Full text of Mid-Continent Banker : The Financial Magazine of the Mississippi Valley and Southwest : February 1977, Volume 73, No. 2

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The Financial Magazine o f the Mississippi Valley & Southwest

YEAR-END STATEMENT ISSUE

FEBRUARY, 1977

Centennial Event in Little Rock:
W orthen Begins Second Century
Page 96

The T-Bill Futures Market:
New Financial Tool for Banks
Page 33

Realistic Pricing of Services:
A Must for Sound Banking
Page 35

BOARD R O O M NEWS
Promotions—Elections—Earnings
Page 72

LENDING OPPORTUNITIES
Financing Picture for RVs Brightens

Mobile Home Financing in Perspective:

As Sales Return to Pre-Crisis Levels

The Potential for Profits Remains Great!


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Federal Reserve Bank of St. Louis

Thanks a

billion

Mid-America!
(and you helped us do it in only 58 years, 3 months and 28 days)

That’s right, on Decem ber 3 1 ,1 9 7 6 ,
Liberty ended the year with total bank resources in excess of one billion dollars.
Take a look for yourself.

Statement of Condition
December 3 1 ,1 9 7 6

RESOURCES
Cash and Due from Banks...........................

$ 230,308,116

U.S. Treasury & Agencies S ecurities........

200,158,870

Other Securities..........................................

92,799,827

Federal Funds Sold and Securities
Purchased under Agreement to Resell.

193,775,000

Loans-Less Reserve for Loan Loss............

371,559,344

Fixed Assets-Less Accumulated
Depreciation...........................................
Other A ssets.................................................

6,356,703
14,040,295

TOTAL RESOURCES..........................

$ 1,108,998,155

LIABILITIES
Demand Deposits.......................................... $356,954,349
Time and Savings Deposits......................... 471,471,862
$ 828,426,211
TOTAL DEPOSITS...............................
Federal Funds Purchased and Securities
199,491,222
Sold under Agreement to Repurchase.
16,092,315
Other Liabilities.............................................
19,200,000
Subordinated Notes and Debentures. . . .
SHAREHOLDERS’ INVESTMENT
Capital S tock................................................. $ 9,200,000
S urplus..........................................................
9,200,000
Undivided Profits........................................
27,388,407
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT

$ 1, 108,998,155

IT WAS ALSO THE SEVENTH CONSECUTIVE YEAR-END
LIBERTY HAS REPORTED THE LARGEST DEPOSITS IN OKLAHOMA.

But there’s nothing magic about one day’s totals. In fact, both the bank and Liberty National
Corporation (the bank’s parent company) exceeded a billion in resources earlier in 1976.
However, we think it is much more important for you to know that few banks anywhere can
match Liberty’s ALL AROUND STRENGTH* in liquidity, net capital ratio, deposit growth,
uninterrupted earnings gains or return on shareholder investment and... none in
CUSTOMER SERVICE AND COMMUNITY INVOLVEMENT.

Oklahoma’s Leading Bank

i S

L IB E R T Y

THE BANK OF MID-AMERICA
Liberty National Bank and Trust Company/P. O. Box 25848/Okiahoma City 73125/Phone 405/231-6000/Member F.D.I.C.

* Liberty’s large liquid assets (cash and U. S. Treasury Securities) provide added depositor protection; our net capital
(uncommitted capital) is also unusually large; Liberty's deposits have almost tripled since 1967; consolidated earnings have
advanced every year for 9 years an average of 9% and our return on shareholder investment has consistently exceeded 12%.


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CORNERSTONE
M emphis Bank & Trust is becoming the cornerstone of area
banking. M ore and more banks, over 100 now all over the Mid-South,
are banking w ith M emphis Bank & Trust. We have the fastest grow ing
C orrespondent Bank Departm ent in Dixie.
W e're in th a t position not just because w e offe r the full range of
banking services, other banks also o ffe r im pressive shopping lists.
Nor are w e m aking it just because w e're big, some banks are bigger.
Banks are banking on us fo r the same reason our other customers
d o . . . w e 're dependable. W e're the most solid bank in town, stonesolid, and we back our services w ith personal attention and
unbeatable experience. We th ro w in some extras, too, that bankers
appreciate, like e xpe rt insurance capability, guidance in the
construction and design of bank fa cilitie s . .. even selection of
furnishings.
Solidarity plus the personal touch and the w illingness to take
the e xtra step have made M emphis Bank & Trust the fastest grow ing
m ajor bank in M e m p h is. . . in all departm ents.
That same philosophy is m aking us the bank
w here bankers bank in
the Mid-South. That's
the biggest com2 p lim e n ta b a n k
L

c a n 9 e t-/ ^ fM N S

Member FDIC

MEMPHIS BANK © ’ TRUST
Correspondent Bank D epartm ent/ln Tennessee, 1-800-582-6277/1 n other states, 1-800-238-7477

TH E B A N K E R S B A N K
MID-CONTINENT BANKER for February, 1 977

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Federal Reserve Bank of St. Louis

Convention Calendar
5

I S

: ! " ' |s U

F e b ru a ry

February, 1 9 7 7

Volume 7 3 , No. 2

FEATURES

Feb. 20-26: ABA Operations/Automation Div.
Business of Banking School, Fort Worth,
American Airlines Learning Center.
Feb. 23-25: Bank Administration Institute
Workshop Series, Mobile.
Feb. 27-March 1: ABA National Credit Con­
ference, Chicago, Palmer House Hotel.
Feb. 27-March 4: ABA National Personnel
School, Denver, Marriott Hotel.
Feb. 27-March 4: ABA Community Bank CEO
Program, Santa Barbara, Calif., Santa B ar­
bara Biltmore.
Feb. 28-March 3: Bank Administration In­
stitute EDP Audit Conference, Houston.

31 TAX REFORM ACT OF 1976
33 THE T-BILL FUTURES MARKET

Tully R. Davia

N e w fin a n c ia l to o l f o r b a n k s

35 REALISTIC PRICING OF SERVICES

James E. Brown

A m u s t f o r so u n d b a n k in g

44 PROPERLY WRITTEN MOBILE HOME PAPER IS SOUND!

John Leiter

T h e re a l tr ic k is to k e e p th e lo s s r a tio lo w

47 MOBILE HOME FIN ANCING IN PERSPECTIVE:

Billy L. Stephens

T h e p o te n tia l f o r p ro fits re m a in s g r e a t!

54 RENAISSANCE OF MOBILE HOME SERVICE COMPANIES

Richard W. Possett and
Richard A. VandenBerg

T h e y h a v e e m e rg e d fr o m th e D a r k A g e s !

62 KANSAS BANK OFFERS POS SERVICE
W o r l d o f E F T S co m es c lo s e r in G r e a t B e n d

72 BOARD ROOM NEWS
P r o m o tio n s , e le c tio n s , e a r n in g s , re tire m e n ts

DEPARTMENTS
6 THE BANKING SCENE
10 CO M M UNITY INVOLVEMENT
13 SELLING/MARKETING

14 MORTGAGE LENDING

22 INVESTMENTS

16 EFTS

24 CORPORATE NEWS

18 AGRICULTURAL NEWS

26 NEW PRODUCTS

28 PERSONNEL

STATE NEWS
90 ALABAMA
90 ARKANSAS
90 ILLINOIS

91 INDIANA

92 LOUISIANA

94 NEW MEXICO

92 KANSAS

92 MISSISSIPPI

94 OKLAHOMA

92 MISSOURI

94 TENNESSEE

92 KENTUCKY

95 TEXAS

Editors
Ralph B. Cox

Editor & Publisher
Lawrence W. Colbert

Assistant to the Publisher
Rosemary McKelvey

Managing Editor

MID-CONTINENT BANKER Is published
13 times annually (two issues in May)
by Commerce Publishing Co. at 1201-05
Bluff, Fulton, Mo. 65251. Editorial, execu­
tive and business offices, 408 Olive, St.
Louis, Mo. 63102. Printed by The Ovid
Bell Press, Inc., Fulton, Mo. Second-class
postage paid at Fulton, Mo.
Subscription rates: Three years $21; two
years $16; one year $10. Single copies,
$1.50 each.

Jim Fabian

Associate Editor
Daniel H. Clark

Assistant Editor
Advertising Offices
St. Louis, Mo., 408 Olive, 63102, Tel. 314/
421-5445: Ralph B. Cox, Publisher: Mar­
garet Holz, Advertising Production Mgr.
Milwaukee, WIs.,- 161 W. Wisconsin Ave.,
53203, Tel. 414/276-3432; Torben Soren­
sen, Advertising Representative.

4

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Federal Reserve Bank of St. Louis

March

Richard A. Powers

A le r t c u sto m e rs to its im p a c t

Commerce Publications: American Agent
& Broker, Club-Management, Decor, Life
Insurance Selling, Mid-Continent Banker,
Mid-Western Banker, The Bank Board
Letter and Program. Donald H. Clark,
chairman; Wesley H. Clark, president;
Johnson Poor, executive vice president
and secretary; Ralph B. Cox, first vice
president and treasurer; Bernard A. Beggan, William M. Humberg, James T. Poor
and Don J. Robertson, vice presidents;
Lawrence W. Colbert, assistant vice presi­
dent.

March 2-4: ABA Advanced Construction Lend­
ing Workshop, Columbus, O., Ohio State
University.
March 2-4: Bank Administration Institute OnLine Operation/Small Bank Seminar, Dal­
las.
March 6-8: Bank Administration Institute Di­
rectors Forum, Palm Springs, Calif.
March 6-9: Robert Morris Associates Financial
Statement Analysis Workshop, Kansas City,
Crown Center.
March 7: Bank Marketing Association Com­
munity Bank Seminar, Milwaukee, Marc
Plaza Hotel.
March 9: Bank Marketing Association Com­
munity Bank Seminar, Kansas City, Mar­
riott Hotel.
March 13-16: Bank Administration Institute
Bank Presidents Forum, Place Not An­
nounced.
March 14-15: Robert Morris Associates Loan
Quality Control Workshop, St. Louis, Breckenridge Pavilion.
March 14-16: Independent Bankers Association
of America Convention, Washington, D. C.,
Washington Hilton Hotel.
March 15-19: Bank Marketing Association
Essentials of Bank Marketing Course—Mid­
west Extension, Chicago, University of Chi­
cago.
March 16-18: Bank Administration Institute
Audit Management Seminar, New Orleans.
March 20-22: National Automated Clearing
House Assn. Conference on Selling ACH Ser­
vices, Dallas, Fairmont Hotel.
March 20-23: ABA Trust Operations and Auto­
mation Workshop, Bal Harbour, Fla., Ameri­
cana Hotel.
March 20-23: Bank Administration Institute
Corporate - to - Corporate Electronic Funds
Transfer System Conference, New York
City.
March 21-23: Bank Administration Institute
Corporate-to-Corporate EFTS Conference,
New York City.
March 22-25: Bank Administration Institute
Personnel Short Course, BAI Headquarters,
Park Ridge, 111.
March 24-25: Robert Morris Associates Inter­
national Lending: Techniques & Standards
Workshop, Washington, D. C., Hyatt Re­
gency.
March 27-30: ABA Bank Trainers’ Workshop,
Chicago.
March 27-30: Robert Morris Associates Credit
Department Management Workshop, Kansas
City, Crown Center.
March 27-30: ABA National Installment Credit
Conference, New Orleans, Hyatt Regency.
March 27-April 1: ABA Community Bank CEO
Program, Port St. Lucie, Fla., Sandpiper
B av.

March 30-April 1: Bank Administration In­
stitute Workshop Series, Atlanta.
March 30-April 1: Bank Administration In­
stitute On-Line Operation/Large Banks
Seminar, BAI Headquarters, Park Ridge,
111.

April
April 1-4: Louisiana Bankers Association An­
nual Convention, New Orleans, Hyatt Re­
gency.
April 1-5: Bankers Association for Foreign
Trade Annual Meeting, Dorado Beach, P. R.,
Cerromar Beach Hotel.
April 2-5: Association of Reserve City Bank­
ers Annual Meeting, Phoenix, Arizona Bilt­
more.
April 3-8: Graduate School of Bank Market­
ing, New Orleans, International Trade Mart.
April 3-6: ABA Southern Regional Bank Card
Management Workshop, Orlando, Fla., Or­
lando Hyatt House.

MID-CONTINENT BANKER

fo r

February, 1977

You want a bank that can back
you ...over-line or overseas.

Count on the total capa­
b ility of M ercantile Trust in
St. Louis.
We can provide the o ve r­
line support you need to take
advantage of big o pp o rtu n itie s
And we can support
you w ith a full range of
specialized services. For
instance, our International
D epartm ent can help you
and your custom ers with
overseas contacts, docu­
ments, financing, even
custom s services.
When you have an
o p p o rtu n ity that calls
fo r som ething s p e c ia lcall 314-425-2404.

W e ’r e
w ith y o u .

M=RCnnTII=
BACK
M ercantile Trust Company N.A. • (314) 425-2404 • St. Louis, Mo. • M em ber F.D.I.C.
MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

5

The Banking Scene
By Dr. Lewis E. Davids
Hill Professor of Bank Management,
University of Missouri, Columbia

Innovative Bankers Don’t Rest on Their Laurels!
HE LAST 15 years have been truly
innovative for American banking
and finance. Today’s young adults cas­
ually accept things such as checks im­
printed with magnetic ink character
recognition (M ICR ) symbols and ubiq­
uitous bank credit cards as normal fa­
cilities that are available to nearly
everyone. Yet, a generation ago, MICR
and bank cards were virtually in testtube stages and were unknown to the
general public— and to most bankers.
Some ideas, such as negotiable cer­
tificates of deposit (C D s), had been
used successfully in early colonial bank­
ing in America; but, with time, they
fell into disuse, were forgotten and
were rediscovered much later. Today,
over $60 billion in CDs of $100,000 or
more— issued by large, commercial
banks— are in circulation as part of our
money stock. This is a remarkable phe­
nomenon, but consider this: In a num­
ber of recent years, the volume of these
CDs actually ex ceed ed the total cur­
rency in circulation (although the vol­
ume of CDs now is about $12 billion
lower than the currency in circulation).
Other mind-boggling developments
reveal a technical sophistication in
banking that would have been con­
sidered impossible by the public a gen­
eration ago.
Recently, the annual number of
turnovers of bank debts and demand
deposits in New York banks has ex­
ceeded 400. Remember, there are 365
days and more than 65 legal holidays
in most years. Taking that remarkable
turnover rate into consideration, one
may wonder how a daily balance of ac­
counts is accomplished in New York
banks!
Other financial centers have expe­
rienced high-deposit turnovers. Roston,
Philadelphia, Chicago, Detroit, San
Francisco-Oakland and Los AngelesLong Reach have had demand-deposit
turnover rates substantially exceeding
100 times a year since early 1976, and
226 other Standard Metropolitan Sta­
tistical Areas (SMSAs) have averaged

T

6

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Federal Reserve Bank of St. Louis

more than 70 bank debt and deposit
turnovers on an annual-rate basis!
The old South American bank tradi­
tion of not returning checks to cus­
tomers now is being studied seriously in
the U. S. It has been conjectured that
if North American check writers could
be conditioned to accept a computer
printout or a microfiche— under certain
circumstances— of their monthly state­
ments, the cost of handling debit items
could be reduced to perhaps as little as
20 % of present costs.
The ARA has established a task
force to study the ramifications of such

basic hurdles that innovations in our
payments system must overcome.
Naturally, the ramifications of such
innovations spill over to banking’s com­
petitors, the financial intermediaries
and merchants with in-house POS capa­
bilities. They are not sleeping at the
switch; they are experimenting with
systems that can be compatible and
competitive with bank ATMs and POS
and ACH systems. Some involve inter­
changeable plastic cards, some involve
passbook entry. Some are on-line, while
others are off-line.
Manufacturers of electronic equip-

" .. . it appears that the city banker is at odds with the country
and community banker. . . . This gives commercial banking's com­
petitors the opportunity to ‘run with the ball / while commercial
bankers are sidelined
a step. If Latin American bank cus­
tomers can accept such a system, why
couldn’t North American bank custom­
ers do likewise?
At least one U. S. bank already has
“truncated” check handling and doesn’t
send canceled checks back to its cus­
tomers. It employs a single-page state­
ment with check reconciliations printed
by computer. Should a customer re­
quire a check, either the document it­
self or a copy could be retrieved easily.
This is but a first step in the con­
tinuing, logical evolution of the auto­
mated clearing house (A C H ): catch­
ing and stopping paper entries at the
earliest point in the clearing system. It
appears that the niche for paper en­
tries is in irregular payments, while
electronic giro payments are especially
adaptable for regular payments. Some
experts estimate that regular payments
would account for 80% of all payment
transactions.
It appears that public acceptance of
E F T S and POS terminals is growing at
a much faster rate than had been pro­
jected. However, a public acquiescence
to E F T S probably is only one of the

ment have been equally innovative in
devising techniques and solutions to
actual or potential problems of secur­
ity, privacy and customer accommoda­
tion. For example, one electronic de­
vice can detect forgeries of signatures
more readily than can humans. Such
devises—when tied to visual or audio
scanners, profile programs and scram­
bling devices—should reduce many of
the risks that now are simply a part of
the cost of doing business.
Intermediaries that are active in get­
ting their “piece of the E F T S action”
include S&Ls and mutual savings banks.
Some less likely candidates are credit
unions and mutual funds.
Commercial bankers have been truly
innovative in the last 15 years. They
are continuing to experiment success­
fully in areas of widespread importance
to society and themselves, and they are
to be congratulated for their outstand­
ing performance.
But they must not sit back on their
laurels. Other financial institutions and
organizations haven’t been sitting idly
by; they also have been innovative in
implementing services their customers

MID-CONTINENT BANKER for February, 1977

FirstTennessee B anks
The firstTennessee-w ide banks.


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Federal Reserve Bank of St. Louis

With $2 billion in assets, First Tennessee is the biggest
bank system between Atlanta and Dallas. First in
size and first in correspondent capabilities. Both First
Tennessee Bank N.A. Memphis (formerly First National
Bank) and First Tennessee Bank N.A. Chattanooga
have fully-staffed correspondent bank divisions. First
Tennessee Banks. One new name for the
first Tennessee-wide banks.
’ Registered Service Mark owned and licensed by First Tennessee National Corporation.

FIRST TENNESSEE BANKS

" The old South American bank tradition of not returning checks
to customers now is being studied seriously in the U. S. . .. If Latin
American bank customers can accept such a system, why couldn't
North American customers do likewise?"
have accepted in great numbers, such
as negotiable orders of withdrawal
(N O W s), share drafts, credit cards
and lines of credit tied to overdrafts.
They also have been able to do some­
thing that, unfortunately, commercial
bankers haven’t been able to do: Agree
among themselves that they will not
restrict their own options and flexibil­
ities in innovation.

Too often, it appears that the city
banker is at odds with the country and
community banker to the extent that
legislation limiting the options of all
commercial bankers is beng introduced
and enacted into law with great regu­
larity. This gives commercial banking’s
competitors the opportunity to “rim
with the ball,” while commercial bank­
ers are sidelined. # *

H ere's What Form er Students
Say About LBSST

. ..

“ I’ve learned more about people and myself in
this week than I learned at college in five years.
Thank you.”
“ Some things I’ll never forget. This was a
tremendous experience for me . . .”
“ . . . I found all the material to be highly
informative and all the instructors really
knew the material well.”
The Louisiana Banking School for Supervisory Training is
a one-week intensive course in supervisory techniques. The
LBSST Experience involves some sixty hours of training in em ­
ployee motivation, human relations, group dynamics, and leader­
ship, tailored especially for bankers.
Sessions on improved written and oral communications are
also included along with real help for banking supervisors
charged with responsibility for training personnel in basic bank
marketing.
LBSST has been sponsored annually for the past four years
by the education committee of the Louisiana Bankers Associa­
tion. Last year for the first time it was made available to bankers
throughout the U.S.
Bankers attending LBSST live at the College Inn, a dorm i­
tory adjacent to the campus of the University of Southwestern
Louisiana in Lafayette. All classes are held on campus.
Registration fee for the 1977 session is $ 2 2 5 .
cludes room, meals, tuition and all course materials.

This in­

Complete details and registration information may be ob­
tained by completing and mailing the coupon below.
Clip and mail to:
LBSST
P. 0 . Box 2871
Baton Rouge, La. 7 08 21
(5 0 4 ) 3 8 8 -6 2 9 1
I’d like to know more about LBSST. Please send complete details to:
Name ---------------------- ------ ----------------------------------------------------------------------—
Bank ------------------------------------------ ----------------------------------------------------— —
Address---------- ---------------------------------------------------------------------- — ---------------C it y ______________________ ;____ State______________ Zip---------------------

8

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Federal Reserve Bank of St. Louis

To the Editor:
We hope your magazine might help
us alert the banking community to a
problem which is not only of serious
concern to Rand McNally, but also a
matter of potential financial loss and
embarrassment to local banks and their
community merchants.
W e have heard of a number of banks
that feel they have been “ripped off”
by promotional schemes which might
seem obvious and clumsy frauds were
it not for one special element.
The way the scheme usually works
is that a bank will be offered a quantity
of a popular Rand McNally travel
guide for premium use at little or no
cost. The bank, however, is required
to lend its support and endorsement
to efforts by the promoter to sell to
local merchants advertising space in a
special supplement to the travel guide.
Not all such promotions are fraudulent,
of course, but in some cases careless or
unscrupulous operators reportedly have
collected substantial sums of money
and then disappeared or have other­
wise failed to perform as promised.
W e fear that bank officials may be
more easily led into such unsound ven­
tures simply because our company’s
name and product are involved, ancj,
there is an association with Rand Mc­
Nally’s long history of reputable service
to the banking industry. There also is
the fact that, while Rand McNally does
not itself participate in or offer this
particular kind of premium promotion,
there are legitimate and reputable com­
panies that do.
Promotion managers and premium
buyers for banks should be forewarned
that if they are offered such an adver­
tising sales-premium program (a) Rand
McNally is not a party to the offer and
(b) the credit record, financial stand­
ing and prior reputation of those mak­
ing the offer should be carefully
checked before the bank commits either
its money or its prestige to the venture.
Sincerely yours,
Arthur L. DuRois
Vice President
Map Division
Rand-McNally & Co.
Chicago

MID-CONTINENT BANKER for February, 1977

A M Y IN THE TRANSIT DEPARTMENT.
The Transit Department is working late again.
United Missouri’s Transit Department works 24 hours a day
—five days a week, and 18 hours a day on weekends.
This enables us to give better service at lower costs.
It’s why you should send the coupon for our Rapid Transit
Item Profitability Schedule and other information.
Or better yet, ask about our 30-day trial of guaranteed better
service and better costs. You can phone collect.
You have nothing to lose, and profits to gain.

Correspondent Department
United Missouri Bank of Kansas City, N .A .
10th & Grand, Kansas City, Mo. 64141
(816) 221-6800
Q

S e n d m e th e R a p i d T r a n s i t P r o f ita b ility
S c h e d u le .

□

r m in t e r e s t e d in y o u r 3 0 - d a y tr ia l, to o .

N a m e _________________________________________________
A d d ress______________________________________________
C ity ___________________________________ ,_______.________
S ta te __________________________________Z ip____________

1
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•
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UNITED MISSOURI BANK OF KANSAS CITY, N. A .
MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

9

Community Involvement
In Houston:

Rescue of Transit System by Bank

Bank Receives Award
For Service to Minorities

Hailed by C ity O fficials, Residents
IR ST PRIZE for “enlightened selfinterest” was awarded editorially to
Union National, Little Rock, recently
by the A rkansas G azette after the bank
stepped in at the 11th hour to rescue
the Central Arkansas Transit System.
The bank granted a loan of $461,000
to the transit system to enable the sys­
tem to meet expenses for the balance
of 1976, pending receipt of federal aid
expected early this year. The loan was
granted after an expected loan, to have
been participated in by seven local
financial institutions, failed to mate­
rialize.
Union National’s action was hailed
by local officials as “a brilliant, inspired
stroke of public relations” by the local
press. Members of the Metroplan Tran­
sit Policy Board also praised the bank’s
action. “What do you say to the guy
who just saved your life?” asked one
board member. Another cited the
bank’s loan as “a great positive ges­
ture.”
Even the public came forward to ex-

press its appreciation. Six “pickets”
paraded in front of the bank for eight
hours carrying signs that said nice
things about the bank. One sign, typical
of the others, carried this message: “A
savings in UNB is a savings for CAT
and the people.” Another sign pro­
claimed that people who put their sav­
ings in accounts at Union National
made good investments because the
bank’s directors made an investment
in people.
When the loan announcement was
made, Bob Connor, Union National’s
executive vice president, said, in part:
“We recognize and acknowledge our
responsibilities, as citizens and as a
leading financial institution of the area,
to help Metroplan, the cities and county
and the people who need this system
overcome the present money crisis.”
The Arkansas G azette summed up
the praise the bank gained by its ges­
ture in these words: “You can’t buy
that kind of good will.” * *

Public Tested:

The intent of Capitol Bank was to
extend health services to many of its
neighbors who otherwise might not
have had access to those services. But
the response to the program was great­
er than expected, the spokesman states.
Every diabetes appointment was taken,
300 glaucoma tests were administered
and long lines of people passed through
the blood pressure and hypertension
test stations, he says.

Health Fair's Popularity
Earns It Yearly Status
Capitol Bank, Chicago, held a twoday Health Fair recently, which en­
couraged visitors to come to the bank
and be tested for diabetes, hyperten­
sion, blood pressure and glaucoma, at
no charge. And, a bank spokesman
says, due to the fair’s popularity, it
will become an annual event.

N ot for Profit:
A customer of Capitol Bank, Chicago, takes
part in Health Fair, tw o-day event at institu­
tion during which area residents could be
tested free for glaucom a, diabetes, blood
pressure and hypertension. Fair proved so
popular, a bank spokesman says, that it will
become an annual event.


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Federal Reserve Bank of St. Louis

Substandard Properties
Targeted by Subsidiary
BankAmerica Corp., San Francisco,
has announced plans, subject to Fed
approval, for a new subsidiary that will
engage in purchase and restoration of
abandoned and substandard properties
to provide middle-income urban hous­
ing.
The subsidiary, which will be called
BA City Improvement and Restoration
Program Corp., will concentrate its ef­
forts initially in East Oakland, Calif.,
a city in the San Francisco area. The
subsidiary will purchase and rehabili­
tate about 30 houses and place them on

The United Negro College Fund has
given its Fred D. Patterson Award for
1976 to Port City Bank, Houston, for
its service to the minority community.
Besides having an aggressive minor­
ity loan policy, the bank takes part in
the support of a number of minority
oriented organizations: the Greater
Jerusalem Baptist Church and Gospel
Melody Crusade and the United Negro
College Fund.
In addition, the bank has helped in
the development of minority youth
through the establishment of its Bar­
bara Jordan Scholarship. A part of the
bank’s 30th anniversary celebration,
the $3,000 award was presented by
U. S. Representative Jordan to the stu­
dent selected as most worthy from
candidates from a number of area high
schools.

Frank Azzarello Jr. (e.), s.v.p., Port City Bank,
Houston, accepts United Negro College Fund's
1976 aw ard for service to minority community
from Earl Loggins and Patricia Pearsall. Bank
w as cited for aggressive loan policy, par­
ticipation in minority events, establishment of
minority scholarship.

the market at a modest price. In addi­
tion, an HC spokesman notes, the new
unit will operate essentially at a break­
even level, with no profits accruing to
BankAmerica Corp.
The HC’s efforts in the project will
be a partnership of private industry
and neighborhood concerns. The gub-l
sidiary will receive about $300,000 in
capitalization and lines of credit to be­
gin operations, the spokesman says.
Kyhl Smeby, senior vice president
and administration group head for Bank
of America’s southern California oper­
ations, has been named president of
the planned HC subsidiary and will
continue in his other position. Mr.
Smeby has been with the bank 37
years.

MID-CONTINENT BANKER for February, 1977

With hundreds of well-trained
LeFebure service technicians across
the country, there's one near you to
meet your needs, They're LeFebure
employees. They hove specially
equipped vehicles and all the
necessary tools. They know how to
properly install and service bonking
equipment and security systems.

Service is just a phone call away.
Warehouse facilities are maintained
at branch offices ond service depots
throughout the United States. An
inventory of standard items and
bock-up ports ore always on hand.
Warehouses also serve os a staging
area for incoming shipments.
Equipment moves efficiently, as
required, from warehouse to jo b site.
Your contractor's schedule is met.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

CLOSfc
TO
YOU
There’s a trained
LeFebure service
technician just
a phone call away.

LeFebure servicemen are factory
trained in oil aspects of installation
and service through o
comprehensive LeFebure training
program. They ore continuously kept
up-to-date on technology and new
equipment, They're professionals.
So when it comes to servicing
equipment and systems, regardless of
moke, you con put your confidence in
LeFebure.

SIMPLE, RELIABLE AND EFFICIENT

Division of Walter Kidde & Company, Inc.
Cedar Rapids, Iowa 52406

WHERE MONEY MEETS can be in the solid surround­

ings of tradition or in an atmosphere of contemporary flair, but the feeling must be
the same, the feeling that things of great importance take place there. We know the
feeling at Arrow Business Services. Our Design Department can give it to you in
your meeting rooms, your lobbies, throughout your facility. They and you can
choose from 16,000 square feet of custom showroom and 25,000 square feet of
active inventory right behind it. Furniture. Decor pieces and accessories. People
and paper flow systems. Even supplies.
Arrow also knows that even where money
meets the surroundings shouldn't cost too
5INESS SERVICES INC.
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an affiliate of Memphis Bank & Trust
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meet your needs. Call us.
oou 396-9861

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12

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Federal Reserve Bank of St. Louis

MID-CONTINENT BANKER for February, 1977

Selling /Marketing
Youth M arket:

W indow on Akard Street
Plugs W alk-Up, Hours
“A Window on Akard Street” not
only is the street-level facility of First
National, Dallas, it’s the theme that
has been used to promote the walk-up.
Featured in newspaper and radio ads,
the promotion was aimed at a young
market. Ad copy stressed walk-up con­
venience and accessible banking hours
(7 :3 0 a.m. to 6 p.m .). The promotion
was handled by Tracy-Locke Advertis­
ing & Public Relations, Dallas.

phasis will be placed on helping the
community banker get the job done ip
a minimum of time and with a small
financial investment.
The program’s format will be morn­
ing presentations followed by questionand-answer sessions, while afternoon ac­
tivities will be interaction sessions for
idea exchanges among participants.
On hand as guest speakers for the
seminar will be James H. Donnelly Jr.,

professor of business administration,
University of Kentucky-Lexington, and
E. Laird Landon Jr., associate professor
of marketing, College of Business &
Administration, University of ColoradoBoulder.
For more information on the “Com­
munity-Bank
Marketing
Seminar,”
write Education Department, Bank
Marketing Association, 309 W. Wash­
ington St., Chicago, IL 60606.

YO U CAN SEE
T H E WORLD ESI 40 DAYS
By Leland T . Waggoner

First in Dallas
opens awindow
on Akard Street.

SEE THE WORLD IN 40 DAYS?
Sure, not just around it but really see it.

PACIFIC—

We’re pleased
to announce the
opening of our new
street level facility
that’s just inside die
First National Bank
Building. On Akard.
Betw een Elm St.
— ELM
and Pacific St.
We’ll have tellers on duty from 7:30 a.m. until
6 :0 0 p.m ., Monday through Friday, to give you the
First Class service you deserve.
Stop by on your way to work, on your way to
lunch or shopping, or on your way home for complete
teller and new account services.
Our new street level facility on Akard. Ju st
another example of how we go out of our way so you
won’t have to go out of yours.

First National B ank in D allas

Read how one busy executive like you, a senior vice president
of Home Life Insurance Company, did what you can do—
meet monks in Khatmandu, drug smugglers in Kyber Pass,
belly dancers in the Middle East, on a trip without ruinous
expenses which not only circles the globe but criss-crosses it too.

YOU CAN SEE THE WORLD IN 40 DAYS by Leland T.
Waggoner also gives you complete information on charter
flights— OTC, ITC, TGC— and the "new” ABC approved
by the CAB.
This also makes the perfect gift book for the experienced,
novice, or even armchair traveler.
Illustrated with color photographs, 240 pages, 6" x 9"

One-Day Event:

Community-Bank Marketing
Is BMA Seminar Topic
The Bank Marketing Association has
announced that it plans to sponsor a
one-day “Community-Bank Marketing
Seminar” on March 9 at Kansas City’s
Marriott Hotel. The seminar will be
directed at banks with assets of $25$200 million.
The program has been designed for
the community banker who has market­
ing responsibilities on a limited or parttime basis. The latest “hot” topics and
“how-to” techniques will be featured.
Areas of concentration by speakers
will be marketing research, radio ad­
vertising, premiums, E F T and market­
ing to the agricultural market. Em-

Commerce Publishing Co.
4 0 8 Olive Street
St. Louis, MO 6 3 1 0 2

Please send m e ........... copy(s) of AROUND TH E W O RLD
IN 40 DAYS by Leland T. Waggoner at $9-30 per copy. I
enclose the payment.*
Name ........................................ ...........................................................................................
Address

...............................................................................................................................

City/State ..................................................................................... Zip ..........................
* The above price represents a 15 % discount to readers of this publication.

MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

MCB

13

Mortgage Lending
Constant-Paym ent-Factor Innovation
Expected to Blunt Criticism of V R M s

T

HE ADOPTION of broad-scale
variable-rate mortgages (VRM s) in
the U. S. has been stalled by wide­
spread criticism that they may restrict,
rather than increase, the availability of
mortgage credit to lower and middle
income groups while failing to curtail
a financing gap that causes many fam­
ilies to forgo owning homes.
But an innovative type of VRM—
one with a constant-payment factor de­
signed to reduce the financing gap—
offers potential benefits to many bor­
rowers and lenders, according to Wil­
liam R. McDonough, author of an ar­
ticle in the Dallas Fed’s Business R e­
view for December, 1976. Mr. Mc­
Donough is a Fed economist.
He says VRMs are a means of im­
proving the functioning of mortgage
markets during periods of inflation.
Most mortgage funds are provided
by specialized institutions that obtain
loanable funds through short-term de­

posits. Portfolios of these institutions
typically consist of a substantial per­
centage of long-term loans. During
periods of unanticipated inflation,
yields on portfolios tend to fall below
current interest rates and returns to
mortgage specialists are too small to al­
low them to compete for short-term de­
posits.
Variable-rate mortgages can alleviate
this problem, according to Mr. Mc­
Donough, by allowing the mortgage
rate to change over the term of the
loan. This is done by indexing the
mortgage rate to an appropriate refer­
ence rate that reflects the current mar­
ket cost of funds.
Thus VRMs have an advantage over
fixed-payment mortgages, Mr. Mc­
Donough says, in that interest rev­
enues can be structured to provide
lenders with satisfactory profit margins,
allowing them to compete more readily
for funds. As a result, a more stable
supply of funds is available to support

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Each of these magnificent Halls is quickly convertible into separate,
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Federal Reserve Bank of St. Louis

housing.
However, he continues, standard
VRMs do not reduce the financing gap,
which results when anticipated infla­
tion increases monthly payments rela­
tive to family income in the early years
of the mortgage. Monthly payments are
increased because interest rates include
a premium to compensate for anticipat­
ed inflation.
From his examination of the experi­
ences in Canada and the United King­
dom, where use of VRMs is long estab­
lished and widespread, Mr. Mc­
Donough concludes that the financing
gap detracted from the potential bene­
fits of variable-rate financing.
A solution to the problem, he says,
is the constant-payment-factor VRM.
This mortgage design provides not only
a competitive return to lenders, but
also a time profile of payments for bor­
rowers, which diminishes the financing
gap.
Features
distinguishing constantpayment-factor VRMs from other fixedterm mortgages are:
• Payments start low, increase over
time with prices, family income.
• Separate interest rates are used
to compute payment levels and interest
charges.
The interest rate used to compute
payment levels is called the constantpayment factor. This factor can be
chosen to approximate the real, or in­
flation-free, mortgage rate, which
makes the first payment low enough
to eliminate the financing gap. Inter­
est charges, meanwhile, are determined
by applying the current nominal inter­
est rate, or debiting factor, to the un­
paid principal.
As long as the difference between
the two interest rates approximately
averages out over time to the inflation
rate, nominal monthly payments will
increase at about the same rate as
prices. And the real values of payments
and outstanding principal will be about
the same throughout the term of the
loan as those of a comparable fixed-rate
mortgage in a noninflationary environ­
ment.
The benefits that constant-paymentfactor VRMs offer are offset somewhat
by uncertainty about future monthly
payments, Mr. McDonough says. If a
family’s income does not keep pace
with inflation, pressure on its household
budget would ensue, perhaps leading
to delays in mortgage payments or
even default.
Nevertheless, the author asserts, the
constant-payment-factor VRM may be
the best option for some borrowers and
lenders in periods of inflation, because
it reduces the financing gap while pro­
viding satisfactory profit margins to
specialized mortgage lenders. * *

MID-CONTINENT BANKER for February, 1977

How does the energy capital
move its energy?
Helping it reach its destination is
First City National Bank.
Some thirty underground pipelines carry
Texas Gulf Coast resources to major U .S.
cities thousands of miles away. These
pipelines move millions of gallons of oil,
natural gas, petrochemicals and other
liquid products.
This area of Texas has become one of
the nation’s most important oil and gas
transmission centers — connecting the
products of plants and refineries along the
Houston Ship Channel with inland desti­
nations as far away as New York City.

One-quarter of the nation’s major
pipeline companies moving natural gas are
found in Houston. Together these 14
companies operate more than 12 2 ,0 0 0
miles of natural gas pipeline.
First City National Bank uses its
financial strength to help move Texas
Gulf Coast resources. This involvement
has taught us even more about the energy
field. And what we know is yours for the
asking.
We’re becoming involved with more
and more industries every day. And we’re

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

proving to correspondents that more ser­
vice is the result of more experience.
Understanding business as well as bank­
ing has made us . . .

A major financial strength behind
Texas industry.

FIRST
C IT Y
N A TIO N A L
BAN K
O F HOUSTON

15

EFTS

(Electronic Funds Transfer Systems)

MAP EX Offers Its Services
To S&Ls, CUs in Mo.-lll. Area,
Adopts Sure Pay' Trademark
ST. LOU IS—The Mid-America Pay­
ment Exchange (M A PEX) has an­
nounced that S&Ls and credit unions in
the eastern Missouri/ southern Illinois
area now may join commercial banks in
offering their customers E F T services
through MAPEX. The exchange also
has adopted the generic name “Sure
Pay” to market its services.
The decision to expand membership
in the exchange beyond commercial
banks was made at a meeting of the
MAPEX board. Under the program,
customers can take part in services such
as automatic deposit of payrolls and
social security payments and dividends.
“Sure Pay,” the generic name
MAPEX has adopted for marketing its
services, will include automated pay­
roll deposits and prearranged transfers
of funds. The name was chosen, a
MAPEX spokesman says, due to its
identifiability and to develop a greater
understanding of the automated clear­
ing house system.
MAPEX, which became operational
last July, currently processes in excess
of 90,000 payments monthly. Its op­
erational area covers the eastern half
of Missouri, southern Illinois and south­
western Indiana.

Group of Tulsa Bankers

ered for the switch. The committee has
solicited proposals from potential ven­
dors and will allow manufacturers
about one month to submit bids.
Mr. Davis says the system is expect­
ed to be functional by 1978.
Initial services that have been sug­
gested by the report are check guaran­
tees, credit card authorizations, POS
funds transfers and shared ATMs.
Credit card authorizations already
are being handled electronically at a
number of department-store chains in
the area, Mr. Davis reports. But, he
adds, they only can check in-store
cards against their own records of cus­
tomer transactions—bill payments and
current balances.
Also recommended by the study
were measures to ensure security and
privacy of transactions for the con­
sumer.
Besides Mr. Davis’ bank, institutions
represented on the steering committee
are First National, Republic Bank,
Fourth National, Bank of Commerce,
Boulder Bank, Guaranty Bank, Utica
National and F & M Bank.
Transaction Telephone System
Activated by Continental Bank
CHICAGO—Thirteen Chicago-area
merchants have signed contracts with
Continental Illinois National for par­
ticipation in a “transaction telephone”
system that will provide automated
check and credit verification through
a link with the bank’s electronic POS
network.

Plans City-W ide EFT Net
Following Andersen Study
TULSA—A committee of nine bank­
ers has released a first set of detailed
plans for a cooperative, city-wide elec­
tronic banking system. The announce­
ment followed a four-month study for
24 area banks by Arthur Andersen &
Co., and was coordinated by the Tulsa
Clearing House Association’s steering
committee on electronic funds transfer
systems.
The study proposes services to be of­
fered by ATMs and shared terminals at
retail locations, as well as the network’s
functional requirements.
According to John M. Davis, assist­
ant vice president, Bank of Oklahoma,
and steering committee chairman, the
next phase will be to solidify what ser­
vices will be offered, agree to a concep­
tual design and list the specifics ven­
dors must meet in order to be consid­
16

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Federal Reserve Bank of St. Louis

Chicago retailer is shown using new transac­
tion phone linked to Continental Bank's elec­
tronic POS system. Phones offer 20-second
computerized credit authorizations on purchases
made with Master Charge cards. Check veri­
fication is also provided to holders of Conti­
nental debit cards plus cards from five other
Chicago-area banks—Avenue Bank, O ak Park;
Glenview State; National Security and Pioneer
banks, Chicago; and Skokie Trust.

The retailers are said to be the first
to use the system, which the bank de­
veloped and has been testing since last
summer. The transaction telephones of­
fer computerized, voice-response tele­
phone authorization for credit and
check purchases and represent another
phase of the bank’s POS network that
also includes electronic terminals.
The bank has installed 33 transac­
tion phones in the 23 retail locations
represented by participating mer­
chants. Several hundred additional
phones are expected to be installed
this year.
Because the transaction phone op­
erates on regular phone lines as op­
posed to private leased lines, the
merchant using the transaction phone
will have the flexibility to access any
charge card or debit card network of­
fering electronic message authorization
services, in addition to Continental’s
network.

'Electronic Paychecks'
Offered by OC Firm
OKLAHOMA CITY—The salaried
employees of the Macklanburg-Duncan
Co. (M -D ) reportedly have become the
state’s first corporate employees to have
their paychecks processed electronically
and deposited directly to individual
bank checking accounts.
The program, which is coordinated
by Liberty National, works this way:
The firm’s employees grant permission
for automatic deposits each payday.
M-D prepares a magnetic tape of all
participating employees and their banks
and delivers the tape to Liberty Na­
tional. The bank then balances the en­
tries and credits the accounts of M-D
employees who bank at Liberty Na­
tional.
A magnetic tape then is prepared for
all other M-D employees and delivered
to MACHA—the Mid-America Auto­
mated Clearing House Association—in
Kansas City. MACHA balances and
validates the remaining entries, sorts
them according to bank and sends
magnetic tapes or paper journals to
those banks.
On paydays, participant employees
receive “payslips” rather than paychecks. This, a bank spokesman says,
is the employees’ guarantee that their
money is available for immediate use.
Currently, 14 banks in the Oklahoma
City area are involved in the M-D/Lib­
erty National direct payroll deposit
program. In addition, Liberty National
serves M-D’s sales force in 40 states
with wire transfer payroll processing.

MID-CONTINENT BANKER for February, 1977

Our idea of
correspondent banking:
THE COMMITTEE O F ONE.
Our people are real, live, experienced correspondent professionals,
with years of correspondent banking behind them. They aren’t
management trainees or just goodwill ambassadors, so they can okay
loans or services—like our new EFT S services—on the spot.
Without going through unwieldy,
time-wasting committees.

WE CALL YO U BY NAME.
NOT BY PHONE.
You see, National Boulevard
believes in person-to-person,
eye-to-eye contact with the
management of every
correspondent bank. Right
there at the correspondent
bank. So things get done
faster, friendlier.

THE FUTURE STARTS TODAY
And now our individualized services
will be better than ever, because
National Boulevard is ready for EFTS.
Electronic Funds Transfer
Systems. For instance, our
Central Information File is
capable of transmitting
information to correspondent
banks. Soon, checking and
savings accounts will be on line.
Then, step-by-step, eveiy
correspondent service will be fully
integrated into the system for more
convenient, better banking.

The bank for the New Downtown
NATIONAL BOULEVARD BANK
OF CHICAGO
400-410 North Michigan Ave., Chicago, 111. 60611
MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Phone (312) 467-4100

Member FDIC
17

Agricultural News
Stronger Market for Cattle Prices
Foreseen by Livestock Economists
By ROBERT F. ANDERSON
President
Farmers Grain
& Livestock Corp.
West Des Moines, ia.
HE YEAR 1975 was the one that
turned the cattle cycle around. This
year should be the one that starts cattle
prices on a sustained upward march.
That’s the nutshell view as seen by
livestock economists at my firm
(F G L ). It’s in tune with observations
by most private, livestock industry,
U. S. Department of Agriculture
(USDA) and state extension analysts.
The consensus is that cattle prices
this year will move appreciably above
depressed 1976 averages and rise fur­
ther through the later ’70s. Quotations
by 1980 should climb substantially
above the best annual averages ever
seen.
The key element in the outlook for
stronger markets is the prospect for a
record decline in availability of beef
per person. Additionally, consumer de­
mand is expected to rise. Inflation is
as certain as death and taxes.
What’s happening is that the cattle
cycle is shifting gears! The national
herd climbed from 1967 through 1974
and now is retracting. From 1967
through 1974, cattle and calf slaughter
held mostly between 39 million and 41
million head per year. These rates were
low in relation to herd size, and the in­
ventory rose from 108.8 million at the

cycle’s low point January 1, 1967, to
an all-time peak of 131.8 million in
early 1975.
Beef consumption per person was
able to increase in most years, rising
from 106.5 pounds in 1967 to 116.8
pounds in 1974.
Turnaround in the cycle came in
1975. Cattle and calf slaughter zoomed
to nearly 47 million head. That was
enough to reduce the following January
1st inventory for the first time in nine
years.
The cycle shift actually had its ori­
gin in 1974’s combination of unfavor­
able developments: sagging cattle
prices, poor range conditions, short
feed grain and soybean crops and rec­
ord-high feed costs. The resulting se­
vere financial squeeze on ranges and
in feed lots triggered the herd liquida­
tion that’s still continuing.
The 1975 slaughter boost lifted that
year’s beef intake per person to more
than 120 pounds, highest ever. Then,
last year’s record kill provided a new
peak of nearly 129 pounds of beef per
person.
Especially significant in the past
couple of years’ big kills have been the
heavy culling of cows and a smaller
holdback of heifers for replacement.
The apparent result is a slide of about
one-tenth in the nation’s beef cows.
This will put limits on beef-production
capacity in the years just ahead.
Estimates of the latest January 1st
declines in cow and all cattle numbers

C A T T L E NUM BERS AND U.S. POPULATION
Itoad

are key parts of the USDA’s February

2 nd annual report on cattle inventories.
These figures will provide new guides
to the years ahead.
Preliminary figures indicate an in­
ventory decline of more than 10 million
head the past two years. Analysts
across the board expect further liquida­
tion in 1977. Most look for the herd to
stabilize or start expanding next year.
“Our crystal ball shows cattle slaugh­
ter will decline about 6 % in 1977, with
most of the drop coming from smaller
kills of cows and nonfed steers and
heifers,” predicts Howard Madsen,
American Meat Institute (AM I) econ­
omist.
He believes, however, that next win­
ter’s cattle-calf inventory still will fall
to about 117/2 million head from about
121 million this year. Mr. Madsen also
expects beef consumption per person
to drop about six pounds this year and
continue downward the next several
years.
Going farther out on a limb is Bruce
Ginn, head of the USDA’s Western
Livestock Marketing Project. His re­
cent research indicates slaughter might
drop every year through 1980.
“Considering the supply curve of the
past 12 years,” says Mr. Ginn, “beef
consumption in 1980 would be forced
under 110 pounds per person.” The
drop from nearly 129 pounds last year
would be, by far, the steepest on rec­
ord.
Reduced beef supplies point to high­
er cattle prices. As in any cattle cycle,
the price uptrend won’t be smooth. It’s
sure to have its share of ups and downs
that will test the skills of even the best
managers and whipsaw the profits from
beneath many unwary producers.
There will be many times when the
best action for feed-lot operators, herd
owners and agricultural lenders will be
to “hang loose” and ride with the up­
ward market.
Certainly, there will be other times

JANUARY 1 CATTLE NUMBERS
(million head)

HUSkxi

Persons

>60

1970*

* 1S

1975

■

■I 0 7 7

A m erican Meat Institute

I8

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Federal Reserve Bank of St. Louis

“

■

1976

1 (1 7 0
nerlcan Meat Institute

MID-CONTINENT BANKER for February, 1977

“B ein g a First correspondent b an k
helped us succeed in landing
im portant new business
lik e Floyd Fairleigh’s feed yard.”

mwr*rÎ0**é~

The Security State Bank
Scott City, Kansas is a true
success story. A correspondent
bank relationship has helped it
grow and maintain important
new accounts.
It began in 1967 when
Duane Ramsey of Security State
solicited the agri-business of
Mr. Floyd Fairleigh of Scott City.
To handle his sizeable credit
needs, Security State sought
the participation of the First
National Bank of Kansas City.
First National responded
y offering a major line of credit
the agri-business expertise
of people like Gene Foncannon.
Correspondent help like
this has played a part in the
growth of Security State Bank.
And as Floyd Fairleigh’s small
feed yard operation has grown to
six agri-business corporations,
Security State has grown with
many new accounts.
If your bank needs a
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relationship to solicit and obtain
new business, extend credit, add
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MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Member FDIC

when lenders will want their borrowers
to use high futures prices to protect
both borrowers and lenders against
sharp market reversals.
The trick will be to know when to
hang loose, when to hedge, when to
take advantage'of dips in the markets
to invest for better days ahead, when
to start pulling back on the reins.
No one has all the right answers to
such “when-to” questions. However,
there are clues, and there will be sig­
nals to look for. People who develop
the proper insight will be in the best
position to spot them and take the most
profitable action.
First, know the main reason w hy
livestock economists expect cattle
prices to start rising this year and why
they predict a basically bullish market
through the late 1970s.
No. 1 on the list is beef per person.
America has become a beef-eating na­
tion accustomed to getting more and
more beef. Last year’s record more
than doubled rates of the early 1950s.
When beef supplies slip, cattle prices
start to climb— even when other meat
is ample. Consumers gripe about pay­
ing more for beef, but they usually pay
higher asking prices until these prices
really go “out of sight.”

