View original document

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

Contents
2

President’s Message

7

Introduction

9

Promoting Economics and Personal Finance

11

Fostering Community Development Initiatives

14

Educating Bankers in the Third District

17

Teaching Others about the Economy: Research’s Role

20

Making Check Processing More Efficient: Check 21

23

Training Employees for the 21st Century

27

Board of Directors

28

Councils

31

Operating Statistics

32

Current Officers

33

Statement of Auditor Independence

34

Financial Reports

55

Key Bank Contact Information

www.philadelphiafed.org | 1

President’s Message

T

he theme for our 2004 annual report is “Shar-

When people know how to assess economic costs and

ing Our Knowledge.” Knowledge is integral

benefits, they make better decisions about how much

to everything we do as individuals and as a

to spend, where to invest, and what career to pursue.

society. Each of us accumulates knowledge, and we

When voters understand the fundamental workings of

use and share it as part of every purposeful activity in

the economy, they support better public policy choic-

which we engage. Our organizations and institutions

es, both in their local community and for the nation. In

do likewise.

short, well-informed economic decisions and well-un-

As the nation’s central bank, the Federal Re-

derstood economic policies are the building blocks for
success in a market economy and

serve provides a financial environment that fosters sustained economic growth and a financial system
that is reliable and accessible to
all. In pursuit of these objectives,
we often share our knowledge, and
we do so enthusiastically, because
the more knowledgeable we make
our constituencies – be they consumers, bankers,

educators, the

public at large, or our own employees – the closer we can come

All across the country,
the Federal Reserve
System is playing a
valuable role in
educating young
people about the
financial system and
its role in a
market economy.

to achieving our goals.
In this opening letter, I

a democratic society.
As president of this Bank, I
see every day how sharing knowledge helps the Federal Reserve
achieve its mandated mission – as
monetary authority, as bank regulator, and as payments system provider.
For instance, by helping
people understand the cross-currents affecting the economy and
articulating the value of a stable
price environment, we at the Fed

will give you a quick overview of the ways in which

strengthen the public mandate for a monetary policy

the Federal Reserve Bank of Philadelphia endeavors

that promotes full employment and sustainable eco-

to share its knowledge and the rationale behind those

nomic growth. Moreover, by maintaining an open dia-

efforts. The essays that follow will convey to you the

logue with academia, civic leaders, and the business

texture and substance of our programs. Along the way

community, we advance our collective knowledge

you will meet some of the many people at the Bank

about the economy, and hopefully, we make better

involved in their development and delivery. I hope you

policy decisions ourselves.

will find these efforts and the impact they are having as
exciting as I do.

As a regulator, the Federal Reserve is responsible for promoting safe and sound practices in the bank-

As an economist and a former professor, I am

ing industry. Over time, industry conditions change,

doubly aware of the value of economic education.

new laws are enacted, and new regulations are written.

2 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

By keeping the bankers in our District up-to-date on

forms of payment offer. Again, sharing our knowledge

these developments, we help them adapt more read-

is an important part of meeting the challenge. The Fed

ily to changing standards. The Fed also oversees the

aims to keep both financial institutions and their cus-

industry’s compliance with many consumer protection

tomers up-to-date on developments in electronic pay-

laws. Here we aim to educate not only the financial

ments, including current standards for processing trans-

institutions but the consumers themselves about their

actions, disclosure of fees, protection from fraud, and

protections under the law. Sharing our knowledge with

recourse in the event of an error. The Fed also keeps

both sides and building a common understanding are

legislators up-to-date on payments technology, so that

surely the best ways to ensure that the law achieves its

they can establish standards that provide both reason-

intended purpose.

able safeguards and ample opportunity to innovate.

The Federal Reserve is also responsible for

So sharing our knowledge helps us achieve

maintaining a reliable and efficient payments system.

our mission in all its dimensions. But how do we actu-

This is an area where new information technology is

ally go about sharing this knowledge?

driving tremendous change. Consumers and businesses
are rapidly relinquishing paper transactions – handling

Reaching Our Constituencies

cash or writing checks – in favor of electronic ones,

When it comes to providing economic educa-

swiping a card or logging on to a computer. The chal-

tion to the individual, we have developed a three-part

lenge for the Fed is to preserve the reliability we have

approach. First, we support programs that help young

all come to expect from paper-based payments without

people learn more about economics at school. Second,

diminishing the convenience that the new electronic

we support programs that help adults get the back-

The wisdom and
leadership of our Board
of Directors are of
inestimable value
in guiding the Bank
through changing times.

Federal Reserve Bank of Philadelphia President Anthony M. Santomero (center right) with (left to right) Doris Damm, Deputy
Chairman, Board of Directors; Ron Naples, Chairman, Board of Directors; and Federal Reserve Bank of Philadelphia First Vice
President William H. Stone, Jr.

www.philadelphiafed.org | 3

ground they need to handle their immediate economic

nomic education and financial literacy to adults across

and financial decisions. Third, we offer programs that

the District. Financial literacy is a person’s best defense

help the public at large understand the ever-changing

against financial fraud and abuse, and so we seek to

structure of the U.S. economy.

offer people financial education before they fall vic-

Supporting economic education for school-

tim to unscrupulous business practices. Like any good

age children is at the core of our efforts because we

inoculation program, financial education is most ef-

recognize that broad-based economic education now

fective if it is targeted at the most vulnerable among

will translate into a society of more financially literate

us. In this case, the most vulnerable are older people,

adults in the future. Unfortunately, the basic concepts

people in low- and moderate-income communities,

of economics and finance often receive only cursory treatment in many
schools. Sometimes, they are excluded
altogether. As a consequence, graduates enter adulthood ill-equipped to
make good life choices about their
careers or their personal finances. This
situation has led the Bank to focus on

and those with a poor credit history.

Financial education
is most effective
if it is targeted at
the most vulnerable
among us.

programs that integrate economics and

We provide both literature to consumers themselves and curricula to those
who counsel and instruct them.
As a regulator, the Fed specifies the
information that financial institutions
must provide in the disclosure forms
they give their customers. But these
disclosures are useful only if consum-

finance more fully into school curricula at all levels. We

ers can read and understand them. So we think sup-

also provide teachers with presentations and seminars

porting financial literacy is an essential element of our

to enhance their own background in these subjects and

approach to effective regulation.

with classroom materials and training on their use. By

But our posture is not a purely defensive one,

working with schools and teachers, the Philadelphia

geared to protect the consumer from harm. Over the

Fed can leverage its knowledge resources and have a

long term, we hope to help all consumers master the

substantial impact.

basics of money management, empowering them to

We are not alone in this effort. All across the

take control of their financial futures. An example of

country, the Federal Reserve System is playing a valu-

our success in this endeavor is our faith-based financial

able role in educating young people about the financial

education initiatives, which have been quite effective

system and its role in a market economy. Each Federal

in making inroads in communities around our District.

Reserve Bank has its own economic education special-

Yet our young and at-risk populations are not

ists and tailors its programs to the needs and resources

the only ones that need education. In today’s rapidly

of the District it serves. With our Bank situated on Inde-

changing world, education is becoming a life-long pro-

pendence Mall in the heart of historic Philadelphia, we

cess for virtually everyone. Recognizing that the Bank

offer the visiting public “Money in Motion,” a history-

has a part to play in that process, we have expanded

based look at central banking in the U.S. By partnering

our efforts to keep the public up-to-date on changes in

with area educators, we are now leveraging the exhibit

the financial landscape. We are continually enhancing

as an educational resource for area students.

our “Money in Motion” exhibit. For instance, in 2004

The Bank also has been active in bringing eco-

4 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

the new $50 bill made its debut. We held several

events to educate the public about currency authen-

of programs to brief Third District bankers on recent

ticity and to point out the security features of the new

changes in the law and to discuss emerging trends in

bill. In addition, we produced brochures on consumer

the financial services industry.

credit topics such as identity theft and credit card
Building Our Knowledge

fraud.

We are pleased to share our knowledge and
Networking with the Research Community

contribute to the continual learning process of our con-

Our research economists maintain close ties

stituencies. But we too must be continual learners if we

with a number of the major colleges and universities in

are to pursue our mission effectively. Recognizing this,

our area. Many of our economists are
engaged in the national and international academic scene, as well. And
we often host prominent scholars for
a semester or more of research and interaction here in the Bank. This rich
network of knowledge-sharing helps
advance the frontiers of economic
science.
Engaging the Banking Community
The Philadelphia Fed also

our Bank has been quite active in de-

The Philadelphia
Bank has been quite
active in developing
educational programs,
not just for its own
employees but for the
entire Federal Reserve
System.

veloping educational programs, not
only for our own staff members but
for our colleagues across the entire
Federal Reserve System. Our Professional Education Program (PEP) and
its partner, ePEP, combine traditional
classroom and technology-based instruction to provide a high quality
“blended learning” experience for all
business lines throughout the System.
Through this program, we help the

made a significant investment in edu-

Federal Reserve build the knowledge

cating the banking community during

it needs to meet the challenges of a

2004. In October, the payment system took an im-

changing world.

portant step forward with the enactment of the Check

I am proud of all of the contributions to educa-

Clearing for the 21st Century Act. Check 21, as it is

tion and knowledge sharing that the Philadelphia Fed

known, establishes the legal structure necessary to en-

makes. I believe they make a difference in our District’s

able the transition from paper to electronic check pro-

communities, in the financial services industry, and

cessing. To take full advantage of this new opportunity,

across the Fed System. As I said at the outset, I believe

the Federal Reserve launched an aggressive program

they serve us well in the pursuit of our mandated mis-

to move all retail payments to electronics. To engage

sion. As you read this report, I hope you come to share

the banking community in this effort, the Bank ac-

my perspective.

tively shared its knowledge about the implications of
Check 21 with District banking leaders and kept them
informed about the evolution of Federal Reserve payments processing throughout 2004.

Board of Directors
In the context of this year’s report, it is particularly fitting that we recognize the contribution of our

Aside from developments in payments, our

Board of Directors, who share their knowledge with

bank supervision and regulation staff offered a number

us so generously. Their wisdom and leadership are of

www.philadelphiafed.org | 5

inestimable value in guiding the Bank through these
changing times.

A Closing Thought
Before closing, I will mention that Philadel-

I am pleased to report that Ronald J. Naples,

phia’s role in the monetary policy decision-making

chairman and CEO of Quaker Chemical Corpora-

process is now somewhat more pronounced because

tion, has been reappointed chairman of the Board of

2005 is a voting year for Philadelphia on the Federal

Directors, and Doris M. Damm, president and CEO of

Open Market Committee (FOMC). As many of you

ACCU Staffing Services, has been reappointed deputy

know, the FOMC consists of 12 Federal Reserve Bank

chairman of the Board of Directors for 2005. In ad-

presidents and the seven members of the Board of Gov-

dition, P. Coleman Townsend, chairman and CEO

ernors and sets the course for monetary policy. While

of Townsends, Inc., has been re-elected to a second

all Fed presidents attend and contribute to the discus-

three-year term.

sions, only five vote on the final decision. The voting

We greatly look forward to the counsel and

schedule is dictated by the Federal Reserve Act and

guidance of our newest Board member, Wayne R.

is done on a rotating schedule of one-year terms. So

Weidner, chairman of National Penn Bank. At the

expect the Philadelphia Reserve Bank to be even more

same time, we offer our sincere thanks to Walter E.

closely watched in the year ahead.

Daller, Jr., chairman, president, and CEO of Har-

At times like this, I especially appreciate the

leysville National Corporation, who completed his

strong support I receive from the Third District busi-

term of service on our Board of Directors. His insights

ness community, our Board of Directors, our Research

will be missed.

Department, and the Bank’s advisory councils, as well

I would also like to acknowledge the contribution of Rufus A. Fulton, Jr., chairman and CEO of

as from all of the employees who keep us in touch with
the Third District.

Fulton Financial Corporation. We had the pleasure of
his service for three years on our Board (1997-2000),
and he represented the District admirably on the Federal Advisory Council (FAC) from 2001 to 2004. In his
stead, we are also pleased to announce that Bruce L.
Hammonds, president and CEO of MBNA Corporation,
has been appointed to represent the Third District on
the FAC. On behalf of all of us here at the Philadelphia

Anthony M. Santomero

Fed, I thank our Board members for their thoughtful

President

insights and commitment to public service.

April 2005

6 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Introduction
Sharing knowledge with its many constituencies
allows the Federal Reserve Bank of Philadelphia
to contribute to the economic vitality of the
Third District and the nation.

www.philadelphiafed.org | 7

Members of the Pennsylvania Governor’s Institute
for the Social Studies came to the Bank to learn
about resources for teaching economics in the
primary grades.

8 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Promoting Economics and
Personal Finance

The Federal Reserve’s primary role is to ensure a sound
financial system and a healthy economy. However,
keeping the financial system and economy sound is
easier when consumers are financially literate.

Andrew T. Hill, Ph.D.
Economic Education Specialist
Community Affairs Department

T

o help consumers become more aware of

Fed’s permanent exhibit, “Money in Motion.” The

money matters, the Federal Reserve System and

curriculum comprises six lessons aimed at different

the Federal Reserve Bank of Philadelphia have

levels: grades three through five, grades six through

renewed their commitment to teaching the public about

eight, and high school. The lessons provide classroom

economics and personal finance. The Philadelphia Fed

activities that prepare students to visit the exhibit, to get

plays a strong role in carrying out this commitment

the most out of the exhibit while they’re here, and to

in the Third District through the work of economic

follow up once they’re back in the classroom.

education specialists such as Andrew Hill in the Bank’s

Also in 2004, the Bank began a series of

Community Affairs Department. Over the past several

evening courses that helped teachers learn how to

years, Hill has helped to develop several new programs

integrate economics and personal finance into their

and expand existing ones.

teaching of reading, writing, and math. This program,
“Economics in Children’s Literature,” showed a group

What’s New
One big undertaking in 2004 involved
developing a curriculum to go with the Philadelphia

of mostly primary-school educators how to incorporate
such lessons using many of the children’s books already
in their curriculums.

www.philadelphiafed.org | 9

In addition, for five days in July, 37 teachers

For the past two years the Bank has been a

came to the Philadelphia Fed to attend a course called

partner in “Money Talks,” a five-day summer course

“Making Sense of Money and Banking.” Modeled after

for Delaware teachers who want to learn how to teach

a similar program at the St. Louis Fed, “Making Sense”

personal finance in kindergarten through grade 12.

shows teachers how to incorporate lessons about eco-

Partners in this endeavor are the Delaware Bankers As-

nomics and the Federal Reserve System into their social

sociation and Citigroup.

studies, consumer science, and business curriculums.

One very successful program over the past

The teachers received professional development credit

few years has been “Keys to Financial Success,” which

and a binder of curriculum materials.

was developed in partnership with

In the past year,
the Federal Reserve
System has renewed

Existing Programs
The Bank also continued to
offer long-standing programs in 2004.
The “Hot Topics in Economics” seminar, which is in its seventh year, invites teachers to come to the Bank one
evening for three short presentations
on topics related to economic and
personal finance issues. For example,
the 2004 program included talks by

its commitment to
teaching the public
about economics and
personal finance.

the University of Delaware’s Center
for Economic Education and Entrepreneurship, the Delaware Bankers
Association, and Community Credit
Counseling Services of Maryland and
Delaware. Originally done as a pilot
in a Newark, Delaware, high school
in the 2001-02 school year, “Keys” has
now grown to 24 high schools in the
First State. Recently, a high school in
Bristol, Pennsylvania, adopted the pro-

various Bank staff on exchange rates,

gram, and the Bank’s economic educa-

health-care costs, and the outlook for

tion specialists are working to expand

the economy.
A program of even longer standing is the Topi-

“Keys” in the Commonwealth. They’re also hoping to
start a “Keys” program in New Jersey.

cal Seminar Series, which has been held for 21 years

At the state level, the Philadelphia Fed’s eco-

in Delaware. This five-night series is sponsored by the

nomic education specialists attend the annual meetings

University of Delaware’s Center for Economic Educa-

of the New Jersey Education Association. At the nation-

tion and Entrepreneurship. The concluding night of the

al level, they participate in a number of conferences,

series is devoted to a speaker from the Philadelphia Fed,

including those of the National Council on Economic

who, last year, made a presentation on the history of

Education and the National Council on Social Stud-

central banking.

ies. Events such as these offer an opportunity to talk to

Of course, throughout the year, Hill and other

teachers around the Third District and the nation and

staff members in Community Affairs are kept busy

let them know about free resources available from the

with many other presentations and conferences. For

Fed.

example, in 2004, the Bank hosted the Pennsylvania

As we move further into 2005 and beyond, the

Governor’s School for Global Entrepreneurship for the

Philadelphia Fed will continue to find innovative ways

third year, welcomed teachers from the Pennsylvania

to fulfill its mission in the economic education and fi-

Governor’s Institute for the Social Studies, and partici-

nancial literacy arena.

pated in the Chamber of Commerce of Southern New
Jersey’s annual Summer Institute for Teachers.

10 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Fostering Community
Development Initiatives

The Bank’s Community Affairs Department has
primarily an informational and educational function.
As part of this function, the department develops
a number of programs and initiatives that identify
issues in low- and moderate-income communities.
Marvin M. Smith, Ph.D.
Economic Education Specialist
Community Affairs Department

A

s part of its mission, the department expands

mixed-income projects, and promoting the importance

opportunities for low- and moderate-income

of good schools. The Bank also co-sponsored another

communities and people by working with

conference for practitioners interested in reclaiming

lenders, government representatives, and community

vacant properties in their Pennsylvania communities,

developers through workshops, seminars, and publi-

an important issue for older towns and cities.

cations. In this way, Community Affairs helps bankers

In addition, Community Affairs conducts or

understand and respond to the credit and deposit needs

commissions research on critical community develop-

of underserved communities.

ment issues. The Bank co-sponsored a seminar with

A major issue being addressed is reinventing

the New York Fed and Rutgers University at which

America’s older communities. In 2004, Community

60 nationally known academic researchers discussed

Affairs held a national conference with speakers and

community development finance strategies. Further-

attendees from across the United States who discussed

more, the department has conducted research on rotat-

ways to make existing communities vibrant and com-

ing credit and savings associations, informal lending

petitive again. Some of the topics covered included

arrangements often used by immigrant populations to

creating 24/7 downtowns, financing mixed-use and

finance small businesses or consumer purchases.

www.philadelphiafed.org | 11

Volunteers learn how to educate others on the importance
of financial education. Pictured with Marvin Smith (center) are some of the volunteers (clockwise from top): Michael Cunningham, New Covenant Church of Philadelphia;
Alberta Wilson, Beulah Baptist Church; Diana Lynch, Eastwick United Methodist Church; and Patsy Harris, Enon
Tabernacle Baptist Church.

12 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

While recognizing the need to highlight community development issues, the Bank also understands

to take a leadership role in providing ongoing financial
education within their houses of worship.

the importance of personal financial education for low-

Patsy Harris of Enon Tabernacle Baptist Church

and moderate-income and minority people. Financially

observed that the Philadelphia Fed “provided an exten-

literate consumers foster a healthy economy. Financial

sive training package we could take back to our church-

education helps people develop the skills to meet their

es and share with our membership. We were able to

objectives, including financial stability, homeowner-

incorporate these training materials into our sessions to

ship, higher education, or retirement. Consequently,

help our members be more informed consumers.”

the Philadelphia Fed and the Federal Reserve System

Michael Cunningham, director of the New

have been actively involved for some time in a num-

Covenant Church of Philadelphia’s Institute for Finan-

ber of key initiatives to educate the public, particularly

cial Success, also attended a train-the-trainer workshop

those who are low and moderate income, on matters of

at the Philadelphia Fed. Cunningham noted, “The ses-

personal finance.

sion stimulated participation and gave attendees the
confidence to facilitate various financial education

Working with Churches

workshops within their own congregations.” In fact, the

Philadelphia meets this challenge by con-

New Covenant Church recently launched a homeown-

tinuing to promote financial education. In particular,

ership program, which will include credit counseling

the Bank launched a faith-based financial education

and loan processing classes taught by graduates of the

initiative in 2004. Leading this initiative is Economic

train-the-trainer workshops.

Education Specialist Marvin Smith. By forging strong
partnerships with faith-based organizations, particular-

Continuing Support and Other Programs

ly in minority neighborhoods, the Bank reaches out to

But the Philadelphia Fed’s efforts do not end

communities and provides people with the tools, train-

with the training workshop. The Bank provides continu-

ing, and information to build a better financial future.

ing support, communication, and encouragement to its

Smith’s programs successfully combine counseling and

program participants. Once the new instructors have

education to trainers, who can then empower congre-

conducted their congregations’ financial education

gants to secure their own financial success.

classes, they have the opportunity to reconvene with

Smith asks religious leaders to identify volun-

their original training group to share experiences and

teers from their congregations to participate in training

offer feedback. At that time, the Fed assists them with

workshops conducted by Community Affairs. During

addressing challenges they have faced and provides

these “train-the-trainer” workshops, volunteers learn

any necessary additional information.

how to teach others about financial matters. These

The Bank will also hold presentations at an

workshops are held at no cost to the house of worship

organization’s request. For example, Smith coached

or the participants.

members of New Covenant Church on how budgeting

The program curriculum includes subjects

works and encouraged participants to develop their

such as credit, checking, budgeting, savings, consumer

own budgets. He also addressed about 1,000 clergy

rights, loans, and homeownership. They are also given

and lay representatives from the northeastern United

valuable teaching tips on different learning styles. Con-

States at a fall 2004 convocation of the African Method-

gregants who have completed the workshop are able

ist Episcopal Church.

www.philadelphiafed.org | 13

Educating Bankers
In the Third District

Supervising banks is obviously a big part of what the
Bank’s Supervision, Regulation and Credit (SRC)
Department does, but it also conducts several highly
successful outreach programs.

Michael E. Collins
Senior Vice President &
Lending Officer
Supervision, Regulation &
Credit Department

T

he outreach programs supported by SRC are

Bankers’ Forums. To make attendance as convenient as

aimed at maintaining communication channels

possible, SRC splits the locations: two in Philadelphia

between the Philadelphia Fed and its depository

and three elsewhere in the Third District. The forums

institutions, keeping Third District bankers informed,

give chief executive officers from area banks an oppor-

helping them comprehend banking regulations and

tunity to discuss emerging issues and challenges with

compliance, and soliciting their input and feedback on

SRC staff and their peers. The most important aspect of

emerging and existing public policy issues.

the Bankers’ Forums is hearing concerns directly from
bankers, but it also gives SRC a chance to meet with

Meetings

financial institutions outside the examination process.

To keep the lines of communication open, SRC

Although these meetings generally focus on discussions

holds meetings throughout the year. These meetings

about local financial industry issues, in 2004, the Bank

take various forms and are geared to different audi-

Secrecy Act (BSA) and the USA Patriot Act were com-

ences.

mon themes. The BSA requires banks to file suspicious
Five times annually, the department holds

14 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

activity reports on money laundering and certain other

crimes. The Patriot Act, in part, reinforces anti-money

commentary on guidelines issued by other regulators.

laundering statutes with an eye to preventing funding

In its publications outreach last year, SRC

of terrorists and their organizations. In discussions, SRC

reached an even broader audience when The RMA

cautioned bankers that, when there is a violation of

Journal printed an article by Mike Collins on fraud man-

these laws, the Fed cannot exercise discretion in en-

agement techniques. RMA is a professional association

forcement actions, since such proceedings are gener-

that advances the use of sound risk principles in the

ally mandated by statute.
SRC also sponsors two
other annual meetings: a roundtable for certified public accountants who audit banks SRC
supervises and a roundtable for
banks’ chief financial officers
and internal auditors. The agenda
for these meetings is set by SRC
in conjunction with the Federal
Reserve’s Board of Governors in
Washington, DC.

financial services industry.

The most important
aspect of the Bankers’
Forums is hearing
concerns directly from
bankers, but it also gives
SRC a chance to
meet with financial
institutions outside the
examination process.

Other Initiatives
Enhancing

commu-

nication with other regulators
was also a priority in 2004. To
that end, SRC developed and
hosted a program with Pennsylvania’s Department of Banking
to establish good communication between new leadership.
In addition, SRC developed
and hosted a program with the

Publications

heads of the banking depart-

Another way SRC keeps

ments in each of the District’s

bankers abreast of what’s happening in the financial

three states to discuss coordination of crisis manage-

services industry is through its quarterly newsletter SRC

ment activities.

Insights and its companion insert Compliance Corner.

Another

area

in

SRC,

the

Consumer

This publication, which is available in both paper and

Compliance/Community Reinvestment Act (CC/CRA)

electronic form, offers a wealth of information to de-

unit, contributes significantly to SRC’s outreach initia-

pository institutions. Each issue begins with a commen-

tives. Last year, the unit developed a CD-ROM training

tary from Senior Vice President Mike Collins on top-

module on the Home Mortgage Disclosure Act, entitled

ics ranging from trends in enforcement activity, to the

“HMDA: Understanding the Changes to Regulation.”

changing supervisory landscape, to the impact of the

The CC/CRA unit also conducted a training session on

Sarbanes-Oxley Act. Newsletter articles cover subjects

consumer regulations for the National Credit Union Ad-

such as “phishing” (an Internet scam), Basel II’s impact

ministration and, with the Bank’s Retail Payments De-

on competition in the U.S. financial services industry,

partment, participated in several Check 21 initiatives.

and training for bank directors. Although SRC Insights

This unit also conducts outreach to community groups

is targeted to the banks SRC supervises, it also contains

and fields consumer complaints.

www.philadelphiafed.org | 15

Visiting Scholar Jan Brueckner of
the University of California-Irvine
meets with members of the Bank’s
Research Department to discuss his
latest research.

16 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Teaching Others About the Economy:
Research’s Role

The Research Department plays many different roles
within the Bank and the Federal Reserve System. We
talked with Philadelphia Fed Director of Research
Loretta J. Mester to find out what Research does to
promote the Bank’s education efforts.
Loretta J. Mester, Ph.D.
Senior Vice President &
Director of Research
Research Department

Q: Tell us about the Research Department’s educa-

edge within the economics profession by disseminating

tional roles.

our research worldwide.

LJM: The department does many different things to
educate its various constituencies. Our main responsi-

Q: What is the department’s role in preparing

bility is to brief President Santomero in preparation for

President Santomero for the FOMC?

Federal Open Market Committee (FOMC) meetings. But

LJM:

we also try to educate the public on current economic

current economic conditions, and we develop forecasts

conditions and economic research.

of the economy and discuss the risks to those forecasts.

Our economists brief President Santomero on

Our economists give speeches on the econom-

We analyze forecasts from others as well. We point out

ic outlook. They also write articles for the department’s

different options for monetary policy and the reasoning

flagship publication, Business Review.

behind those options. Preparation for the briefings is

We also talk to reporters to help them better

quite lengthy and entails gathering and analyzing data

understand various aspects of the economy. In turn, they

and applying various economic models to the current

can better explain the economy to their readers.

economic situation to develop appropriate policy

Of course, we also work to advance knowl-

recommendations.

www.philadelphiafed.org | 17

Q: How does the Business Review fit into Research’s

Q: Do your reports literally move markets?

educational role? Isn’t the material highly technical?

LJM: They can. The BOS has been known to move

LJM:

The work our economists do is often highly

markets. Traders read the survey immediately upon

technical. However, in the Business Review, we distill

its release, and movement in the markets is sometimes

the technical material into a form that is accessible to

attributed to survey results that have come out

educated lay readers. We want readers to understand

differently than market participants expected.

economic issues, but not necessarily all of the technical
Q: Can you tell us about the department’s conferences

details.
We

should

note

and forums?

that

our Review differs from those of
many of the other Reserve Banks.
Our Business Review articles are
aimed at an educated lay audience
— people who are interested in
economic issues but who are not
economists. One way we measure
our success in this area is by the

The annual
Policy Forum brings
together policymakers,
academics, market
economists, and
members of the press.

LJM: The Research Department
sponsors several conferences a year
that span the various interests of
the Bank’s research efforts. Since
2001, we’ve been hosting the Policy Forum, a large macroeconomic
conference that brings together
policymakers, academics, market

number of requests we get to

economists, and members of the

include Business Review articles

press. The Policy Forum’s partici-

in reading materials for college courses and books of

pants discuss relevant issues that the Federal Open

readings that accompany textbooks. And we’ve been

Market Committee will need to deal with in the com-

highly successful on that front.

ing years.
We also co-sponsor a macroeconomics work-

Q: What about the department’s other publications?

shop each year with the University of Pennsylvania’s

How is the information gleaned from your economic

Economics Department.

surveys used?

In 2005, we will have several events. In April,

LJM: Our surveys are used in current analysis of the

we will hold a conference on immigration. In June,

national and regional economy. For example, the

we’ll be co-hosting a conference in Berlin, Germany,

Survey of Professional Forecasters and the Livingston

on “Bank Relationships, Credit Extension, and the

Survey report measures of inflation expectations, along

Macroeconomy.” Our co-sponsors are the German In-

with forecasts of other economic variables. These

stitute for Economic Research and the Journal of Finan-

measures of expectations are important variables in

cial Intermediation. In September, we will co-sponsor a

setting monetary policy, and they’re also used as a

conference on issues in consumer credit and payments

data source in economic research.

with the Bank’s Payment Cards Center.

The department’s Business Outlook Survey

These conferences serve several purposes.

(BOS) of regional manufacturers is used for regional

They inform us about cutting-edge research on the

analysis. Because it comes out earlier than other

conference topic and bring together researchers with

measures of the national economy, the information in

common interests, which can spur collaborations. They

the BOS is also used as an early forecast of trends in the

also advance the research agenda on these topics by

national economy.

illuminating which questions remain open.

18 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Q: How is your department’s research disseminated to

Q: Is any of your work international in nature?

other institutions?

LJM: Economics itself is international in scope. As

LJM: The web is the premier medium through which

I mentioned earlier, our research is disseminated

we disseminate early versions of our research. Since the

through the web, both on the Bank’s own web site and

web is a global instrument, our economics colleagues

on various databases. Some of our economists focus on

around the world have access to our papers. But even

topics such as international economics and trade.

before the final working paper is produced, economists

We have set up economist exchange programs

have been exchanging ideas by presenting seminars

with both the Bank of Sweden and Bank of Canada.
Their economists come to the

at other institutions and conferring with colleagues. In addition,
we sponsor our own seminar series and visiting scholar program,
through which we bring in other
economists to discuss their research.
In effect, economists “vet”
their work by presenting it to other
economists. We also send our papers to academic and Fed libraries
and post them to online databases

Over the years, the
Research Department
has helped various
institutions in the area
by supplying data,
reviewing their
analysis, and offering
policy advice.

Philadelphia Fed for a week or
so, and we then send one of our
economists to their central bank
for a week. This helps create closer
ties among central bank staff, who
often are researching similar types
of economic questions.

It also

enables our economists to gain
a broader perspective of world
economic conditions.
Q: Do the other 11 Reserve Banks’

such as the Social Sciences Research Network. Ultimately, we revise our work based

Research Departments work the same way?

on the feedback gleaned from presenting and discuss-

LJM: Our general goals are very similar. Certainly,

ing our work, and then submit papers to academic jour-

briefing a Reserve Bank’s president for the FOMC is

nals. This starts another round of revisions as authors

a critical function of all Research departments in the

respond to referees’ comments before the work is finally

System. Of course, regional knowledge is the unique

published in the journal.

item each Reserve Bank president brings to the FOMC
meetings.

Q: How does the Bank’s Research Department help

Some System departments emphasize different

the Philadelphia region?

areas of interest, depending on their location. For

LJM: Over the years, we’ve helped various institutions

example, Reserve Banks in the Midwest may do more

in the area by supplying data, reviewing their analysis,

research on agriculture-related economic issues. Some

and offering policy advice. In 2004, our chief regional

departments may emphasize shorter term current

economist attended the Mayor’s Economic Summit to

analysis, while others emphasize longer term research.

discuss the economic future of Philadelphia.

Most of the Reserve Banks, including our own, have a

We produce articles on the region, either as

mix of these activities.

stand-alone reports or as part of our Business Review,
which contain information about some aspect of the local economy. Various city organizations have used this
information in their policy discussions.

www.philadelphiafed.org | 19

Making Check Processing
More Efficient: Check 21

The Check Clearing for the 21st
Century Act, also called Check 21,
fosters innovation and efficiency in
the payments system. On October
28, 2004, this important new legislation took effect.
Anthony Scafide, Assistant Vice President, and Tom Lombardo,
Manager, both in Customer Relations

T

he essence of the law is that it allows a substi-

tions to increase their use of image processing in check

tute check, created from an electronic image, to

collection and improve their business operations.

serve as the legal equivalent of the check itself.

In doing so, it eliminates a significant legal barrier to

Preparation at the System Level

check truncation and electronification of check pro-

As preparations to implement Check 21 were

cessing. A collecting bank can create an electronic im-

underway across the financial services industry, the

age of a check, transmit the image to the paying bank’s

Federal Reserve System embarked on a year of training-

location, and then present the paying bank with a paper

intensive activities to educate Reserve Bank custom-

reproduction or with the electronic image itself.

ers on making the most of the opportunities available

The Fed proposed Check 21 to enable the

through the new legislation. Importantly, the Fed also

industry to make check processing more efficient and

helped them clarify how best to pass those benefits

reliable. Now, banks must consider how to use the

along to their own customers.

new options offered by Check 21 to create shareholder

In early 2004, experts from the Federal Reserve

value and improve service quality. The new legislation

System made presentations at the Bank Administration

provides an excellent opportunity for financial institu-

Institute’s Check 21 Implementation Planning Clinics,

20 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

which were held around the nation to review the legal

for further outreach to bankers around the region.

aspects of Check 21, provide an overview of Federal

Following the field meetings, Anthony Scafide,

Reserve initiatives, and share perspectives on develop-

assistant vice president, and Tom Lombardo, manager,

ing and implementing Check 21 plans.

both of the Philadelphia Fed’s Customer Relations De-

The Federal Reserve also sponsored online

partment, presented six open seminars throughout the

Check 21 seminars to support financial institutions’

Third District to provide bankers the opportunity to

efforts to develop and implement Check 21 strategies.

learn more about Check 21. Upon customers’ requests,

These online seminar topics included an overview of

or when more one-on-one training was needed, Scafide

the new Check 21 product suite, information on how to

and Lombardo also conducted comprehensive presen-

best use the new product suite within financial institu-

tations for individual bank customers interested in ob-

tions’ business environments, and tools to help assess

taining more information on Check 21.

readiness for Check 21 implementation. Participants,

The seminars emphasized how financial in-

numbering in the thousands, agreed that these online

stitutions can enhance their efficiencies and improve

seminars were very informative and highly practical

customer service. Another important component of the

and allowed the Reserve Banks’ busy customers to be

seminars was the introduction of a variety of new and

informed without leaving their offices.

improved products, services, and solutions offered by

In addition, in Federal Reserve Bank Customer
Service locations around the nation, account execu-

the Federal Reserve and designed to support banks’ best
use of the new options under Check 21.

tives continue to talk to customers, answering questions
about Check 21 and helping identify opportunities to
leverage technology and evaluate banks’ long-term
payments processing strategies in light of Check 21.

Follow-Up
As a follow-up to the six seminars and to address any outstanding issues bankers were facing,
Scafide and Lombardo developed “Keeping Our Prom-

Preparation in Our District

ise,” a Check 21 town hall meeting focusing on issues

Education continued at the District level, as

dealing with regulation, compliance, operations, and

each of the 12 Reserve Banks held seminars around

products and pricing. The session allowed an open

their respective regions to help bankers learn to maxi-

dialogue between the bankers and relevant experts in

mize efficiencies under Check 21 and take advantage of

each of the topical areas discussed.

Check 21-related opportunities.

