View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

RESERVE
BANKOF PHILADELPHIA
THEFEDERAL
ANNUALREP0RT1990

AN

ow

ORAL
HISTORY
OF THE
YEAR.

..ý, .
Adw

ýýý

P
I
ýro
jý

-ý. ý
ý
r
º-

ý

ableOf Contents

President'sLetter
Two
...............................................................................................................................
Introduction
Four
.......................................................................................................................................
The New RegionalDelivery System
Five
.................................................................................................
ContingencyPlanning
Six
.........................................................................................................................
Supervisionand Regulation-

The International Perspective
Seven
.....................................................

CommunityReinvestmentAct

Eight
.........................................................................................................

Implementationof the Bank's New Check System
Nine
........................................................................
Data Security
Ten
......................................................................................................................................
Electronic FundsTransferServices...............................................................................................
Eleven
Twelve
Quality Assurance
........................................................................................................................
Thirteen
Renovationof the Check AdministrationArea..........................................................................
The RegionalEconomy
Fourteen
.............................................................................................................
Sixteen
De Novo Banking in The Third District
......................................................................................
Eighteen
Board of Directors
......................................................................................................................
Nineteen
Officers
.......................................................................................................................................
Twenty-One
Advisory Councils................................................................................................................
Twenty-Two
Statementof Condition........................................................................................................
Twenty-Three
Earningsand Expenses.....................................................................................................
Operating Statistics..............................................................................................................
Twenty-Four

resident'sLetter
TheFederal
Reserve
thedifferent
manyhats.Theyrepresent
wears
inwhichweoperate
spheres
andinclude
monetary
policy,cash,check
bankexamination,
regulation,
andelectronic
payments,
consumer
TheFederal
Reserve
protection,
andcommunity
alsoserves
affairs.
as
thegovernment's
itschecking
mainbank,keeping
accounts
andhelningto handle
itsIOUs.
ThustheFederal
Reserve
BankofPhiladelphia
isa multi-faceted
Wehavepeople
organization.
withawidevariety
ofskillsandexperienceauditors
andeconomists,
managers
and
mechanics,
clerksandcarpenters,
evendoctors
andlawyers.
Wehavea Board
thatincludes
ofDirectors
bankers,
business
people,
andcommunity
fromallsortsof
leaders.Ourstaffcomes
backgrounds-ethnic,
geographical,
and
educational.
Someofouremployees
cookfood,some
teachwhileotherskeepbooks,
conduct
outside
meetings
or program
Mostall ofthembringa sense
andpride
ofdetermination
computers.
totheirwork.
State-of-the
inmanyareas
artautomation
supports
ourpeople
themtotransfer
or prepare
payrolls
at
enabling
money,
clearchecks
Electronics
linkourstaffto otherinstitutions,
astounding
speeds.
theworld.
largeandsmall,around
theDistrictandaround
in1990.
ManyoftheBank's
werenoteworthy
accomplishments
froma number
Forthisreport,
ofdifferent
people
areas
weselected
during
themtotell,in theirownwords,
whathappened
andasked
theyear.
including
Youwill hearfrommanyactivities
ournewcontingency
theBank's
functions
essential
planning
onkeeping
effort.Itfocuses
2

running
shouldsomecatastrophe
occurtoourbuilding,
computers
or
We've
beenthrough
theplanning
elsewhere.
andtestingandtheprogramnowis operational.
Qualityisouroperational
watchword,
andwehavehadspecial
fora number
programs
qualityimprovement
ofyears.In1990,teams
DirectDepartments
weresetupintheAccounting
andTreasury
and
byyear's
goodresults
wereevident
end.
Banks
to make
theirCommunity
andthriftswererequired
Actratings
Reinvestment
begunafter
publicforallexaminations
July1,1990.Thisraised
a number
ofquestions,
andwereached
out
ina variety
thisBankis producing
ofways.Inaddition,
withanswers
to explain
aSystem
movie
ratings
andotherCRAmatters.
Thenational
during1990andbyyearendwas
economy
slowed
Inresponse,
the
tobeina recession.
generally
acknowledged
Federal
Reserve
eased
policyusingallthreeofitsmajorinstruments.
Through
thekeyfederal
fundsratewas
openmarket
operations
times.Reserve
requirements
werelowered
reduced
several
selectively
thediscount
ratewasreduced.
andin December
Although
theseactions
tooffsetweakness
inthe
weredesigned
thecurrent
policymakers
alsohadto lookbeyond
economy,
needfor
lag,andwemustbe
ease.Monetary
policyoperates
withasignificant
lestexcessive
stimulation
created
nowlingersintothenext
concerned
inflation.
recovery
whenit wouldservetoincrease

Edward
G.Boehne

3

Introduction

Mostannual
tellaboutthemajorevents
ofthe
reports
different
hereis
pastyearandsodoesthisone.What's
thatthewordscomefromthepeople
onthescene.
Throughout
theyear,theyachieved
goalswithuncomdirection
promising
andwill,preparing
usfora more
technologically
eraof
complex
andhighlysophisticated
banking.
Asyouturnthepages
ofour"oralhistory"
you'llfind
fromthepeople
to
stories
andcomments
whoworked
FirstVicePresident

4

meetthosegoals.
People
fromeverylevelofouroperations
spoke
in
franklyaboutwhathappened
intheirworkplaces
1990.Thestoriesarefrank,oftenserious
andattimes
humorous.
Let'shearwhattheyhavetosay...

he NewRegionalDeliverySystem
Spring,1990-A majorchangein thewayU.S. SavingsBondsarehandledtookplacein
theThirdDistrict.UndertheTreasury's
System(RDS)program,
newRegionalDelivery
financialinstitutionsin Pennsylvania
* Theycanonly
stoppedissuingsavingsbonds.
andsubmitthemto theFedfor processing.
acceptordersandpayments

intheSavings
Consequently,
BondDivision
hadtoadapt
toacompletely
ourpeople
newwayofdoingbusiness.
Annie Ward,FiscalOfficer
Wereallyhad
"Oh,yes. Ourwholebusiness
changed.
We
down
together
andput
anoperation. hadto writ:
sit
procedures,
rewriteprocedures.Wehadto controlour
problemstr
work,andwedid thatverywellconsidering
poppedup. It wasdifficultat times,but wegotthrough
Mary Beth Butkus, Manager
"Ourcustomers
hadto adaptto a fairlyradicalchange
butthanksto theeffortsof ourcustomers
andthecoopera"
tionof ourstaff,thetransitionwentverysmoothly.
Customer
ServiceLiaisonOpeialor

Tammie
Kaminsky,Coordinator
Wedefinitely
haveaninteresting
situationaroundhere
It'sabsolutely
duringtheholidays.EvenHalloween!
howmanypeopleboughtbondsfor giftsaround
amazing
October
31. / imaginethesamewill happenthisyear.
Dayorat
Whether
it's Halloween,
LaborDay,Veteran's
Christmas
the
holidays,
everybody
needs
- around

"
a bond!
JacquelynJames, DataEntryClerk
"RDSreallypulledus together
asa team.
Mary Davidson,Supervisor
"Flexibilitywasthethingthatweneeded
mostduringthe
training,to beableto stopandstartatanymoment,to go
direction.lt's still the
fromentering
to verifying,to change
biggestneedandvirtuethatanRDSdataentryoperator
canhave.

"Thestatesof NewJerseyandDelaware
forconversion
toRDSby theSpringo11991
arescheduled
5

Contingency
Planning
OneoftheBank's
hightoitscustomers
isto provide
majorcommitments
reliable,
disruption.
Asaresult,
qualityelectronic
payments
services,
without
significant
be
fully
to
deal
wemust
prepared withacrisis,suchasaserious
outage
computer
In1990ourcontingency
or lossofthebuilding,
andensure
aprompt
recovery.
fordisaster
concentrated
planning
people
onthemanylevelsoftesting
readiness.

Alan Kiel, AssistantVicePresident
and
Contingency
PlanningOfficer
'Surprise!A surprisetestthatis.It wascarriedouton October1,andrequiredthemobi' computer
lizationof fivecriticalapplications,
operations
andtechnical
supportto ourtwo
sites.It wasa longnight,but we
recovery
weresatisfiedwiththeresults.Theoperationswererecovered
to pointof failureand
thisis absolutely
,.
crucialin a realdisaster.
(Securities
Jack Kelly, Manager
Division)
"It'sa majoraccomplishment
to beableto
fullyreconcilewithourcustomers
aftera disOur
testing
aster. contingency
covered
all the
in
bases,
and theeventof therealthing,we'd
comeprettycloseto a full recovery...

Melita Saunders,
FiscalOperations
Assistant
"Theworldcantstopforsix hours:we'vegot
to keepthesecurities
movingandthebusinessgoing.
RonSheldon, AssistantVicePresident
and
Officer
DataSystems
"It won'tcomebackto biteyou...everytime
wehaveasurprisetest,it givesusa chance
to fix aglitch,andin therealdisaster,we've
"
got it covered.

' (Funds,Securities,
ACH.Treasury-Direct
IAS)
andAccounting

6

Tom0 Malley,Emergency
Operations
Assistant,
keeping
oneanother
postedon
latestcontingency
plans.

AlanKiel

f
Supervision
andRegulation-The International Perspective
increasAstheglobalmarketplace
theworldbecome
changes
andcountries
around
inglyinterdependent,
S&R teamalsobegins
to facesomemajor
ourinternational
banks
Among
themweremore
toexamine,
challenges.
procedures
morecomplex
time
in
lands
far
from
home.
andmore

I

SteveHoffman, VicePresident
of International
Examinations
"Whileona recentexamin Brazil,/ reallybeganto havean
for thejob theFederal
Reserve
System
doesin
appreciation
controllinginflationin ourcountry.Thisreallyhit home
when,whilewaitingfor a flightbackto the U.S.,wedecided
to havea drinkat theairportcafe.Bythetimeweordereda
secondround,thepricehadgoneup! Whenthathappens,
timeto get outof thecountry.
"
you knowit's definitely
Elisabeth Videira-Dzeng,Assistant
Examiner
"Intheinternational
areaof S&Rweareprimarilyresponsiblefor theexamination
of subsidiaries
of Edge
Corporations.
Wedetermine
based
whichonesto examine
ontheirsize,howsignificanttheyareto theoverallorganitheyhaveproblems.Theteam
zationandwhether
to theseinternational
is important
to our
approach
exams
function,andtogetherwedecidewherethebiggestproblemsare,andwhichareasof thesesubsidiaries
needto be
targeted.
As theglobalscenechanges,
theproblemsthese
bankshavechange
too."
John Deibel, International
Examinations
Officer
"In ourarea,manyof us spend25percentof theyearaway
fromhome- for threeandfourweeks
at a time. Thatby
itselfcanbea realchallenge!
"
TomTweedale,Supervising
Examiner
'All of usarerecognizing
thatthere'smoreandmore
beingpaidto theexposures
attention
of largebanksthat
comeby wayof theirinternational
operations.
Consequently,
we'vereallyneededtostepup ourinternationalinvolvement.We've
invested
a lot moreeffortand
humanresources
to ensurethatthesubsidiaries
weare
forabroadareoperating
responsible
as soundlyasthe
here."
onesweexamine

Community
Reinvestment
Act
tothepublic.This
Banks
theirCRAratings
available
andthriftsnowmustmake
toallexaminations
applies
started
afterlastJulyfirstandisoneof
requirement
incommunity
reinvestment
procedures
madein1990.
several
majorchanges
Community
Theyadded
andour
uptoabusyyearforbothourexaminers
Department.
Affairs

Jc, E]

Examiner
JohnFields,Senior
"ThenewCRAlegislationhascaused
many
of thebanksto takea closelookat their
internal
practices.It'sgiventhema chance
In manycasesit's
to reviewtheirmethods.
andthe
reallybroughtthecommunities
to coordinate
bankstogether
effortsin determiningthecreditneedsof thosecommuni"
tiesin whichthebanksoperate.

