Federal Reserve Bulletin, 1997-02

VOLUME 83 • NUMBER 2 • FEBRUARY 1997 FEDERAL RESERVE 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 67 INDUSTRIAL PRODUCTION AND CAPACITY Increase in the amount of revenue that section UTILIZATION: HISTORICAL REVISION AND 20 subsidiaries may derive from underwriting RECENT DEVELOPMENTS and dealing in securities. The Board has completed a revision of its mea- Adoption of a revised interagency uniform sures of output, capacity, and capacity utilization financial institutions rating system. for the industrial sector. The primary feature of Expansion of the Federal Reserve Board's audit the revision is a new formulation for aggregating contract. the indexes and utilization rates using weights that are updated annually rather than every five Final rule and proposed rule regarding Regulayears. The new formulation has been used to tion D. revise the output, capacity, and utilization rates Adjustment of the dollar amount that triggers back to 1977. It provides more accurate current additional disclosure for certain types of estimates of developments in industrial producmortgages. tion and capacity utilization and eliminates an earlier, small overstatement of the growth trends Proposed revision to Regulation B; withdrawal of production and capacity. of a proposed amendment to Regulation B relat- The revised indexes of industrial production ing to the collection of data on race and other and capacity show slower growth, on average, information in credit transactions; proposed than the earlier estimates while the cyclical pat- revisions to Regulation C; proposed revisions to terns of the revised measures are nearly the same Regulation M; extension of the time to receive as before. Both from 1977 to 1987 and from 1987 comments on proposed amendments to the to 1996, total industrial output grew at an average Board's margin regulations (Regulations G, T, pace of about 2.3 percent a year—about lA per- and U); proposal for a consumer information centage point less than previously estimated. The study; and possible amendments to the Truth growth of industrial capacity was revised down in Lending Act and the Real Estate Settlement nearly as much; consequently, the rate of total Procedures Act. industrial capacity utilization was also revised Publication of the annual update of the directory down only a fraction of a percentage point at the of community development investments by end of 1996. banking organizations. 93 INDUSTRIAL PRODUCTION AND CAPACITY 101 MINUTES OF THE FEDERAL OPEN MARKET UTILIZATION FOR DECEMBER 1996 COMMITTEE MEETING HELD ON Industrial production advanced 0.8 percent in NOVEMBER 13, 1996 December, to 129.1 percent of its 1987 average, At its meeting on November 13, 1996, the Comafter a similar gain in November. The utilization mittee adopted a directive that called for mainof industrial capacity increased 0.4 percentage taining the existing degree of pressure on repoint in December, to 83.8 percent, the highest serve positions and retaining a bias toward the level since August 1995. possible firming of reserve conditions during the intermeeting period. 97 ANNOUNCEMENTS Resignation of Lawrence B. Lindsey as a member 109 LEGAL DEVELOPMENTS of the Board of Governors. Various bank holding company, bank service Appointments of new members to the Thrift Insti- corporation, and bank merger orders; and pendtutions Advisory Council. ing cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 FINANCIAL AND BUSINESS STATISTICS A78 BOARD OF GOVERNORS AND STAFF These tables reflect data available as of December 26, 1996. A80 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A3 GUIDE TO TABULAR PRESENTATION A.82 FEDERAL RESERVE BOARD PUBLICATIONS A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics A84 MAPS OF THE FEDERAL RESERVE SYSTEM A50 International Statistics A86 FEDERAL RESERVE BANKS, BRANCHES, A63 GUIDE TO STATISTICAL RELEASES AND AND OFFICES SPECIAL TABLES A76 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments Carol Corrado, Charles Gilbert, and Richard start date, which is 1919 for total IP, 1948 for manu- Raddock, of the Board's Division of Research and facturing capacity, and 1967 for total industrial capac- Statistics, prepared this article. Carly Kudon pro- ity. The Federal Reserve's accompanying statistics vided research assistance. for industrial electric power use, which begin in 1972, have also been rebased and revised to incorpo- The Board of Governors of the Federal Reserve Sys- rate previously unavailable data. tem has completed a revision of its measures of output, capacity, and capacity utilization for the industrial sector. The primary feature of the revision REVISIONS TO OUTPUT, CAPACITY, AND is a new formulation for aggregating the indexes and UTILIZATION utilization rates using weights that are updated annually rather than every five years. The new formula- The revised indexes of industrial production and tion has been used to revise the output, capacity, and capacity show slower growth, on average, than the utilization rates back to 1977. It provides more accu- earlier estimates, whereas the cyclical patterns of the rate current estimates of developments in industrial revised measures are nearly the same as before production and capacity utilization and eliminates an (chart 1). Both from 1977 to 1987 and from 1987 to earlier, small overstatement of the growth trends of production and capacity. 1. Industrial production, capacity, and utilization, 1967-96 For 1992 and thereafter, the 264 individual industrial production (IP) series also incorporate additional or updated statistics that are typically available for an annual revision. Moreover, we added or altered eleven production series to improve their market classification, coverage, and reliability; some of these improvements were made to pre-1992 figures, depending on the availability of source data. The industrial capacity indexes were reestimated from 1977 onward to be consistent with the revised IP series and updated measures of manufacturers' capital input. The revisions to both production and capacity indexes are, of course, reflected in the utilization ratio. Some additional small changes to aggregate capacity utilization rates were made from 1976 back to 1967 to improve their consistency with the new formulation. Besides the reformulation of aggregates, the annual updating of all measures, and the improvement of selected series, the revised production and capacity indexes are now expressed as percentages of output in 1992. This rebasing affects all series from their NOTE. Other contributors to the revision and to this article include the following: Ana Aizcorbe, William Cleveland, Christopher Furgiuele, Michael Mohr, Cora Moyers, Gerald Storch, and Dixon Tranum. NOTE. Seasonally adjusted monthly data through December 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 Federal Reserve Bulletin • February 1997 1. Revised growth rates of industrial production and capacity, and level of capacity utilization, 1967-96 Difference between revised and earlier growth rates (percentage points) RReevviisseedd ggrroowwtthh rraattee ((ppeerrcceenntt)) IIIttteeemmm Total Due to the new formulation 1967-77 1977-87 1987-96 1977-87 1987-96 1977-87 1987-96 Production Total industrial 3.3 2.3 2.3 -.3 -.2 -.3 -.2 Manufacturing 3.4 2.7 2.5 -.5 -.3 -.5 -.3 Excluding computers 3.2 2.2 2.1 .1 -.1 -.1 -.1 Capacity Total industrial 3.5 2.4 2.2 -.2 -.2 -.4 -.1 Manufacturing 3.6 2.8 2.5 -.5 -.3 -.6 -.2 Excluding computers 3.5 2.2 2.2 .1 -.1 -.1 -.1 Capacity utilization (level, end of period) Total industrial 83.9 82.7 83.2 -.1 -.2 -.1 -.7 Manufacturing 83.3 82.7 82.2 -.2 -.1 -.2 -.7 Excluding computers 83.3 82.9 82.0 -.1 .5 -.2 -.4 NOTE. Growth rates are calculated as the average percentage change in the third quarter, and for 1996 the calculations in the last column end in the second seasonally adjusted index from the fourth quarter of the first year specified to the quarter. The capacity utilization rates are for the fourth quarter of the last year fourth quarter of the last year specified. For 1967 the calculations begin in the specified. 1996, total industrial output grew at an average pace manufacturing, growth in manufacturing excluding of about 2.3 percent per year—about lA percentage computers is reduced only a bit as a result of intropoint less than previously estimated (table 1). The ducing the new formulation (table 1). growth of industrial capacity was revised down The revisions for 1992-96 not only incorporate the nearly as much; consequently, the rate of total indus- new annual weighting formulation but also update trial capacity utilization was revised down only a source data. In particular, data from the Annual Surfraction of a percentage point at the end of 1996. (See vey of Manufactures of the Bureau of the Census the summary tables in appendix A for details of the account for most of the reduction of 1 percentage revised indexes.) point in the growth in manufacturing output in 1994 The downward revisions to production and capac- (table 2). Since 1992, growth in manufacturing has ity growth arise primarily from the introduction of averaged 3.8 percent a year, down 0.5 percentage the new formulation for those measures, which tends point from the earlier estimates. to reduce the influence of the fastest growing The largest revisions of the production indexes by industries—such as computers—on aggregate market group—upward in consumer durable goods growth. In particular, although the revised output and and downward in business equipment—relate to the capacity indexes now show slower growth for total treatment of computers; the downward revision in 2. Revised growth rates of industrial production and capacity, and level of capacity utilization, 1992-96 Revised growth rate Difference between revised and earlier growth rates (percent) (percentage points) IItteemm 1992-96 1994 1995 19% 1992-96 1994 1995 1996 Production Total industrial 3.5 5.7 1.8 3.7 -.4 -.9 .2 -.8 Manufacturing 3.8 6.5 1.6 4.0 -.5 -1.0 .2 -.8 Excluding computers 3.2 6.0 .7 3.1 -.2 -.9 .5 -.1 Capacity Total industrial 2.8 2.5 3.3 3.7 -.4 -.3 -.5 -.3 Manufacturing 3.1 2.7 3.7 4.1 -.5 -.5 -.6 -.4 Excluding computers 2.6 2.3 3.1 3.3 -.3 -.3 -.4 -.1 Capacity utilization (level, end of period) Total industrial 84.3 83.1 83.2 -.4 .2 -.2 Manufacturing 83.9 82.3 82.2 -.4 .2 -.1 Excluding computers 83.9 82.1 82.0 -.2 .5 .5 NOTE. Growth rates for 1992 to 1996 are calculated as the average percent- quarter of the previous year to the fourth quarter of the year specified. The age change in the seasonally adjusted index from the fourth quarter of 1992 to capacity utilization rates are for the last quarter of the year. the fourth quarter of 1996. Growth rates for years are calculated from the fourth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 69 equipment reflects both the new formulation and the and mining, 1 percent (table A.6). Despite the conreassignment of a portion of computer output (mainly tinuing expansion, productivity advances and the personal computers for home use) from business increased use of temporary employees have limited equipment to consumer durable goods other than the hiring of permanent employees in industry. automotive products (tables A.3 and A.5). Among Employees on manufacturing payrolls numbered major industry groups, the large upward revisions in 18.3 million at the end of 1996, up only 200,000 semiconductors and electrical machinery relate to the since 1992 and down 1 million since the late 1980s. use of quality-adjusted price indexes for semiconduc- Employment in nondurable manufacturing, where tor components to develop new annual production production growth had been slow, declined in 1995 benchmarks (tables A.4 and A.6). and 1996. The slower overall trend growth in production is reflected in the lower trend growth in the revised estimate of manufacturing capacity, which is also Production in the 1990s by Market Group 0.5 percentage point below the earlier estimate for the period from 1992 to 1996. (The effect of revisions The output of durable consumer goods helped fuel of the production indexes on our capacity indexes is the recovery and expansion from the 1991 trough described in the section on methods.) The rate of until 1994, with strong gains in light trucks, automomanufacturing capacity utilization—the ratio of pro- biles, appliances, and personal computers (chart 2 duction to capacity—in the fourth quarter of 1996 is and table A.5). Since then, real output of home comonly 0.1 percentage point lower than the earlier esti- puting equipment, adjusted for quality improvements, mate. Like the earlier estimates, the revised ones has risen more than 30 percent per year, while output show that capacity utilization reached its most recent of consumer durables other than personal computers high at the beginning of 1995 and that pressures on has flattened noticeably. industrial capacity have been lower since then. Assemblies of autos and light trucks hit a cyclical Revisions to utilization rates are quite disparate low in early 1991, climbed at a double-digit rate among industries (table A.7). Substantial upward through early 1994, and then essentially flattened. revisions in utilization in the fourth quarter of 1996 Domestic assemblies of light vehicles averaged about for miscellaneous manufacturing, apparel, aero- 11.7 million units annually from 1994 to 1996, while space and miscellaneous transportation equipment, total sales, including imports, averaged nearly 15 miland electrical machinery including semiconductors lion units. largely counterbalance the downward impact on utili- Underlying the overall trend in U.S. production of zation of the new annual weighting formulation and light vehicles during the past decade were several lower utilization rates for motor vehicles and parts, important developments: the growth of U.S. assembly computers, and other industries. plants owned by Japanese manufacturers (transplants), which substantially cut imports of vehicles; quality improvements that made American-built vehi- INDUSTRIAL DEVELOPMENTS IN THE 1990S cles more competitive; and the shift in the composition of overall output to light trucks, especially sport The industrial sector entered the 1990s operating at a utility vehicles. Assemblies of light trucks in the high level. Then, following the spike in oil prices that United States, which averaged 33/4 million units in accompanied Iraq's invasion of Kuwait in August the late 1980s, reached 5XA million in the second half 1989, a rather shallow six-month contraction ensued. of 1996; in contrast, automobile production has Output of durable manufactured goods fell 7 percent trended down from 8 million units in 1985-86 to just to a trough in March 1991 and then surpassed its over 6 million units last year—despite the growth of previous peak in the fourth quarter of 1992, with transplants. the completion of the gradual recovery from the In contrast to the substantial growth in the output contraction. of consumer durables during the 1990s, the pro- During the four years since then, the industrial duction of consumer nondurables grew at an annual sector, led by gains in durable manufacturing, has rate of only about 1 Vi percent. Significant disparities continued to expand, with only a six-month pause in growth rates are apparent among the components after January 1995. During this expansion phase, of this group. Newspaper circulation trended graduoutput in durable manufacturing advanced at an ally downward. Production of clothing fell about annual rate of 6 percent; output at utilities, roughly one-tenth in 1995 and early 1996 to a level near the 2Vi percent; nondurable manufacturing, IV2 percent; recession low of 1990-91. Foods and tobacco grew Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Bulletin • February 1997 2. Industrial production by market groups, 1987-96 Index, 1992 = 100, ratio scale Index, 1992 = 100, ratio scale Consumer goods Intermediate products J L J L J L 1988 1990 1992 1994 1996 1988 1990 1992 1994 1996 NOTE. Seasonally adjusted monthly data through December 1996. slowly overall. But production of drugs and medi- Of the major subgroups within business equipcines and output of paper products for the home ment, only transit equipment exhibited practically no exhibited strong growth. net production growth from 1991 to early 1996 as The business equipment group lagged the cyclical assemblies of business autos stagnated and the output improvement in overall IP but has been a major of commercial aircraft and parts dropped sharply, source of strength since early 1992. Led by a double- particularly in 1993. Demand for business trucks digit annual rate of growth in the output index for strengthened considerably early in the expansion, but information processing and related equipment, the then in late 1995 and 1996, assemblies of heavy output of business equipment advanced more than trucks and trailers weakened significantly. The output one-third through the end of 1996. The quality- of transit equipment eventually pushed to new highs, adjusted output of computers nearly quadrupled over but not until 1996, with the strong recovery in prothe period and accounted for more than one-third duction of commercial aircraft and parts. of the growth in business equipment. Excluding com- The reductions in real federal investment in puters, output of business equipment grew about defense and space equipment have cut the production 25 percent. index for such equipment, which includes military Growth in the industrial equipment group was aircraft and parts, about one-third since mid-1989. strong from early 1992 to mid-1995 and then flat- The decline, which was quite rapid from 1991 tened at a level that exceeded its 1989 cyclical peak through 1995, is estimated to have eased in 1996. by about 15 percent; however, the output of construc- The output of construction supplies, which dropped tion equipment—the fastest growing component— more than one-tenth during the 1990-91 recession, continued to rise in the second half of 1995 and 1996. did not recover to prerecession levels until late 1993 The output of the "other equipment" group, which and early 1994. The recovery was slowed by high includes farm and service industry equipment and vacancy rates and the related weakness in the conoffice furniture, also grew rapidly in 1993 and 1994 struction of multifamily residential buildings and and then paused before rising in the latter half of nonresidential structures, particularly office and 1996 to a level about one-tenth above that preceding industrial buildings, that persisted into 1993. In conthe last recession. trast, single-family starts recovered much sooner and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 71 more robustly. From the end of 1993 through late moderation reflects an acceleration in the growth of 1996, the output of construction supplies advanced at capacity as well as the relatively mild industrial an average annual rate of roughly 4 percent, despite a recession at the start of the decade and the temperate decline in the first half of 1995 that was correlated pace of the expansion that has lasted nearly six years. with a dip in housing starts. An acceleration in the growth of capacity in recent The output of business supplies grew slowly in the years has accommodated this lengthy expansion with- 1990s. Although commercial and other sales of elec- out signs of substantial pressures on productive tric and gas utilities expanded solidly, output of paper capacity. The low in utilization, 78.1 percent, business supplies and agricultural chemicals grew occurred at the production trough in early 1991 and hardly at all, and newspaper advertising trended was well above the previous low of 71.1 percent in sharply downward. late 1982. Over the years of expansion after 1991, In the 1990s, the production of materials for fur- utilization reached a high of 84.9 percent in late 1994 ther industrial processing grew more rapidly than the and early 1995 (table A.l). Although this level was output of finished goods. Producers of industrial near the high recorded in the late 1980s, it was materials comprise a large, diverse group that noticeably below the cyclical highs of the 1970s. accounts for roughly 40 percent of total industrial Utilization eased in 1995 and ended 1996 at about production. Durable goods materials, such as steel, 831/2 percent—still more than a percentage point turbines, semiconductors, and parts used in comput- above the long-term average. ers, motor vehicles, and aircraft, account for more Within manufacturing, utilization rates in late 1996 than half of industrial materials. The output of were relatively high for industrial machinery and durable goods materials has increased more than equipment, especially computers, and for a number 40 percent since the beginning of the decade. Not of primary-processing industries including petroleum surprisingly, computer parts and semiconductors led refining, rubber and plastics products, fabricated the advance with double-digit annual growth rates. metal products, and primary metals, such as steel The strength in the output of durable goods materials (table A.7). By contrast, apparel products, printing was supported by gains since the 1990-91 recession and publishing, and leather and products had utilizain the output of steel, motors, and other parts used to tion rates that were below their longer-run averages. make motor vehicles, appliances, and heavy equip- As the current expansion has continued, real ment. However, the weakness in the aerospace indus- investment expenditures for industrial plant and try was a restraining influence until recently. equipment have increased rapidly and contributed to In comparison with the gains in durable goods a faster rate of growth of capacity. The annual rate of industries, the growth in the production of nondura- growth of manufacturing capacity roughly doubled, ble goods materials and energy materials was anemic. from approximately 2 percent early in the decade to The downtrend in crude oil production, particularly more than 4 percent in 1996; in durable manufacturin Texas and Alaska, tended to offset recent gains in ing, capacity growth tripled to more than 6 percent the production and use of natural gas and coal. (table A.8). High and rising rates of growth of capac- Declines in the production of residual fuel oil, nuclear ity were, of course, most evident for computers and materials, and coke similarly offset a moderate rate of semiconductors, but the acceleration was large even increase in the generation of electricity. Within non- for more slowly growing industries such as steel, durable goods materials, growth in textile, paper, and fabricated metals, and lumber. Growth in capacity in chemical materials was quite slow on balance from nondurable manufacturing has remained low. early 1989 until the third quarter of 1993 and then In mining, the long-term decline in capacity modgrew strongly for a time, only to fall back in 1995. erated as the drop in available drilling rigs, which From the start of the decade through late 1996, the began in 1983, lessened substantially. Utilization in output of this group grew at an annual rate of only oil and gas well drilling, although far below earlier IV2 percent. In this group, plastics resins, synthetic peaks, rose to its highest level since 1982. Recent rubber, and paperboard were relatively strong increases in offshore drilling also helped to maintain performers. reserves and offset the ongoing decline in oil and gas extraction from aging oil fields. Capacity growth in the rest of mining and in utilities was relatively modest. Output growth at utilities exceeded capacity Capacity and Utilization in the 1990s growth over the past ten years; as a result, the excess capacity that developed after the energy shocks in So far in the 1990s, the rate of capacity utilization in the 1970s and early 1980s has essentially been total industry has reached neither the extreme highs eliminated. nor the extreme lows of the 1970s and 1980s. This Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • February 1997 NEW AGGREGATION METHODS 3. Proportion of computer output in industrial production, 1977-96 As indicated, the most important improvement for Percent this revision is the introduction of new aggregation methods from 1977 onward. As before, the contribu- — 6 tion of an individual industry to total output or capacity is based on the value added by that industry. Now, — . —7 5 however, we update the value-added weights annu- / ally, rather than quinquennially, and keep them con- — f Earlier J— 4 / current with production. The aggregation method for / — J IP, a version of the Fisher-ideal index formula, is — 3 more firmly rooted in economic theory and elimi- y^V/^— 2 * Revised nates a source of upward bias in the previous estimates. Some of the same issues are addressed in the — i recent reformulation of the featured measure of real 1 1 1 1 1 1 1 I 1 1 1 i 1 i i i i 1 output published by the U.S. Department of Com- 1978 1984 1990 1996 merce's Bureau of Economic Analysis (BEA).1 Measures of industrial output can be distorted if weight years ensured that the IP index reflected the the relative valuations of the component series are evolution of relative prices over time, the weights of out of date by even a few years. In order to minimize very fast growing industries, such as computers, this bias, for the revised production index, annual became outdated quickly and caused output growth weights are estimated through the most current to be overstated. periods even though comprehensive data on value In general, a measure of real output based on added lag a few years. These estimates are developed relative prices of a more recent year increases less from related information on producer prices or, if rapidly than a measure based on relative prices of an required, by statistical extrapolation. earlier year. This characteristic result, which has long The aggregation of capacity and capacity utilizabeen observed in the construction of index numbers, tion is accomplished by a generalization of the exists because the goods for which output grows method introduced in the 1990 revision of those rapidly tend to be those that are characterized by series. The approach is discussed more fully in the declining relative prices and production costs.2 Ecoaccompanying box, "Aggregation of Industrial Pronomic theory suggests that the preferred measure of duction and Capacity Utilization—A Technical output growth between two periods is a geometric Note," which presents the algebraic formulations of average of two indexes: one weighted according to the new industrial production and capacity utilization the relative price structure of the earlier period and measures. the second weighted according to the relative price structure of the later period. This result is called a Industrial Production Fisher-ideal index. Quantity measures derived as Fisher-ideal indexes usually grow more slowly than To represent the changing relative price and cost quantity measures derived using just the earlier peristructure of industries, the industrial production index od' s prices as weights. Even though the previous IP was previously built, for the most part, in five-year index used a progression of valuation periods, it still chronological segments, each with value-added overstated output growth because it used prices of a weights drawn from the first year of the segment— given year to weight quantities for some number of the year of the quinquennial Census of Manufactures, subsequent years. the underlying data source for value added. Chaining An example of how this bias was manifested in the the segments together formed a continuous index earlier index is illustrated by the pattern of the proexpressed as a percentage of output in a reference portion of computer output in industrial production year. Although the periodic introduction of new (chart 3). During the interval between the censuses, 1. See J. Steven Landefeld and Robert P. Parker (with Jack E. 2. For example, see the discussion and results of the use of alterna- Triplett), "Preview of the Comprehensive Revision of the National tive weight years for industrial production in Kenneth Armitage and Income and Product Accounts: BEA's New Featured Measures of Dixon A. Tranum, "Industrial Production: 1989 Developments and Output and Prices," Survey of Current Business, vol. 75 (July 1995), Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 31-38, and the references contained therein. pp. 188-204 (especially pp. 201-03). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 73 the relative proportion of an industry in IP equaled its 4. Relative unit value added in industrial production, base-period proportion multiplied by its growth since 1977-96 the base year relative to the growth of total IP. Thus the share of an industry grew (or declined) along with its relative gain (or loss) in production, regardless of relative price movements. Under the earlier aggregation method, with base-period weights fixed at 1977, 1982, 1987, and 1992, the current proportion of computer industry output grew in intervening years along with its relative gain in production until a new weight year was introduced. It would fall back with the introduction of new weights because the industry's value added, measured in current dollars, did not rise nearly as steeply as did its real output. The revised index eliminates the exaggerated saw-tooth pattern of the computer share by updating the industry's valueadded proportion—and its implied relative price— each year.3 With weights updated annually, an industry's share fluctuates much less over time, but it will rise, for example, when a relative increase in an industry's real output is not offset by a proportionate relative decline in its value added per unit of output. The revised IP index is called an annually weighted Fisher index. In the new formulation, the weights are expressed as unit value added (a "price") to facilitate the aggregation of IP as an annually weighted Fisher index for the recent period. Generally, the unit valueadded measures track broad changes in corresponding producer prices and evolve considerably more slowly than the corresponding real output (or than 1. Non-energy materials and non-energy products exclude computers and value added itself, which contains both quantity and semiconductors. price-cost elements).4 Therefore, even though the value-added data are available only after a lag of lated for the following year, given the persistence of about two years (and sometimes longer), the weights many relative price trends. required for aggregating IP in the most recent period The relative unit value added of the combined can be (1) estimated from available data on producer series for computers and semiconductors in total IP prices through the most recent year and (2) extrapo- declines about 13!/2 percent per year, on average, from 1977 to 1987, and by more than 10 percent, on average, since then. If the annual weights for IP were 3. The IP index for computers was first benchmarked to an annual not estimated through the current period and this index of real output derived using a hedonic price index for computers relative price of computers and semiconductors was in a revision published in April 1990 that affected data from 1977 held fixed for three years rather than allowed to onward. Although the total IP index and its major industry and market subtotals before 1977 remain as previously formulated, total IP growth continue its decline, the most recent IP estimates before 1977 is not noticeably overstated from the effects of declines in would overstate growth by about Vi percentage point the relative price of computers for those years. The growth trend from at an annual rate. Within the index, aside from 1967 to 1977 of manufacturing IP and of manufacturing IP excluding computers was similar (table 1). Moreover, the results of this revision computers and semiconductors, the basic trends in suggest that aside from computers, from 1977 onward relative price relative unit value added for non-energy products, movements among components of the earlier IP index caused only non-energy materials, and total energy can also a small overstatement of the trend growth of overall industrial production. diverge from one another at times (chart 4), and such 4. For example, for fourteen of the twenty two-digit industry developments are reflected in the timely producer groups in manufacturing, more than 50 percent of the variance of the price figures. change in value added is explained by the change in the IP index for the industry, and, in simple regressions, the coefficient on the change The new formulation for monthly IP is computain IP is not significantly different from 1 for these fourteen industries. tionally more complex than the previous formulation: The notable exceptions to this pattern are the food, petroleum, and paper industries. Each month's computation involves weights from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • February 1997 Aggregation of Industrial Production and Capacity Utilization—A Technical Note Industrial Production uses averages of monthly output growth estimates weighted by earlier and later year prices. Like the Bureau of Eco- An individual IP series, /„, represents a quantity of output nomic Analysis, which introduced this type of Fisher varifor a period n expressed relative to the quantity produced in ant for its quarterly estimates of real GDP, the weights will a reference period 0, that is, l = (qjq,o). The previous n be updated in the middle of the year. A convenient way of practice was to compute an IP aggregate, either the total expressing this timing is that a monthly IP aggregate in index or its major market and industry subtotals, I*, as a month m is computed with weights from the years containweighted relative quantity, ing the months (m - 6) and (m + 6). The new formula for the growth of monthly IP in month m is given by £v using value added, v, to indicate the relative importance of the individual quantities. As a result, the IP index was Al ^m-\Py{m-6) + expressed as a value-added weighted sum of its components, 1* = Z/ h>, where w = v/Xv. The previous IP index k where the subscript, y{m), denotes "year containing month generally was built in five-year segments, with the initial m." The new total IP index, as well as its major market and year of each segment used as the base year for weights; the industry subtotals, are computed as the cumulative product segments were linked together over time to form a continuof a monthly series of these growth estimates from 1977 ous index expressed as a percentage of output in a reference onward. The monthly estimates for each aggregate are year. controlled so that their annual growth rates conform to the The previous IP index was called a linked-Laspeyres growth rates of an annually weighted Fisher index derived index. Consider that value-added weights have both quanusing annual data. tity and price-cost elements. With v = qp, each segment of 0 0 The revised monthly IP index and its major aggregates the former IP index could also be expressed as the weighted are computed as annually weighted Fisher indexes even for aggregate quantity, ~Lq n p 0 /Tiq 0 p 0 . This is a Laspeyres quanthe most recent period. For the more recent estimates, tity index, which shows changes in quantities with prices Federal Reserve extrapolations of the annual weights are held fixed at base-year values. used. Laspeyres quantity measures usually overstate output With the more complex formulation of the new IP index, growth as one moves further from a base period. This the Federal Reserve will provide users with additional time occurs because, series representing the proportionate contribution of over time, the quantities that increase the changes in a component index to the change in the total most tend to be those whose prices have increased, relaindex. These statistics, which for a month are the average of tively, the least. As a result, the use of weights from an implicit value-added shares for the component in month earlier period increasingly exaggerates the relative imporm - 1 based on earlier and later-year unit value added, tance of the fast growing components as time passes. Conrepresent the linear term of a Taylor's series expansion of versely, quantity measures derived from a Paasche index, the formula for monthly IP growth given above. which is expressed as Xg„/?„/Z<7/? and shows changes 0 n in quantities with prices at current period values, usually understate the output change. Capacity and Capacity Utilization Economic theory suggests that the preferred measure of quantity change is a geometric average of a Laspeyres index An individual capacity utilization series, U n , is a ratio of the and a Paasche index. This result is called a Fisher-ideal actual level of output to a sustainable maximum level of quantity index. Quantity measures derived as Fisher indexes output or capacity. The output figures are indexes of indusregister increases (or decreases) that fall between those trial production, and the related capacity series are derived derived from either a Laspeyres or a Paasche formulation. from survey data on utilization and capacity to provide an The new formulation for aggregating industrial produc- integrated system of output, capacity, and utilization meation is based on a Fisher index that updates the weights sures for the industrial sector. every year (but not every month). Source data on value The aggregation of capacity and capacity utilization rates added are available annually. presents distinct issues in that they are constructed and The "price" weights used in the new IP formulation are defined in relation to industrial production: Given that annual unit value added, that is, value added (an annual U = qjc and that l - q /q is a production index, then n n n n 0 series in dollars) divided by an IP index for the year, the capacity index, C , consistent with the production index n P y = VyHy. Technically, the new formulation for monthly IP is c n /q 0 = (q n /q 0 )/U n , or, C n = I n /U n . Given a production is a variant of the Fisher index described above in that it Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 75 Aggregation of Industrial Production and Capacity Utilization—Continued aggregate, it is desirable to preserve this relationship for often sizable for aggregates that contained components with related capacity and capacity utilization aggregates. That is, divergent relative prices, such as computers or energy matewe want C* = or equivalently, U* = to hold rials. As a result, the aggregate capacity indexes between after aggregation. the two base years were then smoothly adjusted so that no The revised utilization aggregates are given by discontinuity in the utilization aggregate occurred.1 Just as using the ratio of a linked-Laspeyres IP index to a linked-Laspeyres capacity index might distort aggregate u = , utilization, so using the ratio of a Fisher IP index to a Fisher n I(v/£/ ) capacity index might produce a similar distortion. Conn sequently, the new capacity aggregates are not annually which expresses a utilization aggregate as the ratio of the weighted Fisher indexes of the individual capacity series. If components' aggregate actual value added to their aggre- a capacity aggregate were to be formulated in a way simigate value added at capacity. This expression is imple- lar to that of a production aggregate and if a utilization mented in terms of a production index for a year, that is, aggregate were calculated as a ratio of the two separately with value added (an annual series in dollars) as P Y I Y , and aggregated series, a noticeable distortion in this utilization given that U Y = I Y /C Y , then a utilization aggregate is calcu- aggregate would occur if two conditions are present: (1) the lated as relative price of a component industry changes significantly, and (2) the utilization rate of the component differs from the average of the group.2 In general, only the direct aggregation of the individual proportional relationships preserves I p y q the appropriate aggregate for capacity utilization. The major advantage of the new procedure is that utilization rates through the current period are aggregated with which is equivalent to the expression, capacity proportions in current period values. Previously, the more recent capacity proportions were valued in prices of the most recent weight-base year, which could introduce distortions in current measures of capacity utilization.3 IP C, Y Thus, the aggregate utilization rates are equivalent to capacity-weighted aggregates of individual utilization rates; that is, they are a combination of component utilization 1. See Richard D. Raddock, "Recent Developments in Industrial Capacity rates weighted by proportions that reflect the component's and Utilization," Federal Reserve Bulletin vol. 76 (June 1990), pp. 411-35. share in the aggregate current value of production at 2. To illustrate the distortion that may result, consider a two-industry capacity. example. One industry grows slowly, another industry, such as computers, grows very fast and its unit value added is falling. If computer manufacturers With the weights for production now updated annually, typically operate at a higher rate of utilization than does the other industry, the utilization aggregates are now derived from component their share of overall capacity will be less than their share of actual production. The lower capacity share for computers implies a slower rate of growth measures annually. The new monthly capacity aggregates for the Fisher index of combined capacity than for the Fisher index of are constructed in three steps: (1) utilization aggregates are combined production. Assume that the computer manufacturers produce calculated on an annual basis through the most recent full 50 percent of the total value added (in current dollars) of the two industries but maintain only 45 percent of the total capacity (also in current dollars). If year; (2) the annual aggregate capacity is derived from the the actual and capacity output of computers in real terms were growing corresponding production and utilization aggregates; (3) the 20 percent per year (with no growth in nominal value added), and if the real monthly capacity aggregate is obtained by interpolating output and capacity of the other industry were not growing, the Fisher production aggregate of the two industries would grow about 10 percent with an annually weighted Fisher index of its constituent per year (0.50 x 0.20 + 0.50 x 0.00), and the Fisher capacity aggregate monthly capacity series. For the very recent period, since would grow about 9 percent per year (0.45 x 0.20 + 0.55 x 0.00). The ratio of the Fisher IP index to the Fisher capacity index would increase by the most recent full year, each monthly capacity aggregate 1 percent every year, and the aggregate utilization rate would increase is extrapolated by this same Fisher index, adjusted by a without bound. factor that accounts for the differences in their relative 3. That is, the utilization aggregate for a month since the most recent weight-base year was computed as the ratio of a linked-Laspeyres production growth rates. index to a linked-Laspeyres capacity index, which yielded, Previously, the appropriate relationships for capacity utilization aggregates were exact only in each weight-base year. When a new base year was introduced into the produc- ZPc tion and capacity measures, however, each utilization aggre- 0 m gate for the new base year was calculated with weights for that year and the previous base year. The differences were where P0 is unit value added in the base year. 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76 Federal Reserve Bulletin • February 1997 two years. In addition, the unit value-added figures industry value added. Annual weights for the aggrehave little intuitive meaning as weights. Users (and gation of gross value of products are derived from estimators) of the former IP index always found its estimates of the total market value of production. The aggregation to be more conveniently viewed in terms sources of these figures are the same as those used of value-added shares rather than prices because the for the periodic updating of weights for the earlier contribution of a component index to the total index measures.6 was seen directly with value-added shares. For the most part, source data on value added were With the new Fisher formulation for IP, the growth available through 1994 at the time the revision was rate of the total index can still be viewed as a compiled (in late 1996). To construct output, capacvalue-added weighted sum of its components' growth ity, and capacity utilization using the new formularates. Specifically, the growth of a component index tions through the most recent period requires unit multiplied by its share of value added gives its value added for more recent years. For example, to approximate contribution to the growth of the total compute IP growth as an annually weighted Fisher index (table A.9). To supplement the information on index for the second half of 1996 requires unit value value-added proportions for the previous year that are added for 1996 and 1997. The estimates for recent shown in the statistical release, the Federal Reserve periods were obtained in two steps. First, industry now provides corresponding (and more exact) producer prices from the Bureau of Labor Statistics, monthly statistics representing the proportionate con- which were available through the third quarter of tribution of a monthly change in a component index 1996 at the time the revision was compiled, were to the monthly change in the total index—for exam- extrapolated to obtain annual averages for 1996 and ple, the computer share shown in chart 3. With the additional statistics, many calculations frequently performed by users of the former index are achieved with the revised index in a similar fashion.5 This revision also updates the formulation used for 6. Annual value-added data are reported in the quinquennial Census of Manufactures and the Annual Survey of Manufactures of the the supplementary series on the gross value of prod- Bureau of the Census. Value added for electric and gas utilities are ucts leaving the industrial sector, which are expressed computed from annual revenue and expense data reported by the Department of Energy and the American Gas Association. Valuein dollars. The industrial production data on gross added data for mining industries are available only every five years value of products, which cover the period since 1977, from the Census of Mineral Industries. Estimates of unit value added continue to be aggregated from production indexes for intervening years are derived from related final product prices, either a producer price index from the Department of Labor's Bureau for products using weights based on the market value of Labor Statistics or a spot price for selected commodities such as of production. (The materials series are excluded to crude oil, gold, or silver. Annual data on the total value of production avoid double-counting.) Previously, they were com- (shipments plus inventory change, including the value of excise taxes) required for the gross value of product aggregates are derived from bined with gross-product weights drawn entirely from these same sources. the year 1992. They are now derived as annually weighted Fisher indexes, with gross-product weights updated annually and expressed in 1992 dollars after aggregation. Data Availability Annual Weights Files containing the revised data and the text and tables from the supplement to the G.17 release, "Industrial Annual weights for the aggregation of IP and capac- Production and Capacity Utilization: Historical Reviity utilization were derived from annual estimates of sion," are available on the Board's World Wide Web site at http://www.bog.frb.fed.us. Files will also be available through the Economic Bulletin Board of the Department 5. An example of a typical calculation is as follows: Assume a of Commerce; for information, call (202) 482-1986. Dis- 10 percent jump in the output of the motor vehicle and related kettes containing either historical data (through 1985) or industries and that these IP components account for 5 percent of total more recent data (1986 to those most recently published index points in value-added terms in the previous period. Then the in the G.17 release) are available from Publications Sercontribution of this development to the percentage change in total IP for a given month is 0.05 x 0.10 = 0.005, or Vi percent for the month. vices, Board of Governors of the Federal Reserve Sys- Current estimates and historical time series of the monthly proportions tem, Washington, DC 20551, or phone (202) 452-3245. (the 5 percent in the example) for IP components shown on tables 1 This article will be available on the Board's Web site and 2 of the Federal Reserve's statistical release G.17 "Industrial Production and Capacity Utilization" are available with the revised at (http://www.bog.frb.us/releases/G17/About.htm). index. (See box, "Data Availability.") Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 77 1997. Second, the unit value-added measures were computer industry was assigned to business equipextrapolated based on these annual averages of indus- ment. (As in the earlier index, the industry's semitry producer prices. Later this year, the formulation finished product is allocated to the materials market will require weights drawn from 1997 and 1998; at group.) that time source data through 1995 will be available, To improve coverage and reliability, monthly and the same procedures will apply. source data for five IP series were modified. With these changes, the monthly IP index now comprises 264 series for the period since 1992, and the propor- NEW METHODS FOR INDIVIDUAL PRODUCTION tion that is derived from physical product data rises AND CAPACITY SERIES 2 percentage points, in 1994 value-added terms, to 42 percent. The revision also incorporated improvements in the Portions of two equipment series, farm equipment composition of selected IP market aggregates and (SIC 352) and construction and mining equipment enhancements to the structure of selected production (SIC 3531-3), which were based on input data, now and capacity series. As part of the revision from 1992 make up two new series derived from monthly proonward, monthly source data for all IP series— duction estimates reported in Stark's Off-Highway physical product data and measures of inputs to Ledger. A weighted average of assemblies of comproduction—were updated to reflect revisions by the bines and two types of tractors is the basis for the data providers and were adjusted by the Federal new farm equipment series, which represents Reserve to eliminate seasonal, calendar, and holiday SIC 3523. The remaining portion of the former series, variation.7 The revised IP series reflect further adjust- lawn and garden equipment (SIC 3524), is reprements of their annual averages to benchmark indexes sented by production worker hours and, with this derived from more comprehensive and newly avail- revision, assigned to the consumer durable goods able annual source data. market group. The new construction equipment The revision to the Federal Reserve capacity esti- series, which represents SIC 3531, is constructed mates incorporated revised measures of industry capi- using a weighted average of assemblies of crawlers, tal input and detailed data from the Census Bureau's wheel loaders, skid steer loaders, wheel tractors, and Survey of Plant Capacity for 1993 and 1994. No new other construction equipment. Production worker broad survey results on capacity utilization rates hours are the basis for the remaining portion of the beyond 1994 or on business investment plans beyond former series, mining and oil and gas field equipment those first reported for 1996 were available for this (SIC 3532-3). The revised IP index incorporates revision. For the 1997 annual update, the Federal these new equipment series beginning in 1987. Reserve will have new results from the Survey of Before the current revision, the monthly output of Plant Capacity for the fourth quarters of 1995 and original equipment parts for new motor vehicles, a 1996. portion of the total motor vehicle parts industry (SIC 3714), was represented by data on production worker hours at parts plants and motor vehicle assem- Modifications to Series blies. The series from 1992 onward now derives from monthly production estimates reported in Stark's To improve the IP market aggregates, the portion of Component Ledger. The new series is constructed the output of computer and office equipment using a weighted combination of gas engines, trans- (SIC 357) designated as final product is now further missions and axles (on-highway), and brakes. These split from 1982 onward into production of consumer components cover more than 40 percent of the total goods, mainly personal computers for home use, and value of production in SIC 3714 and most of the business equipment. The split is accomplished with original-equipment parts subcomponent. expenditure data from the national income and prod- Production of medium and heavy trucks, formerly uct accounts. Formerly, all of the final product of the a single component of business trucks, is now represented by separate series for medium-weight (gross vehicle weight of 14,001-33,000 pounds) and for heavy trucks (33,001 pounds and more) based on the same monthly production figures as previously used 7. For a summary of the Federal Reserve methods for seasonally adjusting the source data used to construct the index of industrial (Ward's Automotive Reports) in combination with production, see Richard D. Raddock, "A Revision to Industrial Pro- information on factory shipments by detailed weight duction and Capacity Utilization, 1991-95," Federal Reserve Bulleclass reported by the American Automobile Manutin, vol. 82 (January 1996), pp. 16-25 (especially pp. 23-24). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • February 1997 facturers Association. Similarly, capacity series for (SIC 3672-9) was benchmarked to an annual index medium-weight trucks and another for heavy trucks of real output that incorporated a quality-adjusted and trailers were developed from the same sources; price index for domestically produced integrated movements in the output of truck trailers are highly microcircuits (the major product of SIC 3674, which correlated with the output of heavy trucks. is the largest industry in the broader IP grouping). Output of stone, sand, and gravel mining Board staff constructed this index from detailed price (SIC 141-2 and 144), formerly an input-based IP indexes for selected semiconductor components, series, is now derived from quarterly production data mainly memory and logic chips, developed by the reported by the Department of the Interior. These BEA as part of its recent comprehensive revision of data, which cover most of the output of this industry, the national income and product accounts. The BEA are interpolated to a monthly frequency and incorpo- also revised its quality-adjusted price index for comrated in the index beginning in 1992. puters for that revision, and the IP benchmark index for computers and office equipment incorporates those results. Updated Data and New Production Benchmarks Revised Estimates of Industrial Capacity The regular updating of source data for industrial production includes the introduction of annual data The capacity utilization estimates fully incorporate from the Annual Survey of Manufactures for 1994 the more detailed data from the latest Census Survey and selected Current Industrial Reports for 1995, of Plant Capacity issued in September 1996, which both published by the Bureau of the Census. Avail- provided revised utilization rates for manufacturing able annual data on mining for 1994 and 1995 from industries for the fourth quarters of 1989 to 1994. the Department of the Interior were also introduced. Preliminary results through 1994 from the Census Individual IP series incorporate revisions to the survey had previously been incorporated in the Fedmonthly indicators (either physical product data, pro- eral Reserve estimates of capacity and utilization. duction worker hours, or electric power usage) back Revised or newly available estimates of capacity in to 1992. Seasonal factors for electric power and most physical volume (number of units, tons, barrels, and physical product series were calculated on the basis so forth) for selected industries for 1992-96 are also of data through mid-1996; for production-worker incorporated. hours and the unit counts of motor vehicle assem- Measures of industry capital input, which are used blies, seasonal factors were updated with data through in estimating manufacturing capacity, were updated October 1996. Productivity relationships used to with Federal Reserve estimates of manufacturers' extrapolate input-based IP series beyond 1994 or real net capital stocks that are now built from invest- 1995 were updated using the revised output and input ment data expressed in chained 1992 dollars; fordata. merly, the net capital stocks were derived from With this revision, the annual updating of the indi- investment flows in constant 1987 dollars. vidual IP series for manufacturing from 1992 onward Within manufacturing, those capacity indexes that reflects the incorporation of annual benchmarks of are derived from the Census survey and estimates of real output that are formulated as annually weighted capital input have been revised back to 1977; as a Fisher indexes. While the vast majority of individual result, capacity utilization rates for manufacturing series were not revised for the years from 1977 to have been revised from January 1977 onward.8 1991, the new or modified series described earlier Capacity growth and utilization rates for mining and were adjusted to benchmarks formulated as annually utilities have essentially been updated only in the weighted Fisher indexes from the initial year of the 1990s, as have those manufacturing series derived series. The sources for the basic data used to con- from capacity and output data in physical units. struct the new annual IP benchmarks in this revision After a revision of the industrial production are the same as those used for calculating the earlier indexes, the individual capacity indexes must typibenchmarks. cally also be revised because capacity is calculated For this revision, the annual IP benchmark quantity from industrial production and survey data on utilizaindexes for semiconductors and related components and for computers and office equipment incorporate improvements from 1977 onward. The IP 8. Some additional small changes to aggregate capacity utilization rates for the 1967-76 period were made to improve consistency with index for semiconductors and related components the new estimates from 1977 onward. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 79 tion rates. For example, in this revision, the produc- 5. Change in manufacturing capacity and capital input, tion index for semiconductors shows much faster 1967-96 growth because of a change in the methodology of Percent measuring its output; consequently, the related capacity index (maximum output) had to be similarly revised; otherwise, output growth far in excess of capacity growth would yield a time series of implausible utilization rates. In many instances in manufacturing, we estimate a single capacity series to match a number of the individual production series. In such cases, the new annual weighting formulation affected the estimated growth of production and was a factor in the reestimation of individual capacity series. For the most part, these are series derived from industrial production, data on utilization rates from the Survey of Plant Capacity, and Federal Reserve estimates of 1968 1972 1976 1980 1984 1988 1992 1996 capital input. To construct an individual capacity index, we first calculate preliminary, implied end-of-year indexes of indicator.10 Interpolating between the final end-ofindustrial capacity by dividing a production index by year capacity indexes produces a continuous monthly a utilization rate obtained from a survey for that time series. end-of-year period. These ratios are expressed, like The capital input measures, which reflect estimates the indexes of industrial production, as percentages of the service flow derived from the net stocks of of production in a comparison base year, currently productive tangible capital assets, were introduced in 1992, and they give the general level and trend of the capacity estimation methods last year for the period capacity estimates.9 The Federal Reserve's actual from 1991 onward; as a result of the current revision capacity indexes combine these preliminary indexes the capital input measures are now incorporated with information from alternative indicators of annual in most manufacturing capacity series from 1977 capacity change; these alternatives include capacity onward.11 As a result, the annual changes in manufacdata in physical units and estimates of capital input. turing capacity from 1977 onward are more strongly In general, the actual capacity indexes are propor- correlated with changes in capital input than are the tional to fitted values from regressions that reflect annual changes in previous figures. both the trend growth of capacity implied by the In general, the relationship between capacity and survey data and the annual changes of the alternative capital input is variable over time and across indus- 10. Specifically, the regressions fit the logarithm of the ratio of the capacity implied by the survey data to the alternative indicator by a low-order polynominal or piece-wise linear function of time. See 9. Each implied capacity index number is an estimate of a sustain- Raddock, "A Revision to Industrial Production and Capacity Utilizaable maximum level of output expressed as a percentage of actual tion, 1991-95," and "Recent Developments in Industrial Capacity and output in 1992. Thus, if in December 1992 the production index is 100 Utilization." and a related utilization rate from a survey is 80 percent, then the 11. We estimate capital input for manufacturing industries in three implied capacity index is 100/0.8 = 125. steps. First, we prepare estimates of net capital stocks (by industry and The capacity indexes capture the concept of sustainable practical asset type) from investment data using a perpetual inventory model; capacity, which is defined as the greatest level of output that a plant the methods used to derive the net stocks are described in Michael can maintain within the framework of a realistic work schedule after Mohr and Charles Gilbert, "Capital Stock Estimates for Manufacturtaking account of normal downtime and assuming sufficient availabil- ing Industries: Methods and Data," Federal Reserve Board, Industrial ity of inputs to operate the machinery and equipment in place. Both Output Section, March 1996. Second, we develop annual estimates of the questions asked in the broad Census survey and the narrower the implicit rental prices for each asset type and use these estimates to surveys of selected industries are generally consistent with this defini- create weights that describe the relative contribution made by each ton of capacity. The concept itself generally conforms to that of a asset to the total input of capital. Finally, we create the annual full-input point on a production function, with the qualification that estimates of capital input for each manufacturing capacity series by capacity represents a realistically sustainable maximum, rather than aggregating across the real net stocks by asset type using a chain-type some higher unsustainable short-term maximum. See Carol Corrado quantity index that incorporates the weights created from the rental and Joe Mattey, "Capacity Utilization," Journal of Economic Per- prices. spectives (forthcoming, Winter 1997). Since last year's annual revision, the basic elements used to create In the absence of utilization rate information for an industry, which the capital input measures have been converted to use investment data is the case for a few series in mining, trends through peaks in expressed in chained 1992 dollars; otherwise, we use the same proceproduction are used to estimate capacity output for that industry. dures to derive capital input. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1997 tries. For total manufacturing, capital input grew with the unrevised estimates before 1977. The more rapidly than capacity in the late 1970s and more McGraw-Hill/DRI survey was the primary determislowly after 1982 (chart 5). Capital expenditures on nant of the level of utilization series in manufacturing pollution abatement equipment, which grew rapidly from 1955 through the mid-1970s. Following previin the late 1970s, are included in the net stocks used ous practice, continuity is achieved by applying a to derive the capital input measures and can cause the level adjustment to series whose data source changed growth rates of capital input and capacity output to from the McGraw-Hill/DRI survey to the Census differ. Similarly, the bunching of permanent plant survey to maintain consistency with the historical closings in some industries and the lengthening of the levels based on the earlier survey. (The two surveys workweek of capital in others in the 1980s can lead overlapped for fourteen years.) Generally, utilization to differences in the measures. In recent years, the rates from the Census survey, now the main source relatively fast growth of capacity output generally for manufacturing utilization rates, were lower, on represents continued gains in manufacturers' overall average, than those of the discontinued McGraw-Hill/ productivity (output per unit of combined inputs, DRI survey; thus Federal Reserve utilization rates for including capital, labor, and materials) and an major industry totals and subtotals differ from those increase in their rate of capital investment. issued by the Census Bureau. In compiling this revision of manufacturing capacity, every effort has been made to achieve continuity Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 81 APPENDIX A: SUMMARY TABLES PUBLISHED IN THE G.17 SUPPLEMENT, JANUARY 27, 1997 A.l. Revised data for industrial production, capacity, and utilization for total industry, 1987-96 Seasonally adjusted data except as noted Quarter AAnnnnuuaall YYeeaarr JJaann.. FFeebb.. MMaarr.. AApprr.. MMaayy JJuunnee JJuullyy AAuugg.. SSeepptt.. OOcctt.. NNoovv.. DDeecc.. aavvgg..11 1 2 3 4 Industrial production (percentage change) 1987 -.6 1.2 .4 .4 .4 .9 .6 .1 -.1 1.3 3 .6 4.3 6.7 5.6 6.9 4.6 1988 .1 .3 .0 .6 .1 .0 .7 .5 -.4 .3 .7 .5 3.1 3.0 3.8 3.6 4.4 1989 .5 -.8 .9 .3 -.6 -.2 -1.0 .4 -.2 -.5 .4 .5 3.8 .5 -4.4 .0 1.8 1990 -.5 .5 .5 -.6 .4 .0 -.1 .2 .1 -.5 -1.3 -.6 1.9 .8 .9 -5.7 -.2 1991 -.5 -.8 -.9 .3 .8 1.2 .1 .1 .9 -.1 -.1 -.6 -8.2 1.3 6.3 1.1 -2.0 1992 .0 .7 .8 .7 .4 -.3 .7 -.4 .5 .8 .6 .1 1.1 6.7 2.2 5.6 3.2 1993 .4 .5 .1 .3 -.6 .2 .3 -.2 1.0 .3 .5 .7 3.7 .8 1.7 5.8 3.4 1994 .3 .5 .7 .4 .6 .5 .5 .0 .1 .6 .6 .9 6.2 6.7 4.4 5.6 5.0 1995 .3 -.2 .1 -.3 .1 .2 .0 .8 .4 -.4 .2 .1 3.9 -.7 3.2 .8 3.3 1996 -.4 1.3 -.5 .9 .4 .6 .0 .3 .1 .0 .8 .7 1.6 6.2 3.3 3.8 2.7 Industrial production (index) 1987 90.2 91.2 91.5 91.9 92.3 93.1 93.7 93.8 93.7 94.9 95.2 95.8 91.0 92.5 93.7 95.3 93.1 1988 95.8 96.1 96.2 96.7 96.8 96.8 97.4 98.0 97.6 97.9 98.6 99.1 96.0 96.8 97.7 98.5 97.3 1989 99.7 98.9 99.8 100.1 99.5 99.3 98.3 98.7 98.5 98.1 98.5 98.9 99.5 99.6 98.5 98.5 99.0 1990 98.5 99.0 99.4 98.9 99.3 99.3 99.2 99.4 99.5 99.0 97.7 97.1 99.0 99.2 99.4 97.9 98.9 1991 96.7 95.9 95.0 95.3 96.0 97.2 97.2 97.4 98.3 98.2 98.1 97.4 95.8 96.2 97.6 97.9 96.9 1992 97.5 98.1 98.9 99.6 100.0 99.7 100.4 100.1 100.5 101.3 101.9 101.9 98.2 99.8 100.3 101.7 100.0 1993 102.3 102.8 102.8 103.2 102.6 102.8 103.1 102.8 103.9 104.1 104.6 105.4 102.6 102.8 103.3 104.7 103.4 1994 105.7 106.2 107.0 107.4 108.1 108.6 109.1 109.2 109.3 109.9 110.6 111.6 106.3 108.0 109.2 110.7 108.6 1995 111.9 111.6 111.7 111.4 111.5 111.7 111.7 112.6 113.0 112.5 112.7 112.8 111.8 111.6 112.4 112.7 112.1 1996 112.4 113.8 113.2 114.3 114.8 115.5 115.5 115.8 116.0 116.0 116.9 117.7 113.1 114.8 115.8 116.8 115.1 Capacity (index) 1987 113.9 114.0 114.1 114.3 114.4 114.5 114.6 114.7 114.8 115.0 115.1 115.2 114.0 114.4 114.7 115.1 114.6 1988 115.3 115.5 115.6 115.7 115.8 115.9 116.0 116.2 116.3 116.4 116.5 116.7 115.5 115.8 116.2 116.5 116.0 1989 116.8 117.0 117.2 117.4 117.6 117.8 118.0 118.2 118.4 118.6 118.8 119.0 117.0 117.6 118.2 118.8 117.9 1990 119.2 119.3 119.5 119.7 119.9 120.0 120.2 120.4 120.6 120.8 121.0 121.2 119.3 119.9 120.4 121.0 120.1 1991 121.4 121.5 121.7 121.9 122.0 122.2 122.4 122.5 122.7 122.8 123.0 123.2 121.5 122.0 122.5 123.0 122.3 1992 123.3 123.6 123.8 124.0 124.2 124.4 124.6 124.7 124.9 125.1 125.3 125.5 123.6 124.2 124.7 125.3 124.4 1993 125.7 125.8 126.0 126.2 126.4 126.6 126.7 126.9 127.1 127.3 127.5 127.7 125.8 126.4 126.9 127.5 126.7 1994 128.0 128.3 128.6 128.9 129.2 129.5 129.8 130.1 130.5 130.8 131.1 131.4 128.3 129.2 130.1 131.1 129.7 1995 131.8 132.1 132.5 132.8 133.2 133.6 134.0 134.3 134.7 135.1 135.5 135.9 132.1 133.2 134.3 135.5 133.8 1996 136.3 136.7 137.1 137.5 137.9 138.4 138.8 139.2 139.6 140.0 140.5 140.9 136.7 137.9 139.2 140.5 138.6 Utilization (level, percent) 1987 79.1 80.0 80.2 80.5 80.7 81.3 81.8 81.7 81.6 82.6 82.7 83.1 79.8 80.8 81.7 82.8 81.3 1988 83.1 83.3 83.2 83.6 83.6 83.5 84.0 84.3 84.0 84.1 84.6 85.0 83.2 83.6 84.1 84.6 83.9 1989 85.3 84.5 85.1 85.2 84.6 84.3 83.3 83.5 83.2 82.7 82.9 83.2 85.0 84.7 83.3 82.9 84.0 1990 82.6 82.9 83.2 82.6 82.8 82.7 82.5 82.5 82.5 81.9 80.7 80.1 82.9 82.7 82.5 80.9 82.3 1991 79.6 78.9 78.1 78.2 78.7 79.5 79.5 79.5 80.1 79.9 79.7 79.1 78.9 78.8 79.7 79.6 79.2 1992 79.0 79.4 79.9 80.4 80.6 80.2 80.6 80.2 80.5 81.0 81.3 81.2 79.5 80.4 80.4 81.2 80.4 1993 81.4 81.7 81.6 81.7 81.2 81.2 81.3 81.0 81.7 81.8 82.1 82.5 81.6 81.4 81.3 82.1 81.6 1 1994 82.6 82.8 83.2 83.3 83.7 83.9 84.1 83.9 83.7 84.1 84.4 84.9 82.9 83.6 83.9 84.4 83.7 1995 84.9 84.5 84.3 83.9 83.7 83.6 83.4 83.8 83.9 83.3 83.2 83.0 84.6 83.7 83.7 83.2 83.8 1996 82.4 83.2 82.6 83.1 83.2 83.5 83.2 83.2 83.1 82.8 83.2 83.5 82.8 83.3 83.2 83.2 83.1 NOTE. Monthly figures show the percentage change from the previous month; 1. Annual averages of industrial production are calculated from not seasonquarterly figures show the change from the previous quarter at a compound ally adjusted indexes. annual rate of growth. Estimates from October 1996 through December 1996 are subject to further revision in the upcoming monthly releases. Production and capacity indexes are expressed as percentages of output in 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1997 A.2. Revised data for industrial production, capacity, and utilization for manufacturing industries, 1987-96 Seasonally adjusted data except as noted Quarter Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Annual avg. Industrial production (percentage change) 1987 -.8 1.6 .2 .5 .3 1.0 .7 -.2 .1 1.3 .5 .6 5.0 7.0 5.5 7.6 5.3 1988 -.2 .4 -.1 1.0 -.1 .0 .7 .3 .2 .2 1.0 .6 2.4 4.1 3.7 5.2 4.7 1989 .9 -1.2 .8 .1 -.7 .0 -1.1 .4 -.3 -.6 .4 .1 4.3 -.7 -4.5 -1.4 1.9 1990 -.2 .9 .3 -.8 .4 -.1 .0 .3 .0 -.6 -1.3 -.6 2.9 -.1 .8 -6.3 -.5 1991 -.9 -.7 -1.1 .3 .7 1.4 .2 .2 1.1 -.1 -.2 -.5 -9.7 1.2 7.8 1.7 -2.4 1992 .2 .8 .9 .6 .4 -.1 .7 -.3 .4 .7 .6 -.1 2.3 7.3 2.8 5.1 4.0 1993 .8 .3 .1 .5 -.5 .0 .3 -.3 1.1 .2 .5 .8 4.5 1.4 1.2 6.2 3.7 1994 .1 .6 .9 .7 .7 .2 .8 .1 .2 .7 .7 .9 6.3 8.1 5.0 6.7 5.5 1995 .4 -.4 .1 -.3 -.1 .2 -.1 .7 .7 -.4 -.1 .1 4.2 -1.4 2.6 1.0 3.5 1996 -.4 1.3 -.8 1.1 .4 .7 .5 .1 .2 .0 .6 1.0 1.1 6.3 5.0 3.7 2.7 Industrial production (index) 1987 89.6 91.0 91.2 91.6 91.9 92.8 93.4 93.3 93.4 94.6 95.0 95.6 90.6 92.1 93.4 95.1 92.8 1988 95.4 95.8 95.7 96.7 96.6 96.6 97.2 97.5 97.7 97.9 98.9 99.4 95.7 96.6 97.5 98.7 97.1 1989 100.3 99.1 99.9 100.0 99.4 99.4 98.3 98.7 98.4 97.9 98.2 98.3 99.8 99.6 98.5 98.1 99.0 1990 98.1 99.0 99.3 98.6 99.0 98.9 98.8 99.1 99.1 98.5 97.2 96.6 98.8 98.8 99.0 97.4 98.5 1991 95.8 95.1 94.1 94.4 95.0 96.3 96.6 96.8 97.8 97.8 97.6 97.1 95.0 95.2 97.0 97.5 96.2 1992 97.2 98.0 98.9 99.5 100.0 99.9 100.5 100.2 100.6 101.4 102.0 101.8 98.0 99.8 100.5 101.7 100.0 1993 102.6 102.9 103.0 103.6 103.0 103.0 103.4 103.0 104.2 104.4 105.0 105.9 102.9 103.2 103.5 105.1 103.7 1994 106.0 106.6 107.5 108.2 109.0 109.2 110.0 110.1 110.3 111.1 111.9 112.9 106.7 108.8 110.2 111.9 109.4 1995 113.3 112.9 113.1 112.7 112.6 112.9 112.7 113.4 114.2 113.8 113.6 113.8 113.1 112.7 113.4 113.7 113.2 1996 113.4 114.8 113.9 115.2 115.7 116.4 117.0 117.2 117.4 117.4 118.1 119.3 114.0 115.8 117.2 118.3 116.3 Capacity (index) 1987 113.2 113.4 113.6 113.8 113.9 114.1 114.2 114.4 114.6 114.7 114.9 115.0 113.4 113.9 114.4 114.9 114.1 1988 115.1 115.3 115.4 115.5 115.7 115.8 116.0 116.1 116.3 116.5 116.6 116.8 115.3 115.7 116.1 116.6 115.9 1989 117.0 117.3 117.5 117.8 118.0 118.3 118.5 118.7 119.0 119.2 119.5 119.7 117.3 118.0 118.7 119.5 118.4 1990 119.9 120.1 120.3 120.5 120.7 120.9 121.1 121.3 121.5 121.7 121.9 122.2 120.1 120.7 121.3 121.9 121.0 1991 122.4 122.6 122.7 122.9 123.1 123.3 123.5 123.6 123.8 124.0 124.2 124.3 122.6 123.1 123.6 124.1 123.4 1992 124.5 124.7 125.0 125.2 125.4 125.7 125.9 126.1 126.3 126.5 126.8 127.0 124.7 125.4 126.1 126.8 125.8 1993 127.2 127.4 127.6 127.8 128.0 128.2 128.4 128.6 128.9 129.1 129.3 129.5 127.4 128.0 128.7 129.3 128.3 1994 129.8 130.1 130.5 130.8 131.2 131.5 131.9 132.2 132.6 132.9 133.3 133.6 130.1 131.2 132.2 133.3 131.7 1995 134.0 134.4 134.8 135.2 135.6 136.0 136.5 136.9 137.3 137.8 138.2 138.7 134.4 135.6 136.9 138.2 136.3 1996 139.1 139.6 140.1 140.5 141.0 141.5 142.0 142.5 142.9 143.4 143.9 144.4 139.6 141.0 142.5 143.9 141.7 Utilization (level, percent) 1987 79.1 80.2 80.3 80.6 80.7 81.4 81.8 81.5 81.5 82.5 82.8 83.1 79.9 80.9 81.6 82.8 81.3 1988 82.9 83.1 82.9 83.7 83.5 83.4 83.8 84.0 84.0 84.1 84.8 85.1 83.0 83.5 83.9 84.7 83.8 1989 85.7 84.5 85.0 84.9 84.2 84.1 83.0 83.1 82.7 82.1 82.2 82.2 85.1 84.4 82.9 82.1 83.6 1990 81.8 82.4 82.6 81.8 82.0 81.8 81.6 81.7 81.5 80.9 79.7 79.1 82.3 81.9 81.6 79.9 81.4 1991 78.2 77.6 76.6 76.8 77.2 78.1 78.2 78.3 79.0 78.9 78.6 78.1 77.5 77.4 78.5 78.5 78.0 1992 78.1 78.6 79.1 79.5 79.7 79.5 79.9 79.5 79.7 80.1 80.4 80.2 78.6 79.5 79.7 80.2 79.5 1993 80.7 80.8 80.7 81.0 80.5 80.4 80.5 80.1 80.9 80.9 81.2 81.7 80.7 80.6 80.5 81.3 80.8 1994 81.6 81.9 82.4 82.7 83.1 83.0 83.4 83.3 83.2 83.6 84.0 84.5 82.0 83.0 83.3 84.0 83.1 1995 84.6 84.0 83.9 83.4 83.0 83.0 82.6 82.9 83.2 82.6 82.2 82.0 84.2 83.1 82.9 82.3 83.1 1996 81.5 82.2 81.3 82.0 82.0 82.3 82.4 82.3 82.1 81.8 82.1 82.6 81.7 82.1 82.3 82.2 82.1 NOTE. See notes to table A. 1. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 83 A.3. Revised growth rates of industrial production, by market group, 1977-96 Difference between revised Revised growth rate and earlier growth rates (percent) SSeerriieess (percentage points) 1977-82 1982-87 1987-92 1992-96 1977-82 1982-87 1987-92 1992-96 Total index .5 4.0 1.4 3.6 -J -.1 -.1 -.4 Products, total 1.2 4.1 1.0 2.9 -.7 -.6 -.2 -.6 Final products 1.6 3.6 1.4 3.0 -.9 -.8 -.3 -.6 Consumer goods -.2 3.5 1.3 2.5 .0 .1 .1 .1 Durable -4.3 8.5 1.3 6.0 .0 .7 .7 1.1 Automotive products -7.5 11.2 -.1 5.9 -.2 -.5 -.3 -1.0 Other durable goods -2.2 6.7 2.3 6.0 .1 1.6 1.4 2.8 Nondurable 1.1 2.1 1.3 1.6 -.1 -.1 .0 -.2 Non-energy products 1.5 2.2 1.3 1.4 -.1 -.1 .0 -.2 Energy products -.6 1.7 1.5 2.7 -.1 -.1 -.1 -.2 Equipment, total 3.9 3.6 1.5 4.0 -1.7 -1.7 -.8 -1.8 Business 2.6 3.8 3.3 6.1 -2.5 -2.7 -1.0 -2.0 Industrial -2.6 -1.7 1.0 6.1 .0 .0 -.2 1.0 Information processing and related — 14.5 9.1 4.8 9.4 -3.7 -5.3 -1.8 -4.5 Transit -1.2 4.0 5.8 .0 -.4 -.6 -.5 .1 Other -2.4 3.2 .3 3.8 -.1 -.1 -.3 -.7 Defense and space 6.0 10.1 -3.2 -6.3 .0 1.3 .1 .5 Intermediate products .0 5.9 -.1 2.3 .0 .0 .0 -.5 Construction supplies -2.7 6.7 -.9 4.0 -.1 .0 .1 -.3 Business supplies 2.1 5.3 .3 1.2 -.1 .0 -.1 -.6 Materials -.5 3.8 2.0 4.7 .0 .5 .2 .0 Durable -.6 6.9 2.7 7.6 -.1 .6 .3 .2 Nondurable -1.1 4.0 1.9 1.5 .0 .0 .0 -.5 Energy -.3 -.1 .8 1.0 -.2 .1 .0 .0 Aggregates, excluding computer and office equipment Total index -.1 3.6 1.3 3.1 .0 .3 .1 Business equipment -.2 1.6 2.8 3.7 -.1 -.1 —•2 -•2 NOTE. Growth rates are calculated as the average annual percentage change from the first to the last year indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1997 A.4. Revised growth rates of industrial production, by industry group, 1977-96 Difference between revised Revised growth rate and earlier growth rates SSeerriieess cc SS oo II dd CC ee11 (percent) (percentage points) 1977-82 1982-87 1987-92 1992-96 1977-82 1982-87 1987-92 1992-% Total index .5 4.0 1.4 3.6 -.5 -.1 -.1 -.4 Manufacturing .3 5.2 1.5 3.9 -.6 -.3 -.1 -.4 Primary processing -2.7 4.7 1.0 2.9 -.1 .0 .0 -.3 Advanced processing 1.9 5.4 1.8 4.3 -.8 -.5 -.1 -.5 Durable manufacturing .0 6.2 1.7 5.9 -1.1 -.4 -.1 -.5 Lumber and products 24 -4.0 8.3 -1.0 2.3 .0 .1 .0 -.8 Furniture and fixtures 25 -.1 6.2 -.2 2.2 .0 .0 .0 -.7 Stone, clay, and glass products 32 -3.1 4.5 -.9 2.7 -.1 .0 .0 .0 Primary metals 33 -7.5 4.0 .5 4.0 -.2 .2 .1 -.1 Iron and steel 331,2 -10.2 3.5 .9 3.9 -.3 .5 .0 -.4 Raw steel 331pt -9.8 3.5 .2 2.9 .0 .0 .0 .0 Nonferrous metals 333-6,9 -2.8 4.6 -.2 4.1 .3 .0 .2 .2 Fabricated metal products 34 -2.1 3.7 -.4 4.4 .0 .0 -.2 .1 Industrial machinery and equipment 35 3.1 5.5 3.1 11.8 -4.2 -3.9 -1.3 -1.6 Computer and office equipment 357 33.4 23.9 10.0 31.3 -1.6 -4.5 -1.6 -.9 Electrical machinery 36 6.3 7.9 5.7 13.0 .9 2.3 1.4 1.8 Semiconductors and related components 3672-9 23.1 15.8 14.6 26.7 6.9 9.5 5.2 7.4 Transportation equipment 37 -2.6 8.8 .8 1.4 -.1 -.3 -.1 -.7 Motor vehicles and parts 371 -9.2 10.8 1.0 6.0 -.1 -.4 -.4 -1.1 Autos and light trucks 337711pptt -8.4 12.6 .3 5.6 -.2 -.1 -.1 -.7 Aerospace and miscellaneous transportation equipment 372-6 4.2 7.4 .5 -3.8 .0 -.1 .1 .1 Instruments 38 4.9 4.2 1.3 .7 .0 .1 .1 -.8 Miscellaneous manufactures 39 -1.6 1.8 1.3 3.0 .0 .1 .0 -.7 Nondurable manufacturing .5 3.9 1.3 1.5 -.1 -.1 .0 -.3 Foods 20 2.0 2.6 1.3 1.5 -.1 -.1 .0 -.5 Tobacco products 21 .6 -.3 -.9 1.4 .0 .0 -.1 2.6 Textile mill products 22 -1.9 3.7 .8 1.7 .0 .0 .0 .5 Apparel products 23 -.3 1.8 -1.1 -.4 .0 -.3 .0 .9 Paper and products 26 1.2 4.1 1.9 1.9 .2 .0 .0 .1 •'lytFs Printing and publishing 27 3.2 5.7 -.5 -.3 .0 -.1 -.1 -.3 Chemicals and products 28 -.4 4.1 2.8 2.1 .0 .0 .1 -1.0 Petroleum products 29 -3.1 2.3 .6 1.6 .0 .0 .1 -.3 Rubber and plastic products 30 .3 8.7 3.1 4.8 -.1 .0 .0 -.3 Leather and products 31 -4.1 -7.2 -2.3 -5.3 .0 .0 .0 -1.3 Mining 1.5 -1.7 -.3 .8 .0 .1 -.1 .2 Metal mining 10 -2.2 2.5 10.1 .4 .9 -.3 -.3 .1 Coal mining 12 3.7 1.8 1.6 1.4 .0 .0 .0 -.1 Oil and gas extraction 13 1.5 -2.8 -1.5 .1 -.3 -.2 -.1 .2 Stone and earth minerals 14 -4.6 5.1 -.2 4.3 .0 .3 .0 .3 Utilities .1 1.7 2.3 3.0 -.3 -.1 .0 -.1 Electric 491,493pt 1.6 3.1 2.3 3.0 .0 .0 .0 .0 Gas 492,493pt -3.2 -2.8 2.4 2.7 -.6 .3 -.1 -.4 Aggregate, excluding computer and office equipment Manufacturing -.4 4.7 1.3 3.3 -.1 .2 .1 -.2 NOTE. Growth rates are calculated as the average annual percentage change products, furniture and fixtures, industrial and commercial machinery and from the first to the last year indicated. computer equipment, electrical machinery, transportation equipment, instru- Primary-processing manufacturing includes textile mill products, paper and ments, and miscellaneous manufactures. products, industrial chemicals, synthetic materials, and fertilizers, petroleum 1. Standard Industrial Classification; see Executive Office of the President, products, rubber and plastics products, lumber and products, primary metals, Office of Management and Budget, Standard Industrial Classification Manual, fabricated metals, and stone, clay, and glass products. Advanced-processing 1987 (U.S. Government Printing Office, 1987). manufacturing includes foods, tobacco products, apparel products, printing and pt Part of classification. publishing, chemical products and other agricultural chemicals, leather and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 85 A.5. Revised growth rates of industrial production, by major market group, 1992-96 Difference between revised Revised growth rate and earlier growth rates (percent) MMaarrkkeett ggrroouupp (percentage points) 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 Total index 3.9 3.0 5.7 1.8 3.7 -.1 -.2 -.9 .2 -.8 3.9 1.9 4.3 l.l 3.7 -.2 -.6 -1.3 .1 -.9 Final products 4.0 2.0 4.3 1.4 3.9 -.3 -.6 -1.1 .0 -1.3 Consumer goods 3.7 2.2 3.9 .7 2.1 .3 .3 -.1 .2 .1 Durable 7.4 10.3 6.6 1.1 2.7 .6 -.3 .5 2.0 2.2 Automotive products 11.7 11.6 5.7 -.9 1.0 .3 -2.8 -1.6 .3 -1.0 Other durable goods 4.2 9.4 7.2 2.5 3.9 1.1 2.2 2.3 3.2 4.8 Nondurable 2.7 .1 3.2 .7 2.0 .2 .3 -.3 -.3 -.5 Non-energy products 2.8 -.4 4.4 -.3 2.4 .2 .2 -.3 -.5 -.2 Energy products 2.5 3.4 -4.0 6.6 -.4 .0 .9 .0 .0 -1.7 Equipment, total 4.6 1.5 4.9 2.4 6.9 -1.1 -2.0 -2.6 -.1 -3.0 Business 6.8 3.4 8.1 4.6 8.0 -1.4 -2.5 -3.3 .1 -3.0 Industrial 3.7 6.8 8.9 7.3 -.2 -.7 .9 .3 3.8 -.1 Information processing and related 13.2 2.0 11.5 12.2 11.2 -1.7 -5.5 -6.3 -1.8 -6.2 Transit .8 -2.1 1.1 -13.4 21.6 .3 -2.9 -1.4 .8 5.3 Other 3.4 9.6 5.4 -.8 2.4 -1.3 -.4 -2.5 2.8 -1.2 Defense and space -5.8 -6.5 -8.0 -8.2 -.9 .0 .5 2.3 .9 -2.1 Intermediate products 3.3 1.8 4.3 .1 3.1 .1 -.8 -2.0 .2 .3 Construction supplies 3.7 5.8 6.6 -.8 5.9 -.3 -.2 -1.5 -.4 .6 Business supplies 3.1 -.5 3.0 .7 1.3 .4 -1.1 -2.3 .7 .2 Materials 3.9 4.6 7.9 2.9 3.7 .2 .4 -.2 .5 -.7 Durable 6.5 8.2 10.9 5.7 5.1 .2 1.0 -.3 .4 -.3 Nondurable 2.4 1.7 5.9 -2.3 1.7 .1 -.6 -1.0 .4 -1.4 Energy .0 -.6 2.1 .9 1.9 .0 -.2 .3 .8 -1.2 Aggregates, excluding computer and office equipment Total index 3.5 2.7 5.3 1.1 2.9 .2 -.1 -.8 .5 -.2 4.7 2.4 6.2 1.1 4.4 -.1 -1.1 -2.4 2.3 .7 NOTE. Growth rates are calculated as the percentage change in the seasonally adjusted index from the fourth quarter of the previous year to the fourth quarter of the year specified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1997 A.6. Revised rates of growth in industrial production, by major industry group, 1992-96 Revised growth rate2 Difference between revised and earlier growth rates IInndduussttrryy ggrroouupp cc SS oo II dd CC ee11 (percent) (percentage points) 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 Total index 3.9 3.0 5.7 1.8 3.7 -.2 -.9 .2 -.8 Manufacturing 4.4 3.3 6.5 1.6 4.0 -i -.4 -1.1 .2 -.8 Primary processing .. 3.9 4.0 6.2 -.9 2.6 -i -.3 -.8 .2 -.4 Advanced processing 4.6 3.0 6.7 2.8 4.7 -.4 -1.1 .3 -.9 Durable 5.2 5.8 8.2 3.7 5.6 -.3 -.4 -1.1 .3 -.9 Lumber and products 24 5.4 2.2 4.1 -.1 2.5 -.4 -1.7 -1.6 .1 .7 Furniture and fixtures 25 5.1 3.4 3.9 -1.7 3.2 .2 -1.8 -3.4 2.0 .4 Stone, clay, and glass products 32 3.6 4.2 4.7 -.5 2.4 -.2 .0 .7 -.6 -.3 Primary metals -.9 2.9 .1 -.3 -1.4 .8 .8 Iron and steel -1.2 2.9 .2 -.1 -1.3 1.2 -1.3 Raw steel .6 -1.9 -.3 -.2 -.3 -.1 .8 Nonferrous -.7 2.9 .0 -.5 -1.5 .0 3.4 Fabricated metal products .9 3.2 -1.0 .7 .1 .0 .0 Industrial machinery and equipment 11.7 10.0 -3.3 -.9 -.2 -.8 -5.2 Computer and office equipment .. 40.7 38.1 -1.2 -6.6 1.6 4.5 -2.5 Electrical machinery 15.9 7.2 3.2 .4 .9 4.0 2.8 Semiconductors and related components 36.4 15.6 8.9 4.6 8.4 10.4 7.9 Transportation equipment -6.1 5.4 -.1 -.1 -2.0 .1 -1.9 Motor vehicles and parts -3.0 -3.7 -.6 1.2 -1.8 -.4 -6.0 Autos and light trucks -3.3 -.5 .3 -2.1 -.3 -.6 -2.0 Aerospace and miscellaneous -10.6 19.3 .0 -1.0 -1.9 1.2 3.5 Instruments .5 3.0 .2 -.6 -2.8 -.1 .2 Miscellaneous .9 2.5 .0 -.5 -3.6 .3 .9 Nondurable -.9 2.2 .3 -.4 -.9 .1 -.3 Foods .8 2.1 .2 -1.0 -1.5 .4 .1 Tobacco products ... -8.8 2.3 -1.5 3.3 15.8 -2.7 -3.6 Textile mill products -5.5 2.0 .2 .5 .9 .2 .2 Apparel products -7.6 -2.5 -.5 .9 1.2 1.4 .3 Paper and products .. -2.6 1.4 -.1 -.3 .5 .4 -.6 Printing and publishing -1.3 1.2 .3 -1.2 -1.4 .6 .5 Chemicals and products 1.6 3.6 .5 -.4 -2.4 -.8 -1.2 Petroleum products .4 3.1 .0 -.3 -.9 .2 -.4 Rubber and plastics products -.5 2.9 .3 -.3 -.9 .0 -.6 Leather and products -8.9 -3.4 -.1 -1.2 -5.1 .3 1.5 Mining .3 -.3 1.6 -1.3 3.9 .0 .2 4 .5 -.8 Metal mining 5.7 2.2 -3.0 4.7 .1 -.4 -.3 -.2 -3.3 3.7 Coal mining -.7 -3.3 8.9 -.2 4.1 -.2 -.1 -.2 2.9 -6.2 Oil and gas extraction .. -.3 -.6 -.3 -2.5 4.1 .2 .0 .4 .5 -.2 Stone and earth minerals 3.4 5.6 7.0 .2 5.6 -1.1 2.7 .6 -1.8 .3 Uti E li l t e i c e t s r ic .. 491,3pt R ~-l 6 5 . . 5 3 1. . 1 4 -. . 1 2 . . 5 1 -. . 3 1 . . 2 3 -1 -. . 6 2 Gas ... 492,3pt 5^5 -1.2 10.9 -2.1 -1.0 1.6 -1.2 .4 -3.1 Aggregate, excluding computer i#li| and office equipment Manufacturing .7 3.1 .2 --..22 --11..00 ..44 --..11 99 • NOTE. See notes to table A.4. Growth rates are calculated as the percentage 1. Standard Industrial Classification, see table A.4, note 1. change in the seasonally adjusted index from the fourth quarter of the previous pt Part of classification. year to the fourth quarter of the year specified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 87 A.7. Revised and earlier capacity utilization rates, by major industry group, 1967-96 Difference between revised Revised index and earlier indexes (percent of capacity) SSIICC (percentage points) IItteemm ccooddee11 1967-95 1988-89 1990-91 1994:Q4 1995:Q4 1996:Q4 1994:Q4 1995:Q4 1996:Q4 avg. high low Total index 82.0 85.3 78.1 84.4 83.2 83.2 -3 .2 -.2 Manufacturing 81.1 85.7 76.6 84.0 82.3 82.2 -.3 .2 -.1 Primary processing 82.0 88.9 77.8 88.7 86.2 86.4 -.6 ..11 -.1 Advanced processing 80.6 84.2 76.1 81.9 80.5 80.4 -.2 ..22 -.2 Durable 79.3 84.5 73.2 83.5 82.0 81.6 -.4 .3 -.1 Lumber and products 24 82.6 93.6 75.5 86.6 84.7 84.5 ^t.O -2.8 -2.6 Furniture and fixtures 25 81.7 86.6 72.5 83.8 81.3 82.0 -2.1 -.1 .3 Stone, clay, and glass products 32 77.9 83.6 69.7 80.7 79.3 79.5 -.1 -.2 .0 Primary metals 33 80.1 92.7 73.7 93.6 91.1 90.8 -1.7 -.7 -.1 Iron and steel 331,2 80.0 95.2 71.8 93.5 90.7 89.3 -1.4 -.2 -2.1 Raw steel 33 lpt 79.7 92.7 71.5 94.8 92.5 89.7 -.7 -.8 2.4 Nonferrous 333-6,9 80.5 89.3 74.2 93.9 91.8 92.7 -1.9 -1.2 2.5 Fabricated metal products 34 77.7 82.0 72.2 85.8 84.3 84.6 1.0 .5 -.2 Industrial machinery and equipment 35 80.9 85.4 72.4 88.0 90.2 89.1 .8 2.1 -1.2 Computer and office equipment 357 80.9 86.9 66.9 82.2 89.7 91.0 -.3 1.1 -5.4 Electrical machinery 36 80.8 84.0 75.1 87.8 87.3 80.3 .1 1.7 3.1 Semiconductors and related components 3672-9 79.4 81.0 75.5 87.3 88.2 78.6 1.9 2.2 4.7 Transportation equipment 37 76.0 85.8 68.5 76.0 69.4 72.2 -1.3 -1.6 -2.8 Motor vehicles and parts 371 76.6 89.1 55.9 82.5 74.7 69.5 -2.5 -3.7 -7.6 Autos and light trucks2 37 lpt 92.2 53.3 85.1 77.7 76.0 -.1 -2.6 -4.2 Aerospace and miscellaneous 372-6,9 75.7 87.3 79.2 68.1 62.5 75.7 .4 1.4 3.6 Instruments 38 82.1 81.4 77.2 77.2 77.6 79.9 -.8 -.2 .7 Miscellaneous 39 75.1 79.0 71.7 78.0 77.6 78.5 2.2 4.3 6.7 Nondurable 83.5 87.3 80.7 84.7 82.6 82.9 -.1 .3 -.1 Foods 20 83.1 85.4 82.7 82.5 81.5 81.7 -.4 -.3 -.5 Textile mill products 22 85.6 90.4 77.7 92.2 83.6 83.3 1.6 1.3 1.0 Apparel products 23 81.4 85.1 75.5 86.3 77.5 74.5 5.1 5.1 4.5 Paper and products 26 89.3 93.5 85.0 93.1 89.0 88.8 -.8 .8 1.4 Printing and publishing 27 86.2 91.7 79.6 82.3 81.4 82.8 3 1.0 1.4 Chemicals and products 28 79.6 86.2 79.3 79.2 78.9 79.0 -1.5 -1.8 -3.5 Petroleum products 29 85.8 88.5 85.1 91.2 91.7 94.3 -1.6 -.6 -.5 Rubber and plastics products 30 84.5 89.6 77.4 93.5 91.0 92.1 -.3 .8 1.6 Leather and products 31 81.7 83.3 76.1 78.6 73.0 71.5 -6.2 -6.2 -5.7 Mining 87.3 86.8 86.1 88.7 88.0 91.8 -.6 .2 -.3 Metal mining 10 77.9 89.4 79.9 84.5 87.7 86.8 .1 -2.6 .6 Coal mining 12 87.0 91.5 83.4 84.4 84.9 87.6 -2.2 1.9 -2.9 Oil and gas extraction 13 88.3 86.6 87.5 89.8 88.3 92.9 -.4 .0 .0 Stone and earth minerals 14 84.9 89.1 79.4 92.7 91.2 94.5 2.4 1.6 2.5 Utilities 87.1 92.6 83.4 86.4 90.4 88.9 -.6 -1.1 -2.8 Electric 491,3pt 88.9 95.0 87.1 89.1 91.8 90.5 -.4 -1.2 -2.7 Gas 492,3pt 82.3 85.0 67.1 77.2 85.2 82.8 -1.1 -.7 -3.0 Aggregates, excluding computer and office equipment Total index 82.1 85.4 78.2 84.5 83.0 83.0 -.2 .3 ..22 Manufacturing 81.1 85.8 76.8 84.1 82.1 81.9 -.1 .5 .5 NOTE. The "high" columns refer to periods in which utilization generally 1. Standard Industrial Classification; see table A.4, note 1. peaked; the "low" columns refer to recession years in which utilization gener- 2. Series begins in 1977. ally bottomed out. The monthly highs and lows are specific to each series, and pt Part of classification, all did not occur in the same month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1997 A.8. Revised growth rates of capacity, by major industry group, 1992-96 Difference between revised Revised growth rate and earlier growth rates IInndduussttrryy ggrroouupp SSIICC (percent) (percentage points) ccooddee 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 Total index 1.9 1.8 2.8 33 3.7 -.2 -.4 -3 -.4 -.3 Manufacturing 2.1 2.0 3.1 3.7 4.1 -.3 -.5 -.4 -.5 -.3 Primary processing 1.0 1.2 2.0 2.1 2.4 -.3 -.3 -.2 -.5 -.1 Advanced processing 2.6 2.4 3.7 4.6 4.9 -.3 -.6 -.4 -.3 -.4 Durable 2.0 2.5 4.1 5.5 6.1 -.5 -.6 -.5 -.5 -.5 Lumber and products 24 .1 .3 2.4 2.1 2.8 -.5 -.8 1.6 -1.2 .4 Furniture and fixtures 25 .5 1.3 1.4 1.3 2.3 -.5 -.6 -.6 -.4 -.1 Stone, clay, and glass products 32 .1 .1 .9 1.2 2.2 -.6 -.1 .0 -.5 -.5 Primary metals 33 -1.1 -.1 1.4 1.8 3.3 .1 .2 -.5 -.3 .2 Iron and steel 331,2 -2.3 -1.0 2.8 1.9 4.5 .0 .0 .0 .0 .9 Raw steel 33 Ipt -3.0 -4.2 .9 3.1 1.1 .0 .0 .0 .0 -2.8 Nonferrous 333-6,9 .5 .9 -.3 1.6 1.8 .2 .4 -1.0 -.7 -.6 Fabricated metal products 34 -.1 1.5 1.5 2.7 2.9 -.4 .4 -.4 .5 .9 Industrial machinery and equipment 35 3.8 4.7 6.3 9.0 11.4 -.3 -1.1 -2.4 -2.4 -1.1 Computer and office equipment 357 14.4 19.0 22.8 29.0 36.1 .4 .4 -2.2 2.2 6.8 Electrical machinery 36 6.5 8.1 11.7 16.6 16.5 .1 .8 2.0 1.8 .9 Semiconductors and related components 3672-9 15.9 20.6 27.3 35.1 29.7 1.8 8.0 9.0 10.0 4.2 Transportation equipment 37 1.4 .7 3.0 2.8 1.3 -.6 -1.3 -.4 .7 -.3 Motor vehicles and parts 371 3.2 2.9 7.5 7.2 3.4 -.5 -1.6 .9 1.6 -.6 Autos and light trucks 371pt .8 .0 5.5 5.9 1.8 -1.6 -2.7 -.3 2.7 .0 Aerospace and miscellaneous 372-6,9 .1 -1.9 -2.1 -2.5 -1.5 -.2 -1.1 -1.8 -.3 .2 Instruments 38 1.1 .5 .2 .0 .0 -.1 -.4 -.8 -.9 -1.0 Miscellaneous 39 1.5 1.5 1.4 1.4 1.4 -3.4 -2.3 -2.4 -2.5 -2.5 Nondurable 2.2 1.4 1.8 1.6 1.7 -.1 -.4 -.3 -.3 .1 Foods 20 2.6 1.8 2.0 2.1 1.9 .4 -.2 .0 .4 .3 Textile mill products 22 1.7 2.5 3.5 4.1 2.4 -.8 -.8 .4 .4 .6 Apparel products 23 .2 .5 .4 2.9 1.3 -1.9 -2.1 -.6 .8 .8 Paper and products 26 1.8 2.3 1.5 1.9 1.6 -.5 .1 -.6 -1.3 -1.2 Printing and publishing 27 .6 -.8 -.1 -.2 -.5 -.3 .0 -1.7 -.2 .0 Chemicals and products 28 3.8 2.2 3.0 2.0 3.5 -.1 -.4 .7 -.4 .9 Petroleum products 29 -1.5 -.6 1.9 -.2 .3 -.3 .0 1.6 -.8 -.5 Rubber and plastics products 30 3.8 3.3 4.3 2.3 1.6 -.4 -.9 -.4 -1.2 -1.5 Leather and products 31 -2.6 -2.1 -1.7 -1.9 -1.4 .1 .1 .8 .9 1.0 Mining -1.2 -.6 .7 -.4 -.4 .0 .4 .8 -.4 -.2 Metal mining 10 2.5 1.8 -1.5 .9 1.2 .0 .1 -1.2 -.1 .2 Coal mining 12 -.3 1.4 4.3 -.9 .8 -1.2 .3 3.2 -2.0 -.2 Oil and gas extraction 13 -1.8 -1.6 -.2 -.8 -1.1 .3 .3 .4 .0 -.2 Stone and earth minerals 14 .0 1.9 1.0 1.9 1.8 -.5 1.0 -.5 -1.1 -.7 Utilities 1.4 .8 1.2 1.8 2.1 .3 .2 .8 .8 .7 Electric 491,3pt 1.5 1.4 1.0 2.2 2.6 .0 .7 .6 1.1 1.0 Gas 492,3pt .0 .2 .4 .5 .7 .0 .0 -.1 -.2 -.3 Aggregate, excluding computer 1.7 1.5 2.5 2.8 3.0 -.2 -.3 -.1 -.2 -.1 Manufacturing 1.9 1.7 2.7 3.1 3.3 -.3 -.4 -.3 -.3 -.1 NOTE. See notes to table A.4. Growth rates are calculated as the percentage pt Part of classification, change in the seasonally adjusted index from the fourth quarter of the previous year to the fourth quarter of the year specified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 89 A.9. Value added and annual proportions in industrial production, by industry groups, 1994-96 Previous Revised IItteemm cc SS oo II dd CC ee11 v 1 a 9 lu 9 e 2 - 1994 1995 v 1 a 9 lu 9 e 2 - 1994 1995 1996 IP IP IP IP IP added added proportion proportion proportion proportion proportion proportion proportion Total index 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Manufacturing 85.4 86.2 86.5 85.4 86.6 86.6 86.4 Primary processing 26.6 26.7 26.3 26.5 28.2 28.3 27.7 Advanced processing 58.9 59.6 60.1 58.9 58.4 58.4 58.7 Durable 45.0 47.2 48.1 45.0 46.3 46.5 46.8 Lumber and products 24 2.0 2.0 1.9 2.0 2.2 2.0 2.1 Furniture and fixtures 25 1.4 1.4 1.4 1.4 1.4 1.3 1.3 Stone, clay, and glass products 32 2.1 2.0 2.0 2.1 2.2 2.1 2.1 Primary metals 33 3.1 3.2 3.2 3.1 3.6 3.6 3.5 Iron and steel 331,2 1.7 1.8 1.8 1.7 2.0 1.9 1.9 Raw steel 331pt .1 .1 .1 .1 .1 .1 .1 Nonferrous 333-6,9 1.4 1.4 1.4 1.4 1.6 1.7 1.6 Fabricated metal products 34 5.0 5.1 5.1 5.0 5.2 5.3 5.3 Industrial machinery and equipment 35 8.0 9.2 10.1 8.0 8.6 9.1 9.5 Computer and office equipment 357 1.8 2.5 3.3 1.8 1.7 2.1 2.5 Electrical machinery 36 7.2 8.2 9.1 7.3 7.7 8.3 8.6 Semiconductors and related components 3672-9 2.6 3.3 4.0 2.6 4.2 4.6 4.8 Transportation equipment 37 9.5 9.5 9.1 9.5 9.3 8.6 8.4 Motor vehicles and parts 371 4.8 5.7 5.6 4.9 5.4 5.1 4.8 Autos and light trucks 37 lpt 2.5 3.0 2.9 2.6 2.7 2.4 2.3 Aerospace and miscellaneous 372-6,9 4.7 3.8 3.5 4.6 3.8 3.5 3.6 Instruments 38 5.4 5.0 4.9 5.4 5.0 4.8 4.7 Miscellaneous 39 1.3 1.4 1.3 1.3 1.3 1.3 1.3 Nondurable 40.5 39.1 38.3 40.4 40.3 40.2 39.5 Foods 20 9.4 9.1 9.0 9.4 9.3 9.3 9.4 Tobacco products 21 1.6 1.4 1.4 1.6 1.2 1.2 1.2 Textile mill products 22 1.8 1.8 1.7 1.8 1.8 1.7 1.6 Apparel products 23 2.2 2.1 1.9 2.2 2.1 1.9 1.8 Paper and products 26 3.6 3.6 3.5 3.6 3.7 3.7 3.3 Printing and publishing 27 6.8 6.3 6.1 6.7 6.6 6.5 6.5 Chemicals and products 28 9.9 9.5 9.5 9.9 10.0 10.2 10.1 Petroleum products 29 1.4 1.4 1.3 1.4 1.6 1.6 1.8 Rubber and plastics products 30 3.5 3.8 3.7 3.5 3.8 3.8 3.8 Leather and products 31 .3 .2 .2 .3 .2 .2 .2 Mining 6.9 6.3 6.1 6.9 5.9 5.6 5.6 Metal mining 10 .5 .4 .4 .5 .5 .5 .4 Coal mining 12 1.0 1.0 1.0 1.0 .9 .9 .9 Oil and gas extraction 13 4.8 4.4 4.2 4.8 3.9 3.7 3.7 Stone and earth minerals 14 .6 .6 .6 .6 .6 .6 .6 Utilities 7.7 7.4 7.4 7.7 7.5 7.7 8.0 Electric 491,3pt 6.1 5.9 5.9 6.2 5.9 6.0 6.3 Gas 492,3pt 1.6 1.5 1.5 1.6 1.6 1.7 1.8 NOTE. The IP proportion data are estimates of the industries' relative contri- 1. Standard industrial classification; see table A.4, note 1. butions to overall IP growth in the following year. For example, a 1 percent pt Part of classification, increase in durable goods manufacturing in 1997 would account for a 0.468 percent increase in total IP. APPENDIX B: REVISION OF ELECTRIC POWER comparison base year was 1987. The revisions of the DATA electric power series stem from three sources: more complete reports from utilities and some changes in The Federal Reserve's monthly indexes of industrial the Federal Reserve's utility reporting panel for electric power use, which begin in 1972, have been recent years; more accurate staff estimates of the revised.12 The indexes are now expressed as percent- increase in the electricity generated by individual ages of electric power use in 1992; the previous manufacturing and mining firms for their operations (cogeneration) that took place during the last half of the 1980s; and adjustments of the detailed series on 12. The electric power indexes appear in table 9 of the Federal purchased power consumption to annual benchmarks Reserve's monthly statistical release G.17, "Industrial Production and derived from data published in the Annual Survey of Capacity Utilization." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1997 Manufactures (ASM) from 1972 to 1993. Compared Description of Data Collected with the previously published data, the revised index of total electric power use in manufacturing and The respondents to the Federal Reserve's Monthly mining shows somewhat stronger growth since 1989 Survey of Industrial Electricity Use report to the and a slightly greater decline from 1979 to 1982; the Reserve Bank in their Federal Reserve District. The overall pattern, however, is quite similar to previous survey consists of two voluntary reports: one for results (chart B.l). The revised cogeneration compo- electric utility companies and one for manufacturing nent grows noticeably faster (chart B.2). and mining firms that are cogenerators. The utilities Since 1971 the electric power data have been used report their data in thousands of kilowatt-hours of regularly to estimate key components of the monthly electric power sold to manufacturing and mining industrial production index. Currently, forty-one indi- establishments classified according to their SIC for vidual monthly production series are derived from 1987.13 Each utility reporter provides, on average, electric power data, and these series represent 28 per- sales data for 120 three-digit SIC industry groups. cent of the IP index in terms of its 1994 value-added Each cogenerator reports power used according to the proportions (table B.l). Electricity is an integral input SIC grouping for its own plant. to industrial production processes, with such diverse Currently, 175 utilities and 186 cogenerating comuses as powering industrial machinery and materials panies voluntarily participate in the monthly electric conversion processes to controlling lighting and cli- power survey; the response rate for the combined mate. For these forty-one series, changes in electric panel is about 95 percent. A comparison of the power use are generally closely linked to output kilowatt-hour sales reported by utilities to the Federal changes, a linkage that is primarily a reflection of Reserve with establishment reports in the 1994 ASM the variation in machine operation rates or materials indicates that the Board survey captured about 75 perconsumption that accompanies short-run adjustments cent of the total sales by electric utilities to manufacin production. In the current revision of industrial turing establishments. Seventy-one new cogenerators production, the forty-one production series incorpo- joined the FRB reporting panel in 1992, raising the rate the revised electricity data from January 1992 sample coverage from about 30 percent of cogeneronward. The electric power data are also used to develop productivity extrapolations after 1994 for production 13. The reports are based on monthly meter readings, or billings, series based on production-worker hours. In the and may not uniformly represent electric power use. However, a new monthly estimation process for the index of produc- data collection procedure implemented in 1990 has allowed easier detection of instances of billing for two months or of delayed reporttion, electric power data continue to be used to review ing. The possibility of a systematic irregular relation of billing periods output estimates made with physical product and (once corrected) to calendar months is generally rejected by the data; a production-worker-hour data. Thus, the use of elec- statistical analysis comparing electric power data with productionworker-hour data for seventy different SIC codes showed the reports tric power series goes beyond the direct monthly to be significantly more closely related for the same months than at estimation of the forty-one series. any lag. B.l. Revised and earlier industrial electric power use, B.2. Revised and earlier electric power cogeneration, 1972-96 1982-96 Index, 1992 = 100, ratio scale Revised NOTE. Seasonally adjusted monthly data through November 1996. NOTE. Seasonally adjusted monthly data through November 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Historical Revision and Recent Developments 91 B. 1. Industrial production series based on electric power The electric power database has been revised back components as a proportion of total industrial to 1982 to reflect the expansion of the cogenerator production, 1994 panel. Data provided by new participants in the Percent cogenerator panel were incorporated in the revision Proportion of of the electric power indexes in July 1994, which Series IP index in 1994 covered the period back to December 1991. The new Total 28.31 participants typically began cogenerating operations Job printing 2.98 after 1982 and contributed to the increase in cogen- Drugs and medicines 2.80 eration that took place in the last half of the 1980s. Office and computing equipment 2.09 Medical instruments 1.57 Passage of the 1978 Public Utilities Regulatory Poli- Soap and toiletries 1.51 Canned and frozen food 1.29 cies Act stimulated much of this increase. In this Metalworking machinery 1.09 revision, the staff estimated the likely effect of these Bakery products 1.01 Miscellaneous machinery .99 new reporters on cogeneration at the three-digit SIC Metal stampings .98 Soft drinks .88 level for the years back to 1982 consistent with Miscellaneous foods, n.e.c .81 aggregate data on cogeneration from the ASM. New General industrial equipment .75 individual cogeneration series were prorated back Electrical industrial apparatus .68 Lighting and wiring products .68 linearly to zero in January 1982, unless we had Office furniture, fixtures, and miscellaneous .65 Household furniture .64 specific information to indicate otherwise. Miscellaneous rubber products .60 Concrete and plaster products .60 This revision introduced adjustments to annual Miscellaneous chemical products .59 benchmarks for the monthly electric purchased power Hardware and tools .48 series derived from ASM data at the three-digit SIC Computer parts .45 Iron and steel foundries .44 level. The purpose of these adjustments was to Miscellaneous stone and earth manufacturers .39 improve the accuracy of the Federal Reserve's his- Metal services, wire products .37 Knit garments .36 torical data by detailed industry classification. The Children's and miscellaneous garments .33 Agricultural chemicals, n.e.c .32 overall index has always captured total industrial Bolts, fasteners .32 power use quite well, judging from the ASM data, Electrical distribution equipment .30 Glass products .24 but discrepancies at the three-digit level were Paving and roofing materials .19 sizable.14 .18 Wood products, n.e.c .17 The benchmark adjustments to each Federal Miscellaneous glassware .14 Reserve series involved the following steps: (1) The Miscellaneous primary metals .13 Plumbing fixtures .11 annual ASM series on purchased electric power was Wood containers .07 Leather and belting .05 indexed and then converted to a monthly series by Miscellaneous metal ores .03 Consumer glassware .03 interpolating linearly between the annual index values. (2) The ratio of the ASM-Census monthly index n.e.c. Not elsewhere classified. to the Federal Reserve monthly index was calculated. (3) A centered, three-year average of the ratio was determined, with the weights for computing the threeated power to about 50 percent, judging from ASM year average tapered for twelve months at the begindata. Altogether, the panel of utilities and cogenera- ning and end of the three-year period. (4) The tors accounts for about 73 percent of total industrial smoothed monthly ratios were multiplied by the use of electric power in the United States. original Federal Reserve monthly index values to obtain the final monthly index. This method of adjustment to benchmarks preserves the higher-frequency, Aspects of the Revision of Electric Power Data month-to-month changes in the Federal Reserve series while ensuring that the longer-run trends in the The revised data incorporate more complete reports ASM data are reproduced. that have been received from respondents since the 1995 annual update. The new figures incorporate a more accurate classification of customer SIC codes by the utility respondents and also some changes in 14. Comparisons with Department of Energy (DOE) data on industhe reporting panel back to 1989. Although the effects trial sales of electricity by utilities are not useful because the industrial of these changes are generally small relative to U.S. classification used by DOE relates partly to size of establishment; it totals, the classification changes have improved the includes large commercial and irrigation customers in the industrial category, while frequently classifying small industrial customers as recent figures by detailed industry classification. commercial. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1997 Results of the Revision the monthly growth rates for total electric power use is about 1.2 percentage points from 1973 to the The revisions for major series are generally small present; it is about 0.9 percentage point over that (table B.2). The largest users of electric power are the period if recessions are excluded. The measurement chemicals, primary metals, and paper industries, fol- precision of the growth rates is largely determined by lowed by producers of food products, petroleum the utility sample, which represents about 90 percent products, transportation equipment, and rubber and of total combined sample coverage (utilities plus plastics products. Within chemicals, the inorganic cogenerators). A statistical analysis of the utility data chemical and plastics materials industries are the suggests that the standard deviation of the measuremajor consumers, and within primary metals, basic ment error of growth rates for total power use is steel and primary aluminum processing absorb large 0.5 percentage point. For cogenerators, the standard amounts of electric power. Among these major indus- deviation of the errors for sample growth rates is trial groups, the largest revisions since 1989 occur in larger, 1.9 percentage points, but has been reduced petroleum refining. from 3.0 percentage points, which was the standard Two-digit SIC groups of series were seasonally deviation before the 1992 expansion of the reporting adjusted using a multivariate procedure that, in com- panel. These estimates of standard errors decline as parison with standard methods, yields seasonal fac- the period of the growth rate lengthens. • tors that contain less noise and tend to be more stable as new data are received.15 The standard deviation of 15. See Eric J. Bartelsman and William P. Cleveland, "Joint Seasonal Adjustment of Economic Time Series," Finance and Economics Discussion Series No. 93-28 (Board of Governors of the Federal Reserve System, August 1993). B.2. Revised growth rates pf electric power use, 1973-96 Difference between revised Revised growth rates BBiilllliioonnss ooff (percent) and earlier growth rates SSeerriieess kkiilloowwaatttt hhoouurrss (percentage points) iinn 11999922'' 1973-79 1979-89 1989-96 1973-79 1979-89 1989-96 Total index 934.1 2.4 .5 1.3 -.1 .0 .1 Total utilities 835.3 2.6 .5 1.2 -.2 -.1 .2 Total cogeneration 98.8 -1.6 1.0 2.4 2.8 1.7 1.1 Total manufacturing 854.0 2.2 .6 1.3 -.1 .0 .2 Durable manufacturing 365.8 1.9 .1 .6 .1 .0 .1 Nondurable anufacturing 488.3 2.5 1.0 2.0 -.2 -.1 .2 Mining 80.1 5.6 .4 1.0 -.2 .2 .0 Two-digit industries Chemicals and products 171.7 2.4 -.5 1.5 -.5 -.5 .0 Primary metals 150.9 1.9 -1.8 -.6 .3 .1 .0 Paper and products 113.3 3.2 2.7 1.6 .6 .5 -.1 Food and kindred products 58.8 2.7 2.4 2.6 -.3 .0 .1 Petroleum products 47.0 3.5 1.9 2.9 .1 1.3 1.5 Transportation equipment 39.6 .4 2.0 .6 .1 .3 .4 Rubber and plastic products 38.0 4.8 3.0 4.3 .0 -.5 .0 Oil and gas extraction 36.0 3.1 .5 .2 .2 -.1 .2 Stone, clay, and glass products 33.8 2.7 .0 1.0 .0 .1 .0 Industrial machinery and equipment 33.2 3.1 1.8 .6 .2 -.1 -.2 Electrical machinery 33.0 1.4 1.6 2.2 .1 -.3 .8 Textile mill products 31.5 .4 1.0 1.4 .0 .0 .1 Fabricated metal products 31.4 2.1 1.4 1.4 -.5 -.4 .2 Lumber and products 19.8 2.3 2.0 2.5 -2.2 -1.2 -.1 Metal mining 18.6 9.3 .1 2.9 -.3 1.0 -.5 Printing and publishing 17.3 2.2 4.9 2.6 -.7 -.2 -.1 Instruments 13.7 2.3 4.7 .8 .0 .0 1.3 Stone and earth minerals 12.8 4.5 -.1 1.4 -.7 .2 -.4 Coal mining 12.7 7.6 1.2 -.2 .1 -.3 .3 Apparel products 8.2 -1.9 .7 .0 -3.1 -1.7 -.5 Furniture and fixtures 6.0 1.0 3.3 1.8 -1.0 .2 -.4 Miscellaneous manufactures 4.5 2.3 1.0 4.1 -.6 -.1 -.6 Tobacco products 1.5 2.5 1.9 .5 2.3 2.4 -3.0 Leather and products 1.0 -2.1 -2.0 -2.5 -1.0 -3.0 -1.5 NOTE. Growth rates are calculated as the annual percentage change from the 1. Sold in 1992 to each category as reported by the Bureau of the Census, first year to the last year indicated. The 1996 estimate is the average through November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

