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FR 609
Minutes for
To:
Members of the Board
From:
Office of the Secretary
September 1, 1966
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. Robertson
Gov. Shepardso
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
Minutes of the Board of Governors of the Federal Reserve
System on Thursday, September 1, 1966.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Robertson, Vice Chairman
Shepardson
Mitchell
Maisel
Brimmer
Kenyon, Assistant Secretary
Holland, Adviser to the Board
Solomon, Adviser to the Board
Molony, Assistant to the Board
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Brill, Director, Division of Research and
Statistics
Mr. Hexter, Associate General Counsel
Mr. O'Connell, Assistant General Counsel
Mr. Hooff, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Smith, Assistant Director, Division of
Examinations
Messrs. Robinson, Sanders, and Smith of the
Legal Division
Messrs. Egertson, Lyon, and Sundberg of the
Division of Examinations
Mr. Fisher and Miss Ormsby of the Division of
Research and Statistics
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Approved items.
The following letters were approved unanimously
after consideration of background information that had been made available to the members of the Board.
Copies are attached under the respec-
tive item numbers indicated.
Item No.
Letter to Nevada Bank of Commerce, Reno, Nevada,
approving the establishment of a branch in
Gardnerville.
1
9/1/66
-2Item No.
2
Letter to Bank of Waynesboro, Waynesboro,
Georgia, approving an investment in bank
premises.
Application of First Virginia Corporation (Items 3-5).
There
had been distributed drafts of an order and statement reflecting
approval by the Board on August 19, 1966, of the application of The
First Virginia Corporation, Arlington, Virginia, for permission to
acquire 80 per cent or more of the voting shares of The Staunton
Industrial Bank, Staunton, Virginia.
After a technical correction in the draft order had been noted,
the issuance of the order and statement was authorized.
Copies of the
documents as issued are attached as Items 3 and 4, respectively.
Unan-
imous approval also was given to a letter to The First Virginia Corporation in the form attached as Item No. 5.
Mr. O'Connell pointed out that the statemenC in this case contained an abbreviated paragraph reciting statutory considerations, which
paragraph would be used henceforth if the abbreviation was sufficiently
No objection to the use of
responsive to an earlier Board suggestion.
such a paragraph was indicated by the members of the Board.
Housing legislation (Item No. 6).
The Bureau of the Budget had
requested a report on enrolled bill S. 3688, "to stimulate the flow of
mortgage credit for Federal Housing Administration and Veterans Administration assisted residential construction."
The Board had not previously
,
-3-
9/1/66
been requested to report on this bill, the first section of which
would increase the borrowing authority of the Federal National Mortgage Association under its secondary market operations from 10 to 15
times its capital account.
Another section would enlarge the Associa-
tion's lending ability through an increase of $110 million in the
amount of preferred stock that it could sell to the Secretary of the
Treasury.
Another section authorized the Association to purchase up
to $1 billion in Federal Housing Administration and Veterans Administration mortgages secured by new residential units if the original
principal obligation on each unit did not exceed $15,000.
However,
the Association was authorized to increase the $15,000 limit to $17,500
for single-family dwellings in areas where the Secretary of Housing and
Urban Development found that cost levels so required.
Of the $1 billion
authorized under this section, $500 million would be transferred from
the Association's outstanding special assistance auChority.
Total funds
available to the Association under the proposal would amount to $4.76
billion.
There had been distributed a memorandum from the Legal Division
dated August 31, 1966, submitting a draft of reply to the Budget Bureau
stating that the Board favored approval of the bill.
There had also
been distributed a memorandum from Mr. Brill dated September 1, 1966,
submitting for the Board's information an analysis of the legislation
by Mr. Fisher.
-4-
9/1/66
The letter to the Budget Bureau was approved unanimously; a
copy is attached as Item No. 6.
Messrs. Robinson, Smith (Legal), Egertson, Lyon, and Fisher
then withdrew.
Proposed study of banking structure.
There had been distributed
a memorandum from the Division of Examinations dated August 26, 1966,
submitting, pursuant to an earlier Board request, a condensed format of
available information pertaining to the banking structure of a given
State (California) for the years 1961-1965.
