The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis "Wfe were impressed by their service, even when we were practically no customer at all.” “ W hen we started o u r re la tio n sh ip w ith Liberty, it was on a s tric tly se condary basis — w ith a ‘c o m p lim e n ta ry ’ account. Even as such a sm all custom er, however, we q u ic k ly fo u n d o u t w hat ‘su p e rio r s e rv ic e ’ re a lly means. In tim e w e cam e to re ly on them m ore and m ore, using th e ir se rvices m ore e x te n s iv e ly and m ore frequently. L ib e rty is now ou r p rim ary co rresp o n d en t. They respond to o u r needs q u ic k ly — w ith o u t any b u rea u cra tic paper s h u fflin g — and th e y keep th e ir p ro m ises.” Tom Treadwell C hairm an P e o ple ’s State Bank of H o ld e n v ille L ib e rty ’s co rre s p o n d e n t bankers d o n ’t m easure th e ir se rvice by th e size of th e ir custom ers. A sm all b a nk’s problem s and needs are ju st as im po rta n t as a large b a nk’s — to the bankers, to th e ir custom ers, and to us. Because th is uncom m on a ttitu d e is com m on in e ve ry d e partm ent, you have L ib e rty ’s e n tire re sources at y o u r disposal th ro u g h yo u r co rre s p o n d e n t — no m atter how large or small yo u r s p e c ific need m ight be, no m atter w hat size cu sto m e r you are. Call us at 405-231-6164. You’ll fin d out, as hundreds o f bankers already know, when our respondents talk —we listen. OUR CUSTOMERS CALL IT SUPERIOR SERVICE. W E CALL IT BUSINESS AS USUAL BECAUSE...W E CARE ABOUT YOU. LIBERTY THE BANK OF M ID-AM ERICA The Liberty National Bank and Trust Company / P.O. Box 25848 / Oklahoma City, Oklahoma 73125 / 405-231-6164 / Member FDIC MID-CONTINENT BANKER is published monthly except semimonthly in May by Commerce Publishing Co., 408 Olive, St. Louis, Mo. 63102, Aug., Vol. 77, No. 9 Controlled-circulation postage paid at St. Louis, Mo., and at additional mailing offices. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis All the Country’s T op D esigners are right here in the Mid-South. Steelcase, Knoll International, Herman Miller . . . all the best are as close as your telephone and Arrow Business Services, just down the road in Memphis. You don't have to go to New York, Chicago or the West Coast to give your bank the benefit of the most modern and space-efficient concepts in office design. We have them all, expertly displayed and in inventory in our huge Memphis showroom and warehouse. As a bonus, the professional design consultants on our staff specialize in bank facilities. Our totally self-contained modular units can help you maximize space utilization and flexibility while achieving a bright, open atmosphere in your entire bank. Unlike adding or moving walls, the cost of modular units can give you additional advantages such as investment tax credits for capital equipment, and provide you with office space that changes easily when your needs do. We'll be happy to send you information on ^ D D ^ Y l/ L / modular systems or visit with you personally. So give us a call or visit our showroom. BUSINJC SE < 'y Let us show you what Arrow Business Services sosolllubmndillvllmlihTsiTennessee^Slld can do for you and your bank, no further 901/345-9861 away than here in Memphis. MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 RepublicBank D allas doesn’t stop here. RepublicBank Dallas isn't limited by geographic bound aries. Today our activities ex tend to every part of the coun try. And the leading activity that touches banks all over the country is our Financial Institutions Division. We have the services and the experience to m eet every kind of correspon dent banking need. Our Financial Institutions Division has a full range of ser vices from cash management to bank financing and loan par ticipations. Last year, we bought and sold loans with over a thousand banks and handled over two million cash letter item s daily. In our cor respondent relationship, we're more interested in the relation ship than in transactions alone. And we can tailor our services to m eet your individual institu tional needs. Along with a full range of services, we m atch your needs with a group of top correspon dent professionals. They have in-depth, up-to-the-minute in formation on money markets, economic trends, and current or proposed legislation that may https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Dallas City Limits w industry. They know the ins and outs of credit needs, loan sales, and acquisitions. They know how to put together a pro ject from a structural to a legal standpoint. As well as how to create a solid non-credit pack age of services. At RepublicBank Dallas, you'll find the people and the services you expect from the correspondent institution, and you'll discover there is no lim it to what we can do. ^R epublicB ank Dallas We know no limits. Member FDIC M AKE M O N E Y N O T PAPERW ORK Every time money orders leave your institution they leave paperwork behind. So do official checks and interest and dividend checks. T h in k of all the reconciling, filing and storing. T h e tracing and refunding. T h e n think of what those jobs cost in time and money. If you use Am erican Express®programs for these items, handling them takes less time and costs less money. Because we do the paperwork for you. T h e Financial Institution M oney Orders (FIMO®) are printed with your name and supplied at no cost. You pay a modest fee for each money order sold, but you control the profit because you decide what to charge. T h e Official Checks are tailored to your design and also supplied free of charge. W h a t’s more, your unlimited-amount checks guarantee you substantial monthly income from the re m ittance options we offer. T h e Continuous Form Checks are tailored to your design as well. A nd while there’s a modest fee for each, you’ll find it a small price to pay for the interest and dividend check paperwork that’s eliminated. Remember, you’re in business to make money, not paper work. So send us the coupon for more information. It could be the last piece of paperwork you handle for a long time. M CB “ T] Money Orders ^ O ffic ia l Checks Continuous Form Checks Please send me more information on Mr. Gil Rosenwald □ Money Orders □ Official Checks V.P.—Marketing and Sales Operations □ Continuous Form Checks Travelers Cheque Division American Express Company—37th Floor American Express Plaza, New York, NY 10004 -T itle- Name_ InstitutionAddressI__ City------ MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis _State_ -Zip_ -J 5 Convention Calendar Volume 77, No. 9 August , 1981 FEATURES 27 AG BANKERS LOOK AT FUTURE Believe their role will be tougher 32 FARM CREDIT ACT AMENDMENTS Can they help bankers help farmers? 36 WORLD FOOD DEMANDS How they will affect farm industry 40 MARKETING ASSISTANCE FOR NEIGHBORHOODS One bank’s unusual program 44 BANK FOCUSES ADS ON ITS AREA Promotes it as tourist attraction 48 COMMUNITY-DEVELOPMENT STEWARDSHIP It belongs to bankers DEPARTMENTS 8 INSURANCE 10 WASHINGTON WIRE 15 BANKING WORLD 20 REGULATORY QUESTIONS 18 THE BANKING SCENE 22 SELLING/MARKETING 25 REGULATORY NEWS REGIONAL MEETINGS 71 KANSAS 83 MISSOURI STATE NEWS 90 ALABAMA 92 INDIANA 93 MISSISSIPPI 90 ARKANSAS 92 KENTUCKY 93 MISSOURI 91 ILLINOIS 93 LOUISIANA 93 OKLAHOMA 94 TEXAS EDITORS Ralph B. Cox ....... Publisher Rosemary McKelvey .. Editor Lawrence W. Colbert Assistant to the Publisher Pamela Walsch Assistant Editor Jim Fabian . . . Senior Editor Eleanor Wainwright Editorial Assistant MID-CONTINENT BANKER Editorial/Advertising Offices St. Louis, Mo., 408 Olive, 63102. Tel. 314/4215445; Ralph B. Cox, Publisher; Marge Bottiaux, Advertising Production Mgr. Subscription rates: Three years $27; two years $20; one year $12. Single copies, $2 each. Foreign subscriptions, 50% additional. Milwaukee, Wis., 152 W. Wisconsin Ave., 53203, Tel. 414/276-3432. Commerce Publications: American Agent & Bro ker, Club Management, Decor, Life Insurance Selling, Mid-Continent Banker, Mid-Western Banker and The Bank Board Letter. MID-CONTINENT BANKER is published monthly ex cept semimonthly in May by Commerce Publishing Co., 408 Olive St., St. Louis, Mo. 63102. Officers: Donald H. Clark, chairman emeritus, Wesley H. Clark, president; James T. Poor, execu tive vice president and secretary; Ralph B. Cox, first vice president and treasurer; Bernard A. Beg- Printed by The Ovid Bell Press, Inc., Fulton, Mo. Controlled circulation postage paid at St. Louis, Mo., and at additional mailing offices. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis gan, Lawrence W. Colbert, William M. Humberg and Don J. Robertson, vice presidents: David Baetz, assistant vice president. Aug. 20-23: Independent Bankers Association of Amer ica Seminar/Workshop on One-Bank Holding Com pany, Colorado Springs, Colo., the Broadmoor. Aug. 23-Sep t. 4: ABA National Installm ent Credit School, Norman, O kla., University o f Oklahoma. Sept. 13-15: Kentucky Bankers Association Annual Convention, Louisville, Galt House. Sept. 13-16: ABA National Personnel Conference, Dal las, Lowe’s Anatole. Sept. 13-16: Bank Administration Institute Community Bank Presidents’ Forum , Colorado Springs, Colo. Sept. 13-16: Bank M arketing Association Annual Con vention, Washington, D . C ., W ashington Hilton. Sept. 17-18: Robert Morris Associates Loan Group Management W orkshop, Houston, Galleria Plaza. Sept. 20-23: ABA National Bank Card Convention, New Orleans, Hyatt Regency New Orleans. Sept. 23-26: ABA International Payment Systems Con ference, Scottsdale, Ariz., Cam elback Inn. Sep t. 27-30: National Association o f Bank W omen Annual Convention, Chicago, Hyatt Regency Chica goOct. 3-7: ABA Annual Convention, San Francisco. O ct. 11-15: Consum er Bankers Association Annual Conference, Hilton Head, S. C ., Hyatt on Hilton Head. Oct. 18-20: ABA International Banking Conference, New York City, Grand Hyatt Hotel. Oct. 18-21: ABA Large Bank Security Seminar/Insurance and Protection D ivision, Lincolnshire, 111., M arriott’s Lincolnshire. O ct. 18-21: Bank M arketing Association Corporate Marketing C onference, Boston, Colonade Hotel. Oct. 18-23: Independent Bankers Association o f Amer ica Bank Executive D evelopm ent Seminar, Muncie, Ind ., Ball State University. Oct. 22-23: Robert Morris Associates Loan Group Man agem ent Workshop, Chicago, Hyatt Regency Woodfield. Oct. 25-31: ABA National Com pliance School, Nor man, Okla., University of Oklahoma. Oct. 25-27: Bank M arketing Association Product D ev elo p m en t/ P ro d u ct M a n a g e m e n t C o n fe re n c e , Phoenix, Hyatt Regency Phoenix. Oct. 28-30: Bank Marketing Association Marketing in a Community Bank W orkshop, Dallas, Regent Hotel. Nov. 8-11: ABA National Agricultural Bankers Confer ence, Washington, D. C ., Sheraton Washington. Nov. 8-11: Bank Adm inistration Institu te National Convention, Honolulu, Sheraton Waikiki. Nov. 8-19: ABA National Com mercial Lending School, Norman, Okla., University of Oklahoma. Nov. 11-13: Association o f Bank Holding Companies Fall Meeting, New Orleans, New Orleans Hilton. Nov. 15-18: ABA National C orrespondent Banking C onference, Kansas City, Hyatt Regency Kansas City. Nov. 15-18: Robert Morris Associates Annual Fall Con ference, New Orleans. D ec. 1-5: Bank M arketing Association Essentials of Bank M arketing Course — Southwest Extension, Houston, University o f Houston. D ec. 6-9: Bank Administration Institute Money Trans fer D evelopm ents C o n feren ce, New York City, Grand Hyatt Hotel. Jan . 24-27: Bank Administration Institute Bank Pro ductivity Conference (PATH), Atlanta. Jan . 25-28: ABA Insurance and Protection Conference o f Financial Institutions, New Orleans, Hyatt Regency. Jan . 31-F eb . 3: ABA Conference for Branch Adminis trators, Atlanta, Omni International. F e b . 7 -1 0 : ABA B an k T elec o m m u n ica tio n s, Los Angeles, Century Plaza. F e b . 7-10: ABA National T rust C o n feren ce, New Orleans, Hyatt Regency. F eb . 7-19: ABA National Installm ent Credit School, Norman, Okla., University o f Oklahoma. F eb . 10-12: ABA Bank Investm ents Conference, San Francisco, St. Francis Hotel. F eb . 23-26: ABA National Com pliance Conference, Phoenix, Hyatt Regency. F eb . 28-M arch 3: ABA Community Banks Executive Conference, Dallas, Fairm ont Hotel. M arch 2-5: Bank Administration Institute Check Pro cessing C onference, New Orleans, Marriott. M arch 7-10: ABA National Credit Conference, Los, Angeles, Century Plaza. M arch 10-12: ABA Corporate/Commercial Marketing Conference, San Francisco, Hyatt Regency. MID-CONTINENT BANKER for August, 1 9 8 1 Does your correspondent bank make investments that bring the desired return? We do— overnight or over a decade. It’s a big job, staying attuned to all domestic and international money markets. It’s a job for experts who devote all their time to the task. Experts who have access to the latest com munications and computer equip ment. The experts in Mercantile’s Bond/lnvestment Department. No matter how long you want your in vestment capital tied up, we can pro vide a plan that suits your needs. Overnight Investments. Federal funds. Repurchase agreements. Reverse-repurchase agreements. Short-term Investments. U S. Treasury bills. Agency obligations. Tax-free municipal notes. Commercial paper. Large certificates of deposit. Banker’s acceptances. And almost any other type of money market instrument. sions wisely. By keeping you up-to-the minute on constantly-changing money and securities markets. That’s why we keep a service office on Wall Street. And why we’ve invested in computers. And keep access to the Federal Reserve Book Entry System. Longer-term Investments. U S. Treasury Bonds. Agency obligations. Tax-free municipals and other long term debt instruments. Safekeeping Services. The last thing you probably need is the inconven ience and risk of shipping certificates back and forth. Save that hassle by keeping your certificates in our vault: we’ll provide computer reports for your records. All these keep you informed and let us execute your buy/sell orders im mediately. They’re your best guaran tee of desired return. Just Plain Good Advice. No, we can’t make any final decisions for you. But we can help you make deci- We’re with you. Correspondent Banking Division Mercantile Trust Company N.A. St. Louis, MO (314) 425-2404 MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis What’s more, Investment is just one of our correspondent services. So call a Mercantile Banker today. MERCnnTIIE BRfK 7 Insurance ABA Insurance/Protection Conference Scheduled HE ABA will sponsor its first resentatives, brokers, agents, consul national insurance and protection tants, equipment manufacturers) and conference of financial institutions bankers. January 25-28 at the Hyatt Regency in W ith the insurance marketplace New Orleans. According to Donald T. undergoing drastic changes, continues Browne, chairman of the ABA’s insur Mr. Browne, and the rising crime rate ance and protection division and vice in this country, insurance underwri president/insurance division, First ters and brokers are vitally interested Atlanta Corp., the conference will in and concerned with the “state of the have these unique features: art” of security for financial institu 1. It will be the only conference the tions. Current interest in areas of em ABA knows of that will address simul ployee defalcation and E D P and E FTS taneously the subjects of security and security is unparalleled, and bankers’ insurance. ability to maintain adequate insurance 2. The program will be more man coverages for the banking industry agement oriented than technical. It may well depend on their ability to will address the su bjects of com communicate the “security function” munication, cooperation and coordina to the insurance industry. tion between the security and insur “Past approaches to bank security ance functions and other “manage- and protection may not be adequate m e n t’-type subjects of common in for today’s sophisticated banking tech terest to both disciplines will be sched nology,” Carl L. Carter points out. He uled. is conference chairman and vice presi3. It will provide a forum for ex dent/security director, National Bank change of information between provid of Detroit. “With limited knowledge of ers of service (insurance-industry rep- current security and risk potential, the financial officer can offer his financial institution only limited opportunity to improve loss-prevention and control programs. The conference is struc tured to communicate ideas that will bring officers up to date on both tech nology and insurance and protection information.” Two general sessions already are scheduled for the three-day confer ence, with “Crises Planning” set for January 26 and “Selling Yourself and Your Program to Management” for January 27. After each session, break out groups will further develop topic areas with discussion and audience CALL THESE SPECIALISTS participation. Management-oriented topics will Harold E. Ball • Carl W. Buttenschon include: “Anatomy of a Burglary,” “In John E. King • M ilton G. Scarbrough surance and Protection — Areas of In teraction,” “Are Your Employees Get 214 / 559-1173 ting the Message?,” “Exposures You N ever Thought o f,” “ATM Expo sures,” “Do You Think You Know Your E m p loyees?,” “NOW Accounts — Your Involvement and the Effect on Your Program,” “Security Officer: You Are Liable for Your Actions — Are You Protected?” and “What Lies Ahead for Financial Institutions — Are You Pre pared?” P.0. Box 220998, Dallas, Texas 75222 T For faster service on BANK CREDIT INSURANCE <D INDUSTRIAL LIFEINSURANCECOMPANY _ _ /OQ^__ Q A member company of Lr U c s J U Republic Financial Services, Inc 8 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The final conference day will be de voted to essentials of E FT , with identi fication of m oney-transfer systems such as Bankwire, Fed Wire, SW IFT, C H IP S and NACHA — how they operate and identification of potential areas of exposure. A discussion of E F T insurance will include the old bond, E F T rider, new bond and rider and latest EFT-insurance developments. Protection in E F T will relate to em ployees, line security, equipment, E D P room and wire transfer room. For further information on the con ference, contact: Shelly Davis, Insur ance/Protection Division, ABA, 1120 Connecticut Ave., N. W ., Washing ton, DC 20036. • • Father/Son Tennis Match Is Sponsored by Bank The National Father/Son Indoor Tennis Championship, officially recog nized by the U. S. Tennis Association, came into being with the help of Hous ton’s Fannin Bank. The tournament idea actually was the brainchild of Sammy Giammalva, former tennis pro and now general manager/tennis director, Houston Metropolitan Racquet Club. His own two sons teethed on tennis racquets — the younger recently made a spectacu lar pro debut — and Mr. Giammalva thought it would be a great way to call attention to the younger men who were following in their famous fathers’ footsteps. How did Fannin Bank get involved? According to Culver Turlington, vice president/marketing director, “We felt the opportunity to become identi fied with a sports event of this nature was worthwhile and focused interest on father/son relationships. The event offered prestigious association — established tennis stars — and their ‘future star’ sons. We feel the Father/ Son Tennis Tournament will continue to grow and attract favorable attention to the bank and to Houston.” Mr. Turlington said the bank is especially fortunate to have a tennis professional with the contacts and organizational skills to handle tourna ment details — Mr. Giammalva. In this year’s $20,000 championship matches, Roy and Anthony Emerson retained their title and defeated Sam my Giammalva and Sammy Jr. MID-CONTINENT BANKER for August, 1 9 8 1 Rapid transit Speed. It’s the essential ingredient of intelligent m ovem ent of money. It’s also why m ore correspondents choose the rapid transit system at C om m erce. Our day starts with balance reporting at 5 :0 0 A.M. B y 9 :0 0 , w e’re on the phone with custom ers, advising them of how m uch m oney is immedi ately available for investm ent and how m uch is deferred. Same day available balance reporting coupled with timely information on previous day’s ending ledger balance enables correspondents to m anage their funds position accurately and maximize profits. W hat’s m ore, we handle exception item s, exceptionally fast. O ther banks take w eeks to get return item s back to you. Our unique post office box and special zip code allow us to handle these item s quicker. F a st turnaround on return item s m eans less float as well as minimal risk of em barrassm ent and loss. In addition, we have a special problem-solving team for cash letter adjustm ents. Our Special Adjustment Staff (S. A.S.) pays quick attention to your problems. If an e rro r has been made in the checks sent to us for clearing, this special team quickly catch es the erro r and adjusts the correspondent for the proper amount. Large dollar adjustm ents receive immediate priority. Rapid transit at Com m erce adds up to the best availability schedule around. If you’d like to plug into our rapid transit system , call your Correspondent B anker « , » « « « D n n 1r at C om m erce— now. * * L O Ilim e rC e b a ilK No one knows the value of Kansas City tim e b etter than C om m erce. (816) 234-2000 • 10th & Walnut • Kansas City, MO 64141 MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MEMBER FDIC Washington Wire Usury-Rate Override Bill Introduced S the federal budget nears com pletion and Congress can turn its attention to other matters, it’s appar ent that one of the first items on the agenda of the banking committees will be the question of a federal override of unrealistic state usury-rate laws. In the Senate, key Banking Com m ittee m em bers have introduced S 1406. The prime sponsor is Senator Richard Lugar (R.,Ind.), and he has been joined by Senator Jake Garn (R. ,Utah), committee chairman; Sena tor William Proxmire (D.,W is.), for mer chairman and ranking minority m em ber, and Sen ator A lphonse D ’Amato (R.,N.Y.). Other cosponsors are likely to sign up as the bill moves through committee hearings. This bill would eliminate usury ceil ings on all business and agricultural loans and on both open- and closedend consumer credit. In addition, fees for bank cards would be authorized. As was the case with the limitedusury override in the Omnibus Bank ing Law, states would have a threeyear period in which they could ex empt themselves from provisions of the override. The ABA has been vigorous in its support of this bill and of HR 2501, introduced by House Banking Com m ittee m em ber John L a F a lce (D.,N .Y.). The two bills are essentially identical, and ABA President Lee G underson, p resid en t, Bank of Osceola, Wis., has testified in support of the Senate bill before the commit tee. The reception new members of the committees give this bill will be an interesting indication of their thinking about banking issues. In many ways, the bill is a continuation of the interestrate deregulation that was begun with the limited override contained in last year’s Omnibus Banking Law. Among the many other changes brought about by that law: The government has be gun to deregulate the liability side of the bank ledger, as seen in the man date to end Regulation Q limits by 1986 and reform of reserve require ments. Now the usury-override leg- A Editors Note: This column was prepared by the ABA’s public relations division. 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis islation gives Congress an opportunity to act again with respect to the asset side of the ledger. The ABA always has maintained that if a bank must pay market rates for deposits, it should be able to charge market rates for loans. Although the 97th Congress has been in session for several months, there has been little opportunity for any observers to form a clear impres sion of the collective attitudes and working patterns of the two congres sional banking committees. There are several reasons for this. One simply is that the attention of both Congress and the ABA has been dominated by pas sage of the national economic recovery plan, which should be completed in the next two months. It has been diffi cult to get Congress’ attention away from what, properly, it has put at the top of its agenda for the first few months of this session. An exception, of course, has been the series of hear ings held in May by the Senate Bank ing Committee. These hearings gave a comprehensive overview of legislative matters of interest to all segments of the financial industry. However, generally, Congress has been focusing its attention almost ex clusively on problems of the budget and other parts of the Administration’s economic package. Another reason that basic attitudes of committee members still are un- clear is that so many of the members are new to Congress. O f the 40 mem bers of the House Banking Commit tee, nine are serving their first terms. On the Senate side, three of the 15 members were elected for the first time in 1980. Changes in the structure of congres sional leadership brought about by the November elections also mean these committees will move cautiously in taking any legislative initiatives that will tell the public the way the mem bers are likely to think about banking issues. Both committees have new chairm en, and in the Senate, the whole leadership structure is in Re publican hands. For most of the cur rent membership of Congress, this is the first time in their careers that Re publicans have con trolled eith e r house. O f course, it will take some time for members of both parties to become accustomed to this situation. When the debate over the national economic recovery plan finally is end ed, the banking committees will re sume the work of deregulating the banking industry. Congress generally is thought to be more open to longneeded reforms than at any time in recent history. The public and banking community are awaiting their first opportunity to determine how the new Congress will act on specific banking issues. • • ABA Voices Support of Bill To Override State Usury Laws HE economic health of the con sumer-credit industry depends on reform of unrealistic interest-rate ceil ings, ABA President Lee Gunderson told the Senate Banking Committee last month. He was stating the ABA’s support of proposals for federal preemption of state usury ceilings. Mr. Gunderson, president, Bank of Osceola, Wis., pointed out that, with increasing costs of funds to financial institutions and upward pressure on interest rates, banks located in states T with restrictive usury ceilings are un able to meet their customers’ credit needs, particularly in the consumerloan area. As a result of these pres sures, he said, the need for federal preemption of all state usury ceilings has become a major goal of the finan cial industry. Mr. Gunderson emphasized that in dividual states have no impact on fac tors associated with the cost of a finan cial institution’s management of its liabilities (e.g., deposits). It is the MID-CONTINENT BANKER for August, 1 9 8 1 ON DIECIEMI3IER 1913 WIE LAID Ti ll: CORNIERSTONIE FOR TI-IIE ATM IENCI.OSURIE CONCIEFT. Your options are clear: you must select either a factory-crafted building such as those offered by our Manu factured Buildings Division. Or choose a locally designed structure to be built at the site. But remember, only one company is the true financial specialist who is as familiar with the ATM as the enclosure that contains it. Only one company can truthfully claim to be the pioneer of the ATM enclosure concept. Only one company has installed more factorycrafted ATM enclosures than all other manufacturers combined. Only one company has such a wealth of financial experience, extending back 68 years. To December 3, 1913. Whenever you think of your ATM enclosure need, call the company who has thought of it most often. Ask for Harvey B. Leaver at 314/647-3800. He’s expecting to hear from you. Bank Building Corporation BBC Manufactured Buildings, Inc. 12690 60th Street North 813/536-9437 Clearwater, FL 33520 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis .Corcneirtrht^ Z^x^Z s l r i i w s T r - oxcjI - u i - On a sunny winter day more than a generation ago, what was to become the Bank Building Corporation came into existence. Over 8000 financial structures have been created by us since. None more important to you than the ATM enclosure you’re about to buy. BBC MANUFACTUREP 0L>lU>H<óS, l«HC. federal government, the ABA head continued, which has intervened to regulate the liability side of the ledger. “Recent congressional initiatives such as the phasing out of Regulation Q and imposition of universal reserve re quirements, which financial institu tions must maintain on certain de posits, have a major impact on costs associated with a depository institu tion’s management of its liabilities,” Mr. Gunderson testified. “These fac tors, when coupled with the effect of competition among financial interme diaries for deposits (which Congress has decided not to regulate), amplify the need for federal intervention to deregulate the asset side of the ledger (e.g., loans). “As costs associated with extending credit approach or exceed the usury ceiling, the market is constrained from working freely and thus is unable to allocate credit in the most effective manner. “The adverse impact of restrictive usury ceilings is greatest on the lesssophisticated and less-affluent custom ers, as well as first-time credit seekers, who can least afford being shut out of the credit market. Since the risk pre mium generally is greatest for these customers, they either will be shut off totally from legitimate credit markets when the cost of granting loans approaches the usury ceiling or will be able to obtain credit only under much more stringent terms, such as higher down payments and shorter maturity, which they often can ill afford.” Addressing himself to the provision allowing bank-card fees, Mr. Gunder son pointed out that existing prohibi tions on such fees in many states create an unfair burden on lower-income card holders and contribute significantly to the unprofitability of bank-card pro grams. Mr. Gunderson was referring to the card holder who uses his bank credit card simply as a convenient payment device — as a cash or check alternative — w ithout in cu rrin g an in te re st charge. Such a card user, he said, is being subsidized by those other active accounts who pay charges over a period of months, and the card issuer incurs the same processing expenses and cost of funds extended during the “free-use” period while earning no fi nance or usage charge. • • 12 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bank Appoints Council O f Residents as Guide On Serving Its Market In an effort to continue developing innovative and unique methods of re search to better serve its market, Mur freesboro (Tenn.) Bank has established a 20-member community council. It meets quarterly to help the bank keep its finger on the pulse of Rutherford County, in which the bank is located. The council, which represents a cross-section of the bank’s primary market, is expected to serve as an ongoing conduit of information on the area’s current and future banking needs. The council also is expected to play an important role in letting the bank know how people feel about its day-in and day-out performance. Murfreesboro Bank also plans to use the council as a focus research group in its continuing examination of new banking services. When Jack Weatherford, chairman/ CEO of the bank, announced forma tion of the council last spring, he said, “As we move further into the 1980s, it is becoming increasingly important for financial institutions to be mindful of the changing needs of both their cus tomer bases and of their communities as a whole. This is why we believe our community council gives us an impor tant new dimension that can have a major effect on decisions by our man agement.” C o m m u n ity council a p p o in te d by M urfreesboro (Tenn.) B an k to help it continue to serve its m arket is com posed of: ( front ro w , I. to r.) V iv ia n C a rp e n te r, m a rk e tin g rep.; Dr. Ja m e s G a rn e r Jr.; M ary K eeb le H u d d lesto n ; Dr. Ja m e s Bishop; Jo h n Hood, s.v.p./m arketing; M ary Scales, educator; Ed Shires, M urfreesboro M edical C lin ic ; D ennis Brow n, North A m e rica n C a r Co rp .; a n d W illia m Burton, atto rn ey; (back ro w , I. to r.) D avid Hopper, v.p./t.o.; Tom B atey, B atey's O ffice E q u ip m en t; Robert B. M ifflin, s.v.p.; Don M cClaran, M cClaran-R o b ertso n R e alty; Dan M itchell, fa rm er, C h ris tia n a , Tenn.; W illia m G reene, v.p./business a n d fin a n c e , M idd le Tennessee State U n ive rsity; A . C . Puckett, m ayor, LaV e rgn e, Tenn.; J u lia n G o o d p aster, m inister; G eo rge Law , Blue Bird of Tennessee; Larry H ayn e s, H a yn e s Brothers S u p p ly ; Dr. Fred Lovelace a n d Kenneth Victory, C rosslin Su p p ly Co., Sm yrn a, Tenn. Exec. Development School Sponsored by Consumer BA Classes will focus on management relations, non-verbal communication, strategic management, leadership, motivation, conflict management and Developing “people” skills in bank decision-making. managers is the goal of the Executive A management practices index, a Development School for Bankers, a confidential survey of the participants’ week-long intensive-training session subordinates, is taken before the resi sponsored by the Consumer Bankers dent session. A summary of the results Association (CBA) in conjunction with is prepared and shared with the parti the M clntire School of Commerce, cipants during individual counseling University of Virginia. sessions, giving them an opportunity At the school, to be held October to interpret candid feedback from their 18-23 at the University of Virginia, employees. Charlottesville, instructors will work Admission to the school is limited to with participants to help them develop 36 bankers and is open to graduates of the two skills deemed most important three-year banking schools or candi for an effective bank administrator: dates with a title of vice president or “human skill” — the ability to work higher with a minimum of five years’ through and with people to accomplish banking experience. organization goals; and “conceptual For more information, write: Susan skill” — the ability to grasp and under Gowin, Consumer Bankers Associa stand the complexities of the total tion, 1725 K Street, N. W ., Suite 1410, organization. Washington, DC 20006. MID-CONTINENT BANKER for August, 1 9 8 1 A M E R I C A American Bankers Enjoy Smooth Sailing With Harland s Shipshape Checking Service. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H a rla n d ,T h e G reat A m eric a n C h e c k Printer, sm T hirty-Four C o n v e n ie n t Facilities F ro m S ea to S h in in g Sea. HARLAND J O H N H H A R L A N D C O M P A N Y • C H E C K P R IN T E R S P O B O X 10 5 2 5 0 . A T L A N T A . G A 3 0 3 4 8 © HARLAND 1981 U nion N ation al B an k ’s new Personnel Consulting Agency: Professional financial people placing professional financial people. For years, banks and savings and loan institutions have located people to fill key managerial positions through “specialized” employment agencies, through the industry grapevine, or simply by adver tising in the “Help Wanted” section of the newspaper. But now, there’s a finan cial management personnel placement service run by professionals. It’s the Union National Bank Personnel Consulting Agency and it’s headed up by J o e Zegler, Senior Vice President and Union’s Personnel Director. J o e is the dean of Arkan sas bank personnel directors, with more than 25 years’ https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis experience in personnel man agement. He is president of the Arkansas Personnel A sso ciation and he originated the first Personnel Committee of the Arkansas Bankers Asso ciation. J o e has conducted two statewide seminars for bank personnel and chief executive officers. So if you’re looking for that special individual to round out your management team, don’t rely on a classified ad, or the grapevine, or a “specialized” employment agency that places financial personnel one moment and salesmen the next. Call us, instead. Because we are specialists in placing financial management personnel. For all the details on the Union National Bank Personnel Consulting Agency, call J o e Zegler today at (5 0 1 ) 3 7 8 -4 2 5 7 or in Arkansas call toll free 1 -8 0 0 -4 8 2 -8 4 5 0 . Unirai National Bank OF LITTLE ROCK MEMBER FDIC BANKING WORLD ARCHER KEEHN PETRIE Silas Keehn became president of the Chicago Federal Reserve Bank July 1. He succeeds Robert P. Mayo, who re tired March 31 at 65. Since March, 1980, Mr. Keehn had been chairman, Pullman, Inc., Chicago. Before going to that firm, he had spent his entire career with Pittsburgh’s Mellon Bank and its parent HC, Mellon National Corp., also in Pittsburgh. He joined Mellon Bank in 1957 and held various management positions in domestic commercial-lending activities, includ ing service as head of the Middle Western division. Subsequent posts at the bank were: vice president/international, London; vice president and di vision head, national departm ent; senior vice president and head of that department and executive vice presi dent. In 1979, Mr. Keehn became vice president of the HC and, early in 1980, vice chairman of the HC and bank. John G. Heimann, who resigned as Comptroller of the Currency May 15, last month joined Warburg Paribas Becker-A. G. Becker, Inc., New York City, as managing director/chairman of the execu tiv e co m m ittee. Mr. Heimann, who was appointed Comp troller by President Jimmy Carter in 1977, has had a career that included being New York’s superintendent of banks, commissioner of New York state’s Division of Housing and Com munity Renewal and consultant to Robert Weaver when he was Secretary of Housing and Urban Development (HUD). Mr. Heimann also has worked for two Wall Street firms. HEIMANN Liberty National, Oklahoma City. Mr. Talkington travels in Oklahoma, Texas and Kansas. Mr. Anderson is the cor respondent officer in charge of the western Oklahoma, southwest Kansas and west Texas regions. John S. Archer has been elected a commercial banking officer, MissouriKansas department, Commerce Bank, Kansas City. He joined the bank in 1974 and calls on banks in Kansas. Michael J. Petrie, with Commerce since 1979, has been elected a com mercial banking officer/agribusiness department. He works with corre- Killed at H yatt Regency J. Robert Bolton, 63, vice president/commercial banking division, Boatmen’s National, St. Louis, and his wife, Julia, 52, were among those killed July 17 in the collapse of two walkways at Kansas City’s Hyatt Re gency Hotel. Jim Talkington has been promoted to senior vice president and Terry Ander son to vice president, both in the cor respondent banking department, at MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Mr. Bolton joined the bank in 1952, working first in the business development department and join ing the correspondent banking divi sion in 1955. He was made an assis tant vice president in 1957 and elected vice president/commercial banking in 1967. Survivors include two children, Douglas and Ruth Ann Bolton. ANDERSON TALKINGTON spondent banks in Kansas and Mis souri. Continental Bank, Chicago, has opened regional offices in Minnesota and Michigan. The Minnesota office, located in Minneapolis, is managed by Vice President David G. Handy. It is responsible for Continental’s commer cial-banking business, including cor respondent-bank relationships, in Minnesota, North and South Dakota and Montana. Stephen W. Scheetz, vice president, manages the Michigan office, located in Evergreen, near D e troit. This office directs Continental’s com m ercial-len d in g a ctiv ities in southeastern Michigan. The bank also has regional representative offices in Dallas, Houston, Cleveland, Denver, Los Angeles, New York City, San Francisco and Seattle. Huibert A. H. Soutendijk has been prom oted to p resident, N orthern Trust International Banking Corp., New York City, an Edge Act subsidi ary of Chicago’s Northern Trust. He had been vice president/manager since 1975. Joaquin P. Viadero has been promoted to president and Rafael Madan to vice president/manager, Northern Trust Interamerican Bank, Miami, also an Edge Act subsidiary of Northern Trust. Mr. Viadero had been vice president/general manager. Angelo R. “Buddy” Bianchi, New Jersey banking commissioner, has be gun another term as chairman/president, Conference of State Bank Super visors. He is the first person ever to be elected to a second consecutive term as CEO of the group. Also reelected were Michael D. Edwards, Washing ton state banking supervisor, as CSBS 15 president-elect and Sidney A. Bailey, Virginia commissioner of financial in stitutions, as vice president. Mr. Bian chi named Charles L. Childers, presi dent, Tyler (Tex.) Bank, advisory council chairman. Dennis M. Kennedy, senior vice president/cashier, United States National, Omaha, has been elected president, Mid-America Automated Clearing house Association (MACHA). Robert E. Hogue, senior vice presid ent, Liberty National, Oklahoma City, and former MACHA president, continues as an advisory director. Also elected to MACHA posts were: to vice president, Loren R. Anderson, executive vice president, National Bank of Com merce, Lincoln, Neb.; and to treasur er, John J. Cipriano, vice president/ corporate services, Bank of Oklahoma, Tulsa. John P. Borden continues as ex ecutive director/secretary. John D. Mangels, president, Rainier National, Seattle, is the newly elected president of Robert Morris Associates. He succeeds Robert H. Duckworth, executive vice president, First Inter state (formerly First National) of Arizo na, Phoenix. Other new RMA officers are: first vice president, Douglas W. Dodge, executive vice president, Mercantile-Safe Deposit, Baltimore; and second vice president, Jack R. Crigger, executive vice president, Am erican N ational, C hattanooga, Tenn. NORTON Prochnow GSB Post Open MADISON, W IS. — A ninemember committee now is seeking candidates to head the Herbert V. Prochnow Graduate School of Bank ing at the University of Wisconsin. The committee is headed by Robert C. Nelson, chairman of the school’s board of trustees and executive vice president, Indiana Bankers Associa tion. The position will be vacated September 15 by Herbert V. Proch now, who will retire after having headed the school since its begin ning in 1945. The school formerly was known as the Graduate School of Banking, but was renamed last December in hon or of Mr. Prochnow, a retired officer of Chicago’s First National. The committee is looking for someone to fill the salaried, parttime, five-year term and be the school’s top official and chief spokes man in promoting its objectives and extending its contribution and influ ence. Permanent administrative offices are maintained in Madison. All academic activities related to the school, which has an annual en rollment of 1,600, come under the direct or functional control of this position. The school is sponsored by the 16-member Central States Con ference of Bankers Associations. Those wanting to be considered for the post or who want to suggest someone for it should contact: Robert C. Nelson, Executive Vice President, Indiana Bankers Assn., 929 Electric Bldg., 25 Monument Circle, Indianapolis, IN 46204. 16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MANGELS George D. Norton, executive vice president/cashier, P hilad elph ia National, has been elected chairman, Bank Administration Institute. He succeeds N. Berne Hart, president/ chairman/CEO, United Banks of Col orado, Denver. E lected chairmanelect was William H. Dougherty Jr., president, NCNB Corp., Charlotte, N. C. Emile A. Nejame, senior vice president/controller, Bankers Trust, New York City, remains secretary/ treasurer. Banking Issues/Strategies To Be Studied by BAI in Its New Center PARK RID G E, ILL. — The Bank Administration Institute (BAI) has establish ed a C en ter for Banking Issues and Strategies. BAI President Ronald G. Burke, in announcing the center, cited a commitment to the ex amination and interpretation of evolv ing banking issues and formulation of workable solutions. Susan E. Rau is the center’s director. She is a BAI principal systems special ist who joined the institute in 1980. Previously, she had worked as an op erations efficer/staff consultant at Chi cago’s Continental Bank. Two lead projects currently are underway. The first is a research pro ject on strategic planning. Out of this work will come a strategic-planning package for use in the planning process in banks ranging from $200 million to $1 billion in assets. The second major project is a re search program exploring “Current Competitive Impacts on Community Banks.” Here, the BAI will undertake a long-range assessment of competi tive and deregulatory factors and their relationships to the future of commu nity banks. The research will probe market and project trends affecting the financial-services industry, impact of these trends on community banks and community-bank performance, ap propriate responses to specific prob lems that arise from the trends and community-bank product and service offerings. In the future, according to Mr. Burke, the center will be working on major issues dealing with the future of financial services in the context of pro jected competitive, deregulatory and consum er in flu en ces, m arketing strategies, interstate banking and a changing technical framework estab lished by the BAI’s volunteer banker commission. Further information on the center is available from: Susan E. Rau, Direc tor, Center for Banking Issues and Strategies, Bank Administration Insti tute, 303 S. Northwest Highway, Park Ridge, IL 60068. Changes at BAI PARK RIDGE, ILL. — The Bank Administration Institute (BAI) has created four directorates and pro moted key executives to head the newly established posts. Reporting directly to BAI President/CEO Ronald G. Burke are: David Van L. Taylor, executive vice president/banking services; Wayne B. Lewin, executive vice president/ education; R. Gerald Fox, executive vice president/communications; and Michael G. Glass, executive vice president/finance and membership. Mr. Taylor was senior vice presi dent and director/banking services. Mr. Lewin recently returned to the BAI after a year as vice president/ operating services planning, North ern Trust, Chicago. Previously, he had been with the institute from 1976-80. Mr. Fox formerly was senior vice president and director/ communications division. Mr. Glass was vice president/community bank ing and assistant to the president. A former banker, he once was presi dent, Wichita State, and vice presi dent/cashier, Southwest National, Wichita. MID-CONTINENT BANKER for August, 1 9 8 1 C O N D E N S E D S T A T E M E N T O F C O N D IT IO N AS OF JUNE 30, 1981 RESOURCES Cash and Due from Banks................................................................................................................ $ , 231,919,505.72 U. S. Treasury Securities................................................................................................................... 461,023,028.62 Obligations of States and Political Subdivisions....................................................................... 55,114,273.03 Federal Reserve and Corporate Stock........................................................................................... 1,507,149.88 Federal Funds Sold and Securities Purchased Under Agreements to Resell.................... 850,000.00 Loans....................................................................................................................................................... 983,849,202.73 Less: Valuation Portion of the Reserve For Possible Loan Losses...................................... 7,482,097.12 976,367,105.61 Bank Premises and Equipment........................................................................................................ 13,247,895.23 Other Real Estate................................................................................................................................ 6,000,882.11 Customers’ Acceptance Liability.................................................................................................... 85,154.65 Accrued Income Receivable............................................................................................................. 27,092,221.46 Other Assets........................................................................................................................................... 9,514,312.28 TOTAL........................................................................................................................................... $ 1,782,721,528.59 L I A B I L I T I E S Deposits.....................................................................................................................................................$ 1,413,172,275.58 Federal Funds Purchased, Securities Sold Under Agreements to Repurchase and Note Option Account............................................................................................................. 170,131,303.43 Acceptances Outstanding................................................................................................................ 85,154.65 Dividend Payable July 1, 1981.......................................................................................................... 5,347,680.00 Special Dividends Payable............................................................................................................... 2,158,296.94 Accrued Taxes, Interest and Expenses........................................................................................ 24,739,297.27 Deferred Income Tax Portion of the Reserve For Possible Loan Losses..................................................................................................................... ..............1,692,027.20 TOTAL LIABILITIES..................................................................................................................... $ 1,617,326,035.07 C A P I T A L A C C O U N T S Capital Stock........................................................................................................................................... $ 2,800,000.00 Surplus................................................................................................................................................... 47,200,000.00 Undivided Profits............................................................. 112,699,456.10 Capital Portion of Loan Loss and Securities Reserves...........................................................................2,696,037.42 TOTAL CAPITAL ACCOUNTS................................................................................................ ACCOUNTS...................................................................................................$ $ 165,395,493.52 165,395,493.52 TOTAL.............................................................................................................................................. $1,782,721,528.59 TOTAL............................................................................................................................................$ 1,782,721,528.59 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Banking Scene By Dr. LEWIS E. DAVIDS Illinois Bankers Professor of Bank Management Southern Illinois University, Carbondale Gresham 's Law and Cash Discounts RESHAM ’S LAW is named after Sir Thomas Gresham, master of England’s mint in the 16th century. Asked by his sovereign why certain of that nation’s currency circulated rapid ly and other parts were hoarded, his classic response was ‘Bad money drives out good.” If we declare all types of money equal in value-purchasing power, they must actually be kept equal in value or buying power. If they are not, under valued money will be hoarded, ex ported to places where its true value is recognized or, in the case of metallic money, be marked down for sale in the bullion market. Overvalued cheaper money will be kept in circulation. Sir Gresham’s law applies to any money system and to all types of money. It’s interesting to conjecture about some current money developments and how the law of Gresham will react to them. The U. S. Senate has passed SB 414, the Cash Discount Act. It’s similar to HR 31, which passed the House earlier. The leg islation p ro hibits the Federal Reserve from implementing the act and calls for a two-year study on the “effect of charge-card transactions on card issuers, merchants and con sumers. . . . ’ The fact that the Fed will need two years to study charge cards is part of the economic malaise that’s affecting our society. In the desire not to rock the boat, one delays taking ac tion. A few months ago I was visiting a bazaar in Cairo, Egypt, with friends. The merchants there typically don’t post the price of the goods they sell, realizing a preference for the art of bargaining on the part of the typical Egyptian — not to mention the touring American. I’m not very good at hag gling, but some friends who were with me enjoy the phenomenon. One of the first steps in haggling is to mentally discount what the product probably will sell for. Thus an item G 18 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis priced at 100 Egyptian pounds by the merchant probably will sell for 65 pounds eventually. However, the would-be purchaser doesn’t accept the fact that 65 will be the probable amount and makes a counteroffer of 50 pounds. The merchant makes a coun teroffer of, say, 75 pounds and gradual ly — depending on the skill of the bar gainer — a price finally is struck. Should a debit-card transac tion be co n sid ered a cash transaction and entitled to a cash discount? I learned that you must be willing to walk out of a shop, and if the merchant doesn’t follow you, it may indicate that you have misjudged the point at which he will sell. However, the fact that you have knowledge of the bargaining in that particular stall or shop permits you to move down the crowded streets and start again with another merchant offering the same product. If one is dealing in fairly high priced merchandise, another element is in troduced. In this case, the use of American dollars probably will be able to save another 10% or 15% for the buyer. Thus, one had to convert the American dollar into the current ex change rate and consider it as worth 10% to 15% more than that rate. If one doesn’t have American currency but has traveler’s checks, these too are valued at a premium over the Egyptian pound, but at a lower premium than American currency. The larger jew elry shops accept both Visa and Mastercard as well as some European credit cards. Here one has mixed reactions. In one jewelry store the merchant would give a pre mium for the credit card over the Egyptian pound, but discounted from American currency. In another shop, the credit card was accepted at the official rate of exchange. With some exceptions, the Amer ican culture doesn’t encourage or sup port bargaining. This may be changing as a result of the Senate’s Cash Discount Act, which appears likely to pass but in a consider ably different form than that which was originally proposed. One of the Feder al Reserve governors has said she didn’t wish there to be more than a 5% discount for cash. However, wiser heads prevailed and pointed out that setting a figure could result in a truthin-lending situation with disclosure and the like. The argument that the amount of cash discount should be left to the individual merchant and the market won out. Since the Fed can t implement the regulation until the two-year study has been made, time is provided for mer chants, banks, credit-card holders and debit-card holders to consider the alternatives. There appears to be a rather schiz ophrenic attitude on the part of cred it/debit card issuers. One prefers what we may call the right of privacy; that is, one in which it isn’t apparent whether the individual with the card is using a credit or a debit approach. Whether the other major card is a debit or credit card is fairly easily de termined. If the debit card is tied to an electronic transfer system, the account of the purchaser immediately is deb ited and the account of the merchant immediately is credited, providing the transaction is approved. The merchant pays a transfer fee. However, with the use of a credit card, the merchant’s account is im mediately credited when the items are deposited with the bank, less the ser vice charge. The bank, however, is providing credit for a period in the approximate range of about 45 days. Today, in many places debit cards wouldn’t be processable by electronic fund switching. This is because not MID-CONTINENT BANKER for August, 1 9 8 1 CORRESPONDENT QUIZ 1. Who has the fastest-growing Correspondent Bank Department in the South? 2 . Who was the first to offer seminars on new Banking regulations and laws featuring leading national advisors and government officials? 3. Who continues to offer those seminars and regular updates on how to maximize profits at no cost to correspondents? 4. Who offers correspondents special insurance programs at low group rates? 5. Who is "big enough to handle every correspondent need, yet small enough to handle each one of them, one at a time, with expert personal attention? 6. Who gives you senior experience and expertise on everything.. .from transit, data processing, Visa and MasterCard, draft collection, investments, federal funds, safekeeping, credit assistance, loan participation, trust services, wire transfers and Business referrals...to seasoned advice on advertising, marketing, personnel training and even the design and MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 19 many merchants are tied on-line to the system. To the extent that the funds aren t switched electronically, there will be float. While debit-card float isn’t as extensive as credit-card float, it still can be important as volume builds cash discount, say, of 5% to 10% flatly applied to all transactions has a sim plistic appeal for cash transactions. To a somewhat lesser extent — since in the future there will be an almost in stantaneous transfer on the debit card — should a debit card transaction be considered a cash transaction and therefore be entitled to a cash dis count? An affirmative reply raises the ques- tion of how the tradeoff between cash discount and float will be handled and viewed by the purchaser. Undoubted ly there will be considerable variations on how people react, depending on age, market segmentation and other up. demographics. It’s interesting to think what may go It even can be varied by the time of through a merchant’s mind when con day. I recently talked with a merchant fronted with the selection of currency, about the use of checks, credit cards a credit card, a debit card or a check. A and the like. It was that manager’s con tention that there were substantial variations between individuals who shopped during the day and those who shopped in the evening. The latter tended to be younger and therefore not as well established with credit. They also tended to have a lower unit purchase price for their total bill. They tended to purchase more convenience goods with higher markups, but total amounts were considerably lower than John W. Rosbrugh, examiner in the St. Louis those of the people who shopped dur Fed s consumer and community affairs depart ing what would be considered morning ment, answers common questions about federal and afternoon. regidations affecting most hanks. Information given here reflects Mr. Rosbrugh’s opinions, There’s no doubt that a number of not necessarily those of the St. Lotiis Fed or the credit-card holders have stopped using Board of Governors. cards due to the jump in interest-rate ceilings in some states. Whether this is a short-term situation that may reverse itself isn’t known at present. Another issue is whether the cash The following questions and be identified as “state agency” discount should be tied to the total bill answers relate to changes in or “credit bureau.” Any fees or to the product. To illustrate: jewelry disclosures as a result of Reg paid in cash would not need to and furniture typically have a much ulation Z simplification: be included in any itemization higher markup than do groceries. Thus since they have not been fi a jewelry and furniture store typically nanced. Is there any specific could offer a higher cash discount than requirement that dis could a supermarket. Similarly, the closures be separate from all If the creditor gives average-purchase bill total will vary other information? customers the option from store to store. of whether they wish to receive Should a cash discount, say, of 2% No. Disclosures may itemization of the amount fi be extended on purchases of under • be made on the same nanced and the customers fail $20, 3% from $20 to $40, 4% scaled page as the note, on separate to check either box, how will upward, or should a more simple pages, on back of note or secur this be treated? approach be adopted? It will be fasci ity agreement. The only re nating to see how advertisements can quirement is that all required lt is necessary for the be phrased competitively if discounts disclosures be made together • customer to check are on a sliding scale. Undoubtedly the and separated from other in either yes or no to avoid a viola Ralph Nader types will insist on a formation by lines or other tion by the bank. truth-in-cash-discount law! means. When all is said and done, no matter What is the proper what the Fed wishes you, the mer In an itemization of * method to be used in chant, the banker, the credit-card * the amount financed, disclosing on wraparound organizations or the debit-card orga where it has been requested financing? by nizations to do, the fact remains that the customer, may similar the customer is in the driver’s seat. To Wraparound loans are items be grouped or must they the extent that he or she perceives one • considered new trans be individually listed? transaction media to be better than actions and disclosures would another, he or she will utilize that pre Any amount paid to be made as for a refinancing. rogative. • third parties must be A dditional funds advanced Until now, many individuals have itemized separately by party, under this type financing would been enamored with the float associ with an identification of the be subject to rescission if the ated with the credit card. Whether party except that public officials property involved in the trans credit/debit cards will become more or government agencies and action is the customer’s prin attractive rests in a fundamental way credit-reporting agencies may cipal residence. on Gresham’s law. No regulators can abrogate it! • • Fed Answers Reg Questions A A Q Q A A 20 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1981 êB b First Commerce Corporation and First National Bank of Commerce New O rleans .j C O N SO LID A TED S TA TEM EN T OF INCO M E (In Thousands) INTEREST INCOME Interest and fees on loans and leases............................................ Interest on obligations of states and political subdivisions ........... Interest on other investment securities .......................................... Dividends on corporate stock ......................................................... Interest on short-term Investments and bank deposits.................. Total interest income.................................................................... INTEREST EXPENSE Interest on NOW account deposits.................................................. Interest on savings deposits ......................................................... Interest on other consumer time deposits..................................... Interest on time deposits of $100,000 and over .......................... Interest on foreign branch time deposits....................................... Interest on short-term borrowings.................................................. Interest on long-term debt ............................................................. Total interest expense................................................................. NET INTEREST INCOME ................................................................ PROVISION FOR LOAN LOSSES.................................................... NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES .................................................................... OTHER INCOME Service charges on deposit accounts .......................................... Credit card merchant discounts .................................................... Computer services.......................................................................... Trust department fe e s .................................................................... Other operating revenue................................................................. Tota other Income...................................................................... OPERATING EXPENSE Salary expense............................................................................... Employee benefits.......................................................................... Total personnel expense ........................................................... Net occupancy expense................................................................. Equipment expense........................................................................ Litigation settlement........................................................................ Other operating expense .............................................................. Total operating expense............................................................. INCOME BEFORE INCOME TAX EXPENSE AND SECURITIES TRANSACTIONS .......................................... INCOME TAX EXPENSE.................................................................. INCOME BEFORE SECURITIES TRANSACTIONS AND EXTRAORDINARY ITEM ............................................................... Investment securities transactions................................................ Income tax e ffe c t............................................................................ Net securities losses.................................................................. INCOME BEFORE EXTRAORDINARY ITEM ................................. EXTRAORDINARY ITE M .................................................................. NET INCOME..................................................................................... EARNINGS PER SHARE Primary Income before securities transactions and extraordinary item . Income before extraordinary ite m .............................................. Net income ................................................................................. Fully diluted Income before securities transactions and extraordinary item . Income before extraordinary ite m .............................................. Net income ................................................................................. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . Six Months Ended June 30, 1980 1981 $32,284 2,293 17,681 857 22,148 75,263 $29,720 1,342 11,066 611 17,412 60,151 578 2,435 5,463 15,937 1,721 24,079 663 50,876 24,387 2,190 2,647 3,795 10,262 2,549 15,455 919 35,627 24,524 2,220 2S,197 22,304 1,573 1,584 564 882 1,540 6,143 28,340 1,060 1,148 500 516 680 3,904 26,208 7,294 1,752 9,046 1,481 1,698 1,114 4,725 18,064 6,337 1,629 7,966 1,417 1,534 4,162 15,079 10,276 2,650 11,129 3,509 7,626 (11,626) 5,336 (6,290) 1,336 1,068 $ 2,404 7,620 (10,866) 4,998 (5,868) 1,752 $ 1,752 $ $ $ 2.76 0.48 0.87 $ $ $ 2.98 0.69 0.69 $ $ S 2.34 0.48 0.80 2,763 $ $ $ 2.36 0,63 0,63 2,555 Member FDIC CO N SO LID A TED BALANCE SHEET June 30. (In Thousands) ASSETS Cash and due from banks ............................................ Due from banks - tim e................................................... Investment securities: U.S. treasury securities.............................................. Obligations of U.S. agencies and corporations ....... Obligations of states and political subdivisions ....... Other bonds, notes, debentures and corporate stock Total investment securities (market value $297,722,000 and $309,007,000, respectively) . Other short-term Investments........................................ Loans and leases ........................................................... Allowance for loan losses.......................................... Unearned income....................................................... Total net loans and leases..................................... Bank premises and equipment ..................................... Accrued interest on securities and loans...................... Other assets .................................................................. Total assets............................................................. LIABILITIES Deposits in domestic banking offices: Demand deposits........................................ NOW account deposits............................... Savings deposits ........................................ Other consumer time deposits.................... Time deposits of $100,000 and over ......... Foreign branch time deposits over $100,000 . Total deposits .......................................... Short-term borrowings..................................... Accrued interest payable ............................... Accounts payable and other accrued liabilities Long-term d e b t................................................ Total liabilities.......................................... STOCKHOLDERS’ EQUITY Common stock, $5 par value Authorized - 10,000,000 shares Issued - 2,910,049 and 2,658,519 shares, respectively Capital surplus .................................................................. Retained earnings ............................................................. Less - 61,078 and 71,518 shares of common stock in treasury, respectively, at cost ....................................... Total stockholders' equity.......................................... Total liabilities and stockholders' equity.................... 1981 1980 $ 250,977 97,164 $ 171,059 65,789 220,361 10,017 61,777 18,861 161,337 59,470 56,112 18,882 311,016 118,550 417,031 (10,269) (9,949) 396,813 14,327 18,528 )I3,564 $1,220,939 295,801 211.750 396,604 (8,108) (10,538) 377,958 14,052 13,610 6,912 $1,156,931 $ 447,742 26,464 89,816 98,945 217,204 880,171 21,798 901,969 199,883 9,183 23,773 14,386 1,149,194 $ 388.921 14,550 35,300 23,318 73,168 (1,423) 71,745 $1,220,939 100,420 85,719 178,517 753,577 35,097 788,674 241,390 9,806 32,286 21.065 1.093,221 13,293 31,196 __ 20,917 65,406 (1.696) 63,710 $ 1 , 156,931 These financial statements are preliminary unaudited figures, and are subject to adjustment which may or may not be material. 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 S E N IO R M A N A G E M E N T THOMAS G. RAPIER President and Chief Executive Officer EDWARD L. LOWDER Chairman of the Board FRANCIS C. DOYLE Chairman of the Board — Emeritus IAN ARNOF Executive Vice President Chief Financial Officer A. PEYTON BUSH III Executive Vice President Chief Banking Officer MICHAEL A, FLICK Executive Vice President Chief Credit Policy Officer MICHAEL JESSE SHANNON Executive Vice President Commercial Banking Division W. STANLEY BLACK Senior Vice President Retail Banking and Marketing Division and International Department A. JAMES DURICA Senior Vice President Financial Reporting and Control Division JOSEPH C. WHITE JACK W. PARKER Senior Vice President Senior Vice President Financial Management and Economist Investments Division MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CHRISTOPHER B. YOUNG Executive Vice President Chairman, Senior Loan Committee JOSEPH V. WILSON III Senior Vice President Operations Division 21 Selling / Marketing Bush, Garn, Kemp Invited to Speak at BMA Convention HUCK V WHEAT IC E PR E SID E N T George Bush; Jake Gain, U. S. senator and chairm an, Banking, H ousing and Urban Affairs Committee; and Jack F. Kemp, U. S. rep resen ta tiv e and House Republican conference chair man, have been invited to address the 66th annual convention of the Bank Marketing Association (BMA) when it convenes S e p tem b e r 13-16 in Washington, D. C. More than 2,000 bank marketing professionals are expected to attend the convention, with sessions sched uled on all phases of bank marketing, including advertising and promotion, business development, sales training, electronic banking, marketing man agement, marketing research, specialinterest issues and strategic planning. Presentations will be made in a vari ety of program formats, including five general sessions, 15 departm ental, 17 workshops, two luncheon sessions and three dawnduster sessions, as well as informal rap sessions. More than 150 suppliers will exhibit products pertaining to the banking in dustry. The products include display, marketing, public relations, training and research services, along with bank equipment and advertising specialty products. More than 60 speakers have been invited to address the meeting. Head liners in addition to Messrs. Bush, Garn and Kemp, include Dhan G. Mukerji, president, MacDonald Moti vational R esearch C e n te r; Leo Cherne, executive director, Research Institute of America; Nat S. Rogers, chairm an, F irst C ity N ational, Houston; Joseph W. Ostrow, execu tive vice president, Young & Rubicam; Kenneth J. Rudnick, vice president, Continental Bank, Chicago; and Willis 22 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis GARN HALE BUSH Interstate Banking Talk “Interstate Banking: It Is Here and There Is Much More to Come,” is the title of a talk scheduled for the BMA convention in September. The speaker will be Orin Kramer, former associate director of the White House domestic policy staff during the Carter Administration. Mr. Kramer is the principal architect of the White House report on inter state banking and now is a consultant to banks for McKinsey & Co., New York City. Following the talk, a panel discus sion will assess the implications of Mr. Kramer’s message. Among the panelists will be L. J. Hebert Jr., president, LaFourche National, Thibodaux, La. J. Wheat, executive vice president, Liberty National, Oklahoma City. Ronald Hale, executive vice presi dent, City National, Bryan, Tex., is BMA president. Prior to the convention, BMA mem bers will elect new officers. Those nominated include Leonard W. Huek, execu tiv e vice p resid en t, V alley N ational, Phoenix, as p resid en t; Richard M. Rosenberg, vice chairman, Wells Fargo Bank, San Francisco, as first vice president; Barry I. Deutsch, vice president, Mellon Bank, Pitts burgh, as second vice president; and James W. Wentling, corporate vice president/marketing, Flagship Banks, M iam i, as treasu rer. Among the nominees for BMA directors is H. F. (Hal) Means Jr., senior vice president, Peoples National, Tyler, Tex. New officers and directors will take office during the convention. ROGERS In addition to its annual “best of TV” and “best of radio” competitions, the BMA is including a new competition, “best of print, ” in its 1981 bank adver tising awards program. Winners in the three competitions will receive certificates of excellence. In addition, the top 30 “best of TV” commercial entries will appear in a full-length feature film to premier at the convention and winning “best of radio” commercials will be incorpo rated into an audio cassette program. Ads judged as representing the finest financial print advertising will be dis played at the convention. Categories for the new “best of print” competition include newspaper and magazine ads, internal/external b roch u res and n ew slette rs, sales promotion pieces, specialty advertis ing materials, outdoor transit advertis ing and direct mail. • • Ag-Marketing Conference Set for Oct. in K.C. Developments in agricultural tech nology, changing trends in marketing techniques and advances in electronic communication tools will be presented at the 1981 National Agri-Marketing Association outlook conference, set for October 19-20 at the Crown Center Hotel, Kansas City. Theme for this year’s conference will be “Keeping Up or Catching Up — Profiting From Trends in AgriMarketing.” The conference is open to all marketers, communicators, lend ers, educators, farmers and other pro fessionals with an interest in agricultu ral marketing. More information is available from NAMA, National Outlook Confer ence, 8340 Mission Road, Suite 112, Prairie Village, KS 66206. MID-CONTINENT BANKER for August, 1 9 8 1 “It’s a happy them e-w ith everything happily going for you! All the materials are ready right now for the launching of your 1982 Christmas Club. It’s not so far away, you know! You can get this colorful folder full of coordinating materials just by writing today, or call toll free.*” Your 1982 Christmas Club power pack includes Coupon Book, Carol Book, Cut-out Application, Member Envelope, Christmas Club Check, Window Envelope, Soft-sheet Poster, Statement Enclosure, Shopping & Christmas Card List, Application Folder, Teller Badge, Easel Display Cards, Pocket Calendar.. .selected and market tested Premiums. chRistmas c la b a corporation The O riginal *Ms. Renée Brett: (800) 523-9334 New York, New Jersey, Maryland, Delaware; (800) 523-9440 all other states except Pennsylvania; (215) 258-6101 Pennsylvania residents. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1981 Christmas Club a Corporation, Easton, PA. P.O. Box 20, Easton, Pennsylvania 18042 This coordinated collection was specially selected to excite. Inspired by the magnificence of French cuisine, our collection includes three proven performers: Beautiful and fresh Spring Blossom fine ch in a; sparkling French lead crystal with faceted accessories; and finally, Corning ware11 French White™ cookware. At Salem, we're prepared to offer you a variety of programs tailored to meet your needs and designed to target your particular objectives. W hether it be https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis to g enerate low interest deposits, M oney Market Certificates, or N.O.W. accounts, we have more proven complete programs to choose from and more pro motional experience to depend on. Let us plan a program for you from our French collection . We can help you co m b in e flair with savoir-faire. For m ore information write or phone Jay H. Keller The Salem China Co. 1000 SOUTH BROADW AY, SALEM, O HIO 44460 216/337 8771 Regulatory News Bank-Capital Definition Broadened B R O A D E N E D d efinition of bank capital has been supplied to the three fed eral bank regulatory agencies for use in determining ade quacy of capital in banks they super vise. The definition was proposed by the Federal Financial Institutions E x amination Council, which requested comment by August 31. Purpose of the proposal is to promote uniformity among federal bank regulators. Bank capital should be defined as consisting of two elements — primary and secondary capital, according to the proposal. Primary capital would consist of common and perpetual preferred stock, surplus and undivided profits, contingency and other capital re serves, mandatory convertible instru ments and 100% of the allowances for possible loan losses. Secondary capital would consist of limited-life preferred stock and sub ordinated notes and d eb en tu res, according to the proposal. Secondary capital would (1) amount to no more than 50% of the amount of primary capital, and (2) financing instruments in secondary capital would be phased out of the bank’s capital as they approached maturity. The council noted that the three agencies — the Fed, the FD IC and the Comptroller of the Currency — would continue to stress the importance of an adequate level of primary capital for the safe and sound operation of banks. Lim ited-life preferred stock and subordinated notes and debentures were viewed by the council as having some, but not all, of the characteristics of capital and thus would be consid ered elig ib le for consideration as second capital if: • These instruments have an origi nal final maturity of at least 10 years and an original w eighted average maturity of at least seven years; • Any serial of installment repay ments, once begun, are made at least annually, with each payment no less than the previous one; • Together, such financing equals no more than half the amount of pri mary capital; and • The percent of such issues consid ered as capital declines by a fifth each year when their maturity is less than five years distant. This would mean that such instruments would have no capital value when their maturity is less than a year. The council made clear that, although its proposal was aimed at promoting uniformity among federal bank regulators, individual agencies have the flexibility to depart from the guidelines when circumstances war rant. • • D ID C Steps Up Schedule To Phase O ut Ceilings On Interest Rates The Depository Institutions Dereg ulation Committee (DIDC), at its June 25 meeting, adopted a schedule to step up the phaseout of federally imposed in te re st-ra te ceilin gs on deposits under $100,000 at all federally insured commercial and mutual savings banks and S&Ls. The D IDC voted against a proposal made by Federal Home Loan Bank Board Chairman Richard Pratt that would have permitted thrifts to pay 25 basis points more than commercial banks on six-month money-market certificates at all interest-rate levels. Currently, thrifts can offer this 25basis-point differential only when the six-month Treasury-bill rate is above IV Sc and below 8%%. Finally, the committee decided to submit for public comment several proposals relating to new short-term instruments and to ask for public com ment on ways to boost ceilings on pass book accounts. It postponed consideration of dereg ulating ceilings on IRA and Keogh accounts until its September meeting. At the time of the D ID C ’s June meet ing, Congress was considering expand ing eligibility of these accounts to all individuals, and so the committee felt any changes in regulations concerning these accounts should be made after Congress acted on the matter. Here is the interest-rate-phaseout schedule as adopted by the D IDC: August 1, 1981: 1. Remove all rate ceilings on all deposits with maturities of four years and more. 2. Index rate ceilings for 2 1/2-year-to-four-year de posits to the 2V2-year Treasury secur- MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ity and retain a 25-basis-point differen tial. August 1, 1982: 1. Eliminate ceil ings on three-to-four-year deposits. 2. Index rate ceilings for two-to-threeyear deposits to the two-year Treasury security and retain the differential as above. August 1, 1983: 1. Eliminate ceil ings on two-to-three-year deposits. 2. Index rate ceilings for one-to-two-year deposits to the one-year Treasury security. August 1, 1984: 1. Eliminate ceil ings on one-to-two-year deposits. 2. Index rate ceilings for all time deposits under one year to comparable Treas ury-security yields as above. August 1, 1985: 1. Eliminate ceil ings on all time deposits. In other action, Treasury Secretary Donald Regan was elected D ID C chairman, and Fed Chairman Paul Volcker was named D ID C vice chair man. The D ID C ’s principal office has been moved from the Federal Reserve Building to the Treasury Department. Check-Guarantee, Credit-Card Proposals Made by FDIC The FD IC has proposed permitting banks to offer two customer services currently restricted by regulations — issuing check-guarantee cards and sponsoring customers for credit cards issued by correspondents and assum ing responsibility in case of card holder default. A check-guarantee card assures merchants that a customer has suffi cient funds on deposit with the issuing bank to cover checks up to a specified limit. Such programs may be tied to an overdraft feature or to ATM services. Under the credit-card program, the sponsoring bank lends its credit rating to its customers while the correspon dent bank does the billing and receives the interest. As proposed, a sponsor ing bank would have to perform a cred it check on each applicant for a card and merchants would be required to verify credit purchases at the point of sale. Both practices are in limited use throughout the nation. 25 When your agricultural customers need additional help. We make things grow. Now and then, when you need help with your better agricultural customers, it’s nice to be lined up with the First National Bank of Kansas City. We’ve been lending money to farmers and the agricultural com munity for years and years. As a matter of fact, we have two officers who do nothing else. Sometimes, as much as you want to help make things grow for your customers, you need help doing it. That’s when you should contact us. We can help you help. Call and ask for Gene Foncannon or Jim Stallbaumer. □ FIRST NATIONAL DiarterBank KANSAS CITY 10TH AND BALTIMORE □ BOX 38 □ KANSAS CITY, MO 64183 □ (816) 221-2800 □ MEMBER FDIC 26 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1 9 8 1 Ag Bankers' Viewpoint Bright Future Predicted for Farming But Bankers' Role W ill Be Tougher R EL A TIV E L Y bright future is predicted for farmers by bankers in the Mid-Continent area. Despite dire predictions that have been publi cized extensively in the media, farm ing will continue to be a viable — although a changing — industry, they contend. But it behooves bankers involved in ag lending to keep abreast of the changes facing agriculture so their in stitutions will be kept fine tuned to service the financial needs of the in dustry. The trend of farms continuing to in crease in size in both acreage and total sales volume is predicted by Byron Baker, manager, agricultural services, First National, Belleville, 111. Farms with less than $20,000 in gross sales will decrease significantly in number during the next few years, he says. This is due to the high capital requirements necessary to operate a farm as well as the increased cost of capitalization of farms in recent years. Poor managers are being weeded out due to a number of factors, Mr. Baker says. The small inefficient mana ger’s acreage will be added to larger farmland operations as natural attrition takes place.This doesn’t mean own ership will vest in these larger oper ations; much of the land will be owned by absentee landowners and/or other business entities. Many managers of large farms will lease a good portion of their total acreage. “I feel that the family farm isn’t doomed, Mr. Baker says, “however, the perception of what a family farm is will change to the image of such a farm as a business.’ Good farmers typically also are good businessmen.” The complexity of the total farming operation will require an educated banker in all aspects of farming to keep up with the lending needs and the lending expertise needed to serve farmers, he says. Smaller banks will have to draw on the expertise of larger banks that can allocate more full-time attention to the agricultural needs of the area. Tools such as discounting privileges provide that the 1980 amendments to the Farm A Credit Act will provide an opportunity for acquisition of funds by banks to meet the ag credit needs of their com m unities. D etails will have to be worked out concerning how a bank also can provide these discount privileges to its correspondent customers, Mr. Baker says. “I feel the mobility of money will tend to bring rates closer together for all types of banks,” he says. Conse quently, there should be less of a prob lem in harmonizing interest rates be tween correspondent relationships. Mr. Baker sees a slowing of the infla tion rate and a subsequent slowing down of rising farmland prices. This slower increase in land values will eliminate any offset to poor manage ment practices since lower liquidity will not meet the cash-flow needs of such farmers in the future. Agricultural lending will play a more important part in the future growth of ag banks than it has in the past, says Lonnie L. Kinchen, president, Bank of Kennett, Mo. Agricultural bankers must change with the times and be come professionals in ag lending in order to keep up with today’s modern farm managers. He predicts that the farmer and those businesses that support farmers MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis will be a major source of deposits in the future. “I expect to see less farm own ership and more rented land managed by young, efficient, professional farm ers,” he says. Competition for land to rent is keen and the young farmer will better utilize his capital by investing in modern, efficient equipment to im press landowners. Mr. Kinchen says the family farm isn’t doomed and never will be. Too much emphasis is placed on saving the family farm. The corporate farm and the commercial family farm go hand in hand, in his opinion. This structure will influence prices more than the smaller family farm but the family farm — through good management and effi cient operations — will compete and probably enjoy a better return than it would if there were no corporate farms or large commercial family farms. In the Kennett area, growth hasn’t been by corporate farms but by indi vidual farms getting larger as neigh bors quit or retire. Thus, family farms are approaching the status of commer cial family farms. Mr. Kinchen believes agriculture in the future should be divided into two segments: the commercial farm, com prising both large family and corporate operations, and sm all, in efficien t units. Ag programs should be directed to the commercial farmer, with the small, inefficient units being treated as a social problem with totally different programs. “I’m bullish on agriculture and not at all discouraged about the future of farming,” Mr. Kinchen says. Farming is in the midst of a great time of volatility and challenge that undoubtedly will bring about much change, says Glenn E. Heitz, presi dent, Federal Land Bank of St. Louis. Consequently, ag lenders must be prepared to adapt to farmers’ changing credit needs. Mr. Heitz believes that the family farm will survive and continue as a keystone in the framework of Amer ican agriculture, due to the fact that no corporate entity can match the effi ciency of the family farm. Not only does the family farm’s labor base pro27 vide that efficiency, the determination and willingness to sacrifice when Amendments' Effect needed can’t be underestimated in the The Farm Credit Act amend productivity and longevity of the fami ments of 1980 are expected to have ly-farm system. little short-run effect on the present This doesn’t mean that the family mix of ag-lending between banks and farm won’t change, he adds. Agricul the Farm Credit System in the Midture is likely to witness a split trend in South, according to John H. Hem family farms: Some family units will bree, senior vice president, Union Planters National, Memphis. expand considerably and compare in Although the amendments are ex size with the largest corporate farms; pected to expand the market poten others will retain a semblance to to tial of the system, interest rates will day’s smaller family operations. continue to be an important factor in In the future, the percentage of total borrowing patterns that have led production probably will be domi many agri-borrowers to seek lower nated by the few, he says. But among rates from the system. these few will be a representative Commercial banks have the ex group of family-owned and operated pertise in specialized banking ser farms. Many of these farms likely will vices and it remains to be seen how the Farm Credit System will com involve two or three generations of the pete on this level, Mr. Hembree family in the overall operation. says. We are seeing a slowdown in farm Commercial bankers must be expansion, Mr. H eitz says. Those knowledgeable with the new struc farmers who recently purchased addi ture of the Farm Credit System so tional acreage and have already “dollar they can formulate competitive averaged” the purchase price with that marketing and lending activities. of the remainder of the unit generally aren’t inclined to assume more debt for added purchases. come even more complex. Lines of Most other farmers are taking a credit will grow even bigger. Borrow “wait-and-see” stance, primarily be ers will be more financially sophisti cause of higher production costs, in cated, and credit demand is going to cluding interest rates. The land market increase substantially. Added pressure currently is populated with more than will be encountered if government the usual number of investor-type lending is curtailed, he says. buyers seeking tax shelters, a change Agriculture, with its increasing de in trend from the past several years. pendence on exports, is going to face This is a short-term market aberra an extremely volatile income situation. tion, he says, and when money costs But Mr. Heitz believes farming will slacken somewhat and commodity become more profitable in the long prices becom e profitable, farmers run, and farmers’ standard of living again will plunge into the land market will continue to improve. and the trend some have labeled The future of farm ing rem ains “agrarian cannibalism” will continue, bright, he says, yet, the lender’s job albeit at a more cautious rate. will not get any easier. “I think we will He says that a numeric majority of see in such an environment a con farms will in all likelihood provide a tinued movement toward cash-flow much smaller, but nonetheless impor lending as opposed to security lend tant, share of farm products. Many of ing. Lenders dealing with agriculture these smaller enterprises will be fami will have to become farm-finance spe ly farms, but they will more closely cialists. resemble the operation of today ’s part“Above all, in this coming atmos time farm. Off-farm income will, in phere of complexity and increasing effect, subsidize these units and allow risks, lenders will have to work even them to remain productive. This off- more closely with the borrower and farm income also will act to stabilize with one another.” Reporting on the ag situation from net income in the face of what could be violent shifts in farm income and, con Kansas is James S. Birkbeck, presi sequently, provide a more financially dent, Denison State, Holton, who sound operation that can attract the feels the future for ag lending is se credit needed to remain efficient. cure. “We had a tough year in. 1980 and I To those involved in supplying agri culture with credit, this means that the think 1981 will be somewhat better,” extension of constructive credit is he says. “However, looking further going to get even tougher. The margin ahead, I think we are going to have for error will be sliced so thin that, for greater farm and livestock profitabil all practical purposes, it will dis ity.” appear. Credit requirements will beGreater profitability and cash-flow 28 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis will solve the problems facing good, efficient farmers, he says, but they won’t solve the problems of some of the highly leveraged operations and the somewhat marginal and poorly margined operations. Most likely, such operations will be sold, merged or rented in the future. Cash flow is one of the major prob lems facing operators, he says. This is especially troublesome due to bigger expenses and higher interest rates. Some highly leveraged operators who had large acreages of corn last year are selling small tracts of real estate to take care of their cash-flow problems. This probably affects younger operators especially hard, since they usually are highly leveraged. Mr. Birkbeck doesn’t feel the family farm is doomed, but it is going to be come larger and more specialized, changes that will cut down on the num ber of such farms. He sees more rented farmland in the future as younger operators use their capital for livestock and equipment rather than for real estate. “The trend of fewer farmers and larger farms has been with us a number of years,” says Loren D. Richard, agri cultural loan officer/correspondent bank officer, H utchinson (K an.) National. “The family farm of one-half section or less, as we knew it, is sup plemented by a job in town today. Family farms now are Sub-Chapter S corporations, with their stockholders primarily those who farm it. We are seeing more outside money going into agriculture, and we will see more in coming years. If this trend continues, much of the farmland and farms them selves will be out of the hands of the people who farm them. I believe more land will be rented, first of all because of the increase of off-the-farm interest in farmland because of the inflation in its value. It’s competitive for a farmer to buy compared to an individual who is looking for an investment. The in vestor or investors do not have to buy their groceries from production of the land. This is a big consideration today when most farmland will not pay for itself solely from production of that land.” Mr. Richard points out that the larg er concentration of farmland under single management demanding everhigher loan limits does send a lot of loan business to larger correspondent banks, which use local banks mainly as pass-throughs. He feels that with these increased credit needs, the correspon dent relationship in future years will be of utmost importance in financing agriculture. With today’s high cost of MID-CONTINENT BANKER for August, 1 9 8 1 funds, he continues, it’s increasingly more difficult for rural and correspon dent banks to agree on interest rates. “Most of our downstream corre spondent banks,” he explains, “have prime rates fairly close to ours and possibly Vi% to 1% lower. In these cases, they have had to pass on the rate necessary to sell the loan. In some iso lated cases, they have done so without any margin allowed for the old portion of the loan. We have floated loans on the prime rate of a bank, selling the loan with a floor and a ceiling added in case of any major fluctuations between the two rates. This has worked with reasonable success._________________ One banker foresees "quite a change" in the makeup of farms throughout the country. He points out that it is becom ing increasingly difficult for young farmers to pay the price required to own farms. “I feel the No. 1 problem in ag lend ing and other forms of lending as well is the high cost of loanable funds. This is a prime time for the saver, and I ’m glad to see the small saver get a break. With deregulation as we see it coming, the lender will be at the mercy of his com petitor as to what he will have to pay for his source of funds. Surely, there is a happy medium in which the borrow er and saver both are treated fairly, with less differential between large and small savers. The interest rate, along with unregulated competition pulling needed funds out of local mar kets and into foreign investments, def initely has stunted business growth. This applies whether that business be farming, small business or giant cor poration. We have a lot of smaller in dustries in Kansas, mostly manufactur ing some form of farm equipment. These companies are surviving, but, for the most part, not forming the capital necessary for growth and pro viding additional jobs. “In summary, we in Kansas and in most parts of our nation are dependent on the agricultural economy. When agriculture is down, as it is today, we definitely are aware of it, as we are down with it.” E. H. Brauer Jr., president/CEO, Mercantile Bank, Shelbina, Mo., be lieves the Farm Credit Act amend ments of 1980 and other Farm Credit acts prior to that year are making the Farm Credit System a difficult orga nization for rural banks to compete with in the ag-lending area. “Whereas, the Farm Credit System MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Now, First National Bank has a new source of funds available for cattle and grain loans. FIRST AGCORP. a „ agricultural credit corporation that is a wholly owned, non-banking sub sidiary of First Midwest Bancorp., Inc. First Agcorp is another of the many correspondent services available through the First National Bank of St. Joseph. Just call John Kam, “ 5 " Where your success is a tradition. First National Bank St. Joseph, M issouri 64502 Call: (816) 279-2721 Affiliate of First Midwest Bancorp., Inc. Member F.D.I.C. 29 (FCS) was allowed to deal only in direct loans with farmers in ag-lending areas, its banks now are allowed to go into all kinds of ag-related areas. Also, we find the new amendments have in creased the length of maturity on the short- and intermediate-term loans to the point where they can justify about any loan they want to insofar as matur ity is concerned. “The big problem we encounter here in northeast Missouri in dealing with the FCS is the fact that it is oper ating on a much narrower margin as far as profit is concerned than are banks. Therefore, FCS banks are difficult to compete with on interest rates. The Production Credit Association (PCA) in northeast Missouri operates on a margin U/2% above the average cost of funds received from the investing pub lic. In the past, it has not been difficult for banks to compete with PCAs and the Farm Credit Association (FCA) be cause of their lack of experienced loan officers and expertise in the lending area. However, in the past two to three years, they have done much better in paying reasonable salaries to em ployees and have a good benefits pro gram, and all this allows them to hire good people. “I strongly believe that in the fu ture, the FCA will be our strongest competitor by far in areas where it has good, experienced loan personnel. I believe that we, as rural bankers, are going to have to be innovative in our ideas to compete with the FCS for agri cultural loans.” Mr. Brauer also foresees “quite a ch an g e” in the makeup of farms throughout the country. He points out that it is becoming increasingly diffi cult for young farmers to pay the price required to own farms. With interest rates from 17% to 18% in rural com munities and land selling from $1,000 to $2,000 an acre in Mr. Brauer’s area, it’s impossible for a young man to bor row practically all the money to buy a farm and make that kind of return on the land itself. Because of this difficul ty in obtaining farm ownership, Mr. Brauer predicts that in the near future, farm ownership will become more and more concentrated in outside inves tors’ hands, with the family farm be coming a tenant-type operation. He says farms already are becoming larger in acreage in his area, and he thinks that trend will continue, with good young farmers handling more land in this tenant-type operation. “One problem being encountered at this point by correspondent banks in the ag-lending area,” Mr. Brauer con tinues, “is lack of ag-lending expertise on the part of the bank with which they are corresponding. Many larger banks today have not found it necessary to put a strong agricultural department in their correspondent divisions. In the past, that has not been too bad, as ag credits were not large compared to other com m ercial borrowings and were not so complicated. However, as farms get larger and farming opera tions get larger and borrowing require ments get larger, a much greater analysis is needed in the area of ag credits. Without proper analysis in the future, there is going to be a great volume of loan losses in the ag-credit area.” Mr. Brauer doesn’t find much diffi culty any longer in harmonizing in terest rates on participation loans from the rural area. At one point, he says, before investors became sophisticated in the agricultural area, this was a problem , but rural banks now are paying the same rates for money as are city banks. Therefore, rural customers realize they must pay the going in terest rates or the money will not be Farm Equipment Sales to Drop ARM EQ U IPM EN T and machinery manufacturers in the U. S. feel the 1981 dollar volume for retail sales will be up only 5% to 8% over last year. The forecast resulted from a survey of member companies of the Farm & Industrial Equipment Institute (FIE I), Chicago, and the results are considerably less optimistic than was the outlook at the end of 1980. Key factors influencing the less-optimistic outlook by manufacturers include reduction in government support programs, continued rising inflation, high interest rates and low farm prices. Those who thought business may improve listed these reasons: aggressive industry pricing actions, possible lower interest rates by harvest time and a pent-up demand for many products. The survey was taken after the F IE I reported that sales of major farm machinery for the first four months of 1981 were running behind 1980, a year that saw sales drop significantly below previous years totals. F 30 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis available to them. Harmonizing of rates should not be a problem between rural and city banks as far as participa tions are concerned, he believes. Despite all the problems of ag lend ing, Mr. Brauer sees a good future for it. However, he adds, rural banks must become more aggressive in their lend ing policies and be more willing to go out and lend money to farmers at their places of business. We, as agricultural banks,” he con cludes, “may have to be willing to take a lesser margin on our loans than in the past because of increased competition from the Farm Credit Administration. I believe we will either have the choice of taking a lesser margin or becoming investment-oriented more than agoriented. I cannot stress too strongly the fact that we are going to see an increased level of lending from the FCA and that we must look critically at our lending policies and at how well we are doing the job in the ag-lending field.” Another banker who warned about increased competition from the FCS is Richard E. Bonewitz, vice president, Indiana National, Indianapolis. He be lieves the Farm Credit Act amend ments of 1980 will place increased pressure on commercial banks to stay competitive with the FCS. He points out that the amendments reinforce the quasi-governmental status of the FCS, with its limited taxability and ability to continue to obtain low-cost funds. The amendments allow the FCS to com pete with commercial banks in provid ing international services to cooper atives; allow PCAs to more actively seek participations with rural banks in direct competition with correspondent banks and provide for liberalized poli cies that allow the FC S to lend to corporate borrowers for “marketingand processing-type” loans. In the past, this system has stretched its poli cies to finance various types of agri cultural businesses, he says, and will continue to do in the future as it strives to be a commercial-lending and bank ing organization. He advises commer cial banks to find ways to extend addi tional services if they want to retain their customer base. “With the much higher interest-rate levels experienced during the last 18 months,” Mr. Bonewitz continues, we have had less of a problem in har monizing the interest rate on partic ipations between the country bank and our rate than we have in the past. Rural banks have been faced with much higher costs of funds because of m oney-m arket C D s, which have placed their cost of funds closer to (Continued on page 66) MID-CONTINENT BANKER for August, 1 9 8 1 The long-term specialists in farm credit. 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 6 0 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 5 0 0 Federal Land Bank Associations across the country. MID-CONTINENT BANKER for August, 1 9 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. The Land Bank The Federal Land Banks of: Houston, TX 430 Lamar 77001 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 31 Farm Credit Act Amendments of 1980 Can Help Bankers Help Farmers By Donald E. W ilkinson, Governor, Farm Credit Administration, W ashington, D . C. H E B U S IN E S S o f the Farm Credit System (FCS) is not to help agricultural banks! Rather, its only business is to improve the income and well-being of American farmers and ranchers by furnishing sound, ade quate and constructive credit and closely related services to them, their cooperatives and to selected farmrelated businesses necessary for effi cient farm operations. In some cases, serving the credit needs of agriculture means channeling some of the funds through commercial banks. And some of the changes brought about by the 1980 amend ments to the Farm Credit Act of 1971 will make it easier for the FC S to serve agricu ltu re through com m ercial banks. With that understanding, let’s look at how the FCS and agricultural banks can work together to help agriculture, since helping agriculture is their com mon objective. I would like to set the stage by re viewing the specifics of the key amend ments to the 1971 act affecting the working relationship between banks and the FCS. The “other financial institution” (O FI) provision is the amendment bankers are most interested in. It is one of the major modifications of the Farm Credit Act of 1971, because it expands significantly the access of O FIs to the Federal Interm ediate Credit Bank (FICB) discount window. I ’m sure most bankers recall the de bate that centered on this amendment. Opponents argued that the amend ment restricted rather than expanded discount-window access. Actually, what this amendment does for the first time is define what the access will be. Let’s take a step back in F IC B his tory to see what the precedents were that established the pattern for dis count-window access before the 1980 amendments. Actually, the FICBs originally were chartered in 1923 to discount agri cultural paper for commercial banks This article is based on remarks made by Mr. Wilkinson at this years annual con vention of the Independent Bankers Asso ciation of America. 32 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and OFIs. However, this banking au thority never achieved its intended purpose of making short-term credit more readily available to farmers. For one reason or another, commercial banks and other lending institutions didn’t avail themselves of the author ity. As a consequence, the Production C red it A ssociations (PCAs) w ere established in 1933 to distribute dis counted funds to farmers. But even though PCAs were established to fill the void left by the commercial bank ing industry, the FIC B authority to provide a source of credit to O FIs sig nificantly committed to financing agri culture remained intact. As time went on, the banking indus try showed only sporadic interest in accessing the discount privilege. D e mand on the system was heavy when money was tight and bank loan-todeposit ratios were temporarily high. This, of course, stressed the F C S ’s funding mechanisms at their most vulnerable times. This stress during vulnerable periods forced the FCS to develop and administer certain re quirements for access to the FIC B dis count window. I am neither pointing a finger at commercial banks nor condoning the past actions of the FCS. Rather, my intention is to review the past in an effort to shed some light on the cir cum stances in which agricultural banks and the FCS found themselves last year. Returning to the O FI aspect of the 1980 amendments, the law sets forth four conditions for granting commer cial banks access to the FIC B discount window. • The com m ercial bank or O FI must be significantly involved in farm lending. • The bank must have a continuing need for a supplementary source of funds to meet the needs of its agri cultural borrowers. • The bank must have only limited access to regional or national capital markets. • The bank may not use the FIC B services to expand financing to persons or for purposes oth er than those authorized in the 1971 act. The basic thrust of the regulations will be to (1) assure equitable O FI ac cess, (2) protect the FCS against mis use and (3) eliminate inconsistencies among the districts. Now let’s look at the provisions of the draft O FI regulations. Under the draft regu lations, O F I elig ib ility criteria are clearly defined, as con trasted with current regulations in which the criteria are general, non specific and lend themselves to either a very broad or very narrow interpreta tion, depending on one’s point of view. Opponents to the new law have argued that the old law and regulations should have been retained and the FC S forced to open the FIC B discount win dow to all commercial banks. However, precedents have estab lished a narrow interpretation of the old law. The 1980 amendment guaran tees access to the FIC B discount win dow by qualified agricultural lenders and new regulations are needed to more specifically define that access. Changes that the draft eligibility regulations would make include the following: • Lowering the volume of agricul tural loans required to establish eligi bility from 25% to 15% of the total loan portfolio. • Changing the required loan-todeposit ratio from 65% to 60%. • Restricting access to the FIC B discount window to banks or affiliates that have only limited access to nation al or regional money markets. In addition, a new section in the proposed regu lations estab lish es MID-CONTINENT BANKER for August, 1 9 8 1 Expeditious. Third National Bank's Data Processing Service can help you streamline your operations. It’s becoming increasingly difficult for a bank to oper ate profitably without electronic data processing and other automated procedures. But the necessary hardware is expensive, and a computer operation of your own may be more than you wish to undertake at this time. The answer? Data processing and other automated services from Third National Bank in Nashville. Third National Bank offers a full range of computerized , data processing services, including a Commercial Loan Package designed especially for commu nity banks. This package comprises a https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis complete accounting program for commercial loans with daily updates on each account, past-due no tices, maturity notices, and more. Take the first step toward a more streamlined, and more profitable, operation today. Call Sonny Johnson, head of the Correspondent Bank Depart ment, or the representative who serves your area: Ish Smith or Wayne Whisman, East Tennessee; Clarence Suiter or Ed Lowery, Middle Tennessee and Alabama; Roy Lawrence, West Tennessee; Lee Owen, Ken tucky. Our Tennessee WAT! is (800) 342-8360. In neigh boring states, dial (800) 251-8516. 1 THIRD NATIONAL BANI^ In Nashville Member F.D.l.C. appeal rights for rejected applicants. The Farm Credit Administration, the federal regulatory agency for the sys tem, will have responsibility for re viewing appealed decisions on a caseby-case basis. I believe this eligibility section is an important part of the draft regulations, because it helps fulfill the congression al mandate to open the F IC B discount window to qualified agricultural lend ers. We also feel that this will satisfy those who have felt that access to the discount window was arbitrarily deter mined in the past. There is another significant provi sion of the O FI amendment that is favorable to commercial banks. This provision will level the playing field by granting O FIs the authority to dis count with the F IC B for the same types of loans that PCAs are authorized to make. The current authority re stricts OFIs to discounting loans for agricultural purposes only, whereas, PCAs have broader authority to make loans to farm-related businesses, rural residents and aquatic producers. In addition, PCAs have the authority to make loans for the “other needs” of agricultural and aquatic producers. A question often on the minds of bankers regards the timetable for im plementation of the amendments. Implementation will not take place before early next year, due to certain legal procedural requirements and the mandatory congressional review of draft regulations. Now I want to mention a few FCS concerns over expanding O FI access to the FIC B discount window. The F IC B s will have problem s maintaining adequate staff to handle the O F I req u ests unless some mechanism for responding to potential wide fluctuations in O FI credit de mands is established. A nightmarish management problem would develop if FICBs were required to constantly tool up and then tool down as credit demand fluctuated. Closely related to this problem is the importance of protecting the F C S’s credibility in the money markets. It is a reputation earned over a more than 60-year period. And although the sys tem has been unfairly criticized for its “unlimited” access to the money mar kets, it hasn’t taken its reputation as a good market citizen lightly. The system voluntarily coordinates its bond sales with the U. S. Treasury, the Fed and with leading securities dealers to assure that every issue of system securities will go through and fit into the overall monetary picture. For example, the FCS gives considera34 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tion to whether another organization, such as the Federal National Mortgage Association, is going into the market with any unusual demand. If the FCS was to enter the market with a bond sale at the same time, it might be dis advantageous to both. The bottom line is that we must not surprise or shock the investment com munity. Any increase in credit de mand resulting from factors such as O FI discounting must be absorbed gradually. The investment community has been able to accommodate agricul ture’s credit needs and it will continue to do so as long as we don’t overburden or confuse it. I want to address another mecha nism agricultural banks may want to pursue in meeting their growing credit demands — participation agreements with PCAs. These agreem ents are similar to overline arrangements be tween commercial banks and their cor respondents. PCA participations with commercial banks have worked well in some areas. In others, they have not been an un qualified success. Participations have worked well when PCA management and commercial bank management have put aside old prejudices. Unfor tunately, publicity about the less suc cessful efforts apparently has led to considerable misunderstanding of the program. FIC Bs now are taking posi tive action by examining the PCA par ticipation programs and amending them when possible to improve PCA receptivity. I encourage bankers to take a look at the program for them selves and then decide whether or not it can work for their institutions. The 1980 amendments provide for a liberalization of this program that we think will benefit both farmers and sm all country banks. One of the changes involves the issuance of participation certificates in conjunc tion with a loan. The certificates will be issued directly to the commercial bank instead of to the borrower. This makes the PCA an invisible third party in the transaction, something commercial bankers consider important. The FCS appreciates the construc tive, cooperative relationship evi denced by banking leaders. L et’s work together to identify our common areas of interest and to build a relationship that will assure our mutual success in furthering the interests of American agriculture. • • 25th Annual Market Day Set for Sept. 2 in St. Joe ST. JO SE P H , MO. — The 25th annual Market Day, co-sponsored by First Stock Yards and First National banks, St. Josep h , will be held September 2. Registration will begin in the lobby of First Stock Yards Bank at 9 a.m., followed by a tour of Bio-Zyme Enter prises. A report on the current day’s market will be given at a luncheon at the Hoof and Horn Steak House, adja cent to the bank. The afternoon session will begin at 2 p.m. at the St. Joseph Country Club. Featured speaker will be Max Lennon, dean, College of Agriculture, Uni versity of Missouri-Columbia. His topic will be “New Horizons in Agri culture.” A panel discussion on various agri cultural commodities and price trends is set for 3 p.m., to be followed by the traditional social hour and steak din ner. • Commercial Credit International Banking Corp. Stephen C. Johnson has been named executive vice presi dent of this firm, a subsidiary of Com mercial Credit Co., Baltimore. He joined the subsidiary in 1978 as a vice president based in Quito, Ecuador. Capitalizing on Change Is Theme of NABW Meeting The theme for the 59th annual con vention of the National Association of Bank Women will be “Banking ’81: Capitalize on Change.” The conven tion will be held September 27-30 at the Hyatt Regency Hotel, Chicago. Convention sessions will center on the impact of recent economic, legisla tive, regulatory and technological de velopments in banking; the issues and questions they raise for the future of the industry; and the strategic re sponses that will determine banking’s survival in the tough competition of the ’80s. Among the speakers lined up for the convention are Chicago Mayor Jane M. Byrne; Frank Cappiello, panelist on “W all $ tre e t W e e k ” on P B S ; Donald Jacobs, Northwestern Univer sity; Thomas Wageman, president, LaSalle National, Chicago; and Gail M elick, executive vice president, Continental Bank, Chicago. Two seminars will be held prior to the opening of the convention dealing with management process and the management of conflict and change. MID-CONTINENT BANKER for August, 1981 Ba n k e r s n e e d MEANINGFUL RELATIONSHIPS TOO. A lot o f people think cor respondent banking is pretty m uch the same wherever you go. We think they’r e wrong. A t Crocker w ere committed to providing the most person alized and professional corre spondent services we can. T h a t’s based on our strong operationalcapabilities.And the ability to deliver them efficiently, and reliably. O u r correspondent ban k ing departm ent is staffed by professionals. We think they’re second to none in the business. A nd because correspond ent banking is their only job, you’ll find them especially Member FDIC © Crocker Na onai Bank 1981 knowledgeable, and quick to respond to your needs. We believe our range of correspondent banking ser vices is unique. T h a t’s why we think we can correspond exactly to your needs. So, if a meaningful ban k ing relationship interests you, contact Steve Spaulding, Senior V ice President and Manager, Crocker C orre spondent Banking D epart m ent, O n e M ontgomery St., San Francisco, C A 94104. O r call (415) 477-3014. ®Crocker Bank Doing more for your business! MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 35 W orld Food Demands Tax Farm Industry; Ag Bankers Urged to Follow Trends MERICAN agriculture and rural banks will be operating in an en tirely changed atmosphere during the balance of this decade, said Daniel G. Sisler, noted agricultural economist connected with Cornell University, at this year’s annual convention of the Independent Bankers Association of America. World food demands have forced farmers to put virtually all their mar ginal land to work to produce enough food to fulfill government commit ments to less-advantaged countries. At the same time, according to Dr. Sisler, farmers face inflationary costs for inputs and low prices for their prod ucts, placing them in high-risk posi tions as bank customers. This changed atmosphere on the agricultural front makes it necessary for rural bankers to work more closely than ever with their farm customers, providing them with sufficient funds to see them through to the end of the decade, when the tide is expected to change for the good for farmers strong enough to survive the intervening years. Agricultural exports have made an enormous contribution to closing the gap in our international accounts and paying our crude oil bill, Dr. Sisler said. This tremendous outburst of agri cultural production, increased de pendence on the world marketplace and the political position of food has greatly altered U. S. farming, both now and in the future. The forces of increased agricultural exports, the un certainty engendered by heavy re liance on the world marketplace, cou pled with the use of food as a political tool, have completely altered the are na in which our farmers operate. “The U. S. is by far the world’s largest producer of corn, wheat, soy beans and rice entering the interna tional marketplace. We truly are the world’s residual supplier of grains. At present, we export nearly two-thirds of our total wheat output, about 35% of our corn production, 40% of our soy beans and nearly half of our total rice crop. At a time when America has asked so much from its farmers, the spector of enormous uncertainty has A 36 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis come into play. I often think those in Washington who make both demands and regulations fail to appreciate that agriculture still is a biological busi ness.” W hen the communist giants de cided to enter the world market, they injected a new and powerful force — the factor of intense uncertainty. “I estimate that over the past decade annual year-to-year variability in Soviet grain production is about 42 million metric tons. In some years, the Soviet Union is a net exporter of grain; in others up to 35 million tons is pur chased.” Mainland China also has added a great measure of uncertainty in the world market as it started making large grain purchases in the latter half of the 1970s, Dr. Sisler said. Agricultural production in China has grown rapidly but a large part of that growth has taken place in provinces of China that also are subject to wide swings in pre cipitation and grain production. “The American farmers and the bankers who serve them now are in the unenviable position of being a yo-yo, with prices and demand being pulled up and down by the string of weather in seini-arid grain-producing areas of Russia and China. “To meet the challenge of increased export earnings, American farmers have greatly expanded crop acreage. In 1970 we planted about 293 million acres of cropland, including hay. In 1980 we planted 357 million acres and the planting intentions