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CONTENTS
MESSAGE
2

TO CHANGE
THESTRENGTH
5

YEARIN REVIEW

t5
DIRECTORS
2l

FINANCIAL
SUMMARY

Architectural
designsol bankshave
changed
overthe yearsas
as dramatically
perform.
the services
theseinstitutions
0nce,bankswerebuiltto resemble
for
provided
tresses.Theirexteriors
the image
0f strengthandstability.
Theirinteriors
exVaultswerein
udedthe imageol security.
themainlobby;tellers
workedbehind
cages.
AfterWorldWarll, the architectural
hendsin banking
changed
t0 reflect
a
friendlier,
morecust0mer-oriented
approach.
Thearchilecture
of linancialinstitutions
lessmonumental
rapidlybecame
in outward
appearance
andmoreoperationally
ellicient
inviting.
andaesthetically
In the Eleventh
Reserve
District,
Federal
the diversity
of culluresandpeoplein TBXas,
Louisiana
andNewMexicois reflectod
in the
architecture.
our annualreportsalutesthe
0f financial
dcsign,history
andinnovation
institutions
in this District.

:r'

't!
-_--L---@

G
. Forthe statescomprising
the
FederalReserve
DistrictEleventh
andpartsof Louisiana
all of Texas
and NewMexico-theeventsduring 1988areviewedwith guarded
optimismin that therewasrenewed,thoughmodest,economic
And in the yearahead,
strength.
an acceleration
of economic
growthin the Districtis anThissomewhat
stronger
ticipated.
regionaleconomic
outlookis likely to be ledby a morebroadlygrowthin manufacturing.
based
particularly
because
of capacity
in otherpartsof the
constraints
country.
Despite
this limited
economic
optimism,solutionsto
the problems
for financialinstitu-

RrtuertH, Boykin, ()eft): Adn. Bobb-yR. hunan, tt,lN (Ret.)

tions,bothin thisDistrict
and
in the country,have
elsewhere
not, andwill not, comeeasily.
During1!88,morethan200
banksfailednationwide,
more
than 100bankswereclosedin
Texas
alone,and87 savings
and
loansweremergedunderthe
Southwest
Plan.Moreover,
the
FDICexperienced
the first lossin
its 54-year
history,andCongress
continued
to wrestlewith the
futureof boththe thrift industry
and depositinsurance.
In the year
ahead,Districtfinancialinstitutionswill remaintroubled,and,
without recapitalizalion,
a turnaroundin Districtbankingconditionscouldlagtheeconomic

recovery
by at leasttwo vears.
ln our annualreportthis
year,attentionis focused
on the

groundandredefine
the direction

the mostefficientin the world,

of the tuture.

but areprotected
from unexpected

TheFederal
Reserve
hashad

events,
whethernaturalor man-

changes
to the bankingstructure

changes
too-changesfrom which

overthe pastdecade.
Onecannot

a greatdealhasbeenlearned.

separate
lhe currenteventsin the

Thisknowledge
hasbeenapplied

nual reportarephotographs
of

financialindustri'from the events

to helpthe financialindustryand

trnancialinstitutions-p ast and

in theDistricrt
s eo0nomy
within

the pa,yments
systemoperatemore

present-fromTexas,
Louisiana

thoselast10years,particularly

efficientlv.

and NewMexico.Whatis striking

within the lastfour Overbuilding

In the areaof financialser-

made.
Throughout
this year'san-

aboutthe evolutionin the banking

and declining
energyprices

vices,Congress
directed
the

industryis that,while the rulesof

depressed
bothconstruction
activi

Federal
Reserve
to implement
a

operation
andcompetition
have

ty andrealestate
pricrs.causing

policylimitingthe "holds"finan

changed
alongwith the architec-

se\ereeconomic
problems
in the

cia[institutions
canplaceon

turalstyleof the buildings.
finan-

Districtfbr bothbank.s
and thrifts,

deposited
fundsandexpediting
the

ciai institutions
still existto serve

Thjs.situation
wa.saggravated
by

relurnuf unpaidchecks.
In

individualcustomers
andtheir

problems
associated,
not only

response,
we implemented
a new

communities.
Thosewho continue

with energyand realestateloans,

regulation,
Regulation
CC.Thisef-

to find this business
important

but alsowith loansto otlier

fbrt requiredmoreefficientand

andinteresting
areto be com-

businesses
adversel.v
affected
by

moretechnologically
advanced

mended,
but still morecommend-

thesefactors.N1uch
of what hap-

processes
andthe cooperation
and

ablearethosewho maketop

penedin 1988andis likelyto oc-

furthereducation,
not only of

prioritiesof commitments
to per-

cur in 1989is not rootedin the

thoseof us in the Federal
Reserve.

s0nalattentionto service,
quality

erentsof 1988but ratherin those

hut alsoof hankers
lrrd their

and innovation.
Thefutureof the

0f late1985andearly1!86.

customers.
\flhilecontinuedadap-

financialindustrylieswith those

l a l i u n sw i l l h e r e q u i r e tdl .t i sp r o -

who havethe abilityandthe

couragement
in the factthat the

cesswasmadelessdifficultin this

strengthto maintainthesecom-

Districts financialindustr.y
alread\r

District
because
of our earlierex-

mitmentsin the faceof contin-

is demonstrating
capabilities
to

perience
in expediting
returnsof

uing change.

meetthe needsof the future,At

checksin a pikrtprogramfor the

n0 timein thisDistrict
s history

l'ederalReserve.

Nevertheless,
thereis en-

havetherebeenmorechanges
oc-

The FederalReserve
alsoex-

curringor morechallenges
to

pandedits effortsto ensurethe

meet.Sincethe 1970s,
the bank-

integrityandviabilityof its elec-

ing industryhashadto facein-

tronil;5s1y1ss5
by enhancing
and

credible
change,
competition
and

extending
its existiltgdisaster

uncertainty.
Althoughhigh risk is

recovery
program.Effortsin this

inherent
in change,
alsoinherent

areawill ensurethat transactions

is the potentialto breaknew

madeelectronically,
not only are

BobbyR. Inman

(x.)uq*L

Chairman of tbe Board

Robert
H. Boykin
Pruident and. Cbie! ExecutiueOlficer

llv

TEXAS
In Texas,bankinggotoff t0 a slos,start
lhankst0 SamHouston.
Houston,
a close
friendof anti-banking
President
advocate
AndrewJackson,madesurethattherewas
no provision
lor chartering
banksin the
Texasconstitution
0l 1845.0ut of necessity,
provided
primitive
merchanls
banking
services.Private,
banksopened
unregulated
around
thestate.
BankWiththe passage
of the National
ingActin 1864,national
bankswere
in the statelor lhe lirst time.
chartered
Following
the CivilWar,the Texasconstitutionol 1869contained
no clauseprohibiting
state-chartered
banks,andthe statelegislatureassumed
to do so. Betheauthority
tween1870and1871,30 bankswerecharteredby the slate,but onlyeightopened.
wasalsoallowed
Branch
banking
butdid
notoccur.
linancial
In 1875,following
a severe
panicin 1873,the prohihition
againststate
chartsring
0f banksreturned
t0 the state
leavingonlyprivateandnaconstitution,
in thestate.
tionalbanks0perating
of state
Evenwiththe prohibition
banks,Texas
wasthe first staleto havea
TheTexasBankers
bankersassociation.
Association
wasorganized
in Lampasas
in
the issueol state-chanered
1885t0 address
waslhe 0nly
banks.At thattime,Texas
statethatprohibited
statebanks.In 1904,
statechartering
returned
t0 Texas.But
wasprohibited.
branchbanking
By 1910,
in Texashadno
only14 0l the 249counties
bank.

T H
Therehavebeenfew turning

N G T H

T 0

C H

A N G

wasallowedto lapsebecause
of

venta risingtideof bankfailures

pointsin the historyof the United

politicalopposition
to national

prosperous
in the otherwise

Statesbankingindustry.In fact.

bankinginstitutions.
In his veto0f

1920s.To a largeextent,these

for the 50 yearsbetween
1930and

the recharter
of the Second
Bank,

failuresreflected
in the
distress

1!80,regulation
of the banking

President
AndrewJackson
decried

agriculture
sectorFarmprices

industryremained
essentially
un-

the "exclusive
privilege"and

werein declineandruralbanks

changed.
But todaythe banking

"monopoly"enloyed
by the Bank.

Approximately
suffered.
one out

industryfacesa seriousturning

By the 1860s,two piecesof

of six banksfailedin the 1920s.

pointthat hasbeenpreceded
by

federallegislation-theNational

Unfortunately,
this wasa record

morethan a decade
of deregula-

Currency
Act(1863)andthe Na-

soonto be broken.

tion anddramatic
economic

tionalBankingAct(1864)-estab

events,
Currently.
attention
is

lisheda systemof nationallychar-

in i933
turningpointoccurred

focused
on the roleof depositin-

teredbanksto be regulatedby a

whena steepdecline
in economic

surance,
theviabilityof savings

newlycreated
Officeof the Comp-

activitycreated
crisisin
a genuine

and loans,and expanded
powers

trollerof theCurrency.
Thereis

the bankingsystem.Oneof the

for commercial
bankingfirms.As

no indication
thatCungress
in-

Presifirst actsof newlyelected

in the past,policydiscussions
will

tendedto prevent
branching
by

dentFranklinRoosevelt
wasto

centeron competitiveness,
flex'

the newnational
banks.Successive declare
a "bank holiday"in

ibility andstability.
As we look

Comptrollers
of the Currency,

March1933to stopwidespread

back,the turningpointthe bank-

howeveq
interpreted
the actsas

runson banksandrestorecon-

ing industryfacestodaywill be as

precluding
branching
by evenna-

fidencein the bankingsystem.

significant
as anyof the major

tionalbanks.Theresultwasthe

Mostbanksreopened
one week

turningpointsmentioned
in this

establishment
of the dualbanking

larcr andthe runs werelargely

historical
overview.

syslemwe havetodaywherebya

over.But Congress
wasconvinced

bankcanchoose
its chartering

and
that majorreformwasneeded

agencyand,thus,its regulatory

passedthe BankingActof 1933a

structure.

few monthslater.

HistoricalTbrningPoints

Perhaps
the mostimportant

In the early19thcentury,

Thenextmajorturning

The BankingAct redefined

commercial
bankswerelicensed

pointwasthe creationof the

bankingin the 1930s,andits ef-

by individual
states
andrheir

Federal
Reserve
Systemin 1913

fectsarestill prevalent.
Among

scopeand authoritywerebasically

followingseveralmajorfinancial

otherthings,the Actcreated
the

confined
to thestategranting

panics.Congress
setup the

Federal
Deposit
Insurance
Corpora-

theircharters.
Thereweretwo

Systemto actas lenderof last

tion (FDIC).
In additionto pro-

ZO-year
episodes
(17911811and

resortin orderto easethe severity

vidingan insurance
fund,the

181636)whenfederally
chartered

of financialpanicsandprovide

FDICalsowasgivenregulatory

institutions
operated
acrossthe

greaterstabilityfor both the bank

poweroverthe institutions
it in-

fledgling
nation.Thesewerethe

ing systemandthe economy.

sured.TheActalsodivorced
com-

FirstBankandthe Second
Bank
of the UnitedStates.
Eachcharter

The newlycreatedFederal
Reserve
Systemwasunableto pre-

mercialbankingfrom investment
bankingby prohibiting
banksfrom

TEXAS
HaldtimoshitboththeTexas
economy
andthebanking
indust.y
dudngtho1920s
andlingered
untilWorld
Warll. Thoagriculturalsoctor
0fthestatewasespecially
affocted.
AlterWorld
Warll, sconomic
activity
gradually
improved.
Bythe1970s,
growth
in
theoilindustry
contributod
l0 economic
prospority
in Toxas.
ouring
the1980s,
the
Gollapso
of worldwide
oilprices
anda drop
in loalestats
values
seriously
affected
the
0c0n0my
andbanking.
Asa result,
in ths
lats1980s,
thostatolegislature
titted
rostrictions
0nbothbranch
banking
andintorstalo
bankacquisitions.

T H E

N G T H

H A

mostsecurities
or
underwriting

throughin the interstate
banking

withdrawfunds
wheninvestors

dealingin themfor theirown ac-

barrierTheBankHoldingCom-

and infrom financialinstitutions

provicounts.Anothersignificant

panyActof 1956closed
this

vestthemdirectlyin higher-

all
sionof the Actprohibited

avenuefor mostholdingcom-

yieldingmarketable
securities.

banksfrom payingintereston de-

paniescontrollingtwo or more

manddepositsand gavethe

banks.Thisleft one-bank
holding

in the
majorbankingderegulation

FederalReserve
the powerto set

companies
outsidethe regulatory

early1!80s.The first eventwasa

the ratesfor all otherdeposits.

arena.As a result,theybecame
at-

Reserve
1970rulingby the Federal

Thatled to the Fed'sRegulation
Q

tractiveand grewrapidlyin the

that liftedinterestrateceilingson

rates
which,until 1!86,governed

1960s.The BankHoldingCom-

of deposit
negotiable
certificates

paidon deposits.

panyAct Amendments
of 1970ex-

(CDs).TheseCDswerelarge-

tendedregulatoryprovisionsto in-

($100,000
deposits
denomination

cludeone-bank
holding
companies.

to compete
or more)designed

{!SThe 1930salsobroughtimportantturningpointsfor savings
andcredit
andloan associations

S! ['romthe 1930sto the

$ Tho particulareventsled to

easilY
primarilywith short-term,

HomeLoan
unions.The Federal

l!80s, regulation
of the banking

tradedU.S.Ileasurybills.As

BankBoardwasestablished
to

reindustryin the UnitedStates

marketrateson T-billsroseduring

oversee
savingsand loans.The

mainedessentially
unchanged.

the creditcrunchof 1966,and

FederalSavingsand LoanIn-

Eachtypeof financialinstitu-

againin the periodfrom

(FSLIC)
an
surance
Corporation

tion-banks, savings
and loans,

in CDsde19681970,investments

insurance
systemsimilarto the

mutualsavings
banks,bank

As a result,in
clinedsignificantly.

FDIC,wasestablished
in 1934.A

holdingcompanies
andcredit

Reserve
suspend1970,the Federal

l9J4 actpermitted
creditunions

unions-had fairlywell-defined

ed interestrateceilingson large

to be federallyas well as state

products,
interesfrates
customers,

of
negotiable
CDswith maturities

chartered.

Deregulation
andterritories.

30 daysor more.Theavailability

changed
all that.

CDspaying
of large.negotiable

t"S Oneissueleft relativelyun-

marketinterestratescreateda

touchedby the BankingActof
1933wasthe operation
of bank

Deregulation

commercial
banksspecifically

newmoneymarketinstrument.
But interestrateson retaildeposits

holdingcompanies.
Charters
of
€S By the late 1950s,federal

to
(lessthan$100,000)
continued

limitedtheiractivities
andplaced

bankingregulatorsfaceda dif-

Thissituationresulted
be capped.

them undervarioustypesof regu-

ficult,andsometimes
impossible,

in the introduction
of money

latory control.Howwer,bank

taskin settinginterestrateceilings

marketmutualfundsby securities

ownerscouldform bankholding

Regulators
on deposits.
soon

the 1970s,and
firms.Throughout

companies
whichcouldoperate

realizedthat financialinstitu-

especially
duringtimesof high

other,nonfinancial
subsidiaries.

tions-and commercial
banksin

marketinterestrates,the number

krmissiblesubsidiaries
alsoin-

particular-needed
to
something

of thesefundsand theirassets

cludedotherbanks,in the same

allow them to atltacJfundsand

marketforces
grew In essence,

or differentstates.Holdingcom-

avoid"disintermediation"
of

process.
propelled
the deregulation

panieswerethe first break-

deposits.
Disintermediation
occurs

S tne secondeventleadingto

In essence,
market
forces
propelled
the
deregulation
process.

LOUISIANA
. Banking
history
in Louisiana
is tiedt0
UnitedStateshistory,but alsohasrootsin
French
lawsandcustoms.
ln the 1800s,
Louisiana's
economy
wasbasedon agricultureandloreign
in
trade.Forinslance,
1834,exports
handled
by the portat New
0rleansexceeded
thoseat NewYorkCity.
Thecottonmarketin New0rleans
wasthe
second
largest
in theworld.
of a
Earlyin the 1800s,the0rganization
bankrequired
the statelegislature's
approval.By 1837,therewere16 banks,with
mainolficeslocatedin Neworleansand
serving
branchoffices
othercities.In 1837,
the cotlonmarketcrashed,devastating
cotton brokers,
larmers
andbankers.
passed
In 1842,Louisiana
thelirst
protection
l0r
stalelawthat provided
in caseol banklailure.Based
on
depositors
French
law,the actsaidthatdepositors
wouldshareequally
withnoteholders
in the
caseof liquidation.

st>

T H

G T

T 0

wasthe infurtherderegulation

poseda ma'orcompetitive
MMMFs

to
permittingfinancialinstitutions

orderof
troductionof negotiable

to the bankingindustry.
challenge

and
offer variablerate mortgages

at
withdrawal(N0\f) accounts

the
Thesefundsweredepleting

generally
easingotherformsof

banksin Massamutualsavings

placedin banksby offerdeposits

In 1980,Congress
regulation.

were
No\il accounts
chusetts.

ing flexibilityandinterestrates

Institutions
passed
the Depository

theypaid
revolutionary
because

thebankscouldnot,Thein-

Con
and Monetary
Deregulation

interesland allowedchecksto be

ledbankers
troductionof MMMFs

trul Act.TheActmadesweePing

writtenagainstthem-a combina'

to recommend
a levelplaying

in banking.ThePrinciPal
changes

for
tion that wasnot possible

in
field" amongthe participants

of the Actwere:
components

banks.As a resultof theseevents,

the financialmarketplace.

were
two pieces
of legislation

NOWAccounts.Another

DeInstitutions
TheDepository
(DIDC)was
Committee
regulation

passed
in the early1980sto deal

revolutionwasoccurringin

the orderly
to oversee
established

with the situation.\flith the pas-

Massachusetts
aboutthe same

of interestrateceilings
elimination

sageuf thoseacts.a newerain

time.ln the early1970s,N0\f ac-

by March31,1986.
on all deposits

bankingwasborn.

as an ex
countswereauthorized

wasgiven
Reserve
TheFederal

perimentfor mutualsavings

the powerto set reservere-

Funds.Moneymarketmutual

formally
banks.ln 1973,Congress

quirements
for all financialinstitu-

in
wereintroduced
funds(MMMFs)

the newaccountfor all
approved

certaintypes
tionsthat maintained

1L)73andgrewrapidly-especially

in the state.
financialinstitutions

accounts.
of transaction

bv 1979andinto the early1!80s.

In 1976,a federalstatutesanc-

arefinancialintermediNIMMFs

tionedtheirissuance
throughout

ariesthat allowsmall and

the NewEngland
states.Congress

investors
to pool
medium-sized

N0!il accountsfor
alsoapproved

to investuP
loanswereauthorized

in a
theirfundsandbuv shares

NewYorkin 1c)78
and for New

in conof theirassets
to 20percent

andlargeportfolioof short-term

in 1979.Theseaccounts
Jersey

sumerloansandcommercial
PaPer.

of
obligations
denomination

popularandquick
wereextremely

andthe
banks,largecorporations

ly spreadthroughoutthe New

In the early
federalgovernment.

England
states,NewYorkandNew

1!80s,yieldson thesetypesof ac-

Thesuccess
of N0\il acJersey.

ripples
Act sentsignificant

countswerehigherthanmostin-

countsled someto recommend

throughoutthe bankingindustry,

from financouldreceive
vestors

themfor the entirenation.

somefine tuningwasnecessary.

MoneyMarketMutual

Notonly were
cial institutions.

Legislative
Action.In addi-

Banksandthriftswereallowed
to offerNO\f accounts.
savingsand
Federally
chartered

Stateusurylawswerepre
mortgages.
emptedfor residential
\ilhilethe MonetaryControl

Furtherstepstowardthat end

but most
shareseasilyredeemed,

tion.a rapidlychanging
economic

weretakenin 1982with the Garn-

provided
sercheck-like
MNlNlFs

to
environment
broughtproblems

Act.TheprinciPal
St Germain

vices.Thepopularityof theseac-

the bankingindustry.Risingin-

Gerof the Garn-St
components

andwithcountsrosedramatically

terestratesandinflationwerethe

mainAct included:

had
in a few years,investors

primaryculprits.Bankers
andcon-

morethan $200billion
deposited

sumers
beganrecummending

an accountfor banks
authorize

of
in them.Thepopularity

phasingout depositrateceilings,

directlywith
that wouldcompete

to
TheDIDCwasinstructed

G E

i{. ''

ilr

,iq.
lt tt ., ' i

1
L3-

t4-\

ffi*m
vF*l )g r*"Y*
,{

i&-._.

----'=

finnn*
;*r" ix.

i*:

ffi

,.:*

T I4llG
I tE=llt =
T IfiTTT

T H
MMMFS.
Federallycharteredsavingsand

T R

G T H

relationships.

C H A

IssuesAffecting

areeroding.At the sametime,the

the Currentlirrning Point

recenthugelossesincurredby

loanswerepermittedto offer demanddepositsfor business
loan

inU.S.thriflsandthe resulting
Today,the issuesaffecting

arepromptsolvency
of the FSLIC

the currentturningpointin the

ing seriousattentionon the part

bankingindustryarecomplexand

of policymakers.Theexactdetails

in
55 percenlof theirassets

far-reaching
in their impact.

regardinghow the regulatory

varioustypesof commercial
loans

Rapidlychanging
institutions
and

strucurewill be changed
remain

and 30 percentin consumer

business
strategies,
spurredby

unclear

loans.

technological
advancement
and

Thrifts wereallowedto invest

Statecharteredbanksand thrifts

In reactionto the thrift

financialinnovation,
havebroken

arefocusing
crisis.policymakers

wereallowedto offer variablerate

throughthe regulatory
barrierst0

considerable
attentionon the

mortgages.

competition
in
that wereerected

federaldepositinsurance
system.

the aftermath
of the GreatDepres-

Theirconcernhasbeenmagnified

sion. The financialservicesmar-

as the thrift crisishasbroughtto

ketplace
hascontinued
to become

and
light someof the negative

bankor thrift, federalregulatory

increasingly
sophisticated.
in-

unintended
consequences
of the

agencies
wereauthorizedto allow

tegrated,
international
andcom-

system.While
depositinsurance

mergers
of bankswith thriftsor

petitive.Thesechanges,
coupled

the systemhasserveda stabilizing

mergers
that crossed
statelines.

with the severedifficultiesen-

banking
role in helpingto prevent

counteredby a laryenumberof

panics,it alsohassubsidized
ex-

resultof the Garn-St
Germain
Act

financialinstitutions,
both in the

risk takingby allowingincessive

spurredregionalreciprocal
bank-

Eleventh
Distdctand elsewhere
in

stitutionsto pay fixedinsurance

ing arrangements.
Barriers
to in-

the country,havebroughtto a

premiums,
of the degree
regardless

terstatebankinghavefallenquick-

headthe needfor seriousreview

of risk in theirloanportfolios.

ly in the 1980s.In fact,asof

of the U.S.regulatory
structure.

Moreover,
thosein chargeof the

January1989,all but five states

Callsare increasing
for legislative

depositinsurance
systemhave

havepassed
someform of

and regulatoryactionto address

alloweddeeplytroubledinstitu-

liberalizedinterstatebankinglaw

threebroadandinterrelated
points

tionsto continueoperating.

By the early1!!0s, we will see

of change:
the thrift crisis,deposit

Troubled
institutions
haveoffered

the full effectsof the erosionof

insurancereform,and the expan-

premiumratesto attractfunds,

interstate
barrierswhenmany

sionof bankpowers.

therebyraisingfundingcostsfor

Federalchartersfor new mutual
savingsbankswereauthorized.
ln instances
involvinga failing

Newmergerguidelines
as a

highlypopulated
statesdroptheir

Themostpressing
areaof

theirhealthycompetitors.
In addi-

regionalreciprocity
provisions
and

financialpolicvinvolves
the future

tion, depositors
areoftenprovided

openthemselves
to nationwide

of the thrift industryandthe

a perverse
incentiveto utilizethe

reciprocal
banking.

FSLIC.
As the financialindustry

mostriskyfinancialinstitutions

continues
to become
morecom-

moreatbecause
of the generally

petitiveand integrated,
the dif-

tractiveinterestratesofferedby

ferences
betweenthrifts and banks

Thefederal
suchinstitutions.

!: ll

NEW MEXIC()
NewMexic0
history
is lilledwithtalesof ambitious
andenterprising
people
whocamet0 thestatet0 improve
lheireconomic
c0ndition.
In the
earliest
days,merchants
financed
tradeandcommerce.
Thesemerchantprovided
bankers
mostbanking
services.
Given
thespecial
characteristics
of thefrontier,
lhese"bankers"probably
fullilledbanking
needseffectively.
Theireffectiveness
mayhaveactually
delayed
thecoming
of bankst0
NewMexico.
Banking
in NewMexico
alsowashampered
by thestate's
population,
sparse
a shortage
ol currency,
theagricultural
basis0f the
ec0n0my,
andthelatearrival
ol railroads.

T H

G T H

depositinsurance
systemobvious-

in financingtheirsecurities

ly deserves
seriousattentionas

affiliates.

partof any regulatory
reform
package,
especially
in light of con-

Summary

tinuedexpansion
in the rangeof
activities
allowedfor financial
institutions.

\fhile the basicstructure
of
the nations present-day
banking

Despite
the degree
of

industrywasdetermined
in the

deregulatron
that hasalreadyoc-

1 0 3 0 st h. er a p r d i toyf c h a n gien

curred,changing
marketcondi-

that structurehasincreased

tionscontinueto underscore
the

dramatically
duringthe 1!80s.

needfor someexpansion
of the

Thishasmademanaging
and

powersfinancialinstitutions
are

regulating
financial
institutir-rns
an

allowedto exercise.
Financial
in-

increasingly
complextask.Strict

novationcontinues
to increase
the

definitions
of permissible
linesof

gainsfiom integratinga varietyof

commerce
andstructurearebe-

financialservices
within a single

cominglesspractical.
Forfinancial

firm, andbankingorganizations,

institutions,
the changing
environ-

now morethanever,requirenew

mentmeansnewchallenges
and

powersto servetheircustomers.

As the complexity
opportunities.

ln response,
recentFederal
Reserve

of lhe financial
marketplace
in-

Boardrulingsallowbankholding

creases,
so shouldthe flexibility

companies
leewayto
additional

with whichfinancialinstitutions

raisemoneyfor corporations
in

Forregulators
operate.
and

the securities
markets.Additional

legislators,
managing
the direction

stepsin this directionarelikelyto

of financialinnovationis para-

occur.Recognizing
that
concerns

mount.Together
with the Con-

powerscould
the newsecurities

gress,tinancialinstitutions
and

leadto an excessive
concentration

theirregulators
mustresolve
the

of financialpoweramongbanks,

issuesof the thrift crisis,deposit

the Fed'srulingsrequirebanking

insurance
reform,andthe expan-

organizations
t0 create"firewalls"

sionof bankpowers.
The strength

designed
to limit the flow of funds

of our nation'sbankingindustry

between
the newsecurities
af-

hasalwaysbeenin the handsof

filiatesandbankaffiliates
within

thosewho havehadthe abilityto

the sameholdingcompany.
This

innovateandthe strengthto

alsolimitsthe abilityof holding

change.

companies
to usebankdeposits
insuredby the federalgovernment

T 0

C H

jit
!:T'

NEW

MEXICO

It wasnotuntilthe completion
ol rail linesandthe rise0l agricultural
pricosat theturn 0f the cenlurythatthe NewMexicobankingindustryexperienced
growth.In 1900,only26 banksexisled
significant
in NewMexico.Bythetimetheterritory
became
a statein 1912,at least122banks
hadbeenestablished
in thearea.
Initially,
bankingin NewMexicowascloselytiedt0 the agriculture
pricesr0seandlell, so did bankprofits.Thisrelasoctor.As agricultural
tionshipc0ntinued
throughout
the lirst halfof the 20thcentury.As the
state'sdevelopment
of mineral,
defense,
andoil andgasindustries
incroased,
s0 did lhe numberot bankingfirmsin largercities.
Thepost-World-War-ll
expansion
of bankingin NewMexicooccurred
periodol econ0mic
duringthe greatest
grotrvlh
in the state'shistory.The
increase
in economic
activityhadthe greatest
elfecl0n bankingin larger
citios.

-\--

t_.

^*a,.-.,_

Y
As bankingbecomes
more
nationwide
andworldwidein its

disasterrecoverya high priority.
To meetthis priority,a

back-upcopiesof our software
records,
our data
andtransaction

scope,we look everyday for ways

disasterrecoveryplan was initiated

servicesstaff and the staffat

to increase
the speedandreliabili-

for the Eleventh
Federal
Reserve

Culpeper
wereableto restoreand

in a complex
ty of our services

Districtto ensurethatservices

verifyour operutingsystemsin

During1!88,operaenvironment.

continuein the faceof.a Irau-

under12 hours.Thissimulation

by changes
tionswerehighlighted

matlccompuleror communlca-

makesus the first FederalReserve

in checkprocessing
that resulted

tionsdisruption.
The recovery

and
Bankto simulatea disaster

from federallegislationduringthe

planis designed
for two typesof

to Culpeperin
transferprocessing

prior year;effortsto protectour

disasters-onein whichthe data

under12 hours.

from all
electronic
transactions

services
operations
areinoperable

typesof disasters:
reductions
in

andone in whichthe entire

requiredto re-create
our opera-

paper-based
andeffortsto
services;

DallasFedis inoperable.
The plan

good,the
tionswasextremely

increase
thenumberof service

coversthe mostcriticalelectronic

DallasFedhasplansto signifi-

In
optionsavailable
electronically.

services-transfers
of funds,auto-

cantlyreducethat timeduring

addition,our supervision
staff

matedclearinghouse,
transfers
of

1989.Because
eachFederalReserve

facedan unusualand challenging

securities
andaccounting
services.

Bankmust"revalidateits

yearin monitoringthe performanceof banksin this District.

Centralto the DallasFed's

Whilethe amountof time

disasterrecoveryplanstwiceeach

disasterrecoveryplan is a building

yeaqplansare aheadyunderway

in Culpeper,
Virginia.This

to decrease
the amountof time

building,locatedabout60 miles

necessary
ro be backin business.

Washington,
D.C.,is
outside

Our goalis to makesurethat,in

equipped
with the latestin large-

all information
caseof a disasteq

volumeof transactions
in the

scalecomputers
andcommunica-

is recovered
serandall electronic

UnitedStates
takesplaceelec-

tionssystems.
Because
of its

vicesare restoredquicklywith a

tronicallyusingcomputers
and

capabilities,
the Culpeper
center

minimumof disruptionto the

datacommunications
equipment,

hasbeenchosento serveas an

financialmarketplace.

financialinstitutions
and their

alternate
processing
sitefor the

customers
couldbe seriously
af-

Eleventh
Federal
Reserve
District.

fectedby a majoroutageat the

If a severedisasteroccursat the

DallasFed.Thereliabilityand

DallasFed,recordsarerecon-

availability
of our computer

structedat Culpeper
andoperating

a majorchange
we implemented

systemis crucialto smoothfinan-

capability
is restored
within the

in the directionof the nation's

cial service
operations.
As a result

shortestpossible
time.

payments
system.TheExpedited

DisasterRecovery

Because
mostof the dollar

of the potentially
seriousconse-

Thefirst majortestof the

CheckServices

Thisyearwasone in which

Act(andthe
FundsAvailability

quences
of failuresof computers

plancamein June1988whena

RegulaFederalReserve
subsequent

andcommunications
equipment,

simulated
forcedthe closdisaster

ripplesthroughout
tion CC)caused

the DallasFed,andthe entire

ing of the DallasFedand its

the financialindustry.As man-

FederalReserve
System,havemade

transferof fundssystem.Using

datedby the Act,our efforts,and

Histodcally
vaultshavobeona centlal
eloment
in bankdesign.
0ncoprominently
located
in thomainlobby,
vaultsnoware
usually
locatsd
undorground.
Vaults
have
0v0lv0d
fromhighlydecorated
andornamentalsafes
to massive
blocks
ol steel.
Thothroovaults
thathavospanned
the
history
oftheFoderal
Reserve
Bank0l Dallas
w01o
madobythoMoslor
SaleCompany
ol
Hamilton,
ohio.In 1959,Edwin
H. Mosler,
Jr.-thenpresidenl
ol thecompany-spoke
t0 a gloupof businessmen
vault
about
design.
withthe
"Wekeepupconstantly
waysburglars
lindlhatwhatmanmakos,
mancanbreak.
Andtheyfindways;andwe
findwaysto stopthom."

nathoseof financialinstitutions

cantstoryin financialservices

wereconducted.
fundsauthorities

aroundshorttionwide,centered

revolves
aroundthe evolutionof

Theresultswill guideus in the

to collect
eningthe timenecessary

services.
As the volume
electronic

rightdirectionin offeringthe

and returna check.TVo seriesof

growsandthe
of transactions

kindsof electronic
services

to educate
seminars
designed

speednecessarl
t0 getthosetrans-

the financial
necessary
to manage

bankersin this Districtandhelp

actionsacrossthe nationor

marketplace
of the future.

themprepare
for the coming

aroundthe worldincreases,
our

changes
wereheld.

attentionto the advancement
of

servicenetefficientelectronic

electronic
services
will continueto

work,progress
mustbe made

merelythe first stepin a nev.tera

be amongour top priorities.Since

paper-based
towardeliminating

in checkprocessing.
Startingin

the early1980swhenthe Federal

(ACH)
automated
clearinghouse

to imthe late 1950s,technology

Reserve's
communications
network

andtransferof fundstransactions.

print magnetic
ink on the bottom

wasexpanded,
we haveimple-

Progress
on that goalwasmade

of checksto makesortingtaster

mentedprograrns
to keepaheadof

during1!88 in the Eleventh

Approximately
10
was dweloped.

the gamewith innovations
that

District.Officesin this District

yearslater,the FederalReserve
an-

will transferfundsand informa-

ACH
papercommercial
reduced

nouncedthat it wouldno longer

tion quicklyandaccurately.

of
returnitemsandnotification

Theevents
of this yearare

handlechecksthat did not have

As partof this goal,we con-

In orderto achievea more

changevolumeby morethan25

this magnetic-MICR-encoding.

tinueto develop
andexpandser-

percentlargelybasedon the suc-

Thatannouncement
spurredthe

vicesofferedoverthe RESPONSE

cessof CATIE.
CATIE-the

industryinto the standardization

network-our electronic
link to

Touch-Tone
Assistance
Customer

we havetoof checkprocessing

f i n a n c i ai nl s t i l u t i o ni ns t h i s

InformationExpress-wasintro-

day.Regulation
CCtakesthis

In addition
District,
t0 theservices

ducedin 1987initiallyto provide

process
evolutionary
one stepfur

currentlyoffered,the Federal

directaccess
to reserveand clear-

andstanther towardautomation

Reserve
System
is continuingits

ln 1988,
ing accountbalances.

dardizalionof returnedchecks-

effortsto planfor electronic
ser-

overCATIE
serviceswereexpanded

not iust thosein the forward

viceneedsof the future.Dueto

to
enablingfinancialinstitutions

process.
presentment

growthin both
the explosive

returnACHitemsoverthe tele-

volumeanddollarvaluescarried

phoneas well.Fortransferof

tuallyeveryfinancialinstitution

networks,
overelectronic
the

funds,the volumeof thosemade

in the nationand
andconsumer

Systemdeveloped
a list of goals

nonelectronically
wasreduced15

for future
will be the springboard

fbr the service
throughthe

percent
versusthosemadein 1987.

improvements
in the collection

mid 1990s
including
virtually100

and returnof checks.

percentreliability,
faster

more
feredfinancialinstitutions

throughputandmoreflexibleser-

optionsfor returningACHitems

viceoptions.Financial
institutions

Reserve
thanany otherFederal

nationwide
wereaskedto com-

Bank.Institutions
canreturnACH

pletea surveyon the list, and

comitemsthrougha personal

face-to-face
interviews
with leading

puter,dedicated
link or
computer

Thislegislation
louches
vir-

ElectronicServices

As the 1980scometo a conclusion,probablythe mostsignifi

In addition,this Bankof-

ar:t$f
4

.:'*

:4"

."&'
''*

yoarsago,Roman
Twothousand
architoct
illarcushllio wrotothatan
architcct's
dutyis to provido
conpractical
structivo
strsngth,
utility
goals
andaoslhotic
offoct.Theso
haYo
notchangod,
although
buildings
have.

*3^'

'."*4a. . . .

A R
overthe telephone
by usingCATIE.

ble reverification.
Risinginterestrateshave

District.The stateof the banking
industryin this District,andin

caused
a dramaticincrease
in the

Texas
waswellpubliespecially,

volumeof securities
transactions.

cized.0f the morethan 200banks

Purchasing
securities
throughthe

113were
closed
nationwide,

trendstowardmoreelectronic
ser-

Treasury
Directprogramis one of

closedin Texasandfour in the

vices,we alsorealizethe impor-

our fastestgrorvingservices

District'sportionof LouiEleventh

tanceof the humanelementin

because
of ratespaidandthe ease

no bankswere
siana.However,

service.
Our Customer
Assistance

of participation.

closedin our portionof NewMex'

CustomerAssistance
Services

Whilewe seeandencourage

Division-still the only formal

The officesof the DallasFed

reico.Thatand relatedproblems

suchgroupin the FederalReserve

alsobecame
moreinvolved
in is-

quiredour effortsto be focused

System-workedwith the Dis-

suingSavings
Bondsfor corporate

on meetingthe normalmandates

in
tricts financial
instilutions

customers
utilizingthe payroll

uponus as supervisors.
imposed

solvingproblems.
Representatives

plan.TheTreasury
savings
Depart-

whileat the sametime dealing

handledalmost80,000callsand

menthasencouraged
our par-

with areatroubledbanksand

60,000lettersfrom Districtinstitu-

ticipationin this areato helpcor-

in an
bankholdingcompanies

tions.This year,our customers

poratecustomers
efficiently

unusualand difficulttime.

helpedevaluate
the qualityof ser-

distribute
Savings
Bonds.Alsoin

vicesprovided
in this areaandit

an effort to increasethe efficiency

out
strainedas we sentexaminets

wasgratifyingto learnthat our

of Savings
Bondhandling,we par-

to reviewfinanciallystrainedin-

viewthe competency
customers
of

program
ticipated
in a nationwide

stitutions.ln addition,in orderto

our staffas highlyas we do.

known as E-ZCleanUnderthis

administer
borrowingeffectively,

program,Savings
Bondsareen-

wereexresources
considerable

codedwith the redemption
value,

pendedin obtaining,
evaluating

sentto the Fedwith check

that had
andoverseeing
collateral

shipments,
andprocessed
on the

beenpledged
againstloansat the

electronic
servicefor orderingcur-

high-speed
equipment
usedto

discountwindow

rencyandcoinwentonline.Called

handlechecks.Thisprogrameli-

ACCENT,
the systemservesinstitu-

minatesexception
itemhandling

ministrative
rulingspavedthe way

tionsin the Dallas,Houstonand

and is muchmoreefficientfor

within
for statewide
branching

SanAntoniooffices.Thesysten

Savings
Bondissuers.

Bankof
Texas.FirstInterstate

Cashand Securities
Services

During1!88,a new Z4-hour

financialinstitutions
enables
to

were
Our staffandresources

Duflng1!88, courlandad-

Texasbecame
the first financialin-

placecashtransactions
directly.

Supervision
and Regulation

stitutionin the Districtto convert

selectthe amountof cashto be

Activities

statewide,
its officesto branches

delivered,
andreceive
earlycredit
for currencyandcoin shipped
to

althoughseveral
smallerinstituTheeconomic
climatein

tionspreceded
that bankin estab-

Fed.ACCENT
the Dallas
minimizes

1988had a significant
impacton

acrosscounty
lishingbranches

the possibility
of errorand

the supervision
of banksandbank

lines.

the needfor possi'
eliminates

holdingcompanies
in the Eleventh

Thephysical
structures
hderal Reserve
0f banksin the Eleventh
fromRoman
Districtarecomprised
columns
l0 modernart.
of everything
Bankbuildings
in this 0istriclareespecially
influenced
by Spanish,
FrenchandGsrman
ll,hilea buildingcanbe appreciated
for
alchitecture.
ils dosign,its detailsgiveit character.

C T 0
HeadOffice
Seated(from left): RobertL. Pfluger,Rancber,
San Angelo,Texas;Aclm.BobbyR. Inman, USN
(Ret.),(Chairman),Chairmanof tbe Board and
CbiefExecutiueOfficer,WestmarkSytemsInc.,
Austin, Texas;T.C.Frost,Cbairmanof the
Brnrd, FrostNationalBank, San Antonio, Texas
During mostrtf 1988,Mr. Frostuas the Dallas
to the FederalAduisoryt
Feds representatiue
Council.
Standing(from left): RobertTedEnloe,III,
President,LomasE NettletonFinancial
Corporation,Dallas, Texas;Leo E. Linbeck,Jr,,
Chairmanof the Board and CbiefExecutiue
)fficer, LinbeckConstructionCorporation,
Houston, Texas;CharlesT. Dctyle,Chairman of
the Board and ChiefExecutn:eOfficer, Gulf
National Bank, TexasCity, Texas;Maj, Gen.
Hugh G. Robinson(Ret), (Deputy Cbairman),
ChiefExecutiue)Jficer, Tetra Group, Dallas,
Texas,Gary E. Wood,President,TexasResearch
League,Austin, Texas;RobertG. Greer,
Chairmanrf the Board, TangleurxtdBank, N.4.,
Houston, Texas.

EI PasoBranch
Seated(from left): Dauid L. Stone,President,The
PortalesNatirnal Bank, Portales,New Mexico;
HumbertoF. Sambrano.President,SamCorp
GeneralContractum,El Paso,Texas.
Standing(from lefi): Diana S. Nataliuo,
President,The Unit.'ersityryf Texasat El Paso,El
Paso, Texas;Henrl B. Ellis, Presidentand Cbief
CreditOfficer,MBank El Paso,N.4., El Paso,
Texas;Pe1ttunYates,(Chairman), President,Yates
Driiling CompanJ',Artesia, Neu' Mexico; Etbel
)lson, Ouner, NAMBErf Ruidoso,Ruidoso,Neu'
Mexico.
(CbairmanPro
Notpictured:John R. Sihle.y,
Tem),President,Tri'Mountain Enterprises,
Carlsbad,Neu'Mexico,Mr Sihleyresigned
effectiueSeptember15, 1988.

Thorovolution
in bankarchitecpilmalily
turooccuned
in banklobbies.0ilginally,
interiors
of banks
wsreratherffampedandtollors
stayod
insido
woodon
"cagos."
Businoss
transaclions
worocon.
ducted
through
stoolbals01voico
tubes.fullowing
lllorldWarll, a new
lobbyGoncopt
developed.
hcilitles
bocamo
bottollit, moreopen,and
moreinviting
lo Gustomors.

BOAR

DIRECTORS
HoustonBranch
Seated(from Ieft):Jeff Austin,Jr., Presiden\ First
National Bank of Jacksonuille,Jacksonuille,
Texas;Gilbert D. Gaedcke,Cbairman o/ tbe
Board ancl ChiefExecutiue)fficer, Gaedcke
Equipment Company,Houston, Texas;Dauid E.
Sbeffteld,ViceCbairman, TexasNational Bank,
Victoria, Texas.
Standing (from left): Jenard M. Gross,Presiden\
GrossBuilders, Inc., Houston, Texas;Cliue
Runnells,Presidentand Director, Mid-CoastCable
Teleuision,Inc., El Campo, Texas,and President
and Director, Runnells Cattle Compary,,Bay City,
Texas.
Not pictured: WalterM. Mischer,Jr., (Cbairman),
Presidentand Cbie/ OperatingOfficer, The
Miscber Corporatktn,Houston, Texas;and
AndrewL. Jffirson, Jr., (CbairmanPrctTem),
Attorney,Jffirson and Mims, Hotuton, Texas.

SanAntonioBranch
Seated(fron left): C. Iuan Wilson,Cbairman of
tbe Board and CbiefExecutiueOfficer, First Cr.ty
Bank of CorpusCbristi, Corprc Christi, Tews;
Sam R. Sparks,President,Sam R. Sparks,Inc.,
Progreso,Texas;Robert T. Rork, Regional
Chairman, NCNB Texas,Dallas, Texas.
Standing(from left): RobertF. McDermott,
(Chairman),Chairmanof tbe Board and
President,United SeruicesAutomobile Associa
tion
San Antonio, Texas;Jane Flato Smitb,
Inuestmentsand Ranching,San Antonio, Texas;
Lanrence E. Jenkins, (Cbairman Pro Tem), Vice
President(Retired),LockbeedMissilesE Space
Inc., Austin, Texar.
CompanJ),
Not pictured: RubenM. Garcia, CbiefExecutiue
Officer, Modern Machine Shop,Inc., Laredo,
Texas.

ol bankinteliol
Thoovolution
by
has
been
inlluesced
design
needs
changing and
customors'
to ptovide
nowsorbanks'abilitios
vaults,
oncea prominont
vicos.Bank
lobby,have
feature
of
the
design
from
centheh
costly
beonremoved
now
and
are
usually
tlallocations
olfto onesideot in a baselocated
mont.Tholocusis onmolepersonal
innovaandlinancial
service
contact
tion.

M A N

RobertH. Boykin, Presidentand CbiefExecutiue
Officer,(left); and William H. Walld.ce,First Vice
Presidentand Cbief OperatingOfficer

Seated(from lefr): Millard E. Sueatt, Senior Vice
President,GeneralCounsel,and Secretary;Ja1 K,
Mast, Senior VicePresident;RobertSmitb, Lil,
Senior VicePresidentin Chargeof the Hou$ton
Branch; ThomasH. Robertson,VicePresidentin
Cbargeof tbe San AntonictBranch;Haruey
Rosenblum,
Senbr VicePresidentand DirectoroJ
Research.
Standing (from left): TonyJ. Saluaggio,Senior
VicePresid.ent;
JamesL. Stull, Senior Vice
President;GeorgeC. Cochran,III, Senior Vice
Presid.ent;SammieC Clay, VicePresidentin
Cbargeof the El PasoBranch; W. Artbur Tribble,
VicePresident.
Not pictured: RobertF, Langlinais, VicePresid'ent
and GeneralAuclitor.

Banks
wolodssignod
odginally
to rosemblo
fortresses.
Hoavy
ornamontation
andrichuseof
ploioctod
mahogany
an
andmarble
aura0l solidity,
security
andsuccoss.WhenFDIG
insurance
became
a realigin the1930s,
thislortressliksappoaranco
wasnolonger
nocossary.
Thodaysof Roman
colgavoway
umnsandstonostlucturos
f0rms.
to m0r0modorn
archiloctural

A D V

c o

U N

Advisory Council of Financial Institutions
JOHNH. DALTON
CctuncilCbairman
Cbairmanand
CbiefExecutiue)f/icer
FreedomCapital Corporation
San Antonio, Texas
JAMESA. ALTICK
Presid.entand. CbiefExecutiueOfficer
Central Bank
Monroe,Louisiana
WILTIAME. BRADY
Cbairman of tbe Board.
and, President
DentonSauingsAssociation
Denton, Texas

H.O. BURSUM,
III
Presid,ent,
ChiefExecutiueOfficer, and Casbier
First StateBank
Socono,New Mexico

GARRYOVEN
Presid,entand CbiefExecutiueOJficer
First FederalSauingsBank
o/ New Mexico
Rosuell,New Mexico

WALTERE. JOHNSON
President
First Interstate Bank of TexaqN.A.
Houston, Texas

BOOKMANPETERS
Cbairman of the Board
and ChiefExecutiueOfficer
First Ctty National Bank of Bryan
Bryan, Texas

BENLAND
President
Family FederalSauingsand Loan
Association
Sbreueport.
Louisiana

A.W. RITER,JR.
SeniorChairmanof the Board
NCNB Texas-Tltler
Tyler, Texas
LOVELLSMITH,JR.
Cbairmanof tbe Board
and President
FirstStateBank
Rio Vista, kxas

DELTONP. MOORECbairman
TexasCredit Union League
Manager
kxaco PAW
EmploleesFederal Credit Union
Port Artbur, Texas

KENNETH
L. BURGESS
President
SecurityStateBank
Abilene, Texas

'Mr. Moore uas appointed to lbe council
b fill tbe posilion lett bf Clfde N. Cbodte,Presidmt, Ensffcb Fedtral Credit Union, Dallrc, Teras.

AdvisoryCouncilof SmallBusiness
and Agriculture
CAROLYN
DRAPER
Council Cbairman
President
3-D Distribution Sltstems,Inc,
Dallas, Texas
J. WAYLANDBENNETT
CharlesC. TbompsonProfessorof
Agricultural Finance
and Associate
Dean
Collegeof Agr'icultural Sciences
TexasTechUniuersitlt
Iubbock, Texas
ROBERT
M. CARTER
Farmer
Plainuiew, Texas
J0HN 0. CHAPMAN
Rancher
ChapmanRancb, Texas

LTOYDE. CLINE
President
Lloyd Cline Farms, Inc.
Lamesa,Texas

DAN PUSTEJOVSKY
Cbairmanof tbe Board
G. & P, SeedComPanlt,Inc.
Aquilla, Texas

J.B, COOPER,
JR.
Farmer
Roscoe,Texas

WILLIAMP STEPHENS
ExecutitteDirector
Farm and Rancb HeritageInstitute
Las Cruces,New Mexico

SHARON
JOBE
Cbief Financial Officer
TCPIndustries,Inc,
Dallas, Texas
ROBERT
W. PHITIP
Partner
Arthur AndersenE Compa.n!
Dallas, Texas

J. ALFREDWASHINGTON
Publisber/Oumer
Dallaslfeekly
Dallas, Texas
A. ZUNIGA
CARLOS
VicePresident
Zuniga Freigbt Seruices,Inc.
Laredo, Texas

designsol linancial
Architectural
playan important
rolein
institutions
institution's
theirimage.A financial
lacilitiesaflectits abilityto deliver
its imagein the marketservices,
place,its abililyto respond
to growth
of
andchange,
andthephilosophy
ils manaoement.

HeadOffice
ROBERT
H. BOYKIN
President
and CbiefExecutiue
Officer
WILLIAM
H. 'UTALLACE
First VicePresident
and Cbief0peratingOfficer

REBECCA
W. MEINZER
VicePresident

L. JOHNSON
JOHNNY
AssistantVicePresident

GERALD
P.O'DRrSCOLr,
JR.
VicePresident
and Associate
Directorof Research

C. taVORLYM
AssistantVicePresident
R. McCULLIN
JAMES
AssistantVicePresid.ent

GEORGE
C. COCHRAN,
III
Smior VicePresident

LARRY
J. RECK
VicePresident

JAYK. MAST
SeniorVicePresident

D. SANDERS
JESSE
VicePresident

DEANA. PANKONIEN
Assistant
GeneralCounsel
Secretary
and Assistant

EUGENIE
D. SHORT
VicePresident

JOHNR. PHTILIPS
AssistantVicePresident

LARRY
M. SNNTL
VicePresident

TARRY
C. RIPTEY
AssistantVicePresident

W ARTHUR
TRIBBLE
VicePresid,ent

MARYM. ROSAS
AssistantVicePresident

UZZIAHANDERSON
AssistantVicePresident

R0BERT
J. ROSSAT0
Assistant
GeneralAuditor

BASIL
J. ASARO
AssistantVicePresident

THOMAS
H. RUST
AssistantVicePresid,ent

TERRY
B. CAMPBELT
AssistantVicePresident

PHILIP
R. SPEAR
AssistantVicePresident

M. DONDORSEY
AssistantVicePresid,ent

MICHAEL
N. TURNER
AssistantVicePresident

BIttY D. I'ULLER
AssistantVicePresident

M. WELCH
STEPHEN
AssistantVicePresident

T GH0LSON
JOSEPH
AssistantVicePresident

ROBERT
t. WHITMAN
AsshtantVicePresident

L. HEDRICK
JERRY
AssistantVicePresid,ent

IMILIES. WORTHY
AssistantVicePresid,ent

HARVEY
ROSENBTUM
SeniorVicePresident
and Directorof Researcb
TONYJ. SALVAGGIO
SeniorVicePresid,ent
L. STULT
JAMES
SeniorVicePresident
MILLARD
[. SWEATT
SeniorVicePresident,
General
Counsel
and Secretary
LYNEH. CARTER
VicePresident
JACKA. CTYMER
VicePresident
W. MICHAEL
COX
VicePresident
and Economic
Ad.uisor
BILLY
J. DUSEK
VicePresidmt
ROBERT
D. HANKINS
VicePresident
HBLEN
E. HOTCOMB
VicePresident
JOELL. KOONCE.
JR.
VicePresid,ent
ROBERT
F. LANGLINAIS
VicePresident
and GeneralAuditor

ANDREW
W. H0GW00D,
JR.
AssistantVicePresident

RICHARD
J. BURDA
ExaminingOfficer

RICHARD
D. INGRAM
AssistantVicePresident
and Assistant
Secretary

MARVIN
C. McCOY
ExaminingOfficer

ALBERT
J. JARAMrrrO
As,gistant Vice President

El PasoBranch

HoustonBranch

SAMMIE
C. CLAY
VicePresid.ent
in Cbarge

ROBERT
SMITH,
III
SeniorVicePresident
in Cbarge

THOMASH. ROBERTSON
VicePresident
in Cbarge

ROBERT
W. SCHULTZ
AssistantVicePresident

VERNON
L. BARTEE
VicePresident

TAYLOR
H. BARBEE
AssistantVicePresid,ent

R.JIMENIZ
JAVIER
OperatioffOfficer

RENE
G. GONZALES
AssistantVicePresid,ent

JOHNA. BULL0CK
AssistantVicePresident

LUTHER
E, RICHARDS
AssistantVicePresident

THOMAS
C. COLE
AssistantVicePresident

E/k(lit(

kutililrt'

L lt)8t)

SanAntonioBranch

S T A

M E N

c o

N D

0 N

December
3l.

December
31.

1987

1988

(Thousands)*

ASSETS
Goldcertificateaccountr
Specialdrawingrightscertificateaccountz
Coin
Loansto depositoryinstitutions
Securities:
Federalagencyobligations
U.S.government
securities
Total securities
Itemsin process
of collection
Bankpremises(net)
0ther assets
Interdistrict
settlement
account
TOTALASSETS

676,000
307,000
27,877
687,785

669,000
307,000
28,955
4r6,225

390,7rO
13,r04,763

448,O81
12,986,405

fi13,495,473
695,590
22,498

fi13,434,485
574,682
20,336
917,611
5,028

) CtR4 411r

(2,812,546)
$15,184,111

fi16,373,322

fir1,663,736

fi12,312,O19

2,40r,r29
r2,900
840

2,985,403
12,750
55,876

LIABILITIES
FederalReserve
notes
Deposits:
Depository
institutions
Foreign
0ther
Totaldeposits
Deferredcredititems
0ther liabilities
TOTALLIABILITIES

fi 2,414,869
616,195
173.249

$ 3,O54,O28
499,r29
157,496

fir4,868,O49

fi16,022,672

158,031
r 5 8 , 0 3r

175,325
175,325

3r6,062

350,650

CAPITAL
ACCOUNTS
Capitalpaid in
Surplus
TOTALCAPITAL
ACCOUNTS
TOTALLIABILITIES
ANDCAPITAL
ACCOUNTS

$15.184.111

*Detailfigures
to totalsbecause
maynot balance
of rounding.
'ThisBank's
share
of goldcertificates
deposited
by theU.S.Treasun
with the Federal
Reserve
System.
2ThisBank'sshareof special
drawingrightscertificates
deposited
b,vthe U.S.Treasurywith the FederalReserve
Bankof NewYork.

$16,373,322

c o

A N D

E X P

FortheyearendedDecember
Jl

0ther income
Total currentincome

1987

1988
(Thousands)*

CURRENT
INCOME
Intereston loans
Intereston governmentsecurities
Incomeon foreigncurrency
Incomefrom pricedservices

b r > 2 , 6 0/
1,030,436
25,762
48,081
930

$1,258,O76

$1,O73,454

15,924
980,24O
29,246
46,o23
1,O20

CURRENT
EXPENSES
Currentoperatingexpenses
Lessexpenses
reimbursed

81,159
5,070

76,490
4,753

Currentnet operatingexpenses
Costof earningscredits

75,089
6,332

7 1, 7 2 7
4,959

82,42r

76,696

Currentnet expenses
CURRENT
NETINCOME

fir,175,655

I 996,759

PROFIT
ANDLOSS
Additionsto currentnet income:
Profit on salesof governmentsecurities
(net)
Profiton foreignexchange
transactions
(net)
Otheradditions

2,488
r53,364
70

1,358
0

1,369

$ 155,922

43,935
23

0
20

Total deductions

43,959

Net additions(deductions)

(42,590)

Total additions
Deductions
from currentnet income:
Losson foreignexchange
transactions
(net)
0ther deductions

Costof unreimbursed
Treasuryservices

155,902
2,504

1,888

Assessment
by Boardof Governors:
Expenditures
FederalReserve
currencycosts

NETINCOME
AVAILABLE
FORDISTRIBUTION

fir,r14,249

DISTRIBUTION
OFNETINCOME
Dividendspaid
Payments
to the U.S.Treasury

10,516
r,t2I,o27

Transferred
to Surplus
Surplus,Januaryi

(17,294)
175,325

Surplus,
December
31

$ 158,031

*Detailfiguresmaynot balance
to totalsbecause
of rounding.

7,387
9,541

6,877
9,830

$r,r33,450

9,863
1,105,796
17,791
r57,534

fi 175,325

M
ANDBMNCI1ES
HEADOFFICE
COMBINED
Handled
Numberof Pieces

1988
Currencyreceived
andcounted
Coinreceived
andcounted
Foodstampsredeemed
Transfersof funds

964,4r1,800
2,03r,387
,OOO
226,475,250
6,382,598

1987
883,620,250
I ,975,981,000
206,636,225

DollarAmount(Thousands)
1988

12,r3r,631
3a3,233
1 , 111 , 0 4r

1987
r 1, 5 3 3 , 4 2 7
309,804
1,028,646

6,287,618

9,O30,389,655

L),O18,968,357

34,910,896
260,093,356
1 , 0 11 , 0 0 9 , 0 6 3

18,69r,642
72,1rO,327
582,703,r22

1 7, 4 9 2 , 2 1 6
72,845,484
548,771,257

17,860,)rr
27,Or8,829

306,570,875
21,672,430

326,2rO,299
16,778,829

HANDLED
CHECKS
U.S.government
checks
Finesort
All othert

34,123,947
271,931,207
r,ro3,220,490

ACHITEMS
HANDLED
Commercial
Government

6r,653,167
29,210,O42

ITEMSHANDLED
COLLECTION
U.S.government
couponspaid
All other

24,693
227,721

28,086
) )1 )4<

)a 4))

19,276
424,929

679,324

49a,918,487

994,2r5,840

ISSUES,
REDEMPTIONS,
EXCHANGES
OFU.S.
GOVERNMENT
SECUzuTIES
Definitiveand book-entry

8,542,845

9,310,164

LOANS
Advances
made

rExclusive
Reserve
Banks.
of checksdrawnon the Federal

l, ))o

2,76r

1 t 9 , 8 5 3 , r37

s9,760,201

Full text of Annual Report of the Federal Reserve Bank of Dallas : 1988 Annual Report

FRASER