It will take some time for the full effects of

In Philadelphia, our District’s training began

Check 21 to be realized. The infrastructure of check

with the 2004 Field Meetings. Each year, Philadelphia

processing will evolve, generating new check products

Fed officials travel throughout the Third District edu-

and services, and new ways to deliver them. The Fed-

cating financial institutions on the economic outlook,

eral Reserve is committed to working with the financial

banking trends and developments, and financial ser-

services industry in this dynamic environment to ensure

vices. Last year, the financial services portion of the

a smooth transition and to achieve all the efficiencies

meeting focused exclusively on the upcoming imple-

this new legislation offers.

mentation of Check 21. These meetings set the stage

More information on Check 21 is available at www.frbservices.org or
on the Federal Reserve Board of Governors’ web site at www.federalreserve.gov.
Or you may contact the Federal Reserve Bank of Philadelphia’s
Customer Service office at (877) 574-1776.
www.philadelphiafed.org | 21

Examiners in the Bank’s Supervision, Regulation
and Credit Department use a most unusual tool
— Philadelphia’s Mural Arts Program.

22 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Training Employees
For the 21st Century

Training employees is also an important aspect of
sharing our knowledge. A well-trained staff makes
the Philadelphia Fed better able to serve both its
external and internal customers. The Organizational
Learning & Development unit has primary responsibility for this task.
Stephen G. Hart
Assistant Vice President
Organizational Learning &
Development Division
Human Resources Department

T

he Federal Reserve Bank of Philadelphia carries

Both units share three primary objectives: match em-

out its mission to educate the public in many

ployees’ skills to the Bank’s or System’s strategic focus,

ways. But members of the public are not the

be performance driven and results oriented, and have a

only ones who benefit from Fed education and training.

technological bias.

The Bank also trains employees at every level and in a

To meet these objectives, OL&D staff, under

variety of ways to help them become even more effec-

the direction of Assistant Vice President Steve Hart,

tive at their jobs.

offer a variety of training programs for employees.

Organizational Learning and Development

A quick look at just a few of the items on OL&D’s

(OL&D), which is part of the Bank’s Human Resources

training calendar demonstrates this. For example, last

Department, has two primary training units. One

year, OL&D offered courses on building collaborative

group concentrates on training within the Bank, and

relationships, learning leadership at work, establishing

the other, called the Electronic Professional Education

good client/consultant relationships, and preventing

Program (ePEP), concentrates on training System-wide.

workplace violence.

www.philadelphiafed.org | 23

Active Training

But it quickly became evident that one week

Also this past year, OL&D made a concerted

of training, once a year, wasn’t enough. Nor did such a

effort to move from passive to active training. Instead of

schedule meet the training needs of the various Federal

waiting for people to come to them, staff members vis-

Reserve Banks. So a blended learning model was devel-

ited departments to identify training needs. In this new

oped.

role, the trainers not only customize training to meet

To further facilitate the System’s training needs,

departmental needs, but they also expand their roles

the Philadelphia Fed proposed the idea of continuous

as organizational development consultants. This new

learning: No matter what month new employees are

model offers opportunities for the
trainers to help managers and officers
look at skill development as well as
ways to improve a process, develop
team effectiveness, or explore the use
of alternative management styles.
In addition, the Bank’s trainers were busy last year in operations
areas, helping employees adjust to
the new check processing platform
and implementing Check 21. OL&D
also got involved in cross-training
Check employees. Some OL&D staff
members ventured into a new area:

hired, they do not have to wait to

The most exciting
training news
in 2004 was the
announcement that
in 2005 the Bank
will offer an on-site
bachelor’s degree
completion program
in conjunction
with Philadelphia
University.

learn FRS accounting methods. To
implement this idea, online models
were created. Furthermore, subject
matter experts round out these online
sessions by sharing their experience
via Sametime, a web-based tool that
allows employees to attend live virtual training sessions from their desktops.
Another component of blended learning is virtual learning. The
Philadelphia Fed and Banks around
the System can use video confer-

developing training materials for

encing to “attend” training sessions.

special projects. In particular, they

While this technology can be used

worked with a vendor on technical support for the Trea-

for information sharing, it also allows Fed trainers to

sury Check Information System (TCIS) project, a new

hold interactive, collaborative sessions.

web-based system for reconcilement and claims processing of Treasury Checks.

A particularly successful ePEP program in 2004
involved training the examiners in Supervision, Regulation and Credit using a most unusual tool—Philadel-

ePEP and Blended Learning

phia’s Mural Arts Program. As part of this course, 60

The Bank’s trainers also oversaw several ePEP

examiners went through various exercises, all designed

programs. Originally, the Professional Education Pro-

to stress the importance of good communication, col-

gram involved a full week of training in Federal Reserve

laboration, and teamwork. One “experiential exercise”

System accounting functions. Then the System expand-

had participants visit some of Center City Philadelphia’s

ed that model to include Fed employees who work in

murals and reflect on the facts, emotions, and symbols

Cash departments.

contained in these works of art.

24 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Training
the
Examiners

An exercise of this type is particularly useful because examiners are
collaborating more in their work. For
example, safety and soundness examiners may have to work more closely with
community affairs examiners. Thus, it’s
crucial for them to be able to communicate more effectively.
Bachelor’s Degree Program
Perhaps the most exciting training news in 2004 was the announcement that in 2005 the Bank will offer an
on-site bachelor’s degree completion
program in conjunction with Philadelphia University. This opportunity,

S

ome Philadelphia Fed employees
need highly specialized training.
One example is bank examiners.

What goes into the making of a commissioned bank examiner?

Ian Harvey
Manager, Staff and Career
Development
Supervision, Regulation &
Credit Department

Training takes approximately three years to complete. A
quick listing of what assistant examiners undergo includes:
• An orientation program that teaches everything from basics
of banking and bank examinations to administrative details.
• An introduction to common operational, analytical, and

which will allow employees to obtain

supervisory techniques for banks, bank and financial holding

an undergraduate degree in Finance or

companies, and foreign banking organizations, focusing on

Management, follows close on the heels

credit, market, liquidity, operational, legal, and reputational

of the Bank’s very successful and well-

risks.

received associate’s degree program,

• A 115-hour self-study program in three segments.

which was offered through the Com-

• A report writing course and sessions on conducting meetings

munity College of Philadelphia. Early
indications are that this program will
prove to be popular with employees.
As the Bank rises to meet the
challenges of the 21st century workplace, OL&D will continue to play a
major role in ensuring that Bank employees have the skills they need to
carry out the Bank’s and the System’s
strategic goals.

with management.
• A management skills course that teaches critical thinking,
teamwork, negotiation, and listening techniques.
• Courses on fundamentals of interest rate risk management,
bank management, and examination management.
Successful completion of training, coupled with demonstrated skills on-the-job, allows an assistant examiner to earn the
designation of commissioned examiner. At this stage, in addition
to their technical skills, examiners demonstrate analytical rigor, are
effective communicators, and possess strong leadership skills.
But it doesn’t end there. Federal Reserve examiners’ learning continues throughout their careers, as they hone their technical
and supervisory skills through on-the-job training and continuing
professional development, ensuring that they possess a deeper
understanding of the broader financial system.

www.philadelphiafed.org | 25

26 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Board of Directors
Robert E. Chappell (7)
Board member since January 2000. Chair, Budget and
Operations Committee and Member, Personnel Committee. Chairman and CEO of Penn Mutual Life Insurance
Company. Chairman of Insurance Federation of Pennsylvania. Member of Taxation and Financial Services Steering
Committee for American Council of Life Insurance. Serves
on boards of Quaker Chemical Corporation, South Chester Tube Company, LOMA, and Wharton Financial Institutions Center at University of Pennsylvania.
Walter E. Daller, Jr. (5)
Board member since January 2002. Member, Budget
and Operations and Personnel committees. Chairman,
President, and CEO of Harleysville National Corporation.
Chairman of Harleysville National Bank and Trust Company. Serves on boards of North Penn United Way, Lower
Salford Historical Society, Muhlenberg House, Montgomery County Lands Trust, Perkiomen Valley Watershed, and
TCM Bank of Tampa, Florida.
Doris M. Damm (9)
Deputy Chairman, Federal Reserve Bank of Philadelphia
Board of Directors. Board member since January 2001.
Chair, Personnel Committee and Member, Audit Committee. President and Chief Executive Officer of ACCU Staffing Services. Other affiliations include Cerebral Palsy of
New Jersey, Cherry Hill Economic Development Council,
Our Lady of Lourdes Medical Center, Our Lady of Lourdes
Foundation, and Cherry Hill Regional Chamber of Commerce.
William F. Hecht (6)
Board member since January 2004. Member, Research
and External Affairs and Budget and Operations committees. Chairman, President, and CEO of PPL Corporation.
Member of Executive Committee of Edison Electric Institute. Director of Nuclear Energy Institute, Edison Electric
Institute, Lehigh Valley Hospital and Health Network,
Dentsply International and RenaissanceRe Holdings, Ltd.
Vice Chairman Board of Trustees of Lehigh University.
President of Lehigh Valley Partnership.
Garry L. Maddox (1)
Board member since January 2003. Member, Audit
and Personnel committees. President and CEO of A.
Pomerantz & Company. Founding President of World
Wide Concessions, Inc. Founder and Executive Director
of LPGA Urban Youth Golf Program of Greater Atlantic

City. Founder and President of Youth Golf and Academics Program. Serves on boards of Boys and Girls Club of
Camden County, Corporate Alliance for Drug Education,
Greater Philadelphia Chamber of Commerce, Fairmount
Park Commission, Neumann College, Philadelphia Sports
Congress, Operation Good Neighbor, and St. Christopher’s
Hospital for Children. Director Emeritus of Philadelphia
Child Guidance Center. Member of Board of Governors
of National Adoption Center.
Ronald J. Naples (8)
Chairman, Federal Reserve Bank of Philadelphia Board of
Directors. Board member since January 2001. Chairman
and Chief Executive Officer of Quaker Chemical Corporation. Chairman of Board of University of the Arts. Serves
on boards of Glatfelter, Philadelphia Museum of Art,
Franklin Institute, Foreign Policy Research Institute, Rock
School of the Pennsylvania Ballet, and American Red
Cross - Southeastern Pennsylvania Chapter.
Eugene W. Rogers (4)
Board member since January 2004. Member, Audit and
Research and External Affairs committees. CEO of Newfield Bancorp, Inc. and CEO of Newfield National Bank.
Director of Atlantic Central Bankers Bank. Member of
Kennedy Hospital Advisory Board, and Chairman of South
Jersey Community Bankers Association.
Kenneth R. Shoemaker (3)
Board member since January 2003. Chair, Audit Committee and Member, Research and External Affairs Committee. President and CEO of Orrstown Bank; President
and CEO of Orrstown Financial Services. Chairman of
Council of Trustees of Shippensburg University. Serves
on boards of Cumberland Valley School of Music and
Carlisle Regional Medical Center. Founding President of
Mainstreet Non-Profit Redevelopment Corporation.
P. Coleman Townsend, Jr. (2)
Board member since January 2002. Chair, Research and
External Affairs Committee and Member, Budget and Operations Committee. Chairman and CEO of Townsends,
Inc. Member of Board of Trustees of University of Delaware, Winterthur Museum, Gardens & Library, The Henlopen Fund, and Historical Society of Delaware. Serves
on Council of Advisors for Delaware Center for Horticulture. Active participant on Delaware Art Museum-Collections Committee, Delaware Public Policy Institute, and
Delaware Business Roundtable.

www.philadelphiafed.org | 27

Federal Reserve Bank of Philadelphia

2004 Business Advisory Council
Lynn Banta (7)
Owner
Twin Stacks Development Co. Inc.
Dallas, PA

Melinda K. Holman (2)
President
Holman Enterprises
Pennsauken, NJ

Jeffrey J. Trester (1)
Director & Co-CEO
PriceSCAN.com, Inc.
Malvern, PA

Michael F. Camardo*
Executive Vice President
Lockheed Martin Technology
Cherry Hill, NJ

Chairman
Dennis E. Klima (8)
President & CEO
Bayhealth Inc.
Dover, DE

Rodman Ward (4)
President
Speakman Company
Wilmington, DE

Robert L. Gronlund (10)
Chairman & CEO
Wood Mode Inc.
Kreamer, PA
Douglass C. Henry, Jr. (9)
CEO
Henry Molded Products, Inc.
Lebanon, PA

John Milligan (3)
President
Milligan & Company
Philadelphia, PA
Albert Morrison, III (5)
Chairman, President & CEO
Burnham Holdings
Lancaster, PA

William L. Wilson*
Principal-in-Charge
Synterra
Philadelphia, PA
Mark S. Stellini (6)
President & CEO
InfoSystems
Wilmington, DE
* Not pictured

28 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

2004 Community Bank Advisory Council
John W. Adonizio (6)
Chairman & President
Landmark Community Bank
Pittston, PA

Robert E. Forse (3)
Chairman, President & CEO
Woodlands Bank
Williamsport, PA

Thomas A. Bracken (1)
President & CEO
Sun National Bank
Vineland, NJ

Mark D. Gainer (2)
President & CEO
Union National Community Bank
Mt. Joy, PA

Joseph E. Chippie*
President & CEO
First National Bank of Wyoming
Wyoming, DE

Chairman
Aaron L. Groff (8)
Chairman, President & CEO
Ephrata National Bank
Ephrata, PA

William F. Snell*
President & CEO
Farmers and Merchants Trust Co.
Chambersburg, PA

George W. Nise (4)
President & CEO
Beneficial Savings Bank
Philadelphia, PA

Peter C. Zimmerman (5)
President & CEO
First National Bank of Newport
Newport, PA

Donna M. Coughey (9)
President & CEO
First Financial Bank
Downingtown, PA

John T. Parry (10)
President & CEO
First National Bank & Trust Co.
of Newtown
Newtown, PA
Michael M. Quick (7)
Chairman
Susquehanna Patriot Bank
Marlton, NJ

* Not pictured

2
6

7

3

4
8

9

5
10

www.philadelphiafed.org | 29

Federal Reserve Bank of Philadelphia

2004 Credit Union Advisory Council
David W. Clendaniel*
President & CEO
Dover FCU
Dover, DE

Dorothy A. Fox (4)
President & CEO
NE PA Community FCU
Stroudsburg, PA

Eileen Crean (5)
President & CEO
CUMCO FCU
Vineland, NJ

Louise P. Lingenfelser (2)
President & CEO
UGI Employees FCU
Wyomissing, PA

Maurice Dawkins (6)
President & CEO
American Spirit FCU
Newark, DE

Robert L. Marquette (1)
President & CEO
Members 1st FCU
Mechanicsburg, PA

James E. Everhart, Jr. (7)
President & CEO
Louviers FCU
Newark, DE

Larry D. Miller (3)
President & CEO
Mennonite Financial FCU
Lancaster, PA

Chairman
Diana L. Roberts (8)
President & CEO
Hershey FCU
Hershey, PA
Larry L. Stoner (10)
President & CEO
Susquehanna Valley FCU
Camp Hill, PA
Edwin L. Williams*
President & CEO
Discovery FCU
Wyomissing, PA
Virginia F. Williams (9)
CEO
FAA Technical Center FCU
Northfield, NJ
* Not pictured

6

30 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

3

2

1

7

5

4
8

9

10

Operating Statistics

I

n 2004, Philadelphia’s total volume of commercial

processor of cash in the Federal Reserve System in

checks processed decreased 9 percent and the

2004. The volume of currency processed increased

dollar value of transactions decreased 19 percent.

7 percent, while the related dollar value increased 3

Philadelphia continues to be responsible for process-

percent, both attributable to normal growth. Gaining

ing all government checks for the First, Second, Third,

a large customer in 2004 led to a 76 percent increase

Fourth, and a portion of the Fifth Federal Reserve Dis-

in processed coin volume and a 19 percent increase in

tricts. While the volume of U.S. government checks

processed coin value.

remained fairly constant, the dollar volume increased
10 percent in 2004.

In 2004, both the number and value of loans to
depository institutions were higher than in the previous

The Philadelphia Bank continued to be a major

year.

SERVICES TO DEPOSITORY INSTITUTIONS

2004

2004

2003

2003

Volume

Dollar Value

Volume

Dollar Value

82.0 million checks

$109.6 billion

81.9 million checks

$100.0 billion

1,129.4 million checks

$2,001.8 billion

1,239.6 million checks

$2,457.1 billion

Currency processed

2,358.1 million notes

$44.3 billion

2,212.0 million notes

$43.0 billion

Coin paid and received

756.3 thousand bags

$242.7 million

430.9 thousand bags

$204.6 million

120 loans

$1,393.6 million

99 loans

$308.3 million

Check processing:
U.S. government

Commercial checks

Cash operations:

Loans to depository institutions
during the year

www.philadelphiafed.org |31

Federal Reserve Bank of Philadelphia

Current Officers
Anthony M. Santomero
President
William H. Stone, Jr.
First Vice President
Richard W. Lang
Executive Vice President
D. Blake Prichard
Executive Vice President
Michael E. Collins
Senior Vice President
and Lending Officer
Supervision, Regulation
and Credit
Loretta J. Mester
Senior Vice President and
Director of Research
Research
Milissa M. Tadeo
Senior Vice President
Cash Services and
Treasury Services
John G. Bell
Vice President
Financial Statistics
Robert J. Bucco
Vice President
Wholesale Product Office
Peter P. Burns
Vice President and Director
Payment Cards Center
Theodore M. Crone
Vice President and
Economist
Research
John J. Deibel
Vice President and Chief
Examination Officer
Supervision, Regulation and
Credit
Michael Dotsey
Vice President and Senior
Economic Policy Advisor
Research
Richard A. Elliott
Vice President
Facilities Management,
Records, and Document
Services

Donna L. Franco
Vice President and
Chief Financial Officer
Faith P. Goldstein
Vice President
Public Affairs
Mary Ann Hood
Vice President
Human Resources
Arun K. Jain
Vice President
Cash Services
William W. Lang
Vice President
Supervision, Regulation
and Credit
Edward M. Mahon
Vice President and
General Counsel
Legal
Stephen A. Meyer
Vice President and Senior
Economic Policy Advisor
Research
Mary DeHaven Myers
Vice President and
Community Affairs Officer
Community Affairs
A. Reed Raymond, III
Vice President and Chief
Administrative Officer
Supervision, Regulation and
Credit

Kei-Mu Yi
Vice President and
Economist
Research

Eric A. Sonnheim
Assistant Vice President
Supervision, Regulation and
Credit

Mitchell S. Berlin
Assistant Vice President
and Economist
Research

C. Danny Spriggs
Assistant Vice President
Protection

Donna Brenner
Assistant Vice President
Accounting Services
Jennifer E. Cardy
Assistant Vice President and
Assistant General Auditor
Shirley L. Coker
Assistant Vice President and
Counsel, Legal
Michael T. Doyle
Assistant Vice President and
Technical Services Officer
Information Technology
Services
William L. Gaunt
Assistant Vice President
Supervision, Regulation and
Credit
Stephen G. Hart
Assistant Vice President
Human Resources
John P. Kelly
Assistant Vice President
Check Operations
Retail Payment Services

Patrick M. Regan
Vice President
Information Technology
Services

Elisabeth V. Levins
Assistant Vice President
Supervision, Regulation and
Credit

Richard A. Sheaffer
Vice President and General
Auditor

Alice Kelley Menzano
Assistant Vice President
Information Technology
Services

Herbert E. Taylor
Vice President and
Corporate Secretary
Vish P. Viswanathan
Vice President and
Discount Officer
Supervision, Regulation and
Credit

Includes promotions through February 2005
32 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Camille M. Ochman
Assistant Vice President
Treasury Services
Anthony T. Scafide, Jr.
Assistant Vice President
Customer Relations

Marie Tkaczyk
Assistant Vice President
Information Technology
Services
Constance H. Wallgren
Assistant Vice President
Supervision, Regulation and
Credit
John D. Ackley
Treasury Services Officer
Treasury Services
Aileen C. Boer
Research Support Officer
Research
Maryann T. Connelly
Assistant Counsel, Legal
Cynthia L. Course
Enforcement and Information
Services & Support Officer
Supervision, Regulation and
Credit
Frank J. Doto
Information Technology
Officer
Supervision, Regulation and
Credit
Suzanne W. Furr
Wholesale Product Officer
Wholesale Product Office
Spyro Karetsos
Enterprise Risk Management
Officer
Enterprise Risk Management
Wanda Preston
Check Adjustments Officer
Retail Payment Services
Michelle M. Scipione
Cash Services Officer
Cash Services
Stephen J. Smith
Assistant Counsel, Legal

Statement of Auditor Independence
The firm engaged by the Board of Governors for the audits of the individual and combined financial statements of the Reserve Banks for
2004 was PricewaterhouseCoopers LLP (PwC). Fees for these services
totaled $2.0 million. To ensure auditor independence, the Board of
Governors requires that PwC be independent in all matters relating to
the audit. Specifically, PwC may not perform services for the Reserve
Banks or others that would place it in a position of auditing its own
work, making management decisions on behalf of the Reserve Banks,
or in any other way impairing its audit independence. In 2004, the
Bank did not engage PwC for any material advisory services.

www.philadelphiafed.org | 33

Financial Reports
35

Letter to Directors

36

Report of Independent Accountants

37

Report of Independent Auditors

38

Statements of Condition

39

Statements of Income

40

Statements of Changes in Capital

41

Notes to Financial Statements

34 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Letter to Directors

www.philadelphiafed.org | 35

Report of Independent Accountants

36 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Report of Independent Auditors

www.philadelphiafed.org | 37

Federal Reserve Bank of Philadelphia

Statements of Condition
As of December 31, 2004 and December 31, 2003 (in millions)
2004

2003

ASSETS
Gold certificates
Special drawing rights certificates
Coin
Items in process of collection
Loans to depository institutions
U.S. government securities, net
Investments denominated in foreign currencies
Accrued interest receivable
Interdistrict settlement account
Bank premises and equipment, net
Other assets
Total assets

$

382
83
56
360
5
21,581
624
151
4,007
76
74

$

380
83
37
493
21,121
552
158
905
80
97

$

27,399

$

23,906

$

24,725
916

$

21,347
802

LIABILITIES AND CAPITAL
Liabilities:
Federal Reserve Notes outstanding, net
Securities sold under agreements to repurchase
Deposits:
Depository institutions
Other deposits
Deferred credit items
Interest on Federal Reserve notes due U.S. Treasury
Accrued benefit costs
Other liabilities
Total liabilities
Capital:

Capital paid-in
Surplus
Total capital
Total liabilities and capital

The accompanying notes are an integral part of these financial statements.

38 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

$

603
1
490
27
42
7

719
2
451
9
52
7

26,811

23,389

294
294

258
259

588

517

27,399

$

23,906

Federal Reserve Bank of Philadelphia

Statements of Income
For the years ended December 31, 2004 and December 31, 2003 (in millions)
2004

Interest income:
Interest on U.S. government securities
Interest on investments denominated in foreign currencies

$

Total interest income
Interest expense:
Interest expense on securities sold under agreements to repurchase
Net interest income
Other operating income:
Income from services
Reimbursable services to government agencies
Foreign currency gains, net
Other income
Total other operating income
Operating expenses:
Salaries and other benefits
Occupancy expense
Equipment expense
Assessments by Board of Governors
Other expenses
Total operating expenses
Net income prior to distribution
Distribution of net income:
Dividends paid to member banks
Transferred to surplus
Payments to U.S. Treasury as interest on Federal Reserve notes
Total distribution

2003

662
8

$

742
7

670

749

9

7

661

742

38
21
36
3

40
20
75
3

98

138

73
10
13
34
27

84
9
13
36
29

157

171

$

602

$

709

$

17
35
550

$

15
26
668

$

602

$

709

The accompanying notes are an integral part of these financial statements.

www.philadelphiafed.org | 39

Federal Reserve Bank of Philadelphia

Statements of Changes in Capital
For the years ended December 31, 2004 and December 31, 2003 (in millions)
Capital Paid-in
Balance at January 1, 2003
(4.6 million shares)

$

Transferred to surplus
Net change in capital stock issued
(0.6 million shares)
Balance at December 31, 2003
(5.2 million shares)

$

Transferred to surplus
Net change in capital stock issued
(0.7 million shares)
Balance at December 31, 2004
(5.9 million shares)

The accompanying notes are an integral part of these financial statements.

