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After the Monetary Control act was passed in changes required by deregulation at home and
1980 there was a period of planning and then they traveled widely abroad to examine subsidcame the time for implementation. On this iaries of Third District institutions. Our Research
Department continued to delve into the economic
schedule, 1983 should be a year of accomplishit
turned
to
be
for
ment and that's exactly what
out
challenges facing the District and the Nation.
Bank
Philadelphia.
Community outreach has been in the Bank's
the Federal Reserve
of
The Bank as a whole made significant progress mainstream for many years and these efforts
toward the goal of matching costs and revenues received particular emphasis in 1983. We haveset
from the sale of services during 1983.
aside a section of this report to describe our outBringing revenues and costs into balance re- reach program in more detail.
I am also pleased that the Third District is sharing
quired action on multiple fronts. Costs had to be
lowered and were. Quality of service had to be in the national economic recovery. We have the
maintained at a minimum and preferably increased. best chance in years to restore noninflationary
It was.
growth as the "norm. " Monetary policy has an
business
New products and new
were essential. important role to play, but a federal budget moving
introduced
Special check services were
and new convincingly toward balance is critical.
I believe that one year provides a foundation for
wire transfer and transportation systems were ininstituwhat happens in the next and the Bank's many
augurated. During the year, 29 additional
tions began depositing checks with us and the accomplishments in 1983 should make it easier
number of new customers increased across the for us to meet the major chal lenges that await us in
spectrum of our other services. Overall, business 1984 and beyond.
volumes grew more than six percent.
Price changes were also required. More appropriate fees were charged for a wide variety of
services. The Bank priced all its check float by the
end of 1983, after we squeezed the level of float
down to a minimum through changes in credit
Edward G. Boehne
President
availability and operating improvements.
While costs and revenues were a major concern,
the Bank's staff scored important accomplishments in other areas during the year. Our Supervision and Regulation people adapted well to the

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3

OPERATIONS
The Federal Reserve Bank of Philadelphia
provides a variety of services to depository institutions in the Third District. During 1983, we found
new ways to expand our services and improve
their value to our customers.

CHECK SERVICES
More than 600 million checks were handled by
this Bank in 1983. Processed items increased
more than 9 percent to an average of 1.7 million
checks a day, and 29 additional institutions began
depositing checks with us in 1983.
During the year we added new premium options
in several of our check programs to provide later
deposit hours and better funds availability to our
customers.
These enhancements were made possible by
recent improvements in our processing operations and by a major reorganization of the air
transportation network the Fed uses to ship
checks around the country. New routes were
added and others changed in order to accelerate
the movement of checks and provide earlier funds
availability.
These transportation improvements helped to
reduce check float and we also acted to offset
some of its other major causes. For example, new
crediting and adjustment procedures were introduced for interdistrict and returned checks. Such
efforts reduced the level of float in this District from
a daily average of about $105 million in the first
quarter of the year to less than $10 million a day in
the final quarter. By year-end the cost of float
which had not been eliminated was incorporated
in our check service fees as required by the
Monetary Control Act.

4

ACH SERVICES
Automated clearing house operations, which
process payments electronically, continued their
rapid growth in 1983. Commercial transactions
registered a major gain of 55 percent while
government transactions were up 14 percent.
Steps were taken during the year to expand the
scope of this service and make it easierto use. For
the first time all types of debits and credits were
accepted at the nighttime deposit deadline, giving
ACH customers greater flexibility and better funds
availability. And corporations were permitted to
make payments to other firms through ACH facilities.
The Federal Reserve feels ACH will become an
increasingly important component of our future
payments system and continues to explore ways
to improve this service.

CASH SERVICES
In meeting the needs of the region, the Philadelphia Reserve Bank issued more than 823
million pieces of currency and received about $10
billion in cash deposits during 1983. Virtually all of
the latter was verified on our new high-speed
currency counting equipment. These machines
can process 1,200 notes a minute while automatically detecting counterfeits and destroying notes
that no longer are fit for circulation. To increase
output we added an extended work shift which
lengthened the hours of our counting operation by
50 percent. This will help us handle growing cash
volumes and, at the same time, improve the quality
of currency in circulation.
A new wrapped coin service, which was announced in March, met with considerable success.
Now depository institutions can order coin either
in bulk form or in conveniently wrapped rolls.
Smaller depository institutions find this service
particularly attractive.

FISCAL AND SECURITIES SERVICES
Savings Bond activity surged in 1983 as the
number of EE Bonds issued by our staff moved
past the million mark. This Bank now issues

Savings Bonds for some 300 area firms that offer
payroll deduction plans for their employees. A
new automated bond processing system was
installed early in the year and it streamlined
operations and provided additional capacity to
handle the volume growth.
With activity up 35 percent in the year, our
book-entry safekeeping service was among the
fastest growing operations in the Bank. This
popular service gives depository institutions the
ability to make deposits, withdrawals, transfers,
and other transactions directly to their book-entry
account at this Bank.
In 1983 the volume of funds transferred overour
Fedwire communication network passed the $3
trillion mark. A new automated communication
switching system became operational in 1983.
The new technology will provide greater operating
efficiency and capacity to support increasing wire
volumes and services in the future.
On-line access to Fedwire was expanded with
the addition of 22 new customers, bringing the
total to 150 institutions. Several new on-line applications were added to permit customers to submit
tenders for new Treasury issues, receive results of
Treasury auctions, and send deposit advices for
Treasury Tax and Loan Accounts.

5

COMMUNITY OUTREACH
This Bank has a long history of community involvement but outreach to its various publics hit a
high watermark in 1983.
Our community affairs staff worked hard to build
new bridges of communication and cooperation
between lenders and local community development organizations. During the year our staff visited
compliance officers at Third District bank holding
companies and called on community leaders in
these same cities. In June we convened a special
conference on the Community Reinvestment Act
and drew more than 150 people with an active
interest in the field.
Our president feels that a good way to find out
about local business conditions is to go and talk
with people on the scene. With this in mind he
hosts a series of working luncheons before each
Federal Open Market Committee meeting. Often
in cooperation with a local banker he invites a
number of local leaders and they sit down and
exchange ideas and information.
The Bank encourages its officers and employees
to participate in professional, civic and community
activities and the number doing so increases year
after year. Economists from our Research Department made particular contributions in 1983 with
service on business development, technology
and tax groups. Our executives and staff are especially active in efforts to revitalize the region's
economy.
Our people currently lend their management
and professional skills to help such diverse organi-

6

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zations as the Community Leadership Seminar
Program,the Philadelphia Fellowship Commission,
American Red Cross, Pennsylvania Hospital, the
Afro-American Historical and Cultural Museum,
and the Philadelphia Museum of Art.
Several of our executives hold key leadership
positions in local professional organizations such
as the Bank Administration Institute, American
Institute of Banking, and Philadelphia Finance
Association which foster continuing education
and professional development.
Many diverse groups visit the Bank and among
our most special guests are senior citizen groups.
A typical program might include a lecture, discussion, film, tour, and sometimes lunch. We take
as many such groups as we can and there is quite
a waiting list.
The Bank is committed to promoting economic
education in our schools. During the past year our

staff conducted many special seminars for area
teachers to broaden their understanding of our
financial system. We are now working with the
local school system to develop a program to teach
basic economic principles in the lower grades.
And our many business and financial publications,
films, and other educational materials are designed
to inform and reach a broad segment of the public,
as are the numerous speeches given by our officials and staff to business, professional, and service groups.
In the spring we reached out to a different audience when we co-sponsored a special economicsand-the-law seminar for federal judges. Judges
often are required to adjudicate complicated business and financial disputes and the two-day program focused on current economic developments
and principles.

The Bank tries hard to maintain good relations
with the media. In 1983 we responded to hundreds
of requests for information and interviews; we
called on editors and reporters around the District;
we invited a number of newspeople to informal
background luncheons in the Bank; and we conducted well-attended press conferences on topics
of regional interest.
As a good neighbor, this Bank makes some of
thefacilities in its new building availablefor use by
selected non-profit organizations. During 1983
more than 80 different groups, ranging from the
Boy Scouts of America to the Minority Arts Resource Council, held meetings on our premises.
The continuing series of free noontime concerts
in our auditorium and art exhibits in the Eastburn
Court provided enjoyment to thousands of visitors
as well as to our own employees in 1983.

7

EXECUTIVECHANGES
Robert M. Landis, partner in the Philadelphia
law firm of Dechert, Price & Rhoads, was redesignated Chairman of the Board of the Philadelphia
Reserve Bank for 1984. Mr. Landis also was appointed to a new three-year term as a Class C
director of the Bank.
Nevius M. Curtis, president and chief executive
officer of Delmarva Power & Light Company, Wilmington, Delaware,was reappointed Deputy Chairman of the Bank for 1984. Both appointments
were made by the Board of Governors of the Federal Reserve System.
Member banks elected two new directors in
December. John H. Walther, chairman and chief
executive officer of New Jersey National Bank,
Trenton, New Jersey, was elected a Class A director by large member banks in the District. He
succeeded Roger S. Hillas, chairman and president, Provident National Bank in Philadelphia.
Carl E. Singley, dean and professor of law, Temple
University School of Law in Philadelphia, was
elected a Class B director by medium-sized member banks. Mr. Singley succeeded HarryA. Jensen,
director and former chief executive officer of Armstrong World Industries, Inc., Lancaster, Pennsylvania.
The Board of Directors of the Philadelphia Reserve
Bank appointed Raymond J. Dempsey, chairman
of the board and president of Fidelity Bank in Philadelphia, to represent the Third District on the

Federal Advisory Council in 1984. He succeeded
John H. Walther, chairman and chief executive
officerof NewJersey National Bank, Trenton, New
Jersey, who was a member of the Council from
1981 to 1983.
Among the executive changes in 1983, John D.
Johnson resigned as executive vice president of
the Bank in December to pursue a career in the
private sector. He had been in charge of the
Bank's service departments: cash, check and fiscal operations.
John M. L. Gruenstein was promoted from research officer to vice president and economist in
the economic research department where he heads
the urban/regional studies section.
Malcolm T. Humphrey joined the Bank's official
staff in July as systems development and support
officer in the computer services department. He is
responsible for applications development and
maintenance for the Bank's computer support
systems.
Mary M. Labaree was appointed to the Bank's
official staff effective January 1,1984, as operations officer-direct access securities, in the fiscal
operations department.
After more than 40 years of service, AlexanderA.
Kudelich retired as senior vice president in September. BarryJ. Cummings resigned as data communications officer in the computer services department.

9

DIRECTORS
Chairman
Robert M. Landis, Partner
Dechert, Price & Rhoads
Philadelphia, Pennsylvania
Deputy Chairman
Nevius M. Curtis, President and Chief Executive Officer
Delmarva Power & Light Company
Wilmington, Delaware

George E. Bartol, III, Chairman
Hunt Manufacturing Company
Philadelphia, Pennsylvania
JoAnne Brinzey, Cashier and Chief Executive Officer
First National Bank at Gallitzin
Gallitzin, Pennsylvania
Eberhard Faber, IV, Chairman and Chief Executive Officer
Eberhard Faber, Inc.
Wilkes-Barre, Pennsylvania
Richard P. Hauser, Chairman and Chief Executive Officer
John Wanamaker
Philadelphia, Pennsylvania
Douglas E. Johnson, Chairman and President
Ocean County National Bank
Point Pleasant, New Jersey
Carl E. Singley, Dean and Professor of Law
Temple University School of Law
Philadelphia, Pennsylvania
John H. Walther, Chairman and Chief Executive Officer
New Jersey National Bank
Trenton, New Jersey
Member of the Federal Advisory Council
Raymond J. Dempsey, Chairman and President
Fidelity Bank
Philadelphia, Pennsylvania

January 2,1984

10

OFFICERS
Edward G. Boehne, President
Richard L. Smoot, First Vice President

Konstanty G. Adack, Executive Vice President
Thomas K. Desch, Senior Vice President
and Lending Officer
Donald F. Doros, Senior Vice President

Robert A. Dobie, Assistant Vice President
Judith H. Helmuth, Operations Planning
and Control Officer
Eugene E. Hendrzak, Statistical Officer

James F. Gaylord, Senior Vice President
Hiliary H. Holloway, Senior Vice President
and General Counsel
Donald J. Mullineaux, Senior Vice President
and Chief Economist
William H. Stone, Jr., Senior Vice President
Ronald D. Watson, Senior Vice President

Malcolm T. Humphrey, Systems Development
and Support Officer
Jerry Katz, Compensation and Benefits Officer
and Assistant Secretary
Alan L. Kiel, Staffing and Development Officer
Robert H. Klein, Assistant Vice President
Mary M. Labaree, Operations Officer - Direct
Access Securities

Peter M. DiPlacido, Vice President
James B. Duffy, Vice President
Ronald G. Foley, Vice President
Stanley J. Forst, Vice President
John M. L. Gruenstein, Vice President
and Economist
Richard W. Lang, Vice President
and Associate Director of Research
Donald J. McAneny, Vice President
and General Auditor
Lawrence C. Murdoch, Jr., Vice President
and Secretary
Terence B. O'Brien, Vice President
Lawrence C. Santana, Jr., Vice President
Jack P. Besse, Assistant Vice President
James E. Burns, Financial Accounting Officer
James M. Cleary, Technical Services Officer
Edward J. Coia, Assistant Vice President

Thomas B. Lambinus, Budget Officer
Frederick M. Manning, Assistant Vice President
and Community Affairs Officer
Janice M. Moulton, Research Officer
and Economist
Joseph J. Ponczka, Examining Officer
Aris Protopapadakis, Research Officer
and Economist
Edward G. Rutizer, Examining Officer
Louis N. Sanfelice, Assistant Vice President
and Assistant Secretary
John B. Shaffer, Assistant General Auditor
Ronald R. Sheldon, Data Services Officer
Charles J. Sullivan, Jr., Assistant Vice President
Vish P. Viswanathan, Assistant Vice President
Elizabeth S. Webb, Assistant Counsel

January 2,1984

11

STATEMENTOF CONDITION
ASSETS
Gold certificate account
Special drawing rights certificates
Other cash
Loans and securities:
Discounts and advances
Federal Agency obligations

United StatesGovernmentsecurities
Total loans and securities

Other assets:

Cash items in process of collection
Bank premises - net
Operating equipment - net
All other
Interdistrict settlement account
Total assets

December30,1983

December 31,1982

$ 541,000,000
225,000,000
17,578,762

$ 554,000,000
225,000,000

158,300,000
288,405,972
5,022,743,875

100,470,000
297,836,122
4,519,356,629

$5,469,449,847

$4,917,662,751

376,149,904
49,971,600
6,951,642
265,624,218
145,518,490

299,075,089
51,170,428
7,884,894
334,446,700
363,665,237

13,379,786

$7,097,244,463

$6,766,284,885

$5,856,106,598

$5,560,027,923

LIABILITIES & CAPITAL ACCOUNTS
Note liabilities:
Federal Reserve notes
Deposits:
Reserve accounts of depository institutions
U.S. Treasury - general account
Foreign
All other
Total deposits
Other liabilities:
Deferred availability cash items
All other
Total liabilities
Capital accounts:
Capital paid in
Surplus
Total liabilities and capital accounts

12

731,869,750
0
6,600,000
12,413,067

$ 750,882,817

815,918,349
0
8,610,000
21,204,701_

$ 845,733,050

268,120,511
80,188,837

172,841,270
68,101,342

$6,955,298,763

$6,646,703,585

70,972,850
70,972,850

59,790,650
59,790,650

$7,097,244,463

$6,766,284,885
I

EARNINGS AND EXPENSES
1983

1982

$502,849,580

$524,668,313

17,201,591
17,332,387

28,640,328
14,867,390

$537,383,558

$568,176,031

47,326,691
4,059,102

45,509,325
1,392,678

$ 51,385,793

$ 46,902,003

$485,997,765

$521,274,028

699,610
2,178

2,806,247
631

Currentearnings:

From U.S. Government securities
From discounts, advances and
miscellaneous sources
From services to depository institutions
Total current earnings

Net expenses:
Operating expenses (after deducting
reimbursable or recoverable expenses)
Cost of earnings credits
Total net expenses
Current net earnings
Additions to current net earnings:
Gain on sales of Government securities
Miscellaneous nonoperating income
Total additions

$

Deductions from current net earnings:
Assessment by the Board of Governors:
Board expenditures
Federal Reserve currency*
Loss on foreign currency transactions
Miscellaneous nonoperating expenses

701,788

$

2,806,878

3,214,900
8,308,678
20,077,085
12,783

2,579,800
4,524,082
6,134,101
46,687

$ 31,613,446

$ 13,284,670

Net deductions

$ 30,911,658

$ 10,477,792

Net earnings before payment to U.S. Treasury

$455,086,107

$510,796,236

Dividends paid
Paid to U.S. Treasury (interest on
Federal Reserve notes)
Transferred to Surplus, additions

$

$

Total deductions

4,024,901

3,393,998

439,879,006
11,182,200

500,598,188
6,804,050

$455,086,107

$510,796,236

*The 1982 Annual Report showed this item as an addition to net expenses.

13

SUMMARY OF OPERATIONS
OPERATING STATISTICS
MILLIONS OF DOLLARS

1983
Loans to depository institutions
Currency received and counted
Coin received and counted
Checks handled:
U.S. Government checks
Postal money orders
All other
Issues, redemptions and exchanges of
U.S. Government securities
Transfers of funds
Food stamps redeemed

$

11,820
10,372
144

1982
$

20,309
8,923
147

29,102
323
373,814

49,388
306
315,351

1,234,068
3,070,076
482

789,506
2,267,636
443

THOUSANDS OF ITEMS PROCESSED
Loans to depository institutions
Currency received and counted
Coin received and counted
Checks handled:
U.S. Government
Postal money orders
All other
Issues, redemptions and exchanges of
U.S. Government securities
Transfers of funds
Food stamps redeemed
*Unrounded data.

FEDERAL
RESERVE
BANKOF
fHILADELI'HIA
Ten Independence Mall, Philadelphia, PA 19106

1,987*
863,400
875,000

1,750*
780,200
907,100

30,400
6,300
609,600

34,300
6,200
605,900

13,100
2,100

14,200
2,000

120,800

118,600

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