained
in Mr. Strothman's letter of March 8, 1965, the Board
approves the appointment of Marvin L. Knoff as an
assistant examiner for the Federal Reserve Bank of
Minneapolis, effective March 15, 1965.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Item No. 18
3/12/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 12, 1965.
CONFIDENTIAL (FR)
Mr. George D. Royer, Jr., Vice President,
Federal Reserve Bank of Kansas City,
Kansas City, Missouri. 64106
Dear Mr. Royer:
In accordance with the request contained in your letter
of March 8, 1965, the Board approves the appointment of Hugh Gordon
Hueftle as an assistant examiner for the Federal Reserve Bank of
Kansas City. Please advise the salary rate and the effective date
of the appointment.
It is noted that Mr. Hueftle is indebted to The
Commercial National Bank of Kansas City, Kansas City, Kansas.
Accordingly, the Board's approval of Mr. Hueftle's appointment
is given with the understanding that he will not participate in
any examinations of that bank until his indebtedness has been
liquidated.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER