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The Federal Reserve Bank of San Francisco

The Federal Reserve Bank of San Francisco

is one of twelve regional Reserve Banks


=r LQ~tbe _BoaLiJeoom

serves the Twelfth Federal Reserve District,



which , together with the Board of

which includes the nine western states -­

Governors in Washington, D.C., comprise

Alaska, Arizona , California , Hawaii, Idaho,

the nation's central bank.

Nevada, Oregon , Utah , and Washington -­
Guam, American Samoa, and the Northern

As th e nation's central bank, th e Federal

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Reserve is responsible for making and
carrying out our nation's monetary policy.

To serve this expansive region, th e San

It also is a bank regulatory agency, a

Francisco Reserve Bank has five offices: the

provider of wholesale-priced banking

headquarters in San Francisco, and offices

services, and the fiscal agent for the United

in Los Angeles, Portland , Salt Lake City, and

States Treasury.

Seattle. Each office provides financial

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services to the public and banking
institutions in its locale.

Federal Reserve Bank

of San Francisco

MAR 1 0 1995


ECQrn_tne BOQLarD


From le f t, J ames

A. Vohs, Ch ai rmm (1994), Robert 1.

Par ry, P resident , J ud ith


Runstad, Ch ai rman (1995),

and Patr ick K. B ar r on, First Vice P r esident.

Pa int ing in backg r ound:
Nat han Ol ive ir a

Yucatan Secuence Figure 1

o il on canvas 84 x



The robust economy in much of the West

The accompanying report on banking in

The Report discusses the performance of

during 1994 was reflected in the strong

the TWelfth District notes that while short­

the banking industry in the TWelfth District

performance of banking throughout most

term factors continue to cause ebbs and

during 1994, various actions District banks

of the TWelfth District. District banks in

flows in banking, it is the longer-term

are taking to meet the many chall enges

Nevada , Oregon, Washington, Alaska , and

trends that are shaping the future of the

facing them , and the opportunities for

Idaho recorded exceptional performances.

industry. These trends include the

legislated banking reform in this ever­

In California , the turnaround in the

fundamental revolution in the processing of

changing environment.

economy also helped boost bank earnings,

risk information and innovations in the field

though the state's economy was not yet

of finance. These developments have

strong enough to keep many community

heightened competition both outside and

we strive to anticipate and meet the needs

banks from experiencing weak returns.

within banking, putting a premium on

of our financial system in this dynamic

efficiency and broadening the horizons of

economic and regulatory environment.

Bank credit conditions in the District

financial services. One response has been

The supervision and regulation of bank

improved considerably, with consumer

consolidation in banking with interstate

holding companies and state-chartered

lending outside of California and Hawaii

banking an important aspect of this. Banks

member banks is a vital area of our

especially strong. The most notable

in the District also continue to adapt by

responsibility. As this Report indicates,

development in lending for the District, and

expanding fee-based products and

maintaining a safe and sound financial

for the nation, was the rebound in

services, including in less traditional areas,

system is becoming an increasingly

business loans at banks.

such as investment services.

complex task. Our goals continue to be


- - --





- --

It is imperative that, as the central bank,







the prudent supervision of financial

assessment of economic and financial

who completed their terms of service

institutions along with monitoring

conditions throughout our nine western

during 1994: On the San Francisco Head

compliance with community development

states is critical to the formulation of

Office Board , William E.B. Siart (Chairman

and reinvestment legislation throughout

monetary policy.

and Chief Executive Officer, First Interstate
Bancorp, Los Angeles, CAL William L.

the Twelfth District. In wholesale banking,
we continue to enhance the quality, safety,

In particular, we acknowledge the many

Tooley (Chairman, Tooley &. Company, Los

and efficiency of our payments system to

contributions of James A. Vohs . (Chairm an

Angeles, CAl; on the Portland Branch

benefit financial institutions and their

and Chief Executive Officer, retired, of

Board, its Chairman, William A. Hilliard

customers in all market segments.

Kaiser Foundation Health Plan, lnc.. and

(Editor, retired, The Oregonian, Portland,

Kaiser Foundation Hospitals, Oakland ) who

OR), Stuart H. Compton (Chairm an, Pioneer

This Report reviews the Bank's

stepped down as Chairman of the San

Trust Bank, N.A., Salem, OR); and, on the

performance in responding to new

Francisco Head Office Board at the end of

Federal Advisory Council , Twelfth District

challenges and achieving our fundam ental

the year after serving in this post for three

Member and President, Richard M.

objectives during 1994.

years. We are delighted that he will

Rosenberg (Chairm an and Chief Executive

continue to serve the Bank as Deputy

Officer, BankAmerica Corporation , San

Chairman of the Board in 1995.

Francisco, CAl .

We would like to extend our thanks and
appreciation to our Twelfth District
directors for their invaluable counsel

We also would like to express our sincere /

during 1994. The Directors' independent

thanks and appreciation to those directors


~~~ ~ T /Z
Judith M. Runstad

Robert T. Parry




_ _ _We_SJJ~_[O_Bao~Log_:_~aap_tL0-9_tQ_t5e_
C5alleoge_oJ-: C5aoge_

In 1994, banking in the Twelfth federal

Banking in the West turned in a strong

A rebound in bank lending in 1994 proved

Reserve District continued its rebound, with

performance in 1994. Banks in the Twelfth

reports of the demise of traditional banking

banks reporting record earnings as well as

federal Reserve District registered record

to be exaggerated. Buoyed by strong bank

increases in lending. Banking also

profits, improved their asset quality, and

capital positions and economic growth,

continued to adapt to changes in financial

maintained the strong capital positions

credit conditions in the District improved

markets, changes driven and shaped by

built up over the past few years.

considerably after the so-called credit

technological innovations and regulations.

crunch of the early 1990s.

This section examines the recent

The performance of banking mirrored the

performance of banks in the Twelfth

robust economic expansion in most of the

Looking ahead to the 21st century,

District, focusing on the effects of the

region . The long-awaited turnaround in

banking in the District and elsewhere will

growth in the regional economy and the

the California economy also contributed to

continue to be under pressure to adapt.

rise in market interest rates . In addition,

im pro ved banking conditions, though it

Efficiency will remain critical, calling for

this section discusses the adaptations

was not enough to keep many community

continued cost-cutting and consolidation

District banks are making and the

banks in the state from weak

even in the wake of strong bank earnings.

opportunities for legislated banking reform

performances. The sharp rise in interest

furthermore, innovations that have

in the changing environment.

rates spawned by the strong national

dramatically reduced the cost of amassing

economy in 1994 had only a small negative

and disseminating information related to

effect on reported bank earnings in

financial risk, as well as the cost of

the District.

measuring, evaluating, and managing risk,

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _5~

will mean greater competition in traditional

Another example is deposit insurance.

bank business lines, from both outside and

With the collapse of the fSLIC from the

within the industry. Similar forces are

thrift crisis and the heavy losses to the FDIC

behind the greater emphasis by banks on

from bank failures in recent years,

fee-based products and services.

policymakers have been acutely sensitive
to the dangers of extending deposit

The pace of banking's evolution in financial

insurance coverage. Public policy, however,

services, however, is still hobbled by

also needs to be concerned with

regulatory legacies from the 1930s. The

efficiency in financial markets. In recent

most symbolic example is the Glass­

years developments have tipped the

Steagall Act. Today, key parts of this

balance between these two considerations.

barrier have been eroded--Iarger banks,

This should open the way to giving more

including some in this District can

weight to the potential gains in efficiency

underwrite securities, and a broad array of

from further removing barriers separating

banks offers investment services and

financial institutions.

mutual funds. Still, limits remain on this
and other fronts.



_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1. S_tcQD-9_EeLtQrnJDnC_e_

E_e_c_occC[O_[ O~O~9 _S __

recorded exceptional performances, with

The drag on bank performance in

aggregate ROAs of better than 1.30

California was apparent at smaller banks.

The strong economic recovery in most of

percent. In Utah and Hawaii, aggregate

Community banks (institutio ns with assets

the region and the long-awaited

ROAs for banks were only a bit below the

under $300 million) in California reported

turnaround in California helped push up

national average. In Arizona, which had

an annualized ROA of only 0.36 percent

net income for banks in the Twelfth District

strong economic growth in 1994,

through the third quarter of 1994.

in 1994. Profits among District banks

aggregate bank earnings were well below

Community banks operating in Southern

through September of 1994 were $4.6

the national average, due in part to

California , the area hit hardest during the

billion , up from a strong $4 billion for the

isolated losses on sales of securities.

recession , fared worse as a group, barely

comparable period in 1993. Annualized,

breaking even in the first three quarters of

the earnings in 1994 represent an

In California, which accounts for close to

1994. Overall, nearly 20 percent of the

aggregate return on assets (ROA) of 1.19

65 percent of banking assets in the

banks in California lost money in the first

percent. That was a record rate for the

District, the recovery helped to boost bank

three quarters of 1994. That is well above

District and marked last year as the first

performance, with an aggregate ROA for

the national figure of 4 percent and is

since 1990 that District bank performance

the banks in the state of 1 percent

indicative of the lingering effects of the

at least matched the national average.

(annualized) through the third quarter of

nearly three years of recession in the state.


Much of the strength in earnings in

Within the District, banks in Nevada,

1994, however, was due to the profitability

Oregon, Washington, Alaska, and Idaho

of the large institutions in the state.

B sseJ_D_u_aJij_~_-=
cL>Ls_a~e_~ I~DIe~=

Nevada's commercial real estate loans, and

The bottom-line impact from the overall

Hawaii's residential mortgage and

improvement in asset quality was a sizable

business loans.

reduction in banks' expenses for

The economy gave District banking its

contributions to loan loss reserves. For the

biggest boost through an improvement in

In California , asset quality improved across

first three quarters of 1994, expenses for

asset quality. Growth in the economy

the board. The problem loan ratios for

loan losses for District banks were about

strengthened the financial position of

business and consumer loans dropped to

$1 billion less than for the comparable

borrowers and helped stabilize the value of

levels close to the national averages.

period in 1993. Western banks also

collateral backing bank loans. As a result,

However, with the slower growth in the

reduced their holdings of real estate

problem loans as a percent of total loans

California economy, the aggregate problem

obtained through defaults on loans, as they

have been coming down in the District.

real estate loan ratio remained above the

"cleaned up " their balance sheets by selling

national average and continues to be a

off those nonearning assets.

Outside of California , overall loan quality

drag on bank performance. This is

generally was quite good, with total

particularly true for community banks in

problem loan ratios below the comparable

Southern California, many of which have

U.S. ratios. Moreover, only some states

both a high dependency on real estate

The strong national economy pushed up

continued to report relatively poor asset

loans and a relatively high proportion of

short- and long-term interest rates in

quality for specific types of loans, such as

problem real estate loans.

1994. While the j um ps in rates were

Alaska's construction loans, Ari zona's and

I~ IsE 1D_l o_e ces_ K o.tes

sizable--250 basis points on 3-month

Treasury bills and 200 basis points on 10 ­

sales of only $79 million through the third

the third quarter were about $500 million.

year Treasuries--they had little net effect on

quarter of 1994, compared to a net gain of

While the unrealized losses were larger

the aggregate performance of banking in

$128 million for the same period in 1993.

than the realized losses, they still were

the District during 1994.

Only a limited number of banks in the

relatively small. Unrealized losses in 1994,

District had losses from securities sales

for example, represented only about 1

One reason is that the rise in the average

that materially affected earnings, and only

percent of total equity capital for banks in

yield on banks' assets kept pace with the

in Arizona were the isolated losses large

the District. Moreover, even if District

increase in the cost of bank funding. In the

enough to have a noticeable effect on

banks had booked these losses in 1994,

District, net interest margins, which have

aggregate earnings.

earnings still would have been on a par

been relatively high in recent years,

with their strong 1993 performance.

narrowed only slightly, and then mainly at

The bigger impact on banks was from

the region's larger banks. Smaller banks as

unrealized losses on securities . Banks

~-DEj-tQI=8_ern_oj _D_~-=

a group actually reported wider margins

currently report unrealized losses on

__tco ng

in the western states, other than Hawaii.

securities classified as available-for-sale.
District banks held about $53 billion in

Capitalization is another indicator of

Another reason is that realized and

available-for-sale securities as of

financial strength for banking in the

unrealized losses on securities were

September 1994, which was about 62

District. With higher earnings in 1994,

limited. For the District as a whole , banks

percent of their total investment securities.

banks in the District were able to maintain

reported a net realized loss from securities

The unrealized losses reported through

the strong capital positions that they had

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _


rebuilt in recent years, while also
increasing dividends and buying back
equity. As of September 1994, average Tier
1 and total risk-based capital ratios in the
District were 9.9 percent and 12.9 percent,
respectively. These figures are just below
the high national averages, and compare
favorably with the regulatory guidelines for
identifying well-capitalized banks--the
guidelines include a Tier 1 ratio of 6
percent and a total capital ratio of 10
percent. Within the District, 97 percent of
bank assets were held by banks that met or
exceeded these guidelines for well­
capitalized institutions.




~~~~~~~~~~~~~~_IL~8e~Da_~_[eniliD9Bank credit conditions in the District also

Alaska fell off sharply in 1994. In

Perhaps the most notable development in

improved considerably in 1994. Strong

California, both the economic recovery and

lending for the District, and for the nation,

capital positions and a reservoir of liquid

the turnaround in bank lending lagged the

was the rebound in business loans at

assets allowed banks to respond to the

rest of the District. As a result, bank loans

banks. Competition in the market for

increase in the demand for credit. Total

for the state in September 1994 were only

business credit has been intense for some

loans in the District rose by close to 6-3/4

about 3 percent above the level a year

time, driving down the bank share of non­

percent from September 1993 to

earlier. Nevertheless, that was a marked

mortgage business lending over the past

September 1994, following a contraction

improvement from the 3 percent decline

several years. This longer-run trend made it

of over 3-1/2 percent during the previous

the previous year.

difficult to predict when and how much

12 months.

commercial and industrial loans at banks
Consumer lending by banks in the District

would recover after contracting during

Several District states experienced

outside of California and Hawaii was

most of the 1990s.

exceptionally strong loan growth. In

especially strong, as households resumed

Arizona, Idaho, Nevada, Oregon, Utah, and

their borrowing to finance an increase in

Beginning in late 1993, however, business

Washington, total loan growth was over 10

spending. Real estate lending also was

loans at banks began to turn up in the West

percent, compared to the national average

strong in the faster-growing states in the

and in the nation. From September 1993 to

of around 8-1/2 percent. However, in


September 1994, business credit

Hawaii, soft economic conditions limited

extended by District banks increased by

loan growth, and bank loan growth in

more than 5 percent. That was less than

-- - --------- -I[


the approximately 8-1/2 percent for banks
nationally, mainly because of the lag in the
rebound in California.

The timing of the bounceback in bank
business lending is roughly consistent with
the usual lagged response to an upturn in
the economy, though the lag was on the
long side.

It also reflects the influence of

other cyclical or transitory factors. One is
the shift back to shorter-term financing by
businesses in response to the rise in
interest rates. Another is the slowing of the
balance sheet restructuring by businesses,
which apparently contributed to the
weakness in the overall demand for
business credit in recent years.





__~~.~~_I I I ~


The weak bank earnings and the dearth of

disseminating information related to

related services, one of the last bastions of

lending in the first part of the 1990s

financial risk, as well as the cost of

traditional banking.

followed by the more recent rebound

measuring, evaluating, and managing risk.
Competition among banks also has

suggest that short-term factors continue to
cause ebbs and flows in banking.

For banks this has meant greater

intensified. One example is the market for

However, banking also is being driven by

competition. New competitors are able to

retail deposits, where innovation and

longer-term trends that are broad,

penetrate service areas traditionally

deregulation have meant price competition

relentless , and global.

associated with banking. More open

for small-denomination accounts not only

capital markets have contributed to the

locally but nationally. Innovations,

One key trend is the fundamental

growth of nonbank competitors , like

including those in computing and

revolution in the processing of information

pension funds and mutual funds.

telecommunications technology, also have

about risk. This includes not only

Securitization has changed real estate as

helped bring a national dimension to

innovations in hardware and software for

well as consumer financing . Nonbanks are

competition for mortgage financing as

computer and telecommunications

going head-to-head with banks, as finance

well as certain types of consumer and

technology; it also includes innovations in

companies gain some market share at the

business credit.

the field of finance . These innovations

expense of banks and as investment banks

have dramatically changed the way

expand their consumer and business

financial services are provided. They have

lending. Nonbanks even offer transactions-

reduced the cost of amassing and


~S_tcu _c_t uLQ[C5_a_[l9_es __

Oregon, and utah allow entry by holding

to Arizona. For states like Arizona, Nevada

companies from all the other states in the

and Washington, the lion's share of

The competition from outside and from

country, while California and Washington

banking is controlled by out-of-state

within banking is putting a premium on

allow access on a reciprocal basis. Alaska

holding companies. Districtwide,

efficiency and broadening the horizons of

and Oregon also permit interstate

consolidation has meant some increase in

financial services. One response has been

branching. Only Hawaii still prohibits

concentration among the top few banking

consolidation in banking itself. While the

acquisitions of commercial banks by out­

organizations. Many local banking markets

evidence of the effects of bank mergers on

of-state holding companies (tho ug h even

in the District, though, have had either

efficiency is mixed, cost reduction remains

there a bank holding company has entered

stable or declining levels of concentration.

part of the force driving consolidation in

through the acquisition of a thrift). Though

This has been due in part to entry by new

banking. For the District, the result has

interstate banking in the West is open to

banks and the tendency for smaller

been around a 20 percent net reduction in

holding companies nationally, most cross­

competitors to gain market share. Another

the number of banks since the mid-1980s.

border banking in the region has been

reason is interstate acquisitions generally

In 1994, banking consolidation continued

initiated by holding companies with

do not reduce the number of competitors

in the District with 45 mergers.

headquarters in the District.

in local markets. Rather, these, and other
market extension mergers, expand lending

Interstate banking has been an important

The merger activity in the District has

and funding opportunities and allow for

dimension of the consolidation trend. In

altered the banking landscape, changing

greater diversification. The recent

the District, Alaska, Arizona, Idaho, Nevada,

the names on banking offices from Alaska

adoption of federal legislation authorizing



interstate branching also gives holding

banks rose in 1994, but by less than assets

for loan servicing and for deposit and

companies the opportunity to reduce cost

and earnings did.

trust services.

Ee_ 5_a _s_e_d=_B~QoIj=tl9 -=

Beyond these services, banks in the West

by consolidating their interstate operations
in coming years.

are joining the move into less traditional
Pressures to lower overhead costs in the

Banks also continue to adapt by expanding

areas, like investment services. Although

District also are evident in the decline in

fee-based products and services. The bulk

only the largest banks are involved in

the number of bank branches and other

of this activity is related directly to

securities underwriting, a broader base of

costs, particularly in California. Over the

traditional bank credit and deposit

the banking industry is generating fees

past few years, the number of branches in

services. Among these, certain off-balance

from offering other services. In the

California has dropped by more than 600,

sheet credit services have outpaced on­

District, one-quarter of the banks are now

or about 13 percent. California banks also

balance sheet lending. Over the 12

providing their customers with mutual

have cut payroll costs, including a 1.3

months ending September 1994, for

funds and/or annuity products as

percent cut in the first three quarters of

example , loan commitments in the District

alternatives to traditional deposit products.

1994. In other parts of the District, rapid

were up 18 percent and letters of credit

These include a number of smaller

economic growth has eased immediate

rose by 13 percent, compared to the 6-3/4

institutions; for example, the median size

pressures to reduce the number of banking

percent rise in loans. In addition, banks in

of bank offering mutual funds is about

offices. For the same reason, outside of

the District garnered a large portion of

$200 million. Still, mutual fund sales in

California salaries and benefits at District

their noninterest income from charges

the District are dominated by a few large


institutions. The top 10 banks in the

off-balance sheet contracts on behalf of

concentrated in a few large institutions.

District accounted for around 90 percent of

their customers, including other banks,

In the District, about 10 percent of the

the close to $55 billion in mutual fund

while banks of all sizes use the derivatives

banks reported having off-balance sheet

sales at western banks in the first nine

as part of their own trading activities and

interest rate and foreign exchange rate

months of 1994.

for managing portfolio risk.

contracts. The median asset size for

For the District as a

whole, gross fee income from the mutual

those banks was $1.6 billion, and the

funds and annuities was $225 million, or a

As a group, District banks tend to be

top ten banks accounted for about 97

little less than 3 percent of total

relatively less active than banks nationally

percent of the notional value of interest

noninterest income.

in providing and using off-balance sheet

rate and exchange rate contracts as of

instruments. In September 1994, for

September 1994.

Another fast-growing set of off-balance

example, District banks accounted for

sheet items is financial derivatives. These

about 10 percent of the $15-1/2 trillion in

consist of interest rate and foreign

notional value of interest rate and

exchange rate contracts--including options,

exchange rate contracts reported by banks

swaps, futures, and forwards. (Banks also

nationally, compared with about a 14

hold on-balance sheet derivative

percent share of banking assets. Although

instruments such as collateralized

banks in the District as small as around

mortgage obligations and structured

$50 million in assets use off-balance sheet

notes.) Some large banks enter into the

derivatives, their use currently is


- -


- -


- - - -


- - - -



_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ [~l._[O_Q~JD~9-~6e

These developments in the financial

losses to the FDIC from bank failures in

and investment banking and perhaps

services industry are changing the face of

recent years. These events have focused

debate the integration of insurance and

banking and blurring many of the

attention on the moral hazard problems

banking or even the mixing of commerce

distinctions between banks and nonbank

that can stem from deposit insurance.

and banking. Balancing the concern to

financial institutions. While the process is

Moral hazard arises when the provision of

protect the deposit insurance system will

being driven in large part by technology, it

deposit insurance severs the connection

be the concern that the current artificial

has been influenced by regulations and

between a bank's risk-taking and its cost of

separation of certain financial activities

legislation that have allowed innovation,

financing, thereby removing a natural

forces the economy to forgo potential

but, at the same time, have tempered its

check on risk-taking. Without the proper

gains in efficiency, resulting in higher

pace and dimensions. A number of factors

safeguards, deposit insurance and

cost and lower quality financial services.

explain the cautious approach to change in

excessive risk-taking by banks can mean

In addition, the artificial barriers may

the legal environment, but a key factor is

heavy losses for the deposit insurance

mean lost opportunities for banks and

concern over the risk exposure of the

system as well as a misallocation of

other financial institutions to diversify

deposit insurance system from extending

financial resources in the economy.

and reduce risk.

In 1995, risk to the deposit insurance

In recent years, developments have tipped

This concern is not surprising in light of

system will be an issue, as the Congress is

the balance between these concerns. In

the estimated $150 billion tab picked up by

likely to consider legislation to recognize

particular, several serious legislative and

taxpayers in the thrift crisis and the heavy

the interconnection between commercial

regulatory measures have been taken to

the federal safety net.




deal with risk in banking and the exposure

banking industry today is far stronger than

capitalized banks likely present a minimal

of the deposit insurance system. What

it was just three years ago, as banks have

risk for the deposit insurance system.

these measures have in common is the

responded both to regulatory efforts and to

While a bank's capital position can

goal of putting the consequences of bank

market pressure to raise their level of

deteriorate, the impact on the insurance

decision-making, the downside and the

capital. Banks issued equity and longer­

system can be controlled if actions are

upside, on the shoulders of the banks and

term debt and used retained earnings to

taken promptly and if those actions are

of some of their liability holders. These

recapitalize. In addition, strengthened

based on measures that reflect the true

measures include having uninsured

balance sheets and an improved outlook

value of a bank's assets and liabilities.

depositors regularly bear losses when

for banking have been reflected in the rise

banks fail, adopting a depositor preference

in bank stock prices from the depressed

These developments should mitigate

rule, enacting Prompt Corrective Action,

levels of the early 1990s.

concerns over the deposit insurance

accounting explicitly for the market-value

system, and perhaps tip the balance of the

of some bank assets and liabilities,

The effect of this turnaround in bank

legislative agenda more toward the

as well as setting risk-based deposit

capitalization has been a tremendous

potential gains from removing barriers

insurance premiums.

increase in the buffer between potential

separating financial institutions.

private losses in banking and the deposit
The most far-reaching change, though, has

insurance system. It is difficult to estimate

been the recapitalization of the banking

precisely the value of deposit insurance,

industry. The capital position of the

but available estimates suggest that well-



_________________ _ _B_OOK OrfLcecs_

Robert T. Parry, Presid ent a nd
Chi ef Executi ve Officer

W. Gordon Sm ith, Vice Pres id ent an d Directo r

Ells wo rth E. Lund , J r., Assista n t Vice President

Patri ck Tong, Vice President

Thomas P. McGrath , Assis ta n t Vice President

Patrick K. Barron, First Vice President and
Chi ef Operating Officer

D. Kerry Webb , Vice President

Elizabeth M. O'Sh ea, Assi sta n t Vice President

Jack H. Beebe, Senior Vice Pres id ent a nd Director

Sallie H. Weissing er, Vice President

Gail G. Quarles, Assistant Vice President

Sara K. Garrison , Seni or Vice Presid ent

Patri cia A. Welch , Vice President

Philip M. Ryan, Assista nt Vice Presid ent

Mich ael J . Murray, Sen ior Vic e Presid ent

Ja mes M. Barnes, Direct or

W. Sta rr Seeg m ille r, Assista n t Vice Presid ent

Ter ry S. Schwa ko p f, Senio r Vice Presid ent

Kenneth R. Binn in g , Director

Susan A. Su the rland , Assistant Vice Presid ent

Laure nce Washti en , Sen io r Vice President

Harold H. Blum , Dir ector

Ja mes J . Ten qe . Assista n t Vice Presid ent

S. Jean Hinrichs, Gen era l Audi tor

Nancy Em erson , Director

Thomas R. Th aanu m , Assis ta n t Vice President

Rob ert D. Mulford, Vice Presid ent and
Gen eral Counsel

Eli ot E. Giuili , Director

David M. vandre , Assistant Vice President

Don ald R. Lieb , Director

Kelly K. Walsh , Assistant Vice President

Eliza be th R. Masten , Vice Pres id ent and
Sec re ta ry of th e Boa rd

J ohn Y. C. Li n, Director

Beverley-Ann Hawkins, Automa tio n Officer

C. Kenneth Arnold , Vice President

Susan G. Porterfield , Direct or

Le lia M. Jones , Exami ni ng O ffice r

Eli zabe th K. Ch risten sen , Vice Presid ent

Wayn e L. Rick ards, Director

Mark Levo nia n, Research O ffice r

Bar bar a J. Contini , Vice Presi de n t

Kenneth M. Kinos h ita, Associ at e Gen eral Counsel

Brian Motley, Research O ffice r

Robert L. Fienberg, Vice President and Director

Paig e Birdsa ll, Assistant Vice Presid ent

Gary P. Palm er, Financia l Analysis Officer

Frederick T. Furlong, Vice Presid ent

Sylvia A. Cunningham, Assistant Vice Pres id ent

Glenn D. Rud ebusch , Research Officer

Willi am K. Ginter, Vice Presid ent

Pete r K. C. Hsieh , Assistant Vice Presid ent

Bharat Trehan , Resear ch O ffice r

Reu ven Gli ck, Vice Presi dent

John S. Hs iao, Assis ta n t Vice Presid en t

Dal e L. Vaug han , Examin in g Officer

John P. J ud d, Vice President a nd Asso cia te Direct or

Deb o rah S. Jackson- Duke, Assistant Vice Presi de n t

David W. Walker, Exam ining O ffice r

Douglas R. Sha w, Vice Presi de n t and Co unse l

Rob e rt C. J ohnson , Assistant Vice Presid ent

_ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ J1



- - --







JSLoct5eLrL ~e9J~Oo

[QS~B.o.9-e_' .e.s

Gordon Werkema, Sen io r Vice President

John F. Moore, Seni or Vice Presid ent
Sean J . Rodrigu ez , Vice Presid ent









Thomas D. Th omson , Executive Vice President of
Central Bank Functi on s, ser ved th e Fed er al Reserve
Bank both at th e Board o f Governo rs in Washington,

J~.ortLQo_a=B[·o~o_c~E~_ _

Anthony Fabi an , Dir ect or

D. C. and in San Francisco before re ti ring February L

A. Kenneth Ridd , Vice Presid ent

Nancy Olmst ead , Direc to r

19 95 . Th omson began his Reserv e Bank career as

Mary E. Lee, Assi stant Vice President

Dar cy J . Coulter, Assistant Vice President

an eco no m ist at th e Boa rd , th en worked in

Rob ert D. Long, Assistant Vice Presid ent

Brent M. Du xbury, Assistant Vice Presid ent

comm ercial banking for a do zen yea rs before

Robin A. Rockwo od , Assistant Vice Presid ent

Rach el A. Romer o, Assistant Vice President

return in g to th e Fed in San Franc isco.

Mary Rector, Offi cer


Eug en e A. Th omas, Senior Vice President of

Gal e P. Ansell, Assistant Vice Presid ent

S.e.o.Loc- O_f_ c.e rs_8.eJJ.ce

Jimmy F. Kamada, Assistant Vice Pres id ent
Kenneth L. Pet er son , Assistant Vice Presid ent

S~ali ·[aI.e


Feder al Reserve Ban k o f San Fran cis co in 1
960 and
Three of th e Bank's se nio r o ffi cers with co m bined

retired February L 1995. Tho mas held positions in

service o f nearly 90 yea rs elec ted to participat e in

the Portland and Los Ang el es o ffices before heading

th e ea rly re ti re men t pr ogram o ffere d during 19 94 .

th e Su pe rv isio n, Regulati on, and Cred it areas in

And rea P. Wol cott, Vice Presid ent
Gerald R. Dalling , Assi stant Vice Presid ent
Jed W. Bodily, Offi cer

su pe r vislo n. Regulati on and Cred it, j oined the

San Franci sco.
E. Ron ald Liggett, Senio r Vice Presid ent o f the
Northern Region , retired J uly 1. Duri ng his 37·year

Richard B. Hornsby, Offi cer
car eer, Liggett se rved in th e Portland , Seatt le , and
Salt Lake Ci ty o ffices.




_ _ _ _ _ _ _ _ __ _ _ __ E1Lg5Itgbts_o_t
O o_ r ot.ion s-=-o_n

a =

Ei~~_a_rlcj_a l=-:S_eD/j_c_e_s_~_


Th e January implementation of the same­

co llection business of a large financial

day settlement provisions of Regulation CC

institution with multi-state operations.

led to a significant, but not unanticipated ,
As a major provider of financial and

decline in th e volume of checks processed.

Elec t ro n ic P a ym e nt s and

payments services, the Federal Reserve

Despite thes e loss es, we increased

F i sca I A ge ncy

Bank of San Francisco strives to be

producti vity and reduced direct costs by

recognized for operational excellence,

more than 10 percent. As a result, the

The focus on efficiency, quality, and

outstanding customer service, and

District moved into the top ranks of

continual improvement in customer service

leadership within th e Federal Reserve

productivity performance in the Federal

was evident in th e performance of the

System and th e financial services

Reserve System. More importantly, we

automated clearing house (ACH) r funds

community. In keeping with these

were able to reduce prices on a number of

transfer, securities services, and fiscal

objectives, the Bank continued its pursuit

services and to maintain prices at 1993

agency operations in 1994.

of efficiency and higher levels of customer

levels ove rall.

ser vice by upgrading automation,

ACH Ser vice registered excep tio nal

maintaining tight cost control, and working

In addition to our efficiency gains, we

financial performance in 1994, due to

closely with our customers to ensure that

made considerable progress toward o ur

careful management of costs and staffIng

our services meet their chang ing needs.

long-term goal of end -to-end electro n ic

and dramatic improvement in productivity.

collection of checks by refining products

Our District now stands as one of the

and services to meet specific customer

leaders in the Federal Reserve System not

needs. At year-end, volumes of items

only in terms of th ese performance

During a year of dramatic changes in our

delivered electro nically were 200 perc ent

statistics, but also for such innovative

business environment, we met ambitious

above th e level attained in 1993. A

customer services as Fed -Mail deli very

productivity goals and saw considerable

particularly noteworthy accomplishment

option for ACH advices whi ch eli m ina tes

growth in electro nic collection services.

was our success in securing th e electronic

costly handling of paper advices.

Check S er v i c es


As part of a multi-year effort to centralize

tenders. At times, the volume of tenders

machines will increase currency

and upgrade the computer processing

processed in the Twelfth District exceeded

throughput, enhance counterfeit detection

systems for the Federal Reserve's key

that of all other Districts, including New

capabilities, and provide for more effective

electronic payments services, we moved

York. By reevaluating our operations and

monitoring of deposit quality.

our Funds Transfer Service to new

improving efficiency, we were able to

nationwide software. As the first District

accommodate this surge in volume and

The Bank also continued its efforts toward

with a sizeable customer base and

improve overall service.

the installation of an automated materials
handling system in the vaults of our San

significant wire transfer volume to shift to
this system, we played a major role in

Ca-sh S e rv ice s

identifying and resolving issues that will

Francisco and Los Angeles offices. Delays
encountered in integrating the automated

speed the process for other Districts. This

In 1994 Cash Services made further

storage and retrieval devices with the newly

new system will improve funds availability

progress in a multi-year effort to upgrade

installed rack led to the use of manually

nationwide, enhance reliability and

automation, efficiency, and customer

operated vehicles for storage and retrieval

recovery time, and ensure a consistent,

service. The renovation of all five offices'

purposes. In 1995 the Bank will work with

high level of funds transfer service.

facilities and the installation of new,

the vendor to obtain the full benefits of an

second-generation currency processing

automated environment.

Improved productivity and highly

equipment moved forward at a rapid pace.

responsive customer service were evident

Nine machines were installed, bringing the

Despite these challenges of automation,

in Fiscal Agency and Securities Services

total to 12 and marking the midway point

our District continued to deliver a high level

operations. Rapidly rising interest rates

in our conversion process. The Salt Lake

of customer service. For example, our Los

brought a dramatic increase in the public's

City office was fully converted early in the

Angeles offlce accommodated a spike in

demand for short- and medium-term

year and served as a national test site for

food coupon volume following the

Treasury securities and a corresponding

improving the processing of poor quality

Northridge earthquake.

increase in the volume of inquiries and

currency. These second-generation

T2 .

Our Bank led the Federal Reserve's zero­

access to Federal Reserve services, and

Economic education expanded with

based review of customer service levels in

non-centralized automation services.

workshops for teachers on money,

cash operations. In this effort to provide

banking, and two new topics. The new

for a more consistent level of service

This office expands our existing Federal

programs focused on instruction in the use

nationwide, we met with several dozen

Reserve System responsibilities for

of Bank software on monetary policy and

customers, whose input will help shape the

customer electronic access, which cover

the System video/collaborative material

new policy to be announced in 1995.

such facilities as Fedline and Computer

product, The Federal Reserve. Using a

Interface connections. A key 1994 initiative

satellite distance learning program, we

was the development and piloting of FED­

brought together 360 Oregon high school

Mail, which uses e-mail technology to

seniors to learn about the Federal Reserve.

System Support
Prod uc t .O f fi ce

deliver low-security data to customers. By
In recognition of our strategic contributions

year-end some 300 customers in four

The Audiovisual staff completed several

to Federal Reserve System payments

Districts were receiving FED-Mail service,

major projects, among them "Closing the

services, our Bank was given responsibility

which will expand nationwide in 1995.

Gap," a System-wide Community Affairs

for the System's new Support Product
Office in 1994. This new office is part of an

program explaining 10 basic fair-lending

:~ l_Lc __oI orma tj_o~

overall restructuring of the System's

guidelines. "Your Money Matters," a
training program to help cash handlers

management of financial and payments

Media outreach continues to focus on

detect counterfeit currency, was revised for

services, which also includes the creation

expanding awareness and understanding

the Treasury and the Board of Governors.

of product offices for retail payments,

of the Federal Reserve System . Media visits

wholesale payments, and fiscal services.

ranged from Oregon and Washington to

The Research Library introduced FedWest

This office will be responsible for setting

California's central valley and Arizona.

Onl.ine. a public bulletin board service

strategic and tactical direction for the

containing economic and banking

accounting functions, customer electronic

information produced by the Bank.


Approxim ately 300 users log on each

saving, stock returns, and budget and

discussions and data on developments in

month to read or download flies.

trade deficits. Several issues in bank

District states. Pacific Basin research and

capital regulation and bank lending were

analysis is disseminated by th e Center for

Employee communications grew as the


Pacific Basin Monetary and Economic

District newsletter, 12L Times, increased

NAFTA, interstate banking, the California

from quarterly to bi-monthly, and received

economy, and the convergence of income

two national awards for d esign and

levels across states.

Regional studies dealt with

content. In addition, we introduced 12L


Economic Research staff delivered 67
speeches to non-profit organizations.

Newswire, an e-mail bulletin board, for

Ajoint conference with the Center for

Public outreach efforts also included 75

San francisco employees.

Economic Policy Research at Stanford

meetings between staff and officials who

University brought together academic and

visited the Bank from the U.S. and abroad ,

System economists to discuss monetary

particularly Pacific Basin countries.

E_CO_D_QmLc~e_s _e_oLc_h ~=

policy in a low-inflation environment.

S_u_~e CY _ __ ~ ~

This year's research addressed a wide

Reil_llLg j j _Q D,

variety of policy-related issues. Some

Policy issues were presented to the public

studies exam ined monetary policy issues in

through various formats. The Weekly Letter

the U.S., including the effectiveness of

presents analyses of policy issues and

various targets and indicators, while others

economic developments for business and

During 1994 the Supervision, Regulation ,

covered monetary and exchange rate

academic readers . The Economic Review

and Credit department was reorganized

policies in East Asian countries. Other

contains technically oriented research.

into two departments, one focusing on

macroeconomic studies included various

Fedviews is a monthly video discussion

safety and soundness supervision and

aspects of business cycle behavior in th e

between two department economists on

regulation (Banking Supervision and

U.S. , as well as international research on

current macroeconomic policy issues.

Regulation), the other on credit,

inflation and growth , investment and

Western Economic Developments contains

compliance and community affairs.

o.nd__CI e_ iJ_ _

29:- -- - - - -- -- -- --

- - ­

__I 2LQOO9-ement


_ _" .ornrni tree

Fr om lef t, Rober t T Parr y. P r eSident and Ch ie f Execut ive O ffi cer . Michael


Mu rray , Senior Vice President.

Corpor a te Adm inistra tio n. Patr ick K. B arr on, Fir st Vice P r esident and C hief O per at ing O fficer .

and Thomas D. Thomson, Executive Vice P r eSident. C entr al B ank Funct ions.

Pai nt ing in background:
B yr on Gardner

Ribbon Landscape 1
acr ylic on canvas 6S x 50 li S'

_ _ _ __ _ _ _ __ _ _ _ _ _ _


B_QJJ ~9 -S_u_p_e~Vj_SjD_D _


a_n([::E~e9u JaJjDIL-

these, international examiners examined

financial, and supervisory information on

92 agencies and branches, 15 Edge Act

financial institutions.

offices, and 4 representative offices. This

ance-a~n d

Examiners conducted 68 examinations of

Bank was actively involved in the

Cred~Compl i

commercial banks. Outstanding formal and

development of a new Supervisory

C_ommuniJf _ B ££ajLs _

informal supervisory actions involving state

Program for Foreign Banks with initiatives

member banks declined from 25 at year­

designed to improve the supervision of

Community Affairs provided information to

end 1993 to 22 in 1994.

Foreign Banking Organizations operating in

more than 600 lenders by sponsoring six

the United States.

small-business lending seminars. They
helped District bankers learn how to make

Examiners completed 130 on-site
inspections of bank holding companies, 8

Domestic application filings totaled 257, up

small business loans profitably, how to

more than 1993 because new bank holding

from 252 in 1993. Applications to form

integrate public sector programs and

companies were formed and problem

bank holding companies or acquire

lending criteria successfully, and how to

institutions required heightened

additional banks or nonbanking businesses

enhance their institution's CRA program.

supervisory attention. At year-end there

increased significantly (from 52 in 1993 to

Two other seminars, "Resolving Legal

were 58 outstanding supervisory actions

83 in 1994), reflecting continued interest

Issues When Lending on Indian

(not including supervisory letters) in place

in consolidations and the desire of banking

Reservations," focused on resolving legal

at holding companies in less than

organizations to expand during favorable

and jurisdictional issues, sovereign

satisfactory condition, 13 less than 1993.

economic conditions.

immunity questions, and underwriting
problems that arise when lending on
Indian reservations.

At year end, there were 142 agencies and

In another major project, staff completed

branches of foreign banks in the District,

validation of District data in the National

19 Edge and Agreement corporation

Information Center database, the Federal

At other conferences in San Francisco,

offices, and 42 representative offices. Of

Reserve's central repository of structure,

Honolulu, and San Diego, more than 900

Lb --- -- - - - ----- ------- - ------ -- ­


- L




S~LQIlC LL_O peLo ~tLo_n s

From lef t, A ndre a P . Wolco tt, Vice P resident,
Salt Lake Ci ty, J ohn F. M oore, Senior Vice President,
Los A ngeles, and Gordon

R G . Werkema, Senior Vice

P re sident, Nor thern Re9 ion

A. Kenneth Ridd, Vice

P resident, Por tland, was not ava ilable f or the pho1 09ra ph
Paintin9 in back9raund:
Fritz Schold er

ping Ind After Leigh 1
erchinq and actJatint 1 90 Lt 3 1 x b2 1/2"

- --










- -





bankers, housing and small business

During 1994, 56 depository institutions

reflecting reduced amounts borrowed

developers, representatives of non-profits,

borrowed from the discount window

under adjustment credit. This Bank held

Native Americans and native Hawaiians,

compared to 64 in 1993, and 587 loans

$39.0 billion in collateral accounts at year

and government officials heard nationally

were extended, compared to 483 loans in

end compared to $29.3 billion at the end

recognized speakers discuss community

1993. The dollar amount of funds

of 1993, as banks had been pledging

reinvestment, economic development,

borrowed declined from $5.1 billion in

additional assets to their collateral pools.

lending on trust lands, fair lending, and

1993 to $3.5 billion in 1994, primarily

other related issues.

5_umrno_[ 1
-0=£ 0-r_
In its continuing role in the guidance of
non-profit mortgage banking consortia, the
department was key to the development of
the Association of Reinvestment Consortia
for Housing which represents over 300
commercial banks, thrifts and savings and
loans, with loan commitments and
fundings of over $700 million.

Custod y Serv ices _ _

Volume (in thousands)




Cash Services

Currency notes paid into circulation

Food stamp coupons processed

3 ,758,533

4 ,069,935
651 ,348






2 ,994,572
73 ,648

29 ,941













Security Services

Other Treasury original issues

Book-Entry Securities processed

Po/ m Servi.c.e s
Check Services

Commercial checks collected

Government checks processed

Return items processed

Electronic Payments Services

Some 2,000 regulatory inquiries were
received, about the same as previous
years. These usually involve truth-in­
lending issues, but there was a notable
increase in fair lending inquiries.

Wire transfers processed

Automated clearinghouse

transactions processed

Discou nls_o _o a - A c{y_onC eS
Total discounts and advances"

Number of financial institutions


*who le number (not in thousands)



_ _ _ _ _ _ _ _ _ _ _ _____-___= Eor o1ogs-ooirExp-eos-e-s_

__ _

(lo_t5D:us_ od_s_o_

December 31,


Current Earnings
Discounts and Advances
United States Government Securities
Foreign Currencies
Income from Services
All Other


.. 1,919,419 1,943,930

December 31,


Profit and Loss


Current Expenses
lbtal Current Expenses
Less: Reimbursement for Certain Fiscal Agency
and Other
Net Expenses
Cost of Earnings Credits
Current Net Earnings









Deductions From Current Net Earnings
Loss on Sales of United States
Government Securities (Net)
Loss on Foreign Exchange Transactions (Net)
All Other
Total Deductions







Cost of Unreimbursed Treasury Services

2,129,354 2,213,981


Net Additions (+) or Deductions (-)

lbtal Current Earnings

Additions to Current Net Earnings
Profit on prior period Adjustments
Profit on Sales of United States
Government Securities (Net)
Profit on Foreign Exchange Transactions (Net)
All Other
lbtal Additions






1,929,449 2,019,291
Assessments by Board of Governors
Board Expenditures
Federal Reserve Currency Costs
Net Earnings Before
Payments to the U.S. Treasury
.. 2,225,503
Dividends Paid
Payments to the U.S. Treasury
(Interest on Federal Reserve Notes) .......... 2,177,906




Transferred to Surplus
Surplus, January 1
Surplus, December 31




--------------- --~

( _Lo~_5o_us~a_rldS __oI_cLoJLoLs)-



December 31 ,





Loans to Depository Institutions


33 ,295

Federal Agency Obligations


342 ,931

Gold Certificate Account
Special Drawing Rights Certificate Account..
Other Cash

United States Government Securities:



December 31,




1,392 ,000

541 ,512

16,726,325 18,722,081
13,592,343 15,419,200
4 ,619 ,775

Federal Reserve Notes


Items in Process of Coll ection
Bank Premises
Operating Equipment

34,373,225 38,761,056
34,749,451 39,302 ,568


31 ,746

31,023 ,861 26,322,759

lbtal Depository Institutions ­
Reserve Accounts
Other Deposits
lbtal Deposits


4 ,938,398
5 ,039,231


Deferred Credit Items
Other Liabiliti es




Total Liabilities
Total United States Government Securities
Total Loans and Securities


37,097,537 34,443,234

Cap ital A ccounts
Capital Paid In


5]2 ,217
512 ,217


Total Liabilities and Capital Accounts 38,121,971 35,432,984
Other Assets:
Denominated in Foreign Currencies
All Other



3 ,295,072

Interdistrict Settlement Account

(3 ,685, 226) (12 , 12 1,65 1)

Total Assets

38,121 ,971 35,432,984

~ '-O








_ _Eeafrcal=~e_s_er~e=S
_ook_o_t SOD_Ecooc_Ls_c_Q_B_o_OCd_o_t 0 lrectors

Chairman of the Board and
Federal Reserve Agent
Judith M. Runstad
Foster, Pepper &:. Shefelman
Seattle, Washington

Deputy Chairman
James A. Vohs
Chairman and CEO (Retired)
Kaiser Foundation
Health Plan, Inc. and
Kaiser Foundation Hospitals
Oakland, California

Gerry B. Cameron

Chairman and CEO

U.S. Bancorp

Portland, Oregon

Krestine M. Corbin
President and CEO
Sierra Machinery, Inc.
Sparks, Nevada

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

Richard L. Mount

Chairman, President

and CEO

Saratoga Bancorp

Saratoga, California

Cynthia A. Parker
Executive Director
Anchorage Neighborhood
Housing Services, Inc.
Anchorage, Alaska

Carl J. Schmitt
Chairman and CEO
University Bank &:. Trust
Palo Alto, California

Fe_d _eCOC ~_dY LSO~y=
C _O ncL JS
I 2Lem5_ec
Edward M. Carson
Chairman of the Board
first Interstate Bancorp
Los Angeles, California

E. Kay Stepp
Principal and Owner
Executive	 Solutions
Portland , Oregon














[Qs- H;LXO-gele_s_Bcanc_6_B o~a[a oJ-=OLcecJ_Qcs_

Chair of the Board
Anim E. Landecker
Western Regional Vice
Local Initiatives
Support Corporation
Los Angeles, California

Anne L. Evans
Evans Hotels
San Diego, California

Antonia Hernandez
and General Counsel
Mexican American Legal
Defense and
Educational Fund
Los Angeles, California

David L. Moore


Western Growers Assn .

Irvine, California

William S. Randall
Chief Operating Officer
First Interstate Bancorp
Phoenix, Arizona

Steven R. Sensenbach
President and CEO
Vineyard National Bank
Rancho Cucamonga,

Thomas L. Stevens, Jr.


Los Angeles Trade­ 

'Technical College

Los Angeles, California


~QctlaD(f=Bca~c5_B_o_a[a o_fOLce_cJ_QcS_

Chairman of the Board
Ross H.. Runkel
Professor of Law
Willamette University
Salem, Oregon

Cecil W. Drinkward
President and CEO
Hoffman Corporation
Portland, Oregon

John D. Eskildsen
President and CEO
U.S. Bank of Oregon
Portland, Oregon

Elizabeth K. Johnson
TransWestern Helicopters,
Scappoose, Oregon

Marvin H.. O'Quinn
Chief Operating Officer
Providence Portland
Medical Center
Portland , Oregon

Carol A. Whipple
Rocking C Ranch
Elkton, Oregon

Thomas C. Young
Chairman , President
and CEO
Northwest National Bank
Vancouver, Washington



- - - -'0 33­

S_olt L_ok _e_CLtf_BLOocb _B_o~OLd

of - Qi.ce_ct oJ:s

Chairman of th e Board
Gerald R. She rratt
Presid ent
So uthe rn Utah University
Ced ar City, Utah

Richa rd E. Davis
Presid ent and CEO
Salt Lak e Convention
&:. Visitors Bu rea u
Salt Lake City, Utah

Nancy Mortensen
Vice Presid ent-Marketing
Zion s Cooperative
Mercantile Institution
Salt Lake City, Utah


Con stance G. Hogland
Executive Director
Boi se Neighborhood
Hou sing Serv ices, Inc.
Boi se, Idah o

Dani el R. Nelson
Cha ir ma n and CEO
West On e Bancorp
Bo ise , Id ah o

Roy C. Nels on
Presid ent
Bank of Utah
Ogden , Utah




_ -Se_ottle


0_£ -Di. ce_c_tQcS_

Chairman of the Board
George F. Russell , Jr.
Frank Russell Company
Tacoma . Washington

Em ilie A. Adams
Presid ent and CEO
Better Business Bureau
Seattle, Washington

Th omas E. Cleveland
Chairman and CEO
Enterprise Bank
Bell evu e, Washington

Tornio Moriguchi
Uwajimaya, Inc.
Seattl e, Washington

Cons tance L. Proctor
Alston , Courtnage, MacAulay
&: Proctor
Seattle, Washington

John V. Rindl aub
Chairman a nd CEO
Seafirst Corporation
Seattle, Washington

William R. Wiley
Seni or Vice President for
Science and Technology
Battell e Memorial Institute
Richl and , Washington




C_O_UQCJLQD_Sma l[~B_usJoe_s_s_a oa_~9[ic_ultu[ e_[g-~15
Donald Butler
Agrolink Corp.
Tucson . Arizona

Vice Chairman
Bailey S. Barnard
Former President
Heller First Capital Corp.
San Francisco, California

Barry Baszile
Baszile Metals Service
Los Angeles, California

Jerry D. Caulder
Chairman, President and CEO
Mycogen Corp.
San Diego, California

Karla S. Chambers
Vice President
Stahl bush Island Farms, Inc.
Corvallis, Oregon

Walter F. Payne, Jr.
President and Chief Executive Officer
Blue Diamond Growers
Sacramento, California

Nancy G. Learned
Learned-Mahn, Inc.
Boise , Idaho

Leslie 'Tang Schilling
L.T.D.D., Inc.
San Francisco, California

Lawrence S. Okinaga
Carlsmith , Ball , Wichman ,
Murray, Case &. Ichiki
Honolulu, tlawai i

Peter H. van Oppen
President and Chief Executive Officer
Redmond , Washington

Peter Ii . Parra
Executive Director
Employers' Trai ning Reso urce
Bakersfield , California

Bob L. Vice
California Farm Bureau Federation
Sacramento, California


_____ ___ _ _ _ __.. Lwm '---'~

This Report wa s prod uced by Ka ren

The background paintings in the

Sa n Fra ncisco O ff ice

Fla mme, designed a nd illustra ted by

photographs are from the art collection of

P .O . Box 7702

Ma rk Hendri cks. Western Ba nk ing wa s

the Federal Reserve Bank of San francisco.

Sa n Fra nc isco, Ca Iifornia

wri tten by Fred erick T. Furlong a nd

Acquired between 1981 and 1987 with

G ory C. Zi mmerman wit h ed floria l

funds designated as part of the budget for

Los A ngeles Bran ch

as si sta nce from J ud it h Goff.

the construction of the new San francisco

P.O . Box 20 77 Termi na I Anne x

Highlig hts was writ ten by Borbar a

and Los Angeles facilities, the collection is

Los A ng e les, Ca li fornia

Bennett o nd Koren Flomme. Color

comprised of over five hundred artworks by

pho togr aphy by Pau l Schu lz.

artists from the Twelfth District. The objects

Portiand Bra nch

are installed in public and work spaces in

P.O . Box 343b

the San francisco headquarters and the

Portla nd. Ore gon 9720 8

9 4120

90 051

four branches where they provide an
environment that is not only enjoyable and

Sa It La ke C ity Bra nch

stimulating, but educational as well. While

P.O . Box 30 780

its primary emphasis is on contemporary

Sa It La ke Ci t y. Uta h 84 1

art, the collection is given added
dimension by a select sampling of

Sea tt le Bra nch

traditional crafts.

P.O. Box 35b 7, Termi na I Annex
Sea ttle, Wa shington 981 24