Federal Reserve Bulletin, 1996-02

VOLUME 82 • NUMBER 2 • FEBRUARY 1996 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 115 AN ANALYSIS QF ^COMMERCIAL BANK places higher priority on the effectiveness of risk EXPOSURE TO INTEREST RATE RISK management processes and operational controls, before the Subcommittee on Financial Institu- This article evaluates some of the factors that tions and Consumer Credit of the House Commay be affecting the level of interest rate risk mittee on Banking and Financial Services, among commercial banks and estimates the December 5, 1995. general magnitude and significance of this risk using data from the quarterly Reports of Condition and Income and a simple interest rate risk 139 ANNOUNCEMENTS model. That risk measure suggests that the interest rate risk exposure for the vast majority Alan S. Blinder to step down as Vice Chairman of the banking industry is not significant at of the Board of Governors. present. The article also concludes that a relatively simple model can be useful for broadly Action by the Federal Open Market Committee. measuring the interest rate risk exposure of insti- Issuance of press statement and communique by tutions that do not have unusual or complex the Basle Committee on Banking Supervision. asset characteristics. Publication of staff commentary on Regulation C. 129 STAFF STUDIES Amendment to Regulation K. In Bank Mergers and Industrywide Structure, 1980-94, the author presents data on all bank Proposal for a one-time Check Fraud Survey; mergers from 1980 to 1994, including the num- proposed revisions to the staff commentary to ber, sizes, locations, and types. He also places Regulation B; proposed changes to Regulathe mergers in perspective by examining indus- tion K; extension of comment period on protrywide data on banking structure and perfor- posed amendments to Regulation M; proposed mance for the period. amendments to Regulation U; proposed revisions to the official staff commentary to Regu- 130 INDUSTRIAL PRODUCTION AND CAPACITY lation Z; and proposed revisions to the official UTILIZATION FOR DECEMBER 1995 staff commentary to Regulation DD. Industrial production edged up 0.1 percent in Availability of videotape on the home buying December, to 122.8 percent of its 1987 average, process. after a revised gain of 0.3 percent in November. Publication of the December 1995 update to the Capacity utilization eased 0.2 percentage point Bank Holding Company Supervision Manual. in December, to 82.8 percent. 133 STATEMENT TO THE CONGRESS 142 MINUTES OF THE FEDERAL OPEN MARKET Alan Greenspan, Chairman, Board of Governors COMMITTEE MEETING HELD ON of the Federal Reserve System, discusses the NOVEMBER 15, 1995 issues raised by the recent events relating to the U.S. operations of Daiwa Bank; summarizes the At its meeting on November 15, 1995, the present system of supervision of the U.S. offices Committee adopted a directive that called for of foreign banks; and explains several initiatives maintaining the existing degree of pressure on the Federal Reserve has implemented in this reserve positions and that did not include a area in the past two years, including a new presumption about the likely direction of any uniform examination rating system for U.S. adjustments to policy during the intermeeting branches and agencies of foreign banks that period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

149 LEGAL DEVELOPMENTS A67 GUIDE TO STATISTICAL RELEASES AND SPECIAL TABLES Various bank holding company, bank service corporation, and bank merger orders; and pend- A76 INDEX TO STATISTICAL TABLES ing cases. A78 BOARD OF GOVERNORS AND STAFF 196 MEMBERSHIP OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE A80 FEDERAL OPEN MARKET COMMITTEE AND SYSTEM, 1913-96 STAFF; ADVISORY COUNCILS List of appointive and ex officio members. A82 FEDERAL RESERVE BOARD PUBLICATIONS A1 FINANCIAL AND BUSINESS STATISTICS A84 MAPS OF THE FEDERAL RESERVE SYSTEM These tables reflect data available as of December 27, 1995. A86 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics A45 Domestic Nonfinancial Statistics A53 International Statistics Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk David M. Wright and James V. Houpt, of the Board's SOURCES OF INTEREST RATE RISK Division of Banking Supervision and Regulation, prepared this article. Leeto Tlou and Jonathan Hacker Interest rate risk is, in general, the potential for provided assistance. changes in rates to reduce a bank's earnings or value. As financial intermediaries, banks encounter interest Banks earn returns to shareholders by accepting and rate risk in several ways. The primary and most often managing risk, including the risk that borrowers may discussed source of interest rate risk stems from default or that changes in interest rates may narrow timing differences in the repricing of bank assets, the interest spread between assets and liabilities. His- liabilities, and off-balance-sheet instruments. These torically, borrower defaults have created the greatest repricing mismatches are fundamental to the business losses to commercial banks, whereas interest margins of banking and generally occur from either borrowhave remained relatively stable, even in times of high ing short term to fund long-term assets or borrowing rate volatility. Although credit risk is likely to remain long term to fund short-term assets. the dominant risk to banks, technological advances Another important source of interest rate risk (also and the emergence of new financial products have referred to as "basis risk"), arises from imperfect provided them with dramatically more efficient ways correlation in the adjustment of the rates earned and of increasing or decreasing interest rate and other paid on different instruments with otherwise similar market risks. On the whole, these changes, when repricing characteristics. When interest rates change, considered in the context of the growing competition these differences can give rise to unexpected changes in financial services have led to the perception among in the cash flows and earnings spread among assets, some industry observers that interest rate risk in liabilities, and off-balance-sheet instruments of simicommercial banking has significantly increased. lar maturities or repricing frequencies. This article evaluates some of the factors that may An additional and increasingly important source of be affecting the level of interest rate risk among interest rate risk is the presence of options in many commercial banks and estimates the general magni- bank asset, liability, and ofif-balance-sheet portfolios. tude and significance of this risk using data from the In its formal sense, an option provides the holder the quarterly Reports of Condition and Income (Call right, but not the obligation, to buy, sell, or in some Reports) and an analytic approach set forth in a manner alter the cash flow of an instrument or finanprevious Bulletin article.1 That risk measure, which cial contract. Options may exist as standalone conrelies on relatively small amounts of data and tracts that are traded on exchanges or arranged requires simplifying assumptions, suggests that the between two parties or they may be embedded within interest rate risk exposure for the vast majority of the loan or investment products. Instruments with embedbanking industry is not significant at present. This ded options include various types of bonds and notes article also attempts to gauge the reliability of the with call or put provisions, loans such as residential simple measure's results for the banking industry by mortgages that give borrowers the right to prepay comparing its estimates of interest rate risk exposure balances without penalty, and various types of deposit for thrift institutions with those calculated by a more products that give depositors the right to withdraw complex model designed by the Office of Thrift funds at any time without penalty. If not adequately Supervision. The results suggest that this relatively managed, options can pose significant risk to a banksimple model can be useful for broadly measuring the ing institution because the options held by bank cusinterest rate risk exposure of institutions that do not tomers, both explicit and embedded, are generally have unusual or complex asset characteristics. exercised at the advantage of the holder and to the disadvantage of the bank. Moreover, an increasing 1. James V. Houpt and James A. Embersit, "A Method for Evaluat- array of options can involve significant leverage, ing Interest Rate Risk in Commercial Banks," Federal Reserve Bullewhich can magnify the influences (both negative and tin, vol. 77 (August 1991), pp. 625-37. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1996 positive) of option positions on the financial condi- typically focus on near-term earnings, economic tion of a bank. value analysis can serve as a leading indicator of the quality of net interest margins over the long term and help identify risk exposures not evident in an analysis CURRENT INDICATORS OF INTEREST RATE RISK of short-term earnings. The conventional wisdom that interest rate risk does not pose a significant threat to the commercial bank- New Products and Banking Practices ing system is supported by broad indicators. Most notably, the stability of commercial bank net interest If, as some industry observers have claimed, new margins (the ratio of net interest income to average products and banking practices have weakened the assets) lends credence to this conclusion. From 1976 industry's immunity to changing interest rates, then through midyear 1995, the net interest margins of the the need for more comprehensive indicators of interbanking industry have shown a fairly stable upward est rate risk such as economic value analysis may trend, despite the volatility in interest rates as illus- have increased. In particular, commercial banks trated by the federal funds rate (chart 1). In contrast, are expanding their holdings of instruments whose over the same period thrift institutions exhibited values are more sensitive to rate changes than the highly volatile margins, a result that is not surprising floating-rate or shorter-term assets traditionally held given that by law they must have a high concentra- by the banking industry. The potential effect of this tion of mortgage-related assets. trend cannot be overlooked, but it should also be kept Interest margins, however, offer only a partial view in perspective. Although commercial banks are much of interest rate risk. They may not reveal longer-term more active in mortgage markets than they were a exposures that could cause losses to a bank if the decade ago, this activity has not materially altered volatility of rates increased or if market rates spiked their exposure to changing long-term rates. Indeed, sharply and remained at high levels. They also say the proportion of banking assets maturing or repriclittle about the potential for changing interest rates to ing in more than five years has increased only 1 perreduce the "economic" or "fair" value of a bank's centage point since 1988, to a median value of holdings. Economic or fair values represent the only 10 percent of assets at midyear 1995. The present value of all future cash flows of a bank's comparable figure for thrift institutions at midyear current holdings of assets, liabilities, and off-balance- 1995 was 25 percent. sheet instruments. Approaches focusing on the sensi- However, the industry's concentration of long-term tivity of an institution's economic value, therefore, maturities is a limited indicator of risk inasmuch as involve assessing the effect a rate change has on the banks have also expanded their concentration of present value of its on- and off-balance-sheet instru- adjustable rate instruments with embedded options ments and whether such changes would increase or that can materially extend an instrument's effective decrease the institution's net worth. Although banks maturity. For example, although adjustable rate mortgages (ARMs) may reprice frequently and avoid some of the risk of long-term, fixed rate loans, they 1. Net interest margins of commercial banks and thrift institutions and the federal funds rate, 1976-95 also typically carry limits (caps) on the amount by which their rates may increase during specific periods Percent Percent and throughout the life of the loan. Managers who do not take into account these features when identifying —— 1166 4— Commercial banks . or managing risk may face unexpected declines in 1144 earnings and present values as rates change. •X —— 1122 k Federal funds rate / Collateralized mortgage obligations (CMOs) and —— 1100 2— so-called structured notes are other instruments with —— 88 option features.2 They may also contain substantial l - ^y T 6 leverage that compounds their underlying level of + y' 4 interest rate risk. For example, as interest rates rose 0 — / Thrift institutions — 2 I 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1980 1935 1990 1995 2. In general structured notes are debt securities whose cash flow NOTE. Year-end data, except for 1995, which is through June 30. Commer- characteristics (coupon rate, redemption amount, or stated maturity) cial banks are national banks, trust companies, and state-chartered banks, depend on one or more indexes, or these notes may have embedded excluding savings banks insured by the Federal Deposit Insurance Corporation. forwards or options. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 117 sharply during 1994, market values fell rapidly for coupled with the more recent rise in loan demand, certain structured notes and for CMOs designated as has caused shifts in the structure of funding. Tradihigh risk.3 However, these instruments accounted for tionally deposits have funded 77 percent or more of less than 1 percent of the industry's consolidated banking assets; at midyear 1995, however, deposits assets at midyear 1995, although individual institu- funded less than 70 percent of industry assets—a tions may have material concentrations. record low. If the recent outflow of core deposits Off-balance-sheet instruments, on the other hand, (demand deposits and money market, savings, and have grown dramatically and are an important part of NOW accounts) continues, many banks may feel the management of interest rate risk at certain banks. pressured to offer more attractive rates. However, the The notional amount of interest rate contracts—such amount by which rates must increase to reverse the as interest rate options, swaps, futures, and forward deposit outflow is difficult to judge. rate agreements—has grown from $3.3 trillion in To meet the recent rise in loan demand, banks have 1990 to $11.4 trillion as of midyear 1995.4 These made up the funding shortfall with overnight borrowcontracts are highly concentrated among large institu- ings of federal funds, securities repurchase agreetions, with fifteen banks holding more than 93 per- ments, and other borrowings. These funding changes cent of the industry's total volume of these contracts may have effectively shortened the overall liability in terms of their notional values. In contrast, 94 per- structure of the industry and, along with other prescent of the more than 10,000 insured commercial sures facing the industry, must be adequately considbanks report no off-balance-sheet obligations. ered in managing interest rate risk. Although banks do not systematically disclose the price sensitivity of these contracts to the public, the regulatory agencies have complete access to this nec- Analysis of Portfolio Values essary information through their on-site examinations and other supervisory activities. Moreover, these con- In this environment of new products and competitive tracts are concentrated at dealer institutions that mark pressures, treasury and investment activities have nearly all their positions to market daily and that become more important for many banks in managing actively manage the risk of their interest rate posi- interest rate risk. Although banks are constrained in tions. These dealer institutions generally take offset- their lending and deposit-taking functions by the ting positions that reduce risk to nominal levels, and preferences and demands of their customers, they they are required by bank supervisors to employ have substantial flexibility in increasing or offsetting measurement systems that are commensurate with the resulting market risks through the securities and the risk and complexity of their positions. interest rate contracts they choose to hold. The risk profile of the investment securities portfolio can be evaluated by observing changes in the portfolio's fair Competitive Pressures value from actual rate moves. This analysis is possible because unlike most other banking assets and Competitive pressures are also affecting banking liabilities, the current market value of a bank's secupractices and the industry's management of interest rities portfolio is easily determined and is publicly rate risk. Specifically, competition may be reducing reported each quarter. the banking industry's ability to manage interest rate For example, the industry's aggregate securities risk through discretionary pricing of rates on loans portfolio (excluding securities held for trading) for and deposits. For example, growing numbers of bank 1993:Q4 had a 1.4 percent market value premium, customers are requesting loan rates indexed to broad which represented an unrealized gain of $11.5 billion market rates such as the London interbank offered (chart 2). The rise in interest rates during 1994 (as rate (LIBOR) rather than to the prime lending rates depicted by the two-year Treasury note yield) and the that banks can more easily control.5 On the deposit resulting drop in the value of securities produced a side, sluggish domestic growth since 1990, when market value discount of 3.5 percent by 1994:Q4, which meant a loss in value of 4.9 percentage points 3. The Federal Financial Institutions Examination Council has ($40 billion). With the subsequent fall in interest designated CMOs as high risk when they fail to meet certain criteria rates during the first half of 1995, the portfolio recovregarding the sensitivity of their fair value to interest rate movements. ered a portion of its loss and rose to a market value 4. The notional amount of an interest rate contract is the face amount to which the rates or indexes that have been specified in the premium of 0.1 percent ($1 billion) at 1995:Q2. contract are applied to determine cash flows. Although partly affected by changes in the composi- 5. LIBOR is the rate at which a group of large, multinational tion of the portfolio, these results suggest that the banking institutions agree to lend to each other overnight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1996 average duration of the industry's securities portfolio tial effect of rate changes on economic value as well may be roughly one and one-half to two years, a as on earnings—banks are taking a longer-term permaturity range many might view as presenting banks spective and considering the full effect of potential with relatively little interest rate risk.6 When applied changes in market conditions. As a result, they are to earlier periods, this analysis further suggests that more likely than before to avoid strategies that maxithe price sensitivity of the industry's securities port- mize current earnings at the cost of exposing future folio has remained largely unchanged since at least earnings to greater risk. the late 1980s. Several techniques are used to measure the expo- Although this analysis of portfolio value may help sure of earnings and economic value to changes in in the evaluation of risks in the securities activities of interest rates. They range in complexity from those banks, it does not consider any corresponding and that rely on simple maturity and repricing tables to potentially offsetting changes in the economic value sophisticated, dynamic simulation models that are of banks' liabilities or other on- or off-balance-sheet capable of valuing complex financial options. positions. That limitation helps to explain why the banking industry has typically ignored economic or Maturity and Repricing Tables long-term present value effects when measuring interest rate risk. A maturity and repricing table distributes assets, liabilities, and off-balance-sheet positions into time TECHNIQUES FOR MEASURING bands according to the time remaining to repricing or INTEREST RATE RISK maturity, with the number and range of time bands varying from bank to bank. Assets and liabilities that Historically, banks have focused on the effect that lack specific (that is, contractual) repricing intervals changing rates can have on their near-term reported or maturities are assigned maturities based often on earnings. Spurred in part by supervisory interest in subjective judgments about the ability of the instituthe matter, more recently many banks have also been tion to change—or to avoid changing—the interest examining the effect of changing rates on the eco- rates it pays or receives. When completed, the table nomic value of their net worth, defined as the net can be used as an indicator of interest rate risk present value of all expected future cash flows dis- exposure in terms of earnings or economic value. counted at prevailing market rates. By taking this For evaluating exposure to earnings, a repricing approach—or more typically, considering the potentable can be used to derive the mismatch (gap) between the amount of assets and the amount of 6. The duration of a security is a statistical measure used in liabilities that mature or reprice in each time period. financial management to estimate the price sensitivity of a fixed rate By determining whether an excess of assets or liabiliinstrument to small changes in market interest rates. Specifically, it is the weighted average of an instrument's cash flows in which the ties will reprice in any given period, the effect of a present values serve as the weights. In effect, it indicates the percent- rate change on net interest income can be roughly age change in market value for each percentage point change in estimated. market rates. For estimating the amount of economic value exposed to changing rates, maturity and repricing 2. Unrealized gains or losses on securities, all insured commercial banks, and the yield on two-year tables can be used in combination with risk weights Treasury notes, 1993:Q4-1995:Q2 derived from the price sensitivity of hypothetical instruments. These weights can be based either on a representative instrument's duration and a given Two-year note yield interest rate shock or on the calculated percentage change in the instrument's present value for a specific rate scenario.7 In either case, when multiplied by the balances in their respective time bands, these weights 7. Though duration is a useful measure, it has the shortcoming of assuming that the rate of change in an instrument's price is linear, whether for rate moves of 1 or 500 basis points. The second approach, analyzing present values for a specific rate scenario, recognizes that many instruments have price sensitivities that are nonlinear (a characteristic called convexity) and tailors adjustments to cash flows (such as principal prepayments) to the specific magnitude and level of the rate shock. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 119 provide an estimate of the net change in the economic nizing these variables, few institutions claim to meavalue of an institution's assets, liabilities, and off- sure this sensitivity well, and most banks use only balance-sheet positions for a specific change in mar- subjective judgments to evaluate deposits that fund ket rates. When expressed as a percentage of total one-half or more of their total assets. This measureassets, the net change, or "net position," can also ment conundrum makes estimates of interest rate risk provide an index for comparing the risk of different especially difficult and underscores the lack of preinstitutions. Although rough, such relatively simple cision in any measure of bank interest rate risk. measures can often provide reasonable estimates of interest rate risk for many institutions, especially those that do not have atypical mortgage portfolios THE BASIC SCREENING MODEL nor hold material amounts of more complex instruments such as CMOs, structured notes, or options. In recent years, the Federal Reserve has used a simple screening tool, the "basic model," to identify commercial banks that may have exceptionally high lev- Simulation Techniques els of interest rate risk. The basic model uses Call Report data to estimate the interest rate risk of banks Simulation techniques provide much more sophisti- in terms of economic value by using time bands cated measures of risk by calculating the specific and sensitivity weights in the manner previously interest and principal cash flows of the institution for described. The available data, however, are quite a given interest rate scenario. These calculations can limited, with total loans, securities, large time deposbe made considering only the current holdings of the its, and subordinated debt divided into only four time balance sheet, or they can also consider the effect of bands on the basis of their final maturities or next rate new lending, investing, and funding strategies. In adjustment dates, and with small CDs and other either case, risk can be identified by calculating borrowed money split into even fewer time bands.8 changes in economic value or earnings from any No data are available for coupon rates or for the rate variety of rate scenarios. Simulations may also incor- sensitivity of off-balance-sheet positions or trading porate hundreds of different interest rate scenarios (or portfolios. "paths" through time) and corresponding cash flows. These data limitations require analysts to supple- The results help institutions identify the possible ment the available maturity data with other informarange and likely effect of rate changes on earnings tion provided in the Call Report and to make imporand economic values and can be most useful in tant assumptions about the underlying cash flows and managing interest rate risk, especially for institutions actual price sensitivities of many assets and liabilities with concentrations in options that are either explicit of banks. For example, the timing of cash flows from or embedded in other instruments. Instrument valua- loans on autos, residential mortgages, and other porttions using simulation techniques may also be used as folios may differ widely as a result of their unique the basis for sensitivity weights used in simple time amortization requirements, caps, prepayment options, band models. However, such simulations can require and other features. Yet Call Report data provide no significant computer resources and, as always, are details on the types of loans or securities contained only as good as the assumptions and modeling tech- within each time band. To distinguish among key niques they reflect. instrument types within each time band, each bank's Indeed, whether a bank measures its interest rate balance sheet is used as a guide to divide the balances risk relative to earnings or to economic value or in the time bands into major asset types. The appenwhether it uses crude or sophisticated modeling tech- dix describes that process and the derivation of risk niques, the results will rely heavily on the assump- weights for price sensitivity. tions used. This point may be especially important Table 1 provides an example of the calculations when estimating the interest rate risk of depository used to derive a bank's change in economic value for institutions because of the critical effect core deposits a rise in rates of 200 basis points. To begin, assets can have on the effective level of risk. The rate and liabilities are divided into time bands according sensitivity of core deposits may vary widely among to their maturity; the basic model uses four time banks depending on the geographic location of the depositors or on their other demographic characteris- 8. Two additional time bands of data are available for subordinated tics. The sensitivity may also change over time, as debentures because of the informational requirements of the riskdepositors become more aware of their investment based capital standard. However, relatively few institutions have outstanding subordinated debt, and in any event, these balances do not choices and as new alternatives emerge. Recogreflect a material source of funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1996 bands. Risk weights based on the price sensitivity of the bank's assets to fall by a larger amount than a hypothetical instrument are then applied to each liabilities increase in economic value; as a result, a balance to derive the estimated dollar change in value net decline of $13.5 million occurs in the bank's of each time band. Finally, the net of total changes in economic value.9 To provide an index measure, that asset and liability values gives the net change in amount is divided by total assets to derive a "net economic value. position" ratio of-1.97 percent. As rates rise, longer-maturity assets become less valuable to a bank, while longer-term liabilities become more valuable. In the example shown in COMPARISON OF THE BASIC MODEL table 1, the rise in rates causes the economic value of WITH THE OTS MODEL Despite its limitations, the basic model seems to be a 1. Worksheet for calculating risk-weighted net positions useful indicator of the general level of an institution's in the basic model interest rate risk. This conclusion is based on a recent Dollar amounts in thousands study using the more extensive interest rate risk information reported by thrift institutions and comparing Change in Risk Balance sheet item Total weight economic the results of the basic model with the model devel- (dollars) value (percent) (dollars) oped by the Office of Thrift Supervision (OTS).10 To help ensure that the large losses from interest rate (1) (2) (1) X (2) INTEREST-SENSITIVE ASSETS exposures experienced by many thrift institutions Fixed rate mortgage products 0-3 months 0 -.20 0 during the 1980s are not repeated, the OTS collects 3-12 months 0 -.70 0 extensive interest rate risk data on them and uses a 1-5 years 0 -3.90 0 More than 5 years 233,541 -8.50 -19,851 fairly complex and sophisticated simulation model Adjustable rate mortgage products — 2.932 -4.40 -129 (the OTS model) to estimate their levels of risk. Other amortizing loans and securities The data reported by thrift institutions consists of 0-3 months 0 -.20 0 more than 500 items of information about the maturi- 3-12 months 0 -.70 0 1-5 years 28.858 -2.90 -837 ties and repricing characteristics of financial instru- More than 5 years 0 -11.10 0 ments. These data are used in the OTS model to Nonamortizing assets calculate changes in economic value under a number 0-3 months 132.438 -.25 -331 3-12 months 7.319 -1.20 -88 of interest rate scenarios. Although other sophisti- 1-5 years 182,373 -5.10 -9,301 More than 5 years 11.194 -15.90 -1,780 cated interest rate risk models can be used to evaluate Total interest-sensitive assets 598,655 -32,317 the effectiveness of the basic model, only the OTS provides both a sophisticated measure of risk and an All other assets 85,696 extensive database with which to compare "bottom Total assets 684,351 line" results from hundreds of institutions. INTEREST-SENSITIVE LIABILITIES The OTS model calculates price changes based on Core deposits 0-3 months 56,082 .25 140 data specific to each portfolio rather than relying on 3-12 months 39,634 1.20 476 1-3 years 157,785 3.70 5,838 time bands and hypothetical instruments. For instru- 3-5 years 50,600 7.00 3,542 5-10 years 28,167 12.00 3,380 ments without embedded options, the model discounts static cash flows that are derived from a Total 332,269 13,376 portfolio's weighted-average maturity and coupon. CDs and other borrowings 0-3 months 117.491 .25 294 For instruments such as adjustable rate mortgages 3-12 months 77,303 1.20 928 that have embedded options, the OTS model uses 1-5 years 78,140 5.40 4,220 More than 5 years 0 12.00 0 Monte Carlo simulation techniques and data on cou- Total interest-sensitive liabilities 605,204 18,817 pons, maturities, margins, and caps to derive market Other liabilities 112 Total liabilities 605,316 Equity capital 79,035 9. As mentioned earlier, the existing Call Report provides no Summary information on the rate sensitivity of off-balance-sheet positions, and Change in asset values -32,317 therefore those positions are not included in the calculation of eco- Change in liability values 18,817 Net change in economic value -13,500 nomic value. 10. The authors would like to thank Anthony Cornyn and Donald Net position ratio (change in Edwards of the Office of Thrift Supervision for providing the thrift economic value divided by total industry regulatory input data and the output of the OTS Net Portfolio assets) (percent) -1.97 Value model for the present study. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 121 value changes. To measure interest rate risk, the institutions. Identifying those differences requires model estimates fair values under prevailing inter- regressions, scatter plots, rank ordering, and other est rates (base case) and at alternatively higher and statistical techniques, which have been used in similower rate levels, including a uniform increase of lar research.11 Plotting the results generated for each 200 basis points for all points along the yield curve. thrift institution by the OTS model along one axis Any decline in economic value relative to the base and the results of the simple risk measure along the case reflects the potential interest rate risk of the other reveals a substantial correlation between the institution. results of the two models on a thrift-by-thrift basis Like other models, however, the OTS model relies (chart 4). If the modeling results for each institution on key assumptions, particularly those related to were identical, they fell along the 45 degree line the rate sensitivity of core deposits. Since informed shown; if they were significantly different, they fell parties can disagree on the proper treatment of these away from the line. A regression line drawn through deposits, standard estimates of core deposit sensitivi- the points indicates that although the two measures ties were used in both models for the purpose of are substantially correlated, the basic model tends to comparing the results. estimate higher risk than the OTS model, especially To perform a comparison, OTS data were obtained for above-average risk levels. for the 1,414 of 1,548 thrift institutions that supplied Another way to evaluate the similarity of exposure such data for year-end 1994. For each thrift institu- estimates made by the two models is to compare the tion, the more than 500 pieces of OTS data were percentage of thrift institutions that fall within a reduced to the 24 inputs required by the basic model. given level of difference. On that basis, the two After applying the basic model's risk weights to each models calculated exposures that came within V2 perposition and incorporating the OTS core deposit esti- cent of assets or less for about half the institutions mates, the dollar change in economic value and a net and within 1 percent or less for almost 80 percent of position ratio were calculated for each institution. them. Given that industry interest rate exposures The interest rate exposures for the thrift industry showed a broad range of 11 percentage points as calculated by the two models revealed strikingly (roughly +3 to -8 percent), these differences appear similar results. The distribution curves for interest fairly small and suggest that the basic model perrate risk produced by each model (chart 3) nearly forms well relative to a more complex model in overlap. By both measures, the median change in placing an institution along the risk exposure spececonomic value was about -2.3 percent of assets. trum. However, depending on the model's purpose, Other measures of industry dispersion of interest rate these differences may not be satisfactory. For examrisk were similar in most respects. ple, the level of acceptable precision should vary These frequency distributions, however, do not depending on whether the model is for identifying reveal differences in the two measures for individual and monitoring the general magnitude of risk, for making strategic decisions that precisely adjust the bank's risk levels, or for evaluating capital adequacy. 3. Comparison of interest rate risk exposures of the In evaluating a model, other characteristics of its thrift industry calculated with the basic model and the performance may also be significant to users. For OTS model, December 31, 1994 example, if the model is to be used by regulators for surveillance purposes, the model should also be evaluated on its ability to identify institutions that are taking relatively high levels of risk. In this context, the basic model identified nearly two-thirds of the institutions ranked by the OTS model in the top risk quintile of all institutions and 90 percent of the institutions that were ranked by the OTS model in the top 40 percent. Assuming that the OTS model has correctly identified high-risk institutions, these results -8 -6 -4 -2 0 2 4 11. James M. O'Brien, "Measurement of Interest Rate Risk for Net position Depository Institution Capital Requirements and Preliminary Tests of NOTE. Observations are the net positions for 1,414 thrift institutions. The net a Simplified Approach" (paper presented at the Conference on Bank position is the change in economic value for a rise of 200 basis points in rates Structure and Competition sponsored by the Federal Reserve Bank of expressed as a percentage of total assets. Chicago, May 6-8, 1992). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1996 suggest that there is clear room for improvement in adjustable rate and fixed rate mortgage portfolios, the basic model's identification of high-risk institu- which make up the bulk of the assets of most thrift tions but that, even so, a simple model can provide a institutions. The differences in calculations of mortuseful screen. When used as a supervisory tool, the gage price sensitivity occur when the basic model's model and its results can be validated during on-site generic assumptions regarding maturity, coupon, cap, examinations of interest rate risk. or other characteristics do not reflect actual portfolio characteristics that are taken into account by the OTS model. For roughly half the institutions, these simplifying assumptions produce differences of V2 percent DIFFERENCES IN ESTIMATES or less in the two models' estimates of risk exposure OF INTEREST RATE RISK EXPOSURE relative to assets. The magnitude of differences between exposure esti- For institutions classified as high risk by one model mates from the two models will depend on two but not the other, the largest differences arose from factors: (1) the difference in price sensitivity calcu- three principal sources. First, some high-risk thrift lated for a given portfolio and (2) the relative promi- institutions held high concentrations of equities and nence of a particular portfolio relative to the balance equity mutual fund balances (15-40 percent of sheet. So, for example, a relatively small difference assets), which were assigned a price sensitivity by the in an adjustable rate mortgage portfolio that makes OTS model of -9.0 percent but were not given a up three-quarters of the balance sheet may translate price sensitivity by the basic model. Because the vast into fairly large differences in the net position ratio. majority of banks have minimal or no equity hold- On the other hand, a large difference in the valuation ings, the basic model was not designed to address of a high risk CMO that makes up less than 1 percent them. Second, for thrifts with large holdings of cerof assets would have a minimal effect on the net tain types of adjustable rate mortgages, the single risk position ratio. weight used by the basic model translated into a The largest differences between the two models' fairly large underestimation of risk relative to that estimates of risk exposure for thrifts arise from estimated by the OTS model. And third, the basic model tended to overstate the risk of longer-term amortizing assets relative to the results of the OTS. 4. Comparison of interest rate risk exposures of individual thrift institutions calculated with the basic model and the OTS model, December 31, 1994 POTENTIAL ENHANCEMENTS TO THE BASIC MODEL To evaluate the potential measurement benefits of using more data than are currently available from the four time bands of bank Call Reports, the basic model was expanded and run using thrift data. The changes to the basic model produced results that are much closer to those generated by the OTS model. These enhancements are similar to certain features recently described by the banking agencies in their proposed "baseline" measure of interest rate risk.12 They include expanding the number of time bands from four to seven by dividing the existing one- to five-year time band into one- to three-year and threeto five-year periods and splitting the more than fiveyear band into three periods separated at the ten-year and twenty-year points. NOTE. Observations are the net positions for 1,414 thrift institutions. The net 12. "Proposed Interagency Policy Statement Regarding the Meaposition is the change in economic value for a rise of 200 basis points in rates surement of Interest Rate Risk, Federal Register (August 2, 1995), expressed as a percentage of total assets. pp. 39490-572. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 123 Further changes involved obtaining minimal infor- 2. Percentage of thrift institutions falling within a given mation about the repricing frequency and lifetime range of difference in net position caps on adjustable rate loans, separately identifying Basic model Enhanced model low- or zero-coupon assets, and requiring institutions Range of difference in net position (basis points) OTS model OTS model to self-report the effects of a specific rate movement on the market values of CMOs, servicing rights, and 0-50 444888...888 666777...666 0-100 777999...444 999111...000 off-balance-sheet derivatives. For this exercise, the values calculated by the OTS model for CMOs, servicing rights, and off-balance-sheet derivative items were used as a proxy for values that would be selfreported by the institution. Such changes expanded by both the enhanced and the OTS models in the top the number of items evaluated by the model from quintile from 62.9 percent to 76.0 percent. The vast twenty-four to sixty-three and the number of risk majority of the measured improvement resulted from weights from twenty-two to forty. the increase in time bands. Such relatively small improvements virtually eliminated the differences in how the enhanced and OTS models evaluate the thrift industry's overall THE IMPORTANCE OF ASSUMPTIONS interest rate risk. As shown in chart 5, the regression ABOUT CORE DEPOSITS and 45 degree lines (which were already close) almost converge, and the two models produce results All the previous comparisons of the results of the that are within 100 basis points of each other for models and all the previous estimates of risk used a more than 90 percent of all thrifts (table 2). In addi- uniform assumption for core deposits. The importion, the enhanced version of the basic model (the tance of assumptions regarding the rate sensitivity of enhanced model) significantly improved the rank core deposits has been stressed several times. For ordering of risk achieved by the basic model by example, replacing the assumptions used by OTS increasing the percentage of thrifts that were ranked with those proposed by the banking agencies produces a difference of 30-40 basis points in the average measure of the thrift industry's interest rate risk as calculated with the basic model (chart 6). Given 5. Comparison of interest rate risk exposures of individual sufficient flexibility in the treatment of core deposits, thrift institutions calculated with the enhanced model and the OTS model, December 31, 1994 the results of different interest rate risk models could easily vary widely, regardless of whether the models are similar in complexity and sophistication. 6. Effect of different assumptions for core deposits on interest rate risk exposures of the thrift industry calculated with the basic model, December 31, 1994 Enhanced model NOTE. Observations are the net positions for 1,414 thrift institutions. The net NOTE. Observations are the net positions for 1,414 thrift institutions. The net position is the change in economic value for a rise of 200 basis points in rates position is the change in economic value for a rise of 200 basis points in rates expressed as a percentage of total assets. expressed as a percentage of total assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1996 ESTIMATED INTEREST RATE RISK 8. Interest rate risk trends in the commercial banking industry, calculated with the basic model, OF COMMERCIAL BANKS December 31, 1991-June 30, 1995 Because the basic and OTS models produced fairly Net position similar results for thrift institutions (charts 3 and 4), the basic approach was considered a workable model "t _ , „ . Increase in 2 for commercial banks, especially given that mortgage Bank at 10th percenule of risk economic value products (the primary source of differences) are much less important in bank balance sheets. When applied Median + to the data submitted at year-end 1994 by 10,452 ii 0 commercial banks, the basic model shows, on aver- Bank at 90th percentile of risk — age, little interest rate risk posed by an instantaneous Decrease in parallel rise in rates of 200 basis points (chart 7). economic value 2 The median exposure was -0.03 percent of assets, although 5 percent of all banks had exposures worse 1992 1994 than -2.0 percent. Of course, this relatively balanced NOTE. Observations are the net positions of more than 10,000 commercial view of the banking industry's exposure is highly banks calculated with the basic model under banking agency assumptions about dependent on the subjective estimates of the price core deposits. The net position is the change in economic value for a rise of 200 basis points in rates expressed as a percentage of total assets. Year-end data sensitivity of core deposits (in the case of chart 7, except for 1995. those assumed by the federal banking agencies) and should be viewed in that context. COMPARISON OF THE THRIFT The net exposures of the industry will change over AND BANKING INDUSTRIES time as institutions respond to changes in market opportunities and in customer demands. The gener- With the distributions of interest rate risk for comally neutral overall position of commercial banks mercial banks and thrift institutions, we can compare may not be uncharacteristic, however. Since 1991, their exposures and consider the relative importance the industry's median net position ratio calculated of interest rate risk to each group. Applying the core with the basic model has been close to zero most of deposit assumptions proposed by the banking agenthe time and was -23 basis points at year-end 1991 cies to both groups, the comparison shows, not sur- (chart 8). Even a commercial bank consistently prisingly, that thrift institutions have significantly ranked at the 90th percentile (top 10 percent) of higher risk exposures than banks (chart 9). As before, risk had a measured exposure of no worse than net exposures of the banking industry are centered -1.7 percent. 9. Comparison of interest rate risk exposures of the thrift and banking industries calculated with the 7. Distribution of interest rate risk exposure of the basic model, December 31, 1994 commercial banking industry calculated with the basic model, December 31, 1994 Percentage of institutions Percentage of institutions 50 Commercial banks — 40 — 30 { — 20 \ — 10 -10 -8 -6 -4 -2 0 2 4 6 Net position Net position NOTE. Observations are the net positions of more than 10,000 commercial banks and 1,414 thrift institutions calculated with the basic model and banking NOTE. Observations are the net positions for 1,414 thrift institutions. The net agency assumptions for core deposits. The net position is the change in ecoposition is the change in economic value for a rise of 200 basis points in rates nomic value for a rise of 200 basis points in rates expressed as a percentage of expressed as a percentage of total assets. total assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 125 around zero and skewed noticeably to the left, sug- needed regarding customer behavior, and those gesting that most bank outliers are exposed to rising assumptions may often determine a model's results, rates. Thrift institutions, however, have an average making precise estimates of risk unattainable. Finanexposure of -2.0 percent (exposing them, too, to cial innovations and the evolution in banking markets rising rates), with the distribution centered rather have made the measurement of interest rate risk even evenly around that point. more challenging; nonetheless, the limited banking Although some commercial banks may have as industry data suggest that the majority of bank risk much interest rate risk as many thrift institutions, this profiles have not been significantly altered by these analysis suggests that the exposure of the two indus- developments. Although "blind spots" arising from tries is much different, a conclusion consistent with data limitations exist, the relatively small industry current and past indicators. The primary cause of the concentrations of complex instruments or instrudifference is, of course, the heavier concentration ments maturing in more than five years suggest that of mortgage products among thrift institutions. The errors from insufficient data are unlikely to materially median price sensitivity of thrift assets was calcu- change conclusions regarding the industry's overall lated at 5.1 percent, compared with 3.0 percent for risk profile. banks. The median figures for liabilities were much Comparing the results of a simple risk measure closer, at 3.7 percent and 3.4 percent respectively. (the basic model) with those of a more sophisticated technique that uses substantially more data (the enhanced model) suggests that a simple measure LIMITATIONS OF FINDINGS performs well in measuring an industry's risk exposure and may be capable of identifying the general Conclusions regarding the reliability of the basic magnitude of risk for most institutions. Fairly small model are limited to a single interest rate scenario; increases in the amount of data on maturities and further research must be conducted to determine other factors appear to improve significantly a simple whether the basic model's performance can be main- model's performance in measuring the risk of inditained over more diverse interest rate scenarios such vidual institutions and identifying those taking the as falling rates and nonparallel shifts in yield curves. greatest amount of risk. Considering that rough Moreover, despite a strong correlation with exposure assumptions must be made about the price sensitivity estimates produced by the OTS model, limitations in of core deposits and the potential that simple models commercial bank data could conceal an increase in appear to have for measuring risk, supervisors and the industry's risk profile. For example, if an institu- managers may find simple measurement approaches tion lengthened the maturity of assets in the longest useful for monitoring an institution's interest rate time band (more than five years) from ten to twenty risk. years, the related risk would not be identified by the data currently collected. Such deficiencies suggest that relatively minor enhancements to regulatory APPENDIX: THE DERIVATION OF TIME BAND reporting, such as one or more additional time bands, CATEGORIES AND RISK WEIGHTS could materially improve supervisors' understanding and monitoring of bank risk profiles. The basic model divides an institution's balance sheet into several categories and distributes the balances among four time bands on the basis of their final CONCLUSION maturities or repricing frequency. The amounts within each band are then multiplied by a risk weight based Interest rate risk does not currently appear to present on the estimated percentage change in value of a a major risk to most commercial banks. Nevertheless, representative instrument for a given change in marfor individual institutions, interest rate risk must be ket interest rates. For mortgage products these risk carefully monitored and managed, especially by insti- weights also reflect the effect of loan prepayments tutions with concentrations in riskier or less predict- that are expected to result from the designated rate able positions. change. Once the estimated effects on assets and Measuring interest rate risk is a challenging task liabilities are combined, they can be expressed as a and is made even more difficult for depository insti- percentage of total assets to derive an index measure tutions because of the uncertainty regarding core of interest rate risk. deposit behavior and the options embedded through- The key asset categories used in the basic model out their balance sheets. Critical assumptions are are the following: fixed rate mortgage products, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1996 adjustable rate mortgage products, other amortizing lack of historical data and of commonly accepted assets, and nonamortizing assets. Because time band methodologies to adequately measure their price sendata on the Call Report are limited to two asset sitivity makes uncertain the slotting of these deposits categories, total loans and total securities, each into their appropriate time bands. Though many bank's balance sheet is used as a guide to slot its banks believe that their core deposits are especially assets into these four major asset types. insensitive to interest rate moves and therefore are of The four time bands for total loans and total securi- fairly long effective maturity, increased competitive ties are analytically divided into the four asset cate- pressures and changing customer demographics raise gories using some assumptions and the process of questions in that regard. The time bands used in the elimination. For example, the balance of fixed rate enhanced model are those used by the federal bankresidential mortgage loans is deducted from the long- ing agencies in their proposed Joint Agency Policy est asset time band (the fourth) and placed in the Statement on Measuring Interest Rate Risk (Policy fourth time band of the mortgage category. If the Statement) (.Federal Register, August 2, 1995). Core mortgage balance is larger than the available amount deposits are divided into three categories and slotted of the asset time band, then any residual balance is among five possible time bands (table A.l). deducted from the next longest time band (the third) and so on until the total fixed rate mortgage balance is accounted for. This procedure is repeated through- Derivation of Risk Weights out the program for other assets such as mortgage pass-through securities, consumer installment loans, The risk weights are derived from a present value and so forth. Once fixed rate mortgage products, analysis that estimates the expected change in value other amortizing assets, and adjustable rate mort- of hypothetical instruments in response to a shift in gages are accounted for and totaled by time band, all rates of 200 basis points (table A.2). As a surveilresidual time band balances are assumed to be lance tool, the basic model's risk weights are recalcunonamortizing. lated when changes in market conditions are consid- For liabilities other than core deposits, the process ered large enough to require it. As used for this is straightforward because CDs, other borrowings, article, the risk weights for the seven-time-band and subordinated debentures are generally homo- model of the banking agencies' policy statement are geneous, nonamortizing products and usually do not adapted to the basic model. contain embedded prepayment or other options. The assumed coupons of the hypothetical Therefore specific assumptions regarding the compo- instruments—7.5 percent for assets and 3.75 percent sition of these time bands are unnecessary. for interest-bearing liabilities—are thought to be gen- The category presenting the greatest challenge for erally representative of those in the banking industry evaluating price sensitivity is nonmaturity core during 1994. In addition, instruments are assumed to deposits, which fund one-half of a typical bank's mature or reprice at the midpoints of the time bands. balance sheet. Because these deposits have no stated To adapt risk weights for seven time bands to four maturity and typically do not reprice as quickly as time bands, an average of the two risk weights for the general market rates, their effective maturity or one- to three-year and three- to five-year time bands repricing frequency must be analytically derived. The is used. For instruments maturing in more than five years, the risk weight relates to the time bands for five to ten years, ten to twenty years, or more than A. 1. Core deposits, grouped by type of account and twenty years based on the likely portfolio maturity distributed by assumed effective maturity or for that category. For mortgage products, whose value repricing frequency is dependent on prepayment rates and the behavior of Percent periodic and lifetime caps, risk weights were derived 0-3 3-12 1-3 3-5 5-10 from estimates calculated by the OTS model, which Type of account All months months years years years factors in the effect of these embedded options in Commercial demand their values. deposit 50 0 30 20 ... 100 Retail demand deposits, savings, and NOWs . 0 0 60 20 20 100 Money market deposits .. 0 50 50 100 Potential Errors of the Basic Approach NOTE. Core deposits have no stated maturity and therefore are not slotted into time bands in the Call Report. Because the number of time bands was not limited to the four used in the Call Report, five were derived and used in both Obviously the basic model contains potential estithe basic and enhanced models. Five time bands were derived because this breakdown was considered the most analytically useful. mation errors. One misestimation of risk can occur Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

An Analysis of Commercial Bank Exposure to Interest Rate Risk 127 when actual bank financial instruments vary from the just under five years rather than the midpoint matuassumed hypothetical instrument's maturity. For rity of three years. In that case the actual price change example, in the most extreme scenario, all the assets for an increase of 200 basis points in rates would be slotted in the one- to five-year time band for non- 7.8 percent rather than the assumed 5.1 percent amortizing assets could have a maturity skewed to change of the hypothetical instrument. A.2. Derivation of the risk weights for the basic and enhanced model Percent Enhanced model Basic model TTiimmee bbaanndd MMaattuurriittyy11 (( CC ppee oo rr uu cc pp ee oo nn nn tt)) Price Risk weights 2 Price Risk weights2 (percent of par) (percent) (percent of par) (percent) OTS DERIVED RISK WEIGHTS Fixed-rate mortgages 0-3 months 1.5 months 7.50 99.80 -.20 99.80 -.20 3-12 months 7.5 months 7.50 99.30 -.70 99.30 -.70 1-3 years 2 years 7.50 98.00 -2.00 1-5 years 3 years 7.50 (KB 96.10 -3.90 3-5 years 4 years 7.50 94.30 -5.70 ... 5-10 years 7.5 years 7.50 92.40 -7.60 10-20 years 15 years 7.50 91.50 -8.50 91.50 -8.50 More than 20 years 25 years 7.50 88.50 -11.50 Adjustable-rate mortgages3 Reset frequency 0-6 months4 6 months 7.50 95.80 -4.20 6 months-1 year5 12 months 7.50 95.60 -4.40 95.60 -4.40 More than 1 year6 3 years 7.50 93.40 -6.60 Near lifetime cap7 12 months 7.50 93.00 -7.00 STATIC DISCOUNTED CASH FLOWS Other amortizing instruments 0-3 months 1.5 months 7.50 99.80 -.20 99.80 —.20 3-12 months 7.5 months 7.50 fig 99.30 -.70 mm 99.30 -.70 1-3 years 2 years 7.50 98.00 -2.00 ... 1-5 years 3 years 7.50 97.10 -2.90 3-5 years 4 years 7.50 96.30 -3.70 . Mi Bplf 5-10 years 7.5 years 7.50 93.50 -6.50 . . . 10-20 years 15 years 7.50 88.90 -11.10 BR® 88.90 -if.io More than 20 years 25 years 7.50 84.90 -15.10 All other instruments 0-3 months 1.5 months 7.508 99.75 -.25 99.75 -.25 3-12 months 7.5 months 7.50S 98.80 -1.20 98.80 -1.20 1-3 years 2 years 7.50 96.40 -3.60 1-5 years 3 years 7.50 94.90 -5.io 4 years 7.50 <W§&93 .40 -6.60 -v . . . ^^HsSsillft^W 7.5 years 7.50 s 89.40 -10.60 WIM . . . 10-20 years 15 years 7.50 •agji 84.10 -15.90 84.10 -15.90 More than 20 years 25 years 7.50 mi jjfj 81.00 -19.00 Liabilities 0-3 months 1.5 months 3.758 100.25 .25 100.25 .25 3-12 months 7.5 months 3.758 101.20 1.20 101.20 jj|g 1.20 1-3 years 2 vears 3.75 103.70 3.70 1-5 years 3 vears 3.75 105.40 5.40 3-5 years 4 years 3.75 107.00 7.00 5-10 years 7.5 years 3.75 112.00 12.00 112.00 12.00 10-20 years 15 years 3.75 119.90 19.90 More than 20 years 25 years 3.75 126.30 26.30 Zero- or low-coupon securities9 1.5 months 0 99.75 -.25 jHH ... 3-12 months 7.5 months 0 98.80 -1.20 • _ ... 1-3 years 2 years 0 96.20 -3.80 85 . . . 3-5 years 4 years 0 92.60 -7.40 • • • lllliP 5-10 years 7.5 years 0 86.60 -13.40 10-20 years 15 years 0 75.00 -25.00 More than 20 years 25 years 0 61.90 -38.10 NOTE. All estimates are based on a rise in interest rates of 200 basis points. 4. Six-month Treasury yield; the margin is 275 basis points; the periodic cap 1. With the exception of fixed rate and adjustable rate mortgages, no prepay- is 100 basis points; the lifetime cap is 500 basis points. ments are assumed for these hypothetical instruments. 5. Twelve-month Treasury yield; the margin is 275 basis points; the periodic 2. Calculated using a rounding convention. cap is 200 basis points; the lifetime cap is 500 basis points. 3. Coupons on adjustable rate mortgages (ARMs) are assumed to adjust to an 6. Three-year Treasury yield; the margin is 275 basis points; the periodic cap index based on Treasury yields on actively traded issues adjusted to constant is 200 basis points; the lifetime cap is 500 basis points. maturities. On the first reset date, the coupon rate will adjust to the index yield 7. Twelve-month Treasury yield; the margin is 275 basis points; there is no plus the margin. Most ARMs also have caps on the amount the rate can change. periodic cap; the lifetime cap is 200 basis points. A periodic cap limits the amount by which a coupon rate may adjust on the reset 8. Actual initial price is slightly less than par. date. A lifetime cap prevents the coupon rate from adjusting above a preset limit 9. Price is represented as a percentage of purchase price. during the life of the mortgage. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1996 In addition, errors can result from using incorrect Another source of error could come from instrucoupon rates. For example rather than the hypotheti- ments such as CMOs and structured notes whose cal coupon of 7.5 percent, a bank's actual assets time band slotting is based on contractual maturities could have coupons skewed to 10.5 percent, resulting or repricing dates but whose detailed features can in an actual price change of 4.9 percent rather than cause highly specific and unusual cash flow behavior. 5.1 percent. Though coupon differences for most These instruments could cause potentially more siginstruments result in minor errors, coupon differences nificant errors for the basic model; and the errors for mortgage products can create much larger errors would be further compounded for institutions that use because the coupon also strongly influences the off-balance-sheet derivative instruments because no mortgage's prepayment behavior and thus its value. data are available to evaluate whether those instru- Nevertheless, assuming a bank's actual maturities ments reduce or increase an institution's risk. As of and coupons are fairly evenly distributed or centered year-end 1994, 578 of the 10,452 commercial banks around the hypothetical instrument's maturity and used off-balance-sheet derivative contracts based on coupon, errors should not be material. interest rates. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

129 Staff Studies The staff members of the Board of Governors of the necessarily indicate concurrence by the Board of Federal Reserve System and of the Federal Reserve Governors, by the Federal Reserve Banks, or by Banks undertake studies that cover a wide range of members of their staffs. economic and financial subjects. From time to time Single copies of the full text of each study are the studies that are of general interest are published available without charge. The titles available are in the Staff Studies series and summarized in the shown under "Staff Studies" in the list of Federal Federal Reserve Bulletin. The analyses and con- Reserve Board publications at the back of each clusions set forth are those of the authors and do not Bulletin. STUDY SUMMARY BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94 Stephen A. Rhoades This study presents data on all bank mergers from Hanover, took place during the subperiod 1991-94; 1980 to 1994, including the number, sizes, locations, (3) the number of banks declined and nationwide and types. To place the mergers in perspective, the banking concentration increased substantially while paper also examines industrywide data on banking local market concentration changed little; and (4) the structure and performance, including data on number of banking offices continued to grow even as branches, ATMs, stock prices, and changes in the the number of ATMs exploded. The data on ATMs number of organizations over the period. and banking offices, along with other information, Among other findings, the data show that suggest that electronic banking is not yet close to (1) 1980-94 was a period of record merger activity, providing a substitute for branch offices and that the with more than 6,300 mergers and $1.2 trillion in branch office may be an important retail platform acquired assets; (2) several of the largest mergers differentiating banks from other providers of finanin U.S. banking history, including BankAmerica- cial services. • Security Pacific and Chemical Bank-Manufacturers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Industrial Production and Capacity Utilization for December 1995 Released for publication January 24 and boosted total production a bit less than 0.1 percent. For the fourth quarter, industrial production Industrial production edged up 0.1 percent in Decem- grew at an 0.8 percent annual rate after having risen ber after a revised gain of 0.3 percent in November. at a 3.2 percent annual rate in the third quarter. Gains in business equipment and construction sup- At 122.8 percent of its 1987 average, industrial plies were largely offset by small declines in con- production in December was 1.1 percent higher sumer goods and materials. The end of a strike at a than it was in December 1994. Capacity utilizamajor aircraft producer in mid-December accounted tion eased 0.2 percentage point in December, to for nearly half of the gain in business equipment 82.8 percent. Industrial production indexes Twelve-month percent change Twelve-month percent change 10 Materials Products 1989 1990 1991 1992 1993 1994 1995 1989 1990 1991 1992 1993 1994 1995 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 - Total industry Capacity 140 — Manufacturing Capacity —- ~ 140 120 120 100 100 '——^-^^^Production^^* ^ Production 80 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing — Utilization — 90 Utilization 90 80 80 70 70 1 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1981 1983 1985 1987 1989 1991 1993 1995 1981 1983 1985 1987 1989 1991 1993 1995 All series are seasonally adjusted. Latest series, December. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

131 Industrial production and capacity utilization, December 1995 Industrial production, index, 1987 = 100 Percentage change CCCCaaaatttteeeeggggoooorrrryyyy 11999955 19951 DDeecc.. 11999944 ttoo Sept.r Oct.r Nov.r Dec.P Sept.r Oct.r Nov.r Dec.P DDeecc.. 11999955 TTTToooottttaaaallll 122.8 122.3 122.7 122.8 .1 -.4 .3 .1 1.1 PPPPrrrreeeevvvviiiioooouuuussss eeeessssttttiiiimmmmaaaatttteeee 122.9 122.5 122.85 .2 -.3 .2 MMMMaaaajjjjoooorrrr mmmmaaaarrrrkkkkeeeetttt ggggrrrroooouuuuppppssss PPPPrrrroooodddduuuuccccttttssss,,,, ttttoooottttaaaallll2222 119.4 118.5 118.7 119.0 .1 -.7 .2 .2 .7 CCCCoooonnnnssssuuuummmmeeeerrrr ggggooooooooddddssss 116.0 115.2 115.5 115.4 .2 -.7 .3 -.2 -.1 BBBBuuuussssiiiinnnneeeessssssss eeeeqqqquuuuiiiippppmmmmeeeennnntttt 158.2 156.5 157.4 158.8 .5 -1.1 .6 .9 4.9 CCCCoooonnnnssssttttrrrruuuuccccttttiiiioooonnnn ssssuuuupppppppplllliiiieeeessss 108.4 108.0 108.7 109.6 1.4 -.4 .6 .8 -.9 MMMMaaaatttteeeerrrriiiiaaaallllssss 128.1 128.2 128.7 128.6 .0 .1 .4 -.1 1.6 MMMMaaaajjjjoooorrrr iiiinnnndddduuuussssttttrrrryyyy ggggrrrroooouuuuppppssss MMMMaaaannnnuuuuffffaaaaccccttttuuuurrrriiiinnnngggg 124.9 124.4 124.7 124.8 .6 -.4 .2 .1 .8 DDDDuuuurrrraaaabbbblllleeee 134.4 133.4 134.5 134.9 1.0 -.7 .8 .3 2.8 NNNNoooonnnndddduuuurrrraaaabbbblllleeee 114.4 114.5 113.8 113.6 .1 .1 -.5 -.2 -1.7 MMMMiiiinnnniiiinnnngggg 100.0 98.0 97.7 97.6 .0 -2.0 -.3 -.2 -3.2 UUUUttttiiiilllliiiittttiiiieeeessss 122.7 123.3 125.1 125.6 -4.8 .5 1.5 .4 7.8 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1994 1995 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, DDDeeeccc... 111999999444 11996677--9944 11998822 11998888--8899 Dec. Sept.r Oct.r Nov.r Dec.P tttooo DDDeeeccc... 111999999555 Total 82.1 71.8 84.9 85.1 83.6 83.0 83.0 82.8 3.9 Previous estimate 83.7 83.2 83.1 Manufacturing 81.4 70.0 85.2 84.7 82.8 82.2 82.1 81.8 4.3 Advanced processing 80.7 71.4 83.5 82.4 81.1 80.5 80.3 80.1 4.9 Primary processing 82.6 66.8 89.0 90.2 86.8 86.1 86.3 86.0 2.9 Mining 87.4 80.6 86.5 89.9 89.2 87.5 87.2 87.0 .1 Utilities 86.9 76.2 92.6 86.8 90.7 91.0 92.3 92.5 1.1 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. When analyzed by market group, the data show The output of materials edged down, with a decline that the output of consumer goods slipped 0.2 per- in durable materials about offsetting small gains in cent, with the weakness concentrated among indus- nondurable and energy materials. Among durables, tries producing nondurable goods. The production of the production of basic metals and parts for consumer durable consumer goods rose 1.2 percent, largely durables decreased, while the output of parts for because of an increase in the output of automotive equipment grew more slowly. Even so, the output products. Although the production of other durable of durable materials advanced at about a 7 percent goods, such as carpeting and furniture, also increased annual rate in the fourth quarter, about the same rate noticeably, the overall gain in this grouping was held as in the previous quarter. Among nondurables, the down a bit as the output of appliances and televisions output of both paper and chemicals increased but reversed some of its sharp rise in November. The remained at weak levels, while the production of output of business equipment rose 0.9 percent, textiles declined further. boosted by the end of the aircraft strike and ongoing When analyzed by industry group, the data show strength in the production of information processing that manufacturing output edged up 0.1 percent in equipment such as computers. However, the produc- December after a 0.2 percent increase in November; tion of industrial equipment has been sluggish lately, excluding the initial recovery in aircraft production, on balance having changed little since August. The factory output was unchanged in December. For the output of construction supplies increased noticeably fourth quarter, factory output grew 1.7 percent at an in both November and December; in the fourth quar- annual rate, compared with a 2.6 percent increase in ter, production expanded at about a 4Vi percent the previous quarter; the deceleration was the result annual rate after a 1 percent gain in the previous of the drop in the production of aircraft and parts. quarter. The output of durable manufacturing industries rose Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1996 0.3 percent in December, mainly because of the trial machinery and equipment, which includes comincrease in aircraft and parts production and further puters, is the only major industry whose current gains in the output of computing equipment. The operating rate is noticeably above the level of a production of nondurable manufacturing was down year ago. The rate in primary-processing industries again as the output indexes of many major industries decreased 0.3 percentage point in December, to declined or were little changed. 86.0 percent, and was 4.2 percentage points below its The factory operating rate decreased 0.3 percent- year-ago level. Outside of manufacturing, the utilizaage point, to 81.8 percent. Since December 1994, tion rate in mining was down slightly in December; it which was the most recent high, capacity utilization fell sharply for the quarter because of contraction in has fallen 2.9 percentage points. With the December the output of coal and in oil and gas extraction. The decline, the utilization rate in the advanced- operating rate at utilities picked up a little in Decemprocessing industries was 80.1 percent—a 2.3 per- ber; for the quarter, the rate eased just a bit from the centage point decrease from December 1994; indus- high level of the previous quarter. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

133 Statement to the Congress Statement by Alan Greenspan, Chairman, Board of directed Mr. Iguchi to continue transactions during Governors of the Federal Reserve System, before the the two-month period that avoided the disclosure of Subcommittee on Financial Institutions and Con- the losses. sumer Credit of the Committee on Banking and We understand that some officials at the Japanese Financial Services, U.S. House of Representatives, Ministry of Finance were informed in early August December 5, 1995 about Daiwa's losses. They did not instruct Daiwa to inform the U.S. authorities; nor did they themselves I appreciate the opportunity to discuss with you today do so. This lapse on the part of the Ministry of the issues raised by the recent events relating to the Finance is regrettable because open communication U.S. operations of Daiwa Bank and to provide you and close cooperation among supervisory authorities with our preliminary conclusions on these issues. As are essential to the maintenance of the integrity of the you requested, my testimony will be presented in two international financial system. Finance Minister Takeparts. I will first address the events that culminated in mura has acknowledged the ministry's failure in this the issuance of consent orders requiring Daiwa to regard and has pledged that in the future the ministry terminate its banking operations in the United States. will promptly and appropriately contact U.S. authori- I will then summarize for you the present system of ties on such matters of U.S. interest. We have been supervision of the U.S. offices of foreign banks and assured that the ministry is taking steps to implement explain a number of initiatives the Federal Reserve this pledge. In addition, we have been pleased that has implemented in this area in the past two years. once the Daiwa problem was disclosed, the Japanese authorities have fully cooperated with U.S. supervisors in dealing with the consequences. EVENTS RELATING TO DAIWA BANK On October 9, Daiwa also announced that its separate federally insured bank subsidiary in New York I believe the basic facts surrounding this incident are had incurred losses of approximately $97 million as a fairly well known, but I will briefly summarize the result of trading activities, at least some of them key events. A more detailed chronology is provided unauthorized, between 1984 and 1987. These losses in an attachment.1 Of course, I would be pleased to should have been reflected in the books and records answer, to the extent that I can, any questions that and financial statements of the subsidiary but were you might wish to ask regarding these events. not. Instead, the losses were concealed from federal On September 18, 1995, Daiwa Bank met with a and state regulatory authorities through a device that Federal Reserve representative and reported that transferred the losses to offshore affiliates, apparently Daiwa's New York branch had incurred losses of with the knowledge of senior management. $1.1 billion from trading activities undertaken by On October 2, 1995, the New York Superintendent Toshihide Iguchi, a branch official, over a period of of Banks and the Federal Deposit Insurance Corporaeleven years. These losses were not reflected in the tion (FDIC), together with the Federal Reserve, books and records of the bank or in its financial issued cease-and-desist orders against Daiwa requirstatements, and their existence was concealed through ing a virtual cessation of trading activities in the liquidations of securities held in the bank's custody United States. On November 2, Daiwa was indicted accounts and falsification of its custody records. on federal criminal charges. At the same time, the Although Daiwa indicates its senior management Federal Reserve, the FDIC, the New York Superinlearned about these trading losses in July, they tendent, and a number of other state banking authoriconcealed the losses from U.S. banking regulators ties jointly issued consent orders under which Daiwa for almost two months thereafter. Moreover, they must terminate its banking operations in the United States by February 1996. This matter has troubling implications for super- 1. The attachment to this statement is available from Publications vision and regulation in a world of multinational Services, Mail Stop 127, Board of Governors of the Federal Reserve banking and increasing interrelationships of financial System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1996 systems. Not only were bank employees able to con- bank management to carry out their duties in a ceal massive losses over an extended period of time, responsible and honest manner with adherence to but senior management of Daiwa also took steps to systems and operational controls designed to ensure conceal the events in question from U.S. regulatory the safe and sound conduct of business. authorities. This is particularly disturbing given that This is not to say that supervision can be based it would obviously have been in the best interest of solely on trust. Supervisors must test a bank and its both the bank and its management to have dealt with management in its compliance with law and sound the problems openly and in compliance with host business practice. This is, after all, one reason for the country regulations and operational standards. conduct of on-site examinations. An appropriate bal- The action taken by the Federal Reserve and the ance, however, must be struck between a supervisor's other regulatory authorities in terminating the U.S. reliance on the institution's systems and management operations of Daiwa was quite stern, particularly to function properly and the need to verify that its given that no U.S. depositor or U.S. counterparty systems are being appropriately implemented and ultimately lost any money. We, however, were united that management is addressing any significant probin the belief that this supervisory response was neces- lems. Without reliance on trust, an army of permasary because actions such as Daiwa's carry the threat nent resident examiners would be necessary to ensure of significant damage to a major asset of our nation— that the operations of a bank are conducted in a the integrity of our financial system. manner that is safe and sound and otherwise consis- Trust is a principle of central importance to all tent with the requirements of law. Such an approach effective financial systems. Our system is strong and to supervision clearly would be counterproductive to vibrant in large part because we demand that finan- the desired support of a vibrant, innovative banking cial institutions participating in our markets operate system. For a supervisor to become a bank's internal with integrity and that any information made avail- auditor would either stifle the independence of manable to depositors and investors be accurate. When agement in the bank or create an unacceptably adverconfidence in the integrity of a financial institution is sarial supervisory process. shaken or its commitment to the honest conduct of In this context, we have sought to review the business is in doubt, public trust erodes and the entire examinations in question in an effort to determine system is weakened. whether the supervision of Daiwa should have pro- The need to trust other participants is essential in a ceeded on a different basis and how such problems, complex marketplace. For example, on the basis of to the extent feasible, might be avoided in the future. trust, counterparties typically trade millions of dollars Accordingly, we have reviewed the steps taken to on an oral commitment that may not be formalized implement the authority vested in the Federal Reserve for hours. A breach of that trust by failure to honor Board in December 1991 in the Foreign Bank Supersuch commitments—presumably because markets vision Enhancement Act (FBSEA) with regard to the turn adverse—would inevitably lead to an institution examination and supervision of the operations of being drummed out of the marketplace. No set of foreign banks in the United States. We have carefully statutes can ensure the effective functioning of a reviewed the examination reports and other relevant market if a critical mass of financial counterparties is documents that are presently available to seek to deemed untrustworthy. Any risk that counterparties determine what, if anything, could or should have will not honor their obligations will be reflected in a been done differently that might have brought to light widening of bid-ask spreads, a reduction in liquidity, the events in question at an earlier date. and, as a consequence, a less efficient financial sys- A review of the Federal Reserve's three examinatem. Consequently, actions such as I have recounted tions of Daiwa's New York branch in the period in the Daiwa case cannot be tolerated. The potential between 1992 and 1994 indicates that the examiners cost to our financial system and hence to our econ- identified and instructed management to address a omy is too large. number of internal control weaknesses at the branch. What is true for the financial system in general is Specifically, when the examiners learned that a single particularly true for the supervision of financial insti- person, Mr. Iguchi, was responsible for both securitutions. Indeed, the whole system of supervision pro- ties trading and custody operations and some related ceeds upon the basis of trust, whether in terms of the back-office functions, branch management was told veracity of representations or reports filed by man- that his duties should be separated. The examiners agement or transparency with regard to any material explored whether Mr. Iguchi was able to use his developments affecting the financial condition of the position as overseer of the custody account to gain institution. Supervisors need to trust the ability of improper advantage in carrying out the bank's own Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 135 trading activities. The examiners, however, did not and information sharing among supervisors. When focus on the possibility that this breakdown in inter- the committee issued a supplement to the Concordat nal controls had the potential for the misappropria- in 1990, the Group of Ten countries agreed that tion of customer and bank funds. parent authorities should inform host authorities of The Federal Reserve accepted statements by supervisory measures that have a significant bearing branch management that the basic internal control on the operations of their banks' foreign establishproblems, which in retrospect helped Mr. Iguchi to ments. The 1990 supplement stated that parent aucarry out his illegal activities, had been corrected. thorities should be ready to take host authorities into Obviously, the examiners and their supervisors did their confidence when a particular bank faces probnot at the time believe that employees of Daiwa's lems. Consistent with this standard, as I noted earlier, New York branch would be engaged in criminal the ministry has pledged to promptly inform U.S. activities. authorities in the future of any material information With the benefit of hindsight, there were some on matters of U.S. interest. clues that were missed in the examination of Daiwa. With a more robust follow-up, the problem might have been found sooner. Our examinations were con- REGULATION OF FOREIGN BANKS ducted after the passage of FBSEA in the context of a rapid buildup of examination staff in 1992 and 1993 I will now turn to the general issue of how branches to meet our new responsibilities under that act. It is and agencies of foreign banks are supervised in the possible that we had not yet developed adequate United States. experience to implement our new responsibilities. FBSEA, passed by the Congress in December The Federal Reserve was still in the process of devel- 1991, increased the responsibilities of the Federal oping improved examination procedures and assess- Reserve over the U.S. offices of foreign banks in the ment systems (including, as I discuss below, an following key ways. improved supervisory program, rating system, and examination manual). This was being done, follow- • First, a foreign bank may no longer establish a ing enactment of the legislation, to ensure that the state or federally licensed branch or agency without U.S. banking operations of foreign banks are super- prior approval from the Federal Reserve. vised with the same attention to safety and soundness • Second, FBSEA sets out uniform standards for issues as are the operations of domestic banks. None- approval of such applications, which feature, among theless, the bottom line is that we did not succeed in other things, the need for comprehensive, consoliunearthing Daiwa's transgressions when we might dated supervision by the home country authorities have. Hopefully, this event will stiffen our resolve. and the adequacy of financial and managerial You have also asked us to discuss whether Daiwa resources. was subject to comprehensive consolidated super- • Third, the Federal Reserve may terminate the vision in Japan as well as the arrangements between license of a state branch or agency, after appropriate the U.S. and Japanese banking authorities for sharing notice to the licensing state, and may recommend to supervisory information. I believe that it is fair to say the Office of the Comptroller of the Currency the that the system of supervision in Japan is detailed and termination of the license of a federal branch or extensive and requires substantial financial reporting. agency. As with the U.S. supervisory system, however, false • Fourth, the Federal Reserve was given full information provided by a bank or its officers to examination authority over branches and agencies. supervisors will inevitably hinder the effectiveness of • Finally, each such office is required to be examsupervision. In this case, there was clearly a break- ined at least once during each twelve-month period, down of internal controls at Daiwa, especially in the with coordination as appropriate among the other internal audit function, that resulted in an incomplete relevant federal and state supervisory authorities. picture of Daiwa's overall operations. Moreover, the regulators in Japan have announced certain measures Commencing in 1992, the Federal Reserve took a that are intended to improve overall supervision of number of steps, which I describe further below, to Japanese banks. implement its expanded authority in this area and With respect to information sharing, the Basle improve the supervision of the U.S. offices of foreign Supervisors Committee, beginning in 1975 with the banks. As indicated by these initiatives, the Federal adoption of the Basle Concordat, established a series Reserve recognized early in the process that increasof agreements recognizing the need for cooperation ing emphasis was required to be placed on the assess- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1996 ment of the adequacy of risk management systems uniform, and timely manner. The program was forand internal controls of foreign banks. Many of the mally adopted earlier this year, and the implementaimprovements focus in particular on these areas. tion phase is now under way. To fulfill its expanded role under FBSEA over the The new supervisory program also emphasizes U.S. offices of foreign banks, the Federal Reserve has enhanced contacts between U.S. supervisors and the significantly increased the number of staff members home country supervisors of foreign banks. This case dedicated to examining and monitoring the activities and the effect that it has had on Daiwa's activities, of these offices. Federal Reserve examiners devoted both in the United States and abroad, illustrate that primarily to the examination of U.S. offices of foreign problems of a bank in one market ultimately will banks now number 252, up from 106 in 1991. The affect its operations globally, including in its home total number of examination and other professional country. In the end, there will be a mutuality of supervisory staff dedicated to supervision of these interest between home and host country supervisors, activities has increased from 119 in 1991 to 288 which underscores the need for effective communicurrently. cation and increased cooperation. In this regard, While internal controls have long been a focus of although there were delays in the disclosure of examinations, the growth in bank trading activities in Daiwa's problems to the U.S. authorities, once the the early 1990s also led to Federal Reserve initiatives matter was disclosed there was effective cooperation to enhance its examination of trading activities. A among U.S. and Japanese regulatory authorities in number of these examination procedures address the dealing with the consequences in an orderly manneed to have a proper separation of duties between ner that avoided losses to customers and systemic the front office and back office, as well as effective disruption. audit procedures. I believe that, like ourselves, supervisors through- In the aftermath of Barings and Daiwa, our super- out the world recognize that more needs to be done to visory sensitivities have been heightened to the ensure better coordination and timely communication potential magnitude of the risks associated with a of material information. The Basle Committee on combination of trading and back-office functions. Banking Supervision has emphasized the importance Barings confirmed the importance of the increasing of such international cooperation through issuance of emphasis the Federal Reserve's supervisory staff had international standards for supervision of multibeen placing on the review of foreign banks' internal national banking organizations and is discussing controls and risk management systems. The circum- ways to broaden further and strengthen lines of comstances of the Daiwa case reinforce the need to pay munication. We will support those efforts and will close attention to these areas during examinations continue our own initiatives to improve communicaand to take heed of potential red flags that might tion with foreign supervisors under the new supersuggest the possibility of rogue employees or a break- visory program. down of internal controls. Both cases demonstrate the The Federal Reserve has also committed extensive need, once serious deficiencies in internal controls resources over the past few years to enhancing the are identified, to ensure that relevant books and supervisory tools available to examiners and financial records are reconciled and verified in an expeditious analysts to improve further our supervision of the and thorough manner. This is true in the domestic, as U.S. operations of foreign banks. In 1994, the federal well as the foreign, banking context. Careful atten- and state banking supervisory agencies adopted a tion to controls can reduce the potential for fraud new uniform examination rating system for U.S. such as occurred in the Daiwa case, although such branches and agencies of foreign banks that places potential can never be fully eliminated. higher priority on the effectiveness of risk manage- In the past two years, the Federal Reserve has ment processes and operational controls. The new implemented a number of initiatives that address rating system, commonly referred to as the ROCA these concerns. The Federal Reserve, together with system, focuses on the following elements: risk manthe state banking departments and other federal regu- agement, operational controls, compliance with U.S. lators, has worked to coordinate better and enhance laws and regulations, and asset quality. The first three further the supervision of the U.S. activities of for- of these components evaluate the major activities or eign banks. To that end, we have developed a new processes of a branch or agency that may raise supersupervisory program for the U.S. operations of for- visory concerns. The ROCA system will direct exameign banks. One important aspect of this program is iners' attention to the combination of front- and backto ensure that the information available to the U.S. office duties, such as occurred in Daiwa, as a supervisors is utilized and disseminated in a logical, significant flaw in internal controls. We believe that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to the Congress 137 the ROCA system focuses more clearly on the impor- many regulatory and supervisory tools as possible to tant areas of a foreign bank's U.S. operations than investigate and enforce compliance. The Daiwa matwould the previous AIM (asset quality, internal con- ter illustrates that the 1991 legislation provided the trol, and management) system. appropriate remedial tools to address serious failures Another new supervisory tool is the Examination to comply with law and regulation. Manual for the U.S. Branches and Agencies of For- I believe that there are valuable lessons to be eign Banking Organizations. The Federal Reserve, in learned by bankers and supervisors from this unfortucooperation with state and other federal banking nate case. The loss of more than $1 billion suffered agencies, has developed the manual for conducting by Daiwa and the catastrophic losses suffered by individual examinations of the U.S. branches and Barings in Singapore because of a rogue trader illusagencies of foreign banks. The manual serves as a trate the enormity of the damage that can be incurred primary, comprehensive reference source for exami- by global trading banks when internal control sysnation guidelines and procedures and is beneficial to tems are less than adequate. These losses and the both new and experienced examiners. The manual is institutional injury incurred are far greater than the also being widely used as a reference tool by the losses banks have encountered from their authorized foreign banking community in the United States to proprietary risk-taking positions. The lesson forceimprove its own internal systems of controls. fully taught by these cases is that management must In addition, in 1994, the Federal Reserve adopted a pay as much attention to such seemingly mundane new Trading Activities Manual. Although the manual tasks as back-office settlement and internal audit has been developed primarily for U.S. commercial functions as to the more exotic high-technology frontbanks, it also applies to the U.S. branches and agen- end trading systems. Banks that neglect making the cies of foreign banks, many of which are actively requisite investments in these areas do so at their engaged in transactions involving trading activities. peril. While the adequacy of internal controls has This manual includes detailed examination proce- long been a point of major emphasis of supervisors, dures for evaluating controls in trading activities and these recent events reinforce the need for supervisors emphasizes the importance of separation of duties in to pursue rigorously the expeditious correction of a trading operation such as Daiwa's. internal control deficiencies in financial institutions. The Federal Reserve has also taken steps to Moreover, in an era of mergers and aggressive cost enhance the training of examiners. For example, we control, supervisors must clearly emphasize to bank have developed an internal controls school that was officials that key control and processing areas in designed initially for examiners of branches and banks must remain fully staffed by competent and agencies of foreign banks and expanded to meet the experienced personnel. needs of other examiners. We are also initiating a Looking more broadly at the supervisory system comprehensive capital markets examiner training and its functions within the international banking program covering risk assessment, trading exposure system, I would like to conclude by discussing a few management, and advanced derivative products. This general points that are raised by this case. No superprogram addresses skill needs at a variety of levels visory system can, nor should endeavor to, stop all and utilizes instructors from the financial sector to losses. Any system that attempted to be fail-safe supply expertise to train our examiners in these spe- would impose intolerable costs on the public and the cialized areas. banking industry and almost certainly would stifle Even given the new supervisory program and tools legitimate financial innovation. Moreover, in any as well as our heightened sensitivity to possible red supervisory regime, the ultimate responsibility for the flags, no system of supervision will uncover all fraud. protection of a privately owned bank must rest with As the Board stated in 1991 in support of FBSEA, the top management of the bank and its directors. fraud is very hard for any regulatory authority to After all, it is in their long-term interest to operate the detect, especially when bank employees actively con- bank in a safe and sound manner and to obey the law. spire to prevent official scrutiny. But if, after the Supervisors must, to some extent, rely on this mutualfraud is discovered, swift and stern corrective action ity of interest in performing their tasks. While good is taken by the supervisory authorities, financial insti- examiners are not naive and do not expect bankers to tutions hopefully will recognize that deception pays bare their souls, normally they must rely on a basic no dividend. FBSEA legislation was designed to trust that they will not be deceived as they raise minimize the potential for illegal activities by estab- issues through successive layers of management. An lishing uniform standards for entry by foreign banks assumption that most bankers are truthful should and, if illegal activities are suspected, to provide as remain the rule, not the exception. However, when a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1996 bank has shown through repeated actions that it can- cially with respect to internal and external audit not be trusted, even at the highest levels of the standards. For example, we are presently reviewing corporation, supervisors should resort to extraor- our general policies in this area to determine the dinary regulatory measures. extent to which more specific guidance can be given In such circumstances, the Congress has provided to examiners for purposes of evaluating the adequacy the supervisors with what I believe to be a full and of audit coverage. Consideration will also be given to appropriate range of powers, including cease-and- requiring targeted external audits in banking institudesist authority, civil money penalties, and, in the tions, whether foreign or domestic, when deficiencies case of foreign banks, the authority to terminate their in operations or concerns over the adequacy of inter- U.S. operations. This episode demonstrates that the nal audit have not been addressed. supervisors will use these powers when, through a Clearly, we also need to fully implement our pattern of unacceptable behavior, the basic bond of enhanced supervisory program in an expeditious trust that needs to exist between banks and their manner. In doing so, the Federal Reserve will be regulators is irreparably broken. However, if our fur- reviewing the Daiwa case, Barings, and other major ther review of the events in question suggests addi- international banking events to identify further spetional authority is needed, we will of course convey cific improvements to the supervisory process as it that view to this committee. applies to both foreign and U.S. banks, as well as our We are considering a number of initiatives that existing statutory authority. We will report to the may be implemented at an administrative level, espe- Congress on the conclusions of our review. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

139 Announcements ALAN S. BLINDER TO STEP DOWN AS both on your Council of Economic Advisers and as Vice Chairman of the Federal Reserve System; and I hope VICE CHAIRMAN OF THE BOARD OF GOVERNORS I have made some small contribution to the success of both. I will always be grateful to you for giving me these Alan S. Blinder, Vice Chairman of the Federal two rare opportunities to serve my country. Reserve Board, announced on January 17, 1996, that That public service remains a high calling bears emphahe would not continue in his position beyond the sis these days, when the work of government is under unceasing attack. During my three years in Washington, I expiration date of his term on January 31. have come to know many individuals—both political Following is the text of a statement issued by the appointees and career civil servants, both in the Adminis- Vice Chairman: tration and at the Fed—who work harder under much more difficult conditions for far less money than they could earn Yesterday, I informed President Clinton that I have in the private sector. They do it because they believe, as I decided not to seek renomination to another term as a do, in the idea of public service. A nation that routinely member of the Board of Governors of the Federal Reserve denigrates its public servants, and makes public service as System. I will, instead, return to teaching at Princeton unpleasant as possible, may soon find itself with the kind University next month. of government it has tacitly asked for. It pains me to think When I accepted nomination to the Vice Chairmanship that my own country may be becoming such a nation. in 1994,1 knew that my term as Governor ran only through Finally, it has been a rare privilege to get to know Mrs. January 31, 1996. My idea at the time was to serve out the Clinton and you. It's an association that Madeline and I balance of the term—marking three years away from will always treasure. And I thank you most sincerely for Princeton—and then return to the University. Since then, I that, too. have had many occasions and reasons to question this tentative decision. But, in the end, a variety of personal Yours very truly, considerations pushed me back toward my original plan. It was, frankly, an extremely difficult career choice, Alan between two finely balanced alternatives. And I leave with some regrets, for I continue to believe deeply in the idea of cc: The Vice President public service. The opportunity to serve the public at this Laura Tyson, National Economic Council level comes rarely and is reserved for few. I shall always be grateful to President Clinton for granting me that privilege. Chairman Alan Greenspan issued the following statement: The text of Vice Chairman Blinder's letter to President Clinton follows: It has been a privilege to have worked with Alan Blinder during his all-too-short tenure as Vice Chairman of the Federal Reserve Board. Dr. Blinder's economic percep- January 16, 1996 tions and analysis have been of utmost value to the Board. They will be missed, as will he. The Vice Chairman has President William J. Clinton been a trusted colleague and personal friend. I wish him The White House well. Washington, D.C. Dear Mr. President: ACTION BY THE FEDERAL OPEN MARKET It is with a somewhat heavy heart that I write to inform COMMITTEE you that I do not wish to continue on the Board of Governors of the Federal Reserve System beyond the expiration Chairman Alan Greenspan announced on Decemof my term on January 31st. I found this decision extremely difficult and wrestled with it for a long time. In the end, ber 19, 1995, that the Federal Open Market Commithowever, a variety of personal factors overcame the strong tee had decided to decrease slightly the degree of pull of public service. pressure on reserve positions. I imagine that most people leave government with some Since the last easing of monetary policy in July, regrets. So do I, for there are certainly things I could have inflation has been somewhat more favorable than done better and, of course, there is much more to be done. But I nonetheless look back with some pride on my service anticipated, and this result along with an associated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1996 moderation in inflation expectations warrants a mod- ity. The final rule also streamlines the review proceest easing in monetary conditions. dures for notices and applications. This action is expected to be reflected in a decline in the federal funds rate of 25 basis points, from about 53A percent to about 5V2 percent. PROPOSED ACTIONS The Federal Reserve Board on December 20, 1995, PRESS STATEMENT AND COMMUNIQUE BY THE requested comment on a proposed one-time Check BASLE COMMITTEE Fraud Survey. The survey will help the Federal Reserve fulfill the congressional mandate to report on The Federal Reserve Board issued on December 12, the advisability of modifying the Expedited Funds 1995, a press statement and communique by the Availability Act to extend the maximum permissible Basle Committee on Banking Supervision to amend hold period for local checks as a means of decreasthe Basle Capital Accord of July 1988 to take account ing losses related to check fraud. Comments were of market risk. Copies of the statement and commurequested by February 20, 1996. nique are available on request from Publications Ser- The Federal Reser/e Board on December 22, 1995, vices, Board of Governors of the Federal Reserve published for public comment proposed revisions to System, Mail Stop 127, Washington, DC 20551. its staff commentary to Regulation B (Equal Credit Opportunity). Comments were requested by February 28, 1996. REGULATION C: STAFF COMMENTARY The Federal Reserve Board on December 22, 1995, issued for public comment proposed changes to the The Federal Reserve Board published on Decemprovisions of the Board's Regulation K regarding ber 6, 1995, a staff commentary to its Regulation C interstate banking operations of foreign banking orga- (Home Mortgage Disclosure) that interprets the nizations. Comments were requested by February 5, requirements of the regulation. 1996. The commentary provides guidance on issues such The Federal Reserve Board on December 11, 1995, as the treatment of prequalifications, loan applicaextended to February 15, 1995, the comment period tions received through a broker, participations, refion proposed amendments to its Regulation M (Connancings, home equity lines of credit, and mergers. sumer Leasing), which carries out provisions of the The Board believes that the commentary will help Consumer Leasing Act. reduce burden and ease compliance by clarifying The Federal Reserve Board on December 7, 1995, application of the rules, providing flexibility in comissued for public comment proposed amendments to pliance, and consolidating the guidance that is curits Regulation U (Credit by Banks for Purchasing or rently available from a variety of sources. Carrying Margin Stocks). Comments were requested Compliance is mandatory for collection of data by February 15, 1996. that begins January 1, 1996, which is to be submitted The Federal Reserve Board on December 1, 1995, to supervisory agencies no later than March 1, 1997. issued for public comment proposed revisions to the official staff commentary to its Regulation Z (Truth in REGULATION K: FINAL RULE Lending). Comments were requested by February 2, 1996. The Federal Reserve Board issued on December 22, The Federal Reserve Board on December 1, 1995, 1995, a final rule amending its Regulation K (Interna- published for public comment proposed revisions to tional Operations of U.S. Banking Operations) to ease the official staff commentary to its Regulation DD the burden on U.S. banking organizations seeking to (Truth in Savings). The commentary applies and make investments in foreign companies. The final interprets the requirements of the regulation. Comrule was effective immediately. ments were requested by February 2, 1996. The final rule, which is part of an overall review of the entire regulation, expands the authority of strongly capitalized and well-managed banking VIDEOTAPE ON THE HOME BUYING PROCESS organizations to make certain foreign investments. Now AVAILABLE No prior notice or application to the Board will be required before an organization makes an investment The Federal Reserve Board on December 14, 1995, that falls within this revised general consent author- announced the availability of a new educational video- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 141 tape on the home buying process entitled "Both includes the incorporation of SEER and CAMEL Borrower and Lender." ratings, and revised capital adequacy guidelines. The The program is designed for first-time homebuyers capital adequacy guidelines no longer distinguish and is divided into four segments: between originated and purchased mortgageservicing rights. The guidelines contain new conver- • Financial preparedness sion factors for certain derivative contracts, recognize • Types and terms of mortgages certain netting arrangements in calculating credit ex- • The mortgage application process posure on such contracts, and impose lower capital • Settlement and closing. requirements for retained recourse for small business loans and leases on personal property than are re- The entire program is approximately two hours quired for other assets sold with recourse. long with each segment about thirty minutes in Other sections emphasize the responsibilities of length. The videotape is a byproduct of the Board's holding companies to oversee the activities of their recent distance learning program, which was broaddepository institution subsidiaries. They include cast nationwide via satellite. (1) examiner guidance regarding the evaluation of the The videotape was aired on the American Bankers overall allowance for loan and lease losses and the Association (ABA) satellite network, American use of accounting standards (SFAS 114 and 118) for Financial Skylink, on January 30, 1996. For more estimating impaired loans for financial reporting information on Skylink, please call ABA's John purposes, and (2) a clarification of the February 17, Cavanaugh at (202) 663-5116. The video is available 1994, "Interagency Statement on Retail Sales of for purchase from VIDICOPY. Single or bulk copies Nondeposit Investment Products." A complete list of of the entire program may be purchased at the followchanges to the Manual is contained in the update ing rates: package. The Manual and the updates are available to the 1-30 copies @ $12.95, includes shipping public and may be obtained from Publications Ser- 31-99 copies @ $11.45, includes shipping. vices, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. For additional information, write VIDICOPY at Copies of the Manual, updated through December 650 Vaqueros Avenue, Sunnyvale, CA 94086 or call 1-800-708-7080. 1995, are available at a cost of $104.00. To be added to the mailing list to receive updates for 1996, please send an additional $20.00. PUBLICATION OF THE DECEMBER 1995 UPDATE TO THE BANK HOLDING COMPANY SUPERVISION MANUAL CHANGE IN BOARD STAFF The December 1995 update of the Bank Holding The Board of Governors announced that Frederick Company Supervision Manual has been published. M. Struble, Associate Director, Division of Banking The update includes a revised discussion of the Sys- Supervision and Regulation, retired, effective Janutem's BHC Surveillance Program, which, in turn, ary 31, 1996. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Minutes of the Federal Open Market Committee Meeting Held on November 15,1995 A meeting of the Federal Open Market Committee Mr. Reinhart,1 Assistant Director, Division of was held in the offices of the Board of Governors of Monetary Affairs, Board of Governors Mr. Ramm,1 Section Chief, Division of Research the Federal Reserve System in Washington, D.C., on and Statistics, Board of Governors Wednesday, November 15, 1995, at 9:00 a.m. Ms. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of Present: Governors Mr. Greenspan, Chairman Mr. McDonough, Vice Chairman Messrs. Beebe, Goodfriend, Lang, Rolnick, and Mr. Blinder Rosenblum, Senior Vice Presidents, Federal Mr. Hoenig Reserve Banks of San Francisco, Richmond, Mr. Kelley Philadelphia, Minneapolis, and Dallas Mr. Lindsey respectively Mr. Melzer Ms. Minehan Messrs. Gavin and Kopcke, Mses. Krieger and Mr. Moskow Rosenbaum, Vice Presidents, Federal Reserve Ms. Phillips Banks of St. Louis, Boston, New York, and Ms. Yellen Atlanta respectively Messrs. Boehne, Jordan, McTeer, and Stern, Mr. Stevens, Consultant, Federal Reserve Bank Alternate Members of the Federal Open of Cleveland Market Committee By unanimous vote, the minutes of the meeting of Messrs. Broaddus, Forrestal, and Parry, Presidents the Federal Open Market Committee held on Septemof the Federal Reserve Banks of Richmond, ber 26, 1995, were approved. Atlanta, and San Francisco respectively The Manager of the System Open Market Account reported on recent developments in foreign exchange Mr. Kohn, Secretary and Economist markets and on System foreign currency transactions Mr. Bernard, Deputy Secretary Mr. Coyne, Assistant Secretary during the period September 26, 1995, through Mr. Gillum, Assistant Secretary November 14, 1995. By unanimous vote, the Com- Mr. Mattingly, General Counsel mittee ratified these transactions. Mr. Baxter, Assistant General Counsel The Manager also reported on developments in Mr. Prell, Economist domestic financial markets and on System open mar- Mr. Truman, Economist ket transactions in government securities and federal agency obligations during the period September 26, Messrs. Davis, Hunter, Lindsey, Mishkin, Promisel, Siegman, Slifman, and Stockton, Associate 1995, through November 14, 1995. By unanimous Economists vote, the Committee ratified these transactions. By unanimous vote, the Committee authorized the Mr. Fisher, Manager, System Open Market Account renewal for an additional one-year period of the System's reciprocal currency ("swap") arrangements Mr. Winn, Assistant to the Board, Office of Board with foreign central banks and the Bank for Interna- Members, Board of Governors tional Settlements that were due to mature on various Mr. Ettin, Deputy Director, Division of Research and dates in December 1995. The renewal encompassed Statistics, Board of Governors Mr. Madigan, Associate Director, Division of all the System's swap arrangements except that with Monetary Affairs, Board of Governors Mr. Simpson, Associate Director, Division of 1. Did not attend portion of meeting covering the monetary policy Research and Statistics, Board of Governors discussion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

143 the Bank of Mexico, which is scheduled to mature on worked by private production workers rose apprecia- January 31, 1996, and will be considered at a later bly further. Construction payrolls recorded another meeting. The amounts and maturity dates of the sizable advance. The rate of job growth in the arrangements approved for renewal are shown in the services industry slowed a little further, reflecting a table that follows: decline in employment in personnel supply services after two months of strong advances. Manufacturing employment declined again. The civilian unemploy- Amount of arrangement ment rate edged down in October to 5.5 percent. Term Maturity Foreign bank (millions of (months) date Industrial production fell somewhat in October dollars equivalent) after having risen appreciably in the third quarter; Austrian National Bank 250 12 12/04/95 most of the loss reflected the strike in the aircraft Bank of England 3,000 12/04/95 industry, but motor vehicle production and mining Bank of Japan 5,000 12/04/95 Bank of Norway 250 12/04/95 output also recorded substantial declines. In contrast, Bank of Sweden 300 12/04/95 Swiss National Bank 4,000 12/04/95 production of information processing equipment continued to rise at a rapid pace. Total utilization Bank for International Settlements: of industrial capacity contracted in October, with Swiss francs 600 12/04/95 Other authorized European declines widespread across industries. currencies 1,250 12/04/95 Total nominal retail sales, which had expanded National Bank of Belgium 1,000 12/18/95 relatively briskly over the second and third quarters, Bank of Canada 2,000 12/28/95 National Bank of Denmark ... 250 12/28/95 fell in October. As part of a pattern of widespread Bank of France 2,000 12/28/95 German Federal Bank 6,000 12/28/95 weakness in October, purchases at furniture and Bank of Italy 3,000 12/28/95 appliance stores were down appreciably after large Netherlands Bank 500 12/28/95 gains in earlier months, and sales at general merchandise and apparel outlets reversed most of their sizable The Committee then turned to a discussion of the September increases. Housing demand and construceconomic and financial outlook and the implementa- tion activity firmed in the third quarter: Sales of both tion of monetary policy over the intermeeting period new and existing homes posted solid advances, and ahead. A summary of the economic and financial single-family housing starts rose considerably, though information available at the time of the meeting and multifamily starts remained sluggish. of the Committee's discussion is provided below, Business investment in both equipment and strucfollowed by the domestic policy directive that was tures expanded less rapidly in the third quarter. approved by the Committee and issued to the Federal Stepped-up shipments of nondefense capital goods in Reserve Bank of New York. August and September more than offset a sharp drop The information available at the time of the meet- in shipments in July, but the quarterly average gain ing was mixed, but on balance it suggested a more was significantly smaller than the increases recorded moderate rate of expansion of economic activity after in the previous two quarters. Although orders for a strong gain during the summer. Consumer spending nondefense capital goods also rose more slowly in had turned sluggish recently; but with order backlogs the third quarter, the still-sizable order backlogs still large, business spending for durable equipment pointed to substantial expansion of spending on busiwas continuing at a robust if somewhat less rapid ness equipment in the near term. Nonresidential conrate, and the sizable rise in housing starts in the third struction increased appreciably further in the third quarter presaged higher residential construction out- quarter, reflecting a surge in office and institutional lays. Appreciable increases in employment and hours building activity. worked tended to confirm that the economy had Available data suggested a reduction in business continued to expand at a solid pace, although manu- inventory accumulation in August and September. In facturing activity had weakened a little. Consumer manufacturing, the pace of stockbuilding slowed in and producer prices had risen more slowly on aver- the third quarter from the brisk rate of the first half of age in recent months after having increased at ele- the year, leaving the factory stock-shipments ratio vated rates in the early part of the year, and growth in unchanged in the third quarter and a little above labor costs had slowed further. historic lows. In the wholesale sector, inventories Nonfarm payroll employment, though held down were drawn down in August and September after somewhat by the onset of a labor strike in the aircraft sizable buildups in earlier months; with sales weak, industry, increased in October at the average monthly the aggregate inventory-sales ratio for the sector pace of the third quarter; in addition, aggregate hours edged up in the third quarter and was at the upper end Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1996 of its range for recent years. Retail inventories Open market operations were directed toward expanded significantly in August (latest data avail- maintaining the existing degree of pressure on reable), but the stockbuilding was generally in line with serve positions throughout the intermeeting period. sales and the ratio of inventories to sales remained The federal funds rate averaged close to 53A percent, near the middle of its range in recent years. apart from a temporary rise around the end of the The nominal deficit on U.S. trade in goods and third quarter. Other short-term market rates also services narrowed markedly in August; for July and changed little on balance; market participants contin- August combined, the deficit was significantly ued to anticipate an easing of monetary policy at smaller than its average rate in the second quarter. some point but apparently viewed the chances of The value of exports declined over the two-month near-term easing as small. Longer-term interest rates period, with increases in exports of computers and declined further over the intermeeting period, peragricultural products more than offset by decreases in haps in response to a growing conviction that inflaexports of aircraft, gold, and service receipts. Imports tion pressures would remain subdued and that subfell more than exports; with the notable exception stantial reductions in fiscal deficits would be achieved of computers and semiconductors, declines were over a period of years. The lower longer-term interest recorded in most major import categories. Available rates, coupled with continuing reports of strong cordata indicated that economic expansion remained porate earnings, helped lift major indexes of equity subdued in the major foreign industrial countries. prices to new record levels during the period. In Growth continued to slow in the European economies foreign exchange markets, the trade-weighted value other than Italy, and the Japanese economy showed of the dollar in terms of the other G-10 currencies little evidence of a sustained recovery. declined slightly over the intermeeting period. Consumer prices rose at a slightly faster rate in Expansion of the broad monetary aggregates weak- October; with a smaller increase in food prices offset- ened in October. M2 was unchanged in October after ting higher energy prices, the index for items other having grown relatively rapidly in the third quarter than food and energy also picked up a little. For the and despite the persistence of low opportunity costs four months ending in October, prices for nonfood, associated with holding M2 assets. For the year non-energy items advanced at a rate well below that through October, M2 expanded at a rate in the upper of earlier in the year. Producer prices of finished half of the Committee's range for this aggregate in goods edged down in October, reflecting a further 1995. Growth of M3 apparently was held down decline in the prices of finished energy goods. somewhat by the reduced need for additional bank Excluding food and energy, producer prices were funding during a time of sluggish loan demand; for unchanged in October and increased at a slower pace the year to date, M3 grew at a rate a little above its in the third quarter than in the first half of the year. range. Total domestic nonfinancial debt had risen Growth in total nominal hourly compensation of pri- more slowly in recent months, reflecting reduced vate industry workers slowed in the third quarter and, expansion of both private and federal borrowing. on a year-over-year basis, continued to trend down; Nonetheless, for the year to date, this measure of debt the decrease in compensation growth over the past remained around the midpoint of its monitoring year spanned most major occupations and industries. range. At its meeting on September 26, 1995, the Com- The staff forecast prepared for this meeting sugmittee adopted a directive that called for maintaining gested that the growth of economic activity would the existing degree of pressure on reserve positions slow from the strong third-quarter pace to a rate more and that did not include a presumption about the in line with the increase in the economy's potential. likely direction of any adjustments to policy during The forecast assumed that the favorable interest rate the intermeeting period. The directive stated that in and wealth effects of the extended rally in the debt the context of the Committee's long-run objectives and equity markets would provide support for a modfor price stability and sustainable economic growth, erate advance in final sales. Consumer spending was and giving careful consideration to economic, finan- expected to expand at a rate generally in line with the cial, and monetary developments, slightly greater growth of incomes; the favorable effects of higher reserve restraint or slightly lesser reserve restraint prices on financial assets held by households would would be acceptable during the intermeeting period. be offset to some extent by the difficulties of increas- The reserve conditions associated with this directive ing numbers of households in servicing their growing were expected to be consistent with growth of M2 debts. The greater affordability of housing stemming and M3 over the balance of the year at a pace near from the earlier decline in mortgage rates was prothat experienced in recent months. jected to help sustain homebuilding activity at a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 145 relatively high level. In anticipation of reduced of the economy had tended to stagnate for some time, growth in sales and profits, business investment in including a slight decline in manufacturing activity new equipment and structures was projected to slow reported for October, but recent improvement in appreciably from the very rapid pace of the past few orders for steel was cited as a favorable if not deciyears. Strong export expansion would be associated sive omen in the outlook for industrial production. In with the improving outlook for the economies of other sectors of the economy, members observed that major trading partners. Although substantial uncer- tourism displayed considerable strength in many tainty still surrounded the fiscal outlook, the forecast areas, while cattle operations and energy production continued to incorporate a considerable degree of were adversely affected by high production costs or fiscal restraint. In the staff's judgment, wage and low prices. price inflation likely would not deviate significantly In their review of developments in key demand from recent levels. sectors of the economy, members observed that con- In the Committee's discussion, members com- sumer spending appeared to be on a firm growth mented that recent statistical and anecdotal informa- trend, though weakness in overall sales of motor tion pointed on balance to an appreciable slowing in vehicles in recent months and a decline in total retail the economic expansion, which had displayed unex- sales in October had introduced a cautionary note. It pected strength during the summer months. There was suggested that the performance of retail sales was some mix of views among the members concern- during the holiday season would tend to set the tone ing how far the slowing might proceed, though they for the longer-term trend in such sales, and in this generally viewed moderate growth as the most likely respect available data and anecdotal reports covering course for the economy. A number of members the first part of November were somewhat promising. believed that growth around potential was a probable More generally, further growth in consumer spendoutcome, with business activity sustained in part by ing, though probably at a somewhat slower pace than the favorable developments this year in the bond and over the past year, appeared likely. Such growth stock markets. Other members expressed concern would be supported by moderate expansion in about some signs of further ebbing in the strength of incomes and by the favorable effects on household final demands, and they envisaged the possible need wealth and confidence of the substantial improvefor a policy adjustment at some point to sustain ment in the value of financial assets this year and the continued moderate growth. With regard to inflation, ready availability of financing on relatively attractive members noted that despite generally high levels of terms. Consumer confidence currently seemed to be resource use, including tight labor markets in many at a fairly high level, albeit not uniformly so across parts of the country, inflation had been more subdued the country, and at least for the quarters immediately than many had expected over the past several months. ahead, anticipated strength in homebuilding should A number of members commented that they saw a induce spending for many household durables. On basis in this development for mild optimism about the negative side, some members emphasized that the outlook for inflation, but others expressed con- the growth in consumer debt was likely to exert an cern that, in the context of current forecasts for increasingly inhibiting effect on consumer spending. economic activity and relatively high levels of Moreover, the satisfaction of earlier pent-up demands resource use, progress toward lower inflation was might well limit sales of many consumer durables, unlikely over the projection period and indeed there notably motor vehicles, in coming quarters. In one was a risk of some modest deterioration in price view, the projected growth in personal incomes and performance. the increases that had occurred this year in the value In the course of the Committee's discussion, mem- of household holdings of financial assets would probers reported on uneven business conditions in differ- vide relatively little stimulus to consumer spending ent parts of the country and among industries. On because the distribution of such gains was heavily balance, modest to moderate growth appeared to tilted toward consumers in higher income or older characterize most regions, with overall levels of age groups. activity ranging from relatively robust in some Further sizable growth in business fixed investregions to comparatively depressed in others. The ment, but at a pace well below that experienced in mixed conditions were especially notable in manufac- recent years, was expected to provide appreciable turing where numerous producers faced lagging impetus to the expansion over the next several quardemands while others, particularly in high-tech indus- ters. Favorable factors in the outlook for business tries, found it difficult to satisfy strong demands for capital spending included a desire to upgrade techtheir products. More generally, the industrial sector nological capabilities for competitive reasons, strong Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1996 business earnings and cash flows, and an ample avail- Members welcomed the generally favorable price ability of financing on relatively liberal terms. Declin- and cost developments of recent months and the ing office vacancy rates in a number of areas would related indications that currently high levels of help to support office construction, and several mem- resource use did not appear to be associated with bers also commented on the strength in commercial rising inflationary pressures. Many emphasized the and other nonresidential building activity in various persistence of subdued increases in labor costs, and a parts of the country. number provided supporting anecdotal indications of Ongoing efforts by many business firms to bring relatively small advances in labor compensation in inventories into better alignment with sales had many parts of the country despite tight labor markets. resulted in declining inventory investment since ear- The anecdotal reports also continued to suggest that lier in the year. Some further inventory adjustments, strong competition was holding down price inflation notably in stocks of motor vehicles, were expected and that producers were benefiting from soft prices of over coming months, though not at a pace that would industrial materials. While a number of members have a marked retarding effect on economic activity. believed that these developments might augur a mod- Over much of 1996, inventory investment was pro- est decline in inflation over the year ahead, given jected to be a more neutral factor in the economy, current forecasts of moderate economic expansion, with accumulation proceeding at a pace in line with many viewed as more likely the prospect of little or growth in final sales, but the risks of unexpected no progress toward price stability over coming quardevelopments in this sector of the economy were ters, and some expressed concern about the potential always substantial. for an upward drift in the rate of inflation. An under- The outlook for fiscal policy remained obscured by lying factor in the relatively favorable climate for the uncertain outcome of the current debate between inflation was the continued limited rise in the costs of the Congress and the Administration. While substan- worker benefits. In the view of some members, howtial fiscal restraint aimed at eventually balancing the ever, benefit costs were likely to be less well conbudget appeared to be the likely result, the timing of tained as time went on and further major gains in the implementation of various tax and expenditure curbing such costs became more difficult to achieve. initiatives and the resulting extent of the fiscal Moreover, worker willingness to accept relatively restraint over the forecast period could not be antici- limited increases in wages and other compensation pated with any degree of precision. For the nearer might well begin to erode as concerns about job term, the ongoing shutdown of much of the federal security tended to diminish after an extended period government presented a downside risk to the expan- of relatively low unemployment. On balance, recent sion whose effects would depend on the presently experience had raised questions about the relationuncertain duration of the shutdown and the potential ship between levels of resource use and inflation that unsettlement in financial markets that might develop warranted careful monitoring. at some point. The members generally believed, how- In the Committee's discussion of policy for the ever, that in light of the underlying strength of the intermeeting period ahead, all but one member economy, the retarding effects of likely federal bud- favored or could accept an unchanged policy stance. get developments would not be sufficient in them- This policy position took account of current indicaselves to arrest the expansion over the forecast tions of a generally acceptable rate of economic period, at least if the federal government shutdown growth and the absence of any clear signs regarding were of relatively short duration and a federal debt the future strength of the expansion in relation to the default were averted. economy's potential or the future course of inflation. The nation's foreign trade deficit had worsened Several commented that current monetary policy substantially during the past several years, but cur- might be viewed as somewhat restrictive, though the rent forecasts did not point to further deterioration degree of restraint was difficult to calibrate and it did over the projection period. An anticipated firming in not appear as yet to be inhibiting declines in the economies of major U.S. trading partners was intermediate- and long-term interest rates, increases expected to bolster exports. Several members ques- in stock prices, or the availability of financing from tioned, however, the extent to which forecasts of lending institutions. strengthening economic activity were likely to mate- Members expressed somewhat differing views rialize in a number of these countries, and they sug- regarding the stance of monetary policy that was gested that the foreign sector might well remain a likely to prove consistent with the Committee's somewhat constraining factor in the performance of objectives over time. In the view of some, private the domestic economy. spending was not likely to have sufficient momentum Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 147 to overcome the effects of increased fiscal restraint if the directive would be consistent with what they the current stance of monetary policy were main- viewed as the most likely policy course over coming tained. In the circumstances, an easing at some point months. They agreed, however, that the current would be needed to foster sustained economic growth uncertainties surrounding the economic outlook were at an acceptable pace and would be consistent not likely to be resolved during the weeks immediwith progress toward the System's price stability ately ahead, and since no policy action was likely to objective. For most of these members, however, the be required in this period they could accept a symstronger-than-expected performance of the economy metric directive. in the third quarter had reduced the urgency of such a At the conclusion of the Committee's discussion, policy move and had created enough uncertainties to all but one of the members indicated that they could justify a careful appraisal of unfolding developments vote for a directive that called for maintaining the before a decision was made to ease policy. In the existing degree of pressure on reserve positions and view of one member, the probability of a shortfall that did not include a presumption about the likely from an acceptable rate of economic expansion was direction of any adjustments to policy during the sufficiently high to require an immediate easing of intermeeting period. Accordingly, in the context of policy. Other members believed that an unchanged the Committee's long-run objectives for price stabilpolicy was desirable under current conditions and ity and sustainable economic growth, and giving that the direction and timing of the next policy move careful consideration to economic, financial, and were more open to question. Not only were recent monetary developments, the Committee decided that data giving an uncertain picture of the underlying slightly greater or slightly lesser reserve restraint strength of aggregate demand, but current forecasts would be acceptable during the intermeeting period. generally did not point to progress toward the Sys- The reserve conditions contemplated at this meeting tem's long-run goal of price stability. In this view, were expected to be consistent with moderate growth therefore, the current stance of monetary policy, even in M2 and M3 over coming months. if slightly restrictive, was likely to be consistent with satisfactory economic growth over time, and it The information reviewed at this meeting suggests a moderation in the expansion of economic activity after a would provide better assurance of consolidating gains strong gain in the third quarter. Nonfarm payroll employagainst inflation and fostering some further modment increased further in October and the civilian unemeration in price increases over coming years. With ployment rate edged down to 5.5 percent. Industrial proregard to potential fiscal policy developments, duction fell somewhat in October after a moderate rise in although an especially broad range of outcomes the third quarter. Total nominal retail sales were little changed on balance over September and October. Singleseemed possible, the members agreed that the Comfamily housing starts were up considerably in the third mittee could not freeze its policy options while it quarter. Orders for nondefense capital goods point to subawaited the outcome of a prolonged federal budget stantial expansion of spending on business equipment in debate nor could it commit itself to a specific the near term; nonresidential construction has risen appreresponse to a particular fiscal policy agreement. Fis- ciably further. The nominal deficit on U.S. trade in goods and services narrowed over July and August from its cal policy and any associated market reactions would average rate in the second quarter. After increasing at be among the many factors that would have to be elevated rates in the early part of the year, consumer and taken into account in the formulation of monetary producer prices have risen more slowly on average in policy. recent months. Short-term market interest rates have changed little on In the Committee's discussion of possible interbalance since the Committee meeting on September 26 meeting adjustments to monetary policy, a majority while long-term rates have fallen somewhat. In foreign of the members expressed a preference for retaining a exchange markets, the trade-weighted value of the dollar in symmetric directive. In their view, the potential need terms of the other G-10 currencies has declined slightly to adjust policy during the relatively short intermeet- over the intermeeting period. In October, M2 was unchanged and M3 growth modering period was remote, and some of these members ated. For the year through October, M2 expanded at a rate also believed that the direction of the next adjustment in the upper half of its range for 1995 and M3 grew at a to policy was uncertain. A few also noted that the rate a little above its range. Growth in total domestic adoption of a biased intermeeting instruction at this nonfinancial debt has slowed somewhat in recent months point might send an unintended message regarding but for the year to date remains around the midpoint of its monitoring range. the prevailing view within the Committee concerning The Federal Open Market Committee seeks monetary the risks to the expansion. The remaining members and financial conditions that will foster price stability and said that they preferred a directive that was tilted promote sustainable growth in output. In furtherance of toward an easing policy action. Such an instruction in these objectives, the Committee at its meeting in July Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1996 reaffirmed the range it had established on January 31- gested to him that in the absence of an easing move February 1 for growth of M2 of 1 to 5 percent, measured the underlying rate of nominal GDP growth was from the fourth quarter of 1994 to the fourth quarter of likely to be lower than needed to maintain real GDP 1995. The Committee also retained the monitoring range of at or near its potential. The intermediate forecast was 3 to 7 percent for the year that it had set for growth of total domestic nonfinancial debt. The Committee raised the 1995 subject to a number of significant risks: household range for M3 to 2 to 6 percent as a technical adjustment to balance sheets seemed unlikely to sustain the current take account of changing intermediation patterns. For rate of durables expenditure for any extended period; 1996, the Committee established on a tentative basis the government expenditures were certain to be cut subsame ranges as in 1995 for growth of the monetary aggrestantially; and with fiscal contractions underway in gates and debt, measured from the fourth quarter of 1995 to the fourth quarter of 1996. The behavior of the monetary Europe and Canada and severe financial stresses aggregates will continue to be evaluated in the light of present in Japan and Mexico, he did not see much progress toward price level stability, movements in their likelihood of a substantial expansion of exports. In velocities, and developments in the economy and financial keeping with his views, the financial markets were markets. signalling the likelihood that a weaker pace of nomi- In the implementation of policy for the immediate future, the Committee seeks to maintain the existing degree of nal GDP growth would materialize. The yield curve pressure, on reserve positions. In the context of the Com- was virtually flat, with government securities up mittee's long-run objectives for price stability and sustain- through relatively long maturities trading at yields able economic growth, and giving careful consideration to below the current average federal funds rate. Thus, economic, financial, and monetary developments, slightly markets would be unlikely to find some easing greater reserve restraint or slightly lesser reserve restraint would be acceptable in the intermeeting period. The con- inappropriate and over the intermediate horizon templated reserve conditions are expected to be consistent would view the current level of short-term rates as with moderate growth in M2 and M3 over coming months. unsustainable. It was agreed that the next meeting of the Commit- Votes for this action: Messrs. Greenspan, McDonough, tee would be held on Tuesday, December 19, 1995. Blinder, Hoenig, Kelley, Melzer, Ms. Minehan, Mr. Moskow, Mses. Phillips and Yellen. Vote against The meeting adjourned at 1:35 p.m. this action: Mr. Lindsey. Mr. Lindsey dissented because he believed that Donald L. Kohn monetary policy should be eased. The evidence sug- Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

