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RESEARCH LIBRARY Federal f-^eserve Bank of St. Louis JUL 0 7 1988 S U M M A R Y R E P O R T THK FEllK8i\l. ^ RESERVE RVNKof ST. I / R T 8 President's Message I .n 1987, the Federal Reserve Bank of St. Louis continued to emphasize many of the themes that have served us so w^ell in recent years. Important among these is our desire to provide leadership in the rapidly changing times facing the financial services industry. In economic research, our focus remains on money and its relationship to economic activity in a policy context. We think our work is particularly important now w^hen there are questions about the relevance of monetary growth in formulating policy Our supervision and regulation activities continue to be characterized by timely examinations and inspections, w^ith active follo^v-up on any problem situations. In 1987, the n u m b e r of bank failures in the Eighth District w^as among the lov^est in the country, totaling only two. Finally, in providing services to financial institutions, w^e further emphasized electronic payment systems, particularly the automated clearinghouse (ACH) function. Our FEDNET connections \vere expanded by 50, bringing to almost 300 the number of institutions on this dial-up PC network. Of these, more than 150 became ACH users in 1987. All of our activities continue to be characterized by high quality and a concern for controlling costs, two hallmarks of the Bank's operations. We are among the top two or three banks in the Federal Reserve System based on a set of internal quality measures, and our check services were perceived as having the best quality in the System according to a national survey of correspondent banks. In 1987, v^^e again had only a modest increase in total expenses over the prior year—2.6 percent — reflecting our ongoing attention to costs. The year 1987 also marked the departure of our active and able chairman of the board for the past five years, W. L. Hadley Griffin, w^ho retired on December 31 We regard him highly for his efforts here and ^vish him well in the future. We also wish to express our gratitude to other retiring directors for their contributions to our organization: Paul K. Reynolds and Jesse M. Shaver, St. Louis; Wilbur P GuUey, Jr., Douglas W. Jackson, and Sheffield Nelson, Little Rock; John E. Darnell, Jr., and R. I. Kerr, Jr., Louisville; and Edgar H. Bailey, John P Dulin, and G. Rives Neblett, Memphis. A final w^ord of gratitude is due Joseph P Garbarini, w^ho served for 27 years at the Federal Reserve Bank of St. Louis before retiring last November as first vice president and chief operating officer. Joe's leadership at the St. Louis and Memphis offices, as well as his tireless work on Federal Reserve System projects, will be remembered for years to come. <^A.^ Thomas C. Melzer President and Chief Executive Officer T .he r e m a i n d e r of this r e p o r t JLh summarizes the financial status and certain operating statistics of the Federal Reserve Bank of St. Louis and its three b r a n c h e s in Little Rock, Louisville and Memphis. In addition, it highlights the Bank's boards of directors and officers who will guide us through the coming year. ! The Statement of Condition Federal Reserve Bank of St. Louis (thousands of dollars) D e c e m b e r 31 Assets 1986 1987 G o l d certificate a c c o u n t Special D r a w i n g Rights certificate a c c o u n t Coin $ 351,000 160,000 1 $ 366,000 160,000 27,845 38,147 25,977 218,128 230,428 6,321,843 5,816,381 $6,539,971 $6,046,809 501,849 19,971 371,092 723,405 568,629 19,599 387,299 0 $8,733,280 $7,611,388 $6,941,914 $5,889,469 1,165,633 4,650 20,460 1,020,808 $1,190,743 $1,037,426 07,472 77,111 0 504,569 63,510 864 $8,617,240 $7,495,838 $ 58,020 58,020 $ 57,775 57,775 116,040 $ 115,550 Loans t o d e p o s i t o r y institutions 37,075 Securities: Federal a g e n c y obligations U.S. G o v e r n m e n t s e c u r i t i e s Total s e c u r i t i e s Cash i t e m s in p r o c e s s of c o l l e c t i o n Bank p r e m i s e s ( n e t ) O t h e r assets Interdistrict settlement account TOTAL ASSETS Liabilities Federal R e s e r v e n o t e s Deposits: Depository institutions Foreign Other Total d e p o s i t s D e f e r r e d availability cash i t e m s O t h e r liabilities Interdistrict settlement account TOTAL LIABILITIES 4,500 12,118 Capital Accounts Capital paid in Surplus TOTAL CAPITAL ACCOUNTS $ TOTAL LL\BILITIES AND CAPITAL ACCOUNTS 1 $8,733,280 $7,611,388 Income and Expenses (thousands Current of dollars) Income 1986 1987 Interest on loans to depository institutions Interest on government securities Earnings on foreign currency Revenue from priced services All other income $ 3,663 469,887 10,668 29,119 1,553 470,078 11,817 28,079 445 371 $513,782 5511,898 Current operating expenses Less expenses reimbursed $ 60,229 (8,008) $ 58,724 (7,294) Current net operating expenses Cost of earnings credits $ 52,221 4,347 $ 51,430 4,423 Current net expenses $ 56,568 $ 55,853 $457,214 $456,045 Total current income Current $ Expenses CURRENT NET INCOME Profit and Loss Additions to current net income: Profit on sales of government securities (net) Profit on foreign exchange transactions (net) All other additions Total additions $ 1,210 55,933 32 1,958 59,119 3 $ 57,175 $ 61,080 0 175 0 3,700 Deductions from current net income: Loss on foreign exchange transactions (net) All other deductions Total deductions $ 175 $ 3,700 Net additions or deductions Cost of unreimbursed Treasury service Assessment by Board of Governors: Expenditures Federal Reserve currency costs $ 57,000 (3,396) $ 57,380 O $ (2,503) (5,146) $ (2,959) (5,775) Total assessment $ (7,649) $ (8,734) NET INCOME AVAILABLE FOR DISTRIBUTION $503,169 $504,691 Dividends paid Payments to the U.S. Treasury (interest on Federal Reserve notes) $ (3,462) $ (3,374) (499,441) (497,265) Distribution of Net Income Transferred to surplus Surplus, January 1 266 57,754 4,052 53,723 Surplus, December 31 $ 58,020 57,775 The Federal Reserve Bank of St. Louis Operating Statistics Operations Senfices Cash Number of Pieces Handled 1987 1986 to Depository Dollar Amount (thousands) 1987 1986 Institutions Services: Currency Received and Counted Coin Received and Counted 545,628,000 915,443,000 827,987,000 104,500 94,400 U.S. Government Checks Postal Money Orders Another 33,608,000 146,436,000 543,247,000 34,208,000 140,341,000 525,418,000 29,552,500 12,551,200 311,506,500 29,328,200 11,103,200 313,303,200 Commercial U.S. Government 32,306,000 17,848,000 25,724,000 16,063,000 199,553,400 10,249,900 158,420,100 8,594,500 U.S. Government Coupons Paid All Other Ciieclc 580,283,000 91,000 267,449 117,000 327,894 43,000 476,300 64,800 543,200 2,709,600 2,663,500 3,552,198,000 3,670,276,000 2,169 1,028 4,963,100 2,179,300 $ 6,731,900 $ 5,951,200 Senfices: Automated Clearingtiouse (ACH) Senfices: Collection Services: Wire Transfer of Funds: Loans to Depository Institutions: Services to U.S. Treasury Issues, Redemptions, 8k Exchanges of U.S. Government Securities: Definitive Book-Entry Food Stamps Redeemed: 7,003,241 276,477 163,759,000 7,658,790 $ 3,138,400 2,229,517 $ 179,039,000 208,798,000 256,487 164,550,000 728,300 776,700 DIRECTORS St. Louis Board of Directors Chairman Robert L. Virgil, Jr. Dean John M. Olin School of Business Washington University St. Louis, Missouri Frank M. Mitchener, Jr. President Mitchener Farms, Inc. Sumner, Mississippi Executive Committee Deputy Chairman H. Ed^vin Trusheim Chairman and Chief Executive Officer General American Life Insurance Company St. Louis, Missouri Roger W Schipke Senior Vice President General Electric Company Louisville, Kentucky Audit Committee H. L. Hembree, III Chairman of the Board and Chief Executive Officer Arkansas Best Corporation Fort Smith, Arkansas Robert J. Sw^eeney Consultant Murphy Oil Corporation El Dorado, Arkansas H u m a n Resources Committee David W Kemper Chairman and Chief Executive Officer Commerce Bank of St. Louis, N.A. Clayton, Missouri Janet M. Weakley President Janet McAfee Inc. Clayton, Missouri Robert L.Virgil, Jr., Chairman David W. Kemper Robert J. Sweeney H. Edwin Trusheim H. Edwin Trusheim, Chairman David W. Kemper Roger W. Schipke Robert J. Sweeney H. L. Hembree, III, Chairman Robert E. Menz Frank M. Mitchener, Jr. Janet M. Weakley Federal Advisory Council Member Donald N. Brandin Chairman of the Board Boatmen's Bancshares, Inc. St. Louis, Missouri Robert E. Menz Chairman of the Board and President First National Bank of Highland Highland, Illinois E c o n o m i c Advisory Council Small B u s i n e s s Lynn Broeder, Executive Director, Ecumenical Housing Production Corporation, St. Louis, Missouri Susan A. Cejka, President, Cejka & Company, St. Louis, Missouri Samuel B. HoUis, President, Federal Compress & Warehouse Co., Inc., Memphis, Tennessee Carl S. Rosenbaum, President, Arkansas Glass Container Corporation, Little Rock, Arkansas William A. Stone, President, Louisville Plate Glass Company, Louisville, Kentucky Agriculttire Lary C. Eckert, President, Eckert's, Inc., Belleville, Illinois