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MID-CONTINENT BANKER (issN0026-296X) j p e Financial M agazine o f the M ississippi Valley & Southw est AUGUST, 1980 See Page 51 https://fraser.stlouisfed.org ____ Federal Reserve Bank of St. Louis Ag Bankers Survey Farm Scene— Page 19 Liberty looks at: Energy leaders with Oklahoma roots. All Oklahomans benefit from the jobs and salaries provided by the oil in dustry. From world-wide energy developers to re gional independent oil producers, hundreds of oil companies have grown from Oklahoma roots, many aided by financing from Liberty Bankthrough the years. Just one ex ample is the Energy Com pany which owns the drilling rig shown here. It all began in 1957 and con tinues today, with Liberty as its major source of financing. year, 60% of our com mercial and industrial loans will be energyrelated. With the help of Liberty’s billion (plus) dol lars of resources, our commercial bankers will provide financial service to encourage research, exploration and new de velopments in Oklahoma’s oil industry. Through this direct in volvement, Liberty’s pro fessional and financial resources constitute an energy force that stimu lates the growth of jobs, paychecks and homes for Oklahomans. At Liberty, we realize the important role of the oil industry in Oklahoma’s future. That’s why this DOING MORE FOR YOU WTHEnergy We’ve got the answers # j LIBERTY THE BANK OF MID-AMERICA The Liberty National Bank and Trust Company / PO. Box 25848 / Oklahoma City, Oklahoma 73125 / (405) 231-6000 / Member FDIC MID-CONTINENT BANKER is published monthly except semimonthly in May by Commerce Publishing Co., 408 Olive, St. Louis, Mo. 63102, August, Vol. 76, No. 9. Controlled circulation postage paid at Fulton, Mo. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis O u r Personal Touch Is Becoming A n American Tradition Harland.The Great American Check Printer. H A R LA N D JO H N H H A R LA N D COM PANY • CHEC K PRINTERS P O BOX 105250, ATLANTA. GA 30348 © H A R L A N D 1980 Left to Right: Abigail Woods, Assistant Cashier, Contract Services Group; John Fowler, Senior Vice President, Cor respondent Division; Gary A. Thompson, Assistant Cashier, Data Processing Department; James Hopkins, Assistant Vice President, Data Processing Department. The First offers you innovative new E F T services backed by banking professionals to set you apart from your competition and attract new customers. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis OiarterBank FIR S T NATIONAL BANK OF KANSAS CITY 10TH AND BALTIMORE □ BOX 38 □ KANSAS CITY, MO 64183 (816) 221-2800 □ MEMBER FDIC MID-CONTINENT BANKER for August, 1 9 8 0 ili Fürst Commerce Corporation and First National Bankof Commerce New Orleans M EM B E R FDIC AND SUBSIDIARIES • FOR SIX MONTHS ENDED JUNE 30,, 1980 FIR S T C O M M E R C E C O R P O R A TIO N FIR S T C O M M E R C E C O R P O R A TIO N C O N S O L ID A T E D BALANCE S H E E T C O N S O L I D A T E D S T A T E M E N T O F IN (In Thousands) (In Thousands) OME S ix M o nth s E nded J u n e 30, 1979 1980 Ju n e 30, 1980 1979 ASSETS Cash and d u e fro m b a n ks................ $ 1 7 1 , 0 5 9 $ 1 2 0 ,6 7 4 18,500 65,789 Due fro m b a n k s —tim e ...................... In ve stm e n t s e cu ritie s: 161,337 8 3 ,6 05 U S. tre a s u ry s e c u ritie s ................ O b lig a tio n s o f U.S. a g e n cie s and 59,470 47,2 85 c o rp o ra tio n s ................................. O b lig a tio n s of states and p o litic a l 56,112 4 9,0 06 s u b d iv is io n s ................................. O th e r bonds, notes, d e b e n tu re s 18,882 1,896 and co rp o ra te s to c k .................. Total in v e s tm e n t s e c u ritie s (m a rke t va lu e $ 30 9 ,0 0 7 ,0 0 0 and $ 18 0 ,5 8 8 ,0 00 , 181,792 2 9 5 ,8 0 1 re s p e c tiv e ly )............................ 6 34 T rading a c c o u n t s e c u ritie s .............. 155,736 O th e r sh o rt-te rm in v e s tm e n ts ........ 211 ,750 408,921 3 9 3 ,1 9 1 L o a n s...................................................... (6,930) (8 ,1 0 8 ) A llo w a n c e fo r loan losse s............ (6,179) (10,004) U ne a rn ed in c o m e .......................... 3 95 ,81 2 375 ,079 Total net lo a n s............................. D ire ct lease fin a n cin g , n e t of u ne a rn ed in co m e o f $ 5 3 4 ,0 0 0 and $871 ,0 0 0 , 3,3 8 4 2,879 re s p e c tiv e ly ..................................... Bank p rem ise s and e q u ip m e n t.. . . 14,052 14,225 Due fro m cu sto m e rs on a c c e p ta n c e s ..................................... 651 1,570 3,6 4 9 F o re clo se d real e s ta te ...................... 668 Real e sta te s u b je c t to c o n tra c ts of 10,073 s a le ...................................................... A c c ru e d in te re s t on s e c u ritie s and 13,610 9,4 4 6 lo a n s ................................................... 3,5 8 6 O th e r a sse ts......................................... 5,593 Total a ssets................................... $ 1 , 1 5 6 , 9 3 1 $919,081 L IA B IL IT IE S D eposits in d o m e s tic b an kin g o ffice s: D em and d e p o s its ........................... $ S a vin g s d e p o s its ............................ O th e r co n s u m e r tim e d e p o sits. . Tim e d e p o sits o f $ 1 0 0 ,0 0 0 and o v e r................................................. F o re ig n bran ch tim e d e p o sits o v e r $ 1 0 0 ,0 0 0 ........................................... Total d e p o s its ............................... S h o rt-te rm b o rro w in g s ..................... Bank a cce p ta n ce s o u ts ta n d in g ...................................... A ccru e d in te re s t p a y a b le ................ A cco u nts payable and o th e r accrued lia b ilitie s ............................................ L on g -te rm d e b t................................... Total lia b ilitie s ............................. S T O C K H O L D E R S ' EQ U ITY C om m o n sto ck, $5 par va lu e A u th o riz e d — 1 0 ,0 00 ,0 0 0 shares Issued—2,6 5 8,51 9 and 2,185,721 shares, re s p e c tiv e ly ...................... C apital s u rp lu s ..................................... R etain e d e a rn in g s .............................. 3 8 8 ,9 2 1 100,420 85,719 $ 3 1 9 ,9 8 0 1 14,920 5 3,3 99 178 ,517 753,577 156,077 6 4 4 ,3 7 6 35,097 788 ,674 241 ,390 17,271 6 61 ,64 7 1 57,660 651 9,806 1,570 6,491 31,635 21,065 1,093,221 6 ,9 0 8 24,1 53 8 5 8 ,4 2 9 13,293 31,196 20,917 65,406 L e ss—7 1 ,5 1 8 shares o f co m m on (1 ,6 9 6 ) sto ck in treasury, at c o s t.............. 63,710 Total sto c k h o ld e rs ' e q u ity. . . . Total liab ilitie s and sto ckh o ld e rs’ e q u ity ......................................... $ 1 , 1 5 6 , 9 3 1 1 0,929 25,4 83 25,9 36 6 2 ,3 48 (1,696) 6 0,6 52 $919,081 IN T E R E S T IN C O M E $ 29,720 In te re s t on o b lig a tio n s o f states and p o litic a l s u b d iv is io n s ............... In te re s t and d iv id e n d s on o th e r in v e s tm e n t s e c u ritie s ....................... In te re s t on tra d in g a c c o u n t s e c u ritie s .............................................. In te re s t on s h o rt-te rm in v e s tm e n ts and bank d e p o sits. .■......................... Total in te re s t in c o m e ................... $ 24,4 65 1, 3 4 2 1,402 11,672 4,667 5 104 17,412 60 , 1 5 1 8,051 38,6 89 2,647 2 ,884 IN T E R E S T E X P E N S E In te re s t on savin g s d e p o s its ............ In te re s t on o th e r c o n s u m e r tim e d e p o s its .............................................. In te re s t on tim e d e p o s its o f $ 1 0 0 ,0 0 0 and o v e r.......................... In te re s t on fo re ig n b ranch tim e d e p o s its .............................................. In te re s t on s h o rt-te rm b orro w in g s. In te re s t on lo n g -te rm d e b t............... Total in te re s t e x p e n s e ............... 3,795 1,667 10,262 7,7 7 0 2,549 15,455 919 35,627 7 59 6 ,3 1 9 976 20,3 75 N ET IN T E R E S T IN C O M E ........................ P R O V IS IO N FOR LO A N L O S S E S ........ 24,524 2,220 18,314 2,422 22,304 15,892 2,968 871 2,664 766 65 3,904 26,208 85 3,5 1 5 19,407 6,337 1,629 7,966 1,417 1,534 4,190 5,453 1,282 6,7 3 5 1,398 1,336 3,8 4 5 N E T IN T E R E S T IN C O M E A FTE R P R O V IS IO N FOR LO AN L O S S E S . . . O T H E R IN C O M E S e rv ic e charges, e xc h a n g e and o th e r fe e s ............................................... O th e r o p e ra tin g re v e n u e ...................... Trading a c c o u n t s e c u ritie s gains and lo s s e s ....................................................... Total o th e r in c o m e .......................... Total o p e ra tin g in c o m e .................. O P E R A TIN G E X P E N S E S a la ry e x p e n s e ......................................... E m p lo y e e b e n e fits .................................. Total p e rs o n n e l e x p e n s e ............... N e t o c c u p a n c y e x p e n s e ....................... E q u ip m e n t e x p e n s e ................................ O th e r o p e ra tin g e x p e n s e ...................... O p e ra tin g e x p e n s e b e fo re c o s t o f fo re c lo s e d p ro p e rty .................... C ost o f fo re c lo s e d p ro p e rty ................. Total o p e ra tin g e x p e n s e ................ IN C O M E B E F O R E IN C O M E TAX E X P E N S E A N D S E C U R IT IE S T R A N S A C T IO N S .................................... IN C O M E TAX E X P E N S E ........................... IN C O M E B E F O R E S E C U R IT IE S T R A N S A C T IO N S .................................... Total in v e s tm e n t s e c u ritie s 11,129 3,509 4,4 5 9 1,324 7,620 3,1 3 5 (10,866) 4,998 In co m e ta x e ffe c t.............. (5 ,8 6 8 ) N e t s e c u ritie s losses. $ 1,752 N ET IN C O M E ................................................. S E A R N IN G S PER S H A R E P rim ary In co m e b e fo re s e c u ritie s tra n s a c tio n s ......................................... S N et in c o m e ..............................................$ F u lly d ilu te d In co m e b e fo re s e c u ritie s tra n s a c tio n s .........................................$ N et in c o m e ..............................................$ W E IG H T E D AV E R A G E C O M M O N S H A R E S O U T S T A N D IN G ................... 13,314 1,634 14,948 15,107 (28) 15,079 (16) 7 $ _____ i i ) 3,1 2 6 2. 98 0.69 $ $ 1.24 1.23 2. 3 6 0.63 $ $ 1.05 1.05 2,555 2,536 These financial statem ents are prelim inary unaudited figures, and are subject to adjustm ents which may or may not be material. E X E C U T IV E M A N A G E M E N T O F F IR S T N A T IO N A L B A N K O F C O M M E R C E T H O M A S G. R A P I E R F R A N C I S C. D O Y L E IAN A R N O F P re sid e n t and C h ie f E x e c u tiv e O ffic e r C hairm an o f th e B oard E x e c u tiv e V ice P re sid e n t C h ie f F in an cia l O ffic e r M I C H A E L A. F L I C K M IC H A E L JE SSE S H A N N O N C H R I S T O P H E R B. Y O U N G E xe c u tiv e V ice P re sid e n t C h ie f C re d it P o licy O ffic e r E x e c u tiv e V ice P re sid e n t MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis E x e c u tiv e V ice P re sid e n t A. P E Y T O N B U S H III E x e c u tiv e V ice P re sid e n t C h ie f B a n k in g O ffic e r J O S E P H C. W H I T E S e n io r V ice P re sid e n t 5 Convention Calendar The Financial Magazine of the Mississippi Valley & Southwest Volume 76, No. 9 August, 1980 FEATURES 19 AG BANKERS REPORT ON FARM SITUATION M o st a re h a n g in g in d e s p ite a d v e rs e c o n d itio n s 23 UNDERSTANDING FUTURES MARKETS I t ’s th e k e y to su c c e ssfu l h e d g in g 33 INDUSTRIAL REVENUE BONDS T h e y g av e b a n k its n e w b u ild in g 42 FILLING CAPITAL VOIDS OF BUSINESS FIRMS B a n k /c o m m e rc ia l fin a n c e firm c o o p e ra tio n can d o it 54 THE INTERSTATE-BANKING CONTROVERSY T w o b a n k e rs g iv e o p p o s in g v ie w p o in ts DEPARTMENTS 8 THE BANKING SCENE 10 WASHINGTON WIRE 14 REGULATORY NEWS 16 BANKING WORLD CONVENTIONS 63 KENTUCKY 64 AMBI REGIONAL MEETINGS 66 MISSOURI 75 KANSAS STATE NEWS 84 ALABAMA 84 INDIANA 85 MISSISSIPPI 86 OKLAHOMA 84 ARKANSAS 85 KENTUCKY 85 MISSOURI 86 TENNESSEE 84 ILLINOIS 85 LOUISIANA 85 NEW MEXICO 86 TEXAS Milwaukee, Wis., 161 W. Wisconsin Ave., 53203, Tel. 414/276-3432. EDITORS Ralph B. Cox Publisher Lawrence W. Colbert Assistant to the Publisher Rosemary McKelvey Editor Jim Fabian Associate Editor Advertising Offices St. Louis, Mo., 408 Olive, 63102, Tel. 314/ 421-5445; Ralph B. Cox, Publisher; Marge Bottiaux, Advertising Production Mgr. 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER (publication No. 3 4 6 -3 6 0 ) is published m onthly except semimonthly in May by Commerce Publishing Co., 408 Olive St., St. Louis, Mo. 63102. Printed by The Ovid Bell Press, Inc., Fulton, Mo. Controlled circulation postage paid at Fulton, Mo. Subscription rates: Three years $27; two years $20; one year $12. Single copies, $2 each. Foreign subscriptions, 50% additional. Commerce Publications: American Agent & Bro ker, Club Management, Decor, Life Insurance Selling, Mid-Continent Banker, Mid-Western 3anker and The Bank Board Letter. Officers: Donald H. Clark, chairman; Wesley H. Clark, president; Janies T. Poor, executive vice president and secretary; Ralph B. Cox, first vice president and treasurer; Bernard A. Beggan, William M. Humberg, Don J. Robertson and Law rence W. Colbert, vice presidents; David Baetz, assistant vice president. Aug. 31-Sept. 3: Independent Bankers Association of America Seminar/Workshop on Bank Ownership, Chicago, Drake Hotel. Aug. 30-Sept. 2: Assemblies for Bank Directors 42nd Assembly, Colorado Springs, Colo., the Broadmoor. Sept. 7-9: Kentucky Bankers Association Annual Con vention, Louisville, Galt House. Sept. 7-10: ABA Southern Regional Operations/Automation Workshop, New Orleans, Hyatt Regency. Sept. 8-9: Association for Modern Banking in Illinois Annual Convention, Chicago, Continental Plaza. Sept. 14-17: ABA Bank Card Annual Conference, New York City, New York Hilton. Sept. 14-17: Bank Marketing Association Annual Con vention, San Francisco, San Francisco Hilton. Sept. 14-26: ABA National Installment Credit School, Norman, Okla., University of Oklahoma. Sept. 21-22: ABA IRA Workshop/Trust Division, Chi cago, Hyatt Regency O’Hare. Sept. 20-21: ABA Bank Personnel Division Productiv ity Workshop, Seattle, Olympic Hotel. Sept. 21-24: ABA National Personnel Conference, Seattle, Olympic Hotel. Sept. 21-24: Bank Administration Institute National Convention, Detroit, Detroit Plaza. Sept. 24-26: ABA Introductory Bank Planning Work shop, Dallas, Fairmont Hotel. Oct. 1-3: ABA Executive Marketing Management Workshop/Trust Division, Chicago, Hyatt Regency O’Hare. Oct. 1-3: Bank Administration Institute Check Trunca tion Conference, Miami, Omni International Hotel. Oct. 5-8: National Association of Bank Women Annual Convention, Washington, D. C., Washington Hil ton. Oct. 5-9: Bank Administration Institute Conference on EDP Auditing, Houston, Stouffer’s Green way Plaza Hotel. Oct. 11-15: ABA Annual Convention, Chicago. Oct. 19-23: Independent Bankers Association of Amer ica Bank Executive Development Seminar, Muncie, Ind., Ball State University. Oct. 20-26: Consumer Bankers Association Annual Conference, Coronado, Calif., Hotel del Coronado. Oct. 26-28: ABA Employee Benefit Trusts Workshop, Chicago, Hyatt Regency O’Hare. Oct. 26-29: Bank Marketing Association Corporate Marketing Conference, Dallas, Fairmont Hotel. Oct. 26-31: ABA National Commercial Lending Gradu ate School, Norman, Okla., University of Oklahoma. Nov. 5-7: ABA Central Regional Workshop — 1980 Operations/Autom ation Division, Indianapolis, Hyatt Regency Indianapolis. Nov. 9-12: ABA National Agricultural Bankers Confer ence, Dallas, Loew’s Anatole. Nov. 9-12: Robert Morris Associates Fall Conference, St. Louis, Stouffer’s Riverfront Inn. Nov. 9-13: Bank Marketing Association Trust Market ing Workshop, Houston, Galleria Plaza. Nov. 9-20: ABA National Commercial Lending School, Norman, Okla., University of Oklahoma. Nov. 13-16: 43d Assembly for Bank Directors, Pinehurst, N. C., the Pinehurst. Nov. 12-14: Association of Bank Holding Companies Fall Meeting, Washington, D. C., Mayflower Hotel. Nov. 15-18: ABA Underwriting/Compliance Clinic, Houston, Houstonia Inn. Nov. 16-18: ABA National Correspondent Banking Conference, Atlanta, Hyatt Regency. Nov. 16-19: Bank Administration Institute ATM Con ference, New Orleans, New Orleans Hilton. Nov. 16-19: Bank Marketing Association Officer Call Sales Workshop, Chicago, Chicago Marriott. Nov. 18-22: Bank Marketing Association Essentials of Bank M arketing Course/Southwest Extension, Houston, University of Houston. Nov. 30-Dec. 2: Bank Marketing Association Product Development/Product Management Conference, New Orleans, Fairmont Hotel. Nov. 30-Dec. 3: Bank Administration Institute Money Transfer Conference, New York City. Dec. 4-7: Independent Bankers Association of America Seminar/W orkshop on Bank Ownership, Point Clear, Ala., Grand Hotel. Dec. 7-12: ABA National Commercial Lending Gradu ate School, Norman, Okla., University of Oklahoma. Jan. 18-20: ABA International Banking Conference, New York City, Grand Hyatt. Feb. 5-8: 44th Assembly for Bank Directors, Hawaii, Kuilima. MID-CONTINENT BANKER for August, 19 8 0 Does your correspondent bank minimize float in check clearing? A Mercantile Banker makes it smooth-sailing. If check clearing were a one-bank operation, it would be easy. But it isn’t. It takes a solid, broad-based organization. Mercantile has that organization — one set up to handle the two most im portant elements in the check clear ing process. Availability. First, th e re ’s our g e o g ra p h ica l co n ve n ie n ce . We operate four regional com puter centers to speed processing: Kansas City, Macon, Springfield and St. Louis. Over 200 direct send points to collect checks drawn on distant locations in a hurry. We continually keep tabs on airline schedules for daily deliveries to major banks around the country as well as to “ remote disbursement” banks. Float. Just as important, Mercantile experts can provide fast, accurate cash letter analysis. And they’ll recommend ways to cut float to rock bottom. Another tool is the automated balance reporting system we make available to our customers. Technology plays a big role, too. Our high-speed computers work 24 hours, processing 500,000 items every day. That’s why, on the average, your checks will clear in less than 0.9 days. All in all, 1600 Mercantile employees are ready to help make your check clearing job smooth-sailing. And that’s just one of the many cor respondent services we provide. To find out more about us, call a Mercantile Banker today. W e’re with you. Central Group, Banking Dept. Mercantile Trust Company N.A. St. Louis, MO. (314) 425-2404 MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MERCnnTIIE BRfK 7 The Banking Scene By D r. LEWIS E. D A V ID S Illinois Bankers Professor of Bank Management Southern Illinois University, Carbondale Banking and C rim in a l B ehavior H IT E -C O L L A R crim e affects b an k in g in tw o m ajor ways. O ne involves th e custom er who e n gages in practices in w hich th e b ank’s resources or assets are d iv erted im p ro p e rly . T h e o th e r in v o lv e s e m ployees and staff w ho use th e b ank’s r e s o u r c e s fo r p e r s o n a l b e n e f it. W h eth e r or not actual crim e has in creased com pared w ith figures for p re vious years, th e fact is th at increasing public disclosure and concern about the subject are evident. A review of w hat has h ap p en ed to prem ium rates covering blanket bond, fraud and th e like w ould seem to indi cate c learly th a t in s u ra n c e u n d e r- "O n e a re a o f special con cern involves the a c tio n by w h at a re considered rep u tab le consulting firms th at have d e v e lo p e d techniques fo r th eir clients th at have resulted in a form o f k it in g /7 w rite r s b e lie v e b a n k e x p o s u re to w hite-collar crim e is increasing. Some of my peers appear to have taken posi tions that are logical in th e ir derivation b u t ineffective in reducing w hite-collar crim e. They recom m end th e following: (1) By tightening up internal controls, the problem will be solved to a large ex tent. (2) A uditors, both internal and external, should be used to d eterm in e if a bank’s staff is acting w ith a high degree of m orality and w ithin th e law. O ne of th e com plexities of this topic is th a t som e bank ers w ho co n sid er them selves to be highly ethical and supporters of p ro p er behavior becom e involved w ith breaking rules and reg ulations affecting th e ir banking o p era tions. A n u m b er of problem areas exist in vo lv in g w h ite -c o lla r c rim e a g ain st 8 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis banks by custom ers. T he area of com p u te r fra u d c o n c e rn s all b a n k e rs. T here is recognition that th e average com puter fraud involves am ounts of m uch g reater m agnitude than o th er types of defalcations, such as “lapping” and diversion of dorm ant accounts. O ne area of special concern involves th e action by w hat are co n sid e re d reputable consulting firms that have developed techniques for th eir clients th at have resu lted in a form of kiting. (They w ould be quick to use th e term “cash m anagem ent. ”) D ata on bank d eb its and deposit turnover, published u n d er A12 in the m o n th ly F e d e ra l R eserv e B u lletin, show that, for all com m ercial banks, d eb it and deposit tu rn o v er for 1976 was 116.8. In 1977 it ju m p e d to 129.2; in 1978 it stood at 139.4. T he m ost recen t data indicate that th e figure has increased to 189 tim es for all com m er cial banks in th e U. S. Stated another way, th e velocity of bank debits is such that th e typical d e m a n d d e p o s it — r e p r e s e n tin g accounts of individuals, partnerships, corporations, states and political sub divisions — turns over 189 tim es d u r ing a 365-day year. W hen one adjusts for holidays and w eekends, this m eans th at for all com m ercial banks, dem and deposits on th e average are tu rning over about once every day. H ow ever, if we look to m ajor N ew York City banks for the sam e period, th e d e m and-deposit debit-and-deposit tu rn over increases from 411.6 in 1976 to 503 in 1977 to 541 in 1978 and to a m ind-boggling 763.4 tim es annual rate in January, 1980. As I in te rp re t th e se figures, th e average bank deb it stays in those m ajor N ew York C ity banks approxim ately one-th ird of a day! H ow ever, th e d an g er of using averages is th at some fig ures are higher and some are lower than average. I t’s conceivable to con clude from these figures th at some d e m and d eposits at som e m ajor New York banks tu rn o ver alm ost every hour. Such velocity indicates th at the banking system is th e victim of crim i nal activities. Looked at from a som ew hat different perspective, some of that tu rn o v er u n doubtedly is the result of individual firms and com panies playing w ith float and taking advantage of the difference betw een such things as th e Federal Reserve deferred-availability schedule and the actual tim e fram e n eed ed to c le a r c e rta in ite m s. T h e q u e s tio n em erges as to m ultiple m oralities; this is, of firms teaching the type of cash m anagem ent cited above and the firms that, in effect, are using float rath er " M a n y of our concepts of ethics have been strengthened in recent years. H ow ever, in some a rea s , such as the con cept of fa m ily life-style, they have been w e a k e n e d ." p r o g r e s s iv e ly than m aintaining collected cash bal ances in th eir banks. C ertainly, many of the kiting firms believe what they are doing constitutes a relatively legitim ate activity. If they can do it and no one stops them , they reason, who appears to be h u rt by the action? O f course, d irectly and in directly, banking and financial in stitu tions in general are h u rt by kiting op erations, especially if they ten d to esca late. At some point, w hen the firms are found out, a traum atic recognition of th e problem and the losses involved results. A nother aspect of the topic involves th e proliferation of banking regula tions. I know of several bankers who have taken early retirem en t because, in th eir opinion, banking regulations (Continued on page 80) MID-CONTINENT BANKER for August, 19 8 0 TH IS BANK OPENED IN 1913. W E OPENED IT UP IN 198a This is the m ain banking room of Helena N ational Bank in their headquarters building, built in 1913. W hile m aintaining the traditional exterior that the citizens of Helena, Arkansas, have come to know and respect, the bank asked us, A rrow Business Services, to completely redesign the interior in keeping with the needs of banking today. We specified one of several m odular systems we offer to achieve a bright, open atmosphere while still providing privacy where it's needed, functional efficiency and flexibility to change as the bank does. O ur design opened up a closed environ ment to provide a better reception for customers and better working conditions for employees. We back up a wealth of bank experience with 16,000 square feet of ideas in our showroom BUSINESS SERVICES INC an affiliate of Memphis Bank & Trust and 25,000 square feet of active inventory in 3050 Millbranch • Memphis. Tennessee 38116 our warehouse. Let A rrow Business Services 901/345-9861 open up your bank for you. Give us a call. 54RROI4 Î MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 9 Washington Wire W hat Congress Does in Election Year F o r bankers, how ever, several m a ITH both national political p a r ties poised for th e election cam jo r legislative m atters rem ain on the and it is fair to say they all have paigns, C ongress is d ue to re tu rnagenda, to W ashington im m ediately after Labor th e potential of seeing action before Day. Ahead of it will be five to six th e legislative year is over. O ne of the legislative weeks before it adjourns for m ore im portant questions for bankers is how Congress will attem p t to p re th e N ovem ber elections. As is th e case w ith every C ongress, sent th e electorate w ith a “balanced” th e 96th C ongress faces its final work budget. B udgetary decisions taken in period w ith w hat w ould appear to be a early sum m er left a revenue shortfall of s u b s ta n tia l b a c k lo g o f le g isla tio n . Aside from b udgetary actions, how ev The dom inant re a lity is that er, it is expected that only a relatively small n u m b er of bills will be enacted all legislative m atters . . . will into law during th e final days of the be discussed and resolved in a 96th Congress. highly political atm osphere re The dom inant reality is th at all leg gardless of the specific genesis islative m atters b ro u g h t forw ard for debate b etw een now and th e end of of the bills. this Congress will be discussed and re quite a few billions of dollars, and con solved in a highly political atm osphere gressional lead ersh ip was known to regardless of th e specific genesis of the have a list of possible revenue-raising bills. Thus, for several w eeks prior to this w riting, sponsors of w hat is seen as options. Owing to strong A dm inistra tion support, one of th e options for essen tial legislatio n u n d e rsta n d a b ly have been m aneuvering to assure that revenue-raising was a proposal to re th eir bills will enjoy bipartisan sup quire tax w ithholding on th e paym ent of savings in terest and dividends. port, rath er than b eing th e p e t projects S u ch tax w ith h o ld in g has b e e n of eith er party. O f course, this is p a r ticularly th e case w hen legislation is opposed by the ABA for years, and (not brought forw ard by m em bers of the w ithstanding the fact that a m ajority of the Senate and num erous m em bers of m inority party. Adding to the p redictable political th e H ouse of R ep resen tativ es have pressures of this season is th e inev it gone on record as opposing this tax able bottleneck C ongress faces every proposal) the possibility rem ains that such legislation could be com bined two years. The question always is: W hat speci w ith o th er proposals and enacted on fic legislative proposals can be com th e eve of adjournm ent as a last-ditch bined to produce a package th at can be m ethod of balancing the budget. A long list of o ther banking issues enacted? This question com es to the fore sim ply because it frequently takes rem ains pending as of this w riting, and as m uch effort and legislative tim e to all these issues are subject to electionenact a single, sim ple bill as it takes in year pressures that can alter th eir sta some cases to enact a relatively com tu s a n d p o te n tia l for m o m e n tu m alm ost overnight. plex legislative package. F or example, legislation to expand The tendency to assem ble legisla tive packages during th e last days of a th e pow ers and perm issible activities congress frequently is balanced by the of th e C ooperative Farm C redit Sys desire to u n dertake no new and p o te n tem (CFCS) rem ains very m uch alive. tially controversial business as an elec O ver and above the fact that this leg tion approaches. W ith these te n d e n islation is strongly supported by the cies and pressures at work, it always is quasi-governm ental Farm C red it Sys p ro b lem atic w h e th e r any additional tem , th e bills have the advantage poli major legislation will be enacted d u r tically of purporting to help farmers and th e agricultural sector of the econ ing th e calendar year. omy in general. H ow ever, the bottom Editor’s Note: This column was prepared line of this legislation is that it w ould m ove th e F arm C re d it System in by the ABA’s public relations division. W 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis creasingly out of agriculture and into com petition for banks’ best com m er cial (and nonfarm) custom ers. For over a year, the ABA has b een urging that this legislation be am ended so that the final product would allow the C FC S to m odernize itself, while lim iting o ppor tunities for it to abandon its com m it m ent to agriculture. O n e reaso n this leg islatio n c o n tinued to move forward was that sup porters of expansion of the C FC S w ere offering sm aller banks the opportunity to discount some of th eir loans through one of the system ’s arms, the F ederal Interm ediate C redit banks. This blan dishm ent was accepted by some bank ers, although th e ABA’s agriculture bankers com m ittee reaffirm ed its com m itm ent to the necessity to am end the Farm C redit System legislation in such a way as to make it equitable. M any observers believe that enhanced bank access to the discounting facilities of the F ederal Interm ediate C redit banks w ould have been part of such legisla tion in any case. On another front, as of early July, th e Senate Banking C om m ittee was taking up H ouse-passed legislation to im pose severe limits on activities and growth of bank holding com panies. In particular, the legislation w ould lim it insurance activities of bank H Cs and banks to those strictly credit-related. M em bers of th e insurance industry had been calling for such legislation for years, b ut m any W ashington observers believed that the legislation in fact did not gain m om entum until its sponsors offered to exem pt sm aller com m ercial banks from the anti-com petitive stric tures of the bill. In the case of both the Farm C redit System legislation and the bank HC bill, it is fair to conclude that the m eas ures w ould not have advanced as they have done had th ere been an attem pt to divide, and thus reduce, the influ e n c e of th e b a n k in g c o m m u n ity . N evertheless, every effort was being m ade by the ABA to assure that the Farm C redit System legislation w ould be am ended to make it equitable and that the proposed limits on bank HCs and banks would not be enacted. S tartin g in S ep tem b er, how ever, these and all o ther rem aining federal MID-CONTINENT BANKER for August, 19 8 0 Get to know your Commerce banker. Frampton Rowland joined Commerce in 1963 after studying at Indiana University, Oklahoma and K-State, and stints with the U.S. Army Medical Corps and a large finance company. Now he’s an experienced Calling Officer for our Correspondent Department. Whatever your needs, Frampton Rowland can help. Michael Brixey of our Correspondent Department worked as an FDIC Senior Bank Examiner before joining the Commerce system in 1977. Michael relaxes with golf, fishing, hunting and archery. He knows all phases of banking—loans, operations and investments. When it comes to correspondent banking, Michael Brixey can do the most for you. H.C. Bauman went to William Jewell College. Before joining Commerce in 1975, he was chief executive officer of a Kansas City area bank. Today, he’s Manager of our Kansas and Oklahoma Groups. This former Air Force captain enjoys racquetball and tennis, as well as helping you with all your correspondent requirements. Look for him soon. Wfe’re the leading correspondent bank in the Midwest. What can we do for you? v NA €* Commerce Bank of Kansas City o 10th & Walnut MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis onnn 816/234-2000 M EM B ER FDIC V 11 banking legislative issues will have to be view ed in th e fiercely partisan poli tic a l c o n te x t th a t w ill p e r v a d e W ashington. It is im possible to im agine, m uch less to describe, th e n u m b e r of perm utations th at any such leg islative proposals could go through in such an atm osphere. In th e expectation th at use of politi cal carrots and sticks will be in full fo rc e as C o n g re s s r e c o n v e n e s in S eptem ber, the ABA has called a ses sion of its Banking L eadership C onfer ence for early S ep tem b er to provide th e association w ith guidance on th e legislative and regulatory issues that will rem ain p ending at that tim e. B e sides th e issues described above, th e Banking L eadership C onference may have on its agenda a discussion of the first reaction to a federal study of b ra n ching and in terstate expansion of d e pository in stitu tio n s; th e stu d y was m andated by a provision of th e In te r national Banking Act of 1978. Also, the conference will have an opportunity to review and set new strategies reg ard ing actions of th e federal regulatory agencies as they p rep are to m ove to w ard im plem entation of th e D eposi to ry In stitu tio n s D e re g u la tio n and M onetary C ontrol Act. At the focus point of th e discussion, undoubtedly, Market Day in St. Joseph Scheduled for Sept. 3 Former ABA Head Dies HARTSVILLE, S. C. — A. Lee M. Wiggins, 89, died July 7. He headed the ABA in 1943-44. Mr. Wiggins was associated with Bank of Hartsville from 1921 until 1971, serving asv.p., pres, and final ly ch. He organized Trust Co. of South Carolina in 1919 and served as its pres, from 1941-69. During his multifaceted career, Mr. Wiggins was under secretary of the Treasury in 1947-49, owned the Hartsville Messenger and was an officer of several railroads. will be the first step taken this sum m er by the D epository Institutions D ereg ulation C om m ittee to begin phasing out deposit-interest ceilings. T h e ABA’s B an k in g L e a d e rs h ip C onference com prises the ABA coun cil and governm ent relations council, staffs and elected leadership of th e state bankers associations and leaders of oth er national banking trade associa tions. • • ST. JO S E P H , MO. — The 24th an n u al M ark et D ay, co sp o n so red by F irst Stock Yards and F irst National, will be held S eptem ber 3. Registration will begin in the lobby of F irst Stock Yards at 8:30 a.m . and th e m orning program will include a tour of Philips Roxane, In c ., a livestock pharm aceutical firm. A luncheon at the H oof and H orn Steak H ouse will in clude a rep o rt on the cu rren t day’s m arket. The afternoon session will begin at 2 at the St. Joseph C ountry C lub and will feature Dam ian J. Hogan, vice presi den t (retired), M etropolitan Life In surance Co. His topic will be “Is Suffi cient C aution Being Exercised Today in the Field of Long-Term Farm and Ranch M ortgage C redit?” A panel dis cussion of p resen t and future trends in livestock and grain m arketing is sched uled to follow Mr. H ogan’s talk. When your customer needs a hand with receivables, will you have it to lend? Sometimes even your best industrial and retail clients can find themselves long on receivables and short on working capital. And if your bank can’t provide the financing they need, they’ll find a bank that can. General Electric Credit Corporation has the financing experience and pro grams to help you make sure your good customers—industrial as well as retailstay your good customers. GECC can offer your industrial clients receivable loans plus inventory and fixedasset financing. We can offer your retail clients just about everything from open- 12 end receivables financing to complete customized charge account programs. And because GECC is a $ 7-billion company, your customers can count on us even when other money sources start drying up. To find out more about why it pays to have GECC lend a hand, call the regional office nearest you. Or write. General Electric Credit Administrative Offices: 260 Long Ridge Rd. • Stamford, CT 06902 ATLANTA, GA CHICAGO, IL DALLAS, TX PALO ALTO, CA STAMFORD, CT (404) 256-6025 (312) 986-3610 (214) 747-0310 (415) 493-3811 (203) 357-4386 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1 9 8 0 staff or shavetails, hiding Thebank, time in the correspondent until they move that gets in department on to something else. the trenches. Lynn Hobson, Gus Morris The Officers that lead the Correspondent Bank Depart ment at Memphis Bank & Trust don’t direct operations from behind a desk at HQ. They get out there in the trenches with you where the battles are fought. Unlike other banks, Memphis Bank &> Trust doesn’t trust your corre spondent needs with junior assistance, loan participation, trust services, wire transfers and business referrals. Their arsenal includes expert advice on insurance, regulatory affairs, advertising and marketing, training personnel... even the design and supply of hank facilities. Give our Officers a calLThey can help you win the war. and Jim Newman are all Senior Vice Presidents, all in the field putting their senior experience and ability on the front line with you. With a full staff behind them, they’ll give you fresh reinforcements in transit, In Tennessee, 1-800-582-6277. data processing, Visa and In other states>1-800-238-7477. Master Charge, draft collec MEMPHIS tion, investments, federal BANK 3* funds, safekeeping, credit TRUST Member FDIC MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 13 Regulatory News D I D C Turns D o w n Proposals For C o m p etitive M M C s The D epository Institutions D e re g ulation C om m ittee (D ID C ) has tu rn e d down a proposal by m em bers of the H ouse Banking C om m ittee to estab lish a new savings in stru m en t to help depository institutions com pete w ith m oney m arket m utual funds. The in stru m en t w ould have had a m in im u m d e p o s it o f $ 1 0 ,0 0 0 an d would have had no fixed term . D eposi tors could make up to four w ithdraw als m onthly, b u t th e am ounts w ithdraw n would have to be $300 or m ore b u t couldn’t be in excess of 12% of th e fu n d s on d e p o sit. T h e in s tru m e n t would have contained provision for in centives to encourage depositors to com ply w ith m inim um withdraw als. A se c o n d p ro p o s a l w o u ld h a v e altered existing m oney m arket certifi cate features to p erm it w ithdraw als, to lim it w ithdraw al am ounts and im pose m onthly ceilings on w ithdraw als. The D ID C stated th at th e proposal had m erit, b u t should not be enacted at this tim e. Report of Condition Rules Standardized by Regulators The F ederal Financial Institutions Exam ination Council has approved the sta n d a rd iz a tio n o f th e in stru c tio n s issued to com m ercial banks for use in preparing q uarterly reports of condi tion and incom e req u ired of all fed eral ly insured com m ercial banks. Regulatory agencies previously had issued separate instructions. The standardized instructions will be issued in separate pam phlets cover ing the condition and incom e reporting re q u ire m e n ts of banks w ith foreign offices, th e reporting req u irem en ts of banks with m ore than $100 m illion in assets and w ith dom estic offices only, th e abbreviated reporting forms that banks w ith less than $100 million assets may use if th ey w ish and th e su p p lem en ta ry re p o rtin g sch ed u les re quired of all banks with m ore than $300 million in assets. Instructions for banks w ith foreign offices will be effective for S eptem ber, 1980, reports. Those for banks w ith assets of m ore than $100 million w ith dom estic offices only and for th e sup p lem en tary rep o rtin g schedules will be effective for th e D ecem ber, 1980, reports. 