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Minutes for
To:
Members of the Board
From:
Office of the Secretary
May 2, 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
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve System
on Wednesday, May 2, 1962.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Miss Carmichael, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Hackley, General Counsel
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Solomon, Director, Division of Examinations
Mr. Hexter, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Furth, Adviser, Division of International
Finance
Mr. Conkling, Assistant Director, Division
of Bank Operations
Mr. Benner, Assistant Director, Division of
Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Thompson, Assistant Director, Division
of Examinations
Mr. Young, Senior Attorney, Legal Division
Mr. Fuerth, Attorney, Legal Division
Mr. Poundstone, Review Examiner, Division
of Examinations
Discount rates.
The establishment without change by the Federal
of the rates on
Reserve Banks of Boston and Atlanta on April 30, 1962,
was approved unanimously,
discounts and advances in their existing schedules
would be sent to those
with the understanding that appropriate advice
Ranks.
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Circulated or distributed items.
The following items, which had
been circulated or distributed to the Board and 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, granting permission for (1) an increase
in its investment in Chase Manhattan Overseas
Corporation, New York City, and (2) investment
by the latter in shares of Banco Mercantil y
Agricola, Caracas, Venezuela.
1
Letter to Philadelphia International Investment
Corporation, Philadelphia, Pennsylvania, granting
consent to the purchase of stock of a proposed
Bahamian subsidiary, "New World Development
Corporation Limited."
2
Letter to Central Trust Company, Rochester,
New York, approving the establishment of a branch
at 2595 West Henrietta Road, Town of Brighton,
Monroe County.
3
Letter to The First National Bank of Springfield,
Springfield, Ohio, approving its application
for fiduciary powers.
Letter to Peninsula Bank and Trust Company,
Williamsburg, Virginia, approving an investment
in bank premises.
5
Letter to the Federal Deposit Insurance Corporation
regarding the application of Farmers and Merchants
State Bank of Bushnell, Bushnell, Illinois, for
continuation of deposit insurance after withdrawal
from membership in the Federal Reserve System.
6
Letter to Devon-North Town State Bank, Chicago,
Illinois, granting permission to exercise limited
fiduciary powers.
7
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Item No.
Letter to the Federal Deposit Insurance Corporation
regarding the application of The First State Bank,
Booker, Texas, for continuation of deposit insurance
after withdrawal from membership in the Federal
Reserve System.
8
Letter to Bank of Idaho, Boise, Idaho, approving an
investment in bank premises.
9
Letter to the Bureau of the Budget reporting
favorably on a bill proposed by the Treasury Department
to extend for two years from June 30, 1962, the
authority of the Federal Reserve Banks to purchase
United States obligations directly from the Treasury.
10
Messrs. Furth, Benner, and Poundstone then withdrew from the
meeting.
Report on competitive factors (Orangeburg-North, South Carolina).
Under date of April 30, 1962, there had been distributed a draft of
report to the Comptroller of the Currency on the proposed consolidation
of The Liberty Bank of North, North, South Carolina, and The Southern
National Bank of Orangeburg, Orangeburg, South Carolina.
The conclusion
of the report read as follows:
The Southern National Bank of Orangeburg and The Liberty
Bank of North do not appear to be competitive to a significant
degree and the consolidation would have little effect on
competition.
There being no objection, the report was approved unanimously
for transmittal to the Comptroller.
Report on competitive factors (Rapid City-Sturgis, South Dakota).
Under date of April 26, 1962, there had been distributed a draft of
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Federal Reserve Bank of St. Louis
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report to the Comptroller of the Currency on the competitive factors
involved in the proposed consolidation of American National Bank of
Rapid City, Rapid City, South Dakota, and The Bear Butte Valley Bank,
Sturgis, South Dakota.
After a change in the conclusion of the report had been
suggested by Governor Robertson and agreed upon, the report was approved
unanimously for transmittal to the Comptroller in a form in which the
conclusion read as follows:
The proposed consolidation would have little adverse
effect on competition.
However, the resulting bank would be able to provide
strong competition for the second largest bank in the State
which now serves both the Sturgis and Rapid City communities.
Application of Commerce Union Bank (Items 11 and 12).
On
April 24, 1962, the Board voted to approve the application by Commerce
Union Bank, Nashville, Tennessee, to merge with Broadway National Bank,
also of Nashville, the two offices of Broadway National Bank to be
operated as branches of Commerce Union Bank.
Pursuant to that action,
g
there had been distributed drafts of an order and statement reflectin
the Board's decision.
of
There being no objection, the Board authorized the issuance
the order and statement.
Copies are attached as Items 11 and 12,
respectively.
from the meeting.
Messrs. Shay, Leavitt, and Fuerth then withdrew
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Application of Whitney Holding Corporation (Items 13-16).
Pursuant to the understanding at the meeting on April 3, 1962, distribution had been made of drafts of an order and statement reflecting
the Board's decision to approve the application of Whitney Holding
Corporation, New Orleans, Louisiana, for permission to become a bank
holding company by acquiring substantially all of the voting stock of
(1) Crescent City National Bank, New Orleans, Louisiana (a proposed
new bank), into which would be consolidated the existing Whitney
National Bank of New Orleans, under the latter title, and (2) Whitney
National Bank in Jefferson Parish, Jefferson Parish, Louisiana (a
proposed new bank).
A dissenting statement by Governor Robertson also
had been distributed.
In discussion, Mr. Solomon referred to a portion of the proposed
majority statement relating to an application of Whitney National Bank
in Jefferson Parish to establish a branch in the Airline Park Shopping
Center, which was now pending before the Comptroller of the Currency.
It was indicated in the statement that the new Metropolitan Bank of
Jefferson opened for business in this shopping center on March 1, 1962,
and that there might be some question as to whether the public interest
would be promoted by the establishment in that center of a branch
affiliated with the largest bank in Louisiana.
According to the
statement, the unfavorable significance of this factor was somewhat
lessened by the rapid growth of the East Bank area, which suggested
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a greater than usual likelihood that two new banking offices in the
same area might achieve within a reasonable time a scale of business
that would permit both to operate soundly and profitably.
The
statement indicated further that it would seem reasonable to assume
that the branch of Whitney Jefferson in the shopping center would not
be authorized by the Comptroller of the Currency if its presence would
threaten the sound and serviceable operation of the newly-established
bank.
Mr. Solomon raised the question whether it was appropriate to
include this material on the proposed branch of Whitney Jefferson
inasmuch as the Comptroller of the Currency had responsibility for
acting on that application and the statement, as now drafted, might
imply that the Board was suggesting a course of action to the Comptroller
of the Currency.
Mr. Hexter replied that he would be reluctant to delete the
material pertaining to the proposed branch.
Both the Federal Reserve
Bank of Atlanta and the Board's staff had found that the probable
effect of the establishment of the proposed branch on the business of
the new independent bank in the shopping center was an adverse factor
in the application of Whitney Holding Corporation to become a bank
holding company.
Accordingly, it seemed appropriate for the Board's
statement to acknowledge this adverse factor and explain the reasons
for approval of the holding company application in spite of it.
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Federal Reserve Bank of St. Louis
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additional reason for including the references to the proposed branch
was the fact that, under the provisions of section 3(c) of the Bank
Holding Company Act, the Board was required to take into consideration
five factors in deciding an application.
Omission of reference to the
proposed branch might imply that the Board did not consider it necessary
to take this aspect of the matter into account, despite the requirements
of the statute, on the ground that the Comptroller of the Currency had
responsibility for approving or disapproving the branch application.
Rather than to omit the material in question, Mr. Hexter suggested
changing the wording in order to try to eliminate any implication that
the Board was in any sense suggesting to the Comptroller of the Currency
the action that he should take on the pending branch application.
For
this purpose, Mr. Hexter read certain alternative language.
There being general agreement with the views expressed by
Mr. Hexter, it was understood that the statement would be revised
accordingly.
