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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ChecOKard
Banking Centers
Downtown
Liberty Tower Concourse
PARTICIPATING ST O R ES :
inside this store
for the convenience of participating banks’ customers
9275 N. May
May Avenue & Britton Rd.
4309 S. E. 15th
Del City
2036 N. E. 23rd
Oklahoma City
115 E. Atkinson Plaza
Midwest City
729 N. Moore
City of Moore Shopping Center
2407 N. Westminster Rd.
Nicoma Park
2500 N. May
Oklahoma City
5116 N. Shartel
Oklahoma City
4417 N. W. 50th
Springdale Shopping Center
9325 N. Pennsylvania
The Village
4621 Windsor Mall
Windsor Hills Shopping Center
4273 N. W. 63
Plaza Midi Shopping Center
3025 S. E 44th
Hartsdel Shopping Center
ChecOKard
PARTICIPATING BANKS:
In fact, there’s a ChecOKard Banking Center inside
13 Anthony’s in the Oklahoma City area.
A neighborhood ChecOKard Banking Center gives
customers of participating ChecOKard banks more
freedom to handle their everyday banking needs —
The freedom to make
□ Checking Account Deposits
and Withdrawals
□ Savings Account Deposits
and Withdrawals
all electronically with their
ChecOKard. And, it can all be
done in the evenings and on
Sunday, when participating
banks are closed.
Participating ChecOKard banks
and Anthony’s — working to-
□ Transfers Between Checking
and Savings
□ Pay for Anthony’s Purchases
gether to make banking and
buying more convenient for our
customers. If you want this kind
of electronic banking conven
ience for your customers too
. . . contact the Correspondent
Department
0»
m LIBERTY
T H E B A N K O F M ID -A M E R IC A
Liberty National Bank & Trust Company/P. O. Box 25848/Oklahoma City 73125/(405) 231-6164
V.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
American National Bank
1500 S. Midwest Blvd.
Midwest City
Choctaw State Bank
23rd & Harper
Choctaw
Citizens National Bank &
Trust Co.
N. W. 23rd & Classen Blvd.
Oklahoma City
Del State Bank
3000 Tower Drive
Del City
First National Bank
100 S. Broadway
Moore
Liberty National Bank &
Trust Co.
100 Broadway
Oklahoma City
Medical Center State Bank
1300 Lottie
Oklahoma City
Park State Bank
2414 N. Westminster Road
Nicoma Park
Security Bank & Trust Co.
6914 S. E. 15
Midwest City
Shepherd Mall State Bank
23rd & Villa
Oklahoma City
Southeast Plaza Bank
1300 S. E. 44
Oklahoma City
Quail Creek Bank, N.A.
12201 N. May
Oklahoma City
First NBC and New Orleans in 1831:
The city was lit by
and had the beginnings of its
first Improvement Bank.
aaBHWHi/
n 1831 N ew Orleans was a
rapidly growing city constantly
needing improvements. O n e of
the vital improvements made at
this time was the basis for the
founding of a new bank, the N ew
Orleans Canal and Banking C om
pany, the ancestor of the First
National Bank of Commerce. T h e
A ct of the Louisiana State Legis
lature that created the N ew
Orleans Canal and Banking C om
pany stated that, in addition to
its normal banking activities, the
Bank had the purpose of cons
tructing a much needed canal
from above Poydras Street to
I
i l i i 11
B i i i l i B B i i
l i i i l i B ill
BDIBiiBDBB
IBBi i i Bi i i
i i HiBlIfll B
IB
Lake Pontchartrain. Thus the very
first of a list of “ improvement
banks” was begun.
Since its beginning 14 3 years
ago, First N B C has changed its
name and location, but it has always
adhered to the attitude of constant
improvement, of progressiveness
and of stability. These are the
qualities that enable First N B C
to best serve all your corre
spondent banking needs. For
information on First N B C ’s cor
respondent banking programs con
tact D ou g Lore at 1 / 8 0 0 / 4 6 2 9 3 1 1 , within Louisiana, or 1 /8 0 0
/ 3 3 3 - 9 6 0 1 , outside Louisiana.
First National Bank of Com m erce
CORRESPONDENT BANKING DEPARTMENT
2 1 0 Baronne S tre e t/N e w Orleans, Louisiana 7 0 1 1 2
M em ber F D I C
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3
You want a bank that can back
you ...over-line or overseas.
Count on the total capa
bility of Mercantile Trust in
St. Louis.
We can provide the over
line support you need to take
advantage of big opportunities
And we can support
you with a full range of
specialized services. For
instance, our International
Department can help you
and your customers with
overseas contacts, docu
ments, financing, even
customs services.
When you have an
opportunity that calls
for something specialcall 314-425-2404.
We’re
with you.
M ERCnriTlls
BACK
Mercantile Trust Company N.A. • (314) 425-2404 • St. Louis, Mo. • Member F.D.I.C.
4
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
Convention Calendar
The Financial Magazine o f the M ississippi Valley & Southwest
November
Nov. 13-17: Bank Administration Institute
Forum for Presidents of N ot-So-Sm all Com
munity Banks, Phoenix, Ariz., Biltmore
Hotel.
. . .
,
„
Nov. 14-17: A B A National Agricultural &
Rural Affairs Conference, New Orleans,
New Orleans Marriott.
Nov. 17-19: Bank Administration Institute
Float Management Seminar, K ey Biscayne,
Fla., Sonesta Beach Hotel.
Nov. 18-19: Robert Morris Associates Lending
to Banks & Bank HCs Workshop, Boston,
Copley Plaza Hotel.
Nov. 28-Dec. 1: Bank Marketing Association
Trust Marketing Workshop, Houston, Sham
rock Hilton Hotel.
Nov. 30-Dec. 3: Bank Administration Institute
Trust Operations Short Course, Park Ridge,
HI., B A I Headquarters.
December
Dec. 8-10: Bank Administration Institute
Organization Development Seminar, Park
Ridge, 111., B A I Headquarters.
Dec. 12-15: Robert Morris Associates Financial
Statement Analysis Workshop, Atlanta.
February
Feb. 3 -6 : Assem bly for Bank Directors, M exi
co City, El Camino Real.
Feb. 6 -9 : A B A National Trust Conference,
New Orleans, Fairmont-Roosevelt Hotel.
Feb. 6 -9 : A B A I&PD Risk and Insurance
Management in Banking Seminar, Tucson,
Doubletree Inn.
Feb. 6-18: A B A National Installment Credit
School, Norman, Okla., University of Okla
homa.
Feb. 13-15: A B A Bank Investment Conference,
Atlanta, Peachtree Plaza Hotel.
Feb. 14-16: A B A Bank Telecommunications
Workshop,
Atlanta,
Omni
International
Hotel.
Feb. 15-18: A B A Conference for Branch A d
ministrators, Atlanta, Fairmont Hotel.
Feb. 20-26: A B A Operations/Automation Div.
Business of Banking School, Fort Worth,
American Airlines Learning Center.
Feb. 27-M arch 1: A B A National Credit Con
ference, Chicago, Palmer House Hotel.
Feb. 27-March 4: A B A National Personnel
School, Denver, Marriott Hotel.
Feb. 27-March 4: A B A Community Bank CEO
Program, Santa Barbara, Calif., Santa Bar
bara Biltmore.
November, 1976
Volume 12, No. 12
FEATURES
25 STABLE NEAR-TERM BOND MARKET SEEN
Jim Fabian
Bank bondmen polled
27 NEW GUIDELINES FOR MUNICIPAL BONDS
Herbert P. Dooskin
Right now, they’re the only game in town
30 FINDING SOLUTIONS THROUGH SECTION 79
Alfred G. Dietrich Jr.
New solutions to problems faced by bankers
38 HOW TO STOP FRAUDS, EMBEZZLEMENTS
Oscar W . Jones
Bankers must act to stem tidal wave
48 ABA'S HERITAGE CONVENTION
Jim Fabian
Regulation, legislation, politics share spotlight
52 COMPTROLLER'S CREDIT LIFE INCOME PROPOSAL
Comments pro and con sent to Washington
72 DETACHED FACILITY SERVICES TOPIC OF KBA REGIONALS
Surveys give hint of public’s mood
74 MBA TO TRY AGAIN FOR EFT LEGISLATION
Jim Fabian
Proposed bill discussed at regional meetings
DEPARTMENTS
14 EFTS
10 SELLING/MARKETING
7 COMMUNITY INVOLVEMENT
16 BANKING WORLD
12 NEWS ROUNDUP
8 THE BANKING SCENE
20 NEW PRODUCTS
18 CORPORATE NEWS
March
March 2 -4 : A B A Advanced Construction Lend
ing Workshop, Columbus, O., Ohio State
University.
March 14-16: Independent Bankers Association
of America Convention, Washington, D. C.,
Washington Hilton Hotel.
March 15-19: Bank Marketing Association
Essentials of Bank Marketing Course— M id
west Extension, Chicago, University of Chi
cago.
March 20-23: A B A Trust Operations and Auto
mation Workshop, Bal Harbour, Fla., Am eri
cana Hotel.
March 27-30: A B A National Installment Credit
Conference, New Orleans, Hyatt Regency.
March 27-April 1: A B A Community Bank CEO
Program, Port St. Lucie, Fla., Sandpiper
Bay.
April
April 1 -4 : Louisiana Bankers Association A n
nual Convention, New Orleans, Hyatt R e
gency.
................
.
April 1 -5 : Bankers Association for Foreign
Trade Annual Meeting, Dorado Beach, P. R.,
Cerromar Beach Hotel.
April 2 -5 : Association of Reserve City Bank
ers Annual Meeting, Phoenix, Arizona Bilt
more.
April 3 -6 : A B A Southern Regional Bank Card
Management Workshop, Orlando, Fla., Or
lando Hyatt House.
April 3 -6 : Bank Marketing Association R e
search Conference, Boston, Hyatt Regency
Cambridge.
April 17-20: Independent Bankers Association
of America Bank Ownership Sem inar/W orkshop, Las Vegas, Sands Hotel.
April 20-21: Bank Marketing Association Com
munity Bank Marketing Seminar, Panama
City, Fla., Bay Point Inn.
April 24-27: A B A National Marketing Con
ference, New Orleans, Hyatt Regency.
STATE NEWS
82 LOUISIANA
82 MISSISSIPPI
83 MISSOURI
86 TEXAS
Editors
Ralph B. Cox
Editor & Publisher
Lawrence W. Colbert
Assistant to the Publisher
Rosemary McKelvey
Managing Editor
Jim Fabian
Associate Editor
Daniel H. Clark
Assistant Editor
Advertising Offices
St. L o u is, Mo., 408 O live, 63102, T e l. 314 /
421-5445; R alp h B. Cox, P u b lis h e r; M a r
g a re t H olz, A d v e rtis in g P ro d u c tio n M gr.
M ilw a u k e e , W is., 161 W. W is c o n s in A ve.,
53203, Tel. 414/276-3432; T o rb e n S o re n
son, A d v e rtis in g R e p re s e n ta tiv e .
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
80 INDIANA
80 KANSAS
82 KENTUCKY
76 ALABAMA
78 ARKANSAS
78 ILLINOIS
86 NEW MEXICO
86 OKLAHOMA
86 TENNESSEE
M ID -C O N T IN E N T BANKER is p u b lis h e d
13 tim e s a n n u a lly (tw o is s u e s in May)
by C o m m e rc e P u b lis h in g Co. a t 1201-05
B lu ff, F u lto n , Mo. 65251. Editorial, execu
tive and business offices, 408 Olive, St.
Louis, Mo. 63102. P rin te d b y T he Ovid
B ell Press, In c ., F u lto n , Mo. S e co nd -cla ss
p osta ge p aid a t F u lto n , Mo.
S u b s c rip tio n ra te s: T h re e ye a rs $21; tw o
ye a rs $16; one y e a r $10. S in g le co pie s,
$1.50 each.
C o m m e rc e P u b lic a tio n s : A m e ric a n A g e nt
& B ro k e r, C lu b -M a n a g e m e n t, D ecor, L ife
In s u ra n c e S e llin g , M id -C o n tin e n t B a n ker,
M id -W e ste rn B a n ker, The B a n k Board
L e tte r a nd P ro gra m . Donald H. Clark,
c h a irm a n ; Wesley H. Clark, p re s id e n t;
Johnson Poor, e x e c u tiv e v ic e p re s id e n t
a nd s e c re ta ry ; Ralph B. Cox, fir s t v ic e
p re s id e n t a nd tre a s u re r; Bernard A. Beg-
gan, William M. Humberg, James T. Poor
Don J. Robertson, v ice p re s id e n ts ;
Lawrence W. Colbert, a s s is ta n t v ic e p re s i
a nd
d e n t.
but they’re watching as Mississippi’s ETV
network shows them how to “Go Metric’'
with a series produced for PBS . . one of
the increasing number of programs from
the Mississippi Center for Educational
Television that are being viewed nation
wide. Well bet you don’t know all the facts
about the good things we’re doing in
Mississippi.
Find out more from
First National Bank...
you’ll be interested
in what you hear.
Jackson, Mississippi Member FDIC
6
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
'Walk on Wild Side’:
Bank's Wildlife Promotion
Gives Boost to Zoo
“ Walk on the W ild Side” was the title
of what has been termed one of the
most successful and best-received pub
lic relations projects in the history of
First National, Little Rock.
The two-week promotion was a joint
project of the bank and Friends of the
Zoo. Twenty original paintings by a
wildlife artist/conservationist were dis
played in the bank lobby. A print of
one painting was presented to the zoo
for auction by the bank, one print was
presented to a staff person and another
to the public in a drawing. Tw o films
depicting the artist’s work, technique
and philosophy were shown during the
event.
O nlookers g a ze at zoo official handling baby
orang utan during "W alk on W ild Side" promo
tion in lobby of First N at'l, Little Rock.
Highlight of the promotion, how
ever, was a visit to the bank each day
of a wild animal from the zoo. Object
of the visits was to create support and
enthusiasm for the Friends of the Zoo.
Included in the list of visiting animals
was a parrot, a tortoise, a boa con
strictor, a tiger cat, an iguana and an
orangutan. People were allowed to
handle the parrot and boa and the
huge tortoise was permitted to wander
through the bank lobby. Other animals
were handled by zoo officials.
Solar '76':
Project Seeks Answer
To Major Energy Query
“ Solar ’76” is the title of a research
project for which interim financing has
been supplied by Lakewood Bank, Dal
las. It is hoped the research will de
termine how energy-efficient a “ 1976technology” home could be if it drew
a substantial part of its energy needs
from solar power.
A lobby display of a model of the
home, which has been constructed in
northeast Dallas, brings public atten
tion to the project, an experiment by
Dallas Power and Light Co. (D P& L ).
Community
Involvement
Directors, Staffers Work
To Aid Children's Hospitals
Tim Louderm ilk, v.p., Lakew ood Bank, D allas,
inspects "So lar '76" experim ental home model
in institution's lobby. Lakew ood Bank is pro
viding interim financing for a side-by-side
com parison test of tw o "19 7 6 -style" hom es—
one using p a rtial solar pow er, the other con
ventionally pow ered.
And while solar-assist-power homes
aren’t new, this one is said to be unique
in at least twTo w ays:
• The project is private. DP&L de
signed the solar power plant; the bank
provided interim financing and a local
construction firm has built the house
and a near-identical “ control” house
two doors away.
• Virtually all extant solar-power
homes have been designed around a
solar-power system, so there has been
no way of comparing their cost effi
ciency to other structures with conven
tional power systems. The Dallas homes
are “ 1976” structures.
DP&L has calculated that the solar
power system, which requires only one
three-by-eight-foot panel for each 240
square feet of floor space, will supply
30% of the space heating and 65% of
the water heating requirements for an
average family. Besides the projected
$200-300 energy cost saving per year
in both homes, because of their su
perior insulation, DP&L has estimated
that the solar home will show an ad
ditional savings of as much as $250
yearly.
ST. LOUIS— Cardinal Glennon Me
morial Hospital for Children and Shriners’ Hospital for Crippled Children each
are $1,000 richer, thanks to the work
of directors and staff members of Tower
Grove Bank.
The gifts represent 200,000 points
earned following a sales incentive pro
gram and were redeemable in catalog
merchandise. The two-month program
sought to drum up new business in
checking, savings, CDs, safe deposit,
loans, Master Charge and BankAmericard, trusts and checkloans.
Participants were placed in cate
gories: executive group— “ all charity;”
employees electing to donate some or
all their points to charity; contact per
sonnel; and non-contact personnel.
And, according to a bank spokesman,
staffers were most enthusiastic about
the program. Many employees gener
ated points in excess of those needed for
a catalog item and donated the excess
to the charity.
Municipal Program:
Bank Aids Counties, Cities
In Obtaining Grants, Loans
First National, St. Louis, has an
nounced the Community Assistance
Program, to aid municipalities and
counties throughout Missouri and south
ern Illinois in obtaining federal grants
and loans.
According to a bank spokesman, bil
lions of dollars in federal monies avail
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
able to communities weren’t used dur
ing 1975, primarily because many local
governmental bodies lacked the staff,
time or money to seek those funds.
First National’s program offers a com
puterized analysis of all available fed
eral grant and loan programs, matched
to the specific needs of a municipality
or county. In addition, a professional
staff is available to assist local govern
ments in writing and filing all technical
and administrative documents required
in seeking loans or grants.
First National’s Community Assist
ance Program is available through the
bank’s network of correspondent banks
in Missouri and southern Illinois to
communities of all sizes.
From left, John D. W eiss, ch. and pres., TG
B ancshares Co.; Lua R. Blankenship, asso ciate
exec, dir., C ard in a l Glennon M em orial Hospital
for Children; N orm an J. Stupp, dir. emeritus,
Shriners' Hospital for Crippled Children; and
Richard E. Fister, pres.. Tow er G rove Bank, all
of St. Louis, a re show n during presentation of
checks for $1,000 to each of two hospitals.
Gifts represented 200,000 points earned by
Tow er G rove Bank directors, em ployees during
sale s incentive program . TG Bancshares is par
ent HC for bank.
7
The Banking Scene
By Dr. Lewis E. Davids
Hill Professor of Bank Management,
University of Missouri, Columbia
A New Paper Tiger— With Real Claws
if t e e n
years
a g o , bankers
were concerned about the exponen
tial growth of a paper tiger: The pub
lic’s use of checks was expanding at a
mind-boggling rate.
The Fed, equipment manufacturers
and bankers worked together and the
resultant cure was M ICR (magnetic
ink character recognition). Through
MICR, banks were able to harness that
paper tiger, although they haven’t put
it to rest.
N ow a new legal paper tiger is grow
ing well past the kitten stage— it’s now
a man-eater. It’s Regulation “ B,” a
stepchild of the Equal Credit Oppor
tunity Act (E C O A ).
In theory, “ B” is supported by all
“ decent” people. It was drafted b y the
Federal Reserve Board and, on casual
reading, appears well intended, but a
more careful perusal shows its lack of
clarity; it belongs in the same generally
well-intended, but dysfunctional, class
as Regulation “Z,” the so-called “ Truth
in Lending” legislation.
Both regulations have cynically been
called the “ Legal Pi-ofession’s Full-Em
ployment acts.” Even a Philadelphia
lawyer would have difficulty in relating
some of “ B’s” provisions to the real
world, and banks, including some of
the nation’s largest, are seeking inter
pretations of the regulation.
Numerous new interpretations of
“ B” are cluttering up the Federal Reg
ister, in which they are published. One
has to wade through such Federal Re
serve letters and interpretations as the
following:
F
“ Section 202.4 (e ) provides that a
creditor may not prohibit an applicant
from opening or maintaining an account
in a birthgiven first name and surname
or a birthgiven first name and combined
surname. You ask whether a creditor may
require that all accounts be carried in the
same name.
“ Bank proposes to adopt a policy of
permitting a customer to choose to use a
maiden name, married name or combined
surname. Under this policy, a customer
8
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Federal Reserve Bank of St. Louis
could change the name on his or her ac
counts at reasonable intervals but at any
given time, all accounts must be carried
in the same name. You also indicate that a
customer would be permitted to maintain
an account in a different name (a profes
sional name or stage name, for example)
if the customer filed an appropriate form
with the bank. You believe that adoption
of this policy is necessary to prevent con
fusion, reduce the risk of fraud and simpli
fy record keeping.
“ The Board’s staff is of the opinion that
the policy described above is consistent
with the Act and Regulation B. Section
202.4 (e ) was intended to correct a prac
tice about which women had complained:
refusing to open an account for a married
woman in her own given name or sur
name. The inability to open an account in
one’s own name may prevent an individual
from developing a credit history in that
name, and thus may impede the indi
vidual’s efforts to obtain credit. The staff
feels that (subject bank’s) proposed policy
is reasonable and consistent with Regula
tion B.”
— Excerpts from a Federal Re
serve Board letter of May
10, 1976, by Anne J. Geary,
senior attorney.
After reading the interpretations, one
becomes more aware of the fact that
those interpretations are only the tip
of the regulatory “ iceberg.” For ex
ample, the quoted Federal Reserve let
ter raises the very real probability of
potential for bank customers of Spanish-American ancestry to revert to the
common Latin-American practice of
using hyphenated last names to identify
the families of the father and mother.
Harold E. Mortimer, a member of
both the District of Columbia and New
Jersey Bar associations, in a speech be
fore the 11th Banking Law Institute,
noted that a husband could adopt his
wife’s name. I think legally adopted
pseudonyms will becom e more com
mon.
All of those variations on one small
facet of “ B” have significant implica
tions to banks. One is how to legally
establish who a person is if he may, at
will, change names under "B .” How
does one establish a credit history when
the regulation doesn’t authorize a bank
er to obtain a listing o f all the names a
credit applicant may and would use?
Furthermore, how can one have a
competent collection system when the
true identity of a debtor is clouded by
his use of other names for purposes
such as employment or residence? Mis
taken identities in collections are open
invitations for staggering lawsuits against
a bank.
Look up the original Regulation “ Z”
and compare it with its current form,
one which will continue to change and
expand. It’s frightening to see how a
regulation can get out of hand and be
come more incomprehensible as the
regulator attempts to clarify it.
Regulation “ B” undoubtedly is going
through the same sort of well-intended
but cancerous growth as “ Z.”
What are bankers to do when more
and more of their obligations for pru
dence in the lending and investment of
depositors’ and shareholder’s funds are
usurped by such regulations as “Z ” and
“ B” ? There is no simple answer. Bank
officers and clerical staff need addition
al education and training in these areas.
Legal counsel is essential to a bank.
Record keeping and liability are bound
to increase; costs related to regulation
in all areas will rise. To stay in business,
institutions must transfer to their bor
rowers their additional costs and risks
generated b y overzealous government
regulations. Such costs should be identi
fied as regulatory-imposed expenses.
The Federal Reserve System, and
the Philadelphia Fed in particular, has
shown an increasing awareness that it
has fathered a legal paper tiger. Studies
and cost figures of bank compliance
with and enforcement of burgeoning
bank regulations are starting to filter
out to knowledgable bankers. They are
frightening. Bankers must transfer these
costs quickly and identify their sources
to their customers! * *
MID-CONTINENT BANKER for November, 1976
ADAYINTHETRANSIT DEPARTMENT.
The Transit Department is working late again.
United Missouri’s Transit Department works 24 hours a day
—five days a week, and 18 hours a day on weekends.
This enables us to give better service at lower costs.
It’s why you should send the coupon for our Rapid Transit
Item Profitability Schedule and other information.
Or better yet, ask about our 30-day trial o f guaranteed better
service and better costs. You can phone collect.
You have nothing to lose, and profits to gain.
Correspondent Department
United Missouri Bank of Kansas City, N .A .
10th & Grand, Kansas City, Mo. 64141
(816) 221-6800
□ Send me the Rapid Transit Profitability
Schedule.
□ I’m interested in your 30-day trial, too.
Nam e_________ ___________________________—--------Address—
--------------------------------------— ----------------
City-------------------------------------------- —-----------------------State----------------------------------------------- Zip-----------------
i
____________________________________________ J
k l UNITEDMISSOURI BANKOf KANSAS CITY, N.A.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9
Selling /
Marketing
T V , Radio Commercials Take Spotlight
At M BA-BM A Marketing, PR Seminar
By JIM FABIAN
Associate Editor
stole the show at
the third annual Marketing and
Public Relations Seminar, sponsored in
St. Louis recently by the Missouri
Rankers Association and the Rank Mar
keting Association.
A reel of prize-winning T V bank
commercials started off the day-long
program, and a talk illustrated by hu
morous radio spots was given imme
diately following lunch.
Keynote speaker of the day was Felix
LeGrand, soon-to-retire executive vice
president, Missouri Rankers Association.
He told the 150 bank marketing peo
ple attending the conference that mar
keting and public relations have a big
job cut out for them in the present era.
He said that studies have shown that
74% of the public feel the major goal of
business is profit, even at the risk of
inflation and unemployment. Sixty-one
percent of the public believes there is a
conspiracy among big corporations to
set prices as high as possible, he said.
He quoted Willis Alexander, ARA
executive vice president, who has said
that big government doesn’t look much
better than business in the eyes o f the
public. While a majority may be in
favor of government planning of eco
nomic activities, a substantial majority
opposes greater government manage
ment.
Mr. LeGrand said that, as in most
other businesses today, change is the
order of the day. Change has been es
pecially marked in the banking in
dustry, he continued.
“ New technologies, most notably
EFTS, are making great forward strides
aimed at improved customer con
veniences, lower costs, greater effi
ciency. The EFTS concept is simple: it
refers to any system that replaces
checks with electronic impulses for pay
ment or deposit.
“ New management techniques and
technological change place an added
challenge on the marketing techniques
of banks as well. As we gradually leave
a paper-based system and no longer
C
o m m e r c ia l s
10
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
have to cope with a check volume that
otherwise would double to 54 billion
checks by 1985, the demand for in
formative public relations and sound
marketing plans will be vital. Custom
ers must understand why EFTS is
needed and how the new system will
affect them.
“The legislative
environment in
which we operate must be modern
ized,” he continued. “ I can tell you that
the banking industry has learned to
keep at least one eye— sometimes both
eyes— on what our legislators at state
and federal levels are up to. W e have
learned to act rather than react after
the fat is in the fire.”
In today’s consumer-oriented econ
omy, he said, there is absolutely no
substitute for aggressive, well-planned
marketing programs. “ W e in banking
consider marketing a major factor in
the growth o f savings accounts by well
over 40 million since 1952, and the in
crease in the dollar volume of these ac
counts by more than $200 billion. It is
expected that marketing will help us
reach our second trillion-dollar econ
omy in something under 15 years.”
Charles Manahan, vice president.
First National, Wichita, Kan., remarked
during a concurrent workshop that the
installment loan market is narrowing,
with more competition in store. He told
how his bank instituted a simple-inter
est loan plan and said that the monthly
statement mailing to installment loan
customers is useful in enabling the bank
to keep in touch with customers. He
also said yields were better from simple
interest than from add-on interest, over
the long haul.
Jack Regan, senior vice president,
Credit Systems, Inc., St. Louis, told
those attending his workshop about a
limited E FT system that could be op
erational in a five-state area within six
months, once a decision is made to go
ahead. The limited system would re
place a system that is currently stymied
due to failure of the Missouri legis
lature to enact enabling legislation last
session.
Concurrent workshops in the after
noon dealt with direct mail advertising,
premiums, free checking and other top
ics.
William J. Carner, marketing man
ager, First National, St. Louis, spoke
at the free checking workshop. He said
many banks got involved in offering
free checking because they didn’t know
what their costs were. Since then they
have found out that $1,700 is the
break-even point on a checking ac
count! Losses realized by banks offer
ing free checking are equal to from
3/2% to 4% interest; therefore, banks of
fering free checking are actually pay
ing that amount of interest to account
holders.
He predicted the return of per-item
charges for checking customers. New
York banks, he said, are abandoning
free checking and are charging cus
tomers a per-item charge on top of a
minimum balance.
Although banks abandoning free
checking find they lose many accounts,
they are not losing out in total bal
ances, he said. This is because the ma
jority of the lost accounts have low
balances and these balances are more
than made up from other sources.
A Big 10-4:
'Slanguage' of CB Radio
Is Taught by New Record
“ There’s smokey in a plain brown
wrapper!” “ What’s your 20?” “ Keep
your eyes peeled for that countymountie taking pictures!”
Such seemingly nonsensical state
ments as those above and more are ex
plained in full in a new record from
Pickwick
International,
W oodbury,
N. Y. “ How to CB” is a package con
sisting of a booklet and record or tape
that clarifies 500 CB terms and tells
how to:
• “ Break” a channel and do a radio
check.
• Pick a “handle” and use “ 10”
code.
• Use CB in an emergency and talk
CB etiquette.
