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Minutes for march 22, 1963
To:
Members of the Board
From:
Office Of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve .System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
Minutes of the Board of Governors of the Federal Reserve
System on Friday, March 22, 1963.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Noyes, Director, Division of Research and
Statistics
Mr. Koch, Associate Director, Division of
Research and Statistics
Adviser, Division of Research and
Brill,
Mr.
Statistics
Mr. Holland, Adviser, Division of Research
and Statistics
Mr. Solomon, Associate Adviser Division of
Research and Statistics
Mr. Furth, Adviser, Division of International
Finance
Mr. Sammons, Adviser, Division of International
Finance
Mr. Katz, Associate Adviser, Division of
International Finance
Mr. Eckert, Chief, Banking Section, Division
of Research and Statistics
Mr. Yager, Chief, Government Finance Section,
Division of Research and Statistics
Miss Dingle, Senior Economist, Division of
Research and Statistics
Mr. Goldstein, Economist, Division of
International Finance
Money market review.
Mr. Yager reported on developments in the
Government securities market, with emphasis on the results of the recent
3/22/63
-2-
Treasury refunding, following which Mr. Eckert discussed current
banking statistics and the reserve outlook, making reference to a
distributed table summarizing monetary developments during the five
weeks ended March 20, 1963.
Mr. Goldstein reported on foreign exchange
market developments.
After discussion based on these reports, all of the members of
the staff except Messrs. Sherman, Kenyon,and Fauver 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
Kelleher, Director, Division of Administrative Services
Connell, Controller
O'Connell, Assistant General Counsel
Shay, Assistant General Counsel
Kiley, Assistant Director, Division of Bank Operations
Goodman, Assistant Director, Division of Examinations
Smith, Assistant Director, Division of Examinations
Leavitt, Assistant Director, Division of Examinations
Spredher, Assistant Director, Division of Personnel
Administration
Mr. Young, Senior Attorney, Legal Division
Mr. Hill, Attorney, Legal Division
Mr. Collier, Chief, Current Series Section, Division of Bank
Operations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Banks of New York, Philadelphia, and San Francisco on March 21,
1963, of the rates on discounts and advances in their existing schedules
Vas
p4pproved unanimously, with the understanding that appropriate advice
I/0111d be sent to those Banks.
'kg
3/22/63
-3-
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 The Chase Manhattan Bank, New York, New York,
1
aPproving an extension of time to establish a branch in
North Bellmore, Nassau County.
Letter to Trust Company of Morris County, Morristown,
New Jersey, approving an extension of time to establish
a branch in Morris Township.
2
Letter to Chesaning State Bank, Chesaning, Michigan,
approving an investment in bank premises.
3
Letter to The First State Bank of Hotchkiss, Hotchkiss,
Colorado, granting its request for permission to act in
certain fiduciary capacities.
4
Letter to First National City Bank, New York, New York,
authorizing the establishment of a branch in Amsterdam,
The Netherlands.
5
Letter to Chemical Bank New York Trust Company, New York,
New York, approving the establishment of a branch at New
York and Baisley Boulevards, Jamaica.
6
Letter to The First Pennsylvania Banking and Trust Company,
l'hiladelphia, Pennsylvania, approving the establishment of
a branch on Oregon Avenue between Third and Fifth Streets.
7
Letter to Girard Trust Corn Exchange Bank, Philadelphia,
1ennsylvania, approving the establishment of a branch at
,
'ed Lion and Verree Roads.
8
Letter to Union Trust Company of Maryland, Baltimore,
u land, approving the establishment of a branch at
'S. Route 40 and Rolling Road, Baltimore County.
9
i
11,44etter
to Union Bank and Trust Company, Grand Rapids,
chigan, approving the establishment of a branch in
uenison, Georgetown Township.
10
1
3/22/63
Item No.
Letter to United California Bank, Los Angeles,
California, approving the establishment of a branch
in an unincorporated area west of Santa Barbara.
