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609
Minutes for
To:
Members of the Board
From:
Office of the Secretary
September 7, 1961
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Minutes of the Board of Governors of the Federal Reserve System on
Thursday, September 7, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
King
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Molony, Assistant to the Board
Fauver, Assistant to the Board
Solomon, Director, Division of Examinations
Chase, Assistant General Counsel
O'Connell, Assistant General Counsel
Hostrup, Assistant Director, Division of
Examinations
Goodman, Assistant Director, Division of
Examinations
Leavitt, Assistant Director, Division of
Examinations
Spencer, General Assistant, Office of the
Secretary
Smith, Legal Assistant
McClintock, Review Examiner, Division of
Examinations
Items distributed to the Board.
The following items, which had
been distributed to the members of the Board and copies of which are
attached to these minutes under the respective item numbers indicated,
'were approved unanimously:
Item No.
Letter to Boston Overseas Financial Corporation,
11 ston, Massachusetts, approving its request for
kl) consent to transfer shares of (a) International
Factors Limited and (b) Corporacion Financiera de
!!°ston S. A. F. y C. from Massnat Corporation to
coston Overseas Financial Corporation; and (2) consent to purchase and hold one-third of the stock of
International Factors Corporation, a Massachusetts
corporation.
1
4.1,f),t,:r7b
ka)tik—o gar
9/7/61
-2Item No.
Order and Statement, prepared pursuant to the
action taken by the Board on August 30, 1961,
approving the application of First Security
Corporation, Salt Lake City, Utah, for permission
to acquire the shares of Sanpete Valley Bank,
Mount Pleasant, Utah.
2-3
Messrs. Hostrup, Goodman, and Smith then withdrew from the
meeting.
Report on competitive factors (Valley Stream-East Hampton, New
York).
A draft of report to the Comptroller of the Currency on the
competitive factors involved in the proposed consolidation of Osborne
Trust Company, East Hampton, New York, and Valley National Bank of
Long Island, Valley Stream, New York, had been distributed with a memorandum from the Division of Examinations dated August 30, 1961.
The
conclusion in the report read as follows:
Because of location and the distances between offices
of the consolidating banks, there is no competition between
them. The proposed consolidation would have virtually no
effect on banking in Nassau County. There would be little,
if any, effect on the over-all competitive situation in
Suffolk County, but, in the eastern portion of the South
Fork of Long Island, the area in which the Osborne bank
Presently competes, competition would probably be intensified.
However, it is believed that the competitive strength of the
larger bank would not have a serious adverse effect on the
competitive position of the remaining banks in the East
Hampton area.
The report was approved unanimously for transmittal to the
Comptroller.
."
3063 "
9/7/61
-3Manufacturers-Hanover merger.
Subsequent to the meeting on
Wednesday afternoon, September 6, 1961, at which approval was given to
the application by Manufacturers Trust Company, New York, New York, to
merge with The Hanover Bank, also of New York City, there had been
distributed, at the suggestion of Governor Balderston, a proposed
statement, prepared by Mr. Hexter, Assistant General Counsel, that might
be used in responding to inquiries as to the reasons for the Board's
aPProval.
A memorandum from Mr. Hexter dated September 7, 1961, trans-
mitting the draft statement, noted that Governor Balderston had suggested
that with some modification such a statement might also be used in the
1961 Annual Report.
As the transmittal memorandum pointed out, the
statement that had been drafted merely highlighted the principal bases
for approval, as inferred from the discussion by the Board at yesterday's
meeting, and it was contemplated that a longer, more documented statement
would be prepared for possible use in any more elaborate discussions of
the merger.
In commenting upon this subject, Chairman Martin questioned, for
reasons that he stated, the advisability of making available at this
time any explanatory statement in addition to the press release already
issued.
Instead, he would be inclined to await further developments.
In the interim, he suggested, the staff could prepare a statement along
the lines contemplated for inclusion in the Annual Report so that such
306
-4-
9/7/61
a statement, if needed, would be available.
In addition, the staff
ed to
could also be working on a longer statement of the kind referr
ent likein Mr. Hexter's transmittal memorandum, so that such a statem
wise would be available if needed.
