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BRAZILIAN COURT HOTEL » , Palm Beach, Florida irr r i j I F I I IJ San Francisco, C a l i f o r n i a January 12, 1943 Annual Report of President L. M. to the Giannini Stockholders N CONCLUDING last year's report I assured you that every resource o f Bank o f America w o u l d be devoted to w i n n i n g the war. T h e promise has been kept. T h i s report o f stewardship, covering a f u l l year o f b a n k i n g service under war conditions, m i g h t w e l l be entitled "Victory Banking in California." D u r i n g 1942: — T o t a l resources rose to $2,771,689,632, representing an increase of $676,054,013; — D e p o s i t s advanced to $2,586,140,699, increasing $677,756,778 w i t h i n the year; — T o t a l loans and investments increased f r o m $1,607,683,462 to $2,106,219,404; — I n v e s t m e n t s increased $572,635,534, a m o u n t i n g at year-end to $1,265,749,444, w h i l e loans decreased $74,099,592 to a total of $840,469,960; — I n c l u d e d i n the increase i n investments, holdings of securities o f the U n i t e d States G o v e r n m e n t and Federal Agencies rose $549,353,856, f r o m $493,707,663 to $1,043,061,519. Loans made f o r war p r o d u c t i o n purposes i n the 12 months ended September 30th, and commitments outstanding on that date, totaled $409,631,000, according to a special survey covering the period. Sales o f war savings bonds to the public aggregated $160,218,000 (sales price) d u r i n g the year, raising cumulative sales to $192,735,000 since inception o f the campaign i n M a y , 1941. W i t h C a l i f o r n i a industrial and business activity rising to record heights and a large increase i n population, the Bank was called upon to handle a vastly larger v o l u m e o f business i n 1942. 1 UJJJ EARNINGS A N D THEIR DISPOSITION 11 i l l ROSS income o f $76,736,880 was derived f r o m operations i n 1942. O p e r a t i n g expenses amounted to $50,159,022. Resultant earnings were $26,577,858. Charges against these earnings, t o t a l i n g $9,627,743, consisted o f reserves set up and applied to absorption o f losses or revaluation o f assets, and provisions f o r depreciation and amortization, employes' profit-sharing bonus, and benefit f u n d . F r o m the remaining $16,950,115, dividends aggregating $10,528,582 were paid, $928,582 o n Preferred Stock at the rate o f $2 a share, and $9,600,000 on C o m m o n Stock at the rate o f $2.40 a share. A f t e r these payments^ and provisions, $6,421,533 was added to Capital Funds f r o m the year's earnings. CHANGES I N CAPITAL FUNDS D u r i n g the year, the already substantial m a r g i n o f actual value o f bank premises and other real estate over book carrying values was 2 SUMMARY OF OPERATIONS—1942 INCOME FROM: Loans $45,121,793 Security investments 19,961,550 Miscellaneous sources, i n c l u d i n g trust fees, service charges, a n d recoveries 11,653,537 GROSS INCOME $76,736,880 EXPENSES: Salaries a n d payments f o r personal services $22,099,921 Interest o n deposits 10,814,962 T a x e s : Local, State a n d Federal, in- c l u d i n g Social Security, a n d Federal D e p o s i t Insurance assessments . . O t h e r o p e r a t i n g costs 8,913,232 8,330,907 TOTAL OPERATING EXPENSES . 50,159,022 EARNINGS $26,577,858 CHARGES AGAINST EARNINGS: D e p r e c i a t i o n o f b a n k i n g premises, f u r n i t u r e , fixtures a n d e q u i p m e n t , a n d amortization of bond premiums . . $ 4,531,928 Reserves set u p a n d a p p l i e d t o absorpt i o n o f losses or r e v a l u a t i o n o f assets Clorinda Giannini Memorial 3,847,969 Benefit Fund 50,000 Employes' p r o f i t - s h a r i n g p a r t i c i p a t i o n 1,197,846 9,627,743 $16,950,115 Dividends paid: P r e f e r r e d S t o c k — r a t e $2 a share . $ C o m m o n S t o c k — r a t e $ 2 . 4 0 a share A d d e d t o C a p i t a l F u n d s f r o m earnings 928,582 9,600,000 6,421,533* $16,950,115 * F o r changes in Capital Funds, see Page 2. 3 DISTRIBUTION OF THE GROSS INCOME DOLLAR - 1 9 4 2 further increased. I n this connection $2,437,617 o f reserves was used to effect a reduction o f the book value o f those investments, in addition to n o r m a l depreciation. Capital Funds were f u r t h e r reduced i n 1942 by a p p l y i n g $3,960,200 to the purchase and retirement o f 79,204 shares o f Preferred Stock. T h i s reduced the Preferred capital account by $1,584,080 (par value of retired shares) and Reserve f o r Increase o f C o m m o n Capital was correspondingly increased. G i v i n g effect to the a d d i t i o n o f $6,421,533 f r o m the year's earnings, and o f aggregate w i t h d r a w a l s o f $6,397,817, total Capital Funds increased $23,716 over the previous year-end figure, and on December 31, 1942, amounted to $160,402,363. PREFERRED STOCK RETIREMENT O n January 2, 1943, $2,646,150 was transferred f r o m U n d i v i d e d Profits to the retirement f u n d and an a d d i t i o n a l 53,920 preferred shares were purchased and retired. I n c l u d i n g this transaction, un- 4 d i v i d e d profits t o t a l i n g $9,656,200 have been utilized to retire 193,124 shares, w h i c h represents nearly one-third o f the 600,000 shares originally issued i n June, 1940. HHI | | P | O T A L DEPOSIT G R O W T H deposits o f $2,586,140,699 o n December 31, 1942, com- posed o f $1,601,668,776 demand and $984,471,923 savings and time, represented increases f o r the year o f $625,485,404 i n demand and of $52,271,374 i n savings and time deposits. H i g h e r wages, less merchandise available f o r purchase, and a general tendency t o w a r d t h r i f t , accounted p r i n c i p a l l y f o r the increase i n savings deposits; the increase i n demand deposits resulted p r i m a r i l y f r o m the inevitable inflationary consequences o f financing such a stupendous war p r o g r a m as ours. Potent factors affecting demand deposits are Treasury disbursements and investments by banks i n G o v e r n m e n t securities. I n the T w e l f t h Federal Reserve District, w h i c h includes C a l i f o r n i a , Treasury disbursements are far i n excess o f receipts f r o m sales o f securities, taxes, and the like, and the rate o f movement o f funds to the District is rapidly increasing. Excess o f Treasury disbursements over receipts i n the T w e l f t h D i s t r i c t amounted to $2,809,000,000 i n 1942, compared w i t h $1,000,000,000 i n 1941, $420,000,000 i n 1940, and $244,000,000 i n 1939Part o f these disbursements return to other districts i n payment f o r goods, but a large part remains as bank deposits i n the T w e l f t h District. I n one respect the year's deposit gain conforms to a steady trend: g r o w t h o f Bank o f America as a commercial bank. I t has l o n g been the nation's largest savings institution. W h i l e m u c h o f the g r o w t h i n demand deposits must be attributed to war activities, Bank of America's rate o f gain considerably exceeded that shown f o r city banks i n the T w e l f t h D i s t r i c t i n their weekly reports to the Federal Reserve System. (See Page 9 . ) T h i s appears to reflect the advantages o f statewide branch 5 banking w h i c h serves a l l ramifications o f C a l i f o r n i a l i f e and business — o v e r - a l l instead o f restricted coverage. D u r i n g 1942, the Bank was designated as General U n i t e d States Depositary i n 23 new locations; 53 branches n o w act as such depositaries. Members o f the staff actively assisted schools i n setting up war savings programs. So as not to compete w i t h the sale o f stamps and bonds, t the Bank v o l u n t a r i l y discontinued solicitation o f school savings deposits f o r the duration o f the war. However, the Bank continues to maintain school savings facilities, and toward the end o f the year was carrying over 240,000 school savings accounts w i t h aggregate deposits of about $5,200,000. December 1st disbursements to 278,000 members o f the Christmas Club topped $19,000,000. M a n y o f these depositors save f o r taxes through the Christmas C l u b and redeposit f o r this purpose. T o t a l number o f deposit accounts o f all classes rose to 2,649,000. 