8

,.,

[iJl'Piä JO1IIiS

Bonita Jones, Supervising
Examiner
Thebasicpurposeof theCRAlegislation
wasto prohibitbanksfromredliningin certainurbanareas,andto ensurethatthecredit needsof therespective
communities
were
met. Thepublicdisclosure
of theCRAratit better.Thebanks
ingsimplyenforces
definitive
evidence
of their
mustnowshow
A
lot
the
banks
performance. of
needour
helpto interprettherules,tojust helpthem
CRA."
alongin understanding

%:2'1"': "

FredManning, VicePresident
and
Community
AffairsOfficer
I thinkthestageis beingsetfor meaningful
by
involvement
in community
revitalization
districtbanks.Morepeoplearepaying
to thesubjectof CRA,andthenew
attention
legislationthatwentinto effectlastsummer.
There
thatbankers
area lot of questions
We've
beenout
to
have
need
answered.
there,givingspeeches
to manygroups,
theirquestions,
answering
andtakingcalls,
closeto 4,000callson CRAalone!We'rethe
information
link nowas bankers
learnwhat
CRAlegislation
requiresof them,andhow
theyneedto goaboutmakingchanges.
"

mplementationof the Bank'sNewCheckSystem
During1990,thisBankcontinued
workona majornewsystemwhichwill improve
through'91and
everyfacetof checkprocessing.Theimplementation
will continue
'92. Someof theparticipants
tell usabouttheeffortbehindthetransition.

i

Development
EdMorrison, Systems
Officer
"Oneof themajorreasonsfor replacing
thecurrent
systemis to improveourabilityto offerimproved
"
qualityandservicesto ourcustomers.

ArunJain, Check
PlanningOfficer
Its newarchitecture
thatwill
- newtechnology
positionus to takeadvantage
of futuretechnolothatwill enhance
gy. We'vedesigned
something
"
everyaspectof ourcheckprocessing.

John Hampton,SectionHead
Wecollaborated
a lot of effort,andtalent.I hadinput
in thewholeprocessandthatmademefeelgreat."

Ron Lowicki, SectionHead
Anytransitionis alwaysa concern.But.fromwhatI've
impresseenso far,thewholeprocessis beinghandled
involved
peoplefromeverylevelof
sively.Management
in itsdiscussion
CheckOperations
andplannings
knows
everybody
essentially
gnat:n ,"7ctable.and
less
to
moreor
what expect.
_ ....

...:

ýI..,..,

. ,.

Data
Security
TheBank
Reserve
System
treatinformation
andtheFederal
collected
andgenerated
We
focus
high
level
intheconduct
ofourbusiness
asanasset.
a
ofattention
onthe
protection
oftheinformation
assets
usedtosupport
andoperate
ourBank.Wewant
financial
loss
through
fraud,
toeliminate
thepossibility
of
malicious
penetration
or
Wedothisbyimplementing
DataSecurity
careless
operation.
policies
andproceintotheday-to-day
duresthatareintegrated
operations
oftheBank.
Bill Evans, VicePresident
Services
of Computer
TheBankcontinued
to emphasize
theimportance
of
DataSecurity
in
1990.
Recognizing
operations
our
rolein thepayments
mechanism
andtheconfidence
in
Fed
by
financial
the
theBank
placed the
community,
strivesto achievethehighestlevelsof DataSecurity
possibleto protectourinformation
assets.Our
thevalueofprotectingour
employees
understand
information
assets.TheBankhasa DataSecurity
Administration
staffthatmetregularlywiththeBanks
departments
andconducted
securityawareness
proThe
the
future
be
grams. challenge
of
will maintaining
duringrapid
ourcurrenthighlevelof DataSecurity
"
technological
in
advances computing
capabilities.
AlannaKelton, DataSecurity
Administrator
Establishing
DataSecuritycontrols
theappropriate
a greatdealof meticulous
,equires
attention.The
Administration
puta
operating
areasandDataSecurity
of of hardworkintotheDataSecurity
programin 1990
d expectto continuethisin thefuture."
DataSecurity
Ed Vine, Manager,
Administration

H
.e

di. u A anila

oftheirlatestfindingsto Bili Evans
(standing).

10

l'e hada longlistof initiativesto achieve
thispast
ar. I'm happywiththe waywecarriedoutjustabout
e,erything.Oneof theimportant
aspectsof ourjob is
have
in
the
technical
*r;
we
projectsat
: eparticipation
theBank.Wemakesurethatall of theseeffortsmeet
for theprotectionof information.Our
ourrequirements
development
the
of management
guidefor information
securitywasa bigplusfor us. Thismanualcontains
thesafeguards
by whichtheFederal
Reserve
System
"
protectsits dataassets.

Electronic
FundsTransferServices
transferring
Every
day,over$50billionpasses
through
ourBankelectronically,
payments
amongFederal
In1990,we
Reserve
Banks,
institutions,
in asafe,efficient
depository
manner.
andgovernment
agencies
impressive
in
Electronic
Funds
improved
thereliability
andexperienced
growth our
of oursystems
PCproduct
Transfer
Many
"Fedline,
"
Federal
Reserve
toaccess
avariety
services. customers
use
a
of
in 1990,anditsservice
Ourexperience
Fedline
menu
expanded.
withthegrowth
services.
wasimproved
EFTcanexpect
in thecoming
in service
inFedline
hasgivenusaflavorofthetrends
years.
volumes
JeannineButcavage,
Manager,
Funds
Transfer/Fedline
Support
Thesystemsthatmovebillionsof dollarseach
dayneedto bereliable.Theymustbeableto
recoverfromanysortof problemincludingfires
Lastyearwemadea number
andearthquakes.
of procedural
andtechnical
to improve
changes
ourabilityto restoreservicelevelsin theevent
of aproblem."

TomLombardo,Manager,
ACH
"Manycorporations
areseeingthatACHproto paper-based
videsanefficientalternative
payments,
andas such,we'veseensignificant
"
growthin ourACHbusiness.