93 Industrial Production and Capacity Utilization for December 1996 Released for publication January 17 industrial production in December was 5.1 percent higher than it was in December 1995. For the fourth Industrial production advanced 0.8 percent in Decem- quarter as a whole, industrial production grew ber after a similar gain in November. The output of 4.1 percent at an annual rate after an increase of non-energy consumer goods, business equipment, 4.5 percent in the third quarter; growth in the fourth and non-energy materials advanced sharply. The quarter was held down significantly by strike-related unseasonably mild weather in December caused a losses in the motor vehicle industry. The utilization large drop in the output of utilities, reducing the of industrial capacity increased 0.4 percentage point growth rate of overall production about 0.3 percent- in December, to 83.8 percent, the highest level since age point. At 129.1 percent of its 1987 average, total August 1995. Industrial production indexes Twelve-month percent change Twelve-month percent change Materials Durable _ manufacturing Products 1990 1991 1992 1993 1994 1995 1996 1990 1991 1992 1993 1994 1995 1996 Capacity and industrial production Ratio scale, 1987 production =100 Ratio scale, 1987 production = 100 160 — Manufacturing 160 140 Capacity — 140 120 ^ 120 100 ^ - 100 Production 80 80 I I I I I 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity 1982 1984 1986 1988 1990 1992 1994 1996 1982 1984 1986 1988 1990 1992 1994 1996 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

94 Federal Reserve Bulletin • February 1997 Industrial production and capacity utilization, December 1996 Industrial production, index, 1987=100 Percentage change Category 1996 19961 Dec. 1995 to Sept.r Oct/ Nov/ Dec.P Sept.' Oct/ Nov.' Dec.P Dec. 1996 Total 127.2 127.1 128.1 129.1 .2 -.1 .8 .8 5.1 Previous estimate 127.1 126.9 128.0 .1 -.2 .9 Major market groups Products, total2 123.1 123.1 124.4 125.2 .4 .0 1.0 .6 5.1 Consumer goods ... 116.8 116.7 118.2 118.7 .3 -.1 1.2 .5 2.6 Business equipment 172.0 172.5 174.6 176.6 .6 .3 1.2 1.1 11.5 Construction supplies 115.4 113.8 115.2 115.8 .8 -1.3 1.2 .5 4.8 Materials 133.4 133.1 133.8 135.1 -.1 -.2 .5 .9 5.2 Major industry groups Manufacturing 129.6 129.5 130.4 131.8 .3 -.1 .7 1.1 5.6 Durable 142.3 141.5 142.8 144.7 .0 -.5 .9 1.3 7.3 Nondurable 115.6 116.2 116.7 117.6 .7 .5 .5 .8 3.4 Mining 101.9 102.0 102.7 104.0 -.8 .1 .6 1.2 5.9 Utilities 125.4 125.5 128.4 124.1 -.1 .1 2.3 -3.3 -.8 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1995 1996 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, DDDeeeccc... 111999999555 11996677--9966 11998822 11998888--8899 Dec. Sept.r Oct/ Nov/ Dec.P tttooo DDDeeeccc... 111999999666 Total 82.1 71.8 84.9 82.9 83.4 83.0 83.4 83.8 4.0 Previous estimate 83.3 82.9 83.3 Manufacturing 81.4 70.0 85.2 81.9 82.3 81.9 82.2 82.8 4.5 Advanced processing 80.7 71.4 83.5 80.2 80.5 80.0 80.6 81.1 5.3 Primary processing . 82.8 66.8 89.0 86.0 86.7 86.6 86.1 86.9 2.4 Mining 87.5 80.6 86.5 87.7 91.2 91.3 91.9 93.0 -.1 Utilities 87.0 76.2 92.6 92.2 91.4 91.4 93.4 90.2 1.5 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 posted in November. The production of industrial that the output of consumer goods advanced 0.5 per- equipment, which had been weak for much of 1996, cent, led by a 2.2 percent increase in the output of increased sharply in December, and the output of durable consumer goods. A surge in the production information processing equipment grew further. of appliances, which had been weak for several The output of construction supplies rose 0.5 permonths, contributed a substantial portion of the cent in December after an upward-revised increase of increase in durable consumer goods. In addition, the 1.2 percent in November. But with output quite weak output of motor vehicles, which had rebounded in in October, growth in construction supplies for the November after the settlement of the strike at General fourth quarter as a whole decelerated to a 3.5 percent Motors, rose slightly further in December. The pro- annual rate after a 9.6 percent gain in the third duction of nondurable consumer goods was flat, held quarter. down by a large decline in utility output for residen- The output of materials increased 0.9 percent; the tial use. Excluding energy products, however, the production of durable and nondurable materials rose nondurable consumer goods sector marked its fourth sharply, but the output of energy materials declined. consecutive sizable monthly increase; the sector Among durable materials, which advanced 1.6 per- (excluding energy products) had been quite sluggish cent, output grew sharply in the parts and materials since the beginning of 1995. The recent strength has used primarily by the computer and motor vehicle been concentrated in foods and tobacco and in industries. The output of nondurable materials chemicals. increased 0.6 percent in December after a rise of The output of business equipment rose 1.1 percent 0.8 percent in November; advances in textile and in December, nearly matching the 1.2 percent jump paper materials led the increase in both months. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 95 production of energy materials fell 0.6 percent, a The aggregate IP indexes will be constructed with drop reflecting the unseasonably mild weather in a superlative index formula similar to that introduced December. by the Bureau of Economic Analysis as the featured When analyzed by industry group, the data measure of real output in its January 1996 compreshow that factory output rose 1.1 percent after a hensive revision of the National Income and Product revised increase of 0.7 percent in November; the Accounts. At present, the aggregate IP indexes are production of durable goods increased 1.3 percent, computed as linked Laspeyres indexes, with the while that of nondurable goods rose 0.8 percent. weights updated every five years. Because of the Within the durable and nondurable groupings, most rapid fall in the relative price of computers and major industries posted sizable gains. The only peripheral equipment, that periodic updating of industries in which production was little changed weights is too infrequent to provide reliable estimates were lumber, printing and publishing, and chemicals. of current changes in output, capacity, and capacity The output at mines rose again, but production at utilization. With the publication of the revision, utilities was sharply curtailed because of the mild value-added proportions will be updated annually, weather. and the new index number formula will be applied to For the fourth quarter as a whole, factory output all aggregates of IP, capacity, and gross value of advanced at a 4.1 percent annual rate. Production was product. held down by strike-related disruptions in motor vehi- For the most part, relative price movements cles, which were mainly concentrated in October. among the 260 individual components of the IP Production, outside of motor vehicles and parts, grew index are likely to have little visible effect on total at an annual rate of 5.8 percent in the fourth quarter, IP. However, the more frequent updating of the up from its third-quarter rate of 5.1 percent. The relative price of the output of the computer industry pickup in growth in this grouping reflected stronger could lower overall IP growth in some years as growth in nondurable manufacturing, particularly in much as Vi percentage point; in other years, the foods, textiles, and paper. updating of weights will have virtually no effect. The factory operating rate increased 0.6 percentage Because the new index number formula will slow point, to 82.8 percent. The rate for advanced- capacity growth as well as IP growth, the effect of the processing industries rose 0.5 percentage point, to reaggregation on overall capacity utilization should 81.1 percent; the rate for primary-processing indus- be small. tries rose 0.8 percentage point, to 86.9 percent. The regular updating of source data for IP will This release and the history for all published include the introduction of annual data from the 1994 series are available on the Internet at Annual Survey of Manufactures and selected 1995 http://www.bog.frb.fed.us, the Board of Governors Current Industrial Reports of the Bureau of the Cen- World Wide Web site. sus. Available annual data on mining for 1994 and 1995 from the Department of the Interior will also be introduced. Revisions to the monthly indicators for REVISION OF INDUSTRIAL PRODUCTION AND each industry (physical product data, production- CAPACITY UTILIZATION worker hours, or electric power usage) and revised seasonal factors will be incorporated back to 1992. In The Federal Reserve will publish revisions of its addition, the benchmark index for semiconductor outmeasures of industrial production (IP), capacity, put will be revised back to 1977 to reflect a hedonic capacity utilization, and industrial use of electric price index, similar in concept to what is used for the power on January 27, 1997. The revisions of IP, computer industry. capacity, and capacity utilization will incorporate The statistics on the industrial use of electric power updated source data for recent years and will feature will be revised back to 1972. These revisions stem a change in the method of aggregating the indexes. from three basic sources. First, the new figures incor- From 1977 onward, the value-added proportions porate more complete reports received from utilities used to weight individual series will be updated for the past few years. Second, an updated panel of annually rather than quinquennially. In addition, the reporters on cogeneration will be fully integrated into IP indexes and the capacity measures will be rebased our survey of electric power use. Third, the levels of so that 1992 actual output equals 100. Capacity the monthly electric power series for manufacturing utilization, the ratio of IP to capacity, will be recom- industries will be benchmarked to indexes derived puted on the basis of revised IP and capacity from data published in the Census Bureau's annual measures. surveys and censuses of manufactures. These indexes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1997 will also be revised so that 1992 electric power usage through the Economic Bulletin Board of the Departequals 100. ment of Commerce; for information about the Bulle- More detail on the plans for this revision is avail- tin Board call 202-482-1986. In addition to the data able on the Internet at http://www.bog.frb.fed.us, the currently provided, the time series of implicit prices Board's World Wide Web site. Once the revision is necessary for a user to aggregate IP and capacity published, the revised data will be available at that under the new methodology will be provided. For site and on diskettes from the Board of Governors of information on these revisions, call the Industrial the Federal Reserve System, Publications Services, Output Section of the Board of Governors at 202-452-3245. The revised data will also be available 202-452-3151. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

97 Announcements LAWRENCE B. LINDSEY: RESIGNATION AS A of the Manhattan Institute for Economic Research, MEMBER OF THE BOARD OF GOVERNORS 1988; and the Outstanding Doctoral Dissertation Award from the National Tax Association, 1985. Lawrence B. Lindsey on January 10, 1997, Governor Lindsey, his wife Susan, son Troy, and announced his resignation as a member of the Board daughter Emily, reside in Clifton, Virginia. of Governors of the Federal Reserve System, effec- A copy of his letter of resignation appears below. tive February 5. His letter of resignation was sent to President Clinton yesterday. January 9, 1997 Governor Lindsey will join the American Enterprise Institute in Washington as a Resident Scholar The Honorable William Jefferson Clinton The President of the United States and holder of the Arthur F. Burns Chair in Econom- The White House ics. He will also become Managing Director of Eco- Washington, D.C. 20500 nomic Strategies, an economic advisory service based in New York City. Dear Mr. President: As is customary in such cases, Governor Lindsey I hereby submit my resignation as a Member of the will not attend the meeting of the Federal Open Board of Governors of the Federal Reserve System effec- Market Committee that is scheduled for February 4 tive February 5, 1997. Consequently, I will not be attendand 5. ing the Federal Open Market Committee meeting on Febru- Governor Lindsey served as a member of the ary 4th and 5th. Board of Governors for more than five years, from It has been my honor and privilege to have served on the Board of Governors for more than five years. During November 1991 to February 1997. Additionally, he that time, under the outstanding leadership of Chairman was Chairman of the Board of the Neighborhood Greenspan, the Federal Reserve has played an integral role Reinvestment Corporation, a national public-private in the recapitalization and strengthening of the banking community redevelopment organization, from 1993 system and has administered monetary policy in a manner until the effective date of his resignation from the which has made our economic performance the envy of the world. Federal Reserve. My tenure at the Board has also allowed me, both as Before joining the Board, Governor Lindsey was a Chairman of the Board's Community and Consumer Special Assistant to the President for Policy Develop- Affairs Committee and as Chairman of the Neighborhood ment during the Bush Administration. He is a former Reinvestment Corporation, to become actively involved in the areas of community development and affordable housprofessor of Economics at Harvard University and ing. Frankly, this involvement has been one of the most also served three years on the staff of the Council of personally and intellectually enriching experiences of my Economic Advisers during the Reagan Administra- life, and the area has become one in which I expect I will tion where he was Senior Staff Economist for Tax retain an abiding interest. Policy. I have been most impressed with the talent, dedication, and integrity of my colleagues at the Board. The ten men Governor Lindsey was born on July 18, 1954, in and women with whom I have served during my tenure Peekskill, New York. He received his A.B. magna have each brought exceptional insights, energy and skills cum laude from Bowdoin College and his master's to the tasks at hand. The country has been fortunate to have and Ph.D. in economics from Harvard University. He had the services of each of them. I therefore respectfully is the author of The Growth Experiment: How the suggest that in your search for a successor to my seat on the Board, that you consider my colleagues, past and New Tax Policy is Transforming the U.S. Economy present, as ideal models for the type of individual who will (New York: Basic Books, 1990) and has contributed be an asset to the Board. numerous articles to professional publications. His honors and awards include the Distinguished Public Sincerely, Service Award of the Boston Bar Association, 1994; an honorary Juris Doctor Degree from Bowdoin College, 1993; selection as a Citicorp/Wriston Fellow Lawrence B. Lindsey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1997 APPOINTMENTS OF NEW MEMBERS TO THE writing and dealing in securities from 10 percent to THRIFT INSTITUTIONS ADVISORY COUNCIL 25 percent of its total revenue. The increase is effective March 6, 1997. Section 20 The Federal Reserve Board announced on Decem- subsidiaries will therefore be allowed to employ the ber 27, 1996, the names of seven new members of its 25 percent limit for the first quarter of 1997. Thrift Institutions Advisory Council and designated a The revenue limit is designed to ensure that a new president and vice president of the council for section 20 subsidiary will not be engaged principally 1997. in underwriting and dealing in securities in violation The council is an advisory group made up of of section 20 of the Glass-Steagall Act. twelve representatives from thrift institutions. The Based on its experience in supervising these subpanel was established by the Board in 1980 and sidiaries and developments in the securities markets includes representatives from savings and loans, sav- since the revenue limitation was adopted in 1987, the ings banks, and credit unions. The council meets at Board concluded that a company earning 25 percent least four times each year with the Board of Gover- or less of its revenue from underwriting and dealing nors to discuss developments relating to thrift institu- would not be engaged principally in that activity for tions, the housing industry, mortgage finance, and purposes of section 20. certain regulatory issues. The new council president for 1997 is David F. Holland, Chairman, President, and CEO, Boston ADOPTION OF A REVISED INTERAGENCY Federal Savings Bank, Burlington, Massachusetts. UNIFORM FINANCIAL INSTITUTIONS RATING The new vice president is Charles R. Rinehart, Chair- SYSTEM man and CEO, Home Savings of America, FSB, Irwindale, California. The Federal Reserve Board announced on Decem- The seven new members, named for two-year ber 24, 1996, adoption of a revised interagency Uniterms beginning January 1, are the following: form Financial Institutions Rating System (UFIRS), commonly known as the CAMEL rating system, to David E.A. Carson, Chairman, President, and CEO, include an increase in the emphasis on risk manage- People's Bank, Bridgeport, Connecticut ment processes and the addition of a sixth rating component for sensitivity to market risk. The revised William A. Fitzgerald, Chairman and CEO, rating system was effective January 1, 1997, for use Commercial Federal Bank, Omaha, Nebraska at examinations of state member banks. Stephen D. Hailer, President and CEO, The existing CAMEL rating system produces a North Akron Savings Association, Akron, Ohio composite rating of an institution's overall condition and performance by assessing five components, Edward J. Molnar, President and CEO, Harleysville which form the acronym CAMEL: capital adequacy, Savings Bank, Harleysville, Pennsylvania asset quality, management administration, earnings, Guy C. Pinkerton, Chairman, President, and CEO, and liquidity. The updated rating system will now be Washington Federal Savings & Loan Association, referred to as the CAMELS rating system, to include Seattle, Washington sensitivity to market risk. The UFIRS is an internal supervisory tool used by Terry R. West, President and CEO, JAX Navy Federal Credit Union, Jacksonville, Florida federal supervisory agencies represented on the Federal Financial Institutions Examination Council to Frederick Willetts, III, President and CEO, evaluate the soundness of financial institutions on a Cooperative Bank for Savings, Inc., SSB, uniform basis and to identify those institutions requir- Wilmington, North Carolina ing special supervisory attention or concern. INCREASE IN THE AMOUNT OF REVENUE THAT EXPANSION OF THE FEDERAL RESERVE SECTION 20 SUBSIDIARIES MAY DERIVE FROM BOARD'S AUDIT CONTRACT UNDERWRITING AND DEALING IN SECURITIES The Federal Reserve Board said on December 17, The Federal Reserve Board announced on Decem- 1996, that it had expanded its audit contract with ber 20, 1996, an increase in the amount of revenue Coopers & Lybrand to include an annual financial that a section 20 subsidiary may derive from under- audit of each of the twelve Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 99 These audits by the independent outside auditor REGULATION Z: ADJUSTMENT OF THE DOLLAR will be in addition to the annual audit of the com- AMOUNT THAT TRIGGERS ADDITIONAL bined Reserve Bank financial statements that Coopers DISCLOSURE FOR CERTAIN TYPES OF & Lybrand has conducted since 1995. MORTGAGES The use of an outside accounting firm to audit all twelve Reserve Banks was announced recently by The Federal Reserve Board has published, under Chairman Alan Greenspan during a Washington, Regulation Z (Truth in Lending) requirements, an D.C. speech. adjustment of the dollar amount that triggers addi- Since 1995, Coopers & Lybrand has conducted tional disclosure for certain types of mortgages. The year-end audits of the combined Reserve Bank finan- adjustment is effective January 1, 1997. cial statements as well as of the individual financial The Board is required to adjust annually the total statements of two or three Reserve Banks each year. amount of total points and fees paid by the borrower The audit of the 1995 combined Reserve Bank finan- that triggers additional disclosures under Truth in cial statements represented the first such audit con- Lending. The adjustment is based on the annual ducted by an independent accounting firm. Based on percentage change in the consumer price index in the success of this program, the Board has decided to effect on June 1, 1996. In 1996 the base amount was extend the outside audit to all twelve Reserve Banks. raised to $424. The Reserve Banks will continue to be audited by This adjustment was made as a result of the Home each Bank's internal audit function and by the Ownership and Equity Protection Act of 1994, which Board's financial examiners. The General Account- sets forth rules for creditors offering home-secured ing Office also conducts audits of the Reserve Banks. loans with total points and fees payable by the consumer at or before loan consummation that exceed the greater of $400 or 8 percent of the total loan REGULATION D: FINAL RULE AND PROPOSAL amount. The Federal Reserve Board announced on December 26, 1996, a final rule and notice of proposed rulemaking designed to simplify and update the PROPOSED ACTIONS Board's Regulation D (Reserve Requirements of Depository Institutions) and to reduce regulatory bur- The Federal Reserve Board on December 23, 1996, den. The final rule is effective April 1, 1997. published for public comment proposed revisions to The final rule adopts an earlier proposed rule as it its Regulation B (Equal Credit Opportunity). Comwas proposed and makes certain technical changes. ments were requested by January 31, 1997. In general the final rule deletes transitional rules In addition, on December 23, 1996, the Board relating to the expansion of reserve requirements to withdrew a proposed amendment to Regulation B nonmember depository institutions, the authorization relating to the collection of data on race and other of NOW accounts nationwide, and other matters that information in credit transactions. The proposed no longer have a significant effect. The final rule also amendments would have eliminated a rule that genereliminates the transition rules for de novo institutions ally bars creditors from asking about sex, race, color, and separate transition rules for "dissimilar" religion, and national origin. Under the proposal, mergers. creditors would have been allowed but not required The proposed rule requests comment on a clarifica- to collect this information for all types of nonmorttion of the definition of "savings deposit," consistent gage credit applications. In withdrawing the prowith comments the Board received on the earlier posal, the Board stated its belief that the issue was proposal, and conforming changes to the definition of one that is best left for the Congress to consider. "transaction account." The proposed definitions also The Federal Reserve Board on December 17, 1996, incorporate existing staff interpretations. No substan- published for public comment proposed revisions to tive change is intended. Comments on the proposal its Regulation C (Home Mortgage Disclosure). Comare requested by February 4, 1997. ments are requested by February 25, 1997. The rules are in accordance with the Board's pol- The Federal Reserve Board on December 18, 1996, icy of regular review of its regulations and the requested comment on proposed revisions to Regula- Board's review of its regulations under section 303 of tion M (Consumer Leasing) to implement amendthe Riegle Community Development and Regulatory ments of the Consumer Leasing Act. Comments were Improvement Act. requested by February 7, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1997 Also, on December 18, 1996, the Federal Reserve This year's directory has been expanded to include Board announced a month-long extension of time to a separate section featuring community development receive public comments on proposed amendments to investments by state member banks. Previous editions its margin regulations (Regulations G, T, and U) included only bank holding company investments. issued in response to the enactment of the National The directory consists of descriptive profiles of Securities Markets Improvement Act. As a result of more than 150 existing community development corthe extension, comments were requested by Janu- porations (CDCs) and investments made by bank ary 31, 1997. holding companies and state member banks. These The Federal Reserve Board on December 23, 1996, profiles provide information on the amount of initial requested public comment on issues to be addressed capital invested by an institution, a description of the in a proposed consumer information study required community development projects or activities underby the Economic Growth and Regulatory Paperwork taken or planned, and contact persons who can pro- Reduction Act of 1996. Comments were requested by vide additional information on the organization and January 31, 1997. operation of the CDC or other community develop- The Federal Reserve Board on December 24, 1996, ment investment activity. joined with the Department of Housing and Urban In issuing the directory, the Board emphasized that Development in issuing a request for public comment bank holding companies or state member banks that on possible amendments to the Truth in Lending Act are considering making community development and the Real Estate Settlement Procedures Act. Com- investments are encouraged to consult with staff ments were requested by January 31, 1997. members of both Community Affairs and Applications at their District Federal Reserve Bank. Single or multiple copies of the directory may be PUBLICATION OF THE ANNUAL DIRECTORY OF obtained by contacting the Community Affairs offices COMMUNITY DEVELOPMENT INVESTMENTS BY of the District Federal Reserve Banks. For further BANKING ORGANIZATIONS information, contact the Division of Consumer and Community Affairs, Board of Governors of the Fed- The Federal Reserve Board announced on Decem- eral Reserve System, Washington, DC 20551, or ber 23, 1996, the publication of its annual update of phone (202) 452-3378. • the directory of community development investments by banking organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

101 Minutes of the Federal Open Market Committee Meeting Held on November 13,1996 A meeting of the Federal Open Market Committee Mr. Moore, First Vice President, Federal Reserve was held in the offices of the Board of Governors of Bank of San Francisco Ms. Browne, Messrs. Davis, Dewald, Eisenbeis, the Federal Reserve System in Washington, D.C., on Goodfriend, and Hunter, Senior Vice Presidents, Wednesday, November 13, 1996, at 9:00 a.m. Federal Reserve Banks of Boston, Kansas City, St. Louis, Atlanta, Richmond, and Chicago Present: respectively Mr. Greenspan, Chairman Messrs. Cox and Judd, Vice Presidents, Federal Mr. McDonough, Vice Chairman Reserve Banks of Dallas and San Francisco Mr. Boehne respectively Mr. Jordan Ms. Perelmuter, Assistant Vice President, Federal Mr. Kelley Reserve Bank of New York Mr. Lindsey Mr. McTeer Mr. Meyer By unanimous vote, the minutes of the meeting of Ms. Phillips the Federal Open Market Committee held on Septem- Ms. Rivlin Mr. Stern ber 24, 1996, were approved. Ms. Yellen The Manager of the System Open Market Account reported on recent developments in foreign exchange Messrs. Broaddus, Guynn, Moskow, and Parry, markets. There were no open market transactions in Alternate Members of the Federal foreign currencies for System account during the Open Market Committee period since the meeting on September 24, 1996, and Messrs. Hoenig, Melzer, and Ms. Minehan, thus no vote was required by the Committee. Presidents of the Federal Reserve Banks of The Manager also reported on developments in Kansas City, St. Louis, and Boston respectively domestic financial markets and on System open market transactions in government securities and federal Mr. Bernard, Deputy Secretary agency obligations during the period September 24, Mr. Coyne, Assistant Secretary Mr. Gillum, Assistant Secretary 1996, through November 12, 1996. By unanimous Mr. Mattingly, General Counsel vote, the Committee ratified these transactions. Mr. Prell, Economist By unanimous vote, the Committee authorized the Mr. Truman, Economist renewal for an additional one-year period of the System's reciprocal currency ("swap") arrangements Messrs. Lang, Lindsey, Mishkin, Promisel, with foreign central banks and the Bank for Interna- Rolnick, Siegman, Simpson, Sniderman, and Stockton, Associate Economists tional Settlements. The amounts and maturity dates of the arrangements approved for renewal are shown Mr. Fisher, Manager, System Open Market Account in the table below. The Committee then turned to a discussion of the Mr. Ettin, Deputy Director, Division of Research and economic and financial outlook and the implementa- Statistics, Board of Governors tion of monetary policy over the intermeeting period Messrs. Madigan and Slifman, Associate Directors, Divisions of Monetary Affairs and Research and ahead. A summary of the economic and financial Statistics respectively, Board of Governors information available at the time of the meeting and Mr. Reinhart, Assistant Director, Division of of the Committee's discussion is provided below, Monetary Affairs, Board of Governors followed by the domestic policy directive that was Ms. Low, Open Market Secretariat Assistant, approved by the Committee and issued to the Federal Division of Monetary Affairs, Board of Governors Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1997 balance over earlier months of the year. Much of the Amount of arrangement slackening in October resulted from work stoppages Term Maturity Foreign bank (millions of (months) date in the motor vehicles industry, but the output of other dollars equivalent) industries also apparently decreased slightly on bal- Austrian National Bank 250 12 12/04/96 ance. The drop in production was accompanied by a Bank of England 3,000 12/04/96 slight decline in capacity utilization in manufacturing. Bank of Japan 5,000 12/04/96 Bank of Norway 250 12/04/96 Total retail sales rose appreciably in September Bank of Sweden 300 12/04/96 Swiss National Bank 4,000 12/04/96 after having changed little on net over July and Bank for International August; for the third quarter as a whole, total retail Settlements: Swiss francs 600 12/04/96 sales edged higher after having expanded briskly in Other authorized European currencies ... 1,250 12/04/96 the first half of the year. September sales totals were Bank of Mexico 3,000 12/13/96 Bank of Canada 2,000 12/15/96 boosted by strong spending at automotive dealers, National Bank of Belgium 1,000 12/18/96 food stores, and nondurable goods outlets. However, National Bank of Denmark ... 250 12/28/96 Bank of France 2,000 12/28/96 expenditures for furniture, appliances, and other non- German Federal Bank 6,000 12/28/96 Bank of Italy 3,000 12/28/96 auto durable goods fell, and apparel sales weakened a Netherlands Bank 500 12/28/96 little further. Housing starts declined in September from the unusually high level recorded in August, and permits moved lower for a second straight month. The information reviewed at this meeting sug- Home sales were mixed, with sales of new homes gested that the growth of economic activity slowed well sustained in September while those of existing substantially in the third quarter, and the limited homes continued on a downtrend. information available for the period since then indi- Growth of business fixed investment surged in the cated continued moderate expansion. A marked soft- third quarter. Outlays for durable equipment picked ening in the growth of consumer expenditures up sharply, and new orders for business equipment accounted for much of the slowing in the third quar- remained on an upward trend. Sales of computers and ter, but slight weakening in housing demand, net communications equipment increased rapidly, but exports, and federal purchases of goods and services demand for other capital goods was up only slightly also exerted retarding effects. On the other hand, a during the quarter. In the transportation sector, expensizable increase in inventory investment, greater ditures on motor vehicles and aircraft strengthened strength in business demand for durable equipment, while sales of heavy trucks continued to drift lower. and an upturn in spending on nonresidential construc- Spending on nonresidential structures more than tion helped foster moderate further economic growth reversed a second-quarter decline; however, incomin the third quarter. Employment posted sizable ing data on contracts pointed to a continuation of the increases over the third quarter and rose substantially pattern of somewhat slower growth recorded thus far further in October, but on balance the gains were in 1996. somewhat below those recorded earlier in the year. The pace of inventory investment picked up mark- Industrial production had weakened somewhat edly after midyear, but inventory-sales ratios nonerecently. Consumer price inflation had picked up this theless remained relatively low. In manufacturing, year because of larger increases in food and energy inventories rose moderately in the third quarter, more prices. Increases in labor compensation, though mod- than offsetting a small rundown in stocks in the erating in the third quarter, also had been somewhat previous quarter; stock-shipments ratios for most larger this year. industries remained near the low end of their recent Private nonfarm payroll employment increased ranges. In the wholesale sector, inventories declined considerably in October after a small rise in Septem- sharply in September after having edged down in the ber; private payroll growth had moderated on balance previous two months, and the aggregate inventorysince midyear but nevertheless had remained sub- sales ratio for the sector fell to the low end of its stantial. In October, job gains were large in service range over recent years. At the retail level, substantial industries; construction employment registered inventory accumulation occurred over the Julyanother moderate gain; and manufacturing payrolls August period (latest data). Although stock-sales edged up after a sizable September loss. The civilian ratios rose slightly, inventories remained relatively unemployment rate in October was unchanged at well aligned with sales. 5.2 percent. The nominal deficit on U.S. trade in goods and Industrial production appeared to have declined services narrowed somewhat in August from a high appreciably in October after having grown briskly on rate in July; however, for the two months combined, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 103 the deficit was considerably wider than its average degree of pressure on reserve positions, and the fedrate for the second quarter. Exports declined apprecia- eral funds rate generally remained close to the level bly over the July-August period, with most of the expected with an unchanged policy stance. Market decrease occurring in nonmonetary gold and aircraft. participants had anticipated some tightening of mone- Imports rose only marginally on balance over the two tary policy at the September 24 meeting, and the months. The limited available information suggested announcement of an unchanged policy led to an that, on average, economic activity in the major for- immediate decline in interest rates, with the larger eign industrial countries expanded moderately in the decreases occurring at the shorter end of the yield third quarter. curve. Interest rates, especially those at intermediate Consumer price inflation had picked up on balance and longer maturities, dropped further over the this year as a result of sizable increases in food and remainder of the period in response to information energy prices. Over August and September, however, indicating that price and labor cost pressures were increases in food prices were offset by a net decline lower than market participants had expected. Equity in energy prices, and overall consumer prices rose markets responded to the declines in interest rates as more moderately. For the twelve months ended in well as to favorable earnings reports, and most major September, the advance in consumer prices of items indexes reached record highs. other than food and energy was a little smaller than it In foreign exchange markets, the trade-weighted had been over the previous twelve months. At the value of the dollar in terms of the other G-10 currenproducer level, price inflation also was moderate over cies depreciated slightly on balance over the inter- August and September despite appreciable increases meeting period. Interest rates in the foreign industrial in the prices of food and energy items; producer countries fell somewhat less on average than did U.S. prices of items other than food and energy rose interest rates. The dollar changed little against the considerably less over the twelve months ended in German mark and most other major continental Euro- September than they had over the previous twelve pean currencies, but it rose against the yen as prosmonths. Growth in the employment cost index for pects for a significant supplemental budget package private industry workers slowed considerably in the in Japan waned in the aftermath of the recent electhird quarter after having trended up over the first two tions in that country. The dollar declined against the quarters of the year; however, this measure of labor pound sterling in response to the release of favorable compensation was up slightly over the twelve months data on the U.K. economy as well as an unexpected ended in September compared with the previous increase in the Bank of England's minimum lending twelve months. Average hourly earnings of produc- rate. tion and nonsupervisory workers were unchanged in M2 grew at a slower pace in September and Octo- October, but the twelve-month rise in this index ber than it had over earlier months of the year; the through October was a bit larger than the increase weaker expansion resulted from a continuing rapid over the previous twelve months. runoff in its liquid deposit components. Nonetheless, At its meeting on September 24, 1996, the Com- M2 was estimated to have grown for the year through mittee adopted a directive that called for maintaining October at a rate in the upper half of the Committee's the existing degree of pressure on reserve positions annual range. By contrast, M3 expanded at a substanbut that included a bias toward the possible firming of tially faster rate in September and October than it had reserve conditions during the intermeeting period. earlier in the year, reflecting a surge in its large time The directive stated that in the context of the Com- deposit and other managed liability components to mittee's long-run objectives for price stability and meet business demand for bank loans. For the year sustainable economic growth, and giving careful through October, M3 was estimated to have grown at consideration to economic, financial, and monetary a rate around the top of its annual range. Total developments, somewhat greater reserve restraint domestic nonfinancial debt had expanded moderately would be acceptable and slightly lesser reserve on balance over recent months and had remained in restraint might be acceptable during the intermeeting the middle portion of its range. period. The reserve conditions associated with this The staff forecast prepared for this meeting sugdirective were expected to be consistent with moder- gested that the expansion would continue at a rate ate growth of M2 and M3 over coming months. close to, or perhaps a little above, the economy's With incoming information continuing to suggest estimated growth potential. Consumer spending was moderate economic growth and subdued price infla- projected to rebound in the current quarter and subsetion, open market operations during the intermeeting quently to expand at a moderate pace in line with the period were directed toward maintaining the existing projected increase in disposable income; the favor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1997 able effect on household wealth of the rise that had ued to see the risks as tilted toward some rise, even occurred in stock prices and the ample availability of assuming that the expansion settled into a pattern of credit for most borrowers were expected to balance growth near the economy's potential as they anticicontinuing consumer concerns about the adequacy of pated and resource utilization remained near current their savings and the restraining effect of high house- levels; other members felt that the risks surrounding hold debt burdens. Homebuilding was forecast to the forecasts for both economic growth and price decline slightly further in response to the previous inflation had become more evenly balanced, but more backup in residential mortgage rates but to stabilize evidence was needed before a firm judgment could be at a relatively high level in the context of continued reached. income growth and a generally favorable cash flow In their review of developments in key sectors of affordability of home ownership. Business spending the economy, members said that they anticipated a on equipment and structures was projected to grow pickup in consumer spending from its much reduced less rapidly in light of the anticipated moderate rate of growth in the third quarter. While the factors growth of sales and profits. On balance, the external relating to the prospects for consumer expenditures sector was expected to exert a small restraining influ- did not all point toward greater strength, members ence on economic activity over the projection period. tended to focus on those favoring an upturn. These A slight degree of fiscal restraint was anticipated over included persisting growth in employment and the forecast horizon. Continued pressure on incomes and clearly upbeat consumer sentiment as resources, especially in labor markets, pointed to a evidenced by recent surveys and anecdotal reports. likely underlying tendency toward higher inflation Financial factors also seemed likely on balance to over the projection period; however, it was expected accommodate continuing growth in consumer spendthat improved supply conditions in food and energy ing, in particular the marked increases that had markets, as well as planned technical changes, would occurred in the value of stock holdings and a stilldamp increases in the consumer price index relative ample availability of credit to most households. Supto the elevated 1996 rate. porting evidence included anecdotal reports from In the Committee's discussion, members com- retailers in a number of areas who were experiencing mented that most recent developments bearing on the sizable gains in sales and seemed optimistic about the outlook for economic growth and inflation had been outlook for the upcoming holiday season. Among the favorable. The information on economic activity developments that would tend to limit growth in since the September meeting had confirmed earlier consumer spending, members emphasized that the indications of appreciable slowing in the expansion level of consumer indebtedness had strained the to a sustainable pace close to the economy's poten- liquidity of many households. The growth of contial. The outlook remained subject, as usual, to con- sumer credit was now exhibiting a moderating trend, siderable uncertainty, but many of the members possibly pointing to restrained spending by many observed that underlying trends in key sectors of the households because of already heavy debt service economy along with generally supportive financial burdens and generally tightening credit standards for conditions seemed consistent with further moderate consumer loans. Other negative factors cited in the economic expansion. In this regard, several focused outlook for consumer expenditures were the possibilon what they saw as the promising prospects for a ity of a correction in the stock market and the probrebound in the growth of consumer expenditures able satisfaction of much of the earlier pent-up following weak expansion in the third quarter; the demand for consumer durables. In balancing these pickup would help sustain moderate economic conflicting influences, the members generally congrowth over the nearer term despite some anticipated cluded that a pickup in the growth of consumer retrenchment in inventory accumulation. With respect spending to a moderate pace was a likely prospect for to the outlook for inflation, members emphasized that this critical sector of the economy. despite widespread indications of tight labor markets, Business fixed investment was expected to provide the increase in wages had been muted and somewhat further but diminished impetus to the expansion. This less than anticipated, and there was no broad evi- view took account of the continued availability of dence of rising price inflation. Indeed, many major debt and equity financing on favorable terms but also measures of inflation had exhibited a slight down- of expectations of a more moderate growth trend in trend since 1993. Looking ahead, views differed to sales and the substantial buildup that had already some extent regarding the most likely course for occurred in stocks of equipment and structures. With inflation. Several members indicated that, while regard to the latter, some overbuilding of commercial recent developments were encouraging, they contin- and other structures characterized conditions in a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 105 number of areas. Nonetheless, members reported con- extent, was appreciably below expectations. At the siderable nonresidential building activity in several same time, business firms generally were not raising parts of the country, and nationwide such activity was their prices sufficiently to compensate for faster expected to help sustain modest growth in overall increases in their labor costs, to the extent that the nonresidential construction in coming quarters. latter were occurring, evidently because of the persist- Recent data, supported by anecdotal reports from ence of intense competition in most markets. Indeed, several though not all parts of the country, suggested with the notable exception of the overall consumer that residential building activity was slowing some- price index, the rate of inflation as measured by what, apparently in lagged response to earlier various broad price indexes had tended to ease marincreases in mortgage interest rates. However, in the ginally or at worst to stabilize over the past two context of the partial reversal recently of the previous years. Prices of farm commodities and industrial increases in mortgage rates and sustained growth in materials had declined considerably recently. employment and incomes, the housing sector was Despite the recent encouraging reports on labor viewed as likely to exert only a minor constraint on compensation and prices, the members agreed that overall economic activity over the forecast horizon. the risks of rising inflation could not be dismissed, Another somewhat negative factor in the outlook for and several continued to view slightly higher inflaeconomic activity was the prospect of some widening tion as a likely if not inevitable prospect. Much in the nation's trade deficit over the projection period. would depend, of course, on the strength of the Fiscal policy currently remained on a mildly economic expansion and the associated degree of restrictive course, but the range of potential develop- pressure on resources, notably in labor markets which ments was especially wide, injecting an element of appeared to have comparatively little slack in relation considerable uncertainty in the economic outlook. to other producer resources. It was suggested in this Legislation affecting the federal budget could have regard that restrained increases in labor compensamarked beneficial or adverse effects not only directly tion in comparison with historical experience probon spending and incomes but also on business and ably were a transitory phenomenon, though one could consumer confidence and financial markets. not predict when a more normal relationship would The growth of nonfarm business inventories in the re-emerge. A related concern was whether the tightthird quarter had exceeded earlier expectations, but ness in labor markets would ease sufficiently and members commented that the sizable rise appeared to quickly enough to prevent inflation pressures from have been largely voluntary and the overall level of escalating significantly. Some members mentioned a inventories was still historically low in relation to number of favorable factors in the outlook for inflasales. Against this background, inventory accumula- tion that tended to attenuate such concerns, such as tion was likely to continue but at a slower pace in the reduced pressures on food prices as a result of bettercurrent quarter. Beyond the near term, inventory than-expected harvests and improved supply condiinvestment was expected to become a more neutral tions in markets for energy. Relatively restrained factor in the performance of the economy, given the monetary growth in recent months also was cited as a absence of incentives to build stocks relative to sales development consistent with subdued inflationary in a period of moderate growth in projected demand. pressures. Moreover, the view was advanced that The members recognized, however, that the prospec- recent developments in bond markets could be read tive behavior of inventories remained subject to sub- as suggesting some decrease in inflationary expectastantial uncertainties. tions. On balance, while the members expressed vary- In their discussion of the outlook for inflation, ing degrees of concern that tight labor markets and members again focused on developments in labor attendant increases in wages might at some point lead markets and the extent to which rising cost pressures to rising price inflation, they agreed that there was in those markets might be passed through to higher little or no evidence of such a development at this prices. The statistical and anecdotal information gen- point and the outlook was far from certain. erally continued to point to tight labor markets and to In the Committee's discussion of policy for the a somewhat faster rise in labor compensation costs intermeeting period ahead, all the members indicated this year. Even so, the increases in such costs were that they could support an unchanged policy stance still falling short of those that would have been and the retention of a bias toward restraint in the anticipated on the basis of historical experience under directive. The slowing of the expansion to a sustainsimilar labor market conditions. Moreover, the able pace near the economy's growth potential and advance in the overall employment cost index in the the recent surprisingly favorable inflationary developthird quarter, while perhaps understated to some ments suggested lower risks of strengthening price Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1997 pressures and provided the Committee with a desir- nonfarm payroll employment increased appreciably on balable opportunity to pause and observe further devel- ance over September and October. The civilian unemployment rate remained at 5.2 percent in October. Industrial opments bearing on the course of economic activity production, which continued to rise in the third quarter, and inflation. Indeed, to the extent that inflation appears to have declined in October owing in important expectations had declined recently, short-term inter- measure to work stoppages in the motor vehicles industry. est rates, which had changed little in nominal terms, Total retail sales turned up in September after slumping had edged higher in real terms, implying slightly earlier in the summer. Housing starts fell in September from the exceptionally high level registered in August. greater monetary restraint and reducing the odds that Outlays for business equipment were strong in the third inflation would pick up. quarter and new orders continued to trend upward; busi- With regard to possible adjustments to policy dur- ness spending on nonresidential structures posted a modering the intermeeting period, all the members indi- ate advance. Inventory investment was substantial in the cated that they could support a proposal to retain the third quarter, but inventory-sales ratios remained relatively low. The nominal deficit on U.S. trade in goods and sercurrent bias toward restraint. Several viewed such a vices widened considerably in July-August from its bias as desirable because they continued to believe average rate in the second quarter. Increases in labor comthat the risks remained tilted, at least to some extent, pensation, though moderating in the third quarter, have toward rising inflation over time. In the circum- trended up this year; consumer price inflation also has stances, an asymmetric directive would best reflect picked up this year, owing to larger increases in food and energy prices. their views even if, as seemed likely, intermeeting developments did not prompt a policy tightening Market interest rates have moved lower since the Committee meeting on September 24, 1996, with the largest adjustment. Other members commented that a shift to declines occurring in intermediate- and long-term maturia symmetric directive might be viewed as more conties. In foreign exchange markets, the trade-weighted value sistent with the apparently diminished inflationary of the dollar in terms of the other G-10 currencies has pressures. They agreed, however, that such a shift depreciated slightly over the intermeeting period. would be premature in the currently uncertain envi- Growth of M2 in September and October remained ronment and might signal, inaccurately, that the Fed- below its pace in the first half of the year, while expansion of M3 was substantially higher over those two months. For eral Reserve was less concerned about the possibility the year through October, M2 is estimated to have grown at of a a modest upward trajectory in price inflation. a rate in the upper half of the Committee's annual range, At the conclusion of the Committee's discussion, and M3 at a rate around the top of its range. Expansion in all the members indicated that they supported a direc- total domestic nonfinancial debt has been moderate on balance over recent months and has remained in the middle tive that called for maintaining the existing degree of portion of its range. pressure on reserve positions and retaining a bias The Federal Open Market Committee seeks monetary toward the possible firming of reserve conditions and financial conditions that will foster price stability and during the intermeeting period. Accordingly, in the promote sustainable growth in output. In furtherance of context of the Committee's long-run objectives for these objectives, the Committee at its meeting in July price stability and sustainable economic growth, and reaffirmed the ranges it had established in January for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent giving careful consideration to economic, financial, respectively, measured from the fourth quarter of 1995 to and monetary developments, the Committee decided the fourth quarter of 1996. The monitoring range for that somewhat greater reserve restraint would be growth of total domestic nonfinancial debt was maintained acceptable and slightly lesser reserve restraint might at 3 to 7 percent for the year. For 1997 the Committee be acceptable during the intermeeting period. The agreed on a tentative basis to set the same ranges as in 1996 for growth of the monetary aggregages and debt, reserve conditions contemplated at this meeting were measured from the fourth quarter of 1996 to the fourth expected to be consistent with moderate growth of quarter of 1997. The behavior of the monetary aggregates M2 and relatively strong expansion in M3 over com- will continue to be evaluated in the light of progress ing months. toward price level stability, movements in their velocities, and developments in the economy and financial markets. The Federal Reserve Bank of New York was authorized and directed, until instructed otherwise by the In the implementation of policy for the immediate future, the Committee seeks to maintain the existing degree of Committee, to execute transactions in the System pressure on reserve positions. In the context of the Com- Account in accordance with the following domestic mittee's long-run objectives for price stability and sustainpolicy directive: able economic growth, and giving careful consideration to economic, financial, and monetary developments, somewhat greater reserve restraint would or slightly lesser The information reviewed at this meeting suggests that reserve restraint might be acceptable in the intermeeting growth in economic activity slowed substantially in the period. The contemplated reserve conditions are expected third quarter, and the limited available information indi- to be consistent with moderate growth in M2 and relatively cates continued moderate expansion more recently. Private strong expansion in M3 over coming months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 107 Votes for this action: Messrs. Greenspan, It was agreed that the next meeting of the Commit- McDonough, Boehne, Jordan, Kelley, Lindsey, McTeer, tee would be held on Tuesday, December 17, 1996. Meyer, Mses. Phillips, Rivlin, Mr. Stern, and Ms. Yellen. The meeting adjourned at 12:25 p.m. Votes against this action: None. Donald L. Kohn Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

109 Legal Developments FINAL RULE—AMENDMENT TO REGULATION D The revisions are as follows: The Board of Governors is amending 12 C.F.R. Part 204, Section 204.2—Definitions its Regulation D (Reserve Requirements of Depository Institutions), issued pursuant to section 19 of the Federal Reserve Act in order to simplify and update it and reduce (f)(1) Nonpersonal time deposit * * * regulatory burden. The amendments to modernize Regulation D are in accordance with the Board's policy of regular review of its regulations and the Board's review of its (iii) A transferable time deposit. A time deposit is regulations under section 303 of the Riegle Community transferable unless it contains a specific statement on Development and Regulatory Improvement Act of 1994. the certificate, instrument, passbook, statement or Effective April 1, 1997, 12 C.F.R. Part 204 is amended other form representing the account that it is not as follows: transferable. A time deposit that contains a specific statement that it is not transferable is not regarded as Part 204—Reserve Requirements of Depository transferable even if the following transactions can be Institutions (Regulation D) effected: a pledge as collateral for a loan, a transaction that occurs due to circumstances arising from death, 1. The authority citation for Part 204 continues to read as incompetency, marriage, divorce, attachment, or othfollows: erwise by operation of law or a transfer on the books or records of the institution; and Authority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611, and 3105. 3. Section 204.3 is amended as follows: 2. Section 204.2 is amended as follows: a. Paragraph (a)(3)(i) is removed and the paragraph desiga. In paragraph (c)(l)(i) introductory text, the introductory nation (a)(3)(ii) is removed. text of footnote 1 is amended by removing "before maturi- b. Paragraph (f)(1) is revised. ty" and adding in its place "during the period when an c. In paragraphs (h)(1) and (h)(2), the words "required early withdrawal penalty would otherwise be required un- clearing balance penalty-free band" are revised to read der this part", removing "the" after "imposing" and add- "required charge-free band". ing in its place "an", removing "penalties" and adding in d. Paragraph (i)(l)(ii) is amended in the last sentence by its place "penalty", and footnote 2 is removed. removing "in its operating circular" and adding in its place b. In paragraphs (c)(l)(iv)(C), (c)(l)(iv)(E), and (d)(2), "in its discretion." footnotes 3 through 5 are redesignated as footnotes 2 e. Paragraph (i)(4)(ii) is amended by removing "penalties" through 4, respectively, and footnote 6 is removed. in the second sentence and "penalty" in the third sentence c. Paragraph (f)(l)(iii) is revised. and adding in their place "charges" and "charge," respecd. Paragraph (f)(l)(iv) is removed and paragraph (f)(l)(v) tively. is redesignated as paragraph (f)(l)(iv). f. Paragraph (i)(5)(iv) is removed. e. In newly redesignated paragraphs (f)(l)(iv)(C) and (f)(l)(iv)(E), footnotes 7 and 8 are redesignated as foot- The revisions are as follows: notes 5 and 6, respectively. f. Paragraph (f)(3) is removed and footnote 9 is removed. Section 204.3—Computation and maintenance g. In paragraph (h)(l)(ii)(A), footnote 10 is redesignated as footnote 7 and is amended by removing "(1) that were acquired before October 7, 1979, or (2)". (f) Deductions allowed in computing reserves. (1) In deterh. In paragraph (h)(2)(ii), footnote 11 is redesignated as mining the reserve balance required under this part, the footnote 8 and is amended by revising "footnote 10" to amount of cash items in process of collection and balread "footnote 7". ances subject to immediate withdrawal due from other i. In paragraph (t), footnote 12 is redesignated as foot- depository institutions located in the United States (innote 9, and footnote reference 2 is redesignated as foot- cluding such amounts due from United States branches note reference 9. and agencies of foreign banks and Edge and agreement Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1997 corporations) may be deducted from the amount of gross transaction accounts. The amount that may be deducted 7. Section 204.9 is amended by removing paragraph (b), by may not exceed the amount of gross transaction ac- redesignating paragraph (a)(1) and (a)(2) as paragraphs (a) counts. and (b), respectively. 4. Section 204.4 is revised to read as follows: ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Section 204.4—Transitional adjustments in mergers Orders Issued Under Section 3 of the Bank Holding Company Act In cases of mergers and consolidations of depository institutions, the amount of reserves that shall be maintained by Community First Bankshares, Inc. the surviving institution shall be reduced by an amount Fargo, North Dakota determined by multiplying the amount by which the required reserves during the computation period immediately Order Approving the Acquisition of a Bank Holding preceding the date of the merger (computed as if the Company depository institutions had merged) exceeds the sum of the actual required reserves of each depository institution dur- Community First Bankshares, Inc., Fargo, North Dakota ing the same computation period, times the appropriate ("Applicant"), a bank holding company within the meanpercentage as specified in the following schedule: ing of the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3 of the Maintenance periods Percentage applied BHC Act (12 U.S.C. § 1842) to merge with Mountain occurring during to difference to Parks Financial Corp. ("MPF"), and indirectly acquire quarters following compute amount MPF's wholly owned subsidiary bank, Mountain Parks merger or to be subracted Bank ("MP Bank"), both of Denver, Colorado. consolidation Notice of this proposal, affording interested persons an opportunity to submit comments, has been published 1 87.5 (61 Federal Register 46,650 (1996)). The time for filing 2 75.0 comments has expired, and the Board has considered the 3 62.5 proposal and all comments received in light of the factors 4 50.0 set forth in section 3 of the BHC Act. 5 37.5 Applicant, with total consolidated assets of $2.3 billion, 6 25.0 operates subsidiary banks in seven states.1 Applicant is the 7 12.5 fourteenth largest banking or thrift organization ("deposi- 8 and succeeding 0 tory institution") in Colorado, controlling $401.1 million in deposits, representing 1.2 percent of total deposits in 5. Section 204.7 is amended in paragraph (a)(1) by remov- depository institutions in the state.2 MPF is the sixteenth ing "after application of the 2 percent carryover provided largest depository institution in Colorado, controlling in section 204.3(h)" and adding in its place "after applica- $361.7 million in deposits, representing 1.1 percent of total tion of the carryover provided in section 204.3(h)." deposits in depository institutions in Colorado. On consum- 6. Section 204.8 is amended as follows: mation of this proposal, and taking into account proposed a. In paragraph (a)(2)(i)(B)(5), footnotes 13 and 14 are divestitures, Applicant would become the eighth largest redesignated as footnotes 10 and 11, respectively. depository institution in the state, controlling $644.2 milb. In paragraph (a)(3)(v), footnotes 15 and 16 are redesig- lion in deposits, representing 2 percent of total deposits in nated as footnotes 12 and 13, respectively, and revised to depository institutions in Colorado. read as follows: Section 3(d) of the BHC Act, as amended by section 101 of the Riegle-Neal Interstate Banking and Branching Effi- Section 204.8—International banking facilities ciency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a (a) Definitions. * * * bank located in a state other than the home state of such bank holding company, if certain conditions are met.3 For purposes of the BHC Act, the Applicant's home state is (3) * * * ^ ***12***13*** 1. Asset data are as of June 30, 1996. 2. State deposit data are as of June 30, 1995, but are adjusted to take into account mergers and acquisitions through October 31, 1996. 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding 12. See footnote 10. company's home state is the state in which the operations of the bank 13. See footnote 11. holding company's banking subsidiaries were principally conducted Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 North Dakota, and Applicant would acquire a bank in In order to mitigate the potential adverse competitive Colorado. The conditions for an interstate acquisition un- effects of the proposal in the Grand County and Summit der section 3(d) are met in this case.4 In view of all the County banking markets,9 Applicant has committed to facts of record, the Board is permitted to approve this make divestitures in each of these banking markets.10 In proposal under section 3(d) of the BHC Act. the Grand County banking market, Applicant proposes to The BHC Act prohibits the Board from approving an divest the Grandby, Colorado, branch of MP Bank to an application under section 3 of the BHC Act if the proposal out-of-market acquirer. In the Summit County banking would result in a monopoly, or if the proposal would market, Applicant proposes to divest its controlling interest substantially lessen competition in any relevant market, in Vail Banks, Inc., Vail, Colorado ("Vail Banks"), to Vail unless such anticompetitive effects are clearly outweighed Banks or to an out-of-market acquirer. After the divestiture in the public interest by the probable effect of the transac- in the Grand County banking market, four competitors tion in meeting the convenience and needs of the commu- would remain in the market, including a new competitor nity to be served.5 controlling 24.8 percent of market deposits. The HHI Applicant and MPF compete in the Grand County bank- would increase by no more than 53 points to a level of ing market, the Summit County banking market, and the 3142. After the divestiture in the Summit County banking Denver-Boulder banking market, all in Colorado.6 On con- market, market concentration, as measured by the HHI, summation of this proposal, concentration would not sig- would remain unchanged.11 nificantly increase in the Denver-Boulder banking market.7 In accordance with the BHC Act, the Board sought The Herfindahl-Hirschman Index ("HHI"), for the comments from the Department of Justice on the competi- Denver-Boulder banking market would increase by 1 point tive effects of the proposal in the relevant banking markets. to a level of 1057.8 The Department of Justice has indicated that, subject to completion of the proposed divestitures, consummation of the proposal would not likely have any significantly adverse effect on competition in any relevant banking market, and has not objected to consummation of the proposal. The on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. Office of the Comptroller of the Currency also has not 4. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and objected to the proposal. (B). Applicant is adequately capitalized and adequately managed. On Based on all the facts of record, and subject to Appliconsummation of this proposal, Applicant and its affiliates would not control more than 10 percent of the total amount of deposits of insured cant's divestiture commitments, the Board concludes that depository institutions in the United States or more than the state limit consummation of this proposal would not have a signifiof 25 percent of the total amount of deposits in all federally insured cantly adverse effect on competition or the concentration of financial institutions in Colorado. There is no minimum age requirebanking resources in any relevant banking market. ment for subsidiary banks acquired as a result of the purchase of a Colorado bank holding company. Colo. Rev. Stats. § 11-6.4-103 (2), The Board has carefully reviewed the financial and man- (4) (Supp. 1996). agerial resources and future prospects of Applicant and 5. 12 U.S.C. § 1842(c). MPF in light of all the facts of record, including relevant 6. The Grand County banking market is approximated by Grand supervisory reports of examination. The Board also con- County, Colorado, and the Summit County banking market is approxcludes that the financial and managerial resources and imated by Summit County, Colorado. The Denver-Boulder banking future prospects of the institutions involved in this promarket is approximated by the Denver RMA and the remaining portions of Adams and Arapahoe Counties, Boulder County, and the posal, and considerations relating to the convenience and towns of Erie, Frederick, and Keensburg in Weld County. 7. Market data are as of June 30, 1995. Market deposit data are based on calculations in which the deposits of thrift institutions are 9. Applicant would become the largest depository institution in both included at 50 percent. The Board previously has indicated that thrift banking markets, and would control deposits of $50.9 million (repreinstitutions have become, or have the potential to become, significant senting 69.4 percent of market deposits) in the Grand County banking competitors of commercial banks. See Midwest Financial Group, market, and $108.2 million of deposits (representing 55.9 percent of 75 Federal Reserve Bulletin 386 (1989); National City Corporation, market deposits), in the Summit County banking market. The HHI 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly would increase by 2261 points to a level of 5350 in the Grand County included thrift deposits in the calculation of market share on a banking market and by 1085 points to a level of 5069 in the Summit 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 11 Federal County banking market. Reserve Bulletin 52 (1991). 10. Applicant has committed to execute a sales agreement to accom- 8. Under the revised Department of Justice Merger Guidelines, plish the divestitures before consummation of the proposal and to 49 Federal Register 26,823 (June 29, 1984), a market in which the complete the divestitures within 180 days of consummation. Applipost-merger HHI is between 1000 and 1800 is considered moderately cant also has committed that, if it is unsuccessful in completing the concentrated and a market in which the post-merger HHI is over 1800 divestitures within 180 days of consummation, it will transfer all is considered highly concentrated. The Justice Department has in- interests necessary to effect the divestitures to an independent trustee formed the Board that a bank merger or acquisition generally will not that is acceptable to the Board and that will be instructed to sell the be challenged (in the absence of other factors indicating anticompeti- assets promptly. In addition, Applicant has committed to submit tive effects) unless the post-merger HHI is at least 1800 and the executed trust agreements acceptable to the Board stating the terms of merger increases the HHI by more than 200 points. The Justice the divestitures prior to consummation of the proposal. Department has stated that the higher than normal threshold for an 11. Applicant currently owns 24.6 percent of the voting shares of increase in the HHI when screening bank mergers and acquisitions for Vail Banks. Applicant acknowledged that its ownership of these anticompetitive effects implicitly recognizes the competitive effects of shares constituted a controlling interest for purposes of the BHC Act limited-purpose lenders and other non-depository financial entities. when it acquired them in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1997 needs of the communities to be served, are consistent with state.1 Belleville is the 213th largest commercial banking approval of this application. The other supervisory factors organization in Wisconsin, controlling deposits of approxithe Board must consider under section 3 of the BHC Act mately $34.7 million, representing less than 1 percent of also are consistent with approval. total deposits in commercial banking organizations in the Based on the foregoing and all other facts of record, the state. On consummation of the proposal, Country would Board has determined that the application should be, and become the 30th largest commercial banking organization hereby is, approved. The Board's approval is expressly in Wisconsin, with approximately $241 million in deposits. conditioned on compliance by Applicant with its divestiture commitments and other commitments made in connec- Competitive Considerations tion with this proposal. For purposes of this action, the commitments and conditions relied on by the Board in The BHC Act prohibits the Board from approving an reaching this decision are deemed to be conditions im- application under section 3 of the BHC Act if the proposal posed in writing by the Board in connection with its would result in a monopoly, or would substantially lessen findings and decision and, as such, may be enforced in competition in any relevant banking market, unless the proceedings under applicable law. Board finds that the anticompetitive effects of the proposal The acquisition of MPF shall not be consummated be- are clearly outweighed in the public interest by the probafore the fifteenth calendar day following the effective date ble effects of the proposal in meeting the convenience and of this order, or later than three months following the needs of the community to be served. effective date of this order, unless such period is extended Country and Belleville compete directly in the Madison, for good cause by the Board or by the Federal Reserve Wisconsin, banking market.2 Country operates the 11th Bank of Minneapolis, acting pursuant to delegated author- largest banking or thrift organization ("depository instituity. tion") in the Madison banking market, controlling deposits By order of the Board of Governors, effective Decem- of approximately $77.1 million, representing approxiber 2, 1996. mately 2 percent of total deposits in depository institutions in the market ("market deposits").3 Belleville operates the Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and 24th largest depository institution in the market, control- Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not ling deposits of approximately $34.7 million, representing voting: Governor Yellen. less than 1 percent of market deposits. On consummation of this proposal, Country would become the ninth largest JENNIFER J. JOHNSON depository institution in the Madison banking market, con- Deputy Secretary of the Board trolling deposits of $111.8 million, representing approximately 3 percent of market deposits. The market would remain moderately concentrated, as measured by the Country Bank Shares Corporation Herfindahl-Hirschman Index ("HHI"),4 and numerous Mount Horeb, Wisconsin 1. State deposit data are as of June 30, 1995. Order Approving the Acquisition of a Bank Holding 2. The Madison, Wisconsin, banking market is approximated by Company Dane County except for the eastern tier of townships; and Dekorra, Lowville, Otsego, Fountain, Prairie, Columbus, Hampden, Leeds, Arlington, Lodi, and West Point townships in Columbia County, all in Country Bank Shares Corporation, Mount Horeb, Wiscon- Wisconsin. sin ("Country"), a bank holding company within the mean- 3. Market data are as of June 30, 1995. Market share data are based on calculations in which the deposits of thrift institutions are included ing of the Bank Holding Company Act ("BHC Act"), has at 50 percent. The Board previously has indicated that thrift institurequested the Board's approval under section 3 of the BHC tions have become, or have the potential to become, significant Act (12 U.S.C. § 1842) to acquire all the voting shares of competitors of commercial banks. See Midwest Financial Group, Belleville Bancshares Corporation ("Belleville") and 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly thereby indirectly acquire Belleville State Bank ("Belincluded thrift deposits in the calculation of market share on a leville Bank"), both of Belleville, Wisconsin. 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 11 Federal Notice of the application, affording interested persons an Reserve Bulletin 52 (1991). opportunity to submit comments, has been published 4. On consummation of this proposal, the HHI would increase (61 Federal Register 36,884 (1996)). The time for filing 3 points to 1245. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in comments has expired, and the Board has considered the which the post-merger HHI is between 1000 and 1800 is considered proposal and all comments received in light of the factors moderately concentrated. The Justice Department has informed the set forth in section 3(c) of the BHC Act. Board that a bank merger or acquisition generally will not be chal- Country is the 34th largest commercial banking organi- lenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger zation in Wisconsin, controlling total deposits of approxiincreases the HHI by more than 200 points. The Justice Department mately $206.3 million, representing less than 1 percent of has stated that the higher than normal threshold for an increase in the total deposits in commercial banking organizations in the HHI when screening bank mergers and acquisitions for anticompeti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 113 competitors would remain in this market. Based on all the these and all the facts of record, the Board concludes that facts of record, the Board concludes that consummation of all supervisory factors that the Board is required to conthis proposal would not result in any significantly adverse sider under the BHC Act, including the financial and effects on competition or on the concentration of banking managerial resources and future prospects of Country and resources in the Madison banking market or any other Belleville weigh in favor of approval of this proposal.7 relevant banking market. The Board also must consider the financial and manage- Convenience and Needs Factor rial resources and future prospects of the companies and banks involved, the convenience and needs of the commu- The Board has long held that consideration of the convenity to be served, and certain other supervisory factors. nience and needs factor includes a review of the relevant depository institution's record of performance under the Supervisory Factors Community Reinvestment Act (12U.S.C. § 2901 et seq.) ("CRA"). As provided in the CRA, the Board has evalu- The Board has carefully considered the financial and man- ated this factor in light of examinations by the primary agerial resources and future prospects of Country, Bel- federal supervisor of the CRA performance records of the leville, and their respective subsidiaries,5 and other supervi- relevant institutions. The Board also has considered comsory factors in light of all the facts of record. These facts ments from the Wisconsin Rural Development Center, Inc. include supervisory reports of examination assessing the ("Protestant"), which maintain that Country's lead bank, financial and managerial resources of the organizations and Mt. Horeb Bank, has not adequately assisted in meeting the confidential information provided by Country.6 Based on credit needs of small- to medium-sized family farmers, small businesses, and low-income borrowers in its community. Protestant also contends that the bank's participation tive effects implicitly recognizes the competitive effects of limited- in government-guaranteed programs has been minimal, purpose lenders and other non-depository financial entities. and that the bank is improperly reducing its agricultural 5. The Board received comments alleging that two directors of lending through more stringent underwriting criteria for Country's lead subsidiary bank, State Bank of Mt. Horeb, Mount Horeb, Wisconsin ("Mt. Horeb Bank"), have potential conflicts of farm loans. interest because they extend credit in their farm-related private busi- An institution's most recent CRA performance evaluanesses in Mount Horeb at a higher rate to borrowers who are unable to tion is a particularly important consideration in the applicaobtain loans from Mt. Horeb Bank. The comments also contend that Mt. Horeb Bank has been unwilling to restructure or consolidate tions process because it represents a detailed on-site evaluexisting farm loans, has not honored its loan commitments, has treated ation of the institution's overall record of performance its customers poorly and unprofessionally, and has taken too long to under the CRA by its primary federal supervisor.8 The act on loan applications. Country denies the allegations made in the comments, and, in particular, notes that all the extensions of credit made by the two directors in their private businesses were to longstanding account holders on the same terms offered to other custom- visory information assessing the competence, experience, and integers. In its evaluation of the managerial factors in this case, the Board rity of Country's director and in light of the court's preliminary has considered the comments and recent reports of examination by the findings and the final disposition of the cases noted. In addition, the bank's primary federal supervisor, the Federal Deposit Insurance Board has carefully reviewed supervisory information regarding steps Corporation ("FDIC"), assessing the managerial resources and opera- taken by the Country director to ensure compliance with the interlock tions of Mt. Horeb Bank. Based on all the facts of record, including prohibitions of the Depository Institution Management Interlocks Act confidential supervisory information provided by the FDIC, the Board (12 U.S.C. § 3201) ("DIMIA") and the Board's Regulation L concludes that the comments do not warrant denial of the proposal. (12 C.F.R. 212). 6. One commenter contends that adverse managerial considerations This commenter also notes that an attorney who provides legal are raised by a preliminary ruling in 1994 in a lawsuit against a services to Country and Belleville, and who also is a minority sharedirector of Country based on his actions as a director of a manufactur- holder of Country, was suspended from the practice of law for six ing company. The lawsuit involved an attempt by the directors of the months by the Wisconsin Supreme Court for failing to account propmanufacturing company to acquire control of the company through a erly with his law firm for fees received from Country. Country states stock repurchase program. The case was settled without a final judg- that the attorney is one of a number of attorneys employed by these ment by the court. In addition, the commenter maintains that this organizations, owns less than 10 percent of the voting shares of director and two other principals of Belleville used unethical tactics to Country, and does not serve as an officer or director of either organizaencourage minority shareholders of the bank to sell their shares at tion or their subsidiaries. below-market prices in connection with the formation of Belleville as 7. Two commenters state generally that Belleville's management a bank holding company in 1992. These allegations involve personal does not consider the interest of the minority shareholders of Beloffers made by a group of Belleville Bank shareholders to purchase leville Bank, and a number of commenters contend that these shareshares of other shareholders of the bank. The offers did not involve holders have not received a fair return on their investment and would bank funds or any corporate action by the bank. The shareholder not benefit from the proposal. Based on all the facts of record, the group members deny that they used unethical tactics to encourage Board concludes that these matters do not relate to factors specified in minority shareholders to sell their shares, and note that they infor- the BHC Act and are therefore beyond the jurisdiction of the Board to mally consulted with four other members of the bank's board of consider in reviewing applications under section 3 of the BHC Act. directors and representatives of two brokerage firms to determine the See Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 fairness of the prices offered. The commenter also alleges that this (10th Cir. 1973). director continued to exercise influence over Belleville Bank's board 8. The Board notes that the Statement of the Federal Financial of directors after his resignation from the board in 1990 while he also Supervisory Agencies Regarding the Community Reinvestment Act served as a director of Country. The Board has considered these provides that a CRA examination is an important and often controlling comments in light of relevant reports of examination and other super- factor in the consideration of an institution's CRA record and that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1997 Board also takes into account information on an institu- levels, especially low- and moderate-income ("LMI") bortion's lending activities that assist in meeting the credit rowers, and to small businesses and small farms. The needs of low- and moderate-income neighborhoods, in- January 1996 Examination considered the bank's loans to cluding programs and activities initiated since its most be reasonably distributed throughout its assessment area. recent CRA performance examination. Examiners reviewed loans made by the bank, including Country's four subsidiary banks received CRA perfor- consumer installment, single payment and real estatemance ratings of "satisfactory" or "outstanding" in their related loans, and rejected credit applications for complimost recent evaluations for CRA performance by their ance with applicable fair lending and other applicable primary federal regulator, the FDIC. Country's lead bank, laws.14 The examiners concluded that loan denials ap- Mt. Horeb Bank, received an "outstanding" rating for peared to be reasonable and supported, and they found no CRA performance from the FDIC as of January 1996 violations of substantive provisions of anti-discrimination ("January 1996 Examination").9 Belleville Bank, received laws and regulations. a "satisfactory" rating for CRA performance from the As noted in the January 1996 Examination, Mt. Horeb FDIC as of January 1995. Bank actively engages in agricultural lending activities, Mt. Horeb Bank is a small bank, with total assets of with agricultural lending constituting approximately approximately $88 million, and operates a main office and 20 percent of the bank's outstanding loans. In addition, the one drive-in branch.10 It primarily makes residential real bank participates in government-sponsored loan programs estate loans, farm loans, commercial real estate loans, and designed to assist farmers, including programs offered by small business loans.11 As of the January 1996 Examina- the Wisconsin Housing and Economic Development Aution, approximately 23 percent of Mt. Horeb Bank's out- thority CROP ("WHEDA/CROP") Fund15 and the Farmstanding loans were for residential real estate purchase and ers Home Administration ("FmHA").16 In 1995, Mt. Horeb improvement, 20 percent for agricultural-related purposes, Bank originated 12 WHEDA/CROP loans totalling 20 percent for financing real estate construction and devel- $172,000, and 7 FmHA loans totalling $744,000. The opment, 18 percent for business purposes, and 10 percent bank's other lending activities included 5 Small Business for consumer loans.12 Administration loans totalling more than $266,000, and The January 1996 examination characterized the bank's financing for three centers that provide affordable housing loan-to-deposit ratio as strong and calculated the average and care facilities to LMI elderly and disabled individuals. loan-to-deposit ratio as 79 percent from December 31, The Board has carefully reviewed all the facts of record 1993, to September 30, 1995.13 A substantial majority of in considering the CRA performance record of Bank, in- Mt. Horeb Bank's loans, when measured either as a per- cluding information provided by Protestants, Country's centage of total number of loans or as a percentage of total responses, and relevant reports of examination. Based on dollar amounts of loans, were within its assessment area. Examiners also found that the bank had an excellent record of originating loans among borrowers of different income 14. The Board has carefully considered the results of the bank's compliance examination in light of comments by a community organization contending that closing costs and charges on loan transactions reports of these examinations will be given great weight in the are not adequately disclosed. applications process. 54 Federal Register 13,742, 13,745 (1989). 15. Protestant criticizes Mt. Horeb Bank's participation in the 9. Protestant asserts that the bank's rating is incorrect because WHEDA/CROP Fund, contending that the bank refuses to restructure examiners did not have the information provided by Protestant's program loans and makes poor credit decisions that result in a large comments to this proposal. number of forbearances for program loans. Protestant also maintains 10. A subsidiary bank of a bank holding company is a small bank that Mt. Horeb Bank violated WHEDA/CROP interest payment rules for purposes of the new regulations jointly promulgated by the federal by underwriting loans on the basis of 360 days rather than 365 days, financial supervisory agencies to implement the CRA if it had less and alleges that bank officials have threatened retaliation against any than $250 million in assets as of December 31 of either of the prior borrower who publicizes these practices. Country has denied any two calendar years, and was an affiliate of a holding company that, as improper actions by bank officials in connection with the WHEDA/ of December 31 of either of the prior two calendar years, had total CROP Fund. Under WHEDA/CROP guidelines, a participating bank banking and thrift assets of less than $1 billion. See 60 Federal may submit a request for forbearance to prevent a default, and a Register 22,156 (May 4, 1995). See also 12 C.F.R. 345.12(t). proposed repayment schedule for WHEDA's approval. In 1995, 11. For purposes of the new CRA regulation, a small business loan Mt. Horeb Bank submitted forbearance requests for ten loans to is a commercial and industrial loan with an original amount of WHEDA. Two loans were paid in full before WHEDA considered the $1 million or less, or a loan secured by nonfarm, nonresidential forbearance requests and forbearances were granted for the remaining property with an original amount of $1 million or less. See 12 C.F.R. eight loans. The Board has provided copies of Protestant's contentions 228.12(u). to WHEDA, and WHEDA staff informally has indicated that it does 12. Mt. Horeb Bank also sells loans on the secondary market. In not consider the number of loans submitted by the bank to be exces- 1995, the bank originated and sold 66 loans totalling $6.3 million. sive, and characterized the interest payment rule violation as technical Accounting for these loans would increase the residential real estate in nature. The Board also has considered these comments in light of lending to more than 50 percent. confidential supervisory information provided by the FDIC, and has 13. Mt. Horeb Bank's average loan-to-deposit ratio was 79.1 per- concluded that these comments do not warrant denial of the proposal. cent in 1994 and 72.8 percent in 1995. The bank's average loan-to- 16. Protestant also argues that Mt. Horeb Bank's participation in the deposit ratio would increase to approximately 85 percent by account- FmHA program is inadequate. FmHA loans represent more than ing for its loans sold on the secondary market. 15 percent of Mt. Horeb Bank's outstanding agricultural loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 115 this review, and for the reasons discussed above, the Board Voting for this action: Chairman Greenspan and Governors Kelley, concludes that convenience and needs considerations are Lindsey, Phillips, Yellen, and Meyer. Absent and not voting: consistent with approval.17 Vice Chair Rivlin. JENNIFER J. JOHNSON Conclusion Deputy Secretary of the Board Based on the foregoing and all the facts of record, the GB Bancorporation Board has determined that the application should be, and San Diego, California hereby is, approved.18 The Board's approval is expressly conditioned on Country's compliance with all the commit- Order Approving Acquisition of Shares of a Bank ments made in connection with this application. The commitments and conditions relied on by the Board in reaching GB Bancorporation, San Diego, California ("GBB"), a this decision shall be deemed to be conditions imposed in bank holding company within the meaning of the Bank writing by the Board in connection with its findings and Holding Company Act ("BHC Act"), has applied under decision and, as such, may be enforced in proceedings section 3 of the BHC Act (12 U.S.C. § 1842) to acquire up under applicable law. to 24.9 percent of the voting shares of Pacific Commerce The acquisition shall not be consummated before the Bank, Chula Vista, California ("Pacific Bank"). fifteenth calendar day following the effective date of this Notice of the application, affording interested persons an order, or later than three months after the effective date of opportunity to submit comments, has been published this order, unless such period is extended for good cause by (61 Federal Register 52,947 (1996)). The time for filing the Board or by the Federal Reserve Bank of Chicago, comments has expired, and the Board has considered the acting pursuant to delegated authority. application and all comments received in light of the By order of the Board of Governors, effective Decemfactors set forth in section 3 of the BHC Act. ber 9, 1996. GBB, with consolidated assets of approximately $527 million, is the 37th largest commercial banking organization in California, controlling deposits of approximately $415 million, representing less than 1 percent of total deposits in commercial banking organizations in the 17. The Board also has considered comments from a number of area state.1 Pacific Bank, with assets of approximately $59 residents objecting to the loss of a locally owned bank. The Board has million, is the 250th largest commercial banking organizaconsidered these comments in light of all the facts of record, including tion in California, controlling approximately $43 million in the records of Country's subsidiary banks in assisting to meet the credit needs of their communities. deposits, representing less than 1 percent of total deposits 18. Protestant also has requested a private meeting with the Federal in commercial banking organizations in the state. Reserve Bank of Chicago ("Reserve Bank") to discuss the issues Pacific Bank has objected to the proposal, contending raised in Protestant's comments, but declined to meet with the Rethat it is not for sale and that management will oppose any serve Bank in the presence of Country. Although the Board's Rules of Procedure permit System staff to arrange for a private meeting be- attempts by GBB to gain control of Pacific Bank. tween a protestant and the applicant for the purposes of clarifying and The Board notes that the BHC Act does not bar GBB narrowing the issues and providing a forum for resolving differences, from acquiring control of Pacific Bank, if it obtains prior this procedure does not authorize a private meeting with any one party Board approval. As noted above, however, GBB would during the processing of an application. See 12 C.F.R. 262.25(c). acquire less than 25 percent of the voting shares of Pacific Protestant also has requested that the Board hold public hearings or meetings to consider public testimony regarding the managerial and Bank, and GBB does not propose to control Pacific Bank the convenience and needs considerations in the proposal. Sec- without the prior approval of the Board. GBB also has tion 3(b) of the BHC Act does not require the Board to hold a public made a number of commitments that are similar to commithearing or meeting unless the appropriate supervisory authority for the ments previously relied on by the Board to determine that bank to be acquired makes a timely written recommendation of denial an investing bank holding company would not exercise a of the application. In this case, neither the FDIC nor the Wisconsin Commissioner of Banking has recommended denial. controlling influence over another bank holding company Under its rules, the Board may, in its discretion, hold a public or bank for purposes of the BHC Act.2 GBB has committed hearing or meeting on an application to clarify factual issues related to not to exercise or attempt to exercise a controlling influthe application and to provide an opportunity for testimony, if approence over the management or policies of Pacific Bank; not priate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully to seek or accept representation on the board of directors of considered Protestant's request in light of all the facts of record. In the Board's view, Protestant has had ample opportunity to submit its Pacific Bank; not to challenge a nominee of management views and has, in fact, submitted materials that have been considered for the board of directors of Pacific Bank; and not to have by the Board in acting on the application. Protestant has not demonstrated why its written submissions do not adequately present its allegations and what, if any, additional matters would be addressed in a public hearing or meeting. Based on all the facts of record, the 1. Asset data are as of June 30, 1996. Deposit data are as of June 30, Board has determined that a public hearing or meeting is not neces- 1995, and reflect transactions through September 30, 1996. sary to clarify the factual record and is not otherwise warranted in this 2. See, e.g., Mansura Bancshares, Inc., 79 Federal Reserve Bulletin case. Accordingly, Protestant's request for public hearings or meet- 37 (1993) {"Mansura"). The commitments provided by GBB are set ings on the application is denied. forth in the Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1997 any representative of GBB serve as an officer, agent or Based on all the facts of record, including the increase in employee of Pacific Bank. GBB also has committed not to market concentration as measured by the Herfindahlattempt to influence the dividend policies, loan decisions, Hirschman Index ("HHI")7 and the number of competitors personnel decisions, or operations of Pacific Bank; and not that would remain in the market, if GBB were to control to dispose or threaten to dispose of shares of Pacific Bank Pacific Bank, the elimination of competition between the in response to any action or non-action by the bank. two entities would not substantially lessen competition in The Board has adequate supervisory authority to monitor the San Diego banking market or any other relevant bank- GBB's compliance with its commitments, and retains ex- ing market. press authority to initiate a control proceeding against In light of all the facts of record, the Board concludes GBB if facts presented later indicate that GBB or any of its that competitive considerations are consistent with apsubsidiaries or affiliates in fact controls Pacific Bank for proval. The financial and managerial resources and future purposes of the BHC Act. Based on these commitments prospects of GBB and its subsidiaries and Pacific Bank and all other facts of record, it is the Board's judgment also are consistent with approval, as are considerations that, for purposes of the BHC Act, GBB would not acquire related to the convenience and needs of the communities to control of Pacific Bank on consummation of the proposal.3 be served and other supervisory factors the Board must The Board has noted that one company need not acquire consider under section 3 of the BHC Act. control of another company in order substantially to lessen Based on all the facts of record, the Board has detercompetition between them, and that the specific facts of mined that the application should be, and hereby is, apeach case will determine whether a minority investment proved. The Board's approval is expressly conditioned on would have significant anticompetitive effects.4 GBB and compliance by GBB with all the commitments made in Pacific Bank compete directly in the San Diego, California, connection with this application, including the commitbanking market.5 As a combined organization, GBB would ments discussed in this order. The commitments and condiremain the fourth largest commercial banking organization tions relied on by the Board in reaching this decision shall in the market, controlling deposits of approximately be deemed to be conditions imposed in writing by the $443 million, representing 2.6 percent of total deposits in Board in connection with its findings and decision, and, as commercial banks or thrift institutions in the market.6 such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the fifteenth calendar day following the effective date of this 3. The Board previously has indicated that the acquisition of less than a controlling interest in a bank or bank holding company is not a order, or later than three months after the effective date of normal acquisition for a bank holding company. See, e.g., North Fork this order, unless such period is extended for good cause by Bancorporation, Inc., 81 Federal Reserve Bulletin 734 (1995) ("North the Board or by the Federal Reserve Bank of San Fran- Fork")\ State Street Boston Corporation, 67 Federal Reserve Bulletin cisco, acting pursuant to delegated authority. 862 (1981). Nonetheless, the requirement in section 3(a)(3) of the BHC Act that the Board's approval be obtained before a bank holding By order of the Board of Governors, effective Decemcompany acquires more than 5 percent of the voting shares of a bank ber 18, 1996. suggests that Congress contemplated the acquisition by bank holding companies of between 5 and 25 percent of the voting shares of a bank Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and or a bank holding company. See 12U.S.C. § 1842(a)(3); 12 C.F.R. Governors Kelley, Lindsey, Phillips, Yellen, and Meyer. 225.11(c). Nothing in section 3(c) of the BHC Act, moreover, requires the Board to deny an application solely because a bank holding company proposes to acquire less than a controlling interest in a bank JENNIFER J. JOHNSON or bank holding company. Accordingly, the Board previously has Deputy Secretary of the Board approved the acquisition by a bank holding company of less than a controlling interest in a bank or a bank holding company. See, e.g., North Fork (acquisition of 19.9 percent of the voting shares of a bank holding company); Mansura (acquisition of 9.7 percent of the voting shares of a bank holding company); and SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 (1990) ("SunTrust") (acquisition of up to 24.99 percent of the voting shares of a bank). 4. See, e.g., North Fork; Mansura; SunTrust. For example, the acquisition of a substantial ownership interest in a competitor or a the calculation of market share on a 50-percent weighted basis. See, potential competitor of the acquiring firm might alter the market e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). behavior of both firms in such a way as to weaken or eliminate 7. The HHI would increase 1 point to 1470. Under the revised independent action at each organization and increase the likelihood of Department of Justice Merger Guidelines, 49 Federal Register 26,823 cooperative operations. See Mansura at 38. (June 29, 1984), a market in which the post-merger HHI is between 5. The San Diego banking market consists of the San Diego, 1000 and 1800 is considered to be moderately concentrated. The California, RMA. Justice Department has informed the Board that a bank merger or 6. Market share data are as of June 30, 1995, and are based on acquisition generally will not be challenged (in the absence of other calculations in which the deposits of thrift institutions are included at factors indicating anticompetitive effects) unless the post-merger HHI 50 percent. The Board previously has indicated that thrift institutions is at least 1800 and the merger increases the HHI by more than have become, or have the potential to become, significant competitors 200 points. The Justice Department has stated that the higher than of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin normal HHI thresholds for screening bank mergers for anticompeti- 788 (1990); National City Corporation, 70 Federal Reserve Bulletin tive effects implicitly recognizes the competitive effect of limited- 743 (1984). Thus, the Board has regularly included thrift deposits in purpose lenders and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 117 Appendix section 3 of the BHC Act (12 U.S.C. § 1842) to acquire up to 24.9 percent of the voting shares of Rancho Vista GBB commits that it will not, directly or indirectly, with- National Bank, Vista, California ("Rancho Bank"). out the Board's prior approval: Notice of the application, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 52,947 (1996)). The time for filing (1) Take any action that would cause Pacific Bank or any comments has expired, and the Board has considered the of its subsidiaries to become a subsidiary of GBB or any of application and all comments received in light of the its subsidiaries; factors set forth in section 3 of the BHC Act. (2) Acquire or retain shares of Pacific Bank that would GBB, with consolidated assets of approximately cause the combined interests of GBB and any of its subsid- $527 million, is the 37th largest commercial banking orgaiaries and any of its officers, directors, principal sharehold- nization in California, controlling deposits of approxiers, and affiliates to equal or exceed 25 percent of the mately $415 million, representing less than 1 percent of outstanding voting shares of Pacific Bank or any of its total deposits in commercial banking organizations in the subsidiaries; state.1 Rancho Bank, with assets of approximately $93 (3) Seek or accept any representation on the board of million, is the 172d largest commercial banking organizadirectors of Pacific Bank or any of its subsidiaries; tion in California, controlling approximately $81 million in (4) Exercise or attempt to exercise a controlling influence deposits, representing less than 1 percent of total deposits over the management or policies of Pacific Bank or any of in commercial banking organizations in the state. its subsidiaries; Rancho Bank has objected to the proposal, contending (5) Have or seek to have any representative serve as an that GBB intends to acquire control of the bank. Rancho officer, agent, or employee of Pacific Bank or any of its Bank also has asserted that the proposed investment would subsidiaries; cause experienced officers and employees to leave Rancho (6) Propose a director or slate of directors in opposition to Bank and create uncertainty about its long-term prospects, a nominee or slate of nominees proposed by the manage- thereby adversely affecting the bank's ability to compete ment or board of directors of Pacific Bank or any of its for and retain customers. subsidiaries; The Board notes that the BHC Act does not bar GBB (7) Solicit or participate in soliciting proxies with respect from acquiring control of Rancho Bank, if it obtains prior to any matter presented to the shareholders of Pacific Bank Board approval. As noted above, however, GBB would or any of its subsidiaries; acquire less than 25 percent of the voting shares of Rancho (8) Attempt to influence the dividend policies or practices; Bank, and GBB does not propose to control Rancho Bank the investment, loan, or credit decisions or policies; the without the prior approval of the Board. GBB also has pricing of services; personnel decisions; operating activi- made a number of commitments that are similar to committies (including the location of any offices or branches or ments previously relied on by the Board to determine that their hours of operation, etc.); or any similar activities or an investing bank holding company would not exercise a decisions of Pacific Bank or any of its subsidiaries; controlling influence over another bank holding company or bank for purposes of the BHC Act.2 GBB has committed (9) Enter into any other banking or nonbanking transacnot to exercise or attempt to exercise a controlling influtions with Pacific Bank or any of its subsidiaries, except ence over the management or policies of Rancho Bank; not that GBB may establish and maintain deposit accounts to seek or accept representation on the board of directors of with Pacific Bank, provided that the aggregate balance of Rancho Bank; not to challenge a nominee of management all such deposit accounts does not exceed $500,000 and for the board of directors of Rancho Bank; and not to have that the accounts are maintained on substantially the same any representative of GBB serve as an officer, agent or terms as those prevailing for comparable accounts of peremployee of Rancho Bank. GBB also has committed not to sons unaffiliated with Pacific Bank or any of its subsidiarattempt to influence the dividend policies, loan decisions, ies; and personnel decisions, or operations of Rancho Bank; and (10) Dispose or threaten to dispose of shares of Pacific not to dispose or threaten to dispose of shares of Rancho Bank or any of its subsidiaries in any manner as a condi- Bank in response to any action or non-action by the bank. tion of specific action or non-action by Pacific Bank or any of its subsidiaries. The Board has adequate supervisory authority to monitor GBB's compliance with its commitments, and retains express authority to initiate a control proceeding against GB Bancorporation GBB if facts presented later indicate that GBB or any of its San Diego, California Order Approving Acquisition of Shares of a Bank 1. Asset data are as of June 30, 1996. Deposit data are as of June 30, 1995, and reflect transactions through September 30, 1996. GB Bancorporation, San Diego, California ("GBB"), a 2. See, e.g., Mansura Bancshares, Inc., 79 Federal Reserve Bulletin bank holding company within the meaning of the Bank 37 (1993) ("Mansura"). The commitments provided by GBB are set Holding Company Act ("BHC Act"), has applied under forth in the Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1997 subsidiaries or affiliates in fact controls Rancho Bank for mately $87 million, representing 6.4 percent of total depospurposes of the BHC Act.3 The Board notes that the bank's its in commercial banks or thrift institutions in the market.7 managerial resources are adequate, and that management Based on all the facts of record, including the increase in of Rancho Bank has clearly expressed its intention to market concentration as measured by the Herfindahlremain independent. Based on these commitments and all Hirschman Index ("HHI")8 and the number of competitors other facts of record, it is the Board's judgment that, for that would remain in the market, if GBB were to control purposes of the BHC Act, GBB would not acquire control Rancho Bank, the elimination of competition between the of Rancho Bank on consummation of the proposal.4 two entities would not substantially lessen competition in The Board has noted that one company need not acquire the Oceanside banking market or any other relevant bankcontrol of another company in order substantially to lessen ing market. competition between them, and that the specific facts of In light of all the facts of record, the Board concludes each case will determine whether a minority investment that competitive considerations are consistent with apwould have significant anticompetitive effects.5 GBB and proval. The financial and managerial resources and future Rancho Bank compete directly in the Oceanside, Califor- prospects of GBB and its subsidiaries and Rancho Bank nia, banking market.6 As a combined organization, GBB also are consistent with approval, as are considerations would become the fourth largest commercial banking orga- related to the convenience and needs of the communities to nization in the market, controlling deposits of approxi- be served and other supervisory factors the Board must consider under section 3 of the BHC Act. Based on all the facts of record, the Board has determined that the application should be, and hereby is, approved. The Board's approval is expressly conditioned on 3. Rancho Bank alleged that GBB's continued expression of interest compliance by GBB with all the commitments made in in acquiring Rancho Bank conflicts with the commitments made by connection with this application, including the commit- GBB, and that this alleged conflict raises adverse managerial considerments discussed in this order. The commitments and condiations. GBB responded that its actions were intended only to explore tions relied on by the Board in reaching this decision shall the feasibility of acquiring Rancho Bank through a transaction that would be negotiated with the bank's board of directors. The Board be deemed to be conditions imposed in writing by the does not believe that such general expressions of interest violate the Board in connection with its findings and decision, and, as commitments or the BHC Act's prohibition against exercising a such, may be enforced in proceedings under applicable controlling influence over the management or policies of a banking law. organization. Under the BHC Act and the Board's regulations, GBB may not actually acquire ownership of, control, or vote shares of The transaction shall not be consummated before the Rancho Bank without the Board's prior approval. The Board also has fifteenth calendar day following the effective date of this considered Rancho Bank's concerns in light of a review of the order, or later than three months after the effective date of managerial resources of GBB by the Federal Reserve Bank of this order, unless such period is extended for good cause by San Francisco in its most recent examination and management's the Board or by the Federal Reserve Bank of San Franrecord for complying with applicable rules and regulations. 4. The Board previously has indicated that the acquisition of less cisco, acting pursuant to delegated authority. than a controlling interest in a bank or bank holding company is not a By order of the Board of Governors, effective Decemnormal acquisition for a bank holding company. See, e.g., North Fork ber 18, 1996. Bancorporation, Inc., 81 Federal Reserve Bulletin 734 (1995) ("North Fork")\ State Street Boston Corporation, 67 Federal Reserve Bulletin 862 (1981). Nonetheless, the requirement in section 3(a)(3) of the BHC Act that the Board's approval be obtained before a bank holding company acquires more than 5 percent of the voting shares of a bank suggests that Congress contemplated the acquisition by bank holding companies of between 5 and 25 percent of the voting shares of a bank 7. Market share data are as of June 30, 1995, and are based on or a bank holding company. See 12 U.S.C. § 1842(a)(3); 12 C.F.R. calculations in which the deposits of thrift institutions are included at 225.11(c). Nothing in section 3(c) of the BHC Act, moreover, requires 50 percent. The Board previously has indicated that thrift institutions the Board to deny an application solely because a bank holding have become, or have the potential to become, significant competitors company proposes to acquire less than a controlling interest in a bank of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin or bank holding company. Accordingly, the Board previously has 788 (1990); National City Corporation, 70 Federal Reserve Bulletin approved the acquisition by a bank holding company of less than a 743 (1984). Thus, the Board has regularly included thrift deposits in controlling interest in a bank or a bank holding company. See, e.g., the calculation of market share on a 50-percent weighted basis. See, North Fork (acquisition of 19.9 percent of the voting shares of a bank e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). holding company); Mansura (acquisition of 9.7 percent of the voting 8. The HHI would increase 11 points to 1418. Under the revised shares of a bank holding company); and SunTrust Banks, Inc., Department of Justice Merger Guidelines, 49 Federal Register 26,823 76 Federal Reserve Bulletin 542 (1990) ("SunTrust") (acquisition of (June 29, 1984), a market in which the post-merger HHI is between up to 24.99 percent of the voting shares of a bank). 1000 and 1800 is considered to be moderately concentrated. The 5. See, e.g., North Fork; Mansura; SunTrust. For example, the Justice Department has informed the Board that a bank merger or acquisition of a substantial ownership interest in a competitor or a acquisition generally will not be challenged (in the absence of other potential competitor of the acquiring firm might alter the market factors indicating anticompetitive effects) unless the post-merger HHI behavior of both firms in such a way as to weaken or eliminate is at least 1800 and the merger increases the HHI by more than independent action at each organization and increase the likelihood of 200 points. The Justice Department has stated that the higher than cooperative operations. See Mansura at 38. normal HHI thresholds for screening bank mergers for anticompeti- 6. The Oceanside banking market consists of the Oceanside RMA tive effects implicitly recognizes the competitive effect of limitedand the towns of Bonsall and Fallbrook, all in California. purpose lenders and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 119 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Ida Grove Banc shares, Inc. Governors Kelley, Lindsey, Phillips, Yellen, and Meyer. Ida Grove, Iowa JENNIFER J. JOHNSON American Bancshares, Inc. Deputy Secretary of the Board Holstein, Iowa Order Approving the Acquisition of a Bank Holding Company Appendix Ida Grove Bancshares, Inc., Ida Grove, and American Bancshares, Inc., Holstein ("American") (collectively "Ida Grove"),1 bank holding companies within the meaning of GBB commits that it will not, directly or indirectly, withthe Bank Holding Company Act ("BHC Act"), have apout the Board's prior approval: plied for the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all of the voting shares of Pierson Bancorporation ("Pierson"), and thereby acquire (1) Take any action that would cause Rancho Bank or any Farmers Savings Bank ("Farmers"), both of Pierson, and of its subsidiaries to become a subsidiary of GBB or any of all in Iowa. its subsidiaries; Notice of the application, affording interested persons an (2) Acquire or retain shares of Rancho Bank that would opportunity to submit comments, has been published cause the combined interests of GBB and any of its subsid- (61 Federal Register 51,114 (1996)). The time for filing iaries and any of its officers, directors, principal shareholdcomments has expired, and the Board has considered the ers, and affiliates to equal or exceed 25 percent of the application and all comments received in light of the outstanding voting shares of Rancho Bank or any of its factors set forth in section 3 of the BHC Act. subsidiaries; Ida Grove, with total consolidated assets of approxi- (3) Seek or accept any representation on the board of mately $197 million, is the 29th largest commercial bankdirectors of Rancho Bank or any of its subsidiaries; ing organization in Iowa, controlling deposits of approxi- (4) Exercise or attempt to exercise a controlling influence mately $174.6 million, representing less than 1 percent of over the management or policies of Rancho Bank or any of total deposits in commercial banking organizations in the its subsidiaries; state.2 Pierson, with total consolidated assets of approxi- (5) Have or seek to have any representative serve as an mately $15.5 million, is the 364th largest commercial officer, agent, or employee of Rancho Bank or any of its banking organization in Iowa, controlling deposits of apsubsidiaries; proximately $12.6 million, representing less than 1 percent (6) Propose a director or slate of directors in opposition to of total deposits in commercial banking organizations in a nominee or slate of nominees proposed by the manage- the state. On consummation of this proposal, Ida Grove ment or board of directors of Rancho Bank or any of its would become the 27th largest commercial banking organisubsidiaries; zation in Iowa, controlling deposits of approximately (7) Solicit or participate in soliciting proxies with respect $187.2 million. to any matter presented to the shareholders of Rancho After the acquisition of Pierson, Ida Grove proposes to Bank or any of its subsidiaries; effect a series of transactions which would result in its (8) Attempt to influence the dividend policies or practices; subsidiary bank, Western Bank and Trust, Moville, Iowa the investment, loan, or credit decisions or policies; the ("Western Bank"), operating branches in Kingsley and pricing of services; personnel decisions; operating activi- Pierson, Iowa.3 The Board has carefully reviewed comties (including the location of any offices or branches or ments that assert that the proposal, when viewed in its their hours of operation, etc.); or any similar activities or entirety, would permit Ida Grove to evade state law branchdecisions of Rancho Bank or any of its subsidiaries; ing restrictions. Iowa law generally prohibits the establish- (9) Enter into any other banking or nonbanking transac- ment of a de novo branch in a town that has an office of tions with Rancho Bank or any of its subsidiaries, except that GBB may establish and maintain deposit accounts with Rancho Bank, provided that the aggregate balance of all such deposit accounts does not exceed $500,000 and 1. Ida Grove Bancshares, Inc. owns approximately 80.1 percent of the voting shares of American. that the accounts are maintained on substantially the same 2. Asset and state deposit data are as of June 30, 1996. terms as those prevailing for comparable accounts of per- 3. Ida Grove has applied for the Board's approval to acquire sons unaffiliated with Rancho Bank or any of its subsidiar- Pierson, and to merge Pierson into American. American would suries; and vive the merger and directly own all the voting shares of Farmers. (10) Dispose or threaten to dispose of shares of Rancho After these transactions, Ida Grove would cause Farmers to relocate its main office to Kingsley and to establish a branch at its former Bank or any of its subsidiaries in any manner as a condilocation in Pierson, both in Iowa. Farmers would then merge into tion of specific action or non-action by Rancho Bank or Western Bank, and Western Bank would operate branches in Kingsley any of its subsidiaries. and Pierson, Iowa. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1997 another bank.4 Each transaction proposed by Ida Grove is and all the facts of record, the Board has concluded that separately authorized by state statute, and the overall trans- consummation of this proposal would not have a signifiaction has been approved by the Iowa Department of cantly adverse effect on competition or the concentration of Banking.5 In this light, the Board concludes that the overall banking resources in the Sioux City banking market or any transaction is not prohibited by state law. The Board also other relevant banking market.10 notes that the first and only step in the overall transaction Based on all the facts of record, the Board also has requiring the Board's approval—the acquisition of Pierson concluded that the financial and managerial resources11 by Ida Grove—is clearly authorized by state law.6 and future prospects of Ida Grove, Pierson, and their re- Western Bank and Farmers compete directly in the Sioux spective subsidiaries, and all other supervisory factors that City, Iowa, banking market ("Sioux City banking mar- the Board must consider under section 3 of the BHC Act, ket").7 On consummation of the proposal, Western Bank are consistent with approval of this proposal.12 would become the 15th largest commercial banking or The Board also has considered the convenience and thrift organization ("depository organization") in the mar- needs of the communities to be served, including the ket, controlling deposits of approximately $13.8 million, records of performance of the institutions involved under representing approximately 1 percent of total deposits in the Community Reinvestment Act (12 U.S.C. § 2901 depository organizations in the market ("market depos- et seq.) ("CRA"). The Board notes that Farmers—the bank its").8 Concentration in the banking market, as measured being acquired in this case—received a "needs to imby the Herfindahl-Hirschman Index ("HHI"), would re- prove" rating at its most recent examination for CRA main at a level of 1555, and numerous competitors would performance from its primary federal supervisor, the FDIC, remain in the market after consummation.9 Based on these as of May 1996. Ida Grove has stated that it will implement CRA policies and programs similar to those of Ida Grove's 4. Section 524.1202 of the Iowa Code provides that a bank with headquarters in one county may establish a branch in a town in the acquisitions for anticompetitive effects implicitly recognizes the comsame or a contiguous county if that town does not have an office of petitive effect of limited-purpose lenders and other non-depository another bank in operation. Iowa Code Ann. § 524.1202. Kingsley, financial entities. Pierson, and Moville are all located in the same or contiguous Iowa 10. Two financial institutions ("Protestants") contend that numercounties. ous competitors serve the credit needs of Moville and Kingsley, Iowa, 5. A bank with headquarters in a contiguous county may relocate its both of which are in the Sioux City banking market, and that an main office to another town. See Iowa Code Ann. § 524.312. There- additional competitor could adversely affect the existing banks in fore, Farmers may relocate to Kingsley. Farmers also may operate a these "over-banked" towns. As noted above, Western Bank currently branch office in Pierson, the town from which it relocated, because no operates in Moville and the proposal would not increase the number of office of another bank is located in Pierson. See Iowa Code Ann. competitors in that town. The Board has previously concluded that the § 524.1202(1). Western Bank also may operate branches in Kingsley BHC Act requires the Board to focus on whether a proposal would and Pierson after its merger with Farmers because the Iowa branching substantially lessen competition or create a monopoly, and that the restrictions prohibiting the establishment of a branch office in a town de novo entry of a bank would have a positive effect on competition in with an office of another bank do not apply to branches acquired in a any banking market. See Wilson Bank Holding Company, 82 Federal merger between banks located in the same or contiguous counties. See Reserve Bulletin 568 (1996). The Board concludes that the entry into Iowa Code Ann. § 524.1202(3). Kingsley by Ida Grove would enhance competition for banking ser- 6. Iowa Code Ann. § 524.1804. vices. 7. The Sioux City banking market is approximated by Woodbury 11. One protestant contends that a loan from Ida Grove to American County, excluding the townships of Lakeport, Sloan, Willow, and violates section 23A of the Federal Reserve Act (12 U.S.C. § 371c) Little Sioux; the townships of Garfield and Elkhorn in Plymouth ("Section 23A"). Section 23A imposes restrictions on loans between a County, all in Iowa; and the Sioux City Rand McNally Area located in subsidiary bank and its affiliates, and by its terms would not apply to a South Dakota and Nebraska. loan between affiliated bank holding companies. 8. Market deposit data are as of June 30, 1995, and include data 12. Protestants allege that Ida Grove and its subsidiary banks are from Western Bank, a newly formed bank subsidiary of Ida Grove, as and will be undercapitalized. In addition, Protestants contend that of November 29, 1996. Market share data are based on calculations in Western Bank's pricing policies (interest rates paid on certificates of which the deposits of thrift institutions are included at 50 percent. The deposits and charged for loans) will adversely affect Western Bank's Board previously has indicated that thrift institutions have become, or financial condition, thereby adversely affecting American's capacity have the potential to become, significant competitors of commercial to retire the debt to be incurred in connection with the acquisition of banks. See Midwest Financial Group, 75 Federal Reserve Bulletin Pierson, and that these pricing policies constitute unfair competitive 386 (1989); National City Corporation, 70 Federal Reserve Bulletin practices. The Board has carefully reviewed these comments in light 743 (1984). Thus, the Board has regularly included thrift deposits in of all facts of record, including the most recent reports of examination the calculation of market share on a 50-percent weighted basis. See, assessing the managerial and financial resources of the relevant come.g., First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). panies. The Board has consulted the Federal Deposit Insurance Corpo- 9. Under the revised Department of Justice Merger Guidelines, ration ("FDIC") on the effect of Western Bank's pricing policies on 49 Federal Register 26,823 (June 29, 1984), a market in which the the financial condition of the bank and on the FDIC's assessment of post-merger HHI is above 1800 is considered to be highly concen- the bank's current management. The Board notes that Ida Grove trated. In such markets, the Justice Department is likely to challenge a would remain well-capitalized after consummation of this proposal merger that increases the HHI by more than 50 points. The Justice and would retire the proposal's acquisition debt in accordance with Department has informed the Board that a bank merger or acquisition the Board's guidelines. The Board also has reviewed the interest rates generally will not be challenged, in the absence of other factors offered under Wester Bank's pricing policies for evidence of predatory indicating anticompetitive effects, unless the post-merger HHI is at pricing in light of pricing information nationwide and in the local least 1800 and the merger increases the HHI by more than 200 points. market where Western Bank competes. Based on all the facts of The Justice Department has stated that the higher than normal thresh- record, the Board concludes that all the supervisory factors considered old for an increase in the HHI when screening bank mergers and under the BHC Act are consistent with approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 121 lead bank, United Bank of Iowa, Ida Grove, Iowa ("United By order of the Board of Governors, effective Decem- Bank"), after consummation of the proposal.13 United ber 20, 1996. Bank received an "outstanding" rating for CRA performance at its most recent examination for CRA perfor- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and mance by the FDIC as of March 1996. In addition, Western Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not voting: Governor Yellen. Bank plans to advertise extensively in the community through various media, as well as to implement a compre- JENNIFER J. JOHNSON hensive officer calling program, to promote its credit prod- Deputy Secretary of the Board ucts and services. Moreover, Western Bank will enter into a regulatory compliance services agreement with United JDOB Inc. Bank whereby experienced staff of United Bank will re- Sandstone, Minnesota view and monitor compliance policies and procedures, and train and consult with Western's staff on regulatory compli- Order Approving Acquisition of a Bank ance issues, including the CRA. The Board expects that the actions proposed by Ida Grove will address the deficiencies JDOB Inc., Sandstone, Minnesota ("JDOB"), a bank holdin Farmers' record of performance, particularly in the types ing company within the meaning of the Bank Holding and geographic distribution of its loans. Company Act ("BHC Act"), has applied for the Board's In light of these commitments, and based on all the facts approval under section 3 of the BHC Act (12 U.S.C. of record, the Board concludes that considerations relating § 1842) to acquire Centennial National Bank ("Bank"), to the convenience and needs of the communities to be Walker, Minnesota, a de novo nationally chartered bank. served, including the CRA performance records of the Notice of the proposal, affording interested persons an institutions involved, are consistent with approval.14 The opportunity to submit comments, has been published Board will review the effectiveness of these efforts in (61 Federal Register 53,746 (1996)). The time for filing future applications by Ida Grove to establish depository comments has expired, and the Board has considered the facilities. application and all comments received in light of the Based on all the facts of record, the Board has deterfactors set forth in section 3 of the BHC Act. mined that this application should be, and hereby is, ap- JDOB is the 166st largest commercial banking organizaproved. The Board's approval is specifically conditioned tion in Minnesota, controlling deposits of approximately on compliance by Ida Grove with all the commitments $39.1 million, representing less than 1 percent of total made in connection with the application and with the deposits in commercial banking organizations in the state.1 conditions referenced in this order. For purposes of this Bank's de novo entry into the Brainerd, Minnesota banking action, these commitments and conditions are deemed to market2 would enhance competition in that market. Based be conditions imposed in writing by the Board in connecon all the facts of record, the Board concludes that consumtion with its findings and decision, and, as such, may be mation of the proposal would not have any significantly enforced in proceedings under applicable law. adverse effects on competition or the concentration of The transaction shall not be consummated before the banking resources in any relevant market. fifteenth calendar day following the effective date of this The Board also has determined in light of all the facts of order, or later than three months after the effective date of record that financial and managerial resources and future this order, unless such period is extended for good cause by prospects of JDOB, its subsidiaries, and Bank, and considthe Board or by the Federal Reserve Bank of Chicago, erations relating to the convenience and needs of the comacting pursuant to delegated authority. munities to be served, are consistent with approval of the application, as are the other supervisory factors the Board must consider under section 3 of the BHC Act.3 13. As noted above, Farmers would be merged into Western Bank. Although Western Bank has not been examined for CRA performance by the FDIC, Ida Grove is initiating CRA policies and programs at 1. All banking data are as of June 30, 1996. Western Bank that are similar to those of United Bank. 2. The Brainerd banking market consists of Crow Wing County and 14. One depository institution argues that, because it has a satisfac- portions of southern Cass County, all in Minnesota. tory record of CRA performance in Kingsley, the convenience and 3. Comments by First National Bank of Walker, Walker, Minnesota needs of the community are already being served. The CRA was not ("First National"), contend that information in JDOB's application to intended to limit either the number of service providers or competition charter Bank, primarily financial data and projections, is incorrect. In in providing services to a community. Rather, the CRA recognizes the addition, First National maintains that Bank's proposed chief execuresponsibility of each depository institution in a community to help tive officer cannot effectively manage both Bank and another JDOB meet the credit needs of the community. CRA performance ratings subsidiary bank and that numerous financial institutions currently evaluate the efforts of a particular institution in helping meet the credit serve the credit needs of the community. First National also has needs of the community, and do not reflect a judgment regarding asserted that the banking market cannot support an additional competwhether the community would benefit from additional services that itor. The Board has carefully reviewed these comments in light of all may be provided by other depository institutions. The Board, more- the facts of record, including information from JDOB that substantiover, concludes that the steps proposed by Ida Grove to strengthen ates its financial information, reports of examination assessing the Farmers' CRA performance will have a positive effect on serving the financial and managerial resources of JDOB and the Bank's effect on overall credit needs of the community. those resources, and the "satisfactory" rating of JDOB's current Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1997 Based on the foregoing and all the facts of record, the Notice of the proposal, affording interested persons an Board has determined that the application should be, and opportunity to submit comments, has been published hereby is, approved. The Board's approval of the proposal (61 Federal Register 42,251 (1996)). The time for filing is conditioned on compliance by JDOB with commitments comments has expired, and the Board has considered the made in connection with the application. The commitments notice and all comments received in light of the factors set and conditions relied on by the Board in reaching this forth in section 4(c)(8) of the BHC Act. decision shall be deemed to be conditions imposed in BancSecurity is the 12th largest depository institution in writing by the Board in connection with its findings and Iowa, controlling deposits of $415 million, representing decision, and, as such, may be enforced in proceedings approximately 1.1 percent of total deposits in depository under applicable law. institutions in the state.1 MFC, with deposits of The acquisition shall not be consummated before the $103 million, is the 57th largest depository institution in fifteenth calendar day following the effective date of this the state, representing less than 1 percent of deposits in order, or later than three months after the effective date of depository institutions in the state. On consummation of this order, and Bank shall be open for business within six the proposal, BancSecurity would become the ninth largest months after the effective date of this order, unless such depository institution in Iowa, controlling total deposits of periods are extended for good cause by the Board or the $518 million, representing approximately 1.4 percent of Federal Reserve Bank of Minneapolis, acting pursuant to total deposits in depository institutions in the state. delegated authority. The Board previously has determined by regulation that By order of the Board of Governors, effective Decem- the operation of a savings association by a bank holding ber 20, 1996. company is closely related to banking within the meaning of section 4(c)(8) of the BHC Act. 12 C.F.R 225.25(b)(9). Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not Competitive Considerations voting: Governor Yellen. Under section 4(c)(8) of the BHC Act, the Board is re- JENNIFER J. JOHNSON quired to consider whether a proposal is likely to result in Deputy Secretary of the Board any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts Orders Issued Under Section 4 of the Bank Holding of interests, or unsound banking practices.2 The Board Company Act concludes that consummation of this proposal would result in significantly adverse effects on competition in the rele- BancSecurity Corporation vant banking market. In reaching this conclusion, the Board Marshalltown, Iowa carefully considered the entire record, including information, analysis and arguments provided by BancSecurity. Order Denying Acquisition of a Thrift Holding Company The Board and the courts have found that the relevant geographic banking market for analyzing the competitive BancSecurity Corporation, ("BancSecurity"), a bank holdeffects of a proposal must reflect commercial and banking ing company within the meaning of the Bank Holding realities and should consist of the local area where the Company Act ("BHC Act"), has requested the Board's depository institutions involved offer their services and approval under section 4(c)(8) of the BHC Act (12 U.S.C. where local consumers can practicably turn for alterna- § 1843(c)(8)) and section 225.23 of the Board's Regulatives.3 In making a determination on the geographic market tion Y (12 C.F.R. 225.23) to acquire Marshalltown Finanin this case, the Board has considered worker commuting cial Corporation ("MFC"), and MFC's wholly owned patterns (as indicated by census data), shopping patterns thrift subsidiary, Marshalltown Savings Bank, FSB ("Savand other indicia of economic integration and the transmisings"), all of Marshalltown, Iowa, and thereby to engage in sion of competitive forces among depository institutions, operating a savings association. and relevant banking data. In addition, the Board has reviewed information from on-site investigations of the area conducted by staff of the Board and the Federal subsidiary bank at its most recent examination for Community Reinvestment Act performance by its primary federal supervisor, the Office of the Comptroller of the Currency ("OCC"). The Board previously 1. State deposit data are as of June 30, 1995. In this context, has concluded that the BHC Act requires the Board to focus on depository institutions include commercial banks, savings banks, and whether a proposal would substantially lessen competition or create a savings associations. monopoly and that the establishment of a de novo bank would have a 2. 12 U.S.C. § 1843(c)(8). positive effect on competition in any banking market. See Wilson Bank 3. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 Holding Company, 82 Federal Reserve Bulletin 568 (1996). In addi- (1982). The key question to be considered in making this selection "is tion, the OCC has reviewed First National's contentions and reaf- not where the parties to the merger do business or even where they firmed its preliminary determination to approve Bank's charter. For compete, but where, within the area of competitive overlap, the effect these reasons, and based on all the facts of record, the Board con- of the merger on competition will be direct and immediate." United cludes that all the factors required to be considered under the BHC States v. Philadelphia Nat'l Bank, 374 U.S. at 357 (1963); United Act are consistent with approval. States v. Phillipsburg Nat'I Bank, 399 U.S. 350 (1969). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 123 Reserve Bank of Chicago in connection with the proposal of their business originated in Tama County. On the other ("Federal Reserve Survey"), which included interviews hand, banks located in the eastern three quarters of Tama with bankers, consumers, and owners of small businesses County generally reported few or no accounts with Marin Marshall County and adjacent areas.4 shall County residents. Banks in Clay Township indicated The Board has determined that the relevant market for that they derived small to modest amounts of business in analyzing the competitive effects of this proposal is a rural Marshall and Tama Counties.7 The Federal Reserve Survey area in central Iowa approximated by Marshall County also suggests that there is relatively little advertising by plus the townships of Spring Creek, Carlton, Indian Vil- area financial institutions outside their local communities.8 lage and Highland in Tama County ("Marshall County The Federal Reserve Survey of households and busibanking market"). The Board also has concluded that the nesses in Marshall County indicated that Marshall County relevant banking market does not include Howard, Toledo, consumers almost exclusively obtained banking services Tama and Columbia Townships in Tama County and Felix from Marshall County depository institutions. Almost all and Clay Townships in southern Grundy County as pro- the transaction and savings accounts, and all the certificates posed by BancSecurity.5 of deposit reported in a telephone survey of Marshall Banking data reveal that a very high proportion of depos- County residents were in Marshall County depository instiits and loans of BancSecurity's subsidiary bank, Security tutions. In addition, 40 of the 47 consumer loans and 16 of Bank, Marshalltown, Iowa ("Security Bank"), and Sav- 17 commercial and industrial loans to the Marshall County ings are received and originate from the Marshall County participants in the telephone survey within the last five banking market. Data provided by BancSecurity show that years were from Marshall County depository institutions, approximately 96 percent of Security Bank's deposit and none of the eight remaining consumer loans were from accounts and 94 percent of its loans, and approximately depository institutions in either Tama or Grundy Counties. 78 percent of Savings's deposits and 95 percent of the An overwhelming majority of households and business loans made by Savings, originated in the Marshall County owners interviewed in Marshall County stated that they banking market.6 In contrast, approximately 2 percent of would seek another Marshall County depository institution Security Bank's deposit accounts and approximately if they became dissatisfied with their current institution. 3 percent of its loans are from the portions of Tama County Almost none of the respondents stated that they would not included in the banking market. In addition, Security consider an institution in Tama or Grundy County. Bank received approximately 1 percent of its deposit ac- Marshalltown, with a population of approximately counts from and made approximately 2 percent of its loans 25,000 residents, is the largest town in the Marshall County in Felix and Clay Townships in southern Grundy County. banking market. The communities surrounding Marshall- Discussions with senior management of depository insti- town, particularly those identified by BancSecurity as intutions in Marshall, Tama and Grundy Counties, moreover, cluded in the relevant banking market, are small, offer few confirmed that competition among banking organizations incentives for regular travel to these areas by Marshall in different counties is limited. Banks in Marshall County County residents, and are not conveniently located to Margenerally reported only a modest amount of business from shalltown.9 Tama and Toledo, for example, have popula- Tama County, mostly from the western townships that are tions of approximately 2,700 and 2,400 residents, respecincluded in the Marshall County banking market. In addi- tively, and are located approximately 20 miles from tion, Marshall County banks that were located near the Marshalltown. Travel time between the communities and border with Tama County reported that only 5 to 8 percent 4. BancSecurity objects to consideration by the Board of any 7. There are no banks in Felix Township. information or staff submissions that have not been provided to it 8. All Marshall County banks advertise in the Marshalltown daily under the Freedom of Information Act ("FOIA"). Certain information newspaper that circulates primarily in Marshall County. The newspain the record has been withheld from BancSecurity as privileged from per has few subscribers in Tama and Toledo in Tama County or Felix disclosure under the FOIA. The Board notes that the rules regarding and Clay Townships in southern Grundy County. Security Bank and access to information under the FOIA provide the appropriate frame- Savings are two of only three depository institutions with offices in work for considering a challenge to confidential treatment accorded both Marshall and Tama counties. Security Bank's Tama County staff's submissions and other information, and that BancSecurity's branch advertises primarily in a local weekly newspaper in the town challenge was reviewed under the FOIA and denied. The Board's where the branch is located. The Toledo branch of Savings advertises rules do not provide an applicant access to information that is other- primarily in a Tama weekly newspaper. Although Security Bank and wise exempt from disclosure under the FOIA. BancSecurity, more- Savings also advertise on Marshalltown radio stations, these stations over, has been provided all nonconfidential information in the record broadcast over an area even larger than the extended area identified by of this notice. BancSecurity as the relevant banking market. For example, one Mar- 5. During the processing of the notice, BancSecurity proposed shalltown station broadcasts over an area encompassing 25 Iowa additional larger geographic areas as the relevant banking market. For counties. Banking data also show little indication that the radio the reasons discussed in detail in this order, the Board concludes that advertising has been effective in generating customers from outside these alternative proposals would not constitute the relevant banking the Marshall County banking market. market for considering the competitive effects of the proposed acquisi- 9. The Board notes that general survey data suggest that individuals tion. in households and small business owners have a strong preference for 6. The data have been adjusted to exclude banking data from offices purchasing basic banking services very close to where they live or of Security Bank in Jasper and Hardin Counties. work, and that the data are similar in urban and rural markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1997 Marshalltown is approximately 30 minutes.10 Clay and included in the market, the competitive effects of this Felix Townships in southern Grundy County have popula- proposal still would be significantly adverse.13 tions of approximately 1,500 and 300 residents, respec- The Federal Reserve Survey found that Marshalltown's tively, and are located approximately 15 miles from Mar- large number of retail shopping options provided a disinshalltown. Travel time between the communities and centive for Marshalltown residents to shop in neighboring Marshalltown is approximately 20 to 25 minutes. communities. In addition, on-site visits to communities Commuting data indicate that Marshall County residents surrounding Marshall County did not lend support to generally do not regularly travel outside of their county.11 broadening the Marshall County banking market beyond In addition, except for the Tama County townships in- the previously identified westernmost townships in Tama cluded in the Marshall County banking market, residents of County on the basis of travel patterns for goods and Tama County generally do not commute in large numbers services. Basic services such as restaurants, clothing stores, to Marshall County.12 Approximately 13 percent of the and medical and financial services were available in most work force residing in Tama County commute to Marshall of the communities surrounding Marshall County. County, with more than half of these commuters traveling Based on all the facts of record, and for the reasons from the four Tama County townships that are included in discussed above, the Board concludes that the Marshall the Marshall County banking market. Only 4.5 percent of County banking market, an area that includes all of Marthe Tama County work force commuting to Marshall shall County and Spring Creek, Carlton, Indian Village, County resides in Howard, Toledo, Tama, and Columbia and Highland Townships, in Tama County, is the appropri- Townships, that BancSecurity argues should be included ate geographic market for analyzing the competitive effects within the Marshall County banking market. A significant of the proposal. The Board also concludes that Howard, percentage of the labor force from Felix and Clay Town- Toledo, Tama, and Columbia Townships in Tama County, ships in southern Grundy County commute to Marshall and Felix and Clay Townships in southern Grundy County, County. Other data, including interviews with Grundy should not be included in the relevant banking market. County banking officials, indicate, however, that banks in these southern Grundy County townships do not consider Competitive Effects in the Marshall County Banking Marshall County banks to be significant competitors. Market Moreover, even if these Grundy County townships were Security Bank and Savings compete in the Marshall County banking market. Security Bank is the largest of 14 depository institutions in the market, controlling approximately $214 million of deposits and representing 10. BancSecurity maintains that designation of Tama and Marshall almost 38 percent of the total deposits in the market Counties as a Rand-McNally basic trade area and the overlap of ("market deposits").14 Savings is the third largest of the school district boundaries between the Counties, among other things, support its contention that the relevant banking market should be 14 depository institutions in the market, controlling deposlarger. The Board notes that these delineations are made for purposes its of approximately $87 million, representing 7.7 percent not related to the competitive overlap between depository institutions of market deposits. On consummation, BancSecurity would and that the facts of this case, including those noted above, indicate control total deposits of approximately $301 million, reprethat these delineations do not adequately reflect the area in which senting approximately 49.2 percent of market deposits.15 competition for banking services is real and immediate. See Wyoming Bancorporation v. Board of Governors, 729 F.2d 687 (1984). 11. Residents of Marshall County have one of the lowest rates of commuting outside their county in Iowa. Only 9.5 percent of the 13. The Herfindahl-Hirschman Index would increase by 733 points county's workers commute outside Marshall County for employment, to 2623, and BancSecurity would control 45.3 percent of total deposits and only approximately 1.8 percent commute to Tama or Grundy in the market. County. 14. Market data are as of June 30, 1995, and are based on calcula- 12. BancSecurity states that 1990 census data understate the number tions that include the deposits of thrift institutions at 50 percent. The of commuters because the data do not fully reflect the 1,500 new jobs Board previously has indicated that thrift institutions have become, or created in the Marshalltown area in the last five years nor the large have the potential to become, significant competitors of commercial number of retirement-age residents of Tama County who may travel to banks. See WM Bancorp, 76 Federal Reserve Bulletin 743 (1984). the Marshalltown area for reasons other than employment. BancSecu- Because the deposits of Savings would be controlled by a commercial rity also argues that data from the Iowa Department of Transportation banking organization after consummation of the proposal, those deshow a high traffic flow on the main highways between Marshall and posits are included at 100 percent in the calculation of BancSecurity's Tama Counties and that, in a 1992 labor survey, many Tama County pro forma market share. See Norwest Corporation, 78 Federal Reresidents reported that they would accept a daily commuting distance serve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve of up to 60 miles. The Board has considered these data in light of all Bulletin 669 (1990). the facts of record, including data that suggest that events since 1990 15. BancSecurity contends that the methodology used to assess the may have decreased the amount of commuting into Marshalltown. For competitive effects in the market does not give sufficient weight to the example, the data indicate that firms have exited or downsized in deposits of a thrift competitor in the market and gives too much Marshalltown, a number of workers from out of state have transferred weight to the deposits acquired from Savings, which will continue to to Marshalltown in the case of the relocation of workers after a be operated as a traditional thrift after consummation of the proposal. corporate consolidation, and there have been increases in employment The deposits controlled by the thrift competitor have not been given opportunities in Tama County, such as the recent opening of a gam- full weight because it does not provide the full range of products and bling casino in the Meskwaki Indian Settlement in southwest Tama services offered by commercial banks in the relevant market, particu- County and the expansion of several other companies in Tama County. larly residential mortgages or commercial loans. The deposits of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 125 The market, as measured by the Herfindahl-Hirschman considerations would mitigate any potential adverse com- Index ("HHI"), is already highly concentrated.16 Consum- petitive effect in any relevant banking market, including mation of this proposal would cause the HHI to increase by the number of depository institution competitors remaining 849 points to 3032. This increase in concentration would in the banking market, the attractiveness of the banking significantly exceed the threshold levels in the Justice market to potential entrants and low regulatory barriers for Department merger guidelines.17 entry, and competition provided by credit unions and other The Board notes that HHI thresholds are used as guide- providers of financial services located within and outside lines to help the Board, the Justice Department, and other the banking market. banking agencies identify cases in which a more detailed Security Bank and Savings compete directly in a number competitive analysis is appropriate to ensure that the pro- of products, including residential mortgage loans, an indiposal would not have a significantly adverse effect on vidual product that is important to Marshall County bankcompetition in any relevant banking market. A proposal ing market residents.20 Security Bank is the largest prothat fails to pass the HHI market screen nevertheless may vider of residential mortgage loans in the market, with a be approved if other information indicates that the proposal market share of approximately 36 percent. Savings is the would not have a significantly adverse effect on competi- second largest provider, with approximately 25 percent of tion.18 The Board has carefully considered BancSecurity's the market. After consummation of the proposal, the concontentions that consummation of the proposal would not centration in the market for residential mortgage loans, as result in significantly adverse competitive effects because measured by the HHI, would increase 1758 points to 3953 BancSecurity and Savings do not provide the same types of and BancSecurity would have a pro forma share of more banking products and services other than residential mort- than 60 percent of the residential mortgage loan market. gage loans and retail deposits19 and that a number of This pro forma market share would be approximately five times larger than the market share of the next largest competitor, and 10 of the remaining competitors would each control a market share of less than 5 percent. Savings, however, have been included pro forma at 100 percent because the deposits would directly enhance the capacity of Banc- Security Bank and Savings also compete directly with Security to offer a full range of commercial banking products. Indeed, respect to federally insured deposit accounts. Security in this case, BancSecurity characterizes as a public benefit of the Bank is the largest provider of these accounts in the Martransaction the fact that Savings will be able to attract larger lending shall County banking market with a market share of aptransactions as a result of combined lending limits available through proximately 34 percent. Savings is the third largest proloan participations with BancSecurity's banking subsidiaries. BancSecurity also has referred to public benefits from the availability of other vider of these accounts with approximately a 14 percent new banking services from Savings. In this light, the Board concludes market share. After consummation of this proposal, conthat its traditional methodology appropriately considers thrift deposits centration in the market for federally insured deposit acin analyzing the competitive effect of the proposal. counts, as measured by the HHI, would increase 961 points 16. Under the revised Department of Justice Merger Guidelines, to 2933, and BancSecurity would have a pro forma share 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. The Justice of greater than 48 percent of the market.21 BancSecurity's Department has informed the Board that a bank merger or acquisition market share after consummation of the proposal would be generally will not be challenged (in the absence of other factors more than twice as large as the share of the next largest indicating anticompetitive effects) unless the post-merger HHI is at competitor, more than five times as large as the third least 1800 and the merger increases the HHI by more than 200 points. largest competitor, and ten competitors would have market The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects shares of less than 5 percent. implicitly recognize the competitive effect of limited-purpose lenders The Board has carefully considered the mitigating effect and other non-depository institutions. of the fact that 13 depository institutions would remain in 17. The proposal also would significantly exceed the Justice Department Merger Guidelines under BancSecurity's delineation of the the market after consummation, including several banks relevant banking market by causing the HHI to increase 697 points to controlled by large bank holding companies, in light of 2224. In addition, market share calculations based on BancSecurity's BancSecurity's pro forma share of market deposits. Banccontentions regarding the weight accorded deposits held by thrift Security would control market deposits at least ten times competitors in the Marshall County banking market also would signiflarger than market deposits controlled by all but two of the icantly exceed the screening guidelines. If deposits of the thrift competitor in the market were given full weight, the HHI would remaining competitors. In addition, 10 of the 12 remaining increase 823 points to 2933, and BancSecurity would control competitors would have less than 5 percent of deposits, and 48.3 percent of market deposits. If the deposits controlled by Savings were weighted at 50 percent pre- and post-merger, the HHI would increase 578 points to 2761 and BancSecurity would control 45 percent of market deposits. Bank engages in a wide variety of banking products and services 18. HHI calculations are based on deposit data that were assembled including mortgage, commercial, agricultural, and consumer lending, before Tama State Bank moved its main office to Marshalltown in and deposit taking. September 1996. The Marshalltown office is a recently established 20. The analysis of the proposal's structural impact on residential de novo office, and the bank has retained its office in Tama County. mortgage loans is based on call report mortgage data, discussions with The deposits of this institution, therefore, have not been included in area bankers, and a telephone consumer survey of borrowing practices the HHI calculations. by local residents. 19. Savings, a thrift institution, engages primarily in accepting 21. This calculation is based on weighting thrift institutions in the federally insured deposits and making residential mortgages. Security market at 100 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1997 nine of these competitors would have less than 3 percent of market substantially offset the mitigating elfect of this deposits.22 BancSecurity's share of market deposits would consideration. Specifically, office protection laws restrictapproximately equal the market shares of all other deposi- ing intrastate branching significantly limit the number of tory institutions combined, and would be more than twice potential competitors eligible to enter the Marshall County as large as the market share of its closest competitor. The banking market.27 Entry by acquisition of an existing finandegree of disparity between the market shares of Banc- cial institution is permissible; however, this proposal would Security and its competitors significantly reduces the miti- effectively eliminate MFC as an entry vehicle, and entry gating effect of the number of remaining competitors and through the acquisition of a competitor to BancSecurity would permit BancSecurity to maintain a dominant market would not increase the number of competitors in this position despite the presence of firms that may have overall market. Although interstate banking will be permitted in greater organizational resources. Iowa after June 1, 1997, out-of-state banking organizations The Board also notes that, although several large depos- will only be permitted to acquire an Iowa bank that has itory institutions have competed in the banking market for operated for at least five years and will not be able to a number of years, deposit market shares have been fairly establish de novo branches.28 stable in the past five years, without significant encroach- BancSecurity contends that credit unions and other fiment on BancSecurity's market share by competitors. Be- nancial institutions in and outside the Marshall County tween 1991 and 1994, for example, Security Bank contin- banking market exert a mitigating competitive influence. In ued to control more than twice the share of market deposits the aggregate, however, the four credit unions in the Maras its next largest competitor.23 Data also indicate that shall County banking market control less than 7 percent of Security Bank currently has a dominant market share in the market deposits. Three of the four credit unions control every lending category examined in the Federal Reserve small amounts of deposits and have restrictive membership Survey.24 For certain types of credit, Security Bank's share requirements. The largest credit union is open for memberin the Marshall County banking market is two or three ship to all residents of Marshall, Tama, Grundy, and Hardin times more than the share of the next largest provider. Counties, but offers a narrow product line that excludes These conditions have prevailed despite the entry into the residential mortgages and commercial deposit and lending market of five banking organizations since 1994.25 More- services.29 over, the Federal Reserve Survey found that residents In addition, as previously discussed, the Justice Departtended to form long-standing banking relationships with ment guidelines used to screen the competitive effects of local depository institutions that were not easily displaced depository institution acquisitions implicitly take into acby depository institutions that did not have an established count competition provided by credit unions and nonrecord of serving the Marshall County community. depository lenders in the banking market. Specifically, the Although the Marshall County banking market has char- adoption of higher thresholds for screening bank mergers acteristics that make it attractive for entry,26 the barriers to recognizes that competition by nonbank sources not inentry imposed by Iowa law on new entrants into a banking cluded in the calculation of the HHI may serve to mitigate the adverse competitive impact of a merger. 22. In addition to the small market shares held by nearly all remaining competitors, the Board notes that more than half of the remaining firms are in small communities throughout Marshall 27. See Iowa Code Ann. §§ 524.1202 & 524.1419. Iowa law would County. permit a bank headquartered in a contiguous county to establish a new 23. BancSecurity indicates that Norwest Bancorp, Minneapolis, branch in Marshall County only in towns that do not already have a Minnesota ("Norwest"), has increased its share of market deposits by bank office in operation. De novo branching into the relevant banking 63 percent since entering the market through the acquisition of a market would therefore be limited to eight very small towns, none of branch of a failed thrift institution in June 1994, has established a which has a population in excess of 350. A bank headquartered in a second location in Marshalltown for the purpose of offering mortgage contiguous county could also relocate its home office into the market, and other loans as well as securities brokerage services, and has or a new bank could be established. (See Iowa Code Ann. §§ 524.312 announced plans to build a new bank facility in Marshalltown. The & 524.301) However, the fixed costs of building a suitable facility, Board notes, however, that Norwest controls less than 3 percent of the hiring additional staff, advertising costs and other activities associated deposits in the Marshall County banking market. with establishing a new headquarters make this option unrealistic for 24. In addition to Security Bank's share of the market for federally many small banking firms. The establishment of a new bank would insured deposits, residential mortgage loans, and consumer loans, involve costs similar to those of relocating an existing bank, but also Security Bank also controls approximately 44 percent of the market would include costs to meet the initial capital requirements and to gain for small commercial and industrial loans (loans in amounts of less regulatory approval. Federal savings banks may branch without rethan $1 million) and approximately 57 percent of the market for all striction under Iowa law and may act as an agent for their banking commercial and industrial loans. affiliates under federal interstate banking law. However, this affects 25. Recent entry by banking organizations appears to have contrib- only a small number of institutions and does not make the office uted little to increasing competition in the banking market because protection barriers any less significant for most potential competitors. four of the five entrants have acquired existing banking offices. The 28. Iowa Code Ann. §§ 524.1205 & 524.1805. fifth entrant, Tama State Bank, relocated its headquarters from Tama 29. If deposits controlled by this credit union were given the same County to Marshalltown in September 1996. weight as thrift institutions in the banking market, the HHI would 26. Data indicate that population and deposits per banking office, increase 818 points to 2903 on consummation of the proposal. The per capita income and growth in market deposits, and profitability of HHI for federally insured retail deposits would increase by 880 points banks in the banking market (as measured by the return on assets to 2705 under the proposal if deposits in this credit union were given (annualized)) are all above the average for Iowa's rural counties. full weight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 127 The Board concludes in light of all the facts of record, competitive effects. Accordingly, the Board hereby denies including the Federal Reserve Survey, which indicates that BancSecurity's notice under section 4(c)(8) of the BHC the overwhelming majority of retail and commercial cus- Act. tomers in the Marshall County banking market obtain their By order of the Board of Governors, effective Decembanking services from a local depository institution, that ber 9, 1996. out-of-market financial institutions, including institutions providing electronic banking services, do not mitigate the Voting for this action: Chairman Greenspan and Governors Kelley, substantially adverse competitive effects of this proposal.30 Lindsey, Phillips, Yellen, and Meyer. Absent and not voting: Vice Chair Rivlin. Public Benefits JENNIFER J. JOHNSON Deputy Secretary of the Board The Board has considered whether the potential benefits to the public, such as greater convenience, increased competi- Bank of Montreal tion, or gains in efficiency outweigh possible adverse ef- Montreal, Canada fects of the proposal. BancSecurity has indicated that it could expand the programs of Savings to include those offered by BancSecurity to benefit the existing customers The Bank of Nova Scotia of both institutions. BancSecurity also states that, through Toronto, Canada the acquisition of Savings, it would be able to improve the quality of services provided to the customers of both Canadian Imperial Bank of Commerce institutions, and to increase the lending limits of the com- Toronto, Canada bined entity. The requirement under section 4 of the BHC Act that the The Chase Manhattan Corporation Board must determine that public benefits from a proposal New York, New York can reasonably be expected to outweigh potential adverse effects necessarily involves a balancing process that takes First Chicago NBD Corporation into account the extent of the potential for adverse effects. Chicago, Illinois The Board notes that MFC and Savings are well-managed organizations in satisfactory financial condition and that National Bank of Canada Savings received a "satisfactory" rating from its primary Montreal, Canada federal supervisor in its most recent evaluation for performance under the Community Reinvestment Act. For the Royal Bank of Canada reasons discussed in this order, however, the effects on Montreal, Canada competition in the Marshall County banking market are substantially adverse. In light of these and all the facts of The Toronto Dominion Bank record, the Board has concluded that the public benefits Toronto, Canada resulting from potential costs savings, gains in efficiency or greater convenience identified in the proposal are not suffi- Order Approving a Notice to Engage in Certain cient, on balance, to outweigh the significantly adverse Nonbanking Activities and Application to Become a effects on competition in the Marshall County banking Member of the Federal Reserve System market. For reasons noted above, and based on all of the facts of Bank of Montreal, Montreal, Canada; The Bank of Nova record, the Board concludes that the proposed transaction Scotia, Toronto, Canada; Canadian Imperial Bank of Comwould have significantly adverse effects on the Marshall merce, Toronto, Canada; The Chase Manhattan Corpora- County banking market. The Board also concludes that tion, New York, New York; First Chicago NBD Corporaconsiderations relating to public benefits, including finantion, Chicago, Illinois; National Bank of Canada, Montreal, cial and managerial resources of the institutions involved, Canada; Royal Bank of Canada, Montreal, Canada; and do not lend sufficient weight to outweigh these adverse The Toronto Dominion Bank, Toronto, Canada (collectively, "Notificants"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), 30. BancSecurity has noted the absence of any comments by the have requested the Board's approval under section 4(c)(8) Justice Department, any other federal regulator of financial instituof the BHC Act (12 U.S.C. § 1843(c)(8)) and sections, or any competitor in the market about possible adverse compettion 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) itive effects of this proposal. The BHC Act, however, charges the Board with determining independently whether a particular proposal each to acquire up to 13.3 percent of the voting shares of can reasonably be expected to produce benefits to the public that Multinet International Bank, New York, New York outweigh possible adverse effects, such as undue concentration of ("Multinet"). Notificants propose that Multinet, a de novo resources or decreased or unfair competition. (12 U.S.C. § 1843(c)(8)). uninsured state licensed trust company, would serve as a In making its determinations, however, the Board carefully considers the views provided to it by other agencies. clearinghouse for multilateral netting of foreign exchange Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1997 transactions. Multinet would provide the proposed services currencies.4 Multinet would charge participants a fee for to all qualifying participants worldwide. each trade that it cleared. In addition, Multinet has applied under section 9 of the As a member of the Federal Reserve System, Multinet Federal Reserve Act to become a member of the Federal would open an account with, and receive payment services Reserve System.1 As a state member bank, Multinet would from, the Reserve Bank. Multinet would have access to have an account at the Federal Reserve Bank of New York Fedwire to make and receive U.S. dollar payments, which, ("Reserve Bank") and would use Federal Reserve System among other things, would be used to conduct U.S. dollar payment services to clear and settle U.S. dollar payments to settlements and would have a book-entry securities acand from the clearinghouse. count, which would be used to hold and manage U.S. Notice of the proposal, affording interested persons an Treasury securities pledged by participants as collateral.5 opportunity to submit comments, has been published Multinet's key service provider would be International (61 Federal Register 39,660 (1996)). The time for filing Clearing Systems, Inc. ("ICSI"), a wholly owned subsidcomments has expired, and the Board has considered the iary of The Options Clearing Corporation ("Options Clearnotice and all comments received in light of the factors set ing"), both of Chicago, Illinois.6 ICSI would operate forth in section 4(c)(8) of the BHC Act and section 9 of the VALUNET®, a proprietary netting, settlement, and risk Federal Reserve Act. management software system developed and tested with Notificants are large commercial banking organizations the direction and support of Options Clearing and currently headquartered in Canada and the United States. They en- in use by ICSI to effect bilateral netting of foreign exgage directly and through subsidiaries in a broad range of change contracts.7 In addition, two representatives of ICSI banking and permissible nonbanking activities in the would serve on Multinet's 12-member board of directors, United States. and one of ICSI's representatives also would serve on the board's executive committee and risk management com- Proposed Activities mittee.8 Multinet would address the risks inherent in foreign ex- Closely Related to Banking Analysis change clearing and settlement by establishing a clearinghouse for financial institutions that enter into foreign ex- Section 4(c)(8) of the BHC Act provides that a bank change contracts. Multinet would net spot and forward2 holding company may, with Board approval, engage in any foreign exchange contracts between participants in the activity that the Board determines to be "so closely related clearinghouse, and condition payments to a participant to banking or managing or controlling banks as to be a under a foreign exchange contract on strict compliance by proper incident thereto."9 Multinet proposes to engage in the participant with the clearinghouse rules. Those proce- trust company activities (including activities of a fiduciary, dures would reduce the volume of settlement payments agency, or custodial nature) related to the maintenance of among participants and have the potential to reduce significantly the credit, liquidity, and other risks and the transaction costs associated with clearing and settling foreign 4. Operations are expected to begin in U.S. and Canadian dollars exchange contracts.3 only, with transactions in other currencies to be added thereafter. Multinet has committed that it will not clear foreign exchange con- Multilateral netting would be achieved through the legal tracts in any additional currencies, and will not make any change in technique of novation and substitution, whereby Multinet the overall currency liquidity limit or level of available credit facilities would become the counterparty to each participant in every in any eligible currency, without prior notice to the Federal Reserve contract accepted for netting and would receive payments System. 5. Multinet has committed that it will not incur any overdrafts in its from and make payments to each participant in the proper account at the Reserve Bank. 6. Options Clearing is a registered clearing agency that is owned by several U.S. stock and commodity exchanges and regulated by the Securities and Exchange Commission. Options Clearing is the largest clearinghouse for options contracts in the world, and has developed 1. Multinet would not accept deposits and would not be insured by complex risk management and settlement techniques for the numerous the Federal Deposit Insurance Corporation. On August 21, 1996, products it clears. Multinet received an Organizational Certificate and conditional Au- 7. ICSI stalf would monitor participants' positions and submitted thorization Certificate from the New York State Banking Department. contracts for compliance with Multinet's policies and procedures, and, The Authorization Certificate is conditioned on Multinet's becoming a under the direction of Multinet staff, would make and receive all member of the Federal Reserve System and addressing certain other settlement payments. ICSI staff also would help to assess the operaorganizational and operational matters. tional capabilities of potential and active participants, train applicants 2. Forward contracts would have a maturity of not more than two in the use of VALUNET®, and provide participants with telephone years. support. 3. Multinet also would provide bilateral netting services to subscrib- 8. Nine of the 10 other members of the board of directors would be ers outside the clearinghouse. Because Multinet would not be a party representatives of Notificants. The tenth member would be a represento those transactions, its assets and the collateral pledged by partici- tative of Multinet. pants in the clearinghouse would not be at risk with respect to the 9. 12 U.S.C. § 1843(c)(8). Regulation Y also provides that bank transactions. Multinet has committed that it will not net or settle holding companies may engage in incidental activities that are necesobligations created by or through any other bilateral or multilateral sary to carrv on an activity that is closely related to banking. See netting service without prior notice to the Federal Reserve System. 12 C.F.R. 225.21(a)(2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 129 the collateral pool to be pledged by participants; foreign tilateral Netting Systems ("Policy Statement").13 Multinet exchange transactions (through the substitution of Multinet would take multiple steps to control the risks inherent in its as the counterparty to both sides of every accepted con- operations, including imposing membership criteria on partract); and processing and transmitting financial, banking, ticipants, evaluating all foreign exchange contracts before and economic data. All these activities are permissible for acceptance on the basis of several risk-related criteria, bank holding companies under section 4(c)(8) of the BHC withholding payments due a defaulting participant, and Act, and would be performed by Multinet in the manner using a line of credit secured by withheld payments and the authorized by the Board.10 securities pledged by participants to fund settlement payments when a participant defaults. Proper Incident to Banking Analysis To address the risk that financially weak institutions or institutions that lack experience in foreign exchange trans- In order to approve the proposal, the Board also must actions would default or be unable to fulfill their obligadetermine that the proposed activities are a proper incident tions on a timely basis, Multinet would subject potential to banking; that is, that the activity "can reasonably be and active participants to stringent and objective memberexpected to produce benefits to the public, such as greater ship requirements, including minimum requirements with convenience, increased competition, or gains in efficiency, respect to capital, credit rating, and experience in the that outweigh possible adverse effects, such as undue con- foreign exchange dealer market.14 Applicants also would centration of resources, decreased or unfair competition, be required to complete successfully a trial period as a conflicts of interests, or unsound banking practices."11 As subscriber to Multinet's bilateral netting service.15 Multipart of its evaluation of these factors, the Board has care- net would continue to monitor the performance of particifully reviewed the financial and managerial resources of pants after they became members. the Notificants and Multinet and the effect the proposed To address the risk to Multinet arising from the potential transaction would have on these resources. Based on all the default of a qualified participant, Multinet would establish facts of record, the financial and managerial12 resources of and continually update for each participant a series of the Notificants and Multinet are consistent with approval exposure measurements and collateral requirements based of the proposal. on Multinet's expected loss if the participant failed to The Board also has reviewed the proposal in light of its perform on any of its outstanding foreign exchange con- Policy Statement on Privately Operated Large-Dollar Mul- tracts. Each contract submitted would be evaluated to determine whether it would cause either party to the contract to exceed its exposure limits or collateral requirement. Contracts that would cause any of the exposure limits to be exceeded, or that required additional collateral that was not 10. Multinet would not be a bank, would not make loans or timely provided, would not be accepted for netting.16 Parinvestments, and would not accept deposits other than of funds ticipants also would be required to contribute collateral to generated from trust activities that were not currently invested and were properly secured, and would satisfy the other limitations of cover Multinet's estimated exposure to settlement losses in Regulation Y with respect to trust company activities. See 12 C.F.R. the clearinghouse as a whole and to the risk that a settle- 225.25(b)(3). Foreign exchange trading has been approved by the ment agent might fail to deliver a currency under Multi- Board by order. See The Hongkong and Shanghai Banking Corpora- net's multi-currency line of credit. Multinet also would tion, 75 Federal Reserve Bulletin 217 (1989); The Long-Term Credit monitor the risk profile of participants to identify possible Bank of Japan, Limited, 74 Federal Reserve Bulletin 573 (1988). Multinet also would provide data processing and transmission ser- future limit violations or the need to call for additional vices pursuant to a written agreement, and would observe certain collateral.17 limitations on the facilities and hardware provided with its data processing and transmission services, as required by Regulation Y. See 12 C.F.R. 225.25(b)(7). 11.12 U.S.C. § 1843(c)(8). 13. See 59 Federal Register 67,534 (December 29, 1994). The 12. Each of the Notificants would have a representative on the board Policy Statement also incorporates the minimum standards for multiof directors of Multinet, who may be an officer or director of the lateral netting systems set forth in the Report of the Committee on Notificant. Under the Depository Institution Management Interlocks Interbank Netting Schemes of the Central Banks of the Group of Ten Act (12 U.S.C. § 3201 et seq.) ("Interlocks Act") and the Board's Countries. Regulation L (12 C.F.R. Part 212), certain management interlocks 14. Multinet has committed that it will not admit a foreign financial between depository institutions or depository holding companies, as institution as a member of the clearinghouse without prior notice to defined in the Interlocks Act, that are not affiliated for purposes of the the Federal Reserve System, unless the System has previously ap- Interlocks Act are prohibited. The general purpose of the Interlocks proved the admission to Multinet of the identical type of financial Act is to promote competition between depository institutions in the institution from the same foreign country. provision of credit to the general public. See H.R. Rep. No. 95-1383, 15. All Notificants have successfully completed this trial period. at 14 (1978), reprinted in 1978 U.S.C.C.A.N. 9273, 9286. In view 16. Contracts that were not accepted would remain bilateral conthereof, the Board previously has determined that a management tracts and would be settled outside Multinet. interlock between a depository institution and a limited purpose trust 17. Multinet's credit exposure on accepted forward contracts would company that does not have the power to accept deposits or make be fully collateralized by U.S. government obligations, and additional personal or commercial loans is not prohibited by the Interlocks Act. collateral would be required to cover the potential volatility of the See Letter from General Counsel to Charles M. Thompson, Esq., accepted forward contracts over five business days. Multinet also dated July 13, 1994; Letter from General Counsel to Mr. John A. would be authorized to close out a participant's forward contracts in O'Conner, Jr., dated July 8, 1994. whole or in part to cover any collateral deficiencies resulting from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1997 Multinet proposes to establish several standard clearing- concludes that the proposal can reasonably be expected to house techniques to control and allocate the risk associated produce public benefits that would outweigh the potential with the failure by a participant to settle on a timely basis of the proposal for adverse effects, if any, under the proper its payment obligations on accepted foreign exchange con- incident to banking standard of section 4(c)(8) of the BHC tracts. In general, if a participant failed to pay Multinet, Act. Multinet would withhold payments due the defaulting par- The Board also has considered the factors it is required ticipant and use the withheld payments, along with securi- to consider when reviewing an application to become a ties in the collateral pool, to secure an advance under member bank under section 9 of the Federal Reserve Act. Multinet's line of credit in the currencies and in the Multinet has provided the Board with several commitments amounts that the defaulting participant failed to deliver. As intended to ensure that the Board would have adequate currently structured, Multinet would use the loan to pay the enforcement authority over Multinet as an uninsured state parties that performed their payment obligations to the member bank.19 Based on all the facts of record, the Board clearinghouse. In the event the collateral pool was drawn finds that Multinet's application for membership is consisdown, participants would be required to replenish the pool tent with approval.20 by pledging additional collateral. A participant's failure to make a required pledge would constitute a default and Conclusion enable Multinet to withhold settlement payments due that participant, thereby providing additional collateral to the Based on all the facts of record, including all the commitpool.18 Multinet would minimize its operating risk through ments, stipulations, and representations made by the Notifiits reliance on the back-office support staff of ICSI and the cants and Multinet, and subject to all the terms and condiuse of comprehensive disaster recovery facilities and protions set forth in this order, the Board has determined that cedures. the notices and the application should be, and hereby are, The risk management policies and procedures that Multi- approved. Approval of the notices and application is specifnet proposes to implement in providing foreign exchange ically conditioned on compliance by Notificants with the clearinghouse services are consistent with the Board's Pol- commitments and stipulations made in connection with the icy Statement. Based on all the facts of record, the Board notices and application. The Board's determination also is finds that the risk management policies and procedures are subject to all the terms and conditions set forth in Regulaconsistent with approval of the proposal. tion Y, including those in section 225.7 and 225.23(g) The risk management techniques of Multinet also can (12 C.F.R. 225.7 and 225.23(g)), and to the Board's authorreasonably be expected to produce notable public benefits ity to require such modification or termination of the by increasing the reliability of clearing and settlement in activities of a bank holding company or any of its subsidforeign exchange transactions. All participants would be iaries as the Board finds necessary to ensure compliance subject to clearinghouse standards concerning their finan- with and to prevent evasion of the provisions of the BHC cial condition and operational capabilities, their volume of Act and the Board's regulations and orders thereunder. The payments would be reduced, and the multi-party collateral, Board's decision is specifically conditioned on compliance loss-sharing, and credit arrangements would ensure prompt with all the commitments, stipulations, and representations payment to performing parties. Moreover, the proposal can made in the notices and application, including the commitreasonably be expected to increase competition in the ments and conditions discussed in this order. The commitprovision of foreign exchange services. Multinet would be ments, stipulations, representations, and conditions relied the first clearinghouse for multilateral netting of foreign on in reaching this decision shall be deemed to be condiexchange transactions in the United States and only the tions imposed in writing by the Board in connection with second such clearinghouse in operation worldwide. By its findings and decision, and, as such, may be enforced in increasing the availability of clearing and settlement ser- proceedings under applicable law. vices, these services should be available at lower cost and These activities shall not be commenced later than three to a larger number of financial institutions and their cus- months after the effective date of this order, unless such tomers. period is extended for good cause by the Board or by the For these reasons, and in reliance on all the commit- Federal Reserve Bank of Chicago or New York, pursuant ments made in connection with the proposal, the Board to delegated authority. By order of the Board of Governors, effective December 4, 1996. changes in exchange rates or the value of the collateral or from the maturation of accepted forward contracts and the shift of collateral to the settlement collateral pool. Based on these collateral requirements, the Board has determined that Multinet's credit exposure on forward 19. Multinet also has stipulated that it is subject to the supervisory, foreign exchange transactions would not be significant. examination, and enforcement powers of the Board under the BHC 18. Multinet has committed that it will notify the Federal Reserve Act as if it were a subsidiary of a bank holding company, and to the System of all proposed changes to its rules and user manual, and that supervisory, examination, and enforcement powers of the Board under it will provide the System with a copy of any final agreement or legal the Federal Deposit Insurance Act ("FDI Act") as if Multinet were an opinion related to its netting and settlement services and related insured depository institution for which the Board is the appropriate collateral arrangements, or any amendment to such documents before Federal banking agency under the FDI Act. using or acting in reliance on such documents or amendments thereto. 20. See 12 U.S.C. § 322; 12 C.F.R. 208.5. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and in certain nonbanking activities related to the operation of Governors Kelley, Lindsey, Phillips, Yellen, and Meyer. ATM and POS networks, including various data processing services, pursuant to section 225.25(b)(7) of Regulation Y JENNIFER J. JOHNSON (12 C.F.R. 225.25(b)(7)).3 Applicants propose to conduct Deputy Secretary of the Board these activities throughout the United States, Bermuda, Canada, Mexico, Central America, and the Caribbean. Barnett Banks, Inc. Notice of the proposals, alfording interested persons an Jacksonville, Florida opportunity to submit comments, has been published (61 Federal Register 56,547, 58,882 (1996)). The time for Crestar Financial Corporation filing comments has expired, and the Board has considered Richmond, Virginia the notices and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. As in First Union Corporation other cases, the Board also sought comments from the Charlotte, North Carolina Department of Justice on the competitive effects of these proposals. The Department of Justice conducted an investi- NationsBank Corporation gation of the proposals and indicated that it had no objec- Charlotte, North Carolina tion to consummation of the proposed transactions. Applicants are large commercial banking organizations Southern National Corporation with headquarters in Florida, Virginia, and North Carolina, Winston-Salem, North Carolina and they engage directly and through subsidiaries in a broad range of banking and permissible nonbanking activi- Wachovia Corporation ties in the United States.4 Winston-Salem, North Carolina Section 4(c)(8) of the BHC Act provides that a bank holding company may, with Board approval, engage in any Order Approving Notices to Conduct Certain Data activity that the Board determines to be "so closely related Processing and Other Nonbanking Activities to banking or managing or controlling banks as to be a proper incident thereto." The Board previously has deter- Barnett Banks, Inc., Jacksonville, Florida; Crestar Finanmined that all the activities proposed in these notices are cial Corporation, Richmond, Virginia; First Union Corpoclosely related to banking within the meaning of secration, Charlotte, North Carolina; NationsBank Corpora- tion 4(c)(8) of the BHC Act.5 Applicants would conduct tion, Charlotte, North Carolina; Southern National these activities in accordance with Regulation Y and previ- Corporation, Winston-Salem, North Carolina; and Wachoous Board decisions. via Corporation, Winston-Salem, North Carolina (collec- The Board also must consider whether the performance tively, "Applicants"), bank holding companies within the of the proposed activities by Applicants through Company meaning of the Bank Holding Company Act ("BHC Act"), "can reasonably be expected to produce benefits to the have given notice under section 4(c)(8) of the BHC Act public . . . that outweigh possible adverse effects, such as (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's undue concentration of resources, decreased or unfair com- Regulation Y (12 C.F.R. 225.23) to acquire or retain control of 5 percent or more of the voting shares of Southeast Switch, Inc., Maitland, Florida ("SES"), after its mergers depository records of such institutions) are connected by electronic or with Internet, Inc., Reston, Virginia ("Internet"), and Ala- telecommunications means to one or more computers, processors, or bama Network, Inc., Birmingham, Alabama ("Alabama switches for the purpose of providing ATM services to retail custom- Network").1 ers of the institutions. POS terminals are generally located in the establishments of merchants. They accept ATM or similar cards and, Currently, SES operates an electronic funds transfer using the ATM network or a parallel POS-only network, provide ("EFT") network under the tradename HONOR, Internet access to the cardholder's account to transfer funds to the merchant's operates an EFT network under the tradename MOST, and account. Alabama Network operates an EFT network under the 3. A list of Company's proposed data processing and transmission activities is set forth in Appendix A. In connection with its EFTtradename ALERT. These EFT networks provide data prorelated data processing and transmission activities, Company also cessing and data transmission services to banks and retail would provide management consulting services to depository institumerchants who are members of their branded automated tions for EFT-related activities pursuant to section 225.25(b)(l 1) of teller machine ("ATM") and point of sale ("POS") net- Regulation Y (12 C.F.R. 225.25(b)(l 1)) and check verification serworks.2 The combined entity ("Company") would engage vices to retailers pursuant to section 225.25(b)(22) of Regulation Y (12 C.F.R. 225.25(b)(22)), which permits a bank holding company to engage in authorizing a subscribing merchant to accept personal checks and purchasing from the merchant validly authorized checks 1. Applicants are the bank holding companies that would control that are subsequently dishonored. more than 5 percent of any class of Company's voting shares. Other 4. Asset and deposit information for each of the Applicants is set current shareholders of SES, Internet, and Alabama Network also forth in Appendix B. would own shares of Company after consummation of this proposal. 5. See 12 C.F.R. 225.25(b)(7), (11), and (22); The Bank of New York 2. In general, an ATM network is an arrangement whereby more Company, Inc., et al., 80 Federal Reserve Bulletin 1107 (1994) than one ATM and more than one depository institution (or the ("Bank of NY Order"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1997 petition, conflicts of interests, or unsound banking prac- The proposed joint venture would provide services to tices."6 As part of this consideration under section 4(c)(8) depository affiliates of the joint venture participants, inof the BHC Act, the Board reviews the financial and cluding the Applicants, and to unaffiliated financial institumanagerial resources of the Applicants and their subsidiar- tions under operating rules that promote open access to the ies, and any company to be acquired, and the effect of the network, which are discussed in detail below. Accordingly, proposal on those resources.7 Based on all the facts of smaller financial institutions would have the opportunity to record, the Board concludes that financial and managerial provide their customers with greater access to their deposit considerations are consistent with approval of the propos- accounts and thereby could compete with larger, multials. In addition, there is no evidence in the record that the state organizations for retail deposit funds without the proposals would result in conflicts of interests or unsound necessity of substantial investments in branch systems or banking practices. their own proprietary ATM networks. The operating rules also promote competition between Company's network Competitive Considerations and alternative providers of EFT-related services, including national ATM and POS networks, other regional networks, The proposals would result in a joint venture between large and third-party providers of EFT switching and processing banking organizations that would operate the predominant services, thereby encouraging price and other competition EFT network in a multi-state area in the southeastern for the services provided by the proposed network. United States. The Board has considered whether the pro- In addition, each of the Applicants would be free to posed joint venture would result in undue concentration of continue to operate its own proprietary network and to resources or unfair competition under applicable principles participate in other national and regional networks while of antitrust law. participating in Company's network. Moreover, there is no The Board previously has concluded that the economic evidence in the record that this proposal would reduce and market structure characteristics of the EFT industry competition among Applicants, the other owners of Comtend to favor establishing a dominant network to serve a pany, and other banking organizations as providers of multi-state region.8 For example, network externalities, banking products and services. In particular, Company's such as the economies of ubiquity, appear to promote operating rules do not set prices that a member institution consolidation of regional ATM networks.9 As a result, must charge its retail customers for ATM or POS transacdominant ATM networks have emerged in various geo- tions. In this light, and based on all the facts of record, the graphic areas throughout the EFT industry.10 One recent Board concludes that the proposal would not result in study indicates that the ten largest regional networks now adverse effects such as undue concentration of resources or account for 80 percent of all regional ATM network trans- unfair competition. actions in the United States.11 The Board also has considered whether these proposals would result in decreased competition. The Board and the courts traditionally have considered the area of effective competition between the merging parties in order to deter- 6. See 12 U.S.C. § 1843(c)(8). mine whether a particular merger transaction is likely to 7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, decrease competition. This area of effective competition 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, has been defined by reference both to a line of commerce, 73 Federal Reserve Bulletin 155 (1987). 8. Early ATM networks typically were composed of banks that used or product market, and to a geographic market. their ATMs for dispensing cash, and were confined to branches in The Board previously has identified three distinct prodlocal banking markets. The smaller ATM networks have tended to ucts that may be offered by ATM networks: consolidate in response to several factors, including increased con- (1) Network access (access to an ATM network identisumer desire to obtain widespread access to their accounts, the rise of interstate banking, the competitive advantage produced by economies fied by a common trademark or logo displayed on ATMs of scale, and the desire to undertake relevant and timely technology and ATM cards); research and development and thereby enhance the products available (2) Network services (the switching and gateway funcfrom and through the network. tions for the network); and 9. As an ATM network expands the number of its financial institution members and available ATMs, its value to network cardholders (3) ATM processing (the data processing and telecomincreases due to the greater accessibility of their deposit accounts. munications facilities used to operate, monitor, and sup- Similarly, as the number of cardholders increases, so does the number port a bank's ATMs).12 of transactions and hence the economic return on ATM terminals in the network. This increased economic return provides incentives for banks to establish additional ATMs, thereby further enhancing the HONOR provides all three services to its network memnetwork's value to cardholders. Accordingly, banks tend to place a bers. In contrast, MOST and ALERT provide only network greater value on membership in a network as its membership expands. access directly; network services and ATM processing are 10. Although the network in the proposals would become the provided to members of these networks through third parnation's largest regional EFT network in transaction volume, a number of other large networks would continue to operate both in Company's service area and elsewhere throughout the United States. 11. See McAndrews and Rob, "Shared Ownership and Pricing in a Network Switch," 14 International Journal of Industrial Organization 12. See Banc One Corporation, et al., 81 Federal Reserve Bulletin 727 (October 1996). 492 (1995) {"EPS Order"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 ties.13 The relevant product market in which to examine the cally.18 Moreover, smaller networks and third-party procompetitive effects of this proposal, therefore, is the net- cessors will continue to operate EFT networks within the work access market.14 Southeast Region, and to provide both direct and potential The Board previously has determined that the geo- competition for Company.19 Finally, national networks ofgraphic market for network access is an area significantly fer an attractive alternative to regional networks for some larger than local banking markets and has considered the financial institutions in the Southeast Region, and national market area of an ATM network to consist of regions networks appear to be increasing their competitive pressure comprising several states.15 In this case, the HONOR net- on regional networks.20 work operates primarily in the Southeast, in North Caro- The Board also believes that proposed operating rules lina, South Carolina, Georgia, and Florida ("HONOR core for Company, when taken together, facilitate competition states"), and is the predominant regional EFT network in with national and other regional networks and with thirdthat area. MOST operates primarily in the Middle Atlantic, party service providers, and ensure access to the network in Maryland, Virginia, the District of Columbia, and Ten- for all depository institutions.21 Applicants anticipate that nessee ("MOST core states"), and is the predominant Company would continue the use of certain procompetitive regional EFT network in that area. ALERT operates pri- rules currently implemented by one or more of the constitmarily in Alabama and is the predominant regional EFT uent networks. For example, all depository institutions network in that state. On consummation of these proposals, would be permitted to participate in the network on a Company would provide network access in a region con- nondiscriminatory basis and would be permitted to join sisting of those states and adjacent states ("Southeast Re- other regional networks and to co-brand their cards and gion"). ATM terminals. The Board also notes that national network Although the three networks involved in this proposal transactions initiated at a terminal in Company's network operate primarily in areas adjacent to one another, the would not be required to be routed through Company's record also indicates that the MOST network has a notable switch. The combined entity, moreover, would allow the presence in the HONOR core states and that the HONOR use of third-party processors and would permit unbranded network maintains a notable presence both in the MOST subswitching22 of transactions subject only to a royalty fee core states and in Alabama.16 There are a number of established to compensate Company for the use of its considerations, however, that mitigate any decrease in exbrand.23 isting or potential competition resulting from these proposals. For example, the extent of geographic overlap among 18. The record indicates that banking organizations tend to transport HONOR, MOST, and ALERT results primarily from the regional ATM marks as they expand into new geographic areas. geographic expansion of a few member institutions, and 19. For example, Publix Supermarkets Inc., operates an ATM network under the tradename PRESTO in Florida and Georgia, and First the record indicates that the EFT networks generally have Tennessee Bank operates an ATM network under the tradename not actively competed for new members in each other's Money Belt in Tennessee, Virginia, Georgia, and Florida. Electronic core states.17 In addition, several other large regional net- Data Systems, a large third-party processor, operates an ATM network works, such as MAC and NYCE, currently operate in areas under the tradename MPACT in 14 states, including Mississippi and adjacent to Company's proposed network. The Board be- Arkansas. 20. A number of smaller banks in the Southeast Region that are lieves that these regional networks would provide competimembers of a national network are not members of HONOR, MOST, tive constraints to the proposed network, and that their or ALERT. In addition, VISA operates a national EFT network under existence may become increasingly significant as multi- the tradename PLUS, and recently has announced that it plans to state banking organizations continue to expand geographi- change the PLUS mark to VISA in order to generate greater brand recognition in all regions of the country. 21. The Board previously has determined that ATM network operating rules are an important consideration in assessing the competitive impact of a proposal under the section 4(c)(8) factors. See Bank of NY 13. Several regional or national firms, such as Deluxe Data Systems Order; EPS Order. In addition, Company's corporate structure ensures and Electronic Data Systems, offer network services and ATM pro- that its board of directors will represent a wide range of interests and cessing services to unaffiliated networks and their members. that Company policy will not be dominated by the organizations with 14. In considering network access for POS transactions, the Board the largest shareholdings. Twenty-two members of the Company's notes that there are a number of competitors in the market, including 26-member board of directors will be appointed by the Company's two large national networks that have grown substantially in recent Class A shareholders, which are all financial institutions. The Class A years throughout the nation (VisaCheck and MasterMoney). Based on shareholders consist of both net issuers and net acquirers of network all the facts of record, the Board concludes that the proposals would transactions, vary in asset size of the organization, and are geographinot significantly affect competition in any market for POS-related cally diverse. services. 22. "Subswitching" refers to the switching of transactions between 15. See EPS Order at p. 494-95. members of the same regional network without accessing that net- 16. For example, HONOR operates 484 ATMs in Virginia, and work, and therefore without paying the network's switch fee. Gener- MOST operates 419 ATMs in North Carolina. ally, this is accomplished by routing the transaction through a third- 17. The record indicates that the overlap among these networks is party processor that provides ATM processing services for both attributable primarily to (1) the membership of two large interstate network members. bank holding companies in both the HONOR and MOST networks, 23. Applicants have stated that Company's proposed operating rules and (2) the membership of a few large Alabama-based organizations would not be made final until the proposals are consummated. The in both the ALERT and HONOR networks. Board believes that the benefits of the five operating rules summarized Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1997 For those reasons, and based on all the facts of record, of these cost savings would be passed on to member the Board concludes that consummation of the proposals financial institutions, and to consumers, in the form of would not have a significantly adverse effect on competi- lower fees.26 The record also indicates that Company plans tion in any relevant market. to increase research and development expenditures over the levels budgeted by the constituent networks in the past. Public Benefits The broader ownership base of Company should improve the probability of success for new products by increasing Section 4(c)(8) of the BHC Act requires that, in order to the number of financial institutions that would be willing to approve a proposal, the Board must determine that the introduce these products to consumers in earlier stages of public benefits reasonably to be expected from the pro- development. posal would outweigh potential adverse effects. This is a For the foregoing reasons, and after careful considerbalancing process that takes into account the extent of the ation of all the facts of record, the Board has concluded potential for adverse effects, which, for the reasons indi- that the balance of the public interest factors it must cated above, the Board does not believe to be significant in consider under the proper incident to banking standard of this case. section 4(c)(8) of the BHC Act is favorable and consistent Consumers would benefit from the added account avail- with approval of these proposals. ability and convenience resulting from the consummation of these proposals. In particular, an ATM network with a Conclusion larger number of financial institution members and available ATMs has greater value to network cardholders, be- Based on all the facts of record, the Board has determined cause they would have broader and more convenient ac- that the notices should be, and hereby are, approved. The cess to their deposit accounts. In this case, the geographic Board's approval is specifically conditioned on Applicants' territory covered by a network in the Southeast Region compliance with the commitments made in connection would expand significantly, and, accordingly, the benefits with these notices and the conditions referred to in this to consumers in this area of the country would be en- order. The Board's determination also is subject to all the hanced, particularly as consumers travel increasingly and conditions set forth in Regulation Y, including those in business activity continues to grow.24 sections 225.7 and 225.23(g) of Regulation Y (12 C.F.R. Furthermore, as noted above, the proposed joint venture 225.7 and 225.23(g)), and to the Board's authority to would offer services to all financial institutions, and smaller require such modification or termination of the activities of financial institutions would have the opportunity to provide a bank holding company or any of its subsidiaries as the their customers with greater access to their deposit ac- Board finds necessary to ensure compliance with, and to counts. Membership in Company's network would thereby prevent evasion of, the provisions of the BHC Act and the enable smaller financial institutions to compete with larger, Board's regulations and orders issued thereunder. For purmulti-state organizations for retail deposit funds without poses of this action, the commitments and conditions are the necessity of making substantial investments in branch deemed to be conditions imposed in writing by the Board systems or their own proprietary ATM networks. in connection with its findings and decision, and, as such, Consummation of these proposals would result in other may be enforced in proceedings under applicable law. public benefits. For example, the proposal is expected to This transaction shall not be consummated later than produce economies of scale and reduce average costs for three months after the effective date of this order, unless the combined network.25 The Board expects that a portion such period is extended for good cause by the Board or by above are important considerations in its determination to approve indicates that HONOR'S marginal costs to provide switching services these proposals. Accordingly, Company must notify the Board if are substantially lower than the prices charged to MOST and ALERT Company does not adopt those operating rules substantially as pro- by a third-party provider of these services. Hence, increased transacposed so the Board can determine whether the rules as adopted affect tion volume for the HONOR switch and the elimination of costs the Board's consideration of the factors in this case. attributable to the current outsourcing of services for MOST and 24. See generally Schiller, "The Travel Market in the United States ALERT network transactions would be likely to allow Company to and the Third District," Business Review of the Federal Reserve Bank realize economies of scale and to reduce average costs for the comof Philadelphia, pages 11-21 (September-October 1996) (demonstrat- bined network. The transactional cost savings for Company could be ing increases in aggregate travel during the period from 1984 to substantial, even after taking into account the added capital, conver- 1994). Moreover, available evidence indicates that the benefits of sion, and operating costs that would be incurred in expanding Comubiquity have continued to grow over time as ATM networks have pany's network processing capacity and utilization. consolidated. In particular, the number and percentage of interchange The Board also notes that, due to the large market share of the third transactions—in which consumers access their accounts through ter- party performing switching services for MOST and ALERT network minals not deployed by their own financial institutions—have in- transactions, the conversion of transaction volume from the thirdcreased markedly in recent years. See generally Bank Network News party switch to the HONOR switch could increase competition in this (1988-1995). product market. 25. The MOST and ALERT networks do not provide switching and 26. See McAndrews, "Retail Pricing of ATM Network Services," processing services directly to their members. HONOR provides Working Paper No. 96-4, April 1996, Federal Reserve Bank of switching and processing services directly to its members and cur- Philadelphia (indicating that network fees and consumer prices are rently maintains some excess capacity in its system. The record lower in larger EFT networks). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 the Federal Reserve Bank of Atlanta or the Federal Re- Appendix B serve Bank of Richmond, acting pursuant to delegated authority. Asset and Deposit Data as of June 30, 1996 By order of the Board of Governors, effective December 9, 1996. Barnett Banks, Inc., with approximately $41.8 billion in Voting for this action: Chairman Greenspan and Governors Kelley, total consolidated assets, is the 13th largest commercial Lindsey, Phillips, Yellen, and Meyer. Absent and not voting: banking organization in the United States, controlling Vice Chair Rivlin. $34.6 billion in deposits. Barnett operates subsidiary banks in Florida and Georgia. JENNIFER J. JOHNSON Crestar Financial Corporation, with approximately Deputy Secretary of the Board $18.5 billion in total consolidated assets, is the 40th largest commercial banking organization in the United States, controlling $11.7 billion in deposits. Crestar operates sub- Appendix A sidiary banks in Virginia, Maryland, and the District of Columbia. First Union Corporation, with approximately $139.9 bil- List of Activities lion in total consolidated assets, is the sixth largest commercial banking organization in the United States, controlling $90 billion in deposits. First Union operates subsidiary (1) ATM access and network services; banks in Connecticut, Delaware, the District of Columbia, (2) On-line and off-line POS access and network services; Florida, Georgia, Maryland, North Carolina, Pennsylvania, (3) Point of banking services that will permit customers to South Carolina, Tennessee, and Virginia. conduct transactions similar to those available at ATM NationsBank Corporation, with approximately $192.3 bilterminals with the help of a third party; lion in total consolidated assets, is the fifth largest commer- (4) Scrip services, in which a customer receives a voucher cial banking organization in the United States, controlling (scrip) that is redeemable for cash at a retail register; $98.4 billion in deposits. NationsBank operates subsidiary (5) Gateway services, by which Company will route transbanks in North Carolina, Delaware, the District of Columaction requests for participants between the Company's bia, Florida, Georgia, Kentucky, Maryland, New Mexico, network and other EFT networks; South Carolina, Tennessee, Texas, and Virginia. (6) Group purchasing, in which Company will purchase Southern National Corporation, with approximately EFT-related supplies for the benefit of network partici- $20.6 billion in total consolidated assets, is the 32d largest pants; commercial banking organization in the United States, (7) ATM terminal driving services, in which Company's controlling $14.7 billion in deposits. Southern National terminal driving data processing system will operate, monoperates subsidiary banks in North Carolina, South Caroitor, and otherwise control ATMs for participating financial lina, and Virginia. institutions and other ATM owners; Wachovia Corporation, with approximately $46 billion (8) POS terminal driving services, in which Company's in total consolidated assets, is the 31st largest commercial POS terminal driving data processing system will operate, banking organization in the United States, controlling monitor, and otherwise control POS terminals of customers $25.1 billion in deposits. Wachovia operates subsidiary under contract with Company; banks in North Carolina, South Carolina, Georgia, and (9) Transaction authorization services; Delaware. (10) Card production, issuance, and related activities, including ordering and embossing cards, encoding information on cards, generating and assigning personal identifica- Royal Bank of Canada tion numbers, providing emergency card issuance services, Montreal, Canada maintaining cardholder records, distributing marketing materials and notices, and providing special card handling and Norwest Corporation related services; Minneapolis, Minnesota (11) Electronic benefit transfer services; (12) Automated clearinghouse processing services; (13) Home banking and bill payment services; Stichting Prioriteit ABN AMRO Holding (14) Proprietary ATM services for non-financial entities, in Stichting Administratiekantoor ABN AMRO Holding ABN AMRO Holding N.V. which Company will provide all ATM services discussed ABN AMRO Bank N.V. above to non-financial entities; and All of Amsterdam, The Netherlands (15) Private financial network services, in which Company will provide telecommunication links between Company's EFT processing systems and the data processing systems ABN AMRO North America, Inc. of its customers. Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1997 Order Approving Notices to Engage in Nonbanking Proposed Activities Activities Integrion is a joint venture among Notificants, 12 national banks, one savings and loan holding company,4 and Gem- Royal Bank of Canada, Montreal, Canada, a foreign bank- ini Management Corporation, a subsidiary of International ing organization that is subject to the Bank Holding Com- Business Machines Corporation ("IBM"). Integrion will pany ("BHC") Act; Norwest Corporation, Minneapolis, design, develop, and operate a data processing and trans- Minnesota; Stichting Prioriteit ABN AMRO Holding, mission system through which depository institutions and Stichting Administratiekantoor ABN AMRO Holding, their affiliates would make available home banking and ABN AMRO Holding N.V., ABN AMRO Bank N.V., and other financial services to their respective customers. Inte- ABN AMRO North America, Inc., bank holding compa- grion will not itself provide home banking or other finannies within the meaning of the BHC Act, have requested cial services. Instead, the data processing and data transthe Board's approval under section 4(c)(8) of the BHC Act mission system ("gateway") Integrion designs and (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's operates will serve as a switch or interface, electronically Regulation Y (12 C.F.R. 225.23) each to acquire more than connecting customers of member depository institutions 5 percent of the voting interests in Integrion Financial with the member depository institutions themselves.5 Network, LLC, White Plains, New York ("Integrion"), Customers would connect to Integrion's gateway, and and thereby engage in data processing and data transmis- thus a member depository institution, using a variety of sion activities pursuant to section 225.25(b)(7) of the devices, including personal computers ("PCs"), touch- Board's Regulation Y (12 C.F.R. 225.25(b)(7)).1 tone telephones, or other electronic communication devic- Notice of the proposal, affording interested persons an es.6 Once a customer is connected to the gateway, Integrion opportunity to submit comments, has been published would electronically route and connect the customer to the (61 Federal Register 54,441 (1996)). The time for filing appropriate member depository institution, using software comments has expired, and the Board has considered the developed by Integrion that would facilitate communicanotice and all comments received in light of the factors set tions between the customer's PC (or other device) and the forth in section 4(c)(8) of the BHC Act. depository institution's hardware and software.7 In this RBC, with total consolidated assets of approximately manner, the Integrion gateway will provide customers with $131.6 billion,2 is the largest commercial banking organi- access to the menu of electronic banking and financial zation in Canada, and operates a branch in New York, New services offered by their respective member depository York; agencies in Los Angeles, California, and Miami, institutions, including remote banking services;8 bill- Florida; and a representative office in Chicago, Illinois. Norwest, with total consolidated assets of $77.8 billion,3 is the 12th largest commercial banking organization in the 4. The following national banks would become members of Inte- United States, and controls banks in Minnesota and grion on consummation of the proposal: Bank of America NT & SA; 14 other states. NationsBank, N.A.; KeyBank, N.A.; Bank One, Columbus, N.A.; ABN AMRO, with total consolidated assets of Mellon Bank, N.A.; Barnett Bank, N.A.; First Bank N.A.; PNC Bank, $339.4 billion, is the largest commercial banking organiza- N.A; Michigan National Bank; The First National Bank of Chicago; Comerica Bank-Ann Arbor, N.A.; and Fleet National Bank. Each of tion in the Netherlands, and controls seven depository these national banks has applied to the Office of the Comptroller of the institutions in Illinois and one commercial bank in New Currency to invest in Integrion through an operating subsidiary of the York. ABN AMRO Bank N.V. also operates branches in bank. Washington Mutual Inc., a savings and loan holding company, Boston, Massachusetts; Chicago, Illinois; New York, New also would become a member of Integrion and has provided notice of York; Pittsburgh, Pennsylvania; and Seattle, Washington; its intent to invest in Integrion to the Office of Thrift Supervision. 5. Notificants do not currently anticipate that Integrion's facilities and agencies in Atlanta, Georgia; Miami, Florida; Houswould be used by member depository institutions to store customer ton, Texas; and Los Angeles and San Francisco, California. account data. Notificants do expect that Integrion would store limited Each Notificant also engages in a number of nonbanking amounts of data related to transactions conducted through the gateactivities in the United States. way, such as information relating to bill payment instructions transmitted to member depository institutions. Integrion is permitted to store and transmit data to the extent permissible under section 225.25(b)(7) of the Board's Regulation Y. 12 C.F.R. 225.25(b)(7). 6. Customers using a PC may connect to the Integrion gateway through dedicated, private communications networks; through personal financial software programs; or through the Internet. 7. Integrion has contracted with IBM to provide the telecommunications and data network infrastructure necessary for Integrion to electronically link member depository institutions with their customers. 1. Royal Bank of Canada ("RBC"), Norwest Corporation ("Nor- Under this contract, communications between Integrion and member west") and Stichting Prioriteit ABN AMRO Holding ("ABN depository institutions will be transmitted through an existing, propri- AMRO") and its subsidiaries listed above are hereafter collectively etary IBM telecommunications and data network. referred to as "Notificants". 8. It is expected that the remote banking services offered by a 2. Except as otherwise noted, asset and ranking data are as of member depository institution would include the ability to gain access December 31, 1995, and use exchange rates then in effect. to account information, transfer funds between accounts, obtain infor- 3. Asset and ranking data for Norwest are as of June 30, 1996. mation on available loan or deposit products, apply for a loan, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 payment functions; and access to stock quotations.9 The Board previously has permitted bank holding com- The proposed activities appear to be data processing and panies providing permissible data processing and transmistransmission activities that are permissible for bank hold- sion services to financial institutions to process and transing companies under section 4(c)(8) of the BHC Act and mit a limited amount of nonfinancial data for such section 225.25(b)(7) of the Board's Regulation Y. The institutions as an incidental activity.14 Notificants contend Board previously has determined by regulation that certain that member depository institutions desire to offer Internet data processing and transmission activities are closely re- access to their customers in order to make their package of lated to banking and therefore permissible for bank holding banking and financial services more marketable, and to companies under section 4(c)(8) of the BHC Act. Regula- permit the institutions to compete more effectively with tion Y permits bank holding companies to provide data nonbank financial service providers. Notificants have indiprocessing and transmission services, facilities, data bases, cated that providing Internet access to customers of memor access to such services, facilities, or data bases by any ber depository institutions would constitute a small part of technological means, if the data to be processed or fur- Integrion's overall data processing and transmission activinished are financial, banking, or economic in nature.10 ties,15 and would not require modification of the gateway's Regulation Y also provides that bank holding companies capabilities or systems. In addition, as noted above, Intemay engage in incidental activities that are necessary to grion would provide Internet access only as an accommocarry on an activity that is closely related to banking.11 dation to its member depository institutions, which in turn would offer Internet access to their customers only as part Internet Access of a broader package of banking or financial services. In light of the foregoing, and based on all the facts of record, In addition to providing these services, Integrion's gateway the Board has concluded that Integrion's provision of Internet access to customers of its member depository instituwill provide customers of member depository institutions tions is incidental to its permissible data processing and with a means of connecting to the Internet, a nontransmission activities. proprietary computer network that contains significant amounts of data that are not financial, banking, or economic in nature.12 As an accommodation to its member Other Considerations depository institutions and their customers, Integrion proposes to provide an electronic link to an Internet access In order to approve this notice, the Board also must find provider.13 that the performance of the proposed activities by Integrion "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse efestablish additional accounts, order checks, or communicate electronifects, such as undue concentration of resources, decreased cally with a customer service representative. or unfair competition, conflicts of interests, or unsound 9. The individual banking and financial services that a customer would be able to gain access to through Integrion's gateway would banking practices."16 As part of the Board's evaluation of depend on the products offered by the member depository institution. these factors, the Board considers the financial and mana- Such products and services would be offered by the member deposi- gerial resources of the notificants and their subsidiaries and tory institution in its own name, and would be displayed to the the effect the transaction would have on such resources.17 customer using the graphics, logo, and service marks chosen and The Board notes that the capital ratios of Norwest and developed by the depository institution. Thus, it would appear to customers connecting to their depository institutions through the ABN AMRO North America, Inc. meet applicable risk- Integrion gateway that they are connected directly to the depository based capital standards and that each of the foreign bank institution, and the data processing and transmission services provided Notificants maintains capital equivalent to the capital by Integrion would be essentially transparent to consumers. levels that would be required of a U.S. banking organiza- 10. See 12 C.F.R. 225.25(b)(7); see also Cardinal Bancshares, Inc., 82 Federal Reserve Bulletin 674 (1996); and The Royal Bank of tion. Based on all the facts of record, the Board has Canada, 82 Federal Reserve Bulletin 363 (1996) (bank holding com- concluded that financial and managerial considerations are panies may provide data processing and transmission services to consistent with approval. financial institutions for purposes of allowing such institutions to offer electronic banking, bill payment, and stock quotation services). Notificants must provide these financial data processing and transmission services through Integrion in accordance with the limitations set forth 14. See BNCCORP, INC., 81 Federal Reserve Bulletin 295 (1995); in section 225.25(b)(7) of Regulation Y. see also First National of Nebraska, Inc., 82 Federal Reserve Bulletin 11 .See 12 C.F.R. 225.21(a)(2). 82 (1996). 12. Notificants must consult with the Federal Reserve System prior 15. Notificants expect that less than 10 percent of Integrion's to providing, through Integrion, data processing or transmission ser- revenues would be derived from providing Internet access to customvices to any non-depository organization, or providing access to ers of member depository institutions. Notificants have committed that non-financial databases other than as described in this order, in order Integrion will provide nonfinancial data processing and transmission to permit the System to determine whether such activities are permis- services in accordance with the limitations in Regulation Y and sible under section 4 of the BHC Act and Regulation Y. relevant Board orders. 13. Integrion could, for example, provide access to the Internet 16. 12 U.S.C. § 1843(c)(8). through an electronic link to IBM's proprietary network, which main- 17. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, tains connections to a wide variety of public and proprietary databases 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, and computer networks, or to other Internet access providers. 73 Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1997 The Board believes that consummation of the proposal 225.23(g) of Regulation Y (12 C.F.R. 225.7 and would enhance consumer convenience by expanding the 225.23(g)), and to the Board's authority to require such availability of remote banking services and by making modification or termination of the activities of a bank these services available in new ways. Consummation of the holding company or any of its subsidiaries as the Board proposal would permit member depository institutions and finds necessary to ensure compliance with, and to prevent their affiliates to deliver remote banking services to their evasion of, the provisions of the BHC Act and the Board's customers more efficiently, and would establish a joint regulations and orders issued thereunder. The Board's deciventure that pools the resources of a number of banking sion is specifically conditioned on Notificants' compliance organizations for the purpose of developing data pro- with the commitments made in connection with this notice cessing and transmission systems that would facilitate the and the conditions discussed in this order. The commitcreation and distribution of additional remote banking ments and conditions relied on in reaching this decision products that respond to consumer needs. In addition, the shall be deemed to be conditions imposed in writing by the communications gateway operated by Integrion would al- Board in connection with its findings and decision and, as low member depository institutions and their affiliates to such, may be enforced in proceedings under applicable make existing remote banking services available to con- law. sumers through additional means, such as through personal By order of the Board of Governors, effective Decemfinancial software programs, screen phones, and the public ber 2, 1996. Internet. There is no evidence in the record to indicate that consummation of the proposal would result in any signifi- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and cantly adverse effects, such as undue concentration of Governors Kelley, Lindsey, Phillips, and Meyer. Absent and not resources, decreased or unfair competition,18 conflicts of voting: Governor Yellen. interests, or unsound banking practices, that are not out- JENNIFER J. JOHNSON weighed by the public benefits of this proposal.19 On the Deputy Secretary of the Board basis of the foregoing and all the facts of record, the Board has concluded that the public benefits reasonably to be expected from Integrion's proposed activities outweigh Stichting Prioriteit ABN AMRO Holding any possible adverse effects from the proposal, and, there- Stichting Administratiekantoor ABN AMRO fore, that the activities are a proper incident to banking Holding under section 4(c)(8) of the BHC Act. ABN AMRO Holding N.V. ABN AMRO Bank N.V. Conclusion All of Amsterdam, The Netherlands Based on the foregoing and all the facts of record, including the commitments discussed in this order and all other Order Approving Notice to Engage in Certain commitments and representations made by Notificants in Nonbanking Activities, Including Underwriting and connection with the notices, and subject to the terms and Dealing in All Types of Debt and Equity on a Limited conditions set forth in this order, the Board has determined Basis, and Certain Other Securities- and that the notices should be, and hereby are, approved. The Derivatives-Related Activities Board's determination is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and Stichting Prioriteit ABN AMRO Holding, Stichting Administratiekantoor ABN AMRO Holding, ABN AMRO Holding N.V., and ABN AMRO Bank N.V., all of Amster- 18. The Board notes that, pursuant to the terms of Integrion's dam, The Netherlands (collectively, "Notificants"), bank charter, Notificants and other members of Integrion will remain free to compete with each other and Integrion in the development and market- holding companies within the meaning of the Bank Holding of data processing and transmission networks similar to the ing Company ("BHC") Act, have requested the Board's Integrion gateway, as well as remote banking and other financial approval under section 4(c)(8) of the BHC Act (12 U.S.C. services. § 1843(c)(8)) and section 225.23 of the Board's Regula- 19. In considering the public interest factors in this case, the Board tion Y (12 C.F.R. 225.23) to acquire all the voting securihas carefully considered the measures that Integrion and member financial institutions will take to protect the account data and other ties of ChiCorp Inc., Chicago, Illinois ("ChiCorp"), and financial information that will be transmitted through the gateway thereby engage in a wide range of nonbanking activities, from electronic interception, interference, or fraud. The Board previ- including securities- and derivatives-related activities. ously has noted that the nature of the risks associated with providing Notificants have applied to engage in the following electronic banking services is not different from those associated with more traditional forms of banking. See Cardinal Bancshares, nonbanking activities throughout the United States, and Inc., 82 Federal Reserve Bulletin 674, 676 (1996). Among other propose to provide the following services worldwide: security measures, Integrion and member depository institutions will (1) Making, acquiring, and servicing loans and other use log-in passwords and encryption procedures to attempt to mainextensions of credit for their own account and for the tain the privacy and integrity of data transmitted. In addition, as part account of others, pursuant to section 225.25(b)(1) of of its operations, Integrion will transmit data to member institutions through a private communications network. the Board's Regulation Y; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 (2) Providing various types of investment and financial (14) Providing clearing-only services for futures and advisory services, pursuant to section 225.25(b)(4) of options on futures contracts to, and serving as the pri- Regulation Y; mary clearing firm for, certain professional floor traders (3) Leasing personal or real property or acting as agent, on the Kansas City Board of Trade ("KCBOT") and the broker, or adviser in leasing such property, pursuant to Minneapolis Grain Exchange ("MGE"); and section 225.25(b)(5) of Regulation Y; (15) Providing brokerage services with respect to for- (4) Operating an automated front-end securities order ward contracts for the delivery of certain financial and entry system, and thereby providing to others data pro- nonfinancial commodities. cessing and data transmission services, facilities and data bases, and access to such services, facilities and Notice of the proposal, affording interested persons an data bases, for the processing, transmission or storage of opportunity to submit comments, has been published financial, banking, or economic data, pursuant to sec- (61 Federal Register 41,413 (1996)). The time for filing tion 225.25(b)(7) of Regulation Y; comments has expired, and the Board has considered the (5) Conducting discount and full-service brokerage ac- notice and all comments received in light of the factors set tivities, pursuant to section 225.25(b)(15) of Regula- forth in section 4(c)(8) of the BHC Act. tion Y; Stichting Prioriteit ABN AMRO Holding, with total (6) Underwriting and dealing in obligations of the United consolidated assets of $339.4 billion,1 is the largest com- States and other obligations that state member banks mercial banking organization in the Netherlands. Notifimay underwrite and deal in under 12 U.S.C. §§ 335 cants control seven depository institutions in Illinois and and 24(7) ("bank-eligible securities"), pursuant to sec- one commercial bank in New York. ABN AMRO Bank tion 225.25(b)(16) of Regulation Y; N.V. also operates branches in Boston, Massachusetts; (7) Acting as a futures commission merchant ("FCM") Chicago, Illinois; New York, New York; Pittsburgh, Pennfor nonaffiliated persons in the execution and clearance sylvania; and Seattle, Washington; and agencies in Atlanta, on major commodity exchanges of futures contracts and Georgia; Miami, Florida; Houston, Texas; and Los Angeles options on futures contracts based on bullion, foreign and San Francisco, California. exchange, government securities, or certificates of de- ChiCorp and its principal subsidiary, The Chicago Corposit or other money market instruments that a bank poration, Chicago, Illinois ("TCC"), engage worldwide in may buy or sell in the cash market for its own account, a wide range of investment advisory, securities underwritand providing investment advice with respect to such ing, and futures-related activities. Notificants propose to contracts as an FCM or a commodity trading advisor merge TCC with and into Notificants' existing section 20 ("CTA"), pursuant to sections 225.25(b)(18) and (19) of subsidiary, ABN AMRO Securities (USA) Inc., Chicago, Regulation Y; Illinois ("Company").2 TCC and Company are, and Com- (8) Underwriting and dealing in, to a limited extent, all pany will continue to be, broker-dealers registered with the types of debt and equity securities other than interests in Securities and Exchange Commission ("SEC") under the open-end investment companies ("bank-ineligible secu- Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) rities"); and a member of the National Association of Securities (9) Buying and selling all types of debt and equity Dealers ("NASD"). In addition, TCC is, and Company securities on the order of customers as a "riskless princi- would become, registered as an FCM and CTA with the pal" and acting as agent in the private placement of all Commodity Futures Trading Commission ("CFTC") untypes of debt and equity securities; der the Commodity Exchange Act (7 U.S.C. § 1 et seq.) and a member of the National Futures Association (10) Trading for their own account, for purposes other ("NFA"). Accordingly, Company will be subject to the than hedging, and for the account of customers in gold recordkeeping and reporting obligations, fiduciary stanand silver bullion, bars, rounds and coins, and platinum dards, and other requirements of the Securities Exchange and palladium coin and bullion; Act, the Commodity Exchange Act, the SEC, CFTC, (11) Trading for their own account in foreign exchange NASD and NFA. spot, forward, futures, options, and options on futures contracts, and providing transaction and advisory services to nonaffiliated customers with respect to such Activities Previously Approved by the Board foreign exchange-related instruments; (12) Acting as an FCM for nonaffiliated persons in the Activities Approved by Regulation—The Board previously execution and clearance on major commodity exchanges has determined by regulation that certain of the proposed of futures and options on futures contracts based on lending, investment and financial advisory, leasing, data bonds or other debt instruments, certain commodities, processing, securities brokerage, bank-eligible underwritand stock, bond, or commodity indices, and providing investment advice, including discretionary management services, with respect to such contracts; 1. Asset and ranking data are as of December 31, 1995, and use exchange rates then in effect. (13) Providing execution-only and clearing-only ser- 2. See Stichting Prioriteit ABN AMRO Holding, 81 Federal Reserve vices for options on securities to institutional customers; Bulletin 182 (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1997 ing and dealing, and FCM and futures advisory services are period.6 Notificants have committed that Company will so closely related to banking as to be proper incidents conduct its underwriting and dealing activities in bankthereto within the meaning of section 4(c)(8) of the BHC ineligible securities subject to the 10-percent revenue test.7 Act.3 Except as discussed below, Notificants have commit- Private Placement and "Riskless Principal" Activities— ted that these activities will be conducted within the limita- Private placement involves the placement of new issues of tions established by Regulation Y and the Board's orders securities with a limited number of sophisticated purchasrelated to these activities. ers in a nonpublic offering. A financial intermediary in a Bank-Ineligible Underwriting and Dealing Activities — private placement transaction acts solely as an agent of the The Board has determined that, subject to the prudential issuer in soliciting purchasers and does not purchase the framework of limitations established in previous decisions securities and attempt to resell them. Securities that are to address the potential for conflicts of interests, unsound privately placed are not subject to the registration requirebanking practices, or other adverse effects, the proposed ments of the Securities Act of 1933, and are offered only to activities of underwriting and dealing in bank-ineligible financially sophisticated institutions and individuals and securities are so closely related to banking as to be a proper not to the public. Company will not privately place regisincident thereto within the meaning of section 4(c)(8) of tered securities and will only place securities with customthe BHC Act.4 Notificants have committed that Company ers that qualify as accredited investors. will conduct the proposed underwriting and dealing activi- "Riskless principal" is the term used in the securities ties using the same methods and procedures and subject to business to refer to a transaction in which a broker-dealer, the same prudential limitations established by the Board in after receiving an order to buy (or sell) a security for a the Section 20 Orders.5 customer, purchases (or sells) the security for its own The Board also has determined that the conduct of these account to offset a contemporaneous sale to (or purchase securities underwriting and dealing activities is consistent from) the customer.8 Riskless principal transactions are with section 20 of the Glass-Steagall Act (12 U.S.C. understood in the industry to include only transactions in § 377), provided that the company engaged in the under- the secondary market. Thus, Company would not act as a writing and dealing activities derives no more than 10 riskless principal in selling bank-ineligible securities at the percent of its total gross revenue from underwriting and order of a customer that is the issuer of the securities to be dealing in bank-ineligible securities over any two-year sold, or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. Company also would not act as a riskless principal in any transaction involving a bank-ineligible security for which it 3. See 12 C.F.R. 225.25(b)(1), (4), (5), (7), (15), (18) and (19). As or an affiliate makes a market. part of its securities brokerage activities, Company would provide The Board has determined that, subject to the limitations execution-only and clearing-only services with respect to securities to established by the Board in prior orders, the proposed institutional customers. Company will provide clearing-only services with respect to securities only if Company has the ability and the right private placement and riskless principal activities are so to reject a trade given to Company for clearance for any reason. As discussed further below, the Board has separately considered Notificants' requests to provide clearing-only services to professional floor 6. See Section 20 Orders. Compliance with the 10-percent revenue traders and with respect to options on securities. limitation shall be calculated in accordance with the method stated in 4. See Canadian Imperial Bank of Commerce, et al., 76 Federal the Section 20 Orders, as modified by the Order Approving Modifica- Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al., tions to the Section 20 Orders, 75 Federal Reserve Bulletin 751 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities (1989); the Order Approving Modifications to the Section 20 Orders, Industry Ass'n v. Board of Governors of the Federal Reserve System, 79 Federal Reserve Bulletin 226 (1993); the Supplement to Order 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin A13 (1987), aff'd sub nom. Securities Industry Ass'n v. Board Bulletin 360 (1993); and 10 Percent Revenue Limit on Bank-Ineligible of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. Activities of Subsidiaries of Bank Holding Companies Engaged in 1988), cert, denied, 486 U.S. 1059 (1988); as modified by Review of Underwriting and Dealing Securities, 82 Federal Reserve Bulletin Restrictions on Director, Officer and Employee Interlocks, Cross- 1008 (1996) (Order dated September 11, 1996) (collectively, "Modifi- Marketing Activities, and the Purchase and Sale of Financial Assets cation Orders"). The Board notes that Notificants have not adopted Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, the Board's alternative indexed-revenue test to measure compliance 82 Federal Reserve Bulletin 1113 (1996) (Order dated October 30, with the 10-percent limitation on bank-ineligible securities activities, 1996) (collectively, "Section 20 Orders"). and, absent such election, Notificants will continue to employ the 5. To address potential conflicts of interests arising from Company's Board's original 10-percent revenue test. conduct of full-service brokerage activities along with underwriting 7. The Board also notes that Company may engage in activities that and dealing in bank-ineligible securities, Notificants have committed are necessary incidents to the proposed underwriting and dealing that Company will inform its full-service brokerage customers at the activities, provided that they are treated as part of the bank-ineligible commencement of the relationship that, as a general matter, Company securities activities, unless Company has received specific approval may be a principal or may be engaged in underwriting with respect to, under section 4(c)(8) of the BHC Act to conduct the activities indepenor may purchase from an affiliate, those securities for which brokerage dently. Until such approval is obtained, any revenues from the incidenand advisory services are provided. In addition, at the time any tal activities must be counted as ineligible revenues subject to the brokerage order is taken, the customer will be informed (usually 10-percent revenue limitation. orally) whether Company is acting as agent or principal with respect 8. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)). to a security. Confirmations sent to customers also will state whether The Board notes that Company, as a registered broker-dealer, must Company is acting as agent or principal. See PNC Financial Corp., conduct its riskless principal activities in accordance with the cus- 75 Federal Reserve Bulletin 396 (1989). tomer disclosure and other requirements of the federal securities laws. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 closely related to banking as to be a proper incident thereto General Partnership Activities — Company proposes to within the meaning of section 4(c)(8) of the BHC Act.9 assume TCC's role as general partner and investment ad- The Board also has determined that acting as agent in the viser to several limited partnerships ("Partnerships") that private placement of securities, and purchasing and selling invest in assets that a bank holding company is permitted securities on the order of investors as a riskless principal, to own.14 The Board previously has permitted bank holding do not constitute underwriting and dealing in securities for companies to serve as general partner and investment adpurposes of section 20 of the Glass-Steagall Act, and that viser for unregistered limited partnerships that invest in revenue derived from these activities is not subject to the securities.15 Notificants have committed that the proposed 10-percent revenue limitation on bank-ineligible securities activities would be conducted in accordance with limitaunderwriting and dealing.10 tions contained in the BHC Act and in previous Board Notificants have committed that Company will conduct decisions.16 Notificants have committed, for example, that its private placement activities using the same methods and the Partnerships, together with Notificants and their affiliprocedures and subject to the same prudential limitations ates, will not control more than 5 percent of any class of as those established by the Board in Bankers Trust and J.P. voting securities of any issuer without prior Board approv- Morgan,n including the comprehensive framework of re- al.17 Notificants also have committed that no directors, strictions imposed by the Board in connection with under- officers, or employees of Notificants or their affiliates will writing and dealing in bank-ineligible securities, which serve as directors, officers, or employees of any issuer of were designed to avoid potential conflicts of interests, which the Partnerships, Notificants and their affiliates hold unsound banking practices, and other adverse effects.12 more than 10 percent of the total equity.18 Notificants also have committed that Company will con- Precious Metal and Foreign Exchange Activities — Noduct its riskless principal activities subject to the limita- tificants propose that Company trade in gold and silver tions previously established by the Board.13 combination with investment advisory services, Company will conduct its riskless principal activities in accordance with the limitations 9. See J.P. Morgan & Company Incorporated, 76 Federal Reserve established by the Board for the full-service brokerage activities of Bulletin 26 (1990) ("J.P. Morgan"); Bankers Trust New York Corpo- bank holding companies. See 12 C.F.R. 225.25(b)(15)(ii). ration, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 14. The Partnerships would not register as investment companies 10. See Bankers Trust. under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 11. Among the prudential limitations discussed more fully in Bank- et seq ). Each Partnership would be limited to not more than ers Trust and J.P. Morgan are that Company will not privately place 100 investors. As general partner, Notificants may provide certain open-end investment company securities or securities of investment administrative and advisory services to the partnership, including companies that are advised by Notificants or any of their affiliates. In monitoring the development of the limited partnerships' investments addition, Company will make no general solicitation or general adver- in the portfolio companies, issuing reports to limited partners, admintising for securities it places. istering cash flow, and distributing dividends. 12. Notificants have indicated that Company may purchase, for its 15. See Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736 own account, a portion of the securities that it privately places. (1994) ("Meridian"). Notificants have committed that if Company purchases for its own 16. See Meridian. The Partnerships will not invest in futures conaccount any securities that it privately places, Company will treat all tracts or options on futures contracts on any financial or nonfinancial revenue derived from the placement transaction as bank-ineligible commodity, or knowingly acquire debt securities that are in default at revenue subject to the 10-percent limitation. Company also proposes the time of acquisition, without prior approval from the Federal to act as principal or agent in the resale of privately placed securities Reserve System. In addition, Notificants have committed that they through transactions that would be exempt from registration under the will consolidate the Partnerships with other subsidiaries of Notificant Securities Act of 1933, such as, for example, resales to qualified for purposes of calculating Notificants' capital adequacy whenever institutional buyers pursuant to Rule 144A under the Securities Act of such information is required to be presented to the Board of Gover- 1933. Notificants have committed that, if Company acts as principal nors. In consolidating the capital ratios, Notificants will exclude the with respect to any portion of such an unregistered resale transaction, limited partners' investments and an equal amount of assets from the Company will treat the revenue derived from the entire transaction as numerator and denominator, respectively. part of Company's bank-ineligible revenues subject to the 10-percent 17. Notificants also have committed that the Partnerships will not revenue limitation. control more than 25 percent of the total equity, including subordi- 13. See The Bank of New York Company, Inc., 82 Federal Reserve nated debt, of any issuer without prior Board approval. In furtherance Bulletin 748 (1996). Neither Company nor its affiliates will hold of the commitments, Notificants have committed that they will monithemselves out as making a market in the bank-ineligible securities tor, on a system-wide basis, the holdings of the Partnerships and all that Company buys and sells as riskless principal, or enter quotes for other entities controlled by Notificants. specific bank-ineligible securities in any dealer quotation system in 18. Company also proposes to serve as investment adviser with connection with Company's riskless principal transactions, except that discretionary voting authority for several trusts established for pen- Company and its affiliates may enter bid or ask quotations, or publish sion fund customers that invest in banks and bank holding companies "offering wanted" or "bid wanted" notices on trading systems other ("Bank Trusts"). Notificants must obtain the Board's approval under than NASDAQ or an exchange, if Company or the affiliate does not the BHC Act before Notificants acquire in the aggregate control of enter price quotations on different sides of the market for a particular more than 5 percent of the voting shares of any bank or bank holding security for two business days. In other words, Company or its affiliate company. In this regard, Notificants have committed that, in the event must wait at least two business days after entering a "bid" quote on a that shares held by the Bank Trusts would cause the aggregate security before entering an "ask" quote on the same security and vice holdings of the Bank Trusts, Notificants and any Partnership to exceed versa. Company will not act as riskless principal for registered invest- 5 percent of any class of voting securities of a bank or bank holding ment company securities or for any securities of investment compa- company, Company will irrevocably transfer the voting rights associnies that are advised by Notificants or its affiliates. In addition, ated with the securities held by the Bank Trusts to an unaffiliated because Company proposes to provide riskless principal services in corporate trustee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1997 bullion, bars, rounds, and coins, and platinum and palla- ers24 and certain sophisticated non-institutional commerdium bullion and coins for its own account and for the cial hedger customers.25 account of customers. Notificants also propose that Com- The Board previously has determined that Company's pany trade for its own account in foreign exchange spot, proposed futures-related execution, clearing and advisory forward, futures, options and options on futures transac- activities, including its proposed clearing-only activities, tions, and provide execution and limited advisory services are so closely related to banking as to be proper incidents with respect to such instruments to unaffiliated customers. thereto, provided that the activities are conducted in con- The Board previously has determined that the proposed formity with certain limitations and conditions designed to, precious metals activities are closely related to banking inter alia, ensure that the activities are consistent with safe and permissible for bank holding companies under sec- and sound banking practices and mitigate potential contion 4(c)(8) of the BHC Act.19 The Board also previously flicts of interests.26 Notificants have committed that Comhas approved the proposed foreign exchange-related activ- pany will conduct these additional FCM and advisory ities subject to certain limitations,20 and Notificants have committed that Company will conduct its foreign exchange-related activities in accordance with the limitations established by the Board.21 Additional FCM and CTA Activities — Notificants also propose that Company act as an FCM for, and provide 24. For purposes of determining whether an individual meets the $1 million net worth requirement for an institutional customer in advisory services to, unaffiliated persons in connection Regulation Y, Notificants will consider a parent's net worth to include with the purchase and sale of futures and options on futures accounts of the parent's minor children if the parent has discretionary based on bonds or other debt instruments, certain commod- authority over the account or the selection of the account's investment ities, or stock, bond or commodity indices.22 Company's manager. Furthermore, Notificants will consider a grantor trust to be an institutional customer if: FCM activities would include engaging in execution-only, (i) The grantor is the trustee or fiduciary of the trust with clearing-only and omnibus account activities with respect discretionary authority over the trust's assets, and to futures and options on futures based on financial and (ii) The net worth of the grantor, including grantor trusts over nonfinancial commodities, and providing discretionary which it retains discretionary authority, exceeds $1 million. portfolio management services with respect to futures and 25. Notificants have stated that all non-institutional commercial hedger customers would be engaged, or affiliated with a commercial options on futures on financial and nonfinancial commodienterprise engaged, in producing, manufacturing, processing or merties.23 Company would provide these additional futures- chandising products or providing services related to the commodities related execution-only, clearing-only and discretionary underlying the futures and options on futures contracts in which the portfolio management services only to institutional custom- customer trades. In addition, such customers would not be engaged in executing their own trades on the floors of commodity exchanges. Notificants have committed that Company will: (i) Require its non-institutional commercial hedger customers to state in writing that they would engage in "bona fide hedging transactions" as defined by the CFTC (see 17 C.F.R. 1.3(z)); 19. See The Bessemer Group, Incorporated, 82 Federal Reserve (ii) Establish an initial credit review process to determine whether Bulletin 569 (1996) (palladium coin and bullion); Swiss Bank Corpo- the proposed hedging activities of a non-institutional commercial ration, 81 Federal Reserve Bulletin 185 (1995) (platinum coin and hedger customer were appropriate in light of the customer's net bullion); Midland Bank PLC, 76 Federal Reserve Bulletin 860 (1990) worth and business activities; (gold and silver bullion and coin). Company may engage in metal (iii) Not permit a non-institutional commercial hedger customer assaying, storage and transport activities as an incident to its precious to trade in any commodities other than those that the customer metal trading activities. See Westpac Banking Corporation, 73 Fed- would trade to hedge risks that arise from its commercial activieral Reserve Bulletin 61 (1987). ties; and 20. The Long-Term Credit Bank of Japan, Limited, 79 Federal (iv) Establish a system to detect any unauthorized trading activity Reserve Bulletin 347 (1993) ("LTCB"). by a non-institutional commercial hedger customer. See Societe 21. See LTCB. Company's foreign exchange-related advisory ser- Generale, 81 Federal Reserve Bulletin 880 (1995) ("Societe vices will be limited to discussions regarding current market condi- Generale"). tions, and will not be provided on a separate fee basis. In addition, 26. See Northern Trust (clearing-only services for financial futures Company will not recommend that a customer purchase or sell partic- and maintenance of omnibus accounts); Bank of Montreal (execution ular foreign exchange instruments or contracts. and clearing and clearing-only services for nonfinancial futures); 1994 22. Company proposes to provide FCM and related advisory ser- J.P. Morgan Order (execution and advisory services on nonfinancial vices with respect to certain futures contracts and options on futures futures); Banque Nationale de Paris, 81 Federal Reserve Bulletin 386 contracts that are based on indices that track estimated losses to the (1995) ("BNP") (discretionary portfolio management services for insurance industry from catastrophic events. Notificants have stated financial futures); CS Holding, 81 Federal Reserve Bulletin 803 that Company's execution and advisory services with respect to such (1995) ("CS Holding") (discretionary portfolio management services contracts will not require Company to register as an insurance agent or for non-financial futures); Societe Generale (financial and nonfinanbroker in any state. cial futures execution, clearing-only, and advisory services for non- 23. Notificants have committed that Company would provide these institutional commercial hedger customers). Because non-institutional services in accordance with the limitations previously established by commercial hedger customers have special expertise in commoditythe Board. See Northern Trust Corporation, 79 Federal Reserve related transactions, the Board previously has noted that such custom- Bulletin 723 (1993) ("Northern Trust")-, Bank of Montreal, 79 Fed- ers are capable of detecting conflicts of interest or advice that is eral Reserve Bulletin 1049 (1993) ("Bank of Montreal"); and J.P. motivated by the bank holding company's self-interest, and are un- Morgan & Co. Incorporated, 80 Federal Reserve Bulletin 151 (1994) likely to rely unduly on commodity-related investment advice pro- ("1994 J.P. Morgan Order"). vided by a bank holding company. See Societe Generale. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 activities in accordance with the limitations established by have the ability to reject an executed trade presented to it the Board in previous cases.27 for clearance, even where the company believes the trade Notificants also propose that Company provide clearing- presents unacceptable risks in light of market conditions or only services to, and serve as the primary clearing firm for, the traders' financial position. The Board also noted that, at certain professional floor traders on the KCBOT and MGE the time of the application, the applicants lacked appropriwith respect to the futures contracts and options on futures ate operational systems to track and manage the intra-day contracts traded on such exchanges.28 The Board previ- risks arising from the trading activities of the floor traders. ously has determined that providing clearing services with This lack of a mechanism to monitor intra-day trading respect to exchange-traded securities, options, futures, and activities presented the possibility that a professional floor options on futures contracts is closely related to banking trader could incur substantial losses through the trading of within the meaning of section 4(c)(8) of the BHC Act.29 In options or futures contracts, which the applicants would be 1991, however, the Board denied an application by Notifi- obligated to clear and guarantee, before the applicants cants to engage de novo in providing the proposed services could act to mitigate their credit risk exposure. to market makers and other professional floor traders deal- Since 1991, the Board and bank holding companies have ing for their own accounts.30 The Board's decision in the gained substantial experience with the conduct, methods, 1991 ABN AMRO Order was based on the Board's conclu- procedures, and regulation of clearing-only activities. Also, sion that, at the time of the application, the applicants had the Board has authorized bank holding companies to pronot sufficiently demonstrated that the potential public bene- vide clearing-only services with respect to futures contracts fit of the proposed activity outweighed the financial risks and options on futures contracts for customers other than associated with serving as the primary clearing firm for professional floor traders, subject to certain conditions professional floor traders.31 designed to assure that the bank holding companies have In the 1991 ABN AMRO Order, the Board recognized the ability to manage the attendant financial risks.32 In that a company serving as the primary clearing firm for particular, the bank holding companies agreed to provide professional floor traders may be exposed to significant the clearing-only services pursuant to "give-up" agreefinancial risks because the company generally would not ments that provide the bank holding companies the right to refuse to accept for clearance any customer trade that the bank holding company deems unsuitable in light of market 27. Company also proposes to provide clearing-only services to conditions or a customer's financial situation or objecunaffiliated customers with respect to options on securities. Options tive.33 In addition, the bank holding companies agreed to on securities are treated as securities for purposes of the federal establish procedures to monitor the intra-day trading activsecurities laws, and the Board has treated options on securities as securities for purposes of the Glass-Steagall Act. See 15 U.S.C. ities and risk exposure of their clearing-only customers. § 77b(l), § 78c(a)(10); Swiss Bank Corporation, 82 Federal Reserve The facts of record in this case indicate that TCC has, Bulletin 685 (1996). The Board previously has determined that providand Company will have, sufficient risk management poliing clearing services with respect to exchange-traded securities, options, futures, and options on futures contracts is closely related to cies, procedures, and systems to permit Notificants and banking within the meaning of section 4(c)(8) of the BHC Act. See Company to adequately monitor and control the risks, Stichting Prioriteit ABN AMRO Holding, 11 Federal Reserve Bulletin including the intra-day risks, associated with Company's 189 (1991) ("1991 AMRO Order"); BNP; Northern Trust. Company proposal to serve as the primary clearing firm for a limited will provide clearing-only services with respect to options on securinumber of professional floor traders on the KCBOT and ties only to institutional customers and pursuant to agreements that permit Company the right to review and reject any trade presented to MGE.34 Specifically, TCC establishes trading, credit, marit for clearance for any reason. These commitments are similar to gin, and exposure limits for each professional floor trader those relied on by the Board in previous cases in which the Board for which it serves as the primary clearing firm.35 Adherdetermined that providing clearing-only services with respect to ence to these limits is monitored on an intra-day basis by exchange-traded futures and options on futures is a proper incident to experienced TCC personnel who are physically present on banking within the meaning of section 4(c)(8) of the BHC Act. See Northern Trust; Bank of Montreal. 28. ChiCorp currently serves as the primary clearing firm for 17 professional floor traders on the KCBOT and 34 professional floor traders on the MGE. Because the number of professional floor traders 32. See Northern Trust; Bank of Montreal. on these exchanges may vary over time depending on trading volume 33. The Board also noted that the rules of the applicable exchanges and other factors, Notificants have requested authority for Company to provided the bank holding companies with sufficient time to review an act as the primary clearing firm for up to 20 professional floor traders executed trade before determining whether to accept the trade for on the MGE and 40 professional floor traders on the MGE. clearance. 29. See 1991 ABN AMRO Order; BNP; and Northern Trust. 34. The Board received comments supporting Notificants' proposal 30. See 1991 ABN AMRO Order. to provide clearing-only activities for professional floor traders from 31. A primary clearing firm is obligated to accept and clear all The Options Clearing Corporation, the Board of Trade Clearing trades submitted by a professional floor trader, even if the trade was Corporation, and the Chicago Board of Trade ("Commenters"). The initially presented to, and rejected by, another clearing firm. Once a Commenters asserted that approval of the proposal would increase primary clearing firm clears a trade for a professional floor trader, the competition in the futures markets and would not result in adverse firm becomes obligated to settle the trade in the event of a default by effects in light of the risk management systems that are utilized by the professional floor trader. Particular exchanges may refer to compa- major futures exchanges and their clearing members. nies serving as a primary clearing firm by different titles. For example, 35. Notificants have stated that Company will adopt the risk manthe Chicago Mercantile Exchange refers to firms providing primary agement policies, procedures, and systems used by TCC in connection clearing services as qualifying clearing firms. with its primary clearing activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1997 the floor of the KCBOT and MGE.36 These TCC personnel Minneapolis to monitor and control the financial risks visually monitor the trading activities of floor traders on associated with TCC's primary clearing activities on the the exchanges and review trades submitted by the floor KCBOT and MGE. Based on this review and other facts of traders for clearance.37 If a TCC employee determines that record, the Board concludes that TCC has the managerial a floor trader is exceeding the limits established by TCC, or and operational resources and systems adequately to moniis otherwise engaged in questionable trading activities, the tor and control the financial risks arising from its role as employee has the ability to limit or halt the floor trader's primary clearing firm on the KCBOT and MGE. activities, require the floor trader to post additional margin, The record in this case also indicates that Notificants' partially or entirely liquidate the floor trader's positions, or proposal to assume the clearing-only activities of ChiCorp immediately revoke the floor traders membership on the on the KCBOT and MGE, within the framework discussed exchange.38 The managers of TCC's operations on the in this order, can reasonably be expected to produce public KCBOT and MGE also personally guarantee TCC against benefits that outweigh possible adverse effects. The Board any losses that TCC may incur from serving as the primary notes that the KCBOT and MGE are small exchanges with clearing firm for floor traders on the exchanges, which relatively low transaction volumes, and that ChiCorp provides such personnel with an incentive to closely moni- serves as the primary clearing firm for a significant percenttor the trading activities of the floor traders. Notificants age of the professional floor traders on such exchanges. have stated that Company will install an on-line risk man- Notificants' proposal would permit Company to continue agement system that will provide personnel in Chicago, providing primary clearing services to the professional Kansas City, and Minneapolis with intra-day data on the floor traders on the KCBOT and MGE that are currently trading activities of professional floor traders on the customers of TCC. KCBOT and MGE, and that will permit such personnel to In light of all the facts of record, including the limited analyze Company's exposure to such trading activities on nature of Company's proposed clearing-only activities for an intra-day basis. professional floor traders, the commitments provided by The Board notes that the type of risk management sys- Notificants, and the operational and managerial systems tems necessary to appropriately manage the risks arising that Company will have in place to monitor and control the from a particular activity necessarily depends on the scope risks arising from the proposed activities, the Board has and nature of the proposed activity. Company proposes to concluded that the credit and other risk considerations serve as the primary clearing firm for a limited number of associated with the proposed clearing-only activities for professional floor traders on two exchanges. These ex- professional floor traders on the KCBOT and the MGE are changes have relatively small trading areas and volumes, consistent with approval of this notice and that, therefore, which permits personnel on the floors of the exchanges to the proposed activity is a proper incident to banking within monitor trading activity on the exchanges. The Federal the meaning of section 4(c)(8) of the BHC Act.39 Reserve Bank of Chicago ("Reserve Bank") conducted an Brokerage Services With Respect to Forward Contracts on-site review of the operational and managerial infrastruc- Based on Certain Financial and Nonfinancial Commoditure maintained by TCC in Chicago, Kansas City, and ties — Notificants propose that Company act as broker with respect to forward contracts based on certain financial and nonfinancial commodities. In this capacity, Company would assist customers in arranging forward contracts with 36. TCC has four risk management employees who monitor trading on the KCBOT, and three risk management employees who monitor third parties pursuant to which the customers would make trading at the MGE. (or receive) delivery of financial and nonfinancial commod- 37. Trades on the KCBOT and MGE are not electronically submit- ities on a future date.40 Company would act as a broker ted to the clearing firm or the exchange. Instead, trading cards for each only with respect to forward contracts that are based on trade are submitted by each professional floor trader to its clearing firm, which enters the trade into the exchange's clearing system. Both the KCBOT and the MGE require that TCC collect the trading cards from each floor trader at least once during each half hour period, 39. The Board notes that it has requested comment on whether the thereby providing TCC personnel with an opportunity to review the list of permissible activities in Regulation Y should be amended to intra-day trading activities of floor traders. KCBOT rules also require permit bank holding companies to provide clearing-only services to that TCC enter all collected trades into the exchange's on-line clearing professional floor traders. See 61 Federal Register 47,242, 47,254 system within 45 minutes of the end of the half-hour period during (1996) ("Regulation Y Proposal"). The Board will consider whether which the trades were collected. The KCBOT's on-line clearing to amend Regulation Y to permit bank holding companies in general system also permits TCC to monitor the trading activities of floor to provide clearing-only services to professional floor traders at the traders, both individually and in the aggregate, on an intra-day basis, time it considers the proposed amendments to Regulation Y. and allows TCC to identify any potentially unmatched trades. Al- The Board also has proposed in its revision of Regulation Y to though the MGE does not operate an on-line clearing system, TCC modify the conditions that govern certain other activities that TCC personnel maintain tally sheets that are updated every 30 minutes and currently conducts without restriction. Notificants have committed that reflect all trades submitted by each professional floor trader that, during the one-year period following consummation of the prothroughout the day. posal, Company will engage in these activities in accordance with the 38. TCC risk management personnel in Chicago also electronically limitations set forth in the Regulation Y Proposal and, thereafter, will receive trade information four times a day from the KCBOT and at the conduct these activities subject to the conditions adopted by the Board end of the day from the MGE. Reports based on such data are in Regulation Y, as then in effect. prepared by risk management personnel and reviewed daily by officers 40. Because Company will act only as a broker, Company will not in Chicago, Kansas City, and Minneapolis. itself be required to take physical delivery of the nonfinancial com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 those financial and nonfinancial commodities that also determination of the capitalization of Company is based on serve as the basis for an exchange-traded futures contract.41 all the facts of record, including Notificants' projections of Bank holding companies are permitted to act as a broker the volume of Company's underwriting and dealing activiin the execution and clearance of futures contracts and ties in bank-ineligible securities. options on futures contracts based on financial and nonfi- In connection with this proposal, the Reserve Bank has nancial commodities 42 As noted above, the forward con- reviewed the operational and managerial infrastructure of tracts that Company proposes to broker would be based on Company, including its computer, audit, and accounting the same financial and nonfinancial commodities that un- systems and internal risk management procedures and conderlie futures contracts that bank holding companies are trols, with respect to the proposed underwriting and dealpermitted to broker as an FCM. Bank holding companies ing in debt and equity securities, and has determined that also are permitted to broker forward contracts on foreign Company has established an adequate operational and manexchange and arrange swap transactions that are based on agerial infrastructure to ensure compliance with the renonfinancial commodities or indices of nonfinancial com- quirements of the Section 20 Orders. The Reserve Bank modities 43 Accordingly, the Board has concluded that act- also has reviewed the operational and managerial infraing as a broker for forward contracts based on those structure of ChiCorp with respect to its provision of financial and nonfinancial commodities that underlie an clearing-only services to locals on the KCBOT and MGE, exchange-traded futures contract is a permissible activity including the policies, procedures, and systems that for bank holding companies under section 4(c)(8) of the ChiCorp has, and that Company will have, in place to BHC Act.44 monitor and control the financial risks associated with such activities. On the basis of the Reserve Bank's review, and all the facts of record, the Board concludes that financial Other Considerations and managerial considerations are consistent with approval of this proposal.48 In order to approve this notice, the Board must determine that the activities are a proper incident to banking, that is, Consummation of the proposal can reasonably be exthat the performance of the proposed activities "can rea- pected to provide added convenience and services to Notisonably be expected to produce benefits to the public . . . ficants' customers by offering them an expanded range of that outweigh possible adverse effects, such as undue con- products and services. Notificants also have stated that centration of resources, decreased or unfair competition, consummation of the proposal would give ChiCorp access conflicts of interest, or unsound banking practices."45 As to Notificants' worldwide customer base and contacts and part of its review of these factors, the Board considers the would permit ChiCorp and Company to compete more financial and managerial resources of the notificant and its effectively in the market for securities- and futures-related subsidiaries and the effect the transaction would have on services. There are numerous providers of the proposed such resources.46 The Board notes that Notificants' capital nonbanking services and, therefore, consummation of the ratios satisfy applicable risk-based standards under the proposal would not significantly decrease competition in Basle Accord, and are considered equivalent to the capital any relevant market. The Board also believes that the levels that would be required of a United States banking conduct of the proposed activities within the framework organization. The Board also has reviewed the capitaliza- established in this order, prior orders, and Regulation Y is tion of Notificants and Company in accordance with the not likely to result in significantly adverse effects, such as standards set forth in the Section 20 Orders and finds the undue concentration of resources, decreased or unfair comcapitalization of each to be consistent with approval.47 The petition, or unsound banking practices. Accordingly, and for the reasons set forth in this order and in the Section 20 Orders, the Board has concluded that Notificants' proposal to engage in the proposed activities is consistent with the modities underlying the forward contracts that it arranges under any Glass-Steagall Act, and that the proposed activities are so circumstances. 41. Exchange-traded futures contracts may be based on a wide variety of commodities, including precious metals, oil, cocoa or wool. Banking regulators have not expressly permitted banks to engage in the proposed activity. See OCC Interp. Ltr. No. 494, reprinted in 48. The Board received a comment from an anonymous source [1989-1990 Transfer Binder] Fed. Banking L. Rep. (CC) at U 83,083 contending that ChiCorp has no minorities or women in senior man- (Dec. 20, 1989). agement positions and requesting that the Board deny the proposal on 42. See Bank of Montreal, 79 Federal Reserve Bulletin 1049 (1993). this basis. The Equal Employment Opportunity Commission 43. See 12 C.F.R. 225.25(b)(17); Swiss Bank Corporation, 81 Fed- ("EEOC") has jurisdiction to investigate and determine whether eral Reserve Bulletin 185 (1995). companies are in compliance with federal equal employment laws. 44. See Bank of Montreal, 79 Federal Reserve Bulletin 1049 (1993); The Board has noted that unsubstantiated allegations of improper Swiss Bank Corporation, 81 Federal Reserve Bulletin 185 (1995). actions under a statute administered by another federal agency are 45. 12 U.S.C. § 1843(c)(8). beyond the scope of the Board's review under the factors specified in 46. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, the BHC Act. On the other hand, substantiated improper actions may 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, be considered by the Board in light of all the facts of record of an 73 Federal Reserve Bulletin 155 (1987). application under the factors in the BHC Act or in the context of the 47. The Board notes that, as a registered broker-dealer, Company Board's general supervisory authority over bank holding companies. must comply with the SEC's net capital rule. See 15 C.F.R. See Norwest Corporation, 82 Federal Reserve Bulletin 580, 582 240.15c3-l. (1996). The Board has referred the comment to the EEOC. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1997 closely related to banking as to be proper incidents thereto Unidanmark A/S within the meaning of section 4(c)(8) of the BHC Act, Unibank A/S provided that Notificants limit Company's activities as Copenhagen, Denmark specified in this order and the Section 20 Orders, as modified by the Modification Orders.49 Order Approving Notice to Engage in Nonbanking On the basis of all the facts of record, the Board has Activities determined to, and hereby does, approve this notice subject to all the terms and conditions discussed in this order and in the Section 20 Orders, as modified by the Modification Unidanmark A/S and its wholly owned subsidiary Unibank Orders. The Board's approval of this proposal extends only A/S, both of Copenhagen, Denmark (collectively, "Notifito activities conducted within the limitations of those or- cants"), foreign banking organizations subject to the providers and this order, including the Board's reservation of sions of the Bank Holding Company Act ("BHC Act"), authority to establish additional limitations to ensure that have requested the Board's approval under section 4(c)(8) Company's activities are consistent with safety and sound- of the BHC Act (12 U.S.C. § 1843(c)(8)) and secness, avoiding conflicts of interests, and other relevant tion 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) considerations under the BHC Act. Underwriting and deal- to retain their ownership of 100 percent of the voting ing in any manner other than as approved in this order and shares of Aros Securities Inc., New York, New York the Section 20 Orders, as modified by the Modification ("Aros"),1 and thereby engage in the following activities: Orders, is not authorized for Company. (1) Providing investment advisory services pursuant to The Board's determination also is subject to all the terms 12 C.F.R. 225.25(b)(4); and conditions set forth in Regulation Y, including those in (2) Providing discount and full-service securities brokersections 225.7 and 225.23(g) (12 C.F.R. 225.7 and age services pursuant to 12 C.F.R. 225.25(b)(15); and 225.23(g)), and to the Board's authority to require modifi- (3) Acting as agent in the private placement of all types cation or termination of the activities of a bank holding of securities, and buying and selling all types of securicompany or any of its subsidiaries as the Board finds ties on the order of customers as a "riskless principal" necessary to assure compliance with and to prevent eva- through Company.2 sion of the provisions of the BHC Act and the Board's Aros is registered as a broker-dealer with the Securities regulations and orders issued thereunder. The Board's deci- and Exchange Commission ("SEC") under the Securities sion is specifically conditioned on Notificants' compliance Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and is a with all the commitments made in connection with this member of the National Association of Securities Dealers notice, including the commitments discussed in this order ("NASD"). Accordingly, Aros is subject to the recordand the conditions set forth in the Board regulations and keeping and reporting obligations, fiduciary standards, and orders noted above. The commitments and conditions shall other requirements of the Securities Exchange Act of 1934, be deemed to be conditions imposed in writing by the the SEC and the NASD. Board in connection with its findings and decisions, and Notice of this proposal, affording interested persons an may be enforced in proceedings under applicable law. opportunity to submit comments, has been published This transaction shall not be consummated later than (61 Federal Register 56,961 (1996)). The time for filing three months after the effective date of this order unless comments has expired, and the Board has considered the such period is extended for good cause by the Board or the notice and all comments received in light of the factors set Reserve Bank, acting pursuant to delegated authority. forth in section 4(c)(8) of the BHC Act. By order of the Board of Governors, effective Decem- Unidanmark A/S, with total consolidated assets of apber 11, 1996. proximately $45.9 billion, is the second largest banking organization in Denmark.3 In the United States, Uni- Voting for this action: Chairman Greenspan and Governors Kelley, bank A/S operates a branch in New York, New York. Phillips, Yellen, and Meyer. Absent and not voting: Vice Chair Rivlin and Governor Lindsey. JENNIFER J. JOHNSON Deputy Secretary of the Board 1. Notificants previously received approval under section 4(c)(9) of 49. ChiCorp's subsidiary, ChiCorp Insurance Agency, engages in the BHC Act to retain temporarily their ownership interest in Aros. the sale as agent of insurance products, including annuities, in Illinois. See Letter dated August 14, 1996, from Jennifer J. Johnson, Deputy Notificants propose to transfer these activities to a subsidiary of Secretary of the Board, to Robert L. Tortoriello, Esq. ("4(c)(9) Ap- Notificants' thrift subsidiary, LaSalle Bank, F.S.B. ("LaSalle Bank"), proval Letter"). Chicago, Illinois, upon consummation of this proposal. The Board has 2. Aros also engages in certain securities underwriting and dealing determined that LaSalle Bank is a Qualified Savings Association activities. Pursuant to the 4(c)(9) Approval Letter, Aros must disconwithin the meaning of section 4(i)(3) of the BHC Act and is, therefore, tinue such activities within six months of the date on which Notifientitled to engage in these types of insurance agency activities in cants acquired control of Aros. Illinois. See Stichting Prioriteit ABN AMRO Holding, 78 Federal 3. Asset and ranking data are as of December 31, 1995, and use Reserve Bulletin 296 (1992). exchange rates then in effect. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 Activities Approved by Regulation do not constitute underwriting and dealing in securities for purposes of section 20 of the Glass-Steagall Act, and that The Board previously has determined by regulation that revenue derived from these activities is not subject to the the proposed investment advisory and securities brokerage 10-percent revenue limitation on bank-ineligible securities activities are closely related to banking for purposes of underwriting and dealing.8 section 4(c)(8) of the BHC Act.4 Notificants propose to Notificants have committed that Aros will conduct its conduct the activities in accordance with the Board's regu- private placement activities using the same methods and lations and prior Board decisions relating to the activities. procedures and subject to the same prudential limitations as those established by the Board in Bankers Trust and J.P. Private Placement and "Riskless Principal" Activities Morgan,9 including the comprehensive framework of restrictions imposed by the Board in connection with under- Private placement involves the placement of new issues of writing and dealing in bank-ineligible securities, which securities with a limited number of sophisticated purchas- were designed to avoid potential conflicts of interests, ers in a nonpublic offering. A financial intermediary in a unsound banking practices, and other adverse effects. Notiprivate placement transaction acts solely as an agent of the ficants also have committed that Aros will conduct its issuer in soliciting purchasers and does not purchase the riskless principal activities subject to the limitations previsecurities and attempt to resell them. Securities that are ously established by the Board.10 privately placed are not subject to the registration requirements of the Securities Act of 1933, and are offered only to Financial Factors, Managerial Resources, and Other financially sophisticated institutions and individuals and Considerations not to the public. Aros will not privately place registered securities and will only place securities with customers that Under the proper incident to banking standard of section qualify as accredited investors. 4(c)(8) of the BHC Act, in order to approve this notice, the "Riskless principal" is the term used in the securities Board must determine that the performance of the probusiness to refer to a transaction in which a broker-dealer, posed activities by Notificants can reasonably be expected after receiving an order to buy (or sell) a security for a to produce public benefits that would outweigh possible customer, purchases (or sells) the security for its own adverse effects. As part of the Board's evaluation of these account to offset a contemporaneous sale to (or purchase factors, the Board considers the financial and managerial from) the customer.5 Riskless principal transactions are resources of the notificants and their subsidiaries and the understood in the industry to include only transactions in effect the transaction would have on such resources.11 The the secondary market. Thus, Aros would not act as a riskless principal in selling bank-ineligible securities at the order of a customer that is the issuer of the securities to be sold, or in any transaction where Aros has a contractual 8. See Bankers Trust. agreement to place the securities as agent of the issuer.6 9. Among the prudential limitations discussed more fully in Bankers Aros also would not act as a riskless principal in any Trust and J.P. Morgan are that Aros will not privately place open-end transaction involving a bank-ineligible security for which it investment company securities or securities of investment companies that are advised by Notificants or any of their affiliates. In addition, or an affiliate makes a market. Aros will make no general solicitation or general advertising for The Board has determined that, subject to the limitations securities it places. established by the Board in prior orders, the proposed 10. See The Bank of New York Company, Inc., 82 Federal Reserve Bulletin 748 (1996). Neither Aros nor its affiliates will hold themprivate placement and riskless principal activities are so selves out as making a market in the bank-ineligible securities that closely related to banking as to be a proper incident thereto Aros buys and sells as riskless principal, or enter quotes for specific within the meaning of section 4(c)(8) of the BHC Act.7 bank-ineligible securities in any dealer quotation system in connection The Board also has determined that acting as agent in the with Aros' riskless principal transactions, except that Aros and its private placement of securities, and purchasing and selling affiliates may enter bid or ask quotations, or publish "offering wanted" or "bid wanted" notices on trading systems other than NASDAQ securities on the order of investors as a riskless principal, or an exchange, if Aros or the affiliate does not enter price quotations on different sides of the market for a particular security for two business days. In other words, Aros or its affiliate must wait at least two business days after entering a "bid" quote on a security before entering an "ask" quote on the same security and vice versa. Aros 4. See 12 C.F.R. 225.25(b)(4) and (15). will not act as riskless principal for registered investment company 5. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)). securities or for any securities of investment companies that are The Board notes that Aros, as a registered broker-dealer, must conduct advised by Notificants or their affiliates. In addition, because Aros its riskless principal activities in accordance with the customer disclo- proposes to provide riskless principal services in combination with sure and other requirements of the federal securities laws. investment advisory services, Aros will conduct its riskless principal 6. "Bank-ineligible securities" refers to securities that state member activities in accordance with the limitations established by the Board banks are not authorized to underwrite or deal in under 12 U.S.C. for the full-service brokerage activities of bank holding companies. §§ 335 and 24(7). See 12 C.F.R. 225.25(b)(15)(ii). 7. See J.P. Morgan & Company Incorporated, 76 Federal Reserve 11. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, Bulletin 26 (1990) ("J.P. Morgan"); Bankers Trust New York Corpo- 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, ration, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 73 Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1997 Board notes that Notificants' capital ratios satisfy applica- Orders Issued Under Sections 3 and 4 of the Bank ble risk-based standards under the Basle Accord, and are Holding Company Act considered equivalent to the capital levels that would be required of a United States banking organization. Based on NationsBank Corporation all the facts of record, the Board concludes that financial Charlotte, North Carolina and managerial factors are consistent with approval of the proposal. There is no evidence in the record indicating that NB Holdings Corporation consummation of this proposal is likely to result in signifi- Charlotte, North Carolina cantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of Order Approving the Merger of Bank Holding interest, or unsound banking practices. The Board expects, Companies moreover, that consummation of the proposal would provide added convenience to Notificants' customers and NationsBank Corporation and NB Holdings Corporation, would increase the level of competition among existing both of Charlotte, North Carolina (collectively, "Naproviders of these services. The Board has determined, tionsBank"), bank holding companies within the meaning therefore, that the performance of the proposed activities of the Bank Holding Company Act ("BHC Act"), have by Notificants can reasonably be expected to produce pub- filed applications and notices under sections 3 and 4(c)(8) lic benefits that outweigh possible adverse effects under the of the BHC Act (12 U.S.C. §§ 1842 and 1843(c)(8)) to proper incident to banking standard of section 4(c)(8) of acquire the banking and nonbanking subsidiaries of Boatthe BHC Act. men's Bancshares, Inc., St. Louis, Missouri ("Boat- Based on the foregoing and all the facts of record, men's").1 NationsBank also has filed a notice under secincluding the commitments discussed in this order and all tions 211.4 and 211.5 of Regulation K (12 C.F.R. 211.4 other commitments and representations made by Notifi- and 211.5) to acquire Boatmen's Foreign Investment Comcants in connection with this notice, and subject to the pany, an agreement corporation under section 25 of the terms and conditions set forth in this order, the Board has Federal Reserve Act (12 U.S.C. §§ 601-604a), also of determined that the notice should be, and hereby is, ap- St. Louis, Missouri. Notice of the proposal, affording interproved. The Board's determination is subject to all the ested persons an opportunity to submit comments, has been conditions set forth in Regulation Y, including those in published (61 Federal Register 53,375 (1996)). The time sections 225.7 and 225.23(g) of Regulation Y (12 C.F.R. for filing comments has expired, and the Board has consid- 225.7 and 225.23(g)), and to the Board's authority to ered the applications and notices and all comments rerequire modification or termination of the activities of a ceived in light of the factors set forth in the BHC Act, the bank holding company or any of its subsidiaries as the Federal Reserve Act, and regulations promulgated thereun- Board finds necessary to assure compliance with, and to der. prevent evasion of, the provisions of the BHC Act and the NationsBank, with total consolidated assets of approxi- Board's regulations and orders issued thereunder. The mately $192.3 billion, is the fifth largest commercial bank- Board's decision is specifically conditioned on Notificants' ing organization in the United States, controlling approxicompliance with the commitments and representations mately 4.6 percent of total banking assets of insured made in connection with this notice, including the commit- commercial banks ("total banking assets").2 Its subsidiary ments and conditions discussed in this order. The commit- banks operate in North Carolina, Delaware, the District of ments, representations, and conditions relied on in reaching Columbia, Florida, Georgia, Kentucky, Maryland, South this decision shall be deemed to be conditions imposed in Carolina, Tennessee, Texas, and Virginia. NationsBank writing by the Board in connection with its findings and also engages in a number of permissible nonbanking activdecision and may be enforced in proceedings under appli- ities nationwide. Boatmen's, with total consolidated assets cable law. of approximately $40.7 billion, is the 24th largest banking This transaction shall not be consummated later than organization in the United States. Boatmen's, which operthree months after the effective date of this order, unless ates subsidiary banks in Missouri, Arkansas, Illinois, Iowa, such period is extended for good cause by the Board or the Kansas, New Mexico, Oklahoma, Tennessee, and Texas, Federal Reserve Bank of New York, acting pursuant to delegated authority. By order of the Board of Governors, effective December 16, 1996. 1. Boatmen's would merge with and into NB Holding Corporation, a wholly owned subsidiary of NationsBank, with NB Holding as the surviving corporation. Boatmen's subsidiary banks are listed in Ap- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and pendix A, and Boatmen's nonbank subsidiaries are listed in Appen- Governors Kelley, Lindsey, Phillips, Yellen, and Meyer. dix B. NationsBank also has requested the Board's approval for an option to purchase up to 19.9 percent of the voting shares of Boatmen's if certain events occur. The option would expire on consummation of the proposal. JENNIFER J. JOHNSON 2. State asset and banking data are as of June 1995, and consoli- Deputy Secretary of the Boarddated asset data are as of June 30, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 controls approximately 1.1 percent of total banking assets Competitive Considerations in the United States. After consummation of the proposal, NationsBank Section 3 of the BHC Act prohibits the Board from approvwould become the fourth largest commercial banking orga- ing any proposal that would result in a monopoly, or that nization in the United States, with total consolidated assets would substantially lessen competition for banking serof approximately $233 billion, and would control approxi- vices in any relevant part of the country unless the Board mately 5.7 percent of total banking assets in the United finds that the anticompetitive effects are outweighed in the States. NationsBank would also control 5 percent of the public interest by a proposal's effect on the convenience total deposits in banks and savings associations insured by and needs of the community. NationsBank and Boatmen's the Federal Deposit Insurance Corporation ("FDIC"). compete directly in three banking markets in Tennessee (Lawrence County, Memphis and Nashville) and in two Interstate Analysis banking markets in Texas (El Paso and Austin).6 The Board has carefully reviewed the competitive effects of the Section 3(d) of the BHC Act, as amended by Section 101 proposal in these banking markets in light of all the facts of of the Riegle-Neal Interstate Banking and Branching Effi- record, including the number of competitors that would ciency Act of 1994, ("Riegle-Neal Act") allows the Board remain in the markets, the characteristics of the markets, to approve an application by a bank holding company to the projected increase in the concentration of total deposits acquire control of a bank located in a state other than the in depository institutions7 in the markets ("market deposhome state of such bank holding company, if certain condi- its") as measured by the Herfindahl-Hirschman Index tions are met. For purposes of the BHC Act, NationsBank's ("HHI") under the Department of Justice Merger Guidehome state is North Carolina.3 As noted above, Boatmen's lines ("DOJ Guidelines"),8 and commitments made by controls banks in Missouri, Arkansas, Illinois, Iowa, Kan- NationsBank to divest certain branches. In evaluating the sas, New Mexico, Oklahoma, Tennessee, and Texas. The competitive factors in this case, the Board also has considconditions for an interstate acquisition enumerated in sec- ered carefully comments from the Coalition that assert that tion 3(d) are met in this case.4 In view of all the facts of the proposal would have a significantly adverse effect on record, the Board is permitted to approve this proposal competition in the El Paso banking market. under section 3(d) of the BHC Act.5 Consummation of the proposal would not exceed the threshold levels of market concentration, as measured by the HHI, in the Memphis, Nashville, and Austin banking 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding markets.9 In order to mitigate the potential anticompetitive company's home state is that state in which the operations of the bank effects of the proposal in the Lawrence County and El Paso holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 4. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). ("OCC") under section 30 of the National Bank Act and the OCC has Comments from Inner City Press/Community on the Move, the Mid- appealed the court's decision. NationsBank will abide by the final South Peace and Justice Center of Memphis, Tennessee, and the disposition of the matter by the courts. Statewide New Mexico Alliance (collectively, the "Coalition"), main- 6. The banking markets are described in Appendix C. tain that the proposal does not meet the conditions in section 3(d) 7. In this context, depository institutions include commercial banks, because NationsBank is not adequately managed and because savings banks, and savings associations. Market data used for the NationsBank would acquire a percentage of the insured deposits in table in Appendix C are as of June 30, 1995. Market concentration New Mexico and Missouri that exceed state law limits. Based on all calculations include deposits of thrift institutions at 50 percent. The the facts of record, and for the reasons discussed in the order, the Board has previously indicated that thrift institutions have become, or Board concludes that NationsBank is adequately managed and ade- have the potential to become, significant competitors of commercial quately capitalized. In addition, on consummation of the proposal, banks. See Midwest Financial Group, 75 Federal Reserve Bulletin NationsBank and its affiliates would control less than 10 percent of the 386 (1989); National City Corporation, 70 Federal Reserve Bulletin total amount of deposits of insured depository institutions in the 743 (1984). Thus, the Board has regularly included thrift deposits in United States, and less than 30 percent of the total amount of deposits the calculation of market concentration on a 50-percent weighted of insured depository institutions in any state in which Boatmen's basis. See e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 bank subsidiaries are currently located, including New Mexico, which (1991). imposes a 40-percent deposit limitation. The Missouri Commissioner 8. Under the revised DOJ Guidelines, 49 Federal Register 26,823 of Finance has confirmed that the deposit limitation in Missouri law (June 29, 1984), a market in which the post-merger HHI is less than does not apply to an initial acquisition by an out-of-state banking 1000 is considered unconcentrated, and a market in which the postorganization and has approved the transaction. All the Boatmen's merger HHI is between 1000 and 1800 is considered moderately banks to be acquired by NationsBank also would have been in concentrated. The Justice Department has informed the Board that a existence and have continuously operated for at least the minimum bank merger or acquisition generally will not be challenged (in the period of time required under applicable state law. All other require- absence of other factors indicating anticompetitive effects) unless the ments of section 3(d) of the BHC Act would be met on consummation post-merger HHI is at least 1800 and the merger increases the HHI by of the proposal. more than 200 points. The Justice Department has stated that the 5. The Coalition also notes that a federal court has recently invali- higher than normal HHI thresholds for screening bank mergers for dated the relocation of the main office of a NationsBank's subsidiary anticompetitive effects implicitly recognize the competitive effect of bank in Texas into New Mexico because the bank retained a branch at limited-purpose lenders and other non-depository financial instituits former Texas location. Ghiglieri v. Sun World, N.A. and Eugene tions. Ludwig, No. EP 96 CA 324 (W.D. Tex. 1996). The relocation had 9. The HHI would remain unchanged at a level of 1468 in the been approved by the Office of the Comptroller of the Currency Nashville banking market, increase 23 points to 1689 in the Memphis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • February 1997 banking markets, NationsBank has committed to divest all Other Factors under the BHC Act the Boatmen's branches in Lawrence County and two branches in El Paso.10 The BHC Act also requires the Board to consider the Although the HHI for the El Paso banking market would financial and managerial resources and future prospects of increase 222 points to 2199 after the proposed divestitures, the companies and banks involved in a proposal, the convethe Board believes that a number of factors would mitigate nience and needs of the community to be served, and any potential anticompetitive effect. Ten commercial bank- certain other supervisory factors. ing organizations, including three large multi-state banking organizations, would remain in the market. Two of the A. Supervisory Factors multi-state banking organizations together would control more than 50 percent of the market deposits, and two The Board has carefully considered the financial and manadditional bank competitors would each control at least agerial resources of the companies and banks involved in 5 percent of the market deposits. NationsBank would be- this proposal and the effect of the proposed acquisition on come the third largest competitor in the El Paso banking the future prospects of these organizations, and other supermarket, controlling market deposits of approximately visory factors in light of the facts of record including the 23 percent. The market also has characteristics that make it views expressed by NationsBank and the commenters.13 attractive for entry for out-of-market firms.11 Two banking The Board notes that NationsBank, Boatmen's, and their organizations have entered the market de novo since 1990, subsidiary banks meet or exceed the "well capitalized" and 14 commercial bank branches have opened or been thresholds and are expected to continue to do so after announced to open in the market since June 1995. consummation of the proposal.14 The Board also has re- The Board sought comments from the United States Attorney General, Department of Justice ("Attorney General"), the OCC, the FDIC, and the Office of Thrift Super- small banks and become customers of large banks with extensive ATM networks, like NationsBank, to avoid the surcharge. The Board vision ("OTS") on the competitive effects of this proposal. notes that the practice of surcharging ATM transactions by non- The Attorney General advised the Board that consumma- customers is fairly recent and limited data are available on the effect tion of the proposal would not likely have any significantly of ATM surcharging on customer behavior. An analysis of deposit adverse effects on competition in any relevant market. The data in Texas, although preliminary, does not support the Coalition's OTS, OCC and the FDIC also have not objected to con- contentions. Moreover, the Coalition provides no facts to show that NationsBank has sufficient market power through its network of summation of the proposal. Based on all the facts of ATMs to compete unfairly with smaller institutions in the market for record, and for the reasons discussed in this order, and after banking services. The Board notes that smaller banks may be able to carefully considering public comments on the competitive provide their customers with access to a large number of ATM factor, the Board concludes that consummation of the machines, through alternative regional and national networks or nuproposal would not have a significantly adverse effect on merous convenient ATMs that do not have a surcharge. Based on all the facts of record, the Board concludes that the record in this competition or the concentration of banking resources in proposal does not support the conclusion that NationsBank's ATM any relevant banking market.12 surcharge policy would have a significantly adverse effect on competition or on the availability of ATM services to consumers. 13. The Coalition cites instances of litigation and administrative regulatory actions regarding securities-related activities by Nabanking market, and increase 69 points to 1055 in the Austin banking tionsBank's securities brokerage subsidiary, NationsSecurities, includmarket. ing the sale and marketing of securities and the compensation paid to 10. Nationsbank has committed to execute sales agreements for bank employees for customer information. Some of these actions are each of the proposed divestitures prior to consummation of this pending and no conclusions of wrongdoing have been reached. Other transaction, and to complete the divestiture within 180 days of con- cases have resulted in settlements with state regulatory agencies or summation. NationsBank also has committed that, in the event it is individuals in which NationsSecurities has taken corrective actions or unsuccessful in completing these divestitures within 180 days of paid compensatory damages. NationsSecurities is a registered broker/ consummation, it will transfer the unsold branches to an independent dealer subject to the jurisdiction of the Securities and Exchange trustee that is acceptable to the Board and that will be instructed to sell Commission ("SEC") and, as a wholly owned subsidiary of a national the branches promptly. See Bankamerica Corporation, 78 Federal bank, is subject to the supervision and jurisdiction of the OCC. The Reserve Bulletin 338 (1992); United New Mexico Financial Corpora- Board has carefully reviewed the Coalition's comments in light of tion, 77 Federal Reserve Bulletin 484 (1991). NationsBank also has confidential supervisory information from the OCC. The Board also committed to submit to the Board, before consummation of this has provided the Coalition's allegations of improper securities trading proposal, an executed trust agreement acceptable to the Board stating by Boatmen's officials to the SEC for consideration. the terms of these divestitures. The Coalition also makes a number of allegations regarding the 11. For example, the banking market's population and amount of business practices of Stephens, Inc., an Arkansas securities firm, and deposits have increased by 2.1 and 1.9 percent, respectively, from its business relationships with NationsBank and Boatmen's. The Coa- 1992 to 1995 in contrast to all other Texas metropolitan statistical lition objects to a fairness opinion on the proposal by Stephens, Inc., areas which averaged annual increases of 1.6 and 1.0 percent for because that company owns approximately 2.5 percent of the stock of population and amount of deposits, respectively. Boatmen's. This interest was disclosed to NationsBank's sharehold- 12. In analyzing the competitive effects of the proposal, the Board ers, who must vote to approve the acquisition, in accordance with considered the Coalition's contention, based in part on public state- applicable securities laws. Moreover, federal and state securities reguments by NationsBank officials and banking commentators, that Na- lators have the authority to investigate and adjudicate any improper tionsBank's policy of imposing a surcharge on ATM transactions by actions by Stephens, Inc. non-customers would have adverse competitive effects by causing 14. The Coalition asserts that NationsBank projects a decline in customers of small banks to terminate their relationships with the capital as a result of the proposal and intends to rely on Boatmen's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 151 viewed the operational and management structure for Na- 'ATMs, and special products such as bank-by-mail, PC tionsBank after it acquires Boatmen's.15 Based on all the home banking, and bank-by-phone. facts of record, including all comments that have been The Board also has long held that consideration of the received relating to these factors, and a review of relevant convenience and needs factor includes a review of the reports of examination of the companies and the banks records of the relevant depository institutions under the involved in the proposal, the Board concludes that the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) financial and managerial resources and future prospects of ("CRA"). The Board has received and considered comthe companies and banks concerned are consistent with ments from a number of commenters relating to the CRA approval, as are the other supervisory factors that the performance records of both institutions. Forty-six com- Board must consider under section 3 of the BHC Act.16 menters have commended the assistance NationsBank and Boatmen's provided in community redevelopment activi- B. Convenience and Needs Considerations ties and have favorably noted the records of both organizations for reinvesting in their communities.17 These com- The Board has carefully considered the effect of the pro- menters generally asserted that the combined organization posed acquisition on the convenience and needs of the would benefit all the communities to be served. community to be served in light of all the facts of record. Fifteen commenters, including the Coalition ("Protes- The Board notes that NationsBank provides a full range of tants"), criticized the CRA performance records of financial services, including commercial and retail banking NationsBank and Boatmen's.18 Protestants maintain that services, trust and investment management services, corpo- the 1995 Home Mortgage Disclosure Act (12 U.S.C. rate and investment banking services, and international § 2801 et seq.) ("HMDA") data and the record of branch banking services, through its bank and nonbank subsidiar- closings for both organizations support denial of the proies. NationsBank has stated that the acquisition would posal. Protestants also contend that NationsBank's record result in an enhancement and expansion of the banking of CRA performance is deficient in a number of areas, services available in the markets currently served by Boat- including activities involving housing-related and small men's. NationsBank also would provide the communities business lending, ascertainment and marketing, and comserved by Boatmen's with one of the larger retail branch munity development.19 networks in the country, expanded access to services at The Board has carefully considered the CRA performance records of both institutions in light of all the facts of record and the comments received on the proposal. excess capital. The Coalition also notes that NationsBank was forced NationsBank indicated that it intends to enhance Boatto recognize a loss of $40 million in the first quarter of 1996 for losses men's community investment program by integrating it from its participation interest in a loan with other banks involving with the NationsBank program. In this light, the Board has fraudulent conduct by a borrower, and provides estimates for other given substantial consideration to the existing record of potential liabilities for NationsBank. NationsBank as reflected in CRA and supervisory examina- 15. The Board has taken into account the Coalition's comments: (1) Objecting to the replacement of Boatmen's senior management tions, and the current programs and policies of by NationsBank officials, NationsBank, of helping to serve the convenience and (2) Criticizing NationsBank's management for a computer failure needs of all its communities. in 1996 and for a retracted mail solicitation of home equity loans in Texas, (3) Challenging the effectiveness of its board of directors, and CRA Performance Examinations (4) Citing reviews of NationsBank's operations in Nashville, Tennessee, and Charlotte, North Carolina, by the Department of Labor As provided in the CRA, the Board has evaluated the ("DOL"), and NationsBank's response to proposed DOL reviews convenience and needs factor in light of examinations by of NationsBank's operations in Tampa, Florida, and Columbia, the primary federal supervisors of the CRA performance South Carolina. The Coalition also cites pending lawsuits brought by former records of the relevant institutions. An institution's most NationsBank employees that have not adjudicated any improper ac- recent CRA performance evaluation is a particularly importions by NationsBank. These comments have been carefully consid- tant consideration in the applications process because it ered in light of all the facts of record, including confidential reports of represents a detailed on-site evaluation of the institutions's examination assessing the managerial resources of NationsBank, and confidential information provided by the DOL. 16. The Board also has considered other comments relating to these factors, including comments from a developer and investors criticizing NationsBank's involvement in a multi-family housing project and from a trust beneficiary criticizing NationsBank's conduct as trustee. 17. These commenters included the ACORN Housing Corporation, These comments have been provided to the OCC, the primary federal the Greater Washington Urban League, the NAACP, and the United supervisor of the NationsBank subsidiaries involved, for consider- Way of Mid South. ation. Another commenter alleges that NationsBank's subsidiary bank 18. These commenters included Vickers & Associates, representing in Virginia has engaged in improper conduct in connection with a several community-based groups, Texas Community Reinvestment community block grant program administered by the City of Lynch- Coalition and Corporation for Affordable Housing, and several indiburg. For the reasons previously stated by the Board, the facts of vidual commenters. record do not support the commenter's allegations, and no new facts 19. Several commenters questioned NationsBank's commitment to are presented in this case. See NationsBank Corporation, 82 Federal community development based on their experiences in a redevelop- Reserve Bulletin 154(1996). ment project in Texas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • February 1997 overall record of performance under the CRA by its pri- HMDA data for communities served by Lead Bank indimary federal supervisor.20 cate an increase in the number of loan applications re- All the NationsBank subsidiary banks in Virginia, North ceived from, and loans extended to, minorities and individ- Carolina, Georgia, Florida, Tennessee, and Texas, compris- uals in LMI census tracts.25 ing approximately 96 percent of the organization's banking The data for NationsBank, including NBMC, and Boatassets, received "outstanding" ratings at the most recent men's also reflect some disparities in the rate of loan examinations of their CRA performance by their primary originations, denials, and applications by racial group or federal supervisor, the OCC, as of July 1995.21 In addition, income level. The Board is concerned when the record of all of Boatmen's subsidiary banks received "outstanding" an institution indicates such disparities, and believes that or "satisfactory" ratings for CRA performance at their all banks are obligated to ensure that their lending practices most recent examinations by their primary federal supervi- are based on criteria that assure not only safe and sound sors.22 lending, but also assure equal access to credit by creditworthy applicants regardless of race. The Board recognizes, Lending Performance Record of NationsBank however, that HMDA data alone provide an incomplete measure of an institution's lending in its community be- In general and Lead Bank. The Board has reviewed cause these data cover only a few categories of housingthe 1993, 1994, and 1995 HMDA data reported by related lending and provide limited information about the NationsBank's bank subsidiaries and NationsBanc Mort- covered loans.26 HMDA data, therefore, have limitations gage Corporation ("NBMC") in light of Protestants' com- that make the data an inadequate basis, absent other informents. These data generally indicate that NationsBank has mation, for concluding that an institution has engaged in improved its record of home mortgage lending in low- to illegal discrimination in lending. moderate-income ("LMI") census tracts and census tracts In light of the limitations of HMDA data, the Board has with predominately minority residents ("minority census carefully reviewed other information, particularly examinatracts").23 NationsBank reports that its nationwide HMDA tion reports that provide an on-site evaluation of complidata from 1992 and 1995 show an increase of approxi- ance by NationsBank and Boatmen's with the fair lending mately 36 percent in loans to individuals in LMI census laws. The examinations of NationsBank's subsidiary tracts and an increase of approximately 61 percent in loans banks, which included a fair lending review of NBMC, and to individuals in minority census tracts.24 In addition, 1995 Boatmen's subsidiary banks found no evidence of prohibited discrimination or other illegal credit practices at the institutions. Examiners also found no evidence of practices intended to discourage applications for the types of credit 20. The Statement of the Federal Financial Supervisory Agencies listed in the banks' CRA statements.27 Regarding the Community Reinvestment Act provides that a CRA NationsBank also has taken a number of steps to inexamination is an important and often controlling factor in the consideration of an institution's CRA record and that reports of these crease lending by its subsidiary banks to LMI and minority examinations will be given great weight in the applications process. borrowers. NationsBank has implemented second and third 54 Federal Register 13,742 and 13,745 (1989). level reviews of declined loan applications from minorities 21. The following mergers occurred after the examinations were and LMI individuals to ensure that consistent loan deciconducted: sions are made. Other corporate fair lending programs (1) NationsBank, N.A (Carolinas), Charlotte, North Carolina and NationsBank, N.A., Richmond, Virginia, merged to form Na- include periodic reviews of underwriting guidelines and tionsBank, N.A., Charlotte, North Carolina ("Lead Bank"); and procedures, regression modeling to test variances in credit (2) NationsBank of Florida, N.A, Tampa, Florida, and NationsBank decisions, and on-going sensitivity and cultural diversity of Georgia, N.A., Atlanta, Georgia, merged to form NationsBank, training for all bank personnel. In addition, NationsBank's N.A. (South), Atlanta, Georgia. corporate fair lending group provides a comprehensive NationsBank of Texas, N.A., Dallas, Texas, and NationsBank of Tennessee, N.A., Nashville, Tennessee, also received "outstanding" ratings for CRA performance by the OCC in July 1995. NationsBank of Delaware, N.A., Dover, Delaware, a limited purpose credit card ceived from minority census tracts increased by approximately 98 bank, and NationsBank of Kentucky, N.A., Hopkinsville, Kentucky, percent. received "satisfactory" CRA performance ratings in their most recent 25. Boatmen's HMDA data for 1994 and 1995 HMDA also gener- CRA performance examinations by the OCC as of July 1995. ally indicate increases in housing-related lending in LMI and minority NationsBank also recently acquired Sun World, N.A., El Paso, Texas census tracts, and Boatmen's origination rate for loans in LMI and ("Sun World"), which has not been examined for CRA performance minority areas exceeded the average origination rates for all lending by the OCC. Sun World's predecessor, Sun World Savings Bank, institutions in the St. Louis, Missouri MSA. F.S.B. received a CRA rating of "outstanding" from its primary 26. These data, for example, do not provide a basis for an indepensupervisor, the OTS at its most recent CRA performance examination. dent assessment of whether an applicant who was denied credit was, 22. The CRA performance ratings for Boatmen's subsidiary banks in fact, creditworthy. Credit history problems and excessive debt are set forth in Appendix D. levels relative to income — reasons most frequently cited by a credit 23. NationsBank conducts most of its housing-related lending denial — are not available from the HMDA data. through NBMC, a wholly owned subsidiary of NationsBank's subsid- 27. As part of its examination for compliance with fair lending laws iary bank in Texas and the Board has considered HMDA data reported of the NationsBank's subsidiary banks and NBMC, the OCC selected by NBMC for areas served by NationsBank's bank subsidiaries. samples from a wide range of housing-related loan applications by 24. During the same period, applications received from LMI census minority and non-minority borrowers for comparative analysis. The tracts increased by approximately 67 percent and applications re- review found no evidence of illegal credit discrimination. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 153 on-going review of bank performance in providing all Minority Business Development Agency.30 In 1995, Naapplicants fair access to credit. tionsBank originated 5,473 loans for $2.5 billion to small NationsBank's senior management has developed exten- and minority-owned businesses located in LMI communisive written policies, procedures and training programs to ties.31 help ensure that its bank and operating subsidiaries do not NationsBank engages in a number of community develillegally discourage or pre-screen applicants. According to opment activities to help meet the credit needs of its examiners, NationsBank regularly assesses the adequacy communities through its community development corporaof nondiscriminatory policies, procedures and training pro- tion, NationsBank Community Development Corporation grams through internal reviews and management reporting ("NCDC"). Examiners commended NationsBank's high mechanisms. As part of its continuing evaluation of fair level of participation in local development and redeveloplending practices and procedures, in 1994, NationsBank ment projects in the 1995 CRA examinations and noted contracted with an outside vendor to evaluate the treatment that NationsBank continues to pursue lending relationships of prospective applicants throughout its bank branch and that promote the development and redevelopment of its mortgage company offices. communities. The NCDC has invested $200 million for the NationsBank engages in a number of housing-related purpose of making housing available to LMI individuals and small business and small farm lending activities that and families through partnerships with local community are designed to assist in meeting the credit needs of its organizations. entire community.28 Examiners noted, for example, that NationsBank also has implemented a Community Devel- NationsBank has taken additional steps to assist in meeting opment Financial Institutions ("CDFI") initiative to prothe housing-related credit needs of the LMI communities vide capital to financial institutions that specialize in reviwithin its banks' delineations. NBMC committed in mid- talizing neighborhoods. The program has two components: 1995 to provide incentive financing for qualified borrowers (1) The CDFI will invest $15 million in development with incomes of less than 80 percent of median household banks and bank holding companies located in incomes. Approximately 600 families took advantage of NationsBank communities, and the program in 1995, resulting in an aggregate loan volume (2) NationsBank will invest $10 million directly into of $39.1 million. NBMC renewed and increased its com- non-bank CDFI institutions such as community developmitment of below-market funds available in 1996 to ment credit unions, multi-bank community development $240 million. Through September 7, 1996, more than corporations, and loan funds. 3,400 families have gained access to the below-market interest rates to purchase a home. In December 1995, The Board also has considered NationsBank's progress NationsBank also established a partnership with the Neigh- under its Community Investment Program ("CIP"), a borhood Assistance Corporation of America to provide 10-year program to make a minimum of $10 billion of $500 million for home mortgages in LMI communities. community investment loans.32 Since the program began in The program provides 100-percent financing, as well as intensive individualized credit and homebuyer counseling, and is being tested in Washington, D.C.; Baltimore, Maryland; Charlotte, North Carolina; and Atlanta, Georgia. 30. These centers provide loans, technical assistance, counseling NationsBank also participates in programs designed to and access to innovative business technology for start-up and existing meet the small business credit needs of its delineated businesses. communities. NationsBank actively participates in 31. One commenter alleges that NationsBank illegally discriminates government-sponsored programs, such as those of the against minority-owned businesses. The comments provided no facts and are based on studies of NationsBank's HMDA data that have been Small Business Administration ("SBA") and various city previously considered by the Board and found not to substantiate governments. In 1995, NationsBank made 743 SBA loans allegations of illegal discrimination in NationsBank's mortgage lendtotaling $102 million.29 NationsBank also helped establish ing. See NationsBank Corporation (Bank South) 82 Federal Reserve Small Business Resource Centers in four cities in partner- Bulletin 172 (1996); NationsBank Corporation (CSF Holdings) 81 ship with the SBA and the Department of Commerce Federal Reserve Bulletin 1121 (1995). The Board also has considered the commenter's objection to the discontinuance of Boatmen's plan to increase lending to minority-owned small businesses in light of NationsBank's record of small business lending. 32. Protestants criticize the program for improperly including auto- 28. Some Protestants contend that services provided by Boatmen's mobile and debt consolidation loans. The types of loans under the CIP subsidiary banks — particularly small business loans and other types included consumer loans as well as mortgages for single-family and of business credit — will be diminished by the proposal because multi-family housing, purchase and rehabilitation mortgage loans, NationsBank provides less autonomy in lending decisions to manage- home improvement loans, commercial real estate financing, and small ment of its subsidiary banks. The Board believes an institution's business loans to minority-owned businesses. The CRA requires the performance should be assessed on the institution's actual record of federal banking agencies to encourage depository institutions to help assisting to meet the credit needs of its entire community, and accord- meet the credit needs of the community, and does not establish a ingly, in reviewing the proposal has focused on NationsBank's record statutory preference for any specific type of credit. Protestants provide as discussed above. no substantiation for their allegation that a significant portion of the 29. NationsBank has been designated by the SBA as a "Preferred loans reported by NationsBank under the CIP charged usurious rates Lender" or "Certified Lender" in every state in which its subsidiary of interest and relevant examinations of NationsBank do not substantibanks operate. ate this allegation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • February 1997 1991, NationsBank has made CIP loans totalling $13 bil- ination") found that the bank's lending activities reflected lion. a reasonable geographic distribution of applications re- Lead Bank. The Lead Bank, which serves North Caro- ceived and loans made throughout its service communities. lina, South Carolina, Maryland, Virginia, and the District Examiners concluded, for example, that the Florida bank of Columbia, received credit applications from all seg- effectively provided residential and business real estate ments of its communities, including LMI areas, and had a loans to LMI individuals and in LMI geographies within its reasonable geographic distribution of loans throughout its communities after analyzing its total lending activity. In communities, including LMI areas, according to the 1995 addition, the bank actively participated in government- CRA performance examination ("Lead Bank Examina- sponsored loan programs for housing and small businesses tion"). Examiners noted, in particular, that Lead Bank offered through the Federal Housing Authority ("FHA"), effectively identifies potentially underserved areas and tar- Veterans Administration ("VA") and the SBA. Examiners gets these areas for additional resources. noted that SBA lending increased from 21 loans, totalling Examiners also noted that the bank offered a wide vari- approximately $3.3 million in 1993 to 42 loans, totalling ety of credit and financial products and services to help approximately $8.5 million in 1994. meet community needs. The Lead Bank Examination found The Florida Examination also considered the bank's that the bank assisted in meeting housing-related credit participation in state and local housing loan programs, needs in its communities by originating loans with flexible including the Broward County Housing Finance Authority terms and underwriting standards through NBMC. In par- and the Florida Housing Finance Agency Single Family ticular, Lead Bank originated 303 affordable mortgage Bond Program. The Florida bank's participation in local loans totalling $19 million in North Carolina, 451 afford- development and redevelopment projects, particularly able mortgage loans totalling $27 million in South Caro- within metropolitan markets, was characterized by examinlina, and 951 affordable mortgage loans totalling $90 mil- ers as very active. Examiners also noted that the bank's lion in Virginia, Maryland and Washington, D.C in 1994. participation through various national corporate and local Lead Bank also continued its efforts to help meet the needs initiatives and partnerships often reflected a leadership of small businesses in its communities, including LMI role. Community development projects cited in the examiareas. In 1994, business loans in LMI areas totalled nation included the Tampa Challenge Fund II, a lending $73 million in North Carolina, $38 million in South Caro- partnership with local organizations and the City of Tampa lina, and $287 million in Virginia, Maryland and Washing- for the construction and rehabilitation of single- and ton, D.C. multiple-family affordable housing in which the Florida In other states. The Board also has considered Protes- bank financed 24 projects totalling $1.1 million in 1994, tants' criticisms of NationsBank's lending record in Flor- and the Keystone Challenge Fund, a program providing ida, Georgia, Kentucky, Tennessee and Texas in light of all purchase mortgages to LMI homeowners in which the the facts of record. As noted above, except NationsBank's Florida bank made 18 loans totalling $1.3 million in 1994. subsidiary bank in Kentucky which received a "satisfacto- Georgia. In the 1995 CRA performance examination of ry" rating, all of NationsBank's subsidiary banks received NationsBank's subsidiary bank in Georgia ("Georgia Exan "outstanding" rating from the OCC in their 1995 exam- amination"), examiners noted that the lending activities of inations for CRA performance. the bank in Georgia effectively reached LMI individuals The 1995 CRA performance examinations for the and geographies. For example, the Georgia bank partici- NationsBank subsidiary banks in these states found that the pated in various community-based partnerships that recommunity delineations for the banks were generally rea- sulted in the origination of 88 loans totalling $6.5 million sonable and did not arbitrarily exclude any LMI neighbor- in 1994. The bank also increased the number of business hoods. None of the banks was found to have engaged in loans made in LMI areas of Georgia from $131 million in illegal credit practices or practices that discouraged appli- 1993 to $200 million in 1994. According to examiners, the cations for credit. Examiners also determined that the bank effectively identified potentially underserved areas banks' ascertainment efforts were generally effective, and and targeted them for priority attention and additional in some cases commendable, and that marketing activities resources. were adequate. The banks engaged in various lending The Georgia Examination also found that the bank had activities and community development programs to help undertaken significant efforts to meet the credit needs of its meet the credit needs of their communities, including LMI delineated community through the origination of loans for neighborhoods. Examiners found that all these banks of- residential mortgages, home improvement, small busifered some type of program to support affordable housing nesses, and small farms. The bank participated in governand small business lending in their communities, and that mentally insured, guaranteed, or subsidized loan programs all banks participated to some extent in federal and local for housing and small business. Examiners noted that the government-sponsored loan programs. The OCC's exami- number of SBA-guaranteed loans originated by the Geornations, moreover, noted that these banks were actively gia bank almost doubled in number and dollar volume involved in community development lending programs. from 1993 to 1994. Florida. The 1995 CRA performance examination for Kentucky. NationsBank's subsidiary bank in Kentucky is NationsBank's subsidiary bank in Florida ("Florida Exam- its smallest bank representing less than 1 percent of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 155 NationsBank's total assets. The 1995 CRA performance LMI neighborhoods. Overall, the bank made 87 percent of examination ("Kentucky Examination") found that the its loans within its delineated communities in 1994 in number of mortgages made in LMI areas had increased response to ascertained credit needs of the community. The each year since 1992.33 Examiners also noted that the Texas bank participated in loans and loan pools with other bank's management identified potentially under served ar- financial institutions, non-profit community development eas and focused efforts in these areas to assist in meeting organizations, public housing authorities, private developcredit needs. The Kentucky Examination concluded that ers, and other organizations that promote affordable rental the bank offered a wide variety of credit and financial and owner-occupied housing for LMI consumers. The products and services to meet the needs of its delineated bank, in conjunction with a community group providing community, including housing-related loans with flexible homebuyer education seminars, made 539 loans totalling terms and underwriting standards. In addition, the Ken- $31 million in 1994.35 tucky bank assisted in meeting credit needs for affordable The Texas Examination also noted that the bank made a housing through its participation in projects with the Ken- total of $375 million in small businesses within its delintucky Housing Corporation and the Affordable Home Own- eated communities in 1994, and a total of $18 million in ership Program. agricultural-related loans in 1994, with $7 million of the The Kentucky Examination also found that the bank total originated in rural communities. In addition, the Texas provided small business loans, including small businesses bank actively participated in community development and in LMI areas. In 1994, the Kentucky bank originated redevelopment activities, particularly in the large urban 88 loans totalling $7.8 million to small businesses in its markets. Examiners noted that during 1993 and 1994, the delineated community, and offered loans guaranteed by the bank participated in 73 credit programs that focused on SBA. The bank also actively engaged in agricultural lend- helping to meet the credit needs of LMI consumers in the ing, originating loans totalling $957 thousand in 1994. areas of affordable mortgages, affordable multi-family Tennessee. NationsBank's subsidiary bank in Tennessee housing, and small business operations, including multireceived credit applications from all segments of its com- family housing projects with NCDC. During 1994 and munities, including LMI areas and had a reasonable geo- 1995, NationsBank provided more than $5 million in figraphic distribution of its loans and applications through- nancing to the Parks at Wynne wood Partnership, a partnerout its delineated community, according to its 1995 CRA ship formed to acquire and rehabilitate a 484-unit multiperformance examination ("Tennessee Examination"). Ex- family project in the Oak Cliff area of South Dallas.36 aminers also noted that the Tennessee bank had been NationsBank and the Texas bank also provided more than successful in its efforts to lend to LMI individuals. $6 million in financing to the Carlton Court Limited Partnership, a project designed to assist LMI individuals to buy The Tennessee Examination found that the bank assisted their first homes. in meeting housing-related credit needs in its community by originating 477 loans with flexible terms and underwriting standards totalling $28 million through NBMC.34 Ex- Branch Locations and Closings aminers also noted that the bank originated loans totalling $70 million to small businesses located in LMI areas in Protestants have expressed concerns that branch closings 1994. Agricultural lending for the Tennessee bank in 1994 resulting from the proposal would have a materially adtotalled $12 million. In addition, the Tennessee bank ac- verse effect on the community, particularly in LMI neightively participated in loans guaranteed by the SBA and borhoods. Protestants also contend that NationsBank's originated 40 SBA loans totalling $5.6 million in 1994. branch closings to date have adversely affected LMI neigh- Examiners also favorably noted the bank's participation borhoods. The Board has carefully considered these comwith the Tennessee Housing Development Agency in orig- ments in light of all the facts of record. ination loans to LMI borrowers and a number of other NationsBank states that it does not have a final branch community development projects designed to serve the closing plan for branches of Boatmen's banks because of credit needs of its community through housing-related and small business loans. Texas. The geographic distribution of loan and applica- 35. Homebuyers completing the seminar received a 1 percent distions for NationsBank's subsidiary bank in Texas was count on the loan's rate of interest. found to be reasonable in the 1995 CRA performance 36. One commenter from Texas contends that NationsBank does not examination of the bank ("Texas Examination") and indi- assist LMI communities in Austin, Texas. The record indicates that NationsBank has been involved in several affordable housing projects cated that the bank affirmatively solicited credit applicain Austin, that include assisting a developer to purchase and renovate tions from all segments of its communities, particularly in properties in East Austin and assisting a community-based organization in the Dove Spring area to construct new properties. NationsBank is also involved with the Austin Housing Authority and a local community group in providing home buyer and ownership education 33. For example, 15.3 percent of bank's and mortgage company's to the residents in LMI housing. In 1995, moreover, NationsBank's HMDA originations were in LMI areas in 1994, in comparison to percentage of total originations in Texas made to Hispanics 11.1 percent in 1993. (16.7 percent) and in LMI areas (22.2 percent) exceeded the aggre- 34. Eleven of the loans, totalling $605,000, were extended through a gate's percentage of originations to Hispanics (15.9 percent) and in partnership with a local community-based organization. LMI areas (14.8 percent). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • February 1997 the number and the diversity of the markets in which the In weighing the convenience and needs factor in this NationsBank and Boatmen's banks operate. NationsBank application, the Board has taken into account the branch does not expect to have identified potential branch closures closing policy of NationsBank and its record of closing before March 31, 1997. NationsBank indicates that it does branches as reviewed by its primary supervisor in the not intend to vacate any area currently served by Boat- examination process. The Board also has considered that men's, and notes that in past branch closures, it has consis- this proposal involves an acquisition with little institutional tently avoided any closings or consolidations that might overlap. To permit the Board to monitor the potential effect have an adverse effect on LMI areas. NationsBank also of branch closings that may result from this transaction, projects, as a general matter, that any branch closings or NationsBank must provide a copy of its proposed branch consolidations that might result from the proposed merger closures as soon as available to the Federal Reserve Bank would likely result from NationsBank and Boatmen's each of Richmond ("Reserve Bank"), and notify the Reserve having branches in close proximity. Bank of any changes in the preliminary plan for closing All NationsBank subsidiary banks are required to use the branches for a period of two years or until the depository corporate Banking Center Opening and Closing Policy in institution where the branch closings are proposed is examclosing a branch, and the Board expects that this policy ined by its primary federal supervisor for CRA perforwill be used for the branch closings resulting from the mance, whichever period is shorter. For branches to be proposal. Before a branch can be considered for closure, closed in LMI census tracts, NationsBank's preliminary the policy requires that the Community Investment Pro- plan should indicate the proximity to the closest gram manager for the appropriate state consider whether NationsBank branch and any steps NationsBank would the closing would have an adverse impact on the commu- take to mitigate the impact of the branch closure. The nity served and what actions will be taken to minimize that Board will also review branch closures resulting from the impact. This consideration would include the other finan- proposal in future applications to expand the operations of cial institutions serving the area and the banking alterna- NationsBank's depository institutions.39 tives available to customers affected by the closure. The Community Investment Program manager may also hold at Other Aspects of NationsBank's CRA Performance least one meeting with neighborhood leaders to assess the impact of the closure, and implement appropriate sugges- Fair lending law compliance. Protestants allege that tions from the meeting to minimize the impact of the NationsBank's subsidiary banks, including NBMC,40 and closure. All closings of branches serving LMI areas must NationsBank's nonbank lending subsidiaries have engaged be approved by the Community Investment Program man- in lending practices that violate the fair lending laws.41 ager. The OCC has reviewed this policy and found it to be effective in enabling the NationsBank banks to provide federal banking agency no later than 90 days before the date of closure reasonable access to banking services in their communi- that contains: ties. As part of the 1995 CRA performance examinations, (1) The identity of the branch to be closed and the proposed closing OCC examiners reviewed branches closed pursuant to the date; (2) A detailed statement of the reasons for the decision to close the policy. The OCC concluded that all of the NationsBank branch; and subsidiary banks generally had good records of opening, (3) Statistical or other information supporting closure consistent closing and relocating their offices while providing all with the institution's written policy for branch closings. segments of the communities with reasonable access to 39. The Board has considered Protestants' objection to certain lease bank services.37 None of the 1995 CRA performance exam- arrangements for Boatmen's branches that prohibit the leasing of the property to another bank for a period of up to one year after the lease inations noted any materially adverse effects on LMI neighis terminated. The Board does not believe such provisions warrant an borhoods from branch closings. adverse finding under the convenience and needs or competitive The Board notes that branch closings resulting from the factors. proposal will be assessed by the primary federal supervisor 40. The Coalition maintains that NationsBank's subsidiary banks illegally "steer" minority applicants to NationsBank's nonbank lendfor CRA performance of the bank closing the branch in ing subsidiary, NationsCredit Corp. ("NationsCredit"), and cites future CRA performance examinations. NationsBank also NationsBank's HMDA data, NationsBank's policy of compensating is required to give at least 90 days written notice of all bank employees for referrals that result in loans by NationsCredit, and branch closing subject to the Joint Agency Policy State- experiences of individual borrowers with the referral process. The ment on Branch Closings ("Joint Policy Statement").38 Coalition also contends that NationsBank's subsidiary banks and NBMC illegally discriminate against African Americans, citing allegations in a recent law suit regarding NationsBank's lending in the Washington, D.C. metropolitan area. The Board has provided a copy 37. At the time of the examination, the Kentucky bank had not of the Coalition's comments to the banks' primary federal supervisor, opened or closed a branch office since the previous examination and the OCC, for consideration. no other weaknesses were noted regarding branch closings. Examiners 41. The Coalition contends that NationsBank's nonbank subsidiarconsidered the Kentucky bank's record in this regard to be adequate. ies, NationsCredit and SunStar Acceptance Corp., have engaged in 38. See 58 Federal Register 49,083 (1993) (interpreting section 42 deceptive trade practices and other improper lending activities, includof the Federal Deposit Insurance Act (12 U.S.C. § 1831r-l)). Under ing an allegation that NationsCredit targets minority borrowers for these provisions, all insured depository institutions are required to loans that have high rates of interest. The Coalition cites pending submit a notice of any proposed branch closing to the appropriate lawsuits, a survey of housing-related loans in Fulton and DeKalb Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 NationsBank denies Protestants' allegations and maintains examinations also found that these outreach efforts supthat it complies with fair lending laws and HMDA report- ported the development of innovative products and sering requirements. vices. According to the examinations, management offi- The Board has carefully considered the comments of cials regularly monitored ascertainment efforts to determine Protestants and NationsBank in light of all the facts of if unmet credit needs existed and to what extent new credit record, including the OCC's fair lending examination find- products should be considered. ings and the NationsBank fair lending policies and proce- Members of the communities served by NationsBank's dures. As noted, these examinations found no evidence of subsidiary banks are informed of the banks' credit and illegal discrimination by the banks or NBMC, and favor- other banking products through a variety of local media, ably commented on NationsBank's fair lending policies including newspapers, radio and television stations, and and procedures to prevent illegal practices like pre- publications that have a predominately minority readerscreening. The Board also notes that NationsCredit has a ship. For example, NationsBank's subsidiary bank in Florconsumer compliance program in place. Staff of the pro- ida and Texas use Spanish-language marketing materials in gram perform compliance reviews for NationsCredit and larger cities with large Hispanic populations. NationsBank work closely with the compliance group responsible for also works with approximately 300 community-based orgaoverseeing the compliance program for the NationsBank nizations to provide education seminars to customers on subsidiary banks. In addition, NationsBank's internal audit such topics as operating a small business, purchasing a department performs consumer compliance reviews of home, and money management skills for high school stu- NationsCredit. Moreover, the pending civil actions cited by dents. In addition, NationsBank's subsidiary banks, includ- Protestants to support their allegations are in their prelimi- ing its banks in Tennessee and Kentucky, hosted communary stages and no conclusions of wrongdoing have been nity "loan day" programs primarily in LMI areas.44 The made.42 The Board notes that the OCC and the Board banks also used direct mail advertising to promote credit retain sufficient supervisory authority to take appropriate products in LMI communities. action against NationsBank if a court determines, or an examination finds, that NationsBank has engaged in illegal Conclusion on Convenience and Needs Considerations activities. The Board also can take such findings into account in considering future applications by NationsBank The Board has carefully considered all the facts of record, to expand its operations.43 including the comments received from all commenters and Outreach and Marketing Activities. Protestants maintain responses to those comments and the CRA performance that NationsBank's outreach and marketing efforts, particu- records of the subsidiary banks of NationsBank and Boatlarly in Florida, Kentucky, Tennessee and Texas, are inade- men's, including relevant reports of examination from their quate. The 1995 CRA performance examinations of the primary federal supervisors.45 Based on a review of the NationsBank subsidiary banks, including the banks serving entire record, the Board concludes that convenience and the states identified by the Protestants, found multi-faceted needs considerations, including the CRA records of perforoutreach and marketing programs for the development and mance of both organizations' subsidiary banks, are consispromotion of the banks' credit and special deposit-related tent with approval of this proposal 46 products. Examiners noted, for example, that Nations- Bank's ascertainment process was comprehensive and effectively used contacts with government officials and 44. These events offered credit education sessions, information on community organizations. The 1995 CRA performance credit and deposit products, and free access to credit reports. 45. Protestants allege that consummation of this proposal could result in significant job losses, particularly in Memphis, Tennessee. The convenience and needs factor has been consistently interpreted by Counties in Georgia that shows a high percentage of loans by Nations- the federal banking agencies, the courts, and Congress to relate to the Credit to minority borrowers, and the complaints of individual bor- effect of a proposal on the availability and quality of banking services rowers. The Coalition also alleges that NationsCredit improperly in the community. In this light, the Board previously has concluded classifies loans secured by real property as home equity loans to avoid that the effect of a proposed acquisition on employment in a commu- HMDA reporting requirements. nity is not among the factors included in the BHC Act. See Wells 42. The Board has reviewed pending and past litigation against Fargo & Company, 82 Federal Reserve Bulletin 445, 457 (1996). NationsBank. The pending proceedings will provide injured parties 46. The Board has carefully reviewed Protestants' comments conwith an adequate remedy if the allegations of improper practices by tending that NationsBank's checking and ATM fees adversely affect NationsBank can be sustained. Other law suits have been concluded LMI individuals. As discussed above, NationsBank provides a full with injured parties receiving a settlement or an award of compensa- range of credit products and banking services that assist in meeting the tory damages in some cases. credit and banking needs of LMI individuals and these products 43. Protestants have requested that, prior to acting on this proposal, include a low-fee checking account for LMI customers that allow a the Board conduct an on-site examination of NationsBank's nonbank certain number of free withdrawals per month. In addition, there is no lending subsidiaries for the purpose of examining their compliance evidence in the record that the fees charged by NationsBank are based with fair lending laws. In light of all the facts of record, the Board on any factor that would be prohibited under law. NationsBank has concludes that such an examination is not warranted. The complaint indicated that after consummation of this proposal it will continue to by an individual identified in the Coalition's comments has been offer Boatmen's low-fee checking account as well as a low-fee checkforwarded to the OCC, the primary supervisor of NationsBank N.A. ing product currently offered by NationsBank. Although the Board has (South), Atlanta, Georgia, and also will be reviewed by the Reserve recognized that banks help serve the banking needs of their communi- Bank as a consumer complaint. ties by making basic services available at nominal or no charge, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • February 1997 Nonbanking Activities NationsBank will provide enhanced products and services to the communities served by Boatmen's. NationsBank NationsBank also has given notice under section 4(c)(8) of also indicates that the proposal would result in efficiencies the BHC Act to acquire the nonbanking subsidiaries of through integration of certain of NationsBank's and Boat- Boatmen's listed in Appendix B and thereby engage in the men's back office operations and the sharing and pooling described nonbanking activities. Section 4(c)(8) of the of expertise and other resources resulting in benefits to the BHC Act provides that a bank holding company may, with customers of both organizations. Accordingly, based on all the Board's approval, engage in any activity that the Board the facts of record, the Board has determined that the determines to be "so closely related to banking or manag- proposal can reasonably be expected to produce public ing or controlling banks, as to be a proper incident there- benefits that outweigh any adverse effects under the proper to." The Board previously has determined by regulation or incident to banking standard of section 4(c)(8) of the BHC order, subject to certain prudential limitations, that each of Act. The Board also concludes that all the factors required the activities described in Appendix B is closely related to to be considered under the Federal Reserve Act and the banking within the meaning of section 4(c)(8) of the BHC Board's Regulation K are consistent with the acquisition of Act.47 NationsBank has provided the Board with all the Boatmen's Foreign Investment Company. commitments the Board obtained in other cases in which it has approved an application by a bank holding company to Conclusion engage in these activities in accordance with the Board's regulations and prior orders. The Board has considered all the issues raised in public In order to approve this proposal, the Board also must comments filed in connection with this proposal in light of determine that the performance of the proposed activities the factors that the Board is required to consider under the are a proper incident to banking, that is that the proposed BHC Act. Based on the foregoing and all the facts of transaction "can reasonably be expected to produce bene- record, the Board has determined that this transaction fits to the public . . . that outweigh possible adverse effects, should be, and hereby is, approved.50 The Board's approval such as undue concentration of resources, decreased or of this proposal is specifically conditioned on compliance unfair competition, conflicts of interests, or unsound bank- by NationsBank with all the commitments made in connecing practices."48 As part of the Board's evaluation of these factors, the Board considers the financial and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.49 As noted above, based on all the facts of record, the Board has 50. Several Protestants have requested that the Board hold a public concluded that financial and managerial considerations are hearing or meeting on the proposal. Protestants contend that a hearing is necessary to provide community groups and consumers in various consistent with approval of these notices. states an opportunity to comment on the applications and notices and The Board also has carefully considered the competitive to provide additional information for the record. Section 3(b) of the effects of the proposed acquisition of the nonbanking com- BHC Act does not require the Board to hold a public hearing on an panies and, in so doing, has considered the comments application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of submitted by the Coalition regarding the competitive efthe application. In this case, the Board has not received such a fects of the proposed acquisition. The Board believes that recommendation from any state or federal supervisory authority. The the markets for these nonbanking services, in each case, Board's rules also provide for a hearing on notices under section 4 of are unconcentrated, and notes that there are numerous the BHC Act if there are disputed issues of material fact that cannot be providers of these services. As a result, consummation of resolved in some other manner. See 12 C.F.R. 225.23(g). Protestant have not identified any disputes of material fact relating to the secthis proposal would have a de minimis effect on competition 4 notice by NationsBank to acquire Boatmen's savings association for these services. Based on all the facts of record, the tion. Board concludes that the proposal is not likely to result in Under the Board's rules, the Board may also, in its discretion, hold decreased or unfair competition, conflicts of interests, un- a public hearing or meeting on an application or notice to clarify factual issues related to the notice and to provide an opportunity for sound banking practices, undue concentration of resources, testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The or other adverse effects. Board has carefully considered these requests in light of all the facts The Board expects, moreover, that the acquisition of of record. In the Board's view, Protestants have had ample opportu- Boatmen's by NationsBank would provide added conve- nity to submit their views, and have, in fact, provided numerous nience to Boatmen's customers and the public. As noted, submissions that have been considered by the Board in acting on this proposal. Protestants' requests fail to demonstrate why their substantial written submissions do not adequately present their allegations. After a careful review of all the facts of record, the Board concludes CRA does not impose any limitation on the fees or surcharges for that Protestants' requests dispute the weight that should be accorded services. to, and the conclusions that may be drawn from, the existing facts of 47. See e.g. Boatmen's Corporation, 74 Federal Reserve Bulletin record, but do not identify any genuine dispute about facts that are 706 (1988); 80 Federal Reserve Bulletin 448 (1994). material to the Board's decision. Based on all the facts of record, the 48. See 12 U.S.C. § 1843(c)(8). Board has determined that a public hearing or meeting is not neces- 49. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75 sary to clarify the factual record in the proposal, and is not otherwise Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 warranted in this case. Accordingly, the requests for a public hearing Federal Reserve Bulletin 155 (1987). or meeting on the proposal are denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 tion with this proposal and the conditions in this order.51 (6) Boatmen's National Bank of Newark, Newark The Board's determination on the proposed nonbanking (7) Boatmen's National Bank of North Central Arkansas, activities also is subject to all the conditions set forth in Bull Shoals Regulation Y, including those in sections 225.7 and (8) Boatmen's National Bank of Northwest Arkansas, 225.23(b)(3) of Regulation Y, and to the Board's authority Fayetteville to require such modification or termination of the activities (9) Boatmen's National Bank of Pine Bluff, Pine Bluff of a bank holding company or any of its subsidiaries as the (10) Boatmen's National Bank of Russellville, Russellville Board finds necessary to ensure compliance with, and to (11) Boatmen's National Bank of South Arkansas, Camden prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. For pur- Banks in Illinois poses of this action, these commitments and conditions shall be deemed to be conditions imposed in writing by the (1) Boatmen's Bank of Quincy, Quincy Board in connection with its findings and decision, and, as (2) Boatmen's Bank of South Central Illinois, such, may be enforced in proceedings under applicable Mount Vernon law. (3) Boatmen's National Bank of Central Illinois, Hillsboro The acquisition of Boatmen's subsidiary banks may not (4) Boatmen's National Bank of Coles County, Charleston be consummated before the fifteenth calendar day after the (5) Boatmen's Bank of Franklin County, Benton effective date of this order, and this proposal may not be consummated later than three months after the effective Banks in Iowa date of this order, unless such period is extended by the Board or by the Reserve Bank, acting pursuant to delegated (1) Boatmen's Bank of Fort Dodge, Fort Dodge authority. (2) Boatmen's Bank of North Iowa, Mason City By order of the Board of Governors, effective Decem- (3) Boatmen's National Bank of Northwest Iowa, Spencer ber 16, 1996. (4) Boatmen's Bank Iowa, National Association, Des Moines Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Lindsey, Phillips, Yellen, and Meyer. Bank in Kansas JENNIFER J. JOHNSON Deputy Secretary of the Board (1) Bank IV, National Association, Wichita Appendix A Banks in Missouri Bank Subsidiaries of Boatmen's to be Acquired by (1) Boatmen's Bank of Marshall, Marshall NationsBank Banks in Arkansas (2) Boatmen's Bank of Mid Missouri, Columbia (3) Boatmen's Bank of Pulaski County, Richland (1) Boatmen's Bank of Northeast Arkansas, Jonesboro (4) Boatmen's Bank of Southern Missouri, Springfield (2) Boatmen's National Bank of Arkansas, Little Rock (5) Boatmen's Bank of Southwest Missouri, Carthage (3) Boatmen's National Bank of Batesville, Batesville (6) Boatmen's Bank of Troy, Troy (4) Boatmen's National Bank of Conway, Conway (7) Boatmen's Bank of Vandalia, Vandalia (5) Boatmen's National Bank of Hot Springs, Hot Springs (8) Boatmen's First National Bank of Kansas City, Kansas City (9) Boatmen's First National Bank of West Plains, West Plains (10) Boatmen's National Bank of Boonville, Boonville 51. Several Protestants have requested that the Board delay action (11) Boatmen's National Bank of Cape Girardeau, on, or extend the public comment period for, the proposal in order that Cape Girardeau more information could be considered. Protestants contend that Na- (12) Boatmen's National Bank of Lebanon, Lebanon tionsBank has not sufficiently responded to requests for additional information or the issues raised by the Protestants. Protestants also (13) The Boatmen's National Bank of St. Louis, St. Louis maintain that they have not had sufficient time to review and comment (14) Boatmen's Osage Bank, Butler on all the information submitted in connection with these applications (15) Boatmen's River Valley Bank, Lexington and notices. The Board is required under the BHC Act to act on (16) Boatmen's Bank of Kennett, Kennett applications and notices within specified time periods. The Board (17) Boatmen's Bank Rolla, Rolla notes, moreover, that the Protestants and NationsBank have had a reasonable opportunity to comment as provided under the Board's application processing procedures and have, in fact, submitted volumi- Banks in New Mexico nous comments that have been carefully considered by the Board. Based on all the facts of record, and for the reasons discussed above, (1) Boatmen's Credit Card Bank, Albuquerque the Board concludes that the record is sufficient to act on the proposal (2) Sunwest Bank of Albuquerque, National Association, at this time, and that delay or denial of the proposal on the grounds of informational insufficiency is not warranted. Albuquerque Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • February 1997 (3) Sunwest Bank of Clovis, National Association, Clovis men's has subsidiary banks, pursuant to section (4) Sunwest Bank of Farmington, Farmington 225.25(b)(6) of Regulation Y; (5) Sunwest Bank of Gallup, Gallup (7) Bank IV Community Development Corporation, Wich- (6) Sunwest Bank of Grant County, Silver City ita, Kansas: providing loans to and making equity invest- (7) Sunwest Bank of Hobbs, National Association, Hobbs ments in corporations or projects designed primarily (8) Sunwest Bank of Las Cruces, National Association, to promote community welfare pursuant to sec- Las Cruces tion 225.25(b)(6) of Regulation Y; (9) Sunwest Bank of Raton, National Association, Raton (8) Bank IV Affordable Housing Corporation, Wichita, (10) Sunwest Bank of Rio Arriba, National Association, Kansas: acting as a special limited partner in an investment Espanola designed primarily to promote community welfare pursu- (11) Sunwest Bank of Roswell, National Association, ant to section 225.25(b)(6) of Regulation Y; Roswell (9) Boatmen's Life Insurance Company, St. Louis, Missouri: underwriting credit insurance sold in connection (12) Sunwest Bank of Santa Fe, Santa Fe with loans made by certain affiliated banks and reinsuring credit life and credit accident and health insurance under- Bank in Oklahoma written by third party insurance companies in connection with loans made by certain affiliated banks pursuant to (1) Boatmen's National Bank of Oklahoma, Tulsa section 225.25(b)(8)(i) of Regulation Y; (10) Fourth Financial Insurance Company, Wichita, Kan- Bank in Tennessee sas: reinsuring credit life and credit accident and health insurance underwritten by third party insurers in connec- (1) Boatmen's Bank of Tennessee, Memphis tion with loans made by certain affiliated banks pursuant to section 225.25(b)(8)(i) of Regulation Y; Banks in Texas (11) Arch Reinsurance Company, LTD, Georgetown, Grand Cayman: reinsuring various operating insurance pol- ( ( 1 2 ) ) B Su o n a w tm es e t n ' B s a N nk at i o o f n E al l B Pa a s n o k , E of l A Pa u s s o ti n, Austin icies underwritten by third party insurers for the benefit of (3) Boatmen's First National Bank of Amarillo, Amarillo the applicant and its affiliates; and reinsuring credit insurance products underwritten by third party insurers and sold by affiliates pursuant to section 225.25(b)(8)(i) of Regula- Appendix B tion Y; (12) Consumers Protective Life Insurance Company, Little Rock, Arkansas: underwriting credit insurance sold in connection with loans made by its Arkansas banking affiliates Nonbank Subsidiaries of Boatmen's and Their Activities: pursuant to section 225.25(b)(8)(i) of Regulation Y; (13) Southwest Protective Life Insurance Company, Fort (1) Boatmen's Trust Company, St. Louis, Missouri, Boat- Smith, Arkansas: reinsuring credit life insurance underwritmen's Trust Company of Arkansas, Little Rock, Arkansas, ten by third party insurers in connection with loans made Boatmen's Trust Company of Illinois, Belleville, Illinois, by its affiliated thrift pursuant to section 225.25(b)(8)(i) of Boatmen's Trust Company of Oklahoma, Oklahoma City, Regulation Y; Oklahoma, Boatmen's Trust Company of Texas, Amarillo, (14) Boatmen's Insurance Agency, Inc., St. Louis, Mis- Texas: corporate trust, pension, and personal trust adminissouri: sale of credit insurance directly related to extensions tration pursuant to section 225.25(b)(3) of Regulation Y; of credit by its affiliated banks, and direct mail solicitation (2) Boatmen's Trust Company of Kansas, Overland Park, of accidental death and dismemberment insurance to the Kansas: pension administration activities pursuant to secapplicant's deposit and loan customers pursuant to section tion 225.25(b)(3) of Regulation Y; 225.25(b)(8)(i) of Regulation Y; and (3) Union Realty and Securities Company, St. Louis, Mis- (15) River City Capital Management, Inc., St. Louis, Missouri: holding certain real estate in a fiduciary capacity for souri: acting as a general partner for certain limited partnerthe customers of its parent, Boatmen's Trust Company, in ships that would be exempt from registration as investment connection with the parent's trust activities pursuant to companies under the Investment Company Act of 1940 section 225.25(b)(3) of Regulation Y; (15 U.S.C. § 80a-1) (See Meridian Bancorp, Inc., 80 (4) Superior Federal Bank, F.S.B., Fort Smith, Arkansas: Federal Reserve Bulletin 736 (1994). traditional thrift activities pursuant to section 225.25(b)(9) of Regulation Y; (5) Fourth Investment Advisors, Inc., Tulsa, Oklahoma: providing portfolio investment advice to third parties pur- Appendix C suant to section 225.25(b)(4) of Regulation Y; (6) Boatmen's Community Development Corporation, St. Louis, Missouri: providing community development Local banking markets where the bank subsidiaries of lending and equity investments in all states in which Boat- NationsBank and Boatmen s compete: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 (1) Lawrence County, Tennessee banking market — ap- Williamson and Wilson Counties, plus the town of Spring proximated by Lawrence County, Tennessee. Hill in Maury County, all in Tennessee. (2) Memphis, Tennessee banking market — approximated (4) El Paso, Texas banking market — approximated by by Shelby, Tipton and Fayette Counties in Tennessee; El Paso County, Texas, and a portion of Dona Ana County, Crittendon County, Arkansas; and De Soto and Tate Coun- New Mexico. ties in Mississippi. (5) Austin, Texas banking market — approximated by (3) Nashville, Tennessee banking market — approximated Williamson, Travis, Hayes, Caldwell and Bastrop Counby Cheatham, Davidson, Robertson, Rutherford, Sumner, ties, all in Texas. Appendix D Boatmen's CRA Performance Examination Rating Boatmen's Subsidiary Banks CRA rating Date Boatmen's National Bank of Batesville, Batesville, Arkansas Outstanding 4/29/96 Boatmen's National Bank of North Central Arkansas, Bull Shoals, Arkansas Outstanding 4/1/96 Boatmen's National Bank of South Arkansas, Camden, Arkansas Outstanding 4/29/96 Boatmen's National Bank of Conway, Conway, Arkansas Outstanding 4/29/96 Boatmen's National Bank of North West Arkansas, Fayetteville, Arkansas Outstanding 5/6/96 Superior Federal Bank, FSB, Fort Smith, Arkansas Outstanding 8/8/94 Boatmen's National Bank of Hot Springs, Hot Springs, Arkansas Outstanding 4/15/96 Boatmen's Bank of Northeast Arkansas, Jonesboro, Arkansas Satisfactory 2/13/95 Boatmen's National Bank of Arkansas, Little Rock, Arkansas Outstanding 4/8/96 Boatmen's National Bank of Newark, Newark, Arkansas Outstanding 5/6/96 Boatmen's National Bank of Pine Bluff, Pine Bluff, Arkansas Outstanding 4/29/96 Boatmen's National Bank of Russellville, Russellville, Arkansas Outstanding 4/22/96 Boatmen's Bank of Franklin County, Benton, Illinois Satisfactory 11/28/94 Boatmen's National Bank of Coles County, Charleston, Illinois Satisfactory 9/27/94 Boatmen's National Bank of Central Illinois, Hillsboro, Illinois Satisfactory 9/12/94 Boatmen's Bank of S. Central Illinois, Mount Vernon, Illinois Outstanding 1/3/94 Boatmen's Bank of Quincy, Quincy, Illinois Outstanding 2/4/94 Boatmen's Bank Iowa, N.A., Des Moines, Iowa Outstanding 9/6/94 Boatmen's Bank of Fort Dodge, Fort Dodge, Iowa Outstanding 4/24/95 Boatmen's Bank of North Iowa, Mason City, Iowa Outstanding 7/15/96 Boatmen's National Bank of Northwest Iowa, Spencer, Iowa Satisfactory 7/25/94 Bank IV N.A., Wichita, Kansas Outstanding 3/13/95 Boatmen's National Bank of Boonville, Boonville, Missouri Satisfactory 10/3/94 Boatmen's Osage Bank, Butler, Missouri Outstanding 12/30/94 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • February 1997 Appendix D—(continued) Boatmen's Subsidiary Banks CRA rating Date Boatmen's National Bank of Cape Girardeau, Cape Girardeau, Missouri Satisfactory 4/4/94 Boatmen's Bank of Southwest Missouri, Carthage, Missouri Outstanding 9/5/95 Boatmen's Bank of Mid Missouri, Outstanding 12/12/94 Boatmen's First National Bank of Kansas, Kansas City, Missouri Outstanding 1/18/94 Boatmen's Bank of Kennett, Satisfactory 4/1/96 Boatmen's National Bank of Lebanon, Satisfactory 8/15/94 Boatmen's River Valley Bank, Lexington, Missouri Outstanding 1/19/96 Boatmen's Bank of Marshall, Outstanding 8/16/94 Boatmen's Bank of Pulaski County, Outstanding 9/5/95 Boatmen's Bank Rolla, Outstanding 8/8/94 The Boatmen's National Bank of St. Louis, Outstanding 2/26/96 Boatmen's Bank of Southern Missouri, Springfield, Missouri Outstanding 10/18/95 Boatmen's Bank of Troy, Satisfactory 4/3/95 Boatmen's Bank of Vandalia, Vandalia, Missouri Satisfactory 1/10/95 Boatmen's First National Bank of West Plains, West Plains, Missouri Satisfactory 9/12/94 Boatmen's Credit Card Bank, Albuquerque, New Mexico Satisfactory 8/19/94 Sunwest Bank of Albuquerque, N.A., Albuquerque, New Mexico Outstanding 4/4/94 Sunwest Bank of Clovis, N.A., Clovis, New Mexico Outstanding 3/31/94 Sunwest Bank of Rio Arriba, N.A., Espanola, New Mexico Satisfactory 3/31/94 Sunwest Bank of Farmington, Farmington, New Mexico Satisfactory 3/8/96 Sunwest Bank of Gallup, Gallup, New Mexico Satisfactory 1/12/96 Sunwest Bank of Hobbs, N.A., Hobbs, New Mexico Satisfactory 4/11/94 Sunwest Bank of Las Cruces, N.A., Las Cruces, New Mexico Satisfactory 4/18/94 Sunwest Bank of Raton, N.A., Raton, New Mexico Outstanding 3/31/94 Sunwest Bank of Roswell, N.A., Roswell, New Mexico Satisfactory 3/31/94 Sunwest Bank of Santa Fe, Santa Fe, New Mexico Outstanding 11/25/94 Sunwest Bank, Silver City, New Mexico Outstanding 4/24/95 Boatmen's National Bank of Oklahoma, Tulsa, Oklahoma Satisfactory 9/12/95 Boatmen's Bank of Tennessee, Memphis, Tennessee Outstanding 12/12/94 Boatmen's First National Bank of Amarillo, Amarillo, Texas Satisfactory 5/16/94 Boatmen's National Bank of Austin, Austin, Texas Satisfactory 10/14/94 Sunwest Bank of El Paso, El Paso, Texas Outstanding 7/8/96 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date Compass Bancshares, Inc., Greater Brazos Valley Bancorp, Inc., December 4, 1996 Birmingham, Alabama College Station, Texas Compass Banks of Texas, Inc., Greater Brazos Valley Delaware Bancorp, Birmingham, Alabama Inc., Compass Bancorporation of Texas, Inc. Dover, Delaware Wilmington, Delaware Commerce National Bank, College Station, Texas 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 1st Floyd Bankshares, Inc. 1st Floyd Bank, Atlanta November 27, 1996 Rome, Georgia Rome, Georgia ABC Bancorp, M&F Financial Corporation, Atlanta December 13, 1996 Moultrie, Georgia Donalsonville, Georgia Merchants & Farmers Bank, Donalsonville, Georgia Albany Bancorp, Inc., First National Bancorp of Columbia, St. Louis December 6, 1996 Albany, Kentucky Inc., Columbia, Kentucky First National Bank of Columbia, Columbia, Kentucky Berthoud Bancorp Employee Stock Berthoud Bancorp, Inc., Kansas City December 19, 1996 Ownership Plan, Berthoud, Colorado Berthoud, Colorado Bluestem Bank Holding Company, Thomson Holdings, Inc., Minneapolis December 12, 1996 L.L.C., Centerville, South Dakota Sioux Falls, South Dakota BOK Financial Corporation, Park Cities Bancshares, Inc., Kansas City December 9, 1996 Tulsa, Oklahoma Dallas, Texas Capitol Bancorp, Limited, Brighton Commerce Bank, Chicago November 27, 1996 Lansing, Michigan Clinton Township, Michigan Carolina Financial Corporation, Community FirstBank of Charleston, Richmond December 23, 1996 Charleston, South Carolina Charleston, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin • February 1997 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Central Texas Bankshare Holdings, Hill Bancshares Holdings, Inc., Dallas December 26, 1996 Inc., Weimar, Texas Columbus, Texas Hill Bancshares, Inc., Colorado County Investment Wilmington, Delaware Holdings, Inc., Hill Bank & Trust Company, Wilmington, Delaware Weimar, Texas Citizens Bancorp, Inc., Citizens Bank of Campbell County, Cleveland November 29, 1996 Newport, Kentucky Newport, Kentucky City National Corporation, Ventura County National Bancorp, San Francisco December 3, 1996 Beverly Hills, California Oxnard, California Ventura County National Bank, Oxnard, California Frontier Bank, N.A., La Palma, California CN Bancorp, Inc., County National Bank, Richmond December 4, 1996 Glen Burnie, Maryland Glen Burnie, Maryland CNB Bancshares, Inc., BMC Bancshares, Inc., St. Louis December 17, 1996 Evansville, Indiana Mt. Carmel, Illinois Bank of Mt. Carmel, Mt. Carmel, Illinois The Colonial BancGroup, Inc., Jefferson Bancorp, Inc., Atlanta December 13, 1996 Montgomery, Alabama Miami Beach, Florida Jefferson Bank of Florida, Miami Beach, Florida Columbus Bancorp, Inc., Salin Bank and Trust Company, Chicago November 27, 1996 Indianapolis, Indiana Indianapolis, Indiana Cullen/Frost Bankers, Inc., Corpus Christi Bancshares, Dallas December 5, 1996 San Antonio, Texas Corpus Christi, Texas The New Galveston Company, C.S.B.C.C., Inc., Wilmington, Delaware Wilmington, Delaware Citizens State Bank, Corpus Christi, Texas Deerwood Bancshares, Inc., Deerwood Bancorporation, Inc., Minneapolis November 27, 1996 Deerwood, Minnesota Deerwood, Minnesota First National Bank of Deerwood, Deerwood, Minnesota Diboll State Bancshares, Inc., The First State Bank, Dallas December 3, 1996 Diboll, Texas Jasper, Texas Diboll State Bancshares of Delaware, Inc., Wilmington, Delaware F&M Bancorporation, East Troy Bancshares, Inc., Chicago November 22, 1996 Kaukauna, Wisconsin East Troy, Wisconsin F&M Merger Corporation, State Bank of East Troy, Kaukauna, Wisconsin East Troy, Wisconsin F&M Bancorporation, Green County Bank, Chicago November 22, 1996 Kaukauna, Wisconsin Brodhead, Wisconsin FBOP Corporation, SDNB Financial Corp., Chicago December 10, 1996 Oak Park, Illinois San Diego, California San Diego National Bank, San Diego, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date First American Corporation, Hartsville Bancshares, Inc., Atlanta December 12, 1996 Nashville, Tennessee Hartsville, Tennessee CommunityFIRST Bank, Hartsville, Tennessee First Mineola, Inc., First National Bank, Dallas December 17, 1996 Mineola, Texas Mineola, Texas First SCK Financial Corporation, First National Bank of Anthony, Kansas City December 4, 1996 Anthony, Kansas Anthony, Kansas FNB Company, FNB Company of Delaware, Dallas December 13, 1996 Livingston, Texas Wilmington, Delaware The First National Bank of Livingston, Livingston, Texas FNB Company of Delaware, The First National Bank of Livingston, Dallas December 13, 1996 Wilmington, Delaware Livingston, Texas Forrest City Financial Corporation, Forrest City Bank, FSB, St. Louis November 27, 1996 Forrest City, Arkansas Forrest City, Arkansas Forsyth Bancshares, Inc., The Citizens Bank of Forsyth County, Atlanta November 25, 1996 Cumming, Georgia Cumming, Georgia Fredonia State Bankshares, Inc., State Bank of Fredonia, Kansas City November 22, 1996 Fredonia, Kansas Fredonia, Kansas Frandsen Financial Corporation, State Bank of Lonsdale, Minneapolis November 21, 1996 Forest Lake, Minnesota Lonsdale, Minnesota Great Basin Financial Corporation, Great Basin Bank of Nevada, San Francisco December 24, 1996 Elko, Nevada Elko, Nevada Haviland Bancshares, Inc., Fredonia State Bancshares, Inc., Kansas City November 29, 1996 Haviland, Kansas Fredonia, Kansas Hoeme Family Partnership, First National Bancshares of Scott City, Kansas City December 20, 1996 Scott City, Kansas Ltd., Scott City, Kansas Independent Bancorp, Limited, Bank of Little Chute, Chicago December 13, 1996 Little Chute, Wisconsin Little Chute, Wisconsin Liberty Financial Corporation, B and K Bancorporation, Inc., Chicago December 2, 1996 West Des Moines, Iowa West Des Moines, Iowa Liberty Bank & Trust, Bloomfield, Iowa Winnebago County Bancorporation, West Des Moines, Iowa Liberty Bank and Trust, Forest City, Iowa L.B.T. Bancorporation, West Des Moines, Iowa Liberty Bank & Trust, Lake Mills, Iowa First Liberty Bancorp., West Des Moines, Iowa Liberty Bank & Trust, Mason City, Iowa BW3 Bancorporation, West Des Moines, Iowa Liberty Bank & Trust, N.A., Pocahontas, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • February 1997 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Liberty Financial Corporation, I.S.B. Bancorporation, Inc., Chicago December 2, 1996 West Des Moines, Iowa— West Des Moines, Iowa Continued Liberty Bank & Trust, Woodbine, Iowa A.B.C. Bancorporation, Inc., Tucson, Arizona Liberty Bank & Trust, Tucson, Arizona Linn Holding Company, Inc., Heritage Bank, St. Louis December 10, 1996 Linn, Missouri Loose Creek, Missouri MainBancorp, Inc., MainCorp Intermediate Holding Dallas November 26, 1996 Austin, Texas Company, Wilmington, Delaware ROSB Bancorp, Inc., Red Oak, Texas MainBank, Red Oak, Texas MainCorp Intermediate Holding ROSB Bancorp, Inc., Dallas November 26, 1996 Company, Inc., Red Oak, Texas Wilmington, Delaware MainBank, Red Oak, Texas Mancos Bancorporation, Inc., Southern Colorado Bank Holding Kansas City December 4, 1996 Mancos, Colorado Company, Pagosa Springs, Colorado Mark Twain Bancshares, Inc., First City Bancshares, Inc. of St. Louis November 26, 1996 St. Louis, Missouri Springfield, Missouri, Springfield, Missouri First City National Bank, Springfield, Missouri Metrocorp, Inc., Metrobank - Illinois, N.A., Chicago December 23, 1996 East Moline, Illinois East Moline, Illinois New Asia Bancorp, Inc., NAB Bank, Chicago December 9, 1996 Chicago, Illinois Chicago, Illinois The Oskey Limited Partnership, Hiawatha Bancshares, Inc., Minneapolis December 16, 1996 Mesa, Arizona Hager City, Wisconsin Glenwood Bancshares, Inc., Glenwood City, Wisconsin Panhandle Aviation, Inc., National Bank of Iowa, Chicago December 18, 1996 Clarinda, Iowa Denison, Iowa Pennwood Bancorp, Inc., Pennwood Savings Bank, Cleveland November 27, 1996 Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania Pineries Bankshares, Inc., Mattoon State Bank, Chicago December 13, 1996 Stevens Point, Wisconsin Mattoon, Wisconsin Pontiac Bancorp, Inc., Bank of Dwight, Chicago December 10, 1996 Pontiac, Illinois Dwight, Illinois Provident Bancorp, Inc., South Hillsborough Community Bank, Cleveland December 4, 1996 Cincinnati, Ohio Apollo Beach, Florida Salin Bancshares, Inc., Columbus Bancorp, Inc., Chicago November 27, 1996 Indianapolis, Indiana Indianapolis, Indiana Security Bancshares, Inc., Security Bank of Amory, St. Louis December 20, 1996 Amory, Mississippi Amory, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date South Central Bancshares, Inc. Hopkins Bancorp, Inc., St. Louis November 22, 1996 Russellville, Kentucky Wickliffe, Kentucky Citizens State Bank, Wickliffe, Kentucky South Coast Bancorp, Inc., South Coast Thrift and Loan San Francisco December 9, 1996 Irvine, California Association, Irvine, California State Financial Services, Inc., State Bank & Trust Company, St. Louis December 19, 1996 Harrodsburg, Kentucky Harrodsburg, Kentucky Summit Bancorp., B.M.J. Financial Corp., New York December 6, 1996 Princeton, New Jersey Bordentown, New Jersey Summit Bank, The Bank of Mid-Jersey, Hackensack, New Jersey Bordentown, New Jersey Two Rivers Bank Holding Rock Valley State Bank, Chicago December 19, 1996 Company, Rock Valley, Iowa Rock Valley, Iowa UST Corp., Walden Bancorp, Inc., Boston December 2, 1996 Boston, Massachusetts Acton, Massachusetts U.S. Trust Corporation, U.S. Trust Company of New Jersey, New York December 20, 1996 New York, New York Princeton, New Jersey Walker Ban Co., Pequot Area Bancorporation, Inc., Minneapolis December 18, 1996 Walker, Minnesota Pequot Lakes, Minnesota Wintrust Financial Corporation, Barrington Bank & Trust Company, Chicago December 4, 1996 Lake Forest, Illinois N.A., Barrington, Illinois Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Campello Bancorp, Cody Services Corporation, Boston December 3, 1996 Brockton, Massachusetts Brockton, Massachusetts Cattail Bancshares, Inc., To engage de novo in making and Minneapolis November 26, 1996 Atwater, Minnesota servicing loans First Citizens BancShares, Inc., Atlantic States Bank, Richmond December 4, 1996 Raleigh, North Carolina Raleigh, North Carolina The Fuji Bank, Limited, Heller Financial, Inc., New York December 18, 1996 Tokyo,Japan Chicago, Illinois FW Financial, Inc./First Western FW Insurance Agency, Minneapolis November 22, 1996 Bancorp, Inc., Atkinson, Nebraska Huron, South Dakota Heartland Financial USA, Inc., Tri-State Community Credit Chicago December 20, 1996 Dubuque, Iowa Corporation, Dubuque, Iowa JS Investments, Limited Partnership, Mountain Bank, Minneapolis December 17, 1996 Billings, Montana Whitefish, Montana Nbar5, Limited Partnership, Ranchester, Wyoming First Interstate BancSystems of Montana, Billings, Montana MidAmerica Bancshares, Inc., MidAmerica Financial Corporation, Minneapolis December 6, 1996 Newport, Minnesota Newport, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • February 1997 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Mid Am, Inc., Mid Am Private Trust, N.A., Cleveland December 11, 1996 Bowling Green, Ohio Cincinnati, Ohio The Mitsubishi Trust and Banking Spectrum Capital, Ltd., New York December 16, 1996 Corporation, New York, New York Tokyo,Japan National Commerce Bancorporation, J & S Leasing, Inc., St. Louis December 24, 1996 Memphis, Tennessee Knoxville, Tennessee Norwest Corporation, Advance Mortgage, Minneapolis December 3, 1996 Minneapolis, Minnesota Chesapeake, Virginia Norwest Corporation, Mortgage One, Minneapolis December 4, 1996 Minneapolis, Minnesota Canton, Ohio Peoples Bancorp Inc., Russell Federal Savings Bank, Cleveland November 27, 1996 Marietta, Ohio Russell, Kentucky Provident Bancorp, Inc., Information Leasing Corporation, Cleveland November 22, 1996 Cincinnati, Ohio Cincinnati, Ohio Procurement Alternatives Corporation, Cincinnati, Ohio Royal Bank of Canada, To engage de novo through a wholly New York November 22, 1996 Montreal, Quebec, Canada owned subsidiary in certain activities related to making and servicing loans The Royal Bank of Scotland Group CFG, Citizens Capital, Inc., Boston December 4, 1996 pic, Boston, Massachusetts Edinburgh, Scotland The Royal Bank of Scotland pic, Edinburgh, Scotland The Governor and Company of the Bank of Ireland, Dublin, Ireland Citizens Financial Group, Inc., Providence, Rhode Island Southern National Corporation, Fidelity Financial Bankshares Richmond December 16, 1996 Winston-Salem, North Carolina Corporation, BB&T Financial Corporation of Richmond, Virginia Virginia, Fidelity Federal Savings Bank, Winston-Salem, North Carolina Richmond, Virginia Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Louisville Development Bancorp, Louisville Community Development St. Louis December 11, 1996 Inc., Bank, Louisville, Kentucky Louisville, Kentucky Louisville Real Estate Development Company, Louisville, Kentucky Magna Group, Inc., Homeland Bankshares Corporation, St. Louis December 17, 1996 St. Louis, Missouri Waterloo, Iowa HBC Acquisition Sub, Inc., Homeland Savings Bank, FSB, St. Louis, Missouri Des Moines, Iowa Homeland Trust Company, Des Moines, Iowa Homeland Student Loan Company, West Des Moines, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 169 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 The Citizens Banking Company, EST National Bank, Cleveland December 24, 1996 Sandusky, Ohio Elyria, Ohio FCNB Bank, Elkridge Bank, Richmond December 11, 1996 Frederick, Maryland Elkridge,Maryland Mercantile Bank of Lawrence, Mercantile Bank, Kansas City December 2, 1996 Lawrence, Kansas Overland Park, Kansas Summit Bank, The Bank of Mid-Jersey, New York December 6, 1996 Hackensack, New Jersey Bordentown, New Jersey Tehama County Bank, Wells Fargo Bank, N.A., San Francisco December 11, 1996 Red Bluff, California San Francisco, California PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the cancellation agreements. On October 18, 1996, the district Federal Reserve Banks in which the Board of Governors is not court denied plaintiffs' motion for a temporary restraining named a party. order. A hearing on the motion for preliminary and permanent injunctive relief is set for February 10, 1997. The New Mexico Alliance v. Board of Governors, No. 96- Clifford v. Board of Governors, No. 96-1342 (D.C. Cir., filed 9552 (10th Cir., filed December 24, 1996). Petition for September 17, 1996). Petition for review of Board order review of a Board order dated December 16, 1996, approv- dated August 21, 1996, denying petitioners' motion to ing the acquisition by NationsBank Corporation and NB dismiss enforcement action against them. On November 4, Holdings Corporation, both of Charlotte, North Carolina, of 1996, the Board filed a motion to dismiss the petition. Boatmen's Bancshares, Inc., St. Louis, Missouri. Also on Artis v. Greenspan, No. 96-CV-02105 (D. D.C., filed Septem- December 24, 1996, petitioners moved for an emergency ber 11, 1996). Class complaint alleging race discrimination stay of the Board's order. in employment. On December 20, 1996, the Board moved Artis v. Greenspan, No. 1:96CV02619 (D.D.C., filed Novem- to dismiss the action. ber 19, 1996). Employment discrimination action. On De- Leuthe v. Board of Governors, No. 96-5725 (E.D. Pa., filed cember 20, 1996, the Board moved to dismiss the action. August 16, 1996). Action against the Board and other First Baird Bancshares, Inc. v. Board of Governors, No. Federal banking agencies challenging the constitutionality 96-1426 (D.C. Cir., filed November 18, 1996). Petition for of the Office of Financial Institution Adjudication. review of Board order dated November 6, 1996, approving Long v. Board of Governors, No. 96-9526 (10th Cir., filed applications of First Commercial Corporation, Little Rock, July 31, 1996). Petition for review of Board order dated Arkansas, Arvest Bank Group, Inc., Bentonville, Arkansas, July 2, 1996, assessing a civil money penalty and cease and and TRH Bank Group, Inc., Norman, Oklahoma, to acquire desist order for violations of the Bank Holding Company all the shares of The Oklahoma National Bank of Duncan, Act. The Board's brief in opposition to the petition was Duncan, Oklahoma. On November 20, 1996, the Court filed November 27, 1996. denied petitioners' motion for a stay. Board of Governors v. Interamericas Investments, Ltd., No. Snyder v. Board of Governors, No. 96-1403 (D.C. Cir., filed 96-7108 (D.C. Cir., filed June 14, 1996). Appeal of district October 23, 1996). Petition for review of Board order dated court ruling granting, in part, the Board's application to September 11, 1996, prohibiting John K. Snyder and enforce an adminstrative investigatory subpoena for docu- Donald E. Hedrick from further participation in the banking ments and testimony. On November 15, 1996, the court industry. On November 21, 1996, the Board moved to dismissed the action on appellants' motion. dismiss the petition. Interamericas Investments, Ltd. v. Board of Governors, No. American Bankers Insurance Group, Inc. v. Board of Gover- 96-60326 (5th Cir., filed May 8, 1996). Petition for review nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, of order imposing civil money penalties and cease and 1996). Action seeking declaratory and injunctive relief indesist order in enforcement case. Petitioners' brief was filed validating a new regulation issued by the Board under the on July 26, 1996, and the Board's brief was filed on Truth in Lending Act relating to treatment of fees for debt September 27, 1996. On August 20, petitioners' motion for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • February 1997 a stay of the Board's orders pending judicial review was Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, denied by the Court of Appeals. 1995). Appeal of dismissal of action against Board and Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed others seeking damages for alleged violations of constitu- March 7, 1996). Petition for review of a Board order dated tional and common law rights. The appellants' brief was February 7, 1996, approving applications by The Fifth filed on June 23, 1995; the Board's brief was filed on Third Bank, Cincinnati, Ohio, and The Firth Third Bank of July 12, 1995. Columbus, Columbus, Ohio, to acquire certain assets and Money Station, Inc. v. Board of Governors, No. 95-1182 assume certain liabilities of 25 branches of NBD Bank, (D.C. Cir., filed March 30, 1995). Petition for review of a Columbus, Ohio. Petitioner has moved to consolidate the Board order dated March 1, 1995, approving notices by case with Kuntz v. Board of Governors, No. 95-1495. On Bank One Corporation, Columbus, Ohio; CoreStates Finan- April 8, 1996, the Board filed a motion to dismiss the cial Corp., Philadelphia, Pennsylvania; PNC Bank Corp., action. Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio, Henderson v. Board of Governors, No. 96-1054 (D.C. Cir., to acquire certain data processing assets of National City filed February 16, 1996). Petition for review of a Board Corporation, Cleveland, Ohio, through a joint venture suborder dated January 17, 1996, approving the merger of First sidiary. On April 23, 1996, the court vacated the Board's Citizens BancShares, Inc., Raleigh, North Carolina, with order. On July 31, 1996, the full court granted the Board's Allied Bank Capital, Inc., Sanford, North Carolina. Petitionsuggestion for rehearing en banc, and vacated the April 23 ers' motion for a stay was denied on March 7, 1996. panel decision. On December 19, 1996, the parties filed a Following briefing on the merits of the petition, petitioners stipulation of voluntary dismissal. In re Subpoena Duces filed a motion for voluntary dismissal on December 19, Tecum, Misc. No. 95-06 (D.D.C., filed January 6, 1995). 1996. Action to enforce subpoena seeking pre-decisional supervi- Research Triangle Institute v. Board of Governors, No. sory documents sought in connection with an action by 1:96CV00102 (M.D.N.C., filed February 12, 1996). Con- Bank of New England Corporation's trustee in bankruptcy tract dispute. On May 3, 1996, the Board filed a motion to against the Federal Deposit Insurance Corporation. The dismiss the action. Board filed its opposition on January 20, 1995. Oral argu- Inner City Press/Community on the Move v. Board of Gover- ment on the motion was held July 14, 1995. nors, No. 96-4008 (2nd Cir., filed January 19, 1996). Peti- Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New tion for review of a Board order dated January 5, 1996, York, filed September 17, 1991). Action to freeze assets of approving the applications and notices by Chemical Bankindividual pending administrative adjudication of civil ing Corporation to merge with The Chase Manhattan Cormoney penalty assessment by the Board. On September 17, poration, both of New York, New York, and by Chemical 1991, the court issued an order temporarily restraining the Bank to merge with The Chase Manhattan Bank, N.A., both transfer or disposition of the individual's assets. of New York, New York. Petitioners' motion for an emergency stay of the transaction was denied following oral argument on March 26, 1996. The Board's brief on the merits was filed July 8, 1996. The case has been consolidated for oral argument and decision with Lee v. Board of FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Governors, No. 95^1134 (2d Cir.); oral argument is sched- OF GOVERNORS uled for January 13, 1997. Banco Latino C.A., S.A.C.A. Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed Caracas, Venezuela September 21, 1995). Petition for review of Board order dated August 23, 1995, approving the applications of The Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets The Federal Reserve Board announced on December 4, and assume certain liabilities of 12 branches of PNC Bank, 1996, the issuance of an Amended Cease and Desist Order Ohio, N.A., Cincinnati, Ohio, and to establish certain against Banco Latino C.A., S.A.C.A., Caracas, Venezuela, branches. The Board's motion to dismiss was filed on and Banco Latino International, Miami, Florida. October 26, 1995. Lee v. Board of Governors, No. 95^134 (2nd Cir., filed Nir Kantor August 22, 1995). Petition for review of Board orders dated New York, New York July 24,1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York, and the acquisition of U.S. Trust by Chase Manhattan The Federal Reserve Board announced on December 23, Corporation, New York, New York. On September 12, 1996, the issuance of an Order of Prohibition against Nir 1995, the court denied petitioners' motion for an emergency Kantor, a former officer and institution-affiliated party of stay of the Board's orders. The Board's brief was filed on BT Securities Corporation, New York, New York, a non- April 16, 1996. Oral argument, consolidated with Inner City bank subsidiary of Bankers Trust New York Corporation, Press/Community on the Move v. Board of Governors, is New York, New York, a registered bank holding corporascheduled for January 13, 1996. tion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 George T. Wittman Written Agreement dated December 9, 1994—terminated New York, New York December 9, 1996. The Federal Reserve Board announced on December 11, Ronald E. Bond, Former President 1996, the issuance of an Order of Prohibition against and Chairman of American State Bancshares, George T. Wittman, a former private banking account Inc. officer and institution-affiliated party of the New York Broken Bow, Oklahoma Branch of Banque Indosuez, Paris, France. Written Agreement dated April 24, 1992—terminated De- TERMINATION OF ENFORCEMENT ACTIONS cember 9, 1996. The Federal Reserve Board announced on December 13, Northern Bancorp, Inc. 1996, the termination of the following enforcement actions: Woburn, Massachusetts and James J. Mawn and Robert L. McCrensky Bankers Trust New York Corporation Bankers Trust Company BT Securities Corporation Written Agreement dated February 15, 1996—terminated New York, New York November 6, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance A25 Federal fiscal and financing operations DOMESTIC FINANCIAL STATISTICS A26 U.S. budget receipts and outlays All Federal debt subject to statutory limitation Money Stock and Bank Credit All Gross public debt of U.S. Treasury— Types and ownership A4 Reserves, money stock, liquid assets, and debt A28 U.S. government securities measures dealers—Transactions A5 Reserves of depository institutions, Reserve Bank A29 U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A30 Federal and federally sponsored credit institutions agencies—Debt outstanding A6 Selected borrowings in immediately available funds—Large member banks Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local governments and corporations A7 Federal Reserve Bank interest rates A3 2 Open-end investment companies—Net sales A8 Reserve requirements of depository institutions and assets A9 Federal Reserve open market transactions A32 Corporate profits and their distribution A33 Domestic finance companies—Assets and Federal Reserve Banks liabilities, and consumer, real estate, and business credit A10 Condition and Federal Reserve note statements All Maturity distribution of loan and security Real Estate holdings A34 Mortgage markets Monetary and Credit Aggregates A35 Mortgage debt outstanding A12 Aggregate reserves of depository institutions Consumer Credit and monetary base A13 Money stock, liquid assets, and debt measures A36 Total outstanding A15 Deposit interest rates and amounts outstanding— A36 Terms commercial and BIF-insured banks Flow of Funds Commercial Banking Institutions— A37 Funds raised in U.S. credit markets Assets and Liabilities A39 Summary of financial transactions A40 Summary of credit market debt outstanding A16 All commercial banks A41 Summary of financial assets and liabilities A17 Domestically chartered commercial banks A18 Large domestically chartered commercial banks A19 Small domestically chartered commercial banks DOMESTIC NONFINANCIAL STATISTICS A20 Foreign-related institutions Selected Measures Financial Markets A42 Nonfinancial business activity— A22 Commercial paper and bankers dollar Selected measures acceptances outstanding A42 Labor force, employment, and unemployment A22 Prime rate charged by banks on short-term A43 Output, capacity, and capacity utilization business loans A44 Industrial production—Indexes and gross value A23 Interest rates—money and capital markets A46 Housing and construction A24 Stock market—Selected statistics A47 Consumer and producer prices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • February 1997 DOMESTIC NONFINANCIAL STATISTICS- Reported by Nonbanking Business CONTINUED Enterprises in the United States A58 Liabilities to unaffiliated foreigners Selected Measures—Continued A59 Claims on unaffiliated foreigners A48 Gross domestic product and income A49 Personal income and saving Securities Holdings and Transactions A60 Foreign transactions in securities A61 Marketable U.S. Treasury bonds and INTERNATIONAL STATISTICS notes—Foreign transactions Summary Statistics Interest and Exchange Rates A50 U.S. international transactions—Summary A61 Discount rates of foreign central banks A51 U.S. foreign trade A61 Foreign short-term interest rates A51 U.S. reserve assets A62 Foreign exchange rates A51 Foreign official assets held at Federal Reserve Banks A52 Selected U.S. liabilities to foreign official A63 GUIDE TO STATISTICAL RELEASES AND institutions SPECIAL TABLES Reported by Banks in the United States A64 Pro forma balance sheet and income statements for priced service operations, September 30, 1996 A52 Liabilities to and claims on foreigners A68 Terms of lending at commercial banks, A53 Liabilities to foreigners November 4-8, 1996 A55 Banks' own claims on foreigners A56 Banks' own and domestic customers' claims on A72 Assets and liabilities of U.S. branches and agencies foreigners of foreign banks, September 30, 1996 A56 Banks' own claims on unaffiliated foreigners A57 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

A3 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 Financial Statistics • February 1997 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1995 1996 1996 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Q1 Q2 Q3 July Aug. Sept. Oct.r Nov. Reserves of depository institutions2 1 Total -6.9 -7.9 -6.4 -16.4 -20.3 -20.9 -21.1 -28.4 -6.7 2 Required -7.7 -8.5 -5.7 -16.6 -18.8 -19.0 -23.3 -27.9 -7.5 3 Nonborrowed -6.4 -6.5 -7.6 -17.6 -20.0 -20.3 -22.0 -26.7 -5.0 4 Monetary base3 2.7 1.5 2.2 5.9 7.6 6.3 4.5 3.5 5.8 Concepts of money, liquid assets, and debt4 5 Ml -5.1 -2.7 -.7 -7.0 -9.1 -9.9 -8.7 -16.8 .1 6 M2 4.1 5.7 3.8 2.7 1.6 3.8r 3.3r 2.9 7.1 7 M3 4.6 7.1 5.5 4.4r 2.8 4.9r 7.2r 8.6 6.6 8 L 6.0 5.0 5.7 4.8 3.3r 6.6r 8.3r 3.9 n.a. 9 Debt 4.7 5.0 5.6 5.0r 5.9r 4.5r 3.8r 4.6 n.a. Nontransaction components 10 In M25 8.4 9.4 5.7 6.9r 6.2 9.5r 8.3r 10.9 9.9 11 In M3 only6 6.8 12.7 12.4 10.7 13' 9.3r 21.8r 29.8 5.0 Time and savings deposits Commercial banks 12 Savings, including MMDAs 13.1 22.6 12.7 11.5 9.6 17.5 10.2 17.4 16.7 13 Small time7 4.8 2.5 -2.9 3.7r 5.4 6.2r 6.2r 5.6 8.0 14 Large time8'9 19.5 8.0 17.6 16.8 16.3 10.0 21.4 49.6 16.9 Thrift institutions 15 Savings, including MMDAs -2.8 -.3 8.1 -.2 -.7 -4.9 -1.0 3.3 -2.6 16 Small time7 4.9 -2.3 -3.2 — .6' -2.7 3.8r 3.4r 6.8 2.0 4 17 Large time8 8.4 6.4 -3.0 8.5 12.7 9.4 18.8 13.8 9.1 | Money market mutual funds 18 Retail 16.9 13.3 9.4 13.6 13.1 14.9 17.4 14.5 14.8 19 Institution-only 10.3 27.9 8.7 18.6 16.8 20.4 25.7 7.3 13.2 Repurchase agreements and Eurodollars 20 Repurchase agreements10 -12.7 3.4 16.3 -4.2 -11.1 -5.6 19.4 13.6 -17.1 21 Eurodollars10 -6.7 17.0 7.4 -.3 -17.2 7.5 21.1 56.0 -23.3 Debt components4 22 Federal 2.3 3.0 4.7 3.8 6.0 4.5 1.0 3.7 n.a. 23 Nonfederal 5.5r 5.8 5.9 5.5r 5.8r 4.6r 4.8r 4.9 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- amounts held by depository institutions, the U.S. government, money market funds, and ing during preceding month or quarter. foreign banks and official institutions. Seasonally adjusted M3 is calculated by summing large 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with time deposits, institutional money fund balances, RP liabilities, and Eurodollars, each regulatory changes in reserve requirements. (See also table 1.20.) seasonally adjusted separately, and adding this result to seasonally adjusted M2. 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency securities, commercial paper, and bankers acceptances, net of money market fund holdings of component of the money stock, plus (3) (for all quarterly reporters on the "Report of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference separately, and then adding this result to M3. between current vault cash and the amount applied to satisfy current reserve requirements. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 4. 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 U.S. 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 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail OCDs, each seasonally adjusted separately. money fund balances, each seasonally adjusted separately. M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and money market mutual funds (money funds with minimum initial investments of less than term) of U.S. addressees, each seasonally adjusted separately. $50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository 7. Small time deposits—including retail RPs—are those issued in amounts of less than institutions and money market funds. Seasonally adjusted M2 is calculated by summing $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions savings deposits, small-denomination time deposits, and retail money fund balances, each are subtracted from small time deposits. seasonally adjusted separately, and adding this result to seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) booked at international banking facilities. balances in institutional money funds (money funds with minimum initial investments of 9. Large time deposits at commercial banks less those held by money market funds, $50,000 or more), (3) RP liabilities (overnight and term) issued by all depository institutions, depository institutions, the U.S. government, and foreign banks and official institutions. and (4) Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S. 10. Includes both overnight and term. banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 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. 16 Oct. 23 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 427,377 426,254r 427,779 425,131' 428,123 429,842 U.S. government securities2 2 Bought outright—System account 387,118 386,942 392,296 387,116 387,020 386,640 386,486 393,581 393,796 3 Held under repurchase agreements 4,540 3,042 3,219 3,945 3,634 2,251 4,904 429 3,982 Federal agency obligations 4 Bought outright 2,319 2,289 2,245 2,309 2,288 2,249 2,247 2,247 5 6 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 824 0 1,43 0 4 967 0 1,62 0 4 1,78 0 2 1,65 0 2 1,87 0 4 228 0 0 Loans to depository institutions 7 Adjustment credit 95 50 77 158 4 5 9 63 9 8 E Se x a te s n o d n e a d l c c r r e e d d i i t t 310 0 212 0 10 0 5 213 0 19 0 7 18 0 1 12 0 6 10 0 9 10 0 6 10 Float 595 704r 789 907 1,136 402r 504 1,260 799 11 Other Federal Reserve assets 31,577 31,580r 31,155 31,638 31,718 31,751' 31,972 31,981 30,489 12 Gold stock 11,050 11,049 11,049 11,049 11,049 11,049 11,049 11,049 11,049 13 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 14 Treasury currency outstanding 24,739 24,800 24,862 24,794 24,808 24,822 24,836 24,850 24,864 ABSORBING RESERVE FUNDS 15 Currency in circulation 431,635 432,734 436,949 433,891 433,263 432,201 433,764 436,538 437,167 16 Treasury cash holdings 282 287 276 292 281 281 280 277 275 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,139 5,064 4,939 4,885 5,414 5,228 5,013 4,905 5,039 18 Foreign 176 174 169 178 166 182 170 166 173 19 Service-related balances and adjustments .. 6,379 6,655r 6,896 6,799 6,659 6,666' 7,004 6,794 6,774 20 Other 357 373 352 381 358 378 370 359 364 21 Other Federal Reserve liabilities and capital , 14,088 13,883 14,263 13,834 14,139 14,146 14,060 14,152 14,457 22 Reserve balances with Federal Reserve Banks' 13,828 12,651r 12,637 13,211 13,075 11,637' 13,064 12,268 13,550 End-of-month figures Wednesday figures Sept. Oct. 30 Nov. 6 Nov. 13 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 428,168 437,240 427,170 434,727 426,869' 433,040 437,679 U.S. government securities 2 Bought outright—System account 383,910 385,087 392,662 387,055 386,616 387,585 387,367 393,765 393,430 3 Held under repurchase agreements 7,014 7,830 7,548 1,255 9,332 2,680 7,270 0 8,475 Federal agency obligations 4 Bought outright 2,309 2,247 2,237 2,309 2,260 2,247 2,247 2,247 2,247 5 6 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 1,33 0 8 2,97 0 0 2,763 0 824 0 2,897 0 2,12 0 0 2,375 0 0 0 1,72 0 5 Loans to depository institutions 7 Adjustment credit 1,360 6 111 704 12 5 3 17 372 9 8 E Se x a te s n o d n e a d l c c r r e e d d i i t t 294 0 15 0 7 76 0 205 0 18 0 9 18 0 0 11 0 0 11 0 2 99 0 10 Float 640 312r 951 3,395 981 100' 1,352 4,295 1,158 11 Other Federal Reserve assets 31,302 31,994r 30,892 31,422 32,440 31,952' 32,316 32,113 30,173 12 Gold stock 11,050 11,049 11,049 11,049 11,049 11,049 11,049 11,049 11,049 13 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 14 Treasury currency outstanding 24,766 24,836 24,892 24,794 24,808 24,822 24,836 24,850 24,864 ABSORBING RESERVE FUNDS 15 Currency in circulation 430,394 433,238 440,914 434,677 433,308 433,379 435,668 437,994 437,742 16 Treasury cash holdings 286 281 273 281 281 281 278 276 272 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 7,700 5,897 4,857 3,594 5,337 5,388 5,774 4,512 5,119 18 Foreign 265 176 170 165 168 165 166 169 183 19 Service-related balances and adjustments .. 6,539 7,004' 7,110 6,799 6,659 6,666' 7,004 6,794 6,774 20 Other 368 363 292 366 364 330 362 346 366 21 Other Federal Reserve liabilities and capital , 13,744 14,066 14,219 13,660 13,937 13,884 13,866 13,964 14,212 22 Reserve balances with Federal Reserve Banks' 14,406 15,181' 15,064 13,190 20,249 12,366' 15,526 14,111 18,644 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 Financial Statistics • February 1997 t.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1993 1994 1995 1996 Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. 1 Reserve balances with Reserve Banks2 29,374 24,658 20,440 16,753 16,590 15,392 14,761 13,688 12,800r 12,881 2 Total vault cash3 36,818 40,378 42,088 41,146 41,979 42,773 42,517 43,639 42,913 42,737 3 Applied vault cash4 33,484 36,682 37,460 36.382 37,095 37,451 36,880 37,309 36,749r 36,854 4 Surplus vault cash5 3,334 3,696 4,628 4,764 4,883 5,322 5,637 6,330 6,164 5,883 5 Total reserves6 ' 62,858 61,340 57,900 53,135 53,686 52,843 51,642 50,997 49,550r 49,735 6 Required reserves 61,795 60,172 56,622 52,275 52,535 51,778 50,681 49,959 48,556r 48,715 7 Excess reserve balances at Reserve Banks7 1,063 1,168 1,278 860 1,150 1,065 961 1,038 994 1,021 8 Total borrowings at Reserve Banks8 82 209 257 127 386 368 334 368 287 214 9 Seasonal borrowings 31 100 40 105 192 284 309 306 212 109 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1996 July 31 Aug. 14 Aug. 28 Sept. 11 Sept. 25 Oct. 9 Oct. 23 Nov. 6r Nov. 20 Dec. 4 1 Reserve balances with Reserve Banks2 14,448 14,940 14,613 14,623 13,324 12,653 13,141 12,371 12,914 13,143 2 Total vault cash3 43,492 43,326 41,604 43,007 44,028 43,941 42,196 43,013 42,497 42,908 3 Applied vault cash4 37,740 37,604 36,114 37,083 37,505 37,258 36,267 37,021 36,768 36,874 4 Surplus vault cash5 5,752 5,722 5,490 5,924 6,523 6,683 5,929 5,992 5,729 6,034 5 Total reserves6 52,188 52,544 50,726 51,705 50,829 49,911 49,408 49,392 49,682 50,017 6 Required reserves 50,964 51,514 49,835 50,741 49,745 48,839 48,470 48,388 48,678 48,963 7 Excess reserve balances at Reserve Banks7 1,223 1,029 891 964 1,084 1,072 938 1,004 1,004 1,054 8 Total borrowings at Reserve Banks8 442 306 349 394 335 402 286 161 143 346 9 Seasonal borrowings 304 290 328 308 317 274 205 154 108 86 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. 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1996, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 71,817 73,330 72,201 72,887 71,752r 83,017 85,282 86,493 81,974 2 For all other maturities 15,154 15,306 16,965 16,168 16,576 15,678 15,144 15,001 15,895 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 15,419 15,857 19,483 15,192 14,466 18,374 21,104 18,616 17,421 4 For all other maturities 19,277 19,255 17,812 18,432 19,023 18,015 18,894 18,894 18,976 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 17,772 17,002 16,570 18,957 17,104 18,184 18,228 20,466 18,998 6 For all other maturities 36,037 36,853 37,152 35,978 36,034 34,934 34,302 32,556 32,243 All other customers 7 For one day or under continuing contract 40,007 40,916 42,297 41,575 41,046 41,867 41,395 43,135 41,956 8 For all other maturities 13,730 14,084 14,588 14,137 14,134 14,024 13,878 13,525 13,461 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 64,758 62,470 59,218 62,154 62,229r 70,222 69,818 72,489 70,607 10 To all other specified customers2 23,324 23,066 23,302 24,890 22,879 24,108 23,756 25,456 22,362 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

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit' FFeeddeerraall RReesseerrvvee BBaannkk 1/ O 3/ n 9 7 Effective date Previous rate 1/ O 3/ n 9 7 Effective date Previous rate 1/ O 3/ n 9 7 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.40 1/2/97 5.35 5.90 1/2/97 5.85 New York 1/31/96 Philadelphia 1/31/96 Cleveland 1/31/96 Richmond 2/1/96 Atlanta 1/31/96 Chicago 2/1/96 St. Louis 2/5/96 Minneapolis 1/31/96 Kansas City 2/1/96 Dallas 1/31/96 San Francisco 5.00 1/31/96 5.25 5.40 1/2/97 5.35 5.90 1/2/97 5.85 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank level)—All of Effective date 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 1981—Nov. 2 13-14 13 1988—Aug. 9 6-6.5 6.5 6 13 13 11 6.5 6.5 1978—Jan. 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aug. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 8 27 10-10.5 10 4 6 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 5.5 20 8.5 8.5 Oct. 12 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 Nov. 22 9-9.5 9 17 5 5 26 9 9 Nov. 6 4.5-5 4.5 1979—July 20 10 10 Dec. 14 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5-4.5 3.5 20 10.5 10.5 17 8.5 8.5 24 3.5 3.5 Sept. 19 10.5-11 11 21 11 11 1984—Apr. 9 8.5-9 9 1992—July 2 3-3.5 3 Oct. 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug. 16 3.5-4 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov. 15 4-4.75 4.75 June 13 11-12 11 17 4.75 4.75 16 11 11 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 10 Apr. 21 6.5-7 6.5 9 5.25 5.25 Sept. 26 11 11 23. 6.5 6.5 N D o e v c . . 1 5 7 12 1 - 2 1 3 1 12 3 J A u u ly g . 2 1 1 1 5.5 6 - 6 5 6 . 5 1996— F Ja e n b . . 3 5 1 5.0 5 0 . - 0 5 0 . 25 5 5 . . 0 0 0 0 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Jan. 3, 1997 5.00 5.00 14 14 1987—Sept. 4 5.5-6 6 11 6 6 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

A8 Domestic Financial Statistics • February 1997 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of deposits Effective date Net transaction accounts2 1 $0 million-$49.3 million3 33333 11111/////22222/////9999977777 1111100000 11111/////22222/////9999977777 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. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning January 2, 1997, for depository institutions that report weekly, include commercial banks, mutual savings banks, savings and loan associations, credit and with the period beginning January 16, 1997, for institutions that report quarterly, the unions, agencies and branches of foreign banks, and Edge Act corporations. exemption was raised from $4.3 million to $4.4 million. 2. Transaction accounts include all deposits against which the account holder is permitted 4. The reserve requirement was reduced from 12 percent to 10 percent on to make withdrawals by negotiable or transferable instruments, payment orders of with- Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that drawal, or telephone or preauthorized transfers for the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 11/2 years was reduced from 3 percent to 1 Vi percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that deposits, not transaction accounts. began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of l'/i as of June 30 of each year. Effective with the reserve maintenance period beginning January 2, years or more has been zero since Oct. 6, 1983. 1997, for depository institutions that report weekly, and with the period beginning January 16, 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero 1997, for institutions that report quarterly, the amount was decreased from $52.0 million to in the same manner and on the same dates as the reserve requirement on nonpersonal time $49.3 million. deposits with an original maturity of less than 1 Vi years (see note 5). 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

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1996 TTyyppee ooff ttrraannssaaccttiioonn 11999933 11999944 11999955 aanndd mmaattuurriittyy Apr. May June July Aug. Sept. Oct. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,717 17,484 10,932 88 0 3,311 0 0 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 332,229 376,277 398,487 32,218 40,467 31,726 32,368 34,271 32,791 38,661 4 Redemptions 0 0 900 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 1,223 1,238 390 35 0 0 0 1,240 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 31,368 0 0 3,511 5,107 0 2,807 2,780 2,371 1,623 8 Exchanges -36,582 -21,444 0 -4,824 -5,448 0 -4,415 -3,580 -2,890 -1,770 9 Redemptions 0 0 0 787 0 0 0 0 0 0 One to five years 10 Gross purchases 10,350 9,168 4,966 1,899 0 0 0 1,279 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -27,140 -6,004 0 -3,511 -4,049 0 -2,807 -1,409 -2,371 -1,623 13 Exchanges 0 17,801 0 4,824 3,748 0 3,694 1,780 2,890 1,395 Five to ten years 14 Gross purchases 4,168 3,818 1,239 479 0 0 0 297 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts 0 -3,145 0 0 -1,058 0 0 -1,371 0 0 17 Exchanges 0 2,903 0 0 1,700 0 721 900 0 375 More than ten years 18 Gross purchases 3,457 3,606 3,122 1,065 0 0 0 900 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts 0 -918 0 0 0 0 0 0 0 0 21 Exchanges 0 775 0 0 0 0 0 900 0 0 All maturities 22 Gross purchases 36,915 35,314 20,649 3,566 0 3,311 0 3,716 0 0 23 Gross sales 0 0 0 0 0 0 0 0 0 0 24 Redemptions 767 2,337 2,376 787 0 0 0 0 0 0 Matched transactions 25 Gross purchases 1,475,941 1,700,836 2,197,736 253,482 259,135 248,534 267,438 265,397 234,992 268,304 26 Gross sales 1,475,085 1,701,309 2,202,030 251,510 259,595 249,277 268,975 264,536 238,036 267,128 Repurchase agreements 27 Gross purchases 475,447 309,276 331,694 46,449R 30,688 43,048 46,151 45,202 36,014 33,836 28 Gross sales 470,723 311,898 328,497 50,345 24,984R 41,666 37,779 56,286 33,374 33,020 29 Net change in U.S. Treasury securities 41,729 29,882 17,175 854R 5,244R 3,950 6,836 -6,508 -404 1,993 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 774 1,002 1,303 82 16 40 52 0 27 63 Repurchase agreements 33 Gross purchases 35,063 52,696 36,851 2,372 5,722 4,113R 3,145 8,500 4,536 12,683 34 Gross sales 34,669 52,696 36,776 3,372 4,372 6,488 2,863 7,544 4,436 11,051 35 Net change in federal agency obligations -380 -1,002 -1,228 -1,082 1,334 —2,415R 231 956 73 1,569 36 Total net change in System Open Market Account... 41,348 28,880 15,948 —228r 6,578r l,535r 7,066 -5,552 -331 3,562 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

A10 Domestic Financial Statistics • February 1997 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAccccoouunntt 1996 1996 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 Sept. 30 Oct. 31 Nov. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,049 11,049 11,049 11,049 11,049 11,050 11,049 11,049 2 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 3 Coin 616 618 623 624 619 596 621 621 Loans 4 To depository institutions 185 113 129 471 93 1,654 162 118888 5 Other 0 0 0 0 0 0 0 00 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 2,247 2,247 2,247 2,247 2,237 2,309 2,247 22,,223377 8 Held under repurchase agreements 2,120 2,375 0 1,725 2,323 1,338 2,970 2,763 9 Total U.S. Treasury securities 390,265 394,637 393,765 401,905 398,755 390,924 392,917 400,210 10 Bought outright2 387,585 387,367 393,765 393,430 392,767 383,910 385,087 392,662 11 Bills 187,325 187,106 193,504 193,169 192,507 183,650 184,826 192,401 12 Notes 152,392 152,392 152,392 150,922 150,922 152,392 152,392 150,922 13 Bonds 47,869 47,869 47,869 49,339 49,339 47,869 47,869 49,339 14 Held under repurchase agreements 2,680 7,270 0 8,475 5,988 7,014 7,830 7,548 15 Total loans and securities 394,817 399,372 396,140 406,347 403,407 396,226 398,296 405,397 16 Items in process of collection 6,458 7,748 13,208 7,000 6,682 2,521 5,646 3,609 17 Bank premises 1,214 1,216 1,217 1,221 1,221 1,207 1,215 1,221 Other assets 18 Denominated in foreign currencies 19,518 19,518 19,526 19,534 19,542 19,484 19,511 19,338 19 All other4 11,352 11,707 11,464 9,488 10,013 10,679 11,442 10,332 20 Total assets 454,742 460,946 462,945 464,981 462,251 451,481 457,498 461,286 LIABILITIES 21 Federal Reserve notes 409,453 411,728 414,042 413,774 416,966 406,510 409,304 416,915 22 Total deposits 25,923 29,303 26,084 31,042 25,309 29,331 29,754 27,450 23 Depository institutions 20,041 23,001 21,057 25,376 20,158 20,997 23,317 22,131 24 U.S. Treasury—General account 5,388 5,774 4,512 5,119 4,688 7,700 5,897 4,857 25 Foreign—Official accounts 165 166 169 183 164 265 176 170 26 Other 330 362 346 366 299 368 363 292 27 Deferred credit items 5,482 6,050 8,855 5,954 5,811 1,897 4,375 2,702 28 Other liabilities and accrued dividends 4,475 4,443 4,467 4,709 4,666 4,515 4,598 4,730 29 Total liabilities 445,333 451,523 453,448 455,479 452,752 442,252 448,031 451,796 CAPITAL ACCOUNTS 30 Capital paid in 4,565 4,577 4,577 4,581 4,587 4,535 4,565 4,587 31 Surplus 3,860 3,860 3,860 3,860 3,860 3,958 3,860 3,860 32 Other capital accounts 984 986 1,059 1,061 1,052 736 1,042 1,043 33 Total liabilities and capital accounts 454,742 460,946 462,945 464,981 462,251 451,481 457,498 461,286 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 596,136 600,971 603,941 607,563 610,668 590,730 600,425 661144,,559999 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 530,439 530,703 530,522 530,248 529,445 533,392 530,917 529,197 36 LESS: Held by Federal Reserve Banks 120,986 118,975 116,479 116,474 112,479 126,882 121,613 112,282 37 Federal Reserve notes, net 409,453 411,728 414,042 413,774 416,966 406,510 409,304 416,915 Collateral held against notes, net 38 Gold certificate account 11,049 11,049 11,049 11,049 11,049 11,050 11,049 11,049 39 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 388,686 390,960 393,275 393,007 396,199 385,742 388,537 396,148 42 Total collateral 409,453 411,728 414,042 413,774 416,966 406,510 409,304 416,915 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

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1996 1996 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 Sept. 30 Oct. 31 Nov. 30 1 Total loans 185 113 129 471 93 1,654 186 188 2 Within fifteen days1 167 22 38 464 87 1,508 171 140 3 Sixteen days to ninety days 18 91 91 7 6 145 15 48 4 Total U.S. Treasury securities 390,265 394,637 393,765 401,905 398,755 383,910 385,087 392,662 5 Within fifteen days' 18,935 27,714 18,010 18,434 21,270 7,494 11,135 7,741 6 Sixteen days to ninety days 88,745 83,344 93,258 91,814 85,628 91,276 83,090 92,763 7 Ninety-one days to one year 113,426 113,893 112,810 120,133 120,333 115,601 121,176 120,633 8 One year to five years 94,775 95,303 95,303 95,917 95,917 95,531 95,302 95,917 9 Five years to ten years 34,028 34,028 34,028 33,782 33,782 33,653 34,028 33,782 10 More than ten years 40,356 40,356 40,356 41,826 41,826 40,356 40,356 41,826 11 Total federal agency obligations 4,367 4,622 2,247 3,972 4,560 2,309 2,247 2,237 12 Within fifteen days' 2,274 2,375 10 2,062 2,662 335 154 339 13 Sixteen days to ninety days 806 967 957 630 644 566 806 644 14 Ninety-one days to one year 275 268 268 268 242 477 275 242 15 One year to five years 520 520 520 520 520 440 520 520 16 Five years to ten years 467 467 467 467 467 467 467 467 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

A12 Domestic Financial Statistics • February 1997 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1996 IItteemm D 19 e 9 c 2 . D 19 e 9 c 3 . 1 D 9 e 9 c 4 . D 19 e 9 c 5 . Apr. May June July Aug. Sept. Oct.r Nov. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 54.37 60.52 59.36 56.36 55.18 54.23 54.11 53.20 52.27 51.35 50.14 49.85 2 Nonborrowed reserves4 54.24 60.44 59.16 56.11 55.09 54.10 53.73 52.83 51.94 50.98 49.85 49.64 3 Nonborrowed reserves plus extended credit5 54.24 60.44 59.16 56.11 55.09 54.10 53.73 52.83 51.94 50.98 49.85 49.64 4 Required reserves 53.21 59.46 58.20 55.09 54.06 53.37 52.96 52.13 51.31 50.31 49.14 48.83 5 Monetary base6 351.24 386.88 418.72 435.01 436.64 437.01 439.09 441.88 444.20 445.86 447.16 449.30 Not seasonally adjusted 6 Total reserves7 56.06 62.37 61.13 58.02 56.00 53.29 53.87 53.05 51.88 51.27 49.85 50.06 7 Nonborrowed reserves 55.93 62.29 60.92 57.76 55.90 53.16 53.48 52.69 51.55 50.90 49.56 49.85 8 Nonborrowed reserves plus extended credit5 55.93 62.29 60.92 57.76 55.90 53.16 53.48 52.69 51.55 50.90 49.56 49.85 9 Required reserves8 54.90 61.31 59.96 56.74 54.88 52.43 52.72 51.99 50.92 50.23 48.85 49.04 10 Monetary base9 354.55 390.59 422.51 439.03 437.12 436.13 439.89 443.22 444.58 445.53 445.41 449.23 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 56.54 62.86 61.34 57.90 55.87 53.14 53.69 52.84 51.64 51.00 49.55 49.74 12 Nonborrowed reserves 56.42 62.78 61.13 57.64 55.78 53.01 53.30 52.48 51.31 50.63 49.26 49.52 13 Nonborrowed reserves plus extended credit5 56.42 62.78 61.13 57.64 55.78 53.01 53.30 52.48 51.31 50.63 49.26 49.52 14 Required reserves 55.39 61.80 60.17 56.62 54.75 52.28 52.54 51.78 50.68 49.96 48.56 48.72 15 Monetary base12 360.90 397.62 427.25 444.45 442.96 442.17 445.95 449.29 450.77 451.70 451.88 455.87 16 Excess reserves13 1.16 1.06 1.17 1.28 1.12 .86 1.15 1.07 .96 1.04 .99 1.02 17 Borrowings from the Federal Reserve .12 .08 .21 .26 .09 .13 .39 .37 .33 .37 .29 .21 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 elfect 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 (1) 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 (1) 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 1), 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

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1996 1992 1993 1994 1995 IItteemm Dec. Dec. Dec. Dec. Aug. Sept. Oct.' Nov. Seasonally adjusted Measures2 1,024.4 1,128.6 1,148.7 1,124.9 1,099.1 1,091.1 1,075.8 1,075.9 2 M2 3,438.7 3,494.0 3,509.2 3,657.4 3,754.4r 3,764.7' 3,773.7 3,796.0 3 M3 4,187.1 4,249.6 4,319.2 4,572.4 4,752.1' 4,780.6' 4,814.7 4,841.3 4 L 5,075.6 5,164.5 5,302.9 5,681.9 5,881.9r 5,922.8' 5,942.0 n.a. 5 Debt 1 l,880.7r 12,506.5r 13,148.4r 13,866.9r 14,368.9' 14,414.3' 14,469.8 n.a. Ml components 6 Currency3 292.9 322.4 354.9 373.2 385.0 387.5 339900..33 339922..66 7 Travelers checks4 8.1 7.9 8.5 8.9 8.4 8.4 8.5 8.6 8 Demand deposits5 339.1 384.3 382.4 389.8 407.3 405.3 396.1 400.6 9 Other checkable deposits6 384.2 414.0 402.9 353.0 298.4 290.0 280.9 274.1 Nontransaction components 10 In M27 2,414.3 2,365.4 2,360.5 2,532.6 2,655.3' 2,673.6' 2,697.9 22,,772200..11 11 In M3 only8 748.5 755.6 810.0 914.9 997.7 1,015.8' 1,041.0 1,045.3 Commercial banks 12 Savings deposits, including MMDAs 754.1 785.0 751.9 775.0 857.2 864.5 877.0 889.2 13 Small time deposits9 509.3 470.3 505.3 578.3 580.6' 583.6' 586.3 590.2 14 Large time deposits • 286.5 272.2 298.3 342.1 375.3 382.0 397.8 403.4 Thrift institutions 15 Savings deposits, including MMDAs 433.0 433.8 397.0 359.5 367.1 366.8 367.8 367.0 16 Small time deposits9 361.9 317.6 318.2 359.4 352.8' 353.8' 355.8 356.4 17 Large time deposits10 67.1 61.5 64.8 75.1 76.8 78.0 78.9 79.5 Money market mutual funds 18 Retail 356.0 358.7 388.1 460.3 497.7 504.9 511.0 551177..33 19 Institution-only 199.8 197.9 183.7 227.2 257.2 262.7 264.3 267.2 Repurchase agreements and Eurodollars 20 Repurchase agreements 128.1 157.5 180.9 179.4 191.6 194.7 196.9 119944..11 21 Eurodollars12 66.9 66.3 82.3 91.1 96.8 98.5 103.1 101.1 Debt components 22 Federal debt 3,064.3 3,323.3 3,492.2 3,638.8 3,743.4 3,746.5' 33,,775588..22 n.a. 23 Nonfederal debt 8,816.4r 9,183.1' 9,656.2r 10,228.1' 10,625.5' 10,667.8' 10,711.6 n.a. Not seasonally adjusted Measures2 1,046.0 1,153.7 1,174.2 1,150.7 1,095.0 1,088.6 1,075.2 1,083.7 25 M2 3,455.1 3,514.1 3,529.6 3,677.1 3,758.4' 3,761.8' 3,769.4 3,801.9 4,205.1 4,271.2 4,340.9 4,593.4 4,758.2' 4,775.4' 4,815.5 4,855.4 5,102.9 5,194.1 5,332.3 5,711.4 5,885.1' 5,907.5' 5,933.3 n.a. 28 Debt ll,882.3r 12,508.5r 13,150.0r 13,867.4r 14,317.9' 14,377.1' 14,434.3 n.a. Ml components 29 Currency3 295.0 324.8 357.5 376.1 385.9 386.8 389.0 339922..88 30 Travelers checks4 7.8 7.6 8.1 8.5 9.0 8.8 8.6 8.4 31 Demand deposits 354.4 401.8 400.1 407.9 404.9 404.5 399.1 408.3 32 Other checkable deposits6 388.9 419.4 408.4 358.1 295.2 288.4 278.5 274.1 Nontransaction components 33 In M27 2,409.1 2,360.4 2,355.4 2,526.4 2,663.4' 2,673.2' 2,694.2 22,,771188..22 34 In M3 only8 750.0 757.1 811.4 916.3 999.8 1,013.6 1,046.1 1,053.6 Commercial banks 35 Savings deposits, including MMDAs 752.9 784.3 751.6 775.0 860.3 866.9 878.9 892.9 36 Small time deposits9 507.8 468.2 502.3 574.3 582.0' 583.6' 585.4 587.1 37 Large time deposits10, 11 286.0 272.0 298.1 342.0 376.1 382.7 400.9 407.0 Thrift institutions 38 Savings deposits, including MMDAs 432.4 433.4 396.9 359.5 368.4 367.8 368.6 368.5 39 Small time deposits9 360.9 316.1 316.3 356.9 353.6' 353.8' 355.3 354.6 40 Large time deposits10 67.0 61.5 64.8 75.1 76.9 78.1 79.5 80.2 Money market mutual funds 41 Retail 355.1 358.3 388.2 460.6 499.1 501.1 506.0 551155..22 42 Institution-only 201.1 199.4 185.5 229.4 256.9 258.0 262.6 269.9 Repurchase agreements and Eurodollars 43 Repurchase agreements12 127.2 156.6 179.6 178.0 192.7 195.7 198.8 119933..66 44 Eurodollars'2 68.7 67.6 83.4 91.9 97.2 99.0 104.3 102.8 Debt components 45 Federal debt 3,069.8 3,329.5 3,499.0 3,645.9 3,730.9 3,736.1 3,740.9 n.a. 46 Nonfederal debt 8,812.5r 9,179.0r 9,651.0r 10,221.4r 10,587.0' 10,641.1' 10,693.4 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • February 1997 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 U.S. 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) savings deposits (including MMDAs), (2) small-denomination time 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) Travelers checks issued by depository institutions are included in demand deposits. balances in retail money market mutual funds (money funds with minimum initial invest- 5. Demand deposits at commercial banks and foreign-related institutions other than those ments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh owed to depository institutions, the U.S. government, and foreign banks and official institubalances at depository institutions and money market funds. Seasonally adjusted M2 is tions, less cash items in the process of collection and Federal Reserve float. calculated by summing savings deposits, small-denomination time deposits, and retail money 6. Consists of NOW and ATS account balances at all depository institutions, credit union fund balances, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits at thrift institutions. adjusted Ml. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) money fund balances. issued by all depository institutions, (2) balances in institutional money funds (money funds 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term) (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S. term) of U.S. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are ment, money market funds, and foreign banks and official institutions. Seasonally adjusted subtracted from small time deposits. M3 is calculated by summing large time deposits, institutional money fund balances, RP 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to booked at international banking facilities. seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market funds, L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury depository institutions, the U.S. government, and foreign banks and official institutions. securities, commercial paper, and bankers acceptances, net of money market fund holdings of 12. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1996 1994 1995 Dec. Dec. Mar. Apr. May June July Aug. Sept.r Oct.r Nov. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 1.96 1.91 1.85 1.88 1.88 1.89 1.90 1.91 1.90 1.91 1.98 2 Savings deposits3 2.92 3.10 2.91 2.91 2.89 2.87 2.88 2.86 2.84 2.85 2.85 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 3.79 4.10 4.02 4.01 4.03 4.08 4.13 4.17 4.11 4.11 4.10 4 92 to 182 days 4.44 4.68 4.49 4.51 4.51 4.55 4.59 4.60 4.61 4.60 4.60 5 183 days to 1 year 5.12 5.02 4.83 4.86 4.88 4.95 5.00 5.00 5.04 5.02 4.99 6 More than 1 year to 2 x/2 years 5.74 5.17 4.94 5.03 5.10 5.18 5.25 5.25 5.29 5.27 5.23 7 More than 2vl years 6.30 5.40 5.19 5.28 5.36 5.46 5.50 5.50 5.54 5.52 5.48 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts 1.94 1.91 1.83 1.84 1.81 1.80 1.81 1.81 1.84 1.90 1.92 9 Savings deposits3 2.87 2.98 2.86 2.85 2.84 2.86 2.88 2.86 2.84 2.80 2.82 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 3.80 4.43 4.37 4.42 4.49 4.54 4.64 4.64 4.59 4.64 4.67 11 92 to 182 days 4.89 4.95 4.76 4.77 4.83 4.91 5.01 5.06 5.11 5.08 5.03 12 183 days to 1 year 5.52 5.18 4.89 4.91 4.96 5.02 5.09 5.26 5.33 5.32 5.29 13 More than 1 year to 2 years 6.09 5.33 5.15 5.23 5.26 5.35 5.41 5.59 5.61 5.60 5.56 14 More than 2 Y2 years 6.43 5.46 5.24 5.32 5.38 5.51 5.60 5.80 5.82 5.79 5.76 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 304,896 248,417 218,500 228,551 208,570 201,037 204,980 190,696 190,033 188,803 167,497 16 Savings deposits3 737,068 776,466 827,561 805,419 839,319 838,385 835,033 860,719 852,336 859,524 896,645 17 Personal 580,438 615,113 661,686 639,848 668,788 667,802 662,465 683,081 675,576 680,596 712,581 18 Nonpersonal 156,630 161,353 165,875 165,572 170,531 170,583 172,568 177,638 176,759 178,928 184,064 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 32,265 32,170 35,426 34,117 30,383 31,483 31,690 32,907 32,695 32,428 32,482 20 92 to 182 days 96,650 93,941 97,230 96,168 95,911 94,654 93,941 91,235 91,167 91,195 92,530 21 183 days to 1 year 163,062 183,834 186,206 190,297 193,821 194,900 197,108 200,038 200,008 199,397 201,278 22 More than 1 year to 2V5 years 164,395 208,601 209,051 208,571 208,932 209,390 208,906 209,618 211,234 213,012 214,033 23 More than 2V5 years 192,712 199,002 199,267 198,236 198,922 198,935 198,224 199,755 198,324 199,126 198,596 24 IRA and Keogh plan deposits 144,155 150,546 151,517 151,396 151,652 151,690 150,873 151,048 151,309 151,276 151,363 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 11,175 11,918 11,671 11,461 11,715 11,255 10,889 10,682 9,838 9,938 9,710 26 Savings deposits3 70,082 68,643 67,215 66,729 67,630 66,938 66,854 67,431 67,980 67,975 68,102 27 Personal 67,159 65,366 64,152 63,486 64,121 63,642 63,557 63,927 64,425 64,326 64,135 28 Nonpersonal 2,923 3,277 3,063 3,243 3,510 3,296 3,296 3,504 3,555 3,649 3,967 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 2,144 2,001 2,145 2,182 2,349 2,229 2,368 2,316 2,540 2,503 2,405 30 92 to 182 days 11,361 12,140 13,499 13,931 13,955 13,725 13,587 13,440 13,474 13,300 13,088 31 183 days to 1 year 18,391 25,686 26,577 27,305 28,121 27,950 28,506 29,339 29,383 29,659 29,316 32 More than 1 year to 2Vi years 17,787 27,482 25,959 25,704 25,444 25,513 26,132 26,199 27,192 28,063 28,573 33 More than 2 Vi years 21,293 22,866 22,671 22,547 22,661 22,593 22,563 22,477 22,348 22,156 21,822 34 IRA and Keogh plan accounts 19,013 21,321 20,766 20,697 20,683 21,116 21,051 21,052 21,002 20,983 20,627 1. 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