6 F r o m these facts it w i l l be seen that Bank o f America continues to serve the needs o f all classes, the f u l l range f r o m the smallest savings depositor to the largest commercial customer. M INVESTMENTS OTEWORTHY features o f the Bank's investment operations dur- i n g the year were the increase i n Government and total securities held, and the c o n t i n u i n g h i g h degree o f l i q u i d i t y i n the Bank's position. Increase i n G o v e r n m e n t securities alone substantially exceeded the net increase i n total deposits after deduction o f cash reserves required to be maintained w i t h the Federal Reserve Bank. T h e increase i n demand deposits has been invested largely i n Treasury bills and other short-term G o v e r n m e n t paper. O n December 31, 1942, issues m a t u r i n g i n less than one year comprised 35.6 per cent o f the G o v e r n m e n t p o r t f o l i o , compared w i t h 12.5 per cent o n December 31, 1 9 4 1 ; maturities o f five years and less increased f r o m 29.1 to 50.6 per cent. 7 U n d e r a recent r u l i n g o f the Federal O p e n M a r k e t Committee, Treasury bills held by banks may be sold to the Federal Reserve Bank and repurchased i f desired, w i t h dealings on a yield basis o f .375 per cent. T h i s makes Treasury bills practically the equivalent o f cash and enables banks to keep available funds f u l l y employed on an incomeyield basis. Bank o f America again has availed itself o f an o p p o r t u n i t y to participate i n financing the war to the fullest extent possible, w h i l e maint a i n i n g a l i q u i d position. L E N D I N G ACTIVITIES |AR INFLUENCES were felt i n all fields o f credit served by the Bank. Larger volume o f business was done i n some divisions, smaller in others. War-purpose loans rose sharply, consumer credit demand was i n lesser volume, and increase i n defense housing loans exceeded the decrease i n other types o f real estate loans. * Reporting member banks, other than Bank of America, in 7 cities of 12th Federal Reserve District and 101 cities of the U n i t e d States. 8 D u r i n g the year, the Bank assisted b o t h the largest and the smallest borrowers i n financing expansion, conversion to war production, repair o f irreplaceable equipment, debt consolidation and l i q u i d a t i o n of debts on a budget plan, and other necessary adjustments. D i v e r s i t y o f services and statewide operations enabled the Bank to participate i n certain loan fields that are expanding, thus offsetting to the m a x i m u m extent a lower v o l u m e o f business f r o m contracting fields. T o t a l loans outstanding December 31, 1942, amounted to $840,469,960, compared w i t h $914,569,552 the year before. I n the year ended N o v e m b e r 25, 1942 (latest date for comparative f i g u r e s ) , Bank o f America's deposits increased 30.32 per cent. I n comparison, combined deposits o f all other r e p o r t i n g member banks i n seven large cities o f the T w e l f t h Federal Reserve District increased 22.29 per cent, and i n 101 large cities o f the nation, 15.80 per cent. D u r i n g this same one-year period, Bank o f America's total loans outstanding declined only 3.88 per cent, w h i l e loans o f all other reporting member banks i n the seven cities o f the T w e l f t h District declined 14.31 per cent, and o f such banks i n the 101 cities, 10.88 per cent. A l t h o u g h contending w i t h more r a p i d increase i n deposits, the Bank's outstanding loans equalled 37.12 per cent o f deposits at N o v e m b e r 25, 1942, compared w i t h a loan-deposit ratio of 20.03 per cent f o r all r e p o r t i n g member banks, e x c l u d i n g Bank o f America, i n 101 cities. WAR-PURPOSE LOANS Loans f o r war p r o d u c t i o n purposes kept pace w i t h the state's mounti n g o u t p u t o f war materials. I n the quarter ended September 30th (date o f most recent survey), the total o f such loans made by the Bank, i n c l u d i n g renewals, was $118,169,000, compared w i t h $40,488,000 i n the last quarter o f 1941, the v o l u m e nearly t r i p l i n g . C o m m i t m e n t s unused at September 30th totaled $82,844,000 as compared w i t h $54,729,000 at mid-year, indicating continuance o f the u p w a r d trend i n this field. 