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Minutes for
To:
Members of the Board
From:
Office Of the Secretary
May 24 1963
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve .System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
• Gov. King
Gov. Mitchell
40)
Minutes of the Board of Governors of the Federal Reserve
System on Friday, May 24, 1963.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Mills
Robertson
Shepardson
King 1/
Mitchell
Mr. Sherman, Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Solomon, Director, Division of
Examinations
Mr. Johnson, Director, Division of Personnel
Administration
Mr. Koch, Associate Director, Division of
Research and Statistics
Mr. Holland, Adviser, Division of Research
and Statistics
Mr. Furth, Adviser, Division of International
Finance
Mr. Hersey, Adviser, Division of International
Finance
Mr. Mattras, General Assistant, Office of the
Secretary
Mr. Eckert, Chief, Banking Section, Division
of Research and Statistics
Mr. Yager, Chief, Government Finance Section,
Division of Research and Statistics
Mr. Axilrod, Senior Economist, Division of
Research and Statistics
Miss Dingle, Senior Economist, Division of
Research and Statistics
Mr. Keir, Senior Economist, Division of
Research and Statistics
Mr. Bernard, Economist, Division of Research
and Statistics
Mr. Goldstein, Economist, Division of
International Finance
T7--Entered
-
meeting at point indicated in minutes.
5/24/63
-2Money market review.
Mr. Keir reported on recent developments
in the Government securities market and commented on steps taken by
the Treasury to keep the national debt within the ceiling prescribed
by
law.
Miss Dingle then discussed changes in bank credit and the
111°IleY supply, after which Mr. Goldstein reported on recent developments
in the foreign exchange market.
All members of the staff then withdrew except Messrs. Sherman,
Noyes, Solomon, and Mattras and the following then entered the room:
Mr. Hackley, General Counsel
Mr. Shay, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Hricko, Senior Attorney, Legal Division
Mr. Potter, Senior Attorney, Legal Division
Discount rates.
The establishment without change by the
Pederal Reserve Banks of New York, Philadelphia, Cleveland, Richmond,
Chicago, St. Louis, Minneapolis, Kansas City, and Dallas on May 23, 1963,
the rates on discounts and advances in their existing schedules was
4PProved unanimously, with the understanding that appropriate advice would
be sent to those Banks.
Governor King joined the meeting at this point.
).
Report on competitive factors (York-Hanover, Pennsylvania
There had been distributed a draft of report to the Federal Deposit
1484rance Corporation on the competitive factors involved in the proposed
tilelbger of First National Bank and Trust Company, Hanover, Pennsylvania,
%/ith The York Bank and Trust Company, York, Pennsylvania.
5/24/63
After discussion, the report was approved unanimously for
transmission to the Corporation. The conclusion read as follows:
The proposed merger of the First National Bank
and Trust Company, Hanover, Pennsylvania, with The
York Bank and Trust Company, York, Pennsylvania,
would not only eliminate the small amount of competition
existing between the participants, but also would alter
significantly the banking structure in Hanover and provide
a potential threat to the ability of other local banks to
continue to offer effective competition and remain independent
units.
At present, York Bank holds a larger proportion
of York County's banking resources than any other bank,
and the instant proposal would add substantially to the
applicant's holdings of such resources.
Report on competitive factors (Boise-St. Manes, Idaho).
There
had been distributed a draft of report to the Comptroller of the Currency
On the competitive factors involved in the proposed merger of First Bank
(If St. Manes, St. Manes, Idaho, into First Security Bank of Idaho,
National Association, Boise, Idaho.
After discussion, the report was approved unanimously for transto the Comptroller, with the understanding that the wording of
the conclusion would be revised to read as follows:
The proposed merger of First Bank of St. Manes,
St. Manes, Idaho, into First Security Bank of Idaho,
N. A., Boise, Idaho, a subsidiary of First Security
Corporation, Salt Lake City, Utah, a registered bank
holding company, would apparently have little effect
on other banks nor would it eliminate any significant
degree of competition between the two named above,
since there is little or no competition between these
two banks whose nearest offices are about 50 miles
apart.
There exists a heavy degree of concentration of
banking resources in Idaho where the two largest banks
operate over half of all commercial bank offices and
hold almost two-thirds of all commercial bank deposits.
5/24/63
-4Any increase in concentration of banking resources
in these two banks must be considered as seriously
adverse to the preservation of banking competition.
Mr. Potter then withdrew from the meeting.
Application of Bank of Virginia (Items 1, 2, and 3).
Pursuant
to the decision reached at the meeting on May 20, 1963, there had been
distributed a proposed order and statement reflecting the Board's approval
or the application of The Bank of Virginia, Richmond, Virginia, to merge
with The Farmers Bank of Dinwiddie, Dinwiddie, Virginia.
The issuance of the order and statement was authorized, subject
to the understanding that the wording of the statement would be revised
slightly.
Copies of the order and statement, as issued, are attached to
these minutes as Items 1 and 2.
