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Operations of the Federal Reserve Bank of St. Louis —1977 PAUL A. WATKINS, JR. ItS the central bank of the United States, the Federal Reserve performs three basic functions. It conducts monetary policy, supervises and regulates member banks, and provides various services to the public, the Treasury, and commerical banks. These functions are performed by the Federal Reserve System’s Board of Governors in Washington, the 12 regional Reserve Banks located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco, and the 25 branches of the regional banks. Although they have authority to examine all member banks, Federal Reserve Banks generally do not examine national banks, all of which are required to be members of the Federal Reserve System. Primary responsibility for examination and supervision of national banks, which number 340 in the Eighth District, lies with the office of the Comptroller of the Currency. The Federal Deposit Insurance Corporation (FDIC), along with respective state banking authorities, examines state nonmember banks that are insured by the FDIC. Noninsured banks are examined only by state authorities. The Federal Reserve Bank of St. Louis, together with the state banking authorities, has responsibility for the supervision of the 79 state chartered banks in the Eighth District which have elected to become members of the Federal Reserve System. An annual examination is made of state member banks in order to evaluate their assets, liabilities, capital accounts, liquidity, operations, and mnanagement. Attention is also focused on compliance with applicable laws and regulations. Federal Reserve Banks also supervise bank holding companies. At the end of 1977, the Federal Reserve Bank of St. Louis had jurisdiction over 20 multibank and 88 one-bank holding companies. Prior approval must he obtained from the Federal Reserve System for bank holding company formations and for acquisitions of additional banks and permissible nonbank subsidiaries. Applications for holding company formations and for acquisitions of additional subsidiaries are analyzed by the Bank Supervision and Regulation Department along with the Legal and Research Departments. These departments consider the history, financial condition, and prospects of the institutions, and evaluate the quality of management. They also assess the legal aspects of the proposal and its likely effects on banking and nonbanking competition. During 1977, the Federal Reserve Bank of St. Louis received 14 applications to form one-bank or multibank holding companies and 24 applications from holding companies to acquire additional subsidiaries, engage de novo in nonbank activities, or establish new locations. Information gathered from such examinations is utilized by banking authorities to direct attention to potential problems or unsatisfactory conditions of the banks. Supervision seeks to foster an effective banking system in which the public interest is safeguarded. After formation, bank holding companies are required to register and file annual reports with Federal Reserve Banks. These annual reports are analyzed by the staff of the Bank Supervision and Regulation Department to verify accuracy and completeness, to The Eighth Federal Reserve District is served by the head office in St. Louis and branches in Little Rock, Louisville and Memphis. The district encompasses Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee. This article reviews the operations of the Federal Reserve Bank of St. Louis during 1977. .Lia-ri-k i Page 16 ‘t~ i;(mn-ttI~ jliC[2’U.ii ~ticm-n APRIL 1978 FEDERAL RESERVE BANK OF ST. LOUIS ascertain the current financial condition of the holding company and its subsidiaries, and to determine compliance with applicable laws and regulations. Examination reports prepared by the primary Federal supervisory agency of the respective bank subsidiaries are also analyzed by the Federal Reserve Bank to determine the overall condition of such subsidiaries. In addition, discretionary on-site inspections of bank holding companies and their nonbank subsidiaries are conducted by Supervision and Regulation personnel. The purpose of these inspections is similar to that of examinations of banks. The collection and clearing of checks drawn on member and nonmemher banks is a service provided by the Federal Reserve System and is a major activity at this Bank. Payment for the items cleared is accomplished on the day of presentment by a charge to the reserve account of the member bank or to the reserve account of a member correspondent. Checks drawn on nonmember banks are also paid for on the day of presentment by a charge to the account of a specified member correspondent. During 1977 the four Federal Reserve offices in the Eighth District cleared 693 million checks totaling $289 billion. This reflects increases of almost 4 percent in the number of checks cleared and more than 14 percent in dollar value when compared with 1976 check clearing activity. Although growth in the volume of items cleared has slowed somewhat over the past year, the dollar value of these items continued to increase at about the same rate as in past years. A major goal of the Federal Reserve System is to provide a speedy check payments mechanism. To this end a Regional Check Processing Center (RCPC) program was implemented during the early 1970s to Table I increase the speed of the check payment process and to facilitate the return of dishonored items. The RCPCs that have been in operation in the Eighth Federal Reserve District since 1972 continue to enable the overnight collection of items drawn on banks in the RCPC area, thereby permitting prompt credit and payment for these checks. Wire transfers have been used for many years to facilitate transfers of balances between banks. The Federal Reserve and its member banks utilize a computer network for transferring funds nationwide. Using this system, many member banks are able to render more efficient service to their customers and effect payment for the purchase and sale of Fed funds. Nonmember banks benefit from this service indirectly through correspondent member banks. Settlement for such transfers is made by debits and credits to reserve accounts. Generally, transfers through this network are for large amounts, with no charge levied for transfers of $1,000 or more. Member banks also utilize these facilities to transfer marketable government securities. All four Federal Reserve offices and 22 commercial banks in the Eighth District with a significant volume of transfers are currently on-line. Several other banks are considering the installation of terminals. Over 360 member banks nationwide have installed on—line terminals connected to their Federal Reserve District computers. Member banks not having on-line terminals may telephone their transfers to their local Federal Reserve office where the transfers are entered into the wire transfer system over Federal Reserve Bank terminals. Terminal installations at the banks are connected to the computer at the St. Louis Federal Reserve office which is the switching center for the Eighth VOLUME OF OPERAT(ON$’ Number (thousands) 1977 Checks hoSted’ Transfers of funds Currency received and counted , ,,., Government securities issued, serviced, and redeemed U.S. Government coupons paid Food Stomps received and counted ,,,,, 1976 3~8% 667,678 1,141 974 17.1 318,000 281,000 400 120,000 (millions) 1977 Change 692,723 13,300 Dollar Amount Percent $ 1976 288,929 $254,357 1,035,000 Percent Change 871,000 13.6% 18.8 13.2 2,900 2,800 3.6 13,226 .6 36,388 69,050 —47.3 592 —32,4 1 85 266 —30.5 133,000 —10.5 504 556 — 9,5 5 T,aal for the St. Louis, Little Rock, Louisville and Memphis o~ees. ‘Excludes US. Government checks and postal money orders, Page 17 APRIL 1978 FEDERAL RESERVE BANK OF St LOUIS District. Operators of the terminals in the commercial banks can initiate transfers directly from their banks, at which time the transfers are processed automatically through -the computer at the St. Louis office and directed through a central switching computer at Culpeper, Virginia, to another Federal Reserve District for the account of the receiving commercial bank. Transfers of funds may also he made between member banks in the same District. If the receiving hank is on—line, transfers are switched automatically to that hank’s terminal through its Federal Reserve District computer. By transferring funds electronically, all necessary information for completing the transfer is obtained. Third-party information may be entered to identify the originator and/or the recipient of the funds. Member bank reserve accounts are debited and credited automatically, and banks with on-line terminals receive an immediate record of each transaction at its conclusion. The use of electronic equipment for transfers of funds has reduced the time required for completion of a typical transaction from almost an hour to a matter of only a few minutes. With the installation of on-line terminals at the 22 District commercial banks, about 3,900 transactions per day are sent and received by electronic means, and thus do not require manual processing by Eighth District personnel. This represents 82 percent of total transfers processed. Volume and dollar amounts of transfers processed by the Eighth District continues to increase. During 1977, more than 1.1 million transfers amounting to $1,035 billion were completed by the Federal Reserve Bank of St. Louis and its branches. This is an 18 percent increase in number and a 13 percent increase in value over the previous year. A-rndenu. jiCt&”YUtZ Fe u-rn-en The Bank has been processing the payroll for Air Force installations in the Eighth Federal Reserve District by electronic means since August 1975. A number of other Federal recurring payments are also settled through the electronic funds transfer system (EFTS). Social Security payments comprise the largest category with a monthly volume of 280,000 payments. Monthly volumes for other categories are 11,700 Civil Service Annuity payments, 8,500 railroad retirement payments, 12,000 Veterans Administration payments, and 5 CIA retirement payments. In addition, 2,000 revenue sharing payments are processed quarterly. Page 18 ;:UUCeIfl-~Th-; An automated clearing house (ACH) provides for the exchange of payments on magnetic tape. Traditional clearing houses, by contrast, provide for the exchange of payments with batches of paper checks. The St. Louis Reserve Bank and each of its branches operate automated clearing houses. The Arkansas Automated Clearing House, operated by the Little Rock Branch. began operations in October 1977. The Kentuckiana Automated Clearing House, operated by the Louisville Branch, began operating in April 1976. The Mid-America Payments Exchange, operated by the Bank’s head office in St. Louis, has been operational since July 1976. In addition, the Mid-South Automated Clearing House, operated by the Memphis Branch, began operations in February 1977. The District’s four ACT-I’s process about 42,000 commercial debit and credit items monthly. (..;X~-EU axe! Coin and currency, comprising approximately 26.1 percent of the snotiey stock, are more widely used than demand deposits in consummating small transac— tiosis. primarily’ because of convenience. Personal c’lleC’ks geiierallv are used for transactions of larger amounts. The Federal Reserve Banks supply, through the commercial banking system, virtually all of the coin and currency in circulation, and excess coin and currency is returned to Federal Reserve Banks through the commercial banking system. Approximately 318 million pieces of currency valued at $2.9 billion were received and verified at the four Federal Reserve offices in the Eighth District during 1977. This was an increase of about 13 percent in number of pieces, and a 4 percent increase in dollar volume from 1976. The number and value of coins received and verified showed a decline from 1976 levels. Combined sorting, counting, and wrapping of coin and currency at the four offices averaged almost 6.4 million pieces per working day in 1977, up slightly from 1976. In sorting currency at the Reserve Banks, that which is no longer usable is removed from circulation and destroyed. During 1977, the Federal Reserve Bank of St. Louis and its branches verified and destroyed currency totaling $771 million. Lenc!--i-ri~g Three types of credit are made available to member banks in the Eighth Federal Reserve District: short- FEDERAL RESERVE BANK OF ST. LOUIS term adjustment, seasonal, and emergency credit. Member banks may make temporary adjustments in their reserve positions due to deposit losses, unexpected or mmnusual requests for loans, or other changes they encounter. Member banks which have highly seasonal loan demands may apply to this Bank for seasonal credit. Such loan demands are due primarily to a recurring pattern of challge in deposits and loans. Under seasonal credit, member banks are permitted to maintain a portion of their liquid assets in the form of Federal funds (loans of excess reserves to other banks), so long as such holdings conform to the bank’s normal operating experience. Arrangements for this type of credit should be made in advance. Credit for longer periods is also available to member banks to meet emergency conditions which may result from unusual local, regional, or national financial situations, or adverse circumstances where member banks are involved. The discount rate is the rate of interest charged by the Federal Reserve Bank on loamis to member banks. The level of the discount rate, in relation to other short-term market rates, has an influence on the volume of credit extended by the Federal Reserve Bank. \-Vhen the discount rate is higher than other market interest rates, member banks usually choose to obtain funds from other sources to make temporary reserve adjustments. When the discount rate is low in relation to other market rates, member banks tend to rely more heavily on the Federal Reserve for funds. At the start of 1977, the discount rate was 5.25 percent. The rate was increased twice during the year, and at yearend it was 6 percent. However, throughout the last half of 1977, the discount rate was below other short-term interest rates. As a result of this difference in rates, member bank borrowings in the Eighth District were relatively high. The daily average of loans outstanding amounted to $23.7 million in 1977, more than ten times the $2.2 million for 1976. There were 860 loans amoummting to ~.5.0billion made to 63 Eighth District member banks by tile Federal Reserve Bank of St. Louis during 1977. This is an increase from 1976 when 231 loans totaling $428.9 millon were made to 32 member banks. F-i-see-I Agene-u As a fiscal agent of the Federal Government, the Federal Reserve Bank performs many services. The U.S. Treasury makes payments for various types of Government spending through accounts maintained APRIL 1978 in the System. Funds received by the Treasury are deposited into its account at the Federal Reserve Bamiks or into tax and loan accounts at designated commnercial banks. These funds represent mainly receipts from payment of taxes and collections from the sale of Government securities to the public. Balances in the tax and loan accounts are transferred upon call to the account of the Treasury of the United States at Federal Reserve Banks in order for the Treasury Department to have use of the funds. The Federal Reserve Banks also act on behalf of the Government in marketing Treasury securities. When the Treasury offers new securities, the Reserve Bammks prepare and distribute apphcations and official offering circulars, receive subscriptions from those who wish to buy, allot the securities among the subscribers according to the tenns of the offering, collect payment, and make delivery to the purchasers. With funds from the Treasury’s account, Federal Reserve Banks pay interest on securities and redeem them at nmaturity. Reserve Banks also pay interest on and redeem securities of most Government-sponsored corporations. The Federal Reserve Banks will, as fiscal agents, hold in safekeeping securities pledged to secure Government deposits in tax and loan accounts at commercial banks. Federal Reserve Banks will also Imold securities of member banks in safekeeping. U.S. Treasury and most government agency securities are held in hook-entry form by the Reserve Banks. Securities of the U.S. Government and various government agencies are issued, serviced, and redeemed by Federal Reserve Banks. In 1977, 13.3 million securities totaling $36.4 billion were handled by the Federal Reserve Bank of St. Louis and its branches. Also durimig 1977, coupons of U.S. Treasury and agency securities totaling 400,000 pieces amounting to $185 million were paid by Eighth District offices. U.S. Government food stamps are also redeemned by Federal Reserve Banks, A total of 120 million food stamps amounting to $504 million were received and counted by the Federal Reserve Bank of St. Louis and branch offices during 1977. The Federal Reserve System, while working closely with other pohic~makimmgagencies in the Government, has the primnary responsibility for the formulation and implementation of monetary policy. Through representation on the Federal Open Market Committee, Page 19 As of March 2, 1978 DIRECTORS St. Louis Chairman of the Board and Federal Reserve Agent ARMAND C. STALNAKER, Chairman and President General American Life Insurance Company, St. Louis, Missouri ViRc~xIA M. BAILEY. Owner. Eld0 Properties, Little Rock. Arkansas RALPH C. BAn. Vice President. Wabash Plastics. Inc., Evansville, Indiana DoNALD N. BRANDmN. Chairman of the Board and President, The Boatmen’s National Bank of St. Lonis, St. Louis. Missouri RAYruoNn C. BURROUGHS. President and Clmief Executive Officer, The City National Bank of Murphyshoro. Mumphyshoro, Illinois K. SxiiTn, JR., Senior Vice President, Monsanto Company, St. Louis, Missouri WimmIA~.mH. STROI’BE, Associate Dean, College of Science and Technology. Western Kentucky University, Bowling Green, Kentucky WILIItM B. WALTON. Vice Chairman of the Board. Hol. iday Inns, Inc., Memphis. Tennessee W~r, WEmGEL. Executive Vice President amid Chief ExecF. utive Officer, First National Bank and Trust Company, Centrahia, Illinois TOM Little Rock Branch Chairman of the Board G. LARRY KELLEY, President Pickens-Bond Construction Co., Little Rock, Arkansas B. FINLEY VmNsoN, Chairman of the Board. The First RONALD W. BAILEY. Executive Vice President and General Manager. Producers Rice Mill, Inc., Stuttgart, National Bank in Little Rock, Little Rock, Arkansas Arkansas E. HAYS, Jn., President and Chief Executive Officer, The First National Bank of Hope, Hope, Arkansas E. RAY KEMP. JR.. Vice Chairman of the Board and Chief Administrative Officer, Dillard Department Stores, Inc., Little Rock, Arkansas THOMAS T. G. VmrssoN, President, The Citizens Bank, Batesvihie, Arkansas FIELD \VASSON. President. First National Bank, Siloam Springs, Arkansas Louisville Branch of the Board Chairman JAMES H. DAVIS, Chairman and Chief Executive Officer Porter Paint Co., Louisville, Kentucky Chairman of the Board, Tell City Natiommal Bank. Tell City, Indiana RICHARD 0. DONEGAN, Vice President and Group Execu. tive, General Electric Company, Louisville, Kentucky J. DAVID Gmssortm. Chairman and Chief Executive Officer, Citizens Fidelity Bank and Trust Company. Louisville. Kentucky HOWARD BRENNER. Vice B. ONEv, President, The First National Bank of Carrollton, Carrollton, Kentucky FRED F. THOMPSON, Professor of Economics, Murray State University, Murray, Kentucky JAMES TOM G. Voss, President, The Seymour National Bank, Seymour, Indiana Memphis Branch Chairman of the Board JEANNE L. HOLLEY, Associate Professor of Business Education and Office Admirustration, University of Mississippi, University, Mississippi W. M. CAMPBELL, Chairman of the Board and Chief Executive Officer, First National Bank of Eastern Arkansas, Forrest City, Arkansas ROBERT E. HEALY. Partner~In-Charge,Price Waterhonse & Co.. Memphis, Tennessee FRANK A. JONES, JR., President, Cook Industries, Inc., Memphis, Tennessee STALLINGS LIPrORD, President, First-Citizens National Bank of Dyersburg, Dyersburg, Tennessee WILLIAM WOOTEN MITCHELL, Chairman, First Tennessee Bank N.A., Memphis, Tennessee CHARLEs S. YOUNGBLOOD, President and Chief Executive Officer, First Columbus National Bank, Columbus, Mississippi Member, Federal Advisory Council CLARENCE C. BARKSDALE, Chairman of the Board and Chief Execmmtive Officer First National Bank in St- Louis, St. Louis, Missouri Page 20 OFFICERS St. Louis LAWRENCE DONALD B. ANATOL K. Roos, President W. MORIARTY, BALBACH, Senior Vice President P. GARBARINI, Senior Vice President & Controller HAROLD F. UTHOFF, Senior Vice President LEONALL C. ANDERSEN, Economic Adriser A. BRYANT, First Vice President F. GARLAND RUSSELL, Jmt., Senior Vice President, General Counsel, and Secretary JOSEPH RUTH JR., J. BERNHARDT Vice President SARTORIUS, General Auditor T. SNOVER, Vice President WARREN ROBERT W. THOMAS. Vice President DENIS S. KARNOSKY, Vice President JAMES R. KENNEDY, Vice President DELMER JOHN F. OTTING, Vice President CHARLES D. ZETTLER, Vice President WEISZ, Vice President CLIFTON B. LUTTRELL, Assistant Vice President NORMAN N. BOWSHER, Assistant Vice President E. D. Assistant Vice President ARTHUR L. KEITH M. CARLSON, Assistant Vice President EUGENE F. Oar, Special Adviser A. MELVIN CARR, Assistant Vice President hARRY ALBERT CAROL JOAN B. P. BURGER, CLAYPOOL, Assistant Vice President Secretary KALEY, LESLIE F, EDWARD JOHN W. DRUELINGER, Assistant Vice President 0. REA, Assistant Vice President PAUL SALZMAN, Assistant Vice President CR0NIN, Assistant General Counsel & Assistant RIcHARD L. OERTEL, Assistant Vice President R. W. MICHAEL LINDHORST, Assistant General Auditor ALAN C. SCHOTT, Assistant Vice President J. WILLIAM Assistant Vice President SCHMEDING, Assistant Vice President SNEED, Assistant Vice President WHEELER, Assistant Vice President Little Rock Branch JOHN MICHAEL THOMAS R. T. F. BREEN, Vice President and Manager MORIARTY, Assistant Vice President and Assistant(~~~Ianager CALLAWAY, Assistant Vice President DAVID T. RENNIE, Assistant Vice President Louisville Branch DONALD JAMES GEORGE F. REITER, E. L. HENRY, Senior Vice President and Manager CONRAD. Assistant Vice President and Assistant Manager Ja., Assistant Vice President THOMAS J. WILSON, Assistant Vice President Memphis Branch L. PAUL A. C, I. TERRY BRITT, Vice President and Manager BLACK, JR., Assistant Vice President and Assistant Manager CREMERIUS, JR., Assistant Vice President C. L. EPPERSON, JR., Assistant Vice President Page 21 FEDERAL RESERVE BANK OF ST. LOUIS APRIL Table II Table III COMBINED COMPARATIVE STATEMENT OF CONDITION COMPARATIVE PROFIT AND LOSS STATEMENT (DolIor Amounts in Thousands) (in thot,sor’ds of dollars) 1977 December U S Govern merit Sccjrities Bus . . . . cc’ tificates . Notes . . Bonds Total earnings 31, 19/6 Net .763,667 SI .512 649 —— . . 1.955,859 274.192 54,28 2,61% $2,802 7CC S . Gold Certir.cate Ri serves . Special Drawing Rignts Cer,fica’c Account . . ... Coin . . . . . . . Loans .,nd Secaritieu, 0 D;uccunts and Advor.cns Secu.cd y US. Goverr,r”erst and Agersc~ Obirgatior... Othe’ Discounts and Ad~ances Federal Agcrcy Obligations Baugnt O~t’iqtst Cash Items in Process at Ca’leclio., . Bank Premises (net) Other Assets ln’erdist’ict Settlement Account ... . —— 2.148,02! 3/0,930 . . rOTAL US. GcVERNM.ENT SECiJRITIES . . TOTAL ASSEIS I7ccemb~r 31, 1977 $ 468,914 53 .100 19,869 .166,364 50,000 26,661 6,600 300 329,654 565,391 12.833 75,292 . 276,987 321 441 12 668 63,456 210,478 -.— $5.8 24.111 . ‘‘ —. Ruserve Accounts US Trcosurs” Gene a’ Account For&g’, Ottrtr Depaui’’s. . . . TOTAL DEPOSITS Other L’obilitiec $ $5,291,055 ... 817.44? $ 765,374 474,331 9,098 22,260 . 573,537 7,778 58.153 323,136 51.414,842 53,91 2,1 26 .262,632 11 4,545 53,535,992 249.! 05 47,458 36.009 . Fede’a’ Reserve Notes (NEI) . Defe. rca Avai,ability Cash Items Intardstr ict Set’! e mont Account .. . . . . . TOIAL LIAB:LITIES $5,759,897 — $5,225,951 CAPITAL ACCOUNTS Capital Paid In Surplt.r ... S TOTAL LAPITAI ACCOUNTS TOTAL LIABILITIES AND CAPITAL A~COUNT5 ... . . 32.137 32,137 S 32,552 32.552 S 64,274 $ 55824,171 55,291,055 1 the Fi:derssi Opt’st \IarLi I (.nrnniifls’t’ (I (Psl(. i s’iris’si’,Is of IL. ii Gin.’’ ,t.’’.,’n nss’rstIsi’s~ ol tin’ (‘‘shut! Ri’’.i’i’’~S ilti,LIi! ann list’ I’rc’’.idirit 5.1 lIst’ I s1 tit’rai II. sin,’ BoiL sit ‘Jew ‘ii., L Li’s prr’sss.Llser.t it5~’IiII iii’s, ~‘it t bitt, it Lit. rs is,.LI:iIiE f.lr\:,.n Brsc’r~ iIansL t’s’.’sid, Os ‘,ri~ iflLr liii 1 iiit.ttjlsL’ ii.tsfs. 1 t’ t’.( )‘¼I(tlsit’n’t. tiss’ Ililrc’is.t 5’ Lust ‘ale oITr.’usnr~ ted ( sue, .5 runt Ls4tisi.’~ Sec tsr’slis, ~ dir spin nss,srk,’t. . . Curr nt net earnings Percent Change $256 795 109% 33619 35,041 5251 269 5829 Assessn,ersts for e penses of Board of Governors . Net earnings before payment to U.S Trea ury +460 —1,563 Net additions (+) or deductions ~—) . $221,754 1,403 $243,977 $220,811 1,963 1,915 4 1 133% — Il 4% 10.4% Di tribetton of N t Earnings. Dividends . . 2.5% Interest on Federal TOTAL . . . 242 329 —415 $243877 217,582 11.4 1,314 —1316 $220,811 10.4% Reserve Banks contribute to System ass areness of local and regional business conditions through the collection of business, monetary, and financial data. Information gathered is used by the President of this Bank in policy discussions during meetings of the Federal Open Market Committee. Economic data and analysis of reglonal, national. and international conditions are made available to the public by the Research Departlnent through its varV ous releases. Comprehensive analysis of economic problems and conditIons provide the basis of articles appearing in this Review. The Review, which is published monthly, has a circulation of about 43,000 copies and is distributed both nationally and internationally. As mentioned above, the Research Department also assists in the bank regulatory function by reviewing the impact of bank mergers and holding company acquisitions on the communities to be served. 65.104 I’ederai Resin IiaIshs pi..~ .tii iIIt~iII tills) rnle is IorsnIIia)UI!j, S\ stens U’’. (he 12 ledenti liihC\ 1 l’age 22 . Reserve Notes . Transferred to Surplus LIABILITIES Ds’posits, Member Bank xpenses 1976 $284.888 ASSETS I 1978 .L~XL~fdU .injonfl The Bank Relations and Public Infonnation Departnient endeavors to establish and maintain personal contact with all banks located in the Eighth Federal Reserve District through a structured visitation program and attendance at various banking functions. An effort is also made to increase public understanding of the functions, responsibilities, and policies of time Federal Reserve System by distributing films and publications, providing in-house tours, delivering FEDERAL RESERVE DANK OF ST. LOUIS speeches, and conducting seminars. Emphasis is placed on maintaining contact with schools and colleges in this District, The Functional Cost Analysis Program offered to member banks is administered by this department. This program provides participating member banks with bank operating costs by function and permits comparison svith banks of similar size. Technical assistance is furnished during thc first year to banks desiring to participate in the program. Last year, 50 Eighth District member banks participated in the program. In maintaining contact with the banking industry and the general public during 1977, the officers and staff members of the Federal Reserve Bank of St. Louis and its branches delivered 208 addresses before hankers, business groups, and educators. The Bank APRIL 1978 was represented at 223 banker, 491 professional, and 200 miscellaneous meetings. Under the bank visitation program, 837 banks in the District were visited. During 1977, 355 groups requested films and 5,291 visitors toured the four Federal Reserve offices in the Eighth District. The Bank’s net expenses for 1977 were 4 percent lower than net expenses for 1976. While expenses declined, the Bank’s payments to the Treasury increased by more than 11 percent, from $218 million in 1976 to $242 million in 1977. The $242 million paid to the Treasury was 85.1 percent of total earnings. In 1976, by comparison, 84.7 percent of total earnings was paid to the Treasury. Page 23