The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW 1 U ^ n f t i e r n Mortgage O * Banking Matures V • A Perspective On Florida’s Income • Oistrict Business Conditions F E D E R A L R E S E R V E B A N K OF A T L A N T A October 1967 S o u t h e r n B a n k i n g E s s e n tia l M M o r t g a g e a t u r e s — R o l e in a G r o w i n g P a r t I R e g io n Will the supply of mortgage funds be adequate to finance the anticipated expansion in home build ing in the South? If this question seems familiar, you might have read it seven years ago in an analysis of home financing in the South (M onthly Review, October 1960). At that time the South1 was confidently looking forward to continued im provement during the “Soaring Sixties.” High rates of population growth and migration were matched by rising income as industrialization in tensified. These trends were broadly based and their extension in the decade ahead was expected to generate sharp increases in capital needs. Of course, the South’s savings were growing also, but the outlook for heavy dependence upon out side sources of financing persisted. The magnitude of the capital importation job offered opportunity and challenge to the region’s financial institutions. One of the youngest of this xI n the p re v io u s a n a ly sis, as in th is one, the S o u th c o n sists of the states of A la b a m a , F lo rid a , G e o rgia, L o u isia n a , M is s is s ip p i, a n d T ennessee, a ll o r p a rt of w h ic h lie in the D is t r ic t served b y th is B a n k . family was the mortgage banker, who by 1960 had become established extensively throughout the area. He had made a substantial contribution to financing the region’s growth by exporting residential mortgages, mainly to New York and New England life insurance companies and mutual savings banks. By the end of the 1950’s, however, his outside source of mortgage funds was sharply curtailed. Rising interest rates and more attractive investment choices for institu tional investors challenged the mortgage banker to find new ways to grow and maintain his service to the region. The southern mortgage banker and the region he serves became substantial beneficiaries of a new approach to fiscal and monetary policies in the early 1960’s. This policy mix was oriented toward stimulating more rapid growth in the na tional economy. The South was ready to utilize a larger share of the enlarged capital investment possible under such policies, and the mortgage banker was in a position to help bring lender and borrower together. How Has Southern Growth Fared? M o n t h ly R e v ie w , V o l. L I I , N o . 10. F ree su b sc rip tio n a n d a d d itio n a l copies a va ila b le u p o n request to the R e se a r c h D e p a rtm e n t, F e d e ra l R e se rve B a n k of A tla n ta , A tla n ta , G e o rg ia 30303. 1 3FRASER 0 Digitized for The projections of rapid population growth, ris ing income, increased housing needs, and expan sion of public facilities beyond the savings capac MONTHLY REVIEW ity of the region continued to be met. Approxi mately 1,350,000 housing units were built, total construction volume rose year after year, and private mortgage debt outstanding doubled be tween 1959 and the end of 1966. Savers and bor rowers participated in this growth bonanza, as the region’s long established financial institutions increased the rewards offered to savers and these institutions in turn found or developed more pro ductive uses for savings. Although their contribu tions to a growing South are important, this is not their story. It is, instead, the story of the maturing mortgage banker who has learned to serve his region better, even though he has had to work with the least efficient instruments in the capital markets. A m o n g the “ b ig fo u r” fin a n cia l in stitu tio n s, co m m e rc ia l b a n k s e x p e rie n ce d the g re a te st rate of grow th in m o rtga ge debt h o ld in g s; life in su r a n c e c o m p a n ie s, the sm a lle st. Percentage Increase 40 80 120 All Private Commercial Banks Savings & Loan Assn's. Mutual Savings Banks Life Insurance Co's. A la b a m a a n d M is s is s ip p i led the s ix sta te s in the grow th rate of m o rtga ge deb t d u r in g the 1 959-66 period. What Is the Background of Increasing Capital Needs? While the total United States population was ex panding by 10.6 percent, that of this region grew by 14.4 percent in the seven years under review. Total personal income expanded from 8.8 percent of the national total to 9.3 percent. In terms of annual levels, this amounted to an increase of $20 billion, i.e., from $33.5 billion in 1959 to $53.5 billion in 1966. Changes of this magnitude might have been expected to stimulate rising demand for more and better housing. But this was only the begin ning of the upward spiral of capital demands as more people with more current income expanded their goals. Pressure mounted for more and better roads, schools, water and sewer systems, recrea tional facilities, and all the other public capital expenditures which help make a bigger house into a better home. The potential home buyer found P riv a te ly held n o n fa rm m o rtg a g e d e b t a g a in s t p ro p e rtie s in the S ix t h D istric t sta te s m ore th a n d o u b le d betw een year-end 1 9 5 9 a n d 1966, w ith F lo rid a c o n t in u in g a s th e la rge st user. Billions of Dollars 1966 r 25 15 — Fla. Ga. La. OCTOBER 1967 Tenn. Ala. Miss _® * States Alabama Mississippi himself in competition for the available supply of savings not only with business firms and con sumers, but also stronger competition from his own