40 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

$

233

Surplus

$

233

Total Capital

$

466

-

26

26

25

-

25

258

$

259

$

517

-

35

35

36

-

36

294

$

294

$

588

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
1. STRUCTURE

by member banks, three represent the public and three
represent member banks. Member banks are divided

The Federal Reserve Bank of Philadelphia (“Bank”)

into three classes according to size. Member banks

is part of the Federal Reserve System (“System”) cre-

in each class elect one director representing member

ated by Congress under the Federal Reserve Act of

banks and one representing the public. In any election

1913 (“Federal Reserve Act”) which established the

of directors, each member bank receives one vote, re-

central bank of the United States. The System consists

gardless of the number of shares of Reserve Bank stock

of the Board of Governors of the Federal Reserve Sys-

it holds.

tem (“Board of Governors”) and twelve Federal Reserve
Banks (“Reserve Banks”). The Reserve Banks are char-

2. OPERATIONS AND SERVICES

tered by the federal government and possess a unique
set of governmental, corporate, and central bank char-

The System performs a variety of services and oper-

acteristics. The Bank in Philadelphia serves the Third

ations. Functions include formulating and conducting

Federal Reserve District, which includes Delaware, and

monetary policy; participating actively in the payments

portions of New Jersey and Pennsylvania. Other major

mechanism, including large-dollar transfers of funds, au-

elements of the System are the Federal Open Market

tomated clearinghouse (“ACH”) operations, and check

Committee (“FOMC”) and the Federal Advisory Coun-

processing; distributing coin and currency; performing

cil. The FOMC is composed of members of the Board

fiscal agency functions for the U.S. Treasury and certain

of Governors, the president of the Federal Reserve Bank

federal agencies; serving as the federal government’s

of New York (“FRBNY”), and, on a rotating basis, four

bank; providing short-term loans to depository institu-

other Reserve Bank presidents. Banks that are members

tions; serving the consumer and the community by pro-

of the System include all national banks and any state-

viding educational materials and information regarding

chartered bank that applies and is approved for mem-

consumer laws; supervising bank holding companies

bership in the System.

and state member banks; and administering other regulations of the Board of Governors. The Board of Gov-

Board of Directors
In accordance with the Federal Reserve Act, supervision and control of the Bank are exercised by a Board

ernors’ operating costs are funded through assessments
on the Reserve Banks.
The FOMC establishes policy regarding open mar-

The Federal Reserve Act specifies the

ket operations, oversees these operations, and issues

composition of the Board of Directors for each of the

authorizations and directives to the FRBNY for its ex-

Reserve Banks. Each board is composed of nine mem-

ecution of transactions. Authorized transaction types

bers serving three-year terms: three directors, including

include direct purchase and sale of securities, the pur-

those designated as Chairman and Deputy Chairman,

chase of securities under agreements to resell, the sale

are appointed by the Board of Governors, and six direc-

of securities under agreements to repurchase, and the

tors are elected by member banks. Of the six elected

lending of U.S. government securities.

of Directors.

The FRBNY

www.philadelphiafed.org | 41

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
is also authorized by the FOMC to hold balances of,

tion, the Bank has elected not to present a Statement of

and to execute spot and forward foreign exchange (“F/

Cash Flows. The Statement of Cash Flows has not been

X”) and securities contracts in, nine foreign currencies

included because the liquidity and cash position of the

and to invest such foreign currency holdings ensuring

Bank are not of primary concern to the users of these

adequate liquidity is maintained. In addition, FRBNY

financial statements. Other information regarding the

is authorized to maintain reciprocal currency arrange-

Bank’s activities is provided in, or may be derived from,

ments (“F/X swaps”) with various central banks, and

the Statements of Condition, Income, and Changes in

“warehouse” foreign currencies for the U.S. Treasury

Capital. A Statement of Cash Flows, therefore, would

and Exchange Stabilization Fund (“ESF”) through the

not provide any additional useful information. There

Reserve Banks.

are no other significant differences between the policies outlined in the Financial Accounting Manual and

3. SIGNIFICANT ACCOUNTING POLICIES

GAAP.
Each Reserve Bank provides services on behalf of

Accounting principles for entities with the unique

the System for which costs are not shared. Major ser-

powers and responsibilities of the nation’s central bank

vices provided on behalf of the System by the Bank, for

have not been formulated by the Financial Accounting

which the costs were not redistributed to the other Re-

Standards Board. The Board of Governors has devel-

serve Banks, include: Collateral Management System,

oped specialized accounting principles and practices

Electronic Cash Letter System, Groupware Leadership

that it believes are appropriate for the significantly dif-

Center, Subcommittee on Credit, Reserves, and Risk

ferent nature and function of a central bank as com-

Management Administration Office, and Treasury Di-

pared with the private sector. These accounting prin-

rect Central Business Administration Function.

ciples and practices are documented in the Financial

The preparation of the financial statements in con-

Accounting Manual for Federal Reserve Banks (“Finan-

formity with the Financial Accounting Manual requires

cial Accounting Manual”), which is issued by the Board

management to make certain estimates and assump-

of Governors. All Reserve Banks are required to adopt

tions that affect the reported amounts of assets and li-

and apply accounting policies and practices that are

abilities, disclosure of contingent assets and liabilities

consistent with the Financial Accounting Manual.

at the date of the financial statements, and the reported

The financial statements have been prepared in

amounts of income and expenses during the reporting

accordance with the Financial Accounting Manual.

period. Actual results could differ from those estimates.

Differences exist between the accounting principles

Unique accounts and significant accounting policies

and practices of the System and accounting principles

are explained below.

generally accepted in the United States of America
(“GAAP”). The primary difference is the presentation of

a.

Gold Certificates

all security holdings at amortized cost, rather than at the

The Secretary of the Treasury is authorized to issue

fair value presentation requirements of GAAP. In addi-

gold certificates to the Reserve Banks to monetize gold

42 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
held by the U.S. Treasury. Payment for the gold certifi-

transactions among Reserve Banks based upon Federal

cates by the Reserve Banks is made by crediting equiva-

Reserve notes outstanding in each District at the end of

lent amounts in dollars into the account established for

the preceding year. There were no SDR transactions in

the U.S. Treasury. These gold certificates held by the

2004 or 2003.

Reserve Banks are required to be backed by the gold of
the U.S. Treasury. The U.S. Treasury may reacquire

c.

Loans to Depository Institutions

the gold certificates at any time and the Reserve Banks

The Depository Institutions Deregulation and Mon-

must deliver them to the U.S. Treasury. At such time,

etary Control Act of 1980 provides that all depository in-

the U.S. Treasury’s account is charged, and the Reserve

stitutions that maintain reservable transaction accounts

Banks’ gold certificate accounts are lowered. The value

or nonpersonal time deposits, as defined in Regulation

of gold for purposes of backing the gold certificates is

D issued by the Board of Governors, have borrowing

set by law at $42 2/9 a fine troy ounce. The Board of

privileges at the discretion of the Reserve Bank. Bor-

Governors allocates the gold certificates among Reserve

rowers execute certain lending agreements and deposit

Banks once a year based on average Federal Reserve

sufficient collateral before credit is extended. Loans are

notes outstanding in each District.

evaluated for collectibility, and currently all are considered collectible and fully collateralized. If loans were

b. Special Drawing Rights Certificates

ever deemed to be uncollectible, an appropriate reserve

Special drawing rights (“SDRs”) are issued by the

would be established. Interest is accrued using the ap-

International Monetary Fund (“Fund”) to its members

plicable discount rate established at least every fourteen

in proportion to each member’s quota in the Fund at

days by the Board of Directors of the Reserve Bank, sub-

the time of issuance. SDRs serve as a supplement to

ject to review by the Board of Governors.

international monetary reserves and may be transferred
from one national monetary authority to another. Un-

d. U.S. Government and Federal Agency Securities

der the law providing for United States participation

and Investments Denominated in Foreign Currencies

in the SDR system, the Secretary of the U.S. Treasury

The FOMC has designated the FRBNY to execute

is authorized to issue SDR certificates, somewhat like

open market transactions on its behalf and to hold the

gold certificates, to the Reserve Banks. At such time,

resulting securities in the portfolio known as the Sys-

equivalent amounts in dollars are credited to the ac-

tem Open Market Account (“SOMA”). In addition to

count established for the U.S. Treasury, and the Reserve

authorizing and directing operations in the domestic

Banks’ SDR certificate accounts are increased. The Re-

securities market, the FOMC authorizes and directs the

serve Banks are required to purchase SDR certificates,

FRBNY to execute operations in foreign markets for ma-

at the direction of the U.S. Treasury, for the purpose of

jor currencies in order to counter disorderly conditions

financing SDR acquisitions or for financing exchange

in exchange markets or to meet other needs specified

stabilization operations. At the time SDR transactions

by the FOMC in carrying out the System’s central bank

occur, the Board of Governors allocates SDR certificate

responsibilities. Such authorizations are reviewed and

www.philadelphiafed.org | 43

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
approved annually by the FOMC.

support its own currency. Drawings under the F/X swap

The FRBNY has sole authorization by the FOMC to

arrangements can be initiated by either the FRBNY or

lend U.S. government securities held in the SOMA to

the partner foreign central bank and must be agreed to

U.S. government securities dealers and to banks partici-

by the drawee. The F/X swaps are structured so that

pating in U.S. government securities clearing arrange-

the party initiating the transaction (the drawer) bears the

ments on behalf of the System, in order to facilitate the

exchange rate risk upon maturity. The FRBNY will gen-

effective functioning of the domestic securities market.

erally invest the foreign currency received under an F/X

These securities-lending transactions are fully collater-

swap in interest-bearing instruments.

alized by other U.S. government securities. FOMC pol-

Warehousing is an arrangement under which the

icy requires the FRBNY to take possession of collateral

FOMC agrees to exchange, at the request of the Trea-

in excess of the market values of the securities loaned.

sury, U.S. dollars for foreign currencies held by the

The market values of the collateral and the securities

Treasury or ESF over a limited period of time. The pur-

loaned are monitored by the FRBNY on a daily basis,

pose of the warehousing facility is to supplement the

with additional collateral obtained as necessary. The

U.S. dollar resources of the Treasury and ESF for financ-

securities lent are accounted for in the SOMA.

ing purchases of foreign currencies and related interna-

F/X contracts are contractual agreements between

tional operations.

two parties to exchange specified currencies, at a speci-

In connection with its foreign currency activities,

fied price, on a specified date. Spot foreign contracts

the FRBNY, on behalf of the Reserve Banks, may enter

normally settle two days after the trade date, whereas

into contracts that contain varying degrees of off-bal-

the settlement date on forward contracts is negotiated

ance-sheet market risk, because they represent con-

between the contracting parties, but will extend beyond

tractual commitments involving future settlement and

two days from the trade date. The FRBNY generally

counter-party credit risk. The FRBNY controls credit

enters into spot contracts, with any forward contracts

risk by obtaining credit approvals, establishing trans-

generally limited to the second leg of a swap/warehous-

action limits, and performing daily monitoring proce-

ing transaction.

dures.

The FRBNY, on behalf of the Reserve Banks, main-

While the application of current market prices to

tains renewable, short-term F/X swap arrangements with

the securities currently held in the SOMA portfolio and

two authorized foreign central banks. The parties agree

investments denominated in foreign currencies may re-

to exchange their currencies up to a pre-arranged maxi-

sult in values substantially above or below their carrying

mum amount and for an agreed-upon period of time

values, these unrealized changes in value would have

(up to twelve months), at an agreed-upon interest rate.

no direct effect on the quantity of reserves available to

These arrangements give the FOMC temporary access

the banking system or on the prospects for future Re-

to foreign currencies it may need for intervention opera-

serve Bank earnings or capital. Both the domestic and

tions to support the dollar and give the partner foreign

foreign components of the SOMA portfolio from time

central bank temporary access to dollars it may need to

to time involve transactions that may result in gains or

44 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
losses when holdings are sold prior to maturity. De-

securities purchased under agreements to resell and un-

cisions regarding the securities and foreign currencies

realized gains and losses on the revaluation of foreign

transactions, including their purchase and sale, are mo-

currency holdings under F/X swaps and warehousing

tivated by monetary policy objectives rather than profit.

arrangements are allocated to the FRBNY and not to

Accordingly, market values, earnings, and any gains

other Reserve Banks.

or losses resulting from the sale of such currencies and

In 2003, additional interest income of $61 million,

securities are incidental to the open market operations

representing one day’s interest on the SOMA portfo-

and do not motivate its activities or policy decisions.

lio, was accrued to reflect a change in interest accrual
calculations, of which $2 million was allocated to the

U.S. government securities and investments denominated in foreign currencies comprising the SOMA

Bank. The effect of this change was not material; therefore, it was included in the 2003 interest income.

are recorded at cost, on a settlement-date basis, and
adjusted for amortization of premiums or accretion of

e.

