Full text of Federal Reserve Bank of New York Circulars : Third Progress Report on MICR Programs

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Federal R eserve

Bank

of

N ew Yo r k

N E W Y O R K 4 5 , N. Y.
RECTOR

2-5 7 0 0

February 23, 1962
Third Progress Report on MICR Program

To All Banks in the Second
Federal Reserve District:
Enclosed is a copy of a press statement and its accompanying
tables summarizing the results of the third semiannual survey of com­
mercial "bank participation throughout the nation in the Magnetic Ink
Character Recognition program of the American Bankers Association.
Also enclosed is an additional table showing the participation by banks
in this District in the program.
Although barely one year has elapsed since the first survey,
the latest figures reveal that Second District banks have made a sig­
nificant stride forward in preparing their checks for processing on
electronic check-handling equipment. Now 97*0 per cent of all banking
offices to which checks are sent for payment by the Federal Reserve
Bank of New York have started encoding their ABA routing numbers, as
compared with 89.1 per cent six months ago and 68.4 per cent one year
ago. Geographically, all banking offices in 68 of the 75 counties in
New York, New Jersey, and Connecticut located within the Second District
have started encoding their checks, including all banking offices in
the twelve northern counties of New Jersey. Six months ago, all banking
offices located in 47 of the 75 counties had started encoding their
checks, and one year ago, all banking offices located in only 13 of
such counties had done so. In terms of average check volume handled
daily by this Bank, 53*0 per cent of all checks are now encoded in con­
trast to 38.O per cent six months ago and 19*5 P er cent one year ago.
While the progress made by Second District banks since the
first survey was undertaken has been very encouraging, it is our hope
that those banks that are not yet encoding their checks with magnetic
ink will do so as soon as possible. We would also urge the cooperation
of those customers of banks who order their check forms directly. If
MICR, as is generally agreed, is the key to the solution of the check
collection problem of the future, its value will only be realized when
all banks are actively participating in the program.
ALFRED HAYES,
President.
Enclosures




STATEMENT fox* the Press
F e d e r a l R e s e r v e B a n k o f N e w Y ork
N e w Y o r k 4 - 5 . N.Y.
R E cto r 2 * 5 7 0 0 -e x t .

156

No. 11
FOR RELEASE;

MONDAY, FEBRUARY 26, 1962

In only a year the proportion of checks carrying magnetic ink
identification of the bank on which they are drawn has increased from one in
five to almost three in five, the Federal Reserve System reported over the week­
end.

This is the finding of the third semiannual survey undertaken by the System

to measure participation by commercial banks in the MICR program of The American
Bankers Association according to Marcus A. Harris, Chairman of the Federal Reserve
System's Subcommittee on Collections.
The survey indicated that 54.6 per cent of all checks cleared through
the 12 Federal Reserve Banks and their 24 branches carried the magnetic ink
characters devised by The American Bankers Association for electronic identi­
fication of drawee banks,

a prerequisite for high-speed check processing.

This

figure compares with 36.1 per cent just six months ago and 19*5 per cent one
year ago.
Furthermore, the survey indicated that of the 15,709 banking offices
throughout the country to which checks are sent for collection by the Federal
Reserve Banks, 97*1 per cent were issuing some redesigned checks bearing encoded
ABA routing numbers.

This figure compares with 80.3 per cent and 52.6 per cent

in August and February 1961, respectively.
These percentage increases, Mr. Harris said, are significant testimony
to the fact that virtually all banks have recognized the urgent need to improve
the Nation s collection system to accommodate an ever-increasing volume of checks.




(M ORE )

2

Among the 12 Federal Reserve Districts, the Third (Philadelphia)
District leads, with all par banks in that District now encoding their checks,
and with 73*3 Per cent of such checks being encoded.

The greatest improvement

percentagewise in the number of banks encoding occurred in the Eighth (St. Louis)
District, which showed an increase of 47.8 per cent since the August 1961 sur­
vey, while the greatest improvement in the number of checks encoded occurred in
the Ninth (Minneapolis) District where the percentage of encoded checks increased
by 25.2 .
Cataloging the figures on a state-by-state basis discloses that all
par banks located in ten states and the District of Columbia are now encoding
their checks.

These states are:

Delaware, Montana, New Hampshire, New Jersey,

North Dakota, Ohio, Rhode Island, South Dakota, Vermont and West Virginia.
Delaware also leads in the volume of encoded checks issued with 78.6 per cent,
followed by Washington with 73*3 P e^ cent and California with 70.8 per cent.
Mr. Harris observed that, although country banks, in total, lead their
city counterparts by a slight margin both with respect to the percentage of banks
encoding and the percentage of encoded checks being issued, this relationship
varies within each Federal Reserve District, and suggests a broad distribution
of banks are participating in the MICR program.

He went on to say that now that

virtually all banks are participating in the program by encoding their ABA rout­
ing number on their checks, it is the hope of the banking system that more and
more banks will also encode the dollar amount on checks which they receive for
collection.
The attached tables give information on the encoding of checks in the
12 Federal Reserve Districts, and in each of the 50 states, the District of
Columbia, Puerto Rico and the Virgin Islands.




# # # # # #

SECOND DISTRICT ENCODING SURVEY BY STATES AND COUNTIES

February 1962
Banking Offices
to Which
Checks are Sent
by FRBNY
*w York City
Bronx
Kings
New York
Queens
Richmond
Total
3W York State
Albany
Allegany
Broome
Cattaraugus
Cayuga
Chautauqua
Chemung
Chenango
Clinton
Columbia
Cortland
Delaware
Dutchess
Erie
Essex
Franklin
Fulton
Genesee
Greene
Hamilton
Herkimer
Jefferson
Lewis
Livingston
Madison
Monroe
Montgomery
Nassau
Niagara
Oneida
Onondaga
Ontario
Orange
Orleans
Oswego

Per Cent of
Encoding Offices
Now
Increase Since
Encoding
August 1961

Total Daily
Average Check
Volume
Sent to All
Banking Offices

Per Cent of
Check Volume
Now
Increase Since
Encoded
August 1961

0
6
6l*
3
1

0
100.0
67.2
66.7
100.0

0
16.7
25.2
0
0

0
3,780
904,687
9,212
3,436

0
37-5
40.7
55-5
69.2

0
8.9
11.5
14.2
2 2 .1

71

70.4

24.2

921,115

41.0

11.7

5
15
9
14
8
16
4
5
4
4
5
13
14
37
4
6
6
8
5
l
8
14
6
6
7
9
7
64
12
14
14
7
20
4
9

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
83.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

0
0
0
0
0
0
0
0
0
0
0
7 .7
0
0
1 6 .7
0
14.3
0
0
0
0
0
16 .6
0
0
0
0
1 .7
0
7 .1
0
0
0
25.0
0

89,651
3,232
12,340
5,517
4,722
5,503
4,118
3,850
3,779
1,470
2,676
8,268
20,206
46,706
2,212
2,026
2,914
3,095
2,898
300
7,804
4,311
947
1,991
3,680
B,399
4,844
124,565
4,890
14,427
25,064
4,872
16,727
1,152
4,154

39.7
49.7
6 1.6
57.8
57-0
53.7
58.6
56.1
80.8
71.6
59-1
39.2
66.5
74.2
63.3
51.0
44.1
55-6
63.2
23.7
61.3
52.1
38.6
64.7
71.9
54.9
76.3
72.7
66.3
64.8
59-5
53-5
60.9
63.4
45.5

10.6
15.5
25.3
15.3
15.5
13 .8
4.8
20.7
5 .7
1 1 .3
14.8
12.9
18.6
16 .8
19 .5
25.8
20.0
21.4
10.6
10.8
7.4
26.2
27.4
11.9
21.4
18.0
27.7
18.8
14.3
17.1
24.8
12.2
16.7
22.7
13 .6

Includes 22 foreign banking agencies and corporations whose drafts are collectible through the City
Collection Department of the New York Clearing House.




2

Banking Offices
to Which
Checks are Sent
by FRBNY
New York State (Cont'd)
Otsego
Putnam
Rensselaer
Rockland
St. Lawrence
Saratoga
Schenectady
Schoharie
Schuyler
Seneca
Steuben
Suffolk
Sullivan
Tioga
Tompkins
Ulster
Warren
Washington
Wayne
Westchester
Wyoming
Yates

Per Cent of
Encoding Offices
Now
Increase Since
August 1961
Encoding

Total Daily
Average Check
Volume
Sent to All
Banking Offices

Per Cent of
Check Volume
Now
Increase Since
Encoded
August 1961

3,888
7,332
940
1,009
1,668
8,701
50,984
5,542
2,449
7,326
16,822
3,767
3,278
6,348
93,188
2,155
841

55.2
72.3
61.8
71.3
53.5
45.9
72.2
44.5
57.6
58.2
61. &
68.9
6 5.1
74.1
34.1
66.8
46.9
47.3
58.3
68.3
64.5
32.5

19 .2
32.3
15.5
32.9
24.2
23.0
30.4
28.2
21.6
20.8
12.7
23.8
19.3
16.9
24.0
12.8
21.4
18.0
15.3
12.0
15.4
13.7

2.8

695,882

62.3

17.4

96.4

4.3

1,616,997

50.2

14.1

43
28
12
8
24
20
10
7
8
6
25
10

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2.3
25.0
8.3
0
12 .5
20.0
10.0
0
0
0
12.0
0

74,249
111,576
73,373
5,073
44,905
24,092
32,101
34,064
13,384
6,305
101,667
7,003

76.0
50.7
58.8
6 5.1
63.5
50.8
69.4
79.9
61.0
61.3
47.6
71.9

20.8
22.0
10.3
26.1
28.4
30.3
7.3
16.6
15.5
39.9
13.1
39.0

201

100.0

10.0

527,792

59.7

17.1

Connecticut
Fairfield

29

9 6.6

6.9

76,475

69.2

21.6

Virgin Islands
and Puerto Rico

16

81.3

50.0

5,355

29.I

14.3

921

97.0

7.9

2,226,619

53.0

15.0

Total
Total New York City
and State
New Jersey
Bergen
Essex
Hudson
Hunterdon
Middlesex
Monmouth
Morris
Passaic
Somerset
Sussex
Union
Warren
Total

Total Second District




12
4
6
9
IT
6
5
2
4
5
14
45
11
6
4
15
8
8
10
17
10
2

100.0
100.0
100.0
100.0
100.0
83.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

8.3
0
0
0
5.9
16 .6
0
50.0
0
0
0
0
0
0
25.0
0
37.5
0
0
0
10.0
0

4,797
3,919
4,640
10,688

604

99.5

675

ENCODING SURVEY BY STATES AND OTHER SUBDIVISIONS

FEBRUARY 1962

State
Alabama
Alaska
Arkansas
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
District of Columbia
Puerto Rico
& Virgin Islands
Total




No. of
Banking
Offices
in Survey

Per Cent of
Banking Offices
Increase
Now
Since August
Encoding
1961

Total Daily
Average Check
Volume
Sent to All
Banking Offices

Per Cent of
Check Volume
Increas
Now
Since Aug
Encoded
1961

179
39
138
151 •
1,525
165
138
37
275
136
77
105
973
539
735
590
376
115
73
174
197
483
296
70
584
122
420
39
65
287
81
675
250
58
689
382
251
910
23
135
105
257
1,000
86
69
355
392
181
625
55
11

91.1
92.3
96.4
82.8
98.7
97.6
99.3
100.0
94.2
93.4
55.8
83.8
99.4
99.8
98.4
98.5
96.3
93.0
97.3
98.9
99.0
98.3
99.7
7 7 .1
96.4
100.0
98.3
92.3
100.0
100.0
9 5 .1
96.4
96.8
100.0
100.0
99.7
99.6
99.9
100.0
78.5
100.0
98.4
96.5
70.9
100.0
95.5
96.2
100.0
9 7 .1
92.7
100.0

29.3
28.2
50.7
15.7
0.6
4.9
1 1 .1
0
9.4
16.8
0.5
14.3
19.0
15.0
20.0
2 1.2
33.1
20.8
40.7
1 .2
26.6
13.0
2.8
15.5
56.0
1 3 .1
27.0
10.5
3-0
10.2
19.2
6.3
27.3
1.7
5-2
54.4
4.8
3.0
52.2
31.6
2.9
26.2
14.3
19.2
20.3
11.7
8.7
3.8
28.7
14.5
0

108,600
11,100
68,900
26,900
1,147,000
99,500
327,500
25,700
265,100
207,000
5,100
42,800
804,700
268,600
187,700
219,600
170,000
104,400
75,000
200,000
699,000
401,300
252,100
45,000
335,300
48,800
131,000
12,600
93,000
646,900
26,500
1 ,617,000
123,000
25,900
588,000
183,400
116,500
687,000
62,000
49,000
38,200
163,200
574,000
87,500
63,000
205,000
275,900
87,000
162,300
8,000
22,000