14 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Credit Restraints Over The Fed last month announced plans to complete the phase-out of the special measures of credit re straint issued last March 14. The following m easures were announced: • Eliminated the remaining 5% marginal reserve requirem ent on managed liabilities of large banks and agencies and branches of foreign banks. This action applied to man aged liabilities beginning July 10, for reserves required beginning July 24. In addition, the Fed eliminated, effective the same date, the 2% sup plementary reserve requirement ap plicable to member banks on large time deposits, instituted in Novem ber, 1978. • Eliminated the remaining l¥z% special deposit requirement that ap plied to increases in covered con sumer credit, effective for covered credit extended in June and thereaf ter. No further special deposits were required after the deposit mainte nance period ended on July 23. • Eliminated the remaining l lA% special deposit requirement that ap plied to increases in covered assets of money market mutual funds and other similar institutions. The action applied to covered assets beginning July 28 and no special deposits will be required after August 11. • Phased out the special credit restraint program limiting domestic loan growth to a range of 6% to 9% in 1980. Banks with $300 million or more in deposits are expected to complete reports due under this program July 10 for data as of June 30. Consumer Affairs Program Statem ent Issued by FD IC The F D IC has adopted a formal con sum er affairs program statem ent d e scribing its consum er and civil rights activities. T he program statem en t describes th e stru c tu re and operations of the F D IC s Office of C onsum er and C om p lia n c e P rogram s an d o u tlin e s th e agency’s procedures for handling com plaints, supervising bank com pliance, p ro m o tin g con su m er ed ucation and fostering consum er involvem ent in the d evelopm ent of F D IC policies. H ighlights of the program include: • An o u tre a c h effort to im prove com m unication w ith m inority consum ers. O ne facet of this project is the publication of F D IC consum er litera tu re in both English and Spanish. • A toll-free consum er information h o tlin e (8 0 0 /424-5488) to a n s w e r general banking inquiries and handle com plaints involving banks supervised by the F D IC . • Sem inars to help banks im prove th e ir com pliance w ith consum er p ro tection and civil rights statutes and regulations. T he sta te m e n t was p u b lish e d in c o o rd in a tio n w ith sim ila r re p o r ts issued by 34 o ther dep artm en ts and agencies of the federal governm ent. TIL Restitution Policy Guide Adopted by Regulatory Agencies F ed eral reg u lato ry agencies have a d o p te d a policy g u ide co n cern in g reim bursem ent to borrow ers of banks u n d er th eir jurisdiction w hen the cost o f b o rro w in g was in a c c u ra tely dis closed. The policy is req u ired to im ple m ent the restitution provisions of the T ru th -in -L en d in g Sim plification and Reform Act that becam e law last M arch 1. In general, restitution is req u ired u n d er the act w hen th e u n d e rsta te m ent of the cost of borrow ing is p art of a clear and consistent p attern or prac tice of violations, or results from gross negligence or from willful violation in ten d ed to m islead the person to whom th e credit was extended. The restitution req u irem en ts of the act apply to all types of credit subject to T r u th - in - L e n d in g d is c lo s u re s . H ow ever, th e re are certain special rules that apply to m ortgage transac tions involving irregular paym ents. W here th e am ount of an adjustm ent w ould be less than $1, no restitution to th e consum er is req uired, b u t in such cases outstanding for m ore than a year after the violation, paym ents to the U. S. T reasury may be ordered. A uniform inter-agency plan will be developed within th e F ederal F inan cial Institutions Exam ination Council for im plem enting the restitutio n provi sions. Institutions identified as having reim bursable violations u n d e r Regula tion Z en fo rc e m en t gu id elin es th at w ere developed by th e agencies last year will be exam ined by th e agencies w ithin a year to d eterm in e if restitu tion is necessary u n d er th e new policy. MID-CONTINENT BANKER for August, 19 8 0 ATTEND BERYL SPRINKEL’S MONTHLY SEMINARS W ITHOUT LEAVING YOUR OFFICE. The “Sound of Business ’: an up-to-date monthly report on business conditions in con venient cassette form. Every month, Dr. Beryl Sprinkel and his associates hold an inform ative sem inar on the latest de velopm ents in econom ics and business. And nobody is in the audience. The reason? These discussions are taped exclusively fo r sub scribers to Harris Bank’s “ Sound of Business’.’ Each month, they are sent directly to hundreds of executives all over the coun try. Executives who realize the benefit of receiving the think ing and forecasts of some of the n a tion ’s most respected economists: Dr. Beryl Sprinkel, Dr. Herbert F. Neil, Jr., Dr. Robert J. Genetski, and Dr. Robert R. Davis. The “Sound of Business” sum marizes current economic events and analyzes their likely impact. Each cassette is an audio “ maga zine” that talks in practical terms of both opportunities and caveats, in a series of short “articles’.’ You can listen whenever you have even a few minutes’ time, in your office, on a plane, commuting, wherever you have a cassette recorder. The cost is modest: just $100 for 12 half-hour tapes. But the benefits can be much more than modest, and we’d like to prove it to you. Simply send in the cou pon, and well start yoursubscription with your first cassette. Listen to it, and if for any reason you’re not satisfied, just write “cancel” on your invoice and return it without payment. So send in the coupon today. You’ve got nothing to lose, and you could find the “Sound of Busi ness” is music to your ears. HARRIS BANK, H arris Trust and Savings Bank, 111 W. M onroe St., Chicago, IL 60603. M em ber F.D.I.C., Federal R eserve System. I To: Harris Bank, Public Relations Division 111 West Monroe Street Chicago, Illinois 60603 I’D LIKE TO ' ATTEND’.’ PLEASE START MY SUBSCRIPTION. N am e. A d d re ss- C ity. S ta te . Firm . T itle . MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 15 BANKING WORLD the group’s annual election A ugust 7. O th er new officers are: first vice p resi d e n t, John D. M angels, p resid en t, Rainier National, Seattle, and second vice p resid en t, Douglas W. D odge, executive vice president, M ercantileSafe D eposit & Trust, Baltim ore. O ne of the four new directors is from the M id-C ontinent area — W. E. Ayres, senior executive vice president, Sim mons F irst National, Pine Bluff, Ark. T he new officers and directors will b e gin th eir term s S eptem ber 1. SULLIVAN DIERKS • Barry F. Sullivan jo in ed C hica go’s F irst National and its p aren t H C, F irst Chicago C orp., July 28 as chairm an /C E O . H e su cceed s A. R o b ert Abboud. Mr. Sullivan form erly was ex ecutive vice p re sid e n t and a m em b er of the m anagem ent com m ittee of New York C ity’s C hase M anhattan Bank, w hich he jo in ed 23 years ago. D uring that tim e, he had m anaged nearly ev ery dep artm en t th ere. Since 1978, Mr. S u lliv an h ad b e e n re s p o n s ib le for corporate, international and m erchant banking, trade finance and inform ation services. • David A. Dierks, vice p resid en t, F irst N ational, St. Louis, has b een a p p o in te d m a n a g e r o f th e b a n k ’s Europe/M id-E ast/A frica group h ead q u artered at th e L ondon Branch. H e replaces Richard A. M urray, who has been nam ed d ep u ty international divi sion m an ag er, a n ew p o st in F irst N ational’s in tern atio n al d ep artm en t. Mr. D ierks is going to London; Mr. M urray is retu rn in g to St. Louis after having b een in L ondon since f976, w hen th e bank opened a re p re se n ta tive office there. The office becam e a branch in f979. Mr. D ierks jo in ed the bank in 1969. • Robert L. Bergmann, senior vice p r e s id e n t, M e r c a n tile T r u s t, St. Louis, has been elected chairm an of th e Paym ent & A dm inistrative C om m unications Corp. (PAAC) and its su b sidiary, Paym ent & T elecom m unica tions Services C orp. (PATS). T hese are N ew York C ity -b ased organizations that adm inister Bank W ire, a banking industry-ow ned electronic funds trans16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MURRAY BERGMANN fer system. H e also was reelected to a tw o-year term on th e boards of both groups. • N. Berne Hart, president/chairm an, U nited Banks of Colorado, Inc., D enver, becam e chairm an of th e Bank A d m inistration In stitu te July 1. H e succeeds Carl W. K lem m e, executive v ice p r e s id e n t, M o rg an G u a ra n ty T rust, N ew York City, who continues on the BAI’s executive com m ittee in an advisory capacity as im m ediate past chairm an. G eorge D. N orton, execu tiv e v ic e p r e s id e n t/c a s h ie r , P h il adelphia, is the BAI’s new chairm anelect, succeeding Mr. H art. Mr. N or to n ’s election places him in line to b e com e chairm an next year. • Robert H. Duckworth, executive vice president, F irst National of Arizo na, Phoenix, was elected president, R obert M orris Associates (RMA), at HART NORTON AYRES DUCKWORTH • Manufacturers H anover Corp., N ew York City, has o p en ed a fullservice com m ercial financing office in Los Angeles. It is the w estern com m erc ia l-fin an c in g h e a d q u a rte rs for M anufacturers H anover C om m ercial C o rp ., M H C ’s asset-b ased services subsidiary. In addition to the com m er cial-financing facility in Los Angeles, M H C C has a factoring office in the same location. Vice P resident M ichael Levy heads th e new office. • C harles A. Agem ian has b een honored by the ABA through its Sto nier G raduate School of Banking for his contributions to and achievem ents in international econom ic developm ent and continual dedication to th e bank ing com m unity’s operational and e d u cational efforts. Mr. Agemian received th e Ayres L eadership Award from E d w ard Jesser, form er chairm an of the school’s board of regents and chair m an, U n ited Jersey Bank, H acken sack, N. J. Mr. Agemian once was ex ecutive vice president, C hase M anhat tan, New York City, and now is chairm an/C E O , G arden State National, Param us, N. J. H e served on the Stonier faculty 25 years. MID-CONTINENT BANKER for August, 19 8 0 CONDENSED STATEMENT OF CONDITION AS OF JUNE 30, 1980 RESOURCES Cash and Due from B a n k s .................................................................................................... U. S. Treasury Securities ...................................................................................................... Obligations of States and Political S ub d iv isio n s............................................................. Stock in Federal Reserve Bank ............................................................................................ Federal Funds Sold and Securities Purchased Under Agreements to R e s e ll.......... Loans ......................................................................................................................................... Less: Valuation Portion of the Reserve For Possible Loan L o sse s........................... Bank Premises and Equipment ............................................................................................ Other Real E s t a t e ..................................................................................................................... Custom ers' Acceptance L ia b ility .......................................................................................... Accrued Income Receivable ................................................................................................ Other Assets ............................................................................................................................. TOTAL ................................................................................................................................... $ 269,646,408.34 432,645,767.98 52,834,054.20 1,500,000.00 111,500,000.00 888,291,668.53 ............7,482,097,12 880,809,571.41 11,530,877.33 2,179,992.10 1,167,578.42 20,611,335.21 9,266,515.70 $ 1,793,692,100.69 LIABILITIES D e p o sits....................................................................................................................................... Federal Funds Purchased, Securities Sold Under Agreements to Repurchase and Note Option Account ................................................................................................... Acceptances Outstanding ...................................................................................................... Dividend Payable July 1, 1980 .............................................................................................. Special Dividends Payable .................................................................................................... Accrued Taxes, Interest and E x p e n se s................................................................................ Deferred Income Tax Portion of the Reserve For Possible Loan L o sse s...................... TOTAL LIABILITIES ............................................................................................................ $ 1,375,779,123.54 235,049,182.58 1,167,619.26 2,673,965.00 2,158,296.94 24,670,365.94 1,692,027.20 $ 1,643,190,580.46 CAPITAL ACCOUNTS Capital S to c k ............................................................................................................................. $ 2,800,000.00 Surplus ....................................................................................................................................... 47,200,000.00 Undivided Profits ..................................................................................................................... 97,805,482.81 Capital Portion of Loan Loss and Securities R e se rv e s............................................................... 2,696,037.42 TOTAL CAPITAL ACCOUNTS ACCOUNTS............................................................................................ ............................................................................................ $ 150,501,520.23 TOTAL ..................................................................................................................................... $ 1,793,692,100.69 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T h e lo n g -term s p e c ia lis t s in fa rm c r e d it. It takes a concerted effort to provide financing for American agriculture today. Farming is now agri-business, with a variety of credit needs. One of them is long-term financing.. .where the Land Bank has con centrated its efforts for more than 60 years. Long-term farm loans are our only business.. .loans to purchase land, make land improvements, construct farm homes and new facilities... almost any long-range need.The Land Bank understands these needs because our owners and directors are farmers them selves. They help to plan and provide credit at the local level in more than 500 Federal Land Bank Associations across the country. But the farm credit picture includes more than long-term financing. And the people at the Land Bank are proud to work alongside others in the financial community who also serve the American farmer. We appreciate your cooperation in providing the capital to keep our agriculture strong. T he Land B ank The Federal Land Banks of: Houston, TX 430 Lamar 77001 18 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Louisville, KY 201 West Main 40202 St. Louis, MO 1415 Olive 63103 New Orleans, LA 860 St. Charles 70150 Wichita, KS 151 North Main 67202 MID-CONTINENT BANKER for August, 1 9 8 0 ■H wÊÊm The Cattle Feeder Situation Most Farmers Are Hanging In Despite Adverse Conditions, Bankers Report in Survey $ cc I N R E C E N T years, th e cost of duction credit they n eed ed for 1980; cred it has m ore than doubled, th at the m ajority of farm custom ers did th e cost of fuel has trip led , th e costnot of tap any new sources of c redit this fertilizer has tripled. But right now year; th at farm incom e is expected to hogs are selling at $32 a h u n d re d — th e be down this year; that th e attitu d e of same price th ey sold for 20 years ago!” th e typical farm er is pessim istic; that This statem en t by a ban k er in Kan farm su p p lie rs are tig h te n in g th e ir sas City ju st about sum s up th e plight credit term s; that m ost farm suppliers of the A m erican farm er in 1980 — and are experiencing “good” financial con it bodes anything b u t w ell for th e fu ditions; that little farm land is being sold to foreigners — or to anybody ture. M ore than 500 ag bankers in the 13 else; that farm land prices are falling; s ta te s s e r v e d b y M i d - C o n t i n e n t th at th e m ajority of farm ers are in busi B a n k e r w ere polled last m onth about ness for keeps and plan to vote in a new th e farm situations in th e ir areas. A P resid en t this N ovem ber. O ne banker rep o rted that farm ers healthy response in excess of 20% in d i cates that ag bankers are eager to pass used to have a saying that they “could on th eir assessm ents of th e ag situa take a load of hogs to town and buy a new m otor car w ith th e m .” Now it tion. The survey tabulation shows th at the takes about five loads of hogs to buy the vast m ajority of farm ers th ro u g h o u t th e sam e auto! (Continued on next page) M id-C ontinent area received th e proMID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Livestock farmers are lamenting the fact that costs have soared and prices have stayed the same or have increased only slightly, says a Mis souri banker. Farm prices, he said, are pretty well geared to what the consumer will pay in the supermarket and this is translated back to livestock prices, for example, through the prices the packer will pay and what he thinks the retailer can reasonably charge and still make a profit. Fat cattle currently selling at around $68 a hundredweight prob ably would be closer to $100 a hun dredweight, the banker said, if those prices had followed the inflationary trend of other prices — those for fuel, fertilizer and tractors. “The American consumer today is getting the best bargain in the world for the price of his food despite rising food costs at the supermarket,” the banker said. “The average American is spending a smaller percentage of his paycheck every year for food. No other consumer in any part of the world has this same bargain.” Another banker in Missouri, when questioned how cattlem en were doing this year, pulled out a compu ter printout and read off a set of sta tistics provided by one of his cattle feeder customers. In the month of May, he said, the feeder sold 900 head of cattle at an average loss of $95 per head! In April he made a little money but he sold 900 head of cattle in that month and the loss for the two months averaged $86 per head. C urrent livestock prices assure that cattle feeders can t make a profit, he said. The banker provided additional facts to illustrate the squeeze cattle men are in. The livestock that the cattle feeder sold in April and May cost him 800 per pound for an aver age weight of 730 pound feeders. It cost the feeder about 500 per pound to put weight on the cattle that sold at an average weight of about 1,050 to 1,100 pounds. So, each animal cost the feeder $584 and it cost him $185 to bring each animal up to sell ing weight, making a total of $769. Each animal sold for only $748, a net loss of $21 per animal. “The tough cattle feeders who have been in business for many years will stick it out and hope for rising prices,” the banker said. It’s ex pected that they will pay less in the future for their feeder cattle and hopefully pay less for their feed. “If they don’t” he added, “we city folks are in for some even higher prices for our beefsteaks!” 19 Ag B anker Survey (continued) T h e g e n e ra l c o n se n su s was th a t dairy and grain farm ers are doing well in com parison to livestock farm ers. A nu m b er of ag bankers rep o rted that farm incom e was steady, th at farm ers w ere optim istic and that land prices w ere rising in th e ir areas — b u t these w ere in th e m inority. Almost half th e responding bankers rep orted th at som e of th e ir farm cus tom ers w ere tapping new sources of credit from such places as th e Small Business A dm inistration, P roduction C red it associations, th e F ed eral Land Bank and th e F arm ers H om e A dm inis tration. Some of th e assistance given was in th e form of disaster loans. A handful of bankers re p o rte d that farm incom e was expected to rise in th e ir te rrito ry and ab o u t 20% p r e dicted th at farm incom e w ould rem ain steady; b u t about 75% indicated farm incom e w ould drop in f980. M ore than 60% of responding b ank ers said th e attitu d e of th e ir farm cus to m e rs was p e s sim istic , b u t m any qualified th at fact by stating th at farm ers generally are pessim istic no m atter how good tim es are. A bout 15% re p o rte d th a t farm ers are o p tim istic, while 7% are b itte r, 7% are resentful and anoth er 7% are p rone to blam e the grain em b arg o lev ied by P re sid e n t C arter for th e ir problem s. M ost farm su p p lie rs are lim itin g credit term s to 30 days or less, b u t 30% of the bankers stated th at term s h a d n ’t changed from th e usual. M ore than 15% said sup p liers are pressing for C O D term s and alm ost 10% said in terest rates on unpaid balances have risen. The financial condition of farm su p pliers is “good,” according to 35% of the respondents. A bout 15% rep o rted the situation to be “fair” and an o th er 15% said suppliers w ere in “shaky” condition. M ore th an 20% rep o rted th at eq u ip m e n t sales are dow n this year and a handful said th e eq u ip m en t dealers in th e ir areas had gone out of business. A lm ost 50% of th e b a n k e rs said th ere have been no significant sales of farm land this year in th e ir areas to for eigners and very little sales to local people. M ore than 20% rep o rted land prices rem aining steady, w hile 5% said land prices w ere up and 22% said land prices had fallen this year. Almost 60% of ag bankers said th eir farm custom ers are in business to stay, as long as they can stay solvent. Less 20 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis than 10% rep o rt cutbacks on the part of farm ers and few er than that are giving up. Almost 30% rep o rt that farm ers are fighting for higher prices. T h e m ost illu m in atin g resp o n ses cam e in th e sectio n of th e surv ey asking for political assessm ents of farm custom ers. I t’s difficult to d eterm in e w h eth er the rem arks given by bankers Farmers Cut Costs An eastern Kansas banker has p r e d ic te d a 30% d e c re a s e in national farm incom e this year, d u e to cattle, hogs and grain sell ing at low er prices than last year. F arm balance sheets, he said, will “shrink” at year-end. F arm ers are cutting costs in o rd e r to survive, th e banker said. They are testing th e ir soil and, on th e basis of th e tests, are c u t ting th e am ount of fertilizer they use. T hey also are elim inating one or two tillage operations to save energy. T hey are sharing farm e q u ip m e n t and fixing up an y th in g to k eep from buying new eq u ip m en t. This accounts for eq u ip m en t sales being down about 50%. Kansas is expected to have its second-largest w heat crop this y e a r — a b o u t 395 m illio n bushels, the b anker said. C attle feeders have lost m oney during th e last eight m onths due to h igher transportation and p ro cessing costs and low er prices for cattle. T he b an k er said som e farm ers will go u n d er this year — not because of size, b u t because of dead leverage. O nly two things could possibly aid fa rm e rs in th e n e x t few m onths, he said: an increase in prices for crops and cattle and b e tte r w eather. In general, farm ers are frus tra te d w ith th e C arter A dm inis tra tio n and th e actions of th e U. S. C ongress, th e b an k er said. H e said th a t c o rre sp o n d e n t loans com ing into his bank are of lo w er q u a lity th a n th e y have b een in th e past. H e suspects so m e o f th e lo an s a re b e in g m oved from o th er banks due to th e ir d eteriorating quality. reflect the opinions of farm custom ers or bankers, b u t both probably agree on th e fact that th e C arter A dm inistration is in deep trouble in th e farm belt. “Most (farmers) feel that the presen t A dm inistration is ineffective and that a responsible C ongress is essential b u t it’s unlikely to h a p p e n ,’ ” says D onn H arrison, executive vice p re sid e n t, C itizens Bank, E ldon, Mo. Farm ers a re “ d is g u s te d w ith w e lfa re , fuel prices, defense spending, lack of an ability to control inflation, governm ent w aste and pap er w ork,” he adds. “The p re se n t A dm inistration isn’t regarded as favorable to farm ers,” re po rts S. W. G ro ten h u is, p re sid e n t, Casey (111.) National. “Lifelong, diedin-the-w ool D em ocrats insist they plan to vote for R eagan,” he says. “Farm ers feel they have been m ade th e b u tt of m any political decisions and express th eir desire for some change in th e attitu d e of political lead ers,” says H enry F. W arden, cashier, Bank of Bernice, La. “ F a rm e rs are aw are of o v e r-re g ulation and too m uch governm ent in everything. T hey’re disappointed w ith C arter b u t m ost will continue to su p p o rt h im ,” says I. J. Grizzell, p resi d en t, F irst N ational of Franklin C oun ty, D echerd, Tenn. “M ost farm ers will not vote for C ar te r . T h e y fig u re h e has h a d his chance, reports Earl McVicker, vice p resid en t and ag representative, F irst National, D odge City, Kan. “H ow ev er, they are less than excited about Reagan. They feel his farm know ledge is lacking.” “C arter is out, ” says Francis W. Esely, president, Farm ers State, C anton, Kan. “And he could take some of the D em ocrats in C ongress w ith him if things don’t im prove considerably.” C h a rle s D. R u sh in g , p re s id e n t, State Bank, B ernie, M o., reports that “ M ost farm ers are looking for new faces due to discontent w ith th e p res e n t A dm inistration. T hey’re not sure a change will m ean b e tte r tim es, b u t th e y ’re willing to give it a try. ” • • MID-CONTINENT BANKER for August, 1 9 8 0 Christm as is Happiness And here’s everything you need to celebrate with a totally successful Christmas Club program! If you have been overlooking the power of a club acount, now is the time to investigate its ability to attract inexpensive funds. Today, with so much money going into high-interest accounts Christmas Club helps bring your deposits into better balance. And Christmas Club provides both the incentive and m eans-a concept that has been thoroughly tested and proven for over 70 years. 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Packed 36 sets of four to a master carton. Tabs for hanging included. Your customers will find many uses for them around the house. FOR MORE INFORMATION CONTACT: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INC. 680 Sixth Street (201) FRENCHTOWN, NEW JERSEY 08825 9 9 6 -2 1 1 3 U nderstanding Futures M arkets Is Key to Successful H edging By Robert K. W ilm o u th H E VAST m ajority of people d o n ’t have th e slightest idea of w hat fu President/CEO tures m arkets are about or w hy they Chicago Board of Trade exist. A second group of people have some ideas b u t th ey are th e w rong ones. Some farm ers sim ply don’t possess T he n u m b e r o f fu tu re s co n tracts trad ed has b een setting new records th e necessary skill and sophistication for 10 consecutive years. And th e re ’s to hedge effectively, ju st as th ere are every indication th at this grow th will som e w ho d o n ’t have th e skill and continue through th e 1980s. Trading sophistication to use borrow ed m oney volum e in 1979 grew to nearly 34 m il effectively. In addition, th ere are some lion contracts changing hands. T h at’s a who lack th e discipline and th e te m six-fold increase over volum e in 1969. p eram en t req u ired by futures trading. T he parad o x b e tw e e n m is u n d e r I suspect th at criteria you use in ju d g standing of futures m arkets on the one ing a farm er’s ability to use credit w ise hand and the dram atic record trading ly are n ’t m uch different from criteria volum e on the o th er h and isn’t particu for th o se w ho sh o u ld or sh o u ld n ’t larly paradoxical. W h at’s happ en in g is hedge. At th e risk of re p e titio n , it that m ore and m ore groups, including comes down to a question of suitabil farm ers, are taking th e tim e and tro u ity. It’s adm ittedly a ju d g m en t call, b ut ble to und erstan d futures trading — or it’s an im portant one. H edging isn’t for hedging — because it pays them to. I t’s everyone. I t’s safe to say that th ere are large to th eir econom ic advantage to do so. As u n d erstan d in g of th e m ark et in num bers of agricultural producers who could and should be utilizing the fu creases, use of th e m arket increases. H edging, or use of th e futures m ar tures m arket b u t are n ’t. Some because ket by farm ers to establish a selling or they don’t u n d erstan d it and are reluc buying price, is m uch like credit. Both tan t to participate in a m arket whose are m anag em en t tools. Both, to be workings they don’t have th e skills and used profitably, m ust be used p ro p e r the know-how to use properly. I’d be ly. Both, if m isused, involve risks. A the first to agree w ith them . T here are farm er who uses th e futures m arket is a n u m b er of good ways to acquire a no m ore assured of m aking a profit than know ledge of hedging b u t learn-asa fa rm e r w h o b o rro w s m o n e y is you-go isn’t one of them . A farm er who d oesn’t u n d erstan d hedging shouldn t assured of m aking a profit. Thus, if you have borrow ers who are hedge. T here clearly are perils in using the seeking your advice or who are seeking financing in connection w ith futures trading, th e first question th at has to be addressed is th at of suitability. T h at’s Mr. Wilmouth’s remarks are based on a not a term norm ally u sed in connection talk given at the 1980 Agriculture Confer w ith the use of the futures m arket for ence sponsored by First Tennessee Bank, Memphis. hedging, b u t it should be. T MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis futures m arket if one doesn’t u n d e r stand it, uses it im properly or is u n aware of — or u n p rep ared to accept — risks. It’s not my mission and it certainly shouldn’t be your mission to encourage any farm er — or anyone else for that m atter — to use the futures m arket if h e d o e s n ’t u n d e rs ta n d it. I t ’s o u r objective to encourage and contribute to an understanding of futures. W ith th e know ledge of how to use the m ar ket, a farm er can make an inform ed decision about w hen he should use the m arket — or w h eth er he should use it at all. Before a farm er attem pts to becom e a hedger, he should und erstan d w hat hedging is — a tem porary purchase or sale in the futures m arket solely for the purpose of offsetting an existing price risk in the cash m arket. I t’s a m eans of protecting oneself against a decrease in th e price of some com m odity you in ten d to sell at a future date or against an increase in the price of some com m odity you in ten d to buy at a future date. Any o ther use of the futures m ar ket isn’t hedging; it’s speculating. Second, a farm er contem plating use of the futures m arket should know his costs. The point of hedging is to lock in (at least approxim ately) an acceptable profit or loss. And th e re ’s clearly no way of accom plishing that unless you have a good fix on costs. I t’s like trying to m easure the distance betw een two p o in ts w ith o u t know ing w h ere th e points are. T h ird , anyone co n tem p latin g th e use of the futures m arket for hedging m u st u n d e r s ta n d b asis: th e r e la tionship betw een prices in the cash m arket and prices in the futures mar23 ket. Fourth, a farm er w ho’s contem plat ing using futures should und erstan d m argin requirem ents. M argin isn’t a down paym ent. I t’s req u ired of both buyer and seller and it’s simply “good faith’’ money. If a person has b een a buyer in th e futures m arket and the price goes down — or if he has been a seller and th e price goes up — his broker is going to call on him to come up w ith additional m argin m oney — m oney to keep his m arket position ad e q u ately m argined at all tim es. This doesn ’t m ean his hedge isn’t working. Keep in m ind that his position in the futures m arket was to offset a position in the cash m arket; so if he has a loss in th e futures, he should have a roughly equal and offsetting profit in th e cash m arket. N onetheless, a farm er who is going to h e d g e sh o u ld u n d e rs ta n d about m argin calls and should have a source of funds — his own or borrow ed — to m eet them . A farm er who realizes a profit on his fu tu re s position can draw on th ese funds. All a broker requires is that he m aintain enough in his account to keep his position currently m argined to th e m arket. T here are two o th er things a farm er should know before he gets into h ed g ing: H e should know a good bro k er and he should know a good lender. A b rok e r and a len d er w ho, them selves, have an understanding of hedging — of how it works and of how they can help a farm er do it successfully. Because to hedge successfully, a farm er is going to need th eir help. A len d er certainly should have an understanding of m argin req u irem en ts because chances are th at — sooner or later — a farm er who hedges is going to call on a len d er to lend him th e m oney to m eet m argin calls. W ith a properly executed and m aintained hedge, this shouldn’t be a problem . If th e price in th e futures m arket moves against him , he will need additional m argin funds; if the price moves in his favor, funds will accrue to his brokerage account to c u r tail any outstanding loans. Like any o th er tool, knowing w hen to use the lu tures m arket is as im por tant as knowing how to use it. T here are no pat formulas. E ven w hen fu tures can be used effectively to reduce risks, different farm ers have different perceptions of risk and different finan cial abilities to assum e risk. And they differ in th e ir w illingness to accept risks. So in any given situation one farm er m ig h t choose to h ed g e and another m ight not. O ne farm er m ight hedge sim ply because he can’t afford th e consequences of a price decline. 