9 Muttk of Atnerira N A T I O N A L IavSITNG? ASSOCIATION Statement of Condition December 31, 1942 LIABILITIES RESOURCES C a s h in our vaults a n d on d e p o s i t w i t h F e d e r a l Reserve B a n k $ C a s h on deposit w i t h b a n k s i n N e w Y o r k , C h i c a g o a n d o t h e r c i t i e s a n d c a s h i t e m s i n p r o c e s s of c o l l e c t i o n . TOTAL D e m a n d deposits. F u n d s p l a c e d w i t h t h e B a n k b y i n d i v i d u a l s , corporations, firms, b a n k s , p u b l i c officials a n d t h e U n i t e d S t a t e s G o v e r n m e n t ( p a y a b l e o n d e m a n d ) . SI.601,668.776.37 350.278.009.96 S a v i n g s a n d time deposits. F u n d s p l a c e d w i t h t h e B a n k i n s a v i n g s a c c o u n t s o r for e x t e n d e d p e r i o d s of t i m e b y i n d i v i d u a l s , corporations, firms, U n i t e d States G o v e r n m e n t , S t a t e of C a l i f o r n i a a n d p o l i t i c a l s u b d i v i s i o n s thereof 254,763,374.78 CASH $ 605,041,384.74 984.471.922.63 TOTAL DEPOSITS Securities of the U n i t e d States G o v e r n m e n t and Federal Agencies $1,043,061,518.77 State, county a n d m u n i c i p a l bonds 45.985,908.52 Stock in F e d e r a l Reserve B a n k ' a h a v e reserved ior interest r e c e i v e d i n a d v a n c e o n l o a n s This amount w i l l be t a k e n into i n c o m e as e a r n e d . 3.720,000.00 TOTAL LIABILITIES TOTAL SECURITIES W e h a v e l o a n e d to our customers for u s e i n t h e i r b u s i nesses, f o r w a r p r o d u c t i o n c o n t r a c t s , f o r t h e s t o r i n g of c o m m o d i t i e s , for i n t e r m e d i a t e c a p i t a l u s e s , f o r b u i l d i n g , b u y i n g or m o d e r n i z i n g t h e i r h o m e s , f i n a n c i n g a u t o m o b i l e or h o u s e h o l d e q u i p m e n t p u r c h a s e s , a n d $ for o t h e r l e g i t i m a t e n e e d s $ etc supplies inventory, automotive $ 50,000,000.00 9,215,920.00 from 62,000,000.00 $ $ equipment, $ 1,172,236.28 2,834,881.21 2,784,080.00 Retirement F u n d . F u n d s set a s i d e f r o m p r o f i t s t o r e t i r e P r e f e r r e d Stock b y p u r c h a s e or b y c a l l i n a c c o r d a n c e w i t h t h e A r t i c l e s of A s s o c i a t i o n of t h e B a n k . . . . 3,974,282.61 12,074.463.57 Reserve for Increase of C o m m o n C a p i t a l . F u n d s p r o v i d e d f r o m e a r n i n g s for t h e i n c r e a s e o j C o m m o n C a p i t a l r e s u l t i n g f r o m t h e r e t i r e m e n t of P r e f e r r e d S t o c k . . . . 30,956,355.77 21.151.214.33 O t h e r Reserves. Set a s i d e o u t of a c c u m u l a t e d p r o f i t s b y t h e B o a r d of D i r e c t o r s , a v a i l a b l e a s a r e s e r v e , i n a d d i tion to Surplus a n d U n d i v i d e d Profits, a g a i n s t n o r m a l contingencies 864,795.928.74 Other r e a l estate o w n e d . T h i s is r e a l e s t a t e a c q u i r e d i n t h e s e t t l e m e n t of d e b t c a r r i e d a t cost o r a p p r a i s e d v a l u e , w h i c h e v e r is l o w e r 150,000 Reserve for W a r C o n t i n g e n c i e s , Etc. A d d i t i o n a l p r o f i t s a c c u m u l a t e d f r o m o p e r a t i o n s a n d set a p a r t b y t h e B o a r d of D i r e c t o r s for u n f o r e s e e n c o n t i n g e n c i e s w h i c h m a y r e s u l t f r o m t h e w a r or p o s t - w a r r e a d j u s t m e n t s , a n d other contingencies figure r e p r e s e n t s t h e cost less d e p r e c i a t i o n r e s e r v e of $18,944,792.51 . . . . over U n d i v i d e d Profits. P r o f i t s a c c u m u l a t e d a n d n o t w i t h d r a w n , but left w i t h the Bank for use i n c o n d u c t i n g its business 16.590.257.41 Bank b u i l d i n g s , f u r n i t u r e , fixtures a n d safe deposit v a u l t s . T h i s of Surplus. P a i d i n b y s t o c k h o l d e r s or a c c u m u l a t e d e a r n i n g s i n t h e o p e r a t i o n of t h e B a n k 