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FedennlResERVE
Bnrukof Dnllns
REpow1972
nruruunl
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FederalReserveBankof Dallas
To the Member Banksin the
Eleventh Federal ReserveDistrict:
The year 1972 showeda significantchangedevelopingin bankingstructure in many partsof the nation but especiallyin the EleventhFederalReserve
District.Therefore,I am usingthis Annual Reportof the Bank to review some
of the opportunities,challenges,and possibleproblemsof the holding company movement.Of course,not all banksare involvedin the new structure,but
nearly all may eventually be affected by it. I hope that this review of structural
changewill be informativeand helpful.
The statementof condition,earningsand expenses,
and volume data on
operations of the FederalReserveBank of Dallas for 1972, with comparative
figuresfor 1971,are also shown in this report.In addition,listsof the directors
and officersof the Bank and its branchesas of January1,1973, are included.
The directors, officers, and employees of the Federal ReserveBank of
Dallasjoin me in wishing you a prosperousand happy New Year. We hope
that our contactswith you and your associates
during 1973 continue to be
pleasantand constructive.The fine cooperation and assistanceyou have given
us in the past are greatly appreciated.
yours,
Sincerely
ffi%
P. E.COLDWELL
President
President'sReview
BANKINGSTRUCTURE-OPPORTUNITIES
AND CONCERNS
Much will be written of the economicprogress
of the United Statesand the superior performance
of the Southwestduring 1972. Observersare likely
to point to the settlementof some important uncertaintiesas a prime sourceof strengthin bolstering
consumer and businesspsychology.Certainly,the
completionof the election and the potential ceasefire in Vietnam removedtwo major uncertainties.
In
addition, though, the behavior of the economywith lessenedinflationarypressuresand strong upward production and sales-has reduced business
fears of both strong future inflation and a severe
credit crunch.The economyseemsto be progressing
at a satisfactorypace/and dangersof inflation have
been reduced although not eliminated.Unemployment of human and material resourcesis, unfortunately, still high but is trending downward, and
prospectsfor further improvementare brighterthan
before.
In this setting,the nation's banking industry
has been showingconsiderablegrowth in loansand
depositswhile, at the same time, devoting major
attention to restructuringof the industry.This restructuringhas come about largelyas a resultof the
1970amendmentto the BankHolding CompanyAct
t h a t b r o u g h to n e - b a n kh o l d i n gc o m p a n i e su n d e rt h e
act. The amendedact also permitted some liberalization for all holding companies,which the Federal
Reservepromptly implemented by regulation.Becauseof the importanceof this restructuringeffort
in the banking industry, it seems appropriate to
reviewsome of the opportunitiesand attractionsof
the new structure,the critical featuresof holding
companyexpansionin the formativeefforts,and potential problemsafter organization.
The popularityof the holding companystructure reflectsthe opportunitiesfor expansionin service and profitsand widened horizonsof financially
oriented endeavors.To the banks located in unitbanking states,the holding company device representsthe only way to achievedepositconcentration
or banking growth beyond that availablefrom in-
ternal generationof a single unit. Such growth is
important to maintain the relative positionsof the
banks and their primary customers.Although it is
not necessarythat the lending limits of the large
banksalwaysmatch the borrowing requirementsof
the biggest customers,significant differences in
theserelativepositionsmean that much of the lending and servicingto the largebusinessborrowerswill
go out of the area,and compensatingdepositsfollow the loans.More importantly,without the businessof these largestborrowers,the local banks cannot fully develop their peripheralservices,such as
trusts,internationalcontacts,and professionalconsulting.As a result,all customersare denied access
to fully developedservicesat the local level.
Bank concentrationis also important in providing a meansof effectivelymarshalingoff-season
depositsand lendablefunds from banks located in
areas with weak loan demand. Similarly,holding
company expansioncan make the specializedservices of a large bank available,through subsidiaries,
to localitieswith bankstoo small to develop them.
While such servicescould be obtained through correspondentbanks, the extent of attention and degree of service are probably more effective through
holding company control.