The Chairman commented that yesterday
he called Assistant Attorney General Loevinger on the telephone and
advised him of the action taken by the Board.
Perhaps the Justice
thus far there
Department would request certain data at some time, but
had been no such request.
point of
Chairman Martin also said that from a public relations
view he thought there was merit in the suggestion made at yesterday's
to Board
meeting that in future cases a statement be prepared prior
action.
would
Then, after the Board had acted, such a statement, which
be along the lines of those used in the Annual Report, could be released
if the Board so desired.
sion
Following the Chairman's remarks there was a general discus
in which a view was expressed that in future merger cases it would be
ed statement
desirable, as the Chairman had indicated, to have a prepar
much the
available that could be released following Board action, in
y cases.
same manner as the procedure followed in bank holding compan
With respect to the Manufacturers-Hanover merger, it was understood that
no further statement would be issued at this time, but that the staff
would prepare for the Board's consideration and use, if needed, (1) a
for inclusion
statement regarding the merger that would be appropriate
0.0100
9/7/61
-5-
in the 1961 Annual Report, and (2) a longer, more detailed statement of
the type issued in bank holding company cases.
At this point all of the members of the staff except Mr. Sherman
and Mr. Fauver withdrew from the meeting.
Appointment of directors.
Chairman Martin referred to a memo-
randum from Mr. Fauver dated September 6, 1961, copies of which had been
distributed to the members of the Board, reviewing the appointments of
Chairmen and Deputy Chairmen and Class C directors of the Federal Reserve
Banks to be made as of the end of 1961, and listing Board-appointed
directors of Federal Reserve Bank branches who would not be eligible
for reappointment for additional periods beyond their existing terms.
At his suggestion there ensued a general discussion of appointments that
might be made by the Board and of the procedure to be followed in
connection with such appointments as were to be made later this year.
Thereupon the meeting adjourned.
Secretary's Note: Pursuant to recommendations contained in memoranda from
appropriate individuals concerned, Governor
Shepardson today approved on behalf of the
Board the following actions relating to the
Board's staff:
lary increases
Name and title
effective September 17? 1961
Division
Basic annual salary
To
From
Office of the Secretary
Pearl S. Thompson, Senior Records Clerk
$5,005
$5,170
3'06G
-6-
9/7/61
Salary increases, effective September 17, 1961 (continued)
Division
Name and title
Basic annual salary
To
From
Research and Statistics
Joyce Ann Kohan, Secretary
Phyllis H. Lockhart, Draftsman
4,145
$ 5,005
4,250
4,145
4,250
6,600
6,765
10,895
11,155
5,005
3,395
5,170
3,500
5,170
5,335
$
4,84o
Examinations
Virginia Crawford, Special Assistant Federal
Reserve Examiner
Francis D. Dargo, Assistant Federal Reserve
Examiner
Personnel Administration
John J. Hart, Personnel Assistant
Administrative Services
Grace R. MacVean, Reservations Clerk
John S. Hollis, Jr., Messenger
Office of the Controller
Maria Jo Peterson, Payroll Clerk
Acceptance of resignation
Marian Jean Kline, Draftsman, Division of Research and Statistics,
effective at the close of business September 15, 1961.
Secret
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 1
9/7/61
ADDRESS CJFFICIAL CORRES.Onv,r ,
17
TO THE SOARD
September
Boston Overseas Financial Corporation,
67 Yilk Street,
Boston, Massachusetts.
Gentlemen:
In accordance with the request contained in your letter of
August 14, 1961, transmitted through the Federal Reserve Bank of Boston,
the Board of Governors grants its consent for Massnat Corporation
("Hassnat") to transfer to Boston Overseas Financial Corporation ("PCFC")
the shares of International Factors Limited and Corporacion Financiera
de Boston S. A. F. y C. presently owned by Massnat. It is noted that,
concurrently with this transfer, Massnat will transfer to BOFC sub•
stantially all its cash not needed to meet accrued liabilities. It
is understood that you desire to preserve the corporation for the time
being on an inactive basis against the possibility that it may be
useful at some future time, and that the corporation will not be reactivated without the prior approval of the Board of Governors.
