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Inthis issue: C o n c e n t r a t io n R e g u la t o r y in B a n k in g N u m e r o lo g y M a rk e ts: o r U s e f u l M e r g e r G u id e lin e ? T e n n e s s e e 's E co n o m y M o m e n tu m Fo r F u rth e r D is t r ic t B a n k in g N o te s: D is t r ic t B u s in e s s C o n d it io n s B u ild s U p G a in s S B A G u a ra n te e s Digitized186 for FRASER Concentration in Banking M arkets: R e g u la t o r y N u m e r o lo g y o r U s e f u l M e r g e r G u id e lin e ? b y C h a r le s D . S a lle y A m ericans have lo n g been convinced that com petition in the m arketplace is a g o o d thing. C om p etition a m o n g num erous firms usually results in w ide r choice for the consum er, a high degree of innovation, and rewards to efficient operation. M o n o p o ly , on the other hand, tends to restrict the variety of products, result in higher prices, and discou rage innovative production techniques. That is w hy through the years the C o n gress has enacted m uch legislation designed to preserve com petition. M o re specifically, these antitrust laws are intended to en cou rage com petitive markets even though com petition m ight result in the c losin g of som e firms. Since the theory of com petition, however, assum es that it is the less efficient firms and those unresponsive to consum er d em an ds that fail, their c lo sin g can be a gain to the com m u n ity as a whole. T o enforce the antitrust laws, G o vern m e nt agencies have often used the num ber of firms as a convenient indication o f the existing degree o f market com petition. A m arket is rarely perfectly com petitive (an extremely large num ber o f firms) or purely m onopolistic, but generally lies som ew here between these extremes. U sin g the num ber of firms to characterize a market, then, one presum es that the fewer the firms, the less com petitive the m arket and vice versa. C oncentration as a M easu re o f C o m p e tition U p o n further reflection, the num ber of firms is really only part of the market picture. There may be m any firms; yet, a few large ones co u ld exercise a great influence over the market. Therefore, one needs an index that m easures the relationship between the num ber of firm s and their share of the market. The concentration ratio, or the market share of total assets, incom e, sales, or som e other unit accounted for by one firm or a grou p of firm s is used for this purpose. It attempts to gau ge the d o m in a n ce over the market, or lack of dom inance, by a few firms. For example, if the three largest firms account Monthly Review, Vol. LVII, No. 11. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. NOVEMBER 1972, MONTHLY REVIEW for 90 percent of total output, one w ou ld presum e that the m arket is less com petitive, even though there m ight be a total of 80 firms, than if the three largest firm s accou nt for o n ly 5 percent (see Table 1). Because the concentration ratio gives a better picture o f m arket structure than the num ber of firms, it has b eco m e a c o m m o n proxy m easure for the degree o f com petition in a market. U sin g this ratio in such a manner, one assum es that a handful of large firms, high concentration, and unaggressive com petition o ccu r sim ultaneously.1 M a n y court decision s and regulatory agency rulings on mergers thus refer to “concen trated" markets. This is so frequent, in fact, that m any observers have com e to interpret the concentration ratio itself to be a hard, final criterion o f com petition. This is hardly the case, though, because the concentration ratio, w hile superior to the num ber o f firm s as a m easure of market structure, has several sh ortco m in gs as a m easure o f com petition. The concentration ratio can o n ly suggest that the fewness o f large firm s m akes restrictive pricing and o u tpu t decision s m ore possible than if there were m any firm s o f equal size. It does not m ean that the large firm s are actually e n ga gin g in anti-com petitive conduct. The existence o f a few gigan tic firm s m ay sim p ly reflect eco n o m ies o f large-scale operations in produ ction technology, m anagem ent, or distribution. Therefore, in this light, it w o u ld seem best not to regard the concentration ratio as an inflexible rule to regulate m ergers but as a signal to a possible problem area w arranting further investigation. This h olds particularly for bank m erger and h o ld in g co m p an y regulation w here the concentration ratio can be especially m isleading. Conflicting Goals of Bank Regulation The traditional regulatory policy of lim iting the num ber o f banks has produ ced m any markets with little or no com petition and with correspo nd in gly high concentration ratios. A t first blush this appears to be a questionable policy, but it is not w hen w e recall that com petition often results in the clo sin g o f num erous inefficient firms. T h o u gh highly desirable in m ost industries, perfect com petition (as m arked by unrestricted entry o f new firm s and failure of som e existing firms) is unacceptable in b an kin g because the local bank is usually m ore critical to a co m m u n ity than a single business. W h e n a bank fails, the depositors and the businesses served by the bank get hurt as well as the stockholders. JThe popular presumption is that with fewer firms, a collusive agreement is more easily reached. Economic theory suggests, however, that even without collusion, the fewness of competitors alone may alter their pricing and output decisions from those made under conditions where there are many competitors. FEDERAL RESERVE BANK OF ATLANTA TABLE 1 The c o n c e n tra tio n m ark et s tr u c tu r e ra tio th a n is is th e a b e tte r num ber m easu re of of f ir m s . Market B Market A (Share) (Share) 15% ) 45% ratio for 1 35% ) 75% ratio for 15% } three largest 2 20% > three largest 15% ) 20% ) 3 15% 4 10% 15% 5% 5 15% 5% 6 10% 5% 7 100% 100% Both markets have the same number of firms, but larger firms are more significant in Market A than in Market B. Firm Because the local ec o n o m ic base m ay not be big e n o ugh for all banks to operate profitably, bank failure can result if the num ber of banks in a com m u n ity is not limited. Already possessing m anagem ent experience and a m in im u m critical operating size, existing banks have additional advantages over new banks for w hich the risk of failure is, therefore, usually greater.2 O n the one hand, then, the goal o f banking efficiency seem s to require encouragem ent of com petition, while, on the other, the goal of ban king stability seem s to require restriction of com petition. Both go als focus on the control of market entry o f new banks via charter regulation and on the control of market exit o f co m petin g banks via m erger regulation. Both goals hence affect the num ber of banks in a m arket and the level of deposit concentration. Thus, w e shall see, a high concentration ratio in b an kin g markets is am b igu o u s unless it is taken in the context o f tw o very different market situations. Tw o M arket Patterns: Rural and Urban If you closely exam ine the actual concentration of deposits held by the largest bank in counties within the Sixth District,3 you find that high levels of concentration o ccu r m ost often in tw o distinct types of markets. H igh concentration ratios appear in rural markets with total deposits of $45 m illion or less and in urban markets with deposits of $100 m illion or more. Chart I illustrates this fin ding with the use of 1970 concentration ratios of bank deposits held by 2On the other hand, there is an argument for free entry in banking, arising as a result of deposit insurance, close supervision of operations, and controlled liquidation by the banking agencies. Placing emphasis on supervision, rather than restricting entry, might make it possible to protect the public interest from the consequences of bank failure and also to retain the competitive benefits of easier entry. See D. A. Alhadeff, "A Reconsideration of Restrictions on Bank Entry," Quarterly Journal of Economics, May 1962. 3The Sixth Federal Reserve District consists of Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee. 187 Chart I A T hree-D im ensional Diagram of C oncentration in 3 7 6 C ounties of th e Sixth Federal R eserve D istrict, 1 9 7 0 . of total in the county, county having $200 million. The largest bank 40 percent of these deposits. Plotting every county in this manner produces a contour surface. Note: Best-fit curve for 1970 is presented rather than actual data. the largest bank in each of the 376 District counties having ban king offices. W e have plotted on this three-dim ensional diagram the num ber of banks in the county, the total deposits, and the percent share of these deposits (or concentration) held by the largest bank. Plotting every county in the District in this m anner produces an array of such points. A n d connecting these points into a c o n tinuous surface gives us the contour that visualizes the degree of concentration. In a nutshell, this diagram sh ow s that, in the Sixth Federal Reserve District at least, the highest level of concentration tends to occur in the sm allest rural markets and in distinctly urban markets. This fin ding fits the different regulatory em phasis given to tw o distinct market situations. In rural markets, inclu ding the num erous o n e -ban k com m unities, the regulatory concern is for stability rather than Digitized188 for FRASER com petition. It allow s a new co m p e tin g bank to enter only if the c om m u n ity's d em an d for banking services is great en ough for the existing bank(s), as well as for the new bank, to survive. O n the other hand, in urban markets, w here deposits are concentrated in several large organizations, the regulatory em phasis is on en cou ragin g com petition, especially by preventing the disappearance of existing sm aller com petitors through merger. W ith o u t qualification, the statem ent that low deposit concentration and unrestricted com petition in ban king markets are desirable per se is therefore quite m eaningless. M easu res of concentration clearly have little significance in rural markets where ban king stability is param ount. How ever, concentration m ay be a useful, though inconclusive, indicator of the com petitive situation in urban markets where com petition is a regulatory concern. NOVEMBER 1972, MONTHLY REVIEW In other w ords, 80-percent concentration by the largest bank in a rural market with $8 m illion in total deposits sh ou ld not surprise anyone. But 50 percent concentration by th e largest bank in an urban m arket with $400 m illion in deposits should raise the interest o f a regulatory authority appraising a prop osed m erger or h o ld in g com p an y acquisition in this market. Thus, the dual purpose of ban king regulation tends to confine the usefulness of concentration ratios to the larger b an king markets. Accurate Measure of Concentration in Urban Banking Markets W e can n o w recognize the usefulness of concentra tion ratios in m eeting only o n e of ban kin g market regulation's tw o goals— ban king efficiency. Even so, concentration ratios are not fo o lp ro o f measures o f com petitive m arket structure. Even in urban areas, the sim ple concentration ratio fails to take account o f the size discrepancy a m o n g the leading banks themselves. For example, all that a co n ce n tration ratio o f 75 percent for a city's three largest banks tells is that the " b ig three" together control 75 percent o f all bank deposits in the area. N o w the 75 percent ratio m ight represent three banks w hose m arket shares are 60 percent, 10 percent, and 5 percent, respectively; or perhaps each of the three banks holds 25 percent each. The observer w o u ld anticipate a stronger m arket influence from the largest bank in the earlier exam ple; yet, the sim ple concentration ratio does not call this to his attention. Therefore, to rem edy this particular shortcom ing, som e persons prefer another m easure o f concentra tion know n as the Herfindahl Index. This c o m p u ta tion does take into account the size distribution a m o n g the larger banks.4 (The m axim um index value for a m arket controlled entirely by a m o n o p o ly bank w o u ld be 100 percent x 100 percent or 1.0000.) The H erfindahl Indices for the tw o illustrations, each w ith 75 percent concentration, w o u ld be .3725 and .1875, respectively. Thus, w hereas the sim ple concentration ratio indicates that both markets are equally concentrated, the Herfindahl Index conveys m ore accurately that the second m arket is m uch less concentrated than the first (Table 2). W e , therefore, com pu ted a H erfindahl Index of concentration for 1960 and 1970 for each of the 4The Index is the sum of the squared market shares rather than a simple sum of the percentile shares (which is the way we arrived at the concentration ratio). i= n The actual calculation is HI = 2 X2. , where X: is x i i i=1 the percentile share of the ith firm. See I. M. Grossack, "Towards an Integration of Static and Dynamic Measures of Industry Concentration," Review of Economics and Statistics, August 1965. FEDERAL RESERVE BANK OF ATLANTA TABLE 2 M a rk e ts r a tio Firm 1 2 3 4 5 6 7 can but a have th e sam e d iff e re n t s iz e Market A (Share) 60% 1 10% h 5% ' 5% 5% 5% 5% c o n c e n tra tio n d is trib u tio n . Market B (Share) 75% concentration ratio i 25% 25% f 25% 5% 5% 5% 5% .3725 Herfindahl Index .1875 for three largest firms The Herfindahl Index distinguishes between the size distribution of different firms. Sixth District's county b an king markets that had m ore than one bank. These com putations also confirm ed w hat w e fou n d from the sim ple co ncen tration ratios o f the largest bank: The concentration of bank deposits is generally highest in the sm allest counties with only a few banks and again in the larger m etropolitan areas (see A p p e n d ix and C hart II on fo llo w in g page). Changes in Concentration So far, w e have dw elled on the degree of con cen tration in rural and urban b an king markets, but have not said w hether this concentration has increased or not. Therefore, to shed light on this question, w e have used several m ethods to com pare concentra tion in 1960 with 1970 in each county. O n e such com parison, using the Herfindahl Index for 1970, represents a sim ple com parative static measure. (A higher value for 1970 indicates that larger banks have increased their market shares du ring the ten-year period.) The other com parison represents a dyn am ic m easure of the ch ange in deposit concentration. That m easure com pares the 1960 percentile shares o f each bank in a given county with the 1970 market shares through regression analysis.5 (A coefficient greater than one generally indicates that the large banks have grow n at the expense o f the other banks and, hence, there has been an increase in concentration. A coefficient less than one indicates that the sm aller banks have w on larger shares from the large banks, and, hence, concentration has decreased.) 5A simple regression of the individual 1970 shares on the 1960 shares gives a biased picture, since there is a tendency for the growth rates of banks that are largest at the outset to be less than the average rate for the market. (This may be simply a characteristic of the arithmetic of percentages, not necessarily some rule of bank behavior.) Therefore, we calculated the geometric mean of the regression of 1970 on 1960 shares and the reciprocal of the regression of 1960 on 1970 shares. Specifically, the dynamic concentration measure is the geometric mean of 2xy/2x2 and 2y2/2xy where x is the deviation from the mean share in 1960 and y is the deviation from the mean share in 1970. See S. J. Prais, "The Statistical Conditions for a Change in Concentration," Review of Economics and Statistics, August 1958. 189 Even a scan nin g o f the fifth c o lu m n (concentra tion coefficient) in the A p p e n d ix show s that in the iarge majority o f counties there has been a general d ec re a se in concentration du ring the period 1960-70. The few instances o f increased concentration seem to have taken place prim arily in som e sm aller markets w h ose total deposits during the period grew from $7 m illion to about $35 m illion. M arket Share Stability Chart II M e asu re d by th e c o n c e n tra tio n c o u n tie s a n d H e rfin d a h l ty p ic a lly in d i s t i n c t l y 190 in th e th e h ig h e s t s m a lle s t ru ra l u rb an a re a s. H erfindahl Index for ea ch county w ith m ore th an on e bank. Rural Urban 1.0000 - - .7500 .5000 __________ - W e have seen that the Herfindahl Index and the d ynam ic coefficient are better measures o f co n ce n tration than the sim ple concentration ratio. Recall n ow that a ch ange in concentration, how ever m easured, is a m easure only of market structure; the associated change in com petition is m e rely p re su m e d . Thus, w hile w e kn ow that ban king markets in the Sixth District have generally becom e less concentrated, w e do not kn ow w hether they have becom e m ore com petitive. Here is w here still another aid— useful in trying to m ake this judgm ental leap from concentration to com petition — com es in. S up po se that new or s,mailer banks have gained a gro w in g share of a particular market. If that has happened, it m ay be indicative o f increased com petition, perhaps even aggressive com petition. But if the leading banks have m aintained their relative positions over m any years, it m ay be indicative o f little aggressive com petition. Thus, the stability of m arket shares is an indication of the intensity of com petition a m o n g banks in a market. A convenient m easure of market share stability is the correlation coefficient of the market shares in tw o different years, say 1960 and 1970. If the shares o f the com petitors have not ch an ge d — i.e., the largest bank in 1960 is still the largest in 1970, and the sm allest bank is still the sm allest— the correlation o f the shares is perfect and the correla tion coefficient is 1.000. Conversely, if the sm aller banks have been aggressive and have gained such an increased share that they are n ow the largest banks, there will be little correlation between the 1960 and 1970 shares and the coefficient w ill be low, say, .300. The coefficient w ill be low even w hen the largest bank has lost its lead position to the second largest. It is also possible, however, that the sm all banks could have gained such a large share that the concentration level has remained high. In such an event, the concentration measure by itself is not an accurate proxy for the degree of com petition. The low correlation of m arket shares indicates— despite the high concentration— that the level of com petition w as very great du ring the tenyear period between 1960 and 1970. Thus, by using the dynam ic m easure of co n ce n tration and the correlation coefficient of market shares, it is possible to get an im proved indication of the degree of com petition in a market. The joint In d ex , o c c u rs .2500 10 ■ 20 i 50 i 100 i 500 (million $) Total d e p o sits i 200 i i 1000 2000 3000 Note: Best-fit curve for 1970 is presented rather than actual data. m easure is still a structural one, but the judgm ental leap from com petitive structure to com petition is on firm er ground. If the concentration coefficient is g rea ter than o n e and the share correlation coefficient is high, the large banks have m aintained their leadership and even increased their shares. If the concentration coefficient is less than o n e and the share correlation coefficient is lo w , the sm aller banks have aggressively gained shares at the expense o f the larger banks or from mergers w ith other sm all banks. Judging from the figures in the Appendix, the latter describes w hat has typically happened in Sixth District b an kin g markets. In other w ords, th e larger ban ks h ave lo st s o m e o f th eir d o m in a n t p o sitio n s in th e face o f n e w ch a llen g es from sm a ller c o m p e tito rs. Conclusion In their concern to en cou rage com petition in the gro w in g urban b an king markets, the regulators of bank m ergers and h o ld in g co m p an y acquisitions are likely to invoke one or m ore of various m easures of m arket structure. Because these m easures are only approxim ation s to the actual degree of com petition in individual markets, bankers can be sure that their p ro p o sed mergers w ill not be approved or denied sim p ly on the basis of concentration arithmetic, how ever sophisticated. Nonetheless, bankers can be equally sure that high levels of concentration in urban markets w ill incur the scrutiny o f the A m erican concern for co m p e ti tive markets. W h ile m easures of concentration by them selves are im perfect as gu idelines for mergers, they are extremely useful in sign a lin g a possible problem area w arranting a closer l o o k * NOVEMBER 1972, MONTHLY REVIEW A P P E N D IX Static and Dynamic Measures of Deposit Concentration Sixth District Commercial Banks State and County Total Deposits 1970 ($ Mil.) ALABAMA Hale . . . . . 10.2 Bibb . . . . . 12.4 Sumter . , . . 15.1 Clay . . . . . 15.2 Crenshaw . . 16.1 Bullock . . 16.3 Macon . . . . 16.3 . . 16.4 Conecuh Blount . . . . 16.4 Wilcox . . . . 16.8 Perry . . . . . 17.6 Choctaw . . 18.3 Lamar . . . . 19.0 Fayette . . . . 19.3 Lawrence . . . 20.0 Saint Clair . . 20.6 Autauga . . . . 21.4 Randolph . . 22.4 Pickens . . . . 23.4 Chilton . . . . 24.1 Chambers . . 24.7 . . 24.9 Monroe Marion . . . . 26.7 DeKalb . . . . 28.3 . . 28.5 Cherokee Henry . . . . 28.6 Russell . . . . 29.5 Cullman . . 29.6 Colbert . . . . 30.3 Butler . . . . 30.5 Shelby . . . . 30.6 Franklin . . 31.6 Geneva . . . . 33.3 . . 34.8 Marengo Elmore . . . . 35.5 Dale . . . . . 38.1 Clarke . . . . 39.0 Jackson . . 39.9 Pike . . . . . 44.7 Barbour . . 47.1 . . 48.1 Tallapoosa Coffee . . . . 53.4 Walker . . . . 54.0 . . 58.3 Escambia Baldwin . . 61.6 Talladega . . . 66.1 . . 67.9 Covington Lee . . . . . 74.7 . . 75.4 Marshall Lauderdale . . 83.4 Dallas . . . . 92.8 Etowah . . . 107.9 Houston . . . 112.4 Tuscaloosa . 122.0 Calhoun . . . 148.3 Madison . . . 158.8 Morgan . . . 297.9 Montgomery . 401.5 Mobile . . . 498.9 Jefferson 1,349.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FLORIDA Levy . . . . . 9.8 . . . 10.9 . Bradford Sumter . . . . 11.2 . Herfindahl Index Coefficients 1970 Share Concen Stability1 tration2 . 0.5207 . 0.3581 . 0.5048 . 0.5466 . 0.3702 . 0.5009 . 0.4475 . 0.3574 . 0.5002 . 0.3661 . 0.4953 . 0.5166 . 0.3507 . 0.4317 . 0.5033 . 0.2446 . 0.5996 . 0.2549 . 0.2053 . 0.2903 . 0.3857 . 0.2418 . 0.2897 . 0.2560 . 0.4077 . 0.4306 . 0.3122 . 0.4301 . 0.4205 . 0.4452 . 0.2592 . 0.2155 . 0.2119 . 0.2263 . 0.3091 . 0.3349 . 0.2617 . 0.3760 . 0.3466 . 0.1751 . 0.2929 . 0.3320 . 0.3370 . 0.2193 . 0.1760 . 0.1910 . 0.2259 . 0.1818 . 0.1546 . 0.5189 . 0.2722 . 0.1875 . 0.3405 . 0.4656 . 0.2119 . 0.3288 . 0.6248 . 0.3572 . 0.3508 . 0.3019 . 1.000 . 0.506 . 0.855 . 0.372 . 0.000 . 1.633 . 1.000 . 1.511 . 1.000 . 0.726 . 2.236 . 0.000 . 1.758 . 0.985 . 0.702 . 2.113 . 0.778 . 0.114 . 0.727 . 2.101 . 0.992 . 1.012 . 1.000 . 0.182 . 0.917 . 0.654 . 0.993 . 0.985 . 0.361 . 1.000 . 0.513 . 0.761 . 1.000 . 0.721 . 0.551 . 0.553 . 0.818 . 0.262 . 1.000 . 0.799 . 0.943 . 0.459 . 0.904 . 1.025 . 0.918 . 0.788 . 0.864 . 0.477 . 0.989 . 0.999 . 0.902 . 0.745 . 0.578 . 0.409 . 0.998 . 0.910 . 0.988 . 0.442 . 0.942 . 0.746 . 0.980 . 0.626 . 0.444 . 0.279 . 0.957 . 0.865 . 1.228 . 0.951 . 0.962 . 0.903 . 0.902 . 0.555 . 0.833 . 0.309 . 0.999 . . 1.370 . 0.948 . 0.908 . 0.680 . 0.695 . 0.991 . 0.908 . 0.955 . 0.886 . 0.992 . 0.824 . 0.959 . . 0.877 . 0.808 . 0.761 . 0.956 . 0.974 . 0.951 . 0.769 . 0.789 . 0.982 . 0.841 . 0.702 . 0.834 . 0.993 . 0.972 . 0.859 . 0.385 . 0.751 . 0.999 . 0.958 . 0.993 . 0.817 . 0.994 . 0.824 . 0.912 . 0.698 . 0.996 . 0.947 . 0.998 . 0.888 . 0.995 . 0.924 . 0.963 . 0.790 0 3867 . . 0.3818 0.5583 . . 0.5202 0.5016 . . 0.5018 . 0.941 . . 0.953 . 0.997 . 0.589 . 1.061 . 1.000 1960 . 0.5806 . . 0.5128 . 0.5018 . 0 5204 . . 0.4033 . 0.5002 . 0.3703 . 0.3387 . 0.5153 . . 0.2763 . 0 4916 . 1.0000 . 0.3740 . 0.4349 . 0.5245 . . 0.2771 . 0.6918 . . 0.2661 . . 0.2775 . . 0.3129 . 0.5821 . 0.2399 . 0.3444 . . 0.4459 . 0.4078 . 0.5086 . 0.6217 . . 0.4501 . 0.7803 . . 0.5344 . . 0.2738 . 0.2792 . 0.2159 . . 0.2062 . 0.3227 . 0.5251 . 0.3737 . 0.3171 . 0 3674 . 0.2126 . 0.3125 . 0.3681 . 0.4287 . 0.2250 . 0.1829 . 0.1922 . 0.2668 . 0.2052 . 0.1851 . 0.6734 . 0.2978 . 0.2468 . 0.3583 . 0.5313 . 0.2529 . 0.4988 . 0.6744 . 0.3996 . . 0.3862 . 0.4293 . 1 Correlation coefficients for 1960 and 1970 shares. Maximum value is 1.000. FEDERAL RESERVE BANK OF ATLANTA State and County Total Deposits 1970 ($ Mil.) Herfindahl Index Coefficients 1970 Share Concen Stability1 tration2 Gulf . . . . . 12.6 . 0.5493 . . 0.5542 Taylor . . . . 13.5 . 0.5213 . . 0.5041 Hendry . . . . 13.6 . 1.0000 . . 0.5948 Madison . . 15.2 . 0.5615 . . 0.5103 Walton . . . . 15.4 . . 0.5457 . . 0.5704 Hardee . . . . 18.6 . 0.6562 . . 0.5849 Clay . . . . . 25.4 . 0.4166 . . 0.3749 . . 27.8 . 0.4098 . . 0.4249 Suwanee Osceola . . . . 28.6 . 0.5000 . . 0.3724 . . 29.8 . 1.0000 . . 0.5599 Hernando Citrus . . . . 33.4 . 0.6202 . . 0.4339 . . 34.4 . 0.4299 . . 0.4686 Putnam . . 34.6 . 0.4249 . . 0.4511 Columbia Jackson . . 36.1 . 0.3388 . . 0.3388 Gadsden . . 38.0 . 0.3548 . . 0.3329 Santa Rosa . . 38.9 . 0.4347 . . 0.2667 Saint Johns . . 50.1 . 0.4227 . . 0.3934 . . 50.7 . 1.0000 . . 0.5004 Charlotte Monroe . . . . 62.4 . 0.3466 . . 0.2614 Saint Lucie . . 65.0 . 0.4791 . . 0.4168 . . 66.7 . 0.4482 . . 0.2849 Highlands Indian River . . 69.9 . 0.6588 . . 0.4597 Martin . . . . 72.4 . 0.8671 . . 0.3920 Seminole . . 76.8 . 0.4155 . . 0.2380 . . 78.7 . 0.2245 . . 0.1654 Okaloosa Bay . . . . . 99.3 . 0 5045 . . 0.3184 Pasco . . . . 113.3 . 0.3050 . . 0.2464 Marion . . . 115.7 . 0.3059 . . 0.2160 Collier . . . . 118.4 . 0.3994 . . 0.3654 Alachua . . . 123.4 . 0.2720 . . 0.2312 Lake . . . . 148.6 . 0.1325 . . 0.1200 Leon . . . . 173.2 . 0.2909 . . 0.2235 . 199.9 . 0.2182 . . 0.1433 Escambia Manatee . . . 216.0 . 0.3323 . . 0.1979 Brevard . . . 248.2 . 0.1545 . . 0.0765 Lee . . . . . 273.1 . 0.4644 . . 0.2216 Volusia . . . 301.3 . 0.1687 . . 0.0907 Sarasota . . . 379.8 . 0.2408 . . 0.1426 Polk . . . . . 425.2 . 0.1201 . . 0.0983 Orange . . . 774.6 . 0.2257 . . 0.2230 Palm Beach . 864.0 . 0.1193 . . 0.0556 Hillsborough 1,003.6 . 0.2363 . . 0.1889 Duval . . 1,266.5 . 0.2664 . . 0.2115 Pinellas . . 1,322.3 . 0.1002 . 0.0549 1,394.7 . 0.0974 . . 0.0537 Broward Dade . . 3,258.4 . 0.1309 . . 0.1037 . 1.048 . 1.000 . 0.990 . 0.443 . 1.000 . 0.435 . 1.000 . 0.407 . 1.002 . . 1.243 . 1.000 . 0.737 . 0.801 . 0.707 . 0.989 . 1.095 . 0.484 . 0.782 . 0.346 . 1.000 . 0.984 . 0.705 . 0.994 . 1.183 . 0.996 . 1.134 . 0.999 . 0.984 . 0.341 . 0.889 . 0.704 . 0.302 . 0-995 . 0.911 . 0.028 . 0.000 . 0.807 . 0.342 . 0.934 . 0.757 . 0.419 . 0.885 . 1.000 . 0.623 . 0.480 . 0.894 . 0.902 . 0.420 . 0.746 . 0.636 . 0.972 . 0.624 . 0.661 . 0.760 . 0-970 . 0.670 . 0.928 . 0.910 . 0.948 . 0.864 . 0.848 . 0.786 . 0.969 . 0.770 . 0.901 . 0.606 . 0.931 . 0.593 . 0.885 . 0.457 . 0.938 . 0.560 . 0.917 . 0.536 . 0.948 . 0.614 . 0.831 . 0.919 . 0.965 . 0.992 . 0.779 . 0.506 . 0.861 . 0.992 . 0.993 . 0.857 . 0.614 . 0.946 . 0.942 . 0.620 . 0.874 . 0.985 GEORGIA Talbot . . . . Jones . . . . Atkinson . . . Stewart . . . Montgomery . Wilcox . . . Madison . . . Pike . . . . . Oglethorpe Jasper . . . . Hancock . . . Paulding . . . Jefferson Davis Liberty . . . . Randolph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 4.1 4.3 4.5 5.6 5.7 6.0 6.1 6.6 7.3 7.8 8.3 8.8 8.8 8.9 . . . . . . . . . . . . . . . 1960 0.5980 0.5924 0.6936 0.5067 1.0000 0.3384 0.5003 0 4089 0 5231 0.5031 1.0000 1.0000 1.0000 1.0000 0 5362 . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7175 0.6683 0.5801 0.5037 0.4329 0.3129 0.5006 0.4108 0.5206 0.5036 0.8652 0.6023 0.5000 . 0.8083 . 0.5544 1.000 0.999 1.000 0.980 0.896 0.967 0.000 0.995 0.995 1.000 1.000 1.000 0.520 1.000 1.000 . . . . . . . . . . . . . . . 1.490 1.350 0.644 0.748 0.387 0.842 1.732 1.013 0.942 1.061 0.855 0.452 0.000 0.785 1.226 - Geometric mean of the regression of 1970 on 1960 percentile shares of total deposits and the reciprocal of the regression of 1960 on 1970 shares. Coefficients greater than one indicate increase in market concentration. 191 Static and Dynamic Measures of Deposit Concentration Sixth District Commercial Banks State and County J o h n so n . . C a to o s a . . T e lf a ir . . C a lh o u n B roo ks . . T a y lo r . . Irw in . . F a y e tte . . S e m in o le A p p lin g . . C a n d le r P u tn a m B u tts . . . Cam den . . W ilk e n s o n C h a rlto n P ie r c e . . E vans . . D o oly . . B a co n . . E a rly . . . M o rg a n R o c k d a le P u la s k i . . B le c k le y M o n ro e . . S c re v e n . . D o u g las C o ok . . . M acon . . T a ttn a ll C h a tto o g a B e rrie n . . W o rth . . G ra d y . . T u rn e r . . H a rt . . . F ra n k lin W ilk e s . . P each . . C ris p . . . B a rro w . . Je ffe rs o n G re e n e . . N e w to n . . F o rs y th . . B u rk e . . M c D u ffie Ben H ill M e r iw e th e r T e rre ll . . Dodge . . W a s h in g to n Jac kso n . . H a ra ls o n H e n ry . . D e c a tu r . . E m anuel S te p h e n s E lb e rt . . U p so n . . M itc h e ll Toom bs . . S u m te r . . C o ffe e . . W a lk e r . . W a lto n . . C h e ro k e e W a re . . . G ordon . . B a ld w in B u llo c k . . P o lk . . . H a b e rs h a m C o w e ta . . Total Deposits 1970 ($ Mil.) . . 9.7 . . . 9.8 . . 10.2 . . 10.3 . . 10.3 . . 10.4 . . 10.6 . . 10.7 . . 10.9 . . 1 1 .0 . . 11.1 . . 11.2 . . 11.2 . . 11.4 . . 11.9 . . 12.0 . . 12.2 . . 12.4 . . 12.4 . . 12.9 . . 13.4 . . 13.4 . . 13.7 . . 13.8 . . 13.8 . . 14.5 . . 14.5 . . 15.1 . . 15.1 . . 15.6 . . 16.3 . . 16.4 . . 17.0 . . 17.3 . . 17.4 . . 17.4 . . 17.7 . . 17.9 . . 18.2 . . 18.2 . . 18.3 . . 18.4 . . 18.8 . . 19.0 . . 19.2 . . 20.2 . . 20.4 . . 20.4 . . 20.6 . . 21.2 . . 21.5 . . 21.6 . . 21.6 . . 21.7 . . 21.7 . . 21.7 . . 22.2 . . 25.1 . . 25.8 . . 26.7 . . 27.5 . . 29.0 . . 29.1 . . 30.2 . . 30.3 . . 31.6 . . 32.1 . . 32.3 . . 32.7 . . 33.6 . . 33.9 . . 33.9 . . 36.5 . . 37.8 . . 38.2 . Herfindahl Index Share Concen 1970 Stability1 tration2 1960 . 0.5656 1.0000 0.4775 . 0.5757 0.5004 0.5049 0.6144 1 .0 0 0 0 0.5012 1 .0 0 0 0 1 .0 0 0 0 0.5445 1 0000 . 0.3387 0.3642 1 .0 0 0 0 0.4262 0.5208 0.2788 0.5078 0.5172 0.3654 1 .0 0 0 0 0.4110 0.5003 0.3504 0.5045 0.6608 0 3668 0.2481 0.3556 1 .0 0 0 0 0.3364 0.5372 0.5495 0.5125 1 .0 0 0 0 0.4454 0.5460 1 .0 0 0 0 0 5025 0.5000 0.4057 0.2630 0.8373 1 .0 0 0 0 0.4011 0.5014 0.6335 0.2659 0.5027 0.4244 0.6388 0.2907 0.4347 0.8385 0.5006 0.3942 0.5005 0.5020 0.6237 0.2678 0.3483 0.4532 0.4550 0.5446 . 0.3680 . 0.3629 0.3629 . 1 .0 0 0 0 0.3423 0.4107 0.3367 0 4068 . 0.4586 192for FRASER Digitized Coefficients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5560 . 1.000 . 0.5437 . 1 .0 0 0 . 0.3222 . 0.987 . 0.3787 . 0.971 . 0.999 . . 0.4543 . 0.981 . 0.5057 . 0.992 . 0.5047 . 1 .0 0 0 . 0.5468 . 0 .0 0 0 . 0.5033 . 0.5759 . 1 .0 0 0 . 0.6009 . 1 .0 0 0 . 0.996 . . 0.5178 . 0.5285 . 1 .0 0 0 . 0.934 . 0.2520 . 0.981 . 0.3482 . 1 .0 0 0 . . 0.6205 . 0.4262 . 0.889 . 0.5091 . 1 .0 0 0 . . 0.2780 . 0.979 . . 1 .0 0 0 . . 0.5260 . 1 .0 0 0 . . 0.5103 . 0.987 . . 0.3645 . 0.8354 . 1 .0 0 0 . . 0.4440 • . 0.985 . . 0.5086 . 1 .0 0 0 . . 0.3375 . 0.651 . . 0.999 . . 0.4736 . 0.5155 . . 1 .0 0 0 . . 0.3692 . 0.998 . . 0.808 . . 0.2848 . 0.3069 . 1 .0 0 0 . . 0.6829 . 1 .0 0 0 . . 0.3399 . . 0.968 . . 0.5089 . . 0.995 . . 0.4489 . . 0.982 . . 0.5006 . 0 .0 0 0 . . 0.6136 . . 1 .0 0 0 . . 0.3604 . . 0.684 . . 0.5296 . . 0.961 . . 0.4056 . . 0.712 . . 0.5016 . . 0 .0 0 0 . . 0.5031 . . 0.520 . . 0.3039 . . 0.759 . . 0.2830 . . 0.995 . . 0.5336 . 0.949 . . 0.5313 . . 0.999 . . 0.4055 . . 0.984 . . 0.5039 . . 1 .0 0 0 . . 0.5485 . . 