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Federal Reserve Bank of St. Louis

" An element that could really bolster cattle prices this year
is strong demand. The kind of
tax cuts, tax rebates and extra
jobs being urged by the Carter
Administration would give con­
sumers more spending power,
some of which . . . would be
used to raise demand for m e a t/'
There aren’t many annual examples
of this, simply because average beef in­
take has been forced down only six
times in the past 26 years. But each
time beef consumption did drop, cattle
prices rose.
More significantly, when beef sup­
plies per person dipped as much as
they might this year, cattle prices have
exploded!
The most recent example is 1973.
U. S. beef intake fell 6/2 pounds per
person. Choice grain-fed steers zoomed
24% over 1972 on the average—in
spite of government meat price con­
trols. A 1971 dip of less than a pound
sparked a 10% cattle price rise.
A beef drop like 1973’s is possible
in 1977. A 24% price hike would mean
choice steers averaging $48 for the
year!
“Don’t expect 1977 prices to average
this high,” cautions Carl Stewart, FG L
analyst. “Consumers also had to put up
with a steep cut in pork supplies in
1973. By contrast, pork production will
rise sharply this year. It could lure
some demand away from beef if the
latter’s prices rise sharply.”
All in all, F G L is not as bullish on
1977 beef prices as the rest of the in­
dustry. We feel friendly toward 1978.
Nonetheless, higher average fed-cat­
tle prices than last year’s is the uni­
versal prediction for 1977. A mid-$40s
annual average up from 1976’s $39
average catches the viewpoints of most
livestock economists.
Summer is developing as the best
candidate for the year’s strongest mar­
ket. National beef production then
might be one-tenth below last July-September’s all-time peak for any quarter
in history.
Most analysts agree that the most to
expect for choice steers in summer is
the upper $40s. But Ray Daniel, who
forecasts farm prices for Chase Econo­
metric Associates, Inc., believes JulySeptember prices could average $48
to $49. This would imply peak rates
above $50.
An element that could really bolster
cattle prices this year is strong demand.
The kind of tax cuts, tax rebates and
extra jobs being urged by the Carter
Administration would give consumers

more spending power, some of which
presumably would be used to raise de­
mand for meat.
It’s important to keep in mind, how­
ever, that cattle prices don’t rise con­
sistently even during a long market up­
trend. Recent history is full of ex­
amples where feedlot operators have
become too optimistic— and overloaded
markets with price-plunging supplies.
Slaughter of range cattle also could
be surprisingly high in 1977. “Cattle
slaughter is especially sensitive to the
weather,” points out AMI Economist
Howard Madsen. “Limited and expen­
sive forage supplies contributed to the
continued high cow and calf slaughter
in 1976.”
Forecasts of a sizable cutback in
1977 range-cattle slaughter assume
favorable grazing conditions. Ample
grass is far from certain. After many
months of dry weather, grazing pros­
pects are much worse than they were
last winter.
If soil-moisture conditions don’t im­
prove substantially in the months
ahead, range-cattle slaughter might
stay surprisingly high. The extra beef
could put a lot more pressure on sum­
mer and fall markets then otherwise ex­
pected.
Movement of cattle into feedlots
also needs to be watched closely. If the
USDA’s monthly cattle-on-feed reports
show big increases in feed-lot place­
ments, consumers might still get rather
abundant grain-fed beef
supplies
throughout the year.
If analysts who predict choice steers
near $50 in summer are right, live-cat­
tle futures will need to advance consid­
erably from mid-January rates. Experi­
ence shows that a shift to widespread
bullishness in traders’ attitudes could
lift futures quotations to excellent
hedging levels.
The latter situation may be particu­
larly pertinent if a real bull market is
followed by a shift to heavy weights
in the feed lot and a slug of cattle from
parched ranges.
Wray Finney, American National
Cattlemen’s Association president, sums
it up this way: “Widespread drought
could keep herd liquidation and beef
supplies high for the short term. But
if beef producers don’t start recouping
their losses soon, more producers will
be forced out of the cattle business,
and consumers eventually will find
much less beef available at much higher
prices.”
How much higher? Substantially, ac­
cording to at least one analyst, James
J. Galvin of W. R. Grace & Co. His
“working figures” include annual aver­
ages above $50 for choice grain-fed
steers in 1978 and 1979. His 1980
working figure is above $60. • •

MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

Bank Investments
O utside Advisory Service Valuable
To Small Bank's Portfolio Manager
By LOREN FRITZ
President
Cedarburg State Bank
Cedarburg, Wis.
F E W years ago, dealing in finan­
cial markets was relatively simple
for bank investment portfolio managers.
Rates were stable; the country’s fiscal
policies were more or less predictable,
and credit and loan demand fluctuated
within understood boundaries.
Recent market volatility has changed
all that, however, requiring more mar­
ket expertise and more time to be spent
by bank managers in monitoring their
portfolios for maximum gain.
Cedarburg State, with assets of $29
million—like other banks across the
country, both large and small—is deal­
ing with these new complexities by
going outside. We are turning to other
banks and financial institutions for as­
sistance in managing our investment
account more efficiently and profitably.
In looking for outside investment
portfolio advice, we found there are
unquestionable differences among the
services available, and no two banks
would have the same experience with
any one of them. However, the rela­
tionship we have with our advisers and
the results we have achieved may be
helpful to the banker considering such
a move.
Our decision to seek professional as­
sistance was made on the basis of three
factors:
• Our officers lacked specialized in­
vestment training, without which, we
felt, we could not manage our portfolio
adequately.
• Staff members did not have time
to stay on top of investment conditions
on a full-time daily basis. We all had
other responsibilities.
• We knew our portfolio assets, if
properly managed, were great enough
to contribute significantly to our earn­
ings. If we were to maximize our re­
turn, our portfolio had to be managed
as efficiently and profitably as possible.
T eam w ork A pproach. In 1973 we
signed with the Continental Bank, Chi­
cago, portfolio advisory service. We
have found its approach to be a co­
ordinated, comprehensive system for
continuously generating quality ideas
oriented to our specific objectives and

A

22

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

needs. With Continental’s help, we have
been able to interpret and apply op­
portunities in the national money and
capital markets. And we have been able
to more properly integrate our portfolio
with our structure of loans, deposits
and capital.
A real plus in Cedarburg State’s re­
lationship with our advisory service has
been the teamwork involved between
our bank and the Continental people.
They operate in a consulting environ­
ment, and whether we accept their ad­
vice depends on the level of teamwork
and trust that has been built up be­
tween us. Without this type of coopera­
tion, a bank, I am convinced, could do
its portfolio and overall asset-liability
structure great harm. Portfolio man­
agement cannot be performed in a vac­
uum with the primary objective being
simply to outperform markets.
One of the most important steps in
a bank’s affiliation with a portfolio ad­
visory service is the initial portfolio
analysis. Continental started our rela­
tionship by analyzing not just our port­
folio, but our asset-liability structure as
well, to identify cash-flow and earnings
characteristics. The goal was to see at
what point income considerations could
be balanced with liquidity requirements
to improve our overall performance.
The analysis determined the timing,
magnitude and duration of seasonal
and cyclical liquidity requirements. It
incorporated a study of our interest
margins to develop a structure for in­
vestments that reflects both liquidity
and income needs.
The analysis gave direction to our in­
vestment portfolio, and, through care­
ful and judicious management since
then, we have achieved some positive
results. The contribution of investment
earnings to total income has jumped
from 31.8% to 38.8%, while total invest­
ments have remained at about 35% of
total assets. The ratio of loans and in­
vestments to total bank assets has re­
mained constant at around 90%. Yields

are up dramatically, and average ma­
turities of investments actually are
shorter today than they were three
years ago.
Tangible Results. To give a clearer
picture of what we have been able to
accomplish, and what other banks
might hope to accomplish through out­
side management, consider Cedarburg
State’s tangible gains:
• Investment yields: The average
yield of U. S. Treasury, federal agency
and municipal investments in our port­
folio has improved markedly, up from
6.99% in 1973 to 8.14% at year-end
1975.
• Many bankers simply wouldn’t
have spotted the swap opportunities
and other market shifts that Continental
did in time for profitable action. Some
of the best investment opportunities are
quick blips in the market and may be
gone in minutes. W e have an advantage
in that Continental is on top of market
conditions all the time, watching for
us—something many banks aren’t doing
or can’t do for themselves.
• Liquidity planning: There have
been consistent improvements in our
ability to meet deposit withdrawals as­
sociated with disintermediation and to
fund increases in higher-income loans
through the liquidity segment of the
bank’s securities portfolio. For example,
during 1974 the liquidity portfolio was
heavily drawn on to fund various loan
requests in the local trade area.
• Income planning: W e’ve been as­
sisted in planning the amount of se­
curity gains/losses and taxes consistent
with year-to-year net-income objectives.
• Return on assets: By identifying
and managing a liquidity portfolio and
an income portfolio, we have been able
to improve our profits without sacrific­
ing liquidity or portfolio flexibility. Re­
turn on average total assets has in­
creased from 1.25% in 1973 to 1.38% in
1975.
Our experience may not be typical of
a bank going outside for portfolio-man­
agement assistance. I feel we have been
particularly fortunate in developing the
kind of relationship we now enjoy with
our adviser and in the quality of service
we’re getting.
But no matter which service a bank
chooses, one thing should hold true:
For the banker who feels he has neither
enough time nor enough expertise to
manage his bank’s portfolio himself, the
advisory service can be a valuable
partner in portfolio management. * *

"In looking for outside investment portfolio advice, we found
there are unquestionable differences among the services avail­
able, and no two banks would have the same experience with any
one of them "
MID-CONTINENT BANKER for February, 1977

1. For the money...

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2nd. It’s a carbonless copy o f where each
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MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

23

Corporate
News
Roundup
H A CKA M A CK

CARLTON

GOETSCH

WILKIN

NORDWALL

• Doane Agricultural Service, Inc.
J. W. Hackamack has been elected
president of Doane Agricultural Ser­
vice, St. Louis, succeeding Forest L.
Goetsch, who has become chairman.
Mr. Hackamack was manager of the
firm’s Farm & Ranch Management
Division. Mr. Goetsch served as presi­
dent since 1970 and will assume re­
sponsibility for developing the firm’s
growing international operations. Three
new division managers have been ap­
pointed. Marvin Nordwall succeeds
Mr. Hackamack, John Wilkin has been
named manager of the Publications
Division and Dub Carlton is manager,
Marketing Research Division.

WEARSTLER

KIN G

• Diebold, Inc. Earl F. Wearstler,
vice president and general manager,
Rank/ Systems Division, Diebold, Inc.,
Canton, O., has been elected to the
board, filling the vacancy created by
the death of Gustave L. Levy last No­
vember. Gilman R. King has been ap­
pointed to the newly created position
of assistant general manager, Bank/
Systems Division. He was formerly di­
rector of corporate development.
• Alan B. Eirinberg & Associates,
Inc. Alan B. Eirinberg has left Ex­
change National, Chicago, to found
Alan B. Eirinberg & Associates, Inc.,
24

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Chicago, a marketing/ consulting firm
serving the financial industry. Mr.
Eirinberg served Exchange National as
senior vice president in charge of mar­
keting. He will continue to serve the
bank on a consulting basis. He had
been with the bank for more than 12
years. Mr. Eirinberg is a director of the
Bank Marketing Association and is a
former president of the Chicago Finan­
cial Advertisers and the Chicago Met­
ropolitan Chapter, BMA. He also is a
former treasurer of the Chicago Asso­
ciation of Direct Marketing.

EIRINBERG

LEONARD

• Lawrence Systems, Inc. James H.
Leonard has been elected chairman,
succeeding Louis E. Tippet, who is re­
tiring. Mr. Leonard was formerly presi­
dent of the San Francisco-based firm,
assuming that title in March, 1975. He
retains the president title. He has been
CEO of the firm since December, 1975.
Prior to joining Lawrence, he was with
First National, Chicago. Richard H.
Meckstroth, senior vice president, has
been named head of the South Central
Group of Lawrence regional offices and
Wayne H. Frederick, vice president,
is new Houston regional manager.
• MGIC Investment Corp. Robert
E. Cantwell has been named account
executive-secondary market services for
the South Central Division of MGIC
Investment Corp., Milwaukee. He is
based in the Houston office and works
in Kansas, Missouri, Arkansas, Louisi­
ana, Texas, Oklahoma and New Mex­
ico. He was formerly with Coldwell
Banker, Dallas.
• First Ogden Corp. Robert W.
Martin, CPA has been promoted to
controller of First Ogden Corp., Naper­
ville, 111. He joined First Ogden in
1973.

BLENDER

• Howard J. Blender Co. Howard
J. Blender, president, Howard J. Blen­
der Co., Dallas, has been accepted as
an accredited member of the Society
of Professional Management Consul­
tants. The firm is said to be the nation’s
largest exclusive bank management
consulting firm.
• Wantuck & Associates. T. Otto
Wantuck has formed a mobile home
financing firm, Wantuck & Associates,
with offices in Houston. Mr. Wantuck
has 27 years’ experience in mobile home
lending with banks, S&Ls, sales finance
companies and service companies. Pri­
mary function of the new firm, accord­
ing to Mr. Wantuck, is to provide
marketing, systems and administrative
expertise to lending institutions engaged
in, or planning to engage in, mobile
home financing.
• Talcott National Corp. James Talcott, Inc., has concluded the sale of
Talcott Computer Leasing, Inc., to
EFM Computer Leasing, Inc. The sale
consisted of all the issued and out­
standing capital stock of Talcott Com­
puter Leasing plus additional computer
leases and equipment. E FM Computer
Leasing is a member of the San Fran­
cisco-based E FM Group.
• Associates Commercial Corp. Bar­
ry S. Epstein has been appointed vice
president-corporate development for
the industrial division. He will be re­
sponsible for the development of busi­
ness in the New York metropolitan area
for the Chicago-based firm. He was for­
merly national sales manager for C.I.T.
Corp.
• NYTCO Services, Inc. George F.
Cole has joined the firm’s Chicago of­
fice. A native of Maine, he has a back­
ground in the collateral control field.
NYTCO Services is a division of Col­
lateral Financial Services, Inc. NYTCO
is headquartered in St. Paul.
• Florida Software Services,, Inc.
This Orlando, Fla.-based firm has pro­
moted Nestor M. de Armas to vice
president of finance. He joined the firm
about a year ago and was secretarytreasurer. Before joining Florida Soft­
ware, he was with Peat, Marwick,
Mitchell & Co., a CPA firm.

MID-CONTINENT BANKER for February, 1977

“When I lost my job,
' knew it would be rough.
But I never figured I’d be
out of work this long.
There’s no way in the
world I can pay back
my loan!”


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

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• Doane Agricultural Service. A
new “Tax Guide for Farmers,” which
includes provisions
of the Tax Reform
Act of 1976, has
been published by
Doane Agricultural
Service, St. Louis.
The 300-page guide
has nine chapters
covering tax man­
m m é k
agement as a fi­
nancial tool, man­
aging income and
expenses of the
farm business, how to handle land and
depreciable property, tax reporting and
returns, social security taxes and bene­
fits, tax aspects of farm business organi­
zations and additional tax-saving prin­
ciples. It’s available at $10.95 per copy
from Doane at 8900 Manchester Road,
St. Louis, MO 63144.
• Kennedy Sinclaire, Inc. A book­
let entitled “Protecting Your Land
From the Federal Estate Tax” is of­
fered by this firm. It is designed to
alert farmers and ranchers to the fact
that their estates are particularly vul­
nerable to federal estate tax problems
despite the recent liberalization of es­
tate and gift tax laws. The booklet
shows how careful planning, coupled
with the use of trust services, can help
farmers and ranchers avoid needless
losses and gain greater financial securi­
ty for themselves and their heirs.
Write: Mrs. Kathy Klaassen, Kennedy
Sinclaire, Inc., 524 Hamburg Turnpike,
Wayne, NJ 07470.
• Mosler Safe Co. A brochure de­
scribing a new alarm system— Century
21—is available from Mosler Safe Co.
The system’s plug-in flexibility is said
to afford any size facility the protection
necessary for its type of risk potential.
The system is said to be easily adapta-

New
Products
and
Services
ble to enable its protection capability
to grow along with the facility being
protected. The system is engineered to
conform to existing requirements for
UL-certified Grades AA, A and R se­
curity for both vault and safe protec­
tion. Write: Mosler Safe Co., Depart­
ment PR-078, 1561 Grand Blvd.,
Hamilton, OH 45012.
• Pitney Bowes. A “fact-finding” ap­
proach to reducing mailing costs is used
in a new booklet published by Pitney
Bowes, Stamford, Conn. Called “24
Revealing Questions About Postage and
Mailing,” the booklet is said to contain
much valuable information about post­
age practices. According to Pitney
Bowes, the questions can help firms
uncover hidden costs, and the booklet
also offers tips on evaluating readers’
answers to the questions and weighing
them against what the firm calls “the
many important benefits of metered
mail.” Write: Pitney Bowes, Walnut
and Pacific Streets, Stamford, CT
06904.
• American Bankers Association.
The ABA Trust Division has published
two new reference guides for personal
trust and tax administrators, trust op­
erations personnel and attorneys and
estate planners. Titles are “Outline of
the Tax Reform Act of 1976 Provisions
Affecting Trust and Estates” (# 3 6 5 3 0 1 )
and “Generation-Skipping Transfers in
Trust” (# 3 6 5 3 0 2 ). A set of both publi­
cations (# 3 6 5 3 0 0 ) is available for $25
for ABA members and for $30 to non­
members. They also are available sing­
ly. Write: Order Processing Depart­
ment, ABA, 1120 Connecticut Ave.,
N. W., Washington, DC 20036.
• National Association of Real Estate
Investment Trusts. The third annual
fact book for the R E IT industry has
been published as a comprehensive
reference source on the industry. The
book reviews the financial highlights
of 1975 and describes the lending and
investing procedures of REITs. It is
available for $1 per copy. W rite: Na­
tional Association of Real Estate In­
vestment Trusts, 1101 17th Street,
N. W., Washington, DC 20036.

26

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

• Diebold, Inc. The new Diebold
surveillance system calendar clock ties
together the identity of the bank cus­
tomer, teller location where the financial
transaction took place, time of day and
date. In this way, says Diebold, any
review of the transaction can pinpoint
not only who was involved on both
sides of the transaction, but establishes
that the transaction did take place at
a given time on a specific date. The
manufacturer points out that the co­
ordinated identification established by
the surveillance system calendar clock
can be of particular value in controlling
forgery and bad-check passing. Write:
Diebold, Inc., Canton, OH 44711.
• Holbrook Merrill Co. This firm
is offering a line of sorting, transport
and storage equipment designed for fi­
nancial institutions. The line includes
outgoing mail distribution units, incom­
ing mail sorting and storage cabinets,
mobile mail collection tubs, data pock­
et extenders for computer sorting
equipment, computer printout carriers,
check trays, racks and transporters and
custom-built mail tray carts. For a free
brochure describing the equipment,
write: Holbrook Merrill Co., 1150 Kifer
Road, Sunnyvale, CA 94086.
• Actron, Inc. This bank equipment
manufacturer now offers solid-state in­
door time/temp and time/date signs.
Each sign features five-inch digits il­
luminated by electro-candescent lamps.
The signs can be placed in lobbies or

windows of drive-in facilities. The dis­
plays measure 2 4 " x 8 " and have faces
of acrylic. A variety of colors is avail­
able. Write: Actron, Inc., 810 E. Crab­
tree, Arlington Heights, IL 60004.

MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

P.O. Box 10525Q Atlanta. Georgia 30348

E S O P Pitfalls, Misunderstandings
Detailed in Harris Bank Stu d y
ANKS and businesses that are set­
ting up employee stock ownership
plans (ESO Ps) without considering
their risks may find these plans both
dangerous and expensive. So writes Paul
Much in a Harris Bank of Chicago re­
port called “ESOP? Caveat Emptor!”
Mr. Much is corporate services officer
in the bank’s corporate financial con­
sulting section.
The report details pitfalls and com­
mon misunderstandings of the increas­
ingly popular deferred-compensation
plan.
“Properly done,” says Mr. Much, “an
ESO P can be an extremely useful em­
ployee benefit as well as a means of
serving the interests of both share­
holders and creditors.”
While an ESO P is first and foremost

B

an employee benefit, he cautions, many
are misled as to the plan’s real eco­
nomics.
“They consider it a new tax gimmick
available to reduce financing costs,” he
continues, “because of the tax deducti­
bility of principal payments on an
ESO P loan used to buy stock.
“But if the ESO P is being under­
taken primarily as a financing vehicle,
this means new stock is being sold, and
equity is an expensive form of financ­
ing. If the ESO P borrows to buy the
equity, unlike any other equity issue,
the investors’ debt affects the com­
pany’s debt capacity.
“Compared with a company borrow­
ing directly, there may be definite cash­
flow and debt-coverage differences due
to employee put options on stock re­

W hat's an E S O P ; How Does It W o rk?
HAT is an employee stock owner­
ship plan (E S O P ), and how does
it work? Paul Much answers both ques­
tions in Harris Bank of Chicago’s re­
port, “ESO P? Caveat Emptor!” Mr.
Much, corporate services officer, cor­
porate financial consulting section, de­
scribes an ESO P and its mechanics this
way:
An ESO P is a qualified benefit plan
under Section 401 of the Internal Reve­
nue Code designed for the “exclusive
benefit of the employees” and invests
primarily in the common stock of the
company adopting it. In its simplest
form, the adopting company sets up an
employee stock ownership trust (ESOT)
and annually contributes—as a tax-de­
ductible expense—up to 15% of its total
payroll to the trust as deferred em­
ployee compensation. (In some cases,
contributions of 25% of payroll may be
considered as a tax deductible expense.)
The E SO T then purchases employer
stock from existing shareholders, hold­
ing it for the employees until retire­
ment or other separation of service
when it’s delivered to them. This form
(when the company does not receive
new capital) is commonly called a
“transfer-of-ownership ESO P.”
Rather than purchase existing stock
from other shareholders, the E SO T
might purchase new stock (authorized,
but unissued) from the company. This

W

28

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Federal Reserve Bank of St. Louis

form is particularly attractive to grow­
ing companies because the E SO T pro­
vides a captive financing source. While
such an ESO P increases the cash avail­
able to the company, it also dilutes out­
side shareholders’ (non-employee) per­
centage ownership.
Unlike most other benefit plans, the
trust can borrow to buy new or existing
stock. In a ‘levered ESO P,” the loan is
repaid by the trust using the annual
cash contributions from the employer.
In most articles, authors point out that
the tax deductibility of the contribu­
tions allows repayment of principal
with pretax dollars, thereby lowering
the cost of debt. This conclusion is mis­
leading because the firm actually has
raised equity at fair market value. The
borrowing done by the equity pur­
chasers (participants in the ESOP) rep­
resents a contingent liability of the
firm.
The trusts maintain individual em­
ployee accounts and credit them with
the employer’s annual contributions
with the individual credits allocated in
proportion to eligible compensation.
(Individual participants may be subject
to a maximum of $100,000 eligible
compensation. Using 15% of payroll
contribution, the individual credit
would be $15,000.) Employee income
taxes on the ESO P contribution are de­
ferred until the stock is delivered. At

ceived on retirement. Also, since an
ESO P’s debt usually is considered an
obligation of the company, use of an
ESO P does not improve the creditworthiness of the company.
“As a financing vehicle, an ESO P
does not improve a company’s value to
its shareholders. Share value relates to
the profitability of the firm’s invest­
ments, not its method of financing.”
Mr. Much warns that long-run impli­
cations of the plans should be analyzed
with the continuing advice of qualified
financial, tax and legal experts.
The Harris report also gives these
warnings on ESOPs:
• For employees, an ESO P carries
risks not found in other profit-sharing
plans, which typically hold a diversified
portfolio of securities, while an ESOP
puts all its profit-sharing eggs in one
basket. Also, since distributions are
made in stock and not cash, employees
may face tax complications when they
retire.
• While many believe that the legis­
lative path has been cleared for ESOPs,
numerous unresolved legal questions re­
main.
Information and sample copies of the
report may be obtained by writing:
Paul Much, Corporate Services Officer,
Harris Bank, 111 W est Monroe Street,
Chicago, IL 60690. • •

that time, ordinary income tax rates
are applied to the market value of the
contributions. Because this creates a
tax liability to the employee without a
concomitant cash inflow, most employ­
ees will have an incentive to sell at
least a portion of the stock on retire­
ment. If there’s not a ready market for
the company’s shares, either the com­
pany or the trust may stand ready to
buy back shares at the retiring employ­
ee’s option (put option). Any apprecia­
tion in value would be taxed as a cap­
ital gain if and when the employee sells
the shares.
Cash dividends paid to employee
stockholders can be held in a separate
account in the trust for the employees
or paid directly to them. The tax treat­
ment would depend on the option
chosen.
The trust is administered by a com­
mittee appointed by the company’s di­
rectors. Generally, the committee votes
the employee shares held in the trust.
However, in some cases, voting rights
are passed through directly to the em­
ployees, or employee representatives
may be committee members.
Shares involved in ESO P transactions
must be bought and/or sold at fair
market values. If a ready market does
not exist, where a fair price can be de­
termined quickly, an independent party
should be employed to value the stock.

MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

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Federal Reserve Bank of St. Louis

MID-CONTINENT BANKER for February, 1977

Bankers: Alert Customers to Impact
Of Tax Reform Act of 1976
On Their Financial Decisions

T

HE TAX REFO RM ACT of 1976
is the most sweeping tax legislation
enacted since the Internal Revenue
Code of 1954.
Its impact will be great, and vir­
tually every type of taxpayer is affected
—individuals, corporations, partner­
ships, estates and trusts. While taxpay­
ers may feel that the “reform” aspects
affect only the wealthy, implications of
the law carry well beyond that partic­
ular impact. For example, the janitor
who has acquired his own apartment
building and sells it for a gain at re­
tirement may be surprised to find that
he has entered the privileged class of
those paying a minimum tax.
Of particular importance to bankers
is the fact that the new law will cut
across numerous financial decisions
made by customers. Increasingly, bank­
ers are called on by customers for as­
sistance in unraveling a simple decision
that has been ensnarled in all-too-complex tax considerations. Of course, even
greater assistance is provided by any
guidance that will help a customer in
achieving his financial objectives with­
out adverse tax consequences.
This does not mean that a bank
would replace a customer’s lawyer or
accountant in providing tax counsel.
The point is that people come to banks
to make financial decisions, and it
would be a disservice to customers if
the tax consequences of their decisions
were overlooked.
The following areas will require re­
view in light of changes made by the
new law. Although this listing is by
no means complete, it’s intended to
alert those in banking to the situations
in which customers are likely to require
assistance. While it’s not appropriate
for a banker to provide legal advice, he
should be able to identify a situation
in which a customer needs additional
counseling.
I. IN VESTM EN TS:
Proper financial analysis involves a
review of the after-tax return provided
by an investment, and the new tax law

By RICHARD A. POWERS

ject to tax through the minimum tax
or by reducing the benefit otherwise
provided by the maximum tax on
has had a significant effect on this cri­ earned income, which is available to
terion for many groups of investors and
those having substantial income from
investments.
earnings. The new law has revised
a.
Capital gain: A new holding-pe­ these two forms of taxing preference
riod requirement (nine months in 1977
items in such a manner that it’s far
and 12 months in 1978 and thereafter)
more likely that the preference gen­
has been imposed to obtain long-term
erated by long-term capital gain will
capital-gain treatment on sale of an result in additional tax liability. At a
asset. Particular attention should be
minimum, any professional or executive
paid to sales that may occur shortly be­ who utilizes the maximum tax (basi­
fore or after December 31, 1977, since
cally, those who earn more than $52,the tax treatment may, in certain cases,
000 per year) will incur additional tax
depend on the calendar year in which
liability for any tax preference that oc­
the sale occurs. For example, if secur­ curs.
ities acquired on March 1, 1977, were
This may make investments that pro­
sold on December 31, 1977, the gain vide a return in the form of long-term
would be long term. However, under capital gain comparatively less attract­
the 12-month holding requirement ef­ ive for certain individuals.
fective in 1978, retaining possession of
b.
Tax shelters: Tax shelters were a
the securities until January 31, 1978,
specific target of the law, and the tax
would result in short-term-gain treat­ benefit available from virtually all such
ment.
investments is affected. Real estate tax
The amount of ordinary income that shelters were spared from the new pro­
may be reduced by capital losses is to vision limiting deductions, but other
be increased from the current limit of benefits formerly available to real es­
$1,000 to $2,000 in 1977 and $3,000
tate and other investments in partner­
in 1978 and thereafter.
ship form were eliminated. The attract­
The benefit provided in the taxation iveness of tax shelter was further re­
of long-term capital gains may be re­ duced by the harsher treatment of taxduced indirectly, since one-half of the preference items typically produced by
long-term capital gain is an item of tax
such investments.
preference. Tax preference may be subRevisions in taxation of participants
in tax shelters are too numerous and
complex to review in detail, but it’s
Richard A. Powers is
clear that no future commitment should
a financial counseling
be made to such an investment without
officer in the trust and
an in-depth review of the new tax con­
investment services de­
sequences. Likewise, disposition, either
partment of Chicago's
by gift or sale, of any current interest
Continental Illinois N a­
tional. He heads the
in a tax shelter should be carefully
department's six-yearevaluated, since there may be signifi­
old financial advisory
cant tax consequences under both the
service for executives,
prior law and the recent legislation.
a comprehensive pro­
It might also be noted that some in­
gram of personal fi­
dividuals
have created their own tax
nancial planning of­
shelter in the form of a vacation resi­
fered by Continental
dence, such as a condominium in Flor­
to corporations as part of its benefit package
ida, which is rented during part of the
for executives. According to Continental, this
year. The new tax law provides specific
is the only bank-sponsored counseling service
of its kind between the East and West coasts.
guidelines in the treatment of such in-

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

31

"O f particular importance to bankers is the fact that the new
law w ill cut across numerous financial decisions made by custom­
ers.

vestments, and their use should be care­
fully reviewed in light of the changes
made.
c. Investm ent interest dedu ction :
The Reform Act has made the stan­
dards for the deductibility of investment
interest more stringent, although the
effect of this provision is to postpone
rather than eliminate a deduction for
excessive investment interest. Essen­
tially, for this rule to apply, an indi­
vidual’s investment interest must exceed
his investment income by $10,000, but
special provisions relate to debts that
were in existence previously. Thus, it’s
most important that those involved in
lending be aware of this impact on the
deductibility of the borrower’s interest
payments when the loan is to be used
to acquire an investment producing
little current income.
d. M i s c e l l a n e o u s : Several other
changes were made with regard to
other forms of investment, such as
municipal bonds or traded options, and
the new provisions should be analyzed
by those who may be considering such
investments. With respect to the mu­
nicipal bond mutual funds that have
appeared as the result of the new law,
investors will need guidance in assess­
ing such factors as interest-rate risk as­
sociated with a new form of invest­
ment.
II. EM PLO YEE B E N E F IT S:
For many individuals, assets pro­
vided in the form of employee benefits,
such as pension and profit-sharing
plans, represent their largest personal
resource. Tax implications of decisions
made with respect to these plans are,
therefore, most important since they
could significantly affect the benefit de­
rived by the employee. The Tax Re­
form Act has made several changes that
relate to both the income-tax and es­
tate-tax treatment of distributions from
employee-benefit plans.
a. Lum p-sum distributions: Favor­
able income-tax treatment is provided
for lump-sum distributions from cer­
tain benefit plans, and the advantage
has consisted of taxation of the distri­
bution as capital gain and ordinary in­
come subject to special averaging. The
new law has given the taxpayer the
option of electing to have the entire
amount treated as ordinary income sub­
ject to the special averaging. This
would permit a taxpayer to avoid the
potentially adverse impact of the pref­
erence associated with the long-term
capital-gain element.

32

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Federal Reserve Bank of St. Louis

Lump-sum distributions to an estate,
however, may have a less desirable ef­
fect for federal estate-tax purposes after
the Tax Reform Act. Basically, an in­
dividual must measure the income-tax
benefit to his ultimate beneficiary
against the negative impact of the
lump-sum distribution to the estate.
This is a somewhat complex analysis,
and the matter could be simplified if
the plan involved permitted the bene­
ficiary to make the election so that an
evaluation of the better alternative
need not be made until the employee’s
death.
b. K eogh plans and individual re­
tirem ent accounts: The new law also
has provided a slightly more liberal
contribution standard for individual re­
tirement accounts maintained by cer­
tain married employees, and it has
made a minor change in the provision
for a minimum contribution to a Keogh
plan. In addition, the form of distribu­
tion from these plans at death will, un­
der the new law, determine their includability in an employee’s estate for
federal estate tax purposes.
III. R E T IR E E S :
Those approaching retirement also
should take note of the fact that bene­
fits previously provided through the
Retirement Income Credit and the ex­
clusion of gain from the sale of a resi­
dence by a taxpayer over age 65 have
been improved. In view of the expand­
ing number of employees electing an
early retirement, it’s important that re­
tirees do not overlook the benefit that
may be available through delaying the
sale of the family residence until after
age 65.
IV. E STA TE AND G IF T TAXES:
Estate and gift taxation has under­
gone a drastic revision. Federal estate
and gift taxes now have been unified
with a cumulative tax structure. The
former specific exemptions ($30,000
gift, $60,000 estate) have been re­
placed with a credit, and the amount of
the credit will gradually increase from
$30,000 in 1977 to $47,000 in 1981.
The estate-tax marital deduction offers
the opportunity to choose between the
greater of 50% of the adjusted gross es­
tate or $250,000, rather than simply
taking 50% of the adjusted gross estate
as previously had been the case. A re­
vision also has been made with respect
to the gift-tax marital deduction.
Changes also have been made in the
manner in which gifts made within
three years prior to death and joint

tenancy property are to be taxed in an
estate. Large estates, which previously
may have been transferred from one
generation to the next without federal
estate taxation, now may be subject to
a new tax on “generation-skipping
transfers.”
Under prior law, the basis of prop­
erty passing to a beneficiary from a de­
cedent was “stepped up” to its fair
market value on the date used to value
the estate. The new law provides that
no step-up in basis will be allowed for
appreciation occurring after December
31, 1976. For purposes of computing
gain, the new law allows the basis of
marketable securities to be stepped up
to their fair market value on Decem­
ber 31, 1976, plus an allocable portion
of federal and state death taxes appli­
cable to the appreciation of the prop­
erty. Special rules are provided for
stepping up the basis of property other
than marketable securities and for es­
tates which include less than $60,000
of appreciated property.
Of course, in considering any re­
vision in an individual’s estate plan, it
is most important that an attorney be
consulted.
The foregoing summary is not in­
tended to be a distillation of the new
tax law or an analysis of all its com­
ponents. It is intended only to alert
bankers to the far-reaching impact of
the Tax Reform Act of 1976. It’s clear
that the new law will have an impact
on a number of financial decisions
bankers will be discussing with their
customers, and it’s most important that
assistance be provided in identifying
and clarifying the effects of this new
legislation. • •

Management Course for Women
Sponsored by NABW, College
CHICAGO—A new bachelor’s de­
gree program in management is being
sponsored jointly by the National As­
sociation of Bank Women, Inc., and
Mundelein College here. The program
is designed to help bring a “skirted”
look to the vested, button-down collar
image of the traditional bank executive.
The program in management permits
women to retain their full-time careers
while completing degree requirements.
Sixteen women participated in the first
of six two-week institutes recently.
Banks in the Chicago area with par­
ticipants were First National, Northern
Trust and Harris Bank.
The program is designed to bridge
the gap for those women bankers who
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MID-CONTINENT BANKER for February, 1977

The T-Bill Futures Market
—A New Financial Tool for Banks
OMM ODITY FU TU R ES have been
utilized as a hedging medium by
commercial interests for over 100 years
in the United States.
Most of this hedging heretofore has
been done by producers and retailers
in the agricultural sector of the econ­
omy. Producers of grains and market­
able animals have found it useful to be
able to lock in prices that often are
very volatile when products are left to
be sold in cash markets. Processors and
retailers have been able to hedge in­
creasing costs of raw materials through
hedging price increases in these futures
markets. Over the years, the agricul­
tural, metals and forest products in­
dustries have been able to divest them­
selves of market risks through use of
futures markets. In recent years, utili­
zation of futures has been widened to
encompass financial investments.
Four-and-a-half years ago, the Chi­
cago Mercantile Exchange (C M E ) be­
gan trading foreign currency futures,
developing a market in eight of the
most actively traded foreign currencies.
More recently, the market was expand­
ed to include interest-rate futures when
in January, 1976, CM E introduced
trading in Treasury-bill futures. The
market was created to offer a hedging
medium to those corporations and gen­
eral financial institutions seriously im­
pacted by interest-rate changes. In this
article, we are going to concentrate
specifically on commercial-bank par­
ticipation, both actual and potential,
in this new T-bill futures market. First,
we will discuss the conceptual frame­
work within which the market oper­
ates; secondly, how commercial banks
have used the market thus far; thirdly,
how that participation has been influ­
enced by the Comptroller of the Cur­
rency’s guidelines for usage of the mar­
ket by commercial banks, especially
what the guidelines are; and, lastly,
what the guidelines mean for commer­
cial banks using the bill-futures market.
T-bill futures trade as a function of
the cash market in T-bills. The con­
tract is based on a three-month T-bill
or what is commonly known as a 91day T-bill. The contract calls for a mil­
lion dollars in 91-day T-bills with an
allowance for 90- or 92-day bills. Mini­
mum fluctuation of the contract is one
basis point, which is equivalent to $25

By TULLY R. DAVIA
Interest Rate
Futures Specialist
M errill Lynch Pierce
Fenner & Smith, Inc.
Chicago
(i.e., one basis point would be worth
$100 on a one-year bill; the contract
is for one quarter of that maturity).
Maximum fluctuation per trading day
is 50 basis points or %%. As with most
commodity futures contracts, leverage
is of fundamental importance in the
trading of the contract, both from the
hedger’s and speculator’s standpoint.
The security deposit on a position of
one contract is $1,500, with a mainte­
nance level of $1,000 to be sustained
at all times on the client’s account.
Hedgers utilizing this contract can, in­
stead of cash, deposit T-bills, whereby
the interest is not lost on the deposit.
Since the market value fluctuates daily,
each account (speculative or hedge)
must be brought up to the market vari­
ation on a daily basis—what is termed
mark-to-the-market variation margin. If
the futures position is a losing one, that
change must be met in cash. Thus, the
market, in effect, is a no-credit market
in which the financial integrity of the
exchange is consistently intact.
As of this writing, the “round-turn”
commission—the cost of getting in and
out of the T-bill futures market—is $60.
For orders of nine or more contracts,
the commissions are negotiated.
When the market was created, CME
was confronted with a small conceptual
problem. Cash T-bills are discounted
to their maturity values and are quoted
in terms of discounted rate of yield
with a bid higher than the offer. That
system of quotations is awkward to
commodity markets because the tradi­
tional quotation then shows a bid lower
than the offer. The IMM (C M E’s In­
ternational Monetary Market) index

" Banks that have been seriously impacted by the volatility of
the short-term-interest-rate markets w ill find that T-bill futures can
help hedge some of the risk involved in dealing in those markets

MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

was created to remedy this problem.
The index is the annualized discounted
yield from 100, which produces the
IMM index price. In that way, when
three-month bills are quoted at 5% dis­
count, the IMM index would read
9,500.
Since the market began trading on
January 6, 1976, the immediate cash
market in T-bills has defined a positive
yield curve. That’s the typical curve
that has been defined in the short-terminterest-rate market for the majority of
the last 10 years. Basically, the posi­
tive-yield curve indicates that market
participants feel that interest rates in
the future will be higher, both as a
function of anticipated inflationary
pressures as well as a pickup in eco­
nomic activity. In the short-term mar­
ket, the latter factor is the most domi­
nant one. With the cash market trading
on that basis, the futures market has
defined a somewhat more sharply in­
clined yield curve. That is, futures
trade at a discount to cash and—with
futures trading on a quarterly basis out
as far as 18 months into the future—
the discount becomes greater the more
removed the futures contract is from
the present. Also, the fact that when
futures mature and become deliverable,
what is deliverable against the futures
position is a 91-day T-bill or bills in the
amount of $1,000,000. Thus, the
March futures of 1977 will have a June
23, 1977, 91-day bill as the deliverable
commodity. When futures traders are
speculating or representing hedging in­
terests, they must take this fact into ac­
count.
In the early part of 1976, the market
was anticipating interest rates to in­
crease by as much as 100 to 150 basis
points over the course of the future
year to year and a half. Thus, the more
distant contracts traded at very sizable
discounts to the cash market. Most
economists were projecting early in
1976 that by the end of the year, the

33

short-term interest-rate market would
weaken by 100 to 150 basis points.
That is, interest rates would increase
by that amount. The futures market,
as a reflection of that projection, had
that pricing scenario reflected in the
more distant futures contract. Even the
nearby futures contracts were at con­
siderable discounts to cash as expecta­
tion of immediate Federal Reserve
tightening of the short-term market
was constantly at play in the futures
market. A number of commercial banks
in the spring of the year were operat­
ing on the aforementioned interest-rate
forecasts and found that the more dis­
tant futures contracts—such as June,
September and December, 1977, were,
at times, in excess of 8% yield for
three-month bills deliverable against
these futures contracts. These commer­
cial banks, perceiving this as an invest­
ment hedge opportunity, were buyers
of these steeply discounted deferred
months of futures. Thus, they were
locking in investments of 8 % to as
much as 8/2% for 91-day bills, deliver­
able to them in June, September and
December, 1977. This was an invest­
ment hedge as the banks’ own projec­
tions of interest-rate movements indi­
cated this to be a better investment
than was available then or would be
available in the future, a substitution
then for a cash-market transaction.
Commercial banks also have uti­
lized what is termed the hedged ride
on the yield curve by buying the cashdeliverable T-bills and simultaneously
selling the appropriate bill futures
against the position, locking in the rate
at which the cash bills were purchased.
Thus, if the cash market weakens, a
profit is accumulated in the futures
market position that will, to a large de­
gree, offset the loss incurred in the cash
position. This assumes, of course, that
the cash position is not held to full ma­
turity, but for whatever reasons a liqui­
dation of the cash market bills is neces­
sitated. This type of hedge is typical
of commodity futures markets.
The previous examples of commer­
cial-bank utilization of the bill-futures
market has been an outgrowth of these
banks’ aggressive nature. They have
participated in the market from the be­
ginning because they saw the immedi­
ate use of this market as a financial
tool. For most commercial banks, how­
ever, the market is still a new concept,
one that will need more explanation
and description for them to become ac­
customed to its usage. The vast major­
ity of commercial banks are in that
category. These banks have found
some additional motivation for using
the market from the guidelines which
were set down by the acting Comptrol­
ler of the Currency. In his memo to

34

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Federal Reserve Bank of St. Louis

presidents of all national banks, No­
vember 2, 1976, in the banking circular
No. 79, the acting Comptroller dis­
cussed usage of GNMA and T-bill fu­
tures markets by national banks. The
initial specification was that any par­
ticipation in the market first must be
cleared through the legal advisory ser­
vices division of the Comptroller’s Of­
fice. In the proposal for usage, there
are certain stipulations which must be
adhered to. The following is a copy of
the letter as it appeared:
National banks may participate in
(1 ) the GNMA mortgage futures mar­
ket through the Chicago Board of
Trade and (2 ) the T-bill futures mar­
ket through the International Money
Market of the Chicago Mercantile Ex­
change in order to reduce the risk of
interest-rate fluctuation in the corre­
sponding cash markets, provided that
proposals for such activity are submit­
ted to this office (Attn.: Legal Ad­
visory Services Division) for prior ap­
proval.
The following information must be
included in those proposals :
1. Background and experience of all
persons authorized to buy and sell
futures contracts ( traders ).
2. Trading limits to be imposed on
traders.
3. Conditions, if any, which permit
deviations from those limits.
4. Bank personnel responsible for
authorizing such deviations.
5. Procedures developed to prevent
unauthorized trading.
6 . Scope and frequency of internal
audit and control procedures.
7. Copies of forms, in blank, which
inform management of the daily
futures-contracts activity.
8 . Copies of internal record-keeping
forms, in blank, which reflect the
bank’s daily futures-contracts ac­
tivity with regard to :

Robert W. Kneebone Dies
Robert W. Kneebone, 77, died
December 22 in a Houston hospital.
He was former chairman, Founda­
tion of the Southwestern Graduate
School of Banking, and dean for
bankers, Southwestern Graduate
School of Banking, both in Dallas.
He also was consulting vice presi­
dent, Texas Commerce Bank, Hous­
ton.
Before retiring in 1967 from an
active career in banking, Mr. Knee­
bone was senior vice president of
the old National Bank of Commerce,
predecessor of Texas Commerce
Bank. He was a member of the
council of the Assemblies for Bank
Directors and faculty coordinator of
many assemblies.

