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The Financial Magazine o f the M ississippi Valley & Southwest APRIL, 1977 I ÜHvl OPERATIONS ISSUE St. Louis S&Ls Start POS System In 45 Markets; > Mo. Legislature Locks Banks O ut (See Page 37) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis * Make deposits ($ 2 S mínimum) Make cash'Withdrawals ($200 Umili TtMMwi $ch nucks: eteree now have rem ote M oo« B iir d tl y » 3?5S M anelwM «r ffaMNf *> 10551) SaplistChweS* ■ » 2 9 » Corseti VIHage ' Raaä •“ 1Ô78G Watsóa RSéd I ?. Cf.nt*r . <• Csr.îsr ¿ Í ■i p stores soon} > B em em ber! T o ar Pass C ard acco unt ta rn s 5.25% w ill} «h etfecthre annual yield o f S.39% CHE "BANK-BY-SATELLITE” DOWN-TO-EARTH ITY This is how. On March 7,1977 in Tulsa, Oklahoma, Mrs. Mary Lou Creekmore, a customer of Guaranty National Bank, went shopping n the Anthony’s store in Cherokee Village Shopping Center. Mrs. Creekmore bought three dresses. jH For the first time in banking history, a customer has used a simple, plastic card > ! to transfer money / !I via satellite. // CHEO0O&BP IS S U E D B Y ISSUING BA N K S NAM E 123 GOOD THRU LAST DAY OF it 'I J L ~1 ) L- 4 5 b ') “| YO U R N A M E j D liSSfl She paid for them with her ChecOKard. Using Anthony’s point-of-sale banking terminal, Mrs. Creekmore had money transferred from her Guaranty National Bank account to the Anthony’s store account. Westar (Western Union’s geo-stationary com munications satellite) sent the request from Tulsa to Oklahoma City where the funds were transferred from Mrs. Creekmore’s Guaranty Checking Account to Anthony's account by National Sharedata. The money transfer notification was sent back to Tulsa ,.. and Mrs. Creekmore went home with her dresses. This practical, down-to-earth banking application of a communications satellite gives us a look into an exciting future of banking ease and convenience. LIBERTY E. BANK OF MID-AMERICA Liberty National Bank & Trust C om pany/P.O .Box 25848/O klahom a C ity 7312 5/P hone:405/231-6164/M em ber F.D.I.C. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis aaiisss Division, like fine crystal, is ready to serve. Dependable, almost flawless, yet a real bargain in the long run. Why? Excellence is always the best buy, especially when you have customers who are depending on you. And they do depend on you. THE BOATMRTS NATIONAL BANK OF S t LOUIS Area Code 314 425-7500 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis perform. And we enjoy doing it. In every phase of Correspondent Banking. . . overline participations, investments, all services. Boatmen's Correspondent Services, like fine crystal, ready to serve. Convention Calendar April April 17-19: ABA International Personnel Workshop, New York City. April 17-20: Independent Bankers Association of America Bank Ownership Seminar/Workshop, Las Vegas, Sands Hotel. April 20-21: Bank Marketing Association Com munity Bank Marketing Seminar, Panama City, Fla., Bay Point Inn. April 24-26: ABA Workshop for Bank Plan ning Officers, Atlanta, Omni Hotel. April 24-27: ABA National Marketing Con ference, New Orleans, Hyatt Regency. April 24-27: Bank Administration Institute Southern Regional Convention, Dallas, Fair mont Hotel. April 24-27: Bank Marketing Association EFTS Conference, Philadelphia, University CityHoliday Inn. April 24-May 5: ABA National Commercial Lending School, Norman, Okla., University of Oklahoma. April 27-29: ABA Governing Council Meeting, White Sulphur Springs, W. Va., The Green brier. April 29-May 1: NABW Southwestern Region al Conference, Austin, Tex., Austin Hilton Hotel. May April, 7977 Volume 73, No. 4 FEATURES 37 S&Ls PARTICIPATE IN SHARED POS N ETW O R K Jim Fabian Money-Matic comes to St. Louis supermarket chain 41 E L IM IN A T IN G FREE C H E C K IN G Rosemary McKelvey It doesn’t lose 'good’ customers 43 A U TO M A T E D DISTRIBUTIO NS SYSTEM LINKS DEPARTMENTS Jim Fabian Eliminates need for most messengers 45 H O W TO PROTECT DATA CENTERS Charles B. Tebbs From bombs, arson, sabotage 57 THE M A N Y USES O F THE TELEPHONE Rosemary McKelvey 'Ma Bell’ can help banks’ operations 68 A U TO M A T E D TELLER M A C H IN E REPORT C A R D : Units take pressure off tellers, provide 24-hour service 72 EFT NETW ORKS BROADEN O PERATIONS: More banks, services involved 82 INTERSTATE B R A N C H IN G A D VO C A TED In interim report issued by National EFT Commission DEPARTMENTS 6 TH E B A N K IN G SCENE 10 B A N K IN G W O R L D 14 NEW S R O U N D U P 16 INSTA LLM EN T LE N D IN G C O M M U N IT Y IN V O LV E M E N T 20 S E L LIN G /M A R K E T IN G 31 TRUSTS 24 N E W PRODUCTS 26 C O R PORATE NEWS 28 SECURITY 32 EFTS STATE NEWS ALABAM A 96 IN D IA N A 97 L O U IS IA N A 99 N E W M E X IC O ARKANSAS 96 KANSAS 98 MISSISSIPPI 99 O K L A H O M A IL L IN O IS 97 KENTUCKY 98 M IS S O U R I 100 TENNESSEE 100 TEXAS Editors Ralph B. Cox Editor & Publisher Lawrence W. Colbert Assistant to the Publisher Rosemary McKelvey Managing Editor Jim Fabian Associate Editor Daniel H. Clark Assistant Editor Advertising Offices St. Louis, Mo., 408 Olive, 63102, Tel. 3 14 / 421-5445; Ralph B. Cox, Publisher; M ar garet H olz, A dvertising Production Mgr. M ilw aukee, Wis., 161 W. W isconsin Ave., 53203, Te l. 414/276-3432; Torben Soren sen, A dvertising R epresentative. 4 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis M ID -C O N T IN E N T BANKER is published 13 times ann u ally (two issues in May) by C om m erce Publishing Co. a t 1201-05 B luff, Fulton, Mo. 65251. Editorial, execu tive and business offices, 408 Olive, St. Louis, Mo. 63102. Printed by The Ovid Bell Press, Inc., Fulton, Mo. Second-class postage paid a t Fulton, Mo. Subscription rates: Th ree years $21; tw o years $16; one year $10. S ingle copies, $1.50 each. Com m erce Publications: A m erican Agent & Broker, C lub -M an ag em ent, Decor, Life Insurance S elling, M id -C o ntinent Banker, Mid-W estern Banker, The B ank Board Letter and Program. Donald H. Clark, chairm an ; Wesley H. Clark, president; Johnson Poor, executive vice president and secretary; Ralph B. Cox, firs t vice president and treasurer; Bernard A. Beg- gan, William M. Humberg, James T . Poor Don J. Robertson, vice presidents; Lawrence W. Colbert, assistant vice presi and dent. May 1-3: ABA Southern Trust Conference, Atlanta, Omni International Hotel. May 1-3: Independent Community Banks in Illinois Annual Convention, Springfield, Holiday Inn East. May 1-4: Bank Marketing Association EFT Conference, Cherry Hill, N. J., Cherry Hill Inn. May 1-4: Bank Marketing Association Bank Librarians Conference, Boston, Copley Plaza. May 4-6: ABA Southern Trust Conference, Nashville, New Opryland Hotel. May 4-6: Alabama Bankers Association An nual Convention, Huntsville, Von Braun Civic Center. May 8-10: Texas Bankers Association Annual Convention, Dallas, Fairmont Hotel. May 8-11: Conference of State Bank Super visors Annual Convention, Atlanta, Omni International Hotel. May 8-11: Robert Morris Associates Credit De partment Management Workshop, Dearborn, Mich., Hyatt Dearborn. May 9-11: ABA National Conference on Urban Economic Development, Dallas, Dallas Mar riott. May 10-12: Oklahoma Bankers Association An nual Convention, Tulsa, Sheraton Skyline Hotel. May 11-13: Kansas Bankers Association An nual Convention, Overland Park, Glenwood Manor. May 11-13: Bank Administration Institute La bor Relations Seminar. Park Ridge, 111. May 12-15: 28th Assembly for Bank Directors, Palm Beach, Fla., the Breakers. May 14-18: Mississippi Bankers Association Annual Convention, Biloxi, Broadwater Beach/Biloxi Hilton. May 15-16: ABA/Insurance Industry Confer ence, Arlington, Va., Crystal City Marriott. May 15-17 : Tennessee Bankers Association An nual Convention, Gatlinburg, Sheraton Hotel. May 15-18: ABA National Operations/Automa tion Conference, New Orleans, Hyatt Regen cy. May 15-18: Arkansas Bankers Association An nual Convention, Hot Springs, Arlington Hotel. May 15-18: Bank Marketing Association Staff Sales Training Workshop, Phoenix, Del Webb’s Mountain Shadows Resort. May 15-20: ABA National Commercial Lending Graduate School, Norman, Okla., University of Oklahoma. May 15-20: ABA National Personnel School, Pittsburgh, Marriott Inn. May 15-20: Louisiana Banking School for Su pervisory Training, Lafayette, University of Southwestern Louisiana. May 17-20: Bank Administration Institute Com puter Performance Measurement Seminar, New York City. May 22-25: ABA National Conference on Real Estate Finance, San Francisco, St. Francis Hotel. May 22-25: NABW Southern-SoutheasternSouth Central & Florida Regional Con ference, Nashville, Hyatt Regency Hotel. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 You want a bank that can back you ...over-line or overseas. C o u n t on th e to ta l c a p a b ility o f M e rc a n tile T rust in S t. L o u is. W e can p ro v id e th e o v e r lin e s u p p o rt y o u n e e d to ta k e a d v a n ta g e o f big o p p o rtu n itie s A n d w e can s u p p o rt y o u w ith a fu ll ra n g e o f s p e c ia liz e d s e rv ic e s . For in s ta n c e , o u r In te rn a tio n a l D e p a rtm e n t can h e lp yo u and y o u r c u s to m e rs w ith o v e rs e a s c o n ta c ts , d o c u m en ts, fin a n c in g , e ve n c u s to m s s e rv ic e s . W h e n y o u h a ve an o p p o r tu n ity th a t c a lls fo r s o m e th in g s p e c ia lca ll 3 1 4 -4 2 5 -2 4 0 4 . We’re with you. M E R C n n T IIE BACK M ercantile Trust Company N.A. • (314) 425-2404 • St. Louis, Mo. • M em ber F.D.I.C. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Banking Scene By Dr. Lewis E. Davids Hill Professor of Bank Management, University of Missouri, Columbia Credit Cards: Weigh the Alternatives! RADE JOURNALS Iv e read from the various financial and merchan dise fields— S&Ls, mutual savings banks, personal and commercial finance companies, credit unions, major oil com panies, insurance companies and retail merchants—share a salient feature: Those institutions are vitally concerned with the way they are affected by changes in payment mechanisms and pricing structures. Without exception, all of these jour nals insist that any payment system or T ed by many other banks. Chances for success in the operation of the practice are debated widely in the trade. Making the new debit cards more popular with the public than the pre vailing credit cards will call for much creative selling and some additional material benefits from debit-card is suers, or else credit card issuers will have to adopt some fee structure sim ilar to Citibank’s. But competitive fac tors will make this difficult to imple ment. "Com m ercial bankers, w ho have had low net earnings on dis counts generated by customers' use of credit cards at merchant accounts, tend to view the em erging debit cards (at least for a tim e) as likely to be additional drains on their earnings." electronic fund transmission technique that emerges as more viable than those used previously doesn’t necessarily ex clude the old systems’ use. The journals all want a significant voice in how they can contribute and participate. Commercial bankers, who have had low net earnings on discounts generated by customers’ use of credit cards at merchant accounts, tend to view the emerging debit cards (at least for a time) as likely to be additional drains on their earnings. The new debit cards will involve materially higher expenses to introduce and run parallel with exist ing credit cards. Whether a significant segment of the general public that holds and uses credit cards can be con ditioned to give up the “free” float and adopt the non-float debit card is a question about which many bank mar keting executives have strong mental reservations and for which they would like answers. Citibank’s commendable attempt to have its credit card holders pay a monthly carrying fee if they pay off their balances—thus avoiding any in terest charge on as much as 45 days’ float—is an idea that hasn’t been adopt 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis To make things more difficult for both issuers of credit cards and debit cards, an old idea is being revived: Cash is more desirable to a merchant than a credit instrument; a guaranteed credit instrument is more acceptable than a non-guaranteed check; and a guaranteed check is more acceptable to a merchant than a guaranteed credit ticket, which involves a discount by the bank from its face amount. Thus, after years of talk about the “checkless” society, talk that has been fueled by use of credit cards, giro sys tems and E F T S , we supposedly should need fewer checks and currency, but developments challenge such views. Several attempts have been made by innovators in the last decade to sign up merchants to give a discount from their list prices to customers who pay with currency. Such plans have had modest success. This probably is because the use of currency today accounts for only about 10% of the payments made in the U. S. Thus, merchants in general have only a minor proportion of their sales consummated with currency, al though the proportion may vary tre mendously depending on merchant and product line. Exxon Corp. a few months ago in augurated a plan in some limited mar keting areas permitting a discount to customers who pay in cash rather than charge Exxon products on their credit cards. The discount for currency was roughly equivalent to the cost of the credit transaction, including float cred it-card handling and collection ex penses. Following Exxon’s approach, there has been a revival of the idea of mar keting an identification card that would be acceptable to merchants who, in turn, would give a discount from their list prices to retail customers. The mer chant’s discount would approximate the bank’s discount-rate charges for the credit tickets that the merchant would deposit at the bank. Merchants and bankers, however, recognizing that ours is a check-writing society, knew that the ID “cash” card would call for a discount from list prices for payments in currency or checks. This idea was introduced several years ago on the West Coast, but it didn’t catch on significantly for a num ber of reasons, including ambivalence on the part of merchants who accepted bank credit cards. But a resurgence of the idea is developing in Arizona, Texas, California and Florida. A different, but related, situation in volves an unsuccessful attempt by a major West Coast commercial bank to adapt the “touch-tone” telephone as a giro-fund switching device for its cus tomers to pay bills. Though dropped by that institution, the basic idea re cently was adopted successfully by a mutual savings bank. The current suc cess of that simpler package indicates that the “touch-tone” approach d oes work with proper market segmenta tion. On the East Coast, a medium-sized mutual savings bank, which handles a major bank credit card, has made many of its savings-account customers happy by crediting passbook accounts with a MID-CONTINENT BA N K ER fo r April, 1 9 7 7 A DAYINTHETRANSIT DEPARTMENT. T h e Transit Departm ent is working late again. U nited Missouri’s Transit Departm ent works 24 hours a day —five days a week, and 18 hours a day on weekends. This enables us to give better service at lower costs. It’s why you should send the coupon for our Rapid Transit Item Profitability Schedule and other information. O r better yet, ask about our 30-day trial o f guaranteed better service and better costs. You can phone collect. You have nothing to lose, and profits to gain. C orrespondent D epartm ent U nited Missouri B an k of Kansas City, N .A . 10th & G rand, Kansas City, M o. 6 4 1 4 1 T I I I I (816) 556-7000 □ Send me the Rapid Transit Profitability Schedule. □ I’m interested in your 30-day trial, too. Name_________________________________________ Address-----------------------------------------------------------City___________________________________________ State_____________I_______________ Zip_-------------- I I I I I I I I I I I I J k l UNITED MISSOURI BANKOf KANSAS CITY, N.A. MID-CONTINENT BANKER for April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 7 " M akin g the new debit cards more popular w ith the public . . . w ill call for much creative selling and . . . additional m aterial benefits from debit-card issuers. . . percentage of the billing charges to their bank credit cards. This, in effect, is a cash discount from the list price. Another marketing phenomenon has an interesting relationship to the situ ation: the fantastic growth of the “cents-off” merchandise coupons. Mer chandise coupons have been used suc cessfully for generations to help sell soap, coffee and the like, but their re cent dramatic increase has amazed many marketing observers. In addition, a pro file of coupon users shows that they are younger, better educated and more affluent than non-users. Thus, conven tional wisdom to the effect that users of “cents-off” coupons are likely to be thrifty little old ladies with time on their hands and the patience to clip newspapers for the coupons is refuted. My point is that the concept of a single price-structure is eroding. What’s more, merchants who sell on credit and accept bank credit cards are increas Let our billion dollar organization help your bank profit. Call Lynn Mosley (205/832-8588), president of First Alabama Bancshares, Inc Affiliate Banks First Alabama First- Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama Bank of Montgomery, N.A. Bank of Birmingham Bank of Huntsville, N.A. Bank of Tuscaloosa, N.A. Bank of Dothan Bank of Selma, N.A. Bank of Gadsden, N.A. Bank of Athens, N.A. Bank of Baldwin County, N.A. Bank of Guntersville Bank of Hartselle Bank of Phenix City, N.A. Bank of Mobile County ingly being asked by good customers to quote a discounted cash price from their posted list price, and many re tailers are granting— often grudgingly — discounts for cash or check payments! Trading stamps, which in recent years waned in usage in many com munities, have shown renewed vitality. Housewives, it seems, have again de veloped puckered lips from licking and pasting stamps in books. The pricing structure is further complicated by this, especially when banks issue stamps. As we continue to observe innova tions, experimentation and changing technology in credit, debit, cash ID cards, point-of-sale terminals, optical scanning price recorders, shifts in con sumer attitudes toward giro systems, marketing techniques involving touchtone, rebates, stamps, upstream and downstream, and “cash” discounts, it becomes increasingly important for commercial bankers to stay attuned to all related developments, not only by other bankers, but by other financial intermediaries and by merchants at lo cal and national levels. The consumer today is exercising a much greater price sensitivity than in the past. Yet, paradoxically, what works well in one region of the country can prove to be a dramatic failure in another. Some of the previously noted developments may work in your com munity. Some probably will not. It seems that no individual standard ized credit system is likely to emerge. Each innovator will try to incorporate features he believes will meet the needs of the perceived market. Some of those innovators will be ahead of their time and will meet consumer re sistance simply because their products are new and strange. Other systems, while logical and in the public inter est, will fail to be born because of ob solete laws and regulations. All the newer systems provide an un known potential for massive fraud. Many bankers would like a respite from the changes they face. The forces at work not only in banking and financial institutions, but also in society and technology, clearly indicate that to re sist any change is likely to be as un fortunate an experience as to try to adapt to the multitude of innovations. Great selectivity and careful weigh ing of all alternatives are essential! • Thomas E . Davis has been pro moted to senior vice president and di rector of research, Federal Reserve, Kansas City. He had been vice presi dent and senior economist. In his new post, he succeeds Raymond J. Doll, who retired. 8 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r April, 1 9 7 7 No worry if you have LSI Insurance through Scarborough Sure you require evidence of primary auto coverage at the time of your loan, but what happens when your borrower's vehicle is unin sured, his auto is stolen, damaged or destroyed, and he defaults? One thing for sure, you have problems. W ith Lenders Single Interest Insurance Auto Insurance through Scarborough, you can protect your bank's loan . . . because you have coverage up to replacement value, unpaid balance or cost to repair. No follow-up system requiring borrowers to continue primary insurance is foolproof. That's why the policy available through Scarborough is vital. It provides positive, continuous protec tion. Protection on a blanket basis for all in dividual auto loans (dealer or direct). Single Interest Insurance through Scarborough & Company can: ■ Reduce installment loan charge-offs. ■ Reduce expense involved in follow-up systems. ■ Provide protection for extended auto loan terms up to 48 months. ■ Include towing and storage. Because you deal directly with Scarborough on claims, you receive prompt, fair and professional service, with a minimum of red tape. Another reason to think of Scarborough for Lender Single Interest Auto Insurance. Call or write Bob Marshman or clip the coupon below for more information. r Scarborough the bank insurance people Scarborough & Company 222 N. Dearborn St. Chicago, Illinois 60601 Phone (312) 346-6060 Fill in this coupon to receive the free booklet "Lenders Single Interest Automobile Insurance". N a m e _____________________________________________ T itle. Bank Address __________________ MC 4/77 C ity _________________ State MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Z ip --------------------- 9 BANKING WORLD FORD • Richard F . Ford, president, First National, St. Louis, will take office in October as vice chairman of the ABA’s Commercial Lending Division. The chairman will be Ralph B. Gilpatrick Jr., senior vice president, Mellon Bank, Pittsburgh. Two Mid-Continent-area bankers are among eight nominated to serve for the first time on the division’s 20-member executive committee. They are George R. Baker, executive vice president, Continental Bank, Chicago; and Thomas R. Clevenger, president, First National, Topeka. • Thomas R. Williams was elected chairman, First National Holding Corp., Atlanta, March 15. He also was elected to the board of the HC, parent organization of First National Bank, Atlanta. He succeeds Edward D. Smith, who retired after 23 years with the First National organization. Mr. Williams, who had been the HC’s CEO since January, 1976, retains his titles of president of the HC and chairman of the bank. Mr. Smith has joined an Atlanta law firm in an “of counsel” po sition. He remains on the boards of the HC and bank. • Bette B. Anderson has given up the post of president, National Associa tion of Bank Women, to become under secretary of the Treasury in Washing ton, D. C, This reportedly is the high est Treasury post ever held by a wom an. Mrs. Anderson was vice president, Citizens & Southern National, Savan nah, Ga. Edith E. Calliham, vice presi dent, First National of South Carolina, Charleston, has succeeded Mrs. Ander son as NABW president. • George Bush, former director, Central Intelligence Agency (C IA ), Washington, D. C., has been named a director and chairman of the execu 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ANDERSON WILLIAMS CALLIHAM tive committee, First International Bank, Houston. He also has been elect ed to the boards of First International Bancshares, Inc., Dallas, the Houston bank’s parent HC, and First Interna tional Bancshares, Ltd., the HC’s mer chant bank in London. Mr. Bush re cently completed 10 years of public service, which included being a Repub lican member of the U. S. House of Representatives from Houston and Harris County, U. S. representative to the United Nations, chairman of the Republican National Committee and chief of the U. S. Liaison Office in China. On leaving the CIA post last January, Mr. Bush received the Nation al Security Medal for “public service of the highest order” from outgoing President Gerald Ford. • Richard M. Rathgeb has ad vanced from assistant vice president to vice president, First National, St. Louis. He heads the regional banking division group that covers Illinois, Ken tucky and Iowa. He joined the bank in 1970. • Conrad E. Lawlor has been named acting regional director for the Small Business Administration’s Region V II Office, headquartered in Kansas City. This four-state region includes Missouri and Kansas. Mr. Lawlor, a ca- RATHGEB LAWLOR BUSH reer civil servant, has served in various key executive positions for the SBA in Region V II and was district director, 1965-70. He was assigned to the Kan sas City Regional Office as deputy chief of finance and investment from 1970 to 1973. He then was transferred to the Des Moines (la .) District Office, where he was community economic de velopment chief two years. • Central Bancorp., Cincinnati, last month elected three new directors: Walter E. Bartlett, general manager, W LW T, and president, Multimedia Broadcasting Co.; Ruth C. Mead, part ner, Rend & Co., Dayton, O.; and Har ry Rossi, president, Union Central Life Insurance Co. • Key managers have been an nounced for the multinational banking department announced by Chicago’s Continental Bank last July. The new department is headed by Senior Vice President J. Joseph Anderson, who re ports to Executive Vice President Ed ward M. Cummings. Vice President W. Denis Wright heads one North American division and another North American division is headed by Vice President William L. Staples. A New York office is headed by Vice President William L. Gunlicks. Multinationals headquartered in Latin America and the Asia-Pacific region are served by a Chicago-based division headed by Vice President Carroll M. Rickard. The European multinational regional office in London, headed by Senior Vice President Caren L. Reed, coordinates the following European units: a Lon don office, whose area manager is Vice President James P. Donahue; a Brussels office under Vice President William A. Page and a Frankfurt office under Vice President Robert J. Morrison. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 For 100 years,we’ve beenyears ahead« We’re commemorating our 100th anniversary with an even stronger effort to be the bank that serves you best. “100 years of service. That's a long time. And we’re all quite proud of this accomplishment. “It all started on January 2, 1877. The doors of Worthen Bank were opened for the first time. And through those 100 years, Worthen has grown to be the largest and most service-minded bank in Arkansas. “Looking through the years, and all the way back to the found ing days of our bank, there has always been a dedication by man agement to three very important principles: 1. Integrity toward customers; 2. Sound management of the money entrusted to us, and; 3. Innovation of new banking services. “It is on these three prin ciples that we base our success in serving you. “Our management has been dedicated to finding new ways of offering banking services. Our staff has been dedicated to the delivery of those services. “Worthen Bank was opened with assets of $75,000. Today, our assets are over half a billion dollars. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis People have responded to our posi tive attitude and have made us the largest bank in the state. “We re proud of this leadership position. And in this, our 100th year, it is our continuing commit ment to always be the bank that serves you best.” WORTHEN Worthen Bank & Trust Company, N .A. Little Rock, Arkansas / M em b er F D IC 3 fabco company 11 Community Involvement Tel-M oney' Financial-Info Service Garners BMA's Golden Coin Award E E D FINANCIAL information? Well, if you’re in South Bend, Ind., that information could be as close as a phone call away, thanks to First Bank’s “Tel-Money” service. “Tel-Money,” which has won the Bank Marketing Association’s 1976 Golden Coin Award in the public af fairs category, is a service consisting of a library of pre-recorded tapes. A con sumer merely has to call a specified telephone number, ask the operator to play a specific tape and then listen. The “Tel-Money” line is in service 24 hours a day, seven days a week. Included on each three-minute tape is information, with a “credit tag” at its end. The recording also points out the name and telephone number of a specially trained member of First Bank’s staff who can supply informa tion beyond that of the recorded mes sage. Topics for inclusion in the library were chosen after the bank conducted research to identify subjects that might be on the average person’s “most want ed” list or that may be important. The messages were prepared by First Bank’s marketing staff and reviewed by line division personnel and legal staff. Actu al recordings were made by profession als and each tape subsequently was tested for ability to communicate ef fectively. How did the service come about? As early as 1973, First Bank began to look for a way to provide financial counsel ing services to consumers—about 250,- N 000 of them—in its market area. Bank officials recognized a banking trend to ward increased consultative involve ment with customers, and, after con ducting image studies, found that many of its retail customers were aware of First Bank’s inability to communicate with them on an advisory level. What was needed, bank officials reasoned, was a way to enhance the bank’s image, provide high-quality educational infor mation and provide the consumer mar ket with easy, confidential access to that information. Once the project became reality, “Tel-Money” was advertised in news paper supplements, outdoor posters and through 65,000 brochures that were sent to checking- and savings-account customers. Besides winning the BMA award, has the service been a success? “Yes, definitely,” says a bank official. “During ‘Tel-Money’s’ introduction, an average of 80 calls per day were received by our ‘Tel-Money’ operator, and, although First Bank had originally expected to receive about 2,000 calls during the duration of the introductory period, twice that amount came in! And com ments, letters and new-account signa ture cards we received have told us of the appreciation people in our market area have for the service. “In addition,” the official continued, “the service has referred a substantial number of new-business prospects to First Bank’s line officers!” • • 'Black' Arts: Free,reliable,i^sy-to-uiiderstaiid information on money simply bv dialing 234-1411 Afro-American View Is Focus of Display A black-arts display held at Detroit Bank wasn’t an exhibition featuring an evil brand of magic; it was reportedly one of the largest art shows represent ing works by Afro-Americans to be held in Michigan. Assembled by American Black Art ists, Inc., the Detroit Bank display was titled “Art From a Black Perspective” and included oil and acrylic paintings, sculpture, charcoal and chalk drawings and mixed-media works. More than 150 pieces by 50 artists were featured in the one-month show in the bank’s Main Office exhibit area. 12 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Discussing a painting by LeRoy Foster of the young Frederick Douglas symbolically breaking the bonds of oppression for all people is Leno Art Jaxon, dir. and founder of American Black Artists, Inc., which assembled 150-work art show for Detroit Bank. All works in exhibition, which was held in bank's Main Office, were by Afro-American artists and depicted various ex periences and emotions of blacks throughout American history. The show’s theme was a depiction of a broad range of human experiences and emotions that have been used by Afro-American artists attempting to de fine the present state, predict the fu ture direction and illustrate the past of black people in the U. S. Blood Needed: Employees of Holding Co. Join Red Cross ‘Bank’ Under an agreement signed at Heri tage/Pullman Bank, Chicago, the American Bed Cross has agreed to meet blood and blood component needs of all employees of the bank and its parent HC, Heritage Bancorp. Under the plan, all blood needs of nearly 400 employees of the bank and HC and the employees’ families will be met by the Red Cross. A blood-drawing program was held at Heritage/Pullman Bank, and 60 pints of blood were drawn from bank and HC employees, and donated to the Red Cross Blood Processing Center. Red Cross blood technician draws pint of blood from Bruce Morrison, aud., Heritage Bancorp. Photo was taken during blood-draw ing program held at Heritage/Pullman Bank, Chicago. Here’s a nice, new addition to your ban k operation. njfl m The new First National Bank building When a new building gives correspondent bankers like Bob Rook and Larry Reed the additional space and equipm ent to work more e ffe ctive ly fo r you, it can be a plus to your bank operation. And the new First National Bank b uilding does. Drop by and see our new building on your next v is it to Am arillo. W e’ ll be moving in May 16th, and hold our dedication and open house on Sunday, May 22nd. If you can’t make it our way, give Bob or Larry a call at th e ir new number. They’ll be glad to tell you how an 88-yearold bank, in a brand new building, could make a nice, new addition to your bank operation. The F IR S T national Bank oT Rmanillo P.O.Box 1331 Amarillo, Texas 79180 NEW (806) 378-1400 after May 16th. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 13 NEWS ROUNDUP News From Around the Nation Fed to Propose N O W Accounts The Fed is expected to ask Congress to enact legislation allowing all Americans to collect interest on money de posited in demand accounts by authorizing banks to issue NOW (negotiable order of withdrawal) accounts. The accounts would be available only to individuals and the initial interest ceiling would be lower than 5%, with increases planned after a few years. The same legislation is likely to provide for interest pay ments on reserves, a move that is designed to curb the exodus of banks from the Fed system. Fed Rules on HC M oney Orders The Fed has announced that it will consider requests by HCs to enter the money order business on a case-by case basis. At the same time, it ruled favorably on applications to issue money orders by Citicorp, New York, and Republic of Texas Corp., Dallas. Republic will be permitted to retain its three money order subsidiaries and Citicorp will be permitted to start one. Roth HCs will be permitted to issue money orders with face values up to $1,000 on consignment to agents or vendors, such as convenience stores and banks, which will sell them to the public. The Fed hopes to promote competition in the money order field by permitting HCs to get into the business. HCs can compete with nonbank money-order firms better than can commercial banks, since the latter are subject to reserve requirements. Ag-Land Fund Plan Dropped Continental Bank, Chicago, has withdrawn its application to the IRS requesting tax-exempt status for employee benefit plans investing in the bank’s proposed Ag-Land fund. A spokesman said the bank had decided not to proceed with the plan after discussing the proposal with various members of the business and ag communities and govern ment leaders. The fund had been proposed as a vehicle to permit pension funds to invest in farmland and then lease the land to farmers. The plan had met with vigorous opposition from farm ers and ag-related organizations. Fed Accommodation' Called Inflationary Increased pressure on the Fed to accommodate federal deficits will lead to serious inflation in years ahead, said Lawrence K. Roos, president, St. Louis Fed, recently. He said accommodation occurs when the Fed is called 14 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on to make open market purchases of securities issued by the Treasury to finance federal deficit spending. “If the Fed accommodates the Treasury by buying gov ernment securities on the open market,” he said, “upward pressure on interest rates is alleviated, but inflationary pressures are created . . . because purchase of government securities by the Fed increases the nation’s total stock of money.” Mr. Roos said inflation would not be the only adverse result if the Fed were forced to cooperate continually with the Treasury by accommodating as much debt as the fed eral government desired. “When government expenditures are financed by the indirect sale of bonds to the central bank, the costs (of government services) are hidden and citizen awareness of government expenditures is dimin ished. When citizens are not aware of government expend itures, obviously they are denied information they need to exercise effective control of government.” He asked that the Fed be permitted to continue to function “with the independence necessary to assure eco nomic stability.” Privacy Protection Asked Congress has been asked to ensure that the confidential ity of information regarding bank customers is fully pro tected in any audits of federal bank regulatory agencies by the General Accounting Office. An ABA spokesman testified that, while bankers sup port the concept of performance audits of bank regulators, they are concerned about possible breaching of the confi dentiality of information on bank customers that is con tained in bank examination reports. The more people having access to examination reports, the spokesman said, the greater the risk of invasion of personal privacy. T&L Account Interest Pushed The ABA has lent support to a legislative proposal to permit the Treasury to invest funds in its T&L accounts with banks in open-ended bank obligations secured by a pledge of acceptable collateral or in obligations of the U. S. government and its agencies. But the ABA strongly opposes other provisions of the legislation that would permit S&Ls to act as depositories for T&L accounts. The opposition is based on the volatil ity of the accounts. The ABA has asked Congress to amend the measure so as to require the Treasury to reimburse banks for the rapidly expanding services they provide federal agencies in addition to the servicing of T&L accounts and issuing and redeeming savings bonds. The services referred to in clude handling IRS tax liens and levies and microfilming checks under the Bank Security Act. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 - "f ¡ 3 \ Í m ' ' >sv' \ ^ ' S IM M E N T A L ANGUS ■ i * f 0V< H ' “ Total Performance" A N 0 6 9 0 707 O F ID E A L The Angus breed's "top-total performance bull." 789 progeny show a 102.4 weaning ratio ... 210 progeny with a 103.1 yearling ratio ... and an A D G ratio of 103.4... a bull for all reasons. “ Daughters That Calve E a sy" S M 0 0 0 4 U E L I Top rated for daughters' first-calf calving ease in 1976 National Simmental Sire Sum mary. Plus outstanding growth. POLLED HEREFORD HEREFORD ' WÊmÊÈÈÈm DeForest, Wis. 53532 Tel. 6 0 8 -8 4 6 -3 7 2 1 “ Son Of D 4 " HH0781 D4 M IS C H IE F The D 4 's are well known for high per formance. His 4.09 pounds per day on test topped the Midland Test Station. "G o ld Seal Sire" HP0800 L E A D E R One of top ranked sires in A P H A National Sire Evaluation Program. Solid growth from birth to market. C H A R O L A IS M A I IME-AIMJOU SH O R TH O R N Cow-calf operators w an t a profit. So do you. Y o u r financial guidance and our proved performance bulls can be the means to beef herd success. The poss ibilities are unlim ited ... the tim e is now. H elp yo ur cattlemen to breed fo r p ro fit. Send coupon fo r the ABS Beef Sire D irecto ry o f high-performance bulls. " A Champion For Cham pions" SS0018 W H IT E H OPE Grand Champion Shorthorn at Denver in 1976. Polled, from great cows with milking ability. A bull to use. „ o I__I Beef Management Systems M C B -0 078 [ H Herd Owner Training. Semen & Equipment. P Becoming an ABS Representative. f l Have an ABS Representative call. AMERICAN BREEDERS SERVICEiD« 2 Ä MID-CONTINENT BANKER for April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ABS is an authorized distributor of Cryogenic refri 15 Installment Lending E xh ib it Award, Energy-Saving Loans Promote Home-Improvement Programs This is part of crowd that attended first annual (1976) home-improvement show sponsored by First Nat'l, Elkhart, Ind. Participating merchants don't have to be bank customers. They are charged $110 for each booth they occupy. Admission to annual shows is free. T TH IS TIM E of year, home own ers, after digging out of a winter of snows and cold, look around their dwellings and see that some improve ments should be made. Perhaps a new kitchen would be in order, an extra room added, maybe some aluminum siding. Of course, such projects cost money, and usually the home owners don’t have enough to cover the jobs they want to do. Thus, they turn to their local banks for home-improve ment loans. At least, that’s what those local bankers hope. However, these home owners could go to finance companies or even to their brothers or brothers-in-law to get the needed funds. Therefore, to get the prospective borrowers to go to their banks, the latter should spotlight homeimprovement loans through newspaper ads, TV or radio commercials, state ment stuffers, etc. An Indiana bank—First National of Elkhart—has begun sponsoring annual home-improvement shows to stimulate local residents’ desires to fix up their homes and, of course, to go to First of Elkhart for the money to do this. The bank’s home improvement shows are open to any merchant in the Elkhart area who’s involved with home improvement in the broadest sense, says Robert R. Raymond, marketing A 16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis officer. Participants in the 1977 show— held March 25-27—included firms that sell everything from aluminum siding, kitchen cabinets, insulation, carpeting, lawn and garden equipment to pianos, TV sets, swimming pools and tele phones. The shows are entirely free to the public and are paid for primarily by participating merchants, who are charged $110 for each booth they oc cupy. The booths are sold on a firstcome-first-served basis. The 1977 show, held in an Elkhart gymnasium, fea tured 45 firms occupying 72 booths. First of Elkhart begins planning each year’s show about five months ahead of the actual dates. Letters and contracts are sent to all area merchants, who in turn, are asked to return the signed contracts with checks for booth costs. The bank’s branch managers and officers also make calls on merchants. Mr. Raymond emphasizes that a mer chant doesn’t have to be a bank cus tomer to take part in the show. The 1976 show attracted more than 10,000 visitors. Although the mer chants were happy because their ex hibits brought them sales, says Mr. Raymond, the show last year didn’t gen erate many home-improvement loans. For the 1977 show, the bank planned to offer special home-improvement-loan rates and a premium to anyone who closes a loan with First National. In addition, the bank promoted the 1977 show with billboard, newspaper, radio and TV advertising in its market area. E nergy-Saver L oan Plan. Lake View Bank of Chicago last month announced a 20% cut in interest rates on homeimprovement loans to customers financ ing energy-saving projects. President Joseph D. Barnette says an energysaver-loan borrower will be charged at an annual percentage rate of 10.20% instead of the bank’s usual 12.83%. Ac cording to Mr. Barnette, this cost-cut ting measure would save a borrower of $3,000 for three years a total of $135 in interest charges. Projects qualifying for the reduced rate include insulation, weather strip ping and caulking, storm windows and doors and other related conservation projects. “Since these steps could cut up to 25% or more off heating bills while helping add to the real estate’s overall value, it is one of the best returns on an investment that I can imagine,” Mr. Barnette says. The bank plans to keep its special loan rates in effect as long as there are sufficient numbers of local home own ers and businesses requesting the pro gram. H om e-Im provem ent Award. Reagan Commerce Bank of Houston has initiat ed what it calls the T. C. Jester Award. The bank plans to give it each spring to a resident of the city’s Heights area who does the most to improve his own home and whose work has encouraged similar improvements by his neighbors. The first such award, a pewter plaque, will be presented April 21, San Jacinto Day. Persons may nominate their own or one of their neighbors’ homes. Com plete rules and entry forms are avail able at the bank, from Heights area merchants or from the Houston Heights Library. Any house located within specified boundaries may be nominated. The award is named for the Reverend T. C. Jester, who was pastor of the Heights Baptist Temple for more than 20 years. The bank points out that the clergyman’s influence was in strumental in strengthening Heights area residents during the critical era between 1925 and 1950, years that in cluded a depression and World War II. According to the bank, his concern made him a stabilizing influence in the Heights and throughout northwest Houston. The T. C. Jester Award is part of Reagan Commerce Bank’s $ 10-million commitment to the re-emergence of the Heights communities. A companion award, the Dr. Mylie E. Durham Sr. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 of those with a business interest in the used car O F F IC IA L GUIDE S tandard R eference of the in d u stry . . . w ith a regional e d itio n fo r y o u r m arket. The essential data req uired fo r accurate, p ro fita b le used ca r a p p ra isa l by dealer, lender, insurer, assessor. A new edition every 30 days Authoritative • Accurate • Current SU BSCRIPTION RATES SUBSCRIPTION ORDER FORM National Automobile Dealers Used Car Guide Co. 8400 Westpark Drive, McLean, Va. 22101 Please e n te r our order f o r . . . New □ Annual Subscriptions to the N.A.D.A. Car Guide, issued every 30 days. □ Additional □ Official Used R em ittance enclosed □ W ill rem it on receipt of invoice MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1 sub. 15.00 4 sub. ________ 49.25 6-14 sub. — . 11.00 ea. 2 sub. .28.00 5 sub__________ 58.00 15-29 sub------ -10.50 ea. 3 sub. 39.25 30 and over. -10.25 ea. N am e. PLEASE TYPE OR P R IN T By....... Street (P.O. Box). C ity............................. State.................................... Zip Code. Award for commercial improvement, was presented last fall. Judges for the 1977 award are three prominent cultural historians and a restoration architect. • • Two Bank Charge Cards Report Volume Increase, BankAmericard/Visa Card Holders 33,915,460 Accounts 20,555,000 Merchants 874,884 Participating Banks 7,889 Outstanding Balances $ 5.2 billion Retail Volume $10.1 billion Gross/Dollar Volume $11.1 billion Average/Retail Purchase $26.10 Master Charge 40,680,830 25,039,329 992,924 8,594 $ 6.5 billion $12.3 billion $13.7 billion $26.27 Delinquency Decrease Bank-card volume, outstandings and participations continue to grow while delinquencies decrease, according to statistics recently released by the two national bank-card systems. BankAmericard sales volume passed the $ 11-billion mark last year, with de linquencies reaching a new all-time low, reports National BankAmericard Inc. (N B I), San Francisco-based ad ministrative organization for that card program. With the conversion that be gan March 1, BankAmericard and its affiliated cards issued in 22 countries will establish Visa as the system’s global work mark. Gross BankAmericard sales volume (sales and cash advances) for 1976 was $11.1 billion, up 23.6% over the 1975 total of $8.9 billion. As of last December 31, outstandings on Bank- r Americard were $5.2 billion, up 19.4% over the same date in 1975. Dollars de linquent (30 days or more past due) represented 3.13% of dollars outstand ing, a new low. The portion of card holders paying their bills in full each month remained fairly constant at 35.6% during 1976. Net charge-offs for the year totaled .86% of gross volume, com pared with 1.27% for 1975, continuing a downward trend and the lowest loss figure in three years. Of this .86%, .76% was credit losses and .10% fraud losses. BankAmericard transactions at retail point of sale averaged $26.10, a 7.6% increase over the 1975 figure of $24.26. As of last December 31, the average outstanding balance was $382.43, up 7.3% over the $356.47 average a year before. As of last December 31, NBI members totaled 7,889, an increase of YOU MAY NEVER HAVE TO BUY T-BILLS AGAIN... TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES CURRENT ASSETS EXCEED $170,000,000 Exclusively in U.S. Government Secur ities. Ownership of various government issues with different maturity dates. No minimum holding period. Stability of principal — constant net asset value $1. Portfolio priced at amortized cost. First day’s interest; dividends 365 days a year. Telephone transfer of monies. For more complete information on TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES management fees and expenses, call our Bank Service Desk. Ask for our literature and prospectus. Be sure to read before you invest. Toll free: 800-245-2423. No charges to buy. No charges to sell. FEDERATED SECURITIES CORP., Distributor Dept. ST-4 Federated Investors Bldg., Pittsburgh, PA. 15219 18 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 14.8% over the year-earlier figure. Interbank Card Association, New York City, licensor of the Master Charge card, reports record advances in card holders, outstanding balances, active accounts and merchants in 1976. Domestic outstanding balances as of last December 31 rose to $6.5 billion, a $1.1-billion—or 21%— gain over yearend 1975. U. S. Master Charge card holders increased by 3.7 million to an all-time high of 40,680,830, or 9.9% over the 1975 figure, while active ac counts reached 16,693,729, which is 12.6% more than in the similar period in 1975. As of December 31, number of U. S. merchants honoring the card totaled 992,924, an 18% increase over the 841,288 reported at year-end 1975. This number represents 1,368,237 retail out lets. Master Charge’s gross dollar volume rose $2.4 billion in 1976 to an all-time high of $13.7 billion, a 21.2% boost over 1975. The average retail purchase last year was $26.27, up 7.6% from $24.42 a year earlier, and the average cash ad vance went up 2.3% to $116.12. The percent of outstanding balances 30 days or more past due dropped from 4.3% at year-end 1975 to 3.2% at the close of last year. During 1976, number of participat ing banks grew 1,252 to an all-time high of 8,594. Record Initial Sales ST. LOUIS—Record sales of more than $1 million were reported for the first 2 5 days of operation of a newly formed BankAmericard creditcard organization called Monetary Card Services, Inc. (MCS). This not-for-profit corporation was created to operate a joint processing service for BankAmericard banks in a five-state area—Missouri, Kansas, Iowa, southern Illinois and western Kentucky. As of press time, about 100 banks had joined MCS. Information on the group may be obtained from: Monetary Card Ser vices, Inc., 220 South Jefferson Ave nue, St. Louis, MO 63103. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Wall to wall security with LeFebure surveillance and alarm systems. You've g o t to be hard-nosed with the constant threat of arm ed robberies. And LeFebure surveillance and alarm systems are a tough defense. You can g e t a better look a t w hat you w ant to see with the LeFebure 2701 70MM Camera. The negative a re a is tw ic e as la rg e as o th e r 3 5 MM surveillance cam eras... so you g e t big, clear blow-ups for better evi dence. Easy film loading with cassette to save tim e. This is a proven system... a defense that works. Vault protection is autom atic and reliable with the com pact LeFebure Grade A 3 0 0 0 Vault Alarm system. And th e c a re fu lly d e s ig n e d LM -3800 Line M o n ito r watches over the total alarm system. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis LeFebure has engineered just about everything you need in d e p e n d a b le security systems to provide a reli ab le defense for your operation and all of the pe o p le in it. Write to d a y for facts on alarms; smoke, heat and in frared detectors; triggering devices; program clocks; closed circuit TV and other special systems. You g e t your money's worth with LeFebure... ideas and honest answers to solve tough security problems. SIMPLE, RELIABLE AND EFFICIENT LeFebure Division of Walter Kidde & Company, Inc. Cedar Rapids, Iowa 52406 Selling /Marketing W h o Loves Ya? Banks Get Wi+h Spirit; Celebrate Valentine's Day As a famous bald-headed television cop often asks, “Who loves ya?” Last February 14, customers of at least five banks in the Mid-Continent area learned the answer to that question: their financial institutions! Valentine’s Day celebrations were held in the lobbies of three banks in Missouri: American National and City Bank, both of St. Louis, and Brent wood Bank. In Illinois, Heritage/ Standard Bank, Evergreen Park, and Heritage Bank, Country Club Hills, both held a “salute to the gals.” Continuing a six-year custom, Ameri can National, Brentwood Bank and City Bank gave away chocolate, foilwrapped “kisses” to customers at tellers and drive-up windows. At the two Heritage banks, women customers were greeted by lobby displays keyed to How profitable can Christinas dobs be? Send for The Unidex Report’s fascinating new research findings which prove again that Christmas Clubs can significantly increase your cross-selling opportunities. That’s right. Customers who maintain Christmas Clubs are more likely to use your other services than those who don’t. A national sample clearly shows that these customers are 17.7% more likely to have an installment loan in the institution where they maintain a Christmas Club account. And there’s much more. The complete service pattern will really open your eyes. It’s a totally factual map to your future. And one you can profit by. Read how in The Unidex Report on Christmas Clubs. Send for your copy today. Just write: John H. Guinan, President, Christmas Club a Corporation, P.O. Box 20, Easton, Pennsylvania 18042. c b R is r m a s club a corporation P.O. Box 20 Easton, Pennsylvania 18042 20 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Marion Shallow (I.), pers. banking div., Robert Conlan, v.p. & aud., Mary Johnston, asst, cash., and Alfred J. O'Malley, pres., all of Heritage/Standard Bank, Evergreen Park, III., prepare to hand out sampler boxes of W hit man's chocolates to women customers. Valentine’s Day. Women customers also received complimentary sampler boxes of Whitman’s chocolates. From A m erican Express: Above-Average Incomes Are Charge-Card Targets Progress Bank, Fenton, Mo., now of fers a new American Express chargecard program designed for persons with above-average incomes who do sub stantial business and personal traveling and entertaining. The American Express Gold Bank Card provides all international charge privileges of the American Express Card plus a cash reserve of at least $2,000 issued by the bank. Under the new program, a card holder may ob tain up to $1,000 in travelers checks every 21 days by writing a personal check at an overseas travel office of American Express Co., its subsidiaries and representatives. Payment for the travelers checks may be drawn from the cash reserve. A special feature of the program makes it possible for card holders to borrow money from Progress Bank either as cash or in the form of a check ing-account deposit. According to Lewis R. Corbet, vice chairman, Progress Bank, “With the widely accepted card, one may do any thing from buying a rough-cut dia mond in Rio to purchasing scientific reports from the U. S. government. Russia’s Intourist honors the American Express Card and, by special govern ment edict, it’s the only charge card accepted in Burma.” MID-CONTINENT BA N K ER fo r April, 1 9 7 7 CREATE AN INCIDEN ■as i m u This line of savingsstarters from International Silver offers all the ingredients needed t*00* or successful one-time and continjing incentive programs. These feature distinctive Datterns in flatware and a tremendous assortment n silverplate holloware and pewter holloware. Each Dearing the famous International trademark, added assurance of the quality and value that thrift-minded customers expect for their money. And Jack Daly, International’s top premium expert, has the facts and figures to prove it. He’ll also help you choose the best incen sntlem en: W e’d lik e to see w h a t you ca n d o fo r us. □ C a ll a s soon as p o s s ib le . □ S end c a ta lo g b e fore w e meet. ime_ m pany- ty-------https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -Title_ A d d re s s . -S tate___ tive for your particular promotion. And work with you from planning to delivery for results you’ll really welcome. Before you wrap up your next incentive program, talk to Jack or any of the specialists at International Silver. They know more about setting up successful financial incentive programs than just about anyone in the field. INTERNATIONAL Write today for your free SILVER COMPANY International Silver The more you get into premiums Catalog. the better we look. In te rn a tio n al S ilv e r C om pany; S p e c ia l S a le s D iv is io n 500-South B ro a d St, M e rid e n , C T 06450 Seven five-week-o!d puppies prove handful for six adults. Pups are "stars" of TV com mercial and other advertising media being used by Commerce banks across Missouri in con nection with their smoke detector premium program. L. to r. are: Don Clabaugh, art director; John Valentine, account exec., Valentine-Radford, Kansas City, Commerce's ad agency; Laura Kemper, director of advertising, Commerce banks; Bob Jones, Jones Productions; Andrea Thalman, dogs' owner; and Jean Haskins, member, St. Louis Dalmatian Club. Smoke Detector Premiums Publicized In Ads Featuring Dalmatian Pups H ILD REN AND DOGS are surefire attention-getters in photos, news paper articles, ads, TV commercials, etc., as the Commerce banks of Mis souri can testify to firsthand. The banks, which belong to Commerce Bancshares, headquartered in Kansas (Advertisement) Concern for W ildlife Is Big Business When the people of Missouri passed only one statewide tax in 1976, they confirmed their determination to pre serve our wilderness. Have you noticed the number of TV spectaculars, radio commentaries and the whole new indus try of magazines, books and newspaper features devoted entirely to this sub ject? A concern for our environment is rapidly becoming one of the most pow erful voices in our nation. Until now, there has been little an advertiser could do to capitalize on this deep commitment of all the people in this country. Just developed, though, is a weekly series of eye-catching illustrated news paper columns called, “Your Wilder ness.” In these columns, offers of spe cific bank services are combined with interesting stories of the importance of wildlife and intriguing puzzles— sure to get response from readers. This format, in similar series, has been acclaimed by customers and bank ers every time it has been used. “Your Wilderness” columns, with an unusual guarantee of readership, are now being distributed as a syndicated service through Country Press, Inc., City Bank Bldg., Suite 306, Div. A, 4625 Lindell Blvd., St. Louis, MO 63108. Write for details and samples of this unique means of creating improved community involvement. 22 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis City, are using seven dalmatian puppies to publicize their smoke-detector pre mium program. Traditionally, dalmatians have been firehouse mascots and thus are an appropriate tie-in with smoke detectors. The latter are smalls battery operated devices that are at tached to ceilings in homes and sound an alarm in a fire’s earliest stage. The seven Commerce pups—just five weeks old when they made their debut —are appearing in newspaper ads and TV commercials across Missouri. They have made a big hit with the public as evidenced by the fact that requests have been going into the various Com- Proteet your fam ily with a First Alert smoke detector from Commerce B ank Whai can vue do for you? # C om m erce Bank Commerce banks' smoke detector premium of fer is featured in advertising along with dal matian pups, traditionally firehouse dogs. Here, pups are grouped around smoke detector. They have made big hit with Missourians, many of whom have asked various banks whether they can buy or adopt them. merce banks to adopt or buy the pups. The TV commercial opens with a shot of the pups fast asleep; then the smoke detector goes off, and they rise and trot down a flight of stairs and out a door to safety. Because of their small size, their stomachs rub across the steps, and they gingerly put one paw out each time they advance down the stairs. “Everyone is aware of the importance of smoke detectors in fire protection,” says Laura Kemper, director of advertis ing for Commerce banks, “and the pup pies inspire the protectiveness people feel about their families.” However, she admits, the pups were hardly “pro talent.” “They seemed to enjoy the attention,” she went on, “ex cept when it came to running down a flight of stairs for the television com mercial. That took about a pound of liverwurst and a lot of patience.” The commercial took two days to shoot in Kansas City. The Commerce campaign is tied to a new deposit and installment-loan cam paign that allows the banks to offer the detector at substantially reduced prices. It will run until April 15. According to Miss Kemper, the pro motion is going well, and a lot of peo ple have shown interest in the detec tors. They’re called First Alert and are manufactured by the Smoke Alert divi sion of Pittway Corp., Aurora, 111. • • $79 Value: Free Cameras for Loans Bring 2,500 Customers Every time more than 2,500 people in Louisville snap a picture they think of Citizens Fidelity Bank! And the peo ple at Citizens Fidelity think about the more than 2,500 direct loans the camera snappers took out at the bank—each amounting to at least $1,500! What do cameras and loans have in common? Just ask Tony McEwen, Citi zens Fidelity marketing officer and re tail products manager. He’ll tell you that people snap up cameras when they’re free and they don’t mind taking out a loan to do it. From last August to November, the bank offered free Polaroid Super Clinch er Land cameras free to anyone tak ing out a direct loan to buy an auto, boat or RV; to consolidate existing loans; to pay for a vacation, etc. The cameras were billed as a $79 retail value and came with carrying case and tripod mount. Ads on TV, in newspapers and on bill boards directed camera fans to get their loans directly from one of the bank’s nearly 50 banking centers. According to Mr. McEwen, the pro motion was very successful for increas ing bank growth. MID-CONTINENT BA N KER for April, 1 9 7 7 The two-sided story of the 60-second money order. The story of the American Express® Financial Institution Money Order (FIMO) has a happy ending for both sides. Yours and your customer’s. FIMO will not only save your tellers valuable time at the counter, they’ll also eliminate costly cashier’s checks and processing. analysis of your present system for and that they write in the payee’s you, just mail the coupon below to name themselves for privacy they Gil Rosenwald, Director of Money don’t get with most money orders. No matter which side you’re on, Order Sales Development, FIMO is a story with a happy ending. American Express Company, New If you’d like more information, or York, N.Y. 10004. Or call him col lect at (212) 480-3226. would like us to prepare a financial All your tellers have to do is issue FIMO in the specified amount. They don’t even need an officer’s authorization. Then you just mail a weekly report to American Express and your work is done. We do all the processing— including reconciling, storing, filing and ordering. We’ll even run down exception items and stolen money orders. And handle refunds. As for your customers, they’re sure to appreciate the fact that FIMO can be issued in under a minute, MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Gil Rosenwald, Director of Money Order Sales Development Am 4 1 American Express Company, American Express Plaza, N .Y ., N.Y. 10004 The FIMO story interests me very much. Q Please send me more infor mation. □ I am interested in the financial analysis. Please tell me more. Name: American Express FIMO. The money-making money orders» 23 W RITTEN LOAN POLICY New Products and Every Bank Should Have One! "The Bank Board And Loan Policy" Provides the Information Needed to Formulate a Written Loan Policy or Update an Existing Onel A must for banks, this 40-page manual tells why all banks should have written loan policies and how they can formu late or update such policies to serve as guides for lending officers and to help protect the bank from making costly commitments. • Sillcocks-Miller Co. “Security pan tograph write-in or signature panels” have been introduced specifically for plastic banking and credit cards by Sillcocks-Miller Co., Berkeley Heights, N. J. These panels, says the manufac turer, have special individually de signed overprints, each to exact cus tomer specifications, to help prevent tampering or forging. All are tailored to each client’s needs; they are not standardized. In addition to manufac turing magnetic banking cards, the firm produces a variety of plastic advertis ing and promotion items. Among the latter are decals, tent or bend-back counter signs, wall signs with or with out adhesive or pressure-sensitive back ing, “Take One” literature boxes, re membrance products for bank custom ers, calendar cards, slide charts or disc calculators, pocket cards, key or lug gage tags. Of special interest now is the firm’s complete metric-conversion line featuring customer-education gifts. Write: Sillcocks-Miller Co., 310 Snyder Avenue, Berkeley Heights, NJ 07922. • Brandt, Inc. Two automatic pack aging machines have been introduced by Brandt, Inc., Watertown, Wis. A LEFT: Brandt's Model 1702 portable automatic wrapper will be available in July. RIGHT: Model 1780 heavy-duty, high-speed automatic coin wrapper is available now. small, portable automatic wrapper, des ignated Brandt Model 1702, will be available in July. According to Brandt, it offers two-button control, is light weight and has a large-capacity input hopper, which is capable of holding up to 10,000 coins and wraps all-denomi nation U. S. coins. It offers options for special token or foreign coin wrapping. Now available is the Model 1780, which is described as a heavy-duty, high-speed automatic coin wrapper that produces up to 1,440 wraps of coin per hour. Built on a roll-about stand, the machine features infrared stack detection, which stops the ma chine from functioning when a poor stack is detected, thereby avoiding spills. Brandt says the Model 1780 also can be used as a high-speed coin veri fier and has an easily attachable bag ging attachment. W rite: Brandt, Inc., Watertown, W I 53094. Branch Monitoring System Introduced The manual presents the loan policies of four well-managed banks and con tains a rating formula for secured and unsecured loans, conditional sales con tracts, all mortgages, government and municipal bonds and government agency securities. Topics spotlighted include: • Conditional Sales Contracts • All Mortgages • Loans for Education Also included are sections on who should have lending authority, lending procedures, loan limits, credit depart ment responsibilities and loan examiner responsibilities. Can your bank afford to this manual? « _• _ <fc,| « e be without (Missouri banks add 4</2% tax) Price: $4.25 ORDER TODAY! (Sorry, no billed orders) The BANK BOARD Letter 408 Olive St., Suite 505 St. Louis, M O 63102 24 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Branch monitoring systems like the one pictured here now are available from Diebold, Inc., Can ton, O. These Diebold DGM-320 branch monitoring systems can accommodate a minimal number and variety of signals or as many as any conceivable practical situation might require, says the manufacturer. The system is under the direct and complete control of the institution in which it's installed. Each system is application engineered so that no two systems are precisely alike, says Diebold. Its capabilities include electronic monitoring of internal wiring and defeat-resistant cir cuits and monitoring of telephone lines between the central office and remote points. Two basic communications networks are standard with the system: The DGM Series 100 and 200. The first accommodates a multi-point network for applications involving long distances within the net work. The Series 200 network is designed for situations in which distances don't make telephone tarifFs a major cost factor. Write: Diebold, Inc., Canton, OH 44711. MID-CONTINENT BA N KER fo r April, 1 9 7 7 When your business customers open their accounts with you, give them everything they need at one time. Checks. Commercial deposit tickets. Rubber endorsement stamps. And money bags. It’s all there in Harland’s Business Account Group (B.A.G.), and it’s a great way to get off on the right foot with new business customers. iUl B.A.G. merchandise is produced or stocked at your Harland plant, so service is speedy. Your customers will have everything they need without delay. And, not only will B. A.G. make a happy customer, it will also save you money. How? Because the costs of the deposit tickets, money bags and rubber stamps are passed on to the customer in one debit. To find out more about the B.A.G. program, just talk to your : Harland Sales Representative. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HARLAND P.O. Box 105250, Atlanta, Ga. 30348 A'MUST' for Directors of Roundup State-Chartered Banks! "Bank Shareholders' Meeting Manual" A 60-page book designed to directors of bring state-chartered their operations Corporate News enable banks to up-to-date. It was developed in recognition of several • Insured Credit Services, Inc. This Chicago-based private insurer of homeimprovement loans has been merged with Old Republic International Corp. Old Republic, also based in Chicago, is a multi-line insurance holding com pany, with insurance subsidiaries that provide specialized lines of coverage for lending institutions. The firm is a leading carrier in the consumer credit life and disability field, as well as in home-improvement credit-guaranty in surance. Old Republic also provides numerous other credit-oriented insur ance coverages, among which are mort gage credit life and disability. Insured Credit Services is described as the na tion’s leading managing underwriter of private credit loss insurance on homeimprovement loans. ICS pioneered the idea of privately insuring home-im provement loans through Old Republic 22 years ago and has continued to ex pand its services to provide a compre hensive range of portfolio review and marketing aids to the lending com munity. new trends in business and society— trends involving an increased sensitivity of the public regarding conflicts-of- interest; greater concern for minority rights; greater demand for fuller dis closure; data on control and ownership and of related business interests, includ ing voting of trust-held securities. The book also provides a means for state bank directors to modify pro cedures to bring their banks into com pliance with statutes and current state regulations. banking Its use can result in economies and efficiencies for banks. Can Your Bank Afford to be Out-of-Date? PRICE: $7.75 each SEND YOUR ORDER AND CHECK (sorry, no billed orders) TO THE PUBLISHER; The BANK BOARD Letter 408 Olive St. (Suite 505) St. Louis, Mo. 63102 26 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • Talcott National Corp. John A. Kingston has been elected president and chief operating officer, Talcott Na tional Corp., New York City, and its business finance and factoring subsidi ary, James Talcott, Inc. He succeeds Brooke Grant, chairman, who continues as CEO. Mr. Kingston formerly was senior vice president. Before joining Talcott in March, 1976, he was presi dent and CEO, United Virginia Factors Corp. In other action, William R. Gruttemeyer was elected executive vice president, Talcott National Corp., and James Talcott, Inc. Mr. Grutte meyer went to Talcott in 1974 from Chase Manhattan Bank, New York City. HOWE BAKER • Bank Building Corp. John F. Howe has been named vice president and general manager, Central Financial Facilities Division, Bank Building Corp., St. Louis. He succeeds John P. Mushill, who has assumed responsibili ty for the Western Financial Facilities Division in San Francisco. Mr. Howe went to Bank Building in 1973 after having been vice president, corporate planning, Inmont Corp., and director of corporate planning and evaluation, Monsanto Co. • S&H Promotional Services Co. Robert H. Baker Jr. has been named national accounts manager, Financial Promotions Division, S&H Promotional Services Co., Hillside, 111. He formerly was vice president, Jefferson Bank, Pe oria, 111. In his new post, Mr. Baker will arrange internal staff-incentive pro grams for financial institutions for this Sperry & Hutchinson Co. division. Slater Named Exec. V.P. Of Consumer Bankers Assn. WASHINGTON, D. C.—Richard K. Slater has been appointed executive vice president of the Consumer Bankers Association. He previously served as as sistant director of the American Bankers Association’s Installment Lending Di vision and as an officer of the Bank of Virginia-Potomac. He also served as a staff economist, National Commission on Consumer Finance. In his new position, Mr. Slater will direct the CBA’s activities in the areas of consumer banking administration, legislative relations and communica tions. He also will serve as director of the Graduate School of Consumer Banking, which is sponsored by the as sociation, and will have responsibility for developing new educational pro grams for the school. Mr. Slater received a bachelor’s de gree in business administration from Bowling Green (O .) State University and a master’s degree from the Uni versity of Maryland, College Park. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Try us for a short term on Short Terms You’ll discover why we call it High Perform ance Securities Servicing." Take the Chase Performance Test. We know that Chase has put together a securities servicing system that cannot be surpassed in today’s fast-paced money marketplace. We want you to benefit from it. It’s very simple to take the Chase Performance Test and find out how good our service is. As simple as having Chase process some of your short term investment transactions for a short period of time. It doesn’t require a major commitment or changes in your internal procedures. Special Processing Unit. You’ll have immediate access to our specialized Short Term Investment Processing Unit. Its sole reason for being is the processing of short term instruments. That means completion of transactions fast—very fast. We do it through direct communciation with the New York Federal Reserve Bank for government and government agencies’ securities transactions and for funds settlement on commercial paper. Start Today. Start taking advantage of Chase’s fast short term investment processing right away. All you have to do is call your Chase Relationship Manager at (212) 552-3192, or use the coupon. Try us on short terms and you’ll __ soon see what our new High ==r Performance Securities Servicing | System is all about. "= = = Chase Relationship Manager Correspondent Banking Division P.O.Box 217 Bowling Green Station New York, New York 10004 I want to know more' about how Chase High Performance Securities Servicing makes short work of my short terms. Call me. Name____________________________ Title________________ Bank_____________________ __________________________ _ Street________________________________________________ City__________________ State__________________ Zip______ Phone (___)________________________________________MCB Give your bank the Chase Advantage3 MEMBER FDIC ©Chase Manhattan Bank, N.A. 1977 Sam e-Day Clearance. Because this unit handles only short term transactions, you’ll get fast through-put time. Any transaction received by 1:00 p.m. (Eastern time) will be delivered the same day. And we’ll work smoothly with any system you now use. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 27 Security Recoveries of Charged-Off Loans: An Area Where Controls Are Needed By OSCAR W. JONES Director of Loss Prevention Services Scarborough & Co. Chicago N A LERT LOAN O FF IC E R of a bank in the East was walking down the street and came upon a for mer borrower of his bank whose loan had been charged off. The loan officer halted the former customer and politely suggested that he make at least a par tial payment on the loan. Much to the bankers surprise, the former customer replied, “I no longer owe the bank. I paid another loan officer, Mr. Smith, more than a year ago; I received a receipt for my payment and my note was marked ‘paid.’ ” Mr. Smith, the loan officer in ques tion, was confronted with that infor mation and confessed that he had col lected the former customers chargedoff loan and had misappropriated the proceeds to his own use, rather than apply the money as a recovery of A charged-off loans. The bank had no system of reconciling its charged-off loans and Mr. Smith—knowing this— had been diverting recoveries for near ly 10 years! Subsequently, a program of 100% direct verification of the charged-off loans of the bank uncovered a total of more than $150,000 that had been em bezzled by Mr. Smith. This bank’s entire system of audit and internal controls later was found to be weak, but there presently are many banks across the country with otherwise excellent audit and internal controls that neglect to exercise proper controls over (or audits of) chargedoff loans. Quite often, bank personnel will forget charged-off loans. But the fact that a loan has been charged off doesn’t necessarily mean HOW IS T H E C H A R G E -O F F LEDG ER RECON CILED M O NTHLY? F irs t, analyze your "Reserve for Loan Losses" account for the month thusly: Balance: Beginning of m o n th ........................................................... $ ________________ Plus: Recoveries......................................................................(1) $ _________________ Less: C h a rg e -o ffs .................................................................. (2) $ _(______________ )_ Plus: Direct Credit T ra n s fe rs .................................................... $ ________________ Less: Direct Debit Transfers ..................................................... $ _(____________ )_ Equals: Balance-End of Month ..................................................... $ Then, using the same "Charge-off" and "Recovery" figures, proceed to arrive at the month-end figure to which your charge-off ledger should balance: Balance: Charge-off Ledger - Beginning of M o n th ................... Plus: C h a rg e -o ffs ...................................................................(2) $ Less: Recoveries...................................................................... (1) $ Equals: Balance - End of M on th.................................................... (Charge-off ledger should balance to this figure.) Th is procedure should be repeated at each subsequent month-end. 28 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis $ that it is entirely uncollectible; the op posite often is true. According to a Fed study of member banks, more than 25% of all charged-off loans are recovered. My experience, however, has shown that many bank officers and employ ees systematically divert charged-off loan recoveries to their own use. There fore, the charge-off ledger constitutes a potential asset over which adequate audit and internal control must be maintained, particularly since chargedoff loans aren’t a part of a bank’s gen eral-ledger assets and don’t appear on a bank’s statement of condition. There fore, all banks should establish a charge-off ledger covering all categories of loans. This ledger should be recon ciled to the reserve for loan losses monthly. Here’s a simple formula an auditor or control officer may follow in order to begin a charge-off ledger and the job of reconciling it at each month’s end: Establish the beginning balance. Un less a bank is relatively new, many of the institution’s charged-off loans may date so far in the past that there may be little hope of their being collectible. Because of this, bank management— working with the board of directors and loan departm ent(s)— should estab lish an inventory of those charged-off loans of recent years that have a rea sonable potential for collectability. A ledger sheet (see illustration) should be set up for each charged-off loan. The accumulation of these sheets, in alphabetical or numerical sequence, will constitute the charge-off ledger, and the total of the balances of these ledger sheets will be the beginning bal ance for the charge-off ledger. In addition to proving the chargeoff ledger monthly, the charged-off notes themselves should be proved to the same memorandum control figure. These notes should be kept under dual control at all times and all charged-off notes should be given audit review shortly after their charge-off to ensure that they were authorized properly for charge off. Finally, all accounts in the chargeoff ledger—except those in the process of litigation for collection— should be included in the bank’s annual directverification program; such action would have caught Mr. Smith, the errant loan officer, in the beginning of his “caper.” The former loan customer, not knowing that his loan had been charged off, would have notified the bank promptly that the balance on his direct verifica tion form was incorrect. * * $ This article is reprinted with permission from the December, 1976, “Loss Protection/Prevention Bulletin” of Scarborough & Co., Chicago. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Count on the hank that counts with bankers. Reliability in banking since 1883 MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis D e p e n d a b ility and the w ill to serve are the p rim e in g re d ie n ts of e ffic ie n t c o rre s p o n d e n t b an kin g . S in ce 1883, k n o w le d g e a b le b a n ke rs have lo o ked to th e W h itn ey. M ore than 90 ye ars of c o rre p o n d e n t b a n kin g e x p e rie n c e has earned fo r us a re p u ta tio n fo r re lia b ility and se rvice . W e ’d like to jo in w ith y o u r b an k to w o rk to g e th e r. 29 Money-Market Funds Gain Acceptance As Adjunct to Cash Management Needs By RICHARD FISHER President Federated Securiites Corp. Pittsburgh N EARLY 1974, a new investment vehicle in the form of the “money market fund” was introduced. Spawned by the historically high short-term in terest rates money market instruments carried, these funds were designed to allow an individual or institution to commit funds to the money market while avoiding the tedium of monitor ing maturities, shopping for rates and conducting expensive credit analyses. In an economy that saw too many borrowers competing for too few dol lars, the funds became an instant suc cess. Media exposure coupled with a heightened public awareness of the corrosive effects of inflation on cash positions and savings accounts further stimulated investor awareness of the funds. Our firm created a money market fund in mid-1973. W e foresaw a need by institutional investors, specifically bank trust departments, for an admin istratively convenient, conservatively managed cash equivalent fund that could be used to move surplus cash in response to movement in the equity and bond markets. We structured our funds—called Money Market Management, Inc., and Trust for Short-Term U. S. Govern ment Securities-—along the lines of the types of instruments they were de signed to compete with. Money Market Management, with a portfolio confined to the CDs of the 50 largest U. S. banks, and the Trust, with a portfolio limited to government securities matur ing in one year or less, provided trust J officers with a product mix that could replace or supplement prior or existing cash management needs. Coupled with a high quality port folio profile, we put into place an ad ministrative capability that was a mir ror image of the trust clients’ opera tions department. W e added a service package that includes a legal staff ori ented toward trust law and familiar with the workings of the Comptroller’s office and state banking departments. Our initial marketing efforts showed us it was necessary to convince the skeptical trust officer that money mar ket funds had a function and identity light years removed from the typical mutual fund with which he was fa miliar. Success came to the funds in the form of investments from small- to medium-sized regional trust depart ments that realized that aggressive cash management had become co-equal with managing a portfolio of stocks and bonds. As our client list grew, so did the administrative sophistication of the services we offer. We now have a bank service depart ment staffed by trust operations profes sionals. Using the computer capability of the funds’ transfer agent, coupled with procedural formats of our own de sign, we provide trust subaccounting services flexible enough to mesh with existing trust department computer programs. The aim is to provide par ticipating trust departments with com plete cash management services while helping them to avoid the labor-inten sive and concomitantly capital-inten sive efforts of performing the same functions in-house. Once we establish a relationship with a trust department, we strive to FARMERS GRAIN AN D LIVESTOCK » provide meaningful information about our performance. This takes the form of weekly portfolio profiles along with yield figures, rates and maturities of the instruments we hold. If a particu lar investment is transitional in nature or perhaps interest-rate sensitive, the information can be provided on a more frequent basis. As interest rates retreated from his toric highs, the maturity schedule of our portfolio enabled us to remain com petitive with alternative money market instruments. Our Trust for Short-Term U. S. Government Securities, for exam ple, has compared favorably with 90day Treasury bills for the period shown. For each week since mid-June, 1976, the Trust’s net yield has exceed ed the weekly average yield available from three-month Treasury bills (before transaction costs) and without the mar ket risks associated with direct invest ment. Late in 1976, the Tax Reform Act provided another opportunity to sup plement our trust products. The act permits an investment company in cor porate form to pass on the income from municipal obligations in its port folio tax-free to its shareholders. Antici pating passage of the act, we created Federated Tax-Free Income Fund, Inc. Limited to high-quality municipal obligations, the tax-free fund simplifies the chore of procuring and warehous ing municipal obligations with the ad ditional feature of liquidity on a daily basis. Increasingly, trust departments are accepting this vehicle as well. Of additional import is the recent proposal by the Comptroller’s office to amend Regulation 9.18 (collective in vestment funds), whereby a trust de partment in its master-note arrange ments with corporate borrowers would be compelled to recognize the lending limits applicable to any one corporation as provided for in 12 U.S.C. 84. As suming the proposal’s adoption, the trust officer will be provided with an additional stimulus to explore integra tion of the types of investments de scribed here into the cash management program. * * The Marketing Advisory Service FGL Will Help You . . . 1 . Increase the volume of your loan portfolio. 2. Increase profitability and stability. 3. Develop credibility and leadership in the ag community. 4. Provide marketing expertise to your Clients. GIVE FGL A CALL . . . (515) 223-2200 1200 35th Street, West Des Moines, Iowa 50265 30 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Our new address is simple to rem em ber... "THETALLEST Visit us on your next trip to Tulsa. We want you to see what we be lieve to be the finest banking facility in the great Southwest. A b a n kin g fa c ility d esigned and constructed to make bank ing easier fo r our customers, o u r e m p l oy e e s , and o u r friends like you. Bank of Oklahoma — now in our new home — the Bank of Oklahoma Tower. Truly a land mark in banking. BANK OF OKLAHOMA© Bank of Oklahoma Tower P.O. Box 2300 Tulsa, Oklahoma 74192 New: (918) 588-6000 MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 31 —FTS (Electronic Funds Transfer Systems) Bank-to-Bank Check-Guarantee System Is Planned by Group of Illinois Banks BANK-TO-BANK check-guarantee system is planned to begin oper ating in November in Illinois under sponsorship of the eight-month-old or ganization called Electronic Funds Il linois, Inc. ( E F I ) , headquartered in Chicago. E F I’s full-time director is Michael Miller, who holds the title of president. Daniel N. Quigley, executive vice pres ident, National Boulevard Bank, Chi cago, is E F I’s chairman. Secretarytreasurer is Harold Moe, president, Second National, Danville. Warren Martin, executive vice president, Cap itol Bank, Springfield, is on its execu tive committee. The organization is supported chiefly by equity membership fees paid by bank members, which include banks with under $10 million in deposits to those with over $1 billion in deposits. Fees are based on amount of deposits. A Dial-A-Pro (800) 523-9440 Call toll free for person to person promotion service anytime. You’ll find an organization that delivers the proven deposit building club programs and premium promotions you need, when you need them. c b ra srm a s d o b a corporation P.O. Box 20 Easton, Pennsylvania 18042 32 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The group had 650 members as of press time. When the membership was 631, a study was made, and it showed —according to Mr. Miller— that E F I had a 51.6% membership penetration of the 1,223 banks in Illinois. Broken down, this study revealed a 43% pene tration of members of the Associa tion for Modern Banking in Illinois (A M B I), a 68% penetration of the In dependent Community Bankers of Illi nois (IC B I) and a 58% penetration of the Illinois Bankers Association (IB A ). E F I plans to meet the first part of May with banking organizations in sev en other states—Arkansas, Iowa, Mis souri, Nebraska, Oklahoma, Texas and Wisconsin. They will discuss the possi bility sometime in the future of estab lishing a regional E F T network. On February 22, E F I met with representa tives of E F T systems from Iowa, Ne braska and Texas to discuss standards, operations and security questions in volved in a possible interchange. The mailing address for E F I is: Boom 330, 400-410 North Michigan Avenue, Chicago, IL 60611. • * and treasurer, Mr. Rives. Mr. Gudinas has appointed MAPEX Director Dean Kamper, president, First National, Belleville, 111., as chairman, legal/legis lative committee; Mr. Goldstein as chairman, marketing/ education com mittee; and Mr. Rives as chairman, rules/operations committee. Statewide Electronic Processing For Arkansas Banks Is Begun By Worthen's Computer Center L IT T L E ROCK—Worthen Bank’s Computer Service Center last month began accepting electronic transmittals of bookkeeping information from banks across Arkansas that use the center. Thus, these banks no longer have to Gudinas Elected M APEX Pres.; Four New Directors Named Computers like this one are being installed in banks throughout Arkansas that use Worthen Bank of Little Rock's Computer Service Center. ST. LO U IS—Richard J. Gudinas, ex ecutive vice president, Boatmen’s Na tional, and senior v ic e p r e s i d e n t , Boatmen’s B a n c shares, Inc., has been elected presi dent, Mid-America Payment Exchange ( M A P E X ) . He succeeds Lawrence Chapman, vice president, First Na tional. G U D IN A S MAPEX also has named four new directors: Lawrence Abeln, vice president and comptrol ler, St. Louis County National, Clay ton, Mo.; and, from St. Louis, W il liam LeGrand Rives, vice president, First National, and Jerome Goldstein, vice president of financial services, Mercantile Trust; and James Moser, president, Bank of Poplar Bluff, Mo. In addition, MAPEX has made the following appointments: vice president, George Ryrie, president, First Nation al, Alton, 111.; secretary, Mr. Abeln; send paper documents each day by courier service to the center here. Information now can be transmitted electronically through use of “intelli gent” computer terminals that are be ing placed in banks throughout the state. Besides editing and checking, these “intelligent” computer terminals retain information as it’s processed through out the day. At the end of the day, each bank is able actually to see on its terminal screens up-to-the-minute, balanced transaction data before it’s transmitted to Worthen’s Computer Service Center for processing. By the following morning, the processed infor mation is re-transmitted to the banks either in printed form or stored for later printing. A Worthen spokesman points out this eliminates the vast amount of paperwork usually required and helps banks balance and verify their daily operations. According to the spokesman, this is the first time this advanced step in electronic data processing has been made available by an Arkansas bank. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Building up your b an k? Citibank isequipped to help. Take the problems of managing your annual growth and your eamings-per-share. Citibank can help you determ ine the feasibility of your growth objectives, evaluate the risk factors, and establish effective strategies. Citibank can also advise you on procedures to maximize asset and liability management, and on the design and implementation of a reliable customer account profitability system. We can offer bank evaluation studies and assessm ent of your capital needs. And we can introduce you to Citicorp specialists in such fields as leasing, mortgage banking, and operations technology. To give your financial planning and growth strategy a lift, get in touch with your Citibanker, Correspondent Bank Department, 399 Park Avenue, New York, N.Y. 10022. Or call (212) 559-4477. Citibank, N.A, Member FDIC https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis American Express announces the most im portant development in travelers cheques since the travelers cheque. Express Pac A s you know, A m erican Express invented X J L travelers cheques. A nd now, we have invented a brand-new way of selling them. It’s called Express Pac® and it’s been proven, in exhaustive testing, to benefit both customer and seller in several important ways. W hat Express P ac does for you and your custom ers. Express Pac streamlines and speeds up the whole process of selling travelers cheques. In eighteen months of testing, we proved that it reduces transaction time by more than 50% . W h ich means that your tellers can handle twice as many customers in the same amount of time as before. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T his also translates into an important customer benefit: shorter, faster-moving lines. In addition, Express Pac drastically cuts settlement time, virtually eliminates com m on clerical errors, and provides for better inven tory and audit control. Interested in hearing more? T h en let’s talk about how Express Pac works. How does Express P ac do all these things? First, let’s take a look at what Express Pac is. Like we said, it’s a new system of selling trav elers cheques that have been conveniently packaged in envelopes containing 3 , 5 , or 10 cheques of the same denomination. A s you can see by the diagram, there are ten different color-coded envelopes, or Pacs, in all, which can be sold singly, or in combi nations, to provide your customer with any amount of travelers cheques he desires, in multiples of $50, Cheque Denom ination $io $20 $50 $100 ■■■ 3 CHEQUE PAC Muuuu ' «150 5 CHEQUE PAC $50 $TOO $250 IO CHEQUE PAC 5100 $200 «500 ■llftl W h at if your customer doesn’t happen to want a multiple of $50? W e tested that, too, and found it just wasn’t a problem. But more on that later. Now, here’s where Express Pac really saves the time. Included in each Express Pac is a pur chaser’s application form, already filled in with most of the information you used to have to put in by hand: cheque serial numbers, denominations and amounts, all neatly pre printed on the form. Also on the form is the amount to be col lected from the customer, the amount to be retained by the seller, and the amount to be sent to Am erican Express. So all your customer has to do at the teller window is put his signature on the form, and print his name and address. A nd all your teller has to do is fill in the date, collect the money, hand over the cheques and one of the attractive new leather like wallets, and request that the customer sign his cheques and insert them into the wallet before he leaves the premises. W ith the customer signing his cheques away from the teller window, and inserting them into the wallet himself, your teller will be able to serve the next customer in line that much sooner. Benefits extend all the way into the back office. Express Pac reduces settlement time because the amounts to be retained and the amounts to be sent on to A m erican Express are neatly https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis printed on each purchase form. T here’s no guessing at illegible figures. So there are fewer mistakes. A nd there’s less time spent correc ting those mistakes. A nd since packaging eliminates broken series of cheques or loose cheques, inventory and audit procedures are less complicated, less time-consuming. Received enthusiastically by sellers and custom ers. Before introducing Express Pac, we knew from our figures that 9 0 % of our customers buy travelers cheques in multiples of $50. W h at about the other 10% ? W h at would they think about Express Pac? This is one of the questions our test market research was designed to answer. T h e results were quite remarkable. In eighteen months of testing involving over 70,000 transactions, we received only one customer objection. Management and sellers, of course, were happy with the system right from the start. A s we figured they would be. And Express P ac is coming to your area soon. W e’ll be in touch with you very soon, with more details on Express Pac. O n ce you put Express Pac into actual operation, we think you’ll agree with us: that with the advent of Express Pac, the travelers cheque business will never be the same. American Express Travelers Cheques m Sm W BKm m &m i : I : :V l : H I H r r ^ im h fl m m i m M T H m i l „ .. . m IK' ^ ■J H , v£vv^g^§* r a n H r a f rm K t t n a i m j T s : ; - iBBW M a«M ii m ■ ■ 1 mm m m ■ « [• 9 b ' i . ■ ■ wsm&BmWMmsmmm- mmmm M 'V -'i. •[ ?i v ¿"'m lim n iM M The conventional automated teller machine is machine. An independent, self-contained automated teller. Each machine has its own intelligence system, which accounts for almost half the cost of an ATM. And the typical ATM is offered in only one design, so you may have tc buy more—or less—ATM than you need. You need more than a machine. You need The System. The Teller-Matic System is a network of automated customer terminals, a5l operated by a single intelligence source. This sharing of inte ligence also means shared intelligence costs, making it possible to reduce the cost per terminal drastically compared with the conventional ATM. And because The System has built-in versatility, it offers you a wide range of design and application options; Mosier An American-Standard Company Hamilton, Ohio 45012 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis You need more than a machine. You need an automated teller system versatile enough to adapt to your individual -equirerfients and advanced enough to meet your future needs. That’s the idea behind The System. Consider application flexibility. Teller-Matic offers a fully secured customer terminal for exterior and remote locations. For lobby and other secured locations, you can get a nonsecure terminal and save the cost of unneeded security features. Consider cabinet styling flexibility. You can choose from one of Telier-Matic’s standard cabinet designs, or provide your own customized cabinet to coordinate with a particular interior design theme. Consider future expansion needs. With The System, you can start with only one or two terminals—plus an intelligence module—and plug in additional terminals as you need them. Each intelligence module will operate up to six customer ter minals. And conversion of the entire system to on-line opera tion is simple and economical. Banks locked out by balky state legislature By JIM FABIAN Associate Editor THAN 150,000 S&L deposi MORE tors in the metropolitan St. Louis area have access to their passbook savings accounts 14 hours a day, six days a week. These customers don’t have to go to an S&L to transact their savings business; they merely drop in at the nearest of 45 Schnucks super markets, each of which is equipped with a point-of-sale (PO S) terminal at its courtesy counter. Initiation of the new POS network coincided with news that the Missouri legislature failed for the second con secutive year to enact legislation en abling banks to offer E F T services in the state. Eight St. Louis-area S&Ls are mem bers of the Money-Matic E F T switch that is operated for Remote Service Unit Corp. (R SU ) by Cashex, the corporation that handles Schnucks’ check verification service. RSU is a service organization authorized by the Federal Home Loan Bank Board to service Money-Matic. The switch is said to be the first application of a com munity-wide financial customer service between several financial institutions and a major food chain in a metro politan area. Following announcement of the ser vice last January, RSU put a small number of POS terminals into service early in March, with the balance due to be installed this month. Customers of participating S&Ls can withdraw up to $200 per day through the terminals or deposit any amount over $25, which is the minimum amount for any trans action. In order to use the system, a customer needs a plastic debit card from a par ticipating S&L and a personal identifi- cation number (PIN ) assigned by the S&L. At the market, the customer fills out a deposit or withdrawal slip and hands it to the courtesy counter clerk with his debit card. The clerk inserts the debit card into the terminal and gives the customer a PIN pad. The customer taps out his PIN, which acti vates the terminal. In the case of a withdrawal, the terminal verifies that the customer has sufficient funds to permit withdrawal and debits the customer’s account. Then the clerk pays out the money in cash. In the case of a deposit, the customer hands his money to the clerk, who enters the deposit through the terminal. With your Pass Card you carl: * Make deposits ($25 minimum) • Make cash withdrawals ($290 limit) I The»« Schnucks stores now haw® remote M©ney*Matfe terminals to handle.Lafayette Pms Cards: :. * #750 Mamsheshsr B o x) pl?XfiX * Fenton Fait Mali •10550Baptist Church ♦20» Dorsett VStiage ©enier * 10760WatsonRoaO * ¿61$OaisvflteShopping Cmim Morestores soon? - Remember! Your Pass Card account earns : 5.25% with m effective anneal yield of 5.39% : Mailing piece sent to customers of Lafayette Federal Savings, St. Louis, advertises availability of Money-Matic POS service at Schnucks markets in St. Louis metropolitan area. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis All expenses involved with the system are paid by the participating S&Ls. The service is free to the customer. Deposits and withdrawals made at the markets are transmitted to the S&L involved by direct line. Total trans action time to enter a deposit or check an account balance for a withdrawal is less than six seconds. Executive director of RSU is James E. (E d ) True. Mr. True told M id C o n t i n e n t B a n k e r that more S&Ls are expected to join Money-Matic once it has had an opportunity to prove it self. He cited the primary advantages of the service to thrifts as the offering of a new and exclusive service and an extraordinary opportunity to generate new deposits from the 43-store network, 37 iiP ij / t n m m m , since each terminal is tantamount to a branch for the S&L. The market chain benefits from the service since it is expected to attract more customers and some of the risk is expected to be eliminated from its money-handling service. RSU is directed by a five-person board drawn from the participating S&Ls. According to Mr. True, the op tion exists for any financial institution to join the system and be represented at each terminal. All that is necessary for commercial banks to join the system is enabling legislation from Jefferson City. C u s to m e r (facing camera) punches PIN to activate POS unit being serviced by S ch n u c ks M a r k e t courtesy desk em ployee. Installation is part of MoneyMatic POS s y s t e m serviced by RSU, Inc., for eight St. Louisarea S&Ls. RSU has authority to operate through out Missouri and will soon seek per mission to begin operations in Illinois, where Schnucks has additional outlets. For the most part, bankers in Mis souri are taking the development of Money-Matic calmly. No movement has been formulated to fight the RSU setup or to hold it up until banks can par ticipate. “It wouldn’t help banking in the least to fight this thing,” said James E. Brown, president, Mercantile Bancorp., St. Louis, Missouri’s largest bank HC. “W e believe in what they’re doing, but we don’t believe S&Ls should have an exclusive on it.” He cited a danger that S&Ls, with less technical know-how than banks, might botch the POS service, thus putting a bad taste in the mouths of consumers about E F T . Such a develop ment could rebound against all financial institutions in the future, he said. He termed the recommendations of the National Commission on E F T “ideal istic.” He was referring to the com mission’s recommendation that, if states don’t enact enabling E F T legislation by a certain date, federal law would super sede state law. Along with many bankers, Mr. Brown wonders how far the Missouri legis lature will let banking’s competitors go before it begins to grant equality to banks. Even partial equality would be an improvement, he said, especially now that inequality between banks and thrifts is increasing. “S&Ls already have better rates, branching privileges and NOW account authority,” he said. “And now they have POS, too. Thrifts don’t really need the extra advantages they’re getting at the expense of banks,” he said. “Obviously, we’re not surprised by this expansion of service by the S&Ls in our area,” said Clarence C. Barks dale, chairman and CEO, First Na tional, St. Louis, in reference to MoneyMatic. “It should show all bankers in Missouri the urgency of the situation. R e t a i l e r 's E x p e c t a t io n s : Money-Handling Costs, Risks Lowered by Money-Matic HE EXPECTA TIO N of realizing add another service that we feel the lower costs and risks in handling consumer will appreciate because cus money at retail outlets is seen by an tomers will have much greater access executive of the supermarket chain par to their S& L accounts. Our hours are, ticipating in the Money-Matic POS sys of course, much longer than S& L hours. tem that became operational in the St. Our supermarkets are open from 8 a.m. Louis area recently. Craig D. Schnuck, until 10 p.m., Monday through Satur executive vice president, S c h n u c k s day. Most of our stores are closed on Markets, Inc., outlined the retailer’s Sunday. viewpoint about POS in an exclusive M C B : What if people come into the interview with M id - C o n t i n e n t B a n k e r . supermarket just to make a withdrawal Forty-three of the chain’s outlets are or deposit and don’t shop for groceries? equipped with Money-Matic terminals Isn’t this a costly service to a food re that are available to 150,000 S&L tailer? M r. Schnuck: Right now we have customers in the St. Louis area (see people coming into the stores strictly to adjoining article). cash checks. Banks have forced us into The interview follows: M C B : What are the advantages to the check cashing business and we are you as a retailer offering the Money- bearing the expenses of check cashing. Matic system? The Money-Matic system permits us to M r. Schnuck: Our interest is in pro offer financial services to individuals at viding our customers with an additional a much lower cost and with much less service, hopefully providing another risk than we incur with check cashing. reason for them to come into our stores. M C B : What other advantages do you W e, as a company, are basically service see in offering Money-Matic? M r. Schnuck: A reduction in the oriented; Money-Matic enables us to T 38 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis number of checks cashed, which should reduce our check-handling expenses and check-cashing losses. However, these are advantages that we h op e will occur, but, as yet, it is much too early to tell if they will. MCB: How does Schnucks protect its own interests? Mr. Schnuck: W e protected our in terests during the initial negotiations with RSU. The S&Ls are reimbursing us for our labor costs for each trans action, paying for terminal installation and for installation of telephone lines to the central computer and a telephone line for customer use, as well as other physical changes made in the stores to accommodate the system. The S&Ls are promoting the service. W e stand to benefit from their pro motional efforts. W e also will benefit from the S&L customers who are presently not our customers who will come into our stores to use the MoneyMatic system. W e will have opportuni ties to capture those people as regular MID-CONTINENT BA N K ER fo r April, 1 9 7 7 “I believe that, if they had offered this service a year ago, E F T legislation supported by banks would have been overwhelmingly approved in Jefferson City. However, once again this shows us how a small group of Missouri bankers has a tendency to line up against each other according to size with this disastrous result.” Mr. Barksdale said thrifts are oper ating Money-Matic under the legitimacy of the law that has always favored S&Ls and must be changed eventually to put banks and savings institutions on an equal basis, branchwise. “It behooves every banker in Mis souri,” he said, “regardless of the size of his bank, to become aware of the problems of the noncompetitive situ ation banks find themselves in with S&Ls and make his views known im mediately to his state representative and senator. “The cooperative actions by all bank ers in Missouri to support legislation that will enable banks to be competitive is a must; otherwise we, in Missouri, will find that we can no longer compete and have lost out to a more aggressive competition,” he said. Bankers have conceded that legis lation authorizing E F T operations for banks will not pass in the Missouri legislature this year. Commenting on that situation, Bill B. Lee, chairman, government relations committee, Missouri Bankers Associ ation (M B A ), and chairman and presi dent, First National, Neosho, said that Missouri bankers did a better job of lobbying for E F T legislation this year than last, but there is still much com placency on the part of many bankers toward E F T . They want to hold out until the National Commission on E F T makes its final report, despite the fact that E F T is already upon us, he said. Glen K. Arnold Jr., president, Mis souri Independent Bankers, and presi dent, Blue Ridge Bank, Kansas City, said he’s not alarmed at the head start thrifts are getting in the E F T arena. He said thrifts have always been com petitive with banks and they won’t steal business away. All efforts to obtain enabling legis lation for E F T is premature, he said. Bankers are forgetting that customers must bear the cost of E F T services in the long run and that the only people benefiting from E F T now are equip ment suppliers. Only time will tell whether banks gain entrance to E F T in Missouri. A spokesman for the MBA said enabling legislation will be introduced in the legislature again next year. Perhaps Money-Matic will be the catalyst that puts Missouri legislators in the mood to pass the MBA-sponsored bill that will open the door for partici pation in E F T for Missouri banks. * * CHICAGO— Continental Illinois Na tional and Tel-A-Data Corp., a subsidi ary of American National, have an nounced an agreement to permit S&Ls and banks that are Tel-A-Data on-line data processing customers to use Conti nental’s POS network in Chicago-area merchant locations. Under the agreement, Continental will develop a computer switch to per mit information on POS transactions at Continental’s electronic terminals to be transmitted to Tel-A-Data’s computer files. According to a spokesman, the com puter link “will offer customers of our Tel-A-Data’s 67 S&L and bank clients the convenience of conducting some of their routine financial transactions at a merchant location close to where they live, work or shop.” Tel-A-Data’s bank clients will be able to issue plastic automatic banking cards to their customers, permitting the cus tomers to cash checks at any of Conti nental’s terminals in the Chicago area. The terminals are located at Dominick’s Finer Foods, Treasure Island Food Mart, Inc., and Wieboldt’s, Inc. S&L customers, a bank spokesman said, initially will be able to use their plastic cards for cashing checks and customers. W e definitely think this ser vice will be helpful in attracting new customers, since it is an exclusive ser vice. MCB: How soon do you expect to have electronic transfer of payments for groceries in your stores? Mr. Schnuck: How far away we are from an E F T system depends entirely on economics. I feel it will occur only when the costs of the system can be justified by the financial community. I think the consumer will accept and use the system after initial concerns are overcome if the system does not impose an additional cost on the consumer. If E F T systems are designed properly, people will develop confidence in them. I think the future of E F T systems will be successful if the consumer does not have to pay for the service. The financial industry is making a mistake if it thinks the consumer will pay to participate in an E F T system. Retailers, also, are unwilling to bear additional costs. All costs should be borne by the participating financial institutions. M CB: How soon do you expect to have an automated check approval or check authorization system? Mr. Schnuck: A check authorization system is being developed by Cashex, a company that is neither a retailer nor a financial institution. W e are very interested in implementing such a sys tem because it offers some important advantages to us. It should enable us to reduce our check cashing losses dramatically and we should be able to improve our security system significantly with such a system. • • Money-Matic transactions are carried out at service centers of Schnucks' markets. Chain ex pects to benefit from service because it will attract non-customers into the store. Once inside, they might decide to purchase grocery items. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Continental Bank, Tel-A-Data Develop Computer Switch For POS Network Link 39 making deposits to or withdrawals from savings accounts at Dominick’s. Other retail terminal locations may be added at a later date to provide these same financial services. Due to less stringent regulations governing S&Ls, their customers will be able to use the terminals for a greater variety of transactions than bank customers, the spokesman said. Customer-Operated Terminals Placed in Louisville Stores By Citizens Fidelity Bank L O U ISV IL L E —The second phase of Citizens Fidelity’s Service Tree Service program has been implemented in more than 50 Convenient Food Mart Stores. Customer-operated terminals permit bank checking and savings customers to do their routine banking transactions and shopping at the stores. The new terminals are totally cus tomer operated so merchants are free to attend to their customers, a spokes man said, and bank customers can do their routine banking in complete privacy. The service permits customers to deposit to or withdraw from their checking or savings accounts and to transfer funds from one account to an other. The spokesman termed the first phase of the service to be an experiment that proved that banking units at the point of sale are the “most cost-efficient means for delivery of retail services to a broad marketplace.” ABA Slates Conference On Revitalizing Cities DALLAS—The Marriott will be the site of the American Bankers Associa tion’s second National Economic De velopment Conference May 9-11. The event will feature presentations and discussions of opportunities avail able to banks in strengthening local economies. Conference Chairman W il liam I. Spencer, president, Citibank, New York City, says the subject mat ter will be pertinent to commercial lending officers, CEOs, mortgage lend ing officers and urban economic devel opment professionals. Titles of general sessions to be held during the conference include “Assign ing Priorities to Bank Goals,” “Federal, State and Local Government Economic Development Incentive Programs,” and “The Impact of Regional Economic Development Councils.” A number of concurrent workshops will serve as “how-to” sessions on specific program information. Profitable EFT Marketing Is Topic of BMA Conference In Cherry Hill, N J | May 1-4 CHERRY H ILL, N. J.—The Cherry Hill Inn will be the site of the May 1-4 E F T conference of the Bank Marketing Association. The event’s title is “Mar keting E F T for Profitability.” The conference has been geared to marketing and operations people with E F T responsibilities. The three-day program will explore new developments and innovations in the E F T environ ment, and heavy emphasis will be placed on maximizing E F T marketing opportunities for increased bank profit ability. The program will include special sessions for large and community banks, while panels, “rap” sessions and question-and-answer sessions also have been planned. Session titles include “E F T Is Alive and Well— Or Is It?,” “ATM— Planning and Playback,” “Community Banks: How to Participate at a Profit,” “Large Banks: Point-of-Sale Services,” “Plastic Cards—Are They Here to Stay?,” “Retail and Nonbank View points on E F T S ” and “Advertising E F T .” On hand to take a “crystal-ball” look at the implications of a >checkless/ cashless society will be Paul Nadler, professor of business administration, Rutgers University, New Brunswick, N. J. Speakers from the Mid-Continent area who have been scheduled to ap pear are Michael E. Henesey, E F T S marketing representative, Fourth Na tional, Wichita; Alex W. “Pete” Hart, senior vice president, First National, Chicago, and Jack W. Whittle, chair man, Whittle Group, Chicago. Con ference chairman is Keith W . Hughes, vice president-retail banking, Crocker National, San Francisco. Registration fees for the conference are $235 for BMA members and $335 for nonmembers. For additional pro gram information, write Donald J. Hoss, Education Department, BMA Headquarters, 309 West Washington Street, Chicago, IL 60606. A&P To Switch to Customer-Operated P O S Terminals First Nat'l to Take Over Continentars System in Chicago Stores ITING TH E FA CT that financial transactions at electronic terminals in supermarkets have been disappoint ing, the A&P food chain in Chicago has opted to remove POS terminals from the courtesy counters of 52 of its Chi cago stores in favor of customer-op erated units. In so doing, the stores are terminat ing a service supplied by Continental Illinois National over the past two years. The Continental setup was in stalled in the stores when they were owned by National Tea Co. The stores were purchased by A&P late last year. The new service will be provided by First National, which will convert the system and expand it to include an ad ditional 52 A&P stores in the Chicago C 40 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis area. The changeover will take place next month. When the changeover is made, there will be no cessation of service. A spokesman for Continental said the bank had terminated its service agreement with A&P because customeroperated terminals would limit the range of financial transactions that could be conducted at the machines. According to an A&P spokesman, the chain wishes to retain its own check cashing service, which it purchased from National Tea. By placing the ter minals away from the courtesy desk, he said, customers banking with First National will be able to approve their own checks through the terminals and will not be obliged to wait in long lines with customers using A&P’s check OK service. The A&P spokesman said the chain is not closing the door to future de velopments of full transaction electron ic terminals within its stores, but mere ly postponing it. When First of Chicago takes over the system, it will install data capture terminals at which customers will be able to verify their own checks. The system will use a negative file which merely verifies that a customer is known, but the system has the poten tial for both on-line or off-line transac tions and the use of a positive file. Eventually, the customer will be able to use Visa charge cards, succes sor to BankAmericard, for groceries. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Free Checking Can Be Eliminated Without Losing Valuable Customers URING the late ’60s and early ’70s, banks were getting increasingly competitive and were looking for new ways to attract business. One idea var ious banks across the country latched on to was free checking; that is, elim inating service charges for all demanddeposit customers. As it turned out, this wasn’t a good idea. Banks found that most of the cus tomers attracted to their banks be cause of the free checking also were the ones with the most activity in their accounts. Thus, these accounts became extremely costly to maintain. As S. Joseph Ward, vice president and public relations director, Bank of Vir ginia Co., Richmond, puts it: “The ac counts were not paying their way, and it was not fair to other depositors or the bank to continue this policy.” With in a few years, many of the “freechecking” banks were going back to service charges. Bank of Virginia had been offering totally free checking service for several years when, in April, 1974, it an nounced it was going back to service charges, beginning with the June state ment period. In a letter to the bank’s checking-account customers, President William T. Gordon cited recent wide spread increases in all supplies, postage costs and personnel costs as reasons to re-evaluate free checking. However, he pointed out that the bank would charge $1 per month only on those checking accounts with balances of less than $50 during the period covered by the state ment. That meant, he continued, that customers could continue to enjoy free checking services just by maintaining a minimum balance of only $50. Mr. Ward points out that Bank of Virginia was the first bank in its market area to take a “free” service away from a customer, but he is proud that his bank had the courage to take an obviously much-needed action. An- By ROSEMARY McKELVEY D M anaging Editor nouncement of resumption of service charges was made not only in the presi dent’s letter, but also through signs in each branch. The action also was an nounced to all news media concurrently with the first date of statement stuffing. The action, says Mr. Ward, went well with the bank, but most competitor banks followed suit. According to Mr. Ward, the closed accounts were monitored daily to de termine what effect the action was having. He says there was a small de cline in number of accounts, but the average balances increased. Also, he adds, most of the closed accounts were those that would become the most un profitable for the banks to which they moved. The decline in number of checking accounts leveled off after about six months, and from that point, the normal increase in accounts was resumed. Bank of Virginia today does not offer any form of free checking. Its schedule is set up on a very simple formula: When an account falls below $50 in any month or cycle period, a $1 ser vice charge is added to that statement. “W e believed,” says Mr. Ward, “a customer would have less difficulty in understanding the $50 minimum as opposed to some average-balance fig ure, which has been customary with many banks in the past. This decision also has proved to be a good one.” Mr. Ward reports that after more than two years since the decision of the Bank of Virginia Co.’s lead bank to discontinue free checking, officers are pleased with the response and with the type of accounts now being main tained. “W e will continue to monitor the service costs required to handle a 11A n a n a l y s i s o f t h e a c c o u n ts w e lo s t s h o w e d , a s e x p e c t e d , t h a t m o s t o f t h e o p p o r t u n is t s h a d g o n e e l s e w h e r e , i n c l u d i n g t h e o u t o f - s t a t e a c c o u n ts a t t r a c t e d b y t h e l a c k o f s e r v ic e c h a r g e s a n d n o m in im u m -b a la n c e r e q u ir e m e n ts . M o s t s a tis fy in g to us w a s th e fa c t t h a t w e h e ld o n to m o s t o f th e n e w , p r e v io u s ly u n tr ie d c h e c k in g - a c c o u n t c u s t o m e r s , w h o l i k e d t h e n e w s e r v ic e a n d h a d n o o b je c t io n t o p a y i n g a r e a s o n a b l e p r ic e f o r i t . " MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis checking account,” Mr. Ward adds, “and will not hesitate to apply a fair and equitable service charge for the handling of an account.” Rhode Island Hospital Trust Na tional of Providence was another leader in its area in discontinuing free check ing. Gail Bonner, market research of ficer, says all six major banks in the Providence area had free checking for 11 months—from December, 1969, to November, 1970. The other institutions were quick to follow Hospital Trust’s action in reinstating service charges. It all started December 2, 1969, when the bank began advertising free check ing in newspapers and over the radio. Within 72 hours, there were public an nouncements and/or hastily contrived ads from all major banks in the state, announcing they were dropping all bal ance requirements. Two Rhode Island banks even began offering n o -s e r v ic e -c h a r g e business checking. As a former officer of Hos pital Trust asked in a speech at a re gional meeting of the Bank Marketing Association in 1972, “Can you envision your bank handling the typical check reconciliations for several supermarkets or from a major department store with out charging the customer for the service?” No-service-charge business checking lasted about four months, with thè two banks restoring service charges to business accounts with some chagrin. According to the Hospital Trust spokesman, their experiment landed no substantial business accounts, attract ing only a few hyper-cost-conscious corner-drugstore types and some chronic problem children, “which the rest of us passed on with sighs of re lief.” Hospital Trust re-established service charges on all personal checking ac counts November 16, 1970. A mass mailing was made to all such customers October 16, a month in advance, so that they would know of the bank’s intention. No advertising was done, but the bank prepared a press release and, subsequently, sent an option form to each customer, with his or her next regularly scheduled statement, reinforc ing the earlier notification and asking each person to tell the bank if he wanted a per-check charge plan or a minimum-balance plan. In preparing the announcement and promotional ma terial, the bank worked closely with its 41 " M o r e a n d m o r e b a n k s a r e lo o k i n g a t a l l o f t h e a r e a s o f vices r e l a t i v e to c u s to m e r s w i t h a n e y e to i n s t i t u t i n g ser r e a s o n a b le a n d f a i r c h a r g e s f o r s e r v ic e s ad agency for the creative input and used customer-attitude surveys (fo cused interviews) both before and after the fact to assess the reaction that should be expected. What happened? There wasn’t a stampede of ex-Hospital Trust cus tomers lined up at competitors’ account desks, so the other banks took similar action and restored service charges, too, pretty much on the same basis as Hos pital Trust: suggesting that customers retain a minimum balance of $100 or $200, for which they would continue to receive no service charges, and es tablishing a fixed charge if and when checking-account balances fell below the level established to receive con tinued free checking. “During the preceding 11-month pe riod,” Hospital Trust’s spokesman told the BMA, “our ordinary share of mar ket would have been a net increase of approximately 5,000 personal checking accounts. Because of aggressive promo tion . . . we gained 8,000 accounts dur ing this period. Of this 8,000, we lost approximately 2,000 in the three-month period that followed restoration of ser vice charges, leaving us with a net in crease of 6,000 accounts and an in creased share of market. “An analysis of the accounts we lost showed, as expected, that most of the opportunists had gone elsewhere, in cluding the out-of-state accounts at tracted by the lack of service charges and no-minimum-balance requirements. Most satisfying to us was the fact that we held on to most of the new, pre viously untried checking-account cus tomers, who liked the new service and had no objection to paying a reason able price for it.” About 50% of the bank’s personal checking-account customers had—be fore December, 1969—been the econ omy “special” or low-balance/ per-checkcharge customers. However, given a choice of maintaining a minimum bal ance or paying a per-check fee on the basis of check volume, 80% opted for the minimum-balance plan. There were a few letters of com plaint, particularly from area freshman college students, who had established no-service-charge checking accounts in September and found themselves, in a month’s time, informed to the contrary (abruptly, in their opinion). They com plained bitterly about being “sucked into” a “free” service for which they 42 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis subsequently were charged. However, Hospital Trust had nowhere near the number of complaints it expected. Fidelity Bank, Philadelphia, insti tuted free checking in December, 1974, and stopped it in April, 1976. Accord ing to Paul J. Levine, vice president, there were two schools of thought: 1. It would increase deposits. 2. It would increase servicing costs. The latter happened, without an accompanying rise in dollar amounts. As other banks found, the type of accounts attracted to free checking at Fidelity Bank were high activity with low average bal ances. A lot of so-called “convenience” accounts were opened. A wife or hus band would open a second account when the spouse already had one. Thus, the number of checking accounts went up, but average balances were minimal. Fidelity, realizing the inevitable, de cided to drop free checking and was the first major bank in the city to do so. In February, 1976, the bank in formed checking-account customers of the decision in a mailing that went along with their statements. The an nouncement was a candid letter from the CEO citing a loss of service-charge revenue accompanied by a boost in servicing costs. Before mailing the statement-stuffer announcements, the bank held a televised news conference in its main office to make the announce ment. In addition, it sent press releases to all newspapers, large, small, daily, weekly, etc., in its market area. Initially, says Mr. Levine, the bank lost business. However, eight months later—in December, 1976—net declines in number of accounts was only 2%, and there was a dollar increase of 8%. In the last three months of 1976, the number of accounts started to go up again. This past February, the bank readjusted its service charges upward and again mailed notices with state ments. The reason: Fidelity has 82 branches in seven counties, and so the cost of maintaining the check-process ing function continues to increase. Mr. Levine believes some people have the idea that the banks are using their money, and so that should be enough recompense. To counter this attitude, Mr. Levine suggests that banks first of all, of course, keep their service charges reasonable and then explain to the public the need for them and the problems a bank has with check ing accounts. He also suggests that banks tell how a checking account is a valuable and convenient service for bank customers, but that a bank has significant costs in maintaining it. Pittsburgh’s Equibank in tro d u c e d free checking with no minimum bal ance in May, 1972. However, because of increases in labor, operations and postage costs, the bank reinstated ser vice charges in April, 1976. Personal checking accounts still are free if their holders maintain a balance of $50 or more. There’s a $2-per-month service charge on accounts where the balance falls below $50 during the month. There are three exceptions to the minimum-balance rule: No s e r v ic e charge is applied to accounts of cus tomers 62 or older who receive social security; customers under 62 on social security who have their checks de posited directly into their checking ac counts by the Treasury Department and1 customers who have their paychecks deposited directly into their checking accounts by their employers. Reinstatement of service charges was announced to the g e n e r a l p u b lic through a press release sent to all me dia. There also was a letter from the bank’s president—William E. Bierer— sent to each current checking-account customer. There was no direct adver tising. However, as new ads and bro chures on checking-account services were produced, the revision was in cluded. Equibank employees were given con siderable background on service charges before the public announcement was made. Each contact employee received a manual describing the reasons, pur poses and procedures involved in the new fee, along with suggestions on how to answer inquiries from custom ers. In addition, the bimonthly em ployee magazine carried an interview with R. W. Plumb, executive vice pres ident, retail banking group, explaining the new policy. About six months after Equibank re instated service charges, Pittsburgh National, the city’s second-largest bank, also did so. All these banks went to free check ing with high hopes of increasing busi ness. They found that it mostly result ed in higher operating costs, and so they did the wise thing: They rein stated service charges without apolo gizing. As Mr. Plumb put it in the Equibank’s employee publication in terview, “More and more banks are looking at all of the areas of services relative to customers with an eye to instituting reasonable and fair charges for services. Banks are addressing the question of service and fee income as a necessity for the kinds of services they are performing for their custom ers.” * * MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Is anelectronic railroad needed a t your bank? S BANKS expand into larger quar- ters dictated by growth, opera tions departments face increasingly complex problems involving mail dis tribution and transit of important docu ments. Often, when a bank moves into a gleaming new office tower, it is con solidating a number of far-flung opera tions formerly housed in various office buildings in the downtown area. Con solidation into one building eliminates a good many horizontal delivery prob lems, but it can also create vertical de livery problems! Two banks in the Mid-Continent area that have solved the latter type of problem are Fort Worth National and Mercantile Trust, St. Louis. Both banks are using a distribution system called “Telelift,” which con sists of a network of tracks on which individual cars run in shafts hidden within walls. The system, somewhat like a model railroad, can transport mail and other relatively lightweight loads to bank departments. According to Mosler Airmatic & Electronic Systems Division, supplier of the system, more than 200 installa tions have been made throughout the world in various types of buildings, in cluding hospitals. An installation is cur rently being put in place in Citicorp Center, New York City. Fort Worth National uses Telelift to move items between operations areas located beneath its parking garage and motor bank and offices in its adjacent 37-story tower building. The system dispatches and receives securities, cash, mail and supplies. According to Richard W. McKithan, senior vice president, Telelift was chosen for the job because it was “ba sically an uncomplicated system that would work or could be made to work without too much effort.” He said he had checked out systems utilizing pneumatic tubes, vertical con veyors and office messengers at the time the bank’s new buildings were being designed, but concluded that Telelift would increase both the speed By JIM FABIAN Associate Editor A and efficiency of the operation of dis tributing paperwork throughout the bank. Mr. McKithan says T e l e l i f t has helped reduce the amount of cash maintained at teller stations, since ad ditional cash can easily be called up Bank personnel can place up to 20 pounds of paperwork in each Telefift car and send car on its w ay to other departments via auto mated delivery system supplied by Mosler. Kurt R. Eisleben points to terminal of "Tram" automated delivery system on wall-mounted diagram of system at Mercantile Trust, St. Louis. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and dispatched safely with Telelift. Another benefit, he says, was realized in the deletion of additional vaults in the commercial loan, note and trust de partments. These departments send all sensitive paperwork to the main vault area at the close of each working day via Telelift. Don Bohannon, operations officer, says that, before Telelift, mail was de livered about once every two hours. Now it’s delivered on a continuous basis throughout the day. “In several areas we transmit large amounts of cash and negotiable secur ities in Telelift cars that are locked. Our security people were a little con cerned at first, but I think experience has shown that Telelift can do the job just fine.” Mercantile Trust uses its Telelift sys tem (which it has renamed “TRAM”) primarily to deliver mail to depart ments in the Main Office and the ad jacent high-rise tower building and to expedite teller-to-proof department ship ments. The system delivers items to 23 stations located on 21 floors in the two connected buildings. Each station is serviced every 30 minutes during the working day. “TRAM has proved to be an efficient, labor-saving device that will pay for its half-million-dollar cost within three years,” says Kurt R. Eisleben, mailing department manager. The system includes more than 50 self-propelled cars that run on tracks that fan out from the mail department and traverse a central shaft to serve the tower stations and move across a pedestrian bridge (hidden by a false ceiling) to reach the bank. The cars move at about 100 feet per minute, assuring delivery from the fourth floor mail room to the 20th floor of the tower in less than three minutes. Granted, an individual can walk faster than 100 feet per minute, but no one can climb stairs or wait for and ride elevators at this speed, Mr. Eisleben says. Capacity of each car is 20 pounds. This is equivalent to a stack of standard 43 computer output 12 inches thick. Solidstate switching units with “read head” capability make a central computer un necessary, as each switch makes deci sions regarding the routing of cars. The system is paying for itself be cause it has eliminated the need for most messengers, accelerated delivery time and enabled the bank to centralize its word processing and copying cen ters, thus eliminating costly decentral ized equipment, Mr. Eisleben says. The move to the tower resulted in the bank closing two of its three former mail departments and the TRAM system made it possible to conduct regular, uninterrupted mail deliveries at reg ular intervals throughout the day. The TRAM also eliminated the sight of su permarket-type push carts in hallways and elevators delivering mail. “There’s little chance that a TRAM car will be delayed in making its rounds,” Mr. Eisleben says. “It doesn’t have to wait for an elevator, it doesn’t have to learn the layouts of the various floors of the building, it doesn’t stop at the water cooler and it will work any num ber of hours with no thought of over time pay!” Most floors have one TRAM station, which is serviced by personnel work ing on each floor. Certain departments have point-to-point authorization for Multiple-Delivery System First National, Chicago, utilizes three automated delivery systems. The bank’s Telelift system oper ates between the lower levels of the Main Bank building and floors two to 11 of an adjacent annex. The 10station, 26-car system racks up about 2,300 car movements each month, carrying mail and other communica tions. All cars are routed through the distribution department. The bank also has a conveyor ver tical lift system that serves only the main building. The system averages 23,000 trips per month throughout the 34 floors housing bank offices. A pneumatic tube system serves all banking floors of both buildings. Although large items cannot be ac commodated with this system, de livery is extremely fast, averaging between one and two minutes. The tube system provides direct service between stations. The bank uses messengers to de liver negotiable instruments. sending material. These include the proof, bond, discount and trust security departments. Mr. Eisleben says the TRAM system permits his department to deliver mail BMA Slates Bank Management School For August 13-19 at U. of Wisconsin HE BANK M ARKETING Associa tion has scheduled its 1977 Bank Management School for Marketing Managers for August 13-19 at the Uni versity of Wisconsin, Madison. The seven-day course, which is sponsored annually by the BMA in cooperation with the university, formerly was called the Graduate Course in Bank Market ing Management. The course is designed to provide marketing managers with necessary ex posure to advanced marketing topics and management concepts and prac tices. According to a BMA spokesman, the program assists bankers in becom ing better marketing managers and bet ter management executives. The course’s new name was designed to more adequately reflect the thrust of the curriculum, which h a s n ’ t changed dramatically since its 1973 inception. Fine tuning, however, has produced a program that is said to be more attuned to the broad-based needs of marketing managers functioning as marketers, managers and bankers. The school’s curriculum is focused T 44 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on the changing, challenging environ ment confronting today’s bank market ing manager, the BMA spokesman notes: Courses include “The Changing Environment for Banking— Cultural and Social,” with Michael H. Mescon, re gents’ professor of human relations and chairman, Department of Management, School of Business Administration, Georgia State University, Atlanta; “High-Profit vs. Low-Profit Banks— Ap plied Asset & Liability Management,” with William F . Ford, vice president, Wells Fargo Bank, San Francisco; and “Management by Objectives,” with Louis A. Seiberlich Jr., senior partner, Omnisystems, Milwaukee. Other topics will be “Commercial Marketing,” with Richard F. Langan, vice president, Morgan G u a ra n ty Trust, New York City; “The Changing Environment for Banking—the Legis lative Impact,” with Bryan K. Koontz, executive director, Wisconsin Bankers Association; and “The Price of Bank Funds,” with Harry Blythe, professor of finance, Ohio State University, Colum bus. to bank departments earlier than would be possible with messengers. Cars load ed with early arriving mail are sent to the various departments on a schedule timed to coincide with arrival of per sonnel in those departments. This en ables the mail department to clear out its bins early in the day. The system is monitored in the mail room by utilizing a 23-station schematic diagram that shows—by means of lights — the location of all cars in the system. It also transmits a report by station and zone if a failure occurs in the system. Similar to a model railroad, the system has spurs for temporary storage of ex cess cars. The system also has a track maintenance car—with a self-contained vacuum sweeper—that roams the net work. Mr. Eisleben says much of the sys tem’s potential remains untapped, but it is doing everything his department wants it to do. His aim is to see TRAM totally replace secretarial and clerical help being used for hand deliveries be tween departments. The Telelift system can be installed in existing buildings, according to Mosler. In such cases, it usually is not hid den behind walls to cut down on in stallation costs. A single-track system requires a right of way of about oneand-one-half square feet. * * Students will be able to participate in “BankSim,” a computer bank simu lation program that allows students to act as members of a senior-manage ment team that has responsibility for the total management and success of a “bank.” Director of the BMA Bank Manage ment School for Marketing Managers is Neil M. Ford, professor of market ing, Graduate School of Business, Uni versity of Wisconsin. Interested bank marketing managers are urged to ap ply for the program as soon as possi ble, since a limited number of places are available. Tuition for the school is $550 (dou ble-occupancy room) or $575 (single occupancy) for BMA members; $700 or $725 for nonmembers. For more information, write Schools Registrar, Bank Marketing Association, 309 West Washington Street, Chicago, IL 60606. ’Instant Statements’ W ICH ITA—Kansas State now makes “instant statements” available to its cus tomers. Its NCR 260 printer produces a customer statement in just a few sec onds. The statement shows all activity on a checking and/or savings account with final balance to the moment. Ac cording to a bank spokesman, Kansas State depositors consider this free ser vice to be convenient and helpful. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 How to Prevent Destruction O f a Bank's Data Center By Bombs, Arson, Sabotage By CHARLES B. TEBBS Assistant Vice President Security/Protection Dept. Bankers Trust Co. New York City of its hardware conceivably could shut down a bank. While I will be addressing my self primarily to cases of catastrophes that would put a bank’s data center out of business, the methods I will describe to protect computers against such at tacks also are applicable to and effec tive against less serious acts of inten tional damage. The purpose of this article is to have you plan for such destruction, rather than bet on the chance it won’t hap pen, to lessen the chances of your wak ing up to hear that famous word of the TV ad, “Gotcha”—not in the face, but in the heart of your bank. Consider the destruction of a data center by fire as IBM said about its fire in Hawthorne, N. Y., in 1972. “A holocaust hot enough to buckle steel girders, make plastic butter out of keyboards and tape reels, reduce tons of paper to ash.” Or destruction of a data center by explosion—dead bodies, twisted steel of central processing units (C PU s), torn tapes and shattered glass. In either case, utter havoc. Such cases are different from other forms of sabotage—for instance, you could discover the complete inability to function because of the intentional malicious act of individuals miles away —unionized city employees having called a general strike and literally “cutting off your water.” Here, utter frustration. You are down! The consoling thoughts here are: 1. Your local competition is in the same boat, and 2. When things cool off, you can resume normal operations without replacing hardware and soft ware. What are the chances of a disgrun tled employee, terrorist or other person attacking your facility by fire or bomb today, in 1977? “Very slim,” you say. “The Viet Nam war is over, Dow isn’t making napalm, the universities aren’t doing weapons studies, SDS is dead and everybody D e s t r u c t io n loves banks. Oh what a relief it is—we don’t have to worry about the security of our hardware.” Well, times do change. Things prob ably aren’t as bad as in the late ’60s and early ’70s. But, from time to time, some of us still find the blasts as loud and the fires as hot. The old causes have been replaced by new ones. In stead of war protesters, we now have terrorist members of FALN, PLO and SOIL. They may not be after data cen ters per se, but these groups don’t like banks and bomb them with frightening regularity. Most banks have data cen ters. Let’s look at some recent events: 10/26/74— Five Manhattan banks were bombed. 4/2/75— Bankers Trust head quarters on Park Avenue and other banks were bombed. 10/27/75— Con tinental Bank was bombed in Chicago. There should be no doubt that ter rorism is still a serious threat in some areas. While we may consider the proba bility of attack by outsiders to be low, the possibility should be of concern to us—more so since arson or bombings can have a horrendous effect on our ability to function in a tim ely fashion. I’m sure that those who bombed our headquarters building would have bombed our data center given half a chance. What is the possibility of at tack by outsiders in your area? You’ll In this article, the author advises banks with computer process ing centers to plan for their possible destruction by bombs, arson or sabotage, rather than bet on the chance that such catastrophes won't happen. In essence, he says: 1. Analyze your risks. 2. Know your employees. 3. Make data center tough to find and penetrate. 4. Review internal safeguards. 5. Before disaster strikes, identify your critical programs; know who can help, where and how soon. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis know only if you keep your finger on the pulse of specific political, economic or social issues or local situations that might trigger severe tensions. The risk of attack by outsiders does not concern me as much, however, as the danger presented by the insider who also may want to say “Gotcha”— disgruntled because he is being let go in a reduction-in-force program or be cause a fellow employee with less time, knowledge and experience got the pro motion. This person has access, is vengeful and probably knows how best to put you down. He could be in any of our data centers on any given day. And if he can drop chips from the key punch equipment into the main frame (sabotage), he can do more and can present a real threat to the protection of your hardware. With today’s restric tions on employment practices, how much do we know about this particular insider who can learn how to make bombs from the underground press and our own army field manuals? Risk analysis alone is a complicated subject. For our purposes, suffice it to 45 say that if you haven’t analyzed your risks and weighed your vulnerability to natural hazards, internal break downs, acts of fraud and acts of de struction, you should do so without delay. If you find there’s a threat by acts of destruction, what’s the answer? What can you do? Of course, there’s no single, simple answer because banks are of different sizes and different geo graphical locations. Some of us may rely on service bureaus for 1 0 0 % of our data output. Some of our data centers are old, some new, some large, some small, some housed separately and some in operations centers, each with varying numbers of employees and a variety of equipment and programs. Our interests are similar, but we have different risks so our security needs will vary. they are bondable. Check on this as quickly as possible. B. Security A w areness—This essen tially is a management responsibility. Make sure: 1. Employees know securi ty requirements. 2. You check on ad herence to security procedures. C. W hat do you know abou t the other insiders—th e non-em ployees, ven dor representatives, m aintenance p er sonnel an d cleaners? 1. Do you have backgrounds? 2. Are they supervised? 3. Are they escorted? Probably not, and I know all the ex cuses. But why should we pay less at tention to the “inside-outsiders” than to our own known employees? Fre quently, these people work when the data staff doesn’t, thereby giving them every opportunity to yell “Gotcha.” D. H ow is M orale? If your manage " If you have a choice, hide the data center and m ake it as inaccessible as possible. A void underground and first-floor lo cations; keep it a w a y from outside building w indow s and not directly under the roof. Insulate it top and bottom and sideways w ith its own support groups— programmers and systems people." As different as we are, there are ment thinks profits should be better, some basic and practical security con the data center manager may be asked, siderations that could measurably re “What steps are you going to take to duce the odds of these data centers be reduce your 1977 budget by 4%?” We coming a target of catastrophic attack all know the results—there are layoffs; and allow us to recover should we, in raises and promotions cease, and inno spite of logical safeguards, become vative research programs come to a such a target. L et’s take up briefly halt. Thereafter, fewer lower-paid peo what we can do in areas of personnel ple do more work for the same money. practices, location, perimeter security People are tired, make more errors and and internal safeguards to protect our either cease to care or say between clenched teeth as they are fired, after data centers. 15 years of dedicated service, “I’ll get I. Personnel Practices: A. N ew E m ployees—There’s an old you!” If this is happening (and you saying in banking—“Know your cus should know), don’t give them a tomer.”, In this day of computer tech chance to say “Gotcha”—escort them nology, is it any less important to know out quickly and don’t let them come your employees— particularly the ones back. Get their keys and IDs. II. Site or L ocation : working in the “heart” of your bank? Most of you are concerned with Data managers may be screaming at personnel for applicants with the result the security of existing data centers. Unless that data center happens to be that proper procedures suffer. W e all have an applicant fill out an applica in a stage of physical transition, I tion, but it’s incumbent on us to know doubt, in this economy, if anything I more about this employee in so critical say could possibly convince manage an area. Fortunately, most banks do ment to move merely to improve secur backgrounds on all employees (if you ity—rightfully so. It’s your service re don’t, you should)—and fingerprint sponsibility to secure what you have them (if you don’t, you should—all of as best you can. When did you last them ). The problem is, you won’t put take a hard look at what you have? Is them to work in a teller cage until you it: 1. The “look what we have” glass menagerie. 2. The dedicated building get the results of the investigation. They might steal $300! Likewise, you or, 3. The multi-tenant mix? A. If management is still showing won’t put them in your trust depart ment with bearer paper or in your coin off the now grown-up “baby,” I suggest and currency departments. You ensure you take down the nursery signs, give that in your bank they are not being the creature some privacy (by hanging put to work prematurely in your data curtains) and rip out the cart treadle. B. If a dedicated building, your center. If there is any question, be sure 46 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis neighborhood might slowly have gone to pot. Take a look. Have undesirable neighbors moved in? Are there external threats? If you think so: 1. Again, take the sign down. 2. Brick up windows. 3. Bury your power and communica tion lines. 4. Reduce means of access. 5. Control access. 6 . Lock and alarm access points. 7. Continually watch thy neighbor and thy neighborhood. C. If a non-dedicated building (multi-tenant mix), do the other ten ants present a danger by being contro versial or because of their product or housekeeping? Are you off the beaten track within the building? Do tenants cause access problems? D. If located in your own building, you have advantages—you can control the environment around your data cen ter, keep the whole structure secure, fire safe and with necessary backup power and air. If you have a choice, hide the data center and make it as inaccessible as possible. Avoid underground and firstfloor locations; keep it away from out side building windows and not directly under the roof. Insulate it top and bot tom and sideways with its own sup port groups—programmers and systems people. At Bankers Trust, the data center (in place for two years) occupies most of five floors near the top of the new 42-floor high-rise operations center— the data center proper on 37, 38 and 39 and check processing on 34 and 35. The secured areas of these floors ac commodate 253 employees and $26 million worth of hardware. The center operates around the clock, 6/2 days a week. The check-processing group alone handles 1 ,0 0 0 ,0 0 0 pieces of pa per a day valued at $ 2 billion to $2/2 billion. Since I am the individual pri marily responsible for the security of the center, it helps also to have total security responsibility for the building itself, one of the most fire-safe towers in the world. Bankers Trust Plaza was the first building constructed under New York’s rigid “Public Law 5”—the first completely sprinklered high rise in New York. There is emergency com munication throughout and a system to control air flow, power flow and evacuation procedures from the man dated fire-command station. It is so fire safe, it’s the only building I know of in New York permitted to keep all firetower doors locked from the stair side —fail-safe in the event of an emergen cy. It’s comforting to know we have a diesel generator for certain elevators and exit lights, emergency power ser vice consisting of six gas-fired 5,800 kw turbines on the roof, uninterrupt ed power service consisting of 1,658 on-line batteries, each 560 DC volts, MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Call Jim Dixon, Vice President and In vestm ent Officer at Fourth National, and you have called upon 18 years of experience in the investm ent areas of banking. Jim is in charge not only of Fourth National's ow n in vestm ent portfolio, but he is also here to help you, our cor respondent bankers, w ith your's. W hether it be adjg g te e - on particular H rv e s tm e n ts and i|pnds, or overall ^ ^ ^ t r a te g y on invest¡¡ jlp n t m anagem ent, is the m an to « ■ p a ll. As past PresiB e n i of the Oklafflèvia Society of j|p ih a n c ia l Analysts, he is a recognized Reader in the field. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (tours), the manager’s fiancee, the high for the data center alone. That is real power backup—needed in our case be school senior class, prized bank cus tomers and, last, but not least, visiting cause we won’t bet our life on Con Ed. The risk of power failure was weighed firemen. This proud, outgoing manager is and the probability found to be high. To secure this fire-safe building we holding “open house”— showing his de installed: a) hundreds of balanced partment to everyone. Tough as it may magnetic contacts on all exterior doors be, do yourself a favor and restrict ac cess based on legitimate need. In ad and interior doors to vital areas, b ) 40 dition to our 253 employees, we have card readers—for access control, c) a list of bank service people and ven closed-circuit TV, d) sonic alarms, e) a programmable guard tour system dor representatives who are allowed and, f) two-way radios, all controlled access. Vendor representatives, mainte from our Diebold DGM 320 security nance personnel, cleaners and firemen console— the largest system of its kind should be identified, registered and in private hands when installed. All escorted. Those users who demand this, to back up 72 armed guards on face-to-face contact can have it without fixed posts, doing tours or acting as re entering. How do you keep out the sponse personnel. unwanted? This is the environmentally safe and The degree of security you need can secure structure in which w e housed range from a closed door operated by our data center. You have to be an em treadle to a receptionist alone, guard ployee or authorized and announced alone, electric door releases, card read visitor to take an elevator to a bank- ers, mantraps or a combination thereof. occupied floor—no thieves and, we Regardless of the approach you take h op e, no terrorists. This outer perime you should: a) reduce entrances to a ter security is the first line of defense minimum— one if possible; b) have for our data center. Of course, you may someone check anyone who enters; c) not have or need this all-inclusive pro register and escort authorized non-em tection for your building. It does show ployees; d) equip emergency exits with how far some of us have gone. crash bars— detex alarms; e) if you do III. Perim eter Security and A ccess not operate around the clock, be able Control: Here, we come to basic se to lock the facility, alarm the doors and curity considerations tailored to your afford prompt response; f) set up a data center needs—your best defense desk or input-output windows for the against the outsider. By securing the users (our windows are at opposite perimeter, you protect the people, the ends of the floor and removed from the facility, the software and the hardware. employee entrance. They are of banditYou all know which people need to barrier construction. There are speak have access to the data center: data ers, deal plates, package pass-throughs center employees, users, vendor repre and cart pass-throughs.); g) check all sentatives, auditors, maintenance per incoming and outgoing packages; h) sonnel (painters, carpenters, electri have data center personnel inspect, cians, etc.), cleaning personnel, de handle and store incoming deliveries. livery personnel, security personnel At Bankers Trust, we have excep Detrolt Bank Holds Special Seminar Thomas D. Thomson (r.), v.p. & chief economist, Detroit Bank, outlines areas he will cover during the bank's special seminar on banking, finance and economics to (I. to r.): Eugene A. Miller, s.v.p.; Donald R. Mandich, e.v.p.; and U. S. Army Col. Bruce E. Green. The seminar, held March 14, was attended by high-ranking members of the armed forces and senior federal government personnel, all of whom attend the Industrial College of the Armed Forces at Fort McNair, Wash ington, D. C. This was the second year those attending the college went to Detroit as part of their field studies. Col. Green is Detroit trip director for the college. 48 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tionally tight access security, card readers, good and bad card alarms, door controls, mantraps with inter locked doors and a comparison of I.D. photos to the employee’s face. IV. Internal Safeguards: Bob Court ney, in his capacity as computer se curity specialist at IBM , has listed fire as the third highest risk or threat to data centers. The fire could be caused simply by poor housekeeping or by arson! Either way, the effects could be di sastrous, and so it’s incumbent on you to ensure that people are trained and that appropriate protective equipment is in place. Consider these points in light of your operation: 1. Do you have proper smoke- and fire-detection equipment? 2. Will it sound a local audible alarm and send an alarm to the fire department? 3. Are personnel trained to react to this alarm? Have they heard it? Are drills held for all personnel? 4. Do you rely on hand-carried ex tinguishers, or do the detection devices trigger sprinklers, a C 0 2 system or Halon flooding? If extinguishers, are they the proper type, and have personnel had experi ence in using them? If sprinklers, how well advanced would the fire be before the fusible link of the sprinkler head was melted in an air-cooled environment? Maybe you have gone to a dry sprinkler sys tem incorporating a delayed discharge of clean water through previously un charged lines. If so, have you “keyed” your manual sprinkler controls? (to prevent that sort of sabotage)? If C 0 2, is the release timed allowing for evacuation of personnel? In concen trations needed to extinguish a fire (by displacing oxygen), it can incapacitate and kill. Have you looked to see if Halon or Freon-1301 might now be justified for your data center? It sustains life and results in little or no damage to equip ment. 5. Are you properly protecting your magnetic tapes, disks and microfilm? Are data stored in vaults made for this purpose? If not, is the library sprinklered? (W ater won’t damage magnetic-data-storage media. On the other hand, sustained heat—about 150° F — may distort the material.) But C 0 2 or Halon allow for a speedier recovery. So, you take a hard look and find security systems, fire systems and emer gency procedures in good shape (or take action to correct any deficiencies). You are ready— oh what a relief it is! Then in spite of your good work, disaster strikes—the event that hap- MID-CONTINENT BA N K ER fo r April, 1 9 7 7 and is the only factor in this whole pens only to someone else. Were you covered virtually all data from media really ready? in the computer room at the time of topic where the horseshoe and prayer V. R ecovery Plans: the fire. However, it took 10 days to might help. Your vendor knows this On April 10, 1976, a fire struck First complete all media cleaning, and users and tells you not to rely on him. It Data Corp.’s computer facility in Wal had to wait that time or use week-old took IBM eight days to recover after tham, Mass. It started at 8 :4 5 p.m. on data from the off-site tape storage. The the Hawthorne fire. There is some Saturday and fed on combustibles on point is—how long could your users, hope, fortunately, because today some two floors below the data center. It the bank departments, wait? If you are types of non-compatible equipment can be programmed to be compatible with was under control at 4 a.m. the next OK on software, look at your backup day. David Friesen, vice president equipment. in several days. for operations, in describing lessons B. B acku p E quipm ent: Did you pre C. Site: Let’s say you have the tapes learned from the fire said, “We learned viously locate and get the equipment. Where do you compatible backup that our emergency procedures and equipment? 1. Are you small enough put it assuming your old site is un planning were fairly good— as far as to be handled by a service bureau? usable? Have you located an alternate they went. These plans focused on re Could it handle your critical programs? site that has the power, water and air sponding to the emergency situation Have you identified those programs, you’ll need? The larger you are, the and that, of course, is necessary. The personnel, transportation and commu longer it will take to prepare a site. plans were much weaker in the area nications to handle them? or 2. Did D. O ther Considerations: 1. Do you of recovery from the damage caused you develop a mutual-aid agreement have the proper “all-risk” insurance, by a major disaster.” To improve the with another bank or association? Has “media coverage” and “extra expense”? recovery plans, they asked the ques the other bank changed equipment or 2. If you figure the number of days you tion, “What would be necessary to re become too busy to accommodate you? might be down, have you made ar store critical service to users in the Is the agreement spelled out as to scope fastest possible time?” That’s a good of support, operating protocols, test rangements with other banks, the Fed question for all of us because our abili exercises and costs? 3. Or, are you re and clearinghouse associations for ex ty to recover quickly or even stay in lying solely on your vendor to replace tensions on clearing checks, credit, business after such a disaster will de equipment? This may be OK if you are etc.? Summary: 1. Analyze your risks. 2. pend on how well we planned in three small and have to replace only a mini main areas: mum of equipment. But if you are Know your employees. 3. Make the data center tough to find and penetrate. A. B acku p T apes—Were backup large, your acquisition of replacement tapes vaulted at another site with suffi equipment will depend on what the 4. Review internal safeguards. 5. Be cient frequency, and were media in the vendor has in the warehouse for ship fore disaster strikes, identify your criti cal programs; know who can help, ment, in transit or just coming off the computer room protected from fire, where and how soon. • * water and soot? First Data Corp. re line. This will vary from day to day How much new business does your present Christmas Club generate? If your present Christmas Club isn’t attracting as many new customers as you would like, maybe it’s outlived its usefulness. If that’s the case, why not look into an attractive and practical Christmas Club program from Rand McNally. You’ll find that they have all the innova tive ideas, materials and know-how needed to help you organize, promote and get the most out of your C lu b ... including some cost-saving features you can’t afford to overlook. A name you know, a company you should know more about R an d M ? N a lly Financial Systems Division P.O. Box 7600 / Chicago, Illinois 60680/(312)267-6868 10 East 53rd Street / New York, New York 10022 / (212) 751-6300 206 Sansome Street / San Francisco, California94104 / (415) 362-4834 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 49 Enables banks to get in on ground floor of EFTS N M ID -FEBRUARY, M e r c a n tile Trust, St. Louis, announced the availability of an on-line electronic banking machine system for banks in a three-state area. According to Jerome J. Sandweg, vice president, financial services divi sion, Mercantile is the first bank in Mis souri and one of the first in the nation to market such a system. Mr. Sandweg says the bank is draw ing on its considerable experience with its “Fingertip Banking” ATM service, which it introduced to its retail cus tomers in St. Louis in November, 1975. The system Mercantile is offering to banks in Missouri, Illinois and Kansas is similar to the Fingertip system, Mr. Sandweg says. Banks contracting for the system will be provided with on premise, on-line central information files and will install Diebold automated teller machines (ATMs) in an outer wall of the bank or facility. The system, activated by plastic debit cards, enables customers to con duct most personal banking transac tions at the ATM. These transactions include deposits, withdrawals, balance inquiries and transfers of funds on a 24-hour, seven-day-a-week basis. Individual banks using Mercantile’s system would develop their own mar keting trade names which would be best suited to their individual areas and tied to their advertising programs and public images. Mr. Sandweg told M id - C o n t i n e n t B a n k e r that the system is being offered to encourage greater familiarity and usage of ATMs by the public and to permit smaller banks to provide their customers with these new electronic ser vices. Mercantile Trust also sees the ser vice as a way to increase its service to I 50 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis By JIM FABIAN Associate Editor correspondent and other banks, Mr. Sandweg says. Mercantile presently handles data processing for more than 80 midwestem banks. What type of bank would be best suited for an ATM system? Mr. Sand weg says it’s difficult to pinpoint an ideal situation, because every bank is unique regarding the attitude of man agement toward electronic banking, not to mention its competitive situation. However, he adds, a $35-million (or larger) institution in a community that supports at least one other bank or thrift would be a likely candidate for an ATM system. He adds that a bank installing an ATM should locate the unit in a high-traffic area where chances are excellent for capturing a significant share of the market. An ideal location would be in the external wall of a sub urban bank facility in a new shopping center. A bank located in a downtown area could place an ATM in a facility in a fast-growing area of the community and expect the unit to do a good job in Typical Mercantile Bank "Fingertip Banking" unit. Individual banks using Mercantile's ATM system w ill develop individual marketing trade names for the service. tapping the market potential in that area. Bankers, for the most part, are eager to offer ATM service, Mr. Sandweg says, but encounter problems in starting up their own. Mercantile’s existing sys tem eliminates most start-up dangers and provides ATM service at a cost well below what a bank would incur were it to develop its own service. Even so, the costs are significant. Fees associated with implementing Mercantile’s ATM service will vary slightly, Mr. Sandweg says, depending on the size of the bank and number of ATMs, debit cards and accounts in volved. Basically, start-up fees would be about $50,000. This includes con version of accounts to a central infor mation file, staff training, marketing re view, file scrubbing, card manufacture, card issuance and multiple mailings. Monthly on-going fees would be about $2,500 and would include on line operation of the ATM and C IF and related reports, additional debit card issuance and file maintenance. Still other costs would involve ATM depreciation and maintenance, CRT rental and phone lines, for an estimated start-up cost of from $15,000-$30,000 and a monthly on-going cost of from $l,000-$3,000. The system is geared to Diebold TABS ATMs, which cost about $35,000 when used on-line. Each bank will own its own ATM. However, Mr. Sandweg says, cus tomers contracting for Mercantile’s sys tem can save by not “reinventing the wheel” because Mercantile has done all the spadework. By not creating its own software, the bank can save a great deal of money. And, by using the Die bold ATM, it can save time by not shopping around for equipment. Mer- MID ■CONTINENT BA N K ER fo r April, 1 9 7 7 When you need data processing, you can buy a computer, buy the software to go with it, and hire and train a staff to run it. O r you can use Central Trust’s Computer Services Depart ment. For data processing assistance in any of the following areas, contact Central Trust today. •Demand Deposit Accounting, including • M ortgage Loans Combined Statem ent P roof Transit Audio Response • C om m ercial Loans • Installment Loans • Investment A ccounting •Savings Deposit Accounting IRA Deposits •Payroll •M icrofiche THE CENTRAL TRUST COMPANY C FOURTH AND VINE ST R EE T S • CINCINNATI, OHIO 45201 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • Certificates of Deposit C IF Call: AFFILIATE Tin Central Bancorporallon Gib Witter Bill Korengel Kevin Blase Eric Lenning Adrian Smith 852-5445 852-5490 852-5094 852-5690 852-5023 5 cantile maintains the system, which means that, when a client bank is closed, Mercantile monitors the ATM and is in a position to alert the bank if it needs servicing or if a malfunc tion occurs. Also, during non-banking hours, cus tomers using the ATM have access to a phone with a direct line to Mercan tile’s troubleshooters. Should a cus tomer become confused when operat ing the ATM, he merely picks up the phone and tells his problem to the Mercantile employee, who instructs the customer how to operate the unit prop erly. A valuable part of the service, Mr. Sandweg contends, is the fact that Mercantile establishes the C IF and maintains it. The C IF portion of the system provides the following features through on-line CRTs installed in the teller area or back office of the client bank: • On-line C IF inquiry for all cus tomers, providing account number re lationships, including look-up of ac count numbers based on name. • Timely balance inquiry data for both checking and savings accounts. Transactions at the ATM or CRT ter minal update balance inquiry records immediately. • Selective holds can be placed on accounts via the terminals. • New account information will be entered and controlled on each bank’s premises. • Master file and name and address changes will be entered daily from each bank, under local control. The ATM provides the following ser vices, which are the same as those of fered by Mercantile to its own cus tomers: • Withdraw cash from checking and savings accounts, and from Master Charge (by cash advance). • Deposit to checking and savings accounts and immediate withdrawal privileges based upon a portion of the deposit. • Verification of account balances. • Transfer of funds from savings to checking, checking to savings and from Master Charge to checking (by cash advance). • Payments to various accounts, in cluding charge card, installment loan, mortgage loan, etc. • Messages to bank to request sup plies and register changes of address. One of the strengths of the system, according to Mr. Sandweg, is the fact that it has been standardized to permit widespread implementation of the ATM service. In planning for installation, a banker will want to be aware of these general considerations, he adds: • Mercantile will provide debit card/ ATM service, including initial and 52 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on-going card issuance, 24-hour an swering service when the bank is closed, staffing, training, marketing ad vice and on-line computer processing. • This service is provided only to banks that process both DDA and savings with Mercantile. Master Charge processing is optional. • The central information file must be installed and operational about two months before cards are issued and ATMs installed. • Normally, automatic o v e r d r a ft privileges are implemented through Mercantile’s personal credit system. • Bank personnel will have on-line balance inquiry and hold capability through CRTs located in the teller area. • Each bank’s ATMs will be re served for the exclusive use of its cus tomers and its own unique debit card. • Each bank will buy and own a Diebold ATM according to specifica tions. Assistance will be provided to in sure that the proper features are ordered on the ATM so it will interface prop erly with Mercantile’s network. • The normal implementation peri od is from six to nine months to secure equipment, create the C IF file, issue cards, design a marketing program, etc. The Mercantile system was not of fered to correspondents and other banks earlier, Mr. Sandweg says, because it appeared that the Bankmate switching system, operated by Financial Com munication Services Corp., St. Louis, would become a reality. But legislative setbacks in Missouri have put Bankmate on the back burner for the time being. He says that any bank installing an ATM system now will be ahead of its competition should the Bankmate system become operational. • • ATM Success Stories Offered In Portfolio Format The experiences of two Mid-Conti nent area banks utilizing Diebold TABS automatic teller units are de tailed in a portfolio of 10 ATM suc cess stories published by Diebold. In describing the success of the “Fin gertip Banking” ATM service of Mer cantile Bank, St. Louis, Charles A. Elfrank, senior vice president, says, “Our first objective was to serve our present customers, but ‘Fingertip Banking’ has brought us new customers, too!” The Mercantile system, installed in November, 1975, recently chalked up its millionth transaction. Volume is now approaching 100,000 transactions a month, giving Mercantile a ranking in the upper 5% of banks in the nation in machine usage. Mercantile uses Diebold TABS ATMs in its Main Office and in its fa cilities in St. Louis. Affiliate banks of Mercantile - Bancorp, throughout Mis Free-standing ATM facility in shopping center in Enid, Okla., is used extensively by custom ers of First National. Photo is taken from case study of ATM operation published by Diebold, Inc. souri are gradually being equipped to offer the service to their customers. Mercantile is offering its ATM ex pertise to other banks (see adjoining article). The other Mid-Continent area bank featured in the ATM portfolio is First National, Enid, Okla. H. H. “Bud” Champlin, chairman, president and CEO, says, “W e were most interested in being able to pro vide our customers with the most con venient banking possible, and, in doing so, felt that our 7/24 bank equipped with Diebold TABS was the route to take. “I can say without any reservation it has accomplished our main purpose in providing convenient banking to our customers.” Copies of the Diebold portfolio are available from the firm, located in Canton, O. 44711. • Frank E . McKinney Jr., chair man, American Fletcher Corp., Indi anapolis, has been selected by the New York Alumni Association of Sigma Al pha Epsilon fraternity to receive the fraternity’s “Highest Effort Award.” This award recognizes an alumnus who has “performed a service that betters either man’s condition or knowledge; demonstrated by his actions the ideals of the fraternity . . . and set an exam ple of service to his fellowman or com munity for those who follow.” Mr. Mc Kinney, an alumnus of the fraternity’s Indiana University chapter, was the winner in the financial field. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Two new Brandt Coin Wrapping Systems deliver convenience and productivity Brandt’s new 1702 and 1780 . . . reliable, efficient, accurate and quiet. Costly and tedious manual coin wrapping is a thing of the past when you select one of Brandt’s new coin wrapping systems. Brandt’s unique m o d u la r d e s ig n is another important key to total coin wrapping productivity. This construction of the 1780 allows you to add other components and accessories as your coin wrapping needs increase. And the 1702’s hinged cabinet gives quick access when service is necessary. That means less downtime. The Model 1702 is Brandt’s portable answer for totally economical coin wrapping. Small and lightweight, it moves easily where you need it and operates with a minimum of noise. The new Brandt Model 1702 . . . portable and economical. The new Brandt Model 1 7 8 0 ... fast and efficient. Both deliver top coin wrapping productivity. The Model 1780 is Brandt’s high speed answer for totally efficient coin wrapping. It automatically packages up to 1440 w raps per hour with uncom prom ising Brandt quality, accuracy and reliability. the most for Both new units are e xtre m e ly sim p le to operate. Denomination changeover is fast and easy. And both models have large-capacity hoppers for fast loading. MID-CONTINENT BA N K ER fo r A plil, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 53 M ercantile P u ts Banking Convenience At Its Custom er’s H ngertlos « © ro u n d « * J* CKS° * ^ p i: jf ■f U f automatic banking jS N cjgypppjhgs In the real world of automatic banking, Diebold TABS makes it happen || Many banks. Of various sizes. In different | localities. But with one thing in com m on: successful automatic banking programs. | For these banks, and the hundreds of others using Diebold TABS, the future of automatic banking is NOW. How about Your bank? If your attitude toward automatic banking is "let’s wait and I see," the success these banks have enjoyed may be constructive in helping you decide how long to wait. | We'll be glad to send you a copy of ja each of these automatic banking case histories, with the understanding that what you see may make you want to wait no longer. transactions p f 8 ATLANTIC.3ANCDRP0RATÌM;JaekseevHlt. Fit.: I "Our eight TABS insta tâtions are ■ ■averaàwa TMW KKTbàÜBfefcfisftSv:, W ait not, w ant not. P REAIOTELUER Th e bank thafe ready when you are. Indiana's O ldest National Bank Dem onstrates Youthful H air For New ideas AMERICANBANKft TRUSTCO.. lMsiit|. Mich.: FIRST NATIBNAL BANK, lichimind. Ind.: "50% of our new accounts specify automatic banking as the reason for opening the account." Our competition has a car i base three times large* than ours. But our unit accounts tor 49% o' this area's ATM transactions " " B A N K * IN -T H E -B O X ” Automatic Banking Performs Like Thoroughbred in Blue Grass Country makes it big in Nebraska DIEBOLD I N C O B A N K & R P O R A T E B U S IN E S S C A N T O N , O H iO D S Y S T E M S 4 4 7 1 1 "W e k n o w h o w to help you" In Canada: The Diebold Company of Canada, Limited Toronto, Ontario; M ontreal, Quebec NATIONALBANK»COMMERCE, Lincoln. Neb.: FIRST SECURITY5 TRUSTCO., Lexington. Ky.: "Usage increases number ■'Far us. it completely solved the Saturday ibanking problems.” . f lt a A , Xhk :; I ¡KpiCTìISfeUfi anticipated.:”1jl The Story Of One Of The Most Popular Personalities hi The Tbmpa Bay Area KAntwmtK B&nkmri Sys LAKESHINTY NATIONALBANK, Peisesvittl. Ok,: ■“Applications foràuôm atic tfiftkihg • » service èóntirtftcto: average 300 ’dwr available tor ttjoreOTffl ‘ : As ¿¡mbï•■ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FIRST NATIONAL BAU. Enid. Okla.: f f l f j p | i § ! i ”|iÿ ô ù " Î) t3 tÉ i6 by : :eliminating much custoiper ^treasure; : : f|ejonn* fldtWKroftàtIMSUÉC: ■■; NATIONAL BANK OF GEORGIA. AtMa. Ge.j “ We were the last in our market to : introduce automatic banking, therefore 1 !weiHad: to be th e 'b e s t". EXCHANGE IANC0RP0RATBN. Imps. F l*|f|S : "We’re averaging transactions per month at oneMStâtiatiaO^i SYSTEM FLEXIBILITY The keystone of TABS success is its interfacing ' flexibility - in terms of your customer, in terms of your operations. Further examples of this flexibility include the TABS fully programmable video display, off-host applications, MICR transaction records, on-line interfaces, asynch or bisynch protocols, and on-line/off-line reversion modes. In addition, the Diebold TABS interactive video display can greet your customers by name, and the system dispenses currency in any denomination. It also offers a choice of walk-up, drive-up or lobby models. NETWORK VERSATILITY The Diebold Terminal Control Unit provides network management for multi ple TABS installations with an attractive price performance ratio. It can operate off-host or interface with your IBM, Burroughs. NCR. or Honeywell main frame,. Diebold provides standard system software for both the controller and TABS itself, while m ultiple software and hardware options are available for program tailoring. In addition, the Diebold TCU’s multidrop and local line capabilities keep leased line requirements to a minimum, and the system includes network-wide non volatile memory. SUPPORT COMPETENCE § |§ | Diebold has implemented statewide, countywide and citywide networks, including operating system interfaces and off-line applications. But our experience and competence extend as well to the many other factors which will assist in achieving successful automatic banking | programs — ATM site selection, marketing strategies, employee training, and card design and encoding,'to name a few. We know what’s required and how to help you meet those •; requirements by supporting your system interface, your marketing programs, and your operational considerations. Most of ail, we do thYngs yourway. After all) we’ve been working--with financial-institutions' like •yours, for well over a century. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis i l î '© i * l f !H Î B Î is i W E S S : S H sirE Ü li î» ; :î i p i l îé îfïllijij In Canada: The Diebold Company of canada, Limited Toronto, M M é f Montreal, $ $ 1 $ . •. « BOATMEN'S BANK W e've M oved UPTO W N » DOWNTOWN Boatmen’s Bank and Trust Company of Kansas City has moved its main downtown bank into sleek, quarters in Kansas City’s unique new City Center Square. The bank’s two-story layout is open, airy and very contemporary. Interesting angles and an unusual, almost diagonal, interior are highlights of the Bank’s new offices. Earth tones of beige, soft gold, brown and muted orange mingle together with focal points being the beautiful, green tropical plants which have been carefully placed in eye-catching areas of the Bank. Three splashing brickworked fountains are located at the foot of the wood-and-glass modified Empire-style stairway to the second level. A panoramic view of the Bank on two levels is possible from the landing on the stairway. Open expanses of glass and visually-airy work areas supply pleasing surroundings for customers and employees alike. to City Center Square Boatmen’s Bank and Trust Company of Kansas City is the fifth largest bank in assets in Kansas City, M issouri. The Bank is the seventh largest in the metropolitan area. Since 1969, the Bank has quintupled its total assets for a compound growth rate of 23% and has tripled its profit. Innovative banking . . . and the ability to recognize a good business idea make Boatmen’s go. The time is right to “ Come Aboard” ! 11th and B altim ore A New Corner On Downtown Banking! B O A T M E N 'S B A N K AND TRUST CO . O F KANSAS C IT Y AT TH ESE TH REE CONVENIENT KANSAS C IT Y LOCATIONS Downtown Midtown Southtown 1101 Baltimore 31st and Main 101st and Wornall Member FDIC 56 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 Banks’ Operations Can Be Helped In Many Ways by the Telephone ITH IN A F E W W EEK S of each other, St. Louis’ Mercantile Trust and Nashville’s First American Na tional announced two different new services, but each has something in common with the other: Both involve use of the telephone. Mercantile unveiled its “Tallyphone,” which is a Bell System transaction tel ephone. Customers holding Mercantile Fingertip Banking cards (automated teller cards) can use the device to ob tain checking- or savings-account bal ances or Master Charge available credit on any accounts tied to their Finger tip Banking cards. When activated by one of these cards, the Tallyphone gives desired account balances through a computerized voice response. At present, three Tallyphones are operating in Mercantile’s main lobby, but additional units may be installed in other area Mercantile banks if the service proves popular with customers. In the meantime, customers of all St. Louis-area Mercantile banks and Mer cantile Bank, Springfield, Mo., may use their Fingertip Banking cards in these Tallyphones. During the introduction period, bank personnel were stationed at the equipment to demonstrate how to use it. “This is a pilot program and the first such bank installation in St. Louis,” says Charles A. Elfrank, senior vice president in charge of personal banking at Mercantile. “It is designed to give rapid service to customers seeking bal ances. Mercantile’s Fingertip Banking machines, of course, also will continue to provide balance information.” First American of Nashville intro duced its “Phone-a-Loan” service, which is designed especially for people who don’t have time to go to the bank during regular banking hours to apply for a loan. However, says President Kenneth L. Roberts, it’s available to everyone. Here s how Phone-a-Loan works: A person needing a loan, but with no time to go to the bank, merely calls First American from his or her home, office or even a phone booth—anywhere there’s a phone. A special staff has been trained to handle these calls. Loan-application information is taken over the phone, and an applicant is called back with an answer in a matter W https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis By ROSEMARY McKELVEY M anaging Editor of hours, according to the bank. If the loan is approved, all the borrower has to do is go to the nearest First Amer ican office, sign the loan form and pick up the money. Phone-a-Loan is in operation from 8 :3 0 a.m.-6 p.m. Monday through Fri day and from 8 :3 0 a.m.-noon on Satur day. Neither of these services is unique. Many other banks are offering them. However, these two particular banks were singled out in this article because they are the most recent ones to an nounce services tied in with the tele phone. They also are good examples of how this instrument can help banks’ operations and marketing efforts. In fact, in recent years, the Bell Sys tem has developed teams of account executives who specialize in communi cations for banks—programs that can help banks attract new business, re duce operating costs and make tele phone usage more efficient than former lyThese account executives are trained in all facets of banking so that they know the field thoroughly. In fact, ac cording to Clifford L. Titus, market manager-finance for Southwestern Bell in St. Louis, several of these represent atives formerly were bankers. Mercantile Bank of St. Louis' new "Tally phone" gives account balances via com puterized voice response when activated by Fingertip Banking card. Three Tally phones are operating in bank's main lobby. Objective of this equipment is to save time of bank personnel. Customers who merely w ant to know their current account balances are urged to use "Tally phone" instead of asking bank employ ees, who then must stop and look up re quested information. Emphasizing that the phone should not be considered an expense but an asset to and problem solver for banks, Mr. Titus describes some of Bell’s “Phone Power” programs: • They can help bankers collect overdue loan payments by showing banks’ installment loan staffs how to use the phone with maximum efficiency when calling delinquent borrowers. • They can analyze teller operations and see whether and/or where human tellers’ time can be reduced with in stallation of teller-terminal systems. • They can make time-, labor- and cost-saving suggestions on the handling of telephoned account inquiries. The Mercantile Tallyphone installation is one example. Another example would involve utilization of an audio-response unit, in connection with customers’ touch-tone phones. This unit would be connected to a bank’s computer, and a special line or lines to the unit would be added to the bank’s existing phone system. Then, the numbers for the special line or lines would be adver tised to the public. Persons with touchtone phones would call those numbers and reach the voice-response unit with out going through the bank’s main switchboard. After calling the special number, the depositor would punch in his account number and receive the re quested information without taking the time of the bank’s switchboard operator or bookkeeping personnel. Banks may protest that such a sys tem eliminates the personal touch, but Mr. Titus believes that most people to day are familiar enough with com puters to accept this arrangement. In addition, they’re interested in getting the information they want as quickly as possible without having to talk to perhaps two or three persons and be ing put on hold” while a bank em ployee searches records. Mr. Titus gives another illustration of installing a separate line to ease the load on a bank’s main switchboard: A bank instituted a direct-deposit program for a hospital’s payroll. This bank found that although the program reduced its lobby traffic on payday, many of the hospital’s employees were tying up the bank’s phone lines to inquire whether their money had been deposited and whether they could start writing checks on it. A Bell representative suggested 57 putting in a smaller phone system with a separate number from the bank’s main number. Then, the bank began an educational program to get directdeposit customers to use the special number when calling about their ac counts and not tie up the main lines into the bank. Installation of separate phone lines can be done on temporary or perma nent bases, Mr. Titus points out. For example, if a bank is running a limited program, say, offering a certain pre mium for only 30 days, separate lines can be installed just for that length of time. Also, he adds, calls on those spe cial lines can be monitored to give a bank an accurate count on the calls made on a particular promotion. Mr. Titus emphasizes that although the various programs offered by Bell’s financial division have standard ele ments, each bank is treated on a oneto-one basis, with the Bell representa tive making individual studies of each one so that he has an in-depth under standing of the business problem facing the bank. In that way, the representa tive can come up with a workable plan for that particular bank. The answer may lie in recommending additional or entirely new communications equip ment, or it may be as simple as show ing bank personnel how to use present equipment more efficiently than they had been doing. In other words, the Bell representative takes an advisory approach; he wants to become a busi ness/communication consultant to a banker. That is, understand the bank er’s business problems and issues and then develop a business solution that will address those problems and issues. E FT S . No discussion of banking to day would be complete without in cluding electronic funds transfer sys tems. Of course, the Bell System, a pioneer in communications, believes it can be a big help to banks in the E F T S field. In this connection, according to Mr. Titus, Bell has formed an E F T S marketing support group. Members of this group study the E F T S market from the viewpoints of the merchant and consumer on the user side and also from the bank’s side in the transmission of data from the point of sale back to the data base at the bank. They then endeavor to design, develop and recom mend a solution that will be workable and attractive to all parties involved. According to Mr. Titus, Southwest ern Bell, which covers five states— Arkansas, Kansas, Missouri, Oklahoma and Texas—is currently working in each of these states toward develop ment of an E F T system that can be offered to financial institutions. Work ing toward the goal, Southwestern Bell is studying the current and future mar ket needs of E F T systems which, when 58 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis completed, will form the foundation for the E F T S communication system that will be recommended as a solu tion. In the POS area, Bell recommends that any banker trying to develop a POS system closely evaluate the costdisplacement values to the merchants and consumers. Frankly, says Mr. Titus, a merchant doesn’t care whether a sys tem is helpful to, or good for, a bank; he is interested in what it can do for his store. “When you develop your overall pro gram, it would be wise to invest a lot of time in developing specific cost saving benefits and then sit down with the decision maker in the merchant lo cation and cover it in detail. It will prove successful in the long run,” Mr. Titus advises. Probably the best-known service pro vided by the Bell System is giving tips on telephone marketing; that is conducting telephone-marketing cam paigns designed to attract new business. The company not only will train bank personnel on the “dos” and don’ts” and effective use, but it will assist the banks in developing a complete marketing campaign around the use of the phone. An example was cited by Mr. Titus: “W e had one of our bankers express a desire to increase the cross-selling of additional bank services to some of his more valued customers. Since the bank er did not have central information files (C IF ), we set up a program to gather information manually and then statistically evaluate what additional bank services could be sold to those selected customers. This program in cluded not only the profitable services that should be offered, but most ef fective use of bank personnel, times of the day to implement the program, ad ditional follow-up programs and the usual telephone tips. The response to the program was good.” As for telephone marketing, Mr. Titus advises that, to start with, banks should choose employees who are personable, at ease, can act natural on the phone. Usually, he says, such people are found in the public relations or marketing de partment. In addition, he says, these employees should be knowledgeable about the customer and the bank ser vices, particularly those they are calling about, and have the ability to overcome —in a nice way—any objections that may be voiced by those being called. On the other hand, they should know when to end a call; that is, to know when a person being called simply is not interested in what the caller is “selling.” Making someone angry cer tainly is not an objective of these calls. Mr. Titus suggests that a bank, when preparing a telephone-marketing cam paign, alert its customers by sending them a pre-selling package of informa tion which indicates that the bank, within a certain length of time, will follow up by a personal call and that the bank would appreciate their taking a few minutes to talk to the bank’s em ployees. Another suggestion to increase market share from people moving into the area is to obtain a list of the new comers—perhaps from local real estate offices—and then mail these people ma terial on the bank’s services and tell them they will be called and asked to become the bank’s customers. According to Bell, the single fastestgrowing part of any business, including banking, is communications, the flow of information. Thus, many business/ banking problems really are communi cations problems in disguise, and Bell, as the world’s largest communications company, believes it can be enormously helpful to banks by applying its ex pertise in communications to banks’ problems. “The system is the solution” is a phrase that appears in many Bell System ads. According to Bell, it’s more than a slogan; it’s a basic expression of its business philosophy. • • ÂBA Communications Up-to-Par, According to Nation's Bankers Answering Independent Survey WASHINGTON, D. C.—An inde pendent survey by Arthur Young & Co. indicates that the American Bankers Association is communicating satisfac torily with its members. According to an ABA spokesman, the survey indicates that the member ship generally is satisfied with the asso ciation’s communications activities. Of the bankers interviewed, most of whom are CEOs, 94% read Capital, the ABA’s weekly newsletter. Of those, it was found that 96% found the publication to be useful. It was felt by 83% of the bankers that the ABA keeps them well informed on its activities in the government rela tions area; 79% said that the ABA’s leg islative positions usually reflect the opinions of their banks. Ninety percent of the surveyed bankers read the announcements of the ABA’s services; 64% said the volume of mail from the association is about right, and 63% said they had participated in ABA conferences, schools or seminars. Of that 63%, the survey showed, 85% said their objectives had been met. The survey was conducted in late 1976 for the ABA Task Force on Bank er Communications, which found that the ABA is “doing a good job of com municating with its members.” MID-CONTINENT BA N K ER fo r April, 1 9 7 7 A re A T 9 1 s fo r Y o u r B a n k ? These Two Independent Research Studies Can Provide Answers......Save Your Bank TIME and M ONEY Why re-invent the wheel? If you're im considering the feasibility of ATMs for your bank, you'll save hundreds of man-hours on research by utilizing these studies created by the First Na tional Bank of Galesburg, III. And you o ö R A ii IfiS T A W -« A T T ö B i may find that ATMs are not for you, thus saving your bank thousands of dollars of capital investment! The Galesburg bank, incidentally, has a successful track record with its A TM . It has, with its A TM , increased its market penetration of NEW AC COUNTS from 37% to 56% in a fourbank community! And 16% of new checking accounts and 20% of new savings accounts came from competing banks. *125 HERE'S WHAT IS PROVIDED IN THESE TWO M ANUALS Also: newspaper reports of CBCT regulatory rulings . . . a 35-page "interpretive ruling" by the Comptroller. All valuable information to help your bank reach a pro per decision on ATMs. E LE C T R O N IC T E L L E R PRO G RAM IN S T A L L A T IO N M A N U A L In 275 pages, this manual tracks the Galesburg bank's ATM operation through market analysis, cost justifica tion, installation procedures and results. One chapter shows actual samples of supplies used in the program, plastic cards, machine receipts. Another chapter discusses customer identification programs, with advertising used to announce ATM services. Manual recommends HOW to issue user cards.. . per sonnel and department to be assigned responsibility. . . also some do's and don'ts affecting any ATM program. MONEY BACK GUARANTEE — I f not completely satisfied, return within 10 days for full refund. I M ID -C O N T IN E N T BANKER 408 Olive St., St. Louis, Mo. 63102 I I This smaller report summarizes estimated vs. actual results of ATM operations. . . activity reports. . . income and expense items. . . also a seven-year projection of growth of checking and savings accounts originating from ATMs. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Please send_____ copies of: Electronic Teller Program Installation Manual and CBCT Report to Management | Check enclosed * $ ____________ 1 CBCT REPO RT TO M A N A G E M E N T I N a m e ______________________________ T it le ____________ l I ! | Bank _________________________________________________ I | I S tre e t__________________________________________________ | I l j City, State, Z ip __________________________________________ j | I * C heck m ust a c c o m p an y o rd e r. W e pay postage and ha n d lin g . M issouri banks: in clu d e 434% sales ta x . 59 To Manage Their Future: ’ Banks Must Commit Themselves To Business-Planning Process ANKING has undergone drastic change in the ’60s and ’70s, and if there is any element of certainty in the future course of banking, it’s that greater and more rapid change will oc cur. Interest on demand deposits, NOW accounts, increased consumerism and increased competition by S&Ls and credit unions in traditional bank prod ucts and services are just some of the major areas of uncertainty that need to be addressed and prepared for. If change, regardless of its scope, is the only element of the future that we’re willing to predict as being in evitable, then how do we, as managers, deal with this phenomenon of change? More and more, the survival of a com pany as well as its long-term profitabil ity is becoming directly linked to its ability to deal with and manage change. Change, in this context, is not all bad or all good. It is merely in evitable as well as essential. Companies that have met the chal lenge of change successfully have done so by linking all the primary functions of a business, such as research and de velopment, purchasing, production, packaging, pricing, distribution, mar keting, etc., to a comprehensive busi ness-planning process. There are two subtle, but critical, points that should be made here. First of all, the banking industry too often views itself as something other than a B By GERARD J. ROTH LEIN JR. And DAVID L. YORK First National Bank & Trust Co. Tulsa business, but quite simply a bank is a business. No, it doesn’t produce and sell widgets, but it does have a vital product, money, that all industries must have, even the widget maker, if we want our free market economy to function. As banks begin to think of them selves as having the basic components of a classical business enterprise, a more accurate portrayal of the true business dynamics of the industry come into view. This perspective will allow our industry to deal more effectively with the future. The second key word when discuss ing business planning is the recogni tion that planning is a management process as opposed to some empirical exercise. If banks are businesses, then, it follows, that bankers need to be managers who utilize the basic tools available to enhance their effectiveness. Business planning is such a tool. How do we as bankers (managers) begin establishing an effective busi ness-planning process? What follows will be an attempt to aid the reader in understanding more of the logic, struc ture and requirements in building a new or refining an existing planning process. It’s somewhat ironic that the com mercial-banking industry has been one of the last major industries to adopt business planning as an integral part of its overall management process. For years, bankers have served as finan cial/ managerial advisers to many of their customers. Bankers have handed out this advice without an established track record of their own in the critical management activity of business plan ning. As was said earlier in this ar ticle, the banking community is facing change at an ever-increasing rate. In the last decade, a growing number of bankers also have embraced the plan ning process as the basic management tool to aid in anticipating and manag ing the future as opposed to merely re acting to what the future might bring. For any business-planning system to succeed, regardless of the industry, the visible and responsive commitment of executive management is a prerequi site. For many small and medium-size banks, “executive management” trans lates into the chairman of the board, the CEO, the president or some com bination. On the surface, making a commitment to a business-planning process appears easy. Experience has shown, though, that responsibilities sur- GERARD J. ROTHLEIN JR. (r.) joined First of Tulsa's trust department in 1972, was elected trust investment officer in 1973 and vice president in 1974. He recently assumed responsibility for the bank's planning function. Mr. Rothlein won the 1976 Chairman's Award for outstanding leadership in asset management and funding. He holds a bachelor of science degree in marketing from St. Peter's College in New Jersey and a juris doctorate from the University of Tulsa College of Law. DAVID L. YORK (I.) went to First of Tulsa's planning department in 1973, was elected planning officer in 1974, corporate planning director in 1975 and recently became assistant vice president with responsibili ties in commercial banking. Mr. York has a bachelor of arts degree in economics from Knox College, Galesburg, III., and a master of busi ness administration degree from Washington University, St. Louis. 60 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 around money the finest is 1 5 A U T O M A T I C COIN W R A P P E R 2 6 T U B U L A R COIN W R A P P E R E s pecially designed fo r m ac h in e fillin g . . . a real tim e-saver. Packed fla t. In s ta n t pate n te d " P o p O p e n ” action w ith fin g e r tip pressure. D en o m in a tio n s id en tifie d by color coding . . . 6 d iffe re n t stan d a rd colors. 3 R A I N B O W COIN W R A P P E R 7 9 F E D E R A L BILL S T R A P P ackage c ontents clearly id en tifie d on faces and edges by color coded panels w ith in verted and reverse figures. M a d e o f extra strong stock to assure unbroken deliveries. O nly pu re d e x trin e g u m m in g used. 8 D U Z I T A L L COIN W R A P P E R Extra w id e . . . extra strong. D esigned fo r a reas w h ere halves a re w ra p p e d in $ 20.00 packs . . . ‘‘ red bordered w in d o w ” fo r e a s e o f id e n tific a tio n . A ccom m odates $20 .00 in dollars, $20.00 in halves. T a p e re d edges. K W A R T E T CO IN W R A P P E R W raps 4 d e n o m in a tio n s in h a lf size packages. A m in iatu re o f th e p o pular "A u to m a tic W ra p p e r” . . . 25c in pennies, $1.00 in nickels, $2.50 in dim es, $5.00 in q u arters. C olo r coded fo r quick, easy id en tific a tio n . Red fo r pennies . . . b lu e fo r nickels . . . green fo r dim e s . . . to in d ic a te q u a n tity a n d d e n o m in a tio n s . . . e lim in a te s m istakes. T ap ered edges. 4 OLD S T Y L E COIN W R A P P E R B asic coin w ra p p e r in extra stro ng k ra ft stock. P rinted in 6 t d iffe re n t stan d a rd colors to d i f f e r e n t i a t e d e n o m in a tio n s. T r ip le d e s ig n a t io n th r o u g h colors, p r in t in g and letters. Tapered edges. A m o u n ts and d e n o m in a tio n s a u to m a tic a lly in d ic a t e d by p a te n te d " r e d bo rd ered w in d o w s ” . A m o u n ts in window s alw ays in r e g is te r . . . e lim in a te s m is tak e s . A ccom m odates a il coins fro m l c to $1.00. C O L O R E D BILL S T R A P E ntire strap is color coded to id e n tify d e n o m in a tio n . P rinted a m o u n t appears on to p and bottom of package. Extra w ide fo r m ark in g and s tam ping. Extra strong stock for safe d e live ry a nd storage. Pure dextrine g u m m in g . BANDING S T R A P S Id eal fo r packing currency, d epo sit tickets, checks, e t c .. . . do not b reak or d e te rio ra te w ith age. Size 10 x % inches a nd m ad e o f strong brown K ra ft stock w ith gu m m ed end fo r eas e o f sealing. Packed 1000 to a carton . SEE YOUR D E A L E R OR T H E C. L . D O W N E Y C O M P A N Y • MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis S E N D F O R F R E E HANNIBAL, S A M P L E S M ISSOURI • D E P T * MC 61 Because we know how many customers you'll have in three years... we know how many drive-up tellers you need now. V We plan for tomorrow today. By identifying market characteristics and customer trends through sophisticated research techniques, we know how many customers you’ll have three years from now. And we can forecast future demands for services and plan for operations expansion to meet those demands. When you work with us, planning for the future comes first. The last thing we do is design and build a building. There’s not another firm in your city, or in the country that can offer our up-front consultant services. . . and back them up with a building guarantee like ours. Simply stated: w e'll b u ild It r ig h t ... on tim e ... and w ith in budget. Bank B uilding Corporation 1130 Hampton Ave. St. Louis, MO. 63139 Please send inform ation about how you can help build my business. We can make that statement because we’ve been in this business for 63 years, and have planned, designed, and built or remodeled more than 6,000 buildings. We’ll be glad to discuss our past and your future. We have a man in your area. M C-477 Name_____________________________________________ T itle ______________________________________________ F irm ----------------------------------------------- :-----------------------------Address________ ,__________________________________ C ity _______________________ State___ _ _ Zip ______ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bank Building Corporation We’ll build you a business. OFFICES: St. Louis, Washington, D.C.; Hartford, Conn,; Chicago, Atlanta, Dallas, Denver, San Francisco rounding the CEO ’s commitment are, oftentimes, the most difficult and frus trating he or she has to assume. What alternatives are open to the CEO at this point? Actually, there are only two meaningful courses of action. The CEO and his board can simply allow the forces of change within and outside of the industry to shape the future direc tion and performance of the bank. The second decision that executive manage ment can make is to adopt, develop and implement a formalized business planning process. L et’s assume a bank’s executive man agement elects to make the formal commitment necessary to establish a planning process. What are the steps required to take in establishing this management process? W e have out lined below a general approach to de veloping the infrastructure necessary to sustain an effective planning process. Before proceeding with the general design of a planning process, it must be understood that each organization’s approach to this management activity will be different. The process has to be tailored to the unique management style, the markets served, the external operating environment, etc., of the bank. Secondly, there are no “cook book” approaches to sound business planning, but there are several basic concepts and tools of planning that have general applicability to all who plan. By formulating responses to the questions posed below, a bank can be well on its way toward implementing an effective business-planning process. I. W hat is our business?/W hat is our mission? Although the answer to this question may seem obvious, the changes that have impacted the banking industry in recent years have resulted in an identi ty crisis for many banks. Are we finan cial supermarkets? Do we cater just to the wholesale customer, the retail cus tomer or some combination? Where are our markets— global, national, regional, local, etc.? It is executive manage ment’s first responsibility in the plan ning process to answer and document these types of questions. II. W h ere are w e now? In answering this question, manage ment is seeking a reference point so that the bank can consider logically and realistically where it wants to be sometime in the future. Listed below is an outline of a well-defined reference point: a. A comparative financial assess ment of the bank’s performance vs. competition (other banks, S&Ls, credit unions, etc.) b. National, regional and local eco nomic factors. " . . . Typically, in itial plan ning efforts consider only a 12month horizon. This type of planning is term ed o p e r a tio n a l p la n n in g . As your process m a tures, the p l a n n i n g horizon should be pushed out to the three- to five-year range de pending on your comfort fac to r." c. Federal and state legislative or regulatory developments. d. Market share trends vs. the com petition. e. Strengths and weaknesses of the bank. III. W here are w e going? The answer to this question implies that a reference point has been de veloped. Management now can analyze where the natural momentum of the bank will carry the organization assum ing no action is taken to react to the external and internal developments that are constantly impacting the bank. At this point, the bank’s management is able to see a gap developing between what has happened to the bank and what is happening to it now, assuming no changes are made. What action does management take if it does not desire to be carried forward into the future by the bank’s own inertia? We must answer the next question. IV. W here d o w e w ant to go as an or ganization? This is the objective and/or goaldevelopment stage designed to close the gap between what has transpired and what you want to happen. Pref erably, these goals or objectives are quantifiable so that management can monitor their achievement or lack thereof. V. H ow do w e get there? Objectives cannot stand alone as they must be supported by strategies that will lead to accomplishment of the previously developed objectives. Strate gy development is at the heart of an effective plan since it provides the framework by which management allo cates the resources of the firm (money, manpower, machines and methods). VI. W ho will b e responsible for ac com plishing th e d esired results? W hat specific resources w ill b e re qu ired and over w hat tim e fram e? W hat are th e costs? All three of these questions are the tactical short-range decisions that the bank’s management must address to MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ensure successful execution of previous ly developed strategies. As previously stated, development and implementation of a planning process are unique to each organiza tion. Our own experience at First of Tulsa is highlighted below to provide the reader with a “real-world” exam ple. One problem you will confront at the outset is the length of the planning horizon. Typically, initial planning ef forts consider only a 12-month horizon. This type of planning is termed op era tional planning. As your process ma tures, the planning horizon should be pushed out to the three- to five-year range depending on your comfort fac tor. In the planning jargon, we refer to this more sophisticated process as strategic planning. As you read the next section, you will see how we ad dressed the horizon problem. At First Tulsa Bancorp., we began our planning process in 1972 with the appointment of a planning committee made up of a representative group of the organization’s managers, who held a series of meetings to deal with the fu ture of the organization. Participants and members of this committee pre pared lists of suggestions and ideas re garding their areas of responsibility as well as the organization’s future needs and directions. Little definitive action took place as a result of these meetings. However, the initial framework, docu mentation and thought process were created for future planning efforts. This framework made people in the organi zation begin to recognize, discuss and assess their individual and collective problems. We began to respect the fu ture and what it might hold for our bank. By January, 1973, an organizational unit was established, termed planning and research reporting to executive management. Staffed with three peo ple, this group began laying the foun dation for a more formalized and docu mented approach to the planning needs of this organization. The initial focus of this area’s work centered on the op erational planning issues that faced managers in the coming year. Each area documented their primary func tions and activities. They began to de scribe “what they thought they did.” The planning cycle of 1974 stressed what planning is, who does it, how it works and how participants benefited. We continued to build on the frame work and experience gained in the pre vious cycle. In the 1975 planning cycle, we built in a subtle, but critical, point of de parture from the 1974 effort. We at tempted to speak to our corporate mis sion for the first time and established 63 several key corporate objectives. The focus still centered around the opera tional-planning level. The organization was still acquiring the mechanics and experience necessary to sophisticate the process further. In 1976, we embarked on our first true strategic planning process. At the outset, we prepared a comprehensive report that aided in establishing a ref erence point for the bank relative to our financial performance, our compe tition, our market-share statistics, reg ulatory/legislative issues and econom ic trends. The process was designed to continue the reenforcement of our cor porate missions and objectives. Through meetings with key managers and executive management, we de veloped a list of “strategic issues.” We defined a strategic issue to mean an is sue that confronted our organization with such magnitude that it required specific resource allocations as well as executive, divisional and operational management’s understanding, commit ment and follow through. Additionally, a strategic issue normally had a plan ning horizon of greater than one year. Sixteen strategic issues eventually were approved by executive management and addressed by the organization. These 16 strategic issues became the focal point of our efforts in 1976, and positive results were attained. In 1977, we’re attempting a further refinement and complexity whereby we are now asking key managers to pre pare strategic plans and set objectives, goals and action plans for their areas of responsibility for an 18-month hori zon. This planning effort will address where are we now, where do we want to be 18 months from now, how do we get there and what specific resources will be required and at what cost. This year’s process will focus at the division al level where development of its plans will link back directly to achievement of the corporate goals and objectives set by executive management. • # First Nat l Ft- Worth, Sponsors Civic Film As Part of Centennial FO R T W ORTH—F ir s t National is observing its centennial this spring. However, instead of receiving birthday gifts, the bank is giving one to its city— a motion-picture portrait of Fort Worth narrated by actor James Stewart. The 15-minute color film, “Fort Worth: The Unexpected City,” will be seen first by the public at the Mayfest on the banks of the Trinity River. Then, prints will be available for use by clubs, civic institutions, the Fort Worth Chamber of Commerce and individual firms, the city (to which the film will be officially presented), the Tarrant County Convention and Visitors Rureau and other groups. The bank’s sponsorship will be re flected only in a single credit line at the film’s end. It’s being produced by Witherspoon & Associates and directed by Jane Schlansker & Co., both of Fort Worth. Although Mr. Stewart is not seen on camera, his distinctive voice provides the central viewpoint linking the com ments of five Fort Worth residents of varied backgrounds, expressing their strongly held feelings about the city and why they chose to live and work there. Mr. Stewart himself has close business and personal ties to Fort Worth. Other facets of the centennial ob servance include a spring encore of last fall’s popular “A Little Noon Music” series on the plaza in front of the bank building, making available a portfolio of historical photos of the city, a pho tography competition, a display of paint ings of historical buildings and me mentos of the centennial. First National opened April 23, 1877, under the direction of Captain Martin R. Loyd, who had served with the Con federate Cavalry in Texas during the Civil War. According to First National, When You're in St. Louis, W hy Not Go One Step Further And Take Advantage of the Finest Hotel Accommodations the City Has to Offer . . . Cfjestfjur Hobge Located between, and only minutes from, Downtown St. Louis and the Clayton Business District (filjrallire Jm t $c ICnitgr 6300 C L A Y T O N ROAD S A IN T L O U IS , M O . 63117 (314) 647-7300 64 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r April, 1 9 7 7 it received the first national bank charter to be used in Fort Worth and the ninth in the state. At the close of the first day’s business, deposits totaled $72,000. At year-end 1976, the bank’s deposits had reached $751.9 million. D o you ever get th e feelin g NewiSbrkfc closing in o n you? • Two Mid-Continent-area bankers are among U. S. delegates to the ABA’s 30th International Banking Summer School, which will be held June 5-18 in Ronneby Brunn, Sweden. They are both from Chicago—William B. Nurre, vice president, Harris Trust; and Carl Brott Ritzel, international banking of ficer, Continental Illinois National. New York is ten people ahead of you for a cab, a hundred places that sell frozen yogurt and a thousand things to do before you go home. New York is everything you could want. Everything except easy. That’s why there’s a Barclay. The Barclay is a small hotel on the east side. (The lobby is fifty feet across. The Big Conference Room holds twenty people.) The Barclay is quiet, calm. It’s elegant without being stuffy, expensive without being ridiculous. Next time you want New York to leave you alone for a while, remember The Barclay. Assembly for Bank Directors Scheduled for M a y 12-15 To Examine Dos & Don'ts' PALM BEACH, FLA .—The Founda tion of the Southwestern Graduate School of Banking, Southern Methodist University, Dallas, and the Florida Bankers Association will cosponsor the 28th Assembly for Bank Directors May 12-15 at the Breakers, here. Leading the program’s discussion topics will be “Dos and Don’ts for Bank Directors,” “What W e Learned From 1974-76” and “What a Director Should Expect From Management,” while panels will examine topics such as marketing and director/management relations, trust business and the HC— developments and administration, and the outlook for bank legislation and regulation. A special spouses’ program also has been planned. According to Assembly co-directors Charles Rice, president and CEO, Barnett Banks of Florida, Inc., Jackson ville, and Philip F. Searle, chairman and CEO, Flagship Banks, Inc., Miami Beach, an innovation for the 28th As sembly will be special-interest sessions on tax reform, communications and ad justments in the middle years. Among the speakers slated for the event are Fed Governor Philip E. Coldwell, Washington, D. C.; George A. LeMaistre, F D IC director, Washington, D. C.; Eugene L. Swearingen, chair man and CEO, Bank of Oklahoma, Tulsa, and Gerald M. Lowrie, ABA executive director of government rela tions. Registration for the 28th Assembly is underway. Registration fee is $300 for directors and $100 for spouses. For more information, write Dr. Richard B. Johnson, President, Foundation of the Southwestern Graduate School of Banking, SMU Box 214, Dallas, TX 75275. « « > **) w i » * if W « « *» * Y , MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis m li W • i \ -O !f h ; it it IS i ■M W hen enough New York’s enough. 48th just off Park. (800) 221-2690. In New York State, (800) 522-6449. In the city, 755-5900. Or call your corporate travel office or travel agent. 