1 .0 0 0 . . 0.2575 . . 0.977 . . 0.5107 . . 0.982 . . 0.4066 . . 0.995 . . 0.4231 . . 0.979 . . 0.3272 . . 0.937 . . 0.2933 . . 0.986 . . 0.5139 . . 0.964 . . 0.5003 . . 0.800 . . 0.3049 . . 0.962 . . 0.5000 . . 0.520 . . 0.4607 . . 0.989 . . 0.5794 . . 0.999 . . 0.2676 . . 0.989 . . 0.2685 . . 0.683 . . 0.4462 . . 0.999 . . 0.3646 . . 0.842 . . 0.3551 . . 0.334 . . 0.3349 . . 0.992 . . 0.3327 . . 0.995 . . 0.3497 . . 0.982 . . 0.8648 . . 1 .0 0 0 . . 0.3574 . . 0.640 . . 0.4248 . . 1 .0 0 0 . . 0.3427 . . 1 .0 0 0 . . 0.3781 . . 0.442 . . 0.4551 . . 1 .0 0 0 . . 0.924 . 0.296 . 0.564 . 0.433 . 0.903 . 1.099 . 0.205 . 0.306 . 1.633 . 0.389 . 0.449 . 0.633 . 0.239 . 0.612 . 0.689 . 0.491 . 0.999 . 0.665 . 0.990 . 1.826 . 0.778 . 0.988 . 0.819 . 1.193 . 6.557 . 0.491 . 0.905 . 0.310 . 1.010 . 1.326 . 0.734 . 0.605 . 1.021 . 0.492 . 0.731 . 0.220 . 0.477 . 0.492 . 0.961 . 0.330 . 0.817 . 1.630 . 0.589 . 1.597 . 0.630 . 0.251 . 1.014 . 1.690 . 0.602 . 0.936 . 1.964 . 0.948 . 0.543 . 1.378 . 0.630 . 0.670 . 0.817 . 0.618 . 0 .0 0 0 . 0.869 . 0.801 . 1 .0 0 0 . 0.434 . 0.970 . 0.803 . 0.321 . 0.848 . 0.856 . 0.746 . 0.854 . 1.630 . 1.087 . 1.697 . 0.780 . 0.986 State and County Low ndes . . . 40.9 . 41.3 T ift . . . . C a rro ll . . . . 42.0 B a rto w . . . . 43.0 H o u s to n . . . 43.6 T h o m a s . . . . 43.7 C la rk e . . . . 46.8 C la y to n . . . . 48.5 C o lq u itt . . . 49.1 L a u re n s . . . . 52.6 G w in n e tt . . . 59.5 T ro u p . . . . 63.5 S p a ld in g . . . 65.9 G ly n n . . . . 76.0 . 82.7 H a ll . . . . W h itfie ld . . . 92.3 F lo yd . . . . 104.7 D o u g h e rty . 127.2 B ib b . . . . 146.4 Cobb . . . . 160.5 D e K a lb . . . 194.1 R ic h m o n d . . 210.0 M uscogee . . 227.9 C h a th a m . . 1,347,9 F u lto n . . . 2,073.5 Coefficients Herfindahl Index Total Deposits 1970 ($ Mil.) 1960 Share Concen Stability1 tration2 1970 . 0.3659 . 0.3441 . 0.2555 . 0.4921 . 0.2844 . 0.3764 . 0.6243 . 0.3043 . 0.4361 . 0.2737 . 0.2036 . 0.2801 . 0.5086 . 0.4298 . 0.3735 . 0.3750 . 0.3525 . 0.3655 . 0.5966 . 0.1811 . 0.1003 . 0.5057 . 0.3247 . 0.7370 . 0.2498 . 0.983 . 0.961 . 0.986 . 1 .0 0 0 . 0.936 . 0.979 . 0.999 . 0.653 . 0.928 . 0.968 . 0.968 . 0.942 . 0.953 . 1 .0 0 0 . 0.826 . 0.999 . 0.998 . 0.933 . 0.974 . 0.946 . 0.420 . 0.989 . 0.993 . 1 .0 0 0 . 0.990 . 0.838 . 0.776 . 0.885 . 0.968 . 0.636 . 1.014 . 0.839 . 0.586 . 0.949 . 0.840 . 0.619 . 0.641 . 0.957 . 0.923 . 2.113 . 0.847 . 0.958 . 0.912 . 0.724 . 0.700 . 0.401 . 0.951 . 0.850 . 0.997 . 0.888 1 .0 0 0 0 . . 0.5406 0.5166 . . 0.3695 1 .0 0 0 0 . . 0.5553 . 1 .0 0 0 . 0.982 . 1 .0 0 0 . 0.285 . 0.444 . 0.332 1 .0 0 0 0 . 0.5220 . 1 .0 0 0 0 . 0.5300 . 0.6142 . 0.5005 . 0.5000 . 1 .0 0 0 0 . 0.3671 . 0.3040 . 0.2115 . 0.3961 . 0.7766 . 0.3645 0.5124 0.1965 0.4536 0.2357 . 0.2677 0.2171 0.2214 0.2926 . 0.5014 0.3780 0.4168 0.5095 0.2802 . 1 .0 0 0 . 0.993 . 1 .0 0 0 . 0 .0 0 0 . . 1 .0 0 0 . . 0.974 . . 0.520 . 0.999 . . 0.856 . . 0.938 . . 0.837 . . 0.599 . . 0.948 . . 0.895 . . 0.988 . . 0.922 . . 0.963 . . 0.989 . . 0.921 . . 0.701 . . 0.939 . . 0.995 . . 0.986 . . 0.912 . . 0.985 . . 0.993 . . 0.946 . . 0.392 . 0.661 . 0.346 . 0.116 . 0.441 . 0.545 . 0.702 . 0.190 . 0.633 . 0.700 . 0.702 . 0.576 . 0.378 . 0.591 . 0.694 . 0.730 . 0.874 . 0.786 . 0.764 . 0.585 . 0.770 . 0.722 . 0.696 . 0.870 . 0.905 . 0.788 . 0.929 . 0.4361 0.4065 . 0.2712 0.5086 . 0.3354 . 0.3702 0.6769 0.5033 0.4473 . 0.3285 0.2632 0.3948 0.5248 0.4465 0 3423 0.4245 0.3618 . 0.4059 0.8355 0.2538 0.3484 0.5465 0.3534 . 0.7417 . 0.3043 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LOUISIANA W e s t B a to n R o uge . . . 14.1 14.7 E a st F e lic ia n a J e ffe rs o n D a vis 17.9 St. Joh n T h e B a p tis t . . . 21.3 V e rn o n . . . . 22.6 L iv in g s to n . 23.8 S a in t J a m e s . . 24.8 P o in te e C o u p e e 26.8 S a in t M a r tin . . 28.0 B e a u re g a rd . 30.7 S a in t C h a rle s . 32.5 . 35.4 E v a n g e lin e Ib e r v ille . . . 41.0 A v o y e lle s . . . 44.5 A s cen sio n . . . 45.6 S a in t B e rn a rd .47.9 S a in t T a m m a n y .50.5 . 62.4 W a s h in g to n 63.6 V e rm illio n 77.4 T a n g ip a h o a Ib e r ia . . . . 78.5 A c a d ia . . . 81.4 S a in t M a ry . 85.0 S a in t L a n d ry . 95.9 L a fo u rc h e . . 117.4 T e rre b o n n e . . 135.6 L a fa y e tte . . 159.7 R a p id e s . . . 202.4 C a lc a s ie u . . 268.5 J e ffe rs o n . . 310.8 E a st B a to n Rouge . . . 793.1 O rle a n s . . 1,955.9 MISSISSIPPI . . . 3.1 . . . 6.6 . . . 8. 8 11.2 . . 13.7 . . 13.9 . . 14.4 . . 16.8 . . 18.5 L a w re n c e W ilk e n s o n P e rry . . C o v in g to n C la ib o rn e S m ith . Lam ar . C la r k e . Adam s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5770 . 0.5095 . 0.5599 . 0.5003 . 0.5222 . 0.3244 . 0.5000 . 0.5179 . 0.2969 . 0.2509 . 0.1676 . 0.2984 . 0.3966 . 0.2575 . . 0.4195 . . 0.1825 . . 0.4052 . . 0.2093 . . 0.2258 . . 0.1839 . . 0.1822 . . 0.2323 . . 0.4146 . . 0.3467 . . 0.3716 . . 0.3917 . . 0.2567 . . . 0.2118 . 0.2669 . 0.2072 . . 0.923 . . 0.972 . 0.2110 . . 0.984 . . 0.779 . 0.7022 . 0 5318 . 0 5477 . . 0.5004 . 0.5622 . 0.5152 . 0.5014 . . 0.4447 . . 0.5400 . . . . . . . . . 1 .0 0 0 0 1 .0 0 0 0 0.5149 0.5003 0.5544 0.5005 0.5007 0.4771 1 .0 0 0 0 . . . . . . . . . . 0 .0 0 0 . . 1.573 . 1 .0 0 0 . . 3.965 . 1.004 . . 0.558 . 0 .0 0 0 . . 0.707 . 1 .0 0 0 . . 0.935 . 1 .0 0 0 . . 0.199 . 1 .0 0 0 . . 0.655 . 0.999 . . 1.136 . 0 .0 0 0 . . 3.536 NOVEMBER 1972, MONTHLY REVIEW Static and Dynamic Measures of Deposit Concentration Sixth District Commercial Banks State and County Total Denosits 1970 ($ Mil.) Herfindahl Index 1960 1970 Coefficients Share Concen Stability1 tration2 Rankin . . . 19.1 . 0.7612 . . 1.0000 Wayne . . . 19.1 . 1.0000 . . 0.5630 Leake . . . 20.5 . 0.6411 . . 0.6342 Simpson . 21.6 . 0.5003 . . 0.5076 Pike . . . . 22.6 . 0.2837 . . 0.3852 Neshoba . 26.9 . 0.5207 . . 0.5354 Pearl River . 28.8 . 0.3550 . . 0.3424 Scott . . . . 30.6 . . 0.3188 . . 0.3147 Marion . . . 30.7 . 0.5022 . . 0.5004 Madison . 31.3 . 0.4232 . . 0.3849 Copiah . . . 35.2 . 0.2660 . . 0.2661 Lincoln . 37.0 . 0.5955 . . 0.5735 Yazoo . . . . 40.3 . 0.5455 . . 0.5277 Newton . . . 41.8 . 0.3681 . . 0.3765 Warren . . . 61.8 . . 0.5043 . . 0.5022 Jackson . 79.6 . 0.5420 . . 0.4347 Jones . . . 82.5 . 0.4250 . . 0.4270 . 89.5 . 0.3596 . . 0.3379 Lauderdale Forrest . . . 116.9 . 0.5613 . . 0.4986 Harrison . . . 150.3 . 0.3401 . . 0.4838 Hinds . . . . 862.9 . 0.4517 . . 0.4276 . . . . . . . . . . . . . . . . . . . . . TENNESSEE Grundy . . Perry . . . Morgan . . Trousdale Unicoi . . . Lewis . . Cheatham Stewart . . Wayne . . Jackson . Humphreys Cannon . . Robertson Hickman Marion . . DeKalb Overton . . Rhea . . . 1.071 . 1.000 . 0.996 . 1.004 . 1.000 . 0.995 . 1.000 . 0.996 . 0.980 . 1.000 . 1.000 . 0.970 . 0.999 . 0.998 . 0.997 . 0.812 . 1.000 . 0.988 . . . . . . 5.3 . 6.7 . 8.8 . 8.9 . 9.3 . 10.0 . 10.2 . 10.4 . 13.0 . 13.1 . 14.2 . 15.1 . 16.0 . 17.2 . 17.8 . 19.0 . 19.2 . 19.6 . . . . . . . . . . . . . . . . . . 0,5402 0 5780 0 5174 0 5178 1.0000 0.5290 0.6783 . 0.3875 0.4685 1 0000 . 0.6034 . 0.7000 0.8740 . 0.5875 0.5477 0 4056 1.0000 0 6031 . . . . . . . . . . . . . . . . . . . 0.5002 . 0.5759 . 0.5362 . 0.5390 . 0.7162 . 0.5141 . 0.7485 . 0.4251 . 0.4246 . 0.6066 . 0.5143 . 0.5691 . 0.7837 . 0.5426 . 0.4328 . 0.2890 . 0.5938 . 0.4445 1.000 . 1.384 1.001 . 0.355 . 0.989 0.998 0.000 . 6.164 0.210 . 1.487 . 1.311 1.000 0.993 . 0.644 0.913 . 0.971 1.111 . 0.426 0.999 . 0.758 0.888 . 1.003 1.000 . . 0.877 1.000 . 0.781 . 1.116 0.943 0.968 . 0.707 0.966 . . 0.697 0.975 . 1.011 0.838 . 0.422 0.922 . 0.851 . 1.611 0.940 0.999 . 0.962 . 0.071 . 0.986 . 1.442 . 1.480 . 0.658 . 0.700 . 1.180 . 1.129 . 0.822 . 0.462 . 0.373 . 0.842 . 0.913 . 0.697 . 0.681 . 0.501 . 0.433 . 0.642 State and County Total Deposits 1970 ($ Mil.) 'Macon . . . . 19.7 Scott . . . . . 20.5 Polk . . . . . 21.2 Jefferson . . 23.5 . . 23.6 Claiborne Cumberland . . 24.4 Smith . . . . 26.9 Cocke . . . . 27.2 Lawrence . . 28.6 Monroe . . . . 29.4 Dickson . . 29.4 Wilson . . . . 31.4 Campbell . . 32.5 Carter . . . . 34.1 . . 34.6 Marshall Franklin . . 36.6 . . 39.3 Hawkins Loudon . . . . 40.4 Coffee . . . . 41.7 Lincoln . . . . 42.1 Sevier . . . . 42.2 Bedford . . . . 42.8 Roane . . . . 43.5 Giles . . . . . 46.2 Sumner . . 47.8 Williamson . . 49.0 McMinn . . . . 50.2 Warren . . . . 51.0 Rutherford . . 51.8 Maury . . . . 57.8 . . 59.6 Putnam . . Hamblen . . 59.8 Greene . . . . 60.1 Bradley . . . . 76.8 Montgomery . . 80.5 Anderson . . 81.0 Washington . 134.9 Sullivan . . . 140.5 Knox . . . . 548.6 Hamilton . 606.1 1,504.9 Davidson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Herfindahl Index 1960 1970 . 0.5939 . . 0.5000 . 0.4028 . . 0.4145 . 0.5228 . . 0.4534 0.3846 . . 0.3719 0.5398 . . 0.5504 . 1.0000 . . 0.5917 . 0.5168 . . 0.5341 . 0.5693 . . 0.5114 . 0.5325 . . 0.4126 . 0.3949 . . 0.4069 0.3575 . . 0.3227 . 0.7504 . . 0.5131 0.2409 . . 0.2418 0.5107 . . 0.5002 . 0.3146 . . 0.3293 0.3055 . . 0.2521 0.6991 . . 0.6168 0.3291 . . 0.3025 . 0.2797 . . 0.2694 . 0.4222 . . 0.4222 0.4001 . . 0.3496 0.5069 . . 0.5001 0.3861 . . 0.3719 03782 . . 0.3788 0.2462 . . 0.1750 0.4532 . . 0.4226 0.2643 . . 0.2254 0.4566 . . 0.4726 0.6149 . . 0.5492 0.3818 . . 0.3789 0.4066 . . 0.3542 0.5053 . . 0.3625 0.4296 . . 0.4293 0.3612 . . 0.3385 . 0.3426 . . 0.3408 0.3342 . . 0.2675 0.3868 . . 0.3616 0.4043 . . 0.5318 0.3586 . . 0.2872 0.4193 . . 0.4030 0.2948 . . 0.3111 Coefficients Share Concen Stability1 tration2 . 0.520 . 0.940 . 0.987 . 0.996 . 1.000 . 1.000 . 1.000 . 1.000 . 0.988 . 0.968 . 0.988 . 0.992 . 0.986 . 0.933 . 0.998 . 0.876 . 1.001 . 0.946 . 0.942 . 1.001 . 0.973 . 0.000 . 0.967 . 0.935 . 0.884 . 0.995 . 0.983 . 0.999 . 0.992 . 0.986 . 0.961 . 0.992 . 0.919 . 0.950 . 0.941 . 0.824 . 0.986 . 0.825 . 0.986 . 0.960 . 0.984 . 0.000 . 1.080 . 0.796 . 0.866 . 1.125 . 0.429 . 1.427 . 0.405 . 0.759 . 1.040 . 0.883 . 0.656 . 1.015 . 0.137 . 1.062 . 0.784 . 0.766 . 0.814 . 0.812 . 1.000 . 0.493 . 0.172 . 0.854 . 1.002 . 0.556 . 0.863 . 0.776 . 1.038 . 0.906 . 0.989 . 0.815 . 0.411 . 0.997 . 0.428 . 0.898 . 0.459 . 0.903 . 1.352 . 0.792 . 0.901 . 1.041 NOW AVAILABLE F e d e ra l R e se rv e P o lic y - M a k in g an d Its P r o b le m s A r e v i e w o f th e p r in c ip a l to o l s o f m o n e t a r y p o l i c y , th e p r o b l e m s f a c e d b y th o s e w h o f o r m u la te p o l i c y , a n d th e a c tio n s ta k e n b y m o n e t a r y a u th o r itie s d u r in g th e p a s t s e v e r a l y e a r s . P u b lis h e d in 1 9 6 4 , th is c o ll e c ti o n o f a r tic le s h a s b e e n u p d a t e d a n d r e v is e d . It is n o w a v a ila b le w ith th e s e lim its : s in g le c o p ie s to in d iv id u a ls ; 1 0 c o p i e s to b a n k in g a n d e d u c a ti o n a l in s titu tio n s . R e se a rc h D e p a r tm e n t, F e d e ra l R e s e r v e B a n k o f A tla n ta , A tla n ta , G e o r g ia 3 0 3 0 3 . FEDERAL RESERVE BANK OF ATLANTA 193 T e n n e s s e e 's E c o n o m y B u ild s U p M o m e n t u m F o r F u r t h e r G a in s b y Jo h n M . G o d fre y As Tennessee's eco n o m y approaches the end of the secon d year of the current e co n o m ic upturn, there are signs that the u nderlying e c o n o m ic strength has generated sufficient m om entu m to carry the e c o n o m y forw ard for som e time. The m ajor evidence of this ec o n o m ic strength m ay be checked off: Personal incom e is up strongly. Em ploym ent is rising in all m ajor categories. U ne m p lo ym e n t is on the wane. Stronger business and consum e r sp en d in g is apparent. For nearly tw o years, there have been noticeable signs that ec o n o m ic activity w as picking up steam in Tennessee. How ever, a n um ber o f w eak areas were partially offsetting the expan ding areas. In particular, a w eakness in the m anufacturing sector w as preventing the state from experiencing a strong and balanced eco n o m ic recovery. This is no longer the case; m anufacturing is turning out to be a strong perform er that sh ou ld carry the Tennessee e c o n o m ic sh o w briskly forward. T h ro u gho u t m ost of Tennessee, manufacturers are reporting that sales, output, and profits are up strongly. Increased orders, in turn, are h aving a favorable im pact on e m ploym ent condition s and are increasing the d em an d s for new and expanded plant and equipm ent. A s a result of the im pressive rebound in m anufacturing, incom es derived from the m anufacturing activity are advancing strongly and increased co nsum e r sp e n d in g is but one result. The basis for expected future gains in Tennessee's e c o n o m y appears m ore clearly, however, w hen the eco n o m y's various sectors are exam ined in greater detail. U sin g the broadest m easure of Tennessee's e c o n o m ic posture— personal incom e— w e note that solid gains have n o w been established that provide the basis for expected future gains. For as a strong incom e m om entu m develops, it begins to feed on itself and can be expected to continue as a source of e c o n o m ic strength. Personal incom e grow th snapped back sharply in the first half of 1972, advancing at an annual rate of 13 percent. This perform ance contrasts sharply with o nly sm all gains du ring the latter half of the previous year, a period N ote: This is one of a series of articles in which economic developments in each of the Sixth District states are discussed. NOVEMBER 1972, MONTHLY REVIEW w hen the w age-price freeze u ndou btedly m ade a significant difference. Nevertheless, personal incom e did advance slightly m ore d u ring 1971 (up 9 percent) than d u ring 1970 w hen the business dow nturn held the grow th in personal incom e to 8 percent. In contrast to the previous tw o years, the private sector of the eco n o m y is n ow pro vidin g the strongest incom e gains. Inco m e from the m anufacturing sector has advanced at an annual rate o f 15 percent. O th e r areas of particular incom e strength are in construction, trade, transportation, com m unications, and public utilities. A n d w hat m akes the strong gains even m ore im portant to Tennesseeans is that a larger proportion is "re al." The pace o f inflation has slow ed so that the additional incom e buys m ore g o o d s and services. Incom es have advanced, in part, because more business firms have experienced rising sales, leading to increased output and em ploym ent. That businesses are n ow seeking to hire m ore w orkers is evidenced by increased help-w anted advertising; and, as a result, total e m ploym ent is n ow rising strongly. In the last twelve m onths, m ore than 54,000 em ployees were added to Tennessee's payrolls. In contrast, only about one-half o f that num ber w as added in the preceding twelve months. M an u factu rin g Em ploym ent: A Source o f Strength These signs of greater strength in em ploym ent su g gest that the Tennessee eco n o m y is n o w solidly on its feet. Em ploym ent in the m anufacturing indu s tries is n o w a special " p lu s " and has been rising at a 2.3-percent annual rate over the last few m onths. This trend began last year as m anufactur ing rose som ew hat less than 2 percent, fo llo w in g a nearly 3-percent decline in 1970. M e asu red by nearly all available econ om ic indicators, the durable go o d s sector has show n the greatest strength. For example, the b o o m in residential construction and new fam ily form ations is having a favorable im pact on the lumber, furniture, and hom e fixture producers. Increased o u tpu t is also sh o w in g up in the m achinery industry, prim arily agricultural equipm ent and consum er electrical products. In Nashville, com pletion of defense contracts for helicopters and military transport aircraft w in gs is being offset by increasing orders for rapid-transit car bodies and civilian aircraft. N o t all durable m anufacturing, however, has been uninterrupted. There w as a short-lived labor-m an agem en t dispute at a m ajor alum inum producer in the early summer. Em ploym ent in nondurable g o o d s m anufacturing is also recovering, although not as vigorously. Textile and apparel manufacturers are expanding their output and once again new plants are o p en in g in Tennessee. T w o areas that felt the brunt of FEDERAL RESERVE BANK OF ATLANTA Personal incom e rebounds in 1972 % chg., seas, adj., an n . rate - 15 1970 1971 1H ’71 2H ’71 1H '12 earlier defense cutbacks— chem icals and ordnance — are no longer experiencing layoffs. This is im portant to such localities as the Tri-Cities area where previous cutbacks were severe. The strong gains in m anufacturing incom es are not just the result of increased em ploym ent. A verage w eekly m anufacturing earnings are up over 7 percent from last year because hourly w ages advanced 5.6 percent and the average w orkw eek increased from 40.1 to 40.7 hours. The longer w orkw eek has m eant increased overtim e pay, a big help in fattening pay envelopes. (Reflecting the greater strength in durable go o d s m anufactur ing, all of these incom e variables were nearly twice as strong in durable go o d s as in n ondurable goods.) N on m an u factu ring Em ploym ent: The G row th Sector Em ploym ent in nonm anufacturing has advanced at better than a 9-percent annual rate and is an additional boost to the Tennessee econom y. G row th in this sector is not unexpected since, during the recent recession, nonm anufacturing em ploym ent declined for only tw o m onths before it began increasing again. So, based on the evidence of previous years, this sh ou ld be the "g r o w th " e m ploym ent area of the future. A ll levels of governm ent em ploym ent continue to advance. A n d as the Federal, state, and local governm ents respond to the pu blic's increasing dem ands for new and increased governm ental services, w e can expect this favorable im pact on e m ploym ent to continue. M o s t Federal and state spen ding has an indirect im pact on em ploym ent, appearing as increased defense orders, highw ay contracts, and the fu n d in g of educational programs. 195 Employment picture brightens Manufacturing recovers Th o u san d s Seas. adj. — 1400 N o n fa rm 1300 %of labor force — 5 850 500 450 M 1969 A t the local level, increased teaching and su p portive staffs account for a large part of recent em ploym ent gains. Service jobs are one of the fastest gro w in g areas in the Tennessee e c o n o m y and the record of the last few m onths is no exception. S h o w in g significant grow th in the recording business, N ashville continues to live up to its title as "M u s ic City, U .S.A." The recreation, tourist, and convention businesses are also p rovid in g considerable stim ulus to the econom y. Increasingly pop ular activities such as skiing got off to a slow start last w inter because of the p o o r weather conditions. This had a negative im pact not only on the resort areas, but also on nearby lo d g in g and eating facilities that are b e gin n in g to develop into im portant year-round businesses. This summer, however, o verflow crow ds visited Tennessee's famed national parks and a new country m usic theme park, O prylan d. Furthermore, such traditional attractions as the A n nu al W a lk in g H orse Celebration report record attendance at their events. A s a result of all this increased activity, new motel and hotel facilities are g o in g up and m ore are being planned in order to house the tourists and convention visitors in the state. T he B o o m in g C onstruction Industry C onstruction activity is boo m ing, providin g another strong stim ulus to the state's econom y. So far this year, the total vo lu m e of construction awards is running nearly 25 percent m ore than for the sam e period last year. H o m e b u ild in g is leading the w ay and is being aided by the Section 235 h o u sin g program s. Bjut despite the market strength in a few m etropolitan areas such as Chattanooga, Digitized 196for FRASER I I 1970 I 1971 1972 m ost of the increase in new hom es too k place outside of the large m etropolitan areas. W ith a strong dem an d for new housing, hom e b u ild in g is bein g aided by the ready availability of m ortgage credit in Tennessee. Savings and loan associations in the state report strong deposit inflow s and sharply higher m ortgage originations. Banks are sim ilarly situated and are extending a significant am oun t of credit for single and m ulti-fam ily residential units. O th er sectors of construction activity are n ow picking up strength and can be expected to offset any leveling-off that m ay occu r in h om e building. N onresidential b u ild in g has turned around, although gains so far this year are only slight. Still, this does represent a reversal of 1971 w hen nonresidential b u ild in g actually declined 25 per cent. Som e areas, such as the facelifting in the central business district of Nashville, represent w ork on m ajor construction projects that were ann ou nced earlier but are still under construction. N o n b u ild in g construction is also ad van cin g as new contracts are let for roads, bridges, and water and sewer treatment plants. Increased construction activity has led to renewed strength in bu ilding-trade em ploym ent. Total construction jobs are running better than 8 percent above a year ago. D esp ite this increase, however, total construction em ploym ent is still b e lo w the peak registered d u ring the previous b u ild in g b o o m in 1968-1969. O th er areas o f Tennessee's e c o n o m y loo k p ro m isin g for the future. The trade sector is c o n tinually ad d in g new em ployees because o f the grow th in new distribution centers, w holesale w arehouses, retail stores and sh o p p in g centers. NOVEMBER 1972, MONTHLY REVIEW In the past year, the trade sector has grow n by nearly 13,000 persons and general retail m erchandis ing has accounted for a large part o f the growth. Finance, insurance, and real estate provided over 3.000 new jobs last year. Tennessee is also b e c o m in g an im portant national center in the fields o f electrical pow er and atom ic energy generation and research. A s headquarters for the T VA , Tennessee has bene fited from the operation o f extensive T V A electrical pow er facilities and the construction of additional pow er-generating capacity. The T V A em ploys over 15,000 persons in the state and has its m ajor e m plo ym ent im pact in the Knoxville, C hattanooga, and Clarksville areas. Prospects for expansion at the A to m ic Energy C o m m issio n 's O a k R idge facilities were enhanced recently by the announcem ent o f plans to construct a $300-m illion nuclear fuel plant. By 1975 em ploym ent at this facility is expected to reach 1,200. This sum m er plans were ann ou nced by the A E C and T V A to construct a $500-m illion nuclear breeder reactor near O a k Ridge. The extensive scientific resources at O a k Ridge played an im p o r tant part in the selection of the O a k Ridge site. Reducing Unemployment Expansion in the econ om y has caused continued drops in the num ber of persons b e c o m in g un em plo yed in Tennessee. T hrough the first half o f 1972, the u nem ploym en t rate averaged 3.8 per cent. This is a considerable im provem ent over the 4.2-percent rate of late 1971 and 4.8-percent rate of early 1971. Translated into the num ber of jobless workers, this m eans a decline o f roughly 20.000 u nem ployed persons from the average of 85.000 persons reached du ring early 1971. How ever, since m anufacturing and construction were hardest hit by layoffs d u ring the recession, they still account for the bulk of insured un e m plo ym ent in Tennessee. Unem ploym ent and em ploym ent Unemployment Percent increase in employment June 1972 from June 1971 June 1972 10 Chattanooga 4.4 Knoxville 3.9 Memphis 4.6 Nashville 4.2 Tri-Cities 4.4 *Not seasonally adjusted Social Security checks have been m ailed and will get a further boost early next year w hen taxpayers file for their overw ithh olding tax refunds. W ith consum er spen ding on the rise, it is not surprising to find that increasing use is being m ade of consum er credit. D u rin g the last year, m em ber banks in the District portion (eastern two-thirds) of Tennessee increased their volu m e of instalm ent auto loans by nearly 20 percent. H om e im provem ent loans picked up this spring as did m ost other types of instalment and noninstalm ent bank loans. How ever, over the last 12 months, the use o f bank credit cards advanced m ore slow ly than instalm ent credit in general. Bank instalm ent credit used to purchase m obile hom es rose over 50 percent, the m ost rapidly gro w in g area o f consum er borrow ing. Farming is Looking Up Tennessee farm ing appears to be in g o o d shape this year. The value o f Tennessee's farm lands and b u ildings is estimated to have reached $4.7 C o n su m e r O p tim ism Is S h o w in g From all indications, Tennessee consum ers are in a sp e n d in g m ood, and this is not surprising after having noted the solid gains in the eco n o m y du ring the last year. The im portant evidence of better times for the consum er has already been m entioned: Incom es are rising and m ore persons are fin ding jobs. These favorable conditions sh ou ld help dispel negative factors that have caused the consum er to hold back on his spending. R ising sales tax receipts indicate that general bu ying is on the u p sw in g throu ghou t the state. Retail sales, based upon selected departm ent stores, are running 14 to 24 percent above last year. Big ticket items such as autos are also posting solid gains. C o n su m e r sp en d in g is getting an added boost this fall n ow that the increased FEDERAL RESERVE BANK OF ATLANTA R ising prices boost farm receip ts -1 3 0 - 110 - 90 1970 1971 1972 197 Ten n essee M em ber Bank D a ta (Percent Change, June 1972 from June 1971) DISTRICT PORTION OF STATE Deposits Loans Securities + 7.4% Business + 11.4% Savings + 8.8% Consumer “Other” Time + 39.3% Farm Real Estate + 16.6% Demand U. S. Government + 1.7% + 17.1% U. S. Agency + 50.3% + 15.7% Municipal + 25.2% TRADE AND BANKING AREAS Deposits Total Other Demand* Time Loans Investments Chattanooga + 6.7 + 0.8 + 20.2 + 18.3 + 12.7 Knoxville + 8.8 + 0.3 + 16.3 + 16.9 + Nashville + 14.3 + 1.8 + 28.0 + 19.0 + 21.8 Tri-Cities + + 3.8 + 12.7 + 15.0 + 12.6 7.6 3.2 ^Demand deposits other than those of banks. billio n — an all-tim e high— up 11 percent from the previous year. O n e factor tending to push up land values w as the purchase of farm lands for future use in nonfarm purposes, in particular, land purchased for use as rural residences and subdivisions. Last year, the state lost nearly 2,000 farms, and about 100,000 acres o f farm land were rem oved from agricultural use. Production and price condition s also appear bright for the farmer this year. Plantings o f such m ajor crops as wheat, cotton, soybeans and tobacco were increased by 6 percent to 11 percent this year. O n ly in corn did plantings decline, cutting this crop back 20 percent to the low est crop on record. M o s t crop prices are up an average of nearly 8 percent this year and reflect a strong dom estic and foreign dem an d for agricultural products. Livestock prices are up even m ore than crop prices, nearly 18 percent. Especially strong prices for cattle and hogs raised the livestock price index. The prices of poultry, eggs, and dairy products, however, are virtually unchanged from a year ago. D u rin g the first eight m onths o f this year, agricultural em p lo ym en t w as up over a sim ilar period last year. The num ber o f farm w orkers increased about 800 over that reported du ring the previous year. Responsible for reversing this trend w as an increase o f 1,000 fam ily workers. Hired help declined slightly. Strong Gains in Bank Deposits and Credit M e m b e r banks in the District portion o f the State have experienced strong deposit gains over the past 12 m onths, and this grow th has enabled them to increase their len ding and purchases of securities. Digitized 198for FRASER Interest-bearing deposits increased by m ore than 25 percent and accounted for m ost of the deposit gain. This is one indication that individuals and businesses seem to have sufficient funds to save considerable am ounts. In the N ashville area, time deposit gains were stronger than in the rest of the state and rose by 28 percent. Nearly one-half of this increase w as accounted for by businesses and state and local governm ents increasing their h oldin gs of m oney m arket C D 's. (Last year's increase in the sales tax rates helped generate a surplus at the state level that is bein g held in the State's banks at interest.) Banks in C h attan oo ga also had large tim e d ep osit increases. T h rou gho u t the State, d em an d deposits advanced 7 percent. Passbook savings accounts were virtually un changed after a llo w in g for the interest earned. Because of these strong increases in deposits, Tennessee banks were able to expand total credit som e $543 m illion from m id-1971 to mid-1972. Total loans advanced over 16 percent, the strongest gains bein g in C h attan o o ga and Nashville. A s w as noted earlier, real estate and consum er loans were strong and accounted for over one-half of the len ding advance. Loans to n on b an k financial institutions advanced by m ore than one third, but business and agricultural loans lagged behind the pace o f total lending. The other m ajor source o f bank credit— securities— rose nearly 20 percent last year. H o ld in gs o f m unicipal o b ligation s advanced 25 percent or $128 m illion and U. S. G o vern m e n t agency issues were up $49 m illion, a 50-percent rise. Tennessee banks added to their h o ld in gs of U. S. Treasury o b ligatio n s in the latter half o f 1971, but liquidated m any o f these h o ld in gs this year. ■ NOVEMBER 1972, MONTHLY REVIEW October 11,1972 BAN K O F PEN SA CO LA Pensacola, Florida Bank A n n o u n c e m e n ts Opened for business as a par-remitting nonmem ber. Officers: Robert D. Blake, Jr., chairman of the board; Donald R. Mair, president; E. Allen Brown, executive vice president and cashier. Capital, $350,000; surplus and other capital funds, $175,000. September 29, 1972 F IR S T A M E R IC A N B A N K O F H ERN AN D O CO U N TY Brooksville, Florida Opened for business as a par-remitting nonmem ber. Officers: J. H. Kimbrough, president; J. R. Henderson, executive vice president. Capital, $400,000; surplus and other capital funds, $400,000. October 17,1972 BARN ETT BAN K O F BRA N D O N , N A T IO N A L A S S O C IA T IO N Brandon, Florida Opened for business. Officers: J. C. Emerson, president; Richard H. Eatman, vice president and cashier; Hugh C. Lyon, vice president. Capital, $500,000; surplus and other capital funds, $500,000. October 2, 1972 October 20, 1972 C IT IZ E N S B A N K O F D U N L A P C H A S E M A N H A T T A N IN T E R N A T IO N A L B A N K IN G C O R P O R A T IO N Dunlap, Tennessee Opened for business as a par-remitting nonmem ber. Officers: Glenn Barker, president; Elmer D. Studer, chairman; Harry C. Phillips, executive vice president and chief operations officer. Capital, $200,000; surplus and other capital funds, $300,000. Miami, Florida Opened for business as an Edge Act Corporation. Officers: J. M. Schneiderman, president; M. A. Santiago, vice president. Capital, $2,500,000. October 25,1972 October 9, 1972 E X C H A N G E N A T IO N A L B A N K O F H O L ID A Y BAN K O F CO W ETA Holiday, Florida Newnan, Georgia Opened for business as a par-remitting nonmem ber. Officers: W. Scott Wilson, president. Capital, $500,000; surplus and other capital funds, $500,000. FEDERAL RESERVE BANK OF ATLANTA Opened for business. Officers: H. E. Long, chair man and president; W. L. Newton, Jr., vice presi dent; Mrs. Cheryl L. Berry, cashier. Capital, $500,000; surplus and other capital funds, $500,000. 199 B A N K IN G S T A T IS T IC S Billion $ -3 2 C R E D IT * 34 D E P O S IT S ** -2 8 — 30 -2 4 — 26 ✓t- — 14 As -1 8 — 10 -1 4 - 8 - 8 Other Securities U.S. Govt. Securities — 4 I I I I I i I i I I I I i i I I I I I I I I I I I i I J J DJ J 1971 1972 LATEST MONTH PLOTTED: SEPTEMBER * Figures are for the last Wednesday of each month. ** Daily average figures S IX T H D J A 1973 - 4 i I i i i i i i i t i I I I M i M I I I I I i II J J DJ J D J A 1971 1972 1973 D IS T R IC T B A N K IN G N O T E S SBA GUARANTEED BANK CREDIT Million $ — 30 — 20 — 10 Alabama Note: Florida Georgia Louisiana Mississippi Tennessee Includes all banks participating with SBA. 200 NOVEMBER 1972, MONTHLY REVIEW S B A P R O G R A M S E N C O U R A G E S M A L L B U S IN E S S F IN A N C IN G BY D IS T R IC T B A N K S Southeastern banks have turned increasingly to the loan guarantee program s o f the Sm all Business A d m inistration (SBA) in order to better serve the credit needs of sm all businesses. In the six District states, com m ercial banks extended $130 m illion in SBA guaranteed bank loans (up 44 percent over the previous year) to m ore than 1,900 sm all business firms (up 32 percent) in the fiscal year ended this June 1972. A n d so far this fiscal year the vo lu m e of len ding has increased at an equally rapid rate. For the m ost part, this represented credit that w o u ld not have been available w ithout S B A assistance, since it guarantees credit only to those firms previously un able to obtain credit on reasonable terms. Between m id-1968 and m id-1972, banks in the District states have extended SBA-guaranteed credit to som e 5,400 sm all businesses for a total of $337 m illion. A n d there has been considerable grow th in the use of S B A loan guarantees over the last several years. In fiscal 1969 som e 1,100 SBA-guaranteed loans were m ade; last year m ore than 1,900 such loans were put on the books. In terms of dollar volum e, the grow th has been even greater: from $67 m illion to 130 m illion. The participation rate a m o n g District banks is fairly high. O v e r one half of the com m ercial banks in each o f the six states are involved with S B A loans and in som e states up to four fifths are active. Banks in Florida and Louisiana seem to m ake the greatest use of the S B A loan guarantees. Last fiscal year banks in these tw o states accounted for m ore than half of the num ber of loans in the District states and nearly half of the loan d ollar volum e. Florida banks have been active for a lon g time, w hile increased participation by Louisiana banks developed m ore recently. M o st businesses in the District, as in the rest of the country, are " s m a ll" rather than large. Therefore, m ost business loans m ade by District banks are "s m a ll" loans m ade to small businesses, and m uch o f this credit represents short-term financing. Term len ding (intermediate- or long-term financing) is still not a m ajor activity of District banks. A lth o u gh term lending has been increasing in recent years, m any banks are still reluctant to extend term credit, especially to sm all firms that m ay present m ore than usual credit risks. How ever, the S B A loan guarantee protects the bank against loss for up to 90 percent of the loan principal plus the accrued interest. Therefore, the S B A loan guarantees are im portant because they allo w banks to help fill a credit gap for sm all businesses. By using the S B A guarantee, banks can extend credit to alm ost any independently-ow ned "sm all bu sin ess." Trade, service, m anufacturing, and c o n struction firms are all eligible for SBA-guaranteed credit and account for m ost of the total volum e. FEDERAL RESERVE BANK OF ATLANTA NUMBER OF SBA GUARANTEED BANK LOANS No. of Loans _ - 2000 District States EH3Q II . n i 1969 1970 l 1971 1972 F is c a l Y e ars Businesses may use S B A credit to purchase b u ild ings, equipm ent, supplies, and w orkin g capital needs. Both new and established businesses are eligible to apply for this credit. The S B A has tw o program s for extending credit to sm all businesses that allo w banks to offer longer maturities and low er interest charges and to require less supportin g collateral. The R egular Business Loan Program accounts for over 95 percent of the dollar volu m e of SB A loan guarantees with District banks and is generally used for financially sounder busi ness firms. The guarantee w ill cover up to 90 per cent of the loan or up to $350,000, w hichever is less. However, loans have averaged considerably less in the District states, only $72,000. The current m axim um rate of interest charged is 8 V 2 percent. The maturity of the loan depends upon its use: for w orkin g capital, up to five years; for other uses, generally not over ten years. The E con om ic O p p o rtu n ity Loan Program allow s banks to extend credit under less stringent c o n d i tions, prim arily in financing firms ow n ed by m ino r ities and other disadvantaged persons. Credit stan dards are m ore relaxed, and m ajor stress is placed on projected ability to repay the loan. The S B A w ill guarantee up to 90 percent o f a $50,000 loan. (Before July 1972, the ceiling w as $25,000.) The average size o f a loan in this District is considerably smaller, $14,000. The maturity m ay run for up to 15 years and interest charges are allow ed up to 8 V 2 percent. JO H N M. G O D FREY 201 Sixth D istric t S ta tistics S e a s o n a lly A d ju s t e d (All data are indexes, unless indicated otherwise.) One Two Latest Month Month Months 1972 Ago Ago Unemployment Rate (Percent of Work F o r c e )................Sept. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Sept. SIXTH DISTRICT INCOME AND SPENDING Manufacturing P a y r o lls ................ Farm Cash R eceip ts....................... C r o p s ........................................... Livestock ................................... Instalment Credit at Banks* (Mil. $) New Loans .................................. Repayments.................................. Sept. Aug. Aug. Aug. 149 138 140 142 147 167 191 158 147 135 151 138 134 127 144 121 FINANCE AND BANKING Member Bank L oans...........................Sept. Member Bank D e p o sits....................Sept. Bank D eb its**....................................Sept. ■ Sept. . Sept. 444 388 445 381 447 416 404 361 FLORIDA Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. 117 109 109 102 105 106 110 116 105 110 104 112 109 119 127 102 120 111 116 119 126 124 99 128 84 116 109 108 102 104 106 110 116 104 110 103 111 108 118 128 104 119 109 116 119 126 124 98 126 82 116 108 108 102 105 107 111 115 104 108 103 110 108 117 125 101 119 109 116 119 125 124 98 126 86 113 106 107 101 103 107 110 114 104 105 100 107 103 116 117 103 115 108 113 116 121 120 100 119 82 Sept. 4.1 4.2 4.3 4.7 Oct. July July July July July July July July July July July July July July July July July 2.1 41.2 218 320 119 179 80 129 275 235 185 269 281 220 161 295 323 198 188 182 214 266 450 710 405 2.2 40.9 228 309 150 174 86 126 277 237 187 272 290 218 163 298 325 197 187 182 208 268 428 720 423 2.4 41.1 189 251 127 173 86 125 271 233 186 267 286 215 163 297 317 192 184 179 205 270 409 707 407 2.8 40.4 200 218 182 170 89 128 256 220 176 250 275 200 164 251 299 185 179 164 201 246 431 612 391 . Sept. . Sept. 193 179 189 175 184 170 158 146 . Sept. . Sept. , Sept. 174 154 199 171 150 198 169 150 190 149 133 170 . Sept. . Aug. 148 157 148 176 144 145 131 136 . . . . . 109 108 109 90 72 109 108 108 96 76 108 107 109 96 75 107 107 108 103 74 . . . . EMPLOYMENT AND PRODUCTION Nonfarm Employment.................... Manufacturing ........................... Nondurable G ood s................... F o o d ...................................... T e x t ile s ............................... Apparel.................................. Paper ................................... Printing and Publishing . . C h e m ica ls........................... Durable G o o d s ....................... Lbr., Wood Prods.. Furn. & Fix. Stone, Clay, and Glass . . . Primary M e ta ls .................... Fabricated M etals................ M achinery........................... Transportation Equipment Nonmanufacturing....................... Construction........................ Transportation .................... T r a d e ................................... Fin., ins., and real est. . . . S e r v ic e s ............................... Federal Government . . . . State and Local Government Farm Employment.......................... Unemployment Rate (Percent of Work Force) . . . . Insured Unemployment (Percent of Cov. E m p.)................ Avg. Weekly Hrs. in Mfg. (Hrs.) . . Construction C ontracts*................ R esidential.................................. All O th er...................................... Electric Power Production** . . . Cotton Consumption**.................... Petrol. Prod, in Coastal La. and Miss.** Manufacturing Production . . . . Nondurable G ood s....................... F o o d ...................................... T e x t i le s ............................... Apparel ............................... Paper ................................... Printing and Publishing . . C h e m ica ls........................... Durable G o o d s ........................... Lumber and W ood................... Furniture and Fixtures . . . . Stone, Clay, and Glass . . . . Primary M e ta ls........................ Fabricated M etals................... Nonelectrical Machinery . . . Electrical Machinery............... Transportation Equipment FINANCE AND BANKING Loans* Bank Debits*/* Farm Cash Receipts Sept. Sept. Sept. June EMPLOYMENT 202for FRASER Digitized One TWo Latest Month Month Months Ago Ago 1972 One Year Ago Manufacturing P a y r o lls ....................Sept. Farm Cash R eceip ts...........................Aug. 4.8 41.0 4.8 41.2 183 168 181 180 165 182r 145 140 147 213 178 165 168 147 159 One Year Ago 153 143 151 139 135 EMPLOYMENT Sept. Sept. Sept. Sept. Sept. 128 113 131 135 106 128 112 131 133 100 128 111 131 132 104 123 109 125 128 99 Sept. Sept. 3.3 41.3 3.3 41.2 3.4 41.7 4.0 40.6 Sept. Sept. Sept. 213 197 227 208 193 230 201 191 222 171 168 190 Sept. Aug. 146 115 142 133 142 117 133 113 Sept. Sept. Sept. Sept. Sept. 116 105 121 110 84 115 105 120 108 82 115 104 119 109 78 113 104 117 108 83 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) Sept. Sept. 3.9 41.1 3.9 40.2 4.1 40.7 4.1 40.4 FINANCE AND BANKING Member Bank Loans . . . . Member Bank Deposits . . . Bank D eb its* * ........................ Sept. Sept. Sept. 190 157 209 184 151 206 181 152 201 152 133 175 Sept. Aug. 140 173 139 166 137 122 122 167 Sept. Sept. Sept. Sept. Sept. 107 102 108 85 76 106 102 107 84 73 107 101 108 85 83 104 100 105 83 71 Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) Sept. Sept. 6.3 42.3 6.5 42.6 6.3 42.3 6.9 40.9 FINANCE AND BANKING Member Bank Loans* . . . . Member Bank Deposits* . . . Bank D eb its* /* *.................... Sept. Sept. Sept. 167 158 163 166 157 165 161 156 153 142 143 153 Sept. Aug. 169 161 167 206 170 156 141 143 Sept. Sept. Sept. Sept. Sept. 115 121 112 92 83 115 121 112 91 77 115 121 112 93 91 111 112 111 98 81 Unemployment Rate (Percent of Work Force) Avg. Weekly Hrs. in Mfg. (Hrs.) FINANCE AND BANKING Manufacture Farm Cash EMPLOYMENT EMPLOYMENT EMPLOYMENT Sept. Sept. Sept. Sept. Sept. NOVEMBER 1972, MONTHLY REVIEW One Two Month Months Ago Ago Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) One Year Ago Latest Month 1972 One Two Month Months Ago Ago One Year Ago EMPLOYMENT Sept. Sept. FINANCE AND BANKING Member Bank L oan s*........................Sept. Member Bank D eposits*....................Sept. Bank D eb its* /** ............................... Sept. 4.2 4.2 4.9 198 173 183 189 172 187 180 167 181 162 144 155 154 148 150 152 149 156 137 116 TENNESSEE INCOME Manufacturing Payrolls.......................Sept. Farm Cash R eceip ts........................... Aug. states Daily average basis Nonfarm Employment.................... Manufacturing........................... Nonmanufacturing....................... C onstruction........................... Farm Employment.......................... Unemployment Rate (Percent of Work Force) . . . . Avg. Weekly Hrs. in Mfg. (Hr*.) . . Sept. Sept. Sept. Sept. 116 110 120 117 91 115 109 119 117 88 115 109 119 116 88 111 105 115 108 91 . Sept. . Sept. 3.5 41.2 3.7 40.8 3.9 40.8 4.4 40.1 FINANCE AND BANKING Member Bank L o a n s* .................... . Sept. Member Bank D eposits*................ . Sept. Bank Debits*/**.............................. . Sept. 190 167 177 185 165 166 180 163 161 160 141 155 fPreliminary data r-Revised . . . . N.A. Not available Note: Ind exes for bank d ebits, construction co n tracts, cotton consum ption, em ploym ent, farm cash receip ts, lo ans, petroleum production, and p a yro lls: 19 67 = 1 00. All other in d exes: 1957-59=100. Sources: Manufacturing production estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Div., McGraw-Hill Information Systems Co.; petrol, prod., U.S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. D ebits to D em and D eposit A cco unts I n s u r e d C o m m e r c ia l B a n k s in t h e S i x t h D i s t r i c t (In Thousands of Dollars) Sept. 1972 Aug. 1972 Sept. 1971 Percent Change Year to Sept. date 1972 9 mos. From 1972 Aug. Sept. from 1972 19711 1971 STANDARD METROPOLITAN STATISTICAL AREAS Birmingham . . . 2,946,912 Gadsden . . . . 86,094 Huntsville . . . 261,306 M o b ile ................ 878,565 Montgomery . . . 496,033 Tuscaloosa . . . 168,911 Bartow-LakelandWinter Haven Daytona Beach Ft. LauderdaleHollywood . . Ft. Myers . . . . Gainesville . . . Jacksonville . . . MelbourneTitusvilleCocoa . . . . Miami ................ Orlando . . . . Pensacola . . . . Sarasota . . . . Tallahassee . . Tampa-St. Pete W. Palm Beach A lb a n y ................ A tla n ta ............... Augusta . . . . Columbus . . . . Macon ................ Savannah . . . . Alexandria . . Baton Rouge . Lafayette . . . . Lake Charles . New Orleans . +24 + 4 + 11 + 13 + 8 + 12 + + + + + + -20 + 9 +18 +66 + 21 + 31 27 3 9 18 8 10 667,167 314,710 456,362 205,509 . 1,438,348 223,965 194,598 . 3,017,220 1,678,377 222,438 211,960 3,349,064 1,149,509 193,715 174,172 2,856,196 -1 4 +25 + + 1 + 16 + - 8 + 12 + -1 0 + 6 + 23 8 17 25 335,656 4,914,849 . 1,179,575 356,157 341,505 546,053 . 2,823,042 817,312 329,566 5,050,907 1,241,730 387,239 335,326 661,239 3,046,998 838,063 297,735 4,149,616 999,924 332,223 244,384 412,959 2,510,458 698,317 + 2 - 3 - 5 - 8 + 2 -17 - 2 + 13 + 18 + 18 + 7 +40 +32 + 12 + 17 15 12 25 14 26 86 20 15 148,413 9,310,682 370,901 356,387 402,998 382,397 - 1 - 4 -1 0 - 1 - 5 - 9 + 10 + 17 + 13 + 10 + 9 + 10 + + + + + + + + + + + + + + 211,771 1,152,734 236,121 192,670 3,697,893 171,116 1,016,313 203,934 192,365 3,342,804r - 5 -13 - 3 - 1 - 6 + 18 - 1 + 13 - 1 + 4 + + + + + 14 11 15 8 7 -1 4 -13 + 15 + 16 + 12 + 13 162,943 164,120 10,902,473 11,411,781 420,688 465,465r 390,459 394,343 437,722 459,512 420,133 459,806 Biloxi-Gulfport . . Jackson . . . . 215,613 1,076,601 250,517 1,235,388 188,186 960,763 Chattanooga . . . Knoxville . . . . Nashville . . . . 964,233 745,035 2,736,730 942,207 748,320 2,701,498 1,004,214 702,783 2,247,395 93,706 101,173 90,575 OTHER CENTERS Anniston . . . . 8 2 3 8 4 4 2,368,856 82,562 235,136 774,917 457,515 150,344 - - 7 16 18 14 11 14 11 + 2 - 4 + 1 - 0 + 6 + 8 + 1 +22 + 20 - 7 + 3 + 10 Aug. 1972 Sept. 1971 141,601 64,232 131,118 65,927 126,079 52,954 145,832 22,214 726,117 1,369,727 133,006 58,901 146,539 24,085 748,296 1,473,602 A t h e n s ................... Brunswick . . . . D a lt o n ................... Elberton ............... Gainesville . . . . Griffin ................... LaGrange............... Newnan ............... Rome ................... Valdosta ............... 150,850 69,154 151,198 17,190 105,929 56,575 31,385 49,988 128,550 87,228 147,083 79,522 155,695 21,459 111,872 58,822 36,076 50,388 122,756 91,261 170,248 39,451 143,135 16,034 99,727 53,476 31,656 37,083 108,816 78,968 + 3 -1 3 - 3 -2 0 - 5 - 4 -1 3 - 1 + 5 - 4 -1 1 +75 + 6 + 7 + 6 + 6 - 1 +35 +18 +10 + + + + + + + + A b b ev ille............... B u n k ie ................... Hammond............... New Iberia . . . . Plaquemine . . . . Thibodaux . . . . 15,448 8,718 58,099 50,019 14,576 34,047 14,723 8,619 63,004 50,896 15,911 29,657 15,564 7,306 53,653 45,607 12,223 28,245 + 5 + 1 - 8 - 2 - 8 +15 - 1 +19 + 8 +10 +19 +21 + 6 + 7 + 12 + 7 + 10 + 7 Hattiesburg . . . . Laurel ................... M erid ian ............... Natchez ............... PascagoulaMoss Point . . . Vicksburg............... Yazoo City . . . . 112,619 62,295 112,006 48,586 108,719 63,364 105,997 47,028 92,611 48,439 82,524 46,058 + 4 +22 + 17 +29 + 17 +36 + 21 + 3 + 5 + 9 135,940 57,297 38,417 149,799 56,034 30,767 88,416 - 9 +54 + 33 58,576 + 2 - 2 + 2 38,168 +25 + 1 + 1 Bristol ................... Johnson City . . . Kingsport............... 119,099 136,450 212,975 128,702 141,320 227,504 D o th a n ................... Selma ................... 3,201,483 88,237 268,523 950,581 519,216 175,061 537,024 342,110 . 201,833 . . 1,002,584 229,605 . 190,117 . . 3,473,298 Sept. 1972 Percent Change Year to Sept. date 1972 9 mos. From 1972 Aug. Sept. from 1972 1971 1971 Bradenton . . . . Monroe County . . Ocala ................... St. Augustine . . . St. Petersburg . . . T a m p a ................... D is tric t To tal 57,007,751 122,623 + 8 54,165 - 3 +15 +19 + 14 + 14 115,188 - 5 + 9 46,366 - 1 0 +14 , 112,709 - 0 +29 25,175 - 8 - 1 2 614,255 - 3 + 1'8 1,303,178 - 7 + 5 +20 + 17 + 47r - 7 + 19 + 14 118,443 - 7 + 1 121,896 - 3 +12 188,272 - 6 +13 60,201,432r 49,989,042r 5 +14 Alabama ............... 6,884,239 7,289,735r 5,879,819 - 6 F lo rid a................... 18,886,800 20,226,772 16,294,002 - 7 Georgia ............... 15,873,460 16,628,732r 13,738,725 - 6 Louisiana1 . . . . 6,126,864 6,569,380 5,849,463r - 7 Mississippi' . . . . 2,507,491 2,701,715 2,136,054 - 7 Tennessee1 . . . . 6,728,897 6,785,098 6,090,979 - 1 +17 +16 +16 + 5 +17 +10 16 21 16 25 5 9 1 32 14 12 + 8 + 18 + 14 + 16 + + + + + + 19 19 16 9 16 11 1 District portion only r-Revised Figures for some areas differ slightly from preliminary figures published in "Bank Debits and Deposit Turnover" by Board of Governors of the Federal Reserve System. FEDERAL RESERVE BANK OF ATLANTA 203 D istric t B u sin e ss C o n d itio n s 275 Nonfarm Employment .117 Unem ploym ent Rate* ____ s*______ •4.1 _ Average Weekly Hours* *Seas. adj. figure; not an index Latest plotting: September, except mfg. production, July, and farm receipts, June. The Southeastern e c o n o m y contin u ed its strong upw ard thrust as the u n e m p lo ym e n t rate dro pp ed, d e m and deposits surged, and residential contract aw ards increased. The agricultural sector rem ained strong. O n ly the consum e r sector hesitated slightly in Septem ber. N on farm em p loym en t gains continued to n udge the District u n em p lo ym en t rate dow nw ard. Septem ber's rate w as 4.1 percent, with Florida, Georgia, M ississip pi, and Tennessee having u nem ploym en t rates belo w 4 percent. Jobs increased in m ost in dustries; the sharpest advance occurred in construc tion em ploym ent. The average factory w orkw eek lengthened in Septem ber after a slight decline the previous month. M e m b e r banks reported exceptionally strong d em an d d ep o sit grow th th rou gh ou t m ost o f O c tober. Tim e deposit gains, however, were unusually w eak and were lim ited to sm all increases in larged en om in ation C D 's by som e o f the larger banks. The strong dem and for loans at m em ber banks c o n tinued d u ring O ctober. To meet increasing loan requests, banks are reducing their holdings of Treasury and tax-exempt securities. Savings inflow s at thrift institutions rem ained llarge and m ortgage rates rose slightly in som e areas. In Septem ber residential construction activity, m easured by contract awards, continued to o u t pace last year's record. Florida leads the region, but each state has show n at least a 30-percent in crease in residential contracts over the first nine m onths of last year. Nonresidential aw ards declined from A u gu st to September. Agricultural prices rose in Septem ber, reflecting rather sharp increases for grapefruit, rice, peanuts, eggs, and wheat. A b ru p t declines in cotton and cottonseed prices were partially offsetting. C o o le r weather and rainfall through m ost of the region revived fall pastures and benefited som e late crops. How ever, O c to b e r estim ates o f crop production projected a sharp drop from the earlier forecast of soybean and cotton production. Rice and peanut harvests are virtually com plete, w ith the rice yield up from 1971's level but the peanut yield dow n. Farm cash receipts through A u gu st 1972 continued well above the level for the sam e m onths in 1971. The increase in co n su m e r instalm ent credit o u t stan din g at com m ercial banks slo w e d in Septem ber, but w as still relatively large. Total outstandings re m ained substantially higher than a year ago. The net gain w as less than in six of the precedin g eight m onths, as new extensions declined and repayments increased. Personal loans were weak, but gains were reported for all loan categories. Septem ber sales of dom estically produ ced au tom ob ile s did not match last year's high levels. The decline w as at tributed to produ ction delays and lim ited dealer inventories rather than to a loss o f co nsum e r c o n fidence. Note: Data on which statements are based have been adjusted whenever possible to eliminate seasonal influences. 204 NOVEMBER 1972, MONTHLY REVIEW
@FedFRASER