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M

E IG H T H D IS T R IC T P E R S P E C T IV E

Federal Reserve Bank of St. Louis

Summer 1983

A Year of Rapid Change for District Banks
Eighth District banks are experiencing an eventful
year. New deposit accounts have dramatically altered
bank balance sheets. New reporting requirements will
increase public scrutiny of banks' financial conditions.
Meanwhile, bankers are showing increased optimism
about loan demand, but maintaining tight credit stan­
dards. A closer look at these events follows.

MMDAs and Super NOWS—
The First Six Months
The pace of financial deregulation increased with the
authorization last year of the money market deposit
account (MMDA) and the Super NOW account. Freed




from interest-rate ceilings, banks faced unprecedented
challenges and opportunities. Over the last six
months, the banking industry has regained funds
previously lost to unregulated financial intermediaries
and has experienced dramatic shifts in the composition
of deposit liabilities.
From their authorization in December 1982 to the
end of June 1983, MMDAs have grown nationwide to
almost $370 billion. Super NOW accounts, introduced
in January, have grown less dramatically to $32
billion. Of the total of MMDA funds, the majority (58
percent) has been gained by commercial banks. The re­
maining funds have found their way to savings and
loans (31 percent), mutual savings banks (10 percent)
and credit unions (1 percent).
An analysis of national data suggests that some
funds have been shifted to MMDAs from money
market mutual funds (MMMFs). The shift from
MMMFs explains only a small fraction of the $370
billion increase in MMDAs, however, as shares in
MMMFs declined only $51 billion between December
1982 and June of this year. The majority of funds in
MMDAs apparently have been shifted from savings
and time deposits.
These new instruments have had a dramatic impact
on the distribution of deposits of Eighth District
member banks. Since December 1982, MMDAs have
grown to just over 12 percent of total bank deposits
and Super NOW accounts to about 2.5 percent. Over
the same period, traditional savings deposits (those ex­
cluding MMDAs) declined 8.2 percent, while time
deposits declined 12.7 percent.
In 1983, the changing composition of deposits has
been related to a bank’s size. Since January, MMDAs
have grown much faster at the District’s smallest
member banks (196 percent) than at the largest banks
(137 percent). During the same period, the savings
deposits of the smallest banks declined much more
than the average for all District banks (—12.1 percent

FEDERAL RESERVE BANK OF ST. LOUIS

vs. —7.5 percent), while the time deposits of the largest
banks declined much more than the average (—13.6
percent vs. —8.5 percent). The smallest banks in the
District are defined as those with $15 million or less in
total domestic assets, and the largest are those with
$750 million or more.

Increased Financial Disclosure
Began June 30
With the June 30, 1983 Call Report, banks began
telling the public more about their financial condition.
The variability of interest rates on certain assets and
liabilities, commitments and contingent liabilities, and
loans that banks originate and sell to other banks are
now reported on two new schedules. In addition, most
information on the Past Due Loan Report is no longer
confidential.
Banks now report information about the maturities
of fixed-rate loans, securities, time deposits and other
interest-bearing assets and non-deposit liabilities. For
those same assets and liabilities with adjustable
interest rates, banks must report the period until in­
terest rates can be changed. This information is intend­
ed to help the public assess a bank’s ability to react to
changes in market interest rates. Banks must report
the amounts of assets and liabilities that have fixed
rates of interest over different periods: one day or less,
one day to three months, three to six months, six
months to one year, one to five years, and over five
years. In addition, the amount of fixed-rate securities
with maturities over 10 years are reported as a
memorandum.
Banks have also begun reporting the amounts of
their commitments and contingencies. Commitments
are a bank’s obligations to extend credit and to satisfy
futures, forward, option and currency exchange con­
tracts. Contingencies are a bank’s potential liabilities
for letters of indemnity and guarantee, letters of
credit, and participations in bankers acceptances.
Since they are only potential obligations of the bank,
these items do not appear on its balance sheet. If the
obligations must be met, however, the financial condi­
tion of the bank can change substantially. Predicting
this is difficult, of course, since the information
reported will not tell how likely a bank is to be called
on its contractual obligations.
Reported as well is the volume of loans that a bank
originates, then sells to other banks. Bank regulators
apparently were led to request this information by the
losses of several large money center banks on loan par­

SUMMER 1983

ticipations they had purchased.
The amount of a bank’s loans 90 days or more past
due and still accruing, non-accruing loans and
renegotiated loans now become public information.
Renegotiated loans include only those restructured
because the borrower was unable to pay under the
loan’s original terms. The amount of loans past due 30
to 89 days and still accruing must be reported, but will
remain confidential.

District Bankers Are More Optimistic
About Near-Term Loan Demand
The demand for commercial and industrial loans at
the District’s five largest banks will stay about the
same this summer, but credit standards will not loosen
despite large inflows of MMDAs since December of
last year. This is the prognosis of senior loan officers at
those institutions, who were interviewed in mid-May.
A majority of the loan officers interviewed expected
commercial and industrial loan demand to be essential­
ly unchanged over the next three months. This was un­
changed from February’s survey, but considerably
more optimistic than December’s, when a majority of
respondents projected a quarter of moderately weaker
loan demand. Compared with a national panel of 60
large banks, the responses from Eighth District banks
in May were similar to those of other banks with under
$5 billion in assets, but more optimistic than those of
banks with over $5 billion in assets. Fully 56 percent of
the over-$5 billion group expected moderately weaker
demand for commercial and industrial loans.
In May, all Eighth District respondents reported
large inflows of funds into MMDAs. None of the banks
had become more aggressive in seeking out new
business loan customers at the date of the earlier
survey, but a majority had by mid-May.
The new funds and increased aggressiveness ap­
parently have not caused the District’s banks to ease
their lending practices. A majority reported either
essentially unchanged or moderately stronger stan­
dards to qualify for its lowest lending rate or a given
spread above that rate, for lending to new and non­
local customers, and for setting compensating
balances or fees on business loans. Banks in the na­
tional panel reported a similar stance on lending.
—Donald M. Brown and
Michael E. Trebing

Banking & Finance—An Eighth District Perspective is a quarterly summary of financial con­
ditions in the area served by the Federal Reserve Bank of St. Louis. Single subscriptions are
available free of charge by writing: Research and Public Information Department, Federal
Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166.




FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1983

EIGHTH DISTRICT BANKING DATA
DISTRICT

Selected Assets
(billions of dollars)
Total Loans1
Commercial and Industrial2
Consumer2
Real Estate2
Total Investments1
Selected Liabilities1
(billions of dollars)
Total Deposits
Transaction Accounts
Savings Deposits
MMDAs
Time Deposits
Selected Interest Rates3
(billions of dollars)
Super NOW Accounts
St. Louis
Little Rock
Memphis
Louisville
MMDAs
St. Louis
Little Rock
Memphis
Louisville

Percent Change
Same Period
Year-to-Date
1982
1983

April 1983

May 1983

June 1983

$20.90
4.14
1.77
2.12
10.48

$20.89
4.12
1.80
2.16
10.66

$20.94
4.01
1.90
2.11
10.86

2.4%
-2.7
10.5
5.5
10.9

3.6%
7.3
3.4
0.5
3.3

$32.46
10.92
6.24
3.65
15.30

$32.26
10.51
6.58
4.01
15.15

$32.39
10.64
6.53
3.95
15.22

3.6%
0.7
100.3
775.9
-12.7

3.6%
-2.8
2.1
N.A.
7.8

April 1983

May 1983

June 1983

7.00%
6.94
7.00
7.22

6.81%
6.94
7.13
7.69

7.06%
7.13
7.25
8.00

7.76
8.00
8.38
8.11

7.77
8.00
8.00
8.01

8.12
8.19
8.12
9.00

REGION I
(eastern Missouri and southern Illinois)

Selected Assets1
(billions of dollars)
Total Loans
Total Investments
Selected Liabilities1
(billions of dollars)
Total Deposits
Transaction Accounts
Savings Deposits
MMDAs
Time Deposits




Percent Change
Year-to-Date
Same Period
1983
1982

April 1983

May 1983

June 1983

$ 7.97
4.32

$ 7.86
4.41

$ 7.82
4.47

-1.5%
9.0

3.7%
1.0

$12.61
4.07
2.05
0.96
6.49

$12.40
3.94
2.07
0.98
6.39

$12.44
4.01
2.10
1.02
6.33

0.1%
-0.9
60.5
686.7
-10.8

2.8%
-4.1
1.3
N.A.
7.1

3

EIGHTH DISTRICT BANKING DATA
REGION II

Selected Assets1
(billions of dollars)
Total Loans
Total Investments
Selected Liabilities1
(billions of dollars)
Total Deposits
Transaction Accounts
Savings Deposits
MMDAs
Time Deposits

(Arkansas, northern Mississippi, western Tennessee)
_____ Percent Change
Year-to-Date
Same Period
April 1983
June 1983
1983
May 1983
1982
$ 7.05
3.46

$ 7.11
3.51

$ 7.18
3.62

5.9%
14.4

. 4.8%
1.9

$11.27
4.07
2.68
1.84
4.51

$11.38
3.88
2.98
2.14
4.53

$11.43
3.93
2.83
2.00
4.67

9.8%
5.8
152.9
874.8
-16.3

4.7%
-1.2
0.2
N.A.
9.5

REGION III
(western Kentucky and southern Indiana)
Selected Assets1
(billions of dollars)
Total Loans
Total Investments

$ 5.89
2.70

$ 5.91
2.73

$ 5.94
2.76

3.6%
9.5

2.1%
9.3

Selected Liabilities1
(billions of dollars)
Total Deposits
Transaction Accounts
Savings Deposits
MMDAs
Time Deposits

$ 8.58
2.77
1.52
0.85
4.30

$ 8.48
2.70
1.55
0.88
4.24

$ 8.51
2.70
1.60
0.93
4.21

1.4%
-3.7
92.2
700.5
-11.4

3.5%
-3.2
5.9
N.A.
7.0

NOTE: Data are not seasonally adjusted.
1 A sample of weekly reporting member banks
2 Large weekly reporting member banks
3 Most common interest rate paid by a sample of banks as of the last week of each month

Federal Reserve Bank of St. Louis
P.O. Box 442
St. Louis, Missouri 63166





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102