Full text of Economic Review (Federal Reserve Bank of Atlanta) : December 1975, Volume 60, Number 12

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In T h is Is s u e :
A Florida Case Study:
Performance of Holding Company Banks
The Impact of Discount Activity
on Federal Funds Borrowings
1975 Crop Production:
Outstanding in Both the Nation and District
Banking Notes: Real Estate Lending Increases
Index for 1975
District Business Conditions

F e d e ra l R e s e rv e B a n k O f A t la n t a
F e d e ra l R e s e r v e S t a tio n
A t la n t a , G e o r g ia

3 0 3 0 3

A d d r e s s C o r r e c t io n

R e q u e sted




BU LK R A TE
U .S. P O S T A G E
P A ID
Atlanta, Georgia
Permit No. 292

A F lo r id a C a s e S t u d y :
P e rfo rm a n c e o f
H o ld in g C o m p a n y B a n k s
By Stuart G. Hoffman
T h is article su m m a r iz e s a staff a n a ly sis a u th o r e d b y D r. H o ffm a n , en title d
" T h e Im p a c t o f H o ld in g C o m p a n y A ffilia tio n o n B a n k P e rfo rm a n c e : A C a s e
S tu d y o f T w o F lo rid a M u lt ib a n k H o ld in g C o m p a n ie s . " T h e c o m p le t e stu d y is
a v a ila b le as the first in a series o f Federal R e se rve B a n k o f A tla n ta W o r k i n g
Papers. S in g le c o p ie s are a v a ila b le u p o n re q u e st to the R e se a rc h D e p a rtm e n t,
F ederal R e se rve B a n k o f A tla n ta , G e o r g ia 30303.
T h e B o a rd o f G o v e rn o r s, in a p p r o v in g o r d e n y in g sp e c ific h o ld in g c o m p a n y
a cq u isitio n s, has been in flu e n c e d in part by results fro m se veral recent
stu d ie s o f the im p a c t o f h o ld in g c o m p a n y a ffilia tio n o n b a n k p e rfo rm a n c e .
A n im p lic it a ssu m p tio n u n d e r ly in g these stu d ie s is that all h o ld in g c o m p a n ie s
affect the p e rfo rm a n c e o f their respe ctive su b s id ia r y b a n k s sim ila rly . If this is the
case, the B o a r d 's relian ce o n the c o n c lu s io n s o f the se stu d ie s is le g itim a te a n d
useful. H o w e v e r, if a ve rag e p e rfo rm a n c e te n d e n c ie s m a sk o ffse ttin g d iffe re n c e s
in the im p a c t o n p e rfo rm a n c e o f a ffiliatio n w ith in d iv id u a l h o ld in g c o m p a n ie s,
the results m a y be m is le a d in g if e m p lo y e d in a n a ly sis o f sp e c ific a c q u isitio n s.
T h e a ssu m p tio n that the p e rfo rm a n c e s o f b a n k s a c q u ire d by d iffe re n t
m u ltib a n k h o ld in g c o m p a n ie s are, n evertheless, sim ila rly a ffe cte d n e e d e d
testing. T w o large F lorid a h o ld in g c o m p a n ie s — H C -1 a n d H C - 2 — o ffe re d to be
g o o d su b je c ts fo r su ch a test. A sa m p le o f 13 p aire d affiliate d a n d in d e p e n d e n t
b a n k s fo r each su b je c t h o ld in g c o m p a n y is u se d to a n a ly z e the effects o f
a ffiliatio n o n 29 m e a su re s o f b a n k p e rfo rm a n c e . (See b o x o n Statistical
M e t h o d o lo g y .) T h e m a jo r c o n c lu s io n s are that the a c q u ire d b a n k s te n d e d to (1)
restructure their asset p o r tfo lio s in fa v o r o f lo a n s a n d state a n d lo ca l g o v e r n m e n t
se cu ritie s a n d a w a y fro m cash, d u e fro m b a la n ce s, a n d U. S. G o v e r n m e n t
se curities, (2) alter their lo an p o r tfo lio s in fa v o r o f in c re a se d h o ld in g s o f
1See for example, Robert J. Lawrence, The Performance of Bank Holding Companies (Washington, D.C.:
Board of Governors of the Federal Reserve System, June 1967); Joe W. McLeary, "Bank Holding
Companies: Their Growth and Performance," Monthly Review, Federal Reserve Bank of Atlanta,
October 1968; Samuel H. Talley, "The Effect of Holding Company Activity on Bank Performance,"
Staff Economic Studies No. 69 (Washington, D. C.: Board of Governors of the Federal Reserve
System, 1972); Robert F. Ware, "Performance of Banks Acquired by Multibank Holding Companies in
Ohio," Economic Review, Federal Reserve Bank of Cleveland, March-April 1973.

M o n t h l y

R e v i e w ,

u p o n r e q u e s t to
Atlanta, G e o r g i a
this R e v i e w , t h e
Research D ep ar t

V ol . LX, N o . 12. F r e e s u b s c r i p t i o n a n d a d d i t i o n a l c o p i e s a va il ab le
t he R e s e a r c h D e p a r t m e n t , Federal R e s e r v e B a n k of Atlanta,
30303. Material herein m a y b e reprinted or abstracted p ro vi de d
B a n k , a n d t h e a u t h o r a r e c r e d i t e d . P l e a s e p r o v i d e this B a n k ' s
m e n t w i t h a c o p y o f a n y p u b l i c a t i o n i n w h i c h s u c h m a t e r i a l is

reprinted.

202




D E C E M B E R 1975, M O N T H L Y R E V IE W

c o n s u m e r l o a n s , a n d ( 3) h a v e o f f s e t t i n g i n c r e a s e s in
total o p e r a t i n g r e v e n u e a n d e x p e n s e s . T h e s e fi n d in g s
a r e v e r y s i m i l a r t o t h o s e f o u n d in p r e v i o u s h o l d i n g
c o m p a n y p e r f o r m a n c e studies. W h ile t h ere w e r e
d i f f e r e n c e s in t h e i m p a c t o n p e r f o r m a n c e o f
a f f i l i a t i o n w i t h H C -1 r e l a t i v e t o H C - 2, t h e
differences w e r e m o r e of d e g r e e th an kind, with
o n l y o n e e x c e p t i o n . B a n k s a c q u i r e d b y H C -1
ac h iev ed significantly g reater o p e r a tin g efficiency
and, th ereb y , relatively g reater before-tax
p r o f i t a b i l i t y t h a n t h o s e b a n k s a c q u i r e d b y H C - 2.
T h e re sults o f this analysis s u p p o r t t h e g e n e r a l
findings of th e p revious h o ld in g c o m p a n y
p e r f o r m a n c e studies an d d o n o t co n trad ict their
applicability to individual acquisitions.
E m p iric a l R e su lts
The findings of the stu d y are s u m m a r i z e d b e l o w
u n d e r the head in g s of the general p e r f o r m a n c e
c a t e g o r i e s l i s t e d in T a b l e 1. T h i s t a b l e p r e s e n t s t h e
m e a n c h a n g e s f o r all 29 p e r f o r m a n c e v a r i a b l e s f o r
each su b je ct h o ld in g c o m p a n y c o m p a r e d to the
i n d e p e n d e n t ban k s a n d th e direct c o m p a r is o n of
H C - 1's s u b s i d i a r i e s t o t h o s e o f H C - 2.
B a n k A sse t S tru cture
A f f i l i a t i o n w i t h H C -1 o r H C -2 t e n d e d , o n a v e r a g e ,
to increase th e acq u ired b anks' total loans/total
asset s a n d sta te a n d local g o v e r n m e n t se cu ri ties /
total asset s ratios. L o o k in g at t h e c o m p o s i t i o n o f t h e
i n c r e a s e d l o a n p o r t f o l i o , s u b s i d i a r i e s o f H C -1 m a d e
m o r e c o n s u m e r l o a n s t o i n d i v i d u a l s ; H C -2 a f f i l i a t e s

Statistical M e t h o d o lo g y
This s t u d y f o c u s e s o n b a n k s a c q u i r e d by t w o
F l o r i d a m u l t i b a n k h o l d i n g c o m p a n i e s b e t w e e n 1965
a n d 1973. D a t a o b t a i n e d o n 29 m e a s u r e s o f b a n k
p e r f o r m a n c e f o r a s a m p l e o f 13 p a i r e d a f f i l i a t e d a n d
i n d e p e n d e n t b a n k s w e r e u s e d to a n a l y z e th e effects
o f affiliation o n t h e p e r f o r m a n c e o f t h e a c q u i r e d
banks. To isolate tho se effects on p e r f o r m a n c e d u e
solely to h o l d i n g c o m p a n y affiliation, a c q u i r e d
banks w e r e paired with similar sized i n d e p e n d e n t
b a n k s l o c a t e d in t h e s a m e b a n k i n g m a r k e t .
The differences b etw e e n the acquired banks and
the i n d e p e n d e n t banks for each p e r f o r m a n c e vari­
a b l e w e r e c o m p u t e d in b o t h t h e b e f o r e - a c q u i s i t i o n
y e a r s a n d i n t h e f i nal y e a r o f t h e s t u d y — 1974.
F r o m t hi s i n f o r m a t i o n , t h e m e a n c h a n g e s i n t h e
d i f f e r e n c e s ( t h e d i f f e r e n c e in 1974 m i n u s t h e
c o r re s p o n d i n g difference b efo re acquisition) w e r e
c a l c u l a t e d . F o r a g i v e n p e r f o r m a n c e r a t i o , its m e a n
c h a n g e is t h e e s t i m a t e d a v e r a g e e f f e c t t h a t a f f i l i a t i o n
with the su b je ct h o ld in g c o m p a n y h ad o n that
p e r f o r m a n c e a s p e c t o f t h e a c q u i r e d b a n k s in t h e
s a m p l e . F i na l l y, e a c h m e a n c h a n g e w a s d i v i d e d b y
its s t a n d a r d e r r o r t o t e s t f o r s t a t i s t i c a l s i g n i f i c a n c e
(t-test). Th is s e r i es o f c o m p u t a t i o n s w a s p e r f o r m e d
se parately to the a c q u ir e d an d paired i n d e p e n d e n t
b a n k s for e a c h o f t h e t w o s u b j e c t h o l d i n g c o m ­
p a n i e s . A t - v a l u e in e x c e s s o f ± 2.17 s i g n a l e d r e j e c ­
t i o n o f t h e h y p o t h e s i s o f n o c h a n g e in a v e r a g e
b a n k p e r f o r m a n c e af t e r affiliation w i t h t h e r el ev an t
holding com pany.

increased loans to farmers. To th e e x ten t that
t h e r e is a l o c a l m a r k e t f o r t h e s e t y p e s o f l o a n s , t h i s
result suggests that th e a c q u ir e d ban k s m a d e m o r e
credit available to their respective c o m m u n i t i e s
a f t e r a f f i l i a t i o n . In c o n t r a s t , b a n k s a c q u i r e d b y
each h o ld in g c o m p a n y t e n d e d to r e d u c e their cash
a n d d u e f r o m b a l a n c e s / t o t a l a s s e t s a n d U. S.
G o v e r n m e n t se cu ri t i es / to t a l asset s ratios, o n av er ag e.
Prices o f B a n k Service s
H o l d i n g c o m p a n y affiliation h a d n o sign ifica nt
effect o n prices the a c q u ir e d ban k s c h a r g e d for
services. S u b si d i ar i es o f e a c h h o l d i n g c o m p a n y
t e n d e d t o r e d u c e t h e s e r v i c e c h a r g e s / t o t a l I PC
d e m a n d d e p o s i t s ratio a n d to i n c r e a s e t h e int er es t
paid o n tim e a n d savings deposits/to tal tim e and
savin gs d e p o s i t s ratio, rela tive to t h e p a i r e d i n d e ­
p e n d e n t banks. W hile the m e a n chan g e for the
i n t e r e st a n d f ees o n l o a n s /t o t a l l o an s ratio w a s
p o s i t i v e f o r b o t h H C -1 a n d H C - 2, it w a s c o n ­
siderably larger for th e f o rm e r h o ld in g c o m p a n y .
T h i s is c o n s i s t e n t w i t h t h e f i n d i n g t h a t H C - 1's
s u b s i d i a r i e s c o n c e n t r a t e d t h e i r i n c r e a s e d l o a n s in
th e c o n s u m e r category.
B a n k E arn in gs, Expenses, a n d P ro fita b ility
A f f i l i a t i o n w i t h H C -2 i n c r e a s e d all f o u r p e r ­
f o r m a n c e variables related to b a n k earnings,

F E D E R A L R E SE R V E B A N K O F A T L A N T A




a l t h o u g h n o n e s i g n i f i c a n t l y s o . H C -1 s u b s i d i a r i e s
significantly raised their total o p e ra tin g in co m e/to tal
assets ratio a n d d e c r e a s e d th e ir tru st d e p a r t m e n t
i n c o m e / t o t a l assets ratio.
Subsidiaries of e ach h o ld in g c o m p a n y e a r n e d a
l o w e r a v e r a g e r a t e o f r e t u r n o n t h e i r U. S. G o v e r n ­
m e n t securities portfolios, b o th b efo re acquisition
a n d in 1974, t h o u g h d a t a i n d i c a t e t h a t t h e n e g a t i v e
a v e r a g e y i e l d d i f f e r e n t i a l w a s r e d u c e d (in a b s o l u t e
v a l u e ) a f t e r a f f i l i a t i o n . A l s o , H C -1 a n d H C - 2's
af fi li at es e a r n e d a h i g h e r r a t e o f r e t u r n o n t h e i r s t a t e
a n d l o c a l g o v e r n m e n t s e c u r i t i e s p o r t f o l i o in 1974
than their paired i n d e p e n d e n t banks. T hese
i m p r o v e m e n t s in i n v e s t m e n t y i e l d s a r e c o n s i s t e n t
with sta te m e n ts m a d e by e ach ho ld in g c o m p a n y to
t h a t e f f e c t in its a p p l i c a t i o n s t o a c q u i r e t h e s a m p l e
banks.
B a n k s a c q u i r e d b y H C -2 i n c r e a s e d t h e i r a v e r a g e
ratio of total o p e r a t i n g e x p e n s e s to total assets,
c o m p a r e d to t h e i n d e p e n d e n t b a n k s . This i n c r e a s e
m a y b e a t t r i b u t e d t o a s i g n i f i c a n t r i s e in
the acquired banks' o ther operating expenses/total
a s s e t s r a t i o . A f f i l i a t i o n w i t h H C -1 b r o u g h t a
s i g n i f i c a n t l y g r e a t e r i m p r o v e m e n t in o p e r a t i n g

203

TABLE 1

P erform ance Variable

MEAN CHANGES IN THE 1974 AND
BEFORE-ACQUISITION DIFFERENCES
HC-1 Affiliates
Com pared with
Independent Banks

HC-2 Affiliates
Com pared with
In dependent Banks

HC-1 Affiliates
Com pared with
HC-21 Affiliates

Bank Asset S tructure
Cash 4- Due from Banks
Total Assets
U. S. Government Securities
Total Assets
State and Local Government Securities
Total Assets
Real Estate Loans
Total Assets
Consumer Loans to Individuals
Total Assets
Commercial and Industrial Loans
Total Assets
Loans to Farmers
Total Assets
Total L o a n s
Total Assets

-1 .4 1
-1.18 )
-3 .0 8
- 1 .2 0 )

4.63
(1.50)
.59
(.27)
5.09
(2.02)

.54
(.31)
.11

(.29)
6.93
(1.76)

-3 .0 7 **
(-4.04)
-3 .1 9
(-1.38 )
2.43
(1.05)
.57
(.34)
1.42
(1.18)
2.62
(1.14)
1.33
(2.09)
6.71*
(2.58)

-1 .6 7
(2.15)
-2 .2 9
(-.7 1 )
1.83
(1.00)
.20
(.10)

3.70
(1.84)
- .87
(-.4 2 )
- .81
(-1.87 )
.24
(.08)

Average Price of Bank Services
Service Charges
Total IPC Demand Deposits
Interest and Fees on Loans
Gross Loans
Interest on Time and Savings Deposits
Total Time and Savings Deposits

-

.06
.60)
2.01

(2.14)
.40
(.98)

- .19
(-1.61 )
.60
(.79)

-

.15
(1.11)

.94
(1.40)
.37
(1.04)

.02

(.09)

Bank Earnings
Total Operating Income
Total Assets
Trust Department Income
Total Assets
Interest on U. S. Government Securities
Total U. S. Government Securities
Interest on State and Local Gov’t. Securities
Total State and Local Gov’t. Securities

.45
(1.99)
- .03
(-1.56 )

.70*
(2.85)
- .04*

.32
(1.53)

- 2 .2 1 )
.21

(1.15)

(.58)
.19
(.71)

(.47)
.32
(1.47)

.42
(1.36)

(.26)
.29
(1.24)
-4 .4 9
(-1.37)

.87
(1.97)
- .03
(-.1 8 )
.16
(1.39)
.91*
(2.38)
6.64
(1.14)

.36
(1.73)
.27
(1.13)
7.77
(1.74)

.08
(.31)
- .55
(-1.18 )
2.28
(.54)

.43
(1.70)
.87
(2.15)
4.96
(1.49)

-1 .5 3
(-1.05)
-1 .0 8
(-.5 2 )

- 1 .1 9
(-1.41 )
- .72
( - .54)

.32
(.72)
.53
(.91)

- .87
(-.4 2 )
5.53
(1.25)
27.60*
(2.76)
.16
(.45)

.54
(.48)
5.20
(1.55)
31.23*
(2.82)
- .30
(-.5 7 )

- 3 .0 2
(-1.40 )
2.70
(.75)
2.82
(.17)
.53
(1.35)

.01
.21

- .10
(- .2 1 )

.23
(1.09)

Bank Expenses
Total Operating Expenses
Total Assets
Interest on Time and Savings Deposits
Total Assets
Salaries and Wages
Total Assets
Other Operating Expenses
Total Assets
Total Operating Expenses
Total Operating Income

.10

(.29)
.02

-

.42

(- 1 .0 0 )

.04
(.17)
- .09
(-.8 2 )
- .58
(-1.27 )
-1 1 .7 1 *
(- 2 .2 0 )

Bank Profitability
Net Income
Total Assets
Income Before Tax and Security Gains (Losses)
Total Assets
Net Income
Total Equity Capital + All Reserves

Capital S tru ctu re
Total Capital Accounts + Reserves
Total Assets
Total Capital Accounts 4- Reserves
Total Deposits

Other Ratios
Total Time and Savings Deposits
Total Deposits
Total Loans
Total Deposits
Cash Dividends Paid
Net Income
Total Deposits
Total Market Deposits

1 In seven cases, H C -l’s subsidiary was acquired in an earlier year than the subsidiary of HC-2 with which it was paired.
In these instances, the before-acquisition comparison was made in the year prior to H C -l’s subsidiary’s acquisition, the
earlier of the two years.
* Statistically significant at the 5-percent level
** Statistically significant at the 1-percent level
NOTE: t-statistics of the mean differences given in parentheses

204




D E C E M B E R 1975, M O N T H L Y R E V IE W

e f f i c i e n c y (as m e a s u r e d b y t h e o p e r a t i n g e x p e n s e s /
o p e r a t i n g i n c o m e ratio) c o m p a r e d t o af fi l iat i on w i t h
H C - 2.
B e f o r e a c q u i s i t i o n , a f f i l i a t e s o f H C -1 h a d l o w e r
av erag e n et i n c o m e p er dollar of assets or p er dollar
o f c apital a n d l o w e r a v e r a g e i n c o m e b e f o r e taxes
a n d s e c u r i t y g a i n s (losses) p e r d o l l a r o f a s s e t s t h a n
t h e p a i r e d i n d e p e n d e n t b a n k s ; in 1974, all t h r e e
r at i os h a d ri sen.
S u b s i d i a r i e s o f H C -2 h a d l o w e r a v e r a g e n e t
i n c o m e p e r d o lla r of assets o r p e r d o lla r of capital,
b u t hig h er a verage i n c o m e b e f o re taxes an d security
g a i n s (losses) p e r d o l l a r o f a s s e t s t h a n t h e i r p a i r e d
b a n k s b e f o r e a c q u i s i t i o n . In 1974, n e t i n c o m e p e r
d o l l a r o f a s s e t s w a s still l o w e r , b u t l e s s s o ; n e t
i n c o m e p e r dollar of capital w as actually higher;
h o w e v e r , i n c o m e b e f o r e taxes a n d se curi ty gains
(losses) p e r d o l l a r o f a s s e t s h a d d r o p p e d .
C a p ita l Stru ctu re
N either h o ld in g c o m p a n y im p ro v e d th e capital
p o s i t i o n o f its a c q u i r e d b a n k s . B e f o r e a c q u i s i t i o n ,
H C -2 s u b s i d i a r i e s h a d h i g h e r c a p i t a l a c c o u n t s p l u s
reserves p e r dollar of assets or p e r dollar of d eposits

t h a n p a i r e d i n d e p e n d e n t b a n k s , o n a v e r a g e . In 1974,
t h e s e ratios h a d d r o p p e d b e l o w t h o s e of t h e p a i r e d
b a n k s , t h o u g h n o t s i g n i f i c a n t l y s o.
S u b s i d i a r i e s o f H C -1 h a d l o w e r a v e r a g e r a t i o s o f
capital a c c o u n ts plus reserves p er dollar of assets
or per dollar of deposits than paired in d ep en d en t
b a n k s , b o t h b e f o r e a c q u i s i t i o n a n d in 1974.
H o w ev er, t h e negative differential w as m u c h larger
(in a b s o l u t e v a l u e ) in 1974.
O t h e r P e rfo rm a n c e V a ria b le s
Th e only p e r f o r m a n c e variable with a m e a n
c h a n g e s i g n i f i c a n t a t t h e 5- p e r c e n t l e v e l f o r b o t h
h o ld in g c o m p a n i e s w as th e cash d iv id en d p a id /n e t
i n c o m e ratio. This m a y partially e xp la in l o w e r
capital plus re se rves/to tal assets o r total d e p o s i ts
ratios.
In 1974, b o t h h o l d i n g c o m p a n i e s ' a f f i l i a t e s h a d a
significantly h i g h e r t otal lo a n s /t o t a l d e p o s i t s ratio
than their p aired i n d e p e n d e n t banks, on average.
F i n a l l y, h o l d i n g c o m p a n y a f f i l i a t i o n h a d n o s i g n i f i ­
c a n t effect, o n a v e r a g e , o n t h e ratio of total t i m e
a n d savings d e p o s i t s to total d e p o s i t s o r t h e m a r k e t
share of the acquired banks. ■

"The Impact of Holding Company Affiliation on Bank Performance: A Case
Study of Two Florida Multibank Holding Companies" by Stuart C. Hoffman
is the first paper circulated by the Federal Reserve Bank of Atlanta in our
new Working Paper Series. The purpose of this series is to make avail­
able to an audience somewhat more specialized than our Monthly Review
readership the full text of some of our Bank economists' research efforts. Some
papers will represent tentative findings of authors who plan to use this series
as a way of getting further critical comment; others will probably be reprinted
with few, if any, changes in yet another series of Bank publications. W e also
plan to publish in our Monthly Review summaries in varying detail of each
study in the Working Paper Series.
One copy of each working paper will be sent without charge upon request.
In addition, those interested may have their name placed on a subscription
list for future studies in the Series. Such requests should include name, street
address or post office box number, city, state, and ZIP code and should be
sent to the Research Department, Federal Reserve Bank of Atlanta, Atlanta,
Georgia 30303.
Harry Brandt
Vice President and Director of Research

F E D E R A L R E SE R V E B A N K O F A T L A N T A




205

T h e Im p a c t o f D is c o u n t
A c tiv ity o n Fe d e ra l
F u n d s B o rro w in g s
by John M. Godfrey

B a n k s w h ic h are m e m b e rs o f the Federal R ese rve Sy ste m m a y use the d is c o u n t
w in d o w fo r a variety o f re a so n s— sh o rt-te rm a d ju stm e n t credit, se a so n a l
b o rr o w in g , a n d e m e r g e n c y credit. W h e n a b a n k uses the d is c o u n t w in d o w ,
the b a n k 's b a la n c e sheet m a y c h a n g e in o n e o r m o re w ays. Lo an s a n d
se cu ritie s m ig h t increase ; that is, b a n k s m ig h t ex te n d a d d itio n a l c re dit as a
result o f re c e iv in g a c c o m m o d a t io n s at the d is c o u n t w in d o w . O r b a n k s m ig h t
turn to the d is c o u n t w in d o w to offset d e p o sit lo sse s o r to re p la ce o th e r typ es
o f b o rr o w e d fu n d s su c h as Fed fu n d s (in te rb a n k b o rro w in g s).
T o better u n d e rsta n d the b a la n c e sheet a d ju stm e n ts that a c c o m p a n y d is c o u n t
activity, all Sixth D istric t m e m b e r b a n k b o r r o w in g at the d is c o u n t w in d o w
d u r in g 1974 w a s ex am in e d . T h e initial a ssu m p tio n w a s that u n le ss a b a n k 's
d e p o sits d r o p o r cre d it d e m a n d s increase, d is c o u n t activ ity is m o st lik e ly to
serve as a su b stitu te for o th e r typ es o f b o rr o w e d fun ds.
T o test the sig n ific a n c e o f this h y p o th e sis, the w e e k ly a ve rag e d o lla r c h a n g e s
in d is c o u n t w in d o w b o r r o w in g o f in d iv id u a l m e m b e r b a n k s w e re c o m p a r e d
w ith the w e e k ly a ve rage d o lla r c h a n g e s in th o se b a n k s ' net Fed fu n d s p u rc h a se s
(gro ss p u rc h a se s less sales). If a b a n k uses the d is c o u n t w in d o w as a su b stitu te
fo r Fed fu n d s, then there s h o u ld be a h igh n e ga tiv e re la tio n sh ip b e tw e e n
c h a n g e s in d is c o u n t a ctivity a n d net p u rc h a se s o f Fed fu n d s. A n incre a se in
d is c o u n t w in d o w b o r r o w in g s w o u ld b r in g a sig n ific a n t d r o p in net Fed fu n d s
p u rc h ase s, w h ile a d e cre ase w o u ld be a c c o m p a n ie d b y m o re net Fed fu n d s
p urchases.
D u r in g 1974, b a n k s face d g e n e ra lly stro n g lo an d e m a n d s, a n d
d e p o sit in flo w s w e re w eak. A s a result, m a n y b a n k s m a d e h e a v y use o f b o rr o w e d
fu n d s su ch as m o n e y m arke t C D 's a n d Fed fun ds. Interest rates w e re h igh
t h r o u g h o u t the year. In p articu lar, the Fed fu n d s rate e x c e e d e d the d isc o u n t

206



D E C E M B E R 1975, M O N T H L Y R E V IE W

r a t e d u r i n g t h e e n t i r e y e a r a n d , a t m i d - 1974, w a s
m o r e t h a n 500 b a s i s p o i n t s a b o v e it.
Banks h a d c o n s i d e r a b l e in ce n tiv e , t h e n , to use
the d isc o u n t w i n d o w an d re d u c e their use of the
m o r e ex p en siv e Fed funds. To s o m e extent, the
i n t e r e s t r a t e d i f f e r e n t i a l in f a v o r o f t h e d i s c o u n t
w i n d o w d u r i n g t h e p e r i o d m a y b i a s r e s u l t s in
f a v o r o f t h e h y p o t h e s i s . T h e r e is n o q u e s t i o n t h a t
banks use the discount w in d o w m ore w h e n the
s p r e a d is w i d e , a n d o n e n e e d o n l y e x a m i n e p e r i o d s
o f n e g a t i v e r a t e s p r e a d t o s e e this. T h e d o l l a r level
of d is c o u n t b o r ro w i n g m o v e s directly w ith the
s p r e a d o f i n t e r e s t r at es. But w e a r e i n v e s t i g a t i n g
to w h a t e x t e n t t h e s e b o r r o w i n g s se rv e as a s u b s t i t u t e
for Fed f u n d s at indi vi du al b a n k s , n o t e x p la in in g
t h e a m o u n t o f t o t a l b o r r o w i n g s in t h e D i s t r i c t o r
System.
T h e results c o n f i r m t h e h y p o t h e s i s t h a t District
b an k s use a d j u s tm e n t credit from th e Federal
Re se r ve as a s u b s t i t u t e for Fed f u n d s . T h e c h a n g e
i n s u c h b o r r o w i n g s o f Si x t h D i s t r i c t b a n k s e x p l a i n s

40 p e r c e n t

o f t h e c h a n g e in n e t F e d f u n d s p u r c h a s e s
(NFF). A n d t h e r e l a t i o n s h i p f u r t h e r i n d i c a t e s t h a t
a $ 10- m i l l i o n i n c r e a s e ( d e c r e a s e ) in F e d e r a l R e s e r v e
b o r r o w i n g s w o u l d b e a s s o c i a t e d w i t h a $ 7. 7- m i l l i o n
d e c r e a s e ( i n c r e a s e ) in n e t F e d f u n d s p u r c h a s e s .
T h e r e la tio n s h ip s a r e highly significant.
S t a t i s t i c a l l y , t h e r e is, h o w e v e r , c o n s i d e r a b l e
v a r i a t i o n in t h e i m p a c t o f b o r r o w i n g w h e n t h e s e
b a n k s a r e a n a l y z e d b y size. T h e larg er o n e s w o u l d
e x p e c t a b l y h a v e m o r e ability to a d j u s t t he ir ,
a l t e r n a t i v e s o u r c e s o f f u n d s ; t h i s is s u p p o r t e d b y
t h e d a t a . A t l a r g e b a n k s , t h e c h a n g e in b o r r o w i n g s
e x p l a i n s 42 p e r c e n t o f t h e c h a n g e in NFF ( w i t h
a r e g r e s s i o n c o e f f i c i e n t o f 0 . 78). T h i s d r o p s t o 18
p e r c e n t ( a n d a r e g r e s s i o n c o e f f i c i e n t o f 0 .60) a t
t h e m e d i u m b a n k s a n d to 5 p e r c e n t at t h e small
b a n k s ( w i t h a r e g r e s s i o n c o e f f i c i e n t o f 0 . 34).
T h e l a r g e b a n k s e n g a g e in a m a s s i v e w i n d o w
d r e s s i n g t h e l as t w e e k o f t h e y e a r , r e d u c i n g b o t h
b o r r o w i n g s a n d n e t F e d f u n d s p u r c h a s e s in o r d e r
t o s h o w a “ c l e a n e r " b a l a n c e s h e e t . In a d d i t i o n t o
s t a t i s t i c a l r e a s o n s f o r n o t u s i n g d a t a f r o m t h e l as t
w e e k in 1974 ( s e e b o x ) , t h e n , t h e r e a r e a l s o
institu ti ona l r ea so n s . This atyp ical b e h a v i o r d u r i n g
o n e w e e k has a d i s p r o p o r t i o n a t e l y large i m p a c t o n
t h e r e s u l t s o b t a i n e d f r o m t h e r e m a i n i n g 51 w e e k s .
F o r t h e s e r e a s o n s , t h e l as t w e e k o f t h e y e a r w a s
deleted.
E x p e c t a b l y , t h e r e w a s little r e l a t i o n s h i p b e t w e e n

seasonal

b o r r o w i n g s a n d NFF. S e a s o n a l
b o rro w in g s are s u p p o s e d to involve extensions of
credit to b an ks w it h o u t alternative so u rces of funds.
(The r e g re s s i o n results s h o w e d v e r y small
c o e f f i c i e n t s [0 . 06] a n d R2' s [0 . 0004]— t h e p r o p o r t i o n
o f t o t a l v a r i a t i o n in n e t F e d f u n d s a t t r i b u t e d t o
t h e v a r i a t i o n in F. R. b o r r o w i n g — w i t h n o s i g n i f i c a n t
results.) B a n k s t h a t b o r r o w f o r s e a s o n a l p u r p o s e s
d o n o t , a p p a r e n t l y , us e t h o s e b o r r o w i n g s as a
substitute

f o r NFF. T h i s s u p p o r t s

F E D E R A L R E SE R V E B A N K O F A T L A N T A




seasonal

T h i s s t u d y i n c l u d e s all

184 S i xt h

District m e m b e r

banks that b o r r o w e d at the d isc o u n t w i n d o w d u rin g
1974. T h e s e i n c l u d e d 14 l a r g e b a n k s ( d e p o s i t s in
e x c e s s o f $400 m i l l i o n ) , 32 m e d i u m b a n k s ( d e p o s i t s
o f l es s t h a n $400 m i l l i o n b u t o v e r $100 m i l l i o n ) ,
a n d 138 s m a l l b a n k s ( d e p o s i t s o f l es s t h a n $100
million). T h e s e c a t e g o r i e s ar e arb it rar y a n d
c o n s train ed by th e n e e d to have a sufficient
n u m b e r o f o b s e r v a t i o n s in e a c h g r o u p . P e r h a p s
$100 m i l l i o n in d e p o s i t s is t o o m u c h f o r a b a n k t o
b e c o n s i d e r e d small, b u t results i n d ic a te d that
there w o u ld not b e any benefits from subdividing
that category into tw o or m o re additional groups.
T h e s e 184 b a n k s m a d e n e a r l y 2,400 c h a n g e s in
t h e i r b o r r o w i n g s d u r i n g 1974. T h e l a r g e b a n k s
m a d e 289 c h a n g e s , t h e m e d i u m b a n k s , 572, a n d
t h e s m a l l b a n k s , 1, 529.
D a t a a r e d r a w n f r o m t h e f i r s t 51 w e e k s o f 1974;
i n c l u d i n g t h e l as t w e e k in 1974 w o u l d g i v e
significantly d if fe r e n t results th a n t h o s e r e p o r t e d
a b o v e . T h e r e s u l t s f o r 52 w e e k s , a l t h o u g h still
s i g n i f i c a n t , e x p l a i n less a b o u t t h e r e l a t i o n s h i p
b e t w e e n b o r r o w i n g s a n d Fed f u n d s p u r c h a s e s t h a n
d o t h o s e f o r 51 w e e k s . T h e r e g r e s s i o n c o e f f i c i e n t
f o r 51 w e e k s is 0.707 a n d negative w h i l e t h e
c o e f f i c i e n t f o r t h e l a s t w e e k in t h e y e a r is 3.728
a n d positive. T h e C h o w t e s t c l e a r l y i n d i c a t e s t h a t
these tw o coefficients are from significantly
different populations and should be rem o v ed from
t h e f i r s t 51 w e e k s o f t h e y e a r .

b o r r o w i n g s ' bas ic p u r p o s e as c r e d i t for b a n k s
w i t h o u t access to the Fed funds market.
T h e r e is a s i g n i f i c a n t n e g a t i v e c o r r e l a t i o n
b e t w e e n c h a n g e s in b o r r o w i n g s f o r adjustment
c r e d i t a n d c h a n g e s in n e t F e d f u n d s p u r c h a s e s ,
b u t t h e s e results are very dif fe r e n t w h e n a b a n k 's
c h a n g e s in b o r r o w i n g a r e p o s i t i v e a n d w h e n t h e y
a r e n e g a t i v e . W h e n b o r r o w i n g s i n c r e a s e , 44 p e r c e n t
o f t h e d e c r e a s e in NFF is e x p l a i n e d ( a n d t h e
r e g r e s s i o n c o e f f i c i e n t is — 0. 91); b u t w h e n
b o r r o w i n g s d e c r e a s e , o n l y 31 p e r c e n t o f t h e r i se
in NFF ( w i t h a r e g r e s s i o n c o e f f i c i e n t o f — 0. 67) is
e x p l a i n e d . This a s y m m e t r i c a l p a t t e r n su g g e st s t h a t
b a n k s u s e t h e t i m e t h a t t h e y a r e in t h e d i s c o u n t
w i n d o w to m a k e portfolio a d ju s tm e n ts that re d u c e
t h e i r n e e d f o r NFF. T h i s b e h a v i o r is c o n s i s t e n t w i t h
the discount w in d o w 's function of allowing banks
the tim e to m a k e o rderly adjustm ents.
T h e p a t t e r n d e s c r i b e d a b o v e varies, h o w e v e r ,
w i t h b a n k size. Larger b a n k s s e e m to r e d u c e th ei r
NFF m o r e w h e n i n c r e a s i n g b o r r o w i n g s f r o m t h e
Federal Reserve than w h e n red ucin g th e m , b u t the
d i f f e r e n c e is n o t s i g n i f i c a n t . Still, t h e c h a n g e in
b o r r o w i n g s d o e s e x p l a i n m o r e o f t h e c h a n g e in
NFF f o r l a r g e b a n k s t h a n f o r m e d i u m a n d s m a l l

207

a r e t h o u g h t t o d e p e n d h e a v i l y u p o n li abi li ty
management.
A t m e d i u m a n d s m a l l b a n k s , t h e c h a n g e in
b o r r o w i n g s e x p l a i n s m u c h l e s s o f t h e c h a n g e in
NFF, b u t t h e d i f f e r e n c e b e t w e e n i n c r e a s e s a n d
d e c r e a s e s in b o r r o w i n g s is s i g n i f i c a n t . A t t h e
m e d i u m b a n k s , o n l y a b o u t 15 p e r c e n t o f t h e
c h a n g e s in NFF is e x p l a i n e d b y t h e c h a n g e in
borro w in g s. At th e small banks, m o r e of the
c h a n g e in NFF is e x p l a i n e d w h e n b o r r o w i n g s
d eclin e than w h e n th ey increase.
The use of the discount w in d o w , of course,
varies directly with t h e differen ce b e t w e e n the
d i s c o u n t rate a n d alte r n a tiv e b o r r o w i n g costs.
D u r i n g 1974, t h e d i s c o u n t r a t e w a s a l w a y s a t l e a s t
100 b a s i s p o i n t s b e l o w t h e w e e k l y a v e r a g e F e d
f u n d s r a t e ; in J u l y, it w a s o v e r 500 b a s i s p o i n t s
l o w e r . T o t e s t t h e i n f l u e n c e o f t hi s r a t e s p r e a d ,
t h e y e a r 1974 w a s s e p a r a t e d i n t o t w o p e r i o d s .
F r o m t h e w e e k e n d e d M a y 29 t o t h e w e e k e n d e d
S e p t e m b e r 4, t h e d i s c o u n t r a t e w a s 300 o r m o r e
basis p o i n t s u n d e r t h e Fed f u n d s rate; t h e s p r e a d
w a s s m a l l e r in all t h e r e m a i n i n g w e e k s .

ba nks. T h e results in d ic a te th a t large b a n k s use
t h e d i s c o u n t w i n d o w as j u s t a n o t h e r s o u r c e o f
funds an d not to m ak e o th e r portfolio adjustm ents.
T h i s is c o n s i s t e n t w i t h t h e i d e a t h a t t h e s e b a n k s