A number of editorial changes in the majority statement also
that he
were suggested and agreed upon, and Governor Robertson stated
statement.
wished to make certain editorial changes in his dissenting
Mills that
Mr. Hexter reported having been advised by Governor
in one minor
the majority statement was satisfactory to him except
point to which
respect, and a change was agreed upon to cover the
Governor Mills had referred.
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The Secretary reported that Governor Mitchell had indicated
that he planned to issue a separate concurring statement, reflecting
essentially the views he had expressed at the meeting on April 3.
The issuance of the order and accompanying statements was then
authorized.
Copies of the order and statements, as issued on May 3,
1962, are attached as Items 13-16.
Distributed item.
The following item, which had been distributed
to the Board and a copy of which is attached to these minutes under the
item number indicated, was approved unanimously:
Item No.
Telegram to the Federal Reserve Agent in
Atlanta authorizing the issuance of a limited
voting permit to Whitney Holding Corporation,
New Orleans, Louisiana, to vote its stock of
Crescent City National Bank, New Orleans,
Louisiana, and Whitney National Bank in
Jefferson Parish, Jefferson Parish, Louisiana,
for certain purposes.
17
Messrs. Hexter, Conkling, Thompson, and Young (Senior Attorney)
then withdrew and Messrs. Masters, Associate Director, Division of
Examinations, Holland, Adviser, Division of Research and Statistics,
and Langham, Chief, Call Report Section, Division of Bank Operations,
entered the room.
Interagency committees.
At the Board's request, Mr. Noyes
reported on recent meetings of the three interagency committees that
had been appointed by the President to study (1) financial institutions,
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(2)
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Federal credit programs, and (3) corporate pension funds and other
private retirement and welfare programs.
Among other things, he mentioned
that a staff working group was to be associated with the latter committee
and a request had been received that a member of the Board's staff be
designated to attend the first meeting of that group.
In connection
with his report on the committee on Federal credit programs, Mr. Noyes
said that he had been asked to serve as acting chairman for a month or
so in the absence of Under Secretary of the Treasury Roosa, who had been
acting as chairman of the committee at the request of the Secretary of
the Treasury.
With reference to the work of this committee, Mr. Noyes
indicated that he would send to each member of the Board a list of
questions suggested by the Budget Bureau for consideration by the
committee.
Question was raised by Governor Balderston as to whether the
activities of the three committees would be such that the Board should
fortify itself by additional temporary staff, to which Mr. Noyes replied
that it was planned to have staff support for each committee as a
whole.
Also, there was some question at this point as to the intensity
of the Board's role in the work of the respective committees.
Form of report of condition (Item No. 18).
Pursuant to the
understanding at the Board meeting on April 30, 1962, there had been
distributed a revised draft of letter to the Comptroller of the Currency
in response to his letter of April 25 asking for comments on a condensed
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report of condition form that the Comptroller planned to use for future
calls, other than those at year end, and to his letter of April 26
indicating that the content of the form might have already been reduced
substantially.
The proposed reply would raise the question whether full
consideration had been given to the essential character of the data
proposed to be omitted.
The letter would state that the detailed
breakdown of loans, deposits, and other data now shown on the back of
the call report was crucial to the Board in the discharge of its
statutory responsibilities for the formulation and execution of monetary
and credit policy.
Therefore, if the report for national banks was
condensed so as to eliminate the vital information now obtained, the
Board would seem to have no alternative but to ask national banks to
submit separate reports of condition on the same form as that now used
by State member banks, thereby adding to the reporting burden of
national banks.
After suggested changes had been agreed upon, the letter was
Sproved unanimously, with the understanding that copies would be sent
to the Bureau of the Budget, because of its continuing responsibility
for Governmental statistical standards, and to the Federal Deposit
Insurance Corporation.
Item No. 18.
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Federal Reserve Bank of St. Louis
A copy of the letter as sent is attached as
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Secretary's Note: In a letter dated May 3,
1962, the Comptroller advised that he had
decided to continue the use of the current
form, subject to further notice to the Board.
Chain banking survey (Item No. 19).
In a letter dated April 19,
1962, the Board inquired whether the Office of the Comptroller of the
Currency would wish to join in a survey of chain banking that had been
requested by Congressman Patman, Chairman of the House Select Committee
on Small Business.
On April 25 the Comptroller of the Currency replied,
indicating that the Board's approach seemed to suggest only a last-minute
acknowledgment of the role of the Comptroller's Office in relation to
the national banking system.
The letter expressed the hope that the
Board 'would exercise appropriate restraint in undertaking direct access
to the national banks of the country."
There had been distributed a draft of reply to the April 25
letter that would point out that surveys of chain banking had historically
fallen to the lot of the Board, basically because of statutory
responsibilities imposed on the Board and the fact that the Congress
on several occasions had asked the Board to compile information on this
subject.
The letter would also state that it was assumed from the
April 25 letter that the Comptroller did not wish to participate in the
survey and that, if this was not the case, the Board would appreciate
being so advised.
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After a number of changes in the draft letter had been suggested
and agreed upon, the letter was approved unanimously in the form attached
as Item No. 19.
It was understood that a reasonable length of time
would be allowed for the Comptroller of the Currency to reply to the
Board's letter.
If no reply was forthcoming, the survey--inclusive of
national as well as State member banks--would proceed.
On the matter
of the form to be used in the survey, it was the consensus that it would
be appropriate to advise the Bureau of the Budget that although there
did not appear to be a need to clear the form with representatives of
the banking industry, that was a matter for the Bureau to decide.
Charges for reports of examination of national banks.
Chairman Martin noted that a letter dated April 30, 1962, had been
received this morning from the Comptroller of the Currency setting
forth a schedule of charges for providing Federal Reserve Banks with
copies of reports of examination of national and District of Columbia
banks, effective June 1, 1962.
After a brief discussion, it was understood that the matter
would be considered by the Board after there had been an opportunity
to study the contents of the letter.
The meeting then adjourned.
Secretary
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
5/2/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 2, 1962
.
The Chase Manhattan Bank,
1 Chase Manhattan Plaza,
New York 15, New York.
Gentlemen:
In accordance with -Tour request and on the basis of the
information furnished in your letter of January 25, 1962, trans1itt3d
through
the Federal Reserve Bank of New York, the Board of Governors
grants
permission to The Chase Manhattan Bank, pursuant to the provisions
of
Sections 9 and 25 of the Federal Reserve Act, to increase from ':W,350,
000
to $15,950,000 the amount it may invest in the stock of Chase
Manhattan
Overseas Corporation ("CEOC"), New York, New York.
The Board of Governors also grants permission to CA)C to invest
directly, or indirectly through an intermediary corporation, to be formed
under the laws ,of Venezuela for the sole purpose of holding such shares,
not more than 9,600,000 in the purchase of voting shares of
Banco
Mercantil y Agricola ("Banco Mercantil"), Caracas, Venezuela, a banking
corporation organized under the laws of Venezuela, provided such investment is made within one year from the date of this letter.
The Board's consent to the proposed purchase and holding of
stock by CHOC is granted subject to the following conditions:
(1) That GMOC shall not hold any stock, directly or indirectly,
in Banco Mercantil if Banco Mercantil at any time falls to
restrict its activities to those permissible to a corporation in which CHOC, with the consent of the Board of
Governors, may purchase and hold stock under its agreement
entered into under Section 25 of the Federal Reserve Act
or Regulation K, or if Banco Mercantil, except with the
consent of the Board of Governors, establishes any branch
or agency or takes any action or undertakes any operation
in Venezuela or elsewhere which at that time is not permissible to CHOC without such consent;
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Federal Reserve Bank of St. Louis
HOARD OF GOVERNORS OF THE FEDERAL RESERVE 5Y5TEM
The Chase Manhattan Pank
-2-
(2)
That, when required by the Board of Governors, CMOC will
cause Banco Mercantil to permit examiners appointed by the
Board of Governors to e7mmine 7anco Mercantil and to furnish
the Board of Governors with such reports as it may require
from time to time; and
(3)
That CMOC will be expected to dispose of its holaings of
stock of Banco Mercantil, as promptly as practicable, in
the event that Banco Mercantil should at any time conduct
its operations in a manner which, in the judgment of the
Board of Governors, causes the continued holding of its
stock by CMOC, directly or indirectly, to be inappropriate
under the provisions of the apreement of CMOC pursuant to
Section 25 of the Federal Reserve Act or Regulation K.
