The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Oklahoma City’s Only O N -LIN E electronic banking facility was announced at The OBA! Did you get to try it out? The CEO’s of Liberty’s Correspondent Banks in Oklahoma did. And, these CEO’s witnessed the first step toward the con ve n ience and ease of true o n -lin e e le c tro n ic banking services in the greater Oklahoma City area. ChecOKard Banking Center Number One is now providing ON-LINE electronic banking services for Liberty ChecOKard holders. And more bankers are learning about the ChecOKard system everyday. These progressive bankers are learning they can take advantage of an existing educated customer card base. Plus, they can offer their customers the extra convenience of over sixty guaranteed check cashing locations in the greater Oklahoma City area alone. What are your needs in the so phisticated world of electronic banking services? Should you begin with verification and guarantee services only? Or, should you consider a full service POS/ATM operation? It’s all available... at your LIBERTY THE BANK OF MID-AMERICA Liberty National Bank and Trust Company/P.O. Box 25848/Oklahoma City, Oklahoma 73125/405/231-6164/M ember FDIC https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Louisiana bankers call: /T 7 \ / \ iw \ v _ _ y A labam a, Arkansas, Mississippi, O klahom a and East Texas bankers call: Bankers in all other parts o f the country call collect: At First NBC —New Orleans, our Correspondent Banking Department is service-intensive and w ere always available to help you find a creative solution to any correspondent banking problem. That’s why we’ve recently improved our incoming WATS facilities —so reaching us is easier than ever. Try one of our brand-new numbers. We’re anxious to hear from you. m s r M IM A I BANK 01 COMMERCE C orrespon den t Banking 210 Baronne Street / New Orléans, Louisiana 70112 MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 / ... M ■■■■ -.j- . . ■ . • ' /I ■* /> I I Convention Calendar Iff- I June, 1976 Volume 7 2 , No. 7 FEATURES 35 FINANCIAL REFORM— NOT A DEAD ISSUE! W. Liddon McPeters Congress seldom forgets its pet issues George A. Le Maistre An idea whose time has come 39 FACTORS BEHIND LOAN-LOSS PROBLEM Robert E. Barnett And their implication on supervision 41 BANKS ARE DOING ALL RIGHT Harry V. K eefe Jr. Despite their bad press 48 INSURANCE AND RISK MANAGEMENT: Robert W. Marshman W hat’s new for bankers? CONVENTION REPORTS 69 ALABAMA 82 LOUISIANA 88 TEXAS 102 ILLINOIS 76 TENNESSEE 80 MISSISSIPPI 84 ARKANSAS 92 KANSAS 106 AMBI 86 O KLAHO M A 96 MISSOURI 18 NEWS ROUNDUP 28 SELLING/MARKETING 10 THE BANKING SCENE 23 PERSONNEL 30 SECURITY 17 EFTS 24 NEW PRODUCTS 33 CORPORATE NEWS STATE NEWS 1 14 ARKANSAS 116 KANSAS 1 18 MISSISSIPPI 119 NEW MEXICO 119 O KLAHO M A 114 ILLINOIS 116 KENTUCKY 118 MISSOURI 119 TENNESSEE 1 16 INDIANA 118 LOUISIANA 120 TEXAS nniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiuiiiuiiuiiiininiiinniininnininnniinnmninniiniiininniiiiniiiiiiniiiniiiiiiiiiiiiiniiinniiimiiiiiiiniiiinininiiniinDmnnniiniiinnnniiiiniinnnninnniiiiiiiiniiiinnmniinini Editors Ralph B. Cox Editor & Publisher Lawrence W, Colbert Assistant to the Publisher Rosemary M cKelvey Managing Editor Jim Fabian Associate Editor Daniel H. Clark Editorial Assistant 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 Awe., 53203, Tel. 414/276-3432; Torben Soren son, Advertising Representative. 4 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis July 11-16: Kansas, Missouri & Nebraska Bankers Associations Basic Trust School, Lincoln, University of Nebraska. July 11-23: ABA School for International Banking, Boulder, University of Colorado. July 18-21: ABA I&PD Risk Management in Banking Seminar, Boulder, University of Colorado. July 19-23: ABA National School of Bank Card Management, Evanston, 111., North western University. July 20-22: ABA Governmental Relations Council Meeting, Washington, D. C., Wash ington Hilton. July 25-31: ABA Operations/Automation Divi sion Business of Banking School, Durham, N. H., New England Center. July 25-Aug. 6: Southwestern Graduate School of Banking, Dallas, Southern Meth odist University. August DEPARTMENTS 114 ALABAMA June June 15-17: Kansas Bankers Association Bank Management Clinic, Lawrence, University of Kansas. June 16-17: Indiana Bankers Association An nual Convention, French Lick, French LickSheraton Hotel. June 16-18: Missouri Bankers Association Young Bankers Seminar, Osage Beach, Mo.. Tan-Tar-A Resort. June 17-18: Robert Morris Associates Secured Lending: Accounts Receivable, Inventory & Equipment Financing Workshop, St. Louis, Stouffer’s Riverfront Inn. June 20-22 : Bank Marketing Association,, Bank Planning Conference, Chicago, Hyatt Regency O’Hare. July 37 REGULATORY REFORM— 8 BANKING WORLD .J 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. 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, Allan Kent, James T. Poor and Don J. Robertson, vice presidents; Lawrence W. Colbert, assistant vice president. Aug. 1-13: Consumer Bankers Association, Graduate School of Consumer Banking, Charlottesville, Va. Aug. 8-13: ABA National School of Real Estate Finance, Columbus, O., Ohio State University. Aug. 14-20: Bank Marketing Association, Graduate Course in Bank Marketing Man agement, Madison, Wis., University of Wisconsin. Aug. 15-28: Central States Conference, Grad uate School of Banking, Madison, Wis., University of Wisconsin. Aug. 16-27: ABA National Trust School/ National Graduate Trust School, Evanston, 111., Northwestern University. September Sept. 4-7: Assembly for Bank Directors, Colo rado Springs, Colo., The Broadmoor. Sept. 12-14: Kentucky Bankers Association Annual Convention, Louisville, Galt House. Sept. 12-14: Bank Marketing Association, EFTS Conference, Toronto, Can., Hotel To ronto. Sept. 12-15: ABA Bank Card Annual Con vention, San Francisco, Hyatt Embarcadero. Sept. 12-17: Robert Morris Associates, Loan Management Seminar, Bloomington, Ind., Indiana University. Sept. 12-17: Kansas, Missouri & Nebraska Bankers Associations, School of Basic Bank ing, Lincoln, Neb., University of Nebraska. Sept. 15-17 : ABA Southern Regional Opera tions/ Automation Workshop, San Antonio, Tex., Hilton Palacio del Rio. Sept. 19-21: Bank Marketing Association, Pub lic Relations Conference, Chicago, Chicago Marriott Hotel. Sept. 19-22: ABA National Personnel Con ference, San Francisco, Fairmont Hotel. Sept. 20-21: Mortgage Bankers Association, President’s Conference, New Orleans, Hyatt Regency Hotel. Sept. 26-29: National Association of Bank Women. Inc., Annual Convention, New York. Waldorf Astoria. Sept. 27-28: Robert Morris Associates, Lend ing to Banks & Bank Holding Companies Workshop, Chicago, Hyatt Regency O’Hare. October Oct. 2-6: ABA Annual Convention, Washing ton. D. C. Oct. 6-8: National Association of Real Estate Investment Trusts, Annual Conference, Chi cago, Hyatt Regency, Chicago. MID-CONTINENT BANKER for Ju n e, 1976 Bank on more from Mercantile... Our resources are assets to you. The point is, at Mercantile, you get all the services you’d expect from one of Am erica’s largest correspondent banks. And more. But the biggest asset of all is our eagerness to work for you! Count on Mercantile. Where you count. M E R C n n T IU E BflfK Central Group, Banking Dept. * Mercantile Trust Company N.A. (314) 425-2404 • St. Louis, Mo. • Member F.D.I.C. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 5 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 Announcing seven dynamic new Automated Financial Systems Designed to make your life a lot easier Central National Bank announces seven new automated financial systems, each offering important benefits to you, your operations, and your customers. They give you management information you can interpret easily and apply quickly. They reduce the clerical workload in your bank, and improve accuracy and efficiency. They simplify your auditing, and improve service to your customers. And, they are custom designed for you by a money center bank that understands a community bank’s needs. The seven new automated financial systems are: On-Line Savings Demand Deposit Installment Loan Certificate of Deposit General Ledger Commercial Loan Payroll Processing These systems represent the most advanced state of the art. They can use either a single or multiple customer identification system. They are fully integrated, and will interface with all the systems we are currently developing. They are supported by a group of 3,800 computer people, 900 of whom specialize in financial systems. Best of all, we guarantee in w riting there w ill be no p rice increase for 24 months from the date of installation. We would welcome the opportunity to discuss these systems with you and to answer any questions you or your operations officers may have. Call your Central Automated Financial Systems Representative at (312) 443-6874. CENTRAL AUTOMATED FINANCIAL A DIVISION OF CENTRAL NATIONAL BANK 1 2 0 South LaSalle Street, Chicago, Illinois 60603 MID-CONTINENT BANKER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 7 B AN K IN G W O R LD HOW ARD HO LLAND • Larry T. Pitts has been promoted from assistant vice president to vice president, correspondent bank division, First National, Kansas City. L. Dean Howard, assistant cashier in that di vision, has been named an assistant vice president. Mr. Pitts joined the bank in 1964 and calls on correspondent banks in Kansas, while Mr. Howard, who joined First National in 1973, calls on banks in Missouri and the Southwest. • George S. Moore has been elected honorary chairman, Tennessee Valley Bancorp, Inc., Nashville. A former chairman of Citibank, New York City, he has served as a TVB consultant since 1972. Mr. Moore retired as Citibank chairman in 1970. Besides his TVB affiliation, he is a consultant to Banco Urquijo, Madrid, Spain. • Kenneth A. Randall, chairman and CEO, United Virginia Bankshares Inc., Richmond, has been appointed presi dent and CEO of the Conference Board. MOORE PITTS R A N D A LL He will remain a United Virginia di rector and succeeds Alexander B. Trow bridge, who has resigned from the Conference Board to become vice chair man, Allied Chemical Corp. Mr. Randall entered banking at State Bank of Provo, Utah, advancing to president before accepting a six-year FD IC board po sition. In 1965, he was named FD IC chairman, the post he held until his term expired in 1970. Through its conference and research programs, the Conference Board encourages exchanges of experience and opinion and performs analyses of business and economic de velopments. • Robert C. Holland, who is a former Fed governor, has been named presi dent, Committee for Economic Develop ment (CED), to succeed Alfred C. Neal on July 1. Mr. Neal plans to retire at that time, having served in that position for 20 years. Founded in 1942, the CED makes recommendations on na tional and international economic policy, government m a n a g e m e n t and edu cational and social issues. Mr. Holland joined the Fed board in 1961 as an adviser to the Division of Research and Statistics and was named a governor in 1973. Prior to that, he had been with the Chicago Fed. • Thomas H. Jacobsen, former vice president and head of systems and operations, personal banking, at First National, Chicago, has joined Barnett Banks of Florida, Inc., Jacksonville. He will serve there as vice president/bank support services, coordinating bank support activities, including E F T S re search and implementation. • George W . Coombe Jr. has been named executive vice president, Bank of America, San Francisco. Since join ing the bank in 1975, he has headed the legal, legislative and tax depart ment. Prior to that, he had been on the legal staff of General Motors Corp., Detroit. • Harris Bankcorp, Inc., Chicago, has begun offering its common stock on the New York Stock Exchange. The HC has reported a first-quarter earnings increase of 3% before securities gains or losses. Proble Credit Guarantee Insurance on all form s o f lending. • MOBILE HOMES • BOATS • LAND CONTRACTS 4 • MODULAR HOUSING • LEASES • VACATION HOMES For additional information, write or call: S ta n le y G. H a rris Jr. (c.), ch., H a rris B a n kco rp ., Payment Plans Diversified Credit Service Inc. Inc., 4524 Bailey Ave. • Buffalo, New York 14226 Telephone: 1 -7 1 6 —834-7600 e .v .p ., a re w e lc o m e d to N e w Y o rk Stock Ex ch a n g e b y its d ir. o f n e w business, W illia m R. Bors. O ccasion w a s listin g o f HC 's stock on C h ica g o , and T h e o d o re H. R oberts (r.), E x ch an g e . 8 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 From then to now we've planned and built or remodeled more bank buildings than any other company anywhere. Since our beginning in 1913, when we were known as the St. Louis Bank Fixture Co., we've pioneered many designs, concepts and methods that are now banking standards. We were instrumental in the demise of tellers' cages. We “opened up" bank lobbies. We introduced drive-in banking. We have developed a revolu tionary concept in preplanned bank buildings. And on more than 6000 projects we’ve helped banks increase earnings through proper planning, design and construction (or remodeling) of their buildings. M ay we help you? We have a man right in your area. Bank Building |C ^ I Corporation Helping banks and banking since 1913 Client Service M ississip p i, G e o rg ia , T e n n essee and K e n tu c k y : 4 0 4 / 6 3 3 -2 9 7 1 A rk a n sa s, L o u isia n a , O k la h o m a and T e x a s: 2 1 4 / 6 3 0 -1 1 3 1 M isso u ri, Illin o is and In d ia n a : 3 1 4 / 6 4 7 -3 8 0 0 J Bank Building Corp., 1130 Hampton Ave., St. Louis, M O 63139 Ba P le a se send me a c o p y o f y o u r b ro c h u re , "H o w T o D e term in e W h e n , H ow and W h y Y o u S h o u ld R e m o d e l.” M C -6 7 6 N am e _------------------------------------------------------------------------- —— -------T itle Firm A d d re s s . C ity , S ta te and Z ip . V. MID-CONTINENT BANKER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis J 9 Th e B anking S ce n e By Dr. Lewis E. Davids Hill Professor of Bank Management, University of Missouri, Columbia Bankers: Speak Out on the Issues! URVEY R ESU LTS in the April, S 1976, issue of T he MBA magazine showed that “. . . 22% (of 6,000 doctors, lawyers, engineers and MBAs respond ing) agree . . . that ‘large companies are doing an adequate job of informing the public of their policies and activi ties, that is, ‘speaking out on public issues.’ ” How do bankers, as a class, feel about informing the public? That’s not known. However, a 1975 survey of women bank directors (as reported in W om en: T he " M a n y b a n ke rs fe e l un c o m f o r t a b le in c o m m e n tin g on s itu a tio n s o u ts id e t h e ir a r e a s o f p r o fe s s io n a l e x p e r tise. In f a c t , m a n y b a n k s h a v e policies t h a t d is c o u ra g e officers a n d s ta ff f r o m m a k ing p u b lic s t a t e m e n t s t h a t m ig h t be co n stru ed as p o l i t i cal in n a t u r e . " “F o rg o tten ' D irectors) showed that only slightly more than 3% of the re spondents felt that “directors don’t get all the facts.” I think that’s a modest percentage. I think the vast majority of banks do provide their executive staffs with all the “facts.” Although few banks conceal im portant information from their execu tives, there are few institutions that could not improve the reports they provide their executives. The survey of T h e MBA should be of interest to bankers for several reasons and one is the differing perceptions among MBAs, lawyers, doctors and engineers. Almost half the lawyers sur veyed by the magazine believed that large companies inform the public ade quately on corporate policies and ac tivities. Less than 30% of the responding 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MBAs agreed that “many of the largest companies should be broken up for the good of the country.” Half the lawyers questioned in the survey felt that “some form of govern ment regulation of wages and prices is needed to stem inflation.” Only one-inthree MBAs shared such views. While 57% of the surveyed MBAs believed “corporations fairly represent (the) quality of their products and services,” only 38% of the lawyers, 48% of the engineers and 40% of the doctors surveyed by T h e MBA shared those views. If less than half of those highly edu cated, professional respondents agreed that corporations fairly represent their goods and services, I think there is need for concern. As highly educated individuals, they should be more in formed than the average man on the street. Several other findings in the survey are of special interest: Only 27% of the combined groups supported the state ment that “labor should take a more active role in corporate decision-mak ing”; two out of three felt that “large corporations have a duty to better the quality of life through nonprofit ex penditures.” How are bankers influenced by such findings? Directors establish policy for their institutions. Many bank directors are lawyers, engineers, medical doctors or MBAs, groups that were included in the survey. I think it showed that more lawyers than MBAs support the break ing up of businesses and as having less faith in competition as a means of keep ing prices at fair levels. Lawyers and doctors favored increased government regulation, more so than MBAs or engi neers. Are such individuals, as bank di rectors, likely to have similar sentiments when making bank policy? The composition of a bank’s board may have its philosophical “tilt” af fected by the mix of professions repre- sented by its directors, but it must be recognized that the bank operates in a certain market area. What are the perceptions of the bank’s customers and other individuals of the market area toward the several topics I have noted? Their views may have an important impact on the social and political cli mate in which the bank operates. The area in the survey that showed the greatest amount of agreement among the professions was that corpo rations should be more active in speak- " . . , t h e r e is th e d a n g e r th a t ban kers w h o speak out m a y b e m is in t e r p r e t e d b y th e pub lic. I t a p p e a r s t h a t b a n k e r s a r e c o n s id e re d as b e h in d -th e -s c e n e s m a n i p u la to r s . . . w h o , c o n tr o llin g th e p u rs e strings, c o n t r o l t h e ir c o m m u n itie s ." ing out on public issues. Approximately four out of five MBAs, engineers and doctors supported that stance, while seven out of 10 lawyers adopted the position. Many bankers are like the shoemaker who thought he should “stick to his last." They are bankers; they will com ment on banking—a topic they know well—and they’ll speak out on the con sequences of changes in banking regu lations. They will, to a lesser degree, be willing to comment on monetary and fiscal affairs that affect banking. Many bankers feel uncomfortable in commenting on situations outside their areas of professional expertise. In fact, many banks have policies that discour age officers and staff from making public statements that might be con strued as political in nature. The study by T he MBA points to a need for a reversal of this stance and MlD-CONTINENT BANKER fo r Ju n e, 1 9 7 6 HOWTOAVOID SLEEPLESSNIGHTSIN THEBONDMARKET. United Missouri introduced its bond Investment Accounting System in 1972. Since then, we’ve added something. Now, in addition to your LAS report, we offer you a review of the report —an analysis of your bond portfolio with recommendations from our skilled bank portfolio specialists. So call us or send the coupon. It doesn’t cost anything extra. And it might save you some restless nights. ■ Pat Thompson, Vice President United Missouri Bank of Kansas City, N.A. P. O. Box 226, Kansas City, Missouri 64141 ; (816) 221-6800 1 would like someone to contact me about: D Bond Investment Accounting Systems J □ Bond Portfolio Analysis D Both of the above ; | I J | Name_______________________________________________________ Bank----------------------------------------------------------Title_________________________ Address_________________________________________________________ J I jj City----------------------------------- State____________________ Zip________________ | | Telephone______________________________________________________________ _ | k UNITED MISSOURI BANK m ljjO F KANSAS CITY, N .A . 10th and Grand • Kansas City, M issouri 64141 • 816-221-6800 MID-CONTINENT BA N K ER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis II supports more political positioning by banks. Certainly, if the voices of bankers remain muted while those of their opponents aren’t, the politicians will misread the sentiments of their constituents. This is adverse to banks and banking. Still, there is the danger that bankers who speak out may be misinterpreted by the public. It appears that bankers are considered as behind-the-scenes manipulators by the public, manipu lators who, controlling the purse strings, control their communities. T he MBA’s study points to the danger of being accused and found guilty of lobbying and of making political payoffs. In these areas bankers must be circumspect. However, the institution should provide, through its marketing or public relations officer, some medium that allows identification of and re sponse to public issues. This may be done with press releases. Or, a bank spokesman should let the appropriate news media know not only of his avail ability to provide a statement on public issues, but of the keen interest of the bank as a good citizen in presenting its official position on such tough and touchy issues. In so doing, the messages should be positive, not negative, and they must not be phrased self-servingly. Through skillful, rational responses on public issues, those issues will be seen by the man on the street in a more informed light. * * S H R EW D BUYERS AUTOM ATE W IT H A U T O M A T IC C O IN W R APPER S rr& O N G TRADE M ARK A U T O M A T IC COIN W R A P P E R S Retirement-Plan Management To Be Subject of Seminar * Precision made on special machines from finest quality materials. • ^Patented Red Bordered Windows automatically indicate the total amount and denomination of contents. ■ Diameter of coin automatically positions value of contents in red window openings. at Save time for tellers, buyers, stockkeepers and depositors. Eliminate errors. ■ For years a favorite with leading banks and financial institutions. m Wrap all coins from 10 to $1.00 in following amounts: 500 in pennies $10 in quarters $2 in nickels $10 in halves $5 in dimes $20 in dollars a Packed 1.000to a box. Tapered edges. Available Imprinted. For details on other high quality "S teel-S trong" Coin Handling Products, call your dealer or send coupon. The C. L. D O W N E Y C O M P A N Y / h a n n ib a l , M i s s o u r i , d e p t . MC PLEASE SEND FREE DETAILS ON "STEEL-STRONG" COIN HANDLING PRODUCTS TO; Name__________________________________ Title— Firm _________________________________________ A ddress______________________________________ City____________________________________ State AROUND 12 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MONEY THE FINEST IS "STEEL-STRONG" COLORADO SPRINGS—The Broad moor Hotel is slated as the site for a seminar on management of retirementplan accounts July 19-23. Kennedy Sinclaire, Inc., Wayne, N. J., financial marketing and actuarial consulting firm, will conduct the program. Due to increasing competition for retirement accounts business, there is a need for greater expertise in the mar keting, investment and administration of such accounts, officials of the firm say. The two-part seminar has been de signed to meet needs of both profes sionals having experience and of neo phytes in the field. The basic program, which will be covered during the first three days of class time, involves study of retirementplan fundamentals, plan design, fund ing methods, reporting and disclosure rules and visual aids. The final two days have been set aside for an advanced session focusing on target benefit pension plans, em ployee stock ownership plans, guaran teed return contracts, marketing, in vestments and fiduciary responsibility. Participants may enroll in one or both parts of the program. MID-CONTINENT BANKER for June, 1 9 7 6 THREE REASONS why most banks depend on O FFIC IA L USED CAR GUIDE Q It is accurate and up-to-date 0 Contains all essential information for identifying and appraising used cars 0 Is the Recognized Authority of those with a business interest in the used car A Regional Edition For Your M arket Every 30 Days SUBSCRIPTION RATES SUBSCRIPTION ORDER FORM N a t io n a l A u t o m o b ile D e a le r s Used Car G u id e Co. 1640 W e stp a rk D rive, M cL ea n , Va. 22101 Please enter our order f o r . . . New □ Additional □ Annual Subscriptions to the N.A.D.A. Official Used Car Guide, issued every 30 days. 1 s u b ....... ....15.00 4 sub. .... . ____ 49.25 6-14 sub. 2 su b. „ ..... ........ 28,00 5 su b. . . . ____ 58.00. 15-29 sub. 3 su b. .... . .........39.25 30 a nd o v e r . 10.25 ea. P LE A S E TYPE OR P R IN T By...... Street (P.O. Box) □ Will remit on receipt of invoice City https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ....... 10.50 ea. Name □ Remittance enclosed MID-CONTINENT BA N K ER fo r Ju n e , 1 9 7 6 11.00 ea. , State ..Zip Code 13 “ The year (1976) is very likely to see about 1.5 million housing starts—better in comparison to 1975 but only average when compared to previous years/' -NATIONAL ASSOCIATION OF HOME BUILDERS Economic News Notes https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis "The way starts are today to hit our target we've got to increase Realtor business. Call MGIC" I hear they can help!" https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis To keep "a p p s " ro lling in, lenders have to do m ore than just tell Realtors the loan w in d o w is open. For example, many Realtors d o n 't kn o w about the "M A G IC L O A N ": • H ow it helps them close m ore sales— faster. • H ow it puts people in homes w ith only 5% to 10% dow n. • O r how it makes " c o n v e n tio n a l" better by e lim ina tin g governm ent red tape. To help— M G IC has a special kit fo r you to give your Realtors. It contains a b o o k le t that tells the REALTOR® everything his sales people should know about mortgage insurance. And a second b o o k le t his sales people can give hom e buyers w hen explaining mortgage insurance to them . This specially designed k it provides the Realtor w ith all the necessary "M A G IC L O A N " info rm a tio n to help his firm sell m ore homes. This year. W ith ease. Your M G IC Representative can supply you w ith "M A G IC L O A N " kits right now. So call him today. W ith new construction m oderate and liq u id ity high— we w ant to do everything we can to help you h it p ro fit targets. That's w hy we say— w hen it comes to m ortgage insurance, there's no substitute fo r experience. M G IC experience. MGIC Because experience pays. Mortgage Guaranty Insurance Corporation, a Subsidiary of M GIC Investment C orp.,M G IC Plaza, Milwaukee, VVI 53201 The end of the paper chase For years, financial institutions have been chasing paper. All kinds of it. Checks by the billions. Deposit slips. Withdrawal slips. Records. Records. And more records to be stored. The Service Card Syste4m can change all that. SCS is a network of point-of-sale; and ATM terminals located in financial institutions and retail outlets around the state. W ith the SCS card, your customers w ill have instant access to their hometown accounts. They'll be able to get cash w ithout a check. They can make checkless retail purchases with funds being electronically transferred from bank account to merchant account. And the SCS card w ill provide instant verification of funds available in respective accounts. The SCS card w ill do all these things and more. If you're interested in the future money management system right now, talk to us. Fidelity Computer Services (405) 272-2168, First Data Management Company (405) 272-4063 or Ted Shaw or Jerry Baskin at Service Card System (405) 272-4911. SERVICE GARD SYSTEM 120 N. Robinson, P.O. Box 25189, O kla h o m a C ity, O klahom a 73125 16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 EFTS (Electronic Funds Transfer Systems) Fidelity Bank Announces Decision To Join Oklahoma EFT Network ID E L ITY BANK, Oklahoma City, has announced its intention to par ticipate in a statewide E F T system operated by Service Card System (S C S ), Oklahoma City. At present, the SCS network consists of 2,500 miles of high-speed transmis sion lines linking strategic geographical areas of Oklahoma. Financial insti tutions throughout the state have been invited to tie in to the system and will be linked to a large computer switch operated by SCS. As an SCS member, Fidelity Bank will be able to offer its customers check less transactions, 24-hour access to ac counts for purchases and withdrawals or deposits at POS terminals or ATMs. Since these services will be available through the system, participating cus tomers of the bank no longer will need to write checks, but may do so, since check verification also is offered through the network. More than 50 banks are expected to join the SCS program during the next six months. They will be able to issue plastic cards bearing the SCS logo to customers, and will be able to install electronic te rm in a ls at check-out counters of retail establishments. Fidelity Bank officials say the insti tution will make the SCS terminals available to correspondent bank and commercial retail customers. The bank intends to begin demonstrations of the system to merchants in the near future. Banks' ATMs Illegal, Appeals Court Rules Officials of the two banks reportedly will ask the U. S. Supreme Court to re view the case, but neither would com ment on the possibility of dismantling the remote terminals in the meantime. F C H IC A G O—Off-premise b a n k in g terminals of Continental Illinois Na tional and First National have been ruled as branches, therefore illegal under Illinois state law, by a threejudge panel of the Seventh U. S. Cir cuit Court of Appeals. The Illinois Attorney General’s Of fice had sued the banks, calling the terminals branches. Last December 10, District Court Judge Herbert L. Will said the ATMs were branches under the McFadden Act. Judge Will said banking machines allowing only with drawals from savings or checking ac counts wouldn’t violate the act. The appeals court disagreed, citing a decision of a District of Columbia ap peals court holding that all electronic facilities are branches. The Chicago appeals court said the banking activi ties carried out at the ATMs are busi ness transactions carried on at the Main Office of each institution, there fore making the terminals branches. Both banks have been operating the facilities in a number of locations in downtown Chicago, and the institutions had begun installation of the machines in retail food chains. Both First Na tional and Continental originally con tended that the machines weren't branches because they don’t provide full-service banking. Security Bank, Lawton, Okla., To Open 15 Neighborhood ATMs LAWTON, OKLA.— Security Bank has announced plans to introduce 15 neighborhood teller terminals by August 1. ^ The terminals will be located in neighborhood stores and shopping centers and will provide the following services: deposits to and withdrawals from checking and savings accounts, note payments, utility payments, pay ments for merchandise purchased and transfers of funds. A bank official says the locations for the terminals, which will be announced at a future date, will be strategically placed so all the town’s residents will be within a few blocks of one. While the ATMs will operate 24 hours a day, those in stores that are open 24 hours will have a brief period of “down time” before 6 a.m. daily for maintenance and programming purposes. To use the terminals, customers will be issued plastic cards and personal identification numbers. The bank is be ginning an informational effort to fa miliarize every customer and citizen of the city with the system. MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Central Trust, Cincinnati, Begins Supermarket Test CINCINNATI— Central Trust has begun a 60-day market research experi ment at the Montgomery Kroger Store. Kroger personnel will accept deposits and honor withdrawals on the bank’s checking and savings accounts during the period. Purpose of the test, reportedly the area’s first, is to measure customer reac tion to such a service and determine operational procedures most suitable to both Kroger and the bank. Equipment for the test is an NCR 279 teller terminal in the store’s courtesy booth. The machine is on-line to Central’s computer. Cash deposits during the 60-day test program have been limited to $300 and withdrawals, to $100. Customers wish ing to withdraw funds present their Central cards and enter a personal iden tification number on the NCR equip ment. Central Trust is contacting its cus tomers in the area by direct mail to advise them of the test, to demon strate the operational procedures to be followed and to seek cooperation in the experiment. At the test’s conclu sion, those bank customers will be sur veyed on the program. Clyde Jackson Elected Head Of Kentuckiana ACH L O U ISV IL L E — Clyde W. Jackson was elected president, Kentuckiana Au tomated Clearing House Association (KACHA), at its recent annual meet ing. He is vice president in charge of marketing, Bank of Louisville. The new secretary-treasurer is James W. Martin, executive vice president, operations and data processing group, First National, Louisville. Kentucky vice presidents of KACHA (all of Louisville) are: Malcolm B. Chancey, senior vice president, operations, Lib erty National; Frank M. Knego, senior vice president and manager, data ser vices division, Citizens Fidelity; and Albert B. Schnell, senior vice president and treasurer, administrative group, Louisville Trust Bank. Indiana vice presidents of KACHA are: Joe C. Neff, executive vice presi dent, American Bank, New Albany; and Ronald Carroll, president, Citizens Bank, Jeffersonville. Mr. Neff’s and Mr. Carroll’s positions were added this year to include representation from southern Indiana banks. 17 NEW S ROUNDUP News From Around the Nation FTC Challenges Interlocks Bid to Halt Due-Course Rule Rejected The Federal Trade Commission (F T C ) has filed a suit against a Washington, D. C., S&L, seeking to force six of its directors sitting on the boards of competing commercial banks to give lip one of their directorships. The test case “contains a message for over 1,000 di rectors of S&Ls around the country,” many of whom also serve on the boards of competing institutions, according to an FTC spokesman. The FTC charged that six of the 11 directors of Per petual S&L also serve on the boards of either American Security or National Bank of Washington, the city’s second and third largest commercial banks. Because the S&L com petes with the banks for savings deposits and mortgage loans, the FTC contended, the interlocking directorates are “unfair acts, practices or methods of competition” un der the Federal Trade Commission Act. The FTC acted against the S&L rather than the banks because the agency does not have jurisdiction over com mercial banks. The S&L has questioned FT C judisdiction over S&Ls. A federal judge has turned down a move by the Na tional Automobile Dealers Association to halt implementa tion of the Federal Trade Commission’s rule repealing the holder-in-due-course doctrine for sellers. The rule went into effect last May 14. The move requested the effective date of the regulation be postponed or that an order be issued declaring the rule null and void. The rule requires sellers to include in all consumer credit contracts a notice informing the buyer of his right to assert claims and defenses against any party holding the contract. This upset the 200-year-old holder-in-due-course doctrine which states that a consumer must honor his fi nancial obligations to a third party regardless of any dis pute with the merchant. Fed Oks GAO Audit The Fed has reluctantly agreed to a comprehensive audit by the General Accounting Office (GAO) of its bank supervisory responsibilities. The OK came after the GAO gave assurances it would protect the identity of banks, their officers, directors, stockholders or customers studied by the agency. The Comptroller and the FD IC had pre viously agreed to comparable audits. The audits were requested by the House Banking, Cur rency and Housing Committee because of concern over reports that some of the nation’s largest banks were on problem lists. Under the agreement, the GAO will study the effec tiveness of the Board of Governors in discharging its bank supervision responsibilities during the past five years. The study will be made through a selection of sample statistics of state-member banks. No inquiry will be made into the Fed’s monetary policy activities. Trading Suspended by Comptroller A 10-day suspension of over-the-counter trading was ordered by the Comptroller of the Currency involving the securities of Mercantile National, Atlanta, last month. The bank requested the suspension and the Comptroller ordered it because of possible inadequate public informa tion about the bank and a proposed purchase and assump tion of the bank by National Bank of Georgia, Atlanta. It was feared that an informed investment judgment couldn’t be made. Agencies Extend Comment Period The FD IC & Fed have extended to June 14 the period for comment on a proposed amendment to regulations that would permit depositors to authorize withdrawals from savings to cover checks drawn on demand accounts. Under the proposal, depositors would have to give thenbanks written authorization to permit withdrawals from savings to cover checks. Any such agreement would have to provide that all transfers be made in multiples of at least $100 and that the depositor forfeit 30 days’ interest on the amount transferred. Guaranteed Student Loans Proposed CD Pooling Comment Date Extended The Fed has extended to July 9 the period for comment on a proposal to forbid pooling of funds into large CDs. The proposal is opposed by bankers, mutual funds and consumer groups. The proposal would prohibit payment of interest on pooled funds of $100,000 or more at a rate above the ceil ing on deposits of less than $100,000. The Fed said the proposal is based on the belief that pooling violates Reg Q ceilings and “may have potentially adverse effects on member and nonmember financial institutions due to po tentially disruptive shifts of funds.” 18 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The federal government would provide for 100% repay ment on defaulted student loans to lenders in states that have guaranteed student loan programs if recently pro posed legislation is passed. At present, lenders in states that don’t have guaranteed student loan programs are reimbursed 100% on defaulted student loans. But the 26 states with programs are reim bursed only 80%. The reasoning goes that lenders in states with the pro grams shouldn’t be penalized 20%, especially since student loans in these states are administered more efficiently and have a default rate of 10%, compared to 17.5% in states without programs. MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 To ro ll y o u r own co in w ith an A m iel in d u s trie s AI-9100 heavy d u ty au tom a tic co in w ra p p in g m achine. “The Biggest little automatic coin wrapper in the Industry” COIN HOPPER Holds 1 0 ,0 0 0 coins. With an accessory adapter it can hold 6 0 ,0 0 0 COUNTING SPEED Counts nickels, dimes, pennies and quarters at 1 ,8 0 0 coins per minute. SOLID STATE ELECTRONICS Assures you of greater reliability and cooler operation. This, in turn gives you higher coin roll production. SIMPLE CONTROLS Push a few buttons, set a couple of dials and you're rolling. PAPER TO COIN TRANSFER POINT Pioneered by Amiel Industries assures you of high coin roll * through put. FIBRE 40 : THE ENGINEERED PAPER The best automatic coin wrapping paper manufactured. Each 8% roll is guaranteed to give you 2 0 0 0 coin roll wraps SAVE ON YOUR ADVERTISING BUDGET Imprint your bank name and logo here and every wrapped roll of coin produced will advertise your bank. HowSweetltis... To have wrapped coin available when you and your customers need it HowSweetltis... To have peace of mind security knowing that your coin never leaves your bank and is sorted and wrapped by your employees. How Sweet It is... To realize that more and more customers are going to be at tracted to your bank because of this additional in house coin wrapping capability! Forward thinking bankers are turning to the A I-9100 as the answer to their coin wrapping needs. For more information and free trial evaluation, call collect (4 0 4 ) 4 5 5 -0 0 9 0 or write the nearest Amiel In dustries office and see How Sw eet It can be for you! WRAPPED COIN PRODUCTION The A I-9100 wraps coin at 18 rolls per minute. Corporate headquarters— P.0. Box 48149, Atlanta, GA. 30340, (404) 455-0090 . Plaza 66, Bldg. B-9, Mt. Prospect Ave., Clifton, N.J. 07013, (201) 473-0166 •2101 Ferry Ave., Suite # 6 0 4 — 1800 Pavilion, Camden, N.J. 08104 (609) 962-9490 •3000 Clearview Pkwy., Atlanta, GA. 30340, (404) 455-0090 •1285 Rand Rd., Des Plaines, ILL. 60016, (312) 299-6630 •2284 Weldon Pkwy., St. Louis, MO. 63141, (314) 567-3323 . Suite #125, 12830 Hillcrest Rd., Dallas, TX. 75230, (214) 387-4579 . P.O. Box 1348, Denver, CO. 80201, (303) 499r1 6 6 3 .3 2 5 Corey Way #111, South San Francisco, CA. 94080, (415) 8 7 3 -0 3 1 6 .3 9 5 FreeportBlvd. #10, Sparks, NEV. 89431, (702) 359-9588 All Amiel Industries products are backed up by a nationwide network of factory trained service engineers and spare parts. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The World’s Leader in Coin & Currency Handling Systems & Equipment TOMEETYOUR NEEDS. with immediate delivery vs. the ■ l i m a ) I industry's standard 3-6 month waiting period. Your next order is probably already in one of our regional warehouses. g l Q ^ T t o offer an emergency ventiia■ I I I J I tor, built directly into the vault door fra me to eliminate costly, space-consuming wall installation. Also a standard feature on all Security doors. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis O D C T t o ° ^ er both aluminum and poli K I I v I ished steel safe deposit boxes with extra features at no extra cost. All are stocked in regional warehouses, available for immedi ate delivery. E I D C V to design a high-quality yet lowl l l l v I cost drive-up system with true-tolife voice communication. There isn't a more reliable system on the market. WE’VEALWAYSPUT FIRSTTHINGSFIRST. C l l l f T t o introduce totally stainless steel ■ I l m v I clad vault doors a no-maintenance feature standard on all Security ckxxs: Saturn II, International and Continental. Twenty years ago, Security Cor poration was just a small company w ith some big ideas. Progressive ideas. Like introducing the concept of value to a century-old industry. W ith innovative products that didn't sacrifice extan features for com petitive prices. The idee that through regional warehousing and an independent dealer remvork, delivery of financial equipment could be immediate. By putting our customers f :rst, we've mane gee to grow as well — and today we're among the four major sup pliers in the industry. With veu t doors, safe deposit boxes, remote transaction systems, nigm depositories, w alk-up/ dr ve-up wiaaows, undercourter and survei lance equipment, and a host of otner quality produces, To see w hy progressive financial institutions everywhere are turning to Security to meet their needs, write tor eetails on our products and services. Security Corporation. While others followed the leader, Security became one. S E C U R IT y f" C O R P O R flT IO n iV 2055 $.E. Main Street rvne California 92714, (7’ 4) 979-9000 CIDCTtoPut our customers first with a ■ l l m v I national network of independent dealers who give you what you need —when you need it, including a complete program of sales, service and i mmediate delivery. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The first name in money orders is ------------ Express. TRAVELERS EXPRESS, that is. Did you think it was another company with a similar, and more familiar name? Well, think again. We process over 48 million money orders, transfer close to 2 billion dollars in funds per year. And, we’ve pioneered every money-making, profit-building concept in the money order business for the past 35 years. Get to know us. On a first name basis. Call toll free 800-527-4573* *ln Texas call collect 214-724-1605 The first name in money orders. EXPRESS COMPANY INC. 1309 Main Street, Suite 410, Dallas, Texas 75202 A Greyhound Subsidiary 22 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ©1976, Travelers Express Company, Inc. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 Personnel First of Tulsa Honors Senior Execs For Outstanding Performances NATIONAL, Tulsa, is a bank FIRthatST believes in honoring senior executives as well as other personnel for work well done. The bank initiated its Chairman’s Award in 1970 as a method of bestow ing special recognition on either an of ficer who is responsible for a section of the bank that has contributed sig nificantly to profits, or to honor out standing individual achievement in ini tiative or imagination in the perform ance of duties. Recipients of the award are chosen on an irregular basis by the bank’s chairman upon recommendation of the executive committee. The award is giv en only when the chairman feels it has been earned. Although the award is not considered to be a formalized “incentive contest” with dollar criteria for eligibility, it is Group Initiates Scholarship On Commercial Banking For Students in Kansas W ICHITA—The Young Bank Of ficers of Kansas (YBOK) has initiated a scholarship program for students in the state’s colleges and universities who have a “sincere interest in careers in commercial banking.” Joseph H. Stout, vice president, cor respondent banking, Fourth National, and YBOK Education Committee chair man, announced the plan, saying, “The objective of this plan is to attract and encourage talented young men and women into the field of commercial banking by providing a proper incen tive. We plan in the outset to offer two scholarships per year.” Scholarships will be for $500 yearly for each student. That amount repre sents the approximate cost of tuition for two semesters, enabling the students to attend school on a full-time basis. Scholarships will be given for an indi vidual’s junior and senior years. The program will begin with one scholar ship being awarded to a junior and one to a senior, and one new scholarship will be available each year. both a personal goal of each officer and a source of pride within the recipient’s area of responsibility, according to John L. Robertson, chairman and CEO. Recipients and their spouses receive two week, all-expense-paid trips to Hawaii or a similar place of their choos ing. They are presented with personal ized wall plaques to commemorate the special recognition they have earned. A permanent plaque detailing the pur pose of the award and listing past re cipients is publicly displayed at the bank. Recipient for 1975 was Jack W. Dikeman, vice president and senior trust officer, who established a profitability analysis system within the trust de partment. The 1974 award was pre sented to John V. Harding, vice presi dent in the correspondent banking de partment, for his work in developing new correspondent business and selling services. * * The YBOK Education Committee has established the following guidelines for selection of recipients: • Career objectives are the first con sideration. There should be substantial and sincere interest by a student in a career devoted to commercial banking. • Scholastic achievements and learn ing potential must be demonstrated. • Financial need isn’t a requirement of the selection, but will be a deciding factor in the case of a difficult decision. • Kansas residency is preferred to encourage students from the state to remain in Kansas after graduation. • Actual selection of recipients will be the responsibility of the school in which the scholarship will be granted. According to Mr. Stout, it’s the desire of the YBOK to offer scholarships through a number of the state’s schools, but since Wichita State University is the only institution offering a banking curriculum, an initial commitment of $1,500 has been made to it. It is hoped, he said, that a plan for rotation of the program can be developed among the state’s schools. MID-CONTINENT BANKER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis WRITTEN LOAN POLICY Every Bank Should Have One! "The Bank Board And Loan Policy' Provides the Information Needed to Formulate a Written Loan Policy or Update an Existing One! A m ust f o r b a n k s , this 2 8 -p a g e m a n u a l tells w h y a ll b a n k s sho uld h a v e w ritte n lo a n policies a n d h o w th e y can fo r m u la te or u p d a te such policies to serve as g u id e s f o r le n d in g officers a n d to help p ro te c t th e b a n k fro m m a k in g costly co m m itm en ts. The m a n u a l presents th e lo a n policies o f t w o w e ll-m a n a g e d b a n k s a n d con ta in s a r a tin g fo r m u la fo r secured a n d unsecured lo a n s , c o n d itio n a l sales con tra c ts , a ll m o rtg a g e s , g o v e rn m e n t an d m u n ic ip a l bon ds a n d g o v e rn m e n t a g e n c y securities. Topics s p o tlig h te d 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? (Missouri banks add Price: $2.90 4'/2% tax) ORDER TODAY! (Sorry, no billed orders) The BANK BOARD Letter 408 Olive St., Suite 505 St. Louis, MO 63 102 23 New Products and Services fails to comply, the machine shuts it self down. The units are expected to be available by September. Write: Amiel Industries, P. O. Box 48149, At lanta, GA 30340. • NCR Corp. The NCR Criterion in formation-processing system was un veiled at a special press conference in Dayton, O., April 30. This new series was developed with three banking trends in mind: electronic funds trans A n d re A m ie l (I.), pres., A m ie l In d u stries , a n d M a rc e l B ris e b a rre , in v e n to r, pose w ith A lfer, more extensive data bases and more 1 5 1 0 -P u ls a r electro n ic coin sorter a n d cou nte r. on-line communications services. Ac M a c h in e is said to b e a b le to h a n d le u p to cording to NCR, the Criterion will ac 2 ,0 0 0 coins p e r m in u te in up to e ig h t d e commodate all current financial and n o m in a tio n s . general-purpose data terminals, includ ing NCR’s new 2500 modular terminal system. The firm points out that the • Amiel Industries. AI-1510-Pulsar Criterion—available in two models, is the name of this firm’s new electronic 8550 and 8570—was developed to per coin sorter and counting machine that mit easy migration for banks using is said to be able to handle up to 2,000 NCR Century systems without their coins per minute in up to eight denom having to rewrite costly existing pro inations. A prototype unit was unveiled grams to achieve higher throughput to at a series of showings at the firm’s meet a heavier data processing burden. headquarters in Atlanta last month. The Criterion, says NCR, is a “virtual” Coins are fed onto a turntable that machine, that is, one that has several utilizes centrifugal force and electronic “personalities” and, therefore, is able selection heads to sort, count and bag to duplicate the performance of various them. Count accuracy is obtained by manufacturers’ computers. Thus, banks use of electronic probing sensors that that install the Criterion won’t have send impulses to a processing system to write all-new software. NCR also for totalization. The operation is said says the Criterion’s basic design was to be accomplished with less noise and developed to handle NCR’s central in at higher speeds than mechanical count formation file (C IF ) software, which is ing machines. Breakdowns are said to available in modules such as on-line be almost non-existent by virtue of the processing, demand-deposit accounting, elimination of mechanical assemblies.. general ledger, mortgage loans, install The unit is equipped with two coin ment loans and savings and accrual bags for each denomination being sort loans. These modules, according to ed and counted. The machine auto NCR, can be implemented on a Cri matically switches the flow of coins terion computer either one at a time or from one bag to the other after tire first all together to form an integrated C IF bag has been filled. A series of lights system. Write: NCR Corp., Davton, on a console instruct the operator when OH 45479. to remove filled bags. If the operator New NCR 6 5 9 0 d a ta m od u les (r.) use " h e a d s -in -p a c k " 7 0 m illio n b ytes o f s to ra g e . Both C rite rio n m a n y p ro v e d NCR C e n tu ry p e rip h e ra ls . 