The Board's consent to the transfer is given subject to the
same limitations as to amounts and dates and the conditions as stated
in its letter of October 21, 1960, with respect to investments in the
stock of the Financiera and its letter of December 28, 1960, with respect
to the purchase and holding of stock of International Factors Limited.
In accordance wi:11 the request contained in your letter of
August 14, 1961, and on the basis of information furnished therein
and in a letter of the same date from Er. Walter D. Malcolm of Messrs.
Bingham, Dana & Gould, counsel for BOFC, the Board of Governors also
grants its consent for BOFC to purchase and hold 400 shares of International Factors Corporation, a business corporation to be organized
under the laws of the Commonwealth of Massachusetts, at a cost of
approximately $400, provided such stock is acquired within one year
from the date of this letter.
The Board's consent to the purchase of stock of IFC is granted
Upon condition that BOFC shall dispose of its holdings of stock of IFC,
30
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
'7)
A,VAIm
Boton Overseas Financial Corporation
promptly as practicable; in the event that IFC should at any tiLle.
(1) engage in issuing, underwriting, selling or distributing securities;
(2) engage in the general business of buying or selling goods, wares,
merchandise, or commodities in the United States or transact any business in tha United States except such as is incidental to its interIvLiQnal
or foreign business; or (3) otherwise conduct its operations in a mannc:'
which, in the judgment of the Board of Governors, c-:_uses the continued
holding of its stock by BOFC to be inappropriate under the provisions
of Section 25(a) of the Fede.'al Reserve Act or regulations thereunder.
Upon completion of the organization of IFC, it is requor-A,),1
that the Board of Governors be furnished (1) a copy of the genera
agreement between IFC, IFL, and The First National Bank of Boston; and
(2) copies of the articles of organization and by-laws of IFC. Please
advise the Board of Governors, through the Federal Reserve Bank of
Boston, when the acquisition of stock has been made.
. Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. C3rmichae1,
Assistant Secretary.
30(
Item No. 2
9/7/61
UNITED STATES OF AkERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON,
In the Matter of the A2plication of
PZST SECURITY CORPORATION
For prior approval of acquisition of
all the common stock of the Sanpete
Valley Bank, Mount Pleasant, Utah.
_______________________ ________
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
WHEREAS, there has come before the Board of Governors,
PlIrsuant to section 3(a)(2) of the Bank Holding Company Act of
1956 (12 USC 1842) and section
4(a)(2)
of Federal Reserve Regu-
lation Y (12 CFR 222.4(a)(2)), an application on behalf of
First Security Corporation, Salt Lake City, Utah, for the Boardts
Pllor approval of the acquisition of all the voting shares of
SanPete Valley Bank, Mount Pleasant, Utah;
a Notice of Receipt
APplication has been published in the Federal Register on
&Ile 9, 1961 (26 Federal Register 5191) which provided an
°PPortunity for submission of comments and views regarding the
17)1
'
01Dosed acquisition; and the time for filing such comments and
171,-/,,Ts has emoired and no such comments or views have been filed;
3070
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that said application be and hereby
is granted, and the acquisition by the First Security Corporation
of all the outstanding common stock of Sanpete Valley Bank, Mount
pleasant, Utah, is hereby approved, provided that such acquisition
is completed within three months from the date
hereof.
Dated at Washington, D.C. this 7th day of September, 1961.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, and Shepardson.
Absent and not voting:
Governors Robertson and King.
(Signed) Merritt Sherman
iierritt Sherman,
Secretary.
(SEAL)
3071
Item NO. 3
9/7/61
HOARD OF GOV7RNORS
OF THE
FEDERAL RFSRVE SYSTEM
APPLICATION BY FIRST SECLUITf CORPORATION FOR
APPROVAL OF TEE ACnYISITIOU OF ALL THE VOTING SHARES
OF SANPET7, VALLEY BANK, MOUNT PLEASANT, UTAH
STATEHENT
First Security Corpointion ("First"), a bank holding company,
48.3 apnlied, pursuant to section 3(a)(2) of the Bank Holding Conpany Act
of 1956 ("the Act"), for the Board's prior approval of the acquisition
°f all the voting shares of Sanpete Valley Bank, Mount Pleasant, Utah
("Bankft).
Views
and recommendations of sunervisory authority. - Pursuant
t° section 3(b) of the Act the Bank Commissioner of the State of Utah
1148 asked for his views and recommendations.
He interposed no objec-
tion to approval of the application.
Statutory factors. - Section 3(c) of the Act requires the
80ard to take into consideration the following five factors: (1) the
financial history and condition of the holding company and bank
e°11cerned; (2) their prospects; (3) the character of their management;
(10 the
convenience, needs, and welfare of the communities and the
ral'ea concerned; and (5) whether or not the effect of the acquisition
14°111d be to expand the size or extent of the bank holding company
"om involved beyond limits consistent with adequate and sound
114tikit'g, the public interest, and the preservation of competition in
the field of banking.
-2-
Discussion. - The Applicant is a bank holding company with
its principal office in Salt Lake City, Utah. It owns a large majority
°f the stock of four banks in Utah, Wyoming, and Idaho, the largest of
which is the First Security Bank of Utah, N.A.
The percentages of all
bank deposits and banking offices in the State of Utah that are held by
Pirst
are 31 per cent and 36 per cent, respectively.
Bank is located in Mount Pleasant, approximately the
gecVaPhica•
it8
l center of Utah and is the only banking office located in
Primary service area, which has been defined as the northern part
°I 81npete County. Deposits of Bank were about '33.6 million at the
end
of 1960.
It appears that most of the people in Sanpete County live
ln cities and towns which are centered in irrigated lands.
Between the
tletl*thern and southern populated portions of the County lies a considerable
4.
'ea cf barren land, and this has resulted in the political subdivision
the County into two school districts and is also an economic factor
cletermin,
lng
the centers of trade and business.
There are three independ-
banks in the southern portion of Sannete County, ranging from 17 to
39 miles from Mount
Pleasant*
The financial prospects and the financial history and
c44ition of both First and Bank are satisfactory*
The management of First is capable and exnerienced and if
the
aPPlication is approved, Bank will undoubtedly benefit from the
-.vision which First would be able to provide.
_3_
Bank appears to have been serving the convenience, needs, and
welfare of its community in a satisfactory manner.
However, the acquisi-
ion by First would probably eanble Bank to expand its mortgage and
installment loan programs and to offer additional services, should the
Ileed for such increased or additional services arise*
Turning to the fifth factor enumerated in section 3(c) of
th3 Act, the acquisition would not, in the Boardfs judgment, expand
the size or extent of the bank holding company system involved beyond
.1ilrats
•
consistent with adequate and sound banking, the public interest
4nd the preservation of competition in the field of banking.
Firstfs banking office nearest to Bank, a branch of First
Seeurity Bank of Utah, N.A., is in the Town of Naohi, some 30 miles
11°rthwe3t of Mount Pleasant.
As of June 21, 1961, the Nephi Office
had total deposits of individuals, partnerships and cornorations
("IPT deposits") of !3.7 million.
Of such deposits, $237,850 (6.4 per
cellt of total IPC deposits) originated from the northern Sanpete County
41
'
ea. Of the latter amount, $202,300 were from the Town of Fountain
4een, in the northwest section of the County, about 14 miles from Nephi
With
no intervening towns, and about 15 miles from Mount Pleasant with
tho
"olizaunity of Noroni in between. Thus, it may be seen that the
1:1131.
'
11 Office of First Security Bank of Utah does not have a large
-'ule of deposits originating from Bank's primary service area and
bY
P"
x
the larger portion derived from such area comes from Fountain
Green.
Further, from the standpoint of highway access, Nephifs location
ill relation to either the northern portion or the southern portion of
'Pete County militates against its having any strong competitive force
tri
such areas. Consequently, it is the Boardts opinion that no
84)11dricant reduction in competition would result from approval of the
1/I'oPosed acquisition.
It is the judgment of the Board, based on the relevant
'facts considered in the light of the general purposes of the Act and
factors enumerated in section 3(c) thereof, that the proposed
acquisition would be consistent with the statutory objectives and the
11111)11c interest and that the application should be aPproved.
8eltsmber
7, 1961.
@FedFRASER