Federal Reserve Bulletin, 1998-02

VOLUME 84 NUMBER 2 FEBRUARY 1998 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman S. David Frost Griffith L. Garwood Donald L. Kohn J. Virgil Mattingly, Jr. Michael J. Prell Richard Spillenkothen Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 77 INDUSTRIAL PRODUCTION AND CAPACITY Issuance of sound practice guidance on informa- UTILIZATION: ANNUAL REVISION AND tion security. 1997 DEVELOPMENTS Issuance of an interagency interim rule on risk- In December 1997, the Board of Governors pub- based capital guidelines. lished the results of an annual revision of its Issuance of an interagency policy statement on measures of industrial production and capacity sound practices for the internal audit function utilization, which cover the nation's manufacturand audit outsourcing. ing, mining, and electric and gas utilities industries. The revision entailed primarily the incor- Proposal to revise the official staff commentary poration of new and more comprehensive source to Regulation Z; proposed amendment to the data, the most important of which were annual appraisal regulation; proposed comprehensive figures on industry real output in 1995 and survey revisions to Regulation K; request for public information on industry utilization rates for the comment on whether U.S. companies operating fourth quarters of 1995 and 1996. The revised in the government debt market of the Nethermeasures show stronger growth of production lands have the same competitive opportunities and capacity and lower rates of capacity utiliza- as Dutch companies in that market. tion since 1992 than did earlier estimates. The revised production indexes and the new source Publication of a brochure Keys to Vehicle Leasdata on utilization rates implied that manufactur- ing on the new disclosure requirements for ing capacity growth was stronger than previously vehicle leasing. estimated. Publication of the December 1997 update of the Bank Holding Company Supervision Manual. Changes in Board staff. 92 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION FOR DECEMBER 1997 Industrial production rose 0.5 percent in Decem- 100 MINUTES OF THE FEDERAL OPEN MARKET ber, to 128.1 percent of its 1992 average, with COMMITTEE MEETING HELD ON widespread increases among most major market NOVEMBER 12, 1997 and industry groups. The rate of industrial capacity utilization edged up to 83.4 percent—its At its meeting on November 12, 1997, the Comhighest rate since September 1995. mittee adopted a directive that called for maintaining conditions in reserve markets that were consistent with an unchanged federal funds rate 95 ANNOUNCEMENTS of about 5>/ 2 percent. The members also agreed to retain a bias in the directive toward the pos- Appointments of deputy chairmen of two Federal sible firming of reserve conditions and a higher Reserve Banks. federal funds rate during the intermeeting period. Appointments of members of the Thrift Institutions Advisory Council. Revisions to Regulation B. 107 LEGAL DEVELOPMENTS Final amendments to Regulations G, T, U, Various bank holding company, bank service and X. corporation, and bank merger orders; and pend- Amendment to Regulation Z. 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 A80 FEDERAL OPEN MARKET COMMITTEE AND December 29,1997. STAFF; ADVISORY COUNCILS A3 GUIDE TO TABULAR PRESENTATION A82 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: Annual Revision and 1997 Developments Richard Raddock, of the Board's Division of REVISIONS TO OUTPUT, CAPACITY, AND Research and Statistics, prepared this article. Robert UTILIZATION Ritterbeck provided research assistance. The average annual rate of growth of industrial pro- In December 1997, the Board of Governors of the duction since 1992 is now shown to have been Federal Reserve System published the results of an 4'/ percent, 3A percentage point higher than pre- 2 annual revision of its measures of industrial produc- viously shown (table l).2 The new estimates show tion and capacity utilization, which cover the nation's manufacturing, mining, and electric and gas utilities industries. The revision entailed primarily the incor- 2. Six appendix tables summarize the revised production, capacity, poration of new and more comprehensive source and capacity utilization figures in more detail. The growth rates of production and capacity and the utilization rates are shown with the data, the most important of which were annual fig- differences between the revised figures and the earlier estimates. ures on industry real output in 1995 and survey Figures for production growth are shown by market and by industry group; capacity and utilization figures are shown by industry group information on industry utilization rates for the fourth only. quarters of 1995 and 1996. The revised measures show stronger growth of production and capacity and lower rates of capacity 1. Industrial production, capacity, and utilization, 1977-97 utilization since 1992 than did earlier estimates (chart 1). The largest revisions to output growth were for 1994 and 1995 and were due mainly to higher figures for manufacturing. The revised production indexes and the new source data on utilization rates implied that manufacturing capacity growth was stronger than previously estimated. Both the earlier and the revised estimates show that capacity utilization reached its most recent high at the beginning of 1995. The revised figures, however, suggest that pressures on industrial capacity since then have been less than previously estimated. The advance in industrial production over 1997 ! I I I I 1 I I 1 1 I l I I 1 I I I I I l I Percent of capacity was almost 6 percent, compared with 4!/3 percent on average over the first six years following the March 1991 cyclical trough.1 Output in manufacturing 90 increased nearly 6V2 percent during 1997, with activity in the final quarter especially robust. With the strong growth in manufacturing, the factory operating rate moved to more than-82 percent in late 1997— above its 1967-96 average but well below the cyclical peaks in the late 1970s and 1980s. NOTE. Other contributors to the revision and this article include the i 1 1 1 1 1 1 1 1 1 1 1 i i i J i i I I I following: Ana Aizcorbe, William Cleveland, Carol Corrado, Christo- 1977 1981 1985 1989 1993 1997 pher Furgiuele, Charles Gilbert, and Michael Mohr. NOTE. In this chart and the charts that follow, revised data for the industrial 1. The figures for the fourth quarter of 1997 are subject to further production indexes are monthly and seasonally adjusted through December revision in the upcoming monthly G.17 statistical releases. 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • February 1998 1. Annual rates of growth in industrial production, 1992-97 Revised growth rate Difference between growth rates: revised less earlier (percent) (percentage points) IItteemm 1992-97 1994 1995 1996 1997 1992-97 1994 1995 1996 1997' Total index 4.5 6.5 3.3 4.2 5.8 .7 .8 1.5 .3 .2 Manufacturing 4.9 7.6 3.3 4.7 6.4 .7 1.0 1.7 .5 .2 Durable 7.2 9.9 6.2 6.5 9.6 1.1 1.7 2.5 .8 .0 Computers, semiconductors, and communications equipment 28.1 39.2 40.6 22.8 30.4 4.9 10.7 10.7 4.4 2.5 Durable manufacturing excluding computers, semiconductors, and communications equipment 3.1 5.3 .3 3.0 4.3 .5 .4 1.0 .3 .3 Nondurable 2.4 4.9 -.1 2.5 2.7 .5 .2 .8 .2 .5 Mining .8 .9 -.8 1.7 2.3 .0 -.7 .5 -1.7 -.1 Utilities 2.3 -.3 6.4 1.5 2.3 -.2 -.2 -.1 .0 .1 NOTE. Growth rates are calculated as the percentage change in the season- the average annual percentage change from the fourth quarter of 1991 to the ally adjusted index from the fourth quarter of the previous year to the fourth fourth quarter of 1997. quarter of the year specified in the column heading. The 1992-97 growth rate is 1. Through the third quarter of 1997. industrial output growth to have been 3A percentage the basic trends underlying the industrial expansion point higher over 1994 and V/2 percentage points of the 1990s have remained largely unchanged. Howhigher over 1995. The upward revisions to industrial ever, gains in the output of durable industrial materiproduction for 1996 and 1997 averaged VA percentage als, including semiconductors, now appear to have point. contributed even more to the overall growth in indus- Stronger gains in the output of information- trial production than previously thought. technology products—defined as computers, semi- The annual rate of growth of industrial capacity conductors, and communications equipment— was revised up V/z percentage points for 1995 and accounted for more than half of the upward revision 3A percentage point for 1996 and 1997 (table 2). The to industrial production; the largest component of this revised annual rate of capacity growth averaged upward revision was semiconductor output. Output 43/4 percent for total industry over 1995-97 and more of other types of manufacturing is also now estimated than 5 percent for manufacturing for this period. The to have grown more rapidly. upward revisions were concentrated in durable man- Aside from indicating this stronger growth, the ufacturing, especially information-technology indusupdated estimates continue to paint a broad picture of tries, in which production rose rapidly because of recovery in industrial activity from the 1990 reces- technological advances. The revised estimates show sion through 1994 followed by a slowdown in 1995 that capacity growth was faster than previously and a resumption of relatively robust growth since thought in many other durable and nondurable manuthen. The revised market group indexes suggest that facturing industries (table A.5). 2. Annual rates of growth in industrial capacity, 1992-97 Revised growth rate Difference between growth rates: revised less earlier (percent) (percentage points) IItteemm 1992-97 1994 1995 1996 1997 1992-97 1994 1995 1996 1997 Total index 3.7 3.7 4.9 4.5 4.7 .8 .9 1.5 .8 .8 Manufacturing 4.1 4.1 5.5 5.1 5.3 .9 1.0 1.8 1.0 1.0 Durable 5.8 5.9 8.3 7.5 8.0 1.3 1.8 2.8 1.3 1.4 Computers, semiconductors, and communications equipment 26.0 27.4 37.8 30.1 30.4 4.9 7.4 11.3 3.2 3.5 Durable manufacturing excluding computers, semiconductors, and communications equipment 2.4 2.3 2.9 3.0 3.0 .7 .5 1.1 1.0 1.2 Nondurable 2.2 2.0 2.3 2.4 2.2 .5 .2 .7 .7 .6 Mining .3 1.0 -.5 .2 .7 .4 .4 .0 .6 -.7 Utilities 1.4 1.3 2.0 1.5 1.4 -.1 .1 .1 -.6 -.2 NOTE. Growth rates are calculated as the percentage change in the season- the average annual growth rate from the fourth quarter of 1991 to the fourth ally adjusted index from the fourth quarter of the previous year to the fourth quarter of 1997. quarter of the year specified in the column heading. The 1992-97 growth rate is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 79 Capacity utilization in manufacturing was revised substantial pressure on productive capability by the down V2 percentage point for the fourth quarter of acceleration in capacity growth that had started ear- 1995 and nearly 1 percentage point for 1996 lier. Within manufacturing, the rate of utilization in (table 3). Because the upward revisions to the growth primary-processing industries remained relatively of capacity exceeded those to the growth of produc- high, particularly for primary metals and petroleum tion in 1996 and 1997, the downward revisions to products. Among advanced-processing industries, utimanufacturing utilization grew progressively larger lization rates were about average overall. Although and reached nearly 1V2 percentage points in the third growth of output and capacity occurred in nearly all quarter of 1997. For the information-technology sec- the major industry groups, the acceleration and rapid tor, which operated at relatively low levels from the pace of growth were centered in durable manufacturmid-1980s through the early 1990s, the revision ing, a grouping that accounts for nearly one-half the shows the utilization rate still having risen sharply by value added in the industrial sector. year-end 1994 and remaining elevated for more than a year after that. Elsewhere in manufacturing, the revisions show utilization rates easing noticeably in Durable Manufacturing 1995. For mining, the capacity utilization rate in 1996-97 Output in durable manufacturing increased 9x/i perwas also revised down—roughly 3 percentage cent during 1997; this growth was led by, but not points—with downward revisions to rates for oil and limited to, the computer, semiconductor, and commugas extraction, stone and earth minerals, and coal. nications equipment industries. Output of durable For electric utilities, the rate of utilization is now manufactures other than computers, semiconductors, estimated to be higher than earlier; electric utility and communications equipment also rose solidly, companies have been reluctant to add new generating reaching nearly 4Vi percent in 1997 (chart 2). capability because of the increased uncertainty in a more open market for electric power. Computers, Semiconductors, and Communications Equipment INDUSTRIAL DEVELOPMENTS IN 1997 Production of computers, semiconductors, and com- Industrial output expanded at a robust pace in 1997. munications equipment together grew about 30 per- Growth of manufacturing picked up from 43A percent cent over 1997, compared with about 23 percent over in 1996 to nearly 6V2 percent in 1997, but the expan- 1996. The acceleration was in the semiconductor sion was largely accommodated without signs of industry, for which the rate of output growth 3. Rates of capacity utilization, 1995-97 Percentage of capacity, seasonally adjusted Difference between growth rates: Revised rate revised less earlier (percentage points) IItteemm 1988-89 high1 1995.Q4 1996:Q4 1997:Q4 1995:Q4 1996:Q4 1997: Q3 Total index 85.4 82.6 82.4 83.2 -.5 -.9 -1.3 Manufacturing 85.7 81.8 81.4 82.2 -.5 -.9 -1.4 Primary processing 88.9 85.8 85.9 86.2 -.4 -.7 -1.3 Advanced processing 84.2 80.0 79.4 80.4 -.6 -1.0 -1.5 Durable 84.6 81.2 80.4 81.6 -.8 -1.3 -2.2 Computers, semiconductors, and communications equipment 81.9 86.0 81.1 81.1 -1.4 -.4 -.9 Durable manufacturing excluding computers, semiconductors, and communications equipment 86.1 81.4 81.4 82.4 -.4 -1.0 -1.5 Nondurable 87.3 82.4 82.5 82.9 -.1 -.5 -.5 Mining 88.0 87.0 88.3 89.7 -1.0 -3.0 -2.8 Utilities 92.6 90.0 90.0 90.8 -.3 .2 .4 1. The "high" column refers to periods in which utilization generally peaked. The monthly highs and lows are specific to each series, and all did not occur in the same month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1998 2. Industrial production, 1992-97 resulted in improved devices and downstream applications that, for similar prices, have yielded far more services, in terms of millions of instructions per second, memory, disk space, and so forth, than did the earlier devices. The production indexes for computers, semiconductors, and communications equipment have reflected the rapid rise of performance per dollar so that they have risen rapidly relative to both nominal output and employment while the price (unit value added) has plunged (chart 3). Transportation Equipment Over 1997, the output of transportation equipment advanced IIV2 percent. The boom in commercial 1992 1993 1994 1995 1996 1997 aircraft and related equipment and parts accounted for the bulk of the increase, but output of motor vehicles grew as well. rebounded to 40 percent in 1997 after having slowed Worldwide demand for commercial aircraft rose over 1996 from the much higher rates of the two swiftly, and incoming orders greatly exceeded delivpreceding years. The 1996 slowdown was related to eries in 1997. The Boeing Company's backlog of an unintended stockpiling of semiconductors by proannounced orders for commercial jet airplanes ducers, distributors, and end-users, who had overesticlimbed to 1,744 units by the end of the year. Boeing mated the sales of personal computers and related began stepping up production and is working with its equipment and apparatus for communications. suppliers to meet a schedule for delivery of forty- In 1997, as in earlier years, the rapid growth in three 7-Series airplanes per month by the spring of the output of information-technology products was 1998 (deliveries of such models averaged eighteen accompanied by declining prices. For example, the planes per month in 1995 and 1996). Boeing delivprice of sixteen-bit chips fell from $11 in May 1997 ered or tendered for delivery 388 airplanes in 1997 to less than $3 late in the year. Though such declines and expects to deliver about 550 in 1998. The boom may be intensified temporarily by excess inventories in orders has reflected the growth in world airline or capacity, they are sustained by technological traffic and the aging fleet of aircraft. In contrast to the progress. Advances in the design of semiconductors production of commercial aircraft and related parts, the production of military aircraft, which had fallen 3. Computers, semiconductors, and communications substantially in 1995, declined a bit further in 1996 equipment, 1992-97 and 1997. Index, 1992 = 100, ratio scale The assembly of heavy trucks rebounded in 1997. After hitting a record high in the spring of 1995, the — Real output (IP) 300 production index for heavy trucks and truck trailers — 250 plummeted roughly 30 percent to a trough in the fall — 200 of 1996; by November 1997, it had surpassed the ^r Nominal output 1995 high. Incoming orders greatly exceeded ship- — — 150 Employment ments in 1997, and the backlog of unfilled orders for heavy trucks more than doubled over the year. The —100 growth in durable manufacturing production was (and Unit value added continues to be) a factor in the high level of demand for heavy (class 8) trucks and truck trailers, which — 50 are used extensively to transport high-value durable 1 i 1 1 1 1 1 goods such as computers, machine tools, engines, 1992 1993 1994 1995 1996 1997 automobiles, and appliances, as well as parts for NOTE. Real output is the aggregation of the industrial production series for computers, semiconductors, and communications equipment. Nominal output is these goods. Census value added plus the cost of materials as reported in the 1992 Census of Manufactures and in the Annual Surveys of Manufactures for 1993 through Part of the rise in transportation equipment over 1995. Unit value is Census value added divided by the industrial production 1997 was related to a fourth-quarter jump in assemindex for the industries covered. Data for unit value added after 1995 are projections. blies of light vehicles, to an annual rate of about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 81 12.6 million units, as producers pushed to make up buildings; the high level of homebuilding and governfor production lost in the summer because of strikes ment spending on construction of schools, prisons, and new-model-year startup problems. Gains earlier and highways; and a rise in exports. With the overall in the year represented, in part, a rebound from the strength in durable finished goods and construction strike-depressed fourth quarter of 1996. activity, the output of primary metals and stone, clay, In recent years, sales of light vehicles including and glass products rose 5 percent or more. imports have, in general, held near 15 million units, and the related production index was only 2XA per- Major Market Groups cent higher in 1997 than it was in 1994. Light trucks have been gaining market share relative to automo- Among the major market groups, growth has been biles: From 1994 to 1997, the production index for widespread and substantial in recent years (chart 4). light trucks rose about \AVi percent, whereas the The rapid growth in computers, semiconductors, and index for automobiles dropped 7 percent. The communications equipment and the strong perforstrength in sales and production of full-size pickup mance of motor vehicles and parts, commercial airtrucks and sport-utility vehicles—especially large, craft, and off-highway equipment were key factors in high-priced models—continued in 1997. Sales of the growth of output of business equipment, durable light trucks reached about 6.8 million units during the materials, and consumer durable goods. The producyear, an increase of AVI percent from a year earlier; tion of nondurable consumer goods, held down by sales of automobiles, at 8.3 million units, declined declines in apparel and footwear and stagnation in 2'/2 percent. some other categories, continued to grow slowly. Of the major market groups, only the production of defense and space equipment declined. Other Industries The production of internal combustion engines and Consumer Goods farm, construction, and mining equipment rose about 10 percent in 1997. The pickup in output reflected Strong growth of real income, a rising stock market, increased construction of office and other commercial and the high level of consumer confidence supported 4. Industrial production, by market group, 1988-97 Index, 1992 = 100, ratio scale Index, 1992 = 100. ratio scale Consumer goods Intermediate products 1 1 I I L 1 I J L J L J L 1989 1991 1993 1995 1997 1989 1991 1993 1995 1997 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1998 robust increases in the sales and production of con- With the overall strength in durable finished goods sumer goods in 1997. Production of consumer dura- and construction activity, the production index for ble goods grew 6 percent over the year, largely industrial materials