24 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bank Hosts Farm Expert in the local m arkets w here farm ers sell rapidly reflect changing conditions in the w orldw ide m arkets w here buyers buy. It m ay not pro v id e a p erfect m echanism for price discovery b u t it is certainly the best and the fairest. • • Action Report Identifies Challenges of Ag Finance Concern on the p art of State Bank of Freeport, III., for its farm customers prompt ed the bank to devote portion of its annual shareholders' meeting to the topic of farm ing. Featured speaker was Orion Samuelson (c.), nationally known for his syndi cated TV show "U. S. Farm Report," which is seen on about 100 stations across the nation. Pictured with Mr. Samuelson are bank E.V.P. Richard A. M iller (I.) and bank Pres. V. W. Nortridge. Bank also featured article on farming in its annual report. A nother m ight hedge because — re gardless of w hat happens to price — th e m arket is offering him w hat he con siders an acceptable profit. O ne of the things a farm er will dis cover as he gains a know ledge of fu tures and hedging is that he doesn’t necessarily have to use the m arket in o rd er to profit from it. To cite ju st one exam ple, assum e a farm er looks at his local cash price on a given day and he looks at the cu rren t futures price and sees that the difference — the basis — is abnorm ally large. H e looks into it and concludes that it is probably a te m porary aberration that is likely to be Corrected. So he holds off selling and a few days or a few weeks later is able to sell at an appreciably b e tte r price. H e d id n ’t actually buy or sell on the futures m arket, b ut his know ledge of it paid off in a higher price in the cash m arket. A nother farm er m ight have looked at th e same situation and decided to take advantage of the abnorm ally wide basis by selling a futures contract in anticipation of buying it back w hen the basis narrow ed.T he futures m arket is a tool that different farm ers can use in different ways, b u t the com m on d e nom inator is an understanding of how it works. F u tu r e s m a rk e ts b rin g to g e th e r large num bers of buyers and sellers in th e e n v iro n m e n t of an o p en , co n tinuing auction. How else could a corn, w heat or soybean grow er in N ebraska know alm ost instantly w hat an im port e r in Brussels is bidding for his grain for delivery next w eek, m onth or even next year? The futures m arket pro vides the m echanism w hereby prices An assessm ent of the challenges that await agricultural lenders in the dec ade of the ’80s is the subject lor a new publication available from the ABA’s agricultural bankers division. “A gricultural Banking In the 1980s” is an in-depth rep o rt on the Agricul tural Finance Planning and Research C onference held last D ecem b er u n d er the joint sponsorship of the ABA and the Farm Foundation. The conference brought to g eth er a group of ag ric u ltu ra l specialists — bankers and agricultural finance econ omists — to identify the issues in agri cultural banking at the beginning of th e decade to give a perspective for building effective research program s, information bases and future planning. “If growth rates for farm d e b t and inflation experience in the 1970s con tinue through th e 1980s, th en total farm d eb t outstanding could approach $500 b illio n by 1990. T h e se h ig h grow th rates for farm d eb t have placed m uch stress on agricultural finance m arkets for generating loan fu n d s,” observes P eter J. Barry, professor of agricultural finance at the U niversity of Illinois, in the introduction to the new ABA publication. T he publication focuses on th re e major topic areas: capital and credit needs of agriculture; bank sources of funds and rural financial m arkets; and policy issues in agriculture and bank ing“ T he p u b lic a tio n is in te n d e d to stim ulate the agricultural len d er to act, instead of reacting, by planning now for the fu tu re ,” Mr. Barry explains. M uch concern is expressed about the impacts of governm ent policies and regulations on banks and th eir ability to serve rural areas and the farm sec tor. The im pact of regulation on access to savers’ funds, nonlocal funds, len d ing potential and m arket shares are all considered. “A hallm ark of U. S. farm credit in th e past has b een its responsiveness to change — the ability to innovate farm lending to accom m odate changing con ditions in ag ricu ltu re,” Mr. Barry ex plains. “ A gricultural Banking In the 1980s’ tells w hat’s in store for the excit ing, high payoff field of agricultural fi nan ce.” MID-CONTINENT BANKER for August, 1980 Good news. M GIC now offers "really bad news" insurance. * G ooPMO(?N)N&-,t:R. . f'\j£ GOT SOME Ö00P NEUIS you Mow that mortgage m e m v ON THE (VORTH SIP£ OF TOCUtNTHAT W/ÊNTC/R IN FLAMES LAST NiGHT1? WELL, CßAVlFOfLp FORGOT TO RCiVEU/ THE in s u r a n c e p o l i c W ." "ANO 0 A K 6 R 0U N G L E O T H E IN V E S T M E N T S (N o u r PÊNSÎC7N f U N P - S O M E T H IN G a b o u t SPECU LA TING - (N FUTUfi.ES DITHOUT M UCH O F A F U T U R E ... " A N O P IP I T E L L ŸOÜ A & Ô U T THE L A T E S T S U IT A g a in s t o u p b e lo ueo C H A IR M A N ? " M G IC has now expanded its coverages fo r the “ really bad news” situations that can face financial institutions and th e ir directors and officers. These policies cover M ortgagee Interest, IR A / Keogh E&O, Pension Trust Liability, Trust D epartm ent E&O and D irectors’ and O fficers’ Liability Insurance. The "'good news” is thatyou can now purchase these coverages fro m the one com pany that specializes in m eeting the unique insurance needs o f financial institutions, M G IC. A.M. Best rating is A+, XIII. Availability subject to approval of insurance filings. v' OH, ANQ T H E R E 15 A 5 M A /-L ERAOfZ in M R KINDELS Ifzp, ACCOUNT. THP 6(G PROBLEM IS HE'5 SUING US fO K*XO O ,O O O.u * ANQ N O \N t h e M G IC 's N 6 Im S / f a m il y o f ^ ap m e n s ' P O L IC IE S . " I MGIC Indemnity Corporation I MGIC Plaza, P.O. Box 488 I Milwaukee, Wisconsin 53201 I good A ll OF THIS IS COVER.EO &Y MC8 I I | I | Send me more information about your “ good news” policies for: □ Mortgagee I nterest □ IRA/Keogh E&O □ Pension Trust Liability □ Directors' and Officers’Liability □ Trust Department E&O I Name/Title __________________________________ ! Firm ____________________________________ j I Address _____________________________________ | I City ___________________State________ Z ip _____ MGIC MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis i i | M G IC Indemnity Corporation a subsidiary o f M G IC Investment Corporation 25 Agricultural News Roundup Reports on What Banks Are Doing in Ag Area Solar Collectors Provide Heat O n Farm Managed by Bank OLAR collectors are helping the east of A ssum ption is used prim arily to D udley farms operation in Illinois warm a hog house, farrowing house reduce its consum ption of liquefied-and nursery. The unit draws air from petroleum (LP) gas, according to D e n inside the building and reheats and re nis Gibbs, a farm m anager w ith Milli- circulates it. kin National, D ecatur, 111., who over Because these solar units are p o rt sees the farm s’ operations. able, th ey also can b e used to dry The two collectors w ere p u t into use grain. This process usually takes place in one of th e buildings around last from O ctober to D ecem ber. O n this April 1, and th e angle of th e sun h eated D udley farm, livestock houses will be the stru ctu re for about 30 days. The able to benefit from the solar heat d u r collectors w on’t totally elim inate the ing the rest of the w inter. need for LP gas, says Mr. G ibbs, b u t T he panels w ere built by W ilbur they will reduce its consum ption su b M etzger, Pana, 111., carpenter. R e d e stantially, especially in th e fall and signed them from two sets of b lu e spring. Through th e ir use, th e h e a te r prints provided by th e U niversity of w on’t have to be tu rn e d on as early as Illinois’ College of A griculture. O ne form erly in th e fall and will be tu rn e d set was for supplem ental heat to farms; off earlier in th e spring. a n o th e r for g rain -d ry in g bins. Mr. Total cost of the two collectors is M etzger com bined th e plans to make a $4,050, w hich rep resen ts about 8,100 panel th at w ould serve both purposes. gallons and four years’ consum ption of Accom plishing som ething like this LP gas at 500 a gallon. T herefore, Mr. isn’t easy, Mr. Gibbs admits. Gibbs points out, w hen th e collectors “It takes a strong com m itm ent on have been in operation about four or th e part of the ow ners, ” he says, “and five years, th e y will have paid for th en we need a lot of cooperation from them selves. A fter that, heating by so th e ten an t on the farm, as h e ’s the one lar collectors in th e building will be who has to learn how to work w ith it free. O f course, if LP gas goes up in and how to get the m ost efficiency from cost, the price of th e collectors will be it.” recovered even sooner. Mr. Gibbs is happy to rep o rt that The solar heat on this farm six miles this project seem s to be w orking well, S These two solar collectors (r.) are being used on Illinois farm to provide heat for building pictured. Because they are portable, they can be used to dry grain. 26 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and everyone involved has positive feelings about its success. They plan to keep close records of costs and efficien cies and hope to im prove the system as they learn m ore about it. The D udley farm s’ ow ners have b e gun to use solar energy on another farm in Indiana and plan to utilize it as m uch as possible on all th eir farms. T heir initial success has sparked an in terest by o th er farm m anagers in Millikin N ational’s farm d ep artm ent, and Mr. Gibbs is w orking w ith them to develop solar units in several other central Illinois farms m anaged by the bank. • • Slight Sales Slippage Predicted by Makers O f Farm Equipment D espite the recent severe dow nturn in sales of certain farm m achinery, m anufacturers rem ain confident that dollar sales volum e of all farm e q u ip m ent will be off as little as 5% for 1980. This optim ism was reflected in a sur vey taken of its m em bers by the Farm & Industrial E q u ip m en t In stitu te and rep o rted at its spring m arketing and m anagem ent conference. In predicting the slight drop in sales, m em ber com panies cited the easing of credit restraints, lower in terest costs and the less-than-expected decline in farm -com m odity exports as positive factors. D etrim ental factors cited in cluded continued credit restrictions by rural bankers and lenders, high costs in general, energy in particular and low com m odity prices. W hile m em bers saw some difficult days ahead, th eir long-range look at th e rest of the 1980s indicates greater opportunities than at any tim e since th e expansion period following th e Ko rean War. They see great challenges to increase productivity and create new b reak th ro u g h s in technology to aid A m erican agriculture in th e continuing battle to adequately feed this nation and ease world hunger. In the forecast for tractors, all tractor sales are expected to be 10.7% below last year’s unit sales, a m arked change from the bullish sales outlook in the MID-CONTINENT BANKER for August, 19 8 0 American Express doesn’t take weekends off. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We’re there w hen your custom ers need us. Whether it’s Sunday in California or Dimanche in Quebec, your customers can find help if their travelers cheques are lost or stolen. Because by simply calling us toll-free, they can arrange for an Emergency Refund® at participating Holiday Inns throughout the U.S. and Canada. A refund of up to $100 to tide them over until normal business hours resume—when they can get the balance of their refund. American Express® Travelers Cheques. Because our refund system doesn’t take naps on Saturdays or Sundays, your customers AMERICAN can get refunds EXPRESS any day of the week. American Express Travelers Cheques survey taken near the end of last year. Specifically, tw o-w heel drive tractors u n d er 30 horsepow er are expected to be down 7.6%, a m ore than 9% d e crease from th e prediction in th e ear lier survey. Two-wheel drive tractors, 30-99 horsepow er, are now forecast to d e c lin e 10.2% to 65,100 from last y ear’s 72,477 units w hile tw o-w heel d rive over 100 h o rse p o w e r are ex p ected to drop 13.6% to 54,000 units. Four-w heel drive tractors are forecast to decrease 10.5% from last year’s very good 11,455 unit sales. T urning to self-propelled com bines, w here previously virtually no changes w ere p re d ic te d , m e m b e rs are now unanim ous in forecasting a decline of 6% to 30,325 units, w ith cornheads ex p ected to fall off 7.3%. A m ong tillage e q u ip m e n t, m oldboard plow sales are forcast to dip to 10.2% to 28,500 units in 1980; disc harro w s off 8.4% ; field cu ltiv ato rs dow n 5.6% to 16,000 units; and chisel plows a slight 2.3% decline. H ay balers over 200 pounds capacity are expected to decrease 6.3% while th e sm aller ones are estim ated to drop 13.1% to 16,300 units. Forage harvest ers will be down 6.4% to the 11,650 range, and m ow er-conditioners should decline to the 23,000 level, a 9.4% drop. The m edian forecast of a 4.1% d e cline in w indrow ers and sw athers is not as bad as the 16.5% decrease expected for grinder-m ixers. T he one positive note in the fore casts for field m achinery sales is for co tto n strip p e rs, w h ere a 4.3% in crease to 1,850 units is predicted. This optim ism is based on the expectation th at cotton prices will rem ain strong. F arm stead eq u ip m en t m anufactur ers pred ict th eir dollar sales volum e will be down 12% from 1979 levels, led by eq u ip m ent used in hog production declining some 30%. No doubt, the outlook for pork prices is the culprit h e re . Sales for e q u ip m e n t u sed in dairy and b e e f production are expected to rem ain level. Sales for portable augers and eleva tors as well as bin-type crop dryers are forecast to drop 15%, b ut th ree m anu facturers in both categories pred ict slight increases. Batch and continuousflow crop dryers should decline 10%. A nother positive note is for sales of m ilking m achines, w h ere a 5% in crease is p red icted , a slight change from the 9% increase forecast earlier. All in all, this update rep o rt indi cates a m ore conservative outlook on th e p art of m anufacturing com pany m em bers who are now taking a waitand-see attitu d e as to w hat effect d e clining in te re st rates and im proved com m odity prices will have on eq u ip m ent sales. Area Farmers G et Free Lunch on 'Ag D ay' H E N U n io n B ank, G re e n sburg, In d ., said, “Y’all com e!’’ to a lunch for its farm custom ers, than 800 show ed up for th e bank’s “Ag D ay’’ celebration. It was th e bank’s way of thanking these custom ers for th eir business. E v e ry o n e at th e bank, from th e chairm an on down, w ore farm clothes, consisting of jeans, bandannas, etc., and shifts of v o lu n teer w orkers m ade b atter and form ed sausage patties out of 300 pounds of w hole-hog sausage. The cooking w ent on from 11 a. m. to 2 p .m . in th e h ig h school cafeteria. G uests consum ed 32 gallons of milk, 25 W Employees of Union Bank, Greensburg, Ind., are dressed in farm clothes and ready to serve more than 800 customers at bank's free lunch on "Ag Day." 28 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis dozen eggs, 15 pounds of b u tter, 105 boxes of pancake mix, 48 bottles of msyrup ore and, of course, the 300 pounds of sausage. E ven th e bank s directors w ere in on it, pouring coffee, clearing tables and “gabbing” w ith custom ers. In addition to eating the free food, guests reg istered for door prizes and received as gifts rain gauges or freezer th e rm o m e te rs and b u m p e r stickers honoring agriculture. The Ag Day idea is an outgrow th of an annual Ag Day Indiana stages to em phasize the im pact farm ing has on th e s ta te ’s econom y. U nion B ank’s senior farm loan officer, Norm C om er, show ed the m aterial p u t out on the state celebration to K enneth C. Hull, th e b ank’s m arketing director. Both agreed the bank could do som ething of a m ore local natu re because D ecatur C ounty, w here the bank is located, is a high pro d u cer of corn, soybeans, b eef and hogs. The bank started out by hav ing its em ployees w ear farm clothes, th en added th e idea of distributing the b u m p e r stic k e rs, ra in gau g es and freezer therm om eters. T hen, the idea expanded to putting on a feed and inviting the county since th e re is no phase of the local econom y not affected by the farm er. “ L e t s le t th e w hole co u n ty say thanks!,” was the way Mr. H ull p u t it. H e reports that th e local radio sta- Janie Obermeyer (I.), new accounts rep., and K a th lee n K irby, tru st d e p t., in appropriate outfits, serve food to one of more than 800 customers at free lunch on bank's "Ag Day." tion did a fair job of reporting, and he feels sure it will be p resen t next year to tape public response. The new spaper, continues Mr. H ull, “disappointed me by showing up near th e end and not catching th e full im pact of the line of people going through and th e e n th u siasm exhibited by our personnel. By the tim e it got th ere, the line was n ear ly down, and we w ere all pooped!” Again, next year, Mr. H ull believes th ere will be b e tte r response. All in all, though, he reports, the bank benefited from th e goodwill and p u b lic re la tio n s g e n e ra te d by th e lunch for a long w hile after it was over. As indicated above, the bank definitely plans to rep eat the program in 1981. MID-CONTINENT BANKER for August, 1 9 8 0 TheM osler People who can show you all the right lines. For more than 20 years, Mosler facilities planning people have been helping financial institutions make their operations more secure and efficient. We help in the planning of new buildings and frequently have been consulted about existing structures, including converting gasoline stations and movie theaters into branches and main offices. We take into our planning everything from space requirements, interdepartmental and customer flow patterns to security systems and parking. Plans that can be used by you and your architect in the actual design of your new facility. In short, Mosler facilities planning people assist you in making sure that your business environment is right for your employees and your customers alike. Products that can show you a better bottom line. Mosler was the first in the industry to bring you remote transaction systems. So it shouldn’t come as any surprise that today Mosler offers a choice of nine drive-in systems. Each addressed to your individual transaction requirements. For example, our new Commercial Express™ Remote Transaction System gives your commercial customers a time-saving drive-in lane of their own— the only system of its kind in both upsend and downsend configurations. And our Trans-Vista® III Drive-In System gives you all the Mosler performance you need to keep your drive-in efficiency high. All at a lower price since you’re not paying for frills you may not need. Driving your operating efficiency up and your operating costs down: It’s another way Mosler products can improve your bottom line. Put this Mosler Advantage to work for you. Write Mosler, Dept. CE-80, 1561 Grand Blvd., Hamilton, Ohio 45012. Ask for a free copy of our new “Commercial Express” brochure. Quality People* Quality Products* / MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a- * * ^ H am ilto n, O h io 45012 29 Banks Put Financing Package Together To G ive N ew Life to Landmark Hotel Editor’s Note: Much o f the text fo r this article was taken from a case study on refinancing the Peabody Hotel by Nan cy M . Falls, credit manager, interna tional division, First Tennessee Bank. m ism in 1968 u n d e r o w n ersh ip of Sheraton H otel C orp., it closed u n d er a veil of b an k ru p tcy p ro ced u res in 1975. Flight from th e country’s inner cities and com petition from cheaper m otel facilities proved h ard er on the HIS is a story about bankers, d e landm ark than any plague or epidem ic. velopers and hotel ducks. It also is one of a city’s dow ntow n struggle to In m idsum m er of 1975, the Peabody live again and th e people who shoul was sold at a public auction for about $300,000 to th e Belz family, a M em dered that goal. phis family active in real estate d e The Peabody H otel in its heyday of catering to th e social elite of th e South velopm ent. The hotel rem ained closed w hile the stood as a symbol of a pro u d and strong Belz fam ily u n d e rto o k a feasibility downtow n M em phis. Originally b uilt in 1869 at th e corner study to d eterm in e w h eth er a sizable of Main and M onroe, ju st two blocks in vestm ent to renovate the hotel and from th e banks of th e M ississippi Riv ad d itio n al facilities could m ake th e e r, th e P e ab o d y w ith sto o d fe d e ra l hotel profitable and once again becom e occupatio n , re c o n stru c tio n and th e a cen ter of dow ntow n activity. Yellow F ev er epidem ic. T he feasibility study was positive The new Peabody, built in 1925 at and signs of th e tim e seem ed to favor th e corner of U nion A venue and T hird th e Peabody. C ities around th e nation Street, did not fare so w ell in th e long had begun to confront inner-city d e ru n w ith th e so c ia l a n d fin a n c ia l terioration and flight, and M em phis epidem ics of m ore m odern tim es. was no different. T he financial com F ro m 1959 to 1965, th e h o te l m u n ity h ad re m a in e d c e n te r e d in changed ow nership th re e tim es. W hile dow ntow n, even though m ajor retail th e grand hotel reo p en ed w ith op ti ers had m oved east to suburbia. The T downtown area still drew 35,000 w ork ers each day. A C e n te r C ity C om m issio n was organized by concerned citizens and an am bitious C e n te r C ity Action Pro gram C oncept Plan was draw n up to coordinate the various enterp rises d e veloping downtown. Five new e n te r tainm ent establishm ents had opened since 1976. A park was u n d e r construc tion on the river bank and a walking mall had b een created out of M ain Street. The signs w ere positive, b ut not certain. A m ultim illion-dollar con vention cen ter had been built at one end of the Mall and was largely u n d e r used. O ne reason for its sluggish p e r form ance was th e absence of a dow n town hotel facility to house conven tioneers. So it seem ed the tim e was right for the H otel Peabody. In 1978, the long road of negotiation and arranging adequate financing b e gan to make the Belz family’s dream of th e Peabody a reality. Officials at the lead banks involved, F irst T en n essee Bank and N ational Bank of C om m erce, knew it w ould be n e c e ssa ry to s tru c tu re a loan th a t w ould be acceptable to both the in terests of the financial institutions and th e developers and at the same tim e (Continued on page 48) TOP LEFT: Era of grand hotels w ill live again when Memphis' Peabody Hotel is renovated with help of city's banks, led by First Tennessee and National Bank of Commerce. Hotel's once-famous ducks used to be found at fountain in center of lobby. BOTTOM LEFT/RIGHT: "Plantation Roof," replica of mansion of old South, is being remodeled inside and out. It formerly was romantic place to gaze at stars and city lights, dine and dance. Photos by Alan Copeland. 30 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 19 8 0 Over 4 million customers regularly watch the Olan Mills Birdie! We’re America’s favorite fam ily photographer. We’re photo graphing from sea to shining sea in 700 studios. And we’ve been photograph ing for over forty-eight years. Now we’re soaring into banks with a complete portrait promotion program at no cost to your bank. It’s a program that’s guaran teed to feather your nest For more information contact the Bank Marketing Division 1101 Carter Street Chattanooga, Tennessee 37402 Telephone (615) 622-5141 Ext. 265 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis THE NATION S STUDIO NEW MARKETING TOOL? to you in management. Productivity is increased, lowering training expenses. Of course, the end result is the best news: A new breed o f marketing-oriented tellers! Hou> you can gain a competitive edge by preparing tellers to be potent marketing tools In short, BBS is a major breakthrough in the art of training tellers. Certainly, in the quality of production and professionalism, BBS is unrivaled. But, above all, is the diligent infusion of marketing-based customer relations skills into every facet of the teller’s trade. A marketing tool? You bet. Your teller corps may be near the bottom of your organization chart, but who can top their customer contact volume? In today’s highly competitive financial services climate, many bankers—perhaps you, too—have recognized the potent marketing role a well prepared teller can play in efforts to gain the elusive “ competitive edge.” Why? Much recent market research shows that retail banking customers place a surprisingly high premium on the quality of a bank’s contact people, especially tellers. Clearly, top-notch tellers, well attuned to their vital marketing niche, are a real plus in any bank’s competitive marketing strategy. After all, every banking day each teller has the opportunity to enhance dozens of old and new bank ties. The friendly, helpful and knowledgeable teller gives new customers confidence they made a sound decision in choosing your bank over the competition. And continued good teller experiences encourage your existing depositors to think only of your bank as their needs change and new services are required. Dollars-and-cents logic fo r marketing - based new teller training Your marketing people invest thousands to entice new depositors into your bank. It takes a steady flow of dollars to compete with S&Ls, mortgage and loan companies, money market funds, credit unions and other banks. You’ve got quite an investment in each new account. How are you protecting that investment? Increasingly, bankers are looking to protect their marketing investment by fielding a new breed of teller—tellers whose basic knowledge and efficiency is strengthened by a total awareness of their essential role as the bank’s front line marketers. How profitable could BBS be? 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Basic Banking Skills (BBS) is a 12-module, multi-media training system featuring selfdirected, problem-centered instruction techniques. A combination of learning media, including color filmstrips, cassette/workbooks, audio recordings and programmed self-instruction texts, heightens student interest and motivation. Yet, as the potential of the teller’s unique marketing role has gained wider recognition, there have come no new, full-scale basic teller training programs to help meet the need. Trainers like BBS. They are able to teach more, in less time, because BBS is designed to instruct with a minimum of supervision. This allows them to devote more time teaching procedures that are unique to their bank while also expanding the time available for vital demonstrations, role-play exercises and hands-on practice. Until now . , . 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Box 68520 Indianapolis, IN 46268 • (317)299-7220 Industrial Revenue Bonds: They Allowed Bank to Boost Downtown Area By Erecting Its New Building There By Jerry Prock and Joyce Prock R O W IN G banks constantly m ust pro p erty already ow ned by the bank at face th e problem of expansion th e site of its South Branch — a loca tion ju st off th e in terstate w ith its adja and new facilities. It is not an unhappy problem , b u t nonetheless, it is a m ajor cen t businesses and near several major problem . A n u m b e r of questions m ust industries, b u t a m ile away from the be answ ered, am ong them — w here town square. The square in M urfreesboro w ith its will the facilities be located and how antebellum courthouse is the hub of will they be financed? In 1977, M urfreesboro (Tenn.) Bank financial and legal activities not only of faced such a p roblem . A fter 72 years of th e town itself, b u t for th e county as operation, th e bank had outgrow n its well. Like m any o th er com m unities, main facilities on th e square in M ur businesses in th e dow ntow n area fight freesboro. It had to decide on a new a continuing battle w ith outlying shop location and th e best m eth o d to finance ping centers, w hich tout easy access th e new expansion. T he m eth o d ev en and convenience in shopping. In M ur tually selected — industrial rev en u e fre e s b o ro , th e p ro b le m was co m bonds (IRBs) — although not recom pou n d ed by th e fact th at th e county m ended for all banks, certainly opens governm ent and offices also had o ut new financing doors to banks in sim ilar grown th e ir quarters and w ere con sid e rin g b u ild in g new facilities — situations. As for th e location itself, several which, of course, m eant leaving the choices w ere open. F irst, and th e most square since no suitable land was avail logical it w ould seem , was to build on able. Several civic and com m unity organ izations, concerned th at such a move w ould be th e death knell to the dow n Jerry Prock is professor o f finance, Middle town area, had expressed concern over Tennessee State University, Murfreesboro, th e prospect. and his wife, Joyce Prock, has taught there T he second option to MBT was to in the mass communications department. G consider acquiring land on the square. O ne possibility was th e southw est cor ner, which had several deteriorating buildings and a few others that possibly m ight have been acquired. The p ro b lem was that even if the en tire block could have been purchased, th e p ro p erty was only a half block deep — re sulting in lim ited space at the onset w ith no room for future growth. The th ird option, to consider p ro p erty available in th e vicinity of the square, resulted in a possible solution. “On my way to w ork one m orning, I thought of the Jam es K. Polk H o tel,” says Jack W eatherford, chairm an/C E O of M urfreesboro Bank. “W hen I got to my desk, I m ade some calls and began doodling and figuring costs.” T he James K. Polk H otel, located one block off th e square, had closed and subsequently was purchased by a group of investors who w ere consider ing renovating it for an office building. In addition, some land adjacent to the hotel site was available. As a whole, th ere was plenty of land for the b u ild ing and for parking. The Polk location w ould allow MBT to stay in the down- LEFT: This is artist's rendering of original Murfreesboro Bank building. BE LOW: This is bank's new home, which was financed by industrial revenue bonds and which is located in downtown area. Bank celebrated its first year in new home last spring. MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 33 town area — a definite b enefit to th e square. Initial investigation of th e hotel con firm ed th at renovation of the Polk was im practical. T he design of th e building was in a d e q u a te , an d d e te rio ra tio n already had taken too great a toll. The big drawback now was th e cost of the land and of dem olition. As a bank grows, it is necessary for its capital to grow. M urfreesboro Bank has enjoyed good capital growth. “M urfreesboro Bank could have fi nanced th e building itself,” says Mr. W eatherford, “b u t since M urfreesboro is growing so rapidly, we hesitated to IN T R O D U C IN G tie up o u r capital. R ath er th an be forced to raise capital later or to issue d eb en tu res or capital notes, we d e cided to take th e lead and look for o th er types of financing.” Industrial revenue bonds seem ed to hold th e answ er. M r. W eath erfo rd ap p roached th e Indu strial D evelop m e n t B oard of R u th erfo rd C ounty, w here th e bank is located, concerning th e possibility of M BT’s using IRBs to finance its new facilities. Aware that bankers in o ther com m unities had m et o p p o sitio n to financing facilities of fin a n c ia l in s titu tio n s from o th e r boards, M BT’s req u est took th e posi — Business Designs by . . . ADVANTAGES OF PRESTIGE LARGE SELECTION • • • • • • • W e only m anufacture career a p p a rel 3 0 -d ay re-orders, guaranteed Continuity of styling fo r 2 years Sizes ranging from 2 to 26 in short, regular & tails O pp ortunity to design your own program from: 3 different fabrics, 45 styles 30 solid colors, 57 prints LARGE SELECTION OF LIGHTWEIGHT ONE AND TWO PIECE DRESSES. CALL OR WRITE FOR A FREE COLOR BROCHURE GENERAL OFFICES: P. O . Box 1 1 0 0 M arlin , Texas 7 6 6 61 (8 1 7 ) 8 8 3 -3 5 8 1 Representatives living in your a re a . May we assist "You" in selecting your new Career Apparel Program? For m ore inform ation, return this coupon: Bank _________________________________________________________________________________________ A d d r e s s ______________________________________________________________________________________ Person to C ontact _____________________________________________________________________________ Telephone _________________________________________ N o . Employees M ___________F____________ Do you presently use career a p p arel? Yes 34 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis No tion of justification. In presenting the case, Mr. W eath erfo rd po in ted out that MBT was com m itting itself totally to continued grow th of the downtown area. F u rth erm o re, because of com petitive pressures, th e o ther banks in town probably w ould retain th eir main offices in the im m ediate area of the square. The Industrial D evelopm ent Board approved M BT’s request. Approval is a major step in a long, tim e-consum ing, expensive procedure. Because of the e x p e n s e in v o lv e d , IR B fin a n c in g would not be suitable for projects of less than $500,000. But for those banks whose projects exceed $500,000, the econom ic results are w orth th e effort. It m ight be helpful at this point to review briefly th e natu re of industrialrevenue-bond financing. Originally developed in 1939 in M is sissippi, IRBs are issued by a gov ern m en tal unit, w hich becom es the ow ner of the project. T he p etitio n er or business th en ren ts th e project at a rate that pays principal and in terest on the bonds. The credit rating of th e busi ness stands b ehind the bonds, b u t b e cause the bonds are issued by a gov ernm ental unit, incom e to the holder is tax free. M ost states now have enabling leg islation w hereby they can issue IRBs. Few states, how ever, have extended this authority to cover retail and finan cial institutions. It is p erm itted in T en nessee. (See accom panying article for th e IRB situation in o th er states.) Each state sets its own lim itations and qualifications for issuing IRBs. The In te rn a l R ev en u e S ervice also has several regulations that m ust be m et if a deb t issue is to be tax-exem pt. For som e banks th e m ost restrictiv e of these req uirem ents is that total capital e x p e n d itu re s m ade by th e lesse e , w ithin the bounds of the issuing gov e r n m e n ta l u n it, c a n n o t e x c e e d $5,000,000 for a six-year period begin ning th re e years before the date of issue of the bonds and ending th ree years after the date of issue. The lim itation exists for bond issues betw een $1,000,000 and $5,000,000. If th e b o n d issu e is for less th a n $1,000,000, th ere are no lim itations on total capital expenditures of th e lessee. Disadvantages. As indicated, dis advantages undoubtedly exist w ith this type of financing, depending on cir c u m sta n c e s, th e com pany and th e com m unity. T he one disadvantage that exists in all instances is that at the end of the original lease, w hen the bonds have been paid, the facility belongs to th e com m unity or county, which can co n tin u e to lease th e facilities, sell MID-CONTINENT BANKER for August, 19 8 0 Howard McMillan and Barney jacks We’ve put together a winning team of commercial loan specialists to serve you and your customers 111 I|% /|IS S IS S IDDI W I ■w w l W w l ^ # ^ # 1 ■ I I I Under the leadership of Howard McMillan, Executive Vice President and head of our Corporate Banking Division, and Barney Jacks, Senior Vice President and head of our Correspondent Bank Department, the resources and expertise of Mississippi’s largest regional bank are teamed up to provide you and your customers with specialized commercial loan expertise in such areas as: Corporate Financing, Petro leum Loans, Real Estate, Accounts Receivhttps://fraser.stlouisfed.org Federal Reserve Bank of St. Louis able, Inventory Financing, International Loans and Agribusiness Loans, including DEPOSIT GUARANTY NATIONAL BLANK Member F D l,C Grow w ith Us them or give th em away. This dis advantage is simply overcom e by in cluding a purchase clause in th e ag ree m en t. T he p u rc h a se clause usually gives th e lessee the right to buy the facilities at a price anyw here from a few dollars to several thousand dollars. As m entioned earlier, another dis advantage of this avenue of financing is that it is a m eticulous, cum bersom e procedure. Initially, th e re are m e e t ings w ith th e bond counsel, th e p re lim inary visit w ith th e Industrial D e velopm ent Board, official p resentation to the board, presentation to the coun ty court and eventually to the invest m ent bankers. As w ith m ost governm ent dealings, num erous records m ust be k ept and reported. F or exam ple, MBT was re q u ired to file a record of all capital expenditures w ith th e IRS — a pro ce d ure that is necessary because of th e $5,000,000 capital-expenditure lim ita tion. Again, as w hen it took th e lead w ith the Industrial D evelopm ent Board in justifying its case, MBT took th e lead w ith th e investm ent bankers by su p plying a list of prospective buyers for th e bonds who had com m itted to $2.3 million of the $3,000,000 bond issue. M ost of the buyers w ere banks in the area that p urchased th e bonds for th e ir own investm ent purposes. J. C. B rad ford was MBT s investm ent banker. Advantages. E ven w ith th e lim ita tions and disadvantages, MBT chose IRB financing because of the u nique benefits. F o r one thing, th e b ank’s capital w ould not be tied up in building and equipm ent. This, of course, gives the bank a greater d egree of flexibility as it continues to grow. A nother distinct advantage was the low er cost of financing. The cost of M B T’s p ro ject was estim ated to be $3,378,000. The bond issue w ould be $3 m illio n w ith M BT p ro v id in g $378,000. Bonds w ith m aturities rang ing from D ecem ber 1, 1978, to D e c e m b e r 1, 1991, w e re issued w ith coupon rates betw een 4% and 6.1%. The net average annual in terest cost, before taxes, for the en tire issue was 6 .1 8 % . W h e n a flo ta tio n c o st of $60,000 is included, total cost of the financing will average 6.37%. This low e r cost of financing is not the only sav ings u n d er the IRB m ethod. Because th e p ro je c t is o w n e d by th e gov ernm ental unit involved, no property taxes m ust be paid. The savings that result because of this would, of course, vary from com m unity to com m unity, b u t in M u rfre e sb o ro , th e savings, b a se d on th e 1978 ra te , w ould be approxim ately $65,400 annually. Besides several redem ption provi sions u n d e r special contingencies, the bank can start retiring th e bonds at its ow n d is c re tio n afte r D e c e m b e r 1, 1986. T he red em p tio n p rem ium on th at date is 4% and declines as the m aturity date is approached. As m entioned earlier, to overcom e one of th e major disadvantages of this type of financing, MBT has th e right to purchase the project after the bonds are retired. Through negotiations, the price was set at 2% of th e bond issue or $60,000. Not fo r Everyone. E ven w ith the obvious advantages of IRBs, this type of financing is not for everyone. F irst of all, m ost states have not w ritten th eir enabling legislation in such a way as to p erm it financial institutions to make use of this financing technique. Banks e x p e rie n c in g c o n sid erab le growth m ight not w ant to use this tech nique because of the $5-million u p p er lim it on capital expenditures over a sixyear period. O f course, leasing some capital eq u ip m e n t and redem ptions clauses in the IRB agreem ent can be used to lessen the hardship created by this restriction. Because of expenses involved, prac tically speaking, th ere is also a lower lim it to this m ethod of financing. Offi cials at MBT have estim ated that the low er lim it is about a half-million dol lars. If th e paperw ork req u ired could be lessened, this lower lim it would d e cline, but, as things now stand, MBT estim ates that its legal, printing and m iscellaneous costs ran $30,000. A fu rther consideration, w hich was an im portant part of M BT’s d elibera tions, is the ethics of a financial in stitu tion using tax-free IRBs. It is here that industrial developm ent boards w ield th e strong arm of discretion. The orig inal in te n t of IRB financing was to stim ulate industry and create new jobs in areas of underem ploym ent, w ith the fundam ental in ten t to benefit not the specific industry, b u t the com m unity as a whole. Thus, it is w ith industrial developm ent boards that this final d e cision m ust rest. In the case of MBT, the Industrial D evelopm ent Board of R utherford County felt it was definite ly in the in terest of the com m unity as a whole to stim ulate and support fu rth er developm ent in the dow ntow n area. In conclusion, although IRB financ ing will not suit the needs of every financial institution, it is an avenue of financing that should be considered in those states w here it already is p e rm it ted . F u rth e rm o re , banking associa tions m ight well consider lobbying for its legalization in states w here it is not available. • • O th er States H ave IRB Financing, But N o t A ll Cover Banks H E article beginning on page 33 tells how a bank in T ennessee fi nanced its new building through use industrial revenue bonds (IRBs). Such bonds are issued by a gov ern m en tal unit, w hich becom es the ow ner of th e p ro ject for w hich th e bonds are issued. The p etitio n er or business th en rents th e project at a rate that pays principal and in terest on the b o nds. T h e b u s in e s s ’ c re d it ra tin g stands b ehind th e bonds, but, because th e bonds are issued by a g o vernm en tal unit, incom e to th e h older is tax free. T 36 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis As is pointed out in th e accom pany ing article, most states have enabling of leg islatio n w h e re b y th e y can issue IRBs, b u t few states have extended this authority to cover financial in stitu tions. O bviously, T ennessee banks can use IRB financing. A check of th e o th er 12 states cov e re d by M i d - C o n t i n e n t B a n k e r shows th at all of them have IRB legisla tion, b u t it doesn’t cover banks in four of th e states. Specifically, here is how the states line up: Alabama. A bill was passed in the regular session of the Alabama Legisla tu re creating a state agency to issue tax-free bonds to be used for housing. This legislation does not include use of such bonds for financial institutions. Arkansas. This state’s IRB law, now about 20 years old, does not cover banks. It does allow m unicipalities and counties to use IRBs to secure and d e velop industry, declare an em ergency and for o th er purposes. Illinois. Such bonds can be issued here, b u t only industrial firms are cov ered, not financial institutions or retail stores. MID-CONTINENT BANKER for August, 1 9 8 0 Indiana. T hese bonds are allowed, and financial institutions are covered. Kansas. IRBs can be issued h e re to cover financial institutions. Kentucky. Legislation en acted d u r ing th e 1980 reg u lar session of this state’s G eneral Assem bly apparently would p e rm it financing of bank b u ild ings — u n d e r certain conditions — w ith proceeds of IRBs. Louisiana. IRBs are allowed h ere and cover banks. M is s is s ip p i. A lth o u g h IR B s a re allowed h ere, they don’t cover finan cial in stitu tio n s. A ccording to Jerry Prock, au th o r of th e accom panying article on IRBs, this type of financing was developed originally in M ississippi in 1939. Missouri. A change in statutes h ere will allow banks, as of A ugust 13, 1980, to make use of IRBs. U ntil now, th e law was lim ited to industrial plants and for industrial purposes. After A ugust 13, the law will be expanded to com m ercial en terp rises and office b u ild ings. As a result, banks will be able to use IRBs to erect new bank buildings if such structures will be for th e good of th e banks com m unities. T hat is, if th e y h e lp im p ro v e a c o m m u n ity ’s d o w n to w n a re a , in c re a s e e m p lo y m ent, etc. New Mexico. Banks h e re can use IR B fin a n c in g if th e y o b ta in th e a p p ro v a l o f t h e i r r e s p e c tiv e c ity adm inistrations. G enerally, the latter are c o n c e rn e d a b o u t re h a b ilita tin g th e ir d o w n to w n areas. T h u s, th e y probably w ould consider a new bank building a good reason to allow th e bonds to be issued. Such a p ro ject w ould im prove a dow ntow n area and keep jobs th e re or possibly increase em ploym ent. O klahom a. R etail an d w h o lesale o u tle ts can u se IR B s, an d u rb a n renew al projects can be financed this way here, b u t not banks. Texas. U n d er enabling legislation h ere, IRBs can be issued for e n te r prises categorized as com m ercial, in dustrial, m anufacturing and m edical research. The Texas Industrial Com m ission is authorized to issue regulations u n d e r w hich application for issuance of bonds can be m ade, and to date, th e com m is sion has issued no regulations for com m e rc ia l e n te r p r is e s . A c c o rd in g to Jam es C. L ed erer, associate counsel, Texas Bankers Association, it d oesn’t in ten d to issue regulations for com m ercial en terp rises and thus forestalls any applications of this nature. In ad d i tion, Senator E d H ow ard, who was a sponsor of this legislation, intends to introduce a bill in th e next legislative session th at would take com m ercial e n terprises outside th e scope of the stat ute. Accordingly, at this tim e, IRBs for com m ercial institutions, w hich would include banks, are not being issued u n less they fall into one general excep tion. If a city has an U rban D evelopm ent A ction G ra n t (UDAG) desig n atio n , any project within th e area may qualify for issuance of IRBs. M any sm aller cities in Texas and approxim ately 20 cities w ith populations of 50,000 or over presently have UDAG designa tio n s. In th e se situ atio n s, th e city c o u n c ils o r c o u n ty co m m issio n e rs m ust approve an application by any en terp rise for issuance of IRBs. The in te n t of this was to decide on a local level w h eth er a com m ercial en terp rise should have the advantage of partici pating in th e program . It should be noted, says Mr. L e d e r er, th at if an area has a UDAG designa tion, any type of project approved for th e area may take part in issuance of IRBs even though it is not a m anufac turing, industrial or m edical-research project. • • Equity-Investment Record At Hibernia National Cited by N atl Magazine IMPACT Official Supplier of Electronic Scoreboards to the 1980 Olympic Winter Games MOUNTAIN 'r P Î J f a f P GROVE NATIONAL BANK i— i m i I TIME AND TEMPERATURE DISPLAYS 100% s o lid state. C ustom N E W O R L E A N S — H ib e r n ia d e sig n e d . A ttach e d to yo ur b u ild in g o r free sta n d in g . N ational’s tru st division has been rec ognized by a national financial news m agazine, Pensions and Investments, for having th e b est equity investm ent perform ance record am ong banks in th e U. S. over th e past 10 years. The perform ance survey, w hich cov e rs m a jo r b a n k s a n d in s u ra n c e com pany com m ingled funds for em ployee-b en efit assets was conducted by th e biw eekly publication, w hich re ports news about large corporate and institutional investors. H ibernia N ational also ranked sixth am ong banks nationally in perform ance of fixed-incom e investm ents over the past five years. T he bank’s retu rn in its Com m on T ru st F u n d A for eq u ity funds was MESSAGE 9.5% annually for th e 10-year period CENTERS h a n g in g o r tra ve lin g com pared to a 5.6% re tu rn for Stan Cb illb o a rd fo r co m m u n ity dard and Poor’s (S&P) 500-Stock In s e rvice and u niq u e rtis in g . dex. The fixed-incom e retu rn for the aSdimv eple keyboard. five-year p eriod was 7.8% annually, Daktronics has taken the service expense substantially higher than th e Salomon out of message displays with 100% solid B rothers Index, w hich was 1.8%. state electronics. Our engineers will H ibernia N ational’s tru st division, custom design a display to enhance the architecture of your building and will said to be th e largest in Louisiana and provide a color drawing and quote at no am ong th e 100 largest in th e country, cost. Call or write for details today. c u rre n tly m anages m ore th an $850 m illion in fiduciary assets. Total trustINC. X > DAKTRONICS, division resources are m ore than $1.1 Box 299 Brookings, SD 57006 DAKTRONICS INC. billion. Phone 605-692-6145 MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis XIII OLYMPIC 37 Community Development Tennessee Bank Finances Local Firm W ith H elp From Its Correspondent H E N D onald L. E d en was dis he believed w ould make it, and a nowcharged from the Army in 1971 successful and thriving small business after serving w ith th e Fifth Special was born. Forces G roup in V ietnam , he w ent Today, D on E d e n ’s Eusco, Inc., of back hom e to Springfield, T en n ., to W hite H ouse is a leader in electrical sort out th e ca re e r options th at lay utility eq u ip m en t sales, serving parts ahead of him. of eight states. O n th e way to getting Tho se o p tio n s w e re a b it in c o n t h e r e , h o w e v e r, E u s c o ’s g ro w th gruous, according to his friend and caused its capital needs to outgrow banker, Lanny W ilkinson, executive Farm ers Bank of W hite H ouse. Mr. vice president/m anager, W hite H ouse W ilkinson tu rn ed to T hird National, (Tenn.) Branch, F arm ers Bank of P o rt Nashville, and th e relationship that d e land, T e n n ., b u t th ey ultim ately w ould v elo p ed is w hat Mr. W ilkinson d e lead to Mr. E d e n ’s capital needs being scribes as “classic: serving th e custom m et by w hat M r. W ilkinson calls a e r first and sharing of risks and rew ards “ classic case o f th e w ay a c o rre s by the ‘dow n-hom e’ bank and the ‘bigpondent-b an k in g relationship should city’ b a n k .” work. M r. W ilkinson, w ho farm ed full “ D on was a jou rn ey m an linem an/ tim e in this rural north central T ennes w ith several years’ experience in pow see area until 1960, w hen he w ent to er-line co n stru ctio n ,” Mr. W ilkinson w ork for F arm ers Bank “so I could recalled in a re c e n t interview , “b u t he afford to keep farm ing,” said Eusco, also held a bachelor of science degree Inc., started as “little m ore than an in a g ric u ltu ra l econom ics from th e idea and a lot of sweat. ” U niversity of T ennessee. ” Mr. E d en, he related, began w ith T hen, w ith th e spark of an e n tre one em ployee, repairing and servicing pren eu r, Mr. E d en added to th e in pow erline construction eq u ip m en t for congruity — he bought half in terest in a co m p an y p a rtia lly ow n ed by his a w om en’s fashion shop. T he business brother. w ent well, b u t after a year, Mr. E d en “O nce established w ith our service says, “I was b ored to d e a th .” business, ” Mr. E d en said, “we e n tered At that point, an opportu n ity p re into th e sale of new eq u ip m en t and sen ted itself, L anny W ilkinson took eventually m oved into a n u m b er of som ething of a chance on a young m an lines of eq u ip m en t n eed ed by all elec- W Donald L. Eden, pres., Eusco, Inc., started his busi ness w ith " little more than an idea and a lot of s w e at." Now his firm provides equipment to elec tric utility industry in e ig h t-s ta te area. 38 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis JOHNSON LOGUE These men p la y key roles in corres pon d en t re la tionships between Third Nat'l and its respondent banks. MILES tr ie u tilitie s for c o n s tru c tio n an d m aintenance of th e ir electric distrib u tion system s.” Since the bulk of E usco’s business involved ordering truck bodies from the m anufacturer and custom -m aking them from th ere by m ounting special ized digging or aerial eq u ip m en t on them , capital needs w ere quite large. “As soon as h e ’d get a purchase o rder signed, D on would ju st bring it to the bank and tell us how m uch m oney he n e e d e d ,” Mr. W ilkinson said. “I t’s not th e most conventional way to go about th e business, b u t D on kept th e orders com ing in an d b u ilt his o p e ra tio n soundly. T here was plenty of work for this young com pany to do — it ju st n eed ed the operating capital to get it done. “W e felt all along th at Eusco, Inc., was a w inner, b u t I had to rem ind D on from tim e to tim e that he was about to outgrow us in term s of lines of credit w e co uld e x te n d ,’ M r. W ilk in so n added. W hen the tim e cam e to look for new m oney, Mr. W ilkinson recalls, “W e w ent to T hird N ational in N ashville.” So Eusco p resid en t D on E den, F arm ers Bank p re sid e n t W illiam Parnell and Mr. W ilkinson w ent to see Sonny Johnson, T hird N ational senior vice p resident in charge of th e correspond e n t banking d ep artm en t, and H ank Miles and Bob Logue, vice presidents who work in th e areas of industrial d e velopm ent and small business loans. Two trips to Nashville — “and on the second one we picked up th e check” — resulted in a shared line of credit and a solid “p artn ersh ip ” am ong th e th ree entities: Eusco, Inc., Farm ers Bank, W h ite H o u se and T h ird N ational, MID-CONTINENT BANKER for August, 19 8 0 Dallas is flying high as a major transportation center. From the days of cattle trails to the days of supersonic jets trailing off in the sky, Dallas has been a transportation hub. A crossroads of the nation... and now the world. D/FW Airport is the world’s largest airport in area. And many of the travelers who pass through D/FW Airport are bankers... coming to Dallas for one reason... Republic National Bank. Our correspondent banking division is known across the United States. Through Republic National Bank of Dallas, you can offer your customers a complete range of financial services such as trust and investment, petroleum and minerals, even international. Republic’s help and cooperation are sought by correspondent banks in virtually every state. Because we offer our corre spondents the capabilities and financial services of the Southwest’s preeminent commercial bank. Republic is one reason that Dallas has become the lead city in correspondent banking. Yet even though bankers pass through D/FW Airport on a regular basis, they’re only a hint of what the future holds. For us—and for Dallas—the best is yet to come. Republic National Bank is Dallas. m REPUBLIC MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Member FDIC 39 $1 .7-Million Loan Made Lanny W ilkin so n (3rd from I.), e.v.p./mgr., White House branch, Farm ers Bank, P o rtlan d , T en n., visits w ith Eusco, Inc., ex ec u tive officers (from I.) D ale Story, Joe Eden and Ed Groves. Nashville. D on E d en is happy w ith th e way the relationship has w orked out, because it has allowed his business to continue to grow and prosper. Mr. W ilkinson is pleased w ith the arrangem ents, too, b u t he sees it in a little different light. “W e’re always happy to have a big ger bank backing us up, not only for th e financial resources it can provide, b u t for its expertise in o th er special areas that we as a sm aller institution ju st can’t afford to have on staff. “W e call on th e T hird for advice as well as for overlines. I t’s ju st good b usi ness all th e way around: O u r re la tionship helps us m eet our custom ers’ needs — and keeps them banking w ith th eir hom etow n bank. F o r our part, we help T hird National offset its costs by m aintaining an account th ere, so the relation sh ip works w ell all th e way aro u n d .” Bob Logue of T hird N ational adds his perspective to the relationship in this way: “In a case like this, we b e com e ad hoc m em bers of L an n y s staff, adding our efforts to his in a way that is b e tte r than eith er of us could do it alo n e.” C lo se c o o p e ra tio n w ith sm all businesses such as Eusco and co rre spondent institutions such as Farm ers Bank of W hite H ouse w ere am ong the elem ents, Mr. Logue said, that led to T hird N ational’s recen t designation as a “certified” bank by the Small Busi ness A dm inistration. U n d e r th e certification program , w hich is designed to give b etter, faster service to small business borrow ers, th e re are sim plified procedures and sho rter processing tim e for SBA bankg uaranteed loans. In norm al circum stances, the SBA conducts an in -d ep th analysis of all NASHVILLE — Third Nat’l is funding a $1.7-million, 10-year term loan to Kleer-Vue Industries, Inc., Brownsville, Tenn., with the loan being guaranteed by the Farmers Home Administration. The funds will be used for new equipment and working capital by Kleer-Vu, manu facturer of photo albums, stationery and microfilm products. sm all-business loan applications it re ceives from banks. U nder th e certifica tion program , how ever, T hird N ation al will make the in-depth analysis and th e SBA only reviews the application. Joe Shaver, SBA district director for T e n n e sse e , said th e certification is granted because of a bank’s proved ability to process applications w ithin th e p aram eters of th e SBA’s cred it criteria and also know ledge of the var ious regulations regarding size stan dards and eligibility factors. F or Lanny W ilkinson, the bottom line is his increased capability to serve his custom ers in a rural town of about 3,000 persons, on the historic th o r oughfare that used to carry overland travelers from Nashville to Louisville. “The relationship betw een a small businessm an and his banker is a special one, to say th e least, ” he said. “And the special relationship we are able to have w ith T hird National helps to keep it that way. ” • • Bank Funds St. Cloud Comer Credit Life Single-Prem ium Term Lenders Single Interest Total Computer Program or In d ivid u a l Pick-and-Choose Program Property Im provem ent Loan Insurance LET’S TALK A B O U T IT. W I N S U R A N C E E NTERPRI SES, INC. I 40 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 5811 HAMPTON AVE. ST. LOUIS, MO. 63109 PHONE: 314/832-2717 These two historic buildings in downtown Nashville are being renovated into new office space and a pedestrian retail mall, with financing for the project being con tributed by Third Nat'l. The development, at a major downtown Nashville intersec tion, gets its name from a famous hotel that operated on the site beginning in ab out 1850. A portion of the building that was used as the hotel as late as 1870 re mains a part of the structure now being renovated. The retail area w ill be ready for occupancy early this fall, and the office area w ill follow on a phased basis begin ning in the fall. MID-CONTINENT BANKER for August, 19 8 0 MEMBER FDIC © Chase M anhattan Bank, N. A. 1979 For more than ten years, New Jersey National Bank in Trenton has counted on Chase to provide overline support in loans to its largest customers. The reasons for such a successful lending partnership are numerous. And Jack Leahy, Chase correspondent banking Relationship Manager for New Jersey National, is pleased to talk about some of them. “I’d say that the first reason for our close working relationship with our neighbors at New Jersey Nat ional is our ability to respond quickly to their loan requests. When they give us all the details of a proposed loan participation, they know that we’ll most likely have an answer for them in just 48 hours. They’ve always appreciated this. “But that’s not the only consideration. You see, one of New Jersey National’s largest customers, Yates Industries, uses scrap copper in the manufacturing of copper foil for electronic circuits. It’s a unique process, and Chase’s electronics industry technical specialist has been able to provide valuable input on the industry—knowledge that helps https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis John J. Leahy, Vice President/Senior Relationship Manager, Correspondent Banking us better understand Yates’ borrowing requirements. It’s that added expertise we can bring that builds even greater confidence in the overall relationship. “New Jersey National’s ability to confidently support their customer is another reason. This confidence has been developed over many years based on mutual respect for the professionalism within each financial institution. As you can imagine, New Jersey National is very pleased with the continued strong support provided by Chase. And, if my correspondent hanks are happy, so am I ” Nobody responds faster Do you need a fast, knowledgeable response on a loan participation’ Contact your Chase correspondent banking Relationship Manager. He or she is ready to help you meet the borrowing needs of your customers. C H A S E Banks Can Fill the Capital Void Facing G row ing Business Firms By Calling in a Commercial Finance Organization H E IM PA C T on m any com m uni ties — large and small — of the capital-raising problem s facing grow ing com panies is profound. The ability of small- and m edium -sized businesses to grow and p ro sp er has a direct effect on local em ploym ent, local tax rev enues and th e health of m any local eco nomies. F or decades th e grow ing b u siness’ principal source of capital and financ By Russell B. Donahue ing expertise has b e e n th e regional Executive Vice President bank, w hich ably has fulfilled a broad Associates Commercial Corp. range of banking needs. W orking w ith businesses in a variety of industries, Chicago regional banks have h elp ed m any small com panies grow into large ones and have m ade an im m easurable co n trib u cess of m any small- and m edium -sized tion to th e financial w ell-being of m any b u sin esses to trad itio n al sources of financing. Access to financing in the com m unities. Today, how ever, th e link b etw een com m ercial pap er m arket and the p ri regional banks and grow ing business is vate p lacem ent of insurance capital tra th reaten e d by th e forces of inflation ditionally has b een available only to and com petition. To stren g th en that larger, m ore prestigious com panies. link, a grow ing n u m b e r of regional And in the equity m arket, w here in banks are working in p artn ersh ip w ith vestors have becom e increasingly riskin d ep en d en t finance organizations like a v e rs e , th e a b ility o f g ro w in g Associates C orp. of N orth A m erica and businesses to raise capital has been severely dim inished. its c o m m e rc ia l fin a n c e su b sid ia ry , H o w e v e r, m a n y c o n c e rn s h av e Associates C om m ercial C orp., to m eet th e capital needs of th e ir com m ercial found th at one avenue th a t’s open to them in th eir search for capital is assetcustom ers. Filling a Capital Void. No one has based financing. Loans secu red by th e assets of a felt the sting of inflation m ore than th e in d ep en d e n t businessm an. Painfully, growing corporation reduce th e level he has learn ed th at even though his of risk for the lender. This dim inished sales may continue to be strong, he risk often allows lenders to m ake m ore m ust sell that m uch m ore of his goods funds available than norm ally possible and gives businesses greater flexibility and services or fall b eh in d inflation. Today’s growing business is running to take advantage of business o p p o rtu faster than ever — ju st to m aintain its nities th at req u ire im m ediate funding; flexibility that is critical to th e ability of presen t value. But keeping up w ith inflation often com panies to grow and prosper. As a result, secured financing has forebodes a reduction in th e quality of a growing business’ balance sheet. In becom e a w idely used lending tool for flation requires g reater dollar invest m any larger banks, w hich have recog m en t by businesses in th e ir receiv nized a significant new business oppor ables and in v e n to rie s. As a re su lt, tunity in the asset-based lending field. assets and c o rre sp o n d in g liab ilities Because of this increased in terest in, b u ild at a faster pace th a n eq u ity , and dem and for, asset-based financing, th ereb y deterio ratin g th e liquidity and m ajor banks have becom e m ore active in com m ercial financing. The National leverage ratios of m any small firms. T he re d u c e d q uality of corporate C o m m e rc ia l F in a n c e C o n fe re n c e balance sheets has dim inished th e ac- (NCFC) reports that 58% of its m em T 42 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis bers are banks or are bank-controlled, as com pared to 19% in 1970. M ajor banks now have a substantial share of the sm all-business financing m a rk e t. By e s ta b lis h in g re g io n a l financing offices to serve individual m arkets, these large organizations are m oving into areas once served exclu sively by regional banks, traditionally th e financing backbone of small- and m edium -sized businesses. C onsequently, regional banks m ust m eet the needs of th eir com m ercial clientele. If not, th ey not only risk los ing the financing business, b u t also the opportunity to provide o th er banking services to these com m ercial custom ers. A Financing Partnership. Providing asset-based loans to small business can be done by local, in d ep en d en t banks in a nu m b er of ways, including establish m ent of an in-house capability. But m ost regional banks find this ineffi cient, perhaps even im possible, b e cause of the lim ited m arket in th eir area to support the effort — and m ore im portantly, because of the overriding n eed for seasoned, know ledgeable and experienced personnel to staff an assetbased financing capability. Few banks can afford to assum e this risk or the cost of establishing an inhouse capability. Thus, the em erging alternative is en terin g into participa tion loans w ith in d ep en d en t com m er cial financing organizations. This p a rt nership provides custom ers of regional banks w ith access to the expertise, ex p e r ie n c e a n d fin a n c ia l r e s o u rc e s necessary to evaluate, fund and adm in istrate asset-based loans. The Impact on Growing Businesses. T he Associates and o th er finance com panies are uniquely qualified to help banks fill the capital void facing grow ing businesses. Years of w orking w ith small- and m edium -sized firms have given in d ep en d en t finance organiza tions th e b ack g ro u n d n ecessary to u n derstand th e credit needs and credit risks of growing businesses. By u tilizin g in d e p e n d e n t finance org an izatio n s, banks n o t only give MID-CONTINENT BANKER for August, 1 9 8 0 National American Bank of New Orleans Statement of Condition as of June 30, 1980 LIABILITIES RESOURCES Cash and Due from B anks..............................$ United States Government Securities........... State and M unicipal O bligations................... Other Securities................................................. Bank Buildings and E quipm ent.................... Loans and D iscounts............. 81,152,015.07 Less Unearned Incom e. . . . 734,291.03 Less Reserve for Possible Loan Losses..................... 1,105,494 58 Loans, N e t...................................................... Federal Funds S old.......................................... Customers’ Liability Account Acceptances. . Other A ssets....................................................... Total Common Capital S tock........ $ 4,000,000.00 1,042,500.00 Preferred Capital Stock........ Surplus..................................... 14,150,000.00 Undivided P rofits................... 10,747,014.55 29,939,514.55 4,035,851.78 Reserve for Taxes, Interest, etc..................... 5,825,000.00 Federal Funds Purchased................................ 1,083,753.00 Liability for Capitalized Leases..................... 12,640.32 Dividends P ayable............................................ 31,337.00 Liabilities Account Acceptances.................... Demand D eposits................... 203,926,217.22 Time D eposits......................... 169,971,235.99 Total D eposits............................................... 373,897,453.21 $414,825,549.86 Total 87,934,462.12 147,914,527.88 8,985,877.57 3,354,279.04 8,916,718.62 79,312,229.46 72,000,000.00 31,337.00 6,376,118.17 $414,825,549.86 BOARD OF DIRECTORS E J d w in B am es l a ir * H Pres., Artfer, Inc. P eter J. B H utler Attorney -at-Law; Certified Public Accountant J P. D o seph o r ig n a c , J r .* Pres., Dorignac Food Center S. L . H ig h l e y m a n G. J ah erbert C n cke P ester M . S h il s t o e c il lau ch e Vice Pres., Delta Life Insurance Co.; Vice Chairman of the Board, Tharp-Sontheimer-Tharp, Inc. A V SPECIAL ADVISORY DIRECTORS * President A . St e in rthur W eorge G. V ath J. K il lia m ro ss Pres., Kross Lumber and Wrecking Co., Inc. er Attorney-at-Law G H . S c h ir o * ic t o r ne President, Shilstone Testing Laboratory, Inc. Investments J ohn Ormond * Attorney-at-Law Former Mayor, City of New Orleans; Insurance Executive *Permanent member of the Executive Committee , III Attorney-at-Law New York City, N .Y . OFFICERS MARKETING DIVISION PRESIDENT G G. V eorge ath F SENIOR VICE PRESIDENTS R R T odney a lph L hom as C. B row er, J . D ubos J. L a t t ie r C astagna Vice Pres. & Mgr. M . ran k rs. E M dna ae H VICE PRESIDENT AND CASHIER C A Vice Pres. nthony P. C E. F o ret R. G arr o ll w abe , III P. C rank AUDITING DEPARTMENT R u d o lf REAL ESTATE DIVISION G erald B Assistant Auditor e n ja m in S. G ravo let r u n ken M . J uan ACCOUNTING DEPARTMENT H. K lw o o d e im Vice Pres. & Mgr. DATA PROCESSING CUSTOMER SERVICES J J Vice Pres. & Trust Officer Vice Pres. C G J G. K aufm ann Vice Pres. M r s . E v e ly n J o hnso n M rs. A d ele K een C h arles A. L andry M r s . O l g a Sie g e n t h a l e r M r s . D o r o t h y St ie r H. B TRUST DIVISION a l v in D a v id L. C ero m e erald B. G G. Y lyn n oung P ook F. Spam pneto h ilip L. B Data Processing Officer ohn L. L S. K azare l in c k atson Asst. Vice Pres. & Trust Officer M iss E t h e l C. G e n e s t e Banking Officer , Jr. am es Asst. Vice Pres. Vice Pres. Asst. Vice Pres. J o seph , Jr. Vice Pres. r if f it h ASSISTANT VICE PRESIDENTS BANKING OFFICERS evo n h is e s i E M r s. E la in e D u b r e t R o bert L. J o u et,J r . A dam H. V o lk B ernard Vice Pres. Auditor Vice Pres. & Mgr. h is e s i V. B J. Sc h ndrew F CORRESPONDENT BANKING h arles A Banking Officer A d r ia n L . B l o c k G e o r g e J. C o o k J o s e p h W . G a g lia n o C BRANCH ADMINISTRATION DIVISION Vice Pres. & Mgr. yde Banking Officer VICE PRESIDENTS INTERNATIONAL BANKING DIVISION RECORDS DEPARTMENT V ernon J. L e w is Supervisor of Records BRANCH OFFICES BROAD-DE SOTO 1425 N. Broad Street M r s . I n e z L . N a v a r r e , Asst. Vice J e r r y P . H e b e r t , Banking Officer Pres. & Mgr. rs. rs. L i l l i a n K o p p e n s , Asst. Vice Pres. S h i r l e y D a l i e r , Banking Officer CHEF MENTEUR 7201 Chef Menteur Highway A r n o l d T . M c C o r m i c k , Asst. Vice M r s . L i n d a G . C o m e a u x , Banking & Mgr. rs. M ary L Pres. & Mgr. Banking Officer M rs. Ja c k ie L in d e l o w , Asst. Vice Pres. & Mgr. M rs . Joan K . St o uder , Banking Officer LAKE FOREST 5660 Read Boulevard Pres. & Mgr. Officer W M Vice Pres. & Mgr. , Banking Officer a r r e n J. J a n e , r s. T er esa K l in e LAKEVIEW 826 Harrison Avenue ELK PLACE 144 Elk Place M A l b e r t H . S c h o f , Vice M r s . A l in e R ic h a r d s , INTERNATIONAL TRADE MART No. 2 Canal Street CARROLLTON 1100 S. Carrollton Avenue M M GOVERNOR CLAIBORNE 3000 Napoleon Avenue ou Qu in n , Asst. Vice Pres. & Mgr. M M e l v in rs. B. H B ech ler ern ard , , Vice Pres. & Mgr. Asst. Vice Pres. LEE CIRCLE 1018 St. Charles Avenue H M Asst.Vice Pres.&Mgr. Banking Officer e r b e r t G. H e c k e r , rs. Im eld a A. San d ers, PARKCHESTER 4764 Paris Avenue Vice Pres. & Mgr. o e n i g , Banking Officer; Executive Director, Ladies Banking Center A . A l l e n M a r t in , M r s. L u c il l e D . K 225 BARONNE 225 Baronne Street M a r t in M iss M Asst. Vice Pres. & Mgr. , Banking Officer E. Zeller , ercedes A lbert WOODLAND 6057 Woodland Highway V oyd C. C o m pagno , Asst. Vice Pres. & Mgr. Correspondents in all principal cities and important centers throughout the world. N A T I ON AL M AIN OFFICE: 200 CARO NDELET STREET, NEW ORLEANS, LA. 70130 TE LE PH O N E ALL O FFICES 504/525-7761 AMERICAN BANK OF NEW OR L EA N S MEMBER: F E D E R A L DEPO SIT IN SU RANCE CORPORATION MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 43 th eir custom ers n eed ed access to assetbased lending expertise, b u t also m ain tain th eir depositor relationship w ith these custom ers. F rom th e b o rro w e r’s stan d p o in t, this partn ersh ip arran g em en t m akes it attractive for him to m aintain a rela tionship with his bank that services so many of his financial needs. By receiv- ing th e financing help he requires, the growing businessm an can continue to place the m anagem ent of tru st and re tirem en t fund assets and dem and d e posit relationships in the hands of his local b an k er, and m ain tain co n tact w ith one of his most im portant sources of business referral. But for most small- and m edium - O bjective o f N ew ABA Board Is C om m unity Developm ent CO M M U N ITY econom ic policy board has b een form ed by the ABA to m onitor, encourage and facilitate bank participation in com m unity and neighborhood-revitalization efforts and coordinate exchange of ideas and experiences am ong banks, com m unity groups and federal, state and local g o vernm ent agencies. The new b o ard ’s official m ission includes assisting bankers in con tinuing and intensifying efforts to assess and respond to com m unity needs, facilitating bankers participation in revitalization program s and keeping bankers inform ed of legislative and regulatory actions affecting th e ir com m unity-econom ic-developm ent activities. The econom ic health of an increasing n u m b er of both large and sm all c o m m u n itie s a n d c e n tr a l- c ity n e ig h b o rh o o d s is b e in g th reaten ed by dw indling tax bases, decreasing job opportunities and decaying h o u sin g ,” says W alter J. Connolly Jr., chairm an of the policy board and p resid en t, C onnecticut Bank and CBT C o rp ., H a rt ford. “Unless th ese areas are to be abandoned altogether — and that should not be considered as a viable alternative — th e private sector m ust becom e m ore actively involved in finding solutions. “The banking in dustry has had a long-standing com m itm ent to com m unity revitalization. H ow ever, creation of this board reflects an aw areness of th e need to continue, and even intensify, these efforts.” Mr. C onnolly cites two basic areas of concern in w hich the com m ercial-banking in dustry can have a direct im pact —- housing and em ploym ent. “Because lending is one of th e prim ary functions of com m ercial banks,” he points out, “it is only natural to expect that our com m uni ties should look to us as a catalyst in im plem enting creative housingfinance and com m ercial-lending program s. Also, because most banks are looked on as leading institutions in th e com m unities they serve, it also is natural th at we should be expected to take a proactive role in im plem enting m inority training and re c ru itm e n t program s. “Banks cannot and should not be expected to do it alone. Only through effective public/private p artn ersh ip s involving creative use of financial and m anpow er resources of banks, o th er business orga nizations, local, state and federal agencies and com m unity groups, can such form idable com m unity-revitalization needs be m e t.” D espite certain com m on elem en ts, Mr. Connolly continues, no two com m unities have th e sam e set and deg ree of problem s. Also, the success of revitalization efforts will vary d ep en d ing on attitudes and effectiveness of local officials and exten t to w hich the private sector is willing and able to play an active role. “I t’s unrealistic to think th at th e re is a single cure-all that can be universally a p p lie d ,” he warns. Two M id-C ontinent-area bankers are on the new policy board: E ug en e B. C roisant, senior vice p re sid e n t, C ontinental Illinois National, Chicago, and D onald E. Lasater, chairm an/C E O , M ercan tile T rust, St. Louis. Ex-officio m em bers are ABA P resid en t-E lect Lee E. G underson, presid en t, Bank of Osceola, W is., and John Perkins, ABA council chairm an and im m ediate past ABA president. Mr. Perkins is p resi dent, C ontinental Illinois, Chicago. A 44 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis sized business borrow ers, the m ost im portant benefit of the partnership b e tw een regional banks and in d ep en d en t finance organizations is the financing flexibility b o rrow ers can receive at com petitive rates. Growing com panies can tap an open line of credit w hen they need it w ithout com pensating bal ances and take advantage of cash dis counts on purchases of attractive newbusiness situations that require ready capital. The partnership also allows the re gional b anker to provide businesses w ith a wide range of asset-based le n d ing services. Not only can a regional bank serve a growing custom er w ith a line of credit secured by th e firm ’s assets, b ut it can help the firm generate n e e d e d c a p ita l by fin a n c in g its accounts receivable. Utilizing th e ex p ertise of broad-based finance orga nizations, like the Associates, regional bankers also have the capability to offer th e ir custom ers acquisition financing services, as well as the financing of new plant and equipm ent. This asset-based lending capability also can e x te n d to g o v e rn m e n tguaranteed lending program s targeted to sm all- a n d m e d iu m -s iz e d b u s inesses. The Associates and o th er com m ercial finance com panies have w ork ed closely w ith the Small Business A dm inistration (SBA) and the F arm ers H om e Association (FmHA) to stru c tu r e g o v e r n m e n t- b a c k e d s e c u r e d loans to growing businesses. The forces of inflation and recession have re stric te d th e ability of m any com panies to grow and have dim in ished the chances of m any others to survive. The recen t W hite H ouse C on ference on Small Business identified th e c a p ita l-raisin g p ro b le m as th e n u m ber-one obstacle facing growing com panies. Financing partnerships w ith in d e p e n d e n t finance organizations has a positive im pact on th e individual busi ness com m unities served by regional banks. By providing small businesses with the capital they need, regional banks prom ote th e econom ic develop m ent of many com m unities at a tim e w h en th e re are m any obstacles to growth. P erh ap s th e m ost im p o rta n t e le m en t in this is th e regional b an k ’s strength in making available th e w ork ing capital that small businesses need to survive in a troubled economy. In so doing, regional banks help to m aintain a high level of em ploym ent and the strength of o th er local businesses that supply goods and services to a growing com pany and its em ployees. If the forces of inflation and reces sion have d eep en ed the capital void MID-CONTINENT BANKER for August, 1 9 8 0 V INTRODUCING THE MICROSORT SYSTEM... THE COIN SORTER/COUNTER THAT NEVER FORGETS The BRANDT® MICROSORT™ Sys tem. The sm a rte r s o rte r/c o u n te r system! The MICROSORT sorter/ c o u n te r id e n tifie s your te lle rs by individual codes. . .Their operational data is locked in its memory. The result: fast, accurate, comprehensive day-end balancing. And the MICROSORT System elimin ates the handwritten report! At the press of a button the equivalent of a balance sheet is issued in printed report form. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis By merging a microprocessor with our dependable coin sorter, we’ve re vo lu tio n ize d the entire s o rtin g / counting process. The MICROSORT System can code up to 18 tellers. Accumulate day-long coin deposits. And process each teller’s day totals. Balancing becomes easier than ever because the MICROSORT System remembers coin deposits by teller code at the end of the day. The MICROSORT System also fea tures full six coin capability, battery stand-by, predetermined bag stops, an optional automatic feed that holds up to 19,000 dimes and much more. The BRANDT® MICROSORT™ Sys tem. The smarter sorter/counter. B ra n d t B ra n d t, Inc. W a te rto w n , W l 53094 B randt® C ashier® C ountess® https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Duplicate. Rapidly gaining popular support...nationwide. Favored to win the vote from all who use it. Endorsed by financial institutions across the country. Forerunner. And front runner... A precedent in the making. It’s appeal? The Duplicate understands the way people really use checks. In a hurry... Long lines. People waiting. Barely enough time to write a check...let alone record it. The Duplicate is out to change all that. Granted, not much can be done about the lines, the people, or the waiting. But why stand around once the check is written? With The Duplicate, each check is backed by a carbonless copy...recording the transaction as it is written. Automatically. Instantly. So what the writer gets is a complete record of the transaction...on the run. Out o f the checkbook... Checkbook needed here...and there. A t the same But not by the same party. The Duplicate understands. It’s not always possible for the check and register to travel together. That’s why each copy is numbered the same as the checks. Recording details on the spot...called to account at a moment’s notice. With the best o f intentions... Register left unattended. Occasional transaction forgotten. A nd when it’s time to tally the total... no one's been minding the score. The Duplicate has...remembering all the missing links. The hurried check as well as the forgotten entry. So striking a balance doesn’t mean waiting for the statement to come anymore. And that makes The Duplicate an ideal candidate for all situations Truncation included. Because whether or not the check is around...the copy remembers. The Duplicate...setting a precedent. For the people. By Deluxe. D ELU X E CHECK PRINTERS, INC. Setting the Standards https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis facing small businesses, then, w orking to g eth er, small banks and in d e p e n d en t com m ercial finance organizations can help fill this gap. In th e process, they can take advantage of significant new -business opportunities in assetbased financing and prom ote the eco nomic developm ent of local com m uni ties. • • First Tennessee Honored Financing Package (Continued fro m page 30) give a p ro p er retu rn on each p arty ’s investm ent. The two banks set about bringing o th er financial institutions in on the Peabody refinancing and making it a tru e com m unity project. After 18 long m onths of negotiation and m uch p lan n in g , th e n ecessary financing package was p u t together. The basis for the banks’ participation was size. The banks w ould assum e a portion of th e total loan liability equal to their percentages of total assets of all banks involved. To reduce th e risk of the lenders, F irst T ennessee and th e d evelopers set about gaining afi Econom ic D evelop m ent A dm inistration 90% guarantee of both the construction and the p erm a n e n t loan. In addition to th e ED A guarantee, the city of M em phis had agreed to guarantee $1 million of th e loan. At a later date, th e city changed from issuing its guarantee to th e d e velopers to issuing a direct loan, su b ordinate to th e financial institutions’ loan. O b ta in in g an E D A g u a r a n te e proved tim e consum ing because of the plethora of paperw ork req u ired to in volve the governm ent and because a guarantee of this type of loan was a first for the Atlanta ED A office. The lead banks had to assure ED A th at not only was the v en tu re a probable success, b u t that p rivate financing w ould not be p o s s ib le w ith o u t th e g o v e rn m e n t guarantee. O n January 11, 1979, the ED A gave an indication th at it w ould look w ith favor on th e project. At a later date, the ED A m ade a direct $600,000 loan to th e d ev elo p ers, su b o rd in a te to th e financial institutions’ loan. Finally, after alm ost four years of negotiation by M em phis banks and d e velopers, th e financial package was c o m p le te d and p u b licly an n o u n ced F ebruary 29, 1980, in the hotel lobby. Bankers and developers form ed an im pressive wall in front of th e fountain w here th e famous ducks once swam. Since this $11.2 million in p erm a nen t loans was a com m unity project, 48 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis First Tennessee, Memphis, received a 1979 "Business in the Arts" award at recent cere monies in Corning, N. Y., for its participa tion last year in the arts. The bank was nominated by the Memphis Arts Council. Listed chiefly was its 1979 commitment of more than $ 1 00 ,0 00 a year in "First Bravo" awards to applicants whose cultural pro jects are chosen to enhance the arts in Memphis and Shelby County. The award is cosponsored annually by Forbes magazine and the Business Committee for the Arts in New York. Shown at the presentation cere monies are (I. to r.): Edward Strauss, pres., Business for the Arts committee; Carol Coletta, public relations mgr. at the bank, who accepted the aw ard, and James Dunn, Forbes editor. banks involved agreed to subsidize the project by giving a below -m arket rate to the developers that would fu rth er help secure the success of the project. The construction loan also carries a p referred rate. F irst T ennessee agreed to provide 54% of th e construction m oney, or $6 million, and NBC agreed to provide 22%, or $2.5 million. As a result of one bank falling out of th e construction loan at the last m in ute, Chicago’s H arris Bank graciously agreed to step in and participate w ith 8.5%, or $957,220. O th er participants — all in M em phis — are C & I Bank, 6%, or $696,000; U n ited A m erican Bank, 3.6% , or $414,710; C om m erce U nion Bank, 2.7% , or $308,490; City National, 1.3%, or $149,160; and TriState Bank, 1%, or $117,520. The Chicago bank will be replaced in the p erm an en t loan by Union P lant ers National, also in M em phis, which has pledged $1.8 million. Jack Belz spoke of the “exem plary p a rtn e rs h ip ” b etw een his com pany, com peting banks, city adm inistration and council, county board of com m is sioners, C e n ter C ity Com m ission and ED A that m ade th e long-sought deal possible. “It’s a reality . . . I t’s a done d e a l,” said Roy Kidd, senior vice president, F irst T ennessee, on th e day of th e clos ing of th e loan package, M arch 8, 1980. It took all day for the bankers involved to sign some 100 docum ents. That day rep resen ted four years of financial and political planning. No one ever said it w ould be easy to revitalize a city’s downtown, b ut the hard work is paying off even before the Peabody’s doors are open. Vacant two- and three-story cottonclassing buildings along world-famous C otton Row have b een tu rn ed into apartm ents and condom inium s dow n town. Professionals are turning shells of old garages into attorneys offices. The pioneer tre n d is even catching on in m idtown, the residential area on the skirts of downtown, w ith people opting to renovate older hom es and live closer to th eir work. As Ronald T erry, chairm an, F irst T e n n e sse e N atio n al C o rp ., p u t it, “The Peabody project is m ore than the renovation of an old hotel. It is the beginning of the renew al of the spirit of the city. As m uch as any o th er single piece of property, th e Peabody re p re sents the history and culture of this city. To the extent it has been the sym bol of dow ntow n’s failure, its reb irth will be a symbol of the success of dow n town redevelopm ent we all have been looking for. C ertainly, th e ten acity dem onstrated over the past four years by all parties involved in this project proves real com m itm ent to revitaliza tion of our central city .” • • Richard B. Johnson Dies Richard B. Johnson, 66, died June 27. He was president and fo u n d e r of the Southwestern Graduate School of Banking at Southern Methodist Universi ty, Dallas, founder and director of the Assemblies for Bank Directors and profes sor emeritus of fi nance and economics at SMU. His early career included serving as assistant to the comptroller, American National Insurance Co.; instructor and assistant professor of economics, University of Arkansas; region al business consultant to the U. S. Depart ment of Commerce and research econo mist, Dallas Fed. At the latter, he was named senior economist in 1946 and held that post until joining SMU in 1948. As chairman of the SMU economics depart ment, Dr. Johnson founded the university's first doctoral program. He initiated an ex tensive publications/research program for bank directors and edited books for bank ers and bank directors. MID-CONTINENT BANKER for August, 1980 IF IT'S NOT ONE THING, IT'S ANOTHER. W IC H ITA (IV) — C on gress has been busy. In the past few years, they have d e liv e re d new p r o gram s to banking with in creasing frequency. The object, deregulation. At first our main concern was c o n f u s i n g o u r c u s tomers. But now we wonder if we ourselves might not be getting confused. And we can’t afford that, because deregulation brings with it strong new competi tion from every segment of the financial community. The message is clear. Every bank, everywhere, needs to act more like a bank than ever before. We can do it by developing our product differences ana making our customer services the best in Kansas. You have the means to get this very im portant job done through the correspondent b a n k i n g services o f T h e Fourth. Call Joe Stout, Tom Potter, Gage Overall, Max Knopp or Phil Miller. T hey’ll help you stay ahead of the competition by putting the systems, the experience and the expertise of the largest bank in Kansas to work for you. TheFourth The Fourth National Bank and Trust Company W ichita, Kansas 67201/(316) 261-4654 M em ber FDIC MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 49 What Banks Are Doing for Their Communities Banks Initiate, Support M ultitude O f Com m unity Involvem ent Projects Kids Learn Money Management From Mr. Day & Night Teller Program T’S NOT uncom m on for som eone to take a serious look at his personal finances and w onder w hat in th e w orld w ent wrong. But how often does one explore th e m an n er in w hich he or she learned , or d id n ’t learn, to m anage m oney and credit? W ouldn’t it be great if everyone had th e opportunity to learn basic m oney m anagem ent at an early age so they could have a head start on this vital aspect of adult life? Look no fu rth e r than F irst National Bank of Arizona and its Mr. Day & Night T eller program . T he program , said to be the first of its kind in th e U nited States, is taking sim ple m oney m anagem ent techniques into Phoenixarea fourth- and fifth-grade classrooms on req u est in an effort to help young consum ers in th e 9-10 age group. Mr. Day & N ight T eller, a colorful costum ed character w ho resem bles th e bank’s Day & N ight T eller ATM, talks A calculator on M r. Day & N ig h t Teller helps youngster add her sources of income during to children directly in th e classroom lesson on how to prepare sim ple budget. about m oney m anagem ent. Through First N a t'l of A rizona basic m oney m a n a g e visual aids, group participation and an m e n t classroom p re s e n ta tio n te a c h e s illustrated workbook, he gives young youngsters im portance of saving, princi sters inform ation on th e im portance of ples of borrowing m oney and how to d ete r saving, principles of borrow ing m oney m ine good values. and how to do a sim ple b u d g et and m o n e y m a n a g e m e n t tip s a n d e n courag em ent at saving often go u n d eterm in e a good value. “For m any years now, th e F irst has h eed ed by children in th e 9-10 age offered films and speakers to Arizona group because they are getting th eir high schools as resources and teaching first taste of preadolescent in d ep en d tools on topics such as banking se r ence. T hese youngsters are unw illing vices, econom ics, careers in banking to heed the advice because to them it and m oney m an ag em en t,” said B ar appears to be control over th eir own bara Lam besis, m anager of th e b ank’s funds, Miss Lam besis said. T h at’s w here Mr. Day & N ight Tel public relations d ep artm en t. “H ow ev er, it has b een observed th at few re ler steps in. Mr. Day & N ight T eller is an in d e sources on sim ple m oney m anagem ent techniques are available for younger p e n d e n t authoritative figure w ho ex students, m any of w hom handle con cites children, said Len Beard, a p ro fe ssio n a l a c to r an d fu ll-tim e F irs t siderable sums of m o n ey .” In addition, ch ildren are relu ctan t to N ational p u b lic relatio n s em ployee take th e ir p a re n ts’ advice on m oney who plays th e role of th e anim ated m atters, Miss Lam besis said. Personal banking m achine. Mr. Day & N ight I 50 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T eller also can keep stu d en t attention focused on the en tire presentation, he said. Mr. Beard said students eagerly par ticipate and that often it is difficult to be sure as m any students as possible have a chance to answ er a question or be a helper. W hile the presentation is entertaining, Mr. Beard said, young sters also have the chance to learn sound m oney m anagem ent at an age w hen th eir adult spending habits are forming. Bank officials said Mr. Day & N ight T eller has broken through social b ar riers am ong children. T hey said he appeals to all youngsters and that stu dents easily interact during the p re sentation. T he program , which is being piloted in Arizona’s M aricopa C ounty, started in early April and has reached several thousand students. Mr. Day & N ight T eller is averaging th ree presentations a day before 65 to 70 students p e r ses sion. Som etim es he gives five p re sentations in a day. T h e p ro g ra m also a p p e a ls to teach ers. M r. B eard said M aricopa C o u n ty te a c h e rs b egan re q u e s tin g classroom appearances as soon as the program started and that Mr. Day & N ight Teller was im m ediately booked solid through May w hen school ends. W ritte n com m ents from teach ers who have seen the presentation speak for them selves: “ M r. D ay & N ight T eller e sta b lished instant rapport w ith th e stu dents. The program shows the chil d ren the value of saving. ” “C hildren n eed m ore exposure to this ty p e of pro g ram for co n su m er aw areness.” “Teaches children about banking in th e ir early school years. M ost texts don’t cover this until high school.” A lthough school is not in session during sum m er, Miss Lam besis said M r. D ay & N ig h t T e lle r is b u sy appearing at day camps, parks and re creation program s and o th er sum m er youth activities that lend them selves to an a tm o s p h e re o f le a rn in g . F ir s t MID-CONTINENT BANKER for August, 19 8 0 National plans to expand the program to th e statew ide level this fall. T he Mr. Day & N ight T eller educa tional program was developed in coop eration w ith th e Arizona D e p artm en t of E ducation (ADE). Teaching profes sionals working on th e project include th e coordinator of special projects in th e A D E Division of E ducation S er vices and m ath coordinators from four M aricopa C ounty school districts. F irst National is offering th e p ro gram free of charge as a com m unity service. T each ers sim ply re q u e s t a classroom appearance by calling the bank’s public relations d ep artm en t. So w hat about those young consum ers? Will they some day w onder w hat w ent w rong w ith th eir finances? If Mr. Day & N ight T eller has his way, they will at least have an early sta rt on avoiding that problem . • • file of therm ogram s of hom es in central O klahom a. T he th erm o g ram s w ere furnished to L iberty by the C en te r for Econom ic and M anagem ent Research at th e U niversity of Oklahoma. They w ere p rep ared u n d e r th e auspices of th e O klahom a D ep artm en t of E nergy, and are m ade available at no charge to th e citizens of th e state. T herm ogram s are in fra-red aerial photographs, m ade at night during the w in ter from an altitude of 750 feet. They show heat-loss in buildings and hom es. Miss Saylors has b een trained to analyze the photographs and help in terested citizens d eterm in e th e need for added insulation in th e ir homes. The photographs show w here heat may be escaping from hom es, indicat ing an energy loss. T hey fill several file draw ers and are com bined w ith a map of the O klahom a C ity area so that in terested citizens can locate th eir indi vidual hom es. W hen a hom e is id en ti fied, the heat loss can be d eterm in ed from the photograph and th e n eed for insulation decided. Since th e booth o p en ed , several h u n d re d custom ers have v iew ed th erm o g ram s of th e ir hom es and b een counseled about e n e r gy-savings ideas. A C h e c O K a rd a u to m a tic te lle r m achine is also a p art of the display. It dem onstrates that, w ith m ore than 65 locations across the state, C hecO K ard makes banking easier by helping cus tom ers save gasoline, tim e and money. A NEW LOW COST ATM BRANCH THAT YOU CAN AFFORD NOW! Bank's Energy-Saving Effort Recognized by Governor (At 1/4 the cost of a small manned branch, it will handle 8 0 % o f your customer's needs.) A certificate of honor from th e gov ern o r of O klahom a has recognized the energy conservation efforts of L iberty National, O klahom a City, in providing an energy savings c e n te r in the bank lobby to help custom ers save energy. The bank’s E n erg y Savings C en ter, opened in May, is staffed by A ssistant Vice P re sid e n t N ancy Saylors, who provides counseling on energy savings subjects to custom ers w ho visit the booth. The ce n te r was designed by artist Paul L eF eb v re to d em o n strate m any energy-saving ideas in hom e construc tion. R esem bling a cutaw ay portion of a hom e u n d e r construction, th e booth exposes sections of insulation in walls and ceiling and shows w eath er strip ping and caulking around window s and doors to m ake hom es airtight. An outstanding feature of th e ce n te r that has attracted m uch atten tio n is a WITH SCARCE GASOLINE PRICED OUTRAGEOUSL Y HIGH - ALERT BANKERS ARE EXTENDING THEIR SERVICES CLOSER TO THE CUSTOMER! BANK CUSTOMERS ENJOY A TM BANKING BECAUSE: 1. It's nearby and convenient. Handy neighborhood location. 2. No tra ffic jams. Bank A n ytim e —Day —N ight —Holidays. AND 1. 2. 3. OF MORE IMPORTANCE FOR THE BANK: M inim um land needed, thus more choice and available sites. A m azingly low er initial cost and low per item cost. W ill gain New A cco u n ts and Keep present ones at a fra ctio n of Regular Branching Cost. 4. C aw thon Facilities are RELOCATABLE! Phone or w rite today fo r C a w th o n 's a ttra ctive brochure and other helpful inform ation. IT'S AN IDEA WHOSE TIME HAS COME! Energy Savings C enter a t Liberty N a t'l, O klaho m a City, features c u ta w a y of home under construction th a t exposes sections of insulation in w a lls an d ceilings. File of therm ographs enables residents to d ete r m ine if th e ir homes are suffering energy loss. MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■0 ” C A W T H O n CAW THON BUILDING SYSTEMS, INC. 5 0 5 Interstate 35E. De Soto (Dallas) Texas 751 1 5 Phone (2 1 4 ) 2 2 3 -4 9 0 0 51 Urban Fellowship Offered To Minority Person Community Action Grant Named for Finley Vinson B oatm en’s National, St. Louis, has established an U rban Fellow ship in cooperation w ith th e d e p a rtm e n t of com m unity d ev elo p m en t at th e U ni versity of M issouri/C olum bia. The one-year, $5,000 fellowship will be aw arded to a St. Louis m inority person who has d em o n strated an in terest in w ork in neighborhoods and who will re tu rn to St. Louis to work in neighborhood redevelopm ent. The selected recip ien t will be a stu den t in residence in C olum bia from A ugust 25, 1980, th ro u g h A ugust, 1981, and will receive e ith e r a m aster’s degree or a diplom a in com m unity d e velopm en t from th e com m unity d e velopm ent d ep artm en t. “O ur p u rp o se in establishing this fellow ship,’’ says D onald N. Brandin, th e bank’s chairm an/C E O , “is to cou ple an educational oppo rtu n ity w ith our desire to help provide com m unity leadership in our neighborhoods in St. Louis. W e at B oatm en’s are com m itted not only to help revitalize our neig h borhoods as a lending institution, b u t to help provide th e concern and exp er tise so necessary for successful renova tion and reh ab ilitatio n .’’ An annual grant of up to $10,000 has b e e n estab lish ed by F irst N ational, L ittle Bock, to h elp a com m unityaction o rganization th at proposes a new and innovative way to help solve a com m unity problem . The grant is nam ed after B. Finley Vinson, the bank’s vice chairm an. Its purpose is to recognize Mr. V inson’s dedication to com m unity involvem ent and to provide an incentive to com m unity organizations to p resen t crea tive answ ers to the needs of central Arkansas. G rant applications can be subm itted to th e bank until O ctober 1. A select com m ittee of bank people will review th e applications and announce a w in n e r in N ovem ber, w ith funds to be m ade available in January. E x clu d ed from co n sid eratio n are annual fund-raising cam paigns, su p p o rt of g e n eral o p e ra tin g b u d g ets, capital building projects unless d irect ly related to the ultim ate success of a specific project, endow m ents, grants to in d iv id u als, sch o larsh ip s or fel lowships directly or indirectly benefitting individual students and organiza tions w hose project orientation is o u t side Pulaski County. BOARD OF DIRECTORS R o b e rt M. S u rd a m C hairm an o f the Board C h a rle s T. F is h e r III P resident J o s e p h G. C o n w a y V ice Chairm an of the Board R ic h a rd H. C u m m in g s V ice Chairm an of the Board A. H. A y m o n d D ire c to r and F o rm e r Chairm an C onsum ers P ow er Com pany D avid K. E a s lic k President The M ichigan B ell T elephone C om pany B e rn a rd M. F a u b e r Chairm an and C hief E xe cu tive O ffic e r K m art C orporation R ic h a rd C. G e rs te n b e rg D ire c to r and F orm er Chairm an G eneral M otors C orporation M a rth a W. G r iffith s G riffith s & G riffith s R o b e rt W. H a rtw e ll President C liffs E le ctric S e rvice Com pany J o s e p h L. H u d s o n , Jr. Chairm an The J. L H udson Com pany W a lto n A. L e w is Chairm an of th e Board Lewis & Thom pson A gency, Inc R ic h a rd M a n o o g ia n President M asco C orporation D on T M c K o n e President L ibbey-O w ens-F ord C om pany Irv in g R ose Partner, E dward Rose & Sons A rth u r R. S e d e r, Jr. Chairm an and P resident A m erican N atural R esources C om pany R o b e rt B. S e m p le Chairm an BASF W yandotte C orporation P e te r W. S tro h President The S tro h B re w e ry C om pany Call Jim m y Gaskell, Chairman and President of First Alabama Bank of Montgomery. For your correspondent needs, 2 0 5 / 8 3 2 - 8 2 1 9 . Personal Banking From Professionals. R vst A la b a m a Bank / 52 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Of M o n t g o m e r y » , NATIONAL DETROIT CORPORATION National Bank of Detroit 611 Wbodward Avenue. Detroit. Michigan 48226 *MemberFDIC MID-CONTINENT BANKER for August, 19 8 0 Som e people like us ju st for our dividends. CONSOLIDATED BALANCE SH EET-June 30, 1980 (d o lla rs in th o u s a n d s ) ASSETS Cash a nd D u e F ro m B a n k s (in c lu d in g F o re ig n T im e D e p o s its o f $ 1 ,0 7 8 ,2 9 3 )............................................................ $ 2 ,4 1 3 ,7 5 4 In v e s tm e n t S e c u ritie s —A t A m o rtiz e d C ost (M a rk e t v a lu e $ 1 ,6 4 2 ,5 7 2 )....................................................... 1 ,6 6 1 ,7 0 8 T ra d in g A c c o u n t S e c u ritie s —A t L o w e r o f C o s t o r M a rk e t (M a rk e t v a lu e $ 3 1 ,5 6 6 ).............................................. 3 1 ,5 6 5 M o n e y M a rk e t In v e s tm e n ts ......................................................... 5 8 7 ,2 5 2 Loans: C o m m e r c ia l.................................................................................... 2 ,4 9 1 ,9 9 3 R eal E s ta te —C o n s tr u c tio n ....................................................... 5 5 ,2 8 9 R eal E s ta te — M o r tg a g e ............................................................. 1 ,0 7 7 ,5 7 5 C o n s u m e r........................................................................................ 6 5 9 ,2 1 7 F o r e ig n ............................................................................................. 5 6 3 ,7 7 3 4 ,8 4 7 ,8 4 7 A llo w a n c e F o r Loan L o s s e s .................................................... (6 1 ,0 3 3 ) U n e a rn e d In c o m e ........................................................................ (8 6 ,2 1 6 ) 4 ,7 0 0 ,5 9 8 Lea se F in a n c in g ............................................................................... 2 4 ,2 3 5 B a n k P re m is e s a nd E q u ip m e n t (at c o s t less a c c u m u la te d d e p re c ia tio n o f $ 7 2 ,8 6 9 ) ............................... 9 9 ,7 8 4 C u s to m e rs ’ L ia b ility on A c c e p ta n c e s ....................................... 4 7 7 ,4 1 9 O th e r A s s e ts ...................................................................................... 1 5 5 ,2 4 0 Total A s s e ts .....................................................................$ 1 0 ,1 5 1 ,5 5 5 W hich is not really surprising when you con sider the facts: First, our dividends have increased every year during the past decade, even in periods of econom ic recession. O ur current annual divi dend rate is $2.00 Second, they’ve also m anaged to outpace inflation over the past ten years. T hird, the dividends we’ve paid out repre sent less than 1/3 of our total earnings—the rest being reinvested for future growth. We are N ational D etroit C orporation, the largest financial holding com pany in the tri state area of M ichigan, Indiana and Ohio with assets of $10.2 billion. We are also the parent corporation of National Bank of D etroit, the largest bank in that area. In addition to our 159 banking offices state wide, we have national subsidiaries engaged in m ortgage banking, com m ercial refinancing and credit life insurance. And we also have international branches and affiliates serving our clients’ banking needs worldwide. For m ore information about National Detroit C orporation, write to our Financial Com m uni cations D epartm ent for a copy of our latest financial report, or call (313) 225-1066. National Detroit Corporation is listed on the New York Stock Exchange (Ticker Symbol NBD). LIABILITIES AND SHAREHOLDERS EQUITY D e p o s its : D e m a n d ........................................................................................... $ 2 ,1 5 1 ,7 0 8 C e rtifie d a nd O th e r O ffic ia l C h e c k s ..................................... 2 7 8 ,4 0 9 S a v in g s ............................................................................................ 1 .3 2 6 ,6 4 6 T im e .................................................................................................. 5 7 2 ,7 8 8 C e rtific a te s o f D e p o s it............................................................... 8 3 5 ,8 4 6 M o n e y M a rk e t C e r tific a te s . . . ............................................ 9 1 7 ,6 2 9 F o re ig n O f fic e ............................................................................... 1 ,2 0 3 ,5 0 2 Total D e p o s its ............................................................... 7 ,2 8 6 ,5 2 8 S h o rt-T e rm B o r r o w in g s .................................................................. 1 ,4 3 8 ,0 9 8 L ia b ility on A c c e p ta n c e s ............................................................... 4 7 7 ,4 1 9 A c c ru e d E x p e n s e s and S u n d ry L ia b ilitie s ............................... 2 14 ,03 1 Long-Term D e b t................................................................................ 1 0 2 ,9 9 7 Total L ia b ilitie s ............................................................. 9 ,5 1 9 ,0 7 3 S h a re h o ld e rs ' E q u ity : P re fe rre d S to c k — N o Par V a lu e ............................................. — No. o f Shares A u th o riz e d 1 ,0 0 0 ,0 0 0 Issu e d — C o m m o n S to c k — Par V a lu e $ 6 .2 5 ......................................... 7 6 ,3 8 9 No. o f Shares A u th o riz e d 2 0 ,0 0 0 ,0 0 0 Issu e d 1 2 ,2 22 ,2 9 1 C a p ita l S u r p lu s ............................................................................. 1 8 2 ,1 6 9 R e ta in e d E a rn in g s ...................................................................... 3 7 3 ,9 2 4 Total S h a re h o ld e rs ' E q u ity .......................................... 6 3 2 ,4 8 2 Total L ia b ilitie s a nd S h a re h o ld e rs ’ E q u it y .........$ 1 0 ,1 5 1 ,5 5 5 A sse ts c a rrie d at a p p ro x im a te ly $ 8 7 0 ,0 0 0 ,0 0 0 (in c lu d in g U.S. T reasury S e c u ritie s carried at $22,000,000) w e re pledged at June 30, 1980, to secure p ub lic deposits (in c lu d in g deposits of $10 1,00 4,0 00 of the Treasurer, State of M ichigan) and fo r other purpose s required by law. O utstanding standby le tters of c re d it at June 30, 1980, app roxim ated $41,000,000. NATIONAL DETROIT CORPORATION National Bank of Detroit M e m b e r F D IC 6ll W bodward Avenue, Detroit, M ichigan 48226 Nation al B ank of De tro it a n d its i n t er n a ti on a l b a n ki n g an d fina n ci ng subsidiary. In t er n at i o n al Bank of D e tro it; NB D C o m m e r c e Bank, Lansing; NB D P ort H u r o n B ank; NB D Tr oy Bank ; NB D D e a r b o r n B ank ; G r a n d Valley Na tional B ank, G r an d v ill e ; First S ta te B ank of Sagi naw : NB D P or ta g e Bank: P eo p le s B an k & Tru st of A l pe n a ; F a rm e r s & M e r c h a n t s Nation al Bank in B en t o n H a rb o r; In st alo an Fin an cia l Services, Inc.; N B D M o rt g a g e C o m p a n y ; NB D I n s u r a n c e C o m p a n y ; NB D Fina ncia l Servi ce s of Flor ida, Inc. MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 53 The Case fo r In terstate Banking * H E U LTIM A TE SH A PE of a new b an k in g sy stem w ill b e d e te r m ined in large p art by th e pressures that make it necessary. T hese can be grouped u n d er broad categories: com petitive, econom ic, technological and regulatory pressures. C om petitive pressures have created a push-pull situation regarding in te r state banking. “P u sh ” p ressures com e from within the banking system . W hile interstate banking exists in alm ost ev ery area of banking on th e asset side of the balance sheet, it is largely p ro hibited on th e deposit or liability side. T h is p r o h ib itio n s te m s fro m th e M cFadden Act of 1927 and was largely upheld in th e Bank H olding C om pany Act of 1958. In sim ple term s, th e two statutes say th at a com m ercial bank may not o perate a deposit-taking office in other than its hom e state, unless it was doing so in 1927 — and few w ere; and a bank holding com pany may not operate a bank in a state o th e r than that in w hich it does its principal business unless it was doing so in 1956 — and few w ere. The resu lt is th at for th e o v e rw h e lm in g m a jo rity o f b an k in g organizations, th e liability side of th e banking business is restricted to one state. H ow ever, to be strong, in te rsta te banking o p eratio n s ultim ately m ust have a d ep o sit b ase com p arab le to th eir lending operations. Some cracks already have app eared in th e wall. On th e w h o le s a le s id e , b ig g e r b a n k s already g a th e r d eposits across state lin e s th ro u g h la rg e - d e n o m in a tio n C D s; and, on th e retail level, o p era tions are contem plated, although suc cess is by no m eans yet assured. F or exam ple, C itibank has a plan to utilize its national credit-card base as a liabil ity-gath erin g m echanism . T he bank holding com pany m ovem ent, p articu larly through its 4c8 activities in th e bank-related field, has elim inated vir tually every constrain t on statew ide and interstate banking except th e deposit-gathering function. “Pull” pressures com e from in te n sifying com petition outside th e bank ing system. T he u n d erlin ed m essage of 54 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Immediate Past Chairman Association of Bank Holding Companies HR 4986 was to foster th e banking and thrift in d u stry’s transitions to com peti tive equality, especially w ith resp ect to n e a r-b a n k c o m p etito rs. T his is th e “level-playing-field” concept. Am ong nonbank financial com peti tors, we m ust m ention credit unions. T hese institutions enjoy increasing in terstate activity, not ju st in term s of dollars or offices b u t through enlarge m en t of th e “com m on-bond” concept above and beyond em ploym ent con sideration. Both tren d s m ake a m ock ery of geographic constraints. Foreign banks also exert a powerful force on th e com ing of interstate bank ing. T heir com petitive advantages in clude: great freedom to o perate on an in terstate basis, particularly through “ g r a n d f a th e re d ” o p e ra tio n s; lo w er rates on credit due to different reserve or capital constraints and exem ption from C om m unity R ein v estm en t Act req u irem en ts. W hile in th e past th eir activities have b een confined m ainly to m oney c e n te rs and large co rp o rate custom ers, not surprisingly, they are now displaying in te re s t in regional m arkets and m iddle-m arket custom ers. O th e r nonbank financial and retail institutions that operate nationw ide in *Mr. Deane is chairman, Bank o f Virginia Co., Richmond. This article is based on remarks given by M r. Deane at the recent annual meeting o f the Association o f Bank Holding Companies. a quasi-banking role include retailers, finance com panies and brokers. W e req u ire th e same freedom on the liability side to m eet our com petition that we indirectly have on th e asset side. In a re c e n t sp e e c h , C itico rp c h a irm a n W a lte r W ris to n o ffe re d th ese b lu n t b u t realistic com m ents: “Banks cannot be sh eltered from com petition; they can only be ban n ed from participating in i t . . . and if we do not participate, we are finished as financial interm ediaries. . . . T he question as we e n te r th e 1980s is not how many people will clim b over our wall into our m arket, b u t w h e th e r w e will allow ourselves to clim b over it and out into th e su n sh in e w h e re th e cu sto m ers a re .” Two final trends u n d er the broad h e a d in g o f c o m p e titiv e p re s s u r e s should be cited: First, th e concept of re c ip ro c a l b a n k h o ld in g c o m p a n y agreem ents b etw een states still is alive a lth o u g h it has n e v e r b e e n im plem ented. It could becom e a reality anytim e. Second, support from small banks for in te rsta te banking is considered m ore likely than in th e past as they consider m erg er as a m eans of obtain ing a decen t price for th e ir stock and th en begin to consider interstate h old ing-com pany affiliation w h ere in tra state options are lim ited. Economic Pressures. T here is one dom inant econom ic pressure: inflation and its im pact on financial institution earnings and credit-allocation p roce dures. In flatio n forces have focused far m ore attention on econom ies of scale, e x p e n se co n tro l and b a la n c e -sh e e t priorities. High in terest rates plus d e posit losses have caused severe p ro b le m s for so m e b a n k s an d th rifts . Already, we have seen a sharp rise in S& L a n d s a v in g s -b a n k m e rg e rs . W hereas in th e past, consolidations and m ergers w ere restricted w ithin states and only am ong like institutions, in the future state lines may have to be crossed and consolidations approved betw een banks and thrifts because of (Continued on page 56) MID-CONTINENT BANKER for August, 198 0 The Case Against In terstate Banking H E w itness had ju st testified in the trial of th e young m an on a charge of m urder. T he Cass C ounty courtroom was in B eardstow n on th e Illinois river. “I saw him do it by th e light of th e m oon,” the w itness declared. C ounsel for th e defense, Abraham Lincoln, leaped to an alm anac on th e wall and poked his finger at the date. “Your honor, th e re was no moon that evening, and th e w itness lies. Ac By Thomas F. Bolger* q u ittal follow ed, b ased on th e ev i President dence. Independent Bankers As an Illinois citizen, I cite th at inci Assn, of America d e n t to prove th e n e e d to exam ine proposals for concentration of bank d e “When two Minnesota corporations posits and loan pow ers. E xperience in can control $2 billion o f Montana bank o th e r s ta te s s tro n g ly re v e a ls th a t deposits, that is an example o f one state m onopoly is th e real destination of so- exploiting another,’’ the Montana offi called convenience-banking proposals. cial said. Exhortations to bulldoze away state W e believe th e M cF adden Act of boundary b arriers to in terstate b ank 1927 and th e D ouglas A m en d m en t ing are p red icated on indications that have b een beneficial in restricting in are ephem eral as th e im aginary cloth terstate banking. ing the C hinese tailors pro d u ced for P ro p o n e n ts of in te rs ta te banking th eir em peror. c o n te n d th a t M cF ad d en p ro te c ts a Large-size m ulti-bank holding com large n u m b er of small institutions by panies m anifest a floodw ater ch aracter a n ti-c o m p e titiv e re s tra in ts on geo istic: the im pulse to shove out on every graphic expansion leading to m arket side and sprawl all over th e landscape. m onopolies and also that anxiety about Two giant M inneapolis-based H Cs, bigness and inordinate concentration whose ram paging directly inspired th e has been a m ajor obstacle to interstate organization of th e In d e p e n d e n t Bank banking. W e believe th at protecting ers Association of A m erica (IBAA) 50 sm aller in stitu tio n s from p re d a to ry years ago, have d em o n strated how to large ones is a recognizable Am erican c o n c e n tra te ban k in g reso u rces in a fairness practice and does not neces state hu n d red s of m iles distant. sarily lead to u n d u e control of m arkets. T h e M in n eap o lis Star e d itio n of A nd we h ope and pray th at public June 10, 1980, re p o rte d increased re aw areness about bigness and undue sen tm en t in M ontana over w hat G ov concentration continues to be a m ajor ernor Thom as Judge calls “an unholy b arrier in th e path of tireless in te r alliance of outside corporations th at state-banking-expansion p ro p o n en ts. M ontana m ust defend itself against. ” An article in th e F ederal R eserve Two are M in n eso ta b an k in g c o r B ulletin (January ’80) on “The C om porations: O ne, F irst Bank System , p etitive Effects of In terstate Banking” owns 17 M ontana banks w ith deposits casts helpful light on our road ahead. of m ore than $1 billion, including th e The article, p rep ared by S tephen A. sta te ’s largest bank in Billings, and R h o ad es o f th e F e d e r a l R e s e rv e M ontana banks led F irst Bank System B oard’s division of research and statis in profit increases last year, rep o rtin g a tics, offers careful analysis of F ed staff 21% increase in earnings. The other, N o rth w e s t B a n c o rp ., ow ns se v e n *Mr. Bolger is president, McHenry (III.) M ontana banks w ith deposits of m ore State, and prepared this article especially than a half-billion dollars. fo r M i d - C o n t i n e n t B a n k e r . T MID-CONTINENT BANKER for August, 198 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis studies on the im pact of bank H Cs on com petition and perform ance in the banking m arkets, a study h ead ed by Mr. Rhoades and Roger D. Rutz. The article concludes that reduction in restrictions on interstate banking woidd have an unfavorable effect on banking structures in local markets and is almost certain to increase con centration o f com m ercial banking under existing merger laws. Careful consideration of th e en tire p ro b le m is w a rra n te d b ec a u se th e push for in terstate banking in the U . S. banking system is a developm ent that could have profound im plications for all facets of the banking system ’s struc ture. As the M ontana situation indi cates, elem ents of in terstate banking already exist, and they are likely to becom e m ore pronounced. In terstate banking is of special in terest now because the International Banking Act of 1978 d irected the P resi dent, in consultation w ith regulatory agencies, to evaluate the restriction on interstate banking in the M cFadden Act. The P resident may send recom m endations to C ongress, b u t he is not e x p e c te d to do so u n til a fte r th e N ovem ber 4th election. U nderlying the defense of M cFad den and the opposition to interstate b ra n c h in g is th e c o n c e n tra tio n is sue. E vidence is clear th at statew ide branching has resu lted in relatively high levels of concentration in both statew ide and SMS A (standard m etro p o lita n s ta tis tic a l a re a ) m a rk e ts . Statew ide concentration in 1975 was highest in statew ide branching states. In 13 of 20 statew ide branching states, the five largest banks controlled m ore than 70% of each state’s com m ercialbank deposits. By contrast, th e five largest banks in only five of th e lim ited branching states controlled as m uch as 50% to 65% of deposits, and in only th ree of th e 15 unit-banking states did the five largest banks control as m uch as 53% to 56% of deposits. W hen concentration in banking is m easured at the SMSA level, the im pact of statew ide branching is m agni fied further. In 1978, th e five largest 55 banks in 64 of 68 SMSAs in statew ide b ran ch in g states co n tro lled 70% or m ore of the states’ deposits. On th e o th er hand, th e five largest banks in 94 of th e 132 SMSAs in lim ited-branching states controlled 70% or m ore of th e states’ deposits. The lowest level of concentration was found in the unit-banking states, w here th e five largest banks in only 29 of the 59 SMSAs controlled 70% or m ore of th e states’ deposits. H igh levels o f co n centration o f financial resources reduce competi tion. Statewide dominance by a few large institutions restricts the ability o f small local institutions to be responsive to com m unity needs and threatens ruinous overextension by aggressive dominant institutions. S tatew id e and lim ite d b ra n c h in g laws have caused alm ost 1,000 unit banks to disappear in 20 years, a d e cline of 16%, while total n u m b er of banks increased by 10%. Sharpest re duction in n u m b er of unit banks oc cu rred in states p erm ittin g statew ide b ra n ch in g , w h e re 42% of th e u n it banks have disappeared. In lim ited branching states, th e 39% decline in unit banks is only slightly below th a t for statew id e b ran ch in g states. Only in unit-banking states has th e attrition rate b een lowest, reg ister ing a decline of only 15% over th e 20year period. Structural effects of a shift from lim ited to statew ide branching is d ram at ically illustrated by th e experience of th e state of Virginia, w hich w ent to s ta te w id e b ra n c h in g an d h o ld in g com pany acquisitions after 1961. In th e 20-year period 1959 to 1978, Vir ginia lost 134 of its 207 unit banks, and at the end of 1978, only 73 un it banks rem ained. A lthough banking offices (banks and b ran ch es) in c re a se d by 180%, the n u m b er of banking firms d e c lin e d by 15%. T hus, w hile th e n um ber of offices offering com m ercial banking services alm ost tripled, the nu m b er of banking alternatives avail able to citizens of Virginia was red u ced by 15%. Effect of statew id e b ran ch in g on banking stru ctu re also is illustrated by th e e x p e rie n c e o f N o rth C aro lin a, which has long had statew ide b ran ch ing and no lim it on acquisition of banks by m ultibank HCs. In 20 years from 1959 to 1978, that state lost all b u t 17 of th e 100 u n it banks it had in 1959. W hile banks and b ran ch offices in creased fourfold in nu m b er, the total of banking firm s in N o rth C arolina d ropped 55%. L ew is I. M a rk u s, W a s h in g to n , D. C. staff econom ist of th e IBAA, 56 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis calls attention to a study of the effects of bank-m arket pow er and the com petitive structure of local m arkets. It found that the m ore concentrated the m ark et, th e m ore likely th e prices charged for dem and-deposit and busi ness-loan services will be higher. This study, “Com m ercial-Bank Pricing and Local M arket Pow er and S tru c tu re ,’’ is an L D IC W orking P aper (75-3) by Alan S. McCall and H. D. M errill. T h ere have been a n u m b er of stu d ies of the relationship betw een concen tration and various m easures of bank perform ance, such as prices charged for one or m ore of th e “pro d u cts’ banks offer. "In te rs ta te banking is of special interest now because the International Banking Act of 1978 directed the President, in consultation with regulatory agencies, to evaluate the re striction on interstate banking in the McFadden Act. The Pres ident may send recommenda tions to Congress, but he is not expected to do so until after the November 4th election." T yp ical fin d in g s have b e e n th a t h igher concentration in local m arkets is associated w ith higher in terest rates on business loans, consum er loans and m ortgages and low er in te re st rates paid on tim e and savings deposits. (This from B ernard Schull, “M ultiple Office Banking and C om petition: A Review of the L iterature: in Compen dium o f Issues Relating to Branching by Financial Institutions, Subcom m it te e on Linancial Institutions, Senate Banking, H ousing and U rban Affairs C om m ittee, Oct. 1976, 94th Congress, 2nd Session, P. 148). E vidence suggests that, from a con sum er view point, statew ide branching has not been to the direct advantage of th e consum er. In California, it was found that larger statew ide branching banks w ithout exception charged sig nificantly h ig h er rates th an sm aller b an k s. It also was show n th a t th e largest California banks charge 2% or m ore on com parable consum er loans th a n rates charg ed by th e sm allest banks. O ne reason large branch banks m ust charge m ore for th eir services is th eir practice of preem ption: They ten d to obtain approval of branch locations in a new or growing area before the sites w ould justify an in d e p e n d e n t bank, and they hold on to such potentially profitable locations for a long tim e until they reach black-ink stage. Proliferation of branch offices is a socially wasteful form of com petition in banking, according to the presid en t of the Lederal R eserve Bank of Boston. Lrom 1957 to 1977, th e n u m b er of com m ercial banks in the U nited States grew by about 6%, b u t the n u m b er of branches m ore than q u adrupled from a b o u t 8,000 to m o re th a n 32,000. W hile th e country ad m itted ly grew d u rin g those years, q u ad ru p lin g of branches reflects an uneconom ic form of com petition. T his v iew p o in t was re fle c te d by R obert E. B arnett, L D IC chairm an, in a 1977 speech before the New York S tate B ankers A ssociation w hen he charged banks w ith wasteful com peti tion for deposits by pu ttin g branches on every corner to com pete on the basis of convenience rath er than price. The sim ple unvarnished tru th of the m atter is this: Studies support the con tention that branch banking provides m ore banking offices than unit bank ing, b ut the advantage of greater con venience through branching appears clearly to be lim ited to m unicipalities and m etropolitan areas w ith popula tions above 7,500. In small towns and villages — those usually e x p ected and p u rp o rte d to benefit most from expanded branching — th e average n u m b e r of banking offices differs little betw een branching and unit banking states. • • Deane (Continued fro m page 54) th e nature and m agnitude of the p ro b lem. W ith the recen t rapid drop in in terest rates, the p ressu re has abated, b u t only an extrem e optim ist w ould p redict that the problem s will not reoc c u r. W h e th e r th e s e m e rg e rs take place, th e im portant point is that reg u la to ry a u th o r itie s se e m to h a v e accep ted th e p rin cip le of in terstate banking. Again, this is a m ixed b les sing; we do not w ant to get interstate banking ju st as a crisis m echanism w ith built-in lim itations. L in ally , eco n o m ic p re ssu re s are g enerated by a m essage from the con sum er that comes through loud and clear: H e wants one-stop convenience; he does not care about th e difference betw een banks and thrifts, or betw een d e p o sito ry in stitu tio n s and M errill Lynch or betw een m oney-m arket cer- MID-CONTINENT BANKER for August, 19 8 0 N E V E R T U K N A A A Y A C U S ID M E R B E C A U S E O F H I S S IZ E . hird N ational C redit of large business customers. O verlines letyou say Third National Credit Overlines let you encourage profitable bus 'yes'to big business. Your loan limitations shouldn’t keep you from getting your share MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis iness financing without worrying about your legal lending limit. Give us a call today.Our Tennes see WATS is (800) 342-8360. In neighboring states, dial (800) 251-8516. 57 tificates and m oney-m arket funds; he does w ant the “bank” th at can give him th e best rates and th e b est deal close by; and he votes w ith his dollars to get these things. H ence, we have had m as sive d isin te rm e d ia tio n and u p w ard churning in th e cost of core deposits. Technological Pressures. T echnolo gy virtually has elim inated tim e and space barriers as it affects delivery of all types of financial services. Locational concepts from “horse-and-buggy days” are anachronism s in a world of satellite com m unications. T echnology should b e view ed as a “liberating force” — particularly w ith resp ect to th e deposit-gathering function. T he National C o m m issio n on E le c tro n ic F u n d s Transfer recom m ended th at electronic applications not be lim ited by state lines. This position was seconded also by several H ouse Banking C om m ittee staff studies. In th e past decade we saw at least one technological change w ith great re p e rc u s s io n s : e v o lu tio n o f c r e d it cards as plastic branches. In th e future, we will see telephone banking and TV banking th ro u g h at-hom e co m p u ter term inals. The M cFadden Act cannot stop people from having access to th e ir en tire trading area. O ne w ord of w arning is appropriate here. It appears th at tim e and tech n o l ogy may be working in favor of m oneyc e n te r b a n k s a n d n e a r-b a n k s an d against re g io n a l in s titu tio n s . T his needs to be kept in m ind as we m old th e interstate-banking stru ctu re of th e future. R eg u la to ry p re ssu re s. C ru c ia l changes already have taken place in the regulatory area w ith far-reaching im plications for in te rs ta te banking. T here is th e pro-com petitive p osture defined in H R 4986; p reem p tio n of state usury laws; authority for thrifts to ex p an d th e ir a ctiv ities o u tsid e th e m o rtg ag e m a rk e t an d p h a se -o u t of Regulation Q. T here also are signs of a pro-com petitive stance regarding in stitutional distinctions. A few instances are: the obvious tre n d tow ard elim ina tio n of th e d ifferen tial; tran sactio n accounts for all depository institutions; authorization of variable rate-flexible m aturity m ortgages and en largem ent of secondary-m arket operations. In o th e r b u sin ess areas, such as tru ck in g , airlines and possibly rail roads, pro-com petitive deregulation is in the wind. T h e se exam p les re fle c t tw o fu n dam ental alterations in regulatory p h i losophy. First, we see a transition to decision-m aking in W ashington and away from a sharing of th e decision m aking p ow er b e tw e e n federal and 58 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis state authorities. This tre n d is a “plus” as long as it reflects a pro-com petitive posture that is perform ance oriented. Second, perform ance by the banking com m unity is a new yardstick for reg ulators. No longer can banks rest on th e th re e Ss, being “small, safe and supervised. Now governm ent au th o r ities seem willing for banks to com pete on equal term s for all types of custom ers in a broad array of services. But they m ust do it th e go v ern m en t’s way. This m eans satisfying national publicpolicy objectives th at may involve a trade-off, d ep ending on type of poli cies and cost of com pliance. B arriers, R oadblocks, E tc. T h e jo u rn ey to interstate banking bristles w ith legal b a rrie rs, roadblocks d e fended by a variety of special in terest shock-troops, stum bling stones and land m ines placed by co m p etito rs. Among key battles that m ust be fought and won, th e m ost im portant is over turn in g th e “M cF adden philosophy.” As a n a tio n a l p o licy , it is all b u t chiseled in stone. O n purely banking grounds, it is not difficult to challenge M cFadden or, for th at m atter, Glass-Steagall. On politi cal grounds, how ever, M cFadden and th e Douglas A m endm ent are seen as protecting states rights, and this is the prop of th e tim e-honored dual-banking system. In addition, M cF adden is seen as protecting sm aller institutions and com m unities they serve from the vora cious ap p etites of larger institutions p e r se and u rb an -o rien ted institutions. Incidentally, this urban-rural d im en sion should not be taken lightly. Its representatives will challenge any set of changes — banking or otherw ise — seen as dim inishing th eir pow er base. A nother aspect of “M cF adden p h i losophy is th e stru ctu re it has created over tim e. That is, th e huge n u m b er of sm aller institutions that are pro tected by anti-com petitive restraints on geo graphic expansion and product exten sion. In m any instances, this has led to m ark et m onopolies, and, rightly or w rongly, battles will be fought to p re serve them . N ear-bank com petitors such as M er rill Lynch and th e retailers will erect th e ir roadblocks to interstate banking, and why not? T hey can operate now on a national basis w ith m inim al regula tory constraints on e ith er th eir creditallocation or fund-acquisition activi ties. W ill they support or snipe at our push to establish a level playing field? A clue to the answ er can be found in views of m ost brokerage firms on the G lass-Steagall Act, w hich separates com m ercial and investm ent banking. A nother obstacle to in terstate bank ing is the consum er m ovem ent and allied legislative-regulatory protectors concerned w ith bigness p e r se and big banking in particular. They fear w hat they recognize as “u ndue concentra tions of econom ic pow er w ithin the p ri vate sector. This battle is as old as our nation and may req u ire com prom ises before it is won. Some likely proposals are: lim itation on interlocking direc to ra te s; re s tric tio n s or ceilin g s on assets or deposit concentrations w ithin a particular state or geographic m arket an d s trin g e n t co m p lia n c e r e q u ir e m ents w ith respect to in-state loand ep o sit activities; m in o rity len d in g and em ploym ent; small business len d ing, etc. (These or others like them may be unpalatable concepts, b u t it is best to be forew arned.) S p e c ia liz e d le n d e rs co m fo rta b le w ith the status quo will erect barriers to interstate banking. They simply do not w ant to see institutional distinc tions blur, no m atter how m any extra pow ers they are granted. They prefer to continue doing w hat they do now. The last roadblock will com e from an unlikely source — my own organiza tion and any n u m b er of o th er regional organizations that m ust insist on an orderly transition into th e future. W e don t w an t M c F a d d e n or D ouglas elim in ated overnight; hopefully, no one wants that kind of chaos. W hat will th e w orld of in terstate banking look like w hen it arrives? W ho will the players be, and how will they play? Interstate-B anking Profile. F irst, econom ic realities may well cause a sharp decline over th e next decade in th e absolute n u m b e r of com m ercial banks and thrift institutions and n u m b er of “brick-and-m ortar” offices. But interstate banking itself will not cause this decline; in fact, it will facilitate a m ore o rd e rly consolidation and re structuring of the financial-services in dustry. Because national public policy w ill n o t c o u n te n a n c e w id e s p re a d fin an cial-in stitu tio n closings or fail ures, it will em ploy institutional re structuring in interstate banking as a m ethod for integrating the weak and the strong. W ith this perspective in m ind, it is possible to sketch the o ut lines of tom orrow ’s “playing field .” Banks will be able to operate in a natural trading area suitable to the size, operational capacity, m anagerial and professional abilities and capital structure of each particular type bank. They will have th e ability to extend a full range of credit and related financial services and th e ability to purchase any type of funds. W ithin this broad m ar ketplace, banks or regional bank HCs MID-CONTINENT BANKER for August, 19 8 0 THE 1980 The completely revised 1980 edition of the Western Bank Directory w ill soon be ready. The leatherette-bound, pocket-size book with BLUE BOOK spiral wire binding is indexed for quick ref erence. It lists every bank and branch in ALASKA, ARIZONA, CALIFORNIA, HAWAII, IDAHO, MONTANA, NEVADA, NEW MEXICO, OREGON, UTAH and WASHINGTON. The Directory contains the names of banks, branches, officers, statement figures, phone numbers, zip codes, industries, population, city, county, date organized, transit numbers and correspondent banks. IF YOU A R E IN A B A N K OR D O IN G B U S IN E S S W IT H B A N K S IN T H IS A R E A, T H E BLU E B O O K S H O U L D BE ON YO UR DESK. O rd e r 'ty o u rd ! MAIL TO: Please enter our order for _______ copies of the 1980 W estern Banker Publications, Inc. 58 Sutter Street, Suite 615 Western Bank Directory. Invoice will be enclosed with your Directory or you may pay in advance. Price: $16.00 one copy, $15.00 each for two or more copies; $1.00 postage and handling will be added for each Directory. Applicable California tax. San Francisco, CA 94104 Bank/Com pany_______________________________________ Street A ddress__________________________________________ C ity __________________________ State___________Zip Code By____________________________ Title MID-CONTINENT BANKER for August, 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 59 m ust position them selves in a realistic m anner so th at th ey can carefully id e n tify appropriate custom er segm ents. How is this accom plished? It makes sense to utilize existing loan p ro d u c tio n o ffices o r b a n k - r e la te d s u b sidiaries w ithin a natural trading area to provide dep o sit and o th e r fundacquisition services. A m inim um of de novo activity may be n eed ed and some dow nstream m ergers and consolida tions w ith sm aller com m ercial banks and th rifts (including finance com panies). In addition, some m ergers and consolidations may take place “am ong eq u als,” probably in contiguous states. To round out its ability to provide a w ide range of services to all sizes of custom ers, a regional banking orga nization will w ant to develop and m ain tain a presence in certain m arkets o u t side its natural trading area, such as New York City, Chicago, San F rancis co or Atlanta. Finally, since foreign banks are at our doorstep, we m ust operate overseas and be on th e ir door steps. Exactly which types of institutions will be involved in in terstate banking? T he full-service players will include tra d itio n a l d e p o s ito ry in s titu tio n s , foreign banks, “near-banks” like Sears, M errill Lynch and Beneficial F inance and some unexpected in tru d ers such as AT&T, IBM and RCA, w hich will becom e involved in financial services th roug h fee-based inform ation com m unications. Some of these “financial superm ark ets” will result from m erg ers b e tw e e n com m ercial banks and thrifts. A handful of banking organiza tions will becom e truly national banks — Chase, C itibank, Bank of Am erica and a few others. Lastly, this scenario does not p reclude a continuing and successful role for sm aller financial in stitutions. T here may not be as m any in d ep en d en t ones as th e re are today, b u t th e w ell-m anaged and aggressive sm aller institutions will adopt, on a sm a lle r scale, stra te g ie s sim ilar to Bank Subsidizes Bus Fares Citizens Fidelity Corp., Louis ville, has more than tripled its sub sidy program of public transporta tion fares for its employees. Effective in lu n e , em ployees of Citizens Fidelity Bank were eligible for a 33% discount on their purchases of bus tickets. To further increase ridership, the bank offered two weeks worth of tickets free to any employee who was willing to try public trans portation for the first time. Employees buying subsidized bus tickets for the first three weeks of the new program were eligible to win a microwave oven and two 10-speed bikes. those being pursued by the regional HCs. C onclusion In te rs ta te banking is co m in g . Issu e s th a t re m a in to be thrashed out involve tim ing and struc tu re. To succeed, interstate banking m ust be im plem ented on a creative, yet p ru d e n t basis. Among the options are: 1. R e c ip ro city or m u tu a l a g re e m ents b etw een states. 2. F a ilin g -b a n k a c q u isitio n s a p proved by federal and state au thor ities. 3. T rade-area banking, acquisitions and branching w ithin natural trading areas such as SMSAs. A variation of this approach m ight be specifically d e lineated m arkets, such as m ajor m oney centers, w hich would be “free trade areas” open to deposit-gathering com petition among dom iciled banks, in te r s ta te c o m p e tito rs a n d fo re ig n ch artered banks. 4. D em arcated geographic regions, p erm ittin g interstate banking w ithin, for exam ple, a F ed district. 5. C ontiguous-state banking, lim it ing a bank’s range, at least initially, to adjoining states. 6. N ationw ide banking, or simply thro w in g open th e doors to uncon strained com petition — both through Just a phone call away. No waiting No worry Available now throughout the Mid-Continent area. Other temporary facilities in various sizes. 60 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MPA SYSTEMS^ 4120 Rio Bravo El Paso, Texas 79902 (915) 542-1345 or (915) 542-1461 acquisition and de novo applications — and let the chips fall w here they may. In considering these and o ther op tions, th ere are th ree subordinate m at ters to weigh carefully. F irst is timing. Do we need a phase-in period? If so, ju st how long? Second is extent. Do we lim it the n u m ber of acquisitions con sum m ated by any single banking or ganization? W hat’s the lim it? M oreov er, do we “cap” these organizations in term s of size? A third concern involves types of institutions taking part. Do we authorize m ergers of banks and non bank financial institutions? If so, w hat will be the necessary constraint? O n the basis of the vote rep o rted at its 1980 annual m eeting, the Associa tion of Bank H olding C om panies feels that the best way to rem edy the cu r ren t situation and, at the same tim e, preserve our presen t regulatory struc tu re and the dual-banking system , is through the structure of the bank h old ing com pany, w hich has b e en well a c c e p ted by th e p u b lic over m any years. The experience of five of our m em ber com panies in operating affili ated banks across state lines, in some cases for m ore than 50 years, dem on strates that such interstate-banking op erations can be pro-com petitive and in th e public interest. O ur position is one that provides for a carefu lly c o n tro lle d and g rad u al approach. O ur four simple proposals are: 1. E n d o rse m e n t of legislation to grant to the F ederal Reserve Board authority to approve “failing-bank” ac quisitions by out-of-state bank HCs. 2. Support for the concept of m erg ers betw een bank HCs and thrift in stitutions in financial difficulties. 3. An am endm ent to Section 3(D) of th e Bank H olding Com pany Act p e r m itting a holding company, subject to F ed approval, to acquire a bank HC in a contiguous state, provided that no bank HC w ith m ore than $500 million in assets be perm itted to acquire m ore than one bank HC in each contiguous state during the first five years of the new law. 4. E n d o r s e m e n t o f re c ip ro c a l arrangem ents betw een states. T here is an im portant need for a fair, re a so n a b le discussion of in te rs ta te banking and our association’s position may not necessarily be the ultim ate answer. H ow ever, if we are to survive in the next century, we m ust leave fortress banking and “move into the sunshine . . . w h ere th e custom ers are, as W alter W riston p ut it. The a sso c ia tio n ’s p o sitio n on in te rs ta te banking is one im portant step in that direction. • • MID-CONTINENT BANKER for August, 1980 J Theoriginal ceramic Santa Claus bank once again is able to delight and please young and old alike. Reserve your exclusive now!! Individually gift boxed! Packed 60 banks per master carton. Limited supply. . . while they last. . . only $3.95 each Exclusive offer by - Heritage Mint, Ltd. 2221 Barry Avenue, Los Angeles, California 90064 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • (213) 473-4538 Lifetime Reminders TO SAVE DAILY... A LIVELY PROMOTIONAL IDEA TO INCREASE LOBBY TRAFFIC & BUSINESS... PROMOTE THE SAVINGS HABIT AT ALL AGES High quality steel and plastic products. All banks have lock and key...from the “see-thru” stacking line...the calendar models and “ book bank” ... to the distinctive genuine hardwood barrel bank. 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N92 W15966 MEGAL DRIVE, MENOMONEE FALLS, Wl 53051 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Phone: (414)251-7860 GUNDERSON NADLER COLE STACY CARDWELL N adler, Gunderson Set for KBA Convention P AUL N A D L E R , L ee G underson and Ken G u e n th e r head the list of speakers for th e 86th annual K entucky B ankers Association convention, set for Louisville from S ep tem b er 7 to 9. C onvention h ead q u arters will be the G alt H ouse. Mr. N adler is professor of business a d m in istra tio n , R utg ers U niversity, N ew Brunswick, N. J. Mr. G underson is ABA p resid en t-elect and p resid ent, Bank of Osceola, Wis. M r. G u e n th e r is associate director, In d e p e n d e n t Bank ers Association of America. H ighlights of th e convention will in clude a luncheon to honor w inners of th e 1980 PhilipM orris com m unity ser vice contest. T he speaker at th e annual b an q u et will be Jam es Boren. C onvention registration is expected to start at 1 p.m . and continue until 6 p.m . on Sunday, S ep tem b er 7, in the third-floor lobby at th e G alt H ouse. T he resolutions com m ittee is expected to m eet th at afternoon and th e trad i tional Sunday evening reception is ex p ected to begin at 6 p.m . M onday’s activities will include a breakfast m eeting of th e KBA nom inat ing com m ittee, registration beginning at 8:30 a.m . and th e first general b usi ness session at 9 a.m . T he K entucky luncheon and separate d inners for 50year C lub m em bers and past p resi dents will com plete th e day’s events. An annual breakfast on Tuesday will be followed by a program of rem em brance and th e second general busi ness session. Tuesday ev ening’s events will begin w ith a p re-b an q u et recep tio n followed MID-CONTINENT BANKER for August, 19 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis by a b an q u et that will include installa tion of officers and en tertain m en t. Presiding at this year’s convention will be KBA P resid en t Vernon J. Cole, c h a irm a n /p re s id e n t, G u a ra n ty D e posit Bank, C um berland. In addition, Mr. Cole is executive vice president, H arlan National, w hich he joined in 1949. H e was a m em b er of the U. S. Air Force from 1951 to 1958 and re e n te r e d b a n k in g in 1958 at H a rla n National, w here he becam e executive vice presid en t in 1972. Scheduled to assum e the KBA p res idency at the convention is Joe Stacy, p re sid e n t, Bank of th e M ountains, W est L iberty. His banking career b e gan in 1945 w hen he jo in ed C om m er cial Bank, W est L iberty. H e left that bank in 1969 as its p resid en t and has been presid en t of Bank of th e M oun tains since 1973. H e served two term s in the K entucky Senate, w here he was m ajority w hip for two years and m ajor ity caucus chairm an for four years. KBA treasu rer this year is E m ery E. C ardw ell,-president, M organtow n D e posit Bank. H e e n te re d banking in 1938 at M atewan (W. Va.) National and jo in e d P o tte r-M a tlo c k T ru s t C o ., Bowling G reen, Ky., in 1947 as tru st officer. H e was prom oted to cashier in 1952 and vice p resid en t in 1957. The bank m erged w ith Am erican National in 1958 and he was nam ed vice p resi den t of that bank and executive vice presid en t in 1969. H e joined Bank of O ldham C ounty, LaG range, in 1971 and was nam ed to his p resen t post at M organtown D eposit in 1972. • • 63 G underson, G o lem b e, Isaac to Speak A t A M B I A nnual M e e tin g in C hicago E E G U N D E R S O N , C a r te r G olem be and W illiam D. Isaac will share th e spotlight with a n u m b er of o th er speakers at th e 1980 annual m eeting of th e Association for M odern Banking in Illinois (AMBI) S ep tem b er 8-9. H eadquarters will be th e C on tinental Plaza H otel, Chicago. T hem e of this year’s convention is “Banking C hallenges in th e N ew D e c a d e .” M r. G u n d e r s o n , w h o is ABAISAAC GUNDERSON presid en t-elect and p resid en t, Bank of Osceola, W is., will open the m eeting at a noon luncheon on S ep tem b er 8. gram, discussing how deregulation will Mr. G olem be, chairm an, G olem be & affect banks. Associates, W ashington, D. C ., will Also on th e speakers’ platform will appear during th e second day of the be W illiam C. H arris, com m issioner of m eeting and will discuss how politics banks and tru st com panies for Illinois, and legislation will affect banks. Mr. who will give a rep o rt on the state of Isaac, who is a directo r of th e F D IC , Illinois banking; two state legislators will follow Mr. G olem be on th e pro- who are sponsors of HB 1299 — the m ulti-bank HC bill that alm ost passed this year — Jim M cPike and G eorge E. Sangm eister, who will speak out about th e m ulti-bank H C situation; W alter D. Fackler, professor of economics at th e G raduate School of Business, U ni v e rsity o f C hicago, w hose to p ic is “M anaging in a New Econom ic E n vironm ent. ” Jon C. Poppen, senior vice p resi d ent, Booz, Allen & H am ilton, C hica ANDERSEN GOLEMBE go, will discuss planning for changing L If yo u do b u s in e s s in S o u th e rn Illin o is a n d th e G re a te r St. l o u i s M e tro p o lita n a re a , let u s h e lp y o u , w e k n o w th e te rrito ry a n d a re e q u ip p e d to h a n d le a ll y o u r n e e d s. -------------------------------------------- > U nion Bank bank m arkets; John L. Stephens, ex ecutive vice p resid en t, H arris Trust, Chicago, will speak on “M anagem ent’s G reatest C hallenge — People ”; and David G. Taylor, executive vice presid e n t/tre a s u re r, C o n tin e n ta l Illinois C orp., and executive vice p resid en t, C ontinental Illinois National, Chicago, will discuss profitable asset/liability m anagem ent. The AMBI business m eeting will be held on the afternoon of S ep tem b er 8 and will feature a leadership rep o rt by T h eo d o re H. R o b erts, chairm an of AMBI and executive vice president, H arris Trust, assisted by AMBI Presi d e n t Jam es B. W att. T he business m eeting also will include a rep o rt by the treasurer, W illard Bunn III, ex e c u tiv e vice p re s id e n t, S pringfield M arine Bank; a legislative rep o rt by W illiam D. Olson, vice president/govern m en t relations, AMBI; a rep o rt by David E. Connor, chairm an, AM BI/ PA C , an d p r e s id e n t, C o m m e rc ia l N ational, Peoria; and a nom inating com m ittee rep o rt by L oren E. Smith, com m ittee chairm an, and chairm an, U nited Bank of Illinois, Rockford. Social events will include a Loop b an k re c e p tio n on th e e v e n in g of S eptem ber 8, sponsored by C o n tin en tal Bank, F irst Chicago C orp., H arris Trust, N orthern T rust and LaSalle N a tional; and a reception and ban q u et featuring the Arbors on Tuesday ev en ing. Mr. Roberts, AMBI chairm an, b e gan his banking career w ith H arris T rust in 1953, serving in the financial and econom ic research d e p a rtm e n t until 1967, w hen he was nam ed com p troller and a m em ber of th e m anage m e n t c o m m itte e . H e was e le c te d K________________________ O F E A S T S T . L O U 1S 200 Collinsville Avenue East St. Louis, llinois (618) 271-1000/398-4800 M E M B E R F .D .I.C . BUNN 64 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DAILY MID-CONTINENT BANKER for August, 19 8 0 FORSTER ROBERTS senior vice p resid en t in 1968, execu tive vice presid en t/secretary in 1971 and executive vice p resid en t, secre tary and treasu rer of H arris Bankcorp, also in 1971. H e is p resid en t, H arriscorp Finance, th e H C subsidiary that operates th e M oney Stores. A M B I S e c o n d V ice C h a irm a n C h a rle s L. D a ily is c h a irm a n , M idA m erica Bank of E dgem ont, E ast St. Louis, and four o th er banks in the area. H e e n te re d banking w ith U nited Bank, St. Louis, in 1945 and has been w ith M endon (111.) State; the St. Louis Fed; Security T rust, Lexington, Ky.; and the fo reru n n er of his p re se n t bank, E dgem ont Bank. A M BI V ice C h a irm a n Jam es E. F o r s te r jo in e d D eK alb B ank n in e years ago as president. F o r 28 years before that, he was associated w ith DeKalb Ag Research. AMBI T reasu rer W illard B unn III joined C hem ical Bank, N ew York City, in 1968 and has b een w ith Springfield M arine since 1978. John A. A ndersen, AM BI secretary, joined F irst National, Lake F orest, in 1957, was elected a vice p resid en t in 1966, executive vice p resid en t in 1972, p re s id e n t/c h ie f o p e ra tin g officer in 1976 and C E O in 1977. • • We lo o k a t fa rm in g from first hand e x p e r ie n c e ... Not from the top floor of a big city bank. If y o u ’re lo o k in g for a b a n k th a t c a n give you ag o v e r line c re d it a n d th e a d v ic e you n e e d to h e lp y o u r ow n ag c u s to m e r s , look to M arine. You g e t all th e s e rv ic e s you c a n get fro m a big city b a n k with o n e big plus: first-hand e x p e r ie n c e . W e ’ve b e e n d ire c tly involved with f a rm in g day-in a n d day-out for m o r e th a n 125 years. W hen y o u ’re th a t c lo se to a g ric u ltu re , you h a v e a b e tte r a p p r e c ia tio n for th e c re d it n e e d s of th o s e in th e ag b u sin e ss. W h e th e r it’s o v e rlin e cre dit, c a s h le tte r service, or any of o u r o th e r c o r r e s p o n d e n t b a n k se rv ic e s, you c a n g e t w hat you n e e d at M arine. Call John Staudt, Correspondent Banking (217) 753-6024 or Don McNeely, Agricultural Finance (217) 753-6015. They can show you how Marine Bank can help you to help your ag customers keep American agriculture going and growing. SPRINGFIELD M a rin e B ank 1 East Old State Capitol Plaza Springfield, Illinois 62701 (217) 753-6000 Member FDIC Loans, Bond Financing Offered by Bank in III. C ity N atio n al, R ockford, 111., is offering low -interest loans designed to assist m erchants and landow ners in the B roadw ay B u sin ess D is tric t R e d e v e lo p m e n t P ro g ram to re h a b ilita te th eir businesses and properties. T he pro g ram , called “ 10/10 P ro g ram ,” offers loans at 10% sim ple in te rest w ith m onthly paym ents up to 10 years. The bank has p ledged to purchase the district’s $300,000 bond issue that will help finance dem olition of existing pavem ent and sidewalks along a th re e block stretch of Broadway, prelim inary to laying a n ew black to p roadw ay, curbs, gutters and sidewalks and in stalling lighting. T he finished area will be a mini-m all. MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 65 N o w Account Profit Workshops A t M o . Regionals F ir s t S trin g . Bob Azelton H. H. “Beanie” Broadhead John Karn That’s what you get from the First Stock Yards Bank. Our correspondent bankers are real pros when it comes to financial expertise and personal attention. Their specialties are bank stock loans, commercial loans, agricultural loans, and data processing. Together, they make millions of dollars worth of loans every year. Team up with a first string correspondent banker -one of the pros from First Stock Yards Bank of St. Joseph, Missouri. W here yo ur su ccess is a trad itio n F ir s t S to ck Y a rd s B a n k St. Joseph, Missouri 64504 Call: (816) 238-0651 ¡Mate of First Midwest Bancorp, Inc. Member F.D.I.C. 66 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis O W A C C O U N TS will occupy cen ter stage at this year’s re gional m eetings for m em bers of the M issouri Bankers Association. Each of the eight m eetings, held from S eptem b e r 8-18, will feature th ree-h o u r N O W account profitability w orkshops p re sented by Carl C. N ielsen, chairm an, D ep artm en t of A dm inistration, W ichi ta State U niversity The traditional afternoon business sessions will not be held this year. In stead, short business sessions to elect officers will be h eld in conjunction with the regional banquets. “Financial Planning for Profitable N O W A ccounts’’ is th e title of Mr. N ielsen’s p resentation. Banks can send any n u m ber of people to th e w ork shops, w hich will have a separate reg istration form and fee from th e evening b an quet program s. W orkshop fee will be $25 p er person and one copy of the course workbook will be included for each b a n k re g is te rin g . A d d itio n a l copies of the workbook will be avail able at $20 each and can be ord ered on the registration form. The workshops will be p resen ted in two sections. T he first will outline the cost of N O W accounts and how to esti m ate the cost for a specific bank. The second section will deal w ith p ro tect ing a bank’s bottom line and w hat can be done to offset th e cost of NOW s. Official MBA regional m eetings will include a social hour, banquet, short business m eeting and en tertain m en t by the T erry Fam ily, a group that p e r forms songs popular over the past 80 years. The first m eeting will be held on S e p te m b e r 8 at th e C row n C e n te r H otel in Kansas City for m em bers from Region Four. The N O W account w ork shop will begin at 3 p .m ., the social hour at 6 and the b an q u et at 7. N 1980 Regional Calendar Region Region Region Region Region Region Region Region 1 — Septem ber 11 — M oberly 2 — Septem ber 10 — Trenton 3 — Septem ber 9 — St. Joseph 4 — S eptem ber 8 — Kansas City 5 — Septem ber 15 — W ashington 6 — Septem ber 16 — Poplar Bluff 7 — Septem ber 17 — Springfield 8 — Septem ber 18 — Jefferson City MID-CONTINENT BANKER for August, 1 9 8 0 R egion T h r e e ’s m e e tin g w ill b e S ep tem b er 9 at th e Ram ada Inn, St. Joseph. The ev en t will begin at 11:30 a.m . w ith a luncheon, followed by a talk on energy and politics at 12:30 by D ean P h illip s, p r e s id e n t, B ank of LaBelle. Mr. Phillips also is p resid en t, H eetco., Inc. T he N O W account w orkshop will begin at 1:15 and will be followed by th e “aw arding of the h a t” cerem ony at 4:15. The social h our will begin at 4:30 and the b an q u et will begin at 6:30 p. m. A w om en’s luncheon program will begin at 12:30 and will feature e n te r ta in m e n t by a v e n trilo q u is t and a fashion show. Region Two’s m eeting will be held S eptem ber 10 at th e G rundy E lectric Co-op in T renton. T he N O W account workshop will begin at 3 p.m . and d e tails of th e social hour and b an q u et w ere not available at press tim e. Region O ne will m eet on S ep tem b er 11 at the Crossroads R estaurant at the M o b e rly R a m a d a In n . T h e N O W account w orkshop is set to start at 3 p .m . B a n q u e t d e ta ils w ill b e a n nounced later. The second w eek of regionals will begin on S ep tem b er 15, w hen Region F iv e m e e ts at th e E lk s C lu b in W ashington. The N O W account w ork shop will begin at 3 p.m . The social N E V E R H A S T H E R E B EEN A T IM E O F S U C H G R E A T C H A N G E IN B A N K IN G That's one reason banking meetings are so important now. Bankers are known for their willingness to share knowl edge and discuss issues. The MBA regionals give bankers that forum. Support your regional. We’ll be at ours. Will you be at yours? THE MISSOURI DEPARTMENT OF REVENUE ANNOUNCES COMPETITIVE BID PROCEDURES The Missouri Department of Rev enue is investing available funds under its control on a competitive bid basis and wishes to expand its list of eligible banks. If you are not presently on the Department of Revenue's bid list through pre vious request and are interested in bidding, please submit your name and address to: Investment Committee Chairman, Missouri Department of Revenue, P. O. Box 629, Jefferson City, MO 65105. Detailed bid procedures will be provided to all responding banks. MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3580 W O O D S O N R D . BANK & TR U ST COM PANY MEMBER F.D.I.C. The S o lid P lace to B a n k 428-1000 8924 St. Charles Rd. • St. Louis, MO 63114 9229 Natural Bridge • St. Louis, m o 63134 3580 Woodson Road • St. Louis, m o 63114 67 Regional Vice Presidents M u n icip al B o n d s c lx c iu ilv e iu G. MILLER FOLKS Specializing in SMITH MOSER ALL GENERAL MARKET BONDS Your "Correspondent” for Municipal Bonds COCHRAN Investment Bankers • Municipal Bonds ON E TWENTY SEVEN WEST TENTH KANSAS CITY, MISSOURI 64105 (8 1 6 ) 221-4311 NEEDING AN INDEPENDENT AUDIT? APPROVED AUDITORS UNDER ABA CONTROLLED GROUP BONDING PLAN Also Offering Assistance in BANK SALES BANK APPRAISALS FEASIBILITY SURVEYS JOHN W. RIDGEWAY & ASSOCIATES B a n k in g C o n s u lta n ts a n d A u d ito rs 909 Missouri Blvd., P.O. Box 1242 Jefferson City, Mo. 65102 314-635-6020 68 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HIMMELBERG hour and b an q u et will be held at 6 p.m . and 7 p .m ., respectively, at the City Park Pavillion. Region Six will m eet on S eptem ber 16 at the Turquoise Room, Holiday Inn, Poplar Bluff'. The N O W account w orkshop will begin at 3 p.m . B anquet d etails w ere n o t available at press tim e. All ev en ts for th e R egion Seven m eeting on S ep tem b er 17 will be held at How ard Johnson’s M otor Lodge in Springfield. T he N O W account w ork shop will begin at 3 p .m ., followed by the social hour at 6 and th e b an q u et at 7. The final regional, for Region Eight, w ill b e h e ld S e p te m b e r 18 at th e Ram ada In n in Jefferson City. T he N O W account workshop will begin at 3 p .m ., w ith the social hour at 6 and the ban q u et at 7. R eg io n a l O ffic e rs. G lenn M iller, ex ecutive vice president/cashier, C anton S tate, is vice p re s id e n t for Region One. H e en tered banking in 1959 at C anton State and has held his p resen t title since 1973. H e is a form er presiM ID-CONTINENT BANKER for August, 1 9 8 0 d en t of both th e Illiam o C h ap ter of Bank A dm inistration In stitu te and the N ortheast M issouri Bankers Associa tion. R eg io n T w o v ic e p r e s i d e n t is Richard M iller, president, M erchants & Farm ers, Salisbury. A photo and biographical inform ation ab o u t Mr. M iller w ere not available at press tim e. D onald D. Folks, vice chairm an/ C E O , Farm ers State, St. Joseph, is vice p resid en t of Region T hree. Mr. F olks e n te r e d b a n k in g in 1949 at A m erican N ational, St. Joseph. H e joined his p re se n t bank in 1977 with his p resen t title. H e also serves as vice c h a irm a n , F a r m e r s & M e rc h a n ts State, D exter, Kan. W hile w ith A m er ican National, Mr. Folks was in charge of correspondent banking. H e serves as a director at banks in Clarksdale, L inneus and W inigan, M o., and at E verest, Kan. Vice p re sid e n t of Region F o u r is Jam es E. Sm ith, executive vice p re si d en t, Union State, Clinton. H e began his banking career in 1968 at Union National, Springfield. H e jo in ed his p resen t bank in 1974 as vice p resid en t and has been executive vice p resid en t since 1975. M r. Sm ith is a contact banker for MBA BancPac, a past chair man of th e MBA agriculture com m it tee and M issouri’s action b anker for the ABA. Region F ive’s vice p resid en t is T. C harles B ruere IV, p resid en t, F irst State, St. C harles. H e jo in ed his bank in 1964 and has been p resid en t since 1969. His photo was not available at press tim e. Jam es M oser, p re sid e n t, Bank of Poplar Bluff, is vice p resid en t of R e gion Six. H e e n te re d banking in 1970 at C itizens Bank, Jonesboro, Ark., and joined Bank of Poplar Bluff in 1974 as executive vice president. H e has been presid en t of the bank since 1975. H e is a m em ber of th e MBA’s bank m anage m ent com m ittee and a form er chair man of th at com m ittee. H e also is a form er p resid en t of th e Semo C h ap ter of the Bank A dm inistration Institute. Region Seven’s vice p resid en t is Roy C ochran, ex ecu tiv e vice p re sid e n t, F irst National, Neosho. H e e n te re d banking in 1953 at Norfolk, N eb., and joined his p re se n t bank in 1957 as as sistant vice president. H e has held th e title of executive vice p resid en t since 1969. Vice presid en t of Region E ight is R. L. H im m e lb e rg , p re s id e n t, TriC o u n ty T ru s t, G lasgow , w hich he joined in 1946. In 1950 he was nam ed tre a s u re r and becam e p re s id e n t in 1961. • • M ID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis F ir st S tr in g . That’s what you get from the First National Bank. Our correspondent bankers are real pros when it comes to financial expertise and personal attention. And our correspondent services are of equal caliber. Our first string specializes in bank stock loans, commercial loans, agricultural loans, estate planning, trusts, and data processing—each is nothing short of first rate. Team up with a first string correspondent banker— FÌfst0Naì]onpJi°^nkmW here your success of St. Joseph, Missouri. |g ^ t r a d i t i o n F ir s t National B a n k St. Joseph, M issouri 6 4 5 0 2 Call: (816) 279-2721 Affiliate of First Midwest Bancorp, Inc. Member F.D.I.C. 69 'Marketing— Banking's Bridge to '80s' Is Theme of BMA's 1980 Convention H IS YEAR is proving to be an atypical one in banking. It begins a decade that m any p red ict will be the most revolutionary in banking history. T he 65th annual conv en tio n of th e Bank M arketing Association, “M arket ing: B an k in g s B ridge to th e ’8 0 s,” S eptem b er 14-17 at th e San Francisco Hilton, will be especially significant in view of recen t and im pending changes and may prove to be a p rototype for future m eetings th at educate, inform and m otivate professionals in th e bank ing industry. Issues that im pact th e largest and sm allest banks will be at th e forefront of this year’s program in an expanded general-session schedule. N uts-andbolts m arketing also will be offered in a com prehensive schedule of specialized departm en tal sessions each day. The convention will feature an im pressive lineup of speakers draw n from the financial com m unity and from the business w orld at large. • JohnS . R eed of C iticorp/C itibank, New York, focuses on th e fu tu re role of electronic banking. • K enneth A. Randall, p resid en t of th e prestigious C onference Board in New York, offers alternative answ ers to the question, “A fter C onvenience Banking — W hat?” • The SRI International consum er re s e a rc h p a n e l from M e n lo P ark , C alif., (formerly th e Stanford Research Institute) analyzes consum er financial decisions and th e ir im pact on bank planning. T • Roger D. Blackwell, professor of m arketing at Ohio State U niversity, C olum bus, describes how Am erican life-styles im pact bank m arketing. • W illiam Safire, colum nist for the New York T im es, states his views on th e c u rren t political scene. • T he N e w sw e e k Periscope Panel will co m m ent on national issues of great im port to everyone. • C. C. H ope Jr., ABA president, will em phasize banking’s position in today’s volatile atm osphere. H e is vice chairm an, F irst U nion National, C h ar lotte, N. C. M any outstanding speakers on the program are from th e M idwest. John V. Egan Jr., vice presid en t/ director, corporate com m unications, C ontinental Illinois National, Chicago, will discuss “Bank Com m unications — New Look for the ’80s.” Jam es J. H ubbard, p resid en t, H u b bard & Associates, G len Ellyn, 111., and G eorge M. M orvis, p re sid e n t, Financial Shares C orp., Chicago, will share th e podium and the topic, “P re paring Your Bank for the 80s.” Phillip J. Zeller Jr., p resid en t/C E O , F irst N ational, Junction City, Kan., w ill d isc u ss th e p ro s a n d cons of “A dvertising — In-H ouse or Through an Agency?” “H igh-Perform ance M arketing in a C om m unity Bank” will be analyzed by Alex Sheshunoff, p resid en t, Sheshunoff & Co., Inc., Austin, Tex. T h e q u e stio n , "W ill C o m m u n ity Banks Make It Through the ’80s?” will b e a n sw e re d by Jack W. W h ittle , chairm an, W hittle, Raddon, M otley & Hanks, Chicago, and D. W. N euenschw ander, president/chairm an/C E O , M edical C en ter Bank, H ouston. O th er m idw esterners to be featured at the BMA convention include Jerry S. Wayt, p resid en t, C itizens Banking C o ., A n d e rs o n , I n d ., a n d D a v id Lampl, president, A m erican National, Shawnee, Okla., whose topic will be “ Survival: C o m p etin g in th e ’8 0 s.” John D. W eissert, p re sid e n t, P eru (Ind.) T rust, will discuss a “Practical Approach to Planning for the C om m unity B ank,” and Patrick R. Leigh, p re s id e n t, S o u th e a s t C o m m u n ic a tions, Inc., Lexington, Ky., will offer insight into “D elivery System s O u t side the H o m e.” M arcy M a ssie , v ice p r e s id e n t/ national director of m arketing, M adi son Financial C orp., Nashville, will offer, " T h re e W ays to W in ” ; and G eorge A. R ieder, senior vice p resi dent, Republic of Texas C orp., Dallas, will offer his thoughts on “Tom orrow ’s M arketing E n v iro n m en t.” Following is a b rief preview of w hat this year’s BMA convention program will include. Sunday afternoon offers delegates a chance to view the m ore than 130 ed u cational exhibits. The exhibit show will open at noon and run until 5 p.m . A reception will follow. M onday m o rn in g ’s pro g ram will lead off w ith a discussion of issues on every b a n k e r’s m ind, including the BMA Convention Speakers HOPE Digitized for70 FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis REED MASSIE RANDALL SAFIRE MID-CONTINENT BANKER for August, 1 9 8 0 AT LAST A DEFERRED INCOME PLAN DESIGNED SPECIFICALLY FOR BANK DIRECTORS. Most Bank Directors would willingly defer their directorship fees for greater future income. It’s simply a m atter of sound financial sense. The problem is, until we came along, nobody came up w ith a sensible alternative. Our plans are tailor-made to provide sub stantially more future income for Bank Directors through the deferment of current fees. If your bank is interested, we will be glad to prepare a program for your Board Members to evaluate —w ithout cost or obligation. You may write or call: Brick and Company, Suite 221, 10800 North Military Trail, Palm Beach Gardens, FL 33410. Telephone (305) 626-0552. BRICK AND COMPANY https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Represented in the Midwest b y [ ] ^ [ ^ G R O U P □ □ □ a n d F a ilu r e The Take the /■ J P : ■ M !j M H undreds o f in s t itu tio n s like these are w ritin g the> ow n su c c e s s s to ' es. Yours can be one o f them . W hen you s e le c t a p ro m o tio n from J. Edward Connelly y o u ’re n o t ju s t ch o o s in g a prem ium . Y ou’re ch o o s in g a c a re fu lly stru c tu re d m a rke tin g program geared to m eet y o u r in s titu tio n ’s o b je c tiv e s . C o n n elly p ro m o tio n s fe a tu re the fin e s t brand-nam e m e rch a n dise from the c o u n try ’s leading m a n u fa ctu re rs. N am es like W est Bend,, T im ex, N a tio n a l S e m ic o n d u c to r and In te rn a tio n a l S ilver have helped m ake these and o th e r C o n n elly p rogram s a succe ss. J. Edw ard Connelly Associates, Inc. Digitized forerica’ FRASER Am s Leader In Financial Marketing For Over 25 Years. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis O ur n a tio n a l sales re p re se nta tive s are seasoned fin a n c ia l m arketing p^os. They provide the stra te g y necessary to design and im p le m e n t a s u c c e s s fu l prem ium in ce n tive cam paign. W h e th e r yo u r needs be m o n e y-a cq u isitio n , s tim u la tin g new a c c o u n ts , tra ffic -b u ild in g , crosss e llin g , o r a c o m b in a tio n o f o b je ctive s, a C onnelly A ss o c ia te can get re su lts fo r you. So th is tim e , d o n ’t ju s t “ run a p re m iu m ” . Get the re s u lts y o u ’ve planned fo r w ith a Connelly program. W rite or ca ll our to ll-fre e num ber today. 800-245-6532 1020 Saw Mil! Run Boulevard, Pittsburgh, Pa. 15220 econom ic clim ate and rapid industry changes being experienced by banks large and small. Following a coffee break, five con c u rre n t d e p a rtm e n ta l sessions will offer specialized p re se n ta tio n s seg m en ted by audience in terest or group. Topics will include a retrospective look at banking from the year 1989, elec tronic delivery system s, bank/agency relationships, issues facing com m unity banks an d view ing th e m a rk e tin g planning process. T h e n alo n g w ith lu n c h , a n o th e r general session will feature p re se n ta tion of awards to w inners of th e G olden Coin and C h ap ter of th e Year and in troduce the P resid en t’s C lub (bankers who have recru ited five or m ore new m e m b e rs for th e BMA d u rin g th e year). The afternoon general session will look at th e re ta il-fin a n cia l-se rv ic e s m arketplace from th e custo m er’s p e r spective and assess the challenges that confront bank planners. This session also will discuss roles of m arketing and m arket research in bank planning. T uesday’s program will begin at 7:30 a.m . w ith lour one-h o u r concu rren t se ssio n s o ffe rin g N O W -a c c o u n tpricing strategies, descriptions of suc cessful m arketing program s, m ark et ing planning in com m unity banks and th ree approaches to profitability. BMA officers will be installed at the general session on Tuesday, and a p re sentation by K enneth Randall will ex am ine specialization, cost co ntainm ent and electronic banking as future o p tions. Five diverse dep artm en tal sessions will offer a discussion of th e task of selling financial services, help in d e ciding w h e th e r to contract advertising through an agency, strategic planning in tom orrow ’s m arketplace, th e new look in b a n k c o m m u n ic a tio n s an d Hayes Joins BMA CHICAGO — Patrick B. Hayes has been named director of the Bank Marketing Association’s chapter ser vices department. In his post, he is responsible for the BMA’s 16 local and regional chapters, where bank ers can share common marketing problems, exchange ideas and ben efit from programs tailored to their specific geographical locations. Before joining the BMA, Mr. Hayes was assistant marketing direc tor, Champaign (111.) Nat l. In addi tion, he was on the board of the BMA’s Central Illinois Chapter, was graduated from the association’s Essentials of Bank Marketing course and participated in several of the BMA’s conferences and seminars. N o rw o o d W. " R e d " P o pe, v . p ./ m a r k e tin g , Sun B anks o f F lo rid a , Inc., O rla n d o , has served as BMA pres, th e past y e a r. Re cently elected to suc ceed him is Ronald E. H ale, e.v.p., City N a t'l, Bryan, Tex. O th e r to p B M A officers for 1 980-81 are: 1st v.p., Leonard W . Huck, e.v.p ., V a l ley N a t'l, Phoenix; 2nd v.p ., Richard M. Rosenberg, v. ch., W ells Fargo Bank, San Francisco, and treas., James W . W e n tlin g , corporate v .p ./m a rk e tin g , Flagship Banks, Inc., M iam i. The follow in g M id -C o n tin e n t-a re a b a n k ers have been n om in ated for BMA direc tors: W illia m M . Fackler, s .v.p./m arketing dir., First N a t'l, B irm ingham , A la .; Charles S. Holden, s.v.p., Citizens N a t'l, Dallas; H. Fred M ille r , s .v .p ./m a r k e tin g , C itizen s Bank, M ichigan City, Ind., and Rebecca N. V a u g h n , v .p ./m a r k e t in g , B ro o k h a v e n (Miss.) Bank. They w ill take office during the conven tion. banking from the hom e. A tw o-hour informal lunch in the ex hibits area will give delegates a chance to chat w ith speakers. T he afternoon general session will feature th e articulate N e w sw ee k P eri scope Panel, w hich will respond to q ueries from the audience. W ednesday’s daw n-duster sessions will rep eat those of the previous day, and the m orning general session will focus on changing life-styles and how they im pact bank m arketing. D epartm entals for W ednesday will focus on the m iddle m arket, five-step p lanning, ’80s m arketing strategies, th e legislative/regulatory environm ent a n d d e liv e ry sy ste m s o u ts id e th e hom e. A general-session luncheon features W illiam Safire, New York T im es col um nist, who will close the program , and a special p rem iere of the 1980 Best of TV film will send delegates hom e w ith som e o u tsta n d in g a d v e rtisin g ideas. Spouses of delegates will find a n u m b e r of special program s awaiting them at th e convention. M onday will feature presentations by Carol Ruth Silver, an attorney and supervisor for the city of San F ra n c is c o ; R o b e rt A. H u r e t, senior vice p resident, Bank of Califor nia, San Francisco, and Reg M urphy, editor, th e San Francisco E x a m in e r . O n Tuesday, spouses will take a day long tour of California w ine country, M ID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis including lunch at Napa Valley’s Sil verado C ountry Club. O n W ednesday, consultant Ann W hite will discuss how m arried couples can balance effective ly the dem ands of family, business and com m unity involvem ent. T he gala grand finale, shared by spouses and delegates, will feature cabaret perform ances by the L etterm en. • • W ildflow er Print Premiums Offered by Botantical Garden The M issouri Botantical G arden, St. Louis, in conjunction w ith th e British M useum , London, is offering a series of four-color prints en titled “W ildflowers of N orth A m erica” as a prem ium for financial institutions. The prints, which m easure 34x21 in ches, illustrate wildflowers in four re gions of the U. S. They are th e first of a series of 16. W rite : L o u is E . W e s th e im e r , M arketing Services, M issouri B otan tical G arden, P. O. Box 299, St. Louis, MO 63166. WE C O N N E C T B A N K S AND BAN KERS L o o k in g for qualified banking p e r s o n n e l? L o o k in g for a b a n k in need of y o u r b a n k in g b a c k g ro u n d ? Finding qualified executive personnel in the field of banking is not an easy task. And it’s equally difficult to find a bank that is in need of your executive talents. Of course, when looking for experienced people, you want someone with banking experience to aid you in your search. We have that experience — 18 years of it, in both rural and metropolitan areas, and we maintain complete confidentiality throughout the query. Serving banking personnel needs. Call today. B r y a n t B u r e a u ® 73 We've Been Bailding Southwest Kansas Since 1876 Southwest Kansas and the First National Bank of Flutchinson go back a long way together. We were one of the first banks that began building a new state. A lot has happened over the last one hundred and four years. All of it good. Southwest Kansas has grown into a major economic business and agricultural center. And the First has We Ve b e e n b u ild in g S o u th w e s t K a n s a s s in c e 1876. helped make it happen by making our experience and expertise available through correspondence banking relationships. Today, we’re as committed to the future of Kansas as we’ve been to its past. And meeting your banking requirements is an important part of that committment. Why not give us a call today? (3 1 6 ) 6 6 3 - 1 5 2 1 Member FDIC First National Dank of Hutchinson 74 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis M ID-CONTINENT BANKER for August, 1 9 8 0 Varied Program Awaits Kansas Bankers At KBA Regional Meetings This Fall VARIETY of topics will be p re sented to Kansas bankers a tte n d ing this year’s Kansas Bankers Associa tio n re g io n a l m e e tin g s , b e g in n in g S ep tem b er 23 in W ichita and conclud ing O ctober 2 in Topeka. T h r e e c o n c u r r e n t s e s s io n s a re scheduled for each of th e six m eetings. T he program for C E O s will begin w ith a slide show on bank security, to be followed by a talk by th e director, Kansas B ureau of Investigation. The m eeting will conclude w ith a rap ses sion w here C E O s can discuss w hat’s on th eir minds w ith officers and staff of the KBA. A session for m iddle m anagem ent and supervisors will include a talk on being p rep ared on p ersonnel adm inis tration, a discussion of regulatory and legislative m atters and th e bank secu r ity slide show. A session for custom er-contact staff will begin w ith a talk en titled “P re venting Bank and C u sto m er Losses” by the director, Kansas B ureau of In- vestigation, th e bank secu rity slide show and a p resen tatio n by H arold S to n es, KBA d ire c to r of re se a rc h , about federal and state governm ental changes affecting th e future of bank- First Week September 23 — Region Four — Wichita — Century II. September 24 — Region Two — Chanute — Neosho County Com munity Junior College. September 25 — Region One —Leavenworth — Ramada Inn & Fort Leavenworth. Second Week Septem ber 30 — Region Six — Dodge City — Community Col lege. October 1 — Region Five — Hays — Fort Hays Kansas State Universi tyOctober 2 — Region Three —Tope ka — Ramada Inn Downtown. ing. Presiding over th e C E O session will b e th e various regional vice p re s i dents. Regional secretaries will p re side at the m iddle m anagem ent and supervisors sessions and Ash M cNeal, KBA risk m anager, will preside at the custom er-contact staff sessions. Each regional will begin at 11:45 a.m . w ith the country agricultural key banker luncheon. Registration will b e gin at 1:15 p.m . and the concurrent general sessions will begin at 2 p.m . and continue until 5:15 p.m . The social hour will begin at 5:15 and the banquet at 6:30. The W ichita regional will in clude a KBA p re sid e n t’s breakfast the following m orning. T hree ban q u et speakers are on tap for th e reg io n als. S p eak in g at th e W ichita, C han u te and L eavenw orth m e e tin g s w ill b e Ja m e s B lak ely . Jeanne Sw anner R obertson will speak at D odge City and Hays and Joe G rif fith will speak at the Topeka regional. Each m eeting will conclude w ith the “$2,000,000 in new deposits in just 58 days.” Family Record Size 9 1/ 4 ” 24cm x 11% ” x 30cm A v a ila b le x 2Vz" x 6cm In b o t h P ro te s ta n t a n d C a t h o lic e d it io n s Heirloom Bible proves outstanding premium for Oklahoma National Bank. Write or call for details and a sample copy of the Heirloom Family Bible on approval. HEIRLOOM BIBLE PUBLISHERS P.0. Box 118 MB • Wichita, Kansas 67201 • (316) 267-3211 MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Oklahoma National didn’t jump blindly into its first premium promotion. Bank marketing officers researched a long time before settling on the ideal item. One that would enhance their image in the community while attracting a large number of large new accounts. Their choice, the Heirloom Family Bible, surpassed expectations. “ The Bible promotion ran 58 days through the Christmas season and brought in $2 million in new money,” said JoAnn Dudleson, bank marketing officer at Oklahoma National Bank & Trust Co. in Oklahoma City. “ The average new account was around $11,000. It increased deposits with regular customers, too.” Let this proven premium program work for you! Pays its own way! Many banks give it free for large deposits and offer it at substantial savings to small depositors.. . usually $12. Your cost is only $9.95 each direct from the publisher. Easy to administer. We provide promotional materials — displays stands, newspaper ad slicks, glossy photos, and radio and television scripts — free; statement stutters and direct mail brochures at cost. Proven successful in large banks or small. Guaranteed sale arrangement. 75 presentation of Young Bankers of K an sas P E P awards to outstanding teach ers. H eading th e KBA regions this year are: R egion O n e, N orm an D aw son, p r e s id e n t, M a n u f a c tu r e rs S ta te , L e a v e n w o rth ; R e g io n T w o , D e a n D aniel, president, F irst National, Coffe y v ille ; R e g io n T h r e e , H a rlin L. Schram , ehairm an/president, M orrill & Janes Bank, H iawatha; R egion F our, W illiam W. Altm an, p resid en t, Bank of M id-America, W ichita; R egion F ive, Ronald R. Louden, p resid en t, C itizens S tate, St. Francis; and R eg io n Six, Jam es D. H errington, chairm an/president, C oldw ater National. M r. D aw son e n te re d ban k in g in 1959 at G oodland State. H e jo in ed M anufacturers State, L eavenw orth, as p resid en t in 1962. M r. D aniel has b e e n in banking since 1956, w hen he joined Bank of O k la h o m a , T u lsa (th e n k n o w n as National Bank of Tulsa). H e m oved to F irst of Coffeyville in 1971 and has b een p resid en t since th at tim e. Mr. Schram ’s first bank was State B ank, B u rc h a rd , N e b ., w h ic h h e joined in 1928. H e has been presid en t, M orrill & Janes Bank, since 1954. M r. A ltm a n b e g a n h is b a n k in g career in W ichita in 1956 w ith F irst National. H e m oved to Bank of MidAm erica in 1979 as president. M r. L o u d en e n te r e d b an k in g in 1963 at A m erican National, St. Joseph, M o., w here he was a vice president. In Regional Vice Presidents 1974 he m oved to Citizens State, St. Francis, as president. Mr. H errington is a one-bank man. H e joined his presen t bank, Coldw ater N atio n al, in 1951. H e was nam ed cashier in 1955, p resident in 1972 and chairm an in 1973. • • Kansas BA to Cosponsor Assembly for Directors LOUDEN D AW S O N SCHRAM DANIEL ALTMAN H ERRINGTON John E. Naftzger Chairman "All the bank you'll ever need" S O IJ T H W K I V A T 'I O I V A . L i The 42nd Assembly for Bank D irec tors will be held August 30-Septem ber 2 at T h e B ro a d m o o r, C o lo ra d o Springs, cosponsored by the F ou n d a tion of th e S o u th w estern G rad u ate School of B anking an d th e Kansas Bankers Association (KBA). C o-d irecto rs of th e assem bly are J. Rex D u w e , c h a irm a n , F a rm e rs State, Lucas, and Clifford W. Stone, chairm an/C E O , W alnut Valley State, El D orado, both in Kansas. Mr. D uw e is a form er p resid en t of both the ABA and KBA and Mr. Stone is p resid en t elect of the KBA. Speakers at th e assem bly will in clu d e H. Joe Selby, sen io r d e p u ty com ptroller for operations, C om ptrol le r of th e C u rre n c y , W a sh in g to n , D. C ., who will exam ine “Regulation, Law and the D irecto r,” and Lee E. G u n d e rs o n , p r e s id e n t, B ank of O sceola, W is., and ABA p re sid e n t elect, who will evaluate “The Im pact of 1980.” Five additional talks will be featured on the program , including “D irectorM anagem ent Relations and O rganiza tion of th e B o ard ,” “T he C hanging C om petitive E nvironm ent and “R e sponding to NOW s and F IR A .” Spe cial sessions will be held on w hat bank boards are doing today, im pacts of re c e n t legislation and reg u latio n and tru st developm ents. A program will be conducted for spouses in which com m itm ents and re sponsibilities of directors will be d e scribed and the use of trusts and the functions of banks and the banking sys tem review ed. DOUGLAS AND TOPEKA • WICHITA, KANSAS 67202 316-264- 5303 Member FDIC CASH LETTER SERVICES! W e 'v e 76 G ot The A n sw e rs! https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CNB COMMERCIAL NATIONAL BANK 6TH & MINNESOTA AVENUE KANSAS CITY, KANSAS 66101 Member F.D.I.C. 913 371-0035 Mike O’Leary Lloyd Burton MID-CONTINENT BANKER for August, 1 9 8 0 CORRESPONDENT BANKING. WHO HAS THE KEY TO PROFITABLY APPLYING YOUR IDLE FUNDS? At Fourth, correspondent banking is advanced, high-speed communications and computer technology. It’s rapid, smooth transactions when your needs are critical. It’s financial resources. For loan participations. For cash letter services. For quick check clear ances. It’s having the solid funding to ease your liquidity problems. It’s people. Specialists. Talented professionals who have insight through research on complex federal regulations. Who understand and recognize special needs. Who are committed to building personal, professional relationships. Correspondent banking. Intelligently applying, through research and technology, your investable funds to produce the maximum return for you. To us, it’s that simple. 2 1 FOURTH NATIONAL BANK THE FOURTH NATIONAL BANK OF TULSA 515 SOUTH BOULDER TULSA, OKLAHOMA 74103 (918)587-9171 MEMBER FD1C MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 77 T e rry L. Mills has joined Kansas C ity’s C om m ercial N ational as c o rre sp o n den t bank rep resentative. H e was with a m etropolitan Kansas City bank. C. A. “B ake’’ W ood, form erly cashier, F irs t N ational, C h a n u te , has b e e n prom oted to vice president/m anager, F irst National/South. Evelyn G rogran has advanced from assistant cashier to cashier. M ahlon C. M orley, president, Valley S ta te , B elle P lain e, also has b e e n nam ed chairm an. H e succeeds the late F re d L. S tu n k el, w ho had b e e n a d irector of the bank 58 years. KINGRY MILLS L a u re n K ingry has b e e n p ro m o ted from assistant vice p resid en t to vice presid en t/co rresp o n d en t banks, F irst National, W ichita, w hich he joined in 1971. Paul Stephenson, vice president/com mercial loans, F ourth National, W ichi ta, has been elected chairm an of the C entral Kansas G roup of th e M issouri Valley C hapter, R obert M orris Associ ates. O th er new group officers are: vice chairm an, Jam es Russell, vice p resi dent, F irst National, H utchinson, and secretary/treasurer, M aurice L innens, vice president, W ichita State. H ornung to vice president, Bruce V. M cC une to c re d it and loan review officer and C h arlen e D. G oeller to a ssista n t tr u s t officer. M r. F o s te r jo in e d th e b a n k in 1974 an d was form erly p re sid e n t, F irst N ational, H am ilton. Mr. H ornung has been with the bank since 1978. Mr. M cC une and Miss G oeller both joined th e bank in 1979. KC Fed Pres. Grilled M ark Plaza S tate, O verland Park, has b e g u n c o n s tru c tio n on th r e e n ew drive-up lanes that will give the bank a total of seven lanes by year end. The bank also has plans to install a new bookkeeping system. B oulevard State, W ichita, has elected D ennis C arton vice president/loan op erations. H e was previously a com m er cial loan specialist w ith th e W ichita office of the Small Business A dm inis tration and before th at was w ith F ourth National. In o th er action, th e bank has p rom oted Ronald D. H eikes to assis tan t cashier/com m ercial loan officer. U n io n N a tio n a l, W ichita, has p ro m oted J. W illiam F o ster to senior vice p resid en t in charge of th e correspon d e n t b an k d e p a rtm e n t, W illiam J. Kansas City Fed President Roger G uffey faced stiff questioning from a group of lo cal bankers concerned abo ut money, b an k ing and the Fed. But the "bankers" w ere fifth -g ra d e students involved in a school d is tric t p ro g ra m d e s ig n e d to p ro m o te understanding of economic concepts a t the e lem entary school level. The program w as videotaped for p layback am ong p artic ip a t ing area schools. What Every Director Should Know About CORPORATE ETHICS $23 per copy O V E R 2 0 0 Pages Society as a whole is demanding more disclosure from all its segments, including banking. This posture literally forces bankers to re-examine policies on types of information that can be disclosed pub licly. The disclosure policy of a board can be a major factor in the public's judgment of a bank's conduct. The fact that a bank is willing to discuss — or make public — actions that have a significant bearing on ethical considerations w ill encourage high 78 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis standards of ethical conduct on the part of the bank's entire staff. It should be the responsibility of EV ERY BANK DIRECTOR to aid in devel oping a code of ethics for his bank. All too often, however, directors lament: "We want to do the right thing but we aren't sure what the right thing is!" This manual w ill enable directors to probe the "g rey" areas of business conduct so they can establish written codes of ethics. Such codes often can help banks avoid "tainted business prac tices" that can place the bank — and its officers and directors — in "uncom fort able" positions in their communities. This manual contains several complete codes of ethics adaptable to YOUR BANK. ORDER TODAY! QUANTITY PRICES 2-4 c o p i e s .................................... $ 2 1 .0 0 each 5 -7 c o p i e s .................................... $ 2 0 .0 0 each 8 -1 0 c o p i e s ................................. $ 1 9 .0 0 each CM O T— 1 cc co ■ LU t i 1 LU I _J .2 I ■ 1 I ! Q GC 4 O co j * 1 Z 1 < “ o -1 u CO CO 03 5 1 1 ° J h- ^ CO o I 1— LU LU 1— < GC o Q. CC N O O A .92 ^ ’q . o o <u £ £ c » > r o . t r as £ .tr z h - co CO O M ID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Crim inal Behavior Du we Gets AIB Post (C o n tin u e d f r o m page 8) . . . for the BANK DIRECTOR! BOARD REPORTS $22.00 More effective board meetings begin with more effective board reports. This 200-page manual will help you determ ine the “quantity and quality” of monthly re ports needed by your directors so they, and m anagem ent, can make proper decisions. Included are examples of reports most needed by bank directors. Contributions by well-known bank specialists are in cluded. CORPORATE ETHICS $23.00 W hat every bank director should know about CORPORATE ETHICS. This m an ual (over 200 pages) indicates why bankers are re-examining policies on types of in formation they will disclose to the public. Bank disclosure policies will encourage high standards of ethical conduct by bank personnel. This manual will help directors establish such codes for their banks. Sev eral complete sample codes are included. I f not »atitfied, return book» within 10 day» fo r full refund. THE BANK BOARD LETTER 408 Olive St., St. Louis, Mo. 63102 _ copies, BOARD REPORTS $_ _ copies, CORPORATE ETHICS $ _ TOTAL EN C L O SE D $ _ Name _________________ T itle___________ Bank ___________________________________ Street __________________________________ City, State, Z ip __________________________ (Please send check with order. In Missouri, add 4.6% tax.) 80 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis have becom e so com plex they felt in c a p a b le of k ee p in g up w ith th em . O th e r bankers may view the regula tions as being so com plex that the only reaso n ab le action is to avoid th em w here it is feasible to do so. T hat is, as reg u latio ns b ecom e m ore com plex, th e re is a decided rationalization that this com plexity justifies an in ad vertent violation of the laws and regulations. O ne o th er aspect is the crim inal’s association w ith the organization. T hat is, a large organization can be robbed or stolen from w ith less indignation on th e part of the general public than a small organization. In m ost com m uni ties, th e largest organization is the com m ercial bank. E ven the nature of being insured today for $100,000 p er account may have tilted public attitudes tow ard the p e rc e p tio n th at th e bank isn’t h u rt w hen a w hite-collar crim e or an arm ed ro b b ery takes place. Stated another w ay, th e ratio n alizatio n exists th a t banks are h u rt less by crim es than are o th er institutions. O ne o ther aspect is that w hat is con sidered a crim e in one instance may be c o n s id e r e d a ra tio n a l p r a c tic e in another. To illustrate: I t’s illegal for a national bank to make political con tributions. Yet in some states, statech artered banks may make such con tributions, and in many foreign nations it’s standard practice for such co n trib u tions to be m ade by financial in stitu tions. It becom es difficult to point out th at a national banker w ould be a crim inal in doing certain things w hile a state-ch artered banker m ight well be able to do the same things w ith a clear LUCAS, KAN. — J. Rex Duwe, former ABA president and chair man, Farmers State here, has been appointed to the newly created post of AIB chairman. The position is part of the institu te’s new structure, which was approved by AIB chapter delegates at the recent national AIB leaders conference. As chairman, Mr. Duwe will serve on the AIB executive committee, a policy board that will work closely with AIB state committees and chap ters in defining and implementing the AIB’s objectives and goals. Other committee members include the AIB president, president-elect and regional vice p re sid e n ts. Mr. Duwe’s term will extend until Octo ber, 1981. Mr. Duwe is chairman of two other Kansas banks, Trader State, Glen Elder, and Sylvan State, Syl van Grove. He headed the ABA in 1975-76 and the Kansas Bankers Association in 1972-73. At present, he is on the ABA council. conscience. W illy Sutton, th e bank ro b b er of yesteryear, said he robbed banks ‘b e cause th a t’s w here the m oney is.” This is as tru e today as it was in his day. M any of our concepts of ethics have b een stre n g th e n e d in re c e n t years. H ow ever, in some areas, such as the concept of family life-style, ethics have b een progressively w eakened. W hile bankers should im p lem en t rigorous internal controls and establish good auditing practices, probably the most im portant factor is moral lead ership of the bank and the banking industry. That is, spokesm en for the industry and an individual b an k er’s ac- COMMERCIAL BANKERS T h ro u g h our netw ork of regional o ffices, co nven iently located in th e n atio n 's m oney centers, we are fo rtu n a te to represent some o f the n a tio n 's finest and fastest growing banks. C u rre n tly we are engaged in a num ber o f searches fo r e x p e ri enced personnel in areas o f O perations, Personnel, C om m ercial Len ding , In s ta llm e n t Lending, F in a n cia l (A u d it and C o n tro lle r), T ru st and M a rk e tin g . These openings, in a w ide choice o f locales, are from the e n try level to President. S tartin g salaries range from $ 1 4 - 4 5 ,0 0 0 . Send resume in con fid en ce, in clud ing g eo g rap h ical and incom e re q u irem ents. A ll fees paid by em p lo yer. 3 6 0 N . M ic h ig a n A ve., C hicago, IL 6 0 6 0 1 6 3 5 0 LBJ Freeway, Dallas, TX 7 5 2 4 0 New York • An New Jersey • Chicago • Atlanta (3 1 2 ) 3 3 2 -2 3 4 1 (2 1 4 ) 2 3 3 -9 0 1 2 • San Francisco • E x e c u tiv e R e c ru itin g a n d P la c e m e n t A g e n c y fo r the Dallas F in an cia l C o m m u n ity MID-CONTINENT BANKER for August, 1 9 8 0 The fastest turnaro The 140 Kansas banks now taking advantage of BANKANALYSIS are at this moment reviewing their analyses com piled from their June 30 call reports. In fact, they've had them for some time now. Think your bank could benefit from this kind of turnaround? We thought so: why not call us, at 913-621-8410, so you can be reviewing your year-end re port next February. % a •? o ■ ■ We look forward to having a quick discussion with you about BANKANALYSIS at the Regional Meetings. BANKANALYSIS: an analysis of a bank, by a bank. MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SECURITY NATIONAL BAM< OF KANSAS CITY One Security Plaza Kansas City, Kansas 66117 Dial Direct — 913-621-8410 81 tions m ust be perceived by subordi nates and the public as establishing the proper clim ate, that banking is p e r ceived to be acting in a socially d esir able and ethical way. I t’s im portant for bank em ployees and society as a w hole to see that bank leaders are acting in the highest and b est in terests of socie ty. Good cash m anagem ent practices are desirable; kiting and playing the float are not. Velocity figures quoted earlier may indicate an exposure of se rious dim ensions at some m ajor banks. Use of Bank W ire, th e F ed W ire and autom ated clearinghouses have expe dited fund switching. How m uch h igh e r can velocity figures go? • • Six-Month Money-Mkt. CD Rated Top New Service Of Last Two Decades W hat do you think is th e m ost suc cessful new banking service of th e past 20 years? I t’s th e six-m onth m oneym ark e t C D , acco rd in g to a survey m ade by A. J. W ood Research C orp., Philadelphia, of m ore than 100 m ark et ing personnel at th e 300 largest banks. About two dozen new banking services and m arketing strategies introduced in the past two decades w ere rated in term s of both success and im portance to the industry. Ranking close b eh in d th e m oneym arket C D are bank credit cards and consum er CD s. Also in th e top half dozen are service “packages,” negotia b le - o r d e r - o f w ith d ra w a l (N O W ) a c c o u n ts a n d a u to m a tic t e l l e r m achines (ATMs). W hat do th ese top bank m arketers consider th e least successful of th e listed services? T elephone bill paying, w ith p o in t-o f-sale (POS) te rm in a ls/ d e b it cards and p re -a u th o riz ed bill paym ents faring only slightly b etter. Rankings in term s of im portance to th e industry are similar. The prim ary BANKERS WANTED Operations ............ ............Iowa . . . Trust Inv. Head .. .......... Neb. . . . Exec. Vice Pres. .. .......... Neb. . . . Agri Loan ............. .......... Mo......... President ............. ......... Minn. .. Jr. Ag Loan ......... .......... Iowa . . . Second Officer . . . .......... Iowa . . . Comm’l Loan ___ .......... Mo......... ... ... ... ... ... ... ... ... .22 ,000 35,000 25,000 20,000 30,000 16,000 30,000 30,000 To inquire about a position forward résumé and salary history. TOM HAGAN & ASSOCIATES OF KANSAS CITY P.0. Box 12346/ 2024 Swift North Kansas City, Missouri 64116 (816) 474-6ft74 82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Marketing Tactics of '80s Available in New Book Kansas Bankers Lead Drive To Repeal Parts of FIRA TOPEKA — The Kansas Bankers Association has formulated a new KBA Regulatory Task Force that will perforin an intensive review of the Financial Institutions Regulatory and Interest Rate Control Act (FIRA) and formulate a strategy for the re peal of sections of the act considered to be most detrimental to hanks and their customers. The concept for the task force is the result of a meeting with the C o m p troller of the C urrency. Comptroller John Heimann indi cated at the meeting that he would be agreeable to supporting repeal of portions of the act, hut not the entire act, provided bankers would isolate the most objectional, discriminatory and unnecessary portions. The Colorado and New Mexico Bankers associations have indicated an interest in joining in the project. difference is that ATMs move to the top of the list. A pparently, says the W ood firm, m any bankers see them as the wave of the future. Bankers in the survey rate scenic checks as the least im portant innova tion am ong those evaluated. O th er ser vices rated unim portant by survey re spondents include in terest in advance, m an u al c h e c k -g u a ra n te e cards and prepackaged travelers checks. The 16-page paperback rep o rt p u b lished by A. J. W ood based on th e sur vey also identifies th e individual in stitutions perceived by th eir peers to be m ost innovative, briefly discusses th e historical p attern of innovation in th e banking industry and prescribes for greater innovation in the future. “Each of the services rated highly on im p o rtan ce,” says R obert L. K ram er, W ood’s senior vice p resident/research director, “has, or eventually will, sig n ifican tly affect co n su m e r ban k in g habits: bank credit cards, ATMs, new savings instrum ents and direct-deposit services. “On th e o th er hand, ju st because a new service is dram atically different does not m ean it will be successful. In fact, th e opposite generally is true. The m ore drastic the req u ired change in behavior, the slower and less likely will be the m arket acceptance of the in novation.” “ F inancial In stitu tio n M arketing: Strategies in the 1980s” is the title of a new hardback book published by the C onsum er Bankers Association. The book explains w hat m arketing leaders foresee for the financial industry in the decade ahead. E d ited by L eonard L. B erry and Jam es H. D onnelly Jr., the book’s 18 papers w ere first p resen ted at a w ork shop co sp o n so red by th e M c ln tire School of C om m erce, U niversity of Virginia, and th e Am erican M arketing Association. The editors state that, in response to th e fu n dam ental changes in today’s financial industry, banks and thrifts w ill fin d th e m s e lv e s in c re a s in g ly forced to alter th eir traditional m odes of business. W hich banks succeed will dep en d greatly on w hat services they offer and how well they reach th eir potential m arkets. A m ong th e book’s topics are th e changing role and status of financial institution m arketing, new technology and its effect on service delivery sys tem s, new approaches to prom otion and service offerings and pricing those services. The book is available at $17.50 p er copy from th e C o n su m e r B ankers A ssociation, 1725 K S tre e t N .W ., W ashington, DC 20006. Reserve Pass-Through Proposals Made by Fed for Correspondents The F ed in late June proposed p ro cedures for pass-throughs of reserves by c o rre sp o n d e n ts for n o n m e m b e r banks. The proposal states that correspon d en t banks passing balances through m ust m aintain th e reserv e balances th ey receive, dollar-for-dollar, w ith th e F ed bank or branch in whose te rri tory the main office of the respondent is located. A r e s p o n d e n t w o u ld b e a b le to choose only one correspondent, b u t it would be able to change the co rrespon d en t as long as the F ed is notified of the change. The correspondent bank would be responsible for m aintenance of the cor rect level of the resp o n d en t’s reserves in all pass-through arrangem ents. Banks m aintaining reserve balances on a pass-through basis w ould be eligi ble for F ed services provided directly from its local F ed office. MID-CONTINENT BANKER for August, 1 9 8 0 I n v e s tm e n t S e rv ic e s S in c e 1 8 9 0 UNDERWRITERS— DISTRIBUTORS— DEALERS S T IF E L , N IC O L A U S & COMPANY INCORPORATED MEMBERS NEW YORK STOCK EXCHANGE, IN C . AM ERICA N STOCK EXCHANGE, IN C . MIDWEST STOCK EXCHANGE, IN C . 500 North Broadway, St. Louis, Mo. (314) 342-2000. Private Wires to M. S. Wien & C o ., Inc., Jersey City, and Asiel & C o ., New York City. CONTACT OUR OFFICE MOST CONVENIENT TO YOU: KAN SAS CITY, MO Leawood Corporate Manor Bldg. 4701 College Blvd. Leawood, Kansas 66211 913-381-7181 OKLAHOM A CITY, O K 73102 Suite 130 Century Center 100 West Main Street 405-235-5700 TULSA, O K 74104 1924 South Utica 918-743-3361 ST. LOUIS, MO 63102 500 N. Broadway 314-342-2000 WICHITA, KS 67202 111 South Main 316-264-6321 LOUISVILLE, KY 40270 201 West Main St. 502-587-6053 CHICAGO • ENID • MEMPHIS • CHICAGO HEIGHTS • KEOKUK • LAWTON • MILWAUKEE • MOLINE • ST. LOUIS • MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CLAYTON • LEAWOOD • MT. VERNON • SHAWNEE • COLUMBUS • LITTLE ROCK • TULSA • NORMAN • DENVER LOUISVILLE OKLAHOMA CITY WICHITA 83 N ew s A b o u t B a n k s a n d B a n k e rs — John M cFarland, F irst N ational, W ynne; secretary — Francine “Sissy” Shane, Union National, Little Rock; and treasu rer — H e rb e rt Thomas III, N atio n al Bank of C o m m erce, Pine Bluff. Illinois DeROSIER MITCHELL Alabama Earl P. M itchell has b een appointed sales eng in eer by L e F e b u re for central Alabama, including Anniston, Tusca loosa, Selma, M ontgom ery and Phenix City. H e will o perate out of th e A tlanta branch. First National, M obile, has p rom oted John F. B eard Jr. and W illiam C. Youngstrom to senior vice presidents. Both jo in ed th e bank in 1977. Mr. Beard is in the m ortgage banking divi sion and Mr. Youngstrom is in th e in vestm ents division. Deborah N elson has b een p rom oted to assistant vice p re sid e n t at Exchange Bank, Attalla. She is a loan officer and joined th e bank in 1975. Arkansas The St. Louis Fed has approved the application of F irst Paris H olding Co. to becom e a bank H C through acquisi tion of F irst National, Paris. Class officers w ere elected at each of tw o b a s ic /in te r m e d ia te b a n k in g schools at th e U niversity of Arkansas, L ittle Rock, in June. Session I officers are: p resid en t — L inda Springer, F irst National, L ittle Rock; vice p resid en t — E d Ow ens, Sim m ons F irst N ation al, P ine Bluff; secretary — T en n ie D ale K eeton, F irst N ational, Paris; and treasu rer — Phillip Young, F irst National, W ynne. Session II officers are: p resid en t — Thom as C arter, F irst National, L ittle Rock; vice p resid en t 84 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H. Peter D eR osier, vice president, N ational B oulevard Bank, Chicago, has been nam ed head of th e correspon d e n t b a n k d iv is io n . H e s u c c e e d s G eo rg e D e a rb o rn , w ho has jo in e d L aPorte (Ind.) Bank as vice chairm an and C E O . Mr. D eR osier joined the co rrespondent division in 1969 as assis tan t vice p resid en t and becam e vice p resid en t in 1977. National Boulevard Bank, Chicago, has e le c te d C harles B. M elby vice p resident/legal affairs and prom oted Jam es F. D ickerson and Thom as L. D ockw eiler to vice presid en ts. Mr. M elby was form erly counsel at F irst N atio n al, C hicago. M r. D ick erso n jo in ed the bank in 1973; Mr. D ock w eiler in 1970. P. David H ub b ard and R obert E. Vanden Bosch senior vice presidents. Mr. H ubbard is group executive in charge of financial consulting, cash m anage m ent and corporate banking m arket ing. H e joined th e bank in 1962. Mr. Vanden Bosch is head of international banking and has been w ith H arris since 1959. Indiana I BA Staff Changes INDIANAPOLIS — Jan Zigler, secretary, Indiana Bankers Associa tion, since 1967, has been named vice president/m em ber services. Succeeding him as secretary is Wen dell C. Hoover, assistant secretary since January. Mr. Zigler joined the IBA staff in 1959. Before going to the association in 1978, Mr. Hoover was executive director, Indiana Health Care Asso ciation. Robert C. Nelson continues as IBA executive vice president. Harris Trust, C hicago, has elected New AMBI Institute A one-week Institute of Commer cial Lending for Illinois Bankers has been announced by the Association for M odern Banking in Illinois (AMBI) for November 16-21 at the University of Illinois, Champaign. The institute will be held in coopera tion with the university and Con tinental Bank, Chicago. The curriculum will include lec tures, case studies and peer group participation on working capital, structuring loans, relating plant calls to the financial statem ent, SBA loans, loans to sole proprietors, small leases, agricultural loans, industrial revenue bonds, buy-out and work out loans, pricing of loans and ac quaintanceship with information sources. Faculty will include Illinois bank ers, corporate executives, federal government officials and university professors. Brian J. Palagyi has b een appointed sales en gineer by L eF eb u re. H e will operate out of th e Colum bus branch and will serve custom ers in Richm ond in addition to areas in Ohio. Kenneth D . Bane has b een nam ed ex e c u tiv e v ice p r e s id e n t at S eco n d N ational, Richm ond. H e jo in ed the bank in 1956 and was m ost recently senior vice p resid en t and senior loan officer. David W. Ritchie has b een prom oted to vice presid en t at Lincoln National, M ID-CONTINENT BANKER for August, 1 9 8 0 F o rt W ayne. H e jo in ed th e bank in 1967 a n d is m a n a g e r, in s ta llm e n t loans. Bancorp., St. Louis, w hen approval of the F ed has been obtained. The agree m ent calls for an exchange of stock b e tw een F irst Union and Colum bia U n ion Bancshares, Kansas City, parent firm of Colum bia Union National. Kentucky Charles F. Haywood, professor of fi nance and fo rm er dean , C ollege of Business and Econom ics, U niversity of K entucky, has b een e le c te d to th e boards of F irst National and K entucky Trust, both in Louisville. H e also is being appointed to th e ir p aren t com pany, F irst K entucky N ational Corp. The Fed has approved th e application o f E x c h a n g e B a n c s h a re s , I n c ., M a y fie ld , to b e c o m e a b a n k H C through acquisition of Exchange Bank, Mayfield. Louisiana Robert L. Goodwin, chairm an/president, Exchange Oil & Gas C orp., has b e e n nam ed a d ire c to r of H ib ern ia N ational and H ib e rn ia C o rp ., N ew O rleans. National American, N ew O rleans, has elected P eter J. B utler to its board. Mr. B utler is an attorney and CPA and has rep rese n te d the bank for 15 years. L ib e r ty B ank, N ew O rle a n s , has prom oted Rehm T. W inters to senior vice president. H e jo in ed th e bank in 1974 as vice p resid en t and cashier. Mississippi Frank C. Allen has resigned as com m issioner of banking and consum er fi nance. H e was appointed to the post last M arch by G overnor W illiam W in te r as part of a plan to reorganize the d ep artm en t. Mr. Allen said the reorga nization had been com pleted and that “obligations and com m itm ents” m ake it im possible for him to continue in the post. COERVER STOWE Missouri Boatm en s National, St. Louis, has elected Jon H. Stowe senior vice presi d e n t in charge of the com m ercial and international banking divisions. W il liam F. Goessling and Jam es F. Ittn e r have b een prom oted to vice presidents in the tru st division. Mr. Stowe was form erly w ith F irst W isconsin N ation al, M ilwaukee, w here he was head of th e m etropolitan banking division. Harrison F. Coerver, vice chairm an, M ercantile B ancorp., St. Louis, re tired June 30, following 45 years in banking. H e continues as a director of th e HC. Mr. C oerver’s banking career began in 1935 w hen he joined M issis sippi Valley T rust, St. Louis, w hich m erged w ith M ercantile Trust in 1951. H e was elected senior vice presid en t in 1961 and p re sid e n t and directo r in 1970. From 1971-72 he served as p resi d e n t of M ercantile T rust and M ercan tile Bancorp. In 1972 he was nam ed vice chairm an of the H C and had been chairm an, executive com m ittee, since 1977. R ichard F. F o rd , p re s id e n t/c h ie f operating officer, F irst National, St. L ouis, has b e e n e le c te d chairm an, D ow ntow n St. Louis, Inc., not-forprofit firm rep resen tin g the downtown St. L ouis b u sin e ss co m m u n ity . In o th er action, John W. Fricke has been prom oted to vice presid en t in F irst N a tio n a l’s b o n d d e p a r tm e n t. H e jo in ed th e bank in 1973. C olum bia U nion N ational, K ansas City, will be acquired by F irst Union REITER STOECKER MID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HAYW OOD G O O D W IN First National Charter Corp., Kansas City, has announced plans to file with th e S E C a re g is tra tio n s ta te m e n t covering a proposed public offering of $25 million of notes due in 1990. Robert E. Reiter has been prom oted to senior vice p resident at U nited M is souri Bank, Kansas City. H e joined the bank in 1969 and supervises the estate planning division. David T. Stoecker has been nam ed p resid en t, Gravois Bank, St. Louis, succeeding H. S. D ressel, who has b e e n n a m e d c h a irm a n /C E O . M r. S to e c k e r was fo rm erly sen io r vice president/com m ercial banking, M er c a n tile T ru st, St. Louis. O scar L. C recelius, form erly chairm an of G ra vois Bank, has been nam ed honorary chairm an em eritus. Thomas J. Albright has been elected vice president, Am erican National, St. Louis. H e joined the bank in 1955 and was form erly assistant vice president/ com m ercial loans. Robert L. Davis has been elected vice president, Bank of Poplar Bluff. H e was form erly executive vice president, F irst National, Poplar Bluff. Robert H. Buckner has b e e n p ro m oted from senior vice presid en t to executive vice p re sid e n t/d ire c to r at C ountry C lub Bank, Kansas City. H e succeeds Jay Reynolds, executive vice president, who took early retirem ent. New Mexico Clarence A. Rumpel, senior vice p re s ident, Santa F e National, is p resident of the New Mexico C hapter, which has r e c e iv e d fu ll-fle d g e d s ta tu s from R obert M orris Associates. O th er chap te r officers are: first vice president, R obert Goodm an, vice president, Rio G rande Valley Bank, A lb u q u erq u e; FORD BUTLER 85 second vice p resid en t, Roy B runer, vice president, F irst National of D ona Ana C ounty, Las C ruces; secretary, Eric Knight, assistant vice p resid en t, F irst National, Roswell, and treasu rer, Barbara Schkade, loan review officer, A lb uq u erq u e National. T he ch ap ter had been operating u n d er RMA’s Ari zona C h a p te r as a g ro u p , or s u b chapter, for eight years. Edwin P. Cover has been m ade senior vice p resident/consum er group, New M exico B a n q u e s t C o rp ., fo rm e rly New Mexico Bancorp., h e a d q u artered in Santa Fe. H e is responsible for the general supervision of consum er ser vices for H C affiliates. Mr. C over also is e x e c u tiv e vice p r e s id e n t, F irs t N ational, Santa F e, th e firm ’s lead bank. Fidelity Bank, O klahom a City. H e was vice president/assistant adm inistrator of that division. John D. Strong Jr., form erly senior v ic e p r e s id e n t/c o m m e r c ia l lo a n s, F o u rth N ational, W ichita, has been prom oted to executive vice p resid en t/ m anager of lending. D avid Lam b, an officer in the com m ercial loan division, has been m ade a senior vice p resid en t in that division. J. Robert Hanes has b een p rom oted to senior vice presid en t/ad m in istrato r of th e o p e r a tio n a l s u p p o r t d iv isio n , Turn your grain drafts into collected STRONG LAMB Texas Ben L. Boyd and W illiam E. M ercer have joined F irst National, Oklahom a City, as vice presidents; Mr. Boyd in energy lending and Mr. M ercer in finance/accounting. Louis H. Brigham has b een elected p resid en t/C E O of the new C om m er cial National, O klahom a City. H e was senior vice p resident, Fidelity Bank, O klahom a City, w hich he joined in f 968. The new bank will be located in a tw o-story, 12,000-square-foot b u ild ing, w hich will be com pleted early next year. Jackie L. Woods has been nam ed as sistant cashier/assistant tru st officer, C e n tra l N atio n al, E n id . She w e n t th e re in 1978. Tennessee CEN TRA L N A TIO N A L BA N K A N D TR U S T C O M P A N Y OF ENID C a ll J o h n P a rris h (4 0 5 ) 2 3 3 -3 5 3 5 Member, FDIC 86 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis C h au n cey W. L e v e r , p r e s id e n t, H am ilto n Bank, Johnson C ity, has been nam ed an Area II vice president, Boy Scouts of America. His activities include the councils h ead q u artered in Knoxville, C hattanooga and Johnson City. William C. Colbert has b een nam ed vice p resident/equity portfolio m ana ger and analyst at F irst T ennessee In vestm en t M anagem ent, In c., M em phis, a subsidiary of F irst T ennessee National C o rp ., HC whose lead bank is F irst T ennessee Bank, M em phis. Mr. C olbert also is a m em ber of th e firm ’s equity portfolio com m ittee. H e was a m em b er of th e investm ent research staff at St. Louis Union T rust prior to joining F irst T ennessee in April. Oklahoma James W. Morris, w ith Bank of Okla hom a, T ulsa, five y ears, has b e e n prom oted to vice p re sid e n t/tru st offi cer in charge of the em ployee benefits group. has been elected first vice p resid en t an d c h ie f a d m in is tr a tiv e o ffic e r, National Bank of C om m erce, Jackson. Mr. H arrell has been w ith the bank 13 years and was form erly executive vice president. Jerre R. Haskew, executive vice presi d e n t, C o m m erce U nion, N ashville, has b e e n e le c te d p r e s id e n t/C E O , C om m erce Union, Chattanooga, suc ceeding John V orderB rugge, who will continue as chairm an of the C hatta nooga bank. Mr. H askew joined C om m erce U nion, Nashville, in 1970. H e was responsible lor long-range corpo rate planning, personnel and corres p o n d en t banking for the bank and its parent, T ennessee Valley Bancorp. James D. Harrell has been elected p resid en t/C E O , F irst N ational of G ib son C ounty, H um boldt, succeeding W allace K im b erlin , w ho had b e e n p resid en t since 1977. Mr. K im berlin United Bank of Texas, A ustin, has com m issioned L eF e b u re to supply a proprietary security system for its new banking/office building. The contract exceeds half a million dollars. The sys tem com bines audiovisual and elec tro n ic sen so rs th a t sc re e n activ ity throughout the building. T he system pinpoints any problem and instructs its o p erato r w hat to do to resolve the situation. First United Bancorporation Plans O ffice Building FO R T W O R T H — F irs t U n ited Bancorp, and Cadillac Fairview South ern Region have announced plans to develop a 35-story office building in th e dow ntow n area that will be the H C s headquarters. F irst National, the H C ’s lead bank, will locate certain banking functions in the new building, w hich is m ore than twice the size of its p resen t building. A parking garage w ith about 1,000 spaces will be built adjacent to the tow e r and provision will be m ade for drivein facilities. C onstruction is expected to start by year-end, w ith occupancy by late 1982. Cadillac Fairview is a publicly held real estate firm. F rost N a tio n a l, San A n to n io , has prom oted W illiam C lyborne Jr. and John M artin to vice presidents. Mr. Clyborne is in the tru st d ep artm en t and Mr. M artin is in the autom ated custom er services d ep artm ent. Both joined the bank in 1978. M ID-CONTINENT BANKER for August, 1 9 8 0 Bankers who aren't"creative" in the 80s might not be bankers in the 90s. It’s no secret that the 80s will be a decade of challenge. And perhaps nowhere will that challenge be more in evidence than in our own industry. A recitation of the contributing factors here would be redundant. We all know what they are. What I’d like to share with you is The First’s approach to what lies ahead. We intend to become even more resource ful in looking for better ways to do business. In the process we intend to encourage a vigor ously “creative” approach in all of our activ ities, from personnel management to product development. By creative I mean an attitude which insures that today’s way of doing things is a subject for constant review. Such an at M ID-CONTINENT BANKER for August, 1 9 8 0 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis titude, and its pervasive commitment to mean ingful innovation, insures further that those who rely on The First can continue to do so with absolute confidence. And as we find better ways to do business, you, our correspondent customers, will share in the fruits of our labors. We intend to make being a First correspondent customer even more satisfying in the years to come. You have my word on it. Dale E. Mitchell, President, The First Helping Farmers Help Themselves Goal of Agribusiness Seminars E L P IN G farm ers h e lp th e m tion to children and still keep control selves was th e goal of Belleville by parents and freeze th e value for (111.) N ational’s agribusiness sem inars estate-tax purposes. last w inter. A bout 200 persons a tten d ed each The bank lined up four experts to session held in the college auditorium . speak on consecutive Thursdays, not only to its farm cu sto m ers, b u t to Two-Tiered Loan Rates neighbors as well. T he sem inars w ere th e first activity Designed to Be Aid of the bank’s th e n new ly form ed farm To Ailing Car Industry departm en t. They w ere sponsored as a An auto-loan program designed to com m unity service by th e bank and by B elleville A rea C ollege, w h e re the stim ulate purchases of cars and thus sem inars w ere held, according to Dale help the ailing autom obile industry has W achtel, assistant vice president/farm b een introduced by Louisville’s L ib er ty National. manager. T he program , w hich uses a twoPricing was th e th em e of th e first sem inar conducted by D arrel L. Good, tiered -rate structure, links the term of a U niversity of Illinois faculty m em a loan and the custom er’s equity posi ber. In his talk, “ M arketing Strategy tion (trade-in value plus any down pay and Price O u tlo o k ,’’ Mr. G ood dis m ent) to d eterm ine the in terest rate. cussed p redicting agricultural prices, This plan is said to benefit the custom factors d eterm in in g livestock prices, e r borrow ing 70% or less of the sticker forces that influence grain prices and p ric e o f new and o n e-y ear-o ld v e hicles. pricing alternatives, am ong others. H ere is how the program works: On Franklin J. Reiss, an extension spe cialist in land econom ics at th e U ni 42-to-48-m onth loans, the regular rate v e rs ity o f Illin o is, d is c u s s e d farm of 15% is reduced by Vz% to 141/2%. H ow ever, on 24-to-36-m onth loans, leases and land prices. R o b e rt M. B ellatti, an a tto rn e y , th e norm al in terest rate of 141/2 is re s tre ss e d th e im p o rta n c e of p ro p e r duced a full 1% to 131/2%. The bank estate planning. H e urged th at farm ers hopes that m ost custom ers will elect to elim inate owning land in jo in t tenancy. take th e 24-to-36-m onth loans and thus H e said that owning th e land as tenants help fight inflation by not overextend in com m on saved the estate tax m oney. ing them selves to 48 m onths. As explained by Jack Shipm an, ex H ow ever, he cautioned his audience to discuss each situation individually w ith ecutive vice p resid en t and head of re tail banking at Liberty National, “This an attorney. “Farm C orporations and th e Farm program rew ards the saver or m ore Fam ily’’ was th e topic of John J. Vas- p ru d e n t buyer. It creates an incentive sen, a B elleville a tto rn e y . H e d is for custom ers not to extend th eir credit cussed advantages, disadvantages and m ore than necessary. Yet it should e n alternativ es re g ard in g incorp o ratin g courage those in the m arket for a new farm operations; how to use a corpora car and are able to afford it to move tion to low er estate taxes and how to ahead w ith th eir plans. W e believe the transfer stock in a family farm corpora- h ard-hit auto industry will benefit from our new program as w ell.” Mr. Shipm an adds that the program is designed so that in terest rates can be adjusted dow nw ard as the prim e rate falls. H Bank Arranges Financing For G ary Flotel Rehab Dale W achtel (r.), a .v .p ., B elleville N a t'l, chats w ith farm ers Tom and W ilm a G aby a t agribusiness sem inar. Digitized for88 FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The closing of financing and the b e ginning of a $6.9-million renovation of th e G a ry (In d .) H o te l has b e e n a n n o u n c e d by M ay o r R ic h a rd G. H atcher. Financing was arranged by St. Joseph Valley Bank and SJV M ort gage C orp., Elkhart. The 10-story hotel, built about 1920, is being rehabilitated into 140 units for th e e ld e rly and h a n d ic a p p e d . T he building also will include com m unity rooms for tenants, com m ercial space and office space for the Gary H ousing Authority. The project is said to be th e first in th e U. S. w h e re fin a n c in g w as achieved through tax-exem pt notes on an interim “turnkey contract of sale. ” The rehabilitation of the Gary H otel is part of a $60-$70-million redevelop m ent program for dow ntow n Gary. • In d e x to A d v e rtis e rs • American Express Co. (Travelers Cheques) ........ 27 Arrow Business Services, Inc................................. 9 Bank Board Letter ........................................ 78, 80 Boatmen’s National Bank, St. Louis ................. 89 Brandt, Inc.............................................................. 45 Brick & Co., Palm Beach Gardens, Fla................ 71 Bryant B ureau........................................................ 73 Cawthon Building Systems, Inc............................. 51 Central National Bank, Enid, Okla........................ 86 Chase Manhattan Bank, New York ..................... 41 Christmas Club — a Corp....................................... 21 Commercial National Bank, Kansas City, Kan. 76 Commerce Bank, Kansas City ............................. 11 Connelly Associates, J. Edward ........................... 72 Daktronics, Inc........................................................ 37 De Luxe Check Printers. Inc....................i . . . 46-47 Deposit Guaranty National Bank, Jackson.......... 35 Don Howard Personnel, Inc................................... 80 Fabcraft, Inc............................................................ 22 Federal Land Bank ............................................. 18 First Alabama Bank, Montgomery...................... 52 First National Bank, H utchinson........................ 74 First National Bank, Kansas City ...................... 4 First National Bank, St. Joseph ........................ 69 First National Bank, St. L o u is ............................. 90 First National Bank of Commerce, New Orleans 5 First Oklahoma Bancorp......................................... 87 First Stock Yards Bank, St. Joseph, Mo............... 66 Fourth National Bank, Tulsa ............................... 77 Fourth National Bank & Trust Co., W ic h ita ........ 49 General Electric Credit Corp.................................. 12 Gerrett Div., M.A..................................................... 62 Hagan & Associates, T o m ..................................... 82 Harland Co., John H............................................... 3 Harris Trust & Savings Bank, Chicago ............... 15 Heirloom Bible Publishers ................................... 75 Heritage Mint, Ltd.................................................. 61 Hutchinson National Bank & Trust Co................. 79 Insurance Enterprises, Inc..................................... 40 Liberty Nat’l Bank & Tr. Co., Oklahoma City . . . 2 MGIC-Indemnity Corp............................................. 25 MPA Systems ........................................................ 60 Memphis Bank & Trust Co..................................... 13 Mercantile Bancorp., St. Louis ........................... 7 Missouri Dept, of R evenue................................... 67 Mosler Safe Co........................................................ 29 National American Bank, New Orleans .............. 43 National Bank of D e tro it................................. 52-53 Olan Mills .............................................................. 31 Pictorial Publishers, Inc.' ..................................... 32 Prestige Business Fashions ................................. 34 Republic National Bank, Dallas ......................... 39 Ridgeway & Associates, John W............................ 68 St. Johns (Mo.) Bank & Trust Co.......................... 67 Security National Bank, Kansas City, Kan........... 81 Southwest National Bank, Wichita ..................... 76 Springfield Marine B a n k ....................................... 65 Stifel, Nicolaus & Co., Inc..................................... 83 Third National Bank, Nashville . . ........................ 57 Union Bank, E. St. Louis, III. ............................. 64 Western Banker Publications, Inc......................... 59 Whitney National Bank, New Orleans ................ 17 Zahner & Co............................................................. 68 M ID-CONTINENT BANKER for August, 1 9 8 0 T r y a B a n k e r s ’ B a n k e r ... Boatmen’s Vice Pirsident Bob Heifer conferring with Donald L. Campbell, President, The Exchange National Bank and James R. Loyd, Executive Vice ITesident, The Exchange National Bank, in front o f Exchange National’s new Building. Overlines . . . Investments . . . Processing . . . Stock Loans . . . Federal Funds (Money Desk) Operations A ssistance. . . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Correspondent Banking Division THE BOATMEN'S NATIONAL BANK OF ST. LOUIS 314 - 425-3600 Everett Knight. President, Gallatin County State Bank, Ridgway, Illinois. Born: Rosiclare, II., 1942. Education: Southern Illinois University, 1963. Recently coordinated and led small investor group in purchase of three Illinois banks. “All banks have bricks, mortar, and money. The difference is the people. I’m looking for good people with a positive attitude.” His St. Louis bank: Firstbank. “They go the extra mile to get things done. They’re pros.” First National Bank in St. Louis. The bank that puts Firstperson performance to work for every correspondent customer. Firstperson* https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Firstbank. W ^~ I I mk First National Bank in St. Louis A First Union Bank 510 Locust Street • St. Louis, Missouri 63101 • (314) 342-6967 • Member FDIC
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