28.0
32.4
24.7
37.9
70.8
53.6
69.6
78.6
43-8
45.9
5.9
33.9
57.7
52.0
42.0
33.1
37.7
35.8
37.3
61.0
59.5
62.9
61.8
42.2
37-0
45.3
27.5
47-6
57.0
64.1
44.2
50.2
35.8
57.5
64.0
40.4
66.8
69.7
56.5
26.5
49.0
41.1
42.1
31.5
65.I
47.3
73.3
48.3
43.8
25.0
45-5

10.9
20.2
14.8
15.6
10.1
21.4
20.4
9.3
19.1
24.1
2.2
5.6
23.3
20.8
20.1
24.4
11.4
17.2
18.3
16.8
11.8
24.3
26.9
15.9
17.1
23.I
16.8
4.2
18.3
17.6
17.8
14.1
18.6
21.1
29.0
25.3
20.8
20.2
16.5
12.5
21.1
23.6
17.7
14.5
38.0
20.7
16.5
15.9
23.6
12.5
17.9

16

81.3

50.0

5,400

29.6

14.8

15,709

9 7 .1

16.8

12,200,000

54.6

18.5

increase

ENCODING SURVEY B Y FEDERAL RESERVE DISTRICTS

FEBRUARY 1962

No. of
Banking
Offices
in Survey

str:

Per Cent of
Banking Offices
Increase
Since
NowAugust
Encoding
1961

Total DailyAverage Check
Volume
Sent to All
Banking Offices

Per Cent of
Check Volume
IncreaE
Since
Now
Augusl
Encoded
1961

1

Boston

City
Country
Total

7
?29
536

100.0
99-2
99.3

14.3
23.7
23.6

210,000
1 ,033,000
1,243,000

48.1
62.6
60.2

20.2
15.5
16.0

2

New York

City
Country
Total

78
843
921

74.4
99-1
97.0

26.6
5.6
7-9

996,200
1 ,230,500
2,226,70C

42.5
61,5
53-0

11.5
17.9
15.0

3

Philadelphia

City
Country
Total

19
678
697

100.0
100.0
100.0

4.8
1.6
1.7

160,000
448,700
608,700

80.3
70.9
73.3

22.0
20.2
20.7

4

Cleveland

City
Country
Total

33

hm
1,208

100.0
99.4
99.4

8.8
7.2
7*2

225,000
658,100
883,100

6 3 .1
63.2
63.2

24.3
23.9
24.0

5

Richmond

City
Country
Total

26
1,056
1,082

88.5
9 5 .1
94.9

19.3
14.5
14.6 _

108,000
567,000
675,000

60.2
45.1
47.6

15.3
18.2
17.7

6

Atlanta

City
Country
Total

50
856
906

90.0
93.1
92.9

15 .0
19.0
18.8

153,100
661,800
814,900

50.6
39.4
41.5

20.4
19.5
19.6

7

Chicago

City
Country
Total

85
2; 682
2,767

100.0
98.5
98.6

6.9
17.3
17.0

218,000
1 ,389,000
1,607,000

49.6
58.O
56.9

20.2
22.5
22.8

8

S t . Louis

City
Country
Total

87
1,16 8
1,255

94.3
96.7
96.6

32.2
48.9
47.8

146,900
488,900
635,800

45.5
33.6
36.4

22.6
18.8
19.8

9

Minneapolis

City
Country
Total

63
710
773

. 100.0
99.9
99.9

0
7.3
6.7

164,700
244,700
409,400

64.5
52.7
57.4

2 9 .1
22.5
25.2

10

Kansas City

City
Country
Total

77
1,727
1,804

98.9
98.3
98.3

4.2
34.2
32.9

127,700
634,700
762,400

42.6
36.0
37.1

18.7
24.6
23.5

11

Dallas

City
Country
Total

67
1,075
1,142

97.0
96.1
96.1

6.2
1 6 .1
15.5

119,000
496,900
615,900

46.8
40.8
41.9

15*3
18.0
17.7

12

San Francisco

City
Country
Total

139
2/479
2,618

9 7 .1
94.7
94.8

0
4.7
4.4

189,100
1 ,529,000
1,718,100

69.3
66.7
67.0

10.0
12.9
12.6

Total

City
Country
Total

731
14,978
15,709

94.5
97.3
9 7 .1

11-3
17.1
16.8

2,817,700
9,382,300
12,200,000

51.8
55-5
54.6

17 .4
18.9
18.5