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IF- -B - ---I e of Atlanta CONTENTS Message from the President 2 Building Bridges, Building Partnerships 5 Directors 20 Officers 26 Financial Statements 30 The three and a half million people who live in Atlanta will always remember 1996 as the year of the Centennial Olympic Games. The staff of the Federal Reserve Bank of Atlanta will particularly remember it that way. The Bank was literally in the middle of the festivities because it is located only one block from Centennial Olympic Park and in the heart of the Olympic Ring, the area of the city where most events took place. This Bank works hard to reach out to the various communities it serves, and the extensive preparations for the Summer Games done by the atlanta Committee for the Olympic Games, the municipalities of metro Atlanta, and the people who live here were a reminder of how important it is to establish public-private partnerships and to make them work. On an institutional level, in the areas of cash services, security, and transportation, the Bank itself worked with many of the groups that helped to coordinate the Games. And during the seventeen days of the Games themselves, on a personal level, many members of our Bank staff helped make numerous domestic and international visitors to our city feel welcome. With or without the Olympic Games in town, however, the Federal Reserve Bank of Atlanta is reaching out to the many communities it serves by Building bridges Building partnerships, Bringing people together to get things done. These three principles guide our work every day, and they are mort important than ever in light of the vast changes taking place in technology, in the financial system, and in the economy at large. Here at the Federal Reserve Bank of Atlanta, we’ve been building bridges and partnerships for many years in the banking industry. Now, to meet today’s challenges and changes, we are beginning to deepen and expand on partnerships we’ve already made, to create new partnerships both inside and outside of the region, and to increase our role as an intermediary, bringing together groups that might not otherwise sit down with one another to talk about how to solve issues that affect the financial arena and the economy. This annual report focuses on some recent steps we’ve taken and points to where we’re headed as we approach the next century. A unique feature of the Federal Reserve System is its decentralized structure and the role it affords for regional participation in important public policy decisions. The president and staff of a Reserve Bank work together with directors to understand what is going on with the people and companies that make up their region’s economy as a key input into decisions about monetary policy. For this reason it is critically important in this time of profound-and not well understood-economic The management team of the Federal Reserve Bank of Atlanta in nearby Centennial Olympic Park: Jack Guynn, president and chief executive officer; HI@ Brown, chairman of the board of directors; and Pat Barron, first vice president and chief operating officer. I shifts to gather information that can help shape the wisest monetary policy and, in turn, foster truly sustainable economic growth. To do so, we at the Federal Reserve Bank of Atlanta garner economic intelligence from throughout the Sixth Districtwhich stretches from the Louisiana-Texas border to the mountains of Tennessee to the tip of the Florida Keys-seeking out the opinions and insights of business people and community leaders about the rapidly changing economy. It is not only the economy that is evolving. Profound changes are taking place in the financial services industry and in the nation's payments system. To address issues like the future of checks and the optimal regulatory framework for the financial system, we are trying increasingly to work in concert with bankers and others to create solutions that will work for the twenty-first century. Being part of the central bank, we also have our own ideas about what measures can best help to increase economic well-being for all, but we do not lay claim to having all the answers. That is why we want to serve as an intermediary-to bring the right people together to discuss and debate problems and, ultimately, to help us make the best decisions that will result in the best outcomes. We recognize that this kind of collaborative process does not produce results overnight. Yet it is a necessary step in building the kind of consensus that does bring about important change. Building bridges and building partnerships are long-term activities. The Atlanta Fed has been part of the Southeast's financial infrastructure for more than eighty years now, and, with offices in six major southeastern cities, we have set down roots throughout the region. We are dedicated to creating the kind of long-term relationships that will continue to work to the benefit of everyone throughout the next century. No one can ever be certain about the future, but we believe the steps we are taking now set the right course. With the help of officers and staff of the Bank and counsel from our directors, I am optimistic that the Federal Reserve Bank of Atlanta wl continue to play a vital role in the nation's economic future. il JACK GUY" many constituencies throughout the Sodteast by building bridges andpartnershli)-cand byplaying on intermediary m b with diverse groups. Thephotographic essay thatfollowspresents a f e w examples of how the Atlanta Fed reached out in 1996: il, Working with business and community leaders in the region to find out more about current develo and trends in the national economy Working with international central bankers and bank supervisors to create partnerships that improve consolidated supervision of international banks Working with the financial community to find w the nation’s payments system more efficient Working with visiting scholars and financial to learn how best to safeguard the financial system while encouraging financial innovation Working with community representatives and bankers to help low- and moderate-income families achieve the dream of owning a home Working with the U.S. Treasury to prot 1 Getting input about changes in the auto indus. try at the Saturn plant in Spring Hill, Tennessee: Jack Guynn, president and CEO of the Atlanta Fed (far right), and Waymon Hickman, Atlanta Fed director (second from left), with Saturn’s Thomas Manoff, vice president of finance (left), and Robert Bonrff, vice president of manufacturing operations. 1 1 Building Bridges, Building Partnerships Gathering information directly from business and community leaders is one of the most important duties of every regional Federal Reserve Bank president. Jack Guynn, president and chief executive officer of the Atlanta Fed, visited Saturn Corporation’s plant in Spring Hill, Tennessee, in September to meet with representatives of the region’s growing automobile manufacturing sector and hear their views on the industry and the regional economy. Grassroots information such as this helps Reserve Bank presidents not only to represent their regions and leading industries at meetings of the Federal Open Market Committee-the Federal Reserve System’s monetary policymaking body-but also to offer unique insights into economic developments nationally. Atlanta Fed Director Waymon Hickman, a community banker in Columbia, Tennessee, accompanied President Guynn on his visit to the Saturn plant. In addition to touring the assembly line, they spoke with members of Saturn management to get their views on the future of the auto industry. With the relocation of many automobile manufacturing facilities and parts suppliers to this region, the Southeast has a particular interest in this industry, which is gaining local prominence along with the area’s traditional manufacturing industries: lumber, paper, home appliances, textiles, and apparel. Although the Summer Olympic Games in Atlanta grabbed a majority of the headlines, the real economic story for the Southeast has been the strong growth driven by the automobile- and housingrelated industries following the 1990-91 recession. Another part of the visit to Tennessee was spent talking with a large group of business and community leaders to hear about their individual economic experiences. Many of these people represent the service industry, which has become a major part of the southeastern economy. In tandem with manufacturing, the growth in the service industry has helped this region to outpace the national economy for more than five years. But, ironically, the strong growth the Southeast has enjoyed has sometimes masked underlying dislocations and painful structural adjustments. For instance, while the automobile industry has been growing in this region, the traditional base of apparel manufacturing has been going through a difficult period as tens of thousands of jobs have moved to developing economies in other parts of the world. This dislocation of workers in parts of the regional economy is an issue that has both economic consequences and social implications. These are the kinds of larger public interest issues that Atlanta Fed staff grapple with every day, and the Bank has found it useful not only to conduct research into issues like state tax policy but also to sponsor conferences and other meetings that bring people together from outside the organization to explore such issues as the best way to finance education reforms and the economic development role of professional sports. Alan Greens an, chairman of the Federal Reserve System’s Board of Governors, ,P . came to e Atlanta Fed in October to speak at a meeting of the board of directors. He also had a chance to talk about the economy with Atlanta Fed Chairman Hugh Brown, who heads a firm in the aerospace industry, and Director Maria Camila Leiva, an executive with the Miami Free Trade Zone, as well as the Sixth District’s other head office and branch directors. Since the information gathered by Reserve Bank presidents and their staff from directors and other business contacts around their regions is an important contribution to policymaking at the Fed, Chairman Greenspan often visits the various regions of the country to hear firsthand what the Reserve Bank directors are reporting. The Atlanta Fed’s board of directors and branch directors, who number forty-four in all, are a broad cross-section of southeastern business and community leaders. In 1996 these included executives in the fields of utilities, nonprofit work, retailing, manufacturing, and banking in addition to aerospace engineering and exporting. The president of the Atlanta Fed also meets regularly with the Bank‘s Advisory Council on Small Business, Agriculture, and Labor to gain insights into the special perspective and concerns of the sectors of the economy the members represent. As 1996 played out as another year of steady growth and low inflation, Atlanta Fed directors and council members helped the president and his staff gain a better understanding of the labor and wage picture in this business cycle. Their information helped Fed policymakers seated around the Federal Open Market Committee table judge whether labor shortages were becoming more widespread and whether wage increases were likely to feed through to higher inflation. As many important economic theories that had been validated by actual experience over past economic cycles have proved to be less useful in today’s environment, input from directors has helped to fill the gap in information and understanding. Some approaches, such as targeting monetary aggregates, have become less reliable, in the same way that inventory cycles are not as helpful as gauges of the economy in an era when “just-in-time” inventory has become a way of life for most businesses. Overall, judgments about monetary policy are enhanced not only by economic models and data but also by the information gathered firsthand from business and community leaders. Dbcussingviews on current economic developments and trends: Federal Reserve Chainnan Alan Greenspan (center) with Atlanta Fed directors Hugh Brown, chainnan, and Maria Camila Leiva. 1 I Building Btidges, Buiiding Partnerships The Atlanta Fed hosted a meeting of the board of directors of the Association of Supervisory Authorities of Latin America and the Caribbean in October. Meetings such as this one at the Miami office help the Federal Reserve System to keep open lines of communication and to work mutually with international banking authorities toward having the necessary information to supervise international financial institutions. The large international banking community in Miami has provided many opportunities for Atlanta Fed staff to develop ties with international banking authorities. For instance, Fed staff have made frequent trips to Latin America to conduct training aimed at helping international supervisors develop policies and procedures Partnering with Latin American supervisory authorities: Sergio GhpJiazza, director of CEMLA, Mexico C i , and lose florencio Guzman, superintendent of banks and financial institutions in Chile and chairman of the Association of Supervisory Authorities of Latin America and the Caribbean, with Suzanna Costello, Atlanta Fed vice president for international examinations, and William Ryback, associate director of banking supervision and regulation at the Federal Reserve Board of Governors. ? a 3 1 to curtail money laundering. But Congress added another reason to expand these ties when it enacted the Foreign Bank Supervision Enhancement Act of 1991, making the Federal Reserve the lead authority for supervising international banks with offices in the United States and approving applications for their entry and expansion. The act, which is in line with the goals of the Basle Agreement on worldwide supervision, was established to ensure that foreign financial institutions operating in the United States would have comprehensive and consolidated supervision by their home country. Within the Federal Reserve System, the Atlanta Fed has been given responsibility for developing specialized expertise on most of Latin America and the Caribbean, a knowledge base that can be used by all of the regional Reserve Banks and the Board of Governors. I'he Bank's supervisory staff have been building partnerships with their counterparts in countries like Colombia and Chile for several years, and staff members have also been on loan in different Latin American and Caribbean countries to teach commercial and central bankers about the Fed's methods of supervision. In addition, the Atlanta Fed's economic research department has established a Latin American research group, a team of economic analysts who monitor economic and financial developments in this region of the world. The Bank has not limited itself to Latin America and the Caribbean in its international partnership-building. For instance, staff are providing ongoing technical assistance to Azerbaijan and other fledgling market economies in the former Soviet Union and in Eastern Europe to help them put modern banking systems and payments systems in place. Over the past three years, more than four hundred central bankers, bank regulators, and commercial bankers from these regions, as well as countries in Africa, Latin America, and Asia, have visited the Atlanta Fed to learn more about the U.S. financial system and the operations of the U.S. central bank. These kinds of initiatives reflect the Atlanta Fed's commitment to helping emerging market economies. 1 11 I L f i A Par - In 1996 Fred Herr, senior vice president of the Atlanta Fed, worked closely with representatives from commercial banks such as SunTrust, NationsBank, and others to take checks to the next step beyond paper. As financial service institutions look for ways to make some of their back-room operations more efficient, the Atlanta Fed has partnered with several commercial banks to develop an efficient check-imaging system, in which a full image of a check is transmitted or stored electronically rather than moving the piece of paper itself or storing it on microfilm. The Sixth District completed tests on such a check-imaging system and went live with imaging services in 1996. Another dimension of the check-imaging effort is reflected in the Bank's work with other Federal Reserve Banks and the U S . Treasury, the nation’s largest check writer, to convert all Treasury checks to electronic images at the Federal Reserve Bank of first deposit. Working with commercial banks and other financial service institutions comes naturally to a regional Federal Reserve Bank, and the Atlanta Fed is forging ahead to become an even more active partner. For instance, this Bank has completed a pilot project with five commercial banks in the Sixth District to test a software program to detect fraudulent checks. With approximately 60 billion paper checks being written in the United States each year, this nation’s payments system is far removed from the Federal Reserve’s goal of moving from paper-based to electronic-based payments. The Atlanta Fed first did a ground-breaking study of how to move toward an electronic system for making retail payments back in the 1970s. More than twenty years after the original COPE (Committee on Paperless Entries) study, it is abundantly clear that this nation still loves its paper checks. A technology even more promising than check imaging is electronic check presentment, which refers to a method of capturing the pertinent data about a paper check embedded in the magnetically encoded characters at the bottom of the check and electronically transmitting that data for presentment and reconcilement. The development in the 1950s of the magnetic ink character recognition (MICR) system, which allows check data to be read electronically, thereby speeding up posting to an individual’s account, was one of the Federal Reserve System’s early contributions to the automation of check processing. Electronic check presentment seems to be more promising for the industry-and for consumers, who should benefit from cost savingsbecause most financial institutions can use technology built on the MICR system, whereas fewer can afford to invest in full-fledged check-imaging systems. The Atlanta Fed has been providing significant leadership and staff resources to help promote this approach with a pilot project of the Electronic Check Presentment Advisory Council, a Fed-sponsored banking industry group that was formed to advance the use of electronic check presentment and to examine possible operational enhancements to make the process more attractive to all participants. This group, which is made up of seventeen banks from across the nation, has teamed with the Southwest Clearing House in a pilot program to work out operational issues involved in wide-scale electronic check presentment. This effort is indicative of a clear Federal Reserve strategy to partner with the industry to improve the overall efficiency and integrity of the payments system. visiting scholarsand staff in the economic research department of the Atlanta Fed U found ample opportunities in 1996 to talk about their research on financial markets not only with academic economists but also with market practitioners like Paul Jacob of Hyperion Capital Management Inc., New York. By partnering with visiting scholars like Steve Smith, who is the H. Talmage Dobbs Jr. Chair of Finance at Georgia State University, the Atlanta Fed brings differing viewpoints to the discussion of monetary policy and financial markets. The research done at the Atlanta Fed has also proved useful to market practitioners like Jacob, who, as director of portfolio strategies for Hyperion, works on asset allocation strategies and econometric model-building for clients. Since the 1980s a number of market forces have transformed the financial services industry. These include further geographic consolidation with the proliferation of interstate banking, increasing international investment, the rise of nonbank financial intermediaries, and ongoing technological changes. In the past few years, derivatives have become high-profile new instruments. With globalization and technology helping these innovations to appear at a breathtaking pace, the issues pertaining to the liquidity, transparency, and regulation of derivatives markets are complex. The Atlanta Fed’s staff of financial economists and visiting scholars have been studying these problems and publishing research for a number of years, foreseeing the tremendous growth in this arena. Recognizing that not all problems can be addressed by in-house research alone or even through partnerships with visiting scholars, the Atlanta Fed is equally involved in bringing together groups of people to work on problems in which they all have an interest. One of the best examples of this intermediary role is the Bank’s annual financial markets conference, which brings together top scholars, market practitioners, and policymakers from around the world. In 1996 the Bank held its fifth annual conference on financial markets. Representatives from organizations as diverse as the Deutsche Bundesbank, the Financial Accounting Standards Board, the University of Chicago, Morgan Stanley, the U S . Office of the Comptroller of the Currency, and the Federal Reserve discussed topics such as whether derivatives change the way monetary policy affects the economy and how to foster transparency in the markets, both in terms of positions taken and prices set. The financial markets conference continues to serve as a thought-provoking forum for such broad issues as optimal regulatory structures in a global context. Connecting scholarly research with real-world practice: Steve Smii, vising scholar at the Atlanta Fed, and Paul Jacob, director of portfolio strategies with Hyperion Capital Management Inc. Finding ways to bring together lenders and lowto moderate-income home buyers: Ron Zimmerman (right), Atlanta Fed vice president in supervision and regulation, with Harriet Stone (left), director of housing management services, Tampa United Methodist Center, and Mishondra Key, homeowner. By purchasin her own home in Tampa, Florida, in 1996, Mishondra Key was part of the American dream, thanks in large part to an undertaking of Ron Zimmerman, vice president in the Atlanta Fed’s supervision and regulation division. Zimmerman developed a software program called Partners, which has helped the Bank to serve as an intermediary between bankers who lend money and people in low- and moderate-income areas who wish to purchase a house. His Partners program provides lenders and community groups with an easy-tounderstand method of determining who can qualify for a home purchase loan, given the underwriting criteria and the financial information provided. It also offers solutions to overcome barriers for applicants who may not immediately qualify for conventional home purchase loans. Community lending has been a strong focus for the Bank since the passage of the Community Reinvestment Act (CRA) of 1977, which governs how financial service institutions meet the credit needs of their communities, including low- and moderate-income areas. In a further effort to bring information to the people who can put it to best use, in 1996 the community affairs department of the Atlanta Fed spurred an effort throughout the twelve regional banks in the Federal Reserve System t o develop a comprehensive computer database system that covers all the community development groups that serve low- and moderate-income areas and small business development needs. With 7,000 contacts in the Southeast alone, this database now allows the regional Reserve Banks to track, sort, and manage information on specialized loan and investment programs. Besides the traditional safety and soundness bank examinations, bank examiners at the Atlanta Fed and elsewhere are required by law to do separate CRA and community lending examinations of lending institutions in the Sixth District. Following a customer survey of commercial bankers carried out throughout the Federal Reserve System, the Atlanta Fed reorganized some of the ways its supervision and regulation division handles examinations in response to suggestions from bankers. Now, for example, rather than visiting a lending institution three or more times for the different kinds of examinations, Bank staff often consolidate their exams into one visit. These changes are part of the Bank’s continuing effort of working with financial service institutions to make bank supervision more efficient. l7 I Assisting the Treasury Department in the successful roll-out of newly redesigned currency: Bob Musso, the Atlanta Fed’s New Orleans branch manager and chairman of the Federal Reserve System’s Cash Advisory Group. I Y I Building Bridges, Building Partnerships Cash vaults throughout the Federal Reserve System in 1996 started to receive the U S . Treasury’s redesigned $100 bill, which employs new technology and enhances the integrity of U S . currency. The Federal Reserve System’s Cash Advisory Group, which is chaired by Robert MUSSO,vice president and branch manager of the Atlanta Fed’s New Orleans office, played an important role in the successful introduction of these notes. Since there was no recall of the “old” $100 bills, the Cash Advisory Group devised a plan to accelerate the return of the old notes while keeping an adequate supply of new notes on hand to replace them. This complicated inventory problem was handled smoothly, preventing any shortage of notes. A similar program will be used to introduce the newly redesigned $50 bills in 1997. At the same time the Atlanta Fed’s operations staff were heavily involved in the new currency roll-out, they were also installing a new generation of high-speed cash processing equipment. This new equipment, which processes cash faster than the old equipment and also more accurately detects counterfeit and unfit currency that must be taken out of circulation, will enable the Sixth District to continue serving both the public and the Treasury Department efficiently. The Atlanta Fed office also played an important intermediary role during the Summer Olympic Games in Atlanta. In preparation for the tight security and limited transportation access to the Atlanta Fed and banks in the city, as well as in anticipation of the much greater need for cash in Atlanta during the two weeks of the Games, the Atlanta office began planning more than a year in advance to make arrangements with commercial banks and city and Olympic officials. Cash delivery trucks had to be rescheduled and rerouted, space had to be created in the cash vault to handle larger inventories, and enough cash had to be on hand to meet the needs of the many Olympic visitors. Through these endeavors, the Atlanta Fed provided a nearly invisible, yet critical, service for all the U S . citizens and visitors from around the world who came to Atlanta for the Summer Games. These examples o the Atlanta Fed’s work-gathering inforkaf tion, buildingpartnershi+s, and serving as an intermedia y- are f on/ypart o what the Bank has done andplans to do to serve its many communities. Nineteen nineq-six began an era o new f leadersh2;oat the Federal Reserve Bank ofAtlanta. Under this f leadershi& the Bank intends tofind new ways o enhancing its legacy by building bridges, building partnersh+s, and bringing people together to work on importantpub Zic interest issues that are arising in today’s rapid& changing world. Atlanta Fed head office directors, drawn from throughout the Southeast, help shape monetary policy by providing the Bank president with insights into current economic developments derived from their business experience and community ties. L E F T T 0 R I G H T : WILLIAMS, PAUL JONES, LENA,HICKMAN, Atlanta Board of Directors KINDERMAN, BROWN, DAVID JONES, RUBENSTEIN. PICTURED: SWEAT NOT HUGH BROWN M. Chairman President and Chief Executive Officer BAMSl Inc. Titusville. Florida LARRY KINDERMAN W. President and Chief Executive Officer Stockham Valves & Fittings Inc. Birmingham, Alabama MARiA CAMILA LENA DANE. SWEAT JR Deputy Chairman Program Director The America Project Atlanta, Georgia Executive Vice President Miami Free Zone Corp. Miami. Florida AND& M. RUBENSTEIN WAYMON HICKMAN L. Chairman and Chief Executive Officer Rubenstein Brothers Inc. New Orleans, Louisiana Chairman and Chief Executive Officer First Farmers and Merchants National Bank Columbia, Tennessee JAMES WILLIAMS B. DAVID JONES R. Chairman and Chief Executive Officer SunTrust Banks Inc. Atlanta, Georgia President and Chief Executive Officer AGL Resources Inc. Atlanta, Georgia Federal Advisory Council Member D. PAUL JONES JR. CHARLES RICE E. Chairman and Chief Executive Officer Compass Bancshares Inc. Birmingham, Alabama Chairman and Chief Executive Officer Barnett Banks Inc. Jacksonville, Florida Birmingham Branch Directors PATRICM COMFTON B. Chairman E- President Patco Inc. Georgiana, Alabama President The Better Business Bureau of Central Alabama Inc. and the Counties of the Wiregrass Birmingham, Alabama MARLIN MOOREJR. D. Chairman Pritchett-Moore Inc. Tuscaloosa, Alabama JULIAN BANTON W. Chairman, President and Chief Executive Officer SouthTrust Bank of Alabama, N.A. Birmingham, Alabama J. STEPHEN NELSON Chairman and Chief Executive Officer First National Bank of Brewton Brewton, Alabama D. BRUCE CARR International Representative Laborers' International Union of North America Gadsden, Alabama L E F T T 0 R I G H T : MOORE,SANDERS, NELSON, BOOMERSHINE, CAR& COMPM)N, COLUMBUS SANDERS President Consolidated Industries Inc. Huntsville, Alabama BANTON Birmingham branch directors visit liberty Park, the Birmingham site selected in 1996 for a new branch building that will replace the current structure, built in 1926. Jacksonville branch directors pause in the branch’s lobby on a rainy day as they gather for their monthly meeting to discuss business and financial condiions in north and central Florida. L E FT T0 R I G - H T : W.\L.DEY, KELLY, SMITH, KLFFIER, J O ~ E S ,HEGGESTAII, WEST Jacksonville Branch Directors Jom D- RUFFIER WILLIAM SMITH G. JR. Chairman President Capital City Bank Group Tallahassee, Florida General Partner Sunshine Cafes Orlando, Florida ROYCE WALDEN B. ARNOLDA. HEGGESTAD Professor of Finance and Director of Entrepreneurial Programs University of Florida Gainesville, Florida Vice President SouthTrust Securities Orlando, Florida TERRY WEST R. JUDY R JONES President J.R. Jones and Associates Tallahassee. Florida PATRICK KELLY C. Chairman and Chief Executive Officer Physician Sales & Service Inc. Jacksonville, Florida I 22 President and Chief Executive Officer Jax Navy Federal Credit Union Jacksonville, Florida Miami Branch Directors STEVEN SHIMP C. R. KIRKLANDON Chairman Chairman American Bankers Insurance Group Miami, Florida President 0-A-K/Florida Inc. Fort Myers, Florida PAT TORNILLO L. JR JOHNSON-STREET -EN Vice President of Minority Business Development Enterprise Florida Miami, Florida ~ L O Executive Vice President United Teachers of Dade Miami, Florida MICHAEL WILSON T. A. MIGOYA S President, Dade/Monroe Counties First Union National Bank of Florida Miami, Florida President Vinegar Bend Farms Inc. Belle Glade, Florida E. ANTHONY NEWTON President and Chief Executive Officer Island National Bank and Trust Co. Palm Beach, Florida LE F T T0 R I G H T : TORNILLO, LANDON, JOHNSON-STREET, SHIMP, NEWTON, MIGOYA. PIClWRED: NOT WILSON Miami is known for its beaches, palm trees, and tourists, but the makeup of the Miami branch board of directorswhose members represent agriculture, labor, banking, insurance, and economic development-reflects interests in south Florida. f f f the diversity of business Nashville branch directors visit the Atlanta Fed to discuss regional and national economic conditions with their counterDarts from other Sixth District branches. LEFT To R I G HT: DALTON, MARCUM, VAUGHN, Lomu, SEWARD, o w , ARANT P Nashville Branch Directors PAULA LOVELL DALEW. POLLEY Chainan President First American National Bank Nashville, Tennessee President Lovell Communications Inc. Nashville, Tennessee JOHNE. SEWARD JR. WILLIAMS A a JR. E. R w Chairman First Knoxville Bank Knoxville, Tennessee JAMES DALTON E. JR President and ChiefExecutive Officer Quorum Health Group Inc. Brentwood, Tennessee FRANCES MARCUM F. Chairman and Chief Executive Officer Micro Craft Inc. Tullahoma, Tennessee President and Chief Executive Officer Paty Lumber Co. Inc. Piney Flats, Tennessee JACK VAUGHN J. President Opryland Hospitality & Attractions Group Gaylord Entertainment Co. Nashville, Tennessee New Orleans Branch Directors HOWARD GAINES C. LuclMAR~N T. Chairman First National Bank of Commerce New Orleans, Louisiana Chairman President Mississippi Coast Coliseum Commission Biloxi, Mississippi KAYL. NELSON President Nelson Capital Corp. New Orleans, Louisiana VICTORBUSSIE President Louisiana AFL-CIO Baton Rouge, Louisiana JO ANGUS COOPER R. I1 Chairman and Chief Executive Officer Cooperfl. Smith Corp. Mobile, Alabama A” SLAYDON President Slaydon Consultants and Insight Productions and Advertising Baton Rouge, Louisiana HOWELL GAGE N. Chairman and Chief Executive Officer Merchants Bank Vicksburg, Mississippi L E FT T0 R I G H T : GAGE, GAINES, ROBERTS,SLAYDON, NELSON, BUSSIE. PICTURED: NOT COOPER St. Louis Cathedral, in the French Quarter, evokes the history and ambience that support the tourism industry, which New Orleans branch directors report on together with other regional industries such as energy, petrochemicals, and shipbuilding. t I, MernbeISofthe Mmgement Committee, framed here by the columns from the original buildingthat still rnatk the Bank's entrance, help guide the Bank as it dealswith I today's changes and chd- lenges that are affeding the framework of the nation's financial system. Left to right Bo n Herr, rw, Caklwd, Eisenbeis, Guynn, Oliver, ke ,Barn, ts Hawki, DeBeer. t (CHAIRMAN) Senior Vice President President and Chief Executive @cer PATRICK BARRON K. Senior Vice President and Coordinating Branch Manager ROBERT EISENBEIS A. Senior Vice President and Director o Research f Senior Vice President WILLIAM ESTES111 B. CHRISTOPHERBROWN G. RICHARD OLIVER R. (VICE CHAIRMAN) First Vice President and Chief Operating @cer Senior Vice President Vice President and General Auditor W. RONNIE CALDWELL Executive Vice President (ADVISOR) JAMES HAWKINS D. Senior Vice President and Coordinating Branch Manager Senior Vice Presidents FRANK CRAVEN J. JR. Senior Vice President and Director o Human Resources f DONALD NELSON E. EDMUND WILLINGHAM Senior Vice President Senior Vice President and General Counsel B. FRANK KING MARYS. ROSENBAUM Vice President Vice Presidents LOISC. BERTHAUME Vice President Vice President and Associate Director o Research f RONALD ZIMMERMAN N. ZANE R. KELLEV Vice President BOBBIE MCCRACKIN H. Vice President and Public Affairs Oficer JOHN R KERR Vice President JOHND. PELICK Vice President Vice President Assistant Vice Presidents EDWARD ANDREWS C. Assistant Vice President JOHN H. ATKINSON Assistant Vice President JAMES L. BROWN Assistant Vice President DAVID CARR E Assistant Vice President ROBERTO C m C J. Research W c e r THOMAS J. CUNNINGHAM Research Ojker JAYNE Fox Assistant Vice President and Corporate Secretary CYNTHIA GOODWIN C. Assistant Vice President BARRY HARTIN G. Assistant Vice President WILLIAM HERBERT R Assistant Vice President SUSAN HOY Assistant General Counsel ALBERT MARTIN I11 E. TED REDDY G. I11 Assistant Vice President MARION . RIVERS P I11 Assistant Vice President WILLLAM. ROBERDS T Research m c e r MELINDA RUSHING J. Assistant Vice President LARRY SCHULZ J. Assistant V i e President ROBERT SEXTON T. Assistant Vice President Assistant General Counsel CHAPELLE DAVIS D. Assistant Vice President DANIEL MASLANEY A. Assistant Vice President J. COURTNEY DUFRIES Assistant Vice President D. WALL Research W c e r LARRY AMELIA MURPHY A. Assistant Vice President J. STEPHEN FOLEY Assistant Vice President DAVID SMITH W. Assistant Vice President ALVIN PILKINTON L. JR. Assistant General Auditor ADRIENNE WELLS M. Assistant V i e President , Branchofficers ATLANTA J A C K S O N V I L L E N A S H V I L L E JAMES M. MCKEE Vice President and Branch Manager JAMES D. HAWKINS Senior Vice President and Coordinating Branch Manager MELSTN PURCELL K. Vice President and Branch Manager MARIEC. GOODING Assistant Vice President and Assistant Branch Manager ROBERT SLACK J. Vice President and Assistant Branch Manager LEE C. JONES Assistant Vice President and Assistant Branch Manager ROBERT LOVE A. Assistant Vice President CHRISTOPHER L. OAKLEY Assistant Vice President MARGARET THOMAS A. Assistant Vice President ROBERT MCKENZIE I. Assistant Vice President JEFFREY L. WELTZIEN Assistant Vice President JOEL WILLIAM POWELL R. Assistant Vice President KIMBERLY WINSTEL K. Assistant Vice President B I R M I N G H A M M I A M I E. WARREN Assistant Vice President NEW ORLEANS ROBERT Musso J. Vice President and Brunch Manager JAMES T. FREDERICKHERR R. Senior Vice President and Coordinating Branch Manager CURRY I11 Vice President and Brunch Manager ANDRET. ANDERSON Assistant Vice President and Assistant Branch Manager JUAN DEL BUSTO Assistant Vice President and Assistant Branch Manager W. JEFFREY DEVINE Assistant Vice President FREDRICFULLERTON L. Assistant Vice President VICKIA. ANDERSON Assistant Vice President EDWARD HUGHES B. Assistant Vice President CHARLES PRIME W. Assistant Vice President SUZANNA J. COSTELLO PATRICUVANDE GRAAF D. Assistant Vice President Vice President FRED Cox D. Assistant Vice President ROBERT DE ZAYAS A. Assistant Vice President RAUL DOMINGUEZ (retired) Assistant Vice President CAROLXNHEALY C. Assistant Vice President AMY S. GOODMAN Assistant Vice President and Assistant Branch Manager I Statement of Condition (in millions) Gold certificates Special drawing rights certificates Coin Items in process of collection Loans to depository institutions U S . government and federal agency securities, net Investments denominated in foreign currencies Accrued interest receivable Interdistrict settlement account Bank premises and equipment, net Other assets Total assets DECEMBER 1996 3 1, DECEMBER 1995 3 1, $ 769 745 81 1,556 0 26,312 1,890 237 0 133 29 $ 556 523 66 688 9 17,728 1,954 180 13,362 118 29 $ 31,752 $ 35,213 $ 27,512 $ 31,186 liabilities and Capital LIABILITIES Federal Reserve notes outstanding, net Deposits Depository institutions Other deposits Deferred credit items Statutory surplus transfer due U S . Treasury Interdistrict settlement account Accrued benefit cost Other liabilities 2,481 19 660 1,7ulr 31 1,033 36 511 70 11 15 64 10 $ 30,912 $ 34435 $ 425 415 $ 389 389 Total capital $ 840 $ 778 Total liabilities and capital $ 31,752 $ 35,213 Total liabilities CAPITAL Capital paid-in Surdus These statements are prepared by Bank management. Copies of f i l l and final financial statements, complete with footnotes, are available by contacting the Public Affairs Department o the Federal Reserve Bank o Atlanta. f f I Statement of Income FOR THE YEARS ENDED (in millions) Interest income Interest on US. government securities Interest on foreign currencies Interest on loans to depository institutions Total interest income Other operating income Income from services Reimbursable services to government agencies Foreign currency gains (losses),net Government securities gains (losses),net Other income Total other operating income Operating expenses Salaries and other benefits Occupancy expense Equipment expense Cost of unreimbursed Treasury services Assessments by Board of Governors Other expenses Total operating expenses DECEMBER 1996 3 1, $ 1,448 43 0 $ 1,086 73 0 $ 1,491 $ 1,159 $ 95 12 (163) 2 3 $ 92 14 93 0 3 $ (51) $ 202 $ 109 16 19 4 47 72 $ 267 Income before cumulative effect of accounting change Cumulative effect of change in accounting principle Net income prior to distribution Distribution of net income Dividends paid to member banks Transferred to surplus Payments to U S . Treasury as interest on Federal Reserve notes Payments to U S . Treasury as required by statute DECEMBER 1995 3 1, 106 13 17 3 33 81 $ 1,173 0 253 1,108 (8) $ 1,173 $ 1,100 $ 25 36 787 $ 22 48 1,030 325 $ 1,173 0 $ 1,100 These statements are prepared by Bank management. Copies offill and final financial statements, complete with f f footnotes, are available by contacting the Public Affairs Department o the Federal Reserve Bank o Atlanta. I Statement of Changes in Capital (in millions) F 0R TH E Y E A R S E N D E D CAPITAL. PAID-IN Balance at January 1,1995 (6,820,342 shares) $ 341 D C M E 31, 1996, AND D C M E 31, 1995 EE BR EE BR SURPLUS $ Balance at December 31,1995 (7,779,238 shares) $ 48 Net income transferred to surplus Net change in capital stock issued (958,896 shares) 341 TOTAL CAPITAL $ 48 $ $ 389 $ 48 $ 389 48 $ 778 36 Net income transferred to surplus 682 36 Statutory surplus transfer to the U S . Treasury Net change in capital stock issued (722,057 shares) Balance at December 31,1996 (8,501,295 shares) $ 36 $ $ 425 $ $ 415 36 $ 840 These statements are prepared by Bank management. Copies offill and final financial statements, complete with footnotes, are available by contacting the Public Afairs Department o the Federal Reserve Bank o Atlanta. f f