## Facts

- First Arkansas Bankstock Corporation (FABCO) owned 99% of the voting shares of Worthen Bank and Trust Company (Worthen) in Little Rock, Arkansas.
- FABCO applied to the Board of Governors of the Federal Reserve System (Board) for approval under the Bank Holding Company Act of 1956 to acquire 80% or more of the voting shares of Arkansas First National Bank (AFNB) in Hot Springs, Arkansas, thereby becoming a multi-bank holding company.
- The Comptroller of the Currency recommended approval of FABCO’s application.
- Multiple banks opposed the application; four protesting banks (including Commercial National Bank of Little Rock) sought judicial review of the Board’s approval.
- Protestants requested a trial-type evidentiary hearing before the Board; the Board denied that request, provided a public oral presentation process, and accepted written submissions and briefs.
- The Board approved the acquisition; protestants petitioned the Eighth Circuit for review, arguing (i) Arkansas anti-branch-banking law effectively barred multi-bank holding companies, and (ii) denial of a trial-type hearing violated due process.

## Issues

1. Whether the Board erred in approving FABCO’s acquisition because Arkansas’s prohibition on branch banking made a multi-bank holding company unlawful under state law as applied through, or recognized by, the Bank Holding Company Act.
2. Whether the Board violated protestant banks’ constitutional or statutory rights by denying a trial-type evidentiary hearing and proceeding through oral presentations and written submissions.

## Decision

- The court affirmed the Board’s order approving FABCO’s application.
- Arkansas’s branch-banking restrictions did not, without specific state legislation directed at holding companies, prohibit formation of a multi-bank holding company.
- The Board’s procedures did not deny due process; a trial-type evidentiary hearing was not required for this type of agency approval proceeding.

## Legal Principles

- Under 12 U.S.C. § 1846, a state may bar or limit bank holding companies only through specific state legislation; a general state policy against branch banking does not itself operate as a holding-company prohibition.
- Branch banking and common ownership of separate banks through a holding company are legally distinct; continued operation of separate, chartered banks under common ownership is not treated as branching absent an applicable statute.
- In Bank Holding Company Act application proceedings, the Board may use informal procedures (oral presentations and written submissions) unless the governing statute or due process requires an evidentiary, trial-type hearing.

## Conclusion

The Eighth Circuit upheld federal approval of FABCO’s acquisition, concluding that Arkansas’s branch-banking limits did not implicitly bar multi-bank holding companies and that the Board’s refusal to provide a trial-type hearing did not violate due process.


Commercial Nat’l Bank of Little Rock v. Bd. of Governors of the Fed. Rsrv. Sys., 451 F.2d 86 (8th Cir. 1971)