The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for November 19, 958
To:
Members of the Board
From: Office of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, if you were present
at the meeting, please initial in column A below to
indicate that you approve the minutes. If you were
not present, please initial in column B below to
indicate that you have seen the minutes.
Chin. Martin
Gov. Szymczak
Vardaman 1/
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not
being sent to Governor Vardaman for initial.
3370
Minutes of the Board of Governors of the Federal Reserve System
on Wednesday, November 19, 1958.
The Board met in the Board Room at
10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Masters, Director, Division of Examinations
Solomon, Assistant General Counsel
Hexter, Assistant General Counsel
Nelson, Assistant Director, Division of
Examinations
Application of Wachovia Bank and Trust Company.
On November 13,
1958) the Board denied the application of Wachovia Bank and Trust Company,
Winston-Salem, North Carolina, for consent to the merger of The Wilmington
Savings & Trust Company, Wilmington, North Carolina, with and into Wachovia
8.441 for approval of the establishment of branches in Wilmington at the
10eations of the head office and branch of Wilmington Savings & Trust.
The Board stated that it did not feel justified in giving its consent
tO the
merger or approving the establishment of the branches in view of
the adverse
effect that the Proposed transactions would seem likely to
haye
on competition in the area and which would not be outweighed by any
other
factors involved.
Subsequently, Wachovia requested an opportunity for its representatives
to meet with the Board and present additional information
l egard.
'
Ing the application.
Also, under date of November 17, 1958,
3371,
-2-
11/19/58
W3.chovia forwarded to the Board through the Federal Reserve Bank of
Richmond a modified proposal under which it would transfer certain
funds to surplus from undivided profits and approval of the merger
Wider section 18(c) of the Federal Deposit Insurance Act would not be
ne
cessary.
Wachovia also proposed to consolidate, as soon as practicable
f0110wing the merger, the banking operations conducted by it at 109
North Front Street in Wilmington with those now conducted by The
Wilmington Savings & Trust Company at 110 Princess Street.
Accordingly,
Wachovia would operate three offices in Wilmington, including the branch
8.t 400 North Third Street presently operated by Wilmington Savings &
Trust
The representatives of Wachovia Bank and Trust Company and The
Wibni
flgton Savings & Trust Company present at this meeting were as follows:
Wachovia
Archie K. Davis, Chairman of the Board,
Carlysle A. Bethel, Vice Chairman of the Board,
John F. Watlington, Jr., President,
R. H. Tate, Senior Vice President,
E. T. Shipley, Auditor.
Wilmington Savings & Trust
Fred B. Graham, President,
Peter Brown Ruffin, director; also President of
Wilmington Shipping Company.
Mr. Davis began the discussion by inquiring whether the Board
care to amplify the reasons for denying the application which were
set forth in its letter of November 13.
14 the
- negative
After Chairman Martin responded
letter of
Governor Mills pointed out that Wachovia's
337
11/19/58
-3-
November 17 seemed to deal primarily with mechanical aspects of the
proposal rather than with the broad problems confronting the Board;
namely, the public interest and the lessening of competition resulting
from the proposed transactions.
Mr. Davis then stated that it was Wachovia's understanding that
the
application had been turned down basicslly because the proposed
tr
ansactions might adversely affect competition in the city of Wilmington
and. the Wilmington area.
Wachovia also understood that approval of the
illerger 2212. se was no longer a matter of issue because of the manner in
lihich the proposal had now been modified.
After discussing the nature
°I' the modifications, Mr. Davis referred to the expansion of Wachovia
14 recent years through mergers and the establishment of branches and
said that he
and his associates would undertake to discuss Wachovia's
concept of its responsibilities in the banking picture of North Carolina
eIla its intentions from the standpoint of a Statewide banking operation.
14
this connection he commented that it was not the intent of Wachovia
t° aominate the banking picture or to stultify competition and that in
everY
community it had entered Wachovia had generated better banking
Pactices.
He noted that under the law Wachovia had the right to operate
84 a Statewide institution and said that this involved broad corresponding
l'esPonsfbilities.
From this point Mr. Davis traced the economic problems
°f the
State of North Carolina, Particularly the need for greater diversiticm, following which he summarized how Wachovia hail played an active
tiee
'
l'Ole in meeting those problems through contributions of money and talent,
-4-
11/19/58
bY Providing technical services to correspondent banks in North Carolina,
South Carolina, and Virginia, and by making contributions in the fields
Of' education and research.
Turning to the Wilmington area, he summarized
the efforts made by community interests over the past 10 or 12 years, and
Particularly within the past five years, to improve economic diversifiCation,
bring in additional industries, and create employment.
Comments
also were made with regard to the improvement of educational facilities.
A8 to
banking, Mr. Davis presented statistics indicating that since
operations beneficial
entering Wilmington in 1955 Waehovia had conducted
to the needs, welfare, and growth of the community.
He also said that
Waehovia planned to establish a foreign department and that those
elperations would be channeled through Wilmington.
Mr. Davis stated that Waehovia had found it was not sound or
effective to try to conduct Statewide operations out of a central organisupplementing the
zati°11. Therefore, it had followed the practice of
misllagement of its local units by creating boards of directors drawn
the immediate areas.
As to the current application, he suggested
that it boiled down to the fundamental question whether Wachovia would
be
branch office
Permitted to retain, following the proposed merger, one
need had
°I* the Wilmington bank (the Third Street office) for which a
alre44 been demonstrated and approval for which had previously been
gl'anted by the appropriate supervisory authorities.
To close that
°trice, he said, would work a hardship on the Wilmington area.