It was suggested that this
or a similar format could be utilized as a ready reference on matters
coming before the Board such as bank merger and bank holding company
cases and competitive factor reports.
The views of the Board were
sought as to the adequacy of the information presented.
The Division
proposed to modify the format in accordance with such suggestions as
might be made and then proceed to prepare similar compilations of data
for the States of Virginia, New York, and Florida.
Existing compila-
tions would be updated each year and other States would be added when
applications before the Board indicated a need, or upon request by
members of the Board.
Governor Mitchell stated that he had been working with the
Banking Markets Section of the Division of Research and Statistics on
a computer program regarding the banking structure of individual areas.
The program, which was not yet entirely complete, could produce all of
tlAWIC
-5-
9/1/66
the information that had been distributed with the memorandum for any
area that the Board was prepared to define as often as there was a call
for it.
He suggested, therefore, that the Division of Examinations
enter into discussion with the Banking Markets Section.
After further discussion it was agreed that the Division of
Examinations would discuss the subject with the Banking Markets Section
before proceeding further.
Messrs. O'Connell, Hooff, Sanders, and Sundberg then withdrew
from the meeting.
Discount administration.
There had been distributed under date
of August 31, 1966, (1) a revised draft of program for discount administration in the current economic environment, intended for internal
System use only, and (2) a draft of letter to member banks concerning
the need to restrain business lending.
The draft letter also discussed
the operation of the discount window in light of the objective of a
slower rate of expansion of bank loans to business, particularly if
member bank adjustments should take the form of moderation in the rate
of expansion of loans, especially business loans, in lieu of liquidation of municipal securities or other investments.
The Vice Chairman referred to an article in today's edition of
the New York Times indicating that a Federal Reserve official had confirmed a plan to use the credit-granting power of the discount window
as a weapon of selective control to force a slowdown in the expansion
9/1/66
-6-
of loans to business.
In consequence of the press story, he felt that
it was advisable to move promptly.
He suggested that the Board edit
the two draft documents that had been distributed and send them to the
Reserve Bank Presidents by wire, with indication that the Board would
like to hold a telephone conference with the Presidents at 2:30 this
afternoon to receive their comments or suggestions.
He also proposed
that a letter to member banks then be issued and released to the press.
It was suggested and agreed that the wire to the Reserve Bank
Presidents should refer to the press story as a development that led
the Board to feel that the letter to member banks should be released
to the press this afternoon if possible.
The Board then turned to consideration of the draft statement
of a program for discount administration in the current environment,
and it developed that the draft was regarded as generally satisfactory.
Accordingly, it was sent by wire to the Reserve Bank Presidents with
notation that in view of the story in today's Times the Board felt that
a letter to all member banks should be released to the press this afternoon, that a draft of such a letter would be sent to the Presidents by
wire shortly, that the Board would like to have a telephone meeting
with the Presidents at 2:30 this afternoon, and that it would appreciate
the Presidents' comments on the program and on the draft letter.
Consideration next was given by the Board to the draft letter
and a number of editorial suggestions were made, principally for purposes
-7-
9/1/66
of emphasis and clarification.
The draft letter, as revised by the
Board, was then sent by wire to the Reserve Bank Presidents.
It was understood that prior to the telephone meeting this
afternoon the Vice Chairman would get in touch with Mr. Wayne, Chairman of the Presidents' Conference, and Mr. Hayes, President of the New
York Reserve Bank, to specify in more detail the procedure that the
Board felt should be followed and the reasons therefor.
Question was raised as to who would sign the letter to the
member banks, and one point of view presented was that it should go
from the Board over the Vice Chairman's signature.
Another view was
that it would be more nearly in line with normal procedures for such a
letter to be sent to member banks in each District over the signature
of the President of the Reserve Bank in that District.
It was under-
stood that this question would be raised specifically with the Presidents during the telephone meeting this afternoon.
It was also under-
stood, however, that a press statement giving the text of the letter
would be released from the Board's offices.
As to the timing of the
press release, it was suggested that it should be issued to the press
as soon after 3:30 this afternoon as proved feasible.
In further discussion Mr. Molony outlined the text of a press
release that might be issued.
Several suggestions were made by members
of the Board, including the suggestion that the press release should
emphasize that the issuance of the letter to member banks reflected a
System decision.
Kir ik
9
66
-8The meeting then adjourned.
Secretary's Note: The minutes of this
afternoon's telephone conference meeting of the Board and the Presidents
have been prepared as a separate document.
6.7-X
Assistant Secreta
Item No. 1
9/1/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADORES, orricem. OORPICISPONDEN
TO THE BOARD
CIE
September 1, 1966
Board of Directors,
Nevada Bank of Commerce,
Reno, Nevada.
Gentlemen:
Federal
The Board of Governors of the
by
ent
lishm
estab
Reserve System approves the
a
of
a,
Nevad
Nevada Bank of Commerce, Reno,
en Bell Street
branch on U. S. Highway 395 betwe
a, provided
Nevad
and Circle Drive, Gardnerville,
s from
month
six
the branch is established within
the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
Item No. 2
9/1/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 1, 1966
Board of Directors,
Bank of Waynesboro,
Waynesboro, Georgia.
Gentlemen:
Pursuant to the provisions of Section 24A of
the Federal Reserve Act, the Board of Governors of the
Federal Reserve System approves an indirect investment
in bank premises of not to exceed $325,000 by Bank of
Waynesboro, Waynesboro, Georgia, for the construction
of a new main office building. It is understood that
$100,000 of this investment (which includes $31,000
already expended for land) will represent stock of the
bank's wholly-owned affiliate and the remaining amount
($225,000) is to be funds borrowed by the affiliate from
a source other than subject bank.
It is the Board's understanding that your bank's
capital structure is to be strengthened in the early part
of 1967 through the sale of new capital stock.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
$
Item No. 3
9/1/66
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
UNITED STATES OF AMERICA
WASHINGTON, D. C.
In the Matter of the Application of
THE FIRST VIRGINIA CORPORATION,
ARLINGTON, VIRGINIA,
Lot approval of the acquisition of
voting shares of The Staunton
Industrial Bank, Staunton, Virginia.
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
section 3(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(a),
CS amended by Public Law 89-485), and section 222.4(a) of Federal
Reserve
Regulation Y (12 CFR 222.4(a)), an application by The First Virginia
Corporation, Arlington, Virginia, a registered bank holding company,
Lot the Board's prior approval of the acquisition of 80 per cent or
more of the voting shares of The Staunton Industrial Bank, Staunton,
Virginia.
As required by section 3(b) of the Act, the Board notified
the Virginia Commissioner of Banking of receipt of the application and
requested his views and recommendation.
The Commissioner expressed no
objection to approval of the application.
-2-
Notice of receipt of the application was published in the
Federal Register on July 19, 1966 (31 Federal Register 9763), which
provided an opportunity for submission of comments and views regarding
the proposed transaction,
Time for filing such views and comments has
expired and all those filed with the Board have been considered by it.
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,
provided that the acquisition so approved shall not be consummated
(a) before the thirtieth calendar day following the date of this Order
or (b) later than three months after said date.
Dated at Ifashington, D. C., this 1st day of September, 1966.
By order of the Board of Governors.
Voting for this action: Vice Chairman Robertson, and
Governors Shepardson, Mitchell, Daane, and Brimmer.
Absent and not voting:
Governor Maisel.
Chairman Martin and
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(SEAL)
BOARD OF GOVERNORS
Item No. 4
9/1/66
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY THE FIRST VIRGINIA CORPORATICN, ARLINGTON,
VIRGINIA, FOR APPROVAL OF ACQUISITION OF SHARES OF THE
STAUNTON INDUSTRIAL BANK, STAUNTON, VIRGINIA
STATEMENT
The First Virginia Corporation, Arlington, Virginia
("Applicant"), a registered bank holding company, has filed with the
Board, pursuant to section 3(a) of the Bank Holding Company Act of
1956, as amended ("the Act"), an application for approval of the acquisition of 80 per cent or more of the voting shares of The Staunton
Industrial Bank, Staunton, Virginia ("Bank").
Applicant, one of four bank holding company groups operating
1/
in Virginia, had ten subsidiary banks at December 31, 1965,
and it
Obtained permission to acquire control of First Valley National Bank,
Rich Creek, Virginia, on July 11, 1966. The eleven banks had total
dePosits of about $271 million and operated 62 offices in the State.
Applicant also controls two insurance agencies, a bank premises company,
R bank servicing corporation, and an advertising agency.
Bank, which was organized in 1930 as an industrial loan
corporation, converted to a State-chartered commercial bank in
17—Unless otherwise indicated, all
banking data noted are as of this date.
-2-
January 1963.
Bank, with deposits of nearly $6 million, has obtained
authority from the State Corporation Commission to establish its first
branch in a new shopping area located about four miles south of its main
office.
Bank's primary service area, with an estimated population of
31,200, encompasses the independent City of Staunton (the county seat of
Augusta County) and the surrounding agricultural area extending approximately four and one-half miles to the north and south and approximately
two miles to the east and west.
Approximately 75 per cent of the amount
of Bank's deposits of individuals, partnerships, and corporations ("IPC
deposits") originate in its primary service area, while about 97 per cent
of such deposits are derived from Augusta County and the independent cities
of Staunton and Waynesboro.
Views and recommendation of supervisory authority. - As
required by section 3(b) of the Act, notice of receipt of the application
was given to, and views and recommendation requested of, the State
Commissioner of Banking.
The Commissioner expressed no objection to
approval of the application.
Statutory considerations. - The Act prohibits Board approval of
any proposed acquisition which would result in a monopoly, or further any
ccmbination, conspiracy, or attempt to monopolize the business of banking
in any relevant area. Nor may approval be given where the Board finds
that the effect of a proposal may be substantially to lessen competition,
Or in any other manner be in restraint of trade, unless such anticompetitive effects are clearly outweighed by the probable effect of the
-3-
t etw
transaction in meeting the convenience and needs of the area to be
served.
In every case, the Board considers the latter factor, as well
as the financial and managerial resources and future prospects of the
bank holding company and the banks concerned.
Competitive effects of proposed acquisition. - Applicant controls
about 5 per cent of the deposits of all banks in Virginia, and is the
third largest bank holding company group and the sixth largest banking
In terms of deposits controlled, the two
organization in the State.
largest banking organizations in the State are more than twice the size
of Applicant, and the third largest such organization is nearly twice
Applicant's size.
Acquisition of Bank would increase Applicant's control
over all deposits in the State by only about one-tenth of 1 per cent.
At June 30, 1964 (the latest date for which a compilation of
deposits by counties is available), 10 banks operated a total of
17 banking offices in Augusta County and the independent cities of
Staunton and Waynesboro.
Those 17 offices held, in the aggregate,
deposits of about $75 million, with Bank's deposits of about $5 million
representing 7 per cent of such total.
Bank's time IPC deposits and
demand IPC deposits represented, respectively, 13 per cent and 1 per
cent of such deposits of the 17 offices in the county.
At the same date,
six banks operated a total of nine banking offices within Bank's designated primary service area.
Bank controlled about 11 per cent of the
total deposits in this area, and was fifth largest in terms of area
d eposits held by each of the six banks.
-4-
Inasmuch as consummation of the proposed acquisition would
represent the initial entry of a bank holding company into Augusta
County, and in view of the relatively small concentration of banking
deposits under Bank's control in the areas earlier mentioned, it is
the Board's judgment that the transaction proposed would not result
in a monopoly, nor does it appear to be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any relevant area.
Applicant's present subsidiary bank located nearest to Bank
iS in Mount Jackson, approximately 50 miles northeast of Staunton.
Applicant states its Mount Jackson subsidiary, with less than $5 million
of deposits, does not presently compete in Bank's primary service area,
and the Mount Jackson bank's size and distance from Staunton reasonably
Support this statement.
These facts also make unlikely any meaningful
future competition between these banks were Applicant's proposal not to
be consummated.
Applicant states further that Bank does not derive any
business from the service areas of Applicant's other subsidiary banks,
and that they derive no business from Bank's service area.
There appear-
nothing to the contrary in the record before the Board, it is concluded that consummation of Applicant's proposal will neither eliminate
cicisting competition between Bank and Applicant's subsidiary banks nor
foreclose significant potential competition between them.
Located in Bank's primary service area are two offices of
First & Merchants National Bank, Richmond (deposits, $500 million),
32'13
-5-
and two offices of Virginia National Bank, Norfolk (deposits, $489 million),
the two largest banks in Virginia; two offices of Planters Bank and
Trust Company, Staunton, a $7.5 million institution; the sole office
of National Valley Bank, Staunton, with deposits of about $19 million;
and one office of Rockingham National Bank, Harrisonburg, a $28 million
institution.
The Board concludes that the competitive force and position
of these competing banks will not be adversely affected as a result of
Bank's acquisition by Applicant.
On the contrary, it may reasonably
be assumed that Bank's affiliation with Applicant will better position
Bank to compete with the banks operating in its trade area.
Consummation
of the proposed acquisition will not affect the number of alternative
banking sources available in the area and, since Applicant does not control a major correspondent bank in Virginia, the proposal is not likely
tO have any measurable effect on the use by Bank's competitors of correspondent banks.
It is the Board's judgment, based on the foregoing
considerations, that Applicant's acquisition of Bank will not create
a monopoly, will not tend substantially to lessen competition, nor
1/ill it be in any other manner in restraint of trade.
Financial and managerial resources and future prospects.
APPlicant's financial resources and prospects, and those of its subsidiary banks, are regarded as satisfactory.
Although Applicant has
a substantial long-term debt, it appears reasonably susceptible of
-6-
=
being serviced without undue burden on its subsidiaries.
Applicant's
banks have sound operating and deposit growth records, and its
nonbanking subsidiaries, favorable earnings records.
Applicant has
followed a rather conservative policy with respect to dividend withdrawals from subsidiaries.
Assuming, as the Board believes is warranted,
the continuation of sound and profitable subsidiary operations and
Applicant's readiness, as proposed, to issue convertible preferred stock
or a mixture of common and preferred stock to meet any necessary debt
and capital requirements of its system, the Board views the prospects
of Applicant and its subsidiary banks as such to be consistent with
approval of the application.
Bank's financial condition, and its prospects either as an
independent institution or as a subsidiary of Applicant's holding
company system, are also considered to be satisfactory.
Its deposit
growth in the past fifteen years - frac' abcut $3 million at year-end
1950 to its present $6 million - has been relatively slow and reflects
the operational limitations to which it was subject as an industrial
loan corporation.
Bank's loan portfolio is weighted substantially
toward consumer loans, with but minor attention given to obtaining
a reasonable share of available commercial and industrial loans.
The
imbalance reflected in Bank's deposit and loan structures stems
bank
Primarily from a lack of experience in full-scale commercial
operations.
Applicant's experience in commercial bank operations
Offers, in the Board's judgment, a source of guidance and assistance
-7reasonably calculated to enhance Bank's ability
to offer more immediately
a broader rang
e of cervices, thus enhancing its growth and competitive
Potential.
Present managements of Applicant, its subsidiaries, and
Bank are considered sati
sfactory.
Applicant states that it does not
contemplate making any changes within Bank
's officer staff following
its acquisitio
n of control, but it does propose to assist Bank in
staffing its proposed new branch
office at the time that office opens
for busin
ess. In addition, since Bank's management has gained most
of its experience
in operating Bank as an industrial loan corporation,
the Board
finds reasonable Applicant's assertion that it will provi
de
benefi
cial assistance to Bank's management
in expanding the operations
of Bank, and
thus make available to Bank's customers a broader range
of commercial
bank services.
Considerations relating to the financial and managerial
resources
and prospects of Applicant and Bank are, in the Board's
judgment, consistent with approval
of the acquisition and provide
some support
therefor.
Convenience and needs of the area to be served. - Augusta
C°untY, located at the northern
end of the Shenandoah Valley, is one
f Virginia's
most prosperous agricultural counties, with more than
half of its total land area devoted
to farming.
However, the princi-
Pal income
-producing activities within the county are industry oriented
,
with manufacturing
accounting for over 30 per cent of the total employment
-8-
in the Staunton-Waynesboro area.
east of Staunton.
tJaynesboro is located about 12 miles
Principal industries in the area include plants of
B. I. du Pont de Nemours & Company, Inc., General Electric Company,
Westinghouse Electric Corporation, and Genesco, Inc.
Also important
to the economy are the numerous retail, wholesale, and service trade
outlets centered in the Staunton-Waynesboro area.
The Shenandoah
National Park and the Blue Ridge Parkway draw a substantial number of
tourists to the area, as do the Staunton Military Academy and Mary
Baldwin College for Oomen, both located in Staunton.
The record indicates that the principal banking needs within
Bank's service area are being satisfied by the nine banking offices
Presently located there.
Inasmuch as the area's available banking
outlets include branches of the State's two largest ccmmercial banks,
APplicant's acquisition of Bank cannot be expected to improve measurably
the scope or
nature of the banking services now available.
However,
assuming the establishment of Bank's proposed suburban office, Applicant's proposal to make available at Bank's main and branch offices
ad
ditional types of credit such as inventory and accounts receivable
Zinancing, floor plan loans and construction loans, and its proposed
e'lTansion of Bank's demand deposit structure represent for certain of
Bank's customers a sufficiently more convenient source of full banking
service over that presently being offered as to support approval of
Applicant's acquisition of Bank.
-9-
Summary and conclusion. - For the reasons aforestated, the
Board concludes that consu
mmation of Applicant's proposal will not
have significan
tly adverse competitive consequences, and that considerations relating to the financial
and managerial resources and prospects of Applicant and
Bank, and to the convenience and needs of the
area to be served, are consi
stent with, and in certain respects affirmatively support, approval
of the application.
In the li3ht of the factors set forth in the Bank Holding
Company Act, and on the basis of
the relevant facts of record, it is
the Board's
judgment that the proposed acquisition is in the public
interest and that the application should
be approved.
Septem
ber 1, 1966.
Item No. 5
9/1/66
BOARD OF GOVERNORS
••4.9
.
of Goy .
k'k ••
•c,
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
September 1, 1966.
REGISTERED
RETURN RECEIPT REQUESTED
The First Virginia Corporation,
2924 Columbia Pike,
Arlington, Virginia. 22204
Gentlemen:
The Board of Governors of the Federal Reserve System
has approved the application of The First Virginia Corporation to
acquire 80 per cent or more of the voting shares of The Staunton
Industrial Bank, Staunton, Virginia. The Board's Order, accompanying Statement, and press release in this matter are enclosed.
In the Board's letter of July 11, 1966, notifying your
Corporation of the approval of the acquisition of shares of First
Valley National Bank, Rich Creek, Virginia, it was noted that your
Corporation had projected that some $4.3 million of additional
caPital in excess of retained earnings would be needed for your
subsidiary banks through 1967. You were advised that with respect
to any program undertaken by your Corporation to provide additional
capital the Board would look with disfavor on any increase in your
existing debt to net worth ratio, and would prefer that such ratio
be reduced. While the Board notes that some reduction has been
effected and that further reduction will result from the Corporation's
acquisition of
shares of The Staunton Industrial Bank, the Board contlnues in its view that there should be no increase in your Corporation's resulting debt to net worth ratio and that efforts should be
made to reduce further such ratio.
In connection with the provision of the Board's Order
requiring that the acquisition be consummated no later than three
months from the date of the Order, advice of the fact of consummation
Should be given in writing to the Federal Reserve Bank of Richmond.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Enclosures
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 6
9/1/66
WASHINGTON
OFFICE OF THE VICE CHAIRMAN
September 1, 1966
Mr. Wilfred H. Rommel,
Assistant Director for
Legislative Reference,
Bureau of the Budget,
20503
Washington, D. C.
Attention:
Mrs. Garziglia
Dear Mr. Rommel:
ation of
This is to advise, in response to your communic
tial
Presiden
favors
s
August 29, 1966, that the Board of Governor
of
flow
the
e
approval of the enrolled bill S. 3688, "To stimulat
'
Veterans
and
ration
mortgage credit for Federal Housing Administ
tion."
Administration assisted residential construc
Sincerely,
(Signed) J. L. Robertson
J. L. Robertson.
@FedFRASER