7.735.711.04 T O T A L D U E US F R O M C U S T O M E R S including 4,088,920.20 FUNDS P r e f e r r e d ( 460,796 S h a r e s . ) I s s u e d at $50 ($20 C a p i t a l $30 S u r p l u s ) , A n n u a l D i v i d e n d $2. P r e f e r r e d t o e x t e n t of a n d r e t i r a b l e a t i s s u e p r i c e a n d a c c r u e d dividends 840,469.960.29 W e h o l d g u a r a n t e e s a n d securities of c u s t o m e r s a n d b a n k s , for l e t t e r s of c r e d i t , a c c e p t a n c e s a n d e n d o r s e d bills charges, 4.245.148.20 $2,611,287,269.13 Capital. Representing the investment stockholders. C o m m o n (4,000,000 S h a r e s . ) the d a t e of t h i s s t a t e m e n t ) , a n d a c c o u n t s r e c e i v a b l e resources $ The difference b e t w e e n the total resources a n d the total l i a b i l i t i e s represents the B a n k ' s w o r k i n g c a p i t a l , p r o v i d e d b y the s t o c k h o l d e r s as a p r o t e c t i o n f o r d e p o s i t o r s . It is c a r r i e d o n t h e b o o k s a s f o l l o w s : W e h a v e interest d u e us o n b o n d s a n d l o a n s ( e a r n e d to deferred 16,812,501.73 $1,265,749,443.75 CAPITAL Other $ $ W e h a v e set aside as a reserve ior interest p a y a b l e o n t i m e d e p o s i t s a n d for taxes a n d other expenses 172.982,016.46 Other bonds a n d securities $2,586,140,699.00 W e h a v e endorsed Bankers' A c c e p t a n c e s a n d i s s u e d Letters oi C r e d i t o n b e h a l f of c u s t o m e r s , a n d h a v e a g r e e d t o h o n o r C u s t o m e r s ' D r a f t s ( n o t y e t d u e ) , a l l of w h i c h a r e s e c u r e d b y t h e g u a r a n t e e s a n d c o l l a t e r a l of c u s t o m e r s a n d b a n k s i n c l u d e d i n r e s o u r c e s 341,803.65 TOTAL CAPITAL FUNDS TOTAL RESOURCES This statement i n c l u d e s the \Jf M e m b e r F e d e r a l Reserve S y s t e m res of t h e ^ $ LIABILITIES A N D CAPITAL $2,771,689,631.89 . . . . FUNDS $2,771,689,631.89 d on. E n g l a n d , b a n k i n g office M e m b e r W ^ f 'ral D e p o s i t I n s u r a n c e r Corporation 160.402.362.76 R E G U L A T I O N V LOANS " R e g u l a t i o n V " loans are a special type o f war-purpose loans w h i c h o r i g i n a t e d i n 1942 t h r o u g h an Executive Order o f the President o f the U n i t e d States. Such loans, made to war contractors and sub-contractors, are guaranteed as t o p r i n c i p a l and interest, i n whole or i n part as arranged, by the W a r D e p a r t m e n t , the N a v y , or the M a r i t i m e Commission. T h e first transaction by the Bank i n this type o f credit was o n M a y 26th. F r o m this date to June 30th, Regulation V loans and commitments totaled $ 4 , 1 4 9 , 0 0 0 ; at year-end the total had increased to more than $75,000,000. REAL ESTATE LOANS T o t a l real estate loans outstanding December 31, 1942, were slightly h i g h e r than the year before. T h i s gain, occurring i n a year w h e n new construction o f non-defense homes was v i r t u a l l y suspended, was made possible by a substantial increase i n F H A loans outstanding, most o f w h i c h represented f i n a n c i n g o f defense housing projects under T i t l e V I o f the N a t i o n a l H o u s i n g A c t . T i t l e V I loans, confined to low-cost d w e l l i n g structures, and financed by projects, are insured, as are other types o f F H A loans. T h e Bank 12 has financed projects i n v o l v i n g f r o m 100 to over 500 homes i n such congested localities as San D i e g o , L o n g Beach, Los Angeles, O a k l a n d , Richmond, V a l l e j o and Napa. Outstanding T i t l e V I loans, exceeding $ 3 0 , 0 0 0 , 0 0 0 o n December 31, 1942, represented more than 8,500 homes p r o v i d e d f o r defense workers. F I N A N C I N G RECEIVABLES I n the year just closed, B a n k o f A m e r i c a advanced $ 7 7 , 1 3 1 , 0 0 0 against accounts receivable. T h i s was an increase o f 38.4 per cent over the year before, and raised to $ 2 0 3 , 4 9 4 , 0 0 0 the total o f such credit extension since creation o f an accounts receivable department i n 1938. W i t h the war production p r o g r a m i n h i g h gear, many a small business i n C a l i f o r n i a had b i g business thrust u p o n it f o r immediate hand l i n g . For numerous such enterprises, increased w o r k i n g capital requirements have been met t h r o u g h the Bank's system o f f i n a n c i n g accounts receivable. C O M M O D I T Y LOANS I n 1942 commodity loans also helped to increase p r o d u c t i o n in many essential and critical lines, i n c l u d i n g foodstuffs, steel, chrome and other metals, machine parts, fabrics and plastics. Warehouse financi n g often furnishes f o r small businesses necessary credit not readily available to them by any other means. LIVESTOCK LOANS I n May, 1942, the Bank f u r t h e r broadened its credit services by establishing a livestock loan department, w i t h the f o r m e r Bankamerica C r e d i t Corporation as its nucleus. T h e field served by this new department is the largest agricultural industry i n California, livestock and livestock products s u p p l y i n g 30 per cent o f all agricultural income and r a n k i n g next to p e t r o l e u m as a basic producer o f income i n the state. TIMEPLAN FINANCING A s foreseen a year ago, i n 1942 T i m e p l a n experienced its first decrease in consumer credit v o l u m e since the department came i n t o b e i n g 13 i n 1935. N o t w i t h s t a n d i n g , T i m e p l a n loans and contracts financed i n 1942 amounted to $144,300,000. Causes f o r smaller v o l u m e are w e l l k n o w n : limitation, and i n some cases e l i m i n a t i o n , o f the type o f goods purchased t h r o u g h T i m e p l a n financing, restrictions o n home modernization, and Federal Reserve Board a n t i - i n f l a t i o n regulations. Public utilities, department stores, musical instrument dealers and other large, financially strong concerns, some o f w h i c h have i n the past carried all or a p o r t i o n o f their o w n instalment accounts, are n o w using Bank o f A m e r i c a service to reduce detail w o r k . These new customers are f i n d i n g the Bank's service so satisfactory that a larger volume o f this class o f business is l i k e l y to result. W A R BOND SALES IAR SAVINGS BONDS are sold throughout the country by banks, post offices, investment dealers, department stores, public utilities and other large corporations, and t h r o u g h other outlets. I n the first ten m o n t h s o f 1942 (latest comparison available), sales o f war savings bonds t h r o u g h Bank o f America branches amounted to 14 1.85 per cent o f the nation's total and 27 per cent o f total sales i n C a l i f o r n i a t h r o u g h all sources. F r o m M a y , 1941, the date o f the o r i g i n a l o f f e r i n g , to the end o f December, 1942, the Bank's sales o f war savings bonds to the p u b l i c amounted to $192,735,000. There is double satisfaction i n the fact that this means not o n l y nearly $193 M i l l i o n s furnished the nation's war chest, but also m o r e than $242 M i l l i o n s ( m a t u r i t y value) i n f u t u r e security f o r patriotic, t h r i f t y Californians. I n addition to sales o f war savings bonds d u r i n g 1942, approximately $187,000,000 o f various issues o f G o v e r n m e n t bonds, tax anticipation notes, etc., were purchased by the p u b l i c t h r o u g h Bank o f America. Thus, investment i n G o v e r n m e n t issues t h r o u g h the B a n k i n 1942, i n addition to investment f o r the Bank's o w n account, approximated $347,218,000. A considerable number o f the Bank's employes are engaged exclusively i n h a n d l i n g war b o n d transactions. T h e Bank's advertising has been used extensively to stimulate b o n d purchases by the p u b l i c . N o part o f such expense is reimbursed to banks and other distributors o f war bonds. W h e n i t became necessary to sell war bonds to the p u b l i c o n an unprecedented scale, the Bank, w i t h its numerous branches, constituted a statewide d i s t r i b u t i n g organization, prepared f o r immediate action. Convenient locations o f branches and the nature o f their relations w i t h the people and business o f the state p r o v i d e an ideal set-up f o r largescale operations. 9 TRUST DEPARTMENT SSENTIALLY, the Trust D e p a r t m e n t engages i n peacetime activi- ties, but it, too, participated i n victory b a n k i n g i n 1942. A t the request o f the Federal Reserve Bank o f San Francisco, the D e p a r t m e n t accepted appointments as agent f o r alien interests. A l s o , more' o f our 15 o w n citizens, serving i n the armed forces, opened custodian and trust accounts f o r the management and protection o f their property. T h e Bank was named i n 2,354 w i l l s covering property h a v i n g an estimated total value o f $99,000,000. D u r i n g the year 770 new trusts and estates were established, w i t h combined assets i n excess o f $26,000,000. M I N T E R N A T I O N A L BANKING ANKING transactions incident to f o r e i g n trade were consider- ably curtailed by war conditions. L a t i n American and other f r i e n d l y nations are eager buyers o f our goods, but war conditions have caused m u c h o f this demand to go unsatisfied. O t h e r nations as w e l l as our o w n are p l a n n i n g f o r more o f the better things o f l i f e t h r o u g h democratic processes after the war. T h e most populous nations, most potentially rich but least developed i n natural resources, lie across the Pacific. C a l i f o r n i a ports w i l l inevitably benefit by their post-war development. I n consequence, a strong rev i v a l i n f o r e i g n b a n k i n g business is anticipated shortly f o l l o w i n g the close o f hostilities. Sales o f travelers cheques increased about 16 per cent, setting a new record, and average outstandings were about 51 per cent higher than i n 1941. THE STAFF N MANY occasions over the years Bankamericans have been called u p o n to show t h e i r mettle, and they have always responded. A g a i n s t a b r i l l i a n t b a c k g r o u n d o f achievement, Nineteen F o r t y - T w o stands out. As staff members j o i n e d the colors, others closed the ranks, shouldered added responsibilities, and u p h e l d the service standard w h i l e h a n d l i n g a record v o l u m e o f essential b a n k i n g business under difficult 16 conditions. W o m e n n o w make u p a larger percentage o f the staff, inc l u d i n g many i n positions f o r m e r l y f i l l e d exclusively by men, and to t h e m much credit is due f o r the continued efficiency o f the organization. T o absorb an unusual number o f inexperienced recruits, educational w o r k has been geared to faster tempo and t r a i n i n g routine cut f r o m months to weeks. A s s i m i l a t i o n o f new employes has been greatly facilitated by the assistance o f those w h o have h a d years o f experience i n the Bankamerican w a y ; and to experienced staff members w h o have stood by their posts the Bank attributes p r i m a r i l y its ability to carry o n and render necessary service. I n the present organization, 5,602 officers and other employes have served the Bank f o r more than five years. O f these, 3,638 have been w i t h the institution f o r over 10 years, 334 o f t h e m f o r m o r e t h a n 25 years. T h e list o f employe benefits was increased i n 1942 by creation o f the Clorinda G i a n n i n i M e m o r i a l Benefit F u n d , a trust to p r o v i d e extraordinary aid f o r those w h o may be w i t h o u t means w h e n overtaken by misfortune. D u r i n g the year, 1,955 staff members were granted m i l i t a r y leave o f absence, and up to the present 2,568 Bankamericans have entered the armed services. I n various ways the business f a m i l y ties w i t h our absent members are being maintained. Employes o n m i l i t a r y leave are p e r m i t t e d to replace their bank g r o u p insurance w i t h N a t i o n a l Service L i f e Insurance and are reimbursed by the Bank f o r the replacement cost. Ind i v i d u a l packages o f Christmas cheer were sent to Bankamericans o n m i l i t a r y duty all over the w o r l d . N e w s o f their co-workers and o f the B a n k reaches them and their families t h r o u g h the staff newspaper. T o Bankamericans and members o f our f a m i l y o f stockholders o n the f i g h t i n g fronts, and to all the rest o f the armed forces, we at Bank o f America renew our pledge o f a year ago: to do our utmost o n the victory b a n k i n g f r o n t . 17 JJJJI ADVISORY BOARDS 11 TRL D V I S O R Y BOARDS have been an i n s t i t u t i o n i n the Bank since earliest development o f our branch system. T h r o u g h these local boards branches g a i n sound counsel i n local matters. Their members have contributed m u c h to the g r o w t h o f the Bank. O n behalf o f the stockholders and management, I w i s h again to express our appreciation o f the efforts o f A d v i s o r y Boards i n the unusual year just ended. • • • Once m o r e i t is a pleasure to assure our 150,000 stockholders that their continued patronage and keen interest i n the affairs o f their Bank have contributed heavily to another successful year. CALIFORNIA INDUSTRY m 11 J 8 J ALIFORNIA'S progress has been accentuated at times by revolutionary d e v e l o p m e n t : discovery o f gold, development o f agriculture, f i n d i n g o i l , perfection o f the m o t i o n picture. A d d e d to the list, w e n o w see California's m a n u f a c t u r i n g industry i n the process o f being established on a permanently higher level as a by-product o f w a r . I n the 12 m o n t h s ended w i t h September, 1942, the value o f war contracts placed i n C a l i f o r n i a was $6,202,796,000. C u m u l a t i v e total value o f war contracts awarded i n California, June, 1940, t h r o u g h September, 1942, was $9,116,877,000. T h i s was 8.68 per cent o f the national total. For the period, value o f C a l i f o r n i a war contracts was $1,320 per capita, 1940 Census, compared w i t h $797 f o r the U n i t e d States. T h e f u t u r e o f aviation must be l e f t to the imagination, but i t is a fact that the nation's aircraft m a n u f a c t u r i n g center is C a l i f o r n i a . S h i p b u i l d i n g i n C a l i f o r n i a is n o w proceeding at an abnormally h i g h rate. H o w e v e r , i t w i l l take many years after the war to replace sunken vessels. O v e r 3,800 ships have been reported sunk in the war to date. 18 Also, an entirely new concept o f w o r l d trade relations may become established, increasing the i n t e r n a t i o n a l flow o f goods beyond any k n o w n record, and r e q u i r i n g s h i p p i n g facilities far i n excess o f f o r m e r peacetime tonnages. T o provide present necessities, durable goods industries and precision manufacturing are being developed extensively i n and adjacent to California. M i n e r a l and other natural resources are at hand, huge power projects have been completed, and the state's army o f trained technicians has been greatly expanded. Various authorities estimate C a l i f o r n i a ' s p o p u l a t i o n increase since the 1940 Census at 600,000 to 750,000. A s i n each previous epoch, it is expected that many o f these new residents w i l l remain and participate i n the further b u i l d i n g o f the state. W a r is a destructive force, exposing us to grievous personal losses and innumerable sacrifices. O u r resources o f m i n d and material w i l l be severely taxed and conceivably there may s t i l l be setbacks and times w h i c h test our fortitude. Unpredictable turns and obstacles litter the course we must f o l l o w . M o r a l and physical qualities may be called u p o n to withstand the most severe attritions w h i c h the stresses o f allout war impose. Y e t we all have f a i t h i n our cause and reason f o r h i g h est confidence i n our capacities to w i n final victory. I n that day, C a l i f o r n i a may expect to emerge f r o m the war w i t h permanent gains i n population, home b u i l d i n g , trade and business o f every description, and particularly i n m a n u f a c t u r i n g , strongly equipped to render a c o n t r i b u t i o n to peace equal to its o u t s t a n d i n g c o n t r i b u t i o n to the struggle to w i n that peace. 19 LH G A H I O RP E T