• Select the type o f CB equipment
for a specific need.
• Keep CB talk legal and use CB
for enjoyment.
With the great national interest in
CB, the “ How to CB” package would
make a novel new-car loan or new-account premium. It’s available on record,
8-track or cassette tape, and that’s a
big 10-4, good buddy!
MID-CONTINENT BANKER for November, 1976
Another innovation from Harland!
The Odyssey Collection.
Beautiful three-to-the-page checks
that travel or stay at home.
ÉSÉ :
Harland is pleased to announce the first real innovation in personal three-to-the-page checksThe Odyssey Collection. Available in three designer styles, the Odyssey Collection also fea
tures the revolutionary Memory Stub™ which enables Odyssey check users to keep an accurat
record of all checks written away from home.
A Harland exclusive, the Memory
Stub™ is attached to each check.
and is consecutively numbered
with each check and record stub.
Ask about the new Odyssey Collection today
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
The Odyssey Collection comes
complete with a handsome carrying
case for storing checks and stubs.
P .O . B O X 1 0 5 2 5 0
A TLA N TA , G E O R G I
30348
NEWS ROUNDUP
News From Around the Nation
Auto Leasing by HCs Upheld
Demise of Cut-Rate Pricing Seen
The Fed has ruled that bank HCs can continue leasing
autos, stating that the practice “is essentially a financial
transaction” akin to lending money and is therefore “ close
ly related to banking.”
The Fed also ruled that auto leasing has no adverse
competitive consequences, contrary to charges made by
the National Automobile Dealers Association.
One proviso was added to the Fed’s 1974 regulations
covering auto leasing— that HCs leasing autos not service
the cars, provide loaners or obtain insurance for custom
ers leasing autos. This change, according to the Fed, en
sures that auto leasing by HCs remains a financial trans
action. It also makes HC auto leasing less competitive
with other auto-leasing firms.
The Fed said that leasing of autos to individuals has
tripled in the last decade and now accounts for 10% of the
new-car market. By 1980, it should account for 40% of that
market.
The current cut-rate pricing structure on consumer ser
vices is going to becom e a thing of the past, said J. Rex
Duwe, ABA Governing Council chairman and chairman
and president, Farmers State, Lucas, Kan., recently.
He said that banks can’t afford to price their services
soley in reaction to services being offered by other types
o f financial institutions. “ Customers base their banking de
cisions on service, forthrightness, convenience and regula
tion as well as price,” he said.
Mr. Duwe said that bankers must realize they can get
tied to loss-leaders, such as free checking, interest-free
customer use of bank cards, some Christmas club accounts
and devices such as N O W accounts. “ Banks, once they es
tablish a service like free checking, are expected to con
tinue that service,” he said.
Tax Bill Signed; Affects Banks
Past-Due Loans Decline
The Comptroller of the Currency’s office says that pastdue loans on the books of the nation’s 4,700 national
banks have dropped to both the lowest absolute level and
to the lowest proportion of outstanding total loans record
ed in the past 18 months.
The development is said to be part of a trend toward
continued improvement in the economy, coupled with
sounder credit extension and better collection efforts by
banks.
Loans are considered past-due if payment is more than
30 days late for installment paper and more than five days
late for single-payment loans.
Deceptive Practices Rules Issued
The Fed has published procedures for handling con
sumer complaints alleging unfair or deceptive practices by
banks.
The complaint procedure, called Regulation AA, be
came effective September 27 and formalizes procedures
for handling consumer complaints.
Any consumer having a complaint regarding an unfair
or deceptive practice by a bank or a violation o f law or
regulation can have the complaint investigated by sub
mitting it to the Director of the Office o f Saver and Con
sumer Affairs, Fed Board of Governors, Washington, D. C.
Complainers are advised to describe the bank practice
or action objected to, give the name and address of the
bank concerned and include the name and address of the
complainer. Complaints involving national banks will be
referred to the appropriate federal regulator for review.
12
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Federal Reserve Bank of St. Louis
Recently signed tax legislation tightens access to bank
account records, raises taxes on thrifts and broadens the
use of individual retirement accounts.
The law also causes the first major changes in estate
and gift taxation in 35 years, tripling the current $60,000
exemption from taxes applying to estates.
The law requires the IRS to get bank customer approval
in most cases for access to their bank records, which more
or less takes bankers off the hook in deciding whether
records should be given out.
The law also permanently exempts from taxation inter
est paid to foreigners or foreign corporations on bank and
thrift accounts, CDs and other savings instruments.
Bad-debt reserves will be taxed at a higher minimum
rate beginning in 1978, primarily affecting thrifts.
IRAs will be expanded to cover nonworking spouses,
military reservists and volunteer firemen by next year at
the latest. The total amount of earnings that can be taxdeferred will increase from $1,500 to $1,750 for spouses
of a working husband or wife.
Late Reporting Banks Fined by FDIC
Fines for late reporting were levied on 89 banks by the
F D IC in September. The banks had not submitted reports
o f income and reports of condition, which were due within
30 days of last June 30.
Fines amounted to $100 per day and were levied be
cause the F D IC considers the data in the reports to have
becom e increasingly useful for market analysis, disclosure
to stockholders and other purposes.
MID-CONTINENT BANKER for November, 1976
Central National Bank is now offering seven automated financial systems designed to help you
fine tune your management controls, evaluate the performance and profitability of your
departments, and spot problems, opportunities and trends early enough to do something
about them.
These systems give you crisply-reported data on your operations that you can interpret
easily and apply quickly. They represent the most advanced state of the data processing art, are
fully integrated and will interface with the next-step programs we are currently developing.
The seven new Central Automated Financial Systems are:
On-Line Savings
Certificates of Deposit
Demand Deposit
General Ledger
Installment Loan
Commercial Loan
Payroll Processing
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)443-7200.
C E N T R A L A U T O M A T E D F IN A N C IA L S Y S T E M S
4 DIVISION OF CENTRAL NATIONAL BANK
120 South LaSalle Street, Chicago, Illinois 60603
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
13
EFTS
(Electronic Funds Transfer Systems)
Two Chicago Institutions
Express Disappointment
On C B C T Review Refusal
CH ICAG O — Officials o f First Na
tional and Continental Illinois National
expressed disappointment last month
that the U. S. Supreme Court refused
to review the banks’ appeals o f lower
court rulings regarding the classification
o f CBCT units as branches.
The high court refused to review
three lower court decisions, each o f
which had ruled unanimously that
CBCTs are branches subject to state
branching laws. Since Illinois is a unit
branching state, the refusal means that
lirst National and Continental Illinois
National must unplug some o f their
C B C I s— those that are being operated
off-premise.
James A. Cassin, senior vice presi
dent, First National, and William D.
Plechaty, senior vice president, Con
tinental Illinois National, both said that
the refusal to review the lower court
decisions represented an inconvenience
to bank customers in Illinois.
As M id - C o n t i n e n t B a n k e r went to
press, it was learned that both First Na
tional and Continental Illinois National,
Chicago, disconnected their off-premise
CBCTs on October 22. Continental Illinois
National had two off-premise machines
and First of Chicago had 10 units in com
munity offices in Chicago and suburbs, five
terminals at various worksites and 12
“ Yes” POS installations at food stores.
Mr. Plechaty said that more than
4,500 transactions had been conducted
in September at the bank’s two offpremise CBCTs in Chicago.
“ W hile we intend to close these two
facilities when ordered to do so,” he
said, “we also will continue to raise
this important issue on the state and
national legislative levels. W e will con
tinue to bring the issue to the legisla
tors— as well as to the public— to
demonstrate the convenience it repre
sents and the customer support it has.”
Mr. Cassin added a positive note in
his remarks. “The action once and for
all puts the issue o f electronic banking
squarely before the lawmakers at the
federal, state and city levels,” he said.
“ W e are hopeful that the Illinois
EFTS Commission will soon recom
mend legislation that will be supported
b y a broad base of banks and other
financial institutions— regardless of their
14
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
stand on traditional branching— and
that the citizens o f Illinois will soon be
allowed to enjoy the benefits o f con
venient, low-cost banking services.”
The Illinois EFTS Commission Mr.
Cassin referred to is sponsored by the
Illinois Bankers Association. Its forma
tion was announced at the association’s
annual convention earlier this year.
Money Stores of Liberty Nat l
Roast Customers at Openings
By Giving Meat to Depositors
LOU ISVILLE— Customers opening
checking or savings accounts during the
grand openings of Liberty National’s
M oney Store in the Kroger Store in the
Rolling Hills Shopping Center or at
9901 Dixie Highway had a choice of
premium: They either could be “roast
ed ” or “ steaked” to a dinner.
New customers received free eightounce steaks or four-pound roasts dur
ing the event and were invited to reg
ister for free “ shopping spree” grand
prizes.
The M oney Store, a manned full-ser
vice branch, is staffed by bank person
nel, who help customers open checking
or savings accounts, process loan ap
plications and purchase money orders,
travelers checks and cashiers checks.
Tw o M oney machines— Docutel T-4s
— are available 24 hours daily, seven
days a week, and customers with a L ib
erty M ONEY Card can make deposits,
transfer funds and withdraw cash from
checking, savings or Master Charge ac
counts with the machines. The ATM s
also will verify checking and savings
balances.
Registering for chance at free grocery shopping
spree during grand-opening celebration of
Money Store a re customer of Liberty N at'l,
Louisville, and her sons. Bank has facilities in
Kroger superm arkets, feature bank personnel
on hand during certain hours and full-tim e
Docutel T-4 ATMs.
Rodney Freem an (I.), customer of H arding M all
Office of First Am erican N at'l, N ashville, is
assisted in m aking deposit to ban k's Anytim e
Teller by Phil G eorge (c.), v.p. and br. m gr.,
and Ken Cox, v.p. and Anytim e Teller project
ch. Occasion w a s 300,000th transaction on
bank's ATMs. The m achines, w hich have been
in operation since M ay, a re said to be ex
trem ely successful—ATM pictured here is re
ported to be most used in nation!
1st American Nat'l Anytime Teller
Acclaimed as Most-Used in Nation
NASH VILLE— The Anytime Teller
ATM of First American National, lo
cated in Harding Mall, has been ac
claimed as the most used in the nation.
During the month of July, 20,090 trans
actions were conducted on the machine.
The bank introduced ATM s to Nash
ville in May, placing 10 of the de
vices throughout Davidson County.
Market research showed that the Hard
ing Mall site would have tremendous
usage, due to that area being a fast
growing part of the city, a section that
attracts young people because of its
multi- and single-family dwellings.
But bank officials were overwhelmed
by its success, a success that has been
attributed to well-planned operating
and marketing programs. All First
American personnel took part in train
ing sessions familiarizing them with the
ATM s before they were installed. An
incentive campaign was begun in May
giving cash awards to employees who
got the public to use the machines.
In addition, bank staffers were sta
tioned at the ATM s to assist custom
ers in their use and to give out coupons
redeemable for strawberry pie at a lo
cal restaurant.
O f the 10 Anytime Teller locations,
six are at branch locations and four
are off-site. And three of the off-site
locations are supermarkets and, officials
say, account for the largest volume in
the U. S. for that type of location!
MID-CONTINENT BANKER for November, 1976
O ur idea of
correspondent banking:
THE COMMITTEE OF ONE.
Our people are real, live, experienced correspondent professionals,
with years of correspondent banking behind them. They aren’t
management trainees or just goodwill ambassadors, so they can okay
loans or services—like our new EFTS services—on the spot.
Without going through unwieldy,
time-wasting committees.
WE CALL YOU BYNAME
NOT BY PHONE.
You see, National Boulevard
believes in person-to-person,
eye-to-eye contact with the
management of every
correspondent bank. Right
there at the correspondent
bank. So things get done
faster, friendlier.
THE FUTURE STARTS TODAY.
And now our individualized services will be
better than ever, because National
Boulevard is ready with EFTS.
Electronic Funds Transfer
Systems. EFTS means
efficient response to your
service requests. Immediate
response. For instance, our
Central Information File is
already on line, sending
special data to correspondents
at a moment’s notice. Soon,
checking and savings accounts will
be on line. Then, step-by-step through the year,
every correspondent service will be fully
integrated into the system for more convenience,
for better banking.
The b ank for the N ew Downtow n
NATIONAL BOULEVARD BANK
OF CHICAGO
400-410 North Michigan Ave., Chicago, 111. 60611
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Phone (312) 467-4100
Member FDIC
15
BANKING WORLD
• Bank o f America has promoted
Robert W . Gibson and H. Dennis
O ’Neil to vice presidents in the Chica
go Corporate Service Office. The two
have becom e senior account officers of
the office, handling account and credit
relationships with major corporations
in Chicago and the Midwest. Both men
have been in the Chicago office since
its opening in 1974.
W O O DRUFF
nnnrnnn
ID
r~\ ^
f
! FOR THE
RIGHT MAN
W ELM AN
SMITH
• Joseph C. Welman, former ABA
president, has retired as a director and
chairman of the executive committee,
Bank of Kennett, Mo. Mr. Welman,
who also was a former president, Mis
souri Bankers Association, retired as
the bank’s CEO in 1973, but continued
as a director. He began his banking ca
reer in 1925, when he joined the Bank
of Kennett as a stenographer for the
late W . F. Shelton Jr., president.
JASPER
r
rn r v r r
PC'.OR THE
RIGHT JOB
/ r /r ...executive personnel^ I
4 IT
for banking, finance
■ I
and related fields
contact
{ £ fr
jr j
TOM CHENOWETH,
|
|
|
|
manager
ff FINANCIAL?'
PLACEMENTS^ 1
f912 Baltimore, Kansas City, Mo.
_j,
phone 816 421-7941
16
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
• Charles E. W oodruff will take
early retirement Decem ber 31 from
New York City’s Manufacturers Han
over Trust and Manufacturers Hanover
Corp., where he is vice chairman. Fol
lowing 14 years with the New York
Fed, he joined the old Hanover Bank
in 1947, and, when that bank and
Manufacturers Trust were merged in
1961, he was made head of the south
western division. In 1963, he was elect
ed senior vice president with responsi
bility for the bank’s business in 31
states. Mr. W oodruff was named execu
tive vice president in charge of the na
tional division in 1966 and vice chair
man in 1973.
• David T. Stoecker, vice president,
Mercantile Trust, St. Louis, has be
come head of the central group, a divi
sion of the regional banking depart
ment. He succeeds James A. Smith,
who has joined St. Louis’ Manufactur
ers Bank as executive vice president.
Daniel W . Jasper, assistant vice presi
dent, has rejoined the central group to
head division A, which covers Illinois,
Indiana, Kentucky and Iowa. Mr. Jas
per, with Mercantile since 1969, had
been in correspondent banking there
before being assigned to the eastern
division of the United States group in
January, 1975. Mr. Stoecker went to
Mercantile in 1965 and was in data
processing until 1972, when he was
transferred to the central group. He
had headed division A since 1974.
STO ECKER
• James E. Smith, former Comptrol
ler o f the Currency, joined First Chica
go Corp. November 1 as executive vice
president. First Chicago Corp. is the
parent HC of First National, Chicago.
His duties at the HC include legislative
liaison activities at state and national
levels. Mr. Smith became Comptroller
in 1973 and resigned the post last July.
Before being named Comptroller, he
was deputy under secretary of the Trea
sury and special assistant to the sec
retary for congressional relations. Dur
ing his 21-year career, Mr. Smith also
served as ABA deputy manager and as
sociate federal legislative counsel.
• Nat S. Rogers, president, First
City National and First City Bancorp,
of Texas, Houston, has been elected to
a two-year term on the Conference
Board, an independent, nonprofit busi
ness and economic research organiza
tion, headquartered in N ew York City.
Another Mid-Continent-area banker,
Ben F. Love, chairman, Texas Com
merce Bancshares, Houston, was re
elected to a two-year term on the Con
ference Board.
• Gaylord Freeman, honorary chair
man, First National, Chicago, has been
named to the Econom ic Policy Council.
The latter has been formed to examine
critical issues affecting long-term U. S.
relationships with both the industrial
ized and the developing countries. Mr.
Freeman is the only commercial bank
er on the council.
MID-CONTINENT BANKER for November, 1976
In correspondent
banking se rv ice s, we’re
the sp ecialists.
Here’s how First Chicago,
a $19 billion banking corporation,
can help you serve your customers more productively.
You know what your correspondent
banking needs are. You also know what
services your present correspondent
bank provides.
Check this list of First Chicago's co m
prehensive services. See if there aren't
many ways we can work together more
productively.
Then call a correspondent banker at
First Chicago, (312) 732-4101, or write us.
DATA PROCESSING
Point-of-Sale Techniques
Bank Accounting Services
Bank Information Systems
Electronic Funds Transfers
CREDIT FACILITIES
Holding Company Lines of Credit
Participations: Upstream and Downstream
Intermediate Term Credit
Liquidity Lines of Credit
Commercial Finance Services: Inventory and
Receivable Financing
Corporate Financing Advisory Services
Leasing Activities and Analysis
Credit Information
Small Business Administration:
Loan Counsel
MANAGEMENT ASSISTANCE
Loan Portfolio Review Techniques
Economic Forecasting
Profit Planning and Forecasting
Marketing and Business Development Advice
Personnel Assistance
Operations Planning
Organization Planning
SPECIAL CORRESPONDENT SERVICES
Annual Correspondent Conference
Account Referrals
Mini-conferences and Workshops,
Special Events Planning
Record Retention and Reconstruction
Cash Management Consulting: Collection,
Concentration, Disbursement and Control
FOCUS: Lockbox Location Model
Visual Aids: Slides and Closed Circuit
TV Production
TRUST BANKING
Personal and Corporate Trust Services
Trust Investment Advisory Services
Monthly Investment Services
Stock Transfer and Shareholders Services
Dividend Reinvestment
PERSONAL BANKING ASSISTANCE
Bank Promotions
YES Card"*
BankAmericard®
Savings Programs
Automobile Leasing Program
Bank-At-Work/Direct Deposit Program
OPERATIONAL SERVICES
Cash Letter Clearings: End-Point &
Float Analyses
Coin and Currency
Collections
Money Transfer
Federal Reserve On-Line Settlement
Securities Custody
Security and Coupon Collection
Payroll Accounting
INVESTMENTS
Government Securities
Municipals
Federal Agency Securities
Federal Funds
Repurchase Agreements
Commercial Paper
Certificates of Deposit
Treasury Tax and Loan Accounts
Money Desk Reviews
Portfolio Analysis Services
INTERNATIONAL BANKING
Worldwide Locations
Merchant Banking
Money Market
Instruments
Letters of Credit
Foreign Exchange
Transactions
Transfers and
Remittances
Ex-Im Financing
FirstChicago
The First National Bank of Chicago
Productive services for banks and bank holding companies.
MEMBER FDIC
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
17
Corporate
News
Roundup
TIERN EY
STICKLER
• Financial Shares Corp. Kent D.
Stickler has joined Financial Shares
Corp., Chicago, as executive vice presi
dent. He had been vice presidentmarketing, Illinois National, Springfield. Mr. Stickler’s primary responsi
bility will be in marketing management
and sales training for the firm’s clients.
Helen J. Tierney has been promoted
from second vice president to vice pres
ident of the firm, which she joined last
year. She formerly was advertising/
publicity manager, Citizens Bank, Park
Ridge, 111.
sion of Federal Signal Corp., BunRidge, 111. Mr. Rigney had been a free
lance graphic and architectural design
er developing programs for many large
corporations and several ad agencies.
NEEDHAM
RIG N EY
• LeFebure. William R. Needham
has been appointed manager of adver
tising and sales promotion of LeFebure,
Cedar Rapids, la., while Fred J.
Spreier has been named sales engineer.
Mr. Needham will be headquartered in
Cedar Rapids and will coordinate the
firm’s nationwide communications ac
tivities. Mr. Spreier will be headquar
tered in Kansas City and will cover the
southwestern Kansas and north central
Oklahoma areas.
W ALLER
GRINSTEAD
• Bank Building Corp. Richard C.
Grinstead II and James N. Waller have
joined Bank Building Corp., St. Louis,
as consultant services managers in the
firm’s Southern Division. Mr. Grinstead
will represent the firm in central and
eastern Kentucky and Mr. Waller will
work in western Tennessee and western
Kentucky. Mr. Grinstead was formerly a
sales engineer with LeFebure Corp.,
Des Moines, la., working out of the
Louisville office. Mr. Waller was for
merly a zone sales manager for Bur
roughs Corp., Detroit, working in the
Omaha office.
• CMI Investment Corp. Ralph E.
Lautmann has been named president,
CMI Investment Corp., Madison, Wis.
Bruce Thomas, who had been chair
man and president, continues as chair
man and CEO. Robert L. W aldo, ex
ecutive vice president and secretary,
has been elected to C M I’s board.
• Federal Signal Corp. Thomas K.
Rigney has been appointed divisional
design director for Federal Sign, divi-
18
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ad Agency Cited
• Credit Systems, Inc. Bowen FI.
Roberts has joined Credit Systems,
Inc., St. Louis, as staff vice president.
He comes from National Data Corp.,
Atlanta, where he was vice president
of marketing for the southern region.
CSI is the operating center for the
Master Charge credit card program in
Missouri, Kansas, Iowa, southern Illi
nois and western Kentucky.
• Florida Software Services, Inc.
Three vice presidents have been named
at Florida Software Services, Inc., Or
lando. They are Hal G. Smith, bank
software development; Nestor M. de
Armas, finance; and Donald L. Parsons,
data services.
Security Corp., Irvine, C a lif., is publishing this
full-page ad in advertising trade publications
a s a testim onial for the firm's ad agency, Coch
rane C hase & Co., N ew port Beach, C alif. The
ad featu res Security Corp. officers, G a ry J. Griff
(I.), v.p., and John K. Griff, pres., decked out in
party hats and stream ers and holding g lasses
of cham pagne as they exp lain that "C o chrane
C hase & Co., is driving us to d rin k." They go
on to point out that their u ncharacteristically
bubbly atttiude is really in celebration of the
fact that Security Corp.'s sales h ave gone up
6 0 0 % in the five yea rs that their firm has been
w ith Cochrane C hase. " O f course, they don't
get all the cred it," sa y s the ad. "W e have
the highest q u ality products and the most in
n ovative m arketing appro ach in our industry.
But until Cochrane C hase cam e along, no one
knew it." A ctually, production of the ad w a s
handled by Cochrane C hase a s part of an on
going institutional cam p aign, but the story is
Security Corp.'s.
® Associates Commercial Corp. This
Chicago-based national commercial fi
nance company has acquired the prin
cipal assets of Rawleigh, Moses & Co.,
Inc. The latter firm engages in factor
ing in 19 states, with its principal ac
counts being in furniture and apparel.
The factoring operation will be direct
ed by Peter Thompson, senior vice
president, Associates Commercial, in
Chicago, and Calvin B. Baird, senior
vice president, in the firm’s Charlotte,
N. C., office, who will be responsible
for factoring activities in the Southeast.
• Continental Mortgage Insurance.
Larry Roberts of Indianapolis has been
named builder representative, north
central states, and William O. Ferrell
of Brownsville, Tex., has been named
southwestern states builder representa
tive for Continental Mortgage Insur
ance, a subsidiary o f CM I Investment
Corp., Madison, Wis. Both men will
serve as liaisons between lending in
stitutions and builders engaged in tract,
condominium and planned unit de
velopments.
MID-CONTINENT BANKER for November, 1976
AN
NECESSITY
FROM
& TRUST.
The lowly paper clip is; as
business, and plenty of whatnots
much a necessity to day-to-day
and whatevers to dress up a
banking as credit information. The same thing
bank lobby. Arrow can take your building from
holds for the design of your facilities and
the ground up. A fully-staffed, experithe way they're furnished.
en ced D esig n D epartm ent stands
That's why one of our sister subready to meet your unique needs,
sidiaries at Memphis Bank & Trust
I| ^
Arrow even has a Service Depart
is the South's most sophisticated
ment, rare in the field, that pro
business supplier. . . Arrow BusijV J r
vides a craftsman's approach to
ness Services, Inc. As a member
JB #
,
¥& ft
furniture restoration and repair,
of the banking family, Arrow is \ J B |
/
■B-1
So talk to Arrow about neuniquely qualified to meet a
JEH
l
/
B i|
cessities. Take it from us at
bank's design and furnishB L
B l
Memphis Bank & Trust. . . they'll
ing needs.
j* 1
treat you like family.
Arrow has 16,000 square
1 'm r V
feet of custom showroom at its
H E l 'I l i
Memphis headquarters display/
\
a
ing furniture and accessories
J
‘ ji *
^
from the finest of Oriental rugs
■ I B
BUSINESS SERVICE^N^r
to paper clips. Right behind that
■M IB
B l 111
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fW , „
_
,
o c r\ r\r\
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t.
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A subsidiary of Memphis Trust Comparr,
showroom is 25,000 square feet
,
**
of active inventory, including
3050 Millbranch,
the things in the showroom, sup■ ! B j
;|
Memphis, Tennessee 38116
plies for industry and general
K . ;; |J|
.. ! m ,
(901)396-9861
|J§
mm
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
19
• Paper Roll Products Co. This D e
troit-based firm has published what it
says is the first complete catalog de
voted exclusively to folded and rolled
paper products for financial institu
tions. Detailed within the embossed
silver-covered brochure are such prod
ucts as rolled-and-folded compartment
and control tapes, teller and bookkeep
ing machine rolls and automatic coin
wrap. Separate pages are devoted to
perforated tapes for data processing
and telecommunications, teletype rolls
and magnetic-transfer ribbons. Also in-
cluded are word-processing supplies,
such as magnetic cards, Flexy Disk and
digital and dictating cassettes, as well
as adding-machine rolls, typewriter rib
bons and copier paper. All products are
illustrated and concisely described to
save time in ordering, says Paper Roll
Products Co., and the brochure’s de
sign is such that additional sheets may
be inserted in proper sequence as more
products are included in the line. For
a free copy, write: Paper Roll Products
Co., 20100 Civic Center Dr., P.O. Box
405, Southfield, MI 48076.
New
Products
and
Services
color filters combined with a new-type
reflector enable the green and/or red
messages of OPEN, CLOSED, EN
TER, EXIT, etc., plus any special, to
focus clearly from a greater distance
than before. The firm added that the
new TEL LITE also blanks out any
shadow of the message showing when
the sign is turned off. W rite: Business
Data Systems, Inc., 578 Hillwood
Drive, Milford, MI 48042.
or without the assistance of a central
host processor. Insta-Share operates
without attendants or environmental
control and plugs into a normal 110volt AC outlet. It has the capacity to
converse with the bank’s host computer
to update its own files on a real-time
basis, and it can be used as a file in
quiry backup when the main CPU is
“ down” or during the night or on vaca
tions. For more information, write:
Patricia J. Forrester, Bank Computer
Network Corp., 10501 Delta Parkwav,
Schiller Park, IL 60176.
• Mosler Safe Co. The Bank Safe
Alarm from Mosler Safe Co., Hamil
ton, O., has a built-in proximity sensor
protecting the control cabinet, and an
optional timer and sensor also can pro
tect the safe with the same circuit. In
addition, perimeter, space alarm and
point protection can be added in two
• BankCom. The microprocessorbased Insta-Share System, believed to
be the world’s smallest time-sharing sys
tem, has been introduced by Bank
Computer Network Corp. (BankCom),
Schiller Park, 111. The system is de
signed to allow banks to support mul
tiple ATMs, teller information termi
nals, customer information terminals
and POS devices 24 hours daily, with
zone steps. Internal Line Security can
be added for high-value points and the
alarm control can report either to p o
lice with Grade AA type or convention
al police reporting systems, or to a lo
cal bell or other annunciator. Write:
Mosler Safe Co., Department PR-053,
1561 Grand Boulevard, Hamilton, OH
45012.
• Business Data Systems, Inc. A
new version of a TEL LITE sign for
bank drive-up traffic control was un
veiled at the ABA’s annual convention
in Washington, D. C. The new sign
incorporates a major breakthrough in
improved legibility of message reading
in direct sunlight, according to its
manufacturer. The firm says special
LOOKING FOR IMMEDIATE ACCURATE INFORMATION
TO DEAL WITH TODAY’S
WILDLY FLUCTUATING GRAIN &
LIVESTOCK MARKET?
OUR ONLY BUSINESS
WRITE OR C A LL
IS ADVICE
F G L » 1200 3 5 th St
W est D es M o in e s . Io w a 50265
515 223 -2 2 00
20
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
Sing a song o f checkbooks,
styles and surprise;
Four and twenty changes
right before your eyes!
W hen the book is opened
the folks’ll start to singN ow isn’t this a catalog
to set before a king?
ast year’ s Personal C h eck b ook Catalog cover
was so regal-looking, so durable, we decided
to keep it fo r another year. But d o n ’ t wink an eye or y o u ’ ll
miss som e very exciting changes. Like a brand new A ntique
check that captures the lo o k o f the old fashioned draft o f
yesteryear. Or the Great M o v e W estward in the pioneering
Spirit o f Am erica style. Then there’ s new photography for
the W ildlife series, new sky ph otos for the Serenity series,
plus new ch eck b ook cover designs. I f you add a new index
fo r easier check selection, and a delightful host o f other
little changes, y o u ’ ll see that w e’ve tried to make check
selection easier fo r y o u r cu stom er and im p rove ch e ck
merchandising fo r your bank. A sk your Deluxe representa
tive fo r the enchanting details.
Little things make a big difference.
CHECK PRINTERS, INC.
S A LES HEADQUARTERS P .0. BOX 3 3 9 9 ST. PAUL. MN. 55165
STRATEGICALLY LOCATED P U N T S FROM COAST TO COAST
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
21
"Inflation's legacy is a shrunken housing market. Between
one-half to two-thirds of all American families have been
excluded from the market."
-Kenneth J. Thygerson, Chief Economist
U.S. LEAGUE OF SAVINGS ASSOCIATIONS
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
"This'M AGIC LOAN' Kit sure helps
brokers show first-time buyers
how to own a home with a
low down payment."
Today's continuing inflation is pricing more and more
potential buyers out of the home market. Yet with current
savings levels, lenders have high loan targets to meet in
order to maintain profits.
Studies indicate that the most promising market segment is
the 25 to 35 year old first-time homebuyer with limited funds
for a down payment.
And with new starts still low and sales of existing homes
running higher than ever, one of the best ways to reach
these prospects is through Realtors®.
To help you do this job, MGIC has developed a new
information/marketing program featuring the "MAGIC
LOAN" Kit. It contains one booklet which tells Realtor sales
people how mortgage insurance can help them close more
sales. And a second that explains directly to their prospects
how mortgage insurance makes possible low down payments.
So far, we have provided more than 300,000 of these kits to
lenders. They are currently being used by more than 20,000
realty firms.
If you are not already taking advantage of this timely
marketing help, contact your MGIC representative. He ll
quickly provide you with a free supply of "MAGIC LOAN"
Kits. After all, part of his job is helping you get loan
money out.
When it comes to mortgage insurance, there's no substitute
for experience. MGIC experience.
I
I
I -..’
V 'S
*T.
I M i
t »t i; f e» p
. <■>< M
• ^
f “X
sv'.-f'S* %
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a
É! St:
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MGIC
Because experience pays.
Mortgage Guaranty Insurance Corporation, a Subsidiary of M G IC Investment Corp.. M G IC Plaza. Milwaukee. WI 53201
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 “ governm ents.” 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
M e m b e r F .D .I.C .
A s u b s id ia ry Ot gaM 1-irst ln tcrm tlo n :i) B a n csh a res.liu .
Branch offices in London, Paris, Singapore and Cayman Islands. Representative offices in Tokyo and Sao Paulo.
24
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
Investments
Stable Near-Term Market Seen
By Bank Bond Men
SPOT survey of bank bond officers
has resulted in predictions of a
relatively stable bond market situation
for the next three to six months
Bond officers were asked to antici
pate new bond offerings in the nearterm, the yields banks can expect from
their bond portfolios and the situation
regarding municipals.
Participants in the survey were John
Otterman, assistant vice president, In
diana National, Indianapolis; James A.
Brickley, senior vice president, First Na
tional, Dallas; R. C. Garraway, vice
chairman-financial, Deposit Guaranty
National, Jackson, Miss.; Frank K. Spin
ner, senior vice president, First Na
tional, St. Louis; and Gordon Pye, vice
president, Irving Trust, New York.
These bond officers were asked how
interest rates are affecting the present
supply of bonds in the market.
Mr. Otterman replied that interest
rates are more affected by supply than
vice versa, although lower general rate
levels tend to bring in smaller and less
er quality issuers. “ Through the entire
yield curve,” he said, “ the spread rela
tionships between types of securities are
at or near the narrow end, although the
curve itself has been historically steep.
The steepness is due to anticipated
higher rates because of inflationary
pressures and strength in the econom y/
Current levels of interest rates con
tinue to be quite attractive to bond is
suers o f all types relative to conditions
prevalent in the markets over the past
three years, Mr. Brickley said. “ Since
we are basically expecting relative sta
bility in the economy and interest rates
over the next three to six months,” he
said, “ companies that have access to
By JIM FABIAN
A
Associate Editor
credit markets should continue to easily
finance their requirements.”
The generally lower level o f interest
rates that has prevailed over the last
several months has caused a dramatic
increase in the forward supply of bonds
coming to market, according to Mr.
Garraway. The bonds being issued are
for purposes of refunding corporates,
advance refunding o f municipals and
general restructuring of balance sheets.
Banks also have been active in recent
months in beefing up their capital ac
counts, he said.
Mr. Spinner predicted that interest
Investment Banker's Views
An investment banker’s look at the
bond market reveals the following:
Interest rates have had no effect
on the present supply of bonds in
the market. Short-term yields will
range from 3.50% to 5% and longtenn yields will be in the 5.10% to
6% area.
The problems in New York City
have not generated more requests
for credit ratings; neither are bank
ers asking questions about unfunded
pension plans that could affect credit
in some of the nation’s major cities.
The many defaults in the eastern
market have tended to upgrade the
Midwest municipal bond market.
These are the views of Kenneth
R. Adams, president, Perry, Adams &
Lewis, Inc., Kansas City.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
rates will rise gradually throughout
1977 if President Gerald Ford is elect
ed, but that they will be flat or slightly
down if Governor Jimmy Carter wins,
due to a threat of possible wage and
price controls.
Mr. Pye said that virtually all moneymarket analysts expect short-term rates
to rise next year. The only question is
how much. “ The best way to get a
handle on how much is to look back m
history at periods economically similar
to how 1977 shapes up,” he said. “ D o
ing this, our best guess is for a 100
basis-point increase at the short end.”
In reply to the question of new bond
offerings in the next few months, Mr.
Otterman said that predicting new
bond offerings is difficult. The Treasury
will be financing its projected $ 19-bil
lion deficit mostly through borrowings,
he said. “ At this time, the municipal
30-day visible supply figure is $1.55
billion and I would expect an addi
tional $2 to $3 billion to be financed
by the end o f the year,” he continued.
“The corporate bond calendar is also
on the low-to-average side.”
Mr. Brickley does not foresee any
significant change from recent demands
on the markets while Mr. Garraway
predicts a large supply of new bond
offerings in the next three to six months.
“W e feel that the supply of money is
available to accommodate these issues
without immediate pressure on long
term rates,” he said.
Mr. Spinner predicts fewer bonds in
the near future.
Mr. Pye said that the appetite for
issuing more bonds is beginning to
wane on the part of corporate treasur
ers. Many already are liquid and are
25
shifting to an investment position. ’“ In
vesting short at the spread to carry on
long bonds just doesn’t look very at
tractive at today’s rates. As soon as
long rates move up, as is expected,
bond issues by corporations should fall
back to two-thirds of the rate during
1976,” he said.
The bond officers had the following
to say regarding the yields banks can
expect:
• A relatively flat yield curve with
rates plus or minus 50 to 100 basis
points from where they are currently.
Spreads between short and longer
maturities are expected to continue to
narrow as the yield curve becomes flat
ter— Mr. Brickley.
* Yields are expected to remain at
present levels or slightly lower over the
next few months and then should trend
generally higher over the next six
months on both short and long maturi
ties. Rate changes probably will be in
the one-half to three-quarters range—
Mr. Garraway.
• Prime-rate yields will stand at 7fi%
in January, rise to 71% by April and
continue up to 8% by October, 1977.
About a year from now, the fed funds
yield will be 61% and short-term U. S.
governments will be at 7%— Mr. Spin
ner,
* A fairly rapid 50 basis-point rise
in long rates could occur in the next
few months, with a slow drift upward
by another 25 basis points by the end
o f 1977. At that time, governments will
be yielding 8.50% and 90-day treasury
bills about 6.50% on a yield-equivalent
basis— Mr. Pye.
A generally cautious situation was re
ported in the municipal bond area by
those surveyed. The lone exception was
Mr. Spinner, who said that, as long as
no credit problems develop, it’s business
as usual.
Mixed preferences were reported re
garding treasury bonds over agencies.
Mr. Otterman said important external
considerations are relative liquidity, cur
rent spread to governments at various
maturities and intangible tax conse
quences. “ Obviously,” he said, “ internal
needs must override how the market as
a whole treats the relationship between
the two types of securities and invest
ment decisions must be based on both.
. . . I have tended to not use agencies
for liquidity and have moved in or out
o f agencies as the spread to govern
ments changes. The tax considerations
are not material to us here.”
Mr. Brickley said that, if the ques
tion is strictly one o f credit quality,
then a direct obligation o f the federal
government must be favored over an in
direct obligation. But if the question
relates to relative yield-spread relation
ships, there are times when agencies are
26
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
more attractive than treasuries. Both
have ready and well-developed market
acceptance for the most part and can be
easily traded or sold.
Mr. Garraway favors treasury bonds
over agencies at this time, primarily
because the current yield advantage on
agencies does not offset their loss of
marketability. Also, he said, the yield
spread is narrow and treasury bonds
offer a better supply from which to
choose.
Mr. Spinner said that, when yield
spreads are small, he prefers U. S. gov
ernments. However, when yield spreads
are large, agencies are preferred.
Mr. Brickley, in commenting on cur
rent issues facing bond departments,
stated that it appears that the trend of
banks over the past 12-18 months
toward greater holdings o f investments
to attempt to fill the void in earnings
created by weak loan demand will con
tinue through most, if not all, o f 1977.
“ If a continuation of the current eco
nomic recovery can be counted on,” he
said, “ then reinvestment decisions faced
early in 1977 will have a strong influ
ence on both a bank’s earnings and its
ability to manage its liabilities as loan
demand returns to the banking system.
“ Many banks and other investors
have substantial holdings o f short-term,
fixed-rate assets that will be running off
throughout the year. This creates not
only a considerable pool o f lendable
an d /or investable funds, but also con
siderable pressures to extend maturities
or lower quality in the re-employment
of these funds as they are available to
achieve stable earnings growth.
“These pressures could converge to
effectively hold interest rates down or
could result in substantial losses as it
becomes necessary to liquidate securi
ties in a far different interest rate en
vironment if current economic policies
fail to result in lower inflation rates and
credit demands consistent with the vi
able and extended period o f economic
expansion that appears to be possible at
this time.” * *
Banks Expected to Push Mortgage Loans
To Erode S&L Market, Insuror Says
R E S U R G E N C E of commercial
bank activity in mortgage loans
was predicted recently by Lee Kendall,
president, Mortgage Guaranty Insurance
Corp., Milwaukee. Mr. Kendall spoke
at a luncheon in Kansas City at the
opening of a M GIC regional office
there.
Mr. Kendall told his audience, many
of whom were associated with thrifts,
that the big banks will be leaders in
the return to mortgage lending. Their
Flanking tee K end all, pres., M ortgage G u ara n ty
Insurance Corp., at K a n sa s C ity luncheon cel
intent, he said, is to get some of the
ebrating opening of regional office there are
mortgage lending business away from
G ra n v e ll Smith, M G IC div. m gr., Houston, and
S&Ls. Bankers have come to realize, he
Lloyd Cole, M G IC regional v.p. and regional
said, that the mortgage lending area is
sales mgr. for K a n sa s and M issouri.
one of the few that S&Ls hold the
lead, thus, they will come up with the
flation, and businessmen, who have
methods necessary to secure a portion
come to realize they can live with infla
of this business.
tion and, in fact, hold it down, by re
Mr. Kendall also predicted that mort fusing to carry large inventories that
gage loan rates would hold steady for
tend to fuel inflation.
the next few months, but that if bank
He noted that it is becom ing evident
ers enter the market in force, rates will that big-spending legislators are losing
drop.
elections, which is another dampener to
He likened the U. S. economy to a inflation.
jet plane that has taken off dramatical
He said housing starts this year will
ly but has reached its cruising altitude not be at the 1.5-million annual rate
and has leveled off. He predicted a predicted, but that the rate next year
good Christmas spending period, with
could rise to 1.7 million, due to a new
federal spending down. But the ques group of first-time home buyers coming
tion marks, he said, are inflation and into the market.
interest rates.
This group of young marrieds, he
Inflation will not skyrocket again be said, is the largest new group of pros
cause of two forces: the consumer, who
pective home buyers since the end of
has learned to cope pretty well with in W orld W ar II. • *
MID-CONTINENT BANKER for November, 1976
Investments
New Guidelines for Municipal Bonds
By HERBERT P. DOOSKIN
HIS N ATION was built on the
Partner
credit system. Just as credit financed
Alexander Grant & Co.*
the railroads that opened the West, it
has been credit—largely in the form
of the municipal bond issue— that cre
ated the essential elements of service
to the millions of
The credibility of the municipal bond
people who live to
offering system was challenged, with
day in communi
the challenge coming primarily from
tie s fo u n d e d or
the New York City and related New
largely constructed
York state moral obligation situations.
during th e la s t
Although it’s unfair to damn the entire
quarter-century.
system because of one city’s problems,
Oddly, the cus
nevertheless the system, once chal
toms and formali
lenged, must take corrective action.
ties relating to this
Greater and more detailed disclosure
unique type of se
— not only about the enterprise bene
curity, the munici
fiting from a revenue bond issue, but
pal bond, have re
also on the basic general obligation
mained all but unchanged over the past
bond— will be essential if we are to
50 years— until now. Suddenly, a rebring back the credibility o f the system.
evaluation is on. Already, it is bringing
There’s nothing to be gained by
about wide-ranging changes, not only
quibbling that New York averted actual
in the way these securities are present
default. The facts o f the Big Mac set
ed for sale, hut even in the systems
tlement meant that old securities were
employed by the issuing unit of gov
redeemed not in cash but in new se
ernment.
curities.
So, it’s time for a look at the assump
And with that, one of the longesttions held for so long by government
held assumptions relating to municipal
officials, broker-dealers, banks and buy
bonds went out the window: The gen
ers— by all those interested in the mu
eral obligation bond, pledging the full
nicipal bond market.
faith and credit and the taxing author
Today in the United States, there
ity of the issuing governmental unit,
exist some 78,000 governmental entities
had become something less than a per
at state and municipal and parallel lev
fectly safe security. The old axiom that
els; not all have the authority to issue
a city would pay its bond holders b e
bonds, but many— including even the
fore its police was challenged. And
smallest units, like mosquito abatement
districts— may and regularly do issue
debt instruments.
As a consequence, the municipal
bond industry has grown tremendously.
* Alexander Grant b Co., headquartered in
In 1974, for example, when corporate
Chicago, is the ninth largest CPA firm in
the United States. Founded in 1924, the
issues including stock totaled some
firm has more than 60 U. S. offices, located
$26.4 billion, there were $22.8 billion
in major commercial centers of the nation,
of new, long-term, and $29.5 million
and is represented in some 150 cities
of short-term, municipal securities sold,
abroad through the international firm of
as well.
Alexander Grant Tansley W itt. Alexander
And Then . . . Default. But then, in
Grant b Co. serves clients of all sizes and
1975, something else happened to mu
types, from multinational corporations that
nicipal securities. New York’s default
are among Fortune’s 500 to individual
proprietorships.
occurred.
T
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
while buyers of these instruments had
never needed to wonder about the
quality o f the bond, nor question the
quality of management of the taxing
body, with the New York troubles, city
and state, came realization that these
were vital considerations.
Moreover, if we look at the fiscal
pressures on New York, we see that al
most all governmental units face the
same pressures. Four fiscal pressure
points have impacted municipalities in
the 1970s.
First, there was rapid inflation. Sec
ond, municipalities that typically ren
der labor-intensive services could not
significantly improve productivity with
capital investment. Third, the public
demanded more and better municipal
services such as mass transit and sub
sidized higher education. Lastly, the
public was reluctant to accept higher
taxes.
Quite obviously, the efficiency with
which a local government managed
these problems would affect its ability
to meet debt obligations as well.
Caution Prevails. However, Congress
moved carefully in dealing with the 40year old rule that had specifically ex
empted the municipal bond market
from regulation of the type that governs
the rest of the securities industry. Un
der the laws that established our Fed
eral Security Regulation framework, in
1933 and 1934, municipal bonds were
specifically excluded from regulation,
on the premise that the federal govern
ment should not have the power to con
trol access of state and local govern
ments to the capital markets. Even in
1975, that premise still seemed valid—
enough so that the Securities Acts
Amendments, signed into law on June
5, 1975, did not extend to issuers of
municipal securities.
However, the 1975 amendments did
establish authority for the regulation of
brokers and dealers, including banks,
in municipal securities through the
Municipal Securities R u le -M a k in g
27
Herbeit P. Dooskin of New York City, national director of manage
ment advisory services for Alexander Grant & Co., is a member o f the
American Institute of Certified Public Accountants and o f its com
mittee on rule making. He has been closely involved, during recent
months, in a study of cities’ response to new regulation of municipal
securities brokers and dealers. He is concerned with the de facto ac
ceptance of the draft set o f disclosure guidelines for municipal offer
ings put forth by the Municipal Finance Officers Association. At the
same time, he sees benefits to municipalities that will balance the ad
ditional expense cities must bear in preparing broad disclosure state
ments.
Board. And while the SEC may not re
quire disclosure from the issuer, the
underwriters may well ask the issuers
for extensive disclosures.
The public is demanding greater dis
closure from the municipal issuer. And
the demand inevitably will be met
either by market forces or government
fiat.
Senate Bill 2969, introduced— but
not passed— in the 94th Congress,
would have mandated certain dis
closures and required audits of many
issuers. It would have required an an
nual report from all issuers with more
than $50 million in bonds outstanding,
extending to investors in the secondary
bond market the advantage of currency
of information that investors in cor
porate securities enjoy through quarter
ly and annual financial reports. Offer
ings of over $5 million would require
a distribution statement with mandated
disclosures. (This bill was sponsored
by Senator Thomas Eagleton of Mis
souri, who has not indicated yet wheth
er he will re-introduce the bill in the
95th Congress.)
A similar bill will pass in the future
unless requirements of full disclosure
are adhered to by issuers and under
writers. A giant step toward voluntary
disclosure is the publication of a set of
“ Disclosure Guidelines for Offerings of
Securities by State and Local Govern
ments,” which was drafted in 1975 by
the Municipal Finance Officers Asso
ciation (M F O A ), the professional and
service organization of public officials
involved in financial management at
state and local levels.
The draft guidelines, still awaiting
final definition, probably before the end
of calendar 1976, already have taken
on many aspects of legal requirements.
To the credit of the M FOA, comments
on the guidelines have been sought
actively, and educational programs
have been offered to acquaint all ap
propriate segments of the industry with
them.
Guidelines Are the Rule. At the
moment, the draft guidelines are the
only game in town, and it is important
that officials at every level— and citi
zens generally— be aware that standards
28
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
have been established that take the
form of legal authority without its sub
stance. Issuers of municipal bonds who
were accustomed to preparing a fourpage official statement now are length
ening their statements to range from
40 to 60 pages. Many are following
the M FOA recommendation that the
official statement be made available to
the underwriters with the invitation for
bids and that the successful underwriter
provide the official statement to the
prospective investors.
The municipal official today is faced
with the fact that voluminous dis
closure is here to stay, whether or not
mandated by congressional act.
To avoid federal regulation, most is
suers will comply with the minimum
disclosures recommended by M FOA
and many will exceed the minimum.
So the issuance o f municipal secur
ities is sure to becom e a time-consum
ing event— especially so if the issuer
has not had audited financial statements
prepared previously.
However, municipalities may find
some balancing benefits: Bankers and
underwriters generally expect that the
disclosure of information in the new
municipal issues will save them money,
allowing the bonds to sell at lower in
terest rates. Given two issues of ap
proximately equal quality, the one with
more disclosures will be more market
able than the one with less.
Moreover, as an accountant, I would
suggest a further benefit: Although
there will be additional expense in
volved in the investigation and prepara
tion of an official statement that meets
disclosure requirements, to a degree
these costs may be recouped through
reduction of a few basis points in the
interest rate on the marketed bond.
Gathering the data needed for re
curring bond issues will dictate a sys
tem within the governmental unit that
enables easy recapture of data. For
many municipal units, there will be ac
companying advantages o f better man
agement potential resulting from this
revamping process, allowing elected of
ficials and citizens generally to follow
more closely the workings of their gov
ernment. * *
Variable-Rate Mortgage Loans
Offered by Bank of America
SAN FRANCISCO— Bank of Ameri
ca began offering variable-rate home
loans throughout California last month.
Through its “ Vari-Rate” program,
the bank is making available real estate
loans for single-family dwellings at in
terest rates that are keyed to a cost-offunds index maintained by the San
Francisco Fed.
Minimum rate for a variable-rate
loan is 9%, which is %% under the rate
for a fixed-rate loan. The origination
fee for variable-rate loans is one-half
point less than the minimum for a
fixed-rate loan.
The interest rate on a Vari-Rate loan
will not change during the first year.
Thereafter, the rate will be reviewed
semi-annually and any changes in the
interest rate will be in
increments,
with no more than one change in any
six-month period, a spokesman said.
At the time of review, a rate change
will be made when the spread between
the customer’s loan rate and the costof-funds index increases or decreases
by more than
from what it was
when the loan was made.
• Andrew
F.
Brimmer,
former
member, Federal Reserve Board of
Governors, has been appointed to the
boards of BankAmerica Corp. and
Bank of America, San Francisco. Air.
Brimmer is president, Brimmer & Co.,
an economic and financial consulting
firm based in Washington, D. C.
Deposit Guaranty's 'First 50'
JACKSON— As a contribution to
the celebration of the nation’s bi
centennial, and in observance of its
own 50 th anniversary (in 1975),
Deposit Guaranty National has pub
lished a hard-cover book titled “ The
First 50.” Written by Carroll Brin
son, a former ad agency executive,
the book not only describes the
bank’s first half century, but also is
the story of the people and events—
local and national— that shaped D e
posit Guaranty’s progress and growth
during those 50 years.
The work takes readers from the
“ Roaring ’20s” through the Great
Depression of the ’30s, World War
II in the ’40s, the comparatively
quiet ’50s, the upheavals o f the ’60s
and up to the half-way mark o f the
’70s. In words and with illustrations,
Mr. Brinson tells the story of the
bank, the people who founded it and
those who followed and who have
contributed to its success over the
years.
MID-CONTINENT BANKER for November, 1976
As the newest m em ber of our
correspondent banker team,
G ary R. Dobson is a man on
the move.
His )ob, as V ice President of
Correspondent Banking, is to
help with your problems, and it’s
easier for him to do that if he
knows them. He already knows
Fourth National an d he knows
whb to con tact for specialized
,
h e lp e
e
l
on
in,
or for
Wait for him to
an d a d v ice
im m ediate hi
He m ay not b e
ibu^but hew iil
e the w heels of
snkbehind him.
Fourth
Tulsa. O klahom a
l:
I
£ § £ § $ ; ¿Ss!
ilsSIssili
Sil
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feJiS
sfs í¡
ry. A Better
ter’s Banker.
18) 587-9171
txcalibur courtesy o fAÍBlaíne Imel A .IA Tulsa.
MID-CONTINENT BANKER for November, 197?!
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
29
Insurance
Finding Solutions Through Section 79
IFE INSURANCE marketers are
always looking for better, more
flexible and complete solutions to the
problems their clients, including banks,
face. Through use of a Section 79 plan,
new, flexible and unique solutions to
clients’ problems can be developed.
This article will discuss what a Sec
tion 79 plan is and will illustrate sev
eral uses of that plan to provide new
solutions to old problems.
What is a Section 79 plan? Briefly,
it is group insurance providing certain
tax benefits to both the bank and its
employees. If the plan satisfies the re
quirements of sections 162 and 79 of
the Internal Revenue Code, premiums
are deductible to the bank (or the firm
purchasing insurance from a bank),
and group term insurance premiums
are not includable in the insured em
ployees’ income, except for amounts in
excess of $50,000 of life insurance.
Amounts in excess of $50,000 are
chargeable to the employee as income
on the basis o f the uniform premium
table set out in Internal Revenue Ser
vice (1RS) Regulations 1.79-3 (d )
( 2) .
Section 1.79 of 1RS regulations sets
out specific requirements to qualify a
plan of group insurance.
The plan must be arranged by the
bank for the benefit o f employees as
either a master policy or a separate
written document and it must make
term insurance available to a group of
lives. That group must include all em
ployees of the bank or a class or classes
o f such employees, members of which
must be determined on a basis that
precludes individual selection, such as
salary, years of service or position.
Finally, the plan must provide cover
age for at least 10 full-time employees
sometime during the calendar year
(1RS Reg. 1.79-1 (b ) (1 ) ( i n) ) .
For plans providing coverage for
fewer than 10 full-time employees dur
ing a calendar year, specific require
ments set out in 1RS regulations must
be met.
First, the plan must provide insur
ance protection for all full-time em30
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
By ALFRED G. DIETRICH JR., CLU
Assistant Vice President
SFO Life Consultants, Inc.
Kansas City
ployees. The regulations define full
time as those employed in the usual
course of the bank’s business and who
work at least 20 hours per week and
at least five months per year.
Second, the waiting period estab
lished under the plan must be no more
than six months from the date o f em
ployment.
Third, the amount o f protection for
employees must be computed on either
a uniform percentage of salary or on
the basis of coverage brackets (estab
lished by the insurer) under which no
bracket exceeds 2/2 times the next low
er bracket and the lowest bracket is at
least 10% of the highest bracket.
Fourth, the only evidence of insur
ability that may be used in determining
either the employee’s eligibility for in
surance or the amount of insurance on
his life is a medical questionnaire com
pleted by the employee. N o medical
examination may be required.
In establishing a Section 79 plan,
these requirements must be adhered
to closely to avoid problems with the
IRS (IRS Reg. 1.79-1 (b ) (1 ) (iii)
(d)).
Life insurance coverage under a Sec
tion 79 plan can be provided by either
term or permanent insurance under
master contracts with certificates, indi
vidual policies or a combination of
both.
A bout half of all life insurance in the
U. S. is group life, and almost all of
that is group term. However, group
term has these built-in disadvantages:
* The employer has no control over
the plan’s cost or amount of benefits
provided.
» Protection for retired employees
either ceases altogether, reduces dras
tically or may be continued only at ex
tremely high rates.
* Benefits are paid only in the
event o f death; no benefits are avail
able to employees while they are alive.
* The insurance company can can
cel a plan because of poor experience.
Permanent insurance under a Section
79 plan allows the employer to realize
all the advantages of regular groupterm plans. He also can offer his em
ployees the advantages of permanent
life insurance.
Specifically, the advantages to both
the bank and its employees are:
* Premiums are guaranteed and
cannot be increased under permanent
Section 79 plans.
* The permanent Section 79 plan
cannot be canceled by the insurance
company as long as the premiums are
paid.
* Premiums under a permanent
Section 79 plan are level, not subject
to increase, and can provide permanent
life insurance to the employee at a
fraction o f the usual cost.
* Cash values under the permanent
plan can be used by the employee for
retirement income or business opportu
nities.
* Permanent Section 79 coverage
is owned by the employee and can be
continued at the same rate if he leaves
the bank or retires. He avoids the high
cost of converting group-term insur
ance.
* The bank has the ability to con
trol the amount o f benefits offered to
employees under a permanent Section
79 plan.
Permanent life insurance under a
Section 79 plan, therefore, offers all the
advantages of permanent individual
coverage and all the advantages of
group life without the disadvantages
of term insurance.
Many times, an insured realizes that
he needs more permanent insurance
but is unable to find sufficient income
to pay the premium. Income tax lever
age available to an insured through a
Section 79 plan may open the door for
additional permanent sales. This in
come tax leverage results from two
facts.
First, to qualify under Section 79,
permanent insurance must be split into
two basic parts: decreasing-term and
MID-CONTINENT BANKER for November, 1976
HOW TO SAFEGUARD YOUR
DIRECTORS AND O FFICERS
PERSONAL ASSETS
life
ill
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No doubt about it, bank directors and officers are
going to court in increasing numbers to defend
themselves against lawsuits brought by bank stock
holders, depositors and third parties. One defense,
of course, is to conduct your business in a manner
which completely avoids lawsuits. Unfortunately,
no bank can be certain it has the answer on how
to do this. The best solution is coverage by D & O
Liability Insurance through Scarborough.
A D & O Liability Insurance policy with Scarborough
protects the bank’s capital assets, and the bank’s
directors’ and officers’ personal assets in cases in
volving alleged wrongful acts while managing or
directing the bank’s business affairs. Coverage in
cludes damages, judgments, and defense costs.
Our free “Guidebook for Bankers” has details on
coverages, exclusions, typical premium rates, and
illustrative claim situations.
Scarborough has the professional know-how you
require for these situations because it has served
banks’ special insurance needs since 1919, devel
oped the market for D & O Coverage and is the
principal source for this coverage.
O n the S p ot
As Suits Rise, Firms
A-rambL* to increase
Insurance for Directors
v. .r 1
C<A-«iqe U +s
More
Call or write Warren Geary
or, clip the coupon for more information.
*
«I
,,
Scarborough
th e b a n k in s u ra n c e
p e o p le
Scarborough & Company
222 N. Dearborn St.
Chicago, Illinois 60601
Phone (312)346-6060
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
31
increasing-cash-value portions. The for
mer is issued as part of a group plan
and, if qualified under IRS Section
162, the premium is deductible as
group-term expense.
The cash-value portion generally is
owned and paid for by the employee;
however, if it is paid for by the bank
and owned by the employee, the pre
mium is taxable as income to the em
ployee.
Second, this income tax leverage re
sults from the differences between the
inputed income for group-term insur
ance on the employee’s life in excess
of $50,000 under the uniform premium
table and the true premium charged
for the insurance.
Figure 1 summarizes the 20-year
cost to a male, age 45, purchasing
$100,000 of a typical permanent prod
uct qualifying under a Section 79 in
comparison to $100,000 of personally
purchased nonparticipating whole life.
Both plans have the same gross pre
mium and the same cash values. A p
proximately 25% in savings results.
Another important income-tax sav
ings available under a Section 79 plan
results from the fact that there’s no
inputed income to the employee dur
ing retirement even though the bank
may continue to pay the premium for
the term portion of the plan (IRS Reg.
Section 1.72-2 (B ) (1 ) and ( 3 ) ) .
Finally, many key employees, as a
FIGURE 1
Twenty Year Cost
$ 100,000
Age 45
Annual Premium $2,466
Personally Purchased
Non-Par Whole Life
Total Premium Paid
by Employee (Non-Ded.)
Group Permanent
Corp. Bonus Plan
$ 49,320
0
0
Taxable Income to Employee
Tax Cost in 50% Tax Bracket
Total Premium Paid by Corp.
Tax Cost in 50% Tax Bracket
$24,477
12,239
49,320
24,660
Total After Tax Cost to Corp.
24,660
Combined Net Cost
$ 49,320
Savings
$36,899
$12,421
FIGURE 2
SUPERIMPOSING*
CLASS
EXISTING
GROUP
PLAN
SECTION 79
PLAN
President
$25,000
$75,000
$ 100,000
Other Officers
15,000
35,000
50,000
III
All Other Employees
10,000
TOTAL
GROUP
PLAN
ii
*A plan of
Section 79
is offered
'Section 79
10,000
group insurance combining Group Term insurance and a permanent
plan for an employer with 10 or more employees.
Permanent coverage
to classes I and term coverage is offered to Class II under the
plan.
FIGURE 3
Age
25
'30
35
40
45
50
55
60
65
70
75
Table of Uniform
Premiums
Annual Rate
.96
1.20
1.68
2.76
4.80
8.16
13.20
19.56
19.56
19.56
19.56
32
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
PS-58
Rate
1.93
2.43
3.21
4.42
6.30
9.22
13.74
20.73
31.51
48.06
73.23
Percentage PS-58
is Higher at
Given Ages
101%
102
91
60
31
12
4
6
61
145
274
result of their success, are substandard
risks. Under a Section 79 plan, a sav
ings can be realized by both parties be
cause any ratings resulting from such
a risk are fully deductible to the em
ployer and not charged or taxable to
the employee.
Many employers provide group life
insurance in limited amounts to their
employees. However, an employer may
desire to ^provide key employees
with additional coverage in significant
amounts. Under Revenue Rule 70-162,
an employer may combine a number
of insurers or policies to create a plan
of group insurance qualifying under
Section 79 of the Internal Revenue
Code. Additionally, under IRS Reg.
Section 1.79, group permanent life cov
erage may be offered to all employees
on a “class” basis. Under such an ar
rangement, a typical superimposed
Section 79 plan may extend coverage
to selected employee classifications as
illustrated in Figure 2.
Group term insurance plans provide
little, if any, protection during retire
ment because of cost considerations
and, therefore, are not permanent solu
tions to estate liquidity problems. At
retirement, the employee is faced with
the following decision: “ Should this
group insurance be dropped altogether
or should it be converted at the em
ployee’s attained age?”
The economics of the situation often
dictate the answer. For instance, $100,000 of term insurance converted at age
65 costs close to $6,500 per year. Per
manent insurance under a Section 79
plan can avoid this problem because
the employee may take over the policy
at a premium based on the original is
sue age (if the employee has partici
pated in the plan since age 45, his an
nual premium will be $2,466) or the
employee may elect to take a reduced
paid-up policy (again, if the employee
has entered the plan at age 45, his
paid-up policy will amount to $59,000).
Permanent insurance under a Section
79 plan, when combined with judicious
use o f trust, can produce significant
estate liquidity to provide an alterna
tive to many stock-redemption plans.
For example, it has been suggested
that a stockholder-employee might de
sire to establish an irrevocable life in
surance trust to own the permanent
policy under a Section 79 plan on his
life. At his death, the trust will receive
the p r o c e e d s income-and-estate-tax
free— assuming that the insured has
lived three years— and use them to
purchase assets from his estate, thereby
giving the estate the liquidity it needs.
A Section 79 plan can also provide
an answer to the problem o f equitably
treating family members not active in
MID-G
MID-CONTINENT
BANKER for November, 1976
This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities.
The offer is made only by the Prospectus.
New Issue / October 1,1976
$ 1 2 5 ,0 0 0 ,0 0 0
First Chicago Corporation
7%% Notes due October 15,1986
Interest payable April 15 and October 15
Price 99.315% and accrued interest from October 1,1976
Copies of the Prospectus may be obtained in any State in which this announcement is circulated only
from such of the undersigned as may legally offer these securities in such State.
Warburg Paribas Becker Inc.
Salomon Brothers
The First Boston Corporation
Morgan Stanley & Co.
In c o r p o ra te d
Merrill Lynch, Pierce, Fenner & Smith
Goldman, Sach s & Co.
In c o rp o ra te d
Bache Halsey Stuart Inc.
Blyth Eastman Dillon & Co.
Dillon, Read & Co. Inc.
In c o rp o ra te d
Drexel Burnham & Co.
Donaldson, Lufkin & Jenrette
In c o rp o ra te d
S e c u r it ie s C o rp o r a t io n
Hornblower & Weeks-Hemphill, Noyes
E. F. Hutton & Company Inc.
In c o r p o ra te d
Kidder, Peabody & Co.
Keefe, Bruyette & Woods, Inc.
Kuhn, Loeb & Co.
In c o r p o ra te d
Loeb, Rhoades & Co.
Lehman Brothers
Lazard Frères & Co.
In c o rp o ra te d
Paine, Webber, Jackson & Curtis
Reynolds Securities Inc.
M. A. Schapiro & Co., Inc.
In c o rp o ra te d
Smith Barney, Harris Upham & Co.
Wertheim & Co., Inc.
In c o r p o ra te d
Dean Witter & Co.
White, Weld & Co.
In c o rp o ra te d
In c o r p o ra te d
Bacon, Whipple & Co.
Daiwa Securities America Inc.
William Blair & Company
L. F. Rothschild & Co.
Shields Model Roland Securities
In c o rp o ra te d
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Blunt Ellis & Simmons
In c o rp o ra te d
Shearson Hayden Stone Inc.
Weeden & Co.
In c o rp o ra te d
33
the management of a closely held
corporation.
The business owner can purchase a
group permanent policy on his life and
name inactive family members as the
owners and beneficiaries o f the policy.
On his death, these members will re
ceive the proceeds while family mem
bers active in the firm will be left the
company stock. It’s not necessary to
balance group permanent insurance
with the value of the company, since
the insurance proceeds are cash while
company stock is not readily converti
ble into cash.
Many pension and profit-sharing
plans utilize life insurance as the tra
ditional method of providing pre-retire
ment death benefits with a qualified
plan. However, there are certain ad
vantages in using a permanent policy
under a Section 79 plan outside the
qualified plan. The income tax savings
offered by a qualified plan can be sub
stantial, for not only are the contribu
tions free of current income taxes, but
investment income and capital gains
also escape current taxation. W hy de
plete these tax savings by using a por
tion of the account to purchase life in
surance?
Additionally, life insurance utilized
i
_____
Underwriters, Dealers, J
Distributors
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& O 'CO N N O R
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34
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
in a pension or profit-sharing plan is
taxed to the employee in accordance
with the P.S.-58 Table. However, if
group insurance is utilized outside the
plan, the first $50,000 of such coverage
is without tax consequence to the em
ployee and the excess is taxed on the
basis of the uniform premium table,
which is substantially lower than the
P.S.-58 rates. Figure 3 illustrates this
difference between the uniform premi
um table and P.S.-58 rates at various
ages. In instances where no pension or
profit-sharing plan exists, certain per
manent policies under Section 79 plans
can be designed to allow for qualifica
tion of the cash-value portion as the
employee’s own IRA plan. The premi
um for the cash-value portion then is
deductible to the employee, subject to
guidelines set forth in the Employee
Retirement Income Security Act.
In looking at the problems bankers
face in planning for the future, it is im
portant for insurance agents to under
stand their clients’ inner motives and
to provide opportunities for clients to
put these inner motives to work. To
maximize the opportunities available to
brokers and their clients, SFO Life
Consultants have taken a slightly differ
ent approach to the Section 79 market.
W e call it “ Solution 79.”
Through our numerous sources, we
are able to select the best products
from the many trusts to which we have
access, for both substandard and stan
dard risks, enabling us to tailor a plan
to meet the individual requirements of
each broker’s clients.
Through utilization of the infinite
variety of combinations available, we
can provide each broker with a definite
competitive edge not available— to our
knowledge— from any other source in
the industry.
New solutions to problems faced by
bankers available through a Section 79
plan add a valuable and flexible tool
to each banker/life insurance agent’s
portfolio.
7 1 3 -2 2 4 -9 6 6 4
ST. LOUIS— First National and
Mercantile Bank have begun offer
ing BankAmericard services to indi
vidual customers and retail mer
chants.
First National will make Bank
Americard operations available to its
17 affiliate banks, to its Master
Charge associate banks and other
institutions in its correspondent net
work.
Mercantile Bank will offer the
service to its affiliates and banks as
sociated with its Master Charge pro
gram.
MID-CONTINENT BANKER for November, 1976
mm8 11v ,1 1
i j m
-a i I
1i
i \
That’s the title of our new booklet about in
surance for banks. With laws, regulations
and market conditions constantly changing,
new risks keep coming along.
Are you sure your bank is protected?
Financial Insurance Service, Inc., was
founded in 1969 just to deal with the insur
ance needs of banks. We write every kind
of coverage a bank should have. As experts,
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Call or write today for your free copy of
The Risks That Take Bankers. (It may be
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MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
35
First of Chicago Lists Advantages
O f Using Insurance Consultant
AN an impartial insurance consult
ant be helpful to a bank? First Na
tional o f Chicago thinks so, according
to Stanley C. Bartecki Jr., operations
officer in the bank’s insurance unit.
The bank, which has retained an in
surance consultant firm since 1968, has
found its value to be in its objectivity
and in the fact that its recommenda
tions, evaluations or advice are factual
and can be relied on. Moreover, says
Mr. Bartecki, the firm— Corporate Poli
cyholders Counsel, Inc. (CPC), Chica
go— performs other useful functions: (a)
acting in the scope of an auditor on in
surance, periodically reviewing and
evaluating the total program; (b) mak
ing available a vast source of knowl
edgeable information compiled from a
wide spectrum of clients and (c) provid
ing policy interpretation or help in fil
ing claims.
“ The insurance consultant,” continues
Mr. Bartecki, “ can be a valuable re
source in the administration of an insur
ance program with the adaptability to
provide extensive service or to function
as an arm o f the more sophisticated risk
manager.”
First National retained CPC eight
years ago in anticipation o f a move to
its new headquarters building. The
bank’s management authorized the firm
to review and evaluate the then-existing
insurance program as it related to fu
ture needs. As a consequence of the
CPC study, the bank’s property and li
ability insurance programs were reor
ganized.
CPC recommended a new concept—
that o f insuring on a corporate-wide
basis rather than individual insurance.
A coordinating program was developed
to include the parent HC, First Chica
go Corp., the bank, as its principal sub
sidiary, and subsidiaries of both. Risk
management techniques were suggest
ed, and a comprehensive insurance pro
gram was outlined. CPC drafted speci
fications for the coverages recommend
ed, requested bids and submitted eval
uations o f the proposals received. Their
presentations were designed to allow
the bank to select the alternative pro
posal that best suited its needs.
Mr. Bartecki says the concept of in
suring on a corporate-wide basis had a
substantial impact on the property in
surance program. The former program
insured each property under a separate
policy at actual cash value and with
minimal deductibles. Under the new
property program, blanket coverage was
purchased with replacement costs re
C
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Disasters don’t strike very of
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on insurance.
Accidents or death often in
terrupt payments on installment
loans, or more likely put the
loan into default. The smart
banker avoids this risk by rec
ommending credit health and
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And when you, the banker,
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36
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Federal Reserve Bank of St. Louis
covery and increased deductibles. A dop
tion of this program, continues Mr. Bar
tecki, produced the following results:
1. Improved administration through
reduction of individual policies.
2. Negotiation of a more equitable
loss recovery.
3. Permitted greater utilization of de
ductibles.
4. Realization of significant savings
in premium and reduced administrative
costs.
The liability insurance program was
modified and, on CPC’s advice, was
consolidated into appropriate packages
insuring on a corporate basis, as with
property insurance. This, Mr. Bartecki
points out, substantially improved both
coverage and cost. Also, to the extent
possible, all liability exposures were
written with a single insurer to avoid
gaps and loopholes in coverage.
The program developed jointly with
CPC and First National recognized and
provided for future corporate growth.
Because of this foresight, Mr. Bartecki
says, subsequent expansion was easily
absorbed into the program, and admin
istrative problems were kept at a mini
mum. Now, with implementation o f a
sound risk and insurance management
program, Mr. Bartecki points out, the
need for consultant services has m odi
fied, and the services now have becom e
an effective tool in administering the
total program. CPC services are direct
ed toward unusual or new exposures,
complex insurance problems, consulta
tion on legislation affecting insurance
and assistance with renewals of major
policies. * *
■ FIRST N A TIO N AL, Dallas, has an
nounced the following promotions:
Stephen D. Fisher, James H. Graves,
Charles A. Kercheval and C. Bruce
Robertson, to vice presidents and Law
rence Cappeletti, John W . Daniel, Ker
ry Garrison, Larry W . James, Patrick
L. Keen, Don R. Kuykendall, Ron L.
Lillard, Raymond Ruse, Joe E. W il
liams Jr. and Phillip R. W ood, to as
sistant vice presidents. Elected direc
tors were Cary M. Maguire, chairman
and president, Maguire Oil Co.; Reece
A. Overcash Jr., president and chief
operating officer, Associates Corp. of
North America; and Doyle E. Rogers,
vice president-Texas, Southwestern Bell
Telephone Co.
MID-CONTINENT BANKER for November, 1976
is for Computer.
And ours is a complex of highly sophisticated data processing equipment.
Which means you can receive monthly status reports showing your commis
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.
The 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 3199, Winston-Salem,
N. C. 27102. As Vice-President of Credit Insurance,
J. Wayne Williard, Jr., 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.
f ) INTEGON
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
37
Insurance
Flow to Stop tlie Alarming Increase
In Bank Frauds, Embezzlements
E D I T O R ’ S
NOTE: The author
of this article for
merly was an agent
with the U. S.
Treasury Depart
ment. In his present
post at Scarbor
ough, Mr. Jones
works closely with
banks throughout
the nation in the
areas of general
bank accounting practices and pro
cedures, internal controls and physical
security. In this timely article, he points
out the need for bankers to be ever
alert to the increasing need to imple
ment effective audit programs and ade
quate internal controls to combat the
alarming increase—during the past dec
ade—in bank frauds and embezzle
ments.
Y A LL comparative standards, it
must be recognized that the last
10 years will go down in history as a
period in which the financial aspects of
this nation’s economy were subjected
to most unusual stresses and strains. In
flation, wide fluctuations in the stock
and bond markets, similar fluctuation in
the prevailing interest rates— all these
hurled their impact on a national econ
omy already groaning under pressure
of the first adverse condition men
tioned— inflation. Only by very com
petent management in the monetary
and fiscal areas of governmental super
vision was disaster in the nation averted.
No industry in the nation felt more
of these stresses and strains than did
that of banking. How the banks met
these obstacles is a success story in it
self. For, despite all the adverse forces
working against the financial institu
tions of our nation, most banks showed
acceptable profits during these trying
B
38
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
By OSCAR W. JONES
Director
Loss Prevention Services
Scarborough & Co.
Chicago
times. Most of the 1975 figures now
have been released, and it’s common
knowledge throughout the industry that
most banks in the country were able to
report increases in net operating earn
ings over the previous year.
H ow have the banks managed to
hurdle the many obstacles thrown into
their financial pathways and still show
a decent profit?
Banks perform many services, but
there are two basic functions: Banks
receive money for deposit, and they
lend that money out for profit. The
ways in which these two functions are
carried out have changed over the last
decade, but the banking industry still
consists of balancing the interests of
depositors, borrowers and stockholders.
But it is of the changes that we must
take particular note in analyzing the
banks’ success story that has unfolded
during the last 10 years when all the
odds were against banks even making
a profit. As we are all well aware, there
have been many changes, both in cus
tomer services offered by, and in the
mechanical and electronic processing
available to, banks in recent years.
Every day throughout the country,
banks are varying existing practices
and procedures in order to offer new
services, reorganizing operations in
order to utilize new equipment and im
proving their facilities by many new
methods.
All this, of course, is the result of
the philosophy of free enterprise, the
law of supply and demand and of the
inevitable result— healthy competition
among our nation’s banks. For it’s
necessary that banks be customer
oriented so that they remain competi
tive within their industry. Most of the
changes are necessary to meet the de
mands of the increasing number of cus
tomers and their transactions. It has
been through these vehicles that the
banks have been able not only to com
pete with other industries, but to show
remarkable profits when compared to
other industries during the same period
of time.
But there has emerged, out of these
10 successful banking years, a monster
— an undesirable byproduct. For, dur
ing these 10 economically successful
years, many banks have permitted a
weakening of their procedural safe
guards, and this weakening has per
mitted staggering losses or has allowed
losses to grow larger before being de
tected— embezzlement losses. There has
been an alarming increase, during the
last 10 years, in incidence and size of
bank fraud and embezzlement losses.
For example, quite recently a $2.9million embezzlement by the president
of a small bank was discovered. The
embezzlement had been perpetrated
over a period of eight years. The lack
of an effective audit program and ade
quate internal controls had permitted
this loss.
In another recent case, a bank’s ex
ecutive vice president was permitted
almost sole control over the bank’s own
investment securities. The officer be
gan diverting these bank-owned se
curities to his own use in financing his
speculations in the stock market. Stag
gering losses in the market finally led
him to disclose his irregularities, but
not until the total loss to the bank had
approached a million dollars.
Yes, there has been an alarming in
crease, during the last 10 years, in inci
dence and size of bank frauds and em
bezzlements.
As bank insurance counselors for the
past 57 years, we are disturbed by this
turn of events, and, as the one who
pays the premium for the insurance to
cover part of these losses, the banker
should be interested in this short re-
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Federal Reserve Bank of St. Louis
view of the subject of losses. Losses
affect the premium of the individual
bank and also the rates for the entire
banking industry.
Right off the bat, let us say again
and again that it’s the bank’s responsi
bility to safeguard its assets. This re
sponsibility has not changed with the
entrance of the computer— or any other
new equipment or methods— on the
scene. Only the required methods of
audit and control have changed.
Much of the written and spoken
word has been disseminated on the
subject of bank auditing and internal
controls. While it’s not within the scope
of these few paragraphs, nor is it our
intention here, to conduct a training
course on the subject, it is worthwhile
to note that the banker o f today must
parallel his operational-procedure im
provements with accompanying and
compensating audit and internal con
trol improvements as well.
The Federal Bureau of Investigation
is required to investigate a wide range
o f fraud and embezzlement crimes oc
curring in federally regulated or in
sured U. S. financial institutions, in
cluding commercial banks, mutual sav
ings banks, S&Ls and credit unions.
Here are the cases of financial in
stitution frauds and embezzlements in
vestigated by the FBI during the last
10 years— the period we’re talking
about:
cedures. And although the basic ele
ments of banking will never change,
bankers feel— and rightly so— that they
must concentrate their attention on
their customers’ needs, desires and as
pirations.
So, let the words used here be few
and simple, and let the problem and
the solution stand out by themselves in
their own significance. With the deluge
o f innovations in the banking field, the
most popular comment about frauds
and embezzlements among all too many
bankers of today has been, “ Let the in
surance company worry about it.” And
while we in the bank insurance field
certainly do worry about it, it is inevi
table that the banker must worry about
it, too. He must worry not only about
bearing some of the loss— through the
vehicle of greater deductibles in his
insurance program— but must also as
sume the responsibility for implement
ing acceptable audit procedures and
for maintaining adequate internal con
trols in his bank.
Most bankers are aware of this, and
— also— are completely aware of, and
concerned with, the monetary consid
eration of any fidelity insurance pro
gram connected with the bank. . . .
“ L ow loss ratios in your bank will
result in lower premium rates for your
bank in comparison with those banks
T o ta l
F is c a l Y e a r
E n d in g J u n e 3 0
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
N um ber
Lo sses
O f C a ses
( M illio n )
3,030
3,157
3,405
3,773
4,125
5,494
6,842
6,787
7,820
10,181
18.2
20.4
25.8
32.9
72.7
115.3
123.3
135.6
151.1
188.7
While it’s not entirely clear to what
extent these statistics apply to the over
all experience o f bank fraud and em
bezzlement, they are nevertheless the
best available. For example, it is en
tirely conceivable that large numbers
of bank frauds and embezzlements with
very small losses in dollars are never
reported to the FBI, or are not consid
ered by the FBI to be worthy o f in
vestigation.
But the fact remains that the FBI
investigated 10,181 cases o f financial
institution fraud and embezzlement in
1975— more than triple the number of
cases a decade ago!
Let’s face it— embezzlement and for
gery losses are on the increase! And
bankers must act now to stem the tidal
wave of these bank-breaking losses.
The next decade surely will bring
further application of increasingly so
phisticated methods o f banking pro
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MID-CONTINENT BANKER for November, 1976
having higher loss ratios. . .
W hile
we recognize that this statement is
trite, we would like to remind all banks
that it is only trite from overuse be
cause it is basically true. This truism,
too, should be considered when eval
uating the banker’s need for a good
audit program and adequate internal
controls. The rising tide of bank fraud
and embezzlement losses can be turned
back by the strengthening of procedural
safeguards, implementation of good
audit programs and by maintenance of
adequate internal controls. But only by
taking these direct actions will bankers
be able to continue to offer new ser
vices, through the vehicles of improved
procedures and methods, and thus ac
complish their purpose, and— at the
same time— guard against correspond
ing increases in fraud and embezzle
ment losses. * *
BMA Slates IRA Update Seminar
For New Orleans November 18
N E W ORLEANS— The Individual
Retirement Account (IR A ) Update
Seminar has been scheduled b y Bank
Marketing Association for Bran iff Place
November 18.
The seminar has been designed for
CEOs and marketing directors who
must have a working knowledge of
Presenting
r\)
the R I S K
what IRAs are and how they can be
marketed. Although planned for banks
with assets of less than $250 million,
the program is open to any banker
wishing to attend.
Among the featured speakers during
the IRA seminar will be George M.
Morvis, president, Financial Shares
Corp., Chicago; and Len Shannon, sen
ior vice president, Central Bancshares
of the South, Inc., Birmingham.
Topics to be discussed in program
sessions will be proved ideas on selling
IRAs to individuals and businesses; an
update on legal, regulatory and opera
tional aspects of IRAs; and current IRA
marketing trends in banks, thrifts and
insurance companies. The seminar also
will provide a forum for exchange and
discussion of IRA marketing expe
riences and ideas.
Specific program topics will be
“ IRAs Revisited— Legislative Update
and Operational Aspects,” “ H ow to
Structure a Sales Approach to IRAs,”
“ Selling IRAs to the Individual,” “ Sell
ing IRAs to Self-Employed Persons,”
“W hat the Others Are Doing and How
to Compete” and “ Winners and Losers
— IRA Campaigns.”
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THE RISK AND INSURANCE
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•C om plete Loose-Leaf, Tab-D ivided, Section Indexed
•T en issues of "R isk M anagem ent News"
•G u id e U pdates For The First Year
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408 Olive St.
St. Louis, Mo. 63102
«
Please send me The Risk and Insurance M anagem ent
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first ten issues ,of "R isk M anagem ent News” plus all
revisions and additions to the Guide. I understand if I
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1503 Philtower Tulsa 918-584-5213
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Street.....................................................................................
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City............................... State..................
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MID-CONTINENT BANKER for November, 1976
□ Check enclosed, please ship postage paid.
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41
First of St. Louis Announces Building Project
TWO-BLOCK-square, $40-million
bank building and office complex
has been announced for downtown St.
Louis as a joint venture by First Na
tional in St. Louis, IBM Corp. and the
Equitable Life Assurance Society of the
U. S.
Announcement of the complex was
made as M i d - C o n t i n e n t B a n k e r went
to press. Brief announcement cere
monies were conducted on the site of
the planned project by Clarence C.
Barksdale, chairman and CEO, First
National.
The high-rise complex, said to top
out at about 40 stories, will contain
850,000 square feet of space and is ex
pected to be the largest building of its
kind in the St. Louis metropolitan area.
In announcing the joint project,
spokesmen for the participating firms
indicated that the project reflects opti
mism for the continued development of
downtown St. Louis and the future
economic growth of the entire metro
politan area.
Mr. Barksdale said he is extremely
enthusiastic about the plans for the new
complex and termed it a major ad
dition to the metropolitan area. “ W e
are particularly pleased to be able to
join forces in this important commit
ment with two prestigious corporations
with outstanding reputations for quality
and excellence in whatever they under
take,” he said.
Groundbreaking for the building is
expected by early 1977, with completion
and occupancy sometime in 1979.
Principal tenants will be First National
A
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
and IBM. The two firms will utilize
70% of the 750,000 square feet of rental
floor space. The remainder will be
leased to other firms.
Mr. Barksdale said First National
will retain its main retail customer
operations in the lobby of the bank’s
present location after completion of the
new building. However, the new build
ing will include a banking lobby for
customers working in the surrounding
area.
The new site is one block from First
National’s Stadium Drive-in.
Mr. Barksdale also said that St. Louis
Union Trust Co., affiliated with First
National in First Union Bancorp., will
Solid s q u a r e s and
dotted line on m ap
and photo (above)
show l o c a t i o n
of
$ 4 0 - m illio n b a n k
b u i l d i n g and office
com plex
announced
as joint venture of
First N ational in St.
Louis, IBM Corp. and
Equitable Life A ssu r
a n c e S o c ie t y f o r
dow ntow n St. Louis.
T w o - b l o c k site is
bordered by M arket,
Eighth, W alnut and
Ninth streets, facing
proposed G a t e w a y
M all.
remain at its present location at 510
Locust, but will move into some of the
space vacated by the bank. First Union’s
administrative offices will relocate to
the Market Street address.
He said the primary reason for pro
ceeding with plans for the new building
is that projections have indicated that
First National will outgrow its present
facilities at Broadway, Locust, Sixth
and Olive streets by 1980. “ W e have
spent more than $700,000 renovating
our present building over the past three
years, but our continuing growth dic
tates the need for larger, more modern
quarters to house our operations,” he
said.
IBM Corp. plans to house about 600
employees in the new building.
The building is a major part of the
second phase of the Civic Center Redevelopment Corp.’s approved develop
ment plan for the stadium area in down
town St. Louis.
Neuhaus-Taylor Architects/Planning
Consultants of Houston and Dallas will
design the building. Preliminary designs
are expected to be ready early next
year.
“ St. Louis is rapidly gaining a na
tional reputation as one of the most
exciting cities in the country,” Mr.
Barksdale said at the announcement
ceremony. “ This project should provide
additional impetus for the further de
velopment of St. Louis and should help
to enhance that reputation.” * *
MID-CONTINENT BANKER for November, 1976
Mr. Banker:
it’s tim e to get your
Insurance Operation
off the ground!
Who has the broadest, most direct
contact with the financial affairs of the
general public? Who has the confi
dence of this public? Who can best
understand their insurance needs,
finance their premiums, take care of
insurance collateral on their loans?
You can!
You can market appropriate insur
ance coverages to your customers in
credit-related transactions more ef
fectively and economically than we or
any other insurance company can.
Through a well-run agency or reinsur
ance operation you can serve your
customers and uncover potentially
significant new sources of profit.
We at Old Republiccan act as prime
carrier and probably process claims
and rate filings more effectively and
economically than you can. Together
we can make a great team. That is
why we already are in partnership with
commercial banks and hundreds of
corporations of all types who serve
the public. And that is part of the rea
son we write the largest volume of
credit life and credit disability pre
miums of any company in the world.
The time is right. If you are a onebanking holding company we can help
you form a profitable underwriting
subsidiary, or show you how to make
your reinsurance operation really
perform. We can help holding com
panies and banks alike form profitproducing insurance agencies. We are
experts in risk management. We can
show you how to "get off the
ground. . safely and soundly.
Old Republic areas of
participation with banks
Feasibility studies including pro-forma op
eration statements for bank holding company
life and disability insurance subsidiaries.
All insurance coverages permitted in Regu
lation Y including:
□
Consumer loan credit life and disability
□
Credit guaranty
PARTNERSHIP FOR PROFITS
□
Mobile home coverages
□
Leasing
OLD REPUBLIC
□
Crop hail
□ ■Automobile coverages
□ Trust Department —employees and
pension plan coverages
□
Agricultural credit life and disability
□
Maturity value savings plan insurance
□
Mortgage life and disability
□
Usual banking holding company coverages
□
Fire, extended coverage and homeowners
□
Commercial loans
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
international corporation
INGENUITY IN INSURANCE
For more information or a copy of our
1974 Annual Report please contact:
William R. Stover, President
Old Republic International Corporation
307 N. Michigan Ave., Chicago, III. 60601
Telephone (312) 346-8100
43
Union Members Assured of Vacation Pay
Under Bank-Operated Stamp Program
By NORMAN E. MEYER
Vice President
Tower Grove Bank
& Trust Co.
St. Louis
ANKS often are called on to per
form diverse and unusual services to
meet a customer’s needs. Probably one
of the most challenging requests made
of Tower Grove Bank came from the
Bricklayers Union back in 1948. The
bank was asked to help the union de
velop a system that would guarantee
its members payment o f their vacation
pay as provided in their union contract.
The problem was that bricklayers,
like most other building trade union
members, worked for a number o f con
tractors each year, consequently making
a vacation plan difficult to administer.
A solution was found with development
of the “ vacation stamp.” This was only
the beginning of what ultimately be
came the multiple fringe-benefit stamp,
which was initiated by the Plumbers
Union in 1951. At that time, the vaca
tion stamp was expanded to include
other fringe benefits such as health and
welfare, pension, training programs and
other union-related benefits.
The
program
works
like
this:
Stamps are issued in various hourly de
nominations and are priced in accord
ance with various union fringe-benefit
plans. The contractor buys the stamps
at the bank or by mail and distributes
them to the employee at the end of
each pay period. (Essentially, the con
tractor prepays his contribution to the
member’s funds.) Issuance of the stamp
is the employee’s guarantee that pay
ment has been made by the contractor.
Stamps are redeemable at the end of
the plan year and at that time, each
member’s stamp book is certified by a
union official or representative of the
fund. The union then sends the books
to Tower Grove Bank, where they are
rechecked and audited. A vacation
check then is prepared by the bank for
B
MR. M EYER is business
developm ent officer at
Tow er G rove Bank and
c o o r d in a t o r o f th e
union fring e benefits
plan described in the
accom panying article.
He holds a bachelor of
science degree from St.
Louis U niversity and an
accounting
certificate
from the U. S. Treasury
Departm ent.
44
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
issuance to the union member. The
bank administers this and other funds
such as pension or health and welfare
separately through its trust department.
In a survey conducted in 1973 by the
International Foundation of Employee
Benefit Plans, the following findings
were cited:
1. Only 7% of the 459 trust funds
responding to the survey reported no
current delinquencies. By contrast, 313
funds reported total current delinquen
cies in excess of $20 million. Although
this money ultimately may be collected,
the findings suggest that delinquency
is a legitimate concern of most funds.
2. In many cases, delinquency seems
to be repetitive and chronic in nature.
About two-thirds of the funds indicated
that delinquency usually involves “ the
same group” of employers each month.
3. Among welfare funds, more than
one-quarter indicated that they “ give
full credit of hours for eligibility pur
poses even though the employer is de
linquent.”
Further fiduciary responsibilities of
fund trustees were created by the en
actment o f the Employee Retirement
Income Security Act o f 1974 (E R IS A ),
which has placed greater regulatory de
mands on trustees to implement neces
sary procedures for collection o f funds
and avoidance of delinquencies
A number o f St. Louis labor leaders
were asked recently what effect the
union fringe-benefit program had in re
ducing delinquencies and collection
problems. In answer, GIlie W . Langhorst, executive secretary-treasurer, Car
penters’ District Council, stated, “ Im
mediately, the amount of delinquent
payments was reduced from 10s of
thousands o f dollars monthly to virtual
ly zero.” He went on to say that the
system has “ also freed our business rep
resentatives in the field to do the jobs
they were elected to perform— service
the membership.”
John J. Flynn, business manager,
Bricklayers’ International Union of Mis
souri, said, “ In addition to virtually
eliminating delinquencies, it benefits
the conscientious contractor to the ex
tent that it protects the funds to which
he has contributed.”
Leo F. Flotron, business manager,
Journeymen Plumbers Union Local No.
35, St. Louis, said he has “ found the
stamp program for collecting fringe
benefits for the various funds to be the
best collecting arrangement there is.”
Pie went on to say, “ In my numerous
trips around the country, and after talk
ing to other union officers, I find they
have many problems with their collec
tion and, as a result, have lost many
dollars.”
The union member also benefits from
this multiple stamp program. As one
member put it, “ I work hard for my
money and need to know just what I’ve
got coming from my employer. With
these stamps in my hand, I know just
what I can count on in the way of
health and welfare benefits and vaca
tion pay.”
The need for a good system of ac
counting and auditing of these varied
funds and stamp transactions made the
use of the computer vital. Recognizing
this need, in 1973 Tower Grove Bank
developed a computer program for
union fringe benefits. This UFB pro
gram accounts for hours worked and
related stamp transactions and performs
a stamp audit to act as a control of
funds. It provides monthly printouts of
contractor and employee listings for a
cross audit of who worked for whom
and how often. It also provides a muchneeded accounting service for rep
resentatives of both the unions and
contractors who make up the board of
trustees charged with ensuring fairness
to both parties.
Because of the comprehensive design
of the program, it has proved to be an
effective instrument to guarantee and
safeguard the many millions of dollars
collected annually by the funds. In ad
dition, ever-increasing reports of multi
employer-funds collection problems are
being expressed by unions around the
country, and yet users of the stamp pro
gram in St. Louis are relatively free of
this concern. What began as an idea in
1948 now has becom e an integral part
of the St. Louis building trades unions’
funds, and its continued growth and de
velopment attest to the success of the
program. * *
Bird Handles PR Job
Handling one of First N at'l of Fort W orth's PR
jobs is Sinbad the parrot, a s he offers tickets
to Fort W orth Zoo dir. Elvie Turner (I.) and
Jerry M inton, bank s.v.p. The free passes are
for the ban k's "First Free Day at the Zoo," a
bank-sponsored d a y at the zoo for customers
and em ployees. The offer is one of a series of
events leading up to First N at'I's centennial
celebration next April.
MID-CONTINENT BANKER for November, 1976
“W ; can handle most things,
but when we carit
it’s nice to be able
to call on the First.”
The Kaw Valley State Bank
and Trust Company of Wamego,
Kansas is a true success story. A
First National Bank of Kansas
City correspondent relationship
has given it added financial / , / j
strength and a team of speciglpts. I
Frank Meek, president, is4
■man who conducts modern day
*banking from behind a rolltop
desk. He understands and
¡¡studies each customer's
^business needs in the best
traditions of the old-fashioned,
small town bank.
In a town with a population
of 2,500, his customers are his
friends and neighbors. And he
can give them most services
they might require.
But Frank Meek has a
correspondent relationship with
the First National Bank of
Kansas City to help him handle
those services his customers
may need from time to time that
he cannot give.
^ w
':"~Together, with the First,
Kaw Valley State Bank has the
added strength of both economic
and manpower resources.
If your bank could benefit
from assistance with overline
loans, investments, transit
collection, bonds, international
services, trusts, cash
management.and other financial
serviced, call the professional
staff of the First National Bank
Correspondent Department.
We take pride in the success
of Frank Meek and the Kaw
Valley State Bank of Wamego.
Our correspondent banking
tradition has been built on help
like this.
Why not put our strong
tradition of excellence to work
for your success.
Frank Meek
Raw Valley State Bank and Trust Company of Wamego
¥ xir success is our tradition.
First
,
Natip
National
Bank
'of KANSAS CITY
MISSOURI
An A ffiliate o f First National
Charter Corporation
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
M em ber FDIC
45
N ew A BA President W. Liddon McPeters, pres.,
Security Bank, Corinth, M iss., relax es at home w ith
his w ife , Sis (c.), and daughter, M arcia. Mr. McPeters
moved up to the ABA 's top post from pres.-elect
last month at the association's convention in W ash
ington, D. C.
McPeters o
Is N ew A B
Mr. and Mrs. M cPeters a re entertained on a
boat belonging to Robert Heyer (I.), Corinth
auto dealer. The photo w a s taken on Pickwick
Lake on the Tennessee River, 18 minutes from
Corinth. This is w here the Tennessee-Tombigbee
W ate rw a y, now under construction, joins the
Tennessee River. The w a te rw a y w ill connect the
M obile, A la ., harbor w ith the Tennessee and
M ississippi River system at this point.
Mr. McPeters is shown
enjoying
one
of
his favorite pastim es,
reading.
How ever,
•during his terms of
ABA pres.-elect and
now as ABA pres.,
such
moments
are
rare.
Mr. and Mrs. M cPeters take a leisurely stroll in the yard of
their home.
Friends of Mr. and Mrs. McPeters a re enter
tained on the lovely patio of their home.
46
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
Mr. M cPeters presides at one of
the Security Bank officers' w eekly
m eetings, w hich a re held in the
bank's trust departm ent conference
room.
ussissippi
President
As ch. of the board of trustees of the Northeast
Regional Library in Corinth, Mr. M cPeters meets
with Mrs. Martin Shelton, business m gr., and
W alt Brow n, exec, dir., of the lib rary, which
serves five northeastern M ississippi counties.
Mr. McPeter's bank is the setting for a dis
cussion w ith Jam es N ewcom b, farm er and mem
ber of the Alcorn County board of supervisors.
Jimm y Fisher (r.), Corinth attorney and pres, of its
Cham ber of Com m erce, talks w ith Mr. M cPeters at
the entrance of the Corinth Industrial Park. They're
standing in front of a sign listing the plants located
in the park. Going up in the background is the
building that w ill house the W. F. Hall Printing Co.,
w here N a t i o n a l G e o g r a p h i c m ag azin e w ill be print
ed starting this fall.
Mr. McPeters visits w ith the Reverend Sam Morris,
asst, pastor. First United Methodist Church of
Corinth, w hich the McPeters fam ily attends. Mrs.
McPeters trims greenery in the background.
Mr. McPeters and Ja m es Newcom b e x
am ine a soybean plant on Mr. McPeters'
farm near Corinth, which Mr. Newcom b
rents. Mr. N ewcom b also is a m ember of
the Alcorn County board of supervisors.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Topics Relevant to Nation's Capital
Dominate ABA's Heritage Convention
,
,
,
Regulation legislation politics economy share spotlight
OVERN M EN T regulation and leg
islation shared the spotlight at this
year’s ABA convention, held last month
in Washington, D. C. But close on the
heels of those two topics were the p o
litical arena and the economy. And the
topic of EFTS was aired often at spe
cial interest sessions.
Billed as “ Banking’s Spirit of ’76”
convention, the 101st gathering of
America’s bankers drew the smallest
attendance— 10,800— since 1970, de
spite the fact that more than 500 young
people— sons and daughters of conven
tion delegates— were registered.
America’s bicentennial celebration
was always in mind during the five-day
meeting and the flavor of the nation’s
capital accentuated this theme by pro
viding a backdrop of current events
and historic sites for the tourist.
The Supreme Court’s timing in
handing down its decision not to re
view lower court rulings regarding the
designation of CBCTs as branches lent
a note of irony to the proceedings. But
ABA President J. Rex Duwe was quick
to respond.
He said, "W e can only be disappoint
ed with a decision which will allow
discrimination to continue in the im-
G
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
By JIM FABIAN
Associate Editor
plementation of electronic funds trans
fer services for bank customers. Only
banks, among all financial institutions,
are being kept out of EFT.
“ It is now clear that a legislative
remedy will be required to assure that
all financial institutions are allowed to
serve their customers as efficiently as
possible in the electronics environment
of today and tomorrow.
“ Such assurance has been, and re
mains, our goal. In the days ahead,
ABA committees and councils, repre
senting banks of all sizes in all areas
of our nation, will develop new strat
egies for the pursuit of this goal.”
There is every reason for bankers to
feel they have the clout to get EFTSenabling legislation passed in Congress,
due to the impressive record they
forged in the last Congress when they
lobbied successfully to defeat the Fi
nancial Reform Act.
Mr. Duwe, who is chairman and
president, Farmers State, Lucas, Kan.,
presided over the convention as out
going ABA president. During the first
general business session, he called for
increased unity within the banking in
dustry to meet legislative and regula
tory challenges that can be expected
next year.
He said the common characteristics
of banks are far more important than
their differences. “ During this past
year, we bankers have faced some of
the most important challenges of our
lives— and we have dealt with those
challenges successfully because we did
so as a united industry.”
Referring to the defeat of financial
reform legislation in the last Congress,
Mr. Duwe said it was bankers “who
consistently pointed out the defects in
this legislation, and bankers can take
pride in helping save the public from
what was inherently poorly conceived
legislation.”
He said that banker action also
helped to prevent legislation that would
have done the following:
• Consolidated all bank regulatory
agencies “ into one monolithic— and
probably unresponsive— giant agency.”
• Dangerously politicized the opera
tions of the Fed,
• Compelled merchants to impose a
surcharge on all credit card sales.
• Required depository institutions to
withhold taxes on all interest and divi
dend payments.
He warned that almost every issue
considered by Congress during the past
year will be raised again when the 95th
Congress is seated in January. “ Finan
cial reform, consolidation of regulatory
agencies, interest on demand deposits
— all will be alive and kicking next
year.”
Prompting new legislative challenges
for bankers, Mr. Duwe predicted, will
be the reports o f the Electronic Funds
Transfer Commission and the Nation
al Commission on the Rights of Privacy,
as well as a study by the General A c
counting Office of the effectiveness of
bank examination and regulatory proN ew ABA officers pose on steps of U. S. Capitol
in W ashington. From I., W illis A lex an d er, e.v.p.;
J. Rex Duwe, eh., governing council; W. Liddon
M cPefers, pres.; A. A. M illigan, pres-elect; Rog
er A. Lyon, treas.
The
Investment
Officer.
He found a single source
to help improve perform ance.
IIS
—
S'*. '■'
1
ß ■
II
S _........ ai. j
The source: The Northern Trust. We
provide three investm ent services, each
o f which offers John’s bank some unique
advantages:
B ond Service —on e p h on e ca ll
brings complete, accurate inform ation
on the whole market, because each o f
our bond experts handles the total mar
ket rather than just a segment. And our
portfolio managem ent service keeps our
customers up-to-date with a monthly
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
analysis that’s a model for the industry.
Money Market Service —customers
deal directly with professionals who can
tell them not only what the rates are,
but why they’re what they are, and
where they’re likely to go.
FOCUS™—ou r tru st in v e stm e n t
advisory service provides all the invest
ment research that our own portfolio
managers use daily, plus clear, concise
m onthly reports, and two yearly m an
agement seminars conducted by the top
trust officers o f the Northern Trust.
W ith this combination o f services
working for it, John’s bank is m eeting
its own investm ent goals and the goals
o f its trust customers across the board.
To put all or part o f it to work for your
bank, get in touch with your C alling
Officer at: The Northern Trust Bank, 50
South LaSalle Street, Chicago 60675.
Telephone (312) 630-6000.
The Northern Trust Bank
Bring your financial future to us.
cedures.
“W e ourselves must first understand
all the complexities and ramifications of
these banking issues— how they will
affect not only banking but the entire
economy. W e must be willing to sacri
fice outmoded thinking in the face of
new realities. And we must make sure
our legislators share our understanding
of these issues,” he said.
“T o do all that will require an even
greater unity of purpose and action
than we have achieved during this past
year. But it is our only hope for a suc
cessful resolution of these issues,” he
said.
Banking successes were commented
on by ABA’s executive vice president,
Willis Alexander, during the second
general business session.
By keeping the customers’ interests
first, banking has succeeded in the leg
islative arena and in the court of public
opinion, he said.
“ Given the scare headlines of a year
ago, Congress’ protracted efforts to re
form banking and the recent backhanded compliments about our socalled lobbying prowess,” bankers con
tinue to find favor in the eyes of the
public, Mr. Alexander said.
W hile the media were reporting
problems with banks “ using year-old
data to infer that we were now suffer
ing a banking crisis” and legislators
were “ decrying so-called banker indif
ference,” bankers continued to serve
and respond to the needs of their cus
tomers, he said.
Citing a nationwide survey that ap
peared in a recent issue of U. S. News
and World Report, he said banking
ranked highest among 26 industries for
“ honesty, dependability and integrity.”
“ It is apparent that our customers
believed what they actually saw and
experienced at our banks more than
what they read and heard in the me
dia,” he said.
He suggested that it is inevitable and
appropriate that certain changes will
occur in banking, “ so long as this
change reflects a sincere and proper
response to the needs and wants of our
customers.”
Mr. Alexander identified six desires
that banking customers will seek in
the years to come:
* Greater convenience in banking
services.
* Expanded value for their funds.
* Assurance of reasonable privacy
for their banking records and trans
actions.
* Equitable treatment as individuals,
not as representatives of a class or
group.
* Participation by their banks in
serving legitimate community credit
needs.
50
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
* Maintenance of freedom of choice
— freedom to use the individual ser
vices and the individual banks of their
own choosing.
“ Bankers can continue to bask in the
high opinion of the public and can
continue to have influence in Congress
as long as we continue to retain the
proper perspective— the customer’s per
spective,” he said.
“ So long as we focus on servicing the
customer’s needs, w e will continue to
succeed as bankers,” he said.
A panel of federal regulators con
cluded that there will be no backtrack
ing on regulations covering financial in
stitutions, but that there is a chance
that the rate of enacting new regula
tions can be slowed.
Panelists included Stephen S. Gard
ner, vice chairman, Fed Board of G ov
ernors; Robert E. Barnett, FD IC chair
man; Garth Marston, acting FHLBB
chairman; and Robert Bloom, acting
Comptroller o f the Currency. Modera
tor was John H. Perkins, president,
Continental Illinois National, Chicago,
and chairman, ABA government rela
tions council.
Mr. Bloom said that the complexity
that is perceived as such a burden on
banking results from trying to regulate
a free economy. If bankers all acted
alike and stayed in the same mold, he
said, there would be no need for all the
regulations that are necessary to keep
banking in line. He said the diversity
of regulations is a tribute, in a way, to
the innovations brought about by bank
ers.
Mr. Gardner said that the sensitive
ness of banking issues causes Congress
Awarded Third Year Running
Jerom e R. Heyer (r.), e.v.p. and off.-in-charge
of operations, Detroit Bank, accepts a plaque
for excellence in accident prevention during
1975 from C arl H. Fiedler (c.), regional safety
m gr., and Eugene B. M artineau, br. m gr., both
of M ichigan Mutual Insurance. Each year, the
a w a rd is given to one com pany in each of
10 insurance classifications for the low est num
ber of on-the-job em ployee accidents and the
least am ount of time lost from w ork a s a re
sult of injuries. Detroitbank Corp., parent HC
for the bank, is only the second com pany in
the a w a rd 's 25-year history to receive the ci
tation three y ea rs in a row for "service to
hum anity through outstanding achievem ent in
sa fe ty ."
to weaken legislation. He called on
bankers in the trenches to give Con
gress the will to pass measures that are
beneficial to banking.
On the topic of deregulating the in
dustry, Mr, Marston said that it’s an old
story— everybody wants to deregulate
the other guy’s industry, but when it
comes to his own, he balks. He asked if
bankers really want deregulation.
Mr. Barnett said that bankers should
concentrate on stopping the increase in
the number of regulations being passed
in Washington. Diminution of the rate
of new regulations is the only hope, he
said.
Mr. Marston said the reasons be
hind banking’s defeat o f reform legisla
tion in Congress could be credited to
the facts that this is an election year
and that there was something in each
bill for everyone to disagree with.
Those who favored reform were not
well organized, he said. It isn’ t possible
to enact legislation with such a broad
scope. He recommended piecemeal ac
tion.
Mr. Bloom said homogenization of
the banking industry should be accom
plished before consolidation of federal
regulatory agencies is attempted.
The regulators agreed that the Su
preme Court’s decision on CBCTs gives
new impetus to the EFT commission.
Mr. Bloom said the structure of the
commission is unfortunate, since no
hardware manufacturers are represent
ed. This indicates, he said, that Con
gress wants a policy report, with no in
fluence from the interests that will ben
efit from hardware sales.
In commenting on the overall condi
tion of the financial industry, Mr. Bar
nett said that 368 banks were on the
FD IC problem list and that a leveling
in the number of problem banks is seen.
He added that 98% of the nation’s
banks are not on the problem list and
that insider abuse is the number one
factor in problem-bank cases.
Mr. Marston said some S&Ls were on
his agency’s problem list, but the situa
tion has improved over what it was a
short time ago.
Mr. Gardner said that the banking
industry has weathered a tough storm
in recent months, but the myth that all
banks are sound has been punctured.
At the last general business session,
ABA officers for 1976-77 were elected.
They are: W . Liddon McPeters, presi
dent, Security Bank, Corinth, Miss.—president; Roger A. Lyon, president,
Valley National, Phoenix— treasurer (for
a second term ); and Mr. Duwe— chair
man of the governing council. Elected
president-elect was A. A. Milligan,
president, Bank of A. Levy, Oxnard,
Calif.
Next year’s convention will be in
Houston, October 15-19. m *
MID-CONTINENT BANKER for November, 1976
Ittakesmorethanpetroleum
tofuel theworld’senergycapital.
physical and human resources, a central
national location, convenient port facili
ties and the availability o f technical and
H ouston and the Texas G ulf Coast’s scientific personnel and services.
Providing financial solutions in the
leadership in the petroleum industry goes
undisputed. And though it all began back energy field is a major part of First City
in 1901 with the discovery of the famous National Bank. What we’ve learned is
Spindletop Oil Field near Beaumont, it yours.
W e’re becoming involved with more
has taken more than just oil to build the
and more industries every day. And w e’re
energy capital of the world.
G ulf Coast energy dominance is the proving to correspondents that more ser
product of a successful formula —
strong economic base, the right mixture of
Helping on many levels is First City
National Bank.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
vice is the result o f more experience.
Understanding business as well as bank
ing has helped us become . . .
A major financial strength lx'hind
Texas industry.
FIRST
CITY
NATIONAL
BANK
OF HOUSTON
51
Comments Pro and Con Sent to Comptroller
On Credit Life income Proposal
PROPOSED REG U LATIO N on
disposition of credit life insurance
income made last July by outgoing
Comptroller James E. Smith produced
a rash of comments. The proposal
would forbid diversion of commissions
on credit life insurance to officers, di
rectors or controlling shareholders of
a national bank, unless all income from
such sales is credited to the bank, its
wholly owned subsidiary or an affiliate
whose beneficial ownership is identical
to that of the bank. It also would re
quire that a bank’s board, by resolu
tion, approve establishment and meth
od of operation of credit life insurance
sales programs and sets forth a non
exclusive list of permissible methods
of selling credit life. Finally, the Comp
troller reserves the right to approve
national bank requests to m odify the
regulations to fit particular circum
stances.
Comments on the proposal were ac
cepted by the Comptroller’s office until
October 1. As of press time, no an
nouncement had been made as to
whether the proposed regulation will
be adopted. If it is, it may clash with
state laws in various sections of the
country because some of these laws
forbid any insurance commission, in
cluding that from credit life income,
being paid to any person or firm other
than a legally licensed insurance firm
or agent.
In August, five Texas banks filed a
suit challenging the proposed regula
tion. They contend that it violates 12
U.S.C.A., Section 92, which denies na
tional banks the power to act as insur
ance agents in cities with populations
of more than 5,000.
Among comments received in the
Comptroller’s office were those from
the ABA. In a letter dated October 1
to C. Westbrook Murphy, deputy
comptroller for law and chief counsel
for the Comptroller, then-ABA Presi
dent J. Rex Duwe (president and
chairman, Farmers State, Lucas, Kan.)
said that, although the ABA supports
the objective of protecting the interests
of minority shareholders underlying
the proposal, the association is con
cerned that the regulation, if adopted
A
52
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
as proposed, may unduly inhibit the
sale of credit life insurance by some
national banks and may create inequi
ties for officers, directors, employees
and principal stockholders of some of
those institutions.
Thus, the letter said, “we suggest
principally that the proposed regulation
be amended to authorize bank boards
of directors to approve the payment of
commissions on credit life insurance
sales to bank officers, directors, employ
ees or principal stockholders, with full
disclosure to all interested parties. . . .
It is important to note that our recom
mendation would leave untouched the
details of the Comptroller’s regulation
as they would apply to those few
banks whose officers, directors, employ
ees or principal shareholders are, in
fact, depriving a bank of income to
which it is rightly entitled. The FD IC
already has adopted an enforcement
policy for the 9,000 state-chartered
banks it supervises that is entirely con
sistent with the alternative we pro
pose.”
The Duwe letter pointed out that
the Comptroller gave as his major rea
son for the proposal his concern about
possible loss of corporate opportunity
for a bank that results from diversion
of credit life insurance income to offi
cers, directors, employees or principal
shareholders. According to Mr. Duwe,
the ABA shares the concern that such
income diversion could materially af
fect bank income statements and also
is aware of the substantial personal li
ability for individuals receiving such
income, as well as for a bank’s board,
that could result from shareholderderivative suits alleging such loss of
corporate opportunity. Nevertheless,
the letter emphasized, the flat prohibi
tion on receipt of income from the sale
of credit life by individuals seems regu
latory overkill, for it ignores the fact
that a number o f state laws prohibit a
Insurance
bank from directly or indirectly receiv
ing income from such sales. Where
such state laws exist, the letter pointed
out, there is, in fact, no corporate op
portunity for a bank to lose.
Under the proposed
regulation,
therefore, the letter continued, banks
in states prohibiting their acting as
agents for the sale of credit life insur
ance would be limited in the options
by which they could make credit life
insurance available to their loan cus
tomers. In fact, said Mr. Duwe, these
banks, if they want to offer their loan
customers credit life insurance, would
have to buy group policies for their
borrowers and absorb the cost thereof
either through reduced profits or higher
interest rates on loans. Although de
creasing profits are an alternative the
Comptroller’s regulation was intended
to avoid, said Mr. Duwe, the fact of
competition from state-chartered banks
operating under no such restriction as
that imposed b y the regulation almost
would preclude an interest-rate in
crease sufficient to compensate a bank
for the group policy’s costs. Where
competition limits interest rates that
may be charged on bank loans, and
prudent lending policy dictates the
availability of credit life insurance cov
erage, the letter pointed out, the
Comptroller’s proposal would have the
unintended effect of decreasing bank
profits.
“Tw o further situations in which a
prohibition on the diversion of credit
life income would work serious inequi
ties on bank directors, officers, employ
ees or principal shareholders should be
mentioned,” said the Duwe letter.
“ First, many banks, especially in small
er communities, are unable to offer
their officers or employees salaries com
petitive with those of similarly situated
institutions without the added remu
neration derived from commissions
from the sale of credit life insurance.
Moreover, the loss of the financial in
centive of credit life insurance com
missions for officers or employees to sell
such insurance as protection for loan
customers could both reduce the flow
of income from insurance sales and in
crease loan losses through borrower
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Federal Reserve Bank of St. Louis
53
death or disability.
