1978 Frbstl Annualreport Review

4145 the central bank of the United States, the Fed-eral Reserve System performs a number of keyfunctions within the nation’s financial community,conducting monetary policy, supervising and regu-lating member banks, and providing various servicesto the public, the Treasury, and commercial banks.

These functions are performed by the Federal Re-serve System’s Board of Governors in Washington,the 12 regional Reserve Banks — located in Boston,New York, Philadelphia, Cleveland, Richmond, At-lanta, Chicago, St. Louis, Minneapolis, Kansas City,Dallas, and San Francisco — and the 25 branches ofthe regional Reserve Banks,

The Eighth Federal Reserve District is served bythe Federal Reserve hank of St. Louis, headquarteredin St. Louis with branches in Little Rock, Louisville,and Memphis. The district encompasses Arkansas andportions of Illinois, Indiana, Kentucky, Mississippi,Missouri, and Tennessee.

This report reviews the operations of the FederalReserve Bank of St. Louis during calendar year 1978.

Bccnk S ;ot?rtn.sion. and Regznatn.in.

The Federal Reserve Bank of St. Louis, togetherwith state banking authorities, has responsibility forthe supervision of 71 state-chartered banks in theEighth District which have elected to become mem-bers of the Federal Reserve System. The Bank makesannual examinations of state member banks in order toevaluate their assets, liabilities, capital accounts, li-quidity, operations, and management. Attention alsois focused on compliance with applicable laws andregulations.

Banking authorities use the information gatheredthrough such examinations to direct attention to po-tential problems or unsatisfactory conditions at thebanks. Supervision seeks to foster an effective bank-ing system in which the public interest is safeguarded.

Page 16

Although they have authority to examine all mem-ber banks, Federal Reserve Banks generally do notexamine national banks, all of which are required tobe members of the Federal Reserve System. Primaryresponsibility for examination of the 336 nationalbanks in the Eighth District lies with the office of theComptroller of the Currency. The Federal DepositInsurance Corporation (FDIC) and respective statebanking authorities examine state nonmember banksthat are insured by the FDIC, while noninsuredbanks are examined only by state authorities.

Federal Reserve Banks also are responsible forsupervision and regulation of bank holding com-panies. At the end of 1978, the Federal Reserve Bankof St. Louis had jurisdiction over 20 multibank and97 one-bank holding companies, compared to 20 and88, respectively, at the end of 1977. Prior approvalmust be obtained from the Federal Reserve Systemfor bank holding company formations, acquisitions ofadditional banks and nonbank subsidiaries, and tienovo expansions of existing subsidiaries. Applicationsfor such bank holding company activities are analyzedby the Bank Supervision and Regulation Department,as well as the Bank’s Legal and Research Depart-ments. These departments consider the history, finan-cial condition, and future prospects of the institutionsinvolved and evaluate the quality of management.They also assess the legal aspects of any proposaland its likely effect on banking and uonbanking com-petition. During 1978, the Federal Reserve Bank ofSt. Louis received 20 applications to form bank hold-ing companies and 25 applications from holding com-panies to acquire additional subsidiaries, engage tienovo in nonbank activities, or establish new locations.An additional 15 applications were received for in-formal review.

After formation, bank holding companies mustregister and file annual reports with Federal ReserveBanks. These annual reports are analyzed by thestaff of the Bank Holding Companies Division to

Operations of the Federal Reserve Bank

- of St. Louis—1978

A. CLIFFORD SAXTON, JR.

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK OF ST. LOUIS JANUARY 1979

verify accuracy and completeness, to ascertain thecurrent financial condition of the holding companyand its subsidiaries, and to determine compliancewith applicable laws and regulations. Examinationreports prepared by the primary Federal supervisoryagency of the respective bank subsidiaries also areanalyzed to determine the overall condition of suchsubsidiaries. In addition, on-site inspections of bankholding companies and their nonbank subsidiariesare conducted by Division personnel. The purposeof these inspections is similar to that of examinationsof banks.

Check Coiiec-tzo-n

The service of collecting and clearing checks drawnon member and nonmember banks is a major activityof this Bank. Payment for the items cleared is ac-complished on the day of presentment by a charge tothe reserve account of the member bank or to thereserve account of a member correspondent. Checksdrawn on nonmember banks also are paid for on theday of presentment by a charge to the account of aspecified member correspondent.

During 1978, the four Federal Reserve Bank of St.Louis offices cleared 744 million checks totaling $317billion. This reflects increases of more than 7 percentin the number of checks cleared and 11 percent indollar value when compared with 1977 check clear-ing activity.

A major goal of the Federal Reserve System is toprovide a speedy check payments mechanism. To thisend, a Regional Check Processing Center (RCPC)program was implemented during the early 1970s toincrease the speed of the check payment process andto facilitate return -of dishonored items, The RCPCsthat have been in operation in the Eighth Federal

Reserve District since 1972 continue to facilitate theovernight collection of items drawn on banks in theRCPC area, thereby permitting prompt credit andpayment for these checks.

Electronic Trans far of Enn.d-s

“Electronic funds transfers” — or “wire transfers”— have been used for many years to facilitate trans-fers of balances between banks. The Federal Reserveand its member banks utilize a computer network fortransferring funds nationwide. Using this system,many member banks render more efficient serviceto their customers and effect payment for the pur-chase and sale of Fed funds. Nonmember banks bene-fit from this service indirectly through correspondentmember banks.

Settlement for such transfers is made by debits andcredits to reserve accounts. Generally, transfersthrough this network are for large amounts, with nocharge levied for transfers of $1,000 or more. Mem-ber banks also utilize these facilities to transfer mar-ketable government securities. All four Federal Re-serve offices and 23 commercial banks in the EighthDistrict with a significant volume of transfers arecurrently participating in this network. Several otherbanks are considering the installation of terminals totake advantage of the service, whose reliability andspeed permit major efficiencies in comparison to thestandard procedure of shipping checks. Nearly 400

member banks nationwide have installed on-line ter-minals connected to their Federal Reserve Districtcomputers. Member banks not having on-line ter-minals may telephone their transfers to their localFederal Reserve office where transfers are entered intothe wire transfer system over Federal Reserve Bankterminals.

Table

Volume of Operations1

Number Dolor AmountI thousands) (millions)Percent . . . Pc-rcent

1978 1977 Change 1977 Change

Chocks haneled~ 743,661 692.723 7.4% $ 317.437 $ 283,868 I i.o%

Transfers of funds 1.576 1,141 29.4% 1.1 33.708 1.035,000 11

Currency received and counted 311,439 318.000 --2. 1% 2.836 2.900 2.2%

Government securitios issued, serviced, and redeomee 13.902 13.300 4.5% 97,018 36,382 166.6%

U.S. Government coupons paid 313’ 400 21.8% 72’ 185 5/.8%

Food s’omps received and counted 122,926 120,000 1.4% 504 504 —

-‘r,.tal 1-.’ stsn’ S~. Ii. ss. I .‘lt- R.-iC~.i~’:i,’ Us. ansI .~•,ss.,. 5’’ ..e’(,..~s-rn,sar’.st,-ItL-L’,s.;.:.c! -n-tal ns,,rI,’,.,ii.l~’’..

‘lksk’rcsc,rne ~:.-n ‘.n ‘sin,, L~!.tu in b..USLISJ’ig ni ,kli,-.;est c-nt.,,’—.

Page I7



Terminal installations at the banks are connectedto the computer at the St. Louis Federal Reserveoffice, which is the switching center for the EighthDistrict. Operators of the terminals in the commercialbanks can initiate transfers directly from their banks,at which timethe transfers are processed automaticallythrough the computer at the St. Louis office and di-rected through a central switching computer at Cul-peper, Virginia, to another Federal Reserve Districtfor the account of the receiving commercial bank,Transfers of funds may also be made between mem-ber banks in the same District. If the receiving bankis on-line, transfers are switched automatically to thatbank’s terminals through its Federal Reserve Districtcomputer.

By transferring funds electronically, all necessaryinformation for completing the transfer is obtained.Third-party information may be entered to identifythe originator and/or the recipient of the funds, Mem-ber bank reserve accounts are debited and creditedautomatically, and banks with on-line terminals re-ceive an immediate record of each transaction at itsconclusion. The use of electronic equipment for trans-fers of funds has reduced the time required for com-pletion of a typical transaction from almost an hourto a matter of minutes.