208




For t h e large b a n k s , w e fi nd a s u r p r i s i n g result.
W h e n t h e r a t e s p r e a d w a s l e s s t h a n 300 b a s i s
points, th e large b an k s w e r e m o s t a p t to substitute
R e s e r v e B a n k b o r r o w i n g s f o r t h e NF F t h a n w h e n
it w a s w i d e r . H o w is it t h a t t h e a g g r e s s i v e l i a b i l i t y
m an ag em en t banks d o not substitute cheaper
d is c o u n t w i n d o w a c c o m m o d a t i o n s for th e m o r e
e x p e n s i v e F e d f u n d s ? T h e a n s w e r m a y l a y in t h e
f i n a n c i a l p r e s s u r e w h i c h d e v e l o p e d in t h e s u m m e r
o f 1974. T h e l a r g e b a n k s d i d n o t s u b s t i t u t e r e s e r v e
b a n k b o r r o w i n g s f or Fed f u n d s b e c a u s e t h e y n e e d e d
both. The form er w ere a co m p lem en t, not a
substitute. Because the d e m a n d for credit was
s t r o n g last s u m m e r , m a n y large b a n k s t h a t b o r r o w e d
m a y h a v e m a d e u s e o f all b o r r o w e d f u n d s s o u r c e s .
W h e n t h e i n t e r e s t r a t e s p r e a d is l a r g e , t h e l a r g e
b an k s clearly s h o w d ifferent b eh a v io r patterns.
D i s c o u n t w i n d o w b o r r o w i n g s e x p l a i n m u c h l es s
o f t h e c h a n g e in N F F — o n l y 26 p e r c e n t w h e n t h e
s p r e a d is w i d e c o m p a r e d t o 54 p e r c e n t w h e n t h e
s p r e a d is n a r r o w . T h e d i f f e r e n c e m a y r e f l e c t t h e
i n t e n s e p r e s s u r e b a n k s w e r e u n d e r , o r it m a y r e f l e c t
closer administration of the d iscount w in d o w .
W h i l e t h e r e w a s n o statistically sign ific an t d i f f e r e n c e
b e t w e e n i n c r e a s e s a n d d e c r e a s e s in b o r r o w i n g s
w h e n the spread w as w ide, the relationship
b e t w e e n b o r r o w i n g s a n d NF F a p p e a r e d t o b e m u c h
w e a k e r w h e n b an k s r e d u c e d their Federal Reserve
borrowings. Then the chan ge explains only 4
p e r c e n t o f t h e c h a n g e i n NFF. ( E x a m i n i n g t h e 42
r e d u c t i o n s in FRB b o r r o w i n g s w h e n t h e s p r e a d w a s
w i d e , w e f i n d s o m e a t y p i c a l b e h a v i o r . O n 12 o f
t h e 42 o c c a s i o n s , b a n k s a l s o r e d u c e d NFF. T h i s
b e h a v i o r is c o n t r a r y t o o u r h y p o t h e s i s t h a t b a n k s
wi l l i n c r e a s e NF F w h e n b o r r o w i n g d e c r e a s e s b u t
m a y b e e x p l a i n e d if b a n k s u s e d t h e d i s c o u n t

D E C E M B E R 1975, M O N T H L Y R E V IE W

w i n d o w to a cq u ire excess reserves to carry o ver
into th e next reserve week.)
A t m e d i u m a n d s m a l l b a n k s , it is a p p a r e n t t h a t
the w ider the spread b etw een the discount and
F e d f u n d s r a t e s , t h e m o r e t h e c h a n g e in FRB
b o r r o w i n g s e x p l a i n s t h e c h a n g e in NFF. T h e
d i f f e r e n c e is n o t s i g n i f i c a n t f o r m e d i u m b a n k s ; it
is f o r t h e s m a l l b a n k s . ( At m e d i u m b a n k s , t h e

c h a n g e in b o r r o w i n g s e x p l a i n s 29 p e r c e n t o f NFF
[ w i t h a r e g r e s s i o n c o e f f i c i e n t o f 0. 73] w h e n t h e
s p r e a d is w i d e a n d 13 p e r c e n t [ w i t h a r e g r e s s i o n
c o e f f i c i e n t o f 0. 5] w h e n n a r r o w . F o r s m a l l b a n k s ,
12 p e r c e n t is e x p l a i n e d d u r i n g w i d e s p r e a d s a n d
2 p e r c e n t w h e n n a r r o w . ) S mal l a n d m e d i u m b a n k s
t e n d t o s u b s t i t u t e d i s c o u n t a c t i v i t y f o r NFF m o r e
w h e n t h e s p r e a d is o v e r 300 b a s i s p o i n t s . ■

This study will be available in early 1976, with complete statistical methodology
and data, as one in the Federal Reserve Bank of Atlanta's Working Paper Series.
Single copies will be available upon request to the Research Department,
Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303.

F E D E R A L R E SE R V E B A N K O F A T L A N T A




209

1 9 7 5 C r o p P r o d u c t io n :
O u t s t a n d i n g in B o t h
th e N a tio n a n d D is tric t
by Gene D. Sullivan
T h e 1975 D i s t r i c t c r o p p r o d u c t i o n f o r e c a s t s a r e f o r r e c o r d h i g h s i n c o r n , s o y b e a n s ,
t o b a c c o , g r a i n s o r g h u m , s u g a r c a n e , a n d r i c e .1 O n l y c o t t o n p r o d u c t i o n wi l l
d e c l i n e su b s t a n t i a l l y f r o m y e a r - a g o levels b e c a u s e f a r m e r s s h a r p l y r e d u c e d
p l a n t e d a c r e a g e in r e s p o n s e t o 1974's p l u n g i n g c o t t o n p r i c e s . U n l i k e l a s t y e a r ,
c r o p p r o d u c t i o n in D i s t r i c t s t a t e s c l o s e l y r e s e m b l e d o u t p u t t r e n d s f o r t h e U. S.
as a w h o l e .
This y e a r 's c r o p p r o d u c t i o n has d r a w n u n u s u a l a t t e n t i o n b e c a u s e o f s h o r t
supplies of several im p o rta n t c o m m o d itie s . Relatively brisk w o r l d w i d e d e m a n d
in t h e f a c e o f 1974's s e v e r e d r o u g h t in t h e M i d w e s t s t i m u l a t e d u n u s u a l l y
i n t e n s e i n t e r e s t in 1975's f e e d c r o p , p a r t i c u l a r l y c o r n . O b s e r v e r s h a v e a n x i o u s l y
a w a i t e d e a c h s u c c e s s i v e U.S.D.A. f o r e c a s t f o r n e w i n d i c a t i o n s o f c r o p p r o d u c t i o n
in 1975.
C o r n : T h e i ni t i al A u g u s t e s t i m a t e o f t h e D i s t r i c t ' s c o r n p r o d u c t i o n w a s a b o u t

9 p e r c e n t a b o v e l as t y e a r ' s l e v e l , w h i c h w a s in t u r n n e a r l y o n e - f i f t h l a r g e r
t h a n t h e 1973 c r o p . In N o v e m b e r , t h e c r o p w a s still e s t i m a t e d a t a r e c o r d
h i g h , t h o u g h it h a d d e c l i n e d s l i g h t l y s i n c e t h e i ni t i a l A u g u s t f o r e c a s t . G e o r g i a
a n d T e n n e s s e e , in t h a t o r d e r , a c c o u n t f o r m o s t D i s t r i c t c o r n p r o d u c t i o n .
D i s t r i c t s t a t e s ' 1975 c o r n p r o d u c t i o n a m o u n t s t o a n i n s i g n i f i c a n t 3.6 p e r c e n t
o f t h e t o t a l U. S. c r o p . U. S. c o r n p r o d u c t i o n is p r o j e c t e d t o b e u p b y o n e - f o u r t h
f r o m 1974's d r o u g h t - r e d u c e d l e v e l .

1974 s t i m u l a t e d D i s t r i c t
1975 f o r e c a s t r e l e a s e d in
o v e r 1974's l e v e l . F a v o r a b l e

Su gar C an e : T h e u n p r e c e d e n t e d l y h i g h s u g a r p r i c e s in
s u g a r c a n e g r o w e r s t o i n c r e a s e p r o d u c t i o n . T h e first

A u g u s t s h o w e d a n e s t i m a t e d i n c r e a s e o f 14 p e r c e n t
w e a t h e r a n d ideal c ircu m stan ces for c a n e p r o d u c t i o n have raised s u b s e q u e n t

’ The data reported in this article refer to the entire areas of Alabama, Florida, Georgia, Louisiana,
Mississippi, and Tennessee, states which are either partially or totally included within the Sixth District.

210



D E C E M B E R 1975, M O N T H L Y R E V IE W

p r o j e c t i o n s s o t h a t N o v e m b e r ' s f o r e c a s t is u p
a n o t h e r 4 p e r c e n t . T h e e n tir e District su g a r c a n e
c r o p is p r o d u c e d in F l o r i d a a n d L o u i s i a n a .
T h e U. S. c r o p is a l s o p r o j e c t e d t o i n c r e a s e
i n 1975 in a p p r o x i m a t e l y t h e s a m e p r o p o r t i o n a s in
t h e Di st ri ct . T hi s Di s t r i c t u s u a l l y a c c o u n t s f o r w e ll
o v e r h a l f o f U. S. s u g a r c a n e p r o d u c t i o n .

Crop Production

U.S.

D IS T R IC T S T A T E S
CORN
1975 F o re c a s t

1975 F o re c a s t

M il.

z

Bu.

R ic e : R i c e h a s s h a r e d in t h e s h a r p g r a i n p r i c e
in cr ease s o v e r t h e pas t t w o o r t h r e e years,
stim u la tin g District f a rm e r s to in c r e a s e a creage.
In 1974, o u t p u t w a s u p o n e - f i f t h f r o m 1973, a n d
t h e A u g u s t p r o j e c t i o n o f 1975' s c r o p w a s u p 6
p e r c e n t f r o m 1974. N o v e m b e r ' s p r o j e c t i o n d e c l i n e d
s l i g h t l y , b u t o u t p u t is still p r o j e c t e d t o r e a c h a

01 *-2 .6
200

100

'M m
/

r e c o r d l ev e l .
T h e U. S. r i c e c r o p h a s a l s o i n c r e a s e d r a p i d l y
s i n c e 1973. A n d 1975's A u g u s t p r o j e c t i o n w a s u p
a p p r o x i m a t e l y 10 p e r c e n t f r o m l as t y e a r ; s u b s e q u e n t
p r o j e c t i o n s r e m a i n u n c h a n g e d . District st ates' rice
p r o d u c t i o n in L o u i s i a n a a n d M i s s i s s i p p i u s u a l l y
m a k e s u p a b o u t o n e - f o u r t h o f t h e U. S. t o t a l .

SU GA R C A N E

C o tt o n : O n e o f t h e m o s t d r a s t i c c h a n g e s in D i s t r i c t
c r o p s in 1975 w a s t h e r e d u c t i o n in e s t i m a t e d
c o t t o n p r o d u c t i o n . In r e s p o n s e t o p l u n g i n g c o t t o n
p r i c e s r e c e i v e d b y f a r m e r s in 1974, D i s t r i c t
a c r e a g e w a s s h a r p l y r e d u c e d . In A u g u s t , p r o j e c t e d
p r o d u c t i o n w as d o w n by m o r e th an a fourth from
1974' s l ev e l . T h e c o t t o n c r o p d e c l i n e d f u r t h e r w i t h
su c c e e d i n g forecasts, so that N o v e m b e r 's estim ate
w a s o n l y t w o - t h i r d s o f last y e a r ' s l evel a n d n e a r l y
40 p e r c e n t b e l o w 1973' s c r o p . M i s s i s s i p p i
a c c o u n t s f o r o v e r o n e - h a l f o f this ye ar 's e x p e c t e d
c o t t o n o u t p u t in D i s t r i c t s t a t e s .
U. S. p r o d u c t i o n is a l s o d o w n f o r t h e s e c o n d
y e a r in s u c c e s s i o n . A u g u s t ' s f o r e c a s t w a s n e a r l y
20 p e r c e n t b e l o w t h e 1974 t o t a l , a n d b y N o v e m b e r
e x p e c t e d p r o d u c t i o n w a s o n l y 70 p e r c e n t o f 1973's
level. D e c l i n i n g S e p t e m b e r a n d O c t o b e r c r o p
f o r e c a s t s r e f l e c t e d d a m a g e t o t h e c r o p in T e x a s
a n d M i s s is s ip p i. Sixth Di s t r i ct s t a t e s p r o v i d e
o n e - f o u r t h o f 1975' s p r o j e c t e d U. S. t o t a l c o t t o n
crop.

RI CE

M il.
C w t.

2 1 .5

■ 1.0* —2.11

i 1 »
/
/

y

i d
19 7 3 1 9 7 4 Aug. Nov.

1973 1 9 7 4 Aug. Nov.

‘ P e r c e n t a g e c h a n g e fro m y e a r-a g o le v e l
‘ P e r c e n t a g e c h a n g e fro m i n it ia l 1 9 7 5 fo r e c a s t

T o b a c c o : T o b a c c o p r o d u c t i o n in D i s t r i c t s t a t e s
j u m p e d b y m o r e t h a n o n e - t h i r d in 1974.
T h e e x p e c t e d c r o p in 1975 w a s e s t i m a t e d f ai r l y
n e a r t h e 1974 c r o p in A u g u s t , a n d s u c c e e d i n g
f o r e c a s t s h a v e s h o w n little c h a n g e . G e o r g i a
p r o d u c e s m o s t o f t h e District's t o b a c c o c r o p ;
T e n n e s s e e is t h e s e c o n d l a r g e s t p r o d u c e r .
U. S. t o b a c c o p r o d u c t i o n i n c r e a s e d a g a i n r a t h e r
s h a r p l y in 1975, r e f l e c t i n g t h e i n c r e a s e in p l a n t e d
F E D E R A L R E SE R V E B A N K O F A T L A N T A




U .S .
D IS T R IC T S T A T E S
O TH ER
I"-'
|

G E O R G IA
I F L O R ID A
M IS S IS S IP P I

[ =

□

K \ M

TEN N ESSEE
L O U IS IA N A
A LA B A M A

211

a c r e a g e . A u g u s t ' s c r o p e s t i m a t e w a s o v e r 10
p e r c e n t a b o v e t h e 1974 o u t p u t . P r o d u c t i o n h a s
d e c l i n e d o n l y slightly w i t h s u c c e e d i n g forec asts ,
m a k i n g 1975 a n o t h e r y e a r o f r e c o r d t o b a c c o o u t p u t .
T h e D i s t r i c t a c c o u n t s f o r a b o u t 15 p e r c e n t o f t h e

Crop Production
D IS T R IC T S T A T E S

U .S.
COTTON

total crop.
1975 F o re c a s t

^

B a le s

G ra in S o r g h u m : A l t h o u g h g r a i n s o r g h u m is a m i n o r

I

I

Ir

t

t

TOBACCO
B il .
Lb s.

w T

2.0
1.5

c r o p i n D i s t r i c t s t a t e s , its p r o d u c t i o n h a s i n c r e a s e d
s h a r p l y f o r t h e p a s t t h r e e y e a r s . T h e 1974 o u t p u t
w a s u p a p p r o x i m a t e l y 14 p e r c e n t f r o m 1973;
A u g u s t ' s e s t i m a t e f o r t h e 1975 c r o p r o s e a g a i n
, b y 18 p e r c e n t . M i s s i s s i p p i , G e o r g i a , a n d T e n n e s s e e
con tin u ed to be the m ajor contributors to the
District c r o p o u t p u t .
U. S. o u t p u t o f g r a i n s o r g h u m d r o p p e d s h a r p l y
i n 1974, f o l l o w i n g a s e v e r e d r o u g h t in t h e p l a i n s
s t a t e s . T h e A u g u s t 1975 f o r e c a s t s h o w e d a r e c o v e r y
o f n e a r l y 30 p e r c e n t f r o m l a s t y e a r ; h o w e v e r , t h i s
still d i d n o t r e t u r n p r o d u c t i o n t o 1973' s l ev e l .
S u b s e q u e n t m o n t h l y p r o j e c t i o n s o f t h e t o t a l U. S.
c r o p d e c l i n e d w i t h N o v e m b e r ' s e s t i m a t e , falling 5
p e r c e n t b e l o w t h e i ni t i al A u g u s t f o r e c a s t . T h e
District's p o r t i o n o f total grain s o r g h u m o u t p u t
(1.0 p e r c e n t ) is p e r h a p s l e a s t o f all t h e n a t i o n ' s
c r o p s c o n s i d e r e d in t hi s anal ys is.

1.0
0.5

m
GRAIN SO RGH UM

1973 19 7 4 Aug. Nov.

1973 1974 A ug. Nov.

• P e r c e n t a g e c h a n g e fro m y e a r- a g o le v e l
‘ P e r c e n t a g e c h a n g e fro m in i t i a l 1 9 7 5 f o r e c a s t

■ ■ I
■

■

M

B

EUD

G E O R G IA

I

F L O R ID A

H H H

M IS S IS S IP P I

S o y b e a n s: In r e s p o n s e t o
0

1974' s

extrem ely high

p r i c e s , t h e s o y b e a n a c r e a g e in D i s t r i c t s t a t e s
i n c r e a s e d s h a r p l y t h i s y e a r . I ni t i al e s t i m a t e s in
A u g u s t s h o w e d a n e x p e c t e d i n c r e a s e in p r o d u c t i o n
o f 20 p e r c e n t . S u b s e q u e n t m o n t h l y f o r e c a s t s h a d
r e m a i n e d fairly s t a b l e unt il N o v e m b e r ' s u p w a r d
r e v i s o n . In t h e D i s t r i c t s t a t e s , M i s s i s s i p p i a c c o u n t s
f o r m o s t o f t hi s y e a r ' s e x p e c t e d i n c r e a s e ; T e n n e s s e e
a n d Louisiana also g r o w significant portio n s of
the crop.
U. S. p r o d u c t i o n is u p f r o m 1974's d r o u g h t r e d u c e d l e v e l , b u t t h e c r o p is n o t r e c o r d l a r g e a s
in t h e D i s t r i c t . In A u g u s t , e s t i m a t e d p r o d u c t i o n
w a s a b o u t e q u a l t o t h e 1973 c r o p , a n d N o v e m b e r ' s
forecast has b e e n increased by 4 p e r c e n t from
t h a t l ev e l . D i s t r i c t s t a t e s ' s o y b e a n p r o d u c t i o n
a c c o u n t s f o r 15 p e r c e n t o f t h e t o t a l U. S. c r o p .
T h o u g h still a r e l a t i v e l y m i n o r p o r t i o n o f t h e
t o t a l , t h e D i s t r i c t ' s s o y b e a n p r o d u c t i o n is m u c h
m o r e s i g n i f i c a n t t o t h e U. S. t o t a l t h a n its c o r n
production.

U .S .
D IS T R IC T S T A T E S
O TH ER

212




I

I

1

1 A LA B A M A

TEN N ESSEE
L O U IS IA N A

O r a n g e s : A l m o s t all o f t h e D i s t r i c t ' s o r a n g e c r o p
is g r o w n in F l o r i d a . P r o d u c t i o n r e a c h e d a n o t h e r
r e c o r d h i g h in 1974, a n d t h e i ni t i al f o r e c a s t o f
1975' s p r o d u c t i o n s h o w s o n l y a s l i g h t d e c l i n e

D E C E M B E R 1975, M O N T H L Y R E V IE W

f r o m l as t y e a r . S o , b a r r i n g u n f a v o r a b l e w e a t h e r ,
F l o r i d a is e x p e c t e d t o h a r v e s t a n o t h e r n e a r - r e c o r d
o r a n g e crop.

Crop Production

Florida usually a c c o u n ts for m o r e than
t h r e e - f o u r t h s o f t h e n a t i o n ' s o r a n g e c r o p , s o U. S.
p r o d u c t i o n t e n d s t o f o l l o w t h e sta te 's t r e n d . Total
U. S. o u t p u t is e x p e c t e d t o d e c l i n e s l i g h t l y t h i s
y e a r f r o m 1974' s h i g h ; it m a y w e l l b e t h e s e c o n d
largest c r o p o n record, h o w ev er.

D IS T R IC T S T A T E S

U.S.
SO YBEAN S

1975 F o re c a s t

1975 F o re c a s t
B il .
Bu.

2E

1.6

P e ca n s: P e c a n s a r e n o t u s u a l l y t h o u g h t o f a s a
m a j o r c r o p in t h i s a r e a , b u t t h e y a r e i m p o r t a n t ,
p a r t i c u l a r l y in G e o r g i a w h i c h a c c o u n t s f o r n e a r l y
half of District sta tes' p r o d u c t i o n . T h e p e c a n
cr o p usually fluctuates sharply fro m year to year,
reflecting w e a t h e r variations th at especially
in f lu e n c e t h e yields o f w ild varieties.
P r o d u c t i o n f el l s h a r p l y in 1974. It is e x p e c t e d t o
r e c o v e r s o m e w h a t t h i s y e a r , t h o u g h it wi l l n o t
r e a c h t h e l a r g e 1973 c r o p . T h e O c t o b e r f o r e c a s t
o f 1975 p r o d u c t i o n w a s r e v i s e d d o w n w a r d f r o m
S e p t e m b e r ' s level, largely b e c a u s e o f h u r r i c a n e
d a m a g e in A l a b a m a a n d G e o r g i a .

.8

1973 1 9 7 4 Aug. Nov.

the

1973

0

ORANGES
M il.
Tons

M il.
Tons

10

10
-0.8*

District sta tes p r o d u c e well o v e r half of th e
U. S. c r o p . T h u s , t o t a l U. S. p r o d u c t i o n fel l s h a r p l y
i n 1974, e v e n t h o u g h t h e c r o p o u t s i d e t h i s a r e a
s h r a n k v e r y l i t t l e f r o m 1973' s l e v e l . T h e f o r e c a s t
o f t h e 1975 c r o p is u p , p a r t l y ' b e c a u s e p r o d u c t i o n
h a s i m p r o v e d in s t a t e s o u t s i d e t h e Sixth District.
H o w e v e r , t h e U. S. c r o p w i l l a p p a r e n t l y n o t r e a c h

1973 19 7 4 Aug. Nov.

J

5

VI

0

level.
PECANS
M il.
Lb s.

2 40

T h e Effect o n In c o m e
A l t h o u g h p r o d u c t i o n o f m o s t c r o p s in t h e D i s t r i c t
wi l l b e e v e n b e t t e r t h a n in 1974, it p r o b a b l y wi l l n o t
r e s u l t i n h i g h e r g r o s s i n c o m e s . In O c t o b e r , c r o p
p r i c e s a v e r a g e d 14 p e r c e n t b e l o w 1974 l ev e l s . T h u s ,
price d eclin es have m o r e th an offset p r o d u c t i o n
g a i n s f o r m o s t c r o p s . T h i s is p a r t i c u l a r l y t r u e f o r s o y ­
b e a n p ro d u c e r s, w h o s e one-fifth larger c r o p faces a
m arket price reduction of m o re than one-third
f r o m t h e fall o f 1974. O r a n g e s a r e t h e m a j o r
ex c e p tio n to th e p attern, since recen t prices have
a v e r a g e d 16 p e r c e n t h i g h e r t h a n a y e a r a g o , e v e n
t h o u g h p r o d u c t i o n is e x p e c t e d t o b e u n c h a n g e d .
O n b a l a n c e , c r o p f a r m e r s ' i n c o m e s wi l l still b e
u n usually high by historical standards. N et i n c o m e of
c r o p p r o d u c e r s h a s b e e n s q u e e z e d b y b o t h ri si ng
c o s t s a n d f a l l i n g p r i c e s , b u t in t h i s r e g i o n a t l ea s t ,
it is l i k e l y t o r e m a i n a b o v e l e v e l s e x p e r i e n c e d in
all y e a r s p r i o r t o 1974. ■

F E D E R A L R E SE R V E B A N K O F A T L A N T A




160

80

0
1973 1 9 7 4 Sept. Oct.

1973 1 9 7 4 Sept. Oct.

♦ P e rc e n ta g e c h a n g e fro m y e a r - a g o le v e l
‘ P e r c e n t a g e c h a n g e fro m in i t i a l 1 9 7 5 f o r e c a s t

U .S .
D IS T R IC T S T A T E S
O TH ER
f ------ ~1 G E O R G IA

TEN N ESSEE
L O U IS IA N A

F L O R ID A
H

i

M IS S IS S IP P I

1

1 A LA B A M A

213

mmmmMWmmmm
B A N K IN G S T A T IS T I C S

D E P O S IT S * *

C R E D IT *

T o ta l

^

—

—

-

/V

_

N et D e m a n d

10

-

T im e

_
S a v in g s

^

""

A/

A/

/V

I I

I I I I I I I I I I I
1973

I I
1974

I .............I I I I I
1975

I I I I I I l I I I I
1973

I i I i i i i i i i i
1974

I I I I I I I I II I
1975

'Figures are for the last Wednesday of each month.
**Daily average figures.

LATEST MONTH PLOTTED: November

S I XTH D I S T R I C T B A N K I N G N D T E 5

R e a l E s t a t e L e n d in g In c re a s e s
S IX T H

REA L ESTA TE LO AN S
D IS T R IC T C O M M E R C IA L B A N K S

% Change
June 1975
From
June 1970

June 1970
Amount
(million $)

June 1975
Amount
(million $)

.

4,717

11,869

+

152

A n n is to n -G a d s d e n
B ir m in g h a m
. .
D o th a n
. . . .
M o b i l e ..............
M o n tg o m e ry
. .

529
52
199
61
98
119

1,186
111
49 3
121
2 30
231

+
+
+
+
+
+

124
113
148
98
135
94

1,596
159
661
165
71

4,418
429
1,798
461
175

+
+
+
+
+

177
170
172
179
146

54 0

1,555

+

188

241
149

484
34 3

+
+

101
130

73
19

104
37

+
+

42
95

DISTRICT

. .

ALABAMA

. . .

F L O R ID A ..................
J a c k s o n v ille
. .
M i a m i ..............
O rla n d o
. . . .
P e n sa c o la
. . .
T a m p a-St.
P e te rsb u rg . .

M ISSISSIPPI* . . .
Jackson
. . . .
H a ttie sb u rg -L a u re l
M e rid ia n . . .
N a tc h e z . . . .

GEORGIA

June 1970
Amount
(million $)

June 1975
Amount
(million $)

1,062
573
80
58
124
101
126

2,455
1,477
141
122
260
2 13
242

. . . .

A tla nta
. . . .
A u g u s ta
. . . .
C o lu m b u s
. . .
M a c o n ..............
Savannah
. . .
S o u th G e o rgia

LOUISIANA*

. . .

A le x a n d ria L a k e C h a r le s
B a to n R o u g e .
La fa ye tte-lb eria H oum a
. .
N ew O rle a n s .

+ 131
+ 158
+ 76
+ 110
+
+
+

110
111
92

6 68

1,622

+

143

.
.

75
153

12 4
3 66

+
+

65
139

.
.

136
304

311
821

+
+

1 29
170

621
123
154
294
50

1,704
38 0
3 81
836
107

+
+
+
+
+

174
209
147
184
114

TEN N ES SEE* . . . .
C h a tta n o o g a
.
K n o x v ille
. .
N a sh v ille
. .
T ri-C itie s
. .

% Change
June 1975
From
June 1970

.
.
.
.

iiiiii

llllllii
M p li

in c lu d e se v e ra l c o u n tie s s u r r o u n d in g ce ntra l cities. B o u n d a rie s of s o m e a re a s in c lu d e c o u n tie s in tw o states. S o m e data are partly estim ate d.
^ R e p re se n ts that p ortion of the state in the S ix th D istrict.

214



D E C E M B E R 1975, M O N T H L Y R E V IE W

Bank lend in g

g re w faster at c o m m e r c ia l

banks

in
Real Estate Loans*

t h e S o u t h e a s t t h a n in t h e n a t i o n a s a w h o l e f r o m
m i d -1970 t o m i d - 1975, a n d a m a j o r r e a s o n w a s t h e
i n c r e a s e in r e a l e s t a t e m o r t g a g e l e n d i n g . O v e r t h e s e
f i v e y e a r s , t o t a l l o a n s in t h e D i s t r i c t i n c r e a s e d f r o m
up
98 p e r c e n t .
$ 20.0 b i l l i o n t o $ 39.5 b i l l i o n ,
N a t i o n a l l y , b a n k l o a n s r o s e o n l y 74 p e r c e n t .
O n e r e a s o n District loan s in c r e a s e d m o r e rapidly
is t h a t b a n k s h e r e e x p a n d e d r e a l e s t a t e m o r t g a g e
l o a n s a t n e a r l y twice t h e r a t e a s in t h e n a t i o n as

Bil.$
All Real Estate Loans

a w h o l e . In t h e S o u t h e a s t , b a n k r eal e s t a t e l o a n s
r o s e $ 7.2 b i l l i o n , u p o v e r 150 p e r c e n t ; n a t i o n a l l y ,
t h e y w e r e u p s l i g h t l y l es s t h a n

90

percent.

W h i l e s u c h a n i n c r e a s e in r e a l e s t a t e l o a n s is
n o t u n e x p e c t e d for a rapidly d e v e lo p in g area such
a s t h e S o u t h e a s t , it h a s b r o u g h t a b o u t a r e l a t i v e
s h i f t in r eal e s t a t e l o a n s a t S o u t h e a s t e r n b a n k s ,
c o m p a r e d t o t h e n a t i o n . In m i d - 1970, all t y p e s
o f r e a l e s t a t e l o a n s c o m p r i s e d 24.7 p e r c e n t o f b a n k s '
t o t a l l o a n s in t h e U. S., b u t o n l y 23.5 p e r c e n t o f
D i s t r i c t b a n k l o a n s . By m i d - 1975, h o w e v e r , r eal
e s t a t e l o a n g r o w t h in t h e S o u t h e a s t h a d r e v e r s e d
t h i s r e l a t i o n s h i p . D i s t r i c t b a n k s h a d 30.1 p e r c e n t
o f t h e i r l o a n s s e c u r e d b y r e a l e s t a t e in c o n t r a s t t o
26.4 p e r c e n t in t h e U. S.
T h e s h i f t in e m p h a s i s t o r eal e s t a t e l o a n s c a m e
at a tim e w h e n banks w e r e receiving strong c o n ­
s u m e r t i m e d e p o s i t inflows. M u c h of t h e s e d e p o s i t
g a i n s c a m e in t h e f o r m o f t h e l o n g e r m a t u r i t y b u t
m o r e e xp en sive deposits. T hese d e po sits allo w ed
b a n k s t o s e e k t h e h i g h e r y i e l d s a v a i l a b l e o n r eal
estate lending. To o b tain h igher returns, b a n k s
increased their financing of short-term , b u t highri sk c o n s t r u c t i o n l o a n s a n d l o n g - t e r m r eal e s t a t e
m o r t g a g e l o a n s . N o w , s o m e r eal e s t a t e l o a n s h a v e
fallen into a r e d u c e d o r n o n i n t e r e s t - a c c r u i n g c a t e ­
gory. T h e e x p e c t e d s ta b le a n d high re tu rn f ro m
r eal e s t a t e c r e d i t h a s p r o v e d e l u s i v e .
All t y p e s o f r eal e s t a t e l o a n s in t h e D i s t r i c t h a v e
g r o w n r a p i d l y d u r i n g t h e last five y e a r s . S t r o n g
g r o w t h h a s c o m e f r o m t r a d i t i o n a l f o r m s o f r eal
e s t a t e loans, s u c h as si ng le fam ily h o u s i n g , w h i c h
i n c r e a s e d n e a r l y 160 p e r c e n t . N e a r l y o n e - h a l f o f
t h e D i s t r i c t ' s g r o w t h o c c u r r e d a t b a n k s in t h e M i a m i ,
Atlanta, an d th e Tampa-St. P etersburg areas. Resi­
dential h o m e m o rtg a g es have p r o b a b ly given banks
th e stable yield that th ey w e r e seeking. Defaults
from h o m e m ortgages d o not se em to have b een
u n u s u a l l y e x c e s s i v e d u r i n g t h e last t w o ye ar s.
M o s t o f t h e b a n k s ' p r o b l e m s h a v e b e e n in m u l t i ­
f a m i l y a n d c o m m e r c i a l r eal e s t a t e l o a n s , s u c h a s
th o se for business properties,
office
buildings,
hotels and motels, other com m ercial in c o m e -p ro ­
d u c in g properties, an d u n d e v e l o p e d land. T hese
loans a c c o u n t e d for nearly o n e -h a lf of th e g ro w th
in r e a l e s t a t e l o a n s d u r i n g t h e l as t f i v e y e a r s . D i s t r i c t
ban k s e x t e n d e d m o r tg a g e credit to th o se types of
p ro p erties that are n o w the m o st overbuilt an d
that are causing m ost of the defaults and interrup­
t i o n s in l o a n r e p a y m e n t s .
F E D E R A L R E SE R V E B A N K O F A T L A N T A




------ ———■
G-’ 7 0

6-’ 71
12-’ 70

6 -72
12-’ 71

Multi-Family
6 -’7 3

12 -'7 2

6-’7 4
12-’ 7 3

6 -'7 5
12-’ 74

■ Figures a re fo r a ll S ix t h D i s t r ic t c o m m e r c ia l b a n k s

W i t h i n t h e Di st ri ct , real e s t a t e l o a n g r o w t h h a s
varied m u c h m o r e th a n th at of total b a n k loans.
In F l o r i d a a n d T e n n e s s e e , f o r e x a m p l e , r eal e s t a t e
l o a n s r o s e 175 p e r c e n t ; in M i s s i s s i p p i t h e y a d v a n c e d
100 p e r c e n t . T o t a l l o a n s v a r i e d m u c h l ess. In A l a ­
b a m a , Florida, Louisiana, a n d T e n n e s s e e , t h e y w e r e
u p s l i g h t l y m o r e t h a n 100 p e r c e n t ; in M i s s i s s i p p i ,
t h e y r o s e 80 p e r c e n t .
M u l t i f a m i l y real e s t a t e l o a n s v a r i e d m o s t a m o n g
t h e s t a t e s . In F l o r i d a a n d T e n n e s s e e , t h e s e l o a n s
r o s e a b o u t 200 p e r c e n t in s h a r p c o n t r a s t t o a n
a v e r a g e o f l e s s t h a n h a l f t h a t r a t e in t h e r e s t o f
t h e District.
Florida b a n k s
l e d t h e D i s t r i c t in
g r o w t h of total residential m o r t g a g e loans, w h ile
T e n n e s s e e b a n k s h a d b y f ar t h e m o s t r a p i d g r o w t h
in c o m m e r c i a l r eal e s t a t e l o a n s .
The rapid g row th of b an k loans for p e r m a n e n t
f i n a n c i n g o f r eal e s t a t e h a s u n d o u b t a b l y c o n t r i b u t e d
t o o v e r b u i l d i n g in m a n y p a r t s o f t h e S o u t h e a s t .
L o a n s t h a t b a n k s w e r e e a g e r t o m a k e in p r e v i o u s
years reflected a general
optimism
about
this
r e g i o n ' s f u t u r e . If t h e S o u t h e a s t h a d l i v e d u p t o
those expectations, banks w o uld have had m any
s o u n d r eal e s t a t e l o a n s o n t h e i r b o o k s . N o w , h o w ­
ever, the region's g ro w th has slo w e d , causing m a n y
d e v e lo p e r s to d efault o n interest an d loan principal
p a y m e n t s . A n d n o w h e r e h a v e m o r e p r o b l e m r eal
estate loans surfaced than w h e r e loan gro w th was
previously strongest.
J O H N

M.

G O D F R E Y

215

IN D E X

F O R

1 -1 2

Ja n u a ry

J u ly

1 0 5 -1 1 6

Fe b ru a ry

1 3 -2 8

A u g u st

1 1 7 -1 3 2

M arch

2 9 -4 8

S e p te m b e r

1 3 3 -1 5 6

A p r il

4 9 -6 8

O c to b e r

1 5 7 -1 7 6

M ay

6 9 -8 4

N ovem ber

1 7 7 -2 0 0

Ju n e

8 5 -1 0 4

D ecem ber

2 0 1 -2 2 0

A G R IC U L T U R E
B en efits o f 1974's Bad W e a t h e r A c c r u e d to District Farmers
G e n e D . S u lliv a n , F e b ru a ry , 18

A D e c a d e o f G r o w t h in S o u t h e a s te r n A gricu ltura l Loans
G e n e D . S u lliv a n , N o v e m b e r , 182

Grain S u p p l i e s a n d F o o d Prices
G e n e D . S u lliv a n , N o v e m b e r , 178
A N e w R e c o r d W h e a t Crop : W ill It R e d u c e Farm I n c o m e ?
Gene

1 9 7 5

D . S u lliv a n , A u g u s t, 12 4

1975 C r o p P r o d u c t i o n : O u t s t a n d i n g in B oth t h e N a tio n a n d
District
G e n e D . S u lliv a n , D e c e m b e r , 21 0

Planting C h a n g e s to R e d u c e Farm P r o d u c t i o n E xp en d itu res
G e n e D . S u lliv a n , M a y , 76

B a n kin g S t r u c tu r e in t h e Sixth District States
B. F ra n k K in g , S e p te m b e r , 1 3 4

B a nking S t ru c tu r e in T e n n e s s e e
B. F ra n k K in g , O c t o b e r , 1 69

B usines s Loans M a d e b y Sixth District Banks:
Is t h e Q u a lita tive I n f o r m a t i o n C o n s iste n t?
W illia m N. C o x , III, a n d W . F. M a c k a ra , M a r c h , 36

Case S t u d y in Florida: P e r f o r m a n c e o f H o l d i n g C o m p a n y
Banks
S tu a rt G . H o ffm a n , D e c e m b e r , 2 02

T h e I m p a c t o f D i s c o u n t A c t iv it y o n Federal Fun ds
B o rro w in gs
Jo h n M . G o d f r e y , D e c e m b e r , 2 0 6

U n i f o r m Price a n d B a n k in g M a r k e t D e l i n e a t i o n
C h a r le s D . S a lle y , J u n e , 86

W h a t D o Banks P ro d u ce?
ANNOUNCEMENTS
3, 1 2 7 , 1 9 6 , 2 0 5 , 209

W . F. M a c k a ra , M a y , 70

B A N K IN G

MARKETS

B a n kin g M a rkets a n d F utur e Entry
BANK A N N O U N CEM EN TS
3, 1 2 7 , 1 9 6 , 205

C h a r le s D . S a lle y , M a r c h , 30

U n i f o r m Price a n d B a n k i n g M a r k e t D e l i n e a t i o n
C h a r le s D . S a lle y , J u n e , 86

B A N K I N G (see a ls o B A N K I N G N O T E S )

B A N K IN G

A c c o u n t i n g for Loan C ha r g e-offs

Busines s Loans in R e c e ss io n

Jo h n M . G o d fr e y , A u g u s t, 1 18

B a n k in g M a rkets a n d Future Entry
C h a r le s D . S a lle y , M a r c h , 30

B a n kin g S t r u c tu r e in A la b a m a
B. F ra n k K in g , S e p te m b e r , 13 7

B a n k in g S t r u c tu r e in Florida
B. F ra n k K in g , S e p te m b e r , 142

B a n k in g S t r u c tu r e in Geo rgia
Jo se p h E. R o ss m a n , Jr., S e p te m b e r , 14 8

B a n k in g S t r u c tu r e in Louisiana
D a v id D . W h it e h e a d , III, O c t o b e r , 158

B a n k in g S t ru c tu r e in M ississippi
S tu a rt G . H o ffm a n , O c t o b e r , 1 64

6
Digitized for2 1FRASER


NO TES

W illia m N . C o x , III, Ju ly , 112

C o n s u m e r Loan D e l i n q u e n c i e s Rise
B rian D . D itt e n h a f e r , M a r c h , 4 4

L iq u id ity Pressures I n te n sify
Jo h n M . G o d f r e y , F e b ru a ry , 24

1974: L o w e r B ank Earnings
Jo h n M . G o d f r e y , J u n e , 1 0 0
A N o t e o n M a n u f a c t u r i n g Loans
Jo s e p h E. R o ss m a n , Jr., M a y , 8 0

Real Estate L e n d i n g Increases
Jo h n M . G o d f r e y , D e c e m b e r , 2 1 4

R e b u i l d i n g B ank L iqu id ity
Jo h n M . G o d f r e y , A u g u s t, 1 2 8

D E C E M B E R 1975, M O N T H L Y R E V IE W

BANKIN G STRUCTURE

E C O N O M IC C O N D IT IO N S IN THE U.S.

Banking Struc ture in Alabama

T h e E co no m y's P erf o rm an ce in Early 1975

B. Frank King, September, 137

Harry Brandt, April, 50

Banking Structure in Florida

B. Frank King, September, 142
Banking Struc tu re in Ge orgia

Joseph E. Rossman, Jr., September, 148
Banking Structure in Louisiana

FARM LOANS
A D e c a d e of G ro w t h in Southeastern Agricultural Loans

Gene D. Sullivan, November, 182

David D. Whitehead, III, October, 158
Banking Structure in Mississippi

Stuart G. Hoffman, October, 164
Banking Structure in the Sixth District States

B. Frank King, September, 134

FO O D PRICES
Grain Su pp lie s an d F o o d Prices

Gene D. Sullivan, November, 178

Banking Structure in T e n n e sse e

B. Frank King, October, 169

GRAIN
Grain Supplies an d F o o d Prices

BANK LENDING

Gene D. Sullivan, November, 178

A c c o u n t in g for Loan Charge-offs

John M. Godfrey, August, 118
Business Loans M a d e by Sixth District Banks:
Is the Qualitative Information C o n sist e n t ?

William N. Cox, III, and W. F. Mackara, March, 36

BOARD OF DIRECTORS
20-21

BO RROW INGS
T h e Im pa ct of D is co u n t Activity on Federal Funds
Borrowings

John M. Godfrey, December, 206

CROP PRO D U C TIO N
1975 C r o p P ro d u c tio n : O utst an ding in Both the Nation
an d District

Gene D. Sullivan, December, 210

H O LD IN G COMPANIES
C ase S tudy in Florida: Per form an ce of H o lding
C o m p a n y Banks

Stuart G. Hoffman, December, 202

PERSONAL IN C O M E
T he Sixth District Share of Personal In c o m e in Mississippi,
Louisiana, an d T e n n e sse e

William N. Cox, III, August, 126

RECESSION
T he C urre n t Re ce ssion in Perspe ctiv e (spe ech )

Arthur F. Burns, Chairman, Board of Governors, Federal
Reserve System, June, 94

SIXTH DISTRICT BANKING NOTES
see BANKING NOTES

DEBITS TO D E M A N D DEPOSIT ACCO UNTS
11, 27, 47, 67, 83, 103, 115, 131, 155, 175, 199, 219

SIXTH DISTRICT STATISTICS
10, 26, 46, 66, 82, 102, 114, 130, 154, 174, 198, 218

D ISC O U N T A C TIVIT Y
The Im pact of D is co u n t Activity on Federal Funds
Bo rro wing

John M. Godfrey, December, 206

DISTRICT BUSINESS C O N D IT IO N S
12, 28, 48, 68, 84, 104, 116, 132, 156, 176, 200

UNEM PLO YM ENT
U n e m p lo y m e n t in 1975 an d 1976: What D o Rules of
T h u m b Predict?

William D. Toal, April, 56
Wages an d U n e m p lo y m e n t : A State Analysis of the
Phillips C urv e

William D. Toal, July, 106

E C O N O M IC A N D FIN A N C IA L C O N D IT IO N S
IN THE SOUTHEAST
1974: A Year of Re ce ssio n

William D. Toal and staff economists, January, 2

WAGES
Wages and U n e m p lo y m e n t : A State Analysis of the
Phillips C urv e

William D. Toal, July, 106

E C O N O M IC C O N D IT IO N S IN SIXTH DISTRICT
STATES

W H EAT

Louisiana an d the Energy Shortage

A N e w R e c o r d W h eat C r o p : Will It R e d u c e Farm In c o m e ?

Joseph E. Rossman, Jr., February, 14

FEDERAL RESERVE BANK OF ATLANTA




Gene D. Sullivan, August, 124

217

Sixth District Statistics
S e a s o n a lly A d ju s te d

(A ll d a ta a re in d e x e s , u n le s s in d ic a t e d o t h e r w is e .]
Latest Month
1975

One
Two
Month Months
Ago
Ago

One
Year
Ago

Unemployment Rate
(Percent of Work Force)*** . . . Oct.
Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Oct.

8.8
40.2

170.0
372
167
177

FINANCE AND BANKING
Member Bank L o a n s ........................ Oct.
Member Bank D ep osits........................ Oct.
Bank D ebits**.......................................Oct.

269
226
296

FLORIDA

SIXTH DISTRICT
INCOME AND SPENDING
Manufacturing Payrolls ................ .
Farm Cash Receipts ........................ .
C r o p s ............................................ .
Livestock........................................ .
Instalment Credit at Banks*/' (Mil. $)
New Loans .................................... .
Repayments ................................ .
EMPLOYMENT AND PRODUCTION
Nonfarm Em ployment....................
Manufacturing ............................
Nondurable G oods....................
Food.......................................
Textiles ................................
Apparel ................................
Paper ....................................
Printing and Publishing . .
Lbr., Wood Prods., Furn. & Fix.
Stone, Clay, and Glass . . .
Fabricated Metals . . .
M achinery........................
Transportation Equipment
Transportation
Trade . . .

State and Local Government
Farm Employment............................
Unemployment Rate
(Percent of Work Force) . . . .
Insured Unemployment
(Percent of Cov. Em p.)................
Avg. Weekly Hrs. in Mfg. (Hrs.) . .
Construction C ontracts*................
Cotton Consumption**................
Petroleum Production */** . . .
Manufacturing Production . . .
Nondurable Goods ................
Food ................................
T e x t i le s ............................
Apparel ............................
Paper ................................
Printing anb Publishing
C h e m ic a ls........................
Durable G o o d s ........................
Lumber and Wood . . . .
Furniture and Fixtures . .
Stone, Clay, and Glass . .
Primary M e ta ls................
Fabricated Metals . . . .
Nonelectrical Machinery
Electrical Machinery . . .
Transportation Equipment
FINANCE AND BANKING
Loans*
All Member B a n k s ................
Large Banks ............................
Deposits*
All Member B anks....................
Large Banks ............................
Bank Debits*/**............................

Oct.
Sept.
Sept.
Sept.

218




186.4
177
152
185

182.5
268
418
205

Oct.
Oct.

677.7
620.3

672.4r
669.9r

632.0
646.2

569.9
596.6

. Oct.
. Oct.
. Oct.
. Oct.
. Oct.
. Oct.
. Oct.
. Oct,
. Oct.
. Oct.
. Oct.
. Oct.
• Oct.
- Oct.
. Oct.
• Oct.
• Oct.
. Oct.
. Oct.
. Oct.
• Oct.
• Oct.
• Oct.
• Oct.
• Sept.

130.6
111.6
112.4
103.4
106.5
113.7
107.6
124.0
108.8
110.5
99.1
115.5
101.3
121.6
144.8
103.6
137.3
123,2
120.9
134.4
150.0
156.8
107.6
143.5
90.5

130.2
110.8
110.8
101.4
105.1
111.9
106.6
123.5
107.3
110.6
98.7
116.0
102.1
121.1
144.8
104.8
137.0
122.5
120.1
134.7
149.4
155.7
108.0
143.6
91.7

129.7
109.6
109.7
100.5
103.4
110.0
105.8
122.7
107.1
109.3
97.3
115.7
101.8
120.3
143.0
103.2
136.8
121.4
121.6
134.7
149.2
154.7
107.4
145.0
95.6

134.4
117.3
115.0
104.4
109.7
114.7
113.7
129.8
113.7
120.3
105.1
128.6
115.9
132.1
164.6
105.1
140.4
148.8
126.5
139.2
154.2
155.9
105.6
138.9
83.1

■Oct.

Manufacturing Payrolls ....................Oct.
Farm Cash R eceip ts............................Sept.
EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing ....................
Nonmanufacturing................
C onstruction....................
Farm Employment....................
Unemployment Rate
(Percent of Work Force)***
Avg. Weekly Hrs. in Mfg. (Hrs.)

EMPLOYMENT
Nonfarm Employment
Manufacturing . .
Ncnmanufacturing .
Construction . .
Farm Employment . .
Unemployment Rate
(Percent of W'ork Fo
Avg. Weekly Hrs. in Mf

9.5

9.8

6.2

5.0
40.1
167
150
184
64.4
91.4
144.0
145.6
126.5
142.4
128.1
138.0
127.8
161.8
141.5
146.4
132.6
144.3
101.2
112.1
145.6
227.7
134.9

5.0
39.8
150
125
175
61.4
91.8
142.4
144.1
128.0
140.3
124.5
134.2
127.8
160.2
140.0
142.9
127.3
141.4
100.0
111.4
147.1
227.1
133.7

2.9
39.7
202
149
254
92.1
100.8
152.7
152.5
134.1
146.6
135.4
138.8
133.8
173.8
152.6
154.0
149.2
156.1
110.8
120.8
157.6
258.3
137.3

. Oct.
Oct.

263
240

263
239

264
242

278
265

. Oct.
. Oct.
Oct.

223
191
314

222
192
322

223
194
307

215
188
289

Manufacturing ....................
Nonmanufacturing
. . . .
C onstruction....................
Farm Employment....................
Unemployment Rate
(Percent of Work Force)*** .
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans* . . . .
Member Bank Deposits* . . .
Bank Debits*/** ....................

190.4
162

MISSISSIPPI
INCOME
Manufacturing Payrolls . . . .
Farm Cash R eceip ts................

197.9
187

195.8
219

201.0
286

FINANCE AND BANKING
nber Bank Loans .
nber Bank Deposits
k Debits** . . .

One
Year
Ago
5.9
40.2

267
224
293

192.2
106

264
225
282

264

186.0
411

188.3
241

210
259

147.0
119.2
152.4
133.3
100.1

147.2
1,17.2
152.9
134.7
99.7

148.3
117.4
154.3
133.4
107.8

156.4
126.5
162.2
194.9
93.5

Oct.
Oct.

11.8
40.3

11.6
39.8

11.5
39.8

7.3
40.0

285
247
324

285
249
322

286
249
318

314
245
309

Manufacturing P ayrclls........................Oct.
Farm Cash R eceipts............................Sept.

9.5

One
Two
Month Months
Ago
Ago

Oct.
Oct.
Oct.
Oct.
Sept.

FINANCE AND BANKING
Member Bank L o a n s............................Oct.
Member Bank D eposits........................Oct.
Bank Debits** ....................................Oct.

4.8
40.2
193
145
240
73.5
93.7
146.0
147.3
128.4
145.3
129.6
140.5
128.9
161.8
144.3
150.3
138.2
145.3
102.5
113.3
145.5
231.9
140.1

. Oct.
. Oct.
. Oct.
. Oct.
. Oct.
. July
. Oct.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.
. Sept.

ALABAMA
INCOME
Manufacturing Payrolls . . . .
. Oct.
. Sept.
Farm Cash R eceip ts............................Sept
EMPLOYMENT
Nonfarm Employment . . .
Manufacturing ................
Nonmanufacturing
. . .
C onstruction................
Farm Employment................

190.0
137
145
179

Latest Month
1975

181,0
237

173.5
112

170.1
229

168.6
180

Oct.
Oct.
Oct.
Oct.
Sept.

126.3
104.8
136.2
118.8
102.3

125.6
103.7
136.0
117.7
112.2

124.4
101.9
134.7
116.1
109.3

130.1
109.1
139.8
140.9
97.1

Oct.
Oct.

8.8
40.4

8.8
40.1

9.2
39.2

5.2
39.4

Oct.
Oct.
Oct.

240
193
366

242
194
403

244
192
354

263
190
323

Oct.
Sept.

174.5
128

177.9
352

171.7
259

164.2
164

Oct.
Oct.
Oct,
Oct.
Sept.

119.6
119.0
104.4 . 104.1
122.8
122.0
100.2
99.1
71.4
75.4

117.5
103.9
120.4
97.1
80.9

118.8
105.9
121.5
99.7
87.7

LOUISIANA
INCOME
Manufacturin
Farm Cash R
EMPLOYMENT

Oct,
Oct.

8.7
38.8

8.2
39.7

8.9
39.1

7.3
40.0

Oct.
Oct.
Oct.

241
207
279

243
202
279

244
205
280

257
195
244

Oct.
Sept.

223.2
70

218.2
201

210.1
279

199.0
150

Oct.
Oct.
Oct.
Oct.
Sept.

129.0
126.2
130.2
116.2
67.8

128.1
125.4
129.3
110.0
64.9

127.3
122.8
129.3
103.2
75.8

131.2
130.5
131.5
138.2
76.3

EMPLOYMENT
.
.
.
.
.

Oct.
Oct.
Oct.
Oct.
Sept.

121.7
111.2
126.5
136.9
110.1

120.9
110.9
125.6
136.7
119.9

121.7
109.9
127.1
134.7
118.9

122.6
117.0
125.2
139.4
98.2

Manufacturing
Nonmanufacturing
Construction
Farm Employment .

DECEMBER 1975, MONTHLY REVIEW

Latest Month
1975

One
Two
Month Months
Ago
Ago

One
Year
Ago

Unemployment Rate
(Percent of Work Force)*** .
Avg. Weekly Hrs. in Mfg. (Hrs.)
FINANCE AND BANKING
Member Bank Loans*. . . . .
Member Bank Deposits* . . .
Bank Debits*/**........................

4,6

. Oct.
. Oct.
. Oct.

. Oct.
Sept.

257
225
267

256
223
281

261
226
267

258
214
264

188.0
115

186.0
163

181.6
167

182.4
148

Latest Month
1975

One
Two
Month Months
Ago
Ago

Oct.
Oct.
Oct.
Oct.
Sept.

127.4
110.8
136.7
132.3
101.3

126.4
110.0
136.6
130.9
97.1

125.4
109.0
134.5
130.7
96.7

130.0
119.2
136.1
145.6
93.4

. . . Oct.
. . . Oct.

8.9
40.6

9.1
40.5

9.3
40.3

5.8
39.7

FINANCE AND BANKING
Member Bank Loans* . . . . . . . Oct.
Member Bank Deposits* . . . . . . Oct.
Bank Debits*/**........................ . . . Oct.

271
218
273

267
217
268

272
218
267

271
206
269

EMPLOYMENT
Nonfarm Employment . . . .
Manufacturing ....................
Nonmanufacturing
. . . .
C onstruction....................
Farm Employment....................
Unemployment Rate
(Percent of Work Force) . .
Avg. Weekly Hrs. in Mfg. (Hrs.)

**Daily average basis

for entire six states
***Seasonally adjusted data supplied by state agencies.
Note: All in d exes: 1 9 6 7 = 1 0 0 .

tPreliminary data

.
.
.
.
.

.
.
.
.
.

.
.
.
.
.

r-Revised

One
Year
Ago

N.A. Not available

Sources: Manufacturing production estimated by this Bank; nonfarm, mfg. and non mfg. 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 Div., McGraw-Hill Information Systems Co.; pet. prod., U.S. Bureau of
Mines; 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.
'Data benchmarked to June 1971 Report of Condition.
NOTE: All employment data have been revised to reflect updated seasonal factors.

Debits to Demand Deposit Accounts
In s u re d

C o m m e r c i a l B a n k s in t h e S i x t h

D is t r ic t

(In T h o u s a n d o f D o lla rs )

Oct.
1975

Sept.
1975

Oct.
1974

Percent Change
Year
to
Oct.
date
1975
10 mos.
from
1975
from
Sept. Oct.
1975 1974 1974

4.995.976
115,521
459.642
1,284.278
864,557
293,456

4.676.193
112.189
431.139
1.357,555
719.734
257.760

+ 6
+ 2
+ 1
+ 11
+ 10
+ 6

+ 13
+ 5
+ 8
+ 5
+ 32
+ 21

+ 12
+ 3
+ 9
+ 15
+ 21
+ 13

885,125
486,643

818,853
429,589

849,265
469,361

+ 8
+ 13

+ 4
+ 4

+ 6
+ 5

. 2,006,199
415,288
291,178
. 5,507,199

1,743,354
378,481
257,860
5,332,250

2.C75.812
370,739
286.960
4,973,441

+ 15 - 3 + 10 + 12 +
+ 13 + 1 + 3 + 11 +

419,751
. 7,693,450
. 1,727,354
754,454
541,839
. 1,374,309
. 4,381,173
. 1,087,098

393,296
7,206,281
1,602,485
643,580r
497,869
970,446
4,208,882
1,006,333

403,203
7,796,720
1,557,454
542,219
563,274
958,476
4,118,052
1,244,638

+ 7 + 4
+ 7 - 1
+ 8 + 11
+ 17 + 39
+ 9 _
+ 42 + 43
+ 4 + 6
+ 8 -13

Birmingham . . . . 5,295.585
Gadsden
. . . .
118,183
463,720
Huntsville . . . .
M o b ile ................ . 1,420,435
Montgomery . . .
950,575
312.439
Tuscaloosa . . .
Bartow-LakelandWinter Haven
Daytona Beach
Ft. LauderdaleHollywood . . .
Ft. Myers . . . .
Gainesville . . .
Jacksonville . . .
MelbourneTitusville-Cocoa
Miami
................
O rlando................
Pensacola . . . .
Sarasota
. . . .
Tallahassee . . .
Tampa-St. Pete . .
W. Palm Beach

.4

5
8
3
1

- 2
- 2
+ 4
+ 13
- 3
+ 13
+ 3
- 8

199,836
A lb a n y ................
220,528
A tla n ta ................ . 22,968,416 23,670,979
614,000
Augusta................
612,865
501,686
501,419
Columbus . . . .
957,127
Macon ................
911,181
1,096,493
Savannah . . . . . 1,104,940

220,940
19,591,189
772,234
512,454
835,890
764,447

+ 10
- 3
- 0
+ 0
- 5
+ 1

- 0 - 3
+ 17 + 11
-21 - 3
- 2 + 10
+ 9 + 9
+45 + 62

Alexandria . . . .
331,883
Baton Rouge . . . . 2,357,878
Lafayette . . .
459,472
313,878
Lake Charles . .
New Orleans . . . . 5,962,506
Biloxi-Gulfport . .
328,026
Jackson ................
1,849,055

331,649
2,218,900
430,706
306,196
5,820,305
294,872
1,840,565

302,190
1,992,298
378,350
311,736
5,391,182
285,162
1,889,777

+ 0
+ 6
+ 7
+ 3
+ 2
+ 11
+ 0

+ 10
+ 18
+ 21
+ 1
+ 11
+ 15
- 2

+ 11
+ 19
+ 29
+ 10
+ 13
+ 13
+ 2

Chattanooga . . . . 1,333,272
Knoxville . . . . . 1,749,895
Nashville . . . . . 4,729,525

1,335,369
1,517,861
4,192,476

1,343,836
2,062,368
4,405,511

- 0
+ 15
+ 13

_ i
-15
+ 7

- 6
-17
+ 9

130,913

126,451

+ 13

+ 17

+ 8

)THER CENTERS
Anniston . . . .

Oct.
1975

Sept.
1975

248,959
94,763

230.446
97,062

Bradenton . . .
Monroe County .
O c a la ................
?t. Augustine
St. Petersburg .
Tampa . . . .

191.130
91.303
223 762
43.554
. 1.045.086
. 2.315.582

177,566
87,158
205,257
43,684
1,018,250
2,233,437

222,091
127.565
203.069
45.590
1,010,335
2,111.519

Athens . . . .
Brunswick . . .
Dalton . . . .
Elberton . . . .
Gainesville . . .
Griffin . . . .
LaGrange . . .
Newnan . . . .
R o m e................
Valdosta
. . .

181,964
123,126
204.466
34.665
194.471
75.603
45.690
51.468
222.581
134,590

188,212
124,716
202.036
31.624
182.161
77,225
41.136
46.566
196,603
107,751

172,201
112,195
193.589
24,602
178.782
86,494
38.027
52,606
147.285
125,023

- 3
- 1
+ 1
+ 10
+ 7
- 2
+ 11
+ 11
+ 13
+ 25

+ 6
+ 10
+ 6
+ 41 +20
+ 9 +10
-1 3 -12
+ 20 -13
- 2 -10
+ 51 + 15
+ 8 + 4

20,682
25.801
86,846
91,511
29,202
68,529

20,524
16.997
101,146
82,505
29,046
60,698

18,700
24,814
106.891
67.700
27,793
42,851

+ 1
+ 52
-14
+ 11
+ 1
+ 13

+ 11
+ 4
-1 9
+ 35
+ 5
+ 60

.

172.893
93.346
148.180
70,733

158,239
96,140
139,689
63.065

138.051
85,703
142,965
68.117

+ 9 + 25
- 3 + 9
+ 6 + 4
+ 12 + 4

.
. . .

160,272
110.520
63.585

163,817
79,970
97,253

161.500
132,093
58.343

- 2
+ 38
-35

140.124
201.883
389,390

136,067
190.942
347,325

161,102
167.032
343,657

+ 3 -13
+ 6 + 21
+ 12 + 13

Dothan
Selma

STANDARD METROPOLITAN
STATISTICAL AREAS'

148,472

. . . .
. . . .

Abbeville . .
Bunkie . . . .
Hammond . .
New Iberia .
Plaquemine .
Thibodaux . .

.

Hattiesburg .
Laurel
. . . .
Meridian . .
Natchez . . . .
PascagoulaMoss Point
Vicksburg . .
Yazoo City .

. . .

.
.
.
.

Bristol . . . .
Johnson City . .
Kingsport . . .

(STRICT TOTAL . . . 99,793.502
Alabama . ,
Florida . . . .
Georgia . . . .
Louisiana
.
Mississippi .
Tennessee- .

.

.

. .
. .
. .

12,167,943
. 30,061,411
. 30.794,901
. 11.253.244
. 3,943,951
. 11.572,052

Oct.
1974

Percent Change
Year
to
Sept.
date
1975
10 mos.
from
1975
Sept. Oct. from
1975 1974 1974

219,423 + 8 + 13
87,656 - 2 + 8
+
+
+
+
+

8 -1 4
5 -2 8
9 + 10
0 - 4
3 + 3
4 + 10

+10
+ 17
+ 18
+ 27

+ 8
+ 62

- 1
-16
+ 9

- 0
+ 13

95,806.815r 91,285,374

+ 4

+ 9

11.456,092
27.676,170r
31.424.210
10.861,819
3,912,731
10,475,793

+ 6
+ 9
- 2
+ 4
+ 1
+ 10

+ 15 + 14
+ 5 + 0
+ 14
+ 13
+ 2
+ 2

10,580.133
28,598.388
27,002,607
9,924,638
3.861,107
11.318,501

iConforms to SMSA definitions as of December 31, 1972.
-District portion only,
r-revised
Figures for some areas differ slightly from preliminary figures published n “Bank Debits and Deposit Turnover" by Board of Governors of the Federal Reserve System.

FEDERAL RESERVE BANK OF ATLANTA




219

District Business Conditions
1967=100

1967=100

—

Seas. Adj.

Seas. Adj.
Mfg. Production

250

Nonfarm Employment
Construction Contracts
200
Unemployment Rate

300

200
Average Weekly Hours
225

175

Farm Cash Receipts
125

I I I I I I I I I I I
1973

1974

1975

1973

*Seas. adj. figure; not an index
Late st plotting: October, except mfg. production and farm cash receipts, Sept.

Moderate economic growth continues as 1975 draws to a close. Consumer spending, aided by increased
instalment borrowing from banks, rose slowly. Em ployment expanded slightly. Falling prices dampened
the gains in farm cash receipts. Construction activity increased, and deposit growth at financial institutions
strengthened.
Employment rose m oderately again in October,
but the unem ploym ent rate remained unchanged.
Nonfarm em ploym ent gained strength from manu­
facturing, which showed increases in all nondurable
industries. Even though construction jobs increased
for the second month, some momentum was lost
in Florida to this still sluggish sector. Nonmanufac­
turing was strengthened because an upturn in the
transportation and public utilities sector offset a
two-month downturn in government jobs. Both
factory hours and earnings rose again this month,
strengthening their upward trends.
Consumer expenditures grew more slowly during
September, as the stimulus from tax rebates d im in ­
ished. Registrations of new cars increased again, and
department store sales expanded slightly. As of
September, the gains throughout 1975 in income
of manufacturing employees were greater than the
increase in consumer prices, indicating growth in
real income. Consumer instalment credit outstand­
ing at banks increased sharply in October for the
first time in over a year. This change prim arily re­
flected a large gain in credit extensions for nonauto
consumer goods.
October's downturn in prices received by farm ­
ers for most commodities continued into Novem ­
ber, according to prelim inary data. Bumper crop
harvests and weakening export demand depressed

most crop prices, and gains in farm cash receipts
were small despite increased production. Although
cattle prices rose slightly, hogs and broilers have
sold at sharply low er prices, reflecting consumer
resistance to high retail prices. U. S. spot prices of
foodstuffs were also falling rapidly in mid-November, as prices declined for both the livestock and
products group and the fats and oils group. The spot
market price index of foodstuffs was down over 25
percent from the year-ago level.
Construction activity expanded in O ctober on the
strength of gains in the nonresidential sector. A
jum p in the value of nonresidential contracts over­
came a dip in residential contracts. Mortgage rates
tended to stabilize after several months of gradual
increase. Deposits flowed into savings and loan as­
sociations at record rates in October. Preliminary
data indicate record inflows continued
into
November.
M em ber bank deposits advanced strongly during
early November, follow ing considerable weakness
in October. A small part of the gain in savings de­
posits reflected newly opened business savings ac­
counts. Bank lending has weakened, and some
large banks had adopted a 7V4-percent prim e rate
by late November. Holdings of U. S. Governm ent
securities posted a strong gain through midmonth.

Note: Data on which statements are based have been adjusted whenever possible to eliminate seasonal influences.

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DECEMBER 1975, MONTHLY REVIEW