A s s u m i n ge f f i c i e n t h a n d l i n g o f t h e h o l d i n g
company/there are real opportunitiesfor increased
profits.The possibilitiesof greaterlending capacity,
broader servicesales,internationaloperations,and
more effective consolidated investment activities
provide the basisfor greaterprofits. In the area of
nonbank but financiallyrelatedactivities,the holding companystructurecan createmany broad-scale
opportunitiesfor serviceand profit. By investingin
mortgageservicing,data processing,and similar industries, holding companies can serve their full
subsidiaries,as well as other customers,even in
out-of-state areas.
To the generalpublic, the new structureoffers
great possibilitiesof improved banking services
through increasedcompetition at all levels.In the
local banking market, new competi,tioncan force
more aggressivebank managementin lending and
service.ln those caseswhere a problem bank is
taken into a holding company/the acquisitioncan
be expectedto providenew management,
additional
capital, or other correctiveaction. Obviously, the
public is well served by the strengtheningof its
bankingunits.lt is the hope of the supervisoryagencies that a concentrationof banking structurewi[l
improvebank managementby developinga stronger
attraction to new managersand supporting even
b e t t e re d u c a t i o na n d t r a i n i n g .S i m i l a r l yt,h e h o l d i n g
companyshould be preparedto come to the aid of
any of its subsidiariesin terms of capital and management and should provide credit appraisaland
auditing assistanceto reduce exposure to credit
failures.
The centralfocus of FederalReserveaction in
approving or denying an application for holding
c o m p a n ya c q u i s i t i o ni s t h e p u b l i c i n t e r e s ti,n c l u d i n g
the safety of financial institutions.The public interest may be expressedin severalcritical features
examined.at the time of application. First, it has
become of prime importance to be certain that
competition among financial institutions is not
s i g n i f i c a n t ldy i m i n i s h e da n d , w h e r e p o s s i b l ei,s i n creased.For example,a holding company with a
substantialpositionin its primarymarketthat wishes
to acquireanothersignificantbank in the samemarket would bear a heavyburden of proof sincethere
would likely be a substantialdegreeof competition
between the two banks that would make denial
. n t h e o t h e r h a n d , a h o l d i n gc o m q u i t e p o s s i b l eO
p a n y s u b s i d i a r yb a n k w i t h o n l y a n o m i n a l p o s i t i o n
in a market might well be granted approvalto expand its shareof its marketby acquiringanotherrelatively small institution in the market, particularly
if the marketwere not highly concentrated.The latter examplemight well haveprocompetitiveaspects.
Nevertheless,the holding company'sshare of the
local and state markets,as representedby percentage of deposits,should not be nearinga dominant
position. Nor should an acquisitionbe permitted if
the bank to be acquired has the presentor nearterm potential strength and size to develop its own
holding company.
Second,the public interest is best served by
encouragingde novo entry into banking markets,
thus increasingthe available banking alternatives.
While not all de novo applicationsare approved,a
large majority, especiallyin marketsoutside those
are
servedby the lead bank and other subsidiaries,
viewed with favor.
Third, the public interest requires that the
terms of purchasebe applied uniformlyto all shareholders,both majority and minority.
Fourth, in a broad sense,the public interest
is servedwhen bankingservicesare availableto promote the economic progressof the local community. lf broaderservicesare availablethrough holding
company associationthan through enforced indep e n d e n c eo f u n i t s ,h o l d i n g c o m p a n ya c q u i s i t i o ni s
viewed in a more favorablelight.
The safetyof all financialinstitutionsis another
prime considerationin the approval of holding
companyacquisitions.The examinationreportsof a
holding company'sexistingbanks and its proposed
subsidiaryare reviewedcarefully,and management
appraisalis made to assurehigh-qualitypersonnel.
The latter is of particular significancewhen the
holding company proposesto acquire a problem
bank. Capital adequacyof all units in a proposed
holding company is appraised,and, on occasion,
approval is conditioned by commitments to in'
creasecapital.Similarly,the FederalReservemaintains a close watch over the debt structureof the
holding companyto ensurethat the companydoes
not have too greata debt-servicingburden. ln general, the purchaseof a subsidiaryfor cashobtained
through borrowing-so-called acquisitiondebt-is
an adversefactor,especiallyif the debt is significant
in relationto net worth or if the holding company
has other debt.