65 A NYONE involved in the design and construction of a new bank in the E F T age knows the importance of working closely with an equipment supplier. A case in point is Bank of Oklaho ma, Tulsa, major tenant in the recently opened 52-story Bank of Oklahoma Tower, said to be the tallest building in the state. The tower is a demonstra tion that persistence and a determina tion to provide quality banking services to a maximum number of people can make a reality out of an idea whose time has come. The tower is built around a flexible system that positions the bank for the age of E F T that lies ahead. Flexibility was the key for Mosler, the firm that supplied much of the equipment in Bank of Oklahoma Tower. Flexibility was necessary in or der to help the bank design and con struct the facility. While the tower was under construc tion, Bank of Oklahoma opened a cus tomer bank communications terminal (C B C T) at Resource Sciences Corp., a Tulsa-based energy and engineering firm employing 750 people located 10 miles from the bank’s headquarters. Another C BC T was opened in the lob by of the bank headquarters during construction of the tower (the former headquarters is now a facility). At that time, Oklahoma was one of a few states retaining pure unit bank ing. Banking laws prohibited any branch facility except a drive-in locat ed within 1,000 feet of the headquar ters. Clearly, the CBCT at Resource Sciences raised some legal questions. Leonard J. Eaton, bank president, explained the action this way: “This bank wants a leadership role in doing what state and national banks have been reluctant to do before—remaining competitive with other financial institu tions so that we serve our present cus tomers better and attract new ones.” Mr. Eaton pointed to three factors influencing the bank’s decision. • Oklahoma unit banking laws orig inally were put on the books to protect farmers. The idea was to make sure that financing was available in rural areas and that city banks, through branches, didn’t drain funds from agri cultural areas to benefit manufacturers. • An S&L already had opened a re 66 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis mote electronic terminal similar to the service Bank of Oklahoma had placed at Resource Science. • The Hinky Dinky situation in Lincoln, Neb., establishing a POS ser vice in a supermarket, had been de clared legal. Bank of Oklahoma’s CBCTs con formed to state law by not offering de posit service. The point was made that anyone could make a deposit at a mail box, but couldn’t at an ATM. In December, 1975, a judge ruled that the Resource Sciences installation was not a branch and could legally take deposits in addition to permitting customers to obtain cash, pay bills and do all the things other ATM installa tions permitted. This cleared the way for Mosler to continue working with the bank to prepare for the E F T revo lution. Less than a month before the tower opened, the U. S. Supreme Court re fused to review three lower court deci sions that ruled that CBCTs were branches subject to state branching laws. This left lower court decisions in force, which meant, in Oklahoma, at least, that CBCTs were not restricted by state banking statutes, since they 52-story Bank o f O klaho m a Tower is centerpiece o f W illiam s Center, m ajor urban ren ew al program in Tulsa. had been ruled as not being branches. Last January, Bank of Oklahoma in stalled two ATMs in the huge lobby of its tower. These are in addition to three through-the-wall installations. Another ATM is in operation in the nearby facility. This new generation of transaction terminals provides special features for a multi-terminal network. Each termi nal has limited, self-contained intelli gence. Operating programs are down line loaded from the controller, giving each terminal in the network control over its own subsystems. One controller can operate up to six terminals. There are no distance restric tions between remote terminals and the controller. The controller uses a DEC PDP-11 mini-computer with an 8-K memory. An additional 64K of memory is generated through a virtual storage operating system developed by Mosler systems designers, making a total of 72K of memory available to each sixterminal network. The system has the capacity to main tain a 5,000 account discretionary file. Eleven more ATMs are on order, along with two controllers to supplement the present two. This will give the bank widespread reach to accommodate more customers. The bank reports that it has 40,000 Master Charge cardholders and antici pates installation of new ATMs to meet demand. There are more than 800 per sons employing TransFund debit cards at Resource Sciences and an average of 7,500 transactions take place month lyOther Mosler equipment in the bank includes a pneumatic tube system, two 10-inch electric vault doors and a pro prietary alarm system that surveys the bank’s headquarters. Computerized cameras guard stra tegic areas throughout the bank. Ir regularities are recorded on video tape or film. Coded identification cards per mit employees to have entry to restrict ed areas and regulate access to all areas after office hours. According to John Davis, marketing director for the bank, “the willingness of Mosler specialists in various fields to work with us to prepare for all eventualities has been instrumental in gaining a position of leadership for the bank in E F T .” * * MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Our liability coverage for banks and bank officers and directors protects you all the way to court In these litiga tiou s times, every bank o fficer and d irector lives under the threat of being hit by a lawsuit. If that should happen, you’ll be glad you have lia b ility coverage from FIS. Our policy offers you many extra benefits, in cluding protection fo r the innocent regard less of the actions of others, coverage of past actions and of subsidiaries, the right to extend coverage fo r another 12 months after non-renewal, and the prom pt settle ment of claims. In fact, if the expenses of defense ap pear heavy, payment in advance can be arranged. And even if you don’t skid into a law suit, you’ll like our lia b ility coverage. Our experts know how to judge the com plex factors influencing risk so carefully that the premium need be no higher than it has to be. W rite or phone us today fo r an outline and cost proposal on lia b ility insurance fo r d irectors and officers. It may keep you o ff the road to ruin. I 2 2 0 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis EAST DEVO N AVENUE • D E S P L A IN E S . IL L IN O IS B 001S • 3 1 2 /2 9 7 -4 6 6 0 A T M Report Card: Electronic Tellers Take Pressure O ff Staff, Enable Banks to Offer 24-Hour Service E ACH DAY sees the installation of more automatic teller machines (ATM s) in banks across the nation. These machines are being used to ex tend banking service hours, to provide banking service in off-premise loca tions, to reduce pressure on bank staffs and—perhaps most important—to en able banks to sign up new customers. ATMs have been in service long enough for their owners to establish track records of their performance. M id - C o n t i n e n t B a n k e r has asked a number of banks to report on their ATMs—how many they have, where they are located, how effective they are in promoting the bank’s services, etc. Capsule reports from selected banks follow: • Central Trust, Cincinnati, has 16 Mosler ATMs in service, with more on order. Twelve of the units are mounted on walls of branches and the Main Of fice, one is in a drive-in, two are in su permarkets and one is in an industrial plant. Volume per month on these ma chines averages 70,000 and 70% of the transactions occur on weekends. All on premise machines are operational 24 hours per day, seven days p er. week; those off-premise are open whenever the site is open. Use of the ATMs has enabled the bank to avoid extending its lobby hours and a staff is on call 128 hours per week to respond to prob lems and insure uptime. • First National, Atlanta, has 21 Docutel units in operation with two more on order. The units are known as “Tillie the Alltime Teller.” One ATM is in the bank’s Main Office, 16 are in branches and four are off-premise (two on college campuses and two in gro cery stores). One of the units on order will be installed in an office building this year. Transactions per month aver age 175,000, which breaks down to an average of between 2,200 and 2,300 transactions per week per machine— said to be the highest transaction vol ume in the United States. Weekends see the highest volume and busiest hours are from noon to 2 p.m. and from 4 to 7 p.m. Approximately 35% of the transactions take place during regular banking hours. All units are Customers m ake use o f "T illie " t h r o u g h - t h e w a ll ATM a t First N a t'l, A tla n ta . Bank's more than 2,2 0 0 transactions per w e e k fo r its 21 ATMs is said to be highest transaction vol ume in U. S. 68 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis open 24 hours a day, except for a daily balancing which takes place between 2 and 2 :3 0 p.m. The ATMs have proved their use fulness by enabling transactions to be transferred from live tellers to ma chines; by offering 24-hour and loca tion convenience; by eliminating the cost of brick-and-mortar expansions; by reducing personnel expenses and staff increases; by offering the consumer the ability to check his account balances, which takes some of the load off tellers and platform personnel; and by offer ing consumer loan/charge card pay ment ability, which also helps eliminate teller transaction time. • Kellogg-Citizens National, Green Bay, Wis., operates 10 Mosler ATMs and has six more on order. One unit is in the lobby of the Main Office, three are available round the clock in bank ing offices and six are in retail stores ( two are through-the-wall installa tions). Sixty-five percent of the transac tions are recorded on weekends and af ter banking hours. Five of the units are operational around the clock and the other five are open daily during hours established by retail stores in which they are located. Concrete results from the ATMs include increased accounts and the ability to provide retail bank ing services in areas where branching would be prohibited. There has been some difficulty getting customers to use the units for the first time, which is being overcome by educational adver tising and by giving demonstrations of how the units work to each customer signing up for a debit card. • Commerce Bank, Topeka, Kan., has five Diebold ATMs in service. One unit is located at the Main Office and another is at a detached branch. Becent installations were made at a gro cery store, a shopping center and a hospital. The two on-premise machines average 10,000 transactions per month; the three other units have not been in service long enough to establish a track record. Evenings and weekends see the most transactions and the units are op erational around the clock. All the units MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Wfe provide the Best check collection services in the midwest. Here’s how we do it. We expedite items hav ing a high dollar value. No special sorting requirements are necessary. □ We make tÊ Ê Ê ^ direct presentment at 4 0 commercial banks and Federal Reserve Bank offices daily. □ We utilize flexible check sort ing routines which can be changed within a 48 hour period. □ We have the ability to analyze your deposits and can recommend the optimum clearing arrangement for you. What can we do for you? Just call or write for our com plete availability schedule. Your Commerce correspon dent will come through for you. €? Commerce Bank o f K a n s a s C ity " 9th & Main 10th & Walnut 12 th & Charlotte (8 1 6 ) 2 3 4 -2 0 0 0 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 69 Commerce Bank, Topeka, Kan., recently in stalled this ATM in a local hospital lobby. It's one of five units w o rkin g for the bank. are on-line directly into the bank’s on premise data processing center. The system is flexible and can accommodate other banks on a shared basis. The sys tem is supported by a C IF, an inhouse card issuing facility and an on line internal teller machine system that can be utilized in a POS environment outside the bank. The units are en abling the bank to maintain steady cus tomer growth. Debit cards are issued to customers on a request basis and all customers are asked to use their cards before leaving the bank to make sure B A N K IN G CAREERS Corporate Personnel Banking Division offers a personalized and professional service to the person seeking to ad vance their career in the banking field. For over 5 years we have served the banking community from coast-to-coast Through constant contact with leading banks, we keep abreast of the current employment situation. To you, the per son seeking to further your career in banking, this means a confidential job search on a continuing basis. To the bank, it means a reliable source to turn to when seeking to fill a key position. We currently have a number of excellent career opportunities available in com mercial, and trust banking. Salaries range from $14,000 to $50,000, and client banks assume all fee costs. If you feel that now is the time to further youi career then call or send your personal resume to: Joe Kremer CORPORATE PERSONNEL 1948-B S. Glenstone Springfield, Missouri 65804 417-883-1212 affiliate offices in principal cities 70 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the cards are properly encoded and to make sure customers know how to use the ATMs. • First National, Dallas, has two Docutel ATMs, both wall-mounted at the Main Office. Average number of transactions per month is 2,500 and the majority of transactions are made on weekends or late on Fridays and early on Saturdays. The units are operational around the clock, which is one of the principal reasons the bank installed them. • First National, Jackson, Miss., op erates five Docutel machines. Four units are wall-mounted in branches and the fifth is free-standing in a grocery store. Busiest times are weekends and evenings and the units are operated on a 24-hour basis. An after-hours service team is on call to reduce downtime. • Boulevard State, W ichita, Kan., has one Mosler ATM, located in a branch. The unit chalks up about 2,500 transactions per month and business is heaviest on weekends between 1 and 8 p.m. Primary advantage of the ser vice is to enable customers to conduct most banking transactions on a 24-hour basis. • First National, Louisville, has 18 Mosler ATMs in operation with two more on order. All the units are on premise at the Main Office, branches and drive-ins. Weekends record the most transactions and all units but one are operational 24 hours a day. The ATMs have proved their usefulness in cross selling, taking checks out of the system and relieving pressure on tell ers. Drawbacks of the units include downtime, capturing cards, customer education and servicing expense. These were overcome by loosening the card capture criterion, revising service con tracts, training a service staff and con ducting systemwide demonstrations of how to use the machines. • First National, Oklahoma City, has one IBM unit in operation, located in the Main Office. The unit serviced 2,500 customers during its first month, is operated on a 24-hour basis and sees the most use on Thursdays and Fridays between 10 a.m. and 1 p.m. and 2 :3 0 to 4 :3 0 p.m. Worthen Bank, Little Rock, has eight ATMs in seven locations. Five of the machines were made by Docutel and three are from Diebold. Six of the units are through-the-wall and two are free standing. The machines are located in the Main Office and at branches, one of which is at the Little Rock Municipal Airport. Saturday is the busiest day for ATM transactions, especially from 10 a.m.-2 p.m. and 5-8 p.m. Usage is also heavy prior to the opening of branches on weekdays. Six of the units operate around the clock, the airport installation operates during airport hours (6 a.m.-11 p.m.) and one unit in the Main Office is available only during the day when the lobby is open. Worthen attributes some growth in new accounts to the ATMs and the machines enable the bank to save on personnel costs. Bill dispensing characteristics of the units have caused some problems. For instance, one type of machine issues cash only in packets; but there are ad vantages to this characteristic, in that the bank can include incentives, such as coupons, in the packets. • Mercantile Trust, St. Louis, has 16 Diebold units in operation, in its “Fingertrip Banking” service. All of the units are located on-premise in St. Louis and Springfield, Mo. The units currently serve about 17,500 customers monthly (placing the bank among the top 5% in ATM usage in the nation) and all but one are operational on a 24hour basis. Fridays and Saturdays are the busiest days and the busiest hours are from 8 a.m. to 5 p.m. Benefits in clude a marked decrease in teller lines and an improved image as a “modem and progressive” bank. One problem encountered was the fact that many customers had either lost or forgotten their personal identification numbers and could not use the system. To cor rect this situation, the bank remailed the numbers to every inactive card holder, which resulted in a significant increase in the number of first-time transactions. * * FDIC Sees Substantial Loss From Hamilton Nat'l Closing CHATTANOOGA—A substantial loss from book value is expected by the FD IC in its liquidation of Hamilton Na tional, which was closed in February, 1976. The F D IC ’s 39-member liquidation staff had collected same $33 million at year-end 1976 through liquidation of loans, securities, real estate and other assets. The major portion of loss is expected to be in the real estate and home loan category, areas that caused the bank’s failure. First Tennessee, Chattanooga, assumed control of the failed bank shortly after it was closed. As of December 31, 1976, the book value of remaining assets assumed by the FD IC , including charged-off loans, was $121.4 million. After deductions of all collections, the F D IC was owed about $71.2 million as reimbursement for cash advances, including the origginfll purchase of assets, subsequent purchase of assets, cost of liquidation to date and settlement of liabilities as sumed. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Simplify your handling of Self-Employed Retirement Plans with the Harris Keogh/ IRA Service. W hile many bankers are discovering that Keogh and IRA deposits build rapidly, they are also discovering that com plying with pension legislation (ERISA) and rule changes prom ulgated by the Departm ent of Labor and the 1RS create extra adm inistrative burdens. T H E KIS PROGRAM Our KIS (K eogh/IR A Service) package is designed to sim plify your adm inistrative duties by providing you with all the Keogh docum ents and forms needed to start a program or to alter your present plan to conform with current legislative requirem ents. TH E KIS PACKAGE Included in the program are the follow ing docum ents contained in the KIS “ paper package” : • • • • Sample Keogh Plan Docum ent Suggested Keogh Sum m ary Plan Description A doption A greem ent and Forms Sample G overnm ent Reporting and Disclosure Forms • A dm inistrative Suggestions • Keogh and IRA Regulations • Com m uniqués to Keep You Up to Date on Changes A ffe cting K eogh/IR A Programs • Telephone Consultations with Harris Keogh/IR A Specialists Even if you presently have a Keogh Plan which com plies with ERISA, an abbreviated KIS package can provide you with features which w ill prove invaluable in your day-to-day operations. ANY Q U EST IO N S? If you have questions about any facet of the KIS program, call David A. Sturdy, 312/461-2576. KIS could be exactly what yo u ’ve been looking for. HARRIS |( u £ b a n k . H a rris T ru s t and S av in g s Bank, 111 W. M o n ro e St., C hicago, III. 60690. M e m b e r F.D.I.C . Federal R eserve S ystem . MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 71 EFT Networks Broaden Operations: More Banks, Services Involved Technological advances include satellite transmission D E S P IT E the lack of a unified stance on th e part of financial executives regarding the m erits of E F T —not to mention a tim etable to im plem ent it—the existing electronic networks in the M id-Continent area are prosper ing. A year ago, a survey of E F T package plans either being launched or still in the conceptual stage was published in M id - C o n t i n e n t B a n k e r to give an indication of the variety of packages big city banks w ere putting together to b e sold to downstream correspondents as participants. O n this and the follow ing pages, an updating of some of these programs appears. ChecOKard Network Expands in Okla.; Satellite Transmission Demonstrated L AST APRIL, an on-line computerterminal-based check guarantee and verification system called “ChecOKard” was being franchised in Oklahoma by Liberty National, Oklahoma City. The shared system initially included 11 banks in the Oklahoma City area and was operated by National Sharedata Corp. Last month, a ChecOKard customer using her card in a Tulsa store partici- ABC-TV affiliate news reporter interview s W illis J. W h ea t (r.), dir. o f m arketing , Liberty N a t'l, O klahom a City, a t site o f first tran sfer o f money via satellite using debit card. Trans mission o f customer's ChecOKard purchase w e n t from C. R. A nthony Co. store in Tulsa to computer center o f N a t'l Sharedata Corp. in O klahom a City last m onth via W estar com munication satellite. 72 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis pated in a historic event in E F T history: her transaction was transmitted to National Sharedata’s computer center in Oklahoma City via Westar satellite in what is said to be the first time in history that a bank debit card was used to transfer funds electronically by means of a communications satellite. The demonstration, according to bank spokesman, afforded the U. S. and the world with an early look into the future of space-age communication as applied to bank payments systems. Although normal land-line computers link Tulsa and Oklahoma City, the demonstration showed that the com munications network supporting Chec OKard has the capability to interface with any E F T facility in the country, the spokesman said. Other milestones in the updating of ChecOKard include the opening of Oklahoma’s first banking center in the concourse of Liberty Tower in Okla homa City last May. Customers could bank with their ChecOKards around the clock for the first time by using an on-line ATM. In addition to the previ ous check authorization service, Chec OKard enabled customers to make de posits and withdrawals and check ac count balances. Then, last November, the system was expanded by establishing banking cen ters in C. R. Anthony’s retail stores. POS terminals were installed in 13 stores that enabled customers to trans act ordinary business plus pay for merchandise purchased. The network was expanded through out Oklahoma to Chickasha and Tulsa and the number of participating banks grew from the original 11 to the present 14 banks. Terminals in stores have been increased to 17. Banks participating in the system in clude Oklahoma National, Chickasha; A m e ric a n National, Midwest City; Choctaw State; Citizens National, Okla homa City; Del State, Del City; First National, Moore; Liberty National and Medical Center State, Oklahoma City; Park State, Nicoma Park; Security Bank, Midwest City; Shepherd Mall State, Southeast Plaza Bank and Quail Creek Bank, Oklahoma City; and Guaranty National, Tulsa. In addition, Liberty National and Citizens National, Oklahoma City; and Guaranty National, Tulsa, maintain on premise ATMs. * * Two Additional Banks Join Ark. EFT Network In the past year, two additional banks have joined the original 12 par ticipating in a statewide ATM network — Arkansas Bank Interchange Group— developed by Commercial National, Little Rock, and several of its corre spondents. Customers of each bank can make deposit or withdrawal transactions to their accounts on the machines operated by their own bank. Additionally, they can withdraw as much as $100 from their checking accounts through the use of the ATMs of all participating banks MID-CONTINENT BA N K ER fo r April, 1 9 7 7 WHERE MONEY MEETS can be in the solid surround ings of tradition or in an atm osphere of contem porary flair, but the feeling must be the same, the feeling that things of great im portance take place there. W e know the feeling at A rrow Business Services. O u r Design D epartm ent can give it to you in you r meeting room s, your lobbies, throughout you r facility. T h ey and you can choose from 16,000 square feet of custom show room and 25,0 0 0 square feet of active inventory right behind it. Furniture. D ecor pieces and accessories. People and paper flow systems. Even supplies. A rrow also know s that even where m oney meets the surroundings shouldn't cost too BUSINESS SER V IC ES IN C. an a ffiliate o f M em phis Bank & Trust m uch money. W e have a feeling we can 3 0 5 0 M illbranch • Mem phis, Tennessee 38116 (901> 396-9861 meet your needs. C all us. HRROL44 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 73 throughout the state. The system makes use of Diebold TABS units. Each participating bank has designed its own debit card and encoding and embossing of the cards of eight of the participating banks is done through Commercial National. Commercial National worked out the bugs in the system before offering it to correspondents throughout Arkansas. The bank set up a card system that could be used interchangeably between all participants and developed the marketing program that was offered to participants. Commercial National assists partici pants in the following areas: Decisions as to which customers should receive cards, card design, working out prob lems and costs, capital investment (in cluding leasing) to solve investment problems of smaller banks, program selling aids, employee training for sell ing the service, support for local ad vertising efforts and encoding and em bossing of cards. Fourth of Wichita's Via' Network Expands; Merges W ith Oklahoma City Operation T HE ESTA BLISH M EN T of a net work of ATMs and POS terminals in Wichita by Fourth National— an nounced a year ago—has come to pass. The system has been named “Via, the Cash Card.” Full participation in the network has been offered to all Wichita-area banks and the network is now being expanded out of the city. To date, 11 banks are participating, in cluding Boulevard State, Chisholm Trail State, City National, Fourth National, £ \ National Bank, Twin Lakes State, United American State and Wichita State— all in Wichita; Citizens State, E l Dorado; Peoples Bank, McPherson; and Planters State, Salina. Via cards were first issued last Sep tember to customers of Fourth National. As other banks joined the system, cards were issued to their customers. About 85,000 cards have been issued in Wichita, El Dorado and McPherson. Salina customers will receive their cards Moneycard ATM System Expands Operations YOUR DIRECT UNE TO PROMPT, PERSONAL CORRESPONDENT BANKING SERVICES For knowledgeable, personalized attention to correspondent banking problems. . . you ought to k n o w a DETROIT BANK-erfarfrfen» D E T R O IT BANK & TRUST Member FDIC 74 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis shortly. The network is supporting eight ATMs, of which four are on the premises of Fourth National and one each on premise at Boulevard State and United American State, Wichita; Citizens State, El Dorado; and Peoples Bank, Mc Pherson. The system is designed to work with ATMs of all major manu facturers. A shared off-premise ATM is now operating in the cafeteria of the Boeing Co. in Wichita. Last November saw the beginning of operations of four POS terminals in four supermarkets in Wichita. The system has grown to 19 terminals in nine markets in Wichita. A check guarantee feature of the program was introduced in January and 20 check guarantee terminals are now in operation in 17 supermarkets and three oil stations. These merchants advertise that they accept checks only from Via cardholders. No other identi fication of the check writer is required. ATM transactions have been as high as 10,000 per month. Cash withdrawals on ATMs exceed deposits by about five to one; however, the dollar amount de posited exceeds withdrawals by about two to one. By the end of this year, some 60 banks are expected to be participating in the network, using about 20 ATMs and more than 75 POS terminals in supermarkets and discount stores. About 65 check guarantee terminals will also be in use at lower-volume merchant locations. Last January the Via network was merged with Service Card System Corp., Oklahoma City. Now cardholders in Oklahoma and Kansas can conduct certain banking transactions at remote terminals in either state. * * Automated card encoding equipment has been added to the “Moneycard” debit card interchange placed in oper ation by Worthen Bank, Little Rock, last year. The equipment provides cor respondents with improved service on card turnaround time. A Moneycard operations department has been formed to handle all Moneycard operations, including implemen tation, card production, hot carding and general questions and problems from correspondents. The network has grown to 16 banks in 18 cities during the year. Twenty-six ATMs are in operation now and a few more are due for installation shortly. The ATMs were p u rc h a s e d from Docutel, Diebold and Mosler. Moneycard is now being offered to MID-CONTINENT BA N K ER fo r April, 1 9 7 7 N ow is the time to expand home improvement loan volume. Here are six reasons why... Unlimited Marketing Opportunities. Every home U im provem ent loan provides the opportunity to ef fectively cross-sell all banking services. The home owner is a ready-made and growing audience fo r prom otions that provide useful and innovative home m odernization ideas. Since 1954, ICS has accumulated a w id e v a r ie t y o f e f fe c tiv e h o m e im - ICS, the w orld's leading insurer of home im provem ent loans, believes current econom ic conditions provide an excellent climate to increase your HIL volume and profits. 1 ^ 2 0 3 Stable Diversification. Consumer HIL Higher yield. Your profits are being squeezed by spiraling costs and can be offset by a h ig h y ie ld h o m e m o d e r n iz a t io n p la n . An ICS program assures that your gross income w ill be higher than that re ceived from FHA auto and m obile home loans. Let us demonstrate how an ICS insured program w ill provide a d r a m a t ic in c re a s e in p r o f it s on a p ri vately insured p ortfo lio compared to FHA coverage. 100% Credit Protection. ICS insured home im- 0 p r o v e m e n t p r o m o t io n s t h a t a re o f f e r e d e x c lu s iv e ly to o u r m o r e th a n 1 1 0 0 c lie n t b a n k s . dem and con- and the t im in g is p e r fe c t fo r in creased loan activity in this category. Loan volume in other categories such as autos, boats and rec vehicles is adversely affected by possible energy shortages and inflationary price increases. tin u e s t o g r o w provement loans enjoy 100% credit protection. And we in c lu d e e v e ry u n p r e d ic t a b le d e f a u lt . . . such as layoffs, recession, strikes, bankruptcy and divorce. O ther loans, by comparison, put the entire burden of risk on you. Increased home modernization activity. There # couldn't be a better tim e to emphasize home im provement loans. Because of inflation, people are m o r e in v o lv e d in d o - it - y o u r s e lf p r o je c ts and are constantly aware of needed improvements. Also high mortgage rates make HIL more feasible from an economic standpoint. 6 Community Service. The home owner is the "back0 bone” of the com m unity. T h e re is n o b e t te r w a y f o r y o u r b a n k t o m a k e a c o n s tr u c tiv e c o n t r ib u t io n t o c o m m u n it y s e rv ic e than the active prom otion of programs fo r financing the maintenance and im provement of property! 6 reasons w hy now is the tim e to expand your home im provem ent loan volume. Call or w rite W illiam F. Schumann, President, fo r personalized ideas applied to your situation. As the w orld's largest home im prove ment loan insurance service company, our expertise w ill help you achieve your p ro fit goals. IN S U R E D C R E D IT \ S E R V IC E S 1 307 N. Michigan Avenue Chicago, Illinois 60601 312/263-2375 America's No. 1 insurer of home improvement loans. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 75 banks that cannot afford to install ATM equipment. These banks issue cards to their customers to be used in the ATMs of banks in close proximity. Many of the 24-hour minibanks in the network are located in regional shopping centers and are readily available to customers of these banks. New Services Added to Owl Network Developed by Central Trust Cincinnati T HE OW L Network, described last year as an ATM interchange be tween Central Trust, Cincinnati, and Covington (Ky.) Trust, now includes a regional check guarantee system along with the automated teller interchange and encompasses seven counties from northern Kentucky to Middletown, O. Current members include four area banks, two S&Ls and a credit union (pending regulatory approval). These institutions presently operate 27 ATMs and 100 POS terminals in retail mer chant locations. A year ago, 15 ATMs were in operation and POS terminals were in the planning stage. Additional ATM locations are being studied. The majority of future ATM instal lations will be off-premise. Presently, the ATMs are located in 18 branches, at four supermarkets, one industrial plant and one airport. Since court decisions have ruled that ATMs are branches, Central Trust has filed branch applications for the ma chines to comply with state regulations. Merchants currently participating in the check guarantee system include all Kroger and Liberal supermarkets as well as the majority of IGA stores in the seven county area, and Food Mart of Chicago's Continental Expands Networks Offering EFT Services to Banks, S&Ls N IN E BANKS are currently partici pating in a POS on-line network to check cashing files and Master Charge files developed by Continental Illinois National, Chicago. ! ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ! FREE issues of S ■Doane’sFarming forProfit.! . . . 6 wm Over 800 banks send this leading newsletter to farm customers each month. It’s filled with facts to help farmers boost income. They appreciate the information and the bank that sends it. There’s no better way to show you’re the ag bank in your area. Your attractive bank heading appears on each issue — and you get exclusive use in your trade area. ■[ EVALUATE FARMING FOR PROFIT. Mail coupon or your name and letterhead for six issues . . . Free. I YOUR N A M E __________________________ T IT L E _______________ ' ! BANK N A M E ________________________________________________ , g ADDRESS___________________________________________________ ■ ■ C IT Y ____________________________ S T A TE ________ Z IP _______ ffi ■ FARMING FOR PROFIT... ...a vital link between you and your farm community. 76 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Amelia, Inc. As more merchants join the program, the system will be ex tended beyond the area’s grocery stores, adding diversity to the retail program. Customers of all network financial institutions receive Owl debit cards that grant access to both ATMs and POS units. Central Trust’s Day and Night owl caricature has been adopted as the network’s symbol. Central Trust provides network fi nancial institutions with marketing sup port in the areas of print literature, advertising, promotional concepts and employee training programs. Systems assistance in the correspondent’s con version to automated C IF, upon which the system is based, and in the pro duction and distribution of debit cards remains a part of the E F T package. • • Duane Agricultural Service, Inc. ■ Merchant membership includes two supermarket chains, a department store and a variety of single-outlet merchants. Terminals are at 175 locations, where Master Charge cardholders and 750,000 merchant and bank cardholders can cash checks and charge merchandise via the network. More than 8.5 million transactions were processed last year and check approvals can be completed in from three to five seconds. Uptime perform ance has been better than 98%. Participating banks, besides Conti nental, are Northern Trust, Pioneer Bank and National Security Bank, all in Chicago; Glenview State; Avenue Bank, Oak Park; Skokie Trust; Roselle State; and Bloomingdale State, all in the Chicago area. Continental’s ATM network is an on line system to status files. Thirteen ATMs have been installed on-premise and transaction volume averages one per cardholder per month. Last month, two Chicago-area S&Ls joined the network and are offering de posit and withdrawal services (in ad dition to check cashing privileges) to their cardholders at one of the super market chains. Additional S&Ls are expected to join before year-end. Continental expects to open its second facility shortly, as authorized by Illinois banking statute, and to expand its ATM network at the new location. 8 9 0 0 Manchester Road St. Louis, Missouri 6 3 1 4 4 (3 1 4 ) 9 6 8 -1 0 0 0 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 (left to right) Julian L. Clark, President and Chief Operating Officer, Deposit Guaranty National Bank; John P. Maloney, President and Chief Operating Officer, Deposit Guaranty Corp.; Charles R. Arrington, Chairman of the Executive Committee, Deposit Guaranty National Bank; Barney H. Jacks, Senior Vice President and Correspondent Department Manager; Robert C. Garraway, Vice Chairman - Financial; and J. H. Hines, Chairman of the Board and Chief Executive Officer. Deposit Guaranty has the capability to handle your needs and those of your customers in this area. The Regional Department of Mississippi’s largest bank is in a position to handle virtually any request you may have for yourself or your customers for assistance in our region. In providing such services, our Regional Department has the complete backing of top management and the support of an in-depth departmental organization equal to that of other regional banks you may now be doing business with. There’s no need to look further when a call to the officer serving your area will bring you the prompt and efficient service you expect. The Regional Department of Mississippi’s Regional Bank Jim Crawford Southwest Mississippi & Louisiana Joel Varner Southeast Mississippi & Southwest Alabama DEPOSIT GUARANTY Bill Lloyd Northwest Mississippi & Arkansas Ed Keeton Northeast Mississippi, West Tennessee & Northwest Alabama C all 6 0 1 /3 5 4 - 8 0 7 6 NATIONAL BANK Member F.D.I.C. Jackson • Centreville • Greenville Greenwood • McComb • Monacello Natchez • Newhebron • and offices in Clinton and Pearl. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 77 Descriptive Statement, A T M Operation Added to EFT Package at First of KC I N 1974, First National Charter Corp., Kansas City, approved a compre hensive plan for the development of retail-oriented computer systems to serve the needs of its affiliate banks. The responsibility for the development of these systems was assigned to the operations division of the HC’s lead bank, First National, Kansas City. Many of the planned systems have been completed and installed at First National and another affiliate, Leawood National. The most recent system installed is a descriptive customer statement. The descriptive statement became a reality when First National installed IBM ’s new 3800 laser beam high speed printer. The statement permits full de scription of transactions generated from an on-line ATM network as well as transactions received from the auto mated clearing house, eliminating the need for individual transaction advices. The descriptive statement also pro vides the ability to describe any trans action from a future point-of-sale sys tem. First National and Leawood Na tional introduced Buttons, the Personal Touch Teller, last October. This net work of Diebold TABS 550 ATMs is supported by an on-line computer sys tem. The ATM network is supple mented by an on-line teller system using NCR’s 279 teller machines. Both the ATM and teller systems are part of the bank’s central information system (C IS ). The CIS offered currently includes demand deposit, savings, CDs, install ment loans and debit card accounts. Inquiries and posting to the system are made from the ATM and teller termi nals as well as CRTs and an inex pensive thermal printer. Access to the CIS is made easy through the use of the regular account numbers or by the powerful ALPHA look-up system. One of the most unusual features of the sys tem is the “instant statement,” which provides a picture of all transactions since the customer last received a statement. The “instant statement” is also available in an abbreviated de scriptive form. The comprehensive plan calls for the placement of commercial loans, club accounts, real estate loans and an auto mated tickler file into the CIS. Com mercial loans, general ledger and in vestment accounting are currently of fered as off-line batch systems. First National is currently develop ing two new services for implemen tation this year. The first of these is an overdraft banking system to be inte grated into the demand deposit system. The other service will combine all customer accounts into a single com bined descriptive statement. First National Charter’s computer systems services are also available to First National’s correspondent cus tomers who send data processing work directly to Kansas City or to one of the remote capture centers. Centers are now operating in Parsons, Iola and Independence, Kansas, and one will soon open in Springfield, Missouri. Other centers in Kansas and Missouri are under consideration. * * In Phoenix: BMA's Sales Workshop Is Slated for M a y 15-18 Enjoy, Enjoy, Enjoy. Phil recommends a duo of Paradise Resorts. Free golf and free tennis, entertainment, cocktail parties, Olympic size pools, sundecks and wide private ocean beaches. Call now for rates and reservations. “The C ritic s C hoice ” O CEA N FR O N T A T 183rd ST., M IA M I BEACH, F LO R ID A CALL YOUR TRAVEL AGENT OR: Anywhere in U SA Phone toll free: 1-800-528-1234 L l i i l n Florida Phone toll free: Best Western 78 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1-800-432-2171 The Bank Marketing Association has slated a staff sales training workshop, “Putting the Sell in Sales Training,” for May 15-18. Headquarters for the event will be Del W ebb’s Mountain Shadows Resort in Phoenix. The workshop has been geared pri marily to individuals with training re sponsibilities in banks of at least $50 million in size, but representatives of banks of all sizes are invited to attend. Designed to familiarize participants with the newest tools and techniques involved in developing a bank training program, the workshop will stress prac tical training methods. Special em phasis will be placed on starting, main taining and evaluating a bank training program, as well as enlisting manage ment support to keep it going. A hu man relationship model, customer re lations model and cross-sell model will be explored in depth, and ways to im plement those models will be discussed and evaluated. Program chairman for the workshop is Douglas Hanks, executive vice presi dent, Whittle Group, Chicago. Registration fee for the workshop is $235 for BMA members and $252 for nonmembers. For more information, write Donald J. Hoss, Director, Educa tion Department, BMA Headquarters, 309 W est Washington Street, Chicago, IL 60606. MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 First NBC knows what it means cor*respond (k ô r'i spond') v.i. 1: for a per son, partnership, firm or corporation to carry on business transactions with another at a distance; esp: BANKING 2: to communicate by letter, telegram or telephone, and, esp. at First National Bank of Commerce, to com municate on a personal level. Our corre spondent banking officers understand all the services you require and anticipate all your needs. When you deal with us you know we know the meaning of correspondent. For in formation on First NBC’s correspondent banking programs contact Doug Lore at 1/800/462-9511, within Louisiana, or 1/800/ 535-9601, outside Louisiana. First National Bank of Commerce CO R RESPO N D EN T BAN KIN G D E PA R T M E N T 210 Baronne Street/New Orleans, Louisiana 70112/504-561-1473 M em ber F D IC MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 79 Joint Leasing Program Is Popular W ith Banks Without Leasing Depts. M ORE AND M ORE of the nation’s banks are finding that it’s possible to offer leasing services as an alterna tive to loans despite a lack of staff peo ple experienced in leasing know-how. This is because firms such as TriContinental Leasing Co. (T C L ) are offering specialized leasing services to banks that take the “sweat” out of the operation. TC L is a St. Louis-based firm that is a division of Yegen Associ ates, Rochelle Park, N. J. “W e were getting calls from banks wanting to finance equipment leases,” said Robert W. Stubbs, TC L’s presi dent, “but the banks didn’t want to shoulder the entire loan. That’s how we got the idea for our program.” Tri-Continental’s leasing program is based on the premise that a business man would rather deal directly with his own bank than arrange lease financ ing through an outside source. “We, in effect, put banks in the leasing busi ness,” Mr. Stubbs said. In return for a fee, TC L sets up a leasing department in a participating bank. It supplies trained personnel and handles most of the paperwork and ad ministrative duties involved in lease transactions. For example, Mr. Stubbs said, when a customer inquires at his bank about an equipment lease, the bank calls on TC L to prepare a lease proposal and cash flow analysis. The bank presents these to the customer and draws up the necessary documents. TC L sets up a payment schedule, purchases the equipment, assumes responsibility for billing and taxes and provides the bank with a collection service. The company also holds seminars to enable loan officers to learn more about leasing procedures. Its attorneys are available to counsel banks on legal as pects of certain lease contracts. Even advertising and other promotional ma terials are provided. Leasing plans are structured indi vidually and offered to only one bank in a given locality, Mr. Stubbs said. This gives that bank an exclusive equip ment-leasing program. Tri-Continental’s lease portfolio in cludes commercial equipment for agri culture, mining, manufacturing, com munications, transportation, medicine and retail sales, as well as others. Among the banks using TC L ’s ser vice is National State Rank, Linden, N. J. According to Thomas E. Farley, assistant cashier, the bank entered the leasing field with two objectives: to 80 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis provide an alternate means of financing for commercial accounts and to increase its installment loan portfolio with qual ity paper at a favorable yield. Mr. Far ley said TC L has assisted the bank in meeting these objectives. At the inception of National State’s leasing program, TC L staged a leasing seminar for bank officers. Those in at tendance were given leasing packages that highlighted the advantage of a leasing operation and outlined specific guidelines in answering customer ques tions relative to leasing. TC L also pro vided brochures about equipment leas ing for the bank’s commercial accounts. The brochures were mailed with check ing account statements and were dis played at branches. TC L assigned an account executive to the bank to follow up on all “in house” lease inquiries. In addition, the account executive submits outside lease offerings for the bank’s consideration. According to Mr. Farley, “W e have found the Tri-Continental personnel to be quite adept in their knowledge of leasing, and we eagerly anticipate a long and profitable relationship.” A bank in a western state reports that two members of the TC L staff serve as representatives of the bank and its leasing activity. They are considered to be bank employees. The bank en tered into its leasing program to give it a competitive edge. Its personnel call on customers of competing banks and offer leasing service— something the competitors don’t provide. The bank also desired an alternate method of fi nancing its own customers. Financial experts estimate that $100 billion worth of equipment is on lease in the U. S. at present. That’s a 33% increase during the last two years. Pro jections developed by the American Association of Equipment Lessors in dicate that leasing will account for as much as 20% of all new equipment ac quired by business within a few years. H HARRY B. BROCK JR. has been named chairman, Central Bancshares of the South, Birmingham, Ala. Terence Brannon has been elected the HC’s president and chief operating officer. Mr. Brannon also was elected to the HC’s board. Mr. Brock remains CEO. TV Set That Pays for Itself O ffered to CD Purchasers T H ER E IS nothing new in a financial institution offering a TV set in lieu of interest. However, when a CD pur chaser can buy a quality TV at a re duced cost, regain the TV ’s cost from interest earned by the CD and still get some interest in cash—that’s news! Customers of six United Jersey Banks were given the opportunity to purchase CDs and 19" Magnavox color TVs from May to September last summer. Print ads attracted attention with this head line: “Get 19 inches of living color. And you can get your money back, too.” The ads advised customers that they could purchase CDs maturing in from one to 3/2 years and get a TV at a spe cial bank price ($350 instead of $4 2 5 ). They could recoup all their money when the CD matured. To take advantage of the offer, cus tomers were required to deposit $1,750 or more in a CD. They could walk out with their TV (or have it delivered). At maturity, the CD will have earned enough interest to pay the depositor back for the TV. A customer depositing $1,750 would be issued a CD in the amount of $1,400 for 3/2 years at a 6/2% interest rate. The $350 difference paid for the TV. Upon maturity, the CD will pay $1,763.01, which means that the customer gets his TV free and collects some small change ($13.01) in the deal. The ad explained that the amount de posited would be reduced by the cost of the TV, plus sales tax and delivery charges. According to Ralph D. Spencer Jr., senior vice president at United Jersey Bank headquarters in Hackensack, the TV sets were chosen as premiums be cause of the special appeal the summer of 1976 offered with the airing of the Olympic Games and the two political conventions. Mr. Spencer said the promotion brought in about half a million dollars, 60% of which was new money. About 170 TVs were sold. “W e were pleased with the results of the program,” Mr. Spencer said, “as it enabled us to offer a quality premium at an attractive price while giving us additional deposits.” * * MID-CONTINENT BA N K ER fo r April, 1 9 7 7 CORNERSTONE. ^ M em phis Bank & Trust is becoming the cornerstone of area banking. M ore and more banks, over 100 now all over the Mid-South, are banking w ith M emphis Bank & Trust. We have the fastest grow ing Correspondent Bank Departm ent in Dixie. W e're in th a t position not just because w e o ffe r the fu ll range of banking services, other banks also o ffe r im pressive shopping lists. Nor are w e m aking it just because w e 're big, some banks are bigger. Banks are banking on us fo r the same reason our other customers d o .. . w e 're dependable. W e're the most solid bank in town, stonesolid, and we back our services w ith personal attention and unbeatable experience. We th ro w in some extras, too, th a t bankers appreciate, like exp e rt insurance capability, guidance in the construction and design of bank fa c ilitie s . . . even selection of furnishings. Solidarity plus the personal touch and the w illingness to take the extra step have made M emphis Bank & Trust the fastest grow ing m ajor bank in M e m p h is. . . in all departm ents. That same philosophy is m aking us the bank w here bankers bank in t h e Mid-South. That's the biggest com plim ent a bank can g e t.^ T ^ y ^ M M M em ber FDIC MEMPHIS BANK©'TRUST Correspondent Bank D epartm ent/ln Tennessee, 1-800-582-6277/1 n other states, 1-800-238-7477 THE BANKER S BANK MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 81 Interstate Branching Called for by Nat l EFT Commission B ANKS and other electronic funds transfer firms should be allowed to cross state lines with terminals to collect deposits, says the National Commission on Electronic Fund Trans fers in a 149-page interim report to Congress issued last month. The com mission had been deliberating since early 1976 and has until next October to complete its final recommendations to Congress. According to the commission, branch ing should be allowed first in “natural market areas” where states grant one another reciprocity, but later Congress should authorize it for any financial in stitution, whether or not states want entry. To force the issue, it was recom mended that Congress establish a date for interstate branching by all federally regulated financial institutions for con tiguous states. Under this plan, states would be forced to change restrictive branching laws if they want statechartered institutions to have a fair chance to compete, says the commis sion. Within states, the commission recom mends that branching restrictions on national banks’ terminals be eliminated as quickly as possible and that states and the federal government start allow ing statewide branching for all financial institutions. The commission didn’t make any rec ommendations on nationwide branch ing because, members say, it was “not clear from evidence available” whether nationwide branching would “alter the nation’s banking structure in a way that would be inimical to the public inter est.” Consequently, it concluded that a “course of moderation is called for.” Also in the branching area, the com mission says that retailers who permit shoppers to use their charge cards to pay bills and make deposits in banks shouldn’t be regulated and that no re strictions should be placed on banks’ or stores’ ability to offer bill-paying and other payment services through terminals anywhere in the country. As to sharing, the commission strongly endorses a concept of “procompetitive sharing” for banks and other financial institutions that want to pool their funds to buy expensive E F T hardware, but it says “mandatory sharing” required by some states should be outlawed because it could create monopolies. The commission also recommends that the Justice Department’s antitrust division should decide, on a case-by82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis case basis, just how competitive the sharing actually is. According to the commission’s report, “limited sharing among relatively small institutions” that could not afford to offer an elec tronic system alone would be “normally acceptable,” but that unlimited sharing normally would violate federal antitrust laws. Finally on sharing, the commission calls for a “cooperative administrative arrangement” among state and federal regulators of financial institutions to de termine which systems banks and thrifts should be allowed to share and which they should not. In the area of technology, the com mission indicated it reached no conclu sion about the need for standards and security in the E F T industry or about the role of major competitors, like American Telephone & Telegraph. The latter has been accused by rivals of en tering the data processing field as a “communications carrier.” The branching proposal is expected to be the most controversial recommen dation to be made by the commission. However, it also is making recommen dations in the areas of consumer safe guards, privacy, the government’s role in E F T and E F T ’s effect on monetary policy. The commission says it’s thinking of assembling a data bank of all crimes against depository institutions to help analyze security problems and that it hopes—in its final report—to come up with guidelines for reducing E F T crime. Hardly had the 26-member commis sion made its interim report public when the Conference of State Bank Supervisors (C S B S ), through its presi dent, John B. Olin, commented un favorably on it. Mr. Olin, Oregon’s superintendent of banks, characterized the report as re flecting an unwarranted bias toward federal solutions to certain E F T issues that could lead to an unjustifiable alter ing of present state-federal checks and balances. “This is particularly true,” says Mr. Olin, “in the report approach to the E F T ‘branch/ terminal issue.’ ” The CSBS doesn’t contend, he continued, that each and every function capable of being performed by E F T technology should be regulated strictly by states. However, it does assert that intrastate and interstate E F T facilities involved in taking deposits, paying checks or making loans should be determined by the states and be applicable to both federally and state-chartered banks. Mr. Olin labels the commission’s rec ommendation to impose a federal solu tion to interstate E F T activities after an unspecified period as “coercive in nature and reflective of bias toward consolidating more control in the cen tral government without evidence that such is warranted.” He indicates that the CSBS would strongly oppose this provision. Mr. Olin congratulated the commis sion’s members for the breadth of their research into highly complex questions and the diligence that has marked their efforts. “We are still in the early stages of E F T development,” he says, “and it is imperative that the dual-banking sys tem, which has served our country so well, not be jeopardized by legislative action in an area where its implications cannot be fully understood or appreci ated at this time.” • * To Alleviate Hardships: Emergency Loans O ffered By First Am erican N at'l First American National, Nashville, has offered extended credit and emer gency loans to residents of middle Ten nessee who are suffering financial hard ships caused by the energy shortage. The bank has set up an “Emergency Action Center,” which accepts tele phone requests for financial assistance. The institution has offered to extend its customers’ installment loan pay ments for 30 days, if needed. Similar provisions have been set up for Master Charge customers. In addition, First American National has begun what, it calls “Emergency Action Loan” procedures to help tide residents over until the end of the fuel crisis. According to Kenneth L. Roberts, president, “First American National re alizes that bad weather, plant closings and layoffs are creating problems for many people. There are some families in middle Tennessee that haven’t re ceived full paychecks with regularity and may not for some time, due to the energy situation. The Emergency Ac tion Center has been set up to accom modate as many of our customers as possible.” MID-CONTINENT BA N K ER fo r April, 1 9 7 7 B is fo r B a n k in g . T h at’s your business, and we never forget it. T h a t’s why all the paperwork in our program is designed for quick and easy completion by loan officers, not underwriters. And we make sure you always have all the supplies you need. Free. B is also for Book. Ours is a thorough Reference Manual that details the entire Integon program of life and health coverage, contract limits, maximum terms, procedures for claims, refunds and reports, and samples of all charts, forms and certificates. Plus a bonus section to make selling easier for you. B is for Bread, too. And we know which side ours is buttered on. S o we never sign you up and then leave you hanging. Instead, the Integon representative works with you to get everything set up and running smoothly. Then he ■SH makes regular visits to keep things that way. And if you need him in-between times, just call. And he 11 make a beeline to your door. When a new loan officer joins your firm, our representative provides a complete training pres entation that helps your staff sell better. S o your bank can earn more. And finally, B is for Bottom Line. And we do everything possible to make sure yours is favorable. There s a lot more, and if you re interested, you should call J . Wayne Williard, Jr., collect at 919/725-7261. As Vice-President of Credit Insurance, he’ll be happy to arrange an appointment at your convenience, without obligation. Or, if you don’t feel like talking, write him at Integon Life Insur ance Corporation, P O. Box 3199, Winston-Salem, N. C. 27102. Either way, once you get all the facts, we think you’ll agree that Integon’s Credit Insur ance program is not only pleasant and profitable. J. Wayne Williard, Jr., Vice-President But also easy as you-know-what. (^INTEGON’ MID-CONTINENT BA N KER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 83 Tellers Seminars Feature Discussions of Security, Swindles, Selling By ROSEMARY McKELVEY M anaging Editor T O MANY customers, a teller is their bank. If she (most tellers seem to be women) is rude and abrupt, in efficient and seems uninterested in the customer, the latter likely will see the bank as rude, abrupt, inefficient and uninterested. On the other hand, when a teller is friendly, helpful, efficient and seems sincerely interested in a cus tomer, the depositor probably will be-, lieve the bank has the same attributes. Tellers always are on the front lines; they are, many times, the only link be tween banks and their customers. Thus, how they work with these customers is extremely important. Realizing that a teller is an important link to a customer and that she must continually increase her knowledge and skills, the Missouri Bankers Association held its second annual tellers seminar series across the state last month. The seminars were held in six widely scat tered cities, including St. Louis and Kansas City. The seminars were put on by Symposiums, Inc., Middleton, Wis., and were attended by about 1,095 bank tellers. Using slides to graphically illustrate their points, representatives of Sym posiums, Inc., spoke on “Basic Trans actions,” “Security,” “Communications,” “Check Swindles” and “Techniques in Sales for Full-Service Bankers.” Before the seminars began, partici pants were given looseleaf binders con taining outlines of each of the above subjects. Thus, they were able to follow along as the speakers made their points. In addition, they can refer to the in formation in the binders anytime they need to at their banks. In the “Basic Transactions” segment of the seminars, the slides allowed the audience to watch over a teller’s shoulder and see how correct every day money-handling procedures are carried out. The tellers were told that the basics of their jobs are safety, ef ficiency/productivity and public rela tions. They were advised to establish a procedure and stick with it day after day, to keep their work areas neat and orderly, to follow this order when pay ing out money: 1. Fix the amount of the check in their minds. 2. Pay out coins first so that a customer can be putting them away while the currency 84 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis is being pulled. 3. Pull currency. 4. Recheck the amount of the check. 5. Pay out currency. 6. Thank the cus tomer by nam e. Even if a teller doesn’t recognize a customer, by the time the transaction is completed, she has seen the name on the check. Also discussed was counterfeit money—how to detect a counterfeit bill and what to do if one is detected. What should be done before, during and after a robbery was outlined and pictured in slides in the “Security” seg ment. First of all, four objectives were given: 1. Safety for employees and cus tomers. 2. Minimizing of losses. 3. Re tention of evidence. 4. Notification of authorities. The importance of being aware and remaining calm was stressed throughout this part of the seminar. A weapons-identification exercise was included and a robbery in progress por trayed, both by means of slides. The importance of listening was em phasized throughout the “Communica tions” segment. In communicating with customers, the tellers were advised to: 1. Communicate effectively. 2. Recog nize customer needs. 3. Create a cli mate of confidentiality and credibility. 4. Appreciate a customer’s business. 5. Listen closely. The tellers were told to restate any instructions given them by their customers so that they know whether they understand them correct ly. They also were advised not only to speak in a friendly way, but to have a friendly look on their faces, too. As it was pointed out, they will defeat their purpose if there’s an unhappy or un friendly look on their faces even if they are speaking in a friendly tone. The tellers also were given hints on how to communicate effectively with their peers and their supervisors. The “Check Swindles” segment start ed out by emphasizing that a person doesn’t have to have a gun to rob a bank. All he needs is a check and a pen. Then, instances were shown on slides of how banks can lose money through stolen and altered checks and through check kiting, followed by a discussion of ways to avoid this. The theme of this segment was, “Know your endorser. Be able to collect to morrow on all the checks you cash to day.” Also illustrated were methods used to falsify identifications. In “Techniques in Sales,” the tellers were told to know thoroughly all the services their banks offer and how each one can benefit a customer. Slides were used to show them how to cross-sell checking and savings accounts, finan cial planning, installment loans, safe deposit boxes and travelers checks. A brochure describing these sem inars points out that a bank’s market ing, advertising and public relations programs can flounder and fail if the person on the front line— the teller— isn’t trained properly. Seminars such as the ones sponsored by the MBA are designed to give tellers this training. $ 9 0 ,0 0 0 Grant Awarded To N A B W Educational Program For Management-Skills Studies CHICAGO—The educational foun dation of the National Association of Bank Women has been awarded a $90,000 grant by the William H. Don ner Foundation, Inc., New York City. Purpose of the grant is to help fund development of a new managementskills study program for women in banking. The new program is the fourth com ponent in a series of degree and non degree courses being developed to as sist women aspiring to move up the bank-management ladder. The NABW will match 50% of the grant through fund-raising efforts among its members and banks. Titled the “Management Series,” the new NABW program will offer women bankers a combination of two seminars and a series of individual or group study modules in six management learning areas. On completion of the program, participants will receive a cer tificate from the NABW recognizing knowledge of management techniques. Participants first will attend a twoday seminar on management process, which covers concepts of management, leadership styles and strategies, prob lem definition, problem solving and de cision making. Participants then will select and complete a series of study modules chosen from subjects such as effective communication, time manage ment, business negotiating and profes sional ethics. A concluding seminar, “Management of Change,” will focus on principles for managing change and conflict in organizations. Heading a team of consultants ex perienced in the subject areas of the new certificate program is Margaret Fenn, associate professor, University of Washington Graduate School of Busi ness Administration, Seattle. MID-CONTINENT BA N KER fo r April, 1 9 7 7 “W ith th e F irst as a p artn er, we’ve succeeded as we’ve helped Jim B oone’s farm im plem ent business succeed.” if ■M mKmm m it«“. m The First National Bank of Quinter, Kansas is a true success story. A correspondent bank relationship has helped it develop and grow with an important new customer. In 1965; Robert Bjugbee, president;o£ the bank, called upon the First National Bank ot K@S»sas<^ity to participate in a major line of credit for Mr. Jim Boone, founder of Ideal -Industries in Quinter, manufacturer and distributor of specialized farm equipment. The First National Bank of Kansas City extended credit used for seasonal working capital and in recent years for major business expansion and distribution o f Jim Boone’s own inventiont the Flex-King stubble m “mulch plow. * - Credit assistance and the j«llj^b|S^ktaEi}itional help of business HllliHMjB^expHertise of the people in our ^ ^ ^ O fte sp o n d e p t Department like B B B g g f e e Dudley have been ■: >i|ja|kjrtapt in the success of First r a l R p ^ a i .Bank of Quinter. * S rApd^as Jim Boone’s small husband-and-wife-company has expanded to a thriving :^eorpoxation, First National . , Bapjbof Quinter has grown with ^ infi^clant new business. * C^ll.th^ professional staff of hf the Correspondent Department ; * of the First National Bank of ^ Kansas City. We can-help your with the development of -^aew bi^ijness. ' . . ; ' *^ > i© y r correspondent tradition ha&been built on helping banks likethe*Tirst National of er. ' . w ; rV.% - 'j Why riot put bur strong % £ tradition' of excellence to’ work your success. 'fe a r success is o u r trad itio n . First . National D q M Y r d KANSAS CITY. D d l 1IVMISSOURI An Affiliate of First National Charter Corporation MID-CONTINENT BA N K ER fo r A pril, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Member FDIC 85 Bank Continues Operations in M idst of New-Building Project W HEN D IREC TO RS of First Na tional, Perry, Okla., decided not only that the bank needed new quarters, but that those quarters should be erected on the site of the old building, they realized that trying to run a bank in the middle of a construction project would be a challenge. However, they concluded that the downtown square is vital to Perry’s economy. President Carl B. Hamm says professional plan ners had recommended that the bank be moved away from the downtown area, but the directors vetoed the idea in the best interest of the community’s economy. “W e decided to design the project in two phases so that the bank could locate in half the new building while the old building was razed and the second half constructed,” says Allen Roth of Roth & Brown, Architects, proj ect architect for Bank Systems Co., bank design specialist, Westwood, Kan., which had been commissioned to plan the new structure. Plans for the new building were pre sented and approved at the annual stockholders’ meeting January 13, 1976; the contract was awarded for general construction in late March, and con struction was begun in April on the first 50-foot half of the concrete block and stucco structure. Steel bar joists and metal deck completed the roof. A temporary wood siding was placed along the column line between the new building and its yet-to-be completed second phase. After closing hours on a Saturday afternoon in mid-July, exist ing tellers counters, bank equipment and furnishings were moved into their temporary quarters. A new vault was constructed in the first half, and the existing vault door was relocated in the prepared opening. The bank was open for business as usual on Monday morn ing. After the old building was torn down and construction begun on the second 50-foot half to join with the first part, two temporary drive-up units were set up in the parking lot. By Sep tember 1, the second half was enclosed and the chore of finishing out the in terior proved to be the most hectic for all concerned. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “Both customers and bank staff mem bers endured a period of inconveni ence,” says Mr. Hamm, “while daily banking chores were carried on to the tune of construction equipment and the hammers of carpenters.” During demolition and construction of the second phase, precautions were taken to keep weather, dust and dirt from filtering into the adjoining side of the Phase 1 building. Two-by-four braces and temporary wood siding sandwiched plastic sheeting together in a weather-proofing effect. This make shift siding was not foolproof, but greatly lessened the chance of outside elements entering. In one case of a summer downpour, Vice President Craig Biggs joined with others in swabbing out a flooded lobby. Hard hats were a fun item—not needed as desperately as indestructible nylon stockings. Bank uniforms were shed, and slack suits were in evidence for the nine-month duration. The com pounded racket of air hammers, elec trical saws and hammers hitting nails often causing mispostings. A human-interest angle resulted from the construction project. A stray mon grel happened along about the same time as the construction crew foreman and appointed herself his dutiful com panion. Her multi-heritage background, As Phase 1 (r.) o f First of Perry's construction w as being carried out, second phase w as pre pared fo r by rem oving facade from original bank building (I.) before dem olition. Phase 2 shell o f new home o f First of Perry adjoins tem p orary b ank facilities (r. back ground) in use. This is new home of First N a t'l, Perry, O k la ., which w a s erected on site of bank's old quarters. Bank continued operations w h ile con struction w as going on. cranky temperament, and incredibly “underbitten” tooth line added to her notoriety. Fed tablescraps by employees and expert in scavenging over week ends, “Dog” became the bank mascot until giving birth to four pups, de scribed as “adorable,” in December. “Dog” herself had been the subject of much publicity, and another ad cam paign ensued that brought immediate homes for the wriggly four. To keep the public informed on and interested in the construction project, First National published monthly con struction progress reports in the local newspaper. The bank believed that in forming the community about the proj ect would create a feeling of involve ment, maximize interest and minimize inconvenience of those who went to the bank. These updates also were mailed to anyone expressing an interest in them. Because of the inconvenience to cus tomers, the bank expected its growth to stagnate and possibly decline during the construction period. Quite the op posite happened: First National had a 50.73% boost in deposits, a 47% increase in assets and a 24% growth in loans! After the building was finished and had been shown at a public open house, Mr. Hamm sent letters to his em ployees, expressing his appreciation for their cooperation during the construc tion period. He thanked them for work ing with dust filtering into their hair and clothing, having to watch their step because of “Dog’s” restroom habits, try ing to talk on the phone above the noise of saws, hammers and drills, coming to work and discovering their work areas had been moved since they left the pre vious day, snagging their clothes on nails and rough lumber. He also thanked them for the long hours spent preparing for and conducting the open house. • • Tem porary drive-up units (foreground) w ere used by First o f Perry during construction of new quarters. In background, old drive-up units are dism antled. N e w building's drive-up facilities fe atu re LeFebure m odel 2111 -T electric drive-up w in d o w and Tel-Air 9 rem ote pneu m atic kiosk units. A dd itio n al LeFebure equip ment includes under-counter equipm ent, w a lk up w in d o w , night depository and complete a la rm components. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 M ore than plastic Citizens Fidelity's Bank Card Service Center handles the credit, debit, and spe cial plastic needs for 100 banks in the Mid west. Our service includes all or any part of the process: encoding, embossing and mailing the plastic of your choice. We also provide merchant and customer billing and processing, credit and collec- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tion administration, employee training, as well as advertising and marketing support. Whether your bank's opportunities be in credit or debit card introduction, BAC to Visa conversion, or dual branding, our bank card Service Center can help turn plastic to profit for you. Call Forrest Cook at (502) 581-3224 today. Citizens I Fidelity Bank&Trust Company Citizens Plaza— Louisville, Kentucky 40202 S e rv ic e m a rk of C it iz e n s Fid elity 3 a n k and T ru s t C o m p a ty Bank HCs'/Lead Banks' Decision Making Is Focus of Study by Academicians STUDY was made last year to de centralized decision making within their HCs. termine the extent of centralized In their introduction to the survey’s decision making by the parent company and/or lead bank among the nation’s findings, the authors say they hope the study will shed light on whether such registered bank holding companies. Dr. John O. King, head of the department firms are taking advantage of strengths that might accrue to them by virtue of of marketing and economics, and Dr. Donald D. Wilson Jr., associate profes being a registered HC. • * sor of marketing, College of Business, Southeastern Louisiana U n iv e r s ity , Hammond, sent questionnaires to CEOs of all 241 registered bank holding com panies as listed in the fall, 1975, edi tion of the M cF adden A m erican Bank Government Predictability Directory. The questionnaires were mailed March 22, 1976, and 110 com In Dealing W ith Citizens pleted responses were returned. As a result of their survey, Dr. King Pledged at Bank Seminar and Dr. Wilson reached these con clusions in their study, which is en HOUSTON—Americans can expect titled “Centralized Decision Making a new sense of predictability and con Within Registered Bank Holding Com sistency in the way the government panies”: deals with them. That was the pledge 1. Small registered bank HCs, both in terms of asset size and number of made by T. Bert Lance, director, Of fice of Management and Budget, Wash subsidiaries, tend to practice a higher degree of centralized decision making ington, D. C., at First City National’s 1977 Executive Management Seminar. than do larger HCs. 2. Recently chartered registered bank Speaking to guests and correspon dents of the bank from around the na HCs practice considerably less cen tralized decision making than do firms tion, Mr. Lance said, “Bankers like to plan and they like to see their cus chartered before 1970. 3. HCs having a designated ‘dead tomers able to plan,” and pledged that the Carter Administration would move bank” tend to practice a higher degree quickly to achieve the following goals: of centralized decision making than do firms having no designated “lead bank.” a forward-moving economy, presenta tion of an energy-reorganization plan 4. From studying data gathered, it to Congress by April 20, completion of appears that as registered bank HCs a welfare-reform proposal by May 1 increase in size, there’s a tendency for and a tax-reform package by August a firm to decentralize those decision 31. areas involving individual d e c is io n In addition, Mr. Lance, former pres making which is an attraction to young, ident, Calhoun (G a.) First National competent, managerial personnel. In this connection, such areas were re and National Bank of Georgia, Atlanta, promised a balanced budget by 1981. ferred to as lending, administration and The Executive Management Seminar operations, marketing and sales train was kicked off by a speech by W. Liding. This carries the implication that if A the smaller HCs are to compete in the job market for talented managerial per sonnel, they must decentralize those de cision-making areas that afford the maximum individual involvement in de cision making. Failure to do this means they will lose the recruiting battle with the larger firms that are offering de cision-making opportunities to their young, talented personnel. Dr. King and Dr. Wilson remind readers of their survey that their find ings are based on information supplied b y parent organizations only. No at tempt was made to determine whether executives of subsidiary banks hold the same opinions relative to the extent of 88 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T. Bert Lance (on podium ), d ir., Office o f agem ent and Budget, addresses 1977 M anagem en t Seminar o f First City N a t'l, tion, as N a t S. Rogers, host b an k pres., on. M an Exec. Houslooks don McPeters, ABA president, who dis cussed “Banking Issues in 1977.” His topics included the effectiveness of the three federal regulatory agencies, ex tension of the Interest-Rate Control Act, E F T S ’ status and payment of in terest on demand deposits. Regarding the latter subject, Mr. McPeters said, “While customers may be able to earn interest on average balances in their checking accounts, they also may wind up paying even more in service charges that are increased to reflect the real cost of servicing checking accounts. That is the message we must communi cate to our customers and our legis lators.” Mr. McPeters is president, Se curity Bank, Corinth, Miss. Other speech topics were “The Eco nomic Outlook for 1977 and Beyond” and “The U. S. Stake in the Middle East,” by J. Robert Ferrari, vice presi dent and chief economist, the Pruden tial Insurance Co. of America, and Rawleigh Warner Jr., chairman, Mobil Corp., respectively. 'Round the Track: Road Racer Premiums Joined W ith A uto Show To Interest Depositors What do road race sets and auto shows have in common? Public interest! A bank in northern Illinois attracted almost a quarter million dollars in new deposits when it offered road racing sets to savers prior to the last holiday season. The promotion fit in well with the bank’s weekend new auto show, which was held on its parking lot after all the 1977 models became available. The public was invited to stop by and do its 1977 auto shopping at the bank as well as register for a free road racing game for the kids. The game was called “Aurora AFX Jackie Stewart Racemaster Speedway.” All the local new car dealers fur nished 1977 products for the bank’s auto show and the bank stood ready to process any auto loan applications that resulted from the show. During the 90-day race car set pro motion, the bank offered sets for $21.95 plus tax to anyone making a $200 de posit to a savings account. Additional racing cars could be purchased for $2 and a $50 deposit. The bulk of the cus tomers made add-on deposits and took home more than 300 race car sets and almost 200 additional race cars. The promotion was advertised on billboards, TV and radio, plus news papers. An in-house display was also mounted. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 It’s 50 miles long, 40 feet deep, and runs around the world. A closer look at the Houston Ship Channel from H ouston’s largest bank. Linking the Gulf of Mexico with the n ation ’s sixth largest city is the Houston ship channel. This 50-mile canal connects Houston with over 250 ports of the world. Since its completion in 1915, the channel has contributed greatly to the economic growth of Houston and the entire Southwest. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Each year the port handles over 86 million tons of cargo, with imports and exports totaling well over $3 billion. First City National Bank contrib utes financially to the smooth flow of goods in and out of the Houston ship channel. Our experience from such involvement is yours for the asking. W e’re becoming involved with more and more industries every day. In so doing, we’re proving to corre spondents that more service is the result of more experience. Under standing business as well as banking has helped us become . . . A m ajor financial strength behind Texas industry. FIRST CITY M TIO M L BANK O F HOUSTON Banker Calls for Federal Intervention To Develop Nation's Energy Sources ALLING for an end to “politically palatable” sloganeering about energy problems, an Oklahoma senior bank executive warned that direct fed eral intervention might be necessary to fully develop the nation’s energy re sources. Richard E. Minshall, senior vice pres ident, Fourth National, Tulsa, said that “sloganeering can be short and simple, while answers and solutions are neces sarily complex.” Pointing out that oil imports have more than doubled since 1970, Mr. Minshall said that “we no longer have sufficient domestic produc tion to meet our own needs and we no longer control the foreign oil that is the source of our necessary imports. “After three years of school closings, long lines at gas stations, brownouts, higher utility bills, we Americans are no closer to understanding the prob lems and acting on solutions than we were three years ago,” he said. Stressing that the nation needs to buy time to develop replacements for oil and gas, Mr. Minshall warned that the oil and gas industries must be given price incentives to increase domestic exploration. “It is the only viable short term solution,” he said, stressing the words “short-term.” Discussing long-term solutions, Mr. Minshall said that priority should be given to developing facilities for the gasification and liquefaction of coal, since such facilities take about three to five years to bring on stream as op posed to nuclear facilities which need a 10-year lead time. However, Mr. Minshall warned, al though the technology is available to process the country’s 350-year supply of coal, it will be expensive. He said that a coal liquefaction plant with a capacity of 100,000 barrels a day would cost about $1.5 billion. “Also,” he said, “based upon present econom ics, the oil equivalent price per barrel for oil from coal conversion would be equal to $20 to $25 per barrel versus the present price of OPEC crude of $14 per barrel. Gasification of coal can be presently done at an M CF (1000 cubic feet) cost of approximately $4, versus $1.50 to $2 per M CF in the U. S. intrastate natural gas market. “Some program of government sub sidy and tax incentives will be required to enable these products to compete with oil and gas at OPEC prices,” said Mr. Minshall. “For example,” he said, “the govern ment could contract with industry to C 90 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis create a synthetic producing capability from coal liquefaction needed to fill much of the gap between U. S. produc tion and consumption. The U. S. could enter into supply contracts on a ‘take or pay’ basis with U. S. industry for 3,000,000 barrels per day at a negotiat ed price of approximately $20 per bar rel for a term long enough to recover the capital costs of plant and equip ment.” Mr. Minshall warned that the price tag on enough plants to achieve this level of production would be high: $45 billion over a three-year period. And the oil from these facilities would be expensive, he said. “But it would be preferable to pay $6.6 billion a year for U. S.-produced and controlled oil than export more than twice that dollar fig ure to pay for foreign crude,” he said. “Jobs, tax revenues and oil producing capability would be created, a trade deficit of $15.6 billion per year would be eliminated and a threat to our na tional security would be greatly re duced,” he said. Pointing out that the United States is no longer in a position to weather another embargo, Mr. Minshall said that “we as Americans must find a posi tive common ground and begin to deal in solutions, and we must do it quick ly ” Mr. Minshall is responsible for the management of oil and gas properties in his bank’s trust department. He is a member of the Tulsa-based group “Energy Advocates,” made up of senior executives and CEOs of leading Okla homa independent oil companies. Members of the group have spoken in many parts of the country, sharing their concern about the nation’s energy situation. • ® SBA Expands Service With 2 New Offices KANSAS CITY—The U. S. Small Business Administration’s Regional Of fice here has announced plans to ex pand its services by opening two new branches in Kansas and Missouri. The additional offices, which are being cre ated with no overall increase in staff ing, will give the SBA three office lo cations in Missouri and two in Kansas. According to an SBA spokesman, the changes will enable the SBA to: • Decrease travel expenses. • Increase employees’ productive time by eliminating excessive travel time. • Increase loan approvals through closer bank and organizational relation ships, thus creating more jobs in the two states. • Save clients’ time and money by providing more convenient agency ser vices. ® Increase bank participation in agency loan programs. • Provide closer loan servicing and management assistance to clients. • Eliminate the confusion caused by one district office serving territory in two states. Locations for the new branch offices have been slated for Springfield, Mo., and the Johnson County, Kan., area, supplementing existing SBA offices in Kansas City, St. Louis and Wichita. The move will allow SBA offices to cor respond to statewide boundaries and normal trade areas, following other fed eral agencies in the Kansas-Missouri area. Educational Benefit: 'Consumer Survival Kit' Cites A B A Housing Guide Two sections from the ABA’s book let, “A Homebuyer’s Guide,” have been selected for inclusion in the Public Broadcasting Service television pro gram, “Consumer Survival Kit.” The television series provides sup plementary printed material to viewers on request for each segment. The ABA reprints cover how to select a house and what the contract is, and were included in the “Consumer Sur vival Kit” supplement, “Home Buying II: A Piece of the Block.” According to a “Consumer Survival Kit” spokesman, the “kit” is finding its way into homes, schools and libraries in the continental U. S., Guam and Hawaii. Canadian viewers are said to be requesting the reprint, too. The ABA booklet was published to assist member banks establish or sup plement their consumer contact and community information programs. Top ics covered by the publication include “Can I Afford a Home?,” “How Will the Home Be Financed?,” “How Do I Apply for a Bank Mortgage?,” “What Are Settlement Costs?” and “What About Condominiums and Coopera tives?” The booklet is available through ABA Order Processing and the order number is 246300. Pricing begins at 45 cents a copy for 1-99 copies and ar rangements may be made for imprint ing at an additional charge of $30. For more information write Linda Feldman, Marketing Division, ABA, 1120 Connecticut Ave., N. W., Wash ington, DC 20036. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 KEEP a valuable bonus for making this test. . . Com pare Value Line vs the whole world of Investm ent advisory services. Does anyone else give you all this? Or even come close? You be the judge. Match The Value Line Survey against any other investment survey you’ve ever used, seen or heard about. Which gives you more? Which does more for you? Compare them in any way you like. If Value Line doesn’t come out ahead—way ahead—simply return the material we’ve sent you for a full refund. But keep the valuable 64-page book, Investing in Common Stocks, just for taking part in the test. What You Receive So that you can test The Value Line Investment Survey in a meaningful way, this special invitation brings you everything that our regular full-term subscribers receive, including... 1. Ratings & Reports Every week you receive new full-page Reports on about 125 stocks, which update and replace the corresponding Reports in your Reference Service (it takes less than a minute to remove the old and put in the new). During a 13-week cycle, new Reports like this are issued on all 1600 stocks. The Reports include price/ volume charts and 22 series of vital statistics going back 15 years and estimated 3 to 5 years ahead. 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Selection & Opinion Every week this 12-page section clearly and concisely presents Value Line’s view of the Business Prospect, Stock Market, and Advisable Investment Strategy. Plus specific Stock Selections, vital Information for Option Writers and Buyers, and the Value Line Averages. This is a sample full-page report of one of the 1600 stocks \ regularly reviewed by Value Line, reduced from 8%” X 11"/ 4. Summary of Advices Every week, for EACH of 1600 stocks under review, this 24-page section shows the current ratings for relative future Price Performance and Safety, together with the Estimated Yield, P/E ratio, estimated long-term Appreciation Potential, Beta, and latest earnings and dividend data. 5. Investing in Common Stocks This little “classic” by Arnold Bernhard, Value Line’s founder and research chief, packs a remarkable wealth of guidance into just 64 pages.. . . revealing methods of stock evaluation and portfolio management that took decades to develop. This book is YOURS TO KEEP, no matter what you decide about the Value Line Survey. $100,000incash prizes will beawarded. Whether you take advantage of this introductory offer or not, you are invited to enter Value Line’s "Invest in America” Stock Market Contest. You assume no risk or obligation. Just send a postcard with your name and address (only one entrant per household) to: Contest Editor, P.O. Box 5131, New York, N.Y. 10017. Please allow 6 to 8 weeks for acknowledgement. QUARTERLYSALES (S «*.) Fai m L (to.SI ta » S I S * . S i t e . 31 192 7 145 7 127 8 2164 682 6 2787 261.2 2746 3312 1145.7 449 6 3634 287 4 4038 504.2 414 7 309 5 265 4 4/04 420 350 3/0 420 EARMRCS PEI SNARE CadIto. 31 ta t 38 Sto 39 Dèe. 31 21 16 08 25 .70 40 84 75 M2 311 1975 150 150 101 1.46 547 105 103 .73 U 9 400 1/5 / 05 90 1/5 425 CM- QUARTERLY DIVIDEM» PAIO »Frf « to Ito. 31 ta» 39 Sa*. 39 Ita 31 1972 065 067 067 067 267 1973 067* 069 069 069 .275 1974 069 071 071 .071 19 098 098 196 582 392 70 20 .20 99 ! Pittstqn negotiated a 12-year agreement with six Ja p a n ese steelm akers. The basic provisions thereof are as follows: • In the 12 months starting April 1.1 977,10.3 million tons of coal will be delivered. Subsequent shipments will be at a rate of 10.9 million tons per year. > • The basic starting price is $2.05 per ton higher than the O ct. 1976 price to the Japanese. Although the details are not yet available, increases in Pittston's costs will be passed along in accordance with price escalalion stipulations. _ • 40*, of the scheduled shipments are subject to annual price and tonnage negotiations. T he price of the remaining 60' < can be renegotiated every three years. Theae con tract term s co n s titu te « hedged position. The deliveries that are price fixed (plus escalation) for three years represented about one-third of Pittston's output (18.6 million tons in 1975 and probably some 2 million tons less this year). The price increase is very small relative to the changes since 1973. With so much volume committed to price for three years, Pittston management must doubt that a seller's market in metallurgical coal is just around the comer, T he 1973-1975 corporate earnings surge is unlikely to be repeated in the n ear future, Pittston's non-coal activities are too small to affect corporate results appreciably. Nor can we visualize enough increased steelmaker demand to provide a sizable boost in coal profits for the next 12 months. Thus, PCO stock prices will do well to match market averages in the year to come. However, replacement cost reporting probably won’t hurt share performance. We estimate that such bookkeeping will cut 1976 profits by but 10' r and will not menace "cash flow” at all. End-of-decade capital appreciation potentia l is fairly good (slightly below that of the average common stock). Pittston's mine development program can provide subslant ially more production capacity in 197981. Thus, even though profit per ton may not grow, net income can be boosted enough to justify all-time high share prices in 3 to 5 years. L.V ./g-a.h. ’ smart saw imi m a»— » ■»■■>w > » ■ l—tot »>71 w* Wf 1*7» 5* jw lm v! « j IVi jv Aitrnii! *4/wio%i Ml lu atitv i » j !*"%! im / ov in«*«* aosi«*xi » .ti«.»%> m i m c w am i m i nu; i t.*\i uoejt tm i noonosv MID-CONTINENT BAN KER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis r - “ --------- ;------- ------------------i j The Value L ine Investm ent Survey I | t o u n i n BERNHARD a c o u u io n & i rCO., n i u r •. c5c EAST A C T i44th i ^ C STREET, T D C c r u c u u YORK, v n a v N.Y. M v 10017 , n n 1 ~r ARNOLD INC. NEW □ Begin my special 10-week trial to The Value Line Survey (limited once to any household every two years) and send me the Investors Reference Service and the booklet "Investing in Common Stocks" as bonuses. My check or money order for $29 is enclosed. .(Trial subscriptions must be accompanied by payment.) □ I prefer one year (52 weeks) of Value Line, plus the bonus. Investors Reference Service and the booklet, "Investing in Common Stocks" for $285. (There are no restrictions on this offer.) □ Payment enclosed □ Bill me for $285 GUARANTEE: If dissatisfied for any reason, I may, under either offer, return the material within 30 days for refund_of .the I have paid. . . . -a full . . . . _____ . . .fee . . ______,____ I 43NS01 SIGNATURE NAM E (please print) ADDRESS APT N O . CITY STATE Z IP . Not assignable without subscriber's consent. Foreign rates on request. Subscription fees are fully tai-deductable. (N Y residents add applicable sales ta i.) 91 Prepare N O W for Annual Meetings Booklets That A id (1) Bank Management • How to Prepare for Kidnap/Extortion Threats. 4-page study, outlines security precautions to take at the bank and at home, sample “alert” system, action to take during and after threat. No. 114, 3 copies for $1. • So Your Husband Is a Bank Director. 2 pages. Outlines for the bank director’s wife the “sensitive” nature of her hus band’s directorship. Stresses the confiden tial nature of the banking business; dis courages bridge-table gossip! No. 115, 3 copies for $1. • A Code of Ethics. 4 pages. Sample policy statements by two banks, covering personal conduct of officers, inside and outside the bank. Example: sets criteria for conflict of interest, political activity, outside interests, trading in bank stock, gifts and entertainment that can be ac cepted by officers. No. 116, 3 copies $1. • Capital Adequacy. 4 pages. When does a bank have enough capital? Should a bank resist supervisory pressure to increase capital? Should a committee of board mem bers keep abreast of capital requirements for their bank? These and other questions discussed. No. 117, 3 copies for $1. • The Bankers’ Handbook. Considered the most complete and definitive reference source covering current practices. It places the money knowledge of 90 of the country’s (2 ) Bank Directors (3 ) Bank Stockholders THREE NEW STUDIES • Risk Management for Bank Directors. An outline of what bank directors should know about risk management in order to adequately protect their bank and themselves in light of their position of fiduciary trust. No. 140, 3 copies for $1. • Bank Ethics and the Board. A hypo thetical case study called “The Water gate Bank,” which outlines various un ethical practices engaged in by a “fic titious” management. Problems are presented; questions asked; and poten tial solutions offered. No. 141, 1 copy for $1. • What Every Director Should Know About Employee-Stock Ownership Plans ( ESOPs). Ever since the Employee Re tirement Security Act (ERISA) became law in 1974, a tremendous amount of publicity has been given to pensions, particularly the use of ESOPS. What is an ESOP? Is it for your bank? This study poses some questions and an swers. No. 142, 1 copy for $1. pendent accountant engaged to conduct an opinion audit, (2) to an internal bank auditor who wishes to make his work more effective and (3) to a bank director who wishes to compare procedures followed by his bank with the modem methods out lined. No. 121, $32. leading bankers at the fingertips of the banker or businessman, in a concise, ana lytical style. In it are the answers to most of your questions about banking—easy to use. I I major sections—in 87 chapters. 1230 pages. No. 120, $30.00. • Bank Audits and Examinations. This study, written in non-technical language, is designed to be helpful (1) to an inde- • What Every Bank Director Should Know About Bank Counsel. A pithy dis cussion of the advantages and disadvan tages of a bank maintaining full-time coun sel, and whether that counsel should be an elected director. The counsel-director re lationship is also covered—a vital relation ship in these days of complicated legal maneuvering. No. 129, 3 copies for $1. • Management Policies for Commercial Banks. 2nd edition by Howard D. Crosse and George H. Hempel. Substantially re vised edition dealing with major policies of liability and asset management in banks. Includes examples of major policies and the relationship of policy makers and the issuing of policy. Examines lending prac- tices, personnel, marketing management and portfolio management and capital structure. No. 131, $15.95. • Management Succession. 8-page study. This has been termed the number one problem in banking. Directors have the legal duty to staff their banks and this publication provides invaluable aids to as sist directors in this area. Includes a com prehensive checklist for management de velopment. No. 133, $1. • Bank Stock Prices. How the price range of a bank’s stock should be determined is discussed in this four-page study. The pros and cons of high and low stock prices are examined so directors can determine where to set the price of their bank’s stock. No. 134, 3 copies for $1. • What Every Bank Director Should Know About Public Relations. A veteran journalist and PR man describes what PR is and how a message can be relayed to the public: how the good works of your bank can be publicized. Includes an ex ample of a deposit-building program that worked; also describes how the bank’s personnel were “sold” on the program, thus insuring its effectiveness. No. 135, 3 copies for $1. • What Every Director Should Know About Personnel Management. One im portant aspect: evaluation of employment policy . . . the director should understand this. Also, each bank should have a re cruitment policy and a general policy with respect to the role of fringe benefits. No. 139, 3 copies for $1. • Commercial Problem Loans. A study that makes a significant contribution to improving lending skills by filling a void in the loan department’s litera ture. The problem loan is identified in detail and a program of supervision is outlined. The volume includes a 41page chapter on collecting problem loans and a case study of a fraud that brings all the points discussed into full play. Also included are a complete sample credit file and a hypothetical credit policy statement. Published in 1974. No. 137, $18. Order by Number Using Coupon on the Opposite Page 92 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for April, 1977 Be a Step Ahead of Bank Regulators! Examiners expect banks to have Written Loan Policies. Send TODAY for your copy of the revised and enlarged edition of The Bank Board and Loan Policy, a 40-page manual that discusses the reasons for a bank having a written loan policy. Included are current loan and credit policies of four well-managed banks that can aid your bank in establishing broad guidelines for its lending officers. A written loan policy can protect directors from lawsuits arising from failure to establish sound lending policies! Check Box No. 1 1 3 , $ 4 .2 5 per copy OTHER MANAGEMENT-DIRECTOR MANUALS • Bank Directors and Their Selection, Qualifications, Evaluation, Retirement. 24 pages. Answers key questions concerning director selection, retention and retire ment. Special section: the prospective di rector and how he should be expected to contribute to the bank’s success. No. 101, $2.85 per copy. • Bank Shareholders’ Meeting Manual. 60 pages, 8)2 x 11". Designed to aid directors of state-chartered banks, this book dis cusses conflict of interest, minority rights, fuller disclosure, voting of trust-held se curities, preparation of stock purchase and stock option plans, also capital notes and debentures. The manual also is helpful in updating annual shareholders’ meetings at a time when stockholders are becoming more in sistent on receiving meaningful information at annual meetings and in annual reports. No. 102, $7.75 each. • A Model Policy for the Bank’s Board of Directors. 24-pages, reviews typical organizational chart, duties and responsi bilities of managing officers and various standing committees, loan, investment and collection policies, and an outline of a suggested investment policy. No.103, $2.85 per copy. • Annual Review for Officer Promotions. 4-page study, contains 12 point-by-point appraisals of officer performance and potentials. No. 104, 3 copies for $1. • Check List of Audit Procedures for Directors’ Examination. 23-part outline en compasses review of major auditcate gories. Special 4-page study. No. 105, 3 copies for $1. • Bank Board Policy and the Preroga tives of Operating Management. Special study focuses on utilization of skills and knowledge of “outside” directors; should the board do more than merely set policy?; who should operate the bank—the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis board or management? No. 106, 3 copies for $1. • The Board of Directors and Effective Management. Harold Koontz, 256 pages. Critical look at directors’ role: functions and responsibilities, decision areas, control, relationship of success to more productive management. No. 107, $13.50 per copy. • Deferred Compensation Plan for Direc tors. Explanation of an important IRS Ruling that will allow your directors to collect directors fees after retirement, thus offering substantial tax savings. No. 108, 3 copies for $1. • A Business Development Policy. A plan for the small bank in setting up objectives and establishing responsibilities in the of ficer staff for getting new business, holding present business. No. 109, 3 copies for $1. • SALES: How Bank Directors Can Help. Detailed outline of a program that has developed more than $40 million in new business for a holding company chain in the Southeast. No. 110, 3 copies for $1. • Planning The Board Meeting (Revised edition). This 64-page booklet provides some workable agenda, suggestions for advance planning and also lists type of re ports a board should receive monthly and periodically. It emphasizes the need for in forming the board as quickly and concisely as possible. An excellent supplement to plans your bank already has. No. I l l , $4.50 per copy. • Policy Statement for Equal Employ ment Opportunity. 4-page study, contains suggested Equal Opportunity Program aimed at preserving a bank’s eligibility to serve as federal depository. No. 112, 3 copies for $1. SEE O P P O SITE P A G E FO P O THER TO PIC S Please Send These Management Aids: 101 . . . copies 102 . . . copies $ .... 116 . . . . copies $ .... 117 . . . . copies $ ... Send Completed Coupon W IT H C H E C K 120 . . . . copies $ ... to: Commerce Publishing Co., 408 Olive 121 . . . . copies $ ... St., St. Louis, Mo. 63102, publishers of copies copies $ ... The BANK BOARD Letter, Mid-Continent $ ... Banker and Mid-W estern Banker. copies $ ... 103 . . . copies $ .... 104 . . . copies $ .... 105 . . . copies $ .... 129 . . . . 131 . . . . 106 . . . copies $ .... 133 . . . . 107 . . . copies $ .... 108 . . . copies $ .... 109 . . . copies $ .... 110 . . . copies $ .... Ill ... 112 copies $ .... . copies $ .... $ ... 134 . . . . copies $ ... 135 . . . . copies $ ••• Enclose check payable to 137 . . . . copies $ ... The B A N K BO ARD Letter 139 . . . . copies $ ... 140 . . . . copies $ ... 141 . . . . copies $ ... 142 . . . . copies $ ... Total $ ... 113 . . . copies $ .... (In Missouri add 114 . . . copies $ .... 4 '/2% Tax) $ ... 115 . . . . copies $ .... TOTAL $ ... Name ................................................................ Bank or C o m p a n y .......................................... Address.............................................................. C ity ............................. State . . . . . . Z i p . . . NEWS From the Mid-Continent Area Alabama ■ MARY GEORG E W AITE, presi dent, Farmers & Merchants Bank, Centre, has been named state chairman of the 1977 Future Farmers of America Foundation Sponsoring Committee. Mrs. Waite joins 31 chairmen from other states in coordinating their states’ fund-raising activities for the FFA Foundation this year. W AITE JEFFERY ■ W ILLIAM .A. JE F F E R Y II, former ly assistant vice president, Merchants National, Mobile, has advanced to vice president. Glenn D. Sigler moved up from assistant cashier to assistant vice president. Elected assistant cashiers were Joy Kemp and Grace Vickery, while new assistant trust officers are Connie Dixon and Nancy Langmaid. ■ DR. W H E E L E R A. GUNNELS has been elected a director of First Na tional, Opp. He practices family medi cine and surgery. ■ RICHARD M. PENNINGTON JR. has been promoted from vice president to senior vice president, First National, Mobile; W. M. “Monty” Collins has moved up to vice president, and Robert S. Wilbanks has become assistant vice president. Mr. Pennington, who went to the bank in 1973, continues as head of the marketing division. Mr. Collins joined First Alabama in 1974 as direc tor of industrial development. Mr. W il banks, with the bank since 1972, is in the commercial loan division. COLLINS PEN NING TO N ■ UNION BANK, Montgomery, has promoted the following: from assistant vice presidents to vice presidents, Ann Thrash and C. Merrill Hiebert; from administrative assistants to assistant vice presidents, Jane L. Cannon and Dorothy J. Norris; from women’s divi sion officer/marketing to assistant vice president, same division, Bertie W. Fann; from assistant cashier/accounting to assistant vice president, Frances R. Norman; and from personnel officer to assistant vice president/personnel of ficer, Eloise M. Pryor. In other action, the bank elected Troup R. Cunning ham to its board. He is a farmer and cattleman. ■ F IR S T ALABAMA BANK, Mont gomery, has promoted Delmar F. Epton and John P. O’Connell from vice presidents to senior vice presidents. Mr. Epton has charge of the operations department. Mr. O’Connell is personnel officer. Arkansas ■ PULASKI BANK and its parent firm, Pulaski Investment Corp., both of Little Rock, have announced plans Cooperation. In Correspondent Banking, Don Lamon and his associates have achieved a record of cooperation and friendly personal service. They’re anxious to be of service to you, too. U N IO NB a iU K& TR U S TC O . 60 Com m erce St., Montgomery, Alabam a Alabama’s Largest Independent Bank 94 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HARROW SMITH CO M PAN Y call TOLL FREE 800-392-5821 Union N atio n a l Bank Bldg. 5 0 1 /3 7 4 -7 5 5 5 Little Rock, Arkansas J. E. WOMELDORFF, Executive Vice President MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Must Reading for Every Director and Officer! These Three Board-Related Books (Including Revised Edition of Conflicts of Interest) Conflicts of Interest Responsibilities of Bank Directors Composition and Compensation of Bank Boards $ 4.25 (1) CO N FLICTS O F IN T E R E ST FO R D IREC TO RS AND O FFIC E R S OF FINANCIAL IN STITU TIO N S $6.25 . . . The new, revised edition includes everything directors and officers should know about the topic: Presents the problem of “conflicts,” gives examiners’ views of directors’ business relationships with the bank, examines ethical pitfalls involving conflicts, conflicts in trust de partments, details positive actions for reducing potential for conflicts. Other important data are the Comptroller’s ruling on statements of business interest of directors and principal officers of national banks and sample conflict of interest policies in use today that can be adapted by your board. N ew m aterial includes F D IC regulation on insider transactions. what is expected of them and the bank they serve in terms of responsibilities to depositors, shareholders and the pub lic. R esponsibilities examines recent court decisions, investment return, con tinuity of management, long-range planning, effects of structural changes —HCs, branching, mergers—on com petition, and more. Q U A NTITY PRICES 2-5 $4.50 ea. 11-25 $4.20 ea. 6-10 $4.35 ea. over 25 $4.10 ea. (3) COM POSITION AND COMPEN SATION O F BANK BOARDS $4.25 . . . A statistical analysis of bank boards based on comprehensive surveys by the Q U A N TITY PRICES 2-5 $5.50 ea. 11-25 $5.00 ea. 6-10 $5.25 ea. over 25 $4.75 ea. (2) R E SPO N SIB IL IT IE S O F BANK D IREC TO RS $4.95 . . . Written by Raymond Van Houtte, president & CEO of Tompkins County (New York) Trust Co., this book is “right” for to day’s problems. Due to the economic influence banks have on their commu nities, the rapid growth of holding companies and the ever-growing “con sumer” movement, directors must know MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis author, Dr. Lewis E. Davids, editor of The BANK BOARD Letter. This book will give the reader an insight into the variety of occupations represented on bank boards; the number of inside and outside directors; frequencies of meet ings; salaries paid. Also included are many tables, showing retirement ages for directors, per-meeting and annual fees, highest paid directors, etc. De signed to help you make comparisons and put your board structure and fees in proper perspective. Q U A NTITY PRICES 2-5 $3.85 ea. 11-25 $3.35 ea. 6-10 $3.60 ea. over 25 $3.10 ea. TH E BANK BOARD L E T T E R 408 Olive St., St. Louis, Mo. 63102 Send These Books: ................... copies, Conflicts of Interest ................................ copies, Responsibilities of Bank Directors $ $ ................................ copies, Composition & Compensation $ Total enclosed $ Name ............................................................................. Title ............ Bank Street .......................................................................................................... ........................................................................................................ City, State, Z i p ....................................................................................... (Please s e nd c h e c k w it h o rd e r. I n M is s o u ri, a d d 4 % % ta x .) 95 to construct a new main bank building in Little Rock’s Pulaski Heights area. The $2.8-million, two-story building will feature what reportedly will be the state’s only drive-up with an overhead teller installation, and parking for 100 cars will be provided on the building’s roof. The structure will have 60,000 square feet of space, 35,000 of which will be occupied by an affiliate, Pulaski Mortgage Co. The building’s main banking room will be a large open space with 20-foot-high ceilings. The bank’s first level will center around an enclosed air-conditioned brick-floored mini-mall fronted with retail shops opening into the bank lobby. A brickand-wood motif will be carried through out the bank’s interior, and its exterior will be of chocolate-tone brick and light tan precast concrete panels. Indiana Malone Heads IBA Division ■ R O BERT R. BATTON has been named to the newly created post of chairman at Kentland Bank. Succeed ing him as president is Ronald L. Humphrey, who formerly was execu tive vice president. Mr. Batton joined Kentland Bank in 1949 as vice presi dent and cashier, advancing to presi dent in 1961. Mr. Humphrey joined the bank in 1965 as trust officer. He previously managed the Federal Land Bank in Kentland. Ernest A. Malone, director of mar keting, Millikin National, Decatur, has been elected president of the Illinois Bankers Association’s mar keting and public relations division. In addition, the following IBA division officers have been named: first vice president— G. Thomas Andes, executive vice president, First National, Belleville; second vice president— Gerald Feezor, president and CEO , Peoples Bank, Marion; and secretary— Karen Reeves DeLee, IBA staff, Chicago. ■ W ILLIAM J. H O CTER has been elected staff vice president of the Illi nois Bankers Association, going there from the Cleveland Fed, where he was vice president and economist. Mr. Hocter is expected to succeed Robert C. Schrimple as IBA executive vice president in September, when Mr. Schrimple retires. Mr. Hocter entered banking in 1962 with the Chicago Fed and joined the Cleveland Fed seven years later. He began his new duties' with the IBA February 22. ■ LEONARD L. W H IT F IE L D has joined St. Joseph Valley Bank, Elkhart, as vice president and trust officer. He previously held the same posts at Mar shall County Bank, Plymouth. ■ L U C IL L E J. BA R RETT has been promoted to assistant vice president, Lafayette National, which she joined in 1969. ■ CASSANDRA M ID D LETO N has moved up from assistant cashier to cashier, Citizens Northern Bank, Elk hart. She joined the bank in 1974. Kansas ■ DENNIS W. SZALLA has joined First National, Wellington, as cashier. He formerly was with First National, Topeka, as assistant vice president and controller. Before that, Mr. Szalla was auditor, Columbia National, Chicago. HOCTER ■ E. STEV E WATSON has joined First Arkansas Bankstock Corp. (FA B C O ), Little Rock, as vice presi dent and general counsel. Mr. Watson, a CPA, formerly was assistant regional administrator and senior trial attorney in the Fort Worth Regional Office of the Securities & Exchange Commission. Illinois ■ JOHN C A LD W ELL M EEK ER has been elected a director of National Boulevard Bank, Chicago. He is execu tive vice president, Amoco Internation al Oil Co., the international subsidiary of Standard Oil Co. (Indiana). ■ CONTINENTAL BANK, Chicago, has elected the Reverend Raymond C. Baumhart, S.J., to its board. He is president, Loyola University of Chica go, and also is a director of Continental Illinois Corp., the bank’s parent HC. 96 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ HARRIS BANK, Chicago, has pro moted Jerome P. Crokin, Paul F . Law less, Wayne W . Thomas and William A. Thuma Jr. from assistant vice presi dents to vice presidents. Mr. Crokin is in the banking department’s division responsible for finance companies, mu tual funds and investment bankers and brokers. Messrs. Lawless, Thomas and Thuma are in the trust department. The bank’s HC, Harris Bankcorp., Inc., elected two new directors— Frank C. Osment, executive vice president, Stan dard Oil Co. (Indiana), and Charles Marshall, president and CEO, Illinois Bell Telephone Co. They also were elected to the bank’s board. Died: P. Jordan Hamel, 57, vice president, trust and investment services department, Continental Bank, Chica go, on March 4. A banker 34 years, Mr. Hamel started with the old City National, which was merged with Con tinental Bank in 1961. ■ NATION M EYER has been elected chairman, First National, Hutchinson, succeeding Leonard Beutler, who has been named h o n o r a r y c h a i r m a n . Charles Lear, formerly executive vice president, succeeds Mr. Meyer as presi dent. The bank also has announced the following promotions: to vice presi dent—Gary Karrer, from assistant vice president; and to assistant vice presi dents—Jim Willingham, from personal loan officer, and Kent Longenecker, from marketing officer. Mr. Karrer is a correspondent banking officer. MEYER LEAR MID-CONTINENT BA N K ER fo r April, 1 9 7 7 Kentucky B AU M A N BRIXEY ■ H. C. BAUMAN, vice president, Commerce Bank, Kansas City, has been elected managing officer of the Kansas division of the correspondent division. He joined the bank in 1975 and has been a vice president since last Novem ber. ■ D. M ICHAEL BR IX EY has joined Commerce Bank, Kansas City, Mo., as assistant vice president in the corre spondent bank division. He has been assigned to southern Kansas. Mr. Brixey had been a bank examiner for the FD IC since 1967. SCHUSTER ■ D ER YL K. SCH USTER, formerly regional director, U. S. Small Business Administration, Kansas City, has joined Overland Park State as executive vice president. He served the SBA for eight years. Prior to that, he had been Kan sas administrative assistant to Senator James B. Pearson and had spent eight years in commercial banking. As SBA regional director, Mr. Schuster directed the SBA’s four-state operation. * H. PH IL MAPES has been promot ed to senior vice president and con troller, MidAmerican Bank, Shawnee Mission. He joined the bank last year as vice president and controller. ■ CEN TRAL BANK & TR U ST is the new name for Central State Bank & Trust Co., Wichita. ■ CLYTIA ARMES has retired after more than 50 years as president of Citizens Bank of Grayson County, Leitchfield. She has been named presi dent emeritus. Succeeding her is How ard Wood, who joined the bank last August. In addition, Paul Gibson, vice president and Big Clifty Office man ager, has been advanced to senior vice president and will continue at the Big Clifty Office. Prior to joining Citizens Bank, Mr. Wood served for 12 years with Citizens Bank of Glasgow, most recently as vice president and con sumer loan department manager. ■ CITIZEN S F ID E L IT Y , Louisville, has named Charles J. Thayer senior vice president and chief financial offi cer, succeeding W . Robert Tennill, vice president, who resigned recently. Named vice presidents were Richard D. Whitty, Henry L. Ryan Jr., Guilio Guinchigliani, Kelly Downard, James R. Combs, James B. Hill and Joseph Morrison. Mr. Thayer joined the bank in 1969 and was named senior vice president in January. ■ F IR S T C ITY BANK, Hopkinsville, broke ground recently for its new NorthWest Branch. The branch will feature four inside teller windows and three drive-up units, as well as an ATM. Completion of the near-$300,000 project is expected this summer. FORET ZELLER service with the New Orleans Fed, which he joined in 1925. He was hon ored with a 50-year plaque from the Louisiana Bankers Association at its 1975 convention. ■ M ICHAEL J. RAPIER, who was president and chief administrative of ficer, National Bank of Commerce in Jefferson Parish, has been named presi dent and CEO. He has been in banking 17 years. Vic J. Passera, formerly chair man of the board and CEO, continues as chairman of the board and also was made chairman of the executive com mittee. A former president of the bank, which he joined 21 years ago, Mr. Pas sera has been in banking 45 years. In other action, NBC elected Sue Cham berlain assistant vice president/admin istration, William E. Miller assistant vice president and manager, Driftwood Branch, and Audrey Aucoin banking officer/personnel administrator. Louisiana ■ REHM T. W IN TERS has been pro moted to vice president and cashier at Liberty Bank, New Orleans. He joined the bank in 1974 after service with another New Orleans institution. ■ CHARLES E. FO R ET, vice presi dent, National American Bank, New Orleans, has been named manager of the bank’s correspondent banking divi sion, succeeding Milton J. Zeller, who has retired after 34 years with the bank. Mr. Foret joined the bank in 1957 and was named vice president in January, 1976. Mr. Zeller’s service at National American was preceded by RAPIER PASSERA ■ JER R Y W. BREN TS has been ad vanced from senior vice president and chief administrative officer to senior executive vice president and chief op erating officer at First National, La fayette. Prior to joining the bank, Mr. Brents worked for a CPA firm for two years before becoming a special agent with the F B I. He left the F B I in 1974 W e make investment & safekeeping easier for you! Dickerson COMMERCIAL NATIONAL BANK Jack Markey 6th and Minnesota Ave. • Kansas City, Kansas 66101 «Member F.O.I.C. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 97 after eight years, going to First Nation al as vice president in charge of cor porate planning. He was named to his previous position in 1976. BRENTS Missouri ■ F IR S T NATIONAL, Kansas City, has promoted Bill R. Mattox to vice president and Rodney K. Brown to as sistant vice president. Mr. Mattox joined the bank in 1963. Mr. Brown has been with the bank since 1974. Named advisory directors were Archie R. Dykes, chancellor, University of Kansas, and Joseph C. Grissom, presi dent, Western Auto Supply Co. H AM LIN ■ W ILLIAM J. HAMLIN r e tir e d March 31 as executive vice president, Guaranty Bank, Alexandria. He joined the bank in 1952 as vice president, was elected senior vice president in 1960, executive vice president in 1970 and a director in 1972. A graduate of the School of Banking of the South, Louisi ana State University, Baton Rouge, Mr. Hamlin also was elected a certified commercial lender by the ABA in 1975. R. BROWN M ATTO X ■ THOMAS J. BROWN, vice presi dent, Commerce Bank, Kansas City, has been elected managing officer of the Missouri division of the correspon dent division. D. Michael Brixey has joined the bank as an assistant vice president in the correspondent division. Mr. Brown joined the bank in 1969; Mr. Brixey was formerly an FD IC ex aminer. Elected vice presidents were Dev Strischek and James R. Trigg, both of whom joined the bank last year. Mississippi ■ BROOKHAVEN BANK has pro moted Mrs. Elizabeth Emfinger and Mrs. Patsy Smith to assistant cashiers and Mrs. Agnes Ratliff to auditor. Mrs. Emfinger joined the bank in 1964, Mrs. Smith in 1963. Mrs. Ratliff has been with the bank for 15 years. BARBER How-dee! FERGUSON SCH N U CK ■ M ERCAN TILE TRU ST, St. Louis, has elected Charles H. Buxton II cash ier. He is also vice president and head of the operating department. Named to the bank’s board were Williard F. Barber Jr., Brown Shoe Co.; Robert W. Ferguson, Southwestern Bell; and Don ald O. Schnuck, Schnuck’s Markets. Mr. Barber was formerly an advisory director. ■ ST. LOU IS UNION TR U ST has elected August A. Busch III, president and CEO, Anheuser-Busch, to its board. He was formerly an advisory director. C oun try/w estern personality M innie Pearl (I.) chats w ith Juanita G. Summers, v.p. & a.t.o ., Brookhaven Bank, during the N a t'l Crusade Kickoff M eeting o f the A m erican Cancer So ciety. Both w e re participants in the tw o -d a y m eeting held in A tla n ta : Miss Pearl is a m em ber o f the society's bo ard and a longtime ACS volunteer; Mrs. Summers is v.p. o f the Lincoln County Unit of the ACS and is serving as cam paign ch. during the 1977 drive. 98 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ ST. LOU IS COUNTY NATIONAL, Clayton, has announced its intention to leave the Fed and convert to a state charter, taking the name of St. Louis County Bank, its original title. The competitive disadvantage involved in Fed membership was cited as the rea son for withdrawal. In other action, the bank has elected Henry D. Schodde, Southwestern Bell, to its board. BUXTON ■ BOATMEN’S BANCSHARES, St. Louis, has elected Edwin J. Spiegel Jr., chairman and president, Alton Box Board Co., to its board. B W A LTER J. EITZEN , chairman, Farmers & Traders, California, was honored with a reception recently to mark his 70th anniversary with the bank. Mr. Eitzen is 94. B LEO F. MANN JR. has been pro moted to vice president, United Mis souri Bank, St. Louis. He joined the bank in 1973. Jack House Dies John C. (Jack) House, 39, vice p r e s i d e n t , business developm ent d e p a r t m e n t , United Missouri Bank, Kansas City, died suddenly last month. He joined the bank in 1973 and tra v eled in the St. Louis m etropolitan a re a as w e ll as in Io w a . MID-CONTINENT BA N K ER fo r April, 1 9 7 7 ROGERS SILVERBERG ■ JOHN P. ROGERS, assistant vice president, Mercantile Trust, St. Louis, has been elected president of the St. Louis Chapter, Bank Administration Institute. Also named chapter officers were: first vice president— Michael P. Dolan, executive vice president, Plaza Bank of West Port, St. Louis County; second vice president— S. H. Wamhoff Jr., vice president and secretary, Lindell Trust, St. Louis; treasurer— Bern hardt J. Sartorius, general auditor, St. Louis Fed; and secretary—Milton A. Weis, auditor, Boatmen’s National, St. Louis. The following have been named St. Louis BAI directors: Kenneth F. Buettmann, senior vice president, Mer cantile National of St. Louis County; William F. Unwin, vice president and cashier, Boatmen’s Bank of Concord Village; and Ernest J. Brundick, vice president and comptroller, Manufac turers Bank, St. Louis. ■ F IR S T NATIONAL, St. Charles, has promoted Mae Silverberg to vice president and Carl Waldvogel Jr. to loan officer. Mrs. Silverberg has been with the bank 27 years; Mr. Waldvogel six years. ■ JOHN H. McHENRY has been pro moted to executive vice president at United Missouri Bank, Jefferson City. Promoted to vice president and cashier was Larry L. French. Both men joined the bank in 1974. ■ U N ITED M ISSOURI BANK, Kan sas City, has promoted Leone Hoffman Park to senior vice president in the business development department, Harlan L. Everett III to director of marketing, William A. Hann and Phil lip A. Harris to vice presidents and Robert Gnaegy to assistant vice presi dent. Mrs. Park joined the bank in 1968, Mr. Everett in 1974, Mr. Hann in 1968, Mr. Harris in 1966 and Mr. Gnaegy in 1967. ■ J. RICHARD FU RR ER, executive vice president, South Side National, St. Louis, has been elected president of the Bank Management Association of St. Louis. Other officers elected were: first vice president—Paul Ross, senior vice president, First National, St. Louis; second vice president— Harley Schwering, president and CEO, Manufacturers Bank, St. Louis; treasurer—Quinton Keller, president and CEO, Lemay Bank; and secretary—A. R. Naunheim, chairman, Charter Bank, Jennings, and president, Charter Bank, Overland. In addition, the following have been named directors of the association: John D. Weiss, president and chair man, T. G. Bancshares Co., St. Louis; Lee W. McNorton, president, Boat men’s National of North St. Louis County, Florissant; and Cyril A. Niehoff, president, Florissant Bank. Died: G. Jack Jones Jr., 53, presi dent, Clifford Banking Co., Clarksville, last month. New Mexico ■ VALLEY NATIONAL, Española, has promoted William A. (Bill) Reed from vice president to executive vice president and Laura Martinez to cus tomer service officer. ■ RONALD R. FIR E ST O N E has been appointed assistant cashier at First National of Lea County, Hobbs. He was formerly with Clovis National. ■ STAN LANE has been promoted to executive vice president at Rio Grande Valley Bank, Albuquerque. He has been in banking since 1965 and was formerly senior vice president. ■ C ITIZEN S BANK, Las Cruces, has named John D. Yarbrough, oil execu tive, and Everett Crawford, senior vice president and cashier, to its board. Mr. Crawford joined the bank in 1973. Lar ry Dorbandt has been elected assistant vice president. ■ DAN SOCOLOFSKY has been named trust officer at Farmers & Mer chants Bank, Las Cruces. He was formerly with a local accounting firm. HENKE ■ CLYDE V. CRUTCHM ER has been named representative of corre spondent banking, Fourth National, Tulsa. He is a former football player and stockbroker. Frank X. Henke III has been named vice chairman and chief operating officer of the bank and its parent HC, Fourth National Corp. He was formerly HC president. He joined the bank in 1967 and headed the trust division. Tom P. Henson has been elected HC president, succeeding Mr. Henke. He joined the bank in 1954 and is an executive vice president of the bank. ■ CHARLES B. CHADW ELL has been elected president and CEO, Se curity Bank, Lawton. Exall English was elected to the new post of vice chair man. Promoted to senior vice president was Grover B. White and Joan Hough ton, Margaret McCracken and Dennis A. Saunders were elected vice presi dents. James J. Doherty and Jack Vardeman were elected assistant vice presidents and James Barnett, vice president, was elected to the board. ■ FOUR D IREC TO RS have been elected to the boards of Liberty Na tional Corp. and its subsidiaries, L ib erty National Bank and Liberty Finan cial Corp., all in Oklahoma City. They are Philip F. Far ha, William J. McWil liams, J. B. Saunders III and Jack C. Tway. Oklahoma Failed B an k Purchased ■ BEN HARNED JR ., senior vice president, First National, Bartlesville, retired March 1 after 43 years with the bank. He remains a director and con sultant. He joined the bank in 1934 and was named senior vice president in 1969 and director in 1971. ■ R O BERT P. HOMES has been named a vice president in the commer cial loan department at UnionBank, Oklahoma City. He joined the bank in 1975, following service with First Na tional, Dallas. MID-CONTINENT BA N K ER fo r April, 1 9 7 7 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CRUTCHMER Washita State has been organized to take over recently failed First State, Foss. The new bank is headed by members of the Huckabay family and opened for business on March 14 in the failed bank’s quarters. First State was closed on March 11 by the Oklahoma banking commis sioner. All depositors of First State auto matically became depositors of the new bank. The FD IC approved the purchase of the failed bank for $107,760. 99 ■ F IR S T NATIONAL, Oklahoma City, has elected Tom Dunlap and Gerald Cornelison vice presidents and Miss Betty Adkins assistant vice president. Miss Adkins has been with the bank since 1963; Messrs. Dunlap and Cor nelison are new to the bank. In other action, Ron Bradshaw, senior vice pres ident, has been promoted from head of the real estate lending division to a newly created post in the commercial lending group. He coordinates the metropolitan lending, personal banking and agricultural lending activities and heads the metropolitan lending divi sion. In the latter post, he succeeds Don Buckalew, senior vice president, who now heads the new regional com mercial lending division. ■ R. G. (TONY) TU R N BU LL has joined Shepherd Mall State, Oklahoma City, as vice president. He was former ly with First National, Oklahoma City, and before that, was with City Nation al, Oklahoma City. ■ JOHN B. JAM ES has joined the correspondent banking department of Citizens & Southern National, Atlanta, as vice president. He manages the de partment’s division serving a territory that includes Tennessee. Mr. James joined the bank in 1967 and has served in a number of departments. Nawrocki has been named information systems division manager and William E. Goodman has been named com modity division manager. vices. Bryan Hardeman has been elect ed a loan review officer and James R. Hulme has joined the bank as trust ad ministration officer. ■ AMERICAN CITY BANK, Tullahoma, has elevated Duane Thorpe to chairman and CEO, named George S. Vibbert Jr. president and elected Leon Ring vice chairman. Mr. Thorpe was the bank’s first president. ■ F IR ST NATIONAL, Canyon, has promoted Jody Magness to assistant vice president and Jan Dietz to assist ant cashier. Miss Magness began her banking career in 1959; Miss Dietz has been with the bank since 1969. ■ F IR S T AMERICAN NATIONAL, Nashville, has named Donald R. Mullican a vice president and promoted Thomas A. Wright, James L. Uden, Larry J. King, Robert L. Polston and Richard A. Lewis assistant vice presi dents. Richard E. Herrington joined the bank recently as an assistant vice president and head of the financial planning department. Mr. Mullican joined the bank in 1959. ■ W ILLIAM J. RO V ERE JR. has been elected a vice president in the metropolitan department at First City National, Houston. He joined the bank recently after service with Bankers Trust, New York City. In other action, First City Bancorp, has received ap proval to acquire East Dallas Bank. It will be the 25th acquisition for the HC. ■ U N ITED AMERICAN, Memphis, has named Robert L. Wheeler a vice president and Alan G. Cooper and John C. Woolley assistant vice presi dents. Mr. Wheeler was formerly with City National, Memphis. ■ ALLEN B. CLARK JR ., assistant vice president and trust officer, Repub lic National, Dallas, was among the 104 young men and women across the nation selected as regional finalists for the 1977-78 White House fellowships. The fellowships were created to pro vide firsthand experience in the process of governing the nation. ■ J. D. BUCKMAN, vice president and trust officer, and Everett E. Kidd, vice president, retired recently at Fort Worth National. Each man has served the bank for 40 years. ■ M IKE MAGNUSSON has been pro moted from cashier to vice president and cashier, Bank of Ardmore. The fol lowing have been advanced from as sistant cashiers to assistant vice presh dents: Reba M. Gordon, Linda L. Whitsett, Wynona Hodges, Sandra Gar rison, manager, Elkton Branch, and Randall B. Hobson and William H. Howell, both with Bank of Giles County Branch, Pulaski. ■ F IR S T TE N N ESSE E NATIONAL CORP., Memphis, has appointed Troy Barron retail credit division manager to replace Glenn Hodges, who was named marketing division manager of First Tennessee Bank, Memphis, and director of marketing for the HC. Stan 100 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ JAM ES R. PERRY has been elected president, First National, Fort Worth. He had been selected for the job late last year, but continued as chairman of State National, Odessa, until March 1. He will continue as State National’s chairman. Mr. Perry is also a director of First United Bancorp., HC con trolling both banks. ■ R O BER T H. DEDMAN, chairman, Club Corp. of America, has been elect ed to the board of First National, Dal las. First International Bancshares, HC controlling First National, has received Fed approval to acquire Beaumont State. ■ PATRICK H. O’DONN ELL JR., senior vice president, Capital National, Austin, has been promoted to manager, trust and property management ser • Index to Ad ve rtisers * A m erican Breeders S ervice .............................. 15 A m erican Express Co. (M oney O rder D iv.) 23 A m erican Express Co. (Travelers Cheques) .................................... 34-35 ATM M anual ........................................ 59 B ank Board Letter ................... 24, 26, 92-93, B ank B uilding Corp............................................. B ank o f Oklahom a ............................................ Barclay, The ......................................................... Beau Rivage H otel .............................................. B oatm en’s N ational Bank, Kansas City . . . B oatm en’s N ational Bank, St. Louis ........... Brandt, In c ................................................................ 95 62 31 65 78 56 3 53 C entral Trust Co., C incin nati ......................... Chase M anhattan Bank .................................... Cheshire Inn & Lodge ...................................... C hristm as Club— a corporation ............... 20, C iticorp ................................................................... C itizens Fidelity Bank & Tr. Co., Louisville Com m erce Bank, Kansas C ity ....................... Com m ercial N a t’l Bank, Kansas City, Kan. Corporate Personnel .......................................... C ountry Press, In c ............................................... 51 27 64 32 33 87 69 97 70 22 Deposit G uaranty N a t’l Bank, Jackson, M iss....................................................... 77 D etroit B ank & Trust Co..................................... 74 Diebold, In c ........................................................... 54-55 Doane A gricultu ral Service, In c ....................... 76 Downey Co., C. L................................................... 61 Farm ers Grain & Livestock H edging Corp. 30 Federated S ecurities Corp.................................. 18 Financial Insurance Service, In c ..................... 67 First A labam a Bancshares .............................. 8 First C ity N ational Bank, Houston ............... 89 First N ational Bank, A m arillo, T e x ................ 13 First N ational Bank, Kansas C ity ................. 85 First N ational Bank, St. Louis ....................... 102 First N a t’l B ank of C om m erce, New O r le a n s ....................................................... 79 Fourth N ational Bank, Tulsa ....................... 47 H arland Co., John H ............................................ H arris Trust & Savings Bank, Chicago . . . . H arrow S m ith Co.................................................... 25 71 94 Insured C redit Services, In c ............................. Integon Corp............................................................. In ternatio nal S ilver Co........................................ 75 83 21 Le Febure Corp....................................................... Liberty N a t’l Bank & Tr. Co., Oklahom a C ity ................................................ 19 2 M em phis B ank & Trust Co........................... 73, 80 M ercantile Bank, St. Louis ............................. 5 M osler ...................................................................... 36 NADA Used Car Guide Co................................. 17 N ational Stock Yards N ational B ank ......... 101 Rand M c N a lly & Co.............................................. 49 Scarborough & Co.................................................. 9 Union Bank & Trust Co., M ontgom ery, A la. U nited Missouri Bank, Kansas C ity ............. 94 7 Value Line In vestm en t Survey ....................... 91 W h itney N ational Bank, N ew Orleans ......... W orthen B ank & Trust Co., L ittle Rock . . 29 11 MID-CONTINENT BA N K ER fo r April, 1 9 7 7 numbers, please! As tax and trust officer, Ron Watson deals prim arily in numbers, but he refuses to give in to today’s tendency to look on a custom er as just another number. Ron can add up a good num ber of banker friends because he insists on looking upon them as people rather than a set of digits. And he likes to think that his particular expertise figures into th e ir correspondent needs as a very im portant plus. In his area of operations, Ron, of course, has authority to make decisions, so when you want to call S. Y. B.. in regard to taxes or trusts, you’ve g ot Ron’s number — 618-271-6633. "Y O U R B A N K E R 'S B A N K " . . . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Just across the river from St, Louis O F N A T IO N A L C IT Y NATIONAL STOCK YARDS. ILLINOIS 62071 RABBIT TRANSIT. your availability of funds. “Rabbit Transit.” It’s an improved system devised by First National Bank in St. Louis to expedite the clearing of cash letters. For you, it can mean two important things: better avail ability and bigger profits. Here’s how. We’re right inthe heart of the nation. That’s more important than you might realize. Our location in the heart of Middle America permits ideal transportation into and out of St. Louis and pro vides a superior transportation network to all Federal Reserve cities. In addition, St. Louis is a Federal Reserve city which enjoys a proven advantage in mail times, and is less than one hour by air from Federal https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Reserve Headquarters and International Airports in Chicago and Kansas City. Our computer is totally dedicated. It’s the latest Burroughs computer system with IPS and MICR technology. It’s used exclusively by our transit operation. And delays do not occur because of con flicting priorities or competi tion for computer time. Our Proof-of-Deposit system computes float on each item processed by endpoint and time of day. Full-time specialized staff. This staff monitors out going transit and keeps current with any changes in transporta tion scheduling. Volumes and endpoints are monitored con tinually so cash letters clear efficiently. With their up-to-the-minute knowledge, our specialized staff can also make a complete and objective analysis of your check clearing system after an appropriate test period. Then, they’ll present a written recom mendation of how it can be handled with increased speed and efficiency. Phone (314) 342-6222 for your own transit analysis. For a copy of our Avail ability Schedule, to arrange for an analysis of your check clearing system, or for more information about “Rabbit Transit,” phone us now. Or contact your Correspondent Banker at 510 Locust, St. Louis, Missouri 63101. First National Bank in St. Louis H^i Member FD1C H I ■ ■
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