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Table of Contents

From the Boardroom
Exploring the Twelfth District
12th District Reorganization
Organization Chart
Spotlight on the Pacific Northwest
Highlights of [991




The Federal Reserve Bank of San Francisco is one of twelve
regional Reserve Banks which, together with the Board of
Governors in Washington, D.C., comprise the nation's
central bank.
As the nation's central bank, the Federal Reserve is
responsible for making and carrying out our nation 's
monetary policy. It also is a bank regulatory agency, a
provider of wholesale priced banking services , and the
fiscal agent for the United States Treasury.
The Federal Reserve Bank of San Francisco serves the
Twelfth Federal Reserve District, which includes the nine
western states - Alaska, Arizona, California, Hawaii, Idaho,
Nevada, Oregon, Utah and Washington - Guam, American
Samoa, and the Northern Mariana Islands.
To serve this expansive region , the San Francisco Reserve
Bank has five offices: the headquarters in San Francisco ,
and offices in Los Angeles, Portland, Salt Lake City, and
Seattle. Each office provides financial services to the public
and banking institutions in its locale.

From the Boardroom

From left, Robert F. Erburu,
Chairman (1991), James A. Vohs,
Chairman (1992), and Robert T.
Parry, President.
This past year saw significant challenges for the Twelfth District economy and western banking.
Along with the rest of the nation, our attention turned to the prospects for recovery from the
national recession.
Spanning nine western states, our District is the largest geographically within the Federal Reserve
System, and possesses an unusually diverse economy. In this Report, we explore the patterns of
diversity that have shaped the western regional economies from their early settlement in the
1800s to the present. We also look at how this diversity was reflected in the economic perfor­
mance of the region during the past year.
As part of our regional profile, this Report spotlights the Pacific Northwest through observations
by Angelo S. Carella, former senior vice president-in-charge of our Portland Branch, who retired
in September 1991 after 35 years of service, and Gerald R. Kelly, senior vice president-in-charge
of our Seattle Branch, who will retire during 1992 after 39 years of service. Kelly and Carella
comment on some of the transitions taking place in the Pacific Northwest, from the changing role
of the branch offices to the impact of the consolidation trend on banking.
In the dynamic economic and regulatory environment in which we operate, it is imperative that
we strive to anticipate and meet the needs of our Twelfth District constituencies. This Report
reviews the Bank's performance during the past year in achieving its fundamental objectives.


The wholesale banking arena is shaped by rapidly changing technological innovation. To meet
the challenges presented by this dynamic environment, we are guided by our well-established
commitment to enhance the quality and efficiency of the payments system to benefit all market
segments of the financial community and its public.
The supervision and regulation of bank holding companies and state-chartered member banks is
another vital area of responsibility for the Bank. The recent passage of banking reform legislation
calling for a stricter regulatory environment, along with the trend toward bank consolidation,
make this a very active arena. Our goals in this area continue to be to maintain a safe and sound
banking system, and to monitor compliance with community development and reinvestment
This Report also highlights key elements of change within our District organizational structure
which took effect on January 1, 1992. The reorganization is part of our ongoing commitment to
meet the divergent needs of the District.
In meeting the challenges of 1991, management was helped by the invaluable guidance of the
Bank's Boards of Directors at our headquarters office and each of our four branches. Their inde­
pendent assessments of economic and financial conditions throughout the nine western states
provided instrumental support in the formulation of monetary policy, and their expert counsel
guided us in major management decisions.
We especially appreciate the contributions of Robert F. Erburu (Chairman of the Board and CEO,
The Times Mirror Company, Los Angeles, CA) who stepped down as Chairman of the San Fran­
cisco Head Office Board at the end of last year after four years of service in this role. His great
gifts of leadership and astute expertise provided instrumental guidance to the Bank's manage­
ment, to its five boards of directors, and to the Board of Governors. We are grateful that Mr.
Erburu will continue to lend his invaluable skills to the Bank as Deputy Chairman of the Board in
We also extend our heartfelt thanks to those individuals who completed their terms of service
during 1991: on the San Francisco Head Office Board, Deputy Chairman, Carolyn S. Chambers
(President and CEO, Chambers Communications Corp., Eugene, OR); on the Los Angeles Branch
Board, David R. Lovejoy (Former Vice Chairman, Security Pacific Corporation, Los Angeles, CA)
and Harry W. Todd (Managing Partner, Carlisle Enterprises, L.P., La Jolla, CA); on the Salt Lake
City Branch Board, Chairman, D.N. Rose (President and CEO, Mountain Fuel Supply Company,
Salt Lake City, DT) and Gerald R. Christensen (President and Chairman, First Federal Savings
Bank, Salt Lake City, DT); on the Seattle Branch Board, Bruce R. Kennedy (Former Chairman,
Alaska AirGroup, Seattle, WA); and, on the Federal Advisory Council, Paul Hazen (President and
COO, Wells Fargo Bank, N.A. and Wells Fargo & Co., San Francisco, CA).

James A. Vohs

Robert T. Parry


Exploring the Twelfth District
- Northern California, Hawaii
A wealth of natural resources provided the common source of early development for both
Northern California and Hawaii. The gold rush of 1849 sparked Northern California's
economic development and turned San Francisco into a major port and financial center.
While the lure of gold drew thousands of prospectors to the Sierras, the fertile Central Valley
provided a home for many farming and ranching immigrants. The region's growing wealth
provided the ready capital necessary for its rapid expansion.
The harvesting of Hawaii's vast sugarcane fields and the development of the plantation
system by European settlers during the early 1800s signaled the beginning of the Islands'
agricultural development. Hawaii's population boomed with the influx of Asian immigrants
imported to work the sugar plantations. Trade flourished as merchant shippers took
advantage of Hawaii's strategic position in the center of the Pacific to build strong market
ties with the United States, particularly California 's booming gold rush economy.

Northern California
Technological leadership has characterized
Northern California's rapid growth since the
turn of the century. This was evident in the
engineering genius which created the
intricate network of canals, darns, reservoirs,
and aqueducts to bring the water supplies of
the Sierra Nevada and the Colorado River to
California's arid valleys and urban centers.
The invention of the refrigerated railroad car
and agricultural specialization entwined to
propel the Central Valle y into its position as
a world- class producer of fru its, vegetables,
and nuts. Since the Franciscan monks' first
attempts to ferment Sonoma Valley grapes
into wine, the inland valleys of Sonoma,



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Napa, and Mendocino counties have become
world renowned for their premier wines.
Northern California's Silicon Valley
launched the modern computer industry and
remains a leading center of the world's high­
tech industries, serving as headquarters for
such innovators as Apple and Hewlett­
Packard. San Francisco remains an
important financial center, serving as the
headquarters for most of the major western
banks, and the Pacific Coast Stock Exchange,
in addition to being a major center for
venture capital.


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During 1991, Northern California felt the
impact of the national recession, though less
severely than Southern California. While
Northern California accounts for 25 percent
of California's total employment, only about
10 percent of the jobs lost in the state since
July 1990 have been in the northern part of
the state. The manufacturing industries of
Silicon Valley, a source of major economic
growth in recent years, were the hardest hit
sector of the region. Unemployment in Santa
Clara County rose from 4.5 percent to 5.6
percent between September 1990 and 1991,
reflecting a 5.5 percent job loss in the elec­
tronic components industry. Cutbacks in the
high-tech area also have
influenced other sectors of
Silicon Valley, with service


employment rising only
slightly and finance em­
ployment experiencing a 1.5
percent decline.
During the past year,
growth in the San Francisco
Bay Area also suffered from
consolidations in the
finance industry, where
employment fell somewhat
below the past year's level.
California state budget shortfalls also have
led to cutbacks in public sector employment.
During 1991, unemployment rates in Central


Northern California's outlook is mixed . The
region's economy has weakened along with
the rest of the nation during the recession.
Defense cutbacks, declines
in high-tech employment,
and the Central Valley's
agricultural problems have
compounded the region's
weak performance.
Although economic
conditions in Northern
California should improve
as the national picture
brightens, future growth
rates are likely to be less
than the high levels
experienced during the
past decade. High costs and an increasingly
inadequate infrastructure are likely to
weaken growth prospects in the San
Francisco Bay Area, while the Sacramento

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Baja California

Valley towns remained among the highest in
the District as lower crop production added
to the usually higher unemployment rates
found in agricultural communities.
Significant damage to citrus crops resulting
from the severe freeze of December 1990,
along with the fifth successive year of
drought conditions, contributed to lower
production levels during the year.
Unemployment in Fresno reached 11.1
percent during September 1991 compared to
10.7 percent in September 1990.

151 6

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area faces persistent state budget problems.
The region should continue to benefit from
its relatively strong population growth. The
availability of relatively low-priced land and

the Islands' economy. The Islands' growing
defense industry also pulled labor away
from the consortium's influence.

housing costs in the inland areas will most
likely promote faster growth to these areas.

Today, Hawaii's primary dependence upon
sugar and pineapple has diminished with the
rapid growth of the tourist industry.
Hawaii's strategic location between Asia and
the Ll.S. mainland has made it a prominent
destination for Asian and U.S. mainland
visitors. Additionally, Japan's rapid income
gains during the 1980s have spilled over to
Hawaii's economy in the 1990s bringing
sharp increases in Japanese investment and
tourism to the Islands.

By the opening of the 20th century, the face
of Hawaii had changed forever. The Islands'
native culture was largely overshadowed by
early Western settlement influences. Penal
labor contracts were declared illegal,
although the plantations
continued to recruit cheap
labor from around the

During 1991, Hawaii's
economy felt the impact of

world. Jim Dole
introduced commercialized
pineapple production to the
Islands' economy, and a

the Gulf War as Japanese
tourist activity fell with the
war's onset. Despite this
setback, overall

mammoth campaign was
launched to sell the luxury
fruit to the world.
Economically and
politically, the Islands were

employment increased 1.4
percent during the year, led
by a 3.2 percent rise in
service sector jobs.
Moreover, recent reports indicate that
conditions have returned to normal with the
renewal of Japanese tourist traffic. The
region's economic strength is reflected in
Hawaii's home prices, which remain the
highest in the nation. The median home
price in Honolulu stands at $345,000.

dominated by a consortium of five
corporations that exerted a powerful
influence over every aspect of Hawaiian
commerce from banking to retail
Statehood in 1959 shifted economic power
away from the rule of the five corporations as
outside capital investment began to infiltrate
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Hawaii's outlook is fundamentally positive,
but the state faces unique challenges.
Agriculture will playa less important role in
Hawaii's future economy as the tourist
industry continues to expand. With Hawaii's

unemployment rate sta ying well under 3
percent ever since the second quarter of 1990,
inadequate supplies of labor, coupled with
high land costs, are likely to constrain
Hawaii's future pace of growth.

-Southern California, Arizona
The rush for gold which drew thousands of prospectors to Northern California in 1849
provided the impetus for Southern California's development. The race to build a
transcontinental railroad and market connections to the rapidly growing northern part of the
state set off the first of Southern California's many population booms. Arizona remained
thinly settled until the discovery of the state's rich copper deposits in the late 1800s lured
mining interests anxious to cash in on the mineral wealth.
Southern California
The opening of the 20th century launched
Southern California toward the industrial
age. The development of a complex water
transportation system, engineered to divert
wa ter from Northern California and the
Colorado River to the arid valleys and
growing metropolis, assured the region's
growth. Southern California grew rapidly
with the discovery of oil in Los Angeles,
Long Beach, and Kern county. Agricultural
specialization, which tailored crops to suit
climate and market demand, propelled the
Imperial Valley toward its position today as
a leading producer of citrus and vegetable
crops. Additionally, sunny weather and
rising wealth combined to attract the motion
picture industry and make Southern
California the moviemaking and television
center of the world.
C rado
California Coast Bluer Delta Jamestown
Dlscouered founded


Today, sprawling Southern California is an
empire unto itself with its vast cultural,
ethnic, and economic diversity. Southern
California also remains a center of activity
for the entertainment, aerospace, electronics,
and research-intensive industries. The region
has become an impressive melting pot with
its wide composition of ethnic groups hailing
from virtually every corner of the world.
Southern California continues to have much
faster population growth than the rest of the
nation. During the 1980s, Southern
California's population grew 19 percent,
double the national average. Within the last
decade, Southern California employment has
grown even faster - by 32 percent. Los
Angeles alone has added 700,000 new jobs
during the past ten years.

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During 1991, th e national recession hit
Southern California harder than any other
area in the Twelfth District. This reflects, in
part, the unwinding of some of the forces
that propelled Southern California's rapid
growth during the previous years. As of
September, Southern California (Anaheim,
Los Angeles-Long Beach, Oxnard-Ventura,
Riverside-Santa Barbara, San Diego)
recorded 77,000 jobs lost since the onset of
the recession in July 1990. Defense-related
manufacturing has been particularly hard
hit. Cutbacks in defense sp ending have led
to significant reductions in
aerospace employment,
with 15,000 jobs lost during
the past year. Recessionrelated cutbacks in the
electronic components
industry accounted for
another 2,000 job losses.
Construction and real estate
activity also have dropped
significantly, particularly in
the nonresidential sector.
In part, this reflects the overbuilding tha t
occurred during the previous years' boom
period in anticipation of further employment
growth. The office vacancy rate in
downtown Los Angeles is approaching a
relatively high 25 percent.
t"" ~ .

While Southern California will likely recover
when the rest of the nation does, constraints


founded irauerse A


due to environmental regulation, congested
transportation networks, and water
restrictions make growth at the boom rates of
the previous decade unlikely. Continued
population growth and the growing
importance of trade with Mexico and the
Pacific Rim nations, however, bode well for
the region's continued economic vitality.

World War II and the invention of air­
conditioning helped transform Arizona into
an industrial economy. The harnessing and
diverting of the rivers of
central Arizona to arid
valley lands and cities ,
which had occurred in the
early part of the century, set
the stage for the region's
rapid growth. The state's
desert landscape and
temperate winters drew
aerospace, defense, and
manufacturing industries to
support the war efforts.
Over the past decade, Arizona's economy has
continued to grow and diversify. This
diverse economic make-up includ es not only
mining, particularly copper, agriculture and
manufacturing, but also a rapidly growing
tourist industry. The state's sunny skies and
temperate winters continue to attract new
immigrants, including many retirees.

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Nonresidential construction remains weak,
with the value of awards down 18 percent
from the level of a year earlier.

During th e 1980s, Arizona's population rose
by 30 percent. Even while suffering a real
estate slump during the latter part of this
period, Ar izona still managed to add almost
500,000 jobs, primarily in the service sectors.

Arizona manufacturing activity slowed
during 1991, w ith employment falling 3.3
percent in September fro m the level of a year
earlier. Defense contractors, inclu din g
Hughes Aircraft, reduced employment, and
IBM closed a major plant in Tucs on.

During 1991, Arizona pe rformed better than
the nation during the national recession.
Arizona's employment grew 1.5 percent
through September 1991, fueled largely by
the continued expansion of services, which
were up 4 percent from the year earlier.

Over the longer term, Arizona's po pulation
is expected to grow at rates above the
national average. The continued

Construction activity weakened further in
1991, with the number of construction jobs
falling 4.8 percent in September 1991 from
the level of a year earlier. Declines in
construction activity reflect overbuilt markets
that have existed for the past several years.

development of retirement commu nities is
expected, and the region hopes to benefit
from expanded trad e with Mexico. The state
also has been actively cou rting Southern
California businesses, hoping th at Arizo na ' s
relatively low land costs will attract firms to
the state.

-Oregon, Washingto n, Alaska
The promise of free land and tales of fortune intertwined to spark the early development of
Oregon, Washington, and Alaska. Lured by the promise of free acreage, thousands of
settlers migrated westward between 1840 and 1860 along the Oregon Trail to fa rm Oregon's
productive Willa mette Va lley and to harvest the abundant timber resources of Washington's
Puget Sound region. Alaska's isolated wilderness remained largely unsettled, except for fur
traders, until 1896 when tales of vast gold strikes in the Klondike drew thousands of
stampeders seeking their fortunes.
California's gold rush economy, with its expansive demand for timber and food supplies,
provided a ready market for the commercial agriculture and timber products of both Oregon
and Washington. Portland emerged as a major shipping center, building strong links with
the neighboring Golden State. Seattle also grew rapidly during this period, serving as the
chief outfitting station and jumping-off point for prospectors bound for Alaska.
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diverse crops, including flowers and nursery
products, grass seed, noncitrus fruits, and a
variety of field crops. Eastern Oregon is the
home of the state's wheat production and
cattle industry.

By the opening of the 20th century, Oregon
was poised for rapid growth. Timber and
developing forest-related industries
dominated the state's growing economy.
Railroad transportation ties, which had been
consolidated during the late 1880s, linked the
state to markets in the eastern states and to
San Francisco in the West. The tapping of
the Columbia River for irrigation paved the
way for the large-scale production of
Oregon's diverse agricultural crops.

During 1991, Oregon felt the impact of the
.national recession, although later than the
rest of the country and with less force. After
averaging 3 percent growth from 1988 to
1990, Oregon's employment rose only 1.4
percent between September of 1990 and 1991.

In recent years, Oregon's economic
dependence upon agriculture and timber has
diminished. Although forestry and
agriculture are still integral components of
the state's economy, tourist-related
businesses and high-tech industries have
seen faster growth recently. Environmental
pressures have sharply curtailed logging
activity, speeding the process of
diversification away from the dominance of
the timber industry. Low production costs
have combined with the region's pristine
beauty and high quality of life to stimulate
rapid population growth and attract new

Problems in Oregon's wood products
industries contributed to the state's overall
weaker numbers. During the past four years,
Oregon's employment in lumber and wood
products has fallen steadily, with 4,500 jobs
lost since 1987. Restrictions on the logging of
public lands due to environmental concerns,
such as the spotted owl debate, have reduced
the availability of federal timber. Small
mills, which historically have depended on
public lands as a primary source of raw
materials, have faced rising log prices. At
the same time, the slump in national
construction activity has curtailed the
demand for wood products.

Today Oregon remains a leading supplier of
wood products and a major beneficiary of
growing international trade, especially the
exporting of lumber products to Japan and
the rest of the Pacific Basin. The Willamette
Valley boasts a highly productive source of

A combination of poor weather conditions
and weakening demand for some products
also led to a disappointing year for the state's
agricultural industry in 1991. Drought
conditions affected some parts of the region,
while the December 1990 freeze damaged

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fruit trees. Wheat and onion crops were off
sharply from the levels of a year earlier.
Potato production remained strong, but
prices were down significantly from the
record level of a year earlier.
The more recent growth sectors of the region
were also affected by the recession.
Electronics employment, which had shown
rapid growth since 1987, slowed to a 1.3
percent annualized growth rate in the first
three quarters of 1991. Non-lumber
manufacturing employment in September
1991 dropped 1.4 percent from that of the
previous year.
During 1991, services
continued to provide the
bulk of Oregon's new jobs.
In September, service
employment rose 3.2
percent from the previous
year. The finance,
insurance! and real estate
ind ustries also registered
strong employment gains
of nearly 4.6 percent over
the period.
Construction activity growth slowed in 1991
for both residential and commercial building.
Although construction employment rose by
2.7 percent between September 1990 and
1991! this growth is well below the double­
digit increases seen in 1990.
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Overall, Oregon's economy outperformed
the rest of the nation during the past year
and is likely to continue to do so. The
region's long-term trend away from its
economic dependence on agricultural and
forest products industries continues to
provide Oregon with a more diverse
economic base.

Since the turn of the century, Was hington has
emerged as a major industria l power. In
1916, Washington's fu ture economy was
unmistakably altered when William Boeing
chose to take advantage of
the region's abundant
timber supplies to begin
his fledgling aircr aft
manufacturing business.
The state's economy has
evolved from one based
largely on agriculture!
logging, and fishing to on e
driven by aerospace,
manufacturing! and
shipping. Access to the
Columbia River's
inexpensive source of
hydroelectric power has made Washington a
leading producer of aluminum. Eastern
Washington's economy remains largely
agricultural, producing such staples as
wheat! potatoes! and barley. Recent
industrial expansion in the Spokane area!
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fueled by low land and labor costs, has
enhanced Spokane's role as a center of
economic activity in eastern Washington.

in manufacturing employment between

September 1990 and 1991.

The Puget Sound region has experienced
some of the greatest growth in the state
fueled by Boeing's dominance as a world
leader in commercial aircraft production and
the establishment of major computer-related
industries. Today, shipping remains as
integral to Washington's economy as it was
to the earliest pioneers who sent their first
shipment of timber pilings to San Francisco
from Elliot Bay. Seattle and Tacoma have
emerged as two of the most important
seaports in the world with both cities
doubling their trade volume since 1980.
During 1991, Washington's economy slowed
in response to the national recession and a
leveling off of the past decade's rapid growth
in the aerospace industry. After growing at
an average rate of 4.7 percent between 1985
and 1990, Washington employment rose less
than one percent between September 1990
and 1991. Although Boeing's success in the
last ten years led to a 44 percent increase in
Washington's aerospace employment, during
1991, aerospace employment flattened out as
Boeing reached its target production levels
for commercial aircraft, and as defense
cutbacks hurt Boeing's defense production.
No growth at Boeing, coupled with
weaknesses in the aluminum and forest
product markets, led to a 2.2 percent decline





The Wa shington outlook remains bright,
although growth is expected to rem ain well
below the high level seen two years ago.
Boeing has planned a multibillion dollar
expansion over th e next several years, which
may spill over into the lower-cost Spokane
area. Although costs have risen in th e Seattle
region and congestion has increased
dramatically, th e state remains an attractive
destination for new businesses and migrants.

Alaska's sprawling wilderness was just
starting to be tamed during the first few
decades of the 20th century. The state
remained largely a frontier economy until
World War II. The construction of military

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Slower growth in the state also has cooled
the housing market fro m its previous frenetic
activity. Between 1989 and 1990, the median
home price in Seattle soared 23 percent with
sales activity skyrocketing. Boeing's rapid
growth combined with an influx of
immigrants from other parts of th e country
acted to bid up Seattle housing prices. N ew
supplies could not keep up with the rapid
population growth. In contrast, during 1991,
the median home price dropped by 3
percent, sales activity slowed, and
construction employment declined by 4.4








hades WlIn


airfields and installations during the war and
the concomitant building of an extensive
road transportation network set the stage for
the later commercial development of the
state. Alaska's economy was finally thrust
into the modern era in 1968 with the
discovery of vast quantities of oil in Prudhoe
Bay and the engineering of the expansive
infrastructure needed to ship oil to the rest of
the country.

Over 80 percent of Alaska's state government
revenues come from taxes on the oil
industry. With this heavy dependence upon
oil, Alaska's economy has yet to recover fully
from a severe recession following the 1986 oil
price collapse. Only within the past two
years has employment in the state risen
above its 1986 level. Ironically, some of this
rise is due to the cleanup of the oil spill in
Prince William Sound.

Alaska's present-day economy remains
heavily dependent upon its natural resource
base, with oil, mining, forestry, and fisheries
providing important sources of employment
and income. Transportation, including the
oil pipeline, also remains a
primary source of
employment in the state.
Although Alaska is the
largest state in the country,
encompassing 571,000
square miles and nearly 16
percent of the entire
geographical area of the
United States, its
population density is
among the lowest. Alaska
contains only 0.2 percent of
the total national population, and 42 percent
of the state's population lives in Anchorage.
This low population density reflects the
rugged topography and climate of the
region. Extreme cold has made development

During 1991, Alaska experienced slower
growth with only a slight gain in overall
employment during the 12 months ending in
September. However, the sharp rise in oil
prices during the Gulf War did provide
temporary relief to Alaska's economy, as
government oil revenues
rose by more than $200
Alaska also suffered a 2.2
percent reduction in
employment during 1991.
Additionally, mining
activity dropped during the
year because of falling
metal prices and
restrictions on new drilling opportunities in
the oil fields , including the Alaska National
Wildlife Refuge, which remains off-limits to

costs very high for most businesses.
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Alaska's construction activity has remained
relatively weak since the 1986 oil price
collapse triggered a downturn in the state's
economy that led to an overbuilt housing
stock. Although recently the stock of vacant
housing has fallen sufficiently to encourage
some new construction, construction
employment was down about 1 percent in
September from the level of a year earlier.

The outlook for the region is relatively
brigh t. Tourism has emerged as a major
growth industry. Alaska will remain an
important oil producer for quite some time,
although production has begun to decline.
The state's other natural resources,
particularly its wild and scenic topography,
have only begun to be tapped.

-Utah, Idaho, Nevada
Religious faith and the pursuit of fortune fueled the economic development of Utah, Idaho,
and Nevada. In 1846, Brigham Young led the Mormons west to Utah entering the Salt Lake
Valley on July 24, 1847. Young quickly organized his followers to colonize the arid valley
and to establish the self-sufficient farming communities that pioneered Utah's agricultural
Young's vision spread to Nevada and Idaho in 1855 when he dispatched missionaries to
establish colonies in the two states. Although the Mormon settlement at Las Vegas Springs
proved to be only temporary due to the harsh climate, their early attempts at farming and
ranching paved the way for later settlement and the development of Nevada's livestock
industry. The colonists successfully established permanent farming settlements in southern
Idaho, and their agrarian efforts, especially the introduction of irrigation, opened the way for
the development of Idaho agriculture.
Idaho and Nevada remained largely unsettled until 1860, when gold was discovered in
northern Idaho and abundant silver deposits were struck at Nevada's famous Comstock
Lode. The discoveries opened both states to a rapid influx of prospectors along with other
migrants anxious to take advantage of the instant markets created by the boomtowns.


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The coming of the transcontinental railroad
and Utah's statehood were major turning
points for Utah's economy. The introduction
of the railroad encouraged an influx of non­
Mormon businesses and settlements, ending
the Mormons' physical isolation. With cheap
transportation close at hand, Utah's mining
industry took off. Merchandising, along with
. commercial agriculture and livestock,
developed with the opening of new markets.
With admission into the
Union in 1896, Utah moved
further toward the nation's
political and economic
Since the opening of the
20th century, Utah's
economy has diversified
beyond its early economic
base of agriculture, mining,
livestock and dairy
farming, to include manufacturing, tourism,
and services. The state has become a center
for credit card processing, telemarketing,
airline reservations, and software companies.
Tourism has become an increasingly
important industry in the state as skiers have
discovered the excellent powder conditions
at resorts such as Snowbird and Park City.
Utah's economy also has benefited from
growth in the defense industry.

~pal i sn

~mer ican


Utah has enjoyed some of the fastest
employment growth in the country over the
last several years. Low land and housing
costs, along with an industrious, well­
educated population, have stimulated Utah's
During 1991, Utah was largely spared the
impact of the national recession, registering a
3 percent rate of growth in employment over
the previous year's September level. While
manufacturing employment
fell, employment in the
construction sector rose 8.5
percent above that of a year
earlier. Additionally,
employment in service
industries grew by 4.7
percent. Utah's
employment growth in
both the construction and
service industries remained
well above national
averages. Employment in finance, insurance
and real estate also strengthened, reporting a
5.2 percent increase over the twelve months
ending in September.
During the second quarter of 1991, the
median home price in Salt Lake City climbed
8 percent from the previous year's level and
continued gains are expected. After
experiencing sharp declines in home prices
and relatively little sales activity during the
middle of the 1980s, Utah is experiencing a

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surge of population growth which has
created a growing demand for new housing.
Utah's future remains relatively bright. The
region is gaining national prominence as a
vacation destination. Additionally, the
state's well-educated and disciplined labor
force makes Utah attractive to businesses.

The coming of railroads in the late 1800s and
early part of the 20th century propelled
Idaho's frontier economy toward the modern
age. The railroads opened transportation
and communication links within the state
and with the rest of the nation. The
availability of reliable freight transportation
and access to wider markets enabled large­
scale mining, timber, and agricultural
production. The harnessing and diversion of
the Snake River during the early part of the
20th century was key to promoting
agricultural prosperity in southern Idaho and
to providing an inexpensive source of
hydroelectric power to spur
industrializa tion.
Today, Idaho's economy has diversified
beyond its agricultural and timber base. The
state has enjoyed some of the fastest
employment growth in the nation during the
last several years.


During 1991, Idaho's economy performed
well relative to other parts of the nation.
Idaho employment grew 2 percent between
September 1990 and 1991. Even so, this is a
slowdown from the 4 to 5 percent rate of
growth during 1990.
A number of factors contributed to Idaho's
slower employment growth during 1991.
Responding to the national recession and
declines in lumber production, Idaho's
manufacturing sector did not grow during
the year. Although electronics employment
continued to rise during 1991, this growth
was at a slower pace than in previous years.
In contrast to the rest of the country,
construction activity in Idaho is relatively
robust. Construction employment is up more
than 8 percent from a year ago with most of
the strength in the residential sector. Idaho is
also experiencing relatively strong
employment growth in the service-producing
industries. Strength in business services,
tourism, and healthcare caused overall
services employment to rise by 4.5 percent
between September 1990 and 1991.
Idaho's economy continues to have a bright
future, and the pace of growth should pick
up when the national economy emerges from
its doldrums.

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194 6

first States of Water Manned
Satellite Rlaska: Bonds Space


Nevada's economy largely followed the
boom and bust pa ttern of mineral strikes into
the early part of the 20th century. In 1931,
casino gambling was legalized in the state.
Additionally, divorce
residency requirements
were lowered to six weeks.
These two events
stimulated the
development of Reno's
casino gambling and
entertainment industries.
The construction of Hoover
Dam on the Colorado River
between 1930 and 1935 provided the catalyst
for Las Vegas' rapid growth. The dam not
onl y supplied water to the desert, but also
provided a cheap source of hydroelectric
power to open the way for manufacturing in
the state.
Since the turn of the century, Nevada has
continued to grow and diversify. Today, Las
Vegas is a modern-day boomtown having
experienced some of the most rapid growth
in the nation with employment gains of 71
percent reported during the last decade. The
state has experienced a resurgence of mining
activity, especially in precious metals such as
gold. The state also has seen growth in
manufacturing and service activities, and in
the casino-dominated recreational tourist

Nevada's economy slowed markedly during
1991. After several years of employment
growth in the 6 to 8 percent range, overall
employment grew by only 0.3 percent during
the year .
During the past year,
Reno's unemployment rate
was a relatively low 4.9
percent, while continued
strength in the govern ment
and finance sectors offset
weaknesses in the service
Las Vegas' economy continued to grow
during the past year, but not at the high rates
of the previous decade. This, in part, reflects
the tapering off of Las Vegas' construction
boom as several large casino construction
projects were completed.
Nevada's outlook is uncertain. The state has
attempted, with some success, to diversify
away from its dependence upon the
gambling industry into such areas as credit
card processing. Future prospects depend, in
part, on Nevada's success in attracting more
tourism, particularly family-oriented
recreation and entertainment, as well as
additional efforts to diversify its economy.
The expansion of business links with
Southern California, including development
of a "bullet train," also may be an important
determinant of Nevada's future growth .


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rzth District Reorganization

Patrick K. Barron/ first vice president/ will
oversee the 1992 organizational changes. As the
Federal Reserve Bank of San Francisco's chief
operating officer/ Barron is responsible for all
operational and financial service activities of its
five offices in San Francisco/ Los Angeles,
Portland/ Salt Lake City/ and Seattle.
Additionally/ he serves on the Bank's management
committee/ its top policymaking body. Prior to his
appointment as first vice president in September 1991/ Barron was senior vice president of
Corporate Services at the Federal Reserve Bank of Atlanta.
To meet our commitment to serve the
evolving needs of the Twelfth District
financial community, the Federal Reserve
Bank of San Francisco implemented
several changes to the District
organizational structure effective January
1, 1992. The changes are reflected in the
organizational chart contained in this
Report. The reorganization involves
senior operations and support personnel
at our Head Office and each of our four
branches. The changes are designed to
enhance the effectiveness of our
management resources and expertise
throughout the District and to improve
coordination among the branches so that
we can provide the appropriate financial
services in a dynamic marketplace. Key
elements of the reorganization include:

Realignment of reporting
structures for several Bank
operation positions to strengthen
accountability within the District
and to reflect the interdependency
of these important functions.
Appointment of a District Quality
Control Coordinator to monitor the
quality of all Twelfth District
financial services.
Appointment of District Product
Coordinators for Cash and Check

The reorganization opens direct lines of
communication and responsibility
throughout the Twelfth District. An
integral component of the reorganization
is the establishment of separate cost/
revenue goals for each of our priced
services at the Head Office and the four
branches to ensure that every office can
respond effectively to market conditions
within their respective zones. A
districtwide enhanced management
development program along with an
ongoing cross-training program within
the financial services areas also have been
implemented to strengthen the
effectiveness of the reorganization.

Gordon R. G. Werkema
Senior Vice President in Charge
Seattle Branch

Branch Operations
(From left)
E. Ronald Liggett, Senior Vice
President, Northern Region
Gerald R. Kelly, Senior Vice
President and Advisor, Seattle
John F. Moore, Senior Vice
President in Charge,
Los .Angeles
Leslie R. Watters, Vice
President in Charge, Portland
Andrea P. Wolcott, Vice
President in Charge, Salt Lake

Board 01 Directors


RobertI. Gald'rel l
Ge ner al Aud Itor

Petel' K C . H $ioeh
As$l Sl anl V ce ~t

AIJ lng
Robef1 T. Parry

Bruce H. 'f't',ompson

Chief E lC
eoJb .... ( )!hcer

Ch.arIeS Q Sowd'

Director,'As $lslaN
Ge net al Aud 'IOl'	

Pr~en t


ASSlstant VlC$ Presiden t
$oIJthe rn Reg oon

G ary G , Hoeth
As $istan t VICe PreSident
Northern Reg on

Patr'ldl. K. Barron

FlfSt VlO8 Pnt$oOen


CNef Oper abng


Superv ision , Regulation and Credit
E U9ene A , ThomaS
seoc r VICe President
perv,SiOn, Reg ulatlOll arc creon
Jane M . Wa:v rman	



W. Sl arr S«>g mlller

Merle E, Boch
ese ent
B ank Examinal ions

HaroldH . Blum

Ass istan t VICe PreSlCl l



Ba nl( E llamma1

Rodney e, Ae!d
v ee PreSideOt

Phi hpM, Ry1IIl
ASSIstant VICe Pfestde nt
tntema toon,l ExarT1l oon

BH e and Internahonal s oce rv eco

Jame s M. Ba me s
AMlsla nt Vtee Presid&nt
Bank Ellanlln a1lOnS. S.F.

RClard S. Ca mpos
AsSislant Voce Presid ent
SHC Inspectoons

W. GordOnSmrth

Don ald R Lieb

VICe President
C red o and Consurner Alta lrs

Assrst m VICe President

Terry S 5chwakop!
A$slsl am VICePresiden t
BH C lnspecbOns


DIstrict ClE'd<

ThOmas P McGr altl
Assi stant VICe Pres ld&nt
Ban k Ella mlnatl()('ls, S L.C.

gooert C . Joh n son
A:>s al1l
Presiden t
Bank ElC nat/On s. L A.


Robert C. Deml&r

ThOmas ~

E llM ll Olng Qtt.cer
S H(; lnspectons, $ .F

SH C l~

ExalTll '"

Bank.and Con su n:er Reg ulation

Wayn& L Rickards

Kennem A B M10g

Kelty K WalSh

munlY Anair$ 0t11Q1)1

George T. Westerman

8HC and Interna bOOal Reg uiabOtl

Dav id M, Vand re
DistriCt Compl iance Oft lQll


Rack FukUf'\ara
Manag<ng OtflCef


Comotner Services and Eleci romc Payment s
Laure IJ':ast\l:E>n
S or-ot VICe PrMlOen l
Com puter $e rYlCeSa llC!
Elec lron lC Paymems
Palnclc Tong
VICe PresiOent
Compu1 er Oper atJOnS

RegulalJOn anclCred ,1

Secretary's Of1ice

Payments and SUP90rt services

M.chael .L Murray P\-@SIdent

Sara K. G&rriSOl'l
SeI'Ior VICe P'reslclent

Adm l'l sl ratlOn

Payme nts and Su ppot1 Servx:e

E.IIzabettlR. Mas ten

C, Kenneth Arnold


Vrce PreSldent

and Secfl llary ct ee Boar d

VICe Pres!de nt
o. slnC1Secu rrty

vce eesceot

"'" Taylor

PaymenlS ~

Doug las 0 , Knuc:!'s.
AS5Istant VICe P'r&.

EUabeU'l K. CI1rl ensen

Jo "'n V.C Lit!

Sylvia "," ~ rnngha.m

Thomas R ThaanlJm

Barbara .L Conclfll

Gail G oc are s

VICe ~

~nI VlCe~

~taJ1l VroePresldenl

VI09 Pre-siden 1

Asslslanl VICe Pres

FIt\3f"OaI Ptarw'lIng and Control



Elecl. onocAcoess


Fonan()al Plaming

Sys rems and (;O:llmun:cauo ns


and Aoc.ountll'lg

Con irol


Nancy E Perkin

Salt.. H. We,r.s.nget"

SSflG , Portert~

Debor S. Jack.


VICe PreSl(le(11

Di tec! Ol"

llons Systems

Corporate Pt!rsonnel

Compensal oon arxl Benelits

Human Resou rces S ystem s and
EmpIoymttnl ,E mploye e Aalatioo s Off :cer	

J 5a(l L. Mo{j ha dan
A ssislant VIQl;IPreside nt



WIlli am K G inter

Ap ic8tJonsSyslems
Pa ige B. $OQ(l
Astl l5lan t VICe President
Data S&C\J(IlY Con ting ency
Pla nn ir'!9 and Support sevcee

VICe P'resldent

Monet ary Agg rega l&.
and F1 rvv Reporu

8lJlldlng and Prope rty Ma na gem en r
James J. Tange
Ass lsl anl VICe Presiden t
Ad mu
"\lStla l lve Service s

Ge ra l<l L. Moreno
Eie<; rorll c Payments Ot1 ~ r

l os Angeles Branch
John F. Moo r9



Ifl Cha1~

Darcy J



Elect "OtlIC Payments Product
Services. AdmarjstralM! sevces



Elect ror-c Payments Product
Ff\anC:i.aJ Ptanr'l!f'l9 anti Control, and

Con$unAntsewces Ot"C

FrnanoaI $ervoces , FINlJ'ICla
Planmng anti Contr Ol, Consu ltant
Se r vces. and Hl; ma n Resou rce s

0 , Keny Wet:lb

Sean .L Rodrig\.le

Racnel A. Rome

A$sIstantVr(;(! Presodent
Chect.; PI QC9SSlng

AdfUstmen t Service s Ot1mr

PaymE'f1 ts servees
Mark W. FIShbeck	


Theodore A, $chr~r


Assl stant VICe PresoOent
nlst ratoon and
C Uffe ncy Pfoce ssi ng (CVC S)

AS5Istan1 VICe PreS>d


s1o<1y Semces	

Cash oceraicoe and Secunnes SeI'VlCe$

Br~ !J.

DuJ( ury

Assrslant Vr(;(! Presidenl
HumaI\ Resources

Organization Chart
January 31, 1992


Thomas D. Thomson
EJc cutr.'e VICt1 PreSldenl
ce ouer Bank Func!l()l"js

Economic Research


Jack H. Beebe

Sef\lOl'VtCJj Presldent

af'ld Director of ResearCh

LO\J ~$ E. Reilly

Public Information

Senior Vice Pl'esi<:&nt
anCl Genera.! Counsel
Robert D. Muno:d


Robert C. Johnson

JOOn P. Judd

Adrian W. Throop

e President

Assls l ant VIC PreSlde nl
BanK ExamlnallOns . L.A.

Vice President and
ASSOCl!I18 rxrec tor ot Research

ae eeerco omee r

gcbert L. Fienberg
VICePresident ancl

Vice Presid en t

oom estc MactoeoonomlC StudIes

Direc tor 01 Pu bl iC Inform at;on


labOr'lS, S L C.


RobertC Demler

r rcoies J. Backer

G. Ross VarOl

Examining Ot1 lCe f
BHC Inspe(':Ol'1 s. S.F.

Ellam,mng ()ff, ce r
BHC tnspect lOf'lS LA

Exa m ,ning Off ICet'



inscecrce S.L C

Hang-Sheng CheOQ
International s tco ee

Vic e P(eSo~nl

and Counsel


Kel"W'\&lh M. Kinoshita

Fredenck T. FUl10ng

Assist ant VIC Prewen\

Banking and RegiOn Studies


K. V/al$n
CorTwnJnr.y AI'l3;f, Otl c er

Pa nts and Support Services

ASsociate Ge l'\&fal Courts oll

Bank and Treasury Services
,John w. Gleason

-Ga A. Taylor
Vu Pre$ider1


B.anll. and Treasury Services
Stepnen A . Kaufman

A ssista nl VJa1 P'rM1clen

As&S'lan l VICe ~nt


Payments Servces



John H. WOng

Doug las 0 KflUdsef'l

A$.slstar\rVlCe Presiden t

DawnS. Blocil

Ga,I G.Ou 4f1e5
s ta " I VlCe ~er"t

As.s. tant Vee PreOO&ot

Cas h $ervice,

E:ect' O/"IIC ACCe

Ellsworttl E. Lund

~ ,.,It"

M $l$lan t VlCe Pre$ldefll

ASSlstanl V teePl' esld ent

Mone1.vy Ag;j regales

lfll eln alJOn and ooresrc
FInanCIal Reports

CorPor ale Planning

an<!Reserve Reports

John /l .


EliOlE. Giu'lr

E. Fton ald Ligge lt





Sak Lake City Branch

Port land Branch


Andrea P \~1

Leslle R. Walt8fS

VICePresiden t

Va Presdeflt
i,nCtl a,se

GoIdof\ R.G. wen<ema

J"lChar ge


Char e

Gerald Ft. Dal. ng

Dean C. Gonnerman

Jimmy F Kamada

AssIstant Vee Pte$Idenl

As.$lsl ant Vrce Prtl$Jdent

Assl stan t V e e President

..."." Rosou<""

Payments seoees

Assislant V oce Pre5ldent
F~. seccotes and


Du ~ tlU ry

Robert R


A.ssi S ta1lt Yce ~

AdlT'lll"lstt atrveServoc:e1
A. Kemelh Add
Cash. F"'anoal se wce s Ofl":¢e.

Support se rvices and
Pl.I ICIntormatJOn
Susan L Rooertson
Ass,sta,nlY-ce Pl'es.dent
Paymenls Services

RowtO. Long
Ass istan t VICe Pre$llUlnl
C US kXTySe~s

Cou n~1

Ooug!as R. Shaw

Reuve nG I

Research Otncer

Custoety S~,

l(eme11l L. P!'terson


Gale P. Aflsell
ant VICe Preside nt
.Ac!rw rat,ve sev ces
r nl$l

Gerald Fl. Kelly

seece vce PresiOerI\
al'ld Advlsor

seesu Branc

Management Committee
(From left)
Patrick K. Barron, First Vice President and Chief Operating Officer
Michael J. Murray, Senior Vice President, Administration
Robert T. Parry, President and Chief Executive Officer
Thomas D. Thomson, Executive Vice President, Central Bank Functions

Spotlight On The Pacific Northwest

April 1991 marked the retirement of
Angelo S. Carella, senior vice
president-in-charge of the Portland
Branch, after 35 years of service with
the Federal Reserve Bank of San
Francisco. In 1975, Carella moved
from San Francisco to the Portland
Branch as vice president-in-charge, and
was promoted to senior vice president­
in-charge in 1980. Carella was a
tireless advocate and much respected
mentor of branch management and
staff, and his leadership and expertise
had a far-reaching impact on both civic
and community activities. Carella
chaired a three-year preparatory effort
to bring the Rotary International
Convention to Portland in 1990, and he
served as president of the Portland
Rotary Club and the Oregon Chapter of
Robert Morris Associates. During his
tenure, Carella also was appointed to
the advisory boards of the Institute for
Managerial and Professional Women
and the Oregon Council on Economic

Gerald R. Kelly, senior vice president­
in-charge of the Seattle Branch will
retire in 1992 after a career spanning
39 years with the Federal Reserve Bank
of San Francisco. Kelly moved from
Los Angeles to the Seattle Branch in
1977. His positive contributions
extend well beyond his leadership as
officer-in-charge of the Seattle Branch
to the business and academic
communities. He lectures at a number
of state universities, and serves as a
charter member to the advisory boards
of Seattle Pacific University's School of
Business and Economics and the
University of Washington's Center for
the Study of Financial Management.
Kelly's ongoing humanitarian
contributions extend into the
community where he is an active
volunteer working with individuals
with special needs.

As previously discussed, the Pacific Northwest states, particularly Oregon and Washington,
have undergone some fundamental changes within the last few decades. Oregon's economy
is at a turning point, slowly moving away from its primary dependence upon agriculture
and timber, while Washington has emerged as a major industrial power. Alaska's relative
isolation serves as a prime example of the challenges presented by the geographical expanse
that encompasses the Twelfth District.
1991 marked the retirement of Angelo S. Carella, senior vice president-in-charge of our
Portland Branch and the announcement of the Seattle Branch's senior vice president-in­
charge, Gerald R. Kelly's, intention to retire in 1992. With 74 combined years of service,
Kelly and Carella are in a unique position to provide a first-hand perspective on the
transformations taking place in the Pacific Northwest, and the Federal Reserve's response to
the changing dynamics of the region.
The logistics of transporting coins and
currency to Alaska in a timely and cost­
effective manner is just one of the unusual
challenges presented by the Twelfth
District's vast geographical diversity, says
Kelly. "Only recently have we been able
to establish a coin depot in Alaska to
serve financial institutions," adds Kelly.
"Althou gh currency could be transported
by air at reasonable expense, the sheer
weight of coin shipments makes air
transport prohibitively expensive. Now,
regular shipments are transported by
barge up the Pacific Coast to Anchorage."

completely stand-alone, full-service
entities, including providing the discount
window," states Kelly . "Now, a bank in
Fairbanks can be on-line directly to San
Francisco, so the Seattle Branch no longer
needs to be the intermediary for these
types of functions ." Kelly is quick to add
that the branches still perform vital
functions not only in the delivery of
check, coin, and currency services, but
also in the crucial role of keeping the San
Francisco office in tune with "the
grassroots needs of the District

Kelly notes that the advent of the
electronic age has brought some
fundamental changes to the Branch
offices of the San Francisco Federal
Reserve. "Prior to this technological
revolution, the branch offices were almost

"Ten to fifteen years ago, this same
picture wouldn't have emerged in
Oregon," states Carella commenting on
Oregon's relatively healthy response to
the national recession. Carella views this
response as "evidence that Oregon isn't as

dependent upon the lumber industry as it
once was." He notes that recent growth in
high-tech industries, tourism, and
services, pushed by Oregon's population
influx, are all contributing to this
transformation. Carella does not want to
downplay the impact of the decline in the
lumber industry. He admits that the state
is still very much in transition "as people
aren't making the same wages as they
were in the lumber industry."
Carella sees environmental issues at the
"forefront of Oregon's economic
concerns" right now. He cites the spotted
owl debate and its impact on the lumber
industry as just one example. "Currently,
a number of proposals are being
considered related to the preservation of a
variety of salmon species which could
have a major spillover effect into other
industries, and possibly even other
states." Carella suggests that one
initiative which proposes to lower water
levels "would hurt not only fisheries, but
also agriculture and manufacturing by
affecting irrigation and Oregon's cheap
source of hydroelectric power." He adds
that, "States which get their surplus
hydroelectric power from Oregon ­
California for example - could be
potentially affected as well."
Turning to banking in the Pacific
Northwest, Carella and Kelly both agree

that the regional banking structure is in
the midst of a major transition. "Prior to
the onset of the consolidation
phenomenon, the Pacific Northwest
existed primarily as a self-contained
regional banking structure," states Kelly.
"We now have de facto interstate banking
with all of the mergers and acquisitions."
Carella notes tha t Oregon has not been
immune from the consolidation trend
either. "In Oregon, we've seen the demise
of the smaller size institutions in the $500
million range. What's left are the
community banks and the major
conglomerates." Carella says the
immediate effect seems to be on
consolidations in banking personnel. He
adds that "the long-term effects are still
unclear" especially with "the overall
weakness in lending on a national basis."
Kelly and Carella both view the
increasing trend toward diversification as
positive for the Pacific Northwest. Says
Kelly, "While much of Alaska's natural
resource potential remains untapped,
Washington's relatively lower tax base
should continue to draw new business to
the area." Carella sees Oregon's long-run
challenge as "continuing to diversify
away from our natural resource
dependence. Balancing the effects of
growth and environmental concerns will
be of prime importance to Oregon's

Highlights Of 1991

Economic Research
Domestic macroeconomic research
focused on several issues important to the
shaping of monetary policy during 1991
and in the years ahead. Studies examined
the effects of slow growth in credit and
the monetary aggregates, weak consumer
confidence, and the 1990-91 recession.
Another study examined the reliability of
recently developed recession-probability
indexes for forecasting recessions. Also
investigated were longer-term issues,
including the relationship between wages
and prices in the 1980s, and the merits of
nominal income targeting as an approach
for Federal Reserve monetary policy.
International research focused on three
areas: the role of exchange rate flexibility
in macroeconomic adjustments; Japan's
financial markets; and economic reform
in China, with a focus on foreign trade.
Banking and financial markets research
included basic research on interstate
banking laws, prompt regulatory
intervention, contagious deposit runs in
banking, commerce powers for banks,
trends in banking risk, the changing role
of banks as commercial lenders, and
deposit insurance pricing.
Regional research studied geographic

changes in the electronic components
industry, the influence of economic
fluctuations of individual states on
neighboring states, the effects of bank
branching restrictions on agricultural
lending, and an inter-industry
productivity comparison.
Three major initiatives were undertaken
during the first full year of operation of
the Center for Pacific Basin Monetary and
Economic Studies. First, the visiting
scholar program was expanded to include
six eminent US. scholars who joined
visiting scholars from Japan, Korea, and
the Philippines. Second, a network to
facilitate communication among
researchers interested in Pacific Basin
monetary and economic policy issues was
expanded to 263 associates and 34
research institutes in various Pacific Basin
countries. Third, two series of Center
publications were launched. The Pacific
Basin Research Abstracts contained
abstracts of 49 research papers by Center
associates and the Center Working Papers
series included a total of six papers on
various Pacific Basin subjects.

Public Information
Programs were expanded to heighten an
understanding of the Federal Reserve
System, its impact on the economy, its

relevance to the society in which it
operates, and the responsibilities of
serving its community. Expanded media
relations and economic education efforts
were the primary activities used to reach
an audience of regional and national
opinion leaders.
Media relations programs included
personal visits by Bank senior
management and staff to media locations,
regional media orientation programs,
numerous print interviews and
appearances on television and radio news
programs, and the Bank's media training
workshops for key staff. Additionally, a
successful effort was launched to develop
an effective program involving the
rapidly growing Spanish-speaking media.
The purposes and functions of the Federal
Reserve System were highlighted in five
economic education workshops for
secondary and post-secondary teachers.
A new format was introduced offering
graduate credit for participating
educators. An advisory board of
educators from throughout the District
was established to provide advice and
feedback on existing and future activities,
and a new economic education videotape
and accompanying curriculum materials
were completed.

Supervision, Regulation and
At year-end 1991, there were 65 state
member commercial banks in the Twelfth
District, four of which have assets
exceeding $1 billion each and 17 of which
have assets between $200 million and $1
billion. During the year, Reserve Bank
examiners conducted a total of 64
examinations of commercial banks. At
year-end, a total of 24 state member banks
were subject to special supervisory
attention because of unfavorable financial
conditions, one less than last year.
All 19 trust and transfer examinations
required by System policies were
completed. A trust examination consists
of the evaluation of bank trust
departments or trust company
subsidiaries of bank holding companies.
Transfer examinations evaluate an
institution's compliance with the rules
governing the transfer of corporate stock.
As well, inspections were completed at 95
of the 247 bank holding companies for
which the Bank has responsibility.
At year-end 1991, there were 153 agencies
and branches of foreign banks in the
Twelfth District, 21 of which have assets
exceeding $1 billion, and 34 Edge Act
corporation offices . Staff members
examined 53 agencies and branches, as

well as 26 Edge offices. During the year,
staff members monitored the condition of
48 agencies and branches with a less than
satisfactory rating. This included the
administration of ten supervisory actions,
including three Cease and Desist orders.
Domestic Applications filings in 1991
totaled 247, representing an increase of 20
percent over 1990 filings of 205. The
volume of long-form applications, which
captures the more complex filings,
increased to 152 compared to 121 a year
earlier, an increase of 26 percent. The
Bank also received five applications to
expand international activities, a decline
of seven from the 1990 level. As a result
of applications approved, supervisory
purview was extended over nine banks
and one nonbank company, bringing an
additional $12 billion in assets under
direct or indirect oversight responsibility
of the Bank.
The Bank's 1991 annual community
investment conference, held in Phoenix,
was attended by nearly 300 bankers,
community leaders and government
officials. Also in 1991, 11 Community
Reinvestment Act (CRA) workshops were
held attracting more than 400 lenders
from throughout the District. In addition,
community affairs staff completed
extensive community profiles of San
Diego and Seattle to provide guidance for

banks in those areas to help address
community credit needs.
The Community Affairs Unit played an
active role in the formation of the Hawaii
Community Reinvestment Corporation.
The Bank also worked throughout the
year with groups of lenders in
Washington and Nevada to form similar
consortia, and the effectiveness of the
program was enhanced by the publication
of a quarterly Community Investment
Approximately 2,000 regulatory inquiries
were handled during 1991. About 45
percent involved Regulation 2, Truth in
Lending, as has been the case for several
years. The remainder involved a variety
of consumer concerns.
Complaints against state member banks
numbered about 150, or 20 more than in
1990. For the first time in several years,
complaints involving allegations of
unauthorized withdrawals from
automatic teller machines decreased from
20 percent to about 10 percent of total
complaints last year.
The Consumer Affairs Unit continues to
be significantly impacted by the Financial
Institutions Reform, Recovery, and
Enforcement Act (FIRREA) amendments
to the Home Mortgage Disclosure Act.

Beginning in March 1991, lenders were
required to submit raw application/loan
data rather than summaries which
regulatory agencies review, edit, and
process. As a result, the Unit had to
translate several hund red thousand lines
of raw data into electronic form for
submission to the Board of Governors.

previous years, due primarily to
consolidation of financial institutions.
Volume in the Twelfth District in 1991
was 7.2 percent ahead of volume in 1990,
compared to a 1990/1989 growth rate of
12.9 percent.

The discount window was used by 97
depository institutions in 1991. The level
of borrowings was relatively modest
compared to previous years, as few
institutions encountered severe liquidity

A number of important initiatives were
set in motion by the Automated Clearing
House (ACH) during 1991. By year-end,
40 percent of commercial ACH receivers

problems requiring our assistance.
Twelfth District institutions increased
their collateral holdings, however, due in
part to a desire to establish contingent
liqu idity sources during uncertain
economic times. Credit staff continue to
be extensively involved in a wide range
of risk management issues concerning the
provision of Reserve Bank services to
depository institutions.

were participating in the All-Electronic
ACH initiative, which requires that all
commercial ACH participants establish
an electronic connection to the Federal
Reserve by July 1993. A new
participating fee was implemented,
aimed at improving the efficiency and
reducing costs for ACH service.
Additionally, plans for the consolidation
of data processing activities were
announced for the System, offering the

Funds Transfe r

opportunity to develop new ACH
services to address the evolving needs of
financial institutions.

For the fifth straight year, Federal Reserve
System targets for service availability
were exceeded. Full-day availability
averaged 99.90 percent and critical hours
service availability was at 99.93 percent.

Growth in ACH transaction volume
remained strong in the Twelfth District.

Volume growth for Fedwire transactions

The volume of transactions handled
continued to outpace the growth
experienced in most other Reserve
Districts. ACH commercial transactions

in the Twelfth District weakened from

in 1991 grew by 14.8 percent over 1990.

Electronic Access

The Twelfth District continued to provide
national leadership direction in its role as
the Electronic Access Office for the
System. It addressed strategic issues
related to security, network, service
requirements, and appropriate platforms
for electronic access to all Federal Reserve
services. It managed the electronic access
environment, which includes over 10,000
Fedline terminals deployed nationwide
that access payments and information
services. National service offerings were
expanded to support new features for
funds, securities, ACH, and other
financial services, as well as support for
submission of monetary aggregates
reports. For computer interface users,
new functionality was provided, allowing
access to funds and securities services
across multiple Districts.
Additionally, the second release of
FLASH-Light was introduced. This new
connection option is designed for the
small ACH receiver as a simple-to-use,
receive-only personal computer-based
facility. It also offers a full array of
Federal Reserve Bank informa tion
At the local level, the District successfully
converted all terminals to the national
Fedline software, offered an automatic
data delivery facility, and provided

enhancements to service products,
including a capability for electronic
savings bonds submission. The District
currently supports over 1,500 electronic
connections to its services.

Check Services
Quality improvements in check
operations and increased automation
were major achievements in 1991.
Improvement was seen in the expeditious
handling of adjustments, as well as the
quality of incoming deposits and
outgoing cash letters and associated
processing information. At the same
time, plans to sustain service in an
emergency were tested and strengthened.
New automated adjustment software was
implemented in all offices, and software
integrating IBM and Unisys systems was
introduced at some locations.

The methodology of processing of the
applications for and issuance of Savings
Bonds through San Francisco was
streamlined at the Portland, Seattle, and
Salt Lake City Branches. Due to the
smooth conversion process and high
receptivity by financial institutions, the
schedule for implementation of the
California offices has been accelerated.

Reliability in securities transfer service
continues to be high. Service availability
was 99.89 percent for a full-day and 99.95
percent during critical hours. Both
measurements surpassed Federal Reserve
System targets. An ongoing effort was
continued to ensure Securities and Fiscal
Services ability to recover from a major

Cash Services
Introduction of the security enhanced
$100 bill marked the first major change in
us. currency since 1929. Internally,
automation and strategic planning were
two areas of emphasis during 1991. The
initiatives will position the Twelfth

District to respond more effectively to
District financial institutions, and various
government agencies. New software will
be acquired to minimize paper transfers
and to improve accountability throughout
the opera tion.
Plans were made to upgrade vault
capacity in the two California offices by
installing high-density material handling
equipment, and currency processing units
were acquired at the Portland and San
Francisco offices. The Bank developed
options to manage currency volume
growth in order to ensure the District's
ability to continue to provide high-quality
service in the future .

Summary of Operations
Volume (in thousands)

Custody Services
Cash Services
Currency notes paid into circulation
Food stamp coupons processed
Securities Services

Savings Bonds original issues

Other Treasury original issues

Book-Entry Securities processed
















Payments Services
Check Services

Commercial checks collected

Government checks processed

Return items processed

Electronic Payments Services
Wire transfers processed
Automated clearinghouse transactions processed

Discounts and Advances
Total discounts and advances*

Number of financial institutions accommodated*


Whole number (not in thousands)

Federal Reserve Bank of San Francisco

.Board of Directors

Chairman of the Board and
Fed eral Reserv e Agent
James A. Vohs

Warren K. K. Luke
President and Director
Hawaii National Bancshares,
Inc. and Vice Chairman
of the Board and CEO
Hawaii National Bank
Honolulu, Hawaii

Chairma n
Kaiser Founda tion
Heal th Plan, Inc. and
Kaiser Foundation H ospitals
Oa kland, California

Deputy Chairman

Robert F. Erburu
Chairman of the Board
and CEO
The Times Mirror Company
Los Angeles, California
Fed eral Ad visory Cou nci l

Richar d M. Rosenberg
Chairman and CEO
Bank of Am erica
San Francisco, California

Rich ard L. Mount
Chairma n , President and CEO
Saratoga Bancorp
Saratoga, California

William L. Tooley
Tooley & Co.,
Investment Builders
Los Angeles, Californ ia

John N . Nordstrom
Co-Chairman of the Board
Nordstrom , Inc.
Seattle, Washington

E. Kay Stepp
President and CEO
Portland General Electric
Portland, Oregon
Judith M . Runstad
Co -Managing Par tner
Foster, Pepper & Shefelman
Seat tle, Washington

William E. B. Siart
First Interst ate Bancorp
Los Angeles, California

Los Angeles Branch

Board of Directors

Chairman of the Board

Walfred J. Fassler
Region al Vice President
Chevron U.S.A ., Inc.
Los Angeles, California

Fred D . Jen sen
Vice Chairman
Aktiv Bank Holding Company
Long Beach , California

William S. Randall
CEO, Sou thwes t Region
First Inte rstate Bank
Phoen ix, Arizona

Anita E. Landecker
Regional Vice President
Local Initiatives Support
Los Angeles, California

Donald G. Phelps
Los Angeles Community
College District
Los Angeles, California

Ignacio E. Lozan o, Jr.


La Opinion

Los Angeles, California

Portland Branch
Board of Directors

Chairman of the Board

William A. Hilliard
The Oregonian
Portland, Oregon

Stuart H . Compton
Pioneer Trust Bank, N.A.
Salem, Oregon

Ross R. Runkel
Professor of Law and
Willamette University
Center for Dispute
Willamette University
Salem, Oregon

Cecil W. Drinkward
Hoffman Construction Co.
Portland, Oregon

Wayne E. Phillips, Jr.
Vice President
Phillips Ranch , Inc.
Baker, Oregon

Elizabeth K. Johnson
Transwestern Helicopters, Inc.
Scappoose, Oregon

Stephen G. Kimball
Chairman, President and CEO
Baker Boyer Bancorp
Walla Walla, Washington

Salt Lake City Branch
Board of Directors

Chairman of the Board

Gary G. Michael
Chairman and CEO
Albertson's, Inc.
Boise, Idaho

H. Roger Boyer
Chairman of the Board
The Boyer Company
Salt Lake City, Utah

Gerald R. Sherratt
Southern Utah University
Cedar City, Utah

Curtis H. Eaton
Vice President; Manager,
Community Banking
Area and Member of
Board of Directors
First Security Bank
of Idaho, N .A.
Twin Falls, Idaho

Virginia P. Kelson, M.B.S.
Ralston Consulting Group
Salt Lake City, Utah

Ronald S. Hanson
Vice Chairman of the Board
Zions First National Bank
Salt Lake City, Utah

Constance G. Hogland
Executive Director
Boise Neighborhood
Housing Services, Inc.
Boise, Idaho

Seattle Branch
Board of Directors

Chairman of the Board

George F. Russell, Jr.
Frank Russell Company
Tacoma, Washington

Emilie A. Adams
President and CEO
Better Business Bureau
Seattle, Washington

William R. Wiley
Senior Vice President,
Technolo gy Management
and Director, Pacific
Northwest Division
Battelle Memorial Institute
Richland , Washington

B. R. Beeksma
Chairman of the Board
InterWest Savin gs Bank
Oak Harbor, Washington

H . H . Lar ison
President and CEO
Columbia Paint & Coatings
Spokane, Washington

Gerry B. Cameron
President and CEO
U.S. Bank of Washington, N.A.
Seattle, Washington

Robert P. Gray
National Bank of Alaska
Anchorage, Alas ka

Advisory Council on Small Business and

Agriculture- I992


Fred W. Andrew
Chairman of the Board
Andrew & Williamson Sales Co.
Bakersfield, California

Kendall E. Bert
Economic Development Director
City Manager's Office
Tucson , Arizona

Vice Chairman

Donald Butier
Shasta Foods International, Inc.
Gonzales, California

David A. Nimkin
Execu tive Director
Utah Small Business
Development Center
Salt Lake City, Utah
Bailey S. Barnard
First Capital
San Francisco, California
Barry Baszile
Baszile Metals Service
Los Angeles, California

Karla S. Chambers
Vice President
Stahlbush Island Farms, Inc.
Corvallis, Oregon
George M. DeMedeiros
Consultant and Retired President
Dairyman's Co-op Creamery Assn.
Tulare, California

Robert D. Fay
Vice President and
Operations Manager
JoLoNa Farms
Sunnyside, Washington
Boyd R. Poulton
Price, Poulton and Co.
Burley, Idaho
Leslie Tang Schilling
L.T.D.D ., Inc.
San Francisco, California
Henry J. Voss
California Department of
Food and Agriculture
Sacramento, California

Comparative Statement of Account

{Thousands of Dollars}
December 31,

199 1


199 0

Gold certificate account.
Special Drawing Rights certificate account..
Other Cash






Loans to depository institutions




Federal Agency obligations




United States Government securities:







Total United States Government Securities
Total loans and securities





Items in process of collection
Bank premises
Operating equipment.






Other assets:

Denominated in foreign currencies
All other





Interdistrict Settlement Account.




Total assets




Federal Reserve Notes





Total depository institutions-reserve accounts
Other deposits
Total deposits







Deferred credit items
Other liabilities





Total liabilities











Capital Accounts
Capital paid in
Total liabilities and capital accounts

Earnings and Expenses

(Thousands of Dollars)
December 31 ,

Current Earnings

199 1

199 0

Discounts and advances
United States Government securities
Foreign currencies
Income from services
All other




Total current earnings




Total current expenses
Less: reimbursement for certain fiscal agency
and other expenses
Net expenses







Cost of earnings credits




Current net earnings






Current Expenses

Profit and Loss
Additions to current net earnings
Profit on prior period adjustments
Profit on sales ofUnited States Government
securities (net)
Profit on foreign exchange transactions (net)
All other
Total additions



Deductions from current net earnings
Loss on foreign exchange transactions (net)
All other
Total deductions




Net additions (+) or deductions (-)




Cost of Unreimbursed Treasury Service




Assessments by Board of Governors
Board expenditures
Federal Reserve currency costs













Net ear~~fl~Je~~;fe~at~:~~~;~ . ~~.~
Dividends paid
Payments to the United States Treasury
(interest on Federal Reserve Notes)
Transferred to surplus
Surplus, January 1
Surplus, December 31

San Francisco Office
PO. Box 7702
San Francisco, Califo rn ia 941 20

Los Angeles Branch
PO. Box 2077, Terminal Annex
Los Angeles, Cal iforn ia 9°°51
Portland Branch
PO. Box 3436
Portland, Oregon 97208
Salt Lake City Branch
PO. Box 30780
Salt Lake City, Utah 84125
Seattle Branch
PO. Box 3567, Terminal Annex
Seattle, Washington 981 24

lhisHep w prod by K am eand writtenby lljndi Beale.

ort as uced arenH m
Oesiqn and qraphicsby Hark Hendricks. Color photoqraphy by Paul Schulz

Orqanizafion chart by William HosenlhaL Printed on recycled paper w soybean inks @ ~