“ A second situation in which diver
sion of credit life insurance income can
be justified is the one-bank holding
company bank acquisition. Controlling
shareholders of national banks who de
sire to sell their interest in a bank have
often found it difficult to find purchas
ers in smaller communities and rural
areas. The one-bank HC provides a ve
hicle whereby a purchaser may borrow
from a large bank to acquire a con
trolling interest in the smaller or rural
bank and repay his borrowings from
the income received from credit life in
surance sales. The substantial tax bene
fits which Congress has provided for
such an acquisition permit larger bor
rowings by the bank purchaser and
the payment of an equitable price for
the controlling shares in such a bank.
Where credit life income would not be
available to finance such transactions,
in many cases, no more than ‘fire sale’
prices could be offered the retiring
controlling shareholder or his estate.”
For these reasons— and because le
gal ramifications of state laws prohibit
bank sales of insurance— the ABA be
lieves an alternative is needed to the
Comptroller's proposal. Such an alter
native, according to the ABA, would
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Federal Reserve Bank of St. Louis
be regulatory authorization for bank
boards to approve the licensing of, and
receipt of income by, bank officers, di
rectors, employees and principal share
holders as agents for the sale of credit
life insurance. Full disclosure to the
board and to all bank shareholders of
the details of such methods of insur
ance sales, said Mr. Duwe, would pro
vide all interested parties an informed
opportunity to discuss alternative meth
ods of insurance sales, and approval by
a disinterested majority of the bank’s
board would guarantee fairness to the
bank. The letter went on to say that
the ultimate sanction for individual of
ficers and directors o f personal liability
in a shareholder-derivative suit in any
case of unfairness further protects the
bank and its shareholders in such a sit
uation. Where bank officers, employees,
directors or principal shareholders are
permitted by the bank’s board to re
ceive income from credit life sales,
such individuals should compensate the
bank fully for the value of premises,
employee time and facilities employed
in insurance sales. To the extent that
the Comptroller’s proposal is based on
a perceived lack of full disclosure to
bank boards or shareholders, the ABA
believes its proposed alternative would
provide for such disclosure, would per
mit banks located in states that pro
hibit bank sales of insurance to remain
competitive with state-chartered banks
in those states both in terms of loan in
terest rates and customer services and
would permit fair treatment both for
bank officers and employees relying on
the income supplement of credit life
insurance commission and for control
ling shareholders seeking an equitable
purchase price for their shares.
The ABA letter also suggested some
changes in wording and terms used by
the Comptroller in his proposal.
The Independent Bankers Associa
tion of America voiced strong objec
tions to the proposal early in Septem
ber, also via a letter to the Comptrol
ler’s office. The IBAA said insurance
agency earnings often play a critical
role in making the sale of a bank to an
independent, local buyer possible be
cause buyers are attracted by the com
bined earnings of the bank and insur
ance agency. In many cases, according
to the IBAA, a buyer may find it diffi
cult, if not impossible, to service an ex
isting bank stock loan or negotiate a
future one with the modest earnings
o f the bank alone, and earnings of the
insurance agency thus may be a critical
ingredient for both parties.
If the regulation is promulgated and
followed by other federal bank regula
tory agencies, the IBAA said, such reg
ulation similarly would affect state
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Federal Reserve Bank of St. Louis
banks. By making transfer of owner
ship of the community bank to other
local owners more difficult, increased
concentration of banking control is
bound to occur, the association be
lieves.
The IBAA said the Comptroller fails
to make a crucial distinction in his pro
posal: the difference between a private
agency legitimately owned by officers
or directors and a bank agency owned
by the bank corporation. The IBAA
pointed out that bank supervisors—
state and federal— have for decades
upheld the right of private agencies to
operate on bank premises provided the
bank is reimbursed for allocable costs.
The IBAA’s objection emphasized the'
lack of legal authority of the Comjitroller to force transfer of income of
private agencies to a bank.
The association said the proposed
regulation also fails to consider several
key legal factors, including: taking of
valuable property rights of individuals
in violation of constitutional due pro
cess; preemption of the exclusive right
of states to regulate insurance; incometax liability of private owners for agen
cy income, which cannot be avoided
by transfer of income under banking
regulation; and relative legal rights of
majority and minority stockholders of
a bank.
W hile the proposed regulation is
limited to credit life, health and acci
dent insurance, the IBAA is afraid that
its adoption may invite extension to
other lines, such as lire and auto insur
ance, now normally handled by private
agencies in banks. The reasoning would
be the same, said the IBAA: protection
o f loan collateral.
The IBAA also refuted the Comp
troller’s contention that payment of
credit life commissions to individuals
is an “ unsafe and unsound practice.”
According to the association, the courts
have held that private agencies, prop
erly operated, provide an important
service to a bank and are safe, sound
and fair. T h e IBAA added that ade
quate remedial laws have existed for
a long time to correct abuses: ceaseand-desist, officer and director removal
proceedings and other statutes, which
should be used on a case-by-case basis
when abuses occur.
What about state law? In surveying
banking and insurance commissioners
in its 13-state area, M i d - C o n t i n e n t
B a n k e r learned that the Comptroller’s
proposal, if promulgated, would clash
with local laws in some o f those states.
However, some of the commissioners
indicated they approve the proposal
although the Comptroller has no au
thority over state-chartered banks.
For instance, Alabama’s Superintend
ent o f Banks M. Douglas Mims said
his department doesn’t have legislative
authority to issue such a regulation,
but, for a number of years, has tried
vigorously to encourage all banks to
deposit fees of this nature directly to
banks’ income accounts. During this
time, he said, one of the standard con
ditions for his office’s approval of new
bank, branch, trust department or any
other applications to expand a bank’s
activities is that all income o f this na
ture go directly to the bank’s income
account. As a result, he pointed out,
most state-chartered banks in Alabama
now handle loan-related insurance in
come in this manner. He added that
he finds there’s less self-serving tenden
cy and less reliance on draining earn
ings to repay large stock loans when
credit life insurance commissions are
not available.
A similar opinion was voiced by
W . Keith Sloan, life and health actuary
in Arkansas’s insurance department. In
general, said Mr. Sloan, Comptroller
Smith’s proposal makes sense and add
ed that it’s difficult to tell whether the
practice of allotting commission income
to a favored few instead of as bank in
come might have injured any particular
bank, but it certainly seems that the
practice has all sorts of potential both
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Federal Reserve Bank of St. Louis
57
for abuse and for creation of unneces
sary conflicts of interest. He pointed
out, however, that some of Mr. Smith’s
wording appears to be contrary to the
spirit of Fed rulings on bank HCs’ ac
quisitions of insurers in which there’s
supposed to be some improvement of
the products to the ultimate purchaser;
whereas, in the Smith proposal, the
bank is directed to make the most
profitable deal it can. Because this un
derstandable attitude underlies most of
the problems that have made consumer
credit insurance the stepchild of two
industries, this seems an unfortunate
occurrence, and so Mr. Sloan’s depart
ment suggests modification.
“ I think,” he added, “that the atti
tudes of the Comptroller of the Curren
cy and of the insurance regulator differ
as a result of looking at two very differ
ent aspects of the same problem. As
stated above, we believe that the per
sons who actually make what presenta
tion is made to the buyer should be
held responsible for their actions in
some manner at least akin to actual
licensing.”
Illinois Bank Commissioner Richard
K. Lignoul emphasized that his office
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Federal Reserve Bank of St. Louis
always has closely scrutinized distribu
tion of credit life insurance income to
parties other than a bank, generally
those parties being employees of the
bank. As Mr. Lignoul pointed out, dis
tribution of credit life insurance income
to a bank employee often has been
viewed by management as a method
of furnishing additional compensation
to that employee. His office views this
type of arrangement as one of armslength transaction. He said the employ
ee who receives such commission first
must submit to his bank’s board a de
tailed explanation o f his arrangement
with the insurance firm and amount of
compensation he receives from that
company. The board then should ap
prove and acknowledge the transaction.
Mr. Lignoul believes this is a man
agement problem, and if there’s a com
plete disclosure of the arrangement and
the directors set the proper guidelines
and assume the responsibility, his office
finds no reason to object. The Illinois
commissioner also pointed to a state
law that specifically prohibits issuance
of an insurance agent’s or broker’s li
cense to any bank, state or national, in
cities and towns with more than 5,000
population.
Kenneth E. Pickering, Louisiana
commissioner of financial institutions,
also approves the Comptroller’s pro
posal, but indicated that there’s a
problem in his state: Under insurance
laws there, a bank cannot be an insur
ance agency, nor can an insurance
agent spread or relinquish any part of
his commission with anyone other than
an agent for an insurance company.
Therefore, said Mr. Pickering, banks
are prohibited from receiving any in
come from insurance sales. He added
that he would like to see this state law
changed.
New Mexico Banking Commissioner
Herbert H. Hughes said he favors
adoption of the proposal and gave this
reason: “ Our job as a regulatory agen
cy is to protect the solvency of a finan
cial institution, not the personal fi
nancial position o f an official of the
financial institution. Such a regulation
would help ensure that there are no
temptations of officials to enter into
business relationships which benefit the
individual at the expense o f the finan
cial institution and, ultimately, the de
positor.”
Another objection Mr. Hughes voiced
about paying insurance commissions to
individuals is that it causes friction
among bank personnel because those
who receive the commissions are hap
py, but the others are unhappy about
the situation.
Among state banking officials who
voiced objections to the Comptroller’s
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Federal Reserve Bank of St. Louis
proposal was H. E. Leonard, Oklahoma
banking commissioner. He cited what
he believes to be two erroneous as
sumptions on which the proposal is
based: 1. Banks are authorized to be
in the insurance business regardless of
state statutes, therefore, the Com p
troller has the authority to regulate.
2. Issuing licenses and regulations gov
erning that function of the state is not
applicable when a national bank is in
volved.
Mr. Leonard said he cannot find a
regulation giving the Comptroller au
thority to regulate insurance firms or
issue insurance licenses. He added that
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the Comptroller certainly could pro
hibit national banks from being in the
insurance business and prohibit their
officers and employees from providing
this service to the public, and that may
be his intent. Mr. Leonard said it’s pos
sible such prohibitions may result.
However, according to the Okla
homan, there are better ways than the
Comptroller’s proposed regulation to
accomplish the prohibition of self deal
ing and conflict of interest and still
permit banks to be legally authorized
to provide this service to the public.
It appears, continued Mr. Leonard,
that each state’s insurance laws should
be considered and then various regula
tions be adopted that will control con
flicts of interest and self dealing, yet
still not be in direct conflict with state
insurance laws. If this isn’t feasible for
the Comptroller, Mr. Leonard suggest
ed that he just order his banks to cease
violating state insurance statutes.
Mr. Leonard emphasized that he
doesn’t differ with the Comptroller in
his concern or reasoning behind the
need for solving the problem, only in
his approach and disregard for state in
surance laws.
The incompatibility of the Comp
troller’s proposal with Texas state law
was pointed out by Hector DeLeon,
general counsel, Texas State Board of
Insurance. In a letter to Mr. Murphy
o f the Comptroller’s office, Mr. DeLeon
pointed out how the proposal violates
the Texas Insurance Code. He closed
the letter like this: “ All insurers and
their agents operating in the state of
Texas are subject to applicable state
laws and regulations and to the super
vision of the State Board of Insurance.
W e expect such insurers and agents to
follow such laws and regulations and
want you to be aware of the many re
spects in which we consider the pro
posed regulation to be incompatible
with the Texas insurance regulatory
scheme. It is our hope that the pro
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least so as to make clear that portions
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The insuror does not guarantee that
the borrower will receive the desired
loan from the lender; it merely assures
the lender that the collateral is guaran
teed for the amount of the appraisal.
Should a loan be granted, the an
nual premium for lenders insurance is
2% of the insured value o f the loan out
standing at the beginning of each poli
cy year. The formal appraisal adds a
one-time 1% cost to the loan, with a
minimum figure of $1,000.
Lenders insurance can mean the dif
ference between a potential borrower
getting or not getting his loan— which
in turn can determine whether the bor
rower will be able to keep his business
afloat. • •
A
MEMBER F.D.f.C.
MID-CONTINENT BANKER for November, 1976
Depend on the bank that
other bankers depend on.
The Whitney doesn’t want you to feel let down when you think about
correspondent banking in the part of the South that we know best. We’ve been
holding up our end with other banks all over the world since 1883.
Perhaps now we can join with you to build a firm foundation of
correspondent banking for the future.
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Federal Reserve Bank of St. Louis
W lateoi
NATIONAL BANK OF NEW ORLEANS |
Reliability in banking since 1883
ABA Slates Insurance Seminar
Security Nat l Hosts Football Party
Security National, Kansas City, Kan., hosted some 700 bankers and spouses at its 15th
annual football party last month. The day-long event began with a pre-game brunch,
took in tire eagerly-awaited KU-Oklahoma game and ended, with a social hour and din
ner. For the second year running, KU lost the contest This year’s score: Oklahoma 28,
KU 10 Photos below were taken at pre-game brunch.
LEFT: R, R. Domer, ass't to pres., host ban k;
Phyllis M ueller, Tam pa State; Lloyd Mueller.
CEN TER: Rick Sw itala , bond officer, host bank;
Jim Cooper, Peoples State, Richmond; John
Peterson, v.p., host bank. RIGHT: M ax Grindle,
Farm ers & M erchants, Hill C ity; Stanley Griffin,
a .v.p , host bank.
TUCSON— The American Bank
ers Association has announced a
seminar on premium-saving risk and
insurance management techniques
for bank executives. The Double
Tree Inn will host the event Feb
ruary 6-9.
Sponsored by the ABA’s Insurance
& Protection Division, the seminar
has been designed to give partici
pants practical, effective working
knowledge of important insurance
coverages and markets. '
To be conducted by experts in
bank insurance and risk manage
ment, the meeting will cover topics
such as bankers blanket bond, cov
erage of directors and officers, fidu
ciary, trust department errors and
omissions and safe-deposit liability.
For registration and information,
write: Edgar W . Armstrong, Asso
ciate Director, Insurance & Protec
tion Division, American Bankers As
sociation, 1120 Connecticut Avenue,
N. W ., Washington, DC 20036.
C. F. Haggard Jr. Heads List
Of Chartered Bank Auditors
Designated by BAI for 1976
LEFT: Don S w itala , v.p., host ban k; J. H. Bedene, First State, A rm a; G ra y Breidenthal,
pres., host bank. RIGHT: Mr. and Mrs. D. W.
V in k; Boyd W ix, aH o f Union Nat'li, W ichita;
J a y Breidenthal Jr., s.v .p ., host bank; Mrs, W ix.
LEFT: W. L. W ebber, ch.; Rose Domer; Joyce
Domer; Ken Domer, a .v .p ., all of host bank.
RIGHT: G a ry Russell, Larry Stapp, both from
KaropoDis State; Mrs, and Mr. Stephen Gilbert,
host bank; Mrs. Stapp; Mrs. Russell.
LEFT: H enry Parkinson, Security State, Scott
C ity; Ken Domer, a .v .p ., host bank. CENTER:
Ram ey Beachly, e.v.p., host ban k; David Coch-
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Federal Reserve Bank of St. Louis
ran . Home State, Erie. RIGHT: John M aclecd,
a .v .p ., host bank; Fred Pracht, First State, Edna.
PARK R IDG E, IL L .— Bank Adminis
tration Institute has announced its
Chartered Bank Auditor designees for
1976. Heading that list is Clyde F.
Haggard Jr., auditor, First Security Na
tional and First Security National Corp.,
both of Beaumont, Tex.
Mr. Haggard led all candidates with
the highest aggregate score on all four
parts of his examinations for the desig
nation and received the program’s First
Award for 1976 at the BAI’s 52nd Na
tional Convention in Philadelphia O cto
ber 20.
The Chartered Bank Auditor designa
tion formally recognizes the professional
practice of internal bank auditing and
is conferred b y BAI’s board of directors
after a candidate has successfully com
pleted four written exams in the major
disciplines of bank auditing, account
ing, economics and law, and manage
ment.
Besides Mr. Haggard, these bankers
from the Mid-Continent area received
the Chartered Bank Auditor designation
for 1976:
G eo rg e W . Conger, trust audit supervisor, First
N atio nal, M em phis; Stanley F. Kopnicky, C iti
ban k In ternational, Houston; Robert J. Morris,
vice president and auditor, Fidelity N atio nal,
Baton Rouge; Ernst L. Schaefer Jr., vice presi
dent, First N atio nal, C hicag o; Larry B. Turner,
auditor, Am erican N atio nal, A m arillo, Tex.;
Ja ck 0. W alker, vice president and general
auditor, Central Bank of A la b a m a , Decatur;
Joseph W . M errill, vice president and account
ing officer, First-Hardin N atio nal, Elizab eth
tow n, K y.; and Je rry L. Sturgeon, auditor, Land
m ark B ancsh ares, C layton, Mo.
MID-CONTINENT BANKER for November, 1976
450 REASONS W H Y
INTERNATIONAL BANKING ISN’T
FOREIGN TO COMMERCE.
F or the 10th Federal Reserve District, the global
banking community begins in Kansas City, at Commerce.
W ith a network of 450 international correspon
dents, Commerce offers the largest and best equipped
International Department in the area.
This means that Commerce can perform any inter
national banking service you may need, right here from
the geographical heart of America.
Our full-time foreign exchange trading staff will
handle exchange of coins, currency, drafts, transfers and
foreign exchange travelers checks in any amount.
W e can write letters of credit for your import cus
tom ers, and handle documentation on export letters of
credit. Our foreign cash letter service can provide imme
diate credit on foreign items.
International Banking. It’s not foreign to us. Call
your correspondent banker or the International Depart
ment of Commerce Bank of Kansas City.
if! Commerce Bank
£*
NA
W T
of Kansas City
9th & Main
234-2000
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
10th & Walnut
MEMBER FDIC
12th & Charlotte
65
Uphill Legislative Battle Predicted
For Proponents of Illinois Unit Banking
By JIM FABIAN
Associate Editor
HE ILLINOIS Bankers Association
is expected to face an uphill battle
on the legislative front in 1977, accord
ing to statements made by Robert C.
Shrimple, IB A executive vice president,
and John R. Montogmery III, IBA first
vice president and president, Lakeside
Bank, Chicago. The two appeared at
the Group Nine fall meeting in Belle
ville last month. Group Nine is the only
IBA group to hold a fall gathering.
Both men called attention to the fact
that the November elections will prob
ably bring dramatic changes in the state
legislature. The expected incoming
president of the state senate is the same
person who handled the various bills
involving branching and holding com
panies in previous sessions, Mr. Schimple said. This will probably result in
the selection o f new banking commit
tee members, the majority of whom are
expected to favor legislation authorizing
branching and the creation of multi
bank HCs.
T
There is doubt whether the current
speaker of the house will return, Mr.
Schrimple said. Should there be a new
speaker, he probably will be an ally of
Chicago Mayor Richard J. Daley. The
mayor recently sided with the branch
ing faction by proposing branch bank
ing in the city limits o f Chicago. Even
though he did not succeed, he is ex
pected to keep trying, Mr. Schrimple
said.
IBA’s rival association, AMBI (As
sociation for Modern Banking in Il
linois) is expected to reintroduce branch
ing and HC bills in the legislature in
January. If the anticipated personnel
changes take place in the statehouse,
IBA will find it difficult to win this
year.
Mr. Schrimple also reported on a
drive to unionize Chicago banks, being
carried out by the Amalgamated Cloth
ing Workers Union. The union’s aim is
to sign up 100 banks in the Chicago
area within the next six months.
Unionization of banks could bring
chaos to Illinois banking, he said, citing
the fact that unionized bank personnel
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Federal Reserve Bank of St. Louis
Highlight of dinner portion of IBA Group 9
meeting last month w a s a w a rd in g of 50-Year
Club m em berships. Feted w ere (from I.) W il
liam J. Thom as, pres., Nat'l Stock Y ard s N at'l;
M argaret Torkelson, First N at'l, V a n d a lia ; and
V irgil Sorrells, v.p., Nat'l Stock Y ard s Nat'l.
would not be permitted to do any work
outside of their principal line of work.
A .workshop on progressive employee
relations will be sponsored by IBA at
the Sheraton Oakbrook Hotel Novem
ber 17 for a limited number of bank
ers. He said a similar program could be
arranged for the southern part of the
state.
Mr. Schrimple said 275 banks have
joined Electronic Funds Illinois (E F I),
the organization sponsored by IBA to
initiate a statewide E FT system. Many
other banks are interested, he said, in
cluding a number that left IBA in fa
vor o f AMBI. Forty-three of the 66
banks represented at a recent meeting
in Peoria signed up and paid their
membership fees.
Richard L. Johannesman, senior vice
president, Mercantile Trust, St. Louis,
spoke on the investment outlook. He
said the economy is basically strong,
despite the recent setbacks, or pauses.
He added that he expects the economy
to continue strong through 1977.
Pie said the current pause is due in
part to a lack o f decision in connection
with the national election. Once the
election is over, there should be a re
sumption o f momentum, he said.
He predicted a fed funds rate of 5%
for the balance o f 1976, with a small
increase due the first quarter of 1977.
Higher interest rates are due for 1978,
he said, therefore, bankers should stay
short. * •
• Edward D. “ Jack” Dunn, Georgia
commissioner of banking and finance,
has been elected second vice president
of the Conference o f State Bank Super
visors by the group’s board. He suc
ceeds Richard F. Schaub, New Jersey
banking commissioner, who gave up
the post because of his pending resig
nation as commissioner to join private
industry. Carl J. Schmitt, California
superintendent of banks, succeeds Mr.
Dunn as an at-large member of the
CSBS board.
MID-CONTINENT BANKER for November, 1976
YOUR BANK REALLY
WANTS YOU TO
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BUT WITH CAUTION!
A n d the most cautious thing you can do is establish a proven Collateral Control
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MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ON THE COVER
Donald N. Brandin, chairman and
president, Boatmen's National, St.
Louis, poses before Boa t men' s
Tower, 22-story a l u mi n u m- c l a d
building adjoining Gateway Mall in
downtown St. Louis. Bank's new
Main Office is in two-story, open
court atrium projecting from tower.
Operations began October 18, fol
lowing move from former home,
Boatmen's Bank Building, two blocks
away (portion of old building can
be seen at far left, identified by
radio tower on roof). At right is
landmark old courthouse, where
historic Dred Scott slavery decision
was made.
Oldest Bank' Moves Into Newest Building
Boatmen's Nat l Occupies New Tower Complex
HE O LD EST bank west of the
Mississippi River, Boatmen's Na
tional, St. Louis, is now located in what
might be called the newest bank build
ing west of the Mississippi.
Although the title “ newest” probably
became outdated within a week of the
building’s opening day, the term will
be applicable to the unique design of
the banking complex for some time to
come.
Boatmen’s moved its banking oper
ations into Boatmen’s Tower the week
end of October 16-17 and opened for
T
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
business the following day— 129 years
to the day of its initial opening. The
bank’s Main Office is now located in a
two-story, open-court atrium with a
glass skylight measuring 8,100 square
feet. The modern office features glassed
greenhouses on three sides, with the
fourth side open to the concourse of
the tower.
The tower itself rises 22 stories above
ground and features a facade of alumi
num and reflective glass panels. Bank
officers occupy the lower six floors of
the tower; the balance of the building
is leased to tenants.
The building is one of the first in
St. Louis to be designed to cut down
on building costs and be energy-ef
ficient. A unique tubular design was
used in the $28-million building to
save nearly $600,000 in construction
costs. Tubular construction had been
considered uneconomical for buildings
of less than 30 stories heretofore.
The tubular concept trimmed some
W orkmen hoist safe deposit box unit through
hole in sid e w alk during m ove from Boatm en's
Bank Building to new Boatm en's Tower on
October 16. More than $2 billion in bank
assets, plus undeterm ined am ount in safe de
posit boxes, w a s m oved w ithout incident.
2/2 pounds of steel per square foot in
the half-million-square-foot structure,
which was translated into a $l-persquare-foot saving.
To reduce energy costs, doublepaned, chrome-coated solar glazing was
used instead of normal glass in the
building’s numerous windows. Although
this material is more expensive than
glass, it is expected to reduce the ad
mission of heat from the sun and should
pay for the added expense (in lower
energy bills) within two or three years.
Construction of the complex began
in June, 1974, and the topping out
ceremony was held early in September,
1975. The building was opened to
limited occupancy in June, 1976.
The spacious banking lobby has en
abled Boatmen’s to consolidate its two
downtown offices under one roof. The
two offices were located in the Boat
men’s Bank Building, home of the bank
since 1914, and the Equitable Building.
A drive-in facility in the Equitable
Building remains in operation.
The tower occupies a site bordered
by Broadway, Pine, Fourth and Chest
nut streets, adjoining the St. Louis Gate
way Mall and one block from the Gate
way Arch Monument grounds and the
MID-CONTINENT BANKER for November, 1976
NATIONAL DETROIT CORPORATION
JVJ3 Parent Com pany of
JÖ J NATIONAL BANK O F D ETR O IT
CONSOLIDATED BALANCE SHEET-Septem ber 30, 1976
ASSETS
Cash and Due from Banks (including
Foreign Office Time Deposits
of $858,747,765) ..............................
Money Market Investments:
Federal Funds S o ld ..........................
Other Investm ents............................
Robert M. Surdam
C h a irm a n of the B o ard
$1,867,715,307
Charles T. Fisher, III
P re sid e n t
802,175,000
44,044,302
846,219,302
11,950,420
Trading Account S e cu ritie s................
Investment Securities— At Amortized
Cost:
U.S. T reasury....................................
States and Political Subdivisions. . .
Federal Agencies and O ther............
Norman B. Weston
V ic e C h a irm a n of the B o a rd
A. H. Aymond
C h a ir m a n C o n s u m e rs P o w e r C o m p a n y
Henry T. Bodman
F o rm e r C h a irm a n —N a tio n a l B a n k of D etro it
Loans:
C om m ercial......................................
Real Estate M o rtg a g e......................
Consumer ........................................
Foreign O ffic e ..................................
Less Reserve for Possible Loan
Losses ..........................................
537,149,659
783,782,640
37,176,513
1,358,108,812
Harry B. Cunningham
1,719,480,143
790,695,150
252,720,372
421,953,818
3,184,849,483
Richard C. Gerstenberg
51,383,930
"37133,465^553
Bank Premises and Equipment (at cost
less accumulated depreciation of
$40,861,450)
Other Assets ........................................
Total A s s e ts ......................
H o n o rary C h a irm a n of th e B o a rd —
S . S . K re s g e C o m p a n y
David K. Easlick
P re s id e n t —T h e M ich ig a n B e ll
T e le p h o n e C o m p a n y
D ire c to r and F o rm e r C h a ir m a n G e n e ra l M otors C o rp o ra tio n
Martha W. Griffiths
G riffith s & G riffith s
John R. Hamann
P re s id e n t —
T h e D etro it E d is o n C o m p a n y
Robert W. Hartwell
P re s id e n t —C liffs E le c t r ic
S e r v ic e C o m p a n y
Joseph L. Hudson, Jr.
65,726,659
164,365,653
$7.447.551.706
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand ............................................
Certified and Other Official Checks
Individual Savings............................
Individual T im e ................................
Certificates of D e p o s its..................
Other Savings and T im e ..................
Foreign O ffic e ..................................
Other Liabilities:
Short-Term Funds B o rro w e d ..........
Capital Notes ..................................
Sundry Liabilities ............................
Total L ia b ilitie s ........................
BOARD OF DIRECTORS
Shareholders’ Equity:
Preferred Stock— No Par Value........
No. of Shares
Authorized
1,000,000
Issued
—
Common Stock— Par Value $6.25. . .
No. of Shares
Authorized 20,000,000
Issued
12,000,000
Capital S u rp lu s ................................
Retained Earnings............................
Less: Treasury S to c k 102,808 Common Shares, at cost
Total Liabilities
and Shareholders’ Equity
Walton A. Lewis
P re s id e n t —L e w is &
T h o m p so n A g e n c y , In c .
Don T. McKone
P r e s id e n t —
L ib b e y -O w e n s -F o rd C o m p a n y
$1,793,725,633
457,994,883
1,356,821,074
770,934,808
488,452,239
144,462,045
1,044,587,378
6,056,978,060
$ 646,834,220
100, 000,000
188,237,009
C h a irm a n —
T h e J . L . H u dso n C o m p a n y
Ellis B. Merry
F o rm e r C h a irm a n —N a tio n a l B a n k of D etro it
Arthur R. Seder, Jr.
P re s id e n t —
A m e ric a n N a tu ra l R e s o u rc e s C o m p a n y
Robert B. Semple
C h a irm a n —B A S F W yand o tte C o rp o ra tio n
Nate S. Shapero
H o n o ra ry C h a irm a n and D ire c to r
and C h a irm a n of E x e c u tiv e C o m m itte e —
C u n n in g h a m Drug S t o re s , In c .