11
Letter to United California Bank, Los Angeles,
California, approving the establishment of a branch
in Calexico.
12
Letter to Chairman Dawson of the House Committee on
Government Operations reporting on H. R. 3496, a bill
that would extend for two years the Reorganization Act
of 1949, as amended.
13
Letter to all Reserve Bank Presidents regarding
aPPlications by individual banks for permission
to carry reduced reserves. (Prepared pursuant to
the understanding at the meeting on March 4, 1963.)
14
In connection with Items 11 and 14 letters to United California
Ilank approving the establishment of branches, Governor Robertson referred
to the recent exchange of correspondence with the member bat* concerning
its capital position and to the decision at the meeting on March 20, 1963,
t° write further to the bank expressing interest in being advised of the
I'esults of its current study of plans for strengthening of capital.
He
noted that branch applications were being received regularly from the bank
411d suggested that developments should be followed closely, against the
P°8sibility that the plans for increasing capital would continue under
study indefinitely while in the meantime a number of additional branches
14:41.1d. have been approved.
Upon advice from the staff that the letter suggested at the
M4rch 20 meeting had been drafted but not mailed, Governor Shepardson
3/22/63
-5-
observed that United California Bank apparently had under consideration
the sale of debentures and raised the question whether some reference to
that phase of the matter should be included in the letter.
During a
4i8cussion of this point it was noted that on occasion in the past the
Board had expressed itself adversely on the substitution of debentures for
capital stock, but that the Board's approval for the sale of debentures
as not required by statute unless a reduction of capital stock was involved.
A view was expressed that the use of debentures must be appraised in the
light of a number of factors affecting the total situation.
Therefore,
it was agreed that the letter to United California Bank should take
e°gnizance of indications that the bank might be thinking in terms of
selling some quantity of debentures, it was also agreed that the letter
should not imply what the reaction of the Board might be if the bank's
8tUdY of plans for angrenting capital resulted in a program that included
the use of debentures. It was understood that the proposed letter would
be redrafted along the lines indicated by this discussion.
Application of Sullivan County Trust Company (Items 15 anfi 16).
?Ilrauant to the decision of the Board on March 19, 1963, to approve the
application of The Sullivan County Trust Company, Monticello, New York,
Permission to merge with The National Bank and Trust Company of Port
aervis, Port Jervis, New York, there had been distributed a proposed
°rder and statement reflecting that decision.
bank would be Intercounty Trust Company.)
(The title of the result-
-6-
3/22/63
After discussion, during which an addition to the text of the
statement was agreed upon, the issuance of the order and statement was
authorized subject to this change being made.
Copies of the order and
statement, as issued, are attached as Items 15 and 16.
Messrs. Shay, Goodman, Young, and Hill then withdrew from the
meeting.
Report on competitive factors (Georgetown-Sadieville, Kentucky).
There had been distributed a draft of report to the Comptroller of the
Currency on the competitive factors involved in the proposed merger of
Parmers-Deposit Bank of Sadieville, Sadieville, Kentucky, into The First
National Bank of Georgetown, Georgetown, Kentucky.
After discussion the report, in which the conclusion read as
rollows, was approved unanimously for transmittal to the Comptroller:
There appears to be little competition existing between
The First National Bank of Georgetown and Farmers-Deposit
Bank of Sadieville. It is not believed that the proposed
merger would have undesirable competitive effects on other
banks operating in the resulting institution's service area.
Chain banking.
The transmittal memorandum from the Division of
EXaminations, dated March 20, 1963, with respect to the foregoing report
°11 competitive factors had brought out that a majority of the resulting
by an individual
11k's stock would be owned, directly and indirectly,
138.
was also a
%lho was proposed as a director of the resulting bank and
director of eleven other banks in Kentucky and three in Florida.