Upon the completion of the proposed transaction, it is requested
that the Board of Governors be furnished a translation of the amended
Articles of Association and By-Laws of Banco Mercantil. If C1100 acquires
the stock of Banco Mercantil through an intermediary corporatio
n, please
furnish pertinent details regarding the corporation, including copies of
the Articles of Association and Ry-Laws and a list of officers
and
directors.
Please advise the Board of Governors through the Federal Reserve
Bank of New York when the acquisition of stock has been made, together
With details regarding the transaction.
Subject to continuing observation and review, the Board suspends
until further notice the provisions of subparagraph (1) of the third
Paragraph of this letter, so far as they relate to restrictions on loans
granted by Banco Mercantil in Venezuela in the Currency of that country.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. a rmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
1611)
BOARD OF GOVERNORS
ote:c1t****
OF THE
000,,,o(ffl601.414i0
li
00
Item No. 2
5/2/62
FEDERAL RESERVE SYSTEM
,*
**
}
2
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
M4y 2s 1962
Philadelphia International Investw4lt Corporation,
Philadelphia, Pennsylvania.
Gentlemen:
In accordance with the request contained in your letter of
February 91 1962, transmitted through the Federal Reserve Bank
of
Philadelphia, the Poard of Governors grants its consent and approva
l
for the purposes of Sections 211.9(c), 211.9(d)(2), and 211.10(
a) of
Regulation K to Philadelphia International Investment Corpora
tion
("PIIC") to purchase and hold shares of capital stock of a
corporation
to be formed under the laws of the Bahamas to be known as
"New World
Development Corporation Limited" ("MIDCL") provided the aggrega
te investment (including all loans to such subsidiary) does not exceed
US$11 750,000.
The Board's approval of the proposed investment is given
subject to the following conditions:
(1) Such investment shall be made within one year from the
date of this letter and the Board of Governors shall
be informed, through the Federal Reserve Fank of
Philadelphia, when such investment is made, together
with pertinent details regarding such investment.
(2) NWDCL shall carry on its business in accordance with
sound financial policies, including, among others,
(a) appropriate diversification of its loan and investment portfolios so as to avoid undue concentrations in loans to, and investments in, individual
enterprises, industries, or otherwise, and (b) proper
regard to the relationship between its assets and the
maturities of its obligations so as to give reasonable
assurance that the corporation will be in a position
to pay its obligations as they mature.
(3)
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Federal Reserve Bank of St. Louis
So long as PIIC is the controlling stockholder in NWDCL,
NWDCL will make no investment in the stock of other corporations except after the consent of the Board of
Governors has been obtained in the same manner as provided by Section 211.9(c) of Regulation K for Financing
Corporations.
BOARD
OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM
Philadelphia International Investment Corpo
ration
(4)
)i.
-2-
PIIC shall not purchase or hold any stock in NWDCL
(a)
if NWDCL at any time fails to restrict its
activities to
those permissible to a corporation in which PIIC
, with the
consent of the Board of Governors, nay purch
ase and hold
stock under Section 25(a) of the Federal Reserve
Act or the
regulations thereunder, or (b) if NWDCL, exce
pt with the
consent of the Board of Governors, establishes any branc
h
or agency, or takes any action or engages
in any operation,
in the Bahamas or elsewhere, which at that
time could not
be taken, or engaged in, by PIIC itself.
(5) PIIC shall be expected to dispose of its holdings
of stock
of NWDCL as promptly as practicable, in the even
t that
NWDCL should at any time (a) engage in issu
ing, underwriting,
selling or distributing securities in the Unite
d States; (b)
engage in the general business of buying or selli
ng goods,
wares, merchandise, or commodities in the United
States or
transact any business in the United States exce
pt such as is
incidental to its international or foreign business
; or (c)
conduct its operations in a manner which, in the judg
ment
of the Board of Governors, is inconsistent with Secti
on 25(a)
of the Federal Reserve Act or regulations there
under.
(6) When required by the Board of Governors, PIIC
will cause
NWDCL to permit examiners appointed by
the Board of Governors
to examine NWDCL and its branches and agencies
, and to furnish
the Board of Governors with such reports as it
may request
from time to time.
(7) That the offices of NWDCL will be establishe
d in quarters
separate and distinct from those of any other orga
nization.
Upon the completion of the organization of
the proposed Bahamian
corporation, it is requested that the Board of
Governors be furnished with
Pies of the final Articles of Incorporat
ion, and By-Laws of the corporation.
1°J-ease advise the Board of Gove
rnors, in writing, through the Federal Reserve
Bank of Philadelphia, when the corporation is estab
lished and opened for
business, furnishing information as to the
exact location of the corporation.
In accordance with your request, the Board's gene
ral consent to PIIC
Under date of April
251 1961, as extended to December 31, 1962, is amended to
include NWDCL, provided that the aggre
gate investment of PIIC and NWDCL in the
Shares of
stock of any one foreign corporation and its subsidiaries
(on a
combined basis)
shall not exceed 5 per cent of the capital and surplus of PIIC
.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
04,0•1****
COSOI,
FEDERAL RESERVE SYSTEM
Item No. 3
5/2/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
aa
-0444**
May 21 1962.
Board of Directors,
Central Trust Company, Rochester, N. Y.
Rochester, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch at 2595 West
Henrietta Road, Town of Brighton (Unincorporated Area),
Monroe County, New York, by Central Trust Company, Rochester,
N. Y., Rochester, New York, 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.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
_ tiotsitIttgrgto
19 O1 ft
"
FEDERAL RESERVE SYSTEM
te
Item No.
4
5/2/62
WASHINGTON 25, D. C.
i%
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 2, 1962.
Board of Directors,
The First National Bank of Springfield,
Springfield, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to your application for fiduciary
powers and grants The First National Bank of Springfield
authority to act, when not in contravention of State or local
law, as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, assignee, receiver, committee
of estates of lunatics, or in any other fiduciary capacity in
which State banks, trust companies, or other corporations
which COMB into competition with national banks are permitted
to act under the laws of the State of Ohio. The exercise of
such rights shall be subject to the provisions of Section 11(k)
of the Federal Reserve Act and Regulation F of the Board of
Governors of the Federal Reserve System.
A formal certificate indicating the fiduciary powers
that your bank is now authorized to exercise will be forwarded
in due course.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
it)40,1
BOARD OF GOVERNORS
OF THE
Item No. 5
FEDERAL RESERVE SYSTEM
5/2/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE
BOARD
May 2, 1962.
Board of Directors,
Peninsula Bank and Trust Company,
Williamsburg, Virginia.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves, under the provisions of Section 24A of
the Federal Reserve Act, an investment of $15,000 in
bank premises by Peninsula Bank and Trust Company,
Williamsburg, Virginia. This expenditure was to purchase a lot for customer parking adjacent to the
Monticello Avenue Branch. It is understood that the
bank's investment in bank premises will be written
down to $200,000 on June 30, 1962.
Very trulyyours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
Item No. 6
5/2/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ga
ADDRESS OFFICIAL CORRESPONDENCE
dr
TO THE BOARD
tr484:ta4.2.4.-
May 2, 1962.
The Honorable Erie Cocke, Sr., Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Cooke:
Reference is made to your letter of April 20, 1962,
concerning the application of Farmers and Merchants State Bank
of Bushnell, Bushnell, Illinois, for continuance of deposit
insurance after withdrawal from membership in the Federal
Reserve System.
No corrective programs that the Board of Governors
believes should be incorporated as conditions to the continuance of deposit insurance have been urged upon or agreed to
by the bank.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
43,411 tr
,1,a° ekt coio;",0
a 1,
iR
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
5/2/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
46
* no,
*itt
748.
'
4104a**-
TO THE BOARD
May 2, 1962.