George A. Stinson
C h a irm a n —N a tio n a l S te e l C o rp o ra tio n
935,071,229
6,992,049,289
Peter W. Stroh
P re s id e n t —T h e Stro h B re w e ry C o m p a n y
ADVISORY MEMBERS
75,000,000
Ivor Bryn
F o rm e r C h a irm a n —M cLo uth S te e l
C o rp o ra tio n
William M. Day
F o rm e r C h a irm a n —T h e M ich ig a n B e ll
T e le p h o n e C o m p a n y
175,000,000
207,819,760
A. P. Fontaine
(2,317,343) __ 445,502,417
$7,447,551,706
F o rm e r C h a irm a n —
T h e B e n d ix C o rp o ra tio n
Ralph T. M cElvenny
F o rm e r C h a irm a n —
A m e ric a n N a tu ra l R e s o u rc e s C o m p a n y
Peter J . Monaghan
A s s e t s c a r r ie d at a p p ro x im a te ly $ 4 0 3 ,0 0 0 ,0 0 0 (in c lu d in g U .S . T r e a s u r y S e c u r it ie s c a rrie d
at $ 5 1 ,0 0 0 ,0 0 0 ) w e re p led g ed at S e p te m b e r 3 0 , 1976, to s e c u re p u b lic d e p o s its (in c lu d in g
d e p o s its of $ 8 4 ,7 0 4 ,4 9 7 of the T r e a s u r e r , S ta te of M ich ig a n ) and fo r o th e r p u rp o se s
re q u ire d by la w .
O u tsta n d in g
$ 2 5 ,1 0 0 .0 0 0 .
sta n d b y
le tte rs
of
c re d it
at
S e p te m b e r
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
30,
1976,
to ta le d
a p p ro x im a te ly
M o n a g h a n , C a m p b e ll, L o P re te & M cD o n a ld
George Russell
F o rm e r V ic e C h a ir m a n G e n e ra l M otors C o rp o ra tio n
69
Mississippi River. Across the street
from the banking lobby is the historic
old St. Louis courthouse, where the
famous Dred Scott slavery decision was
handed down. Special care was taken
during construction of the bank com
plex to make sure movement of the old
fill and clay under the courthouse was
prevented.
Entrance to the tower and the bank
is from either the Broadway or Fourth
Street sides; parking for 200 cars is
available beneath the annex on two
levels.
The first parking level also includes
the safe deposit vault, the commercial
teller department and the armored car
dock. On the second paxking level are
the coin processing department, small
and large currency tellers, processing
department, records and trust vaults.
The lobby includes the teller area, com
mercial real estate, consumer banking,
personal service, personnel, purchasing
and residential real estate departments.
The Missouri Mortgage and Investment
Co., a subsidiary of Boatmen’s Bancshares, is also on this level.
The lobby mezzanine houses the
corporate banking center, international
banking and loan services.
70
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Federal Reserve Bank of St. Louis
The corporate trust department is on
the second floor, as are the customer
services, stock transfer and operations
administration departments.
The third floor includes the executive
offices, board room, auditorium and the
commercial banking department.
Floor four houses data processing,
proof and transit and lock box oper
ations. The trust department is on the
fifth floor, along with the accounting
and operations departments and invest
ment research.
The sixth floor includes the auditing,
advertising, correspondent and bond de
partments, plus the offices of Boatmen’s
Bancshares, HC controlling the bank.
Boatmen’s initially opened for busi
ness on October 18, 1847, as Boatmen’s
Savings Institution, a mutual savings
institution with a state charter. In 1851,
the bank moved to larger quarters, due
to increased business in connection with
river trade. In 1855 the Missouri legis
lature granted the bank a new charter
with the right to issue capital stock.
The bank didn’t own its own home
until 1856, when it constructed a build
ing at Second and Pine streets, which
was in use until 1891, when new
quarters were occupied at Second and
Boatm en's N ational has consolidated banking
operations in this two-story, open-court atrium
a nn ex to Boatm en's Tower. B ank's tw o form er
dow ntow n offices at Boatm en's Bank Building
and Equitable Building w e re m oved to new
location. Drive-in operation a t Equitable Build
ing rem ains in service.
Washington. A fire leveled this building
in 1914, and the bank then moved to
its most recent site, Broadway and
Olive.
Boatmen’s Bancshares was formed in
1969. The HC, which initially con
trolled only Boatmen’s National, has
since acquired 13 other banks through
out Missouri.
As Missouri’s oldest bank. Boatmen’s
National has been a vital part of the
banking scene through much of the
history of St. Louis. From a small bank
on the banks of the Mississippi, it has
grown to St. Louis’ third largest bank
ing institution, and is now housed in
the city’s newest bank building. * *
Teller line in new Boatm en's N atio nal Main
Office overlooks historic old St. Louis court
house and G a te w a y Arch N atio nal Monument
grounds. Center portion of lobby features
green-house-type roof and garden a re a w ith
plants a n d frees.
MID-CONTINENT BANKER for November, 1976
Allforone
andoneforall.
All three of these men head the Correspondent Bank Depart
ment for one bank, Memphis Bank & Trust. As a team, they’ve
given us management depth and ability in correspondent
banking that’s simply unbeatable. T h ey’re a crack unit.
Any one of the three can give you all the correspondent
services you need, with better than 80 years of combined
experience and a full staff behind them. To name a few:
Transit Operations, Credit Assistance, Investments, Bond
Portfolio Analysis, Safekeeping, Trust Services, Data Process
ing, Business Referrals . . . in short, the
whole ball of wax. T h ey’ll even throw in
some extras like expert insurance
capability, guidance in the construc
tion and design of bank facilities,
furniture, decor . . . even supplies.
Service fit for royalty.
Lynn Hobson, Vice President
Gus Morris, Vice President
Jim Newman, Vice President
Call toll-free and they’ll rush
to your rescue. In Tennessee,
1-800-582-6277. In other states,
1-800-238-7477.
Memphis Bank & Trust Correspondent Department
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
71
Bank Services at Detached Facilities
Major Topic at Kansas Regionals
ANSAS bankers learned something
about the public’s attitude toward
banking at their regional meetings in
September and October. They also were
given an opportunity to air their views
on the services that should be offered at
detached facilities.
Both topics came up at the sessions
for chief executives, held concurrently
with sessions for other officers during
the regionals.
The consumer attitude survey, con
ducted by Central Research Corp., T o
peka, revealed that consumers feel de
tached facilities offer adequate services.
Survey participants were consumers of
banking services, both individuals and
businesses, located in cities in Kansas
with 10,000 or more population, or
which are served by banks having de
tached facilities.
More than 500 individuals and more
than 200 businessmen were interviewed
by telephone in early September.
The vast majority of those surveyed
said there were no additional services
needed at the detached facilities they
patronize. Those using banks that main
tain ATMs reported relatively little use
of the machines— 30% of individuals
and 25% of businesses used them.
More than half of those surveyed
whose banks do not have ATM s said
they would not use the machines if they
were installed.
O f those who would use an ATM if
their bank offered the service, 64% of
the individuals said they would use the
machines once a week and 25% said
they would use the units twice a week.
In the area of services offered in de
tached facilities, the survey revealed
that 51% consider check cashing and de
posit services to be important; 12% rate
loan-making services as important; 26%
consider loan payment services to be
important and 30% give importance to
one-payment services for all utility bills.
Almost 80% of the individuals polled
stated that detached facilities should be
open during late afternoon and eve
ning hours. The majority said the clos
ing hour should be either 6 or 7 p.m.
More than half those surveyed favor
detached facilities being open on Satur
days, but only 1% voted for Sunday
hours.
Another survey of consumers, con
ducted by James T. LePage & Associ
ates, revealed that consumers feel banks
are the safest place to keep money, that
cancelled checks are important and that
checking account services are econom
ical.
K
72
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Federal Reserve Bank of St. Louis
Taking part on panel entitled "Banking Struc
ture Position of the K B A " at Region 1 meeting
in Law rence w ere (from I.) Daryl Becker, State
Bank, M eriden; Ben C raig , M etcalf State, O ver
land Park; KBA Pres. Floyd Pinnick, G rant
County State, U lysses, m oderator; and R. H.
Zim m erm an, First State, Salin a.
M ax Falkenstien (I.), Douglas County State,
Law rence, spoke on KBA public attitudes sur
vey at Region 1 meeting. Seated is John Sul
livan Jr., M idAm erican Bank, Sh aw nee M ission,
Region 1 ch.
At Region 1 meeting in Law rence, A lan Lilleoien (I.), First N at'l, Law rence, introduces Dr.
Ron Barnes, Topeka, w ho spoke on "H andling
C hang e and Stress."
Respondents indicated that the bank
ing services used most are personal
checking, savings, safe deposit and
credit card. W hen asked to rate their
individual banks as to the service o f
fered, two categories— helpfulness and
friendliness— were emphasized.
More than 85% of those surveyed
said they consider a bank statement to
be important, while 80% said cancelled
checks were important. More than 52%
gave importance to interest paid on all
money deposited and the opportunity
to transfer money from checking to sav
ings and vice versa.
A portion of the survey was designed
to elicit response on how much custom
ers would use EFT services. Banks and
S&Ls came out even as the institutions
at which customers would most likely
use ATM service.
Almost 36% of the respondents had
no opinion of the use of plastic card
teller service, if it was available, while
almost 42% said they would use such a
service.
More than 44% said they would not
be willing to pay a small service charge
for the convenience of using ATMs on
a 24-hour basis.
Floyd Pinnick, KBA president, and
president, Grant County State, Ulysses,
conducted the discussions on bank struc
ture. At each regional, bankers on a
panel presented three differing views
regarding services that should be of
fered at detached facilities. One rep
resented the status quo position, an
other favored permitting consumer
credit transactions and a third was in
favor of allowing full service at all
Kansas bank facilities.
The KBA governing council will take
into consideration the views presented
at the regionals in addition to the re
sults o f a survey of member banks when
it decides its official position on the is
sue at its Decem ber meeting. The KBA
is presently neutral on the issue.
Judging from the response at the
regionals, each position has its share of
vocal supporters.
The sessions for other officers fea
tured a discussion on the premise that
people are what they are because of
programing they received when young
sters in their respective environments.
The discussion was moderated by Ter
ry Heineman, public affairs administra
tor, United Bank, Denver. * *
Bankers Laud Teachers
Five grade school teachers in Kan
sas received special recognition at
the recently concluded regional meet
ings for outstanding projects in
teaching economics and the Ameri
can free enterprise system in their
classrooms.
Special awards were presented to
the teachers by the Young Bank Of
ficers of Kansas. Assisting in the pro
gram was the Kansas Council on
Economic Education, which sponsors
economic education workshops for
teachers and special curriculum de
velopment in the state’s schools.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
New Attempt to Get EFT Legislation
Launched at Missouri BA Regionals
By JIM FABIAN
Associate Editor
T ^ H E PUSH is on again by the Missouri Bankers Association to have
EFT-enabling legislation passed in the
state capital. A proposed bill was dis
cussed at the recently concluded MBA
regional meetings, held in eight loca
tions throughout the state in Septem
ber and October.
MBA President Charles Richmond,
executive vice president, American Na
tional, St. Joseph, pointed out at the
meetings that positive action on the bill
is vital for Missouri bankers. He re
minded his audiences that E FT bills,
in one form or another, have been
passed by the legislatures of Oklahoma,
Kansas, Nebraska and Iowa— all states
adjacent to Missouri. Even Illinois is
making progress, he reported, its banks
having established a $750,000 fund for
the development of an E FT system
through the Illinois Bankers Association.
Both the MBA board of directors
and its governmental affairs committee
have approved the proposed E FT bilk
Particulars of the proposed legislation
were reviewed by MBA staffer W ade
Nash at the regional meetings.
The proposed bill would permit outof-state EFT entry with or through a
bank, but entry would be limited to ad
jacent states on a reciprocal basis.
Within-state E FT entry would permit
off-premise financial service terminals
throughout a bank’s service area. Banks
could also extend terminals into the
county of any participating bank.
Services allowed would include the
making of deposits, pre-authorized
loans, account transfers and cash with
drawals. New account and new loan
service would not be permitted.
The bill provides for mandatory
sharing of all off-premise units. No
mandatory advertising or symbols may
be required for a plastic card or unit
used on off-premise terminals, however.
Participating banks would be re
quired to notify the appropriate super
visory agency only of the name, ser
vices and locations of terminals. Divi
sion of Finance approval would be re
quired on contracts for third parties
operating terminals to insure non-dis
crimination on costs.
The bill states that services must be
priced at cost, plus a reasonable return
on capital on development, installation
74
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Frank N. Akers (r.), outgoing Region 3 v.p.,
chats wiith MBA Pres. C h arles Richmond during
regional meeting in St. Joseph in September.
Mr. A kers is a .v .p . & ag. rep., Gentry County
Bank, A lb an y . Mr. Richmond is e.v.p., Am erican
N at'l, St. Joseph.
Incoming Region 3 v.p.,
Harold L. Boatm an, 1st
v.p., Farm ers & V alley
Bank, Tarkio, tries on
hat a w a rd e d at St.
Joseph
meeting.
He
came closest to guess
ing prices of prim ary
commodities on Decem
ber 1, 1975, at last
y ea r's meeting.
MBA E.V.P. Felix LeG rand (I.) kibitzes w ith
E. L. Burch (c.J and W alter Kram er at Region
4 meeting in K an sas City. Mr. Burch is new
regional v.p. and is v.p., United Missouri Bank,
K an sas Cutty. Mr. Kram er w a s outgoing re
gional! v.p. at time of meeting. He is pres.,
Alm a Bank.
and operation of the hardware. These
costs are to be passed on to the mem
ber banks based on the number o f per
sonal demand and savings accounts
and the number of plastic cards issued.
The bill states that no off-premise
terminal is to be considered to be a
bank, a branch or a bank facility.
Customer liability for unauthorized
use of the system is stated to be the
same as that provided for in the Bank
Protection Act.
President Richmond warned bankers
that Missourians could be left out of
the E FT picture if they don’t get prop
er legislation passed, since most sur
rounding states are forging ahead in
the E FT area. He also said that if all
banks in a given county do not want
to participate in an EFT network, they
can refuse to do so en masse.
He called bankers’ attention to the
fact that American Express Co. has in
stalled travellers’ cheque vending ma
chines in Missouri and that at least one
Missouri credit union has started a
share-draft program.
New officers were elected at each re
gional meeting as follows:
Region 1: W ill Ben Sims, president,
City Bank, Moberly— vice president;
J. W . Ballinger III, executive vice
president, Bank of Cairo— secretary.
Region 2: Edward E. Holt, vice
president, Trenton Trust— vice presi
dent; Larry Richards, president, Com
munity Bank, Chillicothe— secretary.
Region 3: Harold L. Boatman, first
vice president, Farmers & Valley Bank,
Tarkio— vice president; Charles D.
Maxwell, executive vice president,
Farmers State, Cameron— secretary.
Region 4: E. L. Burch, vice presi
dent, United Missouri Bank, Kansas
City— vice president; Paul Warren,
senior vice president, First National,
Liberty— secretary.
Region 5: John H. Dressel, president,
Gravois Bank, Affton— vice president;
Robert E. Finley, executive vice presi
dent, Colonial Bank, Des Peres— secre
tary.
Region 6: Mrs. Pauline Clubb, execu
tive vice president and cashier, Bollin
ger County Bank, Lutesville— vice presi
dent; Doyle Horn, executive vice presi
dent, Bank of Sikeston— secretary.
Region 7: Darrell W . Johnson, execu
tive vice president, Sac River Valley
Bank, Stockton— vice president; Charles
Spangler, president, Aurora Bank—
secretary.
Region 8: Don L. Singleton, vice
president, Commerce Bank, Columbia
— vice president; W aldo F. Mottaz,
president, State Bank, Hallsville— secre
tary. • •
Louis B. Eckelkam p, ch. & pres., Bank of W ash
ington, and regional v.p., calls Region 5
meeting to order.
MID-CONTINENT BANKER for November, 1976
■
THE BOATMEN'S TOWER
B o a tm e n 's ts m o v in g into bold n e w h e a d q u a rte rs , re fle ctin g th e ir stre n g th
a n d c o m m itm e n t :o th e fu tu re . T h a t sa m e stre n g th an d co m m itm e n t
b a c k s o u r c o rre s p o n d e n t b a n k te a m , a te am w e ll- v e rs e d in to d a y ’ s
b a n k in g e n v iro n m e n t. Pu t C o rre s p o n d e n t b a n k e rs w h o k n o w
If
th e a n s w e r s a n d h a v e th e b a ck -u p on y o u r te a m . B o a tm e n 's
mm I
: l i ; i ri'teft?
C o rre s p o n d e n t B a n k e rs , s p e c ia lis ts w h e n you
n ee d th e m .
y?i
o il
-K
P g S W lr r r r
THE BOATMEN'S
NATIONAL BANK
O F ST. LOUIS
314 / 421-5200
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ft
n
. 41
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From the Mid-Continent Area
Alabama
■ FARM ERS & M ERCHANTS BANK,
Centre, has announced the following
promotions: Colleen Ray, from branch
manager to assistant cashier and branch
manager; Callie S. Day, from branch
manager to assistant vice president and
branch manager; Katherine M cCord, to
assistant cashier; and James B. Barnes
and Richard Couch, from loan officers
to assistant vice presidents.
Opelika Nat'l Has Name Change
■ M ARY GEORGE JORDAN W AITE,
president, Farmers & Merchants Bank,
Centre, has been appointed a director
of the Boy Scouts of America, South
east Region. Mrs. W aite is believed to
be the first woman to serve in that ca
pacity.
Let our
billion dollar
organization
help your bank
profit. Call
Discussing plans for the unveiling of new signs
a fter the nam e change of O pelika N at'l are
(from I.): W alter A. Parrent, s.v .p ,; Robert L.
M cCullough, pres.; and S. Frank W hatley, s.v.p.
Bank of East A la b a m a is the institution's new
nam e, follow ing resignation of its n ational
charter in fa v o r of a state charter.
W ilbur Hufham (205/832-8450),
a member of our correspondent
banking team.
First Alabama Bancshares, Inc.
Affiliate Banks
First Alabama Bank of Montgomery, N.A.
First Alabama Bank of Birmingham
First Alabama Bank of FJuntsville, N.A.
First Alabama Bank of Tuscaloosa, N.A.
First Alabama Bank of Dothan
First Alabama Bank of Selma, N.A.
First Alabama Bank of Gadsden, N.A.
First Alabama Bank of Athens, N.A.
First Alabama Bank of Baldwin County, N.A.
First Alabama Bank of Guntersville
First Alabama Bank of Hartselle
First Alabama Bank of Phenix City, N.A.
First Alabama Bank of Mobile County
■ ROBERT H. W O O D R O W JR.,
formerly chairman and CEO, First Na
tional, Birmingham, has been elected
vice chairman of the bank’s parent HC,
Alabama Bancorp., Birmingham. Mr.
W oodrow remains as a bank director
and trust committee chairman and will
devote full time to his new responsi
bilities at the HC. Newton H. DeBardeleben, formerly bank vice chair
man, has succeeded Mr. W oodrow as
bank chairman and CEO. He also
serves as an HC vice chairman. Con
tinuing as bank president is M. E.
Moor Jr.
W O O D RO W
RrsUVIabama
DeBARDELEBEN
■ DAN L. HENDLEY, executive vice
president, Alabama Bancorp., Birming
ham, has assumed additional duties as
executive vice president of the H C’s
lead bank, First National, Birmingham.
There he will head the newly formed
operations and administration division.
Mr. Hendley joined the HC in 1973.
■ C. E. “ BUTCH ” AVIN GER, regis
tered lobbyist for Birmingham Trust,
76
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for November, 1976
THESE GUYS WON’T
LEAVE W ELL ENOUGH
Joe Blank, Mike Miller and Ron Deal. It
seems they have a couple of key phrases that
work consistently well. For us, ana our corre
spondent banking friends.
They go like this: What if? Why don’t we?
Why not try this? (and) I wonder why nobody
else thought of that?
We didn’t get to be the largest bank in the
state by offering you the same tired solutions
over and over again. We keep it loose. Because
every bank, and every banking problem, are
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
unique. And we’re flexible enough to find the
best solution for you. Because we’ve got people
who won’t leave well enough alone. Call us toll
free. In Tennessee, 1-800-342-8240. In other
states, 1-800-251-8514.
First
American
First American Center, Nashville 37237
FirstA m tennBankgroup
Member FDIC
77
lobby and contains the office of Presi
dent Doyl E. Brown, vice president of
the Arkansas Bankers Association. Also
upstairs are the office of Chairman Erskine Falls, a board room, employee
lounge, operations area and storage
room, etc. The bank has Diebold driveup equipment and an automated teller
machine called “First Five Teller.”
will join the Ala.BA staff on January 1.
He entered banking in 1957 at Bir
mingham Trust as vice president, cor
respondent banking, and was named
state Superintendent of Banks 11 years
later. W hen Mr. Avinger returned to
Birmingham Trust, he was named in
vestment department head, and after
reorganizing that department, he re
turned to correspondent banking and
assumed his present duties in the
capitol.
■ JAMES E. EASON, formerly execu
tive vice president, City National,
Dothan, has been named president of
the new Coffee County Bank, Enter
prise. Serving as bank chairman is Ken
Harris.
■ C O M M E RC IAL N ATION AL, Lit
tle Rock, has formed an agri-business
department to provide specialized fi
nancial services to farmers and agricul
tural industry management. Serving as
consultant to the department is Austin
Vines, retired interim vice president for
agriculture, University o f Arkansas,
Fayetteville. He will provide agri-counseling to customers. Serving as liaison
between agri-business customers and
the bank’s various departments offering
specialized financial services is Rett
Tucker, who is a CPA. Mr. Tucker
holds a bachelor of science degree in
commerce from Washington & Lee
University, Lexington, Va., and a mas
ters degree in business administration
from the University of Arkansas.
LITTLE ROCK— First SBIC of
Arkansas, Inc., has received ap
proval to become a licensee of the
U. S. Small Business Administration.
First SBIC will be located in the
Worthen Bank Building and will
operate as a small business invest
ment corporation, making long-term
loans to and equity investments in
small-business concerns.
The company is owned jointly by
Worthen Bank, headquartered here,
and First National of Hot Springs.
CONNOR
■ W IL L IA M L. CRAVENS, formerly
management advisory services partner,
Russell Brown & Co. accounting firm,
Little Rock, has been named executive
vice president, First National, Little
Rock. A CPA, Mr. Cravens will be re
sponsible for personnel, planning, mar
keting and finance.
M cADAMS
HARROW SMITH COMPANY
This a e ria l v ie w of new quarters of First N at'l,
W ynne, show s unusual curved design of build
ing's front. Structure is designed w ith m ez
zan ine that encircles lobby.
78
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
SMITH
a ROBERT C. CONNOR, executive
vice president, Union National, Little
Rock, has been named president, while
Hall McAdams, vice president, has
been promoted to executive vice presi
dent. Both have been elected directors.
Cliff W ood, vice chairman, has becom e
an advisory director and consultant to
the chairman and Eugene B. Smith Jr.
has succeeded him as vice chairman.
Mr. Smith formerly was first vice presi
dent and executive committee chair
man.
Arkansos
n FIRST NATION AL, W ynne, has
moved into its new 16,000-square-foot
building, which cost more than $1 mil
lion (including furniture and equip
ment). An unusual feature is the curved
wall across the structure’s front. The ex
terior is made up of limestone blocks
quarried in Indiana, and sculptured into
the face o f the rock, on both front and
back, are these words, “ First National
Bank o f W ynne.” The interior features
an open look, with the back entrance
being a solid wall of glass, punctuated
by a second-floor mezzanine, which
runs several feet removed from the
wall. The mezzanine, connected to the
lobby by a spiral staircase, encircles the
Receives SBA Approval
Union N ational Bank Bldg.
501/374-7555
Little Rock, A rk a n sa s
J. E. W OM ELDORFF, Executive V ice President
TUCKER
■ HARRIS BANK, Chicago, has elect
ed Jerome J. Jurs, William J. Potterton
and Edward J. Williams vice presi
dents. Named assistant vice presidents
were S. Leslie Dixon and Rebecca H.
Tolentino.
■ H O W A R D B. SILVERM AN, sen
ior vice president, First National,
Evanston, has advanced to executive
vice president of the bank and its HC,
MID-CONTINENT BANKER for November, 1976
JoinArkansas Firstand Largest
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Twelve fine Arkansas banks have joined hands to form
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W e’ll help from purchase of the automated teller, to d e
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bank’s own identity. Each bank
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Helping to Make Good Banks Better
■■■ Commercial
■■■ National Bank
OF LITTLE ROCK
Arkadelphia,
Fort Smith,
Elk Horn Bank
Merchants National Bank
Batesville,
Jonesboro,
Citizens Bank
Mercantile Bank
Benton,
Mena,
Benton State Bank
The Union Bank
Bryant,
Springdale,
Benton State Bank
First National Bank
Camden,
Wynne,
First National Bank
First National Bank
El Dorado,
Little Rock,
First National Bank
Commercial National Bank
Fayetteville,
First National Bank
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
FDIC
79
First Illinois Corp., also of Evanston.
In his new post, Mr. Silverman will
oversee all lending divisions, asset re
view, deposit services and marketing
and business development.
■ RAN D AL A. W R IG H T has been
elected assistant vice president and
farm manager of Merchants National,
Aurora. Mr. Wright holds a bachelor of
science degree in agricultural economics
from Western Illinois University, M cComb, is a graduate of the Agricultural
Lending School of the IRA and Illinois
State University and has several years’
banking experience in the field.
■ GE R ALD W . DALY, who recently
joined National Roulevard Bank, Chi
cago, as vice president, has been
named to head its real estate depart
ment. He formerly held a similar posi
tion at another bank in Chicago.
Checking First Day's Results
■ THOM AS M. M ILLER has been
elected president and chief operating
officer of Indiana National, Indianapo
lis, succeeding John R. Benbow, who
resigned last month. Mr. Miller formerly
had been the bank’s executive vice
president and headed Indiana National’s
banking group. Thomas W . Binford,
chairman and CEO of the bank and
the HC, has succeeded Mr. Benbow as
president of the HC.
Checking the results of the first d a y's trading
of stock of H arris Bankcorp., Inc., C hicago, on
the M idw est Stock Exchange a re (from I.): Rich
ard B. W albert, ch., M idw est Stock Exchange;
Theodore H. Roberts, HC e.v.p .; Law rence E.
A ugustyn, Billings & Co., co-specialist for the
HC; W illiam F. M urray, HC ch.; and M ichael E.
Tobin, exchange pres. The listing of the HC's
stock on the M idw est Stock Exchange follow s
the A p ril listing of its stock on the N ew York
Stock Exchange.
m C O N TIN EN TA L ILLINOIS NA
TION AL, Chicago, has opened its first
off-site facility at 30 North LaSalle. It
features a drive-up teller and an out
door 24-hour ATM . This facility is
within 1,500 feet of the Main Office.
A second facility at Clark and Division,
within 3,500 yards of the Main Office,
has been scheduled for a 1977 opening.
DALY
C O R EY
■ M ARG ARET TORKELSON of the
bookkeeping department of First Na
tional, Vandalia, has been with that
bank 50 years. The event was cele
brated with a surprise breakfast in the
bank’s social room, with directors, em
ployees and retired personnel in at
tendance.
80
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Federal Reserve Bank of St. Louis
■ AM ERICAN FLE TCH ER N A TIO N
AL, Indianapolis, has elected the fol
lowing assistant vice presidents: Dean
na H. Lane, Stephen F. Spacke, Terry
L. Gentry and Jerry L. Siefers.
Kansas
■ G. GAGE OVERALL, formerly op
erations officer and manager o f check
collections at Fourth National, W ichi
ta, has been named correspondent bank
officer. Martha Butler, the former as
sistant manager, succeeds him as man
ager of check collections. Mr. Overall
has been with the bank since 1972;
Miss Butler, since 1967.
■ ROBERT F. COREY has been
named executive vice president and a
director of Drovers National, Chicago.
He formerly was senior vice president,
investment division.
■ FIRST N ATION AL, Chicago, has
named the following vice presidents:
L. Gene Beube and Richard L.
Kolehmainen, international banking;
A. Thomas Davis, loan review; and
William E. Bennett, Daniel A. Lupiani,
Charles B. Moffett and James S. Winn,
real estate.
Indiana
Chicago M ayor Richard J. Daley (2nd from r.
in center group) w a s guest of honor w hen Con
tinental Bank opened its first off-site personal
banking facility. Officiating at opening-day
cerem onies w ere: Roger E. Anderson (at po
dium), ch.; John Perkins (behind and to im
m ediate right of Mr. Anderson), pres.; and
Challis Lowe (far r., center group), facility
mgr. Sym bolizing facility's location at street in
tersection "w h e re LaSalle meets W ashington,"
m odern-day stand-ins for two historic figures
who ga ve streets their nam es—Rene Robert La
Salle and George W ashin gton —provide canopy
of period flags for cerem ony.
O VERA LL
■ RICH ARD E. SNOW BARGER has
joined Hutchinson National as vice
MID-CONTINENT BANKER for November, 1976
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MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
J
Kansas Bank
Note Company
F IF T H & J E F F E R S O N S T R E E T S • F R E D O N IA , K A N S A S 6 6 7 3 6 • 3 1 6 - 3 7 8 - 2 1 4 6
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81
president, commercial loans. He pre
viously held a similar position at Union
National, Wichita.
■ W ILLIA M R. SHAVER has been
named controller of Security National,
Wichita. He formerly held a similar
position at a bank in the Southeast.
Kentucky
■ JERRY L. SKIDM ORE has been
named assistant vice president, corre
spondent banking division, Citizens Fi
delity, Louisville. He will remain as
assistant vice president in the bank’s
automated customer services depart
ment in Lexington until January 1.
H e has worked out of the Lexington
Data Center since joining Citizens
Fidelity in 1967. Vice President Hobert
Sloane, a correspondent banker since
joining Citizens Fidelity in 1967, has
resigned from the bank to pursue other
banking activities.
dent of commercial loans; Paul Musselwhite, to vice president of installment
loans; James R. Aldridge, Radeliffe
Branch manager, to assistant vice presi
dent; William Bradley Richardson, to
assistant vice president; and Linda H.
Smith, to assistant cashier.
Louisiana
B PHILIP E. D O OLEN , vice presi
dent, Whitney National, New Orleans,
has been named chairman, District Di
rectors’ Council of Bank Administration
Institute. In that post, he will serve as
a district director and as chairman of
the District Directors’ Council. He also
will serve on BAI’s 10-member execu
tive committee of the board, which di
rects the association’s long-range plan
ning programs for the U. S. and abroad.
* LARRY R. M AYFIELD, formerly
executive vice president, Peoples Bank
of Murray, has joined Central Bank,
Owensboro, as senior vice president
and loan officer.
a J. W . PHELPS, president, Liberty
National, Louisville, has been named
president, Business Development Corp.
o f Kentucky (BDC). BDC works closely
with the Kentucky Industrial Develop
ment Finance Authority to finance in
dustrial development projects through
out the state. Last year, Mr. Phelps
served as BDC vice president and pres
ently is a director and executive com
mittee member of the firm.
a ROBERT M. W ALK ER has joined
Citizens Fidelity Bank, Louisville, as
vice president and director of research,
investment management department.
He previously was with Irwin Union
Bank, Columbus, Ind. In other news
at Citizens Fidelity Bank, Jefferson D.
Stewart Jr. has been elected a director,
filling the vacancy left by the death of
William H. Abell. Mr. Stewart is the
retired president of Federal Chemical
Co.
B BENJAMIN BERNSTEIN has been
elected chairman, president and CEO,
Harrison Deposit Bank, Cynthiana. He
will be assisted by Billy M. Stewart,
executive vice president, who has been
named a director. Melvin Hampton,
formerly cashier, has advanced to vice
president, while Grace Jones has suc
ceeded him as cashier. In addition,
Fredric M. Bernstein and Alvin J. L e
vine have been elected directors.
B CITIZENS BANK, Elizabethtown,
has announced the following promo
tions: Glen L. Hodge Jr., to vice presi
82
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Federal Reserve Bank of St. Louis
HOW ELL
DOOLEN
president and data services manager;
Charles B. Clark, to assistant vice presi
dent; John A. Fields, to assistant vice
president and manager, western region,
national accounts; Pierce W . Hance, to
assistant vice president and manager,
eastern region, national accounts; and
Jim Smith, to assistant vice president.
In addition, Ray C. Baas, formerly of
Century National, New Orleans, has
joined First NBC as assistant vice presi
dent.
Mississippi
a W . PARKS JOHNSON has been
promoted to vice president, commercial
loans, Greenville Bank, branch of D e
posit Guaranty, Jackson. He joined the
latter bank in 1970 and became assist
ant vice president last year. This past
August, Mr. Johnson joined the Green
ville Bank. In other action, Deposit
Guaranty elected the following assist
ant vice presidents: M. Ellen Beckham,
Dallas M. Lee, W . Paul Long and
E. James Wicker Jr. M. Ray Grubbs
was made branch officer.
JO H N SO N
a PORTER L. FORTU NE, chancel
lor, University of Mississippi, Universi
ty, has been elected a director of Mis
sissippi Bank, Jackson.
B ROY F. BAAS, assistant vice presi
dent, Bank of New Orleans, has been
appointed Louisiana contact officer, cor
respondent bank department. He joined
the bank in 1971 and has served as
manager o f its Kenilworth and Medical
Plaza branches.
B RAYM OND I. H O W ELL, formerly
executive vice president, Omaha (N eb.)
National, has joined Hibernia National,
New Orleans, as executive vice presi
dent. In his new post, Mr. Howell will
oversee commercial loan, corporate, in
ternational, consumer loan, investment
and trust activities.
B FIRST N A TIO N AL Bank of Com
merce, New Orleans, has announced
the following promotions: James C.
Cronk, to vice president and commer
cial services manager, operations cen
ter; Lawrence H. Ellis Jr., to vice
president and special industries depart
ment manager; John D. Vetter, to vice
a BROOKHAVEN BANK has hosted
bankers from across the state at a pre
view of its Main Office installation of
an IBM System-3, M od 15 computer.
The showing also marked the opening
of the bank’s new data processing de
partment. Presently, the computer han
dles checking account inquiry with
memo post, but a variety of additional
options will be added in the future, a
bank spokesman states. Another new
service is “Jane,” Brookhaven Bank’s
24-hour telephone teller. W hen a cus
tomer calls a special number, a pre
recorded message answers, then the
customer gives instructions on what
service is required: transfer between
accounts, charge an account for an in
stallment loan payment, make an ap
pointment, leave a message or ask a
question concerning an account. A
bank employee listens to the recorded
messages at least twice daily, and cus
tomers are mailed receipts of their
transactions.
MID-CONTINENT BANKER for November, 1976
Sometimes enough N e w a rk 's enough.
Missouri
■ FIRST N ATION AL, St. Louis, lias
announced the elections of William F.
Sommer as controller and Gary T.
Stackle as vice president. The follow
ing have been named assistant vice
presidents: James J. Kerley Jr., Gard
ner R. Lloyd Jr. and Donald W. W il
liams. Charles H. Eggleston, formerly
assistant vice president, First Empire
State Corp., Buffalo, N. Y., has joined
First National as assistant vice presi
dent.
STACKLE
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.
CAPE
■ C. W AYNE CAPE has been named
vice president, American National, St.
Joseph, going there from First State,
Rolla. Both banks are members of
Ameribanc, Inc., St. Joseph. Mr. Cape
has been assigned to the agricultural
lending department. John A. Turner
has joined American National as assist
ant vice president and electronic data
processing programming manager. He
formerly was a systems analyst with
Florida Savings & Loan Services, Inc.,
Orlando.
■ JOE P. YEARGAIN has been elect
ed vice president, Farmers Bank of
Antonia, which has undergone a name
change to Farmers Bank. Mr. Yeargain
served 12 years as a national bank ex
aminer and five years as a bank officer
in Mississippi.
Bank Has its Day
W alter C. B ranneky, e.v.p. (I.), and Fletcher E.
W ells, s.v.p. and cash., both of St. Johns Bank,
accept a proclam ation from St. Louis County
Supervisor Gene M cN ary (r.) designating Oct. 2,
1976, a s "St. Johns Bank & Trust Co. D a y " in
the county. The honor recognixed the bank's
50th ann iv e rsa ry.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
When enough New York’s enough.
48th just o ff 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.
BUSHMAN
BROW N
■ EUGENE G. BUSHMAN, hearings
officer, state personnel advisory board,
has been appointed legislative counsel
for the Missouri Bankers Association,
Jefferson City. A 1960 graduate of the
University of Missouri School of Law,
Mr. Bushman served as state assistant
attorney general, 1960-65, and as ad
ministrative
hearing
commissioner,
1965-69.
a GREGOBY R. W A R T M A N and
Barret S. Heddens III have been elect
ed assistant cashiers at First National,
Kansas City. Mr. Wartman has been
assigned to the correspondent bank di
vision and has been with the bank
since 1975. Mr. Heddens is in the com
mercial loan division and also joined
the bank in 1975. Donald O. Borgman
and George J. Garner were elected as
sistant trust officers.
■ W A RREN W . W E AV ER has been
elected executive vice president, Com
merce Bank, Kansas City. He contin
ues in his post as vice president of the
bank’s parent HC, Commerce Bancshares, Inc., Kansas City, where he has
marketing and administrative responsi
bilities. At the bank, Mr. W eaver will
oversee planning, administration and
the marketing, BankAmericard and
W EA V ER
W ARTMAN
personnel departments. Thomas J.
Brown has joined the bank as vice
president, correspondent division, with
responsibility for Missouri banks. He
formerly was an industrial specialist
for the Missouri Division of Commerce
& Industrial Development. John R.
Wells, vice president and personnel di
rector for the HC, has assumed addi
tional duties as bank vice president,
personnel department. In other news,
James E. McClure, president and chair
man of the affiliate, Commerce Bank
of Springfield, has been elected an HC
director. John J. Hanby Jr., formerly as
sistant branch manager, Ford Motor
Credit Co., has joined the bank as as
sistant vice president, while J. Scott
Kreissl, who previously was commercial
loan officer and credit analyst, National
Bank of Detroit, has been appointed
assistant vice president in Commerce
Bank’s national division.
■ GERARD L. SARACINI, chairman,
Bank of Poplar Bluff, has been hon
ored by a coffee in celebration of his
60th year with the bank. He joined
the bank as messenger boy in 1917, ad
vancing to president in 1953 and to
chairman in 1972. The coffee was held
at the bank’s downtown location and
the public was invited.
84
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
■ A CH ARTER was issued last month
by Finance Commissioner William
Kostman for the proposed Manchester
Bank of W est County, which is sched
uled to open in mid-summer 1977 in
the Maryland Heights suburb of St.
Louis. The next step for the bank is for
the St. Louis-based bank HC, Man
chester Financial Corp., to obtain ap
proval from the Federal Reserve Board
to acquire the bank. Such approval is
expected in 90-120 days, according to
W . C. Johns, who will be the bank’s
president. Mr. Johns is senior vice pres
ident and chief lending officer, Man
chester Bank of St. Louis, also an af
filiate of the HC.
■ JAMES M. M cCRACKEN has been
elected assistant vice president and
corporate trust officer at United Mis
souri Bank, Kansas City, while Archie
J. Thornton Jr. has been named direc
tor of marketing.
■ R. SCOTT R O L A N D has advanced
from vice president to senior vice presi
dent at Citizens Bank, Warrensburg.
A. Jack Pitts has been elected assistant
vice president and will serve as execu
tive officer of the Chilhowee Facility,
while Mary Catherine Handly has been
named loan servicing officer.
Robidoux Center Under Way
Capital-Note Issue
KANSAS CITY— Commerce Bancshares, Inc., has announced that 22
of its 32 affiliated banks will be is
suing capital notes, with the total is
sue to be limited to $17,500,000.
The capital notes will be issued in
$5,000 denominations at an 8/1% in
terest rate and a 10-year maturity,
due December 1, 1986. Interest will
be paid semiannually, and the notes
will be available only until the au
thorized issue is fully subscribed.
The note issues are primarily to
augment the issuing banks’ capital
positions with the funds available for
general corporate purposes. Because
of the 10-year-maturity provision
and the other terms and conditions
under which the capital notes are to
be issued, bank regulatory authori
ties will consider the note issues as
additions to the issuing banks’ cap
ital structures, according to the HC.
WELLS
■ C ONSTRU CTIO N has begun on
the permanent building of Lemay Bank
at Oakville on Telegraph Road and
Baumgartner in St. Louis. Plans for the
building call for more than 7,500
square feet of banking space, five
drive-up lanes and parking for more
than 100 autos. Completion has been
slated for late fall.
Died: C. W . Culley, 49, former Mis
souri commissioner of finance, on O cto
ber 6, in Las Vegas. During his tenure
as finance commissioner, Mr. Culley
served as president, Conference of
State Bank Supervisors. After leaving
the state post, he was an officer of
Bank of St. Louis and, more recently,
vice president, First Bank,
Sand
Springs, Okla.
Robert F. K eatley, ch., m ans the shovel during
groundbreaking cerem onies for the new Robi
doux Center of Am erican N at'l, St. Joseph. The
first spade of earth then w a s placed in the
container held by M ayor W illiam J. Bennett.
Bank em ployees participated by holding cards
that spelled out "A m erican N ational B ank" and
"Robidoux C enter." The new 14-story building
w ill house the bank a s prim ary tenant and
is being built on the site form erly occupied by
the old Robidoux Hotel and a num ber of sm all
er structures. An e arly 1978 completion date
has been scheduled.
MID-CONTINENT BANKER for November, 1976
Minneapolis/St. Paul
'ROCHESTER
'masondrn
MADISON
VDUBUQUE'
FT. DODGE*
UmOOvV
QUAD CITIES]
^^JOTTUMWAk-
-GALESBURGi
BURLINGTON
Omaha
.RO
CK
FO
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New York
■
tpAR RAPIDS
Des Moines
Milwaukee
Chicago
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r .ROCK F A L L S / /
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^
COLUMBIA
JEFFERSON CITY/
Denver
JOPLIN
J#T / / k M
ATTOON
lSpringfield
M
TVERNON
St. Louis
/ X /
CAPE GIRARDEAU\
/
SIKESTON
jP
FT LEONARD WOOD
SPRINGFIELD
Tulsa
Indianapolis
r charlestoi^^^
Washington
Louisville
MARION
sHERRIN
■PADUCAF
CLARKSVILLE
HOPKINSVILLE'
FT. CAMPBELL
Nashville
Dallas/Ft. Worth
Every 2.3 minutes
an Ozark nonstop
takes off somewhere
between New \5 rk and Denver.
Check our schedules
against yours.
*Based on 459 weekday departures
between 0545 and 2346.
G et yourselfup! go O zark.
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
85
Tennessee
New Mexico
■ TONY BULL, formerly senior vice
president, Fidelity National, Albuquer
que, has been named president, suc
ceeding Bob Tinley, who has resigned
to pursue private business interests. Mr.
Tinley has been retained by the bank
on a consulting contract. Mr. Bull also
has succeeded Mr. Tingley as a director
of New Mexico Bancorp., Inc., Santa
Fe, the HC with which Fidelity Na
tional is affiliated. Blake R. West has
been elected a senior vice president of
the HC. He continues as senior vice
president, First National, Santa Fe, an
other HC affiliate.
PRALLE
DAVIS
ert J. Waller, while Jack D. LeForce
has been elected trust officer. Richard
Pralle has been named correspondent
banking officer.
■ STEVE DAVIS, former Oklahoma
University quarterback, has joined Fi
delity Bank, Oklahoma City, as a man
agement trainee, while Charles E. Cot
ter has been elected assistant cashier.
■ GARY R. DOBSON has been named
vice president, correspondent banking,
at Fourth National, Tulsa, while Patri
cia C. Anderson has been elected trust
officer. Mr. Dobson formerly was with
another bank in Tulsa; Miss Anderson,
is a CPA.
BULL
■ GO RD O N FULKERSON has been
named president of First State, Truth
or Consequences, succeeding Johnny A.
Taylor, who resigned. Mr. Fulkerson
entered banking in 1948 at a bank in
Tucumcari.
BECK
W ALLER
86
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
CREPPS
BURGAR
SCHULTZ
BUTTREY
■ RALEIGH SCHULTZ has been ap
pointed a sales engineer with LeFebure
Corp., Cedar Rapids, la. He will oper
ate out of the firm’s Memphis Branch
and will concentrate on the western
Tennessee market. Mr. Schultz former
ly was a branch officer, National Bank
of Commerce, Memphis.
Oklahoma
■ JOSEPH T. CREPPS has been elect
ed executive vice president of First Na
tional, Oklahoma City, while Carl Beck
has been named senior vice president.
Appointed vice presidents were E d
ward G Alexander, Jim Burgar, Sam C.
Gilmore, Bradley W . Krieger and Rob-
B D. ROSCOE BUTTREY, vice chair
man, Third National and its parent
HC, Third National Corp., both of
Nashville, has resigned for health rea
sons. He will remain a director and
maintain an office at the bank. During
his career, Mr. Buttrey has been asso
ciated with Citizens Bank, Cookeville,
and First National, Clarksville. In ad
dition, he organized State Bank, Jack
sonville, Fla., before joining Third Na
tional in 1971 as executive committee
chairman.
TREACY
n JAMES B. TREACY, chairman,
president and CEO, Facet Enterprises,
Inc., has been elected a director of
Bank of Oklahoma, Tulsa. At the bank
and its parent HC, BancOklahoma
Corp., Tulsa, the following promotions
have been announced (all are at the
bank, unless noted) : Monty L. Butts
and Gerald R. Taylor, assistant vice
presidents; M. Nuel Hobbs, HC assist
ant treasurer; Fred H. Gibson, staff
administration manager, information
systems; Ron King, project manager,
methods and procedures; Joe Rodanski,
pension and profit sharing manager,
trust operations; Sue Jane Price, assist
ant trust officer; and Richard W . Willhour, account officer, metropolitan de
partment.
■ LIBERTY N ATION AL, Oklahoma
City, has promoted the following to
vice presidents, BankAmericard divi
sion: Peyton Burke, Gary Burton, Bob
by H. Leonard and Roy Rowlett.
Michael W . Anderson, international di
vision, and Margaret Stuart, personal
banking center, have been named assist
ant vice presidents.
■ FIRST AM ERICAN N ATION AL,
Nashville, has announced the following
changes: William I. Edwards III, vice
president, has been named internation
al division manager, succeeding Henry
T. Berglund III, who will remain dur
ing a transitional period before assum
ing new responsibilities. Bob O. Gra
ham, assistant vice president and de
mand deposit security head, has as
sumed additional duties in the central
ized collection department; Barry W .
O’Donnell, marketing officer, has been
named director of advertising and mar
keting planning, replacing J. L. Tem
pleton Jr., who resigned; and Anna
Durham, marketing officer, has been
appointed director, Young Nashvillians
Club, with responsibility for all the
bank’s packaged services.
a A LD O N V. “ DANN Y” DANCAK,
senior vice president, Capital National,
Austin, has been appointed administra
tive services division manager, while
Nina Velliquette has been named vice
president and operations officer. She
will manage bookkeeping, proof and
transit, tellers and offices services.
MID-CONTINENT BANKER for November, 1976
WE'RE HELPING TO BUILD-UP THIS
PART OF OUR GREAT LAND.
WE'RE WITH YOU#
EVERYWHERE!
AM ERICAN NATIONAL
BANK &TRUSTCOMPANY
National Correspondent Division
Chattanooga, Tennessee $7402
^
Phone 1-(800) 572-7308 in Tennessee or l-(800) 2^1 -6266 in all adjacef# «taies *
V
«
MID-CONTINENT BANKER for November, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
SCy
87
den Sledge, president, Frost National,
San Antonio, and Robert G. Greer,
president, Cullen Center Bank, Hous
ton, would continue in those posts and
serve as HC vice chairmen.
CATER
Index to Advertisers
■ JOHN T. CATER was elected a di
rector of Southwest Bancshares, Inc.,
Houston, last month. Mr. Cater is presi
dent and chief operating officer, Bank
of the Southwest, Houston, the H C ’s
lead bank.
■ A M ERGER plan has been an
nounced by FrostBank Corp., San An
tonio, and Cullen Bankers, Inc., Hous
ton. Under the proposed agreement,
Cullen Bankers would be merged into
FrostBank through an exchange of
stock, with the continuing company to
be called Cullen/Frost Bankers, Inc.
Its registered corporate office would be
in Houston with executive offices in
San Antonio. Dee S. Osborne, Cullen
Bankers
chairman,
would
become
chairman of the resultant firm, while
T. C. Frost Jr., FrostBank chairman,
would be president and CEO. C. Fin
A m e ric a n B a n k D ire c to ry .................................. 60
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 87
B a rcla y, The ........................................................... 83
B a n k o f O k la h o m a ............................................ 53
B le n d e r Co., H ow a rd J ....................................... 40
B o a tm e n ’s N a tio n a l B a n k ............................. 75
B re c k e n rid g e R eso rt H otel ............................. 66
C e n tra l N a tio n a l B a n k, C hica go
13
..................................................................... 9°
C itic o rp
C o m m e rce B ank, K ansas C ity
65
C o m m e rc ia l N a t’ l B a n k, K ansas C ity, Kan. 80
C o m m e rc ia l N a t’ l B ank, L ittle R ock
79
C o n tin e n ta l B ank, C hica go
57
D eLuxe C he ck P rin te rs , In c . .
21
F a rm e rs G ra in & L iv e s to c k H e d g in g C orp.
20
Fede ra ted S e c u ritie s C o rp ....................................58
F in a n c ia l In s u ra n c e S e rvice , In c.
35
F in a n c ia l P la c e m e n ts
16
F irs t A la b a m a B a n c s h a re s
.
............ 76
F irs t A m e ric a n N a t’ l B a n k, N a s h v ille
77
F irs t C ity N a tio n a l B a n k, H o u s to n
51
F irs t
N a tio n a l B ank, C h ica g o ........................ 17
F irs t
N a tio n a l B ank, D alla s
24
6
F irs t N a tio n a l B a n k, Ja c k s o n , M is s ...............
F irs t
N a tio n a l B ank, K ansas C ity
45
F irs t N a tio n a l B a n k, St. Joseph
62
F irs t N a tio n a l B a n k o f C om m e rce ,
N ew O rlea n s ....................................................... 3
F o u rth N a tio n a l B ank, T u lsa .
29
F o u rth N a t’ l B a n k & Tr. Co., W ic h ita . . . . 73
G lobe L ife ............................................................... 39
H a rla n d Co., John H .............................................. 11
H a rro w S m ith Co. ................................................... 78
H ib b a rd , O’C o n n o r & W eeks, In c ................... 34
In s u ra n c e E n te rp ris e s , In c ................................. 36
In te g o n Corp.
37
In te rio r W orld , N a s h v ille .................................. 59
K ansas B a n k N ote
.......................................... 81
L ib e rty N a t’ l B a n k & Tr. Co.,
O kla h o m a C ity ..................................................
2
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(915) 542-1345
88
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
M G IC -In d e m n ity C o rp ....................................... 22-23
MPA S yste m s ......................................................... 88
M a rin e B a n k, E rie, Pa......................................... 40
M e m p h is B a n k & T ru s t Co........................... 19, 71
M e rc a n tile Bank, St. L ou is .............................
4
M is s o u ri E nvelope Co..............................................40
N a tio n a l B a n k o f D e tro it
....................... 69
N a tio n a l B o u le vard B ank, C hica go ............ 15
N a tio n a l F id e lity L ife , E d w a rd s v ille , III. . . 54
N a tio n a l S to c k Y a rds N a tio n a l B a n k ........ 89
New A m e ric a n L ife , C o lu m b ia , M o ............... 56
N o rth e rn T ru s t Co., C hica go ......................... 49
Old R e p u b lic L ife In s u ra n c e Co....................... 43
O zark A ir Lin e s, In c ................................................85
R isk In s u ra n c e M a n a g e m e n t G u id e .......... 41
R ob e rts & A s so cia te s, Ja ck ............................. 88
SLT W a re ho u se C o................................................. 67
S a lo m o n
B ro th e rs
.............................................. 33
S c a rb o ro u g h & Co................................................. 31
T h ird N a tio n a l B ank, N a s h v ille ................... 55
T ra v e le rs E xpress ................................................ 61
US L ife C re d it L ife In s u ra n c e Co................... 60
U n ite d M is s o u ri B a n k, K ansas C ity ..........
9
van W agenen Co., G. D...................................... 58
W h itn e y N a tio n a l B a n k .................................... 63
W oolsey & Co., In c ................................................. 41
STATEMENT OF OWNERSHIP, MANAGE
MENT AND CIRCULATION (REQUIRED BY
39 U.S.C. 3685)
1. Title of Publication: M ID-CONTINENT
BANKER.
2. Date of filing: September 28, 1976.
3. Frequency of issue: 13 times a year (2 is
sues in M ay).
3A. No. of issues published annually: 13.
3B. Annual subscription price: $10.00.
4. Location of known office of publication:
1201-05 Bluff St., Fulton (Callaway), MO 65251.
5. Location of the headquarters or general
business offices of the publishers: 408 Olive
St., St. Louis, MO 63102.
6. Names and complete addresses of publisher,
editor and managing editor: Publisher: Ralph B.
Cox, 408 Olive St., St. Louis, MO 63102; Editor:
Ralph B. Cox, 408 Olive St., St. Louis, MO
63102; Managing Editor: Rosemary McKelvey,
408 Olive St., St. Louis, MO 63102.
7. Owner (If owned hy a corporation, its name
and address must be stated and also immediately
thereunder the names and addresses of stock
holders owning or holding 1 percent or more of
total amount of stock. If not owned by a cor
poration, the names and addresses of the indi
vidual owners must be given. If owned by a
partnership or other unincorporated firm, its name
and address, as well as that of each individual
must be given.) Commerce Publishing Company
408 Olive St., St. Louis, MO 63102; Donald H.
Clark, Wesley H. Clark, Johnson Poor, Ralph B.
Cox, James T. Poor, Lawrence W . Colbert, all
of 408 Olive St„ St. Louis, MO 63102 Don J.
Robertson, 987 Central Ave., Plainfield, NJ;
Grinnell College, Grinnell, Iowa.
8. Known bondholders, mortgagees, and other
security holders owning or holding 1 percent or
more of total amount of bonds, mortgages or
other securities: None.
10. Extent and nature of circulation. The aver
age number of copies each issue during preceding
12 months are: (A ) Total No. copies printed
(Net Press Run), 6,662; (B ) Paid circulation:
1. Sales through dealers and carriers, street ven
dors and counter sales, 0; 2. Mail subscriptions,
5,822; (C ) Total paid circulation, 5,822; (D )
Free distribution by mail, carrier or other means.
Samples, complimentary, and other free copies,
349; (E ) Total distribution (Sum of C and D ),
6,171; (F ) Copies not distributed: 1. Office use,
left-over, unaccounted, spoiled after printing, 491;
2. Returns from news agents, 0; (G ) Total (Sum
of E & F— should equal net press run shown in
A ) , 6,662. Actual number of copies of single
issue published nearest to filing date: (A ) Total
No. copies printed (Net Press Run), 6,600; (B )
Paid circulation: 1. Sales through dealers and
carriers, street vendors and counter sales, 0; 2.
Mail subscriptions, 5,752; (C ) Total paid circu
lation, 5,752; (D ) Free distribution by mail,
carrier or other means. Samples, complimentary,
and other free copies, 344; (E ) Total distribution
(Sum of C and D ), 6,096; (F ) Copies not dis
tributed. 1. Office use, left-over, unaccounted,
spoiled after printing, 504; 2. Returns from news
agents, 0; (G ) Total (Sum of E & F — should
equal net press run shown in A ), 6,600.
11. I certify that the statements made by me
above are correct and complete.
R a l p h B. C o x , P u b lis h e r
12. For completion by publishers mailing at
the regular rates (Section 132.121, Postal Service
Manual) 39 U.S.C. 3626 provides in pertinent
part: “ No person who would have been entitled
to mail matter under former section 4359 of this
title shall mail such matter at the rates provided
under this subsection unless he files annually with
the Postal Service a written request for permission
to mail matter at such rates.” In accordance with
the provisions of this statute, I hereby request
permission to mail the publication named in Item
1 at the phased postage rates presently authorized
by 39 U.S.C. 3626.
R a l p h B. C o x , P u b li s h e r
MID-CONTINENT BANKER for November, 1976
Serious? Of course
Informal? Naturally.
Virg Sorrells feels very strongly that banking is a serious
business. Money matters, and your individual problems matter.
That’s exactly why Stock Yards Bank continues its policy of
doing business in a cordial, informal manner. “With this approach
we get to know each other better,” says Virg, “we can do a more
thorough job of keeping abreast of your local agri-business
situation. That’s why our officers have authority to make decisions.”
And, that’s why a knowledgeable correspondent officer is
always available at 618-271-6633.
"Y O U R BANKER S B A N K " ___
W" 7
■ l#
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
J u s t across the riv e r from St. Lo uis
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