149 Legal Developments FINAL RULE—AMENDMENT TO REGULATION K 3. Section 211.5 is amended by: The Board of Governors is amending 12 C.F.R. Part 203, a. Redesignating paragraphs (c)(2) and (c)(3) as paragraphs its Regulation K (International Operations of United States (c)(3) and (c)(4) respectively and by adding a new para- Banking Organizations), to provide expanded general con- graph (c)(2); and sent authority for investments in foreign companies by US. b. In newly designated paragraph (c)(3), by removing the banking organizations that are strongly capitalized and word "accepted" in the third sentence and adding in its well managed. This expanded authority is designed to place the word "received". permit U.S. banking organizations meeting these requirements to make larger investments without the need for The addition reads as follows: prior approval or review. Certain investments or activities, however, are not eligible for the expanded authority. The Section 211.5—Investments and activities abroad. final rule requires an investor making use of the expanded authority to provide the Board with certain information after an investment has been made. In addition, for those (c^ -f- -iinvestments requiring prior notice to the Board, the rule would streamline the processing of such notices. Effective December 21, 1995, 12 C.F.R. Part 211 is (2)(i) Expanded general consent for de novo investamended as follows: ments. Notwithstanding the amount limitations of paragraph (c)(1) of this section, but subject to the Part 211—International Banking Operations other limitations of this section, the Board grants (Regulation K) expanded general consent authority for investments in an organization by an investor that is strongly capital- 1. The authority citation for Part 211 is revised to read as ized and well managed if: follows: (A) The activities of the organization are limited to activities in which a national bank may engage Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 directly or in which a subsidiary may engage under et seq., 3901 et seq. paragraph (d) of this section; (B) In the case of an investor that is an Edge 2. Section 211.2 is amended by redesignating paragraphs corporation that is not engaged in banking or an (u) and (v) as paragraphs (v) and (w), respectively, and by agreement corporation, the total amount invested in adding new paragraphs (u) and (x) to read as follows: such organization (in one transaction or a series of transactions) does not exceed the lesser of 20 per- Section 211.2—Definitions. cent of the investor's Tier 1 capital or 2 percent of the Tier 1 capital of the parent member bank; (C) In the case of a bank holding company or (u) Strongly capitalized means: member bank investor, the total amount invested in (1) In relation to a parent member bank, that the such organization (in one transaction or a series of standards set out in 12 C.F.R. 208.33(b)(1) are satis- transactions) directly or indirectly does not exceed fied; and 2 percent of the investor's Tier 1 capital; (2) In relation to an Edge or Agreement corporation or (D) All investments made, directly or indirectly, by a bank holding company, that it has a total risk-based an Edge corporation not engaged in banking or an capital ratio of 10.0 percent or greater. agreement corporation during the previous 12month period under paragraph (c)(2) of this section, when aggregated with the proposed investment, (x) Well managed means that the Edge or Agreement would not exceed the lesser of 50 percent of the corporation, its parent member bank, if any, and the total capital of the Edge or agreement corporation, bank holding company have each received a composite or 5 percent of the total capital of the parent memrating of 1 or 2 at its most recent examination or review ber bank; and are not subject to any supervisory enforcement (E) All investments made, directly or indirectly, by action. a member bank or a bank holding company during Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • February 1996 the previous 12-month period under paragraph ployees and applicants for employment alleging discrimi- (c)(2) of this section, when aggregated with the nation in employment, and related matters. proposed investment, would not exceed 5 percent Effective February 5, 1996, 12 C.F.R. Part 268 is of its total capital; and amended as follows: (F) Both before and immediately after the proposed investment the investor, its parent member bank, if Part 268—Rules Regarding Equal Opportunity any, and any parent bank holding company are strongly capitalized and well managed. 1. The authority citation for Part 268 continues to read as (ii) Determining aggregate investment limits. For purfollows: poses of determining compliance with the aggregate investment limits set out in paragraphs (c)(2)(i)(D) Authority: 12 U.S.C. 244 and 248(i), (k) and (1). and (E) of this section, an investment by an investor in a subsidiary shall be counted only once notwithstand- 2. In section 268.207, paragraph (e) is revised to read as ing that such subsidiary may, within 12 months of the follows: date of making the investment, downstream all or any part of such investment to another subsidiary. (iii) Additional investments. An investor that makes Section 268.207—Investigation of complaints. investments under paragraph (c)(2)(i) of this section may also make additional investments in an organization under the standards set forth in paragraphs (c)(l)(ii), (c)(l)(iii) and (c)(l)(iv) of this section. (e)(1) The Board shall complete its investigation within (iv) Ineligible investments. The following investments 180 days of the date of the filing of an individual are not eligible for the general consent under para- complaint or within the time period contained in the graph (c)(2)(i) of this section: determination of the Commission on review of a dis- (A) An investment in a foreign country where the missal pursuant to section 268.206 of this part. By investor does not have an affiliate or a branch; written agreement within those time periods, the com- (B) The establishment or acquisition of an initial plainant and the Board may voluntarily extend the time subsidiary bank in a foreign country; period for not more than an additional 90 days. The (C) Investments in general partnerships or unlim- Board may unilaterally extend the time period or any ited liability companies; and period of extension for not more than 30 days where it (D) An acquisition of shares or assets of an organi- must sanitize an investigative file that may contain inforzation that is not an affiliate or joint venture of the mation classified pursuant to Executive Order No. investor. 12356, or successor orders, as secret in the interest of (v) Post-investment notice. By the end of the month national defense or foreign policy, provided the Board following the month in which the investment is made, notifies the complainant of the extension. the investor shall provide the Board with the follow- (2) Confidential supervisory information, as defined in ing information relating to the investment: 12 C.F.R. 261.2(b), and other confidential information of (A) If the investment is in a joint venture, the the Board may be included in the investigative file by respective responsibilities of the parties to the joint the investigator, the EEO Programs Director, or another venture; appropriate officer of the Board, where such information (B) Projections for the organization in which the is relevant to the complaint. Neither the complainant nor investment is made for the first year following the the complainant's personal representative may make furinvestment; and ther disclosure of such information, however, except in (C) Where the investment is made in an organiza- compliance with the Board's Rules Regarding Availabiltion that incurred a loss in the last year, a descrip- ity of Information, 12 C.F.R. Part 261, and where applition of the reasons for the loss and the steps taken cable, the Board's Rules Regarding Access to and Reto address the problem. view of Personal Information in Systems of Records, 12 C.F.R. Part 261a. >{: ^ H* % ^ FINAL RULE—AMENDMENT TO RULES REGARDING EQUAL OPPORTUNITY Section 268.304—[Amended] The Board of Governors is amending 12 C.F.R. Part 268, its Rules Regarding Equal Opportunity (Rules) to correct 3. In section 268.304(a)(3)(i)(A), remove the words "Execan ambiguity in the provision regarding access to the utive Order No. 10450 (3 C.F.R., 1949-1953 Comp., P. investigative file. The Rules set out the complaint pro- 936)" and add in their place, the words "Executive Order cessing procedures governing complaints by Board em- No. 12356 (3 C.F.R., 1982 Comp., P. 166)". Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 151 ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT tor reports on this proposal were sought from the Attorney General, the OCC, and the FDIC. The Department of Orders Issued Under Section 3 of the Bank Holding Justice concluded that consummation of this proposal Company Act would not have any significantly adverse effects on competition, and the OCC and FDIC did not object to consumma- 1st United Bancorp tion of this proposal. In light of all the facts of record, the Boca Raton, Florida Board concludes that consummation of this proposal is not likely to have a significantly adverse effect on competition Order Approving the Acquisition of a Bank Holding in any relevant banking market. Company, Merger of Banks, and Establishment of The Board has received comments from a shareholder of Branches 1st United ("Protestant") alleging that consummation of this proposal would have an adverse effect on the financial 1st United Bancorp, Boca Raton, Florida ("1st United"), a resources of 1st United. Protestant contends that the finanbank holding company within the meaning of the Bank cial condition of 1st United and United Bank may be Holding Company Act ("BHC Act"), has applied under adversely affected by 1st United's potential assumption of section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all a note owed by American to a third party ("Noteholder"), the voting securities of The American Bancorporation of and the resolution of litigation between American and the the South ("American"), and thereby indirectly acquire Noteholder and between American and a former director of The American Bank of the South ("American Bank"), both American. Protestant also alleges that 1st United's finanof Merritt Island, Florida. 1st United Bank, Boca Raton, cial projections are inaccurate because they overestimate Florida ("United Bank"), a state member bank and a the amount that 1st United would be able to recover on wholly owned subsidiary of 1st United, also has applied American Bank's problem assets. pursuant to section 18(c) of the Federal Deposit Insurance The Board has carefully reviewed the effects this transac- Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to tion would have on the financial resources of 1st United merge with American Bank, and thereby to establish and United Bank. 1st United has indicated that it would branches pursuant to section 9 of the Federal Reserve Act borrow funds from its directors to repay American's debt (12 U.S.C. § 321) at locations set forth in the Appendix.1 to Noteholder upon consummation of this proposal. 1st Notice of the applications, affording interested persons United's debt service projections, which take into consideran opportunity to submit comments, has been published ation this debt, appear reasonable and are consistent with (60 Federal Register 48,161). As required by the Bank the Board's guidelines. In addition, American has settled Merger Act, reports on the competitive effects of the all outstanding litigation with Noteholder, and the Agreemerger were requested from the United States Attorney ment and Plan of Merger between 1st United and Ameri- General, the Office of the Comptroller of the Currency can requires the establishment of an escrow account for ("OCC"), and the Federal Deposit Insurance Corporation payment of any judgment against American in connection ("FDIC"). The time for filing comments has expired, and with the litigation involving its former director.3 the Board has considered the applications and all com- The Board has reviewed examination reports of Ameriments received in light of the factors set forth in the BHC can, American Bank, 1st United, and United Bank in Act, the Bank Merger Act, and the Federal Reserve Act. connection with this proposal. Based on all the facts of 1st United is the 34th largest commercial banking orga- record, including these examination reports and other sunization in Florida, controlling approximately $271 million pervisory information relating to the financial condition in deposits, representing less than 1 percent of total depos- and managerial resources of 1st United and United Bank, its in commercial banking organizations in the state.2 the Board concludes that the financial and managerial American is the 62d largest commercial banking organiza- resources and future prospects of 1st United and United tion in Florida, controlling approximately $154 million in Bank are consistent with approval of this proposal, as are deposits, representing less than 1 percent of total deposits the other supervisory factors that the Board is required to of commercial banking organizations in the state. Upon consummation of the proposal, 1st United would become the 25th largest commercial banking organization in Flor- 3. Protestant also alleges that 1st United's managerial resources ida, and would control approximately $425 million in would be impaired by the appointment of American Bank directors to deposits, representing less than 1 percent of total deposits the board of directors of 1st United or United Bank, and the establishment of an advisory board that would include people who have in commercial banking organizations in the state. defaulted on loans from American Bank. 1st United has indicated that 1st United and American do not compete directly in any neither it nor United Bank has determined to add directors or establish relevant banking market. As noted above, competitive fac- an advisory board. Moreover, 1st United and United Bank have committed that they will provide the Federal Reserve Bank of Atlanta with at least 30 days prior notice before either entity adds any current or former director or executive officer of American or American Bank 1. 1st United proposes to merge American into TAB Acquisition ("American-affiliated individual") to its board of directors or employs Co. ("Newco"), a newly formed subsidiary of 1st United, and then any American-affiliated individual as a senior executive officer, and merge American Bank into United Bank. that they will not add or employ any such American-affiliated individ- 2. Deposit data are as of June 30, 1995. ual if the Reserve Bank issues a notice of disapproval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • February 1996 consider under the BHC Act, the Bank Merger Act, and the ically conditioned on compliance by 1 st United and United Federal Reserve Act.4 Bank with the commitments made in connection with these Protestant contends that asset sales by United Bank after applications. This approval is further subject to 1st United consummation of the proposal would have a negative effect obtaining all necessary approvals from the State of Florida. on residential and commercial real estate prices in Brevard For purposes of this action, the commitments and condi- County, and that United Bank would decrease the interest tions relied on in reaching this decision are deemed to be rates paid by American Bank on time and savings deposits. conditions imposed in writing by the Board and, as such, In addition, Protestant alleges that consummation of the may be enforced in proceedings under applicable law. proposal would result in the loss of the largest community These transactions shall not be consummated before the bank in Brevard County. 1 st United responded that it will fifteenth calendar day following the effective date of this continue to pay market interest rates on time and savings order, or later than three months after the effective date of deposits acquired from American Bank after consumma- this order, unless such period is extended for good cause by tion of the proposal. the Board or the Federal Reserve Bank of Atlanta, acting The Board notes that United Bank received a "satisfac- pursuant to delegated authority. tory" rating under the Community Reinvestment Act By order of the Board of Governors, effective Decem- (12 U.S.C. § 2901 et seq.) ("CRA") from the Federal ber 11, 1995. Reserve Bank of Atlanta, its primary federal supervisor, in its most recent CRA performance examination, as of Feb- Voting for this action: Chairman Greenspan, and Governors Lindruary 28, 1994. The Board also notes that American Bank sey, Phillips, and Yellen. Absent and not voting: Vice Chairman Blinder and Governor Kelley. is operating under a cease and desist order issued by the FDIC, its primary federal supervisor, due to its financial JENNIFER J. JOHNSON and managerial condition, and that consummation of this Deputy Secretary of the Board proposal would result in a financially stronger institution better able to serve the needs of its community.5 In light of Appendix A all the facts of record, the Board concludes that convenience and needs factors are consistent with approval of 850 Triangle Road, Merritt Island, FL this proposal.6 102 W. Central Boulevard, Cape Canaveral, FL Based on the foregoing and all the facts of record, the 7100 North Atlantic Avenue, Cape Canaveral, FL Board has determined that these applications should be, 340 W. King Street, Cocoa, FL and hereby are, approved.7 The Board's approval is specif- 1775 N. Atlantic Avenue, Cocoa Beach, FL 1680 Clearlake Road, Cocoa, FL 1350 N. Courtenay Parkway, Merritt Island, FL 4. Protestant also alleges that the proposal is not in the best interest 2481 Croton Road, Melbourne, FL of 1st United shareholders. The Board notes that the courts can 445 Fifth Avenue, Indialantic, FL provide Protestant adequate relief if he can substantiate that 1st United 2000 Highway A1 A, Indian Harbour Beach, FL or American has violated applicable state or Federal laws in connection with this proposal. Based on the foregoing and other facts of 440 S. Babcock, Melbourne, FL record, the Board concludes that these allegations do not present 4940 Babcock, Palm Bay, FL adverse considerations under the statutory factors in the BHC Act, the 6899 North U.S. Highway 1, Cocoa, FL Bank Merger Act, or the Federal Reserve Act. 1902 S. Flake Boulevard, Rockledge, FL 5. Protestant also asserts that residents of Brevard County, Florida, which includes Merritt Island, were not given proper notice of the 4250 S. Washington Avenue, Titusville, FL proposed transactions. The record indicates that notice of the proposal 326 E. Merritt Island Causeway, Merritt Island, FL was published in the Federal Register and a newspaper of general circulation in Brevard County in accordance with the publication requirements set forth in the Board's Rules of Procedure (12 C.F.R. 262.3(b)) and Regulation Y (12 C.F.R. 225.14(b)). Protestant also alleges that Florida law requires that 1st United's shareholders approve the proposal. Because this proposal involves the merger of American and American Bank into wholly owned subsidiaries of 1st United, however, Florida law appears to require only that 1st United, as sole shareholder of its subsidiaries, approve the transactions. See of Newco. As noted above, American has settled all outstanding Fla. Stat. Ann. §§ 607.1101, 607.1103, and 658.44. litigation with Noteholder, and 1st United would not assume Ameri- 6. The Board also received comments from an individual who can's debt to Noteholder. In addition, 1st United and American have alleged that title to property acquired by American Bank in satisfac- agreed to establish an escrow account to pay any liability arising from tion of a debt previously contracted properly belongs to a condomin- American's litigation with its former director. Furthermore, 1st United ium association. The Board notes that the courts have authority to has provided the Board with charter documents for Newco and has provide redress to this individual or the association if the allegations indicated that Newco is registered with the Florida Secretary of State. can be substantiated. Protestant has had ample opportunity to present written submissions 7. Protestant has requested that the Board delay consideration of this and, in fact, has submitted written comments that have been considproposal for several reasons, including the need for resolution of all ered by the Board. Based on all the facts of record, the Board litigation to which American is a party, a definitive agreement be- concludes that the record is sufficient to act on this proposal at this tween 1 st United and Noteholder about the assumption of American's time, and that delay of action on the proposal on the grounds of debt, and additional information about the formation and registration informational insufficiency is not warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 153 First American Corporation main in the market. After considering the competition Nashville, Tennessee offered by the banking organizations that would remain in the market, the increase in concentration as measured by Order Approving the Acquisition of a Bank Holding the HHI, and all other facts of record, the Board has Company concluded that consummation of this proposal would not result in any significantly adverse effects on competition in First American Corporation, Nashville ("First American"), the Nashville banking market, or any other relevant banka bank holding company within the meaning of the Bank ing market. Holding Company Act ("BHC Act"), has applied under After a review of all the facts of record, including section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all information provided by relevant federal supervisors, the the voting shares of First City Bancorp, Murfreesboro Board also has concluded that the financial and managerial ("First City"), and thereby indirectly acquire its subsidiary resources and future prospects of First American, First banks, First City Bank, Murfreesboro, and Citizens Bank, City, and their respective subsidiaries, and other supervi- Smithville, all in Tennessee. sory factors the Board must consider under section 3 of the Notice of the application, affording interested persons an BHC Act are consistent with approval of this proposal. opportunity to submit comments, has been published Considerations relating to the convenience and needs of (60 Federal Register 48,996 (1995)). The time for filing the communities to be served also are consistent with comments has expired, and the Board has considered the approval. application and all comments received in light of the Based on the foregoing, the Board has determined that factors set forth in section 3 of the BHC Act. this application should be, and hereby is, approved. The First American, with total consolidated assets of Board's approval is specifically conditioned on compliance $8.1 billion, operates subsidiary banks in Tennessee, Ken- by First American with all commitments made in connectucky, and Virginia. First American is the second largest tion with this application. For the purpose of this action, banking organization in Tennessee, controlling deposits of the commitments and conditions relied on by the Board in approximately $5.9 billion, representing 11.8 percent of reaching its decision are deemed to be conditions imposed total deposits in commercial banking organizations in the in writing by the Board in connection with its findings and state.1 First City is the 17th largest banking organization in decision and, as such, may be enforced in proceedings Tennessee, controlling deposits of approximately $297.2 under applicable law. million, representing less than 1 percent of total deposits in The acquisition of First City shall not be consummated commercial banking organizations in the state. Upon con- before the fifteenth calendar day following the effective summation of this proposal, First American would remain date of this order, or later than three months following the the second largest banking organization in Tennessee, con- effective date of this order, unless such period is extended trolling deposits of approximately $6.2 billion, represent- for good cause by the Board or by the Federal Reserve ing 12.4 percent of total deposits in commercial banking Bank of Atlanta, acting pursuant to delegated authority. organizations in the state. By order of the Board of Governors, effective Decem- First American and First City compete directly in the ber 11, 1995. Nashville, Tennessee, banking market ("Nashville banking market").2 On consummation of this proposal, the market Voting for this action: Chairman Greenspan, and Governors Lindwould remain moderately concentrated,3 as measured by sey, Phillips, and Yellen. Absent and not voting: Vice Chairman the Herfindahl-Hirschman Index ("HHI"), and this pro- Blinder and Governor Kelley. posal would not result in market concentration levels that JENNIFER J. JOHNSON exceed those set forth in the Department of Justice Merger Deputy Secretary of the Board Guidelines.4 In addition, numerous competitors would re- 1. All asset data are as of June 30, 1995. 2. The Nashville banking market is approximated by Cheatham, Davidson, Robertson, Rutherford, Sumner, Williamson and Wilson Counties, plus the town of Spring Hill in Maury County, all in Tennessee. 3. Market data are as of June 30, 1994. Market share data are based on calculations in which the deposits of thrift institutions are included 1000 and 1800 is considered moderately concentrated. The Justice at 50 percent. The Board previously has indicated that thrift institu- Department has informed the Board that a bank merger or acquisition tions have become, or have the potential to become, significant generally will not be challenged (in the absence of other factors competitors of commercial banks. See Midwest Financial Group, 75 indicating anticompetitive effects) unless the post-merger HHI is at Federal Reserve Bulletin 386 (1989); National City Corporation, 70 least 1800 and the merger increases the HHI by more than 200 points. Federal Reserve Bulletin 743 (1984). The Justice Department has stated that the higher than normal thresh- 4. The HHI for the Nashville banking market would increase old for an increase in the HHI when screening bank mergers and 56 points to 1492 as a result of this transaction. Under the revised acquisitions for anticompetitive effects implicitly recognizes the com- Department of Justice Merger Guidelines, 49 Federal Register 26,823 petitive elfect of limited-purpose lenders and other non-depository (June 29, 1984), a market in which the post-merger HHI is between financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • February 1996 NationsBank Corporation bank holding company, if certain conditions are met.3 Charlotte, North Carolina These conditions are met in this case.4 In view of all the facts of record, the Board is permitted to approve this NB Holdings, Inc. proposal under section 3(d) of the BHC Act. Charlotte, North Carolina Convenience and Needs Considerations Order Approving the Acquisition of a Bank Holding Company In acting on an application to acquire a depository institution under the BHC Act, the Board must consider the NationsBank Corporation and NB Holdings Corporation, convenience and needs of the communities to be served both of Charlotte, North Carolina (together, "Na- and take into account the records of the relevant depository tionsBank"), bank holding companies within the meaning institutions under the Community Reinvestment Act of the Bank Holding Company Act ("BHC Act"), have (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the applied under section 3 of the BHC Act (12 U.S.C. § 1842) federal financial supervisory agencies to encourage finanto acquire North Florida Bank Corporation ("North Flori- cial institutions to help meet the credit needs of the local da") and thereby indirectly acquire its wholly owned sub- communities in which they operate, consistent with their sidiary, Bank of Madison County, National Association safe and sound operation. To accomplish this end, the CRA ("Madison National"), both of Madison, Florida.1 requires the appropriate federal supervisory authority to Notice of the application, affording interested persons an "assess the institution's record of meeting the credit needs opportunity to submit comments, has been published of its entire community, including low- and moderate- (60 Federal Register 49,277 (1995)). The time for filing income neighborhoods, consistent with the safe and sound comments has expired, and the Board has considered the operation of such institution," and to take that record into application and all comments received in light of the account in its evaluation of bank expansion proposals.5 factors set forth in section 3(c) of the BHC Act. The Board has received comments from the Central NationsBank, with total consolidated assets of approxi- Piedmont Economic Association ("Protestant") alleging mately $188 billion, operates subsidiary banks in nine that a NationsBank subsidiary, NationsBank, N.A., Richstates and the District of Columbia.2 NationsBank is the mond, Virginia ("NationsBank Virginia"), discriminates fourth largest commercial banking organization in the against African Americans and low-income individuals in United States, controlling approximately 4.8 percent of its general lending practices. In particular, Protestant altotal banking assets in the United States, and approxi- leges that homebuyer education seminars sponsored by mately 3.7 percent of total insured deposits in the United NationsBank Virginia in Lynchburg, Virginia, do not ben- States. NationsBank is the third largest commercial bank- efit African Americans and low-income individuals, and ing organization in Florida, controlling deposits of approx- that, through its outreach and lending efforts, NationsBank imately $20.8 billion, representing 14.9 percent of total Virginia attempts to direct African-American and lowdeposits in commercial banking organizations in the state. income borrowers in Lynchburg toward predominantly NationsBank and North Florida do not compete in any African-American and low-income parts of the city, in banking market. Based on all the facts of record, the Board violation of the Fair Housing Act, the Equal Credit Opporconcludes that consummation of the proposed transaction tunity Act, and the CRA.6 would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market. 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted Interstate Analysis on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. For purposes of the BHC Act, Section 3(d) of the BHC Act, as amended by Section 101 NationsBank's home state is North Carolina. 4. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). of the Riegle-Neal Interstate Banking and Branching Effi- NationsBank is adequately capitalized and adequately managed. The ciency Act of 1994, allows the Board to approve an appli- Board has been informally advised by the Florida State Comptroller cation by a bank holding company to acquire control of a that Madison National, through its state chartered predecessor, has bank located in a state other than the home state of such been in existence and continuously operated for the minimum period of time required under Florida law. In addition, upon consummation of this proposal, NationsBank and its affiliates would control less than 10 percent of the total amount of deposits of insured depository 1. North Florida's subsidiary currently is a state chartered commer- institutions in the United States and less than 30 percent of the total cial bank that would be converted to a national bank immediately amount of deposits of insured depository institutions in Florida. before the proposed transaction. NationsBank would cause Madison 5. 12 U.S.C. § 2903. National to merge into NationsBank's wholly owned subsidiary, Na- 6. Protestant also alleged that NationsBank Virginia conspired with tionsBank of Florida, N.A., Tampa, Florida, immediately after the the City of Lynchburg not to inform African Americans and lowacquisition of North Florida. income individuals about low-interest loans available under the city's 2. Asset and deposit data are as of June 30, 1995, and include Community Development Block Grant ("CDBG") program and to acquisitions by NationsBank approved after that date. NationsBank direct funds from this program to unauthorized projects. Similar also operates a limited-purpose credit card bank in Delaware. allegations by Protestant regarding the Lynchburg CDBG program Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 155 The Board has carefully reviewed the CRA performance 1993, NationsBank Virginia and NationsBank Mortgage records of NationsBank and its subsidiary banks and of Company, Dallas, Texas, NationsBank's home mortgage North Florida and Madison National, all comments re- lending subsidiary, made 15.3 percent of their home mortceived on this application, all responses to these com- gage loans in the Lynchburg community in low- and ments, and all other relevant facts of record in light of the moderate-income census tracts, compared to 8.4 percent CRA, the Board's regulations, and the Statement of the for all other lenders in the area. In addition, 31 percent of Federal Financial Supervisory Agencies Regarding the the home mortgage loans made by NationsBank in the Community Reinvestment Act ("Agency CRA State- Lynchburg community were made to low- and moderatement").7 income borrowers, compared to 23.7 percent for all other The Agency CRA Statement provides that a CRA exam- lenders in the area. ination is an important and often controlling factor in the The 1995 Examination also found that both Naconsideration of an institution's CRA record and that re- tionsBank, on a corporate level, and NationsBank Virginia ports of these examinations will be given great weight in engaged in extensive outreach activities with a broad specthe applications process.8 The Board notes that all of trum of representatives from various communities, result- NationsBank's subsidiary banks received ratings of "satis- ing in the development of innovative products and services factory" or better from their primary supervisor, the Office to serve all of NationsBank Virginia's communities. In of the Comptroller of the Currency ("OCC"), at their most addition, the bank maintained extensive calling efforts in recent examinations for CRA performance, as of July all of its delineated communities, including Lynchburg. 1995, and that NationsBank Virginia received an "out- During 1995, NationsBank Virginia also developed a marstanding" rating at that time ("1995 Examination"). Exam- keting plan specifically focused on low- and moderateiners of NationsBank Virginia found no evidence of pro- income individuals, small businesses owned by women hibited discriminatory practices or of practices intended to and minorities, and child care center operators, that emdiscourage applications for the types of products set forth ploys the full range of marketing tools the bank uses in its in the bank's CRA statement, and determined that Na- other marketing efforts. Low- and moderate-income areas tionsBank Virginia has adequate policies, procedures, and in markets such as the Lynchburg area also receive at least training programs in place to support nondiscrimination in one direct mailing a year that describes the bank's credit lending practices. products.9 In addition, NationsBank Virginia has a program to identify census tracts in which the bank's commer- Examiners also noted that NationsBank's Fair Lending cial, consumer, and mortgage lending can be improved and Group reviews the performance of all of NationsBank's to develop broadly coordinated marketing plans to increase subsidiary banks in providing all applicants with fair aclending levels in these areas. Bank management reviews cess to credit, including maintaining second and third these enhanced marketing plans and their results quarterly. review programs for applications that are being considered for denial. Declined applicants for home mortgage and Examiners found that NationsBank Virginia participates home improvement loans also may have their loan deci- in loans and loan pools with other financial institutions, sions reviewed by an independent board provided by the nonprofit community development organizations, public National Urban League. The geographic distribution of housing authorities, private developers, and other organiza- NationsBank Virginia's credit extensions, applications, and tions that promote affordable rental and owner-occupied denials also was considered by examiners to be reasonable, housing for low- and moderate-income individuals. For and revealed that, on the whole, the bank effectively example, NationsBank Virginia participates in a partnerreached low- and moderate-income individuals and areas ship with the Association of Community Organizations for throughout the communities it served. For example, during Reform Now ("ACORN"), in which ACORN provides homebuyer education seminars and helps identify borrowers who qualify for home mortgage loans with total fees were reviewed by the United States Department of Housing and and down payment as low as $1,000. In 1993, NationsBank Urban Development ("HUD") in 1991, and HUD concluded that the Virginia made 500 loans totalling $52.5 million in Viradministration of the Lynchburg CDBG program was in compliance ginia, Maryland, and the District of Columbia under this with the Housing and Community Development Act of 1974. See program.10 In 1994, NationsBank Virginia provided Crestar Financial Corporation, 80 Federal Reserve Bulletin 145 $125,000 in grants to nonprofit community-based organiza- (1994). Moreover, the facts of record indicate that NationsBank Virginia's predecessor banks did not participate in the Lynchburg CDBG tions that provided credit counseling, homebuyer educaprogram at the time of the alleged deception. The evidence before the tion, and counseling to first-time homebuyers, which Board at this time does not indicate that NationsBank engaged in any helped 139 individuals and families acquire a home. The improper actions related to the Lynchburg CDBG program. bank was the largest participant in the Virginia Housing HUD intends to perform another review of this commenter's allegations. If the review produces information indicating that NationsBank has engaged in any improper actions, the Office of the Comptroller of the Currency, which is the primary federal banking supervisor of NationsBank Virginia, and the Board have sufficient statutory author- 9. Under this program in 1994, NationsBank conducted a direct ity to take appropriate action. The Board has provided the OCC with a mail campaign that resulted in the origination of $18 million in auto copy of the commenter's allegations. loans in low- and moderate-income areas. 7. 54 Federal Register 13,742 (1989). 10. NationsBank Virginia made 39 loans totalling $3.9 million 8. Id. at 13,745. under this program in Virginia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • February 1996 Development Authority loan program, and made 324 loans order, or later than three months after the effective date of totalling $23 million under this program during 1994. this order, unless such period is extended for good cause by In terms of small business lending, the 1995 Examina- the Board or by the Federal Reserve Bank of Richmond, tion states that the bank made 4,817 business loans in acting pursuant to delegated authority. original amounts less than $500,000 during 1994, for a By order of the Board of Governors, effective Decemtotal of $420.1 million in small business loans. The bank ber 6, 1995. was the largest participant in the Virginia Small Business Financing Authority Loan Guaranty Program and the City Voting for this action: Chairman Greenspan, Vice Chairman of Richmond Bank Participation Loan Program, and partic- Blinder, and Governors Kelley, Phillips, and Yellen. Absent and not voting: Governor Lindsey. ipated in seven other similar programs. NationsBank Virginia also made a $3 million equity investment in Anthem JENNIFER J. JOHNSON Capital Corporation, a small business investment company. Deputy Secretary of the Board After reviewing all the facts of record, including all comments received by the Board and relevant reports of Norwest Corporation examination, the Board concludes that the CRA perfor- Minneapolis, Minnesota mance record of NationsBank Virginia and the other NationsBank subsidiary banks are consistent with approval of Order Approving the Acquisition of a Bank Holding this application. Based on this and all the other facts of Company record, the Board has concluded that convenience and needs considerations are consistent with approval of this Norwest Corporation, Minneapolis, Minnesota ("Norapplication. west"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") has filed an Other Considerations application pursuant to section 3(a)(3) of the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire Canton Bancshares, The Board also has reviewed the financial and managerial Inc. ("Canton"), and indirectly acquire Canton State Bank, resources and future prospects of NationsBank, North Florboth of Canton, Illinois. ida, and their respective subsidiaries and other supervisory Notice of this proposal, affording interested persons an factors the Board must consider under section 3 of the opportunity to submit comments, has been published BHC Act.11 Based on all the facts of record, the Board has (60 Federal Register 49,846 (1995)). The time for filing concluded that these factors are consistent with approval of comments has expired, and the Board has considered the this proposal. application and all comments received in light of the Based on the foregoing and in light of all the facts of factors set forth in section 3(c) of the BHC Act. Norwest, record, the Board has determined that this application with total consolidated assets of $66.6 billion,1 controls should be, and hereby is, approved. The Board's approval banks in Arizona, Colorado, Iowa, Illinois, Indiana, Minneis expressly conditioned on compliance with the commitsota, Montana, Nebraska, New Mexico, North Dakota, ments made in connection with this application. The com- Ohio, South Dakota, Texas, Wisconsin, and Wyoming, mitments and conditions relied on by the Board in reaching representing 1.6 percent of total deposits in depository its decision are both deemed to be conditions imposed in institutions in the United States.2 Norwest is the 82d largest writing in connection with its findings and decisions and, commercial banking organization in Illinois, controlling as such, may be enforced in proceedings under applicable total deposits of $219 million, representing less than 1 law. percent of total deposits in depository institutions in the This transaction shall not be consummated before the state. Canton is the 354th largest commercial banking fifteenth calendar day following the effective date of this organization in Illinois, controlling deposits of approximately $44.2 million, representing less than 1 percent of 11. The Board received comments from an individual who owns a total deposits in insured depository institutions in the state. small business alleging that NationsBank Virginia acted improperly in On consummation of this proposal, Norwest would bedenying this commenter's loan request and in its dealings with this come the 71st largest commercial banking organization in commenter. NationsBank Virginia responds that all actions it took in Illinois, controlling $263.2 million in deposits, representthis matter were based on the business's financial condition and were consistent with its general lending criteria and procedures. The Board ing less than 1 percent of total deposits in insured deposihas carefully considered these comments in light of all the facts of tory institutions in the state. record, including supervisory reports of examination assessing the managerial strengths and resources of the bank. In addition, the Board has considered the findings of the 1995 Examination, discussed above, that no evidence of prohibited discriminatory practices or of practices intended to discourage applications were disclosed, and that Na- 1. Deposit data are as of June 30, 1995. All market data are as of tionsBank Virginia is an active small business lender. Based on these June 30, 1994. and other facts of record, The Board concludes that these comments 2. In this context, depository institutions include commercial banks, do not warrant denial of this proposal. The Board also has forwarded savings banks, and savings associations with deposits insured by the these comments to the OCC, which is the primary federal banking Federal Deposit Insurance Corporation ("insured depository institusupervisor for NationsBank Virginia. tions"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 Interstate Analysis Eight competitors would remain in the market after consummation, including the largest depository institution Section 3(d) of the BHC Act, as amended by Section 101 in the market, which controls deposits of $122 million, of the Riegle-Neal Interstate Banking and Branching Effi- representing 34.9 percent of total deposits in depository ciency Act of 1994, allows the Board to approve an appli- institutions in the market. In addition, three other deposication by a bank holding company to acquire control of a tory institutions, each controlling over 10 percent of marbank located in a state other than the home state of such a ket deposits would remain in this market. The Board also bank holding company, if certain conditions are met.3 has considered the fact that one of Illinois' largest credit These conditions are met in this case.4 In view of all the unions, Citizens Equity Federal Credit Union, Peoria, Illifacts of record, the Board is permitted to approve this nois ("Citizens"), controlling assets of $1.3 billion, comproposal under section 3(d) of the BHC Act. petes in the Canton market. All residents of Fulton County, Illinois, which includes the Canton market, are eligible for Competitive Considerations membership in Citizens, and Citizens actively engages in commercial lending.8 Norwest and Canton compete directly in the Canton bank- In accordance with the BHC Act, the Board sought ing market.5 In the Canton banking market, Norwest is the comments from the United States Attorney General, the sixth largest commercial banking organization, controlling Office of the Comptroller of the Currency ("OCC"), and $27.6 million in deposits, representing approximately the Federal Deposit Insurance Corporation ("FDIC") on 8 percent of total deposits in depository institutions in the the competitive effects of this proposal. The Attorney market ("market deposits").6 Canton is the second largest General has advised the Board that the proposed transacdepository institution in the market, controlling deposits of tion is not likely to have a significantly adverse effect on $44.6 million, representing approximately 13 percent of competition in any relevant banking market. The OCC and market deposits. On consummation of this proposal, Nor- the FDIC have not objected to consummation of this prowest would become the second largest depository institu- posal or indicated it would have any significantly adverse tion in the market, controlling deposits of $72.2 million, competitive effects in any relevant banking market. representing approximately 21 percent of total deposits in Based on all the facts of record, including the small depository institutions in the market. The concentration in amount by which the Department of Justice merger guidethe market as measured by the Herfindahl-Hirschman In- lines are exceeded, and the number of competitors that dex ("HHI") would increase by 201 points to 2066 points would remain in the market, the Board concludes that the as a result of this proposal.7 consummation of this proposal would not have a significantly adverse effect on competition or the concentration of banking resources in the Canton, Illinois, banking market or in any other relevant market. 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted Other Considerations on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. For purposes of the BHC Act, The financial and managerial resources and future pros- Norwest's home state is Minnesota. pects of Norwest, Canton, and their respective subsidiaries, 4. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Norwest is adequately capitalized and adequately managed. Canton's are consistent with approval, as are the other supervisory subsidiary bank in Illinois has been in existence and continuously factors the Board must consider under section 3 of the operated for the minimum period of time required under applicable BHC Act. The convenience and needs of the communities state law. Upon consummation, Norwest and its affiliates would to be served also are consistent with approval. control less than 10 percent of the total amount of deposits of insured depository institutions in the United States, and less than 30 percent of Based on the foregoing and other facts of record, the the total amount of deposits of insured depository institutions in Board has determined that the application should be, and Illinois. All other requirements of section 3(d) of the BHC Act would hereby is, approved. The Board's approval is expressly also be met on consummation of this proposal. conditioned on Norwest's compliance with all the commit- 5. The Canton banking market is approximated by the northeastern ments made in connection with this application. The comportion of Fulton County, Illinois (Fairview, Farmington, Joshua, Canton, Orion, Putman, Buckheart, Banner, Lewistown, Liverpool, mitments and conditions relied on by the Board in reaching and Waterford townships). this decision are deemed to be conditions imposed in 6. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become significant competitors of factors indicating anticompetitive effects) unless the post-merger HHI commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin is at least 1800 and the merger increases the HHI by more than 200 788 (1990); National City Corporation, 70 Federal Reserve Bulletin points. The Justice Department has stated that the higher than normal 743 (1984). HHI thresholds for screening bank mergers for anticompetitive effects 7. Under the revised Department of Justice Merger Guidelines, implicitly recognize the competitive effect of limited-purpose lenders 49 Federal Register 26,823 (June 29, 1984), a market in which the and other non-depository financial entities. post-merger HHI is above 1800 is considered highly concentrated. 8. Credit unions in Illinois are permitted to make commercial loans. The Justice Department has informed the Board that a bank merger or Citizens has a commercial loan officer and reported $19.3 million in acquisition generally will not be challenged (in the absence of other outstanding commercial loans as of June 30, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • February 1996 writing by the Board in connection with its findings and (5) Providing administrative services to open-end and decision, and, as such, may be enforced in proceedings closed-end investment companies;1 and under applicable law. (6) Providing employee benefits consulting services.2 The transaction shall not be consummated before the fifteenth calendar day following the effective date of this Barclays would reorganize and rename the Wells-Nikko order, and the acquisition shall not be consummated later Entities, and provide the proposed services through BZW than three months after the effective date of this order, Barclays Global Investors, N.A. ("BZW Trust"), and two unless such period is extended for good cause by the Board operating subsidiaries of BZW Trust, BZW Barclays or by the Federal Reserve Bank of Chicago, acting pursu- Global Fund Advisors and BZW Barclays Global Investors ant to delegated authority. Services, all of San Francisco, California (collectively, By order of the Board of Governors, effective Decem- "BZW Entities"). ber 18, 1995. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (60 Voting for this action: Chairman Greenspan, Vice Chairman Federal Register 54,373 (1995)). The time for filing com- Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. ments has expired, and the Board has considered the notice and all comments received in light of the factors set forth WILLIAM W. WILES in section 4 of the BHC Act. Secretary of the Board Barclays, with total consolidated assets of $265 billion,3 operates in the United States through Barclays Bank of Orders Issued Under Section 4 of the Bank Holding New York, N.A., New York, New York; branches in Chi- Company Act cago, Illinois, and New York, New York; an agency in Miami, Florida; and representative offices in San Fran- Barclays PLC cisco, California, and Washington, D.C. Barclays also en- London, England gages in a number of nonbanking activities in the United States. BZW Barclays Global Investors Services would be a Barclays Bank PLC broker-dealer registered with the Securities and Exchange London, England Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.). BZW Global Investors Order Approving a Notice to Acquire Nonbanking Services, therefore, would be subject to the recordkeeping Companies and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934 and Barclays PLC and Barclays Bank PLC, both of London, the SEC. BZW Barclays Global Fund Advisors would be England ("Barclays"), bank holding companies within the an investment advisor registered with the SEC under the meaning of the Bank Holding Company Act ("BHC Act"), Investment Advisers Act of 1940 (15 U.S.C. § 80b-1 have requested Board approval under section 4(c)(8) of the et seq.) and a commodity trading advisor registered with BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Commodity Futures Trading Commission ("CFTC") the Board's Regulation Y (12 C.F.R. 225.23) to acquire under the Commodity Exchange Act (7 U.S.C. § 2 et seq.). Wells Fargo Investment Advisors; The Nikko Building BZW Barclays Global Fund Advisors would be subject to U.S.A., Inc.; Wells Fargo Institutional Trust Company, N.A.; Wells Fargo Nikko Investment Advisors; Wells Fargo Nikko Investment Advisors International; and Wells 1. The administrative services that Barclays would provide to investment companies include computing net asset values and performance Fargo Foreign Funds Advisors, all of San Francisco, Calidata, coordinating communications and activities between the investfornia. Barclays also has requested Board approval to ment advisor and the other service providers, accounting and recordpurchase certain assets and assume certain liabilities of the keeping, disbursing payments for fund expenses, arranging office 401(k) MasterWorks Division of Wells Fargo Bank, N.A., space, and preparing and filing regulatory reports. A list of the San Francisco, California (hereinafter all of the entities to proposed administrative services is included in the Appendix. Barclays also would provide telephone services to shareholders through a be acquired are collectively, "Wells-Nikko Entities"). Bartoll-free 800 number. Barclays has committed that telephone service clays would thereby engage in the following activities: operators will not solicit callers to purchase shares in particular (1) Performing functions or activities that may be per- mutual funds, and that substantive questions about mutual fund perforformed by a trust company in accordance with 12 C.F.R. mance or strategies will be referred to specific mutual fund distributors or investment advisors. See The Chase Manhattan Corporation, 225.25(b)(3); 80 Federal Reserve Bulletin 883 (1995). (2) Providing investment advisory services in accor- 2. Barclays also has provided notice to provide subaccounting for dance with 12 C.F.R. 225.25(b)(4); individual funds in pooled escrow accounts maintained at banks and (3) Providing securities brokerage services in accor- other financial institutions and to provide clients with industry-wide dance with 12 C.F.R. 225.25(b)(15); salary surveys in accordance with 12 C.F.R. 225.25(b)(4) & (7). See Norstar Bancorp, Inc., 72 Federal Reserve Bulletin 729 (1986) (4) Providing advisory services, including discretionary ("Norstar"). portfolio management services, with respect to futures 3. Asset data are as of June 30, 1995, and use exchange rates then in and options on futures on financial commodities; effect. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 the recordkeeping and reporting obligations, fiduciary stan- these funds would not cause Barclays to control the funds dards, and other requirements of the Investment Advisers or to become involved in the distribution of securities.8 Act of 1940, the Commodity Exchange Act, the SEC, and In providing the proposed combination of services to the CFTC. mutual funds, Barclays and the BZW Entities also would be subject to the restrictions set forth in the Board's inter- Glass-Steagall Act pretive rule on investment advisory activities (12 C.F.R. 225.125). The rule requires any bank holding company that Under the Glass-Steagall Act, a company that owns a acts as agent in the purchase or sale of shares of an member bank may not control "through stock ownership investment company advised by a holding company affilior in any other manner" a company that engages princi- ate or recommends the purchase or sale of such shares to pally in distributing, underwriting or issuing securities.4 any customer to disclose to the customer in writing the role The Board previously has determined that the Glass- of the bank holding company and its affiliates with the Steagall Act does not prohibit a bank holding company investment company. In addition, the bank holding comfrom serving as investment advisor to a mutual fund.5 pany must disclose in writing that the shares of the invest- The Board also has previously determined that a bank ment company are not federally insured, are not deposits, holding company may provide administrative services to a and are not obligations of, or guaranteed by, any bank. mutual fund, consistent with the provisions of the Glass- The interpretive rule also precludes an investment com- Steagall Act.6 In Mellon, the Board found that a mutual pany advised by a bank holding company from having a fund administrator provides services that are primarily name that is similar to, or a variation of, the name of any ministerial or clerical in nature, and that the policymaking bank holding company or any of its subsidiary banks.9 The functions rest with the board of directors of the fund, which Board's rule also prohibits a bank holding company from is responsible for the selection and review of the major owning shares of any mutual fund that it advises, from contractors to the fund. The Board also determined that purchasing shares of these mutual funds in a fiduciary providing a combination of administrative and advisory capacity in its sole discretion, and from lending to any such services to a mutual fund would not involve a bank holding fund or accepting shares of such funds as collateral for any company in the distribution of securities. loan for the purpose of acquiring shares of the fund. Barclays has committed that it will not have any director, Barclays has stated that it would abide by these restricofficer or employee interlocks with proprietary mutual tions. funds to which it provides administrative services.7 This Based on all of the facts of record, and subject to the commitment reinforces the independence of the board of commitments made by Barclays and its compliance with the fund, which would have authority to remove Barclays the Board's interpretive rule, the Board believes that Baras administrator of the fund at its discretion. In addition, clays's proposal to provide both investment advisory and the BZW Entities would not be involved in the distribution administrative services to the mutual funds is not prohibof the shares of any mutual fund. Under these circum- ited by the Glass-Steagall Act. stances, the Board believes that control of the proprietary mutual funds would continue to rest with the boards of Bank Holding Company Act directors of the funds, which would be entirely independent of Barclays, and that the proposal by Barclays to The Board previously has determined by order that the provide clerical and ministerial services as administrator to proposed employee benefits consulting services, futuresrelated discretionary portfolio management services, and mutual fund administration services are closely related to banking.10 The Board also has determined by regulation 4. 12 U.S.C. §§22la and 377. 5. 12 C.F.R. 225.25(b)(4); 12 C.F.R. 225.125. The Board also found that the prohibitions of the Glass-Steagall Act do not apply to a 8. Barclays has committed not to engage in advertising activities on closed-end fund that is not engaged frequently in the issuance, sale or behalf of mutual funds that it administers. Barclays has proposed to distribution of securities. On this basis, the Board has by regulation prepare, at the direction and under the supervision of the fund's authorized bank holding companies to sponsor, organize, and manage distributor, sales literature for funds it administers. The ultimate closed-end funds. 12 C.F.R. 225.25(b)(4)(H). A closed-end fund that is responsibility for use of the fund's sales literature would remain with controlled by a bank holding company must conform its activities and the distributor, which would be responsible for filing advertisements investments to the requirements of section 4 of the BHC Act. If and sales literature with the National Association of Securities Dealers Barclays sponsors, organizes, or controls any closed-end fund, there- and for all decisions related to marketing the mutual fund and arrangfore, Barclays must limit any such fund's investments to less than ing for brokers to distribute the fund's shares. Barclays will not 5 percent of the voting shares of any issuer. engage in the development of marketing plans for mutual funds except 6. Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 to give advice to a fund's distributor on regulatory compliance. The (1993) ("Mellon"). proposed sales literature preparation activities are primarily ministe- 7. In this case, "proprietary mutual funds" refers to those mutual rial in nature, and based on all the facts of record and the representafunds that are primarily sold to customers of Barclays. With respect to tions made by Barclays, the Board believes not prohibited by the non-proprietary funds, Barclays would only permit those limited Glass-Steagall Act. interlocks approved by the Board in Mellon. Barclays has not pro- 9. 12 C.F.R. 225.125(f). posed to have any director, officer or employee interlocks between 10. See CS Holding, 81 Federal Reserve Bulletin 803 (1995); mutual funds and the BZW Entities. Norstar; Mellon. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • February 1996 that the other proposed activities are closely related to 225.7 and 225.23(g)), and to the Board's authority to banking.11 Barclays has stated that it would engage in these require modification or termination of the activities of a activities in accordance with the Board's regulations, or- bank holding company or any of its subsidiaries as the ders and related interpretations. Board finds necessary to assure compliance with, and to In order to approve this proposal, the Board also must prevent evasion of, the provisions of the BHC Act and the find that the performance of the proposed activities by the Board's regulations and orders issued thereunder. The BZW Entities "can reasonably be expected to produce Board's decision is specifically conditioned on Barclays's benefits to the public . . . that outweigh possible adverse compliance with all the commitments and representations effects, such as undue concentration of resources, de- made in connection with this application, including the creased or unfair competition, conflicts of interests, or commitments and conditions discussed in this order. The unsound banking practices." 12 U.S.C. § 1843(c)(8). commitments, representations, and conditions relied on in The Board expects that consummation of this proposal reaching this decision shall be deemed to be conditions would provide added convenience and services to the cus- imposed in writing by the Board in connection with its tomers of Barclays by offering them an expanded range of findings and decision and, as such, may be enforced in products and investment management expertise. In addi- proceedings under applicable law. tion, the Board previously has determined that the provi- This transaction shall not be consummated later than sion of administrative services to mutual funds within three months after the effective date of this order, unless certain parameters is not likely to result in the types of such period is extended for good cause by the Board or by subtle hazards at which the Glass-Steagall Act is aimed or the Federal Reserve Bank of New York, acting pursuant to any other adverse effects. There is no evidence in the delegated authority. record to indicate that consummation of this proposal, By order of the Board of Governors, effective Decemsubject to the commitments noted above, would result in ber 21, 1995. significant adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of Voting for this action: Chairman Greenspan and Governors Kelley, interests, or unsound banking practices, that are not out- Lindsey, Phillips, and Yellen. Absent and not voting: Vice Chairman Blinder. weighed by the expected public benefits of the proposal. In every case under section 4(c)(8) of the BHC Act, the JENNIFER J. JOHNSON Board considers the financial and managerial resources of Deputy Secretary of the Board the applicant and its subsidiaries and the effect the transaction would have on those resources.12 In considering these factors, the Board notes that the capital ratios of Barclays Appendix A meet applicable risk-based capital standards under the Basle Accord, and are considered equivalent to the capital List of Administrative Services levels that would be required of a U.S. banking organization. On the basis of all the facts of record, including the (1) Maintaining and preserving the records of the fund, foregoing, the Board has concluded that financial and including financial and corporate records; managerial considerations are consistent with approval of (2) Computing net asset value, dividends, performance this proposal. data and financial information regarding the fund; On the basis of the foregoing and all the other facts of (3) Furnishing statistical and research data; record, including the commitments made by Barclays, the (4) Preparing and filing with the SEC and state securities Board has determined that the performance of the proposed regulators registration statements, notices, reports and other activities by the BZW Entities can reasonably be expected material required to be filed under applicable laws; to produce benefits to the public that would outweigh any (5) Preparing reports and other informational materials possible adverse effects under the proper incident to bankregarding the fund including proxies and other shareholder ing standard of section 4(c)(8) of the BHC Act. communications and reviewing prospectuses; Based on the foregoing and all the facts of record, (6) Providing legal and regulatory advice to the fund in including all the commitments and representations made connection with its other administrative functions; by Barclays in this case, and subject to all the terms and (7) Providing office facilities and clerical support for the conditions set forth in this order, the Board has determined fund; that the notice should be, and hereby is, approved. The (8) Developing and implementing procedures for monitor- Board's determination is subject to all the conditions set ing compliance with regulatory requirements and compliforth in the Board's Regulation Y, including those in secance with the fund's investment objectives, policies, and tions 225.7 and 225.23(g) of Regulation Y (12 C.F.R. restrictions as established by the fund's board; (9) Providing routine fund accounting services and liaison with outside auditors; 11. See 12 C.F.R. 225.25(b)(3), (4), (7), (15) & (19). (10) Preparing and filing tax returns; 12. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve (11) Reviewing and arranging for payment of fund ex- Bulletin 155 (1987). penses; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 (12) Providing communication and coordination services Federal Register 34,623 (1994)). The time for filing comwith regard to the fund's investment advisor, transfer agent, ments has expired, and the Board has considered the applicustodian, distributor and other service organizations that cation and all comments received in light of the factors set render recordkeeping or shareholder communication ser- forth in section 4(c)(8) of the BHC Act. vices; Deutsche Bank, with total consolidated assets equivalent (13) Reviewing and providing advice to the distributor, the to approximately $451 billion, is the largest banking orgafund and investment advisor regarding sales literature and nization in Germany.3 In the United States, Deutsche Bank marketing plans to assure regulatory compliance; operates branches in New York, New York; Chicago, Illi- (14) Providing information to the distributor's personnel nois; and Los Angeles, California. In addition to these concerning fund performance and administration; banking operations, Deutsche Bank owns several nonbank- (15) Participation in seminars, meetings, and conferences ing subsidiaries in the United States. designed to present information to brokers and investment Metals is an FCM registered with the Commodity Fucompanies, but not in connection with the sale of shares of tures Trading Commission ("CFTC") and a member of the the funds to the public, concerning the operations of the National Futures Association ("NFA"). Metals therefore, funds, including administrative services provided by Bar- is subject to the recordkeeping, reporting, fiduciary stanclays to the funds; dards, and other requirements of the Commodity Exchange (16) Assisting existing funds in the development of addi- Act (7 U.S.C. § 1 et seq.), the CFTC, and the NFA.4 tional portfolios; The Board previously has determined that the proposed (17) Providing reports to the fund's board with regard to its financing and futures-related activities are closely related activities; and to banking.5 The Board also previously has determined that (18) Providing telephone shareholder services through a trading gold, silver and platinum bullion in the spot, fortoll-free 800 number. ward and option markets is closely related to banking.6 Deutsche Bank has stated that it would conduct the pro- Deutsche Bank AG posed activities in accordance with the Board's regulations Frankfurt, Germany and prior orders. In order to approve this application, the Board also must Order Approving an Application to Engage in Certain determine that the proposed activities "can reasonably be Precious Metal, Futures Commission Merchant, and expected to produce benefits to the public, such as greater Financing Activities convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue con- Deutsche Bank AG, Frankfurt, Germany ("Deutsche centration of resources, decreased or unfair competition, Bank"), a foreign banking organization subject to the conflicts of interests, or unsound banking practices." provisions of the Bank Holding Company Act ("BHC 12 U.S.C. § 1843(c)(8). The Board expects that Deutsche Act"), has applied under section 4(c)(8) of the BHC Act Bank's proposal would provide added convenience to its (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's customers and increase the level of competition among Regulation Y (12 C.F.R. 225.23) to retain Deutsche Bank existing providers of these services. Sharps Pixley, Inc. ("DBSPI") and Deutsche Sharps Pix- Deutsche Bank has taken steps to address the potential ley Metals, Inc. ("Metals"), both of New York, New York, adverse effects that could result from the proposed activiand thereby engage in trading gold, silver and platinum ties. Both Deutsche Bank and DBSPI have substantial bullion in the spot, forward and option markets for non- experience in trading gold, silver and platinum bullion. hedging purposes,1 providing financing services, and act- The Board has carefully reviewed the risk management ing as an introducing broker and providing futures commis- policies, procedures, and controls used by Deutsche Bank sion merchant ("FCM") execution and advisory services and DBSPI in conducting and monitoring precious metal with respect to futures and options on futures on certain trading activities. These policies and procedures, which financial and non-financial commodities.2 address the credit, market, and operational risks associated Notice of the application, affording interested persons an with the proposed activities, are currently in place and have opportunity to submit comments, has been published (59 3. Asset and ranking data are as of June 30, 1995, and employ 1. DBSPI arranges for precious metal forward and option transac- exchange rates then in effect. tions between Deutsche Bank's New York branch ("DBNY") and 4. DBSPI is a clearing member of the Commodity Exchange, Inc. unaffiliated counterparties. When a precious metal transaction is en- ("COMEX"). DBSPI would maintain a membership on COMEX in tered into with a customer, DBNY enters into an offsetting transaction order to purchase and sell futures and options on futures contracts for with DBSPI, which enters into futures, options and options on futures affiliates and to trade such contracts for its own account to hedge its transactions in accordance with 12 C.F.R. 225.142. precious metal trading activities. 2. DBSPI would not provide advisory services with respect to gold, 5. See 12 C.F.R. 225.25 (b)(1) & (19); J.P. Morgan & Co. Incorposilver, or platinum. Deutsche Bank acquired DBSPI and Metals from rated, 80 Federal Reserve Bulletin 151 (1994); Northern Trust, 79 Kleinwort Benson Group pic, London, England, on December 31, Federal Reserve Bulletin 723 (1993); The Nippon Credit Bank, Ltd., 1993, pursuant to section 4(c)(9) of the BHC Act. See Letter dated 75 Federal Reserve Bulletin 308 (1989). November 29, 1993, from Jennifer J. Johnson, Associate Secretary of 6. See Swiss Bank Corporation, 81 Federal Reserx'e Bulletin 185 the Board, to Eric S. Yoon, Esq. (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • February 1996 been used in the precious metal trading operations of with its findings and decisions, and, as such, may be Deutsche Bank and DBSPI. Deutsche Bank has committed enforced in proceedings under applicable law. that DBSPI will adopt and periodically review and revise This transaction shall not be consummated later than written policies, position limits, internal review proce- three months after the effective date of this order, unless dures, and financial controls for its precious metal trading such period is extended for good cause by the Board or by activities. In addition, management of DBPSI will review the Federal Reserve Bank of New York, pursuant to delethe precious metal trading activities regularly, and the gated authority. internal audit department will review such activities to By order of the Board of Governors, effective Decemensure conformity with established policies and position ber 13, 1995. limits. The Board believes that the controls and limitations established by Deutsche Bank and DBSPI should minimize Voting for this action: Chairman Greenspan, Vice Chairman the potential adverse effects involved in the proposed activ- Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. ities. In every case under section 4(c)(8) of the BHC Act, the JENNIFER J. JOHNSON Deputy Secretary of the Board Board considers the financial and managerial resources of the applicant and its subsidiaries and the effect the transaction would have on those resources.7 In considering these Firstar Corporation Milwaukee, Wisconsin factors, the Board notes that Deutsche Bank's capital ratios meet applicable risk-based capital standards under the Firstar Corporation of Iowa Basle Accord, and are considered equivalent to the capital Des Moines, Iowa levels that would be required of a U.S. banking organization. On the basis of all the facts of record, including the Order Approving the Acquisition of a Savings foregoing, the Board has concluded that financial and Association managerial considerations are consistent with approval of this proposal. Firstar Corporation, Milwaukee, Wisconsin, and Firstar On the basis of the foregoing and all the other facts of Corporation of Iowa, Des Moines, Iowa together, record, the Board has concluded that the balance of public ("Firstar"), bank holding companies within the meaning of interest factors it is required to consider under section the Bank Holding Company Act ("BHC Act"), have filed 4(c)(8) of the BHC Act is favorable. The Board has deternotice pursuant to section 4(c)(8) of the BHC Act mined, therefore, that the proposed activities are a proper (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the incident to banking within the meaning of the BHC Act. Board's Regulation Y (12 C.F.R. 225.23(a)) to acquire all Based on the foregoing and all the facts of record, the voting shares of Harvest Financial Corp., and thereby including all the representations and commitments made indirectly acquire its wholly owned subsidiary, Harvest by Deutsche Bank in this case, the Board has determined Savings Bank, a Federal Savings Bank, ("Savings Bank"), to, and hereby does, approve the application subject to all both of Dubuque, Iowa.1 the terms and conditions set forth in this order, and in the Notice of the proposal, affording interested persons an above-noted Board regulations and orders that relate to opportunity to submit comments, has been published (60 these activities. The Board's determination also is subject Federal Register 55,717 (1995)). The time for filing comto all the terms and conditions set forth in the Board's ments has expired, and the Board has considered the notice Regulation Y, including those in sections 225.7 and and all comments received in light of the factors set forth 225.23(g), and to the Board's authority to require such in section 4(c)(8) of the BHC Act. modification or termination of the activities of a bank The Board has determined that the operation of a savings holding company or any of its subsidiaries as the Board association is closely related to banking for purposes of finds necessary to assure compliance with, and to prevent section 4(c)(8) of the BHC Act.2 The Board requires savevasion of, the provisions of the BHC Act and the Board's ings associations acquired by bank holding companies to regulations and orders issued thereunder. The Board's deciconform their direct and indirect activities to those permission is specifically conditioned on compliance with all the sible for bank holding companies under section 4(c)(8) of commitments made by Deutsche Bank in this application, the BHC Act and Regulation Y. Firstar has committed to including the commitments discussed in this order and the conditions set forth in this order and in the above-noted Board regulations and orders. For purposes of this action, these commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connection 1. In connection with the proposal, Firstar has applied to acquire options to purchase up to 19.9 percent of the stock of Savings Bank. 7. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve These options would become moot upon consummation of this pro- Bulletin 94 (1989); Baverische Vereinsbank AG, 73 Federal Reserve posal. Bulletin 155 (1987). 2. See 12 C.F.R 225.25(b)(9). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 conform all activities of Savings Bank to those require- Financial") favors large farm operations at the expense of ments.3 small- to medium-sized family farms, by reducing the Firstar, with total consolidated assets of $18.6 billion, number and availability of loans to smaller farms and by operates subsidiary banks in Arizona, Illinois, Iowa, Min- limiting the amount of staff and services available to assist nesota, and Wisconsin.4 Firstar is the second largest depos- in meeting their credit needs.7 itory institution in Iowa, controlling deposits of approxi- The Board has carefully reviewed the CRA performance mately $2 billion, representing approximately 5.6 percent records of Firstar and its subsidiaries and Savings Bank, all of total deposits in depository institutions in the state.5 comments received on this application, Firstar's responses Harvest Financial Corp. is the 26th largest depository to those comments, and all other relevant facts of record, in institution in Iowa, controlling deposits of $231 million, light of the CRA, the Board's regulations, and the Staterepresenting less than 1 percent of total deposits in deposi- ment of the Federal Financial Supervisory Agencies Retory institutions in the state. Upon consummation of this garding the Community Reinvestment Act ("Agency CRA proposal, Firstar would remain the second largest deposi- Statement").8 tory institution in Iowa, controlling deposits of $2.2 billion, representing approximately 6.3 percent of total deposits in Record of Performance Under the CRA depository institutions in the state. Firstar and Savings Bank do not compete directly in any The Agency CRA Statement provides that a CRA examinabanking market. Based on all the facts of record, the Board tion is an important and often controlling factor in the has concluded that consummation of this proposal would consideration of an institution's CRA record and that renot result in any significantly adverse effect on competition ports of these examinations will be given great weight in or the concentration of banking resources in any relevant the applications process.9 The Board notes that all of banking market. Firstar's subsidiary banks received either a "satisfactory" or "outstanding" rating from their primary federal supervi- Convenience and Needs Considerations sor, in their most recent examination for CRA performance. Of the 14 Firstar subsidiary banks serving Wiscon- In considering a notice to acquire a savings association sin, for example, ten received a CRA performance rating of under section 4 of the BHC Act, the Board reviews the "outstanding"10 and four received a CRA performance records of performance of the relevant depository institu- rating of "satisfactory" at their most recent examination tions under the Community Reinvestment Act (12 U.S.C. (collectively, the "Wisconsin Examinations").11 Savings § 2901 et seq.) ("CRA"). The CRA requires the federal Bank received an "outstanding" rating from its primary financial supervisory agencies to encourage financial insti- federal supervisor, the Office of Thrift Supervision, as of tutions to help meet the credit needs of the local communi- May 1995. ties in which they operate, consistent with their safe and The Wisconsin Examinations found that Firstar's subsidsound operation. To accomplish this end, the CRA requires iary banks offer a variety of housing-related loans, small the appropriate federal supervisory authority to "assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neigh- 7. Protestant also alleged, without providing specific facts, that one borrower was threatened with foreclosure if he criticized a bank, and borhoods, consistent with the safe and sound operation of that Firstar subsidiary banks are not complying with commitments to such institution," and to take that record into account in its restructure loans or extend credit for expansion in several cases. The evaluation of bank holding company applications.6 Board notes that these complaints have been referred to the primary The Board has received comments on this notice from federal supervisors of the relevant banks for consideration. If a Firstar bank has breached a legal obligation arising out of an individual loan the Wisconsin Rural Development Center, Inc. ("Protestransaction, a court can provide the borrower with adequate remedies, tant"). Protestant maintains that individual Firstar subsid- if allegations of such a breach can be substantiated. iary banks in Wisconsin have not met the credit needs of 8. 54 Federal Register 13,742 (1989). the farming community, as evidenced by low ratios of 9. Id. at 13,745. 10. These banks and examination dates are: Firstar Bank Milwauagricultural loans to total loans, compared to other lenders kee, N.A., Milwaukee (Office of the Comptroller of the Currency in their service areas, and by their limited participation in ("OCC"), as of October 1995); Firstar Bank Appleton, Appleton government-guaranteed agricultural loan programs. Protes- (Federal Deposit Insurance Corporation ("FDIC"), as of December tant also contends that the consolidation of agricultural 1993); Firstar Bank Fond du Lac, N.A., Fond du Lac (OCC, as of lending activity into Firstar Agri Financial Services ("Agri- March 1995); Firstar Bank Grantsburg, N.A., Grantsburg (OCC, as of April 1995); Firstar Bank Green Bay, Green Bay (FDIC, as of May 1994); Firstar Bank Madison, N.A., Madison (OCC, as of May 1995); Firstar Bank Manitowoc, Manitowoc (FDIC, as of March 1995); 3. Firstar has committed that any impermissible securities or insur- Firstar Bank Minocqua, Minocqua (FDIC, as of May 1995); Firstar ance activities conducted by Savings Bank or its subsidiaries will Bank Sheboygan, Sheboygan (OCC, as of June 1994); Firstar Bank cease on or before consummation. Wisconsin Rapids, N.A., Wisconsin Rapids (OCC, as of July 1995). 4. Asset data are as of June 30, 1995. 11. The banks and examination dates are: Firstar Bank Eau Claire, 5. State deposit data are as of June 30, 1994. In this context, N.A., Eau Claire (OCC, as of May 1995); Firstar Bank OshKosh, depository institutions include commercial banks, savings banks, and N.A., OshKosh (OCC, as of March 1995); Firstar Bank Rice Lake, savings institutions. N.A., Rice Lake (OCC, as of May 1993); Firstar Bank Wausau, N.A., 6. 12 U.S.C. § 2903. Wausau (OCC, as of June 1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin • February 1996 business loans, and community development activities to provided by the former Manitowoc Bank would permit the assist in meeting the credit needs of their entire communi- loan officers to devote more efforts to soliciting and receivties, including low- and moderate-income neighborhoods. ing applications for agricultural loans. The banks offer loan programs designed for low- and The Board has carefully considered Protestant's commoderate-income buyers, such as the Community Home ments, information provided by Firstar, and the Wisconsin Works Program that features low down payment, low cost, Examinations in evaluating Firstar's record of CRA perforfixed-rate mortgages with flexible underwriting criteria. In mance. Based on this review, the Board concludes that the addition, Firstar subsidiary banks make government- CRA performance record of Firstar's subsidiary banks, sponsored loans through programs sponsored by the Fed- including their record of making agricultural loans in Wiseral Housing Administration and the Veterans Administra- consin, is consistent with approval of this proposal. tion. The banks also make small business loans through programs of the Small Business Administration.12 Firstar Other Considerations subsidiary banks also engage in a wide range of community development activities that include financing for the The Board also concludes that the financial and managerial construction of housing and rental units for low- and resources and future prospects of the institutions involved, moderate-income residents, participations in state- are consistent with approval. sponsored business development funds, and financial assis- The record also indicates that consummation of this tance to businesses owned by minorities. proposal would result in increased services and products Firstar engages in agricultural lending through propri- for Savings Bank's customers and access to Firstar's entire etary and government-guaranteed lending programs, and banking network in Wisconsin as well as economies of its level of agricultural lending has increased by approxi- scale and benefits to Firstar's customers. The Board also mately $65 million since 1992. As of October 31, 1995, finds that consummation of this proposal is not likely to Firstar's subsidiary banks had 1,227 agricultural loans out- result in any significantly adverse effects, such as undue standing totalling approximately $182.7 million,13 and a concentration of resources, decreased or unfair competigovernment-guaranteed loan portfolio consisting of 285 tion, conflicts of interests, or unsound banking practices loans, totalling approximately $36.5 million. The average that would outweigh the public benefits of this proposal. loan size in its agricultural portfolio is approximately Accordingly, the Board has determined that the balance of $150,000.14 public interest factors it must consider under section 4(c)(8) Agri-Financial is not a consolidated agricultural lending of the BHC Act is favorable and consistent with approval. program but is a trademark name established in 1994 that Based on the foregoing and all the facts of record, the is currently used by Firstar Bank Manitowoc, Manitowoc, Board has determined that this transaction should be, and Wisconsin ("Manitowoc Bank").15 Firstar intends to hereby is, approved.16 The Board's approval of this promerge all its Wisconsin subsidiary banks into a single posal is specifically conditioned on compliance by Firstar Wisconsin bank ("Firstar Bank Wisconsin") in 1996 and with all the commitments made in connection with this to appoint the president of Manitowoc Bank as the head of proposal. the new bank's agricultural lending division. When the The Board's determination is subject to all the condireorganization is complete, the agricultural division will tions set forth in Regulation Y, including those in sections have 14 agricultural loan officers available at eight offices 225.7 and 225.23(b)(3) of Regulation Y (12 C.F.R. 225.7 throughout the state, who would be supported by two and 225.23(b)(3)), and to the Board's authority to require specialists in government-guaranteed loans. Firstar asserts that this structure would increase efficiency and result in better service by and greater accessibility to loan officers 16. Protestant has requested that the Board hold a public meeting or because the administrative support and expertise to be hearing on this application. The Board's rules for processing applications provide that a hearing is required under section 4 of the BHC Act only if there are disputed issues of material fact that cannot be 12. Firstar's lead subsidiary bank in Milwaukee also developed the resolved in some other manner. 12 C.F.R. 225.23(g). The Board may, Elan Small Business Line of Credit, a program that provides financing in its discretion, hold a public hearing or meeting on an application to in amounts less than $25,000 for businesses with annual sales of less clarify factual issues related to the application and to provide an than $1 million. opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 13. Firstar's June 30, 1995, Bank Holding Company Performance 262.25(d). Protestant has had an opportunity to present its views, and Report showed that agricultural loans equalled 1.57 percent of its has submitted substantial written comments that have been considered gross loans, compared to 0.58 percent for its peer group. by the Board. After careful review of all the facts of record, the Board 14. Firstar also estimates that 95 percent of the loans in its agricul- believes that Protestant's request disputes the weight accorded to, and tural portfolio are to farms or agricultural businesses with sales of less the conclusions that may be drawn from, the facts of record, and does than $500,000. not identify disputed issues of fact that are material to the Board's 15. As discussed above, Manitowoc Bank, Firstar's primary agricul- decision. Protestant's request also fails to show why a written presentural lender in Wisconsin, received an "outstanding" CRA perfor- tation would not suffice and to summarize what evidence would be mance rating, as of March 1995. Examiners noted that the bank made presented at a hearing or meeting. See 12 C.F.R. 262.3(e). In light of 149 guaranteed loans through the Farmers Home Administration (now the record in this case, the Board does not believe that a hearing or the Farm Service Agency), totalling approximately $21.9 million, and meeting is necessary to clarify the factual record or is otherwise 19 Wisconsin Housing and Economic Development Authority Crop required or wan-anted. Accordingly the request for a public meeting or loans, totalling $282,000. hearing on this notice is hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 such modification or termination of the activities of a bank Wells Fargo would engage through Company in comholding company or any of its subsidiaries as the Board mercial lending, as well as in the servicing of commercial finds necessary to ensure compliance with, and to prevent loans, both for itself and others. The Board previously has evasion of, the provisions of the BHC Act and the Board's determined by regulation that these activities are closely regulations and orders issued thereunder. The commit- related to banking.2 ments and conditions relied on by the Board in reaching In every case involving a nonbanking proposal by a bank this decision are deemed to be conditions imposed in holding company to engage in nonbanking activities under writing by the Board in connection with its findings and section 4(c)(8) of the BHC Act, the Board considers the decision, and, as such, may be enforced in proceedings financial and managerial resources of the applicant and its under applicable law. subsidiaries and the effect of the proposal on those resourc- This transaction shall not be consummated later than es.3 Based on all the facts of record, the Board has conthree months following the effective date of this order, cluded that financial and managerial considerations are unless such period is extended for good cause by the Board consistent with approval of this proposal. or by the Federal Reserve Bank of Chicago, acting pursu- In order to approve this proposal under section 4(c)(8) of ant to delegated authority. the BHC Act, the Board also must determine that the By order of the Board of Governors, effective Decem- performance of the proposed activities by Wells Fargo ber 11, 1995. through Company "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse Voting for this action: Chairman Greenspan, and Governors Lind- effects, such as undue concentration of resources, desey, Phillips, and Yellen. Absent and not voting: Vice Chairman creased or unfair competition, conflicts of interests, or Blinder and Governor Kelley. unsound banking practices." 12 U.S.C. § 1843(c)(8). The Board expects that consummation of this proposal would JENNIFER J. JOHNSON increase competition among providers of commercial fi- Deputy Secretary of the Board nancing services, and would enhance convenience and service for Wells Fargo's customers. The record does not Wells Fargo & Company indicate, moreover, that consummation of this proposal is San Francisco, California likely to result in any significant adverse effects, such as undue concentration of resources, decreased or unfair com- Order Approving Notice to Engage in Certain Lending petition, conflicts of interests, or unsound banking prac- Activities tices. Accordingly, the Board has concluded that the balance of the public interest factors it must consider under Wells Fargo & Company, San Francisco, California ("Wells Fargo"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has given notice pursuant to section 4(c)(8) of the BHC 2. See 12 C.F.R. 225.25(b)(1). Wells Fargo proposes that Company Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the engage in two types of financing transactions in which Company Board's Regulation Y (12 C.F.R. 225.23), to engage would make an equity investment in the borrower, as well as a senior de novo through its wholly owned subsidiary, Wells Fargo or subordinated loan. In some cases, Company's equity interest would Equity Capital, Inc., San Francisco, California ("Compa- be less than 5 percent of the borrower's total equity (though Company ny"), in certain commercial lending activities pursuant to might also purchase warrants for up to 20 percent of additional equity). In other cases, Company's equity investment could be as section 225.25(b)(1) of Regulation Y (12 C.F.R. large as 24.9 percent of the borrower's total equity. In these cases, 225.25(b)(1)). Company would conduct these activities however, any loans provided by Company would be limited to less throughout the United States. than 25 percent of the total subordinated debt and less than 25 percent Notice of this proposal, affording interested persons an of the total debt outstanding from all sources to the borrower. Wells Fargo has made a number of commitments and proposed opportunity to submit comments, has been published (60 other limitations for these investments, including that Company's debt Federal Register 13,986 (1995)). The time for filing com- interests would not be convertible into equity, and that no borrower ments has expired, and the Board has considered the notice would be able to treat any part of a loan as regulatory capital. and all comments received in light of the factors set forth Company also would have no agreement to acquire any borrower. Moreover, Company would have no director, officer, or employee in section 4(c)(8) of the BHC Act. interlock or other significant relationship with any issuer. Company's Wells Fargo, with total consolidated assets of investments also would be made under agreements with provisions $50.9 billion, is the 17th largest commercial banking orga- that are designed to ensure compliance with the BHC Act and the nization in the United States, and it operates bank subsid- Board's Policy Statement on Nonvoting Equity Investments by Bank iaries in Arizona and California.1 Wells Fargo engages Holding Companies (12 C.F.R. 225.143), including provisions limiting the conversion and transfer of warrants and other convertible through its subsidiaries in a broad range of banking and equity securities. On the basis of these and other limitations that permissible nonbanking activities. would be imposed by Wells Fargo and all the facts of record, the Board has determined that the structure and terms of the proposed transactions appear to be consistent with the BHC Act. 3. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 1. Asset data are as of June 30, 1995. Ranking data are as of Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 October 26, 1995. Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • February 1996 section 4(c)(8) of the BHC Act is favorable and consistent Texas ("BCC"), and thereby engage in mortgage and with approval of this proposal. commercial finance and equipment leasing activities pursu- Based on the foregoing and all the other facts of record, ant to sections 225.25(b)(1) and 225.25(b)(5)(i) of Regulaincluding the commitments by Wells Fargo, the Board has tion Y (12 C.F.R. 225.25(b)(1) and 225.25(b)(5)(i)). determined that the notice should be, and hereby is, ap- Notice of this proposal, affording interested persons an proved. The Board's approval is specifically conditioned opportunity to submit comments, has been published (60 on compliance with all the commitments made in connec- Federal Register 40,381 (1995)). The time for filing comtion with this notice and with the conditions referred to in ments has expired, and the Board has considered this this order. The Board's determination also is subject to all proposal and all comments received in light of the factors the terms and conditions set forth in Regulation Y, includ- set forth in sections 3 and 4 of the BHC Act. ing those in sections 225.7 and 225.23(g) of Regulation Y, Berens is currently a shell holding company engaged, and to the Board's authority to require such modification or through BCC, in mortgage and commercial financing and termination of the activities of a bank holding company or equipment leasing. Neither of the Applicants currently any of its subsidiaries as the Board finds necessary to controls any insured depository institution. Bank is the ensure compliance with, and to prevent evasion of, the 809th largest commercial banking organization in Texas, provisions of the BHC Act and the Board's regulations and controlling deposits of approximately $14 million, repreorders issued thereunder. For purposes of this action, these senting less than 1 percent of the total deposits in commercommitments and conditions shall be deemed to be condi- cial banks in the state.' tions imposed in writing by the Board in connection with The Board believes that the financial factors it is reits findings and decision, and, as such, may be enforced in quired to consider under section 3 of the BHC Act are not proceedings under applicable law. consistent with approval of this proposal. Bank currently is This proposal shall not be consummated later than three well capitalized and is owned by persons who are not months after the effective date of this order, unless such affiliated with Applicants. The record indicates, however, period is extended for good cause by the Board or by the that the financial resources of Berens, which is not cur- Federal Reserve Bank of San Francisco, acting pursuant to rently a bank holding company, are inadequate. Berens and delegated authority. BCC recently filed for bankruptcy under chapter 11 of the By order of the Board of Governors, effective Decem- United States Bankruptcy Code.2 Berens, which has been ber 13, 1995. in operation since 1991, has experienced losses in every year, and is minimally capitalized. Berens had planned to Voting for this action: Chairman Greenspan, Vice Chairman make a private offering of its common and preferred stock Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. to raise funds to purchase Bank, to pay expenses of the transaction, and for other purposes, including the retention JENNIFER J. JOHNSON of sufficient funds to be well capitalized upon becoming a Deputy Secretary of the Board bank holding company. At the time that Berens filed for bankruptcy, Berens had subscribers planning to acquire an Orders Issued Under Sections 3 and 4 of the Bank amount that is significantly less than the amount necessary Holding Company Act to realize those objectives. Accordingly, based on these considerations and all the other facts of record, the Board The Berens Corporation has concluded that considerations relating to the financial Houston, Texas resources of Applicants are not consistent with approval of this proposal. The Board also notes that the proposed Berens Delaware, Inc. management of Berens lacks experience in banking, and in Wilmington, Delaware light of Berens's performance and financial condition, the Board has concluded that considerations relating to the managerial resources of Applicants are not consistent with Order Denying Applications to Become Bank Holding approval. Companies Berens has refused to provide certain information about its operations, business plans, and financial condition and The Berens Corporation, Houston, Texas ("Berens"), and those of BCC that is material to the evaluation of the its wholly owned subsidiary, Berens Delaware, Inc., Wilmfactors the Board is required to consider under the BHC ington, Delaware (together, "Applicants"), have applied Act. In other instances, responses provided by Berens have under section 3(a)(1) of the Bank Holding Company Act been incomplete. Taking into consideration the record in ("BHC Act") (12 U.S.C. § 1842(a)(1)) to become bank this case, the Board concludes that Applicants have failed holding companies by acquiring all the voting shares of to provide adequate assurances that they would make avail- First National Bank of Dayton, Dayton, Texas ("Bank"). able to the Board such information on the operations and Applicants also filed notices under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to retain all 1. All banking data are as of June 30, 1994. the voting shares of Berens Credit Corporation, Houston, 2. 11 U.S.C. 1101 etseq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 activities of Applicants and their affiliates as the Board Notice of the applications, affording interested persons determines to be appropriate to determine and enforce an opportunity to submit comments, has been published compliance with the BHC Act. Accordingly, based on all (60 Federal Register 52,915 (1995)). The time for filing the facts of record, the Board has concluded that consider- comments has expired, and the Board has considered the ations relating to supervisory factors are not consistent applications and all comments received in light of the with approval of this proposal. factors set forth in sections 3 and 4 of the BHC Act. The Board has concluded that other factors it is required Boatmen's, with total consolidated assets of $33.2 bilto consider under the BHC Act do not lend sufficient lion, is headquartered in Missouri3 and operates subsidiary weight to outweigh the adverse considerations discussed banks and thrift institutions in nine states.4 FFC, with total above. consolidated assets of $7.3 billion, operates subsidiary For the foregoing reasons, and based on all the facts of banks in Kansas and Oklahoma. Boatmen's is the fourth record, the Board has determined that approval of the largest commercial banking organization in Oklahoma, applications under section 3 of the BHC Act is not war- controlling deposits of $1.6 billion, representing approxiranted. For the reasons stated above, the Board also has mately 5.1 percent of the total deposits in commercial determined that approval of the notices under section 4 of banking organizations in the state. FFC is the third largest the BHC Act is not warranted, and that the applications and commercial banking organization in Oklahoma, controlnotices should be, and hereby are, denied. ling deposits of $1.9 billion, representing 6.2 percent of By order of the Board of Governors, effective Decem- total deposits in commercial banking organizations in the ber 6, 1995. state. Upon consummation of this proposal, Boatmen's would become the largest commercial banking organization in Oklahoma, controlling deposits of $3.5 billion, Voting for this action: Chairman Greenspan, Vice Chairman Blinder, and Governors, Kelley, Phillips, and Yellen. Absent and not representing approximately 11.3 percent of total deposits voting: Governor Lindsey. in commercial banking organizations in the state. JENNIFER J. JOHNSON Interstate Analysis Deputy Secretary of the Board Section 3(d) of the BHC Act, as amended by Section 101 Boatmen's Bancshares, Inc. of the Riegle-Neal Interstate Banking and Branching Effi- St. Louis, Missouri ciency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a Order Approving the Acquisition of a Bank Holding bank located in a state other than the home state of such a Company bank holding company, if certain conditions are met.5 These conditions are met in this case.6 In view of all the Boatmen's Bancshares, Inc., St. Louis, Missouri ("Boatmen's"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied (2) Fourth Investment Advisors, Inc., Tulsa, Oklahoma, and thereby under section 3 of the BHC Act (12 U.S.C. § 1842) to engage in providing portfolio investment advice pursuant to section acquire all the voting shares of Fourth Financial Corpora- 225.25(b)(4) of Regulation Y; tion, Wichita, Kansas ("FFC"), and thereby indirectly (3) Southgate Trust Company, Overland Park, Kansas, and thereby engage in trust company activities pursuant to section 225.25(b)(3) acquire its two subsidiary banks, Bank IV, N.A., Wichita, of Regulation Y; and Kansas, and Bank IV Oklahoma, N.A., Tulsa, Oklahoma.1 (4) Bank IV Community Development Corporation and Bank IV Boatmen's also has given notice under section 4(c)(8) of Affordable Housing Corporation, both of Wichita, Kansas, and the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 thereby engage in providing equity and debt investment in corporaof the Board's Regulation Y (12 C.F.R. 225.23) to acquire tions or projects designed primarily to promote community welfare FFC's nonbank subsidiaries.2 pursuant to section 225.25(b)(6) of Regulation Y. Boatmen's would engage in these activities nationwide. 3. Boatmen's has reached an agreement with the Missouri Division of Finance to divest all the Missouri branches of Bank IV, N.A., Wichita, Kansas, in order to avoid exceeding the Missouri state limit on deposits. 1. Boatmen's proposes to acquire FFC through Acquisition Sub, 4. Asset data are as of September 30, 1995. State deposit data are as Inc., St. Louis, Missouri, and to merge Acquisition Sub with FFC. of June 30, 1994. Acquisition Sub would survive the merger as a second-tier bank 5. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding holding company subsidiary of Boatmen's, and has applied under company's home state is that state in which the operations of the bank section 3 of the BHC Act to become a bank holding company. holding company's banking subsidiaries were principally conducted Boatmen's also has acquired an option to purchase up to 19.9 percent on July 1, 1966, or the date on which the company became a bank of the voting shares of FFC, which option would expire on consumma- holding company, whichever is later. For purposes of the BHC Act, tion of this proposal. the home state of Boatmen's is Missouri. 2. Boatmen's proposes to acquire: 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). (1) Fourth Financial Insurance Company, Wichita, Kansas, and Boatmen's is adequately capitalized and managed. FFC's subsidiary thereby engage in the reinsurance of credit life, accident, and health bank in Oklahoma has been in existence and continuously operated insurance directly related to extensions of credit by FFC's subsid- for more than five years, the minimum period of time required under iary banks pursuant to section 225.25(b)(8) of Regulation Y; Oklahoma law. Upon consummation, Boatmen's and its affiliates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • February 1996 facts of record, the Board is permitted to approve this in the Cherokee banking market to a depository institution proposal under section 3(d) of the BHC Act. that does not currently compete in the market. Accordingly, no change in the HHI or the number of competitors Competitive Considerations would occur as a result of this proposal. Boatmen's also has committed to divest one or more Boatmen's and FFC compete directly in six banking mar- branches in the Muskogee banking market with deposits kets.7 The Board has carefully considered the effects that totalling at least $41.1 million to a competitively suitable consummation of this proposal would have on competition acquiror. With this divestiture, the HHI is not expected to in each of these markets in light of all the facts of record, increase more than 236 points to 2279 as a result of this including the characteristics of the markets, the increase in proposal. the concentration of total deposits in depository institu- Several factors indicate that the increase in concentration tions8 in the markets as measured by the Herfindahl- in the Muskogee banking market as measured by the HHI Hirschman Index ("HHI"),9 and certain commitments tends to overstate the competitive effects of this proposal. made by Boatmen's. For example, nine competitors would remain in this mar- The acquisition of FFC by Boatmen's would signifi- ket, including the largest and fifth largest commercial cantly increase market concentration in the Cherokee banks in Oklahoma. In addition, the Muskogee banking County and Muskogee banking markets.10 In order to miti- market is attractive for entry, and banks in the market are gate the potential adverse competitive effects, Boatmen's more profitable on average than banks in other non-MSA has committed to divest certain branches in these mar- banking markets in Oklahoma.12 The Board also notes the kets." Boatmen's has committed to divest its only branch effect that two credit unions in the Muskogee banking market, which control approximately 9.6 percent of the total deposits in depository institutions in the market, have would control less than 10 percent of the total amount of deposits of on competition in this market.13 insured depository institutions in the United States, and less than the Consummation of this proposal in the four remaining applicable state limits on deposits in Kansas and Oklahoma. 7. The banking markets are the Cherokee County, Kay County, banking markets where Boatmen's and FFC compete Muskogee County, Oklahoma City, and Tulsa banking markets, all in would not exceed the market concentration levels set forth Oklahoma, and the Kansas City, Kansas-Missouri banking market. in the Department of Justice merger guidelines.14 8. In this context, depository institutions include commercial banks As in other cases, the Board sought comments from the and savings associations. Market deposit data are as of June 30, 1994. Market share data are based on calculations in which the deposits of United States Attorney General's Office and the Office of thrift institutions are included at 50 percent. The Board previously has the Comptroller of the Currency ("OCC"), on the competindicated that thrift institutions have become, or have the potential to itive effects of this proposal. The Attorney General indibecome, major competitors of commercial banks. See Midwest Finan- cated that this proposal is not likely to have significantly cial Group, 75 Federal Reserve Bulletin 386 (1989); National City adverse competitive effects in light of the proposed divesti- Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of tures, and the OCC did not object to consummation of the market share on a 50-percent weighted basis. See, e.g., First Hawaiian proposal. Based on all the facts of record, including the Inc., 77 Federal Reserve Bulletin 52 (1991). proposed divestitures in the Cherokee and Muskogee bank- 9. Under the revised Department of Justice Merger Guidelines, 49 ing markets and the facts discussed above, the Board Federal Register 26,823 (June 29, 1984), a market in which the concludes that consummation of this proposal would not post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Justice Department is likely to challenge a have a significantly adverse effect on competition or the merger that increases the HHI by more than 50 points. The Justice concentration of banking resources in any relevant banking Department has informed the Board that a bank merger or acquisition markets. generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. tion, 77 Federal Reserve Bulletin 484 (1991). Furthermore, Boat- 10. The Cherokee County banking market ("Cherokee banking men's has committed to submit to the Board, before consummation of market") is approximated by Cherokee County, Oklahoma, and the the acquisition, an executed trust agreement acceptable to the Board HHI would increase by 889 points to 4148. The Muskogee banking stating the terms of the divestiture. market is approximated by the Muskogee RMA and the rest of 12. The Muskogee banking market includes the most populous Muskogee County, Oklahoma, and the HHI would increase by county in Oklahoma that is not part of a Metropolitan Statistical Area 792 points to 2835. ("MSA"), and that is the sixth most populous of the 77 counties in the 11. For each market in which Boatmen's has committed to divest state. While non-MSA counties have lost population on average, this offices, it has committed to execute sales agreements prior to consum- banking market has increased its population from 1990 to 1994. mation of the acquisition of FFC, and to consummate these divesti- 13. The credit unions have membership requirements that have tures within 180 days of the acquisition of FFC. Boatmen's also has permitted approximately 34 percent of the residents in the market to committed that if it is unsuccessful in completing these divestitures become members. within 180 days of consummation of this proposal, it will transfer the 14. The HHIs would increase as follows in these markets: Kansas unsold branches to an independent trustee with instructions to sell the City, Kansas-Missouri (122 points to 872); Kay County, Oklahoma branches promptly. See BankAmerica Corporation, 78 Federal Re- (77 points to 1671); Oklahoma City, Oklahoma (105 points to 840); serve Bulletin 338 (1992); United New Mexico Financial Corpora- Tulsa, Oklahoma (130 points to 1263). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 169 Other Considerations ulation Y, and to the Board's authority to require such modification or termination of the activities of a bank The financial and managerial resources and future pros- holding company or any of its subsidiaries as the Board pects of Boatmen's, FFC, and their respective subsidiaries finds necessary to ensure compliance with, and to prevent are consistent with approval of this proposal, as are the evasion of, the provisions of the BHC Act and the Board's other supervisory factors the Board must consider under regulations and orders issued thereunder. For purposes of section 3 of the BHC Act. Considerations relating to the this action, these commitments and conditions are deemed convenience and needs of the communities to be served to be conditions imposed in writing by the Board in conalso are consistent with approval. nection with its findings and decision, and, as such, may be Boatmen's also has provided notice to acquire FFC's enforced in proceedings under applicable law. subsidiaries engaged in credit-related insurance, trust com- The acquisition of FFC's subsidiary banks shall not be pany, portfolio investment advisory, and community devel- consummated before the fifteenth calendar day following opment activities. Section 4(c)(8) of the BHC Act provides the effective date of this order, and the nonbanking transacthat a bank holding company may, with Board approval, tions shall not be consummated later than three months engage in any activity that the Board determines to be "so following the effective date of this order, unless such closely related to banking or managing or controlling banks period is extended for good cause by the Board or by the as to be a proper incident thereto." The Board previously Federal Reserve Bank of St. Louis, acting pursuant to has determined by regulation that these activities are delegated authority. closely related to banking and permissible for bank holding By order of the Board of Governors, effective Decemcompanies under section 4(c)(8) of the BHC Act.'3 Boat- ber 21, 1995. men's has committed that it will conduct these activities in accordance with Regulation Y. Voting for this action: Chairman Greenspan, and Governors Kelley, In order to approve this proposal, the Board also must Lindsey, Phillips, and Yellen. Absent and not voting: Vice Chairman determine that the proposed activities are a proper incident Blinder. to banking, that is, that the proposed transaction "can JENNIFER J. JOHNSON measurably be expected to produce benefits to the public, Deputy Secretary of the Board such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, First Bank System, Inc. such as undue concentration of resources, decreased or unfair competition, or unsound banking practices.16 This Minneapolis, Minnesota proposal should enable Boatmen's to provide greater con- Order Approving the Merger of Bank Holding venience and improved services to its customers and would Companies not significantly reduce the level of competition among existing providers of these services. Financial and managerial considerations also are consistent with approval.17 First Bank System, Inc., Minneapolis, Minnesota ("FBS"), a bank holding company within the meaning of the Bank Based on all the facts of record, there is no evidence in the Holding Company Act ("BHC Act"), has applied under record to indicate that consummation of the proposal is section 3(a)(5) of the BHC Act (12 U.S.C. § 1842(a)(5)) to likely to result in any significantly adverse effects, such as merge with FirsTier Financial, Inc., Omaha, Nebraska undue concentration of resources, decreased or unfair com- ("FirsTier"),1 and thereby indirectly acquire FirsTier's petition, conflicts of interests, or unsound banking pracsubsidiary banks.2 FBS also has provided notice under tices, that would not be outweighed by the likely public section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) benefits of this proposal. Accordingly, the Board has deterand section 225.23 of the Board's Regulation Y (12 C.F.R. mined that the balance of public interest factors it must 225.23) to acquire FirsTier's nonbanking subsidiaries and consider under section 4(c)(8) of the BHC act is favorable thereby engage in permissible nonbanking activities.3 and consistent with approval of this proposal. Based on the foregoing and all the facts of record, including the commitments discussed above, the Board has 1. In connection with this proposal, FBS also has requested apdetermined to, and hereby does, approve the application proval to acquire an option to purchase up to 19.9 percent of the and notices. The Board's approval is specifically condi- outstanding voting shares of FirsTier. This option would terminate tioned on compliance with the divestitures discussed in this upon consummation of this proposal. 2. These subsidiary banks are: FirsTier Bank, N.A., Omaha; FirsTier order and with all commitments made in connection with Bank, N.A., Lincoln; FirsTier Bank. N.A., Scottsbiuff; and FirsTier this application. The Board's determination also is subject Bank, N.A., Norfolk, all in Nebraska; Nevada National Bank, Nevada; to all the terms and conditions set forth in Regulation Y, Valley State Bank, Rock Valley; and Security Savings Bank, Wilincluding those in sections 225.4(d) and 225.23(g) of Reg- liamsburg, all in Iowa. 3. These nonbank subsidiaries are: FirsTier Insurance, Inc., Omaha, Nebraska, which engages in the sale of credit-related insurance pursuant to section 225.25(b)(8)(i) and (vii) of Regulation Y (12 C.F.R. 15. 12 C.F.R. 225.25(b)(3),(4),(6) and (8). 225.25(b)(8)(i) and (vii)); FirsTier Mortgage Company, Omaha, Ne- 16. 12 U.S.C. § 1843(c)(8). braska, which engages in recovery of problem mortgage loans, pursu- 17. See 12 C.F.R. 225.24(b). ant to section 225.25(b)(1) of Regulation Y (12 C.F.R. 225.25(b)(1)); Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • February 1996 Notice of this proposal, affording interested persons an These conditions are met in this case.7 In view of all the opportunity to submit comments, has been published (60 facts of record, the Board is permitted to approve this Federal Register 54,503 (1995)). The time for filing com- proposal under section 3(d) of the BHC Act. ments has expired, and the Board has considered the application and notice and all comments received in light of the Competitive Considerations factors set forth in sections 3 and 4 of the BHC Act. FBS, with total consolidated assets of $33.5 billion,4 FBS and FirsTier compete directly in the Nebraska bankcontrols nine depository institutions in Colorado, Iowa, ing markets of Buffalo County, Omaha/Council Bluffs, Illinois, Kansas, Minnesota, Montana, Nebraska, North Columbus, and Lincoln.8 Consummation of this proposal Dakota, South Dakota, Wisconsin, and Wyoming.5 would not cause the levels of market concentration as FirsTier, with total consolidated assets of $3.6 billion, measured by the Herfindahl-Hirschman Index ("HHI") to controls seven depository institutions in Iowa and Ne- exceed the Department of Justice ("DOJ") merger guidebraska. FBS is the fifth largest depository institution orga- lines9 in any of these banking markets except the Lincoln nization in Nebraska, controlling total deposits of banking market.10 $915.6 million, representing 3.8 percent of total deposits in FBS is the seventh largest depository institution in the insured depository institutions in the state. FirsTier is the Lincoln banking market, controlling $94 million in depossecond largest depository institution organization in Nebraska, controlling deposits of approximately $2.5 billion, representing 10.4 percent of total deposits in insured deposholding company's banking subsidiaries were principally conducted itory institutions in the state. On consummation of this on July 1, 1966, or the date on which the company became a bank proposal, FBS would become the second largest depository holding company, whichever is later. For purposes of the BHC Act, institution organization in Nebraska, controlling $3.4 bil- the home state of FBS is Minnesota. lion in deposits, representing 14.2 percent of total deposits 7. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). in insured depository institutions in the state. FBS is the FBS is adequately capitalized and adequately managed. FirsTier's banks have been in existence and continuously operated for the sixth largest depository institution organization in Iowa, minimum period of time required under the laws of the states of Iowa controlling total deposits of $784.5 million, representing and Nebraska. On consummation, FBS and its affiliates would control 2.1 percent of total deposits in insured depository institu- less than 10 percent of the total amount of deposits of insured tions in the state. FirsTier is the 19th largest depository depository institutions in the United States, and less than the Nebraska institution organization in Iowa, controlling deposits of deposit limit of 14 percent of the total deposits of all banks in Nebraska plus the total deposits, savings accounts, passbook accounts, approximately $310 million, representing less than 1 perand shares in savings and loan associations and building and loan cent of total deposits in insured depository institutions in associations in Nebraska. In addition, this proposal would not violate the state. On consummation of this proposal, FBS would the Iowa deposit limitation that bank holding companies not control become the fifth largest depository institution organization more than ten percent of the sum of total time and demand deposits of in Iowa, controlling deposits of $1.1 billion, representing all banks, savings and loan associations, and savings banks in Iowa. All other requirements of section 3(d) of the BHC Act would also be 3 percent of total deposits in insured depository institutions met on consummation of this proposal. in the state. 8. The Buffalo County banking market is approximated by Buffalo County, Nebraska. The Omaha/Council Bluffs banking market is approximated by the Interstate Analysis Omaha/Council Bluffs RMA; the contiguous areas east of the Elkhorn River in Douglas County, Nebraska; and Pottawattamie County, Iowa, Section 3(d) of the BHC Act, as amended by Section 101 except for the eastern two tiers of townships. of the Riegle-Neal Interstate Banking and Branching Effi- The Columbus banking market is approximated by all of Platte County; the eastern quarter of Nance County, including the town of ciency Act of 1994, allows the Board to approve an appli- Genoa; the southern two-thirds of Colfax County, including the town cation by a bank holding company to acquire control of a of Schuyler; the northwestern quadrant of Butler County, including bank located in a state other than the home state of such a the towns of Bellwood, David City, and Rising City; the northeastern bank holding company, if certain conditions are met.6 half of Polk County, including the town of Shelby; and the extreme northeastern part of Merrick County, including the town of Silver Creek. The Lincoln, Nebraska, banking market is approximated by Lanand Wyoming Trust and Management Company, Gillette, Wyoming, caster County, Nebraska. which engages in fiduciary and asset management services pursuant to 9. Market data are as of June 30, 1994. Market share data before section 225.25(b)(3) and (4) of Regulation Y (12 C.F.R. 225.25(b)(3) consummation are based on calculations in which the deposits of thrift and (4)). institutions are included at 50 percent. The Board previously has FBS also would acquire two inactive nonbanking subsidiaries of indicated that thrift institutions have become, or have the potential to FirsTier, FirsTier Data and Asset Recovery Company, both of Omaha, become, significant competitors of commercial banks. See WM Ban- Nebraska. FBS has committed not to engage in activities through corp, 76 Federal Reserve Bulletin 788 (1990); National City Corporathese subsidiaries without the approval of the Federal Reserve System. tion, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has 4. Deposit data are as of June 30, 1995. regularly included thrift deposits in the calculation of market share on 5. In this context, depository institutions include commercial banks, a 50-percent weighted basis. See, First Hawaiian Inc., 77 Federal savings banks, and savings associations with deposits insured by the Reserve Bulletin 52 (1991). Federal Deposit Insurance Corporation. 10. These markets and the HHI increases are as follows: Buffalo 6. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding City (27 points to 2296); Omaha (242 points to 1778); and Columbus company's home state is that state in which the operations of the bank (22 points to 2049). 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Legal Developments 171 its, representing approximately 3.9 percent of total deposits over, based on all the facts of record, the Board concludes in depository institutions in the market ("market depos- that consummation of this proposal would not have a its"). FirsTier is the second largest depository institution in significantly adverse effect on competition or the concenthe market, controlling deposits of $707 million, represent- tration of resources in any relevant market. ing approximately 28.8 percent of market deposits. Upon consummation of this proposal, FBS would become the Other Considerations largest depository institution in the market, controlling deposits of $801 million, representing approximately The financial and managerial resources and future pros- 32.7 percent of market deposits. The concentration in the pects of FBS, FirsTier, and their respective subsidiaries are market as measured by the HHI would increase by consistent with approval, as are the other supervisory fac- 222 points to 2207 points as a result of this proposal.11 tors the Board must consider under section 3 of the BHC A number of additional factors indicate, however, that Act.13 The convenience and needs of the communities to the increase in concentration levels in the Lincoln banking be served are also consistent with approval. market, as measured by the HHI, tends to overstate the competitive effects of this proposal. For example, 18 competitors would remain in the market after consummation of Nonbanking Activities this proposal, including a depository institution that controls 31.2 percent of market deposits. In addition, the FBS also has provided notice, pursuant to section 4(c)(8) Lincoln banking market appears to be attractive for out-of- of the BHC Act to acquire the nonbanking subsidiaries of market entry. It is the second most populous market in FirsTier. The Board previously has determined by regula- Nebraska, and population growth in the Lincoln banking tion or order that these activities are closely related to market exceeded the national average growth rate from banking for purposes of section 4(c)(8) of the BHC Act. 1980 to 1992.12 As of June 1995, the market's unemploy- FBS has committed that it will conduct these activities in ment rate of 2.8 percent was less than half the national accordance with the Board's regulations and orders approvaverage unemployment rate. Moreover, per capita income ing these activities for bank holding companies. In every figures for 1993 show that the Lincoln banking market's case under section 4 of the BHC Act, the Board considers per capita income exceeds the national average. the financial condition and resources of the applicant and In accordance with the BHC Act, the Board sought its subsidiaries and the effect of the transaction on these comments from the United States Attorney General, the resources.14 Based on all the facts of record, the Board has Office of the Comptroller of the Currency ("OCC"), and concluded that financial and managerial considerations are the Federal Deposit Insurance Corporation ("FDIC") on consistent with approval. the competitive effects of this proposal. The Attorney In order to approve this notice, the Board also must General has advised the Board that the proposed transac- determine that the performance of the proposed nonbanktion is not likely to have a significantly adverse effect on ing activities "can reasonably be expected to produce competition on any relevant banking market. The OCC and benefits to the public . . . that outweigh possible adverse FDIC have not objected to consummation of the proposal effects, such as undue concentration of resources, deor indicated it would have any significantly adverse com- creased or unfair competition, conflicts of interests or petitive effects in any relevant banking market. unsound banking practices," 12 U.S.C. § 1843(c)(8). Based on all the facts of record, including the small amount by which the Department of Justice merger guidelines are exceeded and the number of competitors that 13. The Board has carefully reviewed comments from an individual would remain in the market, the Board concludes that ("Commenter") alleging a number of improper actions by FirsTier consummation of this proposal would not have a signifi- and its management, including allegations related to certain loan cantly adverse effect on competition or the concentration of transactions involving Commenter and her family farming business. banking resources in the Lincoln banking market. More- Commenter's allegations for the most part involve national banks acquired by FirsTier in 1984: FirsTier Bank, N.A., and its predecessor, Omaha National Bank (both in Omaha, Nebraska). Commenter has filed several lawsuits based on her allegations in courts that had the 11. Under the revised Department of Justice Merger Guidelines, 49 authority to provide appropriate remedies if allegations of improper Federal Register 26,823 (June 29, 1984), a market in which the actions could have been substantiated, but Commenter's cases were post-merger HHI is above 1800 is considered highly concentrated. dismissed. The Board has considered these allegations in light of all The Justice Department has informed the Board that a bank merger or the facts of record, including reports of examination assessing the acquisition generally will not be challenged (in the absence of other managerial strength of FBS and FirsTier and their subsidiary banks. factors indicating anticompetitive effects) unless the post-merger HHI The Board notes that after consummation, FirsTier would be inteis at least 1800 and the merger increases the HHI by more than grated into the management structure of FBS and subject to the 200 points. The Justice Department has stated that the higher than policies and procedures of FBS. In light of all the facts of record, the normal HHI thresholds for screening bank mergers for anticompeti- Board concludes that these comments do not warrant denial of this tive effects implicitly recognize the competitive effect of limited- proposal. These comments have been referred to the OCC, the bank's purpose lenders and other non-depository financial entities. primary supervisor, for consideration. 12. This rate of growth also exceeded the growth rate for Omaha, 14. See 12 C.F.R. 225.24. See also The Fuji Bank Limited, 75 the only other metropolitan area in Nebraska, and the state as a whole Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 from 1990 to 1994. Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin • February 1996 Based on all the facts of record, the Board believes that this NationsBank Corporation proposal should enable FBS to provide greater conve- Charlotte, North Carolina nience and improved service to FBS customers and to customers of FirsTier's nonbanking subsidiaries. In consid- Order Approving the Acquisition of a Bank Holding ering the acquisition by FBS of FirsTier's nonbanking Company activities, the record in this case indicates that there are numerous providers of these nonbanking services, and NationsBank Corporation, Charlotte, North Carolina ("Nathere is no evidence in the record to indicate that consum- tionsBank"), a bank holding company within the meaning mation of this proposal is likely to result in any signifi- of the Bank Holding Company Act ("BHC Act"), has cantly adverse effects, such as undue concentration of applied under section 3 of the BHC Act (12 U.S.C. § 1842) resources, decreased or unfair competition, conflicts of to acquire by merger Bank South Corporation ("BSC"), interests, or unsound banking practices that would out- and thereby indirectly acquire its subsidiary bank, Bank weigh the public benefits of this proposal. Accordingly, the South ("Bank South"), both of Atlanta, Georgia.1 Na- Board has determined that the balance of public interest tionsBank also has provided notice under section 4(c)(8) of factors it must consider under section 4(c)(8) of the BHC the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 Act is favorable arid consistent with approval of the notice of the Board's Regulation Y (12 C.F.R. 225.23) to acquire to acquire FirsTier's nonbanking subsidiaries. Bank South Life Insurance Company, Atlanta, Georgia ("Bank South Life"), and thereby engage in credit insurance activities, pursuant to section 225.25(b)(8)(i) of Regu- Conclusion lation Y (12 C.F.R. 225.25(b)(8)(i)).2 NationsBank would engage in these activities nationwide.3 Notice of this proposal, affording interested persons an Based on the foregoing, including the commitments made opportunity to submit comments, has been published (60 to the Board by FBS in connection with this application Federal Register 50,625 (1995)). The time for filing comand notice, and in light of all the facts of records, Board ments has expired, and the Board has considered the applihas determined that the application and notice should be, cation and notices and all comments received in light of the and hereby are, approved. The Board's approval is specifi- factors set forth in sections 3 and 4 of the BHC Act. cally conditioned on compliance by FBS with all the NationsBank, with total consolidated assets of approxicommitments made in connection with this proposal. The mately $188 billion, operates subsidiary banks in nine Board's determinations on the proposed nonbanking activ- states and the District of Columbia.4 NationsBank is the ities also are subject to all the conditions set forth in fourth largest commercial banking organization in the Regulation Y, including those in sections 225.4(d) and United States, controlling approximately 4.8 percent of 225.23(b) of Regulation Y, and to the Board's authority to total banking assets, and approximately 3.7 percent of total require such modification or termination of the activities of insured deposits. NationsBank also engages in a number of a bank holding company or any of its subsidiaries as the permissible nonbanking activities nationwide. NationsBank Board finds necessary to ensure compliance with, and to is the largest commercial banking organization in Georgia, prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. For purposes of this action, the commitments and conditions relied 1. In connection with this proposal, BSC has granted NationsBank on by the Board in reaching this decision are deemed to be an option to purchase up to 19.9 percent of the voting shares of BSC on the occurrence of certain events. This option would terminate on conditions imposed in writing by the Board in connection the consummation of this proposal. Immediately after the merger of with its findings and decision, and, as such, may be en- NationsBank and BSC, NationsBank would transfer Bank South to forced in proceedings under applicable law. NB Holdings Corporation, Charlotte, North Carolina ("NB Hold- The acquisition of FirsTier's subsidiary banks shall not ings"), a wholly owned subsidiary of NationsBank. Thereafter, Bank be consummated before the fifteenth calendar day follow- South would merge into NationsBank of Georgia, N.A., Atlanta, Georgia ("NationsBank Georgia"), a wholly owned subsidiary of NB ing the effective date of this order, and this proposal shall Holdings. not be consummated later than three months after the 2. NationsBank also has provided notice to acquire Bank South effective date of this order, unless such period is extended Securities Corporation, Atlanta, Georgia. This company, however, for good cause by the Board or by the Federal Reserve would cease its activities before acquisition by NationsBank and would not engage in any activities without the Board's approval. Bank of Minneapolis, acting pursuant to delegated author- 3. NationsBank also would acquire BSC's interest in approximately ity. 4.16 percent of the voting shares of Southeast Switch, Inc., Maitland, By order of the Board of Governors, effective Decem- Florida ("Switch"), and thereby engage in providing data processing ber 18. 1995. services and management consulting advice pursuant to sections 225.25(b)(7) and (b)(l 1) of Regulation Y (12 C.F.R. 225.25(b)(7) and (b)( 11)). Under Switch's articles of incorporation. NationsBank would Voting for this action: Chairman Greenspan, Vice Chairman be required to sell this interest, because its share ownership interest in Blinder, and Governors Kelley. Lindsey, Phillips, and Yellen. Switch would exceed 15 percent. 4. Asset and state deposit data are as of June 30, 1995, and include WILLIAM W. WILES acquisitions by NationsBank approved after that date. NationsBank Secretary of the Board also operates a limited-purpose credit card bank in Delaware. 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Legal Developments 173 controlling deposits of approximately $8.7 billion, repre- The acquisition of BSC by NationsBank would signifisenting 12.9 percent of total deposits in commercial bank- cantly increase market concentration in the Fitzgerald and ing organizations in the state. BSC is the fifth largest Savannah banking markets,9 as measured by the HHI.10 In commercial banking organization in Georgia, controlling order to mitigate the potential adverse competitive effects deposits of approximately $5.1 billion, representing that might result from this acquisition, BSC has entered 7.5 percent of total deposits in commercial banking organi- into definitive agreements to sell its only branch in the zations in the state. Upon consummation of this proposal, Fitzgerald banking market to a competitor not currently NationsBank would remain the largest depository institu- operating in the market and to sell one branch in the tion in Georgia, controlling deposits of approximately Savannah banking market to a competitor operating in the $13.8 billion, representing 20.4 percent of total deposits in market that can purchase the branch without exceeding the commercial banking organizations in the state. concentration levels in the Department of Justice merger guidelines." As a result of these divestitures, the HHI in Interstate Analysis the Fitzgerald banking market would remain unchanged and the HHI in the Savannah banking market would in- Section 3(d) of the BHC Act, as amended by Section 101 crease 185 points to 1799 points. Consummation of this of the Riegle-Neal Interstate Banking and Branching Effi- proposal in the three remaining banking markets where ciency Act of 1994, allows the Board to approve an appli- NationsBank and BSC compete also would not exceed cation by a bank holding company to acquire control of a market concentration levels in the Department of Justice bank located in a state other than the home state of such merger guidelines.12 Moreover, numerous competitors bank holding company, if certain conditions are met.5 would remain in all the relevant banking markets. These conditions are met in this case.6 In view of all the The Department of Justice has indicated that, in light of facts of record, the Board is permitted to approve this the proposed divestitures, this proposal is not likely to have proposal under section 3(d) of the BHC Act. a significantly adverse effect on competition. Based on all the facts of record, including the proposed divestitures, the Competitive Considerations Board concludes that consummation of this proposal is not likely to have a significantly adverse effect on competition NationsBank and BSC compete directly in five banking or on the concentration of resources in any relevant bankmarkets in Georgia. The Board has carefully considered ing market.'3 the effects that consummation of this proposal would have on competition in all the banking markets served by BSC in light of all the facts of record, including the characteristics of the markets, the increase in the concentration of total deposits in depository institutions7 in the markets as merger that increases the HHI by more than 50 points. The Justice measured by the Herfindahl-Hirschman Index ("HHI"),8 Department has informed the Board that a bank merger or acquisition and commitments made by NationsBank. generally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the post-merger HHI is at least 1800 and the merger or acquisition increases the HHI by at least 5. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding 200 points. The Justice Department has stated that the higher than company's home state is that state in which the operations of the bank normal threshold for an increase in the HHI when screening bank holding company's banking subsidiaries were principally conducted mergers and acquisitions for anti-competitive effects implicitly recogon July 1, 1966, or the date on which the company became a bank nizes the competitive effects of limited-purpose lenders and other holding company, whichever is later. For purposes of the BHC Act, non-depository financial entities. NationsBank's home state is North Carolina. 9. The Fitzgerald banking market consists of Ben Hill and Irwin 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Counties. The Savannah banking market consists of Bryan, Chatham, NationsBank is adequately capitalized and adequately managed. Bank Effingham, and Liberty Counties. South has been in existence and continuously operated for the mini- 10. As a result of this proposal, the HHI in the Fitzgerald banking mum period of time required under Georgia law. In addition, on market would increase by 716 points to 2827 points, and the HHI in consummation of this proposal, NationsBank and its affiliates would the Savannah banking market would increase by 213 points to 1827 control less than 10 percent of the total amount of deposits of insured points. depository institutions in the United States and less than 30 percent of 11. In addition, NationsBank has committed that if these divestithe total amount of deposits of insured depository institutions in tures are not completed within six months after consummation of this Georgia. proposal, it will transfer the unsold branches to an independent trustee 7. Market data are as of June 30, 1994. In this context, depository who will be instructed to sell the branches promptly. See Bank institutions include commercial banks, savings banks, and savings America Corporation, 78 Federal Reserve Bulletin 338 (1992); United associations. Market share data are based on calculations in which the New Mexico Financial Corporation, 11 Federal Reserve Bulletin 484 deposits of thrift institutions are included at 50 percent. The Board (1991). NationsBank also has committed to submit to the Board, prior previously has indicated that thrift institutions have become, or have to consummation of this proposal, an executed trust agreement acceptthe potential to become, significant competitors of commercial banks. able to the Board. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National 12. The HHI would increase as follows: Athens banking market— City Corporation, 70 Federal Reserve Bulletin 743 (1984). 157 points to 1274 points; Atlanta banking market—370 points to 8. Under the revised Department of Justice Merger Guidelines, 49 1475 points; and Macon banking market—405 points to 1492 points. Federal Register 26,823 (June 29, 1984). a market in which the 13. The HHI would increase as follows: Athens banking market— post-merger HHI is above 1800 is considered to be highly concen- 157 points to 1274 points; Atlanta banking market—370 points to trated. In such markets, the Justice Department is likely to challenge a 1475 points; and Macon banking market—405 points to 1492 points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin • February 1996 Convenience and Needs Considerations Record of Performance under the CRA In acting on an application to acquire a depository institu- The Board recently reviewed the CRA performance record tion under the BHC Act, the Board must consider the of NationsBank in connection with its application to acconvenience and needs of the communities to be served, quire CSF Holdings, Inc., Miami, Florida, and concluded and take into account the records of the relevant depository that NationsBank and its subsidiary banks have the types institutions under the Community Reinvestment Act of policies and programs in place and working well that (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires support an effective record of CRA performance.18 the federal financial supervisory agencies to encourage This review considered the "satisfactory" or "outstandfinancial institutions to help meet the credit needs of the ing" ratings for CRA performance received by all of local communities in which they operate, consistent with NationsBank's subsidiary banks from the Office of the their safe and sound operation. To accomplish this end, the Comptroller of the Currency ("OCC"), their primary fed- CRA requires the appropriate federal supervisory authority eral supervisor; NationsBank's lending activities, includto "assess the institution's record of meeting the credit ing its progress under its Community Investment Proneeds of its entire community, including low- and gram ("CIP") (a 10-year commitment to make a minimoderate-income neighborhoods, consistent with the safe mum of $10 billion of community investment loans); and sound operation of such institution," and to take that NationsBank's ascertainment and marketing activities; and record into account in its evaluation of bank expansion NationsBank's policies and record of closing branches. proposals.14 The Board also carefully considered NationsBank's The Board received comments on this proposal from compliance with applicable fair lending laws. The CSF several commenters ("Protestants")15 alleging, on the ba- Order notes that OCC examinations found that all of sis of data filed under the Home Mortgage Disclosure Act NationsBank's subsidiary banks were in compliance with ("HMDA"), that NationsBank of Georgia, N.A., Atlanta, the substantive provisions of the Fair Housing Act and the Georgia ("NationsBank Georgia"), and NationsBanc Equal Credit Opportunity Act ("fair lending laws").19 Ex- Mortgage Corporation, Dallas, Texas ("NationsBanc Mort- aminers found no evidence of prohibited discriminatory gage"), illegally discriminate against African Americans in practices or of practices intended to discourage applicamortgage lending in Georgia.16 In addition, Protestants tions for the types of products set forth in the banks' CRA express concern that deposits that NationsBank collects in statements. According to the examinations, each bank had Georgia might be used to fund loans and investments out adequate policies, procedures, and training programs in of state rather than be reinvested in local communities. place to support nondiscrimination in lending activities, Protestants also criticized Bank South for its record of and conducted internal audits to evaluate compliance with lending to census tracts with predominantly low- and fair lending laws. Moreover, the OCC examinations found moderate-income and minority residents as indicated by that the banks's community delineations were reasonable HMDA data. and did not arbitrarily exclude low- and moderate-income The Board has carefully reviewed the CRA performance areas, and that the banks annually reviewed their delinearecords of NationsBank, BSC, and their respective subsid- tions and the geographic distribution of their lending. Naiary banks, all comments received on this application, tionsBank's Community Investment Group, which includes NationsBank's and BSC's responses to these comments, its Fair Lending Program, also was found to have develand all other relevant facts of record in light of the CRA, oped internal and external second and third review prothe Board's regulations, and the Statement of the Federal grams for declined mortgage applications.20 Financial Supervisory Agencies Regarding the Community For the reasons discussed in detail in the CSF Order, Reinvestment Act ("Agency CRA Statement").17 which are incorporated herein by reference, the Board concluded that the CRA performance record of NationsBank was consistent with approval of an acquisition under the BHC Act. After consummation of this proposal, NationsBank would implement its CRA and fair lending policies and procedures at Bank South. 14. 12 U.S.C. § 2903. 15. Protestants include the International Brotherhood of Teamsters, the Atlanta, Georgia Labor Council, and several individuals. 16. Protestants maintain that these allegations are supported by a 18. NationsBank Corporation, 81 Federal Reserve Bulletin 1121 recent lawsuit alleging that NationsBank illegally discriminates (1995) ("CSF Order"). against African Americans in making mortgage loans in the Washing- 19. An examination of NationsBanc Mortgage as part of this review ton, D.C., metropolitan area. NationsBank has denied any wrongdo- also found no violations of fair lending laws. ing, and the litigation is in the early stages of developing a factual 20. One commenter expressed concern, without providing specific record. The Office of the Comptroller of the Currency and the Board, facts, that NationsBank's consumer finance subsidiary, NationsCredit moreover, have sufficient supervisory authority to take appropriate Corporation, Allentown, Pennsylvania ("NationsCredit"), lends to action against NationsBank, if the plaintiffs's claims of illegal activity minorities and in minority communities at higher rates and fees than can be substantiated, and the Board can take such findings into those of other NationsBank subsidiaries that primarily serve nonaccount in considering future applications by NationsBank to expand minorities and non-minority communities. There is no evidence in the its activities. record that NationsCredit charges higher rates or fees on any prohib- 17. 54 Federal Register 13,742 (1989). ited basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 175 Record of CRA Performance in Georgia previous examinations noted in the CSF Order found no evidence of prohibited discriminatory practices or of prac- CRA Performance Examinations. The Agency CRA State- tices intended to discourage applications for the types of ment provides that a CRA examination is an important and products set forth in the bank's CRA statement. Naoften controlling factor in the consideration of an institu- tionsBank Georgia has in place all of NationsBank's fair tion's CRA record and that reports of these examinations lending review policies and procedures, including its secwill be given great weight in the applications process.21 ond and third review programs for applications for which a After the CSF Order, the OCC released the results of its preliminary decision to decline has been made.24 These most recent examinations of NationsBank's subsidiary examinations also found that the bank's geographic distribanks for CRA performance. NationsBank Georgia re- bution of applications, originations, and denials was reaceived an "outstanding" rating for CRA performance, as sonable, and considered the bank to be effective in serving of July 1995. In addition, Bank South received a "satisfac- low- and moderate-income individuals and areas. tory" rating for CRA performance from the OCC as of Record of Lending Activities. During 1993, NationsBank January 1995.22 made 873 home mortgage loans for a total of $60.2 million HMDA Data. The Board has carefully considered Protes- to African Americans in the Atlanta market, and made 778 tants' allegations about lending to African Americans in such loans for a total of $42.9 million in 1994. Na- Atlanta in light of 1993 and 1994 HMDA data for Na- tionsBank also offers loans to qualifying low- and tionsBank Georgia and NationsBanc Mortgage. A compar- moderate-income borrowers under its CIP initiative, as ison of the 1993 and 1994 HMDA data for these institu- reviewed in the CSF Order, using nontraditional underwrittions combined indicates an increase in 1994 in the ing criteria and offering below-market rates and reduced percentage of applications received by NationsBank from down payment requirements and closing costs. During African Americans, and that in both years NationsBank 1994, NationsBank made 66 loans totalling $5.2 million in received a higher percentage of its total applications from Georgia under this program. African Americans than did financial institutions in the In addition, in 1993 the bank made 22 commercial real market in the aggregate.23 Between 1993 and 1994, the estate loans totalling $7.5 million for community developpercentage of loan originations by NationsBank to African ment purposes, such as the development of low- and Americans increased, the percentage of loan denials de- moderate-income single- and multi-family housing units creased, and the disparity between NationsBank's denial and renovations of community and retail centers in underrates for African-American applicants and non-minority served areas. The bank committed an additional $22 milapplicants declined. These data also show, however, that lion for this purpose in 1994. NationsBank Georgia also there were disparities in the rates of loan denials by racial supported the community development initiatives of orgagroups. nizations established to help provide housing for low- and The Board is concerned when the record of an institution moderate-income families. During 1993, for example, the indicates disparities in lending to minority applicants, and bank committed $500,000 to the Atlanta Equity Fund to it believes that all banks are obligated to ensure that their provide bridge financing for multi-family housing projects. lending practices are based on criteria that assure not only During 1994, the bank committed $3.3 million to the safe and sound lending, but also assure equal access to Atlanta Multi-Family Finance Alliance to provide concredit by creditworthy applicants regardless of race. The struction and bridge financing for housing for low- and Board recognizes, however, that HMDA data alone provide moderate-income households.25 an incomplete measure of an institution's lending in its NationsBank Georgia also has been a leading small community. The Board also recognizes that HMDA data business lender throughout Georgia. During 1993, the bank have limitations that make the data an inadequate basis, absent other information, for concluding that an institution has engaged in illegal discrimination in lending. 24. An individual Protestant criticized NationsBank Georgia for As previously noted, NationsBank Georgia is in compli- denying his loan application and maintained that the bank illegally discriminates against African Americans in the Atlanta area. In light ance with the substantive provisions of fair lending laws, of all the facts of record discussed above, the Board does not believe and the most recent OCC examinations of the bank and the that these comments warrant denial of the application. The Board has provided these comments to the OCC for consideration. 25. NationsBank also supports the community development initia- 21. 54 Federal Register 13,745. tives of other organizations at the corporate level. During 1993, 22. OCC examiners also conducted a fair lending review of Bank NationsBank Community Development Corporation ("NationsBank South and its mortgage company subsidiary, which included compari- CDC") formed a partnership with the Atlanta Neighborhood Developsons of loan files in which African-American applicants were denied ment Partnership and invested approximately $14 million to acquire loans and non-minority applicants were granted loans. This review and renovate 2,811 multi-family housing units. During 1994, found no evidence of fair lending law violations. NationsBank CDC entered into two additional partnerships to con- 23. Applications from African Americans increased from 15.5 per- struct up to 30 new single-family homes for low- and moderatecent of total applications in 1993 to 20.9 percent in 1994. Lenders in income households in the Martin Luther King, Jr., Historic District the Atlanta market in the aggregate received 10.6 percent of total and the Summerhill neighborhood. Nations Housing Fund, a partnerapplications from African Americans in 1993 and 16.8 percent in ship formed in 1993 by NationsBank and Enterprise Social Invest- 1994. African Americans constituted 25.1 percent of the total popula- ment Corporation, committed $1.1 million in 1994 to revitalize 84 tion in the Atlanta market in 1994. low-income apartment units in the East Point neighborhood. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin • February 1996 made 23 Small Business Administration ("SBA") loans for tion 4(c)(8) of the BHC Act.28 NationsBank has committed a total of $8.2 million, and originated 5,739 small business that it will conduct these activities in accordance with loans for a total of $397.4 million.26 During 1994, the bank Regulation Y. made 50 SBA loans totalling $16.6 million, and originated In order to approve this proposal, the Board also must 3,568 small business loans totalling $245 million. determine that the proposed activities represent a proper NationsBank Georgia committed $2.5 million to a micro- incident to banking, that is, that the proposed transaction loan pool administered by the Atlanta Business Commu- "can reasonably be expected to produce benefits to the nity Development Corporation, and made a four-year com- public, such as greater convenience, increased competition, mitment totalling $200,000 to the Savannah Community or gains in efficiency, that outweigh possible adverse ef- Development Corporation to be used to provide bridge fects, such as undue concentration of resources, decreased financing to small businesses. The bank invested approxi- or unfair competition, or unsound banking practices."29 On mately $2.7 million in the Greater Atlanta Small Business the basis of the record, the Board believes that this pro- Project, the Entrepreneurial Development Loan Fund, and posal should enable NationsBank to provide greater conve- Renaissance Capital Corporation to be used for loans to nience and improved services to its customers. Financial small businesses that normally would not qualify for con- and managerial considerations also are consistent with ventional bank financing.27 approval.30 On the basis of these considerations and all other facts of record, the Board has determined that there is Conclusion Regarding Convenience and Needs Factors no evidence in the record to indicate that consummation of this proposal is likely to result in any significantly adverse The Board has carefully considered all the facts of record effects, such as undue concentration of resources, dein reviewing NationsBank's record of CRA performance. creased or unfair competition, conflicts of interests, or unsound banking practices, that would outweigh the public Based on a review of the entire record of performance, benefits of this proposal. Accordingly, the Board has deterincluding information provided by all commenters, mined that the balance of public interest factors it must NationsBank, and BSC, the Board has concluded that consider under section 4(c)(8) of the BHC Act is favorable convenience and needs considerations, including the overand consistent with approval of NationsBank's proposal to all CRA performance records of the institutions involved acquire Bank South Life. in this proposal, are consistent with approval of this application. Conclusion Other Considerations Based on the foregoing and all other facts of record, The Board also has reviewed the financial and managerial including all the commitments made by NationsBank disresources and future prospects of NationsBank, Bank cussed in this order, the Board has determined that this South, and their respective subsidiaries, and the other su- application and the notices should be, and hereby are, pervisory factors the Board must consider under section 3 approved. The Board's approval is specifically conditioned of the BHC Act. Based on all the facts of record, the Board on compliance by NationsBank with all commitments has concluded that these factors are consistent with ap- made in connection with this application and these notices, proval of the application. including its divestiture commitments as discussed above. The Board's determination on the proposed nonbanking Nonbanking Activities activities also is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and NationsBank also has given notice, pursuant to section 225.23(g) (12 C.F.R. 225.7 and 225.23(g)), and to the 4(c)(8) of the BHC Act, to acquire Bank South Life, and Board's authority to require such modification or terminathereby engage in credit insurance activities. Sec- tion of the activities of a holding company or any of its tion 4(c)(8) of the BHC Act provides that a bank holding subsidiaries as the Board finds necessary to assure complicompany may, with Board approval, engage in any activity ance with, or to prevent evasions of, the provisions and that the Board determines to be "so closely related to purposes of the BHC Act and the Board's regulations and banking or managing or controlling banks, as to be a orders issued thereunder. The commitments and conditions proper incident thereto." The Board previously has deter- relied on by the Board in reaching this decision are deemed mined by regulation that the activities of Bank South Life to be conditions imposed in writing by the Board in conare closely related to banking within the meaning of sec- nection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. The acquisition of Bank South shall not be consum- 26. Small business loans include non-real estate commercial loans mated before the fifteenth calendar day following the effecoriginated in amounts up to $500,000. 27. The bank also provides technical support to small businesses, such as Small Business Journey, a seven-week course on the fundamentals of small business management offered with the University of 28. 12 C.F.R. 225.25(b)(8)(i). Georgia Small Business Development Center. Over 340 persons grad- 29. 12 U.S.C. § 1843(c)(8). uated from this program in 1994. 30. See 12 C.F.R. 225.24(b). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 66 tive date of this order, and this proposal shall not be U.S. Bancorp, with total consolidated assets of consummated later than three months after the effective $21.4 billion, operates subsidiary banks in California, date of this order, unless such period is extended for good Idaho, Nevada, Oregon, and Washington State.4 U.S. Bancause by the Board or by the Federal Reserve Bank of corp is the 37th largest banking organization in the United Richmond, acting pursuant to delegated authority. States, controlling less than 1 percent of total banking By order of the Board of Governors, effective Decem- assets in the United States. U.S. Bancorp also engages in a ber 18, 1995. number of permissible nonbanking activities nationwide. West One, with consolidated assets of $9.2 billion, oper- Voting for this action: Chairman Greenspan, Vice Chairman ates subsidiary banks in Idaho, Oregon, Washington, and Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. Utah. West One is the 70th largest banking organization in the United States, controlling less than 1 percent of total WILLIAM W. WILES banking assets in the United States. Upon consummation Secretary of the Board of this proposal, U.S. Bancorp would become the nation's 32d largest banking organization, controlling less than 1 U.S. Bancorp percent of total banking assets in the United States. Portland, Oregon Interstate Analysis Order Approving the Acquisition of a Bank Holding Company Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Effi- U.S. Bancorp, Portland, Oregon ("U.S. Bancorp"), a bank ciency Act of 1994, allows the Board to approve an appliholding company within the meaning of the Bank Holding cation by a bank holding company to acquire control of a Company Act ("BHC Act") has applied under section 3 of bank located in a state other than the home state of such the BHC Act (12 U.S.C. § 1842) to acquire all the voting bank holding company, if certain conditions are met.5 shares of West One Bancorp, Boise, Idaho ("West One"), These conditions are met in this case.6 In view of all the and thereby indirectly acquire its subsidiary banks.1 facts of record, the Board is permitted to approve this U.S. Bancorp also has provided notice under section 4(c)(8) proposal under section 3(d) of the BHC Act. of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire the nonbanking subsidiaries of West One, and thereby engage in permissible nonbanking activities.2 Notice of the proposal, affording interested persons an cities where West One's banks are located: Boise (September 15, opportunity to submit comments, has been published (60 1995); Seattle (September 13, 1995); and Salt Lake City (September 15, 1995). In addition, consistent with the Board's Rules of Procedure Federal Register 49,847 (1995)). The time for filing com- (12 C.F.R. 262.3(i)(l)), the Board published notice of this proposal in ments has expired and the Board has considered the applithe Federal Register, inviting public comment for 23 days. The Board cations and notices and all comments received in light of has received and carefully reviewed comments from organizations in the factors set forth in sections 3 and 4 of the BHC Act.3 different states where West One's banks are located. Based on all the facts of record, the Board concludes that notice was published in accordance with its Rules and that the public was adequately notified of this proposal. 1. The subsidiary banks are West One Bank and Idaho First Bank, 4. All asset data are as of June 30, 1995. both in Boise, Idaho; West One Bank, Oregon, Portland, and West 5. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding One Bank, Oregon, S.B., Hillsboro, both in Oregon; West One Bank company's home state is that state in which the operations of the bank Washington, Seattle, Washington; and West One Bank, Utah, Salt holding company's banking subsidiaries were principally conducted Lake City, Utah. on July 1, 1966, or the date on which the company became a bank 2. The nonbanking subsidiaries are West One Trust Co., Salt Lake holding company, whichever is later. For purposes of the BHC Act, City, Utah, and West One Trust Co., Washington, Seattle, Washing- the home state of U.S. Bancorp is Oregon. ton, which engages in trust company activities pursuant to section 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). 225.25(b)(3) of Regulation Y (12 C.F.R. 225.25(b)(3)); West One Life U.S. Bancorp is adequately capitalized and adequately managed. West Insurance Co., Phoenix, Arizona, which engages in insurance activi- One's banks have been in existence and continuously operated for the ties permitted under section 4(c)(8) of the BHC Act, pursuant to periods of time required under the laws of the states of Idaho, Utah sections 225.25(b)(8)(i) of Regulation Y (12 C.F.R. 225.25(b)(8)(i)); and Washington. In addition, upon consummation of this proposal, and West One Financial Services, Inc., Boise, Idaho, which engages in U.S. Bancorp and its affiliates would control less than 10 percent of residential and commercial mortgage servicing activities pursuant to the total amount of deposits of insured depository institutions in the section 225.25(b)(l)(iii) of Regulation Y 12 C.F.R. 225.25(b)(l)(iii)). United States, and less than 30 percent of the total amount of deposits 3. Two Commenters contended that notice of the proposal was of insured depository institutions, or the applicable state deposit limit, inadequate. The Board's Rules of Procedure (12 C.F.R. in Utah and Washington. U.S. Bancorp would control more than 262.3(b)(l)(ii)(E)) require an applicant to publish notice in a newspa- 30 percent of the total deposits in depository institutions in Idaho after per of general circulation in the community where the head offices of the proposal. However, Idaho law expressly eliminates any deposit the largest subsidiary bank of the applicant, if any, or the applicant and limitations (Idaho Code § 26-1606 as amended (1995)) and the each organization to be acquired are located. Notice of the proposal, Director of the Department of Finance has indicated that the transacinviting public comment was published on September 14, 1995, in a tion is permissible under relevant Idaho law. Accordingly, in this case newspaper of general circulation in Portland, where U.S. Bancorp is the acquisition by U.S. Bancorp of deposits in Idaho is permitted located, and in newspapers of general circulation in the following under section 3(d)(2)(D) of the BHC Act (12 U.S.C. § 1842(d)(2)(D)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin • February 1996 Competitive Considerations to mitigate the potential that this proposal may result in adverse competitive effects in these markets, U.S. Bancorp U.S. Bancorp and West One compete directly in 23 bank- has committed to divest branches in each of these banking ing markets in Idaho, Oregon, and Washington.7 The Board markets to one or more acquirors whose purchase of has carefully considered the effects that consummation of branches would not substantially lessen competition.12 Afthis proposal would have on competition in these banking ter consummation of this proposal and the divestiture of markets, in light of all the facts of record, including the branches, the competitive effect of this proposal would be characteristics of these markets, the projected increase in within the market concentration levels set forth in the DOJ the concentration of total deposits in depository institu- Merger Guidelines and the parameters applied by the Board tions8 in these markets ("market deposits") as measured in previous decisions in all markets, except the Portland by the Herfindahl-Hirschman Index ("HHI"),9 and com- banking market.13 mitments made by U.S. Bancorp to divest certain branches. Portland Banking Market. U.S. Bancorp is the largest In evaluating the competitive factors in this case, the Board banking organization in the Portland banking market.14 On also has carefully considered the views presented by com- acquisition of West One, U.S. Bancorp would control apmenters. proximately $5.4 billion in deposits, representing approxi- In fourteen banking markets, consummation of this pro- mately 40.5 percent of market deposits. To mitigate the posal would not exceed the levels of market concentration potential anti-competitive effects of this acquisition in the as measured by the HHI under the Department of Justice Portland banking market, U.S. Bancorp has entered into ("DOJ") merger guidelines.10 In nine other banking mar- divestiture agreements to sell 16 branches and approxikets, 1' the increase in the concentration of market deposits, mately $341 million of deposits to a firm that is not as measured by the HHI, indicates that the combination of currently competing in the Portland market. On consumma- U.S. Bancorp and West One, without divestitures, could tion of the proposed divestiture, the HHI in the Portland result in significantly adverse competitive effects. In order banking market would increase by 230 points to 2226, and U.S. Bancorp would control 37.9 percent of the market. A number of additional factors indicate, however, that 7. State banking data and local banking markets are set forth in the the increase in concentration levels in the Portland banking Appendix. market, as measured by the HHI, tends to overstate the 8. Market deposit data are as of June 30, 1994. Market share data competitive effects of this proposal taking into considerare based on calculations in which the deposits of thrift institutions are ation the proposed divestitures. For example, 21 competiincluded at 50-percent weighted basis. The Board previously has indicated that thrift institutions have become, or have the potential to tors would remain in the market, and the number of combecome, major competitors of commercial banks. See Midwest Finan- petitors would not be reduced because U.S. Bancorp has cial Group, 75 Federal Reserve Bulletin 386 (1989); National City committed to sell the divested branches to an out-of- Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). 12. With respect to each market in which U.S. Bancorp has commit- 9. Under the revised Department of Justice Merger Guidelines, 49 ted to divest offices it has committed to execute sale agreements prior Federal Register 26,823 (June 29, 1984), a market in which the to consummation of the acquisition of West One, and to consummate post-merger HHI is above 1800 is considered to be highly concen- these divestitures within 180 days of consummation. U.S. Bancorp has trated. In such markets, the Department of Justice (the "DOJ") is committed that if it is unsuccessful in completing these divestitures likely to challenge a merger that increases the HHI by more than within 180 days of consummation of this proposal, it will transfer the 50 points. The DOJ has informed the Board that a bank acquisition or unsold branches to an independent trustee with instructions to sell the merger generally will not be challenged (in the absence of other branches promptly. See BankAmerica Corporation, 78 Federal Refactors indicating anti-competitive effects) unless the post-merger serve Bulletin 338 (1992); United New Mexico Financial Corpora- HHI is at least 1800 and the merger or acquisition increases the HHI tion, 11 Federal Reserve Bulletin 484 (1991). Furthermore, by at least 200 points. The DOJ has stated that the higher than normal U.S. Bancorp has committed to submit to the Board, prior to consumthreshold for anti-competitive effects implicitly recognizes the com- mation of the acquisition, an executed trust agreement acceptable to petitive effect of limited-purpose lenders and other non-depository the Board stating the terms of the divestiture. financial entities. 13. Based on U.S. Bancorp's proposed divestitures, the HHI in these 10. The markets and the HHI increases are as follows. In Idaho, banking markets would increase as follows. In Oregon, Jefferson Boise (98 points to 3150); Lewiston (86 points to 2025); Moscow County (no increase), Lincoln County (increase not to exceed (354 points to 1494); and Nampa (56 points to 2281). In Oregon, 29 points to 2025 points), Ontario (increase not to exceed 189 points Corvallis (165 points to 1692); Deschutes County (90 points to 1934); to 1870 points), Pendleton (no increase), and Wasco County (no Eugene (121 points to 1680); and Salem (158 points to 1636). In increase); in Washington, Bellingham (increase not to exceed 252 Washington, Bremerton (54 points to 1512); Olympia (63 points to points to 1774 points), Kittitas County (increase not to exceed 10 1309); Seattle (85 points to 1800); Skagit County (124 points to points to 1500 points), and Pasco-Kennewick-Richland (increase not 1875); and Spokane (277 points to 1783). U.S. Bancorp also has to exceed 107 points to 1954 points). committed to divest a branch in the Yakima, Washington, banking 14. The Board received comments concerning the competitive efmarket, although consummation of this proposal would not exceed fects of this transaction from an individual and an organization. The DOJ merger guidelines in that market. In light of this divestiture, the individual expressed concern that the proposed transaction would HHI for the market would increase 253 points to 1604 points. have a significantly adverse effect on competition or the concentration 11. The banking markets are as follows: in Oregon, Jefferson of resources in the Portland, Oregon, banking market, as evidenced by County, Lincoln County, Ontario, Pendleton, Portland, and Wasco higher deposit interest rates and rates of return at West One. The County; in Washington, Bellingham, Kittitas County, and Pasco- organization expressed concern about adverse effects on competition Kennewick-Richland. in the State of Washington. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 179 market competitor. In addition, Portland is an attractive housing-related credit needs of its entire community, inmarket for entry. It is the largest banking market in Ore- cluding low- and moderate-income neighborhoods. gon, and, from 1990 to 1994, its population grew faster One commenter expressed concern, however, that the than any other metropolitan area in Oregon. Five new proposal could have an adverse effect on U.S. Bancorp's competitors have entered the market de novo since 1992, record of performance because of alleged deficiencies in and two more have received regulatory approval to enter the CRA performance record of West One. In particular, the market. In addition, the number of branches in the the commenter questioned West One's record of lending market has increased by 60 over the last live years. to, and of providing lending products that take into account In accordance with the BHC Act, the Board has sought specialized needs of, minorities and residents of lowcomments from the United States Attorney General, the income census tracts. The commenter also suggested that Office of the Comptroller of the Currency ("OCC"), and future branch closings by US. Bancorp, especially in rural the Federal Deposit Insurance Corporation ("FDIC") on areas, should be monitored closely.16 the competitive effects of this proposal. The Attorney The Board has carefully reviewed the CRA performance General has advised the Board that, in light of the proposed records of US. Bancorp, West One, and their respective divestitures, the proposed transaction is not likely to have a subsidiary banks; all comments received; responses to significantly adverse effect on competition in any relevant those comments by US. Bancorp and West One; and all banking market. The OCC and FDIC have not objected to other relevant facts of record, in light of the CRA, the consummation of the proposal or indicated that it would Board's regulations, and the Statement of the Federal Fihave any significantly adverse competitive effects in any nancial Supervisory Agencies Regarding the Community relevant banking market. Reinvestment Act ("Agency CRA Statement"). Based on all the facts of record, including the views expressed by commenters on the potential competitive Record of Performance Under the CRA effects of this proposal, and for the reasons discussed in this order, the Board concludes that consummation of this A. CRA Performance Examinations proposal is not likely to have a significantly adverse effect on competition or on the concentration of resources in any The Agency CRA Statement provides that a CRA examinarelevant banking market. This determination is subject to tion is an important and often controlling factor in the completion of the divestitures proposed by US. Bancorp in consideration of an institution's CRA record and that reconnection with these applications. ports of these examinations will be given great weight in the applications process.17 The Board notes that two of Convenience and Needs Considerations U.S. Bancorp's subsidiary banks, U.S. National Bank of Oregon, Portland, Oregon ("USNB"), its lead subsidiary In acting on an application to acquire a depository institu- bank, and US. Bank of Washington, N.A., Seattle, Washtion under the BHC Act, the Board must consider the ington ("USWA"), both received "outstanding" ratings convenience and needs of the communities to be served, from their primary federal supervisor, the OCC, in their and take into account the records of the relevant depository most recent publicly available examinations for CRA perinstitutions under the Community Reinvestment Act formance, as of March 1994.18 U.S. Bancorp's subsidiary (12 U.S.C § 2901 et seq.) ("CRA"). The CRA requires the bank in Idaho, US. Bank of Idaho, N.A., Coeur d'Alene, federal financial supervisory agencies to encourage finan- Idaho ("USBI"), received a "satisfactory" rating from the cial institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and sound operation. To accomplish this end, the CRA 16. 54 Federal Register 13,742 (1989). Two commenters have requires the appropriate federal supervisory authority to reached agreements with U.S. Bancorp regarding services to be pro- "assess the institution's record of meeting the credit needs vided to low- and moderate-income communities and have requested of its entire community, including low- and moderate- that the Board monitor and enforce compliance with these agreements. The Board has indicated in previous orders and in the Agency CRA income neighborhoods, consistent with the safe and sound Statement that communication by depository institutions with commuoperation of such institution," and to take that record into nity groups provides a valuable method of assessing and determining account in its evaluation of bank expansion proposals.15 how best to address the credit needs of the community. Both the CRA The Board has received comments supporting this pro- and the Agency CRA Statement require the Board's review to focus on the established record of performance of the institutions involved posal from a number of organizations, which commended and the programs and policies that the institutions have in place to U.S. Bancorp's efforts in promoting affordable housing assist in meeting the credit needs of their entire communities. See initiatives and helping community groups achieve their Fifth Third Bancorp, 80 Federal Reserve Bulletin 838 (1994). The objectives for lending programs for minorities and low- Board believes, moreover, that agreements between banking organizaand moderate-income individuals. US. Bancorp also was tions and community groups are private arrangements that are not enforceable by the Board. commended for providing leadership by encouraging bank 17. Id. at 13,745. personnel with financial expertise to assist in addressing 18. U.S. Bancorp's subsidiary savings bank in Washington, U.S. Savings Bank of Washington, Bellingham, received a "satisfactory" rating from the FDIC in its most recent examination of CRA 15. 12 U.S.C. § 2903. performance, as of May 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin • February 1996 OCC in its most recent examination of CRA performance, velopment, and the financial support of non-profit as of September 1994. West One's lead bank, West One organizations engaged in community development, build- Bank, Idaho, Boise, Idaho, was rated "outstanding" for ing affordable housing, and providing educational pro- CRA performance by the Federal Reserve Bank of San grams to small businesses and home buyers. Francisco, as of June 1995. West One's remaining subsid- U.S. Bancorp also has adopted a fair lending policy and a iary banks all received ratings of "outstanding" or "satis- comprehensive fair lending implementation plan. These factory" as of their most recent CRA performance evalua- include comparative file reviews and matched pair testing tions by their primary federal supervisors.19 and a second review program. U.S. Bancorp employs a Fair Lending Program Manager, who is responsible for direct- B. Lending Policies and Programs ing efforts under the fair lending implementation plan and for fair lending initiatives, procedures, and program devel- The Board notes that U.S. Bancorp has the types of policies opment for all of U.S. Bancorp's subsidiary banks. The and programs in effect and working well that assist in subsidiary banks track and analyze lending activity to providing an effective record of CRA performance. Upon ensure reasonable credit distribution and to evaluate fair consummation of this proposal, West One would be inte- lending performance. Lending activity reportable under the grated into the U.S. Bancorp corporate CRA structure, and Home Mortgage Disclosure Act ("HMDA") is analyzed U.S. Bancorp has stated that it plans to continue using population levels of minorities, approval and denial U.S. Bancorp's overall policies and practices, consistent ratios among minorities and non-minorities, and applicant with safe and sound operations, in its existing market areas income levels. and in the new market areas U.S. Bancorp would enter as a U.S. Bancorp has a marketing program in place at each result of the proposal. U.S. Bancorp also intends to review of its subsidiary banks, which involve the use of television, the particular programs currently offered by West One to radio, print, direct mail, sponsorships, educational semiensure that unique CRA-related needs identified by West nars, community events. U.S. Bancorp's subsidiary banks One continue to be met. have developed specific advertising programs for low- and CRA lending programs include products designed to moderate-income areas and individuals, small businesses, assist in meeting the credit needs of low- and moderate- and small farms. Print adds are placed in publications income areas and individuals, small businesses, and small directed toward minority applicants and advertising has farms. For example, U.S. Bancorp subsidiary banks offer been conducted in languages other than English. Multilinhome loan programs with required downpayments as low gual and multicultural loan officers also are recruited in as 2 percent, permit closing costs to be financed, provide order to better reach diverse markets. down payment assistance, and offer flexible underwriting criteria in the areas of credit history, income ratios, and C. Branch Closure Policies and Practices sources of down payment.20 The banks also participate in special home loan programs developed by the secondary U.S. Bancorp's subsidiary banks operate under a branch market, as well as government-insured programs offered closure consolidation policy that would apply to the subsidby the Veterans Administration and the Federal Housing iaries of West One. This policy requires extensive research Administration. to be conducted before reaching a decision to close a In terms of small business lending, U.S. Bancorp subsid- branch, including consideration of any low- to moderateiary banks offer a variety of credit products to small income neighborhoods, rural areas, small businesses and businesses, including the 7a, 504 and Low-Doc programs small farms that might be affected by a branch closure. U.S. through the Small Business Administration. Small busi- Bancorp solicits information directly from the community nesses owned by women and minorities and small busi- about the potential impact of a proposed branch closure. nesses in disadvantaged areas are eligible for loans through These contacts include individuals representing low- to U.S. Bancorp's Commercial Opportunity Loan Program. moderate-income constituencies, small businesses, small This program provides financing under underwriting stan- farms, and senior citizens. The policy requires that, should dards more liberal than conventional financing in terms of the impact of a branch closure be more than minimal, an qualifying criteria and loan terms. Community develop- action plan be developed to minimize the impact. ment activities of the banks include construction and per- Recent amendments to the Federal Deposit Insurance manent financing for multi-family affordable housing de- Act require an insured depository institution to submit a notice of any proposed branch closing to the appropriate federal banking agency no later than 90 days before the 19. West One Bank, Oregon, Portland, Oregon; West One Bank, date of the proposed branch closing.21 The Board also Oregon, S.B., Hillsboro, Oregon; West One Bank, Washington, Seat- notes that branch closings by U.S. Bancorp, particularly in tle, Washington; and West One Bank, Utah, Salt Lake City, Utah, all received CRA Examination ratings of "outstanding" from their primary federal supervisors in their most recent CRA Examinations. Idaho First Bank, Boise, Idaho, received a rating of "satisfactory." 21. See section 228 of the Federal Deposit Insurance Corporation 20. U.S. Bancorp's banks offer a portfolio home loan program called Improvement Act of 1991, adding a new section 42 to the Federal HomePartners U.S. that features qualifying criteria that are more Deposit Insurance Act (12 U.S.C. § 1831r-l). Customers of the inexpansive than secondary market standards. sured depository institution also are required to be notified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 181 low- and moderate-income neighborhoods, will be as- Nonbanking Activities sessed by examiners in the institution's CRA performance U.S. Bancorp also has given notice, pursuant to section evaluation, and will be reviewed by the Board in future 4(c)(8) of the BHC Act, of its proposal to acquire subsidiarapplications to acquire a depository facility. ies of West One engaged in certain mortgage, credit and non-credit related insurance, and trust activities. The Board D. Conclusion Regarding Convenience and Needs has previously determined by regulation or order that the Factors proposed activities are closely related to banking for purposes of section 4(c)(8) of the BHC Act. U.S. Bancorp has The Board has carefully considered the entire record, incommitted that it will conduct these activities in accorcluding the comments filed, in reviewing the convenience dance with the Board's regulations and orders approving and needs factors under the BHC Act. After a review of the these activities for bank holding companies. In every case entire record of performance, including information prounder section 4 of the BHC Act, the Board considers the vided by Commenters, U.S. Bancorp and West One, and financial condition and resources of the applicant and its the CRA performance examinations and other information subsidiaries and the effect of the transaction on those from the banks' primary supervisors, the Board concludes resources.23 Based on all the facts of record, the Board has that the efforts of U.S. Bancorp and West One to help meet concluded that financial and managerial considerations are the credit needs of all segments of the communities served consistent with approval. by their subsidiary banks, including low- and moderate- In order to approve this notice, the Board also must income neighborhoods, are consistent with approval. For determine that the performance of the proposed nonbankthese reasons, and based on all the facts of record, the ing activities "can reasonably be expected to produce Board concludes that convenience and needs considerbenefits to the public . . . that outweigh possible adverse ations, including the CRA performance records of the effects, such as undue concentration of resources, decompanies and banks involved in these proposals, are creased or unfair competition, conflicts of interests, or consistent with approval of these applications. unsound banking practices." 12 U.S.C. § 1843(c)(8). On the basis of the record, the Board believes that this pro- Other Considerations posal should enable U.S. Bancorp to provide greater convenience and improved services to its customers and to The Board also has concluded that the financial and mana- customers of West One's nonbank subsidiaries. In considgerial resources and future prospects of U.S. Bancorp, West ering U.S. Bancorp's acquisition of West One's nonbank- One, and their respective subsidiaries, are consistent with ing activities, the record in this case indicates that there are approval of this proposal as are the other supervisory numerous providers of these nonbanking services, and factors the Board must consider under section 3 of the there is no evidence in the record to indicate that consum- BHC Act.22 mation of this proposal is likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of this proposal. Accordingly, the 22. The Board has carefully reviewed comments alleging a number of improper actions by West One Bank, Idaho ("Bank"), and its Board has determined that the balance of public interest parent holding company, West One. Commenter's allegations against factors it must consider under section 4(c)(8) of the BHC Bank for the most part involve actions and activities engaged in by the Act is favorable and consistent with approval. bank while it was a nationally chartered institution, and before it became a state member bank in 1992. Commenters have presented these allegations to the OCC for consideration. In addition, Comment- Conclusion ers have litigated their claims in connection with foreclosure proceedings by Bank in a court that had the authority to provide Commenters Based on the foregoing, including U.S. Bancorp's commitwith appropriate remedies, if improper actions could have been sub- ments to the Board, and in light of all the facts of record, stantiated. That court did not grant relief to Commenters. Contrary to the Board has determined that these applications and no- Commenter's allegations, West One and its predecessor have received tices should be, and hereby are, approved.24 The Board's all required approvals from the Federal Reserve System to form a bank holding company and to make acquisitions of other banking organizations. Although West One's license to conduct business in Idaho lapsed between November 1981 and April 1982, the Idaho 23. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 Secretary of State has confirmed that the company's authority to Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 conduct business was not suspended for this technical default. The Federal Reserve Bulletin 155 (1987). Board also has considered this matter in light of all the facts of record, 24. Two commenters have requested that the Board suspend the including reports of examination assessing the managerial strength of proposed applications until their allegations of managerial wrongdo- U.S. Bancorp and West One and their subsidiary banks. The Board ing by the predecessors of West One can be investigated. The Board is notes that after consummation, West One would be integrated into the required under applicable law and the Board's processing procedures management structure of U.S. Bancorp and subject to its policies and to act on applications submitted under the BHC Act within specified procedures. In light of all the facts of record, including information time periods. Based on all the facts of record, and for the reasons provided by federal and state law enforcement and securities regula- previously discussed, the Board concludes that delay of this proposal tory agencies, the Board concludes that these comments do not is not warranted, and that the record is sufficient to act on this warrant denial of this proposal. proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin • February 1996 approval is specifically conditioned on compliance by proximately 34 percent of state deposits, and would remain U.S. Bancorp with all commitments made in connection the largest depository institution in the state. with these applications. The Board's determinations on the nonbanking activities Local hanking markets where U.S. Bancorp and West to be conducted by U.S. Bancorp are subject to all the One compete. conditions in the Board's Regulation Y and to the Board's authority to require such modification or termination of the Boise Boise Ranally Metro Area ("RMA") activities of a holding company or any of its subsidiaries as Lewiston Lewiston RMA the Board finds necessary to assure compliance with, or to Nampa Nampa RMA and the cities of Parma prevent evasion of, the provisions and purposes of the and Wilder BHC Act and the Board's regulations and orders issued Moscow/Pullman Moscow, Idaho, and the cities of Pullthereunder. The commitments and conditions relied on by man, Colfax, and Palouse in the State the Board in reaching this decision are deemed to be of Washington conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be en- Oregon forced in proceedings under applicable law. The acquisition of West One's subsidiary banks shall not U.S. Bancorp controls deposits of approximately $7.6 bilbe consummated before the fifteenth calendar day followlion, representing approximately 30 percent of all state ing the effective date of this order, and the banking and the deposits, and is the largest depository institution. West One nonbanking transactions shall not be consummated later controls deposits of approximately $1.1 billion, representthan three months following the effective date of this order, ing approximately 4 percent of state deposits, and is the unless such period is extended for good cause by the Board sixth largest depository institution. Upon consummation of or by the Federal Reserve Bank of San Francisco, acting this proposal, U.S. Bancorp would control deposits of pursuant to delegated authority. approximately $8.8 billion, representing approximately By order of the Board of Governors, effective Decem- 34 percent of state deposits, and would remain the largest ber 11, 1995. depository institution in the state. Upon completion of the proposed branch divestitures, U.S. Bancorp would control Voting for this action: Chairman Greenspan, and Governors Lind- deposits of approximately $8.2 billion, representing sey, Phillips, and Yellen. Absent and not voting: Vice Chairman 32 percent of state deposits, and would remain the largest Blinder and Governor Kelley. depository institution in the state. JENNIFER J. JOHNSON Deputy Secretary of the Board Local banking markets where U.S. Bancorp and West One compete. Appendix A Corvallis Corvallis RMA Deposit Size, Percentage of Deposits, and Ranking for U.S. Eugene Eugene RMA Bancorp and West One in the States Where They Compete1 Portland Portland RMA and the cities of Mount Angel, Scappoose, Saint Helens, and Local Banking Markets Defined Veronia Salem Salem RMA and the cities of Dallas, Idaho Silverton, and Stayton Deschutes Deschutes County U.S. Bancorp controls deposits of approximately Jefferson Jefferson County $75.2 million, representing less than one percent of all Lincoln Lincoln County deposits in depository institutions in the state ("state de- Wasco Wasco County posits"), and is the 14th largest depository institution. West Ontario Malheur County, Oregon; and the cit- One controls deposits of approximately $3.1 billion, repre- ies of Fruitland, New Plymouth, Paysenting approximately 34 percent of state deposits, and is ette, and Weiser, Idaho the largest depository institution. Upon consummation of Pendleton The cities Athena, Hermiston, Pendlethis proposal, U.S. Bancorp would control deposits of ton, Pilot Rock, Stanfield, Umatilla, approximately $3.2 billion, representing approximately and Weston 34 percent of state deposits, and would become the largest depository institution in the state. Upon completion of the Washington proposed branch divestiture, U.S. Bancorp would control deposits of approximately $3.1 billion, representing ap- U.S. Bancorp controls deposits of approximately $4.9 billion, representing approximately 10 percent of all state deposits, and is the fourth largest depository institution. 1. All deposit data are as of June 30, 1994. West One controls deposits of approximately $1.7 billion, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 183 representing approximately 3 percent of state deposits, and the merger were requested from the United States Attorney is the sixth largest depository institution. Upon consumma- General, the Office of the Comptroller of the Currency, and tion of this proposal, U.S. Bancorp would control deposits the Federal Deposit Insurance Corporation. The time for of approximately $6.6 billion, representing approximately filing comments has expired, and the Board has considered 13 percent of state deposits, and would become the third the applications and all the facts of record in light of the largest depository institution in the state. Upon completion factors set forth in the Bank Merger Act and the Federal of the proposed branch divestitures, U.S. Bancorp would Reserve Act. control deposits of approximately $6.5 billion, representing Bank, a wholly owned subsidiary of WSB Bancshares, 13 percent of state deposits, and would become the fourth Inc., Wellington, Texas ("Bancshares"), operates in the largest depository institution in the state. Collingsworth County banking market.2 The Memphis Branch of BOA-Texas operates in the Hall County banking Local banking markets where U.S. Bancorp and West market3 and the Childress Branch of BOA-Texas operates One compete. in the Childress County banking market.4 Bank does not operate in either of these two markets. Based on all the Bellingham Bellingham RMA and the cities of facts of record, the Board concludes that consummation of Blain, Everson, Lynden, and Sumas this proposal would not have any significantly adverse Bremerton Bremerton RMA effect on competition or the concentration of banking re- Olympia Olympia RMA sources in any relevant banking market.5 Pasco- Pasco-Kennewick-Richland RMA The Board also concludes that the financial and manage- Kennewick- rial resources and future prospects of Bank are consistent Richland with approval, as are the other supervisory factors that the Seattle Seattle RMA Board is required to consider under the Bank Merger Act Spokane Spokane RMA and Fairchild Air Force and the Federal Reserve Act. Considerations relating to the Base, Washington, and the cities of convenience and needs of the communities to be served Coeur d'Alene, Hayden Lake, and also are consistent with approval.6 Rathdrum, Idaho Based on the foregoing and all the facts of record, the Yakima Yakima RMA Board has determined that these applications should be, Kittitas Kittitas County and hereby are, approved. The Board's approval of this Skagit Skagit County proposal is specifically conditioned on compliance by Bank with all commitments made in connection with these applications. For purposes of this action, the commitments and ORDERS ISSUED UNDER BANK MERGER ACT conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Wellington State Bank Board and, as such, may be enforced in proceedings under Wellington, Texas applicable law. This transaction may not be consummated before the Order Approving the Merger of Banks and Establishment fifteenth calendar day following the effective date of this of Bank Branches order, or later than three months after the effective date of Wellington State Bank, Wellington, Texas ("Bank"), a state member bank, has applied under section 18(c) of the 2. The Collingsworth County banking market is approximated by Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the Collingsworth County, Texas. "Bank Merger Act") to purchase certain assets and assume 3. The Hall County banking market is approximated by Hall County, certain liabilities of two branches of Bank of America Texas. Texas, N.A., Irving, Texas ("BOA-Texas Branches").1 4. The Childress County banking market is approximated by Childress County, Texas. Bank also has applied under section 9 of the Federal 5. The Board has received and considered comments from a bank in Reserve Act (12 U.S.C. § 321) to establish branch offices Childress, Texas, alleging that too many lenders currently operate in at the current locations of the BOA-Texas Branches. the Childress County banking market in light of its small population. Notice of the applications, affording interested persons The Board notes that there is no evidence in the record to indicate that this proposal would have an adverse effect on the safety and soundan opportunity to submit comments, has been given in ness of Bancshares or Bank. In addition, the number of competitors accordance with the Bank Merger Act and the Board's would remain the same because Bank does not currently operate in the Rules of Procedure (12 C.F.R. 262.3(b)). As required by Childress County banking market. The promotion of competition by the Bank Merger Act, reports on the competitive effects of maintaining the current number of competitors is a positive factor in evaluating proposals under the Bank Merger Act. Based on all the facts of record, including relevant reports of examination, the Board concludes that these comments do not raise adverse considerations under the statutory factors that the Board is required to consider. 1. Bank would acquire the Childress Branch of BOA-Texas located 6. Bank received a "satisfactory" rating from the Federal Reserve at 423 N. Main, Childress, Texas, and the Memphis Branch of Bank of Dallas for performance under the Community Reinvestment BOA-Texas located at 119 S. 6th Street, Memphis, Texas. Act in its most recent examination, as of June 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 Federal Reserve Bulletin • February 1996 this order, unless such period is extended by the Board or Voting for this action: Chairman Greenspan, Vice Chairman by the Federal Reserve Bank of Dallas, acting pursuant to Blinder, and Governors Kelley, Phillips, and Yellen. Absent and not voting: Governor Lindsey. delegated authority. By order of the Board of Governors, effective Decem- JENNIFER J. JOHNSON ber 6, 1995. Deputy Secretary of Board ACTIONS TAKEN UNDER SECTIONS 5(d)(3) AND 18(C) OF THE FEDERAL DEPOSIT INSURANCE ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Acquiring Bank(s) Acquired Thrift Reserve Bank Approval Date Fifth Third Bank of Northern Kentucky Enterprise Bank, F.S.B., Cleveland December 21, 1995 Kentucky, Inc., Newport, Kentucky Covington, Kentucky APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Alabama National BanCorporation, National Commerce Corporation, Atlanta December 1, 1995 Shoal Creek, Alabama Birmingham, Alabama Ameribank Corporation, United Oklahoma Bankshares, Inc., Kansas City December 13, 1995 Shawnee, Oklahoma Del City, Oklahoma Arkansas National Bancshares, Inc. Arkansas National Bank, St. Louis December 5, 1995 Bentonville, Arkansas Bentonville, Arkansas Bank Corporation of Georgia, Effingham Bank & Trust, Atlanta December 19, 1995 Macon, Georgia Rincon, Georgia Bank West Nevada Corporation, Bank West of Nevada, San Francisco December 20, 1995 Las Vegas, Nevada Las Vegas, Nevada BOK Financial Corporation, Security National Bancshares of Kansas City November 27, 1995 Tulsa, Oklahoma Sapulpa, Inc., Sapulpa, Oklahoma Chaparral Bancshares, Inc., Chaparral Delaware Bancshares, Inc., Dallas December 8, 1995 Richardson, Texas Dover, Delaware Canyon Creek National Bank, Richardson, Texas Chaparral Delaware Bancshares, Canyon Creek National Bank, Dallas December 8, 1995 Inc., Richardson, Texas Dover, Delaware Citizens Bancshares, Inc., Western Reserve Bank of Ohio, Cleveland December 11, 1995 Salineville, Ohio Lowellville, Ohio Citizens Community Bancorp, Inc., Citizens Community Bank of Florida, Atlanta December 15, 1995 Marco Island, Florida Marco Island, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 185 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Community Bancshares of Community Bancshares of Indianola, Atlanta November 29, 1995 Mississippi, Inc., Indianola, Mississippi Forest, Mississippi Community Bancshares of Mississippi, Inc., Employee Stock Ownership Plan, Forest, Mississippi Community First Bancorp, Inc., The First National Bank of Cleveland December 13, 1995 Reynoldsville, Pennsylvania Reynoldsville, Reynoldsville, Pennsylvania Cullen/Frost Bankers, Inc., S.B.T. Bancshares, Inc., Dallas December 8, 1995 San Antonio, Texas San Marcos, Texas Dentel Bancorporation, Cory don Bancorporation, Chicago December 6, 1995 Victor, Iowa Corydon, Iowa Empire Bancshares, Incorporated, Founders Trust National Bank, Minneapolis December 11, 1995 Sioux Falls, South Dakota Sioux Falls, South Dakota Farmers & Merchants Financial Farmers State Bank of Huntley, Minneapolis December 7, 1995 Services, Inc., Huntley, Minnesota St. Paul, Minnesota FCB Holding, Inc., First Capital Bancorp, Inc., Kansas City December 14, 1995 Guthrie, Oklahoma Guthrie, Oklahoma FCFT, Inc., First Community Bank of Mercer Richmond December 13, 1995 Princeton, West Virginia County, Inc., Princeton, West Virginia First Charter Corporation, Bank of Union, Richmond December 4, 1995 Concord, North Carolina Monroe, North Carolina FirstFed Bancorp, Inc., First State Bank of Bibb County, Atlanta December 7, 1995 Bessemer, Alabama West Blocton, Alabama First Financial Bankshares, Inc., Weatherford National Bancshares, Inc. Dallas December 11, 1995 Abilene, Texas Weatherford, Texas Parker Bancshares, Inc., Dover, Delaware First National Security Company, American State Bancshares, Inc., St. Louis December 21, 1995 DeQueen, Arkansas Broken Bow, Oklahoma F&M Bancorporation, Monycor Bancshares, Inc., Chicago December 12, 1995 Kaukauna, Wisconsin Ashland, Wisconsin FSC Bancshares, Inc., Farmers and Valley Bank, Kansas City December 5, 1995 Cameron, Missouri Tarkio, Missouri Great Falls Bancorp, Bergen Commercial Bank, New York November 29, 1995 Totowa, New Jersey Paramus, New Jersey Lonoke Bancshares, Inc., First State Bank of Gurdon, St. Louis November 28, 1995 Lonoke, Arkansas Gurdon, Arkansas Mackey BanCo, Inc., Security State Bank, Kansas City December 4, 1995 Ansley, Nebraska Ansley, Nebraska Metropolitan Bancshares, Inc., Wally Bancorp, Inc., Kansas City December 4, 1995 Aurora, Colorado Parker, Colorado NationsBank Corporation, Interim Sun World, National Richmond December 21, 1995 Charlotte, North Carolina Association, NationsBank Texas Bancorporation, El Paso, Texas Charlotte, North Carolina The New Galveston Company, S.B.T. Bancshares, Inc., Dallas December 8, 1995 Wilmington, Delaware San Marcos, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 Federal Reserve Bulletin • February 1996 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Northern California Bancorp, Inc., Monterey County Bank, San Francisco November 28, 1995 Monterey, California Monterey, California Norwest Corporation, Irene Bancorporation, Inc., Minneapolis December 5, 1995 Minneapolis, Minnesota Sioux Falls, South Dakota Omega City Holding Company, Marion Bank Holding Company, Minneapolis December 6, 1995 LaMoure, North Dakota Marion, North Dakota Padgett Agency, Inc., Lansing Financial Corporation, Inc., Kansas City December 15, 1995 Greenleaf, Kansas Lansing, Kansas Passumpsic Bancorp, Passumpsic Savings Bank, Boston December 1, 1995 St. Johnsbury, Vermont St. Johnsbury, Vermont Peoples Holding Corporation, First State Bank & Trust Company, Dallas November 28, 1995 Minden, Louisiana Plain Dealing, Louisiana Quantum Capital Corp., Quantum National Bank, Atlanta December 6, 1995 Suwanee, Georgia Suwanee, Georgia Regions Financial Corporation, Enterprise National Bank of Atlanta, Atlanta December 21, 1995 Birmingham, Alabama Dunwoody, Georgia Regions Financial Corporation, Metro Financial Corporation, Atlanta December 1, 1995 Birmingham, Alabama Atlanta, Georgia Rocky Mountain Bancorporation, N.E. Montana Bancshares, Inc., Minneapolis December 15, 1995 Inc., Plentywood, Montana Billings, Montana RMBI Acquisition, Inc., Billings, Montana Security National Corporation, Sheldon Security Bancorporation, Inc., Chicago December 11, 1995 Sioux City, Iowa Sheldon, Iowa Sheldon Security Financial Corporation, Sheldon, Iowa Security State Bank, Sheldon, Iowa The Templar Fund, Inc., Truman Bank, St. Louis December 15, 1995 St. Louis, Missouri St. Louis, Missouri Tompkins County Trustco, Inc., Tompkins County Trust Company, New York December 8, 1995 Ithaca, New York Ithaca, New York United Community Bancorp, Inc., State Bank of Auburn, Chicago December 15, 1995 Chatham, Illinois Auburn, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 187 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Bridgeport Financial Corporation, Bridgeport Securities Corporation, Dallas December 20, 1995 Bridgeport, Texas Bridgeport, Texas Bridgeport Bancshares, Inc., Dover, Delaware CNB Bancshares, Inc., Service Financial, Inc., St. Louis November 24, 1995 Evansville, Indiana Harriman, Tennessee Southern Finance Company, Inc., Madisonville, Kentucky Crestar Financial Corporation, Crestar Securities Corporation, Richmond November 24, 1995 Richmond, Virginia Richmond, Virginia Fifth Third Bancorp, Kentucky Enterprise Bancorp, Inc., December 21, 1995 Cleveland Cincinnati, Ohio Newport, Kentucky FirstFed Bancorp, Inc., First Federal Savings Bank, December 8, 1995 Atlanta Bessemer, Alabama Bessemer, Alabama Forstrom Bancorporation, Inc., To engage de novo in direct lending December 19, 1995 Minneapolis Clara City, Minnesota Guaranty Bankshares, Inc., To engage in leasing activities and December 5, 1995 Chicago Cedar Rapids, Iowa making and servicing loans Old Kent Financial Corporation, Republic Mortgage Corporation, December 19, 1995 Chicago Grand Rapids, Michigan Salt Lake City, Utah Otto Bremer Foundation, United Insurance Agency, Inc., December 19, 1995 Minneapolis St. Paul, Minnesota Minot, North Dakota Bremer Financial Corporation, St. Paul, Minnesota Premier Financial Services, Inc., Premier Insurance Services, Inc., Chicago December 21, 1995 Freeport, Illinois Warren, Illinois Republic Bancorp, Inc., Premier Partners-James R. Gary Chicago December 19, 1995 Owosso, Michigan Realtors, Stichting Priorieteit ABN AMRO Woodland Hills, California Chicago November 29, 1995 Holding, Amsterdam, The Netherlands Stichting Administratiekantoor ABN AMRO Holding, Amsterdam, The Netherlands ABN AMRO Holding, N.V., Amsterdam, The Netherlands ABN AMRO Bank N.V., Amsterdam, The Netherlands Neville Leasing, Inc., Atlanta, Georgia Summit Financial Corporation, Domestic Loans, Inc., Richmond December 8, 1995 Greenville, South Carolina Manning, South Carolina A+ Loans, Inc., Manning, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 Federal Reserve Bulletin • February 1996 Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date FW Financial, Inc., First Western Bancorp, Inc., Minneapolis November 28, 1995 Huron, South Dakota Huron, South Dakota First Western Agency, Inc., Huron, South Dakota APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date BancFirst, City Bank & Trust Company, Kansas City December 5, 1995 Oklahoma City, Oklahoma Oklahoma City, Oklahoma Bank of Essex, First Union National Bank of Virginia, Richmond December 21, 1995 Tappahannock, Virginia Roanoke, Virginia Baylake Bank-Kewaunee, Baylake Bank, Chicago November 30, 1995 Kewaunee, Wisconsin Sturgeon Bay, Wisconsin Barnett Bank of Polk County, First Federal Savings & Loan Atlanta December 1, 1995 Lakeland, Florida Association of Lake Wales, Lake Wales, Florida Citizens Bank of Talladega, Talladega Federal Savings & Loan Atlanta December 1, 1995 Talladega, Alabama Association, Talladega, Alabama Fayette Bank, The Huntington National Bank of Cleveland November 21, 1995 Uniontown, Pennsylvania Pennsylvania, Uniontown, Pennsylvania Fifth Third Bank of Northern Kentucky Enterprise Bank, F.S.B., Cleveland December 21, 1995 Kentucky, Inc., Newport Kentucky Covington, Kentucky First Community Bank of Mercer First Community Bank, Inc., Richmond December 13, 1995 County, Inc., Princeton, West Virginia Princeton, West Virginia Hawkeye Bank, Hawkeye Bank of Ankeny, Chicago November 30, 1995 Des Moines, Iowa Ankeny, Iowa The Northern Trust Company, Northern Trust Bank/O'Hare, N.A., Chicago November 21, 1995 Chicago, Illinois Chicago, Illinois Northern Trust Bank/Lake Forest, N.A., Lake Forest, Illinois Northern Trust Bank/DuPage, Oakbrook Terrace, Illinois Republic Security Bank, Century Bank, F.S.B., Atlanta November 30, 1995 West Palm Beach, Florida Sarasota, Florida Triangle Bank, First Union National Bank of North Richmond December 1, 1995 Raleigh, North Carolina Carolina, Charlotte, North Carolina Tri-County Bank, NBD Bank, Chicago November 29, 1995 Brown City, Michigan Detroit, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 189 PENDING CASES INVOLVING THE BOARD OF merce Corporation, New Orleans, Louisiana, to merge with GOVERNORS City Bancorp, Inc., New Iberia, Louisiana, and First Bankshares, Inc., Slidell, Louisiana. The Board's brief was filed This list of pending cases does not include suits against the December 22, 1995. Oral argument on the petition for Federal Reserve Banks in which the Board of Governors is not review is scheduled for February 27, 1996. named a party. In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed January 6, 1995). Action to enforce subpoena seeking predecisional supervisory documents sought in connection with Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed Octoan action by Bank of New England Corporation's trustee in ber 10, 1995). Complaint alleging sex, age, and handicap bankruptcy against the Federal Deposit Insurance Corporadiscrimination in employment. tion. The Board filed its opposition on January 20, 1995. Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed Oral argument on the motion was held July 14, 1995. September 21, 1995). Petition for review of Board order Board of Governors v. Ghaith R. Pharaon, No. 91-CIV-6250 dated August 23, 1995, approving the applications of The (S.D. New York, filed September 17, 1991). Action to Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets freeze assets of individual pending administrative adjudicaand assume certain liabilities of 12 branches of PNC Bank, tion of civil money penalty assessment by the Board. On Ohio, N.A., Cincinnati, Ohio, and to establish certain September 17, 1991, the court issued an order temporarily branches. The Board's motion to dismiss was filed on restraining the transfer or disposition of the individual's October 26, 1995. assets. Lee v. Board of Governors, No. 94-4134 (2nd Cir., filed August 22, 1995). Petition for review of Board orders dated July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York, FINAL ENFORCEMENT DECISION ISSUED BY THE BOARD and the acquisition of U.S. Trust by Chase Manhattan OF GOVERNORS Corporation, New York, New York. On September 12, 1995, the court denied petitioners' motion for an emergency In the Matter of stay of the Board's orders. Jones v. Board of Governors, No. 95-1359 (D.C. Cir., filed Professional Bank July 17, 1995). Petition for review of a Board order dated Denver, Colorado June 19, 1995, approving the application by First Commerce Corporation, New Orleans, Louisiana, to acquire DOCKET No. 95-007-B-SM Lakeside Bancshares, Lake Charles, Louisiana. On November 15, 1995, the court granted the Board's motion to Final Decision and Order dismiss. Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, This is an administrative proceeding pursuant to the Fed- 1995). Appeal of dismissal of action against Board and eral Deposit Insurance Act ("FDI Act"), brought by the others seeking damages for alleged violations of constitu- Board of Governors of the Federal Reserve System tional and common law rights. The appellants' brief was ("Board") against the Professional Bank, Denver, Colofiled on June 23, 1995; the Board's brief was filed on July rado ("Bank") in which the Board seeks to issue a cease 12, 1995. and desist order requiring Bank to take affirmative action to Board of Governors v. Hotchkiss, Adversary No. 95-3146 correct the conditions resulting from certain violations of (Bankr. N.D. Ohio, filed May 1, 1995). Action to declare a law and unsafe and unsound practices. This proceeding restitution obligation arising from a Board consent order comes to the Board in the form of a Recommended Decinon-dischargeable in bankruptcy. On December 15, 1995, sion by Administrative Law Judge ("ALJ") Walter J. Althe court granted the Board's motion for summary judg- prin recommending that the Board issue a Cease and Desist ment. Order against Bank by default pursuant to the provisions of Money Station, Inc. v. Board of Governors, No. 95-1182 12 U.S.C. § 1818(b) and 12 C.F.R. 263.19(c). (D.C. Cir., filed March 30, 1995). Petition for review of a Upon review of the administrative record, the Board Board order dated March 1, 1995, approving notices by issues this Final Decision adopting the ALJ's Recom- Bank One Corporation, Columbus, Ohio; CoreStates Finan- mended Decision and orders that the attached Cease and cial Corp., Philadelphia, Pennsylvania; PNC Bank Corp., Desist Order issue against Bank. Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio, to acquire certain data processing assets of National City I. Statement of the Case Corporation, Cleveland, Ohio, through a joint venture subsidiary. The Board's brief was filed November 16, 1995. A. Procedural History Oral argument is scheduled for February 2, 1996. Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed On April 25, 1995, the Board issued a Notice of Charges March 3, 1995). Petition for review of a Board order dated and of Hearing ("Notice") against Bank pursuant to the February 2, 1995, approving the applications by First Com- provisions of 12 U.S.C. § 1818(b). The Notice alleged that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 Federal Reserve Bulletin • February 1996 Bank had engaged in unsafe and unsound practices by sel's proposed cease and desist order on the grounds that concentrating an unduly high percentage of its capital in Bank had not filed an answer and had not shown good loans to its sole shareholder, Oren Benton, and his family cause for its failure to do so. Bank did not file exceptions to members and related business entities (the "Benton the ALJ's recommended decision. Loans") and by issuing a large number of certificates of deposit at well above prevailing market interest rates. The B. Statutory and Regulatory Framework Notice further alleged that Bank had violated the Board's The FDI Act provides that a banking agency may issue a Regulation O, 12 C.F.R. 215, which places restrictions on cease and desist order against an insured depository instituloans by state member banks to their executive officers, tion which is engaging, has engaged or is about to engage directors and principal shareholders, by making Benton in unsafe or unsound practices in conducting the business Loans in excess of applicable lending limits, by making at of that institution or is violating, has violated or is about to least one Benton Loan on preferential terms and by extend- violate a law, rule or regulation.1 12 U.S.C. § 1818(b)(1). ing several indirect Benton Loans without the prior ap- Such an order may require the depository institution to proval of Bank's board of directors. Last, the Notice al- "cease and desist" from the practice or violation and to leged that Bank had violated sections 23A and 23B of the "take affirmative action to correct the conditions resulting Federal Reserve Act, 12 U.S.C. §§ 371c and 371c-l, by from any such violation or practice." Id. exceeding the Act's limits on covered transactions to affili- The Uniform Rules provide that, following the issuance ates, by failing to meet the Act's collateral requirements of a notice of charges, a respondent's failure to file an and by entering into transactions with affiliates that were answer within the time specified "constitutes a waiver of not on an arms'-length basis or in the Bank's best interests. his or her right to appear and contest the allegations in the All of the above-mentioned affiliates were Benton-related notice." 12 C.F.R. 263.19(c). If no timely answer is filed, entities. Enforcement Counsel may file a motion for entry of an Bank was personally served with the Notice by an officer order of default with the ALJ. Id. Upon a finding that of the Federal Reserve Bank of Kansas City ("Reserve respondent has not shown good cause for his failure to file Bank") on April 26, 1995 at a meeting with Bank's presia timely answer, the ALJ is directed to file a recommended dent, outside counsel and board of directors. In accordance order with the Board containing the factual allegations and with the Uniform Rules of Practice and Procedure ("Unithe relief sought in the notice. Id. Any final Board order form Rules"), which are applicable to this proceeding, based on a respondent's failure to file a timely answer is 12 C.F.R. 263.19, the Notice stated that Bank was required deemed to be an order issued upon consent. Id. See to file an answer within 20 days of service and provided 12 U.S.C. § 1818(b)(1) (failure to appear at hearing followthat its failure to file an answer would constitute a waiver ing service of notice is deemed consent to issuance of of Bank's right to appear and contest the allegations in the cease and desist order). Notice. After service of the Notice, Bank's president and its attorney had several discussions with Board Enforce- II. Discussion ment Counsel in which they asked Enforcement Counsel questions regarding the Notice and informed Enforcement In the circumstances of this case, it is clear that the regula- Counsel that Bank was aware that it had 20 days to file an tory prerequisites for the issuance of a default order have answer. During one of these discussions, Bank's counsel been met. The fact that Bank was served by hand with a informed Enforcement Counsel that Bank was electing not copy the notice is supported by the sworn affidavit of a to file an answer. Reserve Bank officer. Both the Notice and the Uniform On May 4, 1995, the ALJ issued a Scheduling Order Rules made clear to Bank that its answer was due within 20 setting a provisional hearing date of June 19, 1995. By days of service of the Notice and that its failure to file an May 17, 1995, the 20th day after service of the Notice, answer could result in default. Enforcement Counsel at- Bank had not filed an answer. On June 16, 1995, Enforce- tested in its motion for entry of a default order that Bank's ment Counsel moved for the entry of an order of default president and attorney informed him in several telephone based on Bank's continued failure to file an answer. En- conversations that they knew that Bank's answer was due forcement Counsel also filed a proposed cease and desist within 20 days of service. In one such conversation, Bank's order with the ALJ. Bank did not file an opposition to the attorney informed Enforcement Counsel that Bank had motion. elected not to file an answer. On July 3, 1995, the ALJ issued an order requiring Bank Bank failed to file a response to Enforcement Counsel's to show cause why it had failed to file an answer and why a motion for default and its proposed cease and desist order, recommended default order and order to cease and desist should not be entered against it. Bank was given until July 11, 1995 to respond to the show cause order. Bank did 1. The term unsafe and unsound banking practice has been defined not file a response. to mean " 'conduct deemed contrary to accepted standards of banking operations which might result in abnormal risk or loss to a banking On July 27, 1995, the ALJ issued a recommended deciinstitution or shareholder.' " Cavallari v. OCC, 57 F.3d 137, 142 sion incorporating the factual allegations in the Notice and (2d Cir. 1995) (citing First National Bank of Eden v. Department of recommending that the Board issue Enforcement Coun- the Treasury, 568 F.2d 610, 611 n.2 (8th Cir. 1978)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 191 to the ALJ's show cause order and to the ALJ's recom- hereto and made a part hereof, and this Order to Cease and mended default order. In short, Bank had repeated opportu- Desist (the "Order") in the proceeding initiated by the nities to respond to the charges in the Notice and failed to Notice. do so. There is no basis in the record for an inference that NOW, THEREFORE, the Board of Governors hereby Bank's failure to file an answer was due to mischance or issues this Order and orders, pursuant to section 8(b) of the inadvertence. The ALJ therefore acted reasonably and in Federal Deposit Insurance Act, as amended (the "FDI accordance with the Uniform Rules in finding that no good Act") (12 U.S.C. 1818(b)), that: cause existed to relieve Bank of the consequences of its 1. The Bank shall not declare or pay any dividends failure to file an answer. without the prior written approval of the Federal Re- Likewise, the Notice sets forth sufficient facts to support serve Bank of Kansas City (the "Reserve Bank") and the conclusion that Bank engaged in unsafe and unsound the Director of the Division of Banking Supervision and practices and violated sections 23A and 23B of the Federal Regulation of the Board of Governors. Requests for Reserve Act and Regulation O. The affirmative relief set approval shall be received by the Reserve Bank at least forth in the recommended cease and desist order is reason- 30 days prior to the proposed dividend declaration date ably calculated to correct the conditions resulting from and shall contain, but not be limited to, current and these violations and practices and is therefore consistent projected information on earnings, cash flow, capital with the provisions of the FDI Act. levels and asset quality of the Bank. 2. Within 45 days of this Order, the Bank shall submit to Conclusion the Reserve Bank an acceptable written plan to achieve, and, thereafter, maintain an adequate capital position. For these reasons, the Board orders that the attached cease The plan shall, at a minimum, address and consider: and desist order issue. (a) The current and future capital requirements of the By order of the Board of Governors of the Federal Bank, including compliance with the Capital Ade- Reserve System, effective this 7th day of December, 1995. quacy Guidelines of the Board of Governors for State Member Banks: Risk-Based Measure and Tier 1 Le- Board of Governors of the verage Measure (Appendices A and B of Regulation Federal Reserve System H of the Board of Governors (12 C.F.R. Part 208, App. A and B)); WILLIAM W. WILES (b) The volume of the Bank's adversely classified Secretary of the Board assets and the potential for additional asset quality problems at the Bank; Final Cease and Desist Order (c) The Bank's anticipated and unanticipated liquidity needs; WHEREAS, the Board of Governors of the Federal Re- (d) The Bank's anticipated levels of retained earnings; serve System (the "Board of Governors") issued on (e) The adequacy of the Bank's loan loss reserves and April 25, 1995, a Notice of Charges and of Hearing (the its effect on the Bank's financial condition; and "Notice") against the Professional Bank, Denver, Colo- (f) The source and timing of additional funds to fulfill rado (the "Bank") in response to: the future capital and loan loss reserve requirements (1) The alleged continuing unsafe and unsound practices set forth in this Order, including the sale of shares of and serious violations of law and regulations relating to its stock or other obligations, or the acquisition by, or the Bank's high level of loans to parties whose ability to merger of the Bank with, another insured depository service such loans in a timely manner is dependent upon institution or holding company thereof. the financial success of companies owned or controlled 3. Unless otherwise agreed to in writing by the Reserve by the Bank's sole shareholder and former director, and Bank, the Bank shall provide the Reserve Bank with at (2) The Bank's unsafe and unsound practice of funding least 5 days prior written notice of any sale, transfer or its liquidity needs through short term, high interest rate disposition of any asset, line of business or operation of certificates of deposit; the Bank where such asset, line of business or operation WHEREAS, in conjunction with the Notice, the Board has a book value in excess of $1 million. The Reserve of Governors issued a Temporary Order to Cease and Bank shall have the right to disapprove any such sale, Desist (the "Temporary Order") against the Bank, effec- transfer or disposition, in which case the Bank shall not tive April 26, 1995; proceed with the proposed sale, transfer or disposition. WHEREAS, the Bank failed to file an answer in re- This paragraph shall not apply to the sale of Fed Funds sponse to the Notice as required by section 263.19(a) of the or of securities sold under agreement to repurchase. Rules of Practice for Hearings of the Board of Governors 4. Within 30 days of this Order, the Bank shall submit to (the "Rules of Practice") (12 C.F.R. 263.19(a)); and the Reserve Bank an acceptable written plan to provide WHEREAS, the Board of Governors, pursuant to sec- for the maintenance of an adequate liquidity position. tion 263.40(c) of the Rules of Practice (12 C.F.R. The plan shall, at a minimum, address and consider the 263.40(c)) issues its Final Decision, which is attached following: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 Federal Reserve Bulletin • February 1996 (a) The maintenance of sufficient liquidity to meet and the ability of that officer to perform competently contractual liability maturities and to meet additional, his or her assigned duties. The primary purpose of this unanticipated demands; review shall be to aid in the development of a manage- (b) The Bank's level of dependence on volatile liabil- ment structure suitable to the Bank's needs that is ities, including out-of-territory, money desk and/or adequately staffed by qualified and trained personnel, wire service deposits; (b) During the term of this Order or as otherwise (c) The selection of appropriate measures to monitor required by law, the Bank shall comply with the the Bank's liquidity position, including quantitative provisions of section 32 of the FDI Act (12 U.S.C. guidelines to establish adequate coverage of volatile 183 li) and Subpart H of Regulation Y of the Board of liabilities by liquid assets; and Governors (12 C.F.R. Part 225, Subpart H) with re- (d) The preparation and submission of regular, peri- spect to the appointment of any new directors or the odic written reports to the board of directors that hiring or promotion of any senior executive officers. document the Bank's progress in achieving compli- 7. Within 30 days of this Order, the Bank shall submit to ance with the plan and that shall include, at a mini- the Reserve Bank an acceptable written plan to reduce mum: concentrations of credit in the Bank's loan portfolio of (i) a complete review of the Bank's then-current insider-related loans, as identified in the Reserve Bank's position in meeting targeted liquidity ratios; Report of Examination of the Bank, dated January 30, (ii) a schedule of anticipated sources and uses of 1995 (the "Report of Examination"). The plan shall funds over future plan horizons; include, at a minimum, the following: (iii) an analysis of strategies or steps taken during (a) A timetable for reducing the aggregate insiderthe reporting period to address deviations from the related concentration to a level that fully complies plan; and with the requirements of section 23A of the Federal (iv) a discussion of contingency plans if actual Reserve Act (12 U.S.C. 371c) and Regulation O of the sources or uses of funds vary materially from pro- Board of Governors (12 C.F.R. Part 215); jections. (b) a description of the specific procedures and meth- 5. (a) The Bank's board of directors shall continue to ods that the Bank will use to reduce the insider-related consist of a majority of outside directors. loans in accordance with the timetable required by (b) For the purposes of this Order, the terms: paragraph 7(a) hereof; and (i) "outside director" shall be defined, except as (c) submission to the Bank's board of directors of otherwise agreed to in writing by the Reserve Bank, monthly, accurate written reports concerning the as an individual who: Bank's efforts to reduce the insider-related concentra- (A) is not an employee, officer or agent of the tion, which shall be maintained for subsequent super- Bank or of any affiliate, visory review. (B) owns not more than 5 percent of the out- 8. Within 45 days of this Order, the Bank shall submit to standing voting stock of the Bank or of any the Reserve Bank an acceptable written plan designed to affiliate, or reduce or improve the Bank's position on each insider- (C) is not related in any manner to any share- related loan and on each loan in excess of $75,000 that holder who owns more than five percent of the was past due as to principal or interest in excess of outstanding voting stock of the Bank or any 90 days as of the date of this Order and all assets, related interest of such a shareholder; including other real estate, adversely classified or listed (ii) "related interest" shall be defined as set forth in for special mention by the Reserve Bank in the Report of section 215.2(n) of Regulation O of the Board of Examination, through amortization, repayment, liquida- Governors (12 C.F.R. 215.2(n)); and tion, additional collateral or other means, whichever (iii) "affiliate" shall be defined as set forth in may be appropriate. This plan shall not be amended or section 23A(b)(i) of the Federal Reserve Act rescinded without the prior written approval of the Re- (12 U.S.C. 371c(b)(l)). serve Bank, except that the plan shall be amended peri- 6. (a) Within 45 days of this Order, the Bank's board of odically to cover loans or other assets in excess of directors shall conduct a review of the Bank's man- $75,000 that have been adversely classified or listed for agement structure and the functions and performance special mention in any subsequent report of examination of the officers responsible for the Bank's operational or visitation of the Bank or loans that are past due as to and financial functions, credit review, and executive principal or interest for more than 90 days as of the date management responsible for the administration of the of each subsequent examination or visitation. Amended Bank's affairs and shall forward to the Reserve Bank plans based on loans or other assets that are classified or the written findings and conclusions of the review listed for special mention or overdue in subsequent along with a written description of any management examinations or visitations shall be submitted to the or operational changes that may be proposed as a Reserve Bank with the next progress report, as required result of the review. The review shall include an by paragraph 16 hereof, following each subsequent exassessment of the duties performed by each officer amination or visitation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 193 9. (a) Without the prior written approval of the Reserve plan, payment or amendment, in which case the Bank Bank, the Bank shall not, directly or indirectly, make shall not proceed with the proposed contract, plan, payany extension of credit to, or for the benefit of, any ment, or amendment. borrower, including any related interest of the bor- (b) For purposes of this paragraph, the terms: rower, who is obligated in any manner to the Bank on (i) "personal service contract" shall include, but is any extension of credit or portion thereof that has not limited to, an employment contract, a consultbeen charged-oflf by the Bank or classified "Loss" or ing agreement or arrangement, a severance pack- "Doubtful", as identified in the Report of Examina- age, or an excessive or supplemental retirement tion or in any subsequent report of examination or plan; and visitation as long as such credit remains uncollected. (ii) "executive officer" shall be defined as set forth (b) The Bank shall not, directly or indirectly, make in section 215.2(e) of Regulation O of the Board of any extension of credit to, or for the benefit of, any Governors (12 C.F.R. 215.2(e)). borrower, including any related interest of the bor- (c) Notwithstanding the provisions of paragraph 10(a) rower, who is obligated in any manner to the Bank on hereof and unless otherwise agreed to in writing by any extension of credit or portion thereof that has the Reserve Bank, the Bank does not need to obtain the been classified "Substandard", as identified in the prior written approval of the Reserve Bank for the pay- Report of Examination or in any subsequent report of ment of directors fees or the reimbursement of reasonexamination or visitation, without the prior approval able expenses that aggregate no more than $100 of the board of directors, who shall document the per month for each of its then- current directors and reasons for additional advances and who shall certify executive officers, provided that such reasonable exthat: penses are incurred in the performance of routine duties, (i) the additional extension of credit is necessary to which have been adequately documented and reported protect the Bank's interest in the ultimate collection on the Bank's books and records. For the purpose of the credit already granted; of calculating the $100 per month total, reasonable (ii) the additional extension of credit is adequately expenses incurred by a director's or executive offisecured and in full compliance with the Bank's cer's related interest will be attributed to such person. lending limits and written loan policy; 11. (a) Unless otherwise agreed to in writing by the (iii) a thorough credit analysis has been performed Reserve Bank, the Bank shall, within 30 days from indicating that the extension of credit is reasonable the receipt of any report of examination or visitation, and justified; charge off 100 percent of all assets classified "Loss." (iv) all necessary loan documentation has been (b) The Bank shall continue to maintain, through properly and accurately prepared and filed; charges to current operating income, an adequate val- (v) the additional extension will not impair the uation reserve for loan losses. The adequacy of the Bank's interest in obtaining repayment of the al- reserve shall be determined in light of the volume of ready outstanding credit; and weighted classified loans, past loss experience, evalu- (vi) the board of directors reasonably believes that ation of the potential for loan losses in the Bank's the additional extension of credit will be repaid loan portfolio of the Bank, and the requirements of the according to its terms. The written certification, Interagency Policy Statement on the Allowance for together with the credit analysis and related infor- Loan and Lease Losses, dated December 21, 1993. A mation supporting this certification, shall be main- written record shall be maintained indicating the tained by the Bank for subsequent supervisory re- methodology used in determining the amount of a view. reserve needed. This record shall be submitted to the (c) For purposes of this Order, the term "extension of Reserve Bank within 15 days of this Order. Thereafcredit" shall be defined as set forth in section 215.3 of ter, the Bank shall conduct, at a minimum, a quarterly Regulation O of the Board of Governors (12 C.F.R. assessment of its loan loss reserve and its nonperform- 215.3). ing loans and shall submit documentation of each 10. Unless otherwise agreed to in writing by the Reserve quarterly assessment to the Reserve Bank within Bank, the Bank shall not, directly or indirectly, execute 30 days of the end of each quarter. The Bank shall not or enter into any personal service contract with or any alter or amend its methodology submitted to Reserve discretionary bonus or incentive plan for, or make any Bank pursuant to this paragraph without providing the discretionary bonus, fee or incentive payment to, or Reserve Bank with 30 days prior written notice. amend any existing personal service contract with or (c) The requirements of this paragraph shall not be discretionary bonus or incentive plan for any current or construed as a standard for future operations of the former director or executive officer, or any related inter- Bank after the termination of this Order. It is the est thereof, without providing the Reserve Bank with at intention of these requirements to provide for an apleast 30 days prior written notice of the proposed con- propriate reduction in adversely classified assets and tract, plan, payment or amendment. The Reserve Bank to maintain adequate loan loss reserves during the shall have the right to disapprove any such contract, term of this Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 Federal Reserve Bulletin • February 1996 12. (a) The Bank shall immediately take all necessary FDIC's disposition of any request for such a waiver. steps, consistent with sound banking practices, to 14. Notwithstanding the requirements of paragraphs 2, eliminate and/or correct any outstanding violations of: 4, 6, 7, 8, 11(b) and 12(c) hereof and upon written notice (i) sections 23A and 23B of the Federal Reserve from the Reserve Bank, the Bank does not have to Act (12 U.S.C. 371c, 371c-l»; submit the required plans, methodology, description or (ii) Regulation O of the Board of Governors program in the event that, as of the date of this Order, the (12 C.F.R. Part 215); and Bank has made such submissions pursuant to the Tempo- (iii) sections 11-7-103 and 11-3-103 of the Colo- rary Order and, except for the submissions required by rado Revised Statutes and CB 101.43, 101.51 and paragraphs 6 and 11(b) hereof, such have been approved 101.52 of the Colorado Banking Regulations identi- by the Reserve Bank and adopted by the Bank. fied in the Report of Examination. 15. The plans and program required by paragraphs 2, 4, (b) (i) The Bank shall take all actions that are neces- 7, 8, and 12(c) hereof shall be submitted to the Reserve sary to ensure that all extensions of credit made by Bank for review and approval. Acceptable plans and the Bank fully comply with the requirements of program shall be submitted to the Reserve Bank within section 23A of the Federal Reserve Act and Regula- the required time periods. The Bank shall submit the tion O of the Board of Governors, including, but plans and program to the Reserve Bank no later than not limited to, obtaining all necessary information 20 days prior to the expiration of the applicable time and documentation to ensure that the proceeds, or periods. The Reserve Bank may comment on the plans any portion thereof, of any extension of credit are and program within 10 days of receipt. The Bank shall used, or transferred, in a manner that fully complies provide the Reserve Bank with revised plans and prowith the requirements of section 23A of the Federal gram, as may be required, within 5 days of receipt of Reserve Act and Regulation O of the Board of written comments, if any. Within 5 days of receipt of the Governors. Pursuant to the statutory requirements revised plans and program, the Reserve Bank shall comof section 23A(a)(2) of the Federal Reserve Act municate in writing its approval or disapproval. The (12 U.S.C. 371c(a)(2)), any transaction, including Bank shall adopt approved plans and program within extension of credit, with any person where the 10 days of approval by the Reserve Bank and then shall proceeds of the transaction are used for the benefit fully comply with them, or, as applicable, shall fully of, or are transferred to, an affiliate of the Bank are comply with all plans and the program submitted pursudeemed to be a transaction by the Bank with the ant to the Temporary Order and approved by the Reserve affiliate. Bank. During the term of this Order, the plans and (ii) The Bank shall not engage, directly or indi- program approved pursuant to this Order and, as applicarectly, in any violation of sections 23A and 23B of ble, the Temporary Order, shall not be amended or the Federal Reserve Act, the Board of Governors' rescinded without the prior written approval of the Re- Regulation O, or applicable provisions of the Colo- serve Bank. rado Revised Statutes. 16. Within 30 days of this Order, and, thereafter, within (c) Within 45 days of this Order, the Bank shall 30 days of the end of each calendar quarter (Septemdevelop an acceptable written compliance program ber 30, December 31, March 31 and June 30) following designed to ensure compliance with the provisions of the date of this Order, the Bank shall furnish to the sections 23A and 23B of the Federal Reserve Act, Reserve Bank written progress reports detailing the form Regulation O, the applicable provisions of the Colo- and manner of all actions taken to secure compliance rado Revised Statutes and this Order, including ap- with this Order and the results thereof, including uppointing an individual as compliance officer to be dated reports on all liquidity, concentration of credit and responsible for coordinating and monitoring compli- asset improvement plans required by paragraphs 4, 7 and ance with the program at the Bank, and shall submit to 8 hereof. Such reports may be discontinued when the the Reserve Bank a written description of the compli- corrections required by this Order have been accomance program. Pursuant to the program, the manage- plished and the Reserve Bank has, in writing, released ment and the directors of the Bank shall familiarize the Bank from making further reports. themselves with the applicable provisions of sections 17. All communications regarding this Order shall be 23A and 23B of the Federal Reserve Act, Regula- sent to: tion O, the applicable provisions of the Colorado (a) Mr. James H. Jonson Revised Statutes and of this Order. Vice President 13. The Bank shall not accept any brokered deposits Federal Reserve Bank of Kansas City except in compliance with the provisions of section 29 925 Grand Boulevard of the FDI Act (12 U.S.C. 183 If). The Bank shall notify Kansas City, Missouri 64198 the Reserve Bank, in writing, in the event that the Bank (b) Ms. Barbara M.A. Walker requests any waiver from the Federal Deposit Insurance State Bank Commissioner Corporation (the "FDIC") of the restrictions imposed by Department of Regulatory Agencies section 29 and shall notify the Reserve Bank of the Division of Banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 195 1560 Broadway, Suite 1175 action affecting Bank or any of its current or former Denver, Colorado 80202 institution-affiliated parties or their successors or assigns. (c) Mr. Everett Covington 21. This Order replaces and terminates the Temporary President Order. Professional Bank 22. Pursuant to section 263.19(c) of the Rules of Prac- 4100 East Mississippi Avenue tice (12 C.F.R. 263.19(c)), this Order is deemed to be an Denver, Colorado 80222 order issued upon consent for purposes of sections 18. The provisions of this Order shall be binding upon 8(b)(2) and (h) of the FDI Act (12 U.S.C. 1818(b)(2) the Bank and its institution-affiliated parties, in their and (h)). capacities as such, and their successors and assigns. By order of the Board of Governors of the Federal 19. Notwithstanding any provision of this Order to the Reserve System, effective this 7th day of December, 1995. contrary, the Reserve Bank may, in its sole discretion, grant written extensions of time to the Bank to comply Board of Governors of the with any provision of this Order. Federal Reserve System 20. The provisions of this Order shall not bar, estop or otherwise prevent the Board of Governors, or any fed- WILLIAM W. WILES eral or state agency or department from taking any other Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 Membership of the Board of Governors of the Federal Reserve System, 1913-96 APPOINTIVE MEMBERS 1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership 2 Charles S. Hamlin ....Boston AAuugg.. 1100,, 11991144 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg ... .New York ...Aug. 10, 1914 Term expired Aug. 9, 1918. Frederic A. Delano ....Chicago ...Aug. 10, 1914 Resigned July 21, 1918. W.P.G. Harding ....Atlanta ...Aug. 10, 1914 Term expired Aug. 9, 1922. AAddoollpphh CC.. MMiilllleerr ... .San Francisco ...Aug. 10, 1914 Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss ... .New York ...Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah ....Chicago ...Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt ... .New York ...June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills ....Cleveland ...Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell ....Minneapolis ...May 12, 1921 Resigned May 12, 1923. Milo D. Campbell ....Chicago ...Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger ....Cleveland ...May 1, 1923 Resigned Sept. 15, 1927. George R. James ....St. Louis ...May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham .. ....Chicago ...May 14, 1923 Died Nov. 28, 1930. Roy A. Young ....Minneapolis ...Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer ... .New York ...Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee ... .Kansas City ...May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black ....Atlanta ...May 19, 1933 Resigned Aug. 15, 1934. M.S. Szymczak ....Chicago ...June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas ... .Kansas City ...June 14, 1933 Served until Feb. 10, 1936.3 Marriner S. Eccles ... .San Francisco ...Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick ... .New York ...Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee ....Cleveland ...Feb. 3, 1936 Served until Apr. 4, 1946.3 Ronald Ransom ....Atlanta ...Feb. 3, 1936 Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison ....Dallas ...Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis ....Richmond ...June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper ... .New York ...Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans ....Richmond ...Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. .. ... .St. Louis ...Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton ....Boston ...Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe ....Philadelphia ...Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton ....Atlanta ...Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell ....Minneapolis ...Sept. 1, 1950 Resigned June 30, 1952. Wm. McC. Martin, Jr ... .New York ...April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr. ....SanFrancisco ...Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson ....Kansas City ...Feb. 18, 1952 Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston ....Philadelphia ...Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller ....Minneapolis ...Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson ....Dallas ...Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr ....Atlanta ...Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell ....Chicago ...Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 J. Dewey Daane ....Richmond ...Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel ... .San Francisco ...Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer ....Philadelphia ...Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill ....Dallas ...May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns ... .New York ...Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan ... .St. Louis ...Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher ....SanFrancisco ...June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland ... .Kansas City ...June 11, 1973 Resigned May 15, 1976. Henry C. Wallich ....Boston ...Mar. 8, 1974 Resigned Dec. 15, 1986. Philip E. Coldwell ....Dallas ...Oct. 29, 1974 Served through Feb. 29, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

197 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership 2 Philip C. Jackson, Jr. Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner .. .Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly .Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller ... San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger Chicago July 2, 1984 Resigned March 11, 1991. Wayne D. Angell Kansas City Feb. 7, 1986 Served through Feb. 9, 1994. Manuel H. Johnson . Richmond Feb. 7, 1986 Resigned August 3, 1990. H. Robert Heller San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr. Dallas May 26, 1987 Reappointed in 1990. Alan Greenspan New York Aug. 11, 1987 Reappointed in 1992. John P. La Ware Boston Aug. 15, 1988 Resigned April 30, 1995. Resigned Feb. 14, 1994. David W. Mullins, Jr. St. Louis May 21, 1990 Lawrence B. Lindsey Richmond Nov. 26, 1991 Susan M. Phillips Chicago Dec. 2, 1991 Alan S. Blinder Philadelphia June 27, 1994 Term expired Jan. 31, 1996. Janet L. Yellen San Francisco Aug. 12, 1994 Chairmen 4 Vice Chairmen4 Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug. 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1936-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934-Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Apr. 30, 1986 Alan Greenspan Aug. 11,1987- Manuel H. Johnson Aug. 4, 1986-Aug. 3, 1990 David W. Mullins, Jr. July 24, 1991-Feb. 14, 1994 Alan S. Blinder June 27, 1994-Jan. 31, 1996 EX-OFFICIO MEMBERS 1 Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the Federal rency should continue to serve as members until Feb. 1, 1936; that the appoint- Reserve Board was composed of seven members, including five appointive ive members in office on the date of that act should continue to serve until members, the Secretary of the Treasury, who was ex-officio chairman of the Feb. 1,1936, or until their successors were appointed and had qualified; and that Board, and the Comptroller of the Currency. The original term of office was ten thereafter the terms of members should be fourteen years and that the designayears, and the five original appointive members had terms of two, four, six, tion of Chairman and Vice Chairman of the Board should be for a term of four eight, and ten years respectively. In 1922 the number of appointive members years. was increased to six, and in 1933 the term of office was increased to twelve 2. Date after words "Resigned" and "Retired" denotes final day of service. years. The Banking Act of 1935, approved Aug. 23, 1935, changed the name of 3. Successor took office on this date. the Federal Reserve Board to the Board of Governors of the Federal Reserve 4. Chairman and Vice Chairman were designated Governor and Vice Gover- System and provided that the Board should be composed of seven appointive nor before Aug. 23, 1935. members; that the Secretary of the Treasury and the Comptroller of the Cur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance A28 Federal fiscal and financing operations DOMESTIC FINANCIAL STATISTICS A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation Money Stock and Bank Credit A30 Gross public debt of U.S. Treasury— Types and ownership A4 Reserves, money stock, liquid assets, and debt A31 U.S. government securities measures dealers—Transactions A5 Reserves of depository institutions, Reserve Bank A32 U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A3 3 Federal and federally sponsored credit institutions agencies—Debt outstanding A7 Selected borrowings in immediately available funds—Large member banks Securities Markets and Corporate Finance Policy Instruments A34 New security issues—Tax-exempt state and local governments and corporations A8 Federal Reserve Bank interest rates A35 Open-end investment companies—Net sales A9 Reserve requirements of depository institutions and assets A10 Federal Reserve open market transactions A35 Corporate profits and their distribution A36 Domestic finance companies—Assets and Federal Reserve Banks liabilities, and consumer, real estate, and business All Condition and Federal Reserve note statements credit A12 Maturity distribution of loan and security holdings Real Estate A37 Mortgage markets Monetary and Credit Aggregates A3 8 Mortgage debt outstanding A13 Aggregate reserves of depository institutions and monetary base Consumer Installment Credit A14 Money stock, liquid assets, and debt measures A16 Deposit interest rates and amounts outstanding— A39 Total outstanding commercial and BIF-insured banks A39 Terms A17 Bank debits and deposit turnover Flow of Funds Commercial Banking Institutions A40 Funds raised in U.S. credit markets A18 Assets and liabilities, Wednesday figures A42 Summary of financial transactions A43 Summary of credit market debt outstanding A44 Summary of financial assets and liabilities Weekly Reporting Commercial Banks— Assets and liabilities A21 Large reporting banks DOMESTIC NONFINANCIAL STATISTICS A23 Branches and agencies of foreign banks Selected Measures Financial Markets A45 Nonfinancial business activity— A24 Commercial paper and bankers dollar Selected measures acceptances outstanding A45 Labor force, employment, and unemployment A25 Prime rate charged by banks on short-term A46 Output, capacity, and capacity utilization business loans A47 Industrial production—Indexes and gross value A26 Interest rates—money and capital markets A49 Housing and construction A27 Stock market—Selected statistics A50 Consumer and producer prices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • February 1996 DOMESTIC NONFINANCIAL STATISTICS- Reported by Nonbanking Business CONTINUED Enterprises in the United States A61 Liabilities to unaffiliated foreigners Selected Measures—Continued A62 Claims on unaffiliated foreigners A51 Gross domestic product and income A52 Personal income and saving Securities Holdings and Transactions A63 Foreign transactions in securities INTERNATIONAL STATISTICS A64 Marketable U.S. Treasury bonds and notes—Foreign transactions Summary Statistics A53 U.S. international transactions—Summary Interest and Exchange Rates A54 U.S. foreign trade A54 U.S. reserve assets A65 Discount rates of foreign central banks A54 Foreign official assets held at Federal Reserve A65 Foreign short-term interest rates Banks A66 Foreign exchange rates A55 Selected U.S. liabilities to foreign official institutions A67 GUIDE TO STATISTICAL RELEASES AND Reported by Banks in the United States SPECIAL TABLES A55 Liabilities to and claims on foreigners A56 Liabilities to foreigners A68 Terms of lending at commercial banks, A58 Banks' own claims on foreigners November 1995 A59 Banks' own and domestic customers' claims on A72 Assets and liabilities of U.S. branches and agencies of foreigners foreign banks, September 30, 1995 A59 Banks' own claims on unaffiliated foreigners A60 Claims on foreign countries— Combined domestic offices and foreign branches A76 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban p Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) MSA Metropolitan statistical area 0 Calculated to be zero NOW Negotiable order of withdrawal Cell not applicable OCD Other checkable deposit ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PO Principal only CMO Collateralized mortgage obligation REIT Real estate investment trust FFB Federal Financing Bank REMIC Real estate mortgage investment conduit FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SAIF Savings Association Insurance Fund FmHA Farmers Home Administration SCO Securitized credit obligation FNMA Federal National Mortgage Association SDR Special drawing right FSLIC Federal Savings and Loan Insurance Corporation SIC Standard Industrial Classification G-7 Group of Seven VA Department of Veterans Affairs GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. "State and local government" also in- Minus signs are used to indicate (1) a decrease, (2) a negative cludes municipalities, special districts, and other political figure, or (3) an outflow. subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • February 1996 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1994 1995 1995 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Q1 Q2 Q3 July Aug. Sept. Oct. Nov. Reserves of depositor/ institutions' 1 Total -3.3 -3.7 -8.0 -1.2 6.3 -2.9 -3.1 -1 l.4r -11.7 2 Required -3.0 -4.0 -7.0 -2.3 3.8 -.8 -2.3 -14.4 -8.9 3 Nonborrowed -2.1 -2.4 -8.6 -2.2 4.3 -1.1 -3.0 -10.8 -10.8 4 Monetary base'1 6.9 6.4 6.3 1.0 -.3 3.3 I.I 3.3 .7 Concepts of money, liquid assets, and debt4 5 Ml -1.2 .0 -.9 -1.0 1.0 -1.6 -3.9 -10.4 -3.4 6 M2 -.3 1.7 4.4 7.7 6.2 8.3 4.4 -l.0r 2.9 7 M3 1.7 4.4 7.1 8.7r 8.4 7.7 4.0r 3.r 1.5 8 L 2.2 6.4 7.6 9.r 1 l.6r 1.1' 8.0r 4.2 n.a. 9 Debt 5.4r 5.3r 7.0r 4.2r 2.4r 3.5r 3.7r 3.6 n.a. Nontransaction components 10 In M25 .2 2.5 6.9 11.7 8.5 12.8 8.0 3.2r 5.7 11 In M3 only6 I2.4r 18.5 20.7r 13.8r 18.8 4.7r 2.3r 22.4r -5.5 Time and savings deposits Commercial banks 12 Savings, including MMDAs -8.5 -13.2 -7.3 10.3 4.3 14.5 11.7 11.2 12.1 13 Small time7 16.0 24.3 23.4 9.8 10.0 5.5 1.9 1.5 4.2 14 Large time8'9 17.7 12.7 15.8 14.3r 19.6 5.6 8.1r 40.3r 17.4 Thrift institutions 15 Savings, including MMDAs -17.6 -20.5 -14.5 -5.8 -7.6 -7.0 -.3 .0 -7.0 16 Small time7 10.9 21.5 26.6 3.7 .3 2.0 2.3 2.7 3.7 17 Large time8 14.1 23.3 14.6 13.4 30.5 9.9 8.2 17.9 4.8 Money market mutual funds 18 General purpose and broker-dealer 7.5 7.9 18.1 43.3 44.5 37.7 17.6 9.9 12.6 19 Institution-only 7.3 10.0 27.1 29.3 39.7 -9.0 15.4 12.9 -5.6 Debt components4 20 5.8r 5.r 5.4r 4.6r 4.3r 2.0r ,8r 2.9 n.a. 21 Nonfederal 5.3r 5.3r 7.5r 4.lr 1.8r 4. lr 4.7r 3.9 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- funds. Excludes amounts held by depository institutions, the U.S. government, money market ing during preceding month or quarter. funds, and foreign banks and official institutions. Also excluded is the estimated amount of 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with overnight RPs and Eurodollars held by institution-only money market funds. Seasonally regulatory changes in reserve requirements. (See also table 1.20.) adjusted M3 is computed by adjusting its non-M2 component as a whole and then adding this 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally result to seasonally adjusted M2. adjusted, break-adjusted total reserves (line I), plus (2) the seasonally adjusted currency L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury component of the money stock, plus (3) (for all quarterly reporters on the "Report of securities, commercial paper, and bankers acceptances, net of money market fund holdings of Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted between current vault cash and the amount applied to satisfy current reserve requirements. separately, and then adding this result to M3. 4. Composition of the money stock measures and debt is as follows: Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of sectors—the federal sector (U.S. government, not including government-sponsored enterdepository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all prises or federally related mortgage pools) and the nonfederal sectors (state and local commercial banks other than those owed to depository institutions, the U.S. government, and governments, households and nonprofit organizations, nonfinancial corporate and nonfarm foreign banks and official institutions, less cash items in the process of collection and Federal noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, which are derived from the Federal Reserve Board's flow of funds accounts, are breakcredit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted (that is, discontinuities in the data have been smoothed into the series) and adjusted Ml is computed by summing currency, travelers checks, demand deposits, and month-averaged (that is, the data have been derived by averaging adjacent month-end levels). OCDs, each seasonally adjusted separately. 5. Sum of (I) overnight RPs and overnight Eurodollars, (2) money market fund balances M2: Ml plus (I) overnight (and continuing contract) repurchase agreements (RPs) issued (general purpose and broker-dealer), (3) savings deposits (including MMDAs), and (4) small by all depository institutions and overnight Eurodollars issued to U.S. residents by foreign time deposits. branches of U.S. banks worldwide, (2) savings (including MMDAs) and small time deposits 6. Sum of (I) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, (time deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in and (4) money market fund balances (institution-only), less (5) a consolidation adjustment both taxable and tax-exempt general-purpose and broker-dealer money market funds. Ex- that represents the estimated amount of overnight RPs and Eurodollars held by institutioncludes individual retirement accounts (IRAs) and Keogh balances at depository institutions only money market funds. This sum is seasonally adjusted as a whole. and money market funds. Also excludes all balances held by U.S. commercial banks, money 7. Small time deposits—including retail RPs—are those issued in amounts of less than market funds (general purpose and broker-dealer), foreign governments and commercial $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions banks, and the U.S. government. Seasonally adjusted M2 is computed by adjusting its non-M 1 are subtracted from small time deposits. component as a whole and then adding this result to seasonally adjusted M1. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or booked at international banking facilities. more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at 9. Large time deposits at commercial banks less those held by money market funds, foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom depository institutions, the U.S. government, and foreign banks and official institutions. and Canada, and (3) balances in both taxable and tax-exempt, institution-only money market Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures Sept. Oct. Nov. Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 410,892 410,695 413,165 411,856 410.282 409.125 409,709 412,622 414.222 416.408 U.S. government securities2 2 Bought outright—System account 371,068 370,901 373,648 371,359 370,796 370,395 371,499 375,660 337733..889977 337733,,773355 3 Held under repurchase agreements 4,206 3,227 3,249 4,112 2,876 1,839 1,426 371 4,423 6.377 Federal agency obligations 4 Bought outright 2,932 2,876 2,796 2,895 2,883 2,812 2,812 22,,881122 22..881122 22,,776611 5 Held under repurchase agreements 106 479 320 400 989 750 391 71 710 169 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 28 45 166 22 24 7 2 3366 3311 11 336600 8 Seasonal credit 254 204 67 217 190 147 84 63 62 58 9 Extended credit 0 0 0 0 0 0 0 0 0 0 in Float 408 537 901 381 304 686 893 1,116 779 1.123 n Other Federal Reserve assets 31,890 32,425 32,019 32,469 32,219 32,489 32,602 32,492 31,228 31,826 i? Gold stock 11,052 11,051 11,050 11,051 11,051 11,051 11,051 11,051 11.050 11,050 13 Special drawing rights certificate account 10,366 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10.168 10,168 14 Treasury currency outstanding 23,721 23,799 23,860 23,797 23,811 23,825 23,839 23,853 23,867 23,881 ABSORBING RESERVE FUNDS 15 Currency in circulation 411,003 411,565 414,005 412,499 410,989 410,761 411,968 413,058 414,272 416,621 16 Treasury cash holdings 322 315 287 313 313 311 293 295 281 278 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,850 5,384 5,410 4,941 5,275 5,228 4,948 6,024 5,125 5,614 18 Foreign 179 179 203 181 184 185 200 177 198 241 19 Service-related balances and adjustments 4,688 4,874 5,109 4,829 4,996 5,006 4,978 4,989 5,250 5,213 ?o Other 348 386 326 546 333 341 343 347 325 283 ?\ Other Federal Reserve liabilities and capital 12,176 12,938 13,006 12,813 12,983 12,910 12,876 12.952 13,155 13.135 22 Reserve balances with Federal Reserve Banks . . . 20,466 20,07 lr 19,896 20,748 20,239 19,426 19,160 19,850 20,701 20.122 End-of-month figures Wednesday figures Sept. Oct. Nov. Oct. 18 Oct. 25 Nov. I Nov. 8 Nov. 15 Nov. 22 Nov. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 410,266 409,828r 412,866 409,976 414,760 411,341 414,368 413,040 416,500 415,422 U.S. government securities 2 Bought outright—System account 367,669 371,227 373,819 370,980 370,173 372,070 371,575 374,930 337733,,888877 337744,,222288 3 Held under repurchase agreements 6,445 2,290 6,983 4,112 7,780 2,290 5,431 2,600 5,104 5,475 Federal agency obligations 4 Bought outright 2,895 2,812 2,692 2,895 2,812 2,812 2,812 22,,881122 22,,881122 22,,669922 5 Held under repurchase agreements 75 210 0 400 975 210 987 500 1,061 0 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 160 1 5 8 124 2 2 3 22,,116644 330022 8 Seasonal credit 261 123 50 213 172 106 68 63 58 52 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 73 833r -1,819 -1,038 -345 1,463 298 1,286 370 948 11 Other Federal Reserve assets 32,687 32,332r 31,136 32,405 33,069 32,387 33,193 30,846 31,043 31,725 1?. Gold stock 11,051 11,051 11,050 11,051 11,051 11,051 11,051 11,050 11,050 11,050 13 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10.168 14 Treasury currency outstanding 23,769 23,825 23,895 23,797 23,811 23,825 23,839 23.853 23,867 23,881 ABSORBING RESERVE FUNDS IS Currency in circulation 409,275 411,767 416,682 412,491 411,416 412.050 413,437 414,261 416,373 417.527 16 Treasury cash holdings 322 314 276 313 314 292 298 281 278 276 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 8,620 7,018 5,703 5,710 5,336 4,627 5,032 5,256 6,505 6,439 18 Foreign 201 275 194 162 269 191 168 194 195 167 IP Service-related balances and adjustments 4,766 5,006r 5,240 4,829 4,996 5,006 4.978 4,989 5,250 5,213 ?0 Other 332 375 282 349 326 409 345 344 280 278 ?] Other Federal Reserve liabilities and capital 13,088 13,073 12,697 12,562 12,723 12,659 12,716 12,843 12,936 12,866 22 Reserve balances with Federal Reserve Banks3 . . 18,650 I7,045r 16,906 18,574 24,409 21,15 0 22,453 19,943 19,767 17,755 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Excludes required clearing balances and adjustments to compensate for float. 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • February 1996 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1992 1993 1994 1995 Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. 1 Reserve balances with Reserve Banks2 25,368 29,374 24,658 21,476 21,058 20,840 20,565 20,519 20,055r 20,066 2 Total vault cash3 34,541 36,818 40,365 39,038 39,839 40,522 40,177 40,648 40,561 40,575 3 Applied vault cash4 31,172 33,484 36,682 35,281 35,986 36,550 36,255 36,640 36,345 36,332 4 Surplus vault cash5 3,370 3,334 3,683 3,757 3,853 3,971 3,923 4,008 4,216 4,244 5 Total reserves6 56.540 62,858 61,340 56,757 57,044 57,390 56,819 57,159 56,400 56,397 6 Required reserves 55,385 61,795 60,172 55,877 56,079 56,300 55,832 56,209 55,319 55,455 7 Excess reserve balances at Reserve Banks7 1,155 1,063 1,168 880 964 1,090 988 950 1,081 942 8 Total borrowings at Reserve Banks8 124 82 209 150 272 371 282 278 245 204 9 Seasonal borrowings 18 31 100 137 172 231 258 252 199 73 10 Extended credit 1 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1995 Aug. 2 Aug. 16 Aug. 30 Sept. 13 Sept. 27 Oct. 11 Oct. 25 Nov. 8r Nov. 22 Dec. 6 1 Reserve balances with Reserve Banks" 19,920 20,793 20,395 21,029 20,182 19,886 20,496 19,334 20,270 20,439 2 Total vault cash' 40,983 40,889 39,324 40,554 40,628 41,153 39,855 41,123 40,218 40,653 3 Applied vault cash4 36,878 36,898 35,491 36,693 36,556 36,805 35,770 36,846 36,071 36,274 4 Surplus vault cash5 4,106 3,991 3,833 3,862 4,072 4,348 4,086 4,277 4,148 4,379 5 Total reserves6 56,798 57,691 55,886 57,722 56,738 56,690 56,265 56,180 56,341 56,713 6 Required reserves 55,443 56,491 55,153 56,879 55,781 55,312 55,406 55,129 55,544 55,627 7 Excess reserve balances at Reserve Banks7 1,354 1,200 733 843 957 1,378 860 1,052 797 1,085 8 Total borrowings at Reserve Banks8 478 250 288 268 274 338 227 121 236 233 9 Seasonal borrowings 245 247 272 245 261 240 204 116 63 51 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of" adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A7 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks' Millions of dollars, averages of daily figures 1995, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Oct. 2' Oct. 9' Oct. 16 Oct. 23 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 82,326 83,166 80,898 80,764 87,443 88,385 87,566 85,916 83,770 2 For all other maturities 1166,,116622 15,083 14,701 15,224 15,906 15,801 16,272 15,698 16,092 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 22,796 20,172 23,263 21,530 18,531 20,008 20,246 20,475 21,528 4 For all other maturities 23,272 23,104 23,054 22,142 22,598 22,303 22,979 21,854 22,400 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 21,188 18,310 20,503 17,911 17,892 17,442 17,047 17,922 17,546 6 For all other maturities 29,949 33,907 34,083 36,211 36,216 31,849 34,156 28,791 28,864 All other customers 7 For one day or under continuing contract 41,493 39,005 40,657 40,997 42,351 42,910 40,802 43,971 41,183 8 For all other maturities 18,040 18,266 17,335 17,254 16,833 16,488 18,640 16,976 21,046 MEMO Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 60,978 54,156 55,932 59,787 61,281 60,195 59,269 56,296 57,722 10 To all other specified customers2 26,021 29,272 28,075 28,031 27,924 30,663 31,801 31,080 29,735 1. Banks with assets of $4 billion or more as of Dec. 31, 1988. 2. Brokers and nonbank dealers in securities, other depository institutions, foreign banks Data in this table also appear in the Board's H.5 (507) weekly statistical release. For and official institutions, and U.S. government agencies, ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • February 1996 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 1/ O 5/ n 9 6 Effective date Previous rate 1/ O 5/ n 9 6 Effective date Previous rate 1/ O 5/ n 9 6 Effective date Previous rate Boston 5.25 2/1/95 4.75 5.45 1/4/96 5.75 5.95 1/4/96 6.25 New York 2/1/95 Philadelphia 2/2/95 Cleveland 2/9/95 Richmond 2/1/95 Atlanta 2/2/95 Chicago 2/1/95 St. Louis 2/1/95 Minneapolis 2/2/95 Kansas City 2/1/95 Dallas 2/2/95 San Francisco 5.25 2/1/95 4.75 5.45 1/4/96 5.75 5.95 1/4/96 6.25 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effectiv level)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 6 6 1981—Nov. 2 13-14 13 1987—Sept. 4 5.5-6 6 13 13 11 6 6 1978—Jan. 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1988—Aug. 9 6-6.5 6.5 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 11 6.5 6.5 12 7 7 23 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 11-11.5 11 1989—Feb. 24 6.5-7 7 10 7.25 7.25 3 11 11 27 7 7 Aug. 21 7.75 7.75 16 10.5 10.5 Sept. 22 8 8 27 10-10.5 10 1990—Dec. 19 6.5 6.5 Oct. 16 8-8.5 8.5 30 10 10 20 8.5 8.5 Oct. 12 9.5-10 9.5 1991—Feb. 1 6-6.5 6 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 4 6 6 3 9.5 9.5 Nov. 22 9-9.5 9 Apr. 30 5.5-6 5.5 26 9 9 May 2 5.5 5.5 1979—July 20 10 10 Dec. 14 8.5-9 9 Sept. 13 5-5.5 5 Aug. 17 10-10.5 10.5 15 8.5-9 8.5 17 5 5 20 10.5 10.5 17 8.5 8.5 Nov. 6 4.5-5 4.5 Sept. 19 10.5-11 11 7 4.5 4.5 21 11 11 1984—Apr. 9 8.5-9 9 Dec. 20 3.5^.5 3.5 Oct. 8 11-12 12 13 9 9 24 3.5 3.5 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1992—July 2 3-3.5 3 1980—Feb. 15 12-13 13 Dec. 24 8 8 7 3 3 19 13 13 May 29 12-13 13 1985—May 20 7.5-8 7.5 1994—May 17 3-3.5 3.5 30 12 12 24 7.5 7.5 18 3.5 3.5 June 13 11-12 11 Aug. 16 3.5-4 4 16 11 11 1986—Mar. 7 7-7.5 7 18 4 4 July 28 10-11 10 10 7 7 Nov. 15 4^.75 4.75 29 10 10 Apr. 21 6.5-7 6.5 17 4.75 4.75 Sept. 26 11 11 23. 6.5 6.5 Nov. 17 12 12 July 11 6 6 1995—Feb. 1 4.75-5.25 5.25 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 9 5.25 5.25 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Jan. 5, 1996 5.25 5.25 8 14 14 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970', and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of deposits Effective date Net transaction accounts3 1 $0 million-$52.0 million3 33333 1111122222/////1111199999/////9999955555 2 More than $52.0 million4 1111100000 1111122222/////1111199999/////9999955555 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. Effective Dec. 19, 1995, the previous reserve requirements, see earlier editions of the Annual Report or the Federal exemption was raised from $4.2 million to $4.3 million. The exemption applies only to Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions accounts that would be subject to a 3 percent reserve requirement. include commercial banks, mutual savings banks, savings and loan associations, credit 4. The reserve requirement was reduced from 12 percent to 10 percent on unions, agencies and branches of foreign banks, and Edge Act corporations. Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that 2. Transaction accounts include all deposits against which the account holder is permitted report quarterly. to make withdrawals by negotiable or transferable instruments, payment orders of with- 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits drawal, and telephone and preauthorized transfers for the purpose of making payments to with an original maturity of less than 1 years was reduced from 3 percent to I [/2 percent for third persons or others. However, money market deposit accounts (MMDAs) and similar the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that accounts subject to the rules that permit no more than six preauthorized, automatic, or other began Dec. 27, 1990. The reserve requirement on nonpersonal time deposits with an original transfers per month, of which no more than three may be checks, are savings deposits, not maturity of I years or more has been zero since Oct. 6, 1983. transaction accounts. For institutions that report quarterly, the reserve requirement on nonpersonal time deposits The Monetary Control Act of 1980 requires that the amount of transaction accounts against with an original maturity of less than I years was reduced from 3 percent to zero on Jan. 17, which the 3 percent reserve requirement applies be modified annually by 80 percent of the 1991. percentage change in transaction accounts held by all depository institutions, determined as of 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero June 30 of each year. Effective Dec. 19, 1995, the amount was decreased from $54.0 million in the same manner and on the same dates as was the reserve requirement on nonpersonal to $52.0 million. time deposits with an original maturity of less than 1 '/> years (see note 5). 3. Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 DomesticN onfinancialS tatistics • February 1996 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS' Millions of dollars 1995 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,714 17,717 17,484 0 0 4,470 0 433 409 1,350 2 Gross sales 1,628 0 0 0 0 0 0 0 0 0 3 Exchanges 308,699 332,229 376,277 30,983 31,663 42,983 25,213 39,195 30,333 29,397 4 Redemptions 1,600 0 0 0 0 0 0 0 0 900 Others within one year 5 Gross purchases 1,096 1,223 1,238 0 0 0 0 0 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 36,662 31,368 0 2,993 7,174 2,177 2,063 7,805 0 1,745 8 Exchanges -30,543 -36,582 -21,444 0 -7,374 -1,392 -562 -5,599 0 -2,049 y Redemptions 0 0 0 0 0 0 0 0 0 0 One to five years 10 Gross purchases 13,118 10,350 9,168 2,549 0 0 0 0 100 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -34,478 -27,140 —6,004 -477 -6,694 -2,177 -2,063 -3,379 0 -1,745 13 Exchanges 25,811 0 17,801 0 5,374 1,392 562 4,805 0 2,049 Five to ten years 14 Gross purchases 2,818 4,168 3,818 839 0 0 0 0 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -1,915 0 -3,145 -2,516 1,248 0 0 -319 0 0 17 Exchanges 3,532 0 2,903 0 2,000 0 0 1,800 0 0 More than ten years 18 Gross purchases 2,333 3,457 3,606 1,138 0 0 0 0 100 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -269 0 -918 0 -1,728 0 0 -525 0 0 21 Exchanges 1,200 0 775 0 0 0 0 1,100 0 0 All maturities 22 Gross purchases 34,079 36,915 35,314 4,526 0 4,470 0 433 609 1,350 23 Gross sales 1,628 0 0 0 0 0 0 0 0 0 24 Redemptions 1,600 767 2.337 370 0 0 0 0 0 1,385 Matched transactions 25 Gross purchases 1,480,140 1,475,941 1,700,836 148,306 155,027 170,083 166,674 179,130 195,830 216,755 26 Gross sales 1,482,467 1,475,085 1,701,309 147,616 153,534 171,959 163,490 185,270 198,587 213,161 Repurchase agreements 27 Gross purchases 378,374 475,447 309,276 36,314 35,158 40,989 8,527 4,130 43,286 28,825 28 Gross sales 386,257 470,723 311,898 39,157 34,377 28,196 24,851 1,075 39,896 32,980 29 Net change in U.S. Treasury securities 20,642 41,729 29,882 2,004 2,274 15,387 -13,141 -2,651 1,241 -597 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 632 774 1,002 20 30 262 333 122 46 83 Repurchase agreements 33 Gross purchases 14,565 35,063 52.696 4,415 6,155 1,941 711 1,610 1,434 3,740 34 Gross sales 14,486 34,669 52,696 5,020 5,955 2,180 1,172 1,510 1,459 3,605 35 Net change in federal agency obligations -554 -380 -1,002 -625 170 -501 -794 -22 -71 52 36 Total net change in System Open Market Account.. . 20,089 41,348 28,880 1,379 2,444 14,886 -13,935 -2,673 1,170 -545 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks A11 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements' Millions of dollars Wednesday End of month Account 1995 1995 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Sept. 30 Oct. 31 Nov. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,051 11,051 11,050 11,050 11,050 11,051 11,051 11,050 2 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 3 Coin 458 464 458 458 432 435 460 442 Loans 4 To depository institutions 109 71 66 2,222 354 421 124 55 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 1 Bought outright 2,812 2,812 2,812 2,812 2,692 2,895 2,812 2,692 8 Held under repurchase agreements 210 987 500 1,061 0 75 210 0 9 Total U.S. Treasury securities 374,360 377,006 377,530 378,991 379,703 374,114 373,517 380,802 10 Bought outright2 372,070 371,575 374,930 373,887 374,228 367,669 371,227 373,819 11 Bills 181,979 181,085 188,624 187,581 183,737 177,093 181,136 183,328 12 Notes 147,418 147,818 143,697 143,697 147,881 147,904 147,418 147,881 13 Bonds 42,673 42,673 42,610 42,610 42,610 42,673 42,673 42,610 14 Held under repurchase agreements 2,290 5,431 2,600 5,104 5,475 6,445 2,290 6,983 15 Total loans and securities 377,491 380,876 380,907 385,086 382,749 377,505 376,663 383,549 16 Items in process of collection 7,007 6,307 6,870 6,294 5,712 3,978 8,015 4,319 17 Bank premises 1,139 1,145 1,146 1,147 1,146 1,114 1,139 1,146 Other assets 18 Denominated in foreign currencies3 21,378 21,388 21,399 21,412 21,424 21,653 21,376 21,049 19 All other4 9,865 10,648 8,233 8,500 9,085 9,814 9,876 8,860 20 Total assets 438,557 442,047 440,231 444,116 441,766 435,717 438,748 440,582 LIABILITIES 21 Federal Reserve notes 388,975 390,359 391,147 393,243 394,354 386,263 388,715 393,505 22 Total deposits 31,254 33,571 31,000 32,560 29,855 32,585 29,911 30,549 23 Depository institutions 26,027 28,027 25,206 25,580 22,972 23,432 22,284 24,369 24 U.S. Treasury—General account 4,627 5,032 5,256 6,505 6,439 8,620 7,018 5,703 25 Foreign—Official accounts 191 168 194 195 167 201 275 194 26 Other 409 345 344 280 278 332 375 282 27 Deferred credit items 5,668 5,401 5,241 5,377 4,690 3,781 7,049 3,832 28 Other liabilities and accrued dividends5 4,412 4,402 4,544 4,576 4,516 4,617 4,432 4,645 29 Total liabilities 430,309 433,733 431,932 435,756 433,416 427,247 430,107 432,531 CAPITAL ACCOUNTS 3,935 3,942 3,946 3,953 3,958 3,915 3,923 3,958 3301 CSuaprpitlauls paid in 3,683 33,,668833 3,683 3,683 3,683 3,624 3,683 3,671 32 Other capital accounts 629 668899 670 723 709 931 1,034 422 33 Total liabilities and capital accounts 438,557 442,047 440,231 444,116 441,766 435,717 438,748 440,582 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 483,834 486,656 494,848 494,229 496,481 484,601 488,911 506,035 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 482,163 481,618 480,391 479,322 478,321 472,874 482,369 477,946 36 LESS: Held by Federal Reserve Banks 93,187 91,258 89,244 86,079 83,966 86,611 93,654 84,441 37 Federal Reserve notes, net 388,975 390,359 391,147 393,243 394,354 386,263 388,715 393,505 Collateral held against notes, net 38 Gold certificate account 11,051 11,051 11,050 11,050 11,050 11,051 11,051 11,050 39 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 367,756 369,141 369,929 372,025 373,136 365,044 367,496 372,286 42 Total collateral 388,975 390,359 391,147 393,243 394,354 386,263 388,715 393,505 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under 5. Includes exchange-translation account reflecting the monthly revaluation at market matched sale-purchase transactions. exchange rates of foreign exchange commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic NonfinancialS tatistics • February 1996 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1995 1995 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Sept. 30 Oct. 31 Nov. 30 1 Total loans 109 71 66 2,222 354 421 124 55 2 Within fifteen days' 28 16 50 2,216 348 273 48 29 3 Sixteen days to ninety days 81 54 15 6 6 149 76 26 4 Total U.S. Treasury securities 374,360 377,006 377,530 378,991 379,703 367,669 371,227 373,819 5 Within fifteen days' 22,542 17,959 23,316 19,780 20,151 2,645 11,078 5,924 6 Sixteen days to ninety days 79,712 88,092 86,256 92,056 87,792 92,851 88,044 87,792 7 Ninety-one days to one year 121,873 120,323 122,959 122,155 122,576 120,681 121,873 130,641 8 One year to five years 84,610 85,010 80,193 80,193 82,678 85,870 84,610 82,956 9 Five years to ten years 29,992 29,992 29,176 29,176 30,876 29,992 29,992 30,876 10 More than ten years 35,630 35,629 35,630 35,630 35,630 35,630 35,630 35,630 11 Total federal agency obligations 3,022 3,799 3,312 3,873 2,692 2,895 2,812 2,692 12 Within fifteen days' 310 1,087 620 1,498 372 185 224 372 13 Sixteen days to ninety days 680 821 701 384 384 747 680 384 14 Ninety-one days to one year 662 521 521 521 531 431 538 531 15 One year to five years 918 918 918 918 853 918 853 853 16 Five years to ten years 427 427 527 527 527 427 427 527 17 More than ten years 25 25 25 25 25 25 25 25 1. Holdings under repurchase agreements are classified as maturing within fifteen days in NOTE. Total acceptances data have been deleted from this table because data are no longer accordance with maximum maturity of the agreements. available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1995 1991 1992 1993 1994 Dec. Dec. Dec. Dec. Apr. May June July Aug. Sept. Oct. Nov. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS- 1 Total reserves3 45.54 54.35 60.50 59.34 57.96 57.76 57.35 57.66 57.52 57.37 56.82 56.27 2 Nonborrowed reserves4 45.34 54.23 60.42 59.13 57.85 57.61 57.08 57.28 57.23 57.09 56.58 56.07 3 Nonborrowed reserves plus extended credit5 45.34 54.23 60.42 59.13 57.85 57.61 57.08 57.28 57.23 57.09 56.58 56.07 4 Required reserves 44.56 53.20 59.44 58.17 57.20 56.88 56.39 56.57 56.53 56.42 55.74 55.33 5 Monetary base6 317.43 351.12 386.60 418.22 428.13 430.69 429.76 429.66 430.86 431.25 432.42r 432.67 Not seasonally adjusted 6 Total reserves7 46.98 56.06 62.37 61.13 58.93 56.82 57.13 57.49 56.93 57.29 56.54 56.56 7 Nonborrowed reserves 46.78 55.93 62.29 60.92 58.82 56.68 56.85 57.12 56.65 57.01 56.30 56.35 8 Nonborrowed reserves plus extended credit5 46.78 55.93 62.29 60.92 58.82 56.68 56.85 57.12 56.65 57.01 56.30 56.35 9 Required reserves8 46.00 54.90 61.31 59.96 58.18 55.95 56.16 56.40 55.95 56.34 55.46 55.62 10 Monetary base9 321.07 354.55 390.59 422.51 428.74 429.29 430.26 431.30 431.08 431.62 431.57 433.18 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS'" 11 Total reserves11 55.53 56.54 62.86 61.34 58.87 56.76 57.04 57.39 56.82 57.16 56.40 56.40 12 Nonborrowed reserves 55.34 56.42 62.78 61.13 58.76 56.61 56.77 57.02 56.54 56.88 56.15 56.19 13 Nonborrowed reserves plus extended credit5 55.34 56.42 62.78 61.13 58.76 56.61 56.77 57.02 56.54 56.88 56.15 56.19 14 Required reserves 54.55 55.39 61.80 60.17 58.12 55.88 56.08 56.30 55.83 56.21 55.32 55.46 15 Monetary base12 333.61 360.90 397.62 427.25 432.79 433.47 434.57 435.56 435.59 436.20 436.32r 438.16 16 Excess reserves1'1 .98 1.16 1.06 1.17 .75 .88 .96 1.09 .99 .95 1.08 .94 17 Borrowings from the Federal Reserve .19 .12 .08 .21 .11 .15 .27 .37 .28 .28 .25 .20 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (I) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (I) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line I), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements in February requirements. 1984, currency and vault cash figures have been measured over the computation periods 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess ending on Mondays. reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • February 1996 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1995 Item 1991 1992 1993 1994 Dec. Dec. Dec. Dec. Aug. Sept. Oct. Nov. Seasonally adjusted Measures2 1 Ml 897.3 1,024.4 1,128.6 1,148.0 1,143.4 1,139.7 1,129.8 1,126.6 2 M2 3,457.9 3,515.3 3,583.6 3,616.9 3,743.5 3,757.3 3,754.3' 3,763.5 3 M3 4,176.0 4,182.9 4,242.3 4,303.9r 4,519.2r 4,534.4r 4,546.1' 4,551.6 4 L 4,989.8 5,059.3 5,145.7 5,269.7r 5,559.5r 5,596.6r 5,616.2 n.a. S Debt 1 l,335.6r 11,878. r 12,514.2r 13,150.8r I3,642.8r 13,684.4r 13,725.6 n.a. Ml components 6 Currency'1 267.4 292.8 322.1 354.5 368.3 369.1 370.5 371.0 7 Travelers checks4 7.7 8.1 7.9 8.4 8.9 8.8 8.8' 8.8 8 Demand deposits5 289.5 338.9 383.9 382.2 390.0 389.7 387.2 387.0 9 Other checkable deposits6 332.7 384.6 414.7 402.9 376.2 372.0 363.4 359.7 Nontransaction components 10 In M27 2,560.6 2,490.9 2,455.0 2,468.9 2,600.2 2,617.6 2,624.5' 2,636.9 11 In M3 only8 718.1 667.6 658.7 687.0r 115.1' 1112' 791.7' 788.1 Commercial banks 12 Savings deposits, including MMDAs 665.6 754.7 785.8 752.3 739.5 746.7 753.7 761.3 13 Small time deposits9 602.5 508.1 468.6 502.6 569.7 570.6 571.3 573.3 14 Large time deposits10' " 333.3 286.7 271.2 296.6 325.2 327.4' 338.4' 343.3 Thrift institutions 15 Savings deposits, including MMDAs 375.6 428.9 429.8 391.9 358.6 358.5 358.5 356.4 16 Small time deposits9 464.1 361.1 316.5 318.3 358.0 358.7 359.5 360.6 17 Large time deposits'" 83.3 67.1 61.6 64.9 73.2 73.7 74.8 75.1 Money market mutual funds 18 General purpose and broker-dealer 374.2 356.9 360.1 389.0 455.9 462.6 466.4 471.3 19 Institution-only 180.0 200.2 198.1 180.8 210.8 213.5 215.8 214.8 Debt components 20 Federal debt 2,763.8' 3,068.6r 3,328.3r 3,497.6r 3,62l.4r 3,623.8r 3,632.6 n.a. 21 Nonfederal debt 8,57l.9r 8,809.5r 9,l85.9r 9,653. Ir 10,021,4r 10,060.6' 10,093.0 n.a. Not seasonally adjusted Measures2 22 Ml 916.0 1,046.0 1,153.7 1,173.7 1,137.0 1,135.7 1,129.4 1,134.9 23 M2 3,472.7 3,533.6 3,606.1 3,640.5 3,736.6 3,747.1 3,751.4' 3,772.5 24 M3 4,189.4 4,201.4 4,266.1 4,330.0r 4,512.9r 4,521.9r 4,541.4' 4,568.0 25 L 5,014.2 5,088.9 5,180.2 5,307.3r 5,548.5r 5,575.4r 5,606.1 n.a. 26 Debt 1 l,333.5r 1 l,879.6r 12,507. Ir 13,143.4r 13,579. Ir 13,637.3' 13,684.4 n.a. Ml components 27 Currency3 269.9 295.0 324.8 357.6 369.0 369.2 369.9 371.6 28 Travelers checks4 7.4 7.8 7.6 8.1 9.5 9.3 8.9 8.7 29 Demand deposits5 302.4 354.4 401.8 400.3 386.5 388.1 390.7 395.6 30 Other checkable deposits6 336.3 388.9 419.4 407.6 372.0 369.1 359.8 359.1 Nontransaction components 31 In M27 2,556.6 2,487.7 2,452.5 2,466.8 2,599.6 2,611.4 2,622.0' 2,637.5 32 In M3 only" 716.7 667.7 660.0 689.5r 776.4r 774.8' 790.0' 795.6 Commercial banks 33 Savings deposits, including MMDAs 664.0 752.9 784.3 751.1 740.8 746.8 753.9 763.6 34 Small time deposits9 601.9 507.8 468.2 502.2 570.3 571.1 571.9 573.0 35 Large time deposits'0, " 332.6 286.2 270.8 296.3 326.6 328.6' 339.2' 345.1 Thrift institutions 36 Savings deposits, including MMDAs 374.8 427.9 429.0 391.2 359.3 358.6 358.6 357.5 37 Small time deposits9 463.7 360.9 316.2 318.1 358.3 359.0 359.9 360.3 38 Large time deposits'" 83.1 67.0 61.5 64.8 73.6 74.0 75.0 75.5 Money market mutual funds 39 General purpose and broker-dealer 372.2 355.1 358.3 387.1 452.6 454.9 459.1 467.0 40 Institution-only 180.8 201.7 200.0 183.1 209.3 209.0 212.9 217.4 Repurchase agreements and Eurodollars 41 Overnight and continuing 79.9 83.2 96.5 117.2 118.2 120.9 118.6' 116.1 42 132.7 127.8 143.9 157.8r I80.0r 176.4' 175.3' 169.7 Debt components 43 Federal debt 2,765.0 3,069.8 3,329.5 3,499.0 3,602.2 3,606.8 3,610.1 n.a. 44 Nonfederal debt 8,568.5r 8,809.8r 9,l77.7r 9,644.4r 9,976.9r 10,030.5' 10,074.3 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term statistical release. Historical data starting in 1959 are available from the Money and Reserves Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve separately, and then adding this result to M3. System, Washington, DC 20551. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 2. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the US. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (1) overnight (and continuing contract) repurchase agreements (RPs) issued 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. by all depository institutions and overnight Eurodollars issued to U.S. residents by foreign Travelers checks issued by depository institutions are included in demand deposits. branches of U.S. banks worldwide, (2) savings (including MMDAs) and small time deposits 5. Demand deposits at commercial banks and foreign-related institutions other than those (time deposits—including retail RPs—in amounts of less than $100,000). and (3) balances in owed to depository institutions, the U.S. government, and foreign banks and official instituboth taxable and tax-exempt general purpose and broker-dealer money market funds. Ex- tions, less cash items in the process of collection and Federal Reserve float. cludes individual retirement accounts (IRAs) and Keogh balances at depository institutions 6. Consists of NOW and ATS account balances at all depository institutions, credit union and money market funds. Also excludes all balances held by U.S. commercial banks, money share draft account balances, and demand deposits at thrift institutions. market funds (general purpose and broker-dealer), foreign governments and commercial 7. Sum of (I) overnight RPs and overnight Eurodollars, (2) money market fund balances banks, and the U.S. government. Seasonally adjusted M2 is computed by adjusting its non-M 1 (general purpose and broker-dealer), (3) savings deposits (including MMDAs), and (4) small component as a whole and then adding this result to seasonally adjusted M1. time deposits. M3: M2 plus (I) large time deposits and term RP liabilities (in amounts of $100,000 or 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at and (4) money market fund balances (institution-only), less (5) a consolidation adjustment foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom that represents the estimated amount of overnight RPs and Eurodollars held by institutionand Canada, and (3) balances in both taxable and tax-exempt, institution-only money market only money market funds. funds. Excludes amounts held by depository institutions, the U.S. government, money market 9. Small time deposits—including retail RPs—are those issued in amounts of less than funds, and foreign banks and official institutions. Also excluded is the estimated amount of $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are overnight RPs and Eurodollars held by institution-only money market funds. Seasonally subtracted from small time deposits. adjusted M3 is computed by adjusting its non-M2 component as a whole and then adding this 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those result to seasonally adjusted M2. booked at international banking facilities. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury 11. Large time deposits at commercial banks less those held by money market funds, securities, commercial paper, and bankers acceptances, net of money market fund holdings of depository institutions, the U.S. government, and foreign banks and official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic NonfinancialS tatistics • February 1996 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks' 1995 1993 1994 Dec. Dec/ Mar. Apr. May June July Aug. Sept. Oct.r Nov. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 1.86 1.96 2.00 1.95 1.96 1.94 1.91 1.93 1.94 1.93 1.95 2 Savings deposits3 2.46 2.92 3.14 3.17 3.20 3.19 3.15 3.12 3.14 3.11 3.14 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 2.65 3.79 4.24 4.28 4.25 4.19 4.17 4.10 4.10 4.11 4.12 4 92 to 182 days 2.91 4.44 4.97 4.94 4.93 4.81 4.77 4.77 4.75 4.75 4.74 5 183 days to 1 year 3.13 5.12 5.60 5.60 5.49 5.27 5.18 5.15 5.14 5.15 5.11 6 More than 1 year to 2 years 3.55 5.74 6.12 6.05 5.83 5.53 5.38 5.39 5.32 5.31 5.27 7 More than 2 VI years 4.28 6.30 6.45 6.37 6.11 5.79 5.62 5.63 5.60 5.56 5.49 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts 1.87 1.94 1.99 1.99 2.00 1.98 1.96 1.98 1.98 1.97 1.94 9 Savings deposits3 2.63 2.87 2.94 2.93 2.95 2.97 2.97 2.95 2.96 2.97 2.99 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 2.81 3.80 4.21 4.18 4.24 4.24 4.28 4.34 4.29 4.34 4.45 II 92 to 182 days 3.02 4.89 5.37 5.38 5.31 5.22 5.16 5.12 5.08 5.06 5.02 12 183 days to 1 year 3.31 5.52 5.94 5.87 5.83 5.61 5.47 5.45 5.35 5.32 5.28 13 More than 1 year to 2 '/2 years 3.67 6.09 6.32 6.25 6.08 5.78 5.62 5.60 5.51 5.50 5.46 14 More than 2'/2 years 4.62 6.43 6.68 6.59 6.32 5.98 5.82 5.78 5.74 5.69 5.64 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 305,237 304,896 292,811 286,987 274,281 274,573 271,777 266,715 253,174 258,411 259,470 16 Savings deposits3 767,035 737,068 713,440 698,963 714,989 718,393 723,302 733,011 744,839 747,943 768,718 1 / Personal 598,276 580,438 564,086 550,674 560,563 563,795 567,624 572,916 584,239 587,235 600,847 18 Nonpersonal 168,759 156,630 149,354 148,289 154,426 154,599 155,678 160,096 160,600 160,707 167,871 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 29,362 32,265 31,623 31,530 31,472 32.140 32,950 30,722 29,804 29,940 31,046 20 92 to 182 days 109,050 96,650 95,583 94,368 93,188 91,999 91,347 89,896 92,220 94,418 97,145 21 183 days to 1 year 145,386 163,062 176,657 179,625 184,560 187,185 186,716 187,141 189,338 188,859 189,124 22 More than 1 year to 2 years 139,781 164,395 183,275 189,652 194,963 198,541 201,761 203,466 203,548 206,993 210,377 23 More than 2 vi years 180,461 192,712 194,722 194,426 192,542 195,024 194,500 199,944 200,182 200,201 202,338 24 IRA and Keogh plan deposits 144,011 144,097 145,959 146,679 146,842 148,894 148,878 149,320 149,570 151,094 155,056 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 11,191 11,175 11,218 11,005 11,019 11,354 11,262 11,104 11,408 11,317 11,613 26 Savings deposits3 80,376 70,082 68,595 67,453 67,322 67,185 66,706 66,776 69,752 69,636 70,265 27 Personal 77,263 67,159 65,692 64.204 64,484 63,966 63,524 63,483 66,403 66,193 66,683 28 Nonpersonal 3,113 2,923 2,902 3,248 2,838 3,219 3,182 3,293 3,349 3,443 3,582 Interest-bearing time deposits with balances of less than $100,000, b\ maturity 29 7 to 91 days 2,746 2,144 1,943 1,780 1,885 1,567 1,784 1,873 1,739 1,768 1,903 30 92 to 182 days 12,974 11,361 11,707 11,245 11,449 11,025 11,131 11,183 11,258 11,231 11,848 31 183 days to 1 year 17,469 18,391 20,277 21,051 20,956 21,702 22,157 22,488 24,837 25,036 25,887 32 More than 1 year to 2 'A years 16,589 17.787 22,648 23,445 24,014 24,658 25,141 25,296 27,825 27,755 28,247 33 More than 2 V2 years 20,501 21,293 22,446 22,671 22,819 22,935 22,930 22,780 23,351 23,470 23,574 34 IRA and Keogh plan accounts 19,791 19,008 20,221 20,388 20,236 20,499 20,568 20,531 21,913 21,784 21,758 I. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508) 2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits Special Supplementary Table monthly statistical release. For ordering address, see inside reflect a series break caused by a change in the survey used to collect these data. front cover. Estimates are based on data collected by the Federal Reserve System from a 3. Includes personal and nonpersonal money market deposits. stratified random sample of about 425 commercial banks and 75 savings banks on the last day 4. Includes both mutual and federal savings banks. of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and foreign currency-denominated deposits. Data exclude retail repurchase agreements and deposits held in U.S. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A17 1.23 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1995r BBaannkk ggrroouupp,, oorr ttyyppee ooff ddeeppoossiitt 1199992222 II99993322 1199994422 Apr. May June July Aug. Sept. DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 313,128.1 334,784.1 369,029.1 367,823.2 423,264.5 413,335.1 391,037.6 407,356.9 399.316.1 2 Major New York City banks 165,447.7 171,224.3 191,168.8 185,842.3 217,587.7 203,342.3 197,712.1 206,835.9 207,562.6 3 Other banks 147,680.4 163,559.7 177,860.3 181,981.0 205,676.7 209,992.8 193,325.5 200,521.0 191,753.5 4 Other checkable deposits4 3,780.3 3,481.5 3,798.6 3,707.7 4,236.4 4,142.3 3,593.9 4,236.4 4,367.1 5 Savings deposits (including MMDAs)5 3,309.1 3,497.4 3,766.3 3,565.4 4,022.4 4,326.8 3,986.6 4,745.3 4,896.6 DEPOSIT TURNOVER Demand deposits' 6 All insured banks 825.9 785.9 817.4 817.2 943.3 901.8 849.4 887.9 861.2 7 Major New York City banks 4,795.3 4,198.1 4,481.5 4,553.3 5,170.7 4,718.9 4,624.7 4,970.9 5,017.7 8 Other banks 428.7 424.6 435.1 444.6 505.8 505.7 462.9 480.7 454.1 9 Other checkable deposits4 14.4 11.9 12.6 12.7 15.0 15.1 12.9 15.5 16.3 10 Savings deposits (including MMDAs)5 4.7 4.6 4.9 5.0 5.6 6.0 5.5 6.5 6.6 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 313,344.9 334,899.2 369,121.8 362,784.7 412,762.0 425,855.1 390,210.5 421,841.6 396,666.0 12 Major New York City banks 165,595.0 171,283.5 191,226.0 180,169.1 207,259.8 209,349.5 196,873.1 213,958.6 207,994.2 13 Other banks 147,749.9 163,615.7 177,895.7 182,615.6 205,502.2 216,505.6 193,337.5 207,883.0 188,671.8 14 Other checkable deposits4 3,783.6 3,481.7 3,795.6 3,918.1 4,070.1 4,261.6 3,525.6 4,203.6 4,432.2 15 Savings deposits (including MMDAs)5 3,310.0 3,498.3 3,764.4 3,726.8 3,982.3 4,432.7 4,054.0 4,750.0 4,847.4 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 826.1 786.1 818.2 805.8 936.5 941.3 848.2 936.7 859.6 17 Major New York City banks 4,803.5 4,197.9 4,490.3 4,459.5 5,095.1 4,972.0 4,657.5 5,343.0 5,069.5 18 Other banks 428.8 424.8 435.3 445.6 513.6 527.7 462.8 506.6 448.7 19 Other checkable deposits4 14.4 11.9 12.6 13.2 14.5 15.7 12.9 15.6 16.7 20 Savings deposits (including MMDAs)5 4.7 4.6 4.9 5.2 5.6 6.1 5.6 6.5 6.6 1. Historical tables containing revised data for earlier periods can be obtained from the 4. As of January 1994, other checkable deposits (OCDs), previously defined as automatic Publications Section, Division of Support Services, Board of Governors of the Federal transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) accounts, Reserve System, Washington, DC 20551. were expanded to include telephone and preauthorized transfer accounts. This change Data in this table also appear in the Board's G.6 (406) monthly statistical release. For redefined OCDs for debits data to be consistent with OCDs for deposits data. ordering address, see inside front cover. 5. Money market deposit accounts. 2. Annual averages of monthly figures. 3. Represents accounts of individuals, partnerships, and corporations and of states and political subdivisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • February 1996 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS' Billions of dollars Monthly averages Wednesday figures Account 1994 1995' 1995 Nov. May June July Aug. Sept. Oct. Nov. Nov. 8 Nov. 15 Nov. 22 Nov. 29 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,300.1 3,483.7 3,499.3 3,516.1 3,531.1 3,551.9 3,555.1 3,559.8 3,556.7 3,556.8 3,565.7 3,560.8 2 Securities in bank credit 954.2 977.0 973.7 964.2 971.2 976.7 975.8 972.1 968.9 970.4 975.0 974.2 3 U.S. government securities 732.5 713.7 711.5 705.9 710.2 707.6 712.5 712.6 711.7 710.6 715.5 713.2 4 Other securities 221.6 263.3 262.2 258.4 261.0 269.1 263.3 259.5 257.3 259.8 259.5 261.0 5 Loans and leases in bank credit- . . . 2,345.9 2.506.7 2,525.6 2,551.9 2,559.9 2,575.2 2,579.2 2,587.7 2,587.8 2,586.4 2,590.7 2,586.7 6 Commercial and industrial 638.4 689.1 692.0 697.5 698.8 702.6 703.3 708.5 706.1 708.0 709.4 710.3 7 Real estate 991.5 1,042.6 1,051.6 1,062.6 1,067.9 1,071.7 1,074.4 1,076.0 1,076.3 1,075.5 1,076.5 1,076.2 8 Revolving home equity 74.9 77.2 77.6 78.0 78.4 78.7 78.7 79.1 79.1 79.1 79.2 79.3 9 Other 916.5 965.5 974.0 984.6 989.5 993.0 995.8 996.9 997.3 996.4 997.3 997.0 10 Consumer 445.2 473.0 478.1 481.1 486.3 489.2 489.1 491.1 490.5 491.7 490.7 491.9 11 Security' 73.3 90.1 89.9 89.3 84.6 87.1 84.7 83.9 87.1 83.3 84.6 81.0 12 Other 197.6 211.9 214.0 221.4 222.4 224.6 227.7 228.2 227.7 228.0 229.5 227.3 13 Interbank loans4 170.4r 185.3 187.4 195.1 192.1 196.0 199.9 200.4 218.5 197.8 197.8 188.8 14 Cash assets5 205.8 210.8 211.3 214.2 209.0 212.4 220.7 211.7 213.1 214.1 220.8 194.6 15 Other assets6 220.9 226.2 226.5 227.0 226.7 231.1 230.5 229.1 226.9 231.2 229.3 227.4 16 Total assets7 3,841.0r 4,049.2 4,067.7 4,0953 4,102.0 4,134.6 4,149.6 4,144.6 4,158.7 4,143.5 4,157.4 4,115.4 Liabilities 17 Deposits 2,521.3 2,567.3 2,584.5 2,608.6 2.614.7 2,628.0 2,643.0 2,634.7 2,637.9 2,645.0 2,643.6 2,607.4 18 Transaction 797.2 785.3 781.2 793.4 784.8 782.3 780.2 765.1 767.5 772.8 776.0 740.1 19 Nontransaction 1,724.2 1,782.0 1,803.3 1,815.2 1,829.9 1,845.7 1,862.8 1,869.7 1,870.4 1,872.2 1,867.6 1,867.3 20 Large time 359.1 392.9 395.9 400.8 407.3 413.2 422.0 422.5 424.6 424.0 421.5 419.7 21 Other 1,365.0 1,389.2 1,407.4 1,414.4 1,422.6 1,432.5 1,440.9 1,447.2 1,445.8 1,448.2 1,446.2 1,447.6 22 Borrowings 590.9r 688.9 676.4 691.7 672.1 676.4 674.5 655.6 657.4 647.9 665.0 652.2 23 From banks in the U.S 168.9' 187.9 187.9 201.9 197.4 201.2 206.1 202.6 216.8 201.2 200.6 192.3 24 From nonbanks in the U.S 422.0 500.9 488.5 489.8 474.7 475.3 468.5 453.0 440.5 446.7 464.4 459.9 25 Net due to related foreign offices 213.6 239.2 244.2 236.5 248.0 254.2 259.2 263.0 272.3 256.6 260.3 262.8 26 Other liabilities8 176.5 214.9 213.7 204.4 207.1 216.4 213.6 212.6 212.4 214.7 213.0 208.6 27 Total liabilities 3,5023r 3,7103 3,718.8 3,7413 3,742.0 3,775.0 3,7903 3,765.9 3,780.0 3,764.2 3,781.9 3,731.0 28 Residual (assets less liabilities)9 338.6r 338.9 348.9 354.0 360.0 359.6 359.3 378.7 378.7 379.3 375.5 384.4 Not seasonally adjusted Assets 29 Bank credit 3,309.5r 3,475.5 3,495.8 3,502.9 3,521.2 3,547.0 3,553.6 3,569.4 3,569.3 3,568.3 3,569.5 3,569.9 30 Securities in bank credit 955.9 978.3 974.5 959.7 968.7 972.4 973.6 973.0 971.4 973.3 974.2 972.7 31 U.S. government securities 733.7 712.8 711.2 702.0 711.0 709.3 711.2 713.4 713.8 712.1 714.8 713.3 32 Other securities 222.2 265.5 263.3 257.7 257.8 263.0 262.4 259.5 257.6 261.2 259.4 259.4 33 Loans and leases in bank credit- . . . 2,353.6 2,497.2 2,521.3 2,543.2 2,552.4 2,574.7 2,580.0 2,596.5 2,597.9 2,595.0 2,595.3 2,597.2 34 Commercial and industrial 638.4 692.2 693.9 696.7 695.4 698.8 700.9 708.1 705.5 706.9 709.6 710.3 35 Real estate 996.2 1,041.0 1,051.4 1,061.9 1,067.1 1,073.0 1,077.1 1,081.2 1,082.2 1,081.1 1,080.5 1,081.1 36 Revolving home equity 75.4 77.0 77.7 78.0 78.5 79.1 79.3 79.5 79.6 79.5 79.5 79.6 37 Other 920.9 963.9 973.7 983.9 988.6 993.9 997.8 1,001.7 1,002.7 1,001.6 1,001.0 1,001.6 38 Consumer 445.4 471.5 475.5 478.8 485.8 490.3 489.1 491.2 490.0 491.5 490.5 493.0 39 Security1 75.0 83.9 85.9 83.9 81.5 85.4 84.1 86.2 91.3 85.3 85.1 83.1 40 Other 198.5 208.6 214.7 221.8 222.6 227.1 228.8 229.8 228.8 230.2 229.5 229.7 41 Interbank loans4 171.9' 179.7 184.4 191.0 187.4 192.3 198.3 202.3 214.4 204.6 195.1 194.3 42 Cash assets5 212.3 208.3 209.5 211.1 201.3 213.9 221.1 218.0 208.0 230.2 220.3 210.5 43 Other assets6 223.7 225.5 225.1 226.5 228.5 231.6 232.4 231.8 230.9 234.2 228.8 230.9 44 Total assets7 3,860.8r 4,032.1 4,057.8 4,074.8 4,081.5 4,127.9 4,148.9 4,164.9 4,166.0 4,180.7 4,157.2 4,149.1 Liabilities 45 Deposits 2,536.4 2,558.3 2,581.6 2,599.5 2,600.6 2,624.4 2,638.6 2,650.1 2,644.4 2,675.7 2,644.7 2,630.4 46 Transaction 811.3 774.1 775.6 784.1 768.8 779.5 777.9 779.5 768.3 801.3 778.2 766.2 47 Nontransaction 1.725.1 1,784.1 1,806.0 1,815.4 1,831.9 1,844.9 1,860.7 1,870.6 1,876.1 1,874.5 1,866.4 1,864.3 48 Large time 358.3 397.1 398.4 400.2 408.0 413.1 419.8 421.7 424.0 422.1 421.2 419.4 49 Other 1,366.8 1,387.0 1,407.6 1,415.2 1,423.9 1.431.8 1,441.0 1,448.9 1,452.1 1,452.4 1,445.2 1,444.9 50 Borrowings 604.1' 674.7 683.4 692.6 681.0 686.4 681.8 676.0 682.8 675.8 673.7 670.6 51 From banks in the U.S 173.2' 182.4 187.8 198.2 195.2 199.1 203.5 207.6 219.7 209.9 200.5 199.6 52 From nonbanks in the U.S 431.0 492.2 495.6 494.4 485.9 487.3 478.2 468.4 463.1 465.9 473.3 471.0 53 Net due to related foreign offices 213.4 244.6 238.3 234.0 243.1 247.7 258.4 262.6 265.0 251.3 262.5 272.5 54 Other liabilities8 181.6 213.0 208.9 201.7 206.4 216.0 215.2 218.4 217.5 220.3 218.7 215.6 55 Total liabilities 3,535.5r 3,690.5 3,7123 3,727.8 3,7313 3,774.5 3,793.9 3,807.0 3,809.7 3,823.1 3,799.5 3,789.2 56 Residual (assets less liabilities)9 325.3 341.5 345.5 346.9 350.3 353.4 354.9 357.9 356.3 357.6 357.7 359.9 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A19 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS'—Continued Billions of dollars Monthly averages Wednesday figures Account 1994 1995' 1995 Nov. May June July Aug. Sept. Oct. Nov. Nov. 8 Nov. 15 Nov. 22 Nov. 29 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS 57 Bank credit 2,951.7 3,081.7 3,099.1 3,110.7 3,123.8 3,139.2 3,146.5 3,154.4 3,156.3 3,153.7 3,156.4 3,152.0 58 Securities in bank credit 871.2 860.2 858.6 849.4 852.6 857.3 856.6 855.4 854.9 854.3 855.9 856.8 59 U.S. government securities 670.9r 647.0 647.0 641.5 643.1 643.3 648.5 648.5 648.6 647.9 649.1 649.1 60 Other securities 200.4 213.1 211.6 207.9 209.5 214.0 208.2 206.9 206.3 206.4 206.8 207.7 61 Loans and leases in bank credit2 2,080.5 2,221.5 2.240.6 2,261.2 2,271.3 2,281.9 2,289.8 2,299.1 2,301.5 2,299.4 2,300.6 2,295.2 62 Commercial and industrial 476.8 516.6 519.0 523.6 524.6 526.8 529.1 532.6 532.4 532.7 533.5 531.8 63 Real estate 950.5 1,004.3 1,013.4 1,024.7 1,030.9 1,035.2 1,037.5 1,039.5 1,039.9 1,038.8 1,039.8 1,039.8 64 Revolving home equity 74.9 77.2 77.6 78.0 78.4 78.7 78.7 79.1 79.1 79.1 79.2 79.3 65 Other 875.5 927.1 935.8 946.7 952.5 956.5 958.9 960.4 960.8 959.8 960.7 960.6 66 Consumer 445.2 473.0 478.1 481.1 486.3 489.2 489.1 491.1 490.5 491.7 490.7 491.9 67 Security-' 46.0 54.0 55.4 52.1 50.4 50.8 50.4 52.7 54.8 53.5 52.3 50.0 68 Other 162.0 173.6 174.6 179.7 179.1 179.9 183.7 183.2 183.8 182.7 184.2 181.7 69 Interbank loans4 147. r 160.9 164.8 173.2 165.5 168.6 168.4 170.4 175.1 172.3 171.8 164.0 70 Cash assets5 181.5 182.6 184.5 187.5 182.7 187.1 194.2 183.0 184.5 185.4 191.0 167.0 71 Other assets6 167.1 170.6 170.3 172.5 171.9 174.2 175.3 174.8 172.5 176.8 175.0 173.8 72 Total assets7 339UR 3,539.0 3,561.7 3,586.8 3,5873 3,612.3 3,627.9 3,6263 3,632.1 3,631.8 3,637.9 3,600.6 Liabilities 73 Deposits 2,366.8 2,409.5 2,424.2 2,447.5 2,448.3 2,457.3 2,468.2 2,465.8 2,464.7 2,475.8 2,477.5 2,440.7 74 Transaction 787.3 775.9 771.9 784.0 775.5 773.3 771.1 755.4 757.7 763.1 766.2 730.6 75 Nontransaction 1,579.6 1,633.6 1,652.2 1,663.5 1,672.8 1,684.0 1,697.2 1,710.4 1,707.1 1,712.7 1,711.3 1,710.1 76 Large time 217.8 247.1 247.6 247.9 248.9 251.9 257.4 264.6 262.9 265.7 265.3 264.7 77 Other 1,361.8 1,386.6 1,404.6 1,415.6 1,423.9 1,432.1 1,439.8 1,445.8 1,444.2 1,447.0 1,446.0 1,445.4 78 Borrowings 491.1' 569.9 563.6 573.1 556.0 562.0 565.3 552.9 553.3 546.8 559.6 552.0 79 From banks in the U.S 154.0r 165.2 168.5 182.3 179.3 183.0 186.9 183.8 198.2 182.2 180.1 174.8 80 From nonbanks in the U.S 337.7 404.8 395.0 390.8 376.7 379.0 378.4 369.1 355.0 364.6 379.5 377.2 81 Net due to related foreign offices .... 66.4 84.0 90.2 82.2 91.0 93.4 94.7 90.1 96.0 86.0 87.4 91.6 82 Other liabilities8 131.5 147.4 146.7 139.1 139.3 146.2 143.7 144.3 145.0 146.5 144.8 140.3 83 Total liabilities 3,056.5R 3,210.8 3,224.6 3,241.9 3,234-5 3,258.9 3,272.0 3,253.1 3,259.0 3,255.1 3,2693 3,224.6 84 Residual (assets less liabilities)9 334.7 328.2 337.0 344.9 352.8 353.4 355.9 373.2 373.1 376.7 368.7 376.0 Not seasonally adjusted 85 Bank credit 2,959.9 3,080.1 3,100.0 3,100.9 3,115.7 3,137.6 3,147.4 3,163.4 3,165.5 3,164.4 3,163.3 3,160.8 86 Securities in bank credit 871.9 862.6 861.6 845.8 850.4 854.3 853.9 855.6 856.3 856.0 855.2 855.2 87 U.S. government securities 670.6 647.9 647.9 638.5 644.2 645.5 647.0 647.9 648.8 647.7 647.7 647.9 88 Other securities 201.2 214.7 213.7 207.3 206.2 208.7 206.9 207.7 207.5 208.4 207.5 207.3 89 Loans and leases in bank credit2 2,088.0 2,217.5 2,238.4 2,255.1 2,265.4 2,283.3 2,293.5 2,307.8 2,309.2 2,308.3 2,308.1 2,305.6 90 Commercial and industrial 476.9 520.5 520.8 522.4 520.8 523.5 527.8 532.4 532.2 532.5 533.5 531.6 91 Real estate 955.1 1,002.7 1,013.2 1,024.1 1,030.0 1,036.2 1,040.2 1,044.6 1,045.7 1,044.4 1,043.8 1,044.7 92 Revolving home equity 75.3 77.0 77.6 78.0 78.5 79.1 79.3 79.5 79.5 79.5 79.5 79.6 93 Other 879.8 925.7 935.6 946.1 951.5 957.2 960.9 965.1 966.1 964.9 964.3 965.1 94 Consumer 445.4 471.5 475.5 478.8 485.8 490.3 489.1 491.2 490.0 491.5 490.5 493.0 95 Security-1 47.2 51.9 54.2 50.1 49.3 50.9 51.1 54.4 56.2 54.5 55.0 51.9 96 Other 163.4 171.0 174.6 179.7 179.5 182.4 185.4 185.2 185.1 185.4 185.2 184.5 97 Interbank loans4 I48.7r 155.7 163.1 168.7 162.0 163.9 165.5 173.5 177.2 179.2 170.5 166.8 98 Cash assets5 188.1 181.4 182.0 184.2 174.3 187.2 193.8 189.5 179.5 201.0 190.9 183.1 99 Other assets6 168.8 169.9 169.6 172.9 172.9 175.6 177.6 176.5 175.7 179.0 173.5 176.4 100 Total assets7 3,409.1R 3,530.3 3,557.8 3,570.1 3,568.2 3,607.4 3,628.0 3,646.4 3,6413 3,667.0 3,641.6 3,630.6 Liabilities 101 Deposits 2,383.5 2,398.5 2,418.3 2,438.5 2,434.6 2,454.5 2,467.8 2,482.5 2,472.8 2,507.8 2,479.7 2,465.1 102 Transaction 801.4 765.2 766.5 774.7 759.5 769.9 768.5 769.7 758.6 791.2 768.5 756.6 103 Nontransaction 1,582.1 1,633.3 1,651.8 1,663.8 1,675.1 1,684.6 1,699.3 1,712.8 1,714.1 1,716.6 1,711.2 1,708.6 104 Large time 218.0 248.7 247.2 248.0 250.7 252.9 258.4 264.7 263.7 265.2 265.7 264.4 105 Other 1,364.1 1,384.6 1,404.6 1,415.9 1,424.4 1,431.8 1,440.9 1,448.1 1,450.5 1,451.4 1,445.6 1,444.1 106 Borrowings 505.2r 560.3 568.6 571.3 562.9 571.2 572.9 574.3 577.0 574.6 572.7 573.1 107 From banks in the U.S I57.7r 161.9 168.2 178.2 177.3 180.4 185.4 188.3 200.4 189.5 180.8 181.3 108 From nonbanks in the U.S 347.6 398.5 400.4 393.1 385.6 390.8 387.5 386.0 376.6 385.1 391.9 391.8 109 Net due to related foreign offices .... 64.9 91.8 89.6 81.8 89.1 88.7 92.0 88.4 91.8 81.9 87.8 92.4 110 Other liabilities8 136.0 145.2 142.9 138.0 138.2 145.9 146.4 149.1 149.3 150.9 149.5 145.9 111 Total liabilities 3,089.6R 3,195.8 3,219.4 3,229.7 3,224.7 3,260.4 3,279.0 3,2943 3,290.8 33153 3,289.8 3,276.6 112 Residual (assets less liabilities)9 319.5 334.5 338.4 340.4 343.5 347.1 349.0 352.1 350.5 351.8 351.8 354.0 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • February 1996 NOTES TO TABLE 1.26 I. Covers the following types of institutions in the fifty states and the District of 4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to Columbia: domestically chartered commercial banks that submit a weekly report of condition commercial banks in the United States. (large domestic); other domestically chartered commercial banks (small domestic); branches 5. Includes vault cash, cash items in process of collection, demand balances due from and agencies of foreign banks; New York State investment companies, and Edge Act and depository institutions in the United States, balances due from Federal Reserve Banks, and agreement corporations (foreign-related institutions). Excludes international banking facili- other cash assets. ties. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic 6. Excludes the due-from position with related foreign offices, which is included in lines banks constitute a universe; data for small domestic banks and foreign-related institutions are 25, 53, 81, and 109. estimates based on weekly samples and on quarter-end condition reports. Data are adjusted 7. Excludes unearned income, reserves for losses on loans and leases, and reserves for for breaks caused by reclassifications of assets and liabilities. transfer risk. Loans are reported gross of these items. 2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to 8. Excludes the due-to position with related foreign offices, which is included in lines 25, commercial banks in the United States. 53, 81, and 109. 3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase 9. This balancing item is not intended as a measure of equity capital for use in capital and carry securities. adequacy analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1995 AAccccoouunntt Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 ASSETS 1 Cash and balances due from depository institutions 116,244 132,703 110,443r 114,416r 135,624 111,258 128,260 117,603 112,645 2 U.S. Treasury and government securities 299,66 lr 298,900' 298,085 300,052 299,893 300,140 300,710 300,094 299,211 3 Trading account 23,486 23,542 23,691 23,368 21,730 22,176 24,475 24,622 25,727 4 Investment account 276,176r 275,358r 274,395 276,684 278,163 277,965 276,235 275,472 273,484 5 Mortgage-backed securities' 104,228r 103,94 r I04,743r 106,3l3r 107,042 107,153 106,431 107,743 108,360 All others, by maturity One year or less 42,976 43,573 43,518 44,054 44,980 45,009 44,696 43,791 42,618 7 One year through five years 71,227r 70,438r 70,082r 70,207r 69,938 70,072 69,460 69,021 68,386 X More than five years 57,745r 57,405r 56,052r 56,1 IT 56,202 55,731 55,647 54,917 54,120 9 Other securities I23,648r I22,454r 121,772 123,910 124,975 123,868 124,124 123,533 123,259 10 Trading account 1,435 1,253 1,265 1,326 1,447 1,636 1,642 1,806 1,873 11 Investment account 62,632r 62,660r 62,697 63,282 63,976 64,237 64,871 65,180 64,677 12 State and local government, by maturity 19,612 19,609 19,602 19,663 19,568 19,555 19,543 19,623 19,636 13 One year or less 4,982r 5,034 5,029 5,019 5,005 5,004 5,010 5,027 5,010 14 More than one year 14,630r 14,576 14,573 14,644 14,563 14,551 14,534 14,597 14,627 15 Other bonds, corporate stocks, and securities 43,020r 43,050r 43,095 43,620 44,409 44,682 45,327 45,557 45,041 16 Other trading account assets 59,580 58,542 57,810 59,302 59,552 57,995 57,612 56,546 56,708 17 Federal funds sold2 95,791 102,149 104,717r 106,132r 107,070 112,585 111,975 102,337 101,015 18 To commercial banks in the United States 62,837 67,852 66,824r 71,253r 69,511 72,904 73,241 66,752 66,340 19 To nonbank brokers and dealers in securities 27,758 28,886 31,466 29,198 32,666 35,125 34,341 32,587 30,614 20 To others3 5,197 5,410 6,426 5,680 4,894 4,556 4,393 2,999 4,061 21 Other loans and leases, gross 1,254,996 1,259,015r l,256,133r l,252,097r 1,266,762 1,268,627 1,266,389 1,268,439 1,264.866 22 Commercial and industrial 345,458 345,009r 345,303r 345,763r 351,125 350,157 350,063 350,778 348,765 23 Bankers acceptances and commercial paper 1,604 1,682 1,527 1,505 1,509 1,444 1,744 1,546 1,553 24 All other 343,854 343,327r 343,776r 344,258r 349,616 348,714 348,319 349,233 347,213 25 U.S. addressees 341,276 340,707r 34l,l74r 34l,673r 346,996 346,109 345,705 346,614 344,666 26 Non-U.S. addressees 2,578 2,620 2,602 2,585 2,620 2,605 2,614 2,619 2,547 27 Real estate loans 499,075 501,503 499,973 499,576 502,042 505,254 503,089 502,003 501,942 28 Revolving, home equity 47,751 47,864 47,826 47,824 47,985 47,985 48,039 48,038 48,026 29 All other 451,323 453,639 452,147 451,752 454,057 457,269 455,050 453,965 453,916 30 To individuals for personal expenditures 247,017 246,792 245,936 245,260 246,105 246,407 246,579 246,405 247,279 31 To depository and financial institutions 66,772 66,445 65,335 62,286 63,959 66,542 66,885 66,324 66,143 32 Commercial banks in the United States 39,100 39,162 37,954 35,336 35,731 38,342 38,820 37,936 37,541 33 Banks in foreign countries 3,354 2,738 2,907 2,687 3,425 2,881 2,806 3,024 3,213 34 Nonbank depository and other financial institutions 24,318 24,545 24,475 24,263 24,803 25,318 25,258 25,364 25,390 35 For purchasing and carrying securities 13,442 15,501 15,096 15,227 16,153 14,989 14,031 16,342 15,434 36 To finance agricultural production 6,762 6,706 6,649 6,582 6,583 6,520 6,615 6,537 6,461 37 To states and political subdivisions 10,926 10,805 10,874 10,839 10,887 10,794 10,857 10,902 10,838 38 To foreign governments and official institutions 997 1,089 975 1,003 995 1,422 1,015 983 1,009 39 All other loans 26,770 27,057 27,815 27,236r 30,292 27,548 28,098 28,836 27,555 40 Lease-financing receivables 37,778 38,108 38,177 38,325 38,623 38,994 39,157 39,330 39,439 41 LESS: Unearned income 1,693 1,761 1,764 1,764 1,769 1,783 1,758 1,749 1,725 42 Loan and lease reserve3 33,889 33,505r 33,507r 33,450r 33,441 33,665 33,698 33,628 33,499 43 Other loans and leases, net 1,219,413 1,223,749 1,220,862 l,216,883r 1,231,553 1,233,179 1,230,933 1,233,062 1,229,642 44 All other assets 146,459r 139,198 I38,729r 136,315' 142,318 137,438 142,999 138,039 138,456 45 Total assets 2,001,217r 2,019,151 l,994,608r l,997,707r 2,041,433 2,018,468 2,039,001 2,014,667 2,004,227 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • February 1996 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1995 AAccccoouunntt Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 LIABILITIES 46 Deposits l,189,956r 1,201,515 l,176,277r l,l69,394r 1,210,635 1,187,627 1,216,934 1,192,446 1,184,303 47 Demand deposits 307,917r 319,624 296,386r 290,203r 321,559 297,252 325,762 307,450 302,468 48 Individuals, partnerships, and corporations 261,25 LR 267,694 250,760r 245,30 LR 268,143 253,831 272,471 256,643 256,047 49 Other holders 46,666 51,930 45,627r 44,902r 53,416 43,421 53,291 50,807 46,422 50 States and political subdivisions 8,230 7,826 7,895 8,195 9,297 7,835 9,098 8,760 8,856 51 U.S. government 1,874 1,584 1,745 1,549 2,596 1,504 3,277 2,501 1,765 52 Depository institutions in the United States 21,147 23,359 19,313r 20,428r 26,039 18,902 25,635 21,493 19,811 53 Banks in foreign countries 5,642 5,419 6,243 5,219 5,540 4,816 5,213 5,653 5,601 54 Foreign governments and official institutions 921 613 575 675 515 962 592 1,159 655 55 Certified and officers' checks 8,852 13,129 9,856 8,836 9,428 9,401 9,475 11,240 9,733 56 Transaction balances other than demand deposits 101,570 99,962 98,883 97,222 99,798 98,804 98,376 96,927 96,132 57 Nontransaction balances 780,469 781,929 781,008 781,969 789,278 791,571 792,797 788,069 785,703 58 Individuals, partnerships, and corporations 757,664 758,868 757,870 758,389 765,544 769,127 770,448 765,499 763,554 59 Other holders 22,805 23,061 23,137 23,579 23,734 22,443 22,349 22,570 22,149 60 States and political subdivisions 19,143 19,219 19,201 19,676 19,865 19,907 19,678 20,002 19,694 61 U.S. government 2,301 2,306 2,243 2,195 2,243 816 787 692 665 62 Depository institutions in the United States 1,048 1,222 1,380 1,400 1,297 1,400 1,571 1,559 1,496 63 Foreign governments, official institutions, and banks . . 313 314 313 308 328 320 314 317 294 64 Liabilities for borrowed money5 413,846 411,666 408,700 4l0,758r 420,083 417,919 415,329 411,051 409,951 65 Borrowings from Federal Reserve Banks 0 825 0 120 0 0 0 2,163 300 66 Treasury tax and loan notes 11,614 7,706 6,166 7,300 5,343 32 2,695 5,756 6,440 67 Other liabilities for borrowed money6 402,232 403,135 402,534 403,339r 414,740 417,887 412,635 403,133 403,211 68 Other liabilities (including subordinated notes and debentures) . . . 207,994 215,372 2l8,859r 226,505r 219,890 221,276 214,795 218,745 218,044 69 Total liabilities L,811,796R 1,828,553 L,803,836R L,806,657R 1,850,607 1,826,821 1,847,058 1,822,243 1,812,299 70 Residual (total assets less total liabilities)7 189,421 190,598 190,772 191,051 190,826 191,647 191,943 192,424 191,929 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 1,672,159 l,675,503r 1,675,929r l,675,602r 1,693,459 1,693,973 1,691,136 1,689,715 1,684,469 72 Time deposits in amounts of $100,000 or more 109,984 110,190 112,89 lr 115,667r 117,924 116,769 117,391 117,269 116,249 73 Loans sold outright to affiliates9 1,432 1,422 1,411 1,402 1,383 1,372 1,363 1,352 1,351 74 Commercial and industrial 280 281 281 281 281 281 281 281 279 75 Other 1,151 1,141 1,130 1,121 1,102 1,091 1,082 1,071 1,072 76 Foreign branch credit extended to U.S. residents10 25,941 26,430 25,896 26,545 26,318 26,211 25,577 25,849 26,122 77 Net owed to related institutions abroad 76,443 82,673 87,340 96,166 85,214 86,397 76,844 83,322 87,056 1. Includes certificates of participation, issued or guaranteed by agencies of the U.S. 8. Excludes loans to and federal funds transactions with commercial banks in the government, in pools of residential mortgages. United States. 2. Includes securities purchased under agreements to resell. 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates of 3. Includes allocated transfer risk reserve. the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank 4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service (ATS) subsidiaries of the holding company. accounts, and telephone and preauthorized transfers of savings deposits. 10. Credit extended by foreign branches of domestically chartered weekly reporting banks 5. Includes borrowings only from other than directly related institutions. to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes 6. Includes federal funds purchased and securities sold under agreements to repurchase. an unknown amount of credit extended to other than nonfinancial businesses. 7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A23 1.28 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1995 AAccccoouunntt Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 ASSETS 1 Cash and balances due from depository institutions 17,055 17,711 16,562 17,104 17,255 17,925 18,320 18,402 17,138 2 U.S. Treasury and government agency securities 41,884 41,476 42,896 43,129 43,941 43,463 42,887 44,649 43,479 3 Other securities 37,947 38,216r 38,18 lr 37,544r 35,504 33,727 35,370 34,776 34,968 4 Federal funds sold' 28,563 31,249 33,468 37,246 37,318 38,391 29,293 27,005 30,002 5 To commercial banks in the United States 9,391 10,981 10,986 14,813 13,476 14,290 8,908 8,435 10,032 6 To others2 19,172 20,267 22,482 22,433 23,842 24,101 20,384 18,570 19,970 7 Other loans and leases, gross 178,493r 176,453r !76,353r 177,022r 177,600 177,032 177,210 178,962 180,797 8 Commercial and industrial 113,346' 112,730r 112,787r 113,389r 113,876 113,500 113,689 114,694 116,502 9 Bankers acceptances and commercial paper . 4,130r 4,046r 4,146r 4,118r 4,464 4,448 4,454 4,632 4,648 10 All other 109,217 108,684 108,642r 109,271 109,412 109,052 109,235 110,062 111,854 11 U.S. addressees 104,209 103,718 103,770r 104,415 104,580 104,225 104,325 104,955 106,706 12 Non-U.S. addressees 5,007 4,966 4,872 4,856 4,832 4,827 4,910 5,107 5,147 13 Loans secured by real estate 23,102 23,101 22,931' 22,923r 22,794 22,779 22,754 22,740 22,623 14 Loans to depository and financial institutions 29,216r 28,180r 28,292r 28,426r 28,355 28,782 28,641 28,780 29,246 15 Commercial banks in the United States 4,030r 4,054' 4,227r 3,982r 3,899 4,058 3,605 3,736 3,486 16 Banks in foreign countries 2,416 2,369 2,402 2,912 3,014 2,932 2,972 3,046 3,119 17 Nonbank financial institutions 22,770r 2l,757r 21,663r 21,532r 21,442 21,792 22,064 21,998 22,641 18 For purchasing and carrying securities 6,255 5,925 6,402r 6,019 6,616 6,044 5,807 6,812 6,503 19 To foreign governments and official institutions 898 899 867 517 463 440 463 452 455 20 All other 4,257 4,213 3,806 4,312 4,122 4,115 4,392 4,113 4,102 21 Other assets (claims on nonrelated parties) 36,782r 37,918r 37,773r 37,350r 40,187 38,811 39,916 40,166 39,456 22 Total assets1 366,163 368,700R 370,144R 373,23LR 376,531 374,666 367,678 368,476 370,656 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 111,124 108,831 108,976 108,105 109,003 108,947 106,360 104,999 105,647 24 Demand deposits4 3,837 3,998 3,710 3,803 4,077 4,033 4,240 4,077 4,010 25 Individuals, partnerships, and corporations .... 3,024 3,131 2,772 3,112 3,098 3,051 3,109 3,022 3,145 26 Other 813 867 939 692 979 982 1,131 1,056 865 27 Nontransaction accounts 107,287 104,833 105,265 104,301 104,927 104,914 102,120 100,921 101,638 28 Individuals, partnerships, and corporations .... 75,410 73,581 74,664 74,131 75,103 75,492 73,247 72,801 73,555 29 Other 31,878 31,252 30,601 30,170 29,824 29,422 28,873 28,121 28,083 30 Borrowings from other than directly related institutions 75,572 77,136 78,617 73,873 75,109 73,574 69,343 70,245 67,879 31 Federal funds purchased5 40,464 43,623 45,052 44,936 44,782 45,233 42,372 44,715 43,455 37 From commercial banks in the United States . . 6,779 8,178 8,884 7,302 7,857 8,262 9,103 8,967 8,511 33 From others 33,685 35,446 36,168 37,634 36,925 36,970 33,268 35,748 34,945 34 Other liabilities for borrowed money 35,109 33,513 33,565 28,937 30,327 28,341 26,971 25,530 24,424 35 To commercial banks in the United States 4,955 4,914 4,395 4,234 4,397 4,524 4,688 4,605 4,670 36 To others 30,154 28,599 29,169 24,703 25,930 23,817 22,283 20,925 19,754 37 Other liabilities to nonrelated parties 53,392 55,322r 54,296r 52,517r 54,460 53,422 55,738 55,841 56,517 38 Total liabilities6 366,163 368,700R 370,144R 373,231R 376,531 374,666 367,678 368,476 370,656 MEMO 39 Total loans (gross) and securities, adjusted7 273,466r 272,359r 275,686r 276,147r 276,989 274,265 272,246 273,220 275,728 40 Net owed to related institutions abroad 100,635 101,734 103,344' 114,902r 113,233 113,407 111,555 112,876 115,797 1. Includes securities purchased under agreements to resell. 5. Includes securities sold under agreements to repurchase. 2. Includes transactions with nonbank brokers and dealers in securities. 6. For U.S. branches and agencies of foreign banks having a net "due to" position, 3. For U.S. branches and agencies of foreign banks having a net "due from" position, includes net owed to related institutions abroad. includes net due from related institutions abroad. 7. Excludes loans to and federal funds transactions with commercial banks in the United 4. Includes other transaction deposits. States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic NonfinancialS tatistics • February 1996 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1995 IItteemm 1990 1991 1992 1993 1994 May June July Aug. Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 562,656 528,832 545,619 555,075 595,382 650,580 648,819 657,938 660,719 669,686r 673,392 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss'''' 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr"""",,,, ttttoooottttaaaallll 214,706 212,999 226,456 218,947 223,038 258,006 251,555 262,695 261,904 268,838 271,299 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr ,,,, ttttoooottttaaaallll 200,036 182,463 171,605 180,389 207,701 216,879 218,005 215,473 215,361 213,883r 215,214 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss4444 147,914 133,370 147,558 155,739 164,643 175,695 179,259 179,770 183,454 186,965 186,879 Bankers dollar acceptances (not seasonally adjusted)5 5555 TTTToooottttaaaallll 54,771 43,770 38,194 32,348 29,835 BBBByyyy hhhhoooollllddddeeeerrrr 6666 AAAAcccccccceeeeppppttttiiiinnnngggg bbbbaaaannnnkkkkssss 9,017 11,017 10,555 12,421 11,783 7777 OOOOwwwwnnnn bbbbiiiillllllllssss 7,930 9,347 9,097 10,707 10,462 8888 BBBBiiiillllllllssss bbbboooouuuugggghhhhtttt ffffrrrroooommmm ooootttthhhheeeerrrr bbbbaaaannnnkkkkssss 1,087 1,670 1,458 1,714 1,321 FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee BBBBaaaannnnkkkkssss6666 9999 FFFFoooorrrreeeeiiiiggggnnnn ccccoooorrrrrrrreeeessssppppoooonnnnddddeeeennnnttttssss 918 1,739 1,276 725 410 n.a. n.a. n.a. n.a. n.a. n.a. 11110000 OOOOtttthhhheeeerrrrssss 44,836 31,014 26,364 19,202 17,642 BBBByyyy bbbbaaaassssiiiissss 11111111 IIIImmmmppppoooorrrrttttssss iiiinnnnttttoooo UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 13,095 12,843 12,209 10,217 10,062 11112222 EEEExxxxppppoooorrrrttttssss ffffrrrroooommmm UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 12,703 10,351 8,096 7,293 6,355 11113333 AAAAllllllll ooootttthhhheeeerrrr 28,973 20,577 17,890 14,838 13,417 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 5. Data on bankers dollar acceptances are gathered from approximately 1()0 institutions. personal, and mortgage financing; factoring, finance leasing, and other business lending; The reporting group is revised every January. Beginning January 1995, data for Bankers insurance underwriting; and other investment activities. dollar acceptances will be reported annually in September. 2. Includes all financial-company paper sold by dealers in the open market. 6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for 3. As reported by financial companies that place their paper directly with investors. its own account. 4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Period Av r e a r t a e ge Period Av r e a r t a e g e Period Av r e a r te a ge 1993 Jan 1 66..0000 1993 6.00 1994—Jan 6.00 1995—Jan 8.50 1994 7.15 Feb 6.00 Feb 9.00 1994—Mar. 24 6.25 1995 . 8.83 Mar 6.06 Mar 9.00 Apr. 19 6.75 Apr 6.45 Apr. 9.00 May 17 7.25 1993—Jan 6.00 May 6.99 May 9.00 Aug. 16 7.75 Feb 6.00 June 7.25 June 9.00 Nov. 15 8.50 Mar. 6.00 July 7.25 July 8.80 Apr 6.00 Aug 7.51 Aug 8.75 1995—Feb. 1 9.00 Mav 6.00 Sept 7.75 Sept 8.75 July 7 8.75 June 6.00 Oct 7.75 Oct 8.75 88..5500 July 6 00 8.15 8.75 Aug 6.00 Dec 8.50 Dec 8.65 Sept 6.00 Oct 6.00 Nov 6.00 Dec 6.00 I. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover, by a majority of the twenty-tive largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic NonfinancialS tatistics • February 1996 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1995 1995, week ending IItteemm 11999922 11999933 11999944 Aug. Sept. Oct. Nov. Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24 MONEY MARKET INSTRUMENTS 1 Federal funds1,2"1 3.52 3.02 4.21 5.74 5.80 5.76 5.80 5.76 5.76 5.71 5.74 5.81 2 Discount window borrowing2'4 3.25 3.00 3.60 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.25 Commercial paper1'5'6 3 1-month 3.71 3.17 4.43 5.85 5.82 5.81 5.80 5.81 5.80 5.81 5.81 5.80 4 3-month 3.75 3.22 4.66 5.82 5.74 5.82 5.74 5.82 5.79 5.75 5.74 5.72 5 6-month 3.80 3.30 4.93 5.75 5.66 5.71 5.59 5.70 5.67 5.61 5.60 5.56 Finance paper, directly placed1"5'7 6 1-month 3.62 3.12 4.33 5.72 5.71 5.71 5.69 5.71 5.71 5.71 5.70 5.68 7 3-month 3.65 3.16 4.53 5.64 5.58 5.66 5.59 5.67 5.64 5.60 5.59 5.58 8 6-month 3.63 3.15 4.56 5.51 5.45 5.51 5.35 5.51 5.48 5.39 5.34 5.30 Bankers acceptances1 s s 9 3-month 3.62 3.13 4.56 5.68 5.66 5.71 5.64 5.73 5.67 5.64 5.64 5.64 10 6-month 3.67 3.21 4.83 5.62 5.58 5.61 5.47 5.62 5.54 5.50 5.47 5.44 Certificates of deposit, secondary marker19 II 1-month 3.64 3.11 4.38 5.77 5.74 5.75 5.75 5.75 5.75 5.74 5.75 5.74 12 3-month 3.68 3.17 4.63 5.77 5.73 5.79 5.74 5.79 5.77 5.74 5.74 5.73 13 6-month 3.76 3.28 4.96 5.79 5.73 5.76 5.64 5.75 5.71 5.65 5.65 5.61 14 Eurodollar deposits, 3-month'110 3.70 3.18 4.63 5.79 5.74 5.81 5.75 5.82 5.79 5.75 5.75 5.75 U.S. Treasury bills Secondary market1'5 15 3-month 3.43 3.00 4.25 5.40 5.28 5.28 5.36 5.24 5.31 5.38 5.38 5.35 16 6-month 3.54 3.12 4.64 5.41 5.30 5.32 5.27 5.31 5.27 5.29 5.29 5.27 17 1-year 3.71 3.29 5.02 5.43 5.31 5.28 5.14 5.27 5.19 5.16 5.14 5.14 Auction average1"'5'" 18 3-month 3.45 3.02 4.29 5.41 5.26 5.30 5.35 5.22 5.29 5.36 5.43 5.34 19 6-month 3.57 3.14 4.66 5.40 5.28 5.34 5.29 5.33 5.31 5.29 5.33 5.25 20 1-year 3.75 3.33 5.02 5.55 5.21 5.30 5.15 n.a. n.a. n.a. 5.15 n.a. US. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 3.89 3.43 5.32 5.75 5.62 5.59 5.43 5.58 5.48 5.45 5.43 5.44 22 2-year 4.77 4.05 5.94 5.98 5.81 5.70 5.48 5.67 5.54 5.51 5.48 5.49 23 3-year 5.30 4.44 6.27 6.10 5.89 5.77 5.57 5.75 5.64 5.62 5.58 5.56 24 5-year 6.19 5.14 6.69 6.24 6.00 5.86 5.69 5.84 5.75 5.73 5.71 5.70 25 7-year 6.63 5.54 6.91 6.41 6.13 5.97 5.83 5.95 5.87 5.85 5.85 5.84 26 10-year 7.01 5.87 7.09 6.49 6.20 6.04 5.93 6.04 5.98 5.97 5.96 5.92 27 20-year n.a. 6.29 7.49 6.92 6.65 6.45 6.33 6.40 6.36 6.35 6.34 6.36 28 30-year 7.67 6.59 7.37 6.86 6.55 6.37 6.26 6.35 6.30 6.29 6.27 6.26 Composite 29 More than 10 years (long-term) 7.52 6.45 7.41 6.90 6.63 6.43 6.31 6.39 6.34 6.32 6.32 6.33 STATE AND LOCAL NOTES AND BONDS Moody's series11 30 Aaa 6.09 5.38 5.77 5.83 5.71 5.74 5.63 5.72 5.74 5.55 5.61 5.61 31 Baa 6.48 5.83 6.17 5.95 5.90 5.95 5.79 5.90 5.84 5.78 5.76 5.76 32 Bond Buyer series14 6.44 5.60 6.18 6.06 5.91 5.80 5.64 5.76 5.70 5.68 5.65 5.65 CORPORATE BONDS 33 Seasoned issues, all industries'5 8.55 7.54 8.26 7.81 7.56 7.39 7.30 7.37 7.33 7.32 7.30 7.32 Rating group 34 Aaa 8.14 7.22 7.97 7.57 7.32 7.12 7.02 7.10 7.05 7.04 7.02 7.03 35 Aa 8.46 7.40 8.15 7.69 7.45 7.27 7.18 7.25 7.21 7.20 7.18 7.19 36 A 8.62 7.58 8.28 7.79 7.56 7.39 7.32 7.37 7.35 7.34 7.32 7.33 37 Baa 8.98 7.93 8.63 8.19 7.93 7.75 7.68 7.73 7.70 7.71 7.69 7.71 38 A-rated, recently offered utility bonds16 8.52 7.46 8.29 7.84 7.55 7.36 7.30 7.40 7.33 7.38 7.27 7.29 MEMO Dividend-price ratio17 39 Common stocks 2.99 2.78 2.82 2.49 2.42 2.41 2.37 2.41 2.41 2.37 2.40 2.35 1. The daily effective federal funds rate is a weighted average of rates on trades through 12. Yields on actively traded issues adjusted to constant maturities. Source: US. Depart- New York brokers. ment of the Treasury. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 13. General obligation bonds based on Thursday figures; Moody's Investors Service. current week; monthly figures include each calendar day in the month. 14. State and local government general obligation bonds maturing in twenty years are used 3. Annualized using a 360-day year for bank interest. in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' 4. Rate for the Federal Reserve Bank of New York. A1 rating. Based on Thursday figures. 5. Quoted on a discount basis. 15. Daily figures from Moody's Investors Service. Based on yields to maturity on selected 6. An average of offering rates on commercial paper placed by several leading dealers for long-term bonds. firms whose bond rating is AA or the equivalent. 16. Compilation of the Federal Reserve. This series is an estimate of the yield on recently 7. An average of offering rates on paper directly placed by finance companies. offered, A-rated utility bonds with a thirty-year maturity and five years of call protection. 8. Representative closing yields for acceptances of the highest-rated money center banks. Weekly data are based on Friday quotations. 9. An average of dealer offering rates on nationally traded certificates of deposit. 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in 10. Bid rates for Eurodollar deposits at 11:00 a.m. London time. Data are for indication the price index. purposes only. NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and 11. Auction date for daily data; weekly and monthly averages computed on an issue-date G. 13 (415) monthly statistical releases. For ordering address, see inside front cover. basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.36 STOCK MARKET Selected Statistics 1995 IInnddiiccaattoorr 11999922 11999933 11999944 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 229.00 249.71 254.16 266.81 274.38 281.81 289.52 298.18 300.05 310.41 311.78 317.58 2 Industrial 284.26 300.10 315.32 337.96 347.69 357.01 366.75 379.13 379.79 390.42 389.63 398.66 3 Transportation 201.02 242.68 247.17 252.37 254.36 254.70 256.80 279.15 285.63 295.54 291.16 300.06 4 Utility 99.48 114.55 104.96 102.08 104.70 106.02 108.12 109.59 111.06 114.67 123.59 119.49 5 Finance 1 79.29 216.55 209.75 213.29 219.38 228.45 236.26 240.49 245.27 260.72 265.12 266.12 6 Standard & Poor's Corporation (1941-43 = 10)' 415.75 451.63 460.42 493.20 507.91 523.83 539.35 557.37 559.11 578.77 582.92 595.53 7 American Stock Exchange (Aug. 31, 1973 = 50)2 391.28 438.77 449.49 456.06 471.54 487.03 492.60 513.25 526.86 547.64 530.26 529.93 Volume of trading (thousands of shares) 8 New York Stock Exchange 202,558 263,374 290,652 338,733 331,184 341,905 345,547 363,780 309,879 352,184 369,386 360,199 9 American Stock Exchange 14,171 18,188 17.951 17,905 19,404 19,266 24,622 23,283 21,825 25,422 17,865 16,724 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers' 43,990 60,310 61,160 60,270 62.520 64,070 66,340 67,600 71,440 77,076 75,005 77,875 Free credit balances at brokers4 11 Margin accounts' 8,970 12,360 14,095 12,745 12,440 13,403 13,710 13,830 13,900 14,806 14,753 15,509 12 Cash accounts 22,510 27,715 28.870 26,680 26,670 27,464 29,860 28,600 29.190 29,796 29,908 30,340 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6. 1970 Dec. 6. 1971 Nov. 24. 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. In July 1976 a financial group, composed of banks and insurance companies, was added collateralized by securities. Margin requirements on securities other than options are the to the group of stocks on which the index is based. The index is now based on 400 industrial difference between the market value (100 percent) and the maximum loan value of collateral stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, 40 financial. effective May 1, 1936; Regulation G, effective Mar. II, 1968; and Regulation X, effective 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Nov. 1, 1971. previous readings in half. On Jan. I, 1977. the Board of Governors for the first time established in Regulation T the 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has initial margin required for writing options on securities, setting it at 30 percent of the current included credit extended against stocks, convertible bonds, stocks acquired through the market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the exercise of subscription rights, corporate bonds, and government securities. Separate report- required initial margin, allowing it to be the same as the option maintenance margin required ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in by the appropriate exchange or self-regulatory organization; such maintenance margin rules April 1984. must be approved by the Securities and Exchange Commission. Effective Jan. 31. 1986. the 4. Free credit balances are amounts in accounts with no unfulfilled commitments to SEC approved new maintenance margin rules, permitting margins to be the price of the option brokers and are subject to withdrawal by customers on demand. plus 15 percent of the market value of the stock underlying the option. 5. Series initiated in June 1984. Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of the 6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant market value of the stock underlying the option (or 15 percent in the case of stock-index to the Securities Exchange Act of 1934. limit the amount of credit that can be used to options). purchase and carry "margin securities" (as defined in the regulations) when such credit is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • February 1996 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1995 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. U.S. budget1 1 Receipts, total 1,153,226 1,257,4511 1,350,576 147,868 92,749 96,560 143,219 95,593 90,008 2 On-budget 841.292 922,425r 999,496 1 15,998 65,788 69,265 112,510 72,200 63,651 3 Off-budget 311,934 335,026 351,080 31,870 26.961 27,295 30,709 23,393 26,357 4 Outlays, total 1.408,532 l,460,553r 1,514,389 135,054 106,328 130,411 135,933 118,352 128,458 5 On-budget 1,141.945 l,18l,18lr 1,225,724 120,236 80,931 104,135 105,098 92,151 101,767 6 Off-budget 266.587 279,372 288,665 14,818 25,397 26,276 30,836 26,200 26,691 7 Surplus or deficit ( -). total -255,306 -203,370 -163,813 12.814 -13,579 -33,851 7,286 -22,758 -38,450 8 • On-budget -300.653 258,756r -226,228 -4,237 -15,143 -34,870 7,412 -19,951 -38,116 9 Off budget 45,347 55,654 62,415 17,051 1,564 1,019 -126 -2,807 -334 Sonn e of financing (total) 10 Borrowing from the public 248,594 184,696' 171,288 8,491 10,627 16,071 -6,618 13,353 38,339 1 1 Operating cash (decrease, or increase (-)) 6.283 16,564 -2,007 -34,312 11,635 30,776 -19,820 16,755 -4,911 12 Other" 429 l,842r -5,468 12,250 -8,683 -12,996 19,152 -7,350 5,022 MEMO 13 Treasury operating balance (level, end of period) 52.506 35,942 37,949 60,540 48,905 18,129 37,949 21,194 26,105 14 Federal Reserve Banks 17.289 6,848 8,620 20,977 11,206 4,767 8,620 7,018 5,703 IS Tax and loan accounts 35,217 29,094 29,329 39,563 37,700 13,363 29,329 14,176 20,402 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget of the accrued interest payable to the public, allocations of SDRs; deposit funds; miscellaneous U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1993 1994 1995 1995 11999944 11999955 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS 1 All sources 1,257,453 1,350,576 582,038 652,234 625,557 710,542 143,219 95,593 90,008 7 Individual income taxes, net 543,055 590,157 262,073 275,052 273,474 307,498 60,909 51,840 39,524 3 Withheld 459,699 499,898 228,423 225,387 240,062 251,398 36,295 46,918 39,945 4 Presidential Election Campaign Fund 70 69 2 63 10 58 1 0 1 5 Nonwithheld 160,047 175,815 41,768 117,937 42,031 132,006 24,743 5,899 1,991 6 Refunds 76,761 85,624 8,115 68,325 9,207 75,958 2,551 978 2,414 Corporation income taxes 7 Gross receipts 154,205 174,422 68,266 80,536 78,392 92,132 33,719 4,813 33,,005566 8 Refunds 13,820 17,334 6,514 6,933 7,331 10,399 730 2,633 1,362 Social insurance taxes and contributions, net . . . 461,475 484,474 206,176 248,301 220,141 261,837 39,902 32,104 38,199 10 Employment taxes and contributions" 428,810 451,046 192,749 228,714 206,613 228,663 39,304 30,549 34,919 II Self-employment taxes and contributions1 . 24,433 27,127 4,335 20,762 4,135 23,429 2,910 -98 91 12 Unemployment insurance 28,004 28,878 11,010 17,301 11,177 18,001 235 1,214 2,940 13 Other net receipts4 4,661 4,550 2,417 2,284 2,349 2,267 364 342 340 14 Excise taxes 55,225 57,485 25,994 26,444 30,062 27,452 5,706 4,453 5,154 15 Customs deposits 20,099 19,300 10,215 9,500 11,042 8,847 1,634 1,786 1,593 16 Estate and gift taxes 15,225 14,764 6,617 8,197 7,071 7,424 1,289 1,160 1,349 17 Miscellaneous receipts5 21,988 27,306 9,227 11,170 13,305 15,749 789 2,070 2,496 OUTLAYS 18 All types 1,460,553 1,514,428 727,685 710,620 752,151r 760,824 135,972 118,352 128,458 19 National defense 281.563 272,179 146,672 133,844 141,884 135,931 26,040 18,353 21,234 70 International affairs 17,083 16,448 10,186 5,800 11,889 4,727 1,479 1,074 1,616 21 General science, space, and technology 16,227 17,563 8,880 8,502 7,604R 8,611 1,612 1,427 1,474 77 Energy 5,219 5,146 1,663 2,237 2,923 2,358 969 348 489 73 Natural resources and environment 21,064 23,328 11,221 10,111 11,911 10,273 1,915 2,835 2,245 24 Agriculture 15,057 9,763 7,516 7,451 7,623 4,039 -102 1,109 2,291 75 Commerce and housing credit -5,122 -18,740 -1,490 -4,962 -4,270 -13,936 2,490 -1,661 -1,465 26 Transportation 38,134 38,555 19,570 16,739 21,835 18,192 3,719 3,128 3,284 27 Community and regional development 10,454 11,000 4,288 4,571 6,282R 4,858 1,043 943 1,087 28 Education, training, employment, and social services 46,307 52,706 26,753 19,262 27,449R 25,738 4,802 3,556 44,,118855 79 Health 106,836 114,760 52,958 53,195 54,147 58,759 9,401 9,657 10,189 30 Social security and Medicare 464,312 495,701 223,735 232,777 236,817 251,975 42,605 40,732 41,947 31 Income security 214,036 220,214 102,380 109,080 101,806 117,639 19,591 14,522 18,134 37 Veterans benefits and services 37,642 37,935 19,852 16,686 19,761 19,267 4,517 1,594 3,280 33 Administration of justice 15,238 16,255 7,400 7,718 7,753 8,062 1,335 1,223 1,258 34 General government 11,316 13,856 6,531 5,084 7,355R 5,797 1,385 1,712 717 35 Net interest6 202,957 232,175 99,914 99,844 109,435 116,170 18,929 20,565 19,058 36 Undistributed offsetting receipts7 -37,772 -44,455 -20,344 -17,308 -20,066 -17,632 -5,796 -2,765 -2,565 1. Functional details do not sum to total outlays for calendar year data because revisions to 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for outlays does 6. Includes interest received by trust funds. not correspond to calendar year data because revisions from the Budget have not been fully 7. Rents and royalties for the outer continental shelf, U.S. government contributions for distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and 3. Old-age, disability, and hospital insurance. Outlays of the U.S. Government-, and U.S. Office of Management and Budget, Budget of the 4. Federal employee retirement contributions and civil service retirement and U.S. Government, Fiscal Year 1996. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic NonfinancialS tatistics • February 1996 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1993 1994 1995 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 4,436 4,562 4,602 4,673 4,721 4,827 4,891 4,978 5,001 2 Public debt securities 4.412 4.536 4,576 4,646 4.693 4,800 4,864 4,951 4,974 3 Held by public 3.295 3.382 3.434 3.443 3.480 3,543 3.610 3.635 n.a. 4 Held by agencies 1,117 1,154 1.142 1,203 1.213 1,257 1.255 1,317 n.a. 5 Agency securities 2_i 27 26 28 29 27 27 27 27 6 Held by public 25 27 26 27 29 27 26 27 n.a. 7 Held by agencies 0 0 0 0 0 0 0 0 n.a. 8 Debt subject to statutory limit 4,316 4,446 4,491 4,559 4,605 4,711 4,775 4,861 4,885 9 Public debt securities 4,315 4.445 4,491 4.559 4.605 4,711 4,774 4,861 4,885 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,900 4,900 4,900 4.900 4.900 4.900 4,900 4,900 4,900 I. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCES. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1994 1995 TTyyppee aanndd hhoollddeerr 11999911 11999922 11999933 11999944 Q4 Ql Q2 Q3 1 Total gross public debt 3,801.7 4,177.0 4,535.7 4,800.2 4,800.2 4,864.1 4,951.4 4,974.0 By tvpe •> Interest-bearing 3,798.9 4.173.9 4,532.3 4.769.2 4,769.2 4,860.5 4,947.8 4,950.6 3 Marketable 2.471.6 2,754.1 2,989.5 3.126.0 3.126.0 3,227.3 3,252.6 3,260.5 4 Bills 590.4 657.7 714.6 733.8 733.8 756.5 748.3 742.5 5 Notes 1.430.8 1,608.9 1,764.0 1,867.0 1,867.0 1,938.2 1,974.7 1,980.3 6 Bonds 435.5 472.5 495.9 510.3 510.3 517.7 514.7 522.6 7 Nonmarketable1 1.327.2 1,419.8 1.542.9 1,643.1 1,643.1 1.633.2 1,695.2 1,690.2 8 State and local government series 159.7 153.5 149.5 132.6 132.6 122.9 121.2 1 13.4 9 Foreign issues" 41.9 37.4 43.5 42.5 42.5 41.8 41.4 41.0 1(1 Government 41.9 37.4 43.5 42.5 42.5 41.8 41.4 41.0 1 1 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 135.9 155.0 169.4 177.8 177.8 178.8 180.1 1 31.2 13 Government account series' 959.2 1.043.5 1.150.0 1,259.8 1,259.8 1,259.2 1,322.0 1,324.3 14 Non-interest-bearing 2.8 3.1 3.4 31.0 31.0 3.6 3.6 23.3 flv holder 4 15 U.S. Treasury and other federal agencies and trust funds 968.7 1.047.8 1.153.5 1.257.1 1.257.1 1.254.7 1,316.6 16 Federal Reserve Banks 281.8 302.5 334.2 374.1 374.1 369.3 389.0 17 Private investors 2.563.2 2.839.9 3,047.7 3,168.0 3.168.0 3,239.1 3,244.6 18 Commercial banks 232.5 294.4 322.2 290.6 290.6 303.5 305.0 19 Money market funds 80.0 79.7 80.8 67.6 67.6 67.7 58.7 20 Insurance companies 181.8 197.5 234.5 242.8 242.8 259.0 260.0 21 Other companies 150.8 192.5 213.0 226.5 226.5 230.3 227.7 n.a. 22 State and local treasuries 485.1 476.7 508.9 443.3 443.3 415.2 415.0 Individuals 23 Savings bonds 138.1 157.3 171.9 180.5 180.5 181.4 182.6 24 Other securities 125.8 131.9 137.9 152.5 152.5 161.4 161.6 25 Foreign and international' 491.7 549.7 623.0 688.6 688.6 729.6 783.7 26 Other miscellaneous investors6 677.4 760.2 755.4 875.6 875.6 891.0 850.4 1. Includes (not shown separately) securities issued to the Rural Electrification Administra- 5. Consists of investments of foreign balances and international accounts in the United tion. depository bonds, retirement plan bonds, and individual retirement bonds. States. 2. Nonmarketable series denominated in dollars, and series denominated in foreign cur- 6. Includes savings and loan associations, nonprofit institutions, credit unions, mutual rency held by foreigners. savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury 3. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. deposit accounts, and federally sponsored agencies. 4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual SOURCES. U.S. Treasury Department, data by type of security, Monthly Statement of the holdings; data for other groups are Treasury estimates. Public Debt of the United States: data by holder. Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1995 1995, week ending Item Aug. Sept. Oct. Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 44,812 48,527 45,143 42,343 43,957 48,337 4411,,333311 49,500 6611,,111100 7766,,664477 5511,,774477 4422,,884499 Coupon securities, by maturity 2 Five years or less 88,513 89,933 90,911 85,213 76,008 89,090 98,718 106,331 102,544 84,443 93,256 94,036 3 More than five years 51,000 49,005 49,652 45,286 45,596 56,156 48,121 51,779 48,882 49,291 57,066 39,249 4 Federal agency 21,039 24,972 24,297 27,231 21,597 23,937 24.225 26,012 27,912 24,657 26,202 25,154 5 Mortgage-backed 27,588 29,574 30,050 23,234 41,187 34,205 20,949 27,425 56,101 35,160 22,998 23,445 By type of counterparty With interdealer broker 6 U.S. Treasury 107,723 110,578 107,881 100,148 96,410 112,366 109,545 120,333 123,848 116,751 116,031 98,686 7 Federal agency 757 661 712 757 723 583 666 881 881 909 664 624 8 Mortgage-backed 8,587 11,127 11,589 88,,551111 1155,,004466 1133,,227777 88,,336699 11 11,,449922 1177,,775544 1144,,556688 8,887 88,,663388 With other 9 U.S. Treasury 76,601 76,887 77,825 72,694 69,151 81,217 78,625 87,277 88,689 93,629 86,038 77,448 10 Federal agency 20,282 24,311 23,586 26,475 20,875 23,354 23,559 25,131 27,031 23,748 25,538 24,530 11 Mortgage-backed 19,001 18,447 18,461 14,723 26,141 20,928 12,579 15,933 38,347 20,592 14,111 14,806 FUTURES TRANSACTIONS' By type of deliverable security 12 U.S. Treasury bills 764 990 606 390 378 585 743 908 1,025 915 527 577 Coupon securities, by maturity 1133 Five years or less 1,747 2,070 1,577 1,519 1,452 1,448 1,742 1,733 1,832 1,444 2,570 2,390 14 More than five years 13,206 16,073 14,681 15,109 13,858 15,320 13,797 15,696 13,829 15,234 16,203 11,456 15 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 16 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 17 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 n.a. 0 Coupon securities, by maturity 18 Five years or less 2,262 1,602 2,129 2,162 2,497 2,092 1,486 2,492 2,518 1,422 1,664 1,001 19 More than five years 4,032 4,257 4,714 3,907 4,808 6,107 3,764 4,647 4,580 5,049 5,778 2,691 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 1,123 897 983 1,201 1,243 1,334 572 571 1,922 1,270 1,015 310 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of mortgage- Major changes in the report form filed by primary dealers induced a break in the dealer data backed agency securities include purchases and sales for which delivery is scheduled in thirty business series as of the week ending July 6, 1994. days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • February 1996 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1995 1995, week ending Item Aug. Sept. Oct. Oct. 4 Oct. 11 Oct. 18 Oct. 25 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Positions" NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 5.044 7,744 -64 -2,108 -349 3,679 373 -3,245 883 27,013 11,183 Coupon securities, by maturity 2 Five years or less 778 7,088 14,476 13,277 7,447 8,169 23,422 20,395 18,006 6,063 7,567 3 More than five years -17,786 -17.370 -15,124 -16.905 -15,567 -14,084 -16,029 -13,579 -10,673 -11,541 -7,770 Federal agency 19,128 21,837 24,009 25,168 23,566 22,486 25.158 24,188 26,453 21,572 20,156 5 Mortgage-backed 30.040 32,596 36,240 32,985 38.074 38,282 36,631 33,432 34,810 34,594 35,726 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -3,539 -2,437r -3,462 -2,074r -2.100 -3,439 -3,963 -5,420 -4,751 -4,674 -5,451 Coupon securities, by maturity 7 Five years or less 2,329 952 -930 961 -376 -646 -1,244 -2,804 -4,437 -4,570 -4,849 8 More than five years -1,283 -8,204 -13,744 -8,879 -11.754 -14,280 -14,853 -17,390 -18,632 -17,461 -15,764 9 Federal agency 0 0 0 0 0 0 0 0 0 0 0 10 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By type of deliverable security 11 U.S. Treasury bills 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0 Coupon securities, by maturity 12 Five years or less 2.239 2,175 3,044 2,089 3.962 3,613 3,620 1.272 1,809 1,238 -528 13 More than five years -2,883 -3.203 -427 -2.163 -1,606 -1,516 389 2,424 3,644 4,679 2,076 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 1,567 1,111 1,591 1,758 891 2,063 1,751 1,557 1,326 988 1,116 Financing5 Reverse repurchase agreements 16 Overnight and continuing 222,242r 2l9,028r 228,244 213,015 221,956 234,243 224,810 242,740 248,826 259,558 232,402 17 Term 408,236r 420,162r 420,502 408,953r 406,176 429,820 434,248 418,006 452,959 378,518 394,835 Securities borrowed 18 Overnight and continuing 156,456 164,552 162,865 166,763 162,135 161,437 163,402 162,158 152,704 156,442 148,923 19 Term 62,392 64,797 65,506 63,271 63,979 67,270 64,833 67,506 72,258 63,511 62,110 Securities received as pledge 20 Overnight and continuing 2,063 2,547 2.377 2.538 2,568 2,693 2,097 2,006 1,895 1,888 1,808 21 Term 112 87 43 42 49 33 51 37 52 112 22 Repurchase agreements 22 Overnight and continuing 478,290r 496,262r 509,729 497,264r 504.181 512,491 498,152 534,796 545,731 558,030 460,497 23 Term 344,994r 356,122r 356,682 335,226r 334,171 363,840 375,729 366,676 399,698 328.008 401,933 Securities loaned 24 Overnight and continuing 4,631 6,312 6,037 6,004 5,995 6,165 5,856 6,170 6,197 7,112 4.969 25 Term 2,102 2,478 2,776 3,012 2,896 2,738 2,682 2,631 2,711 2,855 2.991 Securities pieclged 26 Overnight and continuing 28.712 33,053 29,767 31,518 29,612 30,590 28,724 29,037 28,422 27,629 26,633 27 Term 3.062 3,643 3,892 3,880 3,929 3,864 3,851 3,939 3,762 4,096 5.066 Collateralized loans 28 Overnight and continuing 17.000' I4,676r 16,631 I4,258r 17,308 18,191 16,557 15.692 17,533 20,719 15,199 29 Term n.a. 2,528 2,367 2,528 1,184 2.958 2,767 2,486 1,942 2,361 2.164 MEMO: Matched book6 Securities in 30 Overnight and continuing 210.359' 217,342r 232,058 222,846 226.323 237,029 232,898 238.111 242,689 260,282 228,587 31 Term 388,104' 404.573r 410,727 397.195r 396,212 421,379 421,296 411.926 448,559 374,658 396.538 Securities out 32 Overnight and continuing 308,231r 318,299r 321,797 31 1,954' 319,842 334.957 312,779 325.805 335,422 341,193 265,471 33 Term 290,927' 299,735r 302,123 281,991 283.389 305,638 317,140 315,781 340,912 281,757 343,859 1. Data for positions and financing are obtained from reports submitted to the Federal 4. Futures positions reflect standardized agreements arranged on an exchange. All futures Reserve Bank of New York by the U.S. government securities dealers on its published list of positions are included regardless of time to delivery. primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar 5. Overnight financing refers to agreements made on one business day that mature on the days of the report week are assumed to be constant. Monthly averages are based on the next business day; continuing contracts are agreements that remain in effect for more than one number of calendar days in the month. business day but have no specific maturity and can be terminated without advance notice by 2. Securities positions are reported at market value. either party; term agreements have a fixed maturity of more than one business day. Financing 3. Net outright positions include immediate and forward positions. Net immediate posi- data are reported in terms of actual funds paid or received, including accrued interest. tions include securities purchased or sold (other than mortgage-backed agency securities) that 6. Matched-book data reflect financial intermediation activity in which the borrowing and have been delivered or are scheduled to be delivered in five business days or less and lending transactions are matched. Matched-book data are included in the financing break- "when-issued" securities that settle on the issue date of offering. Net immediate positions for downs given above. The reverse repurchase and repurchase numbers are not always equal mortgage-backed agency securities include securities purchased or sold that have been because of the "matching" of securities of different values or different types of collateralizadelivered or are scheduled to be delivered in thirty business days or less. tion. Forward positions reflect agreements made in the over-the-counter market that specify NOTE, "n.a." indicates that data are not published because of insufficient activity. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Major changes in the report form filed by primary dealers induced a break in the dealer data securities are included when the time to delivery is more than five business days. Forward series as of the week ending July 6, 1994. contracts for mortgage-backed agency securities are included when the time to delivery is more than thirty business days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1995 AAggeennccyy 11999911 11999922 11999933 11999944 May June July Aug. Sept. 1 Federal and federally sponsored agencies 442,772 483,970 570,711 738,928 771,524 785,982 788,323 801,819 811,182 7 Federal agencies 41,035 41,829 45,193 39,186 38,720 38,412 39,403 39,581 38,030 3 Defense Department1 7 7 6 6 6 6 6 6 6 4 Export-Import Bank"" 9,809 7.208 5,315 3,455 3,156 2,652 2,652 2,652 2,512 5 Federal Housing Administration4 397 374 255 116 78 81 84 83 87 6 Government National Mortgage Association certificates of participation' n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. / Postal Service6 8,421 10,660 9,732 8,073 7,615 7,615 8,615 8,615 7,265 8 Tennessee Valley Authority 22,401 23,580 29,885 27,536 27,865 28,058 28,046 28.225 28,160 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 401,737 442,141 523.452 699,742 732,804 747,570 748,920 762,238 773,152 11 Federal Home Loan Banks 107,543 114,733 139,512 205,817 218,131 223,089 223.100 228,299 236,851 12 Federal Home Loan Mortgage Corporation 30,262 29,631 49,993 93,279 107,686 108,484 111,427 112.341 11 1,610 13 Federal National Mortgage Association 133.937 166,300 201,112 257,230 263,023 270,937 268,458 275.271 277,192 14 Farm Credit Banks8 52,199 51,910 53,123 53,175 54.054 53.915 54,635 54,979 55,800 15 Student Loan Marketing Association9 38,319 39,650 39,784 50,335 49,993 51,268 51,325 51,323 51.672 16 Financing Corporation1" 8.170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation1" 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29.996 MEMO 19 Federal Financing Bank debt13 185,576 154,994 128,187 103,817 92,739 90,638 88,892 86,776 84,297 Lending to federal and federally sponsored agencies 20 Export-Import Bank 9,803 7,202 5,309 3,449 3,150 2,646 2,646 2,646 2,506 21 Postal Service6 8,201 10,440 9,732 8,073 7,615 7,615 8,615 8,615 7,265 22 Student Loan Marketing Association 4,820 4,790 4,760 n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 10,725 6,975 6,325 3,200 3.200 3,200 3,200 3,200 3,200 24 United States Railway Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending14 25 Farmers Home Administration 48,534 42,979 38,619 33,719 30,759 30,004 28,419 27,384 26,845 26 Rural Electrification Administration 18,562 18,172 17,578 17,392 17,313 17,256 17,274 17,276 17,276 27 Other 84,931 64,436 45,864 37,984 30,702 29,917 28,738 27,655 27,205 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize (he Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. I, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform. claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration, the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration, and the Veterans Administralion. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation; therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • February 1996 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1995 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. Nov. 1 AH issues, new and refunding1 226,818 279,945 153,950 8,666r 12,323r 17,230r ll,575r 12,450r 9,698r 13,336r 16,580 By type of issue 2 General obligation 78,611 90,599 54,404 3,536 4,332 5,755 3,529 4,519 3,635 6,252 6,084 3 Revenue 136,580 189,346 99,546 5,016 7,472 12,201 6,248 7,789 6,129 7,322 10,496 By type of issuer 4 State 24,874 27,999 19,186 994 1,315 1,329 645 617 1,510 1,825 1,491 5 Special district or statutory authority2 138,327 178,714 95,896 5,814 8,039 11,382 7,399 7,491 5,821 7,831 10,477 0 Municipality, county, or township 63,617 73,232 38,868 1,744 2,450 5,245 1,733 4,200 2,433 3,918 4,612 7 Issues for new capital 101,865 91,434 105,972 6,184r 8,830r 13,083r 8,740r 6,685r 6,339r 7,828r 11,439 By use of proceeds 8 Education 18,852 16,831 21,267 1,863 2,594 2,494 1,924 1,180 1,929 1,725 3,250 9 Transportation 14,357 9,167 10,836 615 606 3,127 1,926 869 446 631 1,452 10 Utilities and conservation 12,164 12,014 10,192 345 1,282 1,235 485 1,504 563 1,794 756 11 Social welfare 16,744 13,837 20,289 1,547 1,738 2,062 1,333 1,421 1,228 1,587 2,253 12 Industrial aid 6,188 6,862 8,161 391 416 411 500 201 627 203 404 13 Other purposes 33,560 32,723 35,227 1,736 1,770 4,467 2,216 1,967 2,050 2,114 3,324 1. Par amounts of long-term issues based on date of sale. SOURCES. Securities Data Company beginning January 1993; Investment 2. Includes school districts. Dealer's Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1995 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999922 11999933 11999944 oorr iissssuueerr Mar. Apr. May June July Aug. Sept.r Oct. 1 All issues' 559,827 754,969 n.a. 40,101r 30,787r 54,789r 56,333r 33,796r 47,601r 56,217 49,729 2 Bonds2 471,502 641,498 n.a. 37,178 26,909 48,579 48,585 29,208r 41,363r 49,000 41,500 By type of offering 3 Public, domestic 378,058 486,879 365,050 32,990 22,756 40,052 42,398 23,147 32,351 43,000 35,000 4 Private placement, domestic3 65,853 116,240 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 27,591 38,379 56,238 4,188 4,153 8,528 6,186 6,06 r 9,012r 6,000 6,500 By industry group 6 Manufacturing 82,058 88,002 31,981 2,174 2,876 2,139 6,330 4,456 3,982 4,580 3,022 7 Commercial and miscellaneous 43,111 60,293 27,900 1,978 1,815 6,085 4,528 1,078 2,480 2,182 3,240 8 Transportation 9.979 10,756 4.573 403 800 955 657 10 133 908 187 9 Public utility 48,055 56,272 11,713 959 331 2,530 2,661 498 620 1,819 2,444 10 Communication 15,394 31,950 11,986 411 336 1,767 1,745 1,520 1,089 2,787 2,807 11 Real estate and financial 272,904 394,226 333,135 31,254 20,752 35,103 32,664 21,646r 33,058r 36,724 30,300 12 Stocks" 88,325 113,472 n a- 2,923r 3,878r 6,210r 7,748r 4,588r 6,238r 7,217 8,229 Bv type of offering 13 Public preferred 21,339 18.897 12.432 205 656 1,507 73 r 753 1,234 1,012 807 14 Common 57,118 82,657 47.881 2,718r 3,222r 4,703r 7,017r 3,835r 5,005r 6,205 7,422 15 Private placement3 9,867 11,917 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. BY industry group 16 Manufacturing 22,723 22,271 1,013r 634 2,370r 2,345r 1,306 2,254r 2,355 1,689 17 Commercial and miscellaneous 20,231 25,761 n.a. 907 2,152r 1,134r 2,747' l,968r l,496r 2,660 4,343 18 Transportation 2,595 2,237 60 48 101 0 0 87r 99 39 19 Public utility 6,532 7,050 137 141 185 209 133 91 190 60 20 Communication 2,366 3,439 20 0 0 0 64 0 47 0 21 Real estate and financial 33,879 52,021 786 903 2,322 2,447r 1,117 2,304r 1,865 2,097 1. Figures represent gross proceeds of issues maturing in more than one year; they are the 2. Monthly data cover only public offerings. principal amount or number of units calculated by multiplying by the offering price. Figures 3. Monthly data are not available. exclude secondary offerings, employee stock plans, investment companies other than closed- SOURCES. Beginning July 1993, Securities Data Company and the Board of Governors of end, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include the Federal Reserve System. ownership securities issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1995 IItteemm 11999933 11999944 Mar. Apr. May June July Aug. Sept.' Oct. 1 Sales of own shares" 851,885 841,286 69,898 68,294 70,798 74,749 76,081 72,113 68,694 72,762 2 Redemptions of own shares 567,881 699,823 60,970 59.957 57,033 61,932 56,344 57.610 54.473 56,173 3 Net sales3 284,004 141,463 8.928 8,337 13,765 12,817 19,736 14,503 14,221 16,588 4 Assets4 1,510,209 1,550,490 1,657,370 1,710,280 1,769,287 1,808,753 1,880,754 1,908,525 1,962,817 1,963,344 5 Cash5 100.209 121,296 121,424 124,092 128,375 122,461 126,340 127.173 127,446 134,034 6 Other 1,409,838 1,429,195 1,535.946 1,586,187 1,640,913 1,686.292 1,754,415 1,781.352 1,835,371 1.829,310 1. Data on sales and redemptions exclude money market mutual funds but include 4. Market value at end of period, less current liabilities. limited-maturity municipal bond funds. Data on asset positions exclude both money market 5. Includes all U.S. Treasury securities and other short-term debt securities. mutual funds and limited-maturity municipal bond funds. SOURCE. Investment Company Institute. Data based on reports of membership, which 2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains comprises substantially all open-end investment companies registered with the Securities and distributions and share issue of conversions from one fund to another in the same group. Exchange Commission. Data reflect underwritings of newly formed companies after their 3. Excludes sales and redemptions resulting from transfers of shares into or out of money initial offering of securities. market mutual funds within the same fund family. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1993 1994 1995 AAccccoouunntt 11999922 11999933 11999944 04 Ql Q2 Q3 Q4 01 Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 405.1 485.8 542.7 533.9 508.2 546.4 556.0 560.3 569.7 581.1 n.a. 2 Profits before taxes 395.9 462.4 524.5 501.7 483.5 523.1 538.1 553.5 570.6 574.1 n.a. 3 Profits-tax liability 139.7 173.2 202.5 191.5 184.1 201.7 208.6 215.6 220.0 220.4 n.a. 4 Profits after taxes 256.2 289.2 322.0 310.2 299.4 321.4 329.5 337.9 350.7 353.6 n.a. 5 Dividends 171.1 191.7 205.2 194.6 196.3 202.5 207.9 213.9 217.1 219.9 223.7 6 Undistributed profits 85.1 97.5 1 16.9 115.6 103.0 1 18.9 121.6 124.0 133.5 133.8 n.a. 7 Inventory valuation -6.4 -6.2 -19.5 -6.5 -12.3 -14.1 -19.6 -32.1 -39.0 -28.2 -7.4 8 Capital consumption adjustment 15.7 29.5 37.7 38.8 37.0 37.4 37.5 38.8 38.1 35.2 35.4 SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • February 1996 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1994 1995 AAccccoouunntt 11999922 11999933 11999944 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS 1 Accounts receivable, gross2 491.8 482.8 551.0 494.5 511.3 524.1 551.0 568.5 586.9 594.7r 2 Consumer 118.3 116.5 134.8 120.1 124.3 130.3 134.8 135.8 141.7 146.2 3 Business 301.3 294.6 337.6 302.3 313.2 317.2 337.6 351.9 361.8 362.4r 4 Real estate 72.2 71.7 78.5 72.1 73.8 76.6 78.5 80.8 83.4 86.1 5 LESS: Reserves for unearned income 53.2 50.7 55.0 51.2 51.9 51.1 55.0 58.9 62.1 61.2 6 Reserves for losses 16.2 11.2 12.4 11.6 12.1 12.1 12.4 12.9 13.7 13.8 7 Accounts receivable, net 422.4 420.9 483.5 431.7 447.3 460.9 483.5 496.7 511.1 5l9.7r 8 AH other 142.5 170.9 183.4 171.2 174.6 177.2 183.4 194.6 198.1 198.1 9 Total assets 564.9 591.8 666.9 602.9 621.9 638.1 666.9 691.4 709.2 717.8r LIABILITIES AND CAPITAL 10 Bank loans 37.6 25.3 21.2 24.2 23.3 21.6 21.2 21.0 21.5 21.8 11 Commercial paper 156.4 159.2 184.6 165.9 171.2 171.0 184.6 181.3 181.3 178.0 Debt 12 Owed to parent 39.5 42.7 51.0 41.1 44.7 50.0 51.0 52.5 57.5 59.0 13 Not elsewhere classified 196.3 206.0 235.0 211.7 219.6 228.2 235.0 254.4 264.4 272.1 14 All other liabilities 68.0 87.1 99.5 90.5 89.9 95.0 99.5 102.5 102.1 101.7 15 Capital, surplus, and undivided profits 67.1 71.4 75.7 69.5 73.2 72.3 75.7 79.7 82.5 84.4 16 Total liabilities and capital 564.9 591.8 666.9 602.9 621.9 638.1 666.9 691.4 709.2 717.1 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses, and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. 1.52 DOMESTIC FINANCE COMPANIES Consumer, Real Estate, and Business Credit1 Millions of dollars, amounts outstanding, end of period 1995 May June July Aug. Sept. Oct. Seasonally adjusted 1 Total 539,996 545,533 614,784 653,872 660,714 661,656 671,807r 674,898r 681,790 2 Consumer 157,579 160,349 176,198 186,584 188,666 189,898 191,806r 193,206r 193,792 3 Real estate2 72,473 71,965 78,770 82,843 84,198 84,886 85,756 86,121 87,266 4 309,944 313,219 359,816 384,446 387,850 386,872 394,245r 395,57 lr 400,732 Not seasonally adjusted 5 Total 544,691 550,751 620,975 653,503 661,910 658,140 665,535r 672,304r 681,127 6 Consumer 159.558 162,770 178,999 184,616 187,303 187,803 190,830r 193,266r 194,102 / Motor vehicles 57,259 56,057 61,609 63,689 65,162 65,861 68,27 lr 68,857 70,816 8 Other consumer1 61,020 60,396 73,221 75,943 76.581 76,302 77,251 77,345 77,865 9 Securitized motor vehicles4 29,734 36,024 31,897 32,117 32,135 32,381 31,551 31,693r 30,096 10 Securitized other consumer4 11,545 10,293 12,272 12,867 13,425 13,259 13,757 15,371 15,325 11 Real estate2 72,243 71,727 78,479 82,735 83,351 84,987 86,107 86,128 87,471 12 312,890 316,254 363,497 386,152 391,256 385,350 388,598r 392,910r 399,554 13 Motor vehicles 89,011 95,173 118,197 128,312 127,487 124,005 124,444r I25,053r 129,207 14 Retail5 20,541 18,091 21,514 21,228 22,142 22,953 23,883r 25,006 25,743 15 Wholesale6 29,890 31,148 35,037 39,512 36,989 32,147 31,392 29,313 32,209 16 Leasing 38,580 45,934 61,646 67,572 68,356 68,905 69,169 70,734r 71,255 17 Equipment 151,424 145,452 157,953 165,219 169,995 170,253 170,825 171,239 172,657 18 Retail 33,521 35,513 39,680 41,264 42.008 42,541 43,121 42,823 43,697 19 Wholesale6 8,680 8,001 9,678 10,643 11,725 12,111 12,278 12,210 11,581 20 Leasing 109,223 101,938 108,595 113,312 116,262 115,601 115,426 116,206 117,379 21 Other business7 60,856 53,997 61,495 64,099 64,365 63,869 64,94 lr 66,111 66,238 22 Securitized business assets4 11,599 21,632 25,852 28,522 29,409 27,223 28,388 30,507r 31,452 23 Retail 1,120 2,869 4,494 5,224 4,989 4,784 4,587 4,818r 4,586 24 Wholesale 5,756 10,584 14,826 17,676 18,310 16,469 17,986 19,773r 20,390 25 Leasing 4,723 8,179 6,532 5,622 6,110 5,970 5,815 5,916 6,476 1. Includes finance company subsidiaries of bank holding companies but not of retailers 4. Outstanding balances of pools upon which securities have been issued; these balances and banks. Data are before deductions for unearned income and losses. Data in this table also are no longer carried on the balance sheets of the loan originator. appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside 5. Passenger car fleets and commercial land vehicles for which licenses are required. front cover. 6. Credit arising from transactions between manufacturers and dealers, that is, floor plan 2. Includes all loans secured by liens on any type of real estate, for example, first and junior financing. mortgages and home equity loans. 7. Includes loans on commercial accounts receivable, factored commercial accounts, and 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of receivable dealer capital; small loans used primarily for business or farm purposes; and consumer goods such as appliances, apparel, general merchandise, and recreation vehicles. wholesale and lease paper for mobile homes, campers, and travel trailers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A37 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1995 IItteemm 11999922 11999933 11999944 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 158.1 163.1 170.4 178.1 181.7 169.4 170.4 174.8 174.3 178.6 2 Amount of loan (thousands of dollars) 118.1 123.0 130.8 136.3 137.7 130.4 130.6 131.8 133.0 136.4 3 Loan-to-price ratio (percent) 76.6 78.0 78.8 78.7 78.2 78.9 78.9 78.1 77.8 78.9 4 Maturity (years) 25.6 26.1 27.5 28.4 27.2 26.6 27.3 28.0 26.6 27.7 5 Fees and charges (percent of loan amount)2 1.60 1.30 1.29 1.30 1.18 1.18 1.12 1.20 I.I 1 1.22 Yield (percent per year) 6 Contract rate1 7.98 7.03 7.26 7.79 7.54 7.58 7.56 7.50 7.39 7.27 7 Effective rate1'3 8.25 7.24 7.47 7.99 7.73 7.78 7.75 7.69 7.58 7.46 8 Contract rate (HUD series)4 8.43 7.37 8.58 7.84 7.80 7.98 7.91 7.78 7 62 n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.46 7.46 8.68 8.03 8.00 8.09 8.03 8.03 7.61 n.a. 10 GNMA securities6 7.71 6.65 7.96 7.53 7.24 7.27 7.49 7.26 7,16 7.01 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 158,119 190,861 222,057 228,078 232,534 235,882 238,850 241.378 246.234 249.928 1? FHA/VA insured 22,593 23,857 28,377 28,576 28,886 28,761 28.640 28.515 28.442 28,424 13 Conventional 135,526 167,004 194,499 200,004 204,022 207,227 210,063 212.652 21 7.469 221,027 14 Mortgage transactions purchased (during period) 75,905 92,037 62,389 3,787 6,575 5,657 5,688 5.002 7.443 6,148 Mortgage commitments (during period) 15 Issued7 74,970 92,537 54,038 6,085 5,605 4,512 6,284 6.019 6,732 6,038 16 To sell8 10,493 5,097 1,820 28 9 26 53 9 0 10 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 33,665 55,012 72,693 81,008 85,532 88,874 91.544 94.989 99.758 102.997 18 FHA/VA insured 352 321 276 257 253 250 246 281 276 271 19 Conventional 33,313 54,691 72,416 80,751 85,278 88,624 91.298 94,708 99,482 102.726 Mortgage transactions (during period) 20 Purchases 191,125 229,242 124,697 10,982 7,001 7,316 9,594 11,458 1 1.092 9,989 21 Sales 179,208 208,723 117,110 10,479 5,326 6,074 8,161 10.239 9,856 9,011 22 Mortgage commitments contracted (during period)9 261,637 274,599 136,067 4.549 6,198 8.106 10.578 12.469 10,388 1 1,339 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics • February 1996 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dolors, end of period 1994 1995 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999911 11999922 11999933 Q2 Q3 Q4 Ql Q2P 1 All holders 3,926,337 4,056,233 4,229,592 4,315,839 4,375,155 4,426,606 4,474,715 4,527,103 By type of property 2 One- to tour-family residences 2,781,327 2,963,391 3,149,634 3,235,939 3,292,201 3,344,791 3,383,139 3,431,841 3 Multifamily residences 306.551 295,417 291,985 295,013 297,650 296,902 298,230 300,629 4 Commercial 759,154 716,687 706,780 702,821 702,679 701,941 709,942 710,266 5 79,305 80,738 81,194 82,066 82,625 82,971 83,404 84,367 By type of holder 6 Major financial institutions 1.846.726 1,769,187 1,767,835 1,763,227 1,786,074 1,815,810 1,841,815 1,865,145 / Commercial banks" 876.100 894,513 940,444 956,840 981,365 1,004,280 1,024,854 1,052,882 8 One- to tour-family 483,623 507,780 556,538 569,512 592,021 611,697 625,378 648,815 9 Multifamily 36,935 38,024 38,635 38,609 38,004 38,916 39,746 40,519 10 Commercial 337,095 328,826 324,409 326,800 328,931 331,100 336,795 339,983 11 Farm 18,447 19,882 20,862 21,918 22,408 22.567 22,936 23,564 12 Savings institutions3 705,367 627,972 598,330 585,671 587,545 596,198 601,777 598,876 13 One- to four-family 538,358 489,622 469,959 462,219 466,704 477,499 483,625 481.434 14 Multifamily 79,881 69,791 67,362 66,281 65,532 64,400 63,778 64,373 15 Commercial 86,741 68,235 60,704 56,872 55,017 54,011 54,085 52,788 lb Farm 388 324 305 299 291 289 288 281 1 / Lite insurance companies 265,258 246,702 229,061 220,716 217,165 215,332 215,184 213,387 18 One- to tour-family 11,547 1 1,441 9,458 8,122 7,984 7,910 7,892 7,817 19 Multifamily 29,562 27,770 25,814 24,958 24,534 24,306 24,250 24,019 20 Commercial 214,105 198,269 184,305 178,194 175,168 173,539 173,142 171,493 21 Farm 10,044 9,222 9,484 9,442 9,479 9,577 9,900 10,058 22 Federal and related agencies 266,146 286.263 328,598 329,725 329,304 373,491 319,770 315,211 23 Government National Mortgage Association 19 30 22 12 12 6 15 10 24 One- to tour-family 19 30 15 12 12 6 15 10 23 Multifamilv 0 0 7 0 0 0 0 0 26 Fanners Home Administration4 41.713 41,695 41,386 41,370 41,587 41,781 41,857 41,917 27 One- to four-family 18,496 16,912 15,303 14,459 14,084 13,826 13,507 13,217 28 Multifamily 10,141 10,575 10,940 11.147 11,243 11,319 11,418 1 1,512 29 Commercial 4,905 5,158 5,406 5,526 5,608 5,670 5,807 5,949 30 Farm 8,171 9.050 9,739 10.239 10,652 10,966 11.124 11,239 31 Federal Housing and Veterans' Administrations 10,733 12,581 12,215 11,169 10,533 10,964 10,890 10,098 32 One- to four-tamily 4,036 5,153 5,364 4,826 4,321 4,753 4,715 4,838 33 Multifamily 6.697 7,428 6,85 1 6,343 6,212 6,211 6,175 5,260 34 Resolution Trust Corporation 45.822 32,045 17,284 13,908 15,403 10,428 9,342 6,456 33 One- to four-tamily 14.535 12,960 7,203 6.045 6,998 5,200 4,755 2,870 36 Multifamily 15,018 9,621 5,327 4,230 4,569 2,859 2,494 1,940 3/ Commercial 16.269 9,464 4.754 3,633 3,836 2,369 2,092 1,645 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 0 14,112 11,407 9,169 7,821 6,730 6,039 40 One- to tour-family 0 0 2,367 1,706 1,241 1.049 840 731 41 Multifamily 0 0 1,426 1,701 2,090 1,595 1,310 1,135 42 Commercial 0 0 10,319 8,000 5,838 5,177 4,580 4,173 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 1 12.283 137,584 166,642 175.377 177,200 178,059 177,615 178,462 45 One- to four-family 100.387 124,016 151,310 159,437 161,255 162,160 161,780 162,674 46 Multifamily 1 1,896 13,568 15,332 15,940 15,945 15,899 15,835 15,788 4/ Federal Land Banks 28,767 28,664 28,460 28,475 28,538 28,555 28,065 28,005 48 One- to four-tamily 1.693 1,687 1.675 1,675 1,679 1,671 1,651 1,648 49 Farm 27,074 26,977 26,785 26,800 26,859 26,885 26,414 26,357 50 Federal Home Loan Mortgage Corporation 26,809 33,665 48.476 48,007 46,863 45.876 45,256 44,224 51 One- to four-family 24.125 31,032 45,929 45,427 44,208 43,046 42,122 40,963 52 Multifamily 2,684 2,633 2,547 2,580 2,655 2,830 3,134 3,261 53 Mortgage pools or trusts5 1.250,666 1.425,546 1,553,818 1,652,999 1,682,421 1,703,076 1,714,357 1,737,483 54 Government National Mortgage Association 425,295 419,516 414,066 435,709 444.976 450,934 454,401 457,101 35 One- to four-family 415.767 410,675 404,864 426,363 435,511 441,198 444,632 446,855 36 Multifamily 9,528 8.841 9,202 9,346 9,465 9,736 9,769 10,246 3/ Federal Home Loan Mortgage Corporation 359,163 407,514 446,029 479,555 482,987 486.480 488,723 496,139 38 One- to four-tamily 351.906 401,525 441,494 475,733 479,539 483,354 485,643 493,105 39 Multifamily 7.257 5,989 4,535 3.822 3,448 3,126 3,080 3,034 60 Federal National Mortgage Association 371,984 444,979 495,525 514,855 523,512 530,343 533,262 543,669 61 One- to four-family 362,667 435,979 486,804 505.730 514,375 520,763 523,903 533,091 62 Multifamily 9.317 9.000 8,721 9,125 9,137 9,580 9,359 10,578 63 Farmers Home Administration4 47 38 28 72 20 19 14 13 64 One- to four-family 1 1 8 5 4 4 3 2 2 63 Multifamily 0 0 0 0 0 0 0 0 66 Commercial 19 17 13 10 9 9 7 6 67 Farm 17 13 10 8 7 7 5 5 68 Private mortgage conduits 94,177 153,499 198.171 222,858 230,926 235,300 237,957 240,561 69 One- to four-tamily 84,000 132,000 164,000 179,500 182,300 183,600 184,400 187,000 /O Multifamily 3.698 6.305 8.701 1 1,514 13,891 14,925 15,743 15,745 /I Commercial 6,479 15.194 25,469 31.844 34,735 36,774 37,814 37,816 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others6 562,798 575.237 579,341 569,887 577,356 584,229 598,772 609,264 /4 One- to tour-family 370,157 382.572 387,345 375,167 379.964 387,057 398,279 406,770 /3 Multifamily 83,937 85,871 86,586 89,417 90,924 91,201 92,137 93,218 /6 Commercial 93.541 91,524 91,401 91,943 93,538 93,292 95,620 96,413 // Farm 15,164 15,270 14,009 13,360 12,929 12,681 12,736 12,863 1. Multifamily debt refers to loans on structures of five or more units. 6. Other holders include mortgage companies, real estate investment trusts, state and local 2. Includes loans held by nondeposit trust companies but not loans held by bank trust credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and departments. finance companies. 3. Includes savings banks and savings and loan associations. SOURCE. Based on data from various institutional and government sources. Separation of 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from nonfarm mortgage debt by type of property, if not reported directly, and interpolations and FmHA mortgage pools to FmHA mortgage holdings in I986:Q4 because of accounting extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. changes by the Farmers Home Administration. Line 69 from Inside Mortgage Securities. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A39 1.55 CONSUMER INSTALLMENT CREDIT1 Millions of dollars, amounts outstanding, end of period 1995' HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999922 11999933 11999944 May June July Aug. Sept. Oct. Seasonally adjusted 1 Total 730,847 790,351 902,853 959,117 970,608 979,375 989,695 993,843 1,004,393 2 Automobile 257,436 280,566 317,237 327,993 330,709 337,127 339,770 341,155 344,749 3 Revolving 258,081 286,588 334,511 366,094 372,350 375,272 379,669 382,094 387,187 4 Other2 215,331 223,197 251,106 265,030 267,549 266,976 270,255 270,595 272,457 Not seasonally adjusted 5 Total 748,057 809,440 925,000 950,620 964,256 971,965 990,428 996,525 1,004,639 By major holder 6 Commercial banks 330,088 367,566 427,851 434,863 437,498 441,165 451,784 449,502 451,232 7 Finance companies 118,279 116,453 134,830 139,632 141,743 142,163 145,522 146.202 148,681 8 Credit unions 91,694 101,634 119,594 123,975 125,313 126,500 128,424 129,027 130,304 9 Savings institutions 37,049 37,855 38,468 38,101 38,400 38,907 38,634 38,894 38,500 10 Nonfinancial business3 49,561 55,296 60,957 55,914 56,349 56,360 55,723 54,177 54,607 11 Pools of securitized assets4 121,386 130,636 143,300 158,135 164,953 166,870 170,341 178,723 181,315 By major type of credit 12 Automobile 258,226 281,458 318,213 326,546 330,739 336,154 341,716 344,401 347,591 13 Commercial banks 109,623 122,000 141,851 142,865 144,761 146,149 148,549 148,901 150,782 14 Finance companies 57,259 56,057 61,609 63,689 65,162 65,861 68,271 68,857 70,816 15 Pools of securitized assets4 33,888 39,481 34,918 36,244 36,690 37,071 36,681 37,476 36,453 16 Revolving 271,850 301,837 352,266 361,273 367,602 370,520 377,784 380,341 384,632 17 Commercial banks 132,966 149,920 180,183 183,006 182,950 184,245 189.163 185,572 186,463 18 Nonfinancial business3 44,466 50,125 55,341 50,595 51,006 50,520 48,976 48,968 49,358 19 Pools of securitized assets4 74,921 79,878 94,376 106,811 112,609 114,338 117,729 123,749 126,739 20 Other 217,981 226,145 254,521 262,801 265,881 264,734 269,467 271,845 272,416 21 Commercial banks 87,499 95,646 105,817 108,992 109,787 110,771 114,072 115,029 113,987 22 Finance companies 61,020 60,396 73,221 75,943 76,581 76,302 77,251 77,345 77,865 23 Nonfinancial business3 5,095 5,171 5,616 5,319 5,309 5,283 5,286 5,271 5,249 24 Pools of securitized assets4 12,577 11,277 14,006 15,080 15,654 15,461 15,931 17,498 18,123 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 3. Includes retailers and gasoline companies. extended to individuals that is scheduled to be repaid (or has the option of repayment) in two 4. Outstanding balances of pools upon which securities have been issued; these balances or more installments. Data in this table also appear in the Board's G.19 (421) monthly are no longer carried on the balance sheets of the loan originator. statistical release. For ordering address, see inside front cover. 5. Totals include estimates for certain holders for which only consumer credit totals are 2. Comprises mobile home loans and all other installment loans that are not included in available. automobile or revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT' Percent per year except as noted 1995 IItteemm 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks' 1 48-month new car 9.29 8.09 8.12 n.a. 9.78 n.a. n.a. 9.44 n.a. n.a. 2 24-month personal 14.04 13.47 13.19 n.a. 14.03 n.a. n.a. 13.84 n.a. n.a. Credit card plan 3 All accounts n.a. n.a. 15.69 n.a. 16.15 n.a. n.a. 15.98 n.a. n.a. 4 Accounts assessed interest n.a. n.a. 15.77 n.a. 16.23 n.a. n.a. 15.94 n.a. n.a. Auto finance companies 5 New car 9.93 9.48 9.79 11.74 11.43 11.08 11.01 10.85 10.75 10.89 6 Used car 13.80 12.79 13.49 14.99 14.78 14.63 14.35 14.23 14.12 14.06 OTHER TERMS3 Maturity (months) 7 New car 54.0 54.5 54.0 54.6 54.4 53.9 54.1 53.5 53.4 54.6 8 Used car 47.9 48.8 50.2 52.2 52.2 52.3 52.4 52.3 52.3 52.3 Loan-to-value ratio 9 New car 89 91 92 92 92 92 92 92 92 92 10 Used car 97 98 99 100 99 99 100 99 100 99 Amount financed (dollars) 11 New car 13,584 14,332 15,375 16,029 16,155 16,083 16,086 16,056 16,402 16,430 12 Used car 9,119 9,875 10,709 11,505 11,396 11,518 11,637 11,662 11,725 11,883 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals that is scheduled to be repaid (or has the option of repayment) in two 3. At auto finance companies, or more installments. Data in this table also appear in the Board's G.I9 (421) monthly statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 DomesticN onfinancialS tatistics • February 1996 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1993 1994 1995 Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 635.3 478.7 540.6 618.5 602.4 660.0 650.3 527.8 607.6 623.9 842.4 819.6 BY sector and instrument 2 U.S. government 246.9 278.2 304.0 256.1 155.9 274.2 210.5 122.9 133.6 156.4 271.8 193.6 3 Treasury securities 238.7 292.0 303.8 248.3 155.7 266.5 211.8 118.2 130.7 162.1 273.0 192.0 4 Budget agency issues and mortgages 8.2 -13.8 .2 7.8 .2 7.7 -1.3 4.7 2.9 -5.7 -1.2 1.6 5 Private 388.4 200.4 236.7 362.4 446.6 385.8 439.7 404.9 474.0 467.5 570.6 626.0 BY instrument 6 Tax-exempt obligations 48.7 68.7 31.1 75.5 -29.9 27.3 13.1 -28.4 -46.4 -57.9 -57.4 -20.3 7 Corporate bonds 47.1 78.8 67.6 75.2 22.0 67.4 35.4 35.9 14.2 2.7 41.4 119.5 8 Mortgages 199.5 161.4 123.9 155.7 187.2 148.5 166.4 170.3 221.0 191.3 241.1 163.2 9 Home mortgages 185.6 163.8 179.5 183.9 195.2 184.6 194.7 164.4 220.8 200.7 207.2 153.3 10 Multifamily residential 4.8 -3.1 -11.2 -6.0 1.7 -2.3 .4 4.4 6.6 -4.6 3.6 8.0 11 Commercial 9.3 .4 -45.5 -22.6 -11.4 -33.9 -29.3 -1.4 -8.6 -6.2 28.6 -1.9 12 Farm -.3 .4 I.I .5 1.8 .2 .6 2.9 2.2 1.4 1.7 3.9 13 Consumer credit 15.6 -14.8 7.3 58.9 121.2 110.1 68.7 122.8 131.6 161.5 100.3 147.9 14 Bank loans n.e.c .4 -40.9 -13.8 4.8 71.4 26.9 69.1 53.6 89.5 73.6 139.8 102.2 15 Commercial paper 9.7 -18.4 8.6 10.0 21.4 3.8 8.2 16.4 33.8 27.2 1.1 44.8 16 Other loans 67.5 -34.4 11.9 -17.7 53.2 1.8 78.9 34.3 30.2 69.2 104.3 68.6 By borrowing sector 17 Household 218.5 171.1 214.2 280.9 353.5 335.0 307.4 308.0 392.1 406.4 324.4 324.7 18 Nontinancial business 123.9 -33.3 .8 18.5 137.1 33.8 135.2 144.2 135.2 133.8 302.4 328.8 19 Farm 2.3 2.1 1.0 2.0 2.8 3.6 2.9 8.7 2.2 -2.4 .6 6.8 20 Nonfarm noncorporate 10.1 -27.9 -43.5 -24.6 15.5 -15.3 11.8 12.7 18.1 19.2 71.8 32.0 21 Corporate 111.4 -7.4 43.2 41.1 118.8 45.5 120.6 122.7 115.0 117.0 230.0 289.9 22 State and local government 46.0 62.6 21.7 63.0 -44.0 17.0 -2.9 -47.2 -53.4 -72.6 -56.2 -27.5 23 Foreign net borrowing in United States 23.9 14.8 22.6 68.8 -20.3 41.8 -98.0 -37.0 20.6 32.9 64.3 36.0 24 Bonds 21.4 15.0 15.7 81.3 7.1 60.1 -2.6 -17.4 20.8 27.7 13.5 46.7 25 Bank loans n.e.c -2.9 3.1 2.3 .7 1.4 -6.3 6.0 -4.5 4.7 -.5 8.1 5.6 26 Commercial paper 12.3 6.4 5.2 -9.0 -27.3 -12.0 -101.8 -5.2 -8.1 5.9 37.9 -9.6 27 U.S. government and other loans -7.0 -9.8 -.6 -4.2 -1.6 .0 .5 -9.9 3.3 -.2 4.9 -6.7 28 Total domestic plus foreign 659.2 493.4 563.3 687.3 582.1 701.8 552.3 490.9 628.2 656.8 906.7 855.6 Financial sectors 29 Total net borrowing by financial sectors 202.6 151.7 239.2 289.5 456.3 364.3 520.6 370.8 412.1 521.9 315.3 381.7 BY instrument 30 U.S. government-related 167.4 145.7 155.8 164.2 284.3 143.3 336.8 254.7 243.1 302.4 125.4 186.1 31 Government-sponsored enterprises securities 17.1 9.2 40.3 80.6 176.9 53.4 160.0 146.6 152.1 249.0 62.9 127.2 32 Mortgage pool securities 150.3 136.6 1 15.6 83.6 112.1 89.9 196.0 108.1 91.0 53.4 62.5 59.0 33 Loans from U.S. government -.1 .0 .0 .0 -4.8 .0 - 19.2 .0 .0 .0 .0 .0 34 Private 35.3 6.0 83.4 125.3 172.1 221.0 183.8 116.1 169.0 219.5 189.9 195.6 35 Corporate bonds 46.0 66.8 80.5 1 18.6 1 10.2 140.8 158.1 95.4 95.9 91.2 150.3 145.3 36 Mortgages .6 .5 .6 3.6 9.8 5.5 9.8 12.4 12.0 4.9 5.1 4.8 37 Bank loans n.e.c 4.7 8.8 2.2 -14.0 -12.3 -18.0 -9.9 -27.7 -11.9 .5 17.8 10.1 38 Open market paper 8.6 -32.0 -.7 -6.2 41.6 76.0 36.6 3.6 42.3 84.0 40.3 33.3 39 Loans from Federal Home Loan Banks -24.7 -38.0 .8 23.3 22.8 16.8 - 10.8 32.3 30.7 38.8 -23.6 2.2 BY borrowing sector 40 Government-sponsored enterprises 17.0 9.1 40.2 80.6 172.1 53.4 140.8 146.6 152.1 249.0 62.9 127.2 41 Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 89.9 196.0 108.1 91.0 53.4 62.5 59.0 42 Private 35.3 6.0 83.4 125.3 172.1 221.0 183.8 116.1 169.0 219.5 189.9 195.6 43 Commercial banks -.7 -1 1.7 8.8 5.6 10.0 1.2 2.0 12.4 22.8 2.9 9.3 18.4 44 Bank holding companies -27.7 -2.5 2.3 8.8 10.3 12.2 3.5 10.1 11.5 16.0 13.4 20.3 45 Funding corporations 15.4 -6.5 13.2 2.9 24.2 36.7 48.8 -17.2 47.2 17.9 62.3 10.4 46 Savings institutions -30.2 -44.5 -6.7 1 I.I 12.8 8.8 -5.6 5.8 14.8 36.1 -19.2 -6.9 47 Credit unions .0 .0 .0 .2 .2 .1 .1 .2 .5 .2 -.3 -.1 48 Life insurance companies .0 .0 .0 .2 .3 .4 .0 .0 .0 1.3 .0 .1 49 Finance companies 23.8 17.7 -1.6 .2 50.2 16.3 63.3 67.0 16.9 53.7 82.5 61.1 50 Mortgage companies .0 -2.4 8.0 -1.0 - 1 1.5 -10.4 -21.6 -18.2 -7.0 1.0 8.2 1.2 51 Real estate investment trusts (REITs) .8 1.2 .3 3.4 13.7 6.1 14.5 15.3 18.8 6.3 6.9 6.4 52 Brokers and dealers 1.5 3.7 2.7 12.0 .5 29.3 -9.9 .3 -7.6 19.3 -29.5 -.1 53 Issuers of asset-backed securities (ABSs) 52.3 51.0 56.3 81.8 61.2 120.3 88.7 40.5 51.1 64.7 56.3 84.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 11999944 Q4 Ql Q2 Q3 Q4 Ql Q2 All sectors 54 Total net borrowing, all sectors 861.8 645.2 802.5 976.8 1,038.4 1,066.1 1,072.9 861.7 1,040.3 1,178.7 1,222.0 1,237.3 55 U.S. government securities 414.4 424.0 459.8 420.3 444.9 417.5 566.5 377.6 376.7 458.8 397.2 379.8 56 Tax-exempt securities 48.7 68.7 31.1 75.5 -29.9 27.3 13.1 -28.4 -46.4 -57.9 -57.4 -20.3 57 Corporate and foreign bonds 114.5 160.6 163.8 275.1 139.3 268.3 190.9 113.8 130.9 121.7 205.1 311.5 58 Mortgages 200.1 161.9 124.5 159.2 197.0 154.0 176.2 182.7 233.0 196.2 246.2 168.0 59 Consumer credit 15.6 -14.8 7.3 58.9 121.2 110.1 68.7 122.8 131.6 161.5 100.3 147.9 60 Bank loans n.e.c 2.2 -29.1 -9.4 -8.5 60.6 2.6 65.1 21.4 82.2 73.6 165.6 117.9 61 Open market paper 30.7 -44.0 13.1 -5.1 35.7 67.7 -57.0 14.8 68.0 117.1 79.3 68.5 62 Other loans 35.8 -82.2 12.1 1.3 69.6 18.6 49.4 56.8 64.3 107.8 85.6 64.1 Funds raised through mutual funds and corporate equities 63 Total net share issues 19.7 215.4 296.0 440.1 162.1 429.5 343.7 207.9 159.6 -62.9 49.6 146.6 64 Mutual funds 65.3 151.5 211.9 320.0 138.3 287.7 236.4 144.0 165.4 7.6 104.5 178.5 65 Corporate equities -45.6 64.0 84.1 120.1 23.7 141.8 107.3 63.9 -5.7 -70.5 -54.9 -31.9 66 Nonfinancial corporations -63.0 18.3 27.0 21.3 -44.9 21.5 -9.6 -2.0 -50.0 -118.0 -68.4 -73.2 67 Financial corporations 10.0 15.1 26.4 38.3 26.0 41.0 48.4 20.0 21.2 14.3 .7 5.6 68 Foreign shares purchased in United States 7.4 30.7 30.7 60.5 42.7 79.3 68.5 45.9 23.1 33.2 12.8 35.7 I. Data in this table also appear in the Board's Z. I (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic NonfinancialS tatistics • February 1996 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 11999944 Q4 Ql Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 861.8 645.2 802.5 976.8 1,038.4 1,066.1 1,072.9 861.7 1,040.3 1,178.7 1,222.0 1,237.3 2 Private domestic nonfinancial sectors 189.9 -7.4 75.9 15.8 234.9 104.4 288.8 270.4 141.9 238.5 -33.8 -238.2 i Households 157.0 -39.6 74.2 3.1 317.4 196.7 337.0 385.9 186.2 360.3 148.3 -157.1 4 Nonfarm noncorporate business -1.7 -3.7 -1.1 -3.2 -2.0 -3.5 -3.6 -1.8 -1.9 -.5 .9 .9 5 Nonfinancial corporate business -3.7 6.7 29.6 14.5 24.1 12.2 19.9 12.2 25.1 39.2 6.2 26.6 6 State and local governments 38.3 29.2 -26.8 1.5 -104.6 -101.0 -64.4 -125.9 -67.6 -160.5 -189.2 -108.6 / U.S. government 33.7 10.5 -11.9 -18.4 -24.2 -7.7 -46.5 -16.2 -9.3 -24.7 -13.0 -25.7 8 Foreign 85.5 26.6 101.2 121.7 132.1 204.2 123.9 64.3 132.2 208.1 260.1 340.8 Y Financial sectors 552.7 615.4 637.3 857.7 695.6 765.2 706.7 543.2 775.6 756.8 1,008.8 1,160.5 1 1 0 1 G Fe o d v e e r r a n ll m y e r n e t la s t p e o d n m so o re rt d g a e g n e t e p rp o r o i l s s e s 15 1 0 3 . . 3 9 13 1 6 5 . . 6 2 1 6 1 9 5 . . 0 6 9 8 0 3 . . 2 6 1 1 2 1 3 2 .3 .1 7 8 1 9 . . 2 9 1 9 9 2 6 . . 4 0 1 1 0 0 8 1 . . 1 1 1 9 2 1 5 . . 0 6 1 5 7 3 4 . . 4 3 6 1 2 2 . . 5 2 5 86 9 . . 7 0 12 Monetary authority 8.1 31.1 27.9 36.2 31.5 38.5 48.8 17.9 24.0 35.4 24.8 12.6 13 Commercial banking 125.1 80.8 95.3 142.2 162.0 188.1 184.7 109.1 191.1 163.3 359.6 292.8 14 U.S. commercial banks 94.9 35.7 69.5 149.6 148.1 197.3 120.6 128.4 164.4 178.9 177.5 212.6 15 Foreign banking offices 28.4 48.5 16.5 -9.8 11.2 -6.5 59.0 -21.5 22.1 -15.0 182.3 75.4 16 Bank holding companies -2.8 -1.5 5.6 .0 .9 -4.8 3.1 .2 2.7 -2.4 -1.9 3.2 17 Banks in U.S. affiliated areas 4.5 -1.9 3.7 2.4 1.9 2.1 2.1 1.9 1.9 1.8 1.7 1.7 18 Funding corporations 16.1 15.8 23.5 18.1 13.8 42.6 19.5 33.5 25.1 -23.0 22.3 -36.6 19 Thrift institutions -154.0 -123.5 -61.3 -1.7 34.9 -13.3 13.6 42.6 52.8 30.5 29.4 5.4 2 20 1 O Li t f h e e r i n i s n u s r u a r n a c n e c e c o c m om pa p n a i n e i s e s 2 9 6 4 . . 5 4 3 83 2 . . 2 6 7 1 9 2 . . 1 8 1 3 0 3 5 . . 3 1 5 2 8 1 . . 1 1 3 8 2 6 . . 1 4 4 2 7 7 . . 6 9 20 6 . . 8 4 8 1 0 6 . . 5 0 9 1 8 9 . . 1 7 10 1 9 3 . . 9 0 9 1 1 4 . . 1 9 22 Private pension funds 17.2 85.7 37.3 40.2 -42.4 -60.1 -97.7 -30.7 -17.6 -23.6 97.6 138.9 23 State and local government retirement funds 34.9 46.0 34.4 25.5 60.8 36.9 72.9 69.3 26.3 74.6 64.5 65.7 24 Finance companies 28.8 -9.8 5.0 -9.0 68.2 22.6 72.1 49.8 58.9 91.8 95.7 56.1 25 Mortgage companies .0 11.2 .1 .0 -22.9 -13.3 -43.5 -36.3 -14.0 2.1 16.5 2.3 26 Mutual funds 41.4 90.3 123.7 169.6 7.6 138.9 61.7 9.4 24.2 -64.8 -10.1 2255..22 27 Closed-end funds .2 14.7 17.4 10.2 3.5 7.7 8.3 3.2 1.4 1.0 .8 11..11 28 Money market funds 80.9 30.1 1.3 14.6 28.5 56.9 -45.0 32.2 50.0 76.7 25.5 138.2 29 Real estate investment trusts (REITs) -.7 -.7 1.1 .6 4.7 .2 6.6 6.6 5.5 .2 2.5 3.1 30 Brokers and dealers 2.8 17.5 -6.9 9.2 -34.0 -82.8 -55.7 -52.6 -19.3 -8.6 30.7 124.2 31 Asset-backed securities issuers (ABSs) 51.1 48.9 53.8 80.5 57.8 113.7 87.9 42.8 46.3 54.3 49.8 78.3 32 Bank personal trusts 15.9 10.0 8.0 9.5 7.1 8.9 8.9 10.2 7.7 1.4 1.6 1.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 861.8 645.2 802.5 976.8 1,038.4 1,066.1 1,072.9 861.7 1,040.3 1,178.7 1,222.0 1,237.3 Other financial sources 34 Official foreign exchange 2.0 —5.9 -1.6 .8 -5.8 2.2 -.2 -14.6 .2 -8.6 17.8 10.3 35 Special drawing rights certificates 1.5 .0 -2.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 36 Treasury currency 1.0 .0 .2 .4 .7 .7 .7 .6 .8 .7 .7 .7 3/ Life insurance reserves 25.7 25.7 27.3 35.2 20.1 35.5 20.0 10.6 23.8 26.2 25.4 25.3 38 Pension fund reserves 165.1 360.3 249.7 309.2 103.6 251.6 6.8 102.6 155.4 149.6 393.6 311.2 39 Interbank claims 35.0 -3.4 43.5 50.9 85.5 4.7 173.0 165.8 -55.0 58.0 27.4 119.4 40 Checkable deposits and currency 43.6 86.3 113.5 117.3 -10.1 81.9 173.1 -66.1 -89.6 -57.7 117.7 103.0 41 Small time and savings deposits 63.7 1.5 -57.2 -70.3 -40.5 -36.6 2.5 -62.4 -57.2 -44.9 52.9 134.3 42 Large time deposits -66.1 -58.5 -73.2 -23.5 19.0 13.7 -39.6 -4.4 81.2 39.0 95.1 44.0 43 Money market fund shares 70.3 41.2 3.9 19.2 45.4 61.1 -35.1 68.5 49.9 98.4 16.6 275.4 44 Security repurchase agreements -24.2 -16.5 35.5 65.5 84.3 -14.4 23.0 176.4 82.8 54.8 167.0 127.5 45 Foreign deposits 38.2 -16.7 -7.2 -11.7 30.1 32.8 16.0 16.9 23.2 64.3 5.0 10.0 46 Mutual fund shares 65.3 151.5 211.9 320.0 138.3 287.7 236.4 144.0 165.4 7.6 104.5 178.5 47 Corporate equities -45.6 64.0 84.1 120.1 23.7 141.8 107.3 63.9 -5.7 -70.5 -54.9 -31.9 48 Security credit 3.5 51.4 4.2 61.9 -2.3 86.5 29.9 -17.7 -62.3 40.9 -15.1 12.6 49 Trade debt 37.0 3.8 41.1 50.0 93.4 54.4 36.6 96.3 115.8 125.0 74.7 65.3 50 Taxes payable -4.8 -6.2 8.5 4.6 3.0 4.9 15.3 -14.4 8.2 3.0 20.9 -5.8 51 Noncorporate proprietors' equity -27.1 -4.2 18.3 -11.7 -30.0 -27.5 -49.5 -25.0 -17.2 -28.3 -40.8 -13.1 52 Investment in bank personal trusts 29.7 16.1 -7.1 1.6 18.8 17.6 15.0 24.7 23.6 11.9 21.0 22.3 53 Miscellaneous 139.0 203.4 270.2 315.6 269.6 389.9 386.7 223.1 320.1 148.7 534.7 298.8 54 Total financial sources 1,414.5 1,539.0 1,765.9 2,332.1 1,885.5 2,454.6 2,190.7 1,750.6 1,803.7 1,796.9 2,786.1 2,925.1 Floats not included in assets ( —) 55 U.S. government checkable deposits 3.3 -13.1 .7 -1.5 -4.8 -15.5 -2.4 -1.4 15.2 -30.7 13.9 -19.0 56 Other checkable deposits 8.5 4.5 1.6 -1.3 -2.8 -6.2 .6 -1.1 -6.2 -4.3 -5.0 -5.4 31 Trade credit 9.1 9.7 4.5 14.2 5.6 10.5 -27.7 16.0 29.4 4.9 -18.0 -5.4 Liabilities not identified as assets ( —) 58 Treasury currency .2 -.6 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.1 59 Interbank claims 1.6 26.2 -4.9 4.2 -2.7 24.0 -29.1 5.3 11.6 1.2 -3.9 9.7 60 Security repurchase agreements -24.0 6.2 27.9 82.5 48.6 22.8 13.5 117.0 66.8 -3.0 87.6 -32.8 61 Taxes payable .1 1.3 14.0 1.0 -2.0 -8.6 .8 1.4 1.0 -11.1 -16.3 30.6 62 Miscellaneous -32.2 -31.6 -51.8 -44.9 29.1 23.0 41.3 -170.0 149.4 95.6 -90.2 -122.3 63 Total identified to sectors as assets 1,447.9 1,536.4 1,774.2 2,278.1 1,814.7 2,404.6 2,194.1 1,783.4 1,536.9 1,744.5 2,818.2 3,069.9 I. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F.6 and F.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Q4 Ql Q2 03 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 11,184.1 11,727.9 12,368.3 12,970.5 12,368.3 12,490.8 12,620.8 12,776.8 12,970.5 13,140.6 13,343.2 By sector and instrument 2 U.S. government 2,776.4 3,080.3 3,336.5 3,492.3 3,336.5 3,387.7 3.395.4 3,432.3 3.492.3 3.557.9 3.583.5 3 Treasury securities 2,757.8 3,061.6 3,309.9 3,465.6 3.309.9 3,361.4 3,368.0 3,404.1 3,465.6 3,531.5 3,556.7 4 Budget agency issues and mortgages 18.6 18.8 26.6 26.7 26.6 26.3 27.4 28.2 26.7 26.4 26.8 5 Private 8,407.7 8,647.6 9,031.8 9,478.2 9,031.8 9.103.1 9,225.3 9.344.5 9,478.2 9,582.7 9,759.7 By instrument 6 Tax-exempt obligations 1,108.6 1,139.7 1,215.2 1,185.2 1,215.2 1,217.6 1.209.9 1,200.9 1,185.2 1,170.2 1,164.6 7 Corporate bonds 1,086.9 1,154.5 1,229.7 1,251.7 1,229.7 1,238.6 1,247.5 1,251.1 1,251.7 1,262.1 1,292.0 8 Mortgages 3,920.0 4,043.9 4,220.6 4,407.9 4,220.6 4,248.3 4,301.3 4,357.6 4,407.9 4,454.7 4,505.9 9 Home mortgages 2,780.0 2,959.6 3,149.6 3,344.8 3,149.6 3,184.4 3,235.9 3.292.2 3.344.8 3,383.1 3.431.8 10 Multifamily residential 304.8 293.6 289.0 290.7 289.0 289.1 290.2 291.9 290.7 291.6 293.6 11 Commercial 755.8 710.3 700.8 689.4 700.8 693.5 693.1 691.0 689.4 696.5 696.1 12 Farm 79.3 80.4 81.2 83.0 81.2 81.3 82.1 82.6 83.0 83.4 84.4 13 Consumer credit 797.2 804.6 863.5 984.7 863.5 859.6 891.6 929.4 984.7 988.7 1,026.6 14 Bank loans n.e.c 686.0 672.1 677.0 748.3 677.0 687.4 706.3 725.4 748.3 776.9 807.9 15 Commercial paper 98.5 107.1 117.8 139.2 117.8 129.9 135.7 138.7 139.2 149.8 162.5 16 Other loans 710.6 725.7 707.9 761.1 707.9 721.7 733.1 741.5 761.1 780.3 800.3 By borrowing sector 17 Household 3,784.5 3,998.7 4,285.8 4,638.9 4.285.8 4,326.3 4,417.7 4.520.9 4,638.9 4,684.8 44,,778800..11 18 Nontinancial business 3,712.1 3,716.1 3,750.1 3,887.5 3,750.1 3,782.5 3.825.8 3,852.5 3,887.5 3,960.8 4,050.0 19 Farm 135.0 136.0 138.3 141.2 138.3 136.7 141.5 143.1 141.2 138.9 143.4 20 Nonfarm noncorporate 1,116.9 1,075.0 1,050.4 1,065.8 1,050.4 1,052.6 1,056.3 1,060.2 1.065.8 1,083.0 1.091.5 21 Corporate 2,460.2 2,505.1 2,561.5 2,680.5 2,561.5 2.593.2 2,628.0 2,649.2 2,680.5 2,738.9 2,815.1 22 State and local government 911.1 932.8 995.9 951.8 995.9 994.3 981.9 971.1 951.8 937.1 929.6 23 Foreign credit market debt held in United States 299.7 313.1 381.9 361.6 381.9 356.5 348.7 352.4 361.6 376.8 387.1 24 Bonds 130.5 146.2 227.4 234.6 227.4 226.8 222.4 227.6 234.6 237.9 249.6 25 Bank loans n.e.c 21.6 23.9 24.6 26.1 24.6 26.2 25.1 26.3 26.1 28.2 29.6 26 Commercial paper 81.8 77.7 68.7 41.4 68.7 43.3 42.0 39.9 41.4 50.9 48.5 27 U.S. government and other loans 65.9 65.3 61.1 59.6 61.1 60.3 59.2 58.6 59.6 59.8 59.5 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 11,483.8 12,041.0 12,750.2 13,332.2 12,750.2 12,847.3 12,969.5 13,129.2 13,332.2 13,517.4 13,730.4 Financial sectors 29 Total credit market debt owed by financial sectors 2,751.0 3,005.7 3,300.6 3,762.2 3,300.6 3,426.5 3,525.7 3,626.8 3,762.2 3,834.1 3,936.3 By instrument 30 U.S. government-related 1.564.2 1,720.0 1,884.1 2,168.4 1,884.1 1,961.5 2,030.5 2,089.8 2,168.4 2.192.7 2.245.0 31 Government-sponsored enterprises securities 402.9 443.1 523.7 700.6 523.7 563.7 600.3 638.3 700.6 716.3 748.1 32 Mortgage pool securities 1,156.5 1,272.0 1,355.6 1,467.8 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1.496.9 33 Loans from U.S. government 4.8 4.8 4.8 .0 4.8 .0 .0 .0 .0 .0 .0 34 Private 1,186.8 1,285.8 1,416.5 1,593.8 1,416.5 1,465.1 1,495.2 1,537.0 1,593.8 1.641.4 1,691.3 35 Corporate bonds 638.9 725.8 844.4 952.1 844.4 882.0 906.6 930.4 952.1 990.2 1,027.3 36 Mortgages 4.8 5.4 8.9 18.7 8.9 11.4 14.5 17.5 18.7 20.0 21.2 37 Bank loans n.e.c 78.4 80.5 66.5 54.3 66.5 62.4 55.3 52.4 54.3 57.1 59.4 38 Open market paper 385.7 394.3 393.5 442.8 393.5 408.8 410.3 420.5 442.8 454.1 462.8 39 Loans from Federal Home Loan Banks 79.1 79.9 103.1 125.9 103.1 100.4 108.5 116.2 125.9 120.0 120.5 By borrowing sector 40 Government sponsored enterprises 407.7 447.9 528.5 700.6 528.5 563.7 600.3 638.3 700.6 716.3 774488..11 41 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1.496.9 42 Private financial sectors 1,186.8 1,285.8 1,416.5 1,593.8 1,416.5 1,465.1 1,495.2 1.537.0 1,593.8 1,641.4 1.691.3 43 Commercial banks 65.0 73.8 79.5 89.5 79.5 78.4 82.1 87.5 89.5 90.3 95.4 44 Bank holding companies 112.3 114.6 123.4 133.6 123.4 124.2 126.8 129.6 133.6 137.0 142.0 45 Funding corporations 139.1 161.6 169.9 199.3 169.9 190.7 191.5 200.6 199.3 221.2 229.1 46 Savings institutions 94.6 87.8 99.0 111.7 99.0 97.6 99.0 102.7 111.7 106.9 105.2 47 Credit unions .0 .0 7 .5 .2 .3 .3 .4 .5 .4 .3 48 Life insurance companies .0 .0 .2 .6 .2 .3 .3 .3 .6 .6 .6 49 Finance companies 391.9 390.4 390.5 440.7 390.5 401.9 414.2 420.9 440.7 456.7 467.3 50 Mortgage companies 22.2 30.2 29.2 17.8 29.2 23.8 19.3 17.5 17.8 19.8 20.1 51 Real estate investment trusts (REITs) 13.6 13.9 17.4 31.1 17.4 21.0 24.8 29.5 31.1 32.8 34.4 52 Brokers and dealers 19.0 21.7 33.7 34.3 33.7 31.3 31.3 29.4 34.3 26.9 26.8 53 Issuers of asset-backed securities (ABSs) 329.1 391.7 473.5 534.7 473.5 495.7 505.8 518.6 534.7 548.8 570.0 All sectors 54 Total credit market debt, domestic and foreign. . . . 14,234.8 15,046.7 16,050.7 17,094.3 16,050.7 16,273.8 16,495.2 16,756.0 17,094.3 17,351.5 17,666.7 55 U.S. government securities 4,335.7 4,795.5 5,215.8 5,660.7 5,215.8 5.349.2 5,425.9 5.522.1 5,660.7 5,750.6 5.828.5 56 Tax-exempt securities 1,108.6 1,139.7 1,215.2 1,185.2 1,215.2 1,217.6 1,209.9 1,200.9 1.185.2 1,170.2 1,164.6 57 Corporate and foreign bonds 1.856.3 2,026.4 2,301.5 2,438.4 2,301.5 2,347.3 2,376.5 2,409.1 2,438.4 2,490.2 2,568.9 58 Mortgages 3,924.8 4,049.3 4,229.6 4,426.6 4,229.6 4.259.7 4,315.8 4.375.2 4,426.6 4.474.7 4,527.1 59 Consumer credit 797.2 804.6 863.5 984.7 863.5 859.6 891.6 929.4 984.7 988.7 1.026.6 60 Bank loans n.e.c 785.9 776.6 768.2 828.8 768.2 776.0 786.7 804.0 828.8 862.1 896.9 61 Open market paper 565.9 579.0 580.0 623.5 580.0 582.0 587.9 599.2 623.5 654.7 673.8 62 Other loans 860.4 875.7 877.0 946.6 877.0 882.5 900.8 916.2 946.6 960.1 980.4 I. Data in this table also appear in the Board's Z. I (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • February 1996 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES' Billions of dollars except as noted, end of period 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Q4 Ql Q2 Q3 Q4 Ql Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 14,234.8 15,046.7 16,050.7 17,094.3 16,050.7 16,273.8 16,495.2 16,756.0 17,094.3 17,351.5 17,666.7 2 Private domestic nonfinancial sectors 2,240.1 2,320.1 2,351.5 2,623.2 2,351.5 2,397.5 2,450.6 2,497.3 2,623.2 2,586.1 2,511.4 3 Households 1,446.5 1,524.8 1,541.7 1,926.4 1,541.7 1,640.7 1,717.1 1,779.9 1,926.4 1,946.9 1,885.7 4 Nonfarm noncorporate business 44.1 42.9 39.7 37.7 39.7 38.8 38.4 37.9 37.7 38.0 38.2 5 Nonfinancial corporate business 196.2 225.8 244.9 269.0 244.9 240.0 245.9 249.7 269.0 259.8 269.3 6 State and local governments 553.3 526.5 525.2 390.0 525.2 478.0 449.2 429.8 390.0 341.5 318.1 1 US. government 246.9 235.0 230.7 206.5 230.7 219.0 215.4 212.6 206.5 203.2 197.1 8 Foreign 958.0 1,055.0 1,172.2 1,272.7 1,172.2 1,203.0 1,218.4 1,254.4 1,272.7 1,336.5 1,421.4 y Financial sectors 10,789.8 11.436.6 12,296.3 12,991.9 12,296.3 12,454.3 12,610.7 12,791.7 12,991.9 13,225.8 13,536.8 10 Government-sponsored enterprises 390.7 459.7 549.8 673.2 549.8 572.0 597.9 629.4 673.2 675.3 697.7 11 Federally related mortgage pools 1,156.5 1.272.0 1,355.6 1,467.8 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 12 Monetary authority 272.5 300.4 336.7 368.2 336.7 341.5 351.6 356.8 368.2 367.1 375.7 13 Commercial banking 2,853.3 2,948.6 3,090.8 3,252.8 3,090.8 3,120.2 3,156.2 3,204.1 3,252.8 3,326.1 3,407.9 14 U.S. commercial banks 2,502.5 2,571.9 2,721.5 2,869.6 2,721.5 2,743.8 2,780.3 2,822.3 2,869.6 2,906.5 2,963.5 15 Foreign banking offices 319.2 335.8 326.0 337.1 326.0 331.8 330.8 335.5 337.1 373.6 397.2 16 Bank holding companies 11.9 17.5 17.5 18.4 17.5 18.2 18.3 19.0 18.4 17.9 18.7 W Banks in U.S. affiliated areas 19.7 23.4 25.8 27.8 25.8 26.4 26.8 27.3 27.8 28.2 28.6 18 Funding corporations 51.5 75.0 93.1 106.9 93.1 97.9 106.3 112.6 106.9 112.4 103.3 iy Thrift institutions 1,192.6 1,134.5 1,132.7 1,167.6 1,132.7 1,134.2 1,146.1 1,160.3 1,167.6 1,173.1 1,175.7 20 Life insurance companies 1,199.6 1,278.8 1,383.9 1,442.1 1,383.9 1,402.7 1,407.6 1,428.1 1,442.1 1,476.8 1,503.0 21 Other insurance companies 376.6 389.4 422.7 443.8 422.7 429.6 434.8 438.8 443.8 447.0 450.8 22 Private pension funds 693.0 730.4 770.6 728.2 770.6 746.2 738.5 734.1 728.2 752.6 787.3 23 State and local government retirement funds 479.9 514.3 542.6 603.3 542.6 560.8 578.1 584.7 603.3 619.5 635.9 24 Finance companies 487.5 492.6 482.8 551.0 482.8 494.5 511.3 524.1 551.0 568.5 586.7 25 Mortgage companies 60.3 60.5 60.4 37.5 60.4 49.5 40.4 37.0 37.5 41.6 42.2 26 Mutual funds 450.5 574.2 743.8 751.4 743.8 759.2 761.5 767.6 751.4 748.9 755.2 27 Closed-end funds 50.3 67.7 77.9 81.4 77.9 80.0 80.8 81.1 81.4 81.6 81.9 28 Money market funds 402.7 404.1 418.7 447.1 418.7 422.0 421.4 423.4 447.1 467.9 494.0 29 Real estate investment trusts (REITs) 7.0 8.1 8.6 13.3 8.6 10.3 11.9 13.3 13.3 13.9 14.7 30 Brokers and dealers 124.0 117.1 126.3 92.3 126.3 112.4 99.3 94.5 92.3 100.0 131.0 31 Asset-backed securities issuers (ABSs) 317.8 377.9 458.4 516.1 458.4 480.3 491.0 502.6 516.1 528.6 548.2 32 Bank personal trusts 223.5 231.5 240.9 248.0 240.9 243.2 245.7 247.7 248.0 248.4 248.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 14,234.8 15,046.7 16,050.7 17,094.3 16,050.7 16,273.8 16,495.2 16,756.0 17,094.3 17,351.5 17,666.7 Other liabilities 34 Official foreign exchange 55.4 51.8 53.4 53.2 53.4 56.4 54.9 55.5 53.2 64.1 67.1 35 Special drawing rights certificates 10.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 36 Treasury currency 16.3 16.5 17.0 17.6 17.0 17.1 17.3 17.5 17.6 17.8 18.0 3/ Life insurance reserves 405.7 433.0 468.2 488.4 468.2 473.2 475.9 481.8 488.4 494.7 501.0 38 Pension fund reserves 4,138.3 4,516.5 4,974.7 5,017.0 4,974.7 4,896.4 4,898.5 5,013.4 5,017.0 5,252.7 5,472.4 39 Interbank claims 96.4 132.6 183.9 270.3 183.9 215.8 230.7 243.1 270.3 266.3 267.0 40 Deposits at financial institutions 5,045.1 5,059.1 5,155.5 5,283.8 5,155.5 5,163.7 5,186.2 5,211.8 5,283.8 5,369.1 5,531.6 41 Checkable deposits and currency 1,020.9 1,134.4 1,251.7 1,241.6 1,251.7 1,220.5 1,229.7 1,204.8 1,241.6 1,193.5 1,245.4 42 Small time and savings deposits 2,350.7 2,293.5 2,223.2 2,182.7 2,223.2 2,233.8 2,214.1 2,198.7 2,182.7 2,206.3 2,235.5 43 Large time deposits 488.4 415.2 391.7 410.7 391.7 382.6 379.0 402.2 410.7 435.2 444.0 44 Money market fund shares 539.6 543.6 562.7 608.2 562.7 579.7 573.9 583.5 608.2 638.9 684.1 45 Security repurchase agreements 355.8 392.3 457.8 542.1 457.8 474.9 512.9 540.2 542.1 595.4 620.5 46 Foreign deposits 289.6 280.1 268.4 298.5 268.4 272.4 276.6 282.4 298.5 299.7 302.2 47 Mutual fund shares 813.9 1,042.1 1,446.3 1,562.9 1,446.3 1,483.9 1,506.9 1,587.7 1,562.9 1,607.2 1,747.1 48 Security credit 188.9 217.3 279.3 277.0 279.3 282.8 278.0 263.2 277.0 268.8 271.6 49 Trade debt 936.1 977.4 1,027.4 1,120.8 1,027.4 1,024.9 1,049.2 1,086.0 1,120.8 1,127.6 1,144.4 50 Taxes payable 71.2 79.6 84.2 87.3 84.2 89.2 82.0 86.3 87.3 93.5 88.5 51 Investment in bank personal trusts 608.3 629.6 660.9 670.0 660.9 655.2 650.1 671.5 670.0 707.2 745.7 52 Miscellaneous 2,991.9 3,176.7 3,430.7 3,746.3 3,430.7 3,560.9 3,600.2 3,701.5 3,746.3 3,872.5 3,907.9 53 Total liabilities 29,612.4 31,386.8 33,840.1 35,696.9 33,840.1 34,201.4 34,533.1 35,183.2 35,696.9 36,501.1 37,437.3 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 22.3 19.6 20.1 21.1 20.1 20.4 20.8 21.0 21.1 22.7 22.9 55 Corporate equities 4,863.6 5,462.9 6,278.5 6,293.4 6,278.5 6,142.6 5,965.8 6,228.7 6,293.4 6,835.8 7,393.0 36 Household equity in noncorporate business 2,448.7 2,413.7 2,425.4 2,512.8 2,425.4 2,474.2 2,502.7 2,526.6 2,512.8 2,525.7 2,528.5 Floats not included in assets ( —) 57 U.S. government checkable deposits 3.8 6.8 5.6 3.4 5.6 .3 .9 1.2 3.4 4.2 2.0 58 Other checkable deposits 40.4 42.0 40.7 38.0 40.7 36.3 38.7 30.6 38.0 32.3 33.7 59 Trade credit -130.6 -125.9 -107.1 -101.4 -107.1 -127.1 -134.2 -126.9 -101.4 -120.3 -133.0 Liabilities not identified as assets (-) 60 Treasury currency -4.7 -4.9 -5.1 -5.4 -5.1 -5.2 -5.2 -5.3 -5.4 -5.4 -5.4 61 Interbank claims -4.2 -9.3 -4.7 -6.5 -4.7 -7.7 -7.4 -3.4 -6.5 -2.7 -2.6 62 Security repurchase agreements 9.2 38.1 120.5 169.1 120.5 135.9 162.5 189.3 169.1 203.3 192.0 63 Taxes payable 17.8 25.2 26.2 24.2 26.2 15.5 21.3 22.0 24.2 6.6 21.2 64 Miscellaneous -320.7 -378.2 -457.3 -347.8 -457.3 -398.7 -387.1 -395.6 -347.8 -382.3 -390.3 65 Total identified to sectors as assets 37,336.0 39,689.2 42,945.3 44,750.6 42,945.3 43,189.2 43,332.9 44,247.7 44,750.6 46,149.7 47,664.3 I. Data in this table also appear in the Board's Z. I (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L.6 and L.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1987=100, except as noted 1995 MMeeaassuurree 11999922 11999933 11999944 Mar. Apr. May June July Aug. Sept.r Oct.r Nov. 1 Industrial production1 107.7r 111.5r 118.1 121.9r 121.4r 121.3r 121.4 121.5 122.7r 122.9 122.5 122.8 Market groupings 7 Products, total 106.4r no.or 115.6r 118.5r Wl.T 117.5r 117.9r 118.0r 119.2r 111199..44 111188..77 111199..00 3 Final, total I08.7r 112.7r 118.3r 121.5r 120.9r 120.6r 121. r I21.2r 122.4r 122.6 121.7 122.0 4 Consumer goods I06.0r I09.51" 113.7r 115.3r 114.4 114. Ir I14.8r 114.6r 115.9r 115.9 115.4 115.8 5 Equipment 112.5r 117.5r I25.3r 131,4r 131.3 I30.8r I31.2r 131.6r 132.9r 133.2 131.7 132.0 6 Intermediate 99.3r 101.8r I07.3r 109.2r 108.2r I08.2r I08.2r I08.5r I09.4r 109.7 109.8 109.7 7 Materials 109.7r 113.8r 122.0r 127.2r 127.0r I27.2r I26.8r I26.8r 128.1r 128.3 128.4 128.7 Industry groupings 8 Manufacturing I08.2r 112.3r 119.7 124.0r I23.5r 123.2 I23.3r 123.3' 124.2r 112244..99 124.7 112244..99 9 Capacity utilization, manufacturing (percent)2. . 79.5r 80.6r 83.3r 84.0r 83.3r 82.8' 82.6r 82.3r 82.6r 82.8 82.3 82.2 10 Construction contracts'1 97.5 105.2 114.2r 116.0 I08.0r 118.0 122.0r 118.0r 123.0r 119.0 114.0 113.0 11 Nonagricultural employment, total4 106.5 108.4 111.3 114.1 114.1 114.0 114.3 114.3 114.6 114.7 114.8 114.9 12 Goods-producing, total 94.2 94.3 95.6 98.8 98.6 98.2 98.2 97.9 97.9 97.9 97.9 97.8 13 Manufacturing, total 95.3 94.8 95.1 97.5 97.4 97.1 97.0 96.6 96.6 96.4 96.3 96.2 14 Manufacturing, production workers 94.9 94.9 96.1 99.1 99.0 98.6 98.3 97.8 97.9 97.7 97.6 97.4 15 Service-producing 110.5 112.9 116.3 119.0 119.0 119.1 119.4 119.6 119.9 120.1 120.1 120.4 16 Personal income, total 135.6 141.4 150.0 157.6 157.9 157.6 158.5 159.5 159.6 160.3 n.a. n.a. 17 Wages and salary disbursements 131.6 136.2 145.0 150.9 151.7 150.6 151.8 153.0 152.8 153.5 n.a. n.a. 18 Manufacturing 118.0 120.0 126.0 130.6 128.9 128.1 128.4 128.5 128.9 129.3 n.a. n.a. 19 Disposable personal income5 137.0 142.5 150.8 158.4 157.1 158.3 159.0 159.9 160.0 160.6 n.a. n.a. 20 Retail sales5 126.4 134.7 145.1 150.6 150.5 152.2 153.5 152.9 153.9 153.8 153.2 154.3 Prices6 21 Consumer (1982-84=100) 140.3 144.5 148.2 151.4 151.9 152.2 152.5 152.5 152.9 153.2 153.7 153.6 22 Producer finished goods (1982= 100) 123.2 124.7 125.5 127.1 127.6 128.1 128.2 128.21" 128.1 127.9 128.5 128.6 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 5. Based on data from U.S. Department of Commerce, Survey of Current Business. the ordering address, see the inside front cover. The latest historical revision of the industrial 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price production index and the capacity utilization rates was released in November 1995. See "A indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve Monthly Labor Review. Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series production index, see "Industrial Production: 1989 Developments and Historical Revision," mentioned in notes 3 and 6, can also be found in the Survey of Current Business. Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. Figures for industrial production for the latest month are preliminary, and many figures for 2. Ratio of index of production to index of capacity. Based on data from the Federal the three months preceding the latest month have been revised. See "Recent Developments in Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 3. Index of dollar value of total construction contracts, including residential, nonresiden- 411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987," tial, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. Division. 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers employees only, excluding personnel in the armed forces. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1995 CCaatteeggoorryy 11999922 11999933 11999944 Apr. May June July Aug. Sept.r Oct/ Nov. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 126,982 128,040 131,056 132,737 131,811 131,869 132,519 132,211 132,591 132,648 132,442 2 Nonagricultural industries1 114,391 116,232 119,651 121,478 120,962 121,034 121,550 121,417 121,867 121,944 121,734 3 Agriculture 3,207 3,074 3,409 3,594 3,357 3,451 3,409 3,362 3,273 3,455 3,276 Unemployment 4 Number 9,384 8,734 7,996 7,665 7,492 7,384 7,559 77,,443311 77,,445511 77,,224499 77,,443322 5 Rate (percent of civilian labor force) 7.4 6.8 6.1 5.8 5.7 5.6 5.7 5.6 5.6 5.5 5.6 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 108,604 110,525 113,423 116,310 116,248 116,547 116,575 116,838 116,932 116,998 117,164 7 Manufacturing 18,104 18,003 18.064 18,506 18,456 18,428 18,353 18,357 18,322 18,303 18,271 8 Mining 635 611 604 583 582 582 577 575 573 571 568 9 Contract construction 4,492 4,642 4,916 5,242 5,190 5,230 5,226 5,233 5,262 5,285 5,289 10 Transportation and public utilities 5,721 5,787 5,842 6,184 6,177 6,192 6,195 6,217 6,206 6,215 6,233 II Trade 25,354 25,675 26,362 27,062 27,045 27.118 27,184 27,177 27,245 27,261 27,347 1? Finance 6,602 6,712 6,789 6,924 6,925 6,930 6,938 6,947 6,957 6,976 6,990 13 Service 29,052 30,278 31,805 32,548 32,630 32,784 32,820 32,986 33,047 33,083 33,170 14 Government 18,653 18,817 19,041 19,261 19,243 19,283 19,282 19,346 19,320 19,304 19,296 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data are averages of monthly figures. By definition, seasonality does not exist in time. population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1996 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1994' 1995' 1994' 1995r 1994' 1995' Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)" 1 Total industry 120.6 121.8 121.4 122.4 142.4 143.7 145.0 146.4 84.7 84.8 83.7 83.6 2 Manufacturing 122.8 124.0 123.3 124.1 145.7 147.2 148.7 150.3 84.3 84.3 82.9 82.6 3 Primary processing1 118.4 1 19.1 1 17.7 117.1 132.6 133.4 134.4 135.4 89.3 89.3 87.6 86.5 4 Advanced processing4 124.9 126.3 126.(1 127.5 152.1 153.8 155.6 157.5 82.1 82.2 81.0 80.9 5 Durable goods 129.8 132.0 131.4 133.0 154.9 156.8 158.9 161.1 83.8 84.2 82.7 82.6 6 Lumber and products 106.0 105.3 102.9 104.9 117.0 117.4 118.0 118.6 90.6 89.7 87.2 88.5 / Primary metals 120.8 121.2 119.1 118.2 126.8 126.9 127.5 128.0 95.3 95.6 93.4 92.3 8 Iron and steel 124.3 125.4 121.9 121.3 131.0 130.9 131.7 132.5 94.9 95.8 92.6 91.6 9 Nonferrous 116.1 115.6 115.1 113.9 121.2 121.5 121.9 122.2 95.8 95.2 94.5 93.2 10 Industrial machinery and equipment 166.0 171.9 174.4 179.0 190.4 194.8 199.6 204.5 87.2 88.2 87.4 87.5 1 1 Electrical machinery 163.4 167.9 171.2 178.4 186.4 191.6 197.6 203.9 87.7 87.7 86.7 87.5 12 Motor vehicles and parts 144.3 147.7 140.5 140.7 169.6 172.1 174.2 176.4 85.1 85.8 80.6 79.7 13 Aerospace and miscellaneous transportation equipment 89.6 89.6 88.7 86.9 132.2 132.2 132.2 132.1 67.8 67.8 67.1 65.8 14 Nondurable goods 115.0 1 15.2 114.4 114.3 135.7 136.6 137.5 138.4 84.7 84.3 83.2 82.6 1.5 Textile mill products 116.0 1 16.4 113.7 110.9 128.1 129.1 130.1 131.1 90.5 90.2 87.5 84.6 16 Paper and products 121.8 121.0 121.2 119.4 129.8 130.6 131.5 132.5 93.8 92.7 92.1 90.1 IV Chemicals and products 123.4 125.3 124.0 124.5 152.8 153.7 154.7 155.6 80.7 81.5 80.1 80.0 18 Plastics materials 124.6 127.5 122.9 1 18.3 130.8 132.1 133.8 1.35.4 95.3 96.5 91.9 87.3 19 Petroleum products 107.5 108.3 108.0 109.2 115.9 116.0 1 16.2 116.4 92.7 93.3 92.9 93.8 20 Mining 100.1 100.6 100.7 100.2 112.0 1 12.0 112.0 112.0 89.3 89.8 89.9 89.5 21 Utilities 116.8 1 18.4 120.7 124.9 134.2 134.4 134.8 135.2 87.1 88.0 89.5 92.4 22 Electric 117.7 118.9 120.4 125.0 131.4 131.7 132.1 132.5 89.5 90.3 91.1 94.3 1973 1975 Previous cycle Latest cycle6 1994 1995 High Low High Low High Low Nov. June July Aug/ Sept.' Oct. Nov.p Capacity utilization rate (percent)' 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 84.6 83.5r 83.3r 83.8 83.7 83.2 83.1 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 84.2 82.6r 82.3' 82.6 82.8 82.3 82.2 3 Primary processing1 92.2 68.9 89.7 66.8 89.0 77.9 89.1 86.9' 86.6' 86.1 86.8 86.4 86.0 4 Advanced processing 87.5 72.0 86.3 71.4 83.5 76.1 82.1 80.8' 80.5r 81.2 81.1 80.7 80.5 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 83.7 82.3' 82.0r 82.6 83.1 82.3 82.2 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.1 89.1 87.2' 87.6r 87.5 90.3 89.4 88.6 7 Primary metals 100.6 66.2 102.4 46.8 92.8 • 74.2 94.7 92.0r 92.5r 90.1 94.3 93.0 93.4 8 Iron and steel 105.8 66.6 110.4 .38.3 95.7 72.0 93.6 90.3' 90.2' 88.9 95.7 91.8 91.9 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.2 96.0 94.2' 95.5' 91.6 92.5 94.4 95.2 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 71.8 87.2 86.7' 86.8r 87.8 88.1 88.5 89.2 II Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.0 87.3 86.6' 87.1' 87.7 87.8 87.5 87.0 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 56.6 85.0 79.8' 77.8' 80.6 80.8 78.6 78.7 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 78.8 67.7 66.1' 66.3' 66.0 65.0 60.7 58.7 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.3 84.8 83.0' 82.7 82.6 82.4 82.4 82.1 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.8 90.5 84.7' 84.0r 85.7 84.1 84.2 83.9 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.7 94.2 90.9' 91.8r 89.6 89.0 89.6 86.7 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.0 80.6 80.2' 79.8r 80.0 80.2 81.1 80.8 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 95.2 90.2r 87.9r 85.4 88.7 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.6 93.5 93.4' 93.7' 93.2 94.5 93.2 93.2 20 Mining 94.4 88.4 96.6 80.6 86.5 86.1 89.2 90.1 89.9r 89.2 89.3 88.2 88.2 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 87.0 89.7' 90.8' 95.3 90.9 90.5 91.5 22 Electric 99.0 82.7 88.3 78.7 94.8 86.7 89.6 9l.6r 92.3' 98.1 92.5 92.2 92.7 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic the ordering address, see the inside front cover. The latest historical revision of the industrial materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; production index and the capacity utilization rates was released in November 1995. See "A primary metals; and fabricated metals. Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing Bulletin, vol. 82 (January 1996). pp. 16-25. For a detailed description of the industrial and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather production index, see "Industrial Production: 1989 Developments and Historical Revision," and products; machinery; transportation equipment; instruments; and miscellaneous manufac- Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. tures. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted 5. Monthly highs, 1978-80; monthly lows, 1982. index of industrial production to the corresponding index of capacity. 6. Monthly highs, 1988-89; monthly lows, 1990-91. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1994r 1995 pro- 1994r GGrroouupp por- avg. tion Nov. Dec. Jan.r Feb.r Mar/ Apr/ Mayr Juner Julyr Aug/ Sept/ Oct. NNoovv..pp Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 118.1 120.5 121.5 121.8 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.9 122.5 122.8 2 Products 60.6r 115.6 117.5 118.2 118.4 118.3 118.5 117.7 117.5 117.9 118.0 119.2 119.4 118.7 119.0 3 Final products 46.3r 118.3 120.1 120.9 121.3 121.1 121.5 120.9 120.6 121.1 121.2 122.4 122.6 121.7 122.0 4 Consumer goods, total 28.6r 113.7 114.8 115.5 115.5 114.9 115.3 114.4 114.1 114.8 114.6 115.9 115.9 115.4 115.8 5 Durable consumer goods 5.6r 124.2 125.4 127.5 127.1 127.3 126.0 124.9 121.6 122.3 121.4 124.0 125.8 123.2 124.4 6 Automotive products 2.5 130.8 131.5 133.9 134.4 135.3 134.4 131.7 127.1 129.1 125.3 130.7 132.8 128.4 130.0 7 Autos and trucks 1.6 132.9 132.7 135.3 136.6 138.2 137.5 132.8 127.4 129.5 123.9 132.0 133.1 128.6 130.4 8 Autos, consumer .9 106.2 104.5 109.1 111.4 111.5 111.2 105.5 99.4 99.2 101.0 100.6 102.6 100.2 99.7 9 Trucks, consumer .7 180.2 182.6 181.4 180.6 185.2 183.6 180.9 177.1 183.6 163.9 188.2 187.7 179.1 185.3 10 Auto parts and allied goods .9 124.9 127.8 129.4 128.4 127.9 126.7 128.0 125.0 126.8 126.6 126.6 130.7 126.5 127.6 11 Other 3.0 118.5 120.0 121.8 120.8 120.4 118.6 119.0 116.7 116.3 118.1 118.1 119.6 118.7 119.6 12 Appliances, televisions, and air conditioners .7 132.7 133.9 139.5 137.9 135.0 132.2 131.6 131.2 131.4 132.2 135.8 139.4 138.6 140.4 13 Carpeting and furniture .8 106.7 108.7 110.4 106.4 108.3 106.1 109.1 103.0 101.8 107.9 104.4 107.0 105.8 105.7 14 Miscellaneous home goods 1.5 118.8 120.1 120.4 121.3 120.7 119.7 118.8 118.1 118.0 117.4 118.0 117.8 117.0 118.1 15 Nondurable consumer goods 23.0 111.2 112.3 112.6 112.7 111.9 112.7 111.8 112.4 113.1 113.0 113.9 113.5 113.5 113.7 16 Foods and tobacco 10.3 109.2 111.6 111.5 111.5 110.1 111.5 111.2 111.5 113.1 112.8 111.8 111.4 111.2 111.6 17 Clothing 2.4 99.2 99.5 100.3 99.6 98.3 98.7 96.9 96.7 94.6 93.6 93.9 93.2 92.3 91.3 18 Chemical products 4.5 126.1 127.7 130.0 131.3 129.2 129.7 126.9 127.3 128.6 128.6 132.6 133.5 136.2 135.4 19 Paper products 2.9 107.1 107.0 106.6 106.0 106.6 105.9 106.9 106.5 106.3 107.6 106.7 107.3 106.5 107.0 20 Energy 2.9 113.8 110.8 110.6 110.9 113.1 113.9 112.2 115.8 115.8 116.1 122.3 118.9 117.6 119.3 21 Fuels .9 106.6 109.0 107.2 107.6 108.7 110.4 108.8 108.2 108.8 108.2 108.4 111.4 108.7 109.0 22 Residential utilities 2.1 116.7 111.5 111.8 112.2 114.8 115.2 113.5 119.0 118.7 119.4 128.2 122.1 121.3 123.6 23 Equipment 17.7r 125.3 128.3 129.3 130.4 131.0 131.4 131.3 130.8 131.2 131.6 132.9 133.2 131.7 132.0 24 Business equipment 13.7r 144.9 150.2 151.5 153.2 154.3 155.1 155.0 154.3 155.1 155.7 157.5 158.3 156.8 157.6 25 Information processing and related 5.7 172.0 182.7 185.2 187.3 188.7 191.6 194.5 193.9 196.0 197.2 201.0 203.0 206.7 208.8 26 Computer and office equipment l.4r 275.5 307.7 313.8 324.2 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 403.9 417.7 27 Industrial 4.0 122.0 124.2 125.0 126.5 127.2 126.9 126.1 126.5 126.2 127.1 129.1 128.9 128.6 129.3 28 Transit 2.6 140.4 142.2 142.4 143.8 145.9 145.7 142.9 139.6 140.3 139.8 138.0 137.9 122.7 120.1 29 Autos and trucks 1.2 141.1 144.2 142.9 145.6 147.7 146.2 141.5 137.8 139.5 139.9 141.3 143.3 135.7 135.6 30 Other 1.4r 123.2 125.7 125.9 127.2 127.2 126.3 123.2 122.7 122.6 122.6 122.2 123.4 122.1 123.8 31 Defense and space equipment 3.3r 71.9 69.4 69.2 68.9 68.2 67.8 67.1 66.8 66.8 66.5 66.1 65.2 64.3 63.2 32 Oil and gas well drilling ,6r 90.9 87.4 87.3 87.7 88.8 87.2 89.3 90.5 86.8 88.4 89.5 88.3 83.5 83.1 33 Manufactured homes .2 132.9 140.1 150.2 153.1 144.6 145.8 146.6 148.3 149.6 148.6 155.9 158.0 158.9 34 Intermediate products, total 14.3 107.3 109.6 109.9 109.5 109.5 109.2 108.2 108.2 108.2 108.5 109.4 109.7 109.8 109.7 35 Construction supplies 5.3 106.2 108.7 110.5 109.7 109.5 109.2 108.0 106.6 107.2 107.3 107.0 108.8 108.5 108.0 36 Business supplies 9.0 108.2 110.4 109.7 109.5 109.6 109.3 108.5 109.4 109.1 109.5 111.0 110.4 110.7 110.9 37 Materials 39.41' 122.0 125.2 126.6 127.1 127.1 127.2 127.0 127.2 126.8 126.8 128.1 128.3 128.4 128.7 38 Durable goods materials 20.8r 132.3 137.3 139.2 140.0 140.2 140.3 139.8 139.8 139.7 140.2 142.3 144.1 144.4 145.1 39 Durable consumer parts 4.0r 135.2 139.0 142.0 142.9 142.6 140.4 137.9 135.9 135.8 133.9 138.4 139.7 139.6 140.0 40 Equipment parts 7.5 142.9 150.8 152.1 154.0 155.4 157.3 158.9 160.3 161.7 164.4 167.1 169.1 169.8 170.8 41 Other 9.2r 122.5 125.7 127.5 127.7 127.0 127.0 125.9 125.6 124.5 124.4 124.9 126.9 126.9 127.6 42 Basic metal materials 3.1r 121.9 124.7 127.4 126.7 126.4 126.7 126.1 125.5 123.5 124.9 123.1 126.9 125.7 126.5 43 Nondurable goods materials 8.9 118.0 120.6 122.1 122.2 121.5 121.5 121.7 122.2 120.4 118.9 118.8 117.8 118.7 117.7 44 Textile materials 1.1 109.9 114.5 113.2 115.1 113.5 113.6 113.2 112.8 109.0 102.6 109.2 106.2 107.1 107.2 45 Paper materials 1.8 118.8 122.0 121.8 120.9 121.6 122.5 122.3 125.6 121.0 123.9 120.4 116.8 120.8 115.1 46 Chemical materials 3.9r 120.2 122.5 124.7 126.4 125.7 125.6 125.6 126.2 125.2 124.4 123.1 123.3 123.6 124.0 47 Other 2.R 117.9 119.4 122.6 119.5 117.8 117.4 118.4 116.9 117.4 113.8 114.6 115.1 114.3 113.9 48 Energy materials 9.7r 105.3 105.6 106.0 106.2 106.4 106.4 106.6 107.2 107.2 107.5 108.5 106.4 105.5 106.2 49 Primary energy 6.3 100.7 101.7 102.1 102.0 102.3 102.1 102.2 102.3 103.0 102.3 101.4 101.3 100.3 100.6 50 Converted fuel materials 3.3 114.5 113.4 113.5 114.3 114.5 114.9 115.5 116.9 115.5 118.1 122.8 116.6 115.9 117.4 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 117.6 120.0 121.0 121.3 121.1 121.3 120.9 121.0 121.1 121.2 122.3 122.4 122.2 122.5 52 Total excluding motor vehicles and parts 95.2 116.9 119.3 120.2 120.5 120.4 120.6 120.3 120.5 120.5 120.7 121.7 121.9 121.7 121.9 53 Total excluding computer and office equipment 98.2r 115.5 117.5 118.4 118.6 118.4 118.5 117.9 117.8 117.8 117.8 118.9 119.0 118.5 118.6 54 Consumer goods excluding autos and trucks . 21.0' 112.5 113.6 114.2 114.1 113.4 113.8 113.1 113.3 113.9 114.0 114.8 114.8 114.5 114.8 55 Consumer goods excluding energy 25.1' 113.7 115.2 116.1 116.0 115.1 115.4 114.6 113.9 114.7 114.5 115.1 115.5 115.1 115.4 56 Business equipment excluding autos and trucks 12.5r 145.0 150.6 152.1 153.7 154.7 155.8 156.2 155.8 156.5 157.2 158.9 159.6 158.7 159.6 57 Business equipment excluding computer and office equipment 12.2r 129.4 132.5 133.3 134.3 134.6 134.8 133.7 132.5 133.2 133.2 134.4 134.5 131.8 131.5 58 Materials excluding energy 29.1' 128.0 132.2 134.0 134.6 134.5 134.6 134.3 134.4 133.8 133.7 135.1 136.1 136.5 136.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1996 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 1994r sic- pro- 1994r Group code por- av". Mar.r Apr.r May' Juner July' Aug.r Sept.r Oct. Nov.p Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 118.1 120.5 121.5 121.8 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.9 122.5 122.8 60 Manufacturing 85.4' 119.7 122.7 123.8 124.1 123.9 124.0 123.5 123.2 123.3 123.3 124.2 124.9 124.7 124.9 61 Primary processing 26.6' 115.6 1 18.2 119.8 119.4 119.1 118.9 118.2 117.9 117.1 116.9 116.6 117.8 117.5 117.3 62 Advanced processing 58.9' 121.7 124.9 125.7 126.4 126.2 126.5 126.0 125.7 126.3 126.3 127.8 128.3 128.1 128.4 63 Durable goods 45.0' 125.8 129.5 131.2 131.8 132.1 132.2 131.6 131.1 131.5 131.5 133.2 134.5 133.8 134.3 64 Lumber and products 24 2.0 104.0 104.3 108.6 107.1 105.0 103.9 103.9 101.7 103.0 103.7 103.7 107.3 106.4 105.7 65 Furniture and fixtures 25 1.4 11 I.I 114.2 114.0 1 13.8 1 14.9 113.4 111.4 110.8 111.3 111.1 110.9 1 12.2 112.2 112.8 66 Stone, clay, and glass products 32 2.1 102.3 104.3 105.7 105.5 104.7 104.7 103.4 104.1 103.8 103.2 103.0 103.6 103.6 103.9 67 Primary metals 33 3.1 116.4 120.0 122.8 121.5 120.8 121.3 120.2 119.5 1 17.5 1 18.3 115.4 120.9 119.4 120.1 68 Iron and steel 331.2 1.7 119.3 122.6 127.4 125.5 124.9 125.8 123.5 123.0 119.2 119.3 117.7 127.0 122.1 122.5 69 Raw steel 331PT .1 107.9 113.4 120.6 114.9 116.4 1 16.8 114.7 113.0 1 12.9 1 11.5 114.2 118.6 111.3 70 Nonterrous 333-6,9 1.4 1 12.2 116.3 1 16.7 116.2 115.3 115.4 115.7 114.8 114.9 116.5 111.9 113.1 115.5 116.7 71 Fabricated metal products. . . 34 5.0 1 10.5 113.3 1 14.8 114.3 115.0 114.3 112.3 113.7 1 13.7 112.4 114.3 115.0 114.0 1 14.5 72 Industrial machinery and equipment 35 8.0' 157.7 165.9 167.5 171.4 171.8 172.4 174.3 174.6 174.4 176.0 179.5 181.6 184.1 187.0 73 Computer and office equipment 357 1.8' 275.5 307.7 313.8 324.2 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 403.9 417.7 74 Electrical machinery 36 7.2' 154.3 162.8 166.3 166.7 167.7 169.4 169.6 171.1 173.0 175.7 178.7 180.9 182.2 183.0 75 Transportation equipment. . . 37 9.5' 115.3 116.3 117.3 1 17.8 1 18.5 118.0 115.7 113.2 113.4 111.6 114.1 1 14.0 109.4 108.5 76 Motor vehicles and parts . 371 4.8 141.2 144.1 145.9 147.3 148.4 147.6 143.0 138.8 139.7 136.7 142.1 143.2 139.8 140.7 77 Autos and light trucks . 371 PT 2.5 133.1 132.8 135.7 137.1 138.6 1.37.9 132.9 127.3 129.2 124.3 131.6 132.8 128.4 130.0 78 Aerospace and miscellaneous transportation equipment 372-6.9 4.7' 90.5 89.5 89.8 89.5 89.7 89.5 89.4 88.5 88.1 87.6 87.2 85.9 80.2 77.5 79 Instruments 38 5.4 109.1 110.3 110.4 1 10.8 110.5 110.9 111.2 109.6 110.9 110.2 1 11.4 111.3 1 11.4 111.7 80 Miscellaneous 39 1.3 120.1 122.7 122.1 123.5 124.1 123.3 122.7 122.3 123.1 121.4 122.4 122.9 122.2 123.1 81 Nondurable goods 40.5 1 13.0 115.1 115.5 115.6 1 14.8 1 15.1 114.6 114.4 1 14.3 114.3 114.3 1 14.3 114.5 1 14.4 82 Foods 20 113.2 114.8 114.9 115.9 114.2 115.0 115.1 115.9 116.1 115.3 115.5 1 15.3 115.0 115.0 83 Tobacco products 21 88.1 94.1 93.0 88.6 88.1 92.3 92.0 89.3 96.4 99.1 91.3 90.2 90.3 91.8 84 Textile mill products 22 1 13.5 115.9 116.6 117.2 115.9 116.2 117.2 113.6 110.4 109.9 1 12.4 1 10.5 111.0 110.9 85 Apparel products 23 100.1 101.0 101.6 100.6 99.8 99.3 97.4 97.5 95.5 94.8 94.5 94.2 92.6 92.0 86 Paper and products 26 1 19.2 122.3 122.5 121.0 121.0 121.1 121.2 122.4 119.9 121.3 1 18.6 118.2 1 19.3 115.7 87 Printing and publishing 27 100.1 101.3 100.7 100.1 100.3 99.3 99.2 99.0 98.6 99.0 100.5 100.3 100.2 100.8 88 Chemicals and products .... 28 121.3 123.2 124.7 126.2 124.7 125.0 123.5 124.0 124.4 124.0 124.4 125.1 126.8 126.5 89 Petroleum products 29 1.4 106.7 108.3 108.1 107.7 108.0 109.1 107.8 107.4 108.6 109.0 108.5 1 10.1 108.6 108.7 90 Rubber and plastic products . 30 3.5 135.9 140.3 141.6 141.8 141.9 141.1 140.8 138.2 137.8 137.7 138.7 139.9 139.8 140.4 91 Leather and products 31 .3 87.5 86.2 85.8 85.4 85.1 85.8 82.7 83.0 81.2 78.7 80.8 80.5 78.7 77.1 92 Mining 6.9' 100.3 99.9 100.7 100.6 100.8 100.3 100.6 100.5 101.0 100.7 100.0 100.0 98.9 98.8 93 Metal 10 .5' 163.5 160.1 162.6 164.2 165.5 164.5 164.6 164.3 166.8 172.2 172.1 171.2 174.9 175.0 94 Coal 12 1.0 112.6 112.7 116.5 116.0 115.1 114.0 1 12.3 1 10.8 112.2 117.0 109.7 1 15.3 1 12.3 109.5 95 Oil and gas extraction 13 4.8' 93.3 92.7 92.9 92.4 93.0 92.2 93.1 93.4 93.6 91.9 92.4 91.3 90.2 90.8 96 Stone and earth minerals 14 .6 107.2 109.7 109.9 113.1 111.3 114.2 112.7 1 11.1 1 1 1.9 113.5 111.6 113.1 112.6 111.5 97 Utilities 7.7 1 17.9 1 16.7 1 16.5 117.3 1 18.5 1 19.2 118.8 122.1 121.0 122.7 128.8 123.1 122.5 124.1 98 Electric 491,493PT' 6.1 117.7 117.7 117.4 118.0 119.1 119.5 118.9 121.2 121.2 122.2 130.0 122.7 122.4 123.3 99 Gas 492.493PT' 1.6 118.5 1 12.8 113.1 114.3 116.4 1 18.0 118.4 125.5 120.6 124.5 124.3 124.3 122.9 127.1 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.6' 1 18.5 121.5 122.5 122.8 122.4 122.6 122.3 122.2 122.3 122.5 123.1 123.8 123.8 123.9 101 Manufacturing excluding office and computing machines . . . 83.7' 116.6 119.2 120.2 120.4 120.0 120.1 119.3 1 18.9 119.1 118.9 119.8 120.3 119.9 119.9 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9r 2,195.0 2,230.9 2,244.6 2,247.3 2,246.9 2,252.0 2,236.5 2,231.5 2,239.1 2,238.8 2,257.8 2,267.9 2,248.3 2,256.8 103 Final 1.552.2' 1,705.5 1,7.31.8 1,743.1 1,748.3 1.748.6 1,755.0 1.743.1 1,737.4 1,745.6 1,743.2 1.760.5 1,767.2 1,747.6 1,756.4 104 Consumer goods 1,033.4' 1,118.2 1,128.7 1,135.6 1,134.6 1.131.1 1,135.5 1.125.2 1,122.3 1,128.4 1,124.0 1,135.7 1,139.8 1.129.9 1,136.2 105 [Equipment 518.8' 587.3 603.1 607.5 613.8 617.5 619.5 617.9 615.1 617.1 619.2 624.8 627.4 617.7 620.2 106 Intermediate 450.7' 489.5 499.1 501.5 499.0 498.3 497.0 493.4 494.0 493.5 495.6 497.3 500.7 500.7 500.4 I. Data in this table also appear in the Board's G.I7 (419) monthly statistical release. For Bulletin, vol. 82 (January 1996). pp. 16-25. For a detailed description of the industrial the ordering address, see the inside front cover. The latest historical revision of the industrial production index, see "Industrial Production: 1989 Developments and Historical Revision," production index and the capacity utilization rates was released in November 1995. See "A Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. Revision to Industrial Production and Capacity Utilization, 1991-95." Federal Reserve 2. Standard industrial classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1995 IItteemm 11999922 11999933 11999944 Jan. Feb. Mar. Apr. May June July Aug.1" Sept.r Oct. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1.095 1,199 1.372 1,293 1,282 1,235 1,243 1,243 1,275 1,355 1,368 1.405 1,395 1 One-family 911 987 1,068 990 931 911 905 930 958 1,011 1.044 1,073 1,059 3 Two-familv or more 184 213 303 303 351 324 338 313 317 344 324 332 336 4 Started 1,200 1,288 1,457 1,366 1,319 1,238 1,269 1,282 1,298 1,432 1,392 1,389 1.337 5 One-family 1,030 1,126 1,198 1.055 1,048 987 1,009 988 1,034 1,107 1.126 1,121 1,099 6 Two-family or more 170 162 259 311 271 251 260 294 264 325 266 268 238 7 Under construction at end of period1 612 680 762 792 797 769 763 755 756 761 773 782 787 8 One-family 473 543 558 578 579 552 544 536 534 538 548 555 563 9 Two-family or more 140 137 204 214 218 217 219 219 222 223 225 227 224 10 Completed 1.158 1.193 1.347 1.436 1,302 1,443 1.334 1,342 1,256 1.345 1,246 1.253 1.298 1 1 One-familv 964 1,040 1,160 1,209 1,080 1,222 1,089 1.072 1,053 1,037 1,012 993 1,027 12 Two-family or more 194 153 187 227 222 221 245 270 203 308 234 260 271 13 Mobile homes shipped 210 254 304 361 335 333 318 329 329 319 335 346 n.a. Merchant builder activity in one-family units 14 Number sold 610 666 670 643 575 612 607 667 723 781' 699 692 673 15 Number for sale at end of period1 265 293 338 342 347 347 348 347 347 344' 347 350 360 Price of units sold (thousands of dollars)' 16 Median 121.3 126.1 130.4 127.9 135.0 130.0 134.0 133.9 133.7 131.0r 134.5 112299..11 113333..44 17 Average 144.9 147.6 153.7 147.4 160.2 153.3 157.8 158.0 160.2 154.2' 160.8 157.1 153.4 EXISTING UNITS (one-family) 18 Number sold 3.520 3,800 3,946 3,610 3,420 3,620 3,390 3,550 3,800 3,990 4,120 4.150 4,110 Price of units sold (thousands of dollars)' 19 Median 103.6 106.5 109.6 108.1 107.0 107.9 108.1 109.0 116.2 115.9 117.6 111155..22 111133..33 20 Average 130.8 133.1 136.4 135.3 133.4 134.5 134.2 135.4 143.3 142.2 144.4 140.5 138.7 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 435,022 464,504 506,904 521,054 521,429 523,467 522,094 514,515 518,934 528,185 526,535 532,278 546,869 ?? 315.695 339,161 376,566 384,806 383,652 383,301 382,220 376,148 377,486 385,233 383,556 384,927 390,927 23 Residential 187.870 210,455 238,884 241,938 240,207 237,894 234.109 231,342 228,388 232,415 232,254 235.594 237,381 74 Nonresidential 127,825 128,706 137,682 142,868 143,445 145,407 148,111 144,806 149,098 152,818 151,302 149,333 153,546 25 Industrial buildings 20,720 19,533 21,121 22.715 23,370 23,911 24.707 24,760 24,416 24,424 24,178 24,073 25.315 26 Commercial buildings 41,523 42,627 48,552 53,338 53,687 55,439 55,011 51,779 55,420 56,906 55,709 55,179 57,523 27 Other buildings 21.494 23,626 23,912 24,373 24,039 23,062 23,948 24,319 23,447 24,463 24,021 24,020 24,780 28 Public utilities and other 44,088 42,920 44,097 42,442 42,349 42,995 44,445 43,948 45.815 47,025 47.394 46,061 45,928 29 Public 119,322 125,342 130,337 136.248 137,777 140.166 139,874 138,367 141,447 142,952 142.979 147.351 155,942 30 Military 2,502 2.454 2,319 2,925 2,624 3,048 2,736 2,442 2,569 3,212 3,025 2,304 3,600 31 Highway 34,899 37,431 39,882 38,574 38,681 40,667 41,158 38.657 40,875 44,204 42,929 43,064 46,047 32 Conservation and development 6,021 5,978 6,228 6,681 7,128 7,139 6,273 5,531 6,117 5,326 6,773 6.499 7.341 33 Other 75,900 79,479 81,908 88,068 89,344 89,312 89,707 91,737 91,886 90,210 90,252 95.484 98,954 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • February 1996 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier months earlier (annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm llleeevvveeelll,,, 1994 1995 1995 NNNooovvv... 11999944 11999955 111999999555 111 NNoovv.. NNoovv.. Dec. Mar. June Sept. July Aug. Sept. Oct. Nov. CONSUMER PRICES2 (1982-84=100) 1 All items 2.7 2.6 1.9 3.2 3.2 1.8 .2 .1 .1 .3 .0 153.6 2 Food 2.4 2.8 3.9 .0 3.6 3.6 .2 .2 .5 .3 -.1 149.4 3 Energy items 1.9 -2.7 .4 -1.1 5.4 -11.5 -.8 -.8 -1.4 .4 -.9 102.8 4 All items less food and energy 2.8 3.0 2.0 4.1 3.0 2.8 .2 .2 .2 .3 .1 163.0 5 Commodities 1.5 1.7 .3 2.6 .6 2.3 .1 .4 .1 .2 .0 140.7 6 Services 3.5 3.6 2.6 4.8 4.3 3.0 .3 .1 .3 .3 .2 175.7 PRODUCER PRICES (1982=100) 7 Finished goods 1.3 2.0 2.2 3.2 .6 1.3 .1 -.1 .3 -.1 .5 128.6 8 Consumer foods .2 3.2 9.2 -1.2 -4.6 8.8 l.0r ,lr 1.0 .0 1.2 130.9 9 Consumer energy 2.0 -3.2 .0 11.3 1.5 -14.3 -2.5r -,8r -.5 -.9 -.5 75.2 10 Other consumer goods 1.5 2.8 .6 2.9 3.2 2.3 .2 .1 .3 .1 .4 143.6 11 Capital equipment 1.7 2.4 -.3 3.0 1.8 2.1 ,2r ,2r .1 -.1 .4 138.0 Intermediate materials 12 Excluding foods and feeds 4.1 3.3 7.2 10.6 3.9 -.6 -,lr ,0r -.1 -.4 -.1 125.3 13 Excluding energy 4.8 4.1 8.3 10.5 4.2 1.8 .3 .1 .1 -.3 -.2 135.5 Crude materials 14 -8.9 13.4 -1.2 -4.6 -.8 42.3 4.lr ,8r 4.2 2.1 3.6 113.9 15 Energy -6.9 -1.4 -7.6 -4.5 14.6 -22.0 -4.6r —4.5r 3.2 -.4 2.1 68.3 16 Other 15.7 -1.5 27.9 21.9 4.6 -18.2 - I.8r -I.r -2.1 -2.6 -2.1 161.7 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 AAccccoouunntt 11999922 11999933 11999944 Q3 Q4 Ql Q2 Q3 GROSS DOMESTIC PRODUCT 1 Total 6,020.2 6,343.3 6,738.4 6,791.7 6,897.2 6,977.4 7,030.0 7,113.2 By source 2 Personal consumption expenditures 4.136.9 4,378.2 4.628.4 4.657.5 4.734.8 4,782.1 4,851.0 4,898.1 .3 Durable goods 492.7 538.0 591.5 591.5 617.7 615.2 620.3 632.4 4 Nondurable goods 1.295.5 1,339.2 1,394.3 1,406.1 1,420.7 1,432.2 1,446.2 1,449.1 5 Services 2,348.7 2,501.0 2,642.7 2,659.9 2,696.4 2,734.8 2,784.5 2,816.6 6 Gross private domestic investment 788.3 882.0 1.032.9 1,055.1 1,075.6 1,107.8 1,094.1 1.113.4 7 Fixed investment 785.2 866.7 980.7 992.5 1,020.8 1,053.3 1.056.9 1,074.5 8 Nonresidential 561.4 616.1 697.6 709.1 732.8 766.4 779.3 788.0 9 Structures 171.1 173.4 182.8 184.6 192.0 198.6 204.3 207.6 10 Producers' durable equipment 390.3 442.7 514.8 524.5 540.7 567.8 575.0 580.4 11 Residential structures 223.8 250.6 283.0 283.4 288.0 286.8 277.6 286.5 12 Change in business inventories 3.0 15.4 52.2 62.6 54.8 54.5 37.2 38.9 1.3 Nonfarm -2.7 20.1 45.9 53.4 47.4 54.1 37.9 43.5 14 Net exports of goods and services -30.3 -65.3 -98.2 -109.6 -98.9 -1 1 1.1 -124.7 -118.3 15 Exports 638.1 659.1 718.7 730.5 765.5 778.8 797.5 802.0 16 Imports 668.4 724.3 816.9 840.1 864.4 889.9 922.2 920.3 17 Government purchases of goods and services 1.125.3 1.148.4 1,175.3 1,188.8 1,185.8 1,198.7 1.209.6 1,220.1 18 Federal 449.0 443.6 437.3 444.3 431.9 434.4 434.7 436.8 19 State and local 676.3 704.7 738.0 744.5 753.8 764.3 774.8 783.3 By major type of product 20 Final sales, total 6,017.2 6,327.9 6,686.2 6.729.1 6,842.4 6,922.9 6,992.8 77,,007744..33 2.1 Goods 2.292.0 2.390.4 2.532.4 2,543.6 2,603.3 2.638.1 2,650.0 2,682.5 22 Durable 968.6 1,032.4 1,118.8 1,125.8 1,151.8 1.175.0 1,178.6 1,201.7 23 Nondurable 1.323.4 1,358.1 1.413.6 1,417.8 1,451.5 1,463.1 1,471.4 1,480.8 74 Services 3,227.2 3,405.5 3.576.2 3,603.6 3,641.9 3,680.6 .3,741.0 3,777.3 25 Structures 498.1 532.0 577.6 581.9 597.3 604.3 601.8 614.6 26 Change in business inventories 3.0 15.4 52.2 62.6 54.8 54.5 37.2 38.9 27 Durable goods -13.0 8.6 34.8 44.1 36.3 48.0 28.3 26.3 28 Nondurable goods 16.0 6.7 17.4 18.5 18.5 6.5 8.9 12.6 MEMO 29 Total GDP in 1987 dollars 4,979.3 5,134.5 5,344.0 5,367.0 5,433.8 5,470.1 5,487.8 5,544.6 NATIONAL INCOME 30 Total 4,829.5 5,131.4 5,458.4 5,494.9 5,599.4 5,688.4 5,719.4 n.a. 31 Compensation of employees 3,591.2 3,780.4 4.004.6 4,023.7 4,095.3 4,157.3 4,183.0 4.230.9 32 Wages and salaries 2.954.8 3,100.8 3,279.0 3,293.9 3,356.4 3,403.4 3,422.3 3,462.7 33 Government and government enterprises 567.3 583.8 602.8 604.4 609.0 617.2 620.3 624.4 34 Other 2,387.5 2,517.0 2.676.2 2,689.6 2,747.4 2,786.2 2,802.0 2,838.2 35 Supplement to wages and salaries 636.4 679.6 725.6 729.7 738.9 753.9 760.8 768.2 36 Employer contributions for social insurance 307.7 324.3 344.6 346.0 350.2 354.3 356.8 360.4 37 Other labor income 328.7 355.3 381.0 383.7 388.7 399.6 403.9 407.8 .38 Proprietors' income1 418.7 441.6 473.7 467.0 485.7 493.6 487.2 492.3 39 Business and professional1 374.4 404.3 434.2 437.1 444.0 449.2 452.2 458.3 40 Farm 44.4 37.3 39.5 29.8 41.7 44.4 35.0 34.0 41 Rental income of persons- -5.5 24.1 27.7 32.6 29.0 25.4 24.2 20.5 42 Corporate profits' 405.1 485.8 542.7 556.0 560.3 569.7 581.1 n.a. 43 Profits before tax" 395.9 462.4 524.5 538.1 553.5 570.6 574.1 n.a. 44 Inventory valuation adjustment -6.4 -6.2 -19.5 -19.6 -32.1 -39.0 -28.2 -7.4 45 Capital consumption adjustment 15.7 29.5 37.7 37.5 38.8 38.1 35.2 35.4 46 Net interest 420.0 399.5 409.7 415.7 429.2 442.4 444.0 n.a. 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • February 1996 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 AAccccoouunntt 11999922 11999933 Q3 Q4 Ql Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 5,154.3 5,375.1 5,701.7 5,734.5 5,856.6 5,962.0 6,008.1 6,075.8 2 Wage and salary disbursements 2,974.8 3,080.8 3,279.0 3,293.9 3,356.4 3,403.4 3,422.3 3,462.7 3 Commodity-producing industries 757.6 773.8 818.2 821.8 837.3 848.5 842.0 846.6 4 Manufacturing 578.3 588.4 617.5 618.3 629.5 638.1 629.6 631.9 5 Distributive industries 682.3 701.9 748.5 753.5 769.6 776.8 782.9 795.4 6 Service industries 967.6 1,021.4 1,109.5 1,114.3 1,140.5 1,160.9 1,177.0 1,196.3 7 Government and government enterprises 567.3 583.8 602.8 604.4 609.0 617.2 620.3 624.4 8 Other labor income 328.7 355.3 381.0 383.7 388.7 399.6 403.9 407.8 9 Proprietors' income' 418.7 441.6 473.7 467.0 485.7 493.6 487.2 492.3 10 Business and professional' 374.4 404.3 434.2 437.1 444.0 449.2 452.2 458.3 11 Farm' 44.4 37.3 39.5 29.8 41.7 44.4 35.0 34.0 12. Rental income of persons" -5.5 24.1 27.7 32.6 29.0 25.4 24.2 20.5 13 Dividends 161.0 181.3 194.3 196.9 202.7 205.5 208.1 211.6 14 Personal interest income 665.2 637.9 664.0 674.2 701.1 723.6 739.3 748.3 15 Transfer payments 860.2 915.4 963.4 969.0 979.7 1,004.8 1,018.6 1,031.0 16 Old-age survivors, disability, and health insurance benefits 414.0 444.4 473.5 476.5 483.1 496.7 503.4 508.3 17 LESS; Personal contributions for social insurance 248.7 261.3 281.4 282.9 286.6 293.8 295.4 298.4 18 EQUALS: Personal income 5,154.3 5,375.1 5,701.7 5,734.5 5,856.6 5,962.0 6,008.1 6,075.8 19 LESS: Personal tax and nontax payments 648.6 686.4 742.1 744.1 754.7 777.6 807.0 807.0 20 EQUALS: Disposable personal income 4,505.8 4,688.7 4,959.6 4,990.3 5,101.9 5,184.4 5,201.0 5,268.8 21 LESS: Personal outlays 4,257.8 4,496.2 4,756.5 4,787.0 4,869.3 4,920.7 4,994.9 5,045.9 22 EQUALS: Personal saving 247.9 192.6 203.1 203.3 232.6 263.7 206.1 222.9 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,489.7 19,878.8 20,475.8 20,536.5 20,739.8 20,836.3 20,858.6 2211,,002233..33 24 Personal consumption expenditures 13,110.4 13,390.8 13,715.4 13.716.6 13,853.5 13,880.1 13,965.7 14,033.4 25 Disposable personal income 14,279.0 14,341.0 14,696.0 14,697.0 14,927.0 15,048.0 14,973.0 15,095.0 26 Saving rate (percent) 5.5 4.1 4.1 4.1 4.6 5.1 4.0 4.2 GROSS SAVING 27 Gross saving 722.9 787.5 920.6 922.6 950.3 1,006.0 983.8 n.a. 28 Gross private saving 980.8 1,002.5 1,053.5 1,052.7 1,082.7 1,126.4 1,090.0 n.a. 2.9 Personal saving 247.9 192.6 203.1 203.3 232.6 263.7 206.1 222.9 30 Undistributed corporate profits' 94.3 120.9 135.1 139.5 130.7 132.6 140.8 n.a. 31 Corporate inventory valuation adjustment -6.4 -6.2 -19.5 -19.6 -32.1 -39.0 -28.2 -7.4 Capital consumption allowances 32 Corporate 396.8 407.8 432.2 432.6 438.0 445.3 454.7 446611..00 33 Noncorporate 261.8 261.2 283.1 277.3 281.3 284.7 288.4 292.0 34 Government surplus, or deficit ( —), national income and product accounts -257.8 -215.0 -132.9 -130.1 -132.3 -120.4 -106.2 n.a. 35 Federal -282.7 -241.4 -159.1 -154.0 -161.1 -148.6 -129.6 n.a. 36 State and local 24.8 26.3 26.2 23.9 28.8 28.2 23.4 n.a. 37 Gross investment 731.7 789.8 889.7 901.5 907.9 947.4 916.8 n.a. 38 Gross private domestic investment 788.3 882.0 1,032.9 1,055.1 1,075.6 1,107.8 1,094.1 1,113.4 39 Net foreign investment -56.6 -92.3 -143.2 -153.6 -167.7 -160.4 -177.3 n.a. 40 Statistical discrepancy 8.8 2.3 -30.9 -21.1 -42.4 -58.6 -67.0 n.a. 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1994 1995 IItteemm ccrreeddiittss oorr ddeebbiittss 11999922 11999933 11999944 Q3 Q4 QL Q2 Q3P 1 Balance on current account -61,548 -99,925 -151,245 -39,714 -43,277 -39,025 -43,267 -39,482 2 Merchandise trade balance2 -96,106 -132,618 -166,099 -44,627 -43,488 -45,050 -48,802 -43,433 3 Merchandise exports 440,352 456,823 502,485 127,384 133,926 138,061 142,850 145,315 4 Merchandise imports -536,458 -589,441 -668,584 -172,011 -177,414 -183,111 -191,652 -188,748 5 Military transactions, net -2,142 448 2,148 1,124 679 542 587 736 6 Other service transactions, net 58,767 57,328 57,739 14,696 15,342 15,068 14,782 15,178 7 Investment income, net 10,080 9,000 -9,272 -2,533 -4,571 -1,961 -2,614 -4,153 8 U.S. government grants -15,083 -16,311 -15,814 -3,488 -6,245 -2,867 -2,284 -2,834 Y U.S. government pensions and other transfers -3,735 -3,785 -4,247 -1,064 -1,063 -782 -989 -987 10 Private remittances and other transfers -13,330 -13,988 -15,700 -3,822 -3,931 -3,975 -3,947 -3,989 11 Change in U.S. government assets other than official reserve assets, net (increase, -) -1,661 -330 -322 -283 -931 -152 -180 136 12 Change in U.S. official reserve assets (increase, —) 3,901 -1,379 5,346 -165 2,033 -5,318 -2,722 -1,893 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 2,316 -537 -441 -111 -121 -867 -156 362 15 Reserve position in International Monetary Fund -2,692 -44 494 273 -27 -526 -786 -991 16 Foreign currencies 4,277 -797 5,293 -327 2,181 -3,925 -1,780 -1,264 17 Change in U.S. private assets abroad (increase, -) -68,115 -182,880 -130,875 -27,492 -56,258 -69,873 -97,340 -41,095 18 Bank-reported claims' 20,895 29,947 915 1,590 -16,651 -29,284 -39,982 14,851 19 Nonbank-reported claims 45 1,581 -32,621 -8,051 -12,449 -11,518 -18,499 20 U.S. purchases of foreign securities, net -46,415 -141,807 -49,799 -10,976 -15,238 -6,567 -21,731 -34,251 21 U.S. direct investments abroad, net -42,640 -72,601 -49,370 -10,055 -11,920 -22,504 -17,128 -21,695 22 Change in foreign official assets in United States (increase, +) 40,466 72,146 39,409 19,691 -421 22,308 37,836 39,479 23 U.S. Treasury securities 18,454 48,952 30,723 16,477 7,470 10,131 25,169 20,597 24 Other U.S. government obligations 3,949 4,062 6,025 2,222 1,228 1,126 1,326 518 25 Other U.S. government liabilities4 2,180 1,706 2,211 494 692 -154 506 194 26 Other U.S. liabilities reported by U.S. banks1 16,571 14,841 2,923 1,298 -9,856 10,940 7,886 18,398 27 Other foreign official assets5 -688 2,585 -2,473 -800 45 265 2,949 -228 28 Change in foreign private assets in United States (increase, +) 113,357 176,382 251,956 60,045 85,136 72,533 86,495 66,185 29 U.S. bank-reported liabilities' 15,461 20,859 114,396 19.650 34,676 -531 12,239 -19,958 30 U.S. nonbank-reported liabilities 13,573 10,489 -4,324 487 -5,242 10,113 10,527 31 Foreign private purchases of U.S. Treasury securities, net 36,857 24,063 33,811 5,428 25,929 29,910 30,315 36,778 32 Foreign purchases of other U.S. securities, net 29,867 79,864 58,625 14,762 10,195 15,816 20,549 30,024 33 Foreign direct investments in United States, net 17,599 41,107 49,448 19,718 19,578 17,225 12,865 19,341 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -26,399 35,985 -14,269 -12,082 13,718 19,527 19,178 -23,330 36 Due to seasonal adjustment -6,641 782 6,183 331 -7,086 37 Before seasonal adjustment -26,399 35,985 -14,269 -5,441 12,936 13,344 18,847 -16,244 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) 3,901 -1,379 5,346 -165 2,033 -5,318 -2,722 -1,893 39 Foreign official assets in United States, excluding line 25 (increase, +) 38,286 70,440 37,198 19,197 -1,113 22,462 37,330 39,285 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 5,942 -3,717 -1,184 3,564 1,120 -322 -II 6,365 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-40. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current dealers. Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • February 1996 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1995 IItteemm 11999922 11999933rr 11999944'' Apr. May June July Aug. Sept. Oct.p 1 Goods and services, balance -39,480 — 74,842 -106,214 -11,076 -10,780 -11,280 -11,186 -8,359 -8,349 Merchandise -96,106 — 132.618 -166,101 -16,336 -15,976 -16,493 -16,230 -13.504 -13,705 3 Services 56,626 57.777 59.887 5,260 5.196 5,213 5,044 5,145 5,356 4 Goods and services, exports 618,969 644,579 701.200 64.412 65,595 64,599 63,408 66,190 67,244 5 Merchandise 440,352 456,824 502.484 47,157 48,307 47.381 46,368 49,084 49,858 n.a. 6 Services 178,617 187,755 198,716 17,255 17,288 17,218 17,040 17,106 17,386 7 Goods and services, imports -658,449 -719,421 -807,414 -75,488 -76,375 -75,879 -74.594 -74,549 -75,593 8 Merchandise -536,458 -589,442 -668,585 -63.493 -64,283 -63,874 -62,598 -62,588 -63,563 9 Services - 121,991 -129,979 -1.38.829 -11,995 -12,092 -12,005 -11,996 -11,961 -12.030 I. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1995 AAsssseett 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. Nov.p 1 Total 71,323 73,442 74,335 88,756 90,549 90,063 91,534 86,648 87,152 86,224 85,755 2 Gold stock, including Exchange Stabilization Fund' 11.056 11,053 11,051 11.055 11,054 11,054 11,053 11,053 11,051 11,051 11,050 3 Special drawing rights-" 8.503 9,039 10,039 11,743 11,923 11,869 11,487 11,146 11,035 10,949 11,034 4 Reserve position in International Monetary Fund" 1 1,759 11.818 12,030 14,206 14,278 14,276 14,761 14,470 14,681 14,700 14,572 5 Foreign currencies4 40.005 41.532 41,215 51,752 53,294 52.864 54,233 49,979 50,385 49,524 49,099 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—S717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, tive currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1995 AAsssseett 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. Nov.p 1 Deposits 205 386 250 166 227 167 190 165 201 275 194 Held in custody 2 U.S. Treasury securities- 314,481 379,394 441.866 469,482 474,181 482,506 505.613 502,737 506,572 507,075 522,950 3 Earmarked gold 13,118 12.327 12.033 11,897 11,800 11,725 11,728 11,728r 11,728 11,709 11,702 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1995 IItteemm 11999933 11999944 Apr. May June July Aug. Sept. Oct.p 1 Total1 483,002 520,578 552,623 560,324 580,073 604,392 612,828 619,419r 618,095 By type 2 Liabilities reported by banks in the United States" 69,808 73,031 85,564 84,859 91,583 93,743 104,745 110,051r 107,646 3 U.S. Treasury bills and certificates1 151,100 139,570 146,417 115544,,557755 115544,,551177 159,654 115577,,551166 116633,,009933 115577,,998877 U.S. Treasury bonds and notes 4 Marketable 212,237 254,059 265,178 263,404 274,254 291,034 290,670 286,145r 291,850 5 Nonmarketable4 5,652 6,109 6,174 6,209 6,245 6,288 6,329 6,366 6,407 6 U.S. securities other than U.S. Treasury securities5 44,205 47,809 49,290 51,277 53,474 53,673 53,568 53,764 54,205 By area 7 Europe1 207,121 215,024 216,771 217,793 223,814 224,343 221,105 222,820 222.360 8 Canada 15,285 17,235 19,248 19,631 19,549 21,746 21,508 20,522 20,355 9 Latin America and Caribbean 55,898 41,492 42,475 44,707 50,288 58,007 63,264 63,375r 61,244 10 Asia 197,702 236,819 266,089 270,519 278,767 290,878 297,343 303,809r 305,061 11 Africa 4,052 4,179 4,200 4,281 4,427 4,309 4,433 4,684 4,761 12 Other countries 2,942 5,827 3,838 3,391 3,226 5,107 5,173 4,207 4,312 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States' Payable in Foreign Currencies Millions of dollars, end of period 1994 1995 IItteemm 11999911 11999922 11999933 Dec. Mar. June Sept. 1 Banks' liabilities 75,129 72,796 78,259 89,587 96,190 106,069 101,456 2 Banks' claims 73.195 62,799 61,425 60,249 72,511 77,195 69,312 3 Deposits 26,192 24,240 20,401 19,640 24,257 28,915 25,668 4 Other claims 47,003 38,559 41,024 40,609 48,254 48,280 43,644 5 Claims of banks' domestic customers2 3,398 4,432 9,103 15,020 11,637 13,070 9,708 I. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • February 1996 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period 1995 IItteemm 11999922 11999933 11999944 Apr. May June July Aug/ Sept. Oct." BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 810,259 926,793 1,017,047 1,037,624 1,041,439 1,057,301 1,059,317 1,075,744 1,073,134 1,097,070 2 Banks' own liabilities 606,444 627.040 721.624 720.976 722.735 735,054 730,208 744,997 734,272 760,747 3 Demand deposits 21,828 21,573 23.376 22,950 23,567 22,226 24,100 21,778 23,750 23,451 4 Time deposits- 160,385 175.032 186.400 182,196 184,299 195,214 191,739 196,816 188,000 202,048 Other3 93,237 112,056 115,933 123,852 127.544 122,722 140,910 139,068 136,103 145,619 6 330 994 318.379 395,915 391 978 387.325 394,892 373,459 387 335 386 419 389,629 1 Banks' custodial liabilities5 203,815 299,753 295,423 316,648 318.704 322,247 329,109 330.747 338,862 336,323 8 U.S. Treasury bills and certificates'1 127,644 176,739 162,826 175,540 182,046 182,204 188,621 187,318 193,070 189,118 9 Other negotiable and readily transferable instruments7 21,974 36.289 42,177 48,278 40,331 45,112 44,252 45,175 47,254 47,968 10 Other 54,197 86,725 90,420 92,830 96,327 94,931 96,236 98,254 98,538 99,237 11 Nonmonetary international and regional organizations8. . . 9,350 10.936 8,606 8,710 8,576 9,776 11,955 9,934 12,696 10,130 12 Banks' own liabilities 6,951 5,639 8,176 7,547 7.609 8,972 10,884 8,630 11,805 8,302 13 Demand deposits 46 15 29 214 34 114 43 40 64 383 14 Time deposits" 3.214 2,780 3.298 3.954 3,516 4,459 4,977 4,457 4,315 3,941 1.*) Other3 3,691 2,844 4.849 3,379 4.059 4,399 5,864 4,133 7,426 3,978 16 Banks' custodial liabilities5 2.399 5,297 430 1,163 967 804 1,071 1.304 891 1,828 17 U.S. Treasury bills and certificates6 1.908 4,275 281 763 510 312 551 826 354 1,342 18 Other negotiable and readily transferable instruments7 486 1,022 149 400 456 492 520 478 537 486 19 Other 5 0 0 0 1 0 0 0 0 0 20 Official institutions' 159,563 220,908 212,601 231,981 239,434 246,100 253,397 262,261 273,144 265,633 21 Banks' own liabilities 51,202 64,231 59,580 67,999 68,974 73.129 75,379 83,346 85,998 83.284 22 Demand deposits 1,302 1,601 1,564 1,485 1,575 1,398 1,429 1,547 1,362 1,651 23 Time deposits" 17,939 21,654 23.511 25,788 27,462 27,426 29,502 31,554 32,048 30.195 24 Other3 31.961 40.976 34,505 40,726 39,937 44,305 44,448 50,245 52,588 51,438 25 Banks' custodial liabilities 108,361 156.677 153,021 163,982 170,460 172,971 178,018 178,915 187,146 182,349 26 U.S. Treasurv bills and certificates6 104.596 151.100 139,570 146,417 154,575 154,517 159,654 115577,,551166 116633,,009933 157,987 27 Other negotiable and readily transferable instruments7 3.726 5.482 13,245 17,473 15,771 18,325 18,159 20,735 23,777 24,108 28 Other 39 95 206 92 114 129 205 664 276 254 29 Banks'" 547.320 592.208 680,738 681,438 680,063 685,718 665,934 684,122 670,198 698,123 30 Banks' own liabilities 476,117 478,792 566,647 558,903 560,440 566,247 545,332 562.682 547,615 574,711 31 Unaffiliated foreign banks 145,123 160,413 170,732 166,925 173,115 171,355 171,873 175,347 161,196 185,082 32 Demand deposits 10,170 9,719 10,633 10,701 11,406 10,554 12,121 10,061 11,817 11,338 33 Time deposits" 90,296 105,192 111,156 100,613 103,681 111,674 104,806 108,842 98,868 114.497 34 Other3 44,657 45,502 48.943 55,611 58.028 49,127 54,946 56,444 50,511 59,247 33 Own loreign offices4 330,994 318,379 395,915 391,978 387,325 394,892 373,459 387,335 386,419 389,629 36 Banks' custodial liabilities5 71,203 113,416 114,091 122,535 1 19,623 119,471 120,602 121,440 122,583 123,412 37 U.S. Treasury bills and certificates6 11,087 10,712 11,219 15,717 14.437 15,021 15,535 15,489 16,170 16,299 38 Other negotiable and readily transferable instruments7 7,555 17,020 14,234 15.815 10,955 11.188 10,583 10,142 9.665 9,804 39 Other 52,561 85.684 88.638 91,003 94,231 93,262 94,484 95,809 96,748 97,309 40 Other foreigners 94,026 102,741 115,102 115.495 113,366 115,707 128,031 119,427 117,096 123.184 41 Banks' own liabilities 72,174 78,378 87.221 86,527 85,712 86,706 98,613 90,339 88.854 94,450 42 Demand deposits 10,310 10.238 11,150 10,550 10,552 10,160 10,507 10,130 10,507 10,079 43 Time deposits" 48.936 45.406 48,435 51,841 49,640 51,655 52,454 51,963 52,769 53,415 44 Other3 12,928 22.734 27.636 24.136 25,520 24,891 35,652 28,246 25,578 30,956 45 Banks' custodial liabilities' 21,852 24,363 27,881 28,968 27.654 29,001 29,418 29,088 28,242 28,734 46 U.S. Treasury bills and certificates6 10,053 10,652 1 1,756 12,643 12,524 12,354 12,881 13.487 13.453 13,490 47 Other negotiable and readily transferable instruments7 10,207 12,765 14,549 14.590 13,149 15,107 14,990 13,820 13,275 13,570 48 Other 1,592 946 1.576 1,735 1.981 1,540 1,547 1,781 1.514 1,674 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 9,111 17.567 17,895 17.651 11,938 12,158 10,129 10,409 9.915 10,372 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments." deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in "Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1995 IItteemm 11999922 11999933 11999944 Apr. May June July Aug.r Sept. Oct.p AREA 50 Total, all foreigners 810,259 926,793 1,017,047 1,037,624 1,041,439 1,057,301 1,059,317 1,075,744 1,073,134 1,097,070 51 Foreign countries 800,909 915,857 1,008,441 1,028,914 1,032,863 1,047,525 1,047,362 1,065,810 1,060,438 1,086,940 52 Europe 307,670 378,107 392,931 368,495 377,387 374,702 377.555 376,475 361,949 376,384 53 Austria 1,611 1,917 3,649 4,030 3,961 3,854 3,923 3,869 5,221 4,887 54 Belgium and Luxembourg 20,567 28,670 21,978 22,855 25,734 21,078 24,793 24,591 24,036 25,102 55 Denmark 3,060 4,517 2,784 2,567 2,811 2,432 2,131 2,468 2,476 3,177 56 Finland 1,299 1,872 1,436 2,028 1,708 1,455 2,390 2,270 1,972 2,419 57 France 41,411 40,316 45,207 38,668 40,976 45,034 42,870 43,309 38,096 43,022 58 Germany 18,630 26,685 27,190 28,496 31,968 34,342 33,790 31,256 31,388 26,342 59 Greece 913 1,519 1,393 2,195 2,160 2,351 2,297 2,398 2,1 19 2,032 60 Italy 10,041 11,759 10,882 9,414 9,810 10,371 10,218 10,813 8.937 10,224 61 Netherlands 7,365 16,096 15,971 12,545 14,622 11,449 11,743 10,685 13,106 15,602 62 Norway 3,314 2,966 2,338 1,374 1,289 1,305 1,119 2,087 1,011 1,048 63 Portugal 2,465 3,366 2,846 2,940 2,855 2,674 3,164 2,933 3,033 2,901 64 Russia 577 2,511 2,714 5,011 7,042 7,177 6,313 7,265 6,367 7,338 65 Spain 9,793 20,493 14,655 9,859 9,780 10,532 9,089 9,973 10,060 13,409 66 Sweden 2,953 2,738 3,093 1,845 1,437 3,471 2,187 2,876 3,143 1,989 67 Switzerland 39,440 41,561 41,881 41,258 39,984 47,243 42,192 41,644 41,376 42,440 68 Turkey 2,666 3,227 3,341 3,624 3,187 3,255 2,972 3,523 3,936 4,066 69 United Kingdom 111,805 133,993 163,768 153,431 151,052 141,110 151,339 150,781 141,572 147,485 70 Yugoslavia" 504 570 245 219 220 220 214 146 215 210 71 Other Europe and other former U.S.S.R.1" 29,256 33,331 27,760 26,136 26,791 25,349 24,81 I 23,588 23,885 22.691 72 Canada 22,420 20,235 24,627 28,563 27,716 29,451 28,888 28,296 28,847 35,356 73 Latin America and Caribbean 317.228 362,161 422,781 431,632 429,741 444,638 435,628 447,310 434,034 439,407 74 Argentina 9,477 14,477 17,199 10,154 10,210 10,806 12,336 11,538 11,179 11,525 75 Bahamas 82,284 73,800 103,684 97,304 92,324 97,244 88,580 95,808 92,583 96,002 76 Bermuda 7,079 8,117 8,467 8,955 8,617 7,156 6,907 6,873 6,073 6,661 77 Brazil 5,584 5,301 9,140 13,114 15,563 18,242 21,224 26,743 27,591 27,316 78 British West Indies 153,033 193,649 229,620 244,233 242,895 252,372 245,018 244,228 234.579 236,032 79 Chile 3,035 3,183 3,114 3,446 2,911 3,304 2,661 2,890 2,698 2,573 80 Colombia 4,580 3,171 4,579 3,598 3,401 3,273 3,429 3.349 3,257 3,397 81 Cuba 3 33 13 6 5 5 5 3 4 13 82 Ecuador 993 880 873 1,054 1,048 1,179 1,118 1,160 1,130 1,311 83 Guatemala 1,377 1,207 1,121 1,094 1.069 1,128 1,099 1,122 1,197 1,068 84 Jamaica 371 410 529 422 542 449 426 444 484 430 85 Mexico 19,454 28,018 12,244 17,246 18,174 19,172 20,977 22,120 22,063 20,879 86 Netherlands Antilles 5,205 4,686 4,530 4,076 6,001 4,626 6,066 4,778 5,016 5,328 87 Panama 4,177 3,582 4,542 4,816 4,881 4,297 4.624 4,998 4,678 4,462 88 Peru 1,080 926 899 931 1,004 996 943 1,028 909 897 89 Uruguay 1,955 1,611 1,594 1,930 2,091 2,029 1,951 1,937 1,839 1,842 90 Venezuela 11,387 12,786 13,975 12,122 12,041 11,187 11,419 11,193 11,963 12,626 91 Other 6,154 6,324 6,658 7,131 6,964 7,173 6,845 7,098 6,791 7,045 92 Asia 143,540 144,529 155,556 187,634 186,272 188,284 192,175 199,607 222,981 222,269 China 93 People's Republic of China 3,202 4,011 10,066 12,138 9,459 10,579 11,908 13,208 22,273 22.351 94 Republic of China (Taiwan) 8,408 10,627 9,826 9,630 9,137 9,740 9,152 9,838 10,253 10,722 95 Hong Kong 18,499 17,132 17,087 20,069 22,690 23,031 25,124 24,152 21,852 21,848 96 India 1,399 1,114 2,338 2,194 1,939 2,104 2,269 2,745 2,914 3,001 97 Indonesia 1,480 1,986 1,587 1,696 2,331 2,115 1,962 2,175 2,366 2,172 98 Israel 3,773 4,435 5,155 5,411 5,326 4,570 4,596 4,723 4,207 3,812 99 Japan 58,435 61,466 64,259 84,761 83,174 83,348 85,801 89,102 104,261 103,967 100 Korea (South) 3,337 4,913 5,124 4,760 5,030 4,982 5,061 4,881 5,443 5,332 101 Philippines 2,275 2,035 2,714 2,257 2,704 2,538 2,652 2,793 2,786 2,840 102 Thailand 5,582 6,137 6,466 10,416 11,582 11,497 11,239 11,177 11,803 10,456 103 Middle Eastern oil-exporting countries1' 21,437 15,824 15,475 15,730 15,612 16,865 16,468 15,779 16,892 17,350 104 Other 15,713 14,849 15,459 18,572 17,288 16,915 15,943 19,034 17,931 18.418 105 Africa 5,884 6,633 6,511 6,583 6,707 6,779 6,962 6,989 7,033 7,209 106 Egypt 2,472 2,208 1,867 2,102 2,045 2,143 1,840 1,924 2,127 1,948 107 Morocco 76 99 97 66 72 90 94 87 79 66 108 South Africa 190 451 433 401 539 594 1,000 746 467 934 109 Zaire 19 12 9 12 10 18 13 15 9 4 110 Oil-exporting countries14 1,346 1,303 1,343 1,328 1,302 1,418 1,364 1,667 1,792 1,544 111 Other 1,781 2,560 2,762 2,674 2,739 2,516 2,651 2,550 2,559 2,713 112 Other 4,167 4,192 6,035 6,007 5,040 3,671 6,154 7,133 5,594 6,315 113 Australia 3,043 3,308 5,141 4,912 4,255 2,944 5,472 5,459 4,777 5,007 114 Other 1,124 884 894 1,095 785 727 682 1,674 817 1,308 115 Nonmonetary international and regional organizations. . . 9,350 10,936 8,606 8,710 8,576 9,776 11,955 9,934 12,696 10,130 1 16 International15 7,434 6,851 7,537 7,173 6,597 8,124 10,266 7,918 10,964 8,294 117 Latin American regional16 1,415 3,218 613 666 1,067 804 834 1,010 876 552 118 Other regional17 501 867 456 871 912 848 855 1,006 856 1,284 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • February 1996 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1995 AArreeaa oorr ccoouunnttrryy 11999922 11999933 11999944 Apr. May June July Aug.r Sept. Oct.p 1 Total, all foreigners 499,437 486,250 483,372 480,697 483,947 519,489 506,828 518,721 513,235 519,392 2 Foreign countries 494,355 483,845 478,781 477,760 482,337 516,856 505,511 517,304 510,408 517,734 3 Europe 123,377 122,823 124,609 122,538 123,304 128,932 125,948 126,617 115,505 130,356 4 Austria 331 413 692 461 756 581 616 685 670 880 5 Belgium and Luxembourg 6,404 6,532 6,737 8,505 8,052 5,148 8,063 8,250 7,051 7,017 6 Denmark 707 382 1,030 549 508 599 443 428 410 634 7 Finland 1,418 594 691 700 431 394 967 1,001 1,221 1,916 8 France 14,723 11,822 12,767 13,132 14.083 15,362 15,419 15,166 13,927 14,766 9 Germany 4,222 7,722 6,732 7,156 6,644 7,986 6,272 7,859 7,802 7,192 10 Greece 717 680 592 560 407 442 445 386 385 404 11 Italy 9,047 8,836 6,041 6,209 6,219 6,734 6,066 5,747 5,911 5,605 12 Netherlands 2,468 3,063 2,957 3,551 5,998 4,356 4,478 4,354 4,721 4,469 13 Norway 355 396 504 1,295 1,382 1,019 1,206 1,047 1,392 1,456 14 Portugal 325 834 938 915 990 1,208 987 916 986 1,026 15 Russia 3,147 2,310 949 657 511 508 495 506 421 696 16 Spain 2,755 2,800 3,529 2,076 2,138 3,565 3,626 3,482 3,520 3,154 17 Sweden 4,923 4,252 4,096 3,522 3,319 2,939 3,557 2,820 2,677 2,604 18 Switzerland 4,717 6,603 7,492 7,398 7,631 10,290 7,539 7,362 7,219 6,320 19 Turkey 962 1,301 874 810 722 713 725 768 802 830 20 United Kingdom 63,430 61,963 66,558 63,642 62,218 65,790 63,746 64,498 54,368 68,988 21 Yugoslavia2 569 536 265 247 248 229 230 230 234 233 22 Other Europe and other former U.S.S.R.'' 2,157 1,784 1,165 1,153 1,047 1,069 1,068 1,112 1,788 2,166 23 Canada 13,845 18,543 18,150 17,482 20,553 19,715 18,870 17,289 18,666 17,796 24 Latin America and Caribbean 218,078 223,997 222,541 224,901 223,659 243,232 237,824 248,921 249,503 249,310 25 Argentina 4,958 4,473 5,834 6,178 6,352 6,596 6,255 6,161 6,119 6,007 26 Bahamas 60,835 63,296 66,096 64,352 62,297 63,287 59,446 60,421 62,436 55,471 27 Bermuda 5,935 8,532 8,381 11,843 10,884 8,549 6,373 8,944 6,295 5,537 28 Brazil 10,773 11,845 9,579 10,896 11,192 11,522 12,528 12,981 13,093 13,346 29 British West Indies 101,507 98,708 95,609 94,155 95,284 113,870 113,951 117,416 119,524 122,061 30 Chile 3,397 3,619 3,794 4,247 3,867 4,316 4,245 4,642 4,436 4,619 31 Colombia 2,750 3,179 4,003 3,928 4,034 4,032 4,182 4,270 4,358 4,578 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 884 680 680 565 663 767 767 725 805 846 34 Guatemala 262 288 366 359 353 344 340 350 361 385 35 Jamaica 162 195 258 262 258 264 277 290 287 289 36 Mexico 14,991 15,713 17,721 17,182 17,375 17,277 17,146 16,833 16,483 16,653 37 Netherlands Antilles 1,379 2,682 1,055 1,333 1,778 2,881 2,730 6,313 5,602 9,233 38 Panama 4,654 2,893 2,179 2,507 2,433 2,506 2,512 2,503 2,575 2,825 39 Peru 730 656 996 1,116 1,095 1,359 1,332 1,368 1,464 1,500 40 Uruguay 936 969 503 366 398 377 424 424 386 441 41 Venezuela 2,525 2,907 1,828 1,679 1,662 1,608 1,647 1,596 1,480 1,826 42 Other 1,400 3,362 3,659 3,933 3,734 3,677 3,669 3,684 3,799 3,693 43 131,789 111,765 107,337 106,749 108,780 118,697 117,198 118,197 120,256 111144,,552233 China 44 People's Republic of China 906 2,271 836 980 879 1,143 1,206 1,163 1,316 1,241 45 Republic of China (Taiwan) 2,046 2,623 1,444 1,534 1,519 1,794 1,913 1,600 1,584 1,595 46 Hong Kong 9,642 10,826 9,159 11,602 12,069 14,894 14,753 14,496 15,677 12,539 47 India 529 589 994 1,139 1,126 1,210 1,732 1,905 1,944 1,924 48 Indonesia 1,189 1,527 1,470 1,463 1,427 1,443 1,516 1,620 1,596 1,623 49 Israel 820 826 688 683 783 949 748 700 712 886 50 Japan 79,172 60,029 59,425 55,191 58,475 61,039 61,268 63,288 63,059 61,817 51 Korea (South) 6,179 7,539 10,286 11,953 12,265 12,617 13,142 12,836 13,028 13,396 52 Philippines 2,145 1,409 660 496 532 916 596 623 750 673 53 Thailand 1,867 2,170 2,902 2,757 2,755 2,688 2,670 2,594 2,594 2,568 54 Middle Eastern oil-exporting countries4 18,540 15,113 13,741 13,292 11,643 12,569 11,946 11,403 11,723 9,963 55 Other 8.754 6,843 5,732 5,659 5,307 7,435 5,708 5,969 6,273 6,298 56 4,279 3,857 3,015 2,741 2,751 2,919 2,907 2,826 2,705 2,783 57 Egypt 186 196 225 181 237 204 193 194 202 224 58 Morocco 441 481 429 440 454 686 645 653 647 457 59 South Africa 1,041 633 671 584 579 563 531 544 454 604 60 Zaire 4 4 2 2 2 2 7 2 2 1 61 Oil-exporting countries5 1,002 1,129 842 700 658 657 659 614 615 586 62 Other 1,605 1,414 846 834 821 807 872 819 785 911 63 Other 2,987 2,860 3,129 3,349 3,290 3,361 2,764 3,454 3,773 2,966 64 Australia 2,243 2,037 2,186 1,768 1,877 1,999 2,072 2,072 2,632 2,095 65 Other 744 823 943 1,581 1,413 1,362 692 1,382 1,141 871 66 Nonmonetary international and regional organizations6. . . 5,082 2,405 4,591 2,937 1,610 2,633 1,317 1,417 2,827 1,658 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab dealers. Emirates (Trucial States). 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements. Since December 1992, has included all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1995 TTyyppee ooff ccllaaiimm Apr. May June July Aug. Sept.r Oct.p 1 Total 559,495 560,040 580,496 625,934 622,095 2 Banks' claims 499,437 486,250 483,372 480,697 483,947 519,489 506,828 518,721r 513,235 519,392 3 Foreign public borrowers 31,367 29,004 23,470 22,193 19,075 23,772 19,716 21,423 22,291 20,937 4 Own foreign offices2 303,991 284,270 282,143 282,383 285,843 300,564 292,026 295,929 296,897 301,464 Unaffiliated foreign banks 109,342 100,169 111,494 104,883 104,005 112,162 113,309 11 l,578r 107,011 103,307 6 Deposits 61,550 49,186 59,142 54,970 51,454 58,583 59,456 57,386 50,490 46,697 7 Other 47,792 50,983 52,352 49,913 52,551 53,579 53,853 54,l92r 56,521 56,610 8 All other foreigners 54,737 72,807 66,265 71,238 75,024 82,991 81,777 89,79 lr 87,036 93,684 9 Claims of banks' domestic customers3 60,058 73,790 97,124 106,445 108,860 10 Deposits 15,452 34,291 56,649 58,526 51,960 11 Negotiable and readily transferable instruments4 31,474 25,819 27,188 31,591 40,192 12 Outstanding collections and other claims 13,132 13,680 13,287 16,328 16,708 MEMO 13 Customer liability on acceptances 8,655 7,846 8,377 8,500 8,751 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 38,623 29,287 32,004 26,429 29,437 35,409 34,221 35,133 34,203 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1994 1995 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999911 11999922 11999933 Dec. Mar. Juner Sept.p 1 Total 195,302 195,119 201,611 201,117 198,959 218,572 215,744 By borrower 2 Maturity of one year or less 162.573 163,325 171,786 175,429 170,580 190,272 183,362 3 Foreign public borrowers 21,050 17,813 17,763 15,557 15,749 15,917 14,307 4 All other foreigners 141,523 145,512 154,023 159,872 154,831 174,355 169,055 5 Maturity of more than one year 32,729 31,794 29,825 25,688 28,379 28,300 32,382 6 Foreign public borrowers 15,859 13,266 10,880 7,670 7,689 7,726 7,721 7 All other foreigners 16,870 18,528 18,945 18,018 20,690 20,574 24,661 By area Maturity of one year or less 8 Europe 51,835 53,300 57,392 58,188 54,389 60,573 51,869 9 Canada 6,444 6,091 7,673 7,360 7,417 8,210 7,765 10 Latin America and Caribbean 43,597 50,376 59,689 61,448 63,803 71,114 73,610 11 Asia 51,059 45,709 41,419 40,696 38.213 44,328 44,157 12 Africa 2,549 1,784 1,820 1,371 1,223 1,443 1,259 13 All other3 7,089 6,065 3,793 6,366 5,535 4,604 4,702 Maturity of more than one year 14 Europe 3,878 5,367 5,276 3,865 4,496 3,700 4,361 15 Canada 3,595 3,287 2,558 2,495 3,596 3,084 2,795 16 Latin America and Caribbean 18,277 15,312 14,007 12,230 13,003 14,116 17,477 17 Asia 4,459 5,038 5,600 4,731 5,215 5,488 5,790 18 Africa 2,335 2,380 1,936 1,553 1,592 1,372 1,372 19 All other3 185 410 448 814 477 540 587 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity. dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • February 1996 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1993 1994 1995 Area or country lyy 1 19yz Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 343.5 344.7 387.4 405.2 476.4 485.6 485.2 496.7 537.6 523.3 519.7 2 G-10 countries and Switzerland 137.5 131.3 152.0 161.6 180.3 174.9 183.7 191.7 207.0 199.2 196.9 3 Belgium and Luxembourg .0 5.6 7.1 7.4 8.0 8.6 9.6 7.0 8.3 7.3 8.5 4 France 11.3 15.3 12.3 12.0 16.6 19.1 21.2 19.7 20.1 19.3 17.4 5 Germany 8.3 9.1 12.2 12.6 29.9 25.0 24.2 23.8 30.4 29.1 27.7 6 Italy 5.6 6.5 8.7 7.6 15.6 14.0 11.6 11.8 10.6 10.7 12.6 7 Netherlands .0 2.8 3.7 4.7 4.1 3.6 3.5 3.6 3.6 4.3 3.9 8 Sweden 1.9 2.3 2.5 2.7 2.9 3.0 2.6 2.7 3.1 3.0 2.7 9 Switzerland 3.4 4.8 5.6 5.9 6.3 6.5 6.2 6.9 6.2 6.1 6.0 10 United Kingdom 68.4 59.7 73.9 84.2 69.5 64.6 78.4 85.5 89.5 86.5 82.3 11 Canada 5.8 6.3 9.7 6.8 7.8 9.7 9.9 9.7 10.6 10.8 11.8 12 Japan 22.2 18.8 16.4 17.6 19.6 20.7 16.5 21.0 24.5 22.1 24.0 13 Other industrialized countries 22.8 24.0 26.0 24.6 41.2 41.7 41.6 45.2 43.9 43.2 49.6 14 Austria .6 1.2 .6 .4 1.0 1.0 1.0 I.I .9 .7 1.2 15 Denmark .9 .9 1.1 1.0 I.I I.I .9 1.2 1.6 I.I 1.6 16 Finland .7 .7 .6 .4 1.0 .8 .8 1.0 1.1 .5 .7 17 Greece 2.6 3.0 3.2 3.2 3.8 4.6 4.3 4.5 4.9 5.0 5.1 18 Norway 1.4 1.2 2.1 1.7 1.6 1.6 1.6 2.0 2.4 1.8 2.3 19 Portugal .6 .4 1.0 .8 1.2 I.I 1.0 1.2 1.0 1.2 1.7 20 Spain 8.3 8.9 9.3 8.9 12.3 11.7 13.1 13.6 14.1 13.3 13.3 21 Turkey 1.4 1.3 2.1 2.1 2.4 2.1 1.8 1.6 1.4 1.4 2.0 22 Other Western Europe 1.8 1.7 2.2 2.6 3.0 2.8 1.0 2.7 2.5 2.6 3.0 23 South Africa 1.9 1.7 1.2 1.1 1.2 1.2 1.2 1.0 1.4 1.4 1.3 24 Australia 2.7 2.9 2.8 2.3 12.7 13.7 15.0 15.4 12.6 14.3 17.4 25 OPEC2 14.5 15.8 14.8 17.4 22.9 21.6 21.6 23.8 19.5 20.3 22.3 26 Ecuador .7 .6 .5 .5 .5 .5 .4 .5 .5 .7 .7 27 Venezuela 5.4 5.2 5.4 5.1 4.7 4.4 3.9 3.7 3.5 3.5 3.0 28 Indonesia 2.7 2.7 2.8 3.3 3.4 3.2 3.3 3.8 4.0 4.1 4.4 29 Middle East countries 4.2 6.2 4.9 7.4 13.2 12.4 13.0 15.0 10.7 11.4 13.5 30 African countries 1.5 1.1 I.I 1.2 1.1 1.1 1.0 .9 .7 .6 .6 31 Non-OPEC developing countries 64.3 72.6 77.4 82.9 94.1 94.5 92.9 95.9 98.4 103.5 103.6 Latin America 32 Argentina 4.8 6.6 7.2 7.7 8.7 9.9 10.5 11.2 11.4 12.3 10.9 33 Brazil 9.6 10.8 11.7 12.0 12.7 12.0 9.3 8.4 9.2 10.0 13.2 34 Chile 3.6 4.4 4.7 4.7 5.1 5.1 5.4 6.1 6.3 7.0 6.3 35 Colombia 1.7 1.8 2.0 2.1 2.2 2.4 2.4 2.6 2.6 2.6 2.9 36 Mexico 15.5 16.0 17.5 17.6 18.8 18.4 19.6 18.4 17.8 17.6 16.3 37 Peru .4 .5 .3 .4 .6 .6 .6 .5 .6 .8 .7 38 Other 2.1 2.6 2.7 3.1 2.8 2.7 2.8 2.7 2.4 2.6 2.6 Asia China 39 People's Republic of China .3 .7 .5 2.0 .8 .8 1.0 1.1 1.1 1.4 1.7 40 Republic of China (Taiwan) 4.1 5.2 6.4 7.3 7.6 7.1 6.9 9.2 8.5 9.0 9.0 41 India 3.0 3.2 2.9 3.2 3.4 3.7 3.9 4.2 3.8 4.0 4.4 42 Israel .5 .4 .4 .5 .4 .4 .4 .4 .6 .6 .5 43 Korea (South) 6.8 6.6 6.5 6.7 14.1 14.3 14.4 16.2 16.9 18.7 18.0 44 Malaysia 2.3 3.1 4.1 4.4 5.2 5.2 3.9 3.1 3.9 4.1 4.3 45 Philippines 3.7 3.6 2.6 3.1 3.4 3.2 2.9 3.3 3.0 3.6 3.3 46 Thailand 1.7 2.2 2.8 3.1 3.0 3.3 3.5 2.1 3.3 3.8 3.9 47 Other Asia 2.4 3.1 3.4 3.1 3.1 3.2 3.4 4.7 4.9 3.5 3.6 Africa 48 Egypt .4 .2 .2 .4 .4 .5 .3 .3 .4 .4 .4 49 Morocco .7 .6 .6 .7 .7 .7 .7 .6 .6 .9 .9 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa-1 .7 1.0 .8 .8 1.0 .9 .9 .8 .7 .6 .7 52 Eastern Europe 2.4 3.1 3.0 3.1 3.4 3.0 3.0 2.7 2.3 1.8 3.4 53 Russia4 .9 1.9 1.7 1.6 1.5 1.2 1.1 .8 .6 .4 .6 54 Yugoslavia5 .9 .6 .6 .6 .5 .5 .5 .5 .4 .3 .4 55 Other .7 .6 .7 .9 1.4 1.4 1.5 1.4 1.2 1.0 2.3 56 Offshore banking centers 53.8 58.1 67.9 72.0 78.1 79.9 76.3 70.5 84.4 83.0 84.0 57 Bahamas 11.9 6.9 12.7 10.8 13.4 13.0 13.4 10.0 12.6 7.9 10.4 58 Bermuda 2.3 6.2 5.5 8.6 8.9 6.5 6.0 8.3 8.7 8.5 6.3 59 Cayman Islands and other British West Indies 15.5 21.5 15.1 17.4 17.5 23.5 21.1 19.8 19.3 23.3 23.3 60 Netherlands Antilles 1.2 I.I 2.8 2.6 3.5 2.5 1.7 1.0 .9 2.5 5.5 61 Panama6 1.4 1.9 2.1 2.4 2.0 1.9 1.9 1.3 I.I 1.3 1.3 62 Lebanon 63 Hong Kong 14.3 13^9 19J 18.7 19/7 2L8 203 19^9 22.4 23 X) 23.1 64 Singapore 7.1 6.5 10.4 11.2 13.0 10.6 11.8 10.1 19.2 16.4 13.3 65 Other' .0 .0 .0 .1 .0 .0 .0 .1 .0 .0 .1 66 Miscellaneous and unallocated8 47.9 39.7 46.2 43.4 55.9 69.7 65.8 66.6 82.0 72.1 59.6 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia. branch of the same banking institution. 6. Includes Canal Zone. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Foreign branch claims only. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks 8. Includes New Zealand, Liberia, and international and regional organizations. are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1994 1995 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999911 11999922 11999933 Mar. June Sept. Dec. Mar. Junep 1 Total 44,708 45,511 50,330 52,102 55,350 57,190 54,586 51,092 50,565 2 Payable in dollars 39,029 37,456 38,728 38,543 42,936 42,712 39,651 37,204 35,635 3 Payable in foreign currencies 5,679 8,055 11,602 13,559 12,414 14,478 14,935 13,888 14,930 By type 4 Financial liabilities 22,518 23,841 28,959 30,485 33,245 35,871 32,852 29,752 28,832 5 Payable in dollars 18,104 16,960 18,545 18,930 22,819 23,262 19,792 17,645 15,876 6 Payable in foreign currencies 4,414 6,881 10,414 11,555 10,426 12,609 13,060 12,107 12,956 7 Commercial liabilities 22,190 21,670 21,371 21,617 22,105 21,319 21,734 21,340 21,733 8 Trade payables 9,252 9,566 8,802 8,979 9,911 9,550 10,005 9,908 10,558 9 Advance receipts and other liabilities 12,938 12,104 12,569 12,638 12,194 11,769 11,729 11,432 11,175 10 Payable in dollars 20,925 20,496 20,183 19,613 20,117 19,450 19,859 19,559 19,759 11 Payable in foreign currencies 1,265 1,174 1,188 2,004 1,988 1,869 1,875 1,781 1,974 By area or country Financial liabilities 12 Europe 12,003 13,387 18,810 20,582 23,689 23,813 20,870 16,804 17,217 13 Belgium and Luxembourg 216 414 175 525 524 661 495 612 778 14 France 2,106 1,623 2,539 2,606 1,590 2,241 1,727 2,046 1,101 15 Germany 682 889 975 1,214 939 1,467 1,961 1,755 1,589 16 Netherlands 1,056 606 534 564 533 648 552 633 530 17 Switzerland 408 569 634 1,200 631 633 688 883 1,056 18 United Kingdom 6,528 8,610 13,332 13,865 18,255 16,848 14,709 10,025 11,133 19 Canada 292 544 859 508 698 618 629 1,817 894 20 Latin America and Caribbean 4,784 4,053 3,359 3,554 3,125 3,139 3,021 3,024 2,808 21 Bahamas 537 379 1,148 1,158 1,052 1,112 926 931 851 22 Bermuda 114 114 0 120 115 15 80 149 138 23 Brazil 6 19 18 18 18 7 207 58 58 24 British West Indies 3,524 2,850 1,533 1,613 1,297 1,344 1,160 1,231 1,118 25 Mexico 7 12 17 14 13 15 0 10 3 26 Venezuela 4 6 5 5 5 5 5 5 4 27 Asia 5,381 5,818 5,689 5,650 5,694 8,149 8,147 7,911 7,720 28 Japan 4,116 4,750 4,620 4,638 4,760 6,947 7,013 6,890 6,791 29 Middle Eastern oil-exporting countries' 13 19 23 24 24 31 35 27 25 30 Africa 6 6 133 133 9 133 135 156 151 31 Oil-exporting countries2 4 0 123 124 0 123 123 122 122 32 All other3 52 33 109 58 30 19 50 40 42 Commercial liabilities 33 Europe 8,701 7,398 6,827 6,553 6,919 6,866 6,835 6,812 6,964 34 Belgium and Luxembourg 248 298 239 263 254 287 241 271 288 35 France 1,039 700 655 554 712 742 760 692 581 36 Germany 1,052 729 684 577 670 552 604 504 575 37 Netherlands 710 535 688 628 649 674 722 574 476 38 Switzerland 575 350 375 388 473 391 327 329 434 39 United Kingdom 2,297 2,505 2,039 2,142 2,309 2,350 2,444 2,848 2,902 40 Canada 1,014 1,002 879 1,039 1,070 1,068 1,037 1,198 1,107 41 Latin America and Caribbean 1,355 1,533 1,658 1,900 2,000 1,783 1,857 1,389 1,856 42 Bahamas 3 3 21 8 2 6 19 8 3 43 Bermuda 310 307 350 493 418 200 345 265 401 44 Brazil 219 209 214 209 215 147 161 97 108 45 British West Indies 107 33 27 20 24 33 23 29 12 46 Mexico 307 457 481 554 703 672 574 362 428 47 Venezuela 94 142 123 147 192 189 276 273 204 48 Asia 9,334 10,594 10,980 10,927 10,968 10,501 11,058 10,937 10,874 49 Japan 3,721 3,612 4,314 4,617 4,389 4,235 4,801 4,785 4,350 50 Middle Eastern oil-exporting countries' 1,498 1,889 1,534 1,534 1,834 1,680 1,603 1,800 1,810 51 Africa 715 568 453 478 510 468 428 463 482 52 Oil-exporting countries- 327 309 167 194 241 264 256 248 252 53 Other3 1,071 575 574 720 638 633 519 541 450 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • February 1996 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1994 1995 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999911 11999922 11999933 Mar. June Sept. Dec. Mar. June 1 Total 45,262 45,073 48,881 50,716 49,513 51,406 56,743 52,177 57,657r 2 Payable in dollars 42.564 42,281 44,883 46,596 45,018 47,065 52,690 47,878 53,276r 3 Payable in foreign currencies 2,698 2.792 3,998 4,120 4,495 4,341 4,053 4,299 4,381 By type 4 Financial claims 27,882 26,509 27,528 29,379 27,337 28,930 32,876 28,651 33,539r 5 20,080 17,695 15,681 16.404 15,842 16,764 18,720 17,218 22,149 6 Payable in dollars 19,080 16,872 15,146 15,847 15,203 16,153 18,245 16,609 21,477 7 Payable in foreign currencies 1,000 823 535 557 639 611 475 609 672 8 Other financial claims 7,802 8,814 11,847 12,975 11,495 12,166 14,156 11,433 11,390r 9 Payable in dollars 6,910 7,890 10,655 11,788 10,172 10,978 13,096 10,266 10,303r 10 Payable in foreign currencies 892 924 1,192 1,187 1,323 1.188 1,060 1,167 1,087 11 Commercial claims 17,380 18.564 21,353 21,337 22,176 22,476 23,867 23,526 24,118r 12 Trade receivables 14,468 16,007 18,390 18,480 19,375 19,713 21,034 20,581 21,177r 13 Advance payments and other claims 2,912 2,557 2,963 2,857 2,801 2,763 2,833 2,945 2,941 14 Payable in dollars 16,574 17,519 19,082 18,961 19,643 19,934 21,349 21,003 21,496r IS Payable in foreign currencies 806 1,045 2,271 2,376 2,533 2,542 2,518 2,523 2,622 BY area or country Financial claims 16 Europe 13,441 9,331 7,249 7,411 6,763 8,156 7,679 77,,227777 7,439r 1 / Belgium and Luxembourg 13 8 134 125 83 114 86 6699 81 18 France 269 764 826 790 995 831 800 808 706 19 Germany 283 326 526 466 459 413 540 443 355 20 Netherlands 334 515 502 503 472 503 429 606 601 21 Switzerland 581 490 530 535 509 747 523 490 499 22 United Kingdom 11,534 6,252 3,535 3,853 3,127 4,440 4,436 3,919 4,493r 23 Canada 2,642 1.833 2,032 2,294 3,080 3,164 3,801 4,064 3,929 24 Latin America and Caribbean 10,717 13,893 16,031 16,645 14,799 14,952 18,841 15,500 20,579r 2S Bahamas 827 778 1,310 1,385 1,288 1,086 2,369 905 2,322 26 Bermuda 8 40 125 34 39 52 27 37 85 21 Brazil 351 686 654 672 466 411 520 487 460 28 British West Indies 9,056 11.747 12,536 13,281 11,993 12,271 14,880 13,274 I6,798r 29 Mexico 212 445 868 850 614 655 606 475 524 30 Venezuela 40 29 161 26 33 32 35 27 27 31 640 864 1,657 2,550 2.234 2,175 1,838 1,457 1,226 32 Japan 350 668 892 1,657 1,349 662 931 584 467 33 Middle Eastern oil-exporting countries' 5 3 3 5 2 19 141 4 5 34 Africa 57 83 99 76 74 87 249 77 64 3S Oil-exporting countries" 1 9 1 0 1 1 0 9 9 36 All other1 385 505 460 403 387 396 468 276 302 Commercial claims 37 Europe 8,193 8,451 9,105 8,793 8,952 8,812 9,517 9,047 9,23 r 38 Belgium and Luxembourg 194 189 184 182 189 179 213 198 216 39 France 1.585 1.537 1,947 1,830 1,779 1,766 1,879 1,783 1,673 40 Germany 955 933 1,018 950 940 883 1,027 995 l,026r 41 Netherlands 645 552 423 355 294 331 307 335 349 42 Switzerland 295 362 432 415 686 538 557 562 620 43 United Kingdom 2,086 2.094 2,377 2,348 2,443 2,505 2,547 2,404 2,460r 44 Canada 1,121 1,286 1,781 1,870 1,875 1,906 1,988 2,006 1,986r 45 Latin America and Caribbean 2.655 3.043 3,274 3.560 3,900 3,960 4,117 4,146 4,344r 46 Bahamas 13 28 11 13 18 34 9 17 21 47 Bermuda 264 255 182 222 295 246 234 202 207 48 Brazil 427 357 460 419 500 471 612 678 766r 49 British West Indies 41 40 71 58 67 49 83 59 85 50 Mexico 842 924 990 1,011 1,048 1,136 1,243 1,114 1,113r SI Venezuela 203 345 293 292 303 388 348 294 318 52 Asia 4,591 4,866 5.979 5.932 6,266 6,561 6,881 7,013 7,18lr 53 Japan 1,899 1,903 2,275 2,447 2,490 2,586 2,623 2,725 2,806r 54 Middle Eastern oil-exporting countries' 620 693 701 654 608 605 690 690 697 55 Africa 430 554 493 487 472 445 454 475 463r 56 Oil-exporting countries" 95 78 72 88 78 59 67 75 61 57 Other1 390 364 721 695 711 792 910 839 913r 1. Comprises Bahrain, Iran. Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A63 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1995 1995 Transaction, and area or country 1993 1994 Ja O n c .— t. Apr. May June July Aug. Sept. Oct.p U.S. corporate securities STOCKS 1 Foreign purchases 319,664 350,558 374,344 30,082 38,769 45,429 42,444 41,908 44,448 41,487 2 Foreign sales 298,086 348,648 368,174 29,206 36,087 43,199 40,009 39,366 44,217 42,856 3 Net purchases, or sales (—) 21,578 1,910 6,170 876 2,682 2,230 2,435 2,542 231 -1,369 4 Foreign countries 21,306 1,900 6,362 877 2,692 2,238 2,443 2,565 294 -1,329 5 Europe 10,658 6,717 2,883 165 381 -44 2,045 1,836 -1,319 1,647 6 France -103 -201 -659 -80 -66 -79 261 17 -126 -54 7 Germany 1,642 2,110 -1,695 -261 -528 -224 8 -104 -136 5 X Netherlands -602 2,251 2,919 349 174 70 364 431 197 528 9 Switzerland 2,986 -30 -2,701 -673 -476 -201 -20 -847 9 449 10 United Kingdom 4,559 840 6,184 1,125 1,382 243 1,445 2,330 -1,114 878 11 Canada -3,213 -1,160 -1,747 -197 75 -740 -425 -10 -197 -74 12 Latin America and Caribbean 5,719 -2,108 4,231 570 -26 1,651 881 1,811 751 -2,921 13 Middle East1 -321 -1,142 -469 59 -87 -99 -24 -5 -77 -8 14 Other Asia 8,198 -1,207 1,278 314 2,013 1,358 107 -961 1,048 61 15 Japan 3,825 1,190 -3,550 29 86 -466 141 -1,076 -598 56 16 Africa 63 29 29 -10 41 15 -5 17 34 -17 17 Other countries 202 771 157 -24 295 97 -136 -123 54 -17 18 Nonmonetary international and regional organizations 272 10 -192 -1 -10 -8 -8 -23 -63 --4400 BONDS2 19 Foreign purchases 283,824 289,614 237,868 18,163 22,830 27,934 23,811 24,742 26,615r 26,327 20 Foreign sales 217,824 229,665 164,247 14,111 16,609 18,774 14,943 16,741 17,338r 19,199 21 Net purchases, or sales (—) 66,000 59,949 73,621 4,052 6,221 9,160 8,868 8,001 9,277r 7,128 22 Foreign countries 65,462 59,064 74,056 4,035 6,309 9,167 9,035 7,982 9,255r 7,196 23 Europe 22,587 37,093 57,717 2,271 4,944 7,772 6,246 5,561 6,782r 6,321 24 France 2,346 242 905 -874 27 44 7 538 63 732 25 Germany 887 657 4,676 -83 -17 667 51 1,163 916 113 26 Netherlands -290 3,322 1,143 -37 191 -59 557 45 203 204 27 Switzerland -627 1,055 774 -87 124 -130 317 -99 343 148 28 United Kingdom 19,686 31,592 48,266 3,396 4,764 7,062 4,969 3,775 4,334r 4,502 29 Canada 1,668 2,958 2,421 184 277 159 169 415 349 139 30 Latin America and Caribbean 15,691 5,442 5,564 889 678 289 1,145 754 1,720 -61 31 Middle East1 3,248 771 1,494 326 -26 64 348 281 241 -246 32 Other Asia 20,846 12,153 6,657 356 426 785 1,189 919 139r 1,126 33 Japan 11,569 5,486 4,053 275 871 293 1,026 1,008 — 371r 645 34 Africa 1,149 -7 -92 -11 -5 47 -13 64 23 -223 35 Other countries 273 654 295 20 15 51 -49 -12 1 140 36 Nonmonetary international and regional organizations 538 885 -435 17 -88 -7 -167 19 22 --6688 Foreign securities 37 Stocks, net purchases, or sales (-) -62,691 -47,236 -41,840 -2,135 -3,648 -4,379 -8,188 -5,904 —7,955r -5,494 38 Foreign purchases 245,490 386,942 282,762 24,519 29,229 29,067 28,582 30,867 28,712 29,382 39 Foreign sales 308,181 434,178 324,602 26,654 32,877 33,446 36,770 36,771 36,667r 34,876 40 Bonds, net purchases, or sales (-) -80,377 -9,272 -35,681 -824 -4,368 -7,473 -5,009 —3,755r —4,868r -5,569 41 Foreign purchases 745,952 848,288 737,493 53,639 75,199 96,154 66,737 72,277r 83,396r 81,257 42 Foreign sales 826,329 857,560 773,174 54,463 79,567 103,627 71,746 76,032 88,264r 86,826 43 Net purchases, or sales (—), of stocks and bonds .... -143,068 -56,508 -77,521 -2,959 -8,016 -11,852 -13,197 -9,659r — 12,823r -11,063 44 Foreign countries -143,232 -57,028 -76,390 -3,115 -8,020 -11,541 -12,978 —9,486r -12,878r -10,609 45 Europe -100,872 -2,712 -36,107 -1,893 -7,561 -5,857 -7,961 -2,539 —2,924r -5,810 46 Canada -15,664 -7,475 -7,278 -1,193 -1 -1,425 -1,751 — 851r — 3,133r 1,563 47 Latin America and Caribbean -7,600 -18,347 -6,508 585 471 -512 -659 817 781r -3,883 48 -15,159 -24,276 -26,620 -558 -1,388 -2,941 -3,158 -7,250 —7,533 -1,770 49 Africa -185 -467 -302 -14 -68 -67 -45 34 —117 5 50 Other countries -3,752 -3,751 425 -42 527 -739 596 303 48 -714 51 Nonmonetary international and regional organizations 164 520 -1,131 156 4 -311 -219 -173 55 --445544 I. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • February 1996 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Millions of dollars; net purchases, or sales (-) during period 1995 1995 AArreeaa oorr ccoouunnttrryy 11999933 11999944 Ja O n c .— t. Apr. May June July Aug. Sept. Oct.p 1 Total estimated 23,552 78,796 129,567 6,400 14,519 22,578 31,865 26,082 — ll,072r 6,303 2 Foreign countries 23,368 78,632 129,079 6,416 14,568 22,395 31,382 26,442 -1 l,002r 6,134 3 Europe -2,373 38,608 51,746 3,152 509 2,665 13,336 9,170 6,377 -3,124 4 Belgium and Luxembourg 1,218 1,098 339 62 -512 -148 -53 580 143 -25 Germany -9,976 5,709 5,632 1,216 -4,129 -1,866 1,039 2,995 2,568 2,831 6 Netherlands -515 1,254 2,161 -243 40 1,078 883 -1.468 -1,915 1,644 7 Sweden 1,421 794 673 -70 211 63 124 100 61 92 8 Switzerland -1,501 481 760 -173 353 9 206 -515 818 174 9 United Kingdom 6,197 23,438 37,809 2,251 5,203 1,359 7,315 7,950 5,570 -5,965 10 Other Europe and former U.S.S.R 783 5,834 4,372 109 -657 2,170 3,822 -472 -868 -1,875 11 Canada 10,309 3,491 87 -1,391 201 433 720 -825 -2,284r -1,864 12 Latin America and Caribbean -4,561 -10,179 31,351 3.212 3,803 5,368 513 11,265 -5,299 17,453 13 Venezuela 390 -319 -295 184 -16 121 -114 -359 -524 -92 14 Other Latin America and Caribbean -5,795 -20,493 16,719 2,189 2,425 5,158 1,034 5,364 1,171 3,033 13 Netherlands Antilles 844 10,633 14.927 839 1,394 89 -407 6,260 -5,946 14,512 lb Asia 20,582 47,042 44,269 1,189 9,845 12,605 16,490 7,322 -10,055 -6,879 17 Japan 17,070 29,518 21,242 1,487 6,291 5,585 6,658 5,430 -4,021 -10,115 18 Africa 1,156 240 754 -36 39 242 -1 -130 108 501 19 Other -1,745 -570 872 290 171 1,082 324 -360 151 47 20 Nonmonetary international and regional organizations 184 164 488 -16 -49 183 483 -360 -70 169 21 International -330 526 -12 -294 356 -409 311 -140 -196 2 22 Latin American regional 653 -154 423 228 -528 629 99 -10 -6 185 MEMO 23 Foreign countries 23,368 78,632 129,079 6,416 14,568 22,395 31,382 26,442 -11,002' 6,134 24 Official institutions 1,306 41,822 37,791 3,158 -1,774 10,850 16,780 -364 -4,525r 5,705 25 Other foreign 22,062 36,810 91,288 3,258 16,342 11,545 14,602 26,806 -6,477r 429 Oil-exporting countries 2b Middle East" -8,836 -38 4,986 733 -1,063 815 3,582 1,890 -50 -624 27 Africa3 -5 0 2 0 0 1 0 0 0 0 I. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A65 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS' Percent per year, averages of daily figures Rate on Dec. 31, 1995 Rate on Dec. 31, 1995 Country Country Month Month effective effective Austria. . 3.0 Dec. 1995 Germany . . . 3.0 Dec. 1995 Belgium. 3.0 Dec. 1995 Italy 9.0 June 1995 Canada. . 5.79 Dec. 1995 Japan .5 Sept. 1995 Denmark 4.25 Dec. 1995 Netherlands . 2.75 Dec. 1995 France" . 4.45 Dec. 1995 Switzerland . 1.5 Dec. 1995 1. Rates shown are mainly those at which the central bank either discounts or makes 2. Since February 1981, the rate has been that at which the Bank of France discounts advances against eligible commercial paper or government securities for commercial banks or Treasury bills for seven to ten days. brokers. For countries with more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood that the central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES' Percent per year, averages of daily figures 1995 TTyyppee oorr ccoouunnttrryy 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec. 1 Eurodollars 3.18 4.63 5.93 5.89 5.79 5.79 5.74 5.81 5.75 5.64 2 United Kingdom 5.88 5.45 6.63 6.63 6.73 6.74 6.71 6.69 6.61 6.42 3 Canada 5.14 5.57 7.14 7.07 6.69 6.62 6.66 6.66 6.02 5.91 4 Germany 7.17 5.25 4.43 4.43 4.46 4.35 4.09 4.00 3.91 3.82 5 Switzerland 4.79 4.03 2.94 3.09 2.77 2.79 2.67 2.15 1.98 1.94 6 Netherlands 6.73 5.09 4.30 4.21 4.14 4.02 3.85 3.88 3.73 3.58 7 France 8.30 5.72 6.43 7.04 6.31 5.81 5.86 6.73 5.74 5.47 8 Italy 10.09 8.45 10.43 10.91 10.93 10.45 10.36 10.74 10.65 10.58 9 Belgium 8.10 5.65 4.73 4.62 4.52 4.41 4.20 4.14 3.87 3.74 10 Japan 2.96 2.24 1.20 1.16 .91 .82 .56 .51 .54 .52 1. Rates are for three-month interbank loans, with the following exceptions: Canada, finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • February 1996 3.28 FOREIGN EXCHANGE RATES' Currency units per dollar except as noted 1995 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999933 11999944 11999955 July Aug. Sept. Oct. Nov. Dec. 1 Australia/dollar2 67.993 73.161 74.073 72.792 74.137 75.371 75.699 74.534 74.053 2 Austria/schilling 11.639 11.409 10.076 9.765 10.168 10.270 9.955 9.974 10.142 3 Belgium/franc 34.581 33.426 29.472 28.562 29.735 30.044 29.105 29.154 29.615 4 Canada/dollar 1.2902 1.3664 1.3725 1.3612 1.3552 1.3509 1.3458 1.3534 1.3693 5 China, P.R./yuan 5.7795 8.6404 8.3700 8.3207 8.3253 8.3374 8.3353 8.3334 8.3350 6 Denmark/krone 6.4863 6.3561 5.5999 5.4073 5.6060 5.6587 5.4912 5.4923 5.5791 7 Finland/markka 5.7251 5.2340 4.3763 4.2592 4.3170 4.3754 4.2781 4.2489 4.3361 8 France/franc 5.6669 5.5459 4.9864 4.8307 4.9727 5.0352 4.9374 4.8882 4.9565 9 Germany/deutsche mark 1.6545 1.6216 1.4321 1.3886 1.4456 1.4601 1.4143 1.4173 1.4406 10 Greece/drachma 229.64 242.50 231.68 225.45 232.38 235.65 232.65 234.16 238.06 11 Hong Kong/dollar 7.7357 7.7290 7.7357 7.7385 7.7416 7.7368 7.7317 7.7338 7.7345 12 India/rupee 31.291 31.394 32.418 31.385 31.592 33.310 34.656 34.710 34.966 13 Ireland/pound2 146.47 149.69 160.35 163.96 160.25 159.05 161.32 160.54 159.18 14 Italy/lira 1,573.41 1,611.49 1,629.45 1,609.71 1,607.18 1,613.41 1,605.69 1,592.67 1,593.88 15 Japan/yen 111.08 102.18 93.96 87.40 94.74 100.55 100.84 101.94 101.85 16 Malaysia/ringgit 2.5738 2.6237 2.5073 2.4500 2.4813 2.5124 2.5324 2.5389 2.5399 17 Netherlands/guilder 1.8585 1.8190 1.6044 1.5557 1.6195 1.6354 1.5846 1.5877 1.6127 18 New Zealand/dollar2 54.127 59.358 65.625 67.417 65.687 65.607 65.899 65.224 64.996 19 Norway/krone 7.1009 7.0553 6.3355 6.1710 6.3438 6.3943 6.2397 6.2536 6.3579 20 Portugal/escudo 161.08 165.93 149.88 145.88 149.88 152.11 148.94 148.68 151.03 21 Singapore/dollar 1.6158 1.5275 1.4171 1.3984 1.4116 1.4331 1.4231 1.4128 1.4148 22 South Africa/rand 3.2729 3.5526 3.6286 3.6404 3.6402 3.6616 3.6502 3.6499 3.6632 23 South Korea/won 805.75 806.93 772.82 760.05 768.88 772.04 767.20 769.78 771.31 24 Spain/peseta 127.48 133.88 124.64 119.71 123.45 125.41 122.51 121.81 122.53 25 Sri Lanka/rupee 48.211 49.170 51.047 50.899 51.227 52.547 52.539 53.199 53.808 26 Sweden/krona 7.7956 7.7161 7.1406 7.1749 7.2383 7.1227 6.8301 6.6088 6.6393 27 Switzerland/franc 1.4781 1.3667 1.1812 1.1556 1.1962 1.1868 1.1453 1.1437 1.1631 28 Taiwan/dollar 26.416 26.465 26.495 26.278 27.234 27.432 26.925 27.257 27.315 29 Thailand/baht 25.333 25.161 24.921 24.755 24.960 25.129 25.115 25.166 25.164 30 United Kingdom/pound2 150.16 153.19 157.85 159.52 156.68 155.90 157.79 156.25 154.05 MEMO 31 United States/dollar3 93.18 91.32 84.25 81.90 84.59 85.69 84.10 84.14 85.07 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, industrial countries. The weight for each of the ten countries is the 1972-76 average world see inside front cover. trade of that country divided by the average world trade of all ten countries combined. Series 2. Value in U.S. cents. revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

67 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1995 A76 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1993 August 1993 A70 June 30, 1993 November 1993 A70 September 30, 1993 February 1994 A70 December 31, 1993 May 1994 A68 Terms of lending at commercial banks February 1995 May 1995 A68 May 1995 August 1995 A68 August 1995 November 1995 A68 November 1995 February 1996 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1994 May 1995 A72 March 31, 1995 October 1995 A68 June 30, 1995 November 1995 A72 September 30, 1995 February 1996 A72 Pro forma balance sheet and income statements for priced service operations June 30, 1992 October 1992 A70 March 31, 1995 August 1995 A76 June 30, 1995 October 1995 A72 September 30, 1995 January 1996 A68 Assets and liabilities of life insurance companies June 30,1991 December 1991 A79 September 30,1991 May 1992 A81 December 31, 1991 August 1992 A83 September 30, 1992 March 1993 A71 Residential lending reported under the Home Mortgage Disclosure Act 1994 September 1995 A68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • February 1996 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 19951 Commercial and industrial loans Weighted Loan rate (percent) Loans Loans made Amount of Average size average secured under Partici- Type o o f f lo m a a n t urity (thou lo sa a n n d s s of (thousands of maturity2 Weighted by commit- pation loans dollars) dollars) average collateral ment (percent) Days effective1 (percent) (percent) ALL BANKS 1 Overnight6 14,385,356 2 One month or less (excluding overnight) 11,161,572 1,958 6.91 26.8 66.6 6.4 3 Fixed rate 9,399,793 2,777 6.76 22.0 62.6 7.2 4 Floating rate 1,761,779 761 7.71 52.8 88.1 1.9 5 More than one month and less than one year 10,669,979 219 148 7.80 46.8 80.9 10.6 6 Fixed rate 4,826,445 292 116 7.05 34.9 83.1 11.9 7 Floating rate 5,843,534 182 175 8.43 56.6 79.1 9.5 8 Demand7 17,757,969 308 7.70 44.8 68.7 5.4 9 Fixed rate 8,282,070 1,354 6.31 19.0 64.3 7.6 10 Floating rate 9,475,899 184 8.92 67.3 72.4 3.5 11 Total short-term 53,974,877 473 7.25 32.5 68.0 5.8 12 Fixed rate (thousands of dollars) 36,660,979 1,308 26 6.62 18.8 63.9 5.9 13 1-99 366,195 18 124 10.01 83.7 40.6 .3 14 100-499 518,850 226 104 8.57 66.9 67.1 8.6 15 500-999 645,729 695 44 7.56 52.5 79.5 11.3 16 1,000-4,999 5,541,025 2,357 36 6.99 30.6 72.6 7.7 17 5,000-9,999 5,365,033 6,561 37 6.77 24.1 67.5 9.4 18 10,000 or more 24,224,148 22,122 17 6.38 12.0 61.0 4.6 19 Floating rate (thousands of dollars) 17,313,897 201 135 8.60 61.5 76.7 5.6 20 1-99 1,787,805 28 179 10.22 81.8 86.9 2.3 21 100^*99 3,321,441 199 184 9.70 75.4 87.8 4.2 22 500-999 1,564,746 665 163 9.36 71.2 88.4 10.4 23 1,000^1,999 3,843.214 1,944 140 8.65 56.9 83.2 5.6 24 5,000-9,999 1,676,083 6,665 106 8.21 58.2 79.6 7.2 25 10,000 or more 5,120.608 22,948 106 7.16 47.1 56.4 5.6 26 Total long-term 8,057,156 334 8.41 67.9 68.7 4.3 27 Fixed rate (thousands of dollars). . 1,721,950 180 8.09 61.7 53.8 6.5 28 1-99 173,042 22 9.77 91.2 26.5 .6 29 100-499 249,339 180 9.10 89.1 41.3 4.7 30 500-999 111,867 657 8.61 76.9 73.1 10.7 31 1,000 or more 1,187,701 4,770 7.58 50.3 58.6 7.3 32 Floating rate (thousands of dollars) 6,335,206 435 8.49 69.6 72.7 3.8 33 1-99 286,861 32 10.12 87.5 64.7 1.8 34 100-499 896,765 218 9.51 81.3 80.1 5.1 35 500-999 467,668 650 9.21 71.1 88.5 18.1 36 1,000 or more 4,683,912 5,440 8.13 66.1 70.3 2.2 Loan rate (percent) Days Effective1 Nominal8 LOANS MADE BELOW PRIME 37 Overnight6 14,052,969 8,518 6.48 6.28 9.1 57.8 2.2 38 One month or less (excluding overnight) 10,719,561 4,333 17 6.78 6.57 24.6 66.6 6.1 39 More than one month and less than one year 7,373,175 897 132 6.90 6.70 31.5 80.5 10.9 40 Demand7 10,968,407 2,375 6.36 6.18 26.5 60.4 6.3 41 Total short-term 43,114,112 2,542 42 Fixed rate 35,498,930 3,569 24 6.51 6.32 16.5 63.8 5.9 43 Floating rate 7,615,183 1,086 108 6.99 6.78 43.3 68.1 4.8 44 Total long-term 4,699,378 1,024 3.0 45 Fixed rate 1,198,615 485 7.31 7.10 53.0 62.8 6.7 46 Floating rate . . . 3,500,763 1,654 7.42 7.17 57.8 66.1 1.7 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 1995'—Continued Commercial and industrial loans—Continued Type o o f f lo m a a n t urity (tho d u o lo s ll a a a n n r s d s s ) of ((( AAA ttthhh vvv ooo ddd eee uuu ooo rrraaa sss llllll aaa ggg aaa nnn eee rrr ddd sss sss sss ))) iiizzz ooo eee fff WW mm aa aa vv ee D tt ii ee uu gg a rr rr y hh aa ii s tt gg tt ee yy ee dd 22 W eff e e L i c g o t h i a t v n e e d 3 r ate (pe S rc t e e a r n n ro t d ) r a 4 r d ( ss p LL ee e cc oo r bb uu c aa yy rr e nn ee n ss dd t ) LLoo ( cc p aa oo uu nn e mm nn ss r c dd mm e ee mm n ii rr tt aa t -- ) dd ee pppaaa ((( ttt PPP ppp iiiooo eee aaa nnn rrr rrr ccc ttt iii eee ccc lll nnn ooo iii--- ttt aaa ))) nnn sss ba c s o e M r m a p o t m e r s i 5 t o c n in g LARGE BANKS 1 Overnight6 9,878,130 7,015 • 6.62 .24 11.4 68.0 1.4 Domestic 2 One month or less (excluding overnight) 8,432,075 3,828 18 6.93 .18 29.7 61.5 3.9 Other 3 Fixed rate 6,882,617 4,899 17 6.77 .12 24.5 55.2 4.5 Other 4 Floating rate 1,549,458 1,943 21 7.61 .29 52.7 89.3 1.3 Foreign 5 More than one month and less than one year 5,680,852 862 130 7.48 .15 41.0 88.4 10.0 Foreign 6 Fixed rate 2,928,564 2,200 97 7.00 .16 34.9 85.1 10.5 Foreign 7 Floating rate 2,752,288 523 165 7.99 .20 47.5 92.0 9.3 Prime 8 Demand7 12,767,728 534 * 7.24 .18 38.5 62.2 4.9 Other 9 Fixed rate 6,944,060 4,652 6.13 .21 16.3 61.6 5.9 Other 10 Floating rate 5,823,668 260 8.55 .20 64.9 62.9 3.8 Prime 11 Total short-term 36,758,785 1,078 38 7.04 .15 29.6 67.7 4.5 Other 12 Fixed rate (thousands of dollars) 26,440,907 4,712 21 6.58 .16 18.8 64.7 4.4 Other 13 1-99 30,533 33 108 8.98 .21 74.8 70.7 2.7 Other 14 100-499 224,360 264 65 7.96 .21 59.9 74.8 7.4 Other 15 500-999 443,272 700 37 7.44 .29 49.8 78.4 8.9 Other 16 1,000-4,999 4,114,280 2,357 34 6.97 .19 31.5 68.1 5.1 Other 17 5,000-9,999 4,191,855 6,594 22 6.80 .10 24.5 62.0 4.7 Other 18 10,000 or more 17,436,607 21,161 16 6.39 .11 13.0 64.0 4.0 Domestic 19 Floating rate (thousands of dollars) 10,317,877 362 108 8.22 .19 57.2 75.3 4.8 Prime 20 1-99 596,174 33 165 10.04 .04 75.1 89.0 1.4 Prime 21 100-499 1,565,993 205 171 9.64 .04 73.2 90.5 3.0 Prime 22 500-999 836,893 668 152 9.20 .07 66.1 86.8 7.3 Prime 23 1,000-4,999 2,166,140 1,969 129 8.36 .12 49.1 85.0 5.6 Prime 24 5,000-9,999 1,057,078 6,657 85 7.87 .40 39.2 73.2 3.2 Prime 25 10,000 or more 4,095,599 21,081 87 7.23 .43 55.6 60.6 5.6 Other Months 26 Total long-term 6,028,605 1,130 45 8.21 .15 66.1 71.2 3.2 Prime 27 Fixed rate (thousands of dollars) . . 994,592 1,158 43 7.78 .22 51.5 56.3 8.7 Prime 28 1-99 12,433 29 44 9.32 .24 85.8 49.0 4.0 Other 29 100-499 52,156 237 48 8.32 .41 67.4 72.6 3.2 Other 30 500-999 43,106 687 49 8.22 .39 78.7 87.4 17.5 Foreign 31 1,000 or more 886,897 5,975 42 7.71 .39 48.8 53.9 8.7 Prime 32 Floating rate (thousands of dollars) 5,034,012 1,125 46 8.30 .14 68.9 74.1 2.1 Prime 33 1-99 67,886 42 35 9.81 .07 86.8 80.0 3.2 Prime 34 100-499 416,458 235 35 9.42 .10 75.5 89.3 7.6 Prime 35 500-999 264,443 682 36 9.06 .24 66.7 85.9 5.6 Prime 36 1,000 or more 4,285,225 6,058 48 8.12 .34 68.1 71.8 1.3 Prime Loan rate (percent) DDaayyss PPrriimmee rraattee99 Effective3 Nominal8 LOANS MADE BELOW PRIME1" 37 Overnight6 9,685,436 8,085 6.56 6.36 9.7 67.4 1.4 8.75 38 One month or less (excluding overnight) 8,154,336 5,084 17 6.83 6.61 27.9 61.0 3.5 8.75 39 More than one month and less than one year 4,412,841 2,807 116 6.90 6.70 30.9 87.9 7.5 8.75 40 Demand7 9,229,294 3,736 6.24 6.06 26.0 56.0 4.8 8.75 41 Total short-term 31,481,906 4,600 30 6.58 6.38 22.2 65.3 3.8 8.75 42 Fixed rate 25,933,638 5,782 20 6.52 6.32 17.4 64.2 4.3 8.75 43 Floating rate 5,548,268 2,352 88 6.88 6.67 44.6 70.5 1.6 8.75 Months 44 Total long-term 3,868,491 3,457 44 7.37 7.13 58.2 67.1 2.1 8.75 45 Fixed rate 777,077 1,752 43 7.27 7.05 47.4 63.7 7.7 8.75 46 Floating rate ... 3,091,414 4,575 44 7.40 7.15 60.9 68.0 .7 8.75 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • February 1996 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 1995'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans made Amount of Average size average secured under Partici- Type o o f f lo m a a n t urity (thou lo sa an n s d s of (thousands of maturity" Weighted by commit- pation loans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) OTHER BANKS 1 Overnight6 4,507,226 7,423 2 One month or less (excluding overnight) 2,729,497 780 6.86 18.1 82.5 13.9 3 Fixed rate 2,517,176 1,271 6.72 15.1 82.7 14.6 4 Floating rate 212,321 140 8.43 53.9 79.0 5.8 5 More than one month and less than one year 4,989,128 119 169 8.17 53.4 72.4 11.4 6 Fixed rate 1,897,882 125 146 7.12 34.9 79.9 14.1 7 Floating rate 3,091,246 115 184 8.81 64.7 67.7 9.7 8 Demand7 4,990,241 148 8.90 60.8 85.1 6.7 9 Fixed rate 1,338,010 289 7.24 32.7 78.4 16.9 10 Floating rate 3,652,231 125 9.50 71.1 87.6 3.0 11 Total short-term 17,216,092 215 7.71 38.7 68.8 8.4 12 Fixed rate (thousands of dollars) 10,220,072 456 36 6.72 18.7 62.0 9.7 13 1-99 335,662 17 125 10.11 84.5 37.9 .1 14 100-499 294,489 203 132 9.04 72.3 61.2 9.6 15 500-999 202,458 684 56 7.83 58.3 82.0 16.4 16 1,000-4,999 1,426,745 2,354 40 7.06 27.8 85.6 15.1 17 5,000-9,999 1,173,177 6,446 96 6.65 22.8 87.4 26.3 18 10,000 or more 6,787,540 25,046 18 6.37 9.4 53.3 6.0 19 Floating rate (thousands of dollars) 6,996,020 122 171 9.15 67.9 78.6 6.6 20 1-99 1,191,631 26 181 10.32 85.1 85.9 2.7 21 100^199 1,755,448 193 191 9.76 77.4 85.3 5.2 22 500-999 727,853 663 170 9.56 77.0 90.3 13.9 23 1,000^1,999 1,677,074 1,911 153 9.02 67.0 80.8 5.6 24 5,000-9,999 619,004 6,679 154 8.79 90.5 90.4 13.9 25 10,000 or more 1,025,009 35,511 167 6.88 13.2 39.7 5.4 26 Total long-term 2,028,551 108 73.3 61.3 27 Fixed rate (thousands of dollars). . 727,357 83 8.51 75.7 50.4 3.5 28 1-99 160,608 22 9.81 91.6 24.8 .4 29 100-499 197,183 170 9.31 94.8 33.0 5.1 30 500-999 68,761 639 8.86 75.7 64.1 6.4 31 1,000 or more 300,804 2,990 7.22 54.7 72.4 3.4 32 Floating rate (thousands of dollars) 1,301,194 129 9.24 72.0 67.4 10.3 33 1-99 218,975 30 10.22 87.6 60.0 1.3 34 100-499 480,307 206 9.59 86.4 72.0 2.9 35 500-999 203,225 612 9.41 76.7 92.0 34.3 36 1,000 or more 398,687 2,596 8.21 43.8 53.4 11.9 Loan rate (percent) Days Effective3 Nominal8 LOANS MADE BELOW PRIME 37 Overnight6 4.367,534 9,666 6.30 6.11 7.9 36.4 3.9 38 One month or less (excluding overnight) 2,565,225 2,948 13 6.64 6.43 14.1 84.3 14.6 39 More than one month and less than one year 2,960,334 446 154 6.89 6.69 32.4 69.5 15.9 40 Demand' 1,739,113 810 7.03 6.86 29.2 84.1 14.2 41 Total short-term 11,632,206 1,150 42 Fixed rate 9,565,292 1,752 32 6.49 6.30 14.2 62.6 10.3 43 Floating rate 2,066,914 444 150 7.30 7.07 39.5 61.8 13.3 44 Total long-term 830,887 240 43 7.25 49.3 56.5 45 Fixed rate 421,537 208 7.37 7.18 63.2 61.2 4.7 46 Floating rate . . . 409,349 284 7.57 7.33 35.0 51.6 8.9 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A 71 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 1995'—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan extensions 4. The chances are about two out of three that the average rate shown would differ by less made during the first full business week in the mid-month of each quarter by a sample of 340 than the amount of the standard error from the average rate that would be found by a complete commercial banks of all sizes. A sample of 250 banks reports loans to farmers. The sample survey of lending at all banks. data are blown up to estimate the lending terms at all insured commercial banks during that 5. The rate used to price the largest dollar volume of loans. Base pricing rates include the week. The estimated terms of bank lending are not intended for use in collecting the terms of prime rate (sometimes referred to as a bank's "basic" or "reference" rate); {he federal funds loans extended over the entire quarter or residing in the portfolios of those banks. Construc- rate; domestic money market rates other than the federal funds rate; foreign money market tion and land development loans include both unsecured loans and loans secured by real rates; and other base rates not included in the foregoing classifications. estate. Thus, some of the construction and land development loans would be reported on the 6. Overnight loans mature on the following business day. statement of condition as real estate loans and the remainder as business loans. Mortgage 7. Demand loans have no stated date of maturity. loans, purchased loans, foreign loans, and loans of less that $1,000 are excluded from the 8. Nominal (not compounded) annual interest rate calculated from the stated rate and other survey. As of September 30, 1990 assets of most of the large banks were at least $7.0 billion. terms of the loans and weighted by loan size. For all insured banks, total assets averaged $275 million. 9. Calculated by weighting the prime rate reported by each bank by the volume of loans 2. Average maturities are weighted by loan size; excludes demand loans. reported by that bank, summing the results, and then averaging over all reporting banks. 3. Effective (compounded) annual interest rate calculated from the stated rate and other 10. The proportion of loans made at rates below the prime may vary substantially from the terms of the loans and weighted by loan size. proportion of such loans outstanding in banks' portfolios. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • February 1996 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19951 Millions of dollars except as noted All states2 New York California Illinois IItteemm in I c T B l o u F t d a s i l 1 n g o IB nl F y s 1 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 1 Total assets4 786,902 321,155 605,018 259,066 74,938 34,380 62,501 18,658 2 Claims on nonrelated parties 701,605 179,179 537,889 145,177 71,206 15,848 58,401 12,686 3 Cash and balances due from depository institutions 148,343 119,391 127,767 100,704 7,680 6,975 10,800 10.238 4 Cash items in process of collection and unposted debits 2,871 0 2,693 0 5 0 109 0 5 Currency and coin (US. and foreign) 22 n.a. 15 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States 87.873 66,335 75,301 55,151 4,846 4,195 7,057 6,658 7 U.S. branches and agencies of other foreign banks (including IBFs) 81,831 63,193 70,045 52,160 4,408 4,109 6,936 6,643 8 Other depository institutions in United States (including IBFs).... 6,042 3,142 5,255 2,991 438 86 121 15 9 Balances with banks in foreign countries and with foreign central banks 57,239 53,056 49,492 45,553 2.793 2,780 3,627 3,580 in Foreign branches of U.S. banks 2,194 1,658 1,878 1,370 33 32 210 210 11 Other banks in foreign countries and foreign central banks 55,044 51,398 47,614 44,183 2,760 2,749 3.417 3,370 12 Balances with Federal Reserve Banks 340 n.a. 267 n.a. 34 n.a. 6 n.a. 13 Total securities and loans 407,046 48,843 279,381 35,760 56,709 7,478 40,719 1,831 14 Total securities, book value 94,297 10,653 86,403 9,431 4,498 628 2,775 568 15 U.S. Treasury 25,461 n.a. 24,305 n.a. 643 n.a. 400 n.a. 16 Obligations of U.S. government agencies and corporations 25,056 n.a. 24,372 n.a. 402 n.a. 99 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 43,779 10,653 37,726 9,431 3,452 628 2,276 568 18 Securities of foreign governmental units 14,180 4,449 12,896 4,019 737 264 453 141 19 All Other 29,599 6,204 24,830 5,412 2,716 364 1.824 427 20 Federal funds sold and securities purchased under agreements to resell 50,147 5,889 45,837 4,778 1,870 598 1,594 360 21 U.S. branches and agencies of other foreign banks 10,287 3,613 8,287 2,926 987 227 558 360 22 Commercial banks in United States 13,918 560 12,973 560 451 0 161 0 23 Other 25,942 1,716 24,577 1,292 432 371 875 0 24 Total loans, gross 312,896 38,201 193,070 26,337 52,253 6,853 37,948 1,263 25 LESS: Unearned income on loans 146 12 92 8 42 2 4 0 26 EQUALS: Loans, net 312.749 38,190 192,978 26,329 52,212 6,851 37,944 1,263 Total loans, gross, b\ category 27 Real estate loans 36,152 210 21,165 55 10,239 154 2,626 0 28 Loans to depository institutions 33,949 22,015 21,820 13,946 7,063 4,978 904 619 29 Commercial banks in United States (including IBFs) 14,609 7,965 8,456 4,060 5,372 3,538 503 331 30 U.S. branches and agencies of other foreign banks 13,086 7,624 7,296 3,803 5,253 3,508 377 282 31 Other commercial banks in United States 1,523 341 1,160 257 118 30 126 49 32 Other depository institutions in United States (including IBFs) 103 0 103 0 0 0 0 0 33 Banks in foreign countries 19,236 14,050 13.261 9,886 1,692 1,440 401 288 34 Foreign branches of U.S. banks 420 341 339 319 20 20 0 0 35 Other banks in foreign countries 18,815 13,709 12,922 9.567 1,672 1,420 401 288 36 Loans to other financial institutions 29,674 807 23,466 433 2,315 14 3,283 281 .37 Commercial and industrial loans 191,177 12,957 108,349 9,888 31,775 1,640 28,881 352 38 U.S. addressees (domicile) 166,019 145 90,158 132 28,711 9 27,683 1 39 Non-U.S. addressees (domicile) 25,158 12,812 18,191 9,756 3,065 1,631 1,198 351 40 Acceptances of other banks 946 82 624 79 167 0 96 0 41 U.S. banks 172 0 143 0 10 0 0 0 42 Foreign banks 774 82 481 79 156 0 96 0 43 Loans to foreign governments and official institutions (including foreign central banks) 3,249 1,915 2,758 1,750 172 67 104 11 44 Loans for purchasing or carrying securities (secured and unsecured) . . . 10,223 45 9,974 45 114 0 90 0 45 All other loans 5,971 140 3,363 109 408 0 1,959 0 46 Assets held in trading accounts 43,911 265 41,603 190 181 75 2,125 0 47 All other assets 52,158 4,791 43,301 3,746 4,766 721 3,162 257 48 Customers' liabilities on acceptances outstanding 10,697 n.a. 7,256 n.a. 2,563 n.a. 430 n.a. 49 U.S. addressees (domicile) 8,209 n.a. 5,088 n.a. 2,503 n.a. 383 n.a. 50 Non-U.S. addressees (domicile) 2,489 n.a. 2,168 n.a. 60 n.a. 47 n.a. 51 Other assets including other claims on nonrelated parties 41,461 4,791 36,045 3,746 2,203 721 2,732 257 52 Net due from related depository institutions5 85,297 141,976 67,130 1 13,889 3,732 18,532 4,100 5,972 53 Net due from head office and other related depositorv institutions' . , . 85,297 n.a. 67,130 n.a. 3,732 n.a. 4,100 n.a. 54 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 141,976 n.a. 113.889 n.a. 18,532 n.a. 5,972 55 Total liabilities4 786,902 321,155 605,018 259,066 74,938 34,380 62,501 18,658 56 Liabilities to nonrelated parties 659,089 298,105 548,632 242,731 52,386 33,760 36,961 14,078 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I T c B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u t F d a s i l n g I o B n F ly s ex T c IB l o u t F d a s i l n g I o B n F ly s exc T IB l o u t F d a s i l n g I o B n F ly s 57 175,086 226,308 147,276 205,006 5,343 7,816 10,947 7,284 58 Individuals, partnerships, and corporations 120,967 14,551 98,598 9,953 4,586 599 8,320 161 59 U.S. addressees (domicile) 108,088 203 91,764 203 2,851 0 7,456 0 6 6 6 0 ? 1 . Co N U m o . m S n . e - U b rc r . i a S a n . l c a h b d e a d s n r k e a s s n s d i e n e a s U g e ( n d n i o t c e i m d es ic S o i t l f a e t ) o e s th ( e i r n c fo lu r d ei i g n n g b IB an F k s s ) 3 1 1 2 8 2 , , , 9 5 8 8 9 7 8 4 9 5 6 1 0 6 4 , , , 4 1 3 6 6 4 0 2 8 2 1 8 6 6 , , , 9 8 1 4 3 4 7 4 6 5 5 6 2 9 , , , 2 3 7 3 8 5 8 2 0 1, 3 7 1 5 3 2 0 5 0 2 2 , , 2 0 5 7 9 9 0 3 9 2 1 , , 3 1 8 9 4 6 4 1 3 1 1, , 4 6 1 6 6 6 2 3 1 63 Other commercial banks in United States 14,394 4,298 12,800 3,856 230 177 1,253 201 64 Banks in foreign countries 8,356 124,416 7,806 114,074 181 4,034 159 4,456 65 Foreign branches of U.S. banks 2.774 4,721 2,618 4,189 0 269 135 238 66 Other banks in foreign countries 5,582 119,695 5,188 109,885 181 3,765 24 4,218 67 Foreign governments and official institutions (including foreign central banks) 3.484 26,842 3,095 24,702 198 914 1133 1,004 68 All other deposits and credit balances 9,020 39 8,612 38 6 0 53 1 69 Certified and official checks 270 217 22 7 70 Transaction accounts and credit balances (excluding IBFs) 8,272 6,611 369 366 71 Individuals, partnerships, and corporations 6,500 5,151 295 352 72 U.S. addressees (domicile) 4,789 4,099 218 347 73 Non-U.S. addressees (domicile) 1,711 1,052 76 6 74 Commercial banks in United States (including IBFs) 204 198 3 0 75 U.S. branches and agencies of other foreign banks 22 ' 21 0 0 76 Other commercial banks in United States 183 177 2 0 77 Banks in foreign countries 808 615 39 2 78 Foreign branches of U.S. banks 2 1 0 0 79 Other banks in foreign countries 806 614 39 2 80 Foreign governments and official institutions (including foreign central banks) 364 321 5 33 81 All other deposits and credit balances 126 109 6 1 82 Certified and official checks 270 217 22 7 83 Demand deposits (included in transaction accounts and credit balances) 7,664 6,304 316 353 84 Individuals, partnerships, and corporations 6,094 5,021 246 340 85 U.S. addressees (domicile) 4,614 4,037 182 335 86 Non-U.S. addressees (domicile) 1,480 985 64 5 87 Commercial banks in United States (including IBFs) 159 n d. 154 n.a. 1 n.a. 0 n.a. 88 U.S. branches and agencies of other foreign banks 6 4 0 0 89 Other commercial banks in United States 153 149 1 0 90 Banks in foreign countries 779 587 39 2 91 Foreign branches of U.S. banks 2 1 0 0 92 Other banks in foreign countries 778 587 39 2 93 Foreign governments and official institutions (including foreign central banks) 296 270 4 3 94 All other deposits and credit balances 66 54 2 1 95 Certified and official checks 270 217 22 7 96 Nontransaction accounts (including MMDAs, excluding IBFs) 166 814 140,665 4,973 10,581 97 Individuals, partnerships, and corporations 114,467 93,447 4,292 7,967 98 U.S. addressees (domicile) 103,299 87,665 2,633 7,109 99 Non-U.S. addressees (domicile) 11,168 5,782 1,659 858 KM) Commercial banks in United States (including IBFs) 32,784 28,749 347 2,394 I0l U.S. branches and agencies of other foreign banks 18,573 16,126 120 1,141 102 Other commercial banks in United States 14,211 12,623 227 1,252 103 Banks in foreign countries 7,549 7,191 141 158 104 Foreign branches of U.S. banks 2,772 2 617 0 135 105 Other banks in foreign countries 4,776 4,574 141 23 106 Foreign governments and official institutions (including foreign central banks) 3,120 2,774 193 10 107 All other deposits and credit balances 8,895 8,504 0 52 108 IBF deposit liabilities 226,308 205,006 7,816 7,284 109 Individuals, partnerships, and corporations 14,551 9,953 599 161 110 U.S. addressees (domicile) 203 203 0 0 111 Non-U.S. addressees (domicile) 14,348 9,750 599 161 112 Commercial banks in United States (including IBFs) 60,460 56,238 2,270 1,663 113 U.S. branches and agencies of other foreign banks 56,162 52,382 2,093 1,462 114 Other commercial banks in United States n.a. 4,298 n.a. 3,856 n.a. 177 n.a. 201 115 Banks in foreign countries 124,416 114,074 4,034 4,456 1 16 Foreign branches of U.S. banks 4,721 4,189 269 238 117 Other banks in foreign countries 119,695 109,885 3,765 4,218 118 Foreign governments and official institutions (including foreign central banks) 26,842 24,702 914 1,004 119 All other deposits and credit balances 39 38 0 1 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • February 1996 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1995'—Continued Millions of dollars except as noted All statesin I c T B l o u F t d a s i l 1 n g o I n B l F y- s 1 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g 120 Federal funds purchased and securities sold under agreements to repurchase 70,628 18,137 60,868 12,946 6,265 3,672 2,883 121 U.S. branches and agencies of other foreign banks 11,123 4,541 7,431 2,276 2,871 1,796 727 122 Other commercial banks in United States 7,218 146 5,110 112 1,501 34 545 123 Other 52,287 13,450 48,327 10,558 1,893 1,842 1,611 124 Other borrowed money 100,461 48,528 57,545 20,460 28,995 21,668 11,980 125 Owed to nonrelated commercial banks in United States (including IBFs) 32,737 16,933 13,636 4,335 15,224 10,815 2,623 126 Owed to U.S. offices of nonrelated U.S. banks 9,429 1,898 5,815 499 2,612 1,281 628 127 Owed to U.S. branches and agencies of nonrelated foreign banks 23,308 15,034 7,821 3,836 12,612 9,534 1,995 128 Owed to nonrelated banks in foreign countries 32,473 29,216 17,607 14,638 10,659 10,525 3,654 129 Owed to foreign branches of nonrelated U.S. banks 1,712 1,607 458 421 752 727 460 130 Owed to foreign offices of nonrelated foreign banks 30,761 27,608 17,149 14,217 9,907 9,798 3,194 131 Owed to others 35,251 2,379 26,302 1,487 3,112 329 5,704 132 All other liabilities 86,606 5,132 77,937 4,320 3,968 3,866 133 Branch or agency liability on acceptances executed and outstanding 11,214 7,751 2,524 442 134 Trading liabilities 39,873 75 38,623 74 106 2 1,120 135 Other liabilities to nonrelated parties 35,519 5,057 31,563 4,246 1,338 602 2,304 136 Net due to related depository institutions5 127,813 23,050 56,386 16,334 22,552 620 25,540 137 Net owed to head office and other related depository institutions'. . 127,813 n.a. 56,386 n.a. 22,552 n.a. 25,540 138 Net owed to establishing entity, head office, and other related depository institutions5 620 23,050 16,334 MEMO 139 Non-interest-bearing balances with commercial banks in United States 979 727 140 Holding of commercial paper included in total loans 654 0 580 0 141 Holding of own acceptances included in commercial and industrial loans 4,453 3,160 1,105 142 Commercial and industrial loans with remaining maturity of one year or less 111,179 62,216 19,119 17,542 143 Predetermined interest rates 64,400 36,844 10,327 12,183 144 Floating interest rates 46,780 25,372 8,793 5,359 145 Commercial and industrial loans with remaining maturity of more than one year 79,997 46,133 12,656 11,339 146 Predetermined interest rates 19,686 12,097 2,594 3,513 147 Floating interest rates 60,311 34,036 10.062 7,826 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T I l B o u t F d a s i l n g I o B n F ly s exc T I l B o u t F d a s i l n g I o B n F ly s exc T I l B o u F t d a s i l n g I o B n F ly s 111144448888 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 168,719 n.a. 142,924 n.a. 5,462 n.a. 10,743 n.a. 111144449999 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 133,771 n.a. 112,434 n.a. 3,478 n.a. 9,144 n.a. 111155550000 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 27,720 n.a. 24,665 n.a. 1,058 n.a. 1,238 n.a. 111155551111 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 7,228 n.a. 5,825 n.a. 926 n.a. 362 n.a. All states2 New York California Illinois inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 111155552222 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 0 0 0 0 0 0 0 0 111155553333 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 58,090 n.a. 29,280 n.a. 20,983 n.a. 6,605 n.a. 111155554444 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 532 0 252 0 122 0 47 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G. 11, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G.l I tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G. 11 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates that no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Index to Statistical Tables References are to pages A3-A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Deposits—Continued Agricultural loans, commercial banks, 21, 22 Federal Reserve Banks, 5,11 Assets and liabilities (See also Foreigners) Interest rates, 16 Banks, by classes, 18-23 Turnover, 17 Domestic finance companies, 36 Discount rates at Reserve Banks and at foreign central banks and Federal Reserve Banks, 11 foreign countries (See Interest rates) Financial institutions, 28 Discounts and advances by Reserve Banks (See Loans) Foreign banks, U.S. branches and agencies, 23, 72-75 Dividends, corporate, 35 Automobiles Consumer installment credit, 39 EMPLOYMENT, 45 Production, 47, 48 Eurodollars, 26 BANKERS acceptances, 11, 12, 21-24, 26 FARM mortgage loans, 38 Bankers balances, 18-23, 72-75. (See also Foreigners) Federal agency obligations, 5, 10, 11, 12, 31, 32 Bonds (See also U.S. government securities) Federal credit agencies, 33 New issues, 34 Federal finance Rates, 26 Debt subject to statutory limitation, and types and ownership Branch banks, 23 of gross debt, 30 Business activity, nonfinancial, 45 Receipts and outlays, 28, 29 Business loans (See Commercial and industrial loans) Treasury financing of surplus, or deficit, 28 Treasury operating balance, 28 CAPACITY utilization, 46 Federal Financing Bank, 33 Capital accounts Federal funds, 7, 21, 22, 23, 26, 28 Banks, by classes, 18 Federal Home Loan Banks, 33 Federal Reserve Banks, 11 Federal Home Loan Mortgage Corporation, 33, 37, 38 Central banks, discount rates, 65 Federal Housing Administration, 33, 37, 38 Certificates of deposit, 26 Federal Land Banks, 38 Commercial and industrial loans Federal National Mortgage Association, 33, 37, 38 Commercial banks, 21, 22 Federal Reserve Banks Weekly reporting banks, 21-23 Condition statement, 11 Commercial banks Discount rates (See Interest rates) Assets and liabilities, 18-23, 68-71 U.S. government securities held, 5, 11, 12, 30 Commercial and industrial loans, 18-23 Federal Reserve credit, 5, 6, 11, 12 Consumer loans held, by type and terms, 39 Federal Reserve notes, 11 Deposit interest rates of insured, 16 Federally sponsored credit agencies, 33 Loans sold outright, 22 Finance companies Real estate mortgages held, by holder and property, 38 Assets and liabilities, 36 Terms of lending, 68-71 Business credit, 36 Time and savings deposits, 4 Loans, 39 Commercial paper, 24, 26, 36 Paper, 24, 26 Condition statements (See Assets and liabilities) Financial institutions, loans to, 21, 22, 23 Construction, 45, 49 Float, 5 Consumer installment credit, 39 How of funds, 40-44 Consumer prices, 45 Foreign banks, assets and liabilities of U.S. branches and Consumption expenditures, 52, 53 agencies, 22, 23, 72-75 Corporations Foreign currency operations, 11 Profits and their distribution, 35 Foreign deposits in U.S. banks, 5, 22 Security issues, 34, 65 Foreign exchange rates, 66 Cost of living (See Consumer prices) Foreign trade, 54 Credit unions, 39 Foreigners Currency in circulation, 5, 14 Claims on, 55, 58, 59, 60, 62 Customer credit, stock market, 27 Liabilities to, 22, 54, 55, 56, 61, 63, 64 DEBITS to deposit accounts, 17 GOLD Debt (See specific types of debt or securities) Certificate account, 11 Demand deposits Stock, 5, 54 Banks, by classes, 18-23 Government National Mortgage Association, 33, 37, 38 Ownership by individuals, partnerships, and Gross domestic product, 51 corporations, 22, 23 Turnover, 17 HOUSING, new and existing units, 49 Depository institutions Reserve requirements, 9 Reserves and related items, 4, 5, 6, 13 INCOME, personal and national, 45, 51, 52 Deposits (See also specific types) Industrial production, 45, 47 Banks, by classes, 4, 18-23 Installment loans, 39 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Insurance companies, 30, 38 Repurchase agreements, 7 Interest rates Reserve requirements, 9 Bonds, 26 Reserves Commercial banks, 68-71 Commercial banks, 18 Consumer installment credit, 39 Depository institutions, 4, 5, 6, 13 Deposits, 16 Federal Reserve Banks, 11 Federal Reserve Banks, 8 U.S. reserve assets, 54 Foreign central banks and foreign countries, 65 Residential mortgage loans, 37 Money and capital markets, 26 Retail credit and retail sales, 39, 45 Mortgages, 37 Prime rate, 25 SAVING International capital transactions of United States, 53-65 Flow of funds, 40-44 International organizations, 55, 56, 58, 61, 62 National income accounts, 51 Inventories, 51 Savings institutions, 38, 39, 40 Investment companies, issues and assets, 35 Savings deposits (See Time and savings deposits) Investments (See also specific types) Securities (See also specific types) Banks, by classes, 18-23 Federal and federally sponsored credit agencies, 33 Commercial banks, 4, 18-23 Foreign transactions, 63 Federal Reserve Banks, 11,12 New issues, 34 Financial institutions, 38 Prices, 27 Special drawing rights, 5, 11, 53, 54 LABOR force, 45 State and local governments Life insurance companies (See Insurance companies) Deposits, 21, 22 Loans (See also specific types) Holdings of U.S. government securities, 30 Banks, by classes, 18-23 New security issues, 34 Commercial banks, 18-23 Ownership of securities issued by, 21, 23 Federal Reserve Banks, 5, 6, 8, 11, 12 Rates on securities, 26 Financial institutions, 38 Stock market, selected statistics, 27 Insured or guaranteed by United States, 37, 38 Stocks (See also Securities) New issues, 34 MANUFACTURING Prices, 27 Capacity utilization, 46 Student Loan Marketing Association, 33 Production, 46, 48 Margin requirements, 27 Member banks (See also Depository institutions) TAX receipts, federal, 29 Federal funds and repurchase agreements, 7 Thrift institutions, 4. (See also Credit unions and Savings Reserve requirements, 9 institutions) Mining production, 48 Time and savings deposits, 4, 14, 16, 18-23 Mobile homes shipped, 49 Trade, foreign, 54 Monetary and credit aggregates, 4, 13 Treasury cash, Treasury currency, 5 Money and capital market rates, 26 Treasury deposits, 5, 11, 28 Money stock measures and components, 4, 14 Treasury operating balance, 28 Mortgages (See Real estate loans) UNEMPLOYMENT, 45 Mutual funds, 35 U.S. government balances Mutual savings banks (See Thrift institutions) Commercial bank holdings, 18-23 Treasury deposits at Reserve Banks, 5, 11, 28 NATIONAL defense outlays, 29 U.S. government securities National income, 51 Bank holdings, 18-23, 30 Dealer transactions, positions, and financing, 32 OPEN market transactions, 10 Federal Reserve Bank holdings, 5, 11, 12, 30 Foreign and international holdings and PERSONAL income, 52 transactions, 11, 30, 64 Prices Open market transactions, 10 Consumer and producer, 45, 50 Outstanding, by type and holder, 30, 31 Stock market, 27 Rates, 26 Prime rate, 25 U.S. international transactions, 53-66 Producer prices, 45, 50 Utilities, production, 48 Production, 45, 47 Profits, corporate, 35 VETERANS Administration, 37, 38 REAL estate loans WEEKLY reporting banks, 18-23 Banks, by classes, 21, 22, 38 Wholesale (producer) prices, 45, 50 Terms, yields, and activity, 37 Type of holder and property mortgaged, 38 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. LAWRENCE B. LINDSEY OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER III, Assistant Director PORTIA W. THOMPSON, Equal Employment Opportunity KAREN H. JOHNSON, Assistant Director Programs Adviser CATHERINE L. MANN, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION J. VIRGIL MATTINGLY, JR., General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel DAVID J. STOCKTON, Deputy Director KATHLEEN M. O'DAY, Associate General Counsel MARTHA BETHEA, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel WILLIAM R. JONES, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel MYRON L. KWAST, Associate Director PATRICK M. PARKINSON, Associate Director OFFICE OF THE SECRETARY THOMAS D. SIMPSON, Associate Director WILLIAM W. WILES, Secretary LAWRENCE SLIFMAN, Associate Director JENNIFER J. JOHNSON, Deputy Secretary MARTHA S. SCANLON, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary and Ombudsman PETER A. TINSLEY, Deputy Associate Director DAY W. RADEBAUGH, JR., Assistant Secretary1 FLINT BRAYTON, Assistant Director DAVID S. JONES, Assistant Director DIVISION OF BANKING STEPHEN A. RHOADES, Assistant Director SUPERVISION AND REGULATION CHARLES S. STRUCKMEYER, Assistant Director RICHARD SPILLENKOTHEN, Director ALICE PATRICIA WHITE, Assistant Director STEPHEN C. SCHEMERING, Deputy Director JOYCE K. ZICKLER, Assistant Director JOHN J. MINGO, Senior Adviser DON E. KLINE, Associate Director GLENN B. CANNER, Adviser WILLIAM A. RYBACK, Associate Director HERBERT A. BIERN, Deputy Associate Director ROGER T. COLE, Deputy Associate Director DIVISION OF MONETARY AFFAIRS JAMES I. GARNER, Deputy Associate Director DONALD L. KOHN, Director HOWARD A. AMER, Assistant Director DAVID E. LINDSEY, Deputy Director GERALD A. EDWARDS, JR., Assistant Director BRIAN F. MADIGAN, Associate Director STEPHEN M. HOFFMAN, JR., Assistant Director RICHARD D. PORTER, Deputy Associate Director LAURA M. HOMER, Assistant Director VINCENT R. REINHART, Assistant Director JAMES V. HOUPT, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board JACK P. JENNINGS, Assistant Director MICHAEL G. MARTINSON, Assistant Director DIVISION OF CONSUMER RHOGER H PUGH, Assistant Director AND COMMUNITY AFFAIRS SIDNEY M. SUSSAN, Assistant Director GRIFFITH L. GARWOOD, Director MOLLY S. WASSOM, Assistant Director GLENN E. LONEY, Associate Director WILLIAM SCHNEIDER, Project Director, DOLORES S. SMITH, Associate Director National Information Center MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN MCNULTY, Assistant Director 1. On loan from the Division of Information Resources Management. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

79 SUSAN M. PHILLIPS JANET L. YELLEN OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES CHARLES W. BENNETT, Assistant Director MANAGEMENT JACK DENNIS, JR., Assistant Director DAVID L. SHANNON, Director EARL G. HAMILTON, Assistant Director JOHN R. WEIS, Associate Director JEFFREY C. MARQUARDT, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JOHN H. PARRISH, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General DONALD L. ROBINSON, Assistant Inspector General GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) BARRY R. SNYDER, Assistant Inspector General DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director ELIZABETH B. RIGGS, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1996 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman EDWARD G. BOEHNE LAWRENCE B. LINDSEY GARY H. STERN JERRY L. JORDAN ROBERT D. MCTEER, JR. JANET L. YELLEN EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. MICHAEL H. MOSKOW ERNEST T. PATRIKIS JACK GUYNN ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist DAVID E. LINDSEY, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary FREDERIC S. MISHKIN, Associate Economist JOSEPH R. COYNE, Assistant Secretary LARRY J. PROMISEL, Associate Economist GARY P. GILLUM, Assistant Secretary ARTHUR J. ROLNICK, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel HARVEY ROSENBLUM, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist MARK S. SNIDERMAN, Associate Economist RICHARD W. LANG, Associate Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL WILLIAM M. CROZIER, JR., First District ROGER L. FITZSIMONDS, Seventh District WALTER V. SHIPLEY, Second District THOMAS M. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD M. KOVACEVICH, Ninth District FRANK V. CAHOUET, Fourth District CHARLES E. NELSON, Tenth District RICHARD G. TILGHMAN, Fifth District CHARLES T. DOYLE, Eleventh District CHARLES E. RICE, Sixth District WILLIAM E. B. SIART, Twelfth District HERBERT V. PROCHNOW, Secretary Emeritus JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

