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Minutes for
To:
Members of the Board
From:
Office of the Secretary
March 28, 1962
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
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. King
Gov. Mitchell
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, March 28, 1962.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mills) Acting Chairman
Robertson
Shepardson
Mitchell
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Solomon, Director, Division of
Examinations
O'Connell, Assistant General Counsel
Shay, Assistant General Counsel
Conkling, Assistant Director, Division of
Bank Operations
Leavitt, Assistant Director, Division of
Examinations
Spencer, General Assistant) Office of the
Secretary
The establishment without change by the Federal
Reserve Bank of Atlanta on March 26, 1962, of the rates on discounts and
advances in its existing schedule was approved unanimously, with the
understanding that appropriate advice would be sent to that Bank.
Call for condition reports.
The Chairman of the Board of
Governors of the Federal Reserve System, the Comptroller of the Currency,
and the Chairman of the Federal Deposit Insurance Corporation having
selected the close of business March 26) 1962) as the date for the first
call for reports of condition to be made by insured banks within the
calendar year 1962, a telegram was sent to the Presidents of all Federal
Reserve Banks on March 27, 1962, requesting that a call be issued on
-2-
3/28/62
March 301 19621 for reports of condition as of the aforementioned date
from State member banks on forms transmitted with the Board's letter of
March 71 1962.
The sending of the telegram was ratified by unanimous vote.
Mr. Conkling withdrew from the meeting at this point and
Messrs. Fauver, Assistant to the Board, Thompson, Assistant Director,
Division of Examinations, and Smith, Review Examiner, Division of
Examinations, entered the room.
Proposal for stationing an examiner in Puerto Rico.
A memorandum
from the Division of Examinations dated March 23, 1962, which had been
distributed, discussed a letter of March 12 from the Federal Reserve Bank
of New York that raised the question of stationing a resident Federal
Reserve examiner in Puerto Rico.
Attached to the memorandum was a copy
of a reply drafted in a manner that would reflect Board approval of the
proposal.
In commenting on this subject, Governor Robertson indicated that
he had reservations.
While there might be some merit to the proposal,
he doubted whether there was adequate justification. The Puerto Ricans
would like to have a resident examiner, principally for the purpose of
counselling.
However, he would be against selling System membership to
Puerto Rican banks by consenting to such a consideration.
Following Governor Robertson's comments, Mr. Solomon said he
understood the Secretary of the Treasury of Puerto Rico had indicated
44)
3/28/62
-3-
to Mr. Crosse, Vice President of the Federal Reserve Bank of New York,
that he considered the stationing of an examiner in Puerto Rico an
indispensable element of System membership.
Three major banks were
now considering making application for membership, but the impression
had been given by the Secretary that he would not care to have those
banks join if the proposal for a resident examiner was disapproved.
During further discussion, Mr. Solomon pointed out that the
Federal Deposit Insurance Corporation had had a resident examiner in
Puerto Rico for several years.
It was understood that the Corporation's
examiner was available to the Secretary of the Treasury and his limited
examining staff for consultation.
Its examiner also served a useful
function by arranging details of trips to the Island made by the
Corporation's examiners. If a System examiner were stationed in Puerto
Rico, he would be expected to perform services similar to those now
given by the Corporation's examiner.
Question was then raised about the status of the smaller
Puerto Rican banks, and whether they would be acceptable for membership
if they should desire to join the System.
There being no detailed
information available on this point, the Division of Examinations was
requested to obtain additional information, with the understanding that
the resident examiner proposal would then be considered further by
the Board.
JL
3/28/62
Application of Bank Stock Corporation (Items 1 and 2). Distribution had been made under date of March 26, 1962, of a proposed order
and statement reflecting approval by majority vote on March 21 of the
application of Bank Stock Corporation of Milwaukee, Milwaukee, Wisconsin,
to acquire 60 per cent or more of the voting stock of Silver Spring
Bank, Milwaukee, Wisconsin.
Mr. O'Connell described certain changes of an editorial nature
that he would suggest making in the draft order and statement, and after
discussion it was understood that the suggested changes would be made.
The issuance of the order and statement was then authorized.
Copies of
the order and statement, in the form issued, are attached hereto as
Items 1 and 2.
Messrs. O'Connell, Thompson, and Smith withdrew from the meeting
at this point.
