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3556 Ameeting of the Federal Reserve Board was held in Washington p -uesday, November 20, 1934, at 3:00 p. m. PRESENT: LI-. Er. Er. Er. hr. Eccles, Governor Thomas, Vice Governor Hamlin Eiller James Szymczak Er. Morrill, Secretary Er. Bethea, Assistant Secretary Er. Carpenter, Assistant Secretary The Secretary stated that, in view of the increase in the etert Of the Governor's office, it will be necessary for the Board to acquire additional space in the Washington Building, that ap1311°zilnately 600 square feet of space are available on the sixth floor of the building adjoining space now occupied by the Board on that floor, and that it has been ascertained that the additional can be leased under the some conditions as are contained in the lease covering the space now occupied by the Board in the 17411111 -g'don Building, and at an annual rental of $1,257.21. The Board authorized the Governor to execute a supplemental lease covering the space referred to at the annual rental stated above. The the Board then acted upon the following matters: Letterdated November 19: 19b4, approved by five members of Board, tO,. Milliams, Chairman of the Federal Reserve Bank " Cleveland: reading as follows: u riee • 19341 elPt is acknowledged of your letter of November 13, " ieing of the appointment by your directors of Mr. 3557 11/20/34 OM f t: . : IMP nr is J. Griggs as Lanaging Director of your 2ittsburgh Branch, and of Lr. George H. Wagner as Cashier of the Branch. ihe Federal Reserve Board approves, effective immediatolY, the salary A the rate of c12,000 per annum fixed by Your directors for bir. Griggs in his new position, and the !alary at the rate of y9,000 per annum fixed for 1,r. Wagner, 2:t being underst ood that the latter salary is to become effective on January 16, 1035, on which date La.. 1;;agner's apPolntment as Cashier of the branch will take effect." Approved. Letter dated hovember 15, 1934, approved by five members of the Board, to ir.Williams, Federal Reserve Agent at the Federal 4eser ve Bank of Clevela nd, reading as follows: "Receipt is acknowledged of jr. Fletcher's letter of Cotober 31, 1034, transmitting a copy of a letter dated Octet'," 23, 1934, from Lir. B. Woodford, Cashier of the 'bourbonAgr icultural Bank b, Trust Company', Paris, ixntucky, requesting that the Board modify the requirement covering the deposit icfi)l' use of trust funds in the bank's commercial department n lich is contained in condition numbered 17 to which the bank ; P' - °ed at the time of its admission to membership, to the ex:ent that such requirement shall apply only to trust funds -tilat are not insured under the provisions of the Banking Act Of 1933. "'"eotion 11(k) of the Federal Reserve Act requires that i:"(is deposited or held in trust by a nationa bank awaitin l g IlTstment shall be carried in a separate account and 'shall it be used by the bank in the conduct of its business unless b__shall first tZds or other set aside in the trust department United States securities approved by the Federal Reserve Taan This provision of section 11(k) was not repealed or lfied by the provisions of the bankincr Act of 1933 relatrecli ° tile insurance of bank deposits and, accordinc0y, this of ' illfeMnt is still effective with respect to trust funds Of tyl!tsb it: .which are used by the banks in the conduct condi'it was the intention of the Board in prescribing the the (1 1°11. of membership above referred to in connection with :' 1' :sion of the bourbon-Agricultural Bank a Trust Comthe:7_ and State banks to the Federal Reserve System that upe.l etshould be subject to the same requirement in this reare national bank- which exercise fiducia ry powers. re quirement is not changed as to national banks by 3558 11/20/34 -3- reason of the insurance of bank deposits the Federal Reserve Board does not feel that it should be modified on that account for State member banks which are subject to the condition in question. You are requested, therefore, to advise the BourbonIgricultural Bank & Trust Company that its trust department '?f not by reason of the provisions for insurance of bank dePosits return to the bank any portion of the securities required to be pledged with the trust department under the condition of membership in question. In this connection, Your attention is directed to the ruling of the Board published 04 Page 121 of the February, 1934, Federal Reserve Bulletin." Approved. Letter dated November 1, 1934, approved by five members of the Board, to "The Citizens National Bank of Petersburg", PetersbUrg 'Virginia, reading as follows: "The Federal Reserve Board has given consideration to application for permission to exercise fiduciary powers, std grants you authority to act, when not in contravention of local law, as trustee, executor, administrator, reglatrar of stocks and bonds, guardian of estates, assignee, feicerver, committee of estates of lunatics, or in any other 041c!laciary capacity in which State banks, trust companies or 15'"ar cor porations which come into competition with national 1111.,! are permitted to act under the lams of the State of th 0-nla, the exercise of all such rights to be subject to e ot,Provisions of the Federal Reserve Act and the regulations iFederal Reserve Board. eiar Ihis letter will be your authority to exercise the fiducovjj"era Granted by the Board. A, formal certificate course. ng alloh authorization will be forwarded to you in due truct"Th° board feels that, if you are tendered any of the Zol )etelrl:tu/Ir by the First National Bank and Trust Company Ot t You should carefully scrutinize their conditVk : ( sisu tt i d3nn4ccept any of such trusts -which, through be detrimental to the interests of your -q.tution.“ APproved, together with a letter, also dated Rovember 19, 1934, and approved by five x„cmbers of the Board, to Mr. Hoxton, Federal t?serire Agent at the Federal Reserve Bank of -3-elIznond, reading as follows: '11.. 3559 11/20/3,1 -4"There is inclosed herewith the letter the Board today has addressed to The Citizens National Bank of Petersburg, Petersburg, Virginia, advising of the Board's approval of the aPPlication of that bank for permission to exercise fiduciary Powers. "It has been noted that the executive committee of your bank has recommended that the Board's approval of the applicati°n of The Citizens National Bank of Petersburg for trust Powers be granted subject to two conditions and that you have suggested in your letter of July 6, 1934, that you might Obtain a resolution of the board of directors of the bank ceePting these conditions before the inclosed authorization , J-s delivered to the bank. Under the provisions of section 11(k) of the Federal Reserve Act the Board is aut..orized to Prescribe regulations to enforce the proper exercise of trust )0wers by national banks and it is not the Board's practice to prescribe conditions in connection with the granting of Permission to national banks to exercise such powers. In this .0 ,nnection, it has been observed that Mr. C. E. Plummer, Prosof The Citizens Itional Lank of Petersburg, in the letter he addressed to you under date of August 28, 1934, at %le direction of the bank's board of directors, has given you , surances that the bank would not sell any of its assets to strust department and would not qualify in any trust handled fr by the predecessor bank which held assets purchased _ ?m the latter. This letter, of course, was received by you :!”quent to your letter to the 'Board of July 6, 1934, in Tig recommendation with regard to prescribing conditions case and it is not entirely clear, therefore, whether You still feel that it is necessary to obtain a resolution ba .Ldle board of directors of the bank to the effect that the Would not sell any of its assets to its trust department t1; /13 1 k/7f not qualify in any trust handled by the predecessor the ' iicl )aroll held assets purchased from the latter. however, Prior t cl_Lhas no objection to ycu obtaining such a resolution ° the delivery of the inclosed letter to the Citizc:ns sta.nce litljc.vo : d Petersburg, if, in view of all the circumef Telegrycu deem it desirable." Z am dated November 1934, approved by five members (31' the Leal-a, io ilecerve texi of cL eZams, Federal Reserve Agent at the Federal eINti.oh to the 15111' stating that the ,oard has given considapplication "The Colonal Trust Company", Pitts- PennsYlvarlia, for a voting permit under the authori of ty of 3560 11/20/34 -5- Is4tion 5144 of the Revised Statutes of the United States, as amende d, "' tiling such organization to vote the stock which it owns or conin "The Greenv ille National Bank", Greenville, Pennsylvania, ' a a has authorized the issuance of a limite permit d to the applicant, subject to the following conditions: "Prior to the issuance of the limited voting permit authorized herein, and prior to December 31, 1934, "(1) Applicant shall, if it has not already done so, charge off or otherwise eliminate from its assets, (a) such Part of the carrying value of stocks of its subsidiary banks as may be in excess of the adjusted value of such stocks, after effect shall have been given to the elimination by such banks of all estimated losses , all depreciation in stooks and defaulted securities, and depreciation in all other securities not of the four highest grades as classified by an investment servic organi e zation regularly engaged 111 the business of rating or grading securities (less net appreciation in securi ties of the four highest grades and any appreciation in securities not of the four highest Fades), as shown by reports of examination of the Freehold ' 5ank and The Greenville National Bank as of May 26, 1934 all!I June 4, 1934, respectively , or with respect to depreciatlon in readily marketable securities, based upon the Current market values of such securities, (b) all estimated ' 4?seee in loans and discounts, (c) all estima ted losses in stocks and defaulted securities, (d) all depreciation in cleol.:rities not of the four highest grades as classified by n iuveatmen.t service organization regularly engaged in the ernese of rating or grading securities (less net apprecia,"71 in securities of the four highest grades and any r eciation in securities not of the four highest grades), to (e) all other losses, such charge-offand selim elina O be tions inati ons rec, based upon the report of examination made by a Federal to itemsbank examiner as of May 26, 1934, or with respect laariteas (0) and (d) upon current market values of readily keable securities; ino, 4 (2) APplicant shall cause each of its subsidiary bank1.4.? -Lnstitut ions to charge off or otherwise eliminate from ass?ts, if it has not already done so, (a) all estima ted sto!!6 in loans and discounts, (b) all estimated losses in soc.!? defaulted securities, (c) all depreciation in 9,4 .71t10e not of the four highes grades t as classified by ''aveetment service organization regularly engage d in the t 4 3561 11/20/34 Ekiia -6- "business of rating or grading securities (less net appreciation in securities of the four highest grades and any appreciation in securities not of the four highest grades), and (d) all other losses, such char ge-offs and eliminations to be based upon the latest avail able reports of examination of the respective banks, or with respect to item (b) and (c) upon current market values of readily marketable securities; "(3) Applicant shall obtain and deliver to you Exhibit L, F.R.B. Form ?-3 and ixhibit i, F.R. B. Form P-4, covering River Sand Company; "(4) Applicant shall agree as follows: First. That Within such time as shall be fixed by the Federal Reserve Agent at the Federal Rese rve Bora- of Cleveland (hereinafter referred to as the Federal Reserve Agent), the unde rsigned uill make, and will cause each of its subsidiary banking institutions to make, such correcti ons as shall be requested by the Federal Reserve Agent in order to remove the cause of any criticisms rela ting to any feature of its or their practices, policies, management or financia cond l ition Which have been made by the appropriate supervisory authorities or the Federal Reserve Agent; Second. That all assets of the unde rsigned and its subsidiary banks which may be Charg ed off i or otherwise eliminated will remain the property : th° bank making such charge-offs or eliminations and will not be T% distributed to the shareholders thereof, or otherwise -aced in any mann er except for cash or its equivalent d/Or other marketable assets." for the following purposes: ",1. To elect directors of such bank at the annual meetof s hareholders or at any adjournments thereof, at any Z: t1.(1.1 prior to February 1, 1935, and to act thereat upon such the ' ers Of a routine nature as are ordinarily acted upon at afInual meetings of such bank. 2. To authorize the issuance by such bank of common az10-- and/or preferred stock of one or more classes, in such : Co ts and with such par values as may be approved by the the,i,,roller of the Currency and the Federal Reserve Agent at mellt,?'ral Reserve Bank Clev of elan d, and to make such amen d4000 ' 60 its articles of association and by-laws as may be or sssarY for such Purpose, at any meeting of the shar eholders adjo urnm ents ther eof, at any time prior t0 Dte The elelellnitk;iloirn17 tel°Priani 4_ s,,ated also that, although paragraph 9 of F.R.B. Form eleuted by 'n° applicant states that the stock certificates of 3562 11/29/34 the aPPlicant do not represent stock of any other corporation, Exhibit M indicates that the applicant may have misconstrued the Pare'graPh and requested that the agent ascertain and advise the 130Ecrdwhether the representation by the applicant in paragraph 9 is "curate. The telegram authorized the agent to have prepared by °cullsel for the Federal reserve bank, and to issue to The Colonial Trust Company, a limited voting permit in accordance with the telegr1411hen the conditions prescribed therein have been complied Approved. Letter dated November 19, 1934, approved by five members of the 4411, to Lr. McClure, Federal Reserve Agent at the Federal Real* of Kansas City, reading as follows: "Reference is made to the voting permit application filed by the First Trust Company, St. Joseph, Missouri, and the applition for membership filed by the First State Bank of St. v'seP, St. Joseph, Missouri. In reviewing the information submitted, it appears that t''61First National Bank of St. Joseph exercises indirect con!°- over the affairs of the First State Bank of St. Joseph Ilthin %.4.01. meaning of section 2(c) of the Banking Act of 1933, 811 ,. tiErc -‘ of the capital stock, except directors' qualifying 1:1, 1;!8, of First Trust Company, St. Joseph, Missouri, is held uis Xhe President of the First National Bank of St. Joseph, Ilioaouri, in office from time to time, Trustee' and in that saidl"son shall be eligible for the office of director of ellen -rust compan_ y who is not a director of said bank or its ahtj?ssor *** and if any such director after his election it841 pease, for any cause, to be a director of said bank or of snl!"880r, he shall ipso facto cease also to be a director the Trust Company'. Consequently it will be necessary for tor alrst National bank of St. Joseph to file an application 4ppli ! Ir ting Permit before final consideration is given to the Jose1,° , 1 4'ion for membership of the First State Bank of St. unlO8s action is taken to terminate the existing 3563 11/20/34 -8- n relationship. since the report of examination of the First iational hank of St. Joseph as of Lay 16, 1934, as well as information regarding such bank's organization, is available to the hoard throu 7h the office the Comptroller of the Currency, and since this offic e is already in possession of information in regard to the First Trust Company, First State Bank of St. Joseph, Buchanan Securities Company, and National Safe Depos it Investment Company, the national bank need not file all exhibits usually required. At this time, the national bank need file only F.R.B. Form P-1 and Exhibits A, C, G, L. N and toget:Ier with any other information which in your opinion is necessary to set forth clearly the relationships between .1:_t and its subsidiaries and affiliates. The applicatio n of the national bank should contain a statement that the informaon contained in the votinr, permit application filed by the 2.rst Trust Company is incorporated by reference in the apPlieation of the national bank. The national bank shoul d be advised, however, that additional information and exhibits be required if, after considerat ion of the items listed ove,, they appear to be necessary. 'Although Regulation P does not specifically so state, A of the voting permit applicatio n to be filed by the t National Bank of St. Joseph should include the First State Bank of St. Joseph followed by the words (Applicant for ' ' - 1711uarehil )). ixhibit A of the application filed by the First rust h„ °rIl°any should be amended so as to include the name of y st icir State Bank of St. Joseph. In this connection, there sed a 'Request for Amendment' of Exhibit A of the votTi° permit application filed by the First Trust Company, IZet should be executed in triplicate by one of the officers of s ecl in Exhibit C of such applicatio n. Two executed copies Loarl:rh 'Request for Amendment' should be forwarded to the and third should be retained for the records of Y-LAr officethe . "In May be r'-'-uer that all of the above mentioned applications th P esented to the Board for simultaneous consideration you practicable date, it will be appreciated if the will impress upon the ?irst National bank of St. Joseph -'uo. for filin g its application for a voting permit as as Possib le.? :I? t Approved. Lette r to Li-. Case, Fedaral Reserve Agent at the Federal ailk of Law York, reading as follows: llo aerlre B there are inclosed the original and copies of a clayton 3564 11/20/3.1 - "Act permit granted to Li-. Samuel L. Allor, 55 Street, i.orwalk, Connecticut, to serve at the same time as director of The Lerchants Bank & Trust kmpany, i;orwalk, Connecticut, and as director of The City National Bank of South Norwalk, South Norwalk, Connecticut, for transmittal by you to LAr. Aller and the two banks, and a copy for your files. "Confidentially, in considering the application of Kr. Aller, it was noted that the examiner for the Federal Deposit Insurance Corporation in his report of examination of The lierchanta Bank ( Trust Company of Norwalk as of Lay 1, 1954, "nsidered that bank to be in an unsatisfactory condition, the total capital structure being approximately ,;53,0u0 less than criticized items of estimated losses, securities depreciation doubtful assets. In the confidential section of his report, 10 examiner stated that the bank was insolvent but that he be1 nd that additional capital to be forthcoming from the construction Finance Corporation might restore the bank to a 80117ent condition. On June lb, 1034, additional capital in the :!°11nt of v98,900 was secured through the sale of preferred oc1to the Reconstruction Finance Corporation; but it is ed that, after giving consideration to the additional capiL.:, provided and based upon the report of examination as of 1, 1934, of deposits. net sound ca)ital amounted to only 4 of "bank was reorganized in 1931 under a plan by which ,1 300,00(., ap " 11 - capital was secured, largely from depositors, and it sul) l!ars that the operations of the last three years Have re0 , ','?d in the loss of the entire ,300,000. Ihe difficulties bank were attributed to the present management which renot regarded as safe by the examiner, who stated that the tors take little interest in the affairs or the institu1°"' 11Aller has been a director of The :..erchants Bank Iprust.Company since its reorganization three years ago andapfal ' entlY shares in the responsibility for the bank's unsatisiatery condition. On the other hand, it is reported that he h: °11° , 0f the better or more desirable directors of the bank, t174 , ! - L.he only interlocking director or officer servin,-_;the of-1,1nctitutions, his attendance at the directors' meetings th baalics has been good, and there is no indication of any hi-ss.e of the credit facilities of the tanks by the applicant, fTnily or his interests. to In all the circunstances, the Board has granted a permit, 31 c. ' cilltinue in efect however, only to the close of December F-e;t4'964- Vihen the permit is sent to the applicant it is sugnd that you call his attention to the limited status of he e tion'°rmit and advise him that the Beard will give considera4 1:°.a new application filed in accordance with the Board's %la L, provided such application is accompanied by , information with respect to any subsequent improvement Z •i'leved Z 3565 11/20/34 -10the condition and management of The Merchants Bank & Trust Compiny and as to Mr. Aller's responsibility or lack of responsibility for the condition of that institution and that s satisfactory showing is made that his services would not be incompatible with the public interest. "Please keep the Board informed of the action taken in this matter." Approved. Thereupon the meeting adjourned.
@FedFRASER