Board of Directors,
Devon-North Town State Bank,
Chicago, Illinois.
Gentlemen:
This refers to your request for permission, under applicable
Provisions of your condition of membership numbered 1, to exercise the
fiduciary powers now or hereafter authorized by your charter and the
laws of the State of Illinois.
The Board has considered your application to exercise full
trust powers most carefully, and after a full review of all the facts,
believes it would serve the best interests of your bank if only limited
trust powers to act as trustee of land trusts and escrow agent were permitted. This view is based on the consideration that the proposed trust
Officer and assistant trust officer although apparently skilled in the
administration of land trusts and escrows, have had no other fiduciary
experience, and therefore are not trained and experienced trust officers
able to assume the serious duties and responsibilities pertinent to a
general trust business. It would be the Board's view that the liabilities and responsibilities of a general trust business should not be
undertaken until the bank is able to staff such a function with trained
and experienced personnel.
It is also pertinent to suggest that the bank should not
assume additional serious corporate responsibilities until such time
as its capital structure is fully adequate for all corporate purposes.
It is observed in the letter of the Federal Reserve Bank to you of
ITril 3, 1962, transmitting the current report of examination, that
Vice President Helmer states the sale of additional capital stock
would appear prudent, and the Board of Governors suggests that the
additional responsibilities of a general trust business would require
an increase in the bankls capital structure to cover the risks and
liabilities incident to the trust function.
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Federal Reserve Bank of St. Louis
1624
For these reasons the Board of Governors grants at this time
to Devon-North Town State Bank permission to act only as trustee of
land trusts and escrow agent.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
a
0
Item No.
5/2/62
FEDERAL RESERVE SYSTEM
tr
0
0
8
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
44
TO THE BOARD
't/stAL
tiaaaci**--
May 21 1962.
The Honorable Erie Cooke, Sr., Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mi. Cocks:
Reference is made to your letter of April 18,
1962, concerning the application of The First State Bank,
Booker, Texas, for continuance of deposit insurance after
withdrawal from membership in the Federal Reserve System.
No corrective programs that the Board of
Governors believes should be incorporated as conditions
to the continuance of deposit insurance have been urged
upon or agreed to by the bank.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
Item No.
9
5/2/62
AOOREISS °mow- COMMESPONOENCIC
TO THE BOARD
411.1M
0o****
May 21 1962.
Board of Directors,
Bank of Idaho,
Boise, Idaho.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves, under the provision of Section 24A of the Federal
Reserve Act, the investment of $30,293.64 made in bank premises
by Bank of Idaho in completing the construction of branch
quarters at Idaho Falls, Idaho. This amount is in addition
to the $753,000 approved by the Board on November 9, 1961.
Very truly yours,
(Signed.) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary*
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 10
5/2/62
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 2, 1962
Mr. Phillip S. Hughes,
Assistant Director,
Legislative Reference,
Bureau of the Budget,
Washington 25, D. C.
Attention: Ur. Reeve
Dear Mr. Hughes:
This is in response to the telephone request of Mr. Reeve
011 May 1, 1962, for the Board's views on a bill proposed by the
Treasury which would amend section lil(b) of the Federal Reserve Act,
as amended, to extend for two years the authority of the Federal
Reserve Banks to purchase United States obligations directly from
the Treasury. Under existing law the authority will terminate on
June 30, 1962.
The use of this authority by the Federal Reserve enables
the Treasury to avoid creating unnecessary financial strains that
Would otherwise occur if it had to draw heavily on its accounts
e
rn8Pecially during periods immediately nreceding tax payment dates.
Temporary Treasury borrowing at such times, followed by prompt
repayment from the proceeds of tax payments, provides a smooth
°Perating mechanism, without the abrupt money market fluctuations
that would otherwise occur. The authority could also be useful in
&
c es ling with situations resulting from a national emergency. Since
-• Y42 when the authority was granted it has been soaringly used, and
use is reported, as required by law, each year in detail in the
ear currently
?oardis Annual Report. The results of its use also ao)
IA Weekly statements issued by the Federal aeserve and in daily
?tatements issued by the Tresury. The Board, therefore, favors
6he proposed legislation.
1
Very truly yours,
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Federal Reserve Bank of St. Louis
Secretary.
L fir A.,
UNITED STATES OF AMERICA
Item No. 11
5/2/62
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
COMEICE UNION BANK
for approval of merger with
Broadway National Bank
•••••
ORDER APPROVING MERGER OF BANKS
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 Commerce Union Bank, Nashville, Tennessee, a member
bank of the Federal Reserve System, for the Boardts prior approval of
the merger of Broadway National Bank, Nashville, Tennessee, with and
into Commerce Union Bank, under the charter and title of the latter,
the two offices of Broadway National Bank to be operated as branches of
Commerce Union Bank.
Pursuant to said section 18(c), notice of the proposed merger,
in form approved by the Board of Governors, has been published and
reports on the competitive factors involved in the proposed transaction
have been received from the Comptroller of the Currency, the Federal
°eposit Insurance Corporation, and the Department of Justice and have
Digitized forbeen
FRASER
considered
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Federal Reserve Bank of St. Louis
by the Board.
o29
-.2—
IT IS ORDERED, for the reasons set forth in the Boardts
Statement of this date, that said application be, and hereby is
approved, provided that said merger 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 2nd
day of May, 1962.
By order of the Board of Governors.
Voting for this action:
Unanimous, with all members present.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
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Federal Reserve Bank of St. Louis
Item No. 12
5/2/62
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSUM
APPLICATION BY C0i, 4ERCE UNION BANK
FOR APPROVAL OF MEAGER WITH BROADWAY NATIONAL BANK
STATEMENT
Commerce Union Bank, Nashville, Tennessee ("Commerce"),
With deposits of $137 million, has applied, pursuant to section 18(c)
of the Federal Deposit Insurance Act, for the Board's prior approval
of the merger of that bank and Broadway National Bank, Nashville,
Tennessee ("Broadway"), with deposits of $18.8 million.
Under the
Ilerger Agreement the banks would merge under the charter and title
cf Commerce, and the Agreement and application contemplate that the
two offices of Broadway would become branches of Commerce, increasing
from 18 to 20 the total offices operated by that 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
lLs corporate powers are consistent with the purposes of the Federal
DePosit Insurance Act, (6) the convenience and needs of the communities
to be
served, and (7) the effect of the transaction on competition
(including any tendency toward monopoly).
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Federal Reserve Bank of St. Louis
The Board may not approve
the transaction unless, after considering all these factors, it finds
the transaction to be in the public interest.
Banking factors. - Commerce acquired 80 per cent of the stock
41.MMINO.........•••••••
of Broadway through an exchange of stock in 1930 and, since that time,
has continuously awned 80 per cent or more of Broadway's stock.
Both
banks have competent management, which includes common officers and
directors who are dominant in the management of each institution and who
will continue with the management of the resulti.ig bank.
The financial
condition of each bank is sound; each has an adequate capital structure;
and both have satisfactory earnings prospects.
These favorable attributes
would also characterize the resulting bank, which would benefit from the
simplification in management and related efficiencies implicit in the
Proposal.
No inconsistency with the purposes of the Federal Deposit
Insurance Act is indicated.
Thus, consideration of the first five statutory factors
enumerated above--the "banking factors"--lends support to the proposal.
Convenience and needs of the communities. - Nashville (population 171,000) is the capital of Tennessee and is located in Davidson
County (population 400,000), which is regarded as the Nashville service
area.
Commerce has 10 offices in Davidson County.
°ffices are outside Davidson County.
The bank's 8 other
The two offices of Broadway are
in Nashville.
No new banking offices will be opened and none will be closed
by consummation of the proposal, and no changes in policies or the
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Federal Reserve Bank of St. Louis
1.6,3,1 4
range of services are contemplated.
While effectuation of the proposal
'would not be expected, therefore, to have significant immediate or
direct effects on the convenience and needs of the communities, the
consequent simplification in administration and related benefits,
referred to previously, would tend to inure to the benefit also of the
customers of the resulting bank and the communities involved.
Competition. - As indicated earlier, Commerce owns 80 per
cent of the stock of Broadway, and officers and directors common to
each bank are dominant in their management.
The close relationship
between the two institutions has been public knowledge for many years,
and little, if any, competition has existed between them. It does not
aPPear that any diminution of competition would otherwise result from
the proposal, the consummation of which would tend to strengthen the
resulting bankts competitive position in relation to the two larger
Nashville banks.
Commerce and Broadway, respectively, rank third and
fifth in size among the eight commercial banks in Nashville and Davidson
0°11nty, and the merger would not change the position of Commerce in this
respect,
Summary and conclusion. - The proposal is to unite two banks
which already are under substantially common ownership and management
and between which virtually no competition exists. This would eliminate
administrative duplication and tend to increase efficiency, with probable
be nefits to the customers of the resulting bank, which would be in a
Position to compete more effectively with the larger banks in the area.
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Federal Reserve Bank of St. Louis
1633
Othe
se) there would be no change in the services offered by the two
banks, and the number and locations of the banking offices would remain
a
tie same.
Accordingly) the Board finds that the proposed transaction
would be in the public interest,
May 20
962.
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Federal Reserve Bank of St. Louis
Item No. 13
5/2/62
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
UNITED STATES OF AMERICA
WASHINGTON, D. C.
In the Matter of the Application of
WHITNEY HOLDING CORPORATION
for approval of its becoming a bank holding
company by acquiring the stock of Crescent
City National Bank, New Orleans, Louisiana,
and Whitney National Bank in Jefferson Parish,
Jefferson Parish, Louisiana
ORDER APPROVING APPLICATION
UNDER BANK HOLDING COMPANY ACT
There has come before the Board af Governors, pursuant to
section 3(a)(1) of the Bank Holding Company Act of 1956 (12 USC 1842)
and section 222.4(a)(1) of Federal Reserve Regulation Y (12 CFR
an application on behalf of Whitney Holding Corporation,
New Orleans, Louisiana, for the Board's prior approval of action whereby Whitney Holding Corporation would become a bank holding company by
acquiring substantially all of the voting stock of (1) the Crescent
City National Bank, New Orleans, Louisiana (a proposed new bank), into
which would be consolidated the existing Whitney National Bank of
New Orleans, under the latter title, and (2) the Whitney National Bank
in Jefferson Parish, Jefferson Parish, Louisiana (a proposed new bank).
A Notice of Receipt of Application was published in the Federal Register
on July 28, 1961 (26 Federal Register 6792), which provided an opportunity
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Federal Reserve Bank of St. Louis
-2-
for submission of comments and views regarding the proposed acquisitions,
and the time for filing such comments and views has expired and all
Comments and views filed with the Board have been considered by it.
23, 1961
Pursuant to Order published in the Federal Register on December
(26 Federal Register 12312), a public proceeding with respect to the
aPplication was held before the Board on January 17, 1962 to provide a
further opportunity for the expression of views and opinions by interested persons.
IT 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 acquisitions approved herein shall not be consummated
(8.) sooner than seven calendar days after the date of this Order or
(13) later than three months after said date, and provided further that
Whitney National Bank in Jefferson Parish shall be opened for business
within six months after said date.
Dated at Washington, D. C., this 3rd
day of May, 1962.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Shepardson, King, and Mitchell.
Voting against this action:
Governer Robertson.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(Seal)
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Federal Reserve Bank of St. Louis
)4.1.
BOARD OF GOVERNORS
Item No. 14
5/2/62
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY WHITNEY HOLDING CORPORATION
FOR PERMISSION TO BECOME A BANK HOLDING COMPANY
STATEMENT
Whitney Holding Corporation, New Orleans, Louisiana
("Applicant'), has applied to the Board of Governors, pursuant to
section 3(a)(1) of the Bank Holding Company Act of 1956 (the "Act")
for approval of action that would cause it to become a bank holding
company under the Act, namely, its acquisition of all of the stock of
Whitney National Bank of New Orleans ("Whitney New Orleans") and
all of the stock of Whitney National Bank in Jefferson Parish, Louisiana
("Whitney Jefferson").
Whitney New Orleans is by far the largest banking institution
in the City of New Orleans and the State of Louisiana, and is one of
the largest banks in the South.
New Orleans, with a population of
627,525 according to the 1960 census, is a major seaport and financial
and industrial center.
Whitney Jefferson is a new bank, organized by Applicant,
and has not yet commenced operations.
It is to be located in an area
* The application refers to "Crescent City National Bank" rather than
to "Whitney National Bank of New Orleans". However, Crescent City
National Bank is only the temporary title of a bank that will continue
tne business of the present Whitney National Bank of New Orleans under
the latter title. For the sake of clarity, this statement refers to
Whitney National Bank of New Orleans and disregards the temporary title
'Crescent City National Bank".
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Federal Reserve Bank of St. Louis
known as the East Bank of Jefferson Parish ("East Bank"), which adjoins
the City of New Orleans on the west.
Under the law of Louisiana, a bank may not establish branches
outside of the parish in which its head office is situated. (A Louisiana
"Parish" is comparable to a "county' in other States.) The boundaries
Of Orleans Parish are coterminous with the boundaries of the City of
New Orleans, and consequently banks situated in New Orleans (including
national banks) may not establish branches beyond the city limits.
Like many other large American cities, the City of New Orleans
has become the central portion of a metropolitan area that extends far
beyond the municipal boundaries.
A large part of the expansion of
Population and business in the New Orleans metmpolitan area has taken
Place in Jefferson Parish, which adjoins the city on the west and south,
as well as into St. Bernard Parish, which lies to the east.
The West
Bank area of Jefferson Parish is separated from most of New Orleans by
the Mississippi River, but the East Bank area (in which Whitney Jefferson
iS to be situated) is not physically separated from New Orleans, but
forms a continuous and homogeneous westward extension of that city.
Views and recommendations of the Cmptroller of the Currency. In accordance with the requirement of section 3(h) of the Act, the
Comptroller of the Currency was asked to submit his views and recd,mmendations with respect to the pending application.
In a letter dated
October 11, 1961, Comptroller of the Currency Ray M. Gidney recommended
aPproval.
Statutory factors. 130ard
to take into
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Federal Reserve Bank of St. Louis
Section 3(c) of the Act requires the
consideration the following five factors: (1) the
4 $
-1.001(1
financial history and condition of the holding company and banks
concerned; (2) their prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the communities and the area
concerned; and (5) whether or not the effect of the acquisitions would
be to expand the size r)r extent of the bank holding company system
involved beyond limits consistent with adequate and sound banking, the
Public interest, and the preservation of competition in the field of
b
anking.
Discussion. - The stated purpose of the proposed holding
company system is to enable an organization centered about Whitney
New Orleans to provide banking services not only through its existing
12 offices within the City of New Orleans but also through offices in
the East Bank of Jefferson Parish.
The holding company system will be
114der the direction of the present executive management of Whitney
New Orleans; in fact, for present purposes the holding company itself
18
simply the means by which Whitney banking offices may be established
841d operated in East Bank.
Consequently, the character of the manage-
Illeat and the prospects of the Applicant and its two proposed subsidiary
evaluated largely on the basis of the financial history
1)anks may
44d condition, character of management, and prospects of Whitney
New Orleans.
The financial history of Whitney New Orleans has been satisfactory. The condition of that bank is sound and its management is
Narded as satisfactory.
Accordingly, it is believed that the manage-
illett of Applicant and Whitney Jefferson will be satisfactory and the
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Federal Reserve Bank of St. Louis
iti39
Prospects of the holding company, which depend principally upon the
Prospects of Whitney New Orleans, are favorable.
depend
To the extent that the prospects of Whitney Jefferson
favorable,
laPon the quality of its management, those prospects also are
since Whitney Jefferson will be subject to general policy direction by
Applicant, and Applicant may be expected to provide competent local
management for Whitney Jefferson.