The general guidelinesof acquisitionare, of
course,appliedto each situationon the basisof the
banking and economic marketsservedand the pec u l i a r i t i e so f t h e i n d i v i d u a la p p l i c a t i o n .B e y o n d
these mattersof acquisition,though, there are important questions regardingactual operation and
managementof holding companiesand the degree
to which such banking concentrationshould be
permitted.lt is this concernover the public interest
and bank safetythat bringsthe FederalReserveinto
continuous monitoring of holding company developmentsafterconsolidation.
Foremostamong the concernsabout the developing bank holding company movement is the
a l l o c a t i o no f l e n d a b l ef u n d s . l f l a r g eh o l d i n g c o m panies use their out-of-marketsubsidiariesmerely
as marshalingpoints to aggregatedepositsand then
concentratetheir lending to accommodateprimary
marketdemands,the local community credit needs
o f t h e s u b s i d i a r i em
s a y b e s l i g h t e dW
. hile it is impossibleto measuresuchactionscompletelyby loan
totals of the subsidiaries(net of participations),
the
FederalReserve,nevertheless,
will be closely monitoring the degreeto which local needsare satisfied
after holding company acquisition.Evidencethat
local needs are being slighted will very likely be
consideredin future acquisitionrequests.
Another concern is the acquisitionof inadequately capitalizedor poorly managedsubsidiaries.
Where such acquisitionwas approvedpartly on the
record of a weak subsidiary,close surveillancewill
b e m a i n t a i n e dt o e n s u r et h a t t h e h o l d i n gc o m p a n y
provides any needed capital or management.In
caseswhere severelycriticized loan or other weak
policy practiceswere evident at the time of acquisition, substantiveimprovement over the months
following acquisitionwill be expected.
A third area of concern involvesthe management and accountingpracticesof the holding company and its subsidiaries.
Where there has been evidence of abusesin round robin deposits,insider
loans, intercorporatedirector lending, and call rep o r t w i n d o w d r e s s i n gi n n o r m a l b a n k i n ga c t i v i t i e s ,
t h e p o s s i b i l i t i e so f s u c h a b u s e sa r e m a g n i f i e di n
holding company arrangements.
By meansof close
reviewof call reportsand simultaneousexamination
of all holding company units when necessary,the
FederalReservewill keep a carefulwatch on intercompanytransfersand policies.Specialreportsfrom
holding companiesare also a possibilityto ensure
that insiderand self-dealingpracticesare avoided.
Finally,the FederalReservewill continue to
analyzecloselythe developingstructureof the banking industryand its effortsto broadeninto nonbank
activities.
One of the unavoidableoffshootsof the holding companymovementwill be the enforceddivest i t u r e o f s o m e b a n k s .S o m e h o l d i n g c o m p a n i e s p r i n c i p a l l yt h o s e w i t h a s i g n i f i c a n tn o n b a n k o r i entation-are irrevocablycommitting themselvesto
divestof their banksas the priceof continuedexpansion into areasnot permittedfor bank holding companies.Others-generally bank-orientedcompanies
with numerous nonsubsidiarybanking interestsare committing themselvesto divest of many of
t h e i r n o n s u b s i d i a rby a n k sa s t h e p r i c e o f b r i n g i n g
other nearbybanksinto full-subsidiarystatus.ln the
case of the companieswith nonbank orientation,
the statutegivessufficienttime (until 1980)to permit orderly sale.In the other case/where divestiture
o f b a n ks u b g o e sh a n d i n h a n d w i t h t h e a c q u i s i t i o n
sidiaries,the FederalReserveBoard'sorders have
not beenso lenient,and commitmentsto divesthave
i n v o l v e d m u c h s h o r t e r t i m e p e r i o d s .T h e v o l u m e
of divestituresthat will be taking place may create
problems in marketingbank stocks.Salesof bank
stock should involve arm's-lengthbargainingand
should be made to entirelydivorcedentities.Nevertheless,if a sizablenumber of banks are sold in a
short time frame, marketing and financing of the
salescould become difficult. In view of the regulatory attitudesconcerningbank-stockfinancingand
the need to find buyerswholly divorced from the
holding companies,it behooves those companies
underdivestiturecommitmentsto proceedpromptly
in efforts to sell.