3374
11/19/58
Mr. Davis also spoke of a sense of moral responsibility felt by
Wachovia toward The Wilmington Savings & Trust Company, stating that all
Parties had entered into the merger negotiations in good faith, that the
Federal Reserve Bank of Richmond had been kept informed of developments,
alla that approval of the State authorities had been obtained.
The
°fficials of the Wilmington bank had opened their books and records to
Wachovia, the local bank's customers had been contacted, and certain
accounts already had been shifted in anticipation of the merger.
The
airectors, stockholders, and customers of the Wilmington bank were now
Dully prepared for the merger and some stock had changed hands.
Mr. Watlington stated that Wachovia operates in what may be
called the principal towns of the State, of which there are eleven.
Re referred to the need that had existed for larger banking facilities
in the State and said that until recently it had often been necessary
f°11 Parties needing funds to go to a metropolitan area.
Since there
14elle no large cities in North Carolina, it was difficult for a bank in
allY One city to grow to the point where it could take care of the needs
c't its sizable customers.
However, by operating in a series of strategic
It had been possible for Wachovia to build up a banking institution
thai.
'
could take care of nearly any customer.
He went on to say that
Wachovia
had no interest in entering any other towns in the State except
,
}tick°
which occupies a strategic location, and that there was no
ate prospect for going into Hickory because the local bank that
Wacho—
via worked with desired to retain its independent status.
3370
11/19/58
-6-
Mr. Watlington said that during the past four years numerous
banks in smaller cities had approached Wachovia with a view to
merging
btlt that Wachovia had no desire to run a "Bank of America" operation.
Iristeaoill it was Wachovia's preference to make its facilities available
thr°1101 correspondent bank arrangements as far as the smaller communities
14ere concerned.
In all, Wachovia hail been approached by 18 banks with
total deposits of $176 million and total resources of $192 million; six
Of those
banks subsequently merged with other banks. In the communities
/There it operates, Wachovia had established 20 branch offices in recent
Years) not to smother competition but to make banking facilities available
t strategic locations.
It had followed a policy of working with corre-
sPondent banks by furnishing analytical services designed to make the
rations of
those banks more sound and profitable.
In 1957 and 1958
811eh services had been rendered to 50 smoller banks.
In further comments, Mr. Watlington traced the growth of Wachovia's
accounts since 1939 and the source of the capital increases.
He
cealed.
attention to the conservative dividend pattern, said that Wachovia
laanned to continue to add to its capital structure by following practices
acillerecl to in the past, and observed that the capital growth could not be
ttributed principally to merger transactions.
With regard to services
l'eliciered to smaller borrowers, he said an analysis two years ago showed
that 90 per
cent of Wachovia's loans were in the amount of 4;5,000 or less.
)IC
11/19/58
-7-
Mr. Watlington concluded by saying that Wachovia had no present
intention of
entering into any additional mergers except that it would
want to give serious consideration to any proposal that might arise in
the town of Hickory.
Mr. Graham commented on the competition afforded by four savings
414 loan associations in the city of Wilmington and the continuing growth
Of those
associations.
He then commented on the strong leadership afforded
since 1931 by the president of Wilmington Savings & Trust who died
l'eeentlY and said that no provision had been made within the institution
to -Lill
the place occupied by that former officer.
Through the years,
he said, the Wilmington bank had been close to the Wachovia organization,
and it continued to maintain a correspondent relationship even after
W4chovia entered the city of Wilmington.
In all the circumstances, the
ai ectors of the Wilmington bank concluded that it would be in the best
of merger.
Interest of
that bank and the community to accept the plan
The Proposal had been submitted to the stockholders, there had been
aiscussion with the State Bank Commissioner, who gave the plan his
' 131pr°va1, the Federal Reserve Bank had been contacted, and there was an
inaication that it would recommend favorably.
O
Only three stockholders,
ina a total of 70 shares, voted against the merger, and the bank's
el111310Yees were satisfied. Since the announcement of the merger the
0th
el" Wilmington banks had already taken steps which indicated a
bl'OMening of
services and intensified competition.
Also, Mr. Graham
11/19/58
-8-
said, Wilmington Savings & Trust had been handicapped in some instances
by its
legal loan limit in dealing with larger borrowers and at times
had found it difficult to place excess lines.
Like Mr. Davis, Mr.
Graham referred to the steps already taken by the two banks in anticiPation of the merger.
For this reason, he said, the position of the
local bank would be gravely injured if the merger did not go through.
He then reviewed the location of banking offices in Wilmington and
stated that if any existing branch of the two banks involved in the
Proposed merger should be closed it would be difficult to provide
adeqUate banking services to the community.
He felt that this would
be Particularly true in the case of the Third Street office.
Mr. Bethel discussed the features of the original application
e•hd the modifications embodied in the revised proposal.
He suggested
that the modified application could be distinguished from one requesting
aPProval of the establishment of additional branches; it involved simply
a' request for permission to continue in operation certain offices that
43, previously been established pursuant to applicable provisions of
of
' In this connection, he said that Wachovia was not unaware
1834
developments in the matter of the Old Kent Bank and Trust Company (Grand
by
RaPicls, Michigan) and wondered why its proposal should be "shattered
the implications of that case". He said that Wachovia could see nothing
the picture that would adversely affect the competitive situation in
Wilnlington or the Wilmington area, that Wachovia would lose standing
with
the public and with its customers, both in Wilmington and throughout
11/19/58
-9-
the State, that it would suffer irreparably if it tried to retrace its
steps and not consummate the merger, and that it was difficult for
Waehovia to see why it should not be permitted to cash checks, receive
deposits, and make loans at the Third Street office.