(a) Maturity of each outstanding
futures contract and type
and value of the correspond­
ing cash transaction.
(b) Maturity date of each futures
contract.
(c) Current market price and
value of each futures con­
tract.
(d) Outstanding gross futures po­
sition.
(e) The open position.
(f) Amount of money held in
margin accounts.
(g) Any maturity gaps existing
between the maturity date of
the futures contract and
completion dates of the cor­
responding cash transaction.
(h) Profit or loss for each corre­
sponding cash and futures
transaction.
(i) Aggregate profit or loss for
all relevant cash and futures
transactions and
(j) Type and amount of each
expected cash transaction
that did not materialize.
Each and every GNMA or T-bill fu­
tures contract, purchased or sold, must
correspond to an appropriate cash
transaction and only be undertaken to
substantially reduce the risk of loss re­
sulting from interest-rate fluctuations.
Robert Bloom
Acting Comptroller of the Currency
These guidelines that were set down
by the Comptroller essentially allow
national banks to participate in the bill
and GNMA futures markets and, to
some degree, indirectly provide an im­
petus for national banks to investigate
possible utilization of the markets to
hedge interest-rate exposure. The ex­
changes have benefited from this ad­
vice by the Comptroller inasmuch as
the markets now are recognized as pro­
viding a useful business tool. It appears
that the guidelines stress that a nation­
al bank adhere to strict organizational
and auditing procedures of its futuresmarket transactions and that it do so
for the purpose of not only assuring
that a complete record is kept of these
futures market transactions, but, more
importantly, that futures positions are
hedges of actual or anticipated cashmarket transactions.
Banks that have been seriously im­
pacted by the volatility of the short­
term-interest-rate markets will find that
T-bill futures can help hedge some of
the risk involved in dealing in those
markets. With careful study and a
knowledgeable broker, a new financial
tool—Treasury bill futures— can bring
added security to the banking commu­
nity. * •

MID-CONTINENT BANKER for February, 1977

Realistic Pricing of Services
Is a M ust for Sound Banking
By JAMES E. BROWN, President, Mercantile Bancorp., Inc., St. Louis

ARGAIN BANKING could well be
an appropriate title for many prod­
ucts and services offered by banks in
today’s marketplace. It’s evident that
banks are more aggressive than ever
in their pursuit of consumers’ total
banking relationships, and the widen­
ing variety of services they offer in
their current marketing efforts calls
for little or no increase in price to the
customer.
One reason banks have grown so
fond of the consumer is the stringent
control of funds by the corporate trea­
surer. This development has convinced
commercial bankers that growth of col­
lected corporate checking balances will
be less than was attainable in past dec­
ades. It’s a well-known fact that a mul­
titude of techniques of cash manage­
ment and short term employment of
funds has been the modus operandi of
today’s dedicated and successful cor­
porate treasurer. So—bankers have, by
necessity, turned to the consumer for a
major source of investable deposits.
But, as will be seen, the profitability of
all consumer funds frequently is ques­
tionable.
The growing population of bank-age
customers reflects a tempting market,
but retail banking presents many costly
pitfalls as well as valuable, additional
deposit avenues for banks. For ex­
ample, banks in every region have ag­
gressively marketed a wide variety of
high-yielding time-deposit plans, free
credit cards, low-cost overdraft checkcredit arrangements, check-guarantee
cards, improved branching facilities,
drive-up and walk-up convenience,
longer lobby hours, gift-merchandise
incentives to both depositors and staff
for new accounts, automated teller ma­
chines; and now they have started put­
ting the total-transaction plastic card
in the sales kit.
In alm ost every on e o f these ap ­
proaches, little, if any, additional charge
to th e custom er to cover costs w as in­
clu d ed in th e p ackage. Is it possible
that somewhere along the line bankers
may have overlooked an allowance for
a margin of reasonable profit in the
pricing structure of their marketing
plans? There is ample evidence to sup­
port an affirmative response to this

Mr. Brown gave the talk on which this
article is based before the St. Louis Chap­
ter of the Bank Administration Institute.

question, or, at least, a suggestion that
bankers may naively believe that some­
how profits will come in time!
Thoughtful bankers surely must re­
alize that the popular game plan called
“cross-sell” does not mean that cross
selling one unprofitable service with
another unprofitable service is good
business for their banks or for the pub­
lic in the long run for that matter.
Their competitive drive for multi-ac­
count customer relationships is acceler­
ating, and the long-range goal appar­
ently is to provide checking, savings
and credit service in one plastic card
account.
Supportive facts about the “bargain”
prices for these services is obvious in
the analysis of cost-price trends of re­
cent years.
Studies of three functional cost anal­
ysis reports of the Federal Reserve
System indicate that the cost of pro­
viding regular checking-account service
for all customers, including corporate
accounts, between 1967 and 1975 has
risen 45% for banks with deposits to
$50,000,000 and by 56% for banks with
deposits over $200,000,000. The price
paid by customers in this time frame
has risen only 15% in smaller banks and
actually has declined by 8% in larger
banks.
Earnings on personal checking ac­

Jam es E. Brown (I.), author of accompanying article, visits with two representa­
tives of Topeka Chamber of Commerce who were sent to call on St. Louis busi­
nesses on occasion of Frontier Airlines' initial nonstop flight between Topeka and
St. Louis.

MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

counts, based on a minimum balance
to avoid service charges by banks up
to $50,000,000 in deposit size have de­
clined between 1971 and 1975 by
20.5%. In the case of banks with de­
posits over $200,000,000, the analysis
indicates that such accounts actually
are losing money as the net expense of
providing checking service has in­
creased 38%, even after allowance for
earnings on the declining value of the
banks’ use of available funds.
It’s also revealing to note, according
to the Fed, that the cost to the bank of
maintaining a savings account, exclud­
ing interest paid, has—since 1967—
risen by 154% for smaller banks and by
92% for larger banks.
To the dismay of many, the cost of
processing certificates of deposit and
other time deposits has risen by 380%
and by 281%, respectively.
The same trend between 1967 and
1975 applies to most categories of other
services provided. For example, the ex­
pense of maintaining a safe-deposit ser­
vice has increased as much as 60% for
most banks while the charge to the cus­
tomer has risen less than 40%— and this
from a base that already was under
priced.
Increased expense of serving cus­
tomers is not limited to consumer bank­
ing.
Commercial and agricultural loan
processing also has incurred increased
expense in the range of 80% to 138%,
excluding the cost of loanable funds.
Even before the expense of com-

35

pliance with the new federal regula­
tions in the real estate area, the cost of
acquisition and processing of real estate
mortgage loans has risen by some 35%
to 70%, depending on bank size; where­
as, the average yield to the banks in­
cluding interest, of course, has risen by
no more than 37%.
In the area of installment loans, the
cost of processing has risen by no less
than 75%, while the total yield to the
lending bank rose by only 16%.
The price the average customer pays
for banking services also is a real bar­
gain when compared to other services
he uses. For example, automobile insur­
ance premiums have risen in this same
time frame by 42.9%; transportation by
57.6%; medical care by 68.1%; and hos­
pital service charges by an astounding
132.8%. This rising cost to the customer
is based on statistics provided by the
U. S. Bureau of Labor Statistics for the
period 1967 to 1975.
Some other interesting statistics have
been recorded by one of the better,
modem full-service banks in the Mid­
west since it announced totally free
checking service two years ago. This
action produced an increase of approxi­
mately 12% in number of accounts, but,
at the same time, the bank’s average
retail checking dollars on deposit de­
clined by an average of approximately
the same percentage— 12%.
Apparently, the decrease in dollar
amounts was caused, at least in part,
by the simple fact that a minimum
balance no longer was necessary to
avoid a service charge.
This trend is typical of the expe­
rience of other banks. Of course, cus­
tomers of these banks no longer were
charged the conditional service fees
that sometimes were assessed prior to
the free checking plan.
During the two year period, this
same bank found that the cost of pro­
viding service rose by 13.3% annually
in the tellers department and by 21.4%
in the new accounts and customer ser­
vice department.
Apparently, this bank and others re­
garded free checking service as a “loss
leader” and necessary to meet or beat
competition.
Another salient result observed was
that 21% of the accounts prior to the
free checking syndrome were under
$200, while— after introduction of free
checking—the number of such low-bal­
ance accounts reached 27% of the total.
Notwithstanding the fact that cost­
accounting practices (especially com­
plex in banking) are far from perfect,
it’s quite apparent that many checking
accounts are, indeed, unprofitable to
banks even when one considers the off­
setting value of other business relation­
ships from the same customers. The
fact is that banks are experiencing in-

36

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Federal Reserve Bank of St. Louis

Jam es E. Brown (r.) and Arnold B. Grobman,
chancellor, University of Missouri-St. Louis,
discuss Mr. Brown's recent appointment as
ch., UMSL's downtown advisory board.

creased expenses in the categories of
loan-loss provisions, taxes, operating
personnel, general administration, in­
surance, occupancy, accounting, legal
and professional assistance and many
facets of overall auditing and security
requirements which have added ma­
terially to the cost of doing banking
business today. Add to these increased
costs the shrinking coverage of the
marketing dollar and expensive sales
programs resulting in a higher cost of
account acquisition.
Bankers who usually are quick to
detect unfavorable trends in the fi­
nancial planning and cost controls of
their commercial borrowers sometimes
fail to recognize that a modest adjust­
ment in their own pricing approach ap­
pears to be the order of the day.
It’s true that most industries have
discussed realistic pricing for years, but
perhaps insufficient focus has been
placed on the profitability of their in­
dividual custom ers’ aggregate relation­
ship. This is especially necessary in
banking.
Imposition of even a modest in­
crease in conditional service charges on
a checking account, after a period of
“free checking,” may prompt a cus­
tomer to move all his other business.
Obviously, banks must anticipate this
and analyze which, if any, of their cus­
tomers’ other accounts are profitable
since it may well be justifiable to toler­
ate and even solicit a loss leader if the
overall relationship is of mutual bene­
fit to the customer an d to his bank.
Therein lies the key.
Bankers in recent years have utilized
a helpful aid to analyze the complex
problem of maintaining overall profit­
ability. It is the automated central in­
formation file where appropriate crossreference account data can be retrieved
and interpreted.
It’s true that some bankers close to
each customer relationship can make
this determination without the help of
modern technology, but this unsophisti­
cated approach is highly vulnerable
and possibly unfair to the bank and/or
to the customer.

Many bankers appear disposed to re­
taining an appreciable percentage of
banking relationships that are unprofit­
able today not only because they recall
all too vividly the recent period of high
interest rates and the premium placed
on the value of collected funds, but
their zeal for sheer growth and size
alone often is defended as a worthwhile
public relations objective and a mark of
prestige.
Another reason bankers have an in­
tense desire to hold on tenaciously to
all customers— at almost any cost—is
the belief that the world of plastic E F T
will result in a service fee that will pay
its way. To the contrary, this new
phase of electronic banking may result
in an even costlier overhead expense,
at least for a period before the escalat­
ing cost and burden of check process­
ing and related services can be mini­
mized to a measurable degree.
Profit may be considered by liber­
tarians to be a dirty word, but for
banking a reason able projit based on
delivery of helpful and expanded ser­
vices to the public at a fair price is a
“must” if banks can continue to be ex­
pected to provide high-quality financial
assistance to their customers.
This advocation cannot end without
a note of optimism. Bankers realize
that their shareholders expect that good
service coupled with reasonable profit
is necessary and justifiable. They have
met the challenge of cost-price squeezes
before and have accomplished their
overall goals.
Banking can continue to be a bargain
to the public in the long run only if it
is mutually beneficial. Realistic pricing
will contribute to sounder banking and,
as a consequence, will enhance the ca­
pacity of banks to finance the multitude
of growing needs of business, govern­
mental bodies and consumers in the
communities they serve.
It’s in the effective execution of these
responsibilities that banks can continue
to demonstrate their strong commit­
ment to leadership in the nation’s econ­
omy. * •

Givhan Named New President
O f Central Bank, Montgomery
MONTGOMERY, ALA.—Walter H.
Givhan has been named president and
CEO, Central Bank. He comes to
Montgomery from Tuscaloosa, where
he served as president and CEO, Cen­
tral Bank of Tuscaloosa, which was
organized about a year ago.
Robert S. Gaddis, chairman, Central
of Montgomery, was recently promoted
to the national accounts development
section of the parent HC, Central
Bancshares of the South, Inc. He re­
mains as bank chairman.

MID-CONTINENT BANKER for February, 1977


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

wheeling in to
iH r o u s o o ib
As the newest member of our
correspondent banker team,
Gary R. Dobson is a man on
the move.
. His job, as Vice President of
; Correspondent Banking, is to
help with your problems, and if s
er jb r him to do that if he
them. He already knows
"
W he knows
i who to contact for specialized

■

■Wait f o r «

Tulsa

LEFT: This former auto dealership at rear of First Nat'l, Fremont, Ind.,
w as gutted, remodeled and integrated into bank building. RIGHT:
This is artist's rendering of what remodeled home of First of Fremont

looks like following extensive remodeling and expansion program.
Drive-up facilities at rear are on site of former auto dealership.
Equipment w as supplied by Mosler Facilities Planning Department.

Planning Department offered free draw­
ings based on our changing needs and
the new flow of customers, personnel
and currency.” * •

Former Auto Dealership Is Turned
Into Addition to Bank Building

Sheldon Named Sr. Vice Pres.
At American N at'l, M obile
FO RM ER auto dealership’s quar­
ters have been successfully inte­
grated into a building housing First
National in Fremont, a rural area in
northeastern Indiana.
The car dealership’s structure was
located at the rear of the bank building,
but separated from it by an alley. The
bank secured permission to close the
alley. Then, the empty building was
transformed into an 11,000-square-foot
addition that’s connected to the bank
building by a 25-foot passageway.
The addition permitted the bank to
add on-site parking, which eliminates
the curbside parking that inhibits
growth of many banks along main
streets in small towns.
“The Mosler Facilities Planning De­
partment has been exceptionally help­
ful in translating our ideas about new
services we wanted to offer into the
most sensible patterns of traffic flow,”
says Earl Ford McNaughton, vice presi­
dent and cashier of the bank. “Its ex­
perience in this kind of conversion was
of great value when we turned over its
drawings to our architect.”
In turn, Jerry Watkins, a former
banker and now a Mosler salesman, who
supervised installation of equipment to
provide the new services, has this to
say: “Rarely has a bank in a smaller
community managed so successfully to
combine the best features of traditional
and modern banking at so little cost.”
Mr. McNaughton, who supervised
construction, was particularly impressed
by Mosler’s ability to adapt to the
customer’s wishes on the job. “For ex­
ample,” he says, “the people at this
bank preferred the looks and tradition
represented by the old vault doors.
Mosler and Jerry Watkins didn’t try to
sell us on the advantages of a new line
of sleek equipment. They adapted their
plans for the vault area to include the

A

-38

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

old doors that we wanted. On the other
hand, when we were talking about our
ideas for a new commercial tellers win­
dow in an enclosed area, I recalled a
similar installation that I’d seen in
California. Jerry wrote for pictures, and
we used that as the basis of our
architect’s design.”
The expansion program provides a
greatly enlarged tellers area, with an
additional enclosed tellers station for
commercial transactions. For security,
Mosler provided extended photo cov­
erage of the customer-transaction area
and added a high-line security system
with direct connection to the sheriff’s
office.
The expanded bank building has an
especially large vault area for storage
of rare and valuable collections such as
china or antiques; Mosler Pneu-Vista
drive-up facilities for three lanes, in­
cluding two remote installations; a
drive-up night depository (in addition
to its regular night depository); a
package receiver; two walk-up windows
near the drive-up and a community
room. There also is space for a Mosler
Teller-M atic™ automated teller ma­
chine, which will be installed when
there’s suitable demand.
The structure’s exterior combines
brick and fieldstone from the Fremont
area. The interior utilizes vertical oak
plank in the tellers counters to match
the vertical panels on the walls of the
former auto agency.
“We had to change very little from
plans that Mosler gave us for our new
facility,” Mr. McNaughton points out.
“W e’ve worked with architects on ex­
pansions and branches before, but they
and we know that banks’ needs are
specialized. W e like the approach that
Mosler used with us. First, the firm’s
man on our site had been in banking
himself. Second, Mosler’s Facilities

M O BILE—American National has
promoted Paul E. Sheldon to senior
vice president, Frederick H. Jones to
vice president, Murlene Durham to as­
sistant vice president and assistant con­
troller, Percy C. Fountain Jr. to assist­
ant vice president and loan officer and
Charles S. Jones to assistant vice presi­
dent and branch manager.
Mr. Sheldon is the author of a study
of Alabama bonded indebtedness and
has acted as technical adviser to the
County of Mobile in its drive to up­
grade the entire bonded indebtedness
of the county to an A -l rating.

Banker 'Bites Bullet'

Howard J. Blender (r.), pres., Howard J.
Blender Co., Dallas, presents the firm's first
"Bite-the-Bullet" aw ard to Jam es C. Travis,
e.v.p. & dir., Nat'l Bank of Commerce, Dallas.
This aw ard is to be presented each year to
a bank executive officer who, working with
the Blender firm, does an outstanding job in a
tough operations situation. Mr. Travis, formerly
s.v.p., cont. & chief financial officer. Bank of
Oklahom a, Tulsa, has installed the Blender
firm's operating control system in two O kla­
homa banks and in his present bank.

MID-CONTINENT BANKER for February, 1977

We provide
the Best check collection services
in the m idw est

Here’s how we do i t

W e e x p e d ite ite m s h a v ­
i n g a h i g h d o lla r v a lu e . N o
s p e c ia l s o r t in g r e q u ir e m e n ts
a r e n e c e ssa ry . □ W e m a k e
.
d ir e c t p r e s e n tm e n t a t 4 0
'" ''c o m m e r c i a l b a n k s a n d F e d e r a l
R e s e r v e B a n k o ffice s d a ily . □
W e u t i l i z e f le x ib le c h e c k s o r t­
in g r o u tin e s w h ic h c a n b e c h a n g e d
w it h in a 4 8 h o u r p e r io d . □ W e h a v e
th e a b i l i t y to a n a ly z e y o u r d ep o sits
a n d c a n r e c o m m e n d th e o p t im u m
c le a r i n g a r r a n g e m e n t fo r y o u .

What can we do for you?
J u s t c a ll o r w r it e fo r o u r c o m ­
p le te a v a i l a b i l i t y s c h e d u le .
Y o u r C o m m erce corresp on­
d e n t w ill com e th ro u g h
fo r y o u .

۔ Commerce Bank
of Kansas City"

9th & Main
10th & Walnut
12 th & Charlotte
(8 1 6 ) 2 3 4 -2 0 0 0
MID-CONTINENT BANKER for February, 1 977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

39

"As a veteran in mortgage finance, it is clear to me that
1977 is shaping up as a year in which the secondary market
w ill be vital to success and p ro fita bility of mortgage
lenders."
, _
—Charles Senmng
Vice President, National Accounts
and Secondary Market, MCIC

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NORTH
CENTRAL
DIVISION

WESTERN
DIVISION

MILWAUKEE
Bill M elchior
Acting Secondary
Market Manager

Fred Biel
Secondary
Market Manager

SOUTH
CENTRAL
DIVISION

LOS ANGELES

Art Cavana!
Secondary!
Market Mal

Atlanta
Jeff Taylor
Secondary
Market Manager

■

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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Sm È M

I

"W e've more than doubled
our secondary market staff
to give you the best in local,
m j^m personalized service/'
Now you can tie directly into the largest conventional secondary
market faster and more easily than ever. All you need do is call
your local MGIC Division office.
»N O RTH
EAST M
D IV IS IO N S

Bob
■M |
W Gundaker
Secondary
Market Manager

North, East, South, or West, each Division office has its own
Secondary Market Manager and staff. Their prime responsibility
is to keep in touch with the entire country via daily communica­
tion with our expanded national staff of experts in Milwaukee.
This means that in a matter of minutes one local phone call can
set MGIC's national team in motion to provide you with the
largest selection of offerings, rates, and buyers/sellers—from the
nation's largest network. (Forward commitments are
our specialty.)
With liquidity high, and local lending rates dropping, MGIC
recognizes the exceptional importance of the secondary market
this year. In fact, we are calling it "the year of the secondary
market"—going all out to help you in every way. No deal is too
big and no deal is too small. Whether it's $100,000 or
$100 million, MGIC is committed to provide you with the fastest,
most productive, most personalized, and now the most
localized service in the industry.

PHILADELPHIA -

So no matter if you're an old hand at secondary market or
contemplating your first deal—there's more reason than ever to
call your local MGIC Division Office now. You'll fin'd there is
no substitute for our service or for our experience.

SOUTHEAST
DIVISION

: .■ '/•I


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

MGIC
Because experience pays.
Mortgage Guaranty Insurance Corporation, a Subsidiary of MGIC Investment Corp.. MGIC Plaza. Milwaukee. WI 53201

KEY MGIC HOME OFFICE
SECONDARY MARKET
SPECIALISTS
(L to R) B ill C arpenter, Tom
LaMalfa, Bruce Grubba, Bob
Tenges. They are in d a ily
to u ch w ith y o u r local
secondary m a rket staff in each
M G IC D iv is io n O ffice .

These are some of the 100 bankers representing 65 A rkansas banks who attended Com­
mercial Nat'l of Little Rock's seminar on "How to Become a High-Performance Bank."

Commercial of Little Rock
Holds A ll-D ay Seminar
For 65 Arkansas Banks
L IT T L E ROCK—Commercial Na­
tional recently sponsored an all-day
seminar on “How to Become a HighPerformance Bank” for about 100
bankers representing 65 Arkansas
banks. Alex Sheshunoff, Austin, Tex.,
bank consultant, was the featured
speaker. The afternoon session was
headed by Gary Raddon of the Whittle
Group, Chicago-based bank marketing
consulting firm.
Each bank represented was provided
its own bank credit and competitive
statistical analysis. The analysis in­
cludes trends and ratios pertaining to
key performance indicators such as de­
posits, loans, yields, expenses, return
on assets and profitability. This tool
allows a bank to analyze its own per­
formance in comparison with competi­
tors and to develop ways to use the re­
sulting data in devising effective mar­
keting strategies.
At the seminar, each banker took a
look at an operating analysis of his
bank’s balance sheets, balance-sheet

schedules, income statements, capital
accounts and loan portfolio. Then the
participants studied a growth compari­
son of each bank and its principal
competitors, including market share.
Mr. Sheshunoff, whose widely used
data books contain comparative finan­
cial data and analyses of every bank
in a given state, began by describing
types of data available in the bank
credit and competitive analysis profile.
He then discussed ways such data can
be used in management and marketing
planning.
His overview of his bank credit com­
petitive analysis service was followed
by a panel of representatives of the
four banks in the group with the high­
est return on average assets. These
bankers were questioned by others at
the seminar.
Mr. Sheshunoff then summarized
those two portions of the program by
saying the aim had been to bring out
some factors that make a high-perform­
ance bank.
Mr. Raddon explained how his firm
aids community banks in turning
Sheshunoff-type data into an effective
marketing plan that directly links finan­
cial objectives to marketing. As he ex­
plained, “Big banks can overpower a
market and be all things to all people,

while community banks have to narrow
the focus.”
Mr. Raddon showed a variety of ad­
vertising and marketing programs
structured for community banks, ex­
plaining that they are designed to fit
specific purposes and to fit a communi­
ty bank’s budget. He added that each
program fits a particular financial ob­
jective, and its effectiveness is mea­
sured periodically.
According to Commercial National,
Messrs. Sheshunoff and Raddon are en­
thusiastic over the response to the first
seminars linking financial planning
with marketing and are planning a se­
ries of similar programs for the fall of
1977.

'Q uality 1 TV Programs
Sponsored by Bank
Houston National has announced it
will sponsor 65 hours of “carefully se­
lected, quality” television programming
on a local station during 1977.
In the past, the bank has sponsored
shows such as “Elizabeth R,” “Six
Wives of Henry V III,” “America,”
“World at War” and “Civilisation.”
This year Houston National is sponsor­
ing a season of hour-long programs on
Sundays and 14 hours of prime-time
shows.
One program the bank has sponsored
is “W e Are What W e Build,” a locally
produced documentary on Houston’s
architecture. In addition, Houston Na­
tional will present “Fall of Eagles,” a
13-week-long documentary to be aired
during the summer months.
Other programming slated by the
bank will be a nine-part series, “Na­
poleon and Love,” “The Commanders,”
which focuses on seven heroes of World
War II, the six-part “Search for the
Nile” and selected episodes of “Win­
dow on the World.”
Also scheduled are six Julie Andrews
specials, three selected shows from the
“Saga of Western Man,” seven seg­
ments of “Jennie,” the story of Sir Win­
ston Churchill’s mother, and several
hour-long Leonard Bernstein concerts.

24HourToll Free Telephone Service
Weekly Confidential Market Report
Marketing Seminars conducted for Clients in Your Area
W R IT E O R CALL
FGL. 1200 35th St.
W est Des M oines, Iow a 50265
515 2 23 -2 2 00

42

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Federal Reserve Bank of St. Louis

MID-CONTINENT BANKER for February, 1977

Our new address is simple to rem em ber.. .

"THE TALLEST
BUILDING IN
OKLAHOMA"
lllllllllllllll

Visit us on your next trip to Tulsa
We want you to see what we be­
lieve to be the finest banking
facility in the great Southwest.
A banking facility designed
and constructed to make bank­
ing easier for our customers,
o u r e m p l o y e e s , and o u r
friends like you.
Bank of Oklahoma — now in
our new home — the Bank of

Oklahoma Tower. Truly a land­
mark in banking.

BANK OF
OKLAHOMA
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
New: (918) 588-6000

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

43

Properly Written Mobile Home Paper Is Sound!
O BIL E HOME paper can be (and
is in some markets) practically
repo-free if three basic principles of
sound lending are followed:
• Make credit-worthy loans only.
• Use good collection practices.
• Make sure there is real equity in
the loan collateral.
This may not sound profound, but
the recent years of mobile home financ­
ing disasters were caused by lenders
not sticking to any of these principles.
What do I mean by that? Think
about it this way: Would you still
make the loan if it were not guaranteed
or insured and if it were your money
that would be lost?
Do you use the same degree of credit
checking thoroughness in qualifying a
borrower for a house loan as you do
for a large personal loan? Of course
not! Why? Simply because the home
loan is collateralized and, therefore,
less risky. Thus, a relatively low rate
can be charged.
On the other hand, the personal loan
is high-risk and you need a much
higher rate and you must qualify the
borrower more thoroughly to lower the
loss rate.
Once a loan is delinquent, there is
no substitute for strong, swift collec­
tion practices to cut losses. Just be­
cause the loan is insured or guaranteed
is no excuse to be lax in collection prac­
tices because, even though the losses
are passed on to others, somewhere
along the line, when the bubble bursts,
the overall results will come home to
roost, as many lenders have discovered
in recent years.
When it comes to equity on a mobile
home loan, if you get 10%-15% down
on a long-term loan on the home (not
the gross deal of home and all the
furnishings), you will have good loan
collateral because today’s mobile home
depreciates little and some actually ap­
preciate.
No loan program is 100% loss free
(if it is, the program is bad), but the
real trick is to keep the loss ratio low
so you rent the money at a profit.
If you’ve had a bad experience in
mobile home paper or know of lenders
who have, here’s why: The basic loan
program has been 115% (or higher) of
total invoice plus setup, freight, taxes,

M

By JOHN LEITER
President
United Compilation, Inc.
Libertyville, ill.
five-year insurance premium and dealer
participation. This adds up to 125%133% of the gross invoice, or much
more than the total retail price.
For example, if the total invoice is
$12,000 and the loan (including the
above items) comes to $15,000 and the
downpayment is $1,000, the actual loan
comes to $14,000— $2,000 more than
the total invoice.
What’s wrong is that, in the $12,000
invoice is about $4,000 worth of furni­
ture, drapes, appliances, etc., so only
about $8,000 of the invoice covers the
house, upon which you lent $14,000, or
about 175% of the collateral. It’s a rare
day that a mobile home is repossessed
with all furnishings intact. In most
cases, the homes are stripped; and
that’s why there is a loss.
The net result of this type of loan is
that the buyer is able to obtain a mo­
bile home with $5,000 or more of the
best furniture and appliances, put down
$1,500 or more, move in and live for
three to six months without making any
payments, move out with the furnish­
ings and get the whole package for
about one-third of the actual price of
the furnishings!
That should be history. The question
is: What can be done to ensure a sound
program? For new mobile homes, one
way to do it would be to make an ini­
tial commitment or tentative loan.
Then, inspect and verify the home and
equipment after setup. Make sure the
unit is where it’s supposed to be and
that it is of the size and from the manu­
facturer specified. Only then is payout
made.
The loan should be for 80%-90% of
the home value only—not including the
personal property. It could be for terms
of 20 years for a medium-priced home,
15 years for low-end units and 25 years
for high-enders. The homes of today
contain from 1,000 to 2,000 square feet
of floor space, not the 500-600 square
feet of 10 years ago. The loan would
be at simple interest and the borrower
could be qualified on a house-loan
basis.

" No loan program is 100% loss free, . . . but the real trick is to
keep the loss ratio low so you rent the money at a profit
44

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

If the borrower meets the more
stringent test for a personal loan, make
a separate loan on the personal prop­
erty— a loan that carries a shorter term
and higher interest rate.
Don’t get volume hungry. That’s
when sound policies and checks and
balances start to get overlooked and
requirements are waived. That’s when
bad loans get into a portfolio. Good,
sound growth is fine and is to be
worked for, but don’t let it pave the
way for shortcuts.
For every new unit sold in 1977
there will be at last three used units
sold between private parties. Of course,
they will need financing, too. Used
units must be treated somewhat dif­
ferently from new ones. Value must be
determined without the original in­
voice.
This should be done by means of
an on-site inspection and appraisal. The
inspection should determine the items
included in the deal, the condition of
the home, improvements or additions
and consideration of the home’s loca­
tion or area.
Following the on-site check, the valu­
ation determination is handled at the
office using the just-prepared work
sheet and some value price guide. One
can separate the parts of the deal into
house, furnishings and so forth by
proper use of a work sheet.
If the belief that mobile homes de­
preciate rapidly like cars is not true,
then why does their value drop? For
years, mobile homes have been sold on
a ready-housing, move-in basis and the
whole package has been financed like
a car. All the furniture, decor packages,
appliances, draperies and so on were
lumped with the house to the point that
they represented 25% to 40% of most
mobile home deals. Of course, those
items won’t last as long as the rest of
the home and, in fact, will be scrapped
long before any loan is repaid. These
are what “depreciate” and show up as
a decrease in value.
At the same time, the home itself
has little depreciation. In fact, some
units are going the other way. Most
mobile homes are only mobile once—
from the factory to a site— and aren’t
moved again, so there isn’t much
chance of their wearing out.
If you insist on financing the thirdof-a-total deal that includes furnishings
on the same basis as a house, don’t
bum rap the mobile home for deprecia­
tion caused by rapidly depreciating
furnishings. • *

MID-CONTINENT BANKER for February, 1977

Two new Brandi Coin Wrapping Systems
deliver convenience and productivity
Brandt’s new 1702 and 1780 . . . reliable, efficient,
accurate and quiet.

Costly and tedious manual coin wrapping is a thing of the
past when you select one of Brandt’s new coin wrapping
systems.
The Model 1702 is Brandt’s portable answer for totally
economical coin wrapping. Small and lightweight, it
moves easily where you need it and operates with a
minimum of noise.
The Model 1780 is Brandt’s high speed answer for totally
efficient coin wrapping. It automatically packages up to
1440 wraps per hour with uncompromising Brandt
quality, accuracy and reliability.

Brandt’s unique m odular design is another important key
to total coin wrapping productivity. This construction of
the 1780 allows you to add other components and
accessories as your coin wrapping needs increase. And
the 1702’s hinged cabinet gives quick access when
service is necessary. That means less downtime.
The new Brandt Model 1702 . . . portable and
economical. The new Brandt Model 1 7 8 0 ... fast and
efficient. Both deliver top coin wrapping productivity.

the most for

Both new units are extremely simple to operate.
Denomination changeover is fast and easy. And both
models have large-capacity hoppers for fast loading.
MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

45

TODAY There's Only ONE
WORKING
APPRAISAL

WHAT DEPRECIATES ON A MOBILE HOME?
For years mobile homes have been sold on a turn-key, instant
move-in basis so that it has become totally confusing to all
segments of the industry w ith regards to what causes
depreciation.
Goodies such as furniture, decor packages, appliances,
etc., all depreciate rapidly, as anybody knows. A two
year old couch has no real market value, yet if it orignally sold in a mobile home, many industry people have a
hard time accepting the simple fact that the couch has
depreciated. Goodies, fo r some time now, have rep­
resented about 25 — 40% of every mobile home deal and
must be properly allowed for in appraising a used mobile
home deal.
Mobile Homes (Houses) have very little depreciation
today and in fact some are actually appreciating in value.
A fter all, if a home is properly maintained, why should a
2 X 4 in a mobile home wear out when it doesn't in a
stick bu ilt house? Most mobile homes today, once loc­
ated, are never moved so if they are properly blocked and
maintained, they should not "wear o u t" and therefore
are holding their values.
Many other factors such as site improvements, condition of
unit, geographic area, and demand do also affect the sales
values, both up and down. By using the UniComp appraisal
system (book and valuation worksheets) all of the individual
factors of a mobile home deal can be determined.

46

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

SYSTEM!
UniComp's mobile home appraisal system, which has been in
use nation wide since 1975, works much like conventional
real estate appraising. The system consists of a UniComp
trade-in guide on the values of used mobile homes and an
appraisal valuation worksheet. The tw o simple, but basic
steps to use are as follows:
Step 1: On site inspections which determine the exact
items included in the deal, condition of home,
extra improvements such as Add-a-rooms, site
improvements such as awnings and skirting, etc.,
and consideration of the site location or area.
This first step does not require an "expert" on
mobile home values, but instead a person who
can look the home over and fill out the w ork­
sheet itemizing all the above items.
Step 2: Valuation determination is handled at the office
by any person who is checked out and exper­
ienced in using the book. Once the appraisal
worksheet is completed, then the values of each
segment of the deal such as house, furnishings
and site improvemets are clearly visible.
The most important tw o factors achieved by Real Estate app­
raisals are on site varification and a truly disinterested third
party fo r values. The UniComp appraisal system accompli­
shes these very important checks or balances on the day to
day flo w o f deals.
There is a correlation of original prices and used unit values.
As in the case of site bu ilt housing, there is a relationship of
values to original prices. Two houses of 1500 sq. ft. when
new, w ith one a top quality custom built home and the
other a economy bu ilt tract type house, would certainly have
different values as the years go by. Likewise, two differently
built mobile homes of the same size w ill not have the same
values when used because of differing qualities of construct­
ion.
The original price does reflect the relative quality level of the
mobile home and is the reason a value guide is so very nec­
essary in setting values on used units. No person, regardless
of the years in the industry, can accurately remember the
literally 10's of thousands of models built each year, so a
value guide is imperative to any truly good appraisal system.
FOR F U LL INFORMATION WRITE:

POST OFFICE BOX 227
GURNEE, ILLINOIS 60031
TELEPHONE AREA (312) 336-8030
PRICING AND APPRAISAL SPECIALISTS FOR THE
MOBILE HOME, RECREATIONAL VEHICLE, MARINE
AND AUTO INDUSTRIES.

MID-CONTINENT BANKER for February, 1977

Y BANK has been financing mo­
bile homes for more than 40 years
and it intends to continue this kind of
financing as long as profits comparable
to those from other types of installment
financing can be achieved.
Mobile home financing is attractive
for two basic reasons:
• More dollars of outstanding may
be serviced by fewer people.
• Mobile homes produce more retail
outstanding compared to floor plan car­
ried than auto financing does.
W e presently have about $21 million
outstanding in indirect mobile home
contracts and $1 million in direct loans.
In addition to the mobile home paper
on our books, we are servicing about
$20 million in mobile home loans for
other lenders.
Prior to 1972, all our mobile home
financing had been on a recourse basis
and our experience had been excellent.
We had been reluctant to become in­
volved in nonrecourse financing, but be­
cause of the success of several service
company programs and the pressure
from some of our dealers, we decided
to begin a program in 1971.
W e also decided that, if a service
company could profitably service loans
in our area from home offices outside
Tennessee, we should be able to per­
form the same services less expensively
and more competently due to our ex­
perience with mobile home financing
and to our collection staff expertise,
gained by servicing our own loans
across the state.
The institution of this program
enabled us to purchase as much mobile
home paper as was available, even if
we were unable to place it on our books
due to loan demand in other areas. W e
felt from the beginning that the greatest
danger was the lender’s tendency to
purchase substandard paper due to the
protection afforded by credit insurance.
W e were unable to completely control

M

By BILLY L. STEPHENS
Assistant Vice President
Commerce Union Bank
Nashville

this and, as a result, the quality of our
nonrecourse paper was not quite as
good as that of our recourse paper.
Our experience was satisfactory until
the 1974 recession. W e experienced a
sizable increase in repos compared to
the average number of repos in previ­
ous years. These repos were, for the
most part, a result of unemployment,
which was extremely high in our area
among mobile home owners.
The percentage of repos in our non­
recourse program was no greater than
that of our recourse program, but dis­
posing of the nonrecourse repos was
difficult. Previously, we had been able
to dispose of most of our repos with
small losses due to the excellent market
for used mobile homes in our area.
In order to sell our repos in a rea­
sonable time, it was necessary to ac­
cept cash bids on many units, which
resulted in greatly increased losses per
unit. W e were protected by credit in­
surance, but our loss ratio increased
until it became unprofitable for our
carrier.
W e took the following steps to at­
tempt to improve the quality of our
mobile home paper and get our insur­
ance loss ratio back into line:

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

• W e cut off dealers with excessively
high repo ratios.
• We added recourse clauses to our
dealer agreements (first 12 months, full
recourse; thereafter, nonrecourse).
• We increased down payment re­
quirements.
• We shortened financing terms.
• W e became more restrictive in
credit evaluations.
These restrictions resulted in the near
elimination of our nonrecourse business
and we feel we have this situation un­
der control now. We do not plan to
solicit nonrecourse business except on a
direct basis. Our experience on direct
loans made to purchase mobile homes
has been excellent due to the quality of
the credit risks.
During 1977 we intend to aggres­
sively seek good quality recourse mo­
bile home business and expect to in­
crease our present retail outstanding by
at least 10%.
Mobile home financing is and has al­
ways been an extremely specialized
area and banks not equipped or ex­
perienced enough to service a dealer
program should limit themselves to di­
rect lending unless they are able to
engage a service company that is finan­
cially strong and has the experience
and personnel to service its loans prop­
erly.
Any bank considering a program of
this type should investigate the service
company, the credit insurance carrier
and the dealers who will be originating
the business. They should also require
the right to approve all contracts to be
funded by them.
If the business is available from a
credit-worthy dealer, the primary con­
sideration should be yield. Many state
laws limit the add-on rate that may be
charged on installment sales contracts
and, because of the terms necessary to
finance mobile homes, this might (in
some cases) make it unprofitable to

47

finance them. If the potential yield is
high enough to be profitable, the bank
should also realize that these loans will
not pay off as rapidly as other types of
installment loans. This means that the
cost of funds may increase considerably
during the loan term and the bank must
be prepared to live with low yields
during tight-money periods.
The next consideration is floor plan
lines. In order to generate a good qual­
ity of retail business, it is usually neces­
sary to extend a line of credit for in­
ventory. A great deal of care should be
exercised in extending wholesale credit,
as the largest losses in any type of in­
direct financing are always a result of
losses from wholesale lines of credit.
After the dealer has been carefully
evaluated and the decision is made to
make the loan, there are several ways
to reduce the risks of floor planning,
including the following:
• Record the lien on the inventory
properly.
• Hold all certificates of origin.
• Advance all funds directly to the
manufacturer.
• Require repurchase agreements
from manufacturers.
• Require curtailments of units of
at least 10% each 90 days and payment
in full within a year.
• Require personal guaranties if the
dealer is a corporation.
• Audit inventory at least monthly
and inspect at least some of the units
each time an audit is made.
• Require the dealer to furnish
proper
physical-damage
insurance,
showing the bank as loss payee.
The final step is to set up a retail
program that will enable the dealer to
operate profitably and will be both

profitable and have little risk for the
bank.
The following are suggestions for in­
suring that the program will be profita­
ble for the bank:
• Limit terms to 10 years on single­
wide units and 12 years on doublewides and obtain deeds of trust on the
real property where the home is to be
parked, whenever possible.
• Require a minimum down pay­
ment of 20% on all double-wides and
15% on single-wides except when a deed
of trust is possible or when the credit
risk is exceptional.
• Investigate all applications to de­
termine the ability of the applicant to
make payments comfortably over an ex­
tended period. Consider such factors as
time on the job, income compared to
payments, present debt and past his­
tory of making sizable installment pay­
ments.
• The equity factor is of extreme im­
portance in mobile home financing.
Mobile homes normally depreciate
yearly for at least the first five years,
while the net unpaid balance is reduced
much more slowly. I would suggest a
maximum advance of 100% of manu­
facturer’s invoice on double-wides with
selling prices of $12,000 or less, reduc­
ing the advance on more expensive
units. The maximum advance on singlewides should be limited to 100% of
manufacturer’s invoice plus sales tax
and a reasonable set-up allowance of
about $500.
The average advance on a dealer’s
business should be much lower than
the maximum allowances and it’s im­
portant to make sure this is the case.
• The best protection available to
a bank on recourse mobile home paper

MilNINEHOMA COMPANIES
-

SERVING THE BANKING INDU STR Y SINCE 1949

-

£

V

V

MOBILE HOME & RECREATIONAL VEHICLE PROGRAMS*
■ MECHANICAL BREAKDOWN INSURANCE
■ CO LLATERAL PROTECTION P L A N *
■ CREDIT LIFE & D IS A B ILITY
* THESE PROGRAMS ARE FULLY FUJTQMflTEO.
A
V

V
T H E P R E S ID E N T

Write:

MINNEHOMA COMPANIES

P.O. BOX 51188
TULSA, OKLAHOMA 74151
OR Call:
In Oklahoma, Call Collect:
48

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Federal Reserve Bank of St. Louis

(800)331 -3780
(918) 835 - 4431

Bank Service Co. Sold
NASHVILLE—Th ird N ational
Corp., parent of Third National
Bank, has sold Mobilehome Guaran­
ty Corp. to Yegen Associates, Inc.,
Rochelle Park, N. J.
A spokesman for Third National
said the once depressed mobile home
subsidiary has improved its financial
condition, but earnings continue to
reflect the industry’s depression.
“We want to concentrate our efforts
and resources in the banking related
field,” said Charles J. Kane, HC
chairman. “So, we were delighted to
find someone at the top of the in­
stallment financing industry with
first-rate reputation and competence
in the mobile home servicing busi­
ness, to take over Mobilehome
Guaranty. We consider the mobile
home industry a vital segment of
the housing market and will con­
tinue to actively finance mobile
homes under Yegen’s service plan.”
Yegen will assume responsibility
for servicing Mobilehome Guaranty’s
existing dealer-lender relationships.
The subsidiary was organized in
Miami in 1969. Its headquarters was
subsequently relocated in Nashville.

is the reserve retained. In past years,
many banks have found themselves in
the position of having to liquidate a
dealer’s retail outstanding without bene­
fit of sufficient reserve balances equal
to at least 3% of the total retail out­
standing.
With the increased balances being
financed and the longer terms being
used, it is not likely that this retention
would be sufficient to liquate a dealer’s
outstanding accounts. I would suggest
a minimum retention of 5% of the retail
outstanding, with the exact retention
being determined by the dealer’s finan­
cial strength.
• Holdbacks taken as additional se­
curity on individual contracts should be
held long enough to evaluate the per­
formance of the loan and to establish
collateral equity. It usually would be
unwise to release any holdbacks until
at least 25%-30% of the loan payments
have been paid. These holdbacks should
not be considered as a part of the
dealer’s retention, as they are taken to
secure a contract that is considered
substandard.
• Require that all mobile home con­
tracts be protected with comprehensive
policies that include VS I and flood cov­
erages. Set up a follow up system to
make sure the mobile home has proper
insurable coverage until paid in full.
• Prompt attention to past-due loans
is essential to avoid repos. No accounts
should be allowed to become 60 days

MID-CONTINENT BANKER for February, 1977

No worry if you have LSI Insurance through Scarborough
Sure you require evidence of primary auto
coverage at the time of your loan, but what
happens when your borrower's vehicle is unin­
sured, his auto is stolen, damaged or
destroyed, and he defaults? One thing for sure,
you have problems.
With Lenders Single Interest Insurance Auto
Insurance through Scarborough, you can
protect your bank's loan . . . because you have
coverage up to replacement value, unpaid
balance or cost to repair.
No follow-up system requiring borrowers to
continue primary insurance is foolproof. That's
why the policy available through Scarborough
is vital. It provides positive, continuous protec­
tion. Protection on a blanket basis for all in­
dividual auto loans (dealer or direct).

Single Interest Insurance through Scarborough
& Company can:
■ Reduce on installment loan charge-offs.
■ Reduce expense involved in follow-up
systems.
■ Provide protection for extended auto loan
terms up to 48 months.
■ Include towing and storage.
Because you deal directly with Scarborough
on claims, you receive prompt, fair and
professional service, with a minimum of red
tape. Another reason to think of Scarborough
for Lender Single Interest Auto Insurance.
Call or write Bob Marshman or clip the
coupon below for more information.
r - - - - - - - - - - - - - - - - - - - *

Scarborough
the bank insurance
people

Scarborough & Company
222 N. Dearborn St. Chicago, Illinois 60601
Phone (312) 346-6060

Fill in this coupon to receive the free booklet
"Lenders Single Interest Automobile
Insurance".
N am e________________________________________

I

Title__________________________________________

|

Bank ________________________________________

■

Address ______________________________________
MC 1/77

C ity _______________ State________Z ip___________

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

49

past due unless arrangements for mak­
ing the account current have been
made. A poor collection effort is sure
to result in an unprofitable program,
regardless of the quality of the loans.
• Whenever repossession is neces­
sary, do it quickly to avoid conversion
and/ or vandalism. Be sure that all repos
are effected legally and that all per­
sonal belongings are out of the home
before taking possession of it.
• Require all dealers to pick up
repos within two weeks of notification
and to recondition them for resale im­
mediately. Physically audit the units
closely until they are sold or paid off.
The dealer should pay all repossessions
in full if not sold within 90 days of
the repossession date.
Due to the rapid increase in the cost
of conventional housing, mobile homes
are and will continue to be a valuable
part of the housing industry and may
be the only solution for the large part of
our population unable to afford conven­
tional housing.
The image of the industry has been
seriously damaged by the poor experi­
ences of many lenders in the past few
years. But much of the blame rests
squarely on the shoulders of lenders.
Any time substandard loans are made,
losses are sure to follow.
The availability of credit for mobile

home financing from banks is essential
to the mobile home industry if it is to
provide its share of the housing needs
in the future. Bankers should review
their mobile home financing experiences
and place the blame for any losses in
proper perspective so decisions regard­
ing future involvement can be made,
based on the potential earnings of such
financing.
Any bank that has the potential busi­
ness available and that is staffed to
handle the business is making a serious
mistake if it chooses to avoid mobile
home financing because of poor judg­
ment in the past.
There is no question that mobile
home financing—properly handled—
still can be a profitable part of a bank’s
installment loan program. * •

Bankers Complete Course
On Commercial Financing
At Washington U., St. Louis
ST. LOU IS—A group of 39 local
bankers has completed an eight-week
course, “What You Must Know About
Commercial Financing,” at Washington
University. The course will be offered
again in the fall of 1977.
A part of Washington University’s

School of Continuing Education and
given in cooperation with the American
Institute of Banking and the National
Commercial Finance Conference, the
course featured Arthur Bromberg as co­
ordinator and lecturer. Mr. Bromberg
is a financial consultant and former
president, Mercantile Financial Corp.
of Missouri.
Guest speakers for the course in­
clude John Fox, former CEO, Mercan­
tile Trust, St. Louis, and present chair­
man, Bank of Ladue, Mo.; Burton
Abrahams, president, Walter Heller
Overseas Corp.; Tom Holling, district
director, U. S. Small Business Admin­
istration; Kenneth Rahn, Jack Engelke
and Greg Bultman, vice presidents,
Aetna Business Credit; Jerome Sidel,
attorney and publisher of articles on
bankruptcies and UCC; Milton Ferman, former vice chairman, Nation­
wide Financial Services; and A. J. Bardol Jr., vice president, SL T Warehouse
Co., St. Louis.
The course covered accounts receiv­
able and inventory financing and fac­
toring; equipment financing and leas­
ing; export and import financing; in­
dustrial and consumer time sales and
the legal aspects of commercial financ­
ing; problems of frauds; and liquida­
tion of collateral.
Course participants received two
units in continuing education and a
certificate of accomplishment.
NABW, Small Business Admin.
Launch 'Women-Business' Drive

INSURE MOBILE HOME
AND TRAVEL TRAILER LOANS
We d o th e w ork . . . you c o lle c t th e com m issions:
Bankers who make a small number of
loans each year on mobile homes and
travel trailers usually need assistance
in setting up proper insurance cover­
ages. We're staffed to do just that and
we presently work with hundreds of
bankers who are licensed to write
general coverages.
They send their applications to us.
W e handle ALL the details and they
collect regular commissions . . . just
as you can.

Our plans provide for various cover­
ages: All Risk Comprehensive; Liability:
Personal Effects; Theft: Adjacent Build­
ings and many other optional cover­
ages.
W rite to us for pamphlets explaining
our coverages . . . and then let us
work with you on insuring your next
mobile home loan or travel trailer
loan. WE DO THE W ORK . . . YOU
COLLECT THE COM MISSIONS.