for 1981 indi cate about 361.5 million acres. Total acreage planted in 1980 and 1981 is the highest in 30 years. Hay acreage in the early 1950s was about 76 million. This fell to about 60 million acres and has remained constant at that level for the past five years. “I don’t feel we have ever had as many acres planted to row crops and wheat as this year. It appears that we have brought into production nearly all available acreage that can profitably produce grains and soybeans. Certain ly if prices were extremely favorable, a small acreage of marginal land could be brought into production, but the flex ibility of adding over 65 million acres formerly idle or in hay no longer is there.” This is the new environment con fronting U. S. grain and livestock pro ducers — little available acreage to bring into production, a mandate to earn over $45 billion in foreign ex change to bail out the balance of pay ments and pay for crude oil, strong sentim ent to hold down domestic prices and, finally, admonishments to take a more active role in providing food for the needy nations of the third world, he said. “If our production falls as the result of poor weather again in 1981, will we be able to honor our bilateral agree ments and let domestic prices soar while the markets of good overseas customers go unfullfilled? What about domestic feed users? I estimate that current exports of feed grains have pushed up the price of cow feed by $18 a ton and the price of poultry laying mash by over $20 per ton. An Iowa banker friend tells me that with cur rent cattle and hog prices, his loans to feedlot operators are off about 50% from last year and to those buying feeder pigs by about 30%. He also told me that he doesn’t know of a single loan that has been made in the past year for confinement hog units in the county. “Can we bail out of the world mar ket? No. Right now we have commit ted about 90 million acres to produc tion for export. We earn about 25% of MID-CONTINENT BANKER for August, 1981 The next time you see Larry Reed or Ted Liles, think of them as a crowd. Because they represent the First Force in correspondent banking from the Texas Panhandle's oldest and largest financial institution. Over 450 full-time professionals — 50 of them specially trained in correspondent banking to provide you with the services you need. And your needs are very important to us. If you have special requirements not covered by our comprehensive list of specialized correspondent services . . . tell us about it! We'll come up with the program or service you're looking for. If interpreting controversial, complex federal rules and regulations is a problem, we'll be happy to answer your questions. And we even hold seminars on that subject from time to time. In short, we want to help you in any way we can. TheFirst National Bank of Amarillo © FN B 1981 8TH & T A Y L O R • 8TH & FILLMORE • (806) 378-1400 MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis M EM BER f d ic 37 our agricultural income from exports. About 1.6 million farm jobs are tied up in production for export. To engage in a significant drawback from exports re jects everything conservative, free en terprise farmers and — I believe, bankers — stand for. “Both bankers and their farmer cus tomers presently are confronting diffi cult times. The continuous inflation we have experienced for the past seven years is a new phenomenon. Bankers have had to pass through higher costs to their customers. This is good busi ness, but it may well mean that bank ers have a riskier loan portfolio. The recent inflationary spiral has hurt farmers more than it has helped them, Dr. Sislersaid. The prices farm ers receive have just not gone up as rapidly as the prices they pay for in puts. “Farmers are confronting a tough debt situation. I know bankers are well aware of this, but let’s look at it from a slightly different perspective. In 1960, total farm debt was about $25 billion and by 1981 total farm debt is esti mated to be over $180 billion. Farmers purchased equipment, buildings and other facilities to gear up to meet over seas demand. Since 1975, farm debt has risen by just about $100 billion. Net income is what pays off loans. In 1960 there was about $2 of farm debt for every $1 of net farm income; that ratio now is well over $5.” Bankers have their woes, he said. With the deregulation act of 1980, other financial institutions can be in creasingly competitive on both the de posit and loan side. Bankers have the problem of interest-rate volatility, and it is increasingly difficult to tell a cus tomer that the guy down the street can’t offer trust services. “Certainly, conditions don’t appear rosy at this time, but in the longer run Many Opportunities for Electronics To Be Used in Farm Machinery HE FARM-MACHINERY industry is heading toward a new frontier in applying high technology to machines as a way to continue to boost American farmers’ efficiency. So says Irv Aal, vice president/general manager, Sperry New Holland North American operations, New Holland, Pa. “For example,” says Mr. Aal, “there are many opportunities for the farm-machine industry to incorporate electronics into its equip ment. Down the road, it is possible we may see ‘intelligent’ machines with the ability to handle corrective action instantaneously without operator involvement. “Applying electronics to farm machinery isn’t new. For several years, farm-machine manufacturers have been designing machines with built-in electronic devices. Sperry New Holland combines and others have electronic sensors that watch over vital machine func tions and warn the operator when there is a problem. “An electronic metal detector on our forage harvesters can sense metal objects in farm fields and automatically stop the harvester feed rolls before the metal damages the cutter head. In the past, small pieces of metal often were chopped and mixed with cattle feed, causing hardware disease’ in dairy cows. The metal detector has helped many of our dairy customers by reducing hardware disease and the expense of replacing valuable cows. “For farmers who grind and mix their own feed, sensitive electron ic scales have been built into portable grinder-mixers. This allows the farmer to do a precise job of blending his own feeds at a lower cost. In the future, according to Mr. Aal, all farm-machine manufactur ers will have to rethink the machines they are building, particularly since the U. S. Agriculture Department continues to project a trend toward fewer, but larger, farms in this country. “Building machines that reflect the needs of our customers’ work environment is good marketing sense,” Mr. Aal concludes. “With fewer farmers producing goods and more people than ever looking to the American farmer for food, sophisticated machines that incorpo rate electronics coupled with hydraulics and other mechanical in novations will help bring more efficiency to food production in the future.” T 38 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis we should keep in mind that world demand for food is rising and the farm ers bankers work with are in a strong position to take advantage of this trend. In the short run, it will be rocky, but the good and very good far mers will make it. “I honestly feel that farm prices and income will be excellent in the latter part of this decade. Bankers will have to continue to do what they have al ways done best — work closely with their farm customers. Bankers will have to understand farmers’ problems and pay close attention to their par ticular needs. “Agriculture is on the rebound, and bankers are in the strongest position to provide the personalized service that will help themselves, and farmers, realize the prosperity of the future,” Dr. Sisler said. • • American Nat'l, Chattanooga, Hosts Data Users Symposiums An on-line linkup with the total cus tomer base was called critical to the success of a bank’s ATM program dur ing a recent series of data users sympo siums sponsored by the national/correspondent division of Am erican National, Chattanooga. The symposiums were designed to update and brief user banks on Amer ican National’s data processing capabi lities and were conducted by Norman R. Miller, vice president, national/correspondent division, and Steve H. Croxall, vice president, data process ing division. Mr. Miller introduced the bank’s new ANB 7-11 ATM system, a support package designed to assist a bank in converting an off-line system to an on line system. Mr. Croxall described a new combined deposit system offered by the bank that will permit user banks to begin pricing based on a customer’s total deposit relationship. Pictured a t A m eric a n N a t'l of C h a tta nooga's d a ta users sym posium held in G ad sd en , A la ., recently w ere (from I.) Steven H. C roxall, v.p ., host bank; J. E. M oody, ch./e.v.p., J. C. Jacobs Bank, Scottsboro, A la .; N orm an R. M iller, v.p ., host bank; and G ail G entry, v.p./cash., N at'l Bank of C o m m erce, B irm in g h a m , A la . Messrs. Croxall and M ille r conducted the symposiums, which also w ere presented in Chattanooga and Knoxville. Construction and remodeling problems require creative, competent solutions. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Bunce Corporation. Providing solutions to complex construction problems through creative planning, design and construction management techniques. The Bunce Corporation KS St. Louis/Dallas/Kansas City/Tulsa/Chicago BUNCE Bank Gives Marketing Assistance To Neighborhood Organizations Trying to Publicize Their Areas By Jim Fabian, Senior Editor F TH E PEO PLE of St. Louis be lieved what they read in national news magazines, they’d pack up and leave town. These publications have been calling attention to the “demise” of St. Louis; in effect, burying the city in the graveyard of civic neglect. Fortunately, business leaders and residents of St. Louis tend to side with Mark Twain, practically a native son, who, when informed of his demise, quipped, “The news of my death is greatly exaggerated!” Civic pride isn’t dead in St. Louis, a fact underscored by the city’s 1981 Fourth of July riverfront extravaganza that attracted half a million residents and involved numerous civic organiza tions. But some civic activities don’t get the publicity they deserve. St. Louis abounds with unique neighborhoods, many of which support organizations created to publicize their “different ness” in attempts to attract new in terest and residents to their “turf.” It often appears that many of these seatof-th e-pan ts organizations can ’t achieve their goals because their funds are meager. The people serving on the commu nity affairs committee at First Nation al, St. Louis, recognize the importance of such organizations and their work. They also recognize the problems such organizations face in achieving their goals. That’s why the bank’s committee established a “Neighborhood Market ing Assistance Program” as a con tinuing operation. According to Alfred H. Kerth III, assistant vice president/ community affairs at the bank, the program’s purpose is “to help neigh borhood organizations achieve some visibility for their programs.” The activity is part of what Mr. K erth calls the “b ack -to -th e-city ” movement. He says that, although the bank does most of its big business in commercial loans, neighborhood rede velopment is part of the bank’s longrange strategy to improve business by developing areas where people want to live and work. In 1979, the bank made a donation to help an association in the Hyde Park area publicize a neighborhood fair. The grant enabled the association to churn out enough publicity to attract trip le the num ber of people who attended the event the previous year. That successful “test-m arketing” effort encouraged the bank to expand its grants for associations, Mr. Kerth says. This year, First National offered a total of $20,000 to neighborhood orga nizations interested in applying for assistance in their marketing efforts. Neighborhood tours a re c o n d u c te d by c o m m u n ity a ffa irs d ep artm en t of First N a t'l, St. Louis, to fa m ilia riz e bank p e rs o n n e l w ith u n iq u e aspects of various sections of city. A lfred H. Kerth III (2n d from r.) is head of com m unity a ffa irs d e p a rtm e n t a t bank. 40 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis None of the 14 associations selected to receive grants received the maximum $7,500; in fact, the largest grant this year was $2,640 to be used to purchase billboard space and produce flyers and window signs to promote a section of the city. The bank is careful to make the pur pose of the grants crystal clear to neighborhood associations when it sends out yearly letters asking for grant proposals. Leaders of some associations tend to overlook the word “marketing” in the program’s title. They expect the bank to fund building rehabilitation and other community-beautification proj ects. Such projects fall under a differ ent area of bank funding, Mr. Kerth says, and don’t qualify for marketing assistance. The program’s purpose is to help neighborhood associations effectively market and improve their neighbor hoods, according to bank literature. A number of guidelines are furnished so applicants for grants won’t stray from the bank’s requirements. Among the guidelines: • Proposals are accepted only from organized neighborhood groups with in the city limits. • Grants are awarded for specific marketing programs and may be used either to augment an existing program or to fund a new one. Grants are not awarded for ongoing staff salaries or for other capital improvements. • Proposals must include detailed information on how grant money will be used. A timetable and budget must be included. • Proposals may request awards of either cash or in-kind services. Falling under the latter category is technical assistance from Neighborhood Mar keting Services, a nonprofit corpora tion under contract to the bank to pro vide marketing services directly to neighborhood organizations that qual ify for grants. • Award decisions are made by a panel of five judges selected by the bank’s committee. This year, the panel included the new mayor of St. Louis, a MID-CONTINENT BANKER for August, 1981 THE HARRIS OVERLOAN: IF IT TAKES US OVER 3 DAYS TO CALL YOU W ITH AN ANSWER, WE’LL APOLOGIZE OVER A FREE LUNCH. When you come to Harris Bank for an overloan, you’ll find we know ex a c tly w h a t you need. And exactly what you don't need. We know you need an answ er. And you d o n 't need six or seven days of sitting a ro u n d the telephone waiting for it. That’s why we’re mak ing this statement: we’ll give you an answer in three days. Or less. Or else. Or else what? Or else we’ll explain what the reasons were over a free lunch. And not at a hot dog stand, either. Quite frankly, we don’t expect to be paying for many lunches. Because quick turnaround is one of the things we do best at Harris. In c re d it m atters, and in every oth er kind of problem solving, from investment coun seling to asset m anage ment to economic advising. A nd we re able to make those q u ick tu rn a ro u n d s with a minimum of error. So, if you need an overloan, call your Harris representative. Or call 312-461-2744. But don’t expect a free lunch. Expect an answer within three days. HARRIS CORRESPONDENT BANKING SERVICES HARRIS BANK. Harris Trust and Savings Bank, 111 W. Monroe St., Chicago, III. 60603. Member F.D.I.C., Federal Reserve System. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 41 minister, a civic-minded citizen and two members of the bank staff. • Grant awards must be used in the calendar year in which they are given or be forfeited and can be used only in the manner outlined in the proposal that qualified for an award. • Grants awarded in the form of cash are disbursed on receipt by the bank of paid invoices for approved products or services. • The bank maintains the right to refuse to reimburse a grantee for any invoice covering expenses incurred outside the scope of the grantee’s proposal. All proposals are carefully checked for creativity and viability, Mr. Kerth says. Care is taken to select judges familiar with city neighborhoods so the legitimacy of requests can be verified. The bank doesn’t always grant the amount of funds requested by an orga nization. Groups sometimes overstate amounts needed and sometimes in clude expenditures judges feel are not practical or appropriate. The bank’s community affairs de partment maintains a list of neighbor hood organizations and uses direct mail to contact them to request pro posals. Other means of communication about the program include newspaper 42 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The community affairs depart ment at First National, St. Louis, is active in many aspects of city and state affairs. It participates in eco nomic-development projects that in clude port development for St. Louis, tourism promotion for the en tire state of Missouri and participa tion in the National Council on Urban Economic Development. The department currently is ac tive in commercial projects in St. Louis, including city-center rede velopment and rehabilitation of the city’s Union Market. It takes part in the Downtown Plan Review Com mittee and the National Leadership Conference on Urban Lending. Residential programs include the Neighborhood Marketing Assistance Program (see adjacent article) and the City Loan Program as a contribu tor to a pool of below-market-rate mortgage funds. Other categories in the depart ment’s outline of activities cover government regulation, public rela tions, corporate social responsibility and miscellaneous projects that affect both bank personnel and the community at large. articles, p u blic-service announce ments and news releases to churches for use in bulletins to members. Each year, the committee asks the judges to look at all proposals (52 were received this year) and rank them in order of importance. When the judges meet, a list of 10 proposals that all con sider important is made, along with a determination of the amount of fund ing each will receive. Any funds re maining are used for proposals on a secondary list, until the funds are ex hausted. Administration of the program isn’t expensive, Mr. Kerth says. It doesn’t take a lot of bank time and it’s struc tured to rely on donated services of outsiders. “We believe we’ve achieved both good publicity and goodwill with this program,” Mr. Kerth says. “There has been some criticism from those who believe $20,000 isn’t much for a big bank to spend. However, most people recognize that this amount is just a small part of our total contribution. We believe the response from the com munity is positive.” Richard F. Ford, First National’s president, is active in civic and com munity affairs. He’s chairman this year of Downtown St. Louis, Inc., which, he says, qualifies as a neighborhood association that’s dedicated to publi cizing its area. “Downtown is a neigh borhood, too, ” he says, “and should be thought of in that way.” His philosophy about the program is this: “If the communities are healthy and they’re vibrant in the city of St. Louis, that rubs off on the whole city. And really, what rubs off on the whole city is good for First National Bank and every other business in St. Louis.” The neighborhood sector of the community affairs committee’s work isn’t the only part, he says. The most important sector is economic develop ment. First National is active in pro moting the Port of St. Louis, a project that means more jobs and a stronger economy for the city. “This neighborhood program is a by product of our efforts to develop a strong city and a strong state,” he says. So much for civic neglect in St. Louis! • • Bank Cosponsors Exhibit O f Magna Carta Document First National, Little Rock, partici pated recently in efforts to exhibit the Lincoln Exemplar of the Magna Carta in the rotunda of the state capitol. The docum ent, w ritten in 1215 A .D ., laid the foundation for legal principles, privileges and rights that have remained the basis for most con stitutions and laws. The exhibit included a short educa tional film produced by Encyclopaedia Britannica, and the dean of the Lincoln Cathedral in England, repository of the document, made appearances dur ing the exhibit. The exhibit was coincident with the observation of law month. Joy Greer, senior vice president/ corporate communications at First National, was a member of the Magna Carta in Arkansas com m ittee that arranged for the exhibit. Bank Helps Library M artin G. S tru w ing , pres., B artlett (III.) Bank, presents microfiche reader to Diane Bertlesen, head lib ra ria n , B artlett Public Library, for use by the library. The Q uan to r 3 0 5 d u a l-fie ld microfiche reader w ill be used in conjunction w ith a n ew microfiche printer purchased by the library. Miss Bert lesen says the reader w ill help students locate reference m a te ria ls q uicker and easier than previously and w ill be of help to the staff. National American Bank of New Orleans Statement of Condition as of June 30,1981 Resources Liabilities $ 86,561,364.69 Cash and Due from Banks.................. 176,673,296.81 United States Government Securities 9,236,312.68 State and Municipal Obligations........ 3,066,946.96 Other Securities................................... 8,475,059.42 Bank Buildings and Equipment......... Loans and Discounts...................... 77,031,908.48 495,188.98 Less Unearned Income.............. Less Reserve for Possible Loan Losses............................. 999,848.16 Loans, Net............................................................ 75,536,871.34 Federal Funds Sold................................................ 21,250,000.00 Customers' Liability Account Acceptances......... 17,856.00 Other Assets............................................................. 7,158,521.81 $387,976,229.71 Total Common Capital Stock.......... $ 4,000,000.00 499,100.00 Preferred Capital Stock......... Surplus..................................... 14,150,000.00 Undivided Profits.................... 11,264,748.32 Reserve for Taxes, Interest, etc......................... Federal Funds Purchased.................................. Liability for Capitalized Leases......................... Dividends Payable.............................................. Liabilities Account Acceptances Demand Deposits................... 176,709,066.95 Time Deposits......................... 170,321,016.64 347,030,083.59 $387,976,229.71 Total Deposits Total. . . . BOARD OF DIRECTO R S E d w in Ja m e s B la ir * S . L. H ig h le y m a n , III President, Artier, Inc. Attorney-at-Law N ew York City, N. Y. P e te r J. B u tle r Attorn ey-a t-La w; Certified P ublic A ccountant Investm ents A lfon so M. D iB e n e d e tto * H e s te r P la u c h e Chairman of the Board & C h ief E x e c u tiv e Officer, Mississippi R iver Grain Elevator, Inc. Jo s e p h R D o rig n a c , Jr.* Pres., D orignac F o od C en ter H e rb e rt G. Ja h n c k e C e c il M. S h ils to n e , S r * S PE C IA L A D V IS O R Y D IR E C T O R S P resident & Owner, Maxwell B u ilding Corporation; P resident, 1 C. E a rl C o lo m b , Sr. C e c il M. S h ils to n e & A s s o cia te s W illia m J. K ross Consultants & C onsulting E n g in e e rs A rth u r A. S te in e r Realtor —B uilder Pres., Kross L u m b er and W recking Co., Inc. Vice Pres., Delta Life Insurance Co.; V ice Chairman of the Board, Tharp-Sontheim er-Tharp, Inc. Attorn ey-a t-Law Jo h n O rm on d G e o rg e G. V ath * Attorney-at-Law V icto r H. S c h ir o * P resident F o rm er Mayor, City of New Orleans; Insurance E x ecu tiv e 29,913,848.32 4,276,925.30 5,850,000.00 881,464.70 6,051.80 17,856.00 * P e rm a n e n t m e m b e r of th e E x e c u tiv e C o m m itte e O FFICER S PR ES ID E N T M A R K E T IN G D IV IS IO N G e o rg e G. Vath F ran k C a sta g n a S E N IO R VICE P R E S ID E N T S Vice Pres, and Mgr. M rs. E d n a M ae H y d e R o d n e y C. Brow er, Jr. R a lp h L. D u b o s T h o m a s J. L a ttie IN T E R N A T IO N A L B A N K IN G D IV IS IO N A U D IT IN G D E P A R T M E N T A n d rew J. S c h w a b e , III A uditor Vice Pres. and Mgr. G era ld M. Ju a n Assistant A uditor F ran k P C h is e s i B anking Officer R u d o lf H. B ru n k e n B anking Officer A C C O U N T IN G D E P A R T M E N T VICE P R E S ID E N T S C O R R E S P O N D E N T B A N K IN G A d rian L. B lo c k G e o rg e J. C o ok R EAL ESTATE D IV IS IO N C h a rle s E . F o re t VICE P R E S I D E N T A N D C A S H IE R Vice Pres, and Mgr. C arroll R. G riffith A n th o n y P C h is e s i E lw o o d H. K eim Vice Pres, and Mgr. B e n ja m in S. G ra v o let Ja m es L. L a z a re Vice Pres. Vice Pres. Jo h n S . K lin ck Vice Pres. A S S IS T A N T VICE P R E S ID E N T S M rs. E la in e D u b re t R o b e rt L. Jo u e t, Jr. DATA P R O C E S S IN G C U S T O M E R S E R V IC E S B A N K IN G O F F IC E R S Asst. Vice Pres. T R U S T D IV IS IO N C R E D IT C A R D D E P A R T M E N T Je ro m e B . G ly n n Vice Pres. & Trust Officer M rs. M ary F ra n c e s C u lle n B anking Officer C a lv in G. K au fm an n Mrs. E v e ly n Jo h n so n Mrs. A d e le K e en C h a rle s A. L an d ry M rs. O lg a S ie g e n t h a le r M rs. D o ro th y S tie r Vice Pres, and Mgr. D avid L. C o ok Asst. Vice Pres. Jo s e p h F. S p a m p n e to , Jr. Data P rocessing Officer RECORDS DEPARTMENT B RANCH AD M IN ISTR A TION D IV IS IO N V erno n J. L e w is V B e rn a rd B e v o n , Jr. Supervisor of R ecords Vice Pres. V icto r H e b e rt Asst. Supervisor of R ecords BRANCH O FFIC ES LEE CIRCLE 1018 St. Charles Avenue B R O A D -D E S O T O 1425 N. Broad Street M rs. In e z L. N avarre, Asst. Vice Pres. & Mgr. Jerry P H e b e rt, Asst. Vice Pres. G O V E R N O R C L A IB O R N E 3 0 0 0 Nap oleon Avenue A lb e rt H. S ch o f, Vice Pres. & Mgr. M rs. A lin e R ich a rd s, B anking Officer H e rb e rt G. H ecker, Asst. Vice Pres. & Mgr. Mrs. Im e ld a A. S a n d e rs , B anking Officer CARROLLTON 1100 S. Carrollton Avenue M rs. L illia n K o p p en s, Asst. Vice Pres. & Mgr. Mrs. S h irle y D alier, B anking Officer IN T E R N A T I O N A L T R A D E M A R T No. 2 Canal Street Mrs. Ja c k ie L in d elow , Asst. Vice Pres. & Mgr. Mrs. Jo a n K. S to u d e r, B anking Officer PARKCHESTER 4 7 6 4 Paris Avenue A. A lle n M artin , Vice Pres. & Mgr. Mrs. L u c ille D. K o e n ig , B anking Officer; E x ecu tiv e Director, Ladies B anking C en ter CHEF MENTEUR 7201 Chef M e nte ur Highway A rn old T. M cC o rm ick , Asst. Vice Pres. & Mgr. M rs. L in d a G. C o m ea u x , B anking Officer W arren J. Ja n e , V ice Pres. & Mgr. Mrs. T ere sa K lin e , B anking Officer M artin E . Z e lle r, Asst. Vice Pres. & Mgr. M iss M e rc e d e s A lb e rt, B anking Officer LA K E V IE W 8 2 6 Harrison Avenue M e lv in H ec h le r, Vice Pres. & Mgr. M rs. B . B e rn a rd , Asst. Vice Pres. Voyd C. C o m p a g n o , Asst. Vice Pres. & Mgr. ELK PLACE 144 Elk Place Mrs. M ary L o u Q u in n , Asst. Vice Pres. & Mgr. LAKE F O R E S T 5 6 6 0 Read Boulevard Correspondents in all principal cities and important centers throughout the world. M AIN O F F IC E : 200 C A R O N D ELET STR EE T , N EW O R LEA N S, LA . 70130 22 5 B A R O N N E 22 5 Baronne Street WOODLAND 6 0 5 7 Woodland Highway AMERICAN BANK OF NEW ORLEANS T E L E P H O N E A L L O F F IC E S 504/525-7761 M E M B E R : F E D E R A L D EP O SIT IN SU R A N C E CORPORATION MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 43 Bank Sponsors Program That Spotlights Area As Tourist Attraction ATTLE and hog farming are para mount to the economy of Ozark County, Mo., where Bank of Gaines ville enjoys the distinction of being the only bank. However, the bank felt that tourism held the most potential in terms of increased economic activity. Why? For years, the county, located in the beautiful Missouri Ozarks, has been a favorite retirem ent area for people from Chicago, St. Louis, Kan sas City and other metropolitan areas. Therefore, the bank, led by Presi dent John H arlin, decided to put together a program to boost tourism in the county and thereby stimulate the economy and, at the same time, intro duce potential retirees to the area and its many attributes. Underlying these objectives, says Mr. Harlin, was the valid assumption that, as always, what is good for Ozark County is good for Bank of Gainesville. Plan o f Action. Because the bank’s budget was small, it enlisted the aid of C business leaders and resort owners who would benefit directly from in creased tourism. However, the bank bears most of the cost of this tourism program. With the help of the bank’s ad agen cy, BHN, Inc., Springfield, Mo., the bank created a marketable entity, the “Ozark County Natural Vacation. ” Ads focused on the natural scenic beauty of the area and urged readers to see the “real” Ozarks — an area distinctly different from other Ozarks tourist attractions, such as Silver Dollar City near Branson, Mo. Previous research conducted by the ad agency indicated that the majority of Ozarks visitors come from within a 400-m ile radius of the area. Thus, advertising efforts were directed to ward St. Louis, Kansas City, Chicago, Springfield, Mo., and, to a lesser de gree, Tulsa, Wichita, Little Rock and Des Moines, la. The media plan included a pre- NO PAST FOODS IN OZARK COUNTY! There are, however, fresh trout, catfish, bass or white bass direct from our streams and lakes. And the service is like the rest of Ozark County — relaxed and friendly. So this year, take time to see the real Ozarks. Visit Ozark County. For more information, including a map of the Ozarks Water Mill Trail, write: Ozark County Natural Vacation P.O. Box Gainesville, Missouri 65655 Ozark SNatural c\hcatiorl This year, see the real Ozarks. m 44 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Th is ad, part of Bank of G a in e s v ille 's to u ris m promotion for its are a , in vites p eo ple to "O z a rk C o u n ty N a t u r a l V a c a tion ," w here there are no fa s t-fo o d r e s ta u r a n ts , b u t w h e r e t h e r e a re streams and lakes loaded w ith fish. Ad app eared in various newspapers and reg ion al editions of TV Guide. printed Sunday newspaper supple ment that appeared almost simul taneously in the above cities, plus in most of Illinois’ major cities. The sup plement was specifically a “vacation guide,’’ which offered information to vacationers in the form of maps and brochures on area attractions and on the area itself. A special travel folder and activities map were created and mailed to every respondent. Other ads (black and white) were created and placed in the eastern/ western Illinois editions and in the Missouri edition of TV Guide. Ads also appeared in the Ozarks Mountaineer, St. Louis suburban newspapers and the Springfield, Mo., newspaper. Box numbers in print ads were coded and added by the publications for account ability purposes. Finally, press releases were pre pared and mailed to major newspapers in targeted cities. Then, to enhance the bank’s image within its market and to create further awareness, two 30-second TV com mercials touting Ozark County’s scen ic beauty were created. Total produc tion cost was $2,000. One commercial focused on quaint water mills in the area; the other promoted fishing and activities the bank believed would attract additional vacationers. Super imposed at the end of each spot was the bank’s logo, which informed viewers that the commercials’ sponsor is Bank of Gainesville and that the bank is “proud to be a part of Ozark County. ” Last month, the two commercials won first place in the Springfield (Mo.) Ad Club’s 1981 “Addy Award” com petition. Residts. By last fall, Mr. Harlin re ports, a lot of people had become in terested in Ozark County. In fact, a fall festival, “Hootin n’ Hollarin’, ” was mentioned on NBC’s popular “Today” TV program . O th er businesses adopted the bank’s theme, “This year, see the real Ozarks.” The Ozark County Natural Vacation campaign began in late April, 1980. Six months later, says Mr. Harlin, the efforts had produced 6,992 inquiries at a cost of $5,587. Preparation and print ing of 10,000 travel folders added another $2,000 to the campaign cost, but, Mr. Harlin points out, “We were careful not to date the piece, so we can con tin u e to use and rep rin t this brochure in the years ahead. He says long-term effects of this project are immeasurable, but he be lieves his community will continue to benefit economically from increased tourist interest. “While total retail sales in the coun ty increased dramatically between MID-CONTINENT BANKER for August, 1981 CORRESPONDENT BANKING. FOURTH'S EXPERIENCE IS A RESULT OF C O M M ITM EN T AND VICE-VERSA. At Fourth, correspondent banking means making commitments. It means providing rapid, smooth transactions when needs are critical. It means using the latest, high speed communications and computer technology. It’s people like Keith Wiegand and John Robinson. Professionals with years of banking experience who stand ready to assist you in all areas of correspondent banking. Who can handle loans of any nature. Who have first-hand experi ence with the needs of hanks in this region and the lending authority to make critical deci sions. Immediately. It’s performance. For loan participations. For cash letter services. For bank stock financing. For quick check clearances. It means having in vestment alternatives to ease your liquidity problems. Correspondent banking. To us, it means commitment. Working together. Fourth National and your bank. 2 1 FO U RTH NATIONAL BA N K THE FOURTH NATIONAL BANK OF T U L SA BOULDER AT SIXTH P.O. BOX 2360 T U LSA , OKLAHOM A 74101 (918) 587-9171 MEMBER FDIC MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1979 and 1980,” continues Mr. Harlin, “we can’t attribute that directly to our campaign. We are sure, however, that we were at least partially responsible. “Results from this year’s campaign are not yet available, but early indica tions suggest that our campaign is gathering considerable momentum. “We may not always be the only bank in Ozark County, but, thanks to this concentrated effort on their be half, we will remain the only bank in the minds of our many customers. ” • • Bank's Railroad Branch Brings U niq ue H o n o r To Its C om m u nity When City National, Dothan, Ala., designed a branch around a former railroad car in 1973, the objective was to focus on the significant role railroads played in the early history and growth of the city. This year, the bank re ceived proof that it had achieved that objective: Its Railroad Rranch was offi cially declared a state landmark by the Alabama Historical Commission by being added to the Alabama Register of Landmarks and Heritage on March 20 . Railroad Branch of City N a t'l, Dothan, A la ., is m ad e up of form er depot and railroad cars, including "The D othan," which becam e official state la n d m a rk this year. Two months later, a historical mark er depicting a brief history of the rail road and its role in Dothan’s develop ment was erected. This is the first time the Alabama Historical Commission has designated an official state land mark in Dothan. Few railway business cars built at the turn of the century (“The Dothan” Standing in front of m arker o fficially desig n a tin g R a ilro a d Branch of C ity N a t'l, Dothan, A la ., as state la n d m a rk are (I. to r.) Jim Loftin, pres., Dothan-Houston Coun ty C h am ber of Commerce; Judy Harris, pres., Dothan Landmarks Foundation; W il lia m P. W a lk e r, ch./CEO of b ank; and E lain e Johnson, rep resenting A la b a m a Historical Commission, which gave m arker to city of Dothan. Mrs. Johnson w as re sponsible fordo ing research culm inating in presentation of this m arker. Her efforts w e re on b e h a lf of D o th a n Landm arks Foundation. C all Pete K night, Senior V ice President of First A lab am a B an k o fM o n tg o m ery. For your correspondent needs, 2 0 5 / 8 32 -834FL Personal B anking From Professionals. Rist#Alabama Bank of Montgomery na 46 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis was built in 1901) are still in existence. The bank says “The Dothan” is a fine example of the craftsmanship and tradition established by the Pullman Co. The depot and adjoining historic cars were dedicated as the bank’s Rail road Branch in 1974. “The Dothan” was constructed for the Chicago & Eastern Illinois Railraod Co. as its business car No. 502 and named “The Mount Vernon. ” In 1958, the car was sold to the Georgia North ern Railroad Co. and renamed “Mount Vernon. It became “The Dothan when the bank acquired it in 1973. Member FDIC MID-CONTINENT BANKER for August, 1981 Eighteen cents an ounce m ay be costing you a ton. Each time the cost of postage goes up, our Bank-by-Mail Deposit Tickets make m ore and m ore sense. No longer will you be required to send a receip t— costing 18 cents just for p ostage— when your custom ers bank by mail or make a deposit after hours. With Deluxe Bank-by-Mail Deposit T ickets, your custom ers send you the original deposit ticket and keep an exact duplicate of the transaction for their own records. At the end of the month, you return the original tickets, along with the custom er’s checks, saving you considerable postage, time and people costs. Add it all up. Then talk to a Deluxe representative. W ell show you why Bank-by-Mail Deposit T ickets are very well worth their weight. Sales Hdqtrs • R 0. Box 43399, St. Paul, MN 55164 • Strategically located plants coast to coast MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4/ C om m unity-D evelopm ent Stewardship Belongs to Bankers I NDUSTRIAL and community de velopment was the theme of a talk given at the Tennessee Bankers Asso ciation’s 1981 convention by James C. Cotham III, com m issioner of that state’s Department of Economic and Community Development. Although, of course, he was speaking of his state, his remarks could be addressed to bankers everywhere. Highlights of his speech follow: Never forget that as a banking in stitution, you basically are part of a community. If you focus broader than that, you will not be tending to your roots; you will lose your grip on the fundamentals of your marketplace. No matter how large your bank is, your business is the sum of individual mar kets. The 1980s will be the era of the com munity. The honeymoon with big gov ernment is over. This decade will be a time of self-reliance. You must take a strong leadership role in your community. The focus of economic growth is on community leadership, but you must know what community growth and community development are all about. Unfortu nately, community development is not high enough on most people’s list of things to worry about. Surprisingly, few people appreciate the value of community development or the need for it, and even fewer understand the processes involved. If your community is to attract new industry, new jobs, new payrolls, new taxpayers, new business opportunities for merchants and new bank deposits, rem em b er this sim ple p rin cip le: Seventy-five percent of everything good that happens to a community happens because of what a community does for itself. The secret is community prepared ness, which, in turn, is the secret of industrial development: 1. Physical fa cilities — w ater, roads, utilities, developed land. 2. Schools and livability. 3. Crime/drug rate. 4. Ability to merchandise commu nity to prospects. These factors are important to in dustries. Banks must take the leadership role in industrial-development prospect ing. Here are four examples: 1. Make lists of customers, banking connections, former residents, con tacts, anyone who, for any reason, might be attracted to your area. 2. Work with your local industrialdevelopment organization and with your state if you wish. 3. If you choose to work indepen dently, at least know what services are offered by organizations such as the "If your community is to attract new industry, new jobs, new payrolls, new taxpayers, new business opportunities for merchants and new bank deposits, remember this simple principle: Seventy-five percent of everything good that happens to a community happens because of what a community does for itself." — J a m e s M . C o th a m III 48 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Department of Economic and Com munity Development. 4. Include your state in your adver tising. Take care of existing industry. It’s your best salesman. Existing industry creates 50% of new jobs/capital invest ment each year through expansions. Promote exporting of manufactured goods by your customers. There are unusual or unique opportunities, and it isn’t that difficult. Mr. Cotham continued his talk, “With transition comes change. With change comes opportunity. Timing is crucial!” Then, he advised his listeners to: 1. Go get high-tech industry. 2. Go get those companies moving to the growth market of the Southeast. 3. Recruit in Japan and Europe. Mr. Cotham believes the next two to three years are crucial for bankers to act if their communities are to share in the growth of this decade. As he put it, “Tend to community/” He finished with these remarks: If we are to succeed, grow, meet job challenges, improve family incomes, increase our economic w ell-being, preserve our life-styles, we will have to do it ourselves. State and local govern ment officials and community leaders must accept the burden of responsibil ity and pain of accountability for action or inaction. State and local govern ments either will have to raise taxes, lower expectations and cut services, or bring in new taxes. If we are to have good schools, good roads, good police and fire protection, rem em ber two things: 1. There is a limit to belt tightening and budget cutting in government. 2. There’s a long-term choice — bring in more taxes or raise taxes from within. To be successful, whether it’s your state, hometown or business, he con tinued, the greatest m anagement obstacles to be overcome are: 1. Inability to face change. 