A16 Domestic Financial Statistics • February 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities' A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1995 1996 1996 Nov. May June July Aug. Sept. Oct.' Nov. Nov. 6 Nov. 13 Nov. 20 Nov. 27 Seasonally adjusted Assets 1 Bank credit 3,598.8' 3,674.2r 3,681.3' 3,687.7' 3,678.0' 3,692.6 3,720.4 3,747.9 3,734.7 3,740.9 3,734.4 3,777.3 2 Securities in bank credit 999.1 996.6' 989./ 983./ 972.3' 966.5' 968.4 986.2 982.3 980.4 982.2 997.2 3 U.S. government securities 714.1 713.2 708.5 707.6 701.3 702.2 700.8 705.4 705.9 703.2 703.6 709.7 4 Other securities 285.0 283.4r 281.3' 276.1' 271.0' 264.3' 267.6 280.8 276.4 277.2 278.5 287.5 5 Loans and leases in bank credit2 ... 2,599.7' 2,677.6r 2,691.6' 2,704.0' 2,705.8' 2,726.1' 2,752.0 2,761.7 2,752.4 2,760.5 2,752.3 2,780.1 6 Commercial and industrial 713.6 735.3 738.5 743.0 744.4 759.0 770.2 774.8 770.7 773.7 772.4 780.1 7 Real estate l,077.0r l,100.3r 1,103.7' 1,105.8' l,112.Cf 1,113.6' 1,115.8 1,119.0 1,114.7 1,115.2 1,120.5 1,123.9 8 Revolving home equity 78.8 79.6r 79.3 19.9 80.6' 81.2' 82.4 83.5 82.9 83.0 83.6 83.9 9 Other 998.2r l,020.6r 1,0245' 1,0(25.9 1,031.4' 1,032.4' 1,033.4 1,035.5 1,031.7 1,032.2 1,036.9 1,039.9 10 Consumer 490.7r 504.7r 510.3' 513.5' 514^ 518.7' 518.7 519.6 519.5 518.4 520.1 519.8 11 Security3 86.3 82.0 81.5 79.1 72.7 73.4 78.6 78.7 78.3 81.7 72.4 84.3 12 Other loans and leases 232.1 255.3 257.6 262.6 261.7 261.3 268.8 269.6 269.2 271.6 266.9 272.0 13 Interbank loans 193.7 210.7 208.4 197.3 198.3 205.0 199.6 213.0 213.0 210.4 214.7 215.4 14 Cash assets4 216.1 219.5 217.2 219.1 221.8 220.0 222.3 231.3 227.7 242.1 223.5 235.4 15 Other assets5 220.0 230.6 240.5 250.0 255.6 258.5 251.2 261.7 253.6 263.8 259.3 264.2 16 Total assets6 4,172.1r 4^78.0r 4^90.1r 4J96J' 43185' 4335.6 4396.1 4371.2 4399.5 4374.2 4,434.7 Liabilities 17 Deposits 2,648.1 2,712.3 2,721.1 2,732.2 2,753.2 2,777.5 2,810.6 2,846.7 2,828.5 2,850.9 2,815.1 2,880.6 18 Transaction 768.7 755.1 750.0 741.9 734.1 725.6 719.6 723.0 717.7 729.3 703.0 746.8 19 Nontransaction 1,879.4 1,957.2 1,971.2 1,990.3 2,019.1 2,051.9 2,091.0 2,123.7 2,110.8 2,121.6 2,112.1 2,133.9 20 Large time 423.2 438.6 444.2 453.9 460.5 471.5 487.3 493.6 489.9 492.4 490.9 497.4 21 Other 1,456.2 1,518.6 1,527.0 1,536.4 1,558.7 1,580.4 1,603.7 1,630.0 1,620.9 1,629.2 1,621.2 1,636.5 22 Borrowings 674.1r 722.0' 713.4' 706.3' 718.2' 719.2' 683.4 697.9 686.9 693.9 705.8 713.8 23 From banks in the U.S 291.5r 307.4' 303.5' 295.4' 300.4' 303.9 294.8 298.1 292.3 290.1 305.3 308.5 24 From others 382.6 414.6 409.9 410.9 417.8 415.3 388.7 399.8 394.6 403.8 400.5 405.3 25 Net due to related foreign offices 264.4 256.9 257.2 253.6 244.4 248.9 243.8 236.4 246.9 241.4 243.9 216.4 26 Other liabilities 222.9 219.7 226.4 218.7 218.6 218.6 238.3 252.8 248.5 254.3 246.9 2515 27 Total liabilities 3,809.? 3,910.8' 3,918.1r 34>10JF 3,934.4' 3,964.3' 3,976J 4,033.8 4,010.8 4,040.5 4,011.9 4,0683 28 Residual (assets less liabilities)7 362.6' 367.2' 372.1' 385.8' 361.8' 354.2' 359.5 362.3 360.4 359.0 362.3 366.4 Not seasonally adjusted Assets 29 Bank credit 3,604.9' 3,671.8' 3,678.4' 3,680.9' 3,677.1' 3,6% .5' 3,719.3 3,746.9 3,740.4 3,739.9 3,733.1 3,769.8 30 Securities in bank credit 997.8 1,001.7' 991.1' 980.7' 976.5' 969.2' 967.7 978.4 977.4 973.9 975.1 985.1 31 U.S. government securities 712.4 714.0 708.6 705.4 704.5 703.7 700.1 704.1 705.8 702.7 702.1 706.1 32 Other securities 285.4 287.7' 282.5' 275.3' 272.0' 265.5' 267.6 274.3 271.5 271.2 273.0 279.1 33 Loans and leases in bank credit2 ... 2,607.2r 2,670.1' 2,687.3' 2,700.2' 2,700.7' 2,727.3' 2,751.6 2,768.5 2,763.0 2,766.0 2,758.0 2,784.7 34 Commercial and industrial 711.9 740.8 741.4 744.1 741.1 754.0 765.7 772.9 769.7 770.4 771.5 778.6 3b Real estate l,082.7r 1,097.2' 1,102.3' 1,105.6' 1,111.5' 1,115.5' 1,118.9 1,124.7 1,121.0 1,122.0 1,125.4 1,128.9 36 Revolving home equity 79.2 79.5' 79.2 80^ 80.8' 81.7' 83.0 84.0 83.5 83.5 84.1 84.3 3/ Other 1,003.4' 1,017.7' 1,023.1' 1,025.6' 1,030.7' 1,033.8' 1,035.8 1,040.8 1,037.5 1,038.5 1,041.3 1,044.6 38 Consumer 491.6' 503.0F 506.6 510.8' 515.1' 519.91 519.2 520.4 519.9 518.8 520.5 521.2 39 Security3 87.7 77.9 79.5 76.6 70.8 73.1 76.9 79.2 80.9 81.7 72.7 83.4 40 Other loans and leases 233.3 251.2 257.5 263.1 262.2 264.9 271.0 271.2 271.6 273.1 267.8 272.6 41 Interbank loans 197.0 204.3 204.5 194.5 192.9 199.5 197.8 215.9 214.2 216.7 214.8 214.2 42 Cash assets4 220.1 216.9 215.1 216.8 212.3 220.9 223.1 235.7 220.9 252.4 227.3 242.7 43 Other assets5 219.4 231.4 240.1 250.8 257.5 259.8 251.5 260.2 255.0 263.9 254.6 261.7 44 Total assets6 4,184.8 4^673' 4^80.9r 4,285.8' 4^823' 4318^ 4334.0 4,400.7 4372^ 4,415.0 4371.8 4,430.5 Liabilities 45 Deposits 2,664.1 2,702.0 2,717.9 2,725.3 2,740.9 2,776.8 2,808.3 2,861.4 2,840.3 2,875.9 2,827.0 2,885.3 46 Transaction 782.3 742.8 743.5 734.8 720.4 724.7 717.9 734.7 721.0 747.6 713.6 755.2 47 Nontransaction 1,881.8 1,959.3 1,974.4 1,990.5 2,020.5 2,052.1 2,090.4 2,126.6 2,119.3 2,128.3 2,113.3 2,130.1 48 Large time 424.2 444.0 444.1 451.7 459.7 470.2 485.5 495.1 491.5 493.4 492.1 499.5 49 Other 1,457.6 1,515.3 1,530.4 1,538.8 1,560.8 1,581.9 1,604.9 1,631.6 1,627.8 1,634.9 1,621.2 1,630.6 50 Borrowings 681.9r 717.3 721.9' 715.0' 1095' 711.5' 674.1 692.0 685.9 690.4 693.1 699.8 51 From banks in the U.S 294.6r 303.8 305.5' 293.5' 289.2' 288.5' 284.8 298.4 292.9 295.5 298.1 302.1 52 From others 387.4 413.5 416.4 421.5 420.3 423.0 389.3 393.6 393.0 394.9 395.0 397.6 53 Net due to related foreign offices 263.3 259.1 249.5 251.8 243.4 245.1 245.2 233.7 236.6 236.3 237.7 229.4 54 Other liabilities 224.9 222.3 227.1 218.2 218.1 218.7 238.3 252.8 248.5 254.3 246.9 257.5 55 Total liabilities 3,834.1r 3,900.8' 3,916^ 3,9103' 3JMJf 3^52.1' 3,965.9 4,039.8 4,011.4 4,056.9 4,004.7 4,071.9 56 Residual (assets less liabilities)7 350.6r 366.5' 364J' ms 370.5' 366.8' 368.1 361.0 361.2 358.1 367.1 358.6 MEMO 57 Revaluation gains on off-balance-sheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 68.3 71.4 70.3 68.4 70.2 74.7 58 Revaluation losses on off-balancesheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 58.2 60.4 60.4 57.0 59.2 63.0 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1995 1996 1996 Nov. May June July Aug. Sept. Oct.' Nov. Nov. 6 Nov. 13 Nov. 20 Nov. 27 Seasonally adjusted Assets 1 Bank credit 3,159.7' 3,215.0' 3,215.3r 3,221.7' 3,213.4' 3,228.7' 3,237.1 3,243.7 3,238.4 3,239.8 3,236.4 3,258.0 2 Securities in bank credit 854.9 845.7 838.1 836.2 823.7 822.5 821.5 822.0 822.3 819.7 820.3 826.1 3 US. government securities 647.1 635.4 629.4 628.3 620.2 619.9 618.4 617.1 619.9 616.4 616.0 617.4 4 Other securities 207.8 210.3 208.7 207.9 203.5 202.6 203.2 204.9 202.4 203.4 204.3 208.7 Loans and leases in bank credit2 2,304.8r 2,369.3r 2,377.1' 2,385.5' 2,389.7' 2,406.2' 2,415.5 2,421.7 2,416.1 2,420.1 2,416.1 2,432.0 6 Commercial and industrial 534.6 548.2 548.4 550.6 552.7 560.5 563.2 564.3 562.8 563.1 562.7 567.4 7 Real estate l,040.3r l,066.8r l,070.6r l,072.7r 1 m<? 1,080.8' 1,082.4 1,085.6 1,081.1 1,081.8 1,087.1 1,090.4 8 Revolving home equity 78.8r 79.6' 192' 79.8' 80.5' 81.2 82.3 83.5 82.9 83.0 83.6 83.9 9 Other 961.5r 987.2r 991.3r 992.9' 998.4' 999.6' 1,000.0 1,002.1 998.2 998.9 1,003.5 1,006.5 in Consumer 490.7' 504.7r 510.3r 513.5' 514^ 518.7' 518.7 519.6 519.5 518.4 520.1 519.8 n Security3 53.6 50.7 46.8 45.9 41.9 44.1 43.8 43.1 44.0 45.8 39.3 43.4 12 Other loans and leases 185.6 198.9 201.0 202.8 201.2 202.1 207.5 209.2 208.7 211.1 206.9 210.9 13 Interbank loans 168.8 187.4 184.1 178.0 181.4 185.5 181.1 192.6 191.8 189.1 191.7 199.3 14 Cash assets4 185.9 193.2 191.4 191.3 194.0 192.2 193.6 200.6 197.7 211.4 193.3 204.3 15 Other assets5 173.7 187.6 200.7 210.9 215.5 220.2 218.2 226.4 219.3 228.0 225.1 228.6 16 Total assets6 3,631.6r 3,726.4r 3,734.4r 3,744^ 3,746.8' 3,769.0r 3,7723 3,805.8 3,789.6 3,810.8 3,789.1 3,832.6 Liabilities 17 Deposits 2,479.2 2,539.9 2,549.5 2,552.4 2,572.8 2,591.8 2,605.0 2,640.2 2,624.4 2,647.4 2,611.5 2,670.5 18 Transaction 759.1 744.3 739.3 731.3 723.7 716.1 709.0 712.3 706.3 718.8 692.6 736.4 19 Nontransaction 1,720.1 1,795.6 1,810.2 1,821.1 1,849.0 1,875.7 1,896.0 1,927.9 1,918.1 1,928.6 1,918.9 1,934.1 20 Large time 267.5 279.4 283.2 287.1 292.1 297.6 295.4 300.4 298.9 301.0 299.8 300.6 21 Other 1,452.7 1,516.2 1,527.0 1,534.0 1,557.0 1,578.1 1,600.6 1,627.6 1,619.3 1,627.5 1,619.1 1,633.6 22 Borrowings 566. lr 585.7r 583.2r 581.4' 586.5' 597.4' 567.7 571.6 568.9 567.1 584.3 574.3 ?3 From banks in the U.S 259^ 270.3r 270.7r 264.6' 264.9' 270.3' 260.8 261.0 259.2 256.4 271.7 261.8 24 From others 306.2 315.4 312.5 316.9 321.6 327.1 306.9 310.6 309.7 310.6 312.7 312.5 25 Net due to related foreign offices 89.8 88.8 80.6 78.0 73.9 74.0 78.7 69.6 71.1 71.2 71.6 65.5 26 Other liabilities 141.3 147.5 157.1 151.4 153.1 153.1 165.8 172.8 170.8 175.8 168.1 174.8 27 Total liabilities 3,276.4 3,361.8 3,370.4r 33633r 33863r 3,416.3' 3,417^ 3,454.2 3,4353 3,461.5 3,435.5 3/485.1 28 Residual (assets less liabilities)7 355. lr 364.5 363.9r 381.3' 360.5' 352.7' 355.1 351.5 354.3 349.3' 353.6 347.5 Not seasonally adjusted Assets 29 Bank credit 3,169.4r 3,215.4r 3,215.5r 3,213.9' 3,210.2' 3,231.2' 3,239.2 3,250.6 3,248.4 3,246.5 3,243.1 3,261.7 30 Securities in bank credit 855.7 849.0 841.4 832.3 825.8 824.0 819.8 820.4 822.0 818.3 818.9 822.4 31 U.S. government securities 646.1 637.0 630.6 626.3 622.1 622.0 618.3 616.9 620.4 616.1 615.5 616.0 32 Other securities 209.6 212.0 210.8 206.0 203.6 202.0 201.5 203.5 201.5 202.2 203.4 206.4 33 Loans and leases in bank credit2 2,313.7r 2,366.4r 2,374. lr 2,381.6' 2,384.4r 2,407.2' 2,419.4 2,430.2 2,426.4 2,428.1 2,424.2 2,439.3 34 Commercial and industrial 533.6 553.6 550.9 550.6 548.5 556.3 560.7 563.2 562.6 561.6 562.4 566.0 35 Real estate l,045.7r 1,063.91 l,069.2r 1,072.6' 1,078.4' 1,082.6' 1,085.5 1,091.1 1,087.2 1,088.5 1,091.8 1,095.2 36 Revolving home equity 79.2r 19.5' 19.2' 80.0 80.8 81.7 83.0 83.9 83.5 83.5 84.0 84.3 37 Other 966.5r 984.4r 990.ff 992.7' 997.6' 1,000.9' 1,002.5 1,007.2 1,003.8 1,005.0 1,007.7 1,010.9 38 Consumer 491.6r 503.0r 506.6 510.8' 515.1' 519.9' 519.2 520.4 519.9 518.8 520.5 521.2 39 Security3 55.5 49.6 47.0 44.6 41.0 44.0 44.0 44.5 45.8 46.4 41.2 45.0 40 Other loans and leases 187.3 196.3 200.4 203.0 201.5 204.5 210.0 211.0 210.9 212.9 208.4 211.8 41 Interbank loans 172.8 180.8 182.1 175.3 176.5 179.4 177.9 196.1 195.3 195.3 193.8 196.9 42 Cash assets4 190.3 191.0 188.6 188.6 183.8 192.2 194.0 205.4 191.6 221.8 197.3 212.0 43 Other assets' 172.4 187.9 200.5 212.2 216.4 221.3 218.7 224.5 220.1 227.7 220.0 225.4 44 Total assets6 3,648_3r 3,718.1 3,729.5r 3,732.9r 3,729.4r 3,766Jr 3,772.4 3,818.8 3,797.6 3333.7 3,796.5 3,838.4 Liabilities 45 Deposits 2,494.2 2,528.2 2,544.1 2,547.8 2,562.1 2,591.1 2,604.4 2,652.9 2,634.5 2,669.9 2,621.5 2,673.1 46 Transaction 772.6 732.7 733.1 724.1 710.2 714.5 707.1 723.9 709.7 736.8 703.0 744.7 47 Nontransaction 1,721.6 1,795.5 1,811.0 1,823.6 1,852.0 1,876.6 1,897.3 1,929.0 1,924.8 1,933.1 1,918.5 1,928.4 48 Large time 267.2 282.7 283.1 287.2 293.4 296.9 294.9 300.0 299.3 300.5 299.6 300.1 49 Other 1,454.4 1,512.8 1,528.0 1,536.4 1,558.5 1,579.6 1,602.5 1,629.1 1,625.5 1,632.6 1,618.9 1,628.3 50 Borrowings 576.3' 584.2r 587.4r 584.4' 575.9' 58 Iff 560.9 569.4 567.9 567.4 575.8 568.9 51 From banks in the U.S 263.3r 268.7 270.91 261.2' 254.1' 255.0' 253.0 261.9 260.7 261.3 265.5 257.6 52 From others 313.0 315.5 316.5 323.1 321.8 332.9 307.9 307.5 307.2 306.1 310.3 311.3 53 Net due to related foreign offices 88.4 93.8 79.3 76.9 72.2 70.8 77.9 67.9 67.8 67.6 69.3 68.6 54 Other liabilities 142.9 149.0 157.5 151.4 151.7 153.0 165.8 172.8 170.8 175.8 168.1 174.8 55 Total liabilities 330 3,355.1 3368.4r 3,360.4r 3,361.9r 3,402.8' 3,409.1 3,463.1 3,441.0 3,480.7 3,434.7 3,485.4 56 Residual (assets less liabilities)7 346.5r 363.0 361.2' 372.5 367.5' 363.4' 363.3 355.8 356.6 353.0 361.8 353.0 MEMO 57 Revaluation gains on off-balance-sheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 32.4 33.1 32.1 31.5 32.6 35.0 58 Revaluation losses on off-balancesheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 28.9 28.9 29.1 27.0 27.9 30.6 59 Mortgage-backed securities9 n.a. n.a. n.a. n.a. n.a. n.a. 236.3 238.3 237.9 235.5 239.3 239.6 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • February 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1995 1996 1996 Nov. May June July Aug. Sept. Oct. Nov. Nov. 6 Nov. 13 Nov. 20 Nov. 27 Seasonally adjusted Assets 1 Bank credit l,820.3r 1,826.1r l,816.1r 1,810.3" 1,793.0" 1,800.8" 1,803.5" 1,804.9 1,803.8 1,802.3 1,798.2 1,814.7 2 Securities in bank credit 453.0 434.1 425.4 421.3 408.6 406.7 406.3 408.8 408.7 405.5 407.7 413.2 3 U.S. government securities 323.1 303.9 296.5 293.3 285.1 284.2 284.0 284.7 287.1 283.2 284.2 285.4 4 Trading account 21.0 21.5 20.9 20.8 19.5 20.6 21.3 21.8 23.1 21.1 20.3 22.4 5 Investment account 302.2 282.4 275.6 272.5 265.6 263.6 262.7 263.0 264.0 262.1 263.9 262.9 6 Other securities 129.9 130.2 128.9 128.0 123.5 122.5 122.3 124.0 121.6 122.3 123.5 127.8 7 Trading account 59.1 59.9 58.4 59.6 57.7 57.1 55.7 57.8 56.0 56.6 57.1 61.0 8 Investment account 70.7 70.3 70.5 68.3 65.8 65.4 66.6 66.2 65.5 65.7 66.4 66.9 9 State and local government. . 22.0 21.0 20.6 20.6 20.5 20.3 20.2 20.2 20.2 20.3 20.3 20.1 10 Other 48.7 49.3 49.9 47.7 45.3 45.1 46.4 46.0 45.4 45.4 46.1 46.8 11 Loans and leases in bank credit2 . . . l,367.2r 1,392.0" 1,390.6' 1,389.0" 1,384.4" 1,394.1" 1,397.1" 1,396.1 1,395.2 1,396.8 1,390.5 1,401.5 12 Commercial and industrial 368.5 374.0 372.7 373.4 373.5 379.3 380.8" 380.5 379.6 379.5 379.3 382.8 13 Real estate 554.8r 558.2r 557.2' 553.9" 554.8" 553.5" 551.6" 551.5 549.7 548.7 552.1 554.1 14 Revolving home equity 52.6r 52.9" 52.5' 52.9" 53.0" 53.2" 53.3" 53.9 53.6 53.5 54.1 54.3 15 Other 502.2r 505.3r 504.7' 501.1" 501.8" 500.3" 498.3" 497.6 496.1 495.2 498.0 499.8 16 Consumer 271.7r 278.6r 282.0' 282.5" 282.8" 285.3" 282.5" 282.2 283.2 282.2 282.6 281.5 17 Security3 48.2 45.4 41.5 40.8 36.8 38.9 38.7 37.8 38.7 40.5 34.1 37.9 18 State and local government 11.6 11.2 11.1 11.2 11.1 10.8 10.8 11.1 11.0 11.0 11.1 11.1 19 All other 112.4 124.6 126.1 127.3 125.4 126.3 132.6 132.9 133.0 134.9 131.3 134.1 20 Interbank loans 114.9 135.2 131.8 129.8 131.8 133.9 130.1 137.8 137.0 134.5 139.0 142.8 21 Cash assets4 123.9 127.0 124.7 126.7 128.3 127.1 127.6" 133.2 131.8 141.1 129.7 134.7 22 Other assets5 123.4 138.9 150.1 155.0 159.1 162.1 159.2" 164.7 160.3 166.3 164.1 164.5 23 Total assets6 2,146.1"" 2,191.0r 2,1863' 2,184.9" 2,175.4' 2,187.2' 2,183.6' 2343 2,196.5 2,207.8 2,194.7 2,220.5 Liabilities 24 Deposits l,293.4r 1,331.8 1,332.2 1,336.6 1,340.6 1,344.8 1,350.8" 1,361.6 1,355.6 1,363.3 1,346.8 1,378.9 25 Transaction 425.9 416.7 409.9 407.9 399.7 390.2" 384.9 384.7 382.9 388.2 372.5 400.0 26 Nontransaction 867.5 915.1 922.3 928.7 940.9 954.7 965.9 976.9 972.7 975.1 974.3 978.9 27 Large time 125.4 130.4 134.3 136.3 139.3 145.3 151.9 153.8 153.7 155.0 153.1 153.2 28 Other 742.1 784.7 788.0 792.4 801.6 809.3 814.0 823.0 819.0 820.0 821.2 825.7 29 Borrowings 428.2r 435.2r 427.3' 417.2" 415.5" 426.7' 402.8" 408.6 406.2 404.5 419.9 410.3 30 From banks in the U.S 182.6r 186.2r 185.5' 184.4" 182.3" 185.9" 172.9" 176.5 174.7 173.3 184.6 176.1 31 From others 245.6 248.9 241.8 232.9 233.2 240.8 229.9 232.1 231.5 231.2 235.3 234.2 32 Net due to related foreign offices 84.2 84.0 75.2 72.2 69.5 68.2 75.4 67.3 68.9 69.0 69.2 62.9 33 Other liabilities 112.9 118.3 128.8 122.3 124.9 126.5 141.0" 149.2 146.9 152.7 143.5 151.6 34 Total liabilities 1,918.6" 1,9693' 1,963.6" 1,9483' 1,950.5' 1,966.2' 1,970.0" 1,986.7 1,977.5 1,989.4 1,979.5 2,003.7 35 Residual (assets less liabilities)7 227.4r 221.7r 222.7' 236.6" 224.9" 221.0' 213.7" 217.7 219.0 218.4 215.2 216.8 Not seasonally adjusted Assets 36 Bank credit l,828.5r l,825.2r 1,814.4" 1,802.6" 1,790.8' 1,800.0" 1,804.4" 1,810.4 1,811.8 1,807.5 1,803.9 1,816.7 37 Securities in bank credit 456.0 435.2 426.4 418.0 412.1 408.4 406.6 409.0 410.2 406.0 408.5 410.6 38 U.S. government securities 324.6 303.6 295.4 291.7 288.4 286.4 285.9 286.5 289.4 284.9 286.1 285.5 39 Trading account 22.0 21.3 19.6 19.9 20.9 21.0 22.0 22.7 23.8 22.3 22.0 22.3 40 Investment acount 302.6 282.3 275.8 271.8 267.5 265.4 263.9 263.8 265.6 262.6 264.1 263.2 41 Other securities 131.4 131.6 131.0 126.4 123.7 122.0 120.6 122.5 120.7 121.1 122.4 125.1 42 Trading account 59.8 61.7 61.1 58.7 57.8 56.2 53.5 55.4 54.4 54.6 55.0 57.3 43 Investment account 71.6 69.9 69.9 67.7 65.9 65.8 67.1 67.1 66.4 66.5 67.4 67.8 44 State and local government. . 22.2 21.1 20.7 20.3 20.3 20.3 20.2 20.3 20.2 20.4 20.4 20.3 45 Other 49.5 48.8 49.2 47.4 45.6 45.5 46.9 46.8 46.2 46.1 47.0 47.6 46 Loans and leases in bank credit2 ... l,372.6r 1,390.0" 1,387.9" 1,384.6" 1,378.7" 1,391.6" 1,397.8" 1,401.4 1,401.6 1,401.5 1,395.4 1,406.0 47 Commercial and industrial 368.2 377.6 373.8 373.2 370.6 376.2 379.2 380.3 380.1 378.8 379.7 382.2 48 Real estate 557.6r 556. lr 556.0" 553.7" 554.4" 553.7' 552.9" 554.5 553.1 552.5 554.4 556.3 49 Revolving home equity 53.0r 52.8r 52.4" 52.9" 53.2" 53.5" 53.8" 54.3 54.0 53.9 54.5 54.6 50 Other 504.7r 503.3r 503.6" 500.9" 501.2" 500.2" 499.1" 500.2 499.1 498.6 500.0 501.7 51 Consumer • 272.0r 277.3r 279.6" 280.1" 282.5" 284.9" 282.5" 282.5 283.2 282.4 282.4 282.0 52 Security3 49.8 44.5 41.8 39.7 35.9 38.8 38.9 38.9 40.1 40.8 35.7 39.5 53 State and local government 11.6 11.2 11.1 11.2 11.2 10.9 10.9 11.1 11.0 11.0 11.1 11.2 54 All other 113.3 123.2 125.6 126.6 124.2 127.0 133.5 134.0 134.1 136.0 132.1 134.8 55 Interbank loans 114.2 131.7 132.9 129.6 127.6 129.3 126.0 137.0 134.3 136.1 136.5 139.5 56 Cash assets4 126.0 125.4 123.6 124.4 120.5 127.3 127.3" 135.7 125.6 148.0 131.3 139.6 57 Other assets5 122.6 139.4 151.1 156.4 159.7 162.5 159.2" 163.4 160.2 165.4 160.9 163.1 58 Total assets6 2,154.7r 2,185.4r 2,185.5' 2,176.4" 2,161.8' 2,182.2" 2,1803" 239.9 2,195.4 2,220.4 2,196.1 2,222.5 Liabilities 59 Deposits 1,302.1 1,323.9 1,330.4 1,333.2 1,333.9 1,344.8" 1,348.1 1,368.8 1,357.8 1,377.7 1,352.6 1,381.3 60 Transaction 433.9 408.8 407.0 402.4 389.9 390.2 382.3 391.7 380.9 399.8 379.6 407.1 61 Nontransaction 868.2r 915.1 923.5 930.9 944.0 954.6 965.8 977.1 976.9 977.8 973.0 974.2 62 Large time 125.1 132.8 134.3 136.7 140.8 144.6 151.0 153.5 153.8 154.4 152.8 153.0 63 Other 743.1 782.3 789.1 794.2" 803.1 810.0 814.8 823.6 823.1 823.4 820.2 821.3 64 Borrowings 436.3r 431.6r 430. lr 422.8" 410.6" 420.5" 398.3" 407.3 407.5 405.9 413.7 404.6 65 From banks in the U.S 185.6r 183.8r 184.9" 183.7" 176.5" 175.5" 168.2" 177.9 177.1 177.8 181.2 172.9 66 From nonbanks in the U.S 250.6r 247.7 245.2 239.1 234.1 245.0 230.1 229.4 230.3 228.1 232.5 231.7 67 Net due to related foreign offices 83.0 89.2 74.1 71.2 67.8 65.0 74.5 65.8 65.6 65.3 67.0 66.3 68 Other liabilities 114.6 120.1 129.2 122.5" 123.5 126.2 141.0" 149.2 146.9 152.7 143.5 151.6 69 Total liabilities 1,936.1/ l,964.8r 1,963.9" 1,949.8" 1,935.8" 1,956.4' 1,962.0" 1,991.1 1,977.7 2,001.6 1,976.9 2,003.8 70 Residual (assets less liabilities)7 218.8r 220.6r 221.6" 226.6" 226.0" 225.8" 218.4" 218.8 217.7 218.8 219.3 218.7 MEMO 71 Revaluation gains on off-balance-sheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 33.7 34.5 32.1 31.5 32.6 35.0 72 Revaluation losses on off-balancesheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 28.9 28.9 29.1 27.0 27.9 30.6 73 Mortgage-backed securities9 n.a. n.a. n.a. n.a. n.a. n.a. 186.1 187.5 187.2 184.9 188.4 188.6 Digitized for FRASER http://fraser.stloFuoiostfneotdes. oaprpge/a r on page A21. Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1995 1996 1996 Nov. May June July Aug. Sept. Oct. Nov. Nov. 6 Nov. 13 Nov. 20 Nov. 27 Seasonally adjusted Assets 1 Bank credit 1,339.4 1,388.9 1,399.2 1,411.4 1,420.4 1,427.9 1,433.6 1,438.8 1,434.6 1,437.6 1,438.2 1,443.4 2 Securities in bank credit 401.9 411.6 412.7 415.0 415.1 415.8 415.2 413.2 413.6 414.2 412.6 412.9 3 U.S. government securities 323.9 331.4 332.9 335.0 335.1 335.8 334.3 332.4 332.8 333.2 331.8 332.0 4 Other securities 77.9 80.1 79.8 80.0 80.0 80.0 80.9 80.9 80.8 81.0 80.8 80.9 5 Loans and leases in bank credit2 937.6 977.3 986.5 996.4 1.005.3 1,012.1 1,018.4 1,025.6 1,020.9 1,023.4 1,025.6 1,030.5 6 Commercial and industrial 166.1 174.2 175.7 177.2 179.2 181.2 182.3 183.8 183.1 183.6 183.5 184.6 7 Real estate 485.5 508.6 513.3 518.8 524.0 527.3 530.7 534.1 531.4 533.1 535.0 536.3 8 Revolving home equity 26.2 26.7 26.7 27.0 27.5 27.9 29.0 29.6 29.3 29.4 29.5 29.6 9 Other 459.3 481.9 486.6 491.8 496.5 499.4 501.7 504.5 502.1 503.7 505.4 506.7 10 Consumer 219.0 226.1 228.3 231.0 232.1 233.4 236.2 237.3 236.4 236.2 237.6 238.4 11 Security3 5.4 5.3 5.3 5.1 5.2 5.2 5.1 5.3 5.3 5.3 5.2 5.5 12 Other loans and leases 61.6 63.2 63.9 64.3 64.8 65.0 64.1 65.1 64.7 65.2 64.4 65.7 13 Interbank loans 53.8 52.2 52.3 48.2 49.7 51.6 51.1 54.8 54.8 54.5 52.7 56.5 14 Cash assets4 61.9 66.2 66.7 64.7 65.7 65.1 66.0 67.3 65.8 70.3 63.6 69.6 15 Other assets5 50.3 48.7 50.6 55.9 56.4 58.1 59.1 61.7 59.0 61.7 61.0 64.1 16 Total assets6 1,485.5 1,535.4 1,548.0 1,559.6 1,571.4 1,581.8 1,588.6 1,601.4 1,593.1 1,603.0 1,594.4 1,612.2 Liabilities 17 Deposits 1,185.8 1,208.1 1,217.2 1,215.8 1,232.2 1,247.0 1,254.2 1,278.6 1,268.8 1,284.1 1,264.7 1,291.6 18 Transaction 333.2 327.6 329.4 323.4 324.1 325.9 324.1 327.6 323.4 330.6 320.0 336.4 19 Nontransaction 852.7 880.5 887.9 892.4 908.1 921.1 930.1 951.1 945.4 953.5 944.7 955.2 20 Large time 142.1 149.0 148.9 150.7 152.8 152.3 143.5 146.6 145.1 146.0 146.8 147.3 21 Other 710.5 731.5 739.0 741.6 755.4 768.8 786.6 804.5 800.3 807.5 797.9 807.9 22 Borrowings 137.9 150.5 155.9 164.2 171.0 170.7 165.0 163.0 162.7 162.6 164.4 164.0 23 From banks in the U.S 77.3 84.0 85.3 80.2 82.6 84.4 87.9 84.5 84.5 83.1 87.1 85.7 24 From others 60.6 66.5 70.7 84.0 88.4 86.3 77.0 78.5 78.2 79.5 77.3 78.3 25 Net due to related foreign offices 5.6 4.7 5.4 5.8 4.4 5.8 3.3 2.3 2.3 2.3 2.3 2.6 26 Other liabilities 28.5 29.2 28.3 29.1 28.2 26.6 24.7 23.6 24.0 23.2 24.5 23.2 27 Total liabilities 1,357.8 1,392.6 1,406.8 1,414.9 1,435.7 1,450.1 1,447.2 1,467.6 1,457.8 1,472.1 1,456.0 1,481.4 28 Residual (assets less liabilities)7 127.7 142.8 141.2 144.7 135.6 131.7 141.4 133.9 135.3 130.9 138.4 130.7 Not seasonally adjusted Assets 29 Bank credit 1,340.9 1,390.2 1,401.1 1,411.3 1,419.4 1,431.2 1,434.8 1,440.2 1,436.6 1,439.0 1,439.2 1,445.0 30 Securities in bank credit 399.7 413.8 415.0 414.3 413.6 415.6 413.2 411.4 411.8 412.4 410.4 411.8 31 U.S. government securities 321.5 333.5 335.3 334.6 333.7 335.6 332.4 330.4 331.0 331.2 329.4 330.5 32 Other securities 78.2 80.3 79.8 79.6 79.9 80.1 80.8 81.0 80.8 81.1 81.0 81.3 33 Loans and leases in bank credit2 941.1 976.4 986.1 997.0 1,005.8 1,015.6 1,021.6 1,028.8 1,024.8 1,026.6 1,028.8 1,033.2 34 Commercial and industrial 165.4 176.0 177.1 177.3 177.9 180.1 181.6 182.9 182.4 182.7 182.7 183.8 35 Real estate 488.1 507.8 513.2 518.9 524.0 528.8 532.6 536.6 534.1 535.9 537.3 538.9 36 Revolving home equity 26.3 26.7 26.8 27.1 27.6 28.1 29.2 29.7 29.4 29.5 29.6 29.7 37 Other 461.8 481.1 486.4 491.8 496.5 500.7 503.4 507.0 504.6 506.4 507.7 509.2 38 Consumer 219.6 225.7 227.0 230.7 232.6 234.9 236.7 237.8 236.7 236.4 238.1 239.2 39 Security3 5.7 5.1 5.2 4.9 5.1 5.1 5.1 5.6 5.6 5.5 5.4 5.5 40 Other loans and leases 62.4 61.9 63.7 65.2 66.1 66.6 65.7 65.8 65.9 66.0 65.3 65.9 41 Interbank loans 58.6 49.1 49.2 45.7 49.0 50.1 52.0 59.1 61.0 59.2 57.3 57.4 42 Cash assets4 64.3 65.6 65.0 64.2 63.3 64.9 66.7 69.7 65.9 73.9 66.0 72.4 43 Other assets5 49.8 48.5 49.4 55.8 56.7 58.8 59.6 61.1 59.9 62.3 59.1 62.3 44 Total assets6 1,493.6 1,532.8 1,544.0 1,556.5 1,567.6 1,584.0 1,592.0 1,608.9 1,6022 1,613.2 1,600.4 1,615.9 Liabilities 45 Deposits 1,192.1 1,204.2 1,213.7 1,214.5 1,228.2 1,246.3 1,256.3 1,284.1 1,276.7 1,292.3 1,268.9 1,291.8 46 Transaction 338.6 323.8 326.1 321.8 320.2 324.3 324.8 332.2 328.8 337.0 323.4 337.6 47 Nontransaction 853.5 880.4 887.6 892.8 908.0 922.0 931.5 951.9 947.8 955.3 945.5 954.2 48 Large time 142.2 149.8 148.8 150.5 152.6 152.4 143.8 146.5 145.4 146.1 146.8 147.2 49 Other 711.3 730.5 738.8 742.3 755.4 769.7 787.7 805.4 802.4 809.2 798.7 807.0 50 Borrowings 140.0 152.6 157.3 161.6 165.3 167.4 162.7 162.1 160.4 161.5 162.1 164.3 51 From banks in the U.S 77.7 84.9 86.0 77.5 77.6 79.6 84.8 84.0 83.5 83.5 84.3 84.7 52 From others 62.3 67.7 71.3 84.0 87.7 87.9 77.8 78.1 76.9 77.9 77.8 79.6 53 Net due to related foreign offices 5.4 4.6 5.2 5.7 4.4 5.9 3.4 2.2 2.3 2.2 2.3 2.2 54 Other liabilities 28.3 28.9 28.3 28.9 28.2 26.8 24.7 23.6 24.0 23.2 24.5 23.2 55 Total liabilities 1,365.9 1,390.3 1,404.5 1,410.6 1,426.1 1,446.4 1,447.1 1,472.0 1,4633 1,479.1 1,457.8 1,481.6 56 Residual (assets less liabilities)7 127.7 142.4 139.6 145.8 141.5 137.5 145.0 136.9 138.9 134.1 142.5 134.4 MEMO 57 Mortgage-backed securities9 n.a. n.a. n.a. n.a. n.a. n.a. 50.3 50.8 50.7 50.5 50.9 51.0 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • February 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1995 1996 1996 Nov. May June July Aug. Sept. Oct. Nov. Nov. 6 Nov. 13 Nov. 20 Nov. 27 Seasonally adjusted Assets 1 Bank credit 439.1 459.2R 466.1' 466.0' 464.7' 463.9' 483.3' 504.2 496.3 501.1 498.0 519.3 2 Securities in bank credit 144.2 150.^ 151.6' 147.4' 148.6' I44.ff 146.9r 164.2 160.0 160.7 161.9 171.1 3 U.S. government securities 67.1 77.8 79.0 79.3 81.1 82.3 82.5 88.3 86.0 86.8 87.7 92.4 4 Other securities 77.2 73.0R 72.5' 68.2' 67.5' 61.7' 64.4 75.9 74.0 73.8 74.2 78.8 5 Loans and leases in bank credit2 .. . 294.9 308.3 314.5 318.5 316.1 319.8 336.4 340.0 336.3 340.4 336.1 348.2 6 Commercial and industrial 179.0 187.2 190.0 192.4 191.7 198.5 207.0' 210.5 207.9 210.6 209.6 212.7 7 Real estate 36.7 33.5 33.2 33.1 33.1 32.8 33.4' 33.4 33.6 33.4 33.5 33.5 8 Security3 32.7 31.3 34.7 33.2 30.8 29.3 34.8 35.6 34.3 35.9 33.0 40.9 9 Other loans and leases 46.5 56.4- 56.5 59.8 60.5 59.2 61.2 60.4 60.5 60.5 60.0 61.1 10 Interbank loans 25.0 23.3 24.3 19.3 16.9 19.6 18.5 20.4 21.2 21.4 23.0 16.1 11 Cash assets4 30.2 26.3 25.7 27.7 27.8 27.8 28.7 30.7 30.0 30.7 30.2 31.2 12 Other assets5 46.2 42.9 39.8 39.1 40.2 38.3 33.0 35.2 34.3 35.7 34.2 35.6 13 Total assets6 540.5 551./ 555.8' 552.0' 549.5' 549.5' 563.4r 590.3 581.7 588.7 585.1 602.0 Liabilities 14 Deposits 168.9 172.4 171.7 179.8 180.5 185.8 205.7' 206.5 204.1 203.5 203.6 210.1 15 Transaction 9.7 10.8 10.7 10.6 10.3 9.6 10.7 10.7 11.5 10.5 10.5 10.4 16 Nontransaction 159.3 161.7 161.0 169.2 170.1 176.2 195.0 195.7 192.7 193.0 193.2 199.7 17 Large time 155.7 159.2 161.0 166.8 168.4 173.8 191.9 193.3 191.0 191.3 191.1 196.8 18 Other 3.6 2.5 0.0 2.4 1.7 2.3 3.1 2.5 1.6 1.7 2.1 2.9 19 Borrowings 108.0 136.3 130.2 124.9 131.7 121.8 115.7 126.3 118.0 126.9 121.5 139.5 20 From banks in the U.S 31.6 37.1 32.7 30.8 35.5 33.6 33.9 37.1 33.1 33.7 33.7 46.7 21 From others 76.4 99.2 97.5 94.0 96.2 88.2 81.8' 89.2 84.9 93.2 87.8 92.8 22 Net due to related foreign offices 174.6 168.1 176.6 175.6 170.5 174.9 165.1 166.8 175.7 170.2 172.4 151.0 23 Other liabilities 81.5 72.2 69.2 67.3 65.5 65.5 72.6 80.0 77.7 78.4 78.8 82.7 24 Total liabilities 533.0 549.0 547.7 547.5 548.2 548.0 559.0 579.6 575.5 579.0 576.4 583.2 25 Residual (assets less liabilities)7 7.5 2.7R 8.1' 4.5' 1.3' 1.4' 4.4' 10.8 6.1 9.7 8.8 18.8 Not seasonally adjusted Assets 26 Bank credit 435.5 456.4R 462.9' 467.0' 467.0' 465.4' 480.0 496.3 492.0 493.4 489.9 508.2 27 Securities in bank credit 142.1 152.7R 149.7' 148.4' 150.7' 145.2' 147.9 158.0 155.4 155.6 156.2 162.7 28 U.S. government securities 66.? 77.0 78.0 79.0 82.4 81.7 81.8 87.2 85.4 86.6 86.6 90.1 29 Trading account n.a. n.a. n.a. n.a. n.a. n.a. 18.6 21.8 20.6 20.5 21.4 24.3 30 Investment account n.a. n.a. n.a. n.a. n.a. n.a. 63.2 65.4 64.8 66.0 65.2 65.8 31 Other securities 75.8 75.7R 71.7' 69.3' 68.3' 63.5' 66.1 70.8 70.0 69.0 69.6 72.7 32 Trading account n.a. n.a. n.a. n.a. n.a. n.a. 47.8' 51.7 50.8 49.9 50.5 53.7 33 Investment account n.a. n.a. n.a. n.a. n.a. n.a. 18.4' 19.1 19.1 19.1 19.0 18.9 34 Loans and leases in bank credit2 ... 293.5 303.7 313.2 318.7 316.3 320.2 332.1 338.3 336.7 337.8 333.7 345.4 35 Commercial and industrial 178.4 187.1 190.5 193.5 192.6 197.7 204.9' 209.7 207.1 208.8 209.2 212.6 36 Real estate 36.9 33.3 33.1 33.0 33.1 33.0 33.4' 33.6 33.8 33.5 33.6 33.7 37 Security3 32.2 28.3 32.5 32.0 29.8 29.1 32.9 34.7 35.1 35.3 31.5 38.4 38 Other loans and leases 46.0 54.9 57.1 60.1 60.7 60.4 60.9 60.3 60.7 60.2 59.4 60.7 39 Interbank loans 24.2 23.4 22.4 19.2 16.4 20.2 19.8 19.8 18.9 21.4 21.0 17.3 40 Cash assets4 29.8 25.9 26.6 28.2 28.5 28.7 29.1 30.3 29.3 30.5 29.9 30.6 41 Other assets5 47.0 43.5 39.6 38.6 41.1 38.5 32.8 35.7 34.9 36.1 34.6 36.2 42 Total assets6 536.5 5492' 551.4r 553.0r 552.9r 552.6r 561.6 581.9 574.9 5813 575.3 592.1 Liabilities 43 Deposits 169.9 173.9 173.8 177.5 178.8 185.7 203.9 208.4 205.8 206.0 205.4 212.1 44 Transaction 9.7 10.1 10.4 10.6 10.3 10.2 10.8 10.8 11.3 10.8 10.6 10.5 45 Nontransaction 160.2 163.8 163.4 166.9 168.5 175.5 193.0 197.6 194.5 195.2 194.8 201.7 46 Large time 156.9 161.3 161.0 164.5 166.3 173.2 190.6 195.1 192.2 192.9 192.5 199.3 47 Other 3.2 2.4 2.4 2.4 2.3 2.3 2.5 2.5 2.3 2.3 2.3 2.3 48 Borrowings 105.6 133.2 134.4 130.6 133.6 123.6 113.2 122.6 118.0 123.0 117.3 130.9 49 From banks in the U.S 31.3 35.1 34.5 32.2 35.1 33.5 31.8 36.5 32.3 34.2 32.6 44.6 50 From others 74.4 98.1 99.9 98.4 98.5 90.1 81.4 86.1 85.8 88.9 84.7 86.3 51 Net due to related foreign offices 174.8 165.3 170.2 175.0 171.2 174.3 167.2 165.7 168.8 168.7 168.4 160.9 52 Other liabilities 81.9 73.3 69.7 66.8 66.4 65.7 72.6 80.0 77.7 78.4 78.8 82.7 53 Total liabilities 5323 545.7 548.1 549.9 549.9 549.2 556.9" 576.7 5703 576.2 570.0 586.6 54 Residual (assets less liabilities)1 4.2 3.5' 3.3' 3.1' 3.0' 3.4' 4.7 5.2 4.6 5.1 5.3 5.5 MEMO 55 Revaluation gains on off-balance-sheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 35.9 38.4 38.1 36.9 37.6 39.7 56 Revaluation losses on off-balancesheet items8 n.a. n.a. n.a. n.a. n.a. n.a. 29.3 31.5 31.4 30.0 31.3 32.4 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 NOTES TO TABLE 1.26 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 quantities of balance sheet items acquired in mergers are removed from past data for the bank statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table group that contained the acquired bank and put into past data for the group containing the 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer ratio procedure is used to adjust past levels. being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks domestically chartered banks have been included in table 1.26, parts C and D. Data are both in the United States, all of which are included in "Interbank loans." merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry branches and agencies of foreign banks have been replaced by balance sheet estimates of all securities. foreign-related institutions and are included in table 1.26, part E. These data are break- 4. Includes vault cash, cash items in process of collection, balances due from depository adjusted. institutions, and balances due from Federal Reserve Banks. The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 5. Excludes the due-from position with related foreign offices, which is included in "Net which were available as of October 2, 1996. due to related foreign offices." 1. Covers the following types of institutions in the fifty states and the District of 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for Columbia: domestically chartered commercial banks that submit a weekly report of condition transfer risk. Loans are reported gross of these items. (large domestic); other domestically chartered commercial banks (small domestic); branches 7. This balancing item is not intended as a measure of equity capital for use in capital and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the institutions). Excludes International Banking Facilities. Data are Wednesday values or pro seasonal patterns estimated for total assets and total liabilities. rata averages of Wednesday values. Large domestic banks constitute a universe; data for 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity small domestic banks and foreign-related institutions are estimates based on weekly samples and equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. of assets and liabilities. government-sponsored enterprises, and private entities. The data for large and small domestic banks presented on pp. A18 and A19 are adjusted to remove the estimated effects of mergers between these two groups. The adjustment for mergers changes past levels to make them comparable with current levels. Estimated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • February 1997 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1996 Item 1991 1992 1993 1994 1995 Dec. Dec. Dec. Dec. Dec. May June July Aug. Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 528,832 545,619 555,075 595,382 674,904 719,069 731,027 734,73LR 753,276' 757,155R 757,718 Financial companies' 2 Dealer-placed paper2, total. 212,999 226,456 218,947 223,038 275,815 301,670 310,524 317,426' 329,026 336,833' 349,288 3 Directly placed paper3, total 182,463 171,605 180,389 207,701 210,829 221,463 223,236 222,583 230,318 226,599 225,977 4 Nonfinancial companies4 133,370 147,558 155,739 164,643 188,260 195,936 197,267 194,722 193,932' 193,724 182,454 Bankers dollar acceptances (not seasonally adjusted)5 5 Total 43,770 38,194 32,348 29,835 29,242 By holder 6 Accepting banks 11,017 10,555 12,421 11,783 7 Own bills 9,347 9,097 10,707 10,462 8 Bills bought from other banks 1,670 1,458 1,714 1,321 Federal Reserve Banks6 9 Foreign correspondents 1,739 1,276 725 410 n a. 10 Others 31,014 26,364 19,202 17,642 By basis 11 Imports into United States 12,843 12,209 10,217 10,062 12 Exports from United States 10,351 8,096 7,293 6,355 13 All other 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 100 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 are 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. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans' Percent per year Date of change Av r e a r t a e ge Av r e a r t a e ge 1994—Mar. 24 6.25 1994 7.15 1995—Jan. . 8.50 1996—Jan. . Apr. 19 6.75 1995 8.83 Feb. 9.00 Feb. May 17 7.25 1996 8.27 Mar. 9.00 Mar. Aug. 16 7.75 Apr. 9.00 Apr. Nov. 15 8.50 1994—Jan. . 6.00 May 9.00 May Feb. 6.00 June 9.00 June 1995—Feb. 1 9.00 Mar. 6.06 July . 8.80 July . July 7 8.75 Apr. 6.45 Aug. 8.75 Aug. Dec. 20 8.50 May 6.99 Sepl 8.75 Sept. June 7.25 Oct. . 8.75 Oct. . 1996—Feb. 1 July . 7.25 Nov. 8.75 Nov. Aug. 7.51 Dec. 8.65 Dec. Sept. 7.75 Oct. . 7.75 Nov. 8.15 Dec. 8.50 1. 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-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1996 1996, week ending IItteemm 11999933 11999944 11999955 Aug. Sept. Oct. Nov. Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 3.02 4.21 5.83 5.22 5.30 5.24 5.31 5.27 5.32 5.21 5.41 5.30 2 Discount window borrowing • 3.00 3.60 5.21 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Commercial paper3,5'6 3 1-month 3.17 4.43 5.93 5.39 5.45 5.37 5.39 5.37 5.38 5.39 5.40 5.42 4 3-month 3.22 4.66 5.93 5.42 5.52 5.43 5.41 5.42 5.41 5.41 5.41 5.42 5 6-month 3.30 4.93 5.93 5.51 5.66 5.45 5.40 5.42 5.41 5.40 5.39 5.40 Finance paper, directly placed3,5,7 6 1-month 3.12 4.33 5.81 5.28 5.33 5.25 5.25 5.25 5.26 5.26 5.25 5.24 7 3-month 3.16 4.53 5.78 5.31 5.38 5.31 5.29 5.31 5.29 5.29 5.28 5.29 8 6-month 3.15 4.56 5.68 5.33 5.40 5.28 5.23 5.26 5.23 5.22 5.23 5.22 Bankers acceptances3,5,8 9 3-month 3.13 4.56 5.81 5.32 5.39 5.32 5.29 5.30 5.30 5.30 5.28 5.29 10 6-month 3.21 4.83 5.80 5.40 5.51 5.36 5.29 5.32 5.29 5.29 5.28 5.30 Certificates of deposit, secondary market3,9 11 1-month 3.11 4.38 5.87 5.32 5.38 5.28 5.30 5.28 5.28 5.29 5.30 5.34 12 3-month 3.17 4.63 5.92 5.40 5.51 5.41 5.38 5.39 5.38 5.37 5.38 5.38 13 6-month 3.28 4.96 5.98 5.57 5.71 5.51 5.43 5.46 5.44 5.43 5.43 5.43 14 Eurodollar deposits, 3-month310 3.18 4.63 5.93 5.41 5.49 5.41 5.38 5.38 5.38 5.38 5.38 5.38 U.S. Treasury bills Secondary market3,5 15 3-month 3.00 4.25 5.49 5.05 5.09 4.99 5.03 5.03 5.03 5.03 5.03 5.02 16 6-month 3.12 4.64 5.56 5.13 5.24 5.11 5.07 5.10 5.08 5.07 5.06 5.06 17 1-year 3.29 5.02 5.60 5.35 5.50 5.25 5.14 5.18 5.15 5.13 5.13 5.13 Auction average3,5,11 18 3-month 3.02 4.29 5.51 5.09 5.15 5.01 5.03 5.04 5.04 5.02 5.03 5.03 19 6-month 3.14 4.66 5.59 5.17 5.29 5.12 5.07 5.15 5.08 5.07 5.07 5.07 20 1-year 3.33 5.02 5.69 5.36 5.57 5.34 5.20 n.a. n.a. 5.20 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities'2 21 1-year 3.43 5.32 5.94 5.67 5.83 5.55 5.42 5.48 5.44 5.41 5.42 5.41 22 2-year 4.05 5.94 6.15 6.03 6.23 5.91 5.70 5.81 5.76 5.70 5.68 5.65 23 3-year 4.44 6.27 6.25 6.21 6.41 6.08 5.82 5.97 5.89 5.81 5.79 5.75 24 5-year 5.14 6.69 6.38 6.39 6.60 6.27 5.97 6.15 6.05 5.97 5.94 5.90 25 7-year 5.54 6.91 6.50 6.52 6.73 6.42 6.10 6.29 6.17 6.08 6.06 6.03 26 10-year 5.87 7.09 6.57 6.64 6.83 6.53 6.20 6.42 6.30 6.18 6.16 6.12 27 20-year 6.29 7.49 6.95 6.97 7.17 6.90 6.58 6.79 6.66 6.56 6.53 6.51 28 30-year 6.59 7.37 6.88 6.84 7.03 6.81 6.48 6.71 6.57 6.45 6.43 6.41 Composite 29 More than 10 years (long-term) 6.45 7.41 6.93 6.94 7.13 6.87 6.55 6.76 6.63 6.53 6.51 6.49 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 5.38 5.77 5.80 5.64 5.57 5.52 5.43 5.53 5.52 5.39 5.41 5.41 31 BBaaaa 5.83 6.17 6.10 5.85 5.79 5.73 5.69 5.70 5.66 5.71 5.70 5.70 32 BBoonndd BBuuyyeerr sseerriieess1144 5.60 6.18 5.95 5.76 5.87 5.72 5.59 5.70 5.67 5.60 5.55 5.54 CORPORATE BONDS 33 Seasoned issues, all industries15 7.54 8.26 7.83 7.76 7.95 7.68 7.41 7.58 7.48 7.38 7.36 7.37 Rating group 34 Aaa 7.22 7.97 7.59 7.46 7.66 7.39 7.10 7.28 7.18 7.08 7.05 7.06 35 Aa 7.40 8.15 7.72 7.63 7.82 7.58 7.31 7.48 7.38 7.28 7.26 7.27 36 A 7.58 8.28 7.83 7.77 7.95 7.70 7.41 7.59 7.49 7.38 7.37 7.38 37 Baa 7.93 8.63 8.20 8.18 8.35 8.07 7.79 7.96 7.86 7.75 7.75 7.75 38 A-rated, recently offered utility bonds15 7.46 8.29 7.86 7.87 8.06 7.83 7.54 7.73 7.59 7.52 7.48 7.42 MEMO Dividend—price ratio 39 Common stocks 2.78 2.82 2.56 2.22 2.20 2.11 2.01 2.11 2.04 2.03 2.00 1.97 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: U.S. 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 approximately 11:00 a.m. London time. Data are the price index. for indication 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

A24 Domestic Nonfinancial Statistics • February 1997 1.36 STOCK MARKET Selected Statistics 1996 IInnddiiccaattoorr 11999933 11999944 11999955 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading volume (averages of daily figures)1 CCCCCCCooooooommmmmmmmmmmmmmooooooonnnnnnn ssssssstttttttoooooooccccccckkkkkkk ppppppprrrrrrriiiiiiiccccccceeeeeeesssssss (((((((iiiiiiinnnnnnndddddddeeeeeeexxxxxxxeeeeeeesssssss))))))) 1111111 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((DDDDDDDeeeeeeeccccccc....... 33333331111111,,,,,,, 1111111999999966666665555555 ======= 55555550000000))))))) 249.71 254.16 291.18 346.73 347.50 354.84 358.32 345.06 354.59 360.96 373.54 388.75 2222222 IIIIIIInnnnnnnddddddduuuuuuussssssstttttttrrrrrrriiiiiiiaaaaaaalllllll 300.10 315.32 367.40 439.55 441.99 452.63 458.30 438.58 444.91 459.69 473.98 490.60 3333333 TTTTTTTrrrrrrraaaaaaannnnnnnssssssspppppppooooooorrrrrrrtttttttaaaaaaatttttttiiiiiiiooooooonnnnnnn 242.68 247.17 270.14 324.77 326.42 334.66 331.57 316.57 321.61 323.12 332.80 348.32 4444444 UUUUUUUtttttttiiiiiiillllllliiiiiiitttttttyyyyyyy 114.55 104.96 110.64 122.83 122.44 124.86 123.60 122.66 122.37 121.12 130.04 135.88 5555555 FFFFFFFiiiiiiinnnnnnnaaaaaaannnnnnnccccccceeeeeee 216.55 209.75 238.48 290.44 287.92 290.43 294.42 287.89 302.95 308.16 324.42 345.30 6666666 SSSSSSStttttttaaaaaaannnnnnndddddddaaaaaaarrrrrrrddddddd &&&&&&& PPPPPPPoooooooooooooorrrrrrr'''''''sssssss CCCCCCCooooooorrrrrrrpppppppooooooorrrrrrraaaaaaatttttttiiiiiiiooooooonnnnnnn (((((((1111111999999944444441111111-------44444443333333 ======= 11111110000000)))))))2222222 451.63 460.42 541.72 647.07 647.17 661.23 668.50 644.06 662.68 674.88 701.46 735.67 7777777 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((AAAAAAAuuuuuuuggggggg....... 33333331111111,,,,,,, 1111111999999977777773333333 ======= 55555550000000))))))) 438.77 449.49 498.13 565.69 580.60 600.93 591.99 550.16 554.88 564.87 574.46 583.21 VVVVVVVooooooollllllluuuuuuummmmmmmeeeeeee ooooooofffffff tttttttrrrrrrraaaaaaadddddddiiiiiiinnnnnnnggggggg (((((((ttttttthhhhhhhooooooouuuuuuusssssssaaaaaaannnnnnndddddddsssssss ooooooofffffff ssssssshhhhhhhaaaaaaarrrrrrreeeeeeesssssss))))))) 8888888 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrriiiiiiiccccccc SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 263,374 290,652 345,729 426,198 419,941 404,184 392,413 398,245 333,343 400,951 420,835 443,521 9999999 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 18,188 17,951 20,387 22,988 24,886 28,127 23,903 21,281 17,916 19,449 18,780 22,151 Customer financing (millions of dollars, end-of-period balances) 11111110000000 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrr-------dddddddeeeeeeeaaaaaaallllllleeeeeeerrrrrrrsssssss4444444 60,310 61,160 76,680 78,308 81,170 86,100 87,160 79,860 82,980 89300 88,740 91,680 FFFFFFFrrrrrrreeeeeeeeeeeeee cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt bbbbbbbaaaaaaalllllllaaaaaaannnnnnnccccccceeeeeeesssssss aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrriiiiiii5555555 11111111111111 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss6666666 12,360 14,095 16,250 15,770 15,780 16,890 16,800 17,700 17,520 17,940 19,890 20,020 11111112222222 CCCCCCCaaaaaaassssssshhhhhhh aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss 27,715 28,870 34,340 33,113 33,100 33,760 33,775 32,935 32,680 35,360 36,610 36,650 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 11111113333333 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn ssssssstttttttoooooooccccccckkkkkkksssssss 70 80 65 55 65 50 11111114444444 CCCCCCCooooooonnnnnnnvvvvvvveeeeeeerrrrrrrtttttttiiiiiiibbbbbbbllllllleeeeeee bbbbbbbooooooonnnnnnndddddddsssssss 50 60 50 50 50 50 11111115555555 SSSSSSShhhhhhhooooooorrrrrrrttttttt sssssssaaaaaaallllllleeeeeeesssssss 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and collateralized by securities. Margin requirements on securities are the difference between the 40 financial. market value (i00 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, previous readings in half. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization; such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1996 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. U.S. budget1 1 Receipts, total 1,153,535 1,257,737 1,355,213 151,995 103,893 99,996 157,668 100,056r 97,917 2 On-budget 841,601 922,711 1,004,134 116,794 75,282 71,505 125,806 74,044r 70,086 3 Off-budget 311,934 335,026 351,079 35,201 28,611 28,491 31,862 26,012 27,831 4 Outlays, total 1,408,675 1,460,841 1,519,133 117,655 130,749 141,828 122,243 140,315r 135,795 5 On-budget 1,142,088 1,181,469 1,230,469 103,997 104,214 113,840 90,253 113,690r 106,395 6 Off-budget 266,587 279,372 288,664 13,657 26,535 27,987 31,989 26,625 29,400 7 Surplus or deficit (—), total -255,140 -203,104 -163,920 34,340 -26,856 -41,831 35,426 -40,259 -37,878 8 On-budget -300,487 -258,758 -226,335 12,797 -28,932 • -42,335 35,553 -39,646 -36,309 9 Off-budget 45,347 55,654 62,415 21,544 2,076 504 -127 -613 -1,569 Source of financing (total) 10 Borrowing from the public 248,619 185,344 171,288 -8,619 29,098 16,160 -5,892 15,588 45,459 11 Operating cash (decrease, or increase (-)) 6,283 16,564 -2,007 -33,519 1,262 23,705 -31,159 18,592 -673 12 Other2 238 1,196 -5,361 7,798 -3,504 1,966 1,625 6,079 -6,908 MEMO 13 Treasury operating balance (level, end of period) 52,506 35,942 37,949 38,033 36,771 13,066 44,225 25,633 26,306 14 Federal Reserve Banks 17,289 6,848 8,620 7,701 6,836 5,149 7,700 5,897 4,857 15 Tax and loan accounts 35,217 29,094 29,329 30,332 29,936 7,917 36,525 19,736 21,449 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. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the 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

A26 Domestic Nonfinancial Statistics • February 1997 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1994 1995 1996 1996 11999944 11999955 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS 1 All sources 1,257,737 1,355,213 625,781 711,003 656,865 767,099 157,668 100,056r 97,917 2 Individual income taxes, net 543,055 590,244 273,315 307,498 292,393 347,285 68,672 54,000 46,338 3 Withheld 459,699 499,927 240,063 251,398 256,916 264,177 39,537 48,866 46,989 4 Nonwithheld 160,433 175,855 42,029 132,001 45,521 162,782 30,629 5,639 2,003 5 Refunds 77,077 85,538 8,787 75,959 10,058 79,735 1,495 505 2,656 Corporation income taxes 6 Gross receipts 154,205 174,422 78,393 92,132 88,302 96,480 36,378 5,654 3,522 7 Refunds 13,820 17,418 7,747 10,399 7,518 9,704 1,274 4,792 1,183 8 Social insurance taxes and contributions, net . .. 461,475 484,473 220,140 261,837 224,269 277,767 43,372 36,104 39,952 9 Employment taxes and contributions2 428,810 451,045 206,615 241,557 211,323 257,446 42,817 34,428 36,967 10 Unemployment insurance 28,004 28,878 11,177 18,001 10,702 18,068 206 1,330 2,574 11 Other net receipts3 4,661 4,550 2,349 2,279 2,247 2,254 348 346 411 12 Excise taxes 55,225 57,484 30,178 27,452 30,014 25,682 5,315 3,923 4,678 13 Customs deposits 20,099 19,301 11,041 8,848 9,849 8,731 1,604 1,432 1,219 14 Estate and gift taxes 15,225 14,763 7,067 7,425 7,718 8,775 1,698 1,547 1,394 15 Miscellaneous receipts4 22,274 31,944 13,395 16,211 11,839 12,087 1,902 2,187r 1,997 OUTLAYS 16 All types 1,460,841 1,519,133 752,378 761,289 752,856 785,368r 122,243r 140,315r 135,795 17 National defense 281,642 272,066 141,885 135,648 132,886r 132,600 19,738 22,284 24,911 18 International affairs 17,083 16,434 11,889 4,797 6,908 8,074 1,007 4,112 814 19 General science, space, and technology 16,227 16,724 7,604 8,611 7,970 8,897 1,689 1,447 1,586 20 Energy 5,219 4,936 2,923 2,358 1,992 1,355 563 -207 -96 21 Natural resources and environment 21,064 22,105 11,911 10,273 11,384 10,238 1,913 1,758 1,888 22 Agriculture 15,046 9,773 7,623 4,039 3,072 71 3,309 2,347 1,405 23 Commerce and housing credit -5,118 -14,441 -4,042 -13,471 -3,941 -6,861 1,559 -167 -4,535 24 Transportation 38,066 39,350 21,835 18,193 20,725 18,291 3,537 3,870 3,386 25 Community and regional development 10,454 10,641 6,283 5,073 5,570r 5,237 1,191 1,247 990 26 Education, training, employment, and social services 46,307 54,263 27,450 25,893 26,295 26,137 5,082 4,176 4,973 27 Health 107,122 115,418 54,147 59,057 57,112r 59,957 10,004 10,378 10,060 28 Social security and Medicare 464,312 495,701 236,817 251,975 251,387r 264,649 41,693 45,420 45,936 29 Income security 214,031 220,449 101,806 117,190 104,760 121,032 13,664 18,544 19,714 30 Veterans benefits and services 37,642 37,938 19,761 19,269 18,687 18,164 1,641 3,336 5,156 31 Administration of justice 15,256 16,223 7,753 8,051 8,092' 9,021 1,382 1,311 1,897 32 General government 11,303 13,835 7,355 5,796 7,602 4,641 1,548 l,763r 200 33 Net interest5 202,957 232,173 109,434 116,169 119,349 120,579 19,243 21,472 20,144 34 Undistributed offsetting receipts6 -37,772 -44,455 -20,066 -17,631 -26,995 -16,716 -6,522 -2,777 -2,635 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 1997; monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1994 1995 1996 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 4,721 4,827 4,891 4,978 5,001 5,017 5,153 5,197 5,260 2 Public debt securities 4,693 4,800 4,864 4,951 4,974 4,989 5,118 5,161 5,225 3 Held by public 3,480 3,543 3,610 3,635 3,653 3,684 3,764 3,739 n.a. 4 Held by agencies 1,213 1,257 1,255 1,317 1,321 1,305 1,354 1,422 n.a. 5 Agency securities 29 27 27 27 27 28 36 36 35 6 Held by public 29 27 26 27 27 28 28 28 n.a. 7 Held by agencies 0 0 0 0 0 0 8 8 n.a. 8 Debt subject to statutory limit 4,605 4,711 4,775 4,861 4,885 4,900 5,030 5,073 5,137 9 Public debt securities 4,605 4,711 4,774 4,861 4,885 4,900 5,030 5,073 5,137 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 5,500 5,500 5,500 1. Consists of guaranteed debt of US. Treasury and other federal agencies, specified SOURCE. US. 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 1995 1996 Type and holder 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 1 Total gross public debt 4,177.0 4,535.7 4,800.2 4,988.7 4,988.7 5,117.8 5,161.1 5,224.8 By type 2 Interest-bearing 4,173.9 4,532.3 4,769.2 4,964.4 4,964.4 5,083.0 5,126.8 5,220.8 3 Marketable 2,754.1 2,989.5 3,126.0 3,307.2 3,307.2 3,375.1 3,348.4 3,418.4 4 Bills 657.7 714.6 733.8 760.7 760.7 811.9 773.6 761.2 5 Notes 1,608.9 1,764.0 1,867.0 2,010.3 2,010.3 2,014.1 2,025.8 2,05 8.7 6 Bonds 472.5 495.9 510.3 521.2 521.2 534.1 534.1 543.5 7 Nonmarketable1 1,419.8 1,542.9 1,643.1 1,657.2 1,657.2 1,707.9 1,778.3 1,802.4 8 State and local government series 153.5 149.5 132.6 104.5 104.5 96.5 97.8 95.7 9 Foreign issues2 37.4 43.5 42.5 40.8 40.8 40.4 37.8 37.5 10 Government 37.4 43.5 42.5 40.8 40.8 40.4 37.8 37.5 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 155.0 169.4 177.8 181.9 181.9 183.0 183.8 184.2 13 Government account series3 1,043.5 1,150.0 1,259.8 1,299.6 1,299.6 1,357.7 1,428.5 1,454.7 14 Non-interest-bearing 3.1 3.4 31.0 24.3 24.3 34.8 34.3 4.0 By holder 4 15 U.S. Treasury and other federal agencies and trust funds 1,047.8 1,153.5 1,257.1 1,304.5 1,304.5 1,353.8 1,422.4 16 Federal Reserve Banks 302.5 334.2 374.1 391.0 391.0 381.0 391.0 17 Private investors 2,839.9 3,047.4 3,168.0 3,294.9 3,294.9 3,382.8 3,347.3 18 Commercial banks 294.4 322.2 290.1 278.3 278.3 283.8 285.0 19 Money market funds 79.7 80.8 67.6 71.3 71.3 87.3 82.2 20 Insurance companies 197.5 234.5 240.1 250.8 250.8 256.0 258.0 21 Other companies 192.5 213.0 226.5 228.8 228.8 229.0 230.9 n a. 22 State and local treasuries5,6 563.3 605.9 483.4 352.2 352.2 336.8 340.0 Individuals 23 Savings bonds 157.3 171.9 180.5 185.0 185.0 185.8 186.5 24 Other securities 131.9 137.9 150.7 162.7 162.7 161.4 161.1 25 Foreign and international7 549.7 623.0 688.7 862.1 862.1 930.2 958.6 26 Other miscellaneous investors6'8 673.5 658.3 840.5 903.7 903.7 912.5 845.0 1. Includes (not shown separately) securities issued to the Rural Electrification Administra- 7. 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- 8. 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 SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the holdings', data for other groups are Treasury estimates. Public Deb! of the United States; data by holder, Treasury Bulletin. 5. Includes state and local pension funds. 6. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable federal securities was removed from "Other miscellaneous investors" and added to "State and local treasuries." The data shown here have been revised accordingly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • February 1997 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1996 1996, week ending IItteemm Aug. Sept. Oct. Oct. 2 Oct. 9 Oct. 16 Oct. 23 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 45,218 53,964 46,500 50,819 43,084 57,220 43,664 41,575 50,868 60,104 47,856 38,613 Coupon securities, by maturity 2 Five years or less 91,717 101,720 99,043 105,597 97,239 90,604 104,279 98,278 106,346 100,651 113,446 90,343 3 More than five years 44,894 47,945 53,211 51,999 60,188 48,211 45,365 56,383 64,128 68,880 57,284 62,421 4 Federal agency 33,593 33,559 30,349 36,011 29,336 30,898 30,713 28,210 30,770 30,724 35,444 33,916 5 Mortgage-backed 35,793 39,470 40,500 37,357 63,617 36,951 29,804 29,510 53,829 63,146 38,702 26,757 By type of counterparty With interdealer broker 6 U.S. Treasury 106,811 118,528 114,131 116,513 116,899 111,875 110,756 113,359 125,283 130,624 123,412 107,387 7 Federal agency 713 796 848 905 926 865 833 719 991 689 753 887 8 Mortgage-backed 13,496 1133,,553333 14,927 11,272 23,807 13,631 11,755 10,505 20,994 21,535 13,792 12,031 With other 9 U.S. Treasury 75,018 85,100 84,624 91,902 83,613 84,161 82,552 82,877 96,059 99,011 95,173 83,991 10 Federal agency 32,880 32,763 29,502 35,106 28,410 30,033 29,881 27,491 29,779 30,035 34,692 33,029 11 Mortgage-backed 22,297 25,937 25,573 26,084 39,810 23,319 18,049 19,005 32,835 41,611 24,909 14,726 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 429 428 96 0 0 189 28 78 159 75 156 209 Coupon securities, by maturity 13 Five years or less 1,649 1,710 1,029 1,286 1,095 832 975 1,063 1,064 826 1,310 2,215 14 More than five years 11,373 14,057 11,938 13,306 12,559 11,173 9,707 13,339 13,309 16,479 13,479 15,278 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 0 0 Coupon securities, by maturity 18 Five years or less 2,194 3,555 3,143 3,341 3,890 3,825 1,659 3,114 3,850 2,238 1,872 1,643 19 More than five years 4,408 3,924 4,548 3,942 5,439 4,785 3,774 4,319 5,374 6,661 4,620 3,583 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 848 1,132 1,113 2,728 1,263 592 1,160 719 945 1,399 608 729 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

Federal Finance A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1996 1996, week ending Aug. Sept. Oct. Oct. 2 Oct. 9 Oct. 16 Oct. 23 Oct. 30 Nov. 6 Nov. 13 Nov. 20 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 13,673 4,530 607 -5,285 -4,184 4,113 3,209 1,006 383 12,706 11,838 Coupon securities, by maturity 2 Five years or less -3,839 -3,592 384 -1,272 -1,113 -6,003 6,925 557 11,898 961 9,466 3 More than five years -14,771 -21,281 -17,347 -22,724 -18,641 -16,180 -15,453 -17,883 -15,199 -17,666 -19.061 4 Federal agency 22,836 20,899 25,339 23,845 26,331 21,897 27,301 26,197 25,729 27,827 22,520 5 Mortgage-backed 36,468 36,981 39,361 38,786 37,679 39,210 39,250 40,855 43,646 44,320 41,239 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -4,401 -963 -1,315 -622 -935 -1,311 -1,447 -1,707 -1,720 -1,959 -1,831 Coupon securities, by maturity 7 Five years or less -473 1,741 667 632 1,009 1,423 268 86 -90 -367 -2,319 8 More than five years -19,325 -7,520 -10,401 -8,577 -10,030 -8,214 -11,002 -12,170 -15,377 -14,422 -18,630 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 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 12 Five years or less -647 -992 -1,261 -1,275 -785 -1,678 -2,554 50 -1,765 -2,591 -1,853 13 More than five years 2,759 -1,021 -1,433 -858 -518 -685 -2,424 -2,325 -1,050 -432 1,189 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 2,003 1,620 2,343 1,629 2,172 2,025 2,605 2,914 1,376 1,174 2,088 Financing5 Reverse repurchase agreements 16 Overnight and continuing 280,269 269,777 253,416 276,218 240,183 270,797 246,917 248,408 259,323 258,190 287,053 17 Term 480,446 450,345 501,087 450,007 498,531 475,818 512,144 527,486 535,831 542,617 433,133 Securities borrowed 18 Overnight and continuing 179,112 187,938 182,236 184,764 184,142 184,313 179,717 180,066 182,134 189,731 196,070 19 Term 67,680 66,776 74,103 73,646 75,365 72,697 74,481 73,923 74,647 73,361 64,746 Securities received as pledge 20 Overnight and continuing 4,034 4,067 3,778 4,090 4,047 4,151 3,406 3,467 3,429 3,456 3,908 21 Term 78 59 41 43 47 31 31 39 146 147 108 Repurchase agreements 22 Overnight and continuing 577,973r 566,786' 572,193 585,714' 562,918 580,508 571,109 568,125 587,925 589,545 606,286 23 Term 429,700 391,841 445,809 387,463 434,487 421,972 459,694 478,488 482,670 491,467 387,544 Securities loaned 24 Overnight and continuing 4,210 3,864 3,860 3,993 3,136 4,166 3,951 4,104 4,172 3,468 3,364 25 Term 3,541 3,567 3,566 3,572 n.a. n.a. n.a. n.a. 3,553 3,664 n.a. Securities pledged 26 Overnight and continuing 41,671 44,798 43,365 45,498 43,289 44,173 42,334 42,919 44,317 48,605 52,942 27 Term 5,795 6,752 6,843 7,305 6,981 6,975 6,839 6,364 7,406 7,487 1,405 Collateralized loans 28 Overnight and continuing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29 Term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 30 Total 19,828' 14,912' 13,787 13,576' 12,649 13,721 14,382 14,113 16,203 15,259 15,037 MEMO: Matched book6 Securities in 31 Overnight and continuing 278,385 263,184 252,532 265,784 244,183 263,374 249,688 248,308 258,048 257,765 287,100 32 Term 476,457 446,548 498,543 453,206 496,432 476,050 506,764 523,420 529,751 532,284 427,813 Securities out 33 Overnight and continuing 369,423' 359,468' 362,320 382,992' 361,544 377,223 355,610 347,735 371,154 373,086 379,899 34 Term 384,256 349,869 398,155 347,930 386,457 375,578 409,703 430,485 431,378 439,326 337,720 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

A30 Domestic Nonfinancial Statistics • February 1997 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1996 AAggeennccyy 11999922 11999933 11999944 11999955 May June July Aug. Sept. 1 Federal and federally sponsored agencies 483,970 570,711 738,928 844,611 868,599 879,355 n.a. 2 Federal agencies 41,829 45,193 39,186 37,347 31,029 31,448 30,939 3 Defense Department' 7 6 6 6 6 6 6 4 Export-Import Bank2'3 7,208 5,315 3,455 2,050 2,015 1,853 1,853 n a. n a. 5 Federal Housing Administration4 374 255 116 97 56 62 62 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 10,660 9,732 8,073 5,765 n.a. n.a. n.a. 8 Tennessee Valley Authority 23,580 29,885 27,536 29,429 28,952 29,465 28,956 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 442,141 523,452 699,742 807,264 837,570 847,807 854,461 861,564 866,071 11 Federal Home Loan Banks 114,733 139,512 205,817 243.194 243,389 249,240 251,169 253,847 254,920 12 Federal Home Loan Mortgage Corporation 29,631 49,993 93,279 119,961 141,248 143,363 146,534 148,729 146,954 13 Federal National Mortgage Association 166,300 201,112 257,230 299,174 305,050 308,385 310,503 312,374 319,153 14 Farm Credit Banks8 51,910 53,123 53,175 57,379 61,197 62,182 60,294 60,219 60,126 15 Student Loan Marketing Association9 39,650 39,784 50,335 47,529 46,735 44,718 46,053 46,459 44,962 16 Financing Corporation10 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 Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 154,994 128,187 103,817 78,681 64,931 63,654 62,233 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 7,202 5,309 3,449 2,044 2,009 1,847 1,847 21 Postal Service6 10,440 9,732 8,073 5,765 n.a. n.a. n.a. 22 Student Loan Marketing Association 4,790 4,760 n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 6,975 6,325 3,200 3,200 n.a. n.a. n.a. n.a. n.a. 24 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending14 25 Farmers Home Administration 42,979 38,619 33,719 21,015 21,015 20,625 19,575 26 Rural Electrification Administration 18,172 17,578 17,392 17,144 16,944 16,952 16,844 27 Other 64,436 45,864 37,984 29,513 24,964 24,230 23,967 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the 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. 1, 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 Administration. 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

Securities Market and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1996 TTyyppee ooff oo iiss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct. Nov. 1 All issues, new and refunding1 279,945 153,950 145,657 13,673 15,647 17,496 11,819 12,502 11,635 16,296 12,453 By type of issue 2 General obligation 90,599 54,404 56,980 5,145 5,491 6,709 4,158 4,104 3,488 5,610 4,777 3 Revenue 189,346 99,546 88,677 8,528 10,156 10,787 7,661 8,398 8,147 10,686 7,676 By type of issuer 4 State 27,999 19,186 14,665 818 2,803 1,038 672 1,180 870 1,912 1,247 5 Special district or statutory authority2 178,714 95,896 93,500 10,097 10,313 10,722 7,597 8,432 8,096 10,435 7,719 6 Municipality, county, or township 73,232 38,868 37,492 2,758 2,531 5,736 3,550 2,890 2,669 3,949 3,487 7 Issues for new capital 91,434 105,972 102,390 9,767 9,468 14,193 8,817 7,133 7,840 11,928 8,039 By use of proceeds 8 Education 16,831 21,267 23,964 2,241 2,840 3,396 2,200 2,320 1,521 2,656 1,515 9 Transportation 9,167 10,836 11,890 964 799 1,400 580 622 846 2,897 1,158 10 Utilities and conservation 12,014 10,192 9,618 613 1,375 972 693 409 785 1,388 1,082 11 Social welfare 13,837 20,289 19,566 1,796 1,633 3,086 2,589 2,412 2,041 1,450 2,017 12 Industrial aid 6,862 8,161 6,581 618 382 610 392 271 581 520 451 13 Other purposes 32,723 35,227 30,771 3,535 2,439 4,729 2,363 1,099 2,066 3,017 1,816 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment 2. Includes school districts. Dealer's Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1996 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999933 11999944 11999955 oorr iissssuueerr Mar. Apr. May June Julyr Aug/ Sept.r Oct. 1 All issues' 769,088 583,240 n a. 55,792 49,030r 69,220 67,072 40,066 44,102 59,564 58,892 2 Bonds2 646,634 498,039 n a. 48,363 36,334r 55,814 54,158 32,632 38,499 53,049 46,400 By type of offering 3 Public, domestic 487,029 365,222 408,806 41,526 30,574 46,745 45,157 26,506 32,548 43,831 38,400 4 Private placement, domestic3 121,226 76,065 n a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 38,379 56,755 76,910 6,837 5,759 9,069 9,001 6,126 5,952 9,218 8,000 By industry group 6 Manufacturing 88,160 43,423 42,950 3,435 2,503 5,887 6,009 4,066 2,882 4,030 6,763 7 Commercial and miscellaneous 58,559 40,735 37,139 3,803 2,664r 4,933 4,272 2,720 2,611 3,170 4,862 8 Transportation 10,816 6,867 5,727 137 120 819 906 525 293 620 436 9 Public utility 56,330 13,322 11,974 788 444 691 1,144 1,046 129 229 1,299 10 Communication 31,950 13,340 18,158 2,253 724 1,097 2,231 647 1,450 829 1,000 11 Real estate and financial 400,820 380,352 369,769 37,948 29,879 42,386 39,597 23,628 31,135 44,171 32,040 12 Stocks2 122,454 85,155 n.a. 7,430r 12,705r 13,437r 12,935 7,649 5,678 6,553 12,492 By type of offering 13 Public preferred 18,897 12,570 10,964 967 2,000 1,660 3,309 1,779 1,164 1,890 3,855 14 Common 82,657 47,828 57,809 6,463r 10,705r 11,111' 9,626 5,870 4,514 4,663 8,637 15 Private placement3 20,900 24,800 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 22,271 17,798 2,051 3,982 3,294 2,653 1,740 1,007 781 1,535 17 Commercial and miscellaneous 25,761 15,713 n.a. 3,597 4,125 5,103 6,629 2,732 2,087 2,995 5,686 18 Transportation 2,237 2,203 232 37 322 197 104 143 0 37 19 Public utility 7,050 2,214 319 149 297 569 299 306 276 100 20 Communication 3,439 494 100 144 1,205 837 1,083 51 0 526 21 Real estate and financial 61,004 46,733 1,130 4,267r 3,216r 2,050 1,690 2,085 2,501 4,609 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- SOURCE. 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

A32 DomesticN onfinancial Statistics • February 1997 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1996 IItteemm 11999944 11999955 Mar. Apr. May June July Aug. Sept. Oct. 1 Sales of own shares2 841,286 871,415 93,856 101,310 96,501 88,115 93,053 86,225 84,171 92,730 2 Redemptions of own shares 699,823 699,497 65,748 81,005 69,419 69,072 76,485 64,993 65,601 72,537 3 Net sales3 141,463 171,918 28,108 20,305 27,082 19,044 16,568 21,232 18,570 20,193 4 Assets4 1,550,490 2,067,337 2,212,517 2,293,491 2,356,307 2,363,024 2,297,216 2,366,030 2,474,339 2,517,049 5 Cash5 121,296 142,572 142,697 148,777 145,554 144,275 148,647 155,129 156,689 149,937 6 Other 1,429,195 1,924,765 2,069,820 2,144,713 2,201,752 2,218,749 2,147,337 2,210,901 2,317,651 2,367,112 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 1994 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 464.4 529.5 586.6 570.9 560.0 562.3 612.5 611.8 645.1 655.8 661.2 2 Profits before taxes 464.3 531.2 598.9 572.4 594.5 589.6 607.2 604.2 642.2 644.6 635.6 3 Profits-tax liability 163.8 195.3 218.7 213.5 217.3 214.2 224.5 218.7 233.4 236.4 233.4 4 Profits after taxes 300.5 335.9 380.2 358.8 377.2 375.3 382.8 385.5 408.8 408.1 402.2 5 Dividends 197.3 211.0 227.4 218.5 221.7 224.6 228.5 234.7 239.9 243.1 245.2 6 Undistributed profits 103.2 124.8 152.8 140.3 155.5 150.8 154.3 150.8 168.9 165.1 156.9 7 Inventory valuation -6.6 -13.3 -28.1 -22.8 -51.9 -42.3 -9.3 -8.8 -17.4 -11.0 2.0r 8 Capital consumption adjustment 6.7 11.6 15.9 21.3 17.4 15.0 14.6 16.5 20.4 22.3 23.6r SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A33 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1994 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q4 Ql Q2 Q3 Q4 Ql Q2r ASSETS 1 Accounts receivable, gross2 482.8 551.0 614.6 551.0 568.5 586.9 594.7 614.6 621.8 631.4 2 Consumer 116.5 134.8 152.0 134.8 135.8 141.7 146.2 152.0 151.9 154.6 3 Business 294.6 337.6 375.9 337.6 351.9 361.8 362.4 375.9 380.9 383.7 4 Real estate 71.7 78.5 86.6 78.5 80.8 83.4 86.1 86.6 89.1 93.1 5 LESS: Reserves for unearned income 50.7 55.0 63.2 55.0 58.9 62.1 61.2 63.2 61.5 59.6 6 Reserves for losses 11.2 12.4 14.1 12.4 12.9 13.7 13.8 14.1 14.2 14.1 7 Accounts receivable, net 420.9 483.5 537.3 483.5 496.7 511.1 519.7 537.3 546.1 557.7 8 All other 170.9 183.4 210.7 183.4 194.6 198.1 198.1 210.7 212.8 216.1 9 Total assets 591.8 666.9 748.0 666.9 691.4 709.2 717.8 748.0 758.9 773.8 LIABILITIES AND CAPITAL 10 Bank loans 25.3 21.2 23.1 21.2 21.0 21.5 21.8 23.1 23.5 26.2 11 Commercial paper 159.2 184.6 184.5 184.6 181.3 181.3 178.0 184.5 184.8 186.9 Debt 12 Owed to parent 42.7 51.0 62.3 51.0 52.5 57.5 59.0 62.3 62.3 68.4 13 Not elsewhere classified 206.0 235.0 284.7 235.0 254.4 264.4 272.1 284.7 291.4 301.3 14 All other liabilities 87.1 99.5 106.2 99.5 102.5 102.1 102.4 106.2 105.7 100.1 15 Capital, surplus, and undivided profits 71.4 75.7 87.2 75.7 79.7 82.5 84.4 87.2 91.1 90.9 16 Total liabilities and capital 591.8 666.9 748.0 666.9 691.4 709.2 717.8 748.0 758.9 773.8 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 1996r TTyyppee ooff ccrreeddiitt 11999955 May June July Aug. Sept. Oct. Seasonally adjusted 1 Total 546,103 615,618 691,616 710,367 724,193 729,091 737,289 737,152 744,842 2 Consumer 160,227 176,085 198,861 207,027 209,856 211,332 210,907 210,948 210,477 3 Real estate2 72,043 78,910 87,077 90,180 96,644 97,023 99,806 100,317 103,457 4 Business 313,833 360,624 405,678 413,160 417,694 420,736 426,576 425,887 430,908 Not seasonally adjusted 5 Total 550,751 620,975 697,340 712,429 727,257 722,399 730,923 733,230 743,656 6 Consumer 162,770 178,999 202,101 205,678 209,367 209,309 210,148 211,788 210,987 7 Motor vehicles 56,057 61,609 70,061 74,327 74,936 75,736 74,433 76,333 75,916 8 Other consumer3 60,396 73,221 81,988 80,435 79,474 79,112 78,928 78,451 77,527 9 Securitized motor vehicles4 36,024 31,897 33,633 31,435 34,529 33,731 34,636 32,807 32,565 10 Securitized other consumer4 10,293 12,272 16,419 19,481 20,428 20,730 22,151 24,197 24,979 11 Real estate2 71,727 78,479 86,606 90,182 95,803 97,276 100,295 100,182 103,709 12 Business 316,254 363,497 408,633 416,569 422,087 415,814 420,480 421,260 428,960 13 Motor vehicles 95,173 118,197 133,277 134,196 136,757 133,325 135,063 138,615 140,057 14 Retail loans5 18,091 21,514 25,304 27,151 29,033 28,649 28,404 28,875 29,072 15 Wholesale loans6 31,148 35,037 36,427 31,360 32,095 26,888 28,188 30,294 30,982 16 Leases 45,934 61,646 71,546 75,685 75,629 77,788 78,471 79,446 80,003 17 Equipment 145,452 157,953 177,297 178,151 184,396 183,119 182,816 181,111 177,677 18 Loans7 43,514 49,358 59,109 57,327 58,788 57,216 55,528 56,132 56,703 19 Leases 101,938 108,595 118,188 120,824 125,608 125,903 127,288 124,979 120,974 20 Other business8 53,997 61,495 65,363 68,112 64,987 64,397 68,367 67,290 74,255 21 Securitized business assets4 21,632 25,852 32,696 36,110 35,947 34,973 34,234 34,244 36,971 22 Retail loans 2,869 4,494 4,723 4,790 4,688 4,613 4,700 4,600 4,650 23 Wholesale loans 10,584 14,826 21,327 25,028 24,868 23,988 23,151 23,170 23,183 24 Leases 8,179 6,532 6,646 6,292 6,391 6,372 6,383 6,474 9,138 1. Includes finance company subsidiaries of bank holding companies but not of retailers 5. Passenger car fleets and commercial land vehicles for which licenses are required. and banks. Data are before deductions for unearned income and losses. Data in this table also 6. Credit arising from transactions between manufacturers and dealers, that is, floor plan appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside financing. front cover. 7. Beginning with the June 1996 data, retail and wholesale business equipment loans have 2. Includes all loans secured by liens on any type of real estate, for example, first and junior been combined and are no longer separately available. mortgages and home equity loans. 8. 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. 4. Outstanding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • February 1997 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1996 IItteemm 11999933 11999944 11999955 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 163.1 170.4 175.8 179.5 180.1 194.0 184.8 187.1 183.9 188.1 2 Amount of loan (thousands of dollars) 123.0 130.8 134.5 137.6 139.4 144.2 141.1 141.7 139.0 143.3 3 Loan-to-price ratio (percent) 78.0 78.8 78.6 79.3 78.7 76.2 77.7 77.2 77.7 78.0 4 Maturity (years) 26.1 27.5 27.7 27.2 25.8 26.7 27.2 27.7 27.4 27.4 5 Fees and charges (percent of loan amount)2 1.30 1.29 1.21 1.16 1.31 1.25 1.38 1.28 1.11 1.19 Yield (percent per year) 6 Contract rate' 7.03 7.26 7.65 7.61 7.75 7.80 7.85 7.77 7.76 7.60 7 Effective rate1,3 7.24 7.47 7.85 7.80 8.05 8.01 8.08 7.98 7.95 7.80 8 Contract rate (HUD series)4 7.37 8.58 8.05 8.34 8.37 8.28 8.45 8.23 8.01 7.73 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.46 8.68 88..1188 8.57 8.55 8.56 8.58 8.56 8.00 8.14 10 GNMA securities 6.65 7.96 7.57 7.81 7.91 7.84 7.68 7.85 7.53 7.19 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 190,861 222,057 253,511 267,330 270,042 272,458 275,133 278,003 279,544 283,835 12 FHA/VA insured 23,857 27,558 28,762 30,442 30,936 30,830 30,803 30,840 30,815 30,744 13 Conventional 167,004 194,499 224,749 236,888 239,106 241,628 244,330 247,163 248,729 253,091 14 Mortgage transactions purchased (during period) 92,037 62,389 56,598 6,720 5,421 5,345 5,360 5,353 4,235 6,805 Mortgage commitments (during period) 15 Issued7 92,537 54,038 56,092 5,228 5,280 5,036 5,673 4,264 5,199 6,533 16 To sell8 5,097 1,820 360 13 0 0 0 53 0 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 55,012 72,693 107,424 121,058 123,806 125,574 127,345 129,426 132,260 135,270 18 FHA/VA insured 321 276 267 212 209 205 201 197 195 195 19 Conventional 54,691 72,416 107,157 120,846 123,597 125,369 127,144 129,229 132,065 135,075 Mortgage transactions (during period) 20 Purchases 229,242 124,697 98,470 12,385 10,266 9,934 9,643 8,687 9,538 9,198 21 Sales 208,723 117,110 85,877 11,904 9,969 9,496 8,994 8,167 8,797 8,456 22 Mortgage commitments contracted (during period)9 274,599 136,067 118,659 11,075 11,164 10,626 8,992 9,315 8,214 9,032 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

Real Estate A3 5 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1995 1996 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999922 11999933 11999944 Q3 Q4 Q1 Q2 Q3P 1 All holders 4,091,827 4,266,932' 4,472,718' 4,657,899' 4,706,615' 4,781,996' 4,869,404 4,949,067 By type of property 2 One- to four-family residences 3,036,251 3,225,545r 3,429,424' 3,587,143' 3,626,329' 3,689,189' 3,757,694 3,824,932 3 Multifamily residences 274,234 270,824r 275,705' 284,201' 287,994' 291,893' 296,974 301,129 4 Nonfarm, nonresidential 700,604 689,365' 684,618' 702,202' 707,673' 715,696' 728,193 735,659 5 80,738 81,198' 82,971 84,352 84,620 85,217' 86,543 87,347 By type of holder 6 Major financial institutions 1,769,187 1,768,093' 1,815,845' 1,895,350' 1,888,970' 1,901,524' 1,925,040 1,951,812 7 Commercial banks2 894,513 940,595' 1,004,322' 1,072,844' 1,080,366' 1,087,207' 1,099,585 1,112,970 8 One- to four-family 507,780 556,660' 611,391' 661,907' 663,614' 665,935' 670,735 676,753 9 Multifamily 38,024 38,657' 39,360' 42,894' 43,842' 44,700' 45,127 45,753 10 Nonfarm, nonresidential 328,826 324,413' 331,004' 344,219' 349,081' 352,641' 359,162 365,640 11 Farm 19,882 20,866' 22,567 23,824 23,829 23,931 24,561 24,825 12 Savings institutions3 627,972 598,437' 596,191' 604,614 596,789 602,631' 612,889 627,999 13 One- to four-family 489,622 470,000' 477,626' 488,869' 482,351' 489,634' 499,021 513,133 14 Multifamily 69,791 67,367' 64,343' 63,605' 61,988' 60,540' 60,809 61,444 15 Nonfarm, nonresidential 68,235 60,765' 53,933' 51,849' 52,162' 52,155' 52,739 53,102 16 Farm 324 305 289 291 288 302' 320 320 17 Life insurance companies 246,702 229,061 215,332 217,892 211,815 211,686 212,565 210,842 18 One- to four-family 11,441 9,458 7,910 7,701 7,476 7,472 7,503 7,440 19 Multifamily 27,770 25,814 24,306 24,638 23,920 23,906 24,007 23,802 20 Nonfarm, nonresidential 198,269 184,305 173,539 175,910 170,783 170,681 171,402 169,944 21 Farm 9,222 9,484 9,577 9,643 9,636 9,627 9,653 9,656 22 Federal and related agencies 286,263 327,014 319,327 314,353 313,760 312,950 314,694 311,697 23 Government National Mortgage Association 30 22 6 2 2 2 2 2 24 One- to four-family 30 15 6 2 2 2 2 2 25 Multifamily 0 7 0 0 0 0 0 0 26 Farmers Home Administration 41,695 41,386 41,781 41,858 41,791 41,594 41,547 41,575 27 One- to four-family 16,912 15,303 13,826 12,914 12,643 12,327 11,982 11,630 28 Multifamily 10,575 10,940 11,319 11,557 11,617 11,636 11,645 11,652 29 Nonfarm, nonresidential 5,158 5,406 5,670 6,096 6,248 6,365 6,552 6,681 30 Farm 9,050 9,739 10,966 11,291 11,282 11,266 11,369 11,613 31 Federal Housing and Veterans' Administrations 12,581 12,215 10,964 9,535 9,809 8,439 8,052 6,627 32 One- to four-family 5,153 5,364 4,753 4,918 5,180 4,228 3,861 3,190 33 Multifamily 7,428 6,851 6,211 4,617 4,629 4,211 4,191 3,438 34 Resolution Trust Corporation 32,045 17,284 10,428 4,889 1,864 0 0 0 35 One- to four-family 12,960 7,203 5,200 2,299 691 0 0 0 36 Multifamily 9,621 5,327 2,859 1,420 647 0 0 0 37 Nonfarm, nonresidential 9,464 4,754 2,369 1,170 525 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 14,112 7,821 5,015 4,303 5,553 5,016 4,025 40 One- to four-family 0 2,367 1,049 618 492 839 840 675 41 Multifamily 0 1,426 1,595 722 428 1,099' 955 766 42 Nonfarm, nonresidential 0 10,319 5,177 3,674 3,383 3,616' 3,221 2,584 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 137,584 166,642 178,059 182,229 183,782 183,531 186,041 185,221 45 One- to four-family 124,016 151,310 162,160 166,393 168,122 167,895 170,572 170,083 46 Multifamily 13,568 15,332 15,899 15,836 15,660 15,636 15,469 15,138 47 Federal Land Banks 28,664 28,460 28,555 28,151 28,428 28,891 29,362 29,579 48 One- to four-family 1,687 1,675 1,671 1,656 1,673 1,700 1,728 1,740 49 Farm 26,977 26,785 26,885 26,495 26,755 27,191 27,634 27,839 50 Federal Home Loan Mortgage Corporation 33,665 46,892 41,712 42,673 43,781 44,939 44,674 44,668 51 One- to four-family 31,032 44,345 38,882 39,239 39,929 40,877 40,477 40,304 52 Multifamily 2,633 2,547 2,830 3,434 3,852 4,062 4,197 4,364 53 Mortgage pools or trusts5 1,433,183 1,562,925 1,717,991 1,795,041 1,853,607' 1,894,686' 1,946,135 1,987,981 54 Government National Mortgage Association 419,516 414,066 450,934 463,654 472,292' 475,829' 485,441 497,248 55 One- to four-family 410,675 404,864 441,198 453,114 461,447' 464,650' 473,950 485,303 56 Multifamily 8,841 9,202 9,736 10,540 10,845 11,179 11,491 11,945 57 Federal Home Loan Mortgage Corporation 407,514 447,147 490,851 503,370 515,051 524,327 536,671 545,608 58 One- to four-family 401,525 442,612 487,725 500,417 512,238 521,722 534,238 543,341 59 Multifamily 5,989 4,535 3,126 2,953 2,813 2,605 2,433 2,267 60 Federal National Mortgage Association 444,979 495,525 530,343 559,585 582,959 599,546 621,285 636,362 61 One- to four-family 435,979 486,804 520,763 548,400 569,724 585,527 606,271 619,869 62 Multifamily 9,000 8,721 9,580 11,185 13,235 14,019 15,014 16,493 63 Farmers Home Administration 38 28 19 12 11 10 9 7 64 One- to four-family 8 5 3 2 2 1 1 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 17 13 9 5 5 5 4 4 67 Farm 13 10 7 5 4 4 4 3 68 Private mortgage conduits 161,136 206,159 245,844 268,420 283,294 294,974 302,729 308,756 69 One- to four-family6 139,637 171,988 194,145 207,679 214,635 219,392 221,380 224,280 70 Multifamily 6,305 8,701 14,925 18,903 21,279 24,477 26,809 28,141 71 Nonfarm, nonresidential 15,194 25,469 36,774 41,838 47,380 51,104 54,541 56,336 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 603,194 608,901' 619,555' 653,155' 650,279' 672,835' 683,535 697,576 74 One- to four-family 447,795 455,572' 461,117' 491,015' 486,111' 506,987' 515,134 527,190 75 Multifamily 64,688 65,398' 69,615' 71,896' 73,239' 73,823' 74,826 75,926 76 Nonfarm, nonresidential 75,441 73,922' 76,142' 77,441' 78,105' 79,129' 80,573 81,369 77 15,270 14,009 12,681 12,804 12,824 12,896 13,002 13,091 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • February 1997 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1996 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999933 11999944 11999955 May June July Aug. Sept.' Oct. Seasonally adjusted 1 Total 844,118 966,457 1,103,296 1,150,801' 1,158,118' 1,170,605' 1,176,426" 1,175,663 1,177,935 2 Automobile 279,786 317,182 350,848 362,298 367,039 373,026' 373,087 373,633 373,573 3 Revolving 287,011 339,337 413,894 443,451 445,104 452,097 454,625 455,369 456,880 4 Other2 277,321 309,939 338,554 345,052' 345,974' 345,482' 348,714' 346,662 347,482 Not seasonally adjusted 5 Total 863,924 990,247 1,131,881 l,141,032r 1,150,954' 1,160,848' l,173,254r 1,179,680 1,179,684 By major holder 6 Commercial banks 399,683 462,923 507,753 504,865' 507,587' 511,084' 517,697' 517,753 518,196 / Finance companies 116,453 134,830 152,624 155,893 155,864 157,102' 155,579' 156,956 153,443 8 Credit unions 101,634 119,594 131,939 134,562 136,055 138,249 140,635 141,968 143,723 9 Savings institutions 37,855 38,468 40,106 41,617 41,089 42,100 42,200 43,000 43,800 1U Nonfinancial business3 77,229 86,621 85,061 74,638 72,018 71,148 71,021 68,570 67,926 11 Pools of securitized assets4 131,070 147,811 214,398 229,457 238,341 241,165 246,122' 251,433 252,596 By major type of credit 1122 Automobile 281,538 319,715 354,055 359,614 365,552 371,849' 374,535 377,047 377,837 13 Commercial banks 122,000 141,895 149,094 150,524 152,921 154,639 155,984 155,443 155,643 14 Finance companies 56,057 61,609 70,626 74,327 74,286 75,736' 74,433 76,333 75,916 13 Pools of securitized assets4 39,561 36,376 44,411 41,180 44,694 45,100 45,589 45,177 44,555 16 Revolving 302,201 357,307 435,674 437,581 440,229 445,715 451,664 455,303 456,368 17 Commercial banks 149,920 182,021 210,298 203,432 204,049 207,926 211,026 213,809 214,638 18 Nonfinancial business3 50,125 56,790 53,525 45,182 42,574 41,715 41,258 38,816 38,105 19 Pools of securitized assets4 80,242 96,130 147,934 164,509 168,844 170,966 174,026 177,406 178,101 20 Other 280,185 313,225 342,152 343,837' 345,173' 343,284' 347,055' 347,330 345,479 21 Commercial banks 127,763 139,007 148,361 150,909' 150,617' 148,519' 150,687' 148,501 147,915 22 Finance companies 60,396 73,221 81,998 81,566 81,578 81,366' 81,146' 80,623 77,527 23 Nonfinancial business3 27,104 29,831 31,536 29,456 29,444 29,433 29,763 29,754 29,821 24 Pools of securitized assets4 11,267 15,305 22,053 23,768 24,803 25,099 26,507' 28,850 29,940 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. Data in this table also appear in the Board's G.19 (421) monthly 4. Outstanding balances of pools upon which securities have been issued; these balances statistical release. For ordering address, see inside front cover. are no longer carried on the balance sheets of the loan originator. 2. Comprises mobile home loans and all other loans that are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 1996 IItteemm 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks2 1 48-month new car 8.09 8.12 9.57 n.a. 8.93 n.a. n.a. 9.11 2 24-month personal 13.47 13.19 13.94 n.a. 13.52 n.a. n.a. 13.37 n.a. n.a. Credit card plan 3 All accounts n.a. 15.69 16.02 n.a. 15.44 n.a. n.a. 15.65 4 Accounts assessed interest n.a. 15.77 15.79 n.a. 15.41 n.a. n.a. 15.64 n.a. n.a. Auto finance companies 5 New car 9.48 9.79 11.19 9.64 9.37 9.53 9.81 10.49 10.52 10.40 6 Used car 12.79 13.49 14.48 13.26 13.49 13.62 13.77 13.92 13.87 13.75 OTHER TERMS3 Maturity (months) 1 New car 54.5 54.0 54.1 51.5 50.8 50.4 50.5 51.4 51.9 52.5 8 Used car 48.8 50.2 52.2 51.8 51.7 51.6 51.7 51.3 51.0 51.1 Loan-to-value ratio 9 New car 91 92 92 91 91 91 91 92 91 89 10 Used car 98 99 99 99 99 100 100 100 100 101 Amount financed (dollars) 11 New car 14,332 15,375 16,210 16,605 16,686 16,854 16,926 16,927 17,182 17,435 12 Used car 9,875 10,709 11,590 12,024 12,233 12,249 12,242 12,132 12,108 12,326 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. Data in this table also appear in the Board's G.19 (421) monthly 3. At auto finance companies, statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1994 1995' 1996' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 481.7 543.0 627.0r 621.2r 720.41" 656.5r 845.7 866.0 578.7 591.4 874.5 693.7 By sector and instrument 2 Federal government 278.2 304.0 256.1 155.9 144.4 166.8 247.8 184.7 86.0 59.3 239.9 62.4 3 Treasury securities 292.0 303.8 248.3 155.7 142.9 172.5 249.0 183.1 85.6 54.1 242.2 60.2 4 Budget agency securities and mortgages -13.8 .2 7.8 .2 1.5 -5.7 -1.2 1.6 .4 5.1 -2.3 2.2 5 Nonfederal 203.5 239.0 370.9' 465.4r 576.0r 489.7r 597.9 681.3 492.7 532.1 634.6 631.3 By instrument 6 Commercial paper -18.4 8.6 10.0 21.4 18.1 35.3' 6.0 34.3 18.1 14.1 30.1 10.7 7 Municipal securities 87.8 30.5 74.8 -29.3 -44.2r -53.5 -54.9 -2.2 -107.2 -12.6 -14.2 36.9 8 Corporate bonds 78.8 67.6 75.2 23.3 73.3 6.2 53.0 98.4 59.8 82.0 60.9 71.5 9 Bank loans n.e.c -40.9 -13.7 3.6r 73.2r 99.6 77.9' 145.5 99.1 75.3 78.5 29.8 78.8 in Other loans and advances -48.5 10.1 -9.4r 54.4 59.0r 67.0' 82.5 57.3 35.2 61.0 32.9 26.9 ii Mortgages 158.4 130.9 155.2' 196.0r 228.6r 214.4' 228.2 239.5 255.0 191.7 363.6 318.7 17. Home mortgages 173.6 187.6 185.8r 203,9r 196.9' 220.5' 209.9 190.8 227.9 159.1 319.1 248.8 n Multifamily residential -5.5 -10.4 -6.0 1.7r 10.5' -3.8' 6.6 10.9 11.3 13.3 13.8 18.4 14 Commercial -10.0 -47.8 -25.0 -11.3r 19.5' -3.7' 10.0 36.1 13.7 18.2 28.4 46.1 ii Farm .4 1.4 .5 1.8 1.6 1.4 1.7 1.7 2.2 1.1 2.4 5.3 16 Consumer credit -13.7 5.0 61.5 126.3 141.6 142.5' 137.6 155.0 156.4 117.5 131.5 87.8 By borrowing sector 17 Household 183.8 198.3 255.9r 372.4r 383.1' 405.5' 382.3 389.9 424.6 335.6 446611..00 398.4 18 Nonfinancial business -61.9 19.5 52.7r 136.4r 241.5' 152.4' 269.8 300.4 178.4 217.4 186.2 202.7 19 Corporate -53.0 34.1 46.5 121.7r 205.1' 133.9' 230.4 268.3 140.5 181.3 139.8 158.4 20 Nonfarm noncorporate -11.0 -16.0 4.2 11.9' 34.8' 19.3' 38.5 29.1 34.4 37.1 46.3 37.2 ?1 Farm 2.1 1.3 2.0 2.8 1.6 -.8 .8 3.0 3.5 -1.0 .1 7.1 22 State and local government 81.6 21.1 62.3 -43.4 -48.6' -68.2 -54.2 -9.0 -110.3 -20.9 -12.5 30.1 23 Foreign net borrowing in United States 14.8 23.7 70.4 -15.3 69.5 44.7' 67.1 45.5 88.3 76.9 49.2 36.6 ?4 Open market paper 6.4 5.2 -9.0 -27.3 13.6 s.o' 43.2 -8.7 23.7 -3.9 -8.4 9.6 75 Bonds 15.0 16.8 82.9 12.2 48.3 39.1 13.9 51.2 55.2 72.7 47.9 11.1 26 Bank loans n.e.c 3.1 2.3 .7 1.4 8.5 -.5 8.1 5.6 8.2 11.9 8.7 15.1 27 Other loans and advances -9.8 -.6 -4.2 -1.6 -.8 1.1 1.9 -2.6 1.3 -3.9 1.1 .7 28 Total domestic plus foreign 496.5 566.7 697.4r 606.0r 789.9r 701.2' 912.8 911.4 667.0 668.3 923.7 730.3 Financial sectors 29 Total net borrowing by financial sectors 155.6 240.0 292.2r 466.7r 446.7' 534.2 267.7 439.9 507.0 572.0 330-3 687.5 By instrument 30 U.S. government-related 145.7 155.8 165.3r 287.5r 205.1 316.1 86.7 196.5 227.7 309.5 143.8 302.0 31 Government-sponsored enterprise securities 9.2 40.3 80.6 176.9 106.9 249.0 62.9 127.2 101.5 136.1 37.4 132.9 32 Mortgage pool securities 136.6 115.6 84.7r 115.4r 98.2 67.1 23.8 69.3 126.2 173.4 106.5 169.1 33 Loans from U.S. government .0 .0 .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 34 9.8 84.2 126.9 179.2 241.6' 218.1 181.0 243.4 279.3 262.5 186.5 385.5 35 Open market paper -32.0 -.7 -6.2 41.6 42.6 86.5 37.6 33.9 43.7 55.1 17.8 105.7 36 Corporate bonds 69.9 82.7 120.1 117.5 184.7' 84.9 167.6 182.3 217.6 171.6 143.8 201.8 37 Bank loans n.e.c 8.8 2.2 -13.0 -12.3 5.5 3.7 -5.0 20.7 7.9 -1.8 24.9 23.6 38 Other loans and advances -37.3 -.6 22.4 22.6 3.4 38.1 -24.5 1.3 4.9 32.0 -5.5 48.6 39 Mortgages .5 .6 3.6 9.8 5.3 4.9 5.2 5.2 5.2 5.6 5.5 5.8 By borrowing sector 40 Commercial banking -13.2 10.0 13.4 20.1 22.5 20.7 21.7 39.0 38.9 -9.7 --3322..66 4400..11 41 Savings institutions -44.7 -7.0 11.3 12.8 2.6 36.1 -18.9 -7.2 5.1 31.5 11.0 42.1 42 Credit unions .0 .0 .2 .2 -.1 .2 -.3 -.1 .1 .0 -.1 -.2 43 Life insurance companies .0 .0 .2 .3 -.1 1.3 .0 .1 -.1 -.4 2.5 .3 44 Government-sponsored enterprises 9.1 40.2 80.6 172.1 106.9 249.0 62.9 127.2 101.5 136.1 37.4 132.9 45 Federally related mortgage pools 136.6 115.6 84.7r 115.4r 98.2 67.1 23.8 69.3 126.2 173.4 106.5 169.1 46 Issuers of asset-backed securities (ABSs) 54.0 58.5 83.3 68.5 132.3' 62.8 67.6 113.2 164.8 183.5 132.8 128.2 47 Finance companies 17.7 -1.6 .2 50.2 51.6 53.0 80.2 52.0 19.8 54.3 47.1 68.4 48 Mortgage companies -2.4 8.0 .0 -11.5 .4 1.1 -7.4 14.8 4.0 -10.0 20.0 16.0 49 Real estate investment trusts (REITs) 1.2 .3 3.4 13.7 5.4 6.3 5.2 5.2 5.2 6.0 5.9 6.5 50 Brokers and dealers 3.7 2.7 12.0 .5 -5.0 19.3 -29.5 -.1 2.1 7.7 -31.8 13.2 51 Funding corporations -6.5 13.2 2.9 24.2 32.0 17.2 62.5 26.4 39.4 -.4 31.6 70.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • February 1997 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1994 1995r 1996' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 11999955 Q4 QL Q2 Q3 Q4 QL Q2 All sectors 55552222 TTTToooottttaaaallll nnnneeeetttt bbbboooorrrrrrrroooowwwwiiiinnnngggg,,,, aaaallllllll sssseeeeccccttttoooorrrrssss 652.1 806.6r 989.6r l,072.7r l,236.5r l,235.4r 1,180.5 1,351.3 1,174.0 1,240.3 1,254.0 1,417.8 55553333 OOOOppppeeeennnn mmmmaaaarrrrkkkkeeeetttt ppppaaaappppeeeerrrr -44.0 13.1 -5.1 35.7 74.3 126.9' 86.8 59.5 85.5 65.3 39.5 126.0 55554444 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 424.0 459.8 421.4r 448.1' 349.5 482.9 334.5 381.1 313.7 368.8 383.7 364.4 55555555 MMMMuuuunnnniiiicccciiiippppaaaallll sssseeeeccccuuuurrrriiiittttiiiieeeessss 87.8 30.5 74.8 -29.3 -44.2r -53.5 -54.9 -2.2 -107.2 -12.6 -14.2 36.9 55556666 CCCCoooorrrrppppoooorrrraaaatttteeee aaaannnndddd ffffoooorrrreeeeiiiiggggnnnn bbbboooonnnnddddssss 163.6 167.1 278.2 153.0 306.3r 130.1 234.5 331.9 332.5 326.3 252.5 284.5 55557777 BBBBaaaannnnkkkk llllooooaaaannnnssss nnnn....eeee....cccc -29.1 -9.3 -8.6r 62.3r 113.5 81.1' 148.7 125.4 91.4 88.6 63.3 117.5 55558888 OOOOtttthhhheeeerrrr llllooooaaaannnnssss aaaannnndddd aaaaddddvvvvaaaannnncccceeeessss -95.6 8.9 8.7r 70.7r 61.6r 106.2' 59.8 56.0 41.3 89.2 28.6 76.2 55559999 MMMMoooorrrrttttggggaaaaggggeeeessss 158.9 131.5 158.8r 205.8r 233.9r 219.3' 233.4 244.7 260.3 197.2 369.1 324.5 66660000 CCCCoooonnnnssssuuuummmmeeeerrrr ccccrrrreeeeddddiiiitttt -13.7 5.0 61.5 126.3 141.6 142.5' 137.6 155.0 156.4 117.5 131.5 87.8 Funds raised through mutual funds and corporate equities 66661111 TTTToooottttaaaallll nnnneeeetttt iiiissssssssuuuueeeessss 224.1r 312.5r 453.6r 152.2r 155.3r -83.6' 50.1 147.0 196.8 227.3 295.6 416.5 66662222 CCCCoooorrrrppppoooorrrraaaatttteeee eeeeqqqquuuuiiiittttiiiieeeessss 76.9r 103.4r 129.9r 23.3r - 18.6r -68.4' -34.0 -18.0 -5.2 -17.2 8.0 65.3 66663333 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss 18.3 27.0 21.3 -44.9 -73.8r -118.0 -60.0 -71.3 -92.8 -71.2 -85.2 -16.0 66664444 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss 28.0r 44.0r 45.2r 20. lr 4.5r 12.2' 9.6 12.5 -.6 -3.5 3.4 11.7 66665555 FFFFoooorrrreeeeiiiiggggnnnn sssshhhhaaaarrrreeeessss ppppuuuurrrrcccchhhhaaaasssseeeedddd bbbbyyyy UUUU....SSSS.... rrrreeeessssiiiiddddeeeennnnttttssss 30.7 32.4 63.4 48.1 50.7 37.4 16.4 40.8 88.2 57.4 89.8 69.7 66666666 MMMMuuuuttttuuuuaaaallll ffffuuuunnnnddddssss 147.2 209.1 323.7 128.9 173.9 -15.2 84.1 165.0 202.0 244.5 287.6 351.2 1. Data in this table also appear in the Board's Z.l (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

Flow of Funds A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 1996' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 11999955 Q4 Ql Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 652.1 806.6' 989.6' 1,072.7" 1,236.5' 1,235.4" 1,180.5' 1,351.3" 1,174.0" 1,240.3" 1,254.0 1,417.8 2 Domestic nonfederal nonfinancial sectors 113.7' 105.3' 77.1" 248.4" -101.0' 248.8" 9.1' -161.5" -67.7" -183.9" -74.9 212.0 Households 38.0' 98.5" 65.2" 293.3" 32.7" 362.7" 155.1" -117.3" 189.3" -96.4" 12.4 184.9 4 Nonfinancial corporate business 30.7 27.8 9.1 49.6 -6.0" 52.0" -41.7" 37.7" -53.1" 33.0" -4.4 53.9 5 Nonfarm noncorporate business -5.3 -.1 -1.1" .2" .3" .3" .3" .3" .3" .3" .4 .4 6 State and local governments 50.3' -20.9' 3.9" -94.8" -127.9" -166.2" -104.5" -82.2" -204.2" -120.8" -83.3 -27.3 7 Federal government 10.5 — 11.9 -18.4 -24.2 -21.5" -24.3 -13.1 -24.2 -24.3" -24.4" -20.7 -15.2 8 Rest of the world 13.3 98.4 129.3" 132.3" 272.7" 207.2" 249.9" 322.2" 361.0" 157.6" 341.1 268.2 9 Financial sectors 514.6' 614.9" 801.6" 716.2" 1,086.4" 803.8" 934.6" 1,214.8" 905.0" 1,291.0" 1,008.5 952.8 10 Monetary authority 31.1 27.9 36.2 31.5 12.7 25.5 18.4 16.7 -4.1 19.7 16.9 9.4 11 Commercial banking 80.8 95.3 142.2 163.4 265.9 179.8 333.0 319.4 244.8 166.2 121.7 190.1 12 U.S. chartered banks 35.7 69.5 149.6 148.1 186.5 178.4 178.7 222.4 227.0 118.1 80.5 125.5 13 Foreign banking offices in United States 48.5 16.5 -9.8 11.2 75.4 -4.5 153.5 86.6 25.6 36.1 44.2 57.5 14 Bank holding companies -1.5 5.6 .0 .9 -.3 -2.4 -1.5 5.3 -9.6 4.6 -5.1 5.3 15 Banks in U.S. affiliated areas -1.9 3.7 2.4 3.3 4.2 8.3 2.4 5.2 1.8 7.4 2.1 1.7 16 Savings institutions -158.9 -79.0 -23.3" 6.7" -7.5 5.6 17.8" -11.7" 32.2" -68.4 34.1 45.2 17 Credit unions 12.8 17.7 21.7 28.1 16.2 24.9 11.6 22.8 11.0 19.5 22.1 34.8 18 Bank personal trusts and estates 10.0 8.0 9.5 7.1 -18.8 1.4 -10.8 -20.6 -23.7 -20.2 -18.1 -12.3 19 Life insurance companies 86.5 78.5 100.9 66.4" 99.1' 77.0" 134.9" 135.5 72.9 53.2" 48.7 2.4 20 Other insurance companies 30.0 6.7 27.7 24.9 21.5 30.4 20.8 20.9 21.9 22.3 23.6 23.7 21 Private pension funds 35.4 41.1 45.9 47.0 61.3 74.7 58.9 57.2 50.5 78.5 82.6 127.5 22 State and local government retirement funds 33.8' 5.9" 21.1" 30.7" 22.7" 44.6" 62.9" 4.9" 2.6" 20.2" 58.7 50.0 23 Money market mutual funds 32.7 4.7 20.4 30.0 86.5 52.8 56.4 134.4 30.0 125.1 175.0 18.4 24 Mutual funds 80.1 126.2 159.5 -7.1 52.5 -78.6 -13.4 23.4 58.0 141.9 67.5 63.7 25 Closed-end funds 12.8 18.2 14.4" -3.3" 13.3" .7" 8.4" 15.1" 16.7" 13.2" 10.9 9.8 26 Government sponsored enterprises 15.1 68.8 88.6" 120.6" 88.9 171.1' 22.2" 93.0 50.0 190.5 39.4 127.8 27 Federally related mortgage pools 136.6 115.6 84.7" 115.4" 98.2 67.1 23.8 69.3 126.2 173.4" 106.5 169.1 28 Asset-backed securities issuers (ABSs) 50.0 53.7 80.8 61.9 112.1 42.6 55.5 100.9 154.4 137.4 113.0 118.1 29 Finance companies -9.2 7.5 -9.0 68.2 64.2 80.7 85.1 67.2 50.8 53.7 40.9 38.9 30 Mortgage companies 11.2 .1 .0 -22.9 -3.4 2.1 -14.4 29.9 7.3 -36.4 47.9 -17.3 31 Real estate investment trusts (REITs) -.7 1.1 .6 4.7 1.8 .2 1.8 1.8 1.8 1.9 1.9 1.7 32 Brokers and dealers 17.5 -1.3 14.8 -44.2 90.1 -8.0 30.5 146.2 -1.8 185.6 -109.0 -72.0 33 Funding corporations 7.0r 18.2" -34.9 -12.7" 9.2" 9.1" 31.2" -11.4" 3.5" 13.7" 124.1 23.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 652.1 806.6" 989.6" 1,072.7' 1,236.5" 1,235.4" 1,180.5" 1,351.3" 1,174.0" 1,240.3" 1,254.0 1,417.8 Other financial sources 35 Official foreign exchange -5.9 -1.6 .8 -5.8 8.8 -8.6 17.8 10.3 9.0 -1.9 --..99 1.6 36 Special drawing rights certificates .0 —2.0 .0 .0 2.2 .0 .0 .0 8.6 .0 .0 .0 37 Treasury currency .0 .2 .4 .7 .6 .7 .7 .7 .8 .0 .0 .0 38 Foreign deposits -26.5 -3.5 -18.5 54.0 33.5 106.4 34.6 110.8 -29.5 18.2 85.0 .9 39 Net interbank transactions -3.4 49.4 50.5 89.7 10.0" 108.5 -22.3 -4.8" -13.5" 80.6" -89.2 -52.1 40 Checkable deposits and currency 86.3 113.5 117.3 -9.7 -12.8 -37.3 31.3 100.2 -113.1 -69.3 43.3 4.5 41 Small time and savings deposits 1.5 -57.2 -70.3 -40.0 96.5 -42.7 29.8 95.6 145.6 114.9 212.5 -4.6 42 Large time deposits -58.5 -73.2 -23.5 19.6 65.6 36.2 108.8 74.4 80.2 -.9 55.1 83.5 43 Money market fund shares 41.6 4.5 20.2 43.3 142.3 81.1 74.2 221.1 122.9 151.1 244.0 4.1 44 Security repurchase agreements -16.5 43.1 71.2 78.3 110.7 48.5 172.5 115.6 95.0 59.8 -19.1 117.7 45 Corporate equities 76.9" 103.4" 129.9" 23.3' -18.6" -68.4" -34.0" -18.0" -5.2" -17.2" 8.0 65.3 46 Mutual fund shares 147.2 209.1 323.7 128.9 173.9 -15.2 84.1 165.0 202.0 244.5 287.6 351.2 47 Trade payables 31.0 46.6 52.4" 114.0" 96.3" 148.0" 85.0" 80.7" 129.3" 90.1" 62.7 126.8 48 Security credit 51.4 4.6 61.4 -.1 26.7 32.7 -5.4 30.1 32.3 49.7 120.6 -37.7 49 Life insurance reserves 25.9R 28.0" 36.0" 34.5" 44.9" 23.2" 50.7" 57.6" 33.1" 38.3" 20.1 42.8 50 Pension fund reserves 201.6' 241.9" 250.5" 251.9" 240.3" 298.5" 271.8" 290.4' 211.2" 187.8" 258.4 287.4 51 Taxes payable -7.4 9.7 5.2 3.2 1.3 4.1 12.0 1.0 2.4 -10.2 5.6 6.6 52 Investment in bank personal trusts 16.1 -7.1 1.6 18.8 -47.7 11.9 -44.3 -45.6 -63.9 -37.1 -47.3 -20.2 53 Noncorporate proprietors' equity .5 16.7 19.7" 25.9" 41.3" 19.6" 41.7" 39.9" 45.3" 38.3" 38.1 23.4 54 Miscellaneous 262.3' 264.9" 353.4" 268.0" 501.3" 381.8" 320.9" 422.2" 426.5" 835.5" 570.0 279.0 55 Total financial sources 1,476.4' 1,797.5' 2,371.5" 2,171.3' 2,753.7" 2,364.5" 2,410.5" 3,098.7" 2,492.9" 3,012.5" 3,108.6 2,697.9 Liabilities not identified as assets (—) 56 Treasury currency -.6 -.2 -.2 -.2 -.5 -.2 -.2 -.4 -.3 -1.0 -1.1 -1.0 57 Foreign deposits -24.0 -2.8 -7.0 44.9 27.2" 64.8 41.6 101.5" -55.7 21.5" 61.4 23.6 58 Net interbank liabilities 26.2 -4.9 4.2 -2.7 -3.1 3.5 -.4 -.9 12.3 -23.6 10.9 -26.9 59 Security repurchase agreements -10.7" 4.1" 34.2" 32.4" 2.8" 89.0" 68.9" -52.4" 26.6" -31.9" -34.5 82.5 60 Taxes payable -2.2 11.9 11.1 8.6 8.7 -.2 -7.5 31.0 9.3 2.2 -23.2 24.9 61 Miscellaneous -13.2" -32.2" -139.7" -106.0" -7.5" -36.8" -251.4" 15.1" -34.8" 241.0" -198.1 -259.5 Floats not included in assets (—) 62 Federal government checkable deposits -13.1 .7 -1.5 -4.8 -6.0 -17.1 4.6 -18.6 3.8 -13.8 8.6 -10.5 63 Other checkable deposits 4.5 1.6 -1.3 -2.8 -3.8 -2.3 -3.6 -3.8 -3.2 -4.7 -3.8 -4.2 64 Trade credit 36.1 11.3 -4.0" -3.1" -23.3' -61.2" 48.9" 30.0" -46.7" -125.5" 43.1 25.6 65 Total identified to sectors as assets 1,473.3" 1,808.1" 2,475.6" 2,205.1" 2,759.2" 2,325.0" 2,509.6" 2,997.1" 2,581.6" 2,948.4" 3,245.2 2,843.3 1. 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