state and local government units. Mortgage borrowers doubled their outstanding debt against properties in the South. Mortgages held by the “big four” financial institutions—sav ings and loan associations, life insurance com panies, commercial banks, and mutual savings banks—increased from $12.7 billion to $25.6 bil lion. State and local government units issued $11.6 billion in securities, of which only a minor part was for refunding purposes. Some measure of the need for outside funds can be seen in the total for these two types alone. Amounting to more than $24 billion, they surpassed the entire increase in long-term savings of the region by a substantial margin. A broader measure of the overall capital needs of the South is total construction contracts, which exceeded $38 billion in the period. Starting with an annual level of $4.0 billion in 1960, each year brought an unbroken string of advances. Even in 1966, a year of sharply restricted availability of 131 funds, the annual level had risen to $6.6 billion. Nevertheless, residential construction continued to be the single most important component of building, amounting to $17 billion in the 1959-66 period. The proportion of residential to total building averaged 44.5 percent of the total and ranged from a high of 47.4 percent in 1965 to a low of 41.4 percent in the sharp housing recession of last year. Although firm data are not available for the actual number of housing units built, the seven-year total exceeded an estimated 1,350,000, or about 14 percent of the U. S. total. How Do You Get This Kind of Increase in Capital? You get it by spending future money. That’s easy, you say? Then try this one: How much future money can you spend? Only as much as some present holder of money will turn over to you in exchange for his appraisal of your credit worthiness. Credit worthiness rests basically upon future ability to pay, accompanied by formal as surances of performance of obligations. The bulk of “present money” available in our economy is turned over by its owners to institu tions, which relieve the owner of determining its “best” use. They stand between the owner and the eventual user of such funds, providing ser vices to both sides of the savings-investment pro cess. Each little rivulet of savings has the poten tial of joining up with other flows through this in termediary system. In practice the bulk of total available savings thus goes into the central capi tal markets where efficiency, speed, and the high est possible degree of certainty in appraisal of credit worthiness becomes crucial for the po tential user. Getting the capital funds needed by an individual, a community, state, or region de pends upon the investment instruments and the service institutions available to convey these bids to the market. Much of the South’s capital investment during the past two decades was accomplished without the bidding for a share of the national pool of savings emanating from the region itself. This is not to say that community initiative in getting a new or expanded industrial plant, military in stallation, or other forms of capital investment was not important. However, the instruments through which such bidding was registered, or the institutional arrangement by which it was transmitted, were not crucial. Indeed, a great deal of investment was put in place through Fed 1 3 FRASER 2 Digitized for eral government or giant corporation financial initiative. Some of it may have been managed from non-borrowed funds, either from current tax flows or internal corporate savings which never got into the mainstream of total current savings. When such borrowing did occur, it was done through instruments and an institutional frame work developed over many decades. Their de mands for funds were prime, subject only to determination of a prime rate. Some of the $11.6 billion of capital funds needed to provide public improvements in the South over the past seven years would fall into the same “prime” classification, as would a minor portion of the regionally headquartered corpora tion borrowing. But for the bulk of the South’s borrowing needs, the complex of ability to pay, appraisal facility, efficiency of instruments, and institutional services moves rapidly away from “prime” toward the point where the market rationing process cuts off some would-be borrower. Now the region’s available instruments and insti tutional family becomes crucial. Here a wellcapitalized mortgage banking industry is essen tial to a growing region. Let’s take a closer look at the $ 13-billion in crease in mortgage borrowing demand in the 1960’s because it was the single largest sector of the South’s total capital needs and a substantial part of it is always so vulnerable to being cut off by capital market rationing. The total lends it self to three divisions in relation to the savingsinvestment flows of the capital markets. Well over half the total was supplied from local or subregional savings flows which never got into the main flow of savings to the capital markets. Instead, with one significant interrup tion, these flows went directly to local savings and loan associations, commercial banks, and local life insurance companies. For the region as a whole, the bulk of these savings came from in creasing incomes of long-time residents, new en trants into the labor market, and in many cases from new, highly paid arrivals who came in with expanding industry. In some cases—for instance, Florida—incoming population brought significant amounts of accumulated liquid savings which went into the local savings institutions where they located. Insofar as