Capital stock, par value $5 per share-issued and outstanding 1,273,677 shares

6,368,385

(1) Security investments are stated at cost less amortization of premiums. Quoted market prices as of April 30, 1963 for United States Government obligations were $49,357,584 and for municipal and other security investments were $46,044,851. Securities carried at $42,461,810 were pledged to secure liabilities and for other

purposes.

(2) Bank premises and furniture and fixtures are stated substantially at cost less accumulated depreciation. See "Property" for information concerning lease commitments.

NOTE: Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period

NOTE: The amounts shown above have been adjusted to give retroactive effect to the consolidation of all banks acquired prior to April 30, 1963.

NOTE: Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period shown.

NOTE: Amounts applicable to all banks acquired prior to April 30, 1963 have been included for the entire period shown. (1) Includes for 1961 $274,000 applicable to loans made over a period of years ending in 1958, as to which losses were charged off in 1958, 1959, and 1960. Such recoveries are not necessarily indicative of recoveries in future years.

(2) Includes losses attributable to three loans aggregating approximately $531,000 in 1960, one loan of $150,000 in 1961, and three loans aggregating $562,000 in 1962. Such losses are not necessarily indicative of losses in future years.

Senator WILLIAMS. We have received reports on the bill from the Federal Reserve System and the Federal Deposit Insurance Corporation, and they will be inserted at this point.

Hon. A. WILLIS ROBERTSON,

BOARD OF GOVERNORS

OF THE FEDERAL RESERVE SYSTEM,
Washington, June 21, 1963.

Chairman, Committee on Banking and Currency,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your communication of June 6, 1963, requesting a report on S. 1642, a bill to amend the Securities Act of 1933 and the Securities Exchange Act of 1934.

The Board of Governors is not in a position to comment on the provisions of the bill that relate to strengthening the standards of entrance into the securities business, extending the coverage of self-regulation and the like. For reasons described herein, the Board's principal concern is with provisions of the bill that are designed to improve investor protection in the over-the-counter market by extension of reporting requiremnts, proxy rules, and "insider trading" provisions of the Securities Exchange Act of 1934-now applicable only to "listed companies"-to certain companies whose securities are traded in the over-thecounter market.

The Board is in agreement with the purpose of the proposed new section 12(g) of the Securities Exchange Act, which is to provide for stockholders of corporations whose securities are widely distributed, but not registered on an exchange, the information and safeguards which that act requires with respect to securities that are so registered. Furthermore, the Board believes that application of the new provisions to stocks of banks, as well as to stocks of other corporations, is in the public interest While the adding of the proposed requirements to the present system of bank regulation and supervision would necessitate careful administration in order to avoid inconsistency, duplication, unreasonable demands, and undesirable disclosures, the Board is satisfied that the requirements can be administered in such a way as to avoid serious problems of this kind. However, the Board doubts the advisability of section 3 (e) of S. 1642, which would add to section 12 of the 1934 act the following new subsection:

"(i) In respect of any securities issued by banks the powers, functions, and duties of the Commission pursuant to the provisions of this title shall be delegated in whole or in part to the Federal banking regulatory agency or instrumentality which has jurisdiction to examine or supervise the business of such banks, upon the request of such agency or instrumentality."

Enclosed herewith is a memorandum commenting upon a number of problems raised by the wording of the proposed new subsection. For the purpose of this report, however, it will be assumed that the purpose and effect of the subsection would be to enable each of the Federal bank supervisory agencies to take the place of the Securities and Exchange Commission with respect to administration of the reporting, proxy, and "insider trading" provisions of the act as they apply to the banks as to which it is the principal Federal supervisor. It would be desirable, of course, for the administration of the proposed reporting requirements and proxy rules to take into account the special situation of banks, especially the extent to which banks are already subject to governmental supervision. Nevertheless, the Board considers it inadvisable to provide that these and other provisions of the Securities Exchange Act of 1934, in their application to banks, may be administered by an agency other than the Commission.

The proposed new section 12 (i) contemplates that administration of the provisions of the 1934 act with respect to the subjects mentioned might be vested in the Comptroller of the Currency as to national banks, in the Board of Governors as to State banks that are members of the Federal Reserve System, and in the Federal Deposit Insurance Corporation as to nonmember banks with deposits insured in accordance with the Federal Deposit Insurance Act. Under such an arrangement, responsibility would be fragmented and the tasks performed less efficiently. It would be necessary for each of those agencies to expand its organization and to maintain staff that would perform for banks work that would be performed by the Commission with respect to corporations generally.