°rcler
A copy of the letter transmitting the
and statement to The Bank of Virginia is attached as Item No. 3.
The meeting then adjourned.
Secretary's Note: Pursuant to recommendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson today
approved on behalf of the Board the following
actions relating to the Board's staff:
Salary increase
Wilhelmina K. Steele, Operator, Tabulating Equipment, Division of
4ta Processing, from $4,580 to $4,950 per annum, effective May 26,
1963.
t
Outside activities
Irving L. Gedanken, Statistician, Division of Research and
Sta+.
, -1stics, to teach an evening course in Statistics at American
university.
5/24/63
Allen E. Simmons, Messenger, Division of Administrative Services,
to work as a messenger for Western Union on weekends.
Item No. 1
5/24/63
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
THE BANK OF VIRGINIA
for approval of merger with
The Farmers Bank of Dinwiddie
ORDER AITROVIEG MERCER OF BANKS
There has come before the Board of Governors, pursuant to the
ilank Merger Act of 1960 (12 U.S.C. 1828(c)), an application by The Bank
f Virginia, Richmond, Virginia, a State member bank of the Federal
Reserve System, for the Board's prior approval of the merger of that
bank and The Farmers Bank of Dinwiddie, Dinwiddie, Virginia, under the
harter and title of the former.
As an incident to the merger, the
stnale office of The Farmers Bank of Dinwiddie would be operated as a
13411ch of The Bank of Virginia.
Notice of the proposed merger, in form
4PProved by the Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the factors set forth in said Act, including reports furnished by the
ConnPtroller of the Currency, the Federal Deposit Insurance Corporation,
411(1 the Department of Justice on the competitive factors involved in
the Proposed merger,
1
e
tz0
'CT
-2-
IT IS HEREBY ORDERED, for the reasons set forth in the Board's
Statement of this date, that said application be and hereby is approved,
Ptovided that said merger shell not be consummated (a) within seven
calendar days after the date of this Order or (b) later than three
months after said date.
Dated at Washington, D. C., this 24th day of May, 1963.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Robertson, Shepardson,
and Mitchell.
Absent and not voting:
Governor King.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(sEAL)
vikaL i3
Item No. 2
5/24/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY THE BANK OF VIRGINIA
FOR PRIOR APPROVAL OF MERGER WITH
THE FARMERS BANK OF DINWIDDIE
STATEMENT
The Bank of Virginia, Richmond, Virginia ("Virginia Bank"),
Ilith deposits of $159 million as of December 31, 1962, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1820(c)), for the
8Oard's prior approval of the merger of that bank and The Farmers Bank
of
Dinwiddie, Dinwiddie, Virginia ("Dinwiddie Bank"), with deposits of
$3
million as of the same date, under the charter and title of Virginia
sank.
The proposal contemplates that the sole office of Dinwiddie Bank
367O1ld be
operated as a branch of the resulting bank, increasing the
riutlber of offices operated by Virginia Bank to 22.
each
Under the Act, the Board is required to consider, as to
Of
the banks involved, (1) its financial history and condition, (2) the
prospects,
adeluaoY of its capital structure, (3) its future earnings
(4) th
e general character of its management, (5) whether its corporate
11°Ilets are consistent with the purposes of 12 U.S.C., Ch. 16 (the
Ped
01 Deposit Insurance Act), (6) the convenience and needs of the
"
"malunity to be served, and (7) the effect of the transaction on
-2-
e°111Petition (including any tendency toward monopoly).
The Board may not
aPProve the transaction unless, after considering all these factors, it
the transaction to be in the public interest.
Banking factors. - The financial history and asset condition of
Ilitginia Bank are regarded as satisfactory, and this should hold true
440 for the resulting bank.
The capital structure of the resulting bank
17111 continue to reflect a need for some strengthening.
The financial
t°rY and condition of Dinwiddie Bank are satisfactory and the net
cutrent earnings are average.
ill
Although Virginia Bank's net current earn-
are below average, improved earnings are expected to result from
`'reased
automation and other economies.
Present management of Dinwiddie Bank is satisfactory but a
latI4gellIent succession problem exists as the two senior officers are
1)a8t the normal retirement age and in rather poor health.
The manage-
raent success4 on problem would be solved by the merger, Virginia Bank
4ing adequately staffed with competent personnel at both junior and
444i0r
levels.
Prospects for solution by other means are not favorable.
The resulting bank would have a satisfactory asset condition
44(1 favorable earnings prospects.
the provisions
There is no indication of any inconsistency with
Of 12 U.S.C., Ch, 16.