these savings flows matched local demand for funds, neither saver nor borrower was concerned further with capital market instruments or institutions. When one moves from this simplified but sel dom encountered model, instruments and institu tions take on increasing significance. Savings may MONTHLY REVIEW be attracted to deficit markets by a wide variety of improved intermediary claims, which broadens the reach of local institutions both within and be tween regions. In the case of the South in the 1960’s, a great deal of this type of augmentation of local savings flows was successfully undertaken by its financial institutions. Similar augmenta tion of local investment outlets was accomplished. Few of these improvements and innovations got even close to solving the main problem of free and full access to the institutionally administered mainstream of savings flows. The special province of mortgage banking—whether carried on by a specialized mortgage company, a bank, the in stitutional investor itself, or by other firms—is to solve this problem. In the absence of its solu tion, a large slice of mortgage credit demand would go unsatisfied, wide interest rate differen tials would persist, differential regional growth would be out of the question, and growth of the entire economy would be substantially impaired. Where Does the Money Come From? Mortgage bankers encountered substantial shifts in preferences among the major financial institu tions to whom they transmitted the bids of their borrowing clients. These shifts affected both the sources of imported funds and the instruments utilized. Their major contours are shown graph ically in the upper right-hand chart. The declining relative importance of New York State as the principal geographic source of mort gage funds serviced2 by the southern mortgage banker was one change. This, in turn, was related to the declining importance of life insurance companies as purchasers of FHA and VA home mortgages, a trend which began in the late 1950’s. Many of the largest life insurance investors were located in New York and had been among the major buyers of these single-family mortgages. 2M o r t g a g e servicing, or m o rtg a g e a d m in istra tio n , is a c o n tin u in g fu n c tio n w h ic h m o rtg a g e b a n ke rs view a s th e ir m a in so urce of revenue a n d profit. I t is u s u a lly done u n d e r con tract w ith the in ve stor-ow n er of the m o rtg a g e a n d in c lu d e s tim e ly collection, a c c o u n tin g for, a n d rem ittan ce of p a y m e n ts due; in su r in g th a t p ro p e r h a z a rd in su ra n c e is m ain tain e d , th a t taxes a n d other ch arge s a g a in st p ro p e rty are paid, th a t de lin q u en cie s a n d foreclosures are p ro p e rly h a n d le d ; a n d the p e rfo rm a n ce of other services as agree d upon. S e r v ic in g fees are u s u a lly p a id m o n th ly on a p e rce n ta ge -o f-o u tsta n d in g-b a la n ce b a sis a n d ra n ge fro m as m u c h as y2 p ercen t a n n u a lly on s in g le -fa m ily m o rtg a g e s d o w n to less th a n Ys percent on la rg e r m ortgages. OCTOBER 1967 N ew Y o rk s u p p lie d le ss m o rtg a g e f u n d s to the S o u th e a s t in the 195 9 -6 6 period, w h ile N ew E n g la n d a n d " a ll oth e r s ta t e s ” in c re a se d th e ir h o ld in g s of m o rtg a g e s on so u th e rn properties. Percent of Total Portfolio 0 10 20 1 1 30 1 40 1 New York New England .....................—1966 ■ M H H H I ■ 1 -— 1959 Sixth District States All Other States I I I I In order to retain these investors as clients, mort gage bankers had to produce the kind of mortgage instruments they preferred. They were unable to overcome entirely this shift away from a mort gage instrument with a very high rating for credit worthiness (accompanied as it was by either FHA insurance or VA guarantee) but which was im paired in a competitive capital market by ceilings on contract interest rates. Some mortgage bankers were able to meet this shift in part by becoming less specialized in resi dential mortgages and expanding their origina tions of nonresidential mortgages. In addition, in many areas of the South, conventional residential mortgages became relatively more credit-worthy and at somewhat higher interest rates more ac ceptable overall, as employment and incomes con tinued to rise. Mortgage bankers in a number of cases were thus able to expand their origination of these mortgages as a partial offset to the de clining importance of VA guaranteed mortgages. N o n re sid e n tia l m o rtg a g e s had b e c o m e m ore im p o rta n t by 1966, but re sid e n tia l m o rtg a g e s re m a in e d the e sse n tia l v e h icle fo r ca p ita l im p ortation. 0 Percent of Total Portfolio 25 50 t Nonresidential — 75 100 i l l i l l —1966 1959 Residential FHA VA Conventional t 133 M o rtg a g e b a n k e r s e x p a n d e d th e ir m o rtg a g e s e r v ic in g fo r m u tu a l s a v in g s b a n k s a n d o th e r in v e sto rs, o ffse ttin g the d e c re a se in m o rtg a g e in v e s tm e n ts b y life in su r a n c e c o m p a n ie s. overriding need for replacement sources of resi dential mortgage funds through Government un derwritten mortgages, led to a second significant shift. M utual savings banks, located primarily in New York and New England, took up some slack. “All other” investors expanded from 20 to 24 per cent of total servicing accounts. Data for “all other” investors by type are not available for 1959, but it seems likely that the Federal National Mortgage Association accounted for a substantially larger share of total servicing But mortgage