A40 Domestic Nonfinancial Statistics • February 1997 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1994 1995 1996' tyyz iyyj Q4 Qi Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors ll,894.6r 12,536.4r 13,163.8" 13,884.2" 13,163.8" 13,339.7" 13,547.7" 13,700.5" 13,884.2" 14,080.4 14,228.8 By sector and instrument 2 Federal government 3,080.3 3,336.5 3,492.3 3,636.7 3,492.3 3,557.9 3,583.5 3,603.4 3,636.7 3,717.2 3,693.8 3 Treasury securities 3,061.6 3,309.9 3,465.6 3,608.5 3,465.6 3,531.5 3,556.7 3,576.5 3,608.5 3,689.6 3,665.5 4 Budget agencv securities and mortgages 18.8 26.6 26.7 28.2 26.7 26.4 26.8 26.9 28.2 27.6 28.2 5 Nonfederal 8,814.2 9,199.9' 9,671.5' 10,247.5' 9,671.5' 9,781.8' 9,964.2' 10,097.1' 10,247.5' 10,363.2 10,535.0 By instrument 6 Commercial paper 107.1 117.8 139.2 157.4 139.2 149.8 162.9 163.3 157.4 174.2 181.7 7 Municipal securities and loans 1,302.8 1,377.5 1,348.2 1,304.0' 1,348.2 1,335.4 1,331.7 1,308.2' 1,304.0' 1,302.0 1,307.8 8 Corporate bonds 1,154.5 1,229.7 1,253.0 1,326.3 1,253.0 1,266.3 1,290.9 1,305.8 1,326.3 1,341.5 1,359.4 y Bank loans n.e.c 672.2 675.9' 749.0 848.6' 749.0 782.7' 810.7' 824.3' 848.6' 853.9 876.8 10 Other loans and advances 686.5 677.1' 737.8' 796.8' 737.8' 762.6' 776.9' 782.1' 796.8' 809.3 815.7 11 Mortgages 4,088.7 4,258.0' 4,454.0' 4,682.6 4,454.0' 4,494.1' 4,560.3' 4,635.2 4,682.6 4,756.6 4,842.5 12 Home mortgages 3,037.4 3,225.5' 3,429.4' 3,626.3' 3,429.4' 3,465.0' 3,519.0' 3,587.1' 3,626.3' 3,689.2 33,,775577..77 13 Multifamily residential 272.5 267.9' 269.5' 280.1' 269.5' 271.2' 273.9' 276.7' 280.1' 283.5 228888..11 14 Commercial 698.1 683.4 672.1' 691.6' 672.1' 674.6' 683.6' 687.0' 691.6' 698.7 710.2 15 Farm 80.7 81.2 83.0 84.6 83.0 83.4 83.8 84.4 84.6 85.2 86.5 16 Consumer credit 802.4 863.9 990.2 1,131.9 990.2 990.9 1,030.8 1,078.2 1,131.9 1,125.8 1,151.0 By borrowing sector 17 Households 4,021.5r 4,279.7' 4,651.8' 5,034.9' 4,651.8' 4,696.9' 4,801.4' 4,925.9' 5,034.9' 5,094.8 5,203.3 18 Nonfinancial business 3,696.8 3,761.9' 3,904.9' 4,146.4' 3,904.9' 3,982.8' 4,066.0' 4,098.8' 4,146.4' 4,203.8 4,263.0 19 Corporate 2,437.6 2,496.5 2,624.8' 2,829.9' 2,624.8' 2,695.4' 2,767.3' 2,790.0' 2,829.9' 2,878.3 2,923.0 20 Nonfarm noncorporate 1,122.9 1,127.1' 1,139.0' 1,173.8' 1,139.0' 1,148.5' 1,155.9' 1,164.0' 1,173.8' 1,185.2 1,194.7 21 Farm 136.3 138.3 141.2 142.7 141.2 138.9 142.8 144.8 142.7 140.3 145.3 22 State and local government 1,095.9 1,158.2 1,114.8 1,066.2' 1,114.8 1,102.2 1,096.8 1,072.4' 1,066.2' 1,064.6 1,068.7 23 Foreign credit market debt held in United States 315.2 385.6 370.4 439.9 370.4 385.7 396.8 419.8 439.9 450.8 459.6 24 Commercial paper 77.7 68.7 41.4 55.0 41.4 50.9 48.1 55.8 55.0 51.5 53.4 23 Bonds 147.2 230.1 242.3 290.6 242.3 245.8 258.6 272.4 290.6 302.5 305.3 26 Bank loans n.e.c 23.9 24.6 26.1 34.6 26.1 28.2 29.6 31.6 34.6 36.8 40.5 '27 Other loans and advances 66.4 62.1 60.6 59.7 60.6 60.8 60.5 60.0 59.7 60.0 60.4 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 12,209.8r 12,921.9' 13,534.2" 14,324.1" 13,534.2" 13,725.4" 13,944.5" 14,120.3" 14,324.1" 14,531.2 14,688.4 Financial sectors 29 Total credit market debt owed by financial sectors 3,025.0 3,322.6" 3,794.6 4,243.9" 3,794.6 3,861.5 3,971.9 4,096.3 4,243.9" 4,324.7 4,496.6 By instrument 30 Federal government-related 1,720.0 1,885.2' 2,172.7 2,377.8' 2,172.7 2,196.2 2,247.1 2,300.1 2,377.8' 2,416.6 2,493.5 31 Government-sponsored enterprises securities 443.1 523.7 700.6 807.5 700.6 716.3 748.1 773.5 807.5 816.9 850.1 32 Mortgage pool securities 1,272.0 1,356.8' 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 33 Loans from U.S. government 4.8 4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,305.1 1,437.4 1,621.9 1,866.0' 1,621.9 1,665.3 1,724.8 1,796.2 1,866.0' 1,908.1 2,003.1 33 Open maiket paper 394.3 393.5 442.8 488.0 442.8 454.1 462.8 473.6 488.0 491.9 518.5 36 Corporate bonds 738.4 858.5 973.5 1,158.2' 973.5 1,012.3 1,056.4 1,112.6' 11,,115588..22'' 1,190.8 1,239.8 37 Bank loans n.e.c 80.5 67.6 55.3 60.8 55.3 53.4 58.4 60.3 6600..88 66.4 72.2 38 Other loans and advances 86.6 108.9 131.6 135.0 131.6 125.4 125.7 127.0 135.0 133.6 145.8 39 Mortgages 5.4 8.9 18.7 24.0 18.7 20.0 21.3 22.6 24.0 25.4 26.9 By borrowing sector 40 Commercial banks 80.0 84.6 94.5 102.6 94.5 95.0 99.9 102.0 102.6 100.5 103.6 41 Bank holding companies 114.6 123.4 133.6 148.0 133.6 137.7 142.9 150.3' 148.0 141.3 148.4 42 Savings institutions 88.4 99.6 112.4 115.0 112.4 107.7 105.9 107.2 115.0 117.8 128.3 43 Credit unions .0 .2 .5 .4 .5 .4 .3 .4 .4 .4 .3 44 Life insurance companies .0 .2 .6 .5 .6 .6 .6 .6 .5 1.1 1.2 45 Government-sponsored enterprises 447.9 528.5 700.6 807.5 700.6 716.3 748.1 773.5 807.5 816.9 850.1 46 Federally related mortgage pools 1,272.0 1,356.8' 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 47 Issuers of asset-backed securities (ABSs) 404.3 487.6 556.1 688.4' 556.1 570.0 596.8 639.8' 688.4' 718.2 748.9 48 Brokers and dealers 21.7 33.7 34.3 29.3 34.3 26.9 26.8 27.4 29.3 21.4 24.6 49 Finance companies 390.4 390.5 440.7 492.3 440.7 456.7 467.2 471.9 492.3 499.8 514.4 30 Mortgage companies 30.2 30.2 18.7 19.1 18.7 16.9 20.6 21.6 19.1 24.1 28.1 31 Real estate investment trusts (REITs) 13.9 17.4 31.1 36.5 31.1 32.4 33.7 35.0 36.5 38.0 39.6 32 Funding corporations 161.6 169.9 199.3 233.9 199.3 221.1 230.0 239.9 233.9 245.6 265.6 All sectors 53 Total credit market debt, domestic and foreign.... 15,234.8" 16,244.5' 17,328.8" 18,568.0" 17,328.8" 17,586.9" 17,916.3" 18,216.6" 18,568.0" 18,855.9 19,185.0 54 Open maiket paper 579.0 580.0 623.5 700.4 623.5 654.7 673.8 692.7 700.4 717.6 753.6 35 U.S. government securities 4,795.5 5,216.9' 5,665.0 6,014.6 5,665.0 5,754.1 5,830.6 5,903.5 6,014.6 6,133.8 6,187.2 56 Municipal securities 1,302.8 1,377.5 1,348.2 1,304.0' 1,348.2 1,335.4 1,331.7 1,308.2' 1,304.0' 1,302.0 1,307.8 37 Corporate and foreign bonds 2,040.1 2,318.3 2,468.8 2,775.1' 2,468.8 2,524.4 2,605.9 2,690.8' 2,775.1' 2,834.9 2,904.6 38 Bank loans n.e.c 776.6 768.0' 830.4 943.9 830.4 864.3' 898.7' 916.2' 943.9 957.0 989.6 39 Other loans and advances 844.2 852.9' 929.9' 991.5' 929.9' 948.8' 963.2' 969.1' 991.5' 1,002.9 1,021.8 60 Mortgages 4,094.1 4,266.9' 4,472.7' 4,706.6' 4,472.7' 4,514.2' 4,581.6 4,657.9' 4,706.6' 4,782.0 4,869.4 61 Consumer credit 802.4 863.9 990.2 1,131.9 990.2 990.9 1,030.8 1,078.2 1,131.9 1,125.8 1,151.0 1. Data in this table also appear in the Board's Z.l (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

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1994 1995 1996' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 Q1 Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 15,234.8r 16,244.5r 17,328.8' 18,568.0' 17,328.8' 17,586.9' 17,916.3' 18,216.6' 18,568.0' 18,855.9 19,185.0 2 Domestic nonfederal nonfinancial sectors 2,688.8r 2,758.7r 3,037.4' 2,901.2' 3,037.4' 3,001.7' 2,950.9' 2,953.4' 2,901.2' 2,857.8 2,882.4 3 Households l,635.0r l,688.5r 2,012.2' 2,009.6' 2,012.2' 2,033.1' 1,987.9' 2,055.5' 2,009.6' 2,013.0 2,023.4 4 Nonfinancial corporate business 257.8 271.5 321.1 315.1' 321.1 292.6 303.5' 290.6' 315.1' 291.3 307.9 5 Nonfarm noncorporate business 38.1 37.0r 37.2' 37.5' 37.2' 37.3' 37.3' 37.4' 37.5' 37.6 37.7 6 State and local governments 757.9r 761.7r 666.9' 539.0' 666.9' 638.7' 622.1' 569.9' 539.0' 515.9 513.4 7 Federal government 236. lr 231.7 207.5' 186.1' 207.5' 204.2 198.2 192.2 186.1' 180.8 177.0 8 Rest of the world 1,023.0 l,147.8r 1,254.7' 1,561.8' 1,254.7' 1,324.0' 1,402.1' 1,493.4' 1,561.8' 1,653.6 1,718.2 9 Financial sectors ll,286.9r 12,106.3' 12,829.1' 13,918.9' 12,829.1' 13,057.1' 13,365.2' 13,577.6' 13,918.9' 14,163.8 14,407.3 10 Monetary authority 300.4 336.7 368.2 380.8 368.2 367.1 375.7 370.6 380.8 379.6 386.3 11 Commercial banking 2,948.6 3,090.8 3,254.3 3,520.1 3,254.3 3,327.8 3,410.1 3,473.2 3,520.1 3,541.6 3,590.8 12 U.S. chartered banks 2,571.9 2,721.5 2,869.6 3,056.1 2,869.6 2,906.5 2,963.7 3,023.7 3,056.1 3,068.8 3,101.3 13 Foreign banking offices in United States 335.8 326.0 337.1 412.6 337.1 373.6 396.0 401.1 412.6 422.2 437.1 14 Bank holding companies 17.5 17.5 18.4 18.0 18.4 18.0 19.3 16.9 18.0 16.8 18.1 15 Banks in U.S. affiliated areas 23.4 25.8 29.2 33.4 29.2 29.8 31.1 31.5 33.4 33.9 34.3 16 Savings institutions 937.4 914.1' 920.8' 913.3 920.8' 925.3 922.4 930.4 913.3 921.8 933.1 17 Credit unions 197.1 218.7 246.8 263.0 246.8 248.1 255.0 258.5 263.0 267.0 276.9 18 Bank personal trusts and estates 231.5 240.9 248.0 229.2 248.0 245.3 240.2 234.2 229.2 224.7 221.6 19 Life insurance companies 1,309.1 1,420.6 1,487.1' 1,586.2 1,487.1' 1,523.1 1,557.1 1,575.5 1,586.2 1,600.5 1,601.0 20 Other insurance companies 389.4 422.7 446.4 468.7 446.4 451.9 457.3 463.0 468.7 474.5 480.2 21 Private pension funds 571.7 617.6 664.6 725.9 664.6 679.3 693.6 706.2 725.9 746.5 778.4 22 State and local government retirement funds 402.3r 423,4r 454.1' 476.8' 454.1' 469.4' 470.9' 470.6' 476.8' 491.1 504.0 23 Money market mutual funds 408.6 429.0 459.0 545.5 459.0 480.6 508.0 505.7 545.5 595.6 594.7 24 Mutual funds 566.4 725.9 718.8 771.3 718.8 719.3 724.8 739.2 771.3 792.4 807.9 25 Closed-end funds 67.7 82.0r 78.7' 92.0' 78.7' 80.8' 84.6' 88.7' 92.0' 94.8 97.2 26 Government-sponsored enterprises 457.8 546.4r 667.0' 756.0 667.0' 671.9 695.9 708.4 756.0 765.2 797.8 27 Federally related mortgage pools 1,272.0 l,356.8r 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 28 Asset-backed securities issuers (ABSs) 378.0 458.8 520.7 632.7 520.7 531.5 555.2 595.7 632.7 657.6 685.7 29 Finance companies 496.4 482.8 551.0 615.2 551.0 568.5 586.9 594.7 615.2 621.7 632.6 30 Mortgage companies 60.5 60.4 37.5 34.1 37.5 33.9 41.4 43.2 34.1 46.1 41.7 31 Real estate investment trusts (REITs) 8.1 8.6 13.3 15.1 13.3 13.8 14.2 14.7 15.1 15.6 16.1 32 Brokers and dealers 122.7 137.5 93.3 183.4 93.3 101.0 137.5 137.0 183.4 156.2 138.2 33 Funding corporations 161.3r 132.5r 127.5' 139.3' 127.5' 138.6' 135.5' 141.4' 139.3' 171.8 179.6 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 15,234.8r 16,244.5r 17,328.8' 18,568.0' 17,328.8' 17,586.9' 17,916.3' 18,216.6' 18,568.0' 18,855.9 19,185.0 Other liabilities 35 Official foreign exchange 51.8 53.4 53.2 63.7 53.2 64.1 67.1 65.1 63.7 62.1 61.4 36 Special drawing rights certificates 8.0 8.0 8.0 10.2 8.0 8.0 8.0 10.2 10.2 10.2 10.2 37 Treasury currency 16.5 17.0 17.6 18.2 17.6 17.8 18.0 18.2 18.2 18.2 18.2 38 Foreign deposits 267.7 271.8 324.6 361.4 324.6 333.3 361.0 353.6 361.4 382.7 382.9 39 Net interbank liabilities 138.5 189.3 280.0 290.7' 280.0 272.8 265.9 267.2' 290.7' 266,3 249.9 40 Checkable deposits and currency 1,134.4 1,251.7 1,242.0 1,229.3 1,242.0 1,193.7 1,246.2 1,200.3 1,229.3 1,183.3 1,212.3 41 Small time and savings deposits 2,293.5 2,223.2 2,183.3 2,279.7 2,183.3 2,200.2 2,222.6 2,255.8 2,279.7 2,342.3 2,340.1 42 Large time deposits 415.2 391.7 411.2 476.9 411.2 441.2 456.3 477.5 476.9 493.6 511.1 43 Money market fund shares 539.5 559.6 602.9 745.3 602.9 634.0 678.5 702.7 745.3 816.9 809.5 44 Security repurchase agreements 399.9 471.1 549.4 660.1 549.4 603.4 629.3 655.5 660.1 666.2 692.1 45 Mutual fund shares 992.5 1,375.4 1,477.3 1,852.8 1,477.3 1,553.3 1,661.0 1,782.0 1,852.8 1,994.3 2,130.6 46 Security credit 217.7 279.0 279.0 305.6 279.0 269.5 277.9 286.2 305.6 326.9 318.6 47 Life insurance reserves 434.8r 470.8r 505.3' 550.2' 505.3' 518.0' 532.4' 540.6' 550.2' 555.2 565.9 48 Pension fund reserves 4,225.4r 4,638.5' 4,846.9' 5,567.1' 4,846.9' 5,030.8' 5,224.2' 5,439.5' 5,567.1' 5,749.7 5,897.7 49 Trade payables 995.1 l,048.2r 1,162.2' 1,258.5' 1,162.2' 1,155.1' 1,177.5' 1,211.1' 1,258.5' 1,246.0 1,278.6 50 Taxes payable 79.7 84.9 88.0 89.3 88.0 94.3 89.2 91.9 89.3 94.3 90.3 51 Investment in bank personal trusts 660.6 691.3 699.4 767.4 699.4 719.7 739.7 758.6 767.4 781.6 790.9 52 Miscellaneous 4,784.5r 5,173.0' 5,436.9' 5,839.8' 5,436.9' 5,516>! 5,574.1' 5,684.4' 5,839.8' 5,974.4 5,988.9 53 Total liabilities 32,890.0r 35,442.4' 37,496.2' 40,934.0' 37,496.2' 38,2i;.'r 39,145.2' 40,017.0' 40,934.0' 41,820.1 42,534.3 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 19.6 20.1 21.1 22.1 21.1 22 7 22.9 22.1 22.1 22.1 22.0 55 Coiporate equities 5,456.8r 6,280.0' 6,263.3' 8,389.9' 6,263.3' 6,797.5' 7,348.4' 7,972.4' 8,389.9' 8,875.8 9,170.9 56 Household equity in noncorporate business 2,460. lr 2,495.5' 2,587.5' 2,699.6' 2,587.5' 2,a.7.?r 2,641.1' 2,655.0' 2,699.6' 2,736.1 2,758.3 Liabilities not identified as assets (-) 57 Treasury currency -4.9 -5.1 -5.4 -5.8 -5.4 -5.4 -5.5 -5.6 -5.8 -6.1 -6.3 58 Foreign deposits 217.6 232.6 278.7 309.0' 278.7 289.1 314.5 300.6 309.0' 324.4 330.3 59 Net interbank transactions -9.3 -4.7 -6.5 -9.0 -6.5 -2.7 -2.9 .1 -9.0 -2.6 -8.0 60 Security repurchase agreements 41.9r 76.1' 108.5' 111.2' 108.5' 130.7' 110.2' 131.2' 111.2' 106.7 118.2 61 Taxes payable 25.2 26.8 35.4' 44.1' 35.4' 20.5' 35.9' 39.1' 44.1' 23.9 38.0 62 Miscellaneous -698.8r -816.7' -876.0' -911.7' -876.0' -877.2' -830.6' -793.8' -911.7' -981.8 -1,057.0 Floats not included in assets (—) 63 Federal government checkable deposits 6.8 5.6 3.4 3.1 3.4 4.2 2.0 .6 3.1 .0 -3.4 64 Other checkable deposits 42.0 40.7 38.0 34.2 38.0 33.3 35.7 27.3 34.2 29.6 31.8 65 Trade credit -251.1 -248.0' -252.0' -275.4' -252.0' -295.1' -306.2' -330.0' -275.4' -326.5 -336.2 66 Total identified to sectors as assets 41,457.1' 44,930.6' 47,044.0' 52,745.9' 47,044.0' 48,342.6' 49,804.6' 51,297.2' 52,745.9' 54,286.6 55,378.2 1. Data in this table also appear in the Board's Z.l (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

A42 Domestic Nonfinancial Statistics • February 1997 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1987=100, except as noted 1996 MMeeaassuurree 11999933 11999944 11999955 Mar. Apr. May June July Aug.' Sept.' Oct.' Nov. 1 Industrial production1 111.5 118.1 121.9 123.6 124.5 125.4 126.4 126.3 126.9 127.1 126.9 128.0 Market groupings 2 Products, total 110.0 115.6 118.3 120.0 120.8 121.3 122.3 122.5 122.7 123.0 123.0 124.1 3 Final, total 112.7 118.3 121.4 123.4 124.8 125.1 126.0 126.7 126.5 126.7 126.7 128.2 4 Consumer goods 109.5 113.7 115.1 115.3 115.9 116.3 116.8 117.3 116.5 116.6 116.3 117.8 5 Equipment 117.5 125.3 131.4 136.5 139.2 139.2 140.8 142.0 142.8 143.0 143.7 145.2 6 Intermediate 101.8 107.3 109.0 109.6 108.6 110.1 111.3 109.9 111.2 111.9 111.7 111.9 7 Materials 113.8 122.0 127.4 129.1 130.3 131.6 132.6 132.1 133.5 133.5 132.9 133.9 Industry groupings 8 Manufacturing 112.3 119.7 123.9 125.2 126.5 127.4 128.5 129.0 129.2 129.6 129.4 130.4 9 Capacity utilization, manufacturing (percent)2. . 80.6 83.3 83.0 81.3 81.9 82.1 82.6 82.5 82.4 82.3 81.9 82.2 10 Construction contracts3 105.2' 114.3r 118.4r 127.0 130.0 129.0' 126.0r 128.0' 131.0 124.0 115.0 n.a. 11 Nonagricultural employment, total4 108.6 112.0 115.0 116.5 116.6 117.0 117.2 117.5 117.8 117.8 118.0 118.1 12 Goods-producing, total 94.6 96.9 98.1 98.1 98.1 98.3 98.4 98.3 98.5 98.3 98.4 98.5 13 Manufacturing, total 95.1 96.4 97.2 96.2 96.2 96.3 96.3 96.2 96.3 96.0 96.1 96.1 14 Manufacturing, production workers 95.3 97.5 98.7 97.4 97.5 97.5 97.5 97.4 97.5 97.2 97.3 97.4 15 Service-producing 113.1 116.8 120.3 122.4 122.6 123.0 123.3 123.6 123.9 124.0 124.2 124.3 16 Personal income, total 141.3 148.4 157.7 163.5 164.3 165.2 166.6 166.7' 167.7 168.6 168.7 169.6 17 Wages and salary disbursements 136.0 142.6 150.9 156.7 157.5 158.3 160.3 159.8' 161.1 162.2 162.0 163.0 18 Manufacturing 119.3 124.9 130.4 131.8 134.4 135.1 135.8 135.8 136.9 136.7 136.7 137.4 19 Disposable personal income5 142.4 149.3 158.2 163.7 162.8 165.1 166.4 166.5 167.4 168.2 168.4 169.2 20 Retail sales5 134.7 144.8 152.2 159.3 159.1 160.4 159.4 159.6 159.6 160.7 161.3 160.7 Prices6 21 Consumer (1982-84=100) 144.5 148.2 152.4 155.7 156.3 156.6 156.7 157.0 157.3 157.8 158.3 158.6 22 Producer finished goods (1982=100) 124.7 125.5 127.9 130.1 130.6 131.1 131.7 131.5 131.9 131.6 132.5 132.5 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 1996 CCaatteeggoorryy 11999933 11999944 11999955 Apr. May June July Aug. Sept.' Oct.' Nov. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 129,200 131,056 132,304 133,361 133,910 133,669 134,181 113333,,888855 113344,,334400 113344,,557744 113344,,881188 Employment 2 Nonagricultural industries3 117,144 119,651 121,460 122,726 122,971 123,228 123,382 123,635 123,833 124,169 124,242 3 Agriculture 3,115 3,409 3,440 3,368 3,491 3,382 3,502 3,421 3,535 33,,445577 33,,335555 Unemployment 4 Number 8,940 7,996 7,404 7,266 7,448 7,060 7,297 6,830 6,971 6,948 7,221 5 Rate (percent of civilian labor force) 6.9 6.1 5.6 5.4 5.6 5.3 5.4 5.1 5.2 5.2 5.4 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 110,730 114,172 117,203 118,922 119,332 119,537 119,772 120,052 120,050 120,274 120,392 7 Manufacturing 18,075 18,321 18,468 18,283 18,303 18.298 18,267 18,291 18,241 18,250 18,259 8 Mining 610 601 580 573 576 575 570 570 567 566 565 9 Contract construction 4,668 4,986 5,158 5,353 5,384 5,401 5,427 5,437 5,449 5,461 5,475 10 Transportation and public utilities 5,829 5,993 6,165 6.294 6,309 6,329 6,333 6,342 6,337 6,337 6,349 11 Trade 25,755 26,670 27,585 27,965 28,052 28,143 28,256 28,275 28,321 28,429 28,449 12 Finance 6,757 6,896 6,830 6,942 6,964 6,967 6,987 6,999 7,009 7,025 7,041 13 Service 30,197 31,579 33,107 34,117 34,285 34,378 34,448 34,532 34,607 34,695 34,765 14 Government 18,841 19,128 19,310 19,395 19,459 19.446 19,484 19,606 19,519 19,511 19,489 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

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1995 1996 1995 1996 1995 1996 SSeerriieess Q4 Ql Q2 Q3r Q4 Ql Q2 Q3 Q4 Ql Q2 Q3r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 122.5 123.4 125.4 126.8 147.7 149.1 150.6 152.0 82.9 82.8 83.3 83.4 2 Manufacturing 124.6 125.3 127.5 129.3 151.9 153.5 155.1 156.8 82.0 81.6 82.2 82.4 3 Primary processing3 117.1 116.7 118.6 120.1 136.1 136.9 137.8 138.6 86.1 85.2 86.1 86.7 4 Advanced processing 128.1 129.4 131.7 133.6 159.5 161.5 163.5 165.6 80.3 80.1 80.5 80.7 5 Durable goods 134.2 136.0 139.5 142.0 164.2 166.7 169.4 172.1 81.7 81.6 82.4 82.5 6 Lumber and products 105.8 104.6 108.9 108.5 120.9 121.7 122.4 123.1 87.5 85.9 89.0 88.1 7 Primary metals 118.8 118.9 119.6 120.0 129.5 130.3 131.4 132.4 91.8 91.2 91.0 90.6 8 Iron and steel 121.3 122.6 122.7 123.7 133.5 134.4 135.7 137.0 90.9 91.2 90.4 90.3 9 Nonferrous 115.3 113.8 115.3 115.1 124.0 124.8 125.5 126.3 93.0 91.2 91.8 91.1 10 Industrial machinery and equipment 186.8 195.3 201.8 209.1 212.0 218.1 224.5 231.2 88.1 89.5 89.9 90.4 11 Electrical machinery 182.9 186.3 189.0 190.3 213.9 221.8 229.9 238.3 85.5 84.0 82.2 79.8 12 Motor vehicles and parts 140.5 132.6 145.9 150.9 179.2 181.3 182.9 184.6 78.4 73.2 79.8 81.8 13 Aerospace and miscellaneous transportation equipment 79.0 84.0 85.8 88.2 129.3 128.6 128.1 127.6 61.1 65.3 67.0 69.2 14 Nondurable goods 113.9 113.5 114.2 115.2 138.4 139.0 139.6 140.1 82.3 81.7 81.8 82.2 15 Textile mill products 109.4 106.4 109.4 110.5 132.8 133.7 134.2 134.8 82.4 79.6 81.5 82.0 16 Paper and products 118.1 114.6 119.3 120.0 133.9 134.9 135.8 136.8 88.2 85.0 87.8 87.7 17 Chemicals and products 126.4 126.9 127.3 129.7 156.5 157.5 158.5 159.5 80.7 80.6 80.3 81.3 18 Plastics materials 123.1 126.9 132.2 134.4 137.1 138.6 139.9 141.1 89.7 91.6 94.6 95.2 19 Petroleum products 107.7 109.7 110.0 110.9 116.6 116.8 117.1 117.3 92.4 93.9 93.9 94.5 20 Mining 98.2 98.7 101.2 102.1 111.9 111.9 111.8 111.8 87.8 88.2 90.5 91.3 21 Utilities 124.1 126.7 127.1 124.0 135.6 136.0 136.5 137.0 91.5 93.2 93.1 90.5 22 Electric 123.7 126.4 127.0 124.0 133.0 133.4 133.9 134.5 93.1 94.8 94.8 92.3 1973 1975 Previous cycle5 Latest cycle6 1995 1996 High Low High Low High Low Nov. June July Aug/ Sept/ Oct. Nov.p Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 83.0 83.7 83.4 83.5 83.3 82.9 83.3 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 82.0 82.6 82.5 82.4 82.3 81.9 82.2 3 Primary processing3 92.2 68.9 89.7 66.8 89.0 77.9 86.0 86.8 86.6 86.6 8866..88 86.4 86.2 4 Advanced processing 87.5 72.0 86.3 71.4 83.5 76.1 80.3 80.8 80.8 80.6 8800..55 80.0 80.6 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 81.8 82.9 82.6 82.6 82.3 81.4 81.9 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.1 86.7 90.2 87.4 88.6 88.4 87.2 87.6 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.2 93.3 91.9 89.8 90.7 91.4 91.7 90.0 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.0 94.5 91.2 89.9 90.6 90.3 92.4 89.7 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.2 91.8 92.7 89.7 90.8 92.9 90.7 90.3 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 71.8 88.0 90.6 89.9 91.1 90.3 90.0 90.0 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.0 85.8 82.1 80.7 79.8 78.9 77.7 77.3 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 56.6 78.5 81.1 83.9 81.4 79.9 74.4 78.8 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 78.8 60.1 67.1 68.4 69.1 70.0 71.2 72.6 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.3 82.2 82.0 82.3 82.0 82.3 82.5 82.6 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.8 82.0 82.7 83.5 81.7 80.8 81.5 81.9 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.7 86.8 87.7 89.1 86.9 87.1 85.8 86.4 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.0 80.5 80.7 81.4 81.0 81.4 82.0 82.0 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 90.3 95.8 94.7 94.9 96.1 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.6 92.1 94.2 93.4 95.1 95.2 96.0 93.9 20 Mining 94.4 88.4 96.6 80.6 86.5 86.1 87.9 91.9 90.3 91.9 91.9 91.3 91.3 ?1 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 92.5 92.6 89.6 91.6 90.4 90.6 92.7 22 Electric 99.0 82.7 88.3 78.7 94.8 86.7 93.0 94.5 91.4 93.5 91.9 91.8 94.0 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

A44 Domestic Nonfinancial Statistics • February 1997 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1995 1996 roup pro- 1995 por- avg. tion Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug.r Sept.r Oct. Nov.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 121.9 122.6 122.8 122.5 124.2 123.6 124.5 125.4 126.4 126.3 126.9 127.1 126.9 128.0 2 Products 60.6 118.3 118.8 119.2 118.6 120.7 120.0 120.8 121.3 122.3 122.5 122.7 123.0 123.0 124.1 3 Final products 46.3 121.4 121.9 122.1 121.9 124.5 123.4 124.8 125.1 126.0 126.7 126.5 126.7 126.7 128.2 4 Consumer goods, total 28.6 115.1 115.9 115.7 114.6 116.6 115.3 115.9 116.3 116.8 117.3 116.5 116.6 116.3 117.8 3 Durable consumer goods 5.6 124.2 124.9 126.3 120.3 125.1 119.3 125.5 126.2 130.4 131.2 127.5 126.5 122.3 125.3 6 Automotive products 2.5 130.7 130.5 132.8 125.9 133.1 120.3 133.5 134.1 138.4 143.4 137.5 135.9 127.8 135.0 / Autos and trucks 1.6 131.4 129.8 132.1 124.1 133.5 111.1 135.9 135.4 138.9 149.6 140.9 136.4 125.9 136.5 8 Autos, consumer .9 103.1 100.2 99.5 92.8 99.7 77.0 104.1 106.2 110.4 116.1 110.7 107.3 91.6 104.0 y Trucks, consumer .7 181.7 182.8 190.6 180.4 194.4 173.1 192.7 187.3 189.2 209.3 194.7 188.0 188.1 194.8 1U Auto parts and allied goods .9 127.8 130.2 132.7 128.1 130.7 137.2 127.2 129.9 136.0 129.3 128.8 133.4 130.0 130.5 ii Other 3.0 118.6 119.9 120.5 115.5 118.1 118.5 118.5 119.3 123.4 120.5 118.7 118.2 117.5 116.8 12 Appliances, televisions, and air conditioners .7 135.5 145.3 141.9 132.2 137.5 138.3 139.7 138.9 151.4 145.4 137.6 135.9 135.9 134.1 U Carpeting and furniture .8 105.8 104.1 107.4 101.1 103.4 105.7 104.4 106.0 109.4 104.6 105.8 106.3 105.5 106.3 14 Miscellaneous home goods 1.5 118.2 117.6 118.3 116.2 117.7 116.9 117.1 118.2 118.7 118.4 117.6 117.0 116.0 114.9 13 Nondurable consumer goods 23.0 112.9 113.8 113.2 113.3 114.5 114.4 113.6 114.0 113.5 114.0 113.8 114.2 114.9 116.0 16 Foods and tobacco 10.3 111.3 110.9 110.6 110.6 112.0 112.3 112.2 112.0 111.7 112.1 111.4 112.3 112.6 113.9 1/ Clothing 2.4 94.8 91.5 89.7 88.2 90.3 88.9 88.8 89.2 88.5 88.5 88.7 88.3 89.0 88.5 18 Chemical products 4.5 131.3 135.0 136.5 138.1 138.1 136.7 133.8 135.2 134.5 137.8 136.8 138.4 139.9 140.4 iy Paper products 2.9 106.6 108.4 106.3 104.9 106.0 105.8 106.1 107.2 106.3 108.2 108.5 108.6 109.0 109.6 2U Energy 2.9 116.5 121.1 119.5 121.0 122.6 123.9 121.8 121.8 121.6 117.4 119.7 117.8 119.1 122.4 21 Fuels .9 108.8 108.2 108.6 108.6 111.8 112.2 111.5 111.7 111.6 111.1 112.2 111.3 113.8 111.6 22 Residential utilities 2.1 119.6 126.6 124.1 126.1 127.2 128.8 126.2 126.0 125.7 120.0 122.9 120.5 121.2 126.9 23 Equipment 17.7 131.4 131.4 132.3 133.7 137.3 136.5 139.2 139.2 140.8 142.0 142.8 143.0 143.7 145.2 24 Business equipment 13.7 155.7 156.9 158.4 160.5 164.8 162.7 166.3 166.0 168.6 170.3 171.1 171.8 173.0 175.2 23 Information processing and related 5.7 198.1 208.1 209.4 213.3 220.5 221.6 224.9 226.2 232.0 233.4 236.5 239.2 242.8 244.4 26 Computer and office equipment 1.4 373.5 417.8 431.7 442.9 463.3 476.0 491.1 505.0 522.0 540.0 553.5 565.0 574.7 585.1 27 Industrial 4.0 127.5 129.1 129.5 129.6 131.3 130.3 129.9 129.4 128.2 128.0 128.9 128.3 128.6 128.8 28 Transit 2.6 136.3 119.6 124.5 128.1 133.2 121.2 136.1 133.4 136.9 144.2 141.1 140.7 137.7 145.4 29 Autos and trucks 1.2 140.1 134.2 135.3 129.1 136.0 113.6 140.0 138.2 141.9 151.8 143.3 138.4 129.2 139.5 30 Other 1.4 123.2 121.4 121.7 122.1 123.5 122.5 122.1 121.1 123.3 123.3 121.9 121.7 124.0 125.4 31 Defense and space equipment 3.3 65.9 62.9 62.0 61.6 63.1 64.2 64.0 64.3 63.7 64.5 65.0 64.7 64.2 64.1 32 Oil and gas well drilling .6 87.1 83.1 83.8 85.1 89.7 96.3 100.6 104.3 102.3 99.1 99.9 96.2 94.4 93.9 33 Manufactured homes .2 152.7 161.8 164.4 158.1 157.8 168.2 170.7 170.4 172.4 164.8 173.7 172.3 171.5 34 Intermediate products, total 14.3 109.0 109.3 110.1 108.5 109.3 109.6 108.6 110.1 111.3 109.9 111.2 111.9 111.7 111.9 33 Construction supplies 5.3 108.2 108.7 110.5 107.2 109.3 111.5 109.2 111.0 113.9 112.0 114.4 115.6 114.3 114.7 36 Business supplies 9.0 109.6 109.9 110.0 109.6 109.5 108.6 108.4 109.6 109.8 108.7 109.3 109.7 110.2 110.3 37 Materials 39.4 127.4 128.4 128.4 128.5 129.4 129.1 130.3 131.6 132.6 132.1 133.5 133.5 132.9 133.9 38 Durable goods materials 20.8 141.5 145.3 144.8 145.8 147.3 145.5 147.3 148.8 150.5 150.3 152.3 152.2 151.1 152.5 3Y Durable consumer parts 4.0 138.5 140.1 139.3 140.6 141.1 132.5 142.1 143.5 148.3 147.6 150.9 149.7 143.9 147.9 40 Equipment parts 7.5 163.0 171.0 170.8 171.7 176.3 176.8 177.2 179.0 180.9 181.1 183.0 183.0 183.2 185.4 41 Other 9.2 126.2 127.9 127.2 128.2 127.8 127.4 126.8 128.1 128.2 127.9 129.5 129.7 129.7 129.5 42 Basic metal materials 3.1 125.7 128.1 126.6 125.7 123.7 124.4 123.7 123.9 125.1 123.5 124.8 126.3 127.4 125.7 43 Nondurable goods materials 8.9 119.8 116.6 117.4 115.7 116.1 116.3 118.8 120.0 120.1 121.1 119.9 120.5 120.9 120.8 44 Textile materials 1.1 109.2 104.8 103.3 100.3 101.8 103.0 104.9 106.2 106.3 108.2 106.8 105.4 107.0 106.8 43 Paper materials 1.8 120.5 114.3 115.2 113.4 113.4 113.7 118.9 118.7 115.2 120.9 119.0 116.8 118.2 118.9 46 Chemical materials 3.9 124.4 122.7 121.9 121.8 121.3 121.6 123.6 125.8 126.8 127.0 127.0 128.0 129.7 128.7 47 Other 2.1 116.5 114.1 118.9 115.2 117.1 116.4 117.8 118.2 119.7 117.5 115.0 118.4 114.8 115.8 48 Energy materials 9.7 106.6 105.7 106.0 105.9 106.1 108.2 107.0 108.1 108.7 106.3 108.4 108.2 107.9 109.0 4Y Primary energy 6.3 101.9 100.8 101.0 100.6 101.3 103.9 103.1 102.7 103.7 101.3 103.2 103.0 102.3 103.1 30 Converted fuel materials 3.3 116.0 115.4 116.2 116.6 115.5 116.7 114.9 118.9 118.7 116.2 118.7 118.5 119.0 120.7 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 121.5 122.3 122.5 122.4 123.8 123.9 124.1 125.0 126.0 125.6 126.5 126.8 126.9 127.7 32 Total excluding motor vehicles and parts 95.2 120.9 121.7 121.9 121.9 123.3 123.7 123.5 124.4 125.2 124.9 125.7 126.1 126.3 127.1 33 Total excluding computer and office equipment 98.2 118.2 118.4 118.5 118.0 119.5 118.7 119.5 120.2 121.1 120.8 121.2 121.3 121.0 122.0 34 Consumer goods excluding autos and trucks . 27.0 114.0 115.0 114.7 114.0 115.5 115.6 114.6 115.1 115.4 115.2 114.9 115.3 115.7 116.6 33 Consumer goods excluding energy 25.7 114.9 115.3 115.3 113.9 115.9 114.3 115.2 115.7 116.3 117.3 116.1 116.5 116.0 117.3 36 Business equipment excluding autos and trucks 12.5 157.0 159.0 160.5 163.5 167.5 167.5 168.7 168.6 171.1 172.0 173.7 175.0 177.3 178.6 57 Business equipment excluding computer and office equipment 12.2 133.0 130.8 131.3 132.6 135.5 132.3 134.8 133.5 134.9 135.2 134.9 134.8 135.3 136.7 38 Materials excluding energy 29.7 134.9 136.6 136.4 136.6 137.8 136.6 138.6 140.0 141.2 141.4 142.4 142.5 141.9 142.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 Group c S o I d C e p p r o o r - - 1 a 9 v 9 g 5 . tion Apr. May July Aug/ Sept/ Oct, Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 121.9 122.6 122.8 122.5 124.2 123.6 124.5 125.4 126.4 126.3 126.9 127.1 126.9 128.0 60 Manufacturing 85.4 123.9 124.5 124.8 124.5 126.2 125.2 126.5 127.4 128.5 129.0 129.2 129.6 129.4 130.4 61 Primary processing 26.6 117.6 117.1 117.3 116.7 116.3 117.1 117.5 118.5 119.7 119.8 120.0 120.6 120.3 120.1 62 Advanced processing 58.9 126.8 128.0 128.4 128.2 131.0 129.0 130.8 131.5 132.7 133.3 133.6 133.9 133.7 135.3 63 Durable goods 45.0 132.5 134.3 134.8 134.9 137.5 135.6 138.3 139.1 141.1 141.5 142.2 142.4 141.7 143.3 64 Lumber and products "'24 2.0 104.5 104.8 106.9 103.1 103.3 107.5 108.4 107.7 110.6 107.4 109.0 109.0 107.8 108.4 65 Furniture and fixtures 25 1.4 111.6 109.8 109.3 109.3 110.5 107.7 108.9 112.1 111.9 109.8 110.7 111.2 113.0 113.5 66 Stone, clay, and glass products 32 2.1 104.1 104.9 104.3 105.5 104.1 102.9 103.6 105.0 105.8 108.8 107.0 108.4 108.1 108.1 67 Primary metals 33 3.1 119.2 120.8 120.0 121.5 117.1 118.0 119.2 118.6 121.0 118.6 120.1 121.4 122.1 120.1 68 Iron and steel 331,2 1.7 122.4 126.1 122.7 128.1 119.5 120.2 122.9 121.0 124.2 122.8 124.1 124.1 127.4 124.1 69 Raw steel 331PT .1 114.7 116.4 118.0 113.9 112.5 114.9 112.9 113.2 115.7 112.9 114.5 114.3 111.9 110.9 70 Nonferrous 333-6,9 1.4 114.8 113.8 116.2 113.0 113.6 114.8 114.2 115.1 116.6 113.0 114.6 117.5 115.1 114.8 71 Fabricated metal products.. . 34 5.0 113.9 114.5 115.0 115.6 117.0 116.1 115.5 116.7 117.3 117.2 118.1 118.6 117.6 118.3 72 Industrial machinery and equipment 35 8.0 177.8 186.5 190.1 191.9 196.1 197.8 199.0 201.2 205.2 205.8 210.5 210.9 212.4 214.5 73 Computer and office equipment 357 1.8 373.5 417.8 431.7 442.9 463.3 476.0 491.1 505.0 522.0 540.0 553.5 565.0 574.7 585.1 74 Electrical machinery 36 7.2 174.9 183.6 182.8 182.4 188.7 187.9 187.3 188.8 191.0 190.1 190.2 190.5 189.7 191.0 75 Transportation equipment. .. 37 9.5 113.3 108.6 109.7 108.3 112.1 103.1 114.6 114.6 116.6 120.3 118.7 118.0 113.9 119.0 76 Motor vehicles and parts . 371 4.8 141.9 140.7 141.2 135.5 141.1 121.3 144.3 144.7 148.7 154.5 150.3 148.0 138.2 146.9 77 Autos and light tracks . 371PT 2.5 131.3 129.6 131.5 123.5 132.8 109.9 135.5 135.3 138.9 149.4 140.9 136.4 125.2 136.3 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.7 85.8 77.7 79.4 82.2 84.2 85.7 86.0 85.7 85.8 87.3 88.2 89.2 90.6 92.2 79 Instruments 38 5.4 110.7 111.5 109.7 111.0 113.4 112.9 112.8 112.4 113.7 112.3 113.6 113.3 114.5 114.7 80 Miscellaneous 39 1.3 122.7 123.3 123.5 122.1 124.0 124.0 122.6 123.0 124.4 124.1 124.0 124.0 123.8 124.0 81 Nondurable goods 40.5 114.3 113.7 113.8 113.1 113.8 113.6 113.5 114.4 114.6 115.2 114.8 115.5 115.8 116.1 82 Foods "20 9.4 115.3 114.8 114.8 114.8 116.0 115.6 115.4 115.6 115.1 115.8 114.6 115.6 116.5 117.5 83 Tobacco products 21 1.6 90.2 88.9 88.4 87.1 90.9 92.6 94.6 91.9 93.0 90.8 92.1 92.9 91.2 93.5 84 Textile mill products 22 1.8 112.6 108.9 108.3 104.1 106.2 109.0 108.2 108.8 111.1 112.4 110.1 109.0 110.2 110.8 85 Apparel products 23 2.2 95.7 92.4 91.5 89.2 90.9 89.7 90.4 90.8 90.9 90.1 90.6 90.1 89.7 88.4 86 Paper and products 26 3.6 119.8 116.2 118.2 114.9 113.5 115.5 118.9 119.5 119.4 121.5 118.9 119.5 117.9 119.0 87 Printing and publishing 27 6.8 99.4 99.3 98.8 97.9 98.7 96.7 96.3 97.7 97.2 97.2 97.4 98.3 99.1 99.1 88 Chemicals and products .... 28 9.9 125.0 126.0 126.5 127.1 127.1 126.5 126.0 127.7 128.1 129.7 129.2 130.1 131.5 131.7 89 Petroleum products 29 1.4 108.3 107.4 108.9 108.9 110.2 109.9 109.7 109.8 110.3 109.5 111.5 111.8 112.8 110.4 90 Rubber and plastic products . 30 3.5 139.4 140.3 139.3 139.0 139.7 140.5 137.6 140.7 142.4 142.3 144.3 144.7 142.8 142.5 91 Leather and products 31 .3 81.3 78.2 76.8 75.6 77.1 76.7 76.2 75.6 76.3 75.4 74.8 74.9 74.9 75.3 92 Mining 6.9 99.9 98.3 98.1 97.1 98.0 101.1 100.4 100.5 102.8 100.9 102.7 102.7 102.0 102.1 93 Metal "lO .5 169.3 175.9 172.8 159.5 157.1 166.1 158.3 161.6 161.3 168.2 168.3 170.6 170.6 168.8 94 Coal 12 1.0 112.9 109.5 108.5 103.3 108.0 114.8 109.5 111.9 113.2 107.1 120.8 120.5 118.9 116.3 95 Oil and gas extraction 13 4.8 91.9 90.1 90.1 90.8 90.2 92.6 93.3 93.2 95.5 94.1 93.8 93.6 92.9 93.7 96 Stone and earth minerals 14 .6 112.3 110.9 112.4 108.9 117.2 117.4 115.6 112.7 118.0 114.6 116.2 116.9 117.6 116.9 97 Utilities 7.7 122.0 125.4 125.1 125.6 126.6 128.0 126.4 128.4 126.6 122.6 125.6 123.9 124.4 127.4 98 Electric 491.493PT 6.1 122.1 123.6 123.9 125.5 126.6 127.1 125.7 128.7 126.7 122.7 125.7 123.7 123.7 126.9 99 Gas 492.493PT 1.6 121.7 132.5 129.9 125.6 126.3 131.5 128.9 127.5 125.8 122.1 124.9 124.7 126.7 129.7 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.6 122.8 123.6 123.9 123.9 125.4 125.4 125.5 126.3 127.3 127.4 127.9 128.5 128.9 129.4 101 Manufacturing excluding office and computing machines ... 83.7 119.5 119.6 119.7 119.3 120.7 119.5 120.7 121.3 122.3 122.5 122.5 122.8 122.4 123.3 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9 2,245.6 2,255.8 2,265.7 2,248.9 2,293.1 2,269.5 2,300.3 2,307.8 2,327.6 2,334.3 2,332.3 2,333.3 2,326.8 2,354.0 103 Final 1,552.2 1,748.7 1,756.8 1,761.9 1,753.0 1,794.2 1,766.8 1,801.5 1,804.4 1,817.1 1,831.0 1,823.1 1,820.2 1,816.0 1,842.8 104 Consumer goods 1,033.4 1,130.5 1,139.3 1,139.0 1,124.7 1,148.4 1,129.5 1,144.9 1,147.2 1,151.5 1,156.4 1,146.7 1,142.8 1,137.9 1,154.2 105 Equipment 518.8 618.3 617.5 622.9 628.4 645.8 637.3 656.6 657.1 665.6 674.7 676.4 677.5 678.0 688.6 106 Intermediate 450.7 496.9 499.0 503.8 495.9 498.8 502.7 498.8 503.4 510.5 503.3 509.2 513.1 510.8 511.3 1. Data in this table also appear in the Board's G.17 (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

A46 Domestic Nonfinancial Statistics • February 1997 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1996 IItteemm 11999933 11999944 11999955 Jan. Feb. Mar. Apr. May June July Aug.r Sept.r Oct. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,199 1.372 1,332 1,378 1,417 1,423 1,459 1,452 1,415 1,457 1,423 1,399 1,362 2 One-family 987 1.068 997 1,056 1,087 1,097 1,115 1,098 1,085 1,073 1,078 1,040 1,011 3 Two-family or more 213 303 335 322 330 326 344 354 330 384 345 359 351 4 Started 1,288 1,457 1,354 1,453 1,514 1,439 1,511 1,478 1,490 1,470 1,533 1,461 1,386 5 One-family 1,126 1.198 1,076 1,146 1,183 1,163 1,209 1,144 1,209 1,150 1,239 1,138 1,082 6 Two-family or more 162 259 278 307 331 276 302 334 281 320 294 323 304 7 Under construction at end of period1 680 762 776 803 800 816 826 826 829 823 820 829 828 8 One-family 543 558 547 569 565 581 591 590 596 592 593 594 591 9 Two-family or more 137 204 229 234 235 235 235 236 233 231 227 235 237 10 Completed 1,193 1.347 1,313 1,403 1,328 1,391 1,350 1,408 1,418 1,447 1,445 1,369 1,360 11 One-family 1,040 1.160 1,066 1,113 1,052 1,112 1,073 1,120 1,128 1,145 1,151 1,112 1,112 12 Two-family or more 153 187 247 290 276 279 277 288 290 302 294 257 248 13 Mobile homes shipped 254 304 340 352 341 364 378 369 372 372 369 373 369 Merchant builder activity in one-family units 14 Number sold 666 670 665 743 784 713 740 734 733 780r 819 782 714 15 Number for sale at end of period1 293 337 372 370 355 368 369 362 356 353r 346 333 336 Price of units sold (thousands of dollars)2 16 Median 126.1 130.4 133.4 131.9 139.4 137.0 140.0 136.4 140.0 144.2r 136.9 138.1 140.0 17 Average 147.6 153.7 157.6 155.3 163.7 162.1 170.0 163.3 166.5 168.4r 157.7 168.4 165.3 EXISTING UNITS (one-family) 18 Number sold 3,800 3,946 3,801 3,720 3,940 4,200 4,200 4,280 4,160 4,150 4,140 4,030 3,970 Price of units sold (thousands of dollars)2 19 Median 106.5 109.6 112.2 114.8 114.0 115.7 116.5 117.6 122.9 121.5 122.3 117.8 116.4 20 Average 133.1 136.4 138.4 141.2 138.7 140.1 141.9 144.4 150.2 149.6 149.9 144.7 143.2 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 482,737 527,063 547,079 558,952 544,577 556,983 564,623 558,481 563,122 558,613 563,959 570,994 581,157 22 Private 362,587 400,007 410,197 418,896 411,248 419,726 424,233 418,120 423,106 418,578 426,024 427,069 431,052 23 Residential 210,455 238,873 236,598 242,474 238,558 245,881 248,013 247,486 246,909 244,618 245,712 245,739 243,851 24 Nonresidential 152,132 161,134 173,599 176,422 172,690 173,845 176,220 170,634 176,197 173,960 180,312 181,330 187,201 25 Industrial buildings 26,482 28,947 32,301 32,495 30,792 30,593 30,285 27,310 28,755 28,599 27,082 29,656 33,077 26 Commercial buildings 53,375 59,728 67,528 66,475 66,461 65,503 67,565 65,834 69,280 68,005 71,921 70,546 74,436 27 Other buildings 26,219 26,961 26,923 28,103 27,470 27,884 27,457 27,723 28,533 28,443 29,677 29,727 3300,,880022 28 Public utilities and other 46,056 45,498 46,847 49,349 47,967 49,865 50,913 49,767 49,629 48,913 51,632 51,401 4488,,888866 29 Public 120,151 127,056 136,884 140,056 133,329 137,257 140,390 140,361 140,016 140,035 137,935 143,925 150,105 30 Military 2,454 2,319 3,005 3,554 3,982 3,126 3,168 3,020 3,140 3,041 2,300 2,588 3,082 31 Highway 34,342 37,673 38,161 39,444 40,956 39,527 39,454 37,715 38,308 39,310 36,581 40,657 41,675 32 Conservation and development 5,908 6,370 6,389 5,352 5,455 5,811 5,956 5,756 6,004 5,498 5,641 5,451 5,605 33 Other 77,447 80,694 89,329 91,706 82,936 88,793 91,812 93,870 92,564 92,186 93,413 95,229 99,743 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

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1995 1996 1996 NNNooovvv... 11999955 11999966 111999999666''' NNoovv.. NNoovv.. Dec. Mar. June Sept. July Aug. Sept. Oct. Nov. CONSUMER PRICES2 (1982-84=100) 1 All items 2.6 3.3 2.4 4.0 3.1 2.6 .3 .1 .3 .3 .3 158.6 7 2.8 4.4 1.9 3.2 4.6 5.3 .5 .4 .5 .6 .3 155.9 3 Energy items -2.7 8.1 1.9 15.8 8.4 -3.9 -.4 -.6 .0 .7 1.2 111.1 4 All items less food and energy 3.0 2.6 2.2 3.5 2.2 2.7 .3 .1 .3 .2 .2 167.2 Commodities 1.7 1.1 1.7 2.6 -.3 .9 .0 -.1 .4 .1 .1 142.2 6 Services 3.6 3.2 2.5 3.4 3.9 3.2 .3 .2 .2 .3 .2 181.4 PRODUCER PRICES (1982 = 100) 7 Finished goods 2.1 3.0 4.4 2.5 2.2 1.8 -.1 .3 .2 .4 .4 132.5 8 Consumer foods 3.3 3.7 4.4 .6 5.9 5.2 .R ,9r .2 .8 -.1 135.9 9 Consumer energy -3.2 12.9 10.8 17.8 -.5 1.0 -,6r ,6r .2 1.9 2.3 84.9 10 Other consumer goods 2.9 .8 3.4 -.3 2.2 .8 -.R .R .2 -.1 .0 144.9 11 Capital equipment 2.6 .3 2.9 .0 .6 1.2 ,0r ,OR .3 -.4 .3 138.7 Intermediate materials 12 Excluding foods and feeds 3.3 .4 -.6 -1.0 .0 .3 -,3r .2 .2 .1 .3 125.8 13 Excluding energy 4.0 -1.2 -2.9 -3.5 .0 -.3 -.3 .1 .1 -.1 .1 133.8 Crude materials 14 Foods 13.7 3.2 20.8 -4.1 60.1 -7.3 2.1' -.1' -3.8 -2.7 -1.9 117.9 15 Energy -1.4 30.5 33.9 52.8 -14.1 21.7 5.4r -1.0r .6 1.5 7.7 89.1 16 Other -1.2 -6.5 -18.4 -10.6 -8.8 -2.6 — 1.7r ,5r .6 .3 -.3 151.6 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

A48 Domestic Nonfinancial Statistics • February 1997 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q3 Q4 Ql Q2 Q3r GROSS DOMESTIC PRODUCT 1 Total 6,553.0 6,935.7 7,253.8 7,309.8 7,350.6 7,426.8 7,545.1 7,616.3 By source 2 Personal consumption expenditures 4,454.1 4,700.9 4,924.9 4,957.9 4,990.5 5,060.5 5,139.4 5,165.4 3 Durable goods 530.7 580.9 606.4 615.8 612.8 625.2 637.6 630.5 4 Nondurable goods 1,368.9 1,429.7 1,485.9 1,491.2 1,494.2 1,522.1 1,544.7 1,546.5 5 Services 2,554.6 2,690.3 2,832.6 2,850.9 2,883.5 2,913.2 2,957.1 2,988.5 6 Gross private domestic investment 871.1 1,014.4 1,065.3 1,074.8 1,064.0 1,068.9 1,096.0 1,156.2 7 Fixed investment 850.5 954.9 1,028.2 1,036.6 1,046.2 1,070.7 1,088.0 1,119.6 8 Nonresidential 598.8 667.2 738.5 746.3 749.7 769.0 773.8 807.0 9 Structures 171.8 180.2 199.7 202.5 204.0 208.4 207.4 213.5 10 Producers' durable equipment 427.0 487.0 538.8 543.8 545.7 560.6 566.3 593.5 11 Residential structures 251.7 287.7 289.8 290.3 296.5 301.7 314.2 312.6 12 Change in business inventories 20.6 59.5 37.0 38.2 17.8 -1.7 8.0 36.6 13 Nonfarm 26.8 48.0 39.6 41.5 19.9 2.7 11.3 35.4 14 Net exports of goods and services -62.7 -94.4 -94.7 -87.6 -67.2 -86.3 -99.2 -120.2 lb Exports 657.8 719.1 807.4 819.0 837.0 839.5 850.0 844.3 16 Imports 720.5 813.5 902.0 906.6 904.2 925.8 949.2 964.5 17 Government consumption expenditures and gross investment 1,290.4 1,314.7 1,358.3 1,364.6 1,363.4 1,383.7 1,408.8 1,414.8 18 Federal 522.6 516.4 516.6 516.8 507.7 518.6 529.6 525.5 19 State and local 767.8 798.4 841.7 847.7 855.7 865.1 879.2 889.3 By major type of product 20 Final sales, total 6,532.4 6,876.2 7,216.7 7,271.5 7,332.8 7,428.6 7,537.1 7,579.6 21 Goods 2,401.4 2,534.4 2,662.2 2,688.8 2,698.0 2,749.3 2,782.0 2,785.0 22 Durable 1,014.3 1,086.2 1,147.3 1,167.2 1,166.4 1,192.1 1,219.1 1,225.5 23 Nondurable 1,387.2 1,448.3 1,515.0 1,521.6 1,531.7 1,557.1 1,562.9 1,559.5 24 Services 3,584.0 3,746.5 3,926.9 3,950.2 3,992.4 4,027.9 4,087.0 4,122.0 25 Structures 547.0 595.3 627.6 632.6 642.3 651.4 668.0 672.6 26 Change in business inventories 20.6 59.5 37.0 38.2 17.8 -1.7 8.0 36.6 27 Durable goods 15.7 31.9 34.9 29.2 27.3 12.3 9.9 34.7 28 Nondurable goods 4.9 27.7 2.2 9.1 -9.4 -14.0 -1.9 2.0 MEMO 29 Total GDP in chained 1992 dollars 6,386.4 6,608.7 6,742.9 6,776.4 6,780.7 6,814.3 6,892.6 6,928.4 NATIONAL INCOME 30 Total 5,195.3 5,501.6 5,813.5 5,861.4 5,927.4 6,015.3 6,118.7 6,203.0 31 Compensation of employees 3,809.5 4,009.8 4,222.7 4,247.7 4,301.1 4,344.3 4,420.9 4,482.9 32 Wages and salaries 3,095.3 3,257.3 3,433.2 3,454.0 3,501.1 3,540.2 3,606.5 3,659.6 33 Government and government enterprises 584.2 602.5 621.7 624.1 626.9 634.0 638.9 644.6 34 Other 2,511.1 2,654.8 2,811.5 2,829.9 2,874.2 2,906.1 2,967.5 3,015.1 35 Supplement to wages and salaries 714.2 752.4 789.5 793.7 800.1 804.1 814.4 823.3 36 Employer contributions for social insurance 333.3 350.2 365.5 367.8 369.8 375.0 380.4 384.6 37 Other labor income 380.9 402.2 424.0 425.9 430.2 429.1 434.0 438.6 38 Proprietors' income' 420.0 450.9 478.3 479.6 486.7 499.5 515.2 526.3 39 Business and professional' 388.1 415.9 449.3 451.5 454.9 461.1 469.4 474.6 40 Farm1 32.0 35.0 29.0 28.1 31.8 38.4 45.8 51.8 41 Rental income of persons2 102.5 116.6 122.2 120.9 125.8 126.9 124.5 127.0 42 Corporate profits' 464.4 529.5 586.6 612.5 611.8 645.1 655.8 661.2 43 Profits tefore tax3 464.3 531.2 598.9 607.2 604.2 642.2 644.6 635.6 44 Inventory valuation adjustment -6.6 -13.3 -28.1 -9.3 -8.8 -17.4 -11.0 2.0 45 Capital consumption adjustment 6.7 11.6 15.9 14.6 16.5 20.4 22.3 23.6 46 Net interest 398.9 394.9 403.6 400.7 401.9 399.5 402.3 405.6 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

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q3 Q4 Ql Q2 Q3' PERSONAL INCOME AND SAVING 1 Total personal income 5,480.1 5,753.1 6,115.1 6,146.9 6,234.5 6,308.5 6,412.4 6,501.4 2 Wage and salary disbursements 3,090.7 3,241.8 3,430.6 3,451.2 3,500.2 3,538.2 3,606.5 3,659.6 3 Commodity-producing industries 781.3 824.9 863.5 866.7 873.9 878.7 900.3 911.0 4 Manufacturing 593.1 621.1 648.4 650.1 654.7 654.8 671.8 678.5 Distributive industries 698.4 739.2 783.7 789.3 800.7 810.5 822.3 832.4 6 Service industries » 1,026.7 1,075.2 1,161.6 1,171.1 1,198.6 1,215.1 1,244.9 1,271.6 7 Government and government enterprises 584.2 602.5 621.7 624.1 626.9 634.0 638.9 644.6 8 Other labor income 380.9 402.2 424.0 425.9 430.2 429.1 434.0 438.6 9 Proprietors' income1 420.0 450.9 478.3 479.6 486.7 499.5 515.2 526.3 in Business and professional1 388.1 415.9 449.3 451.5 454.9 461.1 469.4 474.6 n Farm1 32.0 35.0 29.0 28.1 31.8 38.4 45.8 51.8 12 Rental income of persons 102.5 116.6 122.2 120.9 125.8 126.9 124.5 127.0 13 Dividends 186.8 199.6 214.8 215.8 221.7 226.6 229.3 231.5 14 Personal interest income 648.1 663.7 717.1 719.9 727.2 « 726.1 733.1 742.9 11 Transfer payments 910.7 956.3 1,022.6 1,029.9 1,041.4 1,063.0 1,075.6 1,085.1 16 Old age survivors, disability, and health insurance benefits 444.4 472.9 507.4 510.7 516.1 529.9 536.3 541.7 17 LESS: Personal contributions for social insurance 259.6 278.1 294.5 296.2 298.8 301.0 305.8 309.7 18 EQUALS: Personal income 5,480.1 5,753.1 6,115.1 6,146.9 6,234.5 6,308.5 6,412.4 6,501.4 19 LESS: Personal tax and nontax payments 689.9 731.4 794.3 798.4 807.2 824.9 870.6 872.5 20 EQUALS: Disposable personal income 4,790.2 5,021.7 5,320.8 5,348.5 5,427.3 5,483.5 5,541.8 5,628.9 21 LESS: Personal outlays 4,575.8 4,832.3 5,071.5 5,106.6 5,144.7 5,218.1 5,300.7 5,329.8 22 EQUALS: Personal saving 214.4 189.4 249.3 241.9 282.6 265.4 241.1 299.1 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 24,734.3 25,349.8 25,628.7' 25,726.7 25,684.5 25,753.3 25,990.0 26,066.2 24 Personal consumption expenditures 16,806.7 17,158.4' 17,399.5' 17,453.8' 17,459.9' 17,570.2 17,675.7 17,657.9 25 Disposable personal income 18,078.0 18,330.0 18,799.0 18,829.0 18,986.0 19,041.0 19,063.0 19,242.0 26 Saving rate (percent) 4.5 3.8 4.7 4.5 5.2 4.8 4.3 5.3 GROSS SAVING 27 Gross saving 935.5 1,056.3 1,151.8 1,168.6 1,220.6 1,217.9 1,244.5 1,314.0 28 Gross private saving 962.4 1,006.7 1,071.8 1,085.9 1,138.9 1,133.8 1,121.6 1,196.1 29 Personal saving 214.4 189.4 249.3 241.9 282.6 265.4 241.1 299.1 3n Undistributed corporate profits' 103.3 123.2 140.6 159.6 158.4 171.8 176.3 182.5 31 Corporate inventory valuation adjustment -6.6 -13.3 -28.1 -9.3 -8.8 -17.4 -11.0 2.0 Capital consumption allowances 32 Corporate 417.0 441.0 454.0 456.9 463.6 465.6 471.0 447777..22 33 Noncorporate 223.1 237.7 225.2 224.7 233.4 229.1 233.2 237.4 34 Gross government saving -26.9 49.6 80.0 82.7 81.7 84.1 122.9 117.8 35 Federal -187.4 -119.6 -87.9 -84.6 -80.7 -82.0 -54.1 -48.4 36 Consumption of fixed capital 68.2 70.6 73.8 73.8 73.8 73.2 72.6 72.3 37 Current surplus or deficit (-), national accounts -255.6 -190.2 -161.7 -158.5 -154.5 -155.2 -126.7 -120.8 38 State and local 160.5 169.2 167.9 167.3 162.4 166.1 177.0 166.3 39 Consumption of fixed capital 65.6 69.4 72.9 73.4 74.3 75.1 76.0 77.1 40 Current surplus or deficit (—), national accounts 94.9 99.7 95.0 93.9 88.1 91.0 101.0 89.2 41 Gross investment 993.5 1,090.4 1,150.9 1,161.5 1,173.9 1,167.9 1,187.0 1,215.9 42 Gross private domestic investment 871.1 1,014.4 1,065.3 1,074.8 1,064.0 1,068.9 1,096.0 1,156.2 43 Gross government investment 210.6 212.3 221.9 224.7 220.1 228.8 235.1 234.2 44 Net foreign investment -88.2 -136.4 -136.3 -138.1 -110.2 -129.9 -144.2 -174.6 45 Statistical discrepancy 58.0 34.1 -.9 -7.1 -46.7 -50.0 -57.5 -98.1 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

A50 International Statistics • February 1997 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1995 1996 IItteemm ccrreeddiittss oorr ddeebbiittss 11999933 11999944 11999955 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -99,936r -148,405 -148,154r -37,688 -30,435 -34,869 -40,210 -47,961 2 Merchandise trade balance2 -132,609 -166,121 -173,424 -42,548 -38,026 -42,730 -46,996 -51,593 3 Merchandise exports 456,832 502,463 575,940 144,984 149,422 150,028 153,095 149,937 4 Merchandise imports -589,441 -668,584 -749,364 -187,532 -187,448 -192,758 -200,091 -201,530 Military transactions, net 2,757r 3,270r 3,477r 1,120 978 490r 726 710 6 Other service transactions, net 59,69 lr 59,779 64,776r 17,093 17,657 18,014 17,694 17,049 7 Investment income, net 9,742 -4,159r -8,016r -4,361 -1,890 262 -2,264 -4,705 8 U.S. government grants -16,823 -15,816 -10,959 -2,933 -2,799 -4,259 -2,364 -2,502 9 U.S. government pensions and other transfers -4,081 -4,544 -3,420 -964 -731 -960 -1,029 -1,034 10 Private remittances and other transfers -16,736 -19,506 -20,696 -5,095 -5,624 -5,685 -5,976 -5,886 11 Change in U.S. government assets other than official reserve assets, net (increase, -) -342 -341 -280 252 -199 -152 -353 72 12 Change in U.S. official reserve assets (increase, —) -1,379 5,346 -9,742 -1,893 191 17 -523 7,489 13 Gold 0 0 0 0 0 0 0 00 14 Special drawing rights (SDRs) -537 -441 -808 362 -147 -199 -133 884488 15 Reserve position in International Monetary Fund -44 494 -2,466 -991 -163 -849 -220 -183 16 Foreign currencies -797 5,293 -6,468 -1,264 501 1,065 -170 6,824 17 Change in U.S. private assets abroad (increase, -) -192,889r -155,700r -297,834 -37,954 -98,206 -68,615 -49,850 -62,237 18 Bank-reported claims3 29,947 -8,161 -69,146 8,476 -7,272 1,714 -74 --3322,,448822 19 Nonbank-reported claims 1,581 -32,804 -34,219 7,500 -14,278 -12,707 -3,374 20 U.S. purchases of foreign securities, net -146,253 -60,270 -98,960 -35,839 -32,539 -34,420 -20,200 -21,314 21 U.S. direct investments abroad, net —78,164r -54,465r -95,509 -18,091 -44,117 -23,202 -26,202 -8,441 22 Change in foreign official assets in United States (increase, +) 72,153 40,253 109,757 39,186 11,369 52,021 13,566 23,642 23 U.S. Treasury securities 48,952 30,745 68,813 20,489 12,984 55,600 -3,384 25,335 24 Other U.S. government obligations 4,062 6,077 3,734 518 764 52 1,258 1,217 23 Other U.S. government liabilities4 1,713 2,344 1,082 -71 1,249 -156 220 755 26 Other U.S. liabilities reported by U.S. banks3 14,841 3,560 32,862 18,478 -3,908 -3,264 14,187 -2,080 27 Other foreign official assets5 2,585 -2,473 3,266 -228 280 -211 1,285 -1,585 28 Change in foreign private assets in United States (increase, +) 178,843 245,123 314,705 79,630 87,860 47,450 86,983 100,357 29 U.S. bank-reported liabilities3 20,859 111,842 25,283 -21,542 32,765 -35,571 1,925 226655 30 U.S. nonbank-reported liabilities 10,489 -7,710 34,578 6,945 11,272 6,506 7,296 31 Foreign private purchases of U.S. Treasury securities, net 24,381 34,225 99,340 37,269 1,734 11,832 31,212 41,982 32 Foreign purchases of other U.S. securities, net 80,092 57,006 95,268 31,971 27,321 35,993 29,122 32,961 33 Foreign direct investments in United States, net 43,022 49,760 60,236 24,987 14,768 28,690 17,428 25,149 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 33 Discrepancy 43,550 13,724 31,548 -41,533 29,420 4,148 -9,613 -21,362 36 Due to seasonal adjustment -7,407 1,153 6,279 -801 -8,699 37 Before seasonal adjustment 43,550 13,724 31,548 -34,126 28,267 -2,131 -8,812 -12,663 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) --11,,337799 55,,334466 --99,,774422 --11,,889933 191 17 -523 77,,448899 39 Foreign official assets in United States, excluding line 25 (increase, +) 70,440 37,909 108,675 39,257 10,120 52,177 13,346 22,887 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -3,717 -1,529 3,959 6,147 -1,435 -992 5,555 5,347 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

Summary Statistics A51 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1996 IItteemm 11999933 11999944 11999955 Apr.r Mayr Juner Julyr Aug/ Sept. Oct.p 1 Goods and services, balance -72,037 -104,381 -105,064 -9,528 -10,677 -8,370 -11,755 -10,493 -11,437 -7,986 2 Merchandise -132,607 -166,123 -173,424 -15,584 -16,791 -14,620 -17,492 -16,423 -17,524 -14,089 3 Services 60,570 61,742 68,360 6,056 6,114 6,250 5,737 5,930 6,087 6,103 4 Goods and services, exports 642,953 698,301 786,529 69,154 70,120 69,726 67,249 69,679 68,839 71,735 5 Merchandise 456,834 502,462 575,939 50,741 51,384 50,972 48,779 51,095 50,297 52,893 6 Services 186,119 195,839 210,590 18,413 18,736 18,754 18,470 18,584 18,542 18,842 7 Goods and services, imports -714,990 -802,682 -891,593 -78,682 -80,797 -78,096 -79,004 -80,172 -80,276 -79,721 8 Merchandise -589,441 -668,585 -749,363 -66,325 -68,175 -65,592 -66,271 -67,518 -67,821 -66,982 9 Services -125,549 -134,097 -142,230 -12,357 -12,622 -12,504 -12,733 -12,654 -12,455 -12,739 1. 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 1996 AAsssseett 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct. Nov.p 1 Total 73,442 74,335 85,832 83,710 83,468 83,455 85,099 76,781 75,509 75,558 75,444 2 Gold stock, including Exchange Stabilization Fund1 11,053 11,051 11,050 11,052 11,051 11,050 11,050 11,050 11,050 11,049 11,049 3 Special drawing rights2,3 9,039 10,039 11,037 10,963 11,037 11,046 11,216 10,307 10,177 10,226 10,386 4 Reserve position in International Monetary Fund2 11,818 12,030 14,649 15,117 15,227 15,282 15,665 15,597 15,421 15,517 1,516 5 Foreign currencies4 41,532 41,215 49,096 46,578 46,153 46,077 47,168 39,827 38,861 38,765 38,493 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—$717 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, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1996 AAsssseett 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct. Nov.p 1 Deposits 386 250 386 166 160 182 166 171 265 176 170 Held in custody 2 U.S. Treasury securities2 379,394 441,866 522,170 573,924 578,608 572,839 580,277 590,367 609,801 619,987 634,165 3 Earmarked gold3 12,327 12,033 11,702 11,445 11,339 11,296 11,273 11,217 11,210 11,204 11,198 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

A52 International Statistics • February 1997 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1996 IItteemm 11999944 11999955 Apr. May June July Aug. Sept. Oct.p 1 Total1 520,934 630,867 687,239 689,733 696,373 699,496 703,876 719,561 722,708 By type 2 Liabilities reported by banks in the United States 73,386 107,343 111,032 104,941 118,247 113,416 111,035 116,332 109,942 3 U.S. Treasury bills and certificates3 139,571 168,534 186,638 188,321 187,171 186,061 189,726 182,122 186,180 U.S. Treasury bonds and notes 4 Marketable 254,059 293,691 327,988 334,470 327,822 337,451 341,038 358,226 363,063 5 Nonmarketable4 6,109 6,491 6,238 5,903 5,941 5,980 6,018 6,057 5,890 6 U.S. securities other than U.S. Treasury securities5 47,809 54,808 55,343 56,098 57,192 56,588 56,059 56,824 57,633 By area 7 Europe1 215,374 222,406 241,089 244,222 245,368 245,406 246,761 246,343 246,543 8 Canada 17,235 19,473 20,878 21,670 21,250 20,153 21,662 21,351 21,764 9 Latin America and Caribbean 41,492 66,720 71,381 68,043 70,142 67,990 69,076 69,338 70,477 10 Asia 236,824 310,966 341,148 343,206 346,103 350,747 354,266 369,474 371,218 11 Africa 4,180 6,296 7,388 7,173 6,997 6,910 6,722 6,944 6,587 12 Other countries 5,827 5,004 5,353 5,417 6,511 8,288 5,387 6,109 6,117 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 States1 Payable in Foreign Currencies Millions of dollars, end of period 1995 1996 IItteemm 11999922 11999933 11999944 Dec. Mar. June Sept. 1 Banks' liabilities 72,796 78,259 89,308 109,647 107,514 111,651 111,112 2 Banks' claims 62,799 62,017 60,711 74,015 69,159 65,864 68,129 3 Deposits 24,240 20,993 19,661 22,696 22,208 20,876 23,865 4 Other claims 38,559 41,024 41,050 51,319 46,951 44,988 44,264 5 Claims of banks' domestic customers2 4,432 12,854 10,878 6,145 6,353 7,464 7,130 1. 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

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1996 IItteemm 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct.'' BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 926,672 1,015,076 1,099,790 1,100,589 1,096,031 1,097,866 1,088,880 l,076,137r 1,091,268 1,118,829 2 Banks' own liabilities 626,919 718,671 753,652 735,749 723,534 731,335 720,280 703,807r 724,182 753,053 3 Demand deposits 21,569 23,386 24,448 23,962 23,325 27,364 24,989 23,147r 25,505 23,866 4 Time deposits2 175,106 186,512 192,702 191,999 181,016 189,699 193,413 196,722r 192,466 197,092 Other3 111,971 113,215 139,965 146,589 144,051 149,070 144,504 128,989r 148,503 146,331 6 Own foreign offices4 318,273 395,558 396,537 373,199 375,142 365,202 357,374 354,949' 357,708 385,764 7 Banks' custodial liabilities5 299,753 296,405 346,138 364,840 372,497 366,531 368,600 372,330r 367,086 365,776 8 U.S. Treasury bills and certificates6 176,739 162,938 197,355 217,106 220,823 218,608 217,548 219,949 212,478 221144,,660099 9 Other negotiable and readily transferable instruments7 36,289 42,539 52,250 44,823 49,655 51,463 56,345 55,552 57,702 53,149 10 Other 86,725 90,928 96,533 102,911 102,019 96,460 94,707 96,829' 96,906 98,018 11 Nonmonetary international and regional organizations8... 10,936 8,606 11,039 11,311 11,994 12,158 11,742 12,675 14,443 16,109 12 Banks' own liabilities 5,639 8,176 10,347 10,485 11,207 10,914 10,545 12,084 13,843 15,278 13 Demand deposits 15 29 21 28 34 123 22 49 26 66 14 Time deposits2 2,780 3,298 4,656 4,024 3,442 4,052 3,747 4,738 5,441 5,935 15 Other3 2,844 4,849 5,670 6,433 7,731 6,739 6,776 7,297 8,376 9,277 16 Banks' custodial liabilities5 5,297 430 692 826 787 1,244 1,197 591 600 831 17 U.S. Treasury bills and certificates6 4,275 281 350 426 376 874 865 345 399 600 18 Other negotiable and readily transferable instruments7 1,022 149 341 400 390 370 330 246 201 231 19 Other 0 0 1 0 21 0 2 0 0 0 20 Official institutions9 220,821 212,957 275,877 297,670 293,262 305,418 299,477 300,761 298,454 296,122 21 Banks' own liabilities 64,144 59,935 83,396 91,617 81,909 91,914 83,783 81,463 85,973 83,651 22 Demand deposits 1,600 1,564 2,098 1,679 1,504 2,211 2,211 1,459 2,049 1,316 23 Time deposits2 21,653 23,511 30,716 36,652 32,671 38,929 36,841 37,737' 34,921 35,569 24 Other3 40,891 34,860 50,582 53,286 47,734 50,774 44,731 42,267' 49,003 46,766 25 Banks' custodial liabilities5 156,677 153,022 192,481 206,053 211,353 213,504 215,694 219,298 212,481 212,471 26 U.S. Treasury bills and certificates6 151,100 113399,,557711 168,534 186,638 188,321 187,171 186,061 118899,,772266 118822,,112222 118866,,118800 27 Other negotiable and readily transferable instruments7 5,482 13,245 23,603 19,065 22,661 25,835 29,262 29,281 30,051 25,085 28 Other 95 206 344 350 371 498 371 291 308 1,206 29 Banks10 592,171 678,612 691,661 665,516 662,376 654,325 646,706 636,859' 650,808 678,268 30 Banks' own liabilities 478,755 563,697 568,083 537,453 533,059 530,625 525,543 512,126' 526,023 553,852 31 Unaffiliated foreign banks 160,482 168,139 171,546 164,254 157,917 165,423 168,169 157,177' 168,315 168,088 32 Demand deposits 9,718 10,633 11,758 11,468 10,663 12,380 11,809 11,116' 12,764 11,156 33 Time deposits2 105,262 111,171 103,623 96,238 89,120 90,717 95,353 95,004 91,893 96,153 34 Other3 45,502 46,335 56,165 56,548 58,134 62,326 61,007 51,057 63,658 60,779 35 Own foreign offices4 318,273 395,558 396,537 373,199 375,142 365,202 357,374 354,949' 357,708 385,764 36 Banks' custodial liabilities5 113,416 114,915 123,578 128,063 129,317 123,700 121,163 124,733' 124,785 124,416 37 U.S. Treasury bills and certificates6 10,712 11,264 15,872 16,801 17,584 18,241 18,091 18,670 1188,,555566 1166,,886655 38 Other negotiable and readily transferable instruments7 17,020 14,506 13,035 10,814 11,775 11,021 10,359 10,864 11,298 12,455 39 Other 85,684 89,145 94,671 100,448 99,958 94,438 92,713 95,199' 94,931 95,096 40 Other foreigners 102,744 114,901 121,213 126,092 128,399 125,965 130,955 125,842' 127,563 128,330 41 Banks' own liabilities 78,381 86,863 91,826 96,194 97,359 97,882 100,409 98,134' 98,343 100,272 42 Demand deposits 10,236 11,160 10,571 10,787 11,124 12,650 10,947 10,523' 10,666 11,328 43 Time deposits2 45,411 48,532 53,707 55,085 55,783 56,001 57,472 59,243' 60,211 59,435 44 Other3 22,734 27,171 27,548 30,322 30,452 29,231 31,990 28,368 27,466 29,509 45 Banks' custodial liabilities5 24,363 28,038 29,387 29,898 31,040 28,083 30,546 27,708 29,220 28,058 46 U.S. Treasury bills and certificates6 10,652 11,822 12,599 13,241 14,542 12,322 12,531 11,208 11,401 1100,,996644 47 Other negotiable and readily transferable instruments7 12,765 14,639 15,271 14,544 14,829 14,237 16,394 15,161 16,152 15,378 48 Other 946 1,577 1,517 2,113 1,669 1,524 1,621 1,339 1,667 1,716 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,567 17,895 9,103 8,306 9,284 9,580 7,922 8,276 10,466 10,761 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

A54 International Statistics • February 1997 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1996 Apr. May July Aug. Sept. Oct.p AREA 50 Total, all foreigners 926,672 1,015,076 1,099,790 1,100,589 1,096,031 1,097,866 1,088,880 1,076,137R L,091,268R 1,118,829 51 Foreign countries 915,736 1,006,470 1,088,751 1,089,278 1,084,037 1,085,708 1,077,138 L,063,462R L,076,825R 1,102,720 52 Europe 377,911 390,949 362,958 375,522 367,739 363,744 356,714 356,226r 351,205r 370,791 53 Austria 1,917 3,588 3,537 3,477 3,624 3,209 3,002 4,683 6,017 6,796 54 Belgium and Luxembourg 28,670 21,877 24,842 27,572 25,955 20,856 22,093 25,155 22,482r 23,124 55 Denmark 4,517 2,884 2,921 2,787 2,645 2,796 2,871 2,501 2,652 1,802 56 Finland 1,872 1,436 2,831 2,203 2,188 1,589 1,200 1,113 812 1,509 57 France 40,316 44,365 39,218 41,300 39,636 40,585 36,344 37,365r 37,102r 41,059 58 Germany 26,685 27,109 24,035 24,854 23,950 25,876 24,375 23,128 23,599 23,510 59 Greece 1,519 1,400 2,014 1,714 1,665 1,690 1,811 1,722 l,854r 1,678 60 Italy 11,759 10,885 10,868 10,172 11,039 12,103 12,785 12,552 12,509 12,793 61 Netherlands 16,096 16,033 13,745 12,394 12,575 12,159 11,863 11,460 9,626 11,913 62 Norway 2,966 2,338 1,394 915 828 1,388 1,435 1,556 1,622 1,552 63 Portugal 3,366 2,846 2,761 2,529 1,858 1,401 1,784 1,328 1,473 1,388 64 Russia 2,511 2,726 7,948 8,796 7,259 6,938 6,047 4,988 4,76 lr 5,602 65 Spain 20,496 14,675 10,011 19,547 19,004 20,314 19,366 17,505 20,359 17,665 66 Sweden 2,738 3,094 3,246 3,943 2,410 2,693 2,738 1,592 1,815 1,424 67 Switzerland 41,560 40,724 43,625 36,803 37,097 39,006 39,626 39,073 42,225 32,541 68 Turkey 3,227 3,341 4,124 4,453 4,669 4,926 5,619 7,272 7,992 8,019 69 United Kingdom 133,993 163,813 139,272 146,627 146,335 143,780 138,486 137,086 133,305r 157,764 70 Yugoslavia" 372 245 177 145 146 217 208 207 214 216 71 Other Europe and other former U.S.S.R.12 33,331 27,770 26,389 25,291 24,856 22,218 25,061 25,940 20,786r 20,436 72 Canada 20,235 24,768 30,468 31,283 33,176 33,391 28,811 30,727r 33,199 35,153 73 Latin America and Caribbean 362,238 423,847 440,212 430,878 433,023 432,709 437,682 424,128r 433,524r 443,731 74 Argentina 14,477 17,203 12,235 14,116 11,649 13,579 12,501 13,320 11,989 11,490 75 Bahamas 73,820 104,014 94,991 85,749 86,278 85,227 93,324 87,994r 86,625r 101,007 76 Bermuda 8,117 8,424 4,897 4,262 4,998 4,312 4,205 4,150 4,880 4,910 77 Brazil 5,301 9,145 23,797 20,222 20,105 25,902 23,183 24,518 23,817r 24,283 78 British West Indies 193,699 229,599 239,083 239,169 243,260 234,391 233,128 227,03 lr 233,782r 229,072 79 Chile 3,183 3,127 2,826 2,883 2,868 2,921 2,833 2,462 3,205 2,767 80 Colombia 3,171 4,615 3,659 3,726 3,393 3,642 3,329 3,263 2,889 2,968 81 Cuba 33 13 8 13 8 10 10 14 33 17 82 Ecuador 880 875 1,314 1,264 1,283 1,301 1,405 1,433 1,449 1,383 83 Guatemala 1,207 1,121 1,275 1,085 1,073 1,073 1,092 1,176 1,181 1,207 84 Jamaica 410 529 481 516 550 534 562 625 623 580 85 Mexico 28,019 12,227 24,560 23,328 23,212 24,775 26,314 24,401 26,811 27,682 86 Netherlands Antilles 4,686 5,217 4,672 5,272 4,722 5,162 5,531 3,614 5,289r 5,077 87 Panama 3,582 4,551 4,265 3,887 3,846 3,878 3,852 3,994 3,950 4,060 88 Peru 929 900 974 1,081 1,064 1,013 1,029 1,077 936 1,016 89 Uruguay 1,611 1,597 1,836 1,748 1,757 1,769 1,836 1,799 1,751 1,846 90 Venezuela 12,786 13,986 11,808 14,242 14,645 14,899 15,261 15,029 15,596 16,375 91 Other 6,327 6,704 7,531 8,315 8,312 8,321 8,287 8,228r 8,718r 7,991 92 Asia 144,527 154,346 240,698 237,708 235,910 239,289 236,781 238,567r 243,697r 239,224 China 93 Mainland 4,011 10,066 33,750 25,861 24,857 25,483 28,587 34,224 32,068 26,999 94 Taiwan 10,627 9,844 11,714 14,953 14,598 16,621 16,100 14,768r 15,715r 15,441 95 Hong Kong 17,132 17,104 20,303 18,378 18,606 18,227 17,775 19,454r 17,938r 17,063 96 India 1,114 2,338 3,373 3,752 3,938 4,012 3,954 4,012 3,793 3,709 97 Indonesia 1,986 1,587 2,708 2,627 2,374 2,316 2,561 2,161 2,204 2,436 98 Israel 4,435 5,157 4,041 5,420 5,090 5,168 4,444 4,364 4,134 7,162 99 Japan 61,466 62,981 109,193 111,635 111,500 113,800 112,783 109,312r 112,579r 112,624 100 Korea (South) 4,913 5,124 5,749 5,900 5,703 6,674 5,620 5,406r 5,908r 5,545 101 Philippines 2,035 2,714 3,089 2,467 2,897 2,970 3,041 2,539 3,429 3,191 102 Thailand 6.137 6,466 12,279 12,905 13,387 12,253 11,713 10,691 11,759 11,972 103 Middle Eastern oil-exporting countries13 15,822 15,494 15,582 14,895 14,234 13,379 12,947 13,891 14,715 12,802 104 Other 14,849 15,471 18,917 18,915 18,726 18,386 17,256 17,745 19,455 20,280 105 Africa 6,633 6,524 7,641 7,832 7,404 7,509 7,558 7,259 7,440r 7,058 106 Egypt 2,208 1,879 2,136 2,002 1,873 1,831 2,114 1,920 1,894 1,904 107 Morocco 99 97 104 114 113 115 133 121 78 74 108 South Africa 451 433 739 1,001 745 666 648 632 482 435 109 Zaire 12 9 10 8 16 6 13 6 6 11 110 Oil-exporting countries14 1,303 1,343 1,797 1,904 1,887 2,013 1,928 2,075 2,051 1,940 111 Other 2,560 2,763 2,855 2,803 2,770 2,878 2,722 2,505 2,929' 2,694 112 Other 4,192 6,036 6,774 6,055 6,785 9,066 9,592 6,555 7,760r 6,763 113 Australia 3,308 5,142 5,647 4,895 5,757 7,981 8,387 5,516 5,522 4,786 114 Other 884 894 1,127 1,160 1,028 1,085 1,205 1,039 2,238r 1,977 115 Nonmonetary international and regional organizations.. . 10,936 8,606 11,039 11,311 11,994 12,158 11,742 12,675 14,443r 16,109 116 International15 6,851 7,537 9,300 9,967 10,572 10,824 10,303 10,988 12,761r 14,331 117 Latin American regional16 3,218 613 893 482 649 527 831 1,024 1,193 1,304 118 Other regional17 867 456 846 862 773 807 608 663 489r 474 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

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1996 AArreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Apr. May June July Aug. Sept. Oct.P 1 Total, all foreigners 488,497 483,270 532,751 527,801 519,789 536,239 545,132 547,054r 545,003 563,271 2 Foreign countries 486,092 478,679 530,820 525,085 516,295 533,210 543,018 545,022r 543,297 560,206 3 Europe 123,741 123,408 132,150 135,493 134,459 146,180 143,640 150,30 r 155,676 165,604 4 Austria 412 692 565 1,213 1,212 1,088 1,128 849r 988 1,197 5 Belgium and Luxembourg 6,532 6,738 7,624 8,688 8,711 6,921 7,021 7,018 6,903 6,828 6 Denmark 382 1,129 403 543 482 432 319 230 408 480 7 Finland 594 512 1,055 1,305 1,282 1,013 1,629 1,296 1,350 1,068 8 France 11,822 12,146 15,033 11,604 11,954 11,768 10,571 1 l,571r 12,079 12,792 9 Germany 7,724 7,608 9,263 8,647 8,099 11,831 9,497 7,559 8,670 8,546 10 Greece 691 604 469 622 554 563 527 433 397 426 11 Italy 8,834 6,043 5,370 5,702 6,172 5,721 6,023 6,625r 5,870 5,003 12 Netherlands 3,063 2,959 5,346 6,346 5,618 6,546 6,360 6,565 6,956 7,390 13 Norway 396 504 665 793 933 1,243 1,397 1,342 1,199 1,617 14 Portugal 834 938 888 889 813 704 667 548 484 517 15 Russia 2,310 973 660 741 482 440 514 794 1,135 1,413 16 Spain 3,717 3,530 2,166 5,092 3,158 2,519 3,340 3,073r 4,152 3,885 17 Sweden 4,254 4,098 2,080 3,534 2,526 2,799 2,802 2,726' 2,976 2,919 18 Switzerland 6,605 5,746 7,474 6,370 8,713 12,145 9,520 9,266r 10,930 16,110 19 Turkey 1,301 878 803 973 873 933 912 l,044r 1,083 962 20 United Kingdom 62,013 66,874 67,784 68,999 69,557 75,813 78,098 85,601r 86,127 89,931 21 Yugoslavia2 473 265 147 208 204 164 159 87 87 118 22 Other Europe and other former U.S.S.R.3 1,784 1,171 4,355 3,224 3,116 3,537 3,156 3,674r 3,882 4,402 23 Canada 18,617 18,490 20,874 22,061 20,885 22,246 23,985 25,136 25,335 23,051 24 Latin America and Caribbean 225,238 223,523 256,992 246,364 238,235 239,874 253,372 249,697r 240,454 243,448 25 Argentina 4,474 5,844 6,439 6,187 6,037 6,448 6,598 7,062 7,077 7,042 26 Bahamas 63,353 66,410 58,818 55,497 56,383 60,608 59,627 62,297r 61,825 61,748 27 Bermuda 8,901 8,481 5,741 5,031 2,993 3,620 3,590 3,052 3,640 4,398 28 Brazil 11,848 9,583 13,297 14,164 14,186 15,076 15,197 15,155 15,222 15,417 29 British West Indies 99,319 95,741 123,924 118,609 110,780 102,669 100,886 99,363r 102,182 106,104 30 Chile 3,643 3,820 5,024 4,587 4,350 4,388 4,321 4,174r 4,388 4,278 31 Colombia 3,181 4,004 4,550 4,512 4,511 4,538 4,512 4,725r 4,723 4,811 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 681 682 825 951 936 962 897 932 965 957 34 Guatemala 288 366 457 473 461 452 463 476 507 546 35 Jamaica 195 258 323 335 345 359 346 335 339 362 36 Mexico 15,879 17,749 18,028 17,066 16,877 16,820 16,975 17,544r 17,701 17,742 37 Netherlands Antilles 2,683 1,396 9,229 8,728 8,674 12,888 29,224 23,713 11,207 9,406 38 Panama 2,894 2,198 3,008 2,488 2,592 2,567 2,216 2,21 r 2,143 2,271 39 Peru 657 997 1,829 2,018 2,112 2,395 2,568 2,463 2,541 2,563 40 Uruguay 969 503 466 578 602 623 589 562r 530 547 41 Venezuela 2,910 1,831 1,661 1,377 1,279 1,390 1,402 1,728 1,513 1,636 42 Other 3,363 3,660 3,373 3,763 5,117 4,071 3,961 3,905 3,951 3,620 43 111,775 107,079 115,569 115,037 111166,,449900 118,374 111155,,442255 113,950r 113,606 120,119 China 44 Mainland 2,271 836 1,023 3,405 2,857 2,141 1,344 2,033 1,700 1,420 45 Taiwan 2,625 1,448 1,713 1,626 1,514 1,490 1,301 l,023r 1,696 1,305 46 Hong Kong 10,828 9,161 12,915 15,339 14,745 15,997 13,822 12,466' 13,886 12,975 47 India 589 994 1,846 1,787 1,786 1,794 1,785 2,118 1,975 2,190 48 Indonesia 1,527 1,470 1,696 1,539 1,563 1,562 1,744 l,572r 1,653 1,577 49 Israel 826 688 739 642 615 620 658 667 576 1,017 50 Japan 60,032 59,151 61,461 54,627 54,613 54,005 53,454 54,584r 52,308 59,343 51 Korea (South) 7,539 10,286 14,089 17,250 18,424 19,261 18,644 17,667 17,516 17,032 52 Philippines 1,410 662 1,350 779 838 1,298 1,274 l,216r 1,267 1,347 53 Thailand 2,170 2,902 2,612 2,970 3,015 3,194 2,824 2,864r 2,705 2,699 54 Middle Eastern oil-exporting countries4 15,115 13,748 9,639 7,252 8,976 8,348 9,480 9,489 10,111 11,372 55 Other 6,843 5,733 6,486 7,821 7,544 8,664 9,095 8,251 8,213 7,842 56 Africa 3,861 3,050 2,768 2,767 2,715 2,741 2,605 2,735 2,757 2,638 57 Egypt 196 225 210 225 217 198 216 221 241 204 58 Morocco 481 429 514 594 628 639 602 577 565 543 59 South Africa 633 671 465 493 468 515 441 512 572 614 60 Zaire 4 2 1 1 1 1 1 11 1 1 61 Oil-exporting countries5 1,129 856 552 501 478 474 470 462 429 414 62 Other 1,418 867 1,026 953 923 914 875 952 949 862 63 Other 2,860 3,129 2,467 3,363 3,511 3,795 3,991 3,203r 5,469 5,346 64 Australia 2,037 2,186 1,622 2,620 2,333 2,513 3,172 2,593r 3,784 3,798 65 Other 823 943 845 743 1,178 1,282 819 610 1,685 1,548 66 Nonmonetary international and regional organizations6 . . . 2,405 4,591 1,931 2,716 3,494 3,029 2,114 2,032 1,706 3,065 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

A56 International Statistics • February 1997 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1996 TTyyppee ooff ccllaaiimm 11999933 11999955 Apr. May June July Aug. Sept. Oct.p 1 Total 575,818 599,549 655,518 661,316 688,596 2 Banks' claims 488,497 483,270 532,751 527,801 519,789 536,239 545,132 547,054r 545,003 563,271 3 Foreign public borrowers 29,228 23,416 22,522 26,254 22,208 22,950 20,238 18,882 22,722 24,919 4 Own foreign offices2 285,510 283,183 307,509 299,438 301,887 307,792 298,847 300,210r 311,862 330,249 5 Unaffiliated foreign banks 100,865 109,228 101,410 101,183 98,364 105,348 108,753 11 l,834r 109,305 108,717 6 Deposits 49,892 59,250 37,658 37,662 35,588 33,998 36,145 39,338 35,212 36,160 7 Other 50,973 49,978 63,752 63,521 62,776 71,350 72,608 72,496r 74,093 72,557 8 All other foreigners 72,894 67,443 101,310 100,926 97,330 100,149 117,294 116,128r 101,114 99,386 9 Claims of banks' domestic customers3 87,321 116,279 122,767 125,077 143,593 10 Deposits 41,734 64,829 58,519 71,441 80,695 11 Negotiable and readily transferable instruments4 3311,,118866 36,008 44,161 37,331 46,491 12 Outstanding collections and other claims 14,401 15,442 20,087 16,305 16,407 MEMO 13 Customer liability on acceptances 7,920 8,427 8,410 9,335 9,393 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 29,150 32,796 30,717 32,384 34,258 31,136 3322,,227700 33,527 33,262 39,578 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 States1 Payable in U.S. Dollars Millions of dollars, end of period 1995 1996 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999922 11999933 11999944 Dec. Mar. June Sept.p 1 Total 195,119 202,566 200,070 225,141 233,558 228,494 231,334 By borrower 2 Maturity of one year or less 163,325 172,662 168,359 178,785 193,742 185,976 187,375 3 Foreign public borrowers 17,813 17,828 15,435 15,015 19,567 14,847 15,526 4 All other foreigners 145,512 154,834 152,924 163,770 174,175 171,129 171,849 5 Maturity of more than one year 31,794 29,904 31,711 46,356 39,816 42,518 43,959 6 Foreign public borrowers 13,266 10,874 7,838 7,506 8,104 8,130 6,922 7 All other foreigners 18,528 19,030 23,873 38,850 31,712 34,388 37,037 By area Maturity of one year or less 8 Europe 53,300 57,413 55,770 55,622 57,988 57,157 57,093 9 Canada 6,091 7,727 6,690 6,771 5,473 6,810 8,803 10 Latin America and Caribbean 50,376 60,490 58,877 72,396 84,240 78,490 79,707 11 Asia 45,709 41,418 39,851 40,312 40,317 38,282 37,177 12 Africa... 1,784 1,820 1,376 1,295 1,326 1,279 1,320 13 All other3 6,065 3,794 5,795 2,389 4,398 3,958 3,275 Maturity of more than one year 14 Europe 5,367 5,310 4,203 4,995 6,833 8,191 7,137 15 Canada 3,287 2,581 3,505 2,731 2,563 3,689 3,533 16 Latin America and Caribbean 15,312 14,025 15,717 27,845 19,525 19,519 21,218 17 Asia 5,038 5,606 5,318 8,052 8,490 9,088 9,940 18 Africa 2,380 1,935 1,583 1,447 1,474 1,435 1,349 19 All other3 410 447 1,385 1,286 931 596 782 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

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1994 1995 1996 Area or country 11999922 iy93 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept.p 1 Total 344.7 407.7 486.4 497.4 543.1 528.8 531.3 551.9 573.6 607.8 610.1 2 G-10 countries and Switzerland 131.3 161.8 182.6 190.6 211.5 204.4 200.0 206.0 202.6 222.3 235.2 3 Belgium and Luxembourg .0 7.4 9.6 7.0 10.2 9.4 10.7 13.6 11.0 7.9 11.8 4 France 15.3 12.0 20.7 19.1 19.9 19.9 18.0 19.4 17.9 18.0 17.6 5 Germany 9.1 12.6 24.0 24.7 31.2 30.0 27.5 27.3 31.5 31.4 36.0 6 Italy 6.5 7.7 11.6 11.8 10.6 10.7 12.6 11.5 13.2 14.9 16.4 7 Netherlands .0 4.7 3.4 3.6 3.5 4.3 4.4 3.7 3.0 4.7 6.3 8 Sweden 2.3 2.7 2.6 2.7 3.1 3.1 2.9 2.7 3.3 2.7 3.0 9 Switzerland 4.8 5.9 5.5 5.1 5.7 6.2 6.6 6.7 5.2 6.3 6.3 10 United Kingdom 59.7 84.3 78.4 85.8 90.1 87.1 80.3 82.4 84.8 101.6 101.4 11 Canada 6.3 6.9 10.2 10.0 10.8 11.3 13.0 10.3 9.7 11.1 13.7 12 Japan 18.8 17.6 16.5 20.7 26.2 22.7 24.0 28.5 22.9 23.8 22.8 13 Other industrialized countries 24.0 25.6 42.6 45.2 44.1 43.3 50.2 50.2 61.3 55.5 63.7 14 Austria 1.2 .4 1.0 1.1 .9 .7 1.2 .9 1.3 1.2 1.0 15 Denmark .9 1.0 1.0 1.3 1.7 1.1 1.8 2.6 3.4 3.3 1.8 16 Finland .7 .4 .8 .9 1.1 .5 .7 .8 .7 .6 .6 17 Greece 3.0 3.2 4.3 4.5 4.9 5.0 5.1 5.7 5.6 5.6 6.1 18 Norway 1.2 1.7 1.6 2.0 2.4 1.8 2.3 3.2 2.1 2.3 3.0 19 Portugal .4 .8 1.0 1.2 1.0 1.2 1.9 1.3 1.6 1.6 1.4 20 Spain 8.9 9.9 14.0 13.6 14.1 13.3 13.3 11.6 17.5 13.6 17.3 21 Turkey 1.3 2.1 1.8 1.6 1.4 1.4 2.0 1.9 2.0 2.2 2.8 22 Other Western Europe 1.7 2.6 1.0 2.7 2.5 2.6 3.0 4.7 3.8 3.4 4.8 23 South Africa 1.7 1.1 1.2 1.0 1.5 1.4 1.3 1.2 1.7 2.0 1.9 24 Australia 2.9 2.3 15.0 15.4 12.6 14.3 17.4 16.4 21.7 19.7 22.9 25 OPEC2 15.8 17.4 21.7 23.9 19.5 20.3 22.4 22.1 21.2 20.1 19.4 26 Ecuador .6 .5 .4 .5 .5 .7 .7 .7 .8 .9 1.0 27 Venezuela 5.2 5.1 3.9 3.7 3.5 3.5 3.0 2.7 2.9 2.3 2.3 28 Indonesia 2.7 3.3 3.3 3.8 4.0 4.1 4.4 4.8 4.7 4.9 5.5 29 Middle East countries 6.2 7.4 13.0 15.0 10.7 11.4 13.6 13.3 12.3 11.5 10.1 30 African countries 1.1 1.2 1.1 .9 .7 .6 .6 .6 .6 .5 .4 31 Non-OPEC developing countries 72.6 83.1 93.2 96.0 98.5 103.6 104.0 112.6 118.1 126.1 125.6 Latin America 32 Argentina 6.6 7.7 10.5 11.2 11.4 12.3 10.9 12.9 12.7 14.1 16.2 33 Brazil 10.8 12.0 9.3 8.4 9.2 10.0 13.6 13.7 18.3 21.7 18.1 34 Chile 4.4 4.7 5.5 6.1 6.4 7.1 6.4 6.8 6.4 6.7 6.7 35 Colombia 1.8 2.1 2.4 2.6 2.6 2.6 2.9 2.9 2.9 2.8 3.1 36 Mexico 16.0 17.8 19.8 18.4 17.9 17.6 16.3 17.3 16.1 15.4 16.4 37 Peru .5 .4 .6 .5 .6 .8 .7 .8 .9 1.2 1.4 38 Other 2.6 3.1 2.8 2.7 2.4 2.6 2.6 2.8 3.1 3.1 2.9 Asia China 39 Mainland .7 2.0 1.0 1.1 1.1 1.4 1.7 1.8 3.3 2.9 2.6 40 Taiwan 5.2 7.3 6.9 9.2 8.5 9.0 9.0 9.4 9.7 9.8 10.3 41 India 3.2 3.2 3.9 4.2 3.8 4.0 4.4 4.4 4.7 4.2 ND 42 Israel .4 .5 .4 .4 .6 .7 .5 .5 .5 .6 .5 43 Korea (South) 6.6 6.7 14.4 16.2 16.9 18.7 18.0 19.1 19.4 21.8 21.8 44 Malaysia 3.1 4.4 3.9 3.1 3.9 4.1 4.3 4.4 4.7 5.0 5.1 45 Philippines 3.6 3.1 2.9 3.3 3.0 3.6 3.3 4.1 3.9 4.7 5.4 46 Thailand 2.2 3.1 3.5 2.1 3.3 3.8 3.9 4.9 5.2 5.4 4.7 47 Other Asia 3.1 3.1 3.4 4.7 4.9 3.5 3.7 4.5 4.3 4.7 4.1 Africa 48 Egypt .2 .4 .3 .3 .4 .4 .4 .4 .5 .5 .6 49 Morocco .6 .7 .7 .6 .6 .9 .9 .7 .7 .8 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 .8 .9 .8 .7 .6 .8 .9 .8 .8 1.0 52 Eastern Europe 3.1 3.2 3.0 2.7 2.3 1.8 3.4 4.2 6.2 5.0 5.4 53 Russia4 1.9 1.6 1.1 .8 .7 .4 .6 1.0 1.4 1.0 1.8 54 Yugoslavia5 .6 .6 .5 .5 .4 .3 .4 .3 .3 .3 .3 55 Other .6 .9 1.5 1.4 1.2 1.0 2.3 2.8 4.5 3.7 3.3 56 Offshore banking centers 58.1 73.0 77.2 72.2 84.8 82.7 86.9 99.2 101.5 106.0 106.1 57 Bahamas 6.9 10.9 13.8 10.2 12.5 8.4 12.6 11.0 13.9 17.3 14.8 58 Bermuda 6.2 8.9 6.0 8.4 8.7 8.4 6.1 6.3 5.3 4.1 4.0 59 Cayman Islands and other British West Indies 21.5 18.0 21.5 20.8 19.8 24.2 24.3 32.2 28.7 26.0 32.1 60 Netherlands Antilles 1.1 2.6 1.7 1.3 .9 2.4 5.5 9.9 10.7 13.0 11.5 61 Panama6 1.9 2.4 1.9 1.3 1.1 1.3 1.3 1.4 1.6 1.7 1.7 62 Lebanon 63 Hong Kong 13*9 18/7 20.3 19^9 22^5 23 J 23.1 25^1 25.1 21.8 26.4 64 Singapore 6.5 11.2 11.8 10.1 19.2 14.8 13.3 13.1 15.4 15.9 15.4 65 Other' .0 .1 .0 .1 .0 .0 .1 .1 .1 .1 .1 66 Miscellaneous and unallocated8 39.7 43.4 65.8 66.7 82.2 72.3 64.0 57.3 62.2 72.3 54.3 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

A58 International Statistics • February 1997 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1995 1996 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999922 11999933 11999944 Mar. June Sept. Dec. Mar. June 1 Total 45,511 50,597 54^09 50,187 49,973 47,673 46,448 49,907 48,990 2 Payable in dollars 37,456 38,728 38,298 35,903 34,281 33,908 33,903 36,273 35,385 3 Payable in foreign currencies 8,055 11,869 16,011 14,284 15,692 13,765 12,545 13,634 13,605 By type 4 Financial liabilities 23,841 29,226 32,954 29,775 29,282 26,237 24,241 26,570 24,844 Payable in dollars 16,960 18,545 18,818 16,704 15,028 13,872 12,903 13,831 12,212 6 Payable in foreign currencies 6,881 10,681 14,136 13,071 14,254 12,365 11,338 12,739 12,632 7 Commercial liabilities 21,670 21,371 21,355 20,412 20,691 21,436 22,207 23,337 24,146 8 Trade payables 9,566 8,802 10,005 9,844 10,527 10,061 11,013 10,815 11,081 y Advance receipts and other liabilities 12,104 12,569 11,350 10,568 10,164 11,375 11,194 12,522 13,065 10 Payable in dollars 20,496 20,183 19,480 19,199 19,253 20,036 21,000 22,442 23,173 11 Payable in foreign currencies 1,174 1,188 1,875 1,213 1,438 1,400 1,207 895 973 By area or country Financial liabilities 12 Europe 13,387 18,810 21,703 17,541 18,223 16,401 15,622 16,950 16,434 13 Belgium and Luxembourg 414 175 495 612 778 347 369 483 498 14 France 1,623 2,539 1,727 2,046 1,101 1,365 999 1,679 1,011 13 Germany 889 975 1,961 1,755 1,589 1,670 1,974 2,161 1,850 16 Netherlands 606 534 552 633 530 474 466 479 444 17 Switzerland 569 634 688 883 1,056 948 895 1,260 1,156 18 United Kingdom 8,610 13,332 15,543 10,764 12,138 10,518 10,138 10,246 10,790 19 Canada 544 859 629 1,817 893 797 632 1,166 951 20 Latin America and Caribbean 4,053 3,359 2,034 2,065 1,950 1,904 1,783 1,876 969 21 Bahamas 379 1,148 101 135 81 79 59 78 31 22 Bermuda 114 0 80 149 138 144 147 126 28 23 Brazil 19 18 207 58 58 111 57 57 8 24 British West Indies 2,850 1,533 998 1,068 1,030 930 866 946 826 2b Mexico 12 17 0 10 3 3 12 16 11 26 Venezuela 6 5 5 5 4 3 2 2 1 27 Asia 5,818 5,956 8,403 8,156 8,023 6,947 5,988 6,390 6,351 28 Japan 4,750 4,887 7,314 7,182 7,141 6,308 5,436 5,980 6,051 '29 Middle Eastern oil-exporting countries1 19 23 35 27 25 25 27 26 26 30 Africa 6 133 135 156 151 149 150 131 72 31 Oil-exporting countries2 0 123 123 122 122 122 122 122 61 32 All other3 33 109 50 40 42 39 66 57 67 Commercial liabilities 33 Europe 7,398 6,827 6,773 6,642 6,776 7,263 7,700 8,425 7,916 34 Belgium and Luxembourg 298 239 241 271 311 349 331 370 326 33 France 700 655 728 642 504 528 481 648 678 36 Germany 729 684 604 482 556 660 767 867 839 37 Netherlands 535 688 722 536 448 566 500 659 617 38 Switzerland 350 375 327 327 432 255 413 428 516 3y United Kingdom 2,505 2,039 2,444 2,848 2,902 3,351 3,568 3,525 3,266 40 Canada 1,002 879 1,037 1,235 1,146 1,219 1,040 959 998 41 Latin America and Caribbean 1,533 1,658 1,857 11,,336688 1,836 11,,660077 11,,774400 2,110 2,301 42 Bahamas 3 21 19 88 3 11 11 28 35 43 Bermuda 307 350 345 260 397 219 205 570 509 44 Brazil 209 214 161 96 107 143 98 128 119 43 British West Indies 33 27 23 29 12 5 56 10 10 46 Mexico 457 481 574 356 420 357 416 468 475 47 Venezuela 142 123 276 273 204 175 221 243 283 48 10,594 10,980 10,741 10,151 9,978 10,275 10,421 10,474 11,389 49 Japan 3,612 4,314 4,555 4,110 3,531 3,475 3,315 3,725 3,943 30 Middle Eastern oil-exporting countries 1,889 1,534 1,576 1,787 1,790 1,647 1,912 1,747 1,784 51 Africa 568 453 428 463 481 589 619 708 924 32 Oil-exporting countries2 309 167 256 248 252 241 254 254 435 53 Other3 575 574 519 553 474 483 687 661 618 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

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1995 1996 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999922 11999933 11999944 Mar. June Sept. Dec. Mar. June 1 Total 45,073 49,159 57,888 52,218 58,051 53,424 52,509 55,406r 58,845 2 Payable in dollars 42,281 45,161 53,805 48,425 54,138 49,696 48,711 51,007r 54,000 3 Payable in foreign currencies 2,792 3,998 4,083 3,793 3,913 3,728 3,798 4,399 4,845 By type 4 Financial claims 26,509 27,771 33,897 29,606 34,574 29,891 27,398 30,772r 33,994 5 Deposits 17,695 15,717 18,507 17,115 22,046 17,974 15,133 17,595 18,364 6 Payable in dollars 16,872 15,182 18,026 16,458 21,351 17,393 14,654 17,044 17,926 7 Payable in foreign currencies 823 535 481 657 695 581 479 551 438 8 Other financial claims 8,814 12,054 15,390 12,491 12,528 11,917 12,265 13,177r 15,630 9 Payable in dollars 7,890 10,862 14,306 11,275 11,370 10,689 10,976 ll,290r 13,233 10 Payable in foreign currencies 924 1,192 1,084 1,216 1,158 1,228 1,289 1,887 2,397 11 Commercial claims 18,564 21,388 23,991 22,612 23,477 23,533 25,111 24,634 24,851 12 Trade receivables 16,007 18,425 21,158 20,415 21,326 21,409 22,998 22,123 22,276 13 Advance payments and other claims 2,557 2,963 2,833 2,197 2,151 2,124 2,113 2,511 2,575 14 Payable in dollars 17,519 19,117 21,473 20,692 21,417 21,614 23,081 22,673 22,841 15 Payable in foreign currencies 1,045 2,271 2,518 1,920 2,060 1,919 2,030 1,961 2,010 By area or country Financial claims 16 Europe 9,331 7,299 7,936 7,630 7,927 7,840 7,609 8,929 9,241 17 Belgium and Luxembourg 8 134 86 146 155 160 193 159 151 18 France 764 826 800 808 730 753 803 1,015 679 19 Germany 326 526 540 527 356 301 436 320 296 20 Netherlands 515 502 429 606 601 522 517 486 488 21 Switzerland 490 530 523 490 514 530 498 470 461 22 United Kingdom 6,252 3,585 4,649 4,040 4,790 4,924 4,303 5,568 6,169 23 Canada 1,833 2,032 3,581 3,848 3,705 3,526 2,851 5,269 4,773 24 Latin America and Caribbean 13,893 16,224 19,536 16,109 21,159 15,345 14,500 13,827r 17,644 25 Bahamas 778 1,336 2,424 940 2,355 1,552 1,965 1,538 2,168 26 Bermuda 40 125 27 37 85 35 81 77 84 27 Brazil 686 654 520 528 502 851 830 1,019 1,242 28 British West Indies 11,747 12,699 15,228 13,531 17,013 11,816 10,393 10,100r 13,024 29 Mexico 445 872 723 583 635 487 554 461 392 30 Venezuela 29 161 35 27 27 50 32 40 23 31 864 1,657 1,871 1,504 1,235 2,160 1,579 1,890 1,571 32 Japan 668 892 953 621 471 1,404 871 1,171 852 33 Middle Eastern oil-exporting countries' 3 3 141 4 3 4 3 13 9 34 Africa 83 99 373 141 138 188 276 277 197 35 Oil-exporting countries2 9 1 0 9 9 6 5 5 5 36 All other3 505 460 600 374 410 832 583 580 568 Commercial claims 37 Europe 8,451 9,105 9,540 8,947 9,200 8,862 9,824 9,776 9,812 38 Belgium and Luxembourg 189 184 213 199 218 224 231 247 239 39 France 1,537 1,947 1,881 1,790 1,669 1,706 1,830 1,803 1,658 40 Germany 933 1,018 1,027 977 1,023 997 1,070 1,410 1,335 41 Netherlands 552 423 311 324 341 338 452 442 481 42 Switzerland 362 432 557 556 612 438 520 579 602 43 United Kingdom 2,094 2,377 2,556 2,388 2,469 2,479 2,656 2,607 2,651 44 Canada 1,286 1,781 1,988 2,010 2,003 1,971 1,951 2,045 2,074 45 Latin America and Caribbean 3,043 3,274 4,117 4,140 4,370 4,359 4,364 4,151 4,340 46 Bahamas 28 11 9 17 21 26 30 30 28 47 Bermuda 255 182 234 208 210 245 272 273 264 48 Brazil 357 460 612 695 777 745 898 809 837 49 British West Indies 40 71 83 55 83 66 79 106 103 50 Mexico 924 990 1,243 1,106 1,109 1,026 993 870 1,021 51 Venezuela 345 293 348 295 319 325 285 308 313 52 4,866 6,014 6,982 6,200 6,516 6,826 7,312 7,100 6,883 53 Japan 1,903 2,275 2,655 1,911 2,011 1,998 1,870 2,010 1,877 54 Middle Eastern oil-exporting countries' 693 704 708 689 707 775 974 1,024 879 55 Africa 554 493 454 468 478 544 654 667 688 56 Oil-exporting countries2 78 72 67 71 60 74 87 107 83 57 Other3 364 721 910 847 910 971 1,006 895 1,054 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

A60 International Statistics • February 1997 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1996 1996 Transaction, and area or country 1994 1995 J O an ct .- . Apr. May June July Aug. Sept. Oct.P U.S. corporate securities STOCKS 1 Foreign purchases 350,593 462,950 501,065 53,047 57,552 43,374 49,488 46,136 42,599 57,754 2 Foreign sales 348,716 451,710 490,146 48,774 56,068 42,361 52,142 44,071 42,550 56,699 3 Net purchases, or sales (-) 1,877 11,240 10,919 4,273 1,484 1,013 -2,654 2,065 49 1,055 4 Foreign countries 1,867 11,445 10,961 4,129 1,479 1,013 -2,653 2,051 75 1,061 5 Europe 6,714 4,912 6,505 1,429 -446 -308 -386 3,310 200 447 6 France -201 -1,099 -1,042 -336 -306 -339 -188 -209 -109 -219 7 Germany 2,110 -1,837 1,127 174 -30 218 363 83 -85 116 8 Netherlands 2,251 3,507 1,386 237 -66 129 124 219 -13 -132 9 Switzerland -30 -2,283 2,494 618 -140 78 615 538 -123 144 10 United Kingdom 840 8,066 1,974 345 229 -416 -1,490 2,551 475 909 11 Canada -1,160 -1,517 1,526 52 -394 81 31 -250 191 742 12 Latin America and Caribbean -2,111 5,814 3,653 808 1,298 42 -1,077 1,046 252 -605 13 Middle East1 -1,142 -337 -1,538 -6 -261 -114 -15 -179 -153 15 14 Other Asia -1,234 2,503 871 1,852 1,380 1,359 -1,347 -1,642 -575 511 15 Japan 1,162 -2,725 550 1,446 73 802 -611 -791 104 313 16 Africa 29 2 -68 31 6 -4 33 -33 -6 5 17 Other countries 771 68 12 -37 -104 -43 108 -201 166 -54 18 Nonmonetary international and regional organizations 10 -205 -42 144 5 0 -1 14 -26 -6 BONDS2 19 Foreign purchases 289,586 293,533 331,196 24,130 34,789 35,008 27,727 32,333r 37,407r 40,431 20 Foreign sales 229,665 206,951 227,177 18,705 24,094 25,688 17,458 20,901r 23,858r 29,988 21 Net purchases, or sales (-) 59,921 86,582 104,019 5,425 10,695 9,320 10,269 ll,432r 13,549r 10,443 22 Foreign countries 59,036 87,036 103,838 5,394 10,690 9,305 10,152 ll,453r 13,551r 10,458 23 Europe 37,065 70,318 64,154 3,922 7,114 4,876 6,267 6,184r 8,350' 6,321 24 France 242 1,143 4,828 785 113 326 334 169 565 713 23 Germany 657 5,938 4,915 721 891 1 255 626r 381 -260 26 Netherlands 3,322 1,463 1,759 -52 371 53 442 146 244 93 27 Switzerland 1,055 494 1,044 -144 178 233 258 125r 403 59 28 United Kingdom 31,642 57,591 45,480 2,239 4,217 3,706 4,566 4,305r 6,23 lr 5,358 29 Canada 2,958 2,569 3,404 359 952 314 514 474 122 181 30 Latin America and Caribbean 5,442 6,141 17,770 60 1,166 770 1,811 1,272 1,144 2,964 31 Middle East1 771 1,869 712 122 205 218 205 201 65 211 32 Other Asia 12,153 5,659 17,737 1,094 1,279 3,140 1,186 3,243 3,681 787 33 Japan 5,486 2,250 10,054 135 537 1,912 905 2,583 1,963 1,037 34 Africa -7 234 389 49 107 50 31 17 109 45 33 Other countries 654 246 -328 -212 -133 -63 138 62 80 -51 36 Nonmonetary international and regional organizations 885 -454 181 31 5 15 117 -21 -2 -15 Foreign securities 37 Stocks, net purchases, or sales (—) -48,071 -50,291 -48,525 -6,706 -3,167 -7,527 -3,639 -1,142 -1,733 -2,128 38 Foreign purchases 386,106 345,540 368,009 37,764 43,515 36,728 37,643 34,016 31,195 40,088 39 Foreign sales 434,177 395,831 416,534 44,470 46,682 44,255 41,282 35,158 32,928 42,216 40 Bonds, net purchases, or sales (—) -9,224 -48,545 -33,411 -153 -527 -1,887 -3,396 -5,215 —4,430r -5,777 41 Foreign purchases 848,368 889,471 914,352 81,256 82,453 82,907 80,703 84,448 113,087r 116,314 42 Foreign sales 857,592 938,016 947,763 81,409 82,980 84,794 84,099 89,663 117,517r 122,091 43 Net purchases, or sales (—), of stocks and bonds .... -57,295 -98,836 -81,936 -6,859 -3,694 -9,414 -7,035 -6,357 —6,163r -7,905 44 Foreign countries -57,815 -98,031 -81,044 -6,802 -3,585 —9,361 -7,098 -6,215 —5,637r -7,927 45 Europe -3,516 -48,125 -41,455 -1,949 1,271 -8,356 -4,460 -5,298 -5,505r -6,030 46 Canada -7,475 -7,952 -3,347 614 -231 -472 829 856 222 -574 47 Latin America and Caribbean -18,334 -7,634 -9,679 -1,190 -2,044 975 -2,181 -1,415 -1,277 1,069 48 -24,275 -34,056 -22,791 -4,094 -2,260 -1,401 -1,174 -1,016 971 -819 49 Japan -17,427 -25,072 -7,514 -950 -921 -1,229 231 486 2,456 656 30 Africa -467 -327 -1,450 -14 -32 -116 -53 -25 -49 -468 31 Other countries -3,748 63 -2,322 -169 -289 9 -59 683 1 -1,105 52 Nonmonetary international and regional organizations 520 -805 -892 -57 -109 -53 63 -142 —526r 22 1. 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

Securities Holdings and Transactions!Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1996 1996 AArreeaa oorr ccoouunnttrryy 11999944 11999955 Jan.— Apr. May June July Aug. Sept. Oct.p Oct. 1 Total estimated 78,801 134,074 169,702 15,751 13,8% 8,648 47,825 11,868 13,781 21,439 2 Foreign countries 78,637 133,552 171,495 17,126 13,658 9,459 48,261 11,832 13,938 20,902 3 Europe 38,542 50,000 88,878 8,712 7,290 5,734 18,137 6,751 11,906 10,512 4 Belgium and Luxembourg 1,098 591 780 399 -153 221 -39 73 489 -320 5 Germany 5,709 6,136 13,124 1,833 1,674 1,196 1,233 467 -264 2,813 6 Netherlands 1,254 1,891 -2,113 -2,137 -757 1,067 694 -237 116 -423 7 Sweden 794 358 2,369 286 342 -29 322 -282 431 169 8 Switzerland 481 -472 1,051 1,329 555 -842 395 -730 718 -599 9 United Kingdom 23,365 34,778 51,940 6,070 2,987 5,190 10,911 7,271 6,779 7,641 10 Other Europe and former U.S.S.R 5,841 6,718 21,727 932 2,642 -1,069 4,621 189 3,637 1,231 11 Canada 3,491 252 3,552 1,766 -669 -139 1,714 -1,140 -37 -1,708 1? Latin America and Caribbean -10,383 48,609 -2,600 1,993 -1,167 1,524 23,991 -491 -19,359 1,473 13 Venezuela -319 -2 -213 4 -39 13 16 146 -45 -29 14 Other Latin America and Caribbean -20,493 25,152 5,013 3,865 -2,195 -4,434 986 3,088 -1,547 920 15 Netherlands Antilles 10,429 23,459 -7,400 -1,876 1,067 5,945 22,989 -3,725 -17,767 582 16 47,317 32,319 78,865 4,478 8,216 2,919 4,183 6,359 20,776 9,457 17 Japan 29,793 16,863 32,237 2,382 4,565 879 2,225 2,920 4,938 6,197 18 Africa 240 1,464 1,099 250 -48 22 -31 163 30 -13 19 Other -570 908 1,701 -73 36 -601 267 190 622 1,181 20 Nonmonetary international and regional organizations 164 522 -1,793 -1,375 238 -811 -436 36 -157 537 ?1 International 526 92 -1,017 -414 -9 -747 -395 -287 -52 338 22 Latin American regional -154 261 -1,029 -1,008 9 7 -3 347 -90 -4 MEMO 23 Foreign countries 78,637 133,552 171,495 17,126 13,658 9,459 48,261 11,832 13,938 20,902 74 Official institutions 41,822 39,632 69,372 8,253 6,482 -6,648 9,629 3,587 17,188 4,837 25 Other foreign 36,815 93,920 102,123 8,873 7,176 16,107 38,632 8,245 -3,250 16,065 Oil-exporting countries ?6 Middle East2 -38 3,075 7,616 863 2,172 793 -219 323 4,969 --11,,887766 27 0 2 1 0 1 -1 0 -1 1 0 1. 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. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year, averages of daily figures Rate on Dec. 31, 1996 Rate on Dec. 31, 1996 Country Country Month effective Austria.. . 2.5 Apr. 1996 Germany . .. 2.5 Belgium. . 2.5 Apr. 1995 Italy 7.5 Canada.., 3.25 Nov. 1996 Japan .5 Denmark . 3.25 Apr. 1996 Netherlands . 2.5 France .. 3.15 Nov. 1996 Switzerland . 1.0 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 RATES1 Percent per year, averages of daily figures 1996 TTyyppee oorr ccoouunnttrryy 11999944 11999955 11999966 June July Aug. Sept. Oct. Nov. Dec. 1 Eurodollars 4.63 5.93 5.38 5.46 5.49 5.41 5.49 5.41 5.38 5.43 2 United Kingdom 5.45 6.63 5.99 5.80 5.69 5.72 5.75 5.93 6.27 6.31 3 Canada 5.57 7.14 4.49 4.87 4.76 4.30 4.10 3.54 3.05 3.16 4 Germany 5.25 4.43 3.21 3.29 3.29 3.20 3.02 3.04 3.09 3.13 5 Switzerland 4.03 2.94 1.92 2.53 2.52 2.21 1.82 1.56 1.80 1.99 6 Netherlands 5.09 4.30 2.91 2.81 2.99 2.90 2.70 2.82 2.92 2.99 7 France 5.72 6.43 3.81 3.85 3.73 3.84 3.63 3.39 3.35 3.33 8 Italy 8.45 10.43 8.79 8.73 8.72 8.77 8.42 7.99 7.40 7.22 9 Belgium 5.65 4.73 3.19 3.23 3.29 3.21 3.04 3.02 3.03 3.01 10 Japan 2.24 1.20 .58 .57 .67 .62 .53 .52 .51 .51 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

A62 International Statistics • February 1997 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted Country/currency unit 1994 July Aug. Sept. 1 Australia/dollar^ 73.161 74.073 78.283 78.974 78.305 79.279 79.179 79.684 2 Austria/schilling 11.409 10.076 10.589 10.576 10.435 10.610 10.748 10.640 3 Belgium/franc 33.426 29.472 30.968 30.947 30.553 31.056 31.471 31.172 4 Canada/dollar 1.3664 1.3725 1.3638 1.3697 1.3722 1.3694 1.3508 1.3381 5 China, P.R./yuan 8.6404 8.3700 8.3395 8.3409 8.3379 8.3341 8.3299 8.3294 6 Denmark/krone 6.3561 5.5999 5.8009 5.8014 5.7327 5.8057 5.8576 5.8053 7 Finland/markka 5.2340 4.3763 4.5948 4.5812 4.4793 4.5421 4.5694 4.5512 8 France/franc 5.5459 4.9864 5.1158 5.0881 5.0636 5.1307 5.1652 5.1156 9 Germany/deutsche mark 1.6216 1.4321 1.5049 1.5025 1.4826 1.5080 1.5277 1.5118 10 Greece/drachma 242.50 231.68 240.82 237.65 237.00 239.67 239.76 238.38 11 Hong Kong/dollar 7.7290 7.7357 7.7345 7.7379 7.7345 7.7328 7.7322 7.7323 12 India/rupee 31.394 32.418 35.510 35.667 35.800 35.870 35.804 35.892 13 Ireland/pound2 149.69 160.35 159.95 160.31 161.08 160.96 160.83 166.45 14 Italy/lira 1,611.49 1,629.45 1,542.76 1,526.82 1,516.62 1,520.48 1,523.82 1,513.66 15 Japan/yen 102.18 93.96 108.78 109.19 107.87 109.93 112.41 112.30 16 Malay sia/ringgit 2.6237 2.5073 2.5154 2.4915 2.4933 2.5009 2.5074 2.5234 17 Netherlands/guilder,. .. 1.8190 1.6044 1.6863 1.6862 1.6633 1.6905 1.7141 1.6958 18 New Zealand/dollar2.. . 59.358 65.625 68.765 69.001 68.860 69.640 70.071 70.975 19 Norway/krone 7.0553 6.3355 6.4594 6.4465 6.4153 6.4613 6.4810 6.3554 20 Portugai/escudo 165.93 149.88 154.28 154.56 152.27 153.99 154.28 152.83 21 Singapore/dollar 1.5275 1.4171 1.4100 1.4160 1.4124 1.4086 1.4124 1.4025 22 South Africa/rand 3.5526 3.6284 4.3042 4.3963 4.5289 4.5489 4.5799 4.6577 23 South Korea/won 806.93 772.69 805.00 813.03 817.52 822.40 828.24 830.56 24 Spain/peseta 133.88 124.64 126.68 126.96 125.72 127.11 128.60 127.28 25 Sri Lanka/rupee 49.170 51.047 55.289 55.293 55.603 56.050 57.016 56.987 26 Sweden/krona 7.7161 7.1406 6.7082 6.6394 6.6211 6.6427 6.6006 6.6269 27 Switzerland/franc 1.3667 1.1812 1.2361 1.2320 1.2029 1.2343 1.2586 1.2752 28 Taiwan/dollar 26.465 26.495 27.468 27.573 27.496 27.500 27.532 27.522 29 Thailand/baht 25.161 24.921 25.359 25.355 25.289 25.407 25.474 25.459 30 United Kingdom/pound2 153.19 157.85 156.07 155.30 154.99 155.93 158.63 166.23 MEMO 31 United States/dollar3... 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

A63 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 1996 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1994 November 1996 A64 June 30, 1994 November 1996 A68 September 30, 1994 November 1996 A72 December 31, 1994 November 1996 A76 March 31, 1995 November 1996 A80 June 30, 1995 November 1996 A84 September 30, 1995 November 1996 A88 December 31, 1995 November 1996 A92 March 31, 1996 November 1996 A96 June 30, 1996 November 1996 A100 September 30, 1996 February 1997 A64 Terms of lending at commercial banks February 1996 May 1996 A68 May 1996 August 1996 A64 August 1996 November 1996 A104 November 1996 February 1997 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1995 May 1996 A72 March 31, 1996 September 1996 A64 June 30, 1996 November 1996 A108 September 30, 1996 February 1997 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1995 January 1996 A68 March 31, 1996 July 1996 A64 June 30, 1996 October 1996 A64 September 30, 1996 January 1997 A64 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 1995 September 1996 A68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • February 1997 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, September 30, 1996 Millions of dollars except as noted Banks with domestic Banks with foreign offices' offices only2 IItteemm TToo al Total Foreign Domestic Over 100 Under 100 1 Total assets3 4,430,564 2,710,109 692,175 2,113,600 1,408,495 311,960 2 Cash and balances due from depository institutions 304,648 216,521 74,932 141,589 72,282 15,845 3 Cash items in process of collection, unposted debits, and currency and coin. .. 111,426 2,601 108,825 41,534 4 Cash items in process of collection and unposted debits n.a. n.a . 85,536 28,567 I 1 5 Currency and coin n.a. n.s . 23,289 12,967 6 Balances due from depository institutions in the United States 25,556 11,634 13,921 18,674 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. 66,550 60,524 6,026 4,136 I 8 Balances due from Federal Reserve Banks 1122,,999900 173 1122,,881177 77,,993388 * MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) n.a. n.a. 10,753 15,294 6,402 10 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 790,459 364,013 44,006 320,007 333,727 92,719 11 U.S. Treasury securities 179,979 75,657 1,207 74,450 79,320 25,002 12 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 125,230 26,927 113 2266,,881144 6666,,999944 3311,,331100 13 Issued by U.S. government agencies 5,776 2,458 n.£i . n.a. 2,211 1,107 14 Issued by U.S. government-sponsored agencies 119,454 24,468 n.<i . n.a. 64,783 30,203 15 Securities issued by states and political subdivisions in the United States 73,299 19,765 162 19,603 38,796 14,738 16 General obligations 54,861 13,960 n.<i . n.a. 30,071 10,830 17 Revenue obligations 17,783 5,504 n.a. n.a. 8,438 3,841 18 Industrial development and similar obligations 655 301 n. i. n.a. 287 67 19 Mortgage-backed securities (MBS) 325,027 175,046 3,892 171,154 131,435 18,546 20 Pass-through securities 213,740 118,595 3, 868 114,726 83,711 11,435 21 Guaranteed by GNMA 71,596 46,464 n.a. n.a. 21,688 3,444 77 Issued by FNMA and FHLMC 139,540 70,378 n. i. n.a. 61,241 7,920 23 Privately issued 2,604 1,752 15 1,737 782 70 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 111,286 56,452 24 56,428 47,723 7,112 25 Issued or guaranteed by FNMA, FHLMC or GNMA 8 J,053 41,922 0 41,922 40,438 6,694 26 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 3,165 1,453 n.a. n.a. 1,446 265 77 All other mortgage-backed securities 19,069 13,077 n. i. n.a. 5,840 152 7.8 Other debt securities 66,562 54,937 37,385 17,552 9,868 1,757 79 Other domestic debt securities n.a. 14,655 670 13,985 9,297 n.a. 30 Foreign debt securities n.a. 40,281 36,715 3,567 571 n.a. 31 20,362 11,682 1,247 10,435 7,315 1,365 32 Investments in mutual funds 2,286 908 74 833 1,007 371 33 Other equity securities with readily determinable fair value 4,671 3,428 506 2,922 1,145 98 34 All other equity securities 13,405 7,346 666 6,680 5,163 895 35 Federal funds sold and securities purchased under agreements to resell 157,162 108,999 931 108,068 36,560 11,602 36 141,190 96,060 n. a. n.a. 33,644 11,487 37 Securities purchased under agreements to resell 15,971 12,940 n. i. n.a. 2,916 115 38 Total loans- and lease-financing receivables, gross 2,727,140 1,628,790 303,794 1,324,996 915,637 182,713 39 LESS: Unearned income on loans 5,028 2,151 1,028 1,123 2,058 819 40 Total loans and leases (net of unearned income) 2,722,112 1,626,639 302,766 1,323,872 913,579 181,894 41 LESS: Allowance for loan and lease losses 53,455 33,899 n. i. n.a. 16,837 2,719 47 LESS: Allocated transfer risk reserves 32 32 n. i. n.a. 0 0 43 EQUALS: Total loans and leases, net 2,668,625 1,592,708 n. a. n.a. 896,743 179,174 44 Loans secured by real estate 1,107,569 545,165 26,827 551188,,333377 445599,,886644 110022,,554411 45 Construction and land development f 29,339 36,530 7,811 46 2,599 10,827 11,398 47 One- to four-family residential properties 1 330,112 251,678 53,098 48 Revolving, open-end loans, extended under lines of credit n.a. n.a. n.a. 48,924 30,807 2,642 49 All other loans 1 1 ; 281,188 220,871 50,456 5 5 0 1 M No u n lt f i a f r a m m i n ly o n ( r f e iv si e d o en r t m ia o l r p e r ) o r p e e s r i t d ie e s n tial properties T •1 13 1 7 8 , ,6 6 5 2 9 8 14 1 3 6 , , 9 8 6 5 9 8 2 2 7 , , 2 9 5 8 4 0 52 Loans to depository institutions 103,252 95,161 39,128 56,034 7,879 212 53 Commercial banks in the United States n.a. 46,866 1,497 45,369 7,267 n.a. 54 Other depository institutions in the United States n.a. 6,314 157 6,158 420 n.a. 55 Banks in foreign countries n.a. 41,981 37,474 4,507 191 n.a. 56 Loans to finance agricultural production and other loans to farmers 41,880 6,894 33 6,534 15,609 19,378 57 Commercial and industrial loans 694,872 517,720 135,450 382,270 147,086 30,066 58 U.S. addressees (domicile) n.a. 406,787 28,752 378,035 146,553 n.a. 59 Non-U.S. addressees (domicile) n.a. 110,933 106,698 4,235 533 n.a. 60 Acceptances of other banks 1,562 1,294 863 431 183 84 61 U.S. banks n.a. 224 0 224 n.a. n.a. 62 n.a. 1,071 863 207 n.a. n.a. 63 Loans to individuals for household, family, and other personal expenditures (includes 545,859 261,584 32,449 229,135 256,332 27,943 64 Credit cards and related plans 219,848 95,849 n.a. n.a. 122,340 1,658 65 Other (includes single payment and installment) 326,011 165,735 n.a. n.a. 133,992 26,284 66 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 18,253 9.725 33 99,,669922 77,,559966 993322 67 142,411 131,844 64,773 67,071 9,679 888 68 Loans to foreign governments and official institutions n.a. 11,132 9,601 1,531 31 n.a. 69 n.a. 120,712 55,172 65,540 9,648 n.a. 70 Loans for purchasing and carrying securities n.a. n.a. n.a. 16,094 1,796 n.a. 71 All other loans (excludes consumer loans) n.a. n.a. n a. 49,446 7,852 n.a. 72 71,480 59,403 3,912 55,491 11,410 667 73 Assets held in trading accounts 228,642 227,613 f 957 1 74 Premises and fixed assets (including capitalized leases) 63,076 36,529 1 20,997 5,550 75 5,566 3,142 n.a. 1,910 515 76 Investments in unconsolidated subsidiaries and associated companies 5,386 4,957 n.a. 1 404 26 77 Customers' liability on acceptances outstanding 19,531 19,243 t 267 20 78 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. 31,718 n.a. n.a. 79 43,401 30,145 n.a. 12,511 745 80 144,068 106,241 n.a. 32,136 5,691 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, September 30, 1996 Millions of dollars except as noted Banks with domestic Banks with foreign offices' offices only2 Total Foreign Domestic Over 100 Under 10C SI Total liabilities, limited-life preferred stock, and equity capital ,430,564 2,710,109 n.a. n.a. 1,408,495 311,960 82 Total liabilities ,061,869 2,503,225 692,174 1,906,717 1,279,246 279,398 83 Total deposits ,073,672 1,756,485 450,856 1,305,630 1,047,940 269,246 84 Individuals, partnerships, and corporations 734,854 1,514,312 291,416 1,222,896 975,359 245,183 85 U.S. government n.a. n.a. n. a. 5,473 1,696 349 86 States and political subdivisions in the United States n a. n. a. n.a. 39,503 52,046 19,858 87 Commercial banks in the United States 53,922 46,677 28,744 17,933 6,365 880 88 Other depository institutions in the United States n a. n.a. n.a. 2,958 3,228 1,242 89 Banks in foreign countries n a. 91,184 85,319 5,864 232 n.a. 90 Foreign governments and official institutions n. a. 36,278 35,356 922 31 n.a. 91 Certified and official checks 17,601 9,109 889 8,220 6,777 1,716 92 Residual4 267,296 58,926 9,131 n.a. n.a. 19 93 Total transaction accounts 409,559 278,854 77,771 94 Individuals, partnerships, and corporations 357,567 246,551 68,142 95 U.S. government 2,565 1,400 240 96 States and political subdivisions in the United States 14,567 16,566 7,201 97 Commercial banks in the United States 17,933 6,365 351 98 Other depository institutions in the United States 2,277 961 107 99 Banks in foreign countries 5,864 232 n.a. 100 Foreign governments and official institutions 567 2 n.a. 101 Certified and official checks 8,220 6,777 1,716 102 Residual4 n.a. n.a. 15 103 Demand deposits (included in total transaction accounts) 351,034 183,270 39,869 104 Individuals, partnerships, and corporations 304,373 162,241 35,863 105 U.S. government 2,521 1,347 229 106 States and political subdivisions in the United States 9,285 5,383 1,593 107 Commercial banks in the United States 17,932 6,333 351 108 Other depository institutions in the United States 2,276 954 104 109 Banks in foreign countries n.a. n a. n a. 5,862 232 n.a. 110 Foreign governments and official institutions 565 2 n.a. 111 Certified and official checks 8,220 6,777 1,716 112 Residual4 n.a. n.a. 14 113 Total nontransaction accounts 896,070 769,086 191,475 114 Individuals, partnerships, and corporations 865,329 728,808 177,041 115 U.S. government 2,908 296 109 116 States and political subdivisions in the United States 24,937 35,480 12,657 117 Commercial banks in the United States 1,610 2,042 529 118 U.S. branches and agencies of foreign banks 0 0 n.a. 119 Other commercial banks in the United States 0 0 n.a. 120 Other depository institutions in the United States 681 2,267 1,135 121 Banks in foreign countries 251 165 n.a. 122 Foreign branches of other U.S. banks 0 0 n.a. 123 Other banks in foreign countries 0 0 n.a. 124 Foreign governments and official institutions 355 28 n.a. 125 Residual n.a. n.a. 5 126 Federal funds purchased and securities sold under agreements to repurchase 310,623 216,207 739 215,468 90,774 3,642 127 Federal funds purchased 227,750 164,648 n.a. n.a. 61,077 2,025 128 Securities sold under agreements to repurchase 82,873 51,559 n.a. n.a. 29,697 1,617 129 Demand notes issued to the U.S. Treasury 33,589 28,228 0 28,228 5,108 252 130 Trading liabilities 130,540 130,386 n.a. n.a. 154 0 131 Other borrowed money 320,379 208,522 75,890 132,632 108,526 3,331 132 Banks' liability on acceptances executed and outstanding 19,570 19,282 5,120 14,162 268 20 133 Notes and debentures subordinated to deposits 4 3,273 43,837 n a. n.a. 4,413 22 134 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. n.a. 63,949 n.a. n.a. 135 All other liabilities 125,223 100,276 n.a. n.a. 22,064 2,883 136 Total equity capital 368,141 206,334 n a. n.a. 129,245 32,562 MEMO 137 Holdings of commercial paper included in total loans, gross 169 39 129 609 n.a. 138 Total individual retirement (IRA) and Keogh plan accounts 69,986 66,098 15,139 139 Total brokered deposits 27,739 20,225 1,080 140 Fully insured brokered deposits 21,408 17,923 1,024 141 Issued in denominations of less than $100,000 1,583 3,089 802 142 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less n a. n a. n a. 19,825 14,834 222 143 Money market deposit accounts (MMDAs) 331,507 180,209 27,397 144 Other savings deposits (excluding MMDAs) 149,793 130,878 29,225 145 Total time deposits of less than $100,000 267,844 335,523 103,627 146 Time certificates of deposit of $100,000 or more 131,156 119,728 30,363 147 Open-account time deposits of $100,000 or more 15,770 2,748 863 148 All negotiable order of withdrawal (NOW) accounts 58,113 93,692 36,966 149 Number of banks 9,567 184 n.a. 2,838 6,545 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • February 1997 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, September 30, 1996 Millions of dollars except as noted Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 1 3,834,055 2,967,931 2,182,583 785,348 866,124 2 Cash and balances due from depository institutions 229,716 187,247 143,546 43,701 42,470 3 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 426,446 232,680 175,496 57,184 193,766 4 U.S. Treasury securities 104,322 53,580 38,197 15,383 50,742 5 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 98,304 48,005 36,155 11,850 50,298 A Securities issued by states and political subdivisions in the United States 53,534 27,897 20,146 7,751 25,637 7 Mortgage-backed securities (MBS) 149,981 91,659 71,644 20,014 58,322 8 Pass-through securities 95,146 59,500 46,539 12,961 35,646 9 Issued or guaranteed by FNMA, FHLMC, or GNMA 94,294 58,916 46,167 12,749 35,378 10 Other pass-through securities 852 584 372 212 268 11 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 54,835 32,158 25,105 7,053 22,677 12 Issued or guaranteed by FNMA, FHLMC, or GNMA 47,131 27,597 21,941 5,656 19,534 13 All other mortgage-backed securities 7,704 4,562 3,164 1,397 3,142 14 Other debt securities 11,625 6,211 5,137 1,075 5,414 15 Equity securities 8,680 5,327 4,217 1,110 3,353 16 Investments in mutual funds 1,379 686 559 127 693 17 Other equity securities with readily determinable fair values 1,243 516 420 96 727 18 All other equity securities 6,058 4,125 3,238 887 1,933 19 Federal funds sold and securities purchased under agreements to resell 156,230 129,953 87,340 42,613 26,277 20 Total loans- and lease-financing receivables, gross 2,423,345 1,873,096 1,449,334 423,763 550,249 21 LESS: Unearned income on loans 4,000 2,286 1,721 565 1,714 22 Total loans and leases (net of unearned income) 2,419,345 1,870,811 1,447,613 423,198 548,535 Total loans and leases, gross, by category 23 Loans secured by real estate 1,080,742 791,839 618,447 173,392 288,903 24 Construction and land development 73,680 49,409 38,100 11,309 24,272 25 Farmland 24,825 11,695 9,036 2,659 13,130 26 One- to four-family residential properties 634,889 486,514 379,800 106,714 148,374 27 Revolving, open-end loans, extended under lines of credit 82,373 66,851 53,923 12,928 15,523 28 All other loans 552,516 419,664 325,878 93,786 132,852 29 Multifamily (five or more) residential properties 37,771 26,976 20,651 6,325 10,795 30 Nonfarm nonresidential properties 309,577 217,245 170,860 46,385 92,332 31 Loans to depository institutions 64,125 60,238 53,124 7,115 3,886 32 Loans to finance agricultural production and other loans to farmers 41,521 21,050 16,793 4,258 20,471 33 Commercial and industrial loans 559,423 462,492 339,545 122,947 96,931 34 Acceptances of other banks 699 439 198 241 260 35 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 513,410 390,207 322,966 67,240 123,203 36 Obligations (other than securities) of states and political subdivisions in the United States 18,220 14,783 11,361 3,422 3,437 37 All other loans 77,638 72,067 43,441 28,626 5,571 38 Lease-financing receivables 67,568 59,982 43,460 16,522 7,586 39 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs 31,718 29,320 9,502 19,818 2,398 40 Remaining assets 570,600 517,921 319,087 198,834 52,678 41 Total liabilities 3,465,361 2,684,177 1,976,330 707,847 781,184 42 Total deposits 2,622,816 1,960,101 1,492,034 468,066 662,716 43 Individuals, partnerships, and corporations 2,443,438 1,831,072 1,397,413 433,659 612,365 44 U.S. government 7,518 6,484 5,635 849 1,034 45 States and political subdivisions in the United States 111,408 73,604 52,238 21,365 37,804 46 Commercial banks in the United States 25,178 22,874 18,265 4,608 2,304 47 Other depository institutions in the United States 7,427 4,559 3,730 828 2,869 48 Certified and official checks 16,712 12,402 9,463 2,939 4,310 49 Banks in foreign countries, foreign governments, and foreign official institutions 7,068 6,528 3,362 3,166 540 50 Total transaction accounts 766,185 587,218 445,290 141,928 178,967 51 Individuals, partnerships, and corporations 672,259 513,924 390,868 123,056 158,335 52 U.S. government 4,205 3,447 2,680 767 757 53 States and political subdivisions in the United States 38,334 25,872 18,986 6,887 12,462 54 Commercial banks in the United States 24,649 22,680 18,130 4,550 1,969 55 Other depository institutions in the United States 3,345 2,720 2,154 566 625 56 Certified and official checks 16,712 12,402 9,463 2,939 4,310 57 Banks in foreign countries, foreign governments, and foreign official institutions 6,681 6,173 3,010 3,163 508 58 Demand deposits (included in total transaction accounts) 574,173 464,947 353,723 111,225 109,225 59 Individuals, partnerships, and corporations 502,477 404,969 309,050 95,919 97,509 60 U.S. government 4,097 3,377 2,616 761 720 61 States and political subdivisions in the United States 16,261 12,664 9,336 3,328 3,597 62 Commercial banks in the United States 24,615 22,652 18,102 4,550 1,963 63 Other depository institutions in the United States 3,335 2,714 2,149 566 620 64 Certified and official checks 16,712 12,402 9,463 2,939 4,310 65 Banks in foreign countries, foreign governments, and foreign official institutions 6,675 6,170 3,008 3,162 506 66 Total nontransaction accounts 1,856,632 1,372,883 1,046,744 326,139 483,749 67 Individuals, partnerships, and corporations 1,771,178 1,317,148 1,006,546 310,603 454,030 68 U.S. government 3,313 3,037 2,955 83 276 69 States and political subdivisions in the United States 73,074 47,731 33,252 14,479 25,342 70 Commercial banks in the United States 4,180 2,419 1,847 572 1,761 71 Other depository institutions in the United States 4,083 1,839 1,577 262 2,244 72 Banks in foreign countries, foreign governments, and foreign official institutions 387 355 352 4 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A67 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, September 30, 1996 Millions of dollars except as noted Members IItteemm TToottaall mmee NN mm oo bb nn ee -- rrss Total National State 73 Federal funds purchased and securities sold under agreements to repurchase 309,884 264,819 179,592 85,228 45,065 74 Demand notes issued to the U.S. Treasury 33,589 31,198 16,795 14,403 2,391 75 Other borrowed money 244,490 197,336 148,946 48,390 47,154 76 Banks liability on acceptances executed and outstanding 14,449 14,192 9,753 4,439 257 77 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs 63,949 56,637 39,531 17,105 7,312 78 Remaining liabilities 176,184 159,894 89,679 70,215 16,290 MEMO 79 Trading assets at large banks5 67,563 67,051 28,991 38,059 512 80 U.S. Treasury securities (domestic offices) 16,136 16,065 7,590 8,476 70 81 U.S. government agency corporation obligations 1,462 1,389 1,326 63 73 82 Securities issued by states and political subdivisions in the United States 681 669 490 179 12 83 Mortgage-backed securities 3,204 3,163 524 2,639 41 84 Other debt securities 2,905 2,903 1,268 1,634 2 85 Certificates of deposit 936 936 476 460 0 86 Commercial paper 202 83 83 0 119 87 Bankers acceptances 1,324 1,271 861 410 53 88 Other trading assets 6,579 6,503 1,692 4,811 76 89 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 34,134 34,068 14,681 19,387 67 90 Total individual retirement (IRA) and Keogh plan accounts 151,223 112,298 87,544 24,755 38,925 91 Total brokered deposits 49,045 34,554 23,517 11,037 14,490 92 Fully insured brokered deposits 40,354 28,658 19,518 9,140 11,696 93 Issued in denominations of less than $100,000 55,,447744 33,,226611 2,732 529 2,213 94 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 34,880 25,397 16,786 8,612 9,483 95 Money market deposit accounts (MMDAs) 539,113 441,245 342,527 98,718 97,868 96 Other savings deposits 309,896 234,497 173,990 60,507 75,399 97 Total time deposits of less than $100,000 706,994 486,888 381,527 105,361 220,106 98 Time certificates of deposit of $100,000 or more 281,247 193,808 142,542 51,266 87,439 99 Open-account time deposits of $100,000 or more 19,382 16,445 6,158 10,287 2,937 100 All negotiable order of withdrawal (NOW) accounts 188,771 120,440 90,010 30,430 68,331 101 Number of banks 9,567 3,756 2,736 1,020 5,811 NOTE. The notation "n.a." indicates the lesser detail available from banks that don't have 2. "Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, foreign offices, the inapplicability of certain items to banks that have only domestic offices or were $100 million or more. (These banks file the FFIEC 032 or FFIEC 033 Call Report.) the absence of detail on a fully consolidated basis for banks that have foreign offices. "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were 1. All transactions between domestic and foreign offices of a bank are reported in "net due less than $100 million. (These banks file the FFIEC 034 Call Report.) from" and "net due to" lines. All other lines represent transactions with parties other than the 3. Because the domestic portion of allowances for loan and lease losses and allocated domestic and foreign offices of each bank. Because these intraoffice transactions are nullified transfer risk reserves are not reported for banks with foreign offices, the components of total by consolidation, total assets and total liabilities for the entire bank may not equal the sum of assets (domestic) do not sum to the actual total (domestic). assets and liabilities respectively of the domestic and foreign offices. 4. "Residual" equals the sum of the "n.a." categories listed above it. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and 5. Components of "Trading assets at large banks" are reported only by banks with either possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corpora- total assets of $1 billion or more or with $2 billion or more in the par/notional amount of their tions wherever located; and IBFs. off-balance-sheet derivative contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • February 1997 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 4-8, 19961 Commercial and industrial loans Type o an f d l o m an a turity (t A ho m u lo o sa a u n n n s d t s o f o f ( A th v o e u ra sa g n e d s s i z o e f W m a a v e t e i u g r r a h i g t t e y e d 2 We L ig o h a t n ed r ate (percent) s L ec o b u a y r n e s d Lo c a o u n m n s d m m e i r t a - de pat P io a n rt i l c o i- ans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) ALL BANKS 1 Overnight6 13,304,593 8,497 2 One month or less (excluding overnight) 10,262,769 1,383 6.59 25.7 82.4 4.1 3 Fixed rate 7,995,944 2,120 6.51 24.5 84.0 4.6 4 Floating rate 2,266,825 622 6.87 29.9 76.7 2.4 5 More than one month and less than one year 14,157,764 228 156 7.34 41.3 7.4 6 Fixed rate 6,770,883 446 115 6.76 34.8 73.2 6.4 7 Floating rate 7,386,881 158 194 7.88 47.3 87.4 8.4 8 Demand7 15,505,243 335 7.12 54.0 47.1 4.3 9 Fixed rate 4,537,462 1,307 6.08 17.3 34.5 9.0 10 Floating rate 10,967,780 256 7.55 69.1 52.3 2.3 11 Total short-term 53,230,369 454 6.81 34.9 62.4 4.5 12 Fixed rate (thousands of dollars) 30,576,040 1,284 35 6.35 22.1 61.2 4.7 13 1-99 311,474 18 145 9.44 82.4 48.5 .5 14 100-499 498,120 227 98 7.99 68.7 70.7 5.6 15 500-999 577,104 684 69 7.11 50.2 90.8 11.7 16 1,000-4,999 5,015,362 2,424 43 6.62 36.3 83.5 6.7 17 5,000-9,999 4,562,943 6,584 39 6.48 27.4 75.1 6.5 18 10,000 or more 19,611,038 20,671 28 6.13 14.3 51.4 3.7 19 Floating rate (thousands of dollars) 22,654,329 242 127 7.43 52.2 64.0 4.1 20 1-99 1,819,191 26 189 9.61 81.4 89.4 1.6 21 100-499 3,587,920 203 189 9.10 75.2 91.1 4.7 22 500-999 1,620,539 652 158 8.68 65.7 91.3 7.1 23 1,000-4,999 4,102,794 2,030 144 7.75 56.7 86.0 6.8 24 5,000-9,999 1,892,784 6,435 123 7.00 41.4 72.0 5.2 25 10,000 or more 9,631,101 25,067 82 6.13 36.1 33.6 2.5 26 Total long-term 9,632,757 365 7.47 48.5 85.7 27 Fixed rate (thousands of dollars).. 2,417,060 237 7.02 48.3 79.2 6.9 28 1-99 186,783 22 9.78 93.5 34.8 .1 29 100-499 263,407 230 8.62 84.2 56.6 4.5 30 500-999 128,072 675 7.74 53.8 66.1 4.1 31 1,000 or more 1,838,798 5,073 6.46 38.2 87.9 8.1 32 Floating rate (thousands of dollars) 7.215.697 446 7.62 48.5 87.8 5.3 33 1-99 312,251 33 9.65 84.1 73.9 3.0 34 100-499 977,084 218 8.94 77.7 87.3 8.7 35 500-999 683,664 662 8.38 68.3 89.3 8.1 36 1,000 or more 5.242.698 4,664 7.16 38.4 88.5 4.4 Loan rate (percent) Days Effective Nomina] LOANS MADE BELOW PRIME10 37 Overnight6 13,120,081 9,378 5.99 5.82 12.0 44.7 1.9 38 One month or less (excluding overnight) 9,656,535 3,091 16 6.42 6.22 24.0 82.7 4.2 39 More than one month and less than one year 9,903,311 1,087 140 6.50 6.32 27.7 76.9 7.4 40 Demand7 10,369,576 2,470 6.10 5.94 41.8 28.4 4.6 41 Total short-term 43,049,503 2,414 6.05 56.7 42 Fixed rate 29,494,417 3,370 6.24 6.06 19.9 60.5 4.8 43 Floating rate 13,555,086 1,493 6.21 6.03 37.7 48.4 3.4 44 Total long-term 6,070,261 1,382 86.4 45 Fixed rate 1,761,341 867 6.15 6.03 35.7 84.2 5.8 46 Floating rate ... 4,308,919 1,826 6.62 6.43 37.5 87.2 3.6 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 4-8, 1996'—Continued Commercial and industrial loans—Continued Type o a f n d l o m an a turity (t A ho d m u o l o o s l a u l a a n n n r d s t s s ) o f o f ( A th v o d e u o ra s ll a g a n e r d s s s ) i z o e f W m a a v e t e i u g r r a h i g t t e y e d 2 W av e e L ig r o a h a g t n e e d r ate (percent) c s o L e l c l o b a u a y t r n e e r s d a l Lo c a o u m n m n s e d m n m e t i r t a - de pa ( t p P io e a r n r c t i e c l n o i- t a ) n s ba c s o e M r m a p o t m e r s i 5 t o c n in g Days effective3 (percent) (percent) LARGE BANKS 1 Overnight6 10,602,656 9,084 2 One month or less (excluding overnight) 7,889,654 2,973 6.52 21.9 84.8 3.7 Other 3 Fixed rate 6,221,170 4,640 6.49 21.4 88.7 4.5 Other 4 Floating rate 1,668,485 1,271 6.62 23.7 70.2 .6 Domestic 5 More than one month and less than one year 9,534,855 697 142 7.01 29.6 77.7 8.0 Foreign 6 Fixed rate 4,999,923 3,542 98 6.68 24.9 69.3 7.3 Foreign 7 Floating rate 4,534,932 370 191 7.37 34.7 87.1 8.8 Prime 8 Demand7 13,274,880 556 6.83 50.1 39.2 3.8 Other 9 Fixed rate 4,313,017 2,856 6.00 14.0 31.6 9.3 Other 10 Floating rate 8,961,863 401 7.24 67.4 42.8 1.1 Fed funds 11 Total short-term 41,302,046 998 6.62 30.2 58.0 Other 12 Fixed rate (thousands of dollars) 24,140,171 4,550 30 6.32 18.2 60.0 5.3 Other 13 1-99 32,927 35 109 8.25 88.5 86.9 2.1 Other 14 100-499 223,947 243 70 7.43 62.4 90.3 6.2 Other 15 500-999 401,703 676 61 7.13 46.3 91.7 9.0 Foreign 16 1,000-4,999 3,628,599 2,407 36 6.69 31.4 82.2 6.2 Other 17 5,000-9,999 3,743,786 6,668 39 6.46 25.3 72.1 7.9 Other 18 10,000 or more 16,109,210 20,438 25 6.16 12.1 50.9 4.4 Other 19 Floating rate (thousands of dollars) 17,161,874 476 111 7.03 47.1 55.2 3.0 Prime 20 1-99 728,436 31 189 9.44 78.4 90.9 1.0 Prime 21 100-499 1,876,112 205 184 8.96 74.3 91.8 2.6 Prime 22 500-999 980,147 658 162 8.65 64.5 91.0 4.8 Prime 23 1,000-4,999 2,903,653 2,065 145 7.67 55.2 84.1 6.5 Prime 24 5,000-9,999 1,566,562 6,427 117 6.89 38.6 67.4 4.3 Domestic 25 10,000 or more 9,106,965 26,177 79 6.09 36.0 29.7 1.7 Fed funds 26 Total long-term 7,212,327 968 7.32 90.8 4.9 Foreign 27 Fixed rate (thousands of dollars). . 1,487,513 1,269 6.89 44.3 85.1 8.0 Domestic 28 1-99 16,127 30 9.39 87.4 62.7 .5 Other 29 100-499 62,169 219 8.93 80.8 77.0 10.9 Domestic 30 500-999 66,195 723 7.63 74.0 81.4 5.2 Domestic 31 1,000 or more 1,343,022 5,192 6.73 40.7 85.9 8.1 Domestic 32 Floating rate (thousands of dollars) 5,724,814 911 7.43 44.3 92.2 4.1 Foreign 33 1-99 93,873 40 9.28 76.0 90.2 3.8 Prime 34 100-499 540,932 234 8.73 68.9 96.1 6.8 Prime 35 500-999 493,393 671 8.42 61.1 91.8 6.8 Prime 36 1,000 or more 4,596,616 5,042 7.13 39.0 91.8 3.5 Foreign Loan rate (percent) Days Effective Nominal LOANS MADE BELOW PRIME1" 37 Overnight6 10,429,145 10,084 6.02 5.84 10.7 43.1 2.3 8.25 38 One month or less (excluding overnight) 7,550,779 4,783 16 6.40 6.21 21.1 85.3 3.8 8.25 39 More than one month and less than one year 7,577,371 3,191 129 6.47 6.30 20.0 72.7 7.5 8.25 40 Demand' 9,769,211 3,247 6.01 5.85 40.0 24.2 3.9 8.25 41 Total short-term 35,326,506 4,418 6.19 42 Fixed rate 23,522,669 5,682 6.25 6.07 16.5 59.0 5.3 8.25 43 Floating rate 11,803,837 3,061 5.91 36.0 41.7 1.9 8.25 44 Total long-term 4,861,395 2,980 8.25 45 Fixed rate 1,124,587 2,753 6.22 6.10 35.8 84.0 5.0 46 Floating rate .. . 3,736,809 3,056 6.63 6.43 38.2 90.7 2.0 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 1997 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 4-8, 1996'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans made Amount of Average size average secured under Partici- Type o a f n d l o m an a turity (thou lo sa a n ns d s of (thousands of maturity2 Weighted by commit- pation loans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) OTHER BANKS 1 Overnight6 2,701,937 2 One month or less (excluding overnight) 2,373,115 498 6.82 38.5 74.3 5.6 3 Fixed rate 1,774,775 730 6.57 35.7 67.4 5.0 4 Floating rate 598,340 256 7.56 47.0 94.8 7.4 5 More than one month and less than one year 4,622,909 95 185 8.04 65.5 86.5 6.2 6 Fixed rate 1,770,959 128 163 6.98 62.6 84.4 3.8 7 Floating rate 2,851,949 82 199 8.69 67.2 87.9 7.6 8 Demand7 2,230,363 100 8.83 77.1 94.6 7.1 9 Fixed rate 224,446 114 7.66 80.4 90.2 1.8 10 Floating rate 2,005,917 8.97 95.0 7.7 76.8 11 Total short-term 11,928,323 157 7.46 77.6 4.8 51.4 12 Fixed rate (thousands of dollars) 6,435,869 348 52 6.45 65.8 2.5 13 1-99 278,547 17 147 9.59 37.1 43.9 .3 14 100-499 274,173 216 116 8.45 81.7 54.6 5.2 15 500-999 175,401 702 87 7.06 73.9 88.7 18.0 16 1,000-4,999 1,386,763 2,469 59 6.44 59.0 86.8 8.1 17 5,000-9,999 819,157 6,227 38 6.58 49.1 89.1 .0 18 10,000 or more 3,501,829 21,819 40 5.98 36.8 53.6 .0 24.9 19 Floating rate (thousands of dollars) 5,492,454 96 8.65 68.1 91.3 7.6 20 1-99 1,090,755 23 9.72 83.4 88.4 2.0 21 100-499 1,711,808 200 193 9.24 76.2 90.4 6.9 22 500-999 640,391 643 154 8.73 67.5 91.7 10.5 23 1,000-4,999 1,199,141 1,948 143 7.95 60.4 90.7 7.5 24 5,000-9,999 326,222 6,473 147 7.50 54.5 94.1 10.0 25 10,000 or more 524,137 14,436 123 6.77 36.5 100.0 16.5 26 Total long-term 2,420,429 128 7.92 60.8 70.5 27 Fixed rate (thousands of dollars).. 929,546 103 7.21 54.6 69.9 5.0 28 1-99 170,655 21 9.82 94.1 32.1 .1 29 100-499 201,238 234 8.52 85.2 50.4 2.6 30 500-999 61,877 630 7.86 32.1 49.8 2.8 31 1,000 or more 495,776 4,778 5.70 31.5 93.3 7.9 32 Floating rate (thousands of dollars) 1,490,883 150 8.37 64.6 70.9 9.9 33 1-99 218,377 30 9.81 87.6 66.9 2.6 34 100-499 436,152 201 9.20 88.7 76.4 11.2 35 500-999 190,271 642 8.29 86.9 82.9 11.5 36 1,000 or more 646,083 3,041 7.34 34.1 65.1 11.1 Loan rate (percent) Days LOANS MADE BELOW PRIME10 37 Overnight6 2,690,936 7,378 5.90 5.73 17.3 50.9 .0 38 One month or less (excluding overnight) 2,105,756 1,362 17 6.48 6.29 34.8 73.3 5.9 39 More than one month and less than one year 2,325,941 345 176 6.57 6.40 53.0 90.7 7.1 40 Demand7 600,366 505 7.63 7.39 70.2 95.7 16.2 41 Total short-term 7,722,998 63 42 Fixed rate 5,971,748 ,295 48 6.19 6.02 33.4 66.3 2.6 43 Floating rate 1,751,249 335 131 7.08 6.86 49.1 93.6 13.1 44 Total long-term 1,208,865 6.30 6.15 34.3 45 Fixed rate 636,754 392 6.04 5.89 35.7 84.7 7.3 46 Floating rate .. . 572,111 503 6.59 6.44 32.8 64.3 13.5 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 4-8, 1996'—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); the 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 December 31, 1995, assets of most of the large banks were at least $7.0 billion. terms of the loans and weighted by loan size. Median total assets for all insured banks were roughly $62.0 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 1997 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19961—Continued 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 3 n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t 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 781,232 288,698 603,513 240,630 67,127 25,124 63,820 13,906 2 Claims on nonrelated parties 687,091 139,615 525,413 117,562 63,083 9,291 58,326 7,568 3 Cash and balances due from depository institutions 114,293 85,073 102,485 75,479 3,086 2,337 6,746 5,987 4 Cash items in process of collection and unposted debits 2,517 0 2,402 0 8 0 57 0 5 Currency and coin (U.S. and foreign) 23 n.a. 16 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States 6666,,555533 4444,,557799 6600,,442200 4400,,225522 22,,223311 11,,553399 33,,110044 22,,443366 7 U.S. branches and agencies of other foreign banks (including IBFs) 61,180 42,562 55,798 38,256 1,824 1,539 2,974 2,416 8 Other depository institutions in United States (including IBFs) 55,,337733 2,016 44,,662233 11,,999966 407 0 130 20 y Balances with banks in foreign countries and with foreign central banks 44,730 40,494 39,263 35,227 814 798 3,570 3,551 10 Foreign branches of U.S. banks 978 862 813 720 0 0 132 132 n Other banks in foreign countries and foreign central banks 43,752 39,633 38,450 34,508 814 798 3,439 3,419 12 Balances with Federal Reserve Banks 470 n.a. 384 n.a. 31 n.a. 15 n.a. 13 Total securities and loans 447,946 46,038 312,758 34,514 55,453 6,386 42,888 1,440 14 Total securities, book value 105,791 8,971 97,702 7,812 3,549 702 3,798 436 15 U.S. Treasury 32,264 n.a. 31,019 n.a. 590 n.a. 501 n.a. 16 Obligations of U.S. government agencies and corporations 30,196 n.a. 29,643 n.a. 365 n.a. 48 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 43,331 8,971 37,040 7,812 2,595 702 3,248 436 18 Securities of foreign governmental units 13,448 3,862 12,170 3,368 670 256 512 218 19 All Other 29,883 5,108 24,870 4,444 1,925 446 2,737 218 20 Federal funds sold and securities purchased under agreements to resell 38,182 5,864 34,194 5,412 839 283 2,474 0 21 U.S. branches and agencies of other foreign banks 10,784 4,274 9,866 4,131 388 138 283 0 22 Commercial banks in United States 5,845 101 5,217 101 179 0 205 0 23 Other 21,553 1,490 19,111 1,180 272 145 1,986 0 24 Total loans, gross 342,331 37,082 215,169 26,712 51,950 5,686 39,096 1,004 25 LESS: Unearned income on loans 176 15 112 10 47 2 6 0 26 EQUALS: Loans, net 342,155 37,067 215,057 26,702 51,903 5,684 39,090 1,004 Total loans, gross, by category 27 Real estate loans 31,487 207 19,580 57 8,515 148 1,609 0 28 Loans to depository institutions 34,282 21,529 22,299 13,987 6,061 4,147 979 597 29 Commercial banks in United States (including IBFs) 12,512 6,627 7,885 4,225 3,840 2,184 442 172 30 U.S. branches and agencies of other foreign banks 11,154 6,433 6,807 4,046 3,734 2,179 326 162 31 Other commercial banks in United States 1,358 194 1,078 179 106 5 116 10 32 Other depository institutions in United States (including IBFs) 16 0 16 0 0 0 0 0 33 Banks in foreign countries 21,754 14,902 14,399 9,763 2,222 1,963 537 425 34 Foreign branches of U.S. banks 536 351 449 335 10 10 0 0 35 Other banks in foreign countries 21,218 14,551 13,950 9,428 2,212 1,953 537 425 36 Loans to other financial institutions 41,850 682 34,475 455 2,464 78 4,129 57 37 Commercial and industrial loans 214.372 12,346 122,045 9,983 34,119 1,275 30,276 343 38 U.S. addressees (domicile) 185,746 444 101,652 408 31,458 35 28,745 0 39 Non-U.S. addressees (domicile) 28,626 11,902 20,392 99,,557755 2,661 1,240 1,531 343 40 Acceptances of other banks 591 90 240 8899 112 0 190 0 41 U.S. banks 41 0 9 0 5 0 14 0 42 Foreign banks 550 90 231 89 106 0 176 0 43 Loans to foreign governments and official institutions (including foreign central banks) 3,592 1,975 3,138 1,903 164 39 63 7 44 Loans for purchasing or carrying securities (secured and unsecured) ... 8,226 50 8,058 50 65 0 41 0 45 All other loans 6,245 179 3,684 162 417 0 1,805 0 46 Lease financing receivables (net of unearned income) 1,687 25 1,650 25 32 0 4 0 47 U.S. addressees (domicile) 1,263 0 1,226 0 32 0 4 0 48 Non-U.S. addressees (domicile) 424 25 424 25 0 0 0 0 49 Trading assets 51,830 124 47,219 118 204 3 4,405 3 50 All other assets 34,840 2,515 28,757 2,038 3,501 282 1,813 137 51 Customers' liabilities on acceptances outstanding 8,134 n.a. 5,227 n.a. 2,225 n.a. 417 52 U.S. addressees (domicile) 6,098 n.a. 3,612 n.a. 2,042 n.a. 319 53 Non-U.S. addressees (domicile) 2,036 n.a. 1,615 n.a. 183 n.a. 97 54 Other assets including other claims on nonrelated parties 26,706 2,515 23,530 2,038 1,276 282 1,396 137 55 Net due from related depository institutions5 94,141 149,083 78,100 123,068 4,044 15,833 5,494 6,339 56 Net due from head office and other related depository institutions5... 9944,,114411 n.a. 7788,,110000 n.a. 44,,004444 55,,449944 nn..aa.. 57 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 149,083 n.a. 123,068 n.a. 15,833 n.a. 6,339 58 Total liabilities4 781,232 288,698 603,513 240,630 67,127 25,124 63,820 13,906 59 Liabilities to nonrelated parties 642,929 268,903 546,470 225,533 41,347 24,270 35,611 10,785 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, 19961—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 IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 60 Total deposits and credit balances 189,762 205,631 161,544 189,274 6,723 4,553 12,979 5,841 61 Individuals, partnerships, and corporations 138,893 15,110 114,322 10,326 5,407 68 11,195 155 67 U.S. addressees (domicile) 123,481 399 105,114 398 3,773 0 10,518 0 63 Non-U.S. addressees (domicile) 15,411 14,711 9,208 9,928 1,633 668 676 155 64 Commercial banks in United States (including IBFs) 26,135 44,381 23,973 42,522 756 1,003 1,241 663 65 U.S. branches and agencies of other foreign banks 15,835 41,018 14,717 39,426 326 80 713 572 66 Other commercial banks in United States 10,300 3,364 9,255 3,096 430 123 529 91 67 Banks in foreign countries 9,667 110,968 8,978 104,287 333 2,019 175 3,529 68 Foreign branches of U.S. banks 3,441 4,189 3,165 3,729 175 131 100 319 69 Other banks in foreign countries 6,226 106,779 5,813 100,558 158 1,88 8 75 3,210 70 Foreign governments and official institutions (including foreign central banks) 4,795 35,150 4,419 32,118 206 862 2 1,493 71 All other deposits and credit balances 10,028 22 9,649 21 5 0 359 1 72 Certified and official checks 245 203 17 7 73 Transaction accounts and credit balances (excluding IBFs) 8,121 6,500 357 352 74 Individuals, partnerships, and corporations 6,165 4,822 306 335 75 U.S. addressees (domicile) 4,352 3,723 204 332 76 Non-U.S. addressees (domicile) 1,813 1,099 102 3 77 Commercial banks in United States (including IBFs) 105 100 2 0 78 U.S. branches and agencies of other foreign banks 31 30 0 0 79 Other commercial banks in United States 74 70 2 0 80 Banks in foreign countries 1,059 879 23 7 81 Foreign branches of U.S. banks 55 54 0 0 82 Other banks in foreign countries 1,004 824 23 7 83 Foreign governments and official institutions (including foreign central banks) 420 338866 5 2 84 All other deposits and credit balances 127 111 5 2 85 Certified and official checks 245 203 17 7 86 Demand deposits (included in transaction accounts and credit balances) 7,683 6,316 288 341 87 Individuals, partnerships, and corporations 5,810 4,704 241 324 88 U.S. addressees (domicile) 4,225 3,673 158 321 89 Non-U.S. addressees (domicile) 1,585 1,031 83 3 90 Commercial banks in United States (including IBFs) 96 93 0 0 91 U.S. branches and agencies of other foreign banks 31 n a. 30 n.a. 0 n.a. 0 n.a. 92 Other commercial banks in United States 65 63 0 0 93 Banks in foreign countries 1,032 853 22 7 94 Foreign branches of U.S. banks 55 54 0 0 95 Other banks in foreign countries 977 798 22 7 96 Foreign governments and official institutions (including foreign central banks) 403 380 4 2 97 All other deposits and credit balances 97 83 4 2 98 Certified and official checks 245 203 17 7 99 Nontransaction accounts (including MMDAs, excluding IBFs) 181,641 155,044 6,366 12,627 100 Individuals, partnerships, and corporations 132,728 109,500 5,101 10,860 101 U.S. addressees (domicile) 119,129 101,392 3,570 10,186 102 Non-U.S. addressees (domicile) 13,598 8,109 1,531 673 103 Commercial banks in United States (including IBFs) 26,031 23,873 754 1,241 104 U.S. branches and agencies of other foreign banks 15,804 14,687 326 713 105 Other commercial banks in United States 10,227 9,186 428 529 106 Banks in foreign countries 8 608 8,099 310 169 107 Foreign branches of U.S. banks 3,385 3,110 175 100 108 Other banks in foreign countries 5,222 4,989 135 69 109 Foreign governments and official institutions (including foreign central banks) 4,374 4,033 201 0 110 All other deposits and credit balances 9,901 9,538 0 357 111 IBF deposit liabilities 205,631 189,274 4,553 5,841 112 Individuals, partnerships, and corporations 15,110 10,326 668 155 113 U.S. addressees (domicile) 399 398 0 0 114 Non-U.S. addressees (domicile) 14,711 9,928 668 155 115 Commercial banks in United States (including IBFs) 44,381 42,522 1,003 663 116 U.S. branches and agencies of other foreign banks 41,018 39,426 ! 80 572 117 Other commercial banks in United States n a. 3,364 n.a. 3,096 n a. 123 n a. 91 118 Banks in foreign countries 110,968 104,287 2,019 3,529 119 Foreign branches of U.S. banks 4,189 3,729 131 319 120 Other banks in foreign countries 106,779 100,558 1,1 88 3,210 121 Foreign governments and official institutions (including foreign central banks) 35,150 32,118 862 1,493 122 All other deposits and credit balances 22 21 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 1997 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19961—Continued 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 3 n g o IB nl F y s 3 inc T I l B o u F t d a i s l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 123 Federal funds purchased and securities sold under agreements to repurchase 81,047 16,855 70,455 12,935 4,520 1,819 5,366 1,672 17,4 U.S. branches and agencies of other foreign banks 11,369 3,810 8,035 1,953 2,210 1,553 931 176 175 Other commercial banks in United States 11,137 1,406 7,409 223 1,813 113 1,752 1,070 176 Other 58,540 11,640 55,010 10,759 496 154 2,683 426 127 Other borrowed money 92,672 43,428 58,918 20,734 22,196 17,641 7,850 3,189 128 Owed to nonrelated commercial banks in United States (including IBFs) 24,718 11,643 12,419 4,578 9,048 5,697 1,842 799 129 Owed to U.S. offices of nonrelated U.S. banks 7,211 1,006 4,365 330 1,896 600 532 10 no Owed to U.S. branches and agencies of nonrelated foreign banks 17,507 10,638 8,054 4,248 7,152 5,096 1,309 789 ni Owed to nonrelated banks in foreign countries 33,399 29,010 18,001 13,865 11,886 11,746 2,340 2,335 n? Owed to foreign branches of nonrelated U.S. banks 1,589 1,334 681 465 732 704 148 148 m Owed to foreign offices of nonrelated foreign banks 31,810 27,676 17,320 13,400 11,153 11,042 2,192 2,187 134 Owed to others 34,555 2,775 28,497 2,291 1,262 199 3,668 55 135 All other liabilities 73,817 2, )88 66,280 2,591 3,356 258 3,575 84 136 Branch or agency liability on acceptances executed and outstanding 88,,449911 n.a. 55,,447711 n.a. 22,,330022 n. a. 441199 n.a. 137 Trading liabilities 41,146 76 38,823 71 180 3 2,140 3 138 Other liabilities to nonrelated parties 24,179 2,912 21,986 2,520 875 255 1,016 81 139 Net due to related depository institutions5 138,303 19,795 57,043 15,097 25,780 854 28,209 3,121 140 Net owed to head office and other related depository institutions5.. . 138,303 n a. 57,043 n.a. 25,780 n.a. 28,209 n. a. 141 Net owed to establishing entity, head office, and other related depository institutions5 n.a. 19,795 n.a. 15,097 n.a. 854 n.a. 3,121 MEMO 142 Non-interest-bearing balances with commercial banks in United States 1,179 0 828 0 173 0 80 0 143 Holding of commercial paper included in total loans 897 695 17 174 144 Holding of own acceptances included in commercial and industrial loans 4,471 3,460 885 52 145 Commercial and industrial loans with remaining maturity of one year or less 122,777 69,733 19,348 19,043 146 Predetermined interest rates 73,264 n.a. 42,806 n a. 10,561 n.a. 12,924 n.a. 147 Floating interest rates 49,513 26,928 8,786 6,119 148 Commercial and industrial loans with remaining maturity of more than one year 90,684 52,037 14,621 10,936 149 Predetermined interest rates 20,367 12,274 2,768 3,468 150 Floating interest rates 70,317 39,763 11,854 7,468 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, 19961—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm Total Total Total Total ex I c B lu F d s i 3 n g o IB nl F y s 3 exc IB lu F d s in g I o B n F ly s exc IB lu F d s in g I o B n F ly s exc IB lu F d s in g I o B n F ly s 111155551111 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff t t t t nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 184,323 158,764 6,468 12,494 111155552222 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 144,265 123,224 4,754 10,206 111155553333 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 n.a. n.a. 111155554444 TTTTiiiimmmmeeee CCCC oooorrrr DDDD mmmm ssss oooo iiiinnnn rrrreeee ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 33,317 n 1 .a. 29,476 I 1,281 I 2,119 n 1 .a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 6,741 6,063 432 169 All states2 New York California Illinois Total Total Total Total including IBFs including IBFs including IBFs including IBFs IBFs only IBFs only IBFs only IBFs only 111155555555 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 49,341 n.a. 27,691 n.a. 16,877 n.a. 3,039 n.a. 111155556666 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 491 0 243 0 109 0 40 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.l 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G. 11 monthly statistical release, the G. 11 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

A76 Index to Statistical Tables References are to pages A3-A75 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) EMPLOYMENT, 42 Assets and liabilities (See also Foreigners) Eurodollars, 23 Banks, by classes, 16—21 Domestic finance companies, 33 FARM mortgage loans, 35 Federal Reserve Banks, 10 Federal agency obligations, 5, 9, 10, 11, 28, 29 Foreign banks, U.S. branches and agencies, 72-75 Federal credit agencies, 30 Foreign-related institutions, 20 Federal finance Automobiles Debt subject to statutory limitation, and types and ownership Consumer credit, 36 of gross debt, 27 Production, 44, 45 Receipts and outlays, 25, 26 Treasury financing of surplus, or deficit, 25 BANKERS acceptances, 10, 11, 23 Treasury operating balance, 25 Bankers balances, 16-21, 72-75. (See also Foreigners) Federal Financing Bank, 30 Bonds (See also U.S. government securities) Federal funds, 6, 23, 25 New issues, 31 Federal Home Loan Banks, 30 Rates, 23 Federal Home Loan Mortgage Corporation, 30, 34, 35 Business activity, nonfinancial, 42 Federal Housing Administration, 30, 34, 35 Business loans (See Commercial and industrial loans) Federal Land Banks, 35 Federal National Mortgage Association, 30, 34, 35 CAPACITY utilization, 43 Federal Reserve Banks Capital accounts Condition statement, 10 Banks, by classes, 16-21, 64-67 Discount rates (See Interest rates) Federal Reserve Banks, 10 U.S. government securities held, 5, 10, 11, 27 Central banks, discount rates, 61 Federal Reserve credit, 5,6, 10, 11 Certificates of deposit, 23 Federal Reserve notes, 10 Commercial and industrial loans Federally sponsored credit agencies, 30 Commercial banks, 16-21, 64-67 Finance companies Weekly reporting banks, 16-21 Assets and liabilities, 33 Commercial banks Business credit, 33 Assets and liabilities, 16-21, 64-67 Loans, 36 Commercial and industrial loans, 16-21 Paper, 22, 23 Consumer loans held, by type and terms, 36, 64-67 Float, 5 Deposit interest rates of insured, 15 Flow of funds, 37-41 Number by classes, 64—67 Foreign banks, assets and liabilities of U.S. branches and Real estate mortgages held, by holder and property, 35 agencies, 72-75 Terms of lending, 68-71 Foreign currency operations, 10 Time and savings deposits, 4 Foreign deposits in U.S. banks, 5 Commercial paper, 22, 23, 33 Foreign exchange rates, 62 Condition statements (See Assets and liabilities) Foreign-related institutions, 20 Construction, 42, 46 Foreign trade, 51 Consumer credit, 36 Foreigners Consumer prices, 42 Claims on, 52, 55, 56, 57, 59 Consumption expenditures, 49, 50 Liabilities to, 51, 52, 53, 58, 60, 61 Corporations Profits and their distribution, 32 GOLD Security issues, 31, 61 Certificate account, 10 Cost of living (See Consumer prices) Stock, 5, 51 Credit unions, 36 Government National Mortgage Association, 30, 34, 35 Currency in circulation, 5, 13 Gross domestic product, 48 Customer credit, stock market, 24 HOUSING, new and existing units, 46 DEBT (See specific types of debt or securities) Demand deposits INCOME, personal and national, 42, 48, 49 Banks, by classes, 16-21 Industrial production, 42, 44 Depository institutions Insurance companies, 27, 35 Reserve requirements, 8 Interest rates Reserves and related items, 4, 5, 6, 12, 64—67 Bonds, 23 Deposits (See also specific types) Commercial banks, 68-71 Banks, by classes, 4, 16-21 Consumer credit, 36 Federal Reserve Banks, 5, 10 Deposits, 15 Interest rates, 15 Federal Reserve Banks, 7 Discount rates at Reserve Banks and at foreign central banks and Foreign central banks and foreign countries, 61 foreign countries (See Interest rates) Money and capital markets, 23 Discounts and advances by Reserve Banks (See Loans) Mortgages, 34 Dividends, corporate, 32 Prime rate, 22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 International capital transactions of United States, 50-61 Reserves—continued International organizations, 52, 53, 55, 58, 59 Federal Reserve Banks, 10 Inventories, 48 U.S. reserve assets, 51 Investment companies, issues and assets, 32 Residential mortgage loans, 34 Investments (See also specific types) Retail credit and retail sales, 36, 42 Banks, by classes, 16—21 Commercial banks, 4, 16-21 SAVING Federal Reserve Banks, 10, 11 Flow of funds, 37-41 Financial institutions, 35 National income accounts, 48 Savings institutions, 35, 36, 37 LABOR force, 42 Savings deposits (See Time and savings deposits) Life insurance companies (See Insurance companies) Securities (See also specific types) Loans (See also specific types) Federal and federally sponsored credit agencies, 30 Banks, by classes, 16—21 Foreign transactions, 60 Commercial banks, 16-21, 64-67 New issues, 31 Federal Reserve Banks, 5, 6, 7, 10, 11 Prices, 24 Financial institutions, 35 Special drawing rights, 5, 10, 50, 51 Insured or guaranteed by United States, 34, 35 State and local governments Holdings of U.S. government securities, 27 New security issues, 31 MANUFACTURING Rates on securities, 23 Capacity utilization, 43 Stock market, selected statistics, 24 Production, 43, 45 Stocks (See also Securities) Margin requirements, 24 New issues, 31 Member banks (See also Depository institutions) Prices, 24 Federal funds and repurchase agreements, 6 Reserve requirements, 8 Student Loan Marketing Association, 30 Mining production, 45 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 T T A hr X if t r i e n c s e t i i p tu ts t , i o f n ed s, e r 4 a . l ( , S 2 e 6 e also Credit unions and Savings Money and capital market rates, 23 institutions) Money stock measures and components, 4, 13 Time and savings deposits, 4, 13, 15, 64-67 Mortgages (See Real estate loans) Trade, foreign, 51 Mutual funds, 32 Treasury cash, Treasury currency, 5 Mutual savings banks (See Thrift institutions) Treasury deposits, 5, 10, 25 Treasury operating balance, 25 NATIONAL defense outlays, 26 National income, 48 UNEMPLOYMENT, 42 U.S. government balances OPEN market transactions, 9 Commercial bank holdings, 16-21 Treasury deposits at Reserve Banks, 5, 10, 25 PERSONAL income, 49 U.S. government securities Prices Bank holdings, 16-21, 27 Dealer transactions, positions, and financing, 29 Consumer and producer, 42, 47 Federal Reserve Bank holdings, 5, 10, 11, 27 Stock market, 24 Foreign and international holdings and Prime rate, 22 Producer prices, 42, 47 transactions, 10, 27, 61 Production, 42, 44 Open market transactions, 9 Profits, corporate, 32 Outstanding, by type and holder, 27, 28 Rates, 23 U.S. international transactions, 50-62 REAL estate loans Utilities, production, 45 Banks, by classes, 16-21, 35 Terms, yields, and activity, 34 Type of holder and property mortgaged, 35 VETERANS Administration, 34, 35 Repurchase agreements, 6 Reserve requirements, 8 WEEKLY reporting banks, 16-21 Reserves Wholesale (producer) prices, 42, 47 Commercial banks, 16-21 Depository institutions, 4, 5, 6, 12 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALICE M. RIVLIN, Vice Chair 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 DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel MICHAEL J. PRELL, Director SCOTT G. ALVAREZ, Associate General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel DAVID J. STOCKTON, Deputy Director OLIVER IRELAND, Associate General Counsel MARTHA BETHEA, Associate Director KATHLEEN M. O'DAY, Associate General Counsel WILLIAM R. JONES, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel MYRON L. KWAST, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY MARTHA S. SCANLON, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary DAVID S. JONES, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman STEPHEN A. RHOADES, Assistant Director CHARLES S. STRUCKMEYER, Assistant Director DIVISION OF BANKING ALICE PATRICIA WHITE, Assistant Director JOYCE K. ZICKLER, Assistant Director SUPERVISION AND REGULATION JOHN J. MINGO, Senior Adviser RICHARD SPILLENKOTHEN, Director GLENN B. CANNER, Adviser STEPHEN C. SCHEMERING, Deputy Director WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Deputy Associate Director ROGER T. COLE, Deputy Associate Director DONALD L. KOHN, Director . JAMES I. GARNER, Deputy Associate Director DAVID E. LINDSEY, Deputy Director HOWARD A. AMER, Assistant Director BRIAN F. MADIGAN, Associate Director GERALD A. EDWARDS, JR., Assistant Director RICHARD D. PORTER, Deputy Associate Director STEPHEN M. HOFFMAN, JR., 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 DIVISION OF CONSUMER MICHAEL G. MARTINSON, Assistant Director 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 SUSAN M. PHILLIPS LAURENCE H. MEYER 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 EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FRED HOROWITZ, Assistant Director FLORENCE M. YOUNG, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General GEORGE E. LIVINGSTON, Controller DONALD L. ROBINSON, Assistant Inspector General 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 DAY W. RADABAUGH, JR., 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

A80 Federal Reserve Bulletin • February 1997 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman J. ALFRED BROADDUS, JR. LAWRENCE B. LINDSEY SUSAN M. PHILLIPS JACK GUYNN LAURENCE H. MEYER ALICE M. RIVLIN EDWARD W. KELLEY, JR. MICHAEL H. MOSKOW JANET L. YELLEN ROBERT T. PARRY ALTERNATE MEMBERS THOMAS M. HOENIG THOMAS C. MELZER ERNEST T. PATRIKIS JERRY L. JORDAN CATHY E. MINEHAN STAFF DONALD L. KOHN, Secretary and Economist ROBERT A. EISENBEIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary MARVIN S. GOODFRIEND, Associate Economist JOSEPH R. COYNE, Assistant Secretary WILLIAM C. HUNTER, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel FREDERIC S. MISHKIN, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel LARRY J. PROMISEL, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist LAWRENCE SLIFMAN, Associate Economist JACK BEEBE, 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 H. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD M. KOVACEVICH, Ninth District ROBERT W. GILLESPIE, Fourth District CHARLES E. NELSON, Tenth District KENNETH D. LEWIS, Fifth District CHARLES T. DOYLE, Eleventh District STEPHEN A. HANSEL, Sixth District WILLIAM F. ZUENDT, 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

A81 CONSUMER ADVISORY COUNCIL JULIA W. SEWARD, Richmond, Virginia WILLIAM N. LUND, Augusta, Maine RICHARD S. AMADOR, LOS Angeles, California ERROL T. LOUIS, Brooklyn, New York WAYNE-KENT A. BRADSHAW, Los Angeles, California PAUL E. MULLINGS, McLean, Virginia THOMAS R. BUTLER, Riverwoods, Illinois CAROL PARRY, New York, New York ROBERT A. COOK, Crofton, Maryland PHILIP PRICE, JR., Philadelphia, Pennsylvania HERIBERTO FLORES, Springfield, Massachusetts RONALD A. PRILL, Minneapolis, Minnesota EMANUEL FREEMAN, Philadelphia, Pennsylvania LISA RICE, Toledo, Ohio DAVID C. FYNN, Cleveland, Ohio JOHN R. RINES, Detroit, Michigan ROBERT G. GREER, Houston, Texas SISTER MARILYN ROSS, Omaha, Nebraska KENNETH R. HARNEY, Chevy Chase, Maryland MARGOT SAUNDERS, Washington, D.C. GAIL K. HILLEBRAND, San Francisco, California GAIL SMALL, Lame Deer, Montana TERRY JORDE, Cando, North Dakota YVONNE S. SPARKS, St. Louis, Missouri FRANCINE C. JUSTA, New York, New York GREGORY D. SQUIRES, Milwaukee, Wisconsin JANET C. KOEHLER, Jacksonville, Florida GEORGE P. SURGEON, Chicago, Illinois EUGENE I. LEHRMANN, Madison, Wisconsin THEODORE J. WYSOCKI, JR., Chicago, Illinois THRIFT INSTITUTIONS ADVISORY COUNCIL DAVID F. HOLLAND, Burlington, Massachusetts, President CHARLES R. RINEHART, Irwindale, California, Vice President BARRY C. BURKHOLDER, Houston, Texas STEPHEN D. HAILER, Akron, Ohio DAVID E.A. CARSON, Bridgeport, Connecticut EDWARD J. MOLNAR, Harleysville, Pennsylvania MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin GUY C. PINKERTON, Seattle, Washington DOUGLAS A. FERRARO, Englewood, Colorado TERRY R. WEST, Jacksonville, Florida WILLIAM A. FITZGERALD, Omaha, Nebraska FREDERICK WILLETTS, III, Wilmington, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Consumer and Community Affairs Handbook. $75.00 per year. MS-127, Board of Governors of the Federal Reserve System, Monetary Policy and Reserve Requirements Handbook. $75.00 Washington, DC 20551 or telephone (202) 452-3244 or FAX per year. (202) 728-5886. You may also use the publications order Securities Credit Transactions Handbook. $75.00 per year. form available on the Board's World Wide Web site The Payment System Handbook. $75.00 per year. (http://www.bog.frb.fed.us). When a charge is indicated, payment Federal Reserve Regulatory Service. Four vols. (Contains all should accompany request and be made payable to the Board of four Handbooks plus substantial additional material.) $200.00 Governors of the Federal Reserve System or may be ordered via per year. Mastercard or Visa. Payment from foreign residents should be Rates for subscribers outside the United States are as follows drawn on a U.S. bank. and include additional air mail costs: Federal Reserve Regulatory Service, $250.00 per year. Each Handbook, $90.00 per year. FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL COMPUTERS. Diskettes; updated monthly. BOOKS AND MISCELLANEOUS PUBLICATIONS Standalone PC. $300 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Network, maximum 1 concurrent user. $300 per year. 1994. 157 pp. Network, maximum 10 concurrent users. $750 per year. ANNUAL REPORT. Network, maximum 50 concurrent users. $2,000 per year. ANNUAL REPORT: BUDGET REVIEW, 1995-96. Network, maximum 100 concurrent users. $3,000 per year. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 Subscribers outside the United States should add $50 to cover each in the United States, its possessions, Canada, and additional airmail costs. Mexico. Elsewhere, $35.00 per year or $3.00 each. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- ANNUAL STATISTICAL DIGEST: period covered, release date, num- COUNTRY MODEL, May 1984. 590 pp. $14.50 each. ber of pages, and price. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1981 October 1982 239 pp. $ 6.50 440 pp. $9.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1983 October 1984 264 pp. $11.50 December 1986. 264 pp. $10.00 each. 1984 October 1985 254 pp. $12.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1985 October 1986 231 pp. $15.00 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 1990 November 1991 185 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks THE FEDERAL RESERVE ACT and other statutory provisions affect- Organization and Advisory Committees ing the Federal Reserve System, as amended through August A Consumer's Guide to Mortgage Lock-Ins 1990. 646 pp. $10.00. A Consumer's Guide to Mortgage Settlement Costs A Consumer's Guide to Mortgage Refinancings REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Home Mortgages: Understanding the Process and Your Right RESERVE SYSTEM. to Fair Lending ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— How to File a Consumer Complaint Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Making Deposits: When Will Your Money Be Available? Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Making Sense of Savings $2.25. SHOP: The Card You Pick Can Save You Money GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. Welcome to the Federal Reserve FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated When Your Home is on the Line: What You Should Know monthly. (Requests must be prepaid.) About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 STAFF STUDIES: Only Summaries Printed in the 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, BULLETIN Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Studies and papers on economic and financial subjects that are of Ann Taylor. March 1992. 37 pp. general interest. Requests to obtain single copies of the full text or 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by to be added to the mailing list for the series may be sent to James T. Fergus and John L. Goodman, Jr. July 1993. Publications Services. 20 pp. 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF Staff Studies 1-157 are out of print. MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 1993. 18 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Dietrich Earnhart. September 1989. 23 pp. January 1994. Ill pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Donald Savage. February 1990. 12 pp. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- by Stephen A. Rhoades. July 1994. 37 pp. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by Gregory E. Elliehausen and John D. Wolken. September George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- 1990. 35 pp. ber 1995. 69 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, 1980-90, by Margaret Hastings Pickering. May 1991. by Stephen A. Rhoades. February 1996. 32 pp. 21 pp. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Maps of the Federal Reserve System MINHMPOUSN O BOSTON mm ,INewYork 12 • 3 CMOMM „ - CLEVELAND PHILADELPHIA 10 4 Q KANSAS CI T Y* - . - * ST* LOUIS M CT *0M Q 5 O J 6 • AltANfA JL^AJLMMIAIO' 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 February 1996. 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

A85 1-A 2-B 3-C 4-D 5-E Baltimore MD V I F/ I! /CT m V AH *r \ wv m Buffalo # € M o t te / €T ^RI BOSTON NEW YORK PHILADELPHIA RICHMOND 6-F 7-G 8-H TN- » / Birmingham Wl W Defcoii* IIAA • -TN IA M a. •Memphis New Orleans IN - M Miami ATLANTA CHICAGO ST. LOUIS 9-1 •Hefeaa MINNEAPOLIS 10-J 12-L WY I" CO L Omaha* ^ MO • ALASKA • / MM 1— V? O W ^ A* OK OR MMSMFMKM^ KANSAS CITY / ® jjBBSf w / 11-K MBSB MM S r \\ A El Ess® lLcs Angles San Antonio' HAWAn > DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 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 William C. Brainard Cathy E. Minehan Frederick J. Mancheski Paul M. Connolly NEW YORK* 10045 John C. Whitehead William J. McDonough Thomas W. Jones Ernest T. Patrikis Buffalo 14240 Bal Dixit Carl W. Turnipseed1 PHILADELPHIA 19105 Donald J. Kennedy Edward G. Boehne Joan Carter William H. Stone, Jr. CLEVELAND* 44101 G. Watts Humphrey, Jr. Jerry L. Jordan David H. Hoag Sandra Pianalto Cincinnati 45201 To be announced Charles A. Cerino1 Pittsburgh 15230 To be announced Harold J. Swart1 RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 To be announced William J. Tignanelli1 Charlotte 28230 To be announced Dan M. Bechter1 ATLANTA 30303 Hugh M. Brown Jack Guynn David R. Jones Patrick K. Barron James M. Mckee Birmingham 35283 To be announced FredR. Herr1 Jacksonville 32231 To be announced James D. Hawkins1 Miami 33152 To be announced James T. Curry III Nashville 37203 To be announced Melvyn K. Purcell New Orleans 70161 To be announced Robert J. Musso CHICAGO* 60690 Lester H. McKeever, Jr. Michael H. Moskow Arthur C. Martinez William C. Conrad Detroit 48231 To be announced 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 To be announced Thomas A. Boone Memphis 38101 To be announced Martha L. Perine MINNEAPOLIS 55480 Jean D. Kinsey Gary H. Stern David A. Koch Colleen K. Strand Helena 59601 To be announced John D. Johnson KANSAS CITY 64198 A. Drue Jennings Thomas M. Hoenig Jo Marie Dancik Richard K. Rasdall Denver 80217 To be announced Carl M. Gambs1 Oklahoma City 73125 To be announced Kelly J. Dubbert Omaha 68102 To be announced Bradley C. Cloverdyke DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. Cece Smith Helen E. Holcomb El Paso 79999 To be announced Sammie C. Clay Houston 77252 To be announced Robert Smith, III1 San Antonio 78295 To be announced James L. Stull1 SAN FRANCISCO .... 94120 Judith M. Runstad Robert T. Parry Gary G. Michael John F. Moore Los Angeles 90051 To be announced Mark L. Mullinix1 Portland 97208 To be announced Raymond H. Laurence1 Salt Lake City 84125 To be announced Andrea P. Wolcott Seattle 98124 To be announced Gordon R. G. Werkema2 •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. 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. 1 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. A Guide to A Consumer's Quids to Business Mortgage Credit Lock-ins for Women, Minorities, arid Small Businesses SHOP m The Card You Pick Can Save You Money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory func- The Payment System Handbook deals with expedited tions, the Board publishes the Federal Reserve Regu- funds availability, check collection, wire transfers, and latory Service, a four-volume loose-leaf service con- risk-reduction policy. It includes Regulations CC, J, and taining all Board regulations as well as related statutes, EE, related statutes and commentaries, and policy interpretations, policy statements, rulings, and staff statements on risk reduction in the payment system. opinions. For those with a more specialized interest in For domestic subscribers, the annual rate is $200 for the Board's regulations, parts of this service are pub- the Federal Reserve Regulatory Service and $75 for lished separately as handbooks pertaining to monetary each Handbook. For subscribers outside the United policy, securities credit, consumer affairs, and the pay- States, the price including additional air mail costs is ment system. $250 for the Service and $90 for each Handbook. These publications are designed to help those who The Federal Reserve Regulatory Service is also availmust frequently refer to the Board's regulatory materi- able on diskette for use on personal computers. For a als. They are updated monthly, and each contains cita- standalone PC, the annual subscription fee is $300. For tion indexes and a subject index. network subscriptions, the annual fee is $300 for 1 con- The Monetary Policy and Reserve Requirements current user, $750 for a maximum of 10 concurrent Handbook contains Regulations A, D, and Q, plus users, $2,000 for a maximum of 50 concurrent users, related materials. and $3,000 for a maximum of 100 concurrent users. The Securities Credit Transactions Handbook con- Subscribers outside the United States should add $50 tains Regulations G, T, U, and X, dealing with exten- to cover additional airmail costs. For further informasions of credit for the purchase of securities, together tion, call (202) 452-3244. with related statutes, Board interpretations, rulings, All subscription requests must be accompanied by a and staff opinions. Also included are the Board's list check or money order payable to the Board of Goverof marginable OTC stocks and its list of foreign margin nors of the Federal Reserve System. Orders should be stocks. addressed to Publications Services, mail stop 127, Board The Consumer and Community Affairs Handbook of Governors of the Federal Reserve System, Washingcontains Regulations B, C, E, M, Z, AA, BB, and DD, ton, DC 20551. and associated materials. GUIDE TO THE FLOW OF FUNDS ACCOUNTS A recent Federal Reserve publication, Guide to the Flow dures as seasonal adjustment, extrapolation, and of Funds Accounts, explains in detail how the U.S. interpolation. financial flow accounts are prepared. The accounts, The balance of the Guide contains explanatory tables which are compiled by the Division of Research and corresponding to the tables of financial flows data that Statistics, are published in the Board's quarterly Z.l appeared in the September 1992 Z.l release. These statistical release, "Row of Funds Accounts, Flows and tables give, for each data series, the source of the data or Outstandings." The Guide updates and replaces Intro- the methods of calculation, along with annual data for duction to Flow of Funds, published in 1980. 1991 that were published in the September 1992 release. The 670-page Guide begins with an explanation of Guide to the Flow of Funds Accounts is available for the organization and uses of the flow of funds accounts $8.50 per copy from Publications Services, Board of and their relationship to the national income and Governors of the Federal Reserve System, Washington, product accounts prepared by the U.S. Department of DC 20551. Orders must include a check or money order, Commerce. Also discussed are the individual data in U.S. dollars, made payable to the Board of Governors series that make up the accounts and such proce- of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis