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: T, j *■-' i F^i Atlanta, Georgia April A ls o in • 1964 t h is is s u e : DISTRICT M E M B E R B A N K S STILL IN C O ST SQ U EEZE S IX T H D IST RICT ST A T ISTICS D IST RICT B U SIN E SS C O N D IT IO N S f^ s e rv e B atiks Aionfhlu Review Some Measures of the Quality of Credit in Agriculture Farmers in the United States owed a large debt at the end of 1963— $33 billion to be exact. This was a record amount that topped the previous peak in 1922 by $18 billion and stood $25 billion above the low point in 1946. Farmers had pushed their debt to this height by borrowing substantial amounts during the post-World War II period, especially in the 195 0 ’s. Moreover, for the past three years, they have evinced a willingness to take on even more debt. Judging from the low farm mortgage foreclosure rate in the nation, repayments of farm debts have generally kept pace with the borrowing expansion. Nevertheless, thejfedfci^^ze of the debt, its rapid growth in recent years, and rec o lle c ti(» » J^* Jw siA fem^foreclosures and other farm financial strains in the late 1 9 z u \ * a * j |^ 3 |r s have led some pertheir cfebts in the future. In present quality of credit W h a r w m tfW fo “Quality” in farm loans or farm credit rreqWnwy means different things to different persons. As a general proposition, however, most persons would probably agree that the critical element in loan quality is risk. The relationship is inverse: As the risk on a given loan increases, its quality decreases. When a loan is made, a high degree of risk may be inherent if its terms do not fit the borrower’s earning capacity, net worth, or the structure of his business. Risks may also be inherent in the borrower himself if he is profligate, in ill health, or financially strained by family troubles. Moreover, the risks from unknown future events, such as changes in technology, transportation, and world trade patterns, can, and often do, have considerable influence on the quality of loans repayable at a future time. Because weather is highly unpre dictable, it can have an especially potent influence on the ultimate qual ity of farm loans, while future trends in farm income must also be counted as an important determinant of credit quality. To assess credit quality, both the lender and analyst must weigh the risks inherent in a loan. They must consider not only the types of risks that may be incurred, but how formidable they are and how persistent they seem to be. The inquirer may appropriately ask several questions: Have farm debts risen excessively in relation to farm assets and income? How sound are farm borrowers’ repayment potentials? Were the farm loans made on suitable terms? Were they made for legitimate reasons? Were farm assets satisfactorily appraised? Answers to these questions, as well as a final estimate of the quality of credit, depend heavily on subjective judgment bolstered by past experience, but there are certain measures that the inquirer may consult in forming his judgment. Growth in Farm Assets, Income, and Debt j^ t/ a n ta A substantial rise in farmers’ assets and equities accompanied the growth in farm debt in the 1 9 5 0 ’s and early 1 9 6 0 ’s. Farm assets on January 1, 1963, were valued at about $216 billion in the aggregate, two-thirds more than in 1950, according to the United States Department of Agriculture. However, lia bilities against assets more than doubled from the $ 12billion total in early 1950 to about $30 billion on Janu ary 1, 1963. Farmers’ total equity rose 56 percent in the period to $186 billion. At the beginning of 1963, the farm economy’s debt-equity ratio was 16, higher than the post-World War II low of 9 in 1946 but be low the ratio of 23 in 1940. These ratios were much lower than similar ratios for nonfarm industries. In 1962, for instance, the debt-equity ratio for chemical manu facturers was about 64; it was 48 for drug manufacturers and 46 for lumber manufacturers. Even though farm debt remained relatively small when cast against farm assets, it had risen more rapidly since 1950 than had asset valuations. As farmers’ economic status improved, farm incomes also expanded substantially. In the nation, gross farm income excluding Government payments rose from about $32 billion in 1950 to about $41 billion in 1963, a 28-percent gain. Gross farm income in the District states —Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee— rose from about $3 billion in 1950 to $4 bil lion in 1962. Government payments to farmers in the nation, including those for price support programs designed to stabilize farm incomes, totaled about $1.7 billion in 1963, well above the $283-million total in 1950. Farmers’ off-farm income in the nation also rose 17 percent during this period. This rise in farmers’ gross incomes occurred despite a 6-percent decline nationally in prices for farm products from 1950 to 1963. However, total net farm income— the return to the farmer and his family from their labor, management, and capital investment— dropped from about $13.2 billion in 1950 to $12.8 billion in 1963 principally because farming costs increased. The aggregate data reveal some sharp adjustments in the overall farm financial structure, but they partially obscure the widespread structural changes on individual farms. Because the number of farms declined more than N u m b e r o f F a rm s in th e U n ite d S ta te s 1930 1935 1940 1945 1950 Source: U. S. Department of Agriculture. 1955 1960 a third during the 1950-63 period, the average farmer operated a much larger unit and, consequently, received a higher farm income. Total assets per farm climbed from about $17,000 in 1950 to about $51,000 in 1963; aver age gross income per farm increased from about $5,700 to about $11,500; and net income per farm rose from about $2,300 to about $3,400. The average farmer, how ever, also borrowed more money. In 1963, he obtained farm real estate loans averaging $14,000, compared with $4,700 in 1950. Structural changes in farm businesses during the 1950-63 period have also heightened farmers’ debt repayment ability. The rapid decline in the number of farms and the growth in their size imply that more of the farm debt now outstanding is owed by operators of larger, more pro ductive farms than in previous years. Another development that has strengthened farmers’ debt repayment ability since 1950 is the gain in farm pro ductivity and, hence, in profit potential. Nationally, output per man-hour on farms in 1962 was double the level in In d e x e s o f F a rm O u t p u t p e r M a n - H o u r U n it e d S t a t e s 1 92 9 -62 Index Index 1957-59 = 100 120 120 90 90 60 60 30 ------------— 30 — I I I I I I I I I I I I I I I I I I I I I I l I I l I I I I I I L o 1930 1935 1940 1945 1950 1955 1960 Source: U. S. Department of Agriculture. 1950, and total farm output was 24 percent larger, ac cording to the USDA. In the major regions of the South east and the Delta, delineated by the USDA in its farm output statistics, output per man-hour grew 146 percent and 177 percent, respectively, during the 1950-62 period, while total output expanded about one-third. Adjustments in Credit Procedures Growth in farm assets, incomes, and productivity during the period of rapidly rising farm debt since 1950 has been accompanied by changes in farm lending procedures and in the administration of farm credit. Loan amortiza tion, a plan devised several decades ago to assist farmers in systematically liquidating their mortgage debts, is more widely used by long-term lenders today. Among other things, loan amortization, which allows a farmer to spread long-term farm debt repayment over a 10- to 30-year period, reduces the risk from unexpected adversities in farming in a given year. Then, too, it is an explicit recog nition that farming is a long-term business with a slow capital turnover. Federal land bank farm mortgage loans, which totaled 20 percent of the farm mortgage debt out standing on January 1, 1963, are usually amortized loans with maturities extending to forty years for certain enter prises. Life insurance companies, which hold about 22 percent of the farm mortgage debt outstanding, also pro vide amortized long-term farm loans. The proportion of farm real estate loans written with long maturities has risen in recent years, reflecting in part more widespread use of the amortization principle. • 2 • Meanwhile, procedures in lending for farm operating purposes have evolved to such an extent that advancing funds to farmers solely on short-term notes has assumed a more subordinate role. Lenders now make more inter mediate-term loans for working capital purposes. Typi cally, they relate a farmer’s debt repayment schedule closely to his farming needs for supplies, machinery and other working capital, and to his cash receipts. This tech nique entails a detailed analysis of farm operating budgets, but it facilitates a more systematic repayment of loans. Production credit associations have utilized this budgeting procedure extensively in past years and, in 1961, they were authorized by Federal legislation to make term loans with maturities extending to seven years. Commercial banks also have adopted lending proce dures for term loans that afford farmers flexibility in financ ing their businesses and promote successful loan repay ment. According to the Federal Reserve System’s agricul tural loan survey on June 30, 1956, about 14 percent of farmers’ non-real estate bank loans had maturities exceed ing one year, compared with 6 percent in 1947. An exceptionally low farm foreclosure rate has persisted from 1947 through 1963. In the nation, the number of foreclosures per 1,000 farms, after reaching a peak of about 39 in 1932, declined to one in 1947 and has hovered about that rate ever since. The latest available data on foreclosures for twenty life insurance companies holding about 192,000 farm loans indicate a continued low level of farm foreclosures during the quarter ending F a rm M o rtg a g e D e b t O u ts ta n d in g o n J a n u a r y 1 a n d N u m b e r o f F o re c lo s u re s p e r 1 ,0 0 0 F a rm s U n it e d S t a t e s Billions of Dollars 1 9 3 0 -6 4 Number of Foreclosures Few Loan Delinquencies and Foreclosures Although farm financial developments since World War II have been characterized by an expansion in farm debt, farm creditors report favorable trends in the traditional indicators of farmers’ financial health. Typically, the cur rent record of borrowers is measured from two vantage points— loan delinquencies and loan repayments. The longer-term record of debt repayment is measured by re possessions and foreclosures. According to data from twenty life insurance companies published quarterly by the USDA, 591 farm mortgage ac counts had interest payments that were three months over due in the quarter ending on June 30, 1963. This was about the same number as a year earlier and amounted to only a small fraction of the 192,000 loans in their portfolios. Delinquencies did not rise in the fourth quarter last year, although some loans in Florida had been jeopardized by freezing temperatures earlier in the year. At Federal land banks, the number of loan delinquencies and extensions, which has been small in recent years, declined somewhat from the year-earlier level in the last half of 1963. The Farmers Home Administration also reported few current delinquencies in its portfolio. Farm mortgage loan repayments in 1963 were being maintained, although there were more long-term farm loans outstanding than in earlier years. Farmers’ repay ments to insurance companies flowed in at a rate of 2.1 percent of the loans outstanding during the second quarter of 1963. This repayment rate was slightly higher than the 2.0-percent rate a year earlier and in mid-1961. Comprehensive statistics from short- and medium-term creditors covering loan renewals, repossessions of equip ment, sales of chattels, the write-off of bad debts, and the like are not available. Financial magazines, trade creditors, and official Government statements on farm finance, how ever, report a minimum of such credit distress signals. A stepup in loan renewals was reported for late 1963 in the Midwest primarily because cattle marketings were delayed, while adverse weather conditions in Florida were responsi ble for an upsurge in that area. Source: U. S. Department of Agriculture. on June 30, 1963. At that time, 74 mortgages were in the process of foreclosure, somewhat fewer than the number a year earlier. Federal land banks, with about 379,000 loans outstanding, reported 254 loans called for fore closure in the last half of 1963. A year earlier, 248 loans had been foreclosed. The Farmers Home Administration, which held 96,517 farm mortgage loans in its portfolio on December 31, 1963, reported that it had acquired 23 farm properties by foreclosure in the last quarter of 1963, the same number as a year earlier. Possible W eaknesses Whether farmers will maintain the debt-repayment record established since World War II cannot, of course, be de termined. Although past trends in farmers’ incomes and changes in lenders’ techniques for extending credit are ele ments that have tended to minimize risks and maintain the overall quality of farm loans, some recent develop ments cast a shade of doubt, at least over farmers’ ability to settle their debts as quickly as they have in the past few years. Farmers augmented their debts quite rapidly in 1962 and 1963. In the nation, non-real estate debt outstanding at all operating banks and production credit associations, the principal short-term farm creditors, rose 14 percent in 1963 in contrast with more moderate gains of 9 percent and 5 percent in 1962 and 1961, respectively. This up surge in farm loans outstanding occurred partly because farm production expanded. In the Sixth Federal Reserve District, where extensive gains in loans occurred last year, some impetus also came from credit advanced to citrus growers in Florida whose groves required rehabilitation and from loan extensions granted to growers and their suppliers. • 3 • F a rm M o rtg a g e D e b t a n d F a rm N o n - R e a l E sta te D e b t* O u ts ta n d in g o n J a n u a r y 1 F a rm R e a l E s ta te V a lu e s p e r A c re a n d O p e r a to r s 1 In c o m e p e r F a rm U n it e d S t a t e s BillionsofDollars U n it e d S t a t e s BillionsofDollars ♦Excludes loans guaranteed by the Commodity Credit Corporation. Source: U. S. Department of Agriculture. Farm mortgage debt outstanding with all long-term lend ers rose at a steeper rate in 1963 than in the preceding three years. On January 1, 1964, the total in the nation was about a tenth more than a year earlier, according to the USDA. Gains in 1960, 1961, and 1962 had been 6, 8, and 9 percent, respectively. At commercial banks, farm real estate loans outstanding increased about 15 per cent in 1962 and probably by a similar amount in 1963, contrasting sharply with the 6-percent rise in 1961 and the 4-percent gain in 1960. These loans, however, have been for relatively small amounts. In the first half of 1963, the average commercial bank loan in the nation was about $9,000, well under the $31,000 average for farm mort gage loans made by life insurance companies. Although farm debt expanded substantially in 1963, reflecting especially farmers’ demand for long-term farm loans, the average interest rates farmers paid on loans differed little from the rates paid in 1962 and 1961. The supply of loanable funds, however, became more plentiful, partly because the national monetary authorities acted to provide the economy with ample funds during the 1960-63 period. With an ample supply of funds to lend, long-term farm lenders competed more vigorously for loans, espe cially in 1962 and 1963. Some marginal borrowers could have obtained excessively large credit advances. In view of the slight decline in aggregate net farm in come in 1963, the sizable rise in farm real estate values that also occurred in that year must be considered a further cause for uneasiness about the quality of credit. In Novem ber 1963, the value of farm land and buildings for the nation rose 6 percent above the year-earlier level. This gain further extended the almost uninterrupted rise since the 1930’s in farm real estate valuations. The upward trend in values had been checked by a decline in 1949 and had been slowed in 1959 and 1960, but its advance quickened again in 1961 despite stability in net farm in come per acre, which had held for several years at about $13.50 nationally. Loan Standards Under Pressure? These farm financial developments in 1963 led some analysts to inquire whether farmers’ favorable loan ex DollarsPer Acre DollarsPerFarm Source: U. S. Department of Agriculture. perience since World War II and the expanded supply of loanable funds in recent years have not tended to draw lenders into competing for loans by reducing their lending standards and accepting more risks in their loan portfolios. Loans made by long-term farm lenders are heavily in fluenced by their overall appraisal and loan policies. If farm land appraisals are raised and loan-to-value ratios are liberalized, a newr and higher element of risk may be inherent in the loans. Such changes in these key policies may cause lenders to relax their selectivity among farm borrowers and allow an uneconomical amount of credit to flow to marginal borrowers without a compensating buildup in their reserves for losses. With farm land values rising disproportionately to farm income, the dangers from un healthy credit extensions based on higher appraisals may increase. Another hazard crops up when competitive urges among farm lenders cause them to make farm loans that are not closely related to farmers’ needs. They may make exces sively large loans or they may make loans whose proceeds are used for speculation in land or other farm assets. This Bank obtained some evidence pertinent to these points in September 1963 from a survey of farm loan appraisers, farm real estate dealers, and farm lenders in the District states. Most of the respondents said that long term lenders in the region had tended to lift their ap praisals of farm land somewhat in the past two years and to lend a moderately larger proportion of the appraised values. This reflected, in the respondents’ views, both an increase in loanable funds and greater competition for productive farm loans. The respondents believe that farm land values in District states have increased in the past decade primarily because relatively little farm land was offered for sale, while commercial farmers, the most nu merous and insistent bidders, sought land to enlarge their units. Several respondents in the survey said that some specu lative activity in the farm land market had probably oc curred near communities that are growing rapidly and have a substantial base for future economic development. They cited the Florida Peninsula and the coast along the Gulf of Mexico as areas in which some speculative use of farm credit might have occurred. . 4 . In their analysis of current developments in the farm land market, however, the respondents subordinated changed appraisal and loan policies. Few respondents sug gested that the pohcy changes were unsound when mea sured against the long-term production and income pros pects of the individual farms involved. They suggested that a stepup in appraised values for well located, easily operated farms in good repair and with fertile soils would be justified under present and foreseeable farming con ditions. In their view, many of the farms that changed hands or were mortgaged in the past decade had increased in value as a result of improvements made on them or increased production potential. Future Trends Affect Quality Whether the evaluations of the respondents in the survey prove correct hinges to a great extent upon how well farm lenders have judged the future. The quality of farm credit they extend now depends greatly upon developments in years ahead, especially the course of farmers’ income. Although income projections can be highly undependable, it is often useful to assess the possible trend. The USDA in a recent projection of the farm econ omy to 1968 suggests that farmers as a group may fare reasonably well through that year at least. This projection, which assumes a continuation of present farm programs, anticipates further growth in population and consumer in comes and a small decline in prices of farm products. According to the USDA, a further enlargement of farms is also in prospect, as are increased farm mechanization and efficiency. Farm output in the nation may increase about 11 percent from the 1963 level. Net farm income per farm is expected to rise, perhaps by a tenth, if the number of farms continues to shrink at the present rate. A continued marked decline in the number of farms in the next decade will tend to reinforce these expecta tions because the management and control of the nation’s farms will shift further to commercial farmers through farm transfers and consolidations. This process also may generate some upward pressures on the level of farm land values. Summing Up Looking back over the record of farm loans made in the 1940’s and 1950’s, the evidence does not show clearly that their quality fell below a desirable level. Most farm ers repaid their loans promptly or at least within extended time limits satisfactory to their creditors, and farm fore closures held at a low point for a prolonged period. Many farmers probably used their borrowed funds to increase their earnings. Unwise credit practices today, however, can reduce the quality of lenders’ loan portfolios and lead to future loan delinquencies and foreclosures. If loan appraisals over state the real worth of farms, if farm credit is widely ap plied to speculative uses, and if marginal borrowers are encouraged to invest excessively, the quality of credit will deteriorate even if farm income in the nation does not move lower. If income does decline, this deterioration could cause trouble, especially among the less efficient farm borrowers. . ,T A r t h u r H. K a n t n e r District Member Banks Still in Cost Squeeze High operating expenses plagued District member banks again in 1963. Dollar operating revenue rose appreciably during the year, but expenses drained off a larger share than in 1962— 75.2 percent, compared with 74.0 percent. This marks the third consecutive year in which operating expenses have outpaced gains in total revenue of mem ber banks. As a result, net current earnings declined from 26.0 percent of total revenue in 1962 to 24.8 percent. Net income (after taxes and adjustments to reserves) dropped from 15.7 percent to 14.9 percent of total reve nue. Both the ratios of net income to total capital ac counts and to total assets were fractionally lower in 1963 than in the previous year. These and other ratios measuring the performance of member banks were calculated from regular reports of condition and the report of income and dividends for the year 1963. The ratios, which are shown in the table on Page 6, represent simple averages of individual bank ratios, i.e., each bank’s ratios are weighted equally. The continuing competition for time and savings de posits contributed heavily to the rise in operating expenses in 1963. Interest on these accounts increased from 22.5 percent of revenue in 1962 to 24.1 percent in 1963. The average rate paid moved up from 3.12 percent to 3.29 percent. Total time deposits, moreover, represented a larger proportion of total deposits than in the previous year— 37.9 percent, compared with 36.3 percent. On the revenue side, interest and dividends on other securities, expressed as a percent of total revenue, rose slightly from the 1962 level. Interest and discount on loans also increased, reflecting both a larger portfolio and a higher average return. Service charges on deposit ac counts, however, dropped slightly after hovering at the 8.0-percent level during the two previous years. Member banks shifted their assets in the direction of higher-yielding loans and other securities during 1963. U. S. Government securities, as a percent of total assets, fell only slightly from the 1962 level, while a significant decline occurred in cash assets. Total capital accounts improved in relation to other balance sheet items between 1962 and 1963. The ratio to total assets increased from 8.6 to 8.8 percent, and the ratio to total deposits rose from 9.6 to 9.8 percent. W. M. •5 • D a v is A verage Operating Ratios of Individual Member Banks in the Sixth Federal Reserve District S U M M A R Y R A T IO S : P ercen t o f to tal cap ital accounts N et cu rre n t earnings . . . . N et incom e before taxes . . N et i n c o m e .................................. C ash dividends d eclared . . P ercent of total assets: T o tal o p erating revenue . . N et cu rre n t earnings . . . N et i n c o m e ............................. 1959 7960 1961 1962* 1963 16.5 11.9 82 3.0 16.9 14.8 10.6 3.1 14.3 12.6 8.2 2.9 14.5 12.6 8.6 3.0 14.4 12.1 8.5 3.0 4.24 1.25 62 4.55 1.36 .86 4.52 1.21 .70 4.70 1.21 .72 4.85 1.19 .71 S O U R C E A N D D IS P O S IT IO N O F IN C O M E : P ercent of total o p eratin g revenue: Interest on U.S. G o v ’t, securities 21.5 Interest and dividends on other s e c u r i t i e s .................................. 69 Interest and d iscount on loans 59.5 Service charges on deposit 7 1 accounts ............................ Trust departm ent revenue1 . 2.5 All other o p erating revenue . 5.0 T otal o p eratin g revenue . 100.0 Salaries and wages . . . . 28.7 Pension, hospitalization, n.a. and other benefits . . . . Interest on time and savings d e p o s i t s - .................................. 18.2 N et occupancy expense of n.a. bank p r e m i s e s ....................... All other operating expenses . 41.7 T otal operating expenses . 70.4 N et cu rren t earnings . . . . 29.6 N et losses (o r recoveries and 65 profits + ) 3 ............................. N et increase (or decrease + ) 1.5 in valuation reserves . . . Taxes on net incom e . . . . 6. 7 N et i n c o m e .................................. 149 RA T E S O F R E T U R N ON S E C U R IT IE S A N D LO A N S: R eturn on securities: Interest on U.S. G o v ’t, securities Interest and dividends on other s e c u r i t i e s ....................... N et losses (or recoveries and profits + ) on total securities3 R eturn on loans: Revenue from loans . . . . N et losses (o r recoveries + ) 3 . 21.7 20.5 20.7 20.5 6.9 59.2 7.0 60.5 7.1 60.3 7.2 60.5 7.3 2.6 4.9 100.0 28.3 8.0 2.9 4.0 100.0 29.2 8.0 2.8 3.9 100.0 27.9 7.7 3.0 4.1 100.0 27.0 n.a. 2.6 2.6 2.7 18.0 19.2 22.5 24.1 n.a. 41.6 69.9 30.1 5.1 36.2 73.1 26.9 4.5 39.0 74.0 26.0 4.4 41.1 75.2 24.8 .9 1.0 .6 1.5 2.5 7. 5 19.2 1.8 8. 5 15.6 2.5 7. 2 15.7 2.1 6. 3 14.9 2.95 3.39 3.22 3.33 3.44 ? 87 3.09 3.03 3.23 3.29 .50 + .21 + .21 + .17 + .10 6.90 .18 6.91 .22 6.83 .27 7.07 .20 7.10 .21 D IS T R IB U T IO N O F ASSETS: P ercent of total assets: U.S. G o v ’t, securities . . . . 29.8 O ther s e c u r i t i e s ....................... 10.4 L oans .............................................. 36 9 Cash a s s e t s .................................. ?1 1 Real estate a s s e t s ....................... 16 i All o th er a s s e t s ............................. T o ta l a s s e t s ....................... 100.0 28.0 10.3 39.2 20.5 1.7 .3 100.0 27.9 10.6 40.3 19.0 1.9 .3 100.0 28.0 10.6 40.2 19.0 1.9 .3 100.0 27.5 10.9 41.6 17.8 1.9 .3 100.0 OO 00 O T H E R R A T IO S : T otal capital accounts to: T o ta l a s s e t s .................................. 8.4 80 9.0 8.6 T o tal assets less U.S. G o v ’t, securities and cash assets . 17.0 16.7 16.8 17.5 16.8 T o ta l d e p o s i t s ............................ 89 9.3 10.1 9.6 9.8 Tim e deposits4 to to tal deposits . 32.1 33.0 35.0 36.3 37.9 In terest on tim e deposits4 to tim e d e p o s i t s ....................... 2.51 2.63 2.68 3.12 3.29 N u m b er o f b a n k s ............................ 399 402 418 416 426 ♦Figures for 1962 have been recomputed and may differ from those published in the April 1963 Monthly Review. 1 Banks with none were excluded in computing this average. Ratio included in “All other operating revenue.” 2 Banks with none were excluded in computing this average. Ratio included in “All other operating expenses.” 3 Includes recoveries or losses applied to either earnings or valuation reserves. 4 Banks with none were excluded in computing this average, n.a. Not available. Bank Announcements On M arch 2, T he A m erican N ation al Bank in C ypress G ardens, C ypress G ardens, F lorida, a n ew ly organ ized m em ber bank, opened fo r business and began to rem it at p a r fo r checks draw n on it when received fro m the F ederal R eserve Bank. Officers include A n d rew P. Ireland, President; and L ex H ood, E xecutive Vice P residen t and Cashier. C apital is $150,000, and surplus and o th er capital funds, $150,000, as reported by the C o m p tro ller o f C urrency at the tim e the charter was granted. The C entral Bank and Trust C om pan y, B irm ingham , A la bam a, a new ly organ ized non m em ber bank, opened fo r busi ness on M arch 2 and began to rem it at par. Officers are H arry B. Brock, Jr., President; L lo y d G . Rains, Vice President; and F loyd L . Jones, Cashier. C apital is $500,000, and surplus and u n divided profits, $500,000. A lso on M arch 2, the South C obb Bank, M ableton , G eorgia, a new ly organ ized n on m em ber bank, opened fo r business and began to rem it at par. Officers include J. G. L undy, President; S. C. Cole, Vice President; and Phillip E. Johnson, Cashier. C apital is $250,000, and surplus and un divided profits, $250,000. The C entral Bank o f N o rth D ade, M iam i, Florida, a newly organ ized non m em ber bank, open ed fo r business on M arch 3 and began to rem it at par. Officers are Jacques M ossier, Chair m an o f the Board; Stanley H . W olff, President; and E d R. Schulte, Vice P resident and Cashier. C apital is $300,000, and surplus and un divided profits, $125,000. On M arch 6, the N orth east N ation al Bank o f St. Petersburg, St. P etersburg, Florida, a new ly organ ized m em ber bank, opened fo r business and began to rem it at par. O fficers in clude M organ L. Sm ith, P resident; H . E. Thom as, E xecu tive Vice President; Frank L. Olson, Vice President; and John E. Burke, Cashier. C apital is $250,000, and surplus and other capital funds, $250,000, as reported by the C om ptroller of Currency at the tim e the charter was granted. The R iverlan ds N ation al Bank in L aplace, L aplace, L ouisi ana, a new ly organ ized m em ber bank, open ed fo r business on M arch 9 and began to rem it at par. O fficers are R e m y F. G ross, P resident; A rth u r G. M cD o w ell, E xecu tive Vice P resi dent and Cashier; J. O sw ald M on tegut, Vice President; and C harles S. M acaulay, Vice P residen t and A ssistant Cashier. C apital is $100,000, and surplus and other capital funds, $200,000, as reported by the C o m p tro ller o f Currency at the tim e the charter was granted. On M arch 10, the K e y B iscayne Bank, K e y Biscayne, M iam i, F lorida, a new ly organ ized n on m em ber bank, opened for business and began to rem it at par. Officers include C. G. R ebozo, C hairm an o f the Board; Ira F. W illard, President; Thom as H. W akefield, Vice President; and B yron A . Sperow , E xecutive Vice P resident and Cashier. C apital is $200,000, and surplus and un divided profits, $90,000. The Jefferson N ation al Bank o f M iam i Beach, M iam i Beach, Florida, a new ly organ ized m em ber bank, open ed fo r business on M arch 16 and began to rem it at par. Officers are A rth ur H. Courshon, C hairm an o f the Board; T hom as E. M ottola, President; Jack R. Courshon, L ouis J. Orloff, and Jack Brunton, Vice Presidents; and J. W. C arter, Cashier. C apital is $500,000, and surplus and other capital funds, $500,000, as reported by the C o m p tro ller o f C urrency at the tim e the charter was granted. On M arch 16, the Tennille Banking C om pany, Tennille, G eorgia, a non m em ber bank, began to rem it at par. Officers include W. B. Sm ith, President; M rs. Erin H. Sm ith, Vice President; and Charles V. Sm ith, E xecutive Vice P resident and Cashier. The L iberty N ation al Bank o f St. P etersburg, St. P eters burg, Florida, a n ew ly organ ized m em b er bank, open ed for business on M arch 20 and began to rem it at par. Officers are M organ L. Sm ith, President; W illiam E. Bell, E xecutive Vice President; Frank L Olson, Vice President; and K . K enneth Barzler, Cashier. C apital is $250,000, and surplus and other capital funds, $250,000, as reported by the C o m p tro ller of Currency at the tim e the charter w as granted. On M arch 23, the A m erican Bank o f A tlan ta, A tlan ta, G eorgia, a conversion o f Southern Savings Bank, A tlan ta, G eorgia, open ed fo r business and began to rem it at par. The H alifax N ation al Bank o f P o rt Orange, P ort Orange, Florida, a new ly organ ized m em b er bank, opened fo r business on M arch 23 and began to rem it at par. O fficers are John R. D eB erry, Chairm an o f the Board; W ayne A . C am pbell, P resi dent; and C arl A . Cunningham , Vice P resident and Cashier. C apital is $350,000, and surplus and other capital funds, $175,000, as reported by the C o m p tro ller o f Currency at the tim e the charter w a s granted. •6 • S ix t h D is t r ic t S t a t is t ic s Seasonally Adjusted (All data are indexes, 1957-59 = Latest Month (1964) One Month Ago Two Months Ago One Year Ago S IX T H D IS T R IC T INCOME AND SPENDING Personal Income, (M il. $, Annual Rate) . . Manufacturing P a y r o l l s ..................................... Farm Cash R e c e ip t s ........................................... C r o p s ................................................................... Livestock ............................................................. Department Store S a l e s * / * * ......................... Instalment Credit at Banks,* (Mil. $) New Loans.............................................................. R epaym en ts....................................................... PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................... M an u factu rin g ................................................. A p p a re l.............................................................. C h e m ic a ls....................................................... Fabricated M e t a l s ..................................... Food .................................................................... Lbr., Wood Prod., Furn. & Fix. . . . P a p e r .............................................................. Primary M e t a ls ........................................... T e x tile s.............................................................. Transportation Equipment . . . . Nonmanufacturing........................................... Construction ................................................. Farm Em ploym ent................................................. Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Construction C o n tra c ts * ..................................... Residential ........................................................ All O t h e r .............................................................. Industrial Use of Electric Power . . . . Cotton Consumption** ..................................... Petrol. Prod, in Coastal La. and Miss.** FINANCE AND BANKING Member Bank Loans* All B a n k s .............................................................. Leading C i t i e s ................................................. Member Bank Deposits* All B a n k s .............................................................. Leading C i t i e s ................................................. Bank D e b i t s * / * * ................................................. Latest Month (1964) One Month Ago Two Months Ago One Year Ago G E O R G IA Jan. 43,040 Feb. 139 Jan. 137 Jan. 149 Jan. 122 144p Mar. 42,519r 138r 152 177 109 137 42,352r 138 128 132 120 135r 39,921 128 123 130 115 135 Feb. Feb. 180 158 184 175 189 168 188 151 Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Feb. Jan. Feb. Feb. 113 111 132 107 118 105 94 108 96 95 116 113 101 84 3.5 41.1 165 156 172 121 101 165 113 111 132 107 119 104 95 107 97r 94 118r 113 98r 82 3.9 40.8 201 165 232 121 95 165r 112 111 131 106 117 106 94 108 98 94 119 112 99 80 3.5 41.3 169 165 172 120 95 160r 110 109 129 104 110 102 93 107 96 95 114 110 98 83 4.5 40.4 126 132 121 115 96r 155 Feb. Mar. 168 158 166 156 165 155 147 141 Feb. Mar. Feb. 139 133 145 137 129 142 138 127 144 129 125 132 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Jan. Manufacturing P a y r o lls .....................................Feb. Farm Cash R e c e ip t s ...........................................Jan. Department Store S a l e s * * ...............................Feb. 8,072 141 119 132 7,866r 140r 120 129 7,986r 140 148 126 PRODUCTION AND EMPLOYMENT Nonfarm Employment...........................................Feb. M an u factu rin g ................................................. Feb. Nonmanufacturing...........................................Feb. C onstruction.................................................Feb. Farm Employment.................................................Feb. Insured Unemployment, (Percentof Cov. Emp.) Feb. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Feb. 115 Ill 118 112 71 2.8 40.7 115 114 117 105 71 3.1 40.8 74 3.0 41.1 3.4 39.9 170 143 149 170 140 143 172 144 148 149 132 145 FINANCE AND BANKING Member Bank L o a n s ........................................... Feb. Member Bank D e p o s it s .....................................Feb. Bank D e b it s * * ....................................................... Feb. 110 110 117 112 7,597 127 122 109 111 107 113 108 66 LO U IS IA N A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls ......................... Farm Cash R e c e ip t s ............................... Department Store S ales*/** . . . Jan. Feb. Jan. Feb. 6,439 131 155 117 6,257r 132r 170 119r 6,251r 129 141 116 6,002 123 130 111 Feb. Feb. Feb. Feb. Feb. Feb. Feb. 105 103 105 95 84 3.7 41.9 104 102 104 94 81 4.0 42.2 103 102 104 98 81 3.7 43.1 102 100 103 89 84 5.0 42.7 Feb. Feb. Feb. 157 125 132 154 125 129 148 126 128 144 120 112 Jan. Feb. Jan. Feb. 3,236 145 122 111 3,120r 142r 203 105 3,216r 141 140 99 2,988 134 149 108 Feb. Feb. Feb. Feb. Feb. Feb. Feb. 115 119 114 101 81 4.4 40.7 115 119r 113 100 75 5.2 40.4r 114 118 113 100 79 4.8 40.5 114 117 113 113 82 5.2 40.3 Feb. Feb. Feb. 189 150 156 189 147 150 187 148 149 161 140 140 Jan. Feb. Jan. Feb. 7,101 135 177 116 6,590r 136 97 117 6,680r 134 91 115 Feb. Feb. Feb. Feb. Feb. Insured Unemployment, ( Percent of Cov. Emp.) Feb. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Feb. 113 113 113 133 91 4.4 41.1 113 114 112 125 91 4.9 41.0 112 113 111 123 81 4.4 41.6 110 111 109 123 93 5.7 40.0 172 139 150 167 136 141 168 135 149 150 131 131 PRODUCTION AND EMPLOYMENT Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . FINANCE AND BANKING M ISS IS S IP P I ALA BA M A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Manufacturing P a y r o l l s ..................................... Farm Cash R e c e ip t s ........................................... Department Store S a l e s * * ............................... Jan. Feb. Jan. Feb. 5,927 125 128 116 5,837r 122 145 115r 5,805r 125 120 114 5,547 118 134 104 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................... M an u factu rin g ................................................. Nonmanufacturing........................................... C o n stru ction ................................................. Farm Em ploym ent................................................. Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Feb. Feb. Feb. Feb. Feb. Feb. Feb. 108 103 110 95 86 3.8 41.3 108 103r 110 94r 84 4.4 40.2r 107 103 109 94 79 4.0 40.9 106 102 108 91 88 4.8 40.1 FINANCE AND BANKING Member Bank L o a n s ........................................... Member Bank D e p o s it s ..................................... Bank D e b i t s * * ....................................................... Feb. Feb. Feb. 164 140 142 165 141 139 162 136 141 146 128 128 FLO R ID A INCOME AND SPENDING Personal Income, (M il. $, Annual Rate) Manufacturing P a y r o lls ......................... Farm Cash R e c e ip t s ............................... Department Store S ales*/** . . . PRODUCTION AND EMPLOYMENT Nonfarm Employment............................... Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . FINANCE AND BANKING Member Bank L o a n s * ........................................... T EN N ESSEE INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Manufacturing P a y r o lls ..................................... Farm Cash R e c e ip t s ........................................... Department Store S a l e s * * ............................... Jan. 12,265 Feb. 165 Jan. 134 Feb. 171 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................... M an u factu rin g ................................................. Nonmanufacturing........................................... C onstruction................................................. Farm Employment................................................. Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Feb. Feb. Feb. Feb. Feb. Feb. Feb. 119 123 118 93 93 2.7 41.4 118 124 118r 92 r 97 3.0 40.5 118 124 116 88 94 2.8 41.1 115 118 114 90 97 3.9 40.9 FINANCE AND BANKING Member Bank L o a n s ........................................... Member Bank D e p o s it s ..................................... Bank D e b i t s * * ....................................................... Feb. Feb. Feb. 169 142 146 167 140 147r 165 141 148 145 130 134 12,849r 164 168 167r 12,414r 165 128 169 11,193 152 112 148 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls ......................... Farm Cash R e c e ip t s ............................... Department Store S ales*/** . . . 6,594 125 119 104 PRODUCTION AND EMPLOYMENT FINANCE AND BANKING *For Sixth District area only. Other totals for entire six states. Sources: Personal income estimated by this Bank; nonfarm, mfg. consumption, U. S. Bureau of Census; construction contracts, F. receipts and farm emp., U.S.D.A. Other indexes based on data 100, unless indicated otherwise.) **Daily average basis. and nonmfg. emp., mfg. W. Dodge Corp.; petrol, collected by this Bank. Feb. Feb. Feb. p Preliminary. r Revised. payrolls and hours, and unemp., U. S. Dept. «f Labor and cooperating state agencies; cotton prod., U. S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash All indexes calculated by this Bank. •7 • D IS T R IC T Billions of Dollars Annual Rate Seas. Adj Personal Income N o n fa m r E m p lo y m e n t B U S IN E S S C O N D IT IO N S T h e D is tric t's e c o n o m y ha s b e e n m o v in g a h e a d a t a b r is k pace. In c re a s e d s p e n d in g , a d e c lin e in in s u re d u n e m p lo y m e n t, a n d a n a c tiv e c o n s tru c tio n in d u s t r y a l l s ig n a l g e n e r a l e c o n o m ic s tre n g th . E x p a n s io n in b a n k c re d it is a ls o h e lp in g to s u s ta in a h ig h le v e l o f e c o n o m ic a c t iv it y . C o n d itio n s in th e f a r m e c o n o m y w e r e s a tis f a c to ry b y a n d la r g e , a l th o u g h f r e e z in g te m p e r a t u r e s s e v e r e ly d a m a g e d s o m e crops. O M f g , E m p io y m e n t A v e ra g e W e e k ly H o u rs Worked inMfg. u* L o a n v o lu m e a t D is tric t m e m b e r b a n k s a d v a n c e d s u b s t a n t ia lly b e t w e e n m id - F e b ru a ry a n d m id - M a rc h . This extended the expansion in bank lending registered in February. District member banks, however, continued to exhibit relatively weak demand for U. S. Government securities. On the liabilities side, total deposits showed moderate gains, as U. S. Government demand deposits and time deposits surged ahead markedly. Private demand deposits declined, however, as they had during the month-earlier period. M fg . P a y r o lls In c re a s e d use o f c o n s u m e r in s t a lm e n t c re d it in F e b ru a ry h a s p ro v id e d a b o o s t to D is tric t r e t a ile r s . Consumer instalment credit outstanding C o n s tru c tio n i C o n tra c ts moving ayg: In d u s tria l U s e o f E le c tr ic P o w e ! C o tto n C o n s u m p tio n at District commercial banks expanded by the largest amount since last sum mer. The credit expansion was associated in large part with an increase in the volume of new auto loans. Extensions for the purchase of other consumer durables, repair and modernization purposes, and personal loans were down slightly from the preceding month. Department store sales, according to pre liminary data, moved up further during March, thus extending the February gain jx U* v 0 N o n f a r m e m p lo y m e n t ro s e in F e b ru a ry ,. A substantial gain occurred in construction employment, especially in Georgia and Tennessee, following slow downs caused by bad weather in January. An increase in average weekly hours combined with an increase in manufacturing employment to boost manufactur ing payrolls. Insured unemployment, up sharply in January, dropped back to the relatively low December level, reflecting improvement in all District states. u* Th e D is tric t's s p rin g p la n t in g s e a s o n g o t o ff to a g o o d s t a r t a n d f a r m in g a c tiv itie s g a in e d m o m e n tu m . Highlights of activity in the District’s agricultural sector include tobacco transplanting and corn planting in the southernmost areas, continued vegetable harvests in Florida, and increased marketings of livestock and poultry products in most areas. Good news for farmers also arrived in the form of February advances in the index of prices they receive. Misfortune, however, struck the agricultural sector on March 29 when freezing temperatures ruined much of the peach crop in the northern sections of the region. u* u* v* B a n k ;b e b i t s F a rm C a sh R e c e ip ts moving avg. / R e s id e n tia l c o n s tru c tio n c o n tra c t a w a r d s a r e ru n n in g w e ll a h e a d o f th e y e a r- a g o p e rio d . Latest data, however, indicate a slight decline from the M em ber B ank L oans M e m b e r B a n k D e p o s its .P E R C E N T O F R E Q U IR E D R E S E R V E S ■/ - .5 I ' E x cess R e se rv e s B o rro w in g s fro m 1961 „ ,»»■,. (ni.^ >62 F. R. B a n k ' 1363 *Seas. adj. figure; not a n index. January volume. Nonresidential building contract awards spurted sharply over February 1963 volume, bringing the two-month total for this year well above that for the same period in 1963. ^ v* Th e s u p p ly o f lo c a lly g e n e r a te d m o rtg a g e fu n d s c o n tin u e d to e x p a n d th r o u g h F e b ru a ry , b u t a t a r a t e s h a r p ly b e lo w th e r a t e f o r th e f ir s t t w o m o n th s o f 1 9 6 3 . Savings and loan associations in District states recov ered some of the ground lost in January in year-to-year net new savings growth but are still well below their January-February 1963 rate of gain. However, recent tendencies toward higher yields in the bond markets have not yet been reflected in the export market for the District’s mortgages. N o t e : D a t a o n w h ic h s e a s o n a l in flu e n c e s. s ta te m e n ts a re b a s e d h a ve been a d ju s t e d w h e n e v e r p o s s ib le to e lim in a t e