bankers must serve both sides of the lender-borrower relationship, and tradition ally they have been unable to move with investor preferences any further or faster than the basic conditions in their home territory permitted. Since overall regional growth tended to vary widely between particular urban subregions, it was difficult for many mortgage bankers to in crease staff, capital, and branching operations enough to meet shifting investor preferences by diversification. This fact, plus the continuing T h e a v e ra g e m o rtga ge b a n k e r h a s a lm o s t d o u b le d h is s e r v ic in g v o l u m e s in c e 1959. Average Size of Servicing Account (Millions of Dollars) A sse ts, c re d it lines, a n d ca p ita l a n d net w o rth of firm s h a ve all a d v an c e d . T h e n u m b e r o f m o rtg a g e b a n k e rs o p e ra tin g b ra n c h offices in c re a se d in the 1 9 5 9 -6 6 period, b u t th e a v e ra g e n u m b e r of b ra n c h e s m o v e d u p o n ly slig h tly . Hundredsof Thousandsof Dollars Millions of Dollars 1959 a 134 J r. MONTHLY REVIEW accounts than at the end of 1966. Mortgage com panies typically service a large proportion of FNMA holdings, in 1959 amounting to $910.5 million in the six states. At the end of 1966 they had expanded by 44 percent, to $1.3 billion, while the growth of holdings of life insurance companies exceeded 70 percent and that of mutual savings banks 106 percent. It thus ap pears that mortgage companies were quite suc cessful in developing alternative private sources for mortgage funds. More than likely, the shares of “all other” private investors in 1966, small as they are, represent several-fold gains over 1959. Have Challenges Been Met? From the foregoing appraisal of the performance of the industry between 1959 and 1966, it is pos sible for reasonable observers to differ as to the extent to which mortgage bankers have met the challenges of the period. From the investor’s standpoint, they have been unable to convince all of the major life insurance company investors that they can best handle all of their business in the South. Evidence of this is the direct servicing of an estimated $1.7 billion out of $8.2 billion life insurance company mortgage investments in the six states. It is also supported by the fact that a number of larger commercial and other invest ment property sponsors have found it unneces sary to utilize their services in securing a mort gage loan. One bit of additional evidence which might suggest that the mortgage banker is losing ground is to be found in the changing proportions of total mortgage debt in the South held by outside investors. At the end of 1959 the proportion of total southern nonfarm mortgage debt held by its savings and loan associations and com mercial banks amounted to approximately 46 percent. Life insurance companies located outside the South, mutual savings banks, and FNMA held approximately 52 percent. By the end of 1966 these proportions were reversed, amounting to about 52 and 45 percent, respectively. On the other hand, the reasonable observer might conclude that the South has become better able to finance more of its capital requirements from its own savings. It might also be true that the South now has a greater number of credit worthy entities large and productive enough to compete directly with other would-be borrowers in the capital markets. To the extent that these are acceptable conclusions, the mortgage banker can take pride in helping to achieve these ac complishments by this region. Perhaps more evi dence is needed, and a good source for this is the mortgage banker himself. The accompanying graphic sketch of the repre sentative southern mortgage banker has been drawn from the replies of 106 mortgage bankers to a questionnaire. The response amounted to 61 percent of the 174 mortgage bankers known to be active and whose headquarters were located in the six-state region. Coverage of dollar amount of mortgages serviced by these 106 mortgage bank ers amounted to $7.2 billion, or 89 percent of the estimated total of $8.1 billion of servicing by the 174 companies. A concluding article will present a more com plete analysis of the maturing southern mortgage banker. H iram J. H onea Maturity Distribution of Outstanding Negotiable Time Certificates of Deposit is now available monthly. If you wish to receive this release regularly, please write to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. B a n k A n n o u n c e m e n ts The Perry Loan and Savings Bank, Perry, Georgia, a nonmember bank, began to remit at par on Septem ber 1 for checks drawn on it when received from the Federal Reserve Bank. The Bank of Miami, Miami, Florida, a conversion of the Southern Industrial Savings Bank, opened on Sep tember 5 as an insured nonmember commercial bank and began to remit at par. Officers are Willard M. Ware, president; T. F. Ozburn, Jr., executive vice president; M. E. Stephens, vice president; Robert D. Thornbury, OCTOBER 1967 assistant vice president; and Edward M. Null, cashier. Capital is $320,000; surplus and other capital funds, $304,460. On September 11, the Baton Rouge Bank and Trust Company, Baton Rouge, Louisiana, a newly organized nonmember bank, opened and began to remit at par. Officers include Donald C. Haney, president; Wayne McVadon and Jerry J. Hollis, assistant vice presidents. Capital is $2,050; surplus and other capital funds, $2,050. 