However, the prospects of Whitney
large
Jefferson, as a separate banking institution, also depend, to a
degree, on the extent to which it can attract deposits, make profitable
loans and investments, and otherwise conduct its business safely and
Profitably.
In the decade 1950-1960, while the population of the City of
New Orleans increased 10 per cent (from 570,000 to 628,000), the population of the East Bank of Jefferson Parish increased 128 per cent (from
60,000 to 137,000).
Although there can be no assurance of the continuance
of this exceptionally rapid rate of growth, the geographical situation
in the New Orleans area is such as to create a substantial likelihood
Of considerable further growth in East Bank.
In addition, it is
1MPortant to note that Whitney New Orleans presently holds deposits of
individuals, partnerships, and corporations, emanating from East Bank,
i4 an aggregate amount exceeding 30 per cent of such deposits held by
all banks having their head offices in East Bank.
It is reasonable to
4nticipate that a substantial portion of East Bank deposits in Whitney
Ilew Orleans will be transferred to Whitney Jefferson when it opens for
b
usiness.
Because of this circumstance, as well as the relationship
that
would exist
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Federal Reserve Bank of St. Louis
between Whitney Jefferson and Whitney New Orleans, it
1640
is concluded that the prospects of the former, from this viewpoint
also, are favorable, despite the increase in recent years in the
number of banking offices situated in East Bank.
If the proposed holding company system is created, Whitney
Nell Orleans will continue to render, through its 12 offices in the
City, banking services of the scope and character presently rendered
by it.
Accordingly, consummation of the proposal will not affect the
convenience, needs, or welfare of the New Orleans area, as far as the
fUture operations of Whitney New Orleans are concerned.
Whitney Jefferson, however, will be a new banking institution,
and therefore its establishment necessarily will affect the convenience,
needs, and welfare of the communities and the area it will serve.
The proposed head office of Whitney Jefferson will be situated
aPProximately one mile from the nearest competing banking office.
Its
establishment and operation, therefore, will serve the convenience of
l'esidents and business establishments in its immediate neighborhood,
and will also provide a readily available alternative source of banking
services to residents and business establishments in a wider area.
At
Present, only two banks serve the area within four road miles of the
roPosed head office location of Whitney Jefferson.
Both of these are
ell-established institutions, and the entry of Whitney Jefferson, in
addition to the added convenience, may also contribute to the welfare
c t the area by strengthening local banking competition with resulting
'
11111Drovement in the scope and quality of services rendered by each of
the competing institutions.
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Federal Reserve Bank of St. Louis
-6..
In addition to its head office, Whitney Jefferson has applied
to the Comptroller of the Currency for authority to establish a branch
in the Airline Park Shopping Center, about three and one-half miles
northwest of its head office; the letter would be located near the
liesissippi River in a more industrialized section of East Bank.
The
branch application is pending before the Comptroller of the Currency,
11110 has not, as yet, either approved or disapproved the proposed branch
establishment.
On March 1, 1962 the new Metropolitan Bank of Jefferson
°Pened for business in the Airline Park Shopping Center, which would
also be the location of the proposed branch of Whitney Jefferson.
Any
iDirnediate contribution by such branch of Whitney Jefferson to the
ConIrenience, needs, and welfare cf the area necessarily is considerably
lessened by the fact that the area is already served by a banking
institution. In addition, there may be some question as to whether
adequate and sound banking, as well as the public interest generally,
would be promoted by establishment, in the Airline Park Shopping Center,
°t a banking office affiliated with the largest bank in Louisiana, so
after the opening there of a new independent bank.
However, the
unfavorable significance of this factor is somewhat lessened by the
4P1-cl growth of the East Bank area, which suggests a greater than usual
likelihood that two new banking offices in the same area might achieve,
Illthin a reasonable time, a scale of business that would permit both to
(/Perate soundly and profitably.
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Federal Reserve Bank of St. Louis
104
It is also significant that the Comptroller of the Currency
has held the branch application in abeyance since before the establishment of the new Metropolitan Bank of Jefferson.
Primary responsibility
for deciding whether establishment of the branch would be in the public
interest lies with the Comptroller, and it seems reasonable to assume
that the branch will not be authorized if its presence would threaten
the sound and serviceable operation of the newly-established bank in
the Shopping Center.
Perhaps even more important than service rendered to new
Customers, from the viewpoint of convenience and welfare, is the service
that Whitney Jefferson could render to individuals and business orcanizations in East Bank that already are customers of Whitney New Orleans.
As mentioned, Whitney New Orleans, through its offices in the city,
draws a substantial amount of deposits from East Bank.
Since Whitney
New Orleans draws this business despite the lesser convenience, for
Customers in East Bank, of dealing with a banking office in New Orleans
rather than one in East Bank itself, it may be inferred that doing
business with Whitney offers to its customers in East Bank benefits
that are sufficient, in their judgment, to outweigh the lesser convenience.
may
Although some of Whitney New Orleans' East Bank business
l'emain with that institution, it is almost certain that a substantial
Part will be transferred to the affiliated Whitney Jefferson.
Whitney
cUstomers in East Bank, therefore, will benefit from the convenience of
doing business at a local office that can furnish, more conveniently
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Federal Reserve Bank of St. Louis
-8—
than at present, the services that originally gained this business for
the Whitney organization. Whatever speeal characteristics of Whitney
service drew a consdeable volume of Fast Bank business to Whitney
offices in New Orleans will now become available not only to existing
Whitney customers but to others in East Bank who have not heretofore
found it convenient or feasible to deal with Whitney Few Orleans.
In this aspect, the pending proposal to establish banking
facilities in East Bank through the holding company device is due to
the natural and legitimate desire of a bank in an expanding metropolitan
area to furnish its services more conveniently to customers situated in
a section that, although outside the corporate limits of Orleans Parish,
is realistically an integral part of the metropolitan economy.
The laws
Of Louisiana do not prohibit expansion of a banking organization by this
ineans. In the judgment of the Board, this phase of the proposal is a
Proper expression of the character of the American business system-Some respects, in fact, it is a matter of economic self-defense--and
°light not to be frustrated unless it involves effects significantly
de trimental to the public interest.
Under section 3(c)(5) of the Act, the question arises whether
APPlicant's acquisition of the stock of Whitney New Orleans and Whitney
Jefferson would expand the size or extent of the proposed holding company
8Yetem beyond limits consistent with adequate and sound banking, the
Public interest, and the preservation of competition.
Mention has been
ade of the possible effect of the establishment of the proposed branch
°I' Whitney Jefferson upon adequate and sound banking in its immediate
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Federal Reserve Bank of St. Louis
vicinity.
mould
Apart from this aspect, it appears that the proposal
add a sound and serviceable institution to the financial organizations
situated in East Bank.
From the viewpc,int of concentration of banking facilities,
the significance of establishment of the proposed holding company
cYstem might seem at first blush to be relatively slight.
On June 30,
1961 Whitney New Orleans held 39 per cent of total deposits of barks
in New Orleans and
44
per cent of all deposits of individuals
ships, and corporations.
partner-
The establishment of the holding company
systom would not increase Whitney New Orleans' proportion of the city
banks' deposits; in fact, the anticipated transfer of some accounts
from Whitney New Orleans to Whitney Jefferson would slightly reduce
the percentages held by Whitney New Orleans.
Initially, the deposit
business of Whitney Jefferson may consist largely of such accounts
transferred from the affiliated city bank, and it does not appear
Probable that the predominance of Whitney banks in the New Orleans
metropolitan area will be immediately increasLd as a result of the
instant proposal.
However, the fact that a relatively hi :h proportion of banking
resources in the Neu Orleans metropolitan area is already concentrated
Whitney New Orleans does not demonstrate the propriety of an equal
ei- ro,e of concentration in n holding company system.
It has been
Pointed out that "the Act relates to concentration of banking power,
11°t in the hands of banks, but in the hands of bank holding companies."
ttLer of First New York Corporation (1958) h4 Federal Reserve Bulletin
902) 913-14.
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Federal Reserve Bank of St. Louis
(It5
—10—
It does not appear to the Board, however, that the degree of
concentration of banking; resources in the proposed holding company
sYstem would be such as to jeopardize the vigor of banking competition
either in the City of New Orleans or in East Bank.
