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MONTHLY REVIEW FEDERAL RESERVE BANK IN THIS ISSUE: • Banking Structure and Deposit Concentration in the Southeas • What Makes for Bank Profitability? • District Business Conditions OF A T L A N T A JULY 1969 B a n k in g S tru c tu re C o n c e n t r a t io n and in t h e D e p o s it S o u th e a s t This country’s commercial banking system pro vides a wide range of different services in meet ing th e ' financial needs of individuals and busi nesses. Individual banks, however, vary widely in size and the types of services they offer. Many smaller banks located in predominantly rural and suburban areas or small towns serve mainly the traditional deposit and credit needs of customers in their immediate locales. The large banking institutions, while providing these same func tions, also service the very large corporate busi ness customers with complex and rapidly chang ing national and international financial needs. Within this diverse spectrum of banking activity, there are roles for banks of all sizes and with varying degrees of specialization. In that part of the Southeast including the states lying wholly or partly in the Sixth Federal Reserve District,1 for example, most of the more than 1,800 commercial banks are relatively small and primarily serve limited geographical areas. On the other hand, a high percentage of total bank deposits are held by comparatively few banks. The structure of banking, i. e., the number, relative size, and location of the banks, also varies among the states within this region. Among other economic factors, the population, sources and level of personal income, and industry mix of each state may all influence its banking struc ture and the types of banking services offered. In addition, differences in banking structure are also affected by variations in state banking regu lations on the expansion and consolidation of banks. For example, while each of the District states places some limitations on branch banking, the degree of the restrictions varies. And, the state laws governing the formation and expansion of bank holding companies also differ. The effect of these differences on bank per formance is uncertain. However, economic theory suggests, and most economists agree, that the performance of the banking system is probably closely related to its structure. This article de scribes some of the major elements in the bank ing structure of the Southeast as a benchmark against which suggested modifications or subse quent changes can be compared and evaluated. Monthly Review, Vol. LIV, No. 7. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. 1Alabama, Florida, Georgia, Louisiana, Mississippi, and Ten nessee. 86 M N LY R IEW O TH EV T a b l e I B a n k s S ix t h a n d D e p o s i t s S t a t e s District a n d U. A ll N u m b e r Banks 1961 of 1967 1961 238 Florida 313 447 Louisiana 190 222 Mississippi 191 188 Tennessee 291 295 266 States United States 1,585 13,127 13,526 1961 1 9 6 1 a n d 1 9 6 7 Banks T im e and Savings Deposits 1 9 6 :r o f d o l l a r5 ; 3 , 5 5 2 . 91 , 3 4 6 . 8 8,504.0 3,225.3 2,028.7 4 , 52 9 ■0 1961 1967 Savings and T i m e as P e r c e n t of Total Dep os it s 1961 1967 • 649.0 1,524.1 32.5 42.9 1,535.0 3,994.8 32.2 47.0 2 , 8 2 54. 0 4 6 5,196.7 1,977.2 2,977.6 848.4 2,219.1 30.0 42.7 2,891.4 4,754.8 2,076.3 2.807.1 815.0 1,947.7 28.2 41.0 913.2 1.358.2 363.1 882.0 28.4 39.4 2,525.4 36.2 47.1 13,093.1 31.7 44.2 1,276.3 2,240.2 3 , 2 0 55.,63 6 3 . 6 2,046.4 2 , 1.2 8 83 1,159.1 1,822 2 91,66,1925.52. 0 11,585.2 16,519.0 5,369.6 223,583.2 358,701.0 144,223.1 182,886.0 79,360.1 Bank Structure and Economic Change Banking in the Southeast, as in the nation as a whole, is characterized by a large number of re latively small banking units and relatively few larger banks. The banks in this region tend to be smaller, on average, however. This region’s average deposits of $16.3 million per bank in 1967 were considerably lower than the national average of $26.5 million. On the other hand, the number of banks in creased measurably in the Southeast between mid-1961 and mid-1967, accounting for a major part of the change in the number of banks nation wide. Out of a national increase of 399 com mercial banks during this period, 237 were in the District states, with Florida accounting for the largest part of the gain. Overall, total bank deposits also expanded at a faster pace in this region than for the entire nation between mid-1961 and mid-1967. Georgia’s increase in total deposits outpaced the other Dis trict states, while deposits in Alabama, Florida, and Mississippi grew at about the region’s aver age. Louisiana and Tennessee, on the other hand, lagged the overall District’s deposit growth rate but exceeded the U. S. rate of gain. Although demand deposits still constituted the major deposit source for banks in 1967, the rate of growth in time and savings deposits from mid1961 to mid-1967 was much more rapid. This latter category grew more than three times, as fast as demand deposits at District states’ banks dur ing this period. Consequently, about 45 percent of the total deposits of all commercial banks in the six District states as a group were in the time JU 1 6 LY 9 9 J u n e D e m a n d Deposits 1967 1,995.8 4,760.3 362 District Commercial Total Deposits A la ba ma Georgia Insured S., 175,815.0 35.5 49.0 and savings category in June 1967, up from about 32 percent six years earlier. Nationally, time and savings deposits of commercial banks rose from about one-third of total deposits in 1961 to nearly one-half in 1967. The gains in total deposits (demand and time and savings) at District banks between 1961 and 1967 were influenced by favorable overall eco nomic conditions. Personal and per capita in come both rose steadily in the Southeast, in creased more rapidly than in the nation during this period, and provided an enlarging source of funds for banks. Georgia, where deposits grew the most rapidly among District states between 1961 and 1967, also experienced the largest percentage gain in personal and per capita incomes. (A closer rela tionship between income and deposit changes in each District state over a longer time span was discussed in the April issue of this Review.)2 Whatever the underlying factors affecting over all deposit growth, the form this growth takes in a particular state depends largely on the state’s laws governing bank expansion. Florida, for ex ample, where branching is prohibited altogether except on certain military installations, expe rienced the sharpest increase in the number of banks between 1961 and 1967 and has more banks than any of the other District states. Bank hold ing companies are allowed in Florida, however, and the growth in the number of banks in holding companies (as a percent of all banking 2“Bank Deposit Growth and Income Changes in the South east,” Month ly Review, April 1969, pp. 50-53. 87 offices) increased from 4 percent at the end of 1961 to nearly 20 percent at year-end 1967. Dur ing the same period, the share of deposits con trolled by holding companies also increased sharply from about 8 percent to 34 percent of total bank deposits. Formation and expansion of registered bank holding companies in Georgia are not allowed under current statutes, although those existing prior to this restriction accounted for about 17 and 35 percent of Georgia’s banking offices and total deposits, respectively, in 1967. Tennessee, the only other District state with registered bank holding companies, has hardly expanded at all in this regard during the current decade. While the recent banking expansion in Florida has followed the holding company route and the establishment of new banks, the other District states (where limited branching within certain areas is generally permitted) have experienced sharp increases in the number of branches. And, in each state, the number of banking offices (in dividual banks plus branch banks) expanded faster than population. Consequently, average population per bank office has declined from 7,407 in 1961 to 6,277 in 1967. Florida had the highest average population per bank office in 1967, about 13,000, and Mississippi had the low est, only about 5,000 per office. Deposit Concentration The average population per bank office, the num ber of banks, and changes in the level and com position of deposits are only part of the bank structure picture. Another important element, particularly as it affects competition between banks and their performance, is the distribution of deposits and banking activity among banks of various sizes. Concentration ratios, or shares of various deposit categories held by the few largest banks, are often used as a gauge of the competi tive environment. It is interesting to note what the relationship is between the size distribution of banks and the concentration of total bank deposits in this region. We have arranged the banks in each state in descending order according to their total deposits, and then further grouped them into various size rankings (see Table I I ) . This grouping confirms our earlier statement that a high percentage of total deposits are held by relatively few banks. For example, in 1967 for all six states combined, 5 percent of the banks, or less than 100 banks, held about 50 percent of total deposits, and as few as 15 percent of the largest banks accounted for two-thirds of all bank deposits. On the other hand, the smallest 50 percent of the banks in the six states accounted for only about 10 percent of T a b l e II P e r c e n t a g e B y S i z e S h a r e s R a n k i n g of o f T ot al B a n k s , D e p o s i t s J u n e P e r c e n t Distribution 1 9 6 7 of Total Deposits All I n s u r e d C o m m e r c i a l B a n k s Size R a n k i n g of B a n k s Largest Next Next Next Next Next Smallest 1 4 1 0 1 0 2 5 2 5 2 5 A la ba ma % % % % % % % 26.2 25.8 15.4 8.0 Florida 15.3 18.8 21.0 4.5 46.4 26.7 12.1 21.1 7.3 8.2 1 8 .131 . 2 11.0 9 .6 . 2 2 6.3 2.6 2.5 14.3 12.9 12.9 7.9 3.7 Sixth District United L o u iG se io ar ng ai a Mississippi T e n n e s s eStates e 28.126.1 33.7 12.7 7.7 16.1 10.6 5.2 9.9 2.1 4.8 24.1 14.5 17.6 11.1 States 26.6 19.2 22.5 17.0 9.5 5.9 7.7 3.8 1.6 13.7 7.4 3.4 * B a n k i n g Organizations Largest Next Next Next Next Next Smallest ♦ Consolidates panies. 1 4 1 0 1 0 2 5 2 5 2 5 24.0 20.6 18.5 10.8 15.0 7.4 3.7 % % % % % % % individual 88 subsidiary banks of b a n k 28.1 51.7 13.6 9.8 6.4 10.3 10.3 5.0 5.9 2.4 holding c o imn p a h ei etsh r e e tn District states w it h 30.1 23.8 34.9 12.3 8.7 7.3 12.5 6.8 3.1 2.0 registered 52.8 18.6 11.1 5.3 7.1 3.6 15 1.5 holding c o M N LY R IEW O TH EV In both 1961 and 1967, 15 percent of the larg est District banks held about 65 percent of total deposits at all insured commercial banks. the total deposits with the smallest 25 percent holding only 3 percent. Nationally, the largest 15 percent of the banks held over 80 percent of all deposits in 1967, and the 25 percent at the small er end of the scale held less than 2 percent. The accompanying chart shows bank deposit concentration in another form. This technique uses the entire distribution of banks on a cumula tive basis instead of only the extremes. For each of the size rankings of banks, the percentage of total banks they represent (vertical scale) is plotted against the percentage of total deposits they hold (horizontal scale). If all the banks were of equal size, these plotting would fall along the dashed diagonal line on the chart. Since they are not, the actual distribution falls below the diagonal line. The degree of concentration varies from state to state, as inspection of the charts for each state shows. Hence, a summary measure known as the Gini Coefficient was calculated in order to compare the concentration of one state’s demand, time and savings, and total deposits with deposits in the other states (see Table I I I ). Compared with total deposits, demand deposits in each state are more highly concentrated (as indicated by a Percent of Banks higher coefficient); time and savings deposits are less highly concentrated. Total deposits were the most highly concen- D e p o s i t C o n c e n t r a t i o n o f A ll I n s u r e d C o m m e r c i a l B a n k s Prcn oBns e e t f ak AAAA LBM GOG ERIA TNESE ENSE MS S P ISISIPI 0 2 0 4 0 6 0 8 0 10 0 Prc n oTta Dpsits e e t f o l eo JULY 1 6 99 89 T a b l e D e p o s i t S ix t h District All a n d III C o n c e n t r a t i o n District Insured (Gini S tates, Commercial 1 9 6 1 a n d 1 9 6 7 Banks Coefficient*) T im e State Total 1967 1961 A la ba ma Florida Georgia Louisiana Mississippi Tennessee District S t a t e s .35 .18 Deposits 1961 .30 .44 .34 .18 .41 .31 D e m a n d Deposits .16 .43 .33 .21 .35 1961 .29 .10 .29 .35 .39 .30 1967 .31 .20 .47 .37 .23 .50 .35 .20 and Savings Deposits .23 .42 .45 .33 .29 .10 . .31 .19 .14 .35 .24 . . * T h e G i n i C o e f f i c i e n t is a s u m m a r y m e a s u r e of t h e d ifference b e t w e e n a n e q u a l distribution of t h e b a n k s b y a c t u a l d i s t r i b u t i o n . O n t h e c h a r t s , t h i s is m e a s u r e d a s t h e difference between the equal-distribution diagon t h e c u r v e d l i n e d e f i n i n g t h e a c t u a l d i s t r i b u t i o n . T h e c l o s e r t h e c u r v e d l i n e is t o t h e s t r a i g h t l i n e , i. e., t h e m o r e b a n k s a r e in s i z e a n d t h e l e s s c o n c e n t r a t e d a r e b a n k d e p o s i t s , t h e s m a l l e r t h e G i n i C o e f f i c i e n t ; t h e f u r t h e r t a p a r t , t h e l a r g e r t h e c o e f f i c i e n t . T h e a c t u a l c o n c e n t r a t i o n is m e a s u r e d b e t w e e n z e r o ( a b s o l u t e e q u a l i t y ) a n d o i n e q u a l i t y ) . In t hi s w a y , t h e c o n c e n t r a t i o n o f d e p o s i t s in o n e s t a t e c a n b e c o m p a r e d d i r e c t l y w i t h t h a t o f a n o trated in Georgia and Tennessee. Florida’s de posits were the least concentrated when individ ual banks were considered separately, but when consolidated into the appropriate holding com pany groups (see Table I I ), the concentration was about equal to that of the other states. In every state, the smallest 25 percent of the banks or banking organizatons held less than 5 percent of the state’s deposits in June 1967. C o n c l u s i o n The banking structure of the Southeast, as mea sured by the number of banks and total deposits, is continually undergoing change. The direction this change takes in each state is determined by many underlying economic factors, on the one hand, and regulatory freedoms or restrictions, on the other. The present banking structure of each state in this region represents a variety of eco nomic and regulatory environments. Concentration of banking resources is often used as a test of the competitiveness of the bank ing system. However, whether a large or small 90 number of equal sized banks or a few relatively large banks and many smaller ones is most ap propriate in meeting the banking public’s con venience and needs is debatable. Jo e W . M cLeary Notes on Sources and Data Used Special tabulations of individual banks' condition reports for J u n e 1 9 6 1 a n d 1 9 6 7 w e r e u s e d a s a b as i s f o r t h i s a r t i c l e . A ll i n s u r e d c o m m e r c i a l b a n k s i n e a c h of t h e six District s t a t e s w e r e a r r a y e d b y total d e p o s i t s and then grouped into v a r i o u s size r a n k i n g s w i t h i n e a c h state. F r o m these rankings w e can determin not only the n u m b e r of banks and total bankin d e p o s i t s in e a c h s t a te , b u t a l s o t h e r e l a t i v e s i z e o f the banks and the distribution of v a r i o u s deposi c a t e g o r i e s a m o n g b a n k s of d i f f e r e n t sizes. T h e D i s t r i c t ’ b a n k i n g s t r u c t u r e i n 1 9 6 7 is p r e s e n t e d s a s e v i d e n c e of t h e c u r r e n t s t r u c t u r e w i t h c o m p a r a b l e 1 9 6 1 f ig ur es for c o m p a r i s o n . A s a c a v e a t , c h a n g e s b e t w e e n t h e s e t w o p e r i o d s m a y n o t reflect t yp ical shifts t a k i n g place; also, i nd iv id ua l s ta te s m a y not be the appropriate geographical market areas to consider, although the legal regulations that directly affect b a n k i n g s tr uc tu re a re d e t e r m i n e d largely w i t h i n e a c h state. M N LY R V W O TH E IE W h a t M akes fo r Bank The overall success of a bank, or lack of success, can be measured by net profits at year-end. But it takes more than a single profits figure to determine the factors that contribute to or de tract from an individual bank’s profits. It takes knowledge of the costs involved in the bank’s numerous and diverse operations. All too often, however, bankers have difficulty pinpointing why profits have met or have fallen short of expectations and have difficulty deciding on how best to improve their earnings. Are service charges adequate? Is the interest expense on time deposits too high? Should the loan portfolio be expanded and if so, which category? To what ex tent can the salary structure be improved? A key to answering these and related questions is the ability to determine the specific costs for particular bank services. This knowledge of prof itability and control over expenses has become particularly acute in recent years since there has been a tendency for bank expenses to increase faster than income. For the most part, all bankers have been con fronted with the same expense problems: rising salaries for bank personnel, higher interest rates paid on time deposits, pressure from customers for costly services, and an overall increase in general expenses. Accordingly, all bankers have been forced to scrutinize their costs and, to an increasing extent, to develop more accurate and detailed cost data. Functional Cost Analysis Program To help meet this need, the Functional Cost Analysis Program was developed as a cooperative JU 1 6 LY 9 9 P r o f it a b ilit y ? effort between