With the installation of on-line terminals at the23 District commercial banks, about 4,200 transactionsper day are sent and received electronically andthus do not require manual processing by EighthDistrict personnel. This represents 71 percent of totaltransfers processed,

Volume and dollar amounts of transfers processedby the Eighth District continue to increase. During1978, nearly 1.5 million transfers amounting to $1,154billion were completed by the Federal Reserve Bankof St. Louis and its branches. This is a 29.4 percentincrease in number and an 11.5 percent increase invalue over the previous year. More on-line banks areexpected to be added to the system in 1979.

.1 ::~d4-.~..e’p Be r:r-i.ng Pnq-ns-r.~nt-s

The Federal Reserve computer systems, on a recur-ring basis, process electronic data representing U.S.Government payments. Payments are received onmagnetic tape from Government disbursing centers,processed, and distributed to financial organizations.

The Eighth District has processed such paymentssince August 1975, when the Federal Reserve System

Page 18

began handling the payroll for the Air Force. In 1978,these operations were expanded to include paymentsto Navy retirees.

The electronic funds transfer system (EFTS) cur-rently is used in the Eighth District for the settlementof a variety of Federal recurring payments. SocialSecurity payments constitute the largest category, witha monthly volume of 387,000 payments. Monthlyvolumes also include 19,000 Civil Service Annuitypayments, 14,000 railroad retirement payments. .~ 32,000Veterans Administration payments, 44,000 Air Forcepayments, 14 CIA retirement payments, and 3,000Navy retirement payments. In addition, 2,000 revenue-sharing payments are processed on a quarterly basis.

::%~gt~p-(~JpnClan-ri-ins lb s-es

An automated clearing house (ACH) provides forthe exchange of payments on magnetic tape, in con-trast to traditional clearing houses which provide forsuch payment exchanges with batches of paper checks.

The St. Louis Reserve Bank and each of its branchesoperate automated clearing houses and, since late 1978,are linked to a coast-to-coast network of financialinstitutions automatically handling pre-authorizedpayments via electronic communications and usingFederal Reserve System facilities. The interregionalnetwork consists of 32 automated clearing house asso-ciations. It links approximately 9,400 banks and 1,500thrift institutions which are members of these associ-ations with 6,000 customer corporations.

Within the Eighth District the Kentuckiana Auto-mated Clearing House, operated by the LouisvilleBranch, began operating in April 1976. The Mid-Amer-ica Payments Exchange, operated by the Bank’s headoffice in St. Louis, has been operational since July1976. In February 1977, the Mid-South AutomatedClearing House, operated by the Memphis Branch,began operations, followed in October 1977, by theArkansas Automated Clearing House, operated bythe Little Rock Branch.

Collectively, the District’s four ACH facilities proc-ess approximately 42,000 commercial debits and 20,000credit items each month.

(::O a and C-u-rre-ncn

Coin and currency, approximately 26.4 percent ofthe money stock, are used more widely than demanddeposits in consummating small transactions, pri-



marily because of convenience. Personal checks gen-erally are used for transactions of larger amounts.The Federal Reserve Banks supply virtually all of thecoin and currency in circulation through the commer-cial banking system, and excess coin and currency arereturned to Federal Reserve Banks through thissystem.

Approximately 311 million pieces of currency valuedat $2.8 billion were received and verified at the fourFederal Reserve offices in the Eighth District during1978. This was a decrease of abou-t 2 percent in num-ber of pieces and a 2 percent decline in dollar volumefrom 1977. The number and value of coins receivedand verified showed a decline from 1977 levels. Com-bined sorting, counting, and wrapping of coin andcurrency at the four Eighth District offices averagedalmost 5.6 million pieces per working day in 1978,slightly less than in 1977.

Currency which is no longer usable is removedfrom circulation and destroyed. During 1978, theFederal Reserve Bank of St. Louis and its branchesverified and destroyed currency totaling $761 million.

La-ruling

Three types of credit are available to memberbanks in the Eighth Federal Reserve District short-term adjustment, seasonal, and emergency credit,Member banks may make temporary adjustments intheir reserve positions due to deposit losses, unex-pected or unusual requests for loans, or other changesthey encounter. Member banks which have highlyseasonal loan demands may apply to this Bank forseasonal credit. Such loan demands are due primarilyto a recurring pattern of change in deposits and loans.Under seasonal credit, member banks may maintaina portion of their liquid assets in the form of Federalfunds (loans of excess reserves to other banks), aslong as such holdings conform to the bank’s normaloperating experience. Arrangements for this type ofcredit should be made in advance. Credit for longerperiods also is available to member banks to meetemergency conditions which may result from unusuallocal, regional, or national financial situations, oradverse circumstances where member banks areinvolved.