Mr. Ruffin stated that he had been a director of The Wilmington
Savings & Trust Company for a number of years and was scheduled to
become Chairman of the local Board of Directors if the merger should
he consummated.
He then developed information regarding the wartime
eccmomy of the Wilmington area and the efforts made more recently to
bring in industries of various types.
°Ile of continuing progress.
The picture, as he saw it, was
Mr. Ruffin stated that the local bank's
airectors
unanimously endorsed the merger proposal and that there
already were evidences of increased competition in the local banking
/3ieture, particularly on the part of the remaining independent bank.
Ile felt strongly that operation of the Third Street office was essential
to serve the public adequately, especially because that office provided
service to customers coming across the river into the city.
Of
Consolidation
the Wachovia office on North Front Street and the main office of
Wilmington Savings & Trust, he said) would be accomplished as soon as
14/roPriate studies developed a satisfactory solution for handling the
eombi-flea
volume of business at one location.
Close
over
After referring to the
relationships between Wachovia and Wilmington Savings & Trust
manY years, Mr. Ruffin -- like others who had spoken previously -the damage that would be caused if the merger were not
3379
11/19/58
-10-
consummated.
He then said that as a layman interested in the future
Of the
Wilmington area and dedicated to building up business in eastern
North Carolina, he hoped that the Board might give favorable consideration
to the
application.
Governor Balderston inquired about any plans of Wachovia for
further expansion in the cities where it now operates, and Mr. Watlington
replied
that Wachovia had no plans for further mergers in those cities,
in fact had rejected one proposal in recent weeks.
However, it might
want to open additional branches in those cities, as occasion made that
desirable
,to provide service in certain areas.
Governor Robertson stated that he had no question regarding the
elellient of good faith, the quality of Wachovia's operations, or the
84PPort that Wachovia had rendered to the financing of industries in
North Carolina.
However, he did question the comments that had been
Illade to the
effect that competition would be increased as a result of
the proposed merger.
While he recognized that at this point a negative
decision might pose difficulties because of the steps that had been taken
in 84ticipation of the merger, he pointed out that the Board had a
l'esPonsibility to
make decisions on the basis of what it conceived to
be the Public interest, and this in turn related to competition. The
Present
proposal would result in eliminating one bank out of four in the
city
Of Wilmington, and Wachovia was now in a position to extend financing
to industries in
would be true if
the area to almost the same extent that
the pr
oposal were carried out.
3380
11/19/58
-11-
Mr. Davis responded that seven banking offices would exist in
Wilmington following the merger, of which only three would be under the
control of Wachovia, and said he did not feel that competition would be
seriously affected.
In every community which Wachovia had entered, he
selid, its presence had stimulated competition, and there was already
evidence of this in Wilmington.
He felt that the big job of Wachovia
after the merger might be to hold customers in the area.
Governor Robertson agreed that the entrance of Wachovia into
Wilmington in 1955 might well have stimulated competition but pointed
Out that the step now proposed would eliminate one of the banking units
that had been stimulated. He then outlined a hypothetical case where a
large bank in a community would request permission to absorb the two
Other banks, thus eliminating all competition, and stated that the
dee
ision in such a case would seem to be very clear.
However, the
deci-sion
might not be as clear if the proposal would eliminate one of
three banks.
Therefore, the problem tended to get down to a matter of
degree.
Mr. Davis concurred.
He added that in Wilmington, where three
ballks and seven offices would remain, it was difficult for him to see
that the effect on competition would be serious enough to require
(ilsaPproval of the transaction.
Of
Mr. Watlington referred to a number
other cities where Wachovia operates and where the total number of
e°/11Pet1ng banks was three or less.
He indicated that in several
itistances the pattern involved Wachovia, a large competing bank, and
4 smaller
independent bank.
33(-4
11/19/58
-12-
Mr. Tate pointed out that from 1933 until about 10 years ago
there were only three commercial banks in Wilmington, for the present
134nk of Wilmington was operating as a Morris Plan industrial bank.
Chairman Martin then stated that in this case there was no
question of lack of good faith on anyone's part.
The Board, he said,
Welcomed this opportunity to gain additional insight into the problem
from the standpoint of the banks concerned but it must be realized that
the Board had a great many cases of similar nature. He went on to say
that the Board would reconsider the case but that it must do so in the
light of broad problems which involve elements of judgment and trends,
bcYth short-run and long-run. To the best of its judgment the Board
11111st endeavor to carry out what appeared to be the intent of the Congress,
as indicated by existing legislation.
The representatives of Wachovia Bank and Trust Company and The
Willilington Savings & Trust Company then withdrew from the meeting.
Governor Mills, who was to be out of town the remainder of this
week) said that the picture drawn by the Wachovia and Wilmington repre8entatives had not changed his judgment regarding the fundamentals of
the probiem.
Nor had the meeting served to suggest to him a reversal
Of the Board's earlier decision; if anything, the discussion had
8tengthened his opinion that the Board's original decision was correct.
144110via had now modified its application in such a manner that approval
c)f the merger by the Board was not required, but unless the Board's
11/19/58
-13-
decision should be changed Wachovia must now decide whether to operate
certain branches in contravention of that decision pending a determination by the courts concerning the Board's authority.
Items circulated or distributed to the Board.
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
illdicated, were approved unanimously:
Item No.
Letter to the Federal Reserve Bank of St. Louis in
1
;,e1
1 31Y to a question regarding certain sections of
.egulation T.
Letter to the Presidents of all Federal Reserve Banks
except New York discontinuing the requirement that
certain preliminary figures on required reserves and
4.eserve balances be telegraphed to the Board daily.
2
Letter to the Presidents of all Federal Reserve Banks
ransmitting forms for the use of State member banks
rd their affiliates in submitting reports as of the
xt call date. (To be sent when the forms are printed)
3
;
1114a1 Order and Statement approving the application of
,T1cOhio Corporation, Columbus, Ohio, to acquire shares
The Kenton Savings Bank, Kenton, Ohio.
u,r--1- order and Statement approving the application of
t,1.0a Bond & Mortgage Company, Port Angeles, Washington,
u acquire shares of Forks State Bank, Forks, Washington.
5
Pin-1
un,c4-1- Order and Statement approving the application of
Bond & Mortgage Company) Port Angeles, Washington,
o
acquire shares of Bank of Sequim, Sequim, Washington.
6
Letter to the Presidents of all Federal Reserve Banks
7
par.2?rning the question of borrowing by examiners, with
---Lcular reference to borrowing from nonmember banks. 1/
1/
. 13Proved in a form reflecting an editorial suggestion by Governor
Balderston.
11/19/58
All of the members of the staff except Messrs. Sherman and
ICenYon then withdrew from the meeting.
Activity of recently appointed branch director.
There had been
circulated to the members of the Board a letter to Chairman Martin dated
November 12, 1958, from Chairman Van Buskirk of the Federal Reserve Bank
Of Cleveland, and an enclosed letter from Mr. James N. Land, Senior Vice
Pr esident of the Mellon National Bank and Trust Company of Pittsburgh
Pennsylvania
who had been appointed as a director of the Pittsburgh
/31'anch beginning January 1, 1959.
Mr. Land pointed out that as the
bank's economist he edits a weekly publication entitled "Monetary
Indicators" in which he sometimes interprets Federal Reserve policy
and occasionally
predicts future policy.
The question raised was
Irhether this activity should be terminated or circumscribed in view
of Mr. Land's service as a branch director.
In discussion the view was expressed that it would be inappro
Priate for Mr. Land, as a branch director, to comment on Federal Reserve
Policy in a private publication.
that
His readers, it was noted, might assume
whatever was written had as a basis inside information derived by
*. Land through his
Federal Reserve service.
1
ZtOd
Accordingly, it was
that Chairman Martin would advise Chairman Van Buskirk
14f°rmally that in the view of the Board Mr. Land should refrain from
about Federal Reserve policy in the Mellon publication or
decline
the appointment to the Pittsburgh Branch Board of Directors.
3384:
11/19/58
-15-
Appointment of director at Oklahoma City.
At the meeting on
Monday, November 17, it was understood that Governor Shepardson would
°btain information regarding the qualifications of Mr. Robert N.
McClung who had been suggested for possible appointment to the Board
°I' Directors of Oklahoma City Branch of the Federal Reserve Bank of
444sas City.
After Governor Shepardson's report it was agreed unanimously
to ascertain whether Mr. Don Dennis, rancher in Grady, Oklahoma, would
c pt appointment, if tendered, as a director of the Oklahoma City
Branch for the two-year
term beginning January 1, 1959, with the
'Understanding that if he would accept, the appointment would be made.
The meeting then adjourned.
Se-artke arY
BOARD OF GOVERNORS
1301ti**4.*
OF THE
FEDERAL RESERVE SYSTEM
%
A*
Item No. 1
11/19/58
WASHINGTON 25. D. C.
*
ay
ADDRESS orriciAL
CORRESPONOENOt
TO THE BOARD
,/
t, 41. Vrittgr
°004aa*-
November 191 1958
Mr. George E. Kroner, Vice President,
Federal Reserve Bank of St. Louis,
P. 0. Box 442,
St. Louis 66, Missouri.
Deal' Mr. Kroner:
This is in reply to your letter of October 29, 1958,
•
re
garding a question raised by the Joseph G. Petersen Company,
St.
Louis,Missouri, concerning the application of sections
gke)(1)(A) and 4(c)(5) of Regulation T.
of a
It is understood that a broker who is a member
national securities exchange arranges for the underwriting of a
readily
urch bona
Church
-A issue. The customers of the broker have
available funds for the purchase of these bonds and desire to
make
o
t
Payment immediately upon issuance of the securities in order
from the
4 _ a void accrued interest. Although a firm commitment
4.::suer exists, title search, printing and other mechanical
.;'Pects of the issue often prevent the physical delivery of the
bonds
obviate
until almost the date of the issue. In order to
the
also in
Possibility of accrued interest above noted, and
1,o.er to allow the purchasers sufficient time to secure their
cis, the broker sometimes desires to confirm purchases of the
14d
delivery and pay-me,,,a in question more than seven days before
"I', without designating them as "when, as and if issued."
"prompt" payment
Section 4(c) of Regulation T requires
with
provides,
event,
Speci
.al
Cash Account, and in any
eertaln
seven
within
made
,
da
exceptions, that payment should be
c)':72i.from the date of purchase. Section 4(o)(5) allows the
pe7ltor to treat the transaction as one in which the applicable
the date of purchase
0„ Imd is not seven days, "but 35 days after
the understanding
with
made
'at(Ile", if a good faith purchase is
actual delivery.
against
fu1 Payment is to be made promptly
in a
HOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. George E. Kroner
—2—
in your letter
The Board agrees with the view expressed
tha+ in the circumstances indicated, the transactions would
comply with sections 4(c)(1)(A) and 4(c)(5) of Regulation T.
h G. Petersen
It is noted that the letter of the Josep
are "informed
°mPany, attached to your letter, states that they
:9-so that religious and church bond issues are exempt from any
negulation T provisions". In order to avoid any misinterpretation
the error of that
°n this matter, it might be wise to point out
()Pinion in your reply thereto.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
3386
BOARD OF GOVERNORS
OF THE
44.40
4 fffl
t%
FEDERAL RESERVE SYSTEM
Item No. 2
11/19/58
WASHINGTON 25, D. C.
%)
:1
\
4
ADDRESS OFFICIAL CORRESPONDENCE
TO THE EIOARD
t,440.4.*
November 199 1958.
Dear Sir:
This refers to the Board's letter of December 17; 19579 reguesting that preliminary figures of reserve balances; required reserves,
bor
rowings, and float be telegraphed daily to the Federal Reserve Bank
of New York.
toAs indicated therein; duplications of data were being furnished
New York and the Board and their elimination would be considered after
?mparisons were made of preliminary and final data. The comparisons
curnished
cor
ed the Board of preliminary figures telegraphed to New York with
later figures telegraphed to the Board, and subsequent exj
P rienoe with these data; indicate that summaries prepared in New York of
"e preliminary figures received there are satisfactory for Board purposes.
Since the preliminary figures are needed first in New York and
shoul
44 arrive there by 9330 a.m.; Eastern Time; you may discontinue for to the Board the previously requested daily telegrams of CELL
(re
!quired reserves of reserve city banks); CAFE (reserve balances of reserve
banks), and CARD (reserve balances of country banks); beginning with
they
t4 second Thursday after the date of this letter and Chicago may discon'
senue its similar daily telegrams of CARL, CLEM, and COKE for central rerve city banks.
4
As mon as final daily figures or estimates are available, they
sholo
anr1--Lu be compared with the preliminary figures already wired to New York
,IT::_substantial differences should be telegraphed to New York. Minor
rerences of less than $2 million may be ignored or noted on the followopg daY's telegram. Telegraphic requests for explanations or confirmation
unusual changes will be sent from New York.
1T
When final figures of member bank deposits; reserves; and borrow
trips
are being prepared on forms F.R. 422 and 413, they should be compared
with
cl,n averages of preliminary data previously telegraphed and any unusual
-Lirerences noted.
-2At least temporarily9 the Federal Reserve Bank of New York
has adopted the formula that has been used in the Boardvs Division of
Bank Operations for making daily estimates of required reserves of
country banks. This formula does not yield accurate results in many
of the computation periods9 but it was reviewed at the Reserve Banks
in response to the Boardvs letter of April 49 1955 (December 279 1954
to San Francisco) and later was a subject of further study bya System
research committee. The Boards staff will continue its search for an
improved estimating formula that does not impose a further reporting
burden on country banks. If similar studies should be made at your
!
4nk9 it will be appreciated if a summary of the results is forwarded
tio the Board.
Very truly yours9
Secretary.
To
PRESIDENTS OF ALL FEDERAL RESERVE BANKS EXCEPT NEW YORK
(
Copy to New
York)
s
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS
3
11/19/58
OFFICIAL
CORRESPONDENCE
TO THE BOARD
Dear sir:
The indicated number of copies of the following forms are being
alad :fded to your Bank under separate cover for use of State member banks
coh2neir affiliates in submitting reports as of the next call date. A
of each form is attached.
Htlitiber of
Form F.R. 105 (Call No. 150), Report of condition of
State member banks.
Form p.fl. 105e (Revised November 1955), Publisher's
copy of report of condition of State member banks.
Form F.R. 105e-1 (Revised November 1955), Publisher's
copy of report of condition of State member banks.
Form F.R. 105e-2 (Revised November 1955), Publisher's
copy supplement.
Form F.R. 220 (Revised March 1952), Report of affiliate
or holding company affiliate.
Form F.R. 220a (Revised March 1952), Publisher's copy
of report of affiliate or holiLog company affiliate.
1958,
All of the forms are the sam as those used on September 24,
Very truly yours,
Merritt Sherman,
Secretary.
1,
410
,Lonlares
pr
PREsIDEins
OF ALL FEDERAL RESERVE BATTS
UNIal) STATES OF AMERICA
Item No.
11/19/58
4
BEFORE THE BOARD OF GOVERNORS OF THE i.EDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
BANCOHIO CORPORATION
' for prior approval of acquisition of voting
shares of The Kenton Savings Bank
•••••
ORDER APPROVING APPLICATION FOR PRIOR
APPROVAL UNDER BANK HOLDING COMPANY ACT
There having come before the Board of Governors, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 USC 1842)
and section 4(a)(2) of the Board's Regulation Y (12 CFR 222.4(a)(2
)).9
an application on behalf of BancOhio Corporation, an Ohio corporation
with its principal office in Columbus, for the Board's prior approval
Of acquisition of up to 100 per cent of the 3,000 outstanding voting
shares of capital stock of The Kenton Savings Bank, Kenton, Ohio; a
40tice of Tentative Decision, referring to a Tentative Statement, on
said application having been published in the Federal Register on
°ctober 30, 1958; the said Notice having provided interested persons
an °PPortunity, before issuance of the Board's final order, to file
obi
.
ections or comments upon the facts stated and the reasons indicated
in the Tentative Statement; and the time for filing such objections and
comments having expired and no such objections or comments having been
filed;
3391
IT IS HEREBY ORDERED, for the reasons set forth in the Board's
Statement of this date, that the said application be and hereby is
granted and the acquisition by BancOhio Corporation of up to 100 per cent
Of the outstanding voting shares of The Kenton Savings Bank, Kenton, Ohio,
is hereby approved, provided that such acquisition is completed within
three months from the date hereof.
Dated at Washington this 19th day of November, 1958*
By order of the Board of Governors.
Voting for this action: Chairman Martin, Vice
Chairman Balderston, and Governors Szymczak, Mills,
Robertson and Shepardson.
Absent and not voting:
Governor Vardaman.
(signed) Merritt Sherman
Merritt Sherman,
Secretary.
(sta)
n
363Q()
BOARD OF GOVERNORS
OF THE
FLDERAL RESERVE SYSTEM
APPLICATION BY BANCOHIO CORPORATION, COLUMBUS, OHIO,
FOR PRIOR APPROVAL OF ACQUISITION OF VOTING SHARES
OF THE KENTON SAVINGS BANK, KENTON, OHIO
STATEIENT
BancOhio Corporation, Columbus, Ohio (hereafter referred to
as"BancOhio"), a bank holding company, has applied, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 ("the Act"),
for the Board's prior approval of the acquisition of up to 100 per
cent of the 3,000 outstanding voting shares of The Kenton Savings
Bank (hereafter referred to as "Kenton"), a commercial bank located
in Kenton, Ohio.
Views and recommendations of Superintendent of Banks. As required by section 3(b) of the Act, the Board gave notice of the
application to the Superintendent of Banks for the State of Ohio.
The
SiTerintendent interposed no objection to the application.
Statutog factors. - Section 3(c) of the Act requires the
13°4rd to take into consideration the following five factors: (1) the
financial
history and condition of the holding company and bank 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 acquisition
Iv°111d be to expand the size or extent of the bank holding company
aYetem involved beyond limits consistent with adequate and sound
t
-2-
banking, the public interest, and the preservation of competition
in the field of banking.
Discussion. 4-, It appears that the financial history and
condition, the prospects, and the management of both BancOhio and
Kenton are satisfactory.
The city of Kenton (population of about 8,700) is the
county seat of Hardin County and is served by three commercial banks,
including Kenton. With deposits of about 5 million, Kenton is the
largest bank in the city and the county. it operates two branches,
one about 9-1/2 miles north and one about 9-1/2 miles south of the
City.
There is no evidence that control of Kenton by BancOhio would
be inconsistent with the convenience, needs,and welfare of the area
concerned.
On the other hand, it seems probable that acquisition of
control of Kenton by BancOhio would be followed by a broadening of
banking services and thus contribute to the convenience and welfare
°f the area involved.
BancOhio now controls 21 commercial banks with a total of
47
banking offices and deposits in excess of $608 million.
The
banks are located in 19 Ohio counties, principally in the central
an4 south-central parts of the State.
BancOhio's principal bank is
located in Columbus, the State capital, and it has two other banks
in the same county; otherwise, no county contains more than one of
BancOhio's subsidiary banks.
Control of Kenton by BancOhio would bring within the holding
e°111PanY system the largest bank in a county in which BancOhio is not
now
operating. It would cause BancOhio to control (a) the largest of
-3—
three banking offices in the city of Kenton and about 43 per cent of
the total deposits held by such offices, and (b) three of the ten
banking offices in Hardin County and about 25 per cent of their
deposits.
In the counties in which it would be operating after the
Proposed acquisition, the holding company would control about 26 per
cent of commercial banking offices and 44.6 per cent of their total
deposits, as compared with its present control of 24.5 per cent of
offices and 44.3 per cent of such deposits in the same counties.
The proposed acquisition would not reduce the number of
"mPeting banking offices in the area or otherwise eliminate any
substantial banking competition.
It does not appear that any of
BancOhio's present subsidiaries competes appreciably in the city of
1Centon or in Hardin County.
The nearest present subsidiary of
IllancOhio is more than 20 miles distant from the nearest branch of
ICenton.
The history of BancOhio suggests that the transaction would
not be likely to result in its domination of banking in the area
co
ncerned.
In the circumstances, it is the Board's opinion that the
Proposed transaction would not expand BancOhio's system beyond limits
e°11eistent with adequate and sound banking, the public interest, or
the Preservation of competition in the field of banking.
Conclusion. - The above views were incorporated in the
Tentative Statement issued in connection with the Notice of Tentative
1/ecision published in the Federal Register on October 30, 1958 (23 FR 8413)
affording interested persons an opportunity to submit comments on or
Objections to the Board's proposed action, and no such comments or
objections were received within the period specified for their submission.
In the light of the facts stated and for the reasons indicated,
it is the Board's judgment that approval of the application would be in
accordance with the factors stated in section 3(c) of the Act and with
the purposes of the Act, and that, accordingly, the application should
be aPProved. It is so ordered.
Item No.
5
11/19/58
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
UNION BOND & MORTGAGE COMPANY
for prior approval of acquisition of
voting shares of Forks State Bank
ORDER APPROVING APPLICATION FOR PRIOR
APPROVAL UNDER BANK HOLDING COMPANY ACT
There having come before the Board of Governors pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 USC 1843)
and section 4(a)(2) of the Board's Regulation
y (12 CFR 222.4(a)(2)),
an application on behalf of Union Bond & Mortgage Company, whose
Principal office is in Port Angeles, Washington, for the Board's
Prior approval of the acquisition of 30 additional shares of the outstanding voting shares of Forks State Bank, Forks, Washington; a
Notice of Tentative Decision referring to a Tentative Statement, on
said application having been published in the Federal Register on
October 30, 1958; the said Notice having provided interested persons
an oPportunity, before issuance of the Board's final order, to file
°I0jecti0n5 or comments upon the facts stated and the reasons indicated
it the Tentative Statement; and the time for filing such objections
and comments having expired and no such objections or comments having
been filed;
33t.7
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that the said application be and
hereby is granted and the acquisition by Union Bond & Mortgage
Company of 30 additional shares of Forks State Bank, Forks, Washington,
is hereby approved, provided that such acquisition is completed -within
three months from the date hereof.
Dated at Washington this 19th day of November, 1958.
By order of the Board of Governors.
Voting for this action: Chairman Martin, Vice
Chairman Balderston, and Governors Szymczak2 Mills,
Robertson and Shepardson.
Absent and not voting: Governor Vardaman.
(signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SPAL)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY UNION BOND & MORTGAGE COMPANY, PORT ANGELES,
WASHINGTON, FOR PRIOR APPROVAL OF ACQUISITION OF VOTING
SHARES OF FORKS STATE BANK, FORKS, WASHINGTON
STATEMENT
Union Bond & Mortgage Company, Port Angeles, Washington
(hereafter referred to as "Union") has applied, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (the "Act"),
for the Board's prior approval of the acquisition of direct ownerof 30 shares of the capital stock of Forks State Bank, Forks,
Washington ("Forks").
As required by section 3(h) of the Act, the Board gave
n°tice of this application to the Supervisor of Banking for the State
Of Washington and requested his views and recommendations.
In his
letter to the Board, the State Supervisor of Banking stated in part:
"Union Bond & Mortgage Company has for many
years held a substantial stock interest in Forks
State Bank with the knowledge and approval of this
division. I will therefore interpose no objection
to the acquiring by Union Bond & Mortgage Company
of thirty additional shares."
Section 3(c) of the Act requires the Board to take into
c°nsideration the following five factors: (1) the financial history
arid condition of the holding company and the bank concerned;
:
-2-
(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 acquisition would
be to expand the size or 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 banking.
Union now owns 23.5 per cent of the outstanding shares of
Forks. In addition, it owns more than 25 per cent of the stock of
each of two other banks and 24.5 per cent of the stock of a fourth
bank.
The proposed acquisition of additional stock of Forks would
cause Union to own exactly 25 per cent of the outstanding shares of
that bank.
It further appears that the proposed acquisition of 30
additional shares would not affect control of the bank.
With respect to the first three statutory factors, it
aPPears that the financial history and condition, prospects, and
management of both Union and Forks are satisfactory.
In the circum-
Stances of this case) the proposed acquisition would in no way affect
the convenience, needs, and welfare of the communities and the area
Concerned, nor would the acquisition result in any expansion of the
81-Ze
or extent of Unionls system of banks.
Conclusion. - The above views were incorporated in the
Tentative Statement issued in connection with the Notice of Tentative
Isecision published in the Federal Register on October 30, 1958
(23 '4
lin 01
,
- 0412) affording
interested persons an opportunity to submit
comments on or objections to the Board's proposed action, and no such
comments or objections were received within the period specified for
their submission.
In the light of the facts stated and for the reasons indicated,
it is the Board's judgment that approval of the application would be in
accoance with factors stated in section 3(c) of the Act and with the
Purposes of the Act and that, accordingly) the application should be
aPProved.
t is so ordered.
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Item No.
11/19/58
6
WASHINGTON, D. C.
In the Matter of the Application of
UNION BOND & MORTGAGE COMPANY
for prior approval of acquisition of
voting shares of Bank of Sequim
ORDER APPROVING APPLICATION FOR PRIOR APPROVAL
UNDER BANK HOLDING COMPANY ACT
There having come before the Board of Governors pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 USC 18)43)
and section 4(a)(2) of the Board's Regulation Y (12 CFR
222.4(a)(2)),
an application on behalf of Union Bond & Mortgage Company, whose
Principal office is in Port Angeles, Washington, for the Board's
Prior approval of the acquisition of 10 additional shares of the outstanding voting shares of Bank of Sequim, Sequim, Washington; a Notice
c't Tentative. Decision referring to a Tentative Statement, on said
4PP1ication having been published in the Federal Register on October 30,
1958; the said Notice having provided interested persons an opportunity,
before issuance of the Board's final order, to file objections or
e°111nients upon the facts stated and the reasons indicated in the
entative
Statement; and the time for filing such objections and
"z)rrIrtients having expired, and no such objections or comments having
been filed;
3402
-2-
IT IS HEREBIORDERED, for the reasons set forth in the
Board's Statement of this date, that the said application be and
hereby is granted and the acquisition by Union Bond & Mortgage
Company of 10 additional shares of Bank of Sequiml Sequim,
Washington, is hereby approved, provided that such acquisition
is completed within three months from the date hereof.
Dated at Washington this 19th day of November, 1958.
By order of the Board of Governors.
Voting for this action: Chairman Lartin, Vice
Chairman Balderston, nne Covcrners Szymczal:, Lills,
Robertson and .;;Ilepardsen.
Absent and not votinv: Governor Vardaman.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
3403
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY UNION BOND & MORTGAGE COMPANY, PORT ANGELES,
WASHINGTON, FOR PRIOR APPROVAL OF ACQUISITION OF VOTING
SHARES OF BANK OF SEQUIM, SEQUIM, WASHINGTON
STATEMENT
Union Bond & Mortgage Company, Port Angeles, Washington
(hereafter referred to as "Union") has applied, pursuant to sec-
ti°n 3(a)(2) of the Bank Holding Company Act of 1956 (the "Act"),
for the Board's prior approval of the acquisition of direct ownerof 10 shares of the capital stock of Bank of Sequim, Sequim,
Washington ("Sequim").
As required by section 3(h) of the Act, the Board gave
notice of this application to the Supervisor of Banking for the
State of Washington and requested his views and recommendations.