Serving Banks in Kansas-Missouri-111 inois-Kenfucky

I n s u r a n c e Enterprises
5811 Hampton St., St. Louis, Mo. 63109

50

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Federal Reserve Bank of St. Louis

314/832-2717

CHICAGO—The National Associa­
tion of Bank Women, Inc., has signed
an agreement with the U. S. Small
Business Administration to assist with
the SBA’s “Women in Business” pro­
gram.
Under the agreement, NABW mem­
bers will serve as speakers at SBA-sponsored seminars across the country, pre­
senting information on credit, invest­
ments, commercial and mortgage loans,
marketing, bookkeeping and business
development. Also publicizing the semi­
nars will be local NABW groups.
The NABW’s decision to enter the
program stems from a White House
meeting at which President Ford and
representatives of the NABW and
other women’s organizations discussed
the development of the SBA program.
Ft. Worth N at'l Sets Records
FO R T W ORTH— Fort Worth Na­
tional has broken the billion-dollar bar­
rier in total assets. Total assets reached
an all-time high of $1.1 billion at the
end of 1976. This amounts to an in­
crease of more than 20% over yearearlier figures.
Total deposits surpass $800 million,
a gain of almost 17% over 1975 figures.

MID-CONTINENT BANKER for February, 1977

W hen
You know what a jungle installment lending can be. So do w e. W e sh ou ld .. .with our
combined 57 years of background in the installment loan and finance field. So, when we go
hunting new accounts for your bank, you can be sure we know where the quality trophies are.
And you can also be sure that our safaris are based on sound planning, with safety as a number
one consideration. Our outstanding loss-reserve program is ju st one exam ple.
Last year, we brought home prize installment loan business for a number of banks and S&Ls in
the m idstates, with a delinquency rate of less than one quarter of one percent (considerably
lower than national standards). W e think that’s pretty lair shooting.

.

•

,

. '
■

Call or write today, and we’ll start gearing up for an expedition to bring in those trophy-size
installment loan accounts in your area. As we say, when we go exploring for you, we do mean
business.

INSTALLMENT LENDING SPECIALISTS IN RECREATIONAL VEfflCLES,
MOBILE HOMES, MARINE PRODUCTS, PROPERTY IMPROVEMENT
AND LEASING, AND ALL TYPES OF INSURANCE

M arketing Services o f Indiana, Inc.
P .0 . Box 652
Carmel, Indiana 46032
Dale E . Schenkel, President
John T . Steele, Executive Vice President
317/844-1137

MID-CONTINENT BANKER for February, 1977

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Federal Reserve Bank of St. Louis

51

Lender Shortage Is Serious Problem

RV Delinquency Rate Good

Facing Mobile Home Industry Today
SHORTAGE of interested lenders
to provide funds to finance mo­
A
bile home sales is one of the most im­
portant problems facing the mobile
home industry, according to Edward G.
Silbernagel, president, National Man­
agement Systems, Janesville, Wis.
This condition is the result of the
publicity given mobile home reposses­
sions in 1974 and 1975, Mr. Silbernagel
said. Although a number of lenders
came through this period with good
earnings from their mobile home loans,
their position has not been well pub­
licized.
Although numerous banks have left
the mobile home financing business, he
said, many lenders have remained ac­
tive. An example is Citicorp, parent of
Citibank, New York City, which is
building its mobile home loan port­
folio through two of its subsidiaries—
Advance Mortgage Corp., and Nation­
wide Financial Service, Inc.
Another active lender is BankAmerica Corp., which is financing mobile
homes in California through its Bank
of America subsidiary and on a nation­
wide basis through its Finance America
subsidiary.
“These two giants of the banking
world certainly would not continue
their aggressive mobile home lending
activity if they did not believe it to be
profitable,” Mr. Silbernagel said.
Developing trends in the mobile
home area, he said, include greater
general interest in mobile homes on
the part of the increasing number of
individuals priced out of the conven­
tional home market by rising costs;
more mobile home financing done on a
monthly simple-interest basis similar to
the amortization of a real estate loan;
more mobile home and modular sub­
divisions where the home and lot are
sold as one item similar to the sale of
a site-built home; and greater accept­
ance by lenders of FHA Title I and
VA mobile home programs under the
Veterans Housing acts of 1970 and
1974 as the discovery is made by lend­
ers that a limited number of private
mobile home loan credit risk insurors
are willing to provide protection sim­
ilar to the federal programs.
Mr. Silbernagel also sees the ma­
jority of new mobile home sales being
made in rural areas because housing
shortages are more deeply felt there
and the prices of mobile homes con­
form to incomes in such areas; more
realtors will enter the mobile home
sales area in order to obtain the prod­
uct mix to appeal to all price ranges

52

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Federal Reserve Bank of St. Louis

and income levels; and living in a mo­
bile home will become accepted in the
same manner as any other form of
housing because few alternatives will
be offered in the price range of a mo­
bile home.
National Management Systems con­
sults with lenders, service companies
and insurance companies in the mobile
home finance area. • •
Overholt Raised at Harris Trust
CHICAGO—James H. Overholt, vice
president, Harris Trust, has been
named national sales manager of the
government bond division. He will di­
rect division sales activity from a rep­
resentative office in New York City.
Mr. Overholt joined the bank in
1970 and the government bond divi­
sion in 1971. He was promoted to vice
president last year.

Although loan delinquency rates
for recreational vehicles in the U. S.
climbed slightly in the third quarter
of 1976, RVs still ranked second
lowest among 10 categories listed by
ABA.
The ABA’s installment lending di­
vision reported RV delinquencies for
the third quarter at 1.62. This com­
pares with 1.41 at the end of the
second quarter in June, when RVs
were the lowest among the 10 cate­
gories, which include autos, property
improvement, bank cards, revolving
credit, FHA title 1, home appliances,
personal loans and mobile homes.
Delinquency rates are based on
the total number of loans delinquent
as a percentage of the total number
of loans outstanding.
The third quarter RV figure was
exceeded only by direct auto loans,
at 1.56. RV loans also ranked second
at the end of the first quarter in
March, at 1.67.
The September figure means that
1.62 of every 1,000 RV loans are
delinquent, the second lowest point
for the industry in the last three
years.

Good Year Seen for Mobile Homes, RVs;
That Means Good Profits for Lenders!
GOOD year for mobile home and
RV growth is predicted by Dale
E. Schenkel, president, Marketing Ser­
vices of Indiana, Inc., a firm specializ­
ing in marketing services for lenders.
The firm is located in Carmel, Ind.
Mr. Schenkel predicts a growth rate
of 30% for mobile homes and up to 20%
for RVs in 1977.
While the RV industry has recovered
from its inflation- and energy-crisisinduced slump, the mobile home indus­
try is still in the early stages of its re­
covery, he said.
A great demand is expected by Mr.
Schenkel for the more expensive singleand double-wide mobile home units.
The average mobile home contract is
expected to carry a finance balance in
excess of $11,000.
In the RV industry, the average sale
exceeds $7,000; however, direct dealer
control of financing remains at a low
level.
Both mobile home and RV contracts
can be profitable to lenders, Mr. Schen­
kel said, because yields are excellent.
The ability to purchase sound credits
has improved drastically in the past
two years. Lenders now have an ability
to tie the dealer to his retail paper and
have him assist in the contracts requir­

A

ing delinquency or repossession control.
Today, most prudent lenders have dis­
covered that, with specialty lending, it
is impossible to permit the dealer to
walk away from a retail transaction
with no responsibility.
Mr. Schenkel believes the lender
should be protected by loss reserves
from the mobile home service compa­
ny. Therefore, monies held for losses
are always available at the bank. The
bank can also monitor loss experience
against receivables outstanding. He can
then determine his progress in retail
paper liquidation at all times.
Banks have the opportunity to han­
dle this paper safely and soundly with
high yields and development of new
customers, he said. Those not pleased
in the past should take note of the
changes made by prudent banks.
Mr. Schenkel feels the mobile home
industry has much work to do to pre­
sent a good image to the public. To­
day’s mobile home is a quality-built,
low-cost form of housing. Manufactur­
ers stand behind their products. The
industry has an opportunity to reach
a new class of purchaser by getting its
message across regarding the cost, re­
liability, safety and value of mobile
homes, he said. * •

MID-CONTINENT BANKER for February, 1977

Peace of Mind Ahead
Our single interest insurance
ends worry about repossessions

The interest we insure is yours.
Despite your security agreement and
the best efforts of your tickler system* some
of your borrowers may fail to keep up their

vehicle insurance.
But if any repossession comes in dam­
aged and the borrower’s insurance doesn’t
pay, your bank is protected by the cover­
age we can give you.
Write or phone today for our new free
folder on auto single interest insurance.

2SOO EAST DEVON AVENUE • DES PLAINES. ILLINOIS 6001B* 3 1 2 /2 9 7 - 4 6 6 0

MID-CONTINENT BANKER for February, 1 977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

53

‘ W ise m en say, an d not w ithout reason,
that w hoever w ishes to fo resee the
future must consult th e past. . . .”
Machiavelli

T

HE W ISE LEN D ER , much as
Machiavelli’s wise man, will consult
the past to foresee the future. The pru­
dent banker, desiring to capitalize upon
and profit from the future, carefully
scrutinizes the past. He does not con­
fine his scrutiny solely to business, but
expands into political, social, even cul­
tural history, for parallels which may
give him insight into the future.
One striking historical parallel in­
volves the mobile home financial ser­
vice company. The role of the service
company is to generate profitable re­
tail and wholesale lending opportuni­
ties for lenders who wish to participate
in the growing mobile home market.
In order to fulfill this role the service
company usually acquires mobile home
loans for its client lenders and services
those loans by assisting with or per­
forming the collection and repossession
work.
Service companies have recently
emerged from a period which could be
likened to the Dark Ages in history.
The Dark Ages, from 700 to 1100
A.D., were characterized by barbarism,
or the marauding of fierce, piratical
tribes. Service company competition for
mobile home business as recently as
1974 could be characterized as bar­
baric. There were a number of non-differentiated companies vying fiercely for
the same segment of the market. The
necessary result was a slashing of fees,
often below cost, in order to sign lend­
ers. Once lenders were signed on nondifferentiated programs, intense com­
petition for dealer business resulted in
a deterioration of credit quality. The

54

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

By RICHARD W. POSSETT
Vice President-Finance
and RICHARD A. VANDENBERG
Vice President-Marketing
Sebrite Corp.
Grand Rapids, Mich.
poor quality of credits purchased soon
began to take its toll in the form of in­
creased servicing costs. The inadequate
fees charged were far from sufficient
to cover costs, causing many service
companies to become insolvent.
In addition, the Dark Ages were
characterized by a decline in commerce
and industry. In 1974 both the country
and the mobile home industry fell
into the worst recession since the great
depression. A soaring cost of living,
high unemployment and a sharp in­
crease in the cost of money precipitat­
ed a mobile home industry depression
unlike any in the industry’s history. An
acute rise in delinquency and reposses­
sion ratios highlighted the deteriorat­
ing quality of consumer credit. A de­
parture from sound business practices
came back to haunt many service com­
panies, dealers, manufacturers and
lenders. Some were forced out of busi­
ness, which in turn had a domino effect
on others. Mobile home shipments
plummented from 566,000 units in

Messrs. Possett and VandenBerg are of­
ficers of Sebrite Corp., said to be the
nations largest mobile home financial
service company. Operating coast to
coast, Sebrite Corp. currently services
over $600,000,000 in outstanding mo­
bile home paper. Mr. Possett is a CPA
and a graduate of Western Michigan
University. Mr. VandenBerg holds a
BA from Hope College and an MBA
from Western Michigan University.

1973 to 214,000 units by 1975.
Finally, cultural stagnation charac­
terized the Dark Ages. Culture is de­
veloped as a result of education, disci­
pline and training. Where these in­
gredients are lacking, culture stagnates.
Many service companies, in their thirst
for volume before the recession and in
their desperate struggle for survival
during the recession, entered a period
of intellectual stagnation. Concepts
such as product and service differentia­
tion, satisfaction of customer needs, in­
telligent financial management and
long range planning were largely ig­
nored as the fight to capture every deal
was waged.
As the world emerged from the Dark
Ages, it entered a period of enlighten­
ment referred to as the “Renaissance.”
The Renaissance was to provide the
foundation for the rapid cultural, scien­
tific and economic development which
followed. Service companies have sim­
ilarly entered a period of rebirth and
reawakening—a renaissance. As with
the Dark Ages, striking historical paral­
lels can be drawn between the Renais­
sance and recent service company his­
tory.
The Renaissance was characterized
by commercial expansion. The national
economy and the mobile home indus­
try have both entered a period of re­
covery and growth. Real GNP has re­
sumed its upward climb, although oc­
casionally stopping for a breather.
Money supplies are once again abun­
dant, as evidenced by a prime rate only
a little over half what it was at its
peak.
The mobile home industry likewise
is entering a period of growth. Mobile
home shipments in 1976 from manu­
facturers to dealers will reflect nearly
a 20% increase over 1975 shipments

MID-CONTINENT BANKER for February, 1977

Mosler Century®21
A new, m odular alarm system that
lets you plug in precisely the security you need.

Night Depositories

The new Century
21—so flexible,
so comprehensive,
it lets you design
precisely the se­
curity system you
need. From the
larger main facility to the smallest
branch. Even a free-standing auto­
mated teller machine. Plug-in modules provide for
virtually any level of line security, whether on the
premises or on remote reporting telephone lines.
Expand it, change it, even relocate it—Century 21
is the most versatile alarm system ever.
Century 21 has the basic protection circuits most fi­
nancial institutions now require: safe, vault, night
depository, premise, automated teller machine, and
remote drive-in burglary protection. Century 21 is
available with daytime and 24-hour holdup signaling.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

The Century 21
alarm system is
available in both
UL and non-UL
configurations, de­
pending on the level
of risk. A completely auto­
matic or manual-set solidstate clock for controlled opening and closing times
satisfies UL requirements. In addition, Grade A, B,
and non-UL bells, with their different levels of attack
security, may be selected. Three different levels of
remote line security, starting with UL Grade AA, are
provided by use of plug-in modules. All of this allows
your security officer to select a level of protection in
keeping with the risk involved. To learn more about
Century 21, contact your Mosler sales representative.
Or write for our new brochure: Mosler, Dept. 21, 1561
Grand Blvd., Hamilton, Ohio 45012.

Mosler
An American-Standard Company
H am ilton, O hio 45012

NATIONAL DETROIT CORPORATION
~k r ] Parent Company of
_DJ NATIONAL BANK OF DETROIT
December 31,1976
CONSOLIDATED BALANCE SHEET (dollars in thousands)
ASSETS
Cash and Due from Banks (including
Foreign Office Time Deposits
of $ 7 0 7 ,9 7 1 )..........................................
Money Market Investments:
Federal Funds S o ld .............................
Other Investm ents...............................

Robert M. Surdam
Chairman of the Board

$1,600,693

21,190

Norman B. Weston
Vice Chairman of the Board

A. H. Aymond
Chairm anConsumers Power Company

Henry T. Bodman
Former Chairman—National Bank of Detroit

Harry B. Cunningham

690,189
823,024
47,294
1,560,507

Loans:
C o m m erc ial..........................................
Real Estate M o rtg a g e ........................
Consumer ............................................
Foreign O ffic e .....................................

1,927,562
775,480
264,978
435,654
3,403,674

Less Reserve for Possible Loan
Losses ..............................................

49,798
3,353,876

Bank Premises and Equipment (at cost
less accumulated depreciation of
$42,689) ................................................
Other Assets ............... ............................
Total A s s e ts ........................

Honorary Chairman of the Board—
S. S. Kresge Company

David K. Easlick
President—The Michigan Bell
Telephone Company

Richard C. Gerstenberg
Director and Former C hairm anGeneral Motors Corporation

Martha W. Griffiths
Griffiths & Griffiths

John R. Hamann
President—
The Detroit Edison Company

Robert W. Hartwell
President—Cliffs Electric
Service Company

Joseph L. Hudson, Jr.
Chairman—
The J. L i Hudson Company

66,117
148,545
$7,552,509

Walton A. Lewis
President—Lewis &
Thompson Agency, Inc.

Don T. McKone
President—
Libbey-Owens-Ford Company

L IA B IL IT IE S A N D S H A R E H O L D E R S ’ E Q U IT Y

Ellis B. Merry

Deposits:
D e m a n d ................................................
Certified and Other Official Checks
Individual Savings...............................
Individual T im e ...................................
Certificates of D e p o s its ....................
Other Savings and T im e ....................
Foreign O ffic e .....................................

Shareholders’ Equity:
Preferred Stock—No Par V alu e.........
No. of Shares
Authorized
1,000,000
Issued
—
Common Stock—Par Value $ 6 .2 5 ...
No. of Shares
Authorized 20,000,000
Issued
12,151,720
Capital S u rp lu s ...................................
Retained Earnings...............................
Less: Treasury Stock—
102,808 Common Shares, at cost
Total Liabilities
and Shareholders’ Equity

Charles T. Fisher, III
President

569,950
231,631
801,581

Trading Account Securities—At Lower
of Cost or M a r k e t...............................
Investment Securities—At Amortized
Cost:
U.S. T rea su ry........................................
States and Political Subdivisions...
Federal Agencies and O ther.............

Other Liabilities:
Short-Term Funds B o rrow ed ...........
Capital Notes .....................................
Sundry Liabilities ...............................
Total L ia b ilitie s ..........................

BOARD OF DIRECTORS

$1,717,565
291,561
1,400,477
801,753
385,528
201,457
1,041,288
5,839,629
$964,884
95,327
181,970

$

Former Chairman—National Bank of Detroit

Arthur R. Seder, Jr.
President—
American Natural Resources Company

Robert B. Semple
Chairman—BASF Wyandotte Corporation

Nate S. Shapero
Honorary Chairman and Director
and Chairman of Executive Committee—
Cunningham Drug Stores, Inc.

George A. Stinson
Chairman—National Steel Corporation

Peter W. Stroh

1,242,181
7,081,810

President—The Stroh Brewery Company

-

ADVISORY MEMBERS
Ivor Bryn
Former Chairman—McLouth Steel
Corporation

75,948

William M. Day
Former Chairman—The Michigan Bell
Telephone Company

A. P. Fontaine

178,725
218,343
(2,317)

Former Chairman—
The Bendix Corporation

470,699
$7,552,509

Ralph T. McElvenny
Former Chairman—
American Natural Resources Company

Peter J. Monaghan
Monaghan, Campbell, LoPrete & McDonald

George Russell
Assets carried at approximately $389,000,000 (including U.S. Treasury
Securities carried at $54,000,000) were pledged at December 31, 1976, to
secure public deposits (including deposits of $84,330,105 of the Treasurer,
State of Michigan) and for other purposes required by law.

Former Vice Chairm anGeneral Motors Corporation

Outstanding standby letters of credit at December 31,1976, totaled approxi­
mately $27,200,000.

56

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

MID-CONTINENT BANKER for February, 1977

and the upward trend is expected to
continue in 1977. This growth is slow­
er and less spectacular than the “boom”
years, perhaps, but more likely to pro­
vide consistent opportunities for profit­
able lending.
Improving technology characterized
the Renaissance and is playing an im­
portant role in the service company
renaissance, also. Today the mobile
home industry is building a better
product (to HUE) standards), with
better warranties, and one less likely
to become obsolete by future increases
in mobile home size. There is new em­
phasis on loan guarantee arrangements
other than private credit insurance.
Government programs (FH A and VA)
have been updated to better satisfy to­
day’s market needs. Private credit in­
surers have re-evaluated their role and
made significant product improve­
ments.
Programs
for self-insuring
against loan loss have become more
prevalent. Simple-interest financing has
started to replace add-on interest, giv­
ing lenders and dealers a tool to dif­
ferentiate their financing programs.
As a result of these “technological”
improvements, service companies are
realizing two distinct benefits. First,
many new opportunities are being cre­
ated to provide specialized knowledge
and expertise to lenders. Second, these
changes make it easier for service com­
panies to differentiate their product
service offering. This allows service
companies and their client lenders to
avoid “barbaric” competition for one
market segment and to base growth on
the foundation of a sound business
strategy.
In short, “technological” improve­
ments in both financing techniques and
in the collateral financed will further
stimulate service company rebirth.
Finally, the Renaissance was char­
acterized by intellectual revival. So
also, the service company renaissance
is typified by a rethinking of the va­
lidity of the service concept, the proper
service company role, correcting and
avoiding the abuses of the past and the
opportunities of the future.
As evidence of this intellectual re­
vival, one has only to look at the mar­
keting and management techniques of
today’s established, well-managed ser­
vice company. These are firms that had
the strength to survive the Dark Ages
and the vision to develop and adhere
to improved business techniques to as­
sure a profitable future. What charac­
teristics do these enlightened compa­
nies embody?
• Product and service differentia­
tion are emphasized in the service com­

Mobile Home Resurgence
The mobile home industry has
changed and improved, and so have
the lending opportunities, says a
recent bulletin published by Fore­
most Insurance Co., Grand Rapids,
Mich.
The bulletin advises bankers to
examine the factors that created
previous mobile home lending prob­
lems and the corrective actions that
have been taken. Then future oppor­
tunities can be evaluated.
According to the bulletin, the
mobile home market is changing and
with it have come improved prod­
ucts, built to HUD s t a n d a r d s ;
stronger manufacturers and dealers
who have met the challenges of the
past three difficult years; renewed
emphasis on better credits; and a
slower rate of inflation and some
restored confidence in the economy.
Also, the image and acceptability
of mobile home living continues to
improve, the bulletin says. The
mobile home is larger and fits the
housing needs of more people. It is
affordable new housing for up to
35% of the population that can’t
afford new site-built homes.
Mobile home owners list economy,
the desire to own their own homes
and low maintenance as the most
important reasons for c h o o s in g
mobile home living. They over­
whelmingly express satisfaction with
their homes and indicate they would
buy another, the bulletin says.

pany’s approach to its clients. Enlight­
ened service company management
will attempt to define a segment of the
market which is not being addressed
by competition. Similarly, no enlight­
ened service company will encourage
its client lenders to develop a “me too”
finance plan for its dealers. The strat­
egy will be to construct a plan which
addresses the mobile home customers’
needs, thereby satisfying dealer needs
and creating a preference for the
lender’s finance program.
• Recognition and control of costs
will be emphasized so that financial
statements will properly reflect the real
economic condition of the firm. Future
servicing costs and contingent liabil­
ities must be recognized and dealt with
in the day-to-day planning, operating
and management of the enlightened
service company.
• Management will recognize the
importance of its human resource. It
will recruit, train and retain personnel
with the necessary expertise to supply
clients with quality services.
• The service offering will be “un­
bundled” so that services can be tai­
lored to each lender’s needs. Before a
proposal is tendered, the lender’s needs

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

will be carefully analyzed and defined.
A selection of desired services will take
place jointly between the lender and
the service company. Care will be
taken to avoid costly duplication of ef­
fort, so that profit expectations of all
parties will be realized.
• Pricing of services will be a la
carte. The lender will pay only for the
services he selects based on his needs.
Service companies will no longer mar­
ket and price one package of services
as an indivisible whole.
• Fees will be paid as services are
rendered. In the past, lenders frequent­
ly made payment prior to the services
being rendered and prior to completion
of the earnings process. Structuring the
fee payment as services rendered elim­
inates the need for service companies
to reserve for refunds of unearned fees
and future servicing costs. It removes
the lender s risk that his service com­
pany will be inadequately reserved
and, at the same time, it increases his
yield.
Never has the service company con­
cept held more validity. Lenders need
specialized expertise and assistance
now more than ever if they are to
profitably satisfy the housing needs of
their communities. The astute lender,
one who studies history for parallels,
one who recognizes that service com­
panies are experiencing a renaissance,
will be rewarded with a profitable
niche in the growing mobile home mar­
ket. • •

Numerous Promotions Announced
By Continental Bank, Chicago
CHICAGO—Thirteen new vice pres­
idents are among the promotions an­
nounced recently by Continental Illi­
nois National.
They are: Stephen M. Johns and
Dennis J. McDonnell, bond and
money-market services department;
Peter F . Dolle and Ronald V. Greer,
commercial banking services; William
P. Schoentgen, corporate communica­
tions division; Theordore H. Tung, cor­
porate financial services; Robert L.
Ganchiff, corporate personnel services;
Michael C. Snavely, international ser­
vices; Fred W. Vida, personal banking
services; and Kenneth L. Gilchrist,
Marvin J. Kruger, Donald B. Mclnerney and William F. Sanford, trust and
investment services.
Patrick J. Coll and Joseph W. Saun­
ders were named second vice presi­
dents in the personal banking services
department, and Gerald A. Fisher,
Fred J. Galus, Martin R. Hartmann
and Richard G. Shapiro were named
personal banking officers.

57

T ’S A LONG D RIV E between St.
Louis and Hays, Kan.—535 miles
to be exact—with plenty of time to in­
dulge in trivialities of the open road or
just plain carefree dreaming. One such
indulgence is to count the number of
states seen on license plates of passing
cars. Another game, especially for
someone involved in the recreational
vehicle industry, is to tally the number
of RVs seen on the 10-hour journey.
Last summer, I did just that.
Without too much surprise, my im­
promptu survey revealed that every
third vehicle was, or pulled, an RV.
This does more than attest to the grow­
ing popularity of RVs.
It goes a long way in telling us that
the 550,000 RV units sold in 1975
were a fact and gives credence to in­
dustry projections of a more than 30%
increase in 1976 sales. It likewise was
a barometer that confirmed that the
annual increase in future sales may av­
erage in excess of the 8% forecast. Sales
of all types of RVs are predicted to
reach the 725,000 annual unit level by
1980. If class “B ” motor homes and
van conversions continue their popu­
larity, these predictions will be con­
servative.
History views upward trend. Travel
trailers, first produced commercially in
the 30s, experienced only moderate
growth after World War II and into
the 50s, reaching sales of 15,370 per
year by 1954. By 1961 this figure
reached 28,000. In the late 50s, other
vehicle types were developed, but it
wasn’t until 1965 that production fig­
ures on motor homes were tabulated.
Today, recreational vehicle products
are designed and produced by nearly
500 manufacturers throughout North
America and sold by 15,000 dealers
with retail sales totaling $2.32 billion
in 1975.
Various types of RVs are now com­
monly recognized as travel trailers,
camping trailers, three classes of mo­
tor homes, truck campers and pickup
covers. The Recreation Vehicle Indus­
try Association (RVIA) reports that
average retail prices range from a low
of $330 on pickup covers to a high of
$35,000+ for class “A” type motor
homes. This spread indicates that just
about every level of consumer family

I

58

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

By DONALD T. KNUST
Vice President
Nationwide Financial Services Corp.
St. Louis

income can be served by some type of
recreational vehicle. The variety of
product and cost to the buyer lends it­
self to few circumstances of “oversell,”
always a key to a positive credit en­
vironment.
At a 1973 ABA installment credit
conference in Dallas it was stated that
some 50% of RV retail sales are financed
and 20% of the lenders do 80% of the
finance volume. These figures still
stand.
As a result of something less than a
planned strategy, many lenders have
just a few RV contracts on their books,
usually acquired by accident. Even
those who carry larger portfolios have
benefited largely from standard pro­
grams marketed on a national basis
rather than from those tailored to needs
of local markets.
The unique needs of each market
should put the local banker “in the
driver’s seat” opposite most other fi­
nance competition. There is little rea­
son to belabor past failure to realize
the profit potential. More important is
the foresight to develop and sell a fi­
nance program to penetrate the ex­
panding market.
The bank’s role. A focal point within
a bank must be established to develop
an understanding preliminary to man­
agement decision to aggressively sell
a financing plan.
History, growth and potential of the
RV industry, compilation of market
statistics ( along with buyer credit
demographics) are vital to the re­

search. Such information is available
from RVIA, P. O. Box 204, 14650 Lee
Road, Chantilly, VA 22021; and the
Recreational Vehicle Dealers Associa­
tion (RV D A ), P. O. Box 2159, Boul­
der, CO 80302.
The American Bankers Association
can provide some customer credit dem­
ographics. Recently published figures
(Bulletin # 3 9 5 ) indicate that the RV
product portfolio produced the second
most favorable delinquency rate among
10 categories. Generally, those lenders
who have gained a portfolio of RV
time sales contracts over the past five
to 10 years will share information on
customer/credit demographics. This
data will accurately predict the type
and quality of the credit risk and its
prospective liquidating performances.
One lender with a representative port­
folio found in a recent minimum sam­
pling that 70% of the customers/buyers
were 35 years or older, married and
had families. Some 85% had annual
family income of approximately $15,000. Other significant credit factors
were as favorable.
Crises reveal credit worthiness.
Somewhat superficial though telling
evidence of RV credit quality is found
in the performance of these buyers dur­
ing the 1972 and 1973 energy crises.
The energy crises proved that people
would continue to pay monthly install­
ments, even though, temporarily, full
utilization of their recreational vehicles
was not enjoyed. Beyond that, it
showed that most owners would not
give up their leisure time and vehicle
use in spite of the gasoline shortage.
Bankers may be reluctant to admit
it, but not so long ago, time payments
devoted to recreational activity were
viewed with a jaundiced eye. While
the increasing cost of living may be a
factor, it would be mistaken business
judgment to suggest that such time
sales financing presents an undue risk.
Many Americans have discovered that
the cost is lower and the experience
nicer to vacation by RV instead of
staying at a motel or resort.
Conversely, it is dangerous to gen­
eralize on the profit potential of an un­
balanced portfolio.
The RVIA said that, during 1975,
travel trailers represented 44.4% of to-

MID-CONTINENT BANKER for February, 1977

First Commerce Corporation and
First National Bank of Commerce
AND SUBSIDIARIES. NEW ORLEANS / TWELVE MONTHS ENDED DECEMBER 31, 1976

F IR S T C O M M E R C E C O R P O R A T IO N
C O M P A R A T IV E C O N S O L ID A T E D
S T A T E M E N T O F C O N D IT IO N

F IR S T C O M M E R C E C O R P O R A T IO N
C O M P A R A T IV E C O N SO L ID A T E D
S T A T E M E N T O F IN C O M E

D ecem b e r 31,
1 975

Y ear En d ed D ecem b e r 31,
1975
1976

1976
ASSETS

OPERATING REVENUES
In terest In co m e.....................................................
S erv ice C h arges, Exch an ge and
O th e r F e e s ................................ . . . ..................
T ra d in g A cco u n t In co m e.................................
O th e r O p eratin g R e v e n u e s.............................
T o ta l.......................................................................

OPERATING EXPENSES

$51,630,000

$ 6 6 ,1 7 4 ,0 0 0

5,902,000
590,000
2,442,000
60,564,000

5 ,2 0 3 ,0 0 0
4 6 5 ,0 0 0
1 ,9 5 4 ,0 0 0

25,118,000
12,986,000
3,096,000
3,569,000
3,250,000
1,500,000
10,859,000
60,378,000

In terest E x p e n se...................................................
Salaries and Em ployee B e n e fits ...................
N et O ccu p an cy E x p en ses................................
E q u ip m en t E x p e n ses..........................................
Provision for Possible L o an Losses..............
R evalu ation o f A ssets.........................................
O th e r O p eratin g E x p en ses..............................
T o ta l.......................................................................

INCOME (LOSS) BEFORE
INCOME TAXES, NET
SECURITIES GAINS AND
EXTRAORDINARY GAIN____
APPLICABLE INCOME
TAXES (BENEFIT).....................................
INCOME BEFORE NET
SECURITIES GAINS AND
EXTRAORDINARY GAIN. . . .
NET SECURITIES GAINS,

3 7 ,2 1 5 ,0 0 0
1 2 ,1 4 3 ,0 0 0
2 ,5 3 3 ,0 0 0
3 ,5 2 8 ,0 0 0
9 ,1 5 3 ,0 0 0
8 3 2 ,0 0 0
1 0 ,6 3 3 ,0 0 0
7 6 ,0 3 7 ,0 0 0

186,000

(2 ,2 4 1 ,0 0 0 )

(631,000)

(2 ,3 5 6 ,0 0 0 )

817,000

1 1 5 ,0 0 0

354,000

3 6 ,0 0 0

1,171,000

1 5 1 ,0 0 0

.
.

5,147,000
$. 6,318,000

D em a n d D eposits:
In dividual and B u sin ess........... ...........
B a n k s............................................................
U .S . G o v ern m en t and O th e r
P u blic F u n d s.........................................

$

1 5 1 ,0 0 0

Prim ary
In com e B efo re N et Secu rities G a i n s ..
In com e B e fo re Extraordinary G ain . .
N et In c o m e....................................................
Fully D iluted
In com e B efo re N et Secu rities G a i n s ..
In com e B efo re Extraordinary G a in . .
N et In c o m e....................................................

WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING...........................

$0.39
$0.56
$3.00

$ 0 .0 5
$ 0 .0 7
$ 0 .0 7

$0.52
$0.65
$2.56

—
—

2 ,1 0 4 ,7 6 0

CORPO RATE OFFICERS

4 9 1 ,4 0 5 ,0 0 0
2 2 ,6 3 5 ,0 0 0

6,372,000
14,813,000
32,527,000
$984,644,000

9 ,6 8 7 ,0 0 0
1 ,7 2 0 ,0 0 0
1 0 ,7 0 6 ,0 0 0
$ 1 ,0 5 3 ,6 8 7 ,0 0 0

$

11,453,000
320,577,000

T o ta l D em a n d D ep o sits..................
T im e D eposits:
Sav in gs.........................................................
Foreign B ra n ch es....................................
O th e r............................................................
T o ta l D eposits. ........................................
Funds P u rch ased .........................................
O th e r Borrow ings N et o f D is c o u n t.. .
A ccru ed In terest P a y a b le.........................
A ccru ed T a x e s an d O th e r L ia b ilitie s.

2 6 0 ,1 4 6 ,0 0 0
9 2 ,0 1 1 ,0 0 0
1 4 ,0 4 0 ,0 0 0
3 6 6 ,1 9 7 ,0 0 0

138,303,000
15,347,000
152,832,000
306,482,000
627,059,000
231,392,000
43,250,000
4,147,000
23,366,000
929,214,000

1 1 9 ,9 8 6 ,0 0 0
9 ,4 5 6 ,0 0 0
2 2 3 ,6 7 1 ,0 0 0
3 5 3 ,1 1 3 ,0 0 0
7 1 9 ,3 1 0 ,0 0 0
2 3 9 ,4 1 7 ,0 0 0
3 4 ,0 6 6 ,0 0 0
5 ,6 8 2 ,0 0 0
3 ,9 9 4 ,0 0 0
1 .0 0 2 ,4 6 9 .0 0 0

STOCKHOLDERS’ EQUITY
P referred S to ck , N o P ar V a lu e
A u th orized — 5 0 0 ,0 0 0 S h a re s......... ..
O u tsta n d in g —N one
C o m m o n S to ck , $ 5 Par V a lu e
A uthorized — 1 0 ,0 0 0 ,0 0 0 S h ares
Issu ed —2 ,1 7 6 ,9 7 3 S h ares
O u tsta n d in g — 2 ,1 0 5 ,4 5 5 S h a r e s .. .
C ap ita l S u rp lu s.............................................
R etain ed Earnings.......................................

10,885,000
25,281,000
20,960,000
57,126,000

Less— 7 1 .5 1 8 S h ares o f C o m m o n S to ck
in T reasu ry , at C o st...............................

2,105,455

1 2 4 ,6 7 1 ,0 0 0
6 ,5 1 0 ,0 0 0
1 3 5 ,9 4 8 ,0 0 0
5 ,0 2 5 ,0 0 0
2 4 5 ,3 8 0 ,0 0 0

423,747,000
17,216,000

$237,036,000
72,088,000

T otal Liab ilities.........................................

EARNINGS PER SHARE

$

LIABILITIES

T o ta l T im e D ep o sits..............................

A fter R elated In com e T axes o f
$ 3 2 7 ,0 0 0 , and $ 3 4 ,0 0 0 , R e sp e ctiv e ly .. .

INCOME BEFORE
EXTRAORDINARY GAIN _____
GAIN ON EXCHANGE OF
DEBENTURES, NET OF
RELATED INCOME
TAXES ..............................................................
NET INCOME.................................................

7 3 ,7 9 6 ,0 0 0

$127,511,000
19,000,000
121,284,000
399,000
221,775,000

C a sh an d D u e From B a n k s.....................
D u e From B a n k s—T im e ..........................
In v estm en t S ecu ritie s................................
T ra d in g A cco u n t S ecu ritie s....................
Funds S o ld ......................................................
Loans, Less R eserv e for Possible Loan
Losses o f $ 4 ,4 9 7 ,0 0 0 an d
$ 7 ,5 7 0 ,0 0 0 , R esp ectiv ely .....................
Prem ises and E q u ip m en t.........................
A ccru ed In terest o n S ecu rities and
L o a n s............................................................
O th e r R e a l E sta te........................................
O th e r A ssets................................ \ ...............

T o ta l S to ck h o ld ers’ E q u ity ............

(1,696,000)
55,430,000
$984,644,000

1 0 ,8 8 5 ,0 0 0
2 5 ,2 8 1 ,0 0 0
1 6 ,7 4 8 ,0 0 0
5 2 ,9 1 4 ,0 0 0
(1 ,6 9 6 ,0 0 0 )
5 1 ,2 1 8 ,0 0 0
$ 1 ,0 5 3 ,6 8 7 ,0 0 0

SENIOR V IC E PRESIDENTS
CHARLES C. LeBOURGEOIS

RODGER J. MITCHELL

THOMAS S. DAVIDSON

GUY W. BYRD, JR.

P resid en t an d C h ie f Executive O fficer

V ice C h airm an o f th e B oard

Personal B an k in g D ivision

B o n d and M oney M arket G rou p

HARRY M. ENGLAND

WALTER B. STUART III

MICHAEL A. FLICK

DOUGLASS R. LORE

C h a irm a n o f th e B oard

V ice C h airm an o f th e B oard

Loan A d m inistration D ivision

C o rresp on d en t Banking D ep artm en t

JOHN H. PALMER

SAMUEL D. HUGHES

FRED M. SMITH

Secretary o f th e C o rp o ratio n

U n ite d States/In ternation al G rou p

T ru st D ivision

CHRISTOPHER B. YOUNG
M etropolitan G rou p

MID-CONTINENT BANKER for February, 1 977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

59

tal RV shipments; motor homes, 28.4%;
truck campers, 13.0%; and camping
trailers, 14.2%. Any extreme excess of
these ratios in a portfolio may well rep­
resent greater flexibility in credit cri­
teria than is prudent, particularly if
the excess be the more expensive class
“A” motor homes.
Don’t disregard the fact that the
44.4% unit ratio of motor homes pro­
duces a 53.9% ratio of dollar sales be­
cause of the higher per unit cost. The
rapid emergence of the van conversion
as a combination leisure/basic mode
of transportation has some unproven
credit risk potential. Credit guidelines
must be established accordingly. Al­
though a balanced portfolio among the
products is a reasonable assumption,
a logical variable might well be a pre­
dominance of truck camper contracts
if the area supports good hunting and
fishing.
Maintenance program. To better un­
derstand your growing portfolio and
its expected performance, undertake a
regular analysis of management by the
numbers. Supplement it by participa­
tion in industry trade associations.
Management may take a preconceived
view of the cost of trade association
membership opposite tangible benefits.
But membership fees seldom total more
than the projected profit from four to
six contracts. This is a minor considera­

tion for having ready access to industry
statistics and trends.
Further, trade meetings allow an in­
valuable opportunity to exchange
views, problems and solutions with ex­
perienced lenders and other interested
parties.
Regional and national trade shows
permit firsthand inspection of products.
Since manufacturers supervise the dis­
play of their product at trade shows,
there exists an excellent opportunity
to build a good business relationship
to put you light-years ahead of the
competition. Moreover, there is little
to fear from consumer-oriented govern­
ment regulations and laws when there
is a healthy respect for each other’s
judgment.
In the past 90 days, I have observed
renewed activity among lenders main­
taining fairly substantial RV portfolios.
It is likely that their strategy is to ex­
ploit the expanding sales of RV prod­
ucts in an economy that is trending up­
wards.
It is not too late to jump on the
bandwagon. In most parts of the coun­
try, retail sales are seasonally affected.
Dealers should now be building and
replenishing inventories, so now is the
time to meet the quality dealers in the
area and let them know that you are
ready to assist with inventory financ­
ing. • •

Louisiana Junior Bankers
Will Meet March 17-19
The annual Study Conference and
Convention of the Junior Banker Sec­
tion of the Louisiana Bankers Associa­
tion will be held March 17-19 at the
Bellemont Motor Hotel in Baton
Rouge. Conference chairman is Don
Bordelon, vice president, Guaranty
Bank, Alexandria.

FIELDER

BORDELON

The conference will feature Robert
C. Albright, ABA director of member­
ship relations, and Walter Smiley, pres­
ident, Systematics, Inc., Little Rock.
Mr. Albright’s topic will be “ABA Re­
sources That Can Make You a Better
Banker.” Mr. Smiley will present the
first of three discussions on E FT S.
Other speakers will discuss the fu­
ture of financial institutions in Louisi­
ana, use of upstream correspondent
services and managing the human re­
source asset in banks.
A spouses’ program is planned.
Highlight of the final day will be a
president’s banquet and dance.
Junior Banker officers are Jerry A.
Fielder, vice president and trust officer,
Louisiana
Bank,
Shreveport—presi­
dent; Mr. Bordelon—vice president;
Harold E. Edwards, cashier, National
Bank, Bossier City—secretary; and
Rayford Simon, vice president, Guaran­
ty Bank, Lafayette—treasurer.

Meyers, Shwab A re Sr. VPs
A t Liberty of Louisville

D o n L a m o n is w a i t i n g
o n y o u r c a ll.
He — and Union Bank's Correspondent Banking
Department — can help you make it happen.
CALL DON, TOLL FREE AT 800-392-5821

UNION BaiUK

& TRUST CO. MEMBER F.D.I.C.

60 CO MMERCE ST., M O N TG O M ER Y, AL 36104
Alabam a's Largest Independent Bank.

60


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

L O U ISV IL L E —Liberty National has
promoted William D. Meyers and
Hugh M. Shwab III from vice presi­
dents to senior vice presidents. Mr.
Meyers is also cashier. Mr. Meyers
joined the bank in 1962 and Mr.
Shwab has been with Liberty since
1967.
Other promotions include Warren
Carter, Jim McDonnell and Larry
Price from assistant vice presidents to
vice presidents, and Carl Page from
house counsel to vice president and
house counsel.
Named directors were Wallace H.
Dunbar, chairman & CEO, Thomas
Industries, and Max Shapira, vice pres­
ident, Heaven Hill Distilleries.
MID-CONTINENT BANKER for February, 1977

the spokesman chuckled, “an alarm
would have been set off. And, needless
to say, People’s Liberty currently is re­
placing some older Mosler units with
newer ones!” • •

Hard Work Nets Zero for Burglars;
Depository Is a Tough Nut' to Crack
HE NIGH T D EPO SITO RY of Peo­
ple’s Liberty Bank, Fort Wright,
Ky., proved to be a “tough nut” to
crack for some unknown burglars, even
though they used heavy pry bars in an
attempt to open it.
A bank spokesman estimates that the
burglars worked about five or 10 min­
utes before giving up. Some time be­
tween 2 and 10:30 a.m. one Saturday
— the bank is closed Saturdays—wouldbe burglars managed to pry open only
the stainless steel shelving and the de­
pository door to the Mosler Magna
Dual Bag and Envelope Depository.
“But there was no way they could have
gotten into the receiving safe, which
is housed inside the bank,” the spokes­
man says.
Several successful night-depository
burglaries have been recorded in Ken­
tucky, the spokesman notes. Burglars
often use the “trap and fish” method
to obtain drop bags. But with the sys­
tem at People’s Liberty, the bag is
placed on an elevator-type shelf after
a depositor opens the door. When the

T

door is closed, the shelf lowers the
bag and pushes it into a chute, where
the bag travels into the receiving safe.
“If the burglars had tried to pry the
depository away from the bank’s wall,”

Dam aged night depository bears silent witness
to futile attempts by burglars to "liberate"
deposits from People's Liberty Bank, Fort
W right, Ky. Due to security design of the
Mosler M agna Dual Bank and Envelope De­
pository, even heavy pry bars proved futile
in penetrating receiving safe.

ACH Selling Conference
Set for Dallas by NACHA
DALLAS—The 1977 National Auto­
mated Clearing House Association
(NACHA) conference on selling ACH
services will be held here March 2022 at the Fairmont Hotel.
The conference will be geared to
educate marketing, business develop­
ment and commercial account officers
on the aspects of selling ACH services.
Topics to be covered include how
to choose corporate prospects, progress
of the interregional exchange pilot
project, how to organize a sales effort
and what calling officers should know
about ACH systems and cash manage­
ment. Presentations will be made on
marketing planning, internal training,
media relations and advertising. A re­
view of Sure-Pay marketing materials
and their uses will also be on the pro­
gram.
For more information, contact Ms.
Keith Kiley, Payments System Plan­
ning Division, ABA, 1120 Connecticut
Ave., N.W., Washington, D.C. 20036.

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THE IMAGE ISYOU THROUGH

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

6I

‘Golden Touch5 Account
Brings World of EFTS
Closer for Kansas Bank
LENN IRICK knows the frustra­
tion of not being able to spend his
own money in his own town because
a retailer didn’t know him and refused
to cash a check.
The irony is that Mr. Irick is execu­
tive vice president and director of data
processing for First National in Great
Bend, Kan., largest bank in town. The
bank serves the greater metropolitan
area of Great Bend, which has a popu­
lation of around 22,000.
“W e hope none of our customers ever
will have to face that problem again,’
Mr. Irick says. To assure this, last April
First National became the first com­
mercial bank in Kansas to provide elec­
tronic funds transfer services (E F T S )
from point-of-sale (PO S) terminals at
retail outlets.
Customers now can do much of their
daily banking at convenient discount
stores and supermarkets. They can
make deposits and withdrawals and
verify amounts they have on deposit
in total privacy. It’s a long stride to­
ward a cashless society, Mr. Irick points
out, and customers and retailers are re­
sponding enthusiastically.
Anyone is eligible for a Golden
Touch account. Customers are given
plastic identification cards. The card is
inserted in NCR 279 POS electronic
terminals at a participating retail outlet.
The customer then keys his unique
personal identification number (PIN )
on a module on the customer side of
the counter, out of view of a clerk or
other store customer. This tells the com­
puter on-line at the bank’s headquarters
that the authorized person is using the

G

TOP: To complete First Nat'l of Great Bend's
Golden Touch transaction, customer must key
unique identification number on module at­
tached to NCR 279 electronic teller at place of
purchase. This tells on-line computer that au­
thorized person is using card.
SECOND FROM TOP: NCR 279 electronic teller
terminal in First of Great Bend's main lobby is
used for opening Golden Touch accounts and
also for m aking transactions.
SECOND FROM BOTTOM: In just a few minutes,
customer of bank can open Golden Touch ac­
count, have card embossed and enter his PIN
(personal identification number) in system.
BOTTOM: NCR 796 CRT terminal in First of
Great Bend's main lobby provides on-line ac­
cess to all CIF accounts. Teller here is making
master file change. Terminal also is used by
officers seeking information before m aking de­
cisions about loans, check-cashing requests, etc.

62

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

card. The customer also can extract his
balance—hidden from the clerk—of the
amount on deposit.
At that point, the customer tells the
clerk operating the terminal how much
he wants to deposit or withdraw. The
amount is keyed through the POS ter­
minal, and the cash changes hands.
Meanwhile, the customer’s account is
updated automatically.
There are numerous advantages for
participating retailers, according to Mr.
Irick. The most obvious is that people
are going to spend their money where
they can get it. Retailers also get their
cash in hand and eliminate work asso­
ciated with demand-deposit or creditcard purchasers. In addition, there’s an
opportunity to eliminate bad-check
losses.
Check-guarantee „cards alleviate the
bad-check problem only in part. Checkguarantee cards have limits, and not
everyone qualifies for or has them. By
way of comparison, everyone who qual­
ifies to open a checking or savings ac­
count also can get a Golden Touch
card. Withdrawals from any account
are limited by availability.
Consumers also like the idea, he con­
tinues. It allows them to have instant
access to their own money, which can
be deposited in an interest-earning or
a demand-deposit account. It’s also a
much more convenient way of banking.
“Banks across the country are search­
ing for ways to become more acces­
sible,” Mr. Irick says. “Usually, they do
this by staying open longer hours or
more days. In effect, we are now open
wherever and whenever we install a
POS terminal, without investing in
bricks and mortar or hiring more staff.”
The Golden Touch concept is bring­
ing many new customers to the bank,
he verifies, and there will be a con­
siderable reduction in paper.
While the initial retail POS terminals
are in Great Bwid, the bank expects
them to spread quickly across the state.
Other banks have been invited to par­
ticipate in the concept, and several
have already signed up. First National
of Great Bend also sells other data
processing services to other banks, in­
cluding complete central information
files (C IF ).
The bank operates an NCR Century
201 computer in Great Bend and a
“twin” data processing installation in
Garden City. The two data processing

■MID-CONTINENT BANKER for February, 1977

The Federal Land Bank of Wichita
Over $2 Billion in Loans
Outstanding Indicates
Confidence in Agriculture

Statem ent of Condition
DECEMBER 31, 1976
ASSETS
Mortgage loans and contracts (unmatured b a la n c e )..................
Delinquent instalments, etc..................................................................
Loans in process of closing ...............................................................
Accrued interest receivable on mortgage loans and contracts .
Loans called for foreclosure, judgments, etc...................................

$2,037,535,808.33
4,282,847.47
5,536,867.34
79,011,381.27
2,825,119.62

Total .....................................................................................................
Less Provision for losses .............................................................

$2,129,192,024.03
26,475,853.06

Cash .....................................................................................................................
Investments in Securities and Federal Funds:
U.S. Government (par $10,843,000) .............................................
Federal F u n d s .....................................................................................
Notes Receivable:
Federal Land Bank A sso ciations...................................................
Other Farm Credit Banks
Accounts r e c e iv a b le .........................................................................................
Accrued interest receivable:
Notes and investm ents.................................................................................
Acquired p ro p e rty .............................................................................................
Buiiding Investment (cost) .................................................................
Less accumulated dep rec iatio n .....................................................
Furniture, fixtures, and E q u ip m e n t...................................................
Less accumulated de prec iation.....................................................

4,167,212.96
10,792,710.40
2,850,000.00

13,642,710.40

86,754.64
2,000,000.00

2,086,754.64
25,577.10
30,059.34
36,759.00

2,057,686.68
178,216.97
326,152.58
156,390.09

Other assets ................................................................................................. ......
TO TA LA S S E TS

$2,102,716,170.97

1,879,469.71
169,762.49
2,926,014.64

.......................................................................................

$2,127,680,491.25

LIABILITIES
Consolidated Federal Land Bank bonds outstanding ................
Less bonds o w n e d .............................................................................

$1,840,806,000.00
20,000,000.00

$1,820,806,000.00

System Wide Notes:
Face A m o u n t.......................................................................................
Less: Unamortized discount .....................................................

34,000,000.00
132,781.95

33,867,218.05

Notes payable:
Federal Land Bank A sso ciations...............................................................
Deferred proceeds of lo a n s ................ ............................................................
Accrued interest p a y a b le .................................................................................
Accounts payable .............................................................................................
Trust accounts ...................................................................................................
Other lia b ilities ...................................................................................................
Capital stock owned by Federal Land Bank Associations........ ' . ...........
Participation certificates owned by Federal Land Bank Associations .
Legal reserve.......................................................................................................
Earned s u rp lu s ...................................................................................................

8,256,525.91
4,796,904.35
43,828,633.61
51,721.36
27,813,937.27
4,372,640.65
122,027,840.00
1,136,265.00
34,239,180.00
26,483,625.05

TO TAL L IA B IL IT IE S .....................................................................................................................

$2,127,680,491.25

NOTES:
O f the mortgage loans $2,008,034,366.70 are assigned, as collateral for unmatured consolidated Federal Land Bank
bonds.
The $1,840,806,000.00 represents this bank’s participation in consolidated Land Bank bonds outstanding in the total'
amount of $17,127,175,000.00 for which the twelve land banks in the System are jointly and severally responsible.
The $34,000,000.00 represents this bank's participation in consolidated system wide notes outstanding in the total
amount of $728,150,000.00 for which the thirty-seven Farm Credit banks in the System are jointly and severally
responsible.

LÄNDBÄNK

In November the Wichita Land
Bank reached the $2 billion mile­
stone of long term credit service to
agriculture. This is a tribute to the
generation which organized the
cooperative credit system 60 years
ago. Three and, in some cases,
four generations have enjoyed the
benefits.
It is interesting to note 57 years
were required to reach an unma­
tured principal balance of $1 bil­
lion. This was doubled to $2 billion
in only three years, and present
trends indicate a balance of $3 1/2
billion by 1980.
Providing capital of this quantity
and quality means that the Federal
Land Bank is helping not only this
generation of farmers and ranch­
ers, but all sectors of the economy
throughout Kansas, Oklahoma,
Colorado, and New Mexico.

Senior Officers:
WM. S. MAY
President
J.K. PERRY
Vice President and Treasurer
HAROLD B. WOLFE
Vice President-Credit
MAX H. FOSSEY
Vice President-Field Services
JEROLD L. HARRIS
Vice President and Secretary
MICHAEL BONE
Vice President-Data Processing and
Research

Bank Directors:

The Bank of Generations

MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

VIRGIL A. PREWETT, Chairman
Cherokee, Oklahdma
H.C. HITCH, JR., Vice Chairman
Guymon, Oklahoma
LEO PAULSEN
Concordia, Kansas
LLOYD K. WALKER
Watonga, Oklahoma
BRUCE KING
Stanley, £Jew Mexico
DAVID J. MICHAL
Flagler, Colorado
CLEO C. AINSWORTH
Portales, New Mexico

63

systems soon will be communicating on­
line in a real-time mode. NCR 7200 in­
terfaces also will be installed to re­
duce the static input error syndrome,
Mr. Irick says.
“W e were the first bank in the state
to provide C IF services with a total
customer/bank relationship approach,”
he says, “including commercial loans.
W e started building toward this in
1968 and completed the package in
late 1974, when we first offered this
service to other banks.”
There was little customer reaction
while C IF was being implemented, he
recalls. “One man complained because
we sent him a unified statement, which
told his wife how much money he had
in a savings account.”
As a result, the program was modi­
fied to allow for individual situations,
he says. Almost all customers receive
unified statements at home; however,
some ask to receive all or parts of state­
ments at different addresses.
“When we started developing our
C IF, we were the second-largest bank
in our community. Now, we are No. 1,
with total assets of over $50 million.
Our assets have increased around 2/2
times since acquiring our first computer
— a Century 100.”
Mr. Irick credits this rapid and profit­
able expansion to management’s ability
to grasp the potential of C IF as a mar­
keting tool. “W e have identified people
who are prospects for different services
and have done some very successful
cross-selling, using stuffers and other
advertising.”
Equally important, C IF is used to
identify customers as individuals rather
than as numbers. “Mistakes still hap­
pen, but it is much less likely today
that we will return a check written
against insufficient funds if the custom­
er has other deposit accounts. With
C IF, the banker has the total bank/
customer relationship contiguously re­
ported,” he notes.
Also important, bank officers now
have instant access to information about
each customer’s total relationship with
the bank. “If someone calls or comes in
to discuss a car or personal loan or to
get authorization to cash a check, either
through printout or by accessing an on­
line NCR 796 C RT terminal in the
bank lobby, an officer can accurately
and quickly review our entire relation­
ship with the customer,” he says. “The
result is that our decisions are made
faster, and they are more relevant.”
The same painstaking attention to
detail helped launch the Golden Touch
account program successfully. Mr. Irick
investigated the capabilities of many
plastics manufacturers. This is a key
point, he says. The plastic card drives
the system. If it is faulty, or if plastic

64

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

NCR representative Ted Pilcher (I.) confers with
Ronald Goin, v.p. & senior systems analyst,
and Glenn Irick, e.v.p. and data processing
dir., respectively, First Nat'l, Great Bend. Bank
uses twin NCR Century 201 computers in Great
Bend and Garden City, Kan., for providing
CIF services for its own customers and other
financial institutions.

deliveries are slow, the entire system
can break down.
“W e also carefully selected termi­
nals for long-term as well as initial
feasibility,” he explains. “They are the
most powerful equipment available for
what we need and aren’t too different
from electronic sales terminals used by
many retailers. Also, we foresee retail­
ers eventually using the NCR 279 ter­
minals in conjunction with scanning
devices for automatically transferring
funds during sales transactions.”
The bank introduced the Golden
Touch account with a marketing splash
including newspaper, radio, television,
stuffers and display advertising and
also offered a $5 gift premium to any­
one opening an account for at least
$250.
Card embossing and encoding equip­
ment was set up at a station in the cen­
ter of the main lobby. Customers can
turn in applications at that station and
have their cards embossed in minutes.
At the same time, they may encode
their own identification n u m b ers
through an NCR 279 terminal directly
into the system or, alternatively, can
utilize an algorithmic PIN, which is
determined by the system and confi­
dentially delivered to the customer.
This provides real security, Mr. Irick
believes, since there is no way anyone
else can use that card without knowing
the unique number, which isn’t stored
in computer memory. “If a customer
thinks someone has learned his number,
he can come into the main office and
change the coding in minutes. Hus­
bands and wives opening single ac­
counts have separate cards with dif­
ferent identification encodings. If one
of them loses a card, it’s technically
possible for a knowing thief to dust the
magnetic stripe and read the code.
However, all the person losing the card
has to do is report that fact to us. W e
immediately put it on the ‘hot’ card

list, and the computer rejects that
entry. Even then, it isn’t necessary to
close the account. The other partner
can keep using the remaining card, and
we can replace the lost one in min­
utes.”
Response to the Golden Touch pro­
motion has been tremendous, Mr. Irick
says. Hundreds of a c c o u n ts w ere
opened during the first several weeks,
and, in many cases, the new customers
also opened demand-deposit and other
accounts.
Other participating banks utilize the
same terminals and Golden Touch
cards, but their customers are issued
cards with those banks’ names and
logos embossed. “Even if we don’t
process their data, we can still feed
Golden Touch transactions to them
with total security,” Mr. Irick con­
cludes. “The more participating banks,
the more reason retailers will have for
installing POS terminals, and the better
it will be for all our customers.
“At this time, our system has the ca­
pacity to drive other equipment, such
as inquiry and automated teller ma­
chine devices.” • *

Retirement Training Programs
Set by Kennedy Sinclaire
WAYNE, N. J.— Five r e tir e m e n t
training programs for bankers and con­
sultants involved in the administration
and sale of retirement plans have been
announced by Kennedy Sinclaire, Inc.,
financial marketing firm.
In addition to three one-week basic
training programs, the firm will intro­
duce two advanced seminars this year.
The basic course is designed for
individuals with less than one year’s
experience. The program includes a pre­
class correspondent course, five days of
instruction, sales manual, 35 mm slides
and reference notebook.
Sessions are scheduled for March 1418 at the Hyatt Regency O’Hare, Chi­
cago; July 25-29 at the Marriott,
Denver; and December 5-9 at the Hyatt
House, Cherry Hill, N. J.
The three-day advanced seminar is
designed for individuals with two year’s
experience in the retirement plan busi­
ness. The program will cover com­
petitive retirement products, marketing
retirement services, successful invest­
ment techniques and other subjects.
Sessions will be held May 2-4 at the
Marriott, Saddle Brook, N. J. and
October 19-21 at the Hyatt Regency
O’Hare, Chicago.
For more information, write: Kathy
Klaassen, Kennedy Sinclaire, Inc., 524
Hamburg Turnpike, Wayne, N. J.
07470.

MID-CONTINENT BANKER for February, 1977

THE BANK OF NEW ORLEANS AND TRUST COMPANY
AND SUBSIDIARY

Consolidated Statement of Condition
D E C E M B E R 31

ASSETS

1976

C a sh an d D u e fro m B a n k s .........................................................
S e c u ritie s
U .S . T re a su ry S e c u ritie s .........................................................
S e c u ritie s o f O th e r U .S . G o v e r n m e n t A g e n c ie s . . .
O b lig a tio n s o f S ta te s an d P o litical S u b d iv is io n s . . .
O th e r S e c u r i t i e s .........................................
5 ,2 7 0 ,7 0 8

1975 ___

$ 1 0 7 ,5 6 8 ,5 6 1

$ 4 4 ,3 9 1 ,0 0 7

$ 4 0 ,9 3 7 ,1 0 8
3 6 ,1 7 3 ,2 0 9
4 2 ,5 6 2 ,8 8 0

$ 2 2 ,2 8 2 ,9 1 5
2 4 ,8 7 7 ,0 4 1
4 0 ,8 8 1 ,1 5 4
7 8 0 ,0 0 0

$ 1 2 4 ,9 4 3 ,9 0 5

$ 8 8 ,8 2 1 ,1 1 0

$ 2 5 6 ,2 6 4 ,2 7 5
(2 ,6 0 0 ,0 0 0 )

$ 2 1 1 ,3 8 3 ,1 8 3
(2 ,4 9 6 ,6 4 2 )

N E T L O A N S O U T S T A N D IN G ................................

$ 2 5 3 ,6 6 4 ,2 7 5

$ 2 0 8 ,8 8 6 ,5 4 1

F e d e ra l F u n d s S o ld an d S e c u ritie s P u rch a se d
u n d e r A g re e m e n ts to R e s e l l ..................................................
B a n k P re m ise s an d E q u ip m e n t ...............................................
In te re s t E a rn e d b u t n o t C o l l e c t e d ..........................................
C u s to m e rs ' L iab ility o n A c c e p ta n c e s ...................................
O th e r A s s e t s ...........................................................

$ 8 7 ,2 0 0 ,4 4 0
3 ,1 2 9 ,0 5 4
4 ,5 0 6 ,3 9 0
7 ,0 9 5
3 ,5 1 1 ,6 5 0

$ 3 2 ,3 0 0 ,0 0 0
2 ,9 6 3 ,5 1 2
3 ,4 9 3 ,0 4 5
2 1 2 ,2 8 0
1 ,6 4 0 ,4 4 7

$ 5 8 4 ,5 3 1 ,3 7 0

$ 3 8 2 ,7 0 7 ,9 4 2

$ 1 6 3 ,5 3 2 ,5 8 7
7 6 ,2 5 9 ,7 5 4
2 3 1 ,7 7 0 ,3 8 7

$ 1 2 3 ,3 3 1 ,8 7 9
4 3 ,4 2 4 ,4 8 7
1 4 4 ,7 4 1 ,3 0 1

$ 4 7 1 ,5 6 2 ,7 2 8

$ 3 1 1 ,4 9 7 ,6 6 7

F e d e ra l F u n d s P u rc h a se d an d S e c u ritie s S o ld
u n d e r A g re e m e n ts to R e p u r c h a s e ....................................
A ccru e d T a x e s an d I n t e r e s t .........................................................
Q u a rte rly D iv id e n d P a y a b l e ......................................................
L iab ility o n A c c e p ta n c e s ..................................
O th e r L ia b il i t ie s .......................................

$ 5 4 ,4 6 5 ,0 0 0
2 0 ,4 9 6 ,6 8 4
1 4 1 ,4 3 0
7 ,0 9 5
2 ,6 0 7 ,4 1 0

$ 3 9 ,2 3 0 ,0 0 0
5 ,2 6 3 ,5 2 9
1 4 1 ,4 3 0
2 1 2 ,2 8 0
1 4 5 ,8 1 8

C ap ital N o t e .........................................................................................

$ 5 4 9 ,2 8 0 ,3 4 7
4 ,2 5 0 ,0 0 0

$ 3 5 6 ,4 9 0 ,7 2 4
4 ,2 5 0 ,0 0 0

$ 5 5 3 ,5 3 0 ,3 4 7

$ 3 6 0 ,7 4 0 ,7 2 4

T O T A L S E C U R IT IE S ......................................................
L o a n s O u ts ta n d in g — N e t o f U n e a rn e d In co m e o f
$ 4 ,0 8 6 ,3 8 5 in 1976 an d $ 3 ,9 1 3 ,6 4 7 in 1975
...............
R e se rv e fo r P o ssib le L o a n L o s s e s .....................................

TO TA L A SSE TS

........................

LIABILITIES
D e m a n d D e p o sits .............................................................................
S a v in g s D e p o s i t s .................................................
T im e D e p o sits ....................................................................................
T O T A L D E P O S I T S .................................................

T O T A L L IA B IL IT IE S

......................................................

SH A R EH O LD ER S' EQ UITY
C o m m o n S to c k , $ 1 2 .5 0 P ar V a lu e , 4 0 0 ,0 0 0
S h a re s A u th o riz e d , 2 5 0 ,0 0 0 S h a re s Issu e d
a n d O u t s t a n d i n g ..........................................................................
S u rp lu s ....................................
U n d iv id ed P ro fits .............................................................................

$

3 ,1 2 5 ,0 0 0
2 0 ,3 7 5 ,0 0 0
7 ,5 0 1 ,0 2 3

$

3 ,1 2 5 ,0 0 0
1 2 ,8 7 5 ,0 0 0
5 ,9 6 7 ,2 1 8

TO TA L SH A REH O LD ERS'
E Q U I T Y ...............................................................................

$ 3 1 ,0 0 1 ,0 2 3

$ 2 1 ,9 6 7 ,2 1 8

T O T A L L IA B IL IT IE S A N D
S H A R E H O L D E R S ' E Q U I T Y ............ .....................

$ 5 8 4 ,5 3 1 ,3 7 0

$ 3 8 2 ,7 0 7 ,9 4 2

Contingent Liability on Letters of Credit Issued but not Drawn Against — 12/31/76 - $3,204,245
12/31/75 - $7,057,597
Certain 1975 amounts have been reclassified to conform with 1976 presentations.

THE BANK OF N EW ORLEANS

Bankers with Ideas.

and tr u st company

Member FDIC

H E A D O F F IC E : B N O B u ild in g , Co m m o n & O ’ K ee fe

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

65

BankAmerica's Voluntary Disclosure Code
Opens Its Activities to Public Scrutiny
A

V O L U N T A R Y disclosure cod e has
b een p u t to g eth er and m ad e p u b ­
lic b y B an k A m erica C o rp ., h e ad qu ar­
tered in S a n F ra n cisco . T h e H C de­
scribes th e cod e as th e first of its kind
in ap p roach, scope of inform ation cov­
ered , sp ecific d etail set fo rth and d e­
gree o f com m itm en t to open a large
corporation’s activities to th e p u b lic
gaze.
A cco rd in g to B an k A m erica P resid en t
A. W . C lausen, who ap pointed th e task
fo rce th a t put th e cod e to g eth er, its
aim is “to perm it outsiders to read ily
evaluate B an kA m erica’s operations from
any p o in t o f view . O ur cod e goes b e ­
yond existing and p en d in g governm ent
disclosure regulations. I t is only a b e ­
ginning, of course, b ecau se tim es and
w h at p eople p erceiv e as relev an t b o th
ch an g e. F o r now , its g reatest signifi­
ca n ce is its e xisten ce.”
T h e disclosure p o licy statem en t is a
2 8 -p a g e d ocu m en t th at includes in tro­
d ucto ry rem arks b y M r. C lausen, a
b rie f explanation of o b jectiv es and con ­
straints, th e code itself, an explanation
of how to obtain th e inform ation co v ­
ered and an append ix on aspects o f
com m ercial b an k in g relev an t to dis­
closure issues.
T h e fu ll cod e alone runs m ore than
4 ,5 0 0 words and includes 7 0 categories
o f inform ation abou t b an k and corpora­
tion activ ities th a t w ill b e m ad e avail­
ab le to th e p u blic.

T h e code is organized to focus on
th e th ree m ain fu nctions B an k A m erica
p erfo rm s: its role as a financial in te r­
m ed iary (th e re are 2 4 categ ories o f
disclosure fo r this fu n c tio n ); its tru st,
in v estm en t and m oney m ark et services
(1 1 c a te g o rie s); and its operations as
a corp orate enterp rise ( 3 5 c a te g o rie s).
S e ttin g a stand ard th a t com m its all
lev els
o f m an ag em en t to
cand or,
straightforw ardness and consistency,
th e cod e identifies five key o b je ctiv e s:
1. T o provide B an k A m erica m an ag e­
m en t w ith a continu in g p o licy guide to
effectiv e disclosure.
2 . T o disclose inform ation identified
b y th e corporation’s con stitu en cies to
b e usefu l.
3 . T o do so in lan g u ag e easily u n der­
stood b y laym en as w ell as b y p ro­
fessionals.
4 . T o give th e p u blic read y access to
inform ation
rep o rted
to
regu latory
ag en cies w h ere p erm itted .
5 . T o com m it th e corporation to th e
proposition th a t all m aterial fa cts about
its op eration should b e av ailable fo r
scru tiny, su b je c t only to n ecessary co n ­
straints.
T h e cod e lists sp ecific constraints
th a t cov er p rivacy rights o f individual,
in stitu tional and corp orate custom ers
and proprietary inform ation th a t gives
B an k A m erica com petitors needless ad ­
v an tag e. O th er constraints p ro h ib it dis­
closure of inform ation th a t m ig h t cau se

Members of BankAmerica's disclosure code task force are shown during work session. They are,
I. to r.: Lawrence E. Nerheim, s.v.p. (BankAmerica Corp.); Arthur V. Toupin, e.v.p.; C. M. van
Vlierden, e.v.p.; Leland S. Prussia, task force ch. and e.v.p. & cash.; George W. Coombe Jr.,
e.v.p.; Jam es F. Langton, s.v.p.; and Irwin L. Gubman, sr. counsel & asst, sec., who served as
task force sec. & staff dir. Not pictured is Jerry G. South, v.p. & corp. sec.

66


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Federal Reserve Bank of St. Louis

or aid sp ecu latio n in th e corporation’s
stock, inform ation in a form th a t could
resu lt in m isin terp retatio n and inform a­
tio n th a t doesn’t ju stify th e expense of
providing it.
B an k A m erica em phasizes th a t co n ­
straints are in ten d ed fo r use only w h ere
“clearly ap p rop riate.” T h e y are n ot de­
signed to d eter anyone fro m seeking
inform ation fro m th e corporation.
D isclosure categ o ries range from th e
b an k ’s consu m er in te rest rate s to b rea k ­
downs on loans to foreign governm ents
and cen tral banks. M u ch o f this in­
fo rm atio n alread y appears in annual
and q u arterly reports or w ill b e added
this y ear. R ep orts on o th er b a n k a c­
tivities ap p ear in sep arate b a n k p u b li­
cations. H ow ever, som e inform ation
w ill b e accessible fo r th e first tim e—
m ark et and b on d services, in tern atio n al
sy n d icate loans, m an agem en t o f cor­
p o rate flow o f fu nd s, tru st d ep artm en t
services and th e b oard o f directors.
In term s o f financial in term ed iary a c­
tivities, fo r exam p le, th e co d e requ ires
disclosure o f such n ew item s as de­
posit and loan figures b y m ajo r cu r­
ren cies (in U . S. dollars, B ritish pounds,
D eu tsch e m arks, F re n c h fran cs, Italian
lira and Ja p a n ese y e n ) ; d etailed infor­
m ation on th e effects o f fo reig n ex­
ch an g e trad in g and tran slation on p ro f­
its; and d ollar volum e o f cred its to nonconsolid ated affiliates and oth er insti­
tutions in w h ich th e b a n k has invest­
m ents.
T o b e provided also is a breakdow n
o f B an k A m erica’s loan po rtfo lio, in­
clud ing consu m er loans (fo r auto p u r­
ch ase and lease lines, B ankA m ericard ,
hom e im p ro vem en t and personal loans ) ,
com m ercial and indu strial loans and
fo reign loans. D a ta on “pro blem loans”
w ill b e d ivulged w h en w id espread pu b­
lic co n cern exists abou t a particu lar
industry. D a ta on n on perform ing loans
fo r w h ich in itial co n tractu rai term s are
n o t b ein g m e t also is s u b je ct to dis­
closure.
T h e cod e obliges th e b an k to reveal
its 10 larg est holdings of m u nicipal
bonds and notes and th e m ark et rating
o f each . Also to b e disclosed are m u­
n icip al secu rities holdings b y ratings
as w ell as particu lars relatin g to d e­
fau lts, extensions or m oratorium s.
T h e b an k w ill give m ore inform ation
th an b efo re to hom e loan applican ts,
in clu d in g fa cts ab o u t title insurance,
closing costs and appraised v alu e of
p ro p erty serving as co llateral. T h e b an k

MID-CONTINENT BANKER for February, 1977

is for Attention.

Which is what you get plenty of from an Integon representative. Even after
he sets up your program and makes sure everything is running smoothly, he
still pays regular visits. To keep things that way. And if you need him in-between times, a
call will bring him on the run.
A is also for Ability and Assistance, two more things you get with our representative.
H e’s a specialist in his field. Yet, he knows enough about your business to talk on your
terms. He trains your new personnel. He furnishes all the supplies you need: payment
charts, forms, certificates — even a thorough Reference Manual detailing the entire Integon
program. And all the paperwork is designed for quick and easy completion by loan officers,
not underwriters.
A is for Accounting, too. Because we can
send you a monthly computerized status report
which shows your commissions, claims, premium
income by branch and by month, plus year-to-date
totals and aggregate totals since the beginning of
your contract. S o you 11 know exactly where you
stand.
And finally, A is for Attitude. You’ll like ours,
especially the way our representative works close­
ly with you. To improve market penetration, cut
the loss ratio, and make your whole operation as
easy and profitable as possible.
To find out more, just place a collect call to
J . Wayne Williard, Jr., Vice-President, Credit
Insurance, at 919/725-7261. Or write him at Integon
Life Insurance Corporation, P O . Box 3199,
Winston-Salem, N. C. 27102.
And get him to give you the rest of our
alphabet.
J . W a y n e W illia rd , J r ., V ic e -P re s id e n t

©
MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

in t e g o n 67

also w ill disclose totals o f loans m ade
to directors and th e ir fam ilies.
B an k A m erica w ill lim it its response
fo r inform ation to reason able d im en­
sions, th e co d e states. I t reserves th e
rig h t to im pose ch arg es, w h ere appro­
p riate, sufficient to cov er costs o f p re ­
p arin g and d elivering d ata.
C h airm an o f th e task fo rce th a t p u t
th e cod e to g eth e r w as L ela n d S. Prus­
sia, execu tiv e v ice p resid en t and cash ­
ier, B an k o f A m erica, and treasurer,
B an k A m erica C orp. H e says th a t som e
o f th e co d e’s individ ual item s o f finan­
cia l d ata are provided b y oth er b an k in g
institu tions, b u t th a t th e task fo rce b e ­
lieves th e B an k A m erica co d e m arks
th e first tim e so m any item s hav e b e e n
m ad e acce ssib le on a co n sisten t basis
b y a single firm.
“W h e n w e talk ab o u t co n sisten cy ,”
M r. Prussia adds, “w e m ean w e’re co m ­
m itted to providing this inform ation
a t all tim es, w h eth er it’s good new s or
b a d .”
M r. C lausen em phasizes th a t th e task
fo rce didn’t set ou t to devise m erely a
co d e o f co n d u ct” as oth er firms have
b e e n doing. “W e are co n v in ced ,” he
says in th e “P resid en t’s P rea m b le ” to
th e cod e, “th at a fa r m ore pow erfu l d e ­
te rre n t to w rongd oing is a cod e o f dis­
closure. W h a t b e tte r in h ib ito r to m is­
co n d u ct or inep tness th an th e certain
know led ge th a t one’s actions w ill b e ­
com e know n?” • •

Bank Profit to Be Theme
Of Convention March 14-16
Of Independent Bankers
W A S H IN G T O N , D . C .— B an k p ro f­
it w ill b e th e cen tral th em e o f th e In ­
d ep en d en t
B an kers
A ssociation
of
A m erica’s 4 7 th annual conv ention to
b e held M arch 1416 at th e W ash in g ­
to n H ilto n here.
T h e k ey n o te ad­
dress w ill b e given
b y IB A A P resid en t
C h arles O . M ad ­
dox Jr ., presid ent,
Peoples B an k , W in ­
der, G a.
A p an el on “In ­
d ep en d en ce, P ro f­
M ADDOX
ita b ility and S e r­
v ice ” w ill b e led b y G eorge D em pesy,
v ice presid ent, M an d ab ach & Sim s,
In c ., C h icag o ; and A lex Sheshunoff,
p resid en t, Sheshunoff & C o ., A ustin,
T e x ., w ith M r. M ad d ox as m oderator.
An association lo b b y p an el is sch ed ­
uled on “W h a t W e an d O th ers Aim
F o r .” M r. Sheshunoff w ill co n d u ct a
sem inar on b an k p ro fitability called
“H ow to E n h a n c e th e B otto m L in e .”
G ordon B arn es, m eteoro lo gist, w ill

68

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Federal Reserve Bank of St. Louis

discuss “C lim ate and C rop s: 1 9 7 7 O u t­
look.” “G u id elines
fo r
C o m pliance
W ith th e E q u a l C red it O pportunity
A ct” w ill b e d escribed b y N eil B u tler,
asso ciate d irecto r, division o f consum er
affairs, F e d e ra l R eserv e B o ard staff,
W ash in gton , D . C.
E n te rta in m e n t w ill in clu d e a festiv e
d inner M arch 14, w h en a program w ill
b e p resen ted b y th e N ew V irginians
of V irg in ia P o ly tech n ic In stitu te . D a n c ­
in g w ill follow . T h e con v en tio n w ill
en d M arch 1 6 w ith a b a n q u et. In b e ­
tw ee n w ill b e a b u ffet b re a k fa st and
luncheons.

and C E O , S carb ro u g h Stores, A ustin,
T e x .; E l P aso (T e x .) B ran ch , D allas
F e d — Jo sefin a A. Salas-Porras, execu ­
tiv e d irecto r, B I L an g u ag e Services,
E l P aso ; P h ilad elp h ia F e d — Je a n A.
C ro ck ett, professor o f finance, W h arton
School, U n iv ersity o f P enn sylvania;
and
S an
F ra n cisco
F e d — D oro thy
W rig h t N elson, d ean and professor of
law , U n iv ersity of Sou th ern C aliforn ia
L a w C en ter. E a c h w ill serve fo r th ree
years.

Fed Bank and Branch Boards
Report Increase in Number
Of Women, Minority Directors

W A S H IN G T O N , D . C .— In su ran ce
guidelines fo r au tom ated clearin g house
(A C H ) associations and th e ir p artici­
p atin g financial institu tions h av e b ee n
recom m en d ed b y th e N ation al A uto­
m ated
C learin g
H ou se
A ssociation
(N A C H A ).
A ten tativ e position— su b je c t to final
approval b y th e N A C H A m em bership
— was ad opted at th e N A C H A b o ard ’s
m eetin g S e p te m b e r 2 8 .
T h e proposed guid elines recom m end
th a t A C H s carry fid elity in su ran ce
again st loss through d ishonest acts of
any o f its officers, d irectors or em ploy­
ees in th e am ount of $ 1 0 m illion. D e ­
d u ctib le, it w as proposed, should n o t
exceed $ 1 0 ,0 0 0 .
T h e p re sen t position d oesn’t requ ire
specific form s and lev els o f insurance
cov erage fo r p articip atin g financial in ­
stitutions, b u t N A C H A u rged th e in ­
stitutions to carry in su ran ce in k eep in g
w ith th e low er lim it su ggested b y th e
A m erican B an kers A ssociation’s recom ­
m end ation fo r b la n k e t b o n d fid elity and
fo rg ery -an d -alteratio n insurance. T h e
lev el o f cov erage fo r p articip an ts should
b e in creased to conform w ith th e u p ­
p e r lev el o f th e A B A -su ggested range
b y Jan u ary 1, 1 9 7 8 , it w as recom m end ­
ed.
A ppendix C o f th e N A C H A op erat­
in g rules now w ould call for cov erage
eith er in th e am ounts recom m en d ed b y
th e A B A , plus $1 m illion in additional
fid elity insurance again st em ployee dis­
hon esty, or an am ount e q u al to th e
to tal assets o f th e p articip atin g financial
institu tion. T h e la tte r provision, a
N A C H A spokesm an says, is designed
to acco m m o d ate in stitu tions w ith as­
sets o f less th an $ 7 5 0 ,0 0 0 .
F o rm erly , N A C H A op eratin g rules
req u ired co v erag e to th e u p p er lim it
as recom m end ed b y th e A B A . A cco rd ­
in g to a study b y fe d era l regulatory
agen cies, 98% o f th e co m m ercial banks
in th e U . S. alread y carry th e m inim um
am ount o f in su ran ce suggested b y th e
A B A , and 60% carry th e m axim um ; 84%
o f tho se banks also carry $1 m illion in
excess fid elity in su ran ce, th e study
show ed.

W A S H IN G T O N , D . C .— O f th e 5 0
new d irecto rs serving on F e d b an k and
b ra n ch board s this y ear, 11 are w om en.
O verall, this y ear’s board s o f th e banks
and th eir b ran ch e s in clu d e 1 7 w om en
and 1 6 m em bers of m inority groups.
O f th e w om en directors, four are on
h ead office board s and 1 3 on b ra n ch
board s. M inorities rep resen ted in clu d e
six b lack s, sev en H isp anics, tw o A m eri­
can Ind ians and o n e O riental. T h re e
o f th e b lack s are on h ead office board s.
D u rin g 1 9 7 6 , th e re w ere sev en w om ­
an d irectors in th e F e d system , all at
bran ch es. In ad dition, 1 9 7 6 directors
in clu d ed five b lack s— inclu d ing tw o
a t h ead offices— five H isp anics, tw o
A m erican In d ian s and one O rien tal.
O n e of th e n ew w om en directors a t a
h ead office this y e ar fo rm erly chaired
th e b ra n ch b o ard a t S an A ntonio.
O f th e fo u r w om en d irectors at head
offices, th ree are C lass C directors (a t
P h ilad elp h ia, D allas and San F ra n c is ­
c o ) , w h ile one is a Class B d irecto r (a t
S t. L o u is ). Class B consists o f rep re­
sen tatives of business, indu stry and
co m m erce; Class C consists of m em bers
ap pointed b y th e B o ard of G overnors
in W ash in g to n to rep resen t th e p u blic,
and Class A is m ad e up o f activ e b an k ­
ers who rep resen t F e d -m e m b e r banks.
Class A and B directors are e le cte d b y
m em b er banks in th e ir d istricts.
T h e re are 2 6 9 d irectors in th e F e d
system , 1 0 8 o f th em a t th e 12 F e d e ra l
R eserv e banks and 1 6 1 a t th e 2 5
b ran ch es. E a c h b o ard o f th e 1 2 F e d
banks has nin e m em bers.
B ra n ch
board s consist o f e ith er five or sev­
en m em bers. A p pointm ents to tho se
boards are m ad e b y d irectors o f th e
individual F e d banks and b y th e B oard
o f G overnors.
A m ong n ew w om en d irecto rs are th e
fo llow ing:
S t. L ou is
F e d — V irginia
M itch e ll B a ile y , v ice presid ent, B aile y
C o rp ., L ittle R o ck ; D allas F e d — M ar­
g are t Scarb ro u g h W ilson , chairm an

ACH Insurance Guidelines
Recommended by NACHA

MID-CONTINENT BANKER for February, 1977

Y O U R B A N K R E A LLY
W A N TS Y O U T>
'A P P R O V E ” .
B U T W IT H C A U T IO N

I

And the most cautious thing you can do is_ establish a proven Collateral Control
Program. That’s where we can help. W e’re SLT Warehouse Company and
we’ve been guaranteeing and servicing inventory collateral for over 50 years.
Now that more and more customers are calling on you to finance expansion,
our experience and service becomes more important than ever. To learn
how we can help you say

<ss> SLT WAREHOUSE COMPANY

Y e s ’ but with caution,
call or write today.
WIUJ- ))

P 0. 8 ox 24 2 . St Louis. Mo. 63166 • 314/241-976 0 • Offices in Major Cities
NATIONWIDE COLLATERAL CONTROL SERVICES

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Central Trust's Check Guarantee
Adopted by Cincinnati-Area IGAs

C o n cord C o m pu tin g C o rp .’s C oncord
7 5 0 , a cu stom er activ ated on-line ch eck
authorization term in al th a t enables
shoppers to pre-app rove th eir ow n
ch eck s fo r cash in g fo r IG A personnel.
T erm in als are acce ssib le to m u tu al cu s­
tom ers o f IG A and th ese O w l netw ork
financial in stitu tion s: C en tral T ru st;
C ovington (K y .) T ru st; B o o n e S tate ,
F lo re n ce , K y .; and F irs t N ational, M id ­

C IN C IN N A T I— C e n tra l
T ru st’s
“O w l” n etw o rk system o f ch e ck cashing
verificatio n has b e e n ad opted b y a
n u m ber of IG A superm arkets in th e
g reater C in cin n ati-n o rth ern K en tu cky
area.
E q u ip m en t fo r th e IG A program is
O FFIC ER S

CONDENSED R EPO RT OF

W. V. ALLISON, C hairm an of
the B oard & C h ief E xecu tiv e
Officer
DONALD D. DOTY, P res. &
C h ief Operating Officer
R. W. BU T LER , Sr. V.P.
BEN HARNED, JR ., Sr. V.P.
B A R R Y M. HUDSON, S r. V.P .
BRUCE E, O A K LEY, Sr. V.P .
N EA L T. SEIDLE, Sr. V .P . &
Sr. Trust Officer
ROBERT C. BEARD, V.P.
PA U L D. BROWN, V.P.
E . LYNN CASW ELL, V.P.
B ET T Y D ALRYM PLE, V.P. &
Trust Officer
RONALD E. SWIGART, V.P.
DENNIS O. CUBBAGE, JR .,
Cashier
CHARLES SPR U ELL,
Com ptroller
GLENN BONNER, Asst. V.P.
CHARLES BRANNAN,
Asst. V.P .
FR ED N. BROWN, Asst. V.P .
ALLEN MORGAN, Asst. V .P .
JOHN SPANGENBURG, JR .,
Asst. V.P.
RICHARD F . L E E, A uditor
GLENROY B IL L B E ,
Asst. C ashier
W ILLIAM B. DAVIS,
Asst. Cashier
CECIL P . EP P E R L E Y ,
Asst. Cashier
JA C K W. JENSEN,
Asst. Cashier
STEVE WARWICK,
Asst. Cashier
KENNETH YOUNG,
Asst. Cashier
SPENCER K ISSELL, Trust O f­
ficer—Investm ents
RO BERT FR A SER , Asst. Trust
Officer
BERTHA LANCKRIET, Asst.
Trust Officer—Operations

Wk

first n a t i o n a l

^ ^ L lN
“

T

bank

BARTLESVILLE

BARTLESVILLE, O K L A H O M A

AT CLOSE OF BUSINESS DECEM BER 31, 1976
RESOURCES
Cash and Sight E xch an ge ...................................$ 29,271,767.41
U. S. Government Securities .............................

22,045,392.73

Municipal Bonds .......................................................

37,703,197.34

Other Securities .........................................................

153,601.00

............................................................................

60,076,831.33

..........................................................................

3,392,182.80

Loans
Leasing

B ank Prem ises, Fu rn itu re, Fixtu res and
Equipm ent ................................................................

1,842,850.60

Interest Earned—Not Collected ........................

1,509,577.12

Other Assets ...............................................................

176,472.78
$156,171,873.11

LIA B ILIT IES
Deposits
Demand ..................................... $103,338,344.11
Time and Savings ................

28,088,363.97

Total Deposits ............................................................. $131,426,708.08
Federal Funds P u rc h a s e d .....................................
Reservations

1,500,000.00

.......................

2,203,772.44

Capital Accounts
Capital

....................................... $

Surplus ..........................
Undivided Profits ..................

2,100,000.00

Lloyd Riggs Dies

3,020,000.00
15,921,392.59

Total Capital Accounts .........................................

21,041,392.59

Total Liabilities and Capital A ccounts ____ $156,171,873.11
M ember Fed eral Deposit Insurance Corporation

ANNOUNCING
THE 28th ASSEMBLY
FOR BANK DIRECTORS
AT
The Breakers, Palm Beach, Florida, May 12-15, 1977
Concentrating on
Contemporary Banking
Legislation, Regulation
and Public Policy
For information write The Foundation of
The Southwestern Graduate School of Banking
SMU Box 214, Dallas, Texas 75275
or call A /C 21 4/691-5398.

70

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

d letow n, O .
IG A shoppers w ho don’t h av e O w l
cards are ab le to apply fo r IG A C h eck
card s in order to gain access to th e
equ ip m en t. W ith th e inaugu ration of
this program , th e cu stom er’s O w l C ard
or IG A C h eck C ard rep laces all form er
IG A ch e ck cash in g card s, w h ich w ere
valid only in th e issuing store.
T h e O w l system is op erativ e in 5 5
K ro ger stores and 19 L ib e ra l m arkets
in th e area.
In ad dition, C en tral T ru st has an­
nou nced th a t th e G E E v e n d ale F e d e ra l
C U , rep o rted ly O h io’s larg est fed eral
cred it union, w ill jo in th e O w l n e t­
work. T h e netw ork, accord in g to a
b an k spokesm an, w ill b eco m e th e first
system o f financial institu tions in th e
M id w est to in clu d e a fe d eral cre d it
union am ong its m em bers. T h e m ove
is exp ected to tak e effe ct b y spring.

L lo y d C . Higgs,
6 3 , identified w ith
Bank News, K ansas
C i t y - b a s e d b an k ­
in g jo u r n a l , for
n early 4 0
years,
died Jan u ary 3 1 .
He
su ccu m b ed
from a stroke suf­
fe re d th e d ay b e ­
fo re.
M r. R iggs joined
th e ed itorial staff of Bank New s in 1 9 3 6
on grad uation from th e K ansas State
C o llege D ep artm e n t of Jo urnalism . E x ­
ce p t for a W o rld W a r I I stin t in m ili­
tary service, he had b ee n w ith Bank
New s and related m agazines continu­
ously u n til his re tirem en t Jan u ary 2 ,
1976.
M r. R iggs served in all editorial ca­
p acities, in clu d in g a score o f years as
ed itor. In 1 9 6 9 h e assum ed additional
duties as pu blisher, co n tin u in g to super­
v ise ed itorial p o licies.
O n his retirem en t in 1 9 7 6 , he was
retain ed as con su ltan t p u blisher, from
w h ich post h e m aintained m any of the
con tacts d ev eloped through th e years
w ith bankers o f th e M id w est and Sou th­
w est.

MID-CONTINENT BANKER for February, 1977

Sorrells Observes Anniversary

Statement of Condition
December 31, 1976
RESOURCES
Cash and Due from Banks .................................... $ 8,163,778.75
U.S. Government Bonds ........................................
19,491,703.68 $27,655,482.43
Other Bonds andSecurities .............................................................
Federal Funds Sold ...............................................................................
Loans ......................................................................................................
Bank Building andEquipment ...........................................................
Other Assets
....................................................................................
V irgil B. Sorrells, vice president and director,
National Stock Yards National, National City,
III., completed 50 years of service with the
bank in December. His career began in the
bank's mail room during his high school years.
After graduation, he joined the transit de­
partment and he has had experience in all
bank departments, including correspondent. His
duties now include overall supervision of the
bank. He is a member of the 50-Year Club
of the Illinois Bankers Association.

Education:

11,562,305.80
5,000,000.00
28,659,712.54
1,056,386.58
634,875.63
$74,568,762.98

TOTAL RESOURCES
LIABILITIES
Capital Stock ............................................................. $ 750,000.00
Surplus .........................................................................
2,800,000.00
Undivided Profits ..................................................... 3,424,749.32
Reserves .......................................................................
898,727.58
Demand Deposits
Savings Deposits
Interest Collected
Other Liabilities

..................................................................................
..................................................................................
Unearned .............................................................
.................................................................................

TOTAL LIABILITIES

$7,873,476.90
35,386,467.07
30,357,543.89
432,454.86
518,820.26

....................................................................... $74,568,762.98

Student Advisory Board
Teaches Responsibilities
O F F IC E R S

H igh school students in th e area of
C itizen s B an k , Jefferso n v ille, In d ., have
g o tten a ch an ce to learn ab o u t m an­
aging personal incom e, a cce p tin g cre d it
responsibility and financing a college
ed u cation . T h a t’s th e aim o f th e b an k ’s
stu d en t advisory b o ard , w h ich is in its
fifth year.
T h e b oard m eets this goal b y m aking
presen tations exp lain in g th ese activ ities
to h ig h school groups. A n other o f th e
b o ard ’s goals is to d em onstrate th e need
fo r you th involvem ent in com m unity
affairs. T o accom plish th a t goal, th e
area’s students h elp ed a t C hristm as
tim e w ith C itizen s B an k ’s “E m p ty
S to ck in g F u n d ” fo r n eed y ch ild ren and
b y p articip atin g in th e R e d Cross blood
program b y assistin g w ith b lood drives
in th eir schools.

Bank Gets Easter Seal Aw ard

SYLYESTER F. W ITTE .............
W ALTER C . B R A N N E K Y ........
FLETCHER E. WELLS ...........
HUBERT V. KRIEGER .............
JERRY L. BYRD ......................
EARL R. LUNDIUS .................
W IL L IA M O . ROBARDS ........
FRED G. FETSCH ...................
LEONARD W . HUDDLESTON
J A C K K. ISH ER W O O D ........
M ARIE W E L LIN G H O F F ........
N A N C Y C O L E ........................
RUTH DICKEY ........................
V IR G IN IA F. HAUSER .........
CHARLES C . SM ITH .............
EARLENE TA Y LO R .................
W A L L A C E J, SHEETS ...........
F. GILBERT BICKEL ...............
IRM A G. H ASTINGS .............
VERA BLUM ..............................
PHYLLIS SPELL ........................

............................................... President
................... Executive Vice President
Senior Vice President and Cashier
............... Auditor and Comptroller
..................................... Vice President
..................................... Vice President
....................................... Vice President
................. Assistant Vice President
................. Assistant Vice President
................. Assistant Vice President
................. Assistant Vice President
................................ Assistant Cashier
................................ Assistant Cashier
................................ Assistant Cashier
.............................. Assistant Cashier
................................ Assistant Cashier
....................................... Trust Officer
..................................... Vice President
......... Manager Proof Department
........... Assistant Manager— Facility
........... Assistant Manager— Facility

D IR E C T O R S
HERBERT W . ZIERCHER, Chairman
J O H N H. ARMBRUSTER
F. GILBERT BICKEL, D.D.S.
W ALTER C . BRANNEKY
A NDR EW W . G A R O F A L O
ROBERT E. JO N E S
FRANK J. LAM A
EARL R. LUNDIUS
HARRY A . McKEE, JR.
EDW IN C . RYDER, JR.
FLETCHER E. WELLS
SYLVESTER F. W ITTE

.. . b i g g e r to
s erve y o u b e t te r
Representatives of American Nat'l, Chatta­
nooga, are presented with Easter Seal Society's
outstanding achievement aw ard in recognition
of bank's more than 30 years' service to the
organization. From I.: Gerry U. Stephens, e.v.p.;
John G. Chisolm, comm'l loan off., both of
American Nat'l; Mrs. Rachel Walker, regional
dir., Easter Seal Society. Mr. Chisolm is treas.,
Hamilton County (Tenn.) Easter Seal Society.

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

& TRUST CO.
s Road
63114
MEMBER F.D .I.C .
71

Board Room News
Promotions • Elections • Earnings • Retirements

HC, Correspondent Changes
Involving Johnson, Butts
Announced by Third National
N A S H V IL L E — P .
T ho m as
B u tts,
senior v ice p resid ent and h ead o f the
correspond ent
b an k in g
d ep artm en t,
T h ird N ation al, last m onth w as nam ed
first v ice p resid ent, T h ird N ational
C o rp., th e b an k ’s H C . H e w ill b e re ­
sponsible m ainly fo r relatio ns b etw een
th e H C and its seven b an k in g affiliates
outside N ashville.
H . E . (S o n n y ) Jo h n so n Jr. was p ro­
m oted from v ice p resid en t to senior
v ice p resid en t and su cceed s M r. B utts
as correspond ent b an k in g d ep artm en t

F o rm er Illinois L ie u te n a n t G overnor
N eil F . H artig an has jo in ed th e ban k
as a v ice p resid en t and R e a l E s ta te R e ­
search C o rp., a subsidiary of F irs t C h i­
cago C orp., as presid ent.
M r. H artig an succeed s S tep h en R .
N ichols, w ho has m oved from presid ent
to ch airm an o f R e a l E s ta te R esearch
C orp. A nthony D ow ns, fo rm er ch air­
m an, is now v ice chairm an. T h e th ree
m en fu n ctio n as th e senior m an age­
m en t team fo r th e real e state con su lt­
in g firm.

DRICK

Sloane Joins Corres. Division
At Liberty N at'l, Louisville

Drick Retires From 1st, Chicago,
Hartigan Named Vice President
C H IC A G O — Jo h n E . D rick , ch air­
m an o f th e execu tiv e co m m ittee and
fo rm er p resid en t of F ir s t N ational, has
retired , com pleting 4 1 years of service
w ith th e bank.
M r. D ric k jo in ed th e b an k in 1 9 3 5
in its W a ll S tre e t O ffice, cam e to C h i­
cag o in 1 9 4 2 , w as nam ed a v ice presi­
d en t in 1 9 5 1 , senior v ic e p resid ent in
1 9 6 4 and p resid en t o f th e b an k and
F irs t C h icag o C o rp ., p aren t H C , in
1 9 6 9 . H e has b e e n ch airm an of th e
e xecu tiv e co m m ittee sin ce 1 9 7 4 .
72


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Federal Reserve Bank of St. Louis

MILLER

nan cial and in v estm en t m atters o f b o th
th e b an k and H C .
In oth er actio n , L a rry N . L am in g er
has b ee n prom oted to assistant v ice
p resid ent, and Jo h n D . S p e n ce r has
b ee n nam ed a b an k in g officer. B o th
are in th e financial services division of
th e com m ercial b an k in g d ep artm ent.
Jo h n T . L am p in g has b e e n nam ed
an in v estm en t officer in th e ban k ’s trust
d ep artm ent.
SLO A N E

head . H e jo in ed th e b an k in 1 9 5 0 in
th e tran sit d ep artm en t, b e ca m e assist­
an t cash ier in 1 9 6 2 , assistant v ice presi­
d en t in 1 9 6 6 and v ice p resid en t in
1969.
M r. B u tts w en t to T h ird N ational in
1 9 5 1 as a p art-tim e em ployee w hile a t­
ten d in g V a n d e rb ilt U n iv ersity, was
nam ed assistant cash ier in 1 9 5 7 , assist­
an t v ice p resid en t in 1 9 6 1 , v ice presi­
d en t in 1 9 6 6 and senior v ice p resid ent
in 1 9 7 2 .

COERVER

L O U I S V I L L E — H o b e rt Sloane has
b ee n appointed v ice p resid en t o f the
corresp o n d en t b an k division at L ib e rty
N ational.
M r. Sloane w as in th e corresp o nd ent
d ep artm en t at C itizen s F id e lity fo r 10
years and h ad prior service w ith F irst
N ation al, P ikeville. H e is a grad uate of
th e K en tu ck y Schoo l o f B an k in g and
th e Sch oo l of B an k in g of th e Sou th at
L o u isian a S ta te U niversity.

Manufacturers Hanover
Names W a a g e Chairm an
N E W Y O R K — M an u factu rers H an ­
over C orp. and M an u factu rers H anover
T ru st have nam ed Jo h n A. W a a g e vice
chairm an. H arry T a y lo r w as elected
e xecu tiv e v ice p resid en t of th e T ru st
C om pany to su cceed M r. W a a g e as
h ead of th e intern ation al division. H e
w as also m ad e a m em b er o f th e general

Mercantile Trust, St. Louis,
Names M iller President
S T . L O U IS — L y n n H . M iller has
b e e n e le cte d p resid en t of M ercan tile
T ru st, su cceed in g H arrison F . C oerver,
who has b e e n e le cte d ch airm an of th e
execu tiv e co m m ittee and w ho co n tin ­
ues as v ice ch airm an of M ercan tile
B an co rp ., p aren t H C .
M r. M iller also serves as c h ie f ad ­
m inistrativ e officer. H e jo in ed th e ban k
in 1 9 7 4 as execu tiv e v ice presid ent,
com ing from N orthern T ru st, C h icago,
w h ere h e w as a senior v ice p resid ent.
M r. C o erver jo in ed M ercan tile in
1 9 3 5 and has b ee n p resid en t sin ce
1 9 7 0 . H e is responsible fo r loan policy
and continu es to b e in ch arg e o f all fi­

W AAGE

TAYLOR

PILLIOD

RICKER

MID-CONTINENT BANKER for February, 1977

CONDENSED STATEMENT OF CONDITION
AS O F D E C E M B E R 3 1 , 1 9 7 6

RESOURCES
Cash and Due from B a n k s ...................................................................................................
U. S. Treasury S e c u ritie s .....................................................................................................
U. S. Government Guaranteed S e c u ritie s .......................................................................
Obligations of States and Political S u b d ivisio ns..........................................................
Stock in Federal Reserve B a n k ................................
Federal Funds Sold and Securities Purchased Under Agreements to Resell . . .
Loans .........................................................................................................................................

$

1 4 6 ,1 8 6 ,4 6 9 .0 7
3 5 9 ,7 7 6 ,1 7 5 .3 1
7 3 ,4 1 7 ,1 5 3 .0 1
6 0 ,5 4 2 ,8 7 6 .2 6
1 ,5 0 0 ,0 0 0 .0 0
1 5 1 ,9 5 0 ,0 0 0 .0 0
5 9 3 ,2 3 4 ,8 8 5 .4 5

Less: Valuation Portion of the Reserve For Possible Loan L o ss es ............... .. .

_______6 ,9 8 2 ,0 9 7 .1 2

Bank Premises and E q u ip m e n t...........................................................................................
Other Real E s ta te ....................................................................................................................
Customers'Acceptance L ia b ility .........................................................................................
Accrued Income R e c e iv a b le ..............................
Other A s s e ts ............................................................................................................................

5 8 6 ,2 5 2 ,7 8 8 .3 3
9 ,4 5 8 ,4 9 7 .1 7
3 2 ,0 7 0 .3 5
1 ,3 4 6 ,8 7 4 .5 4
1 2 ,7 8 7 ,8 7 8 .4 9
7 ,7 0 8 ,4 6 9 .6 2

T O T A L ....................................................................................................................................

$ 1 ,4 1 0 ,9 5 9 ,2 5 2 .1 5

L IA B IL IT IE S
Deposits ....................................................................................................................................
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
Acceptances O u tstan d in g ......................
Dividend Payable January 3, 1977 ....................................................................................
Special Dividends P a y a b le ...................................................................................................
Accrued Taxes, Interest and E x p en s es ............................................................................
Deferred Income Tax Portion of the Reserve For Possible Loan L o s s e s ...............
TOTAL L IA B IL IT IE S ..........................................................................................................

$ 1 ,1 2 5 ,1 0 3 ,0 4 3 .4 6
1 5 4 ,6 8 5 ,0 0 0 .0 0
1 ,3 4 6 ,8 7 4 .5 4
1 ,3 4 4 ,2 6 0 .0 0
2 ,9 3 6 ,5 8 1 .9 4
1 4 ,7 6 2 ,1 2 5 .7 2
1 ,9 3 2 ,0 2 7 .2 0
$ 1 ,3 0 2 ,1 0 9 ,9 1 2 .8 6

C A P IT A L A C C O U N T S
Capital S to c k ............................................................................................................................
Surplus ....................................................................................................................................
Undivided Profits ............................................................................ .................................
Capital Portion of Loan Loss and Securities R es erve s ................................................

$

2 ,8 0 0 ,0 0 0 .0 0
4 7 ,2 0 0 ,0 0 0 .0 0
5 5 ,8 9 4 ,2 1 7 .0 5
2 ,9 5 5 ,1 2 2 .2 4

TOTAL CAPITAL A C C O U N T S ........................................................................................

$

1 0 8 ,8 4 9 ,3 3 9 .2 9

TOTAL

$ 1 ,4 1 0 ,9 5 9 ,2 5 2 .1 5

..............................................................................


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

adm inistrative board , o f w h ich M r.
W a a g e is alread y a m em ber.
M r. W a a g e jo in ed th e b an k in 1 9 3 6
and has b ee n an execu tiv e v ice p resi­
den t since 1 9 7 2 .
M r. T a y lo r jo in ed th e ban k in 1 9 6 9
and has b ee n senior v ice p resid ent and
d eputy general m an ager of th e L ond on
B ran ch sin ce 1 9 7 4 .
N am ed directors of th e ban k and
H C w ere Jo h n B . R ick e r Jr ., chairm an
arid p resid ent, C o n tin en tal C orp., and
C h arles J. P illiod Jr ., ch airm an and
C E O , G ood year T ire & R u b b e r Co.

Top-Management Changes
Involving Six Officers
M ade at Bank of America
SAN F R A N C IS C O — B an k of A m er­
ica has m ad e a n u m ber of m an age­
m en t-level
appointm ents.
E xe cu tiv e
V ice P resid en t Alvin C. R ic e was
nam ed execu tiv e officer of th e world
ban k in g division to su cceed C h airm an
C h au n cey J . M ed berry, who has relin ­
quished th a t post to assum e oth er re­
sponsibilities as chairm an. M r. R ic e has
b eco m e a m em ber of th e b an k ’s m an­
ag em en t com m ittee.

RICE

ARMACOST

M r. M ed berry now has overall re ­
sponsibilities fo r d ep artm ents adm inis­
tering th e b an k ’s leg al, legislative and
tax affairs, econom ics and p o licy re ­
search, ban k investm ent, fiduciary and
com m unications services and Sou thern
C aliforn ia activities.
Sam u el H . A rm acost w as appointed
execu tiv e v ice p resid en t to su cceed
M r. R ice as h ead o f th e E u ro p e, M id ­
dle E a s t and A frica division in Lond on.
V ero n e C . G ib b was prom oted to sen­
ior v ice p resid en t to h ead th e San F ra n ­
cisco C o rp o rate S e rv ice O ffice, re p la c­
ing M r. A rm acost, and Jo h n L u cch e si
was nam ed to su cceed M r. G ib b as a
regio nal v ice p resid ent in H on g K ong.
M o n t E . M cM ille n was prom oted to
senior v ice p resid en t to head th e b an k ’s
N ew York C o rp o rate S erv ice O ffice,
althou gh lin e responsibility fo r th a t o f­
fice rem ains w ith Jam es R . D ru m w right, presid ent, B an k of A m erica,
N ew York.
74


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Federal Reserve Bank of St. Louis

SALTER

Five Sr. Vice Presidents
Among Officer Promotions
A t First Nat'l, St. Louis
S T . L O U IS — F irs t N ational has e le ­
vated five v ice presidents to senior vice
p resid ent status. T h e y are T . B arton
F re n ch , R aym on d B . Johnson Jr ., R o n ­
ald D . Prasse, W illiam S. S alter Jr. and
W a lte r D . Schm itz.
Ja m es M . O ates, head of th e clie n t
services d ep artm ent, has b e e n elected
a v ice p resid en t and M orris L . B ond ,
K en n eth A. B retth o rst, W . A lan G ray
and D av id O. Z oeller hav e b e e n d esig­

Delaney Named President
Of Whitney National
N E W O R L E A N S — P a trick A. D e ­
lan ey Sr. w as e le cte d p resid en t, W h it­
ney N ational, in D ece m b e r. H e su c­
ceed s th e la te W illiam A. C arp en ter.
M r. D elan e y w as also e le cte d p resid ent
of W h itn e y H old ing C o rp ., th e ban k ’s
p aren t firm.
M r. D elan e y has b e e n w ith th e bank
fo r 2 3 years. H e b ecam e a v ice presi­
d en t in 1 9 7 1 and has sp en t m ost of his
tim e in operations and personnel. H e
also w as ad m inistrative assistant to M r.
C arp en ter.

DELANEY

HYDE

Hyde Named Correspondent Head
At First N at'l, Little Rock
L I T T L E R O C K — R u sty H yd e has
b ee n nam ed m an ager of th e correspon­
d en t b an k division, F irs t N ational. T h e
division is a p art of th e d eposit m an ­
ag em en t group h ead ed b y Jo h n C.
H ickm an, execu tiv e v ice p resid ent.
M r. H yd e jo in ed th e b an k in 1 9 6 8 ,
b eca m e an officer in 1 9 7 0 and was
e le cte d a v ice p resid en t in 1 9 7 2 .

FRENCH

PRASSE

JO H N S O N

n ated assistant v ice presidents.
M r. F re n c h jo in ed th e b an k in 1 9 6 3
and heads th e real estate and m o rtgage
loan d ep artm en t. M r. Jo hnson, who
jo in ed th e ban k in 1 9 7 1 , head s m etro­
po litan division I and th e nation al accou nts-w est d ep artm en t. M r. P rasse
jo in ed th e b an k in 1 9 6 8 and heads
m etropolitan division I I I and national
accou n ts-east. M r. S a lte r has h ead ed
the
intern ation al
d ep artm en t
sin ce
1 9 7 2 . H e jo in ed th e b an k in 1 9 7 1 . M r.
Sch m itz heads m etro p olitan division I I
and
national
acco u n ts-cen tral
and
southeast. H e has b e e n w ith F irs t N a ­
tional sin ce 1 9 5 6 .

Mitchell Elected Exec. VP
At First of Okla. City
O K L A H O M A C IT Y — D a le E . M itch ­
ell has b ee n e le cte d execu tiv e v ice
p resid ent and tru st officer a t F irs t N a­
tional. H e jo in ed th e b an k in 1 9 7 5 fol­
low ing service w ith a secu rities firm.
S e th V . B ru m ley Jr ., G eo rg e R .
C lark, Jam es H . H am p ton and R onald
J. H eu sel w ere n am ed v ice presidents
and B arn e y L e h m b e ck Jr. was nam ed
d irecto r of m ark etin g and research .

First Tennessee Banks Organized
To M anage HC's Affiliates
M E M P H IS — F irs t T en n e sse e Banks,
a new division of F irs t T en n e sse e N a­
tion al C o rp ., has b ee n organized to
m anage th e firm ’s 13 T en n e sse e banks.
A cco rd in g to R on ald T e rry , C E O ,
the division gives th e H C th e structure
fo r em phasizing th e H C ’s b an k in g busi­
ness. Its o b je ctiv e also is to p ro je ct to
custom ers th e co n cep t o f a system of
banks w orking closely to g eth er to serve
all parts of th e state.
C o n cu rren t w ith th e announcem ent
of th e division’s organization, F irs t N a­
tional, M em phis, b eg an business under
its new n am e, F ir s t T e n n e sse e B ank
N .A . M em phis. A ll banks in th e H C
now h av e a com m on nam e.
P resen t senior m an ag em en t of the
H C constitu tes th e m an ag em en t team
of F irs t T e n n e sse e B an k s, h ead ed by
M r. T e rry , ch airm an ; Jo e Sim s, vice
ch airm an ; and C u llen K eh o e, presi­
dent.

MID-CONTINENT BANKER for February, 1977

DETROITBANK CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31,1976
ASSETS

BO A R D OF D IR E C T O R S

Cash and due from banks...............................$
Time deposits with other banks....................

2 1 0,64 1,00 0
46 0,3 6 9 ,0 0 0

E. A. C afiero
P resident—C h rysle r Corporation

U. S. Treasury securities.................................
U. S. Government agency securities............
State and municipal securities......................
Other securities..................................................
Total securities...........................................

194,294,000
73 ,134 ,0 00
5 6 5,88 9,00 0
5 7 ,069 ,0 00
8 9 0,38 6,00 0

Federal funds sold and securities
purchased under agreements to resell...

77,714 ,0 00

Commercial loans..............................................
85 7,3 8 5 ,0 0 0
Real estate mortgage loans............................
6 0 7,88 9,00 0
Consumer installment loans...........................
187,978,000
Total loans................................................... 1,6 53,252,000
Less valuation portion of reserve
for loan losses........................................
Net loans......................................................

19,686,000
1,6 33,566,000

W alker L. C is le r
R etired C h a irm a n —
The Detroit Edison C om pan y
Fran k A. Colom bo
Retired Executive Vice P re sid e n t—
The J . L. H udson C om pan y
R odkey C raig h ead
President
H ugh C. Daly
V ice C h a irm a n —
A m erican Natural R e so u rce s Com pan y
Lo u is A. F ish e r
Director
W alter B . Ford II
C h a ir m a n Ford & Earl D esign A sso cia te s, Inco rp o rated
Edw ard J . G ib lin
P resident— Ex-C ell-0 Corporation
O scar A. Lu n d in
Retired Vice C h a ir m a n General Motors Corporation

Premises and equipment................................
3 6 ,836 ,0 00
9 ,6 45,00 0
Customers’ liability on acceptances.............
Other assets...............................................
6 2 ,065 ,0 00
TOTAL............................................................ $3 ,381 ,2 22 ,0 00

Donald R. M andich
Executive Vice P re sid e n t—
Th e Detroit B ank and T ru st C om pan y

LIABILITIES

P au l S . M irabito
P resident— B u rro u gh s Corporation

Demand deposits.............................................. $ 7 7 6,91 4,00 0
Savings and personal time deposits............ 1,822,451,000
Other time deposits..........................................
166,925,000
Deposits in foreign offices..............................
7 7 ,093 ,0 00
Total deposits.............................................. 2 ,8 43,38 3,00 0

E. Jo se p h Moore
P re sid e n t—
Detroit Ball Be arin g Com pan y of M ichigan

Federal funds borrowed and securities
sold under agreements torepurchase...
174,055,000
Commercial paper outstanding and
other borrowed funds........................... •___
47 ,922 ,0 00
Acceptances outstanding................................
9,6 4 5 ,0 0 0
7 0 ,060 ,0 00
Other liabilities...................................................
Total liabilities............................................. 3 ,1 45,06 5,00 0

Ja m e s M cM illan
Director

P au l W. O’M alley
Chairm an and P re sid e n t—
E sse x International, Incorporated
Raym ond T . P e rrin g
Retired Chairm an
H. Lynn P ierso n
Retired C h a irm a n —Dura Corporation
R obert F. R oelofs
P re sid e n t—
M acom b County Com m unity College
A lan E. Schw artz
Sen io r P artne r—
Honigm an, Miller, Schw artz and Cohn

SHAREHOLDERS’ EQUITY

W. W arren Sh e ld e n
Director

Preferred stock—no par value;
500.00 0 shares authorized,
none issued........................................

C . Boyd Sto ckm eye r
Chairm an
A rb ie O. T h a la c k e r
C h a irm a n —
Detrex Che m ical In d u strie s, Incorporated

Common stock—$10 par value;
4 .5 0 0 .0 0 0 shares authorized,
4 ,4 3 3 ,2 1 6 shares issued in 1976,
3,3 7 0 ,4 8 3 shares issued in 1 9 7 5 .............

44 ,332 ,0 00

Surplus.................................................................
Retained earnings.............................................
Total...........................

11 4,373,000
8 4 ,060 ,0 00
24 2,7 6 5 ,0 0 0

Less treasury s to c k 182,282 shares at cost................................
6,6 08,00 0
Total shareholders’ equity..................
2 3 6,15 7,00 0
TOTAL............................................................$3 ,381 ,2 22 ,0 00
On D ecem ber 3 1 , 1 9 7 6 se cu ritie s having a par value of
$ 1 1 5 ,1 1 6 ,0 0 0 were pledged where perm itted or required by
law to se cu re liabilities and public and other deposits totaling
$ 7 0 ,5 4 0 ,0 0 0 in clu ding deposits of the State of M ichigan of
$ 5 ,8 2 4 ,0 0 0 . Stan d b y Tetters of credit am ounted to
$1 7 ,3 7 7 ,0 0 0 a s of the sa m e date.

Cle ve lan d T h u rb e r
C o u n se l—
Miller, C anfield, P addock and Stone
H e rbert B. T rix
D irector—
The Standard P ro ducts Com pan y
W illiam R. Yaw
P resident—W abeek Corporation

DETROITBANK
CORPORATION

The Indian head leads you to Detroit’s first family of banks.
MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

75

Senior Officer Executive Panel
Announced for Liberty N at'l HC
O K L A H O M A C IT Y — Six senior staff
officers o f L ib e rty N ational hav e b e e n
ap p o inted to a new ly form ed execu tiv e
p an el of L ib e rty N ational Corp.
T h e y are K en n eth R . B row n, senior
v ice p resid ent and senior investm ent
officer; Jam es W . B ru ce Jr., senior v ice
p resid en t and secretary ; L ou is F . D an fo rth, senior v ice p resid ent and eco n o ­
m ist; G eorge H . H am m onds, controller;
R o b ert E . H ogu e, senior v ice presi­
d en t; and W illis J. W h e a t, senior vice
p resid ent, m arketing.
T h e panel w ill b e d irected b y T . Jo ­
seph Sem rod, L ib e rty N ational Corp.
p resid ent.

M anagem ent Changes M a d e
A t First of Jackson, H C
JA C K S O N , M IS S .— T o p
m an age­
m en t changes hav e b e e n announced at
F irst N ational and F irs t C ap ital C orp.,
p arent H C .
R . B en L am p to n , b an k presid ent, has
b e e n n am ed v ice chairm an of b o th
firms. F ra n k R . D ay, b an k execu tiv e
v ice presid ent, has b e e n nam ed H C
p resid ent and Alvis T . H unt, b an k ex­
ecu tiv e v ice p resid ent, has b e e n nam ed
b an k presid ent.

FRANK DAY

GEO R GE DAY

LAM PTO N

C lyd e B . E d w ard s and R o b ert R .
Sw itten b erg , b o th ban k senior vice
presid ents, w ere e lev ated to execu tiv e
v ice p resid ent status. V ice P resid en t
G eorge R . D ay w as nam ed senior v ice
p resid ent.
M r. L am p to n is a m em ber of the
A B A ’s g ov ernm ent relations cou ncil
and is a p ast p resid ent of th e M issis­
sippi B ankers A ssociation. F ra n k D ay
is chairm an, Sm ith C ounty B ank, T a y ­
lorsville. M r. H u nt is a p ast p resid ent
of th e A IB ’s Jack so n C h ap ter, M r. E d ­
w ards is a m em b er of R o b ert M orris
A ssociates, and M essrs. S w itten b erg
and G eorge D ay are grad uates o f th e
Sch oo l of B an k in g o f th e South.

Exchange Offers Successful
M E M P H IS — E x ch a n g e
offers
by
U n ited T en n e sse e B an csh ares Corp. to
th e shareholders o f its stock in F irs t
T ru st & Savings, P aris, and N ashville
C ity B an k hav e b e e n successful. E x ­
changes w ill b e consu m m ated upon re ­
c e ip t of a fav orab le IR S ruling.
F o llo w in g consum m ation o f th e ex­
ch an ges, th e tw o banks w ill b e ind e­
p en d en t institutions and U n ited T e n ­
nessee B an csh ares w ill ow n only one
ban k — N B C of M em phis.

SWITTENBERG

EDWARDS

HUNT

SEATON

SIMMONS

Seaton, Simmons Named SVPs
At Memphis Bank & Trust
M E M P H IS — M em ph is B an k & T ru st
has prom oted B e rt E . S e ato n and W il­
liam W . Sim m ons to senior v ice presi­
dents.
M r. Seato n jo in ed th e b an k in 1 9 6 0
and also serves as cash ier and op era­
tions head.
M r. Sim m ons h as b e e n w ith th e
ban k sin ce 1 9 7 0 and is in ch arg e of
real estate lending.

C o b b , Grace N am ed Sr. VPs
A t Com m ercial N a t'l, LR
L I T T L E R O C K — Ja m es R . C o bb
and B a rn e tt G race hav e b e e n nam ed
senior v ice presidents at F ir s t N ational.
M r. C o bb is m an ag er of th e operations
division and is presid ent, F in a n cia l
Services C orp., a subsidiary. M r. G race
is m anager o f th e b a n k ’s financial divi­
sion. T h e y jo in ed th e b an k in 1 9 7 3 and
1 9 7 2 , respectiv ely.
R on W . Stro th er and D a le J. W intro ath have b ee n prom oted to vice
presid ents. M r. S tro th e r is assistant d e­
p artm en t h ead in th e b ran ch adm inis­
tratio n d ep artm en t and M r. W in troath
is in th e tru st d ep artm en t.
N ew assistant v ice presid ents are

CANTON EXCHANGE BANK
CANTON, MISSISSIPPI
Condensed Statement of Condition as of December 31 1976
ASSETS
Accrued Income Receivable and
Cash on Hand and Due from Banks $ 4,768,461.61
665,044.90
United States Government Bonds ..
2,525,117.28
Other Resources ........................
1,749,781.25
Obligations of Federal Agencies
$36,085,438.96
TO T A L .............................................
State, County, Municipal, Other
Bonds and Securities .....................
5,130,577.04
LI A B I L I T I ES
Federal Funds Sold ............................
3,050,000.00
Capital Stock ....................................... $ 675,000.00
Loans and Discounts .. $18,592,979.83
Surplus
...................................................
1,750,000.00
Less Unearned
Interest ....... .
( 228,486.54)
Undivided Profits .................................
201,204.49
Less Loan Valuation
Other Liabilities ..................................
346,102.31
Reserve ................. ( 332,072.41)
Deposits .................................................... 33,113,102.16
Loans and Discount Net ................... 18,032,420.88
Bank Premises, Furniture and Fixtures
160,003.00
T O T A L ................................................. $36,085,408.96
Other Real Estate ................................
4,003.00

GRACE

COBB

O F F IC E R S
Chairm an of B oard
JIM M Y JAM ES .................. Mgr. East B ran ch
and Asst. Vice President
and President
MRS. EDITH H. EV ERETT . . Asst. Cashier
MISS ANGIE B E L L E RIMMER . . E xec. Vice
MISS DOROTHY GOZA ........... Asst. Cashier
President and Trust Officer
MRS. ELW YN S. LA TIM ER . . Asst. Cashier
MRS. FLO R A J . RIMMER ............... Sr. Vice
MRS. Z ELLA D. BUNTYN . . . Asst. Cashier
President and Trust Officer
EDWIN A. LOFTON . . . Mgr. B ran ch Offices
EA RL J . Q U IN N ........................ Vice President
and Asst. Vice President
DOUGLAS R A S B E R R Y .........Vice President
MRS. SELENA O A K L E Y ___ Asst. Cashier.
and Cashier
Ridgeland B ran ch Office
JAM ES M. CHANDLER . . . . Vice President
MRS. JA N E HENDERSON . . Mgr. Madison
B ran ch Office and Asst. Cashier
F . E . ALLEN , J R ........................Vice President
FRAN K E. A LLEN

Member Federal Deposit Insurance Corporation

IN OUR 97th YEAR
76


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Federal Reserve Bank of St. Louis

W INTROATH

MID-CONTINENT BANKER for February, 1977

Jim Ja m es and Jo h n R oew e. G reer
B a b e r w as nam ed assistant auditor, Je r ­
ry Griffin w as prom oted to loan officer,
C arol H ard w ick was nam ed assistant
b o ard secretary and R ich ard G . P rin z
w as p ro m oted to trav el officer.

Sneed Retires From Liberty HC
O K L A H O M A C IT Y — E a rl J . Sn eed
re tired la st m onth as p resid en t, L ib e rty
N atio n al C orp. H e is now associated
as cou nsel to th e law firm of C row eD u n lev y -T h w eatt-S w in fo rd -Jo h n so n
&
B u rd ick.

SNEED

McSORLEY

Bernard McSorley Moves
S T . L O U IS — B ern ard J . M cS o rle y
has b e e n n am ed v ice p resid en t and
co m m ercial loan officer a t M an ch ester
B an k . H e w as previously assistant v ice
p resid en t, F irs t N ational.

Three Join Investment Division
At First American, Nashville

Kirkpatrick Named Exec. VP
At First N ational, Tulsa

N A S H V IL L E — F irs t A m erican N a­
tional has n am ed D o n ald B . E d g e a
v ice p resid en t and in v estm en t division
m anager. In ad dition, Je ffre y M . B ra d ­
ley and W illiam W . H arlin I I I have
jo in ed the in v estm en t staff as assistant
v ice presid ents.

T U L S A — L e e G . K irk p atrick has
b e e n e le cte d execu tiv e v ice p resid ent
a t F irs t N ational. H e is in ch arg e of
op erations, ad m inistration and co n ­
sum er banking.
H e was form erly w ith U n ite d C ali­
fo rn ia B an k, w h ere he m anaged th e
M aster C h arg e program .

M r. E d g e has b ee n in th e in vestm en t
field sin ce 1 9 5 5 and prior service in ­
clud es in v estm en t firms in N ew York
and C h icag o as w ell as Sou th C arolina
N ational, C h arlo tte, and U n ion P la n t­
ers N ational, M em phis.
M r. B rad le y retu rns to F irst A m eri­
ca n a fte r resign in g as assistant vice
p resid en t last A pril. M r. H arlin was
fo rm erly w ith T h ird N ational, N ash­
ville.
P au l A. H argis, p resid en t and tre a ­
surer, W ash in g to n Ind ustries, has b ee n
e le cte d to th e b an k ’s board .

QUINLAN

KIRKPATRICK

Two KCK Bankers Retire

Quinlan Joins Corres. Dept.
At Bank of New Orleans

K A N SA S C IT Y , K A N .— M ilton P.
B e a c h and F ra n cis P. L em ery hav e re ­
tired as senior v ice presid ents and di­
recto rs of S e cu rity N ational.
M r. L em ery jo in ed th e b an k in 1 9 3 5
and M r. B e a c h jo in ed th e b an k follow ­
in g a law career. M r. B e a c h w ill b e an
advisory d irecto r o f th e bank.

N E W O R L E A N S — Jo se p h F . Q uin­
lan has b ee n appointed assistant v ice
p resid en t in th e corresp o nd ent b an k
d ep artm en t a t B an k of N ew O rleans.
M r. Q uinlan joins B N O fo llow ing seven
years’ exp erien ce w ith oth er banks.
H e w ill serve as a co n ta ct officer in
the L ou isiana-M ississipp i territory.

OFFICERS
GEORGE J. HELEIN
P resident

J. RICHARD FURRER

South Side National Bank

E x ecu tiv e V ice P resident

GRAND AND GRAVOIS

H. WM. ROBERT

IN ST. LOUIS

V ice P resident & Trust Officer

GEORGE F. BENNER
V ice P resident

WALTER C. HAMMERMEISTER
V ice P resident & Cashier
ALBIN F. OEHLER
V ice P resident
RAYMOND E. KNORPP
V ice P resident
WALTER E. GOEBEL
Assistant V ic e P resident

ROBERT C. WERKMEISTER

Assistant V ic e P resident

LEON A. BREUNIG

Assistant V ic e P resident

W ILLIAM E. MUHLKE

Assistant V ice P resident & A uditor

CA R O L S. ALEXANDER

Asst. C ashier & S ecy , to the Board

ARTHUR L. JEANNET. JR.
Assistant C ashier

VERNON C . BETSCHART
Assistant C ashier

MARGUERITE CIBULKA

S ta te m e n t o f C o n d itio n , D e c e m b e r 31, 1976
RESOURCES
Cash an d due fro m banks ................................................................. $ 7 ,2 5 0 ,1 8 2 .7 8
U .S. G o v e rn m e n t o b lig a tio n , d ir e c t and g u a ra n te e d . . .
1 5 ,1 6 9 ,9 2 8 .4 5
U .S . a g e n c y bonds .................................................................................
7 ,5 1 6 ,1 0 0 .3 3
F e d e ra l Reserve Bank stock ...............................................................
7 5 ,0 0 0 .0 0
O b lig a tio n s o f s ta te and p o litic a l s u b d iv is io n s .....................
5 ,8 6 3 ,1 0 5 .7 6
F e d e ra l funds s o l d ...................................................................................
3 ,2 0 0 ,0 0 0 .0 0
Loans an d disco un t ..................................................
5 2 ,5 6 1 ,5 8 6 .9 1
Banking house an d p ark in g lo t .......................................................
6 4 3 ,6 3 5 .0 0
F u rn itu re, fixtu res and safe d e p o s it va u lts ...............................
1 7 7 ,8 8 1 .1 5
O t h e r resources .........................................................................................
8 7 7 ,7 6 8 .7 2

Sa fe Deposit Officer

$ 9 3 ,3 3 5 ,1 8 9 .1 0

A LYC E L. SCOTT

Personal Loan Officer

JOSEPH E. MAGER

L IA B IL IT IE S

Personal Loan Officer

DIRECTORS
WALTER E. CO LLIN S
RALPH CRANCER. JR.
HOWARD F. ETLING
C. J. FURRER, JR.
J. RICHARD FURRER
THOMAS J. HEJLEK
GEORGE J. HELEIN
PAUL V. HELEIN
CHARLES F. HERWIG
MARTIN SCHLITT
EDWARD C. SCHNEIDER
EDWARD ZEISLER

C a p it a l .......................................................................................................... $ 1 ,2 0 0 ,0 0 0 .0 0
Surplus
...........................................................................................................
1 ,3 0 0 ,0 0 0 .0 0
U n d iv id e d p r o f i t s ......................................................................................
3 ,1 9 7 ,5 3 0 .1 0
Reserve fo r taxes, in te re s t, e t c ...........................................................
1 ,3 5 4 ,0 6 8 .8 8
D eposits: .........................................................................
8 4 ,8 8 6 ,1 8 5 .6 1
D e m a n d d ep os its ............................................ $ 2 3 ,2 9 3 ,9 9 5 .9 4
T im e d ep osits
6 1 ,5 9 2 ,1 8 9 .6 7
U n e a rn e d disco un t
1 ,3 97,40 4.51

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

$ 9 3 ,3 3 5 ,1 8 9 .1 0
Member Federal Deposit Insurance Corporation

77

Davis Named President
Of KC's Mercantile

Lee N am ed Senior Vice Pres.
A t First National, Dallas

K A N SA S C IT Y — M u rray H . D avis
has su cceed ed Jam es L . R ie g e r as p res­
ident, M ercan tile B ank. M r. D avis
joined th e b an k in 1 9 6 0 and was re ­
sponsible fo r its m arketin g efforts until
1 9 7 3 w h en h e b ecam e execu tiv e vice
president.
M r. R ieg er, w ho served 17 years as
p resid ent, is now ch airm an and C E O .
N ath an R ie g e r w as nam ed chairm an
of the execu tiv e com m ittee. H e joined
th e b an k in 1 9 2 1 and served as p resi­
d en t from 1 9 4 5 to 1 9 5 9 . H e h ad b ee n
ch airm an sin ce 1 9 5 9 .

D A L L A S — W illiam C . L e e , auditor,
F irs t N ational, has b ee n e le cte d a sen­
ior v ice presid ent. H e jo in ed th e b an k
in 1 9 6 2 and was nam ed v ice p resid ent
in 1 9 6 9 and auditor in 1 9 7 3 .
N ew v ice presid ents in clu d e B o b by
R . B eall, aud iting group; R o b e rt A.
C h ereck , national group; R . D rau ghon
C row ell I I I and R o g er J. E n lo w , cred it
ad m inistration group; M ich el G irard ,
Paris B ra n ch ; R . M ack L ew is Jr ., per­
sonal tru st d ev elopm en t d ep artm en t;
D ’Ann D . R iem er, sp ecial services
group; and F re d C. Sou thard , property
m an ag em en t group, tru st division.
A d vanced to assistant v ice presidents
w ere Jo h n H . H e b e rle, V irgin ia R .
N ew ell, C arol A. D en to n , R ich ard F .
H errick, Jo h n S. F ro d sh am , Jo sep h N.
P e te t, P am ela D . R eed , Jam es N .
Sch m id t, P a tricia A. Tho m pson, L e e
A. F ritc h ie , J . P atrick Jen so n and J e f ­
fre y R . W h eeler.

Ten Promotions Announced
A t National Blvd., C hicago

BUTLER

N. RIEGER

Chairman Jack Butler Retires
From General Bancshares Corp.

C H IC A G O — Six w om en and four
m en have rece iv e d prom otions at N a­
tional B ou levard Bank.
H ead in g th e list is K ay E . S ch lu eter,
w ho has b e e n n am ed correspond ent
b an k in g officer. O th e r prom otions w ere
won b y B a rb a ra A. R ich ard s, assistant
v ice p resid en t; Jo A n n K . B ongiorno,
assistant d irecto r of p u blic relations;
D oro th y A. C e m y and M ary L o u F itz ­
p atrick , assistant cash iers; and A liéné
L . K aplan, research officer.
G. A llen C o le and R alp h A. V erre cch ia w ere prom oted to assistant v ice
p resid ents; Jo se p h R . K orpalski to op­
erations officer; and C h arles A. V rb a
to assistant tru st officer.

S T . L O U IS — Ja c k G . B u tle r retired
recen tly as chairm an of G en eral B an eshares C orp. and B an k of St. Louis.
H e jo in ed th e corporation in 1 9 3 0
and has b ee n chairm an of th e tw o firms
fo r seven years. H e served b o th firms
as p resid en t fo r 12 years previous to
his chairm anship.
D u rin g his 4 6 years w ith th e H C , he
has served in various cap acities w ith
num erous other affiliate banks.
SCHLUETER

Parrish Joins 1st of Birmingham

78


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Federal Reserve Bank of St. Louis

S+rube Is Promotion W inner
A t Com m ercial N a t’l, K C K
K A N SA S
C IT Y , K A N .— Jo h n H .
S tru b e and C raig Sherrill hav e b e e n
prom oted to v ice p resid ents a t C om ­
m ercial N ational. Also, R o b e rt W .
C h eno w eth, v ice p resid ent, w as nam ed
assistant to th e presid ent.
M r. S tru b e is a correspond ent officer
and M r. S h errill is in ch arg e of E D P
and ch e ck p rocessing operations. M r.
C h en o w eth was form erly in th e M aster
C h arge cre d it card division.
D ean W a ll was prom oted from as­
sistan t v ice p resid ent, system s and pro­
gram ing d ep artm en t, to second v ice
p resid ent, com p u ter services d ep art­
m ent. F re d e rick P retz w as raised from
E D P operations officer to assistant v ice
p resid ent, com m ercial d ata division.

SHERRILL

STRUBE

HERTEL

CHENOWETH

Hertel Named Senior VP
At Detroit Bank & Trust
TORGERSON

B IR M IN G H A M , A L A .— E d w ard L .
P arrish has jo in ed F irs t N ational as
senior v ice p resid en t and head of th e
hum an resources d ep artm ent.
H e was fo rm erly w ith N orth C aro ­
lina N ational, C h arlo tte, w h ere he was
a v ice p resid ent. H e jo in ed th at bank
in 1 9 6 6 as personnel m an ager in th e
G reensboro O ffice.

M r. T orgerso n jo in ed th e b an k in
1 9 7 0 and M r. H ales has b e e n w ith the
ban k sin ce 1 9 7 4 . M isses B row n and
C lare cam e to the b an k in 1 9 6 9 and
M r. O livarri has b e e n w ith F ro st for
1 9 years.

Torgerson Heads Promotions
At Frost N at'l, San Antonio
SA N A N T O N IO — F ro st N a t i o n a l
has ap p o inted V ern on D . T orgerso n Jr.
v ice presid ent; W illiam D . H ales, as­
sistant v ice p resid en t; B ev erly B row n,
ad m inistrative officer; and A lice C lare
and D on O livarri, personal b an k in g of­
ficers.

D E T R O I T — F re d e rick
C.
H ertel,
gen eral m an ager, in tern ation al d ep art­
m ent, D e tro it B an k , has b ee n elevated
to senior v ice presid ent.
A d v anced to first v ice presidents
w ere R ollo G. A. F ish e r, D . Jam es
W atson Jr. and Jam es R . W aterston ,
all in com m ercial loans; and Jo h n E .
P ark, tru st business d evelopm en t.
N am ed v ice presid ents w ere T e r­
re n ce E . K eatin g , pension tru st; Jam es
A. M itch e ll, in vestm en ts; G . E rn e st
P yle, tru st business d ev elop m en t; and

MID-CONTINENT BANKER for February, 1977

Morgan Guaranty Trust Company
OF

NEW

YORK

C o n s o lid a t e d s ta te m e n t o f e o n d itio n

D ire c to rs

D e c e m b e r 3 1 ,1 9 7 G
A s s e ts

ln thou san ds

C a s h a n d d u e fr o m b a n k s

.

.

r

.

$ 3 630 353

In te r e s t-b e a r in g d e p o s its a t b a n k s .............................

5 500 455

U . S . T r e a s u r y s e c u r i t i e s ...................................................

1 723 041

O b lig a tio n s o f U . S. g o v e rn m e n t a g e n c ie s .
.

.

T r a d in g a c c o u n t s e c u r itie s , n e t .

.

.

.

499 904

.

.

.

.

331 032

F e d e r a l fu n d s sold a n d s e c u r itie s
p u r c h a s e d u n d e r a g r e e m e n ts to r e s e ll .
Loans

283 482

......................................................................................

R e a l e s ta t e

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

L e s s : re s e r v e fo r p o ss ib le lo a n lo s s e s .

.

13 5 7 9 2 6 4
.

74 2 8 7

.

.

13 6 5 3 5 5 1

.

..

147 573

.

.

13 $ 0 5 9 7 8

P r e m is e s a n d e q u ip m e n t, n e t ....................................

123 038

C u s to m e r s ’ a c c e p ta n c e l i a b i l i t y ....................................

801 635

T o ta l lo a n s a n d re a l e s ta t e
N e t lo a n s a n d r e a l e s ta t e .

.

.

.

.

.

O th e r a s s e t s .................................................................

.

653 485

T o ta l a s s e t s ...............................................................................

$28 353 408

.

L ia b ilit ie s

D e m a n d d e p o s i t s .................................................................

$ 6 766 641

T im e d e p o s i t s ........................................................................

3 0 1 4 193

D e p o s its in fo r e ig n o ffic e s

.

.

.

.

T o ta l d e p o s i t s .................................... .......

.

P residen t

J. PAUL AUSTIN

C h airm an o f th e B oard
T h e C oca-C ola C om pan y
R. MANNING BROWN JR .

C h airm an o f th e B oard
N ew Y ork L ife In su ran ce C om pan y

C h airm an , F oreig n Policy A ssociation
F R A N K T. C A R Y

C h airm an o f th e B oard
In tern atio n a l B u sin ess M ach in es C orporation
W. GRAHAM CL A YT OR J R .

C h airm an an d C h ie f E x ecu tiv e Officer
S ou th ern R ailw ay S ystem
E M I L I O G. C O L L A D O

F orm er E x ecu tiv e V ice P resid en t an d D irector
E x x on C orporation

11 7 0 3 6 7 5
.

.

21 4 8 4 509

F e d e r a l fu n d s p u r c h a s e d a n d s e c u r itie s
sold u n d e r a g r e e m e n ts to r e p u r c h a s e

2 534 244

C o m m e r c ia l p a p e r o f a s u b s i d i a r y .............................
O th e r lia b ilitie s f o r b o rro w e d m o n e y

W A L T E R H. P A G E

1 109 0 7 7

.
.

C h airm an o f th e B oard

191 9 2 8

O b lig a tio n s o f s ta te s a n d p o litic a l s u b d iv isio n s .
O th e r in v e s tm e n t s e c u r itie s .

E L L M O R E C. P A T T E R S O N

.

.

.

92 484

.

1 057 685

A c c ru e d ta x e s a n d e x p e n s e s ...........................................

398 042

L ia b ility o n a c c e p t a n c e s ...................................................

806 688

D iv id e n d p a y a b l e ...................................................

25 000

C o n v e rtib le d e b e n tu re s o f a s u b sid ia ry
( 41/4 % , d u e 1 9 8 7 ) .
.
.
.....................................

50 000

C a p ita l n o te s ( 6 % % , d u e 1 9 7 8 ) .............................

100 000

C a p ita l n o te s ( 5 % , d u e 1 9 9 2 ) ....................................

80 718

M o rtg a g e p a y a b l e ............................. ....................................

14 5 9 0

O th e r lia b ilitie s .........................................................................

271 438

T o ta l l i a b i l i t i e s ........................................................................

$26 915 398

C H A R L E S D. D I C K E Y J R .

C h airm an an d Presiden t
Scott P aper C om pany
J O H N T. D O R R A N C E J R .

C h airm an o f th e B oard
C am p bell S oup C om pany
W A L T E R A. F A L L O N

C h airm an o f th e Board
E a stm an K od a k C om pan y
L E W I S W. FO Y

C h airm an , B e th le h e m S teel C orporation
H A N N A H. G RA Y

Provost, Y ale University
HOWARD W. JO H N S O N

C h airm an o f the C orporation
M assachu setts In stitu te o f T ech n olog y

S t o c k h o l d e r 's e q u i t y

C a p ita l s to c k , $ 2 5 p a r v a lu e ( 1 0 , 0 0 0 , 0 0 0 s h a r e s )
S u r p lu s

$

.......................................................................................

U n d iv id e d p r o f i t s .................................................................
T o ta l s to c k h o ld e r’s e q u ity

.

.

.

.

.

T o ta l lia b ilitie s a n d sto c k h o ld e r’s e q u ity .

.

250 000
518 385
669 625

.

1 438 010
$28 353 408

A ssets carried at $2 476 752 000 in th e ab o v e statem en t w ere p led g ed as
c o lla te ra l fo r borrow in gs, to secu re p u blic m o n ies as req u ired by law , to
q u a lify fo r fidu ciary pow ers, an d fo r o th er pu rposes.
M em ber, F ed era l R eserve S ystem , F ed era l D eposit Insu ran ce Corp.
A 'e i r Y o r k
2 3 W a ll S tr e e t, 5 2 2 F ift h A v e n u e a t 4 4 t h S tr e e t,
6 1 6 M a d is o n A v e n u e a t 5 8 t h S tr e e t, 4 0 R o c k e fe lle r P la z a
a t 5 0 th S treet, 2 9 9 P a rk A v en u e a t 4 8 th S treet
In t e r n a t io n a l s u b s id ia r ie s S an F ra n c isc o , H o u sto n ,
M ia m i ( t o o p e n in s p r in g 1 9 7 7 ) , T o r o n t o
l l a n k i n y o ff ie e s a b r o a d L o n d o n , P a ris, B r u s s e ls , A n tw e r p ,
A m s t e r d a m ( B a n k M o r g a n L a b o u c h e r e N .V .) F r a n k f u r t ,
D ü s s e l d o r f , M u n ic h , Z ü r ic h , M ila n a n d R o m e ( t o o p e n in
1 9 7 7 ), T o k y o , S in g a p o r e , N a s s a u
R e p r e s e n t a t iv e o ff ie e s M a d rid , B e ir u t, S y d n e y ,
H o n g K o n g , M a n ila , b a o r a m o , C a r a c a s

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

R A L P H F. LEA CH

C h airm an o f th e E x ecu tiv e C om m ittee
H OWA RD J . M O R G E N S

C hairm an o f th e E x ecu tiv e C om m ittee
T h e Procter 6 - G am b le C om pan y
L E W I S T. P R E S T O N

V ice C h airm an o f the B oard

P residen t
W estern E lectric C om pan y, In corp ora ted
JOHN P. SC H R O E D E R

V ice C h airm an o f th e B oard
WARREN

M.

SHAPLEIGH

P residen t, R alston Purina C om pan y
GEORGE

P.

SHULTZ

P residen t, B e c h te l C orporation
O L C O T T D. S M I T H

A etna L ife an d C asu alty C om pany

79

R aym on d E . W ilson , b ra n ch offices ad ­
m inistration.
N ew tru st officers inclu de A lb ert
Boyko, S te p h e n A. M cG ratty , A rthur
W . M o stek, T e rry L . N etzloff and
Jo h n B . W h itle d g e.
A p pointed assistant v ice presid ents
w ere Jam es B . H aeffn er, M ich ae l J .
L a u e r, W illiam L . K ran tz, C lifford J .
R u tz and L lo y d G . Ziegler.

Officers Receive N ew Duties
A t C & S N a t'l, A tla n ta

Five Promoted to Vice Pres.
A t First C ity N a t'l, Houston

HOUSWORTH

MILLER

RIGG ALL

CORNW ELL

A T L A N T A — T w o senior v ice presi­
dents a t C&S N atio n al hav e receiv ed
new responsibilities. E v a n H . H ousw orth Jr. is m an ag er o f th e leg al d e­
p artm en t an d C h arles M . M iller is in
ch a rg e o f statew id e re ta il b an kin g.

Box 1338 • Victoria, Texas 77901
Statement of Condition
December 30, 1976
RESOURCES
Loans ................................................... $ 57,971,976.44
Federal Funds Sold .........................
10,655,000.00
U.S. Treasury Securities .............
29,353,092.24
U.S. Government Agency
Securities ........................................
18,479,218.75
State, County, and Municipal
Securities ......................................
18,736,029.01
Federal Reserve Bank Stock . . . .
360,000.00
Bank Building, Furniture and
Fixtures .........................................
I ,420,456.99
Interest Earned— Not Collected
.
1,796,069.06
Other Assets ..................................
424,556.56
Cash on Hand and With Banks ..
16,075,530.61
$155,271,929.66
LIABILITIES
Capital
............................................. $ 2,000,000.00
Surplus ...............................................
10,000,000.00
Undivided Profits ..........................
4,581,597.10
Reserve for Contingencies
and Other CapitalReserves...
1,223,220.11
Unearned Interest ..........................
1,270,248.40
Other Liabilities ............................
550,000.00
Reserve for Interest, Taxes, etc. .
3,117,156.64
Reserve for Dividend Payable
January 3, 1977 ............................
100,000.00
Deposits ............................................. 132,429,707.41
$155,271,929.66
OFFICERS
W . B. Callan
Chairman of the Board
John J . Welder
Vice Chairman of the Board
David E. Sheffield
President
Roger Williams
Vice President
W . L. Zirjacks
Exec. Y.P. & Sr. Trust Officer
E. A . Munsch
Vice President
Billy W . Ruddock
Vice President
John V. Larson
Vice President
Aaron A . Wieland
Vice President & Cashier
Patricia McMullen
Vice President
Charles Lassmann
Vice President
Elvin Koehn
Vice President & Asst. Trust Officer

First in Victoria • First in Friendliness

80

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

A. Jo h n R ig g all, v ice presid ent, has
b ee n p laced in ch arg e o f th e b an k ’s
statew id e m ark etin g and ad vertising
program .
G eorge R . C ornw ell I I I was n am ed
a v ice p resid en t in th e real e sta te area
and L ou is J . D ou glass, W . R ich ard L e e
and P erry J. P a in te r h av e b e e n pro­
m oted to assistant v ice presid ents.
M r. H ousw orth jo in ed th e b an k in
1 9 5 9 ; M r. M ille r has b e e n w ith C&S
fo r 1 2 years. M r. R ig g all w as w ith th e
b an k from 1 9 5 1 to 1 9 6 3 and rejo in ed
it in 1 9 7 4 as d irecto r of m arketin g and
ad vertising, a position h e retains.
M r. C ornw ell cam e to th e b an k in
1 9 7 2 , M r. D ouglass in 1 9 7 1 , M r. L e e
in 1 9 6 7 and M r. P a in ter in 1 9 6 8 .

Scott Bowling Named V.P.
A t A labam a Bancorp.
B IR M IN G H A M , A L A .— W .
S co tt
B ow lin g Jr. has b e e n prom oted to v ice
p resid en t at A labam a B an co rp . H e is
tax d irecto r fo r th e H C in ad dition to
p erfo rm in g oth er d uties in th e general
acco u n tin g area.
H e jo in ed th e H C in 1 9 7 5 , fo llow ­
in g service w ith F irs t N ational, L o u is­
ville, and A rthur A n dersen & C o ., N ew
O rleans.

H O U S T O N — F irst C ity N ational has
e le cte d five v ice p resid en ts: Syd ney
S. B aile y , m etro p olitan d ep artm en t;
C h arles A. C h ev is, real e state; B rian
A. G ibson and B ria n H . G reen , L ond on
B ran ch ; and R aym on d E . C astro, q u ali­
ty and float control.
N ew assistant v ice presid ents include
M ich ael C . B ak er, R . D av id Collum ,
G eorge B . K elly and S u e Sorrels D eH aven.
O th e r
prom otions
in clu d e
C e cil
Adam s and O livia A nne Jo h n son , p e r­
sonal b an k in g officers; T h o m as H . D u n gan and S te v e n J . L in d ley , p etroleum
b an k in g officers; D ea n n a L . P ren tice ,
ad m inistrativ e officer; W e sle y E . T h a rp ,
loan ad ju stm en t officer; S te v e n D .
Sh erm an , com m ercial b an k in g officer;
K en n e th F . K u basik, cash m an ag em en t
operations
officer;
A u gust V oelkel,
ch e ck p rocessing officer; G o rd o n B .
B row n Jr ., pension tru st officer; and
F re d e rick B . O lle tt I I I , in tern atio n al
ban k in g officer.

Four Senior VPs Named
A t First of Louisville
L O U I S V I L L E — F irs t N ation al and
F irs t K en tu ck y N ation al Corp. have
e le cte d R o g e r M . D alto n , A rthur F .
G u eld a I I I , R o n ald E . H arris and Jo ­
sep h E . R y an senior v ice presid ents.
T h e y w ere fo rm erly v ice presid ents.
T h e tw o firms also prom oted W il­
liam B . B row n fro m sen ior com m ercial
b an k in g officer to v ice presid ent. M ov­
in g up from sen ior in tern atio n al ban k ­
in g officer to v ice p resid en t was R an ­
dall L . A ttkisson.
F irs t K en tu ck y T ru st nam ed Jam es
F . B le ak le y Jr. an d W illiam F . C h an­
d ler Jr . v ice presid ents. T h e y w ere
sen ior in v estm en t officers.
Also prom oted w ere R o b ert S. B u l­
lock to tru st officer and D o n ald R .
W oo d to financial p lanning officer.
M ansel O . W ile y , p resid en t, C elan ese C oatings & S p ecialties C o ., L ou is­
ville, and v ice p resid en t, C elanese
C orp., N ew York, has jo in ed th e boards
o f F irs t N ational, F irs t K en tu ck y T ru st
and F ir s t K en tu ck y N ational Corp.

United American, Memphis, Ups 2
M E M P H IS — U n ite d A m erican has
prom oted L lo y d W . W a rre n to senior
v ice p resid en t and Jo h n M . Sw inny to
v ice p resid en t and h e ad o f th e com ­
m ercial len d in g d ep artm en t.
B o th m en w ere fo rm erly w ith C om ­
m e rcial & In d u strial B an k , M em phis,
and M r. W arre n also served w ith F irs t
N ation al (n o w F irs t T en n e sse e B a n k )
and C ity N ational, b o th in M em phis.

6 Raised at St. Louis Union Trust
S T . L O U I S — R o y J . S ch ick and
H . E u g e n e B rad fo rd hav e b e e n elected
v ice presid ents a t S t. L ou is U nion
T ru st. B o th w ere fo rm erly assistant
v ic e presid ents.
Q u en tin H . G ansloser, R ich a rd T .
G oew ert, Jo h n B . K en n ed y and Jo h n
R ab e n au w ere n am ed assistant vice
presid ents.

MID-CONTINENT BANKER for February, 1977

Land Bank Assn. Heads Named
W IC H IT A — E lv is H ow ell and T o m
K ru se h av e b e e n prom oted to regio nal
v ice p resid en t and assistant v ice presi­
d en t, resp ectiv ely , and w ill d ire ct n ew
supervisory regions set up b y th e F e d ­
eral L a n d B ank.
M r. H ow ell w ill d irect supervisory
activ ities fo r 1 9 fe d era l lan d b a n k asso­
ciations in e astern K ansas and O k la­
hom a. M r. K ru se w ill h av e sim ilar
duties fo r 1 8 associations in eastern
C olorado and w estern parts o f K ansas
and O klahom a.
M r. H ow ell jo in ed th e L a n d B an k
System in 1 9 6 6 and M r. K ru se jo in ed
th e F e d e ra l L a n d B an k of W ic h ita in
1972.

p resid ent, su cceed in g Jo h n T . B oysen,
who retired Ja n u a ry 3 1 a fte r nearly 4 3
years w ith th e bank.
S u ccee d in g M r. C zerw inski is Jam es
R . B ow en , w ho has b e e n prom oted to

CONSOLIDATED STATEMENT OF CO NDITION

MERCHANTS NATIONAL BANK OF
MOBILE, ALABAMA
AND THE MERCHANTS NATIONAL BUILDING CORPORATION
At the Close of Business December 31,1976
ASSETS

Texas HCs Complete M erger
D A LLA S— The
m erg er
b etw een
M e rca n tile T exas C orp. and F e d e ra te d
C a p ita l C orp. o f H ou ston has b e e n
co m p leted . A p prov al to m erg e was
vo ted b y b o th corporation s’ stockho ld ­
ers la st M ay and th e F e d gave its ap ­
p roval last N ov em ber.
T h e m erg er cre a te d th e state ’s fifth
larg est H C , w ith to tal resources o f
ab o u t $ 2 .8 billion.
G en e H . B ish o p is ch airm an o f th e
e xecu tiv e co m m ittee and C E O , L ew is
F . L y n e is p resid en t and L . F . M cC o l­
lum is chairm an.

C&l Elects Three Officers
M E M P H IS — C o m m ercial & In d u s­
trial B a n k has e le c te d C arolyn Jo n es
business d ev elop m en t officer, D av id
B ry an assistant cash ier and R o g er M c ­
D a n ie l con stru ction loan officer.
M iss Jo n es is n e w to th e bank. M r.
B ry a n was fo rm erly auditor.

New United Mo. Director
K A N SA S C IT Y — R aym on d M . A lden, presid ent, U n ite d T ele co m m u n ica­
tions, In c ., W estw oo d , K an ., has b ee n
e le cte d a d irecto r o f U n ited M issouri
B an k h ere.

1st o f Wichita Elects Directors
W IC H IT A — F irs t N ation al has e le c t­
ed C. R o b e rt B u fo rd and R ich ard W .
V o lk to its b oard . M r. B u fo rd is presi­
d en t, Z enith D rillin g C orp. and Sew ard
C o u n ty L a n d & C a ttle C orp. M r. V olk
is p resid en t and C E O , E n e rg y R eserv es
G roup.

KC Fed Announces Changes

Cash and Due from B a n k s ....................................................... $ 66,650,802
U. S. Treasury Securities ..........................................................
35,147,005
Securities of Other U. S. Government Agencies and
Corporations .........................................................
2,000,000
Obligations of States and Political Subdivisions...............
53,024,331
Other Securities .............................................................................
2,696,904
Federal Funds S o l d ............................................
12,000,000
Loans .................................................................................................. 287,426,849
Less: Reserve for Possible Loan Losses ............................
(3,026,038)
Unearned Interest on Loans ...............................................
(7,016,248)
Net Loans ........................................................................
Bank Premises and Equipment ...............................................
Customers’ Acceptance Liability .............................................
Income Earned but Not C o llected ...........................................
Other Assets ...................................................................................

277,384,563
12,116,451
314,545
4,982,374
3,407,663

TOTAL ASSETS ...................................................................... $469,724,638
LIABILITIES

Deposits .............................................................................................. $428,721,639
Federal Funds Purchased and Securities Sold
Under Agreement to Repurchase ......................................
11,214,508
Mortgage Payable (Merchants National Building Corp.)
225,000
Bank’s Acceptances Outstanding ...........................................
314,545
Reserves for Accrued Taxes, Unearned Income,
Interest and Expenses ............................................................
2,387,250
TOTAL LIA BILITIES ............................................................ $442,862,942
CAPITAL ACCOUNTS
EQUITY CAPITAL
Common Stock ...........................................................................
Surplus .........................................................................................
Undivided Profits ......................................................................
Reserve for Contingencies and Other Capital Reserves

3,500,000
16,500,000
6,811,937
49,759

TOTAL CAPITAL ACCOUNTS .................................. $ 26,861,696
TOTAL LIABILITIES, RESERVES AND
CAPITAL ACCOUNTS ..................................................... $469,724,638
Contingent Liability on Letters of Credit Issued but Not
Drawn Against ........................................................................... $ 11,391,585

K A N SA S C IT Y — H en ry R . C zerw inski, sen ior v ice p resid ent, K ansas
C ity F e d , has b ee n ap p o inted first v ice

MID-CONTINENT BANKER for February, 197 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

senior v ice p resid ent from v ice presi­
dent.
M r. C zerw inski jo in ed th e b an k in
1 9 5 9 an d M r. B ow en has b ee n w ith th e
b an k sin ce 1 9 6 4 .

MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION

81

W atson N am ed Exec. VP
A t Bank of Oklahoma, Tulsa
T U L S A — B an k of O klahom a has
nam ed C harles A. W atson execu tiv e
v ice presid ent.
M r. W atso n had b ee n senior vice
p resid ent fo r operations fo r 2/2 years.
H e continu es to oversee h alf th e b a n k ’s
7 0 0 em ployees in areas such as b ook­
keeping, d ata processing, ch e ck pro­
cessing, officer services and security.
H is previous b an k in g exp erien ce had
b e e n w ith F irs t C ity N ational, H ous­
ton.
In oth er action, B an k of O klahom a
prom oted R o n M u rray to assistant vice
p resid ent, personal accou nts service;
R ussell Snow to assistant v ice presi­
d en t, com m ercial b an k in g ; T o m H um ­
ph rey and Jim H arris to assistant v ice
presid ents, op eration s; and S tev e B ritland to tru st officer.

shares, p aren t H C of A m erican N ation ­
al. H e jo in ed H am ilton B an k in 1 9 6 3
and has b ee n p resid ent and a d irecto r
sin ce 1 9 6 9 .

M erchants National, M obile,
Announces O fficer Promotions
M O B IL E ,
A L A .— M erchants
N a­
tional has prom oted M aynard E . (J o e )
G liddon Jr. to senior v ice presid ent
and com ptro ller; C lare n ce C . K eller to
senior v ice presid ent, P. R . F o rrest Jr.
to v ice p resid ent and K ay Iv e y and
Jam es P. Lyons to assistant v ice presi­
dents.

in crease of 14.5% over the $ 2 .5 5 per
share earn ed in 1 9 7 5 . N e t in terest in­
com e fo r 1 9 7 6 in creased b y 12%, from
$ 4 4 .9 m illion to $ 5 0 .2 m illion, as a re­
sult of a 7% in cre ase in average earning
assets and a d eclin e in th e average
rates paid on in terest-bearin g liabilities.
Also co n trib u tin g to im proved earnings
was a red u ction in n et loan losses from
$ 4 m illion in 1 9 7 5 to $ 2 .4 m illion in
1976.

Wichita HC Sets Record Gain
W IC H IT A — F o u rth F in a n c ia l Corp.
has rep orted all-tim e highs in loans and
deposits w ith to tal assets at y ear-end
exceed in g $ 5 0 0 m illion fo r th e first
tim e.
N et incom e rose 10.3% to $ 1 .8 5 per
share fo r 1 9 7 6 , to tal assets increased
13% to $ 5 5 2 m illion, deposits on D e ­
ce m b e r 3 1 stood a t nearly $ 4 2 9 m il­
lion, a gain of alm ost 11%, and loan
volum e was up 18.6%.

Liberty N at'l Reports Increase
GLIDDON

W ATSON

CA N N O N

KELLER

FORREST

Federal Land Bank, Wichita,
Promotes Cannon, Filbert
W IC H IT A — T h e F e d e ra l L an d B an k
has prom oted Jam es D . C an non to v ice
presid en t-rev iew and D ary l F ilb e rt to
assistant v ice p resid ent-ap praisals to
su cceed M r. C annon.
M r. C an non head s a new ly e stab ­
lished review division and M r. F ilb e rt
h ad relo cated from H ays to W ich ita.

Baker Joins 1st of Mobile
M O B I L E — A. D onald B ak er has
jo in ed F irs t N ational as an assistant
v ice p resid en t in th e com m ercial len d ­
ing d ep artm ent. M r. B ak er was fo rm er­
ly w ith C&S N ational, A tlanta, and
w ith P acific F in a n c e Co.

Two Promoted to Vice President
At American of Chattanooga
C H A T T A N O O G A — A m erican
N a­
tional has prom oted W illis T . M cG h in nis Jr. and D on A. D avis to v ice presi­
dents.
M r. M cG h in n is jo in ed th e b an k in
1 9 6 9 and M r. D avis has b ee n w ith
A m erican N ational sin ce 1 9 6 8 .
Tho m as C . M o ttern , presid ent, H am ­
ilton B an k , Jo h n son C ity , has b ee n
nam ed to th e b oard of A ncorp B an c-

82

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Federal Reserve Bank of St. Louis

OKLAH OM A
C IT Y — C onsolid ated
n e t op erating incom e fo r 1 9 7 6 fo r L ib ­
erty N ation al C orp. w as $ 4 .9 m illion,
or $ 5 .9 0 p er share. E arn in g s fo r 1 9 7 5
w ere $ 4 .5 m illion, or $ 5 .4 7 p er share.
C onsolid ated
resources fo r
1976
w ere $ 1 .1 b illio n , com pared w ith $ 9 2 0
m illion a y e a r earlier. Y ear-en d d e­
posits fo r L ib e rty N ational B an k w ere
$ 8 2 8 m illion.

National Boulevard Earnings Up

N ew officers are B ates R . M artin Jr.,
assistant v ice p resid ent and petroleum
en g in eer and M rs. W ilm a Sim m ons, as­
sistan t cashier.
M r. G lid d on jo in ed th e b an k in 1 9 4 0
and M r. K eller has b e e n w ith th e b an k
since 1 9 5 5 . M r. F o rre st joined th e b an k
in 1 9 6 9 , M iss Iv e y in 1 9 7 0 , M r. Lyons
in 1 9 7 2 , M r. M artin in 1 9 7 6 and M rs.
Sim m ons in 1 9 6 1 .

C H IC A G O — N e t incom e o f $ 2 .1
m illion, or $ 1 0 .6 3 p er share, was re­
p orted b y N ation al B o u lev ard B an k for
1 9 7 6 . T h is represents an in crease of
8.7% over th e $ 2 m illion, or $ 9 .7 7 per
share, record ed in 1 9 7 5 .
A verage d aily deposits in 1 9 7 6 w ere
$ 3 1 8 m illion w ith b o th tim e and d e­
m and deposits up slightly. R egular
passbook savings at year-en d increased
b y 30% to a record $ 6 1 m illion.

Nortrust Has Record Earnings
Mona Cunningham Retires
W IC H IT A — M ona C u nningham has
retired from U n ion N ational, w here she
was v ice p resid en t and personnel di­
rector. Sh e had b een w ith th e b an k 4 2
years. M rs. C u nningham was p resid ent,
N ational A ssociation o f B an k W om en ,
1 9 6 6 -6 7 .

Record Earnings for 1st Alabam a
M O N TGO M ERY,
A L A .— R eco rd
earnings hav e b e e n announced b y F irst
A labam a B an csh ares. In co m e b efo re
secu rities tran saction s fo r 1 9 7 6 was
$ 1 4 .4 m illion, or $ 2 .9 2 p er share, an

C H IC A G O — N ortrust C orp., parent
of N orthern T ru st, has rep orted pre­
lim inary year-en d financial figures th at
show ed incom e b efo re secu rity gains
and losses for 1 9 7 6 at a record $ 2 7
m illion. T h e 1 9 7 5 figure was $ 2 6 .8 m il­
lion. E arn in g s on a p er-share basis
w ere $ 5 .4 1 , com p ared w ith $ 5 .3 5 the
previous year. A fter n e t secu rity gains
of $ 2 0 0 ,0 0 0 , n e t incom e am ounted to
$ 2 7 .2 m illion, or $ 5 .4 5 p er share, as
again st $ 2 6 .3 m illion, or $ 5 .2 5 per
share, in 1 9 7 5 .
N e t loan charge-offs in 1 9 7 6 totaled
$ 3 2 7 ,0 0 0 , again st $ 2 .6 m illion for
1975.

MID-CONTINENT BANKER for February, 1977

ST. LOUIS COUNTY NATIONAL BANK
OFFICERS

CLAYTON, MISSOURI

MERLE M. S A N G U IN ET
Chairman of the Board,
President and Chief
Executive Officer
ROBERT C . W O LFO R D
Executive Vice President

Statement
of Condition
ASSETS
Cash and due from b a n k s ........................... $ 29,229,003
Due from banks— interest b e a r in g ..........
3,529,314
Investment securities:
United States Government .....................
30,399,486
States and political subdivisions ........
30,078,654
Other securities .........................................
6,542,052

Federal funds sold and securities
purchased under agreements to resell .
Loans (net of unearned discount of
$1,098,936 and reserve for possible
loan losses of $1,057,744) .......................
Bank premises and equipm ent .................
Other a s s e t s .....................................................

67,020,192
52,692,243

126,203,959
1,432,013
7,426,109
$287,532,833

LIA B ILITIES AND STOCKHOLDERS’ EQUITY
Demand d e p o s its ............................................ $116,565,257
Savings and tim e deposits .......................
135,570,095
Total deposits ....................................
Federal funds purchased and securities
sold under agreements to repurchase .
Other liabilities ..............................................

OPER ATIO N S
LAW R ENCE D. ABELN
Vice President and Comptroller
SYDNEY Y. PENDLETON
Vice President, Data Processing
W ALTER E. BECKER
Assistant Vice President
JAM ES M. MARLER
Assistant Vice President
PAUL L. GIBBONS
Cashier
GERALD P. FAGIN
Data Processing Officer
GILBERT E. FARRELL
Data Processing Officer
W ILLIA M E. CAR R OLL
Assistant Cashier
DAVID EVANGELO FF
Assistant Comptroller

C O M M E R C IA L B A N K IN G
RODNEY F. HILL
Senior Vice President
C. U. IM BODEN
Vice President
LESTER O . W AG N ER
Assistant Vice President
D O N A L D A . WIBBENMEYER
Assistant Vice President
M AR THA R. SHEERIN
Assistant Vice President
TH O M A S C. JAM ES
Commercial Loan Officer

DECEMBER 31, 1976

Total investment securities ..........

JERRY L PATTON
Installment Credit Officer

252,135,352
11,825,451
2,845,871

Total lia b ilitie s ....................................

266,806,674

Stockholders’ equity:
Common s t o c k .............................................
Capital s u r p lu s ............................................
Retained earnings ....................................

5,000,000
10,000,000
5,726,159

Total stockholders’ e q u it y ...............

20,726,159
$287,532,833

MORTGAGE LOANS
TH O M A S M. N O O N A N
Vice President
PATRICK H. STEVENSON
Mortgage Loan Officer

M A R K E TIN G
CURTIS L. GILES
Vice President
JAM ES S. W O LF
Marketing Officer

BUSINESS D E V E L O P M E N T
RICHARD J. KEMPLAND
Vice President
JOSEPH M. W ILSO N
Marketing Officer

PERSONNEL
M ARGIE M. KING
Personnel Officer

C O R P O R A T E SERVICES
JERRY DEMPSEY
Vice President
C U S T O M E R SERVICES
JERRY E. STAMM
Vice President
R AYM O ND F. ERKER, JR.
Assistant Vice President
RICHARD H. TH O M A S
Assistant Vice President
N O R IN N E HOBBS
Assistant Cashier
PAULINE M ITSCHELE
Assistant Cashier
TH E LM A S C H L O B O H M
Assistant Cashier
HARRIS E. W ILIAM S
Assistant Cashier
IN S T A L L M E N T CREDIT
KENNETH W . BEAN
Assistant Vice President
THERESA S. KRONER
Installment Credit Officer
DENNIS L. HASSLER
Installment Credit Officer

A U D IT IN G
PAUL M. STRIEKER
Auditor
TR U ST D E P A R T M E N T
GEORGE R EICHM AN
Vice President and Trust Officer
J A C E. GRISW OLD
Trust Officer
W ILLIA M L. H O E M A N
Trust Officer
W ILS O N F. H U N T
Trust Officer
CARL ENLOE
Vice President and Trust
Investment Officer
JAM ES R. A LB A C H
Assistant Trust
Investment Officer
GERALD L. WEDEMEIER
Assistant Trust Officer
O TW A Y RASH, IV
Assistant Trust Officer
R O NALD H. SPICER
Assistant Trust Officer

BOARD OF DIRECTORS
DAVID D. C H O M E A U
President
Reliable Life Insurance Co.
J. G O R D O N FORSYTH
Vice President
Forsyth Carterville Coal Co.
JA C K R. HENNESSEY
President
Hennessey-Forrestal Machinery
Company
*LEE HUNTER
Chairman of the Board
Hunter Engineering Co.
JAM ES C . LAFLIN
Vice President
Southern Comfort Corporation
J O H N K. LILLY
Investments

BEN PECK
P r e s id e n t

Wohl Shoe Company
MERLE M. S A N G U IN ET
Chairman of the Board
President and Chief
Executive Officer
EDWARD H. S CH M ID T
Former Chairman of the Board
L. EDWARD SMART
President
Imperial Refineries Corporation
JULES Q . STRONG
Attorney
M A H L O N B. W A LL A C E , III
President
Wallace Pencil Company
ROBERT C. W O LFO R D
Executive Vice President

* Advisory director.

ST LOUIS

CONFIDENCE COMES
WITH COUNTY NATIONAL

COUNTY
NATIONAL
BANK
CLAYTON, MO.
MAIN BANK: 8000 FORSYTH
M IN I-BA N K : 7520 FORSYTH
Phone 726-2255 • Member F.D.I.C.

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

83

Record Set for Central HC

Earnings Jump at 1st Okla. HC

B IR M IN G H A M , A L A .— U n au d ited
to tal assets fo r C en tral B an csh ares of
th e Sou th fo r 1 9 7 6 stood a t $ 1 .3 3 b il­
lion, an in crease of 25% over 1 9 7 5 fig­
ures. U n au d ited n e t earnings p er share
fo r th e y ear end ed D e ce m b e r 3 1 , 1 9 7 6 ,
w ere $ 1 .7 4 p er share, com pared to
$ 1 .2 4 p e r share in 1 9 7 5 . T h is rep re­
sents a 40% gain. N e t earnings fo r 1 9 7 6
w ere $ 1 1 .5 m illion, com p ared to $ 8 .2
m illion fo r 1 9 7 5 .

O K L A H O M A C IT Y — A 25% in crease
in earnings fo r 1 9 7 6 over 1 9 7 5 w as re ­
p o rted b y F irs t O klahom a B an co rp .
T o ta l n e t in com e w as $ 1 0 .9 m illion. O n
a p er-share basis, in co m e from op era­
tions to taled $1 in 1 9 7 6 , com p ared to
8 0 0 fo r 1 9 7 5 .

BNO Reports Income
N EW
O R L E A N S — N ew
O rleans
B an csh ares rep o rted 1 9 7 6 n e t earnings
of $ 2 m illion, or $ 2 .5 5 p er share, com ­
p ared w ith 1 9 7 5 n e t earnings o f $ 2 .3
m illion, or $ 2 .8 8 per share.
T h e d ecrease is a resu lt o f in creased
o p eratin g expenses and additions to th e
loan loss reserve o f B an k of N ew O r­
leans. T h e d ecrease, how ever, was
larg ely offset b y im provem ents in th e
funds m argin and after-tax gains on th e
sale o f secu rities.
A t y ear-en d , to tal assets o f B an k of
N ew O rleans stood a t $ 5 8 9 m illion, d e­
posits a t $ 4 7 1 m illion and n e t loans
ou tstand in g a t $ 2 5 4 m illion.

Commerce Bancshares Earnings Up
K A N SA S
C IT Y — P relim in ary
un­
au d ited conso lid ated earnings fo r 1 9 7 6
o f $ 1 5 .4 m illion, or $ 3 .3 0 p e r share,
w ere announced b y C o m m erce B a n c ­
shares. T h e figures com p are w ith earn ­
ings fo r 1 9 7 5 o f $ 1 4 .5 m illion, or $ 3 .0 4
p er share. T h e in crease rep resents 8.6%
in p er-share earnings and 6.4% in d ollar
earnings.
T o ta l assets h it $ 1 .8 billion a t yearend 1 9 7 6 , com p ared to $ 1 .6 b illio n a
y e ar earlier— an in crease o f 11.5%. T o ­
tal deposits rose to a reco rd am ount o f
$ 1 .5 b illion for 1 9 7 6 , com p ared to
$ 1 .3 b illio n in 1 9 7 5 , an in crease of
12.9%.

Citizens Fidelity Earnings Up
L O U I S V I L L E — A 14% in crease in
earnings b efo re secu rities tran saction s

Record Income at Fourth of Tulsa

FIRST PASADENA
S anL

PASAD ENA, TEXAS
AT THE CLOSE OF BUSINESS DECEMBER 31, 1976
RESOURCES
C a s h an d D u e f r o m B a n k s ....................................... $ 2 5 ,6 4 0 ,2 8 2 .9 1
S ecu rities .................................................................................
4 4 ,1 6 3 ,3 9 9 .0 5
Loans
..............................................................................................................................
F e d e r a l F u n d s S old ...............................................................................................
R e a l E s ta te , F u r n itu r e an d F ix tu re s ........................................................
O th e r R e s o u rc e s ....................................................................................................
TO TAL

....................................................................................................

$ 6 9 ,8 0 3 ,6 8 1 .9 6
7 4 ,3 5 6 ,1 7 3 .8 5
7 ,0 0 0 ,0 0 0 .0 0
3 ,4 9 3 ,0 1 7 .1 9
3 ,4 7 1 ,7 5 4 .7 4
$ 1 5 8 ,1 2 4 ,6 2 7 .7 4

LIABILITIES
C a p ita l S to ck .............................................................................................................
C ertified S urplus ....................................................................................................
U n d ivid ed P rofits an d R e se rv e s ...................................................................
D ep o sits ........................................................................................................................
TOTAL

....................................................................................................

$

3 ,0 0 0 ,0 0 0 .0 0
5 ,0 0 0 ,0 0 0 .0 0
1 0 ,0 9 1 ,5 6 2 .3 4
1 4 0 ,0 3 3 ,0 6 5 .4 0

$ 1 5 8 ,1 2 4 ,6 2 7 .7 4

M rs. M a r c e l l a D . P e r r y

S. R . J o n e s , J r .

Senior Chairman of the Board

Chairman of the Board and
Chief Executive Officer

J . W . A n d erso n

H ow ard T . T e l l e p s e n

J . O . K ir k

Vice Chairman o f the Board and
Vice Chairman of the Board
Chairman of the Executive Committee
Executive Vice Presidents
B . F. H olcom b

G . M . M a gee

E . T . Sh e p a r d , J r .

President

(and Cashier)

Senior Vice Presidents
J am es B . C la ry

W . E . M arsh

C a r r o l l D . D a v id so n

W

en d ell

MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION

84

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Federal Reserve Bank of St. Louis

Income Up at 1st Tenn. N at'l
M E M P H IS — F irs t
T e n n e sse e
N a­
tion al C orp. reports n e t in co m e per
share fo r 1 9 7 6 of 9 8 0 , a 27% in crease
over th e 7 7 0 p e r share figure fo r 1 9 7 5 .
N e t in com e w as $ 8 .7 m illion in 1 9 7 6
and $ 6 .9 m illion in 1 9 7 5 .
T h e earnings in crease w as attrib u ted
to satisfacto ry grow th in m ajor incom e
stream s and con tin u ed control of non­
in te rest op erating expenses. L oan-loss
provision w as $ 1 8 .5 m illion fo r 1 9 7 6 ,
up from $ 1 6 .7 m illion in 1 9 7 5 . M an ­
ag em en t exp ects th a t th e ch arg e to
earnings from th e loan-loss provision
w ill b e re d u ced this year.

S T A T E M E N T O F C O N D IT IO N

S ta te

has b e e n rep orted b y C itizen s F id e lity
Corp. In co m e fo r 1 9 7 6 stood a t a re c ­
ord $ 9 .8 m illion, or $ 3 .9 2 p e r share,
com pared to $ 8 .6 m illion, or $ 3 .4 4 p er
share, fo r 1 9 7 5 .
D u rin g 1 9 7 6 , $ 2 .5 m illion in loans
w as ch arg ed off, a slig h t red u ction
from th e 1 9 7 5 figure. C o m m ercial loan
d em and rem ain ed b elo w expectations
throughout th e y ear, b u t n e t average
conso lid ated loans grew 10.5% to $ 5 3 8
m illion.

F. W

a llace

T U L S A — F o u rth N ational C orp. re ­
p o rted reco rd to tals a t y ear-en d 1 9 7 6
of to tal resources, deposits, loans and
n e t incom e.
T o ta l resources w ere $ 2 4 5 .8 m illion at
year-en d 1 9 7 6 and $ 2 0 2 .5 m illion at
y ear-en d 1 9 7 5 , a 21% in crease. N e t in ­
com e fo r 1 9 7 6 w as $ 1 .8 m illion, com ­
p ared to $ 1 .3 m illion in 1 9 7 5 , a 33%
gain. D ep osits rose 25% from $ 1 7 6 .1
m illion in 1 9 7 5 to $ 2 2 0 .1 m illion in
1 9 7 6 . L o an s w ere up 22%, from $ 1 0 9
m illion in 1 9 7 5 to $ 1 3 2 .7 m illion in
1 9 7 6 . C ash dividends paid p e r share
w ere $ 1 .5 0 fo r 1 9 7 6 , com pared w ith
$ 1 .2 5 fo r 1 9 7 5 .

$500 Million Assets for Worthen
L IT T L E
R O C K — W o rth e n
B ank
c e le b ra ted its cen ten n ial b y announcing
it broke th e $500-m illio n -asse t barrier
in 1 9 7 6 , b e in g th e first b an k in A rkan­
sas to do so. T o ta l assets on D ece m b e r
3 1 , 1 9 7 6 , w ere $ 5 1 6 m illion.
A t th e tim e th e b an k d ed icated its
24-sto ry b u ild in g in 1 9 7 0 , assets stood
a t $ 2 1 9 m illion, less th an h a lf th e pres­
en t size. D u rin g th e sam e seven-year
period, th e b an k ’s to tal deposits in­
creased from $ 1 9 6 m illion to $ 3 8 3 m il­
lion. G ross loans in creased from $ 1 1 2
m illion to $ 2 8 0 m illion.

Earnings Up 2 4 .3 % at United Mo.
K A N SA S
C IT Y — U n ite d
M issouri
B an csh ares reports n e t in co m e o f m ore

MID-CONTINENT BANKER for February, 1977

th an $ 1 0 m illion fo r 1 9 7 6 , an in crease
of alm ost $ 2 m illion, or 24.3% over
1 9 7 5 earnings.
O n a p er-share basis, n e t incom e
am ounted to $ 4 .4 3 , a 26.2% in crease
ov er th e $ 3 .5 1 earn ed in 1 9 7 5 .
T o ta l resources o f th e H C stood at
$ 1 .2 b illio n a t y ear-en d 1 9 7 6 , com ­
p ared to $ 1 .1 b illion a y ear earlier. D e ­
posits in creased 21.5% to $ 8 9 4 m illion
from $ 7 3 6 m illion in 1 9 7 5 . L o an s w ere
up 40.5% to $ 5 3 5 m illion.

Assets Up at Mercantile
ST.
L O U IS — M ercan tile B an corp ,
rep o rted a sligh t d eclin e in 1 9 7 6 earn ­
ings from record figures in 1 9 7 5 . C o n­
solid ated
in com e
b efo re
secu rities
tran saction s fo r 1 9 7 6 am ounted to
$ 2 2 .1 m illion, a d eclin e o f 4% from last
year’s $ 2 3 .1 m illion. T h is represents
$ 3 .8 1 p e r share, dow n 5.7% fro m 1 9 7 5 ’s
$ 4 .0 4 p e r share.
T o ta l assets o f th e H C a t y ear-end
stood at $ 3 .1 billion , a 12.3% in crease
from last y ear’s $ 2 .8 billion . T o ta l d e­
posits stood a t $ 2 .2 b illio n , a 7% in ­
crease over 1 9 7 5 ’s to tal. L o an s w ere
$ 1 .3 billion , an in crease o f 12.7% over
1 9 7 5 ’s $ 1 .1 billion.

Second-Highest Earnings
T U L S A — B an cO k lah o m a C orp. had
1 9 7 6 u n au d ited earnings o f $ 5 .8 m il­
lion, a d ecrease o f 5.4% from 1 9 7 5 . Y et
1 9 7 6 earnings w ere th e firm ’s second
h ig h est in history. N e t in com e p er
share w as $ 2 .6 6 fo r 1 9 7 6 , com pared
to $ 2 .8 0 p er share fo r 1 9 7 5 .
T o ta l loans a t y ear-en d 1 9 7 6 w ere
$ 4 0 8 m illion, a 1.7% in cre ase over
1 9 7 5 ’s $ 4 0 1 m illion. T o ta l deposits at
y ear-en d 1 9 7 6 w ere $ 6 6 7 m illion, com ­
p ared to $ 6 0 4 m illion fo r 1 9 7 5 , a 10.4%
in crease.

1st Bancgroup-Ala. Reports Gain
M O B IL E , A L A .— C onsolid ated op­
eratin g in com e fo r 1 9 7 6 fo r F ir s t B a n cgroup-A labam a w as $ 1 .9 5 p e r share,
up 3.7% from 1 9 7 5 . N e t in com e was
$ 2 .0 1 p e r share, up 9.8% over 1 9 7 5 .
T o ta l assets in creased to $ 5 8 9 m il­
lion from $ 5 4 2 m illion a y e ar previous.

A labam a Bancorp. Assets Up
B IR M IN G H A M ,
A L A .— A labam a
B an co rp ’s n e t incom e fo r 1 9 7 6 was
$ 1 7 .1 m illion, com pared to $ 1 7 .5 m il­
lion fo r 1 9 7 5 , rep resen tin g a 2.6% de­
crease. O n a p er-sh are b asis, n e t in ­
com e w as $ 2 .9 3 versus $ 3 .0 1 .
T o ta l assets a t y ear-en d w ere $ 1 .9
b illion , a 10% in crease over 1 9 7 5 figures.
T o ta l deposits a t year-en d w ere $ 1 .6
b illion , a 12% in crease. L o an s in creased
16.4% to $ 9 9 1 m illion.

Harris Earnings Up 5 %
C H IC A G O — C onsolid ated
in com e
b efo re secu rities gains or losses for
H arris B an k co rp was a reco rd $ 3 1 .8
m illion in 1 9 7 6 , com pared w ith $ 3 0 .2
m illion in 1 9 7 5 , a 5% gain.
E arn in g s p er share of $ 5 .0 8 w ere up
2% from th e $ 4 .9 7 figure fo r 1 9 7 5 .
Provision fo r loan losses w as in ­
creased to $ 5 m illion in 1 9 7 6 , com ­
p ared w ith $ 3 .6 m illion in 1 9 7 5 . A t
y ear-end , th e reserve fo r possible loan
losses was $ 2 3 m illion, or 1.3% o f to tal
loans, com p ared to $ 2 5 .6 m illion, or
1.4% o f to tal loans, at th e end o f 1 9 7 5 .
N e t loan losses in 1 9 7 6 w ere $ 7 .6 m il­
lion, com p ared w ith $ 2 .9 m illion in
1 9 7 5 . T h e 1 9 7 6 losses in clu d e a $ 4 .5
m illion w rite-d ow n of one real estate
con stru ction loan. A verage to tal loans
in 1 9 7 6 ( $ 1 .8 b illio n ) w ere dow n 7%
from 1 9 7 5 .

First Amtenn Reverses Loss
N A S H V IL L E — A
strong
financial
turnaround b y F irs t A m erican N ational
co n trib u ted sub stan tially to in creased
earnings in 1 9 7 6 fo r F ir s t A m tenn
C orp. C o nsolid ated in co m e b efo re se­
cu rity tran saction s fo r 1 9 7 6 w as $ 3 .7
m illion, or 6 5 0 p er share. A y ear earlier

First Capital Income Up
JA C K S O N ,
M IS S .— F irs t
C ap ital
C orp., H C controlling F irs t N ational,
rep orted n e t in com e fo r 1 9 7 6 b efo re
secu rity tran saction s of $ 8 .5 m illion,
or $ 4 .8 1 p e r share, com pared to $ 8
m illion, or $ 4 .5 2 p er share, fo r 1 9 7 5 .
T o ta l H C resources w ere $ 8 5 8 m il­
lion a t year-en d , com pared to $ 7 5 5
m illion a y ear previous.

Hibernia Has 'Excellent' Earnings
N E W O R L E A N S — C onsolid ated in ­
com e b e fo re secu rities tran saction s fo r
H ib ern ia Corp. in creased 18.2% to $ 4 .5
m illion, or $ 5 .0 4 p e r share, from com ­
p arab le 1 9 7 5 earnings o f $ 3 .8 m illion,
or $ 4 .2 6 p e r share. C onsolid ated n e t
incom e a fte r secu rities tran saction s to ­
taled $ 4 .3 m illion, com p ared to $ 3 .9
m illion a y ear earlier. T o ta l assets, de­
posits and loans— on a year-en d and
average d aily basis— reach ed th e h igh ­
e st levels in th e firm ’s history.

PIONEER BANK fv TRUST E0 .
2211 South Big Bend Blvd.

St. Louis, Mo. 63117

CONDENSED STATEMENT OF CONDITION
RESOURCES

December 31, 1976

Cash and due from Banks ................................................................ $ 3,386,252.19
U.S. Government Bonds and Agencies ........................................
13,537,941.41
Municipal Bonds and Other Securities ..........................................
1,384,932.33
Loans and Discounts ........................................................................... 33,054,435.98
Federal Funds Sold .............................................................................
6,500,000.00
Banking House, Equipment and Parking Lots .............................
365,120.67
Earned Interest Receivable ................................................................
501,696.57
Other Resources ...................................................................................
971,610.45
$59,701,989.60
LIABILITIES
Capital— Common Stock ............................................... $1,000,000.00
Surplus ............................................................................. 2,000,000.00
Capital Notes Sinking Fund ...........................................
100,000.00
Undivided Profits
...................................................... 1,492,720.10

1,000,000.00
2,000,000.00
1,129,100.08

Total Capital Account ................................................................ $ 4,592,720.10
Valuation Reserve
.............................................................................
437,298.35
Reserve for Taxes,Interest,Insurance, Etc.........................................
666,692.90
Reserve for Interest and Commissions Received in Advance ..
271,932.07
-0Dividends Declared Not Yet Payable ............................................
Securities Sold UnderAgreements toRepurchase ......................
1,300,000.00
Federal Funds Purchased ..................................................................
-0Other Liabilities ...................................................................................
1,279,522.66
Deposits ..................................................................................................
51,153,823.52

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

th e H C rep o rted a loss of $ 3 .8 m illion,
or 6 7 0 p er share.
A dditions to th e loan-loss allow ance
fo r 1 9 7 6 w ere ab o u t $ 1 8 m illion, com ­
p ared to ab o u t $ 3 2 m illion in 1 9 7 5 .
T h is rep resen ted 1.71% of to tal loans as
of D e ce m b e r 3 1 , 1 9 7 6 , com pared to
2.41% a y ear earlier.

$59,701,989.60
M EM B ER

FEDERAL

DEPO SIT

IN S U R A N C E CORPORATION

85

Joint Exception Item Task Force
Announces Preliminary Findings
T

H E JO I N T E x ce p tio n Ite m Task
F o rc e , com posed o f representativ es
of th e A B A , B A I and th e F e d , has com ­
p leted its prelim inary w ork lead in g to
conclu sive findings to b e p u blished this
spring.
T h e task fo rce b e g a n w ork last April
and has b e e n analyzing a n u m ber of is­
sues raised at an E x ce p tio n Ite m C o n­
fe re n ce sponsored b y B A I last M arch.
T h e task fo rce pursued its analysis
through th ree subgroups, each address­
ing a specific area of th e to tal e xce p ­
tion-item problem . A retu rn-item s w ork­
ing group, an ad ju stm ents w orking
group and a re je cts w orking group each
exam ined specific recom m end ations p er­
tainin g to th eir topics and reach ed
te n ta tiv e conclusions.
T h e re je cts w orking group m ade the
follow ing recom m end ations in th e area
of re je c t p rocessing:
• Issu an ce b y e ach F e d office o f a
r e je c t rate rep ort cov ering cash -letter
deposits.
• Q u ality control for M IC R pro cess­
ing should b e ad opted b y all banks.
• F u ll M IC R rep air is encou raged ,
w h en system s are av ailable, to red u ce
volum e and co st of r e je c t processing.
T h is group’s analysis of th e re je c t
p roblem addressed itself to m eans of
red u cin g th e n u m ber of re je cts e n ter­
ing th e system .
E xp an d in g on th e prem ise th a t th e
re je c t pro blem is p ro liferatin g as a re ­
sult of non id entification of th e sources
of re je cts, th e group’s first step tow ard
id entificatio n was a suggestion th at the
F e d pu blish a re je c t-ra te report. T his
proposal w as refined to a reco m m en d a­
tion th at such a rep ort give th e high,
low and av erag e r e je c t rates o f all
banks b ein g serviced b y a F e d office,
w ith th e addressed b an k receiv in g its
individual re je c t rate. T h is p ro ced u re
w ould en able a b an k to com pare its re ­
je c t rate w ith th e high, low and aver­
age, and re late th a t rate to such facto rs
as e qu ip m en t used and volum e. Banks
w ould th en b e ab le to id en tify internal
problem s and re ctify costly situations.

T h e second recom m end ation was in
th e area of qu ality control for M IC R
processing. In v estig atio n show ed th a t
fe w banks actu ally exercise a strict
q u ality control program due to lack
of aw areness of th e p roced u res fo r set­
tin g up such a program . W h ile no spe­
cific rep ort w as p rep ared , th e w orking
group urged th a t this b e an area of
fu tu re work.
A position p ap er is b ein g p repared
on th e final recom m end ation, full
M IC R repair. T h a t p ap er w ill conclude
th a t th e co n cep t of fu ll re je c t repair,
acce p te d industryw ide, could resu lt in
a cost red u ction to th e industry. T h e
group encou rages institu tions th a t have
th e cap ab ility to continu e perfo rm ing
fu ll field repair, d espite th e cu rren t
state of th e art industryw ide.
T h e retu rn-item s w o r k i n g g r o u p
stud ied th ree proposals: end orsem ent
standardization, th e extension of re ­
turn item s deadlines and th e d irect re ­
tu rn of item s to th e b an k o f first d e­
posit th rou gh autom ation.
O n the retu rn-item s d ead line issue,
th e group agreed th at th e co n cep t of
exten d in g th e retu rn-item s d ead line on
N S F item s fro m 2 4 to 4 8 or 7 2 hours
could b e b en e ficial; it also recognized
th e possibility o f u n foreseen problem s
w itho ut fu rth er study of th e effects of
across-the-board im p lem en tation of such
a proced u re.
In th e area of end orsem en t stand ard ­
ization, th e w orking group d rafted a
proposal for a stand ard end orsem en t
specification. I t calls for id entification
of th e b an k o f first-deposit on th e re ­
verse side of th e ch eck in a d esignated
clear-ban d -area, w ith su bsequ en t e n ­
d orsem ent id entified through a sym bol,
th e tech n ology to b e p rescribed b y th e
A m erican N ational Stand ard s In stitu te
B an k in g C o m m ittee.
T h e group also review ed th e area of
m ach in e processing of retu rn item s.
T h e proposal to retu rn item s d irectly
to th e b an k of first-deposit, using exist­
ing read er/ so rter equ ip m en t, was re ­
view ed. U n d er the proposal, retu rn

. . the concept of full reject repair, accepted industrywide ,
could result in a cost reduction to the industry. The group encour­
ages institutions that have the capability to continue performing
full field repair, despite the current state of the art industrywide
86


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Federal Reserve Bank of St. Louis

item s w ould b e qualified w ith the ro u t­
ing n u m ber of th e b an k of first-deposit
— th e dollar am ount using eith er add­
on strips or carry envelopes. Q ualified
item s could th en b e ro u ted using th e
F e d ’s ch e ck p rocessing system .
T h e ad ju stm ents w orking group b e ­
gan prelim inary investigations w ith th e
original ad ju stm en t form s and p ro ce­
dures specified b y B A I’s excep tion
item s study th at h ad b e e n re a cte d to
and review ed b y p articip an ts of th e
E xcep tio n Item s C o n feren ce.
T h e group endorses th e co n c e p t of
stand ard ized ad ju stm en t p r o c e d u r e s
and form s fo r settlin g o f b an k -to -ban k
d ifferences. I t recom m end s a p ilot p ro j­
e c t to d eterm ine th a t im p lem en tation
of stand ard pro ced u res and form s
w ould accom plish a red u ctio n in op­
eratin g losses relativ e to ch e ck end orse­
m ents, an im provem en t in bank/ cus­
to m er relations, and a red u ction o f float
associated w ith ad ju stm ents.
T h e group fe lt th a t a u n ilateral en­
dorsem ent of such p roced u res would
carry less w eigh t tow ard acce p ta n ce of
th e proposal. T h e settlem en t of ad ju st­
m ents w as studied and th e p resen t in­
dustry role in settlem en t of ad ju stm ents
w as p erceiv ed as p rim arily governed b y
individ ual b an k p olicy, lo cal clearing
house rules, U n ifo rm C o m m ercial C ode,
F e d regulations and op erating letters
and p reced en ts o f law . T h e n e t result,
a spokesm an said, “is an incongru en t
h od gepod ge of policies, procedures
and p ractices, w h ich p ro h ib it reliable
statistical com parisons b etw ee n banks,
trad e zones, regio n al b an k in g centers
and F e d officers and/ or banks w ithin
th eir territo ries.”
T h e group recom m end ed to th e full
task fo rce th e fo rm ation of a p ilo t p ro j­
e c t to b e g in in th e spring. T h e task
fo rce su bseq u en tly approved this p ro j­
e ct, w h ich w ill last ab o u t tw o m onths
and address itself to seven p o licies and
proced u res relatin g to in terban k ad­
ju stm ents. T h e p ilo t w ill b e cond u cted
through a te st ban k in a given area
and an oth er w ill b e carried out in the
control b an k op eratin g in a norm al
m ode— fa cilita tin g a com parison of data.
T h e p ilo t p ro je ct w ill b e cond u cted
in e a ch of th e 12 F e d d istricts and al­
m ost 1 0 0 banks h av e b e e n identified
as possible p articip an ts.
B ankers w ishing to u tilize th e reco m ­
m endations of th e task fo rce are urged
to aw ait final conclusions, to b e p u b ­
lished this spring. * *

MID-CONTINENT BANKER for February, 1977

A half-billion-dollar
neighborhood bank is a nice
reflection on everyone.

We've closed the books on one of the best years a Kansas bank has ever
had. And it's a nice reflection on everyone. For Fourth customers, who con­
tributed to record highs in deposits and loans during the year — and for
every Kansan. Because everybody benefits from The Fourth's growing
capability to serve the credit needs of individual customers, plus the needs
of city and state-wide industry.
The progress of The Fourth is evident everywhere, but nowhere more
dramatically than through the introduction of Via, which includes 24-hour
neighborhood banking convenience at all locations. It is Kansas banking's
new dimension — and it represents a bright new future for each of us.

Statement of Condition...December 31
1976

1975

A S S E TS

Cash and due from banks .......................................... .
Investment securities:
U.S. Government obligations ..................................
Federal agency s e c u ritie s ........................................
Obligations of states and political subdivisions . . .
Trading account and other securities ....................
Federal funds sold ........................................................
Securities purchased under agreements to resell . . .

$ 99,485,000

$101,948,000

11,497,000
8,997,000
52,399,000
13,429,000
21,600,000
40,000,000

L o a n s .....................................................................................

269,934,000

Bank premises and equipm ent....................................
Other assets ..................................................................

26,709,000
6,277,000

12,805,000
7,990,000
48,178,000
10,175,000
13,750,000
31,000,000
227,771,000
27,267,000
6,169,000

$550,327,000

$487,053,000

$237,353,000
191,514,000

$220,960,000
165,732,000

Total deposits ......................................................

428,867,000

Federal funds pu rchase d..............................................
Securities sold under agreements to repurchase . . . .
Other liabilities........ .......................................................
Capital n o te ....................................................................
Total liabilities ....................................................

25,150,000
39,825,000
5,197,000
10,000,000

386,692,000
21,900,000
24,990,000
4,685,000
10,000,000

509,039,000

448,267,000

LIAB ILITIES AND S TO C K H O LD E R S ’ EQUITY

Deposits:
Demand ...................................................................... .
Time ............................................................................

Stockholders’ equity ......................................................

A neighborhood bank
as big as Kansas itself.

38,786,000
$487,053,000

TheFourth

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

41,288,000

$550,327,000

Fourth National
Bank & Trust Company,
Wichita, Kansas 67202
Member FDIC

87

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MID-CONTINENT BANKER for February, 1977

Be a Step Ahead of Bank Regulators!
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NEWS
From the Mid-Continent Area
Alabama
■ C O M M E R C IA L
GU ARAN TY
B A N K , M o bile, has nam ed D ic k C oats
assistant v ice p resid en t and E rn estin e
R ud d assistant cash ier and m anager,
D au p h in S tre e t O ffice. M r. C oats re ­
m ains m anager, C o m m ercial G u aranty
B an k B uild ing, and assum es all respon­
sibilities o f th e b an k build in gs, eq u ip ­
m ent, repairs, construction and super­
vision o f p u rchasin g and re lated ex­
pend itu res. M rs. R ud d was assistant
m an ager, D au p h in S tre e t O ffice.
■ SH O A LS
N A T IO N A L , F lo re n ce ,
has prom oted th ree w om en to assistant
v ice presid ents. T h e y are C a m elia
D ean , E ln a H anson and C h eryl L a m ­
b ert. M iss D e a n is also a tru st officer,
M iss H anson is also an assistant cash ier
and M iss L a m b e rt is also a real estate
officer.
■ H A R R Y P E N N IN G T O N has re ­
tired as chairm an, B an k o f H untsville,
and has b e e n su cceed ed b y Jam es H .
H orton, chairm an and treasurer, H or­
to n O il Co. M r. H orton has b e e n a d i­
re cto r sin ce 1 9 6 9 . M r. P en n in g to n b e ­
gan his term as ch airm an in 1 9 6 8 .

Bank History Published
L IT T L E ROCK— “In the Vaults
of Tim e” is the title of a new book
published to commemorate the cen­
tennial of W orthen Bank. The book
relates to the bank’s history as well
as the history of Arkansas.
Its author, Mary Phyllis Walsh,
was associated with W orthen for
37 years, serving as executive sec­
retary to the chairman until her re­
tirement in 1975.
The book is being distributed to
all descendants of the bank’s founder,
W . B. Worthen, and to correspon­
dent bankers, banking organizations,
W orthen employees and directors
and libraries in the state.
Copies are available to the gen­
eral public at the bank. Price: $7.95
per copy.

A m erican H e art A ssociation board . M r.
D au g h erty is secretary -treasu rer of
G roup I I o f th e A rk.BA .

Illinois

■ J O E L B . C A R T E R and Jim m y
B yars hav e b ee n e le cte d to th e board
of F irs t N ational, R ussellville. M r. C ar­
te r is execu tiv e v ice p resid en t and
jo in ed th e b an k in 1 9 7 3 . H e is also
chairm an, A lab am a Y ou ng B ankers,
G roup I. M r. B yars is ow ner of B yars
F e e d M ill.

■ D E N N IS W . S M IT H has b ee n
e le cte d presid ent, F irs t N ational, C ic ­
ero. M r. S m ith succeed s C arl L . O berw ortm an n in th e p resid en t’s post. M r.
O berw ortm ann w ill con tin u e as ch air­
m an and C E O . M r. Sm ith jo in ed th e
b an k as a d irecto r in 1 9 6 8 . T h e follow ­
in g y ear he jo in ed th e b an k as a v ice
presid ent. H e has served as execu tiv e
v ice p resid en t sin ce 1 9 7 4 .

■ E X C H A N G E B A N K , A ttalla, has
prom oted M arie A kin from v ice p resi­
d en t to first v ice p resid en t and R ay
D rum m onds from assistant v ice p resi­
d en t to v ice p resid ent. M rs. Akin joined
the b an k in 1 9 6 5 . M r. D rum m onds has
b ee n w ith th e ban k six years.

■ G R A N IT E C IT Y T R U S T has pro­
m oted E . A. K aran d jeff Jr. from assist­
an t cash ier to assistant v ice presid ent,
M arilyn G arin to assistant tru st officer
and L e n R e v e lle to assistant cashier.

■ C A D D O S T A T E , G lenw ood, opened
fo r business last m onth. I t is op erating
out of an existing b u ild in g located on
p ro p erty w h ere th e ban k w ill ev en tu al­
ly con stru ct a new build ing. R o b ert M .
M cM ah an is p resid en t and C E O . H e
was form erly associated w ith F irs t N a­
tional, S tu ttg art, and H elen a N ational.
■ B . J.
D A U G H E R T Y , presid ent,
F irs t S tate , C onw ay, and chairm an,
A rkansas H e art A ssociation, has b ee n
nam ed to a tw o-year term on th e

90

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Federal Reserve Bank of St. Louis

■ M I L L I O N N A T IO N A L , D ecatu r,
has announced sev eral prom otions, in­
clu d in g tho se o f R o g er L . B eam an
from tru st officer to v ice p resid ent and
tru st officer and L . D ea n C lausen, as­
sistan t v ice p resid en t, to m anager,
corresp o nd ent services. M r. B eam an
jo in ed th e b an k in 1 9 6 6 and M r.
C lausen in 1 9 7 1 . In o th er action, M illikin N ational has ad v an ced D av id A.
M artin from assistant v ice p resid en t to
cash ier, H e rb e rt J . S lig e r from assistant
tru st officer to tru st officer, V ern on A.
M ercier from assistant cash ier to assist­
an t cash ier and assistan t trust officer
and C arol L . O ldinski, assistant cash ­
ier, to m anager, acco u n t services.

CLAUSEN

BEAMAN

■ F I R S T N A T IO N A L , O ttaw a, has
prom oted W illiam F . Sand ers from as­
sistant v ice p resid en t to v ice p resid ent
and C onrad J. H an ley from assistant
cash ier to assistant v ice president.
N am ed assistant cashiers w ere B e tty
L . M cA boy, P a tricia F la n a g a n and
M ary L . L ik o v ich . A nne E . S e b b y and
Ja n ic e S ta lte r w ere ele cte d ad m inistra­
tiv e assistants. T h e b an k also has three
new d irecto rs: R alp h H . C laus, vice
p resid en t o f th e b an k ; P au l A. G erding,
p resid ent, B ellro se S ilice C o ., O ttaw a;
and W illiam J. W alsh , O ttaw a auto
d ealer.
■ S O Y C A P IT A L B A N K , D ecatu r,
has e lev ated F rits R . P ronk to senior
v ice p resid en t and tru st officer, L arry
E . R am ey to v ice presid ent, M ax C.
F o x to cash ier and R ich a rd D . M inick
to assistant cashier. M r. P ronk has b een
w ith th e b an k fo r 2 0 years. M r. R am ey
jo in ed th e ban k in 1 9 6 7 , M r. F o x in
1 9 6 6 and M r. M in ick in 1 9 7 5 .

HARROW SMITH COMPANY
Union National Bank Bldg.
501/374-7555
Little Rock, Arkansas
J. E. WOMELDORFF, Executive Vice President

■ G L A D S T O N E -N O R W O O D T R U S T
& S A V IN G S , C h icag o , op ened its new
bu ild in g last m onth a t th e northw est
co m e r of F o ste r and C e n tral avenues.
T h e year-old ban k had op erated out
of tem porary qu arters on the site. T h e

MID-CONTINENT BANKER for February, 1977

new bu ild in g inclu des 8 ,0 0 0 squ are
fe e t o f sp ace and is o f contem porary
design w ith fa c e b rick and glass. A d ja­
ce n t to the stru ctu re are th ree driveup lanes.
H R A M S E Y N A T IO N A L op ened for
business in its new b u ild in g in D e c e m ­
b er. T h e bu ild in g is on th e site o f its
fo rm er stru ctu re, w h ich w as destroyed
b y fire last M arch . T h e b an k op erated
ou t of tem porary qu arters in a m obile
hom e d uring th e con stru ction o f th e
n ew b u ild in g, w h ich w as d esigned b y
D esig n Studios, St. Lou is.

■ A IR P O R T N A T IO N A L , B eth alto ,
has prom oted M y m a K . M and orca
fro m cash ier to v ice p resid en t and
cashier. S h e was instrum ental in settin g
up op eration al p roced u res at th e bank,
w h ich op ened last year.
■ F I R S T N A T IO N A L , A lton, has p ro­
m oted E d w ard M . C o rb ett and E u g e n e
L . F rizzo to assistant v ice presidents.
M r. C o rb ett continu es to b e in ch arg e
o f real estate lend ing, and M r. F rizzo
m anages th e in stallm en t loan d ep art­
m ent.

NOW
For O n ly $2®*
You M ay Purchase
This Valuable Manual
As a Guide for Your
Board of Directors!

Indiana

Natural style of architecture is seen in en­
trance to newly opened Ramsey Nat'l building,
located on site of former building that burned
last year.

Interior of Ramsey Nat'l features brown, tan
and cream colors. Windows under roof over­
hangs provide natural light. Building w as de­
signed by Design Studios, St. Louis.

■ M E R C H A N T S N A T IO N A L , A uro­
ra, has pro m oted W illiam L . G oh een ,
O liver M . W o lco tt, Jo h n M . R o esch and
B rad le y R . K reiter to senior v ice presi­
dents. P au l W . Slak er and G erald M .
S ch illin g w ere ad vanced to v ice presi­
dents. M r. R o esch is also cash ier and
M r. S lak er is also a tru st officer. A. W .
W a la n w as e le cte d to th e board. H e is
presid ent, L y o n M e ta l P rod ucts, In c.
■ D O W N E R S G R O V E N A T IO N A L
has prom oted S te v e n H. W ilk ey and
Jam es C . M c llra th to v ice presidents.
M r. W ilk e y jo in ed th e b an k in 1 9 7 1
and M r. M c llr a th has b ee n w ith the
ban k sin ce 1 9 6 7 .
■ A V E N U E B A N K , O ak P ark, has an ­
no u n ced plans fo r a n ew drive-in/ w alkin fa cility in th e n o rth east q u ad ran t of
th e com m unity. T h e fa cility w ill b e th e
third fo r th e ban k and con stru ction is
exp e cte d to b eg in in M arch.

■ A M E R IC A N
N A T IO N A L , Sou th
B en d , has ad van ced Jo h n L . Paulson,
com m ercial loans, and D w ain e S.
M ayle, d ep ositor record s, from assist­
an t v ice p resid ents to v ice presidents.
In ad dition, G ra ce S. M c L e a n has b ee n
prom oted from m o rtgage loan officer
to assistant v ice p resid en t and acting
m o rtgage loan d ep artm en t m anager,
and P hilip A. R au , from loan officer to
assistant v ice p resid ent, B ankA m ericard. Je ffrey F . R e m b le has b e e n e le c t­
ed m anaging officer, B en d ix B an kin g
C en ter.
■ T E R R E H A U T E F I R S T N A T IO N ­
A L has announced a n u m ber of pro­
m otions: Jam es E . B row n, v ice p resi­
dent, and K in g A. F a sig , v ice p resid ent
and tru st officer, to senior v ice presi­
d en ts; Stan ley V . H art, D on L o fto n ,
R aym on d L . N orris and Je rra ld L .
T itu s, assistant vice presid ents, to vice
p resid ents; Ja c k H . P ag e, assistant v ice
p resid ent and tru st officer, to v ice pres­
id en t and tru st officer; and R ich ard
W h ite , auditor, to v ice p resid en t and
b ra n ch ad m inistrator. In addition, Jim
C layton has b ee n nam ed assistant v ice
p resid ent, corresp o nd ent banking.

■ R O B E R T D . H O B A N , first vice
presid ent, U n ion B an k , N ew A lbany,
has b e e n prom oted to execu tiv e v ice
p resid ent. E d w ard T . B a er has b ee n
nam ed senior v ice p resid en t and co m ­
m ercial and m ortgage loan m anager,
w h ile Jam es E . N e tt has b ee n nam ed
senior v ice p resid en t and controller.
M r. N e tt is a C P A . In ad dition, L arry
Stru b le has b e e n nam ed v ice p resid en t
and cash ier, and M ich ael M ad d en and

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

A Model Policy for a
Bank's Board of Directors
This 24-page booklet w ill be a valuable
addition to your bank's library, for it
contains a wealth of information that
w ill aid your board and your top man­
agem ent in organizational problems.
Here are some of the sections it contains:
1. A typical organizational chart.
2. Duties and responsibilities of man­
aging officers and various standing
committees.
3. Management philosophy.
4. Policies to be adopted by the board.
5. Operation and policies for the loan
and discount committee.
6. Loan, investment and collection pol­
icies.
7. Outline of a suggested investment
policy.

Every bank should have a
w ritte n set of policies ap­
proved and adopted by the
board. This manual can help
your bank in preparing such
a manual or in updating the
manual you now have in op­
eration.
SEND YOUR ORDER AND CH ECK (sorry,
no billed orders) TO THE PUBLISHER:

The BANK BOARD Letter
408 Olive St. (Room 505)
St. Louis, Mo. 63102

Jo h n G eltm ak er h av e b ee n ele cte d as­
sistant v ice presid ents, continu in g as
b ran ch m anagers.
■ P E O P L E S T R U S T , F o r t W ay n e,
has nam ed M au reen I. G rin sfeld er and
C arolyn E . P ark er assistant tru st offi­
cers.
■ F R A N C IS J . O L IV E R has b ee n
nam ed v ice presid ent, M arion N ational,
w hile C lyd e F . “C h u ck ” F ra n k lin and
L o n d e le W h ite h av e b ee n e le cte d as­
sistan t v ice presid ents. D av id J . R a a b e
has b e e n ad vanced to assistant tru st o f­
ficer, and B e tty K in n er and C h arles B .
K lotz have b ee n nam ed assistant ca sh ­
iers.

■ U N IO N N A T IO N A L , W ich ita , has
co m p leted an extensive rem od eling
program at its m ain b an k fa cility in
U nion C en ter. T h e p ro je ct inclu ded
renovation of second and th ird floor
offices, relo catio n o f th e lobb y from
low er lev el to stre et lev el and expan­
sion of several low er-level dep artm ents.
M ore than 2 3 ,0 0 0 squ are fe e t of floor
sp ace was acq u ired . T h e ban k now o c­
cu pies all of th e first th ree floors and
th e low er lev el of its build ing.

■ F I R S T N A T IO N A L , O lath e, has
e le cte d V a n ce L . W e n g e r v ice presi­
d en t and loan officer and T o m C . H as­
tings assistant cashier. M r. W e n g er is
a fo rm er v ice p resid ent, L aw re n ce N a­
tional, and M r. H astings jo ined F irst
o f O lath e in 1 9 7 5 .

Kentucky

Mississippi

■ W A Y N E L , S M IT H has b een e le c t­
ed p resid ent, C en tral B an k , L exin g ton .
H e was fo rm erly execu tiv e v ice presi­
d en t and jo in ed th e b an k in 1 9 7 5 .
P rio r service w as w ith O hio banks. H e
is a m em b er o f th e exe cu tiv e com m it­
te e o f th e A B A ’s ed u cation al division.
■ C IT IZ E N S F I D E L I T Y , L ou isville,
re ce n tly opened a new b an k in g ce n te r
a t 1 9 9 9 B row nsboro R o ad called th e
L o w er B row nsboro B ran ch . I t is m an­
aged b y Jo e K inder.
■ F IR S T
S E C U R IT Y N A T IO N A L ,
L exin g to n , has nam ed R o g er D ale
R eynolds assistant con troller and m ade
th e follow ing ch an ges in th e in stall­
m en t loan d ep artm en t: Ja c k W itt Jr.,
assistant v ice presid ent, is now in
ch arge of d irect lend ing; Jo h n M orris­
sey, assistant v ice presid ent, now heads
th e lease financing and A u to-V est d e­
p artm en ts and chairs th e em ployee
loan co m m ittee; V in ce R ic c i, assistant
v ice presid ent, is now in ch arg e of in ­
d irect lending.

Louisiana
■ F I R S T G U A R A N T Y R A N K , H am ­
m ond, has appointed L e e R . S p e n ce
v ice p resid en t and tru st officer and
M rs. M arie A. H ollid ay cu stom er ser­
v ice officer. M r. S p en ce w as form erly
w ith F irs t N ational, B row nsville, T e x .,
and is a fo rm er officer of H an co ck
B an k , G u lfp ort, M iss. M rs. H olliday
jo in ed th e ban k in 1 9 7 0 .

TOP: New street-level lobby of Union National,
Wichita, and escalators leading down to
personalized loan division. BOTTOM: Infor­
mation desk area in second-floor lobby.

C

n G U A R A N T Y B A N K , G retn a, has
prom oted D av id J. L u n d g ren to assist­
an t v ice p resid ent, V ale n tin e C . M as­
ters to assistant cash ier and A lfred L .
M oak to controller. M r. L u n d gren
jo in ed th e b an k last y ear; M iss M asters
has b e e n w ith th e b an k sin ce 1 9 6 8 ;
and M r. M oak is new to th e bank.

O

M

M

N

A

T

I

B

A

N

K

O

E
N

R
A

■ A M E R IC A N B A N K , H oum a, has
prom oted P e te M . D rexler and M . C.
P erry Jr. to v ice presid ents, R oland P.
Adam s Jr. to internal auditor and E n ise
“C h u ck ” B erg ero n to assistant cashier.
M r. D rexler also serves as cashier and
M r. P erry is d irecto r of m arketing.

C

I

A

■ M R S . F L O R A J . R IM M E R has b een
nam ed execu tiv e v ice p resid ent and a
d irecto r at C an ton E x ch a n g e B an k , suc­
ceed in g M iss A ngie B e lle R im m er, w ho
resigned follow ing 5 0 years’ service.
F lo ra R im m er now heads th e tru st d e­
p artm en t. T h e ban k rep orted th a t 1 9 7 6
was th e b est year in its history. R e ­
sources stood at $ 3 6 m illion, and a 50%
stock dividend was d eclared , resulting
in $ 2 2 5 ,0 0 0 b ein g paid to stockholders.
In addition, $ 2 0 0 ,0 0 0 was added to
earned surplus.

■ A G R E E M E N T T O M E R G E has
b e e n reach ed b y D ep o sit G u aran ty N a­
tion al, Jack so n , and Sou thern N ational,
H attiesbu rg . T h e m erg er is su b je ct to
sharehold er and regu latory approval.
■ F I R S T U N IT E D B A N K , M eridian,
has prom oted L e e R . M ey er Jr. and
W . F . “B ill” R eid to assistant vice
presid ents. B o th m en jo in ed the bank
in 1 9 7 2 .

Missouri
■ JO H N L . C H L E B O U N JR . has ad­
van ced from v ice p resid en t to presi­
dent, C o m m erce B an k of M ound City,
S t. L ou is. H e su cceed ed his fath er,

L

L

m
1

J®
' • B “*1r- î i
S u k

S

■■**'-*

6 t h & M in n e s o ta A v e . 913 3 7 1 - 0 0 3 5
K a n sas C ity , K a n sas 66101
M K S îlE & B M n in ii]

PROFESSIONAL CORRESPONDENT TRUST SERVICE
92


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Federal Reserve Bank of St. Louis

MID-CONTINENT BANKER for February, 1977

Jo h n L . C h lebo u n, w ho now is ch air­
m an. Je rry F lem in g has jo in ed th e ban k
as com p tro ller, com in g from a Kansas
C ity bank. A ll th ree changes took e ffe c t
Ja n u a ry 1.
■ H A R L E Y E . S C H W E R IN G has
b ee n nam ed ch airm an , p resid ent and
C E O , M an u factu rers B an k , St. Louis.
H e su cceed s G eorge I. B a g g o tt as
ch airm an and C E O . M r. B a g g o tt con ­
tinues as a d irecto r and is honorary
chairm an. M r. S ch w erin g jo in ed th e
ban k in 1 9 4 7 and has b e e n p resid ent
sin ce 1 9 7 3 . T h e b an k has d esignated
Jo se p h R. Stah lsch m id t, v ice p resid ent,
as secretary and tru st officer; prom oted
W illiam A. K u ehn to v ice p resid ent
and aud itor; T o d d R . K e lle r to v ice
p resid en t and d ata processing officer;
and Jam es D re w to assistant treasurer.
R aym on d F . R ein in g er retired recen tly
as v ice chairm an and secretary.

BAGGOTT

SCHW ERING

■ L E O N O R K . S U L L IV A N has b ee n
e le cte d a d irecto r of S ou th w est B an k ,
S t. L ou is, su cceed in g A d albert von
G on tard , w ho died last year. M rs. Su l­
livan re ce n tly retired as congressw om an from M issouri’s third district.
S h e served as senior m em b er of th e
B an k in g and C u rren cy C o m m ittee o f
th e H ouse of R ep resen tativ es w h ile a
congressw om an.

NIEHOFF

Parallel Careers
ST. L O U IS— Two officers at South
Side National not only are observing
their 40th anniversaries there within
a three-month period this year, but
their careers have closely paralleled
each other. The two bankers are
W alter C. Hammermeister, vice
president and cashier, and Albin F.
Oehler, vice president.
Mr. Hammermeister joined the
bank February 9, 1937, as a messen­
ger and transit clerk. He moved up
to assistant cashier in 1957, to vice
president in 1969 and to vice presi­
dent and cashier in 1972. He has
charge of personnel and is an
operations officer. Mr. Hammer­
meister is a former president, St.
Louis Chapter, Bank Administration
Institute.
Mr. Oehler, who has been at South
Side National since May 3, 1937,
also advanced to assistant cashier
in 1957 and became vice president
and auditor (succeeding Mr. Ham­
mermeister in the latter post) in
1969. In 1974, Mr. Oehler dropped
the auditor’s title to become head of
the real estate loan department. Like
Mr. Hammermeister, Mr. Oehler was
a messenger when he joined the
bank.

■ R O B E R T W . C R A W F O R D has
b ee n nam ed execu tiv e v ice p resid en t,
M issouri B an kers A ssociation, su cce e d ­
in g F e lix L eG ran d . M r. C raw ford w as
fo rm erly p resid en t of th e A ssociation
o f G en eral M erch an d ise C h ains, In c .,
W ash in gton , D . C . Prior to th at, he
w as a M issouri state rep resen tativ e,
serving as ch airm an of the Savings &
L o an C o m m ittee. H e is a fo rm er M is­
souri secretary o f state. M r. L eG ran d
resigned his position to b eco m e adm in­
istrato r o f th e M B A ’s V olu ntary E m ­
ployees B en eficiary A ssociation last
m onth.

■ B O A T M E N ’S
N ORTH
H IL L S
B A N K , K ansas C ity, has prom oted B il­
ly D . P arrish to execu tiv e v ice presi­
dent, D eloris K in g to v ice presid ent
and cashier, V alerie R asd all to assistant
cash ier, Jam es R . R u ck e r to in stallm en t
loan officer and C arol A. M ed ley to
com m ercial loan officer.

MID-CONTINENT BANKER for February, 1 9 7 7

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

■ A M E R IC A N N A T IO N A L , St. Jo ­
seph, has realigned sev eral top m an­
agem en t positions. W illiam F . E n rig h t
Jr. and C h arles K . R ich m ond w ere
e le cte d ch airm an and v ice chairm an,
resp ectiv ely. B o th w ere fo rm erly ex­
ecu tiv e v ice presid ents. F o rm er C h air­
m an R o b ert F . K e atley was elected
ch airm an of th e execu tiv e com m ittee,
a n ew post. H e continu es as chairm an
o f A m eriban c, In c. M r. R ich m ond is
th e cu rren t p resid en t o f th e M issouri
B ankers A ssociation.
■ M R S . F R A N C E S C R O W L E Y has
b e e n prom oted to assistant v ice presi­
dent, n ew accou nts, a t M issouri S ta te ,
St. L ou is. S h e jo in ed th e b an k in 1 9 6 7 .
■ H. D U N C A N
E D M IS T O N
has
b ee n nam ed p resid ent and C E O , R olla
S tate , su cceed in g th e late R o b ert D an n en berg , who died last A ugust. M r.
E d m isto n com es from F irs t N ational,
S t. L ou is, w h ich h e served as v ice
p resid en t and head of th e inform ation
system s p lanning division.
■ M R S . M A R Y O S B O R N , second vice
p resid ent, F irs t N ational, Jo p lin , re ­
tired last m onth a fte r 3 2 years in b an k ­
ing. S h e b e ca m e an officer in 1 9 6 4 and
has b e e n second v ice p resid en t since
1971.
■ W A D E B R O T H E R S O N has b een
prom oted to v ice p resid en t at L au rel
B an k , R aytow n. H e has b ee n w ith the
b an k m ore th an th ree years and was
fo rm erly in ch arg e o f d ata p rocessing
a t L au re l B an csh ares, K ansas C ity.
■ R IC H A R D
P A T R IC K
(P A T )
SH A N N O N has b e e n e le cte d senior
v ice p resid ent, B an k o f Springfield . H e
was fo rm erly a v ice p resid en t a t F irst
N ational, St. Lou is.
■ JA M E S E . H IN D M A N JR . has b ee n
ele cte d v ice p resid en t and cash ier,
M ercan tile C o m m erce T ru st, St. Louis.
H e was fo rm erly cash ier and jo in ed the
b an k in 1 9 7 3 , going from B an k of
A m erica.

SULLIVAN

■ C Y R IL A. N I E H O F F has b een
e le cte d p resid ent and c h ie f op erating
officer, F lo rissan t B an k , su cceed in g
M elvyn M oellering, w ho continu es as
ch airm an and C E O . O th er prom otions
in clu d e N o rbert W . L o h e to execu tiv e
v ice p resid ent, E m m a R . Sch oll to
sen ior v ice p resid en t, R o y L aram ie to
v ice p resid en t and cash ier and A lice
G eiser to assistant cash ier. M r. N iehoff
jo in ed th e b an k in 1 9 3 5 .

■ C O U N T Y N A T IO N A L B A N C O R P .,
C layton, plans to acq u ire B an k o f L o u ­
isiana, su b je ct to sharehold er and reg u ­
latory approval. L ea d b an k o f th e H C
is St. L ou is C ounty N ational, C layton.

■ CH ARLES W . N O BE
po inted assistant cash ier
tional, St. C h arles. H e
w ith C o m m ercial B an k
C ounty, O livette.

has b ee n ap ­
a t F irs t N a­
was form erly
of St. L ou is

■ H E R B J E T T has b e e n ele cte d presi­
d en t and C E O , F arm ers T ru st, L e e ’s
Sum m it. H e is fo rm er presid ent, B ar-

93

ton C ounty S tate, L am ar, w h ich he
served sin ce 1 9 6 4 . F arm ers T ru st and
F irst N ational C h arter C orp., K ansas
C ity , have signed an affiliation ag ree­
m ent th at w ould m ake F arm ers T ru st
th e 1 9th m em ber of th e H C , su b je ct
to regulatory and stockhold er approval.
■ C O M M E R C E B A N K of B lu e H ills,
K ansas C ity, has prom oted Jo h n Slepekis from assistant v ice p resid ent to v ice
p resid en t and M arilee G o u ch er to co n ­
sum er b an k in g officer. M r. Slepekis
jo in ed th e b an k in 1 9 7 5 ; M rs. G ou ch er
in 1 9 7 3 .

New Mexico
■ P O R T A L E S N A T IO N A L last m onth
op ened its Sou th B ran ch , w ith F a y e
M id dleton T ip to n as m an ager and
D on n a C row as assistant. T h e b ran ch
has drive-up facilities w ith rem ote con ­
trols and p n eu m atic tu bes, as w ell as
a w alk-in lobby.
■ C. N E A L JO H N S O N has b een
nam ed presid ential assistant at F irst
N ational, A rtesia. H e was form erly an
atto rney in C arlsbad.

■ F IR S T
N A T IO N A L ,
T u cu m cari,
has prom oted B ill Curry from assistant
cash ier to loan officer and E . B ru ce
T ho m as from assistant cashier to op er­
ations officer.
■ R O B E R T E . G A B R IE L has b een
prom oted to senior v ice p resid en t and
controller, B an k of N ew M exico, A l­
b u q u erq u e.

New Banking Commissioner
SANTA F E — Arthur Ortiz, presi­
dent, Centinel Bank, Taos, was
named state banking commissioner
last month by G o v e r n o r Jerry
Apodaca. Mr. Ortiz succeeds Herbert
Hughes, who resigned effective Janu­
ary 2 0 to become director of plan­
ning and evaluation for the New
Mexico Cancer Control Program and
also accept a commission in public
administration from the University
of New Mexico. He had held the
commissioner’s post since January,
1975. He is a former Republican
who became a Democrat in 1973.
Mr. Ortiz, a Republican, is a
former state planning officer and
former state personnel director. He
is moving here to accept the new
post.

You’re in the center
of everything
when you stay Sheraton
and, also, the finest in

K A N S A S C IT Y ,
MISSOURI

Oscar Love Sr. Dies
A L B U Q U ER Q U E — Oscar Mahlon
Love Sr., 85, died January 5. He
was president-emeritus, Albuquerque
National, which he joined in 1925,
when the bank was a year old. In
January, 1976, Mr. Love was honored
by the Albuquerque Chamber of
Commerce for his long service to the
community One of his contributions
was helping establish Kirtland Air
Base here.

B C O M M E R C E B A N K , C arlsbad , has
prom oted W illiam B . H arrison from as­
sistant cash ier to assistant v ice presi­
d en t and D o n T h o rp e from co llecto r
to assistant cashier. E le c te d a d irecto r
was T ho m as G . F ergu son , retired presi­
d en t, N ational P otash C o ., C arlsbad.

Oklahoma
B J. W . M c L E A N , ch airm an and C E O ,
L ib e rty N ational, O klahom a C ity , has
b ee n nam ed to th e F e d e ra l Advisory
C ouncil, a group o f 12 bankers from
over th e n ation w ho m e e t qu arterly in
W ash in g to n , D . C ., fo r top -lev el discus­
sions w ith the F e d ’s B oard o f G over­
nors. M r. M cL e a n , w hose term is for
one year, represents th e 10 th F e d e ra l
R eserv e D istrict.
B F IR S T
N A T IO N A L ,
B artlesv ille,
has prom oted R o n ald E . S w ig art from
assistant v ice p resid en t to v ice presi­
d en t and A llen K . M o rgan from assist­
an t cash ier to assistant v ice president.
M r. S w ig art jo in ed th e b an k in 1 9 6 9
and has ch arg e o f th e d ata processing
d ep artm ent. M r. M o rgan has b ee n w ith
F irs t N ational sin ce 1 9 7 3 .

fl M A Y A V E N U E B A N K , O klahom a
C ity , ch an g ed its nam e to U n ion B ank
& T ru st C o ., e ffectiv e Ja n u a ry 3. T h e
ch an g e was set to co in cid e w ith the
b an k ’s 2 5 th anniversary.

TELEPHO NE ( 8 1 6 ) 8 4 2 -6 0 9 0
FOR RESERVATIONS

P r * o m -S h e i* a t o n M o te» * I n n
SIXTH AND MAIN STREETS
SHERATON HOTELS AND MOTOR INNS. WORLDWIDE

O THER SHERATONS:
• JOPLIN, MO.
SHERATON-PROM MOTOR INN
3600 RANGELINE AT 1-44 AND U.S. 71

FREE

• W AYNESVILLE-FT. LEONARD WOOD, MO.
SHERATON MOTOR INN
1-44 AND MO. 28, OFF 1-66

8 0 0 -3 2 5 -3 5 3 5 MAKES IT HAPPEN
IN MISSOURI, CALL 1-800-392-3500

94


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Federal Reserve Bank of St. Louis

B W IL L IA M S O N C O U N T Y B A N K ,
F ran k lin , has e le cte d Jo e Pinkerton
senior board chairm an, elev ated F u ller
A rnold from p resid en t to chairm an,
nam ed G eorge B ivins Jr. p resid en t and
Jo e B re n t execu tiv e v ice p resid en t and
cashier. M r. P in kerto n jo in ed th e bank
in 1 9 4 7 and is a fo rm er v ice president
o f th e T en n e sse e B ankers A ssociation.
M r. A rnold has b e e n w ith th e bank for
3 0 years and has served as president
sin ce 1 9 7 3 . M r. B iv ins jo in ed th e bank

MID-CONTINENT BANKER for February, 1977

in 1 9 7 4 , going from T h ird N ational,
N ashville. M r. B re n t has b e e n w ith th e
ban k fo r alm ost 2 5 years.

■ F I R S T V IC T O R IA N A T IO N A L has
announced a m u lti-m illion-dollar b u ild ­
ing p ro je ct. T h e first of th e p ro je ct’s
th ree phases involves to tal renovation
o f the top four floors of th e b an k ’s
build in g, now leased to tenants. P hase
tw o w ill involve a co m p lete rem od eling
of th e b an k in g q u arters, incorp o rating
an a d ja ce n t bu ild in g. T h e third phase
involves con stru ction of a th ree-lev el
parking garage b eh in d th e b an k. T h e
entire p ro je ct is e xp ected to b e com ­
p leted in 1 9 7 9 .

Farmers Grain & Livestock Hedging Corp. . 42
Federal Land Bank, W ichita ......................... 63
Financial Insurance Service, In c................... 53
First C ity National Bank, Houston ............. 15
First N ational Bank, B artlesville ................. 70
First N ational Bank, Kansas C ity ................. 19
First N ational Bank, St. Louis ..................... 98
F irst N ational Bank o f Commerce,
New Orleans .....................................................59
F irst Pasadena (Tex.) State Bank .............. 84
First Tennessee N ational Corp........................
7
First V ictoria (Tex.) N ational Bank ............. 80
Fourth N ational Bank, T u l s a ............................37
Fourth N at’ l Bank & Tr. Co., W ichita .......... 87
H arland Co., John H.......................................... 27
Harrow S m ith Co................................................ 90
Insurance Enterprises, Inc............................... 50
Insured C redit Services, Inc..............................25
Integon Corp.......................................................... 67

WRITTEN
LOAN
POLICY
Every Bank Should
Have One!

Leam ington Hotel ............................................ 14
Le Febure Corp.................................................... 11
Libe rty N at’l Bank & Tr. Co.,
Oklahoma C ity ................................................ 2
Louisiana B anking School fo r
8
Supervised T raining ....................................
MG IC-Indem nity Corp...................................... 40-41
M arketing Services of Indiana, Inc..................51
Mem phis Bank & T rust Co......................... 3, 12
M ercantile Bank, St. Louis ............................. 5
Merchants N ational Bank, M obile ............... 81
Minnehoma Cos...................................................... 48
Morgan Guaranty Trust Co., New York . . . . 79
Mosler Safe Co.................................................... 55
N ational Bank o f D etroit ................................. 56
N ational Boulevard Bank, Chicago ............. 17
N ational Stock Yards National Bank .......... 97
Pioneer Bank & T rust Co., St. Louis .......... 85
Prom Sheraton Hotel ...................................... 94
SLT Warehouse Co.............................................. 69
St. Johns Bank & Trust Co., St. Louis . . . . 71
St. Louis County N ational Bank ................. 83
Scarborough & Co................................................. 49
South Side N ational Bank, St. Louis .......... 77
Third N ational Bank, N ashville ................... 30

And Loan Policy"

W hitney N ational Bank, New O rle a n s .......... 73

Provides the Information

ARE YOU A
BANKER WITH
PEOPLE SKILLS?

First phase of building project of Victoria
Nat'l includes 1,400 square foot atrium on
second floor that will extend upward through
the building to a glass domed roof.

■ P A R K E R S Q U A R E B A N K , W ich ita
F alls, has prom oted R on n ie D . Sm ith
to loan officer and H arold E . M iller Jr.
to cre d it officer. M r. Sm ith has com ­
m e rcial and in stallm en t lend ing respon­
sibilities, and M r. M iller heads th e loan
collection d ep artm ent.

•

Index to Advertisers

•

Assem blies fo r Bank D irectors ..................... 70
Bank Board Letter ......................... 88-89, 91,
Bank o f New Orleans ......................................
Bank o f Oklahoma, Tulsa ...............................
Brandt, Inc............................................................

95
65
43
45

Canton (M iss.) Exchange Bank ...................
C hristm as Club— A C orporation .....................
C itizens F id elity Bk. & Tr. Co.........................
Commerce Bank, Kansas C ity .......................
Com m ercial N at’l Bank, Kansas City, Kan.
Com m ercial N at’l Bank, L ittle Rock ..........
Creative Image ..................................................

76
20
29
39
92
21
61

De Luxe Check Printers, In c ........................... 23
D etroit Bank & Trust Co................................... 75

Private organization working
with consumers and the fi­
nancial community is ex­
panding and needs a man­
ager in Kansas C ity and St.
Louis. Strong incentive pro­
gram expected to result in
first year earnings in excess
of $23,000. Requires a dy­
namic leader with adminis­
tra tiv e ability and a proven
record of individual progress
and increasing responsibility.
Knowledge of personnel and
bank operations an asset.
Equity position a possibility.
Reply giving full details in
first letter to:

Mr. David Lonay
Seaboard Bldg., Ste. 700
4th Ave. at Pike St.
Seattle, WA 98101

MID-CONTINENT BANKER for February, 1977

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

"The Bank Board

Uni Comp.................................................................46
Union Bank & Trust Co., M ontgom ery . . . . 60
United Missouri Bank, Kansas C ity .............. 9

Needed to Formulate
a Written Loan Policy
or Update an Existing One!
A must for banks, this 40-page manual
tells why all banks should have written
loan policies and how they can formu­
late or update such policies to serve as
guides for lending officers and to help
protect the bank from m aking costly
commitments.
The manual presents the loan policies
of four well-m anaged banks and con­
tains a rating formula for secured and
unsecured loans, conditional sales con­
tracts, all m ortgages, government and
municipal bonds and government agency
securities.
Topics spotlighted include:
• Conditional Sales Contracts
• All Mortgages
• Loans for Education
Also included are sections on who
should have lending authority, lending
procedures, loan limits, credit depart­
ment responsibilities and loan examiner
responsibilities.
Can your bank afford to be without
this manual?
n •

*

a

(Missouri banks add

Price: $4.25
4«/2% tax)
ORDER TODAY!
(Sorry, no billed orders)

The BANK BOARD Letter
408 Olive St., Suite 505
St. Louis, MO 63102
95

In Little Rock

■

Worthen

¡is

• ft

m m m

WÊÊm

a

Centennial
Throughout

.

¡ill!

B
Edward M. Penick (foreground), ch. & CEO,
Worthen Bank, Little Rock, steps back to 1877,
when his bank w as founded. Bearded man
in background is actor David N. Beidehnan,
who is portraying Mr. Penkk's grandfather,
W. B. Worthen, bank's founder, in TV and
radio commercials spotlighting bank's cen­
tennial.

I I
I M

H

|
i f

.

M

fm

?

*

J

r ,

;

{i e
flB
This desk w as used by Worthen Bank's found­
er, W. B. Worthen, in 1877 and now is on dis­
play in bank's downtown office lobby.

This multistory building at 200 West Capital
in Little Rock houses Main Office of Worthen
Bank and w as dedicated in 1970.


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Federal Reserve Bank of St. Louis

B

E C A U S E 1 0 0 th anniversaries are
unusual m ilestones, L ittle R o ck ’s
W o rth en B an k w ill ce le b ra te its ce n ­
ten n ial all during 1 9 7 7 . T h e ban k
opened Jan u ary 2 , 1 8 7 7 , as P ark er &
W o rth en , B ankers and B rokers.
A h ig h lig h t of th e year-long observ­
an ce is th e op ening of a n ew office—
called A nniversary B ra n ch — on R od ney
P arh am R oad . T h is office has an au­
th e n tic 1 8 7 7 d eco r and an e n tran ce
th a t recreates th e b an k ’s original one.
A tim e cap su le con tain in g b an k in g a r­
tifacts w ill b e b u ried th e re and w on’t
b e op ened u n til 2 0 7 7 , w h en th e bank
is 2 0 0 years old.
Sp ecial T V program s are sch ed u led
d uring th e y ear, inclu d ing a four-hour
te le ca st on th e history of A rkansas. T h is
film ed program , d escribed as th e m ost
com prehen sive ever m ade on th e state ’s
history, w ill b e p resen ted to Arkansas
fo r use in its school system and to th e
E d u catio n al T elev isio n N etw ork for
p u blic view ing.
T h e first of m any sp ecial lo bb y dis­
plays in th e dow ntow n office w as un­
veiled Jan u ary 4. T h is display includes
th e original desk and safe used b y th e
b an k ’s found er, W . B . W o rth en , and an
exclusive co llectio n of oth er early b an k ­
ing relics.
W o rth en B an k plans a u n iq u e ad
cam p aign d uring its cen ten n ial year.
Its new sp ap er ads and T V and radio
com m ercials b eg in b y tellin g th e b a c k ­
ground story o f th e b an k. T V view ers
and radio listeners should reco g n ize th e
storyteller, R ex A llen. W . B . W orth en ,
a ce n tral ch a ra cte r in th e new spaper
ads and T V com m ercials, is b e in g por­
trayed b y acto r D av id N . B eid elm an.
W h e n th e b an k op ened in 1 8 7 7 , it
occu p ied a one-room stru cture on th e
n orthw est co rn er of M arkham and
L ou isian a streets. A ssets op ening day
to taled $ 7 5 ,0 0 0 . T o d ay , W o rth en is th e
only A rkansas b an k to exceed a h alf
billion dollars in assets, a pred iction
m ad e b y th e la te Jam es H . P en ick Sr.,
in his sp eech as b an k ch airm an given
a t th e p u b lic d ed icatio n Jan u ary 3 1 ,
1 9 7 0 , of th e p resen t W o rth en B an k
O riginal home of Worthen Bank in 1877 w as
this one-room structure at Markham and
Louisiana streets.

B u ild ing. M r. P e n ick w as a son-in-law
o f W . B . W o rth en .
T h e partnership of E d w ard P arker
and W . B . W o rth e n co n tin u ed from th e
fo u nd ing u n til 1 8 8 8 , w h en M r. W o rth ­
en b o u g h t M r. P ark er’s in terest. In
1 9 0 4 , w h en resources to taled $ 6 0 0 ,0 0 0 ,
th e b an k was in corp o rated as W . B .
W o rth e n C o., B ankers, and m oved into
n ew qu arters at M arkham and M ain
S treets. M r. W o rth e n w as p resid ent
until his d eath in 1 9 1 1 , w h en his b ro th ­
er-in-law , G ordon P eay , su cceed ed him
and held th e p ost u n til 1 9 2 7 . U n d er
As a special commemorative ac­
tivity for its 100th anniversary,
Worthen Bank has published a book
on the histories of the bank and of
Arkansas. See page 90 for descrip­
tion of the book.
M r. P ea y ’s lead ership , th e b an k reach ed
its first m illion in assets and m oved to
a new location a t F ifth and M ain
streets, b o th events takin g p lace in
1 9 1 5 . E m m e t M orris w as presid ent
from 1 9 2 7 to 1 9 4 0 . D u rin g his presi­
d en cy, W o rth en m oved to a n ew b u ild ­
ing at F o u rth and M ain streets in 1 9 2 9 .
T h e re it rem ain ed u n til it occu p ied its
p resen t 24-sto ry h ead qu arters a t 2 0 0
W e st C ap ital A ven ue in 1 9 7 0 .
Jam es H . P en ick Sr. b e ca m e presi­
d en t in 1 9 4 0 . W h ile h e held th e post,
th e b an k ’s assets in creased from $ 2 4
m illion in 1 9 4 0 to $ 8 2 m illion in 1 9 6 1 ,
w hen h e retired as p resid en t and b e ­
cam e chairm an. A t his d eath in D e ­
cem ber, 1 9 7 5 , he was senior chairm an.
M r. P en ick ’s son, E d w ard M . P enick,
su cceed ed
him
as presid ent. T h e
you nger M r. P en ick now is chairm an
and C E O , and his b ro th er, Jam es P en ­
ick Jr ., is presid ent.
T h e b an k ’s n am e w as ch an g ed to its
p resen t fo rm Jan u ary 1, 1 9 4 7 .
In 1 9 6 4 , W o rth e n acq u ire d B an k of
A rkansas and w as reorgan ized as a
p art of F irs t A rkansas B an k sto ck Corp.
in 1 9 6 8 . D u rin g th e 1 9 6 0 s, th e bank
reco rd ed a 150% grow th in assets, com ­
p ared to a gain of som e 52% th e pre­
vious 10 years.
M o re recen tly , W o rth en introd uced
M o n eycard , A rkansas’ first electro n ic
funds tran sfer service. • •

MID-CONTINENT BANKER for February, 1977

stpr0f
the ,
.rood
show

Stock Yards Bank schedules a continuous “ Road
Show’,’ and one ot the stars is Jim Montgomery.

He continually travels his territory to stay abreast of
the particular agri-business problems in your area.
In the spotlight with a clea r insight into your
individual needs and problems, he’s just the man
to help keep your show on the road.

And he has a large supporting cast, so give Jim or
one of the other high-perform ance specialists a call
at 6/l8-27'l-6633. You’ll discover that you’re a star in the eyes of those hard-driving
men of . . .
"Y O U R


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

B A N K E R 'S B A N K " . . .
J u s t a c ro s s th e r iv e r fro m St. L o u is

THE NATIONAL STOCK YARDS NATIONAL BANK
OF N ATIONAL CITY
N A T IO N A L STO C K YARDS, IL L IN O IS 62071

How our bank can help your bank
grow w ith your farm ers and ranchers.
The world’s appetite for food and fiber is getting bigger
all the time. So today’s demands for agricultural financing
may be more than you can handle with available funds.
First National Bank in St. Louis is ready to help
you and your customers.
With funds for operating and production loans,
machinery and equipment loans. With leasing
plans and exporting assistance.
Even investment and estate planning
to help them conserve their assets.
You’ll find us easy to work with, and
we’re staffed to respond quickly. Our
Agricultural Department is headed by
Neil Bergenthal, Vice-President, who
has 20 years of farm credit experience
in agribusiness and the U.S. Farm
Credit Administration.
Call Neil at (314) 342-6695. And
send for our new brochure, “The
Changed Nature of Agricultural
Financing.”
And grow with your farmers
and ranchers.

First National B ank
in S t. Louis Hi I fli
M ember FDIC

510 Locust, St. Louis, Mo. 63101


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Federal Reserve Bank of St. Louis