2. Inability to believe the need to MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis This 1958 building doesn’t look or act its age. Inside and out, both the form and function of this bank were recently updated by Bank Building Corporation. Decades of success and growth had com m itted Citizens National Bank to their established location, and they'd outgrown their building in the process. Total redesign was needed. Both inside and outside wall surfaces were removed and replaced. Floor area was doubled. In the process of becoming a more use-filled building, the new Citizens has made a strong visual impact on its community. This project was com pleted on Bank Building Corporation budget and on time, with minimum inconvenience to customers and employees. Which comes with practice: since 1913, Bank Building Corporation has com pleted over 8000 projects— many of them rem odeling assignments. We know that some older buildings are right for remodeling, while others are not. And we’ve learned to know the differences between them. Before your need to remodel or build becomes acute, please call Tom Spalding at 314/647-3800. Let’s become acquainted and share more information. Ask us to show you a new beginning or two. 1130 Hampton Avenue St Louis, Missouri 63139 Performance According to Plan. W E’RE G O IN G A L O N G WAY FO R Y O U A N D Y O U R EMPLOYEES. The Training Film Series is an extraordinary group of award-winning films (or videotapes, should you prefer) designed to inform, educate, and motivate your employees. A success with thousands of Bank of America employees, the films deal w ith important topics like bank robbery, loss prevention, and customer relations. Each film comes w ith a Meeting Leader’s G uide that outlines the program’s objectives and suggests presentation techniques. Judges at the Emmy’s, Chris Awards and other nationwide film festivals found many of these films w orthy of prizes and special recognition. We think you’ll agree. If you’re in retail finance, you’ve noticed a change. Every day you’re asked to provide more and more services to your customers, employees and the community at large.To help you meet these ever-increasing demands on your resources, BA Chegue Corporation is offering tw o new services, The Training Film Series for your employees and The CIRcular™ Program for your customers and community. They’re tw o important new ways BA Chegue Corporation is going a long w ay for you. BA Cheque Corporation sells the CIR/Training Film Series to banks for and on its own account. BA Cheque Corporation acts as independent contractor distributing the CIR/Training Film Series to non-bank financial institutions for and on the account of Bank of America NT/TSA. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ¡§¡1H • ï•mm ' . WWSË>i wKËKÊËKÊÊÊÊÈÊm ' ■ .: TO EXP W ER E G O IN G A L O N G WAY FO R Y O U A N D Y O U R CUSTOM ERS. The CIRcular™ Program is a series of consumer information reports specially created to serve both you and your customers. For your customers The CIRcular reports provide straightforward, practical information on banking services and various aspects of personal money management. The tone is nonpromotional, and the content addresses consumers’ questions and concerns. For your institution, the program provides an opportunity to enhance customer relations, improve staff efficiency, support marketing pro grams, and demonstrate social responsibility. Bank of America began distributing The CIRcular https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis reports five years ago in over a thousand California branches. 80,000,000 CIRculars later, w e’d like other members of the financial community to share in the success of this remarkable program. To find out more about these exceptional programs, call Frank Hyzdu,V.R Domestic Sales, toll-free at (800) 227-3333 (in California, Alaska, and Hawaii, call (415) 622-4721 collect). Well tell you how BA Cheque Corporation can help you succeed in the competitive new era of retail finance. And how w e’re going a long w ay for you. BA CHEQUE CORPORATION A b a n k A m e r ic a c o m p a n y Let the others offer gifts. Nowyou can offer a legend. T h ese days, with so m uch com petition for your cu s to m e rs ’ d ep osits, you can't afford to be a follower. You have to lead. K anney Marketing gives you a head s t a r t An upscale bead s t a r t Genuine W e d g w o o d . The legendary giftware. Exclusively from K anney Marketing. OF COURSE. WE OFFER MORE THAN WEDGWOOD. We also feature G race China and Stonew are, G race Flatw are. P rin cess G race C rystal and Gateway Luggage. The hallm arks of K anney professionalism . https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis su ch as 100% retu rn privilege, con tin u ou s delivery, and exp ert prom otion and display a s s i s t a n c e v ir tu a lly u n d e r w r ite y o u r prom otion’s s u c c e s s . Find out about all ou r sparkling gifts for contin uity and ou r exciting new moneyacquisition program s, too. Call co llect or write for o u r b roch u re today. KANNEY marketing services 90 P la n t Ave., Hauppaugje.'N.Y. 117S7 . (516) 273-0055 Wedgwood * is a VS . registered trademark o f Wedgwood Limited. change. 3. Inability to do something affirma tive about it. For people, communities or com panies paralyzed by routine and which continue to operate using time-worn, traditional methods — doing what is comfortable and being afraid to try anything new — this decade could be a disconcerting tim e, a tim e of dis appointment and failure. Those com munities that are prepared, know how to merchandise themselves and hustle will get their share of jobs and growth in the years ahead. The fact is, we have no guarantees, only an opportunity to rise to our full potential, whether it be state, community or business. Our economic and social agenda is long. The issues are critical. The alternatives are not pleasant. The time is too short. Mr. C otham ’s recom m endation: Stop looking at life through a rear-view mirror. Quit looking back toward the Garden of Eden. The simple, uncom plicated past, the horn of plenty are gone forever. Then, he issued this challenge to bankers: As leaders in your industry, accept the stewardship responsibility for tending to the roots of the nation, state and community in helpful, crea tive and imaginative ways. With a pat riot’s zeal, accept the challenge of the future. Work creatively and diligently to ensure that our children and grand children can have a secure future, that we deliver America’s great promise without placing on future generations social and economic burdens they can not bear. Your community and state need your leadership! “Clearly,” Mr. Cotham concluded, “we are entering a time in national government that will test our will and our ability to survive as a free nation. If we are to have a new beginning in America, if we are to experience a time of renewal in our country, and if we are to make the most of Tennessee’s (or any state’s) moment of opportunity in the years ahead: “1. It will require the highest per formance standards for government, community, business, employees and families. “2. It will demand that we deliver the best of ourselves. • • In flation Seminars, Speakers' Bureau Sponsored by Bank of various programs on radio and TV that deal with the economy or other current financial subjects. The three financial seminars were held in April and May in three separate residential areas of Springfield. Indi vidual presentations were made by a panel consisting of Walter R. Lohman, First National’s chairman/CEO; John E. Brubaker, president; and Dean C. Countryman, vice president/investment officer. Question-and-answer periods followed. Pamphlets dealing with inflation and money management were distributed at each seminar. The speakers’ bureau is made up of 28 bank employees. This activity is an expansion of a program the bank has provided for many years through the Springfield-area high schools. The bank sponsors a money, credit and banking course that all students take during their high school careers. Ma jor financial topics for the speakers’ bureau include: “Inflation,” “Personal Money Management,” “Banking and the Economy” and “The Business of Banking. ” Throughout the year, First National will sponsor financially related pro grams on radio and TV and a series of news articles to support the entire program and offer helpful hints on cop ing with inflation. First National, Springfield, 111., be lieves residents of its city need to voice their support of the President’s eco nomic program calling for reduction of government spending, balancing the budget, providing tax relief and reduc tion of excessive government regula tion. The bank has backed up this belief by holding three financial seminars as part of a coordinated program to help the community cope with inflation and suggest ways residents can help “de feat” inflation. Other elements of the bank’s program include development of a speakers’ bureau to make financial presentations to various community social and civic groups and sponsorship G ary L. Hepburn (on p od iu m ), v .p ./m a rk e tin g , First N a t'l, Springfield, III., introduces speakers a t one of bank's seminars on in fla tio n . To M r. Hepburn's right is W a lte r R. Lohman, ch./CEO; and to his left are John E. Brubaker, pres., and Dean C. Countrym an, v .p./investm en t officer. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Advisory Service O n Financial Futures O ffered by Bank CHICAGO — Continental Bank has introdu ced its F in an cial F u tu res Advisory Service, designed to help corporations, banks, S&Fs and gov ernment entities manage their expo sure to in te re s t-ra te flu ctu ations through use of financial-futures mar kets. The service, offered through Con tinental’s bond/treasury services de partm ent, will provide continuing measurement of a client’s interest-rate risk and strategic recommendations for managing it most effectively. The bank’s initial task, says Vice President Dennis J. McDonnell, will be to introduce clients to financialfutures concepts and risk-management results that can be obtained. Specifically, the new fee-based ser vice will explore with clients the feasi bility of hedging floating or fixed-rate assets or liabilities, design specific hedging programs and assist in their execution and monitor hedged posi tions. 53 A new third revised edition of the “Directory of Ser vices for Senior Citizens in Nashville-Davidson County” has been published as a joint project of the gerontology program at Fisk University and Commerce Union Bank, Nashville. The directory includes more than 250 listings of services for senior citizens, including health, educa tion, housing and family services. It was compiled by students of the gerontology program with funding pro vided by Commerce Union. Copies are available at all branches of the bank and at Fisk University. Banking services to trade fair merchants, participants and visitors was provided for the fourth consecutive year by Second National, Lexington, Ky., at the Rolex Inter national Kentucky horse trials. Bank services offered dur ing the trials included cash advances on charge cards, services to participating trade-fair merchants, foreign currency exchange, travelers check redemption and de posits. Photography from “The American Coal Miner,” a BankAmerica Corp., San Francisco, spent more than $l/.5 million with over 400 minority-owned companies last year as part of its minority-purchasing program. The bank set up the program in 1972 after a study was made to determine the volume of purchasing that utilized the services and products of minority vendors. The bank defines a minority-owned firm as one with at least 50% ownership in minority hands or at least 51% of the stock owned by minority persons, including Asians, blacks, native Americans and Hispanics. The amount spent by the bank in 1980 represents an increase of $10.6 million over the amount spent a year earlier. A “Battle Of the Banks” was staged recently between em ployees of F ran k lin County M ercan tile Bank, Washington, Mo., and United Bank of Union, Mo. Com petitions at the annual event include an obstacle course, volleyball, egg toss, football, relay races, bucket race, softball, dunking machine and tug-of-war. The winning bank receives a traveling trophy and each team selects its own “honored athlete,” who also receives a trophy. The event is intended to raise funds for the American Cancer Society and the Washington (Mo.) Sheltered Workshop through donations made by those in attendance. special report of the President’s Commission on Coal, was featured in the lobby of Mercantile Trust, St. Louis, recently in conjunction with the 64th annual meeting of the National Coal Association in St. Louis. The black and white prints were selected from commission photography taken in the coal-producing areas of 17 states in Appa lachia, the Midwest and the West. Topics covered hous ing, transportation, health care and lifestyles of coal min ers. A total of $3,600 in scholarship prize money was awarded by Manufacturers Bank, Detroit, to 24 out of more than 13,000 students who took part in a current events scholarship quiz cosponsored by the bank and the Detroit public schools. First-place award was $700. The contest has been held for three years. Fellowship grants of $1,000 each were awarded to two outstanding career teachers in the Fort Worth public schools recently by Fort Worth National. The awards are used for advanced study and winners were chosen In- a committee appointed by the Fort Worth Classroom Teachers Association. The bank also presented a $1,000 check to an elementary teacher who was chosen 1981 teacher of the year by the Fort Worth Classroom Teachers Association. This is the 13th year the bank has made the three awards. A neighborhood handbook containing comprehensive information about recycling and improving homes, orga nizational and financial resources available to neighbor hood groups, credit sources for home and neighborhood improvement efforts and laws relating to mortgages and the responsibility of financial institutions for neighbor hood reinvestment has been published by Manufacturers Bank, Detroit. The 64-page handbook also contains a listing and description of 132 community organizations actively involved in neighborhood improvement in the city. The first edition of the handbook, published by the bank in 1979, was distributed on request to 30,000 indi viduals. 54 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Three graduates of University City (Mo.) High School were recipients of $500 scholarships from Citizens Bank of University City recently. The grants were presented in memory of deceased directors Max Lubin and Donald Green, who were among the bank’s founders, and Wil liam S. Cohen, a director for 13 years, who died last January. The bank has awarded scholarships for the past four years based on academic achievement, extracurricu lar activities, leadership and character of applicants. Funds are applied toward tuition at colleges of the reci pients’ choice. MID-CONTINENT BANKER for August, 1981 W h a t we sell, everybody’s selling! W h a t makes Whstcap any better? The Westcap Corporation is a major regional distributor of cer ta in types o f fix e d -in c o m e securities to primarily small and medium sized financial institu tions— nationwide. A n d so are a lo t o f o th e r companies. What makes Westcap a better option in this kind of market? In one overused word— service. In another oversimplified phrase: We are able to give our customers the kind of attention they deserve, and quite frankly in the computer ized business world, the kind of attention they crave and appreciate. There are simple reasons for our claims. Under one roof Primarily it’s because we are a “one roof” operation. Sales persons, D. Ann Orr, Vice President-Trading, keeps an ear to the ground to know what and where the attractive invest ments are. That’s her job. “My ability to perform for our customers,” says D. Ann, “is directly related to my knowledge of what they are trying to accomplish in their investment goals. Through our sales people, I have immediate and constant access to our customers and can communicate to them what is available in the market relative to their goals at any given time. This ‘dialogue is vital’.” Our sales people sit in the same room with our traders. They personally know one another. When you call Westcap you can reach your contact. He or she will know your name; you’ll know his or hers. It’s a nice kind of attention we both benefitfrom. Size Now let’s talk about size. We are not the smallest firm of our kind by any means. We don’t rank among the giants either. We are a modest sized company, capable of performing every service you’ll need. And, though we have no argument with the giants, we believe our size favorably affects the quality of service we offer. Because we’re not a Goliath, we strive for a better and closer customer relation ship. That means putting our personal ities upfront in an honest effort to serve our smallest customers as we would our largest. Anybody can sell securities! We do it just a little closer to our cus tomers. They appreciate the difference. traders, operations and manage ment enjoy a physical proximity at our Houston offices. That means immediate execution over the phone— buying, selling or trading. It also means everyone’s available at the other end of your phone— at one number. And, the person you talk to on Monday will be there Thursday when you call again. What is the Westcap advantage? Jim Ogg, First Vice President, Sales points out that “our trading desk is on the sales floor. So when we ask a trader for a bid, we often get it—now while the customer is still on the phone. In today’s volatile market that kind of service means more than convenience— it could mean money. Time is^ money where a customer is concerned, whether he’s buying or selling. We’re very much aware of that, here at Westcap.” It eliminates the problem of call ing New York for one service, Chicago for another and never reaching the same person twice. Even when in the same city, some firms are so fragmented, you can b ecom e d iscou raged by being sw itched from d ep artm en t to department. Not so at Westcap! Mobley E. Cox, Jr., Executive Vice President............. “The chore of man agement is made easier when your resources are close at hand. Our resources are our people. And they’re right here, sharing a rooftop, trading, buying and selling together. We are close-at-hand people at Westcap. That’s one of the reasons manage ment, like everyone else, is available to you with a phone call.” T he W estcap Corporation 1 MID-CONTINENT BANKER for August, st, 1981 191 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1300 Main Street ! Houston, Texas 77002 / 713:631-1 111 55 H andicapped Find Banking Easy A t Bank of A lbuquerque EAF, blind, mentally retarded and physically handicapped persons in Albuquerque should have little or no trouble doing their bank ing, thanks to Bank of Albuquerque. The bank has formed a “special needs department” to coordinate such new services as: bank by braille; special checks for the visually impaired and blind; telecommunications-phone ac cess and interpreter services for the deaf; accessibility for those in wheel chairs and classes in banking fun- D TTY Service in Ft. Worth First Nat l, Fort Worth, says it is the first bank in its area to offer overthe-phone banking services to the speech- and hearing-impaired. It has installed a telecommunication sys tem (TTY), which features a portable teletypewriter that uses the phone to transmit typed messages. Linda Kw entus of First N a t'l, Fort W o r th , d e m o n s tr a te s te le c o m m u n ication system (TTY), recently installed a t bank to b en efit speechand h ea rin g -im p a rie d customers. “We are pleased to offer this TTY service, which will make banking more convenient and accessible for our speech- and hearing-impaired customers,” Says Sam Gill, e.v.p. and mgr./administrative banking group. “By using an in-home TTY unit, a customer can call the First’s TTY number anytime between 8 a.m. and 6 p.m., Monday through Friday, and carry on a written con versation regarding savings or checking accounts, loan payments, money-market CDs or any other banking need.” 56 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis damentals for mentally retarded per sons. The bank doesn’t charge for such services. The new department, headed by Kathy O’Callaghan, special needs con sultant, was initiated by the bank’s board in a resolution of official bank policy to provide the special assistance needed by a certain segment of the population if that segment is to obtain independent financial experience. Bank by braille includes special check systems for the visually im paired (enlarged checks for the partial ly sighted, embossed to simplify find ing the proper lines on which to write) and end-stub checks for totally blind customers using braille slates (metal slates with which blind persons can in d ep en d ently handle th e ir own checking and savings accounts). In addition, the bank provides brailled statements so blind customers can “read” their own statements. H earing-impaired customers are not forgotten because the bank pro vides sign language for them. In fact, 85% of its employees already can “con verse” with their hands, having taken a course sponsored by the bank. Miss O ’Callaghan says that another signlanguage course, which began in July, should result in 95% of the bank staff being able to use it by summer’s end. The bank also offers a telecom m unication system (TTY), which allows deaf customers to conduct busi ness by phone, rather than having to go to the bank. Now, using a device in their homes, these customers can con tact the bank by phone and receive information available to all customers. The TTY, which requires no special wiring or connection, has a display screen and is designed expressly for deaf people. It’s activated simply by placing one’s phone handset onto the built-in coupler. The customer dials the bank number, and an indicator light tells the deaf person whether the number they’ve reached is ringing or is busy. At the other end, the receiving party types a greeting that flashes across an electronic readout display, and the conversation begins. For the wheel-chair customers, the bank has installed a lowered teller win dow at its main office and is designing parking spaces at the main office and bran ch es for custom ers in w heel chairs. Voter Guide Offered Everything needed to communi cate with the Reagan Administration and members of the 97th U. S. Con gress — except an opinion — can be found in the new edition of Budd Co. s ‘Voter Information Guide to Federal Officials.” The free 72-page booklet includes Washington mailing addresses and phone numbers in a state-by-state alphabetical listing of U. S. senators and representatives. Information about the President, Vice President, cabinet members and White House staff also are included. Sections of the guide show com mittee assignments of each congress man, important Washington phone numbers, addressing procedures for writing officials, officers of the Con gress and an outline of how federal laws are made. Copies can be obtained by writing the firm s public affairs department, 3155 W. Big Beaver Road, Troy, MI 48084. As another part of its special-needs program, the bank sponsors classes in banking fundamentals for mentally re tarded individuals working in the com munity and living in independent or semi-independent situations. They are taught on an as-needed basis (current ly two times a week through the sum mer). Miss O’Callaghan works closely with local service and social organiza tions, as well as individuals who write to her asking for assistance. Usually, classes are held at the main office. However, many will be held during the school year in special education classes at Albuquerque public schools, at private schools and the State School for the Deaf in Santa Fe. In teaching these classes, Miss O ’Callaghan reviews budgeting and savings and checking accounts, includ ing statement balancing. Loan applica tions, interest, usury laws or credit are taught infrequently, but should any of these subjects arise, Miss O’Callaghan will discuss them. Besides the above elements of this program, Bank of Albuquerque is re viewing all job descriptions to deter mine which of its positions can be handled by handicapped employees. Miss O’Callaghan reports that re sponse to this special-needs program has been positive, and numerous indi viduals and business accounts have been opened that can be traced direct ly to it. In addition, she has received calls from other financial institutions across the country and has sent them information on the program. • • MID-CONTINENT BANKER for August, 1981 “A holding com pany is a holding com pany is a holding com pany” O r is it? ¡} t- ^ Let’s face it. Holding companies aren’t always alike. So if your correspondent bank thinks all holding company financing is the same, maybe it’s time to look for a different correspondent bank. Like Continental Bank. At Continental we don’t have any pre-conceived notions about what a holding company in your situation might need. W e put together a credit especially made for a holding company of your size, in your state, and in your circum stances. W ith the combination of terms your individual situation calls for. And with any necessary regulatory modifications, evaluation analyses, and even negotiation assistance you might require. That’s the sort of flexibility you expect. And deserve. You expect decisiveness, too. At Continental, you get it. Credit requests don’t go from committee to committee. They go directly to your account m anager—the person who can say “yes” or “no” on most loans. You get a decision fast. From the person who made it. Call John Tingleff at (312) 828-2191 about your holding company financing. We won’t try to put you in one pigeonhole or another. W e’ll just work out the credit that s best for you. It’s what you expect from a top correspondent bank. At Continental Bank, it’s reality. CONTINENTAL BANK Continental Illinois National Bank and Trust Company of Chicago 231 South LaSalle Street, Chicago, Illinois 60693 MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 57 Money-Market Funds: Are Reserve Requirements In Their Future? Fed Chairman Volcker Makes Such Proposal PROPOSAL by Fed Chairman Paul Volcker that reserve re quirements be imposed on moneymarket mutual funds (MMMFs) has brought hearty agreement from the ABA. In fact, Robert W. Renner, chairman, Citizens State, Hartford City, Ind., and head of a 1980 ABA money-market strike force, sums it up this way: “It’s about time!” As could be expected, the Invest ment Company Institute (ICI), head quartered in Washington, D. C ., was quick to voice opposition to Mr. Volck er s suggestion. (See accompanying article.) One of the reasons the Fed chair man would like to have reserves placed A on MMMFs is that their phenomenal growth to more than $120 billion poses a problem for conduct of the Fed’s monetary policy. And as bankers have been pointing out all along, a substan tial amount of this money has been drawn out of community and regional banks. In addition, these funds offer check-writing services, and this — coupled with the fact these funds are offering higher interest rates than banks can pay — puts banks at a great competitive disadvantage. Specifically, Mr. Volcker would like legislation passed authorizing the Fed to impose reserve requirements on those money-market-fund shares that, in fact, serve as the functional equiva Volcker's Proposal Termed 'Regressive Step' by ICI A R E G R E SSIV E STEP. That’s how the Investment Company Institute (ICI), Washington, D. C., describes Fed Chair man Paul Volcker’s suggestion that reserve requirements be imposed on money-market funds offering check-writing services. The ICI maintains this proposal, if it becomes a reality, would reimpose unjustified discrimination between large and small investors. The ICI, the national association of mutual funds, estimates that nearly half the 6,000,000 shareholders in money-market funds have investments worth less than $10,000 each. “Chairman Volcker’s recommendations will receive careful consid eration by the money-market fund industry,” says David Silver, ICI president. “At first reading, it appears that placing reserve require ments on money-market funds offering transaction services will reimpose regulatory discrimination between small investors and small businesses on the one hand and affluent individuals and large businesses on the other in their ability to earn high returns on their cash. “Affluent individuals and large businesses still would obtain the highest interest rates while maintaining zero-balance checking accounts and by using other devices that enable them to maximize returns on their cash. Everyone else trying to manage their money and earn the highest returns would take a cut in yields. Thus, the proposal would increase the invidious discrimination that current interest-rate controls require between large and small investors.” 58 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis lent of transaction balances and to en force a cleaner distinction between transaction balances and other liquid savings. In other words, he is request ing that the basic prem ise of the Monetary Control Act (MCA) be kept in tact by exten din g its reserv erequirement provisions to encompass those MMMF shares that provide the function of transaction balances. Under the MCA, a transaction ac count is one that’s accessible by check or debit card or one that can be used with some frequency for third-party transfers by other means, such as by telephone. In testifying before the House Bank ing Com m ittee’s Subcommittee on Domestic Monetary Policy, Chairman Volcker said the rapid growth of these funds is having strong implications for competitive positions of financial in stitutions, cost and availability of cred it to certain borrowers and imple mentation of monetary policy. “. . . Given the regulatory and eco nomic constraints on long-established savings and payments instruments,” Mr. Volcker continued, “the search for yield and liquidity has led increasingly to the issue of close substitutes for tra ditional deposit instruments. The re sultant blurring of distinctions be tween what traditionally has been con sidered money and these close substi tutes could result in potentially serious com plications for the conduct of monetary policy — particularly for a policy approach focusing on monetary aggregates. Considerations of equity and fair treatment among institutions offering comparable services arise as well. In a broader sense, I also am concerned about the structural im plications for the financial system of more and more short-term liabilities subject to rapid shifting among institu tions.” He pointed out that funds moving into money-market funds simply are MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis recycled into purchases of moneymarket assets, both domestically and internationally. Since most of these assets are issued by banks or their large business customers, said Mr. Volcker, growth of the funds does not appear to have added to liquidity pressures on depositories as a whole. But, he con tinued, money-market funds do tend to concentrate their investments with larger banks and corporations. To the extent that these funds are diverting deposits from sm aller banks and thrifts, the effect, as he sees it, is, in the first instance, to channel funds away from borrowers and geographic areas more dependent on these in stitutions. While market incentives will tend to redistribute the funds to the point of demand, said the Fed chairman, at least for a time, distribu tion of credit is affected. T h e tendency for money funds to divert resources from smaller banks and thrifts,” Mr. Volcker testified, “re mains of concern to the Federal Re serve. The board appreciates industry efforts that have been made to broaden the number of banking and thrift in stitutions from which money funds will purchase negotiable CDs. We also understand those efforts have been im peded by a variety of problems in volved with soliciting, packaging and placing CD issues from a large number of relatively small institutions that ordinarily have not raised funds in money markets. Private initiatives to overcome these problems should be encouraged. “Thus far, evidence suggests that a greater proportion of money-marketfund shares, taken as a whole, seem to substitute for time or savings deposits — as well as purchases of short-term securities — than for transaction bal ances. Despite their easy redeemability, available aggregate data indicate that money-fund shares on the average turn over only about three times each year —- roughly comparable to savings accounts — and that only a few checks are drawn on the ‘average’ account each year. However, these averages undoubtedly mask a significant am ount of tran saction activity. Moreover, there are indications that such activity may become more impor tant. F or one, several brokerage houses apparently are contemplating offering combined margin and moneymarket-fund accounts with checkingaccount capabilities. If they are similar to accounts of this type currently avail able, they will have no minimum de nomination for checks and will be ac cessible by a credit card, greatly in creasing the opportunity for them to 60 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis willing to cope with the problems raised by the growth of these instru ments, we have to recognize and be prepared to live with the conse VOLCKER quences for the meaning and control of particular monetary aggregates. “Competitive and equity considera tions point in the same direction. We should not be surprised that moneym arket-fund assets rise relatively rapidly when those funds do not bear be used extensively for transaction regulatory costs associated with similar purposes. Use of money-fund balances instrum ents in depository institu for transactions would be further en tions.” couraged if discussions now underway In outlining his proposal that to link credit cards and money-market M M M Fs be subject to reserve re funds outside the context of margin quirements, the Fed official suggested accounts come to fruition. Moreover, that the Fed should have sufficient even the relatively infrequent use of flexible authority to put forward defini large checks against a money-market tions of a transaction account to in clude the many new types of plans with "Thus fa r, evidence suggests transaction capability that are likely to be developed. He gave this example: that a greater proportion of an integral coupling of a credit card m o n e y -m a rk e t-fu n d shares, and a money-market fund or other taken as a whole, seem to sub account, even if the money fund is accessed only once a month to pay stitute for time or savings de accumulated charges. posits — as well as purchases Mr. Volcker, in his testimony, fore of short-term securities — than cast that money-market funds would react to imposition of reserve require for transaction balances." ments on shares that can be used for transaction purposes by segregating fund can enable a customer to reduce such accounts, subject to reserves, his balance in a traditional checking from accounts without “checking” account by bunching his ‘small’ checks privileges. Their customers, he be on that account after a transfer from a lieves, would be offered a choice among types of funds, with the “trans money-market fund. ” According to Chairman Volcker, action-balance” account offering a many traditional intermediaries — by somewhat lower yield. He reminded restructuring their assets — are pre his listeners that during the short pared to compete for savers’ dollars, period last year when marginal reserve but are prevented from doing so by requirements were imposed on these regulations, such as interest-rate ceil funds, fund managements amply dem ings and reserve requirements, which onstrated the feasibility and relative directly affect rates of return they can ease of “clo n in g ” th e ir funds to accommodate changes in the regula pay the public. In referring to M M M Fs’ growth, tory environment. Mr. Volcker said, T would not suggest He said that regulatory incentives to that the effectiveness of monetary con separate accounts with transaction trol has been crucially affected so far. capabilities from those providing a We have, however, had to make in convenient and relatively liquid outlet creasingly difficult judgments about for savings would have several benefi implications of this growth for the de cial consequences. They would pro fined monetary aggregates. The pros vide more positive identification of the pect for continued rapid growth of transaction com ponent of moneymoney-market-fund shares, particu market-fund shares for statistical and larly should their significance as trans analytical purposes. Specifically, said action balances rise, as seems likely, Chairman Volcker, the “M i” defini makes the issue much more pointed. tion of money would be cleaner. There is a clear logical case for closing a Monetary control would not be com gap in a monetary-control system built plicated by movements among differ on the premise that reserves should be ent types of transaction accounts. As a assessed against transaction balances matter of equity, one important artifi wherever they might be held. Given cial incentive favoring use of moneyrecent and prospective developments, market funds over traditional deposi the point has strong practical, as well tory institutions would be removed. as logical, significance. If we are un These objectives, he continued, are all MID-CONTINENT BANKER for August, 1981 fully consistent with the philosophic framework of the MCA. He assured subcommittee members that the proposed approach would, in no way, impair returns available to in dividuals looking to M M M Fs as an attractive savings vehicle; such “non transaction” accounts would not be subject to reserve requirements. The fact is, said Mr. Volcker, even for those for whom transaction characteristics are important, yields on transactionoriented money-market funds in cur rent circumstances still would exceed those available at such accounts at other institutions. There’s no reason to believe, said the Fed chairman, that an approach along the lines of his proposal would lead to substantial shifts in the current distribution of funds among depository institutions and moneymarket funds, although one perverse regulatory incentive to use of these funds as transaction balances would be removed. In time, as interest-rate ceilings are phased out, and as the con stellation of interest rates changes, he foresees the relative advantages and disadvantages of money-market funds vis-à-vis depository institutions re flecting market competition. Mean w hile, individuals and businesses would be left with a full range of choices. “ Sim ilar trea tm en t of m oneymarket-fund shares and deposits for reserve-requirem ent purposes may raise the question of whether money- market funds might have access to jor part, been stimulated by strong in Federal Reserve services and to feder centives growing out of high and vari al insurance on share accounts, said able interest rates. Those incentives should recede, as we are successful in Mr. Volcker. “We do not believe that is either necessary or desirable. Re coping with inflation, but it may take some time for rates to decline and a serve requirements are a part of the more stable economic environment to apparatus of monetary control and, in emerge. Moreover, advances in tech one significant respect, would level the playing field” in competition for nology, greater freedom for interna tional flows of funds and new packages transactions business. However, those of financial services facilitated by com reserv e req u irem en ts would not otherwise impinge on the characteris binations of firms in different sectors of tics of the funds or on their investment financial markets are likely to give rise portfolios. Banks and thrifts will be fac to further rapid developments in in ing regulatory ceilings on time and sav- struments and techniques whatever ings-deposit rates for some time and on the course of inflation, economy and demand-deposit rates for the foresee interest rates. That they will do so is testimony to the vitality of our freeable future. Their asset acquisitions and other operations must conform to a market system and to the wisdom of allowing wide latitude for this system host of other regulations, including, for in stan ce, the Com m unity R e to operate. “As lawmakers and regulators, we investment Act. In other words, in im portant respects, depository institu have a responsibility to see to it that tions and money funds are, and will this process of innovation does not im remain, different institutions; compa pair the requirements of monetaryrable treatment with respect to re policy formation and implementation serve requirements does not, in our or the necessity to protect the safety judgment, require the same treatment and soundness of the financial system in all respects. Indeed, extending and the public’s confidence in it. The Federal Reserve services and federal- proposals I have reviewed should be insurance privileges to the funds viewed in that light — not as a futile would seem to imply that we also take effort to turn back the clock, to dis the further step of invoking the whole courage change or to stifle a new in panoply of banking-type controls, a stitution, but rather to provide a step that would seem clearly unneces framework within which change can be consistent with continuing needs of sary and undesirable.” In conclusion, Chairman Volcker public policy.” • • testified: “Recent changes have, in ma A B A Backs V olcker's Proposal HE ABA supports Fed Chairman Paul Volcker’s proposal to impose reserv e req u irem e n ts on m oneymarket funds (MMFs) that serve as transaction accounts. In fact, even before Mr. Volcker made his recommendation before the Subcommittee on Domestic Monetary Policy of the House Banking commit tee, ABA President Lee Gunderson, president, Bank of Osceola, W is., appeared before the Senate Banking Committee on the subject of these funds. The com m ittee, headed by Senator Jake Garn (R.,Utah), held two days of oversight hearings on the growth of MMFs. After the Fed chairman made his recommendation, an ABA staff mem ber told M i d - C o n t i n e n t B a n k e r that Mr. Volcker’s philosophy is in keeping with the association’s position that checks/transaction accounts should have reserves — that this is equitable since banks have to have reserves T against their transaction accounts. If the proposal becomes a reality, the ABA staffer says, M M F yields would he reduced about 1%. Howev er, he adds, firms offering those funds probably then would set up two funds — one would offer th ird -p arty pavment transfers, and the other still would be accessible, but not through such transfers. Mr. Volcker also pre dicted this in his testimony. Robert W. Renner, who headed an ABA money-market strike force on MMFs last year, told M i d - C o n t i n e n t B a n k e r he also foresees such an arrangement if reserves are placed on MMFs. Mr. Renner, chairman/CEO, Citizens State, Hartford City, Ind., suggests cutting out all third-partypayment transfers in these funds. In addition, he would like M M Fs to “clean up their advertising.’ As it is now, these funds’ ads are not subject to the many restrictions that apply to banks’ advertising. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “Granted,” Mr. Renner concludes, “the amount of checks being written is not large, but more and more of them are being written. One even came through my bank the other day! In his testimony, ABA President Gunderson voiced bankers’ concern at seeing MMFs being promoted to the public as though they are demanddeposit accounts, featuring high in terest rates coupled with accessibility through checks. “Traditionally,” he told the sena tors, “this type of product has fallen within the exclusive domain of deposi tory institutions. This was the legacy of the Banking Act of 1933, the GlassStegall Act. “ But m oney-m arket funds now make it clear that the old GlassSteagall divisions no longer serve to provide distinctions between the dif ferent sectors of the financial-services industry. But distinctions do exist. Banks serve the credit needs of their 61 READY TO WORK WITH YOU on bank participations involving new or existing bank customers. READY TO WORK FOR YOU on separate accommodations providing flexible solutions to difficult loan requests. We can help you build strong customer relationships with experienced and specialized handling of . . . - Accounts Receivable Loans - Inventory Financing - Fixed Asset Arrangements ATLANTA Regional Center 33 40 Peachtree Road • Suite 560 Atlanta, Georgia 30326 (404) 26 1-9393 CHICAGO 55 West Monroe • Suite 1150 Chicago, Illinois 60603 (312) 346-5015 DALLAS Regional Center 12201 Merit Drive, Suite 860 Dallas, Texas 75251 (214) 233-6981 KANSAS CITY Regional Center 10950 Grandview • Suite 250 Overland Park, Kansas 66210 (913) 648-002 0 LOS ANGELES Regional Center 1605 W . Olympic Blvd. • Suite 411 Los Angeles, California 90015 (213) 683-806 0 local communities — money-market funds do not. Banks are required to set aside non-interest-bearing reserves against their transaction accounts — money-market funds have no such re quirement. " It is inequitable on its face for federal regulators to require reserves against one type of transaction account and not against another type of transac tion account.” Mr. Gunderson proposed three ways to correct this fundamental in equity: 1. Reserves could be required against those M M Fs that feature ch eckin g. 2. I f reserv es are not deemed to be necessary, they should not be required against any transaction account, including those at depository institutions. 3. The Fed could pay in terest on required reserves. Mr. Gunderson pointed out that it was thought originally that GlassSteagall kept commercial banks out of underwriting and dealing in securities and kept securities underwriters and dealers out of taking deposits. But marketplace developments are show ing that Glass-Steagall is not a barrier, but a one-way street because, as he put it, m arket developm ents and an aberration in the law make it clear that only prohibitions on commercial banks are working. "There is something profoundly dis turbing, ” said Mr. Gunderson, “when I see the securities industry wrap itself in the flag of free enterprise on the one hand, then, on the other hand, shield itself behind the Glass-Steagall Act in protecting its own service-line mo nopolies. “I point specifically to the prohibi tion against banks managing their own m oney-m arket-m u tu al funds and Changes at RMA PHILADELPHIA — Clarence R. Reed, executive vice president, Robert Morris Associates, has been named executive editor, J o u r n a l o f C o m m ercia l B an k L e n d in g , RMA’s monthly publication. Mr. Reed joined RMA in 1958, became the J o u r n a l’s editor in 1960 and executive vice president in 1961. Last year, he was named to RMA s board and executive commit tee. Charlotte Weisman, formerly managing editor of the Jo u r n a l, has succeeded Mr. Reed as editor. She has been with RMA since 1976 and is publications manager. against banks underwriting revenue bonds.” The ABA staff member told M i d C o n t i n e n t B a n k e r that MMFs are being used as transaction accounts and thus affect the Fed’s monetary policy and the definition of what is money. Reserves, he said, should apply to any account counted as money. He pointed out that Treasury Sec retary Donald Regan is not in favor of Chairman V olcker’s proposal, but favors deregulation. The ABA man said he wonders what Mr. Regan means by that statement. He added that the ABA believes Congress will not act swiftly on this proposal, and he asked, “Flow hard will the Fed push it?” If the Fed doesn t get behind the proposal, he said, Congress won’t act on it. He pointed out that there was some in terest in placing restrictions on MMFs some time ago, but it weakened, and those who proposed such restrictions have backed down. • • W e talk industrial It’s sometimes a whole different language. And really being able to understand the business challenges and opportunities of your industrial clients can make all the difference. That’s where we can help. We’re Armco Industrial Credit Corporation. With our participation programs, we can help you offer your customers equipment or accounts receivable financing that might not otherwise be possible. Because we specialize in businesses that Armco itself has expertise in. To find out how we can help you help your clients, call or write to: Armco Industrial Credit Corporation, Dept 171A, 2995 L B J Freeway, Dallas, Texas 75234. 214-247-7044, 1-800-527-0488. (In Texas call 1-800-442-3824.) ARMCO V 62 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ARMCO INDUSTRIAL CREDIT CORPORATION MID-CONTINENT BANKER for August, 1981 NBD Bancorp, Inc. Statement of Condition BOARD OF DIRECTORS Robert M. Surdam Chairman of the Board Charles T. Fisher III President Joseph G. Conway Vice Chairman of the Board Richard H. Cummings CONSOLIDATED BALANCE SHEET-June 30, 1981 Vice Chairman of the Board (dollars in thousands) ASSETS A. H. Aymond Cash and Due From Banks (including Foreign Time Deposits of $1,589,406).................................................... $ Investment Securities—At Amortized Cost (Market value $1,451,685)................................................ Trading Account Securities—At Lower of Cost or Market (Market value $18,564)........................................ Money Market Investments.................................................. Loans: Commercial......................................................................... Real Estate—Construction................................................ Real Estate—M ortgage..................................................... Consumer............................................................................ Foreign................................................................................ Allowance For Loan Losses.............................................. Unearned Incom e.............................................................. 3,220,241 Director and Former Chairman Consumers Power Company David K. Easlick 1,654,330 18,564 1,582,966 2,688,730 58,314 1,190,924 562,009 606,833 5,106,810 (64,984) (67,766) 4,974,060 29,360 Lease Financing..................................................................... Bank Premises and Equipment (at cost less accumulated depreciation of $90,210)............................. 129,313 332,161 Customers’ Liability on Acceptances.................................. Other Assets........................................................................... 242,237 Total Assets...........................................................$12,183,232 President The Michigan Bell Telephone Company Bernard M. Fauber Chairman of the Board K mart Corporation Martha W. Griffiths Partner, Griffiths & Griffiths Robert W. Hartwell President Cliffs Electric Service Company Joseph L. Hudson, Jr. Chairman The J. L. Hudson Company Richard Manoogian President Masco Corporation Wade H. McCree, Jr. Lewis M. Simes Professor of Law University of Michigan Don T. McKone Chairman of the Board Libbey-Owens-Ford Company LIABILITIES AND SHAREHOLDERS EQUITY Deposits: Demand....................................................................... Certified and Other Official Checks........................ Savings........................................................................ T im e............................................................................. Certificates of Deposit............................................... Money Market Certificates....................................... Foreign O ffice............................................................ Total Deposits.............................................. Short-Term Borrowings................................................. Liability on Acceptances.............................................. Accrued Expenses and Sundry Liabilities................. Long-Term D ebt............................................................. Total Liabilities............................................. Shareholders’ Equity: Preferred Stock—No Par Value............................... No. of Shares Authorized.............. 1,000,000 Issued..................... — Common Stock—Par Value $6.25............................ No. of Shares Authorized...............20,000,000 Issued.......................12,265,747 Capital Surplus........................................................... Retained Earnings..................................................... Less Treasury Stock-at cost—2,746 Shares.......... Total Shareholders’ Equity............................. Total Liabilities and Shareholders' Equity James H. McNeal, Jr. $ 2,305,933 457,481 1,427,246 523,072 1,399,110 1,412,250 1,664,565 9,189,657 1,665,201 332,161 198,126 120,414 11,505,559 President The Budd Company Thomas A. Murphy Director and Former Chairman General Motors Corporation Irving Rose Partner, Edward Rose & Sons Arthur R. Seder, Jr. Chairman and President American Natural Resources Company Peter W. Stroh President The Stroh Brewery Company ADVISORY MEMBERS Richard C. Gerstenberg Former Chairman General Motors Corporation 76,661 John R. Hamann Former President The Detroit Edison Company 183,312 417,773 ________(73) 677,673 $12,183,232 Walton A. Lewis Chairman of the Board Lewis & Thompson Agency, Inc. Robert B. Semple Director BASF America Corporation Assets carried at approximately $792,000,000 (including U.S. Treasury Securities carried at $24,000,000) were pledged at June 30, 1981, to secure public deposits (including deposits of $78,960,000 of the Treasurer, State of Michigan) and for other purposes required by law. Outstanding standby letters of credit at June 30, 1981, approximated $57,000,000. For more information about the Corporation, write Financial Communications for a copy of our latest financial report. Or call (313) 225-2596. NBD Bancorp, Inc. is listed on the New York Stock Exchange (Ticker Symbol NBD). BANCORP 611 Woodward Avenue, Detroit, Michigan 48226 National Bank of Detroit and its international banking and financing subsidiary, International Bank of Detroit; NBD Commerce Bank, Lansing; NBD Port Huron Bank; NBD Troy Bank; NBD Dearborn Bank; Grand Valley National Bank, Grandville; First State Bank of Saginaw; NBD Portage Bank; Peoples Bank & Trust of Alpena; Farmers & Merchants National Bank in Benton Harbor; West Michigan Financial Corporation and its banking subsidiaries, The Cadillac State Bank and First National Bank of Evart; National Ann Arbor Corporation and its banking subsidiaries, National Bank and Trust Company of Ann Arbor and Monroe County Bank; American Business Finance, Inc.; NBD Mortgage Company; NBD Insurance Company; NBD Financial Services of Florida, Inc.; Michigan Capital and Service, Inc; NBD Financial Services of Michigan, Inc. M em bers FDIC MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 63 Banks C ontinue Battle Against M o n e y -M a rk e t Funds S m oney-market-mutual funds (M M M Fs) continue to grow, commercial banks are creating pro grams to help them com pete with these funds. The July issue of M i d C o n t i n e n t B a n k e r described several such programs. Now, additional pro grams have been announced. Commerce Banks o f Missouri. As lit tle as $5,000 now can buy a new sav ings certificate, called Bonus Certifi cate, at 38 banks belonging to Com merce Bancshares, headquartered in Kansas City. It allows purchasers with only $5,000 to earn interest usually paid on the $10,000 182-day moneymarket certificate. The Bonus CD also matures in 182 days and is insured by the FD IC . Under the Bonus CD plan, a Com merce bank will lend customers up to $5,000 to meet the $10,000 minimum. The money borrowed is charged an interest rate of 2% over the moneymarket rate. Commerce banks offer this CD as an insured alternative to mutual funds and repurchase agreements, which are not insured since they do not repre sent deposits. “We think the time is right for this new certificate,” says David A. Rismiller, president, Commerce Bank, Kan sas City. “Savers want the high in terest rate, but better yet, there is no risk to their investment because the FD IC insures its safety.” Hord Hardin II, president, Commerce-Manchester Bank, St. Louis, says, “Our expectations are that the high interest rate, insured safety and short-term maturity features will make the Bonus Certificate popular not only with existing customers, but with non customers as well.” Northern Trust, Chicago. This bank has begun offering the Flexible CD, which offers guaranteed rates, cash availability and FD IC insurance. While providing the high interest A 64 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rates of N orthern T ru st’s MoneyMarket Certificate, the new Flexible CD permits a customer to borrow up to the amount on deposit in the CD, less $3,000, at a preferred interest rate only 1% higher than the interest the certificate earns. The bank believes the new product will be especially attractive to those who want to earn the higher interest rates offered through money-market savings certificates without denying themselves access to funds that may be needed for em ergencies and unex pected opportunities. Com m erce introduces the $104000 M oney M arket C ertificate for people who don’t have Sio^ooo. The Commerce Bonus Certificate That is. unless you buy Commerce's new Bonus Certificate. With a Bonus Certificate, youcan put in as little as $5.01«), and well lend you the difference you need to reach the $10.000 minimum, in increments of $1,000. Then at the end of 6 months, we'll deposit a check into your Commerce checking or savings charged on the amount of money you borrowed. Today’s Money Market Certificate rate is 00.00% ijj! Commerce Banks of Greater St. Louis This is sam ple of ad Commerce banks of Missouri are using to tell public about their n ew Bonus Certificate. This ad , sponsored by St. Louis-area Commerce banks, does not show certificate rate because rates change every w eek. W hen a F lex ib le-C D account is opened, the customer receives special checks that allow the customer to bor row $500 or more. The loan can be repaid at any time, in installments of any amount, or all at once. However, if the borrowing is not prepaid, the loan and interest will be deducted auto matically when the Flexible CD is re deemed or renewed. The Flexible CD can be bought, or renewed, for $10,000 or more and ma tures in 26 weeks. The interest rate, determined weekly and based on the previous week’s auction rate for sixmonth Treasury bills, remains con stant for the entire 26-week term. M a n u fa ctu rers H anover Trust. New instruments, known as Market Plus accounts, now are offered by this New York City-based bank. They pro vide a line of credit linked to sixmonth, 30-month and a combination of 6/30-month time deposits. Minimum initial deposits required are $10,000 for the six-month and $1,000 for the 30-month. The option account allows customers to take advantage of shortand medium-term interest swings by guaranteeing the 2 1/2-vear interest rate for a full 30 months, by providing the opportunity of moving most of the funds into a six-month account if short er-term rates are more attractive. By using the line of credit, custom ers have access to money at 1% interest rate simply by writing a check. In addi tion, the bank says, other benefits a customer receives when opening a Market Plus Account include interest paid monthly, a cash bonus and a NOW account free of monthly mainte nance charges for a year. “These new accounts,” says Edward D. Miller, senior vice president/deputy general manager, branch-banking group, “are designed for the customer who is looking for liquidity, flexibility and the highest rates we currently are allowed to offer. • • MID-CONTINENT BANKER for August, 1981 American Express Travelers Cheques MORE REASONS W H Y YOUR CUSTOMERS WILL ASK FOR THEM BYNAM E. Every year, lots of things are lost or stolen with people’s travelers cheques. Like credit cards, cash, and identification. T h at’s why American Express® Travelers Cheques has introduced 5 special services designed to help protect your customers during those times when they may need more than a travelers cheque refund. Extra vacation protection at no extra cost throughout the U .S . and Canada. All, only from American Express Travelers Cheques. 08& Memo. '■Hom y'S^' Check Cashing If they need extra cash, any of our Travel Service or Representative offices in the U .S. or Canada will, following authorization, cash a U .S. or Canadian check for up to $200 during business hours. Credit Card Cancellation If your customers lose credit cards with their travelers cheques, we’ll help them cancel their cards. When they call our Refund Center to report their travelers cheque loss, they simply tell the refund representative that their credit cards are also missing. No matter what time it is, they’ll be switched to someone who will assist in cancelling all their U .S. and Canadian-issued cards. Temporary ID Card m m m m m p m m s mm If they lose all their iden * & s s A i§ e if€ A tf m a m m tification with their %PMM33 • - ! • • j travelers cheques, we’ll I issue them a temporary ID. Following verification, they can pick up the ID ljwete« TEM P O R A R Y at an American Express ID E N T IF IC A T IO N Travel Service office in N O T A C R tO rr O R C M tC K G U A R A N TE E C A R O the U .S. or Canada during business hours. It’s an ID with their name and our name on it, so they can use us as a refer ence wherever they go. 24'H o u r Travel Service Hotline If they need to change travel plans because of their travelers cheque loss, one of our refund representatives can transfer them to the American Express Travel Service Hotline which can help arrange air line, car and hotel reservations. Message Service 'A"3*,"i*cs** If, following their travelers cheque loss, they need to notify someone of a change in travel plans and they’re having trouble reaching them on the phone, we’ll send a Mailgram® for them at no charge, anywhere in the U. S. or Canada. At any hour of the day or night. »MEBICftMB ■EXPRESS V '% -4. c * % https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Now we p rotect m ore than just their money. Now we help p rotect their vacation. Packaged-CD Program for Banks 'Exceeds Expectations' of Issuer HE FIR ST ISSU E of the Pack aged Certificate-of-Deposit Pro gram designed for banks by Merrill Lynch M oney M arkets, In c. (MLMMI), New York City, totaled $130 million, which is $30 million more than the firm was aiming for when it announced the program last May 12. Another CD-packaging program was announced in June by Chicago’s American National, which is working with Shearson Daily Dividend, Inc., to return core deposits to community banks. American National says it is the largest bank to date to develop such a program. The Merrill Lynch program, de scribed in a feature article in the June issue of M i d - C o n t i n e n t B a n k e r , packages F D IC / F S L IC -in su re d $100,000 CDs from community and regional banks and S& Ls into $1million and $5-million units for sale to money-market funds and institutional investors. It is designed for banks ranging in deposit size from $100 mil lion to $1 billion and S&Ls whose de posit sizes go from $200 million to $2 billion. According to Roger M. Vasey, presi dent of MLMM I, a subsidiary of Mer rill Lynch, Pierce, Fenner & Smith, In c., acceptance of the issue “ex ceeded our expectations. Response from the banks has been excellent.” He says 50 regional and community banks and four S&Ls in 16 states par ticipated in the initial issue. Purchasers of the CDs included bank trust departments, municipali ties and credit unions, says Mr. Vasey. Additional money-market funds will take part in subsequent issues, with the next issue scheduled for sale Au gust 25. In most cases, continues Mr. Vasey, participation in the M errill Lynch program must be approved by directors and shareholders of the indi vidual funds, and it takes some time to put such a procedure into effect. He reports that directors of Dreyfus Liquid Assets have authorized their funds to invest in subsequent issues of the program. The first issue was priced at 17.30% to participating banks and S&Ls. This rate was based on the Fed CD composit rate — average cost of moneycenter-bank CDs — on the day prior to issuance. MLMM I reports that bankers were uniformly enthusiastic about the pro 66 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis gram. Alan R. Morse Jr., vice presi dent, U .S.T. Holding Corp., and ex ecutive vice president, United States Trust (Boston), which is participating in the program, says, “Merrill Lynch’s action was extremely sensitive to the need to recycle capital back to small and medium-sized banks. By recycling these funds, regional and community banks can provide more loans for their markets and customers. It’s a responsi ble move on the part of Merrill Lynch, and I hope it will be done by others.” Charles Ferguson, president, Uni versity N ational, D en v er, says, “ Funds received from the M errill Lynch program will better position us to meet loan demand in our operating area.” American National o f Chicago and Shearson Daily Dividend, Inc., a sub sidiary of Shearson Loeb Rhoades, Inc. (recen tly acquired by AmericanExpress), are packaging negoti able CDs for sale to Shearson Daily. Under this program: • The geographical focus will be on depository institutions in Illinois, Indi ana, Kentucky, Missouri, Iowa, Michi gan, Wisconsin, Minnesota and Ne braska. • Negotiable CDs in the package being purchased by the fund will be in principal amounts of $100,000 per de pository institution, complying with FDIC/FSLIC limits. • The CDs will be written for 90 days with the intent of allowing the fund and participating banks and S&Ls to renew them for up to one year, thus providing a more stable source of funds to participating institutions. In announcing the new program, Michael E. Tobin, American Nation al’s chairman, said, “It is critical that every banker recognise that his source of funds, no matter how remote or his torically insulated from other influ ences, is affected increasingly by to day’s dynamic money markets. Ero sion of deposits faced by our corres pondent-banking network motivated us to negotiate the agreement with the fund. The intent of the program is to facilitate the return of deposits into community banks and to stimulate their local economies.” Mr. Tobin added, “The timing of this program is particularly appropri ate in that it provides banks with a new source of funds and could be useful in developing asset/liability-m anagement strategies for 1981 and beyond. Use of this new source of funds by banks and S&Ls will provide valuable experience as we move toward even tual phase-out of interest-rate ceilings, as provided for in the Monetary Con trol Act of 1980.” • • A g Bankers' V ie w p o in t (Continued from page 30) ours. Farmers and agribusinessmen in the future must be willing to compete for funds and pay the competitive rate to obtain those funds. We have had more of a problem in rate differentials between commercial banks and PCAs than we have between city banks and rural banks. Many Indiana banks have lost both farm and agribusiness cus tomers to the FCS because of rate dif ferentials.” Mr. Bonewitz predicts that ag lend ing will be one of the greatest growth areas available to commercial bankers in the future. Why? “Increased demand for this country’s agricultural products throughout the world in the years ahead will result in increased prices and, consequently, increased demand for credit.” He warns there are problems to be faced, particularly as they relate to the changing and unstable nature of our railroad system. This further com pounds problems faced by country grain elevators, according to Mr. Bonewitz. Current legislation before Congress on grain-elevator bankrupt cies, if passed in its present form, he warns, will pose great difficulties for commercial banks. “Commercial banks will continue to face increased competition from the F C S ,” concludes Mr. Bonewitz, “and from foreign banks entering U. S. m arkets, particularly in search of prime agricultural credits. We must con tin u e to search for qualified, aggressive lending officers who are able to compete in a highly competi tive environment.” The Farm Credit Act amendments of 1980 haven’t affected ag lending in the area served by Smith County Bank, Taylorsville, located in a hill sec tion of central Mississippi and histor ically an agricultural area, according to President Friend B. Walker. As far as he knows, no bank in that area has sought participation in the FCS. Mr. Walker points to the Farmers Home Administration (FmHA) as the big competition because it has taken over many of his farm customers. Mr. MID-CONTINENT BANKER for August, 1981 The timetore examine yourcorrespondent banking service is now. The M onetary Control A ct of 1980 is now in place. A ll of its ram ifications, its exact im pact, cannot yet be predicted. T h ere’s no question th a t m ajor changes are in the wind. The only ques tion is how should you react. At The N orthern Trust, we suggest you tak e a long, hard look at your present banking needs. How well are you being served now? W hat are you g et ting for w hat you pay? Who is best equipped to m eet your fu ture requirem ents? As you go down the list of services you require — check collection, wire transfer, w hat ev er— we’d lik e you to keep in mind the Cost/Benefit equa tion. B ecau se this is where The N orthern Trust earned its reputation. Our safekeeping and cash le tter services ran k among the fastest and most accurate a v a il able anywhere. Our C ashline B alan ce Reporting system pro vides sam e day inform ation, allow ing you to m ake the short https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis term investm ent decisions th at are so critical in today’s m arket. Our prom inent position in pri m ary and secondary bond and money m arkets provides you and your custom ers greater selection and ready liquidity. And our con su lting services for short- and long-term profit planning are unique among Chicago banks. W here do we stand on loan participations? We are actively seeking both com m ercial and ag ricu ltu ral, large and sm all. T h ere’s another, even more im portant factor you should be aware of: we have a deep and continuing com m itm ent to the correspondent m arket. We honor our relationships and we respect the re la tionships th a t you have so carefully built with your own customers. If you’d like more inform a tion as to how our speciallytrained officers m ight work in your behalf, contact C urtis E. Skinner, Senior Vice President, The N orthern Trust, 50 South L a Salle Street, Chicago, Illinois 60675. Telephone (312) 630-6000. M em ber F.D.I.C. The more you want your bank to do, the more you need The Northern. The N orthern T ru st c?$C **A-S Walker says that once a farmer takes advantage of FmHA disaster pro grams, he goes to the FmHA thereaf ter. This situation, he continues, seems to apply to large landownertype farms as well as small ones. Most of the time, a commercial bank is called on only to provide interim financing for these farmers or for financing in excess of the amount pro vided by the FmHA. Many bankers believe that a lot of farmers who easily could qualify for loans through the pri vate sector are being financed by the FmHA. Mr. Walker voices an optimistic note when he says, “In my opinion, the family farm is not doomed. Our more stable farm operators continue to pur sue aggressively the b est farm methods in a scientific manner. These are the same ones who continue to own their land and finance their operations through commercial banks, PC As or the Federal Land Bank. Large oper ators who rent farmland for agricultur al purposes,” says Mr. Walker, “seem to be ‘here today, gone tomorrow.’ This poses a serious problem because of poor conservation practices used in cultivating rental land for crops.” Speaking of his own area, Mr. Walk er says much of its timberland has been bought by large tim ber companies (lumber, pulp and paper), which have built large mills and have changed the economy from agricultural to a dual one made up of about half manufacturing/industrial and half agricultural. In conclusion, Mr. Walker says his bank always has been known as the ag bank in its area, and its dealings with farmers have been pleasant and profit able. However, he warns, “If the pres ent trend continues, soon we no longer will be able to claim the family farmer for a customer. The FmHA will have replaced us as the lender of a great majority of all agricultural loans.” “Concern for survival” is how the current condition of ag banks and pro ducers in New Mexico is described by Craig L. Cosner, vice president, First National, Tucumcari. Drought, high interest rates and product costs, he points out, are the major topics of dis cussion of every New Mexico farmer and rancher, as well as the concern of every lending institution providing credit to agriculture. He says all three are causing survival problems to all segments of agriculture in the state. He says agriculture accounted for $1.1 billion in cash sales last year in New Mexico, an increase of only 3.7% over 1979. If the current drought and depressed cash markets continue, he fears that this figure will decline for 68 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Letter From Reagan Last spring, Walter V. Allison, ch., First Natl, Bartlesville, Okla., started a campaign to get area resi dents to write letters to government officials, including President Ronald Reagan, voicing their opinions on his economic recovery program. Little did Mr. Allison think one of the let ters that would be written would be by the President. President Reagan wrote Mr. Allison expressing his appreciation for the banker’s assistance and support. In part, his letter said: “The Administration’s program for national economic re covery is one that depends on the cooperation of all Americans. Only by working together can we increase the productive capacity of our peo ple, stabilize the rate of inflation and revive the spirit that made our na tion great. The challenge is impres sive, but well within the abilities of Americans.” In its “You Write the Letter. I’ll Buy the Stamp” campaign, First of Bartlesville used full-page newspap er ads, radio commercials and signs in the bank to invite the public’s opinions on the President’s propos als. Area residents were invited to take their letters to the bank, where postage was applied and then for warded to Washington. The cam paign produced more than 1,000 let ters and was the subject of a feature article in the May 1st issue of M id C o n t in e n t B a n k e r . To increase the campaign’s im pact, the bank ran a full-page, fullcolor ad in the April issue of Oklaho ma Banker, official publication of the Oklahoma Bankers Association, challenging other banks to start simi lar programs. Several banks in a three-state area adopted the cam paign with equally successful re sults. 1981. In other words, prospects for a profitable year for most of the state’s agriculture are not bright. “This possible decline, throughout the U. S., in farm income, coupled with the increasing cost of lendable funds, is causing a great deal of discus sion by every bank’s loan and discount committee on how to provide ade quate financing at a price agriculture can afford and one that is profitable,” continues Mr. Cosner. “Continued growth of money-market CDs and NOW accounts, along with competi tion from alternate investments, have placed an unusual burden on rural banks in interest they must pay for deposits, and this directly affects all borrowers. ” He points out that as of July 1, 1981, New Mexico removed all usury ceil ings, and this development should allow banks to price their loans in rela tion to their cost, provided they still have borrowers. Mr. Cosner also sees passage of the Farm Credit Act amendments of 1980 and pressure caused by increased in terest rates and competition from the FCS as making it difficult for rural banks to continue to provide adequate financing under past terms and condi tions. “Our bank’s customers are starting to be concerned over cost of produc tion, and we are seeing a trend where by renters are turning back land that had been leased previously under a cash lease — a definite movement to ward a crop lease. Even though ag pro ducers are concerned over prospects for profit, value of land continues to increase, if for no other reason than speculation. ” A Kentucky banker, G. Emerson Jones, vice president, Paducah Bank, believes this country has the resources to feed the world, but says we must remove use of grain embargoes and food as a weapon from our foreign poli cy. Farmers are geared up to produce more than ever before, he says, but they must get a fair return on their investments if they are to continue. Raw materials produced at reason able prices by this nation’s farmers, continues Mr. Jones, have been its strength in the past and will be even more so in the future. Speaking of his own state, Mr. Jones says the family farm has survived there primarily because of tobacco, fruits and vegetables. He feels the farm situation is poised for takeoff, but farm ers’ profits must improve soon. The past three years, most farm products have been selling below costs, he points out, and no industry can survive under these circumstances. “Somewhere in the future, ag lend ing will be fantastic,” Mr. Jones fore casts, “but, as of now, there is a lot of pressure on banks to continue lending to farmers under less-than-ideal profit conditions.” • • Terry M, O Donnell has been named chairm an/CEO and Law rence A. Hornsten president/chief administra tive officer at First City National, El Paso. Mr. Hornsten succeeds Mr. O Donnell as president/chief adminis trative officer, a post held by Mr. O ’Donnell since 1980. Mr. O’Donnell joined the bank in 1978, following ser vice with First City National, Hous ton. Mr. Hornsten joined the bank in 1978 and was senior vice president/ commercial lending. MID-CONTINENT BANKER for August, 1981 RUNNING AHEAD OF SCHEDULE. W ICH ITA (IV) — Every body knows dereguladon is on its way. But the timetable appears to be moving up. T h e D eregulatory C om m issio n seem s to th in k banks and savings and loans need more and better ways to compete with non-depo sitory competitors. And th ey ’re rig h t, b e cause Money Market funds continue to enjoy unprece dented growth. The message is clear. With degregulation com ing a little sooner, we all have to work a lot harder to be ready for the new oppor tunities taking shape. Every bank, everywhere, needs to act m ore like a bank than ever before. We can do it by developing our p ro d u c t d iffe re n c e s and making our custom er ser vices the best in Kansas. You have the means to get this very important job done th ro u g h the c o r r e spondent banking services of The Fourth. Call Joe Stout, Tom Pot ter, Gage Overall or Max K nopp. T h e y ’ll help you meet the competition with the experience and the ex pertise of the largest bank in Kansas. TheFourth IT The Fourth National Bank and Trust Company Wichita, Kansas 67201/(316) 261-4654 Member FDIC MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 69 F in d l i t e c o r r e s p o n d e n t b a n k e t* in t h is c r o w d A n d w e ’ll b u y y o u a d rin k a t th e R egion al». » Ja y D B i c k r e i d e n t h a l , S t e v e S c h w a r z a n d P a m A s h l e y . B G r i s n i k o b w i l l F i t z p a t r i c k , s e e y o u t h e r e . 70 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SECURITY NATIONAL BANK OF KANSAS CITY MID-CONTINENT BANKER for August, 1981 Special-Interest Sessions Planned fo r Kansas Regionals They Will Be Directed to Chief Executive Officers, Middle-Management/Supervisors, Customer-Contact Staffs EGIONAL meetings of the Kan sas B ankers A ssociation — scheduled to be held next month — will be divided into three specialinterest sessions: one for CEOs, one for middle management and super visors and one for customer-contact staffs. These sessions will be held from 25:15 p.m ., following a county agri cultural key banker luncheon at 11:45 a.m. and registration at 1:15 p.m. A social hour will be held at 5:15 p.m ., with a banquet is scheduled for 6:30 o’clock. Regional vice presidents will pre side at C EO s’ sessions and at the ban quets in their respective regions. C EO s will hear Gary Reser, KBA member relations director, review the association’s statewide ad campaign. Th ey will be introd u ced to the “Broken Arrow Cookie Factory” by the Kansas Council on E conom ic Education, Lawrence. Finally, they will be invited to take part in a rap session, “W hat’s on Your M inds?,’’ with KBA officers and staff. Regional secretaries, who helped Mr. Reser put the program together for the regionals, will preside at the middle-management/supervisors’ ses sion. Phil Coleman and Joe Gilliam of Jack Parr Associates, Inc., Salina, will discuss “Positive Thinking, Motivation and Leadership.” Messrs. Coleman and Gilliam also will speak at the customer-contact-staff session. Programs for Regions One, Two and Four will include banquet entertain ment, “A Tall Gal With a Tall Sense of Humor,” to be presented by Jeanne Sw anner R ob ertso n , B u rlin g ton , N. C. The other three regions — Three, Five and Six — will hear Arthur J. Holst, Peoria Heights, 111., describe “A Challenge of a Banking Pro” at their banquets. Schedules, names of regional vice presidents and secretaries of the KBA R First Week September 15 — Region Four — Wichita — Century II September 16 — Region Two — Chanute — Neosho County Com munity College and VFW Hall September 17 — Region One — Lawrence — University of Kansas Student Union Second Week September 22 — Region Six — Gar den City — Garden City Com munity College and Garden City Hilton Inn September 23 — Region Five — Colby — Colby Community Col lege and American Legion Hall September 24 — Region Three — Manhattan — Kansas State Uni versity Student Union regions are: Region One, September 17, after noon session and banquet, University of Kansas Student Union, Lawrence; regional VP, Eugene Barrett, chair man, Kaw Valley State, Kansas City; regional secretary, Bonnie Wells, vice president, First National, Lawrence. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Region Two, September 16, after noon session, Neosho County Com munity C ollege, banquet at V FW Hall, both in Chanute; regional VP, Gerald W. Barnard, president, First National, Oswego; regional secretary, Bob Bunting, Bank of Commerce, Chanute. Region Three, September 24, after noon session and banquet, Kansas State University Student Union, Man hattan; regional VP, Gary Padgett, p resid en t, C itizen s N ational, Greenleaf; regional secretary, J. Eric Mann, vice president, Kansas State, Manhattan. Region Four, September 15, after noon session and banquet, Century II, Wichita; regional VP, Mahlon Morley, chairm an/president, Valley State, Belle Plaine; regional secretary, Tim Haddad, business development offic er, Southwest National, Wichita. Region Five, September 23, after noon session, Colby Community Col lege, banquet, American Legion Hall; regional VP, R. H. Zimmerman, pres ident, First Bank, Salina; regional secretary, Judy Weber, assistant vice president/trust officer, Farm ers & Merchants Bank, Colby. Region Six, September 22, after noon session, Garden City Commun- 71 Regional Vice Presidents BARNARD MORLEY OLIVER ZIMMERMAN BARRETT ity College, banquet, Garden City Hil ton Inn; regional VP, Dale E. Oliver, president, Security State, Great Bend; regional secretary, Leonard Hitz, senior vice president, Western State, Garden City. Eugene Barrett, VP of Region One, joined Kaw Valley State, Kansas City, 18 years ago and moved up from vice chairman to chairman in 1979. Gerald Barnard, VP of Region Two, entered banking in 1955 at his present bank, First National, Oswego, as vice president and became president in 1967. Gary Padgett, VP of Region Three, became a banker in 1956, when he joined Wichita’s Fourth National. He BflNKMflTIC® 24-H our Automated Teller Machine Network! Kansas’ Fastest Growing! 