It1 his letter to the Board, the State Supervisor of Banking stated
in part:
"Union Bond & Mortgage Company has for many
years held a substantial stock interest in the
Bank of Sequin with the knowledge and approval of
this division.
I will therefore interpose no
objection to the acquiring by Union Bond &
Mortgage Company of 10 additional shares."
-2-
Section 3(c) of the Act requires the Board to take into
consideration the following five factors: (1) the financial history
and condition of the holding company and the bank 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 acquisition
would be to expand the size or 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 banking.
Union now owns 24.5 per cent of the outstanding shares of
Sequim.
In addition, it owns more than 25 per cent of the stock of
each of two other banks and 23.5 per cent of the stock of a fourth
bank.
The proposed acquisition of additional stock of Sequim would
eauee Union to own exactly 25 per cent of the outstanding shares of
that bank.
It further appears that the proposed acquisition of
10 additional shares would not affect control of the bank.
With respect to the first three statutory factors, it
appears that the financial history and condition, prospects, and
planagement of both Union and Sequim are satisfactory
In the
cil'cumstances of this case, the proposed acquisition would in no
waY affect the convenience, needs, and welfare of the communities
-3and the area concerned, nor would the acquisition result in any
expansion of the size or extent of Union's system of banks.
Conclusion. - The above views were incorporated in the
Tentative Statement issued in connectioivwith the Notice of Tentative
Decision published in the Federal Register on October 301 1958
(23 FR 8412) affording interested persons an opportunity to submit
comments on or objections to the Board's proposed action, and no
such comments or objections were received within the period
specified for. their submission.
In the light of the facts stated and for the reasons
indicated, it is tlie Board's judgment that approval of the application would be in accordance with factors stated in section 3(c)
°lb the Act and with the purposes of the Act, and that, accordingly,
the application should be approved. It is so ordered.
Item No. 7
11/19/58
S-1680
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1958.
Dear Sir:
At the last Conference of Representatives of the Bank Examination Departments of the Federal Reserve Banks, the question of borr"Ing by examiners was discussed, with particular reference to the
matter of borrowing from nonmember banks. It was indicated by the
13°ard'5 representatives that the subject would be reviewed.
As examiners and assistant examiners for Federal Reserve
Banks have no general authority to examine nonmember banks, the Board
will interpose no objection to their borrowing from nonmember banks
appropriate purposes, except in the limited class of cases referred to below. This represents a modification of the position stated
the Board's letter X-7638 of October 14, 1933, (FRLS #9180) which
-Ls hereby
cancelled.
Section 218 of the Criminal Code prohibits an examiner or
assi
stant examiner of member banks of the Federal Reserve System from
'1,,
cc?Pting a loan or gratuity from any bank examined by him. Accordexaminers and assistant examiners for the Federal Reserve Banks
ofe prohibited from borrowing from State member banks. Section 217
t
he Criminal Code prohibits an officer, director, or employee of a
13'"K which is a member of the Federal Reserve System or an insured
ank from making or granting any loan or gratuity to any examiner or
istant examiner who examines or has authority to examine such bank.
is would appear to prohibit loans by a national bank to examiners
,lau:ssistant examiners for Federal Reserve Banks as the System has
al:riority to examine such bank.“ For the same reason, this would
)c) appear to prohibit loans to such examiners by any insured bank
re-L°h is an affiliate of a State member bank or is a subsidiary of a
istered bank holding company or of a holding company affiliate
ch holds a voting permit from the Board.
4
/4
4
As these sections of the Criminal Code apparently are de111-neci to prevent examiners from borrowing from banks examined by
a0
,
171 °r which they have authority to examine, the statutes would not
14ar to aPP'Y to obligations of examiners which are acquired by
till s from the original nonbank lenders. However, the Board conIles of the view that, as a matter of sound policy, examiners and
34
-2-
S-1680
assistant examiners should not be permitted to participate in any examlhation or investigation of a bank to which they are indebted.
As heretofore expressed in letter S-1462 of July 16, 1952,
(FRLS #6522) regarding special examiners and special assistant examiners
for the Federal Reserve Banks, the criminal provisions of law regarding
tile granting of loans to examiners and assistant examiners who examine
Or have authority to examine member banks could be held applicable by
the Department of Justice to a bank loan obtained by a special examiner.
T herefore, as indicated in the above letter, at the time of designation
a special examiner or special assistant examiner, the employee should
,Q.se informed of the provisions of law which make it a criminal offense
._°r an officer, director, or employee of a member bank or of an insured
'rlk to make or grant any loan to an examiner or assistant examiner
w110 examines or has authority to examine such bank, and subject the
xaminer to criminal action if he accepts a loan from any bank examined
Y him. All employees designated as special examiners or special
”sistant examiners should continue to submit annual reports of
indebtedness
as described in the Board's letter S-1018 of March 24,
1948, (FRLS #905)4). (Letter S-1462 of July 16, 1952, is hereby superseded.)
Z
The Board feels that, in considering applicants for appointm r-lt to positions on the examining staffs of the Reserve Banks, men
'ould not be selected who are involved financially or are heavily in
,?bto However, a proposed appointee need not be precluded from con'
lderation merely because of indebtedness incurred for an appropriate
P
eurPcse. In approving proposed new appointments to the position of
Bxamlher or assistant examiner of persons indebted to banks, the
I'd's approval will be granted with the restriction that such persons
be permitted to participate in any examination of such banks until
ne indebtedness has been liquidated.
r
Very truly yours,
Merritt S
Secretary.
PRESIDENTS OF ALL FEDERAL RESERVE BANKS
@FedFRASER