Application of Farmers and Merchants Bank of Long Beach (Items
3 and 4). Pursuant to the understanding at the meeting on March 21,
1962, distribution had been made under date of March 26 of drafts of an
order and a statement regarding the Board's approval of the application
of Farmers and Merchants Bank of Long Beach, Long Beach, California,
to acquire the assets and assume the liabilities of Farmers and Merchants
Bank of Southern Counties, Long Beach, California. The Board's action
also included approval of the establishment by the applicant bank
Of branches at the locations of the head office and branch of the
Southern Counties bank.
-5-
3/28/62
There being no objection to certain editorial changes suggested
by Mr. Shay, the issuance of the order and statement was authorized.
Copies of the order and statement, as issued, are attached hereto as
Items
3 and 4.
The meeting then adjourned.
Secretary's Notes: On March 271 19621
Governor Shepardson approved on behalf
of the Board the following items:
Letter to the Federal Reserve Bank of New York (attached
Item No. 5) approving the appointment of Pasquale A. Matera and
Eleanor B. Steeneck as assistant examiners.
Memoranda from appropriate individuals concerned recommending
the following actions relating to the Board's staff:
Appointment
Katherine Mae Bulow as Clerk-Typist, Division of Personnel
Administration, with basic annual salary at the rate of $3,7601
effective the date of entrance upon duty.
Salary increases, effective April 11 1962
Ruth D. Stone, Secretary, Office of the Secretary, from
$6,150 to $61315 per annum.
Marjorie M. Gray, Digital Computer Programmer Trainee, Division
of Research and Statistics, from $31970 to $41075 per annum.
Cyril J. Bowman, Assistant Federal Reserve Examiner, Division
of Examinations, from $71095 to $71 260 per annum.
Edward W. Healey, Assistant Federal Reserve Examiner, Division
of Examinations, from $5,850 to $6,015 per annum.
Mary W. Cooley, Cafeteria Helper, Division of Administrative
Services,fram $11698 to $11750 per annum (half-time basis).
Permission to engage in outside activity
James T. Jones, Messenger, Division of Administrative Services,
as a service station attendant on evenings ana week ends.
3/28/62
-6Governor Shepardson today approved on
behalf of the Board the request contained
in a memorandum dated March 27, 1962, from
Mr. Young, Adviser to the Board and Director,
Division of International Finance, that
Robert C. Repetto be employed in the
Division of International Finance on a summeremployment basis, with salary at the rate
of $5,355 per annum, effective the date
of entrance upon duty.
UNITED STATES OF AMERICA
Item No. 1
3/28/62
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
41.
In the Matter of the Application of
BANK STCCK CORPORATION OF MILWAUKEE
prior approval of acquisition of
tu9torPer
cent or more of the voting stock of
Sliver Spring Bank, Milwaukee, Wisconsin
••••
•••
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
WHEREAS, there has come before the Board of Governors,
Pursuant to section 3(a)(2) of the Bank Holding Company Act of 1956
(12 USC 1842) and section 4(a)(2) of Federal Reserve Regulation Y
(12 CFR 222.4(a)(2)) an application on behalf of Bank Stock Corporation
of Milwaukee, Milwaukee, Wisconsin, for the Board's prior approval of
th° acquisition of 80 per cent or more of the voting stock of Silver
SkIng Bank, Milwaukee, Wisconsin; a Notice of Receipt of Application
ha3 been published in the Federal Register on October 12, 1961 (26
ecleral Register 9660), which provided an opportunity for submission
f comments and views regarding the proposed acquisition; and the time
tiling such comments and views has expired and no such comments or
'views
have been filed;
-2IT IS ORDERED, for the reasons set forth in the Board's
Statement of this date, that said application be and hereby is granted,
Provided that the acquisition approved herein shall not be consummated
(n) sooner than seven calendar days after the date of this Order or
(b) later than three months after said date, and provided further that
Silver Spring Bank shall be opened for business within six months after
said date.
Dated at Washington, D. C., this 28th day of March, 1962.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, end King.
Voting against this action: Governor Robertson.
Absent and not voting: Governor Mitchell.
(Signed) Merritt Sherman
Merritt Aerman,
Secretary.
(sFAL)
BOARD 0.7 GCVERNCRS
OF THE
FETTRAL RESERVE
Item No. 2
3/28/62
SYSTEN
•APPLICATIOH BY BANK STOCK CORPORATION OF MIL1AUKLE FCR
APPROVAL OF THE ACUISITION OF 80 PLR CEHT OR MORE OF THE
VOTING STOCK OF SILVER SPRING BANN, IIIIWAUKEL, WISCONSIN
STATEIENT
Bank Stock Corporation of Ililuauke l liL7aukee, iisconsin
("Applicant"), a bank hold'ng company, has applied, pursuant to section 3(a)(2) of the Bank Holdinc; Company Act of l6 ("the Act"),
for the Board 'a Prior aprroval of the acquisition of 30 per cent or
more of the voting stock of Silvcr Spring Bank, ililwaukee, Wisconsin
("Ba").
