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1978 ANNUAL REPORT Federal Reserve Bank of Philadelphia Federal Reserve Bank of Philadelphia Contents: PRESIDENT'S MESSAGE 5 EXECUTIVE CHANGES 7 DIRECTORS 8 OFFICERS 9 STATEMENT OF CONDITION 11 EARNINGS AND EXPENSES 13 ANNUAL OPERATIONS 15 REACHING OUR PUBLICS 16 President’s Message It was an up-beat year for the Federal Reserve. Under the leadership of a new Chairman of the Board of Governors the membership problem was addressed aggressively, a zero-based review of regulations was begun, and other new initia tives were started. I am pleased by the spirit of achievement in the System today and feel that it is fully evident here in Philadelphia. Take automation for example. Just as we were among the best with the old punchedcard equipment of the 1950s and 1960s, now we have implemented new, state-of-the-art computer systems in many areas of the Bank. Or take management. Our style and process has made a good transition from the more informal environment of years gone by and is honed for today's complex challenges. But, most of all, take our record of accom plishment. We have enjoyed one of the most rapid rates of operational improvement in the System, and the overall quality of our work is in the front rank. Unit costs have been a problem due in large iart to the nature of our District and to our leavy building overhead. However, when the mpact of our new building is eliminated, you vill find we have improved efficiency faster than :he average of the twelve Reserve Banks. In 1978 we continued the Bank's pattern of leadership in System projects. Our people played key roles in determining Federal Reserve actions and policy in the fields of automation, manage ment, bank services, public information and human resources among others. Another area I want to mention is improving contact with our various publics. We sponsored a series of Forums that brought business, community and government leaders together in an effort to find solutions to Philadelphia's economic problems. We conducted numerous programs for bankers and made a special effort to inform consumers of their rights under the Fed's new credit regulations. I am pleased with the Bank's performance in 1978 and feel we are in good shape to face the many challenges that lie ahead. President 5 Executive Changes John W. Eckman, Chairman and President of Rorer Group Inc., Fort Washington, Penn sylvania, was redesignated Chairman of the Board of this Bank for 1979. At the same time Mr. Eckman was reappointed to a three-year term as a Class C Director. Werner C. Brown, Chairman of Hercules Incorporated, Wilmington, Delaware, was again named to serve as Deputy Chairman for 1979. The appointments were made by the Federal Reserve Board of Governors. In special June balloting, Donald J. Seebold, President of The First National Bank of Danville, Danville, Pennsylvania, was elected a Class A Director by small member banks in the District to fill the unexpired portion of a term that ends December 31, 1979. Three new directors were elected in December John R. Biechler, President and Chief Executive Officer of The Commonwealth National Bank Harrisburg, Pennsylvania, was elected a Class 7 Director by large member banks. He complete; the unexpired portion of a term that end: December 31, 1980. Robert H. Deacon, Presiden of The Bank of Mid-Jersey, Bordentown, Nev Jersey, was elected a Class A Director by medium sized member banks, and Richard P. Hauser Chairman and Chief Executive Officer of Johi Wanamaker, Philadelphia, Pennsylvania, wa elected a Class B Director by small membe banks in the District. Both Mr. Deacon am Mr. Hauser will serve three-year terms endin December 31, 1981. William B. Eagleson, Jr., Chairman am President of Girard Bank, Philadelphia, Penr sylvania, was reappointed by the Director of this Bank to represent the Third Distric on the Federal Advisory Council during 197f A number of promotions, new assignmeni and changes in the Bank's official staff occurred in 1978. Guy H. Edwards was promoted to Vice President in the Computer Services Department succeeding Bipin C. Shah who resigned to accept a position in private industry. Ronald G. Foley became Assistant Vice President for Fiscal Operations. Robert N. Gilmore was named Assistant Vice President of Cash Operations following the departure of Kathleen Holmes who joined a local bank. Arthur L. Morath, Jr., moved up to Assistant Vice President in the Supervision and Regulation Department. Ronald D. Watson was appointed Assistant Vice Presi dent and Lending Officer in the Credit Depart ment. Hugh Chairnoff who previously directed lending and bank services activities resigned as Vice President. Among the new assignments, Frederick M. Manning, Assistant Vice President, assumed responsibility for Planning and Development in the Human Resources Department; he had been in Supervision and Regulation. Joseph J. Ponczka was reassigned to the Department of Supervision and Regulation as Examining Officer after serving as Fiscal Operations Officer. New official appointments were James B. Duffy, Custody Control Officer; James F. Russell, Data Systems Officer; John B. Shaffer, Assistant General Auditor; and William H. Stone, Jr., Assistant Vice President of Bank Services and Regulations Administration. In addition, Glennie M. Matthewson, III, resigned as Assistant Counsel to return to the private practice of law, and former Assistant General Auditor Robert E. Matthews was appointed Vice President and General Auditor of the Federal Reserve Bank of St. Louis. 7 Directors CHAIRMAN John W. Eckman Chairman and President Rorer Group Inc. Fort Washington, Pennsylvania DEPUTY CHAIRMAN Werner C. Brown Chairman Hercules Incorporated Wilmington, Delaware Robert H. Deacon President The Bank of Mid-Jersey Bordentown, New Jersey John R. Biechler President and Chief Executive Officer The Commonwealth National Bank Harrisburg, Pennsylvania Richard P. Hauser Chairman and Chief Executive Officer John Wanamaker Philadelphia, Pennsylvania Jack K. Busby Chairman and Chief Executive Officer Pennsylvania Power & Light Company Allentown, Pennsylvania William S. Masland President and Chief Executive Officer C. H. Masland & Sons Carlisle, Pennsylvania Jean Crockett Chairman, Professor of Finance Wharton School University of Pennsylvania Philadelphia, Pennsylvania Donald J. Seebold President The First National Bank of Danville Danville, Pennsylvania MEMBER OF THE FEDERAL ADVISORY COUNCIL William B. Eagleson, Jr. Chairman and President Girard Bank Philadelphia, Pennsylvania 8 Officers David P. Eastburn, President Richard L. Smoot, First Vice President Konstanty G. Adack, Senior Vice President Edward G. Boehne, Senior Vice President Thomas K. Desch, Vice President Peter M. DiPlacido, Vice President Guy H. Edwards, Vice President Richard W. Epps, Vice President James F. Gaylord, Vice President Hiliary H. Holloway, Vice President and General Counsel W. Lee Hoskins, Vice President and Director of Research Ira Kaminow, Vice President and Economic Adviser Alexander A. Kudelich, Vice President Donald J. McAneny, Vice President and General Auditor G. William Metz, Vice President Lawrence C. Murdoch, Jr., Vice President and Secretary Evelyn G. Battista, Human Resources Services Officer Jack P. Besse, Assistant Vice President and Assistant Secretary D. Russell Connor, Assistant Vice President Samuel J. Culbert, Jr., Bank Services Officer Robert A. Dobie, Examining Officer James B. Duffy, Custody Control Officer Ronald G. Foley, Assistant Vice President Robert N. Gilmore, Assistant Vice President Judith H. Helmuth, Operations Improvement Officer and Assistant Secre a y Paul E. Kirn, Jr., Assistant Vice President Edwin C. Lodge, Statistical Officer Frederick M. Manning, Assistant Vice President Michael J. McGovern, Data Processing and Technical Services Officer Arthur L. Morath, Jr., Assistant Vice President Donald J. Mullineaux, Research Officer and Economist Joseph J. Ponczka, Examining Officer James F. Russell, Data Systems Officer Edward G. Rutizer, Examining Officer Lawrence C. Santana, Jr., Assistant Vice President John B. Shaffer, Assistant General Auditor William H. Stone, Jr., Assistant Vice President Anita A. Summers, Research Officer and Economist Ronald D. Watson, Assistant Vice President and Lending Officer Elizabeth S. Webb, Assistant Counsel January 1, 1979 9 Statement of Condition ASSETS December 31, 1978 $597,958,400 69,000,000 14,807,559 Gold certif icate account................................. Special drawing rights certificate.................... Other cash......................................................... Loans and securities: Discounts and advances............................... Federal Agency obligations........................ United States Government securities......... 78,873,000 395,432,981 5,483,006,156 $5,957,312,137 Total Loans and Securities.................. Other assets'. Cash items in process of collection........... Bank premises.............................................. Operating equipment - net.......................... All other....................................................... Interdistrict settlement account............... 631,137,721 54,999,804 5,373,497 231,692,499 fi37 108.617 Total Assets.............................................. $6,925,173,000 December 31, 1977 $631,731,900 74,000,000 13,089,874 16,025,000 427,007,000 5,384,085,000 $5,827,117,000 341,805,306 55,777,044 5,099,415 98,301,018 -389,371,391 $6,657,550,166 LIABILITIES Note liabilities: Federal Reserve notes $5,198,716,050 Deposits: Member bank reserve accounts.................. U.S. Treasury - general account.................. Foreign......................................................... All other....................................................... 1,081,420,973 208,072,114 8,716,100 20,777,289 Total Deposits.......................................... $1,318,986,476 Other liabilities: Deferred availability cash items.................. All other....................................................... 233,938,372 85,933,602 Total Liabilities. $6,837,574,500 Capital accounts: Capital paid in.... Surplus............... 43,799,250 43,799,250 Total Liabilities and Capital Accounts. . $6,925,173,000 $4,936,380,307 891,232,423 451,661,963 11,855,100 34,175,217 $1,388,924,703 183,013,091 60,935,265 $6,569,253,366 44,148,400 44,148,400 $6,657,550,166 Earnings and Expenses 1977 1978 Current earnings: From U.S. Government securities............. From discounts, advances and miscel laneous sources........................................ Total current earnings............................. $ 420,301,803 2,012,278 4,644,834 424,946,637 Net expenses: Operating expenses (after deducting re imbursable or recoverable expenses) . . . Federal Reserve currency........................... 30,471,978 3,282,514 Total net expenses.................................... 33,754,492 Current net earnings........................................ 391,192,145 Additions to current net earnings: Miscellaneous nonoperating income......... 17,798 Total additions........................................ 17,798 Deductions from current net earnings: Assessment for expenses of the Board of Governors................................................. Loss on sales of U.S. Government se curities (net) ............................................ Loss on foreign currency transactions .... Miscellaneous nonoperating expenses .... 6,578,886 21,744,327 110,142 Total deductions...................................... 30,703,155 Net deductions................................................. 30,685,357 Net earnings before payment to U.S. Treasury ....................................................... $ 360,506,788 Dividends paid................................................... Paid to U.S. Treasury (interest on Federal Reserve notes)............................................... Transferred to Surplus, additions, de ductions (-)................................................... $ 364,810,998 366,823,276 29,573,053 3,185,166 32,758,219 334,065,057 2,219,531 2,219,531 2,061,800 2,269,800 $ 2,634,130 358,221,808 -349,150 $ 360,506,788 2,648,278 6,294,527 11,760 11,016,365 8,796,834 $ 325,268,223 $ 2,606,405 321,384,018 1,277,800 $ 325,268,223 13 Annual Operations OPERATING STATISTICS Millions of dollars Loans to member banks................................... Currency received and counted......................... Coin received and counted............................... Checks handled: U.S. Government checks............................... Postal money orders...................................... All other......................................................... Collection items handled: U.S. Government coupons paid.................... All other......................................................... U.S. Savings Bonds and Savings Notes issued, exchanged, redeemed.................................... Other Government securities issued, exchanged, redeemed......................................................... Transfers of funds............................................... Food stamps redeemed...................................... Thousands of items processed Loans to member banks.................................... Currency received and counted........................ Coin received and counted............................... Checks handled: U.S. Government checks............................... Postal money orders...................................... All other......................................................... Collection items handled: U.S. Government coupons paid.................... All other......................................................... U.S. Savings Bonds and Savings Notes issued, exchanged, redeemed................................... Other Government securities issued, exchanged, redeemed......................................................... Transfers of funds.............................................. Food stamps redeemed...................................... 1977 1978 $ 7,103 4,143 108 $ 12,646 4,667 118 17,183 251 229,296 15,376 250 252,708 146 3,426 1,376 134,965 1,210,730 367 1978 131 3,812 1,314 157,413 1,126,759 391 1977 3,493* 488,400 815,000 774* 445,395 768,198 33,600 6,600 602,200 42,572 7,058 581,964 422 157 22,800 217 900 101,400 566 152 21,953 270 771 105,076 ‘Unrounded data BANKING STATISTICS Member banks at year end............................... Nonmember banks at year end ■........................ 1978 227 153 1977 236 144 15 Reaching Our Publics In the spring the Bank convened a series of Fed Forums to consider ways to revitalize Philadelphia's economy. Prominent speakers traded views with a blue ribbon audience of community, business, and government leaders and a lot of good ideas came out. Research Officer Anita A. Summers, who heads the urban studies unit of our research department, acted as moderator. Vernon E. Jordan, Jr., President of the National Urban League, Inc., was one of the speakers featured in our series of leadership luncheons for 1978. These meetings bring together business and community leaders to hear nationally known figures speak on a variety of topics. Concerts and other Bank-sponsored events helped enrich the cultural life of center-city Philadel phia in 1978. A series of free lunchtime concerts by students of The Curtis Institute of Music and the Philadelphia College of the Performing Arts drew large and enthusiastic audiences to our auditorium. The recitals provide enjoyment to music lovers and give the budding artists valuable experience in performing before live audiences. The bi-weekly concerts continue in 1979. 16 Board of Governors Chairman G. William Miller shared views on membership and other System problems with chief executive officers of member banks during his visit here in December. The discussion was followed by a luncheon in the East Court. During the year we provided numerous special programs for District bankers. One of the most popular remains visits by boards of directors of member banks who hold meetings in our board room. Our East Court was the scene in March and April of an exhibit of 19th and 20th century French, English, and American etchings. The Bank also hosted an exhibit of original crafts created by members of the Delaware Valley Chapter of the Pennsylvania Guild of Craftsmen and showed works by our own employees' Art Club and Camera Club. 17
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