Bank Premises, Equipment, and Software

discounts on a straight-line basis. Securities sold under

Bank premises and equipment are stated at cost less

agreements to repurchase are accounted for as secured

accumulated depreciation. Depreciation is calculated

borrowing transactions with the associated interest ex-

on a straight-line basis over estimated useful lives of as-

pense recognized over the life of the transaction. Such

sets ranging from two to fifty years. Major alterations,

transactions are settled by FRBNY. Interest income is

renovations, and improvements are capitalized at cost

accrued on a straight-line basis. Income earned on se-

as additions to the asset accounts and are amortized

curities lending transactions is reported as a component

over the remaining useful life of the asset. Maintenance,

of “Other income.” Gains and losses resulting from

repairs, and minor replacements are charged to opera-

sales of securities are determined by specific issues

tions in the year incurred. Costs incurred for software,

based on average cost. Foreign-currency-denominated

either developed internally or acquired for internal use,

assets are revalued daily at current foreign currency

during the application development stage are capital-

market exchange rates in order to report these assets in

ized based on the cost of direct services and materials

U.S. dollars. Realized and unrealized gains and losses

associated with designing, coding, installing, or testing

on investments denominated in foreign currencies are

software. Capitalized software costs are amortized on

reported as Foreign currency gains, net.

a straight-line basis over the estimated useful lives of

Activity related to U.S. government securities
bought outright, securities sold under agreements to re-

the software applications, which range from two to five
years.

purchase, securities loaned, investments denominated
in foreign currency, excluding those held under an F/

f.

Interdistrict Settlement Account

X swap arrangement, and deposit accounts of foreign

At the close of business each day, all Reserve Banks

central banks and governments above core balances

and branches assemble the payments due to or from

are allocated to each Reserve Bank. U.S. government

other Reserve Banks and branches as a result of transac-

www.philadelphiafed.org | 45

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
tions involving accounts residing in other Districts that

provides that Federal Reserve notes become a first and

occurred during the day’s operations. Such transactions

paramount lien on all the assets of the Reserve Banks.

may include funds settlement, check clearing and ACH

Finally, as obligations of the United States, Federal Re-

operations, and allocations of shared expenses. The cu-

serve notes are backed by the full faith and credit of the

mulative net amount due to or from other Reserve Banks

United States government.

is reported as the “Interdistrict settlement account.”

The “Federal Reserve notes outstanding, net” account represents the Bank’s Federal Reserve notes out-

g.

Federal Reserve Notes

standing reduced by its currency holdings of $7,973

Federal Reserve notes are the circulating currency

million, and $8,228 million at December 31, 2004 and

of the United States. These notes are issued through

2003, respectively.

the various Federal Reserve agents (the Chairman of the
Board of Directors of each Reserve Bank) to the Reserve

h. Capital Paid-in

Banks upon deposit with such agents of certain classes

The Federal Reserve Act requires that each member

of collateral security, typically U.S. government securi-

bank subscribe to the capital stock of the Reserve Bank

ties. These notes are identified as issued to a specific

in an amount equal to 6 percent of the capital and sur-

Reserve Bank. The Federal Reserve Act provides that the

plus of the member bank. As a member bank’s capital

collateral security tendered by the Reserve Bank to the

and surplus changes, its holdings of Reserve Bank stock

Federal Reserve agent must be equal to the sum of the

must be adjusted. Member banks are state-chartered

notes applied for by such Reserve Bank.

banks that apply and are approved for membership in

Assets eligible to be pledged as collateral security

the System and all national banks. Currently, only one-

include all Federal Reserve Bank assets. The collateral

half of the subscription is paid-in and the remainder is

value is equal to the book value of the collateral ten-

subject to call. These shares are nonvoting with a par

dered, with the exception of securities, whose collateral

value of $100. They may not be transferred or hypoth-

value is equal to the par value of the securities tendered.

ecated. By law, each member bank is entitled to receive

The par value of securities pledged for securities sold

an annual dividend of 6 percent on the paid-in capital

under agreements to repurchase is similarly deducted.

stock. This cumulative dividend is paid semiannually.

The Board of Governors may, at any time, call upon
a Reserve Bank for additional security to adequately col-

A member bank is liable for Reserve Bank liabilities up
to twice the par value of stock subscribed by it.

lateralize the Federal Reserve notes. To satisfy the ob-

The Financial Accounting Standards Board (FASB)

ligation to provide sufficient collateral for outstanding

has deferred the implementation date for SFAS No. 150,

Federal Reserve notes, the Reserve Banks have entered

“Accounting for Certain Financial Instruments with Char-

into an agreement that provides for certain assets of the

acteristics of both Liabilities and Equity” for the Bank.

Reserve Banks to be jointly pledged as collateral for the

When applicable, the Bank will determine the impact

Federal Reserve notes of all Reserve Banks. In the event

and provide the appropriate disclosures.

that this collateral is insufficient, the Federal Reserve Act

46 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
Surplus

tralized portion of the Bank’s reimbursement receivable,

The Board of Governors requires Reserve Banks to

reported in “Other assets,” totaled $53 million and $74

maintain a surplus equal to the amount of capital paid-

million at December 31, 2004 and 2003, respectively.

in as of December 31. This amount is intended to pro-

The centralized portion of the Bank’s Costs of unreim-

vide additional capital and reduce the possibility that

bursed Treasury services, reported in “Other expense,”

the Reserve Banks would be required to call on member

totaled $10 thousand at December 31, 2004.

banks for additional capital.

k.

i.

Taxes

Pursuant to Section 16 of the Federal Reserve

The Reserve Banks are exempt from federal, state,

Act, Reserve Banks are required by the Board of

and local taxes, except for taxes on real property. The

Governors to transfer to the U.S. Treasury as interest on

Bank’s real property taxes were $2 million for both years

Federal Reserve notes excess earnings, after providing

ended December 31, 2004 and 2003 and are reported

for the costs of operations, payment of dividends, and

as a component of “Occupancy expense.”

reservation of an amount necessary to equate surplus
with capital paid-in.

l.

Restructuring Charges

In the event of losses or an increase in capital

In 2003, the System started the restructuring of sev-

paid-in, payments to the U.S. Treasury are suspended

eral operations, primarily check, cash, and Treasury

and earnings are retained until the surplus is equal to the

services. The restructuring included streamlining the

capital paid-in. Weekly payments to the U.S. Treasury

management and support structures, reducing staff,

may vary significantly.

decreasing the number of processing locations, and

In the event of a decrease in capital paid-in, the

increasing processing capacity in the remaining loca-

excess surplus, after equating capital paid-in and surplus

tions. These restructuring activities continued in 2004.

at December 31, is distributed to the U.S. Treasury

Footnote 10 describes the restructuring and pro-

in the following year. This amount is reported as a

vides information about the Bank’s costs and liabilities

component of “Payments to U.S. Treasury as interest on

associated with employee separations and contract ter-

Federal Reserve notes”.

minations. The costs associated with the write-down of
certain Bank assets are discussed in footnote 6. Costs

j.

Income and Costs related to Treasury Services

and liabilities associated with enhanced pension ben-

The Bank is required by the Federal Reserve Act to

efits for all Reserve Banks are recorded on the books of

serve as fiscal agent and depository of the United States.

the FRBNY.

By statute, the Department of the Treasury is permitted,
but not required, to pay for these services.

4. U.S. GOVERNMENT SECURITIES

Beginning January 1, 1998, the reimbursement process for all Reserve Banks was centralized at the Bank

Securities bought outright are held in the SOMA

that included the transfer of each Reserve Bank’s Trea-

at the FRBNY. An undivided interest in SOMA activ-

sury reimbursement receivable to the Bank. The cen-

ity and the related premiums, discounts, and income,

www.philadelphiafed.org | 47

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
with the exception of securities purchased under agree-

The maturity distribution of U.S. government secu-

ments to resell, is allocated to each Reserve Bank on a

rities bought outright and securities sold under agree-

percentage basis derived from an annual settlement of

ments to repurchase, that were allocated to the Bank at

interdistrict clearings that occurs in April of each year.

December 31, 2004, was as follows (in millions):

The settlement equalizes Reserve Bank gold certificate
holdings to Federal Reserve notes outstanding.

The

Bank’s allocated share of SOMA balances was approximately 2.974 percent and 3.126 percent at December
31, 2004 and 2003, respectively.
The Bank’s allocated share of U.S. Government securities, net held in the SOMA at December 31, was as
follows (in millions):

Within 15 days

2004

2003

Par value:
U.S. government:
Bills

$ 7,822

$ 7,654

Notes

10,732

10,110

Bonds

2,796

3,079

21,350

20,843

Unamortized premiums

280

306

Unaccreted discounts

(49)

(28)

$ 21,581

$21,121

Total par value

Total allocated to Bank

Maturities of
Securities Held

Securities Sold
U.S.
Under
Government Agreements
Securities to Repurchase
(Par value) (Contract amount)
$

912

$

916

16 days to 90 days

5,305

-

91 days to 1 year

5,069

-

Over 1 year to 5 years

6,194

-

Over 5 years to 10 years

1,617

-

Over 10 years

2,253

-

Total

$ 21,350

$

916

At December 31, 2004 and 2003, U.S. government
securities with par values of $6,609 million and $4,426
million, respectively, were loaned from the SOMA, of
which $197 million and $138 million were allocated to
the Bank.
At December 31, 2004 and 2003, securities sold
under agreements to repurchase with contract amounts
of $30,783 million and $25,652 million, respectively,

The total of the U.S. Government securities, net
held in the SOMA was $725,584 million and $675,569
million at December 31, 2004 and 2003, respectively.

and par values of $30,808 million and $25,658 million, respectively, were outstanding. The Bank’s allocated share at December 31, 2004 and 2003 was $916
million and $802 million, respectively, of the contract
amount and $916 million and $802 million, respectively, of the par value.

48 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
5. INVESTMENTS DENOMINATED IN
FOREIGN CURRENCIES
The FRBNY, on behalf of the Reserve Banks, holds
foreign currency deposits with foreign central banks
and the Bank for International Settlements and invests
in foreign government debt instruments. Foreign government debt instruments held include both securities
bought outright and securities purchased under agreements to resell. These investments are guaranteed as to
principal and interest by the foreign governments.
Each Reserve Bank is allocated a share of foreigncurrency-denominated assets, the related interest income, and realized and unrealized foreign currency

European Union Euro:
Foreign currency deposits
Securities purchased under
agreements to resell
Government debt instruments
Japanese Yen:
Foreign currency deposits
Government debt instruments
Accrued interest

gains and losses, with the exception of unrealized gains

Total

and losses on F/X swaps and warehousing transactions.

2004

2003

$ 177

$ 191

63

57

112

57

45

41

224

204

3

2

$ 624

$ 552

This allocation is based on the ratio of each Reserve
Bank’s capital and surplus to aggregate capital and
surplus at the preceding December 31. The Bank’s allocated share of investments denominated in foreign
currencies was approximately 2.923 percent and 2.778
percent at December 31, 2004 and 2003, respectively.
The Bank’s allocated share of investments denominated in foreign currencies, valued at current foreign
currency market exchange rates at December 31, was
as follows (in millions):

Total System investments denominated in foreign
currencies were $21,368 million and $19,868 million
at December 31, 2004 and 2003, respectively.
The maturity distribution of investments denominated in foreign currencies which were allocated to the
Bank at December 31, 2004, was as follows (in millions):
Maturities of
Investments
Denominated in
Foreign Currencies

European
Euro

Within 1 year
$ 262
Over 1 year to 5 years
88
Over 5 years to 10 years
5
Total

$ 355

Japanese
Yen

Total

$ 269
-

$ 531
88
5

$ 269

$ 624

www.philadelphiafed.org | 49

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
At December 31, 2004 and 2003, there were no
material open foreign exchange contracts.

such lease was $1 million for both years ended December 31, 2004 and 2003. Future minimum lease pay-

At December 31, 2004 and 2003, the warehousing

ments under the noncancelable agreement in existence

facility was $5,000 million, with no balance outstand-

at December 31, 2004, were $1 million for years 2005

ing.

through 2006.
The Bank has capitalized software assets, net of

6. BANK PREMISES, EQUIPMENT, AND
SOFTWARE

amortization, of $8 million and $6 million at December 31, 2004 and 2003, respectively. Amortization expense was $1 million for both years ended December

A summary of bank premises and equipment at December 31 is as follows (in millions):
Maximum
Useful Life
(in years)

31, 2004 and 2003.
A software asset was impaired as a result of the decision to standardize check processing in the System.
Asset impairment losses of $1 million were reported as

2004

a component of “Other expenses” for the period ending

2003

December 31, 2003.
Bank premises and
equipment:
Land
Buildings
Building
machinery and
equipment
Construction in
progress
Furniture and
equipment

N/A
50

$

3
74

$

3
72

7. COMMITMENTS AND CONTINGENCIES
At December 31, 2004, the Bank was obligated
under noncancelable leases for premises and equip-

20

12

11

N/A

2

1

10

65

71

Subtotal
Accumulated depreciation

$ 156
(78)

$ 158
(78)

Bank premises and equipment, net

$ 76

$ 80

Depreciation expense, for
the years ended

ment with terms ranging from one to approximately 2
years. These leases provide for increased rental payments based upon increases in real estate taxes, operating costs, or selected price indices.
Rental expense under operating leases for certain
operating facilities, warehouses, and data processing
and office equipment (including taxes, insurance and
maintenance when included in rent), net of sublease
rentals, was $1 million for both years ended December
31, 2004 and 2003. Certain of the Bank’s leases have

$

9

$

9

options to renew. The Bank has no capital leases.
Future minimum rental payments under noncancelable operating leases with terms of one year or more, at

The Bank leases unused space to an outside tenant.
This lease has a term of 2 years. Rental income from

50 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

December 31, 2004, were not material.
At December 31, 2004, the Bank has no other com-

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
mitments and long-term obligations in excess of one

tributions fully funded by participating employers. Par-

year.

ticipating employers are the Federal Reserve Banks, the

Under the Insurance Agreement of the Federal Re-

Board of Governors of the Federal Reserve System, and

serve Banks dated as of March 2, 1999, each of the Re-

the Office of Employee Benefits of the Federal Reserve

serve Banks has agreed to bear, on a per incident basis,

Employee Benefits System. No separate accounting is

a pro rata share of losses in excess of one percent of the

maintained of assets contributed by the participating

capital paid-in of the claiming Reserve Bank, up to 50

employers. The FRBNY acts as a sponsor of the Plan

percent of the total capital paid-in of all Reserve Banks.

for the System and the costs associated with the Plan

Losses are borne in the ratio that a Reserve Bank’s capi-

are not redistributed to the Bank. The Bank’s projected

tal paid-in bears to the total capital paid-in of all Re-

benefit obligation and net pension costs for the BEP and

serve Banks at the beginning of the calendar year in

the SERP at December 31, 2004 and 2003, and for the

which the loss is shared. No claims were outstanding

years then ended, are not material.

under such agreement at December 31, 2004 or 2003.
The Bank is involved in certain legal actions and

Thrift Plan

claims arising in the ordinary course of business. Al-

Employees of the Bank may also participate in the

though it is difficult to predict the ultimate outcome

defined contribution Thrift Plan for Employees of the

of these actions, in management’s opinion, based on

Federal Reserve System (“Thrift Plan”). The Bank’s Thrift

discussions with counsel, the aforementioned litigation

Plan contributions totaled $3 million for both years

and claims will be resolved without material adverse

ended December 31, 2004 and 2003 and are reported

effect on the financial position or results of operations

as a component of “Salaries and other benefits.”

of the Bank.

8. RETIREMENT AND THRIFT PLANS

9. POSTRETIREMENT BENEFITS OTHER
THAN PENSIONS AND
POSTEMPLOYMENT BENEFITS

Retirement Plans

Postretirement Benefits other than Pensions

The Bank currently offers two defined benefit re-

In addition to the Bank’s retirement plans, employ-

tirement plans to its employees, based on length of ser-

ees who have met certain age and length of service re-

vice and level of compensation. Substantially all of the

quirements are eligible for both medical benefits and

Bank’s employees participate in the Retirement Plan

life insurance coverage during retirement.

for Employees of the Federal Reserve System (“System

The Bank funds benefits payable under the medical

Plan”) and the Benefit Equalization Retirement Plan

and life insurance plans as due and, accordingly, has no

(“BEP”). In addition, certain Bank officers participate in

plan assets. Net postretirement benefit costs are actuari-

the Supplemental Employee Retirement Plan (“SERP”).

ally determined using a January 1 measurement date.

The System Plan is a multi-employer plan with con-

www.philadelphiafed.org | 51

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
Following is a reconciliation of beginning and ending balances of the benefit obligation (in millions):

Following is a reconciliation of the beginning and
ending balance of the plan assets, the unfunded postretirement benefit obligation, and the accrued postretire-

2004
Accumulated postretirement
benefit obligation at
January 1

2003

ment benefit costs (in millions):
2004

$

50.4

$

35.1

Service cost-benefits earned
during the period

1.1

0.9

Interest cost of accumulated
benefit obligation

2.4

2.7

(5.5)

13.3

0.8

0.5

Benefits paid

(2.8)

(2.1)

Plan amendments

(4.5)

-

Actuarial (gain)/loss
Contributions by plan
participants

Accumulated postretirement
benefit obligation at
December 31

$

41.9

$

50.4

At December 31, 2004 and 2003, the weighted average discount rate assumptions used in developing the
postretirement benefit obligation were 5.75 percent and
6.25 percent, respectively.

Fair value of plan assets at
January 1

$

Actual return on plan assets

2003

-

$

-

-

-

Contributions by the employer

2.0

1.6

Contributions by plan
participants

0.8

0.5

(2.8)

(2.1)

Benefits paid
Fair value of plan assets at
December 31

$

-

$

-

Unfunded postretirement
benefit obligation

$

41.9

$

50.4

Unrecognized prior service
cost

7.5

12.4

Unrecognized net actuarial
gain (loss)

(13.1)

(19.0)

Accrued postretirement benefit
costs

$

36.3

$

43.8

Accrued postretirement benefit costs are reported
as a component of “Accrued benefit costs.”

52 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
For measurement purposes, the assumed health
care cost trend rates at December 31 are as follows:

The following is a summary of the components of
net periodic postretirement benefit costs for the years
ended December 31 (in millions):

2004

2003
2004

Health care cost trend rate
assumed for next year

9.00%

10.00%

Rate to which the cost trend
rate is assumed to decline
(the ultimate trend rate)

4.75%

5.00%

2011

2011

Year that the rate reaches the
ultimate rate

Service cost-benefits earned
during the period
Interest cost of accumulated
benefit obligation
Amortization of prior service
cost
Recognized net actuarial
(gain)/loss
Total periodic expense

Assumed health care cost trend rates have a significant effect on the amounts reported for health care
plans.

A one percentage point change in assumed

health care cost trend rates would have the following

$ 1.1

Net periodic postretirement
benefit costs

$

0.9

2.4

2.7

(1.7)

(1.9)

0.4

0.5

$ 2.2

Curtailment (gain)/loss

2003

$

(7.7)

$ (5.5)

2.2
-

$

2.2

effects for the year ended December 31, 2004 (in millions):

At December 31, 2004 and 2003, the weighted avOne
Percentage
Point Increase

Effect on aggregate of
service and interest cost
components of net
periodic postretirement
benefit costs
$
Effect on accumulated
postretirement benefit
obligation

One
Percentage
Point Decrease

erage discount rate assumption used to determine net
periodic postretirement benefits costs were 6.25 percent and 6.75 percent, respectively.
Net periodic postretirement benefit costs are reported as a component of “Salaries and other benefits.”
A plan amendment that modified the credited service period eligibility requirements created curtailment

0.6

$ (0.4)

gains.
The Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the “Act”) was enacted in
December 2003.

4.0

(3.2)

The Act establishes a prescription

drug benefit under Medicare (“Medicare Part D”) and a
federal subsidy to sponsors of retiree health care benefit

www.philadelphiafed.org | 53

Federal Reserve Bank of Philadelphia

Notes to Financial Statements
plans that provide benefits that are at least actuarially

Postemployment Benefits

equivalent to Medicare Part D. Following the guidance

The Bank offers benefits to former or inactive em-

of the Financial Accounting Standards Board, the Bank

ployees. Postemployment benefit costs are actuarially

elected to defer recognition of the financial effects of

determined using a December 31, 2004 measurement

the Act until further guidance was issued in May 2004.

date and include the cost of medical and dental insur-

Benefits provided to certain participants are at least

ance, survivor income, and disability benefits. For 2004,

actuarially equivalent to Medicare Part D. The estimat-

the Bank changed its practices for estimating postem-

ed effects of the subsidy, retroactive to January 1, 2004,

ployment costs and used a 5.25 percent discount rate

are reflected in the actuarial gain in the accumulated

and the same health care trend rates as were used for

postretirement benefit obligation and net periodic post-

projecting postretirement costs. Costs for 2003, how-

retirement benefit costs.

ever, were projected using the same discount rate and

Following is a summary of the effects of the expect-

health care trend rates as were used for projecting postretirement costs. The accrued postemployment benefit

ed subsidy (in millions):

costs recognized by the Bank at December 31, 2004
2004

This cost is included as a component of “Accrued ben-

Decrease in the accumulated postretirement
benefit obligation
Decrease in the net periodic postretirement
benefit costs

$ (6.5)
$ (0.9)

Expected benefit

Without

With

payments:

Subsidy

Subsidy

2005

$ 2.4

2006

2.5

2.2

2007

2.6

2.2

2008

2.6

2.3

2009

2.7

2.3

2010-2014

15.1

12.6

$ 27.9

$ 24.0

Total

54 | AR 2004 • FEDERAL RESERVE BANK OF PHILADELPHIA

and 2003 were $6 million and $8 million, respectively.

$

2.4

efit costs.” Net periodic postemployment benefit costs
included in 2004 and 2003 operating expenses were
($1) million and $1 million, respectively.

10. BUSINESS RESTRUCTURING CHARGES
In 2004, the System announced plans for consolidation and restructuring plans restructuring to streamline
operations and reduce costs, including consolidation
of operations and staff reductions in various functions
of several Banks. The Bank’s costs associated with the
restructuring were not material.

www.philadelphiafed.org

Key Federal Reserve
Bank of Philadelphia
Phone Numbers

This address is the Philadelphia Fed’s electronic front
door. Walk through, and you’ll be able to:

Customer Relations
1-877-574-1776

Keep up with the latest information on the regional and

Community Affairs
215-574-6458

•

national economy.
•

Learn about the latest consumer issues.

•

Find links to employment opportunities, educational and
consumer resources, and the latest publications from the
Federal Reserve Bank of Philadelphia, and much more.

In addition, the Bank’s e-mail service notifies you of web updates on the topics you choose, including circular letters, news releases, speeches, payment cards, and more. Be sure to visit the Philadelphia Fed at: www.philadelphiafed.org.

Check out these pages:
Community Affairs:

www.philadelphiafed.org/cca/index.html

Financial Services:

www.philadelphiafed.org/fedservices.html

Payment Cards Center:

www.philadelphiafed.org/pcc/index.html

Research:

www.philadelphiafed.org/econ/index.html

Supervision,
Regulation and Credit:

www.philadelphiafed.org/src/index.html

Financial Statistics/Regulatory Reporting
215-574-6455
Human Resources
215-574-6150
Library & Research
Center
215-574-6540
Payment Cards Center
215-574-7110
Public Affairs
215-574-6113
Research
215-574-6448
Supervision, Regulation
and Credit
215-574-6480
Consumer Complaints
1-800-372-1220
Treasury Services
215-574-4332

www.philadelphiafed.org | 55