135 A P e r s p e c t i v e o n F l o r i d a ' s Florida has been in a tight struggle for a place among the nation’s leading income producing states since 1963, when it first became tenth in total personal income. At that time personal in come amounted to $11.9 billion, or $52 million more than the next ranking state, Indiana. Last year it appeared that Florida was gaining ground, with an income of $15.4 billion—approximately $1.3 billion higher than the previous year and $180 million more than was received by Hoosiers. However, the differential narrowed again in first quarter 1967, with Florida leading by $67 million. In the past Floridians have managed to sustain rapid aggregate personal income growth by creat ing new income sources and modifying old ones. Some of these efforts have been discussed in M onthly Review articles highlighting Florida’s changing seasonal and employment patterns.1 Other states have also changed and expanded their income sources. Accordingly, we need to compare the growth of various income sources in Florida over the past four years with that of other states. I n c o m e Changes in Income Sources Most income in Florida, as in other states, arises from the exchange of labor for wages and salaries. Two-thirds of the $3.5-billion rise in Florida’s personal income from 1963 to 1966 was accounted for by greater wage and salary dis bursements. Strong gains in all 23 types of la bor activity (e.g., manufacturing, trade, services, etc.), for which state estimates are available, helped keep Florida among the top ten states in income. Percentage increases were greater in Florida than in the nation for every type of wage and salary disbursement except the military. One of the fastest growing income sources in Florida over this period was manufacturing, a less important source there than in the nation. Much of this accelerated growth came in the durable goods area, where increased output of transportation equipment and electrical machin ery has brought rising employment. Although these gains reflect to some degree the newness of manufacturing in the state, more traditional Florida sectors such as wholesale and retail trade, iS e e A u g u s t 1965 a n d J u n e 1966. Florida has held its place among the n ation’s top ten states in total personal incom e, but ranks only 29 in per cap ita incom e. P E R CAPITA P ER SO N A L INCOM E PERSO N A L INCOM E P ercent Percent 1st Quarter 1967 Rank Am ount Change 1963 Rank Am ount in Am ount 1966 Rank ($ M illions) ($ M illions) Change 1963 Amount Rank Am ount ($) in Am ount ($) California 1 68,224 2 52,615 29.7 6 3,457 4 2,997 15.3 New York 2 66,919 1 52,697 27.0 4 3,497 5 2,979 17.4 21.2 Illin o is 3 40,204 3 30,228 33.0 2 3,532 7 2,915 Penn sylvania 4 35,961 4 27,847 29.1 19 2,968 19 2,441 21.6 Ohio 5 33,123 5 25,144 31.7 15 3,056 14 2,509 21.8 Texas 6 28,434 6 21,589 31.7 33 2,542 32 2,105 20.8 M ichigan 7 28,222 7 20,787 35.8 10 3,269 13 2,587 26.4 New Je rse y 8 24,966 8 19,400 28.7 7 3,445 6 2,965 16.2 M assachusetts 9 18,516 9 14,547 27.3 9 3,271 9 2,770 18.1 FLO RID A 10 16,061 10 11,865 35.4 29 2,614 31 2,145 21.9 Source: U .S . Departm ent of Com m erce. 1 3FRASER 6 Digitized for MONTHLY REVIEW contract construction, and services of all types also outpaced national growth rates. Among the non-wage sources of Florida in come, transfer payments from the government to citizens on pension or welfare, or for other pur poses also advanced more rapidly than in the nation. These gains were bolstered by increased payments to citizens over 65, in part through new programs such as medicare. Property income, generally a relatively more important source of income in Florida, increased at about the na tional rate. On the other hand, proprietors’ in come, the smallest of the three non-wage income sources, grew less rapidly. Declining farm pro prietors’ income, which accounts for the low growth rate in this category, can be attributed to labor and production expenses increasing faster than gross receipts. Wage and salary disburse ments to farm workers rose appreciably from 1963 to 1966, reflecting advancing production of Florida’s labor intensive crops. R is in g e m p lo y m e n t a n d in c re a se d F lo rid a ’s in c o m e e x p a n sio n . b a n k in g a c tiv ity m irro r Seas. Adj. Recent Developments The pause in Florida’s personal income growth during first quarter 1967 was generally experi enced by other states as well. Nevertheless, there is considerable evidence that Floridians will engi neer another strong advance in personal income this year now that national economic activity has turned up. In fact, personal income in Florida appears to have advanced faster than the na tional rate, according to estimates made by this Bank. Above-average gains for the state’s non manufacturing employment, especially trades and services, coupled with rising manufacturing pay rolls, are providing the impetus. Considering the upturn in contract awards in 1967, construction employment should add to nonmanufacturing em ployment gains later this year. D ata for Florida member banks also point to rising levels of economic activity, with debits, deposits, and loans all showing sizable gains. Growth in time certificates of deposits, which expanded greatly in the first half of 1967, has slackened recently. However, growth in passbook savings accounts and a small revival in demand deposit expansion indicate that Florida banks are still being supplied with lendable funds. In Perspective . . . Even if Florida produces another $l-billionplus income growth, progress will be slow on what is perhaps her major economic problem. De spite expanding personal income, Florida ranks only 29 in per capita income. Over the 1963-66 OCTOBER 1967 1963 1965 1967 period the state’s rate of increase in per capita income, though