The discount rate is the rate of interest chargedby the Federal Reserve Bank on loans to memberbanks. The level of the discount rate, in relation toother short-term market rates, has an influence on thevolume of credit extended by the Federal Reserve

Bank. When the discount rate is higher than othermarket interest rates, member banks usually chooseto obtain funds from other sources to make temporaryreserve adjustments. When the discount rate is low inrelation to other market rates, member banks tendto rely more heavily on the Federal Reserve for funds.

At the beginning of 1978, the discount rate stoodat 6 percent. The rate was increased seven times dur-ing the year and, at year’s end, was 9½percent, thehighest since the Eighth District began operations in1914. Throughout virtually all of 1978, however, thediscount rate was below other short-term interestrates. As a result of this difference between rates,member bank borrowings in the Eighth District wererelatively high, with daily average outstanding loansamounting to $57.8 million in 1978, more than twicethe $23.7 million figure of 1977. There were 2,440loans totaling $10.5 billion made to 119 Eighth Dis-trict member banks by the Federal Reserve Bank ofSt. Louis during 1978. This is a substantial increaseover 1977, when 860 loans amounting to $5 billionwere made to 63 member banks,

Fisctds-tge-n-t

As a fiscal agent of the Federal Government, theFederal Reserve Bank performs many services. TheU.S. Treasury makes payments for various types ofGovernment spending through accounts maintainedin the System. Funds received by the Treasury aredeposited into its account at the Federal ReserveBanks or into tax and loan accounts at designatedcommercial banks. These funds mainly representreceipts from payment of taxes and collections fromthe sale of Government securities to the public. Bal-ances in the tax and loan accounts are transferredupon call to the account of the Treasury of the UnitedStates at Federal Reserve Banks in order for theTreasury Department to have use of the funds.

The Federal Reserve Banks also act on behalf ofthe Government in marketing Treasury securities.When the Treasury offers new securities, the ReserveBanks prepare and distribute applications and officialoffering circulars, receive subscriptions from thosewishing to buy, allot the securities among the sub-scribers according to the terms of the offering, collectpayment, and make delivery to the purchasers. Withfunds from the Treasury’s account, Federal ReserveBanks pay interest on securities and redeem them atmaturity. Reserve Banks also pay interest on andredeem securities of most Government-sponsoredcorporations.

Page 19


WILLiAM B, WALTON. Vice Chairman of the Board, Hol-iday Inns, Inc., Memphis, Tennessee

J. D~vi~GRisso~tt.Chairman and Chief Executive Offi-cer, Citizens Fidelity Bank and Trust Company,Louisville. Kentucky

FRED B. ONE?. President, The First National Bank ofCarrollton, Carrollton. Kentucky

WENDELL G. RAYnURN, Dean of University College, Uni-versity of Louisville, Louisville, Kentucky

DIRECTORS

St. LouisChairman of the Board and Federal Reserve Agent

ARMAND C. STALNAICER. Chairman and PresidentGeneral American Life Insurance Company. St. Louis, Missouri

GEORGE M. RYRIE, President. First National Bank & TrustCompany, Allon, Illinois

TOM K. Sr~nTu, JR., Senior Vice President, MonsantoCompany. St. Louis. Missouri

WILLIAM H. STROUBE, Associate Dean of Faculty Pro-grams, Western Kentucky Universify, Bowling Green,Kentucky

As of January 24, 1979

VIRGINIA M. BAILEY. Owner. Eldo Properties, Little Rock,Arkansas

RALPH C. BAIN. Vice President, Wabash Plastics. Inc.,Evansville, Indiana

DONALD N. BRANDIN. Chairman of the Board and ChiefExecutive Officer, The Boatmen’s National Bank ofSt. Louis, St. Louis. Missouri

RAYMOND C. BURROUGHS. President and Chief ExecutiveOfficer. The City National Bank of Murphysboro,Murphysboro, Illinois

Little RockRONALD W. BAILEY, Executive Vice President and General

Manager, Producers Rice Mill. Inc., Stuttgart,Arkansas

THOMAs E. HAYS. JR.. President and Chief ExecutiveOfficer, The First National Bank of Hope. Hope,Arkansas

G. LARRY KELT.EY. President, Pickens-Bond ConstructionCo., Little Rock, Arkansas

HOWARD BRENNER. Vice Chairman of the Board, TellCity National Bank, Tell City, Indiana

RICHARD 0. DONEGAN, Vice President and Group Execu-tive, Major Appliance Business Group. General Elec-tric Company, Louisville, Kentucky

SISTER EILEEN M. EGAN, President, Spalding College.Louisville, Kentucky

BRUCE E. CAMPnEI.L, JR, Chairman of the Board andPresident, National Bank of Commerce, Memphis,Tennessee

STALT.INGS LIPFORD, President, First-Citizens NationalBank of Dyersburg, Dyersburg, Tennessee

EARL L. MCCARROLL, President, The Farmers Bank &Trust Co., Blytheville, Arkansas

Page 20

Louisville BranchChairman of the Board

JAMES F. THOMPSON. Professor of EconomicsMurray State University, Murray, Kentucky

N

BranchF HAY KENIP JR Vice Chairman of the Board and Chief

Administrative Officer Dillard Department StoresInc Little Rock Arkansas

GORDON F PARiFR Pre’ident The First National Bankof El Dorado Fl Dorado Arkansas

SHUn FY J PINF Speech Communication University ofArkansas at I nile Rock Little Rock Arkansas

B FINLE\ Vi’ssos \ ice Chairman of the Board Thc FirstNational Bank in Little Rock Little Rock, Arkansas

BF NJ ~-MiNP PIERCI Pn ‘~idcnt,Tyrone Hydraulics, mc,Corinth Mississippi

‘.LTrR L WAI KER, President I eMoyne Owen College,Memphis I enness~e

CR 4RI Es S YOUNGBLOOD President and Chief ExecutiveOfficer, First Columbus National Bank, Columbus,Mississippi

Memphis BranchChairman of the Board

FRANK A. JONES, JR., PresidentCook Industries, Inc., Memphis, Tennessee

Member, Federal Advisory CouncilClARENCE C. BARKSDALE, Chairman of the Board and Chief Executive Officer

First National Bank in St. Louis, St. Louis, Missouri


ANATOL B. BALBACH. Senior Vice President

JOSEPH P. GARBARINI. Senior Vice President& Controller

RUTH A. BRYANT, Vice President

A. MELVIN CARR, Vice President

CAROL B. CLAYP00I,. Vice President

DENIS S. KARNOSKY, Vice President

JAMES R. KENNEDY, Vice President

NORMAN N. BOWSHER, Assistant Vice President

ALBERT F. BURGER, Assistant Vice President

KEITH NI. CARLSON, Assistant Vice President

JOAN P. CRONIN, Assistant Counsel & AssistantSecretary

JOHN W. DRUELINGER, Assistant Vice President

CHARLES H. HALBROOK, Assistant Vice President

CLIFTON B. LUTTRELL, Assistant Vice President

ARTHUR L. OERTEL, Assistant Vice President

OFFICERS

St. Louis

Roos, President

JR., First Vice President

F, GARLAND RUSSELL, JR., Senior Vice President,General Counsel, and Secretary

HAROLD E. UTHOrF, Senior Vice President

ROBERT E. MATTHEWS. General Auditor

JOHN F. OTTING, Vice President

WARREN T. SNOvER, Vice President

ROBERT W. THOMAS, Vice President

DELMER D. WEISZ, Vice President

EUGENE F. ORE, Special Adviser

MARTHA L. PERINE, Assistant Vice President

HARRY L. REA, Assistant Vice President

PAUl. SALZMAN, Assistant Vice President

LESLiE F. SCHMEDING, Assistant Vice President

EDWARD R. SCHOTT, Assistant Vice President

WILLIAM J. SNEED, Assistant Vice President

ALAN C. WHEELER, Assistant Vice President

LAWRENCE K.

DONALD W. MORiARTY,

Little Rock BranchJOHN F. BREEN, Vice President and Manager

MICHAEL T. MORiARTY, Assistant Vice President and Assistant Manager

DAVID T. RENNIE, Assistant Vice President

Louisville BranchDONALD L. HENRY, Senior Vice President and Manager

JAMES E. CONRAD, Assistant Vice President and Assistant Manager

GEORGE F. REITER, JR., Assistant Vice President THOMAS J. WiLSON, Assistant Vice President

Memphis BranchL. TERRY BRiTT, Vice President and Manager

PAUL I. BLACK, JR., Assistant Vice President and Assistant Manager

ANTHONY C. CREMERIUS, Jt, Assistant Vice President

Page 21


Table II

Combined Comparative Stotenent of ~or.diiion(.n thousands of dolla’s

ASSETS

Decembei December

31, 15/B 31, 191/U.S. Govo’nmtnt Secu’ities:

Bills . . . . . . . 51,721,549 51.763.667Certificates . —.. —

Notes . . 2.240 002 2.148,021Bonds 508,999 370.930

TOTAL U.S. GOvERNMENrSECURITIES 54.470.550 54,282,61 B

Gold Certificate Reserves 5 466.025 S 468,914Special D’awing Riqhts Certificate

Account . . . . . . . 55,000 53,000

~oir. . . . . . . . 21.666 I 9,869

Loans and Securities:Discounts ond Advances Secured by

US Gavernmtnt and Aqer.cyOb!’gotions . . . . . 31.705 6,600

Other Disrounts and Advar’cou . . 29,855 —

Fadercit Agency ObligationsBought Outright 322.415 339,654

cast, Items in Process of ~alIection . SB 2 B92 565.391

Bank Prerriseu I net) 12,865 12,833Other Assets 155.10) 75,292Inserdistrict Se’tloment Account . . 68,589 —

TOTAL ASSETS 6,216,663 $5,824,171

LIABILITIESDeposits:

Member Bone —— Resorve Accounts . S BSB .203 S 5)7,447U.S Treasu,er — Gc neral Account . 246,465 474,331

Forcigr . . . . 6,28~ 9,098

Other Depo:its . 22,431 22.260

TOTAL DEPOSITS 51.1 63,383 51,323.136

Federal Reserve Notes (N’:t) ... $4,539,975 $3.91 2,126Deferred Availability Cash Items .. 380,254 362,632In terd istrict Ss’ttte men! Account . - Ii 4,545Other Liabiities . 66.111 47.45 B

TOTAL LIABILITIES . . . . 56.149:723 $5,759,897

CAPITAL ACCOUNTSCapital Pad In S 33.470 5 32.137S.i’pius 33.470 32.137

TOTAL CAPITAL ACCOUNTS . . S 66,940 5 64,274

TOTAL lIABILITIES ANDct..PITAL ACCOUNTS . . $6.21 6.663 55,824,171

ihe pi~bui~aksi ha, access to data aisd issi ortrsal Is in

rs’lat.. 1(1 s’i.i,hiiiliiit’ (I(’\’s’IlsIlllss’IIi\ till (isiLill I’s’~4Iii:il)Iil)li(iLtihIIS isi tlit.’ St. I .oi~is Be¼ralcis I )cpal’tnIs’nt.

( ssIs1~)I’s’l5(’Ti’iiVt’ ~ c~F (‘siilis)lllI(1

1I’tIl)li’IIIS ~iiisl(‘I)Ill.litinlt% pI’ssvid(’~ till’ i)t5ic Isti ai’ticIc’’. .sp~ss’.irisi~&ill

the Rr’uiru~. pllhlisils’d itsoittid~- ii> tisis ds’psrtlssc’Ilt.

Ii!, lies jr’it iRks a c’I’s’t.li.ttisri ol abusit 1.2(111(1 so1iir’,

,sitc.I is tiists’sltiitcsl liliUl sI,LtiliIi.ill\ sIts’ ‘!itsi’li:LIsssII1Lli~

Ilis’ I~i’’,s’~sI’e’ill)s’1iits’tisss’stt Ll’,il ~is’i5t’, it! ElI,’ li.tIil,.

rl’’4IIlik(os\ lIiIsc’tiOhI l)\’ rs’vi(’’\ ili’.i tIll’ iIII1LLCL sit l),LI5I,.

JANUARY 1979FEDERAL RESERVE BANK OF ST. LOUIS

The Federal Reserve Banks, as fiscal agents, willhold in safekeeping securities pledged to secureGovernment deposits in tax and loan accounts atcommercial banks. Federal Reserve Banks also willhold securities of member banks in safekeeping. U.S.Treasury and most Government agency securities areheld in book-entry form by the Reserve Banks.

Securities of the U.S. Government and variousGovernment agencies are issued, serviced, and re-deemed by Federal Reserve Banks. In 1978, the Fed-eral Reserve Bank of St. Louis and its branchesprocessed 38,526 original-issue transactions, 113,160Servicing transactions, and 30,503 redemption transac-tions on behalf of the Treasury and various agencies,handling 13.9 million securities with a value of $07billion. Also during 1978, 313,000 redemption transac-tions involving coupons of U.S. Treasury and agencysecurities were processed by the Eighth District of-fices, amounting to $78 million.

U.S. Government food stamps also are redeemedby Federal Reserve Banks. A total of 123 million foodstamps amounting to $504 million were received andcounted by the Federal Reserve Bank of St. Louisand its branch offices in 1978.

The Federal Reserve Banks also act as issuing andredemption agents for United States Savings Bonds.In this capacity in 1978, the Eighth District officesprocessed 13,597,669 Savings Bonds on original issueand redemption as well as reissue and replacementtransactions.

Research

The Federal Reserve System, working closely withother policymaking agencies in the Government, hasthe primary responsibility of formulating and imple-menting monetary policy. Through representation onthe Federal Open Market Committee (FOMC), Fed-eral Reserve Banks play an important role in formu-lating System policy.i The President of this Bank usesthe information gathered in policy discussions atmeetings of the FOMC. In addition, the 12 regionalFederal Reserve Banks contribute to System aware-ness of local and regional business conditions throughthe collection of business, monetary, and financialdata.

1The Federal Open Market Committee consists of the seversmembers of the Federal Reserve’s Board of Govemors and thePresident of the Federal Reserve Bank of New York as pernia-nent members, with four of the remaining 11 Reserve BankPresidents serving on a rotating basis. The FOMC directs thepurchase and sale of Treasury and Government agency securi-ties on the open market.

Page 22


I

FEDERAL RESERVE SANK OF ST. LOUIS JANUARY 1979

Table Ill

Comparative Profit and Loss Statement(in thociands of dohlo s)

Percent1978 1977 Change

Total Earnings . . . . $347,018 $284 888 21.8%

Net Expense . . 33,759 33,619 4

Current Net Earnings . . $313,259 $251,269 247%

Net Additions (or Deductions t 1 —21,065 5829 261,4

Assessments far Expenses ofBoard of Cove nors . . . 1,667 1,563 6.7%

Net Earnings before Paymentsto U S Treasury , - . . $290,527 $243 877 191%

Dtstribotion of Net Earnings’

Dividends , . - 1,975 1,963 .6%

Interest on Federal

Reserve Notes . . 287 219 242 329 185Iran ferred to Surplus 1,333 415 —

TOTAL . . $290,527 $243,877 19.1%

mergers and holding company acquisitions on thecommunities to be served.

.Ra.nk RTcla.t.kia and I’al.Ii.c 1n.hirrn.atiRn

The Bank Relations and Public Information Depart-ment establishes and maintains personal contact withall banks located in the Eighth Federal Reserve Dis-trict through a structured bank call program and at-tendance at various banking functions, An effort alsois made to increase public understanding of the func-tions, responsibilities, and policies of the FederalReserve System by distributing films and publications,providing in-house tours, delivering speeches, andconducting seminars. Emphasis is placed on main-

taming contact with schools and colleges in thisDistrict.

The Functional Cost Analysis Program offered tomember banks is administered by this Department.This program provides participating member bankswith bank operating costs by function and permitscomparison with banks of similar size. Technicalassistance is furnished during the first year to banksdesiring to take part in the program. Last year, 46Eighth District member banks participated in theactivity.

In maintaining contact with the banking industryand the general public during 1978, the officers andstaff members of the Federal Reserve Bank of St.Louis and its branches delivered 423 addresses beforebankers, business groups, and educators, The Bankwas represented at 161 banker, 89 professional, and285 miscellaneous meetings. Under the bank callprogram, 836 banks in the District were visited, Dur-ing 1978, 987 groups requested films from the BankRelations film library, and 6,554 visitors toured thefour Federal Reserve offices in the Eighth District.

Fthanaial Sr;ai.s..mcats

The net expenses of the Federal Reserve Bank ofSt. Louis in 1978 were .4 percent higher than netexpenses for 1977. Although the increase in expenseswas small, the Bank’s payments to the Treasury in-creased by 18.5 percent — from $242 million in 1977to $287 million in 1978.

The $287 million paid to the Treasury was 82.8percent of total earnings. In 1977, by comparison,85.1 percent of total earnings was paid to theTreasury.

-~

Page 23


Documents

1978 Frbstl Annualreport Review