Commercial Nat. Bank of Little Rock v. Board of Gov., No. 20607.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtLAY, HEANEY and BRIGHT, Circuit
Citation451 F.2d 86
PartiesThe COMMERCIAL NATIONAL BANK OF LITTLE ROCK et al., Petitioners-Appellants, v. The BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, Respondent-Appellee.
Docket NumberNo. 20607.
Decision Date12 November 1971

451 F.2d 86 (1971)

The COMMERCIAL NATIONAL BANK OF LITTLE ROCK et al., Petitioners-Appellants,
v.
The BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, Respondent-Appellee.

No. 20607.

United States Court of Appeals, Eighth Circuit.

November 12, 1971.


451 F.2d 87
COPYRIGHT MATERIAL OMITTED
451 F.2d 88
Darrell D. Dover, House, Holmes & Jewell, Little Rock, Ark., for petitioners-appellants

Kathryn H. Baldwin, Atty., Dept. of Justice, Washington, D.C., L. Patrick Gray, III, Asst. Atty. Gen., Ronald R. Glancz, Atty., Dept. of Justice, Washington, D.C., for respondent-appellee.

C. J. Giroir, Jr., Rose, Barron, Nash, Williamson, Carroll & Clay, Little Rock, Ark., for intervenor.

Before LAY, HEANEY and BRIGHT, Circuit Judges.

HEANEY, Circuit Judge.

This case presents two principal questions: (1) did the Federal Reserve Board err in determining that the formation of a multi-bank holding company in Arkansas was lawful despite that state's prohibition against branch banking;1 and (2) did the Board violate the constitutional rights of the fifty-six banks opposed to the formation of the holding company (the protestants) by refusing them a trial-type hearing.

The First Arkansas Bankstock Corporation (FABCO), a one-bank holding company, owned ninety-nine percent of the voting shares of the Worthen Bank and Trust Company (Worthen). It applied to the Federal Reserve Board seeking prior approval to become a bank holding company2 by acquiring eighty percent or more of the voting shares of the Arkansas First National Bank (AFNB). FABCO and Worthen are located in Little Rock, Arkansas, and AFNB in Hot Springs, Arkansas.

The Comptroller of the Currency recommended approval of the application.3 At least two of the protestants

451 F.2d 89
filed responses to the application and requested a trial-type hearing before the Board. The Board denied the request4 and instead ordered a public oral presentation.5 Following the oral presentation, FABCO and the protestants submitted additional briefs

The Board approved FABCO's application. Four of the protestant banks have filed this petition for review of the Federal Reserve Board's order.

The protestants' first contention is that Arkansas's branch banking laws prohibit the formation of multi-bank holding companies. While these statutes do not, by their terms, specifically apply to holding companies,6 it is argued that a multi-bank holding company such as FABCO is, in effect, engaged in branch banking and should come under Arkansas's branch banking restrictions.

Pursuant to the Bank Holding Company Act of 1956, 12 U.S.C. § 1846,7 Arkansas is free to prohibit, by specific legislation, the formation of bank holding companies. See, Whitney Nat. Bank in Jefferson Parish v. Bank of New Orleans, 379 U.S. 411, 419 n. 5, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965); Trans-Nebraska Co., 49 Fed.Res.Bull. 633 (1963). However, the legislative history indicates that Congress did not intend that the Bank Holding Company Act automatically make state branch banking restrictions applicable to bank holding companies. S.Rep. No. 1095, Part I, 84th Cong., 1st Sess. 11 (1955).8

Nevertheless, a banking institution cannot avoid state branch banking restrictions merely because it is organized as a holding company, if it is in fact carrying out branch banking. Whitney Nat. Bank in Jefferson Parish v. Bank of New Orleans & Trust Co., 116 U.S.App.D.C. 285, 323 F.2d 290 (1963), rev'd on other grounds, 379 U.S. 411, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965); First National Bank in Billings v. First Bank Stock Corp., 306 F.2d 937, 942 (9th Cir. 1962). In Billings, the Court found that holding company banking is branch banking when one of the subsidiary banks of the holding company is, "* * * in substance, * * * doing business through the instrumentality of * * *" another subsidiary bank "* * * in the same way as if the institutions were one * * *." First National Bank in Billings v. First Bank Stock Corp., supra at 942. There must exist "* * * the unitary type of operation characteristic of branch banking * * *." Ibid. at 943.9

451 F.2d 90

In this case, there is substantial evidence in the record to indicate that the relationship between FABCO and its subsidiaries did not represent the kind of unitary operation that was unlawful under Arkansas branch banking laws. Worthen and AFNB had no common directors. They will continue to have separate and independent board of directors, no members of which are common to both boards. Both banks will continue to be managed by local officers. Each bank is a separate corporation with its own capital, surplus, and undivided profit. Each will have its own loan limits based on its own capital and surplus. Worthen will be supervised by the Arkansas Bank Commissioner, AFNB by the Comptroller of the Currency, and FABCO by the Federal Reserve Board. Although Worthen and AFNB are located in the same state, they are a considerable distance apart. Finally, there is nothing to indicate that they will be identified as one institution by the public. These basic facts are undisputed.

It is clear that Worthen and AFNB will cooperate in the future. But "* * * it is not...

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16 practice notes
  • Republic of Texas Corp. v. Board of Governors of Federal Reserve System, No. 80-1985
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 24, 1981
    ...535 F.2d 1221, 1225 (10th Cir. 1976) (same); Commercial National Bank of Little Rock v. Board of Governors of the Federal Reserve System, 451 F.2d 86, 90-91 (8th Cir. 1971) (same); Kirsch v. Board of Governors of the Federal Reserve System, 353 F.2d 353, 356 (6th Cir. 1965) (same); Northwes......
  • Alabama Ass'n of Ins. Agents v. Board of Governors of Federal Reserve System, Nos. 74-2981
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 10, 1976
    ...of Federal Reserve System, 506 F.2d 623 (8 Cir. 1974); Comm'l Nat'l Bank of Little Rock v. Board of Governors of Federal Reserve System, 451 F.2d 86 (8 Cir. 1971); First Wisconsin Bankshares Corp. v. Board of Governors of Federal Reserve System, 325 F.2d 946 (7 Cir. 1963). This is particula......
  • Owensboro Nat. Bank v. Moore, Civ. A. No. 91-3.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
    • August 4, 1992
    ...issue with neither of those state powers. See Commercial Nat. Bank of Little Rock v. Board of Governors of the Federal Reserve System, 451 F.2d 86 (8th Cir.1971) (regulation of bank holding companies and branch banking); Bank of New Orleans & Trust Co. v. Saxon, 211 F.Supp. 576 (D.D.C.1962)......
  • Security Nat. Bank & Trust Co. v. First W. Va. Bancorp., Inc., No. 14938
    • United States
    • Supreme Court of West Virginia
    • May 5, 1981
    ...A state may prohibit bank holding companies, whether the banks are federal or state. Cf. Commercial National Bank v. Board of Governors, 451 F.2d 86 (8th Cir., 1971); Grandview Bank & Trust Co. v. Board of Governors, 550 F.2d 415 (8th Cir.), cert. denied, 434 U.S. 821, 98 S.Ct. 64, 54 L.Ed.......
  • Request a trial to view additional results
16 cases
  • Republic of Texas Corp. v. Board of Governors of Federal Reserve System, No. 80-1985
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 24, 1981
    ...535 F.2d 1221, 1225 (10th Cir. 1976) (same); Commercial National Bank of Little Rock v. Board of Governors of the Federal Reserve System, 451 F.2d 86, 90-91 (8th Cir. 1971) (same); Kirsch v. Board of Governors of the Federal Reserve System, 353 F.2d 353, 356 (6th Cir. 1965) (same); Northwes......
  • Alabama Ass'n of Ins. Agents v. Board of Governors of Federal Reserve System, Nos. 74-2981
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 10, 1976
    ...of Federal Reserve System, 506 F.2d 623 (8 Cir. 1974); Comm'l Nat'l Bank of Little Rock v. Board of Governors of Federal Reserve System, 451 F.2d 86 (8 Cir. 1971); First Wisconsin Bankshares Corp. v. Board of Governors of Federal Reserve System, 325 F.2d 946 (7 Cir. 1963). This is particula......
  • Owensboro Nat. Bank v. Moore, Civ. A. No. 91-3.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
    • August 4, 1992
    ...issue with neither of those state powers. See Commercial Nat. Bank of Little Rock v. Board of Governors of the Federal Reserve System, 451 F.2d 86 (8th Cir.1971) (regulation of bank holding companies and branch banking); Bank of New Orleans & Trust Co. v. Saxon, 211 F.Supp. 576 (D.D.C.1962)......
  • Security Nat. Bank & Trust Co. v. First W. Va. Bancorp., Inc., No. 14938
    • United States
    • Supreme Court of West Virginia
    • May 5, 1981
    ...A state may prohibit bank holding companies, whether the banks are federal or state. Cf. Commercial National Bank v. Board of Governors, 451 F.2d 86 (8th Cir., 1971); Grandview Bank & Trust Co. v. Board of Governors, 550 F.2d 415 (8th Cir.), cert. denied, 434 U.S. 821, 98 S.Ct. 64, 54 L.Ed.......
  • Request a trial to view additional results

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