The management and
Policies of the holding company system, it appears, would be equivalent
to those of Jilitney New Orleans.
On the record before the Board, it
appears that a comparable degree of concentration in that bank has not
adversely affected the local competitive situation.
In this connection,
it is to be noted that there appears to be no trend toward increasing
d°I/linance of Ilitney in the area; aitneyls share of the total deposits
°f the metropolitan area diminished from 38 per cent to 35.4 per cent
between 1956 and 1961.
Some cases presented to the Board under the Act involve a
Proposal for holding company acquisition of control of banks that compete
Ilith each other.
These situations necessarily involve the elimination
(/f some banking competition.
`IPPlication.
No such problem is presented by the pending
The only existing bank involved is Whitney New Orleans.
e nsummation of the plan will bring into existence a new banking
Whitney Jefferson, which will be an additional competitor
the banking situation in the western sector of the New Orleans
etropolitan area.
By thus offering the banking public of that district
°Ia0 more alternative source of banking services, the proposal would tend
to increase the vigor of competition. Apart from the possible adverse
e°111Petitive effect of the proposed branch of Whitney Jefferson, previously
rentioned, there is no reason to believe that the increased competition
11°111d be destructive rather than beneficial.
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Federal Reserve Bank of St. Louis
1646
-11-
It is especially noted that East Bank is
already served by
several offices of e bank that is affiliated with Whitney New Orleans'
largest competitor.
Establishment of Whitney Jefferson, therefore, will
introduce into East Bank a new and possibly important sort of competition-that is, competition between local banks affiliated with large banks in the
nearby city and consequently in a position to offer the special services
that may be available as a result of such affiliation.
Viewing the relevant facts in the light of the general purposes
of the Act and the factors enumerated in section 3(c), it is the judgment of the Board that the proposed acquisitions would be consistent with
the statutory objectives and the public interest and that the application
should be granted.
3, 1962
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Federal Reserve Bank of St. Louis
CONCURRING STATEMENT OF GOVEXNOR MITCHELL
Item No. 15
5/2/62
In my juclgment, there are two issues of concern in this case.
would
The first issue is whether an increase in concentration
come about from approving the application.
Whitney presently accounts
for about 35 per cent of New Orleans metropolitan area deposits.
Whitney's
Present position is a fait accompli: No matter how Whitney Holding
Corporation divides its deposit share among the banks it may create, its
Present share will not be changed.
The Whitney organization would still
35 per cent of area deposits even if it were to create and operate
a score of banks.
This is because the plan of the application does not
illclude purchasing other banks but rather intends de novo facilities to
he established in East Bank.
Thus, approval of this action will not
Crease concentration by any meaningful measure whether deposits, loans,
assets, or offices are used.
Whitney has what it has.
Will "concentration" increase in the future?
If Whitney can
Q°tvince increasing numbers of individual and corporate depositors and
1"41 applicants to bank with its new set of offices because it offers
better services and more attractive rates, then we might expect its share
°t deposits and loans to increase.
Denying this application on grounds
"containing an anticipated increase in "concentration" of this sort
/g°1-11d be denying one of the very things this Board is directed to preserve,
e°MPetition.
The second issue is whether approval of this application would
Produce an "overbanked" situation in the East Bank of Jefferson Parish.
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Federal Reserve Bank of St. Louis
3iL
-2-
The use of "overbanking" as a policy criterion may have been
justified in a time when the creation of banks was imperfectly regulated
and deposits uninsured.
The obsolescence of this concept is apparent in
today's context of widespread deposit insurance and regulation of entry
by State and Federal agencies based on responsible management and
adequate capital.
To impose further restrictions on entry by deciding,
ad hoc, that a given area may become "overbanked" if another competitor
is admitted is to preserve comfortable closed markets for established
Decisions with this effect can only be hostile to the
institutions.
Public interest.
Since this Board does not possess perfect foresight, it must
depend on some rough and general rules of thumb if it is to avoid
decisions harmful to the public interest.
The fact that the "overbanked"
Qommunity of today may be the "underbanked" community of tomorrow if the
growth of the community is rapid and substantial suggests that such rules
Of thumb might be formulated in terms of trends in population, in
business expansion, and in deposits.
Strong upward movements in these
indicia would shortly undo any initial condition of "too many" banks.
What can be said in terms of these rules of thumb in the
Present case?
since 1950.
The population of Jefferson Parish has more than doubled
The Federal Reserve Bank of Atlanta reports that further
residential growth in the area is assured.
Rising business activity
in the East Bank area reflects a growing industrial community.
Re3erve
130ard data on deposits of individuals, partnerships, and corporations
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Federal Reserve Bank of St. Louis
-3-
show that deposits increased by more than 300 per cent and deposits
Der capita in Jefferson Parish have increased by more than 100 per cent
in the past decade, outstripping any other urban parish in the State.
The average annual rate of deposit growth of First National Bank of
Jefferson Parish, of Gretna, was 10 per cent over the 10-year period
1951-61.
Merchants Trust and Savings Bank of Kenner has averaged
25 Per cent and Metairie Savings Bank and Trust Company 12 per cent
over the same period.
National Bank of Commerce in Jefferson Parish
Iap averaged 7 per cent in its six years of operation.
Taken together,
these data indicate that an "overbanked situation" could not exist for
1°116 in Jefferson Parish.
Approval of this application will strengthen competition by
41lowing a New Orleans banking organization to operate through de novo
fa.cilities in the rapidly growing East Bank of Jefferson
Parish.
Rejec-
tion of the application would preserve sanctuary for existing Jefferson
krish banks or lead to indirect entry by Whitney through a device with
less competitive impact.
l hy 3, 1962
'
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Federal Reserve Bank of St. Louis
DISSENTING STA
Of IDI
OF GOVERNOR ROBERTSON
Item No. 16
5/2/62
Whitney National Bank of Now Orleans is the largest banking
institution of the City of New Orleans and the State of Louisiana.
controls in the neighborhood of
4o
It
per cent of the deposit and loan
business of all New Orleans banks--more than the second and third largest
banks combined.
The proposal before the Board of Governors would place
control of this bank in Whitney Holding Corporation and thereby would
overcome the effect of the branch banking laws of Louisiana, which
prevent Whitney from establishing any offices outside of Orleans Parish
(the City of New Orleans).
In other words, by this means the Whitney
banking organization would escape the legal limitations that now permit
it to have offices only within the City of New Orleans.
In my judgment, one of the basic purposes of the Bank Holding
Cornany Act--to prevent undue concentration of banking power in holding
cc:nantes—mould be unjustifiably defeated by approval of the creation
Of a holdirg company system to control the predominant bank of a major
Metropolitan area and additional banks within that area, unless such
a.PProval is warranted by favorable factors that outweigh this strong
adverse consideration.
No such substantial favorable factors have been established
iX thi3 case.
It can hardly be asserted that the East Bank of Jefferson
l'arish would lack adequate banking facilities unless Whitney Holding
Ccrl=oration is permitted to establish and control the proposed Whitney
liatler.al Bank in Jafferson Parish.
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Federal Reserve Bank of St. Louis
New banks and branches are being
-2-
established in East Bank at a quite rapid rate, and the neighborhoods
in which Whitney Jefferson would have its offices already have banking
facilities conveniently avaiJable.
The establishment of additional banks and branches always
contributes, in some measure, to the convenience of the banking public,
and also, in many cases, to the vigor of banking competition.
Ordinarily,
therefore, establishment of additional banking facilities is beneficial
from these viewpoints. In this case, however, banking offices affiliated
with the largest financial institution, in the area would be competing
with small local banks, including a bank that opened for business only
ti'ro months ago in the sane shopping center in which it is proposed to
locate one of the offices of Whitney Jefferson.
The effect of the entry
Of Whitney
Jefferson at this time could be significantly detrimental to
this new bank and to another small bank with which Whitney Jefferson
would directly compete.
In view of the specific responsibilities placed
11Pon the Board of Governors by section 3 of the Bank Holding Company Act,
it is questionable whether the Board may properly disregard this
Possibility of destructive competition on the ground that, if such a
danger exists, another supervisory authority may refuse to authorize
•
4litney Jefferson to establish the office in question.
One other aspect of the Whitney Holding Corporation plan must
he taken into account in view of section 3(c) of the Act, which requires
the Board to consider the effect of proposed transactions on the public
interest.
To enable minority stockholder interests to have a voice in
the direction of national banks, section 5144 of the United States
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Federal Reserve Bank of St. Louis
-3Revised Statutes, as amended by the Banking Act of
1933 (12 1J. S.
Code 61), gzovides for cumulative voting in the election of directors
Of national banks--that is, each shareholder has "the right to vote
the number of shares owned by him for as many persons as there are
candidirectors to be elected, or to cumulate such shares and give one
date as many votes as the number of directors multiplied by the number
of his shares shall equal, or to distribute them on the same principle
among as many candidates as he shall think fit".
In order to eliminate minority stockholders of Whitney National
Bank of New Orleans and thereby to insure that Whitney Holding Corporas,
tion will be able to elect all members of the bank's board of director
the plan before the Board includes a so-called "phantom bank" merger,
which makes it impossible for a stockholder of the bank to retain his
stock interest therein.
The purpose of centralizing control of the
holding company and its banks in the hands of very few individuals-Perhaps only one individual--is apparent from other features of the
Proposal.
Not only would the privilege of cumulative voting be denied
to minority stockholders of Whitney Holding Corporation, but its
few
Articles of Incorporation provide that its board may consist of as
as three directors.
Furthermore, the Articles would permit a director,
the vote
absent from a meeting, to authorize another director to "cast
Of
or
the absent director, according to written instructions, general
sPecial...."
Proxies.
directors'
The statutes of Louisiana permit the use of such
if not
Absent such statutory authorization, which is unusual
absolutely unique, the courts uniformly have held that directors'
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Federal Reserve Bank of St. Louis
responsibilities may not lawfully be discharged by giving proxies in
lieu of attending directors' meetings.
The basic duty of directors
IS to direct the poliAes of the corporation. To perform this duty,
directors should attend meetings, participate in discussion, and vote
in accordance with convictions arrived at after full and free interchange of ideas.
In brief, the plan before the Board seems designed to minimize
the participation of stockholders, and even of directors, in the control and management of the holding company and its subsidiary banks.
This appears to be the common objective of (1) eliminating minority
interests in subsidiary banks (where they would enjoy the cumulative
voting privilege), (2) the absence of cumulative voting in the bank
holding company, (3) the provision for a board of directors that may
consist of only three members, and (4) the almost unprecedented profor use of proxies at directors' meetings.
Taken together, these
reatures of the proposal reflect an arrangement by which power to direct
41ad control the holding company system, including its banks, could be
°Ileentrated in the hands of a single individual.
In my judgment, such
841 undemocratic arrangement is particularly inappropriate in a system
that is to consist of national banks, when it is considered that none
Or the three latter features is permissible under the National Bank Act
alle, related Federal statutes.
It should not receive this Board's stamp
Of approval.
The proposal before the Board would promote banking convenience
14 the East Bank section of metropolitan New Orleans to a moderate degree.
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Federal Reserve Bank of St. Louis
It would also, however, provide a vehicle for enhancing the existing
high degree of banking concentration in the area and would permit a
l
centralization of banking power of major proportions in individua
the
hands, to a degree that, to my knowledge, is without parallel in
American banking system.
For these reasons, I conclude that the crea-
tion of the proposed holding company system would be contrary to the
Wblic interest and therefore should be denied.
May
3, 1962
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Federal Reserve Bank of St. Louis
Item No.'WOO
5/2/62
TELEGR AM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
TARVER - ATLANTA
KECEA
A. Whitney Holding Corporation, New Orleans, Louisiana
B.
Crescent City National Bank, New Orleans, Louisiana
Whitney National Bank in Jefferson Parish, Louisiana
C.
None.
D. At any time prior to July 1, 1962, (1) to elect directors of such
banks, and (2) to authorize the consolidation of Crescent City
National Bank with Whitney National Bank of New Orleans, New Orleans,
Louisiana, and for such other purposes as may be necessary in connection therewith, provided that all actions taken shall be in
accordance with plans satisfactory to the Comptroller of the
Currency.
(Signed) Elizabeth L. Carmichael
CAREEMAEL
Definition of KECEA:
The Board authorizes the issuance of a limited voting permit,
under the provisions of section 51.44 of the Revised Statutes
of the United States, to the holding company affiliate named
below after the letter "A", entitling such organization to
vote the stock which it owns or controls of the bank(s) named
below after the letter "B", subject to the condition(c) stated
below after the letter "C". The peruLt authorized hereunder
is limited to the period of time and the purposes stated after
the letter "D". PlefLce proceed in accordance with the instruchttp://fraser.stlouisfed.org
tions contained in the Board's letter of March 10, 1947, (S-964).
Federal Reserve Bank of St. Louis
1.13,!..)f
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 18
5/2/62
OFFICE OF THE CHAIRMAN
May 2, 1962.
The Honorable James J. Saxon,
Comptroller of the Currency,
Washington 25, D. C.
Dear Jim:
We have your letter of April 25, 1962, asking for comments
on a condensed Report of Condition form you "plan to use for future
calls other than the year-end call," and also your letter of April
26, indicating that you already have "reduced substantially the contentiof that form.
The Board wonders if full consideration has been given by
your office to the essential character of these data, and of their
importance not only to the Board but to others in business, in Government, and in banking.
So far as the Board itself is concerned, the detailed
breakdown of loans, deposits, and other data now shown on the back
of the call report form are key elements in determining developments
in the money supply and in basic demands for bank credit. These data
are crucial to the Board in the discharge of its statutory responsibilities for the formulation and execution of monetary and credit
policy.
The Board is in full sympathy with the objective of holding
reporting burdens upon banks to the minimum consistent with the needs
of public policy. However, if the report form for national banks is
so condensed as to eliminate the vital information now obtained, the
Board would have no alternative but to ask the national banks, pursuant to the provisions of Section 11(a) of the Federal Reserve Act,
to submit separate reports of condition on the same form now used by
State member banks.
Because of its continuing responsibility for Governmental
statistical standards, the Bureau of the Budget is being given a copy
of this letter. A copy also is being sent to the Federal Deposit
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
The Honorable James J. Saxon
or THE
FEDERAL RESERVE SYSTEM
—2.
Insurance Corporation in view of its responsibility for compiling
condition statistics for all banks.
Sincerely yours,
ade
Wk. McC. Martin, Jr.
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Federal Reserve Bank of St. Louis
100
BOARD OF GOVERNORS
OF THE
0 fy
FEDERAL RESERVE SYSTEM
gg
WASHINGTON
szt)
044atOcti
'
,
4
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Item No. 19
5/2/62
OFFICE OF THE CHAIRMAN
May 2, 1962
The Honorable James J. Saxon,
Comptroller of the Currency,
Washington 25, D. C.
Dear Jim:
In response to your letter of April 25, 1962,
relating to the survey of member banks in relation to chain
banking that the Board has undertaken at the request of Mr.
Pathan, I can assure you that no discourtesy to your office
was intended.
As you undoubtedly know, historically, surveys of
the banking structure have fallen to the lot of the Board,
basically because of statutory responsibilities imposed on
the Board and by the fact that the Congress on several occasions has asked the Board to compile information on the
subject. The discussions with Mr. Patman over the nature of
this particular survey--and indeed whether such a survey
should be made.--extended over a considerable period of time.
We intended nothing more in our letter of April 19 than to
let you know promptly of the Board's agreement with Mr. Patman
and to offer your office opportunity to join with us in this
project, without presuming to commit you in any way.
Your letter seems to us to indicate that you do not
wish to participate, but if we are mistaken in that, please
let us know.
Sincerely yours,
Wm. McC. Martin, Jr.
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