CassSheerer, SectionHead
Thespeedat whichtransactions
occurin our
lt's important
thatwekeep
areais phenomenal.
alertandbeprepared
to handleallsituations
withlittleadvanced
notice."
.:

'i J rl'1S. Lice

Clerk,TomLombardo,
CassSheerer
andJeannine
Butcavage
collaborate
on
an EFTproject.

Bob Bucco, VicePresident,
Electronic
Funds
Transfer
Services

Suzan.
L, aýla'.
isý.eFi.
consultswith BobBucco.

"Theyear1990wasoneof growthandimprovmentWeare
thesmallestFedgeographically,
but wearemovingup
FundsTransfer
businessquicklyin termsof ourElectronic
to be,providinghigh
es. Ourchallenge
was,andcontinues
is involvedwithmanyothqualityservices.Ourdepartment
erareasof theBankbecause
the
of Fedline
productwhich
Through
Fedline,
wesupport.
we'veassistedtheFiscalarea
Delivery
System'initiativethatautomatwiththeir'Regional
the
Savings
Bonds
edportionsof
process.Similarly,EFT
Department
workedcloselywiththeAccounting
to automate
thedeliveryof accounting
to ourcustomers.
We,
statements
in turn,receive
invaluable
supportfrommanyareasof the
Bank,especially
CSD."

11

Qualiry
Assurance
In 1990,twodepartments,
Treasury
DirectandAccounting,
formedofficial
100percent
"qualityimprovement"
teams.Thegoalwasto encourage
participationoftheworkforcein qualityimprovements.

Officer,Treasury
Direct
Hank Kern, Operations
to geteverybody
involved,
"Wewanted
andmakethemfeel
important
thattheircontributions
to
are
us.Anysuggestion
take
theemployees
comeup with,we
underconsideration
sincethesearethepeoplewhoareclosestto thework."
BarbaraBagby, Secretary,
Treasury
Direct
"People
tendto put forthamuchbettereffortwhenthey
haveinputin determining
whatit takesto maketheirjob
moreefficient.You're
notjust anisolatedworker.
You're
for
an invaluable
partof a team.Thisis essential
"
employee
morale.
Barry Pitfs, Supervisor,
Treasury
Direct
Directis to processrein"Oneof thefunctionsin Treasury
forms
for
securities.Theycanberejected
request
vestment
for anynumberof reasons,
andthenaresentbackfor
Theproblemis thatsomeof thesecurities
resubmission.
are
closeto maturity,buttheywouldbemixedin withtheother
Sooneday,aclerksuggested
thousands
of blueenvelopes.
for theexception
items,so
get
cherry
colored
envelopes
we
they'llstandoutandgetprocessed
immediately.
Thiswasa realwinner.
"

a
Jere:?

O` Cv e'yr.

R,

i. recieýV

Q&Ateams'progress
with
Steven
P. Cohen.

StevenP. Cohen,VicePresident
andController,
Accounting
"Ourgoalwasto havefull employee
participation
- working
towarda common
goalto improvethequalityof workin their
areas.I'm impressed
withmanyof theideasourpeople
cameup with,andtheyreallydoseemto enjoywhatthey

Denlýe
N,'els!

doa lotmore.
"
Clerk
EvelynRyant,General
Accounting
'Asa teamleader,/ reallylearnedaboutwhatpeopleneed.
Wediscussproblemsandstriveto meetreasonable
goals.
Andmostimportantly,
youneverfeelalone.Honestyis a
"
majorkeyto thesuccess
of thisprogram.
Denise Weist, SeniorReportAnalyst,Accounting
"It'simportant
to meetregularly,to keepthemomentum
to
keepyourteammembers
and
postedwithnew
goingideas,developments
"
andresponses.

12

Bar,) Pats(standing)
o:. recantrc aovas.

enovationof the CheckAdministrationArea
Administration
thisyear
Amajorrenovation
areawascompleted
ofourCheck
in ordertobetterutilizespace
amoreefficient
andpleasant
work
andprovide
fortheemployees.
area

JerryG,c` 22},Moore
anoEarsLaR-egetting
; raseoneof renovations
-ier way

Jerry Groff, FacilitiesSpace
Planner

RoyMoore, BuildingSuperintendent

Earl LaRue,Supervisor,
ElectricalServices

"Oneof ourmajoraccomplishments
wasmovingthe
Automated
Clearing
HouseDepartment
out of theadministrationarea.It's nowmuchmoreaccessible
sincewe
it closerto thebuildingcore.Theentireareais
relocated
/
moreefficient.
muchcleaner,nicer,andhopefully,
thinktheemployees
feeltheyaremorea partof theteam

but
"Therenovations
werenecessary,
wesuredomakea lot of noise. Trying
to avoidthatis a majorfeat.As aresult,
wehadto domuchof theworkwhenthe
peoplearen'tthere.Andthatmeans
andafterhours.It justgoes
weekends
the
territory.
"
with

"There's
a greatdealof planningthatgoesintoany
likethis.It startswiththearchitects
majorrenovation
then
andengineers, I getit andmakethenecessary
Welookat thebigpicture notjust that
changes.
that
area needswork. Wehaveto makesurethat
we'vegot consistency
andthatit worksin relation
to otherareasof thebank.Andthebiggestthing
wehaveto beconsiderate
of theworkersof
thoseareas."

thantheydidpreviously.
"

13

he RegionalEconomy
TheResearch
Department
themajor
ofthisBankclosely
monitors
oftheThirdDistrict
economy,
compiling
andanalyzing
sectors
data.
One
important
regional
ofthestaff'ssenioreconomists
1990
brought
discusses
to
theThirdDistricteconomy
and
what
inthisdecade.
whatwecanexpect