JeflErey W Gain, Chief Executive Officer, National Corn Grov^ers Association, St. Louis, Missouri Curtis R. Hancock, Jr., Fulton, Kentucky F. H. Lyons, Jr., England, Arkansas M. Carter Stovall, General Manager, Stovall Farms, Stovall, Mississippi 1 The Federal Reserve Bank of St. Louis Little Rock Board of Directors Louisville Board of Directors Mempliis Board of Directors Chairman James R. Rodgers Airport Manager Little Rock Regional Airport Little Rock, Arkansas Chairman Sandra B. Sanderson President and Chief Executive Officer Sanderson Plumbing Products, Inc. Columbus, Mississippi David Armbruster President First America Federal Savings Bank Fort Smith, Arkansas Thomas A. Alvey Delegate Owensboro Council of Labor Owensboro, Kentucky William H. Brandon, Jr President First National Bank of Phillips County Helena, Arkansas Robert C. Connor President Union National Bank of Little Rock Little Rock, Arkansas Irving W. Bailey, II President and Chief Executive Officer Capital Holding Corporation Louisville, Kentucky Thomas M. Garrott President and Chief Operating Officer National Bank of Commerce Memphis, Tennessee L. Dickson Flake President Barnes, Quinn, Flake & Anderson, Inc. Little Rock, Arkansas ^gflttji^ M^^^^^y Jf \ JB _ 1 ^ ~^P^^^' ^ ^ Chairman Lois H. Gray Chairman of the Board James N. Gray Construction Company, Inc. Glasgow^, Kentucky lorton Boyd . resident First Kentucky National Corporation Louisville, Kentucky Michael J. Hennessey President Munro and Company, Inc. Addison Shoe Company Wynne, Arkansas Wayne Hartsfield President and Chief Executive Officer First National Bank Searcy, Arkansas Raymond M. Burse President Kentucky State University Frankfort, Kentucky Seymour B. Johnson Kay Planting Company Indianola, Mississippi Wm. Earle Love President Sound-Craft Systems, Inc. Morrilton, Arkansas Allan S. Hanks The Anderson National Bank of Lawrenceburg Lawrenceburg, Kentucky Katherine Hinds Smythe President Memorial Park, Inc. Memphis, Tennessee Patricia M. Tow^nsend President Townsend Company Stuttgart, Arkansas Wayne G. Overall, Jr President First Federal Savings Bank Elizabethtow^n, Kentucky Larry A. Watson ( hairman of the Board and President iberty Federal Savings Bank ? 'aris, Tennessee Senior Management Other Officers Thomas C. Melzer President and Chief Executive Officer James R. Bowen First Vice President and Chief Operating Anatol B. Balbach Senior Vice President Research and Public Information Henry H. Bourgaux Senior Vice President Operations Harold E. Uthoff Senior Vice President Banking Supervision and Regulation Ben C. Wade Senior Vice President Adni in istration John P Baumgartner Michael T Belongia Bernard E. Berns John W Block, Jr Timothy A. Bosch Jerry J. Calton Martin J. Coleman Rik W. Hafer Gregory S. Pusczek Harold H. Rieker Harold E. Slingerland Roger D. Smith Courtenay C. Stone Daniel L. Thornton Vice Presidents Ruth A. Bryant Public Information Albert E. Burger Economic Analysis Joan P Cronin Legal Charles R. Halbrook Member Banks James R. Kennedy Information Systems Jean M. Lovati Marketing Michael T. Moriarty Valuables Processing Martha L. Ferine Financial Services William J. Sneed Support Services Randall C. Sumner Credit and Community Affairs Patricia A. Tarbutton Human Resources Robert W Thomas Payments Delmer D. Weisz Bank Holding Companies Assistant Vice Presidents Dennis W Blase Keith M. Carlson Judie A. Courtney Hillary B. Debenport John W. Druelinger R. Alton Gilbert Walter W.Jacobs Jerome J. McGunnigle John P Merker Jerome R. Rodgers Les F. Schmeding Kristi D. Short Frances E. Sibley Darwin W Stephens John A. Tatom Robert J. Taylor Officer Audit Richard E. Kay General Auditor Jeffrey M. Dale Assistant General Robert R. Long Audit Officer Auditor Litde Rock Branch John F. Breen Vice President and Manager Thomas R. Callaway Assistant Vice President David T Rennie Assistant Vice President Louisville Branch W Howard Wells Vice President and Manager George E. Reiter, Jr Assistant Vice President Raymond F. Seefeldt Assistant Vice President Memphis Branch Paull. Black, Jr Vice President and Manager Anthony C. Cremerius, Jr Assistant Vice President Michael E. Trebing Assistant Vice President Federal Reserve Bank of St. Louis Post Office Box 442 St. LouiS^ Missouri 63166 (314) 444-8444 Little Rock Branch Post Office Box 1261 Little Rock, Arkansas 72203 (501)372-5451 Louisville Branch Post Office Box 32710 Louisville, Kentucky 40232 (502) 568-9200 Memphis Branch Post Office Box 407 Memphis, Tennessee 38101 (901) 523-7171