Tliws and recommendations of supervisory authority. - Pursuant
to section 3(b) of the Act, the .;isconsin Comnissioner of Banks was
°s1:cd for his views and recommendations.
he inter2osed no objection
to approval of the application.
Statutory factors. - Section 3(c) of the Act requires the
Board to takc into c,_,nsidel-ation the follow 4 J-, five factors: (1) the
1.1 nancial
history and condition of the holding co)any and bank con-
ecrned; (2) ther prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the comunities and the area
concerned; and
(5) whether
or not the effect of the acquisition would
be to expand the size or e:ftent of the bank hold:.ng copany system
-2involved beyond limits consistent with adequ.te and sound bankins, the
Public interest, and the oreservat_on of coinpetiton in the field of
lpankin:;.
Discussion. - Applicant, a registered bank hole-in-2; company with
its head office in iiilwaukee, tiisconsin, controls three banks. These banks,
all located in :iilwaukec, had combined total deposits at September 27,
1961, of ,„':;324 million. Bank, a newly organized institution not yet in
Operation, will be located in a shopping center in a northwest section
of Ifilwaukee. Bank's primary service area (from which approximately
75 per cent of its total deposits will originate) will comprise some
21 square miles. The area, considered to be one of the most rapidly
developing in Iiilwaukee County, has an estimated population of 144,C00 and
is reliably estimated to increase to 71,000 by 1970.
The financial history and condition of Applicant are satisfactory
and its prospects favorable.
Apdlicant's nanasement is also satisfactory.
Bank, of course, has no financial history; however, on the basis of its
Projected. statements of condition and considering the satisfactory finanel'-al history and condition of Applicant's subsidiary banks, it appears
that &Ink would be mai ntz ined in satisfactory financial condition and
that its pros-?ects as a subsidiary of Applicant would be favorable. Since
it is proposed that the mana[!ement of Bank will be drawn from the Applicant
oranization and from
its banking subsiei cries, there would appear to be
no question but that Bank will be capably and satisfactorily managed.
_3_
Prior to January 31, 1962, when the newly or-anized Hampton
State Bank onened for business, Bank's primary service area had no banking office located therein, althou:h seven banking off:Ices located outside of that area served, and arc presently serving, the area in varying
degrees.
In ad&tion to the shop-,ing center in which Bank
fl be located,
there are two shopping centers located about one mile from Bank's site and
two addiVonal shopping centers are planned, one immediately across the
street from Bank and the other about a mile northeast of Bank's site.
Bank's service area also contains a number of separately located business
establishments. There appears to be no quesVon but that the area concerned can presently sumort two banks and that, with the projected area
growth, Bank and the Hampton State Bank should each experience normal
growth.
Regardless of the 2oard's act'cn on this ap?lication, Bank will
Open for business and provide service to the surrounding communities.
Although this fact renders less significant a consideration of the needs
cf the communities involved, the Boar(' concludes that Bank's operation
as a subsidiary of Bank Stock will result in sufficient benefit to the
communities concerned so as to weigh in favor of approval of the application.
Section 3(c) of the Act requires that the Board consider whether
the effects of Applicant's acquisition of Bank would be to expand the size
or extent of Applicant's system beyond limits consistent with adequate and
sound banking, the public interest, and the preservation of banking
competition.
There are 37 banks located in Milwaukee County, 34 of which
are insured commercial banks. Of the latter, 12 are bank holding ccn.pany
subsidiaries, three of which are controlled by First •isconsin Bankshares,
sizz by The liarine Corporation, and three by Applicant. The combined total
deposits of these 12 holding company banks represent about 76 per cent of
the total deposits held by all commercial banks in Milwaukee County.
At
September 27, iy6l, Applicant's subsidiary banks held combined total dePosits of ,324 ijlliOn, or 20 per cent of the total deposits held by all
commercial banks in Filwaukee County.
The proportion of the total deposits
and loans of all commercial banks in Iiilwaukee County that is held by banks
controlled by the three holding companies has been stated by this Board to
be a matter of concern to it. Jhjle the proposal under cons-LderatIion does
not allevj ate this concern, the consequences, both certain and probable,
to follow upon
approval of the aocuis-:tion here proposed do not warrant,
in the Board's judgment, a find-
under the fifth statutory factor that
17ould require denial of the application.
Assuming that Applicant's projection of Bank s deposit growth
Proves accurate (,,,4 million of de-Posits at the end of three years), consurrn ation of this proposal would increase the present percentages of
comercial bank denosits in Milwaukee County controlled by the three holding companies and by Applicant, respectively, by about 1/2 of 1 per cent.
In the Board's judgment neither increase is sufficiently significant to
1.7arrant an adverse conclusion in this case.
Inasmuch as Bank is
or-ienized, no existing competition
between it and Applicant's banking subsidiaries will be eliminated.
Nor does it ap,Jear that any substantial amount of competition would be
Offered Applicant's subsidiary banks were an independent bank to be
established and operated at Bank's site. None of Applicant's subsidiaries serve the area to any sigaificant degree. Northern Bank, the
Closest to Bank's proposed site of Applicant's subsidiaries, is four
miles from that site.
Approximately L. per cent of Northern's total IPC
deposflt (deposits of individuals, partnerships, and corporations) at
June 30, 1961, originated within Bank's projected primary service area.
The service area of neither of Apolicant's two remaining subsidiaries,
1:arshall
Ilsley Bank end Bank of Commerce, appears to overlap Bank's
Primary service area. Thus, approval would neither eliminate competition
Presently offered to any of 2ank Stock's subsidiaries nor foreclose any
significant amount of corpetition that otherw!se might be offered.
Bank's principal competitor will be the Kempton State Bank,
located sliahtly more than one mile from Bank's site. It is reasonable
to assume that both Bank and Hampton State Bank will retain the characteristics of local, neighborhood banks and in this respect compete for
the banking business to be generated by the residential and business
development in the area. From a comoetitive standpoint, many of the
advantages that may inure to Bank as a subs-jdiary of Applicant may also
be e:Tected to be gained b
the Hampton State Bank by reason of its
affiliation, through common ownership, with a downtown ililwaukce bank
holding nearly
AL00
million in deposits.
In addition to the competition to be offered Bank by the
Hampton State Bank, there will continue to be corpetition offered by
some or all of the banks earlier mentioned as serving Bank's primary
service area. Pr4ne_pal aEong these conetitors would apdear to be the
Idilwaukee "estern Bank and the Capitol Court Office of the First :Jisconsin
National Bank. ialwaukee Uestern Bank is the ninth largest bank in
County,with total deposits at September 27, 1961, of approximately ::30 million. First Jisconsin National Bank, the State's largest
bank, is a subsidary of the largest bank holding company having its
head office in the State.
It is the opinion of tie Board that, as a result of Bank Stock's
acquison of Bank, the communities and area concerned will benefit from
the increased bankin: services to be made available, from the continued
availability of convenient alternative banking sources, and from the competition which it ap:)ears will be both generated and continued following
the acquisition proposed.
Accordingly, viewing the relevant facts in light of the general
Purposes of the Act and the factors enumerated in section 3(c), it is the
i'ld-mcnt of the Board that the proposed acquisition would be consistent
with the statutory objectives and the rniblic interest and that the application should be granted.
Larch 23, 1962
UNITED STATES OF AMERICA
Item No. 3
3/28/62
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
•••
In the Matter of the Application of
FARMERS AND MERCHANTS BANK OF LONG BEACH
for approval of acquisition of assets of
Farmers and Merchants Bank of Southern Counties
.01
ORDER APPROVING ACQUISITION OF BANK ASSETS
There has come before the Board of Governors, pursuant to
section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)),
an application by Farmers and Merchants Bank of Long Beach, Long Beach,
California, a member of the Federal Reserve System, for the Board's
Prior approval of the acquisition by that bank of the assetsond assumpti°n of the liabilities, of Farmers and Merchants Bank of Southern Counties,
Long Beach, California, and, as an incident thereto, an application by
Farmers and Merchants Bank of Long Beach, under section 9 of the Federal
Reserve Act, for the Board's prior approval of the establishment of
branches by that bank at the locations occupied by the head office and
branch of Farmers and Merchants Bank of Southern Counties.
Pursuant to said section 18(c), notice of the proposed acquisition of assets and assumption of liabilities, in form approved by the
Board of Governors, has been published and reports on the competitive
factors involved in the proposed transaction have been furnished by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
and the Department of Justice and have been considered by the Board.
IT IS ORDERED, for the reasons set forth in the Board's
Statement of this date, that said applications be and hereby are granted,
Provided that said acquisition of assets, assumption of liabilities,
and establishment of branches approved herein shall not be consummated
(a) sooner than seven calendar days after the date of this Order or
(b) later than three months after said date.
Dated at Washington, D. C., this 28th day of March, 1962.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and Governors
Balderston, Mills: Robertson, Shepardson, and King.
Absent and not voting:
Governor Mitchell.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
BOARD OF GOVERNORS
OF THE
Item No. 4
3/28/62
FEDERAL RESERVE SYSTEM
APPLICATION BY FARMERS AND MERCHANTS BANK OF LONG BEACH,
FOR APPROVAL OF THE ACQUISITION OF ASSETS OF
FARMERS AND MERCHANTS BANK OF SOUTHERN COUNTIES
STATEMENT
Farmers and Merchants Bank of Long Beach, Long Beach,
California ("Long Beach Bank"), with deposits of $100.3 million, has
applied, pursuant to section 18(c) of the Federal Deposit Insurance Act,
for the Board's prior approval of its acquisition of the assets, and
assumption of the deposit liabilities, of Farmers and Merchants Bank of
Southern Counties, Long Beach, California ("Southern Counties Bank"),
with deposits of $28.1 million. As contemplated by the application and
the Agreement of Purchase and Sale, the two offices of Southern Counties
Bank would become branches of Long Beach Bank, increasing from 2 to 4 the
total offices presently operated by that bank. As an incident to the
foregoing, therefore, Long Beach Bank has also applied, under section 9
of the Federal
Reserve Act, for the Board's prior approval of the establishment of branches by that bank at the locations occupied by the head
office and branch of Southern Counties Bank.
Under section 18(c), the Board is required to consider (1) the
financial history and condition of each of the banks involved, (2) the
adequacy of its capital structure, (3) its future earnings prospects,
(4) the general character of its management, (5) whether its corporate
Powers are consistent with the purposes of the 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 not approve the acquisition unless,
after considering all these factors, it finds the transaction to be in
the public interest.
Banking factors. - Southern Counties Bank was created as a
result of a corporate "spin off" from Long Beach Bank in 1954. The
management and board of directors of the two banks are the same, and
there is common ownership of over 90 per cent of the stock of each of
the banks.
The capital structures of the banks are strong, and their
earnings prospects are favorable. Although the capital structure of
the acquiring bank will be less than the combined capitalization of the
two banks, the capital structure will be adequate.
The acquiring bank's
earnings prospects will be favorable. No inconsistency with the purPoses of the Federal Deposit Insurance Act is indicated.
As management and administrative arrangements now existing
because of the close connection between the two banks would be simplified and improved by the consummation of the transaction and the overall condition of the resulting bank thereby strengthened, the banking
factors lend support to the proposal.
Convenience and needs of the communities. - Both banks serve
the city of Long Beach, which lies 25 miles south of Los Angeles and
_3_
has an estimated population of 350,000. The only branch of Southern
Counties Bank is in Garden Grove, 19 miles east of the bank's head
Office. The number and location of banking facilities in the community will not be changed, and the services available at the two
institutions will remain the same. Therefore, the convenience and
needs of the community would be unaffected by the acquisition.
Competition. - The two banks do not compete with each other.
Not only do they have common ownership and identical management, but
the two offices of Southern Counties Bank are operated and are publioly
regarded as branches of Long Beach Bank. Alternative banking facilities
are available in the communities of Long Beach and Garden Grove at
eight other banks with 31 offices.
Summary and conclusion. - Under the proposal, Long Beach Bank
would be rejoined with Southern Counties Bank, which was "spun off"
from the former in 1954.
As the two banks have identical management and
directorates as well as common ownership and do not compete, approval of
the applications would have no effect on competition and would eliminate
various administrative complexities that have arisen from the working
arrangements
between them. In addition, there would be no change in
the number of banking offices or in the services offered by them.
Accordingly, the Board finds that the proposed transaction will
be in the public
interest.
March 28, 1962
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
5
3/28/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
ti tIkikt:PO
March 27, 1962.
CONFIDENTIAL (FR)
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Crosse:
In accordance with the request contained in your
letter of March 22, 1962, the Board approves the appointment
of Pasquale A. Matera and Eleanor B. Steeneck as assistant
examiners from the Federal Reserve Bank of New York. Please
advise the effective dates of the appointments.
It is noted that Mr. Matera is indebted to
Manufacturers Hanover Trust Company, New York, New York, a
State member bank. Accordingly, the Board's approval of the
appointment of Mr. Matera is given with the understanding
that he will not participate in any examination of that bank
until his indebtedness has been liquidated.
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER