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MONTHLY REVIEW F E D E R A L R E S E R V E B A N K IN THIS ISSUE: • Farm Loans at Southern Banks • Another Milestone in Magnetic Ink Encoding • Bistrict Business Conditions O F A T L A N T A August 1967 F a r m L o a n s a t Today’s average farmer operates a larger, more specialized and mechanized farm. With the adop tion of advanced techniques in all phases of pro duction and marketing, the nature of his assets and expenditures has changed and total produc tion costs have risen. Mechanization and expand ing livestock herds have caused capital invest ments for equipment and livestock to expand at very rapid rates. The expenditure for more ferti lizer, chemicals, fuel and oil, repair and mainte nance, and other items has caused the relative importance of farmers’ own labor or home-grown productive supplies to diminish, resulting in higher cash operating expenses and slower growth rates in net farm incomes. While these changes mirror the adjustments taking place in agricultural production, their impact on the farmer’s credit needs may not be readily apparent to the casual observer. The necessity to purchase larger and more efficient farm machinery has caused increasingly more Monthly Review, V o l. L I I , N o . 8. F re e su b sc rip tio n a n d a d d itio n a l copies a v a ila b le u p o n request to the R e se a r c h D e p a rtm e n t, F e d e ra l R e se rv e B a n k of A tla n ta , A tla n ta , G e o rg ia 30303. 106 S o u t h e r n B a n k s farmers to request bigger and longer-term loans. Farmers who buy breeding stock and farm real estate are following suit. Meanwhile, the full impact of agricultural ad justment is being felt at commercial banks mak ing farm loans. Most banks holding farm loans are located in rural areas, where credit demands have advanced sharply. However, factors affect ing the supply of loanable funds depend, in part, on the success of last year’s crop, nonfarm loan demands, yields on Government securities, rates on savings accounts, and numerous other considerations. Furthermore, even if aggregate loan demands can be satisfied, large individual loan requests exceeding legal lending limits are appearing more frequently. And the orientation of farm loan portfolios toward longer maturities may be less acceptable because of reduced flexi bility in meeting seasonal loan demands or ad justing to fluctuating deposits. Thus, the interaction of these forces affecting the demand and supply of loanable funds is re flected in the characteristics of final loans. Various production, marketing, and other borrower-related considerations dominate certain loan characteristics, such as size, purpose, ma turity, and the renewal status. However, the MONTHLY REVIEW security, method of repayment, interest charge, and the purchase of farm loans from business and other lending institutions exemplify the banker’s need for security and profits. The interest rates on farm loans are probably negotiated more vig orously than any other loan characteristics, and final rates reflect bank policy and the relative bar gaining strength of a farmer and his banker. Farm Needs Affect Loan Requests Amount of Loan Marked advances in farm loan sizes and total outstandings at southern agri cultural banks measure the magnitude of today’s credit needs. Since 1956, the shift to more specialized crops and livestock production has been accompanied by greater and more particular credit demands. For example, the average bank debt for farm borrowers specializing in poultry, meat animals, cash grain, and sugarcane ex ceeded $5,000 in 1966. However, the declining number of borrowers with general farms or em phasizing traditional crops (cotton, tobacco, and vegetables) were reported to have average bank debts of less than $3,000. In addition to shifts in the type of farm production, the general increase in farm size, mechanization, and technology has also caused farmers to seek more and larger loans. Since 1956, the total number of farm loans outstanding advanced over 18,000, or 6 percent, even though the number of farm borrowers declined by 12,000. Thus, the combined effect of these and other forces caused the average farm loan at commercial banks in the Sixth Federal Reserve District to increase from $1,254 in 1956 to $2,840 ten years later, or a gain of 126 percent. The total volume of loans outstanding moved from $336 million to $792 million during the same period. Loan Purpose The diverse nature of agricultural adjustment and borrower demands for credit are more apparent when loans are grouped by pur pose. In 1956, 55 percent of all farm loans at District banks were used for current expenses. By 1966, loans for these purposes declined to 47 percent of the total number, representing an approximate reduction of 16,000 notes. The dollar volume of loans outstanding for current expenses rose to $285 million, or nearly double in ten years, but less than the gain for all loans. This lower increase is largely attributed to the declin ing number of farm borrowers. However, the re maining farmers negotiated much larger loans Farm Loans S ix t h D istric t In s u re d B a n k s 0 1 0 Prc no L a e e t f on 2 0 3 0 4 0 5 0 6 0 7 0 0 La S e on iz 1 0 Prc n oOts nins e e t f u tad g 2 0 3 0 4 0 5 0 6 0 7 0 Udr$ ,0 0 ne 1 0 $ ,0 0 ,9 9 1 0 -4 9 $ ,0 0-9 9 5 0 ,9 9 $ 0 0 -2 ,9 9 1 ,0 0 4 9 $ 5 0 a dOe 2 ,0 0 n vr T yp ica l lo a n s are b e c o m in g la rge r a n d are a c c o u n t in g for an in c r e a s in g p ro p ortion of the cre dit o u tsta n d in g . C rre t Exp n s u n e se In rmd te te e ia T rmin stmn e ve e t P rch se u a R a Esta e l te C n lid teDb o so a e ts & th r P rp se Oe u o s P rce to Otsta d g e n f u n in s 10 20 30 40 I ' I ' I ' I C rre t Exp n s u n e se L o a n s to m e c h a n iz e a n d m o d e rn iz e so u th e a ste rn a g ric u ltu re have e x p a n d e d m ore ra p id ly tha n b o rro w in g fo r o p e ra tin g e x p e n s e s a n d oth e r m a jor u se s. 107 because operating expenditures skyrocketed. Meanwhile, the reduction in loans for current expenses was more than offset by a 28,000 gain in intermediate-term loans. These funds were used to purchase breeding stock, machinery and equipment, autos, and to finance improvements in land and buildings. Notes of this type in creased 29 percent from ten years ago and now account for 39 percent of all loans. Similarly, the dollar volume of loans jumped from $104 million to $284 million, matching the levels for current expenses. Insight into the magnitude of the rapid mechanization is revealed by the near tripling in dollar volume of loans to purchase machinery and equipment. An increase in the average loan size to $2,045 measures both the purchase of larger, more modern implements, as well as significant price rises. Similarly, the growing importance of the Southeast as a livestock region is evidenced by sizable advances both in the number and amount of loans used to purchase breeding stock, primarily cattle. Loans negotiated to buy farm real estate amounted to $148 million, or about 19 percent, of the total loan volume in 1966. An apparent tendency for borrowers to consolidate farming units further and to seek real estate loans with longer maturities accounts for the gain in the number of real estate notes outstanding. Sim ilarly, larger farm units and higher land prices were probably the major forces pushing the average real estate loan from $3,664 to $7,012 in just ten years. Maturity The number and dollar volume of notes in various maturity classifications have also changed. In 1966, loans with maturities of less than one year totaled over 167,000 in number, or 24,000 less than ten years ago. This reduction parallels a decline in the number of loans for current operating expenses. Even though the outstanding value of these short-term notes nearly doubled, they represent only 40 percent of the total outstandings, compared with 49 per cent ten years ago. Average loan sizes jumped from $852 to $1,890. Reflecting the relatively faster growth in Farm Loans at Sixth District Insured Banks C la ssific a tio n N u m b e r of L o a n s 1956 1966 O u t s ta n d in g A m o u n t ( T h o u s a n d s of D o lla rs) 1956 1966 A vera ge* S iz e of L oa n (D o lla rs) 1956 1966 A v e ra g e Effective In te re st R ate (P erce nt) 1966 M ETH O D OF R EPA Y M E N T AND IN T E R E S T C H A R G E S in g le P a y m e n t In sta lm e n t O n O u t s ta n d in g B a la n c e A d d-on D isc o u n t N ot R ep o rted 2 2 9 ,6 4 8 249 ,0 2 1 2 6 ,3 1 8 2 7 ,155 j 3 1 ,2 1 8 11,649 4 4 ,6 5 6 } 108 2 3 9 ,0 1 3 5 7 2 ,6 3 0 1,073 2,501 6.6 65,7 5 2 150 ,8 8 2 ( 55,421 13,315 3 ,317 7 ,105 j 2 ,287 1,619 6.4 11.0 13.3 2 ,0 8 0 4 ,6 3 8 j 2 ,145 / 899 6.8 6.5 6.8 7.5 2 ,6 8 8 3 ,833 2 ,0 4 5 6 ,208 ( 1,662 j 439 7.2 6.6 7.6 6.4 9.2 8.5 31,4 3 5 } 57 966 1 581 PU RPO SE C u rre n t E x p e n s e s Fe e d e r L iv e sto c k O th e r O p e ra tin g E x p e n s e s F a m ily L iv in g 1 65,295 5 ,274 160,021 In te rm e d iate -T e rm In v e stm e n t A ll O th e r L iv e s to c k M a c h in e r y a n d E q u ip m e n t Im p ro v e L a n d a n d B u ild in g s A u t o m o b ile s O th e r C o n s u m e r D u ra b le s 97,3 0 6 14,723 4 9 ,4 1 9 14,836 B u y F a rm 149,367 9,156 11 4 ,1 2 4 | 2 6 ,0 8 7 1 44,983 16,623 128 ,3 6 0 2 84,951 3 8 ,8 0 7 ( 2 2 8 ,5 2 6 / 17,6 1 8 927 4,140 2 8 4 ,0 5 6 73,0 3 7 1 23 ,8 8 8 6 6 ,0 7 4 19,7 5 4 1,303 1,277 1,906 1,099 2 ,092 821 O th er 10 3 ,9 1 2 2 2 ,4 3 8 4 5,8 2 7 27,4 0 5 18,031 2 4 ,2 9 8 56,640 14 7 ,6 4 9 3 ,6 6 4 7 ,0 1 2 6.8 8 ,704 10,192 14,203 3 7 ,2 2 7 1,825 4 ,2 6 4 6.9 10,686 R e a l Esta te C o n so lid a t e o r P a y O th e r D e b ts 125 ,2 8 4 21,191 7 2 ,2 5 9 1 3,015 j 15,316 3 ,502 9,902 15,631 3 8 ,3 6 5 1,554 4 ,5 1 6 6.5 2 ,840 6.9 18,328 N o t R ep o rted 708 TOTAL 3 00,730 ] AVERAGE 8,242 \ } 890 3 1 9 ,0 4 3 3 3 6 ,2 5 9 591 1 ,468 7 9 2 ,2 4 9 1,254 Note: T otals, the s a m e for “ M e th o d of R e p a y m e n t a n d In te re st C h a r g e ” a n d “ P u rp o s e ,” m a y not a d d b e c a u s e of ro u n d in g. *W e ig h te d a v e ra g e s iz e of the o rig in a l loan. 108 MONTHLY REVIEW credit demand to finance intermediate-term in vestments, the number, dollar volume, and average loan size for notes maturing in one to three years increased markedly. These loans now represent over 40 percent of the number and dollar volume of loans outstanding, compared with 32 and 35 percent, respectively, in 1956. A large proportion of the loans with maturities of four years and over were used to purchase farm lands, so their characteristics correspond rather closely with those of real estate loans. Notes with maturities between four to ten years averaged $9,200 each, while loans written for ten years or more averaged nearly $16,000. Effective interest rates charged on loans with various maturity dates did not vary as expected. Normally, rates are higher on small, short-term loans because the servicing cost per dollar lent is greater. For all loans maturing in less than one year, however, the average rate was 6.7 per cent, while rates on intermediate-term and longer-term loans were 7.3 and 6.9 percent, re spectively. Since most notes maturing in less than one year are probably single payment loans, the stated rate on the note equaled the effective or simple interest charges. However, intermediateterm loans for machinery purchases and other uses often have annual, semi-annual, or monthly payments. Although these loans have longer ma turities and are larger on average, many bankers computed the interest charges on a “discount” or “add-on” method which raises net yields. How ever, average effective rates for real estate and other long-term loans were lower because rates are generally computed on the outstanding bal ance. Slight reductions in the number of demand notes, while the average loan size and total out standings have more than quadrupled, show another significant trend in southern farm loans. Except for real estate loans, the demand note exceeds the average size of every other type of loan. These notes are granted for all purposes, and effective interest rates average 6.2 percent. Unlike the demand loan of former years, many of these loans now have a regular repayment sched ule and are substituted for instalment loans by many bankers. Renewal Status Historically, farm borrowers have been relatively good credit risks. Trends in the last ten years do not indicate any significant departure from this pattern, although average debt-to-asset ratios of many farmers have in AUGUST 1967 creased markedly. In both 1956 and 1966, 92 per cent of all loans outstanding either had not been renewed or the renewal was based on a mutual agreement between the farm borrower and banker when the original note was made. The remaining loans were unplanned renewals caused by ad verse developments in the borrower’s farm in comes and numerous other reasons. Less than 12,000 loans were renewed for reasons of low income. Approximately 4 percent of the low in come renewals had overdue payments, compared with less than one percent for loans not re newed. Low income renewals appeared most frequently in loans to consolidate or pay debts, to purchase equipment, and for current operat ing and family living expenses. Bank Practices Change Little Security Just as the nature of agricultural pro duction and the structure of the farm com munity largely dictate the general form of many loan characteristics, the needs of bankers as suppliers of farm credit will dominate others. Apparently, bankers are requiring that farmers secure their loans as fully as they did ten years ago. However, there has been a slight shift away from real estate mortgages as the major security instrument. This trend is evident from the reduction of 10,000 loans secured by farm mortgages since 1956. Similarly, even though the dollar value of mortgage loans has more than doubled, they now represent 37 percent of total farm loans outstanding, compared with 40 per cent a decade earlier. Despite the tendency to rely less heavily on real estate as the major security for farm loans, many bankers still require this type of security, regardless of the loan amount, purpose, bor rower’s repayment ability, and other considera tions. Partial evidence of this practice is ap parent when the $296 million in notes secured by farm real estate is compared with $214 mil lion in loans used to purchase real estate and to improve land and buildings. Chattel mortgages remain the major type of security required by bankers. In 1966, 170,000 loans—representing 53 percent of all loans and a gain of 8,000 since 1956—were secured in this manner. Because most of these loans were for operating expenses to purchase equipment and other short and intermediate purposes, the av erage note size was less than $2,200, well un der the overall average. 109 Unsecured loans are becoming more common today. This trend apparently reflects improved net worths, income flows, and repayment ca pacity of many farm borrowers. Usually, the probability of default is considered nil before unsecured notes will be granted. And even though the average unsecured note totaled only $1,877, the average effective interest rate was only 6.3. Only yields on Government guaranteed or insured loans were lower. Method of Repayment and Interest Charge Repay ment terms have not changed much in the last ten years. Single payment notes still account for over 75 percent of the number and 70 percent of the dollar volume of notes outstanding. Because the bulk of these are for current expenses with maturities of one year or less, their average size was $2,500, or nearly $340 less than the average for all loans. The effective rate was 6.6 percent, compared with 6.9 for all loans. Effective interest rates charged on instalment loans are usually well above the average rate. Instalment loans in which the interest charge was computed by the “add-on” and “discount” methods had effective rates of 11.0 ami 13.3 per cent, respectively. Notes with these higher rates equaled $69 million, or 9 percent, of all farm loans outstanding in 1966. Generally, bankers are discounting more instalment loans than ten years ago, but these increases have been matched by similar reductions in “add-on” notes. Instalment notes in which the interest charge is computed on the outstanding balance had the lowest average rate of 6.4 percent. In 1966, $151 million, or 19 percent, of all outstanding loans were instalment notes of this type. Most of these loans were used to purchase real estate. Purchased Notes Most farm loans held by Dis trict bankers were the result of direct negotia tions between the banker and the farm borrower. However, $61 million, or about 8 percent, of the total outstandings were purchased from other institutional lenders or businesses. (In 1956, 11 percent of the farm loan volume had been pur chased.) Over two-thirds of the dollar value of 110 purchased notes came from various merchants and dealers who had financed merchandise sales for farm customers. Generally, these loans were relatively small and carried an average effective yield of 7.9 percent. Loans purchased from other banks and the Farmers Home Administration were well above average in size, with yields near 6 percent. However, they accounted for only one percent of the total value of outstandings. Interest Rates Perhaps of all the characteristics associated with farm loans, the interest rate is negotiated most vigorously at certain banks and with particular customers. However, other banks’ rates are well established and quite rigid. And some borrowers may not actively seek lower rates. The tendency toward an institution’s rigidity of rates is reflected in the volume of farm loans granted with effective yields near 6, 7, or 8 per cent. In 1966, over 86 percent of all loans repre senting a like amount of total outstandings were written with effective rates at these levels. And over one-half of the total dollar volume had rates between 6.0 and 6.9 percent. Notes with yields between 6.0 and 7.9 percent averaged near ly $3,400 each and were mainly single payment notes for short-term expenditures. However, sev eral real estate and other instalment loans with interest charged on the outstanding balance fell into this group. The significant drop to $1,500 in the average size of loans with 8 percent interest reflects the policy of many banks to charge higher rates for small loans. Virtually all of the loans with effective rates over 9 percent were written with a lower rate stated on the loan. However, discounting or computing interest using the “add-on” basis raised effective yields significantly. It was noted earlier that these loans were used largely to purchase intermediate-term investments. The group of loans with the lowest rates, 5.9 and less, also averaged the largest in size. Most of these notes were either long-term loans to purchase real estate or were relatively large notes from prime bank customers. R obert E. S w eeney MONTHLY REVIEW □e> : / OOOSflE.^U i > • : o E 1 E"' 3 5 U Eii: . ■:o E I E"15B E 3■: • : o E i Em 5 3 UOi: . i 5 8 3 6 7 ^ ^ 1 5 , 5 / q . ' 1 i : o . ■ i 1 0 0 A 0 0 1 3 n o t h e r I n k 7 M ^ 5 / i l e s t o n e I 0 5 i n S M 0 I 0 0 0 I E e < « 0 0 0 5 i : i : o E 5 » , E . i : 1 i . 0 E " q AUGUST 1967 i : . 0 S . . ' ' 0 0 & I E » 1 ' 5 B E 3 > : a g n e t i c E n c o d i n g Effective September 1, 1967, Federal Reserve Banks will no longer handle checks as checks un less they bear the routing symbol and transit number in magnetic ink. This deadline is another step toward com puterization of the nation’s check collection sys tem. Approximately 90 percent of all financial transactions in the United States are carried out by check, and an average of nearly 19 million checks a day are cleared through Federal Re serve offices. Because this number is not only enormous but still growing, it became obvious that checks could be handled efficiently and economically only by means of computers, which, of course, require a machine language. Accordingly, about a decade ago the American Bankers Association, in cooperation with elec tronic equipment manufacturers and Federal Re serve Banks, determined the specifications for a common machine language. This enables checks to go through an electronic sorter at the rate of 60,000 an hour rather than at the rate of about 1,500 per hour attainable by a human operator of conventional proof machines. The special type developed is designated E13b. The required ink is magnetic, similar to the coating on magnetic 5 s & 3 3 ? : /o o o o o » 35U6i: / o o > 3 12 i : O E > 0 E ™ E . . . 5 B 1 5 / coe. l a s a g . q i . s ' v hoe. 0 0 : o & . ' * E> & ' ' 0 recording tape, and quite easy for a competent printer to use. Banks soon began providing their customers with checks conforming to the Magnetic Ink Character Recognition Program. Before long, check writers throughout the country were famil iar with the odd looking numbers and symbols on their checks—characters they could read as easily (although by no means as rapidly) as could a computer. Federal Reserve Banks noted that a larger and larger proportion of the checks bore these characters and could be processed by the high-speed check handling units they had pioneered in developing. The particular magnetic ink characters in which the Federal Reserve Banks have the great est interest are those which make up the payor bank’s routing symbol and ABA transit number. The routing symbol is a four-digit number that tells the machine in which Federal Reserve Dis trict the “payor” bank (i.e., the bank on which the check was drawn) is located, which Federal Reserve Bank or Branch serves that bank, and whether credit will be granted immediately or deferred. Checks drawn on the Federal Reserve Bank of 111 i : c Atlanta, for example, bear the routing sym bol 0610. The “06” means that the payor bank is located in the Sixth District—Alabama, Florida, Georgia, the southern halves of Louisiana and Mississippi, the eastern two-thirds of Tennessee. The “1” signifies that the payor bank is in the zone served by the head office of the Federal Reserve Bank of Atlanta, this zone including the state of Georgia and the city of Chattanooga. The “0” indicates that credit for the check will be granted immediately when it reaches the Re serve Bank. The transit number, also consisting of four digits, identifies the particular payor bank when read in combination with the routing symbol. For example, the transit number 0014, following the routing symbol 0610, refers to a particular bank in the Atlanta area. The same number, 0014, would mean an entirely different bank if it fol lowed another routing symbol. The routing symbol and transit number always appear together in that sequence on a properly imprinted check. These numbers begin about five and one-half inches to the left of the check’s right-hand margin and run along a line about one-fourth inch above the lower margin. Random examples might be 0610-0014, 0210-0378, and 1211-0008. If a check does not already have those numbers in the proper type, ink, and location when received by a Federal Reserve Bank, it will not be handled as a cash item on or after Sep tember 1. In connection with this program, the Federal Reserve Banks previously announced that (1) after January 1, 1964, they would no longer ac cept as cash items any items that, because of their size, could not be processed in the custo mary manner through low-speed proof machines, and that (2) after January 1,1965, they would no longer accept as cash items any items containing more than one thickness of card or paper. Checks requiring special handling have long been known as “headache items” among check collection peo ple and thus had to be eliminated from check collection channels before peak benefits from the M ICR Program could be realized. The response of the banking system and businesses to the pro gram was gratifying. The September deadline was announced by the presidents of the twelve Federal Reserve Banks on August 5, 1966: Reserve Banks “will classify as items requiring special handling all checks, drafts, and similar items received by them on which the payor’s routing symbol/transit 112 number has not been preprinted or post-encoded prior to their receipt by a Federal Reserve office, in E13b magnetic ink characters in the manner prescribed and in the location assigned by the American Bankers Association.” Lacking this machine language imprint, checi:s of $1,000 or more received from banks located outside the city of the receiving Federal Re serve Bank will be charged back to the sending bank and entered for collection as noncash items. All other items will be charged back and returned. In other words, the sending bank will receive credit considerably later than it would otherwise. On July 28, the twelve presidents sent out an additional reminder of the deadline, adding that the Reserve Banks will, as in the past, handle items requiring special handling as cash items only when, in their judgment, special circum stances warrant such handling. The deadline is necessary because the few checks without this machine language informa tion have remained an obstacle to the complete automation of the Federal Reserve check collec tion channels. Such checks have tended to per petuate inefficiency by requiring Federal Reser/e Banks to operate two check collection systems: a high-speed electronic service for the “computer age” checks, and low-speed, far less efficient serv ice, for the outmoded checks. Very few checks will be affected by the dead line, since most checks already bear the neces sary information properly encoded in magnetic ink. A survey conducted in January of this year showed the proportion of nonmachinable checks had dropped to only 2.95 percent for the Federal Reserve System as a whole. A survey three months later showed a further encouraging drop to 2.01 percent, and a survey in June, the most recent month for which results are available, showed a still further drop to 1.59 percent. For the Federal Reserve offices in the Sixth District, the survey results were: F ed e ra l R e se rv e Office N o n c o m p ly in g Ite m s a s P e rce n t of T otal Ite m s R e c e iv e d Jan. ’67 Apr. ’67 J u n e ’67 A tla nta 2.16 1.96 1.18 B ir m in g h a m 5.45 4.23 3.73 J a c k s o n v ille 1.56 1.17 .57 N a sh v ille 4.12 6.35 3.13 N ew 8.93 3.58 3.71 3.76 2.92 2.03 O rle a n s D istric t MONTHLY REVIEW “The near elimination of nonconfirming items has been accomplished largely as a result of the excellent cooperation of everyone concerned with check operations,” the Reserve Bank presidents said in their July 28 announcement. “We ap preciate this generous assistance and believe that the benefits to the banking system and the public will far exceed the costs involved.” Unavoidably, the September 1 deadline will pose problems for a number of banks and their customers, and some will be affected more than others. However, the move to a single collection system involving only “machinable” checks seems particularly appropriate at this time, since the volume of nonmachinable checks now is but a small fraction of all checks collected and the maintenance of a separate system is therefore all the more inefficient. □ B a n k A n n o u n c e m e n ts The Peoples Bank, Woodbury, Tennessee, a new state member bank, opened on July 1 and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Walter L. McCrary is president, and Oscar F. Pitts, executive vice president and cashier. Capital is $160,000; surplus and other capital funds, $240,000. AUGUST 1967 Another new member bank, Citizens and Southern Park National Bank, Atlanta, Georgia, opened on July 14 and began to remit at par. Officers are T. Robert Hazelrig, president; Hewitt H. Covington, vice presi dent; and Frank E. Farmer, cashier. Capital is $400,000; surplus and other capital funds, $200,000. 113 S i x t h D i s t r i c t S t a t i s t i c s Seasonally Adjusted (All data are indexes, 1957-59 = IOO, unless indicated otherwise.) Latest Month (1967) One Month Ago Two Months Ago One Year Ago Latest Month (1967) SIXTH DISTRICT . June . June cn c n o V D in . May 56,776 197 . June 132 . May 119 140 194r 134 115 143 56,715r 52,317 190 193 140 139 141 136 144 145 289 277 301r 277 r 288 265 136 135 165 129 151r 116 102 117 125 105 178r 136 127r 61 135 135 164 129 151 115 104 116 L24 105 176 136 129 61 133 134 166 128 151 111 107 115 128 106 173 132 129 71 4.1 3.8 3.6 3.6 2.2 41.0 174 178 171 143 114 223 2.2 40.8 158 175 143 N.A. 120 220 2.1 40.7 154 138 168 143 118 208 1.7 41.6 174 161 185 137 188 210 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) . June 148 111 90 147 111 83 142 109 86 3.0 42.9 2.7 42.2r 2.6 42.6 2.7 42.0. 259 196 191r 256 194 172 239 180 173 FINANCE AND BAN KING . June 277 247 136 135 164 130 152 114 102 119 125 105 181 136 123 65 One Year Ago 149 109 95 INCO M E AND SP EN D IN G Personal Income (Mil. $, Ann. Rate) Manufacturing P a y r o lls ................ Farm Cash R e c e ip t s .................... C r o p s .................................... L iv e sto c k ................................. Instalment Credit at Banks *(Mil. $) New Loans ............................. R e p a y m e n t s ........................... Two One Month Months Ago Ago 261 198r 191 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t ................. . Manufacturing ....................... ............................. Apparel C h e m i c a l s .......................... Fabricated M e t a l s ................ F o o d .................................... Lbr., Wood Prod., Furn. & Fix. . . Paper ................................. . Primary M e t a l s .................... T e x t i l e s ............................. . Transportation Equipment . . . N on m an u factu rin g.................... . C o n s t r u c t io n ....................... Farm E m p lo ym e n t....................... Unemployment Rate (Percent of Work Force) . . . . . Insured Unemployment (Percent of Cov. E m p . ) ............. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Construction C o n t r a c t s * ............. R e s id e n t ia l............................. All O t h e r .......................... Electric Power Production** . . . . . Cotton C o n s u m p tio n * * ................ Petrol. Prod, in Coastal La. and Miss.* * June June June June June June June June May June GEORGIA INCO M E Personal Income (Mil. $, Ann. Rate) . May Manufacturing P a y r o lls ....................June Farm Cash R e c e ip t s ....................... May 10,818r10,925r 194r 191 139 135 10,130 189 136 EM PLOYM ENT Nonfarm E m p lo y m e n t ....................June M anufacturing............................. June Non m an u factu rin g....................... June C o n s t r u c t io n .......................... June Farm E m p lo y m e n t.......................... June Unemployment Rate (Percent of Work F o r c e ) ............. June Avg. Weekly Hrs. in Mfg. (Hrs.) . . . June 135 130 137 128 59 134 130 136 127r 49 134 129 136 132 51 132 130 134 143 57 3.8 40.6 3.4 40.3r 3.3 40.0 3.7 41.0 260r 205 218 263 210 209r 258 206 186 255 193 198 8,511 179 142 8474r 176 150 8,533 r 173 13£! June June June June June 126 120 128 134 66 127 120 129 146 65 127 120 129 154 58 121 113 123 140 75 June June 4.8 42.0 4.5 41.8r 4.4 41.8 4.4 42.4 227 161 173 222 153 156 212 154 167 4,314r 4,383r 209 212 135 144 4,074 209 144 FINANCE AND BAN KING Member Bank L o a n s ....................... June Member Bank D e p o s it s ....................June Bank D e b its ** .................................June LOUISIANA INCOM E FINANCE AND BAN KING Member Bank Loans* All B a n k s ................................. . June Leading C i t i e s ....................... Member Bank Deposits* All B a n k s ................................. . June Leading C i t i e s ....................... Bank D e b its * /* * ................ . June 25 lr 228 252 225 248 228 236 222 189 174 197 190 169 195 187 173 178 179 166 181 7,526 175 136 7,363r 177 143 7,434r 172 146 June June June June June 124 121 125 119 66 124 122 125r 121 63 . June . June 4.6 40.9 Member Bank L o a n s .................... . June Member Bank D e p o s its ................ . June Bank D e b its **............................. . June 235 183 184 Personal Income (Mil. $, Ann. Rate) . May Manufacturing P a y r o lls ....................June Farm Cash R e c e ip t s ....................... May INCOME Personal Income (Mil. $, Ann. Rate) . May Manufacturing P a y r o lls ................ . June Farm Cash R e c e ip t s .................... . May 7,015 176 142 EM PLOYMENT . . . . . 124 121 125 119 68 124 123 124 127 70 4.4 41.1 4.3 40.6 4.4 41.9 237 185 180 232 183 171 218 177 179 FINANCE AND BAN KING FLORIDA INCOME Personal Income (Mil. $, Ann. Rate) . May 16,379 Manufacturing P a y r o lls ................ . June 245 Farm Cash R e c e ip t s .................... . May 128 16,142r 16,364r 14,941 237r 240 221 141 152 125 7,742 166 129 EM PLOYM ENT ALABAMA Nonfarm E m p lo y m e n t ................ M anufacturin g.......................... N on m an u factu rin g.................... C o n s t r u c t io n ....................... Farm E m p lo ym e n t....................... Unemployment Rate (Percent of Work Force) . . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . 10,968 198 133 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) FINANCE AND BAN KING Member Bank L o a n s * ....................June Member Bank Deposits* . . . Bank D e b it s * / * * .................... 224r 160 173 M IS S IS S IP P I INCO M E Personal Income (Mil. $, Ann. Rate) . May Manufacturing P a y r o lls ....................June Farm Cash R e c e ip t s ....................... May 4,395 214 139 EM PLOYM ENT Nonfarm E m p lo y m e n t ....................June M anu factu rin g..............................June N o n m an u factu rin g....................... June C o n s t r u c t io n .......................... June Farm E m p loy m e n t.......................... June Unemployment Rate (Percent of Work F o r c e ) ............. June Avg. Weekly Hrs. in Mfg. (Hrs.) . . . June 136 143 134 126 56 137 142 134 133 45 138 145 134 136 51 136 146 132 147 62 5.1 40.9 5.2 40.3r 4.6 40.3 4.5 41.6 298r 222 203 298 220 207 300 22:0 190 277 210 185 FINANCE AND BA NKING EMPLOYMENT Nonfarm E m p lo y m e n t ................ M anufacturin g.......................... 114 . June . June 150 156 149 155 148 155 143 150 Member Bank L o a n s * ....................June Member Bank D e p o s it s * ................ June Bank D e b it s * / * * ..............................June MONTHLY REVIEW Latest Month (1967) One Month Ago Two Months Ago One Year Ago One Two Latest Month Month Months (1967) Ago Ago Non m an u factu rin g................ C o n s t r u c t io n .................... Farm E m ploy m en t.................... Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . . June TENN ESSEE INCOME Personal Income (Mil. $, Ann. Rate) . May Manufacturing P a y r o lls .................... June Farm Cash R e c e ip t s ....................... May 8,997 192 118 8,988r 187r 119 9,078r 189 133 8,415 190 130 One Year Ago 133 158 65 129 155 80 4.3 39.9 133 152 65 4.0 40.0 3.2 41.5 251 182 223 243 178 210 235 177 190 133 153r 68 4.7 39.7 FINANCE AND BA NKING EM PLOYM ENT Nonfarm E m p lo y m e n t .................... June M anu facturin g............................. June 136 141 136 142 Member Bank L o a n s * ............. Member Bank Deposits* . . . . Bank D e b its * / * * ....................... 134 143 136 143 248r 181r 219 **Daily average basis. ‘ For Sixth District area only. Other totals for entire six states. r-Revised. N.A. Not Available. Sources: Persona! income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U. S. Dept, of Labor and cooperating state agencies; cotton consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. D e b i t s t o D e m a n d D e p o s i t A c c o u n t s Insured Commercial Banks in the Sixth District (In Thousands of Dollars) Percent Change May 1967 June 1967 Percent Change Year-to-date 6 mos. June 1967 from 1967 June from May June 1967 1966 1966 1966 Year-to-date 6 mos. June 1967 from 1967 June from May June 1967 1966 1966 1966 1,497,687 60,567 180,861 474,758 297,788 95,342 Ft. Lauderdale619,595 Hollywood . . . . 1,540,194 Jacksonville . . . . M i a m i ................... 2,239,103 561,730 O r l a n d o ................ 213,244 P e n s a c o l a ............. Tallahassee . . . . 136,626 Tam p a-St. Petersburg 1,308,491 392,177 W. Palm Beach . . . Albany ................ Atlanta ................ A u g u s t a ................ Columbus ............. Macon ................ Savannah ............. 84,381 4,610,836 293,979 218,494 252,092 269,439 562,703 Baton Rouge . . . . Lafayette ............. 116,017 144,953 Lake Charles . . . . New Orleans . . . . 2,431,359 Jackson ................ 609,962 1,594,742 61,956 185,981 500,144 302,689 100,199 l,442,192r 61,515r 182,800r 446,568r 297,135r 89,222 -6 -2 -3 -5 -2 -5 +4 -2 -1 +6 +0 +7 +8 -5 +0 +4 +2 +8 656,910r 1,542,624 2,295,598r 575,725 206,202 153,405 1,339,764 426,243 556,009r - 6 l,434,489r - 0 2,003,900 -2 499,828r - 2 187,161r +3 113,032r -1 1 l,176,532r - 2 382,070r - 8 + 11 +7 + 12 +12 + 14 +21 + 11 +3 +7 +5 + 10 +5 +10 + 16 +8 +1 89,034 4,532,385 306,997 219,488 257,436 286,015 89,797 4,183,348r 272,016r 191,375r 212,472r 245,436r -5 +2 -4 -0 -2 -6 -6 + 10 +8 +14 + 19 + 10 -2 +8 + 12 + 10 + 12 + 10 596,576 139,096r 146,902 2,547,273 465,015r - 6 116,088 -1 7 -1 129,320 2,362,580r - 5 +21 -0 + 12 +3 + 13 +5 + 15 +2 -1 1 +14 + 11 +1 -1 -4 +8 +6 +28 +7 +8 +22 683,714 534,806 555,630r 436,554r l,287,445r 601,845 464,594 1,651,008 596,533 469,963 1,717,254 A n n is t o n ............. Dothan ............. S e l m a ................ 67,454 61,108 45,735 63,967 64,983 43,619 65,743 54,024 38,759 +5 -6 +5 +3 + 13 + 18 +2 + 12 +10 Bartow ............. Bradenton . . . . Brevard County . . Daytona Beach . . Ft. Myers— N. Ft. Myers . . Gainesville . . . . 35,327 76,953 221,857 94,708 38,387 70,597 236,947 89,899 39,090 64,593 212,616 83,825 -8 +9 -6 +5 -1 0 + 19 +4 +13 -3 +28 +3 +9 79,596 84,423 80,554 86,797 67,830 75,381 -1 -3 + 17 +12 +7 +9 Chattanooga . . . . Knoxville ............. Nashville ............. Lakeland . . . . Monroe County . . O c a l a ................ St. Augustine . . St. Petersburg . . Sarasota . . . . Tampa ............. Winter Haven . . May 1967 122,566 33,977 55,784 19,862 313,140 96,769 683,107 57,545 119,731 36,608 57,925 19,508 318,595 104,433 700,827 64,103 116,097 32,352 52,208 18,539 265,617 92,922 643,259 57,991 +2 -7 -4 +2 -2 -7 -3 -1 0 +6 +5 +7 +7 +18 +4 +6 -1 +3 +5 +6 +5 +10 -0 +5 +1 Athens ............. Brunswick . . . . Dalton ............. E lb e r t o n ............. Gainesville . . . . G r i f f i n ................ LaGrange . . . . Newnan ............. R o m e ................ V a ld o s t a ............. 72,107 43,538 78,741 17,041 76,151 32,279 22,627 24,299 71,011 53,896 73,905 40,193 79,008 17,719 73,227 34,507 23,799 25,187 72,473 54,515 68,951 40,451 82,964 15,606 71,592 30,644 24,743 24,127 70,962 46,207 -2 +8 -0 -4 +4 -6 -5 -4 -2 -1 +5 +8 -5 +9 +6 +5 -9 +1 +0 +17 +8 +5 -5 +16 +6 +7 -5 -4 +2 + 13 Abbeville . . . . Alexandria . . . . Bunkie ............. Hammond . . . . New Iberia . . . . Plaquemine . . . Thibodaux . . . . 11,742 130,404 7,160 38,309 30,879 11,223 24,014 ll,265r 132,229 6,499r 42,644 34,414 12,340 22,477 12,998 138,938 5,855 31,616 32,414 10,157 21,642 +4 -1 + 10 -1 0 -1 0 -9 +7 -1 0 -6 +22 +21 -5 +10 +11 +3 +17 +18 +18 -2 +19 +2 Biloxi-Gulfport . . Hattiesburg . . . L a u r e l ................ M e r id ia n ............. N a t c h e z ............. Pascagoula— Moss Point . . Vicksburg . . . . Yazoo City . . . . 100,794 54,361 36,133 63,030 37,355 105,827 55,126 31,927 69,029 36,344 95,697 51,722 33,980 61,564 34,146 -5 -1 +13 -9 +3 +5 +5 +6 +2 +9 +11 +7 -2 +4 +9 53,430 39,773 30,474 56,374 41,294 35,297 49,655 37,516 34,190 -5 -4 -1 4 +8 +6 -1 1 +9 +7 +4 Bristol ............. Johnson City . . . Kingsport . . . . 77,814 77,925 149,059 81,461 76,929 159,675 73,155 69,456 149,750 -4 +1 -7 +6 + 12 -0 +10 +9 +9 IXTH DISTRICT, Total TANDARD METROPOLITAN TATISTICAL A REA Sf Birmingham . . . . Gadsden ............. H u n t s v i l l e ............. Mobile ................ Montgomery . . . . T u s c a lo o s a ............. June 1967 30,072,550 30,762,115 27,652,672r -2 +9 +8 Alabama^ . . . . F l o r i d a ^ ............. G e o r g ia ):............. Louisiana*t . . . M ississippi*f . . . Tennessee*t . . . 3,904,801 9,060,437 7,557,316 4,052,486 1,373,539 4,123,971 3,802,848r 8,213,536 6,882,948r 3,922,181r l,251,922r 3,579,237r -3 -2 +0 -5 -5 -2 +3 +10 +10 +3 +10 +15 +6 +7 +8 +5 +10 +13 DTHER CENTERS Includes only banks in the Sixth District portion of the state. AUGUST 1967 fPartially estimated. 4,015,301 9,257,929r 7,547,305r 4,266,583r 1,452,306 4,222,691 ^Estimated. 115 D i s t r i c t B u s i n e s s C o n d i t i o n s July brought signs that the District is sailing in a smoother economic current. After declining for several months, manufacturing jobs leveled out in June, and manufacturers lengthened the average workweek. Consumer spending was buoyed by rising auto sales. Despite some adverse developments, construction is still recovering. Banks replenished their holdings of Treasury bills and remained in a generally easy position. Farmers benefited from persistent showers which have stimulated the rapid growth of pasture, corn, and other crops. Most manufacturing industries that had made cutbacks earlier added workers in June. However, the total number of manufacturing jobs remained steady because food processors laid off workers. Nonfarm jobs advanced, despite strikes in several areas. Nevertheless, the unemployment rate in creased as a result of the large number of en trants to the labor force. Construction jobs again registered a less-than-seasonal increase. Automobile sales were a chief contributor to gains in consumer spending in June. Suggesting further improvement were the preliminary indica tions of increasing loan extensions. Total construction rose steadily from its sevenmonth low recorded in March. Dollar volume of residential contracts in June held at approxi mately the May level, and nonresidential con tracts rebounded strongly. The inflow of mortgage funds through FHA and VA mortgages has been curtailed in recent weeks by rising yields on in struments competing with home mortgage in vestments. On the other hand, savings flows to financial institutions have held up well and 116 mortgage lending volume is increasing. Inven tories of unsold and repossessed housing con tinue to be reduced in a number of metropolitan areas. Banks in major cities greatly increased thieir holdings of Treasury bills in July by retaining most of the bills delivered early in the month. Loan expansion at these banks was moderate. Borrow ings from the Federal Reserve Bank of Atlanta remained at a very low level. The general ease of bank reserve positions reflected small gains in demand deposits coupled with sustained rapid growth of time deposits. With tobacco harvesting in Florida and Georgia past the halfway mark, yields and total production are above the 1966 level. However, price declines in the crop and livestock sectors have caused lagging farm cash receipts. Generally good crop conditions and prospects for increasing egg and broiler prices later this year offer some oppor tunity to offset these losses. N O T E : D ata on w h ic h s ta te m e n ts are b a se d h a ve b ee n a d ju ste d w h e n e v e r p o s s ib le to e lim in a te s e a s o n a l influences;. MONTHLY REVIEW
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