72 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis went to Citizens National, Greenleaf, in 1960 as a loan officer and advanced to president in 1965. A photo of Mr. Padgett was not available. Mahlon Morley, VP of Region Four, has been a banker since 1957, when he went to First National, Chanute. In 1966, he joined Valley State, Belle Plaine, as president and became chairman/president last year. R. H. Zimmerman, VP of Region Five, entered banking in 1953 at First National, Harper. In January, 1967, he became president, First Bank, Salina. Dale Oliver, VP of Region Six, has been a banker since 1949, when he joined Citizens State, El Dorado. In 1961, he was named vice president, Security State, Great Bend, and ad vanced to president in 1977. • • Fourth National, Wichita, has pro m oted C leo G. Sim m onds and Maurice L. Junod to assistant vice presidents and named the following new officers: Kathy Anders, new accounts officer; W. R. Hardgrave, trust minerals officer; Mark G. Hejtmanek, management services officer; Norma Hinkle, investment officer; Sue H utchins, operations officer/ branch manager; J. Michael Keller, advertising/communications officer; and David Skinner, marketing officer. Fourth Financial Corp. plans to issue up to $25 million in commercial paper through the bank. Wallace E . Galluzzi has joined Doug las County Bank, Lawrence, as vice president/community affairs. He had been president, Haskell Indian Junior College in Lawrence, which he joined 17 years ago. He had been an em ployee of the Bureau of Indian Affairs since 1949 until retiring from the junior-college presidency last Decem ber. Dale Parker has joined Kansas City’s Security National as assistant vice president/commercial loan division. For the past eight years, he has been with United Missouri, Kansas City, Mo., most recently as assistant vice president/loan administration. CNB PEP Coordinators Young Bank Officers of Kansas (YBOK) has named the following as regional coordinators for its educa tion in personal economics (PEP) program: Rick Mann, vice president, Kan sas State, Manhattan; Dale Hoosier, cashier, Kanapolis State; Roger D. Parson, vice president, Iola State; and Dave Enslen, vice president, Johnson County National, Prairie Village. Mr. Enslen is state chair man for the program. First National, Hutchinson, has estab lished an investment department in its main-bank lobby. It provides invest ment counseling and will be involved in sales of CDs, U. S. government and U. S. government agency securities, commercial paper, repurchase agree m ents and m oney-m arket-m utual funds for customers. In the future, this new department will provide informa tion on all new investment opportuni ties. Its staff is made up of Edwin T. Coons, vice president/investm ent officer; Virginia Robbins, assistant trust and investment officer; Cathy Lilley and Marce Bauer. First Bank, Salina, has been sold by R. H . Zimmerman and family to Frank E. Whitham and family of Leoti. Mr. Whitham and H. G. Applegate were named to the bank’s board as chairman and vice chairm an, resp ectiv ely . R. H. Zimmerman was reelected pres ident and Jeff Whitham was elected executive vice president. Bonnie Kaufman W ells has been elected vice president at First Nation al, Lawrence. She formerly was assis tant vice president/marketing direc tor. She continues as marketing direc tor and coordinates strategic planning. First Citibank, Olathe, has promoted John M. D onaldson to assistant cash ier. He jo in e d the bank last September, a month before it opened. 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, 1981 Lefs get right to the point... It’s that bottom line you’re interested in. And so are we. There are many areas in which our professional correspondent bankers can help, and we welcome the opportunity to prove our worth. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis llulchmsoiTHâtiônal bankandtrust company ONEPOLARIS PLAZA, HUTCHINSON, KANSAS MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION Capital increases have been reported by Roy P. Britton, state bank commis sioner, at two W ich ita banks. Chisholm Trail State increased its capital from $400,000 to $600,000, and University State boosted its capital from $300,000 to $800,000. Both in creases were made through sales of new stock. Ranchmart Bank, Overland Park, has changed its name to First Continental Bank & Trust Co. Bruce A. Long, who was correspon dent bank officer, F irst National, Wichita, has been elected assistant vice president. In other action, the bank prom oted R obert Fay, who joined its staff last May, to vice president/trust investment officer; Gary Donovan from trust real estate assis tant to assistant trust real estate officer and Susan Miller from trust repre sentative to assistant trust officer. Fourth National and its parent HC, Fou rth Fin an cial C o rp ., both of Wichita, have elected Wilson K. Cadman to their boards. He is president/ C EO , Kansas Gas & E lectric Co., Wichita. Hutchinson National has elected Gregory L. McFarland commercial loan officer. He joined the bank July 2, KANSAS ENERGY BEGINS WITH KANSAS BANKS. K SB & T can be your pipeline to energy financing. Member FD1C going there from Commerce Bank, Lebanon, Mo., where he was assistant vice president/com m ercial loans. Chris Schuerer, formerly a personal loan officer, has been named a custom er services officer/customer services department. Before joining the bank in 1980, he was manager of the Benefi cial Finance office in Hutchinson. Richard M eyer, who also went to Hutchinson National in 1980, has been elected assistant auditor. T erry King has join ed N orthgate National, Hutchinson, as president. He formerly was vice president/com mercial loans, First National, Hutch inson, which he joined in 1978. He has 10 years banking experience. Chris Lear, who had been serving as vice president/managing officer at Northgate National, remains with the bank and has been given additional respon sibilities. Harry Wheeler has advanced from assistant vice president to vice presi dent, MidAmerican Bank, Roeland Park. Mark J. Henke was promoted to commercial loan officer and Rita M. Ruysser to consumer banking officer. Mr. Wheeler has been with the bank since 1966 and, in his new post, is re sponsible for loan operations and acts as compliance officer. Mr. Henke joined the bank in 1979 as a trainee. Miss Ruysser, on the bank staff since 1974, formerly was manager of the cred it d epartm en t. She now is assigned to the installment lending di vision. Fidelity State, Topeka, has promoted Thomas Wilds from manager, Fidelity State Garden Bank, to assistant cashier/consumer loan officer, main bank. Craig E. Pederson, a 1981 busi ness graduate of Washburn Universi ty, Topeka, has been named manager, Fid elity State Garden Bank. Mr. Wilds joined Fidelity State as Garden Bank manager in 1978. KANSASSTATEBAM AND TRUSTCOMPANY 123 N. Market / Wichita, Ks. 67202 / (316) 266-6600 Merger Completed NEW YORK CITY — The merger of Shearson Loeb Rhodes, Ine., into American Express Co. has been completed with approval June 29 of shareholders of both firms. Shearson, second-largest securities firm in the nation, is being operated as an independent subsidiary of American Express and retains its management and hoard. Completion of the merger in cluded receipt of all regulatory approvals and filing of a certificate of merger with the state of Delaware. 74 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1981 I n v e s t m e n t S e r v ic e s S in c e 1 8 9 0 UNDERWRITERS— DISTRIBUTORS— DEALERS STIFEL, NICOLAUS & C O M P A N Y IN C O R P O R A T E D MEMBERS NEW YORK STOCK EXCHANGE, INC. AMERICAN STOCK EXCHANGE, INC. MIDWEST STOCK EXCHANGE, INC. 500 North Broadway, St. Louis, Mo. (314) 342-2000. Private W ires to all our own offices. CONTACT OUR OFFICE MOST CONVENIENT TO YOU: KA NSAS CITY, M O Leawood C o rp orate M anor Bldg. 4701 College Blvd. Leawood, Kansas 66211 9 1 3 -3 8 1 -7 1 8 1 ST. LOUIS, M O 6 3 1 0 2 5 0 0 N . Broadway 3 1 4 -3 4 2 -2 0 0 0 LOUISVILLE, KY 4 0 2 7 0 201 West M ain St. 5 0 2 -5 8 7 -6 0 5 3 O K L A H O M A CITY, OK 7 3 1 0 2 Suite 130 Century Center 100 W est M ain Street 4 0 5 -2 3 5 -5 7 0 0 TULSA, O K 7 4 1 0 4 1924 South Utica 9 1 8 -7 4 3 -3 3 6 1 W IC H IT A , KS 6 7 2 0 2 1 1 1 South Main 3 1 6 -2 6 4 -6 3 2 1 Member SIPC MID-CONTINENT BANKER for August. 19 8 1 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 75 This m ap, supplied by Association for M od ern Banking in Illinois, shows five m u lti bank HC regions established by n ew la w creating such HCs in Illinois. Multi-Bank HCs Become Reality For Illinois county, no farther than 10 miles from the bank. 3. F o r the additional lim ited service facility, statutory home-office protection will be one mile. In other words, the third limited-service facil ity cannot be established closer than one mile from another bank’s home office. 4. A bank owned by an HC based in a contiguous region will be prohibited from establishing the facility author ized by this bill within two miles of a bank in any municipality of 10,000 or less population that presently has three or more banks. This “overbanked-community amendment” is a ULTI-BANK holding company 4. After date of enactment, newly further protection for existing banks. M legislation, a controversy that chartered banks cannot be acquired This prohibition will expire seven split the Illinois Bankers Association until they have been in existence 10 years after enactment. early in the 1970s, was passed June 18 years. Another consideration is: The addi by the Illinois General Assembly and Other considerations in the bill are: tional facility will be limited to present signed by Governor James Thompson 1. HCs are regulated by the Fed powers of existing facilities, including: last month. under the Bank Holding Company Act receiving deposits, cashing and issuing SB 578 was sponsored in the House of 1956. checks, drafts and money orders, by Representative Jim McPike, Alton 2. F ed e ral law req u ires prior changing money and receiving pay Democrat, and Representative Ben approval of acquisitions of both state ments on existing indebtedness. Polk, Moline Republican, and in the and nationally chartered banks by both The Illinois Bankers Association, Senate by Senators Roger Keats, W il the Fed and Justice Department. which has been opposed to this legisla mette Republican, George Sangmeis3. The 1977 Community Reinvest tion, tried to attach amendments that ter, Mokena Democrat, and Prescott ment Act requires HCs to demonstrate would: Bloom, Peoria Republican. This bill, they are serving financial needs of 1. Delay the effective date of the which also contains a provision for one communities in which they are operat legislation from January 1, 1982, to additional limited-service facility, is ing before additional banks may be ac July 1, 1982. identical to legislation (HB 666) pre quired. 2. Limit concentration of domestic viously passed by the House. The vote 4. A multi-bank HC cannot charter deposits to 10% for each region. was 99 for and 59 against. any new (de novo) banks. 3. Limit acquisition to one bank a The HC provisions of SB 578 are: Provisions for one additional lim year for two years and two per year 1. Banks will be allowed to affiliate ited-service facility are: thereafter, with a maximum of 10. under common ownership through a 1. A bank can have one additional The bill was supported by the Asso multi-bank HC. Illinois now allows facility for a total of three. Banks pres ciation for Modern Banking in Illinois one-bank HCs. ently are allowed two facilities — one (AMBI), which was formed as a result 2. Five HC regions will be estab within 1,500 feet and another within of a rift in IB A policy in the spring of lished. 3,500 yards of the bank. 1973. At that time, the IBA’s council of 3. A multi-bank HC can acquire 2. The additional limited-service administration — by a close vote of banks only within the HC s home re facility will be allowed only within the 12-10, with eight members absent — gion and one contiguous region. home-office county or if outside the voted to adopt a position of neutrality 76 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1981 In th e premium jungle, Harris Trust & Savings Bank o f Chicago was looking fo r a fresh promotion. Requisites: No complicated “ mix-or-match” inventories; no breakage in transit or breakdown in use. In short, no hassles. Enter Hubert— a customdesigned toy by Animal Fair, who, in a series o f successful promotions, has attracted a ” lion’s share” o f new customers and savings deposits to the bank. Simple and effective. That’s what Animal Fair soft toy programs are ©Animal Fair, Inc., 1980 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis all about. Ask Harris. Ask Atlanta’s Citizens and Southern National Bank, Northwest Bancorporation (Banco), and more! We have a proven track record for designing, manufacturing and delivering on time, top quality, lasting “ originals” to fit specific budget and creative requirements. For an exclusive change-of-pace promotion with year ’round appeal and no hassles, shouldn’t you be “ re-lion” on Animal Fair? animal faim Plan your Soft Toy Promotion Now! Call (612) 831-7200 Or write: Harold McClendon Animal Fair, Inc. P.O. Box 1326 Minneapolis, MN 55440 PRIORITY - R E A D I N G FOR Y O U R DI RECTORS -before "problem” shareholders throw your Annual Meeting into turmoil A tim ely m a n a g e m e n t tool! EFFECTIVE SHAREHOLDER MEETINGS Pitfalls in today’s Annual Meetings and how to avoid them. Tested procedures for an ticipating and handling problems. Shows, step by step, how to plan, prepare and stage Annual Meetings that protect your bank image and enthuse shareholders. 00 100 pages $ 1 2 per copy QUANTITY PRICES 2-5 6-10 11-15 16-20 copies copies copies copies $10.00 $ 9.00 $ 8.50 $ 8.25 ea. ea. ea. ea. needs. The checklist. Promoting attendance. Stockholder pro posals and bases for omitting QUANTITY PRICES Before your next shareholder them. Materials to mail. Agenda meeting, get ready now for gad and procedural rules. “ Problem” SEND COUPON BELOW. ORDER YOUR flies, activists and others who stockholders. P itfalls when COPY TODAY - AND DON’T FORGET may be planning to disrupt your soliciting material. Proxy state YOUR DIRECTORS’ COPIES! program. ment innovations and vote report Here’s how to anticipate damag ing. Annual report and material ing incidents, prepare tested supplied brokers, bankers, countermeasures, turn potential trustees, etc. ADDED BONUS disasters into a plus for your A tested “ how to” of Annual A complete schedule for the bank. Meetings from inception to final preparation of an annual meeting This just-published information reports, including personnel . . . from its inception to “ report ing the results.’ ’ Each item on this tells how to handle controversial responsible for each step. 96 checklist designates a person shareholders’ questions. In pages of “ must” reading for bank responsible for its completion. cludes dealing with inflamatory chairmen, board members and all disruptions, keeping your “ cool” officers involved. while handling them, preparing in advance to minimize them. THE BANK BOARD LETTER Details include handling of 408 Olive St. Louis, Mo. 63102 unusual actions (such as replac __________ copies, ing a CEO) — political contribu EFFECTIVE SHAREHOLDER tions — laws and regulations MEETINGS $_ directors may unwittingly break — stock purchases, sales and Name______________ disclosures — proxy provisions Title. Bank_______________ and proposals — reporting defi Street______________ ciencies spotlighted by the Financial Analysts Federation. City, State, Zip_______ (Please send check w ith order. In Missouri, add 4.6% tax.) A whole section covers meeting Edited by Dr. Lewis E. Davids Editor, The BANK BOARD Letter https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis on multi-office banking and inserted this word into the declaration of policy, which was to be voted on at that year’s convention. However, IBA members adamantly against any change in Illi nois laws learned of the proposed neu tral position and introduced an amend ment that would reinstate the IBA s traditional opposition to multi-office banking. During the 1973 conven tion’s final business session, speakers appeared for both sides and were fol lowed by a standing vote. Each mem ber bank was allowed one “accredited” vote. Those opposing the neutrality stand won — 396-187 — and the IBA again went on record as opposing any change in state banking laws. A ctually, A M B I was form ed in February, 1973, as an outgrowth of an earlier group, Association for FullService Banking. However, an organi zational meeting of the new group was called after the 1973 IBA convention. At the same time, about 150 banks, including four big Chicago banks — C ontinental Bank, F irst National, Harris Trust and Northern Trust — announced they were withholding their dues. In effect, they were with drawing from the IBA. AM BI began its aggressive cam paign to obtain a change in state bank ing laws in 1974, when it proposed two major bills: to amend sections of the Illinois Banking Act to provide for establishment of full-service facilities within the marketing area of an indi vidual bank and to repeal the existing Bank Holding Company Act of 1957 and adopt a new act that would allow establishment of multi-bank HCs sub je ct to certain restrictions. One change did occur in the summer of 1976, when a new facility law, approved by the IBA , was passed: HB 1955 allows banks to operate a second remote- IBA Calls for Unity The Illinois Bankers Association, in the person of its new president, James A. Fitch, last month called for unity in the banking fraternity. Mr. Fitch, president, South Chicago Savings Bank, recognized passage of a multi-bank HC bill for the state by saying it’s time to lay aside differ ences and to band together again for the good of Illinois residents who use banking services. Mr. Fitch set unification of a bat tle-weary industry as his main objec tive in this message: “The time has come for bankers to put their differences aside and to get back to the job of serving peoples’ financial requirements. “ Federal regulations prevent banks from offering competitive rates to savers. Now that the dust is settling from the fight between the money-center banks and those whose focus is in the community, bankers have to pool resources to get Washington to give bank customers competitive savings rates. “Our customers don’t want us squabbling among ourselves. They would rather see us going to bat for them in the halls of Congress and in the recesses of regulatory agencies to bring loan rates down and interest on deposits up. Bankers fighting bank ers for their own purposes do noth ing to instill public confidence in the industry.’’ banking facility within 3,500 yards of a bank’s home office. Since 1967, Illinois banks have been allowed one off-site facility 1,500 feet from their main offices. • • Interest-Rate Ceilings Off in Illinois LTHOUGH the Illinois Bankers Association and Association for Modern Banking in Illinois (AMBI) were at odds over multi bank HCs for the state (see accompanying article), both associations supported a bill to permanently remove interest-rate ceilings on all consumer loans. That bill, HB 438, was passed June 29 by the Illinois House, after concurrence with a Senate amendment. The amendment states that higher interest rates can be charged only on debts incurred after the date the consumer is notified of the interest-rate increase. The vote was 98 yes, 46 no. HB 438 was sponsored in the House by Speaker George Ryan (R.,Kankakee) and former Speaker William Redmond (D.,Bensenville) and in the Senate by its president, Philip Rock (D.,Oak Park), and minority leader, David Shapiro (R .,Amboy). In addition to the IBA and AMBI, supporters were the Illinois Savings & Loan League, Illinois Retail Merchants Association, Illi nois Credit Union League, Illinois Consumer Finance Association and other members of the consumer-lending industry. A MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Prime Rate Is Out; Index Rate Is In At First American N A SH VILLE — First American National, believing the prime rate has outlived its usefulness, has stopped us ing it and has begun using its own First American index rate as a reference for pricing business loans. In announcing the switch, Chair man Kenneth L. Roberts says the prime rate has become a misunder stood standard many people believe is the most preferential interest rate a bank charges its most credit-worthy customers. The index rate, according to Mr. Roberts, is a standard or guideline for pricing F irst A m erican’s business loans. Its negotiations will be based on a customer’s credit standing, compen sating balances, other relationships, length of the loan, collateral and many other factors. He emphasizes that the index rate will not be a minimum or best rate. The index rate, he explains, will be calculated on the bank’s present and near-term costs of funds and market conditions in the areas it serves. First American will renegotiate existing business loans, using the index rate. However, says Mr. Roberts, should any customer determine that his needs are served best by relating the interest rate on his loan to a published rate, First American will use a rate for that customer that will be the average on any given day of prime rates of three money-center banks: Chase Manhat tan, Citibank and Morgan Guaranty, all in New York City. These rates will be rounded to the nearest lA%. Should any p resen t custom ers choose not to renegotiate, he adds, their loans automatically will be priced in relationship to the lower of the two rates. In addition to First American, Nash ville, the index rate will be adopted for business loans by the other seven affili ate First American banks in Tennes see. They are located in Knoxville, Memphis, Clinton/Oak Ridge, Tullahoma, Cleveland, Milan and Union City. 79 Construction Begins on RepublicBank Center; Tow er to Rise 56 Stories in Houston ONSTRUCTION is scheduled to begin this month on a new 56story office tower in downtown Hous ton to be known as RepublicBank Cen ter. The complex will be the new home of RepublicBank, Houston, formerly Houston National. The construction site is bordered by Rusk, Capitol, Smith and Louisiana streets. The project will consist of a gabled tower with a three-tiered roof and a banking hall, constructed of glass and Swedish granite processed in Italy. The new tower will contain approx imately 1.5 million gross square feet of space and 1.2 million net rentable square feet of office space. About 50% of the office space has been leased. Also included in the project are about 12,000 square feet of retail space and underground parking for about 300 cars. Additional parking will be will include spires rising from every provided in a new garage to be con roof level to provide variation against structed within three blocks of the the sky. The architects, Philip Johnson tower and connected to it by tunnel. and John Burgee of New York City, The Center will connect to Houston’s designed the project along the lines of extensive downtown tunnel system. gabled houses found in the Nether Described as being neo-renaissance lands. in architectural style, the Center will R epublicBank C en ter will have feature a pitched or gabled roofline on dual-pane insulating windows, ener both the tower and the banking hall. gy-conserving lighting and energyThe hall will be 125 feet high and its efficient heating, ventilating and air tiered roof will feature a series of sky conditioning. It will be sprinklered lights running the full length of the and equipped with emergency pres 250-foot-long structure. The banking surization and ventilation systems. hall also will feature a mezzanine that RepublicBank will occupy about will overlook the ground floor bank 375,000 square feet — more than 30% lobby from 35 feet above. — of the building’s office area. Initial Entrance to the banking hall will be occupancy is expected by the third through a 75-foot-high arched granite quarter of 1983. doorway. The archway will continue The building will be the sixth home through the banking hall and the tower for the bank, which was opened in lobby to a second arched doorway at 1876 with a capital stock of $100,000. the opposite end of the project. The bank is said to be the secondTwo of the lower office floors in the oldest in Houston. tow er will cross the archway on Its original name was Fox & Watterbridges. Granite will be used exten mack Bankers, but the name “Houston sively in both the mall and ground floor National” was adopted in 1889. In 1928 lobbies of the tower and the connect a move was made to a structure now ing banking hall. Lobby floors will be known as the Fannin Bank Building. paved in a pattern of alternating colors In 1964, Houston National merged of stone and the sidewalk surrounding with Tennessee Bank under the name the project also will be paved in gran Houston National and the institution ite. moved into its present quarters in the In addition to the gables, the build 33-story Tenneco Building. In 1975, ing will be divided into three segments the bank was acquired by Republic of by two major setbacks. The gables and Texas Corp. and last June, it officially setbacks allow tower floors to vary in changed its name to RepublicBank size from less than 5,000 square feet at Houston. It’s one of six RepublicBanks the top to more than 30,000 square feet in the Houston area and is said to be at the bottom. the city’s fourth largest bank with $1.2 The building’s renaissance flavor billion in assets. • • B a n k in g h a ll w i l l feature 75-foo t-h igh arched g ranite door w a y . H a ll w ill be 125 fe e t high and tiered roof w ill fe a tu re series of sky lights running entire length of structure. RepublicBank C enter Tower w ill featu re three tiered segments connected to b a n k ing hall b uilt of glass and g ranite. 80 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1981 C o m m e rc ia l C re d it c a n in c r e a s e a b a n k ’s a c c o u n t a b ility . Y o u r a b ility to h a n d le la rg e r a c c o u n ts . A n d y o u r a b ility to re ta in y o u r g ro w in g a c c o u n ts . W e m a n a g e m illio n s o f d o lla rs in b a n k p a rtic ip a tio n lo a n s . A n d w ith n e a rly 70 y e a rs , o f e x p e r ie n c e in th e b u s in e s s .. .w ell, w e ’re v e ry b ig . S o w e c a n w o rk e ffe ctiv e ly w ith y o u to s a tis fy th e lo a n re q u ire m e n ts o f y o u r b ig g e s t a n d f a s te s t g ro w in g c u s to m e r s . A n d b e c a u s e o f o u r e x p e r tis e in th e e v a lu a tio n a n d c o n tro l o f c o lla te ra l th a t in c lu d e s in v en to ry , re c e iv a b le s a n d fix e d a s s e t s , w e c a n a ls o a s s is t w ith h ig h le v e r a g e a c q u is i tio n s a n d ra p id g ro w th lo a n s . O u r S m a rt P e o p le c a n h e lp m a k e y o u r p e o p le lo o k s m a rte r . In c re a s in g y o u r p ro fit a b ility a s w ell. S o y o u c a n s e e k o u t m o re p ro fita b le a c c o u n ts a n d m o re p ro fita b le b u s in e s s . F o r m o re in fo rm a tio n , c a ll th e C o m m e rc ia l C re d it B u s in e s s L o a n s R e g io n a l F in a n c e n te r n e a r e s t y o u . W ith th e in te llig e n t a p p lic a tio n o f o u r S m a rt M o n ey , y o u ’ll h a v e th e a b ility to k e e p u p w ith y o u r a c c o u n ts . . A n d s e e th e m th ro u g h th e ir g ro w th . R a th e r th a n s e e th e m w a lk o u t th e d o o r. CRED IT BU SIN ESS L O A N S JN C . c o m m e r c ia l a Control Data Company SMARTPEOPLE.SMARTMONEY. Atlanta (404) 393-4686, Baltimore (301) 727-3338, Boston (617) 482-0001, Charlotte (704) 365-1550, Chicago (312) 332-3716, Cincinnati (513) 721-2962, Cleveland (216) 886-6383, Dallas (214) 385-5550, Detroit (313) 352-2710, Houston (713) 523-6600, Jackson (601) 373-6252, Kansas City (816) 474-0202, Los Angeles (213) 386-6871, New York (212) 481-3767, San Francisco (415) 777-5811, Wilmington (302) 995-6056 MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 81 United Missouri Bank’s computer processing performs the work most banks need overnight. Night after night. You just give us your work at the end of each day. We give it back to you each morning. Like clockwork. It’s a well managed, quality data service that makes life for our correspondent banks a lot simpler. Because their work, unquestionably, gets done. Day after day. b UNITED MISSOURI BANK COMPUTER SERVICES DIVISION KANSAS CITY ST. LOUIS CARTHAGE 10tih and Grand Kansas City, Missouri 64141 (816) 556-7000 312 North 8th Street St. Louis, Missouri 63188 (314) 621-1000 300 Grant Street Carthage, Missouri 64836 (417) 358-2135 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Member FDIC MID-CONTINENT BANKER for August, 1981 D eregulation, State Legislation O n Tap fo r Missouri Regionals ANKING deregulation and a re view of a survey of state banking legislation will be the main topics to be presented at this year’s regional m eet ings of the Missouri Bankers Associa tion. Each of the eight meetings, held from September 8 to 24, will feature a presentation on deregulation by Jack Whittle, chairman, Whittle, Raddon, Motley & Hanks, financial marketing group, Chicago. Mr. Whittle is a wellknown figure at banking meetings and has appeared at MBA meetings in the past. Richard Mason, MBA’s legislative lobbyist, will present a brief program at each regional. Title of his presenta tion will be “You Be the Judge — State Legislation.’’ He is expected to review a survey on state legislation now being circulated to MBA members. All meetings but the one in St. Joseph will begin at 3:30 p.m. and will be followed by social hours, banquets and entertainment. Elections of offi cers also will be held and members of the MBA nominating committee will be selected. The first regional will be held September 8 for members of Region One at the Holiday Inn in Hannibal. Vice president of the region is Duane S. Wheelan, president, Perry State. He entered banking in 1955 at First N ational, M ontgom ery C ity. He moved to Perry State in 1964 as cashier and has held the position of president since 1977. Region Two will meet September 9 in the Trenton High School. Philip B Holmes, president, American Bank, Princeton, is region vice president. He joined his bank in 1971 as assistant vice president. He has been president since 1978. Region Three will meet September 10 at the Ramada Inn, St. Joseph. First Week Sept. 8 — Hannibal — Holiday Inn Sept. 9 — T renton — T renton High School Sept. 10 — St. Joseph — Ramada Inn Sept. 11 — Kansas City — Alameda Plaza Hotel Second Week Sept. 21 — St. Louis — Henry VIII Inn/ Lodge Sept. 22 — Cape Girardeau — Holiday Inn Sept. 23 — Springfield — Howard John son’s Sept. 24 — Columbia — Holiday Inn West MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Jack W h it t le , c h., W h ittle , R ad d o n , M o tle y & H a n k s , Chicago, w ill be fe a tu r e d s p e a k e r a t MBA regionals. Separate luncheons for men and women will be held, followed by an afternoon business meeting. The tradi tional “awarding of the hat” ceremony Municipal Bonds c lx c iu iiv e iu Specializing in ALL GENERAL MARKET BONDS Your "Correspondent” for Municipal Bonds m * Investment Bankers • Municipal Bonds ONE TWENTY SEVEN WEST TENTH K A N S A S C IT Y , M IS S O U R I 6 4 1 0 5 (816) 221-4311 83 will be at 4:15, followed by a social hour and banquet. John McConkey, president, First State, New Hampton, is region vice president. He joined his bank in 1971 as cashier and has been president since 1978. Region Four will meet September 11 at the Alameda Plaza Hotel, Kansas City, and will be presided over by Vice President Rodney R. Hill, president, American Bank, Kansas City. Mr. Hill entered banking in 1949 in Chillicothe and joined his present bank in 1953 as controller. He was named president in 1968. The second week of regionals will get underway with the Region Five meeting at the Henry VIII Inn, St. Louis, on September 21. Vice presi dent of the region is Hord Hardin II, president, C om m erce-M anchester Bank, St. Louis. He entered banking in 1959 at First National, St. Louis, and joined his present bank (then known as Manchester Bank) in 1972 as senior vice president. He was named president in 1978. Region Six will meet September 22 at the Holiday Inn, Cape Girardeau, and will be chaired by Vice President R. Winston Reed, executive vice president/cashier, Carter County State, Van Buren. He joined his bank in 1973 F ir s t String. Bob Azelton H. H. “B eanie” Broadhead John K arn 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. THE MISSOURI DEPARTMENT OF REVENUE ANNOUNCES COMPETITIVE BID PROCEDURES Team up with a first string correspondent banker -o n e of the pros from First Stock Yards Bank of St. Joseph,Missouri. Where your success is a tradition F ir s t S to ck Yards B a n k St. Joseph, M issouri 6 4 5 0 4 Call: (816) 238-0651 A ffiliate of First Midwest Bancorp, Inc. Member F.D.I.C. 84 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 Officer, Missouri Department of Revenue, P. O. Box 629, Jeffer son City, M O 65105. Detailed bid procedures will be provided to all responding banks. MID-CONTINENT BANKER for August, 1981 Regional Vice Presidents HOLMES WHEELAN LAST YEAR WE THOUGHT THERE WERE GREAT CHANGES TAKING PLACE IN BANKING (WE EVEN SAID SO IN AN AD) HOW RIGHT WE WERE! HOWEVER, THIS YEAR, EVEN MORE CHANGES ARE TAKING PLACE 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 regionalsgive bankers that forum. Support your regional. We’ll be at ours. Will you be at yours? McCONKEY HILL ...getting bigger to serve better Mini-Bank 9229 Natural Bridge HARDIN REED VISIT OUR NEW FACILITY. PRICE CLINE as assistant cashier and was named ex ecutive vice president in 1977. Members of Region Seven will con vene at Howard Johnson’s Springfield, on Septem ber 23. Larry L. Price, president, Bank of Kimberling City, is vice president. He entered banking in 1962 at Bank of Taney County, For syth, and joined his present bank in 1973 as president. The final regional will be held on Septem ber 24 at the Holiday InnWest, Columbia. It will be chaired by Vice President John R. Cline, chairm an/president, C om m erce Bank, Mexico. Mr. Cline entered banking in MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 5 8 0 W OODSON RD. BANK & T R U S T COMPANY The Solid Place to Bank 4 2 8 -10 0 0 8924 St. Charles Rd. • St. Louis, MO 63114 9229 Natural Bridge • St. Louis, MO 63134 3580 Woodson Road • St. Louis, MO 63114 85 1949 at Monett and joined his present bank in 1969 as executive vice presi dent. He was named chairman/president in 1970. • • Jane H. Rawlings and Denis H. Dick er, both in the correspondent banking division of St. Louis’ Mercantile Trust, have been promoted— Miss Rawlings to vice president and Mr. Dieker to assistant vice president. Miss Rawlings went to Mercantile in 1979 as assistant vice president, the same position she had held at a Nashville bank. She heads M e rca n tile ’s m etropolitan group. Mr. Dieker joined Mercantile last year as a banking officer, going there from a commercial-lending post at a Wichita bank. RAWLINGS DIEKER William J. Barnett J r ., vice president, First National, St. Louis, has been named head of the correspondent divi sion, succeeding T. Barton French, senior vice president. Mr. French has been appointed head of the special in dustries group. Mr. Barnett joined First National in 1974 and, most re cently, was manager, soft goods group/ metropolitan division. First National of KC Announces Formation O f Funds Mgt. Division KANSAS CITY — First National has formed a new funds management divi sion for acquisition and management of funds other than loans and demand de posits. The new division will execute asset/liability strategies. Thomas H. Holcom Jr., senior vice president, heads the division, whose first priority will be an intensified effort to acquire purchased funds. Charles E . Greenway, senior vice president/money center manager, will direct the effort to buy and sell these funds, which include short-term items such as $100,000 CDs, Fed funds and similar instruments. The funds management division will maintain First National’s bond port folio and will offer portfolio-advisory services. It will create a new function, a bond trading department, to better serve investment needs of individuals, corporations and respondent banks. The division also will have responsibil ity for wire transfers and related opera tions. Other responsibilities include development of new instruments to meet customers’ investment needs. First National’s parent HC, First National C harter C orp ., has pur chased 200,000 shares of its common stock at $33 per share under terms of its offer to stockholders dated June 1, 1981. Stockholders tendered more than the maximum of 200,000 shares. Therefore, the purchase was on a pro rated basis, with each stockholder re ceiving payment for about 88% of NEEDING AN INDEPENDENT AUDIT? AUDITS APPROVED BY ABA UNDER CONTROLLED GROUP BONDING PLAN FEASIBILITY SURVEYS AND ASSISTANCE IN FILING APPLICATIONS FOR NEW BANK CHARTERS, SEPARATE FACILITIES, CHANGE OF LOCATIONS. JOHN W. RIDGEWAY AND ASSOCIATES Banking Consultants and Auditors 909 Missouri Boulevard — P.0. Box 1242 Jefferson City, Missouri 65102 314-635-6020 86 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis shares tendered. Those shares not purchased by the time the offer ex pired July 3 were returned to stock holders. Payment was made July 9. Thomas G. Papa has been promoted from vice president to senior vice pres ident, First National, Kansas City, and made head of the bank’s correspondent/regional department. He suc ceeds Senior Vice President Donald R. Lackamp, who resigned to pursue his personal investments. Mr. Papa, who also directs correspondent/commercial banking for the midwestern area, joined First National in 1979, going from Kansas City’s Commerce Bank. First of Kansas City also promoted Michael A. Luby Jr. from vice presi dent to senior vice president. Mr. Luby, with the bank since 1973, is re sponsible for its commercial customers beyond the Midwest. PAPA LUBY THIEBAUTH GUERNSEY John J. Thiebauth has joined Com merce Bank, St. Louis, as president/ CEO. He had been CEO, Stange Co., St. Louis, the past IV2 years. He also has spent 14 years in banking and once was vice president in charge of the national division at St. Louis’ Mercan tile Trust. At Commerce Bank, he suc ceeds George Guernsey III, who has retired, but is doing consulting work for St. Louis-area Commerce banks. Mr. G u ern sey jo in ed C om m erce Bank, St. Louis, in the summer of 1979, going from C om m erceManchester Bank, also in St. Louis, where he was executive vice presi dent. He joined that bank in 1948. MID-CONTINENT BANKER for August, 1981 United Missouri, Kansas City, has promoted the following: to senior vice president/investm ent departm ent, Roger N. Tranckino; to senior vice presidents/trust department, David Anderson and Edward J. McShane; to vice president/investments, Ralph L. Lampton; and to vice president and manager/estate planning division, Lawrence A. Knecht. Peter Gabrovsky, form erly with City National, Atchison, Kan., has been elected assis tant vice president/credit department at United Missouri. United Missouri Bancshares and City Rancshares, also of Kansas City, will be affiliated. When approved, the merger will give United Missouri Bancshares its 22nd affiliate bank, City Bank, Kansas City. St. Louis Move Planned ST. LOUIS — Landmark Banc shares Corp., a multi-bank HC based here, plans to apply for a char ter to open a new national bank in the Gateway Mall area of downtown St. Louis. The HC now has six banks in St. Louis County and one bank in adja cent St. Charles County. president/assistant secretary. Gary J. Harris, formerly with banks in Texas and Missouri, has been named assis tant vice president/credit department manager at Boatmen’s. Brian E . Cuddy has advanced from assistant vice president to vice presi dent, First National, Kansas City. Ron R. Mason has moved up from assistant cashier to assistant vice president, and Hazel L. Brown and Erica J. Steele have been elected assistant cashiers. Boatmen’s National, St. Louis, has announced these promotions: to senior vice president/loan administration, Gregory L. Curl; to senior vice presi dents/trust division, Tom S. Eakin Jr., R ob ert E . F isch e r and Alfred F. Graves; to vice presidents/retail bank ing, Thomas E. Bechtold and John H. Matthews; to assistant vice president/ retail banking, Lawrence K. Otto; and to assistant vice president/commercial banking, Robert L. Seper. David L. Foulk has been named assistant vice LEWINSKI FISCHER EAKIN GRAVES GESSNER Gerald Lewinski has been elected vice president/human resources director, St. Louis County Bank, Clayton. He joined the bank in February, 1980, as assistant vice president/assistant per sonnel director. In other action, the bank advanced George P. Whitelaw II from commercial banking officer to assistant vice president and Landsden McCandless III to commercial bank ing officer. County National Bancorp., the bank’s parent HC, has promoted Martha R. Sheerin from secretary to vice president/secretary. Commerce Bancshares, Kansas City, has elected James W. Gessner to its board and David W. Kemper an advi sory director. Mr. Gessner is president/CEO, Missouri Pacific Railroad, h ead q u artered in St. Louis. Mr. Kemper is senior vice president in charge of planning, Commerce Bank, Kansas City, the HC’s lead bank. He joined the bank in 1978. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Died: Nestor W. Riemeier, 79, retired chairm an, Com m erce Bank, Kirk wood, of a heart attack June 27. A 50year member of the Missouri Bankers Association, Mr. Riemeier was presi dent, Kirkwood Bank, when it was sold to C om m erce Bancshares, Kansas City, in 1969. MISSOURI’S BUSINESS DEVELOPMENT IS OUR BUSINESS by providing a source of credit not otherwise available to Mis souri industry. KEMPER CURL SHEERIN Edward F. Began Jr. has been elected assistant vice president/loan coordina tion, First National, St. Louis. Joann M. Reber has been named assistant cashier at the bank’s Chippewa Bank ing Center facility, and M. Jill Stotler has been named to the same position at the Stadium Drive-in facility. ★ New Projects a Expansion a Operating Capital a Counseling a Participations a Small Business Loans Can we work together to benefit your community? For more information, contact: Jerry Stegall, Exec. Vice Pres. Phone — AC 3 1 4 -6 3 5 -0 1 3 8 FIRST MISSOURI DEVELOPMENT FINANCE CORPORATION 1411 Southwest Blvd. Suite B P.O . Drawer 1745 Jefferson City, Missouri 65102 87 Legislative V icto ry Celebrated by Bankers At N ew M exico BA Convention in Albuquerque ORE THAN 1,100 bankers and spouses braved a heat wave to attend this year’s New Mexico Bankers Association convention in Albuquer que. While the temperature soared into the three-figure mark, bankers re joiced over a most successful year in the state legislature while they fretted over the inroads m oney-m arket mutual funds are making in garnering savings deposits of the public. Republican congressman Joe Skeen, the maverick who attained his seat through a write-in campaign last fall, called on bankers to help perpetuate the U. S. system of government and do everything they can to resurrect the nation’s faltering economy. He said the $1 trillion national debt is totally unacceptable. Last November, he said, the popu lace decided to make big changes in Washington — the result of a change of thinking about government and those who are elected to run it. As a result, he said, the former policy of Congress having no budget process has come to a stop. He said the viability of the nation depends on a balanced budget and he added — partly in jest — that if the programs Congress enacts were sub mitted to bank supervisor scrutiny, most would be classified! “If we don’t get the tax burden off the backs of Americans,’ he said, “the incentive to produce will no longer ex ist.” He cautioned against the shifting of financial assets out of the state to money-market mutual funds and pre dicted that President Reagan’s eco M J. R. Nunn (r.), receives w estern p ain tin g in recognition of his service as NM BA pres, from G ra n t J. M orper (I.), s.v.p. Citizens B ank, Tucum cari, and Mrs. M orper. M r. Nunn is pres., Citizens Bank. Roy A. Richardson, W estern Bank, Artesia, proudly displays p laq ue d esignating him as m em ber of NM BA 5 0 -Y e a r Club. nom ic recov ery program will be en acted . “The P resid en t has tremendous fortitude and is the best of communicators,” he said. He also assured bankers that regula- tory problems plaguing the industry are being dealt with in Washington. J. R. Nunn, president, Citizens Bank, Tucumcari, presided at the con vention. D uring his p re sid e n t’s address, he reflected on his year in office. He said the association must continue to nurture disagreement. If the association is to remain strong and if it is to prosper, he said, it must serve as a clearing house for communication among the state’s banks. He recounted how well the associa tion works by citing his dissatisfaction with the idea of raising membership dues. After considerable discussion, Mr. Nunn remained convinced that higher dues were not called for, but, since the association board voted to raise dues, the action was taken. Now, he admitted, he realizes the action was necessary. ABA P resid en t-E lect Llew ellyn Jenkins, chairm an, Manufacturers Hanover Trust, New York City, spoke to the issues of inflation, managing the money supply, banker consensus and money-market funds, among other topics. He said that, in the past 25 years, we have allowed spending programs to be enacted that have given the nation a beautiful case of inflation. He com plim ented the F ed for doing a tremendous piece of work with what it has to work with. He said it’s not a simple matter for the Fed to manage the money supply. He described the efforts of the ABA to achieve “one voice” status for the banking industry so it can present a united front to Congress. This too, he said, isn’t always a simple matter, since there are so many issues that bankers disagree on. Recently, he said, the ABA had to be ready to testify in Con gress on 14 bills affecting banking. He told bankers about the success of the ABA’s leadership council’s attempts to achieve consensus. He urged bankers to cultivate ties with their congressmen so legislators N e w NM BA officers pose w ith outgoing Pres. J. R. N unn (I.). They are Robert L. Hayes (2nd from I.), pres., Ruidoso State — pres.-elect; J. Larry C arter (2nd from r.), pres., First N a t'l, A lb uq uerq ue — pres.; and Richard G. Elkins (r.), pres., Rio G rande V a lle y Bank, A lb uq uerq ue — treas. M r. Nunn is pres., Citizens Bank, Tucumcari. 88 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for August, 1981 Past p re s id e n ts of N M B A w e re in tr o duced a t conven tio n . From I., th e y a re G. K e n n e th Brashar, C la u d e E. L e y e n d e c k e r, Ed w ard H. Tatum Jr., W . R. N ic k s , H e n ry J aram illo Jr., G. W ilb u r Jones, Leon G. Harm on and J. P. Brandenburg. no longer could insist that they never hear from their banker constituents. In promoting President Reagan’s economic recovery plan, Mr. Jenkins said that one of the greatest causes of inflation is fear, or a lack of confidence in the system of government. “That’s the reason we need the President’s re covery plan,’’ he said. Sharon Janecka, NMBA executive vice president, reported that 10 states have tried to lim it m oney-m arket mutual funds in their areas, none of which have been successful. She reported the success New Mex ico bankers had in their own legislative halls, culminated by the signing of a bill to remove interest-rate ceilings on all forms of lending. She noted that the legislation contains a two-year sunset provision and warned that a r e examination of the law is sure to come up, perhaps sooner than most bankers would expect. She urged them to be alert to attempts to prevent the bill from being extended beyond its initial two-year period. New Mexico Governor Bruce King earned the gratitude of bankers by signing the bill eliminating usury ceil ings. During his convention address he indicated that he relied on the tal ents of the banking industry for many of his programs. He said the banking industry has been extremely helpful in its management of permanent-fund monies. He called for streamlined management of the permanent serverance tax fund. He also said he was sorry to see Arthur Ortiz leave his post as New L le w e lly n Jenkin s, ABA p re s .-e le c t, a d d re s s e s NMBA convention. Mexico director of financial institu tions after more than four years’ ser vice. But he said the new director, Andy Swarthout, will be “stringent but fair.” Announcement of the change was made at the convention. Incoming NMBA president J. Larry C arter, president, First National, Albuquerque, congratulated bankers on their part in making the legislative session so satisfying for the banking industry. Among resolutions passed by the convention was one supporting a bal anced budget by controlled spending and enactment of Administration eco nomic goals. Another resolution made public the association’s opposition to m oney-m arket funds and strongly urged legislation to enable financial in stitutions to achieve parity with the funds. Other resolutions praised out going President Nunn and honored Kenneth Wilbanks, 1979-80 NMBA president, who died shortly after leav ing office. R etirin g N M BA T re asu rer Ike Kalangis, president, Capitol Bank, Sante Fe, was elected for a two-year term on the ABA’s governing council. Mr. Carter was advanced to NMBA president; Robert Hays, president, Ruidoso State, was elected president elect and Richard Elkins, president, Rio Grande Valley Bank, Albuquer que, was elected treasurer. New NMBA directors, to serve for three years, are Eddie Pullman, presi dent, Western Bank, Clovis; Ernest Romero, president, Centinel Bank, Taos, and Richard Berg, president, In ternational State, Raton. — Lawrence W . Colbert, Assistant to the Pub lisher. • • F irst National, A lbuquerque, has promoted William G. Odins to senior vice president, Irene M. Sanchez and Gary Campbell to vice presidents and Mike Dalton, Susan Forcum, Cynthia Gonzales and Antoinette Montano to assistant cashiers. Mr. Odins joined the bank in 1971 and is trust depart ment manager. New Mexico Banquest Corp., Santa Fe, has appointed Jeri L. Laxson as vice president of its newly formed investment/financial services group, and Carol A. Golden as assistant vice presi dent in the financial/operations group. Art O rtiz, retiring dir., N e w Mexico Finan cial Institutions Div., accepts oversize d im e in recognition of his service from J. R. N u nn , NM BA pres. First State, Taos, has elected Edward B. Bennett Jr. to its board. He is chair man, New Mexico Banquest Corp., parent firm of the bank. Am ong speakers a t N e w Mexico BA con vention w ere (from I.) N e w Mexico G ov ernor Bruce King; A rt O rtiz, g ivin g fin a l report as dir. of N e w Mexico Financial In stitutions Div. (he n ow is pres., U n ited S o u th w e s t B a n k , S a n ta F e); S h a ro n Janecka, N M B A e .v .p . (said to be only w o m a n holding such a position); and Joe Skeen, N e w Mexico congressman. MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 89 N ew s A b o u t Alabama Roy W. Gilbert Jr. has been elected president, Southern Bancorp, of Ala bama, Birmingham. He continues as chairman/CEO, First National, Bir mingham, the HC’s lead bank. Kay K. Kelley has been named vice president, First Alabama, Montgom ery, and E . S p en cer K night was elected assistant vice president, both in the commercial loan division. Mrs. Kelley originally joined the bank in 1964 and left in May, 1980, to become executive director, Alabama Commis sion on Aging, after being appointed by Governor Fob James. Mr. Knight joined the bank this year and formerly was with a local finance company. H. Edward McTyre has been named vice president/controller, C entral Bank, Birmingham. Since 1972, he had been with Northeast Bankshare Association, a bank HC in Portland, M e., where he was accounting/tax officer. F irst N ational, Birm ingham , has promoted the following to assistant vice presidents: Janis M. Copeland, operations administration; Carole T. Frawley, manager, Crestline Branch; Linda M. Gaffney, personnel; and W. Paul Huckeba, corporate banking services. Joseph C. Sugg has joined the bank as assistant vice president/ corporate banking. F irst Alabam a, Birm ingham , has elected Wimberly Miree Jr. vice president/senior trust officer, Stanley E. Neuhaus vice president and Wanda Koontz assistant vice president. Mr. Miree is an administrative officer and head of operations/trust department. Mr. Neuhaus is manager of the down town office. Miss Koontz is manager, Mountain Brook Office. The Fed has approved the application of Banclndependent, Inc., Sheffield, to become a bank HC by acquiring First Colbert National, Sheffield. Peoples Bank, Selma, has promoted Schuster Siegel and Jack P. Tucker from vice presidents to senior vice presidents. 90 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B a n k s a n d B a n k e r s Arkansas Litigation Is Settled Over Proposed Merger O f Bank W ith HC Agreement has been reached be tw een F irst Alabama Bancshares, Montgomery, Southland Bancorp., Mobile, and several parties who pre viously had opposed the proposed m erger of M erchants N ational, Mobile, with First Alabama Bank of Mobile County, a subsidiary of First Alabama Bancshares. The agreement provides for settlement of all litigation over the merger among parties signing the agreement. The former opposition group has agreed to support the merger of Mer chants National and First Alabama Bank of Mobile County. As a result, the Comptroller’s Office has canceled a hearing that had been requested by the opposing parties. As a part of the agreement, Mer chants National and First Alabama Bank of Mobile have agreed to sell three branches in the Mobile area, with deposits totaling approximately $25 million, to a new bank that is to be organized under control of the group that formerly opposed the merger. The sale will take place on the effective date of the merger or as soon therafter as the new bank is organized. On approval of the merger of Mer chants and First Alabama/Mobile, Southland will create two new seats on its board, to which nominees of the former dissident group will be elected. On affiliation of Merchants with First Alabama Bancshares, if the former opposition group holds a majority of stock of Southland, that group will select 14 new directors. If the merger now is approved by the C om p troller, M erch an ts of Mobile, following its merger with First Alabama/Mobile County, will be affili ated with First Alabama Bancshares; and Southland Bancorp, will.have as its affiliate City National of Birmingham, together with a new Mobile bank, which will own the three newly ac quired branches. W orthen Bank, L ittle Rock, has reorganized its divisional structure into three groups: banking services, financial management/staff services and deposit generation/liability man agement. Promoted to executive vice presidents to direct the groups were Michael E. Cissell, banking services; Robert L. Trammel, financial manage ment/staff services; and R. L. Qualls, deposit generation/liability manage m ent. Mr. C issell, correspondent banking division manager, has been CISSELL QUALLS TRAMMEL with Worthen nine years; Mr. Tram mel joined the bank 10 years ago, and Mr. Qualls joined the bank a year ago. The banking services group consoli dates the bank’s traditional lending services and includes the correspon dent banking, commercial, consumer and trust divisions. The financial man agement/staff services group central izes the bank’s financial management and includes the financial manage ment, investment banking, properties management and operations divisions. The deposit generation/liability man agement group centralizes delivery of banking depository services and in cludes the marketing, branch adminis tration, human resources and elec tronic banking divisions. Citizens State, Bald Knob, has moved into its new building, located one block from its former site. The 8,100 square-foot building features an ex terior of brown brick with windows of bronze tinted glass. The lobby has a 16-foot clerestory to provide natural light. A second story can be added when needed. Included in the build- MID-CONTINENT BANKER for August, 1981 We give you big-city clout... close to home N e w building of Citizens State, Bald Knob, fe a tu re s co n tem p o ra ry design. Bank is observing its 5 0 th anniversary this year. ing are six teller stations, three noteteller stations, a safe-deposit area and a computer room. There is room for 30 cars in the parking area. Drive-in ser vice is available across the street from the bank at a facility built in 1976. First National, Little Rock, has be come a wholly owned subsidiary of First National Bancshares, a one-bank HC. Bank shareholders have received one share of HC stock for each bank share they held. Executive manage ment and board for the HC remain the same as that of the bank, with Edwin C. Kane serving as chairman and W il liam L. Cravens as president. Norbert E. Schwarz has joined City National, Fort Smith, as executive vice president/chief administrative officer/ director. He formerly was a principal of a management consulting firm in Rockford, 111., and has had 18 years’ experience with banks in Illinois and Wisconsin. When a banker needs a bank, it helps to find one that has the leverage of a major full-service bank like you’d expect to find in Chicago or New York. Springfield Marine Bank can give you that kind of service . . . close to home. We are a large bank—in fact, the largest Illinois bank in deposits and capital outside of Cook County. And we’re the main depository for many of our correspondent banks. So we can offer you the products you’re looking for, such as cash-letter services and overline credit. Yet, we make it easy to bank at Marine. Our Central Illinois location allows easy access to all our services and all our people. You can call any of our top management people directly for consultation, if you wish. You can get what you need at Marine. Cash-letter services, overline credit and many other correspondent bank ser vices. With all the convenience you need, too. Call Don McNeely or Mark Janiak (217) 753-6000 for more details. SPRINGFIELD M a rin e B ank 1 East Old State Capitol Plaza Springfield, Illinois 62701 (217) 753-6000 Member FDIC Southeast Financial Bankstock C orp., M cG ehee, has acquired M cG ehee Bank. Illinois Don G. McNeely, vice president, Springfield Marine Bank, has been appointed head of the correspondent department. He joined the bank in 1966 and has been a vice president since 1980. Mark E. Janiak, loan offi cer, has assumed additional responsi- JANIAK McNEELY MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 5831 -R 91 bilities for Answer Switch and other electronic banking services available to financial institutions. He joined the bank in 1979 and was named loan offi cer in 1980. Northern Trust, Chicago, has pro m oted John V. N. M cC lu re and Michael J. Cundy to vice presidents, Hernan A. Floyd and Randi Christen sen to second vice presidents and elected David W. Grainger to its board and that of Northern Trust Corp. Mr. McClure is in the commercial banking department and Mr. Grainger is chair man of an electric motor and equip ment firm. Indiana Indiana National, Indianapolis, has promoted John P. Whiteman to vice president/trust officer and Elaine F. Bedel and Margie A. Crawford to assis tant vice presidents/trust officers. New officers include Nancy N. Block, trust officer; Judy K. Brown, associate legal counsel; Marilyn S. Heishman, data processing officer; Drew R. Pattyn, branch officer; and Susan M. Wiggenhorn, operations officer. St. Joseph Valley Bank, Elkhart, has opened a new banking center in Bris tol. The 2,800-square-foot one-story building features three drive-through windows and a com m unity room. Manager of the new facility is Thomas E. Young, vice president. bank at the time of its organization in 1973. He has served two terms in the Kentucky Senate, during which time he served as majority whip for two years and majority caucus chairman for four years. Mr. Stacy’s son, C. K., is vice president at Bank of the Moun tains. Expected to assume the KBA pres idency at the convention is Allan S. Hanks, president, Anderson National, Lawrenceburg, who has served the KBA as president-elect since last fall. He entered banking in 1948 at his present bank, was named assistant cashier in 1953 and president in 1971. KBA Treasurer is Myrvin Mohler, president, Bank of Benton. He joined the bank in 1946 and has held every officer position in the bank. He was named president in 1969. Kentucky Kentucky Bankers Assn. To Hold Convention In Louisville Sept. 13-15 Continental Bank, Chicago, has pro moted Theodore E. Bulow, Kenneth J.F etzer, Thaddeus P. Vannice and William A. Saer to vice presidents and elected Cathy S. Callender, Robert G. Sinn, Jean Allen, Jeffrey J. Powell, Robert G. Syphers and Paul J. Binder second vice presidents. LO U ISV ILLE — The 87th annual convention of the Kentucky Bankers Association will convene at the Galt House here on September 13 and con tinue through September 15. Speakers and entertainment activi ties will be announced at a later date. William C. Neill has been elected an assistant vice president at Harris Bank, Chicago. He joined the bank’s invest ment department in 1979, following service with M arine National E x change Bank, Milwaukee. Jay B. Walters has joined Sears Bank, Chicago, as executive vice president and head of the correspondent, com mercial and international divisions. Leo J. Hogan has joined National Boulevard Bank,Chicago, as senior vice president/commercial depart ment. He formerly was with First National, Chicago, where he headed the metropolitan/manufacturing divi sion. Central National, Sterling, has pro moted Lois I. Anderson to vice president/marketing, James E. Mills and Bob Pennington to consumer loan officers, Judith E. Fisher to associate loan officer and Dorothy Forward to investment officers’ assistant. 92 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HANKS STACY MOHLER Joe Stacy, president, Bank of the Mountains, W est Liberty, is KBA president for 1980-81. His banking career began 35 years ago at Commer cial Bank, West Liberty. He resigned as president of the bank in 1969. He was named president of his present RUE BOYD Top-management changes have been announced by First Kentucky National Corp. and its major subsidiaries, First National Bank and First Kentucky Trust, all of Louisville. William M. Rue was named vice chairman/chief finan cial officer of the HC, with responsibil ity for financial systems and informa tion, budgeting and corporate plan ning. He formerly headed the invest ment-management and trust functions of First Kentucky Trust in addition to other HC-management responsibili ties. Morton Boyd Jr. was named president/chief administrative officer of First National Bank, succeeding A. Stevens Miles, who remains president/CEO of the HC. Mr. Boyd had been responsible for the bank’s com mercial accounts divisions. In his new post, he oversees all banking activities for individuals and businesses. W il liam O. Rudd has been elected president/chief administrative officer, First Kentucky Trust, also succeeding Mr. Miles. Mr. Rudd formerly was re sponsible for the bank’s consumer accounts divisions, including branch offices. Now he is responsible for First Kentucky T rust’s trust and invest ment-management activities, includ ing bond trading. He continues to direct activities of the National Proces- MID-CONTINENT BANKER for August, 1981 sing C o ., which p ro cesses large volumes of sales documents generated by a diversity of retailers on a national basis. Messrs. Boyd, Rudd and Rue also were named directors of First National Bank and First Kentucky Trust. John W. Barr continues as the HC’s chairman. United Kentucky Bank, Louisville, has promoted Randall H. Devers to vice president/trust officer, Harry T. Richart III to vice president/retail banking, Ron D. DeW eese and James P. Wheatley to assistant treasurers/retail banking and Donna A. Russell to assistant treasurer/marketing plan ning. First Security National, Lexington, has promoted Harry R. Arnold to vice president/operations and internal ser vices, Douglas S. Lee to assistant vice president/operations and internal ser vices and Rita Evans, Karen M. Frary, Phil Halley, Kitty L. Fox and Ruth A. Reda to assistant cashiers. Citizens National, Bowling Green, has promoted Dan Sharer to vice presi dent and Joni Parrent to assistant vice president. They joined the bank in 1967 and 1979, respectively. The bank has opened a temporary banking facil ity in Smiths Grove on Highway 101. A permanent facility will be built on the site, with completion expected early next year. Louisiana Samuel Andrews and Lawrence H. Ellis Jr. have joined Bank of New O rleans as vice p resid en ts. Mr. Andrews, who formerly was with a large Mobile, Ala., bank, also was made marketing director at BNO. Mr. Ellis had been with another local bank. At BNO, he will develop corporate loans and deposits. In other action, the bank has promoted Wayne J. Borne from assistant vice president to vice president, Lawrence J. Laurie from assistant cashier to assistant vice presi dent, Peter B. Vicknair from data pro- cessing officer to assistant vice presi dent and Louise E . H uete and Step h en E . Sullivan to assistant cashiers. Joycelyn J. Johnson has been pro moted to assistant cashier at Liberty Bank, New Orleans. She joined the bank in 1973 and had been bookkeep ing department supervisor. John Rankin Wilbourne has been promoted from senior vice president to executive officer/branch administra tion, First Guaranty Bank, Hammond. He went to the bank in 1974 from First National (now First Tennessee), Mem phis. Fidelity National, Baton Rouge, has promoted Robert J. J. Morris from vice president/auditor to senior vice president, Donald T. Heroman from assistant vice president/planning offi cer to vice president and Louise K. Albright from auditor to vice presi dent/auditor. Mississippi Harold H. Clopton III has been pro moted from vice president, Brookhaven Bank, to senior vice president in charge of the consumer loan depart ment. M itchell Davis, senior vice president, has assumed responsibility in the commercial loan department. Mr. Clopton joined the bank as assis tant vice president/installment loans in 1974 and became vice president in 1978. Missouri M ercantile T ru st, St. Louis, has promoted Rosalie P. Randazzo from data processing officer to assistant vice president and Mary L. Keener from assistant trust officer to trust officer. Plaza Bank of West Port, St. Louis County, has changed its name to Boat men’s West Port Bank to identify it as a subsidiary of Boatmen’s Bancshares, St. Louis. ELLIS Dick Soergel has jo in e d L ib erty National, Oklahoma City, as assistant vice president/manager, U. S. govern m ent bond trading division. He formerly was with University Bank, Stillwater. Promoted to assistant vice presidents were Fred Breckenridge, John Carruth, James Davis, Ben Hibstenberg, Richard Legako, Cynthia MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANK DIRECTOR! EFFECTIVE BOARD AUDIT $18.50 This 184-page manual provides com prehensive information about the directors’ audit function. It outlines board participa tion, selection of an audit committee and the magnitude of the audit. It provides guidelines for an audit committee, deals with social responsibility and gives insights on en gaging an outside auditor. It includes checklists for social responsibilities audits, audit engagement letters and bank audits. RISK MANAGEMENT $16.50 This 160-page manual provides the vital information a board needs to formulate a sys tem to recognize insurable and uninsurable risks and to evaluate and provide for them. Included are insurance guidelines and checklists to identify and protect directors against various risks. Bonus feature: A model board policy of risk management adaptable to the unique situations at any bank. I f n ot s a tis fie d , r etu rn b o o h s w ithin 10 d a y s f o r f u l l refu n d . Illlllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll Oklahoma ANDREWS . . . f o r the THE BANK BOARD LETTER 408 Olive St., St. Louis, Mo. 63102 __copies. Board Audit $- __copies, Risk Management $. Total Enclosed $. Name --------------------------------- -— T itle ---Bank -------------------------------------------- -----S tre e t______ ______________________ —----City, State, Z i p ---------------------------------- — (Please send check with order. In Missouri add 4.6% tax.) 93 Shipp, Sandra W ebb, Steve Kimball, Donna K. Jack, Steve Mattingly and Karyn Miller. First National, Oklahoma City, has elected John R. Bow les and Jess Thomas vice presidents/trust officers, James A. Tappan vice president/bonds and promoted Thomas R. Pixton and Roger N. Steed to assistant vice presi dents/trust officers. Central National, Enid, has named Charlene R. Smyly and Charles E. Barnes vice presidents. Mrs. Smyly formerly was with a petroleum firm and Mr. Barnes formerly was with Fort Worth National. He has been named head of the regional banking depart ment. Rex Privett has joined the Oklahoma Bankers Association as director of pub lic affairs. He formerly was vice president/legislative and public affairs at First National, Oklahoma City. He is a veteran of 16 years in the Oklahoma House of Representatives, where he served four years as speaker pro tem pore and six years as speaker of the house. First National, Bartlesville, has pro moted Dennis O. Cubbage Jr. to vice president, D. Leonard Hope to finan cial vice president/cashier, F elix Roquem orejr. to trust officer, Richard Spurgeon to assistant trust officer, Jean Hoskinson to assistant cashier/ corporate secretary and Pat Lippert and M argaret Taggart to assistant cashiers. Tennessee James S. Patteson has been named president, Citizens Bank, Savannah. A native of Memphis, he most recently served as a vice president at Park National, Knoxville. Previously, he was associated with First Tennessee banks in Knoxville and Memphis. Donald L. King has been appointed president, Union Bank, Pulaski. He recently served as vice president, Ten nessee National Bancshares, Mary ville, and as senior vice president, Blount National, Maryville. He began his banking career with Third Nation al, Nashville, in 1954. David B. Ramsay has been elected president/CEO, Hamilton Bank of Johnson City, succeeding J. Lloyd Langdon, who had been chairman/ president since 1979. He will remain as chairman. Mr. Ramsay joined the bank last September as executive vice president/chief operating officer. He formerly was with American National, Chattanooga. In other action, the bank has elected Clifford C. Andes vice president/branch manager. He joined the institution in 1956. Texas RepublicBank, Dallas, has established a mining/minerals division, headed by Vice President Phillip T. Dixon, for mer vice president, mining division, Continental Illinois National, Chica go. Also on the staff is Gary P. Thoma son, assistant vice president/lending officer/mining engineer, formerly with Mellon Bank, Pittsburgh. The bank has named seven new vice presidents: Stephen R. Bova, John R. Ball, W il liam R. Colvin, Carol L. Peaster, Don E. McAlister, Z. Buford Moore and Larry D. McNabb. Republic of Texas Corp. has elected Richard I. Galland and Albert B. Wharton III to its board. Mr. Galland is chairman/CEO, Amer ican Petrofina; Mr. Wharton is co owner, W. T. Waggoner Estate. Frost Bank, San Antonio, has pro moted Vernon D. Torgerson Jr. to senior vice president/manager, invest ment department, trust division. He joined the bank in 1970. Also prom oted were Tom Frost III to vice presi- Dwight Grizzell has been promoted to assistant vice p resid en t at Third National, Nashville. He joined the bank in 1972 as a management trainee. F irst Am erican C o rp ., Nashville, plans to acquire First National, Jackson. First National was established in 1873 and has five branches. 94 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FROST TORGERSON BURGESS dent/national accounts; Raymond Burgess, James Cotton, Tom Duesing and Brenda Wilson to assistant vice presidents. Margo Fields and Gary Molberg have been promoted to assistant vice presi dents at First National, Amarillo. They joined the bank in 1978 and 1975, re spectively. N orthPark N ational, D allas, has prom oted four vice presidents to sen ior vice p resid en ts: Jam es B. M cC lure, consum er loan division; David A. Newman, administration di vision; Charles R. Smith, loan admin istration division, and Dale R. Terry, who also is marketing director. Building Plans Announced By Frost Bank, San Antonio Frost National and Cadillac Fairview, real estate developer, have announced construction plans for Two Frost Tower, said to be the largest high-rise office building in San Anto nio and the second component of the Frost Financial Center. Two Frost Tower will contain ap proximately 600,000 square feet of office space and will include a covered parking garage. Cost of the project is approximately $70 million. Combined square footage of the new building and existing Frost Bank Tower will be more than one million square feet. The new building will be located directly north of Frost Bank Tower and will include a plaza. Occupancy is ex pected in the last quarter of 1983. Survey Reveals Factors Public Considers Primary When Selecting a Bank Friendly personnel, capable man agement and safety/reliability are the three most important factors consid ered by individuals in selecting a finan cial institution, according to results of a recent survey on the topic made by A. J. Wood Research Corp. Respondents to the nationwide sur vey were asked to indicate any of 29 factors they considered important when choosing an institution for a checking account, a savings account and as a place to borrow. Physical loca tion served primarily as a screening device — if a bank isn’t adequately convenient, it will not even be consid ered. In selecting an institution in which to open a checking account, availabil- MID-CONTINENT BANKER for August, 1981 With these bankers, it's anything but all quiet on the western front. These people cover the western part of O klahom a for The First. Their attitude toward their jobs is a highly activist one. Q uite simply, they believe in getting to know their client banks from the ground up. This necessarily involves a lot of research. Research which leads to more innovative solutions, both for today and tom orrow. The net effect of this process is a banking relationship which really works for you full tim e. The way our bankers figure it, it all goes w ith the territory. THE FIRST OVER $150,000,000 CAPITAL STRUCTURE MEMBER F.D.I.C./ A SUBSIDIARY OF FIRST OKLAHOMA BANKCORPORATION, INC. THE FIRST NATIONAL BANK AND TRUST COMPANY OF OKLAHOMA CITY MID-CONTINENT BANKER for August, 1981 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 95 ity of free checking was the single most frequently mentioned factor, consid ered important by five out of six re spondents and rated as the single most important factor by more than one out of four. In selecting an institution for a sav ings account, high interest on savings was by far the key factor, considered important by nearly nine out of 10 re spondents and cited as most important by approximately half the respon dents. Low interest rates on loans is the most important consideration in decid ing where to borrow, with four out of five respondents rating this factor as “important” and more than two out of five considering it the single most im portant factor. Survey results were analyzed by a variety of factors, including geographic region, age, marital status, occupa tion, education, household size, in come, checking/savings account bal ances and others. Copies of survey results are avail able at $100 each from A. J. Wood Research Corp., 1405 Locust Street, Philadelphia, PA 19102. Y ou 'll G et EX T R A Profits From The 4 M anagem ent Cycles. Compl eti on— Evaluation m A How Do \ We Get There? Where Are We? Æ Where Are We Going? WITH OUR HELP AND PROVEN SYSTEMS CR A N K * /\ID E Professional Bank Consultants inc 7 3 4 West Port Plaza Suite 2 5 5 St. Louis, Missouri 6 3 1 4 1 314 -4 3 4 -8 8 9 9 COMMERCIAL BANKERS Through our network of regional offices, conveniently located in the nation's money centers, we are fortunate to represent some of the nation's finest and fastest growing banks. C u r r e n t l y we are e n g a g e d in a n u m b e r o f searches fo r e x p e r i e n c e d p e rs o n n e l in areas o f O p e r a tio n s , Personnel, C o m m e r c ia l L e n d in g , I n s t a ll m e n t L e n d in g , F in a n c ia l ( A u d i t a n d C o n trolJer), T r u s t a n d M a r k e t i n g . These o p e n in g s , in a w id e c h o ic e o f locales, are f r o m th e e n tr y level to P resident. Starting salaries range from $20-60,000 + . Send resume in confidence, including geographical and income requirements. All fees paid by em ployer. H O W A R D / F^ersonnet Inc 500 N. Michigan Ave., Chicago, IL 60611 6350 LBJ Freeway, Dallas, TX 75240 N ew Y ork • New Jersey • C hicago • A tla n ta (312) 222-1980 (214) 233-9012 • San Francisco • • Index to Advertisers • American Express Co. (Money Order Div.) ........ 5 American Express Co. (Travelers Cheques)........ 65 Animal Fair, Inc...................................................... 77 Armco Industrial Credit Corp................................. 62 Arrow Business Services, Inc................................ 3 BBC Manufactured Buildings Inc......................... 11 Bacon, AIA Architect & Assoc., Richard L.......... 42 Bank-Aide, Inc........................................................ 96 Bank Board Letter ......................................... 78, 93 Bank Building Corp................................................ 49 Bank of America, San Francisco ................. 50-51 Boatmen’s National Bank, St. Louis ................. 97 Bunce Corp.............................................................. 39 Christmas Club — A Corp...................................... 23 9 Commerce Bank, Kansas City ............................. Commercial Credit Business Loans, Inc.............. 81 Commercial National Bank, Kansas City, Kan. 72 Continental Bank, Chicago.................................... 57 Crocker Bank, San Francisco............................... 35 De Luxe Check Printers, Inc.................................. 47 Don Howard Personnel, Inc................................... 96 Federal Land Bank, St. Louis ............................. 31 First Alabama Bank, Montgomery....................... 46 First Missouri Development Finance Corp........... 87 First National Bank, Amarillo, Tex....................... 37 First National Bank of Commerce, New Orleans 21 First National Bank, Kansas City ....................... 26 First National Bank, St. Joseph, Mo.................... 29 First National Bank, St. L o u is ............................. 98 First Oklahoma Bancorp., Oklahoma City .......... 95 First Stock Yards Bank, St. Joseph, Mo.............. 84 Fourth National Bank, Tulsa ............................... 45 Fourth National Bank & Trust Co., Wichita . . . . 69 H B E Bank Facilities Corp.................................... 59 Hagan & Associates, Tom ................................... 96 Harland Co., John H............................................... 13 Harris Trust & Savings Bank, Chicago ............... 41 Hutchinson National Bank & Trust Co., Hutchinson, Kan................................................. 73 Industrial Life Insurance Co.................................. 8 Kanney Marketing Services, Neil ....................... 52 Kansas State Bank & Trust Co., W ic h ita ............ 74 Liberty National Bank & Trust Co., Oklahoma City .................................................. 2 MPA Systems ........................................................ 96 Memphis Bank & Trust Co..................................... 19 Mercantile Bancorp., St. Louis ........................... 7 Missouri Department of Revenue ....................... 84 National American Bank, New Orleans ............. 43 National Bank of D e tro it....................................... 63 Northern Trust Co., Chicago ............................... 67 RepublicBank, Dallas ........................................... 4 Ridgeway & Associates, John W............................ 86 St. Johns Bank & Trust Co., St. Johns, Mo........ 85 Salem China Co...................................................... 24 Security National Bank, Kansas City, Kan.......... 70 Southwest National Bank, Wichita ..................... 71 Springfield Marine Bank, Springfield, III............. 91 Stifel, Nicolaus & Co., Inc..................................... 75 Third National Bank, Nashville ........................... 33 Union National Bank, Little R o c k ....................... 14 United Missouri Bank, Kansas City ................... 82 Wells Fargo Business Credit ............................... 62 Westcap Corp.......................................................... 55 Whitney National Bank, New Orleans ................ 17 Zahner & Co............................................................ 83 Dallas A n Executive R e c ru i ti n g o n d P la c e m e n t A g e n c y fo r the F in a n c ia l C o m m u n i t y BANKERS WANTED Exec. Vice Pres. — Mo.......................................... Trust Investment— Mo., Ks., Neb....................... Trust-Empl. Benefit— Mo., la............................. Sr. Commi. Loan — Ks., Mo................................. Operations — Mo., Wy., Ks.................................. Cashier — Ks., Mo., la......................................... Ju st a p h o n e ca ll aw ay. Several junior and senior commercial loan positions avail able with major midwestern banks. Degree and large credit experience required. To inquire, please forward résumé and salary history. No waiting No worry Available now throughout the Mid-Continent area. Other temporary facilities in various sizes. 96 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis $36K $25K $26K $40K $25K $27K TOM HAGAN & ASSOCIATES of KANSAS CITY MPA SY STEM S^ P.O. Box 12346/2024 Swift North Kansas City, MO 64116 4120 Rio Bravo El Paso. Texas 79902 , (915) 542-1345 or (915) 542-1461 J 816/474-6874 SERVING THE BANKING INDUSTRY SINCE 1970 MID-CONTINENT BANKER for August, 1981 From Now” Accounts regulation Information ^WEfcr m Don Shay, Executive Vice President, University Bank o f Carbondale, with Russ Spaulding, Vice President, Boatmen’s A Boatmen’s Correspondent Banker can assist you. Call Russ Spaulding today. 314-425-3600 Overlines • Investments • Processing • Stockloans • Federal Funds • Operation Assistance • Regulation Information Digitized forFFRASER m ber D IC https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis C o rresp o n d en t Banking Division THE BOATMEN'S NATIONAL BANK O F ST. LO U IS 3 1 4 -4 2 5 - 3 6 0 0 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 m _ First National Bank in St. Louis I I M A First Union Bank 510 Lo cu st Street • St. Louis, M issouri 63101 • (314) 342 -6967 • M em ber F D IC
@FedFRASER