24 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 8550 and te c h n o lo g y 8570, shown to p ro v id e h e re , ta k e 35 m illio n a d v a n ta g e and of • Rand McNally & Co. The sim plicity and economy of the Hotspot-K coupon payment book now is available in a continuous format for computer preparation from Rand McNally & Co., Skokie, 111. In less than one second, a computer can prepare a personalized coupon book with 12, 18 or 24 payment coupons, each showing complete due date, account number, payment amount and bank and customer names and ad dresses, due to new developments in the Hotspot carbon transfer process. No assembly is needed after encoding; books are bursted and immediately ready for mailing to customers. Books also can be encoded with a typewriter. The coupons weigh less than one ounce and custom designs are available. For samples and information, write: Rand McNally & Co., 8255 North Centra] Park Avenue, Skokie, IL 60076. • Mosler Safe Co. A new brochure on the 400A Grade A Mercantile Alarm System has been released by Mosler Safe Co., Hamilton, O. The U/L ap proved system is said to provide eco nomical round-the-clock protection and consists of safe capacitance, holdup and night premise protection, an outside bell and/or a remote police connection. Optional are an inside bell, automatic program timing, motion detectors and external-line security. The device places an electronic field around that which it protects and around its control cabi net. Write: Mosler Safe Co., Depart ment PR-025, 1561 Grand Boulevard, Hamilton, OH 45012. • John H. Harland Co. A complete line of banking service brochures, the Community Bank Advertising Kit, has been released by John H. Harland Co., Atlanta. With the series, a bank has the option of supplying its own copy for imprinting on the insides and backs of brochures, or the institution can use standard copy supplied by Harland. Advertising copy also is included. A MID-CONTINENT BAN KER for Ju n e, 1 9 7 6 is for Computer. And ours is a complex of highly sophisticated data processing equipment. Which means you can receive monthly status reports showing your com m is sions, claims, premium income by branch and by month, plus year-to-date totals and aggregate totals since the beginning of your contract. C is also for Character and Capability, two things an Integon representative possesses in abundance. He s a specialist in his field. Yet, he knows enough about banking to com municate on your terms. S o when he sets up the program, he makes sure everything is running smoothly. Then he pays you regular visits to keep things that way. And if you need him in-between times, a call brings him on the run. C is for Change, too. And anytime a change brings new personnel to your firm, our representa tive is there with a complete training program which helps your staff sell better. S o your bank can earn more. T h e Integon representative sees that you always have all the supplies you need, including a thorough Reference Manual that details the entire Integon program. And in furnishing these free sup plies, we never lose sight of the fact that your business is banking. S o all paperwork is designed for quick and easy completion by loan officers, not underwriters. And finally, C is for Collect Call. Which you should make to J . Wayne Williard, Jr., at 919/725-7261. Or write him at Integon Life Insur ance Corporation, P O . Box 5199, Winston-Salem, N. C. 27102. As Vice-President of Credit Insurance, J. Wayne Williard, J r., Vice-President he can provide more information. Or arrange an appointment at your convenience, without obliga tion. And no matter what questions you have, he can answer them. Because he knows the credit insurance business from A to Z. [^INTEGON MID-CONTINENT BA N K ER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 25 number of services are covered and a bank can feature only those services it officers. A lobby display and pocket fold er to hold brochures also are available. Write: A1 Rogers, Marketing Depart ment, John H. Harland Co., 655 Lam bert Drive, Atlanta, GA 30324. • Bank Marketing Association. ‘'Cur rent Radio Commercials” is a collection of more than 160 bank radio spots avail able on cassettes from the Bank Market ing Association, Chicago. Developed from selections submitted by BMA member-banks throughout the country, the three-cassette package features spots dealing with checking and savings, charge cards, drive-up facilities, retire ment accounts and all other bank serv ices. Formats include jingles, humorous spots, dramatizations and hard-sell ap proaches. “Current Radio Commercials” is available to BMA members only, for $36. Write: Director, In-Bank Training Services Department, Association Ser- vices Division, BMA Headquarters, 309 West Washington Street, Chicago, IL 60606. • Brandt, Inc. High-speed counter feit detection is offered by the Count ess® Model 865/ CDA from Brandt, Inc., Watertown, Wis. The unit is equipped with a U. S. note Counterfeit Detection Aid (CDA) having a built-in fail-safe system to alert the operator should the CDA become inoperative. Any note passing through the machine that doesn’t satisfy tests for genuineness Heilink’s Big Security vault for small space* will stop the machine and alert the op erator, and notes can be counted at rates of up to 1,200 per second. Of a compact size, the 865/CDA has switch es to bypass the CDA for conventional counting and batching, and documents in a number of sizes can be processed. Write: CDA, Brandt, Inc., Watertown, W I 53904. • LeFebure Corp. A new check-cash ing protection system consisting of a document time-dating device and a model 2163 surveillance camera is be ing marketed by LeFebure Corp., Cedar Rapids, la. When a teller cashes a check, the check is inserted into the device, which stamps it with the time ... defies all known types of attack. Holds up to 180 Meilink safe deposit boxes with exceptional protection. Carries the U. L. TRTL-30 classification and has many of the world’s most highly rated security features. The Meilink Security Vault resists delamination, drilling and torch attacks. Has a massive door shell of special steel and alloys. And manipulation-proof combination locks, four-way boltwork, and anti-drilling and thermal relocking devices. The tough body contains a uniquely engineered reinforce ment network. Qualifies for special insurance rates. Big protection where space is at a premium: that’s Meilink’s Security Vault. @Meüin k BANK EQUIPMENT* 1 3100 H ill Avenue, T ole d o , O hio 43607 • Phone (419) 255-1000 26 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and date and automatically activates the surveillance camera to take a single frame photo of the person cashing the check. The system also is applicable to customers opening new accounts, mak ing loan applications and account de posits and withdrawals. Write: Le Febure Corp., Cedar Rapids, IA 52406. MID-CONTINENT BANKER for Ju n e, 1 9 7 6 David Niven, new spokesman for First National City Travelers Checks so he carries First National City Travelers Checks. f?W hen your customers travel they don’t like to wait for a travelers check refund any more than I do. When they carry First National City Travelers Checks they won’t have to. If theseTravelers Checks are lost or stolen, your cus tomers can get an on-the-spot refund at over 45,000 loca tions worldwide. Thousands more than any other travelers check. And they can spend them at literally millions of places worldwide. “That’s what I’m happy to be telling America in First National City Travelers Checks’ big, new television and magazine ad https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis vertising campaign. You can be sure your customers will listen. So why not take advantage of this opportunity and sell them the Travelers Check that doesn’t make them wait for a refund—First National City Travelers Checks. You won’t have to wait to see how pleased your customers will be. JJ DAVID NIVEN Selling /Marketing 'T e l-M o n e y' : Free Financial A d v ic e Given by Phone Messages In need of some advice on credit and borrowing? Saving? Or, perhaps, about a checking account? Residents of South Bend, Ind., are able to get such advice any time just by dialing a phone num ber. Tel-Money is a service being offered by First Bank. It is a series of recorded messages on the above-mentioned top ics, as well as personal financial man agement, and others. In all, the bank is using 40 of the three-minute record ings, and additional messages have been planned. To take advantage of the service, a person dials a specified number and tells the operator which tape he would like to hear. If additional or person alized information is needed, the caller is instructed at the end of the message to call First Bank’s personal service representative. Officials of the bank felt that many people are hesitant about discussing complicated personal financial matters with a banker or a family member. With the Tel-Money service, anyone can get answers to questions at any time, privately and anonymously. The program makes use of the tele phone tape library console developed by Teletronix Information Systems of Redlands, Calif. Previously, the system had been used in the Tel-Med medical information program, but this reported ly is the first use of the system for fi nancial education. Hom etown Salute: Bank’s C en ten n ial A d s Feature Local Businesses Besides being the nation’s bicenten nial, 1976 is the year of the centennial of Pittsburg, Kan. To recognize that event, First State has run a series of newspaper ads saluting important local business firms. The series pointed out the contri butions the firms have made to the eco nomic well-being of Pittsburg. The ads, bank officials feel, also helped rein force and contributed to a positive out look on the economic growth and de velopment of the community. Firms selected to be featured in the series were those with the largest local pay rolls, businesses that had experienced good growth in recent years. Packets of the ads were made up and distributed on a selective, limited basis to a number of local, state and national government officials, bankers and in dustrialists. While a good part of the distribution was done through the mails, some was done through officer calls. The program was designed by McCormiek-Armstrong of Wichita, the Correction ABOVE: Ad fo r T e l-M o n e y p ro g ra m of First B a n k, South B end, In d ., tells a b o u t service w h e re in one can call n u m b e r a n d h e a r a n y o f 4 0 re co rd e d m essages on fin a n c ia l m a tte rs . BELOW : O p e r a to r inserts ta p e in to p la y b a c k m a c h in e . T ap e c o n tain s m essa ge t h a t c a lle r has req u e s te d a n d if c a lle r needs a d d itio n a l in fo rm a tio n on to p ic, t a p e instructs c a lle r to p h o n e b a n k 's p e rs o n a l service rep . 28 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis An article in this colum n in the M ay 15 issue reported on a cen ten nial observance portrait prom otion at U nited A m erican B ank, Knox ville. How ever, the bank was incor rectly listed as bein g in Chattanooga. T h e editors regret any m isunder standing that m ay have occurred as a result o f this error. T h e prom otion featu red photos b y O lan M ills, head qu artered in C hattanooga. bank’s ad agency. McCormick-Armstrong won an award for the series. A typical ad explained how and when the business being featured was begun, and by whom. That company’s development through the years was traced and the number of people cur rently employed, along with yearly pay roll, was noted. First State also has offered Pittsburg centennial commemorative coins for sale in conjunction with the event. Timmmberrr! Bankers M ake C hips Fly During O p e n in g of O ffic e DeWalt H. Ankeny Jr. and Stanton Jorgens, president and vice president, respectively, of First National, Minne apolis, exchanged their business suits for plaid lumberjack outfits for the opening of the bank’s St. Anthony Falls Office. Mr. Ankeny and Mr. Jorgens, the office’s manager, sawed through a 24foot timber to open the office, an event that brought a twist to the conventional ribbon-cutting ceremony. D e W a lt H. A n k e n y Jr. (I.), pres., First N a t'l, M in n e a p o lis , a n d S tanton Jo rgens, office m g r. & b a n k v .p ., s a w log to open n e w b u ild in g o f St. A n th o n y Falls O ffice. The s a w in g w a s d o n e in p la c e o f c o n v e n tio n a l rib b o n cu ttin g , re flec ted lu m b e r-in d u s try past of office's are a . As an attraction to new customers, the bank displayed a collection of logging and woodworking tools that dated to the mid-19th century. The bank is located near the Falls of St. Anthony, which supplied the power for as many as 16 sawmills during the last century and the log-cutting operation that opened the new quarters helped recall that community heritage. The St. Anthony Falls Office build ing is in the shape of a modified rec tangle with an exterior of stone-tex tured concrete. Its windows are of solar bronze glass in thermal frames. Another feature is the facility’s six drive-up lanes and a paved, 30-car parking area. MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 Give America w hat it wants fo r 76: made-in-America pewter. By international,by George! > INTERNATIONAL SILVER COMPANY The more you get into premiums the better we look. International Incentives A Division of International Silver Company Wallingford, Conn. 06492 □ Call us as soon as possible. □ Send catalog before we meet.. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis America’s Bicentennial celebration presents you with a once in a lifetime opportunity to offer your customers authentic replicas of early American craftsmanship—fine pewter holloware from International Silver. These premiums of lead-free pewter are made with al I the qual ity you’d expect from the leading manufacturer of holloware. Plus the fact it’s one of the broadest lines of pewter products around, including a commemorative Bicentennial plate. See the specialists at International Silver for help. Our half century experience in the premium field can make your promo tion truly revolutionary. .Title. Name. Company. Address_ City_____ .State. “W e added Golnick. . . W e grew 10 % last year while our competition stood still!” REPORTS BANK IN TEXAS (Only one of hundreds of success stories from banks across the country) The Golnick Company specializes in complete bank advertising/marketing programs designed to bring more people into your bank. We can help you enjoy unparalleled growth. We successfully serve more than 1,200 financial institutions across the country. A Golnick program gives your bank an image, identity and per sonality which will be uniquely and exclusively yours. A Golnick pro gram attracts people to your bank in preference to your competition. When you need help being recog nized, you need Golnick, the rec ognized leader. Get in touch with us. There’s no obligation. Write or Call Toll-Free (1)800 030-5810 The World’s Largest Bank Advertising Specialist t h e C io l n ic k COMPANY 1123 N. Eutaw Street Baltimore, Maryland 21201 ® © 1976 Laon Shaffar Golnick Adv. Inc. 30 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis S ecurity New Security System Being Installed At Manufacturers Hanover, New York City COM PUTERIZED security sys tem, said to be the largest and A most advanced bank-owned system in existence, has been installed at nearly a quarter of the branch banks of Manu facturers Hanover Trust, New York. The Diebold system permits the bank’s security department to monitor bank facilities from a centrally located alarm console. The new system replaces the leased equipment in use at the bank’s branches and offices. When installation is com pleted next year, the equipment will monitor all of the bank’s robbery and burglary detection devices. At some locations, the system detects fire and flood conditions. Unlike previous alarms, which sent signals to a private protection agency that, in turn, notified bank officials and police, the new system transmits de tailed information directly to the con sole. “This new setup reduces our response time and gives us much greater con trol over the operations,” explained Allan Croak, vice president and se curity officer. “It’s more advanced than the current equipment and virtually impossible for burglars to circumvent.” In th e e v e n t o f a r o b b e r y w ith th e n e w e q u ip m e n t b ra n c h p e r s o n n e l h a v e b e e n in s tru cted to a c t iv a t e h o ld up a la r m s a t t h e i r stations as soon as t h e y h a v e a safe o p p o r t u n it y to do so. The a l a r m tra n s m its a s ig n a l to th e console v ia th e o n -lin e s av in g s t e le p h o n e n e t w o r k . , He said the bank needed a better alarm system because electronically so phisticated burglars had been able to bypass an increasing number of alarm devices and break into vaults, safe de posit boxes and night depositories, un detected, at banks throughout the na tion. Not all the technical failures of the former devices were caused by burglars, he said. “Nearly 80% of all bank alarms are false; most are caused by equip- N e w security console m o n ito rs a la r m s fro m c e n tra l lo c a tio n at M a n u fa c tu re rs H anover Trust, N e w Y o rk C ity. Pictured a r e A lla n C ro a k (I.), v .p . a n d security o ff., ta lk in g w ith b a n k g u a rd R o lan d D a ttn e r w h ile Security O ff. V in cent A rn o n e is sea ted a t console. D ie b o ld m a n u fa c tu re d e q u ip m e n t. ment malfunctions. This new system has the advantage of being able to dis tinguish mechanical malfunctions from real alarms and spot interference or disruption on telephone lines before it becomes a problem.” In the event of a robbery with the new equipment, branch personnel have been instructed to activate holdup alarms at their stations as soon as they have a safe opportunity to do so. The alarm transmits a signal to the console via the on-line savings telephone net work. Dual use of the lines, devised by the bank’s telecommunications experts, is a significant technical breakthrough, ac cording to Mr. Croak, and it will result in a considerable savings in telephone leased-line costs. The console operator is alerted by a flashing red fight and an audible de vice. As he relays the information to the senior security officer on duty, a permanent record of the place, time and nature of the alarm is recorded on a teleprinter adjacent to the console. Lo cal police and the FBI are then no tified by phone. The console operates around the clock and is said to guarantee continu ous protection through the use of sev eral backup devices. In the event of a blackout, for example, emergency pow er is provided by a battery unit capable of running the system for 80 hours. Disrupted phone fines can be restored through a telephone dial backup which reroutes the connection over another line, according to Mr. Croak. • • MID-CONTINENT BANKER for Ju n e, 1 9 7 6 ■ S3?i , “ Factory trained servicemen LeFebure BRANCH OFFICE LeFebure Lei ■ S p e c ia lly eq u ip p ed s e rv ic e v eh icles Close toypu service LeFebure takes care of your needs fast https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis There are hundreds of well-trained LeFebure service technicians. And there’s one near you to meet your needs. They’re LeFebure employees. They have specially equipped vehicles and tools. They know how to properly install and service LeFebure banking equipment and security systems. Service is as close as your telephone. Warehouse facilities are maintained at branch offices and service depots throughout the United States. An inventory of standard items and back-up parts are always on hand. Warehouses also serve as a staging area for incoming shipments. Equipment moves quickly from warehouse to job site. LeFebure servicemen are factory trained in all aspects of installation and service. They continuously keep up-to-date on technology and new equipment. They’re professionals. You can put your confidence in LeFebure, a company that has been serving financial institutions for nearly a century. D ivision o f W a lte r K idde & Com pany, Inc. Cedar Rapids, Iowa 52 4 06 W e m ake more of the things you need than anyone else in the world. How Much Afore is a Good Employee Worth? Maybe just the cost of an Employee Benefit Program through Scarborough Scarborough Associates knows and under stands the needs of banks and bank employ ees. Supported by 25 years’ experience in em ployee benefits, we have developed an Employ ee Benefit Program including: 1. 2. 3. 4. 5. 6. 7. Major Medical (Hospitalization) Dental Care Long-term Salary Continuance (to age 65) Short-term Salary Continuance Life Insurance (to $100,000) Accidental Death (to $100,000) Cancer Protection Take a moment to compare the benefits and rates...rates which are based on the favorable claim experience of bank employees. Call col lect (312) (346-6060) or write Jim Keye, Director of Group and Association Benefit Programs. At no obligation, he will tailor an Employee Bene fit Program designed to satisfy you and your employees. A S S O C IA T E S IN C . 222 N. Dearborn Street Chicago, Illinois 60601 (312) 346-6060 Adm inistered by Scarborough and Company the bank insurance people 32 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N K ER fo r Ju n e, 1 9 7 6 Presenting R ou n d u p BANKERS C O M FO R T R O B IN S O N 1969. The board vacancy left by Mr. Harland’s death will be filled at a later date, according to company officials. MYERS FING ER • Insurance Enterprises, Inc. James W. Finger and James O. Myers have been named resident vice presidentMissouri and resident vice presidentKansas, r e s p e c tiv e ly , of Insurance Enterprises, Inc., St. Louis. Mr. Finger has been with the firm nine years and has been in the life and credit insur ance field more than 20 years. He most recently was a field service representa tive working for Insurance Enterprises in Kansas and Missouri. Mr. Myers has 11 years’ finance and insurance ex perience. Prior to joining Insurance Enterprises last year, he was general sales manager and finance and insur ance manager for a Kansas automobile dealer. • John H. Harland Co. J. William Robinson, president and CEO, John H. Harland Co., Atlanta, has been elected to the additional post of chairman. He succeeds the late John H. Harland. Mr. Robinson joined the company in 1950, advancing to president and CEO in FOR SALE MODULAR BUILDINGS NEW & USED • Mosler Safe Co. Charles H. Com fort II has been named director of E F T marketing at Mosler Safe Co., Hamil ton, O. He will report to R. William Ayres Jr., president. • Payment Systems, Inc. Phillip Rrooke, technology editor of the A m er ican Banker newspaper, has joined Pay ment Systems, Inc., New York City, as vice president and editor of the Pay ment Systems N ew sletter. Mr. Brooke has been with the A m erican B anker New York headquarters staff since 1967. In his new post, he will have full editorial responsibility for the Payment Systems N ew sletter and certain other publications PSI plans to offer. He suc ceeds Kenneth T. Jablon, who remains as vice president and continues with responsibility for circulation, production and subscription fulfillment of the news letter. • Amiel Industries of North Amer ica, Inc. Several appointments have been announced by Amiel Industries of North America, Inc., Atlanta: John L. Harrigan, vice president of marketing; Thomas G. Dauer, vice president of advertising; Charles F. “BudcT Austin, public relations manager; and Virginia L. Vann, public relations assistant. E. F. BAVIS & ASSOC., INC. Now every commercial banker can understand, plan and monitor a sensible program of Risk Management. This new, concise manual helps you measure all the loss exposures you face...shows how to reduce needless and costly insurance gaps or overlaps...aids you in establishing a full-dimensional risk manage ment program, including loss funding, to conserve your bank assets and get more for your insurance and protection dollar. This unique manual - (which is by the same publisher o f the Risk and Insurance Manage ment Guide For Savings Institutions) - takes you step-by-step through every area of Risk Management planning - in simple terms, with specific examples. You needn't be an insur ance agent to understand it. Yet every section reveals new, proven ways to reduce your risks, losses and problems and is constantly kept up to date. THE RISK AND INSURANCE MANAGEMENT GUIDE •Complete Loose-Leaf, Tab-Divided, Section Indexed •Ten issues of "Risk Management News" •Guide Updates For The First Year » 1 0 0 .° ° HOW Y O U R G U ID E STAYS U P-TO -D A TE You will be automatically billed $50.00 annually for continuing service beyond the first year to keep your guide current. 10-DAY TRIAL O FFER Take 10 days to examine this vital manual at your leisure. If you are not satisfied, simply return the guide at no cost or obligation. Mid-Continent Banker 408 O live St. St. Louis, Mo. 63102 Monday Security Corp. Honored Jack S ch n eid erjo h n (2 n d fro m I.), v .p ., a n d H o ld e r (2 n d fro m r .), v .p ., M o n d a y C o rp ., W e b s te r G ro ves, M o ., receive Ed Security Security C o rp . F iv e -Y e a r D e a le r Service a w a r d s fro m John K. G riff (r.), pres., a n d G a r y J. G riff (I.), v .p .. Security Contact: A Sensible Risk j Management Program In One Step- By-Step Practical Desk Top Reference Guide C o rp ., Irv in e , C a lif. M onday Se Please send me The Risk and Insurance Management Guide for Bankers. The $100.00 initial price includes the first ten issues of “ Risk Management News" plus all revisions and additions to the Guide. 1 understand if I am not completely satisfied I may return the Guide within ten days and my money will be refunded. Please include appropriate sales tax. curity C o rp is p a r t o f th e n a tio n a l n e tw o rk of in d e p e n d e n t d e a le rs a ffilia te d w ith Security C o rp ., m a rk e te r o f e q u ip m e n t a n d services fo r □ Check enclosed, please ship postage paid. fin a n c ia l institu tio n s. N o t p rese n t w h e n th e p h o to w a s ta k e n w a s Don M a rs to n , M o n d a y Security pres. This cu tline w a s run in co rrectly □ Please send me further information. □ Bill me and add $2.50 to cover postage and handling, j in M a rc h . 200 Jimson Road Cincinnati, Ohio 45215 513-733-3584 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Institution.. Street..................................................................... City............................... State.......................Zip.. 33 Shipping broilers to Iraq or selecting plant sites in Mississippi. . . our Corporate Banking Division has the expertise you need. Fred D. Neil, Vice President, Deposit G uaranty National Bank (right), and B. M. Anthony, President & D irector, National B ro ile r M arketing Association, inspecting processing line at M ississippi b ro iler packing plant. H. A Beau W hittington. D irector of Industrial Developm ent, Deposit G uaranty National Bank. Two of the many services offered by our Corporate Banking Division are Industrial Development and International Banking. These departments are staffed with experienced personnel in these two areas of growing importance and are available to serve you and your customers when plans call for assistance in Mississippi. International Banking Industrial Development Japan, Mexico or around the globe, our International Banking experts are ready and able to assist you and your customers in all areas of international banking, including credit information, export and import financing, remittances, currency rates, cable and mail transfers, letters of credit, collections, foreign exchange and other services. Working from our main office in Jackson, through our branch banks in seven Mississippi cities and in cooperation with hundreds of correspondent banks throughout the state, our Industrial Development Department can assist you and your customers in such areas as site selection, transportation and economic studies, labor force statistics, and with construction, equipment and inventory financing, and many other services. For further information, call (601) 354-8249. For further information, call (601) 354-8259. 4 D EPO Sn GUARANTY NATIONAL BANK M ain O ffice: Jackson, M ississippi; G row w ith us; M em ber F.D.I.C.; Branch Banks: G re e n ville Bank, G reenville, LeFlore Bank, G reenw ood; M echanics Bank, M cComb; C ity Bank & Trust Co., Natchez; Farmers Exchange Bank, C entreville; M o n tice llo Bank, M on tice llo ; N ew hebron Bank, N ew hebron, and o ffices in C linton and Pearl. 34 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 FINANCIAL REFORM— Not a Dead Issue! By W. LIDDON McPETERS, President-Elect, American Bankers Assn., and President, Security Bank, Corinth, Miss. N TH E W ORDS of a comic strip character in the W ashington Post, “Old bankers never die, they just lose interest!” If you’ll forgive me for making such a pun, I would like to point out that, if old bankers never die, the same can be said for legislative proposals on Capitol Hill. For, unlike bankers, Con gress seldom loses interest in any pro posal introduced in either house. If a bill is not enacted the first time it is in troduced, it will almost certainly turn up the next year in a different form. Specific bills are vehicles that may dis appear, but the issues and concepts be hind those bills are remarkably longlived. That is certainly true of the package of proposals so inappropriately labeled “financial reform.” Regardless of what happens in the rest of this session of Congress, it's a virtual certainty that these proposals will reappear next year when the new Congress takes office. The forces that generated this legisla tion are stronger today than they ever were, and those forces guarantee the Congress will be considering major changes in our financial system for some time to come. These proposals have already demon strated amazing longevity. Since 1971, when the Hunt Commission issued its recommendations for change, the ABA has been working for comprehensive change to erase the competitive in equalities that unfairly penalize bank customers. In 1973, when the Adminis tration submitted the first Financial In stitutions Act, based on the Hunt Com mission recommendations, ABA stepped up its activities. Despite these efforts, however, on December 11 of last year the Senate passed a Financial Institutions Act that would vastly expand the powers of I bank competitors— and, at the same time, leave banks hamstrung by in equitable rules on interest rates, re serve requirements, taxation and other matters. ABA voiced the banking in dustry’s opposition to this bill. Meanwhile, a parallel effort proceed ed as the House Banking Committee prepared its version of financial reform, called the Financial R efo rm A ct (F R A ). The ABA testified in opposi tion. We detailed precise reasons why FRA was not true reform, why it was not equitable to all institutions and why it would ultimately harm bank cus tomers and the general public. Your letters and phone calls to Congress backed up what we were saying. Partly as a result of our testimony, the old FRA has been broken up into a cluster of smaller bills. Some of this legislation closely parallels the Senateapproved Financial Institutions Act in granting additional banking consumer powers to thrift institutions without eliminating the special advantages they enjoy. Our association is continuing to oppose this legislation. Mr. McPeter’s article is based on a talk he gave last month at the annual conven tion of the Mississippi Bankers Association. He made similar remarks at the Alabama, Kansas and Louisiana conventions. MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The ABA, of course, is always ready and willing to offer a positive and con structive voice in congressional delib erations. But, given the history of this legislation in this Congress, we do not believe that fair and constructive re form that truly serves the public in terest is possible this year. This is the message we are sending to Congress, and with your help and the help of bankers like you all over the country, our message is getting through. But let me repeat: On Capitol Hill, issues do not die and certain members of Congress seldom lose interest. If these proposals are defeated this year, they will be repackaged for considera tion next year. The battle will begin again. We cannot delude ourselves that it will not. Why? Because the fo r c e s th a t spawned these proposals are still pro pelling us toward change. In fact, some are stronger than ever. That being the case, it makes sense for us to examine these forces to see how we can manage them to create an equitable banking environment that serves the best interests of customers as well as financial institutions. Perhaps the strongest force for change is the high importance this nation at taches to providing adequate housing for all income levels. Ever since the Housing Act of 1949, adequate shelter for every American has been an ex plicit national priority—a priority re affirmed in the Housing and Urban De velopment Act of 1968. Housing was the reason S&Ls were granted special privileges to help them attract additional funds. Housing is the ostensible reason Congress has legis lated the interest rate differential be tween banks and thrifts. And adequate housing is one of the major forces be hind the proposals for financial reform 35 ". . . w e m ust c ontinue o u r e ffo rts to m a k e sure this bill . . . is n ot e n a c te d b e fo r e th e close o f th e 9 4 t h Congress. A n d w e m ust r e d o u b le o u r e ffo rts n e x t y e a r w h e n fin a n c ia l r e f o r m le g is la tio n w i l l a lm o s t c e r t a in ly r e tu r n f o r a n e n c o re ." introduced in the 94th Congress. The House proposals, in particular, amounted to nothing short of political credit allocation to housing—allocating funds to a sector of the economy that Congress considered to have a high social priority. No one would argue with the im portance of housing to the health of our nation’s society and economy. As bankers, we are convinced that a solu tion to our housing problems would provide not only adequate shelter for all Americans, but an important boost to our economy in the form of addition al jobs and income. But direct governmental credit allo cation is not the answer to our housing difficulties. For one thing, it fails to take local differences into account. In some rural areas, for example, agricul ture, rather than housing, is in much greater need for credit. And, too, en actment of any direct governmental credit allocation proposal sets a danger ous precedent. If credit can be allocat ed to one high-priority area, why not to another? Are small businesses any less deserving of credit than home buy ers? Or urban renewal projects? Or environmental protection? In a time when our society has identi fied a great many social priorities, bankers might well find their lending policies and programs limited by a series of governmental credit allocation decisions made in Washington. Even more important, customers who want to borrow for personal and business purposes might find the funds in the banking system already allocated by government decree. This potential loss of freedom to borrow for purposes that you decide are important lies at the heart of the problem posed by political allocation of credit. A better solution might be some sys tem of subsidies, either direct or through tax incentives, that would work with the forces of the money market to channel the flow of funds into socially desirable areas, including housing. Such subsidies would preserve the essential freedom of would-be borrowers and their bankers to make their own credit decisions, based on their unique knowl edge of their own communities. Until this or some other solution to the na tion’s housing problem is found, how ever, we can be certain that the need for a more stable flow of mortgage funds will continue to exert pressure 36 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis for major changes in our financial sys tem. Consumerism is certainly a signifi cant force for change in banking. Con sumers—bank customers, if you will— are much more sophisticated today about the value of money. They know that bankers are earning interest on depositors’ funds and they want an ex plicit earning as well as better service on their deposits. This is especially true at a time when inflation has been erod ing the value of dollars salted away in savings accounts. This new consumer demand for high er interest and better service has not escaped the notice of Congress. Al ready, it has brought about Senate ap proval of the Financial Institutions Act, which would permit payment of interest on demand deposits. Even more important, it could make it possible for all regulation of interest rates to stop five-and-one-half years after enactment. Both of these pro visions are included in the financial reform legislation introduced in the House. I should add, however, that, in the House at least, this five-and-one-halfyear period is considered an extension of Regulation Q, not a deadline for termination. In one important area of the nation, New England, the question of paying interest on checking accounts has al ready been resolved. Financial institu tions in all six New England states are already authorized to offer NOW ac counts, for all practical purposes, the equivalent of interest-bearing checking accounts. In its efforts to meet the new de mands of the consumer, Congress is not stopping with interest-rate regulations. Recent congressional a c tio n s h a v e clearly demonstrated that Congress agrees with the Hunt Commission’s ar gument that the consuming public is best served by the free play of com petitive forces. Increased competition among all financial institutions is seen by many in Congress as the best way to provide more and better financial services to the consumer. This is an important break with the basic premise behind much of the bank ing legislation of the 1930s. During that period, bank failures had been one of the most visible symbols of the on set of the great depression. It’s not too surprising that the survival of banks became a major objective of the bank ing acts of 1933 and 1935—even when it meant the introduction of some re straints on competition. Banks were limited in their ability to compete by offering higher interest rates. They were absolutely forbidden to pay interest on demand deposits. Stricter standards made it difficult for new banks to obtain charters, because many believed that over-banking had contributed to the large number of bank failures. And a system of federal deposit insurance and federal regula tion of almost all banks was established to prevent future bank failures. Today there is little doubt that Con gress is still concerned about the sta bility of the banking system—witness recent congressional concern over the news stories about so-called problem banks. But this concern for bank sta bility is now counterbalanced by an increasing emphasis on increased com petition among financial institutions as the key to providing better financial service to the consumer. In both the House and Senate finan cial reform proposals, financial institu tions would be able to pay interest on checking accounts. And by granting thrift institutions the power to provide a full range of lending and depository services, Congress in effect would be creating some 6,000 additional banking competitors overnight—a far cry from Congress’ 40-year-old concern with limiting banking competition, a con cern that had its origin in the failure of a fourth of the nation’s banks during the great depression. Bankers themselves have often dem onstrated a strong awareness that in creased competition can better serve the needs of the consumer as investor. For example, bank automated invest ment services fill an important need for the small investor. And many bankers are convinced that banks should be able to offer commingled agency ac counts—mutual funds, in effect—as an additional service to the small investor. Undeniably, the desire to meet con sumers’ wants and needs is a signifi cant force for change and innovation in our financial system. Another major force pushing us to ward change is inflation. Many of us remember that, in the 1930s, wage and price increases were not a problem but a desirable objective. With incomes, prices and wages at rock bottom, the only economic indicator that was rising was unemployment. Inflation must be factored into every aspect of economic life. It pushes the cost of housing sky high. It leads to soaring interest rates, which, in turn, cause disintermediation that dries up the flow of funds to housing. It gives (Continued on p age 108) MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 REGULATORY REFORM— An Idea Whose Time Has Come By GEORGE A. LEMAISTRE, Director, Federal Deposit Insurance Corp. ARGE BANK failures and economic strains have focused attention on the banking industry and our system of bank supervision and regulation to a degree not seen since the 1930s. Begin ning with the speech given by Arthur Burns of the Fed at the ABA conven tion in 1974 in which he decried what he termed a “competition in laxity” and described the existing regulatory frame work as a “jurisdictional tangle that boggles the mind,” the issue of bank regulatory reform has never been far from the attention of either the bank ing committees in Congress or the banking agencies. It’s dangerous to leave this matter to Congress, because that group rreeds guidance in grappling with it. A myriad of proposals has been put forward, un told hours have been consumed in dis cussion, numerous speakers have pon tificated, reams of paper have been produced, and, finally, what should have been a careful analytical explora tion degenerated into a personal politi cal vendetta. I do not need to tell the outcome: After much sound and fury, the issue of bank regulatory reform is dead in the 94th Congress. Nevertheless, it’s desirable to reflect on the subject of regulatory reform in the banking context, since, like it or not, governmental and regulatory reform seems to be an idea whose time has come. When I talk with businessmen, bankers and even consumer advocates, I hear one persistent complaint: Pro found dissatisfaction with the perva siveness of governmental intervention in our day-to-day affairs and with the reams and reams of paper that are re quired to effect even the simplest and least controversial of transactions. The extent of this concern has been one of the dominant themes of the current L presidential election campaign. The issue posed by this dissatisfac tion is not a simple one. Most informed people share the recognition that our economy is too large and complex to function properly without some govern mental supervision or regulation. For example, while some might dis agree with the direction of monetary policy at a particular time, few would deny the need for a mechanism to con trol the quantity of money in the sys tem. Similarly, although one may dis agree with the specific policies of many environmentalists, the absence of some controls over the disposal of commer cial waste and other pollutants would lead to disastrous consequences in a highly industrialized society such as ours. And, finally, by way of illustration, there is general agreement that some surveillance and supervision of the operation of individual banks is re quired to avoid an excessive number of failures that would create economic instability. Accordingly, the problem is not that regulation and supervision of economic and commercial affairs is inappropriate, Mr. LeMaistre’s article is based on the talk he gave last month at the annual con vention of the Arkansas Bankers Associa tion. He made similar remarks at the Ala bama convention in Puerto Rico. MID-CONTINENT BANKER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis but, rather, that regulation often out lives the problem it was intended to address; that we do not always take sufficient care to choose the least costly means to achieve the desired end; and, often, regulation results in unantici pated consequences that can be more severe than the problem which regula tion sought to remedy. It is not surprising that these prob lems are so rarely dealt with effective ly. All too often, those who are regu lated, while screaming loudest about the sanctity of an unfettered free en terprise system, grow comfortable in their regulated environment and resist mightily when any serious effort is made to deregulate. Similarly, regulatory bodies acquire a vested interest in their own existence and the “turf” which they regulate which prevents their objective assess ment of the regulatory policies they pursue. As a result, governmental agen cies are often loathe to engage in criti cal self-examination. Finally, it must be acknowledged that, while it is possible to deal with these issues with some ease in the ab stract, real-world solutions are not easy to produce. In part, this is a conse quence of practical politics and the fact that any change in the framework of an industry’s regulation may lead to significant short-run dislocations or ad justment costs. At least as important is the simple fact that answers to many of these problems are extremely dif ficult to discover. These factors provide a partial ex planation of why the results of bank regulatory reform efforts were so dis appointing in the 94th Congress. Not withstanding the difficulties, it is im portant— and perhaps critical—that bankers and bank regulators develop a systematic and reasoned approach to 37 " / . . . h o p e b a n k e r s a n d r e g u la to r s w i l l . . . d e a l w it h th e issues . . . in an o r d e r l y a n d a n a l y t i c a l w a y . I f t h e y do, . . . th e n e t re su lt w i l l be a r e g u l a t o r y f r a m e w o r k t h a t is less b u r d e n s o m e a n d m o r e e ffe c tiv e . . regulatory reform. The failure to develop such a posi tive approach will have several adverse consequences. A golden opportunity will be lost to deal in a meaningful way with the problems of excessive and in efficient regulation and to highlight the unintended ill effects and hidden costs of regulation. Similarly, an opportunity will be lost to remedy certain demon strable inadequacies in the present su pervisory framework. Finally, it is critical that we not opt out of the process of shaping the changes that are both inevitable and bound to affect us deeply. The alter native would be to wait for Congress to develop a plan and then either sup port it or defeat it. 1 would like to identify some of the elements of an approach and to suggest some of the changes that might flow from this analysis. These remarks are not intended to be a comprehensive or definitive plan, but are a tentative ef fort to suggest an orderly way of think ing about regulatory reform. First, remedies should be developed that respond directly to inadequacies and abuses that are demonstrated by a careful analysis of the facts, rather than to empty phrases such as “com petition in laxity. ’ The failure of recent legislative efforts to focus upon specific, demonstrated shortcomings of the sys tem ensures that at least one serious flaw will be with us for at least two more years, or until Congress gets back to the subject. Recent events have illustrated that the existing framework for the regula tion and supervision of bank HC sys tems is not only unduly costly because of the overlapping and conflicting juris dictions involved, but, also, in some in stances, simply has not functioned properly. In three of our largest bank failures in the past 18 months— Hamilton Na tional, Chattanooga; American City Bank, Milwaukee; and Palmer Na tional, Sarasota, Fla.—the cause of fail ure was not abusive self-dealing— which from 1960 through 1973 was far and away the predominant cause of failure—but, massive unsafe and un sound lending practices occurring in the essentially unsupervised environ ment of a non-banking HC affiliate. The failure of Hamilton National, a venerable, traditionally conservative, well-run institution, is the most graphic and tragic illustration of this phenome38 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis non. But for $80 million in mortgages initiated by an Atlanta-based mortgage affiliate over a period of months and dumped on the bank, the bank in Chat tanooga would be in existence today. These cases illustrate two points that should be recognized by both the banking agencies and the Congress. First, the notion that one segment of an HC operation can be insulated from the remainder of the system is quite simply a myth. It is the worst form of self-deception to think that the lead bank in an HC is in a safe and sound condition because its last examination was satisfactory if other facets of the HC system are not undergoing equally rigorous scrutiny. When HCs were al lowed to proceed in a manner that would be unacceptable in a commercial bank, some of them were encouraged, in effect, to hide enormous risk. The second point flows from the first. That is, it simply makes no sense for as many as four bank regulatory agencies to have safety and soundness jurisdiction over various segments of an integrated business enterprise as is the case with some HC operations. Inevi tably, this approach will be at times conflicting and uncoordinated. Accordingly, as an individual in volved with the agency concerned with the administration of the deposit insur ance fund, I would rate the fragmented and ineffectual framework of regulating HC systems and not some vague no tion of “competition in laxity” as the most profound cause for concern in our present supervisory structure. As has been suggested by others, including Comptroller of the Currency James Smith, this problem could be remedied by charging the supervisor of the lead bank with the primary supervisory re sponsibility for the entire system, in cluding the HC itself. Even if it were not possible to illus trate the adverse consequences of the present framework in concrete cases, such as the Hamilton failure, such a framework should be rejected both be cause of the governmental waste that results from the unnecessary duplica tion of effort and because of the bur den imposed upon the banker, who must deal with four bank regulators as well as the Securities & Exchange Commis sion (S E C ), the Justice Department, the Federal Trade Commission (F T C ) and miscellaneous regulatory bodies. This brings me to a second element of any serious attempt to reform a regulatory framework: A concerted ef fort should be made to eliminate re dundancy and overlap within the frame work of regulation that applies to an industry. Although many of the regulatory re form proposals that surfaced recently purported to rationalize the bank regu latory structure, some of the most no table instances of duplication and in efficiency were largely ignored by Messrs. Proxmire and Reuss. In my judgment, the existing system of review under the Bank Merger Act represents a classic example of a regu latory process which, although benign, is redundant, time-consuming and un duly costly. Our present system of review of the competitive aspects of a merger has three elements. Under the statute, the primary federal regulator is charged with the responsibility for considering both antitrust and banking factors in determining whether a given merger should be approved or denied. Second, each of the remaining two federal banking agencies and the Jus tice Department are required to file with the primary regulator their own analysis of the competitive implications of the merger in question. Finally, after approval by the bank ing agency, the Justice Department may, within 30 days, sue to overturn the merger on antitrust grounds. This system was designed by Con gress ostensibly to obtain uniform ap plication of the act. Moreover, on pa per at least, the system seems a good example of how checks and balances can be built into governmental proces ses. Yet, the record as developed and reviewed by the Senate Banking Com mittee this session reveals that uniform ity has not been the result. And I can personally testify to the fact that the advisory opinions contribute little, if anything, in the way of facts or analysis that is not brought to our at tention by the FD IC staff. Thus, the net effect of this process is that the energies of bright, compe tent people are consumed in a meaning less task and that more paper is circu lated in a city already choked with it. The redundancy could be remedied without altering the present application of the law. At the very least, the re quirement of the competitive factor re ports should be eliminated. However, I would go a step further, and recom mend simply that the primary bank su pervisor and the Justice Department be given notice of the intention of two banks to merge. The bank agency would have the re sponsibility of reviewing the merger from a safety and soundness point of view and the Justice Department (Continued on p ag e 110) MID CONTINENT BANKER for Ju n e, 1 9 7 6 F a cto rs Behind the L oan -L oss P rob lem And T h eir Im plication on Supervision By ROBERT E. BARNETT, Chairman, Federal Deposit Insurance Corp. E HAVE been going through a period in which problem banks and failures have received more public attention than usual. Even those of us who are in favor of increased disclosure by banks have been unhappy with news stories that have been exaggerated, out-of-date or simply inaccurate. I may be overly sensitive on this, since there is substance to the impres sion one gets from the inaccurate as well as the accurate stories published during this period. Our problem bank list is longer than it has ever been and it includes some sizable banks. Loan losses were up dramatically last year and were more than double the figure for just two years ago. I cannot explain everything that has happened to banks in the last two years. I have not seen any complete explanations for the significant increase in bank problems that accompanied the recent recession. Unlike some observers, I do not find that the performance of the regulators, including the FD IC , is the cause of the problems, although had all of us done our jobs better, per haps we could have blunted the impact on some individual banks. I want to set out three factors which I think account, at least in large part, for the severity of our recent problems and to discuss briefly the implications of these events for bank supervision. While I might make a prediction or two, this article is not about what is going to happen as much as about what has already occurred. The major strands in the explanation for the increase in bank losses and in the number of problem banks include, first, the 1974-75 recession; second, a general trend toward greater risk-taking on the part of the banking system that goes back a fairly long time; and third, some unusual peculiarities of the recent economic and international situation. It is important that we not under estimate the relationship between the economy and bank performance. Some analysts and reporters assume that banking should be immune to the gen eral trends and problems of the econ omy. But that is an unreasonable stan dard for banks. The 1974-75 recession W was much more severe than anything our economy has experienced since World War II, whether measured by decline in GNP, industrial production or increase in unemployment. Since banks play such a major role in our economy, we must expect the health of banks to mirror that of the economy. In periods of economic de cline, the profits of business firms fall and the number of firms encountering financial difficulties and failure always increases. This will be reflected in non accruing loans and loan charge-offs at commercial banks. If this were not the case—if banks were only making loans to firms whose financial condition was so solid that even a severe recession would not affect their ability to pay— the banks would not be doing their job. Banking involves taking moderate risks on individual credits, although we expect that a well-managed, diversified loan and investment portfolio will keep overall losses at reasonable levels. Main taining that portfolio is difficult when there is substantial weakness in the general business environment. We have reviewed the figures on loan losses of commercial banks over the last 25 years and find a definite cyclical pattern. The pattern is not perfect, partly because we only have loss data on an annual basis, and partly because banks exercise some discretion with respect to the timing of chargeoffs. Essentially, we have found that the percentage of loans charged off This article is based on a speech given by Mr. Barnett at the annual convention of the Texas Bankers Association last month in El Paso. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis does increase during periods of busi ness recession. This has been true in all of our post-war recessions— 1949, 1954, 1958, 1960, 1967, 1971 and 1975. The year of recovery following those recessions always produced a re duction in the loan-loss ratio. Of course, we don’t know yet whether that will turn out to be the case for 1976, but if the pattern of those past 25 years continues, then I would expect the loanloss ratio to decline this year. While the pattern is rather clear, the magnitude of these year-to-year changes in bank loan losses was ac tually modest until we got to around 1970. I think that reflects the fact that the economic declines themselves were relatively modest. In fact, most of our recessions of the last 25 years really were slowdowns in the rate of growth of GNP rather than an actual year-toyear decline in the economy. Thus, it is not surprising that, during the period of our most severe postwar recession, we should have a significant increase in bank loan losses and a significant increase in the number of banks on our problem list. The data on loan losses suggests more than a cyclical phenomenon. The extent of bank problems in the last two years was influenced by this recession, but it also reflects some more basic and long-lasting characteristics. This squares with our general assessment of what has been happening in banking. Let me suggest a few numbers that illustrate this general trend. The loan deposit ratio of large banks was 56% in 1960 and 68% in 1975. The ratio of equity capital to assets of large banks was over 8% in 1960 and under 6% in 1975. The ratio of cash and U. S. government securities to assets was over 40% in 1950 and about 25% in 1975. These are significant differences in meaningful ratios. Since the early 1960s, many banks have abandoned their traditional con servatism and have begun to strive for more rapid growth in assets, deposits and income. “Liability management” became the essential phrase in the modem banker’s lexicon. The larger banks also began pressing at the bound39 " W h i l e r e a l e s ta te m a r k e t s h a v e tu r n e d o r a p p e a r to be b o tt o m in g o u t in m a n y a r e a s o f th e c o u n tr y , r e a l e s ta te lo a n p r o b le m s in som e a r e a s m a y be w i t h us f o r some tim e ." aries of allowable activities. They ex panded into fields which some felt in volved more than the traditional degree of risk. These activities included direct lease financing, credit cards, under writing of revenue bonds, foreign op erations and others. This list of activities and the finan cial ratios I cited reflect a general trend towards increased aggressiveness and increased willingness to bear risks on the part of the banking system in general and large banks in particular. The HC movement of the 1970s certainly accelerated these develop ments, although most of the activities of bank HCs could also be, and were in fact, engaged in by banks directly. I am assured by our FD IC examiners that this increased aggressiveness showed up in lowered credit standards as well. During the 1960s, banks generally were not noticeably harmed by the di versification of activities, the movement towards greater risk in their own finan cial structure and lowered credit stan dards. After all, the early and mid1960s represented a fairly extended period of relatively stable growth and moderately stable prices. The first half of the 1970s proved to be a much tougher economic environment in which to operate. Even apart from the recession of 1974-75, we should not minimize the impact on banks of operating in periods of tight credit, high money costs and extremely erratic movements in commodities and other prices. These factors affected not only the banks directly, but also the stability and predictability of business opera tions, and that, in turn, had its impact on the repayment of bank loans. I have mentioned some financial ra tios and changes in activities that spe cifically apply to large banks. Many would argue that small banks have changed much less dramatically than larger institutions, and the loan-loss data support this view. During the 1950s and 1960s, smaller banks generally had higher loss ratios than the larger insti tutions. That pattern clearly has been reversed in the 1970s. The loan-loss ratios have been noticeably higher for larger banks over the last few years. This has been due in part to some failures of major corporations with sub stantial lines from large banks, in part to the large bank’s greater exposure to construction lending and mortgage banking, and in part to their greater 40 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis willingness over this period to finance new and sometimes untested operations or ideas. Moreover, since the large banks tend to have higher loan-to-asset ratios, their earnings tend to be more sensitive to loan losses. The two factors I have mentioned in explaining the increase in bank prob lems—the general state of the economy and the increased willingness of banks to bear risk— are clearly interrelated. The increased aggressiveness of the banks would probably not have shown up to the same extent in increased problems if it had not been for the decline in the economy. Likewise, the third factor I wish to explore is related to the general state of the economy as well. In recent years, in addition to the general decline in economic activity, we have had some special problems. Some are directly related to the econ omy, some are unusual, one-shot events. These include such factors as the tremendous increase in energy costs, rapid rise in food prices, record high interest rates and severe problems in the real estate market. Let us look first at the real estate problem, since many of our bank fail ures and major problems for the past two years have come from real estate loan problems. While real estate mar kets have turned or appear to be bot toming out in many areas of the coun try, real estate loan problems in some areas may be with us for some time. It is difficult to tell what amount of non accruing real estate or real estate in vestment trust (REIT) loans have been written off thus far, and what the ulti mate write-offs will be on the volume of these loans presently on bank books. Some analysts expect that R EIT loans still on the books of the banks will result in losses of up to 25%. While this figure seems high to me, even the more optimistic imply ultimate losses still to be taken by the banks over a period of a number of years to be in the order of a billion dollars. In some instances, loan swaps and refinancing have forestalled or elimi nated immediate charge-offs, but these have been at the price of taking on long-term, low-yielding assets, which may penalize long-term earnings. It is possible, therefore, that bank loans to R EITS will be a drag on the earnings of some large banks for several years. If successful, however, these work-out programs may reduce the number of R E IT failures and lower future losses on R EIT loans. Why all the real estate loan prob lems? One answer given is that land booms are accompanied and fed by forces associated with price apprecia tion and “can’t-miss” projections that feed on themselves. Reyond this, I think banks as lenders and as managers of REITs through HCs deserve a con siderable share of the blame. High rates on construction loans and R EIT fee arrangements that encourage vol ume purchases and sales undoubtedly contributed importantly to a loss of perspective on loan quality. Too many projects required overly favorable sales or occupancy to break even and, al though I recognize that the following is easy to say as a matter of hindsight, the lender’s traditional restraint on the developer’s perpetual optimism was not present. In many cases, bank real estate lending officers were too young and inexperienced to remember past periods of real estate lending problems. Some well-conceived projects have ended up with foreclosures and bank rupt builders. These have been due to the general weakness of the economy, greatly increased building costs and much higher energy costs, all of which contributed importantly to the failure of many real estate ventures that ap peared sound when they were con ceived. High interest rates added to the burden of carrying nonearning as sets and accelerated bankruptcies. Now the economy is on the rise and money for permanent financing seems plenti ful. Many of these projects will be bailed out by the rising tide of the economy, and, in the longer run, per haps by inflation. Some of the real estate develop ments, however, were poorly conceived to begin with. In some instances, costs were just too high for the market and sizable losses will have to be accepted. Some of the developments, particularly second-home or vacation area condo miniums, were based on expectations of ever-increasing prices and eventual resale at a profit. Once it became clear that owning a condominium was not a sure-fire route to ever higher and high er values, it became difficult to sell any. Many of those projects seemed to be based on the “greater fool” theory of investment, that is, even if you foolish ly pay too much for a piece of property, sometime in the future you will be able to sell it at an even higher price to an even greater fool. Many banks have had problems with loans to REITs and real estate devel opers. A smaller number of banks have been affected by other particular prob lems, such as losses on foreign opera tions and oil tankers. It appears that (C ontinued on p ag e 111) MID-CONTINENT BANKER for Ju n e, 1 9 7 6 Banks Are Doing All Right Despite Their Bad Press HAT ACTUALLY HAS happened to banking in the past few years? The industry has been swamped with problems; earnings are down, and bank stocks have acted like hell in the mar ket. Right? Wrong. Earnings for the 24 major banks rep resenting the Keefe Bank Index were $64.75 in 1975, up from $60.24 in 1974, a gain of 7.5%. In fact, bank earnings have risen every single year since 1961. Earnings were down a mod est 2.2% in 1961, the only decline since 1938. This certainly is a record that can be matched by few, if any, other stock groups. Bank earnings are up 47% in the last five years, or 8% a year com pounded. OK—so earnings somehow managed to be up, but judging by what one reads in various brokerage house re ports and financial media, bank stocks must have had a lousy market record. Right? Wrong again. From January 1, 1968, to May 1, 1976, bank stocks rose 44.8%— not much I grant you, but better than the 9.3% gain of the S&P 425 industrial stocks. From the peak of the market in 1972, bank stock prices have fallen 24% and industrials 12%. From January 1 to May 1 this year, bank stocks have risen 21.2%, whereas S&P industrials are up only 13.9%, so despite their admitted problems, bank stocks, on average, have performed well in the stock market. Banking is a great industry with a great record. Personally, I have every penny of my net worth in bank stocks. The employees profit sharing plan of my company purchases bank stocks ex clusively, and that plan has outper formed, by a significant margin, all major mutual funds and bank trust de partments. It’s inherent in the very nature of By HARRY V. KEEFE JR. President Keefe, Bruyette & Woods, Inc. New York City W The talk on which this article is based was given by Mr. Keefe at the 1976 Mis souri Bankers Association convention in St. Louis. banking that the industry must be profitable to protect the depositors’ funds. It is not necessary, on the other hand, that the steel industry, oil indus try or even the computer industry be profitable. Some bankers certainly acted stupid ly in the early ’70s. The financial media, who thrive on sensationalism, have seized on the regulators’ watch lists to create an impression in the pub lic’s mind that a great many banks are in trouble. True, there are six or seven banks that are very shaky, but bear in mind we have 14,000 banks in the 2 4 M ajor Banks in K e e fe In d ex 1974 1973 1972 1971 1970 C h a r g e - o ffs °/c A v e r a g e L o a n s V a lu a tio n R e s e r v e % Y ear-en d L oan s .31 .21 .20 .35 .28 .96 1.01 1.25 1.52 1.77 5-year average .27% U. S. A. Banks are run by people and not all bank presidents are equally cap able— some are going to make serious and unpardonable mistakes. But the many should not be penalized for the sins of a few. Your association and each of you have an obligation to speak back to the newspapers and politicians and make clear what a fine record banking has had. After all, the loan losses suffered in 1974 and 1975 were caused, for the most part, by an inflation-induced de pression. Inflation, in turn, is caused by poli ticians—not bankers. This is a fact that I have not heard mentioned in Senator Proxmire’s or Congressman Reuss’ hear MID-CONTINENT BAN KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ings. It is time banking spoke up in its own defense. For the most part, banks that need capital most do not— and will not in the near future—have access to capital markets. In the last year, four major banking companies have done equity, or equity-related, financing: Citicorp and First Bank System of Minneapolis sold convertible debentures and J. P. Morgan and Northwest Bancorp, sold common stock. The interesting fact of these financings is that each of these four large banking companies had bet ter than average equity/asset ratios b e fore they added new capital. Interestingly enough, there hasn’t been much change in the last three years in the relative earned-on-asset standings of the good vs. poor earning banks. Three years ago First Bank Svs- tem ranked first and Marine Midland last of the 23 banking companies with assets of $5 billion or more, the same relative positions they held in 1975. First International of Dallas and Mor gan have been consistently at top of the list and Bankers Trust at the bot tom. I dwell on the eamed-on-asset ratio because it translates into earned-onequity, which, in turn, is the key to a bank’s ability to raise assets above pres ent levels. If there is one thing I believe strong ly, it is that most banks cannot permit their equity/ asset ratio to decline fur ther. There probably is no finite amount 41 of capital needed by a bank. Ask a regulator how much capital a bank needs and he invariably answers: “More. Probably the most suitable test of capital adequacy is how does a bank’s ratio compare with its peers? The col lective judgment of a large group of bank managements is most likely the best bench mark as to where the proper level of capital should be. In the final analysis, it will be the marketplace that will decide capital levels. I have read all the literature on bank capital ratios and cannot find any one in banking, or the regulatory agen cies, that really knows what a proper equity/asset ratio should be. The “market”—i.e. the suppliers of both short- and long-term funds to banks— will not permit the equity/as set ratio to decline further from present levels. I am sure that one result of the pres ent congressional hearings on banking is going to be a call for stricter govern mental regulation. Politicians have a Pavlovian reaction that the government in Washington knows best what is good for us. I quarrel with that assumption. When Franklin National’s problems surfaced in the summer of 1974, I was approached by the treasurer of one of the nation’s largest chemical companies. His board, for some strange reason, had restricted his purchases of bank CDs to those of the I I members of the New York City Clearing House—of which Franklin was one. He pointed out to me that although he continuously fur nished his financial statements to the banking community, the banks did not, in turn, give their financials to him, and further, if they did, his staff did not have either the skill or experience to analyze bank financials. His question: “Mr. Keefe, can your firm give us a quarterly review of the financial statements of the 250 banks located in 37 different states with whom we have deposit relations?” “Cer tainly,” I said. And out of that has grown a service that we call “Bank W atch.” The corporate clients that have since retained us as consultants control, on an average day, 10% to 15% of the total bank CD market—some $8 billion to $13 billion. Just the other day, the treasurer’s department of one of the world’s largest industrial companies called us to dis cuss a credit review of the 300 banks with which the firm frequently has over $2 billion on deposit. His desire: to bank with the strongest companies. We have a staff of 16 persons pro cessing this data, and the group is headed by the former vice president of a major New York City bank. Many banks—large or small—are being sub jected to our constant daily scrutiny. If your bank has a good balance sheet with good liquidity and strong 42 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H a rr y V. K eefe Jr. (I.) is sho w n ta lk in g w ith John H. O b e r m a n n , ch. o f M issouri B ankers A s soc iatio n 's 1 97 6 co n ven tio n , a fte r d e liv e rin g his a d d re ss. M r. O b e rm a n n is pres., M e rc a n tile -C o m m e rc e Trust, St. Louis. capital ratios, an income account show ing below average loan charge-offs and above-average profitability, then you can be assured that you will be re warded with increased business from these major companies. On the other hand, if your financials do not make good reading, then you are going to be penalized by a loss of business. This discipline of the m arketplace is going to be a much more effective regulator than any agency in Washing ton or any state banking department. Bank managements that perform poorly are going to be fired by their boards— a new, but in my opinion, very constructive trend. Stockholders are going to hold senior managements re sponsible for their errors. " In th e fin a l a n a ly s is , it w i l l he th e m a r k e t p l a c e t h a t w i l l decid e c a p it a l lev e ls. I h a v e r e a d a ll th e l i t e r a t u r e on b a n k c a p ita l ra tio s a n d c a n n o t fin d a n y o n e in b a n k ing . . . t h a t r e a l l y k n o w s w h a t a p ro p e r e q u ity /a s s e t r a t i o should b e / 1 At the end of 1969, the equity/asset ratio for the 24 major banks in our Index was 6.79%. This ratio declined steadily through 1974, when it reached a low of 4.81%—a 30% deterioration in just five years! This was brought about because loans at these 24 major banks rose 15.5% a year compounded, whereas equity plus reserves was increasing at but 8.5% annually. Obviously, this dis parate growth trend could not continue forever. It is this trend—not the absolute level— that has concerned banking reg ulators and investors in bank securities, CDs and commercial paper. In 1975, deterioration in capital ra tios was reversed, and the ratio im proved around 12% to about 5.4%— thanks largely, of course, to a slow down in loan demand. The valuation reserve, despite record charge-offs, increased from 0.96% of loans at the end of 1974 to 1.16% at the end of 1975. Since the valuation reserve is con structed from a direct charge to earn ings, its trend obviously influences re ported earnings. It is clear to me— in retrospect— that some banks were overstating their earnings in the early ’70s. For example: One major bank’s loan valuation reserve dropped from an ab solute level of $46 million at the end of 1969 to $39 million at the end of 1972, whereas, loans meanwhile were increasing from $2.2 billion to $2.4 billion. This bank’s ratio of the reserve to loans, therefore, dropped from 2.02% to 1.34%. Had the bankmaintained its reserve ratio, earnings would have been significantly lower in 1970, ’71 and ’72. Conversely, with a higher reserve going into 1975, the bank might not have had to make the deep charges last year that caused its earnings to drop 24%. It is a simple truism that as the vol ume of loans increases so does risk ex posure. I would be suspicious, there fore, of the earnings of a bank that let its valuation reserve ratio run down during a period of rising loan demand and normal loan losses. What should be the level of the valuation reserve? Results of the past few years indi cate that during periods of normal loan charge-offs—that is when industry av erage charge-offs are running between 20/100ths and 25/100ths— the average reserve should be, in my opinion, at least 1.5% of loans. Thus, during a depression year like 1975, there would be an adequate level of reserve to ab sorb charge-offs and, therefore, no need to impact earnings as severely as som e banks were forced to do in 1975. When I speak of a 1.5% valuation reserve level, I am addressing com mercial and industrial loans and not such low-risk categories as mortgages on single-family homes, acceptances and loans to securities dealers, etc. An adjustment in the 1.5% can be made by deducting such low-risk loans from the total and applying a different factor to them— just for a number, something in the order of 40/100ths. Some banks would argue that their record justifies a lower reserve level, and indeed, I am talking average fig ures. But bear in mind that Morgan, historically the premier lender among the giants, saw its charge-offs jump from .02% of loans in 1973 to .63% in 1975—largely due to the write-down of Grant’s where Morgan was the lead lender. Even with this increased charge-off, however, Morgan’s valua- MID CONTINENT BANKER for Ju n e, 1 9 7 6 Call John And talk to the man whose job It is to know everything about our bank. As President of Fourth National Bonk, John D. Izard supervises, on a day to day basis, the basic lending operations of the bank. He is particularly knowledge able in correspondent banking, having served with major Oklahoma banks over 25 years. Think of a way we might be able to offer you more. Then call John, he II know what we can do. Mg yr^-jr ip iH P j . Cali John, a better banker's banker. (9 1 8 ) 5 8 7 -9 1 7 1 ■ ■ m i I■ National Fourth Bank Ib ls a , O k la h o m a Member F D I C MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 43 tion reserve rose from .84 in 1974 to 1.02 in 1975. My concern with the adequacy of valuation reserves derives from the fact that suppliers of funds to banking— both short-term in the form of CDs and long-term in the form of capital—are seriously concerned by erratic earnings and literally sh o cked by a quarterly loss. Despite the fact that earnings for the industry were in fact up in 1975, it is also a fact that earnings of 35 of the 95 banks followed by the analysts at Keefe, Bruyette & Woods declined last year. I submit that many of these earnings declines could have been averted if the industry had been main taining reserve levels for the prior five years. The table on page 41 shows that although charge-offs in 1974 were not significantly higher than in 1970—nor indeed, much above the five-year av erage—the reserve ratio dropped from' 1.77% to .96% during that five-year period. Is my 1.5% ratio too high for the average bank? Based on last year’s re sults, I think not. We did a survey of the 1975 loss results for 223 of the largest banking companies and found that 38, or 17%, had charge-offs in excess of 1%. Five had losses in excess of 1.75% and indeed one bank of the 223 reached the infamous level of 2.48%! In 1971, the reserve ratio for the 24 major banks was actually 1.52%, but dropped to 1.25% in 1972. In 1971, the banks in the Keefe Index had earnings of $45.30 per share, which increased to $47.71 per share in 1972. Had the reserve ratio been maintained, we esti mate 1972 earnings would have had to drop to approximately $43 per share, or 10% less than was actually reported for that year. This indicates to m e that loan pricing was not ad equ ate in 1972 to support the increased loan volum e. 5' Loan pricing must be such as to permit the valuation reserve to grow parallel with the level of loans without impacting earnings. What I have been discussing so far is one of the most visible indicators of the changes taking place in the banking industry. Prior to 1974, the valuation reserve was an arcane accounting cate gory of only passing interest. Its sud den vault to prominence in the last two years is symptomatic of the rather more subtle fundam ental change in the busi ness of banking: it has been said— “Neither a borrower nor a lender be.” Well, according to that old maxim, you are borrowers., very substantial bor rowers, as well as lenders. You borrow billions of dollars a day in CDs, in federal funds, in municipal deposits, in commercial paper and in Eurodollars. Maybe some of you curse the day CDs came to be back in the early ’60s, but nevertheless, the fact remains: By be 44 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis coming borrow ers of funds rather than simply gatherers of funds in the old sense of branch banking, you have, consciously or unconsciously, subjected yourselves to the same degree of scru tiny you yourselves have always applied to your own borrowing clients. If your bank is a billion-dollar institution, it’s quite likely that, at the very least, 4050% of your total short-term sources of funds are supplied to you by lenders— corporate treasurers, pension funds, money-market funds, state treasurers and the like. One of the things we have learned in working with these discriminating lenders is that they are afraid, not so much of losing money as a depositor, but of being em barrassed. They don’t want to be embarrassed and unable to explain to trustees or direc tors why they lent (or invested) money to a bank with serious problems, es pecially when there are so many al ternatives within the industry. There are in excess of 150 billion-dollar bank ing companies in the United States to day— that’s a lot of “lending” opportu nities for an institution with CD money to invest. Consequently, the lender to banking doesn’t need the hassle, especially con sidering the relatively narrow spreads among CDs of the major banks. If lie’s not getting compensated by more than five or 10 extra basis points in yield for his “risk” of embarrassment, the investment may not be worth the risk. Period. We see a profound change taking place over time toward more discrimination among the lenders to banks, going so far as to err too much on the side of quality, especially when rates are very high as they have been on three separate occasions during the last three years. Make no mistake about it: Bank of America’s new philosophy Ziegler Wins First NBC Open R o d g e r M itc h e ll (r.), p re s ., First N a t 'l B a n k o f C o m m erce , N e w O rle a n s , presents th e $ 3 5 ,0 0 0 w in n e r's check to p ro g o lfe r l o r r y Z ie g le r , fo r th e First NBC N e w O rle a n s open g o lf to u r n a m en t. The annual to u rn e y b en efits New O rle a n s ' C h ild re n 's H o s p ita l a n d w a s held a t th e L a k e w o o d C o u n try C lub. Looking on in the b a c k g ro u n d a r e m em b ers o f th e to u rn a m e n t e x e c u tiv e c o m m ittee. of increased disclosure isn’t a “non recurring” item; you’re going to be under the kleig lights from now on. That’s the bad news. So what can you do about it? Or, perhaps more correctly, what must you, in your spe cific capacity as lenders, do about it? Two things: 1. You and your staff, and particu larly your national lending officers, must know your bank. You must know its weaknesses as well as its strengths. You must have a realistic appreciation of its potential or lack of it if the latter unfortunately is the case. Do you really have established access to the national markets? Can you grow with your bor rowing client? If your client anticipates growth of 8-10% per year and a con comitant growth in his line of credit, can your bank accommodate him over an extended period of time? You must know these critically important things because if our perceptions are correct, and we think they are, you will be expected to know them by your clients and you will be embarrassed by thenquestions if you don’t. As lending offi cers, you are the principal contacts for your bank with your borrowing clients. As such, you are the ones who will have to have the answers to the ques tions that, no doubt, are being asked and will continue to be asked. 2. You must have a more sensitive appreciation o f risk, and by risk I do not mean qualitative credit-risk analyses of your borrowers. Banks always have assumed, and rightly so, that losses will occur; very often, by the time loss po tential is recognized, it’s too late to pull out. Consequently, banks have re lied heavily on their ability to recover their investment through collateral, or as much of it as is humanly possible, no matter how long the original com mitment lies in limbo. It’s a measure of the strength of the banking industry that it has the staying power to recover much of these investments over a long period of time. So I am not talking about credit risk as it pertains to your elients; w hat I am talking about is the risk your hank incurs to itself by m ak ing absolute dollar com m itm ents to any client w hether it is a AAA or a CCC. Why? Traditionally, we have related the size of a loan to a bank’s capital, and, indeed, various regulators have set lim its on that basis. I suggest that the size of a loan and the risk inherent in it should be related not to capital, but rather to your banks’ earnings. The full write-off of just one legal limit loan would impact earnings, on the average, about 40% and that presum es that your bank has tax credits available. Do you know if in fact it does? The lower the bank’s rate of return on assets, the higher the leveraged impact on earn- MID-CONTINENT BANKER for Ju n e, 1 9 7 6 THE BOATM EN'S TO W ER Boatmen's is moving into bold new headquarters, reflecting their strength and comm itment to the future. That same strength and comm itment backs our correspondent bank team, a team well-versed in today's electronic banking environment. Put Correspondent bankers who know the answers and have the back-up on your team. Boatmen's Correspondent Bankers, technicians when you need them. THE BOATMEN'S NATIONAL BANK O F ST. LO U IS 314 421-5200 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Üi ^istsst : ings. One could theorize that the risk iest bank from an investor’s point of view is a bank having substantial capi tal and, therefore, high lending limits, but a low earned-on-asset ratio against which to absorb losses. That may sound contradictory— the more capital you have, the w orse off you are—but if you realize that in 1973 Security National of Long Island could make a legal loan of $12 million, but earned only $9.2 million, you know precisely what I mean. First, no bank is immune to a tem porary setback in earnings. Anyone who thinks that Citibank or Morgan, or in 1849 w e o p en ed w ith a statem en t you could b an k on. I f s w orth rep eatin g . “It is intended to encourage the industrious and prudent, and to induce those who have not hitherto been such, to lay by something for a period of life when they will be less able to earn a support." and we’ve been taking good care of people’s money ever since. DETROIT BA N K & TRUST Member FDIC DESIGNERS AND CONSULTANTS OF FINANCIAL INSTITUTIONS SPECIALISTS IN THE PLANNING AND DESIGN OF FIN ANCIAL BUILDING S, HAVING IN-DEPTH KNOWLEDGE OF ALL PHASES OF SITE PLANNIN G, IN TERIO R DESIGN AND INTERNAL OPERATIONS 11054 SO. MICHIGAN AVE. IBBC CHICAGO, ILL. 60628 PHONE: 312/568-1030 S u b s id ia rie s : In d ia n a B ank B u ild in g C o rp o ra tio n F lo rid a B ank B u ild in g 46 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis anyone else, can consistently turn out 10+% growth on a quarterly basis in definitely is off base. Second, as the data show, when it comes to legal limit loans, “some are definitely more equal than others.” Between 1970 and 1975, both Citibank and Morgan, among the so-called “big six' in New York, actually have improved in terms of their ability to cushion the shock of a Grant’s-type write-off through earn ings strength. The message is clear. Perceptions of the banking industry are changing rap idly. Perceptions by the banking in dustry of itself and of the true nature of risk/reward must change as well. Most banks do not have a corporate plan. They practice something best termed “an exercise in arithmetic fu tility,” consisting of reviewing a pre vious year’s performance and adding or subtracting therefrom in calculating “estimates” for the current year. This is not planning; it is “guestimating.” As a result, lenders are not directed to industry groups providing greatest po tential for the bank. Consequently, overexposure to some industries can be both deleterious and unprofitable. The management cycle demands that a bank must first have a plan before it can organize; have an organization before it can communicate; communicate be fore it can direct; direct before it can measure and measure before it can control. In short, there can be no effective and profitable lending policy until there is a well-thought-out corporate plan that structures types of lending and exposure limits by industry groups; assesses geographic penetration and in dustry group exposure; and monitors whether an effective price—consistent with risk—is being charged the com mercial borrower. Many loan officers have an in-house enemy in the form of their own chair man, a chairman who is a victim of the “3Fs” sickness: a fetish for foot ings, furniture and fixtures. I could cite two or three instances of banks that are now having severe loan problems where the chairman told me two or three years ago: “Mr. Keefe, my goal is to be a billion-dollar bank in three or four years” or “Mr. Keefe, within two or three years, we will be a bigger bank than our competitor.” These goals invariably were met be cause we lived in a period when almost any large bank could inflate liabilities at will. But this “fetish fo r footings” necessitated, it is clear in retrospect, a too-rapid expansion in loans to pay for the purchased facilities. Then there is the chairman who is a monument builder and adds overhead in the process— i.e. furniture and fix tures. Once again, the loan officer is (Continued on p age 52) MID-CONTINENT BA N K ER for Ju n e, 1 9 7 6 HOW TO STEAL YOUR COMPETITORS'/ BEST CUSTOMERS .. the first step is to know your competitors as well as you know your own bank...” SHESHUNOFF SERVICES CAN PROVIDE THE ANSWERS 1.THE BASIC STATE BOOK Sheshunoff & Company was established in 1971 when Alex Sheshunoff President developed a method to bring useful, in expensive bank comparative performance information to the financial community Sheshunoff & Company is the best source of comparative data on individual banks in the United States To ensure completeness of information and continuity of compari sons data on all 14.000 individual banks is obtained from the periodic Reports of Condition Sheshunoff & Company has developed a close working relationship with the regulatory sources and many banks throughout the country using this data And the result of these working re lationships is a thorough and wellformatted set of bank analysis services. THOROUGH Sheshunoff data receives detailed atten tion Its accuracy is checked twice before it is entered into the computer for re formatting and manipulation FORMAT Data format was determined by consulting with the National User's Committee rep resenting banks of all sizes using Sheshun off data Consequently, the format is concise, workable and structured to ac commodate bank planning needs Two Sheshunoff services are of particular importance to bankers interested in im proving earnings performance - the BASIC STATE BOOKS and the CREDIT AND COMPETITIVE ANALYSES 1. THE BASIC STATE BOOKS ■ □ Please send me the follow ing State Book(s) STATE CAN YOU ANSWER THESE QUESTIONS? To steal your competitors' best business, you should first know their strategies. 1. Which Source of Funds is growing most rapidly in your market? Are you get ting your fair share? 2. Which of your competitors has the greatest Loan Loss Experience7 Is this related to Market Share? Is that bank being compensated for the risk? 3. Flow does your Net Interest Margin compare with your competitors'? Is this related to Loan Volume? 4. Flow does your bank's Capital position compare with competitors'? Does this influence your strategies? 5. Are there significant trends in your market? Are you gaining or losing ground in loan and deposit categories? Answers to these kinds ot questions can be found in Sheshunoff data. QUANTITY This hard-bound book is published annu ally and contains current financial infor mation on every bank, compiled by state. Its eight key analytical tables enable you to construct vour own comparative analy ses using your bank, your competitors', or other similar or high-performance banks. To pinpoint a bank's key strengths and weaknesses, you must examine a number of different ratios Sheshunoff's Basic State Books contain eight analytical tables which provide this comparative informa tion on every bank in a state You may be interested in studying your bank and others from a financial view point; the data is structured for both perspectives. USERS' MANUAL You don't need to be an experienced bank analyst to use Sheshunoff's Basic State Book. This year an easy-to-understand User's Manual has been added. To ensure that the Users' Manual is practical and useful, Sheshunoff & Company combined talents with The Whittle Group - a Chicago based team of specialists providing mar keting services to the banking community Together they produced this manual which details uses of the data through sample case studies for each analytical table. ANALYSIS FORMS In addition, the User's Manual contains blank forms and instructions to aid you or someone on your staff to complete a simi lar analysis of your bank and competition 2 . CREDIT AND COMPETITIVE ANALYSIS □ Please send me a c u s to m ' CCA Report' on the follow ing banks (Name. City, State) BANK 1 - REPORT___________________________ COMPETITORS______________________________ 2.CREDIT AND COMPETITIVE ANALYSIS Sheshunoff & Company has added a new service to its line of bank analysis services -th e Credit and Competitive Analysis (CCA). This service is a custom-prepared, detailed financial analysis of a specific bank and its market share by every asset and liability category contained in a Report of Condition This service was developed in response to the many requests Sheshunoff & Company received for “ a program to enable bankers to study in-depth their own markets." The detailed CCA Report is prepared from custom computer printouts of specific bank data formatted for use in the follow ing applications: MANAGING A BANK'S ASSETS AND/OR LIABILITIES DEVELOPING MARKETING STRATEGIES PRICE $175 PER COPY BANK 2 - REPORT EVALUATING LOAN OR DEPOSIT GROWTH POTENTIAL MORE INFORMATION COMPETITORS EVALUATING A BANK'S CAPITAL POSITION □ Please send me m ore inform ation on Sheshunoft Services. I am m ost interested in: NOTE Each Report uses the aggregate of the com petitors totals as the market share denom inator You m ay indicate as m any com petitors as you wish for each Report PRICE $90 FOR FIRST REPORT. S50 FOR EACH ADDITIONAL REPORT NAME ANALYZING A BANK'S EARNINGS CO M PO NENTS-YIELD, COST OF FUNDS, SPREAD. OPERATING COSTS HOW DOES A CCA REPORT DIFFER FROM THE BASIC STATE BOOKS? The difference is the focus. The Basic State Books provide asset/liability and earnings information on all banks in a state. The information is flexibly struc tured to make comparisons easy. The CCA Report is a custom-produced study of a given bank and its specific competitors. The emphasis is on trend analysis —changes in financial relation ships, growth rates, and market share over time. How Does a CCA Report Work? To initiate a CCA Report tell Shesunoff & Company: 1. The name of the principal bank to be analyzed. 2. The names of that bank's principal competitors. In a week you will receive your custom CCA Report. If you have three principal competitors you may request one report comparing your bank to your total com petitive market. Or, if you wish to follow the trend lines of your competitors, you may request reports comparing each of your competitors to the total market. For example: P R IN C IP A L B A N K Report 1: Report 2: Report 3: Report 4: Bank A Bank B BankC Bank D C O M P E T IT O R S VS. vs vs. vs. Banks B + C + D Banks A + C + D Banks A + B + D Banks A + B + C In each report you will receive the princi pal bank's financial detail and its market share and growth trends compared with the aggregate of the other banks There is no limit on the number of competitors entered into one report TITLE FIRM ADDRESS STATE ZIP TELEPHONE □ BILL ME f l CHFCK FNCIOSFD MAIL TO: Sheshunoff & Company P.O. Box 13203, Capitol Station Austin. Texas 78711 (AMOUNT) OR CALL: Alex Sheshunoff 512-444-7722 MID-CONTINENT BANKER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 8 SHESHUNOFF SERVICESWHICH SHOULD YOU HAVE? It depends upon your needs. Their appli cations are different-consequently they may be used separately or together The Basic State Book should be used as a ready reference source for comparative bank analysis. If a question arises regard ing a specific competitor, chances are you will find a ready answer in the Basic State Book The CCA Reports should be obtained for in-depth analysis of your bank and your competitors' The data is detailed for planning your financial and competitive strategies Prices_____________________________ Basic State Books, $175 each Credit and Competitive Analysis Reports, $90 for first report, $50 for each additional report 47 Insurance and Risk Management: What’s New for Bankers? T IS IM PO SSIBLE in the time al lotted to me to cover all areas of bank insurance, so I felt information on Bankers Blanket Bond changes, along with a discussion of some of the problems in underwriting B a n k e rs Blanket bonds, would be of most in terest to bankers. I ’ll explain some of the changes in the Bankers Blanket Bond, then go over the loss picture, explain what these losses have done to the Bankers Blanket Bond market and, finally, make some suggestions for improving this problem. Bankers are changing their methods of doing business, and this necessitates changes in the bond form. Adverse loss ratios on Bankers Blanket bonds today also dictate changes by underwriters. Automated clearing houses and elec tronic funds transfer systems also are changing banking operations. There are approximately 73,000 banking of fices today as compared with 47,000 a decade ago. There are many more overseas functions in today’s banking. Embezzlement and fraud losses from insider transactions are causing many large losses. Then, of course, we have the real estate investment trusts. In recent years, some regulations have been relaxed to give bankers greater freedom to respond to changing market conditions. However, as these regulations are relaxed, some bankers have a tendency to assume greater risks and, therefore, increase vulner ability to failure. So first, let’s go over some changes I By ROBERT W. MARSHMAN Vice President Marketing Scarborough & Co. Chicago and contemplated changes in Bankers Blanket bond forms. Kidnap Extortion Rider. We at Scar borough & Co. were the first to make this coverage available as part of the Bankers Blanket Bond. We write this coverage to afford pro tection from loss through surrender of property away from the bank as a re sult of kidnap or extortion and also as a result of a threat to any office or property of the insured. This second part gives coverage for bomb threats at the bank. In November, 1975, the Surety As sociation changed its Kidnap Extortion riders, and they can now provide cov erage for bomb threats at a bank. When the Surety Association made this change, it also made other changes and now limits the Kidnap and Extor tion coverage to the United States, District of Columbia, Virgin Islands, Puerto Rico, the Canal Zone and Can ada. This is important for bankers who have overseas offices. The Surety Asso ciation also now has a new provision The speech on which this article is based was given by Mr. Marshman at the annual Association for Modern Banking in Illinois convention in Lincolnshire, 111., last month. " W e a t S c a rb o ro u g h also fe e l t h a t e ffe c tiv e i n t e r n a l a u d i t controls a r e m a n d a t o r y if t h e r e is to be h o p e a t a ll o f c o n tro llin g th ese v e r y l a r g e i n t e r n a l losses. E v e ry b a n k should e stab lis h a f o r m a l lo a n p o lic y a n d a d h e r e to it v e r y s trictly . B u r g l a r y a n d r o b b e r y losses can h u rt loss e x p e r i ence, b u t l a r g e i n t e r n a l losses a r e , in m y o p in io n , th e m a in re as o n w e a r e h a v in g s ta g g e r in g loss r a t io s ." 48 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis whereby the bank does not get full coverage over and above the deducti ble, but must participate in the loss for 20% after applying the deductible. ATM Rider. Although this rider was issued in November, 1974, many bank ers still have not added it to their Bankers Blanket Bond. This rider gives limited coverage to automated mechan ical devices situated within a bank’s offices which are permanently staffed by an employee whose duties are those usually assigned to a bank teller wheth er or not public access to such devices is from outside the confines of the of fice. A second part of this rider is to pro vide coverage for automated mechan ical devices that are not situated with in the office of the bank, but are free standing units. In these instances, a schedule of location must be drawn up showing not only the location, but also the limit of liability at each of these locations and the deductible at each location. In no event, however, will this rider pay for any loss as a result of a me chanical breakdown or failure of these automated mechanical devices to func tion properly, or to pay loss because of misplacement or mysterious unexplain able disappearance of such property that is or is su pposed to be in these de vices; or as a result of the use of credit, charge, access, convenience, identifica tion or other cards for gaining access to these automated mechanical devices. Losses as a result of vandalism or ma licious mischief also are excluded. This is a somewhat limited rider in that it does not give complete protec tion to automated teller machines, but rather gives protection only for losses as a result of burglary, plus damage to the machine as the result of burglary. E FT S Rider. This rider should be available very soon and will give the bank protection for debiting or credit ing a customer’s checking or savings MID-CONTINENT BANKER for Ju n e, 1 9 7 6 5 nam e the 5th-most-wanted customer service in your bank. Check Cashing □ Savings □ Checking □ Money Orders □ Drive-Up Banking □ Auto Loans □ Personal Loans (And tell us how much it costs you to provide this valuable service.) S o rr y . If you d id n ’t a n sw e r “ m o n e y o r d e r s ” in t w o s e c o n d s flat. W e d esig n ed it to re lie v e you o f c o s t l y b o o k k e e p i n g o v e r h e a d in the b a c k r o o m s and e x p e n s i v e e x p o s u r e to st o l e n o r raised d o c u m e n t s . W e d esig n ed it to r e lie v e y ou o f handling trou bleso m e cu sto m e r problem s. B e s t o f all, it’s s e t up to p ro vide y ou w ith i m m e d ia t e profits and im m e d ia te c o s t c o n t r o l s . We do all the work. A m erican E x p re s s C om p an y has b e e n p r o c e s s in g fin a n cia l d o c u m e n t s , lik e o u r new F I M O d o c u m en t, s i n c e 1 8 8 2 . O u r k n o w -h o w and o u r f a c i li t ie s a re p ro b a b l y u n m a tc h e d a n y w h e r e in the w orld. S o w h e n y o u r b a n k signs up fo r o u r F I M O P r o g r a m , w e p r o c e s s the m o n e y o r d e r s f o r y ou . W e furn ish the f o r m s ; w e d o the r e c o n c il i n g , proofing, filing, s t o r a g e , r e s e a r c h in g and a d ju stin g . Y o u ’re f r e e to do th e s e llin g ( y o u set y o u r o w n f e e , o f c o u r s e ) w ith ou t the b u r d e n s o f c o s t l y c h o r e s or expensive exposure. M o n e y o r d e r s ra n k j u s t a ha ir b e h in d c h e c k i n g a c c o u n t s , sa vin g s a c c o u n t s , c h e c k c a s h i n g and driveup b a n k i n g o n the list o f s e r v i c e s m ost w anted by bank cu stom ers. W h i c h m e a n s th a t by paying m o r e a t te n t io n to y o u r m o n e y o r d e r s a l e s , y ou c a n i n c r e a s e y o u r sh a re o f a $ 3 7 billion m a r k e t and t a k e a d v a n ta g e o f g re a t o p p o r t u n i ti e s fo r c r o s s - s e l l i n g m o re b a n k s e r v i c e s . A double-duty document for you. T h e r e ’ s still another co st-sav er t u c k e d a w a y in the F I M O P r o g r a m that a p p e a l s to b a n k ers w h o like to think c r e a t i v e l y about services — and c o s t s . W i t h f a c e v a l u e s o f up t o $ 1 ,0 0 0 , A m erican E x p re ss M oney O r d e r s c a n a l s o b e used in p la c e o f m a n y c a s h i e r ’s c h e c k s . W i th the s a m e b e n e f it s o f re d u c e d e x p o s u r e s , sa v in g s o f te lle r tim e and o v e r h e a d , and i m m e d ia t e profits th a t y ou get w h e n y o u use t h e m as m o n e y o r d e r s . T w o m o n e y - m a k in g d o c u m e n t s fo r the p rice o f o n e . Cost per item? .. . B u t i f y o u c a n ’ t t e l l us h o w m u ch it c o s t s to o p e r a t e y o u r c u r ren t m o n e y o r d e r p ro g ra m , t h a t ’s par f o r the c o u r s e . M o s t b a n k s c a n ’t. W e c a n tell y ou , h o w e v e r , on t h e b a s i s o f o u r e x p e r i e n c e w i th m a n y b a n k s , that m o n e y o r d e r s may p r e s e n t l y b e y o u r le a st p ro fitable service. B e ca u se bookkeeping o v e r h e a d , the c o s t o f f o r m s and s to r a g e s p a c e , a n d l o s s e s in s t o l e n a n d raised m o n e y o r d e r s c a n g n a w y o u r profits d o w n to l o s s e s . B u t w e 'v e got that all figured out f o r y ou . A n d w e ’re h e re to tell y ou th a t y o u r 5 t h - m o s t - i m p o r t a n t s e r v i c e c a n a lso b e o n e o f y o u r m o s t pro fita ble s e r v i c e s . How? n a m e o f the w o r l d ’s b e s t - k n o w n f i n a n c i a l - s e r v i c e institu tio n — A m e r ican E x p r e s s C o m p a n y . Y o u r c u s t o m e r s h a v e d o u b le a s s u r a n c e that th e ir m o n e y o r d e r s will be a c c e p t e d a n y w h e r e — at h o m e o r a b r o a d . W e pro v id e a t t r a c t i v e p o in t-o fp u r c h a s e and a d v e rt is in g m a ter ia ls to help y o u tell y o u r c u s t o m e r s that this c o n v e n i e n t j o i n t s e r v i c e is a v a il a b le to t h em . Call it value added. T h e A m erican E x p re ss C o m p a n y F i n a n c i a l In st it u t io n M o n e y O r d e r P r o g r a m d o e s n ’t t a k e y o u r o w n p e r s o n a l iz e d m o n e y o r d e r s o r c a s h i e r ’s c h e c k s a w a y f r o m you. It ju s t m akes them stro n g er. We must be doing it right. T h e p r o o f o f o u r pro g ra m is in the ra pid ly g ro w in g n u m b e r o f b a n k s w h o use it. A l r e a d y , h u n d red s o f b a n k s a c r o s s the c o u n t r y c o u n t on F I M O . F o r very good rea so n s. W e ’ve told y ou s o m e o f th e m . A n d w e ’d like to tell you the re st. A f t e r all, if t h e r e ’s a m o re p ro f itab le w a y to h a n dle y o u r 5 t h - m o s t i m p o rta n t s e r v i c e , y ou o w e it to y o u r b a n k to k n o w the w h o le st o r y . Money Double assurance for your customers. Orders ® FI M O was made for banks. T h e a n s w e r is the A m e r i c a n E x p re s s C o m p a n y Finan cial In sti tu tio n M o n ey O rd er Program ( F I M O ® ) created to m a k e life e a s i e r — and m o re p ro fit a ble — for banks. Y o u r b a n k ’s g oo d n a m e g o e s o n the m o n e y o r d e r alon g with the MID-CONTINENT BANKER for Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Write or call: G. E. Rosenwald Director —Money Order Sales Development American Express Company #2 American Express Plaza. 37th Floor New York. New York 10004 (212)480-3226 49 erage for the kinds of foreign exchange account on the faith of any electronic trading losses suffered by many banks instructions or advices directed to the bank by or through an electronic funds where the traders simply make mis takes, then try to cover up their mis transfer system and purporting to have originated at another banking institu takes and “doubling the bet” in an ef tion or automated clearing house, pro fort to recoup their losses—and without vided that such electronic instructions making or attempting to make any per or advices prove to have been fraudu sonal profit. This rider also has some additional lently transmitted, by or through such limitations in that: electronic funds transfer systems. a. It clarifies the fact that losses Basically, this rider gives additional coverage in the check-forgery section under the bond will not include loss of of the bond. It does not give protection interest or dividends, etc. b. It clarifies that the bond will not to the automated clearing houses them selves, but gives protection only to the respond to contingent liabilities of any sort. insured bank. c. It clarifies that the bond will not The way this rider has been written, pay costs, fees and other expenses in there is no protection for the bank for any point-of-sale terminals. There is curred in establishing amount of loss some question as to just what coverage covered under the bond. d. It clarifies that the bond will not could be involved in the ATMs be cover losses resulting from funds er cause of the way the rider has been worded; that the transaction has to roneously credited to the account of a have originated at another banking in person who later withdraws them; un stitution or automated clearing house. less all of the elements of false pre tense are involved or unless there is This rider does not provide any cov employee dishonesty involved. erage for errors or omissions, but limits We at Scarborough intend to adopt coverage to fraud losses. similar wording in our bonds. Central-H andling-of-Securities Rider. T he ERISA Rider. This rider states This rider was designed to expand that the bond does not apply to any the word “employee” in the bond to in loss occasioned by reason of any fine, clude officers, partners, clerks and other penalty or excise tax on the insured as employees of central-handling-of-sea result of violation of any provision of curities systems. These systems normal the Employee Betirement Income Se ly are the Depository Trust Company, curity Act of 1974. the Pacific Stock Exchange Clearing N otice o f C hange o f Control Rider. Corp. or the Mid-West Securities Trust Many bonding companies have been Co. quite concerned about the wrong ele Securities included in such systems ment buying banks and then using shall be deemed to be property as de funds of the bank they bought to fined in the bond, to the extent of the actually pay for the bank. This rider bank’s interest therein as affected by states that upon the insured’s obtain the making of appropriate entries on ing knowledge of a transfer of its out the books and records of the system. standing voting stock which results in The coverage provided in this rider a change of control (10% or more), the is excess over any coverage carried by insured shall within 30 days of such the individual system, plus any deduct knowledge give written notice to the ible under the bond. underwriters setting forth: This rider does not afford any pro 1. Names of the transferors and tection whatsoever in favor of the sys transferees (or names of the beneficial tem itself. owners). The American Bankers Association 2. Number of shares owned before wants coverage to include Federal Reand after the transfer. serve book entry systems, but to date 3. Total number of outstanding this is not available. shares of voting stock. Revision o f Dishonesty Clause. This Failure to give the required notice is done by a rider to the bond and shall result in termination of coverage changes the definition of a dishonest of the bond, effective on the date of or fraudulent act to mean only the the stock transfer for any loss in which manifest intent: a transferee is concerned or implicated. 1. To cause the insured to sustain N otice o f M erger or Consolidation Rider. At present, all Bankers Blanket such loss; and 2. to obtain financial benefit for the employee, or for any bonds give automatic coverage when other person or organization intended an insured bank picks up another bank by the employee to receive such bene through a merger or consolidation, even fit, other than salaries, commissions, though there is an additional premium fees, bonuses, promotions, awards, prof due the company. With this new rider, the procedure is changed. it sharing, pensions or other employee 1. The bank must give 60 days prior benefits earned in the normal course written notice to the bonding company of employment. This rider is designed to avoid cov- before the merger or consolidation. 50 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2. The bank must obtain written consent from the bonding company in order to extend coverage. 3. The bank must pay any additional premiums due the bonding company. This rider has been filed with and approved by the bonding company, but it has been taken to the Securities and Exchange Commission (SE C ) by bankers. The SEC has ruled that the 60 days prior notice part of the pro cedure is insider information and that banks don’t have to comply with the provision. Now, let’s take a look at th e loss picture. Reported cases of fraud and embezzlement in all financial institu tions skyrocketed from $20,000,000 in 1964 to $188,000,000 in 1974. Bank losses from internal crime soared to $98,000,000 in the last half of 1975, bringing the total for the year to over $150,000,000. These figures are only for bank losses, not all financial institu tions. One official was quoted as say ing, “It’s the malpractice of the bank ing industry.” These internal crimes against banks far overshadow the bur glary and robbery losses which most law enforcement agencies emphasize. There were 15 bank failures in 1975 and, unlike earlier years, some banks that failed were of fairly substantial size. So far this year there have been approximately four to six failures and possibly more to come. Even with the Bank Protection Act of 1968, these bank-related crimes have increased, and last year the FB I spent over 10% of its investigative ef forts in this area. Richard Thornburg, assistant at torney general in the Justice Depart ment’s Criminal Division, recently stated that the “rising number of bank rob beries and related incidents has come at a prodigious cost to the taxpayer and that economic conditions, wider use of narcotics and the failure of banks to take proper and preventive steps are some of the reasons for the increase.” We all know about banks with prob lem loans, and although these may not end up as Bankers Blanket Bond losses, they certainly increase the possibility of a loss under Directors and Officers coverage. Let me digress and speak about Directors and Officers coverage. Most bankers have this insurance, or at least have looked into it, but I predict there will be some changes in this area. First, I believe that more and more insurance companies will exclude from coverage any losses affected by the Employee Retirement Income Security Act of 1974; not only for your own pension plans, but also plans managed in the trust department. I also believe that you will see increased premiums for this coverage. Directors and Officers Liability claims have, what we call in MID CONTINENT BANKER fo r Ju n e, 1 9 7 6 This sales training program has been instrumental in milking our Contact Banking Center a trem endous success, and it didn’t cost our bank a penny” Larry W. Spooner, VP and Cashier, Beloit State Bank, Beloit, Wisconsin “When we began developing our Contact Banking Center, a new banking concept of ‘One person to see for all your banking needs’, our Harland Sales Repre sentative offered the service of Harland’s Sales Training Program. We accepted, and the assistance was invaluable. “With the aid of Harland’s video tape machine, our Contact Banking Staff was able to actually see themselves as they appear to our customers. This helped greatly in strengthening the weak points of their sales techniques. “Harland also provided us with other cross selling and sales training material, free of charge, which we still use on a MID-CONTINENT BAN KER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis regular basis. And, our Harland represen tative continues to help our new personnel become proficient in the sales function. “We’re very proud of our Contact Banking Center concept, and our cus tomers appreciate the program. It has been extremely successful for us, and Harland was a big help in making it so. “Harland proved to us that they do, indeed, do more than print checks’.’ A t Harland, we do more than print checks. We print good ideas. m H A R lA N D BANK STATIONERS. PO BOX 13085. ATLANTA. GEORGIA 30324 5Î the insurance business, a long tail to them. In other words, it may be six to eight years after the premium has been fully earned before all the potential losses have been paid. Some of you possibly have seen the Wyatt reports on Directors and Officers coverage. Every time a new report comes out, it shows that Directors and Officers Lia bility Insurance losses continue to rise faster than premium is earned. The last report stated that losses now may be approaching 100% of earned premium. New FD IC regulations to curb abuses by insiders effective May I, 1976, will also, in my opinion, tend to increase Directors and Officers litiga tion at least for a while. So what have these losses and changes in hanking don e to th e B ank ers B lanket Bond market? We see more and more companies withdrawing altogether from the bond market, or at least becoming very re strictive in their underwriting along with increasing deductibles. We at Scarborough get several calls a month from bankers who have had their coverage canceled mid-term, or from a banker who tells us his bonding company will not renew his coverage. According to federal regulators, there are perhaps 20 banks currently with out a bond and looking desperately for a market. Without a dramatic change quickly in the Bankers Blanket Bond loss pic ture, I predict that bond premiums will double even with larger deductibles. This will make for difficult times for all of us until we find some way to reduce these big losses. There is a proposed complete change in the Bankers Blanket Bond rating structure schedule very soon, and this will be the first rating structure change since 1969. W hat can ive do to im prove the sit uation? Raising rates alone will not do the job any more than they did in mal practice insurance for doctors. Better internal controls and risk management are the best solutions. There must be an awareness on the part of top man agement that there is a problem and then a plan of action to solve it. Some bonding companies are requir ing outside CPA audits before they even will consider writing a Bankers Blanket bond. Other companies are requiring much higher minimum de ductibles in all cases, and some com panies will not quote at all where a bank has more than 10 branches. Another company representative told me the primary concern is the extent and value of internal controls, precau tions and practices that are being un dertaken by bank management. We at Scarborough also feel that ef fective internal audit controls are man52 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis datory if there is to be hope at all of controlling these very large internal losses. Every bank should establish a formal loan policy and adhere to it very strictly. Checking the authenticity of stocks taken as collateral and making sure they are not forged or stolen, b efo re any loan proceeds are advanced, should be done without exception. 1 believe that— at least in commer cial loan departments— a 100% direct verification of all large loans is im perative. Insider loans should be controlled carefully. Some of the largest losses have come as a result of loan trans actions with outside business interests of officers and directors. Burglary and robbery losses can hurt loss experience, but large in ternal losses are, in my opinion, the main reason we are having staggering loss ratios. Although they may not be too frequent, some of them are of such size that all of you will see the effect of them by increased premiums. A few years ago, it was rare to hear of a loss of a million dollars; but today these large losses occur all too often. So even if your bank has a good loss ratio, you are still going to pay for part of these large losses of others. Every banker should understand that loss prevention and risk manage ment are the best methods of reducing Bankers Blanket Bond premiums. The capacity for the bonding com panies to write very high limits of cov erage is becoming more of a problem. Last year the ABA set up a special task force within its Insurance and Protec tion Division to analyze what’s needed to maintain insurance coverages for banks. Its final report said the best so lution seemed to be in greater com munication and cooperation between individual banks and their bond car riers. I feel that these adverse loss ratios can be corrected if we all work to gether, and that we in the bank insur ance business will continue to provide banks with new insurance coverages as banking needs arise. * * Banks All Right (Continued from page 46) asked to produce the income to meet this fetish. Years ago, a sage southern banker, with an incredibly good loan-loss ex perience, told me that the secret of his success was keeping the exposure on any single credit low. “Thus,” he said, “when I do make a mistake— and I have made many—the loss is small.” Yes, there is a measure of risk/reward. The measure is as follows: If a mistake is made in a particular loan, or a group of loans on similar credits, i.e. REITs, what will the loss do to a bank’s earnings? Current accounting methods make the old formula of loan exposure to capital fallacious. Exposure should be related to earnings, and banks with lower earnings power— as reflected in the earned-on-asset ratio— must of necessity take lower risks, re gardless o f capital. A further test of risk/reward can be derived by asking the question—will the increase in net interest income from a loan-volume increase be sufficient to maintain my bank’s capital ratio and valuation reserve ratio? If these questions had been asked in the early ’70s, either pricing would have had to change substantially, or the loan volume increase would have been substantially less than the 15.5% compounded rate actually recorded. While I have lectured that your capi tal ratios must not decline any further and some of you who are not among the “rich” may be discouraged, do not give up hope. Help is coming. The aggregate gross charge-offs for the 22 major banks in the Keefe Bank Index totaled $2,105.1 million for the years 1965 through 1973. We made an arbitrary assumption that recoveries lag charge-offs by two years and found that recoveries for these same companies totaled $628.2 million for the years 1967 to 1975. The aggregate percent age of recoveries to gross charge-offs was thus 29.8%. The average recovery for the 22 banks worked out to 32.2%, ranging from a high of 52% to a low of 17%. This same group of banks had total charge-offs for the two years 1974 and 1975 of $2,437.7 million (16% more than in the earlier nine-year period!). Last year, aggregate earnings for these banks was $2,079 billion. If recoveries for the banks average only 20%, as opposed to the recent ex perience of 30%, their after-tax earnings would be increased $244 million, or 18% of last year’s earnings. Personally, I am fully persuaded that neither the marketplace nor the scare headline writers in the financial media are considering the potential magnitude of the loan recoveries I see coming. Good news never seems to get head lines. An offset to that potential good news is the proposed treatment of non accruing loans by the Financial Ac counting Standard Board. We have done some quick arithmetic on what we hear on the proposal and find that a bank that had 5% of its loans on a non-accruing basis could have its earn ings totally wiped out by the new ac- MID CONTINENT BANKER fo r Ju n e, 1 9 7 6 W ork with a banker who knows what his bank can do for you. At First National Bank in St. Louis, our corre spondent bankers are trained in what our bank can do for you. Across the board. Department by department. The result is men with solid experience and individual authority. So they can make fast decisions for you on their own. They’re backed by a bank with strong, steady growth. And total banking capabilities including overline loans, bond department services, computer ized check collection, cash management systems. Plus our annual correspondent seminars where you can exchange ideas and learn about new profit opportunities. Get to know your First National correspondent banker. He knows his bank. He’d like to put us to work for you. First National Bank in St.Louis iHIr I^Hi Member FDIC MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 53 counting standards. When the FASB asks for comments on the proposed rule in July, we should all be prepared to give them an intelligent review. Ex any problems our accounting friends might hand us, we’re quite op timistic over the outlook for 1977 and 1978 bank earnings. We see chargeoffs declining and reserves being re plenished by recoveries. As the econ omy continues to improve, loan volume will pick up and non-accruals will go current and some back interest will be paid up. Interest income, therefore, should show some healthy gains. That’s the Keyword: healthy. Newspaper reports of banking’s de mise are premature; the old girl’s fit and getting ready to engage once again in a flirtation with investors. She caught my eye years ago, and I have never regretted our love affair. * * SWIGSBIE Administration Elected at Spring Meeting; Swearingen Named Dean DALLAS—The Southwestern Grad uate School of Banking (S W IG S B IE ), Southern Methodist University, held its spring planning meeting with the stu dent council and administration April 30 and May 1. The Friday afternoon meeting opened with a welcome and in troduction of the agenda by Leonard W. Huck, executive vice president, Val ley National, Phoenix. He is completing his three-year appointment as dean for bankers. Eugene L. Swearingen, chair man and CEO, Bank of Oklahoma, Tulsa, has been named to succeed him. The following Mid-Continent-area bankers were named in SW IG SBIE ad ministrative appointments for the 1976 session: Jo Ann Bass, vice president, Arkansas Bank, Hot Springs—director of school activities and special pro grams and co-chairman, intermediate class; Britt D. Davis, executive vice president and senior trust officer, Hous ton Citizens Bank—co-chairman, trust major; Walter C. Jennings, vice presi dent and trust marketing officer, First National, Little Rock—faculty chair man, freshman class; William M. Rich ardson Jr., vice president, First Ala bama Bank, Montgomery—co-chairman, freshman class; and Alan C. Roberts, vice president and trust officer, Fort Worth National— co-chairman, trust major. Also appointed were Edward E. Stocker, executive vice president and senior trust officer, Continental Na tional, Fort Worth—chairman, trust major, and co-chairman, senior class; Vincent E. Thompson, senior vice presi dent, Republic National, Dallas—cochairman, commercial banking major, and co-chairman, senior class; and o€ * 'o 'A ^ v o Q ® ^' B u rton F. Troll (r.), t.o ., M e rc a n tile Trust, St. Louis, a n d his tw in , W a rre n , of G e n e ra l A m e ric a n Life, o ffic ia lly kicked o ff " T w o s d a y " a t th e b a n k la s t A p ril 13. " T w o s d a y " w a s th e n a m e g iv e n to th e firs t d a y o f issue fo r th e n e w t w o - d o lla r b ill a t M e r c a n tile Trust. B. Finley Vinson, chairman, First Na tional, Little Rock—chairman of the Foundation of the Southwestern Grad uate School of Banking. Each class was represented by its1 elected officers. They discussed their plans for events of the upcoming sea son. Class XV II officers from the MidContinent area are Jerry L. Crutsinger, vice president, Texas Commerce Bank, 9** o>- G^’ &\0' A6 3^ Two Introduce Twos on 'Twosday' AO ..« .A V I A o > v 'J _ W c 7 ' ° <r Ä AU -<o»® »< <®° v> :> e 54 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 A D urham L ife’s new Low 100. Designed especially for mobile home loans and second m ortgages, the fa ste st growing part of the m ortgage loan business. We call it the Low 100 because premiums are lower for the borrower, but you get 100% protection. You're paid back the entire unpaid balance n et of unearned interest and finance charges, y et you can offer your custom ers lower m onthly paym ents. We keep the premiums low by fully covering your exposure and no more. One premium is charged regardless of age. The entire premium is paid a t one time, elim inating paper work, collec tions and policy lapses. And no medical exam is required. W ith all th is you still g et the same a ttractiv e com mission plan. The Low 100. One more policy in Durham L ife’s complete line of credit life. E v eryth in g you’ll ever need. Call Dan Boney. Durham Life Durham Life Insurance Company Home Office: Raleigh, N.C. 27611 P.O. Box 27807, Tel. 919/782-6110 MID-CONTINENT BAN KER lo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Houston— second vice president; Lillian M. Koppens, assistant vice president, National American Bank, New Orleans — secretary; and F. Nelson Finch II, vice president, National Bank of Com merce, San Antonio—treasurer. Class X V III officers from the MidContinent area are Pierce A. Hoggett, vice president and trust officer, San Angelo (Tex.) National—president; Jess H. Hodges, vice president and cashier, Fritch (Tex.) State—first vice president; Laurel P. Austin, vice presi dent, First National, Jacksonville, Tex. —second vice president; Yolanda L. Walker, assistant vice president, Na tional Bank of Commerce, Brownsville, Tex.— secretary; and William P. Liles, assistant vice president and trust officer. Fort Worth National— treasurer. The 1976 session is slated for July 25-August 6. For further information concerning SW IGS BIE, contact Dr. Richard B. Johnson, director, South western Graduate School of Banking, SMU Box 1319, Dallas, TX 75275. Economic Education in Public Schools Proposed by New Missouri President ANKING’S IMAGE was discussed at several Mid-Continent-area con ventions last month. One speaker who expressed worry over this image also came up with a suggestion on how to improve it. He is Charles K. Richmond, incoming president, Missouri Bankers Association, and executive vice presi dent, American National, St. Joseph. Although he said he believes the socalled image of banking has been over played recently, he believes that, for a number of years, this image—as well as that of all business for profit—has been suffering. This condition, according to the Missourian, hasn’t been caused by abuses alone, but also by a lack of understanding and appreciation of our economic system and of free enterprise. Just as the deterioration has been slow, he pointed out, the solution won’t be achieved overnight, but bankers must address themselves to it. The solution, as Mr. Richmond sees it, lies in eco nomic education. There are several organizations in Missouri that presently are conducting or sponsoring economic educational programs for young people, said Mr. Richmond, who recommended that banks support such efforts. As one example, he cited the Missouri Council on Economic Education, which is de veloping what he described as an ex cellent program of teacher training, with the goal of making economic edu cation an integral part of the state’s public school system. “It behooves us as bankers and busi nessmen,” he advised, “not only to sup port the council’s work, but also any effort that will accomplish this goal. ’ “I believe, however, the first priority should be to work toward establishing economic education as a required sub ject in our schools. To me, learning about our economic system is just as important as learning English or math and should be taught from the elemen tary-school level through college or the university. It should be a part of our B 56 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tax-supported educational system. Ev erybody would benefit, the general public as well as the business com munity. * * 'Plain English' Loan Contract Announced by Exchange Bank DALLAS— Exchange Bank has intro duced a “plain English loan contract. What the device does is to explain, in plain, everyday language, the terms and conditions of a loan. It eliminates such te c h n ic a l terms as “herein,” “debtor” and “thereof,” replacing them with phrases like “here’s the breakdown of my loan I received today,” “if this loan is refinanced—that is, replaced by a new note,” or “I give you what is known as security interest in my motor vehicle.” While the contract eliminates techni cal language, it doesn’t abbreviate any of the customer’s or bank’s legal rights. Sculpture Given Indian Name TULSA— The new fiber-art sculp ture in the lobby of the First Na tional Tower has been named “Talise,” a word meaning “town” in the language of the Creek Indians. The work, which reportedly is the first of its type in this city, was created by Janet Kuemmerlein of Kansas City. The three-dimensional piece utilizes jute, yarn, string and other fibrous materials, creating freeflowing lines that complement the bank’s other lobby sculpture, “Ica rus.” “Talise” is done in colors of rus set, golden autumn, spring green and amber. The green symbolizes the hills surrounding Tulsa, the yel low, Oklahoma’s cornfields, and the statue’s flowing movement, the wind. To counterbalance the work, a large rug was designed incorporat ing the same flowing pattern and color theme as the bank’s new sculp ture. Burns Predicts Reduction In Unemployment, Limits On Government Spending ST. LOUIS— During a visit to the St. Louis Fed May 20, Fed Chairman Arthur F. Burns predicted an unem ployment rate of 4-5% within 18 months —provided “structural” changes are made in the economy—and that spend ing by the government is beginning to be limited due to public pressure. The changes in the economy, which Dr. Burns has recommended to Con gress, are a reduction in unemployment insurance programs and a revised mini mum-wage law allowing a lower wage for teen-agers. Teen-agers are a major part of the unemployment totals. “Government spending,” the Fed chairman said, “accounts for 40% of our dollar value of total national pro duction. That is a dangerously high figure, and the public knows it.” Dr. Burns showed concern for the possibility of inflation, but said infla tion wouldn’t follow the present rapid growth of the economy because of factors that will help keep the lid on prices. These factors, he said, are sub stantial idle capacity in the nation’s plants, substantial unemployment and the Fed’s policy of moderating the money supply. He indicated that he already has announced a slight reduc tion in money and credit growth. When charged that the Fed was in creasing the money supply to improve the chances for a Republican victory in the upcoming fall election, Dr. Burns said that was “absurd.” He said that the Fed can’t control short-term money growth and that growth must be judged over long periods, noting that a reduction of U. S. Treasury bal ances for April, because of tax refunds, had caused the recent upsurge in mon ey growth. “The money supply must be controlled to allow enough money and credit for expansion, but not too much,” he said. The Fed chairman also singled out the special review by the General Ac counting Office (GAO) of Fed exam inations of state-member banks. He said the review isn’t a “foot in the door” for a GAO audit of the Fed. “The Fed has many friends in Congress, and we will do everything we can to see that a GAO audit isn’t allowed,” Dr. Burns stated. Fed Ch. A rth u r F. Burns sp eaks to press d u rin g visit to St. Louis Fed M a y 20. “Being a First correspondent ban k helped us succeed in landing im portant new business lik e Fbyd Fairleigh’s feed yard.” The Security State Bank of 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 productive correspondent relationship to solicit and obtain new business, extend credit, add expertise and a depth of personnel in your area of interest, call the professional staff of the First National Bank Correspondent Department. We take pride in the success of Security State Bank. Our correspondent banking tradition has been built on help like this. Why not put our strong tradition of excellence to work for your success. : Y xir success is our tradition. First . National D o riL rd O d i I l\ KANSAS CITY. .MISSOURI An Affiliate of First National Charter Corporation MID-CONTINENT BANKER fo r Ju n e , 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Member FDIC 57 in today... out tom orrow When your custom ers order checks from DeLuxe, they get service. Their orders come in one day; the printed checks go out the next. Your customers appreciate this quick service for new accounts or for re-orders. Write for more information on the various ways we can serve you and your customers. We’ll respond to your re quest the same way we’ll handle your customers’ orders. In today; out to morrow. D CHECK PRINTERS, INC SALES HEADQUARTERS P.O.BOX 3399 ST.PAUL, MN. 55165 STRATEGICALLY LOCATED PLANTS FROM COAST TO COAST 58 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Agricultural Outlook Brightest In 4 0 Years, Says Hardin HE LONG-TERM economic future of American agri culture looks generally brighter than at any other time in the nearly 40 years he has been watching it close ly, Clifford M. Hardin, vice chairman, Ralston Purina Co., St. Louis, told Missouri conventioneers last month. Mr. Hardin is a former U. S. Secretary of Agriculture. Mr. Hardin gave analyses both for the next 12 months and for the long term. He forecast a large wheat harvest in 1976, but corn production as low as 5.5 billion bushels and as high as seven billion bushels. With average weather for the balance of the year, he said total production should fall between 6.1 and 6.5 bil lion bushels. As for livestock this year, Mr. Hardin foresees continued improve H A R D IN ment in the cow and calf business, an expected improvement over current levels in beef prices the next several months, continued profitability in milk production, but prices and returns to broiler and turkey producers not to average as high as the previous year. In summary, according to Mr. Hardin, prospects for the 1976-77 farming year are good, with a great many more pluses than minuses in the outlook. For the long term, Air. Hardin pointed out that the commercial worldwide demand for U. S. farm products has been rising generally over the past two decades and will continue to rise into the 1980s and beyond. When the peaks and valleys are averaged out, he said, U. S. farm exports have risen about 5% a year the past 20 years, and he expects the increase in the next decade or more to average perhaps as much as 6% or 7% a year. He credited this expected increase to population growth, and rising af fluence throughout the world, bringing an almost auto matic demand for more and better foods on the part of the people who have the money, whether they live in Europe, Africa or Asia. This pattern of food preference, Air. Hardin pointed out, seems to exist with peoples of all ethnic and geographic backgrounds and all levels of eco nomic development. In Mr. Hardin’s judgment, the American farmer will be able, in the future, to produce enough to meet that kind of rising demand—at least in most years. In fact, he went on, it’s probable that we again will have surpluses of some crops in some years, and it’s also possible that we again will have shortages of some crops in some years. The kind of feed grain and food programs created by Congress in the future is of critical importance, Mr. Har din warned. It’s highly important that nothing be per mitted to interfere with our ability to maximize exports. Price-level supports are the key, he emphasized. According to Mr. Plardin, the gap between the ‘"haves” and the “have nots” is growing, not only between devel oped and developing countries, but within the developing countries themselves. He said the U. S. and other de veloped countries simply cannot begin to produce enough to meet the world’s real nutritional needs, and so the de veloping countries must learn how to produce more on their own soil, with the developed countries helping them learn how to do it. * * T MID-CONTINENT BA N K ER fo r Ju n e, 1 9 7 6 “If there were any other way, we would have taken it, but our attorney recommended we file bankruptcy. That includes what we owe on the family room. There’s no way in the world we can pay back the loan.” Bankruptcies are skyrocketing. And so are losses from unemployment, divorce, and extended illness. Cover your home improvement loan portfolio today with profitable, guaranteed protection from Insured Credit Services. As the world’s largest private source for HIL credit loss insurance, we’re currently working with over 1,000 leading banks. Call or write William F. Schumann, President, for details. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis On the C over New pre-cast stone-and-glass First Alabam a Bancshares headquarters bu ildin g is one o f fo u r structures com prising First A labam a Plaza in M ontgom ery. B uildin g includes many unusual angles due to being constructed on irregular-sized site. Each o f bu ilding's fo u r sides var ies in width. W in dow s in photo are depressed to square off interior o f bu ildin g and provide protective cover fo r entrance doors. Reflec tion shows new' four-story annex o f First A labam a Bank. First A la b a m a P la z a fin a n c ia l c o m p le x in d o w n to w n M o n tg o m e ry inclu des e ig h t-s to ry First A la b a m a B ancshares h e a d q u a r te r s (I.), n e w fo u r-s to ry a n n e x to First A la b a m a B a n k (r.) a n d p o rtio n o f 1 2 -s to ry First A la b a m a : B a n k office b u ild in g ( a t re a r o f a n n e x ). O u t o f p h o to a t r. is p a rk in g fa c ility . In Montgomery: F irst A labam a P laza C om plex Opened; S treet R enam ed to H onor P ro je c t ORE THAN 5,000 people toured the new $ 6-million facilities of First Alabama Plaza in downtown Montgomery recently as the complex held an open house to show off its new buildings. First Alabama Plaza financial center is composed of four structures—three new and one existing—that house the headquarters of First Alabama Baneshares and First Alabama Bank. Chair man of both firms is Frank A. Plum mer, who is also CEO of the HC. M https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The new construction includes the eight-story First Alabama Bancshares headquarters, built of pre-cast stone and featuring large areas of reflective glass. Across First Alabama Plaza Street (named in honor of the complex) is a new four-story annex for First Alabama Bank, an extension of the bank’s 12story headquarters that was constructed in 1907. Also included in the complex is a multi-story parking facility. The HC and bank buildings are con nected by a clear glass-enclosed skywalk positioned 15 feet above street level. The new First Alabama Bancshares administrative headquarters is home to the administrative and operations de partments of the HC and its subsidi aries, and is located on the upper six floors of the eight-story building. Each floor is designed with movable walls to provide for varied office requirements. Executive offices, a reception area and a large conference suite are located on the top floor, as is an outdoor terC le a r glass-en clo se d A la b a m a B ancshares First A la b a m a B ank. ■ s k y w a lk b u ild in g connects First and an n e x of A m o n g to p officers o f First A la b a m a a r e Lynn H. M o s le y (I.), p res., First A la b a m a B ancshares, a n d Jam es S. G a s k e ll Jr. (r.), p res., First A la b a m a B ank. race providing views of the Alabama River, which flows through the edge of the downtown Montgomery area. The first two floors of the building house offices of First Alabama Bank’s travel agency and Master Charge-BankAmericard division. The bank’s new annex has three drive-in teller lanes on the ground level with the entire second floor used for a staff cafeteria and private dining facili ties for guests of the bank. The cafe teria seats up to 250, while the private dining rooms can handle up to 60 in MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 % Count on the bank that counts with bankers. Reliability in banking since 1883 MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis D ependability and the w ill to serve are the prim e ingredients of e fficien t correspondent banking. Since 1883, know ledgeable bankers have looked to the W hitney. More than 90 years of correpondent banking experience has earned for us a reputation for re lia b ility and service. W e’d like to join with your bank to w ork together. 61 four rooms. Two sides of the structure are glass enclosed and provide pano ramic views of the gardens and foun tain that are landmarks in downtown Montgomery. The third floor of the annex houses the bank’s computer section and pro vides individual office space for com puter programers and service person nel. The computer center processes the daily work of First Alabama Bank and its 62 correspondent and affiliate banks throughout the central and south por tions of Alabama. The fourth floor multi-purpose room can be used as an auditorium, accom modating up to 750 people. The stage has a large rear-projeetion screen and numerous multi-color stage and accent lights. The rear-projection room houses a theater lighting console, a sound con trol board with tape decks and a turn table as well as custom-built audio visual equipment for multi-media pre sentations. All equipment can be op erated from the projection room or from a permanent podium on the stage. Movable soundproof partitions make the area flexible in use and size. The partitions can be arranged to provide for up to five meeting rooms with two hallways in addition to a 150-personcapacity auditorium. The main lobby in the 12-story First Alabama Bank building, built in 1907, has been remodeled and modernized to accommodate an additional groundlevel entrance from the new annex building. The multi-level parking facility, with a capacity of 150 cars, includes an ele vator that serves all levels and provides direct connection to the annex. Located under the parking facility is the bank’s purchasing department and a ware house. First Alabama Bank is 105 years old and has assets in excess of $407.5 mil lion. It maintains 16 locations within the city of Montgomery. First Alabama Bancshares has $1,239 billion in assets and includes 11 bank affiliates and five non-bank subsidiaries that maintain more than 90 offices throughout Alabama. * * 62 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis LEFT: A t op e n house, Fran k A . P lu m m e r (I.), ch. o f bo th First A la b a m a B ancshares a n d First A la b a m a B a n k, M o n tg o m e r y , a n d M rs . P lu m m e r ( r .), g re e t M o n tg o m e ry 's M a y o r Jam es Robinson a n d his w if e in M r. P lu m m er's n e w office. M r. P lu m m e r is also CEO , First A la b a m a B ancshares. RIG H T: P a rtia l v ie w o f First A la b a m a B ank's n e w c o m p u te r ce n te r in a n n e x b u ild in g . D u rin g o p e n house, co m pu ters w e r e p ro g ra m e d to p ro d u ce v a rio u s c a rto o n ch a ra c te rs as so u venirs fo r y o u n g sters. V ie w o f e ig h t-s to ry First A la b a m a b a m a B a n k, M o n tg o m e ry . h e a d q u a rte rs . A t to p , B ancshares b u ild in g rig h t, is p o rtio n as seen fro m o f a n n e x , w h ic h new annex is across o f First A la s treet fro m HC MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 The Project Mana He knew where to tu rn when he needed help in a h u rry I t was an im portant assignment, not only in his b a n k ’s long-range plans, but also for Ja c k ’s career. T h a t’s why he w anted some expert ad vice. And he knew who could provid e i t : his Northern Trust calling officer. A phone call and a few minutes later, Ja ck had an appointment with an expert who could give him the in- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis form ation and perspective he needed to manage his im portant new project successfully. T h a t’s one of the advantages of being a correspondent of The Northern Tru st: a lasting personal relationship with a calling officer and staff who care about all your problems. They are the kind of people who can provide spe- cial help with your special assignment, whether it’s building assistance, m arket planning, float reduction, or operational analysis. If you’d like th at kind of correspondent relationship, contact the callin g offlcerforyou rareaatTheN orthern Trust Bank, 50 S. LaSalle St., Chicago, 111. 60690. Telephone (312) 630-6000. The Northern Trust Bank Bring your financial future to us. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis This year, it will be harder than ever to escape Karl Malden Its always been pretty tough to elude Karl Malden. But this year, your customers will be seeing him practically everywhere they turn. shows. O n programs like NBC News Update, CBS Morning News, A BC ’s Good Morning America. O n sports shows like W.C.T. Tennis, Monday Night Baseball, plus the biggest event of all, the Summer Olympics. This is Karl M alden’s fourth year for A m erican Express®Travelers Cheques, and he’ll be selling harder than ever. H e’ll be seen more this year than ever before. Telling people what makes Am erican Express the best travelers cheque. It’s the biggest effort ever in travelers cheque advertising. Throughout all these shows, Mr. Malden will be reminding your customers about loss and theft. And he will be pointing out how easy it is to protect themselves with the best travelers cheque in the world. Your customers, in major mar kets across America, will be seeing new Am erican Express Travelers Cheques commercials every week for the rest of the year. And on dozens of prime-time S o be ready. More and more of your customers will be expecting Am erican Express Travelers Cheques. Make sure you have them on hand. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis LEFT: D o n a ld E. L as ate r, ch., M e rc a n tile B a n co rp ., sp e aks M e rc a n tile T o w e r last m o n th in St. Louis. R IG HT: C lim a x to c ro w d o f civic le a d e rs a t d e d ic a tio n o f d e d ic a tio n cerem on ies s a w u n v e ilin g of of " S y n e rg is m " stainless steel scu lp tu re t h a t rises tw o stories fro m no rth p a tio o f T o w e r gro u n d s. Sculpture Unveiled at Mercantile Tower Dedication t o w e r , which, at 35 stories, is said to be the tallest building in Missouri, was dedicated in St. Louis last month in the presence of several hundred business, civic, labor and public officials. The ceremonies were held on the north patio of the Tower at Seventh and Washington in downtown St. Louis. Donald E. Lasater, chairman, Mer cantile Bancorp., was master of cer emonies. The HC and Mercantile Trust Co. are principal tenants of the build ing, which is the first portion of Mer cantile Center, a six-block development expected to be built over a 10-year period by Mercantile Center Rede- M velopment Corp., a joint venture of Mercantile Trust and Crow, Pope & Land Enterprises, St. Louis. A highlight of the ceremonies was the announcement by Mr. Lasater of an $80,000 grant by Mercantile for the Institute for Urban and Regional Stud ies at Washington University, St. Louis, to conduct a national symposium on human, private and public investment opportunities in mature American met ropolitan areas. The grant was accepted by Dr. William H. Danforth, chancel lor of Washington University. The symposium is scheduled to be held in St. Louis next year. The dedication ceremonies were con cluded by the unveiling of a polished stainless steel sculpture called Syner gism. The 4/2-ton, two-story art work forms the central sculptural theme of Mercantile Tower and its related Mer cantile Center. Mercantile’s occupancy of the Tower brings under one roof all Mercantile headquarters operations, which for many years have been located in sev eral separated downtown St. Louis buildings. The Tower is presently 75% leased with Mercantile occupying floors three through 20. The upper 15 floors are be ing leased by a number of firms. * * ABA Survey Shows 10% Rise ipating in the study, but they saw probability for little change in farm interest rates for this year. Farm inter est rates averaged about 8.9% in 1975, the ABA says. Why did farm lending keep pace with the growth of agricultural credit last year? More than 90% of the partic ipating banks reported a deposit in crease, contrasting with the 1974 fig ures: That year, total farm debt grew 12% and bank-held farm debt increased only 7%. The quality of farm loan portfolios improved by year-end 1975, the survey showed. Forty percent of the reporting banks had that experience, while only 7% indicated a decline in portfolio qual ity. Over half the banks expect their farm customers to encounter increasing payment difficulties in 1976, the ABA said, due to fluctuating commodity prices, increasing farm operation costs and bad weather in the early part of the year. The survey also reported that more than 90% of the responding bankers felt that farmers in their area were receiv ing adequate credit from all sources, while 70% said young beginning farmers in their area were receiving sufficient credit from all sources to become es tablished in farming. e r c a n t il e In Bank-Held Farm DebtPaces Total Ag Credit Growth WASHINGTON, D. C.—Total U. S. farm debt held by banks increased near ly 10% to about $26.5 billion during 1975, nearly equaling the growth in U. S. farm debt from all sources for the same period. Those figures are part of the American Bankers Association’s 1976 Agricultural Credit Survey. The ABA survey is based on year-end 1975 figures reported by a represent ative sample of 1,298 banks from across the U. S. According to the survey, seven out of 10 banks experienced increases in farm operating loans, while 60% re ported increases in equipment and oth er types of farm loans. A further growth in farm lending for 1976 was predicted by bankers partic- 66 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bankers 'G o to Class,' Teach Expertise in Field Stock Yards Bank, Oklahoma City, has begun a program in which its of ficers and employees share their exper tise in various fields of banking with students of local high schools and col leges. The first session included a presen tation on computer processing and in ternal auditing by Gary Lauderdale, operations officer. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 When it comes to student loan administration, bring the mountain to First Minneapolis. There are claims to file. Billing of interest and special allowance. Conversion of Interim to Payout. And, collection practices with “ Due Diligence” A mountain of work that takes hundreds of hours, qualified people and equipment. In other words, it takes the Student Loan Servicing Center at First Minneapolis. We’re specialists. We’ve got the people, the equipment and the dedication necessary to efficiently handle all your student loan work. Over 325 lenders from 32 states have turned their problems over to us. How about you? Call us collect at (612) 370-4114. The Student Loan Servicing Center. First National Bank of Minneapolis. F irs t® ® Minneapolis Student Loan Servicing Center • First National Bank of Minneapolis MID-CONTINENT BA N K ER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 120 South Sixth St., Minneapolis, Minnesota 55402 » Member FDIC 67 D o Your Correspondent Banking W ithO ur First National Bankers O f Birm ingham , Gordon C. Hurst Senior Vice President H. Stafford Naff, Jr. Vice President CharlieTGray Vice President John M. Campbell, Assistant Vice President SOUTHEASTERN BANKING DEPARTMENT THE FIRST NATIONAL BANK OF BIRMINGHAM AN ALABAMA BANCORPORATION AFFILIATE 68 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MEMBER FD.I.C. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 Alabama Bankers Enjoy Puerto Rico Site; Woodrow Becomes Association President By LAWRENCE W. COLBERT Assistant to the Publisher B EA U TIFU L ISLAND, balmy weather and impressive speakers combined to make the 83rd annual convention of the Alabama Bankers Association a rousing success. From May 18 to 22, the Alabamians creatively mixed business and pleasure on the Caribbean island of Puerto Rico. More than 600 bankers and spouses were in attendance in San Juan. The business sessions featured such well-known speakers as George A. LeMaistre, F D IC director; Monroe Kimbrel, president, Atlanta Fed; and W. Liddon McPeters, ABA president elect and president, Security Bank, Corinth, Miss. A special treat was an address by Puerto Rico’s secretary of the treasury, Salvador E. Casellas. In a forceful speech, Horace W. Broom, association president, and presi dent, Citizens Bank, Hartselle, said, “In this bicentennial year, it is time to take stock and determine the path America will follow for the next 100 years. We are at a crossroad. We must control our spending or we will continue to have inflation. If we follow the present trend, we are well on the road to socialism. “Before we look too long at what is wrong with our country, let us look at the foundation upon which our fore fathers built. The wrongs of the past and present do not change the validity of our structure. It works and has worked for 200 years. It is flexible enough to give to every man and wom an the freedom he or she wants. Yet A it is strong enough to prevent abuse. “We have begun to realize that, even though we are only 6% of the world’s population, we consume 35% of the world’s irreplaceable resources. It has been proved time and time again that when we as Americans know what we should do, when we are told what to do by leaders in whom we have confi dence, we respond well. “Our system has given men the op portunity and inspiration to progress from Kitty Hawk to the moon and be yond. We have harnessed steam, devel oped hydro power and split the atom. No nation on the face of the earth has been blessed with more great men than this country. This was due to the eco nomic system of free enterprise and personal reward for individual effort. Men could follow their dreams. “Many things in our country are wrong, but compared with other na tions, it is still the fairest, richest and freest land of all. “Patriotism should be just as much a positive value in our national life as honesty and morality. Even with all its shortcomings, this is still the kind of society in which we want to live. Ten things may be wrong but there are 100 things right. What is wrong can be put right. “If we are going to make things right in America, we need a new spirit of patriotism. We must give credit to our patriots of today in all walks of life. We should recognize the dedicated medical teams that are more concerned with healing the sick than with person al gain. I would like to see some flag A sso ciatio n Pres. H o ra c e W . B room (r.) poses w ith t w o P u erto Rican guest s p e a k e rs — Julio A . Torres (I.), pres., P u erto Rico B a nkers Assn., a n d S a lv a d o r C a sellas, secy, o f tre a s ., Puerto Rico. Th ree a d d itio n a l s p e akers a t th e c o n ven tio n in cluded W . Liddon M cP eters (I.), elecf; M o n ro e K im b rel (c.) p res.. A B A p res.F e d e ra l Re serve B a n k o f A t la n ta ; a n d C la re n c e L. T u rn ip seed (r.), AB A v .p . fo r A la b a m a , a n d pres.. First N a t'l, B re w to n . waving for dedicated lawyers who stand tall in the fight for truth and justice. We need a medal of honor for teachers, in church and school, who train the minds of youth to respect the principles of democracy. “We need to esteem parents who bring their children up in the admoni tion of God. We need to honor the farmers, servicemen, bankers, labor leaders and youth who give their en ergies to build a better country. We need to honor our political leaders and our officials of state who refuse to sell out to the highest bidder. “There is no way to study American history without recognizing the influ ence religion has had on this country. New A la .B A officers fo r I.) 2 n d V .P . W illia m N a t'l, Florence; Pres. ch.. First N a t'l, 1 9 7 6 -7 7 in clu d e (fro m H. M itc h e ll, p res., First R o bert H . W o o d r o w Jr., B irm in g h a m ; Sec.