It
14'a5 reported that this individual usually acquired working control by
If'
3/22/63
-7-
Purchase of stock in a bank and then distributed the Shares to members
Of his family, his associates, or business interests in such manner as
to avoid an affiliate relationship.
The foregoing information led to a discussion, at the instance
of Governor Mitchell, concerning the adequacy of data available to the
Board in respect to chain banking activities, particularly insofar as
such activities were not covered within the scope of the survey made
recently at the request of Congressman Patman.
Possible means of
Obtaining additional information were discussed briefly, following which
it was understood that Governor
Mitchell, in consultation with appropriate
Members of the Board's staff, would give further consideration to what
tne of study might seem appropriate.
Messrs. Leavitt and Collier then withdrew and Mr. Hexter, Assistant
General Counsel, entered the room.
Supervision and examination of Federal Reserve Banks.
Pursuant
to the understanding at the meeting on March 20, 1963, further consideration
/414 given to the proposals outlined and discussed in a memorandum from
Governor Robertson dated December 4, 1962, and in several subsequent
Memoranda and letters from the Board's staff and from certain public
4ecounting firms relating to changes in procedures for examination of
the Federal Reserve Banks.
As the result of a suggestion made following the March 20 meeting,
there had been distributed a memorandum from the Division of Examinations
3/22/63
-8-
dated March 22, 1963, showing the deployment of the Board's field
examining staff at the opening of a rather typical examination and the
Utilization of manpower over the course of the complete examination.
At the beginning of today's discussion, Chairman Martin turned
to Mr. Connell, who commented in amplification of his memorandum of
January 3, 1963, comparing the cost of examinations under current
Procedures with the cost that might be involved if proposals of the
nature suggested by Governor Robertson were adopted.
There ensued a general discussion of cost aspects, the extent to
14hich they should be taken into consideration, and possibilities of placing
greater reliance on work performed by the internal auditing staffs of the
respective Reserve Banks, following which Mx. Johnson summarized the
information presented in his memorandum dated January 9, 1963, concerning
the effects from the personnel administration standpoint of the adoption
cd* proposals such as Governor Robertson had outlined.
Saveral staff members who had been associated with the field
examining function at times in the past were then invited by the Board
to comment in the light of their experience concerning the value of the
examination techniques, as they had known them, in comparison with
Procedures of the kind currently under consideration.
These comments
were made with realization of the fact that in the intervening years
there had been some evolution of examining procedures.
At the conclusion of the discussion, it was understood that consideration of the subject would continue at the meeting of the Board on March 25,
1963.
f 40191,
_9_
3/22/63
The meeting then adjourned.
Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson
a roved on behalf of the Board on March 21,
1963, the following actions relating to the
Board's staff:
Nomination for education award
James A. McIntosh, Technical Assistant, Division of Bank Operations,
nominated for a Career Education Award administered by the National
Institute of Public Affairs, with the understanding that if accepted
by the Institute, he would be absent from his work for one academic
Year on a full-pay status.
Advance of sick leave
Cecil Melanson, Draftsman, Division of Research and Statistics, for
the period beginning March 6 and extending through April 12, 1963.
Pursuant to recommendations contained
in memoranda from appropriate individuals
concerned, Governor Shepardson today
approved on behalf of the Board the following actions relating to the Board's staff:
Andrew R. Hricko as Senior Attorney, Legal Division, with basic
41nua1 salary at the rate of $10,105, effective the date of entrance
uPon duty.
Clifton N. Johnson as Messenger, Division of Administrative Services,
Iflth basic annual salary at the rate of $3,2451 effective the date of
eritrance upon duty.
tsta:blishment of new position
.122.2z21/2._t_Esit thereto
--....p..0
Position of Research Assistant (FR-5) established in the Special
tIldies and Operations Section of the Division of International Finance;
34°11Y Humphrey appointed to that position, with basic annual salary at
'Ile rate of $4,565, effective the date of entrance upon duty.
3/22/63
-10-
_§taary increases, effective March 31, 1963
Suzanne D. Courtright, Statistical Clerk, Division of Reserach
and Statistics, from $4,110 to $4,250 per annum.
Paul F. McGouldrick, Economist, Division of Research and
Statistics, from $9,475 to $9,790 per annum.
N. Lois Orr, Statistical Clerk, Division of Research and
Statistics, from $4 110 to $4,250 per annum.
Henry N. Goldstein, Economist, Division of International Finance,
from $9,475 to $9,790 per annum.
Theodore A. Veenstra, Jr.,Chief, Call Report Section, Division of
Bank Operations, from $11,515 to $11,880 per annum.
Jack M. Egertson, Review Examiner, Division of Examinations, from
$11,880 to $12,245 per annum.
Adeline R. Tweed, Budget and Planning Assistant, Office of the
Controller, from $5,035 to $5,205 per annum.
from
Robert M. Steinberg, Economist, Division of Data Processing,
$8,045 to $8,310 per annum.
Governor Shepardson today also approved
on behalf of the Board a telegram to the
Federal Reserve Bank of Kansas City
(attached Item No. 17) approving the
appointment of James F. Mack, Jr., as
assistant examiner.
if
"1_ A •
Secret6.13y
CAA
Item No. 1
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE 110ARD
March 22, 1963
Board of Directors,
The Chase Manhattan Bank,
New York, New York.
Ge tlemen:
The Board of Governors of the Federal Reserve
System extends to September 2, 1963, the time within
which The Chase Manhattan Bank may establish a branch
at 2840 Jerusalem Avenue, unincorporated area of North
Bellmore, Nassau County, New York.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
3/22/63
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
Trust Company of Morris County,
Morristown, New Jersey.
Gentlemen:
The Board of Governors of the Federal
extends to June 28, 1963, the
System
Reserve
Trust Company of Morris County,
which
time within
may establish a branch in
Jersey,
New
wn,
Morristo
the vicinity of the intersection of Rldgedale and
Hanover Avenues, Morris Township, Morris County,
New Jersey. This branch was authorized in the
Board's letter dated September 28, 1961.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Item No.
3
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
Chesaning State Bank,
Chesaning, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
under the provisions of Section 24A
approves,
System
Act, an investment in bank
Reserve
of the Federal
Bank of not to exceed
State
Chesaning
by
premises
of land, for the purpose
the
cost
including
$272,614.36,
of constructing new banking quarters.
It is anticipated that the present bank
building will be sold as soon as the new structure is
occupied, with proceeds to be applied to the carrying
value of bank premises.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.'
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM
4
3/22/63
WASHINGTON 25, D. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
The First State Bank of Hotchkiss,
Hotchkiss, Colorado.
Gentlemen:
,
This refers to your request for permission
tion of
under applicable provisions of your condi
iary
fiduc
in
certa
in
act
to
membership numbered 1,
capacities.
maFollowing consideration of the infor
al
Feder
the
tion submitted, the Board of Governors of
State
First
Reserve System grants permission to The
istrator,
admin
tor,
execu
as
act
to
Bank of Hotchkiss
understanding
guardian, and conservator, with the
iary appointments
that your bank will not accept fiduc
the permission
of other kinds without first obtaining
of the Board.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
Item No. 5
OF THE
3/22/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE EIDARD
March 22, 1963
First National City Bank,
399 Park Avenue,
New York 22, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
authorizes First National City Bank, New York, New York, pursuant
to the provisions of Section 25 of the Federal Reserve Act, to
establish a branch in the City of Amsterdam, The Netherlands, and
to operate and maintain such branch subject to the provisions of
such Section*
Unless the branch is actually established and opened for
business on or before April 1, 1964, all rights granted hereby
Shall be deemed to have been abandoned and the authority hereby
granted will automatically terminate on that date.
Please advise the Board of Governors, in writing, through
he Federal Reserve Bank of New York, when the branch is opened
'Ior business furnishing information as to the exact location of
the branch. 3
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Item No.
BOARD OF GOVERNORS
6
3/22/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22) 1963
Boareof Directors,
Chemical Bank New York Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
Rochdale
System approves the establishment of a branch in
York
New
of
Village Shopping Center, southeast corner
York,
New
County,
and Baisley Boulevards, Jamaica, Queens
the
d
provide
by Chemical Bank New York Trust Company,
date of
branch is established within one year from the
this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
the Board
(The letter to the Reserve Bank stated that
period
the
of
on
extensi
also had approved a six-month
an
if
extension
that
and
allowed to establish the branch;
the
bed
in
prescri
should be requested, the procedure
be
),
should
(S-1846
Board's letter of November 9, 1962
followed.)
r'kf
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
3/22/63
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
and Trust Company,
The First Pennsylvania Banking
Philadelphia, Pennsylvania.
Gentlemen:
Federal
The Board of Governors of the
t by
hmen
blis
esta
Reserve System approves the
Company,
t
Trus
and
ing
The First Pennsylvania Bank
ch in a
Philadelphia, Pennsylvania, of a bran
Oregon Avenue
shopping center on the south side of
Philadelphia,
between Third and Fifth Streets,
established
Pennsylvania, provided the branch is
letter.
within one year from the date of this
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
the
(The letter to the Reserve Bank stated that
n
Board also had approved a six-month extensio
ch;
the
bran
h
blis
esta
to
of the period allowed
d,
and that if an extension should be requeste
er
d's
lett
Boar
the
in
ed
the procedure prescrib
be
ld
owed.)
shou
foll
,
846)
(S-1
of November 9, 1962
Item No.
8
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
Girard Trust Corn Exchange Bank,
Philadelphia 1, Pennsylvania.
Gentlemen:
al
The Board of Governors of the Feder
by
ent
lishm
estab
Reserve System approves the
Philadelphia,
Girard Trust Corn Exchange Bank,
southwest
the
Pennsylvania, of a branch at
Lion and
Red
corner of the intersection of
ia, proylvan
Penns
Verree Roads, Philadelphia,
one
n
withi
d
lishe
vided the branch is estab
r.
lette
year from the date of this
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary. •
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
r)
BOARD OF GOVERNORS
Item No. 9
OF THE
3/22/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADOPIE50
arriciAL
CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
Union Trust Company of Maryland,
Baltimore, Maryland.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by Union
Trust Company of Maryland at the southwest corner of
U. S. Route 40 and Rolling Road, Baltimore County,
Maryland, provided the branch is established within one
year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-l846), should be followed.)
My,
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 10
3/22/63
WASHINGTON 25, D. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
March 22, 1963
Board of Directors,
Union Bank and Trust Company,
Grand Rapids, Michigan.
Gentlemen:
The Board of Governors of the Federal
approves the establishment by
System
Reserve
Trust Company, Grand Rapids,
and
Bank
Union
Michigan, of a branch at 0-7452 Main Street in
the unincorporated community of Jenison, Georgetown Township, Ottawa County, Michigan, provided
the branch is established within six months from
the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary. •
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
Item No. 11
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
March 22, 1963
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by United California Bank on State Street
between La Cumbre Road and San Roque Road in an
unincorporated area adjacent to and west of the
City of Santa Barbara, California, provided the
branch is established within six months from the
date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 12
3/22/63
WASHINGTON 25, O. C.
ADDRESS OFFICIAL CORRESPONOENCE
TO THE BOARD
March 22, 1963
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by United California Bank at the intersection of Fourth Street and Heffernan Avenue,
Calexico, California, provided the branch is
established within one year from the date of
this letter.
Very truly yours,
(Signed). Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
Item No. 13
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
oFrice
Ma
OF THE CHAIRMAN
ch 22 1963
The Honorable William L. Dawson, Chairman,
Committee on Government Operations,
RoUse of Representatives,
.77501 Longworth Office Building,
weehington, D. C.
bear mr. Chairman:
This is to advise, in response to your request of
Ilarch 4, 1963, that the Board has no objection to H. R. 3496,
which would extend for two years the Reorganization Act of 1949,
48 amended.
Sincerely yours,
(Signed) Wm. MeC. Martin, Jr.
Wm. McC. Martin,
007
BOARD OF GOVERNORS
444totit,,,,4
001,4
Item No. 14
3/22/63
OF THE
tt
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 22, 1963.
Sir:
In its letter of July 31, 1959, the Board indicated that it would
'PPear
414desirable as a general rule to defer consideration of applications by
the vldual banks for permission to carry reduced reserves until standards for
was classification of cities for reserve purposes could be established. It
tio recognized, however, that there might be exceptions warranting considerathelli bY the Board, and in such cases the Reserve Banks were asked to forward
the r recommendations along with a full discussion of the factors upon which
commendations were based.
During the interval since Section 19 of the Federal Reserve Act
mended in July 1959, the Board has granted permission to 94 banks to
Nr4bY reduced reserves. Among these, there were 28 newly organized or new
!tr. banks and many others that were so small as to leave no doubt about
case'"aracter of their business being typical of country banks. In a few
Sects., however, the Board has had to weigh carefully the factors outlined in
tionlcri 204.2(a)(2) of Regulation D, supplemented by the following informasu ggested in the Board's letter of July 31, 1959:
(1)
Volume of debits against deposit accounts, and turnover ratios, in comparison Nith other banks in the
same or similar cities.
Distribution of ownership of demand deposits.
Average ratios of excess reserves to required reserves.
Activity in the markets for Federal funds, Treasury
bills, and bankers' acceptances, and use of the credit
facilities of the Reserve Banks in maintaining reserve
Positions.
114
(5)
Ratios of commercial and industrial loans, of loans to
brokers and dealers in securities, and of loans to non
bank financial institutions to total loans or to total
assets.
As a result of a recent review of the over-all situation, the Board
feel
that there may be a question as to whether some further consideration
rue uld be given to other reserve city banks which have not applied, for one
seas°11 or another, for permission to carry reduced reserves. As may be objorved from the enclosed statement showing deposit data for all member banks
fo_reserve cities, there are a number of banks that would appear to qualify
r reduced
reduced reserves on the basis of any factors that have so far been conSid
& Accordingly, the Board would appreciate comments from your Bank with
kes—c
t t o whether it would be generally appropriate for the Federal Reserve
tanr
to s to take the initiative in inviting banks that would appear to be eligible
aPPlY for permission to carry reduced reserves.
such eligibility careful consbder . The Board believes that in determining
the bank under consideration
which
to
may batlon should be given to the extent
clue e Competing with other banks not eligible for reduced reserves. This is a
ion that goes beyond size. For instance, in New York the Sterling National
rrti';'‘.and Trust Company, with demand deposits of $123 million, was granted perSl°n to carry reduced reserves because it appeared that this bank was not
bliss. ignificant competition with the large money market banks for the types of
othlness that seemed relevant to the question of reserve city status. On the
tiatir hand, in Chicago the reasons for denying permission to the Central
(14:nal Bank, Drovers National Bank, and Exchange National Bank, with demand
clo sits ranging from $70 million to $95 million, included evidence indicating
bE4e competition, at least for some types of business, with the larger Chicago
Ilas 8. Another case under frequent review by the Board concerns a bank which
:ts head office outside of a reserve city but which is opening new branches
i4 vi
braline Outlying sections of the reserve city. The opening of additional
tlatuches by this bank within the reserve city has necessitated review of the
re and extent of its competition with downtown banks.
It may be that the factors mentioned in Regulation D and the Board's
4tt. r
tioll% of July 31, 1959, are sufficient to determine the question of competiit1sei-°r reserve purposes. Aowever, silce this is not an easy question to
Illay hr., the Board would appreciate receiving any additional ideas your Bank
ha' in this regard.
Very truly yours,
tt1Q1
°sUre
4
TO,
*-E PRES:DENTS OF ALL FEDERAL RESERVE BANKS
01119
Item No. 15
3/22/63
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
la the Matter of the Application of
IRE SULLIVAN COUNTY TRUST COMPANY
!?r approval of merger with
The Nz;.tioval Bank and Trust
Company of Port Jervis
calm
APPROVING MERGER OF BANKS
There has come before the Board of Governors, pursuant to the
.15ank Nerger Act
of 1960 (12 U.S.C. 1828(c)), an application by The
Sullivan County Trust Company, Monticello, New York, a State member
bank
of the Federal Reserve System, for the Board's prior approval
f the merger of that bank and The National Bank and Trust Company of
l'(3rt Jervis, Port Jervis, New York, under the charter of the former and
h the title of Intercounty Trust Company.
As an incident to the
bletler, the sole office of The National Bank and Trust Company of Port
jevis would be operated as a branch of the Intercounty Trust Company.
14°tice of the proposed merger, 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
411111111111Miummin
1.01.0
-2--
it Insurance Corporation,
Comptroller of the Currency, the Federal Depos
and the Department of Justice on the competitive factors involved in
the proposed merger,
reasons set forth in the Board's
IT IS HEREBY ORDERED, for the
ved,
Statement of this date, that said application be and hereby is appro
consummated (a) within
Provided that said merger shall not be
Order or (b) later than
Seven calendar days after the date of this
three months after said date.
22nd day of March, 1963.
Dated at Washington, D. C., this
By order of the Board of Governors.
Voting for this action:
Unanimous, with all members present.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(sEAL)
Item No. 16
3/22/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY THE SULLIVAN COUNTY TRUST COMPANY
FOR APPROVAL OF MERGER WITH
THE NATIONAL BANK AND TRUST COMPANY OF PORT JERVIS
STATEMENT
The Sullivan County Trust Company, Monticello, New York
("Sullivan Trust"), a member State bank of the Federal Reserve System,
141th deposits of $12.5 million as of December 28, 1962, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1328(c)), for the
Board's prior approval of the merger of that bank and The National
4nk and Trust Company of Port Jervis, Port Jervis, New York ("Port
Jezvis National"), with deposits of $5.9 million as of the same date.
The banks would merge under the charter of Sullivan Trust and under
the title of Intercounty Trust Company.
As an incident to the
Illerger, the sole office of Port Jervis National would become a
branch of the resulting bank, which would then have three offices,
the two of Sullivan Trust and the one of Port Jervis National.
Under the Act, the Board is required to consider, as to each
°f the banks involved, (1) its financial history and condition, (2) the
44quacy of its capital structure, (3) its future earnings prospects,
(4) the general character of its management, (5) whether its corporate
P°14ers are consistent with the purposes of 12 U.S.C., Ch. 16 (the
-2-
Federal Deposit Insurance Act), (6) the convenience and needs of the
community to be served, and (7) the effect of the transaction on
competition (including any tendency toward monopoly).
The Board may
40t approve the transaction unless, after considering all these
factors, it finds the transaction to be in the public interest.
Banking factors. - Sullivan Trust and Port Jervis National
have satisfactory financial histories and conditions.
structure of Port Jervis National is adequate.
The capital
Consummation of the
transaction would strengthen the capital position of Sullivan Trust,
which is somewhat low.
The capital structure of the resulting bank
14culd be reasonably adequate and its financial condition would be
satisfactory.
Sullivan Trust has favorable earnings prospects.
Effectuation
Of the
proposal would provide a basis for needed improvement in earnand would solve a management problem at Port Jervis National.
Ilecently, one of the bank's two principal executive officers retired
444 the other secured employment elsewhere.
It is doubtful whether this
441411 bank can attract replacement personnel of satisfactory caliber.
the
resulting bank, which would be under the competent management of
Sullivan Trust, would bring to the customers of its Port Jervis branch
he benefits of progressive policies.
The earnings prospects of the
l'esulting bank would be favorable.
There is no indication of any inconsistency with 12 U.S.C.,
eh. 16.
013
-3Convenience and needs of the cormunities. - The head office
of Sullivan Trust is in the Village of Monticello (year-round population
about 6,000, with a 16-fold increase in the area during the summer).
lionticello is a summer resort in Sullivan County in the foothills of
the Catskill Mountains, about 90 miles from New York City.
The single
branch of Sullivan Trust is the only banking facility in Wurtsboro
(Population about 700, with a large increase in the summer), which is
about 12 miles southeast of Monticello in Sullivan County.
Port
4"vis National is in the City of Port Jervis (population 9,300).
14cated in Orange County, Port Jervis is 25 miles south of Monticello
and 18 miles southwest of Wurtsboro.
banking
The resulting bank would be able to provide broader
services and larger loan limits than are now provided by the participating
banks in each of the three communities.
the
The strengthened resources of
the needs of
resulting bank should be helpful in adequately meeting
the People in the areas served by the merging banks.
Jervis
Competition. - Monticello, Wurtsboro, and Port
to
due to
ostitute three separate service areas that do not overlap,
the sparsely populated, heavily wooded central part of the large
tll'artgle formed by the three localities.
There is virtually no
"laPetition between the two participating banks.
no effect upon
The proposed merger would have little or
bank
trig competition in Sullivan County.
Consummation of the proposal
r)-1
-4-
would not change the number of banking offices and the deposit
concentration within Sullivan County and would probably have little
effect upon the only other commercial bank in Monticello, which is a
well-established institution.
Port Jervis National is the seventh largest bank in Orange
County and holds 3.3 per cent of total commercial bank deposits in the
county.
The largest bank in Sullivan and Orange Counties has a branch
Office in Port Jervis.
Consummation of this transaction should stimu-
late competition in the service area of Port Jervis National,
Port
Jervis would no longer be closed to de novo branching since effectuation
of the merger would eliminate the "head office protection" afforded
Port Jervis National by New York banking law.
The residents of both
Monticello and Port Jervis would continue to have alternative banking
f
acilities.
Summary and conclusion. - Consummation of the merger would
strengthen the capital of Sullivan Trust and would solve the management and earnings problems of Port Jervis National.
The resources of
the resulting bank should be helpful in meeting the needs of the residents of the service area of each of the merging banks.
There is
virtually no competition between the participating banks, and the
effect of this merger upon banking competition in the area of each
bank should not be adverse.
Accordingly, the Board finds the proposed merger to be in the
Public interest.
March 22,
1963.
Item No. 17
TELEGRAM
LEASED WIRE SERVICE
3/22/63
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
March 22, 1963
MILLS - KANSAS CITY
Illitarlet March 20, 1963, Board approves appointment of James F. Mack, Jr., •
48 assistant examiner for Federal Reserve Bank of Kansas City.
Please
advise salary rate and effective date of appointment.
It is noted that Mr. Mack is indebted to Home State Bank, Loveland,
Colorado, and to Commercial Bank of Leadville, Leadville, Colorado,
liefturlember banks, and that his father is James Mack, Sr., Vice President
of Traders National Bank, Kansas City, Missouri.
Accordingly, Board's
aPProval of appointment is given with understanding that Mack will not
Participate in any examination of either bank to which indebted until
41debtedness has been liquidated or of Traders National Bank as long
4S
his father is officer of that institution.
(Signed) Elizabeth L. Carmichael
CARMICHAEL
@FedFRASER