generally topping other leading income producing states, was only slightly above the national average. The state’s population growth has been slower in recent years but remains well above that of all but a few states. Considering the projected growth of her population and present per capita income rank, reaching the top ten in per capita income is an impossibility for the near future. Even further improvement in ranking, which de mands continued rapid income gains, presents a real challenge to the people of Florida. P a u l A. C r o w e 137 S i x t h D i s tr i c t S t a t i s t i c s Seasonally Adjusted (All data are indexes, 1957-59 = 100, unless indicated otherwise.) Latest Month (1967) One Two Month Months Ago Ago One Year Ago SIXTH D ISTRICT IN CO M E AND SP EN D IN G ) July 58,313 . Aug. 200 , July 146 . July 147 July 144 C r o p s .................................... L iv e sto c k ................................. Instalment Credit at Banks* (Mil. $) Aug. New Loans .............................. Repayments .......................... • Aug. 57,786r 56,731r 53,115 198r 197 192 149 166 132 193 119 126 149 140 157 322r 270r 308 277 282 265 136 135 164 131 152 114 103 118 126 106 180 137 136 135 166r 130r 152 114r 103r 118 126 104r 185 137 136 135 165 130 152 114 133 135 167 130 150 112 107 115 130 106 175 132 127 69 102 62 121 68 119 125 105 181 136 123 65 4.1 4.1 4.1 3.6 2.3 40.9 188 179 195 148 107 279 2.5 40.7 159 177 144 145r HOr 250 2.2 2.4 40.7 139 137 141 144 114 122 40.9 174 178 171 143 111 223 212 Loans* All Member B a n k s ....................... Aug. Large B a n k s ..............................Sept. Deposits* All Member B a n k s ....................... Aug. Large B a n k s ..............................Sept. Bank D e b it s * / * * ..............................Aug. Personal Income (Mil. $, Annual Rate) July Manufacturing P a y r o lls ....................Aug. Farm Cash R e c e ip t s ....................... July 256 229 256 226 251 228 240 223 194 172 204 193 174 208 189 174 196r 180 159 184 . . Aug. . . Aug. 157 149 108 78 157 150 110 83 156 149 109 95 153 142 110 80 . . Aug. . . Aug. 3.0 42.4 3.1 42.3r 3.0 42.9 3.1 42.7 270 202 197r 261 198 190 245 181 175 Personal Income (Mil. $, Annual Rate) July 11,311 ll,1 77 r 10,959r Manufacturing P a y r o lls .................... Aug. 202 202 199 Farm Cash R e c e i p t s ....................... July 141 151 133 10,157 190 135 Member Bank L o a n s ................. Member Bank D e p o s it s ............. Bank D e b it s * * .......................... 272 200 222r GEORGIA INCO M E PRODUCTION AND EM PLOYM EN T Nonfarm E m p lo y m e n t .................... Aug. Manufacturing ...........................Aug. N o n m a n u fa ctu rin g....................... Aug. C o n s t r u c t i o n ...........................Aug. Farm E m p lo y m e n t...........................Aug. Unemployment Rate (Percent of Work F o r c e ) ............. Aug. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. 135 130 138 124 62 135 131 137 124 63 135 131 137 128 59 131 129 132 121 64 3.8 40.7 3.5 40.4 3.8 40.5 3.9 41.1 265 212 225 263 210 223 260 203 217 252 196 199 3,509r 179 7,995 171 FINANCE AND BAN KING Member Bank L o a n s ....................... Aug. Member Bank D e p o s it s .................... Aug. Bank D e b it s * * ................................. Aug. LO U ISIANA . Aug. . Aug. . Aug. . Aug. 7,635 178 160 7,567r 177r 151 7,510r 175 136 7,099 178 157 125 122 126 121 66 125 121 126 119r 82 124 121 125 119 66 125 124 125 130 78 4.6 40.5 4.3 40.7r 4.6 40.9 4.2 41.4 241 190 184 238 187 200 235 183 184 224 178 181 FINA NC E AND BA N KIN G Member Bank L o a n s ............. Member Bank Deposits . . . Bank Debits** .................... AND 8,648 181 159 8,571r 182r 155 127 120 129 127 62 126 119 127 121 64 126 5.3 41.6 5.5 42.6r 4.8 42.0 4.2 41.9 233 163 171 234 164 184 224 160 168 225 156 166 4,416 211 154 4,490r 211 210 EM PLO YM EN T Nonfarm E m p lo y m e n t .................... Aug. Manufacturing .......................... Aug. N o n m a n u fa ctu rin g....................... Aug. C o n s t r u c t io n ...........................Aug. Farm E m p lo y m e n t...........................Aug. Unemployment Rate (Percent of Work F o r c e ) ............. Aug. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. 120 128 134 66 123 115 125 142 67 FINA NC E AND BA N KING Member Bank L o a n s * .................... Aug. Member Bank D e p o s i t s * .................Aug. Bank D e b it s * / * * ..............................Aug. M IS S IS S IP P I INCO M E Personal Income (Mil. $, Annual Rate) July Manufacturing P a y r o lls .................... Aug. Farm Cash R e c e ip t s ....................... July 4,388r 213 139 3,966 207 177 PRODUCTION A N D EM PLO YM EN T FLORIDA INCO M E Personal Income (Mil. $, Annual Rate) July 17,136 Manufacturing P a y r o lls ....................Aug. 245 Farm Cash R e c e ip t s ....................... July 140 16,851r 16,352r 15,340 243 244 230 175 128 137 PRODUCTION A N D EM PLOYM EN T Nonfarm E m p lo y m e n t ....................Aug. Personal Income (Mil. $, Annual Rate) July Manufacturing P a y r o lls .................... Aug. Farm Cash R e c e i p t s ....................... July P R O D U C T IO N PRODUCTION AND EM PLOYM EN T Digitized for 1 3FRASER 8 One Year Ago INCO M E FINANCE AND BAN KING Unemployment Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) Manufacturing .................... N o n m a n u fa ctu rin g................. C o n s t r u c t io n .................... Farm E m p lo y m e n t.................... Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . One Two Month Months Ago Ago FINANCE AND BA N KIN G 286 256 PRODUCTION A N D EM PLOYM EN T Nonfarm E m p lo y m e n t .................... Aug. Manufacturing .......................... Aug. Apparel .................................... Aug. C h e m i c a l s ................................. Aug. Fabricated M e t a l s ....................... Aug. F o o d ........................................... Aug. Lbr., Wood Prod., Furn. & Fix. . . . Aug. P a p e r ........................................Aug. Primary M e t a l s .......................... Aug. Textiles .................................... Aug. Transportation Equipment . . . . Aug. N o n m a n u fa ctu rin g.......................... Aug. C o n s t r u c t io n ..............................Aug. Farm E m p lo y m e n t.......................... Aug. Unemployment Rate (Percent of Work F o r c e ) ............. Aug. Insured Unemployment (Percent of Cov. E m p . ) .................Aug. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. Construction C o n t r a c t s * ................ Aug. R e s id e n t ia l................................. Aug. All O t h e r .................................... Aug. Electric Power Production** . . . . July Cotton C o n s u m p tio n * * ....................Aug. Petrol. Prod, in Coastal La. and Miss.**Aug. Latest Month (1967) 151 151 150 144 Nonfarm E m p lo y m e n t .................... Aug. M anufacturing ...........................Aug. N o n m a n u fa ctu rin g....................... Aug. C o n s t r u c t i o n ...........................Aug. Farm E m p lo y m e n t...........................Aug. Unemployment Rate (Percent of Work F o r c e ) ............. Aug. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. 137 143 135 131 49 137 143 135 128 58 136 143 134 126 56 137 147 133 145 56 4.9 40.2 5.3 39.9r 5.1 40.8 4.0 41.0 310 231 220 309 232 202 298 222 203 283 228 208 FINA NC E AND BA N KIN G Member Bank L o a n s * ....................Aug. Member Bank D e p o s it s * .................Aug. Bank D e b it s * / * * ..............................Aug. MONTHLYREVIEW Latest Month (1967) One Month Ago Two One Months Year Ago Ago TEN N ESSEE INCOM E Personal Income (Mil. $, Annual Rate) July Manufacturing Payrolls . . . . Farm Cash R e c e ip t s ............. . . . July 9,167 197 126 9,130r 191 141 9,013r 188 118 8,558 189 140 Latest Month (1967) N o n m an u factu rin g................ . . Aug. C o n s t r u c t io n ................... . . Aug. Farm E m p lo y m e n t.................... Unemployment Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. 133 158 67 One Month Ago Two One Months Year Ago Ago 133 153r 69 133 154 65 130 157 77 4.3 40.2 4.5 39.7 4.7 39.8 3.1 40.7 239 181 207 246 181 231 248 181 219 231 174 195 FINANCE AND BA NKING PRODUCTION A N D EMPLOYMENT Nonfarm Employment . . . . Manufacturing ................ . . . Aug. . . . Aug. 136 143 136 142 136 141 135 144 Member Bank L o a n s * ............. Member Bank Deposits* . . . . Bank D e b i t s * / * * ................... . . Aug. . . Aug. *For Sixth District area only. Other totals for entire six states. **Daily average basis. r-Revised. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U. S. Dept, of Labor and cooperating state agencies; cotton consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. D e b i t s t o D e m a n d D e p o s i t A c c o u n t s Insured Commercial Banks in the Sixth District (In Thousands of Dollars) Percent Change August 1967 July 1967 Percent Change Year-to-date 8 mos. August 1967 from 1967 August July August from 1966 1967 1966 1966 STANDARD METROPOLITAN STATISTICAL A REA St August 1967 ............. Lakeland Monroe County . . 1,477,655 57,809 176,276 490,263 282,629 97,380 l,457,579r +4 66,624r + 12 190,426r +9 462,972r +7 342,541 r + 18 90,965 +5 +5 -3 +1 +13 -3 +12 +8 -5 +1 +7 +2 +9 602,758 1,385,776 2,159,795r 543,296 192,544 138,785 541,532r - 3 1,462,888r +10 1,945,954 +5 474,072r - 1 186,996r + 4 138,453r +9 +8 +4 + 17 +14 +7 +9 +7 +5 +9 +7 +9 + 15 G a in e s v ille ............. G r i f f i n ................... LaGrange ............. 1,326,006 376,481 l,187,468r 347,332r -0 +2 +12 + 11 + 10 +2 R o m e ................... V a l d o s t a ................ Albany ............. 87,505 ............. . 4,784,437 Atlanta 310,507 A u g u s t a ............. 236,462 Columbus . . . . 261,107 Macon ............. 276,884 Savannah . . . . 84,382 4,463,065 284,733 207,550 244,073 258,680 +4 90,235 4,481,252r 290,615r +9 206,730r + 14 241,273r +7 256,484r +7 -3 +7 +7 +14 +8 +8 -3 +8 + 11 + 10 + 11 +9 Abbeville ............. A le x a n d r ia ............. 516,149 . 126,289 . 147,557 . . . 2,369,108 523,088 126,595 147,250 2,374,956 499,606r 120,975 138,945 2,286,604r -1 -0 +0 -0 +3 +4 +6 +4 +11 +4 + 13 +2 652,518 568,504 639,107r + 15 590,569 469,205 1,541,642 571,171 445,659 1,535,269 Birmingham . . . . 1,532,931 Gadsden . . . . 64,612 193,104 Huntsville . . . . 522,778 Mobile ............. Montgomery . . . 333,933 Tuscaloosa . . . 102,120 Ft. LauderdaleHollywood . . . 587,408 Jacksonville . . . . 1,525,499 ............. . 2,272,378 Miami 538,311 O r l a n d o ............. 199,575 Pensacola . . . . Tallahassee . . . 151,291 T a m p aSt. Petersburg . 1,325,163 384,389 W. Palm Beach . . Baton Rouge Lafayette . Lake Charles New Orleans Jackson . . . . . . . . ............. Chattanooga . . . Knoxville . . . . Nashville . . . . . +7 569,280r 458,610r l,426,395r +2 +10 +3 +5 +0 +4 +2 +8 +6 +7 +19 OTHER CEN T ERS Anniston . . . . Dothan ............. S e l m a ................ Bartow ............. Bradenton . . . . Brevard County . . Daytona Beach . . Ft. Myers— N. Ft. Myers . . Gainesville . . . 