Another bank practicethat may be aggravated
u n d e r t h e h o l d i n g c o m p a n y a r r a n g e m e n ti s t h e
heavy relianceon Federalfunds. While not the exclusive province of large banks or holding companies,there has developed a tendency for some
banks to purchaseFederalfunds on a daily basis
in amounts even exceedingtheir reserye requirements. Admittedly, bank regulatory attitudes on
Federalfunds purchasesand salesare not clearcut.
To some supervisors,the heavy net purchasesare
borrowings.To others, Federalfunds are just shortterm depositsobtainedin the samemanneras funds
obtained from certificatesof deposit. Still others
do not classifyFederalfunds as either depositsor
borrowings.Under the first interpretation,acquisition of lendable funds by Federalfunds purchases
would be viewed as excessiverelianceon borrowings.Under the depositthesis,there would be problems of interpretationsince payment of intereston
demanddepositsis prohibited and, exceptfor interbank relationships,reserverequirementswould be
applicable.The third, or current,interpretationdoes
not involve borrowing limits, interest rate limits,
or reseryerequirements.Recognizingthe differences
in regulatoryopinion,though,doesnot interferewith
the interpretation that some banks are exposing
themselvesto the problemsof both cost and availability of funds when they make continuouslylarge
n e t d a i l yp u r c h a s e s .
A d i f f e r e n tb u t e q u a l l y d i f f i c u l t p r o b l e m i s
evident where banksconsistentlysell largevolumes
of Federalfunds. ln the caseof such banks,it might
be a legitimate question to ask if they are truly
servicing the credit needs of their communities.
Banksshould be stimulatingeconomic growth and
credit demands, not merely passivelyaccommodating the credit needs of blue-chip customers.
Either problem could be aggravatedby the
holding company movement if banks merely use
this device for fund transfers.Excessive
net salesor
purchasesplace the banks in a position of relying
on out-of-marketforcesover which they have little
control. Perhapsthe heavy net purchasingbanks
should look toward capital increasesor other forms
of local deposit generation,while the heavyselling
banks should review their lending and investing
policies to see if community needs are really being accommodated.
In another area of bank practices-that of
loan commitmentsand quality-there seemsto be
an even greater need for reappraisal.lf commitments are indeed expandingat faster ratesthan the
generationof lendable funds and if such commitments,whether paid for or not/ are viewed as moral
obligationsof the banks,a careful review of comm i t m e n t p o l i c i e ss h o u l d b e c o n d u c t e d .W h i l e f e w
would argue that banks should lend only to customers in their immediate market, there has been
a tendencyfor some banksto make excessivecommitments to national concernswhose businessis
only remotelyconnectedto the local market.Aggravation of this tendenry by large holding companies
could create seriousproblems in periods of credit
restraint.
The quality of loans is another potential hazard for banks,whether tied to holding companies
or independent.Excessive
relianceon larger banks
for credit checksand financialappraisalof borrowers is a dangerouspracticeand one that might be
encouragedunder holding company arrangements.
It will be necessaryfor both the holding company
and subsidiarymanagementsto guard against assuming that someoneelse has reviewedthe creditworthinessof a particular borrower. Similarly,all
u n i t si n a h o l d i n gc o m p a n yw i l l n e e d t o b e c a r e f u l
about excessivecredits granted a single borrower
or his affiliates.Only through unified loan records
a n d c a r e f u ls c r e e n i n gw i l l t h e e n t i r e h o l d i n g c o m pany be assuredof prudent credit extensions.
A s b a n k i n g c o n s o l i d a t e su n d e r t h e h o l d i n g
company device, the pressuresand problems of
are likely
regulatorycontrol and public responsibility
to increase.lt should be clearly understood that
neither bank regulatorynor examinationauthorities
are able to provide full protection of the public
interest.They can only screenout the overt problems or unsound practices.Banks must compete/
b u t i n t h e i r c o m p e t i t i o nm u s t c o m e s o u n dm a n a g e ment policiesto protect depositorsand stockholders
ali ke.
Of importance to the developing consolidation of banking units is the increasingexposureto
the possibility of large-unit failures, which could
have more seriousrepercussions
than the small-unit
failuresof the past. To avoid such large-unitprobl e m s , m a n a g e m e n t so f h o l d i n g c o m p a n i e sb e a r
for sound banking practices,
heavy responsibilities
support of national monetary policies, and str:ict
adherenceto regulations.
In many parts of the nation, the new holding
company movement representsthe first consolidat i o n o f b a n k i n gu n i t s i n m a n y y e a r s .C e r t a i n l y ,i n
s t a t e sl i m i t e dt o u n i t b a n k i n g t, h e h o l d i n gc o m p a n y
provides the only avenue for concentration.The
n u m b e r o f a p p l i c a t i o n fsr o m M i s s o u r i ,F l o r i d a ,a n d
Texas,for example,has been sizable,even without
taking into account nonbank affiliate efforts. The
structureof the banking industry in such statesis
truly undergoinga major revolution.
f n Texas,as of December20,1972,there were
1 5 m u l t i b a n kh o l d i n gc o m p a n i ew
s ith 71subsidiaries,
accounting{or $9,491,300,000in bank deposits,or
3 1. 6 p e r c e n to f t h e s t a t et o t a l . l f a l l p e n d i n ga p p l i cationswere approved,58 more bankswould come
under holding company control and nine more
m u l t i b a n k h o l d i n g c o m p a n i e sw o u l d b e c r e a t e d .
T h e t o t a l o f 2 4 m u l t i b a n kh o l d i n gc o m p a n i e sw o u l d
account for over 42 percentof the state'sbank deposits. ln contrast/on December 31, 1971, there
w e r e n i n e T e x a sm u l t i b a n kh o l d i n gc o m p a n i e sc o n trolling 32 subsidiaries,which accounted {or 14.5
percentof total bank depositsin the state.
In some states/this restructuringis proceeding
without regardto alternateforms-such as branching or merger-and, yet, the number of new units
being charteredis still relativelyhigh. The answer
to this seemingcontradictionis the continuousexpansionof the major urban centersand the desire
for banking outlets in each new shopping center,
residentialdevelopment,or even new cluster of
office buildings.
In an overall sense, the banking structure
yielding the best service in the public interest is,
broadly,the most desirable.But the economic and
financialjustificationof new banking outlets must
be a factor in this overall appraisal.While it is
possibleto maintainthe postureof holdingcompany
expansionas the only meansof consolidation,consideration might be given to at least a study of
metropolitart area branching. The advantagesof
branching authority would include evidence that
opening or even relocatinga branch costslessthan
charteringa new unit bank,even if it is consolidated
into a holding companystructure.A newly chartered
bank must, of course,have the full panoply of directors,officers,and capitaland spacerequirements,
whereas a new branch needs only a building, a
small number of officersand staff,and usuallylittle
or no speciallydevoted capital.Moreover,a branch
can lay off its accounting,loan, proof, transit,payroll, and similar record-keepingoperationsto the
head office, while a unit bank may find such complete spin-offmore difficult.
Eventhough a de novo applicationis viewed
in a generallyfavorablelight, the charterand holding company applicationsand time requirements
for approvalmake opening a new bank more difficult than opening a branch. Perhapsone of the
critical differencesis that it is easier to close or
relocatea branchthan a unit bank.
There are, of course, argumentsin favor of
unit banking and opposed to branching.However,
many of thesehavefaded with the holding company
developmentand may diminish further as the development progresses.
Whether or not branchingis
permitted is not a matter of critical importanceto
the Federal Reserve.There will be more holding
company applicationsto investigateand processif
branchingauthority is denied, and more unit banks
will likely mean more end-point check distribution.
Nevertheless,Federal Reserve functions can be
handled under either form of bankingorganization.
Regardless
of structuralform, the banking industry-in company with many others-faces a
considerablechange in the focus of responsibility.
It is no longer sufficientto make loans and investments,pay an adequatereturn to stockholders,and
protect depositors'funds. These are still the core
requirementsof banking, and bankers who lose
sight of them do so at their peril. But modern
mores and attitudesplace new burdenson bankers.
They are to lead in supportingthe developmentof
minority enterprises, pay attention to the social
allocation of credit, and participatein solving the
pressingsocial,environmental,and economic problems of the nation. To some extent,the consolidation of bankingstructuremay permit more diversion
of credit to attack these problems, but such consolidationcould divorce the decision makersfrom
local problems and, to this extent, perhaps make
the large units less sensitiveto local needs. On
balance, the bank holding company movement
will not necessarilyimprove or reduce bank responsebecauseit will still dependupon management
views of social and other problems.What is likely
to occur, though, is that the large holding companies may increase the exposure and perhaps
vulnerability of banking units to attack, both for
personneland other internal policiesand for credit
allocationand externalpolicies.
Finally,the competitivepoliciesof developing
holding companiesmight be a matter of concern.
At one level, such companiescould institute competitive ratesfor both depositsand loansthat could
severely damage independent competitors. One
could even envisagea "loss leader" war at some
locationfor a limited time, supportedby profit elseIn another
where among the company subsidiaries.
aspect, rate policies could be set by the parent
without regard to local conditions, leading to
greater or lesserbanking activity depending upon
the position of its local subsidiaryin relation to
local competition.At another level of competition,
the holding company must make its policies fit
the environmentwithin which it operates.The concern is whether the parent is a leader or follower
and, if the latter, how far it will go in policies
tending toward unsound banking conditions. The
question, then, is resolved to whether competition will be settledat the poorestor best common
denominator.
In summary,the holding company movement
offersgreat challengesand opportunitiesfor service
and profit. But the demands on managementwill
be proportionatelygreater.Bank managersin the
197O'sand beyond must respond to the political,
social,and economicpressuresof the times. Nevertheless,suchbank officials,especiallythosein multibank holding companies, will need to provide
cohesive leadership to weld diverse subsidiaries
into an effectiveand efficientfinancialorganization.
Directors
FEDERALRESERVE
BANK OF DALLAS
Chas.F. fones
lohn Lawrence
CharlesT. Beaird
ThomasW. Herrick
l. V. Kelly
Carl D. Newton
A. W. Riter, fr.
Hugh F. Sieen
Robert H. Stewart,lll
Administration,
(Chairmanand FederalReserveAgent),Dean,Collegeof Business
Universityof Houston,Houston,Texas
(DeputyChairman),Chairmanof the Board,DresserIndustries,lnc., Dallas,Texas
Inc.,Shreveport,Louisiana
President,Beaird-Poulan
President,MesaAgro Inc.,Amarillo,Texas
President,
The PeoplesNationalBankof Belton,Belton,Texas
Photo Products,Inc.,SanAntonio,Texas
Chairmanof the Board,Fox-Stanley
President,
The PeoplesNationalBankof Tyler,Tyler,Texas
President,El PasoNaturalCas Company,El Paso,Texas
Inc., Dallas,Texas
Chairmanof the Board.FirstInternationalBancshares,
EL PASO BRANCH
Allan B. Bowman
Reed H. Chittim
Gage Holland
C. f. Kelly
Herbert M. Schwartz
Wayne Stewart
Sam D. Young, fr.
Presidentand CeneralManager,BannerMining Company,Tucson,Arizona
President,FirstNationalBankof LeaCounty,Hobbs,New Mexico
Owner, Cage Holland Ranch,Marathon,Texas
Presidentand Vice Chairmanof the Board,The FirstNationalBankof Midland,
Midland,Texas
President,PopularDry Coods Company,Inc., El Paso,Texas
President,FirstNationalBank in Alamogordo,Alamogordo,New Mexico
President,El PasoNationalBank,El Paso,Texas
HOUSTON BRANCH
R. M. Buckley
Seth W. Dorbandt
Kline McGee
Bookman Peters
Nat S. Rogers
Alvin l. Thomas
M. SteeleWright, fr.
Presidentand Director,EastexIncorporated,Silsbee,Texas
FirstNationalBankin Conroe,Conroe,Texas
Chairmanof the Boardand President,
Chairmanof the Board,SouthernNationalBankof Houston,Houston,Texas
President,
The City NationalBankof Bryan,Bryan,Texas
President,FirstCity NationalBankof Houston,Houston,Texas
President,PrairieView A & M College,PrairieView, Texas
Texas
Chairmanof the Board,TexasFarmProductsCompany,Nacogdoches,
SAN ANTONIO BRANCH
Marshall Boykin lll
RichardW. Calvert
Ray M. Keck, lr.
lrving A. Mathews
PeteMorales,fr.
W. O. Roberson
Leon Stone
Partner,Wood, Boykin& Wolter, Lawyers,CorpusChristi,Texas
President,NationalBankof Commerceof SanAntonio,SanAntonio,Texas
Chairmanof the Boardand President.
Union NationalBankof Laredo,Laredo,Texas
Chairmanof the Boardand Chief ExecutiveOfficer,FrostBros.,Inc.,
SanAntonio, Texas
Vice Presidentand CeneralManager,MoralesFeed Lots,Inc., Devine,Texas
President,FirstNationalBankat Brownsville,Brownsville,
Texas
President,
The Austin NationalBank,Austin,Texas
F E D E R AA
L D V I S O R YC O U N C I LM E M B E R
Lewis H. Bond
Chairmanof the Boardand Chief Executive
Officer.The FortWorth NationalBank,
Fort Worth, Texas
Officers
BANK OF DALLAS
FEDERALRESERVE
P. E. Coldwell
T. W. Plant
Robert H. Boykin
fames L. Cauthen
Tony f. Salvaggio
Robert A. Brown
George F. Rudy
George C. Cochran, lll
Leon W. Cowan
Ralph T. Green
Larry D. Higgins
Carl H. Moore
fames A. Parker
W. M. Pritchett
Fredric W. Reed
RascoR. Story
Thomas R. Sullivan
E. W. Vorlop, fr.
Sidney f. Alexander, lr.
Richard D. lngram
Harry E. Robinson, fr.
fesse D. Sanders
T. E. Spreng
E. A. Thaxton, fr.
f. W. Harlow, lr.
William H. Kelly
C. f. Pickering
fames O. Russell
Carroll D. Blake
RobertSmith, lll
f. A. Clymer
C. L Vick
President
First Vice President
SeniorVice Presidentand Secretary
SeniorVice President
Senior Vice President
Ceneral Auditor
Ceneral Counsel
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice Presidentand Controller
AssistantVice President
AssistantVice Presidentand AssistantSecretary
AssistantVice President
AssistantVice President
AssistantVice President
AssistantVice President
Data ProcessingOfficer
Director of Research
PlanningOfficer*
Chief Examiner
Bank RelationsOfficer
Public Information Officer and AssistantSecretary
OperationsOfficer
OperationsOfficer
EL PASO BRANCH
Fredric W. Reed
Forrest E. Coleman
foel L. Koonce, fr.
Vice Presidentin Charge
AssistantVice President
OperationsOfficer
HOUSTON BRANCH
fames L. Cauthen
RascoR. Story
l. Z. Rowe
lohn N. Ainsworth
Thomas H. Robertson
SeniorVice Presidentin Charge
Vice President
AssistantVice President
OperationsOfficer
OperationsOfficer
SAN ANTONIO BRANCH
Carl H. Moore
Frederick l. Schmid
Thomas C. Cole
Robert W. Schultz
Vice Presidentin Charge
AssistantVice President
OperationsOfficer
OperationsOfficer
'Effective February1, 1973
Staternentof Condition
Dec.31,1972
Dec. 31, 1971
ASSETS
Gold certificateaccount
Specialdrawing rightscertificateaccount
FederalReservenotes of other Banks
Other cash
$ 377,502,527
14,000,000
44,1OO,994
13,626,91O
Loansand securities:
Loans .
Federalagencyobligations
U.S.Governmentsecurities
T o t a ll o a n sa n d s e c u r i t i e.s. . . .
41,335,349
57,258,OOO
3,048,048,000
3,146,641,349
Cash items in processof collection
B a n kp r e m i s e s. . . . .
Other assets
TOTAL ASSETS
$
98,118,858
14,000,000
47,844,180
14,144,257
575,000
22,354,O00
3,180,o1o,oo0
3,202,939,O0O
7O7,043,679
11,982,942
45,227,639
$4,360,125,940
1,1O2,233,436
9,172,934
33,541,129
$4,s21,993,794
$2,297,888,016
$2,132,944,915
UABtUTTES
FederalReservenotes in actual circulation
Deposits:
Member bank-reserve accounts
U.S.Treasurer-generalaccount
Foreign
Other
Total deposits
1,373,17O,041
123,671,626
15,950,000
16,987,533
1,529,779,20O
1,437,406,205
83,492,718
'15,680,000
Deferredavailabilitycash items
Other liabilities
T O T A LL I A B I L I T I E S
422,658,9O2
23,493,122
4,273,81924O
715,542,660
35,292,403
4,439,9U,394
19,605,493
1,556,184,416
CAPITATACCOUNTS
Capitalpaid in
43,153,350
43,153,350
86,306,7OO
$4,360,125,94O
Surplus
TOTAL CAPITALACCOUNTS
TOTAL LIABILITIES
AND CAPITALACCOUNTS
-t0
41,014,7O0
41,014,700
82,029,400
$4,521,993,794
Earningsand Expenses
1971
1972
EARNINGS
CURRENT
629,906
171,213,1O5
61,OO7
48,698
171,952,716
$
Loans
U . S .C o v e r n m e nste c u r i t i e. s. . . .
F o r e i g nc u r r e n c i e s
All other
EARNINCS
T O T A LC U R R E N T
$
398,420
169,726,271
148,319
44,792
170,317,8O2
EXPENSES
CURRENT
Currentoperatingexpenses
for expensesof Boardof Covernors
Assessment
19,874,771
1,939,70O
17,257,092
'1,820,000
FederalReservecurrency:
O r i g i n a lc o s t ,i n c l u d i n gs h i p p i n gc h a r g e s
C o s to f r e d e m p t i o ni,n c l u d i n gs h i p p i n gc h a r g e s
Total
1,618,4O8
25,817
23,458,696
1,409,893
27,307
20,514,292
Lessreimbursementfor certainfiscalagencyand other expenses
NETEXPENSES....
933,336
22,525,360
953,324
19,560,968
149,427,356
150,756,834
137,148
1,271
138,419
4,646,106
73,594
4,719,70O
2,856,648
2,856,648
-2,719,229
530,319
530,319
4,189,381
154,946,215
2,418,835
150,657,53O
1,B69,85o
39,144,85O
$ 41,O14,7O0
PROFITAND LOSS
C u r r e n tn e t e a r n i n g s
A d d i t i o n st o c u r r e n tn e t e a r n i n g s :
Profiton salesof U.S.Covernmentsecurities(net) . .
All other
T o t a l a d d i t i o n s. . .
D e d u c t i o n sf r o m c u r r e n tn e t e a r n i n g s :
Losson salesof U.S.Covernmentsecurities(net) . .
All other
Total deductions. .
N e t a d d i t i o n so r d e d u c t i o n s( - ) .
Net earningsbefore dividendsand paymentsto U.S.Treasury
D i v i d e n d sp a i d . .
Paymentsto U.S.Treasury(intereston F.R.notes) .
Transferredto surplus
Surplus,Januaryl....
S u r p l u sD
, e c e m b e r3 1 . . .
11
146,709,127
2,519,557
142,O5O,92O
2,138,650
41,O14,7OO
$ 43,153,350
Volume of Operations
FederalReserveBank of Dallas
Head Office and BranchesCombined
AmountHandled
Number of PiecesHandled'
1972
1971
1972
Loans .
Currencyreceivedand counted....
C o i n r e c e i v e da n d c o u n t e d . . . . . . .
149
256,749,656
588,034,450
125
240,132,5OO
566,806,350
1,741,762,698
1,947,729,550
68,313,239
Checkshandled:
U.S. Government checks
Postalmoney orders.
Allothef
39,042,050
12,438271
531,219r3ffi
39,575,323
11,917,679
473,066,233r
12,995,516,365
331,743,350
173,737,755,192
332,818
734,286
350,862
6'13,632r
Collectionitems handled:
U.S.Governmentcouponspaid. .
All other
lssues,redemptions,and exchanges
of U.S.Covernment securities.. .
Transfersof funds.
Food stampsredeemed.
1115221337
544,215
62,927,ffi7
113O2,gU
484,435
6Q,928,327
'Packaged items
handled as a single item are counted as one piece.
'Exclusive of
checksdrawn on the F,RrBanks,
r-Revised.
12
154,507,U6
292483,Sg9
16,066,573,497
966,488,555,23O
133,670,345
1971
$
1,153,607,5O0
1,736,850,350
64,804,984
12,105,582,495
333,549,874
157,343,240,339r
145,832,314
168,521,957r
19,600,91O,542
815,005,043,000
113,863,573
@FedFRASER