M. Crone,Assistant
VicePresident
Theodore
andEconomist
/ thought
fortheeighth
As theyearbegan,
yearofeconomic
wewereheaded
growthin thenationandin theThirdDistrict./ wasnotalonein thisbelief.Wegot
hadclearly
offtoa goodstart,butbyyear'sendtheeconomy
stumbled.
Were
there
Sure.Factory
jobshadbeendeclinanyearlysignsofweakness?
Fed'ssurvey
ingforsometime,andrespondents
tothePhiladelphia
ofmanufacturershadbeenreporting
decreases
in output.Theconstruction
industry
wasalso
bothcommercial
contracts
andhousing
weak;
startswere
below
1989
levels.
running
Theservice-producing
industries,
whichforthepast
yearshadkepttheregional
economy
growing
seven
industries
faltered,
thegoods
when
showed
signsby
thattheywouldnotbepickinguptheslack
mid-year
in 1990.
Thefinalblowto theeconomywasa sharpdropin
confidence
afterIraqsinvasionof Kuwait.
consumer
Retailers
feltthebruntof theslowdownduringtheholidayseasonassalesfellbelowthepreviousyear'slevels.

InourDistricttheeconomic
hadamajorimpactonstateandlocal
slowdown
finances.
Lagging
taxrevenues
totheCityofPhiladelphia's
fiscal
contributed
in NewJersey
taxreceipts
crisis.Andlower-than-expected
andPennsylvania
haveleftthosestates
withsignificant
revenue
shortfalls.
When
turnupagain?Mostanalysts
anticipate
willtheeconomy
a resumption
by
ofgrowth mid-1991.
however,
Changing
demographics,
willhaveamajoreffectonthepaceof
lookfortheeconomy
in thenext
growth,
andwecanexpect
a different
economic
10years.
WorldWarII andthesubsequent
Because
drop
erafollowing
ofthebaby-boom
1972and1978,
thepopulation
in thenumber
andlaborforce
ofbirthsbetween
willgrowmoreslowlyin the1990s.

14

Certain
than
regions
ofthecountry
willbeaffected
morebythe"birth-dearth"
in Pennsylvania,
NewJersey,
others.Combined
population
growth
andDelaware,
forexample,
thenational
laborforcegrowth
rate.Thisarea's
willlagfarbehind
thanthenation's.Overall,
laborforcegrowthin the
willalsobeslower
annual
threeDistrict
is projected
tobelessthanonepercent.
states
combined
Wein theResearch
Department
howthese
trendswill
arerepeatedly
asked
in theregion.Asthenumber
tothelaborforce
affectbusinesses
ofnewentrants
difficulty
in fillingentry-level
shrinks,
employers
willexperience
particular
and
part-time
positions.Withtheirlargerpart-time
workforces,
retailers
especially
hardfornewemployees.
willhavetosearch
Housing,
There
too,willbeaffected.
willbeless
because
in the1990s
there
ofa needfornewhomes
Annual Growth Rateof the LaborForce
willbefewer
3
peoplein theagegroup25to34,the
buytheirfirsthome.
yearswhenmostpeople
Ona brighternote,thechangingdemographics
of the1990swillhelpsomesegments
of the
economy,
suchasautos.Thefastest-growing
groupin the1990swillbethe35-to-54-year-olds,
typicallythegroupthatbuysthemostnewcars.

2.5

2.5

2
1.6
1.5
1

1.0

1.2 1.2
0.9

Also,baby-boomers
a large
willbeproviding
between
the
poolofmature,
0.5
experienced
workers
agesof45and54. Theirworkexperience
should
0
helpraiseproductivity.
US
ThreeDistrict
States
Howwillthesedemographic
ofthe
changes
1990s
well-being?
affecttheregion's
economic
Although
jobgrowthwillbeslower,unemploytorisetothehighlevels
mentratesarenotexpected
is expected
toprovide
jobs
enough
oftheearly1980s.Theregion's
economy
laborforce.Increased
tofullyemploy
theslower-growing
productivity
should
Third
District
do
Bythese
the
should well
alsoraiserealincomes.
measures,
in the1990s.
"

0.8

1.1

0.7

PA

NJ

N

1980s'
Acr,al N

1990sProjected

15

DNovo
Bankingin the Third District
e
it maybe
Withthenumber
in thelastdecade,
ofbankmergers
andclosures
bothherein the
hardtobelieve
thatnewbanks
to open.However,
continue
"
ThirdDistrictandin thenation,
thegrowth
"de
the
to
of novos, termused
describe
banks
lessthanfiveyearsold,hasbeenimpressively
prolific.

ThomasK. Desch,SeniorVicePresident,
Supervision
& Regulation
"Since1985,74
havebeenchartered
in the
newbanks
ThirdDistrict.Infact,thisfive-year
totalactually
thenumber
thatopened
in the
exceeds
ofdenovos
50-year
previous
period!
Their
isn'tbadeither,considering
performance
thatsince1985,
onlya singleThirdDistrictdenovo
hasfailed.Notsurprisingly,
thecrisisin thefinancial
industry
hasoften
tended
toobscure
in banking
anypositiveorsignificant
evolution
- and
bymanyin thosecommunities
yet,theirarrivalis welcomed
where
theyopen.
Ofcourse,
basicelements
thereareseveral
forthemtosucnecessary
ceed,
suchasa soundmanagement
style,andanabilitytomake
goodcredit
decisions,
is another
important
among
otherthings.A healthy
economy
factorthatcan'tbeoverlooked.
Sowhydonewbanks
in lightofallthebankfailures?
open- especially
When
deregulation
institutions
began,
offinancial
weallknewthata lotof
didn'tanticipate
consolidations
wouldtakeplace.However,
wecertainly
largenumbers
toreplace
thosethat
ofnewbanks
comingintoexistence
According
tonewbankcharter
thereasons
theyopen
applications,
merged.
havebecome
quiteclear.
Firstof all, thelargerexistinglocalbanksareperceived
to havehada
to devotelessandlessattention
to smallercustomers'
tendency
needs,
businesses.
In
this
they
fill
ideal
thoseof small
case,
an
especially
niche,
Secondly,
andonethatreallybenefitsthecommunity
wheretheyoperate.
therearestaffreductions
atmergedinstitutionsthatservetoprovideaready
Manyofthese
bankersin themarketplace.
supplyof available
experienced
bankers
areseniorlenderswhohaveloyalclientsfollowingthemto new
sourcesof fundsandcustomized
services.

16

to
banking
makeit appear
Finally,thearrivalofintrastate
andinterstate
Asa result,
investment
opportunities.
investors
thatbanks
serveasvaluable
has
"seed"
money
hundreds
since1985,
ofmillionsofdollarsofinvestor
tostartbanks.
beenmade
tolocalentrepreneurs
available
they
oftotalassets,
Whilenewbanks
onlyasmallpercentage
represent
However,
in ourcommunities.
function
mostdefinitely
serveanimportant
because
theyareespecially
pronetomistheydorequire
special
attention
thatnew
mustworktoensure
takesin theformative
regulators
years.Thus,
institutions
aspossible.IntheThirdDistrict,
andsafely
operate
assoundly
this
therehasbeenonlyonefailurein thelastfiveyears.Hopefully,
"
exemplary
record
canbemaintained.

III

iio
iI
i

«_. i -A

`ý. ýý;

--

ý-------)

ý.:. .ý......,.
ii

CE, iA[

`

ý

ý ,-ý

1-'
-ý_

---- ;- {r,.. ý'4
ý_:..

\`I----

I-.JT

wiF

;: -ý ý

-\

, EýýIE

rIe.u5

11

.

,y

l

oE«a.
n_--'_
_..,.-ý"; n
ý/Y
= ;`'ýo
ýý..
ý\ . ý`^
i
`>
'

x.

, =c _A_ !ýi

7-.--

`ti

l. uGip

ýý
1

Locationof NewBanks
0 National
StateMember
StateNonmember

17

Board
of Directors
Peter
A.Benoliel,
Chemical
Corp.,wasreappointed
chairman
ofQuaker
aschairboard
In
January
the
the
Federal
Reserve
Bank
Philadelphia
for
1990.
manof
of
of
DavidW.Huggins,
RMSTechnologies,
Inc.,tookofficeasa ClassB
president,
director,
Carl
Singley,
Esquire,
A. McCullough,
succeeding E.
chairman
andSamuel
Meridian
Bank
became
Class
A
director,
andchiefexecutive
officerof
a
succeeding
George
A.Butler,
thenchairman
andchiefexecutive
officerofFirstPennsylvania
Bank,N.A.
LaterintheyearDeputy
Chairman
Gunnar
E.Sarsten,
chairman,
president
and
Engineers
& Constructors
Inc.andGaryE.Burl,
chiefexecutive
officerofUnited
Delaware
National
Bank,resigned
fromtheboard.
H.Bernard
Lynch,
president,
BankofWyoming
president
andchiefexecutive
officerofTheFirstNational
was
Class
A
director,
Mr.Burl.
elected
a
succeeding

Chairman
PeterA. Benoliel
Chairman
Corp.
QuakerChemical
Conshohocken,
PA
Constantinos
I. Costalas
Chairman,
President
and
Officer
ChiefExecutive
Glendale
NationalBankof NewJersey
Voorhees,
NJ
DavidW Huggins
President
RMS Technologies,
Inc.
Marlton,NJ
H.BernardLynch
President
Officer
andChiefExecutive
TheFirstNationalBankof Wyoming
Wyoming,
DE

18

SamuelA. McCullough
Chairman
Officer
andChiefExecutive
MeridianBank
Reading,
PA
JaneG.Pepper
President
ThePennsylvania
Horticultural
Society
Philadelphia,
PA
NicholasRiso

Executive
VicePresident
AholdU.S.A.
Harrisburg,
PA
CharlesF Seymour
Chairman
Co.
Jackson-Cross
Philadelphia,
PA

Officers

SeniorVicePresident
In1990,Edward
J. Coiawasnamed
with
forTreasury
Direct
responsibility
andtheFiscalDepartment
to Senior
VicePresident
andPeterM.DiPlacido
waspromoted
Operations.
Robert
J.Buccomoved
uptoVice
ofCheck
Jr.
Services;
WilliamEvans,
President
Funds
ofElectronic
Services
M.
became
VicePresident
ofComputer
andStephen
Hoffman
VicePresident
of International
wasappointed
Examinations.
toVicePresident
JerryKatz
of
waspromoted
Vice
Human
Resources;
Frederick
M.Manning
wasnamed
M.Tadeo
President
Community
Affairs
Milissa
moved
and
of
In
in theCashDepartment.
otherofficial
uptoVicePresident
Assistant
Vice
Gerard
Callanan
to
A.
changes,
waspromoted
ShirleyL.Coker
President
wasnamed
ofBudget
andPlanning;
to
Assistant
Counsel;
Michael
E.Collinswaspromoted
Examination
JohnJ. Deibel
became
Review
Officer;
Jr.
Robert
N.Downes,
International
Examinations
Officer
and
VicePresident
Assistant
and
wasappointed
ofApplications
Vice
Assistant
Surveillance.
Frank
E.Eisel,
Jr.wasnamed
President
Check
Operations;
Arun
Jain
in
wasappointed

Planning
officerin chargeof thenewCheckSystemProject;
Officerin the
HenryT.Kernwaspromoted
to Operations
Treasury
DirectDepartment;
CamilleM. Ochman
wasappointVice
President
in
Check
Operations;
PatrickM.
Assistant
ed
Regan
to Assistant
VicePresident
waspromoted
andTechnical
Officer;
Sherrill
Shaffer
Assistant
Vice
Services
wasappointed
President
RonaldR.Sheldonwasnamed
andEconomist;
VicePresident
Officer;Herbert
E.
Assistant
andDataSystems
Taylormovedupto Assistant
VicePresident
Assistant
and
SharonN.Tomlinson
Secretary;
to Assistant
waspromoted
VicePresident
A. Valente
of HumanResources
andRichard
Fiscal
became
AuditOfficer.AnnieR.Wardwasappointed
Officer;Bernard
M. Wennemer
Assistant
Vice
wasappointed
Commercial
Examinations
Anthony
J.
White
President
of
and
to
Financial
Services
Officer.
waspromoted

Inchanges
Assistant
VicePresident
ofofficialassignment,
Kiel
Quality
AlanL. assumed
forboth
responsibility
and
Contingency
Planning
Vice
President
John
B.
Shaffer
and
Administrative
Services
Department.
totheGeneral
returned

Stephen
A. Meyer
VicePresident
Directorof Research
andAssociate

Edward
G. Boehne
President

Robert
J. Bucco
President
Vice

William
H.Stone,
Jr.
FirstVicePresident

Jr.
J. Warren
Bowman,
VicePresident

DonaldF.Doros
Executive
VicePresident

Steven
P.Cohen
VicePresident

JamesF.Gaylord
Executive
VicePresident

RobertA. Dobie
VicePresident

Edward
J. Coia
SeniorVicePresident

WilliamEvans,Jr.
VicePresident

Benjamin
L. Nadola
VicePresident

Thomas
K.Desch
SeniorVicePresident
andLendingOfficer

JoannaH. Frodin
VicePresident

LouisN.Sanfelice
VicePresident

PeterM. DiPlacido
SeniorVicePresident
RichardW.Lang
SeniorVicePresident
andDirectorof Research
RonaldB. Lankford
SeniorVicePresident

Manager
Product
andCheck
M.Hoffman
Stephen
VicePresident

JerryKatz
VicePresident
M.Mahon
Edward
VicePresident
andGeneral
Counsel
M. Manning
Frederick
VicePresident
AffairsOfficer
andCommunity

DonaldJ. McAneny

VicePresident
Auditor
andGeneral
Lawrence
C.Murdoch,Jr.
VicePresident
andSecretary

JohnB. Shaffer
VicePresident
MilissaM. Tadeo
VicePresident
VishP. Viswanathan
DeputyCheckProductManager

Gerard
A. Callanan
AssistantVicePresident
andPlanningOfficer
ShirleyL. Coker
AssistantCounsel
MichaelE.Collins
Examination
ReviewOfficer
Theodore
M. Crone
AssistantVicePresident
andEconomist
JohnJ. Deibel

International
Examination
Officer
PatrickL. Donahue
AssistantVicePresident

Robert
N.Downes,
Jr.
Assistant
VicePresident
Jr.
FrankE.Eiset,
Assistant
VicePresident
E.Hendrzak
Eugene
Assistant
VicePresident
ArunJain
PlanningOfficer

HenryT.Kern
Officer
Operations

MarieTkaczyk
Assistant
VicePresident

AlanL. Kiel
Assistant
VicePresident

SharonN. Tomlinson
AssistantVicePresident

MaryM. Labaree
Assistant
General
Auditor

AnnieR. Ward
FiscalOfficer

Thomas
P.Lambinus
AssistantVicePresident

S. Webb
Elizabeth
AssistantCounsel

EdwardMorrison
Systems
Development
Officer

M. Wennemer
Bernard
AssistantVicePresident

CamilleM. Ochman
AssistantVicePresident

AnthonyJ. White
Services
Officer
Financial

PatrickM. Regan
AssistantVicePresident

Richard
A. Valente
Officer
Audit

Edward
G.Rutizer
Assistant
VicePresident
SherrillShaffer
Assistant
VicePresident
andEconomist
Richard
A.Sheaffer
Assistant
VicePresident
RonaldR.Sheldon
AssistantVicePresident
Herbert
E. Taylor
AssistantVicePresident
andAssistantSecretary

20

Advisory
Councils
to exchange
TheBank's
fouradvisory
councils
meetregularly
withseniorofficers
The1990members
important
information
oftheadvisory
problems.
anddiscuss
listed
below.
councils
are
Credit Union
Advisory Council

Community
Bank
Council
Advisory

Chairwoman
Teresa
C. Trudeau
Southwest
Germantown
FederalCreditUnion

Chairman
Dennis
W.DiLazzero
Minotola
National
Bank

DeputyChairwoman
RitaL. Masselle
IMD
FederalCreditUnion
ElisaP.Alexeeve
Trenton
Auto Workers
FederalCreditUnion
MartinJ. Banecker
President
Campbell
Employees
FederalCreditUnion
WilliamComrey
Pennsylvania
Central
FederalCreditUnion
RobertW.Edmondson
AtlanticEmployees
FederalCreditUnion
AliceR.Gift
Rohm& HaasDel-Val
CreditUnion

MarvinJones
DowJonesEmployees
FederalCreditUnion
JohnH. Marsh
JelloEmployees
FederalCreditUnion
ShirleeNicolino
MerckSharp& Dohme
FederalCreditUnion

DeputyChairman
J. LaMaina,
Jr.
Lawrence
Farmers
Bankand Trust
Company
of Hanover
Gerard
M. Banmiller
Bank
Community
National
ofNewJersey
AdolphF. Calovi
SunNationalBank

Small Business/
Agriculture
Advisory Council

ThriftInstitutions
AdvisoryCouncil

Chairman
WalterP.Lomax
LomaxHealthSystems

VirgilP. Moir,Ill

Progress
Federal
Savings
Bank,

DeputyChairman
Gottfried
Schweidler
Woodrite,
Inc.

DeputyChairman
Stephen
D. Miller
FirstHomeSavingsBank

MarilynAbabio
Paragon
Uniforms

RonaldW.Bevan
Delaware
SavingsBank,FBS

CharlesC.Bylone
Vineland
Produce
Auction

PearlH.Brown
Gloucester
CountyFederal
SavingsBank

Jr.
WilliamW.Carlough,

DonaldClark
ClarkSeedCompany

BankofNew
TheFirstNational
Jersey/Salem

WilliamJ. Gordy
GordyFarms

Robert
E.Dickerson
Baltimore
TrustCompany

E.Holtzhauser
Thomas
Holtzhauser
Farms

JaneC.Diebert
SchuylkillHavenTrustCo.

CynthiaHudson
Waterfront
Corporation

AgnesJones
National
Bankof
TheGrange
County
Susquehanna

Eleanor
Marquisee
ArdenFilms& Video

FrankKaminski,
Jr.
Independent
Bank
Pennsylvania
H.BernardLynch
TheFirstNationalBankof
Wyoming

Mazzei
Robert
Bank
Constitution
MelvinPankuch
BlueBallNationalBank

HaroldSchuler
HaroldSchulerFarms

Chairman

SLA

FrankM. Calletta
EmpireSavingsBank,SLA
RonaldA. Goerner
Doylestown
FederalSavings
Loan
Association
and
CarlF.Gregory
ThirdFederalSavings
andLoan
Association
I. Maximilian
Martin
Berean
Savings
Association

LarryR. Weaver
Farm
Weaver

JamesD.Potts
FidelitySavingsandLoan
Association
of BucksCounty

AbramS. Zeiset
ZeisetFarms

JackW.Shader,
Sr.
HarrisSavings
Association
Gregory
L. Walker
Huntingdon
SavingsandLoan
Association

JoAnneSimpson
ChrycoNewark
FederalCreditUnion
FrankWielga
Pennsylvania
StateEmployees
CreditUnion
21

Statement
of Condition
ASSETS
Goldcertificate
account
Special
drawing
rightscertificates
Other
cash- coin
Loans
andsecurities:
Discounts
andadvances
Federal
agency
obligations
U.S.government
securities
Totalloansandsecurities
Other
assets:
Cashitemsin process
ofcollection
Bankpremises-net
Operating
equipment-net
All other
Interdistrict
settlement
account
Totalassets

DECEMBER
31,1990

DECEMBER
31,1989

$ 384,000,000
319,000,000
30,928,799

$ 400,000,000
247,000,000
33,396,947

24,375,000
184,681,067

45,427,000
188,280,688

6,846,363,252
$ 7,055,419,319
527,316,353
44,951,528
15,521,947

6,544,053,928
$ 6,777,761,616

442,143,977
45,870,427
10,354,006
1,778,717,181
862,235,410

1,631,609,702
(701,622,953)
$ 9,307,124,695

$10,597,479,564

$ 7,077,839,408

$ 7,703,029,054

LIABILITIES
ANDCAPITAL
ACCOUNTS
Noteliabilities:
Federal
Reserve
notes
Deposits:
Reserve
institutions
accounts
of depository
U.S. Treasury
account
- general

Foreign
All other

Totaldeposits

1,773,896,908
0
6,750,000
1,712,685
$ 1,782,359,593

1,942,863,835
0
7,350,000
38,169,346
$1,988,383,181

132,244,127
84,333,567

619,328,657
86,780,872

Otherliabilities:

Deferred
availability
cashitems
All other
Totalliabilities

Capital
accounts:
Capital
paidin
Surplus
Totalliabilitiesandcapital

$ 9,076,776,695
115,174,000
115,174,000

$ 9,307,124,695

$10,397,521,764

99,978,900
99,978,900
$10,597,479,564

Earnings
and Expenses
1990
Current
earnings:

$ 577,158,997
119,715,469
34,801,129

1989

$731,675,595

$ 572,880,876
53,384,917
33,690,691
$ 659,956,484

Netexpenses:
Operating
(afterdeducting
reimbursable
expenses)
expenses
Costof earnings
credits
Totalnetexpenses

71,613,230
12,304,551
$ 83,917,781

60,132,759
10,190,699
$ 70,323,458

Currentnetearnings

$ 647,757,814

$ 589,633,026

1,832,900
96,272,600
3,128
$ 98,108,628

374,603
62,602,870
3,555
$ 62,981,028

FromU.S. government
securities
Fromdiscounts,
advances
andmiscellaneous
sources
Fromservicesto depository
institutions

Totalcurrent
earnings

Additionsto currentnetearnings:

Gainonsales
of government
securities
Gainonforeigncurrency
transactions
Miscellaneous
income
nonoperating
Totaladditions
Deductions
fromcurrent
netearnings:
Assessment
bytheBoard
ofGovernors:
Board
expenditures
Federal
Reserve
currency
Miscellaneous
nonoperating
expenses
Totaldeductions

4,531,200
6,150,167
14,620,193*
$ 25,301,560

$ 13,438,078

Netadditions/(deductions)

$ 72,807,068

$ 49,542,950

Netearnings
before
toU.S.Treasury
payment

$720,564,882

$ 639,175,976

$ 6,268,895
699,100,887
15,195,100

$ 6,070,853
635,905,173
(2,800,050)

$720,564,882

$ 639,175,976

4,339,100
5,051,423
4,047,555*

Distribution
ofearnings:
Dividends
paid
Reserve
PaidtoU.S.Treasury
(interest
notes)
onFederal
Transferred
to/(from)
surplus
Netearnings

* Includes
Treasury
nonreimbursed
services

Operating
Statistics
1990

Millionsofdollars
Loans
institutions
to depository
Currency
received
andcounted
Coinreceived
andcounted
Checks
handled:
U.S.government
All other
Issues,
redemptions
andexchanges
of
U.S.government
securities
Transfers
offunds
Foodstamps
redeemed

$

4,172
12,448
179

1989
$

6,265
13,182
176

29,205
1,109,841

28,191
1,032,200

4,745,465
18,478,987
564

3,623,004
14,199,500
392

1,469*
1,078,620
239

1,965*
1,122,300
234

26,440
1,053,180

27,790
985,360

16,986
5,045
114,788

18,370
4,900
78,200

Thousands
of itemsprocessed
Loans
to depository
institutions
Currency
received
andcounted
Coinreceived
andcounted
Checks
handled:
U.S.government
All other
Issues,
redemptions
andexchanges
of
U.S.government
securities
Transfers
offunds
Foodstamps
redeemed

data
'Unrounded

Designby NGSAssociates
Photography
by H.MarkWeidman
Textandprojectcoordination
Mancini
by Rossana
Printingby theFederal
Bankof Philadelphia
Reserve

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