67,027 60,471 57,820 62,489 55,861r 44,712 64,499 56,913 41,776 +7 +8 +29 +4 +6 +38 +1 +10 + 14 31,536 62,249 220,536 86,964 32,386 73,953 221,452r 93,540 35,976 57,044 209,867 86,087 -3 -1 6 -0 -7 -1 2 +9 +5 +1 -5 +24 +6 +7 74,177 78,448 75,254 74,639r 64,688 78,695 -1 +5 + 15 -0 +8 +8 ‘Includes only banks in the Sixth District portion of the state. OCTOBER 1967 fPartially estimated. St. Augustine . . . St. Petersburg . . . ............. Sarasota Winter Haven . . 113,723 32,829 55,960 19,934 307,135 96,923 706,984 49,058 July 1967 123,027 32,089 56,128 21,798r 330,352r 101,273 685,195r 54,014 Year-to-date 8 mos. August 1967 from 1967 August July August from 1966 1967 1966 1966 105,901 32,722 52,879 22,355 281,676 91,888 636,617 54,293 -8 +2 -0 -9 -7 -4 +3 -9 +7 +0 +6 -1 1 +9 +5 + 11 -1 0 +5 +4 +4 +2 +11 +1 +7 +1 70,996 40,529 79,942 13,661 72,148 32,354 22,600 27,442 74,667 54,771 -3 -6 +6 +29 +6 -2 +1 -2 +8 +32 +1 +2 +2 +34 +5 +4 -8 -1 1 -2 +29 +7 +4 -4 +13 +6 +5 -5 -0 +1 +15 +7 +8 +11 +9 +11 +6 -1 +3 +14 +22 +16 -0 +14 +2 71,676 41,241 81,216 18,342 75,468 33,574 20,877 24,318 73,514 70,506 73,804 43,879 76,871 14,269 71,210 34,264 20,766 24,778 68,016 53,327 11,965 134,368 6,793 36,425 39,846 11,430 21,799 11,197 127,738r 7,105 38,086 35,185 11,369 22,032 11,152 +7 124,151 +5 6,128 -4 -4 33,460 35,864r + 13 10,769 +1 -1 21,984 Biloxi-Gulfport . . Hattiesburg . . . . L a u r e l ................... Meridian ............. N a t c h e z ................ Pascagoula— Moss Point . . Vicksburg . . . . Yazoo C i t y ............. 104,495 56,872 32,779 66,751 38,873 106,117 56,191 31,544 65,816 34,953 105,761 56,419 35,526 70,848 36,449 -2 +1 +4 +1 +11 -1 +1 -8 -6 +7 +9 +2 -4 +2 +7 55,321 42,427 51,164 54,519 40,463 31,100 52,983 43,526 46,892 +1 +5 +65 +4 -3 +9 +9 +4 +5 Bristol ................ Johnson City . . . . Kingsport ............. 78,775 73,733 157,095 74,788 76,830 144,769 74,722 74,960 155,054 +5 -4 +9 +5 -2 +1 +4r +8 +6 IXTH DISTRICT, Total 30,976,997 29,168,718 +6 +9 +8 3,863,944r + 10 8,091,308 +8 7,285,372r +8 3,874,614r +0 l,434,566r +11 3,841,819r + 1 +10 +15 +8 +3 +2 +6 +7 +8 +8 +4 +9 +12 B r u n s w i c k ............. Dalton ................ H a m m o n d ............. New Ib e r i a ............. Plaquemine . . . T h ib o d a u x ............. Alabam a! . . . . F l o r i d a ! ............. G e o r g ia ! ............. Louisianaf* . . . M ississippi!* • • ■ Tennessee!* . . • 4,244,759 9,335,686 7,853,322 3,989,398 1,469,852 4,083,980 3,865,263r 8,661,157r 7,304,322r 3,972,865 1,325,302 4,039,809 28,391,623r {Estimated. r-Revised. 139 D i s t r i c t B u s i n e s s C o n d i t i o n s The District’s economy is still on the upbeat. Manufacturing employment, after the midyear turn-around, rose again in August; personal income and outstanding consumer credit increased; and construction con tract volume rebounded. Harvesting of major crops is well underway, with good prospects for an increase in total production. Loan expansion was unexpectedly weak, however, and time-deposit growth moderated. Further gains in employment in August held the unemployment rate steady. Manufacturing jobs turned up for the second consecutive month. In September, however, the transportation equip ment industry was hit, as workers walked out on a major auto producer and the District’s largest airplane manufacturer laid off employees. The region experienced a surge in new and expanded plant announcements during the third quarter. Most fall crops are being harvested throughout the District. The stripping of Tennessee’s tobacco, rice combining in Louisiana, and the digging of Georgia and Alabama peanut crops are virtually complete. Cotton and corn harvesting has begun. Except for cotton, estimated production is ex pected to exceed 1966 levels for all major crops. However, price levels are generally below those of last year and will have a modest dampening effect on cash incomes. Egg, hog, and broiler prices declined even further in August, but the expected drop in their production may cause some price strength in the period ahead. Accompanying the August increase in personal income was a rise in outstanding consumer credit at commercial banks. Loans to purchase consumer goods other than automobiles, mainly durables, advanced. Automobile loans increased markedly 40 in July and declined in August, as did auto mobile sales. Preliminary estimates suggest high er sales for September. Loan expansion in September was very slow at large banks. Time-deposit growth was reduced, with no compensating gain in demand deposits. The slower growth reflected, in part, a small run off of large denomination certificates of deposit. Business loan demand at these banks was ap parently very weak over the normally expansive mid-month tax period. Country member banks experienced a greater-than-seasonal increase in demand deposits in September, but their rate of time-deposit gain slowed further. Improvement was evident in the District’s dollar volume of construction contracts. The trend of month-to-month gains for the current year con tinues, and the year-to-year comparisons benefit from the sharp downtrend of last year’s second half. As a result, value of total construction con tracts has now pulled slightly ahead of the com parable eight-month period of 1966. However, the outlook for mortgage funds suggests some future slackening in the rate of recovery of homebuilding. N O T E : D ata on w h ic h s ta t e m e n ts are b a se d h a ve been a d ju ste d w h e n e v e r p o s s ib le to e lim in a te s e a s o n a l in flue nces. MONTHLY REVIEW