the Federal Reserve Banks and participating member banks. The program pro vides the participating banks with a profit and loss statement of their major lending and invest ing activities. It also develops cost information for safe deposit, computer, trust, and other non fund-using departments. The Reserve Banks furnish participating banks with reports that permit comparisons with their own operations from year to year. The same reports furnished the participating banks also provide a comparison of their own results in each function with a group average of 10 banks of similar size. Service charges, minimum loan charges, safe deposit rental fees, personnel needs, and personnel allo cations are some of the decision-making areas in which the Functional Cost Analysis (FCA) data can be of particular help. Decision-making is thus made much easier and less subject to error. Aside from being of interest to individual bankers, the FCA data are useful in that they can provide answers to banking questions of more general interest. For example, these data can provide important information on why different banks of more or less equal size have higher prof its than others. To develop some insight into this question for small banks in the Southeast, we studied 1966 FCA data for 70 participating Sixth District member banks with deposits of $50 million and under. We divided these 70 banks into two groups: those whose net earnings on total available funds before taxes comprised the top 25 percent (the “more profitable” group or “high earners” ) and the remaining 75 percent 91 (the “less profitable” group or “low earners”) . 1 Information on each major banking function or service was developed for these two groups separately, and then the groups were compared with each other. Normally, studies of this kind try to determine, through vigorous statistical tests, whether differ ences in performance are statistically significant or could have resulted from chance. Also, when figures for two groups of banks are averaged, as they were here, the results hide differences in the performance of individual banks in each group. Recognizing these limitations, the comparisons (shown in part in the accompanying table) nevertheless provide some indication of what makes for bank profitability of small member banks in the Southeast. JThe material used for this study should not be confused with the FCA Report “Performance Characteristics of High Earning Banks.” The latter shows the top quartile perfor mance by individual function only. It does not provide an overall picture of the operations of a single banking unit. S a l i e n t M o r e Comparisons Total gross income per $1,000 of total available funds before Federal income taxes was $58.32 for the high-earning banks and $55.53 for the low earners. Total expenses per $1,000 of available funds were $36.26 and $40.24 for the high and low earners, respectively. Thus, the more profit able group of banks not only generated, through a more profitable investment of funds, more in come per dollar invested, but also operated more economically. This suggests that to boost bank earnings it takes a propitious combination of in come improvement and expense control. Salary and related expenses, a major total ex pense item, accounted for a substantial portion of the differences in the expense ratios of the high- and low-earning banks. The high earners accomplished their saving in salaries through more efficient personnel performance. In all major functions, the volume of work handled per D i f f e r e n c e s P rofitable B a n k s a n d in E a r n i n g s t h e L e s s o f t h e Pro fi ta bl e N e t e a r n i n g s o n $ 1 , 0 0 0 of a va il ab le f u n d s b e f o r e F e d e r a l i n c o m e t a x e s (not i n c lu di ng n o n - f u n d - u s i n g d e p a r t m e n t s ) . $ B a n k s 1 22.06 vs $ 15.29 E a r n i n g s r e s u l t f r o m t h e i n t e r a c t i o n o f: c o s t o f m o n e y , y iEexl p e n s e s . F u n c t i o n a l e x p e n s e s e x e r t a s i g n i f i c a n t i n f l u e d on portfolio ( l o a n s a n d investments), a n d t h e p e r c e n t n of e t e a r n i n g s . E x p e n s e c o n tr ol p r e s e n t s o p p o r t u n i t i e s o n a v a i l a b l e f u n d s in p ortfolio. i m p r o v e d net earnings. $ P e r $ 1 , 0 0 0 of V o l u m e C o s t of m o n e y 2 . 4 2 % vs 2.76% $20.64 vs $23.92 N e t portfolio yield 5 . 2 8 % vs 4 . 8 9 % D e m a n d deposits T i m e deposit, o pe ra ti ng $ 3.93 vs $ 4.64 Portfolio ( p e r c e n t of a va il ab le $35.94 vs $36.73 funds) 8 7 . 8 0 % v s 8 7 . 6 6 %T i m e d e p o s i t , i n t e r e s t $ 7.71 v s $ 8.04 R /E mortgage loans C o s t o f m o n e y is t h e c o s t o f a c q u i r i n g a n d s e r v i c i n g d e p o s i t s I n s t a l m e n t l o a n s $28.86 vs $31.54 a n d c a p i t a l f u n d s l e s s a n y s e r v i c e c h a r g e a n d f e e i n c o m e .O t h e r l o a n s $11.15 vs $13.53 $ 1.24 v s $ 1.47 Investments C o s t of d e m a n d d ep os it s 1 . 2 6 % vs 1 . 5 5 % C o s t of t i m e d ep os it s 3 . 9 8 % vs 4 . 1 2 % C o s t of n e t capital 1 . 3 4 % v s 1 . 7 O t h e r factors w h i c h influence earnings: 9% C o s t of m o n e y funds. is influenced by % D e m a n d deposits T im e deposits N e t capital f u n d s composition of A v a i l a b l e 4 8 . 3 8 % vs 4 6 4 2 . 6 6 % vs 4 6 8 . 9 6 % vs 7 N e t p o r t f o l i o y i e l d is i n f l u e n c e d p o n e n t s o f t h e portfolio. by Investments Loans R / E m o r t g a g e loans Instalment loans C o m m e r c i a l a n d agricultural loans 4 5 5 7 Personnel net . . . . 7 6 1 2 of Fund .10% . 25 % .65% yields N e t Yield 9 % vs 4 . 5 2 % vs 5 . 1 1 % vs 4 . 9 1 % vs 6 .1 5 .0 1% vs of 9 1 7 0 % % % % 4.63% data P e r s o n n e l p e r $ 1 million available f u n d s Salaries a s a p er ce nt of g r o s s i n c o m e 2.00 vs 2.14 19.19% vs 21.71% available C o s t p e r h o m e deb it (cents) A v g . b al., r e g u l a r checking account s S p e c i a l c h e c k i n g activity I n c o m e p e r acct. p e r m o . C D a n d o t h e r t i m e interest the c Aov m r a g e e vs $1,894 $ vs 6.480 $1,96 .91 v s $ 1 .11 $39.15 vs $41.32 c o s t to: M a k e a c o n s u m e r instalment loan Collect o n e c o n s u m e r i n s t a l m e n t loan p a y m e n t Nonfund-using Departments Net earnings from: (Other sources $13.04 $ vs .78 v s of b a n k $1 $ earni C o m p u t e r Service D e p a r t m e n t - v5 ( p e rc en t of e x p e n s e s ) -15.54% 7.s4% Trust D e p a r t m e n t (percent of e x p e n s e s ) - 2 0 .-20.20%s 54% v Safe Deposit D ep ar tm en t -210.650 vs -310.680 (cents per b o x rented) ^ a s e d o n a c o m p a r i s o n of t h e 1 8 (25 p ercent) t op - e a r n i n g Sixth District m e m b e r ( 7 5 p e r c e n t ) t h a t p a r t i c i p a t e d in t h e 1 9 6 6 F C A p r o g r a m . All b a n k s h a d $ 5 0 m i l l i o n o n t h e ratio of n e t e a r n i n g s b e f o r e t a x e s to a v a i l a b l e f u n d s . 92 5.740 banks with the 52 lowero r l e s s in d e p o s i t s ; e a r n i n g s M N LY R IEW O TH EV employee was greater for the high-earning banks. For example, the more profitable banks not only serviced a larger volume of regular checking ac counts, but their expenses per $1,000 of regular checking deposits were lower than for the less profitable banks. As far as the distribution of major assets and liabilities was concerned, the two groups of banks differed little in most respects. However, one notable difference was that the high-earning group had fewer funds in cash and due from banks than did the low-earning banks. The more profitable group of banks also held a smaller per centage of time deposits—on which their interest expense and operating costs were lower than for the less profitable banks. The former averaged 2.30 processing personnel for every $1,000 of time deposits, whereas the less profitable banks averaged 2.89 persons. In the demand deposit function, which employs about three-fifths of total personnel, total operating expenses per $1,000 were $20.64 and $23.92, for the high- and low-earning banks, respectively. Thus, through their ability to control expenses, coupled with a more favorable deposit mix and lower interest expense on time deposits, the more profitable banks were able to generate a higher income from funds less expensively acquired. Enhancing their earnings further, these banks employed their funds in a more profitable asset mix. Their loan portfolio contained a larger per centage of instalment loans—the most profitable type of bank asset according to the study. Also, they received a higher yield on instalment loans and kept down their expenses on them better than the low earners. For the latter, the cost of making an instalment loan amounted to $16.60, while the cost to the more profitable bank was $13.04. Furthermore, the more profitable banks’ investment portfolios contained a larger percent age of high-yielding tax-exempt obligations of states, counties, and municipalities and a smaller percentage of U. S. Government issues. How ever, contrary to what one might expect, the less profitable banks had a larger percentage of real estate loans, which proved to be a profitable category of lending. The trust, computer, and safe deposit departments were loss operations for both groups of banks. The superior earnings of the more profitable group may fairly well be summed up by three factors: First, the high-earning banks were able to generate greater income from their earning assets—particularly instalment loans; second, the high-earning banks were able to secure their deposits at a lower cost; and third, in almost every major area of operations, the high earners at tained more efficient personnel performance. Concluding Comments These conclusions suggest that the typical small bank bent on increasing its profits might consider: (1 ) investing more of its funds in loans, partic ularly instalment loans; (2 ) holding a larger per centage of its investment account in tax-exempt securities; (3 ) studying its interest rate policy on time deposits and the effect this has on the bank’s expenses, on the one hand, and the need to compete for these funds, on the other; (4 ) studying operations carefully for ways to improve operating techniques and increase productivity; and (5 ) pricing services adequately. However, in attempting to enhance bank profitability, liquidity, risk, and other considerations should not be overlooked. Some factors affecting profitability are not within the control of management. To. a large de gree, economic and competitive factors influence profitability. Nevertheless, bank management it self can play an important role to boost profits through well-directed efforts at increasing reve nues and curtailing expenses. Cost accounting provides the rudder to lead and direct such ef forts. This article is based on a thesis written by ROBERT E. HECK in partial fulfillment of the requirements of the Stonier Graduate School of Banking, Rutgers University, June 1969. B a n k A n n o u n c e m e n ts Citizens Bank of Riverdale, Riverdale, Georgia, opened on June 9, as a newly organized nonmember bank and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers are Pierce T. Neese, president; H. Vance Eaddy, Jr., vice president and cashier. Capital is $300,000; surplus and other capital funds, $150,000. On June 16, South LaFourche Bank & Trust Com JU 1 6 LY 9 9 pany, Larose, Louisiana, a nonmember bank, began to remit at par. The Bank of Miramar, Miramar, Florida, a newly or ganized nonmember bank, opened on June 19 and began to remit at par. Gary C. Reed is executive vice president. Capital is $250,000; surplus and other capital funds, $410,000. 93 S ix t h D is t r ic t S t a t i s t i c s Seasonally Adjusted (All d a t a are indexes, L a te st M o n t h 1969 S IX T H One M onth Ago Tw o M on th s A go 1 9 5 7 - 5 9 = 1 0 0 , u nl es s i nd icated otherwise.) D IS T R IC T 170 16 7 1 24 77 In c o m e Apr. 69,3 4 7 M ay 242 Apr. 1 60 Apr. 1 47 Apr. 166 68,6 9 5 240r 1 68 173 170 . M ay . M ay 3 1 4 .9 3 02 .6 358 .4 314 .1 292 .5 2 93 .6 3 05 .5 261 .3 . M ay . M ay 147 14 6 17 4 138 166 115 147 146 1 73 1 37 166 116 147 14 6 17 4 139 16 8 116 1 42 141 1 75 1 33 1 58 1 13 1 07 125 132 1 13 10 7 127 134 1 04 1 24 1 33 M ay M ay M ay M ay Apr. 106 126 136 113 198 1 48 137 57 . M ay 3.5 . M ay . M ay . M ay 1.8 1.8 41.1 185 4 1 .2r 193 41.1 1 82 41.1 207 210 C ro p s 6 8 ,6 3 6 238 177 1 90 172 2 25 165 15 4 103 237 207 161 159 240 180 151 10 8 257 6 3,1 30 224 152 1 52 1 54 U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o rc e )! . . A vg . W e e k ly H rs. in M fg . (H rs.) F IN A N C E A N D . M ay F o o d ..................................... Lbr., W o o d Prod., F u rn . & Fix. T e x t ile s .......................... T r a n s p o r ta tio n E q u ip m e n t U n e m p lo y m e n t R a te (P e rc e n t of W o r k F o r c e )! . . . In s u r e d U n e m p lo y m e n t (P e rc e n t of C ov. E m p .) . . . . A vg. W e e k ly H rs. in M fg . (H rs.) . . M ay . M ay . M ay . M ay . M ay . M ay . . . . . 1.8 1 64 1 59 107 2 43 20 2 112 20 2 147 137 59 147 140 63 1 86 1 42 129 61 3.5 3.3 3.7 1.8 110 2 22 111 F IN A N C E A N D B A N K IN G L oans* . M ay . M ay 321 2 77 318 274 313 268 2 73 2 41 . M ay . M ay . M ay 230 193 261 2 31 1 98 266 225 189 253 208 181 223 2.3 4 1 .6 2.6 2.6 41.1 4 1.5 35 8 259 273 347 253 251 289 223 222 8,65 7 204 157 8,49 7 2 05 1 54 8,5 4 6 8 ,0 3 9 1 87 1 44 130 131 1 29 130 129 124 67 1 28 129 131 129 122 12 2 128 129 127 115 62 64 69 3.9 40.8 4.0 4 1.4 3.8 4 1.6 279 216 233 278 212 2 51 19 9 231 202 P e r s o n a l In c o m e (M il. $, A n n u a l R a t e ) ...................A pr. M a n u f a c t u r in g P a y r o l l s ...................... M a y F a rm C a s h R e c e i p t s .......................... Apr. P R O D U C T IO N A N D IN C O M E P e r s o n a l In c o m e (M il. $, A n n u a l R a t e ) ...................A p ril M a n u f a c t u r in g P a y r o l l s ...................... .M M y y aa F a rm C a s h R e c e i p t s .......................... Apr. 202 15 9 EM PLOYM ENT N o n fa r m E m p l o y m e n t ! ...................... M a y M a n u f a c t u r in g ..............................M a y . M N o n m a n u f a c t u r i n g .......................... M a y C o n s t r u c t i o n .............................. M a y F a rm E m p l o y m e n t ..............................Apr. U n e m p lo y m e n t R a te . M (P e rc e n t o f W o rk F o r c e ) ! ...............M a y A vg. W e e k ly H rs. in M fg . (H rs.) . M ay 13,5 21 251 163 1 3 ,2 9 4 247 174 1 3 ,3 3 6 249 166 12,2 2 5 227 1 52 147 139 150 148 46 147 140 150 153 52 147 140 150 154 54 142 13 5 145 145 52 2.9 4 0 .9 2.8 4 1 .2 2.6 4 1 .0 3.3 4 0 .8 334 252 292 333 255 302 329 250 283 284 227 25 1 1 0 ,1 0 4 9 ,9 5 9 9 ,9 6 7 1 91 188 186 178 180 1 97 9 ,3 1 6 178 170 EM PLOYM ENT N o n fa r m E m p l o y m e n t ! ...................... M a y M a n u f a c t u r in g .............................. M a y N o n m a n u f a c t u r i n g .......................... M a y C o n s t r u c t i o n ..............................M a y F a rm E m p l o y m e n t .............................. Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o r c e ) ! ............... M a y A vg. W e e k ly H rs. in M fg . (H rs.) . . . M a y F I N A N C E A N D B A N K IN G M e m b e r B a n k L o a n s .......................... M a y M e m b e r B a n k D e p o s i t s .......................M a y B a n k D e b i t s * * ..................................... M a y L O U IS IA N A IN C O M E P e r s o n a l In c o m e (M il. $, A n n u a l R a t e ) ...................A pr. M a n u f a c t u r in g P a y r o l l s ...................... M a y F a rm C a s h R e c e i p t s .......................... Apr. 4.6 40.7 2 87 21 5 22 3 IN C O M E P R O D U C T IO N ALABAM A P R O D U C T IO N A N D 167 159 1 07 80 G E O R G IA . M ay E le c t ric P o w e r P r o d u c t io n * * . . . . Apr. C o tto n C o n s u m p t i o n * * ................... P etrol. Prod , in C o a s t a l La. a n d M i s s . ’* *J u n e A ll M e m b e r B a n k s ...................... L a rg e B a n k s .............................. D e p o s it s * A ll M e m b e r B a n k s ...................... L a rg e B a n k s .............................. B a n k D e b i t s * / * * .............................. 83 169 164 124 95 112 B A N K IN G In s ta lm e n t C re d it at B a n k s * (M il. $) P R O D U C T IO N A N D E M P L O Y M E N T 170 164 2.4 4 1.5 . M ay . M ay . M ay . . . . . One Year A^o L a t e st M o n t h 1969 IN C O M E A N D S P E N D I N G P e rs o n a l One Two M on th M o n th s Ago Ago 357 258 268 O ne Year Ago AND EM PLOYM ENT N o n fa rm E m p l o y m e n t ! ...................... M a y M a n u f a c t u r in g ..............................M a y N o n m a n u f a c t u r i n g .......................... M a y C o n s t r u c t i o n ..............................M a y F a rm E m p l o y m e n t .............................. Apr. U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o r c e ) ! ............... M a y A vg. W e e k ly H rs. in M fg . (H rs.) . . . M a y 134134 123 136 144 55 124 137 146 58 132 120 134 149 59 5.4 4 1 .6 5.2 42.1 123 136 153 56 13 4 5.1 4 1 .9 4.7 43.1 254 176 232 169 1 82 F I N A N C E A N D B A N K IN G M e m b e r B a n k L o a n s * ...................... M a y M e m b e r B a n k D e p o s i t s * ...................M a y B a n k D e b i t s * / * * ..................................M a y 1 9 9 259 180 1 97 253 178 192 M IS S IS S IP P I IN C O M E P e rs o n a l In c o m e 5,131 266 1 68 5 ,2 4 8 265 179 5,11 2 26 1 214 4 ,6 6 6 244 14 6 1 47 15 8 142 148 158 1 44 1 43 15 3 13 8 1 45 49 147 157 142 146 52 154 58 14 4 51 4.3 41.0 4.1 4 0.9 3.7 4 0 .8 4.7 4 0 .8 382 386 264 373 255 265 327 240 F I N A N C E A N D B A N K IN G P R O D U C T IO N M e m b e r B a n k L o a n s ............... M em ber Bank B a n k D e b it s** D e p o s its . . . ...................... . M ay . M ay . M ay F L O R ID A IN C O M E P e r s o n a l In c o m e (M il. $, A n n u a l R a t e ) ...................Apr. M a n u f a c t u r in g P a y r o l l s ...................... M a y F a rm C a s h R e c e i p t s .......................... A pr. P R O D U C T IO N A N D N o n fa r m 20,9 0 1 320 157 2 0 ,7 8 4 314 1 75 2 0 ,6 8 8 310 1 88 18,8 3 6 2 81 165 .................. M a y 94 EM PLOYM ENT F IN A N C E A N D . M ay . M ay . M ay B A N K IN G M em ber Bank Loans* . . . . M e m b e r B a n k D e p o s it s * . . . EM PLOYM ENT E m p lo y m e n t t AND N o n fa r m E m p lo y m e n t ! . . . . M a n u f a c t u r in g ................... N o n m a n u f a c t u r i n g ............... C o n s t r u c t i o n ................... F a rm E m p l o y m e n t ................... U n e m p lo y m e n t R a te (P e rc e n t of W o rk F o rc e )! . . Avg. W e e k ly H rs. in M fg . (H rs.) 168 1 65 1 65 1 60 . M ay B a n k D e b i t s * / * * ....................... . M ay 260 282 26 7 2 11 M N LY R IEW O TH EV L a t e st M o n t h 1969 One M onth Ago Tw o M onths Ago TEN N ESSEE IN C O M E P e r s o n a l In c o m e (M il. $, A n n u a l R a te ) . . . . M a n u f a c t u r in g P a y r o l l s ............... F a rm C a s h R e c e i p t s ................... . . Apr. 11,0 3 3 . . M ay 237 1 0,9 13 237r 139 10,9 87 2 36 135 One Year Ago L a te st M o n t h 1969 N o n m a n u f a c t u r i n g ...................... . C o n s t r u c t i o n .......................... .... F a rm E m p l o y m e n t ............................. . U n e m p lo y m e n t R a te 10,0 48 (P e rc e n t o f W o r k F o rc e J t . . . . , . 215 A v e ra g e W e e k ly H o u r s in M fg . (H rs.) , . 131 F IN A N C E A N D B A N K IN G . . M ay . . M ay 1 46 135 14 7 1 56 1 48 157 * F o r S ix t h D ist ric t a re a on ly. O th e r t o t a ls fo r e n t ire s ix sta te s. 14 4 153 “ D a ily a v e ra g e b a s is. M ay M ay Apr. 1 42 168 59 M ay M ay 3.7 40.8 314 203 302 Tw o M onths Ago 1 42 173 61 M e m b e r B a n k L o a n s * ...................... M a y M e m b e r B a n k D e p o s i t s * .................. . M a y B a n k D e b i t s * / * * ............................. , M a y P R O D U C T IO N A N D E M P L O Y M E N T N o n fa r m E m p l o y m e n t t ............... M a n u f a c t u r in g ...................... One M onth Ago t P r e lim in a r y data. Ago 144 18 0 63 13 9 164 3.6 4 0 .6 r 3.1 40.5 3.6 40.7 304 206 305 300 1 93 302 2 71 194 252 66 r-R e v ise d . S o u r c e s : P e r s o n a l in c o m e e s tim a t e d b y t h is B a n k ; n o n fa rm , m fg. a n d n o n m fg . em p ., m fg. p a y ro lls a n d h o u rs, a n d u n e m p ., U .S . Dept, o f L a b o r a n d c o o p e r a t in g sta te a g e n c ie s; c o tto n c o n s u m p t io n , U .S. B u r e a u of C e n s u s ; c o n s t ru c t io n c o n tra c ts, F. W . D o d g e C orp.; petrol, prod., U .S . B u r e a u o f M in e s ; in d u s t r ia l u s e o f elec. pow er, Fed. P o w e r C o m m .; fa rm c a s h re c e ip ts a n d fa rm em p., U .S.D .A . O th e r in d e x e s b a s e d o n d a ta c o lle c te d b y t h is B a n k . A ll in d e x e s c a lc u la t e d b y t h is B a n k . D e b it s t o D em and D e p o s it A c c o u n t s Insured Commercial Banks in the Sixth District (In Thousands of Dollars) P e rc e n t C h a n g e A p ril 1969 M ay 1969 M ay 1968 P e rc e n t C h a n g e yea r to d a te M a y ’6 9 5 m os. fro m 1969 A p ril M a y fro m 196 9 1968 1968 S T A N D A R D M E T R O P O L IT A N S T A T IS T IC A L A R E A S t B ir m in g h a m . . G adsden . . . . H u n t s v ille . . . . M o b ile ............... M o n tgo m e ry . . . T u s c a lo o s a . . . 1 ,94 4,069 67,2 1 3 1 9 6 ,8 5 4 6 2 4 ,7 7 6 3 6 1 ,4 9 9 1 2 2 ,1 6 2 1 ,92 4,845 68,7 2 7 2 1 0 ,3 5 0 572 ,5 3 1 3 5 4 ,9 6 0 11 7 ,4 6 2 1,7 1 2 ,5 1 8 6 6 ,5 1 9 1 9 2 ,4 9 4 5 6 6 ,8 7 0 3 5 4 ,1 4 9 1 1 6 ,4 0 6 + + + + Ft. L a u d e r d a le — H o lly w o o d . . J a c k s o n v ille . . . M ia m i ............... O r la n d o . . . . P e n s a c o la . . . T a lla h a s s e e . . . T a m p a — St. Pete. . W. P a lm B e a c h 1 ,01 5,648 1,93 4,895 3 ,1 8 2 ,7 0 0 7 1 2 ,5 6 8 2 4 5 ,2 2 6 18 7 ,5 6 0 1 ,84 1,619 60 7 ,3 2 1 1 ,11 9,215 1 ,90 4,587 3 ,63 1,358 7 6 5 ,3 3 7 2 3 2 ,5 8 4 17 2 ,7 5 2 1 ,98 2,325 7 0 5 ,6 9 2 8 2 7 ,7 5 9 1,65 3,747 2,8 6 0 ,4 8 7 6 3 9 ,7 6 4 2 2 5 ,1 7 5 168 ,0 2 2 1,60 3,757 50 4 ,5 2 1 + 9 + + -1 7 5 9 7 4 1 1 0 ,301 6 ,65 9,601 2 9 2 ,3 1 2 2 7 9 ,8 1 8 30 8 ,7 1 4 3 1 9 ,3 6 3 1 0 9 ,1 0 9 7 ,0 1 7 ,0 5 0 3 2 2 ,8 6 8 r 2 7 4 ,3 9 8 3 4 6 ,2 2 9 3 4 7 ,1 1 5 1 0 0 ,5 4 2 5,7 7 6 ,1 7 6 3 3 4 ,1 4 0 2 4 9 ,2 7 7 2 7 8 ,9 9 8 3 2 6 ,6 5 1 + + Baton R o u g e L a fa y e tte . L a k e C h a r le s N e w O r le a n s 6 0 2 ,3 2 4 1 5 7 ,142 17 1 ,4 1 6 2 ,7 7 7 ,6 1 2 5 8 8 ,2 7 2 1 6 3 ,0 4 2 1 6 8 ,8 9 6 2 ,69 3,173 642 ,0 3 1 143 ,018 16 1 ,8 5 0 2 ,6 5 9 ,0 2 8 + + + . . . . . . . . B i lo x i— G u lfp o rt Jackson . . . . C hattanoo ga . . K n o x v ille . . . . N a s h v ille . . . . 12 9 ,7 7 8 8 90 ,5 8 1 125 ,9 4 3 7 6 9 ,7 4 8 7 4 8 ,5 0 2 5 6 8 ,8 1 8 2 ,43 2,406 7 9 5 ,2 1 8 5 5 5 ,5 2 5 2 ,3 0 7 ,6 7 2 113 ,0 0 5 6 2 4 ,5 1 2 6 6 0 ,2 0 4 5 2 6 ,7 9 3 l,9 7 3 ,7 8 6 r 9 2 4 2 -1 2 A lb a n y ............... A t la n ta . . . . A u g u s t a ............... C o lu m b u s . . . . M acon ............... Savannah . . . . . . . . 1 2 6 1 5 9 2 -1 1 - 8 2 4 1 3 + 14 + + 2 + 10 + + + 13 + 5 + 5 + 9 + 10 + 14 +23 + 17 + 11 + 11 + 9 + 12 + 15 + 20 M ay 1969 1 0 5 ,0 0 0 1 4 0 ,5 4 9 39,9 9 1 79,8 6 1 2 7 ,0 4 0 4 2 1 ,7 4 6 169 ,2 2 7 9 5 8 ,2 6 7 7 6 ,4 0 5 1 1 0 ,9 6 6 15 7 ,3 4 7 4 6 ,7 9 4 8 0 ,8 3 9 2 8 ,4 0 9 4 5 1 ,8 3 6 17 1 ,9 7 5 1 ,02 7,733 9 0 ,4 9 8 101 ,9 3 5 130 ,921 4 0 ,1 5 5 6 1 ,6 9 4 2 3,9 5 5 36 6 ,8 9 5 1 2 4 ,0 0 9 8 5 6 ,5 6 6 r 7 7 ,8 1 3 -1 -1 A th e n s ............... B r u n s w ic k . . . D a lto n ............... E lb e rto n . . . . G a in e s v ille . . . ............... G riffin L a G ra n g e . . . . New nan . . . . Rom e ............... V a ld o s ta . . . . 96,6 2 7 51,1 0 5 1 2 1 ,7 7 2 16,4 26 7 8 ,0 1 6 3 7 ,1 6 0 24,7 11 2 3 ,7 8 6 8 4 ,8 0 7 5 9 ,8 7 2 9 6 ,2 5 8 5 3 ,1 3 9 1 3 3 ,582 17,7 4 8 7 9 ,6 0 6 3 8 ,8 2 5 3 4 ,2 2 9 2 5 ,2 1 8 8 7 ,8 9 6 6 3,4 71 86,3 1 2 4 5 ,1 5 9 10 3 ,001 1 5,6 97 7 3,7 09 3 9 ,9 8 9 r 23 ,2 7 9 2 5 ,8 5 5 7 9 ,7 4 9 59,1 6 7 + -2 - A b b e v ille . . . . A le x a n d ria . . . B u n k ie ............... Ham m ond . . . . N e w Ib e ria . . . P la q u e m in e . . T h ib o d a u x . . . 1 2,2 70 16 6 ,9 9 7 7,473 4 6,7 21 3 9 ,2 1 4 1 8,2 45 2 7 ,9 9 6 12,1 07 1 9 3 ,7 5 0 8,3 8 4 4 5 ,2 6 2 3 7 ,8 8 0 1 4,4 11 2 5,9 9 3 10,9 28 1 49 ,0 1 2 6,69 7 4 0 ,9 4 2 3 5,6 9 7 2 0 ,2 5 2 2 6 ,2 7 8 + 1 -1 4 + 10 + + 4 H a t t ie s b u r g . . . L a u re l ............... M e rid ia n . . . . N a tc h e z . . . . P a s c a g o u la — M o s s P o in t . . 7 3 ,8 5 8 4 5 ,5 4 7 9 1 ,5 1 8 4 5 ,7 0 9 7 0,7 61 4 5 ,1 9 5 8 5 ,5 2 5 4 6 ,2 4 5 6 4 ,2 5 7 4 2 ,6 7 8 69,8 7 7 4 0 ,2 3 7 + + + - 8 4 ,4 2 9 8 0,3 64 6 7 ,0 8 8 + V ic k s b u r g Y a z o o C it y 4 6 ,1 3 5 3 7 ,9 4 3 4 1 ,4 4 5 35,8 9 1 95,0 1 5 9 3 ,3 0 5 1 7 6 ,281 9 5 ,0 9 4 1 03,697 2 0 5 ,4 0 4 +21 + + + + + 19 7 16 15 8 + 3 + 16 + 6 + 3 + 15 +43 + 14 + 13 6 + 13 + B +23 + 17 + 12 +29 3 5 . . . . ............... ............... 8 3,2 7 7 80,0 5 5 4 9 ,9 3 7 7 7 ,9 2 0 77,5 3 0 4 9,7 91 77,6 91 70,1 4 2 4 7 ,5 1 9 B a rto w ............... B ra d e n to n . . . B re v a rd C o u n t y . . D a y to n a Beach Ft. M y e r s — N. Ft. M y e r s . . 3 9 ,9 3 7 88,2 1 3 2 2 4 ,0 1 7 13 6 ,9 3 5 4 0 ,9 5 7 103 ,231 4 0 ,6 4 3 7 8 ,5 1 3 24 2 ,0 1 1 10 0 ,7 2 7 1 3 2 ,085 2 5 2 ,4 6 5 10 8 ,1 7 0 14 7 ,1 7 6 1 0 8 ,1 0 1 r + + + 0 + 7 + 14 + 5 + 9 + 17 + 8 - 2 -1 5 2 + 12 + 7 + 16 + 1 + 11 7 3 -11 +27 -1 0 ♦c dso lybns int eS t D tr t prio o t esae I lue n a k h ixh is ic ot n f h t t . n JULY 1 6 99 . . . . . . . . B rist o l ............... J o h n s o n C ity . . . K in g s p o r t . . . . OTHER CEN T ERS A n n is to n D o th a n S e lm a S IX T H 1 5 7 2 7 6 + + 7 - 0 +29 + 13 + 15 +36 + 12 - 2 + 7 + 10 + 7 +28 +24 +16 +21 +15 + 11 0 + 12 + 11 4 9 7 + 13 + 18 + 5 + 6 ' + - 8 + . + + 14 2 4 8 6 4 6 +22 12 10 1 + + + + + + 15 6 11 6 fP rtia etimte . a lly s a d ^simt d Et ae. + + 10 +23 +17 + 11 + 10 + 7 + 11 1 + 15 + +31 + 14 + 19 +13 +24 +14 5 +26 40,6 5 1 3 5 ,9 6 2 + 11 + 6 + 13 + +22 + 1 + 10 80,4 0 3 85,5 4 7 1 7 6 ,367 - 0 -1 0 -1 4 + 18 + - + 13 + 15 + 13 -1 1 + 3 + 4 +27 + 8 4 1 7 + + + + + 12 12 12 14 10 -1 0 4 0 ,6 7 1 ,5 9 0 r 35 ,1 2 4 ,5 7 0 r - 3 + 12 +14 4 ,75 3,571 12,3 9 1 ,4 0 3 1 0 ,0 8 5 ,8 7 4 4 ,6 9 2 ,1 5 1 • • . • • • . 1 ,89 6,513 5 ,5 1 0 ,6 9 9 . . . 4 ,76 9,251 1 3 ,3 8 7 ,2 3 4 r 1 0 ,6 2 9 ,4 1 9 r 4 ,5 9 9 ,0 8 7 1,74 3,086 5,5 4 3 ,5 1 3 4,5 0 4 ,4 0 9 10 ,7 6 9 ,7 3 4 r 9 ,0 9 7 ,2 4 9 r 4,4 9 4 ,8 5 5 + 1 ,48 1,577 + 4 ,7 7 6 ,7 4 6 r - 0 + 6 +15 + 9 + 17 +14 + 6 +14 . . . . . . . . . . . . +27 +22 5 5 39 ,3 3 0 ,2 1 1 D IS T R IC T , To tal Alabama:): Florida:): G eorgia}: L o u isia n a t* M is s is s ip p i* T e n n e sse e t* +36 - -1 1 10 + 3 + 16 + + M ay 1968 G a in e s v ille . . . L a k e la n d . . . . M onro e C ounty . . O c a la ............... St. A u g u s t in e . . St. P e t e r s b u r g . . S a r a s o ta . . . . Tam pa ............... W in te r H a v e n . . +29 + 16 + 19 + 12 + 8 + 13 + 17 + 10 + 15 -1 3 + 12 + 11 A p ril 1969 year to d a te M a y '6 9 5 m o s. fro m 1969 A p ril M a y fro m 1969 1968 1968 7 5 2 9 1 + 11 + 4 +28 +15 +21 rRv e. - eis d 95 D is t r ic t B u s in e s s C o n d it io n s The District’s “heatwave” of business activity is emitting some signs of cooling off. Construction contract volume has continued its decline, while consumer activity has slowed. Job growth in the April-May period has been slow, but the unemployment rate has remained low. There has been little or no letup in loan expansion at District banks. Unsettled weather conditions have caused some crop delays and damage in the agricultural sector. Total construction contract volume continued its gradual decline in May, as year-to-year gains nar rowed considerably. Residential contract gains have shrunk the most rapidly. Also, savings flows to savings and loan associations, strong in the first quarter, have weakened considerably since March. A sharp drop in the volume of consumer credit extended by banks in May reflected declines in automobile paper, other consumer goods paper, and personal loans. Personal income moved up ward only slightly in April. In May, a moderate rebound in nonmanufactur ing and construction employment lifted overall employment from the reduced level of the previ ous month. The construction employment re bound was helped by settlement of labor-management disputes in Florida. Manufacturing em ployment was unchanged as gains in apparel, chemicals, paper, and primary metals were large ly offset by losses in the food, lumber and wood, and transportation equipment industries. The transportation equipment industry was adversely 96 affected by a labor-management dispute involv ing automotive workers. The unemployment rate in May was unchanged and remained at a low level. Credit extended by banks in May again in creased at a faster pace than in the nation. The smaller banks, benefiting from steady increases in consumer time deposits, maintained a par ticularly rapid loan growth. At the larger banks, the expansion for some types of lending slowed down during May and the first three weeks of June. Their business loans, however, continued to expand rapidly. Weather conditions caused delays in cotton planting and tobacco transplanting. Heavy rains also did some damage to the peanut crop, al though it benefited peach growers. The out look for the 1969 peach crop is for a slightly lower output than last year, but significantly higher than the light 1967 crop. N O T E : D at a o n w h i c h s t a t e m e n t s are b a s e d h a v e b e e n adju w h e n e v e r pos si bl e to e l i m i n a t e s e a s o n a l influences. M N LY R IEW O TH EV
