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An Intersection
□f Interests:
Bringing Banks and
Communities Together

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CONTENTS
Page

Executive Letters.........................................................................................

4

An Intersection of Interests:
Bringing Banks and Communities Together...................................
Taking the Pulse of a Community....................................................
Bringing People Together................................................................
Developing Resources for Housing and Employment...................
A Point of Reference........................................................................
The Challenge of the Future............................................................

6
8
10
12
16
17

Directors......................................................................................................

18

tense

■

Officers......................................................................................................... 20

Advisory Councils........................................................................................

22

Statement of Condition...............................................................................

24

Statement of Income...................................................................................

25

Statement of Changes in Capital................................................... :............

26

Operating Statistics.....................................................................................

26

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♦ WaS 3 remarkable one for the economy in the Third District and
atlf°nally’the ecor>omic expansion completed its seventh consecui°f 9°°dS and services 9rew more rapidly than at any time this
'Tin !
f
d6Clined t0 its lowest level in 24 Yaara- Inflation slowed,
itv in Asia late in th3 6S e?ined’ and despite concern about ongoing economic instate
rjictrirt on
- 6 year’
out'ook f°r foe American economy is favorable. In the
bv state anfTinT'? 9r0Wth continued, spurred by the long national expansion and effort*
creation
3 g°vernrnerits to create a more receptive climate for business and job
arrncQ +ho not ^

m

tivp vpar Prnrl?nf
decade while n

r_J

.__a

aemmnlm^innhitthe ec°nomic news is undeniably good, it is also true that the prosper*

e''enly distributed. Some people are completely untouched by
+ 1 rou9h the economy and financial markets. There are still
,
3 or 0 Purchase homes and who, though they work full-time, cann°l
h onnn°U9 °h77°rt tfle'r fam'kes- And numerous communities have been strained
populations0 S ' S at ^ave
tdem w'tb smaller tax bases and less self-sufficient
the nntimiem c ' <S

those who nan’t^ff

p
«+-»

roin»zoct^yd'+e

h

s*n^le entity can solve these problems, banks, through their common*

nrnviriinn hnth f-,VI Ies’ have contributed to innovative community-based responses,
enmm ^t'
Iaancia backing and expertise. Banks know their customers and their
RankT
S'
7 ,understand foe problems, yet can see the potential that lies beyond
and create ^obsCata yStS
C°mmunity ^investment, helping to mobilize businesses

rsj

In this Annual Report, we explore the collaboration between banks and corned
nrn,
Th'rd D'Strict and describe the role of our Bank in bringing the5'
it, P,.
er'
e ieve tbat k is particularly important to recognize the contributions
an Ing 0 community revitalization now, as banking and financial services undergo
a ic an rapi restructuring. Despite the challenges of consolidation, banks most
doZsmess00
t0
V,t3lity °f th® C'tieS’t0WnS’ and nei9hborh°°ds in which

In 1997, our Bank maintained its commitment to continuous improvement in the
efficiency of our operations and the guality of our services.
In payments, we improved the speed and reliability of our check imaging sen/ic®
for depository institutions, and we began imaging checks for the U.S. Treasury. On
behalf of the Federal Reserve System, and in conjunction with the Treasury, we helped
introduce the new $50 note with enhanced security features. And, in unison with the
other Reserve Banks across the country, we continued to consolidate and refine our
,
electronic payments service. As a result, we further reduced prices for wire transfers
automated clearinghouse transactions.
In response to the ongoing consolidation of the banking industry, we continued
to work with the Board of Governors and the other Reserve Banks to streamline our bank
examination processes and focus on the factors critical to maintaining the soundness of
the nation’s banking system. At the same time, we continued to promote neighborhood
development and fair access to credit here in our District. Those efforts are the focus of
this Annual Report.
I want to close by recognizing the contributions of our employees to the Bank 5
successes in 1997. It is through their initiative that we found new ways to increase
efficiency, improve existing services, and develop new ones. The pace of change in our
industry and in the economy as a whole will not slow in the years ahead, but for all ofus
at the Federal Reserve Bank of Philadelphia, the commitment to quality service is one
thing that will not change.

4

Edward G. Boehne
President

Bringing Banks and
Communities Together
K

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>—

Financial institutions must try to serve all parts of the communities in

which they do business. When this principle was formally enunciated in the
Community Reinvestment Act (CRA) 20 years ago, it changed bankers’ and ci^

groups’ perceptions of each other. The partnerships that grew out of that

changed perception have benefited neighborhoods, towns, and cities acrossth
country.

£
’ -.

With CRA, community reinvestment became law, but responsible bank­
ers, civic leaders, and government representatives already knew that it made

sense. They understood that economic vitality across an area depends on the

prosperity, stability, and security of every neighborhood. Bankers and commu­

CD

nity representatives recognized that their goals, like their communities, are
common ground. Their interests intersect in the neighborhoods, and the ques­

tion they faced—then and

£

now—is how to extend
financial resources to

underserved areas profit'

ably and maintain an
acceptable level of risk.

Since 1977, CRA has give'
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3

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banks the impetus to take

m

>□
i
□
o

I□

“Consolidation in
banking has the
potential to exacer­
bate tensions between
banks, community
organizations, and
government. One
way to avoid that is
through close and
cooperative dialogue."
— Fred Manning

<
5
□
I
I□
I□
I
0.
Frederick M. Manning has directed community development
efforts at the Federal Reserve Bank of Philadelphia since 1981
and has made the Third District an exemplary proponent of
the Community Reinvestment Act. His approach is straight­
forward: “Simple logic tells us that we need each other. Lend­
ers need activists to alert them to difficulties, to grassroot
attitudes and opportunities, and to be their advocates in the
community. Conversely, community groups need financial
institutions for credit, banking services, financial management,
and business planning advice.”

6

action, and the Federal
Reserve has supported

their efforts.

Much of the support
provided by the Federal

Reserve Bank of Philadel­
phia for community rein­

vestment comes from the
Community and Consume

Affairs Department.

)
I

Th

THE COMMUNITY
AFFAIRS STAFF

°ugh Community Affairs is not responsible for enforcing the Act, the depart­

ment helps banks meet their responsibilities by serving as a conduit for informa-

tion, contacts, and technical assistance.
The real work of community reinvestment is done by the people in

^nks, civic groups, and government agencies. Community Affairs serves as a

civic

I

Frederick M. Manning
Vice President and
Community Affairs
Officer

Vera Bowders
Community
Development Advisor

Catalyst for the process, gathering and circulating information, bringing people
s the

r°ni different arenas together, and creating an environment in which leaders can
I

transform good intentions into workable plans. The Community Affairs staff

ik- !

helPs financial institutions, economic development agencies, and the public

e

answer the essential questions: What are communities’ predominant needs?

.lie

^at resources are available? Are there existing programs that can be dupli-

nu-

cated or adapted? How can banks’ interests be protected while improving

Donald James
Community Affairs
Specialist

Seh/ice to low- and moderate-income clients? What can communities do to
ieS'

make sure mortgage and loan programs succeed? How can diverse groups

arid

v'/°rk together most effectively?

i

The department is an important but subtle link in community reinvest-

rr'er’t, giving the people in board rooms and the people in the neighborhoods

ttle opportunity to talk with each other. Over time, that talk has led to partner-

»fit-

■I

c

shiPs and programs that have enriched communities across the Third District

more affordable housing, flexible financing for first-time homebuyers, start­
up funding and training for microbusinesses, private support for the arts,

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location, health, and recreation, and increased volunteerism.
While the intention of CRA has remained the same over the years, both
I"16 Act and the relationships it inspired have adapted to changing circum-

Star|ces. That adaptive ability has never been more essential than it is now,
>ort

^'Ven the dramatic and rapid consolidation of the financial services industry. At

al

atime when banks are moving to ever more distant corporate headquarters, and

del' I Service areas are spoken of in terms of states instead of neighborhoods, mainrithe

Keith Rolland
Community
Development Advisor

^ining ties with individual communities will require increased diligence on all

Sldes. in such an environment, the information, contacts, and consultation

jrn6f ‘ dr°vided by Community Affairs will be critical in connecting decisionmakers on

al1 sides.

7

The process of community revitalization begins with an assessment of

current conditions. Community Affairs staff members spend time in a desig­
nated area, interviewing bankers, business owners, housing specialists, health

care providers, and people who operate human services organizations. They
examine census data and other statistics, on employment, demographics,

income, lending, and deposits, and review the existing assistance network,

An Intersection

of Interests

Taking the Pulse
□ f a Community

Community Development Advisor Keith Rolland (right) and Steven W. Cappelli, mayor0
Williamsport, Pa., tour the Weightman Block, a S4.3 million redevelopment project that create1

64 low- and moderate-income residential units in the city’s historic Victorian district. Fundi^
sources include the City of Williamsport, which provided approximately $1 million in Coma111
nity Development Block Grant funds and loan guarantees, and Northern Central Bank.

8

COMMUNITY
PROFILES

^eluding public-private

Delaware
Southern Delaware
Wilmington

Partnerships, government

Pr°grams for housing, small
business and economic

New Jersey
Camden
Trenton
Vineland

bevelopment, and nonprofit
initiatives.
Their findings are

Pennsylvania
Easton
Harrisburg
Lancaster
Reading
Scranton/WilkesBarre/Hazleton
Williamsport

summarized in a Profile of
Community Credit Needs, a
Written report analyzing the

ar®a’s history, present
s°cial and economic situa-

t'On- resources, and factors
tampering development.

Federal Reserve Board Governor Laurence H. Meyer (sec­

ond from left) visited Philadelphia last fall for a firsthand
look at redevelopment projects in North Philadelphia anc
Germantown. Among those accompanying him wert

(from left) Philadelphia Fed President Edward G. Boehne

clearly stating the prob-

lems and then identifying

First Vice President William H. Stone, Jr., and Vice
dent and Community Affairs Officer Frederick M. Man
ning.

Sources to address them
'n 9 single document, community profiles enable everyone involved to consider

revitalization in a cohesive way. For example, the 1996 profile of Williamsport,

Pa., revealed a lack of affordable housing and funding for small and new businesses, needs common to many communities in the Third District. A few pages
'ater, the profile lists 46 programs available to assist with affordable housing and
- business development.
Community profiles are really a region’s perception of itself, supported

independent data. In documenting that perception—perhaps for the first
time-—Community Affairs positions the Fed as an impartial, informed intermedi-

ary, an advocate for the area as a whole rather than for any particular constituency. For banks, profiles provide the information necessary to get involved in

revitalization. As they speak with people throughout the Third District, Com­
munity Affairs staff members reinforce an awareness among banks, govern­

ment organizations, community groups, and individuals of how their interests

mtersect. When aware of their interdependence, people are more prepared to
take action together.

9

/

CTJ

Bringing People Together

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Even in an age in
which much communication

takes place electronically, the

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most meaningful relationships

i—j
are built face-to-face. Per­

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sonal contact is central to
Community Affairs’ approach.

It underlies the considerable
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time staff members spend on

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the road, and it is the reason

Community Affairs Councils are regional forums
bring together bankers and community representalitiv®5

behind the formation of Coun­

to discuss issues of local concern. Often, a cas1
conversation at a council meeting leads to a create

cils of Community Affairs

solution out in the community. A joint meeting
Camden-Trenton and Southern New Jersey counc’*’

Officers, regional groups that

is pictured.

respond to the issues raised in community profiles.

Soon after a region’s profile has been completed, community reinvest­
ment officers from local banks are invited by the Fed to join the council. For

each of the next five years, three or four meetings are organized and sponsor^'d
by the Philadelphia

Fed’s Community
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iD.

Affairs Department,

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□
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□
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with the hope that the

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council will continue 0,1

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its own after that.

Meetings focus

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on existing or emergi^

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□
□

issues in the region.
Recent council gather'

ings have addressed
PNC Bank has committed its financial and human resources
to the renewal of Norris Square, a North Philadelphia neigh­
borhood. In 1994, the bank promised $2.5 million over 10
years to strengthen the economy, housing, and community
life of Norris Square. PNC Bank employees have volunteered
for hands-on jobs to spruce up the area.

io

microenterprise lending
in Pennsylvania’s

Lehigh Valley, rural an d

“The council meetings
.
are very beneficial. The
topics are timely and
help the agency see
what is going on with
economic development
in the area. ”

Srr«all-business development in central Pennsylvania, and financing for lead
Paint abatement in older housing in southern New Jersey. Those invited to

sPeak have experience relevant to the topic but can come from any quarter,
deluding bankers from outside the council area, legal experts, representatives

— Howard Henderson
Rural Development
Coordinator
U.S. Department of
Agriculture
Southern New
Jersey Council

°f federal and state agencies, and local community leaders.

Community Affairs Councils, which originated with the Philadelphia Fed,

have effectively increased bank involvement in local economic development.

From the perspective of those invited to make presentations, council meetings
□Her critical exposure to decisionmakers, potential sources of collaboration,

“Almost every meeting
brings people with
special knowledge
whom one would not
otherwise meet."

advice, and funding.

— Paul Baker
Vice President
Colonial Bank, FSB
Southern New
Jersey Council

SERVING THE UNDERSERVED
Cal Hollis, manager of a community development credit union in tiny

Houston, Del., was concerned about his customers who worked on poultry farms
and at processing plants scattered across rural Kent and Sussex counties.

In a presentation to the Southern Delaware Council of Community Affairs

“The county commis­
sioners’ speeches at
the last meeting
regarding Lycoming
County’s economic
development strategy
were very interesting.
The bank was unaware
of all of the initiatives
that office was plan­
ning. ’’

Officers, Hollis talked about the challenges his organization, Delmarva FIFE FCU,

faces. Its clients are widely dispersed, speak mainly Spanish, and come from

cultures in which banks are not trusted. As a result of Hollis’ presentation,

Oelmarva FIFE FCU secured funding from several major Delaware banks for a
Mobile branch office to make weekly visits to customers in Georgetown, Smyrna,
Harrington, and Milford.
Four days a week, the mobile office staff was on the road, providing
bilingual services, opening accounts, making $100 loans to help clients establish

credit, and counseling customers on the value of saving money. Funding for the
— John Frey
Assistant Vice
President
Jersey Shore State
Bank
Williamsport Council

mobile office was provided by Felton Bank, First Omni Bank, Greenwood Trust,
J-C.Penney Bank, and NationsBank. According to Cal Hollis, the credit union
would never
have been able

to assemble a
consortium of
such powerful

friends without
the opportunity

provided by
the council

meeting.

11

CD
<Z>

Developing Resources
for Housing and Employment'
The role of the Fed in community development is like a gardener who

■+-4

£

cultivates native plants. The gardener can’t really take credit for the plants—
they occur naturally—but by weeding and watering around them, the gardener

I—4

enables them to bloom more fully. And when the garden is green and thriving,
......

taking credit isn’t nearly as important as enjoying the view.
In many economically disadvantaged areas of the Third District, where

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affordable housing and secure employment are pressing needs, some prorniS'
ing projects have taken root.

Affordable housing enables renters to become owners, gives them a
financial interest in preserving and improving their neighborhoods, and provide

stability for the community. Secure employment provides the resources neceS'

sary to buy and improve homes, support families, and build security for the
future.

One estimate holds that 57% of all families, and 91% of single people,

k-—J

£

who rent in America cannot afford the median-priced home in their commun1'
ties. Working together, banks and communities can overcome many issues
that in the past have derailed the development of affordable housing. For
example, it may be difficult for banks to provide mortgages to low- and model'

ate-income families: in addition to limited resources, applicants may have p°°r
credit records, or no record at all. Yet these are exactly the people who can

revitalize neighborhoods by becoming permanent residents. Interestingly,

community groups have found that low- and moderate-income people do not
necessarily have a greater chance of defaulting on loans—often, they are

"These people have
been previously shut
out of the banking
system. Now, they're
allowed inside...and
communities are
being rebuilt as a
result of this lend-

successfully paying more in rent than they would pay on a mortgage.
In the Philadelphia area, lenders have developed products and programs

to assist first-time homebuyers with low and moderate incomes. One program
uses flexible loan qualifications: consistent payment of rent and utility bills is com
sidered evidence of creditworthiness, and payments from Social Security and

welfare are accepted as income. Banks have also reduced their risk through

— Fred Manning

consortium financing, and community groups have helped prepare loan appli12

Cants by providing counseling to those who need to resolve old debts or learn
^°w to save and budget. As a final step, specially designed loans are marketed

Wlde|y to make potential customers aware of their availability.
Supporting the development of microbusinesses has proven more

CornPlex than affordable housing, probably because there are more variables
Solved. In addition

a borrower’s

Creditworthiness,

^ere js the question
the viability of the

business itself,

^hich may be a
^die-based or part-

tirr,e effort. Owners

such enterprises
°^en do not have
f°rmal business

plar|s and may be
familiar with

business principles.

^ven so, with the
z

SuPport of commu-

nity development

£
□
u

□
9r°ups that serve as °
01
lriterrnediaries for
*
lining, consultaand oversight,

I

-

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Q.

'ttany
rp'c''oenterprises are
lining access to

expertise and

Adding they need
thrive.

Saint Joseph’s Carpenter Society is rebuilding Camden, N.J., one
block at a time. Since 1985, the organization has purchased and
rehabilitated 160 homes in East Camden, selling them at afford­
able rates to first-time buyers. Among the local banks that have
provided funding, reduced-interest mortgages, and other assis­
tance are CoreStates, PNC, and Summit. In 1994, a grant from
Campbell Soup enabled Saint Joseph’s to establish a course for
families who purchase homes. The training, which covers house­
hold finances, credit, home maintenance, and community devel­
opment, may be part of the reason Saint Joseph’s has so far not
had a single default.

13

in there in the beginning as a player,
we can at least get the banks to the
table,” she says.
Working Capital Delaware

Through Working Capital
Delaware, people can start a business
from ground zero—without collateral,
credit history, or a formal business
plan—and emerge with experience in
both business and credit manage­
ment. Under traditional lending stan­
dards, most of the program’s partici­
pants would be classified as highrisk—too small, too inexperienced, too
expensive to work with. Yet with the
program’s scaled-down loan program
and practical training in business
fundamentals, Working Capital entre­
preneurs have been very successful.
In its first three years of operation,
Working Capital Delaware has served
400 members, made 360 loans, and
maintained a 98% repayment rate.
Program members form peer
groups and progress as a team
through successive levels that com­
bine loans and training in concepts
such as loan review, cash-flow man­
agement, operations, and marketing.

P H O T O : T ho m as Td o h ey Brow n

Microbusinesses can make
bankers nervous. Fledgling entrepre­
neurs may be talented in their spe­
cialty, but might not have a clue about
how to run a business. They tend to
be isolated and work out of their
homes. Often the owner sees the
whole workforce when he or she looks
in the mirror.
From a banker’s perspective,
microbusinesses typically are tiny,
risky, and inexperienced clients.
Microbusinesses can also
assist neighborhood revitalization. A
source of new products and services,
they give birth to creative ideas and
approaches. This is where untested
entrepreneurs gain the experience and
confidence that build thriving careers
for themselves and their employees.
From a community perspective,
microbusinesses are a source of
innovation and employment in areas
battered by economic shifts.
Reconciling these views is the
work of microenterprise programs
such as Working Capital Delaware of
Wilmington, and the Entrepreneurial
Development and Global Education
(EDGE) Center at Kutztown University
in Reading, Pa., which provide train­
ing, networking, mentoring, and
access to funding.
The Philadelphia Fed assists
these groups by creating awareness of
them. By inviting representatives to
make presentations before Community
Affairs Councils and other groups, the
Fed places the topic on bankers’
agendas. One of those invitees is
Mary Dupont, director of Wilmington’s
Women’s Center for Economic Op­
tions, who helped establish Working
Capital Delaware after making a
presentation on peer lending for the
Philadelphia Fed. Dupont has subse­
quently presented the Working Capital
concept to bankers from Philadelphia,
Maryland, and Hawaii. “With the Fed

EDGE Center/Mindco

The EDGE Center pairs entre­
preneurs taking training at the Minority
Development Council (Mindco) in
Reading with advanced business
students at Kutztown University. The
joint program, which is targeted to
female- and minority-owned busi­
nesses in Reading, provides peer and
academic support to 50 new and
prospective business owners each
year, enabling them to develop busi­
ness plans that can be used to acquire
funding.
Bolaji Owoloja opened African
Imports, a shop offering clothing,
jewelry, and arts and crafts in the
Reading Outlet Center in October
1996, before she completed the EDGE
Center/Mindco program. She credits
the program with enabling her to
secure $5,000 in loans, which she
used to purchase inventory.

Among the successful entrepreneurs who have
benefited from microenterprise incubator
groups are Bolaji Owoloja (opposite page), a
retail merchant, Lilliam Lopez (left), a dress­
maker, and Harry A. Brown, Jr. (right), the man
who photographed Lilliam.

P H D TQ : Thomab Tddhey brow n

Each group is responsible for approv­
ing its members’ loans and overseeing
repayment.
Wilmington photographer Harry
A. Brown, Jr. was already working full­
time in his business by the time he
joined the program, which currently
exists in eight states. For Brown, the
incentive was not the $500 loan that
new participants receive, but the
opportunity to get feedback.
Another Working Capital par­
ticipant, dressmaker Lilliam Lopez,
says that the program encourages
individuals to take their businesses
seriously, adding that the support
provided by her peer group has been
invaluable.
Brown, who comes from a
family of entrepreneurs, concurs. His
sister, brother, wife, and mother all
have businesses and followed him into
Working Capital. “The program allows
us to exchange ideas, solve problems,
and be a sounding board for each
other,” he says.
Working Capital Delaware is a
joint venture of the YWCA of New
Castle County and the First State
Community Loan Fund.

An Intersection of Interests

A Point of Reference
In addition to providing the opportunity for bankers, community repre­
sentatives, and other groups to work together, Community Affairs gives them the
information they need to make the most of their combined efforts. The Philadel­
phia Fed, in particular, has become an information clearinghouse for banks,

community groups, and other organizations as well. If there is a model pro­
gram, a key contact, or a source of good advice on a reinvestment topic any­

where in the country, chances are that the Philadelphia Fed’s Community Affair
staff knows about it and has catalogued it in print, on video, or on its web pageThe department publishes an extensive list of brochures, directories, and

guides that detail successful programs and strategies, as well as the institutions

and contact persons behind them. Among these publications are Strategy for
Building Development Partnerships with Banks, a brochure for community and
consumer groups that contains step-by-step instructions on how to approach

banks for funding, Partners in Progress for Philadelphia, a directory of organiza­

tions working to revitalize city neighborhoods, and Small Business = Big Possi'

With a few keystrokes, anyone can reach Community Affairs’ web page:
www.phil.frb.org/pubs/comaff.html

16

bilit|es, a guide that profiles leading small-business lenders and partnerships

fr°m across the nation.
Cascade, a community reinvestment and consumer credit newsletter, is

Published three times each year to update bankers and community groups on
pr°jects and initiatives in the Third District.

The history of the Community Reinvestment Act and recent changes in
'ts implementation are among the topics of two Community Affairs videos. In

Edition, the department has a web page that includes brief descriptions of
Plications, home loan data, and contact lists. Web site visitors who have
Pstions and requests can e-mail them directly to the department through the

site.

E Challenge gf the Future

— Doris Schnider
Executive Director
Delaware CommuT v
nity Investment
Corp.

The effects of the Community Reinvestment Act (CRA) cannot be mea-

Ured like funds in a bank account, but it is possible to identify individual suc-

Cesses that grew out of work inspired by the Act. Owing in part to its influence,

lend

ln9 in previously overlooked areas has become competitive, and loan

Pormance has been good. Since the passage of the Act, more than $220

billon has been committed by lenders to traditionally underserved communities in the United States—$175 billion of that since 1994 alone.

These accomplishments are due to the imagination, cooperation, and
bard

"CommunityAffairs was
very instrumental in the
successful formation of
the Delaware Commu­
nity Investment Corpo­
ration, a multibank
community develop­
ment corporation. The
Philadelphia Fed took
an active role in
acquainting its member
banks with the benefits
of participation in the
consortium. In addi­
tion, the Fed’s continu­
ing support of the
program has contrib­
uted greatly to our
success. In 1996, 31
participating banks
contributed over $57
million to our various
programs. "

work of the people at banks and in the neighborhoods, who continue to

striv.
e to revitalize the places in which they do business, live, and work. The
p
ec)eral Reserve and the Philadelphia Fed are proud to have assisted them.
As CRA enters its third decade, the challenge for everyone interested in

immunity reinvestment is to sustain the relationships already developed and
extend them to include institutions that are larger, more distant geographically,

P less familiar with local priorities. As the number of banks decreases and
steffs shrink, it seems likely that financial institutions’ role in community revital-

’Pon will change. For its part, the Philadelphia Fed’s Community Affairs
Action will strive to ease the transition by continuing to provide information and
Ptacts, and by cultivating an environment in which bankers and community

rePresentatives can work together for the benefit of their communities.
17

Directors
Deputy Chairman, Joan Carter (left), President & Chief Operating Officer, UM Holdings Ltd., Haddonfield, N.J., and Chairman,

Kennedy, Business Manager, International Brotherhood of Electrical Workers, Local Union #269, Trenton, N. J.

J. Richard Jones (left), President & Chief Executive Officer, Jackson-Cross Company, Philadelphia, Pa., with Robert D. Burris (center)
President & Chief Executive Officer, Burris Foods, Inc., Milford, Del., & Howard E. Cosgrove, Chairman, President, & Chief Executive
Officer, Delmarva Power and Light Company, Wilmington, Del.

18

Murry (left), President and Chief Executive Officer, Lebanon Valley Natienal Bank, Lebanon, Pa., and Dennis W. DiLazzero,
,ehtand Chief Executive Officer, Minotola National Bank, Vineland, N.J.

v'a B. Lee (left), President & Chief Executive Officer, Omega Bank, National Association, State College, Pa., and Charisse R. Lillie,
^er, Ballard Spahr Andrews & Ingersoll, Philadelphia, Pa.

19

In 1997, numerous promotions and administrative changes took place among the offic'a

K

staff:
Linda K. Kirson was appointed Treasury Services Officer.

Gerard A. Callanan was named Vice President and Discount Officer for the Supervisio11,
Regulation and Credit Department.

Sharon N. Tomlinson became the Assistant Vice President for the Business Planningar'

Budgets Department.

Mary Ann Hood became Assistant Vice President in Check Adjustments.
Richard A. Valente was named Assistant General Auditor.

Edward G. Boehne
President

Gerard A. Callanan
Vice President and Discount Officer

William H. Stone, Jr.
First Vice President

Theodore M. Crone
Vice President and Economist

Donald F. Doros
Executive
Vice President

Patrick L. Donahue
Vice President

Edward J. Coia
Senior Vice President and Manager,
Cash/Fiscal Product Office
Michael E. Collins
Senior Vice President
and Lending Officer

Richard W. Lang
Senior Vice President
and Director of
Research

Ronald B. Lankford
Senior Vice President
D. Blake Prichard
Senior Vice President

William Evans, Jr.
Vice President
Joanna H. Frodin
Vice President
Arun K. Jain
Vice President
Jerry Katz
Vice President

Henry T. Kern
Vice President

Edward M. Mahon
Vice President
and General Counsel

Milissa M. Tadeo
Senior Vice President

Frederick M. Manning
Vice President and
Community Affairs Officer

J. Warren Bowman, Jr.
Vice President

Loretta J. Mester
Vice President and Economist

Robert J. Bucco
Vice President

Stephen A. Meyer
Vice President and
Associate Director of Research

20

'°uis N. Sanfelice
ICe President
J°hn B. Shaffer

ICe President and
beneral Auditor
J®rbert E. Taylor

e President and Secretary

^sfl R Viswanathan
nfe President and Cash/Fiscal Product
Ufficer
^leen p. Adezio
distant Vice President
J°hnG. Bell

distant Vice President

^irleY L. Coker
S|stant Vice President and Counsel
^an Croushore

Joseph L. McCann
Administrative Services Officer and
Security Officer
Alice J. Menzano
Assistant Vice President and
Cash/Fiscal Product Officer
Edward Morrison
Operations Officer
Camille M. Ochman
Assistant Vice President

Jeanette Paladino
Assistant Counsel
A. Reed Raymond, III
Assistant Vice President and
Examination Review Officer
Patrick M. Regan
Assistant Vice President and
Information Security Officer

S|stant Vice President and Economist

£Otlri J. Deibel

Richard A. Sheaffer
Assistant Vice President

distant Vice President
^°bert n. Downes, Jr.
distant Vice President
^ever|y |_ Evans
^Ss‘stant Vice President

Assistant Secretary

Or|na L. Franco
^9et Officer
^hn v Heelan

Ronald R. Sheldon
Assistant Vice President
Marie Tkaczyk
Assistant Vice President
Sharon N. Tomlinson
Assistant Vice President and Planning
Officer and Assistant Secretary

Richard A. Valente
Assistant General Auditor

ernational Examinations Officer

£ arV Ann Hood
distant Vice President
(J
^°Ward M. James, Jr.
^Pport Services Officer

^ari L. Kiel

Bernard M. Wennemer
Assistant Vice President

Anthony J. White
Financial Services Officer
Michael P. Zamulinsky
Assistant Vice President

distant Vice President

^da K. Kirson
r®asury Services Officer

K
n°mas P. Lambinus
distant Vice President
21

Advisory Council

Community Bank Council
Chair
Dennis S. Mario
President & CEO
Main Line Bank
Villanova, Pa.

Deputy Chair
Ronald L. Hankey
President & CEO
Adams County National
Bank
Gettysburg, Pa.

Jay M. Ford
President & CEO
Crest Savings Bank, SLA
Wildwood Crest, N.J.
Gary N. Gieringer
Chairman & CEO
Patriot Bank
Pottstown, Pa.
Thomas L. Gray
President & CEO
Carnegie Bank N.A.
Princeton, N.J.

Barbara C. Jarvis
President & CEO
The Felton Bank
Felton, Del.

Donald L. Masten
Chairman & CEO
The Pennsville National Bank
Pennsville, N.J.
Gerald A. Nau
President & CEO
Great Valley Savings Bank
Reading, Pa.
John R. Stranford
President & CEO
Third Federal Savings Bank
Newtown, Pa.
John F. Tremblay
President & CEO
Bank of Mid-Jersey
Bordentown Twp., N.J.

W. Jack Wallie
President & CEO
East Stroudsburg Savings
Assoc.
Stroudsburg, Pa.
Robert C. Wheeler
Chairman
Grange National Bank
Laceyville, Pa.

Credit Union Council
Tne-Federal Reserve
Bank's three advisafy

councils include rep-resen talives from njfftiy&fy
the Tiird Districts lead­

Chair
Betty Benfield
President
K of C FCU
Philadelphia, Pa.

ing industries. The regu­
lar meetings between

members of the councils
and the Bank's senior of­
ficers provide a venue
for exchanging impor­

tant information about
local business and the
economy.

Deputy Chair
Francis R. Muto
Manager & CEO
Peoples First CU
Allentown, Pa.
Beverly K. Brown
Treasurer/CEO
CUMCO FCU
South Vineland, N.J.
22

James E. Everhart, Jr.
Manager
Louviers FCU
Newark, Del.

Mary Jane Griffith
Vice President & CFO
South Jersey FCU
Deptford, N.J.
Cathy S. Henry
President & CEO
Heritage Valley FCU
York, Pa.

JQ"RKebles

5j“'Ce One FCU
’^s-Barre, Pa.
^F.LaSala
?6cutive Vice President
C±ark FCU
st Chester, Pa.

^iarn J. Lavage

?s'dent & CEO
5v'ce First FCU
Kilie, Pa

Heloise L. Osborne
Manager
Gemco Employees FCU
Wilmington, Del.
Gary H. Penrose
President & CEO
Mercer County Teachers
FCU
Hamilton, N.J.
Steven D. Schlundt
Manager
Atlantic City Firemen's FCU
Northfield, N.J.

^Mall Business

Sericulture Council
%air
pharon Dauito-Baxter

resident
Jelph Dauito & Sons
island, N.J.
feputy Chair

q Caube
ieral Manager

;^e-tv

'^es-Barre, Pa.

pUben Bermudez
/esident

ante, Inc.
island,
N.J.
Se||a L. Clark

Jr®ctor
p6st Philadelphia Enterprise Center
ei'adelphia, Pa.
p°an R. Henderson
Resident

I ■ Henderson & Associates
; ^Pcaster, Pa.
I
J^mas E. Hoversen

resident
^0|Tarco Products
Maiden, N.J.

Rodney L. Metzler
Owner
Pleasantview Farms
Martinsburg, Pa.

Philip B. Mitman
Owner
Bixler's Jewelers, Inc.
Easton, Pa.
David R. Rice
President
Rice Fruit Company
Gardners, Pa.

G. Erwin Sheppard
Vice President
Sheppard Farms, Inc.
Cedarville, N.J.

Steven J. Shotz
President
Quantum Group
Wilmington, Del.

(2

ftlladelpltia

V

W. Gregory Wood
President
Hocher Manufacturing Company, Inc.
Rehoboth Beach, Del.

23

STATEMENT OF CONDITION
MILLIONS)

(IN

As of December 31,
1997

Gold certificates

$

Special drawing rights certificates

350

1996

$

423

282

396

53

43

222

476

16

9

14,509

15,259

1,014

924

137

138

Bank premises and equipment, net

75

74

Other assets

15

13

$ 16,673

$ 17,755

13,970

$ 13,822

1,720

1,297

Other deposits

10

8

Deferred credit items

184
9

261
7

162

1,762

Accrued benefit cost

49

47

Other liabilities

12

10

16,116

17,214

Capital paid-in

284

273

Surplus

273

268

557

541

$ 16,673

$ 17,755

Coin

Items in process of collection
Loans to depository institutions

U.S. government and federal agency
securities, net
Investments denominated in foreign

currencies
Accrued interest receivable

Total Assets

LIABILITIES:
Federal Reserve notes outstanding, net

$

Deposits:
Depository institutions

Statutory surplus transfer due U.S. Treasury

Interdistrict settlement account

Total Liabilities

CAPITAL:

Total Capital

Total Liabilities and Capital

STATEMENT OF INCOME
(IN

MILLIONS)

For the years ended December 31,

1996

1997
$

944

Interest on U.S. government securities

$

Interest on foreign currencies

_____ 22

21

900

965

40

41

20

18

(154)

(80)

Government securities gains, net

0

1

Other income

4

4

Total Interest Income

Income from services

878

Reimbursable services to
government agencies

Foreign currency losses, net

Total Other Operating Loss

(90)

(16)

65

64

Occupancy expense

9

8

Equipment expense

10

9

2

3

Assessments by Board of Governors

22

24

Other expenses

48

48

156

156

Salaries and other benefits

Cost of unreimbursed Treasury services

Total Operating Expenses
Net Income Prior to Distribution

Dividends paid to member banks

$

654

$

793

$

17

$

12

Transferred to surplus

11

83

0

553

626

145

Payments to U.S. Treasury as interest

on Federal Reserve notes

Payments to U.S. Treasury as required
by statute
Total Distribution

$

654

$

793

i
\

Statement of Changes
(IN

Capita1'

in

\

MILLIONS)

{

For the years ended December 31. 1997 and December 31, 1996

i
I

Capital
Paid-in

Surplus

Total
Capita

1 1
Balance at January 1, 1996
(3.8 million shares)
Net income transferred to surplus
Statutory surplus transfer to the
U.S. Treasury
Net change in capital stock issued
(1.7 million shares)
Balance at December 31,1996
(5.5 million shares)
Net income transferred to surplus
Statutory surplus transfer to the
U.S. Treasury
Net change in capital stock issued
(.2 million shares)
Balance at December 31, 1997
(5.7 million shares)

$

190

$

190
83

(5)

273

380
83
(5)

_____ J3

83

$

*
$

$

268
11
(6)

li

$

284

$

273

Operating Statistics
1997
Volume

1997
Dollar Value

1996
Volume

Wire Transfer
of Funds

7.2 million transfers

$19.8 trillion

6.9 million transfers

ACH:
Government
Commercial

161.7 million items
126.5 million items

$215.8 billion
$331.0 billion

149.0 million items
108.8 million items

Check processing:
U.S. Government 23.1 million checks
831.3 million checks
All others

1996
Dollar 1

$17.6 triH'01’

$77.1 bil"J
$230.6 bill'0

20.4 million checks
$23.8 billion
$1,181.2 billion 816.4 million checks

$21.4 biH'0^
$932.4 biH'°

Cash operations:
Currency
processed
Coin processed

1,110.6 million notes
143.2 thousand bags

$17.9 billion
$69.3 million

961.8 million notes
94.1 thousand bags

$17.0 bill'011
$47.2 mil1'0

Loans to depository
institutions

326 loans

$766 million

457 loans

$1.1 bill!011

$21.3 trillion

1.5 million transfers

Electronic book-entry
1.6 million transfers
transfers
Food coupons
processed

139.1 million coupons $718.6 million 156.8 million coupons

$19.1 trill'011

$802.5 mill'0'

FEDERAL RESERVE LIBRARY
Philadelphia, PA 19106

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r,riting; Federal Reserve Bank of Philadelphia Printshop,