81 CONSUMER ADVISORY COUNCIL KATHARINE W. MCKEE, Durham, North Carolina, Chairman JULIA M. SEWARD, Richmond, Virginia, Vice Chairman RICHARD AMADOR, LOS Angeles, California ERROL T. LOUIS, Brooklyn, New York THOMAS R. BUTLER, Riverwoods, Illinois WILLIAM N. LUND, Augusta, Maine ROBERT A. COOK, Baltimore, Maryland RONALD A. PRILL, Minneapolis, Minnesota ALVIN J. COWANS, Orlando, Florida LISA RICE-COLEMAN, Toledo, Ohio ELIZABETH G. FLORES, Laredo, Texas JOHN R. RINES, Detroit, Michigan HERIBERTO FLORES, Springfield, Massachusetts MARGOT SAUNDERS, Washington, D.C. EMANUEL FREEMAN, Philadelphia, Pennsylvania ANNE B. SHLAY, Philadelphia, Pennsylvania DAVID C. FYNN, Cleveland, Ohio REGINALD J. SMITH, Kansas City, Missouri ROBERT G. GREER, Houston, Texas GEORGE P. SURGEON, Arkadelphia, Arkansas KENNETH R. HARNEY, Chevy Chase, Maryland GREGORY D. SQUIRES, Milwaukee, Wisconsin GAIL K. HILLEBRAND, San Francisco, California JOHN E. TAYLOR, Washington, D.C. TERRY JORDE, Cando, North Dakota LORRAINE VANETTEN, Troy, Michigan FRANCINE JUSTA, New York, New York THEODORE J. WYSOCKI, JR., Chicago, Illinois EUGENE I. LEHRMANN, Madison, Wisconsin LILY K. YAO, Honolulu, Hawaii THRIFT INSTITUTIONS ADVISORY COUNCIL E. LEE BEARD, Hazleton, Pennsylvania, President DAVID F. HOLLAND, Burlington, Massachusetts, Vice President BARRY C. BURKHOLDER, Houston, Texas CHARLES R. RINEHART, Irwindale, California MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin JOSEPH C. SCULLY, Chicago, Illinois GEORGE L. ENGELKE, JR., Lake Success, New York RONALD W. STIMPSON, Memphis, Tennessee DOUGLAS A. FERRARO, Englewood, Colorado LARRY T. WILSON, Raleigh, North Carolina BEVERLY D. HARRIS, Livingston, Montana WILLIAM W. ZUPPE, Spokane, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated MS-127, Board of Governors of the Federal Reserve System, monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per year. (202) 728-5886. When a charge is indicated, payment should Monetary Policy and Reserve Requirements Handbook. $75.00 accompany request and be made payable to the Board of Gover- per year. nors of the Federal Reserve System or may be ordered via Securities Credit Transactions Handbook. $75.00 per year. Mastercard or Visa. Payment from foreign residents should be The Payment System Handbook. $75.00 per year. drawn on a U.S. bank. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Rates for subscribers outside the United States are as follows THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. and include additional air mail costs: 1994. 157 pp. Federal Reserve Regulatory Service, $250.00 per year. ANNUAL REPORT. Each Handbook, $90.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1994-95. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 1984 October 1985 254 pp. $12.50 1985 October 1986 231 pp. $15.00 EDUCATION PAMPHLETS 1986 November 1987 288 pp. $15.00 Short pamphlets suitable for classroom use. Multiple copies are 1987 October 1988 272 pp. $15.00 available without charge. 1988 November 1989 256 pp. $25.00 1980-89 March 1991 712 pp. $25.00 1990 November 1991 185 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1991 November 1992 215 pp. $25.00 Consumer Handbook to Credit Protection Laws 1992 December 1993 215 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small 1993 December 1994 281 pp. $25.00 Businesses 1994 December 1995 190 pp. $25.00 Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System The Federal Open Market Committee SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF Federal Reserve Bank Board of Directors CHARTS. Weekly. $30.00 per year or $.70 each in the United Federal Reserve Banks States, its possessions, Canada, and Mexico. Elsewhere, Organization and Advisory Committees $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs THE FEDERAL RESERVE ACT and other statutory provisions affect- A Consumer's Guide to Mortgage Refinancings ing the Federal Reserve System, as amended through August Home Mortgages: Understanding the Process and Your Right 1990. 646 pp. $10.00. to Fair Lending REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL How to File a Consumer Complaint RESERVE SYSTEM. Making Deposits: When Will Your Money Be Available? ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Making Sense of Savings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. SHOP: The Card You Pick Can Save You Money Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Welcome to the Federal Reserve $2.25. When Your Home is on the Line: What You Should Know GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

83 STAFF STUDIES: Only Summaries Printed in the 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- BULLETIN GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, to be added to the mailing list for the series may be sent to Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Publications Services. Ann Taylor. March 1992. 37 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by Staff Studies 1-157 are out of print. James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by PRODUCTS, by Mark J. Warshawsky with the assistance of Gregory E. Elliehausen and John D. Wolken. September Dietrich Earnhart. September 1989. 23 pp. 1993. 18 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Donald Savage. February 1990. 12 pp. January 1994. Ill pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Gregory E. Elliehausen and John D. Wolken. September PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 1990. 35 pp. by Stephen A. Rhoades. July 1994. 37 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by 1980-90, by Margaret Hastings Pickering. May 1991. George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- 21pp. ber 1995. 69 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Maps of the Federal Reserve System 1 9 2 BOSTON MINNEAPOLIS 12 _ N • NEW YORK CHICAGO! CLEVELAND PHILADELPHIA 4 | SAN FRANCISCO KANSAS CITY I RICHMOND ST. LOUIS 6 ATLANTA DALLAS ALASKA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in December 1991. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

85 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD 1 CT VA H f / VT \ wv — 5ic Ktt Buffalo •Cincinnati • Charlotte MA 1 / NY CT sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H •Nashville KY / Birmingham IN 5/ Louisville LA Jacksonville •Memphis New Orleans Ft Littl^ J- Miami ATLANTA CHICAGO ST. LOUIS 9-1 so MINNEAPOLIS 10-J 12-L Omaha* -!> MO Defter Oklahonm City KANSAS CITY 11-K Lake City A RJ~~R~VHOUSTC •Los Angeles San AiSCllio DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Cathy E. Minehan William C. Brainard Paul M. Connolly NEW YORK* 10045 John C. Whitehead William J. McDonough Thomas W. Jones Ernest T. Patrikis Buffalo 14240 Joseph J. Castiglia Carl W. Turnipseed1 PHILADELPHIA 19105 Donald J. Kennedy Edward G. Boehne Joan Carter William H. Stone, Jr. CLEVELAND* 44101 A. William Reynolds Jerry L. Jordan G. Watts Humphrey, Jr. Sandra Pianalto Cincinnati 45201 John N. Taylor, Jr. Charles A. Cerino1 Pittsburgh 15230 John T. Ryan III Harold J. Swart1 RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 Michael R. Watson William J. Tignanelli1 Charlotte 28230 James O. Roberson Dan M. Bechter1 Culpeper 22701 Julius Malinowski, Jr.2 ATLANTA 30303 Hugh M. Brown Jack Guynn Daniel E. Sweat, Jr. TTeemmppoorraarriillyy vvaaccaanntt Donald E. Nelson1 Birmingham 35283 Donald E. Boomershine Fred R. Herr1 Jacksonville 32231 Joan D. Ruffier James D. Hawkins1 Miami 33152 R. Kirk Landon James T. Curry III Nashville 37203 Paula Lovell Melvyn K. Purcell New Orleans 70161 Lucimarian Roberts Robert J. Musso CHICAGO* 60690 Robert M. Healey Michael H. Moskow Lester H. McKeever, Jr. William C. Conrad Detroit 48231 John D. Forsyth David R. Allardice1 ST. LOUIS 63166 John F. McDonnell Thomas C. Melzer Susan S. Elliott W. LeGrande Rives Little Rock 72203 To be announced Robert A. Hopkins Louisville 40232 John A. Williams Howard Wells Memphis 38101 John V. Myers John P. Baumgartner MINNEAPOLIS 55480 Jean D. Kinsey Gary H. Stern David A. Koch Colleen K. Strand Helena 59601 Lane W. Basso John D. Johnson KANSAS CITY 64198 Herman Cain Thomas M. Hoenig A. Drue Jennings Richard K. Rasdall Denver 80217 Peter I. Wold Kent M. Scott1 Oklahoma City 73125 Barry L. Eller Mark L. Mullinix Omaha 68102 LeRoy W. Thorn Harold L. Shewmaker DALLAS 75201 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus Tony J. Salvaggio El Paso 79999 Patricia Z. Holland-Branch Sammie C. Clay Houston 77252 I. H. Kempner III Robert Smith, III1 San Antonio 78295 Carol L. Thompson James L. Stull1 SAN FRANCISCO .... 94120 Judith M. Runstad Robert T. Parry James A. Vohs Patrick K. Barron Los Angeles 90051 Anita E. Landecker John F. Moore3 Portland 97208 Ross R. Runkel Raymond H. Laurence Salt Lake City 84125 Gerald R. Sherratt Andrea P. Wolcott Seattle 98124 George F. Russell, Jr. Gordon Werkema1 •Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Assistant Vice President. 3. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.7 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of pam- Shop . . . The Card You Pick Can Save You Money is phlets covering individual credit laws and topics, as designed to help consumers comparison shop when pictured below. looking for a credit card. It contains the results of the Three booklets on the mortgage process are available: Federal Reserve Board's survey of the terms of credit A Consumer's Guide to Mortgage Lock-Ins, A Consum- card plans offered by credit card issuers throughout the er's Guide to Mortgage Refinancings, and A Consumer's United States. Because the terms can affect the amount Guide to Mortgage Settlement Costs. These booklets an individual pays for using a credit card, the booklet were prepared in conjunction with the Federal Home lists the annual percentage rate (APR), annual fee, grace Loan Bank Board and in consultation with other federal period, type of pricing (fixed or variable rate), and a agencies and trade and consumer groups. The Board telephone number for each card issuer surveyed. also publishes the Consumer Handbook to Credit Pro- Copies of consumer publications are available free tection Laws, a complete guide to consumer credit pro- of charge from Publications Services, Mail Stop 127, tections. This forty-four-page booklet explains how to Board of Governors of the Federal Reserve System, shop and obtain credit, how to maintain a good credit Washington, DC 20551. Multiple copies for classroom rating, and how to dispute unfair credit transactions. use are also available free of charge. ^tSETir"* A Guide to Business Credit Costs for Women, Minorities, and Small Businesses SHOP m Tha Card You Pick Can Save You Money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis