Full text of Review (Federal Reserve Bank of Dallas) : June 1974
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Business Review ...... ~-=~a.:.v - Cycles in Dallas Differ from the Nation Bank StructureMultibank Holding Companies Expand With New Mexico's Economic Growth This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) lIome Building- CYcles in Dallas Differ from the Nation ........ NeWh . on f ome constructIOn has been ac~~. ~he. most volatile economic lia/t1es lD the United States. CYCI~g .gone through six complete tial s SlDce World War II, residenenthonstruction is now in its sevof n Postwar decline. And in terms currUInber of housing starts, the Eent decline is the most severe. th :lCpansion and contraction in in n~Inber of homes constructed a the n ~s County closely followed prev.ahonal pattern in the two lates~o~s b~ilding cycles. But in the drop i echn~, construction began it did. ng off lD Dallas long before effect In the nation as a whole. The COtnp:t~f.subsidized housing, price and In ItlOn by apartment owners, Vent ~nagement of new home inin a ~rl~ by builders have resulted bUil/c cal pattern in Dallas home natio Ing different from that of the n at large. n ~ort C gage flows Onstru . a cYcl. ~hon of new houses follows ferentl~a movement somewhat difactiVit rom changes in business ness c Yfverall. In postwar busihousU;C es,. the number of new g to decli U~ltS started has tended dUctio ~e lD advance of the re'l'he ren In total national output. tendedCtery in construction has tUrn in bOp.recede the general upCOnd. ~SlDess activity. ~re lar Ihons in mortgage markets Itatingg:~ responsible for precipWhen IS Pattern of activity. strOng OVerall economic activity is crease est, demand for credit ins caUsin :elative to the supply, to rise~ hort-term interest rates In In gage lend oney markets. MortPete Withers typically cannot comand the lthe higher market yields, II y ose deposits as investors lIsilless It . eVlew I June 1974 put their money into money market securities-a process called disintermediation. With growth in deposits slowing, or deposits even declining, mortgage lenders must cut back on new loans either by offering less liberal credit terms or by refusing loan applications altogether. When overall business activity slows, the process is reversed. Interest rates in money markets decline, and deposits at mortgage lending institutions expand. As mortgage funds become more available, families reenter the home market and builders respond by starting more home construction. Downturns in building Conditions in mortgage markets are largely responsible for precipitating patterns of construction activity. Because most families buying homes must finance the largest part of the purchase, home buying suffers when these conditions develop. Builders must eventually respond to the decline in sales by slowing starts on new homes. This was the general sequence of events in Dallas and the nation in the home building declines of 1966-67 and 1969-70. Net new savings (the difference between new deposits and withdrawals) received by major mortgage lenders dropped rapidly before overall business activity became sluggish in 1966 and 1969. The slower deposit growth made mortgage funds scarce. Interest rates charged by lenders rose, and 1 Reduced deposit inflows at mortgage lenders . .. MILLION DOLLARS 2 ,400 .. ---~ , :o;;7 . '- - - - - - - : :::':' .':,'7 ..•.':! .: '':-::' .•.- - - - - - - - - - - - ~J~TE: 1,800 - area~ :~~·~~ Shaded periods of general economic weakness . NET NEW SAVINGS RECEIVED BY INSURED S&L 'S IN UNITED STATES 1,200 - (7 -MONTH MOVING AVERAGE CALCULATED FROM SEASONALLY ADJUSTED DATA) MILLION DOLLARS 32----~:~ ·; ..~ o --------~~--------------------- 1.,; .j·.~r. :;'!, 24 - NET NEW SAVINGS RECEIVED BY INSURED S&L 'S IN DALLAS '. , " ,',' : ,j. \!!:. 16 - : ~: ,it.;]- :', -3 I JUNE '65 I I ' 66 ----------------~ (7-MONTH MOVING AVERAGE CALCULATED FROM SEASONALLY ADJUSTED DATA) 0--- I I ' 67 ' 68 ' 69 ' 70 '71 SOURCES: Federal Home Loan Bank Board Federal Home Loan Bank of Little Rock Federal Reserve Bank of Dallas 2 the time allotted for repayment was shortened. Both changes increased the average size of mortgage payments on new loans. At the same time, the portion of the selling price of homes that could be financed declined, requiring higher downpayments. As these changes in credit conditions discouraged many prospective buyers from entering the hO~~; ing market, fewer homes were bw> in Dallas and in the nation. FroIll peak to trough in the 1966-67 ~e cline, the number of single-fan;ulY units authorized for constructIon (with seasonal and irregular fiuc~ tuations removed) fell 27 perc~nb in Dallas County, compared WIt 29 percent nationwide. In the decline of 19'69-70, the r percentage reductions in both Ill: ' kets were again similar, althoug 67 not quite as close as in the 1966period. The similarity in the pattern of new home construction, however, has not been carried through to the present period. '72 '73 '74 The similarity in the patter~11 of new home construction I Dallas and in the nation haS not been carried through to the present period. -------------~ on' Until early 1973, favorable c ditions in mortgage marke~ aI- e~ lowed a vigorous expansion In n d home construction. In DallaS the nation, new deposits had~g gun growing at mortgage len 0 institutions before the 1969- ~gllge recession was over. With mO~le fot terms becoming more fav ora 1 consumers, the average IJ.lontrl~e.llS payment on new conventlona nt began leveling off. DownpayIllell requirements actually showe~'l declining trend from 1970 un 1 early 1973. . .ttl' By early 1973, lending Inst~ts tions were again losing depoSl ;n -~1 construction of homes began do aU . In Dallas County, the slowB wt n Was even more pronounced. U th t What was extraordinary was 111 a the Dallas decline began 15 Onths earlier than the nation's. SpeCial factors in Dallas Sever If tio ~ actors other than condiute~ In mortgage markets contribide t ~o the earlier decline in resC n lal construction in Dallas thOunty. One was the situation in ap: ~arket for apartments. New the ~:ents were added rapidly in ball 60's as the population of the ~ County expanded. But by bUilt t~O's, more units had been Sorbed an could be readily abcanc . In January 1972, the vacOIn Yrate had risen to 18 percent, nat·pared with 8 percent for the IOn at large. Rent . ----------------~--1972 In Dallas throughout . . . make buying a home more expensive .. . THOUSAND DOLLARS 11.5 .::.f. 9.5 - 7.5 - AVERAGE DOWNPAvMENT ON NEW HOME PURCHASES " :',' ' I," ', ' 3 .5 (S-MONTH MOVING AVERAGE) .~ (,: ~--~--~--_r--_r--~~~r_--~--,_--_r--_r----- NOTE: Calculated as P(1 - Lv), where P is the price of the house and Lv Is the loan-to-value ratio for conventional loans. DOLLARS 270 230 - S fa"o and 1973 compared new r~bly with the cost of omeownership. --------------------1'0 att ract tenants, some landlords resulteVen lowered rents. And as a 1972 ,rents in Dallas throughout \\lith t~nd 1973 compared favorably ship I e cost of new homeownerYear',s n late 1972, for example, a fOur c rent for a typical family of as theost only 55 percent as much a new average annual payment on <\t thecsonventional mortgage loan. Cent a ame time, rent cost 65 perfor th s mUch as homeownership COtnP:rav~rage U.S. family. The COunty~lVelY low rents in Dallas, On the ad a significant impact chased ~umber of new homes purhelPing budget-minded families, llew h 0 reduce the number of AnoOtlU.es bUilt in 1972 and 1973. early doher facto.r adding to the ~as illlprnturn In Dallas housing lllg and UlU.entation of the Housn rban Development Act of l ItSUtess b • ~eVlew I June 1974 190 AVERAGE MONTHLY MORTGAGE PAYMENT ON CONVENTIONAL LOANS FOR NEW HOUSES 150 (S-MONTH MOVING AVERAGE) I I '68 '69 '70 '71 '72 '73 '74 NOTE: Calculated as [P x Lv x R(l + R)T] ..;. [(1 + R)T -1], where P is the price of the house, Lv is the loan-to-value ratio, R is the contract rate of interest, and T is the length of the loan. SOURCES: Federal Home Loan Bank Board Federal Reserve Bank of Da"as 1968. Under Section 235 of that act, interest subsidies were established to promote homeownership by families with modest incomes. The number of homes started under the program increased rapidly until 1971 and then began to dwindle. Finally, in January 1973, a moratorium was imposed on new commitments for construction under this act. Nationwide, the number of Section 235 starts on one- to four-unit structures declined 37 percent from 1971 to 1972. But in Dallas County, the number was cut nearly in half. The drop was particularly significant in Dallas because of the large proportion of houses being built under this program. In 1971, for example, housing built under this program accounted for 15 percent of the starts on single-family units in the nation. But in Dallas, the proportion w~s II 38 percent. In 1972, the proportlo. in Dallas was still 25 percent, corn pared with only 8 percent natio~' wide. So, as the number of sub S\ dized houses declined, the effec was more pronounced in Dallas. The reaction of home builders to changes in market conditions ~ · . . and result in fewer new homes THOUSAND UNITS 1,100 ---------,...,~-------__...,~...,....,...,--------------- 1,000900800SINGLE-UNIT HOUSING PERMITS FOR UNITED STATES (9-MONTH MOVING AVERAGE OF SEASONALLY ADJUSTED DATA) 1,000 - SINGLE-UNIT HOUSING PERMITS FOR DALLAS COUNTY 900 800 - (9-MONTH MOVING AVERAGE OF SEASONALLY ADJUSTED DATA) 500 400 I I SEPT . '64 '65 '66 ' 67 '68 '69 '70 ' 71 '72 '73 '74 SOURCES : U .S . Department of Commerce M/PF Research, Inc ., Dallas , Texas Federal Reserve Bank of Dallas --------------------------------------------~~ 4 -.. ~a~al~o played an important part of b s.tll~guishing the recent pattern 110 Ulldi~g ~ctivity in Dallas. go ~e buIldmg is generally cateco~ze~ as an atomistic industry dentrlsed of many small, indepenbUillroducers. In Dallas, however, weU ers tend to be developers as eraras contractors, and their opLIOns are often on a large scale. cial·arg~ bUilders, with more speare hatton in their organizations, chan ette.r able to keep abreast of know es m their market areas. And tive edge of present and prospecgrea~arket conditions allows them tion ~r control over the accumulaularo unsold homes built on spec~n. Although reliable informa- 1 l. tion on earlier periods is hard to obtain, Dallas builders were definitely more successful in holding down home inventories in 1973 than builders nationwide. 1 Dallas builders were more successful in holding down home inventories in 1973 than builders nationwide. The inventory of houses under construction or completed but unoccupied declined in Dallas County in each of the last three quarters of 1973, bringing the decline for the year to about 23 percent. By contrast, the nation's inventory increased 5 percent over that period, and it was not until the last quarter of 1973 that builders nationwide began to reduee inventories. This difference alone goes far in accounting for the pace of construction in 1973 continuing faster in the nation than in Dallas County, even though sales were falling in both markets. And in combination with the declining number of subsidized housing starts and the high apartment vacancy rate in Dallas, it accounts for the early and sustained drop in local home construction. -William R. McDonough nt a no n ho" " Usm g m ventorles m Da llas were sup plied by M/ PF Resear ch, Inc., Dallns, Texas. "-----------------------------------------------------------New member banks The Peoples National Bank of San Antonio, San Antonio, Texas, a newly organized institution located in the territory served by the San Antonio Branch of the Federal Reserve Bank of Dallas opened for business April 29, 1974, as a rne~ber of the Federal Reserve Syste~. The new member bank opened with capItal of $300,000, surplus of $300,000, and undivided profits of $150,000. The Officers are: Bob G. Shirey, President; Robert B. McGivney, Jr., Vice President; and Zygmund A. Pruski, Cashier. :rhe Pan American National Bank of Dallas, Dallas, Texas, a newly organized astitution located in the territory served by the Head Office of the Federal eserve Bank of Dallas, opened for business May 2, 1974, as a member of the Federal R eserve System. The new member bank opened with capital of $450,000, surplus of $150,000, and undivided profits of $150,000. The officers are: Dr.. Robert Romero, Chairman of the Board; Lance E. Golmon, President and ehu:f Executive Officer; Roscoe L. Eoff, Vice President and Cashier; and O. C. B eVIll, Assistant Cashier. :rhe. Meadowbrook National Bank, Fort Worth, Texas, a newly organized astttution located in the territory served by the Head Office of the Federal eserve Bank of Dallas, opened for business May 20, 1974, as a member of the Federal Reserve System. The new member hank opened with capital of $400,000, ~urplus of $400,000, and undivided profits of $200,000. The officers are: Derry B. ulks, President, and Tommie C. Jenkins, Cashier. ............... ---------------------------------------------------------- ~~.llless It . eVlew I June 1974 5 Bank Structure- Multibank Holding Companies Expand With New Mexico's Economic Growth -----------------------------------------------------------------------~ The nation's financial structure has changed dramatically in recent years with the rapid growth in multibank holding companies, Expansion of these companies in such rapidly growing unit-banking states as Texas, Florida, and Missouri is well known, But the multibank holding company movement has also had a substantial impact on the banking systems in other states, New Mexico, for example, has undergone a marked change in its banking system-and with the formation of only a few holding com- As in other states where multi- !l bank holding companies have bee spreading, New Mexico offers ~WOto important ingredients conduclve such expansion-restriction~ on branch banking and a ~r0V:lOg eW economic base, Branchmg -In ~ '!lMexico is allowed 'onl~ int? a,dJ~loo ing counties or counties wlthlnh'S miles of the main bank, Even t !f limited branching is prohibited'~g there are already banks operatl in those counties" anies The spread of holding comP tbY in New Mexico is also notew or II1Y because expansion of the eco no panies, The state had only one multibank holding company when the movement began taking hold in the late 1960's, and that company had only five subsidiary banks, By 1973, there were still only four multibank holding companies in New Mexico, along with 23 subsidiary banks, But where the state's one multibank holding company had controlled little more than a seventh of the deposits in the state in 1967, the four holding companies operating statewide in 1973 controlled more than half the deposits, ---------------------------------------------------------------~ Recent growth in bank deposits in 'New Mexico has been well above the national average PER CENT CHAN GE 21 ----------------------------------------------------------------------------~ • NEW MEXICO B UNITE'O STATES r::: 14 - " "" 17 ::. :.. ~ ", " -::-: " ", " " " ::- " r;r. " " " " "':" ,,' ,,' ,,' ::. o 2: 195 8 .:. " ',' '" I~\: Q " " " ".; ," " , , ,', " 1 1960 I " :: "" " :: " " "" ',' " " : 1;":1 " " :.' " " "" " " ::" "" " " '1 962 ' " " " 0°: I 1964 I " " :.:. !.:. 7- r:: ~ ".: : .:: 1 :: " " " " ~: " " " " " " .' " '" " " ::. ::. : 19 6 6 I " " "7 :." !: " " ': "" ::. ::. ::. ::. " .:.! .:.: ::. ::. ::. ::. ::. " ·o.! 7:- " , " " " ,,' ",,' a:: !.:. ',' .:: .':' " 19 68 I " '. " :~ " """ ~ '1 97 0 " "" " " " " " " " " " " .... ::. ::. .', " ~ " " " ' t::: 19 7 2 SOUR CES: Federa l De p osit Insurance Corp o rati o n Federa l Reserve Bull etin ----------------------------------------------~ 6 ;eally began picking up only a few :ars before holding companies : arted extending their operations r~:~~s tNhe state. Economic progth In ew Mexico was hampered th roughout most of the 1960's by b e narrowness of the economic se a: and some setbacks in primary eas of employment. ____ B d an~ deposits in New Mexico hau . led from 1967 to 1973, c elplng stimulate the holding Olllpany movement. ____ be . gro\Vt6~te such setbacks, income Pro. 1~ New Mexico began iminc Vlng In the late 1960's. Gains in gro~~e contributed to more rapid doubl ~of bank deposits. Deposits ing st~ from 1967 to 1973, helptno unulate the holding company gro~:n~nt in t?at state. ~ow, in thIn holdmg compames could eco~rn, .contribute to the state's ' 01l11C development. l i o in. "., gl d compames the onl that s· y.company in New Mexico tnult"bgnlficantly predates the tnen: . ank holding company movelIead IS Western Bancorporation. qUartered in Los Angeles, this company holds five subsidiary banks in New Mexico that, together, control close to 14 percent of the bank deposits in the state. Included in these five banks is New Mexico's third largest bank. The company acquired its New Mexico subsidiaries before federal laws governing banle holding companies were changed in 1956 to discourage any further spread of holding company arrangements involving more than one bank. Even when the Bank Holding Company Act was later amended-leading to the rapid expansion of multibank holding companies nationwideWestern Bancorporation was prevented from further expansion in New Mexico by the prohibition of acquisitions across state lines. The other three holding companies sprang up in rapid succession as economic conditions in New Mexico began improving toward the end of the 1960' s. Bank Securities was approved as a multibank holding company in 1969, First New Mexico Bankshare Corporation in 1970, and New Mexico Bancorporation in 1971. Bank Securities, which headquarters in Alamogordo, started with four banks, acquired two more in 1970, and took on another BANI{ HOLDING COMPANIES IN NEW MEXICO, DECEMBER 31, 1972 --------------~----------------------MlJltib k . F' an hOlding companies Irst New M . . C eXICO Bankshare 'Iv orporation (Albuquerque)l estern Bancorporation l3a~~~ Angeles, California) (AI ecuritles, Inc. New ~mO~Ordo) .. . . ..... . .... . I eXlco Bancorporatlon , One_b~c. k(Santa Fe) ... . .... . .. . . . ____ -n.: holding companies . . ... . Subsidi ary banks Percent of total In state Deposi ts Banks Number Deposits (Million doll ars) 23 $1 ,118.0 8 31 .9% 50.8% 556.4 11.1 25.3 5 299.8 6.9 13.6 8 189.4 11 .1 8.6 2 6 72.3 437.0 2.8 8.3 3.3 19.8 1. FI --------~----------------------------------------------- W~lures Includ NO·flo.Che were ac e 910VIs Nation al Bank, Ciovls, and Grant County Bank , Sliver City, SOUIl' etalls qu red In 1973 . C!':s : Boa~~y ~ot add to totals because of rounding . Feder? DGovernors, Federal Reserve System a eposlt I nsurance Corporation n Il.sines"" • s ~eVleW I June 1974 two in 1972. These eight banks, which include the fourth largest bank in the stat e, control nearly 9 , percent of the deposits. The largest multibank holding company in the state is First New Mexico Bankshare Corporation, which operates out of Albuquerque. Formed with five subsidiaries, including the largest bank in the state, it acquired a sixth bank in 1972. Two more banks have since been approved for acquisition, and the company now controls more than a fourth of the bank deposits in New Mexico. The four holding companies operating statewide in 1973 controlled more than half the deposits. New Mexico Bancorporation, headquartered at Santa Fe, has two subsidiary banks, one of which is the fifth largest bank in the state. Together, these subsidiaries account for a little over 3 percent of the deposits in the state. The economic base The proliferation of multibank holding companies in New Mexicoa development that has resulted in roughly a third of the banking offices in the state being subsidiary banks-both affects and is affected by the economic base of the state. Some basic changes, in fact, were going on in New Mexico in the years before multi bank holding companies were being formed. A sparsely populated state with a narrow economic base, New Mexico has depended heavily on a few main sources of income. Tourism, for example, is a major industry in New Mexico. Nearly a third of the earnings in the state come from either services or trade-both of which fluctuate seasonally with tourist traffic. Substantial effort 7 has been made in recent years to expand tourist facilities in New Mexico and otherwise encourage visitors to extend their trips to the state. Part of this effort, however, has been made to compensate for cutbacks in other areas of activity. Efforts to broaden the economic base of New Mexico were being made even before the formation of holding companies could be seen as a movement. Government spending was sharply curtailed in the 1960's. In New Mexico, where some 22 percent of the civilian workers are in federal jobs, business activity was slowed markedly. There were also severe reductions in mining in the late 1960's. Oil and gas production dropped as output from aging fields declined and major exploration efforts were concentrated abroad. Results of these developments were markedly slower increases in income and population. Efforts to broaden the economic base of New Mexico were already being made, however, even before the formation of holding companies could be seen as a movement. About the time Bank Securities was being organized at Alamogordo, new light industries were beginning to appear in the Upper Rio Grande Valley, especially around Albuquerque. These plants, along with federal programs to help with the income problems of Indians, encouraged further expansion-as, of course, has the more recent resurgence of mining and petroleum activity-and income has responded accordingly. In fact, growth in total income in New Mexico has kept up with that in the nation. In recent years, the increase has been well above the national average. Personal income in the state rose nearly a third in 1957-62 and nearly a third again in 1962-67. Brought to a total advance of 77 percent for the ten-year period, this was roughly the same as the advance for the nation as a whole. Moreover, the five years from 1967 to 1972 saw personal incomes in New Mexico rise an average of 57 percent-compared with 49 percent for the nation. This rise in income after about 1967 has been reflected, in turn, in a faster expansion in bank depos- its. In the five-year period 195~6:, deposits in New Mexico expan e about in line with those in the . d nation, while in the 1962-67 perlO , nationwide deposits increased .ts slightly more rapidly than depoSl in New Mexico. But in 1967-72, the expansion in New Mexico was more than twice as fast as in the nation as a whole. ------- ---------------------- In 1967-72, deposits in NeW Mexico expanded more t~a n twice as fast as in the nation. ----------------------- While the increase in bank deposits reflected advances in pe!sonal income, the sha~p jump l~lSO deposits after about 1967 may have reflected some of the changing financial conditions in NeW Mexico. New Mexico banks h~ve pursued more aggressive lendlng_ policies in recent years. The loan to-deposit ratio in the state has Jl'l risen noticeably since 1967. Fro 1962 to 1967, it remained essenXn tially unchanged at 56 percent. e 1972, although sti1lless than th national average, the ratio wa\he close to 60 percent. Moreov~r, haS ratio of cash assets to depOSIts BANKING IN NEW MEXICO AND SELECTED UNIT-BANKING STATES (Banking statistics for December 31, 1972) item Deposits (Thousand dollars) Demand Time ... , ..... , ... . ... . , ... Total . , .. , . .. . , ..... . Total loans (Thousand dollars) ... Loan-to-deposit ratio . ... ... . .. . . Population, 1970 . ..... . . Percent change from 1960 . .. .. Number of banks and branches .. Population per banking office .. Deposits, per capita Demand .. , ... , .. . . .. , Time ...... . . . .... . .. Total . , . . . . , . . . . . . , . Colorado Wisconsin Florida $980,450 1,220,172 $2,200,622 $1,310,181 59.5% 1,016,000 6.8% 217 4,682 $3,094,857 2,882,076 $5,976,933 $3,880,323 64.9% 2,207,259 25.8% 330 6,689 $4,743,545 7,357,776 $12,101,321 $7,580,948 62.7% 4,417,731 11.8% 917 4,818 $9,965,871 9,747,966 $19,713,837 $10,074,054 51.1% 6,789,443 37.1% 641 10,592 $18,693,803 16,003,684 $34,697,487 $20,125,107 58.0% 11,196,730 16.9% 1,238 9,04 4 $965 1,201 $2,166 $1,402 1,306 $2,708 $1,074 1,666 $2,739 $1 ,468 1,436 $2,904 $1,670 1,429 SOURCES : Board of Governors, Federal Reserve System Comptrol le r of the Currency Federal Deposit Insurance Corporation U.S. Bureau of the Census 8 ---- New Mexico Texas $3,0~ fallen . uf SInce 1967, further contrib~g to deposit growth. ut the structure of banking in . h eXICO as also been changba~~apidlY. By 1970, the multiw { holding company movement as Well underway in that state. lo.t .~ewM in Effects on banking A.lth corn oU~h the growth in holding sig ~allIes coincided with other ba::k. cant changes in New Mexico itself I~g practices, the movement nifica as aPI?arently also been sigincr nt. WhIle bank deposits have the e sed ~tatewide, for example, baJ ave .Increased faster at hOld~s affiliated with multibank 1972lUg companies. At the end of corn' banks that had been holding two Pany subsidiaries for at least its t~ears reported average deposoVer had more than doubled COnt he previous five years. By crea rast, unaffiliated banks had inof o~~d their deposits an average Y87 percent. h tt ~-------------- ~~ile bank deposits have in- inc~sed statewide, they have affil~ased faster at banks hOI~~ted with multibank ----- 1n9 companies. - --------------~ost s b more U SI'd'Iary banks pursued areas e~pansive policies in several ing r~t. nalysis of selected'operatShow ~os for December 1972 ~elti~ hat of the 72 banks in New age, h °idsUbsidiary banks, on averthe fo: more of their assets in ness an~ ?f loans-especially busi~esUlt t Instalment loans. As a InCOtUe !bY a~eraged more interest \\rhich an Independent banks tion of~hu~llY held a larger prop~r~elat. elf assets in cash items. the net .Ive to their total assets, \\ras not I~Co~e of subsidiary banks ~ 00 dIfferent from that of I'ltObert independent banks. But as compared with operating incomes, their operating expenses were somewhat less. This difference could be due to management efficiencies that allowed subsidiaries to operate with lower wage and salary costs relative to total assets. Subsidiary banks, however, paid more interest on deposits relative to total assets. It is not clear that these differences result from affiliation with holding companies. It could be that holding companies most often acquire banks that already have the characteristics of subsidiary banks, such as faster deposit growth, higher loan-to-deposit ratios, and lower operating costs relative to total income. But changes in the performance of banks resulting from holding company affiliation cannot be detected from their balance sheets alone. Examination of the performance of bank holding companies in New Mexico was based, therefore, on a method similar to that used in two previous Federal Reserve System studies. l Addressed to the performance of multi bank holding company subsidiaries all across the nation, both of the earlier studies compared operating ratios at banks before and after they were acquired by holding companies. Eighteen ratios were calculated to allow comparisons in the composition of portfolios, capital, prices charged for banking services, expenses, and profitability. To isolate the effects of acquisition on a bank's operation, subsidiaries were paired with independent banks of roughly comparable size in the same markets. When the current study was conducted, there were only 72 banks in New Mexico. Since many of those that were holding company subsidiaries had just recently been acquired, only ten banks were suitable for pairing. Both large and small banks were included. Differences in the ratios were then compared to see if the performance of banks acquired by holding companies had changed since their acquisition. The final variables-derived by subtracting the value for each paired bank from the value for the subsidiary bankwere compared for changes. Like subsidiary banks nationwide, those in New Mexico tended to shift out of cash into loans, especially instalment loans. The extent of the differences in performance of affiliated and unaffiliated banks was rather moderate. Examination of subsidiary banks shows, in fact, very little difference in performance-despite their much faster growth in deposits. Net incomes of these banks changed little after acquisition, although their operating expenses J 'l'nll ey. 7'he ,Lnwren Ef! ceo TI' e P erformance 0/ Bani, HoldinG Companie•• Boord of Governors ot the Federal Resel-ve System. June 1967. nnd Snmuel H , 11 ect 0/ HoldinG Company Acquiaition. on Bank P erformance. Board of Governors. February 1972 IlSilless n . eVleW I June 1974 9 important source of coal and electricity-New Mexico could become the scene of rapid economic development. The same considerations that brighten prospects for the development of its energy resources could dim prospects for the state's important tourist industry. With the possibility for continued gasoline shortages and reduced recreational travel, earnings from trade Outlook and services could decline. Weak growth in population and A shift in the patterns of develthe still narrow economic base opment that would help offset a have combined to place constraints slowing in tourist traffic by expandon the development of financial ing energy industries and attractresources in New Mexico, as they ing new industries based on energy probably will for some time to would call for solid financial backcome. But as an important source ing. Although this study shows relof oil and gas-and a potentially atively little evidence that banks tended to decline as a percentage of total assets. And like subsidiary banks nationwide, they tended to shift out of cash into loans, especially instalment loans. In contrast to the situation nationwide, however, banks acquired by multibank holding companies in New Mexico did not shift their investments away from Government securities and into municipal securities. in New Mexico performed a great aCdeal differently after they ~ere h re q uired by holding compames, t e was some tendency to devo t e more f funds to loans. Also, the abilit~ ~er subsidiary banks to support hlg ke lending limits allows them .to ~:ep larger business loans, helpmgihese larger loans within the state. banks, moreover, have s~own no; ticeable deposit growth III rec~n years-and apparently banks ln _ general are becoming more agg res sive in using their funds. All the~t considerations suggest that reC e changes in the structure of the New Mexico 1;>anking system. are likely to allow greater financlal ent . support for economic developm -Carla M. Warberg ~ ---------------------------------------------New par banks The First State Bank of Sierra County, Truth or Consequences, New Mexico, an insured nonmember bank located in the territory served by the EI Paso Branch of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, April 22,· 1974. The officers are: Travis L. Waller , President, and Morris Slavens, Cash ler. The First Bank of Rowlett, Rowlett, Texas, an insured nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, April 26, 1974. The officers are: Fred A. Lawing, President, and Larry Crenshaw, Cashier. The Texoma Bank, Kingston, Oklahoma, an insured nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas was added to the Par List on its opening date, May 6, 1974. The officers are: ' C. Wayne Griffin, President; Mac Harden Villines, Vice President· and Billie Sue Klepper, Cashier. ' -------------------------------------------------~ 10 --Economy Slows in First Quarter BILLION -DOLLAR CHANGE 40 30 20 10 o • -10 CURRENT DOLLARS ITil CONST ANT DOLLARS 1972 1974 1973 National output, disrupted mainly by the energy shortage, fell at an annual rate of 6.3 percent. p. nCes continued to rise, and the GNP deflator surged at an 11.5 -percent annual rate. 160 150 140 130 .' .' -...--------~~"' "", . ' ••••, WHOLESALE PRICE INDEX .................. ",,'11111""'" t l "'" 1972 SOURCE 120 (1967=100) 1973 1974 s: U.S. Department of Commerce U.S. Department of Labor lilts·llless 'b • Q.evlew I June 1974 11 Research Department Federal Reserve Bank of Dallas Station K, Dallas, Texas 75222 Federal Reserve Bank of Dallas June 1974 Statistical Supplement to the Business Review ........... 'l'otall . WeekI oans and mvestments at enth fi,rep.orting banks in the Elevthe £ lStnct rose sharply again in lise co ur :-veeks ended May 15. The corn~nt~ued to center mainly in 'l'he terclal and industrial loans. loan: ~~ngest demand for business Whichs III came from oil companies, their Iiapparently drew further on finan nes of credit at area banks to De~ expanded operations. about .an~ for real estate loans was tio ns ~ hne with seasonal expect atnain' dut lending to consumers ree IlSllal C?nsiderably weaker than flatio' WIth uncertainties over inness ~ and employment, the weakfleeted consumer loans possibly recrease dconsumer reluctance to inebt ltecent h: terest Igh market rates of indeposi~pparently influenced many at Dist ~rs to reduce their balances Placed rc~ banks so funds could be Ing hi hn In~estment outlets offerdOwn gb er YIelds. With deposits on PU~chnks ~elied more than usual tnarket t ases In the Federal funds bllsines 0 finance the increase in than u s lo~ns and somewhat larger I SUal mcrease in investments. . n COntr t lng in as to an overall weakensales ~~sumer demand, new car ~Pril-th:xas turned up sharply in ~lnce la t first monthly advance b~sted r~ ~cto~er. Seasonally adlIes w gIstratlOns of new automo?\1arch en 34 percent higher than in Sales l'~ ~Plte the gain, however, level.lt~~lned below the April 1973 Cent fr gJStrations were off 5 perSllgges~: ~ear earlier, and dealers sales Was .rther recovery in auto credit conbdi~~g hampered by tight tl0ns . l{ eflect' Blltner ~ng the weakness in conernand, seasonally adjusted department store sales in the Eleventh District were off 2 percent from mid-April to mid-May. The decline was counter to the upward trend since last fall, and retailers reported weakness in all categories of sales. Because of rising prices, unit sales fell faster than dollar sales. Moreover, some department store executives in the Dallas area expressed particular concern that even with the recent opening of several major suburban stores, total sales would continue to decline. The labor market in the five southwestern states softened in April. Nonagricultural employment fell, after remaining unchanged in March. The downturn was attributed to widespread declines in the number of jobholders in nonmanufacturing-particularly construction-and in nondurable manufacturing. Consequently, joblessness was up sharply. The number of unemployed workers rose 2.8 percent and the unemployment rate reached 4.7 percent. April was the second consecutive month the jobless rate had increased. Industrial output in Texas was essentially unchanged in April, continuing the sluggish growth pattern of the past six months. Manufacturing was up slightly, led by a 4percent increase in textile mill production. The gain in textile output was stimulated by an influx of orders from apparel retailers. Textile manufacturers, however, report production still hindered by shortages of petroleum -based fabrics. Petroleum refining was over 2 percent higher than in March, but petroleum mining was fractionally lower. Production of natural gas rose modestly for the third consec- utive month, roughly matching the increase in gas consumption. Distribution of electricity, however, fell nearly 3 percent as customers possibly responded to widespread rate increases by limiting energy use. Although crude oil production in Texas was down slightly, exploration is such that the spring slump usually characterizing drilling in Texas was virtually eliminated this year. In April, the daily average number of rotary rigs drilling in Texas was 468-40 percent more than a year before. In the week ended May 20, the average reached 499 rigs. By the end of April, the number of wildcat oil discoveries completed in Texas since the first of the year reached 85-compared with 69 a year earlier. Gas discoveries totaled 129-seven more than in the first four months of 1973. Although the outlook is for shortages of crews, rigs, and pipe to constrain drilling in Texas throughout the rest of the year, the number of new wells likely will increase as the year progresses and the industry tries to slow the drop in reserves . Last year, the state's oil reserves fell 3 percent. Most of the Eleventh District benefited from at least some rain in April, and moisture conditions in eastern parts of the District were reported excellent on May 1. Much of the five-state area, however, had received less than half the precipitation normal for that time of year. As a result, conditions in an area extending from West Texas through large parts of New Mexico and Arizona reached a moderate drouth stage by May 1. (Continued on back page) CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS Eleventh Federal Reserve District (Thousand dollars) May 15. 1974 ASSETS Federal lunds sold and securities purchased under agreements to resell .... Other loans and discounts. gross .. ... .................. .. Commercial and Industrial loans Agricultural loans. excluding CCC certificates 01 Interest ...................................... . Loans to brokers and dealers lor purchasing or carrying: U.S. Government securities ... . Other securities ................................ .. Other loans lor purcheslng or carrying: U.S. Government securities Other securities .. .............................. .. Loans to nonbank financial Institutions: Sales finance. personal finance. lactors. and other business credit companies Other ... . ..................... . Real estate loans ................................... . Loans to domestic commercial banks .. Loans to lorelgn banks .. Consumer Instalment loans ......... . Loans to lorelgn governments. o"Iciai Institutions. central banks. and International Institutions ................ .. Other loans ... .. ............ .. ........ . Total Investments .... . Total U.S . Government securities Treasury bills .... ..... .. .................... . Treasury certificates 01 Indebtedness .............. . Treasury notes and U.S. Government bonds maturing: Within 1 year.......... .. ........................ .. .... .. 1 year to 5 years .. .. ................. . After 5 years ............................................... . Obligations 01 states and political subdivisions: Tax warrants and short-term notes and bills All other .. .. .. .......... .. .... .... ......... .. ........ . Other bonds. corporate stocks. and securities: Certificates representing participations In l ederal agency loans .......... .. ........ .. All other (Including corporate stocks) Cash Items In process 01 collection . Reserves with Federal Reserve Bank Currency end coin ......... .... .. .. ........ .. ........... .. Balances with banks In the United States Balances with banks In lorelgn countries .............. .. Other assets (Including Investments In subsidiaries not consolidated) TOTAL ASSETS .. Apr. 17. 1974 May16 . 1973 1.311.149 1.831,055 10.166;471 10.106.811 884.844 9.521 .909 ---4.510.536 - - -4,439.868 4.278.698 273,490 283.047 267 .782 1.264 48.014 1,400 57.785 319 59.673 3.789 448.710 3.976 451.517 5.022 517.306 156.615 760.703 1,497.os4 45.512 72.370 1.039.665 145.517 802.305 1,478.644 45.214 65.488 1.048.388 195.161 646.348 1.349.048 28.293 56.937 1.016.762 17 1.308.722 4.240.139 17 1.283.645 4.195.086 500 1.100.060 3.986.616 1.002.433 162.003 0 1.031 .502 161.506 0 - - - - 937.549 153.862 0 147.745 532.1 08 190.143 135.379 483.770 164.538 176.326 2.776.992 151,494 2.735.782 209,474 2.596.331 44.661 239.727 1.612.389 882.057 126.894 479,415 31.175 13.009 263.209 1.582.579 852.506 129.959 556.372 15.822 8.581 234.681 1.642.442 950.398 114.555 412.354 13.829 827.840 794.110 19.677.529 20.064.300 Total demand deposits .................. .. .. .. ........ .. ....... . Individuals. partnerships. and corporations .. ... States and pOlitical subdivisions U.S. Government ..... .. ..................... . Banks In the United States Foreign: Governments. official Institutions. central banks. and International Institutions Commercial banks .................................... .... . Certified and officers' checks. etc . ........ .. ......... . Total time and savings depOSits .......................... .. Individuals. partnerships. and corporations: Savings deposits .... :.. Other time deposits ..................... .. States and pOlitical subdivisions .. .. .............. . U.S. Government (Including postal savings) . Banks In the United States ............ . Foreign: Governments. official Institutions. central banks. and International Institutions ...... .. .. Commercial banks .... .. ................ .. .......... .. .. .. . Federal lunds purchased and securities sold under agreements to repurchase Other liabilities lor borrowed money Other liabilities ..... Reserves on loans ............................ . Reserves on securities .. Total capital accounts Total deposits ... Borrowings ....... Other lIabllltiese .... Total capital accountse ......... " ....... ........................ TOTAL LIABILITIES AND CAPITAL ACCOUNTSe ....... " .......... e-Estlmated 2.364 51 .571 131.541 7.362.236 1.158.548 4.070.666 2.017.680 7.989 80.538 1161 .240 4:058.769 2039.249 • 6.800 82.686 12.162 14.140 13.192 300 2.898,337 198.434 535.908 173.771 24.288 1.319.652 19.677.529 2 343 42)8 9 128.928 46 6.546,5 311 1.184'416 3.5~h39 1.6 '8 14 28 91: 480 12,~ 525 2.411.432 3135 .017 245 '564 '178.259 549 '961 435.541 1~~:910 179.123 24.259 1 119.261 1.301 .052 ;;.:.:..;---- - 296. 413 20.064~ Eleventh Federal Reserve District 769.466 18.296.413 DEMAND DEPOSITS ---1972: April ..... 1973: April . May June July August.. September .. October .. November . Decem ber . 1974: January .. February . March . April Eleventh Federal Reserve District LIABILITIES AND CAPITAL ACCOUNTS Demand deposits of banks Other demand deposits Time depOSits ...... 3.103 62.877 116,499 7.361.723 ---- (Million dollars) TOTAL ASSETSe ~ (Averages 01 dally figures . Million dollars) CONDITION STATISTICS OF ALL MEMBER BANKS ASSETS Loans and discounts. gross U.S. Government obligations ....... ,,', .......... Other securities .............................. ............... ",. Reserves with Federal Reserve Bank Cash In vault .... Balances with banks In"ihe ·Uiiite·it"Siates ... Balances with banks In foreign countrlese . Cash Items In process of collection ............. Other assetse .... 7.165,416 5.139.838 543.154 118.145 1.181.800 DEMAND AND TIME DEPOSITS OF MEMBER BANKS Date Item - 14,527.139 Total depOSits TOTAL LIABILITIES. RESERVES. AND CAPITAL ACCOUNTS ... 118.490 539.345 182.595 ----- Mat6, Apr. 17. 1 73 1974~ 13,735.6 14.811.049 189 7448.813 7.881 '646 5'370.228 4. 741.'136 05 '429.641 1';9 192.143 1.215 34 • 5 1.271.325 May15. 1974 LIABILITIES Apr.24 . 1974 Mar. 27. 1974 Apr. 25. 1973 20.465 2.301 6.592 1.856 363 1.286 23 1.6 14 1.62 1 20.985 2.320 6.531 1.727 361 1.395 20 1.732 1.587 18.357 2.444 6.D15 1.390 334 1.217 14 1.606 1'.373 36.121 36.658 32.750 Total Adjusted ' U.S. Government 12,470 13.237 13.136 13.218 13.259 12.941 13.039 13.289 13,455 14.008 14.384 13.949 13.933 13.984 8.696 9.550 9.502 9.551 9.567 9,492 9.442 9,461 9.816 10.086 10.276 10.082 10.150 10.289 314 331 341 279 261 172 208 239 167 244 302 264 260 236 ~ savingS Total 2.640 285 5 2'859 2'88 4 2'868 2'851 2'85 4 2'8 63 2'871 2:8 83 2 900 2'9 09 2'95 8 2: 915 10.938 13.249 13.336 13.374 13.396 13.507 13.61 8 13.795 13.953 14.154 14.533 14.919 15.126 15.143 comme~clal 1. Other than those 01 U.S. Government and domestic Items In process 01 collection leSS RESERVE POSITIONS OF MEMBER BANKS Eleventh Federal Reserve District (Averages of dally figures. Thousand dollars) 1.643 11.937 15.116 1.672 12.109 15.168 1.548 11 .466 13.302 28.696 3.543 1.351 2.531 28.949 3.826 1.377 2.506 26.316 3.011 1.174 2.249 36.121 36 .658 32.750 css" bankS. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-:'-:-::; Item Total reserves held ................ . With Federal Reserve Bank Currency and coin .................... . Required reserves Excess reserves Borrowings ... Free reserves 4 weeks ended May1 . 1974 4 weeks ended Apr. 3. 1974 2.017 .914 1.693.850 324 .064 2.013.092 4.822 114.280 - 109,458 2.001.302 1.684.164 317.138 1.998.421 2.881 76.858 -73.977 4 n ded ~:~~ f913 26 9 1.767 . 45 1.41889'~81 2 '25 2 1.1598'614 '541 124• 13 _ 11 5.8 BANKO I I EBITS, END-OF-MONTH DEPOSITS, AND DEPOSIT TURNOVER SMSA's I (00 n Eleventh Federal Reserve District liar arno ........ unts In thousands, seasonally adjusted) I \ I DEBITS TO DEMAND DEPOSIT ACCOUNTS ' DEMAND DEPOSITS' Percent change Apr. 1974 April 1974 from ft;3 Annual rate of turnover 4 months, __ StanS1:[I~t~:lr~r':ltan (An~~~~)rate ~~4 19~~:~om A~~7~0, Apr. Mar. Apr. ARIZo;:----:::-=-_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~_ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _1:..:9..:. 74~_---.:1:..:9.:... 74~_ _ _1:.::9:.:.73:......_ lOUISIA~·AT~son . . ............................ . S~nroe ..... N EWMEXICO reveport TEXAS'. Abllane : Roswell' ..................... $15,266,212 5,638,033 19,268,550 1,281,821 -3% 5 0 - 11 Srya ntilie-Harlingen-San Ben'lic; ..................... Corp~~ ~~~I~~ Station ... ......... .. .......... ( gorsleana. ········ ··········· Ela~:: ... .... ... ....... ~~~;;Vfi1h·::::::::::::::: · ............ HOUst~~n-Texas City ············,·· .............. I ( ~~~~~ekpii . . .... ... :: ::::····· ( ~dessa Mldlan~- arr-Edlnburg .... .... . 3~,m,m S:~ ~~~o~?" ·· ..................... .. ...•....... ....... 16:m:~~~ 4,005,205 Co $375,779 127,166 399,519 54,887 40.6 44.1 51 .1 23.1 42.7 43.3 56.6 25.7 360 40'5 46'9 . 24.0 ~g ~~ ~~ ~~ ~~~:g~~ m:~6~ ~~:ri ~~:~ ~~:~ ~~:~ 33.3 2 13 18 45 24 28 134,291 62,910 29.8 30.7 30.4 27.2 41 .2 81:9 -~ ~~ ~~ 2~~:m 0 46 45 3,183,197 ~~ 12 35 ~~:~ !i:~ 12 30 137,913 3,710,806 l~~:m 287 58.8 ~g 29.1 58.6 ~~:~ 257,120 40.3 25.5 53.0 24 .7 20.1 ~~ ~~ 33 20 58 24 ~:~~7:847 ~~ 1 5 10 1 5 - 3 -7 1% ~~:i 23.0 31 .9 !~:~ 2~ 3,23~,~~~::~ ~~'5 ~~ :~ ggV~~ ~~ - 23 3 ....:. ". .. . :::::::: :: ::::::::........ Sherrnan-D~nlson"" .... ..... . ..... 30 ,520,013 Texarka ( . . . ... . .. 1,725,734 TYler na Texas-Arkansas) .. .... .......... ........... 2,164,430 Waco ............. 3,553,778 Wlehlt ··,,···.·.... 5,152,716 Tot a ails .. .................. ,. .. ............................. 4,707 ,146 al-30 centers .. ..... ............ ........... .................•. $712,931,863 t. Oep 2. ~~ :: ~ 0 2 216 :004 :246 2,910,043 ··· . 3,840,266 1,909,411 11,947,019 257,m :m 13,890,215 Killeen-Tem .. j............ ....................... Laredo p e ....... 32% 13 20 27 -~ ~~~r~lo :::::::::::: ....... . ......... •...•.......•... ::::::............... 1U~::g~~ ~~~~nioni~·piirt·Arth~;::6;iingii· ···· ~~:g~~:m I 25% 15 29 16 ~g~ : ~g~ ~~ 42 17 30 10 22 17 43 35 16 13 9 8 14 41 36% 34% ~~.~ 34:9 ~n 47.9 22.5 ~~:g 116,305 ~~:~ ~g 95,260 908,574 86,791 95,613 140,470 162,613 168,759 27.8 34 .0 20.0 22.8 25.3 32.3 28.3 28.0 32.6 18.4 22.7 24 .8 33.5 31 .0 21 :3 29.0 16.5 21 .6 22 .9 28.8 23.4 ~~.~ $13,403,238 53.6 54 .0 42.4 Oslts Of IMI I Unty basis v duals, partnerships, and corporations and of states and political subdivisions CONDlllO N OF THE FEDERAL RESERVE BANK OF DALLAS (Thou 8andd ...............ollars) BUILDING PERMITS rn~':n"i1!cate reserves eder s r banks ...... . . U.S G agency b ' .. Total overnrne a ligations .. Melll~arning ant securities " ~e r ba Ssets deral re nk reserve de .. . ClrcUI serve not I posits ... alion . es n actual Apr. 24, 1974 May 23 , 264 ,629 179,683 0 119,527 3,500,214 3,799,424 1,557 ,918 815 ,043 88,310 0 94,738 3,324,814 3,507,862 1,855,81 0 350,529 48,060 0 56,911 3,409,457 3,514,428 1,490,531 2,467,527 2,461,874 2,280,501 May 22, Item 1974 ................... VAklJE 01= CONSTRUCTION CONTRACTS (Million ~) January-April ~ IVE Area and typ e Apr. 1974 Mar. 1974 Feb. 1974 S SOUT RTATEs,HWESTERN NeSlde ...... 982 987 776 onres7"al buiiCi iii .. ··········· 419 406 358 UNNonbulIg~~lal bUIi~'I~g"" .... 371 402 300 ~TED STAT constructlo~"" 192 179 118 eSI ES .... 7,911 6,610 Non~~7"al buliCiiii······· 8,929 3,924 3,374 2,678 NOnbUlidenlial bUIi~( """"'" 1 ding COnst ng ........ 2,842 2,752 2,260 r':" Art~On rUction .... 2,163 1,785 1,672 NoRavlse a, lOUlslan So TE: Dd a, New Mexico , Oklahoma , and Texas URCE·etalls rna n . F. W. D~d~t a~d to totals because of rounding . e, cGraw-HIIi, Inc. VALUATION (Dollar amounts In thousands) 1973 1974 1973r 3,583 1,474 1,386 723 29,242 12, 206 10,091 6,945 3,816 1,929 1,329 559 30,895 15,546 9,904 5,446 Percent change Apr. 1974 from NUMBER Area Apr. 1974 4 mos. 1974 Apr. 1974 3 mos. 1974 Mar. 1974 Apr. 1973 4 months, 1974 from 1973 2.006 $6,422 $31,221 -33% - 60% - 55% ARIZONA 584 Tucson .. LOUISIANA Monroe66 West Monroe .... 640 Shreveport ..... TEXAS 80 Abilene .... 482 Amarillo ..... 541 Austin ... 236 Beaumont . 129 Brownsvi lle ... 298 Corpus Christi .: 1,619 Dallas ....... 28 Denison ..... 479 EI Paso ....... 419 Fort Worth .. 63 Galveston Houston ...... .. : 2,097 34 Laredo ..... 180 Lubbock .... 110 Midland ...... 113 Odessa .... 80 Port Arthur ... 96 San Ang elo ...... 1 ,725 San Antonio ..... 40 Sherman .... 69 Texarkana ... Waco ................ 285 93 Wichita Falls . 247 1,880 1,090 11 ,120 6,456 33,395 - 63 12 - 50 168 - 20 - 12 317 1,040 1,781 775 460 1,016 5,428 78 1,886 1,464 245 7,833 121 613 296 399 272 284 5,978 131 283 795 287 1,363 4,451 18.721 14,764 1,103 2,995 35,963 91 16,549 33,023 1,000 64,502 178 9,098 1,367 1,098 183 946 21,698 71 2 621 3,721 2,872 4,563 20,728 81 ,869 22,597 11,410 13,899 112,462 669 72,421 79,208 5,526 233,733 980 55,557 15,622 8,481 882 3,822 84 ,677 1,815 2,167 15,415 5,336 - 5 - 44 - 39 423 - 65 17 6 -17 - 53 6 -39 36 -72 - 15 -2 -25 -25 108 16 36 -31 - 51 136 2 -20 -22 623 -71 33 58 20 -9 199 -7 16 -62 0 - 4 -17 -23 9 3 -24 19 124 329 -58 11 - 10 130 2 -40 0 - 43 33 63 26 - 14 - 89 71 170 60 -54 1 2 -25 35 -6 - 21 Total-26 cities . ..10,586 35,915 $255 ,651 $924,911 -3% 21% - 2% " DAILY AVERAGE PRODUCTION OF CRUDE OIL LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT (Thousand barrels) Five Southwestern States' Percent change from Area Apr. 1974 Mar. 1974 Apr. 1973r Mar. 1974 Apr. 1973 FOUR SOUTHWESTERN STATES Louisiana . New Mexico Oklahoma ..... Texas .. .. Gulf Coast ...... . West Texas .................. .. East Texas (proper) .. Panhandle .... . Rest of state .. . UNITED STATES ........ .. 6,475.7 2,081 .5 263 .0 520.1 3,611 .1 708.9 1,893.1 238.3 58 .9 711 .9 9,040.4 6,500 .1 2,083.8 263.1 521 .7 3,631.5 704 .6 1,908.7 241 .1 60.2 716.9 9,084.9 6,637.4 2,255.0 279.7 523.6 3,579 .1 711 .6 1,818.8 209.1 61.4 778.2 9,232.9 -.4% - .1 .0 - .3 - .6 .6 - .8 -1.2 -2 .2 -.7 -.5% - 2.4% -7.7 -6.0 -.7 .9 - .4 4.1 14.0 -4 .1 -8.5 - 2.1% r-Revlsed SOURCES: American Petroleum Institute U.S. Bureau of Mines Federal Reserve Bank of Dallas (Seasonally adjusted) ~ Thousands of persons Item Apr. 1974p Mar. 1974 Apr. 1973r 8,890 .3 8,473.3 417.1 4.7% 8,872 .7 8,467 .1 405.6 4.6% 8,668.9 8,289.2 379.7 4.4% 7,426.3 1,289.5 724 .2 565 .3 6,136.8 244.6 511.3 7,439.6 1,291.8 722 .4 569.4 6,147.8 245.2 518.1 7,127.6 1,249.8 695.3 554.5 5,877.9 234.3 475.8 507 .2 1,775.9 408.9 1,227.1 1,461 .9 508 .0 1,782.1 410.0 1,226.0 1,458.3 486.2 1,710.2 387.7 1,175.8 1,407.9 perceln9ti:fr~~ ~ fils Mar. 197~ 2.6 0.2% 2.2 .1 9.8 2.8 '.3 ' .1 4.2 -.2 3.2 - .2 4.2 .2 1.9 - .7 4.4 - .2 4.4 - .2 1.5 -1 .3 4.3 -.2 3.8 ----=~------.:-=-..::.....----------:-: Civilian labor fo rce . Total employment Total unemployment Unemployment rate Total nonagricultural wage and salary employment .. Manufacturing ... Durable ................... Nondurable Nonmanufacturlng . Mining ......... Construction ........ Transportation and public utilities .. Trade Finance Service .......... Government . -.3 5.5 - .3 .1 3.8 4.4~ ~ --~~~~~~~~--~---------1. Arizona, Louisiana, New Mexico , Oklahoma, and Texas 2. Actual change p-Prellmlnary r-Rev lsed NOTE: DetailS may not add to totals because of rounding . SOURCES: State employment agencies Federal Reserve Bank of Dallas (seasonal adjustment) INDUSTRIAL PRODUCTION (Seasonally adjusted Indexes, 1967 - 100) Area and type of Index TEXAS Total Industrial production . Manufacturing Durable Nondurable Mining ............................... Utilities .. .. ........................ UNITED STATES Total Industrial production . Manufacturing ... Durable ............. ", .... Nondurable .................... Mining " ......................... Utilities ....... Apr. 1974p Mar. 1974 Feb. 1974 Apr. 1973 138.1 143.6 158.7 132.7 120.8 153.4 138.0 143.1 159.0 131 .7 120.7 156.3 135.9r 141 .8r 159.2 129.3r 117.4r 151.4r 136.0 140.6 156.8 128.9 118.1 161.9 124.7 124.7 121 .1 130.2 110.8 144.9 124.2 124.2 120.0 130.5 111.2 144.3 124.6r 124.2r 119.6r 131.0r 110.5r 146.1r 124.1r 123.8r 120.6r 128.4r 109.0r 148.7r p-Prellmlnary r-Revlsed SOURCES : Board of Governors of the Federal Reserve System Federal Reserve Bank of Dallas The drouth caused heavy losses of dryland wheat in the Texas Panhandle, and in early May, winter wheat production in states of the District was projected at 5 percent less than the 1973 crop, But at 266 million bushels, that would still be three-fourths more than the harvest in 1972, Nationwide, increases in livestock production and expected increases in crop production brought a downturn in farm prices, which had reached record highs earlier in the year, Prices received by Texas farm- WI NTER WHEAT PRODUCT ION (~T~ho:u:s:an~d~b:u:sh~e:IS~)________________________________---~~ 1974, Indicated 1972_______ MQ1 1~3 ~_ ----...:..::.=-- - - - - -....:::::....: . . - - - - -1-5-,1-20- 11 '~~~ Arizona ... 17 ,g~g 396 4 335 ~~~sl:e"x~co . ....................... 5,275 8,526 89:rOO~ Oklahoma 173,600 157,800 44~ Texas.... 69,300 98,600 --- 5 150,1 S---.:T..:. ot:a::.: :1 =.::.: .. ::.: ...::.: ...::.: ...::.: ...::.: ...::.: .. ::.: ...::.: ...::.: ...=~_---=2...:.. 65.:.:,.:... 98...:..5_ _ _ _2_8_0_,4_42_ _~ A~ SOURCE: U.S. Department of Agriculture ers and ranchers dropped 6 percent in the month ended April 15, although they held 17 percent higher than a year earlier, Contributing to the decline were lower prices for wheat, hogs, cattle, grain sorghum, cotton, and eggs. In contrast to the fall in average farm prices in Texas, the index of prices paid by U.S. farmers and ranchers rose 2 percent to a level 16 percent higher than a year earlier. A substantial decline in livestock prices has brought a marked slowing in growth of cash receipts from , in pisfarm and ranch marketmgs of trict states. First-quarter sales ts livestock and livestock pro:U~es were only slightly ah~ad 0 ;aCroP for the same quarter m 197 ' ever, receipts were up sharply, h O: twgs, due mainly to a gain in ;nar,; the Crop and livestock receIpts 1 tofirst three months of,t~e ye~rn_ taled just about ~3 ?Ill~on, c first pared with $2.1 bIllion III the quarter of 1973.