Virginia Bank
Convenience and needs of the communities. °Per f--es its main office and 13 branches in the Richmond metropolitan
4rea
3 branches in the city of Norfolk, and 1 branch each in the cities
j
„. 1
1:
-3proposed
tsmouth, and Roanoke. The
Newport News, Petersburg, Por
the
the convenience and needs of
merger would have little effect upon
k.
e°14rr1Unities now being served by that ban
Bank is located in Dinwiddie
The sole office of Dinwiddie
183).
die County (population 22,
(Population 400), the seat of Dinwid
es south of
hway No. 1, about 35 mil
The bank is located on U. S. Hig
munity serves as
t of Petersburg. The com
Iliehmond and 18 miles southwes
within a 10-mile radius,
the trade area for an estimated 10,000 persons
ltural
this predominantly agricu
Iltight leaf tobacco is the principal crop in
, and the
s and beef and dairy cattle
atea. In addition, the raising of hog
nts
economy. A number of reside
Pl.°duction of pulpwood, contribute to the
Hopewell,
ted in Petersburg and
ae employed in industrial plants loca
ble.
appears generally favora
114ginia. The economic outlook for the area
it
osed merger the loan lim
Upon consummation of the prop
reased. Customers
would be substantially inc
4Ppl1cab1e at Dinwiddie Bank
g
e complete range of bankin
f Dinwiddie Bank would have available a mor
office, such
available at that banking
ly
ious
prev
e
thos
ices
than
serv
,
le I loans, dealer financing
48 trust services, vacation savings, FHA Tit
ied program of
der and more diversif
broa
a
and
,
ers
ord
ey
onal
mon
Pers
ity of full-scale
business. The availabil
1"na to individuals and small
the local economy.
rable influence upon
banking should have a favo
ia Bank became
December 21, 1962, Virgin
Competition. - As of
ation, a bank holding
subsidiary of the Virginia Commonwealth Corpor
have
Co
affiliates. The affiliated banks
ing
bank
r
othe
four
h
wit
anY
P
ll1
4
n.
teltal deposits of about $191 millio
e
f'
-4and holds
Virginia Bank is the fifth largest bank in the State
i°ur per cent of total bank deposits in Virginia.
It conducts a fairly
the
Ilidespread correspondent business and is also in fifth place among
banks of Virginia in this respect.
area in which it operates.
It is not the dominant bank in any
In four cities--aichmond, Newport News,
other
Nerfolk, and Roanoke--it ranks fourth in resources, and in the two
cities—Petersburg and Portsmouth--it ranks third.
The resources to be
significantly
gained by the proposed merger would be too small to alter
its
in the areas served
competitive position in the State as a whole or
by it.
Bank is its
Virginia Bank's closest office to Dinwiddie
l'a tezsburg branch, which is about 18 miles northeast of Dinwiddie.
Petersburg area
There is
competition between the banks, chiefly in the
where
negligible in volume.
Virginia Bank has a branch; however, it is
and
1)in 7iddie Bank has concentrated its efforts primarily in Dinwiddie
competitive
the nearby 'rea and has not been a particularly effective
factor outside this fairly small area.
other banks.
In Dinwiddie County there are two
One is The Bank
about 10 miles southwest
f I4cRenney Incorporated, located in McKenney
million as of June 30, 1962.
Of T)inwiddie, having total deposits of $1.2
It confines its services primarily to its own community.
it
The other bank
Southside Virginia in
the county is the main office of the Bank of
Cara°n, about 13 miles east of Dinwiddie.
This bank also operates three
deposits of i8.5 million as of
ffiees in other counties and had total
trlt
-5-
December 31, 1962.
Two of its offices currently compete to some extent
pith Virginia Bank as they are within 15 miles of Petersburg.
The only other banks in close proximity to Dinwiedie are
those in Petersburg, about 18 miles to the northeast.
In addition to
Virginia Bank's office, there are eight banking facilities in Petersburg,
three being offices of First & Merchants National Bank of Richmond, the
largest bank in Virginia.
In addition to that of other banks, in certain fields
competition is provided in Virginia Bank's service area by a number of
nonbanking financial institutions.
Summary and conclusion. - Consummation of the proposed merger
1()Il1deliminate only a negligible amount of competition and uill not have
lverae competitive effects on smaller area banks.
It will solve a man-
agement succession problem confronting Dinwiddie Bank and provide a
broader
range of banking services in the Dinwiddie area.
Accordingly, the Board finds the proposed transaction to be
in
the public interest.
IlaY 24, 1963.
4
Item No.
3
5/24/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 24, 1963.
REGISTERED - RETURN
RECEIPT REQUESTED
The Bank of Virginia,
Eighth and Main Streets,
Richmond, Virginia.
Gentlemen:
The Board of Governors has approved the application,
under the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the
Board's prior consent to the merger of The Farmers Bank of Dinwiddie, Dinwiddie, Virginia, into The Bank of Virginia, Richmond,
Virginia.
Enclosed are the Board's Order of this date, the accompanying Statement, and the press release on this action.
The need for additional capital for The Bank of Virginia has been previously brought to your attention. Approval
Of this merger application does not imply approval of the present
capital structure, and the Board wishes to emphasize the need
for strengthening of your bank's capital position. The proposed
addition of $1,500,000 to capital structure is a constructive
Step; however, the Board does not believe that it is sufficient
to bring your capital to a desirable level.
Very truly yours,
(Signed)
Merritt Sherman
Merritt Sherman,
Secretary.
Enclosures
@FedFRASER