-Treas. Sue K. M o rris ; Exec. V .P . H o w a r d J. M o rris Jr.; a n d 1st V .P . C h a rle s S. Snell, pres., C itizen s N a t'l, S h a w m u t. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 69 H o w a r d M o rris gets o b o ttle o f w in e . Bob W o o d r o w gets g a v e l a n d lo vin g cup. God, through dedicated men, has given us a heritage unique in the world. From the beginning, our nation has been one that has believed in the sov ereignty of God. “The founding fathers were God fearing men who gave definite expres sion of their allegiance to God in the Declaration of Independence and in the Constitution. "It was in 1789 that Congress adopt ed the great seal of the United States. Appearing on the reverse side of the seal is ‘annuit coeptis,’ which means ‘He has favored our undertaking. “Our Liberty Bell in Philadelphia is inscribed with the words God spoke to Moses in Leviticus 25:10, ‘Proclaim lib erty throughout the land and to all the inhabitants thereof.' Even though ‘in God we trust' has been used on our coins since the Civil War, it was as late as fuly 30, 1956, that Congress adopt ed it as our national motto. “We do have an exciting heritage— Bill M itc h e ll gets n o m in a te d by John G a y . one that challenges our integrity, our patriotism, our devotion and our de termination to accept the responsibility handed us by our forefathers. “Our pledge to our country in this bicentennial year should be to recog nize freedom is for all . . . ; to strive for individual support of our country, knowing good government must come from us, the people. We must realize a free society chooses its own future and a free society chooses whether or not it will remain free. We must strive to uphold and support our system of free enterprise and to reaffirm our be lief in the Supreme Being. “Let us remember that a celebration of the past carries with it a responsibili ty for the future.' Mr. Casellas spoke on the unique problems facing the Puerto Rican econ omy and presented a fascinating pic ture of the island, including its bank ing system. He said Puerto Rico’s basic economic objective is to provide a satisfactory level of living and adequate employ ment opportunities to its people. Achieving these goals, however, is made difficult by a number of factors, including a population of more than three million—about 900 people per square mile. Land is scarce and the sources of raw materials are distant, due to Puerto Rico’s position in the ocean. He described the island’s “operation bootstrap,” an economic program aimed at attracting manufacturing firms from the United States mainland and other areas. This program has been going on for some 30 years and has transformed the island’s economy from a stagnant, low productivity, one-crop system into what he describes as a dynamic, diversified, highly productive one. Personal income per capita has trip led over the years, but the unemploy ment rate (10%) has not yielded to progress. He described Puerto Rico’s banking (Continued on p age 75) Farmers & Merchants Bank Centre, A la b a m a Dow ntow n — Diane — Leesburg The Bank W ith The H eart of Gold ALABAMA BAG COMPANY, INC. P .0 . Box 576 T a lla d e g a , A la b a m a 35160 Vinyl Bags, Zipper Top & Drawstring Bags, Coin Bags, Night Deposit Bags, Seals. 70 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Cherokee's Largest Mrs. M ary G eorge Jordan W a ite , President M e m b e r FDIC MID-CONTINENT BA N K ER for Ju n e, 1 9 7 6 UV -¡fuM LüUÄJ cp cu t' CUA& m t4/ ik u iru y -JM jL h c a lA fa ¿ w iupßoutü uA tyC pctiü& t’^ ä iu ii’ - J fa , m d ü o ,a 4 U )7 bmOuuh owe, upcc’/it kößuiA- -f/feu. M ß e A a jL ,.ÜüpocfüL uJitLfv nU tiAv c/-Mub TeT&o, daxltAump / £ t ’(!u d o Ä u o w 'h tfo ^ M jL r m j& i6 m l4 fa m id U Q r ( U id u K u vifa ccum pAd^f ( k p a d iT tM tü ^ d tM tc u w o p \ m s fik 3 a M ^ M y r fo M f G /^ d id u c t^ id m . rm ^ Q ' fh iie t t ä t . lO a .'ä h d fc p id ü t' w it/v d ¿oiuvpajitoUflaiiöTü O fu L ö M f im , ¡-(8 0 0 )5 7 1 -7 3 0 8 c L w L h a jc J itd & ifa, fftte iu t^w itb ikib a m u o e ft u f^ ü u r f& C O JM m J is .jp x ;c r L ^ jjjL a t fd a M MID-CONTINENT BANKER lo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis i/u c U M lfL C U L . 2 3 fü w c t4 & ü . 71 Atlanta Fed President Pats Alabamians on Back For Progress in Ability to Better Serve Public LABAMA bankers received a pat on the back for the progress they have made in the past five years in of fering more and better service to the people of that state. Speaking at the Alabama Bankers Association convention in San Juan last month, Monroe Kimbrel, president, At lanta Fed, began his remarks by stating that, several years ago, Alabama bank ers were giving him more than their share of the headaches that go with the job of being head of a Federal Reserve bank. “But more recently," he continued, “you people from Alabama have taken a back seat in the problem arena. We have not heard much from you. So I am pleased to be here to see you are still alive and fit, to praise you, and to give you some advice." ffe said that people in the Fed were concerned with what some thought were evidences of an inability on the part of Alabama bankers to serve the public adequately for the following reasons: Non par banking was still be ing practiced, most Alabama banks were smaller than banks in adjoining states and only one Alabama bank could operate outside its county of domicile. “The picture of Alabama banking to day is much different," he said. “Ala bama banks, as a whole, have more than twice the assets they had five short years ago. Your average bank has also doubled in size; it employs about 25% more people, and has one and a half times as many offices. You, further, have more than 20 new banks. You now have several banking organi zations that are comparable in size to large organizations in surrounding states. Four operate statewide, and your largest three each have assets well in excess of one billion dollars." While these quantities have been in creasing, quality has too, Mr. Kimbrell said. For one thing, Alabama has abol ished nonpar banking. Alabama banks operate more conveniently for their customers than before, because the number of bank offices in the state has increased considerably faster than the state’s population. Deposits are more equally spread among banks in most local markets than five years ago, de- A 72 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis spite the growth of large statewide or ganizations. “Your banks’ capital-asset ratios have f allen by less than those of banks in the U. S. as a whole or the rest of the Sixth Federal Reserve District. More than banks in the U. S. or the rest of the Sixth District, you have shifted as sets from U. S. government securities to loans and to state and local govern ment securities. Yet, your loan losses have remained moderate, and your loan portfolios, as our examiners say, are very ‘clean.’ ” Not everything in Alabama banking has changed, he added. And Alabam ians are to be congratulated for that. Alabama bankers on the whole kept their heads during the swing to go-go banking in the early 1970s. Growth figures demonstrate that Alabama bankers took advantage of their oppor tunities, but unlike some of their neigh bors, did not overreach their luck or skill. While the proportion of assets committed by banks to real estate loans in most neighboring states was rising, this proportion remained nearly constant in Alabama banks. Loan losses in Alabama banks also rose less than in neighbor states. Further, Alabama bankers depended less on Fed funds and large CDs. “So from all the evidence we have, you adhered to banking practices that were both prudent and opportunistic," he said. “We are aware that your good rec ord may have come partly from a per verse kind of good fortune. Perhaps it was because you had fewer opportuni ties in your state, but we are not sure of that. But what we do know is that even your larger banks concentrated on banking expansion in their back yards, while those elsewhere ranged far afield—in terms of geography and types of nonbanking activity. You owe your good record, at least in part, to prudent and sound judgment. The results are here for all to see, he said. “Along with your own advance ment, you have maintained relative sta bility. The newspapers have not been filled with speculation about the poor condition of this or that Alabama bank, reports of earnings declines here, losses there, management shakeups, emer- gency mergers or FD IC takeovers. You have not been without problems, but you have generally been able to cope. “We know that our activities, at the Federal Reserve Bank of Atlanta and in the Federal Reserve System in gen eral, directly influence some of you. So I would like to say a few words about what we are after. In most matters of supervision and regulation, Federal Re serve banks act within a general frame work of goals, procedures and over sight established by the Board of Gov ernors. We try to make most decisions at the Reserve Bank level and keep them out of the board’s lap. In super vising banks and bank HCs, we try to follow principles that are similar to those many of you have followed in re cent years: To approve what seems prudent and beneficial to the public, but not to allow actions that might lessen competition and endanger bank ing stability. Our efforts continue to aim toward balancing these objectives when they are in conflict.” When the Fed processes expansion applications, he said, it takes a close look at financial performance. Main taining sound, adequately capitalized banking subsidiaries is fundamental to HC and bank management. Capitaliza tion is still prominent in the opinions of the Board of Governors. Therefore, any applications for additional subsid iaries or activities are studied to see their impact on the strength and flexi bility of the parent company or bank. Adequate equity capital support is required for future expansion, Mr. Kimbrell said. Loan losses, nonearning assets and weak loan demand have eroded and continue to erode the cap ital bases of many banks. Capital mar kets and possibly earnings will have to be tapped, not only to replenish capital but to provide support for expanding operations. Capital will become an even more important issue when future applications are considered. “Competition is a further concern of ours that has grown out of our respon sibilities to the public. Our directions from Congress, in the Bank Holding Company and Bank Merger Acts, make it clear that we should avoid the dimu nition of competition through HC ac quisitions or bank mergers. Only when MID CONTINENT BANKER fo r Ju n e, 1 9 7 6 Letters take time to write, to travel and to get a response. And even phone calls can't always convey the full scope of a situation. So when these measures just won't go the distance for you, it's good to know we will. Whether it’s meeting with you at your bank or setting up a conference at ours. Because at First National, being your correspondent banker means much more than handling problems by correspondence. It means being there when you need us, with all the help you need. And you'll have plenty of assistance J fk A to draw from. Our Correspondent Banking | I l S I Division takes in some 16 separate areas of __ financial service. From data processing and operations assis■ M tance to investment securities ■ mm and international hanking. Among the hundreds of people at work for you, you'll find experts in such specialized areas' as geology, forestry and oil exploration. But to get the complete picture, call Jim Andress or Jack Andrade toll free. In Alabama dial (800) 672-6709 and in the Southeast call (800) 633*6710. And we’ll send you a copy of our free correspondent brochure. Or chances are, we’ll be in your area in the next week or two and can bring it by in person. W t v M T ilC H # ■■ IWfi " i l W IIII IIS lfl<BClOS IllV lC than just w riting letten, O First National Bank of M obile A First Bancgroup—Alabama. Inc. Affiliate. Member FDIC. MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 73 large costs to the public are avoided, as in the saving of a failing bank, may the Federal Reserve approve acquisi tions or mergers that diminish competi tion. “In this regard, two problems con cern us very much. First, we have lit tle latitude for direct competitors in terested in combining. Each of the three acquisition applications of Ala bama bank HCs denied by the Board of Governors so far has had large ele ments of direct competition. “Second, we are mindful of our in fluence on the longer-term develop ment of state banking structure. Our attention to this aspect of expansion has grown over the years. Thus, larger organizations that are likely to become competitors will have difficulty com bining even if they do not compete now. Almost 15 years ago, the majority of the Board of Governors expressed concern with state banking structure in a Florida case and more recently in Tennessee, Maryland and Texas. Mi norities of the board, on more than one occasion, have expressed similar con cerns about Alabama.” On the positive side, he continued, the Fed has favored combinations of noncompetitors and extensions of bank activities that strengthen banks or add to the quality and variety of services Let our billion dollar organization help your bank profit. Call john Haigler (205/832-8370), a member of our correspondent banking team. First Alabama Bancshares, Inc. Affiliate Banks First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama First Alabama 74 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Bank of Montgomery, N.A. Bank of Birmingham Bank of Huntsville, N.A. Bank of Tuscaloosa, N.A. Bank of Dothan Bank of Selma, N.A. Bank of Gadsden, N.A. Bank of Athens, N.A. Bank of Baldwin County, N.A. Bank of Guntersville Bank of Hartselle Bank of Phenix City, N.A. Bank of Mobile County ma banks can offer the public. Over the past five years, the Fed has approved more than 50 Alabama HC acquisi tions in which these aspects were pre dominant. “We realize that you have not al ways agreed with every one of these approvals. The evidence is clear, how ever, that Alabama’s smaller indepen dent banks have remained competitive with the larger banks and bank HCs. I suspect that independent bankers make up the great majority of this au dience today. I also suspect that all of you—in HCs and out—have had to work harder in recent years to satisfy your customers. “You will have to keep on working hard if you want to keep up with your customers’ needs and your competition (and I would emphasize here that your competition will probably come more and more from outside of what we now call the banking industry). Economic recovery came to Alabama earlier than to other Southeastern states and has advanced further. In the Southeast, Alabama and only one other state now have more people employed than be fore the recession started. With your sound condition, you are in an excel lent position to help your state sustain this lead. “But you will not be able to stand pat. As an ex-country banker turned Federal Reserve bank president, let me give you some advice. When you de sign lending policies, include objectives of soundness and liquidity, but do not neglect flexibility to meet the needs of your community, state and nation. “When you plan goals for asset mix, place emphasis on those activities which can enhance economic develop ment in your area. Participations in loans to large or national credits, and Fed funds sales, have their attraction in maintaining liquidity or producing high yields; but such investments pro vide little stimulus for growth in your own backyard. On the other hand, de pendence on Fed funds purchases and large CDs can be quite dangerous in certain circumstances. Over the years, he said, changes in banking have caused businesses, con sumers, and governments to place in creasing reliance on banks. Bankers to day have a vital role in financing the economic recovery now in process. They should avoid neither this role nor their opportunities to extend new ser vices to their communities. To fail in this is to slow the recovery and to serve the public poorly. “I urge you to continue in the future to act as I think Alabama’s bankers on the whole have acted in the past: To be prudent but not to hold back from opportunities,” he said. * * MID-CONTINENT BANKER for Ju n e, 1 9 7 6 E n jo yin g first n ig h t's e n te r ta in m e n t a re (I.) M r. a n d M rs. L a rry C o lb e rt, M i d - C o n t i n e n t B a n k e r , St. Louis; a n d M r. a n d M rs . B ert W a tts , P rotec tiv e Life, B irm in g h a m . Alabama Convention (Continued from p age 70) system, which, he said, has grown rap idly and soundly. The system consists of 11 commonwealth-chartered institu tions with 199 branches throughout the island; three U. S.-chartered banks with 24 branches; and two Canadian banks with 10 branches. He said three of the native banks are among the 200 largest in the U. S. He described Puerto Rico’s Govern ment Development Bank, which was created to press forward the economic development program. This bank makes middle- and long-term loans to industry on terms that would ordinarily be unacceptable to commercial banks. It also performs certain functions that make it analogous to a central bank as it serves as a fiscal agent for all govern mental units on the island, including the commonwealth government, public corporations and municipal govern ments. It has the responsibility of mar keting the debt obligations of these governmental units and it acts as a de positary for government funds. It also acts as a settling agent in the island’s clearing system. By and large, Mr. Casellas said, Puerto Rican banks operate similar to mainland banks. However, none of the commonwealth-chartered banks belong to the Fed, although they are eligible for membership. Although Puerto Rican banks have enjoyed remarkable growth through the years, they have shared the problems of the mainland banks during the re cent recessionary period, he said. This is because of the close ties Puerto Rico has to the mainland. The main effect of the recession period has been to re duce the rates of growth in the major indicators of banking activity. Officer elections resulted in Robert H. Woodrow Jr., chairman, First Na tional, Birmingham, advancing to the post of president of the association. Charles S. Snell, president, Citizens National, Shawmut, advanced to first vice president, and William H. Mitch ell, president, First National, Florence, was elected second vice president. Don Lam on is w aiting on yo u r call. He — and Union Bank's Correspondent Banking Department — can help you make it happen. CALL DON, TOLL FREE AT 800-392-5821 UNIONBONK & TRUST CO. M E M B E R Alabama's Largest Independent Bank. What’s this about MID-CONTINENT BANKER fo r Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis F .D .I.C . 60 COMMERCE ST., M O NTG O M ERY, AL 36104 You haven’t heard? Well, things have really been happening! There’s a virtual explosion in growth— almost a billion dollars in new and expanded industry in just 2 years! And Merchants National is booming along with the community, almost doubling in size in the past 5 years. We’re helping celebrate the bicentennial by observing our own 75th year with a 5 million-dollar expansion program. Mobile! The nation’s economic bright spot! i f l Merchants National Bank MfL. W LU Mobile. Mobile, Alabama * ♦ c Member F.D.I.C. AN AFFILIATE OF SOUTHLAND BANCORPORATION 75 Repeal of 10% Interest Limitation A Crucial Issue Facing Tennessee By RALPH B. COX Editor & Publisher en n essee ba n k ers, during their 86th convention in Nashville, pledged their efforts to work for a lim ited constitutional call that could revise the state’s maximum interest rate of 10%. The present 10% limitation on cor porate lending rates was written into the state’s constitution in 1870 and during recent periods of high interest rates has inhibited financing in the state. Tennessee BA’s outgoing president, Jack O. Weatherford, chairman, Mur freesboro Bank, pointed out to conven tion delegates that the “economic well being of Tennessee’’ was at stake in an August 5 election that will determine T https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the call for a limited constitutional con vention. Bankers must, and will, he said, work hard for the success of that election. Otherwise, he stated, future high interest periods will see capital being drained out of Tennessee. Tom Wiseman, a former state trea surer and chairman of the state’s Citi zens for a Constitutional Convention, reiterated the importance of the pro posed convention and asked for banker support in the coming election. Mr. Wiseman reminded bankers that the present 10% interest ceiling in Ten nessee has had a depressing and in hibiting effect upon the economic health and continued growth of the state. “We are net capital importers,” Mr. Wiseman told Tennessee bankers. “We B IC E N T E N N IA L th e m e w a s m uch in e v id en c e as Tennessee b a n k e rs held th e ir 8 6 th co n v e n tio n in N a s h v ille . S in g in g b a n k g ro u p , The Third D im ension, led o ff th e co n ven tio n w ith series o f p a trio tic n u m b e rs . G a y le G u p to n , s.v .p ., 3rd N a t'l, N a s h v ille , acted as o r a to r fo r his ban k g ro u p . do not generate enough capital in our state to finance our own needs. There fore, in times of high money rates in the national market, Tennessee money leaves Tennessee to seek these higher rates and we are unable to attract mon ey from the capital-exporting centers to finance our own business expansion.” Independent bankers in the state al so pledged their support of the consti tutional call. C. G. Williams, president, Bank of Commerce, Morristown, and outgoing chairman of the independent division, pledged that his group was “going to be a very visible force in sup port of the convention.” In the past, the state’s independent bankers have given only lukewarm sup port to efforts to remove Tennessee’s usury ceiling. Convention S peech. A common theme that ran through the convention was concern over increased bank regu lation. TBA President Jack Weatherford noted that bankers everywhere are con cerned with what he termed as “overN E W TBA OFFICERS a r e p ic tu re d (I. to r.): c h a irm a n . Jack O . W e a th e r fo r d , M u rfre e s b o ro ; p re s id e n t, H u g h M . W ills o n , A th en s; p re s id e n t elect, Jack R. vice p re s id e n t, v ille . B u llin er, T. Scott H e n d erso n ; a n d first F ille b ro w n J r., N a s h You might not want Sonny Johnson fora golfing partner. But asa Correspondent Banker, H ell suit yo u to a tee. Sonny Johnson’s golf swing lacks the fluid grace of, say, Sam Snead’s. But accord ing to Sonny, “that’s only because I don’t have time to perfect it.” He may be right. Sonny’s kept pretty busy by our custom ers in West Tennessee and Kentucky who look to him for help in solving their corres pondent banking problems. With 26 years experience in banking and a full set of cus tomized correspondent services to draw upon. . .everything from loan participations to portfolio servicing.. .he’s always “ at the top of his game.” Whatever your correspondent banking need, call Sonny Johnson or the Third National “touring pro” who serves your area. Our Ten nessee WATS line is 800-3 4 2 -8 3 6 0 . In neigh boring states, dial 800-251-8516. If you misdial, take a “ mulligan.” THIRD NATIONAL BANK IN NASHVILLE Member FDIC MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis regulation.” Mr. Weatherford acknowl edged that regulation of the banking industry was needed because banks are handling other people’s money. But bankers are now beginning to protest on this “over-regulation” and “our voices,” he said, “are being heard.” Willis W. Alexander, executive vice president, American Bankers Associa tion, also picked up the regulation theme. He characterized the situation as “regulatory overkill and overzealous ness” by federal agencies. He specifi LEFT: C o n v e n tio n s p e a k e r S tephen G a r d n e r cally criticized the Federal Trade Com (c.), v. ch., F e d e ra l Reserve B o a rd , is p ictu red mission’s recent ruling upsetting the w ith o u tg o in g TBA P res id en t Jack W e a th e r fo r d (I.) a n d o u tg o in g TBA C h a irm a n W . W . M itc h e ll, holder-in-due-course doctrine. ch., 1st N a t'l, M em p h is . RIG H T: C o n v e n tio n Mr. Alexander also pointed to the inequity of a federal ruling allowing savings and loan associations to pay a higher rate of return on IRA accounts (individual retirement). Banks should not be placed at a competitive disad vantage with S&Ls, he said, but he also noted that this decision is being “ap pealed.” Mr. Alexander called upon federal regulators to “let us alone; let us digest what we have.” LEFT: O u tg o in g c h a irm a n o f sta te b a n k d iv is io n , The ABA leader also advised bank Ben S. K im b ro u g h , pres.. First Trust, C la rk s v ille ; ers that the banking industry must s p e a k e r H a rla n M a tth e w s , Tennessee state maintain its credibility. He suggested, tre a s u re r; a n d o u tg o in g c h a irm a n o f n a tio n a l for example, that testimony against cer d iv is io n , V ir g il H. M o o re , p res., 1st Farm ers & M e rc h a n ts , C o lu m b ia . RIG H T: In d e p e n d e n t tain types of banking legislation should b a n k e rs w e lc o m e d s p e a k e r C h a rle s O . M a d d o x not predict dire results should the legis lation be adopted. Plausible objections ner, vice chairman of the Federal Re should be voiced against any possible serve Board, acknowledged there is a legislation, he advised, but “scare tac national preoccupation with the idea tics” should not be used. that every problem in our society can The real answer to better under be corrected by a law. standing of banking and better legisla Under this philosophy, he said, it is tion, he said, will come about through conceivable that the sheer volume of better economic education in this na controls may be, or will become, un tion. He pointed to an excellent pro manageable. gram now being conducted by the Ad The Federal Reserve g o v e rn o r vertising Council of America and noted, nonetheless, that banking issues which is being supported by the ABA, are highly sensitive ones with Con the Department of Commerce and the gress, which has been closely looking Department of Labor. Bankers should at the structure of banking over the obtain more information from ABA past three years. headquarters, he urged. Mr. Gardner hinted that structural Another speaker, Stephen S. Gard reform is probably needed and prob https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis s p e a k e r W illis W . A le x a n d e r (c.), e .v .p ., A m e r ican B a nkers A s so ciatio n , fla n k e d b y A B A V .P . fo r Tenn. W . E. N e w e ll (I.), ch., 1st N a t'l, K in g s p o rt; and Sam M. F lem in g , fo rm e r ABA p re s id e n t a n d re tire d ch., 3 rd N a t 'l, N a s h v ille . Jr. (c.), p res., In d e p e n d e n t B a n kers Assn, of A m e ric a , a n d pres. Peoples B a n k, W in d e r , G a. O n le ft is n e w ly elected p re s id e n t o f TBA In d e p e n d e n ts , Jam es F itz h o g h , p re s ., B a n k o f R ip ley; a n d on rig h t, re tirin g p re s id e n t, C. G . W illia m s , pres., B a n k o f C o m m erce , M o rris to w n . ably will come. “There is just too much dissatisfaction,” he said, “with the status quo not to expect important changes in the rules governing the structure and powers of depository in stitutions.” However, the Federal Reserve vice chairman said, regulatory reform which coincides with structural reform and which is based on a responsible ma jority view of the economic and social effectiveness of our system will prob ably be regulatory reform that other wise might not emerge. It was this thought, said Mr. Gard ner, that led him to testify recently on a series of regulatory reform measures before the Senate that would subject all federal government regulators to a scheduled four- or five-year review. The purpose of the (review) effort, he said, would be to reduce the burden of regulation on the economy and to assure that competitiveness exists in our industry and trade and that the consumer would be protected from monopolistic and cartel-like competi tion that maintains higher prices and costs than would otherwise obtain. Mr. Gardner expressed little doubt A N N U A L B A N Q U E T s a w m a n y Tennessee b a n k ers a n d th e ir w iv e s h o n o rin g b ic e n te n n ia l y e a r b y w e a r in g costum es th a t d e p ic te d a n y p e rio d fro m R e v o lu tio n a ry W a r e ra to F ab u lo u s '5 0 s . that financial institutions could expect some dramatic and interesting develop ments. “And I hope as this effort pro ceeds,” he said, “that banking institu tions and the thrift institutions will not continue to march up the Hill and ad dress only narrow partisan interests. “I expect (financial institutions) to address their own interests, but also would like to see them expand their views and address the broader issues.” These issues, he said, are unemploy ment, productivity, capital formation, energy conversions, government deficits and inflation. “I suggest,” concluded Mr. Gardner, “that a comprehensive regulatory reform review can be useful to the resolution of these issues.” In d epen den t Bankers. In a speech to the TBA independent division, na tional IBA President Charles O. Mad dox, chairman, Peoples Deposit Bank, Winder, Ga., expressed displeasure with regulators—both national and state—which he charged had allied themselves with the larger banks and holding companies. This philosophy, he said, makes it easier to concentrate credit and deposits in the hands of a few institutions. Mr. Maddox noted that Tennessee independent banks could increase their competitiveness if they would follow an example of smaller banks “grouping together” as they had done in his state (Georgia). He suggested smaller banks could share costs in data processing, printing and other expense areas, plus participating in loans on a group basis. This procedure, he remarked, would allow the smaller bank to be more com petitive with the larger financial insti tutions. Officers E lected . In official action, TBA members elected a slate of new officers as follows : Chairman, J. O. Weatherford, chair man, Murfreesboro Bank; president, Hugh M. Willson, president, Citizens National, Athens; president-elect, Jack R. Bulliner, president, First State, Hen derson; first vice president, T. Scott Fillebrown Jr., vice chairman, First American National, Nashville; and sec ond vice president, George R. Taylor, chairman and president, Merchants Bank, Cleveland. Association members also elected three new directors: for East Tennes see, Herbert Whitfield, president, Greene County Bank, Greeneville; Middle Tennessee, Virgil H. Moore Jr., president, First Farmers & Mer chants, Columbia; and West Tennes see, John E. Gauldin III, president, F irst Bank & Trust, Dyersburg. Divisional chairmen also were elect ed as follows: national division, James Smith, senior vice president, Park Na tional, Knoxville; state division, Arch Fitzgerald, executive vice president, Cleveland Bank; and independent bankers, J. R. Fitzbugh, president, Bank of Ripley. Tennessee members of the American Bankers Association elected as their representative on the ABA governing council for two years, W. C. Adams, president, Bank of Maryville. Tennessee bankers also authorized the creation of a corresponding divi sion. Membership will be made up of city correspondent banks with total de posits of $100 million or a minimum of $1 million in correspondent bal ances. Officers were not elected to this new division. * * FIDELITY SECURITIES INCORPORATED A 'M U S T ' for Directors of State-Chartered Banks! "Bank S h areholders 1 M e e tin g M a n u a l" A 60-page book designed to enable directors of state-chartered banks to bring their operations up-to-date. It was developed in recognition of several new trends in business and society— trends involving an increased sensitivity of the public regarding conflicts-ofinterest; greater concern for minority rights; greater demand for fuller dis closure; data on control and ownership and of related business interests, includ ing voting of trust-held securities. The book also provides a means for state bank directors to modify pro cedures to bring their banks into com pliance with current state banking statutes and regulations. Its use can result in economies and efficiencies for banks. Can Your Bank Afford to be You can profit from our wide experi ence in municipals. We welcome the opportunity to analyze your bond account. Call or visit with us anytime. Investment Securities 901 278 2500 Fidelity Building 1981 Union Avenue Memphis, Tenn. 38104 MID-CONTINENT BAN KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Out-of-Date? P R IC E : $ 7 . 7 5 e a c h SEND YOUR ORDER AND CHECK (sorry, no billed orders) TO THE PUBLISHER: The BANK BOARD Letter 408 Olive St. (Suite 505) St. Louis, Mo. 63102 79 Favorite Son McPeters Warns AAississippians That Congress Still Wants Financial Reform By JIM FABIAN Associate Editor HE NATIONAL legislative scene was the main topic at the 88th an nual convention of the Mississippi Bankers Association in Biloxi last month. “Favorite son” W. Liddon McPeters, ABA president-elect, and president, Security Bank, Corinth, warned his colleagues that Congress generally nev er loses interest in any of its pet legis lative proposals, and, even though the banking lobby devastated this year’s Financial Reform Act, no one should be surprised to see the act resurface next year— and perhaps annually until those pushing the anti-banking legis lation finally become convinced that they are sponsoring a lost cause. (Mr. MePeter’s remarks are published in full in this issue, beginning on page 3 5 ). J. Herman Hines, chairman, federal legislative committee, and chairman, Deposit Guaranty National, Jackson, reported on the MBA’s sixth annual Washington, D. C., visit which took 35 bankers to the offices of Mississippi’s congressional delegation and the var ious bank regulatory agencies. The group assembled a series of questions that it thought were of para mount interest to Mississippi bankers and posed them to the various agencies, Mr. Hines said. In addition, a social hour afforded members of the delega tion an opportunity to meet informally T W illia m and E. " B illy " pres., H o w ard C o m m e rc ia l Jr. (I.), N a t'l, MBA L au rel, pres., p resid ed a t c o n v e n tio n . Leo W . Seal Jr. (r.), pres., H a n cock B ank, G u lfp o r t, conducted A B A p o rtio n o f m e e tin g as AB A v .p . fo r M ississippi. with congressmen from other states, most of whom were members of the House Banking and Currency Commit tee. “This past year has proved to be the most challenging in the recent history of banking insofar as federal legislation is concerned,” Mr. Hines said. He traced the course of the Financial In stitutions Act of 1975, stating that the Senate passed it last December with only 14 dissenting votes, one of which came from Mississippi’s Senator James Eastland. He also commented on the House Financial Reform Act, which, he said, would enable banking’s com petitors to “gain everything while com mercial banks gained nothing. The Comptroller of the Currency’s office would be abolished, other bank regula tory agencies would be politicized and the door would be open to the alloca tion of credit.” The MBA legislative committee par ticipated in a state-wide bank presi dents seminar to explain the ramifica tions of the banking acts to Mississippi bank presidents. The unanimous de cision of those in attendance was that the Mississippi bankers emphatically oppose the enactment of the Financial Reform Act of 1976. “Plans were made for an all-out as sault on this horrendous piece of legis lation,’ Mr. Hines said. Under the leadership of the contact banker in each congressional district, groups of bank ers went to Washington to visit with their congressmen. A total of nine trips, involving 3S bankers, was made. L et ter writing campaigns were organized and the cooperation of bank officers, directors, employees, stockholders and customers was received in sending let ters to both Mississippi congressmen and those from other states. “The results of these letters and the combined efforts of other bankers throughout the nation have been most gratifying,” he said. “Every member of the Mississippi congressional dele gation pledged to vote against and work against this proposed legislation.” Miller P. Holmes, chairman of the state legislative committee, and presi dent, Delta National, Yazoo City, said that all legislative problems are not con fined to the nation’s capital— there are many in Jackson, too. He said that bankers don’t carry the weight on the state level that they once did. Of the 126 bills affecting banking in the recent state legislature, he said, 16 were passed despite banker opposition. Presiding Officer William E. Howard Jr., MBA president and president, Com mercial National, Laurel, presented the report of the executive committee. Among matters touched upon was the fact that the MBA held special meet ings during the year on the following topics: Direct deposit of social security checks and the Real Estate Settlement N e w M B A officers a r e (fro m I.) John H. M itc h e ll Jr., v. ch., N a t'l B ank o f C o m m erce o f M issis sip p i, S ta r k v ille — M B A pres.; R a y K. Sm ith, p res.. First N a t'l, G re e n v ille — M B A v .p .; a n d R. D. " B o b b y " G a g e I I I , pres., P o rt G ibson B a n k — M B A tre as. 80 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 Procedures Act, the Equal Credit Op portunity Act and the Financial Re form Act of 1976. The MBA published the first edition of “Selected Mississippi Banking Laws,” which replaces the former “Brown’s Handbook of Banking Laws,” which had last been revised in 1969. Mr. Howard concluded the report by stating, “It is our feeling that ours is one of the best associations of its kind in the country. The interest shown by our members in participating in as sociation activities is excellent. Your executive committee wishes to engage your association in those matters that are relevant and meaningful which will benefit our banks, our communities, our state and our country. We urge your full participation.” Mr. Howard, during his president’s address, urged Mississippi bankers to attend the ABA convention in Wash ington, D. C., this fall to lend support at the installation of W. Liddon McPeters when he becomes ABA presi dent. Orrin H. Swayze, director emeritus, School of Banking of the South, stated that 1,230 students were currently en rolled in the school. Of the 4,809 stu dents who have graduated since the school’s inception in 1952, 470 have been Mississippians. He said 50 female students are currently enrolled and that they generally do a better job than the male students. He said that, although the school has no shortage of students, it is seeking better qualified candidates, a fact that is reflected by stiffer en trance requirements. He pointed with pride to the growing number of senior officers attending the school and chided those who consider themselves to be too old to learn. “If a banker thinks he’s too old to go to school, he’s too old to run a bank!” he said. ABA vice president for Mississippi, Leo W. Seal Jr., president, Hancock Bank, Gulfport, reported that all but two Mississippi banks are ABA mem New Site Gets OK It didn’t take delegates long to make themselves at home at the Mississippi convention’s new sites —the Biloxi Hilton and Broad water Beach hotels. Mixups were held to a minimum and most bankers agreed that the accom modations were vastly improved over those of previous conventions. Most of the convention activities on the day of the first general business session (Monday) were held at the Biloxi Hilton, while activities on the second day were held at the Broadwater Beach. The hotels are within one block of each other and the only time that the short hike between the two was out of the question was dur ing a torrential downpour Mon day afternoon that all but washed out a number of hospitality ses sions scheduled for that time. N a tc h e z , B ank, C o rin th . la tiv e com ., and O rric k M e tc a lfe (I.), ch., B ritton s p e a k e r W . Liddon M cP eters, A B A & K o ontz First p res .-e le c t, a n d MID-CONTINENT BA N K ER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a CARL E. CARVER JR. has been named a director of First United Bank of Mississippi, Meridian. He is a partner in the F. W. Williams State Agency, an insurance firm. ■ GARY L. KONSLER has joined Mississippi Bank, Jackson, as vice presi dent and trust officer. He formerly was assistant vice president at National Bank of Detroit. Walter Richard Bivins has joined Mississippi Bank as consul tant on economic and governmental af fairs. He most recently served as dep uty executive director, Mississippi Em ployment Security Commission, and was one of the bank’s founders. bers. He stressed the importance of bankers contributing to B a n k P A C , which has established a goal of $370,000 to be spent during the 1976 politi cal campaign. He urged bankers to make an effort to encourage each of ficer in their bank to contribute $2 to this fund and said that, if each bank officer in the U. S. participated, the goal would be met. O’Dell A. Sanders, chairman, resolu tion committee, and president, Tunica County Bank, presented resolutions supporting BankPAC, the U. S. Savings Bonds program, the educational efforts of the Young Bankers Section and re sponsible government (which does not necessarily mean big government). John H. Mitchell Jr., vice chairman, National Bank of Commerce of Missis sippi, Starkville, was elected MBA g a v e n e c ro lo g y re p o rt a n d O rrin H. S w a y z e , d ir. em e ritu s , School o f B a n k in g o f South, re p o rte d on school's pro g res s. CENTER: H u d d lin g b e fo r e business session w e r e (fro m I.) S teve E. B a b in g to n , d ir., B ro o k h a v e n B a n k, a n d ch., A B A n o m in a tin g com .; M B A Exec. Dir. John R. H u b b a rd ; LEFT: president, succeeding Mr. Howard, and Ray K. Smith, president, First National, Greenville, was elevated from treasurer to vice president. Elected treasurer was R. D. “Bobby” Gage III, president, Port Gibson Bank. In the ABA election, Crawford S. McGivaren, vice chairman, Bank of Clarksdale, was elected to the governing council to succeed J. C. Whitehead, chairman and president, Bank of Mississippi, Tupelo. ® 9 N a t'l, W h ite h e a d , R IG HT: and ch. & ch., CBA Names M. E. Goldsmith As Vice President-Administration WASHINGTON, D. C.— Margaret E. “Peggy” Goldsmith has been named to the newly created post of vice presi dent-administration by the Consumer Bankers Association. Miss Goldsmith continues as secre tary and assistant treasurer of the CBA, positions she has held since 1947. In her new post, she will supervise all ad ministrative activities of the CBA. Miss Goldsmith, who joined the CBA in 1942, also serves as registrar and as sistant secretary-treasurer of the associa tion’s Graduate School of Consumer Banking. The CBA represents the interests of the installment lending operations of many of the nation’s commercial banks. J. H e rm a n D eposit pres., B ank Hines G u a r a n ty of (I.), ch., N a t'l, M ississippi, M BA fe d e r a l Jackson, T u p elo , and discuss leg is J. C. la tte r 's b e a rd , g r o w n in h o n o r o f b a n k 's c e n te n n ia l. In m id d le b a c k g ro u n d R o b ert E. Ross, v .p .. B ank o f M ississippi, a n o th e r b e a rd g ro w e r. is pres., Security 81 LBA President and ABA President-Elect Focus On Banking Legislation at 1976 Convention HE LOUISIANA Bankers Associa tion, at its annual convention last month, announced an earlier meeting date for its 1977 convention: April 1-4 at the new Hyatt Regency, currently under construction in New Orleans ad jacent to that city’s Superdome. It will be the first time in many years that the LBA hasn’t used the familiar Fairmont (formerly Roosevelt) Hotel as its con vention headquarters. The convention will be held earlier, according to Robert I. Didier, LBA ex ecutive vice president, so that associa tion officers can be free to attend hear ings and sessions of the Louisiana Leg islature. In the past, the LBA had held its annual conventions in late April or early May—at the same time the Legis lature was in session. The President’s Report. In his report as LBA president, J. D. Aeklin Jr., president, Planters Bank, Haynesville, warned that banking has enemies with in the financial industry who would try to enter banking through the back door, using as their key uninformed elected officials who have the mistaken notion that bankers haven’t been doing a proper job of serving the public. He suggested that the best hope of defeat ing such attacks is in actively support- T By RALPH B. COX Editor & Publisher R o bert I. D id ie r Jr. (I.), LBA e .v .p ., visits w ith J. B. Falg o u st, 1 9 7 5 -7 6 assn, tre a s ., a n d e .v .p . & cash.. B ank o f V a c h e rie . ing the LBA. Mr. Aeklin told how pleased and proud he is of the way bankers in Lou isiana and throughout the country fought the proposed Financial Reform Act of 1976. He pointed out that this was the first time in the 29 years he’s been in banking that banks have risen as one unified force against any pro posed legislation. He regards this as a healthy sign and an indication of the strength of the nation’s banking in dustry. However, he warned, the battle N E W LBA OFFICERS, DIRECTORS: L. to r., th e y a r e — p res., D o n a ld L. D e lc a m b re ; p res .-e le c t, W a lte r B. S tu a rt I I I ; tre a s ., G e o rg e S. Lensing; a n d d irecto rs, C h a rle s A. D a vis Jr. a n d Travis G o re. 82 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis is a long way from being won, but, as he put it, “The only way we can hope to keep the rats out of the pantry is by being ever vigilant and by being prepared to move in concert through a strong, viable association.” Another instance of banker activity cited by the LBA president was the comments made to the Fed and FTC by more than 1,900 bankers on the new holder-in-due-course regulation. It was Mr. Acklin’s opinion that this ac tion was enough to force the Fed into some kind of positive action. Let me say here, no matter how large or small your bank,” implored Mr. Aeklin, “when the agencies ask for your comment on a proposed rule or regulation, let them hear from you. You know as well as I, that many of the proposals are completely asinine and uncalled for, but they still affect the operation of all our banks. The more of us they hear from, the better our chances of getting the proper results.” In reviewing the LBA’s accomplish ments during the past year, Mr. Aeklin pointed out that “we got our BANKPAC rolling along toward a promising future” and predicted that this will prove to be an important organization in the years ahead and will add politi cal clout to the banking industry as nothing has before. Mr. Aeklin listed as one of the past year’s largest accomplishments the state-wide institutional advertising pro gram. Member banks pooled some $57,000 and bought more than 200 outdoor boards and commercial time on every TV station in Louisiana. By sup porting this image-building effort, ac cording to Mr. Aeklin, LBA member banks have proved they’re concerned about their industry’s image and are prepared to commit real money to improve it. He added that public opin ion will have a lot to do with the even tual success or failure in banking’s battle to keep S&Ls and credit unions from becoming an even greater threat than they are today. ABA President-Elect Speaks. W. Lid- MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 LEFT: LBA co n v e n tio n ch., Jam es G. A la r io (I.), e .v .p ., S tate B a n k, G o ld e n f a s t a r e school officials (I. to r.) Don W o o d la n d , asst, d ire c to r o f school; M e a d o w , is s h o w n w ith O rrin S w a y z e , re tire d , Jackson, M iss.; W a lte r B. S tu a rt I I I , v. ch., First v e n tio n Jr. (2 n d and speaker and fro m I.), p res., Security LBA P at W illis , A B A A B A Pres.-Elect W . Liddon pres, and M cPeters (r.), con B a n k, C o rin th , M iss.; J. p res., P lan ters v .p . fo r L o u isian a a n d B a n k, v .p ., F id elity N a t'l B ank o f C o m m erce , N e w D. A c klin O rle a n s , a n d assoc, d ire c to r o f school; H a y n e s v ille ; F ran k C ra ig , pres., F id e lity N a t'l, B a to n R ouge; a n d C h a rle s J. C assidy, N a t'l, school d ire c to r a n d ch. & pres., First S tate, B o g alu sa. Baton Ro uge. R IG HT: P h o to g ra p h e d d u rin g School o f B a n k in g o f South b r e a k - don McPeters, ABA president-elect and president, Security Bank, Corinth, Miss., focused on financial legislative proposals and how they never die. In his talk, which is reproduced elsewhere in this issue, Mr. McPeters pointed out that Congress seldom loses interest in any proposal introduced in either house. If a bill is not enacted the first time, according to the ABA officer, it almost certainly will turn up the next year in a different form. Specific bills are only vehicles that may disappear, he continued, but the issues and con cepts behind those bills are remarkably long lived. Mr. McPeters said this certainly was true of “that package of proposals so inappropriately labeled financial re form.” Regardless of what happens in the rest of this session of Congress, he predicted, it’s a virtual certainty that these proposals will reappear next year when the new Congress takes office. He warned that the forces that gener ated this legislation in the first place are stronger today than they ever were, and those forces guarantee that Con gress will be considering major changes in our financial system for some time. Thus, he said, it makes sense for bankers to examine these forces to see how bankers can manage them to cre ate an equitable banking environment that serves the best interests of cus tomers as well as financial institutions. The ABA president-elect discussed the forces that spawned these proposals and that are still propelling us toward change—housing as a social priority, the growing strength of the consumer movement, inflation, the technological revolution and the passage of time it self. This pressure, he pointed out, is felt most strongly by Congress, bank regulators and bankers themselves and is so strong that regardless of what happens in this session of Congress, many of the issues and concepts now currently being called financial reform will continue to be a high priority on Capitol Hill for years to come. That’s why, he warned, bankers cannot rest on the defeat of the so-called banking reform legislation in this session of Congress, but must look further ahead. They can begin, he advised, by looking to their relations with members of Con gress who will be shaping next year’s legislation. S h o w n a t Salem C h in a Co. b o o th a t LBA con Three v e n tio n a re (I. to r.): P a u l M e lto n , v .p ., Louisi ing ana N a t'l, S ib ley, re p .; and B a ton M el Rouge; R a m b in , Thom W e lc h , Salem p res.. First N a t'l, Port A lle n . M r. W elch is h o ld in g sp e c ia lly d e s ig n e d have som e N a t'l S a fe C o ., co n ve rs a tio n a re Baton (I. to d u r r.): Steve Rouge; A lto n Pictured at F a v o rite Check Printers e x h ib it at LBA co n v e n tio n a re (I. to r.): Ju d y H a m lin , sales re p . o f firm , lo c a te d in Little Rock; M a r y H elen W e s tb ro o k , W e s tb ro o k F ixtures, Jackson, M iss.; Loe, S o uth ern N a t'l, T a llu la h ; a n d P e ter B rau n - a n d Jim R in g o ld , N a t'l S a fe. fisch, S a lem B ice n te n n ia l Cup. MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis e x h ib ito rs LBA c o n v e n tio n . They 50-Year Club Inductees. Six bankers who have been in their chosen field at least 50 years were honored at the con vention’s Monday night banquet. They are: Herbert Cobb, president and trust officer, Exchange Bank, Natchitoches; H. B. Fisher, president, Caldwell Bank, Columbia; William Grady Kelly, senior vice president, Bank of Choudrant; George Ramel, director, Continental Bank, Harvey; Guy G. Trudeau, direc tor, Bank of St. John, Reserve; and Oscar Wurster, chairman and president emeritus, Catahoula Bank, Jonesville. New L B A Officers. Donald L. Delcambre, president, State National, New Iberia, was elected LBA president. Elected president-elect was Walter B. Stuart III, vice chairman, First National Bank of Commerce, New Orleans. The new association treasurer is George S. Lensing, president, Bank of Dixie, Lake Providence. Elected to serve three-year terms on the LBA board were: Charles A. Davis Jr., president, Shreveport Bank; and Travis Gore, executive vice president and cashier, Concordia Bank, Vidalia. They represent the LB As Northwestern and Northeastern groups, respectively. v .p ., F a v o rite Check P rinters. M rs . Loe w o n TV p rize. 83 Washington Scene Dominates General Sessions At Arkansas BA Convention in Hot Springs HE KEEN IN TE R E ST Arkansas bankers have in the national legis lative arena was markedly evident at the 86th annual convention in Hot Springs last month. The entire program of the first business session was devoted to remarks made by a parade of speak ers from the nation’s capital. Representing four bank-related agen cies in Washington were George LeMaistre, FD IC director; Dr. Lawrence Kreider, executive vice presidenteconomist, Conference of State BankSupervisors; H. Joe Selby, first deputy comptroller for operations, Comptroller of the Currency; and Jerry Thomas, under-secretary of the Treasury. Mr. LeMaistre discussed bank regu latory reform. He said that the effort that went into regulatory agency re form in Congress should have resulted in a careful analytical exploration of the topic; but, rather, it ended up as a personal political vendetta. The issue is dead as far as the current Congress is concerned. Yet, he said, governmental and regu latory reform seems to be an idea whose time has come, whether bankers like it or not. “Profound dissatisfaction with the pervasiveness of governmental inter- By JIM FABIAN Associate Editor of excessive and inefficient regulation and to highlight the unintended ill ef fects and hidden costs of regulation,” he said. The alternative, he said, would be vention in our day-to-day affairs and to wait for Congress to develop and with the reams and reams of paper that plan for regulatory reform after which are required to effect even the simplest bankers would have to decide either to and least controversial of transactions” support or defeat the plan. is the recurring complaint of business Mr. LeMaistre recommended that men today, he said. remedies be developed that respond He said that most would agree that directly to inadequacies and abuses, regulation is necessary, but that it “of remedies that are backed by careful ten outlives the problem it was intend analyses of the facts. He also said that ed to address, that we do not always a concerted effort should be made to take sufficient care to choose the least eliminate redundacy and overlap within costly means to achieve the desired end the framework of regulation that ap and that regulation often results in un plies to an industry. This redundancy, anticipated consequences that can be he added, could be remedied without more severe than the problem the regu altering the present application of the lation sought to remedy.” law. Also, he said, those who are regu He said that kneejerk opposition to lated grow comfortable in their regu change will not prevent its occurrence, lated environment and resist any serious but may serve to exclude the opponents effort to deregulate. of regulatory reform from participation He called on bankers and bank regu in shaping that change. lators to develop a systematic and “I sincerely hope that we, as bankers reasoned approach to regulatory re and bank regulators, will have the fore form, stating that failure to do so will sight to deal with the issues involved have several adverse consequences. “A in an orderly and analytical way,” he golden opportunity will be lost to deal said. “If we do, I am convinced that in a meaningful way with the problems the net result will be a regulatory framework that is less burdensome and more effective, and an industry which better serves its customers.” Dr. Kreider emphasized the efforts of the Conference of State Bank Super visors (C SBS) to assure strong state banking departments and a viable dual banking system. He noted that CSBS has sought to increase the usefulness and efficiency of state banking departments and to encourage modernization of state bank ing laws and bank regulatory proce dures primarily through an extensive educational program and such special ized programs as the one currently be ing pursued cooperatively by the Comtroller of the Currency and the state banking departments to achieve con sistent classifications for national lines New A rk .B A officers a re (fro m I.) W illia m K e nnedy J r.— pres.; D o yl E. B ro w n — v .p .; M . Lew is— tre a s .; a n d Cecil W . C u pp H. John J r.— p res .-e le c t. 84 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BA N KER for Ju n e, 1 9 7 6 Past presid en ts o f A rk .B A (a n d frie n d s ) g a th e re d fo r p h o to d u rin g c o n v e n tio n . U n o fficia l g a th e rin g has been held a n n u a lly since 1 92 9. of credit shared by one or more state and national banks. Dr. Kreider outlined a federal legis lative program aimed at accomplishing the goal of maintaining and strengthen ing the dual banking system, which in cludes opposition to attempts to politi cize the Fed through political appoint ments of district bank presidents; sup port for national as well as state charter options for foreign facilities and mu tuals in those states that have indicated by statute a need for such institutions; rejection of federalization of all foreign facilities and opposition to the basic thrust and philosophy of all legislation that would centralize bank regulation in a federal agency. He noted that CSBS has increasingly felt compelled to take public interest positions against legislative, regulatory and other proposals that tend to inhibit or preclude banks from serving their communities. In this context, he noted that CSBS had recently come to the de fense of the office of the Comptroller of the Currency and supported reten tion of statutes, regulations, policies and procedures protecting the confi dentiality of individual bank examina tion reports. Mr. Selby discussed changes being made by regulatory agencies, particu larly the Comptroller’s office. He said the current role of federal bank regu lators is that of constructive critics, en suring compliance with the law, moni toring honest dealings, not dictating policy and leaving final decisions to management. He said the Comptroller’s office is on the verge of the first real break through in applying modern technology, information systems and management techniques to the process of bank ex amination. This is a part of the current competition among regulatory agencies to devise the best and most effective mode of examination and follow-up pro cedures. He described the Comptroller’s new National Bank Surveillance System, which collects data from all national banks to provide a central, computer ized data base. He said the system would become a focal point for future examinations fry establishing a peer group to which any given bank’s ratios can be compared. He said the system, when completed, “will be the most ef-> fieient, continuous analysis of banks in the world.” Mr. Thomas gave a rousing speech on the disadvantages of big government that received a standing ovation from those in attendance. He termed govern ment the biggest competitor of the businessman and stated that 70% of the nation’s available capital will be ab sorbed by government in 1976. Highlight of the second general busi ness session was the president’s address, delivered by Dorman F. Bushong, out- A m o n g s p e akers a t A rk .B A c o n ven tio n w e r e G e o rg e L eM aistre (I.), d ir., FD IC , a n d D r. L a w rence K re id e r, e .v .p ., C o n fe re n c e o f S tate B ank Supervisors. Both a re fro m W a s h in g to n , D. C. MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis going Ark.BA president. Mr. Bushong is president, Farmers & Merchants Bank, Bogers. He commented on the trend of coun try banks being forced to offer services normally provided only by urban banks, due to increases in population of Ar kansas’ rural areas. He cautioned bank ers to make sure they make proper charges for these services. He decried the custom of bankers to sell services below cost, saying that banks have a mandate to provide services but they also have a mandate to turn a profit for their stockholders. He congratulated bankers for their successful efforts to influence Congress against enactment of financial reform legislation, stating that bankers do not have to compromise when they are dealing in areas where they know the public’s interest is being eroded. He called for legislation to define and control electronic funds transfer usage and congratulated the Ark. BA task force on E FT S on the job it has been doing. He asked that bankers inform the state banking department what they want in the E FT S area. Convention resolutions were pre sented recognizing Ark.BA members who had died in the past year, saluting the U. S. Savings Bond program and supporting freedom from unfair legisla tion at the federal level. Elected to lead the association for the coming year were: William H. Ken nedy Jr., president, National Bank of Commerce, Pine Bluff—president; Cecil W. Cupp Jr., president, Arkansas Bank & Trust, Hot Springs—president-elect; and Doyl E. Brown, president, First National, Wynne— vice president. John M. Lewis, president, First National, Fayetteville, was elected treasurer. Winners of the two TV sets given away at the business sessions were G. F. Winn, director, Warren Bank, and David O. Ramey, vice president, Citizens State, Bald Knob. * * 85 Banker Involvement Was Running Theme O f Speakers at Oklahoma Convention By LAWRENCE W. COLBERT Assistant to the Publisher ANKER INVOLVEM ENT was the running theme of speakers at the 79th annual meeting of the Oklahoma Bankers Association, held in Oklahoma City May 11-13. Registration of more than 1,000 set a new attendance record. Speaking on banker commitment, William ]. Copeland, vice chairman, Pittsburgh National, said that banking is under severe and constant attack. He noted that banking came out of the worst recession since the 1930s better than it went in. He called on bankers to commit themselves in the following areas: public service, customer benefit innovation, high moral business con duct, political activity and social affairs initiative. “We must do something within the next 10 to 15 years about the growth of the federal government,” Governor Da vid L. Doren told Oklahoma bankers. He then recounted his plans for re organization of state government. “Oklahoma, by the grace of God, did not succumb to the depth or magnitude of economic distress experienced in other parts of the country,” Tracy Kel ly, association president, said referring to the recent recession. “This is largely attributable to our strong endowment of oil, gas and agriculture and the basic industry and thrift of our people,” Mr. Kelly continued. He cited the passage of E F T legisla tion and the success of the OBA’s edu cational program as the highlights of his year as president. Referring to the E F T legislation, he remarked, “My admonition to all bankers across the state is to go slow, be cautious on E FT . Set aside vanity, upmanship, expensive marketing schemes, for a deliberate, economically sensible and practical electronic delivery system that fits your particular marketplace. Make sure your system will interface with the rest of the marketplace.” Mr. Kelly is chairman and president, American National, Bristow. He referred to the attempted break up of the oil industry by Congress as a great danger that has ominous implica tions. “The drive for divestiture does not stem from any antitrust considerations,” he said. “The~e is no sign that the large oil firms have monopolistic shares of production, marketing or refining, or that they have been squeezing com petitors out of business. Nor can pro ponents of divestiture make any solid consumerist claims, since there is no evidence that divestiture will lead to lower prices for petroleum products. In fact, the opposite is probably true. “The controversy is not economic at all, but ideological. The drive for dives titure represents a political declaration that large oil corporations— and, by ex tension, big companies of all kinds, in cluding banks— are somehow evil. It is that old corollary of populism rearing its head again: Bigness is bad, small ness is good.” He termed divestiture attempts as “irresponsible tampering in the open O u tg o in g Pres. Tracy K elly pins b a d g e o f o ffic e on P a t M o o re , n e w O B A pres. GUFFEY PARKER BOREN ing skirmish in a philosophical assault on traditional American business meth ods” that could be the initial step to ward nationalization of the oil business. “When will it be banking’s turn to capitulate?” he asked. He called on bankers to police them selves as a way of allaying the forboding threat congressional intent holds for banking. “My exhortation is, let us develop a greater awareness of each other, a business philosophy that rec ognizes that customer satisfaction, in a capitalistic society, is the justification for a bank’s very existence. Let us be gin again to live up to the spirit of our corporate charters.” Additional comments were made in the E FT S area by Roger Guffey, presi- N e w O B A officers fo r 1 9 7 6 -7 7 a re (I. to r.) John V . A n d e rs o n , p res., First N a t'l, El Reno— tre a s .; W a lte r V . A lliso n , ch., First N a t'l, B a rtle s v ile — p res-elect; P a t M o o re , pres., A m erican S tate, T h o m as— pres.; a n d T racy K e lly , ch. and p res., A m e ric a n N a t'l, B risto w — ch. o f th e b o a rd . 86 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 dent, Kansas City Fed. He said the Fed has been interested in the EFT-related developments that have originated and are continuing to occur in the Okla homa area. He congratulated Okla homa bankers for being in the fore front of E FT S innovation. “The legislation you considered, de veloped and passed this year demon strates what I call managed change,” he said. By managed change, he said he meant a balancing of technological, regulatory and legislative forces in a manner that provides long-term ben efits to the public. “I believe you are to be commend ed for producing a law that is equi table, relatively free of regulatory has sle, yet which has achieved the objec tives of both bankers and legislators by permitting expanded customer services while maintaining the essential features of the unit-banking concept,” he said. Mr. Copeland, in referring to the lumps banking has been taking, said that some of the criticism has some basis of justification—but only some. “To the degree that excessive bad judgment was involved in those loans that went sour—the ones that should never have been made in the first place and which would have gone bad even if there had not been any recessionary period—we are subject to justified criti cism. For normal risk taking we are not. That’s our business and it is es sentia] in a free or semi-free econ omy. Those who aren’t knowledgeable should restrain their criticism.” He said there are important distinc tions between bad judgment and risk taking and bankers should never lose sight of these distinctions. It would be a serious blunder if bankers took re cent publicity to heart and were de terred from risk taking in order to avoid criticism. “That would mean we would no longer serve the nation’s needs in helping lubricate the mech anisms of economic recovery. It pos sibly would mean aborting that recov ery,” he said. He added that the implication that banking is tottering on the brink of breakdown is absolutely false and he il lustrated his point by presenting what he termed the “tremendously good marks’ the banking industry achieved during the recession—increases in capi tal accounts and reserves. A progress report was given on the Oklahoma Business Development Corp., organized in 1970. Since its inception, the corporation has received in excess of 200 inquiries, of which some 30 credit requests were reviewed. More than $2.1 million has been disbursed to 10 Oklahoma firms. The staff has facili tated loans of more than $3 million in cooperation with the Small Business CheckOKard Center Opens OKLAHOMA CITY—The ChecOKard Banking Center Number One has opened for use by all ChecOKard holders in this area. The on line ATM reportedly is the only such facility in the city and is lo cated in the downtown metro Con course beneath Liberty Tower. With a ChecOKard and secret ID number, ChecOKard holders of 11 participating banks are able to make deposits to and withdrawals from checking accounts and may receive checking-account-balance informa tion. By June 15, holders of the cards also will be able to deposit to or withdraw from savings ac counts or transfer funds between savings and checking accounts. Elec tronic check verification and guar antee services also are provided at 50 merchant locations. The new center operates seven days a week and customers can withdraw as much as $100 daily. Banks participating in the ChecO Kard program are American Nation al and Security Bank, both in Mid west City; Choctaw State; Del State, Del City; First National, Moore; Park State, Nicoma Park; and these Oklahoma City banks: Liberty Na tional, Medical Center State, Shep herd Mall State, Southwest Plaza Bank and Quail Creek Bank. ChecOKard is a full-service elec tronic on-line computer banking capability of National Sharedata Corp. While operating in the Okla homa City area initially, any bank in the state may join the program. Administration, the Oklahoma Indus trial Finance Authority, FHA and other lenders. The corporation is presently working on projects representing more than $3 million for firms expanding in Okla homa communities. Priorities for 1976 include raising an additional $152,000 from business and industry to increase the corporation’s loan potential to $5 million and to per mit the corporation to be certified by the Small Business Administration. The second priority is signing up additional bank members. Elected to head the OBA for the coming year were the following: Presi dent—Pat Moore, president, American State, Thomas; chairman-—Tracy Kelly, chairman and president, American Na tional, Bristow; president-elect—Walt V. Allison, chairman, First National, Bartlesville; treasurer—John V. Ander son, president, First National, El Beno. Mr. Moore, in his acceptance ad dress, raised doubts about the future of the American society. He said the at mosphere that appears to prevail re garding the free enterprise system deep MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ly concerns him. He pointed to the new and more re strictive regulations being imposed by regulatory, bureaucratic and consumer agencies. He said these regulations have become so heavy “that I some times fear we bankers and our counter parts in the productive economy will surely collapse.” He said that compliance with the regulations boosts costs, erodes profits and shrinks capital ratios. He said bankers have been quiet about overregulation for too long. “Too long have we been quiet about the burdens of an over-expanded, deficitfinanced bureaucracy. Too long have we been quiet about the part we have played in making this republic the most affluent in history.” # • ■ JOHN H. G REER has joined Shep herd Mall State, Oklahoma City, as sen ior vice president. He has been in bank ing in the area for 12 years, serving in the areas of real estate, data processing, BankAmerieard and commercial loans. ■ BANK O F OKLAHOMA, Tulsa, has promoted Dennis Brand and John Rownak to assistant vice presidents. Both joined the bank in 1973. Jack Stephens has been named personnel officer, and R. Allen Nelson Jr. has been elevated to systems officer. They joined Bank of Oklahoma in 1975. • JOHN M. REARDON, president, Southwestern Bank, Oklahoma City, has been elected to the executive commit tee of the ABA’s Housing and Real Estate Finance Division. He will be in stalled following the ABA’s annual con vention in October. Fifth Loan Charge-Off Report Published by Robert Morris P H IL A D E L P H IA — Robert Morris Associates (RMA) has published re sults of its fifth annual survey of com mercial loan charge-off experience of its member banks. Statistics are for the year ending December 31, 1975. The report is divided into two sec tions, one providing data on domestic loans and the other on international loans. Included in the first section are gross charge-off, recovery and net charge-off figures, d is tr ib u tio n of charge-offs by numbers of loans and dollar amounts involved and a ranking of high-loss industries for the year. The data are grouped by bank asset size and by Federal Reserve district. The international section presents gross charge-off, recovery and net charge-off data for three bank-size categories, also giving an indication of aggregate charge-off e x p e r ie n c e by country and type of borrower. Sur vey reports of 110 banks were used in this section. 87 AT TEXAS BANKERS CONVENTION: Texas W ill Replace New York, California As Nation's Money Center, Gov. Says By LAWRENCE W. COLBERT Assistant to the Publisher iin P E X A S W ILL BECOM E the fi1 nancial center of the United States, surpassing New York and Cali fornia!” These bold words were the prediction of Texas Governor Dolph Briscoe Jr., a former Texas banker. His statement was part of a speech on fiscal responsibility of government and the Texas economy, d e liv e re d at last month’s Texas Bankers Association con vention in El Paso. This kind of optimism was also typi cal of several other convention speakers. Robert E. Barnett, newly installed FD IC chairman, spoke on the solidarity of the nation’s banking system. Michael Doman, regional administrator of na tional banks for the Eleventh Region, said that the national banks of Texas are healthy and vigorous. He cited the rapid growth of Texas banks but questioned why they had not progressed further in EFT S. El Paso again proved to be a gracious host to the convention. Approximately 1,450 registered for the 92nd annual meeting to enjoy the hospitality offered by El Paso and Juarez. Governor Briscoe said that govern ment spending at all levels has gotten out of hand. “The federal budget has quadrupled in just 10 years—jumping from less than $100 billion in 1965 to almost $400 billion in 1975. Next year, the federal government will spend twice as much as it did during our first 150 years as a nation.” He said that state government ap propriations in Texas for the current biennium are about $12.8 billion, up 250% from the $3.7-billion figure spent in 1966-67. “During this period,” he continued, “appropriations for public school edu cation have increased three-fold, wel fare has increased four-fold and higher education, five-fold. “The more we spend at every level, the more people we have to hire to spend it,” he said. “That’s a law of bureaucracy and it goes up proportion ately. As a result, state employment has jumped 199% from 1957 to 1974.” He said one out of every six Texas workers now works for the government at some level and the Labor Depart ment projects that, in the near future, one out of every four new jobs will be in government. “In my opinion,” he said, “we can not allow this to happen. It will lead us to bankruptcy.” He said that neither man nor govern ment can afford to live beyond its means. “We can no longer afford to Luncheon s p e a k e r A r t L in kletter poses w ith Jam es W . T u rn a g e , co n ven tio n e n te rta in m e n t ch., a n d exec, v .p ., El Paso N a t'l. BRISCOE KARN ES DOMAN trade our economic freedoms to the government in exchange for false prom ises of a better future. We can no longer naively assume that government has the power, the wisdom and the financial resources to solve every problem that besets our civilization. The fiscal prob lems currently confronting other state governments reaffirm such a position.” He described the fiscal plights of numerous other states and said, “I am determined that the state of Texas will not experience the fiscal problems of the nature that I have just described. We all recognize why Texas has not experienced these problems— our strong economy. “When other states were losing jobs, we were creating new ones by attract ing and expanding industry. The eco- N e w TBA officers in clu de (I. to r.) R. M . D u ffey Jr., ch.. Pan A m e ric a n B ank, B ro w n s v ille — tre a s .; S. R. G re e n w o o d , pres., Tem p le N a t'l— pres.; a n d C h a rle s L. C h ild ers, pres., Tyler Bank & Trust— v.p . 88 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 Howto sell^ billionayear inTexas andnevermeet the public. A look at one of the state’s fastest growing industries from First City National Bank. In Texas last year, gross sales were over $ 3 8 billion for an industry the public rarely sees — wholesale trade. This figure was strong enough to place Texas fourth in wholesale sales nationally, and sound enough to provide employment for over 2 6 6 ,0 0 0 residents. T h e largest distribution points are Dallas and Houston, but the nature of the more than 2 2 ,0 0 0 wholesale distributors reflects the strength and diversity of the entire Texas market. Categorically, this includes automobiles, agriculture, chemi cals, apparel, furniture, electrical goods, food, hardware, industrial machinery and equipment and lumber. These businesses and more contribute significantly to the healthy wholesale sales volume in the state. First City National Bank aids finan cially in the smooth flow of goods in the Houston area and across the state. We’ve learned a lot about the wholesale business this way. And what we know is yours for the asking. MID-CONTINENT BANKER fo r Ju n e, 19 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis We’re becoming involved with more and more industries every day. And we’re proving to correspondents that more ser vice is the result of more experience. Understanding business as well as bank ing has helped us become . . . A major financial strength behind Texas industry. FIRST CITY NATIONAL BANK OF HOUSTON 89 nomic climate here in Texas brought industry in while other states were taxing so heavily they were driving business and industry out. If we main tain our economic climate, Texas will become the financial center of the U. S.” FDIC Chairman Barnett commented on the agency’s problem list, which, at the time of the TBA convention, con tained about 370 banks, including na tional and state member banks as well as nonmember institutions. He said the number was increasing steadily all dur ing 1975, but that it now appears to be leveling off. Banks on the problem list represent only about 2%% of all in sured commercial banks, he said, but the total is at its highest level in 25 years. He added that the problem list totals reflect the condition of the economy, although there is a lag of about 12 months due to a lag in the examination and analysis process. Thus, he said, it is not surprising that now, about a year from the low point in the recession, we are at a high point on our problem list. If the current relationship follows previous experience, the number of banks on the problem list should get smaller later on this year. He said that those who say inade quate bank regulation was the cause of so many banks being on problem lists miss the point, since the reason so many banks are on the list is because regulators are doing their job and spotting the banks that are getting into trouble. He said regulators would continue to stress the importance of banks achieving adequate capitalization and he said the agencies will demand that loan, invest ment and operating policies and prac tices be reasonable ones. “Frankly, I believe the FD IC and the other regulators have done an ex cellent job of bank supervision during the past two or three years after the magnitude of the problems became ap parent to us,” he said. “Very large bank failures have been resolved by the FD IC working closely with the Comp troller of the Currency or the Fed with out the loss of a dime to any depositor and with only minimum disruption in the communities affected. Compare that with the result of the bank panics in the 1920s or early 1930s!” (See page 39 for an article based on Mr. Barnett’s remarks.) Mr. Doman spoke during the TBA’s national banking division meeting. He reported on the strong, but safe, growth of Texas’ national banks. He chided bankers, however, for a poor showing regarding the adoption of E FT S o p e r a tio n s in serving bank 90 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B ankers a n d w iv e s en jo y s h o p p in g trip to Pron o f C e n te r in J u a re z , w h e r e m a ria c h i b a n d g re e te d th em . A t le ft is Rex B. House, v .p . a n d m g r., corres. b a n k in g , T exas B ank, D a llas. customers. He said that a recent Comp troller survey indicated that, on a na tional level, 10% of the national banks had at least one automatic teller ma chine (ATM ) in operation, but that Texas ranks 26th in the percentage of national banks with ATMs. He said this low participation indicates a lack of convenience for bank customers. He said that the view that ATMs are money losers is short sighted, since that was true primarily on the part of the first banks offering ATM service. According to the Comptroller’s survey, banks that hopped on the E F T S band wagon within the last year or so have generally been satisfied. “Like it or not, the era of electronic banking— like the swine flu—is nearly upon us. An ATM now is almost like innoculation. It may be a pain in the arm but it can help you avoid sickness and that run-down feeling.” He said that customers are likely to conduct their business with the financial institutions that can service their needs most conveniently. He cited the in stance of one bank that averaged 2,400 transactions per month on its ATM to support the convenience claim. He also cited the extraordinary growth of thrifts in Texas, which is far in excess of 100% in less than 20 years. He said the deposit growth rate of S&Ls is exceeding that of banks. The proliferation of thrift offices is making it more convenient for customers to ob tain financial services. Thus, they are demanding more from their institutions. “Texas banks should be in the fore ground of the E F T S development,” he said. “Instead, they are at the bottom half of the states of the nation. Time may very well be running out for you if you wish to maintain your position as the dominant financial entity in the state.” Among the resolutions passed during the convention were proposals com mending the board of directors of TBA for vigorously opposing federal legis lation detrimental to banking; calling on the Texas congressional delegation to help restore constitutional balance to the powers exercised by the three branches of government; and a call to Congress to reclaim the legislative powers that have been usurped by many federal agencies. Newly elected TBA officers are S. B. Greenwood, president, Temple National—TBA president; Charles L. Childers, president, Tyler Bank— TBA vice president; and R. M. Duffey Jr., chairman, Pan American Bank, Browns ville— TBA secretary-treasurer. State banking division officers are Robert B. Lane, executive chairman, Farmers State, Clifton—chairman; War ren B. Duren, president, Mills County State, Goldthwaite—vice chairman; and M. L. Everett, president, Washington County State, B re n h a m — secretarytreasurer. New national banking division offi cers are H. Hart Nance, president, Citizens National, Waco— chairman; C. W. Jones, president and chairman, Mercantile National, Corpus Christi— vice chairman; and Gene H. Bishop, chairman and CEO, Mercantile Na tional, Dallas— secretary-treasurer. Outgoing TBA President J. B. Wheel er, president, Hale County State, Plainview, was elected to the ABA govern ing council. * * ■ MICHAEL ROY CROW has been named vice president of First City Na tional, Houston, going from the parent HC, First City Bancorp, of Texas, Houston, which he joined in 1972. At the bank, Joseph J. Zavislan has been elected trust operations officer; Jeanne von Hollerick Atherton, trust officer; and Nelson H. Creath, assistant vice president, petroleum and minerals de partment. Bank Opens 'N ew fangled' Window W a lte r H. W a lle ric h (r.), ret. v .p ., First N a t'l, Fort W o rth , w a s th e first custom er a t th e b a n k 's " n e w f a n g le d " w a lk - u p w in d o w in the e le v a to r lo b b y o f th e M o to r B ank. p a r k in g Looking g a ra g e on a r e a d ja c e n t to the Pam Co llin s a n d Jack F. D e m e tru k , s.v.p . & cash. The fu ll-s e rv ic e te lle r fa c ility has o p e n ed in itia lly fro m 2 -6 p .m ., M o n d a y -F r id a y . M r. W a lle ric h w a s in c h a rg e o f the b a n k 's o p e ra tio n s a c tiv itie s , w h ic h in clu d ed te lle rs , fo r n e a rly 4 4 y e a rs . He jo in e d th e b a n k in 1 91 2. MID-CONTINENT BANKER fo r Ju n e, 1 9 7 6 Everything about the portfolio added up. But the earnings. A correspondent bank faced a big problem. Their million dollar portfolio wasn’t per forming. And with rising expenses and de creasing loan demands, it looked like they wouldn’t meet their income goals in the years to come. Faced with this dilemma, they came to a bank with a proven earnings record. First in Dallas. Where a team of Asset and Liability Management Specialists rolled up their sleeves. And got down to business. They started by looking long and hard at the bank. Where it was and where it was go ing. The debt structure, their customer pro file, and a dozen other factors. Then, after they knew the bank and the town, they used their market knowledge and the experience they had gained from manag ing their own portfolio to recommend changes. Like the wider spread between “agen cies” and “governments. ” A strategy for ad vance refunding maturities. And active man agement of both assets and liabilities. The result was a higher earning portfolio. One that was better geared to market condi tions. And supported by continuous, up-todate management strategy. And all it took was good thinking. Based on 100 years of experience and a concern for the customer’s best interests. If that’s the kind of creative thinking your bank needs, call Charles Dunlap, Vice Presi dent of our Correspondent Division at 214744-8030. Because at First in Dallas, good banking starts with good thinking. First National Bank in Dallas Member FD I C /A subsidiary Of I J . Hrst International Rancshares.Inc Kw Branch offices in London, Paris, Singapore and Cayman Islands. Representative offices in Tokyo, Sao Paulo and Beirut. MID-CONTINENT BANKER for Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 91 Kansas Bankers Advised to Keep Guard Up Against Financial Reform Act Repeat By LAWRENCE W. COLBERT Assistant to the Publisher T Z ANSAS BANKERS were advised not to lower their guard in de fending their industry from attempts at the federal level to impose odious legislation that would further constrict banking in the marketplace. The warning was given by ABA President-Elect W. Liddon McPeters, who is also president, Security Bank, Corinth, Miss. Mr. McPeters was one of the principal speakers at this year’s Kansas Bankers Association convention, held last month in Wichita. He reminded his listeners that Con gress seldom loses interest in any pro posal introduced in either house. If a bill is not enacted the first time it is introduced, he said, it will most cer tainly turn up the next year in a dif ferent form. Specific bills are only ve hicles that may disappear—but the is sues and concepts behind those bills are remarkably long-lived. This is certainly true of that package of proposals so inappropriately labeled financial reform,” he said. “Regardless of what happens in the rest of this ses sion of Congress, it’s a virtual certainty that these proposals will reappear next year when the new Congress takes of fice. The forces that generated this legislation (the Financial Reform Act of 1976) in the first place are stronger today than they ever were— and those forces guarantee the Congress will be considering major changes in our fi- nancial system for some time to come.” Making his first state convention appearance since becoming president of the Kansas City Fed was Roger Guffey. He said the convention theme— Caucus 7 6— seemed particularly appropriate because Kansas bankers are known for their proclivity to get together to dis cuss and clarify the critical issues af fecting banking. On the one hand, you are facing rapid development of electronic pay ments technology, with the associated impacts in your markets and operations. On the other hand, the industry is under attack through so-called reform legislation’ in Congress.” He cited the excellent work bankers had done in combatting the Financial Reform Act in Congress. He said that among the banking industry’s most able spokesmen has been Kansan Rex Duwe, current ABA president and chairman and president, Farmers State, Lucas. He called attention to the fact that the Fed, too, has been under attack and that the attacks have been incorporated into proposed legislation known as the Federal Reserve Reform Act. He said the legislation “strikes at the very heart of the traditionally independent Fed eral Reserve System.” While supporters of the legislation claim it would democratize the Fed, Mr. Guffey said he believes the legis lation would politicize the Fed and perhaps create a dangerous situation for the economy. He pointed out the lessons of what AB A Pres.-Elect W . Liddon M cP eters (I.) poses w ith J. R. A y re s, KBA pres., f o llo w in g M r. M c P eters' ad d re ss to th e co n v e n tio n . happens when the m o n e y - c r e a t i n g process in a nation is taken over by political forces— the creation of money to finance politically desirable projects leads to inflation, the printing of more money and then rampant inflation. “Inevitably, the financial structure be comes so weak that the economy col lapses, and often, the political structure as well,” he said. Presiding Officer J. R. Ayres, presi dent, Citizens State, Miltonvale, in his president’s message, spoke of the ex cessive amount of bureaucratic inter ference and regulation that banking is faced with. “Banking has always been highly regulated,” he said, “but within the past few years the tempo has been ever increasing. At the present pace, we will soon be as highly regulated as the rail roads and public utilities.” He said all bankers were becoming aware of the difficult task of maintain ing profitable operations on the part of these over-regulated industries. He reviewed the problems facing banking and offered solutions that should enable bankers to cope with and meet the challenge of change. He said banks must plan and pre pare a card base if they want to fit into N e w officers fo r KBA in clu d e (I. to r.) C a rl A . B o w m a n , exec, v .p .; J. R. A y re s, p res., C itizens S tate, M ilto n v a le — ch.; Floyd V . Pinnick, pres., G ra n t C o u n ty S ta te , U lysses— pres.; E lw o o d M a r s h a ll, pres., H o m e N a t'l, E u re k a — pres.-elec t; a n d D u a n e M . S to sk o p f, ch. a n d pres., Ken d a ll S ta te , V a lle y F alls—tre a s . 92 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for Ju n e, 1 9 7 6 E x p erien ce Counts In C o rre sp o n d e n t B a n k in g at F irst N a tio n a l Our bank was only twelve years old when this picture was taken at the northwest comer of Main and Douglas in Wichita, Kansas. While our name has changed, the location is the same, as 100 years ago. This year is our Centennial. Another thing has not changed, and that is our interest in Correspondent Banking. Today, Jim Stanley carries on this tradi tion. So when you need help on trust services, check clearing, overnight investments, or overline loans, call him. 316-263-5711. F.D.I.C. FIRST NATIONAL BANK IN W IC H IT A Correspondent Banking Specialists Since 1876 MID-CONTINENT BA N KER fo r Ju n e, 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 93 the payments system of the future, to remain competitive and to provide ser vices to the public. Bankers should in vestigate the costs and services of the various E FT S providers. Bankers should cost-analyze their ser vices, then review their pricing policies and determine a fair and reasonable price for all services if they want to control their ever-increasing costs in today’s inflation-ridden economy. He said bankers should eliminate costly ac tivities that no longer meet the needs of customers. “How do we compete with insti tutions that are receiving favorable treatment under existing taxes, social laws and regulations?” he asked. By letting the facts be known to the voting public and representatives of govern ment, he said. He called on bankers to become activists and to let the truth be known about unfair treatment. He urged bankers to help legislators and congressional representatives who be lieve in the free enterprise system. He suggested Kansas BankPAC as a good vehicle to do this, since it offers support to free-enterprise candidates at the state and national levels. He termed a personal contribution to BankPAC an investment in banking’s future. In order to obtain relief from burden some legislative, administrative and regulatory strictures, Mr. Ayres recom mends that bankers become active in the political process. “Join hands with our farmer and business friends and en courage them to complain to the mem bers of the legislatures,” he said. Bankers can maintain and increase their share of the marketplace by de veloping more services that will help the public solve its problems. He mentioned estate planning as such a service and said it can meet the needs of the farmer, rancher and individual entrepreneur. He also recommended increased use of banking schools to keep staff people abreast of new developments in bank ing. Announcement of the Arthur W. Kincade award was made at the con vention. Starting at next year’s meeting, the sum of $10,000 will be awarded annually to the Kansas banker who has best exemplified the extension of credit on personal character and performance rather than on material collateral. The award is named for Mr. Kincade, who is chairman emeritus of Fourth National, Wichita. It is given by the family of R. H. Garvey. Mr. Garvey benefitted from Mr. Kineade’s support when seeking funds for ter minal elevators from Eastern banks. Mr. Kineade is said to have told the Eastern bankers that “R. H. Garvey will never 94 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Center; Elmer E. Heiman, president, Baileyville State; Robert W. Asmann, senior vice president, Fourth National, Wichita; Jay L. Jelinek, president, Munden State; and Howard K. Loomis, president, Peoples Bank, Pratt. * * ■ ROY A. EDW ARDS III has been elected vice president, Douglas County State, Lawrence. He joined the bank in 1975. A t the w e lc o m e p a r ty on th e o p e n in g n ig h t M ic h a e l G . G lass (I.) , pres., W ic h ita S tate, visits w ith M ic h a e l V . A s tle, v .p .. C e n tra l S tate, ■ MARK L. M ILLER has been pro moted to vice president and trust of ficer, Planters State, Salina. He has been with the bank three years. W ic h ita . M rs . G lass is a t rig h t. ask for a loan he can’t and won’t pay back.” Any Kansas banker is eligible for the award if he has been in banking a minimum of 10 years, has fulfilled the criteria of the award since 1970 and is not an employee of Fourth National. The award is administered by the KBA. New officers elected by KBA include Floyd V. Pinnick, president, Grant County State, Ulysses—president; Elwood Marshall, president, Home Na tional, E u r e k a —president-elect; and Duane M. Stoskopf, chairman and president, Kendall State, Valley F a lls treasurer. L. W. Stolzer, chairman and president, Union National, Manhattan, was elected to the ABA nominating committee and governing council. Six new regional representatives were inducted for three-year terms to serve on the KBA governing council. They are W. Max Meyers, president, Brother hood State, Kansas City; W. E. Oakes, president, State Exchange Bank, Yates New 5 0 -y e a r club inductees inclu d ed (s e a te d , I.) H. H. S n yd er, Lyons S tate, a n d L. B. C a m p b e ll, First N a t'l, M a d is o n . C h a irm a n o f th e 5 0 y e a r club a n d host fo r th e special luncheon w as Earl W ic h ita . Lesher (s ta n d in g , I.), Fourth N a t'l, Supervision-Regulation Reorganized by Fed; Leavitt Remains Director WASHINGTON, D. C.— The Federal Reserve System board of governors has announced a reorganization of its Di vision of Banking Supervision and Regulation. Continuing as division di rector is Brenton C. Leavitt. The action will realign senior man agement in the division’s three critical areas of responsibility: processing of banking applications, implementation of supervisory and regulatory policy and long-range special projects and financial analysis. To implement the reorganization, the Fed has announced these appointments to associate directors: • John E. Ryan, from assistant di rector. He will have overall responsi bility for the supervisory and regulatory policy functions. He joined the Chicago Fed in 1959, going to the board’s staff 10 years later. • William W. Wiles, from assistant director. Mr. Wiles will have responsi bility for processing of banking appli cations. He joined the board’s staff in 1964. • Ralph H. Gelder, formerly com missioner of business regulation for Maine. He will be responsible for longrange studies for improving supervisory function, financial analysis of HCs and examiner training. As part of this change, the Bank HC Analysis Program will be transferred from the Office of Staff Director for Management to the Division of Banking Supervision and Regulation, with function under Mr. Gelder’s purview. Mr. Gelder also was Maine’s superintendent of banking, 1973-74, and was with the New York Fed from 1960-73. The program will continue under the direction of Peter E. Barna, assistant director. MID-CONTINENT BANKER for Ju n e, 19 7 6 Now your customers can select from the New Kansas Bank Note J l K o N ( A m n n i a f c k a A brilliant full-color brochure that shows your customer exactly what every check will look like in full detail. The selection is complete and outstanding. Sixteen subtle scenic views of America, seven individualized standard safety paper choices, end stub checks, desk book checks and business checks in standard or cus tom design. Our wide variety of colorful covers are also shown in full color. The brochure is designed for easy reading with cap sule comments detailing the benefit features to your customer. It is a marketing and advertising strategy that not only enhances your bank image but should greatly reduce consumer selection time. Put a new spark in yourcustom er service and image Call orw rite for your brochure sample today. CHECK BROCHURE KANSAS BANK NOTE COM PANY FIFTH & JEFFERSON STREETS • FREDON1A, KANSAS 6 6736 • 316-378-2146 For your total bank printing needs. MID-CONTINENT BANKER for Ju n e , 1 9 7 6 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 95 Improve Image of Banking: Require Economic Education In Schools, Says MBA Pres. Bill M o n ro e NBC v e n tio n By ROSEMARY McKELVEY M anaging Editor PROPOSAL to improve banking’s image by making economic educa A tion a required subject in schools was put forth at the Missouri Bankers Asso ciation’s annual convention last month by incoming President Charles K. Rich mond. Mr. Richmond, executive vice president, American National, St. Jo seph, was following in the footsteps of his father, George U. Richmond, who headed the MBA 25 years ago. According to the new MBA presi dent, learning about this country’s eco nomic system is just as important as learning English or math and should be taught from the elementary school level through college or the university. It should be a part of our tax-supported educational system, he continued, and everybody would benefit, the general public as well as the business com munity. Although, in Mr. Richmond’s opin ion, deterioration of banking’s image has been overplayed, he does believe that for a number of years, banking’s image— and that of all business for NEW M BA OFFICERS P a t Lea. 96 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (I. to r.): p re s .— C h a rle s profit—has suffered. This situation hasn’t resulted only from abuses, said Mr. Richmond, but by a lack of under standing and appreciation of our eco nomic and free-enterprise system. Just as the deterioration has been slow, he continued, the solution won’t be achieved overnight, but bankers must address themselves to it. At this point, he made the suggestion about making economic education an integral part of the nation’s educational system. Mr. Richmond pointed out that sev eral organizations in Missouri are con ducting or sponsoring economic educa tion programs for young people, and he recommended that MBA members sup port such efforts. As an example, he cited the Missouri Council on Economic Education, which is developing what he described as an excellent program of teacher training, with a goal of mak ing economic education a vital part of the state’s public school system. It be hooves bankers, he advised, to not only support the council’s work, but also any effort that will accomplish this goal. Another area Mr. Richmond touched on was that of legislation or, more spe cifically, legislators. He pointed out that this year Missourians will be electing K. R ichm ond; v .p .— M ills H. A n d e rs o n ; tre a s .— (2 n d T elevision ta lk fro m I.), W a s h in g to n N e tw o r k , w ith visits a fte r M ills H. A n d e rs o n e d ito r, his con (I.), M B A tre a s . ( n o w v .p .) a n d p res., B ank o f C a rth a g e ; MBA P res id en t R ichard J. P fleg in g (2 n d fro m r .), p res., B ank o f St. A n n ; a n d Felix Le G ra n d , M B A e .v .p ., Jefferso n C ity. one senator, 10 congressmen, all their state representatives and many state senators. He said there are an unusual number of incumbents not running again, and he urged each convention delegate, regardless of political affilia tion, to support financially and work for candidates they believe understand or have a feeling for the problems fac ing our economy, not just the problems pertaining to banking, but also prob lems of fiscal responsibility, inflation, overreaction and over-regulation, candi dates who have an appreciation of the free-enterprise system. In his opinion, bankers have a real opportunity this fall to improve the legislative climate., | Mr. Richmond’s remarks came in his acceptance speech at the end of tlpe two-day convention. However, the twin themes of banking’s image and bankers’ legislative responsibilities also were dis cussed by Richard J. Pfleging, outgoing MBA president, as he opened the con vention. Mr. Pfleging, president, Bank of St. Ann, also pointed out how many members of the U. S. and Missouri legislatures will be elected this year. He said Missouri bankers this year have the responsibility to become involved in careful selection of new faces for at least 24% and up to 32% of their state senators and 17% of the state repre sentatives, excluding changes caused by incumbents possibly losing their bids for reelection. “We should carefully screen all can didates to be sure that we have found that one most understanding of our views,” advised Mr. Pfleging, “for we impose on our legislative staff in the Missouri Bankers Association the bur den of literally retraining and re exposing at least 20% of the elected offi cials to banking’s story. . . . “We must become deeply involved in the selection of the best candidates available to serve the best interests of the public and banking. And then we must actively participate both physical- MID-CONTINENT BANKER for Ju n e, 1 9 7 6 ß0@ CüCO D © G O ä Having one of our own people elected president of the Missouri Bankers Association is quite an honor. Not that we’re surprised. Charlie Richmond is the kind of man who is always willing to take on a little more than is required of him. So, we’re especially proud to see Charlie’s talent, ability and effort recognized and honored by the members of MBA. American National Bank St. Joseph, Missouri iliate of Ameribanc, Inc. MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Member FDIC 97 E x te n d e d -fa c ility b ill is signed in to la w d u rin g M BA c o n ven tio n by G o v e rn o r C h ris to p h e r S. Bond. Looking on in b a c k g ro u n d a re (I. to r.): M B A P re s id e n t R ichard J. P fle g in g , p res., B ank o f St. A n n ; P a u l M . Ross, ch., M B A G o v e rn m e n ta l Louis; M ills H. A n d e rs o n , M B A tre a s . (a n d A ffa irs C o m m itte e , and s.v .p ., First s e n ta tiv e A I N ilg e s (D .,B o u rb o n ) o f 1 2 6 th District, w h o w o rk e d fo r b ill's p as s a g e ; K. Richm ond, M B A v .p . (a n d n o w pres ), e .v .p ., A m e ric a n N a t'l, St. Joseph. ly and financially in seeing that they are adequately and fairly informed of the issues that affect banking on a dayto-day basis. L et’s not leave the job to someone else.” President Pfleging reminded conven tioneers of BANKPAC (Banking Pro fession Political Action Committee), Washington-based nonpartisan organi zation whose purpose is to support con gressional candidates favorable to bank ing’s objectives. He asked that dele gates donate funds, by personal checks, to this group. Mr. Pfleging gave two examples of what can happen when Missouri bank ers get involved in state and national legislation. The first was Missouri H. B. 1395, which was intended to provide necessary rate relief for the small loan industry, but, as he described the bill, was one that became burdened with fn d u c te d in to M B A 's 5 0 - Y e a r C lu b d u rin g r.): Fred H. Kruse a n d U n io n , St. n o w v .p .) a n d p res., B ank o f C a rth a g e ; S tate R e p re b o th C h arles some of the most difficult and unaccept able loan-collection provisions. When it became clear that the MBA couldn’t “get the bill cleaned up,” the associa tion wrote its members and spelled out the bill’s unacceptable provisions. The bankers, in turn, contacted their repre sentatives, and the bill did not pass. Mr. Pfleging’s second example was the Financial Reform Act of 1976. All state bankers associations met with the ABA in Chicago last March 1, and the MBA went home and drew up a game plan that resulted in "legislative hot line’ letters. Mr. Pfleging said that these letters resulted in about 800 let ters from bankers to Congresswoman Leonor Sullivan, other members of the House Banking and Currency Commit tee and other Missouri members of the House. He pointed out that bank di rectors wrote many letters, which had a n n u a l co n v e n tio n H e rb e r t M eckfessel, and o f N o rth last m o n th St. w e r e (b a c k Louis Trust; E d w in r o w , I. to R. S c hertze r, T o w e r G ro v e B a n k, St. Louis; a n d L eo n ard J. S c h rew e, First N a t 'l, St. Louis. (Fro n t r o w ): E d w a rd A . Schroeder (I.), T o w e r G ro v e B a n k; a n d Jam es H icke y, W e b s te r G ro ves Trust. AH a r e e x c e p t f o r M r. H ic k e y , w h o is s.v.p . & tre a s . o f his b a n k . 98 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis r e tire d , added impact because they represented a good cross section of Missouri busi nesses. In addition, a number of bank officers spoke before civic groups; at least five meetings were held with Mis souri congressional delegation members while they were home, and a group of St. Louis bankers met with Mrs. Sulli van. The MBA x-eceived copies of a petition with some 1,800 signatures on it. Although MBA members’ response to this crisis was gratifying, Mr. Pfleging added, it was by no means what they could have accomplished if all mem bers had used the opportunity. For example, he said, one letter from each bank to each Missouri congressional delegation member would have generated more than 8,000 letters. If each employee of the 700-plus Missouri banks signed the petition, according to Mr. Pfleging, there would have been 21,000 signatures on it. He referred again to the Financial Reform Act and warned that bankers may have to pull out all the stops again in the near future because it has been split into three separate packages—one on Federal Reserve reform, the second on the financial reform portion of the original bill (although this has been killed, for all practical purposes, for another year) and one on foreign bank branching in the U. S. In his talk, President Pfleging re ferred to the bad publicity commercial banks have been getting during the past year. He pointed out that when New York City defaulted on its bonds, it was banks that wei'e blamed for the city’s inability to sell any more of its “worth less” obligations. He also discussed the problem-bank issue and how a congres sional committee was almost successful in obtaining full public disclosure of highly confidential bank examination reports of many of the largest banks in the country. As Mr. Pfleging put it, "That hot potato came down to the final breath before the congressional committee holding the hearings decided not to seek a contempt of Congress citation against the Comptroller of the Currency for his refusal to reveal the contents of those reports. “You, no doubt, wonder, as I do,” lamented Mr. Pfleging, “if the govern ment will ever slow down in its serious and endless interference with the freeenterprise system that is the very fabric of American endurance. It seems that everything out of Washington falls into one of three categories, either repressive legislation that discourages the profit motive, oppressive taxation that directs capital to the state or inflationary fiscal policies.” He ended his repoit by saying that bankers can’t always be against some thing. They must learn to be an effec- MID-CONTINENT BANKER for June, 1976 "You do the impossible ultimately, the difficult, immediately." Joe Williams was a familiar figure in early Commerce days. Red-haired, nattily dressed, he was one banker who always seemed to remember your name. Joe Williams headed the Commerce Correspondent Department during the turbulent time of the 30’s. He later became president of the bank. Joe believed that Commerce bankers should do the impossible ultimately—the difficult immediately. That included pioneering the nation’s first 24-hour transit department in 1928. A transit department so complete that banks all over the country turned to Commerce for advice. It also included special attention to each and every bank we served. There was no end to what Joe believed could and should be done for his customers. Banking is more sophisticated today, but Fred N. Coulson, Jr. head of our Correspondent Department, still believes in complete service for our customers. Fred’s people become totally involved with the banks they serve. They continue to find new, innovative means to help correspondent banks. Maybe that’s why approximately one out of every ten banks in the country maintains a relationship with Commerce Bank of Kansas City. Commerce Bank, what can we do for you? fS iil * ! “ Commerce Bank o f b a n k in g o f Kansas C ity 9th & Main 234-2000 MID-CONTINENT BANKER for June. 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 10th & Walnut 12th & Charlotte Member FDIC 99 tive force in bringing forth new and better ways to serve the public un selfishly because that public is the only reason banks exist. “Thirty-thousand credit unions and S&Ls are waiting for us to falter,” Mr. Pfleging warned. “These are the oppor tunity years— use them or lose them.” The latter phrase, by the way, was the theme of the 1976 MBA convention. New Facility Law. Governor Chris topher S. Bond, who was the luncheon speaker on the final day of the conven tion, took the occasion of his appear ance before the MBA to sign into law House Bill 1198. The new law permits banks in second-, third- and fourth-class counties to locate facilities within 15 miles of the main banks, after obtaining approval of the commissioner of finance. The measure also allows banks to make loans at all facilities. During his talk, Governor Bond an nounced that Missouri is undertaking a national information campaign de signed to help attract new jobs for the state’s residents. He said the program represents a major new step of the “Jobs for Missourians” program he has made the top priority of state govern ment. According to the governor, the Divi sion of Commerce and Industrial De velopment in the Consumer Affairs De partment has retained the national pub lic relations firm of Carl Byoir & Asso ciates, Inc., New York City. He added that the Byoir organization, which han dled Kansas City’s “Prime Time” pro motional effort, was selected through a competitive process conducted by the division. Task Force Report. Mr. Richmond also was chairman of a special task force formed during the past year to study the MBA’s program and perform ance and how the association could serve its members better. In his report New 50-Year Club V.P. ST. LOUIS—Arthur H. Gidionsen, retired vice president, Tower Grove Bank, St. Louis, was elected vice president of the MBA’s 50-Year Club at its meeting during the asso ciation’s convention here last month. He succeeds D. D. Salveter, chair man and president, Bank of Crocker, who gave up the post because of illness. Jesse McCreery of Higginsville remains the club’s president, and J. Benjamin Courrier, commer cial banking officer, First Nat’l, St. Louis, continues as secretary. The 54 members present at the club’s get-together represented a to tal of 2,884 years in banking, and their combined ages totaled 3,887. The oldest member present was 84. 100 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ AN A FFILIA TIO N AGREEM ENT has been reached between Ameribanc, St. Joseph, and Peoples State of Spickard. Regulatory approval is pend ing. ■ JACK SUTHERLAND has been elected senior vice president, Mercan tile Bank, Kansas City. He joined the bank in 1973 and established the inter national department. M BA P residen t R ichard J. P fleg in g (I.), pres., B ank o f St. A n n , accepts p la q u e fro m H a rris o n F. C o e rv e r on b e h a lf o f M issouri b a n k s ' effo rts in p ro m o tin g C o e rv e r, U. S. p re s id e n t, sav in g s M e rc a n tile bond sales. Trust, St. M r. Louis, is A B A s av in g s bon d c o o rd in a to r a n d M iss o u ri sta te b a n k in g c h a irm a n . on the task force, Mr. Richmond said members determined that the MBA should serve in three interconnected areas—legislation, education and com munication— and in organization. He described how the task force sent per sonal letters to 693 bankers asking for suggestions and received 141 responses. He added that no recommendations could be made at this time, but some would be forthcoming by mid-summer. William H. Stephenson, who has been the MBA’s administrative assist ant, was given the new title of admin istrative vice president during the con vention. New Officers. Mr. Richmond was elected MBA president for the coming year. The new vice president is Mills H. Anderson, president, Bank of Car thage. Elected treasurer was Pat Lea, chairman and president, First National, Sikeston. ABA Officers. Elected to the ABA’s Governing Council were Mr. Pfleging and Charles W. Risley Sr., president, Excelsior Trust, Excelsior Springs. Mr. Risley headed the MBA in 1974-75. ■ RICHARD F. FORD, president and chief operating officer, First National, St. Louis, has been elected an advisory director, St. Louis Union Trust Co. Both are affiliates of First Union, Inc., St. Louis, of which Mr. Ford is execu tive vice president. H PARK BANK, St. Joseph, has under gone a name change to United Missouri Bank of St. Joseph, reflecting its affilia tion with United Missouri Bancshares, Inc., Kansas City. ■ C LIFFO R D PENERMON has been elected assistant vice president and sen ior installment loan officer of Gateway National. St. Louis. He will supervise collections and operations of the de partment. Mr. Penermon most recently was a collection department credit ad justor, Liberty Loan Corp., Clayton. ■ L E S L IE T. PROCTOR has been named a director of Commerce Bank, Columbia. He is the bank’s vice presi dent in charge of lending and previous ly served as a national bank examiner with the Comptroller of the Currency. ■ M ERCAN TILE NATIONAL, St. Louis County, has begun construction of its new facility in the Bellerive Ex ecutive Park. It will have 3,036 square feet of space, three drive-up lanes and a 24-hour automatic teller. Of a con temporary style, the building will have reddish-brown velour brick with verti cal panels of rough-sawn cedar siding and bronze glass. Completion is ex pected in mid-July. Consultant and construction manager for the project is Bank Building Corp., St. Louis, and Robert D. Katzenmeyer, a Bank Build ing associate. Died: Dale M. Lewis, 64, retired first vice president, St. Louis Fed, April 28. He joined the bank in 1926, ad vancing to assistant vice president, 1949; vice president, 1951; and first vice president, 1966. He retired in 1971. Correction An item on the First Timers page in the May I issue about David Culver, head of the regional bank ing division at First National in St. Louis, incorrectly listed his title as assistant vice president. Mr. Culver is a vice president. The editors re gret any misunderstanding that might have occurred because of this error. MID-CONTINENT BANKER for June, 1976 Now, at a Special LOW Price . . . This 3-Volume Marketing Library All Three Manuals ONLY $25.95 1. How to Plan, Organize & Conduct Bank Anniver saries. . . . The complete guide to procedure when holding a formal opening, an open house, any kind of bank celebration; 166 pages, many illus trations; 12 chapters starting with “First Things First,” ranging through “Add a Little Pizazz and Oom-pah,” concluding with “Expect the Unexpect ed”; eight appendices containing actual plans, budgets, programs used by banks in actual cele brations; a completely factual, step-by-step howto-do-it book now in its second printing. Regular Price: $16.00 2. How to Write Bank Publicity and Get It Pub lished. . . . The complete guide to procedure in writing publicity releases and how to prepare them so that newspaper and magazine editors will use them; 61 pages; 12 chapters with titles such as “Constructing the News Story,” “Placing the News Story,” “Handling ‘Sticky’ Situations,” “Dealing with News Media”; another completely factual, step-by-step how-to-do-it manual. Regular Price: $5.25 3. How to Plan, Organize and Conduct an Incentive Campaign. . . . Mid-Continent Banker’s newest how-to-do-it manual; a complete guide to proce dure in evolving an effective incentive campaign to sell bank services and/or increase bank deposits; MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 96 pages, 16 illustrations; starts by telling you premium terms and the history of incentives, roams through such topics as trade area studies, tying in with current events, getting new business from old customers, motivating staff members and conclud ing with a series of six case histories of actual bank promotions that obtained exceptional results. Regular Price: $10.95 MONEY BACK GUARANTEE—If not com p le te ly satisfied, re tu rn w ith in 10 days fo r fu ll refu n d . MID-CONTINENT BANKER 408 Olive St., St. Louis, Mo. 63102 • Please send us by return mail: — copies, Bank Celebration Book @ $16 each — copies, Bank Publicity Book @ $5.25 each — copies, How to Plan an Incentive Campaign @ $10.95 each — SEND ALL THREE BOOKS AT THE LOW PRICE OF $25.95 □ Check enclosed ........................... Name ........................................................ Bank Street i • Title ........ .. ............... * .................................................................................................... .................................................................................................. City, State, Zip ............................................................................... (Please send check with order. In Missouri, add 4'A % tax.) I - - - - -----101 Plans for EFT Network Are Unveiled At Annual Illinois Convention; Open to All Banks in State By ROSEMARY McKELVEY Managing Editor Plans fo r s ta te -w id e EFT n e tw o r k of ban ks w e r e disclosed by p a n e l consisting o f D a n ie l N . Q u ig le y (s ta n d in g ), IB A EFTS ch. a n d e .v .p ., N a t'l B o u le v a rd , C h ica g o ; M ic h a e l Sherin (fo r e REATION of an electronic funds transfer network for Illinois banks was announced during the annual Il linois Bankers Association convention in St. Louis last month. The new E F T program was unveiled during a pre sentation by Daniel N. Quigley, I BA E FT S chairman and executive vice president, National Boulevard Bank, Chicago, and two representatives of Peat, Marwick, Mitchell & Co.— Michael Sherin and Anthony Dilorio. The project was created as a result of an IBA-commissioned study made by Peat, Marwick. Mr. Quigley also is chairman of a steering committee, which will work on getting the pro gram in operation. The network will be a nonprofit cor poration operating on a cooperative basis, with member banks called pa trons. It will be open to all Illinois commercial banks, those in the Associa tion for Modern Banking in Illinois (AMBI) as well as in the IBA. Later, membership will be thrown open to other financial institutions, service bureaus, retailers, etc. Between Sunday, May 23, and Tues day, May 25, when the presentation was made, some 30 Illinois banks had pledged a minimum of $10,000 each in seed money to get the program under C way, Mr. Quigley said. He also asked that other Illinois banks do the same. There will be an entry fee, which will be a one-time-only charge, of from $1,000 to $2,500 per bank, with from 400-600 banks as charter members. The schedule for the network is: June 1, 1976, founders’ group to be orga nized; October, 1976, formalize the or ganization; May 1, 1977, run a tech nical acceptance test; then later, on a date not yet set, activate the network. This activization will be followed by a monitoring of the network’s activity. Future plans also call for the Illinois network to hook up with other similar networks. Phase I of the network should be check verification, according to the Peat, Marwick representatives. In leading up to the Peat, Marwick announcement of the new network, Mr. Quigley said that the IBA was going to “take one of the most aggressive steps in its history.” He pointed out that a large customer base is necessary for the success of E F T operations, and without considerable participation, no system is going to “fly.” He advised his listeners to look around them and they will see that needed customer base. “Personally,” continued Mr. Quigley, “I believe the way you handle the issue g ro u n d ) and A n th o n y D ilo rio , both of P e at, M a r w ic k , M itc h e ll. of E F T today will determine the future consortium approaches.” He criticized “those banks that have chosen proprietor roles without first attempting to seek a solution through association or consor tium approaches.” He said he believes that the IBA, through its approach, can offer banks more progressive and innova tive steps to E F T development in the industry. According to Mr. Dilorio of Peat, Marwick, his firm—in carrying out the E F T S study for the IBA—had consid ered three approaches— a “do-nothing,” a proprietorship, or “develop-your-ownsystem” approach, and the cooperative program, which the firm recommended to the association. Financial advantages of the latter, he pointed out, include minimizing initial capital commitments and operating costs and setting fees at actual costs. In addition, the nonprofit membership corporate form provides various advantages when seeking ap propriate Internal Revenue Service rul ings and other required regulatory agency approvals. There’s a primary risk in a cooperative E F T network, he warned, and it’s that organizers won’t generate sufficient membership to sup port the organization on a financial and operational basis. Under the cooperative form, as de scribed by Dr. Dilorio, user banks are the network’s owners, and control is ex erted through voting. Amendment to the Amendment. What started out to be a simple vote on a proposed amendment to the IBA con stitution during the last convention business session turned into a heated argument. The amendment, as original ly proposed, would have allowed the IBA to conduct all elections of officers N E W IB A OFFICERS: (I. to r.) tre e s ., J. D. Lem m e rm a n ; 2n d v .p ., B. F. B a cklu n d ; pres., Ray G. L ivasy; a n d 1st v .p ., John R. M o n tg o m e ry III . 102 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for June, 1976 IB A P re s id e n t A r th u r F. Busboom (r.) visits w ith IBA lu n ch eo n . P ictu red , 1. to r., w ith M r. B usboom , a re : 5 0 -Y e a r C lu b m e m b ers just N e ll H a y e s , re tire d , S o uth ern b e fo re Illin o is th e ir N a t'l, F a ir v ie w H e ig h ts; D. K. Farr, e .v .p . & cash., H e n ry S tate; Irm a M eckfessel, v .p . & t.o ., First N a t'l, O 'F a llo n ; E. L. Ju rg e n s, p res., S ta te B ank, A r th u r ; G la d y s D ey, Litchfield B ank; M e lv in C. L o ckard, ch.. First N a t'l, M a tto o n ; a n d John Pfister, Elm hurst N a t'l. by voice votes or secret ballots at the annual conventions, even when there were contests for offices. In the recent past, balloting has been done by mail. Reason given for submitting the pro posed amendment was that in 1975— even with a contest for the second vice president’s office-—only 423 ballots were cast, reflecting less than 44% of the membership. This year, it was noted, only 28% of the membership voted. In addition, it was said that mail balloting costs the IBA a lot in time and money. After the proposal was read by B. F. Backlund, president, Bentonville Bank, and incoming IBA second vice presi dent, opposition was voiced immedi ately by Arlan McPherson, president, Champaign County Bank, Urbana. He suggested that the amendment be amended to say that in the event there is only one nominee for each office, the election should be by acclamation at the convention and approved by voice vote of those delegates in attend ance. After some discussion and a little con fusion as to just what was being voted on, those present approved Mr. Mc Pherson’s amendment to the amend ment. In other words, IBA members will vote on new officers at their an nual conventions unless there’s a con test for one of the offices. In that case, balloting will be done by mail prior to the meetings. Resolution Also Opposed. Two re solutions were proposed at the conven tion, but one, like the above amend ment, ran into some flak in the person of Jack Marantz, president, Bank of Springfield. This amendment read: “Be it resolved that the Illinois Bankers As sociation make every reasonable and appropriate effort on the state and na tional level to assure for Illinois’ banks operational parity with other financial intermediaries in the matter of their ability to serve the economic needs of the citizens of Illinois.” Mr. Marantz voiced disapproval of the resolution on the grounds that it was illegal and against the IBA consti tution. Some conventioneers evidently thought it would allow a change in the state’s banking structure, even to per mitting branching. At that point, IBA President Arthur F. Busboom, presi dent, Bank of Rantoul, assured every one that any proposed structural change would have to be approved by mem bers in a mail ballot. He indicated that the resolution merely meant that Il linois banks should have the right to try to have the same interest-paying abilities and taxation as their competi tors in the financial field. However, in a voice vote, convention delegates turned thumbs down on the resolution. The second resolution proposed fared better and was approved. It asked that the IBA review present Illinois usury statutes and, where necessary, encour age and promote corrective legislation. The President’s Report. In giving his presidential report to conventioneers, Mr. Busboom alluded to comments he made in the May 15th issue of M id C o n t in en t B an k er in which he dis cussed loan losses. He said he suggest ed that many banks under pressure to satisfy stockholders, depositors or good customers had failed to use discretion in making some loans, thus leading to bad loans and problems in operations. His conclusion was that bankers can’t rely on anybody but their own man agements to police these difficult situa tions and solve them before they start. In effect, he continued, bankers must determine sensible profit goals based on sensible and observed operational poli cies. Mr. Busboom said his purpose was not to praise his analytical abilities as to individual bank problem situations, but to wonder if some of these same ideas aren’t applicable to the banking industry as a whole. “While we may never be able to solve the individual problem bank situation,” he said, “I am convinced we can solve the problem banking industry situation. In fact, we must solve this Rin- sp ecial a g e n t in c h a rg e , FBI, C h ic a g o , w a its to m a k e a p p e a r a n c e b e fo re f r e t, R in fret-B o sto n A ssociates, Inc., c o n v e n tio n s p e a k e r. CENTER: IBA Pres. A r th u r F. B usboom (I.) goes o v e r p r o g r a m w ith a n o th e r s p e a k e r, co n ven tio n . W ith him is J. R. M o n tg o m e ry I I I , w h o m o v e d up fro m IBA LEFT: R o b e rt C. S c hrim ple (I.), R e p re s e n ta tiv e John B. A n d e rs o n IB A e .v .p ., (R .,lll.). visits RIG H T: w ith R icha rd MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis P ie rre G. A. H e ld 2 n d v .p . to 1st v .p . d u rin g c o n ven tio n . (I.), 103 situation if we are going to survive either as an industry or as individual banks.” The IBA president contrasted bank ing as it was when many of the del egates started out and as it is today. He pointed out how, formerly, a bank er’s major concern probably was just keeping the doors open, but now it’s different: Banks don’t compete among themselves; they must contend with S&Ls and credit unions, with many S&Ls surpassing banks in size. How ever, he pointed to banking’s biggest problem—an ever-expanding federal authority that seems bent on preempt ing all state and local control and all individual decision making. “Washington has created such an alphabetical jungle for us to work through,” according to Mr. Busboom, “that bankers are becoming concerned when they will have time to concen trate on banking. We have ERISA, RESPA, O SH A /EED A , FIA, FIN E, ECOA and just about any other com bination of letters to consider.” What does all of this mean to Illinois banks, he asked, and answered by say ing that they had better start hanging together or they will be hanging in dividually. He suggested that banks follow the example of the world’s reli gious groups, which—back when every one agreed there was a God and Hea ven—fought over who had the most workable set of keys for entry thereto. But, he said, when organized groups dogmatically proclaimed that neither exists, the religions began looking for their points of agreement more than their points of disagreement. He then proposed that unit-bank ad vocates and branch-bank advocates work together in public on mutual problems and still debate their opin ions on structure. Even though a dif ference on structure does exist, he said, Illinois banks should put up a united front and start winning their battles against encroaching competition and regulation. New President’s Address. Like Mr. Busboom, the incoming president, Ray G. Livasy, president, Millikin National, Decatur, alluded to the difference be tween banking today and in other times. Whereas there was little real criticism of banking years ago, he pointed out, today the criticism is a bit more pointed and a great deal better organized. Also, today, he continued, government involvement in banking and business affairs not only is wide spread, but taken for granted. He also discussed banking’s image and how ev erything that happens in this field is dutifully, almost eagerly, reported in the general press. As an example of how well known the financial establishment has become, he pointed to a recent poll that showed Fed Chairman Arthur 104 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ GEORGE ARQUILLA JR., presi dent, Burnside Construction Co., has been elected c h a irm a n , H e rita g e Olympia Bank, Chicago Heights. Named directors were Scott Hunter, bank vice president, and Bruno V. Valente, vice president, industrial division, Heritage Bancorp., Inc., Chicago, parent HC. Mr. Arquilla also is a director of Heri tage/ Pullman Bank, Chicago, an af filiate. Mr. Hunter joined the bank in 1965, the vear Mr. Valente joined the HC. LEFT: A r la n M cP herson, C o u n ty B ank, U r b a n a , is p res.. sh o w n C h a m p a ig n vo icing o p p o s itio n to v o tin g p ro c e d u re a m e n d m e n t to IB A co n stitu tio n p ro p o sed d u rin g c o n ven tio n . R IG HT: W illia m C o lb y , fo r m e r C IA d ire c to r, sp eaks a t luncheo n session o f IB A co n ven tio n . Burns being voted the third most in fluential man in America, behind only President Gerald Ford and Henry Kis singer. Mr. Livasy suggested that bankers establish a rapport with newspaper edi tors and reporters assigned to their in stitutions, that they be willing to be candid, objective and indulgent with the fact that these editors and report ers know little about business and even less about banking. “I would count it a major accom plishment,” he continued, “if 100 of us would take time to visit, on our own initiative, our news editors or reporters this year.” New IBA Officers. During the final business session, Mr. Livasy advanced to IBA president; John R. Montgomery III, president, Lakeside Bank, Chicago, became first vice president; Mr. Backlund, second vice president; and J. D. Lemmerman, president, National Bank of Monmouth, treasurer. ABA Election. Elected to the ABA’s Governing Council for two years were Mr. Livasy; Gavin “Guy” Weir, presi dent, Chicago City Bank; and Ray mond C. Burroughs, president, City National, Murphysboro. * • ■ A GROUP of investors, headed by Patrick C. O’Malley, has purchased controlling interest in OPAR Corp., a one-bank HC with First Bank, Oak Park, as its primary asset. Other in vestors in the group are Ronald R. Curcio, Ronald J. Farmer, Robert S. Kosin, Ronald Melina, Melvin S. New man and Andreas Tegtmeier. Mr. O’Malley has been named bank chair man and CEO and James R. Frankel and Raymond O’Laughlin have been elected directors of First Bank. Gwendalyn Ragans has been elected assistant cashier, customer service department. She has been with the bank three years. ■ HAL E. CLEVIN GER, formerly of Merchants National, Topeka, has joined Central National, Sterling, as vice president and senior trust officer. Judith A. Fisher also has joined the Central National staff. She formerly was with Whiteside County Bank of Morrison and has been named assistant cashier-operations. ■ RO BERT J. HILDEBRAND, vice president and trust officer, Granite City Trust, has been elected president of the Illinois Bankers Association’s Trust Di vision. His term commences July 1. Other Trust Division officers elected were: Charles G. Dalton, Chicago Title & Trust Co.— first vice president; Ever ett Kassing, assistant vice president and trust officer, First National, Belleville— second vice president; and Donald X. Murray, assistant secretary, IBA, Chi cago—secretary. Named to a three-year division executive committee term was John Finnegan, senior vice president and trust officer, Mid-City National, Chicago, while Charles H. Flanders of IAA Trust Co., Bloomington, was elect ed to a two-year executive committee term. a DULANEY NATIONAL, Marshall, has moved into its new building. The bank’s exterior is colonial in style, and its interior, which has 4,248 square feet of space, features a 34-foot mural, “The War of Independence,” which originally was printed in 1852 from 1,700 wood blocks. All furnishings, fabrics and paint used in the bank fol low the style of historic Williamsburg, Va. More than 2,500 visitors attended Dulaney National’s two-day opening ceremonies, which included drawings for 35 door prizes. MID-CONTINENT BANKER for June, 1976 Must Reading for Every Director and Officer! These Three Board-Related Books (Including Revised Edition of Conflicts of Interest) Conflicts o f Interest $6.25 Responsibilities o f Bank Directors $ 4 . 9 5 Com position and Com pensation o f Bank Boards $4.25 (1) CO N FLICTS OF IN TE R E ST FOR D IREC TO RS AND O FFIC ER S OF FINANCIAL IN STITU TIO N S $6.25 . . . The new, revised edition includes everything directors and officers should know about the topic: Presents the problem of “conflicts,” gives examiners’ views of directors’ business relationships with the bank, examines ethical pitfalls involving conflicts, conflicts in trust de partments, details positive actions for reducing potential for conflicts. Other important data are the Comptroller’s ruling on statements of business interest of directors and principal officers of national banks and sample conflict of interest policies in use today that can be adapted by your board. N ew m aterial includes F D IC regulation on insider transactions. Q U A N T IT Y what is expected of them and the bank they serve in terms of responsibilities to depositors, shareholders and the pub lic. R esponsibilities examines recent court decisions, investment return, con tinuity of management, long-range planning, effects of structural changes —HCs, branching, mergers—on com petition, and more. Q U A N T IT Y $ 4 .5 0 e a . 1 1 -2 5 $ 4 .2 0 e a . 6 -1 0 $ 4 .3 5 e a . over 25 $ 4 .1 0 e a . (3) COM POSITION AND COMPEN SATION OF BANK BOARDS $4.25 . . . A statistical analysis of bank boards based on comprehensive surveys by the PRICES 2 -5 $ 5 .5 0 e a . 1 1 -2 5 $ 5 .0 0 e a . 6 -1 0 $ 5 .2 5 e a . o v e r 25 $ 4 .7 5 e a . (2) R E SPO N SIB IL IT IE S OF BANK D IREC TO RS $4.95 . . . Written by Raymond Van Houtte, president & CEO of Tompkins County (New York) Trust Co., this book is “right” for to day’s problems. Due to the economic influence banks have on their commu nities, the rapid growth of holding companies and the ever-growing “con sumer” movement, directors must know MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis PRICES 2 -5 author, Dr. Lewis E. Davids, editor of The BANK BOARD Letter. This book will give the reader an insight into the variety of occupations represented on bank boards; the number of inside and outside directors; frequencies of meet ings; salaries paid. Also included are many tables, showing retirement ages for directors, per-meeting and annual fees, highest paid directors, etc. De signed to help you make comparisons and put your board structure and fees in proper perspective. Q U A N T IT Y PRICES 2 -5 $ 3 .8 5 e a . 1 1 -2 5 $ 3 .3 5 e a . 6 -1 0 $ 3 .6 0 e a . o v e r 25 $ 3 .1 0 e a . THE BANK BOARD L ET T ER 408 Olive St., St. Louis, Mo. 63102 Send These Books: ................................ copies, Conflicts of Interest ................................ copies, Responsibilities of Bank Directors $ $ ................................ copies, Composition & Compensation $ Total enclosed $ Name ....................................................................... Title ........... Bank .................................................................................................. Street ................................................................................................ City, State, Z i p ................................................................................ (Please send check with order. In Missouri, add 4 xk.% tax.) 105 Same Ground Rules': Open, Unfettered, Free Competition Is Set As AMBI's Goal at Third Annual Convention By ROSEMARY McKELVEY Managing Editor LTHOUGH the Association for Modem Banking in Illinois (AM BI) A is only three years old, it has matured beyond its chronological age. This was made evident at AM BI’s third annual convention last month at the Marriott Lincolnshire Resort in Lincolnshire. AMBI was formed in 1973 by Il linois hankers who want structural changes in the state’s banking laws. When the Illinois Bankers Association refused to alter its stance against multi office banking and other changes, dis sident IBA members formed AMBI. The latter’s main purpose is to get the state legislature to change the state’s present unit-banking statute. AMBI’s 1976 convention showed that this is still the prime objective of the association. For instance, during the convention, members were exhorted to join AMBIpac, a voluntary, nonprofit organization whose members consist of AMBI bankers and others interested in changing Illinois banking law. Its pur pose, as outlined in brochures distrib uted at the meeting, is “to financially support those candidates for the Illinois General Assembly and state-wide office who promote improvement of banking so that multi-unit banking can be ac commodated in Illinois and to support those questions of public policy having the same objective.” AMBIpac funds will be distributed principally to candi dates—of either major political party— N E W A M B I OFFICERS: S e ate d (I. to r .)— v .p ., R o b e rt C. H u m p h re y ; pres., G e ra ld S in clair; tre a s ., W illa rd Bunn Jr. S ta n d in g (I. to r .)— exec, v .p ., P e te r A . R e illy; ch., Lester A. K assing. N o t pic tu re d a re : 2n d v .p ., Loren M . Sm ith; a n d sec., W illia m B. N o rto n . 106 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis for the Illinois General Assembly, but these funds also will be available to candidates for state-wide offices such as governor, secretary of state, etc. Contributions can come only from in dividuals, not from banks. Decisions on how to distribute the money collected will be made by AM BI’s Executive Committee, working with legislative representatives retained by the associa tion. These decisions will be based on reviews of candidates, their positions and, where applicable, their voting rec ords. However, AMBI does not limit its concern to legislative activities. It is establishing the Institute for Modern Banking, a comprehensive banker-edu cation program to be developed over the next three years. Loren M. Smith, president, United Bank of Illinois, Rockford, chairman of the Education Committee, said the program will focus on improving management and tech nical skills of Illinois bankers and will emphasize creativity and positive re sponse to change. The institute, which will feature con ferences, courses, seminars and work shops, will not duplicate existing pro grams of other organizations, but will cooperate to make such programs avail able to AMBI members. The institute’s School of Modern Bank Management, the first year of a three-year course, will be held at Brad ley University, Peoria, August 9-13. De signed for a class of 75 bankers, each of whom has a minimum of five years’ banking experience, the curriculum will deal with aspects of professional man agement. Any places not filled by AMBI members will be open to non member banks. Along the same line, AM BI’s Trust Committee—headed by Kenneth Roeh, vice president and trust officer, First National, Rockford— will have its first Trust Seminar on the last two Fridays in October, one in Chicago and the other in Springfield. Subjects will be “Probate Administration” and “Taxa tion of Trusts and Estates.” MID-CONTINENT BANKER for June, 1976 LEFT: W a lte r J. C h a rlto n (c.), pres., First Trust, Kankakee, m o d e ra te s (I. to r.), M r. S w an so n ; J a y K. Buck, s .v .p ., N o rth e rn Trust, C h ica g o ; p a n e l on c o m p e titio n a n d co n strain ts d u rin g A M B I co n ven tio n . Panelists Jam es Cassin (m o d e r a to r ), s.v .p ., First N a t'l, C h ica g o ; a re : R o b ert P. A b a te (I.), p res., Elgin N a t'l; W illia m D. P le c h a ty (2n d fro m I.), s .v .p .. C o n tin e n ta l B a n k, C h ica g o ; G e o rg e E. P h a le n , e .v .p ., e .v .p ., S alem N a t'l; a n d A lb e r t R. Im le , A M B I le g is la tiv e re p re s e n ta tiv e , S p rin g fie ld . M r, Im le to o k p la c e o f scheduled p a n e lis t, R o b ert B. M a h e r , First N a t'l, Boston; a n d A r th u r "R o n " S w a n s o n , A M B I le g is la tiv e re p r e also A M B I le g is la tiv e re p re s e n ta tiv e . G e ra ld S inclair, s e n ta tiv e , S p rin g fie ld . RIG H T: P o litical a c tio n scene p a n e l m em b ers a re AMBI also will try to educate the public. Lester A. Kassing, president for 1975-76, told the convention that the association had commissioned the mak ing of a 16mm film that should be ready within 90-120 days. The film will last 15 minutes and will be shown to all kinds of consumer groups. Mr. Kassing, president, Jefferson Trust, Pe oria, said its purpose is to let such groups know that the structural changes AMBI wants are in the public interest as well as in banking’s. President’s Report. Mr. Kassing opened the convention with a talk that showed he was optimistic about the fu ture, saying that “the majority of signs now seem to register on the plus side.” However, he also issued a warning by comparing banking to a garden which could be invaded by competing thrift institutions. As he put it, “As we sniff these sweet-smelling roses of better times . . . we dare not neglect to moni tor the bees who also are coveting our garden, lest their unexpected sting of encroachment catch us unprepared. “I submit that the horizon is grow ing indistinct. Swarms of bees covet ing our flower beds are disturbing our vista today. They are stronger, cleverer and closer on the horizon than they were just five short years ago. “Planning for our banks’ futures and their reasonably reliable capital strengthening through earnings has be come awesomely complicated, because of the geometrically increasing host of outside forces which seriously affect us. Yet, we bankers have expressed little effort to control most of these forces. W e’ve been reacting, not initiating. “We note the ravenous appetites of our savings and loan friends. We are beginning to sense the muscle flexing of the credit unions (probably the next to be viewed as the ‘darlings’ of the fi nancial intermediaries . . . a role the S&Ls have recently enjoyed). W e hold our breath expecting the nonfinancials to carve out a plot of our garden with new savings/in vestment instruments. And we seem content to wilt under the load of governments at all levels that have an increasing propensity to heap more stifling legislation and regulation upon us. “As this government interference ac cumulates, many of our businessmen’s alternatives will disappear. These arti ficial constraints act to paint us into a corner. No longer will we have the luxury of choosing between several business alternatives. Innovation would . . . be circumscribed. Development of new customer-pleasing services at cus tomer-attractive prices might be dis couraged. Our retention of market shares could suffer measurably.” Mr. Kassing then asked his audience where this will lead bankers and an swered: “Unless some unforeseen hur dle appears on the scene, I can envi sion the nonbank financial segments ef fectively rewriting the history of retail banking over the next several years.” He referred to the Financial Reform Act of 1976 (shortly after his talk, it was announced that the proposed act had, in effect, been killed because of lack of support in the House Banking and Currency Committee). According to Mr. Kassing, thrift institutions are getting many of banking’s powers even without the act. These institutions, he maintained, probably will delight in launching their “full-service personal banking program with price-cutting leaders” and will sustain such a cam paign for several years. He reminded his listeners of how lethargic most re tail accounts are, but asked, “Will those customers be able to resist ‘such a deal?’ ” Once such customers are lost to commercial banks, he warned, how will banks get them back without serious impact on their earnings and capital positions? The AMBI president then advised conventioneers to create their own scenarios, to look at the hard prob abilities, possibilities, then begin initi ating instead of reacting. He also sug gested the following: MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “Strongly support AMBI, where, in concert, we can create positive pro grams and aggressively pursue them together . . . give special emphasis to exercising our leadership roles by be coming more involved with our elected representatives. Take your thoughts and your positions to them.” He recommended that they remem ber that the theme on which AMBI is based promotes a climate of open, un fettered and free competition. Accord ingly, he added, it’s somewhat incon sistent for AMBI members to set up legal roadblocks for nonbank competi tion. Rather, he said, “we want to open up fuller competition. We want the same ground rules; we need to em phasize a positive tone.” 50-Year Bankers. At the closing luncheon session, Mr. Kassing an nounced that the following AMBI mem bers had become 50-Year Club mem bers: Melvin Lockard, chairman, First National, Mattoon, Mattoon Bank and First National, Cobden, and vice presi dent, Cumberland County National, Neoga; Viola E. Korn, vice president, Drexel National, Chicago; Joseph Bryac, Continental Bank, Chicago; Michael Mercario, Northern Trust, Chicago; and Vallie Flack, president, Bank of Ziegler. John Perkins Endorsed. Mr. Kassing also announced that AMBI—through its Executive Committee—has endorsed John Perkins for ABA president-elect in 1977. Mr. Perkins is president, Con tinental Bank, Chicago. New Officers. At a board meeting following the close of the convention, the following officers were elected for 1976-77: chairman, Mr. Kassing; presi dent, Gerald Sinclair, executive vice president, Salem National; vice presi dent, Robert C. Humphrey, president, State National. Evanston; second vice president, Loren M. Smith, president, United Bank of Illinois, Rockford; sec retary, William B. Norton, president, First National, Morris; and treasurer, Willard Bunn Jr., chairman, Springfield Marine Bank. • * 107 Financial Reform (Continued from p age 36) the consumer a painful education in the value of his dollars and makes him aware that interest rate regulations penalize the small saver when rates rise above Regulation Q ceilings. It aggravates every economic problem that we face in trying to increase eco nomic productivity and create full em ployment. Inflation is a major considera tion in every piece of financial legisla tion considered in Congress. Certainly, an equally important force driving us toward change is the tech nological revolution represented by computers and electronics. It’s difficult to overemphasize the impact of the computer on banking. You can get some idea of its scope, however, if you stop to think for a moment where our bank ing system would be today if we had to sort and handle all the nation’s checks by hand. And the computer did much more than simplify services bank ers were already offering. It opened up whole new areas of banking ser vices to the public. The coming of electronic funds trans fers could do much the same thing. The day of the automated point-of-sale terminal is fast approaching and auto mated tellers are already realities. These machines cut down on the need for paper checks, but they also make it possible for bank customers to gain instant access to their savings accounts — in effect, turning their savings ac counts into electronic checking accounts for payment of their bills. Clearly, these machines could make irrelevant the whole question of paying interest on demand deposits. E F T S could sharply reduce the cost and time of transferring funds from one account to another— in other words, no more float. That change alone has enormous implications for the future of banking. And consider the implications of these machines for branching. It’s possible that an extensive system of off-premise electronic machines might make extensive b r ic k s -a n d -m o r ta r branch systems obsolete. But perhaps the greatest force for change in our financial system is the passage of time itself. Our world has changed drastically since the 1930s, when most of the major banking legis lation under which we operate today was enacted. Our economy has grown and changed in nature. Our society’s priorities have been altered. Our popu lation is more mobile. The communica tions revolution has minimized regional differences and increased worldwide interdependence. And banking itself has gradually changed to take these and other changes into account. All of these forces— the importance of housing as a social priority, the grow ing strength of the consumer move ment, inflation, the technological revo lution and the passage of time itself— all are generating pressure for major changes in our nation’s financial sys tem. And this pressure is felt most strongly by Congress, bank regulators and bankers themselves. Indeed, the pressure is so strong that, regardless of what happens in this session of Con gress, many of the issues and concepts now being called “financial reform” will be high priority on Capitol Hill for years to come. That is why we, as bankers, cannot rest on the defeat of the so-called bank ing reform legislation in this session of Congress. We must look much further ahead. And we can begin by looking to our relations with the members of Con gress who will be shaping next year’s legislation. It is impossible to overemphasize the importance of political involvement for bankers this year. The future of our industry may well depend on it. Part of that involvement should be financial—either through BankPAC or through direct contributions. And, as bankers, we can do much more through our political action committees. But political contributions by them selves are not enough. They can help elect men and women who we believe will give a fair hearing to the complex issues of banking. But we, through our own continuing efforts, must make sure that those we help to elect get com plete and accurate information on bank ing issues when they need it. And that means a personal commitment on the part of every banker. We saw how ef fective that commitment could be this spring when ABA voiced the industry’s total opposition to the mislabeled fi nancial reform legislation. Letters and phone calls from bankers all over the country helped kill the omnibus Finan cial Reform Act in the House. Now we must continue our efforts to make sure this bill, in some other form, is not enacted before the close of the 94th Congress. And we must re double our efforts next year when fi nancial reform legislation will almost certainly return for an encore. Andrew Jackson was famous for getting his words confused but making his intention clear. According to legend, he stood behind the cotton bales at the battle of New Orleans. And, as the British drew near, he gave the historic command: “Elevate them guns a little lower!” The command was a little con fusing, but he got his point across: Shoot the enemy, both high and low. The strategy was effective. L et us try to apply that same kind of strategy as we continue to oppose legislation— wherever and whenever it appears—that is manifestly designed to perpetuate the competitive imbalances in the existing financial system. Our efforts should not be directed toward preserving the status quo— that’s an unrealistic objective and one that I think few bankers really want. Indeed, I think bankers can be proud of their efforts over the past several years to support positive legislation that genuinely serves the public in terest. Now we must apply that same kind of positive approach to legislation that will truly allow all financial insti tutions with the same powers to com pete effectively and flexibly, under equal ground rules, to serve the public interest. That is true financial reform. The future of our industry—and our ability to serve the public effectively— depends on our ability to communicate that message to Washington. * * FARMERS GRAIN & LIVESTOC HEDGING CORP 24 Hour Toll Free Telephone Service Weekly Confidential Market Report Marketing Seminars conducted for Clients in Your Area WRITE OR CALL FG L 1200 3 5 th St, W est Des M o in e s . Io w a 50265 515 2 23 -2 2 00 10 8 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for June, 1976 B ill H ellen, a banker's banker. Correspondent Bankers Bill Hellen has arrived — bringing a new face and a further expansion of expertise to our Correspondent Bank Department. He is, yo u ’ll find, w ell-grounded in all the services we offer our co-banks, with particular emphasis on the investm ent area. Call on him, to help fit your financial needs into our capabilities —fast. (918) 584-3411 Charles M cNam ara BANK OF OKLAHOMA Charles Rice D epartm ent Manager P.O. Box 2300 / Tulsa, Oklahoma 74192 MID-CONTINENT BANKER for June, 1 976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 109 Regulatory Reform (Continued from p age 38) would review the competitive factors. If, in the judgment of the banking agency, the merger was defective in terms of banking factors, then the agency would have the authority to prevent it. The Justice Department could, as it does now, file suit under the antitrust statutes to stop the merg er within the time period. Another area of redundancy has been underscored by the recent highly publicized efforts of the SEC with re spect to disclosure of financial informa tion by large HCs about to go to the market with debt issues. Congress made a determination that banks should be exempt from the registration re quirements of the Securities Exchange Act of 1933. That decision was un doubtedly based on the belief that the special expertise of the bank supervi sors would better protect investors, on the idea that the disclosure of the sort mandated by the securities laws was incompatible with the maintenance of confidence in the banking system and, perhaps, on the political clout of banks at the time. Whatever the reason underlying this scheme or its merits, the rapid evolu tion of the HC and its dominance of banking have served to nullify it. So long as HC systems finance through the HC rather than the bank— and that has been one of the attractive features of the mechanism—bank exemption from SEC jurisdiction is meaningless. Congress should face up to this fun damental anomaly in the law and vest jurisdiction for the protection of inves tors in bank securities in either the SEC or the banking agency or agen cies. The failure to do so will lead to further duplication of time and effort as well as further conflict and confusion. J have focused upon the administra tion of the securities laws and the Bank Merger Act not so much because the redundancy involved in each leads to “bad” or ineffective regulation, but be cause they illustrate so clearly the ex tent to which we have all come to ex pect, and live easily with, needless and wasteful government when the same re sources could be employed to achieve meaningful and needed results. At best, as in the review of merger cases, the result of duplication and overlap in governmental function is waste and inefficiency within the gov ernment. At worst, as in the area of HC supervision, the result is increased costs and burdens upon those regu lated and their customers, confusion of — NOW YOU MAY NEVER HAVE TO BUY T-BILLS AGAIN . . . TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES Companion to Money Market Management, Inc. \ * Invested exclusively in U.S. Government Securities maturing in one year or less. * Provides the yields of various government issues with different maturity dates. * No minimum holding period. * Stability of principal — constant net asset value $1. * Portfolio priced at amortized cost. * Provides first day’s interest; dividends 365 days a year. * Telephone transfer of monies. * No charges to buy No charges to sell. M in im u m in v e s tm e n t: $100,000— 90 day a c c u m u la tio n p erio d . C u rre n t a ssets exceed $75,000,000. For more complete information on TRUST FOR SFIORT-TERM U.S. GOVERNMENT SECURITIES management fees and expenses, call our Bank Service Desk. Ask for our literature and prospectus. Be sure to read before you invest. Call toll free: 800-245-2423. FEDERATED SECURITIES CORP. Distributor . Dept. ST-4 421 Seventh Avenue, Pittsburgh, PA 15219 1 10 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis responsibilities, and, most importantly, regulation that is far less effective than it might be. Finally, and most importantly, any serious effort at regulatory reform must be based upon an analysis of the ob jectives and functions of the entire bank regulatory framework. Congress has assigned to the bank ing agencies and to other agencies of the government—such as the Justice Department, the FTC and the SEC— a host of functions, including, among others, the promotion of economic sta bility through the administration of monetary policy; the protection of the safety and soundness of the banking system and individual banks through bank examinations and supervision; the protection of investors and the securi ties markets through fair and adequate disclosure under the securities laws; the promotion of competition; the pro tection of consumers; the enforcement of anti-discrimination laws; the regula tion of interest rates paid on deposits; and the amelioration of the effects of bank failures when they occur. As even the recitation of this partial list suggests, bank regulation is multi faceted. All too often, these several goals conflict, necessitating trade-offs in terms of both the allocation of re sources and the resolution of disputes. In order to understand, much less intelligently reform, the structure and content of bank supervision and regu lation, each of these functions and its relationship to other functions should be fully comprehended and evaluated. Indeed, it is quite likely that much of the recent controversy surrounding bank supervision is the result of mis understanding, confusion and sub merged disagreements as to the rela tive weights which are to be accorded the different functions involved in bank regulation. While the evaluation of each of these functions is a tedious and difficult process— and one for which the po litical crucible of Congress is especially ill-suited—it is essential if regulatory reform is to lead to anything but dis ruption of a system that often works. The current presidential campaign confirms what we should have already known: That reform of our govern mental and regulatory processes is an idea whose time has come. Kneejerk opposition to change will not prevent its occurrence, but may serve to ex clude the opponents from participation in shaping that change. I sincerely hope that bankers and bank regulators will have the foresight to deal with the issues involved in an orderly and analytical way. If they do, I am convinced that the net result will be a regulatory framework that is less burdensome and more effective and an industry that better serves its customers. MID-CONTINENT BANKER for June, 1976 Loan-Loss Problem (Continued from page 40) some of these problems have been greatly exaggerated. For example, there lias been a widely cited figure of Amer ican bank vulnerability on oil tanker loans of something like $17 billion. It appears now that responsible analysts are saying that the correct figure for American banks is actually nearer $3 billion. Or to take another example, many of the loans to less developed countries that have been cited as a potential problem for large banks appear to be loans to foreign subsidiaries of AAA U. S. corporations. Nevertheless, these special problems, combined with the decline in the economy and the in creased vulnerability of some banks, have led to increased loan losses and a larger number of problem banks. Loan losses need to be viewed with in the context of a bank’s overall ability to absorb such losses through earnings and through reserve and capital ac counts. 1 have mentioned the decline in bank capital ratios and the increase in loan-to-deposit ratios, particularly for the large banks. Some of the decline in capital ratios has been the result of rapid growth of foreign operations, in creased reliance on purchased money, HC acquisitions and inflation, all of which contributed to rapid deposit growth for all banks. During the past year or so, however, many banks have made considerable progress in reducing their vulnerability. Bank capital increased faster than de posits last year and, as a result, capital ratios rose. The deposit mix of banks, and particularly large banks, has im proved considerably from the stand point of cost and stability. Banks have not bid aggressively for CDs, allowing a sizable runoff. Thus, while bank de posits have increased by over 7% since the end of 1974, that increase occurred despite a sizable reduction in large CDs. Bank loans are virtually un changed from year-end 1974, whereas holdings of U. S. government securities have increased by about $40 billion. Thus, the banking system is clearly in a more liquid and less vulnerable posi tion than it was a year or so ago. There is also reason for optimism when we look at bank earnings. In the aggregate, bank earnings have held up fairly well during this very difficult period. Bank earnings rose by about 2% last year, making banking one of the few industries to show an increase in earnings during the recession. But that average increase masks some wide variations. Along with some sizable gains, there were a lot of mod erate gains and some sizable declines. Despite weak commercial loan demand and declining loan rates, banks general ly maintained their spread between gross earnings and money costs. Moneycenter banks actually improved their spreads. Banks experiencing the worst year-to-year comparisons generally did so because of loan losses. Loan losses have come to play a major factor in determining bank net income. This is quite different from the situation only a few years ago when loan losses had a negligible effect on earnings. The increased importance of loan losses is shown in a recent report of Keefe, Bruyette & Woods, Inc., bank stock analyst, which reported an av erage ratio of net loan losses to out standing loans of .65% for 82 large banks in 1975. There was considerable variation among banks and among re gions. The percentage for 10 New York banks was .72% and for 10 southern banks the figure was 1.1%. It was lower in the rest of the country and only .41% for five large banks in Texas. It is difficult to predict bank earn ings for this year. First-quarter reports seem to indicate that most banks have declines as compared with last year. That reflects lower loan volume and lower interest rates as compared with the first quarter of last year, and an increased tendency of banks to spread FREE...6 issues of Doane’s Farming for Profit Over 800 banks send this leading newsletter to farm customers each month. It’s filled with facts to help farmers boost income. They appreciate the information and the bank that sends it. There’s no better way to show you’re the ag bank in your area. Your attrac tive bank heading appears on each issue — and you get exclusive use in your trade area. EVALUATE FARMING FOR PROFIT. Mail coupon or your name and letterhead for six issues . . . Free. TITLE YOUR NAM E BANK NAME ADDRESS _ C IT Y ________ Hi MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis out loan charge-offs throughout the year rather than concentrating them heavily in the last quarter. While it is hard to forecast the bal ance of the year, since much will de pend on loan demand and interest rates, I would expect comparison with last year to get better throughout the year. 1 would also expect to see some improvement stemming from a reduc tion in loan losses. The trends I have described so far have been reflected in our list of prob lem banks. The F D IC ’s problem list, which includes national banks and state member banks as well as nonmember banks, now totals about 370 banks. That number was increasing steadily all during 1975 but now appears to be leveling off. While that is only about 2 /2% of all insured commercial banks, it is nevertheless at its highest level in 25 years. We have compared figures of our problem list with data on the economy as a whole, in much the same way we did with loan losses, and found again a meaningful relationship. However, whereas loan losess appear worst just when the state of the economy is worst, our problem list tends to lag by an average of about 12 months. This should not be surprising since there tends to be a lag in the examination and analysis process and since our own FARM ING FO R PRO FIT... ...a vital link between you and your farm community. STATE D DOANE ZIP. Doane Agricultural Service, Inc. 8 9 0 0 M anchester Road St. Louis, Missouri 6 3 1 4 4 (3 1 4 ) 9 6 8 -1 0 0 0 III examiners are not apt to be completely insensitive to recent economic and fi nancial developments. Thus, it is not surprising that now, about a year from the low point in the recession, we are at a high point on our problem list. If the current relationship follows previ ous experience, I would expect the number on our problem list to get smaller later on this year. Not only has the banking system gotten considerable attention over the last year or so, so has the bank super visory system. There are those who say or imply that inadequate bank reg ulation was the cause of so many banks being on problem lists. That misses the point, however, since it is good bank regulation and supervision that spot the banks that are in trouble and puts them on lists for closer supervision. The ques tion probably should be: Could better regulation and supervision have pre vented banks from reaching a condition which required closer supervision by bank regulators? What are the implica tions of this economic cycle analysis of bank problems for bank supervision? It is my view that bank supervision as we know it in the United States, as opposed to its characteristics in other countries, such as Japan, is limited in its ability to dictate the soundness of the banking system. It appears that a considerable part of the bank problems of the last couple of years have been due one way or another to the general state of the economy. That is clearly a matter beyond the control of the pro cess of bank supervision. Some of the problems have been due to specific un predictable events like the rapid in crease in oil prices and a resulting de cline in the demand for oil and oil tankers. It would have been nice if we had been able to anticipate and prevent the debacle of the R EITS, for ex ample. In view of the vast number of financial experts who failed to foresee these problems, I don’t think it is sur prising that bank supervisors failed also. There is one area, however, in which we do have an ability to lessen the im pact of the business cycle. We must be careful in this area, however. It is the one covering bank attitudes toward risk and the willingness of bankers to in crease loan ratios and decrease capital. W e are giving more attention to these matters at the present time, and we will continue to demand more capital from banks inadequately capitalized, as well as demand that loan, investment and operating policies and practices be reasonable. W e have so informed mem bers of the two banking committees who have expressed concern over capi tal adequacy. W e are analyzing trends rather than static pictures much more intently than we did in the past. Computers are whirring constantly as we try to find I 12 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ways to discover problems sooner. W e are looking much harder at manage ment and are willing to step in quicker with formal orders requiring action on management’s part. W e’ve asked Con gress for more powers to deal not only with dishonest bankers but grossly neg ligent ones. We recognize, however, that bank ing is a risk-taking business and we must rely on market forces, on manage ment and on owners, in addition to our supervisory judgment, to determine the appropriate degree of risk for in dividual banks. I do not believe that even the most outspoken critics of banking and bank regulators want the regulators to run the banks rather than the bankers. W e can all agree that that is not our function. If we are too intent upon preventing all bank failures in our regulatory posture, we may have some success in shortening our prob lem lists, but the conservative banking philosophies we would have to adopt would retard the progress of the econ omy. Attempting to prevent all bank fail ures is not our function, either. In some cases, government policy, which I en dorse, has encouraged a shift towards a riskier banking posture. W e have is sued regulations on “leeway invest ments’ that have broadened the types of investments that can be made. By disapproval of redlining and promoting the concept of equal credit opportunity, we have actively pushed banks into lending that they may feel (though I do not necessarily agree) is more risky. The FD IC has been in the vanguard of those who insist; that the Bank Merger Act be interpreted to permit more competition between banks. This approach has as its corollary an un willingness to protect competitors from the results of competition—i.e., one wins, one loses. Frankly, I believe that the FD IC and the other regulators have done an ex cellent job of bank supervision during the past two or three years after the magnitude of the problems became ap parent to us. Large bank failures have been resolved by the corporation work ing closely with the Comptroller of the Currency or the Fed without the loss of a dime to any depositor and with only minimum disruption in the com munities affected. Compare that with the result of the bank panics in the ’20s or early ’30s! The corporation and the other regu lators should be praised, not berated, for this performance. The jury is still out, however, on the question of prevention. Somehow, the regulators must do a better job of carrying out the full range of responsi bilities given them by Congress, some of which have only limited direct effect on safety and soundness. They must spot problem situations earlier, must be willing and able to move in more quickly with effective enforcement ac tion and must do all of this while recognizing that our economy needs the initiative, ingenuity and aggressiveness of free enterprise and competitive banking. In any case, I believe that the move ment since 1960 has been essentially healthy, though it may have gone too far in some respects. Overall, the sys tem is not in bad shape and I do not think we have to be apologetic. Some individual banks made mistakes and have suffered for them. 1 would have preferred it if we could have spotted those individual situations earlier, and perhaps corrected them. No one, particularly a bank regu lator, likes to see a bank fail. But the role of banking supervision in general, and certainly of the FD IC , is much more oriented toward soundness in the banking system and maintenance of confidence in that system than in pro tecting individual banks. While I recog nize the interrelationship of the two concepts, it should be kept in mind that they are different. As long as banking is part of the competitive en terprise system, there will be bank failures. What the FD IC has done, however, is cushion the shock of a failure. I am sure you have all seen the recent Gal lup Poll which showed that 93% of Americans with bank accounts feel their money is safe. This comes after intensive bad publicity about bank problems, and soon after the largest bank failures in our history. Frankly, we feel that this overwhelming display of confidence is a direct result of the F D IC ’s efforts over the years. Any sug gestions that the operations, funding or control of the corporation be changed must deal with the possibility that this confidence may be eroded. W e certainly can improve our poli cies and our operations in many areas, and I intend to explore the possibilities during my term as FD IC chairman. We cannot completely sever the links, however, between the performance of the economy and the performance of the banking system. If the economy continues to improve, next year will probably be a very good year for banks. I suspect that banks will be somewhat more cautious in their lend ing policies than was the case during the past few years. W e will be more cautious as well and view unusual situ ations much more skeptically than we did five years ago. Whether or not that caution will prove warranted or per haps overdone, will depend in great part on the performance of the economy in the years ahead. * * MID-CONTINENT BANKER for Juno, 1976 Olin Named Pres. & Chairman Of CSBS; Harvel C. Adams Elected First Vice President WASHINGTON, D. C.—John B. Olin, superintendent of banks for Ore gon, has been named president and chairman of the Conference of State Bank Supervisors (C S B S ). He also has been appointed a member of the Ad Hoc Committee on International Bank ing Regulation and of the association’s Nominating Committee. Harvel C. Adams, Arkansas’ bank commissioner, has been elected CSBS first vice president. He also has been named to its Federal Legislation Com mittee. Their elections were made at the Washington-based organization’s 75th annual convention at the Broadmoor Hotel in Colorado Springs, May 9-12. James E. Faris, Indiana dix'ector of fi nancial institutions, is the immediate past president of CSBS. Those from the Mid-Continent-area elected to office were Joseph H. Hemp hill, commissioner of banking, Tennes see—chairman, District Three; Van Smith, president, Bank of Tuckerman, Ark.—vice chairman, Membership Pro motion, and District Three council member; and C. Wayne Highsmith, president, Edgemont Bank, East St. Louis, 111., and Charles L. Childers, president, Tyler (Tex.) Bank—council members, District Two and District Four, respectively. W hat’s new in leasing? Latest brochure gives up-to-date information As a businessman, you’re interested in making your capital work its hardest for you. Now, LeaseAmerica in its latest 18page brochure, tells you in a simple, straight forward way how to free up working capi tal for reinvestment in your business. You’ll also learn about the great flexibility which may be built-in to a lease agree ment which is tailor-made to your indi vidual needs. Write today for your free copy. There’s no obligation, of course. Marketing Director Home Office LeaseAmerica Corporation 200 American Building Cedar Rapids, Iowa 52401 319/366-5331 LEASEAMERICA Consumer Bankers Association Releases Flood Insurance Booklet W ASHINGTON, D. C.—The Con sumer Bankers Association has released a booklet illustrating bankers’ responsi bilities in compliance with the National Flood Insurance Act. “The Consumer Banker and Flood Insurance,” as the publication is en titled, details special requirements placed on lending institutions by the law. Clear explanations are provided for bankers who finance home con struction and improvements in floodprone areas. The booklet also explains responsibili ties for bankers when financing mobile homes or when taking second trusts or security interest on real property located in a flood-hazard area. Two copies of “The Consumer Banker and Flood Insurance” have been made available, without charge, to members of the Consumer Bankers Association. Nonmembers may obtain copies for 50 cents each. Write: Consumer Bankers Association, 1725 K Street, N. W., Washington, DC 20006. MID-CONTINENT BANKER for June, 1 976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis John Cornwall Let us tell you about our mountainside swimming pools, golf courses, three lakes, tennis, social programs, dining and dancing. L et us tell you about our private bathhouse where you’ll find those world-famous H ot Springs thermal waters. And let us tell you about our special summer rates. For Reservations Call Toll Free 8 0 0 /6 4 3 -5 4 0 4 A rea attractions include I.Q . Zoo (train in g of per form ing a n im a ls), a diamond mine, unique pottery works and some of the best fishing in the w orld. H O T S P R IN G S ARKANSAS 113 N EW S From the MicJ-Continent A rea Alabam a A rkansas C orrespondent Sym posium Held by First of M o b ile M O BILE—About 60 bankers at tended First National’s correspondent bank symposium April 29. The annual symposiums, which be gan six years ago, are organized by the bank’s senior vice president-correspond ent banking department, James C. Andress. This year, participants heard a num ber of representatives of the state government and of a local investment brokerage firm. First National officials also were on hand to discuss a variety of topics. Members of the speakers’ panel this year were Fred F. Denton Jr., state industrial development director, Mont gomery; James P. Ferrill, assistant vice president, systems development and re view, First National; Richard E. Con ner, account executive, Merrill Lynch, Pierce, Fenner & Smith, Inc., Mobile Office; and David C. DeLaney, vice president, investments, First National. ■ LARRY McCORD has joined Union National, Little Rock, as assistant vice president and correspondent bank of ficer, corporate division. He will call on correspondent banks in Arkansas. Mr. McCord formerly was assistant cashier and assistant manager, Caddo Trust, Belcher, La. ■ CITY NATIONAL of Fort Smith hosted an all-day conference for cor respondent bankers from Arkansas and Oklahoma April 29 at the Fianna Hills Country Club. About 40 bankers were in attendance. During the morning, golf and tennis matches were held, while two topics were examined during the afternoon seminars: E F T S and Employee Stock Ownership P la n s (E SO P s). Hank Lvday of NCR Corp. discussed the former, and equipment of the future was displayed. ESOPs were covered by Bob L. Sellers of Bob L. Sellers Associates, Memphis, consultant to City National on its ESOP. Bankers asked many questions on ESOPs, il lustrating the growing popularity of the programs. Activities were conclud ed with an evening banquet, during which trophies were presented to the winning golf team and Eloise Bedwell of the bank’s women’s department com mented on the spouses’ activities that had been held concurrently. Illinois ADAMS M cC O R D * N. Q. ADAMS has been promoted to executive vice president and trea surer of First Bancgroup-Alabama, Inc., Mobile, and T. R. Foster has been named vice president, comptroller and finance officer. Mr. Adams retains his title of senior executive vice president and Mr. Foster remains senior vice president and senior comptroller at the HC’s lead bank, First National, Mobile. At the bank, Robert S. McKean has been named vice president; William B. Carmichael and Charles D. Wilkinson, assistant vice presidents; Irvin E. Farmer and John M. Nix, operations officers; Lee Robinson Gwynn and John H. Martin III, branch officers; and Anna Lawson Rogers, loan operations officer. I 14 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis a GEORGE C. M O TTIER has joined Central National, Chicago as second vice president, correspondent banking group. He formerly was with Union Commerce Bank, Cleveland, as an of ficer in the commercial loan depart ment’s metropolitan division. At Cen tral National, the following have been named vice presidents: S. Michael Polanski, John A. Nevell and Woodrow A. Sutton Jr. Mr. Polanski joined the bank in 1971 and advanced to sec ond vice president, correspondent bank ing group, 1974. He now serves in the commercial banking group. Messrs. Nevell and Sutton are in the interna tional banking group. M O TTIE R M ARLOW E ■ P. W ILLIAM MARLOWE, formerly vice president and cashier, Bank of North Aurora, has been named CEO of the new First Security Bank, Aurora. His title there is executive vice presi dent and cashier. Succeeding him at Bank of North Aurora is James T. Can non, formerly loan officer, Naperville National. Mr. Marlowe has more than 10 years’ banking experience, having been with his former bank since before its 1970 opening. Prior to that, he was with Gary (Ind.) National. Mr. Cannon joined Naperville National in 1972. Previously, he had been with Harris Trust, Chicago, and State Bank, Geneva. ■ JOHN BALTZ has joined First Na tional, Millstadt, as auditor. Formerly with Peat, Marwick, Mitchell & Co., William H. Miller Dies W illia m H. M ille r , 80, re tire d s.v.p . & d ir .. C o n tin e n ta l Illin o is N a t'l, C h ic a g o , d ied HARROW SMITH COMPANY U n ion N a tio n a l B ank B ldg. 5 0 1 /3 7 4 - 7 5 5 5 M a y 4 . P rio r to his 1965 re tire m e n t, M r. M ille r h a d calle d on c o rre s p o n d e n t banks in Illin o is a n d In d ia n a . He e n te re d b a n k in g in 1 91 2 at N a t'l C ity B ank, C h ica g o , w h ic h e v e n tu a lly m e rg e d w ith C o n tin e n ta l. Little Rock, A rk a n s a s J. E. W O M ELD O R FF, E x ecu tive V ice P residen t He ad v an ced to s.v.p . & d ir. in 1951 d ir.. C o m m e rc ia l N a t'l, B e rw y n , tre a s .. Reserve C ity B ankers Assn. and and w as d ir. a & MID-CONTINENT BANKER for June, 1976 St. Louis, Mr. Baltz is the third gen eration of his family in banking in Millstadt. His grandfather, G. F. Baltz, was an organizer of First National in 1903 and served as its CEO until 1959. Woodrow Baltz, John’s father, is the bank’s vice president, while xVierton, John’s uncle, is First National’s presi dent. ■ L. C H ESTER MAY has been elect ed chairman and CEO, Chicago Bank of Commerce. He is the retired vice president, finance, of Standard Oil Co. (Indiana). Harry S. Brown, former treasurer and vice president, finance, Band McNally & Co., has been named president and chief operating officer of the bank. The former chairman and president, Clarence A. Beutel, has been elected vice chairman. Sometimes enough N ew ark's enough. It really is The Big Apple. There really are a hundred places to find Szechwan oysters, kinesiology classes, maritime lawyers or a Spode gravy boat like the kids broke. But sometimes New York can get to be too much of a good thing. Unless you know somewhere to hide. Welcome to The Barclay. The Barclay is a small east side hotel. (The lobby is about fifty steps across. The Big Conference Room holds twenty people.) The Barclay is elegant without being stuffy, expensive without being ridiculous. Next time you need to get in out of New York, remember The Barclay. * • ...¿Mi &. MM i \ * « '■Bmm I -.mi § «ms m m m É « ü I» ' !» *■ « ■ KENNETH C. THOMAS, president, Ken Thomas Construction Co. and of Pekin Supply Co., has been named a director of First National, Pekin. James N. Jansen, a bank director since 1957, has been elevated to director emeritus. ■ BONNIE J. BOOTEN has been ad vanced from assistant cashier to as sistant vice president at First National, Alton. She joined the bank in 1957 and will head the newly established market ing department. Mrs. Booten has been handling the bank’s advertising and will assume responsibilities for marketing research, public relations, promotions and business development. ■ CONTINENTAL ILLIN O IS CORP., Chicago, has elected the Reverend Raymond C. Baumhart, S. J., president, Loyola University, Chicago, and Paul J. Rizzo, senior vice president, IBM Corp., as directors. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis When enough New York’s enough. 48th just off Park. (800) 221-2690. In New York State, call (800) 522-6449. In the city 755-5900. Call your corporate travel office or travel agent. Indiana ■ DENNIS L. LEM EN , vice presi dent, American Fletcher National, In dianapolis, has been named head, re gion II, metropolitan division, covering the west area of Indianapolis. Jeffrey C. Lind, assistant vice president, has been appointed head of the Indiana division’s east region. The bank has formed an agribusiness department in the Indiana division, and D. David Murdock, assistant vice president, has been named its head. i-ÉMEN MURDOCK ■ INDIANA NATIONAL, Indianapo lis, has promoted Robert H. Kohrs and Gary K. McWilliams from vice presi dents to senior vice presidents. Mr. Kohrs heads the national/international division, while Mr. McWilliams is head of the Indiana division. Mr. Kohrs joined the bank in 1974 and formerly M cW i l l i a m s kohrs was vice president, Asian banking group, Chase Manhattan Bank, New York. Mr. McWilliams entered banking in 1959 at Indiana National. Kansas Special Newspaper Edition Helps First of Hutchinson Celebrate Its Centennial H U T C H IN S O N — F ir s t National opened for business on May 2, 1876, as Reno County State, and to celebrate its first 100 years of operation, the bank has held a week-long open house and published a newspaper-style account of the town’s history. Written by Lee and Dean Hinnen of the H utchinson N ew s, the paper traces the town from its formative years, when its only building was a wooden shack that served as a post office and hotel, with beds that hung on the walls. C. C. Hutchinson, an Indian agent and land speculator, staked out the town with buffalo bones, which were about the only “natural re source” the area offered at the time. The town actually was born by state law in 1872. Although beset by many ups and downs, Hutchinson slowly began to grow, like the trees that had been planted by E. L. Meyer, the town’s druggist and a bank organizer. When Mr. Meyer, along with three St. Joseph, Mo., bankers, S. W. Campbell, I. T. Hosea and J. S. Lemon, organized Reno County State with several Hutchonians, capital stock was set at $50,000. Actual operating cash was $19,800. S. W. Campbell was the first cashier —the only employee at the time— and his salary was $1,800. Later, when he was promoted to the position of presi dent, E. L. Meyer became the first of a line of Meyers to be involved with the institution. He was named cashier and shortly thereafter (May, 1884), the bank became First National. Mr. Meyer later served as president. As the newspaper goes on to say, there were many rocky years for the bank and for the town itself. But First National moved ahead to prosper, and the ensuing years saw the bank in volved in a number of firsts: • First National moved into its sixstory “skyscraper” headquarters build ing in 1912. It was the town’s first steel structure. • During both world wars, the bank was instrumental in Hutchinson bond drives. Due in great part to First Na tional’s war bond sales, a navy ship was named for the town during each war. • In 1962, the bank offered the state’s first farm management service under the direction of Bill Kimmel. That same year, First National and Hutchinson National led a group of 11 banks to establish a joint data process ing center. Nation Meyer, currently First Na tional’s president, is the grandson of E. L. Meyer. ■ O. ARTHUR KREBS has joined Southgate Bank, Prairie Village, as sen ior vice president in charge of the mar keting division. He succeeds Sam Molen, who has retired and continues as a bank consultant. Mr. Krebs formerly was with United Missouri Bank, Kan sas City, for seven years, and prior to that had been with Anchor Savings As sociation. Died: Willis Shaffer, director, adver tising and public relations, Hutchinson National, on May 7 following a heart attack. Kentucky ■ CITIZEN S F ID E L IT Y CORF, and its affiliate, Citizens Fidelity Bank, both of Louisville, have announced top-man agement changes. J. David Grissom has advanced from bank president to chair man and CEO and from HC president to vice chairman. He succeeds Maurice C. S. Johnson at the bank, while Mr. Johnson retains the posts of chairman and CEO at the HC. Daniel C. Ulmer Jr. moved up from bank executive vice president-banking services to president. Joseph M. Rodes continues as bank ex ecutive vice president-financial services C O MM E R C I A L NATI ONAL B A N K 6th & Minnesota Ave. 913 371-0035 Kansas City, Kansas 66101 PROFESSIONAL CO RRESPONDENT TR U S T SERVICE I 16 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for June, 1976 Our correspondent banken can help you when others have called it a day. When banks in the East have been closed for hours, Bank of America’s experts in Los Angeles and San Francisco are still on the job. As a correspondent for hundreds of banks of every size, we have the facilities and experience to give you outstanding service on any problem that may com e up. We can participate in loans, loan syndications and overlines. We help with foreign trade trans actions. We transact business in the money market. Process your transit. Keep due to and due from up-to-the-minute. Keep your securities safe. And we have a score of other helpful services to help keep both you and your custom ers happy. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis All services are available through one correspond ent specialist assigned to you. You give him your problems. He’ll solve them for you quickly. For more information about what our bank can do for your bank, contact our correspondent banking specialists at Bank of America, 555 California Street, San Francisco 94137, (415) 622-6142; or Bank of America Tower Building, 5 5 5 South Flower Street, Los Angeles 90071, (2 1 3 )6 8 3 -3 2 8 8 . BANK of AM ERICA Correspondent Bank Service senior vice president and senior lending officer. He goes there from Branch Banking & Trust Co., Wilson, N. C., where he was vice president, corporate banking department. ULMER G R ISSO M ■ PAUL S. SE L L S has been elected chairman, Pontchartrain State, Metairie, and Kenneth A. Kuebel has been named president. Both have served on the bank’s board for the past two years. Mr. Sells is president, Ground Pat’i, Inc., and Mr. Kuebel is a real estate appraiser and contractor. McGuire, trust department, to assistant vice president; and David S. Griesemer, to assistant trust officer. ■ G. WAYNE THOMAS has been elected president and CEO, Boatmen’s Bank of West County, Ballwin, suc ceeding William H. Jones, who has been named chairman. The former chairman, Alfred A. Nall, has retired with the title of honorary chairman. Mr. Thomas, a past chairman of the Missouri Young Bankers, has been with the bank since 1975. Mr. Jones joined the bank in 1959 after eight years with the FDIC. M ississippi JO HN SO N RODES and succeeds Mr. Grissom as HC presi dent. The moves were made in antici pation of Mr. Johnson’s 1977 retire ment. ■ L O U ISV IL L E TRU ST has named James T. Crain Jr. and Robert C. Gray Jr. senior vice presidents and trust of ficers. Mr. Crain joined the bank in 1964 and advanced to vice president and trust officer in 1971. Mr. Gray joined the bank after service with Citi zens Fidelity, Louisville. ■ W IL F R E D E. IRISH JR. has been elected vice president at Deposit Guar anty National, Jackson. Named assistant vice presidents were J. W. “Tom” Bertaut, Jean S. Porter and W. Stanley Pratt, while Alex A. Hogan has joined the bank as investment counselor. Mr. Irish joined Deposit Guaranty National this year after 30 years with the U. S. Army. Mr. Bertaut joined the bank in 1966; Mrs. Porter, in 1957; and Mr. Pratt, in 1973. Mr. Hogan recently re tired as vice president, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jackson Office. IR ISH ■ JAM ES M. BIGLANE, chairman, First Natchez Bank, has been elected chairman of the State Banking Board. C R A IN GRAY Missouri Louisiana ■ LOUIS H. MARRERO IV has ac quired all shares of ICE Corp., New Orleans, that formerly were owned by Wilson P. Abraham. The acquisition involved 26% of the HC’s total out standing stock. Mr. Abraham has re signed as chairman of the HC and of its subsidiary, International City Bank, New Orleans, and Mr. Marrero has been elected to succeed him in those positions. Mr. Marrero, an attorney, is president, Marrero Land & Improve ment Association. ■ PAUL A. HARPER JR. has joined First Guaranty Bank, Hammond, as 118 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ■ M ERCAN TILE TRUST, St. Louis, has promoted the following: John E. Berra and Lawrence E. Pirtle, data processing, to vice presidents; James B. m THOM AS ■ Ï McSORLEY ■ F IR S T NATIONAL, St. Louis, has promoted Gary S. Pratte from assistant vice president to vice president and B. J. McSorley from commercial bank ing officer to assistant vice president. Mr. Pratte entered banking at First Na tional in 1969 and currently heads the credit and loan service departments. Mr. McSorley joined the bank in 1970. He was named commercial banking of ficer, regional banking division, Mis souri territory, last December. ■ LARRY G. K ELLEY has joined Commerce Bank of St. Charles as presi dent. The bank has promoted William A. Carpenter to senior vice president. Mr. Kelley formerly was executive vice president and cashier of Commerce Bank of Florissant, an affiliate, which he joined in 1966. He has been a St. Louis-area banker since 1952, while Mr. Carpenter, who joined Commerce Bank of St. Charles in 1971, has been in banking in the area since 1964. Edwin W. Hudspeth Dies E d w in W. H u d s p e th , 7 0 , re tire d pres., M a r k T w a in B ancshares, Inc., St. Louis, d ie d M a y 5 o f a h e a rt a tta c k . A fo u n d e r a n d p a s t pres, o f th e HC , he e n te re d b a n k in g , 1 9 2 2 , a t a b a n k in East St. Louis, III., as a m essenger. BERRA PIRTLE His s u rvivo rs in clu d e his son, E d w in G ., v .p ., M a r k T w a in Baneshares, Inc. MID-CONTINENT BANKER for June, 1976 ■ M ER LE M. SANGUINET, chair man, president and CEO, St. Louis County National, Clayton, has been elected chairman, County National Bancorp., Clayton. He continues at the HC as president and CEO. Robert Von Talge has been named HC vice presi dent and treasurer, advancing from vice president. He joined the HC in 1973. At St. Louis County National, Richard J. Kempland has been appoint ed vice president, business develop ment, and will direct the activities of the bank’s newly formed business de velopment department, which will over see development of banking and trust business. He joined the bank in 1959. manager, Del Norte Office. Mr. Mallett and Mrs. Wescher joined the bank in 1975, while Mrs. Chavez has been with First National since 1970. ■ P A U L L. F O L L M E R has b e e n named vice president and installment loan manager, First National, Santa Fe. He goes there from First National, Albuquerque, where he had been vice president and loan department head for the past four years. Oklahoma m F IR ST NATIONAL, Oklahoma City, has elected Edward M. Behnken and Richard P. Kerrick executive vice presidents and Ken W. Townsend sen ior vice president. Robert J. Waller and Edwin J. Lippmann Jr. have advanced to assistant vice presidents, while An thony J. Mirrione has been named as sistant cashier. Messrs. Behnken and Kerrick are executive committee mem bers. Messrs. Behnken and Mirrione joined the bank in 1972; Mr. Kerrick, in 1954; Mr. Townsend, in 1962; Mr. Waller, who is in the correspondent bank department, formerly was with the Dallas Fed; and Mr. Lippmann joined First National in 1973. KERRICK vice chairman, has been named First National’s acting CEO. Joining the bank’s staff as vice president and senior trust officer and as vice president, re spectively, are Richard M. Corbridge and Joe B. Sylvan III. Named vice pres idents and trust officers were Harold H. Cullison and Paul E. Kallenberger, while D. Wayne Esslinger has advanced to trust investment officer and Boyce B. Smith has been named trust officer. TOW NSEND ■ DAVID B. RAMSAY III has been advanced to vice president, corre spondent division, at American Na tional, Chattanooga, while Elizabeth M. Dalton, also in the correspondent di vision, has been named assistant vice president. WALLER New Mexico BEH N K EN ■ FIR ST TULSA BANCORP., Inc., and its lead bank, First National, both of Tulsa, have announced the following promotions and changes: John L. Rob ertson has requested early retirement and has resigned as chairman, presi dent, CEO and director of both. Rob ert R. Gilbert, HC executive vice presi dent, has been named acting CEO of the HC, and Kenneth C. Olinger, bank MID-CONTINENT BANKER for June, 1976 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis VAUG HN ■ W ILLIAM D. VAUGHN, assistant vice president, Fidelity Bank, Okla homa City, has been assigned to the correspondent bank division. He had been in the commercial credit and col lateral department, loan division, and formerly served as an FD IC examiner for western Oklahoma. ■ JACK D. BURLINGAM E has been elected senior vice president of United Missouri Bancshares, Inc., Kansas City. At the affiliate, United Missouri Bank of Kansas City, Howard L. Boswell has been promoted to assistant vice presi dent and Kenneth F. Harris has been named assistant cashier. Carl H. Schupp and G. Lynn Mitchelson, bank executive vice presidents, have been named directors of the HC. John R. Pitnick has retired from the bank after nearly 43 years. He was vice president, business development department. ■ A LFRED F. M A LLETT has been promoted from assistant vice president and branch administrator to general manager, First Plaza, at First National, Albuquerque. Sobeida “Sobie” Chavez has been elected assistant vice presi dent, real estate, and Michelle W. “Mickey” Wescher has been named as sistant cashier and assistant branch O LIN G E R RAM SAY I 19 ■ L. O. B R IG H TB IL L III, executive vice president, Texas American Bancshares, Inc., Fort Worth, has been elected president and CEO of the wholly owned subsidiary, Exchange Bank, Dallas. He succeeds Charles H. Bird, who has retired. Mr. Brightbill joined the HC in 1973, advancing to executive vice president in 1975. He formerly was with Fort Worth National, the HC’s lead bank. GRANT R. Lye, John Pat Parsons, Charles Pat terson, Bruce C. Richardson, W. W. Scott Jr., Patrick A. Tucker and W. Randolph Woodard. ■ PERRY R U SSELL, senior vice pres ident, Houston Citizens Bank, has been elected vice chairman of the ABA’s Housing and Real Estate Finance Divi sion. He will be installed following the ABA’s annual convention in October. CO O PER BR YA N T of First National, Fort Worth. Pro moted to assistant vice presidents were Bruce Cherry, correspondent banking department, and Gerald Bentley, Master Charge department. Mr. Lanford for merly was with the Texas Department of Banking, examination division, and will manage the bank’s newly formed employee benefits department, trust and investment services division. Mr. Cherry joined the bank m 1968 and Mr. Bentley, in 1972. BRIGHTBILL ■ ANDREW J. LANFORD has been named vice president and trust officer • A lab a m a Bag Co., In c ..................................... 70 A m e ric a n E xpress Co. (M o n e y O rd e r D iv .). . 49 A m e ric a n E xpress Co. (T ra v e le rs C heques) .......... 64-65 A m e ric a n N a tio n a l B ank, St. Jo sep h , Mo. . 97 A m e ric a n N a t’ l B a n k & Tr. Co., C h a tta n o o g a ....................................................... 71 19 A m ie l In d u s trie s .................................................. A rlin g to n H otel ....................................................... 113 B a n k B oard L e tte r ..................... 23, 79, 101, B a n k B u ild in g C o rp .......................................... B ank o f A m e ric a ................................................ B a n k o f O k la h o m a .............................................. B a rcla y, The ........................................................... B a vis & A ss o c ia te s , E. F ..................................... B o a tm e n ’s N a tio n a l B a n k, St. L o u is ........ 105 9 117 109 115 33 45 C e n tra l N a tio n a l B ank, C hica g o ................... 6-7 C o m m e rce B a n k, K ansas C i t y ....................... 99 C o m m e rc ia l N a t’ l B a n k, K ansas C ity, Kan. 116 * JOSEPH M. GRANT has been elect ed a director of Texas American Bancshares, Inc., Fort Worth. Earlier this year, he was named president of the HC’s lead bank, Fort Worth National. ■ JERRY D. BRYANT has been elect ed senior vice president, personnel de partment, and Larry C. Cooper has been promoted to vice president, trust investments department, at Frost Na tional, San Antonio. Mr. Bryant has served as the bank’s personnel director since 1975. Mr. Cooper joined the bank in 1974. Index to Advertisers D eLuxe C he ck P rin te rs , In c ............................... 58 D e p o s it G u a ra n ty N a t’ l B ank, Ja c k s o n , M is s ....................................................... 34 D e tro it B a n k & T ru s t C o................................... 46 Doane A g r ic u ltu r a l S e rv ic e , In c ....................... I l l D ow ney Co., C. L ................................................... 12 D u rh a m L ife In s u ra n c e Co............................... 55 LA N FO R D BRUCE CHERRY ■ RO BERT L. KIRK has been named vice president, credit department, do mestic banking division, First City Na tional, Houston. Named assistant vice presidents were F. Boyd Cherry, Luis Fernandez, Nora Gillespie, Richard F. Hickman, Charles Burton Lents, Dennis F a rm e rs & M e rc h a n ts B ank, C en tre , A la. . . 70 F a rm e rs G ra in & L iv e s to c k H e d g in g C orp. 108 F e d e ra ted S e c u ritie s C o rp ................................. 110 F id e lity S e c u ritie s In c ........................................ 79 F irs t A lab a m a B a n c s h a re s ............................... 74 F irs t C ity N a tio n a l B ank, H o u s to n ............... 89 F irs t N a tio n a l B a n k, B irm in g h a m ................. 68 ................... 91 F irs t N a tio n a l B ank, D a llas F irs t N a tio n a l B ank, K ansas C i t y ................. 57 F irs t N a tio n a l B a n k, M in n e a p o lis ................. 67 ......................... 73 F irs t N a tio n a l B ank, M o b ile F irs t N a tio n a l B ank, S t. L o u is ............... 53, 122 F irs t N a tio n a l B ank, W ic h ita ......................... 93 F irs t N a t’ l B a n k o f C om m e rce , .................................................... 3 New O rle an s F irs t N a tio n a l C ity T ra v e le rs C hecks .......... 27 F o u rth N a tio n a l B ank, Tu lsa ........................... 43 G o ln ic k A d v e rtis in g , In c., Leon S h a ffe r .. 30 H a rla n d Co., John H ............................................ 51 H a rro w S m ith C o.................................................... 114 Contact BRYAN WILLIAMS Correspondent Bank Division (806) 7 6 2 -8 8 0 0 Illin o is B ank B u ild in g C o rp ............................... In s u re d C re d it S e rvice s, In c ............................. In te g o n C orp. .................................................. In te rn a tio n a l S ilv e r Co........................................ 46 59 25 29 K ansas B a n k N ote .............................................. 95 L ea se a m e rica C o rp ................................................ 113 Le Feb u re C o rp ....................................................... 31 L ib e rty N a t’ l B a n k & Tr. Co., O k la h o m a C ity .................................................. 2 L u b b o c k (Tex.) N a tio n a l B a n k ....................... 120 M G IC -In d e m n ity C o rp ....................................... 14-15 M e ilin k B a n k E q u ip m e n t ................................. 26 M e rc a n tile B ank, St. L o u is ........................... 5 M e rc h a n ts N a tio n a l B ank, M o b ile ............... 75 13 NADA Used C ar G u ide Co................................. N a tio n a l S to c k Y a rds N a tio n a l B ank .......... 121 N o rth e rn T ru s t Co.................................................. 63 nUBBOCK IßlATIONAL Dank P a ym en t P lans, In c .............................................. 8 Rand M c N a lly & Co. .......................................... R isk In s u ra n c e M a n a g e m e n t G u id e ............. 54 33 SCS, O k la ho m a C ity ............................................ 16 S c a rb o ro u g h & Co.................................................. 32 S e c u rity C o rp ........................................................ 20-21 S h e s h u n o ff & Co., In c ......................................... 47 Mem ber F.D .I.C . T h ird N a tio n a l B ank, N a s h v ille ..................... T ra v e le rs E xpress ................................................ 77 22 Main and Texas, Lubbock, Texas U n io n B ank & T ru s t, M o n tg o m e ry ............... U n ite d M is s o u ri B ank, K ansas C ity ........... 75 11 W h itn e y N a tio n a l B ank, N ew O rle a n s . . . . 61 120 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MID-CONTINENT BANKER for June, 1976 Ken Brown has made the grade. He earned his degree in "Practical Experience" during many years of calling on bankers and helping them solve their individual correspon dent problems according to the high standards of Stock Yards Bank. Schooled by this experience in first-hand knowledge of your local problems and opportunities, Ken becomes a logical banker to do business with. Of course, it is under stood that he has authority to make decisions as do his fellow officers. So, when you want to get in touch with Ken or one of his learned colleagues, the principle way is to simply dial 6 1 8 2 7 1 -6 6 3 3 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - YOUR BANKER'S BANK ’ W" 7 r J u s t acro ss the r iv e r fro m S t Low's THE NATIONAL STOCK YARDS NATIONAL BANK OF N A T IO N A L C IT Y NATIONAL STOCK YARDS, ILLINOIS 62071 RABBIT TRANSIT. check-clearing system that can dramatically improve your availability of funds. Reserve Headquarters and “Rabbit Transit.” It’s an improved system devised by First National Bank in St. Louis to expedite the clearing of cash letters. For you, it can mean two important things: better avail ability and bigger profits. Here’s how. We’re right in the heart of the nation. That’s more important than you might realize. Our location in the heart of Middle America permits ideal transportation into and out of St. Louis and pro vides a superior transportation network to all Federal Reserve cities. In addition, St. Louis is a Federal Reserve city which enjoys a proven advantage in mail times, and is less than one hour by air from Federal https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis With their up-to-the-minute knowledge, our specialized staff can also make a complete and objective analysis of your check Our computer is clearing system after an totally dedicated. appropriate test period. Then, It’s the latest Burroughs they’ll present a written recom computer system with IPS and mendation of how it can be MICR technology. handled with increased speed It’s used exclusively by our and efficiency. transit operation. And delays Phone (314) 342-6222 do not occur because of con for your own transit analysis. flicting priorities or competi tion for computer time. For a copy of our Avail Our Proof-of-Deposit ability Schedule, to arrange for system computes float on each an analysis of your check item processed by endpoint clearing system, or for more and time of day. information about “Rabbit Full-time specialized staff. Transit,” phone us now. Or contact your Correspondent This staff monitors out Banker at 510 Locust, St. Louis, going transit and keeps current Missouri 63101. with any changes in transporta tion scheduling. Volumes and endpoints are monitored con tinually so cash letters clear efficiently. Member FDIC ■ I M l International Airports in Chicago and Kansas City. First National Bank in S t-L o u is ^ i
@FedFRASER