increased more than IVi percent because of a 16 percent rise in the output of light during 1997. Among durable goods materials, which trucks and an estimated 40 percent jump in the output grew at a pace of 1IV2 percent, output of parts for of home computers. The production of home appli- equipment—especially semiconductors and parts for ances remained at a fairly high level. The indexes computers—led the way. The growth in production for other groupings of durable consumer goods, such of consumer durable parts and other durable materias carpeting and furniture, generally increased some- als, such as basic metals, was in the 5 percent to what. The exception was television sets, which 7 percent range. The rate of growth among nondurashowed a sizable drop. The output of nondurable ble goods materials was slower, averaging about consumer goods, such as foods and tobacco, slowly 3 percent. Output of paper materials, which had fallen advanced overall. Gains in chemical and paper prod- back during 1995 and early 1996, recovered and ucts and in automotive gasoline were in the range of reached new highs in 1997. Activity in the textile 3 percent to 4V2 percent. The production of residen- industry picked up in the second half of the year after tial electricity and gas bounced around monthly but two years of weakness; however, the level in late was basically flat in 1997, and the output of clothing 1997 remained below the previous high. The output eased a bit further as domestic production continued of chemical materials, such as industrial organic to be displaced by imported apparel and footwear. chemicals, flattened out in 1997 after having recovered in 1996. From its level in 1996, the index for energy materials changed little on balance in the first Equipment half of 1997, but it rose in the second half of the year with increases in industrial sales of gas and electric- The output of business equipment, boosted by ity, fossil fuel generation, and gas transmission. double-digit growth in the production of computers, trucks, and commercial jets, advanced more than 10 percent during 1997. Output of industrial equipment, which was flat from late 1995 to early 1997, TECHNICAL ASPECTS OF THE ANNUAL began to pick up in the spring and strengthened REVISION thereafter. The hefty increases in the production of farm equipment and rising backlogs of orders were The 1997 revision involved mainly the routine incorsupported by both domestic demand and demand poration of new and more comprehensive source from abroad, particularly from areas of the former data, which is done annually. The annual value-added Soviet Union. In contrast, output of railroad equip- weights used in aggregating the individual indexes ment, ships, and boats was weak. After years of were also updated, as were the seasonal factors and declines in federal defense spending, the output of productivity relationships. In addition, two individual defense and space equipment largely flattened out production series and a handful of capacity and utiliover 1996 and 1997. zation measures were modified between 1987 and The output of mining equipment was spurred by 1992. The only substantial change in the industry the relative strength in mining activity in 1996 and structure of the production index was the redesign of 1997. In particular, the index for oil and gas well the series for oil and gas field services, which was drilling and related oil-field services advanced at an carried back to 1987.3 average annual rate of nearly 10 percent over the two years. The higher price of natural gas in 1996 led to increased revenues, which producers spent on capital Source Data for Production and exploration in 1997. The principal contributors to the upward revisions to Intermediate Products and Materials industrial production were data from the 1995 Annual The production of construction supplies continued at 3. The modification affected the levels of the aggregate indexes a high level, consistent with the solid pace of build- that contain this series before 1987 because the production indexes are ing activity, and the output of general business sup- chain linked and are expressed as a percentage of output in 1992. All aggregate indexes were subject to very small revisions between 1987 plies grew steadily on balance after some sluggishand 1992 because of the aggregation methodology; the annual indexes ness in 1995 and early 1996. were essentially unaffected. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 83 Survey of Manufactures published by the Bureau of capacity proportions; and the contribution of an indithe Census and new or revised industry price indexes vidual industry to total output or capacity is based provided by the Bureau of Economic Analysis. In on value added by that industry.5 In this revision, particular, the revision to the quality-adjusted price the annual estimates of industry value added were index for semiconductors, which shows a larger rate updated. The Annual Survey of Manufactures as well of price decline than estimated earlier, and the intro- as revenue and expense data reported by the Departduction of a new quality-adjusted price index for ment of Energy and the American Gas Association telephone switching and switchboard equipment into provided information on industry value added in the real output benchmark for communications equip- manufacturing and utilities through 1995. The latest ment noticeably raised the overall production index. value-added data for mining came from the Census of The revision also incorporated more comprehensive Mineral Industries for 1992. 1996 output figures for mining, utilities, and selected The weights used in aggregation are expressed as manufacturing industries, which were derived from unit value added (value added divided by the related annual industry reports issued by the U.S. Geological industrial production index). Generally, the unit Survey, the Energy Information Agency, and the value-added measures track broad changes in corre- Bureau of the Census. sponding producer prices. The weights required for The physical product data that are used to measure aggregation in the most recent period are (1) estithe monthly movements of many individual indus- mated from available data on producer prices through trial production indexes were updated to capture data the most recent year and (2) in light of the persistence that became available after the closing of the regular of many relative price trends, extrapolated for the four-month reporting window.4 Monthly data on following year. production-worker hours or on sales of electric power in kilowatt-hours to industry groups, along with estimates of trends in output per worker-hour or kilowatt- Changes in Series Structure hour, are used to indicate the monthly change in output for many individual production indexes. In The series structure of the index of industrial producthis revision, the Bureau of Labor Statistics bench- tion, which comprises 264 individual series, remains mark of the employment data for March 1996 was essentially unchanged. The measurement of oil and incorporated. More complete reports from the Fed- gas field services, previously covered by a single eral Reserve's Monthly Electric Power Survey were series, was split into two series. In addition, the two incorporated as well. These monthly kilowatt-hour series on nuclear materials manufacturing were comsales figures were benchmarked to data on the annual bined into a single series. use of electric power reported in the Annual Survey The measurement of oil and gas field services was of Manufactures through 1995. modified to cover the various types of activity in the Seasonal factors for the electric power series were industry more thoroughly. Previously, a single series updated using data through May 1997, and those for based on the count of rotary rigs running, issued by the worker hours were based on data through Octo- Baker Hughes, was used for all of SIC 138. Now two ber. Factors for most monthly physical product series series cover SIC 138 from 1987 on, one for drilling were based on data through June. Seasonally adjusted and exploration (SIC 1381,2) and another for miscelfigures for motor vehicle assemblies, which are pub- laneous oil and gas field services (SIC 1389). lished in table 2A of the regular monthly statistical The new drilling and exploration series, like the release, were based on factors estimated with data previous series for all of SIC 138, is based on the through October. count of rotary rigs running, but the weight given to an offshore rig is much larger than that given to a land rig. The difference—one offshore rig is given Weights the weight of twenty-five land rigs—reflects the much higher rental cost of an offshore rig. For miscella- The industrial production index is an annually neous oil and gas field services, the production index weighted Fisher index; capacity utilization is aggre- is based on active well-servicing units, reported by gated from component utilization ratios with current 5. The aggregation procedures are described in Carol Corrado, 4. Information about the sources of monthly data used to calculate Charles Gilbert, and Richard Raddock, "Industrial Production and the indexes can be found in "Table 1: Industiy structure of industrial Capacity Utilization: Historical Revision and Recent Developments," production" on the Board's Web site at www.bog.frb.fed.us/releases/ Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. This G17/About.htm. article is also available on the Board's Web site. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1998 5. Production in the oil and gas field services industry the-year indexes of capacity by dividing a production (SIC 138), 1980-97 index by a utilization rate obtained from a survey for that end-of-year period. These ratios are expressed, Index, 1992= 100, ratio scale like the indexes of industrial production, as percentages of production in 1992, and they indicate the general level and trend of the capacity estimates.7 The Census Bureau's Survey of Plant Capacity is the source of utilization rates used to derive the initial estimates of capacity for most manufacturing industries. The 1996 survey covered about 70 percent Revised more plants than earlier surveys (approximately 17,000 compared with 10,000), and the preliminary results available for the 1997 annual revision were Earlier much more refined and detailed than those used in earlier annual revisions. Because of the marked expansion of the reporting panel and the greater availability of refined industry detail, results from a panel of respondents who had previously participated Dresser Oil Tools, plus workover rigs, reported by Baker Hughes.6 in the survey were reviewed to maintain the consistency of the Federal Reserve estimates over time. The The revised production index for all of SIC 138 Census survey results suggested that factory operatdips more from 1991 to 1992 and rebounds more in ing rates were lower in recent years than previously 1993 than did the earlier index; the bigger swing estimated by the Federal Reserve. Dividing the reflects the greater weight given to offshore drilling, industrial production indexes, which were generally which was more volatile than onshore drilling during revised upward, by the lower-than-expected Census the period (chart 5). utilization rates implied noticeably higher capacity. The separate series on defense nuclear mate- The second step in constructing individual capacity rials has been discontinued because of the loss of indexes is using measures of physical capacity or source data. The single remaining series for nuclear of capital input to estimate and extrapolate the manufacturing (part of SIC 2819) is based on the annual movements of the final capacity indexes. For amount of electricity used in the production of such most manufacturing industries, measures of physical materials. capacity are lacking; in these cases, the annual growth in the capacity estimates is derived from econometric models that relate the increase in the Estimates of Capacity and Utilization figures on implied capacity to the growth of an indus- The revisions to capacity and utilization incorporated the revised production indexes, the preliminary results of the 1996 Survey of Plant Capacity conducted by the Bureau of the Census, updated mea- 7. Each implied capacity index number is an estimate of a sustainable maximum level of output expressed as a percentage of actual sures of 1996 and 1997 capacity in physical units for output in 1992. Thus, if in the fourth quarter of 1992 the production selected industries, and revised estimates of industry index is 100 and a related utilization rate from a survey is 80 percent, capital input. then the implied capacity index is 100/.8 = 125. The capacity indexes capture the concept of sustainable practical The first step in constructing the individual capaccapacity, which is defined as the greatest level of output that a plant ity indexes is calculating preliminary, implied end-of- can maintain within the framework of a realistic work schedule after taking account of normal downtime and assuming sufficient availability of inputs to operate the machinery and equipment in place. Both the questions asked in the broad Census survey and the narrower 6. Well-servicing units are truck-mounted equipment generally surveys of selected industries are generally consistent with this definiused for servicing a well after it is drilled. Such units are used for well tion of capacity. The concept itself generally conforms to that of a completions, maintenance, repairs, well plugging, and abandonments. full-input point on a production function, with the qualification that They include workover rigs, for which the daily costs of operation are capacity represents a realistically sustainable maximum rather than generally higher than those of other types of units. The Baker Hughes some higher, unsustainable short-term maximum. See Carol Corrado workover rig count includes only equipment for wells that are 1,500 and Joe Mattey, "Capacity Utilization," Journal of Economic Perfeet or more in depth and for which tubing is out of the well bore. The spectives, vol. 11 (Winter 1997), pp. 151-67. addition of this workover rig count to the number of active well- In the absence of utilization rate information for an industry, which servicing units approximately doubled the weight given to workover is the case for a few series in mining, trends through peaks in rigs to reflect their higher daily cost. production are used to estimate capacity output for that industry. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 85 March 1997.) The capital input measures were also Data Availability revised historically to incorporate revised estimates of manufacturers' investment in computers for Files containing the revised data and the text and tables 1968-97 and revised estimates of manufacturers' from the supplement to the G.17 release, "Industrial investment in the components of structures for 1978- Production and Capacity Utilization: Historical Revi- 97. The new estimates of computer investment were sion," are available on the Board's World Wide Web site developed from sample data collected in conjunction at http://www.bog.frb.fed.us. Files are also available with the Census of Manufactures for 1977, 1982, through the Economic Bulletin Board of the Department 1987, and 1992, and the new estimates of compoof Commerce; for information, call (202) 482-1986. Diskettes containing either historical data (through 1985) or nents of structures were based on data collected by more recent data (1986 to those most recently published the Census Bureau in its 1994 Annual Capital Expenin the G.17 release) are available from Publications Ser- ditures Survey. vices, Board of Governors of the Federal Reserve Sys- Overall, the average annual growth rate of capital tem, Washington, DC 20551, or phone (202) 452-3245. input in 1995-97 was 0.1 percentage point lower than previously estimated. Thus, the revised capital input estimates, in conjunction with the new survey data on try's capital input and a function that captures the utilization rates and the revised production indexes, growth of an industry's productivity of capital. suggest that a higher rate of growth of aggregate For this revision, the capital input measures, which manufacturing capital productivity more than reflect estimates of the service flows derived from the accounts for the upward revision to the capacity net stocks of productive tangible assets, incorporate growth rates. However, the average annual growth updated BEA estimates of new business investment rate of capital input in 1995-97 was noticeably higher and deflators by asset type for 1993-97. (Figures on for furniture, plastics products, fabricated metal prodindustry investment through 1995 were incorporated ucts, computer and office equipment, communicafor the preliminary 1997 capacity estimate issued in tions equipment, and aircraft and parts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1998 APPENDIX A: SUMMARY TABLES BASED ON THE G.17 RELEASE, JANUARY 16, 1998 A.l. Revised data for industrial production, capacity, and utilization for total industry, 1987-97 Seasonally adjusted data except as noted Quarter Annual Aug. avg.' 1 2 3 4 Industrial production (percentage change) 1987 -.6 1.2 .4 .4 .4 .9 .6 .1 -.1 1.4 .3 .6 4.2 6.7 5.6 7.1 4.6 1988 .1 .3 .0 .6 .1 .1 .7 .5 -.4 .3 .8 .5 3.2 3.1 3.9 3.6 4.5 1989 .6 -.8 .9 .2 -.6 -.2 -1.0 .4 -.2 -.5 .4 .5 3.8 .5 -4.4 -.1 1.8 1990 -.5 .5 .5 -.6 .4 .0 .0 .2 .1 -.6 -1.3 -.6 2.0 .6 1.0 -5.8 -.2 1991 -.5 -.8 -.9 .3 .8 1.2 .1 .1 1.0 -.1 -.1 -.6 -8.3 1.5 6.2 1.1 -2.0 1992 .2 .6 .7 .8 .2 -.3 .7 -.3 .5 .8 .5 .1 1.4 6.2 1.9 5.5 3.1 1993 .5 .4 .1 .4 -.6 .2 .4 -.2 1.0 .3 .4 .8 4.4 1.1 2.1 5.8 3.6 1994 .3 .5 .7 .5 .7 .5 .5 .3 .2 .7 .8 1.0 6.0 7.1 5.5 7.5 5.4 1995 .6 -.1 .1 .0 .3 .3 .0 1.0 .4 -.4 .2 -.1 5.9 1.6 4.5 1.1 4.9 1996 -.2 1.2 -.4 1.1 .6 .5 .0 .3 .3 .0 .8 .3 2.0 7.5 3.6 3.8 3.5 1997 .3 .6 .3 .5 .2 .2 .8 .6 .3 .5 .8 .5 5.2 4.6 6.0 7.4 5.0 Industrial production (index) 1987 90.2 91.2 91.6 92.0 92.4 93.2 93.7 93.8 93.7 95.0 95.3 95.9 91.0 92.5 93.8 95.4 93.2 1988 95.9 96.2 96.3 96.8 96.9 97.0 97.6 98.1 97.8 98.0 98.8 99.3 96.1 96.9 97.8 98.7 97.4 1989 99.8 99.0 100.0 100.2 99.6 99.4 98.4 98.8 98.6 98.2 98.6 99.0 99.6 99.7 98.6 98.6 99.1 1990 98.6 99.1 99.6 99.0 99.4 99.3 99.3 99.5 99.6 99.1 97.7 97.2 99.1 99.2 99.5 98.0 98.9 1991 96.7 95.9 95.0 95.4 96.1 97.2 97.3 97.4 98.4 98.3 98.1 97.5 95.9 96.2 97.7 98.0 97.0 1992 97.7 98.3 99.0 99.8 100.0 99.7 100.3 100.0 100.5 101.2 101.8 101.8 98.3 99.8 100.3 101.6 100.0 1993 102.4 102.8 102.9 103.3 102.7 102.9 103.3 103.1 104.1 104.4 104.9 105.7 102.7 103.0 103.5 105.0 103.6 1994 106.0 106.5 107.2 107.7 108.5 109.0 109.6 109.9 110.1 110.9 111.8 112.9 106.6 108.4 109.9 111.9 109.2 1995 113.5 113.4 113.6 113.6 113.9 114.3 114.3 115.4 115.9 115.4 115.6 115.5 113.5 113.9 115.2 115.5 114.5 1996 115.3 116.7 116.3 117.5 118.3 118.9 118.9 119.3 119.6 119.7 120.6 120.9 116.1 118.2 119.3 120.4 118.5 1997 121.3 122.1 122.5 123.1 123.3 123.5 124.5 125.2 125.6 126.5 127.5 128.1 121.9 123.3 125.1 127.4 124.5 Capacity (index) 1987 114.0 114.1 114.2 114.3 114.4 114.5 114.6 114.7 114.9 115.0 115.1 115.2 114.1 114.4 114.7 115.1 114.6 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 119.2 119.3 119.5 119.7 119.9 120.1 120.2 120.4 120.6 120.8 121.0 121.2 119.3 119.9 120.4 121.0 120.2 1991 121.4 121.6 121.7 121.9 122.1 122.2 122.4 122.6 122.7 122.9 123.0 123.2 121.6 122.1 122.6 123.0 122.3 1992 123.4 123.6 123.8 124.1 124.3 124.5 124.8 125.0 125.2 125.4 125.6 125.8 123.6 124.3 125.0 125.6 124.6 1993 126.1 126.3 126.5 126.8 127.0 127.2 127.5 127.7 128.0 128.2 128.5 128.7 126.3 127.0 127.7 128.5 127.4 1994 129.1 129.5 129.9 130.3 130.7 131.2 131.6 132.0 132.4 132.8 133.3 133.7 129.5 130.7 132.0 133.3 131.4 1995 134.2 134.8 135.3 135.9 136.5 137.1 137.6 138.1 138.7 139.2 139.8 140.4 134.8 136.5 138.1 139.8 137.3 1996 140.9 141.4 142.0 142.5 143.0 143.6 144.1 144.6 145.1 145.6 146.1 146.7 141.4 143.0 144.6 146.1 143.8 1997 147.2 147.8 148.4 149.0 149.6 150.2 150.7 151.3 151.9 152.4 153.0 153.6 147.8 149.6 151.3 153.0 150.4 Utilization (level, percent) 1987 79.1 80.0 80.2 80.5 80.7 81.4 81.8 81.8 81.6 82.6 82.8 83.2 79.8 80.8 81.7 82.9 81.3 1988 83.2 83.4 83.3 83.7 83.7 83.6 84.1 84.5 84.1 84.2 84.8 85. 83.3 83.7 84.2 84.7 84.0 1989 85.4 84.6 85.3 85.3 84.7 84.4 83.4 83.6 83.3 82.8 83.0 83.2 85.1 84.8 83.4 83.0 84.1 1990 82.7 83.0 83.3 82.7 82.9 82.7 82.6 82.6 82.6 82.0 80.8 80.2 83.0 82.8 82.6 81.0 82.3 1991 79.6 78.9 78.1 78.2 78.7 79.6 79.5 79.5 80.2 80.0 79.8 79.2 78.9 78.8 79.7 79.6 79.3 1992 79.2 79.5 79.9 80.4 80.4 80.0 80.4 80.0 80.2 80.7 81.0 80.9 79.5 80.3 80.2 80.9 80.2 1993 81.2 81.4 81.3 81.5 80.9 80.9 81.0 80.7 81.4 81.4 81.6 82.1 81.3 81.1 81.0 81.7 81.3 1994 82.1 82.2 82.5 82.7 83.0 83.1 83.3 83.3 83.2 83.5 83.9 84.4 82.3 82.9 83.2 83.9 83.1 1995 84.6 84.2 83.9 83.6 83.5 83.4 83.1 83.6 83.6 82.9 82.7 82.3 84.2 83.5 83.4 82.6 83.4 1996 81.8 82.5 81.9 82.5 82.7 82.8 82.6 82.5 82.4 82.2 82.5 82.5 82.1 82.7 82.5 82.4 82.4 1997 82.4 82.6 82.5 82.6 82.4 82.3 82.6 82.8 82.7 83.0 83.3 83.4 82.5 82.4 82.7 83.2 82.7 NOTE. Monthly figures show the percentage change from the previous month; 1. Annual averages of industrial production are calculated from indexes that quarterly figures show the change from the previous quarter at a compound are not seasonally adjusted, annual rate of growth. 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

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 87 A.2. Revised data for industrial production, capacity, and utilization for manufacturing industries, 1987-97 Seasonally adjusted data except as noted Quarter Annual YYeeaarr JJaann.. FFeebb.. MMaarr.. AApprr.. MMaayy JJuunnee JJuullyy AAuugg.. SSeepptt.. OOcctt.. NNoovv.. DDeecc.. avg. 1 | 2 3 4 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 .9 .6 2.3 4.1 3.7 5.2 4.7 1989 .9 -1.2 .8 .1 -.7 .0 -1.1 .3 -.3 -.6 .4 .1 4.3 -.7 -4.5 -1.4 1.9 1990 -.2 .9 .3 -.8 .4 -.1 .0 .3 -.1 -.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 .4 .7 .8 .7 .4 -.1 .6 -.3 .4 .7 .6 -.1 2.8 7.0 2.4 5.0 4.0 1993 1.0 .2 .1 .6 -.5 .0 .4 -.3 1.1 .2 .5 .9 5.0 1.6 1.6 6.2 3.8 1994 .1 .6 .8 .8 .8 .2 .7 .4 .3 .9 .9 1.0 6.3 8.8 6.2 9.0 6.0 1995 .6 -.2 .2 .0 .2 .4 -.2 .9 .7 -.4 .0 -.1 6.4 1.4 3.9 1.5 5.4 1996 -.1 1.2 -.6 1.4 .6 .6 .4 .2 .3 .0 .8 .5 1.5 8.1 4.9 4.2 3.6 1997 ..33 .7 .4 .4 .2 .3 .6 .7 .1 .7 1.2 .5 6.2 4.9 6.1 8.3 5.7 Industrial production (index) 1987 89.6 91.0 91.2 91.6 91.9 92.8 93.4 93.3 93.4 94.6 95.1 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 97.3 97.5 97.7 97.9 98.9 99.4 95.6 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 97.8 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 99.0 98.4 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 97.4 98.1 98.9 99.6 100.0 99.8 100.5 100.2 100.6 101.3 101.9 101.7 98.1 99.8 100.4 101.6 100.0 1993 102.7 102.9 103.0 103.6 103.1 103.1 103.5 103.2 104.4 104.6 105.2 106.0 102.9 103.3 103.7 105.3 103.8 1994 106.2 106.8 107.7 108.5 109.4 109.6 110.4 110.9 111.2 112.2 113.2 114.3 106.9 109.2 110.8 113.2 110.0 1995 115.1 114.9 115.1 115.1 115.3 115.8 115.5 116.6 117.5 117.0 117.0 116.9 115.0 115.4 116.5 116.9 116.0 1996 116.7 118.1 117.4 119.0 119.7 120.4 120.9 121.1 121.5 121.5 122.5 123.1 117.4 119.7 121.1 122.4 120.2 1997 112233..55 112244..44 112244..99 112255..44 112255..77 112266..11 126.9 127.9 128.0 128.9 130.5 131.1 124.2 125.7 127.6 130.2 127.0 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 115.2 115.3 115.4 115.6 115.7 115.8 116.0 116.1 116.3 116.5 116.6 116.8 115.3 115.7 116.1 116.6 115.9 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 119.9 120.1 120.3 120.5 120.7 120.9 121.1 121.3 121.5 121.7 122.0 122.2 120.1 120.7 121.3 122.0 121.0 1991 122.4 122.6 122.8 123.0 123.1 123.3 123.5 123.7 123.8 124.0 124.2 124.3 122.6 123.1 123.7 124.2 123.4 1992 124.6 124.8 125.1 125.3 125.6 125.8 126.1 126.3 126.6 126.8 127.0 127.3 124.8 125.6 126.3 127.0 125.9 1993 127.6 127.8 128.1 128.3 128.6 128.9 129.1 129.4 129.7 129.9 130.2 130.5 127.8 128.6 129.4 130.2 129.0 1994 130.9 131.3 131.8 132.2 132.7 133.2 133.6 134.1 134.6 135.1 135.5 136.0 131.3 132.7 134.1 135.5 133.4 1995 136.6 137.2 137.8 138.5 139.1 139.8 140.4 141.1 141.7 142.4 143.0 143.7 137.2 139.2 141.1 143.0 140.1 1996 144.3 144.9 145.6 146.2 146.8 147.4 148.0 148.6 149.2 149.8 150.4 151.0 144.9 146.8 148.6 150.4 147.7 1997 115511..66 115522..33 115522..99 115533..66 115544..33 115555..00 155.7 156.3 157.0 157.6 158.3 159.0 152.3 154.3 156.3 158.3 155.3 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 85.0 84.2 84.1 83.0 83.1 82.7 82.1 82.2 82.1 85.1 84.4 82.9 82.1 83.6 1990 81.8 82.5 82.6 81.8 82.0 81.8 81.6 81.7 81.5 80.9 79.7 79.0 82.3 81.9 81.6 79.9 81.4 1991 78.2 77.5 76.6 76.8 77.1 78.1 78.2 78.2 79.0 78.9 78.6 78.1 77.5 77.3 78.5 78.5 77.9 1992 78.2 78.6 79.1 79.5 79.6 79.4 79.7 79.3 79.5 79.9 80.2 79.9 78.6 79.5 79.5 80.0 79.4 1993 80.5 80.5 80.4 80.7 80.2 80.0 80.2 79.8 80.5 80.5 80.8 81.3 80.5 80.3 80.1 80.8 80.5 1994 81.1 81.3 81.7 82.1 82.4 82.3 82.6 82.7 82.6 83.0 83.5 84.1 81.4 82.3 82.6 83.5 82.5 1995 84.3 83.7 83.5 83.1 82.9 82.8 82.3 82.6 82.9 82.2 81.8 81.3 83.8 82.9 82.6 81.8 82.8 1996 80.8 81.5 80.6 81.4 81.6 81.7 81.7 81.5 81.4 81.1 81.5 81.5 81.0 81.6 81.5 81.4 81.4 1997 8811..44 8811..77 8811..66 8811..66 81.4 81.3 81.5 81.8 81.6 81.8 82.4 82.5 81.6 81.5 81.6 82.2 81.7 NOTE. See notes to table A. 1. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1998 A.3. Rates of growth in industrial production, by major market group, 1993-97 Difference between growth rates: Revised growth rate revised less earlier Market group (percent) (percentage points) 1993 1994 1995 1996 1997 1993 1994 1995 1996 1997' Total index 3.3 6.5 3.3 4.2 5.8 .4 .8 1.5 .3 .2 I Products, total 2.4 4.6 1.8 3.9 4.6 .5 .3 .8 .1 .0 Final products 2.3 4.7 2.2 4.0 5.0 .3 .4 .9 -.1 -.4 I Consumer goods 1.9 4.4 1.7 2.4 2.8 -.3 .5 .9 -.1 .2 I Durable 9.5 6.8 .6 3.4 6.2 -.8 .3 -.4 1.0 -.4 Automotive products 10.6 6.0 -2.1 1.6 9.0 -1.0 .3 -1.2 .7 -.1 I Autos and trucks 15.9 6.2 -4.2 1.6 11.1 -1.6 .6 -1.7 1.1 -.2 Autos 14.4 6.6 -6.9 -3.8 3.7 -2.3 1.7 -2.0 .0 -.3 Trucks 17.1 4.4 1.6 8.0 15.8 -.2 -.9 -1.4 .7 -.4 I Auto parts and allied goods 2.1 5.6 1.8 1.3 5.8 -.1 -.2 ..11 .0 ..11 Other durable goods 8.8 7.4 2.7 4.8 3.9 -.7 .2 ..33 1.4 --..77 Appliances and electronics 18.3 13.4 8.8 8.0 6.8 -1.4 -.9 -5.0 -2.6 -3.2 Appliances and air conditioning .. 14.0 3.3 2.1 1.8 -1.2 1.0 -.5 -2.7 .3 —4.4 I Home electronics 22.5 25.3 15.4 15.3 17.2 -4.0 -.5 -6.7 -3.3 2.1 Carpeting and furniture 3.4 5.5 -1.4 5.4 3.6 -.8 .0 1.2 5.0 1.1 Miscellaneous 5.8 4.3 1.0 2.5 2.7 -.1 1.1 4.0 3.1 1.0 I Nondurable .0 3.7 2.0 2.1 1.9 -.2 .5 1.3 -.5 .4 I Nonenergy -.6 5.1 1.3 2.0 2.1 -.2 .6 1.6 -.6 .6 I Foods and tobacco -.9 6.8 .4 1.9 1.6 .0 .5 .9 -.4 .0 Clothing 1.7 4.3 -5.4 -4.1 -1.1 -.5 1.2 2.5 -1.4 -.4 I Chemical products -2.0 5.2 5.2 4.6 3.8 -.4 -.2 1.5 -.7 2.2 I Paper products 1.1 -.4 3.7 2.4 3.0 -.2 1.9 3.6 -.4 .6 Energy products 3.3 -4.1 6.4 2.8 1.2 -.1 -.1 -.3 .3 -.5 I Fuels 2.4 -2.3 1.3 3.3 2.4 .0 .0 .0 .1 -.8 I Utilities 3.7 -5.0 8.7 2.6 .6 -.2 -.2 -.3 .4 -.6 Equipment, total 2.9 5.1 3.1 6.7 8.7 1.4 .2 .7 .0 -1.3 Business equipment 4.1 8.6 5.4 8.2 10.5 .7 .5 .8 .3 -1.0 1 Information processing and related 3.8 13.5 13.0 11.8 12.4 1.8 2.0 ..88 11..11 -2.5 Computer and office 15.7 29.8 43.0 37.4 32.5 -.1 -.5 ..22 --11..55 .1 Industrial 6.7 9.8 7.7 .0 5.6 .0 .9 .5 .2 -.8 1 Transit -2.3 -2.5 -12.8 19.1 15.6 -.2 -3.7 .6 -2.4 .9 1 Autos and trucks 15.3 2.8 -7.6 .0 5.4 1.1 -2.1 -1.0 1.8 2.2 Other 9.2 6.1 1.8 4.8 9.5 -.4 .8 2.6 1.2 1.8 I Defense and space equipment -6.1 -7.6 -8.6 -1.5 -2.0 .4 .5 -.4 -.3 -1.2 I Oil and gas well drilling 24.0 -7.0 2.0 7.0 9.0 21.8 -5.8 6.3 -7.0 -11.2 1 Manufactured homes 7.5 7.6 6.6 -.9 .1 .1 -5.4 -8.2 -1.3 -3.3 Intermediate products 2.9 4.4 .6 3.7 3.4 1.1 .0 .5 .7 1.0 Construction supplies 5.9 7.2 -.5 5.8 2.0 .1 .6 .3 .1 -.6 Business supplies 1.0 2.7 1.2 2.4 4.4 1.6 -.3 .6 1.1 2.0 Materials 4.8 9.6 5.4 4.7 7.6 .1 1.7 2.6 .7 .4 Durable 8.2 13.9 10.4 6.7 11.6 .0 3.0 4.7 1.2 .7 Consumer parts 16.0 10.1 2.3 .1 7.2 -.3 2.2 3.1 -.8 -1.0 Equipment parts 6.8 22.7 25.8 14.9 21.7 .3 6.6 9.2 3.7 2.2 Other 5.9 9.0 2.1 3.0 5.2 -.2 .6 1.8 .3 .7 Basic metals 5.1 7.1 1.4 2.6 5.6 .2 .6 .8 -.1 1.0 Nondurable 2.4 6.2 -2.4 3.7 3.1 .7 .3 -.1 .9 .3 Textile 4.5 9.1 -7.3 .9 4.0 .2 .5 -.4 -.2 -.1 Paper 5.5 5.2 -3.9 2.9 5.1 .1 -.5 -1.0 .4 -.9 Chemical -.3 6.1 -.2 6.1 1.8 1.5 .6 -.1 1.6 1.2 Other 3.9 5.8 -2.7 .6 3.7 -.1 .3 1.1 .5 -1.2 Energy -.6 2.0 .8 .4 1.7 .0 -.1 -.1 -.6 .3 Primary -2.7 3.4 .6 -1.0 .6 .0 .0 -.3 -.9 .1 Converted fuel 3.3 -.2 1.2 3.0 3.7 .0 -.2 .2 .2 .5 Special aggregates Total excluding: Autos and trucks 3.0 6.6 3.6 4.3 55..77 ..44 ..99 11..66 ..33 ..22 Motor vehicles and parts 2.6 6.5 3.6 4.5 5.5 .4 ..88 1.5 .4 .1 Computers 3.1 6.2 2.7 3.7 5.4 .4 ..99 1.6 ..66 .4 Computers and semiconductors 2.7 4.8 .9 2.9 4.1 .4 .5 1.0 ..33 .3 Consumer goods excluding: Autos and trucks 1.1 4.3 22..11 22..44 22..33 --..22 ..55 11..11 --..22 ..22 Energy 1.7 5.5 1.1 2.3 3.0 -.3 .6 1.1 -.2 .3 Business equipment excluding: Autos and trucks 3.0 9.2 6.9 99..22 1111..00 ..66 .8 11..11 ..33 --11..22 Computers and office equipment 3.1 6.9 2.3 5.7 8.7 .7 .7 1.2 1.3 .1 Materials excluding energy 6.5 11.7 6.6 5.8 9.2 .2 2.2 3.2 1.1 .6 NOTE. Growth rates are calculated as the percentage change in the seasonally 1. Through the third quarter of 1997. 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: Annual Revision and 1997 Developments 89 A.4. Revised growth rates of industrial production, by industry group, 1993-97 Difference between growth rates: Revised growth rate revised less earlier SSeerriieess cc SS oo II dd CC ee11 (percent) (percentage points) 1993 1994 1995 1996 1997 1993 1994 1995 1996 1997 2 Total index 3.3 6.5 3.3 4.2 5.8 .4 .8 1.5 3 .2 Manufacturing 3.6 7.6 3.3 4.7 6.4 .3 1.0 1.7 .5 .2 Primary processing 4.2 6.6 -.4 3.5 3.8 .2 .4 .4 .6 .1 Advanced processing 3.3 8.0 5.1 5.2 7.6 .3 1.3 2.3 .5 .2 Durable manufacturing 5.9 9.9 6.2 6.5 9.6 .1 1.7 2.5 .8 .0 Lumber and products 24 2.0 5.0 1.2 2.8 1.6 -.3 .9 1.2 .1 -.5 Furniture and fixtures 25 3.1 5.3 .4 7.3 3.7 -.3 1.5 2.2 4.8 1.6 Stone, clay, and glass products 32 4.0 5.6 1.5 3.8 5.3 -.2 .9 2.0 1.9 2.0 Primary metals 33 7.4 8.9 -.4 3.5 6.2 .2 .5 .5 -.2 .3 Iron and steel 331,2 8.9 7.8 -.9 2.2 6.7 -.1 .8 .2 -.2 .6 Raw steel 33 lpt 5.7 6.2 .7 -1.7 8.0 .1 .1 .1 .0 -.3 Nonferrous metals 333-6,9 5.4 10.4 .2 4.9 5.5 .5 .1 .9 -.2 .0 Fabricated metal products 34 4.4 9.0 1.2 3.2 4.0 -.1 .5 .3 .5 -.5 Industrial machinery and equipment .. 35 11.6 15.3 12.4 7.6 11.3 -.5 .6 .8 -2.3 -2.9 Computer and office equipment 357 18.9 30.5 37.8 36.5 34.4 -1.3 -.7 -2.9 -1.0 2.3 Electrical machinery 36 10.4 27.2 25.7 12.6 18.7 1.8 8.7 9.8 5.4 2.4 Semiconductors and related components 3672-9 16.5 55.0 59.3 25.5 40.2 .0 17.7 22.9 9.5 8.8 Transportation equipment 37 4.5 1.3 -5.3 5.5 11.6 -.3 .1 .9 -1.0 .4 Motor vehicles and parts 371 17.5 7.8 -1.6 -1.4 10.9 -.5 1.0 1.4 .2 1.2 Autos and light trucks 3377 llpptt 13.2 5.1 -4.5 1.0 9.6 -.4 -.6 -1.3 1.4 -.4 Aerospace and miscellaneous transportation equipment 372-6,9 -9.0 -7.1 -10.8 17.0 12.7 -.1 -1.1 -.3 -1.9 -.5 Instruments 38 -1.8 .7 1.9 4.2 3.9 -.1 -.5 1.4 1.5 -.2 Miscellaneous manufactures 39 5.7 3.9 3.3 5.2 4.1 .2 1.3 2.4 2.0 1.5 Nondurable manufacturing 1.0 4.9 -.1 2.5 2.7 .4 .2 .8 .2 .5 Foods 20 1.6 2.4 1.6 1.7 2.0 .0 .4 .8 -.4 .0 Tobacco products 21 -16.3 43.5 -5.2 2.4 .6 .0 3.1 3.6 -.2 1.0 Textile mill products 22 4.8 6.0 -5.1 .1 5.1 -.2 .0 .4 -.4 .3 Apparel products 23 1.7 6.6 -4.5 -3.4 -1.6 -.5 1.4 3.1 -.7 -.4 Paper and products 26 6.6 4.6 -2.8 2.3 4.9 .0 -.1 -.3 .6 -.3 Printing and publishing 27 -.5 1.2 .0 1.6 3.9 2.1 .0 1.4 1.2 2.0 Chemicals and products 28 -1.0 4.7 2.1 5.4 2.0 .4 .1 .5 .3 1.1 Petroleum products 29 2.6 -1.0 .5 3.3 2.6 -.2 .0 .1 -.1 -.1 Rubber and plastic products 30 6.7 9.6 .0 3.4 4.1 .2 .1 .5 .9 -.7 Leather and products 31 -3.3 -8.9 -11.0 -4.0 -7.8 .6 -.6 -2.1 .7 -.8 Mining 1.7 .9 -.8 1.7 2.3 2.0 -.7 .5 -1.7 -.1 Metal mining 10 2.5 -3.1 4.5 3.3 5.2 .3 -.1 -.3 1.6 .3 Coal mining 12 -3.1 9.2 -.1 2.5 4.2 .1 .3 .1 -1.6 -.4 Oil and gas extraction 13 2.2 -1.2 -1.5 .9 2.0 2.8 -1.0 .9 -2.1 -.3 Stone and earth minerals 14 5.7 6.9 -1.2 5.4 .4 .1 -.1 -1.3 -1.5 .0 Utilities 2.0 -.3 6.4 1.5 2.3 .0 -.2 -.1 .0 .1 Electric 491,493pt 1.1 1.7 5.3 1.0 2.6 .1 -.2 .0 .1 -.5 Gas 492,493pt 5.2 -7.7 10.8 3.1 1.1 -.2 -.5 -.1 .0 1.9 Special aggregate Manufacturing excluding computer and office equipment 3.3 7.1 2.6 4.0 5.9 .3 1.1 1.9 .8 .5 NOTE. Growth rates are calculated as the percentage change in the seasonally products, furniture and fixtures, industrial and commercial machinery and adjusted index from the fourth quarter of the previous year to the fourth quarter computer equipment, electrical machinery, transportation equipment, instruof the year specified. ments, and miscellaneous manufactures. Primary-processing manufacturing includes textile mill products; paper and 1. Standard Industrial Classification; see Executive Office of the President, products; industrial chemicals, synthetic materials, and fertilizers; petroleum Office of Management and Budget, Standard Industrial Classification Manual, products; rubber and plastics products; lumber and products; primary metals; 1987 (U.S. Government Printing Office, 1987). fabricated metals; and stone, clay, and glass products. Advanced-processing 2. Through the third quarter of 1997. 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

90 Federal Reserve Bulletin • February 1998 A.5. Revised growth rates of capacity, by industry group, 1993-97 Difference between growth rates: Revised growth rate revised less earlier IInndduussttrryy ggrroouupp cc SS oo II dd CC ee 11 (percent) (percentage points) 1993 1994 1995 1996 1997 1993 1994 1995 1996 1997 Total index 2.3 3.7 4.9 4.5 4.7 .5 .9 1.5 .8 .8 Manufacturing 2.5 4.1 5.5 5.1 5.3 .5 1.0 1.8 1.0 1.0 Primary processing 1.4 2.3 2.9 3.3 3.4 .2 .3 .8 1.0 i.ol Advanced processing 3.0 5.0 6.8 5.9 6.3 .6 1.4 2.3 1.1 1.0 Durable 3.1 5.9 8.3 7.5 8.0 .5 1.8 2.8 1.3 1.41 Lumber and products 24 .7 2.9 3.9 4.4 4.0 .4 .4 1.7 1.6 .81 Furniture and fixtures 25 2.2 2.5 3.9 5.8 4.9 1.0 1.1 2.6 3.6 2.6 • Stone, clay, and glass products 32 .0 .8 2.3 3.3 3.7 -.1 -.1 1.1 1.1 1.3 Primary metals 33 -.4 2.4 2.5 3.6 3.8 -.2 1.1 .7 .3 .31 Iron and steel 331,2 -1.0 2.8 1.6 4.3 3.9 .0 .0 -.3 -.2 •21 Raw steel 33 lpt -4.2 .9 3.1 2.8 5.8 .0 .0 .0 1.6 -.2 Nonferrous 333-6,9 .4 2.0 3.5 2.8 3.7 -.5 2.3 1.9 1.0 .3 | Fabricated metal products 34 2.4 2.6 4.0 4.7 5.1 1.0 1.1 1.3 1.8 2.4 • Industrial machinery and equipment 35 4.8 8.3 10.8 11.4 11.6 .1 2.0 1.8 .0 -1.1 Computer and office equipment 357 20.0 21.8 31.2 39.9 41.0 1.0 -.9 2.2 3.8 1.4 Electrical machinery 36 10.2 18.3 25.9 19.3 19.2 2.1 6.6 9.4 2.8 3.7 Semiconductors and related components 3672-9 22.7 41.2 56.0 31.8 36.8 2.1 13.9 20.9 2.1 8.0 Transportation equipment 37 .6 3.2 3.8 2.4 3.3 --..11 .2 1.0 1.1 1.6 Motor vehicles and parts 371 2.6 7.1 8.1 4.7 4.6 --..33 -.4 .9 1.3 3.1 Autos and light trucks 37 lpt .2 5.2 5.9 1.2 2.3 .2 -.3 .0 -.6 .1 Aerospace and miscellaneous 372-6,9 -1.8 -1.1 -1.2 -.8 1.9 ..11 1.0 1.3 .7 -.2 Instruments 38 1.2 .1 .5 .8 1.8 ..77 .0 .4 .8 1.4 Miscellaneous 39 2.0 1.9 2.8 3.2 3.2 .6 .5 1.4 1.8 1.6 Nondurable 1.9 2.0 2.3 2.4 2.2 .4 .2 .7 .7 .6 Foods 20 1.9 2.1 2.9 2.6 2.4 .0 .1 .8 .7 .6 Textile mill products 22 2.8 3.8 3.2 2.1 1.8 .2 .2 -.9 -.3 1.2 Apparel products 23 .8 1.5 2.2 .3 .0 .3 1.0 -.8 -1.0 -.1 Paper and products 26 2.0 1.4 2.4 2.4 1.8 -.4 -.1 .5 .8 .8 Printing and publishing 27 .1 .7 .8 .9 .7 .9 ..88 .9 1.5 1.4 Chemicals and products 28 3.2 2.8 2.7 3.6 3.3 1.0 --..22 .7 .2 .0 Petroleum products 29 -.6 1.9 -.2 .3 1.7 .0 .0 .0 .0 ..88 Rubber and plastics products 30 3.5 4.3 5.1 4.5 4.2 .2 .1 2.8 2.8 11..44 Leather and products 31 -2.5 -2.1 -2.5 -2.3 -2.7 -.4 -.4 -.7 -.9 .0 Mining .7 1.0 -.5 .2 .7 1.2 .4 .0 .6 -.7 Metal mining 10 1.5 -1.6 .8 .7 .7 -.2 .0 .0 -.4 -.3 Coal mining 12 1.7 4.1 -.3 1.0 1.7 .3 -.2 .6 .2 .4 Oil and gas extraction 13 -.2 .3 -1.0 -.3 .2 1.4 .4 -.2 .8 -1.2 Stone and earth minerals 14 4.2 2.4 2.4 3.4 4.0 2.3 1.4 .5 1.6 1.7 Utilities .7 1.3 2.0 1.5 1.4 .0 .1 .1 -.6 -.2 Electric 491,3pt 1.4 1.0 2.6 1.6 1.3 .0 .0 .4 -.9 -.5 Gas 492,3pt .2 ,4 .5 2.1 1.9 .0 .0 .0 1.3 1.4 Special aggregates Total excluding computer and office equipment 2.0 3.4 44..55 44..00 4.1 ..55 11..00 11..66 11..00 1.1 Manufacturing excluding computer and office equipment 2.2 33..77 55..00 44..55 44..66 ..55 11..11 11..99 11..22 11..33 NOTE. See note to table A.4. pt Part of classification. 1. Standard Industrial Classification; see table A.4, note 1. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization: Annual Revision and 1997 Developments 91 A.6. Revised and earlier capacity utilization rates, by industry group, 1967-97 Difference between growth Revised rate rates: revised less earlier (percent of capacity) SSIICC (percentage points) IItteemm ccooddee11 1967-96 1988-89 1990-91 1995:Q4 1996:Q4 1997:Q4 1995:Q4 1996:Q4 1997:Q3 avg. high low Total index 82.1 85.4 78.1 82.6 82.4 83.2 -.5 -.9 -1.3 Manufacturing 81.1 85.7 76.6 81.8 81.4 82.2 -.5 -.9 -1.4 Primary processing 82.3 88.9 77.7 85.8 85.9 86.2 -.4 -.7 -1.3 Advanced processing 80.5 84.2 76.1 80.0 79.4 80.4 -.6 -1.0 -1.5 Durable 79.4 84.6 73.1 81.2 80.4 81.6 -.8 -1.3 -2.2 Lumber and products 24 82.6 93.6 75.5 84.0 82.7 80.8 -.7 -2.0 -2.9 Furniture and fixtures 25 81.6 86.6 72.5 79.9 81.0 80.1 -1.4 -.5 -1.1 Stone, clay, and glass products 32 78.1 83.5 69.7 80.9 81.3 82.6 1.6 2.2 2.6 Primary metals 33 80.8 92.7 73.7 90.8 90.7 92.8 -.3 -.7 -.7 Iron and steel 331,2 80.7 95.2 71.8 92.0 90.2 92.6 1.3 1.3 1.6 Raw steel 33 Ipt 80.6 92.7 71.5 92.7 88.7 90.5 .2 -1.2 -1.5 Nonferrous 333-6,9 81.2 89.3 74.2 89.7 91.5 93.2 -2.1 -3.2 -3.6 Fabricated metal products 34 77.9 82.0 71.9 81.8 80.6 79.8 -2.6 -3.6 -5.2 Industrial machinery and equipment 35 81.3 85.4 72.3 87.8 84.9 84.6 -2.4 -5.4 Computer and office equipment 357 81.0 86.9 66.9 84.6 82.5 78.7 -5.1 -8.1 -7.6 Electrical machinery 36 81.0 84.0 75.0 87.0 82.0 81.6 -.3 1.8 1.2 Semiconductors and related components 3672-9 79.6 81.0 75.5 87.6 83.3 85.4 -.6 4.4 5.0 Transportation equipment 37 75.8 85.8 68.5 69.8 71.8 77.6 .4 -1.1 -1.8 Motor vehicles and parts 371 76.6 89.1 55.9 76.6 72.1 76.4 1.9 1.1 .1 Autos and light trucks2 371pt 92.3 53.3 76.7 76.6 82.1 -1.1 .5 .2 Aerospace and miscellaneous 372-6,9 75. i 87.3 79.2 60.6 71.5 79.1 -1.9 -4.0 -4.6 Instruments 38 81.7 81.4 77.2 76.8 79.5 81.1 -.7 -.3 -1.2 Miscellaneous 39 75.2 79.0 71.7 77.7 79.2 79.9 ,1 .2 .1 Nondurable 83.4 87.3 80.7 82.4 82.5 82.9 -.1 -.5 -.5 Foods 20 83.0 85.4 82.7 81.6 80.9 80.6 .1 -.8 -1.1 Textile mill products 22 85.5 90.4 77.7 84.1 82.5 85.1 .5 .4 -.1 Apparel products 23 81.2 85.1 75.5 79.8 76.8 75.6 2.4 • 2.5 2.3 Paper and products 26 89.3 93.5 85.0 88.6 88.5 91.2 -.4 -.6 -1.3 Printing and publishing 27 85.8 91.7 79.6 80.9 81.4 84.0 -.5 -.7 -.4 Chemicals and products 28 79.5 86.2 79.3 78.4 79.7 78.7 -.5 -.3 .3 Petroleum products 29 86.3 88.5 85.1 91.7 94.4 95.3 -.1 -.2 -.8 Rubber and plastics products 30 84.8 89.6 77.4 88.8 87.9 87.8 -2.1 -3.8 -5.2 Leather and products 31 81.2 83.3 76.1 72.5 71.3 67.5 -.5 .7 .3 Mining 87.5 88.0 87.0 87.0 88.3 89.7 -1.0 -3.0 -2.8 Metal mining 10 78.6 89.4 79.9 88.2 90.5 94.5 .5 2.2 2.6 Coal mining 12 86.9 91.5 83.4 84.9 86.2 88.3 .0 -1.4 -2.0 Oil and gas extraction 13 88.5 88.2 88.7 87.7 88.7 90.3 -.7 -3.2 -2.8 Stone and earth minerals 14 84.8 89.0 79.4 85.1 86.8 83.8 -6.0 -9.0 -10.0 Utilities 87.2 92.6 83.4 90.0 90.0 90.8 -.3 .2 .4 Electric 491,3pt 89.1 95.0 87.1 91.4 90.9 92.1 -.4 .5 .5 Gas 492,3pt 82.4 85.0 67.1 84.4 85.3 84.5 -.8 -1.9 -1.5 Special aggregates Total excluding computer and office equipment 82.1 85.5 78.3 82.6 82.4 83.3 -.4 -.7 -1.1 Manufacturing excluding computer and office equipment 81.1 85.8 76.8 81.7 81.4 82.3 -.4 -.7 -1.2 NOTE. The "high" column refers to periods in which utilization generally 1. Standard Industrial Classification; see table A.4, note 1. peaked; the "low" column refers 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

92 Industrial Production and Capacity Utilization for December 1997 Released for publication January 15 128.1 percent of its 1992 average, total industrial production in December was 5.9 percent higher than it was in December 1996. For the fourth quarter as a Industrial production rose 0.5 percent in December, whole, industrial production grew 7.4 percent at an with widespread increases among most major market annual rate after an increase of 6.0 percent in the and industry groups. The overall gain in output was third quarter. The rate of industrial capacity utilizaheld back a bit by a decline in motor vehicle produc- tion edged up to 83.4 percent—its highest rate since tion, which had been quite high in November. At September 1995. Industrial production indexes Twelve-month percent change Twelve-month percent change Total industry Materials 10 5 Products 1991 1992 1993 1994 1995 1996 1997 1991 1992 1993 1994 1995 1996 1997 Capacity and industrial production Ratio scale, 1992 production = 100 Ratio scale, 1992 production = 100 ~~ Total industry - 160 — Manufacturing 160 Capacity 140 — Capacity 140 120 — ^ _—^—— 120 100 — — — —- 100 Production 80 Production _ 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 t i ll 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 Utilization — 90 Utilization 80 ** — —- 80 70 70 J I L J I I I I I I I L 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1983 1985 1987 1989 1991 1993 1995 1997 1983 1985 1987 1989 1991 1993 1995 1997 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

93 Industrial production and capacity utilization, December 1997 Industrial production, index, 1992=100 Percentage change CCaatteeggoorryy 11999977 19971 DDeecc.. 11999966 ttoo Sept.r Oct.' Nov.' Dec. p Sept.r Oct.' Nov.r Dec.P DDeecc.. 11999977 Total 125.6 126.5 127.5 128.1 5.9 Previous estimate 125.7 126.4 127.3 Major market groups Products, total2 119.1 120.0 120.8 121.2 -.1 .8 .7 .3 4.6 Consumer goods 114.5 115.4 116.3 116.6 -.1 .8 .8 .3 2.6 Business equipment 144.4 145.4 147.1 147.8 -.1 .7 1.2 .4 10.3 Construction supplies 120.4 121.3 122.6 123.4 -1.8 .7 1.1 .6 3.9 Materials 136.1 136.9 138.3 139.3 .9 .6 1.0 .7 8.0 Major industry groups Manufacturing 128.0 128.9 130.5 131.1 .1 .7 1.2 .5 6.5 Durable 144.4 145.4 147.8 148.8 .1 .7 1.7 .6 10.0 Nondurable 111.3 112.0 112.7 113.1 .2 .7 .6 .4 2.5 Mining 106.5 106.2 105.8 106.1 .1 -.3 -.4 .3 3.1 Utilities 115.1 116.7 114.5 114.9 1.9 1.4 -1.9 .4 1.9 Capacity utilization, percent 1996 1997 Average, Low, High, 1967-97 1982 1988-89 Dec. Sept.1 Oct. Nov. Dec. P Total 82.1 71.1 85.4 82.5 82.7 83.0 83.3 83.4 4.7 Previous estimate 82.8 82.9 83.2 Manufacturing 81.1 69.0 85.7 81.5 81.6 81.8 82.4 82.5 5.3 Advanced processing 80.5 70.4 84.2 79.7 79.7 80.0 80.6 80.6 6.3 Primary processing . 82.4 66.2 88.9 85.7 85.7 85.7 86.3 86.7 3.4 Mining 87.5 80.3 88.0 87.6 90.1 89.8 89.5 89.7 .7 Utilities 87.3 75.9 92.6 89.8 90.8 92.0 90.1 90.3 1.3 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. MARKET GROUPS business equipment, the output of industrial equipment posted a substantial rise. The production of The output of consumer goods rose 0.3 percent, transit equipment retreated somewhat from the high although it was held down by a 2.5 percent reduction level in November, as reduced production of motor in the output of automotive products. The output of vehicles outweighed a continued increase in aircraft other durable consumer goods, especially appliances, production. grew sharply for a second consecutive month. The The production of construction supplies increased production of nondurable consumer goods increased further and has risen nearly 4 percent over the past 0.4 percent, largely as a result of an increase in year. Mainly reflecting another sizable gain in duraenergy products, mainly automotive gasoline. The ble materials, the output of materials rose noticeably output of non-energy nondurable consumer goods, again in December. Within this group, the output of which had been flat for most of the year, has picked parts for high-technology equipment and aircraft conup somewhat in recent months. tinued to increase rapidly. The production of non- The output of business equipment increased durable goods materials has improved in recent 0.4 percent, with the most significant gain occurring months. The output of energy materials, retracing in information processing equipment. Although most of its decline in November, rose 0.5 percent. growth in the output of computers has decelerated recently, sharp gains for instruments and communica- INDUSTRY GROUPS tions equipment resulted in another sizable gain in the production of information processing equipment Factory output increased 0.5 percent in December, a in December. Among other major components of slower pace than that of the two previous months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1998 Excluding motor vehicles and parts, however, growth Capacity utilization for manufacturing edged up in manufacturing output was about 0.8 percent in to 82.5 percent, its highest level since September each of the past three months. Within the durable and 1995. Utilization in advanced-processing industries nondurable groups, most major industries posted remained at 80.6 percent, while utilization in gains in December. The main exception was motor primary-processing industries climbed 0.4 percentvehicles and parts. The output of durables rose age point, to 86.7 percent. Utilization in advanced- 0.6 percent, with the strongest increases occurring in processing industries remained at about its long-run aircraft, fabricated metal products, and electronic average, while the rate in primary processing induscomponents. During the past twelve months, the tries was 4 percentage points above its long-run averoutput of durables has increased 10 percent. Non- age. Higher operating rates for petroleum refining, durables, which grew only about a quarter as much as primary metals, and fabricated metal products durables over the past year, expanded 0.4 percent in boosted the overall rate among primary processors in December. December. The operating rates for mining and utilities increased slightly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

95 Announcements APPOINTMENTS OF DEPUTY CHAIRMEN OF Chairman and Chief Executive Officer, Commercial TWO FEDERAL RESERVE BANKS Federal Bank, Omaha, Nebraska. The four new members, named for two-year terms The Federal Reserve Board on December 5, 1997, beginning January 1, are the following: announced the appointments of deputy chairmen of Garold R. Base, CCUE, President, and CEO, Community two Federal Reserve Banks for 1998. The new deputy Credit Union, Piano, Texas chairmen are the following: David A. Bochnowski, Chairman, President, and CEO, Peoples Bank, SB, Munster, Indiana Boston Richard P. Coughlin, President and CEO, Stoneham William O. Taylor, Chairman and Chief Executive Officer, Co-operative Bank, Stoneham, Massachusetts Globe Newspaper Company, Boston, Massachusetts. F. Weller Meyer, President and CEO, Acacia Federal Savings Bank, Falls Church, Virginia. Kansas City Terrence P. Dunn, President and Chief Executive Officer, J.E. Dunn Construction Company, Kansas City, Missouri. REGULATION B: REVISIONS The names of the chairmen of the twelve Federal The Federal Reserve Board on December 11, 1997, Reserve Banks and the other deputy chairmen were announced publication of revised regulations under announced last month. Each Reserve Bank has a Regulation B (Equal Credit Opportunity) to impleboard of directors of nine members. The Board of ment legislation creating a legal privilege for the Governors in Washington appoints three of these results of "self-tests" that creditors voluntarily condirectors and designates one of its appointees as duct to determine the level of their compliance with chairman and another as deputy chairman. the act. The Department of Housing and Urban Development is issuing a substantially similar regulation under the Fair Housing Act. The revisions were effective January 30, 1998. APPOINTMENTS OF MEMBERS OF THE THRIFT The self-testing privilege applies only if the credi- INSTITUTIONS ADVISORY COUNCIL tor takes appropriate corrective action to address possible discrimination found in the self-test. The Federal Reserve Board on December 23, 1997, announced the names of four new members of its Thrift Institutions Advisory Council and designated a REGULATIONS G, T, U, AND X: new president and vice president of the council for FINAL AMENDMENTS 1998. The council is an advisory group made up of The Federal Reserve Board announced on Decemtwelve representatives from thrift institutions. The ber 23, 1997, adoption of final amendments to reduce panel was established by the Board in 1980 and regulatory distinctions between broker-dealers, includes savings and loan, savings bank, and credit banks, and other lenders and implement changes to union representatives. The council meets at least three the Board's securities credit regulations. times each year with the Board of Governors to The amendments to Regulations G (Securities discuss developments relating to thrift institutions, Credit by Persons other than Banks, Brokers, or the housing industry, mortgage finance, and certain Dealers), T (Credit by Brokers and Dealers), U regulatory issues. (Credit by Banks for Purchasing or Carrying Margin The new council president for 1998 is Charles R. Stocks), and X (Borrowers of Securities Credit) Rinehart, Chairman and Chief Executive Officer, reflect changes to the Board's statutory authority Home Savings of America, FSB, Irwindale, Califor- under the Securities Exchange Act of 1934, as nia. The new vice president is William A. Fitzgerald, amended by the National Securities Markets Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1998 Improvement Act of 1996, as well as amendments The guidance was developed by a team of superdesigned to simplify the regulations and reduce bur- vision staff from the Federal Reserve Bank of den. They do not change the margin requirements for New York that benchmarked sound information secustocks and convertible bonds. rity policies and practices. The team interviewed a The amendments provide for merging Regula- cross section of Second District financial services tion G into Regulation U, thereby eliminating Regu- institutions as well as security firms, service providlation G. The Board will also discontinue publica- ers, common carriers, certified public accounting tions of its quarterly list of over-the-counter market firms, and other industry-related organizations. The stocks that are subject to its margin regulations team consulted with thirty-four organizations, prifor broker-dealers effective January 1, 1999, and for marily in the Second District. Also, thirteen selected other lenders effective April 1, 1998. The final institutions were interviewed by teams from the Fedamendments are effective April 1, 1998. Compliance eral Reserve Banks of Chicago and San Francisco to with Regulation T is optional until July 1, 1998. validate the team's initial findings. The Board also announced an advance notice of The key points of the guidance are the following: proposed rulemaking and requested public comment to amend Regulations T, U, and X. Comments are • A strong information security program is requested by April 1, 1998. essential. Comments are sought on all aspects of these regu- • Internal network security issues need special lations, including issues stemming from the consoli- attention. dation of Regulation G into Regulation U. • Confidential information needs to be encrypted. • Internet connections need to be carefully constructed. • The backgrounds of employees in especially sen- REGULATION Z: AMENDMENT sitive positions need to be checked. • Management must decide on benefits and costs. The Federal Reserve Board on December 2, 1997, issued an amendment to its Regulation Z (Truth in The guidance is not regulation and should not be Lending) that gives creditors flexibility in providing interpreted as such. Rather, it outlines the types of variable-rate disclosures. prudent and effective measures that financial services The amendment applies to variable-rate loans with institutions have implemented, are in the process of a term exceeding one year and secured by the conimplementing, or plan to implement to protect inforsumer's principal dwelling. It allows creditors to mation and to ensure its integrity, availability, and provide a statement that the periodic payment may confidentiality. substantially increase or decrease together with a maximum interest rate and payment based on a $10,000 loan amount, in lieu of providing a fifteen- ISSUANCE OF INTERAGENCY INTERIM RULE year historical example of index values. The revisions, which implement a provision of the The Federal Reserve Board on December 19, 1997, Regulatory Paperwork Reduction Act of 1996, are issued an interim rule and requested public comment effective immediately, but compliance is optional on amendments to reduce regulatory burden in riskuntil October 1, 1998 (revised). based capital guidelines that apply to banking organizations with significant trading activities. The interim rule is effective December 31, 1997. The action was ISSUANCE OF SOUND PRACTICE GUIDANCE issued jointly with the Office of the Comptroller of ON INFORMATION SECURITY the Currency and the Federal Deposit Insurance Corporation. Comments are requested by March 2, 1998. The Federal Reserve Board on December 8, 1997, The amendments eliminate the requirement that issued sound practice guidance on information secu- when an institution measures specific market risk rity to address the risks associated with computer using its internal model, the total capital charge for networks at financial institutions. The guidance is specific risk must equal at least 50 percent of the being distributed to appropriate examination person- standard specific risk capital charge. nel and to the chief executive officer of each domestic The amendments implement a revision to the Basle and foreign banking organization supervised by the Accord that permits such treatment for an institution Federal Reserve. whose internal model adequately measures specific Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 97 risk. The rule will reduce regulatory burden for insti- is based on the independence rules of the American tutions with qualifying internal models because they Institute of Certified Public Accountants, but it prowill no longer be required to calculate a standard vides additional supervisory interpretation that indispecific risk capital charge. cates to examiners steps they should take to resolve situations in which a certified public accountant's independence may be impaired. ISSUANCE OF AN INTERAGENCY POLICY The policy statement applies to all bank holding STATEMENT ON SOUND PRACTICES companies, banks, and savings institutions insured by FOR THE INTERNAL AUDIT FUNCTION the Federal Deposit Insurance Corporation, and the AND AUDIT OUTSOURCING U.S. operations of foreign banking organizations and provides flexibility for small institutions whose risks The Federal Reserve and the other federal banking and operating systems may not warrant full-time agencies on December 22, 1997, released an inter- auditors. agency policy statement that describes sound practices for managing the overall internal audit function and audit outsourcing arrangements. The main theme of the policy statement is that an PROPOSED ACTIONS organization's board of directors and senior managers are responsible for ensuring that the system of The Federal Reserve Board on December 2, 1997, internal controls is adequate for the nature and scope published proposed revisions to the official staff comof its business. To prudently manage an organization, mentary to Regulation Z (Truth in Lending), which directors should have in place a means for assessing applies and interprets the requirements of the regulathe effectiveness of internal controls—a task nor- tion. Comments are requested by January 20, 1998. mally performed by an internal audit function. The The Federal Reserve Board on December 5, 1997, policy statement describes critical issues that direc- requested comments on a proposed amendment to its tors should consider in establishing and maintaining appraisal regulation for bank holding companies an internal audit function including the following: to exempt any transaction involving the underwriting or dealing of mortgage-backed securities from • Maintaining the independence of the internal the Board's appraisal requirements. Comments are audit function within a bank's organizational requested by January 8, 1998. structure Additionally, the Board is delegating to the Direc- • Implementing basic principles for managing, tor of the Division of Banking Supervision and Regustaffing, and ensuring quality control of the internal lation the Board's existing authority to determine for audit function an individual transaction that the services of an • Ensuring that the frequency and depth of the appraiser are not necessary to protect federal finaninternal audit function's work is consistent with cial and public policy interests in real estate-related the nature, complexity, and risk of the institution's financial transactions or to protect the safety and on- and off-balance-sheet activities soundness of the institution. This delegation of • Promoting candid, timely communication of authority was effective December 9, 1997, and is internal audit findings to the board of directors and intended to aid in the efficient processing of requests senior management and ensuring prompt correction for individual exemptions from the Board's appraisal of internal control weaknesses by management. regulation. The Federal Reserve Board on December 18, 1997, These principles are also applied to internal audit requested comment on proposed comprehensive revifunctions that have been outsourced. Because of the sions to its Regulation K (International Banking unique aspects of these arrangements, additional Operations). The proposals are intended to improve issues are addressed, such as examiner access to the the international competitiveness of U.S. banking outsourcing firm's reports and supporting work- organizations by expanding permissible activities papers and appropriate contingency plans in case the abroad and reducing regulatory burden associated outsourcing contract is terminated. The policy also with the conduct of such activities. provides guidance to examiners on the independence The Board also requested comment on proposed of the certified public accounting firm providing the revisions to Regulation K that are intended to reduce outsourcing service—a quality essential to acting as regulatory burden on foreign banks operating in the bank's external auditor. In this regard, the policy the United States by streamlining the application Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1998 and notice process. Comments are requested by Other government agencies and organizations taking March 14, 1998. part in the educational effort are the following: the The Federal Reserve Board is requesting public American Advertising Federation, the American comment on whether U.S. companies operating in the Automobile Manufacturers Association, the Amerigovernment debt market of the Netherlands have the can Financial Services Association and the AFSA same competitive opportunities as Dutch companies Education Foundation, the Arizona Attorney Genin that market. Comments must be received by Febru- eral, the Association of International Automobile ary 27, 1998. Manufacturers, Consumer Action, the Consumer Bankers Association, the Cooperative Extension System, and the National Vehicle Leasing Association. Copies of the brochure are available free of charge PUBLICATION OF A BROCHURE ON by contacting the Federal Reserve Board's Publi- NEW DISCLOSURE REQUIREMENTS cations Services, Mail Stop 127, Washington, DC FOR VEHICLE LEASING 20551 (202-452-3244) or any of the twelve Federal Reserve Banks. It is also available on the An educational initiative designed to inform the pub- Board's Web site at the following address: http:// lic of their rights under new disclosure requirements www.bog.frb.fed.us/pubs/leasing. for vehicle leasing was announced on December 9, 1997, by the Federal Reserve Board. The vehicle leasing disclosures are part of the Board's Regula- PUPLICATION OF THE DECEMBER 1997 tion M, which governs disclosures for leases of UPDATE OF THE BANK HOLDING COMPANY $25,000 or less to individuals. Central to the SUPERVISION MANUAL government-industry campaign is a brochure to explain new disclosures that will be required in all The December 1997 update of the Bank Holding vehicle leasing transactions, beginning January 1, Company Supervision Manual, Supplement No. 13, 1998. is now available. The Manual comprises the Federal The announcement of the new program was made Reserve System's bank holding company inspection at a special press briefing held by the Board. Also procedures and supervisory guidance. The superrepresented at the briefing were the Federal Trade visory information includes the following. Commission, the Office of the Florida Attorney General, the National Automobile Dealers Association, and the Association of Consumer Vehicle Lessors. The brochure Keys to Vehicle Leasing provides Control and Ownership consumers with an overview of the most common type of vehicle lease used by the automotive industry, Revisions to the general control and ownership seca closed-end lease. Under this type of a lease agree- tion for the repeal of section 2(g)(3) of the Bank ment, consumers may return the automobile, pay any Holding Company Act that originated from the Ecoend-of-lease costs, and walk away. The brochure nomic Growth and Regulatory Paperwork Reduction compares common facets of both buying and leasing Act of 1996. This act also provided a limited new a vehicle so that an individual can make a more exemption, "qualified family partnerships," from the informed decision. definition of "company." Within the text of the brochure, a copy of a closedend lease is included so that consumers can become more familiar with the document. In addition, the brochure stipulates the leasing terms that a dealer Nonbanking Activities must disclose to the consumer. For example, lessors are required to tell individuals about the following: Changes to the "laundry list" of nonbanking activities for the revised Regulation Y (Bank Holding • Fees, taxes, and insurance requirements Companies and Change in Bank Control), effective • Standards for wear and use, maintenance respon- April 21, 1997. The Regulation Y changes are also sibilities, and warranties reflected in the sections on nonbank depository insti- • Early termination charges, security interests, and tutions and savings associations, leasing of personal late payment charges or real property, community development advisory • The consumer's option to purchase the car. and related services, electronic data processing ser- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 99 vicing, payment instrument services, and the arrang- CHANGES IN BOARD STAFF ing of real estate equity financing. The Board of Governors announced on December 18, 1997, the appointments of Stephen D. Oliner and Management Information Systems Janice Shack-Marquez to the official staff as Assistant Directors in the Division of Research and Limited revisions to the inspection guidelines and Statistics. procedures for management information systems are Mr. Oliner joined the Board's staff in 1984 after included. having completed his doctoral studies at the University of Wisconsin. He has served as chief of the The revision supplement includes a more detailed Capital Markets Section since 1994. list of changes to the Manual. The Manual and Ms. Shack-Marquez joined the Board's staff in updates, including pricing information, are available 1986, having worked at the Bureau of Labor Statisfrom Publications Services, Mail Stop 127, Board of tics after receiving her doctorate from the University Governors of the Federal Reserve System, Washing- of Pennsylvania. She has served as chief of the Autoton, DC 20551 (or by fax at 202-728-5886). mation and Research Computing Section since 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Minutes of the Federal Open Market Committee Meeting Held on November 12, 1997 A meeting of the Federal Open Market Committee Ms. Low, Open Market Secretariat Assistant, was held in the offices of the Board of Governors of Division of Monetary Affairs, Board of Governors the Federal Reserve System in Washington, D.C., on Wednesday, November 12, 1997, at 9:00 a.m. Ms. Pianalto and Mr. Rives, First Vice Presidents, Federal Reserve Banks of Cleveland and Present: St. Louis respectively Mr. Greenspan, Chairman Mr. McDonough, Vice Chairman Messrs. Dewald, Hakkio, Rolnick, and Sniderman, Mr. Broaddus Senior Vice Presidents, Federal Reserve Banks Mr. Ferguson of St. Louis, Kansas City, Minneapolis, and Mr. Gramlich Cleveland respectively Mr. Guynn Mr. Kelley Messrs. Bentley, Meyer, and Rosengren, Mr. Moskow Vice Presidents, Federal Reserve Banks of Mr. Meyer New York, Philadelphia, and Boston respectively Mr. Parry Ms. Phillips Ms. Gonczy and Mr. Koenig, Assistant Vice Ms. Rivlin Presidents, Federal Reserve Banks of Chicago and Dallas respectively Messrs. Hoenig, Jordan, Melzer, and Ms. Minehan, Alternate Members of the Federal Open Market Mr. Trehan, Research Officer, Federal Reserve Bank Committee of San Francisco Messrs. Boehne, McTeer, and Stern, Presidents of the Federal Reserve Banks of Philadelphia, Dallas, By unanimous vote, the minutes of the meeting of and Minneapolis respectively the Federal Open Market Committee held on September 30, 1997, were approved. Mr. Kohn, Secretary and Economist The Manager of the System Open Market Account Mr. Bernard, Deputy Secretary reported on developments in foreign exchange and Mr. Coyne, Assistant Secretary Mr. Gillum, Assistant Secretary international financial markets in the period since the Mr. Mattingly, General Counsel previous meeting on September 30, 1997. There were Mr. Baxter, Deputy General Counsel no System open market transactions in foreign cur- Mr. Prell, Economist rencies during this period, and thus no vote was Mr. Truman, Economist required of the Committee. The Manager also reported on developments in Messrs. Cecchetti, Goodfriend, Eisenbeis, Lindsey, Promisel, Slifman, and Stockton, Associate domestic financial markets and on System open mar- Economists ket transactions in government securities and federal agency obligations during the period September 30, Mr. Fisher, Manager, System Open Market Account 1997, through November 11, 1997. By unanimous vote, the Committee ratified these transactions. Messrs. Madigan and Simpson, Associate Directors, By unanimous vote, paragraph l.A of the Authori- Divisions of Monetary Affairs and Research and zation for Domestic Open Market Operations was Statistics respectively, Board of Governors amended to raise from $8 billion to $12 billion the dollar limit on intermeeting changes in System Messrs. Alexander, Hooper, and Ms. Johnson, Associate Directors, Division of International Account holdings of U.S. government and federal Finance, Board of Governors agency securities for the intermeeting period through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

101 December 16, 1997. The Manager advised the Com- consequently fail to achieve their objectives, and the mittee that, as was usually the case at this time of System is associated in the mind of the public with year, the anticipated pattern of reserve needs was the failed operations. In these circumstances, he did such that he might want to add considerably to the not view renewal of the existing swap lines as desir- System's outright holdings of U.S. government secu- able because they are used primarily to facilitate rities over the coming intermeeting period. By unani- market intervention. mous notation vote, the Committee subsequently The Committee then turned to a discussion of the approved a further increase in the intermeeting lee- economic outlook and the conduct of monetary polway to $17 billion. The increase, effective Decem- icy over the intermeeting period ahead. ber 8, was made on the recommendation of the Man- The information reviewed at the meeting suggested ager who saw the need for substantially more outright that economic activity continued to grow rapidly in purchases of Treasury obligations than anticipated recent months. The further advance reflected a surge earlier, largely in light of much greater than projected in business fixed investment and consumer spending, growth in currency. while housing demand remained at a high level. With Mr. Broaddus dissenting, the Committee Significant slowing in exports and inventory investauthorized the renewal for an additional one-year ment provided only a partial offset to the strength. period of the System's reciprocal currency ("swap") Accordingly, production and employment recorded arrangements with foreign central banks and the Bank further large gains. Price inflation remained subdued for International Settlements. The amounts and cur- despite tight labor markets and a pickup in the pace rent maturity dates of the arrangements approved for of labor compensation. renewal are shown in the table that follows: Nonfarm payroll employment rose substantially further in October. Manufacturing payrolls recorded their largest rise in the current economic expansion, Amount of and aggregate weekly hours worked increased signifiarrangement Term Maturity Foreign bank (millions of (months) date cantly; most of the gain in payrolls occurred at duradollars equivalent) ble goods establishments. Hiring remained robust in the service-producing sector, led by sizable increases Austrian National Bank 250 12 12/04/97 Bank of England 3,000 12/04/97 at computer services and engineering and manage- Bank of Japan 5,000 12/04/97 Bank of Norway 250 12/04/97 ment services firms. The civilian unemployment rate Bank of Sweden 300 12/04/97 fell to 4.7 percent in October, its low for the current Swiss National Bank 4,000 12/04/97 Bank for International expansion. Settlements: Swiss francs 600 12/04/97 Industrial production registered a large advance in Other authorized European currencies ... 1,250 12/04/97 the third quarter and apparently remained strong in Bank of Mexico 3,000 12/12/97 October. A third-quarter surge in the manufacture Bank of Canada 2,000 12/15/97 National Bank of Belgium .... 1,000 12/18/97 of durable goods, notably of motor vehicles, aircraft, National Bank of Denmark ... 250 12/28/97 Bank of France 2,000 12/28/97 and information processing equipment, more than German Federal Bank 6,000 12/28/97 offset weak expansion in the output of nondurable Bank of Italy 3,000 12/28/97 Netherlands Bank 500 12 12/28/97 goods and a decline in mining activity. Although the step-up in manufacturing production boosted further the rate of utilization of manufacturing capacity, the Mr. Broaddus dissented because he believed that latter was somewhat below its most recent peak in the Federal Reserve's participation in foreign lanuary 1995. exchange market intervention compromises its ability Retail sales posted a sharp rise in the third quarter, to conduct monetary policy effectively. Because steril- though growth in sales of both durable and nonduraized intervention cannot have sustained effects in the ble goods moderated during the quarter. Consumer absence of conforming monetary policy actions, Fed- spending on services also continued to increase at a eral Reserve participation in foreign exchange opera- relatively brisk pace. Growth in such spending was tions risks one of two undesirable outcomes. First, underpinned by continuing substantial gains in the independence of monetary policy is jeopardized if incomes, the cumulative increase in household net the System adjusts its policy actions to support short- worth over the past several years, and the ready term foreign exchange objectives set by the Treasury. availability of credit to most consumers. Housing Alternatively, the credibility of monetary policy is demand remained strong in the third quarter in assodamaged if the System does not follow interventions ciation with moderate interest rates and very positive with compatible policy actions, the interventions consumer assessments of homebuying conditions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1998 Sales of both new and existing homes increased a bit, food and energy increased by a considerably smaller and housing starts were little changed in the third amount than in the year-earlier period. At the proquarter from the high level recorded during the first ducer level, the September rise in prices was the half of the year. largest monthly increment since January 1991; none- Business fixed investment increased at an unusu- theless, the overall index was unchanged over the ally rapid rate in the third quarter. The rise in outlays past twelve months after a sizable rise over the previwas spread across all categories of producers' dura- ous twelve-month period. The core index also decelble equipment, but the largest gains were in office, erated on a year-over-year basis. The rate of increase computing, and communications equipment. Avail- in the hourly compensation of private industry workable data on new orders pointed to further broad- ers was unchanged in the third quarter, but the based and robust expansion in equipment spending in advance over the past four quarters was somewhat coming months. Nonresidential construction grew at larger than that for the previous four. Growth in a moderate pace in the latest quarter despite a decline average hourly earnings picked up in September and in September. Available information suggested that October, perhaps partly reflecting the effects of an construction would trend upward at a modest rate in increase in the federal minimum wage. coming months. At its meeting on September 30, 1997, the Com- Business inventory investment appeared to have mittee adopted a directive that called for maintaining moderated substantially in the third quarter from the conditions in reserve markets that were consistent rapid rate of the previous quarter, and on balance with an unchanged federal funds rate averaging stocks were at relatively low levels in relation to around 5 xh percent. The Committee retained a tilt in sales. In manufacturing, stocks rose somewhat fur- the directive toward a possible firming of reserve ther in September, but the inventory-to-shipments conditions during the intermeeting period, reflecting ratio for the sector declined to the low end of its its view that the risks continued to be skewed toward range for the past twelve months. Wholesale inven- rising inflation. Reserve market conditions associated tories posted another sizable advance in September; with this directive were expected to be consistent the inventory-sales ratio for this sector was just with some moderation in the growth of M2 and M3 above the high end of its range for the past year. over coming months. Retail stocks fell in August (latest available data), Open market operations were directed throughout more than reversing their July increase. The the intermeeting period toward maintaining reserve inventory-sales ratio for the sector also was at the conditions consistent with the Committee's intended low end of its range for the past year. level of around 5'/2 percent for the federal funds rate, The nominal deficit on U.S. trade in goods and and the rate averaged close to that level over the services widened substantially on balance over July period. Other financial markets became quite volatile and August from its rate in the second quarter. from time to time. Share prices in equity markets Exports of goods and services changed little on net in fluctuated widely in occasionally turbulent trading the July-August period, but imports rose consider- activity and were down somewhat on balance over ably; the largest increases in imports were for aircraft the period; equity markets in other countries, notably and automotive products, though sizable gains also in Asia, also were volatile, and very large declines were recorded for computers, semiconductors, and were recorded in some of those markets. Against this industrial supplies. Available indicators of economic background, U.S. short-term interest rates registered activity in the third quarter pointed to robust expan- small mixed changes over the period since the Sepsion in all the major foreign industrial countries tember 30 meeting, while Treasury bond yields except Japan, where activity rebounded only moder- declined somewhat on balance. Unexpectedly strong ately from a sharp second-quarter decline. Although incoming data on U.S. producer prices, employment, timely data were sparse, the economies of many and wages tended to exert upward pressures on bond Asian countries probably were weakening as their yields on some days, but these were more than offset exchange rates came under pressure, problems in by investor desires for safety and quality, the continutheir financial sectors were revealed, and their mone- ing moderation in consumer inflation, and the perceptary and fiscal policies moved toward restraint. tion engendered by international financial develop- Consumer price inflation remained subdued in Sep- ments that inflation pressures were likely to remain tember. The increase in both overall consumer prices subdued. and the prices of consumer items other than food and The dollar also was affected by the spreading energy was modest. For the twelve months ended financial turmoil in developing countries, appreciatin September, prices of consumer items other than ing significantly over the intermeeting period against Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 103 the currencies of a number of Asian and Latin Ameri- members agreed that there remained a clear risk of can countries. Much of the increase was counterbal- additional pressures on already tight resources and anced, however, by a sizable decline in the dollar's ultimately on prices that could well need to be curbed trade-weighted value in terms of the currencies of the by tighter monetary policy. But the members also other G-10 countries. The dollar's decline against the focused on two important influences that were inject- German mark and other European currencies partly ing new uncertainties into this outlook. Turmoil in reflected diminished market expectations of potential Asian financial markets and economies would tend to tightening in the United States and a snugging of damp output and prices in the United States. To date, monetary conditions by the Bundesbank and other it appeared that the effects on the U.S. economy continental European central banks. Further progress would be quite limited, but the ultimate extent of the in resolving uncertainties surrounding the European adjustment in Asia was unknown, as was its spillover Monetary Union also may have contributed to the to global financial markets and to the economies of rise in European currencies. The dollar appreciated nations that were important U.S. trading partners. The slightly on balance against the Japanese yen. second influence was the apparently sharp increase in Growth of M2 and M3 apparently moderated fur- productivity in the second and third quarters. This ther in October, though the expansion of these aggre- was an encouraging development, although it was too gates remained brisk. A sharp slowing of inflows to early to judge the persistence of the uptrend in promoney market mutual funds accounted for much of ductivity growth and the extent to which it might the deceleration of M2, and an easing in the pace of reduce the additional price pressures that would be issuance of large time deposits, evidently reflecting generated in the event of an extended period of a smaller rise in bank credit, also contributed to a further robust economic expansion. modest reduction in M3 growth. For the year through Strength in consumer spending had provided an October, M2 expanded at a rate that was at the upper important underpinning for robust economic expanbound of the Committee's range for the year and M3 sion, and substantial growth was likely to persist, at a rate substantially above the upper bound of its sustained by increases in employment and incomes, range. Total domestic nonfinancial debt increased in high levels of confidence, and the cumulative effects recent months at a rate somewhat below the middle of very large gains in stock market wealth over the of its range. past several years. The outlook for capital spending The staff forecast prepared for this meeting sug- also remained quite favorable because the factors that gested that the economy would continue to expand were contributing to the ongoing surge in such for a time at a pace considerably above its potential, spending—its potential for lowering production costs but growth was expected to moderate to a more in highly competitive markets and the ready availabilsustainable rate later. Further rapid increases in busi- ity of finance on attractive terms—were likely to ness investment would provide strong impetus to persist. While private domestic demand most likely income growth in the near term, and the rise in would continue to display considerable strength, both household wealth so far in 1997 would stimulate consumption and investment were somewhat vulnerrobust consumer demand going forward. The pro- able to developments in financial markets, perhaps jected strength of domestic demand would be offset arising from further difficulties in Asia. Increased to some extent by a considerable weakening in the uncertainty about asset values could engender greater growth of exports in response to the lagged effects of caution on spending, and of course a substantial the earlier appreciation of the dollar and sharp antici- decline in equity values would reduce household pated reductions in the economic growth of Asian wealth and raise the cost of equity capital. Some and other developing countries. members also commented that additional apprecia- In the Committee's discussion of current and pro- tion of the dollar, perhaps in association with possible spective economic developments, members focused further turbulence in Asia and weakness in foreign on widespread indications of a continued solid economies, would have adverse implications for net advance in economic activity, spurred by strength in exports, which already were seen as a somewhat all major sectors of the domestic economy, and the negative factor in the economic outlook. At the same persistence of subdued increases in prices. The cur- time, a stronger dollar would have a positive effect on rent momentum of the expansion, together with domestic inflation over the projection horizon. broadly supportive financial conditions and favorable In the course of their discussion, the members gave business and consumer sentiment, suggested that eco- considerable emphasis to recent developments in nomic growth was likely to be well maintained, espe- labor markets. Statistical indicators of rising levels of cially over the nearer term. As a consequence, the employment, low and falling rates of unemployment, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1998 and a diminishing supply of new workers were rein- in their costs. On balance, the members felt that the forced by anecdotal evidence of tight labor markets risks remained in the direction of rising price inflathroughout the nation. The demand for many types of tion though the extent and timing of that outcome workers exceeded the supply in many regions, and were subject to considerable debate. a number of members reported that growth of eco- In the Committee's discussion of policy for the nomic activity in various parts of the country was intermeeting period ahead, all but one member being held back by the scarcity of labor. While labor endorsed a proposal to maintain an unchanged policy compensation had accelerated, the pickup was moder- stance, and all agreed that the risks remained tilted ate in light of the taut conditions in labor markets and toward rising inflation. While developments in Southsome of it reflected the legislated rise in the mini- east Asia were not expected to have much effect on mum wage. Nonetheless, members cited numerous the U.S. economy, global financial markets had not examples of efforts to attract or retain workers in yet settled down and further adverse developments especially scarce supply through a variety of bonus could have greater-than-anticipated spillover effects payments and other incentives that were not included on the ongoing expansion. In this environment, with in standard measures of labor compensation. markets still skittish, a tightening of U.S. monetary The effects on costs and prices of somewhat faster policy risked an oversized reaction. Some members increases in compensation evidently were being also emphasized that the relatively favorable trends muted by what appeared to have been a sharp in productivity, costs, and prices continued to raise advance in productivity growth in the past two quar- questions about the strength and timing of any pickup ters. The acceleration in productivity seemed to be in inflation. Other members stressed that the unsusrelated in part to the surge in capital spending, which tainable pace of domestic demand and rising resource had been stimulated by the ability of new equipment utilization seemed to call for a near-term tightening to enhance efficiency and hold down costs, suggest- of policy. Some of these members noted that overing that productivity might be on a higher trend for a all financial conditions remained quite supportive time. But it also could be attributed to some extent to despite the recent market turmoil and high real shortthe strengthening in economic output; such strength- term interest rates. Credit from a wide variety of ening often is associated with a pickup in produc- lenders appeared to be amply available on favorable tivity as producers react initially to the upturn in terms, perhaps overly so in present circumstances. demand by stretching available labor further. If the Nonetheless, all but one of the members believed that pace of the economic expansion were to moderate in in light of the uncertainties about the economic outline with current expectations, the growth in pro- look, an immediate policy tightening was not needed ductivity also could be expected to slow, but to an in the absence of firmer indications that inflationary uncertain extent. pressures might be emerging. In the view of one The trend in productivity gains was a key factor in member, however, aggregate final demand was so the outlook for unit costs and ultimately for price strong that, with economic activity and the associated inflation. As had been true for an extended period, demand for labor having expanded at an unsustaininflation had remained relatively subdued in compari- able pace for some time, one could be reasonably son with past experience under broadly similar eco- confident that inflation would most likely pick up in nomic conditions. The reasons for the relative quies- the absence of policy action. cence of inflation were not fully understood, but they In their discussion of possible adjustments to polundoubtedly included a number of special factors icy during the intermeeting period, the members indibeyond higher productivity such as a lagged response cated that they wanted to retain in the operating to earlier appreciation of the dollar and unusually paragraph of the directive the existing asymmetry damped increases in the cost of health benefits. As toward restraint that was initially adopted at the May they had at previous meetings, members suggested meeting. Such a directive was consistent with their that these favorable influences were likely to erode view that the risks continued to be biased toward over the year ahead. A number of members again rising inflation. Accordingly, the members continued cited reports of increases in health insurance premi- to view the next policy move as more likely to be in ums next year and subsequently. More fundamen- the direction of some firming than toward easing. tally, it was difficult to predict whether anticipated At the conclusion of the Committee's discussion, increases in labor compensation would be fully offset all but one member supported a directive that called by productivity gains in coming quarters and whether, for maintaining conditions in reserve markets that in turn, competitive market conditions would allow were consistent with an unchanged federal funds rate firms to raise prices to compensate for any increases of about 5Vi percent and that retained a bias toward Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 105 the possible firming of reserve conditions and a reaffirmed the ranges it had established in February for higher federal funds rate during the intermeeting growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent respectively, measured from the fourth quarter of 1996 to period. Accordingly, in the context of the Committhe fourth quarter of 1997. The range for growth of total tee's long-run objectives for price stability and domestic nonfinancial debt was maintained at 3 to 7 persustainable economic growth, and giving careful cent for the year. For 1998, the Committee agreed on a consideration to economic, financial, and monetary tentative basis to set the same ranges as in 1997 for growth developments, the Committee decided that a some- of the monetary aggregates and debt, measured from the fourth quarter of 1997 to the fourth quarter of 1998. The what higher federal funds rate would be acceptable or behavior of the monetary aggregates will continue to be a slightly lower federal funds rate might be acceptevaluated in the light of progress toward price level stabilable during the intermeeting period. The reserve con- ity, movements in their velocities, and developments in the ditions contemplated at this meeting were expected to economy and financial markets. be consistent with moderate growth in M2 and M3 In the implementation of policy for the immediate future, the Committee seeks conditions in reserve markets consisover coming months. tent with maintaining the federal funds rate at an average The Federal Reserve Bank of New York was of around 5V2 percent. In the context of the Committee's authorized and directed, until instructed otherwise by long-run objectives for price stability and sustainable ecothe Committee, to execute transactions in the System nomic growth, and giving careful consideration to economic, financial, and monetary developments, a somewhat Account in accordance with the following domestic higher federal funds rate would or a slightly lower federal policy directive: funds rate might be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be The information reviewed at this meeting suggests that consistent with moderate growth in M2 and M3 over economic activity continued to grow rapidly in recent coming months. months. In labor markets, hiring has remained robust and the civilian unemployment rate fell to 4.7 percent in Octo- Votes for this action: Messrs. Greenspan, McDonough, ber, its low for the current economic expansion. Industrial Ferguson, Gramlich, Guynn, Kelley, Meyer, Moskow, production increased very rapidly in the third quarter, and Parry, Mses. Phillips and Rivlin. Vote against this action: appears to have remained strong in October. Retail sales Mr. Broaddus. also rose sharply in the third quarter, though at a moderating pace as the summer progressed. Housing starts, while Mr. Broaddus dissented because he believed that a fluctuating from month to month, were little changed on balance in the third quarter. Business fixed investment modest tightening of policy would be prudent in view posted unusually strong increases in the latest quarter, and of the recent strength in aggregate demand for goods available indicators point to further sizable gains in coming and services; such demand appeared to be growing months. The nominal deficit on U.S. trade in goods and considerably more rapidly than the sustainable rate at services widened substantially on average in July and which it could be supplied without an increase in August from its rate in the second quarter. Price inflation has remained subdued despite some increase in the pace of inflation. While he recognized that a tightening at this advance in labor compensation. meeting presented risks in view of recent finan- Short-term interest rates have registered small mixed cial and economic developments in East Asia, he changes since the day before the Committee meeting on believed these risks were outweighed by the risk that September 30, 1997, while bond yields have fallen somepolicy would have to be tightened more aggressively what. Share prices in U.S. equity markets have fluctuated widely in turbulent trading activity and are down on bal- if action were delayed, demand remained robust, and ance over the period; equity markets in other countries, the recent apparent reduction in inflationary expecnotably in Asia, have been volatile as well and some have tations were reversed. The negative impact on ecoregistered very large declines. In foreign exchange marnomic activity in such circumstances would be markkets, the trade-weighted value of the dollar in terms of the edly greater than if a more modest action were taken other G-10 currencies declined somewhat on balance over the intermeeting period. The dollar appreciated signifi- at this meeting. cantly, however, in terms of the currencies of a number of Asian and Latin American countries. Growth of M2 and M3 appears to have moderated further in October from the unusually brisk rates of August. RULES REGARDING AVAILABILITY For the year through October, M2 expanded at the upper OF INFORMATION bound of its range for the year and M3 at a rate substantially above the upper bound of its range. Total domestic nonfinancial debt has expanded in recent months at a pace By notation vote the Committee unanimously apsomewhat below the middle of its range. proved in final form certain revisions to its Rules The Federal Open Market Committee seeks monetary Regarding the Availability of Information. The final and financial conditions that will foster price stability and promote sustainable growth in output. In furtherance of rules take account of comments received from the these objectives, the Committee at its meeting in July public on the Committee's proposed revisions to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1998 rules that were published earlier in the Federal Reg- It was agreed that the next meeting of the Commitister. The purpose of the revisions is to bring the rules tee would be held on Tuesday, December 16, 1997. into conformity with the Electronic Freedom of Infor- The meeting adjourned at 1:10 p.m. mation Act of 1996, which amends the Freedom of Information Act. The new rules take effect on Donald L. Kohn December 17, 1997. Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

107 Legal Developments FINAL RULE—AMENDMENT TO REGULATION B voluntarily conducts (or authorizes) are privileged as provided in this section. Data collection required by law The Board of Governors is amending 12 C.F.R. Part 202, or by any governmental authority is not a voluntary its Regulation B (Equal Credit Opportunity), implementing self-test. recent amendments to the Equal Credit Opportunity Act (2) Corrective action required. The privilege in this ("ECOA"). These amendments create a legal privilege for section applies only if the creditor has taken or is taking information developed by creditors as a result of "self- appropriate corrective action. tests" that they voluntarily conduct to determine the level (3) Other privileges. The privilege created by this secof their compliance with the ECOA. The Department of tion does not preclude the assertion of any other privi- Housing and Urban Development will publish similar revi- lege that may also apply. sions to the regulations implementing the Fair Housing (b) Self-test defined — (1) Definition. A self-test is any Act. program, practice, or study that: Effective January 30, 1998, 12 C.F.R. Part 202 is (i) Is designed and used specifically to determine the amended as follows: extent or effectiveness of a creditor's compliance with the act or Regulation B; and (ii) Creates data or factual information that is not Part 202—Equal Credit Opportunity (Regulation B) available and cannot be derived from loan or application files or other records related to credit transac- 1. The authority citation for Part 202 continues to read as tions. follows: (2) Types of information privileged. The privilege under this section applies to the report or results of the self- Authority: 15 U.S.C. 1691-1691f. test, data or factual information created by the self-test, and any analysis, opinions, and conclusions pertaining to the self-test report or results. The privilege covers work- 2. Section 202.12 is amended by adding a new parapapers or draft documents as well as final documents. graph (b)(6) to read as follows: (3) Types of information not privileged. The privilege under this section does not apply to: Section 202.12—Record retention (i) Information about whether a creditor conducted a self-test, the methodology used or the scope of the self-test, the time period covered by the self-test, or (b) Preservation of records. * * * the dates it was conducted; or (6) Self-tests. For 25 months after a self-test (as defined (ii) Loan and application files or other business in section 202.15) has been completed, the creditor shall records related to credit transactions, and information retain all written or recorded information about the selfderived from such files and records, even if it has been test. A creditor shall retain information beyond aggregated, summarized, or reorganized to facilitate 25 months if it has actual notice that it is under investianalysis. gation or is subject to an enforcement proceeding for an (c) Appropriate corrective action — (1) General requirealleged violation, or if it has been served with notice of a ment. For the privilege in this section to apply, appropricivil action. In such cases, the creditor shall retain the ate corrective action is required when the self-test shows information until final disposition of the matter, unless that it is more likely than not that a violation occurred, an earlier time is allowed by the appropriate agency or even though no violation has been formally adjudicated. court order. (2) Determining the scope of appropriate corrective action. A creditor must take corrective action that is 3. Section 202.15 is added to read as follows: reasonably likely to remedy the cause and effect of a likely violation by: (i) Identifying the policies or practices that are the Section 202.15—Incentives for self-testing and likely cause of the violation; and self-correction. (ii) Assessing the extent and scope of any violation. (3) Types of relief Appropriate corrective action may (a) General rules — (1) Voluntary self-testing and correc- include both prospective and remedial relief, except that tion. The report or results of the self-test that a creditor to establish a privilege under this section: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1998 (i) A creditor is not required to provide remedial relief Section 202.12—Record Retention to a tester used in a self-test; (ii) A creditor is only required to provide remedial relief to an applicant identified by the self-test as one 12(b) Preservation of records whose rights were more likely than not violated; and (iii) A creditor is not required to provide remedial relief to a particular applicant if the statute of limita- 12(b)(6) Self-tests tions applicable to the violation expired before the 1. The rule requires all written or recorded information creditor obtained the results of the self-test or the about a self-test to be retained for 25 months after a applicant is otherwise ineligible for such relief. self-test has been completed. For this purpose, a self-test is (4) No admission of violation. Taking corrective action completed after the creditor has obtained the results and is not an admission that a violation occurred, made a determination about what corrective action, if any, (d) (1) Scope of privilege. The report or results of a is appropriate. Creditors are required to retain information privileged self-test may not be obtained or used: about the scope of the self-test, the methodology used and (i) By a government agency in any examination or time period covered by the self-test, the report or results of investigation relating to compliance with the act or the self-test including any analysis or conclusions, and any this regulation; or corrective action taken in response to the self-test. (ii) By a government agency or an applicant (including a prospective applicant who alleges a violation of section 202.5(a)) in any proceeding or civil action in 5. Supplement I to Part 202 is amended by adding Section which a violation of the act or Regulation B is alleged. 202.15— Incentives for Self-testing and Self-correction, to (2) Loss of privilege. The report or results of a self-test read as follows: are not privileged under paragraph (d)(1) of this section if the creditor or a person with lawful access to the report or results): (i) Voluntarily discloses any part of the report or Section 202.15—Incentives for Self-testing and results, or any other information privileged under this Self-correction section, to an applicant or government agency or to the public; 15(a) General rules (ii) Discloses any part of the report or results, or any other information privileged under this section, as a 15(a)( 1) Voluntary self-testing and correction defense to charges that the creditor has violated the act or regulation; or 1. Activities required by any governmental authority are (iii) Fails or is unable to produce written or recorded not voluntary self-tests. A governmental authority includes information about the self-test that is required to be both administrative and judicial authorities for federal, retained under section 202.12(b)(6) when the informa- state, and local governments. tion is needed to determine whether the privilege applies. This paragraph does not limit any other pen- 15(a)(2) Corrective action required alty or remedy that may be available for a violation of section 202.12. 1. To qualify for the privilege, appropriate corrective ac- (3) Limited use of privileged information. Notwithstand- tion is required when the results of a self-test show that it is ing paragraph (d)(1) of this section, the self-test report or more likely than not that there has been a violation of the results and any other information privileged under this ECOA or this regulation. A self-test is also privileged section may be obtained and used by an applicant or when it identifies no violations. government agency solely to determine a penalty or 2. In some cases, the issue of whether certain information remedy after a violation of the act or this regulation has is privileged may arise before the self-test is complete or been adjudicated or admitted. Disclosures for this lim- corrective actions are fully under way. This would not ited purpose may be used only for the particular proceed- necessarily prevent a creditor from asserting the privilege. ing in which the adjudication or admission was made. In situations where the self-test is not complete, for the Information disclosed under (d)(3) remains privileged privilege to apply the lender must satisfy the regulation's under paragraph (d)(1) of this section. requirements within a reasonable period of time. To assert 4. In Supplement I to Part 202, under Section 202.12— the privilege where the self-test shows a likely violation, Record Retention, a new paragraph 12(b)(6) is added to the rule requires, at a minimum, that the creditor establish a read as follows: plan for corrective action and a method to demonstrate progress in implementing the plan. Creditors must take appropriate corrective action on a timely basis after the Supplement I To Part 202—Official Staff results of the self-test are known. Interpretations 3. A creditor's determination about the type of corrective action needed, or a finding that no corrective action is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 109 required, is not conclusive in determining whether the files, Home Mortgage Disclosure Act data, or similar types requirements of this paragraph have been satisfied. If a of records (such as broker or loan officer compensation creditor's claim of privilege is challenged, an assessment records) does not produce new information about a crediof the need for corrective action or the type of corrective tor's compliance and is not a self-test for purposes of this action that is appropriate must be based on a review of the section. Similarly, a statistical analysis of data derived self-testing results, which may require an in camera inspec- from existing loan files is not privileged. tion of the privileged documents. 15(b)(3) Types of information not privileged 15(a)(3) Other privileges Paragraph 15(b)(3)(i) 1. A creditor may assert the privilege established under this 1. The information listed in this paragraph is not privileged section in addition to asserting any other privilege that may and may be used to determine whether the prerequisites for apply, such as the attorney-client privilege or the work the privilege have been satisfied. Accordingiy, a creditor product privilege. Self-testing data may still be privileged might be asked to identify the seff-testing method, for under this section, whether or not the creditor's assertion of example, whether pre-application testers were used or data another privilege is upheld. were compiled by surveying loan applicants. Information about the scope of the self test (such as the types of credit 15(b) Self-test defined transactions examined, or the geographic area covered by the test) also is not privileged. 15(b)( 1) Definition Paragraph 15(b)(3)(H) Paragraph 15(b)(l)(i) 1. Property appraisal reports, minutes of loan committee 1. To qualify for the privilege, a self-test must be sufficient meetings or other documents reflecting the basis for a to constitute a determination of the extent or effectiveness decision to approve or deny an application, loan policies or of the creditor's compliance with the act and Regulation B. procedures, underwriting standards, and broker compensa- Accordingly, a self-test is only privileged if it was designed tion records are examples of the types of records that are and used for that purpose. A self-test that is designed or not privileged. If a creditor arranges for testers to submit used to determine compliance with other laws or regulaloan applications for processing, the records are not related tions or for other purposes is not privileged under this rule. to actual credit transactions for purposes of this paragraph For example, a self-test designed to evaluate employee and may be privileged self-testing records. efficiency or customers' satisfaction with the level of service provided by the creditor is not privileged even if 15(c) Appropriate corrective action evidence of discrimination is uncovered incidentally. If a self-test is designed for multiple purposes, only the portion 1. The rule only addresses what corrective actions are designed to determine compliance with the ECOA is eligi- required for a creditor to take advantage of the privilege in ble for the privilege. this section. A creditor may still be required to take other actions or provide additional relief if a formal finding of Paragraph 15(b)(l)( ii) discrimination is made. 1. The principal attribute of self-testing is that it constitutes 15(c)(1) General requirement a voluntary undertaking by the creditor to produce new data or factual information that otherwise would not be 1. Appropriate corrective action is required even though no available and could not be derived from loan or application violation has been formally adjudicated or admitted by the files or other records related to credit transactions. Self- creditor. In determining whether it is more likely than not testing includes, but is not limited to, the practice of using that a violation occurred, a creditor must treat testers as if fictitious applicants for credit (testers), either with or with- they are actual applicants for credit. A creditor may not out the use of matched pairs. A creditor may elect to test a refuse to take appropriate corrective action under this secdefined segment of its business, for example, loan applica- tion because the self-test used fictitious loan applicants. tions processed by a specific branch or loan officer, or The fact that a tester's agreement with the creditor waives applications made for a particular type of credit or loan the tester's legal right to assert a violation does not elimiprogram. A creditor also may use other methods of gener- nate the requirement for the creditor to take corrective ating information that is not available in loan and applica- action, although no remedial relief for the tester is required tion files, such as surveying mortgage loan applicants. To under paragraph 15(c)(3). the extent permitted by law, creditors might also develop 15(c)(2) Determining the scope of appropriate corrective new methods that go beyond traditional pre-application action testing, such as hiring testers to submit fictitious loan applications for processing. 1. Whether a creditor has taken or is taking corrective 2. The privilege does not protect a creditor's analysis action that is appropriate will be determined on a case-byperformed as part of processing or underwriting a credit case basis. Generally, the scope of the corrective action application. A creditor's evaluation or analysis of its loan that is needed to preserve the privilege is governed by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1998 scope of the self-test. For example, a creditor that self-tests 15(d)(1) Scope of privilege mortgage loans and discovers evidence of discrimination 1. The privilege applies with respect to any examination, may focus its corrective actions on mortgage loans, and is investigation or proceeding by federal, state, or local govnot required to expand its testing to other types of loans. ernment agencies relating to compliance with the Act or 2. In identifying the policies or practices that are the likely this regulation. Accordingly, in a case brought under the cause of the violation, a creditor might identify inadequate ECOA, the privilege established under this section preor improper lending policies, failure to implement estab- empts any inconsistent laws or court rules to the extent lished policies, employee conduct, or other causes. The they might require disclosure of privileged self-testing extent and scope of a likely violation may be assessed by data. The privilege does not apply in other cases, for determining which areas of operations are likely to be example, litigation filed solely under a state's fair lending affected by those policies and practices, for example, by statute. In such cases, if a court orders a creditor to disclose determining the types of loans and stages of the application self-test results, the disclosure is not a voluntary disclosure process involved and the branches or offices where the or waiver of the privilege for purposes of paragraph violations may have occurred. 15(d)(2); creditors may protect the information by seeking 3. Depending on the method and scope of the self-test and a protective order to limit availability and use of the the results of the test, appropriate corrective action may self-testing data and prevent dissemination beyond what is include one or more of the following: necessary in that case. Paragraph 15(d)(1) precludes a i. If the self-test identifies individuals whose applica- party who has obtained privileged information from using tions were inappropriately processed, offering to extend it in a case brought under the ECOA, provided the creditor credit if the application was improperly denied and has not lost the privilege through voluntarily disclosure compensating such persons for out-of-pocket costs and under paragraph 15(d)(2). other compensatory damages; ii. Correcting institutional polices or procedures that 15(d)(2) Loss of privilege may have contributed to the likely violation, and adopt- Paragraph 15(d)(2)(i) ing new policies as appropriate; iii. Identifying and then training and/or disciplining the 1. Corrective action taken by a creditor, by itself, is not employees involved; considered a voluntary disclosure of the self-test report or iv. Developing outreach programs, marketing strategies, results. For example, a creditor does not disclose the reor loan products to serve more effectively segments of sults of a self-test merely by offering to extend credit to a the lender's markets that may have been affected by the denied applicant or by inviting the applicant to reapply for likely discrimination; and credit. Voluntary disclosure could occur under this parav. Improving audit and oversight systems to avoid a graph, however, if the creditor disclosed the self-test rerecurrence of the likely violations. sults in connection with a new offer of credit. 2. Disclosure of self-testing results to an independent con- 15(c)(3) Types of relief tractor acting as an auditor or consultant for the creditor on Paragraph 15(c)(3)(H) compliance matters does not result in loss of the privilege. 1. The use of pre-application testers to identify policies and Paragraph 15(d)(2)(ii) practices that illegally discriminate does not require credi- 1. The privilege is lost if the creditor discloses privileged tors to review existing loan files for the purpose of identifyinformation, such as the results of the self-test. The priviing and compensating applicants who might have been lege is not lost if the creditor merely reveals or refers to the adversely affected. existence of the self-test. 2. If a self-test identifies a specific applicant that was subject to discrimination on a prohibited basis, in order to Paragraph 15(d)(2)(iii) qualify for the privilege in this section the creditor must 1. A creditor's claim of privilege may be challenged in a provide appropriate remedial relief to that applicant; the court or administrative law proceeding with appropriate creditor would not be required under this paragraph to jurisdiction. In resolving the issue, the presiding officer identify other applicants who might also have been admay require the creditor to produce privileged information versely affected. about the self-test. Paragraph 15(c)(3)(iii) Paragraph 15(d)(3) Limited use of privileged information 1. A creditor is not required to provide remedial relief to an 1. A creditor may be required to produce privileged docuapplicant that would not be available by law. An applicant ments for the purpose of determining a penalty or remedy might also be ineligible from obtaining certain types of after a violation of the ECOA or Regulation B has been relief due to changed circumstances. For example, a crediformally adjudicated or admitted. A creditor's compliance tor is not required to offer credit to a denied applicant if the with this requirement does not evidence the creditor's applicant no longer qualifies for the credit due to a change intent to forfeit the privilege. in financial circumstances, although some other type of relief might be appropriate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 FINAL RULE—AMENDMENT TO REGULATION C public policy interests in real estate-related financial transactions or to protect the safety and soundness of the institu- The Board of Governors is amending 12 C.F.R. Part 203, tion. This delegation of authority is intended to aid in the its Regulation C (Home Mortgage Disclosure). The Board efficient processing of requests for individual exemptions is publishing revisions to its staff commentary that inter- from the Board's appraisal regulation. prets the requirements of Regulation C. The Board is Effective December 9,, 1997, 12 C.F.R. Part 265 is required to adjust annually the asset-size exemption thresh- amended as follows: old for depository institutions based on the annual percentage change in the Consumer Price Index for Urban Wage Part 265—Rules Regarding Delegation of Authority Earners and Clerical Workers. The adjustment reflects changes for the twelve-month period ending in November. 1. The authority citation for Part 265 continues to read as In 1998, depository institutions with assets totaling follows: $29 million or less are not required to collect data. The effective date of this rule is January 1, 1998, and this Authority: 12 U.S.C. 248(i) and (k). rule applies to all data collection in 1998. For the reasons set forth in the preamble, 12 C.F.R. Part 203 is amended as 2. Section 265.7 is amended by adding paragraph (c)(6) to follows: read as follows: Part 203—Home Mortgage Disclosure Section 265.7—Functions delegated to Director of (Regulation C) Division of Banking Supervision and Regulation. 1. The authority citation for Part 203 continues to read as follows: (c) * * * (6) Appraisal not required. To determine pursuant to 12 C.F.R. 225.63(b)(12) that the services of an ap- Authority: 12 U.S.C. 2801-2810. praiser are not necessary in order to protect Federal financial and public policy interests in real estate-related 2. In Supplement I to Part 203, under Section 203.3 financial transactions or to protect the safety and sound- Exempt Institutions, under 3(a) Exemption based on locaness of an institution. tion, asset size, or number of home-purchase loans, paragraphs 2 and 3 are redesignated as paragraphs 3 and 4, respectively; and a new paragraph 2 is added to read as follows: ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Orders Issued Under Section 3 of the Bank Holding Supplement I to Part 203—Staff Commentary Company Act First of Waverly Corporation Section 203.3—Exempt Institutions Waverly, Iowa 3(a) Exemption based on location, asset size, or number of Order Approving Acquisition of a Bank Holding home-purchase loans. Company 2. Adjustment of exemption threshold for depository institu- First of Waverly Corporation, Waverly, Iowa ("Waverly"), tions. For data collection in 1998, the asset-size exemption a bank holding company within the meaning of the Bank threshold is $29 million. Depository institutions with assets Holding Company Act ("BHC Act") has requested the at or below $29 million are exempt from collecting data for Board's approval under section 3 of the BHC Act 1998. (12 U.S.C. § 1842) to acquire Schrage, Ltd. ("Schrage"), and thereby indirectly -acquire Farmers State Bank ("Bank"), both of Plainfield, Iowa. FINAL RULE—AMENDMENT TO RULES REGARDING Notice of this proposal, affording interested person an DELEGATION OF AUTHORITY opportunity to submit comments, has been published (62 Federal Register 60,512 (1997)). The time for filing com- The Board of Governors is amending 12 C.F.R. Part 265, ments has expired, and the Board has considered the proits Rules Regarding Delegation of Authority. The Board is posal and all comments received in light of the factors set delegating to the Director of the Division of Banking forth in section 3 of the BHC Act. Supervision and Regulation the Board's authority to deter- Waverly is the 90th largest depository institution in mine in individual cases that the services of an appraiser Iowa, controlling approximately $77.8 million in deposits, are not necessary in order to protect Federal financial and representing less than 1 percent of total deposits in deposi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1998 tory institutions in the state.1 Schrage is the 290th largest The effect of the proposal on market concentration as depository institution in Iowa, controlling approximately measured by the HHI is relatively small. In addition, some $23.2 million in deposits, representing less than 1 percent mitigating considerations presented in the case offset this of total deposits in depository institutions in the state. On marginal effect on competition. Eight depository institution consummation of this proposal, Waverly would become competitors would remain in the banking market after the 65th largest depository institution in Iowa, controlling consummation of the proposal. Four of these competitors, deposits of $101 million, representing less than 1 percent not including Bank, would each have a market share of of the total deposits in depository institutions in the state. more than 9 percent, and the second largest competitor in the market would have a market share of more than Competitive Considerations 24 percent. Although the Bremer County banking market is a relatively small and slow-growing rural banking market, The BHC Act prohibits the Board from approving an the Board notes that there has been actual recent de novo application under section 3 of the BHC Act if the proposal entry into the market by an insured deposit-taking instituwould result in a monopoly or if the effect of the proposal tion. may be substantially to lessen competition in any relevant As in other cases, the Board sought comments from the market, unless the Board finds that the anticompetitive Justice Department and the Federal Deposit Insurance Coreffects of the proposal are clearly outweighed in the public poration ("FDIC") on the competitive effects of the prointerest by the probable effect of the proposal in meeting posal. The Justice Department has advised the Board that the convenience and needs of the community to be served.2 consummation of the proposal would not be likely to have Waverly and Bank compete in the Bremer County, Iowa any significantly adverse competitive effects in the Bremer banking market.3 Waverly is the second largest depository County banking market or in any other relevant banking institution in the market, controlling deposits of market. The FDIC did not object to consummation of the $77.8 million, representing 22.1 percent of total deposits in proposal or indicate it would have any significantly addepository institutions in the market ("market deposits").4 verse competitive effects in the Bremer County banking Bank is the sixth largest depository institution in the mar- market or any other relevant market. ket, controlling deposits of $23.2 million, representing Based on these and all the other facts of record, and for 6.6 percent of market deposits. On consummation of this the reasons discussed in this order, the Board concludes proposal, Waverly would become the largest depository that consummation of the proposal would not result in any institution in the market, controlling deposits of $101 mil- significantly adverse effects on competition or on the conlion, representing 28.7 percent of market deposits. Concen- centration of banking resources in any other relevant banktration in the Bremer County banking market, as measured ing market. by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guide- Other Considerations lines"), would increase by 294 points to 1850.5 The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of 1. All deposit data are as of June 30, 1996. the companies and banks involved in the proposal, the 2. 12 U.S.C. § 1842(c). 3. The Bremer County banking market consists of Bremer County convenience and needs of the community to be served, and (excluding Jackson and Jefferson Townships) and Butler and Shell certain supervisory factors. Based on all the facts of record, Rock Townships in Butler County. the Board concludes that the financial and managerial 4. All market data are as of June 30, 1996. In this context, deposiresources and future prospects of Waverly, Schrage, and tory institutions include commercial banks, savings banks, and savtheir subsidiary banks are consistent with approval, as are ings associations. Market share data before consummation are based on calculations in which the deposit of thrift institutions are included other supervisory factors the Board must consider under at 50 percent. The Board previously has indicated that thrift institu- section 3 of the BHC Act. In addition, considerations tions have become, or have the potential to become, significant relating to the convenience and needs of the communities competitors of commercial banks. See Midwest Financial Group, 75 to be served also are consistent with approval of this Federal Reserve Bulletin 386 (1989); National City Corporation, 70 application. Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Conclusion Reserve Bulletin 52 (1991). 5. Under the revised DOJ Guidelines, 49 Federal Register 26.823 (June 29, 1984), a market in which the post-merger HHI is above 1800 Based on the foregoing, and in light of all the facts of is considered highly concentrated. The U.S. Department of Justice record, the Board has determined that this application ("Justice Department") has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other should be, and hereby is, approved. The Board's approval factors indicating anticompetitive effects) unless the post-merger HHI is specifically conditioned on compliance by Waverly with is at least 1800 and the merger increases the HHI by more than all the commitments made in connection with this applica- 200 points. The Justice Department has stated that the higher than tion. The commitments relied on by the Board in reaching normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited- this decision are deemed to be conditions imposed in purpose lenders and other non-depository financial entities. writing by the Board in connection with its findings and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 113 decision and, as such, may be enforced in proceedings rectly and through its nonbanking subsidiaries, in a broad under applicable law. range of permissible nonbanking activities in the United The proposed acquisition of Schrage shall not be con- States. summated before the fifteenth calendar day following the American Century provides services to no-load mutual effective date of this order, and not later than three months funds. It conducts its activities through three subsidiaries: after the effective date of this order, unless such period is American Century Investment Management, Inc. extended for good cause by the Board or by the Federal ("ACIM"), which provides investment advisory and ad- Reserve Bank of Chicago, acting pursuant to delegated ministrative services to open-end investment companies; authority. American Century Services Corporation ("ACSC"), which By order of the Board of Governors, effective Decem- provides transfer agency services to mutual funds advised ber 15, 1997. by ACIM ("Funds"); and American Century Investment Services, Inc. ("ACIS"), a broker-dealer. ACIM is an in- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and vestment advisor registered with the Securities and Ex- Governors Phillips, Meyer, Ferguson, and Gramlich. Absent and not change Commission ("SEC") under the Investment Advisvoting: Governor Kelley. ers Act of 1940 (15 U.S.C. § 80b-1 et seq.) ("Advisers Act"), subject to the recordkeeping and reporting obliga- JENNIFER J. JOHNSON tions, fiduciary standards, and other requirements of the Deputy Secretary of the Board Advisers Act and the SEC. ACIS is registered with the SEC as a broker-dealer under the Securities Exchange Act Orders Issued Under Section 4 of the Bank Holding of 1934 (15 U.S.C. § 78a et seq.), and is subject to the Company Act recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange J.R Morgan & Co., Inc. Act of 1934 and the SEC.2 New York, New York Activities Previously Approved by the Board Order Approving Notice to Engage in Certain Nonbanking Activities The Board previously has determined by regulation that providing investment advisory and securities brokerage J.R Morgan & Co., Inc., New York, New York ("Morand transactional services is closely related to banking and gan"), a bank holding company within the meaning of the permissible for bank holding companies under sec- Bank Holding Company Act ("BHC Act"), has requested tion 4(c)(8) of the BHC Act.3 The Board also previously the Board's approval under section 4(c)(8) of the BHC Act has determined that providing administrative services to (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's mutual funds is closely related to banking within the mean- Regulation Y (12 C.F.R. 225.24) to acquire approximately ing of section 4(c)(8) of the BHC Act.4 Morgan proposes 45 percent of the shares of American Century Companies, to provide investment advisory, brokerage and transac- Inc., Kansas City, Missouri ("American Century"). Mortional, and administrative services through American Cengan thereby would engage in the following nonbanking tury that previously have been approved by the Board, and activities: Morgan has committed that the proposed activities will be (1) Providing financial and investment advisory serconducted in compliance with Regulation Y and subject to vices, pursuant to section 225.28(b)(6) of Regulation Y the prudential and other limitations established by the (12 C.F.R. 225.28(b)(6)); Board.5 (2) Providing securities brokerage and other transactional services, pursuant to section 225.28(b)(7)(i) and (v) of Regulation Y (12 C.F.R. 225.28(b)(7)(i) and (v)); and (3) Providing certain administrative services for open- 2. Following consummation of the proposal, ACIS would cease to act as a distributor for the Funds. Distribution activities would be the end investment companies or mutual funds. responsibility of a distributor independent of both Morgan and American Century. ACIS would continue to act as a broker for the Funds, Notice of the proposal, affording interested persons an and the Funds may be sold primarily to customers of Morgan and opportunity to submit comments, has been published (62 American Century. 3. See 12 C.F.R. 225.28(b)(6), (b)(7)(i) and (7)(v). Federal Register 55,403 (1997)). The time for filing com- 4. See Bankers Trust New York Corporation, 83 Federal Reserve ments has expired, and the Board has considered the notice Bulletin 780 (1997) ("BTNY"); Commerzbank AG, 83 Federal Reand all comments received in light of the factors set forth serve Bulletin 679 (1997) ("Commerzbank"). in section 4(c)(8) of the BHC Act. 5. See BTNY. The administrative services that Morgan would provide to the Funds through American Century or Morgan's other Morgan, with total consolidated assets of approximately subsidiaries include computing the fund's financial data, maintaining $250.4 billion, is the fourth largest commercial banking and preserving the records of the fund, providing office facilities and organization in the United States.1 Morgan engages, di- clerical support for the fund, and preparing and filing tax returns for the Funds. American Century also provides telephone services to shareholders through a toll-free number. The proposed administrative 1. Asset and ranking data are as of June 30, 1997. services are listed in the Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1998 Glass-Steagall Act bank holding company advises and administers.11 The Board found that the funds would be controlled by the Under the Glass-Steagall Act, a company that owns a independent directors.12 The Board noted that the indepenmember bank may not control "through stock ownership dent directors would be responsible for the selection and or in any other manner" a company that engages princi- review of the investment advisor, underwriter, and other pally in distributing, underwriting, or issuing securities.6 major contractors with the fund.13 The Board has found that this provision prohibits affiliates In this case, Morgan has stated that the number of its of banks from sponsoring, organizing, or controlling a directors and employees who would serve as directors of mutual fund. The Board previously has determined, how- any fund would not comprise more than two of nine ever, that the Glass-Steagall Act does not prohibit a bank directors (less than 25 percent) of these mutual funds. Any holding company from providing advisory and administra- director of the funds who also serves as an officer or tive services to a mutual fund.7 employee of Morgan would be an "interested person" American Century provides administrative, advisory, under the 1940 Act and, therefore, would be required to brokerage, and other services to the Funds. Morgan pro- abstain from voting on the investment advisory and other poses that American Century would continue to provide major contracts of the Funds. these services to the Funds. As noted above, however, The director and officer interlocks proposed by Morgan distribution activities of the Funds would be the responsi- would not appear to affect the independence of the other bility of an independent distributor, which would enter into directors on the boards of directors for the funds. Morecontractual agreements with the Funds to serve as "princi- over, the fact that American Century may be the primary pal underwriter" of the Funds.8 The independent distribu- broker for these funds, much like a bank proprietary fund, tor also would continue to be responsible for supervising would not require a different conclusion under the Glasssales as the "principal" underwriter for purposes of the Steagall Act. The independent members of the board of federal securities laws.9 directors would continue to have authority to review bro- Morgan also proposes to have certain director and officer kerage, advisory, administrative and other major contracts interlocks with the Funds. Morgan contemplates that up to and would retain authority to change the system for distritwo of the nine directors of the Funds would be employees, bution of fund shares. officers, or directors of Morgan or its subsidiaries, includ- Based on the foregoing, the Board concludes that control ing American Century. In addition, Morgan proposes that a of the Funds would rest with the independent members of limited number of employees of Morgan or its subsidiaries, the boards of directors of the Funds and that the proposed including American Century, would serve as junior-level interlocks between the Funds and Morgan, American Cenofficers of the Funds.10 tury, and their subsidiaries would not compromise the The Board previously has authorized a bank holding independence of the boards of the Funds or permit Morgan company and its nonbank subsidiaries to have limited or American Century to control the Funds. Thus, the Board director and officer interlocks "with mutual funds that the concludes that the proposal is consistent with the Glass- Steagall Act. 6. 12 U.S.C. §§ 221a and 377. Proper Incident to Banking Test 7. See 12 C.F.R. 225.125. In particular, the Board has determined that the Glass-Steagall Act does not prohibit a bank holding company In order to approve the proposal, the Board also must find from providing both investment advisory and administrative services that the performance of the proposed activities by Morgan to a proprietary mutual fund, whose shares are sold primarily to customers of the bank holding company. See, e.g., Barclays PLC, 82 "can reasonably be expected to produce benefits to the Federal Reserve Bulletin 158 (1996). public . . . that outweigh possible adverse effects, such as 8. As defined under the Investment Company Act of 1940 ("1940 undue concentration of resources, decreased or unfair com- Act"), a principal underwriter is any underwriter who, as principal, purchases from a mutual fund any security for distribution, or who as agent for such fund sells or has the right to sell the fund's securities to a dealer and/or to the public. 15 U.S.C. § 80a-2(a)(29). 11. See BTNY; Commerzbank. In Commerzbank, for example, the 9. An independent distributor, or intermediaries other than Morgan Board allowed Commerzbank officers and employees to serve as or American Century, would enter into any sales agreements with chairman of the 4-member board of trustees and junior level officers of financial intermediaries to sell shares of the Funds. The independent the mutual funds. In BTNY, the Board permitted two officers of BTNY distributor would be responsible for placing all advertisements and to serve as directors of the funds, with one director serving as would have legal responsibility under the rules of the National Associ- chairman of the boards of the funds, and a limited number of BTNY ation of Securities Dealers ("NASD") for the form and use of all employees serving as junior-level officers of the funds. In each case, a advertising and sales literature prepared by American Century or majority of the board of directors was comprised of individuals that Morgan, and also would be responsible for filing these materials with were unrelated to the bank holding company. the NASD or the SEC. 12. Under the 1940 Act, at least 40 percent of the board of directors 10. Morgan states that no more than three officers or employees of of a mutual fund must be individuals who are not affiliated with the American Century would serve as secretary, treasurer, or vice presi- mutual fund, investment advisor, or any other major contractor to the dent of the Funds. In addition, American Century employees would fund. serve as assistant secretaries, assistant treasurers, or assistant vice- 13. The 1940 Act and related regulatory provisions require that presidents of the Funds. These employees would have no policy- independent directors annually review and approve the mutual fund's making authority at the Funds and would not be responsible for investment advisory contract and any plan of distribution or related policy-making functions. agreement. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 115 petition, conflicts of interests, or unsound banking practic- writing by the Board in connection with its findings and es."14 As part of its review of these factors, the Board decision, and, as such, may be enforced in proceedings considers the financial and managerial resources of the under applicable law. notificant and its subsidiaries and the effect of the transac- The proposal shall not be consummated later than three tion on those resources.15 Based on all the facts of record, months after the effective date of this order, unless such the Board has determined that financial and managerial period is extended for good cause by the Board or the considerations are consistent with approval of the proposal. Federal Reserve Bank of New York, acting pursuant to The Board expects that the activities in which Morgan delegated authority. proposes to engage through American Century would pro- By order of the Board of Governors, effective Decemvide added convenience to both American Century's and ber 8, 1997. Morgan's customers by offering them an expanded range of products and services. The proposed acquisition also Voting for this action: Chairman Greenspan and Governors Kelley, would provide Morgan with further access to U.S. markets Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Vice for its advisory services and products. There are numerous Chair Rivlin. providers of the proposed services and, therefore, consum- JENNIFER J. JOHNSON mation of the proposal would not significantly decrease Deputy Secretary of the Board competition in any relevant market. In addition, the Board previously has determined that the provision of advisory and administrative services to mutual funds within certain parameters is not likely to result in the types of subtle Appendix hazards at which the Glass-Steagall Act is aimed. There is no evidence in the record, moreover, that consummation of List of Administrative Services this proposal, subject to the limitations noted above, would result in any significantly adverse effects, such as undue (1) Maintaining and preserving the records of the Funds, concentration of resources, decreased or unfair competiincluding financial and corporate records. tion, conflicts of interests, or unsound banking practices (2) Computing net asset value, dividends, performance that are not outweighed by the benefits of the proposal. data, and financial information regarding the Funds. On the basis of the foregoing and all the other facts of (3) Furnishing statistical and research data to the Funds. record, including the commitments made by Morgan, the (4) Preparing and filing with the SEC and state securities Board has determined that performance of the proposed regulators registration statements, notices, reports, and activities by Morgan reasonably can be expected to pro- other materials required to be filed under applicable laws. duce benefits to the public that would outweigh any possi- (5) Preparing reports and other informational materials ble adverse effects under the proper incident to banking regarding the Funds, including prospectuses, proxies, and standard of section 4(c)(8) of the BHC Act. other shareholder communications. (6) Providing legal and other regulatory advice to the Conclusion Funds. (7) Providing office facilities and clerical support for the Based on all the facts of record, including all the commit- Funds. ments and representations made by Morgan, and subject to (8) Developing and implementing procedures for monitorall of the terms and conditions set forth in this order, the ing compliance with regulatory requirements and compli- Board has determined that the notice should be, and hereby ance with the Funds' investment objectives, policies, and is, approved. This determination is subject to all the condi- restrictions as established by the board of directors of the tions set forth in the Board's Regulation Y, including those Funds. in sections 225.7 and 225.23(g), and to the Board's author- (9) Providing routine fund accounting services and liaison ity to require modification or termination of the activities with outside auditors. of a bank holding company or any of its subsidiaries as the (10) Preparing and filing tax returns, and monitoring tax Board finds necessary to assure compliance with, or to compliance. prevent evasion of, the provisions and purposes of the (11) Reviewing and arranging for payment of Fund ex- BHC Act and the Board's regulations and orders issued penses. thereunder. The Board's decision is specifically condi- (12) Providing communication and coordination services tioned on compliance with all the commitments and repre- with regard to the Funds' investment advisors, transfer sentations made in the notice, including the commitments agent, custodian, distributor, and other service organizaand conditions discussed in this order. The commitments, tions that render distribution, recordkeeping, or sharerepresentations, and conditions relied on in reaching this holder communication services. decision shall be deemed to be conditions imposed in (13) Reviewing and providing advice to the distributor, the Funds, and investment advisors regarding sales literature and marketing plans for the Funds. (14) Providing information to the distributor's personnel 14. 12 U.S.C. § 1843(c)(8). 15. 12 C.F.R. 225.26. concerning performance and administration of the Funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1998 (15) Providing marketing support with respect to sales of Lloyds Bank Pic, London, England ("Lloyds Bank"), on the Funds through financial intermediaries. December 28, 1995, and thereby became a foreign banking (16) Participating in seminars, meetings, and conferences organization subject to the BHC Act.3 Notificant operates a designed to present information concerning the Funds. branch in New York, New York, and an agency in Miami, (17) Assisting in the development of additional Funds. Florida. Notificant controlled IAI Holdings and IAI Inter- (18) Providing reports to the board of directors of the national, Ltd. prior to its acquisition of Lloyds Bank and Funds. has filed this notice to obtain the Board's approval to retain (19) Providing telephone shareholder services through a its interest in these entities.4 toll-free number. IAI, IAI Ventures, and IAI International are registered as investment advisers with the Securities and Exchange Lloyds TSB Group pic Commission ("SEC") under the Investment Advisers Act Lloyds Bank Pic of 1940 (15 U.S.C. § 80b-1 et seq.). Accordingly, IAI, IAI London, England Ventures, and IAI International are subject to the recordkeeping and reporting obligations, fiduciary standards, and Order Approving Notice to Engage in Nonbanking other requirements of the Investment Advisers Act and the Activities SEC. IAI-Securities is registered with the SEC as a brokerdealer under the Securities Exchange Act of 1934 Lloyds TSB Group pic, London, England ("Notificant"), a (15 U.S.C. § 78a et seq.). IAI Trust is a limited purpose foreign banking organization subject to the provisions of trust company organized under the laws of Minnesota. the Bank Holding Company Act ("BHC Act"), has re- IAI provides investment advice to institutions, pension quested the Board's approval under section 4(c)(8) of the and profit sharing plans, municipalities, and individuals.5 BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of IAI also provides investment advisory and administrative the Board's Regulation Y (12 C.F.R. 225.24) to retain its services to 25 mutual funds ("Funds"), including the indirect ownership of IAI Holdings, Inc., Minneapolis, 19 mutual funds that form the IAI family of mutual funds Minnesota, and thereby engage in the following nonbank- ("IAI Funds").6 Each of the Funds advised and adminising activities in the United States:1 tered by IAI is registered with the SEC under the Invest- (1) Providing investment and financial advisory services ment Company Act of 1940 (15 U.S.C. § 80a-l et seq.) under section 225.28(b)(6) of Regulation Y, including ("1940 Act").7 Unlike most mutual funds, the IAI Funds serving as investment adviser to open-end investment do not have a "principal underwriter" for purposes of the companies ("mutual funds") and providing investment 1940 Act.8 A broker-dealer that is not affiliated with Notifiadvice with respect to foreign exchange and futures cant or IAI serves as the principal underwriter and distribucontracts and options on futures contracts; tor of the other six Funds that are advised and administered (2) Providing securities brokerage services, pursuant to by IAI. section 225.28(b)(7)(i) of Regulation Y; As noted above, the Board previously has determined by (3) Providing foreign exchange transactional services regulation that investment advisory, securities brokerage, pursuant to section 225.28(b)(7)(v) of Regulation Y; foreign exchange execution, and trust activities are closely (4) Performing functions or activities that may be performed by a trust company pursuant to section 225.28(b)(5) of Regulation Y; and 3. Prior to this acquisition, Notificant was known as TSB Group pic. (5) Providing administrative services to mutual funds. 4. Notificant and Lloyds Bank committed that they would keep their respective U.S. businesses separate following the merger until Notifi- Notice of this proposal, affording interested persons an cant received Board approval under section 4(c)(8) of the BHC Act to opportunity to submit comments, has been published (62 retain the United States nonbanking operations of the combined entity. See Letter from Jonathan M. Weld and Timothy J. Byrne, Shearman & Federal Register 11,455 (1997)). The time for filing com- Sterling, to Kathleen M. O'Day, Associate General Counsel of the ments has expired, and the Board has considered the notice Board, dated November 6, 1995. and all comments received in light of the factors set forth 5. As of August 1, 1996, IAI had approximately $15 billion in assets in section 4(c)(8) of the BHC Act. under management. 6. IAI International serves as sub-adviser to certain of the mutual Notificant, with total consolidated assets of approxifunds advised by IAI. mately $267 billion,2 acquired all the voting shares of 7. The Funds are sold through a variety of sales channels, including broker-dealers and 401(k) plans, and are not marketed primarily to customers of Lloyds Bank. Accordingly, the Funds are not proprietary 1. IAI Holdings's principal subsidiaries are Investment Advisers, mutual funds. Inc. ("IAI"); IAI Securities, Inc. ("IAI-Securities"); IAI Ventures, 8. The 1940 Act defines a "principal underwriter" of a mutual Inc.; and IAI Trust Company, all in Minneapolis, Minnesota. Notifi- fund's securities as "any underwriter who as principal purchases from cant also indirectly owns all the shares of IAI International Ltd., a [the mutual fund], or pursuant to contract has the right (whether United Kingdom company that engages in certain nonbanking activi- absolute or conditional) from time to time to purchase from [the ties in the United States. A list of the nonbanking activities to be mutual fund], any such security for distribution, or who as agent for engaged in by IAI Holdings and IAI International is provided in such company sells or has the right to sell any such security to a dealer Appendix A. or to the public or both." 15 U.S.C. § 80a-2(a)(29). The term does not 2. All asset data are as of June 30, 1997, and use exchange rates include a dealer who purchases shares of a mutual fund through a then in effect. principal underwriter that acts as agent for the mutual fund. Id. 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Legal Developments 117 related to banking for purposes of the BHC Act.9 Notificant considered a proposal whereby a bank holding company would conduct these activities in accordance with the limi- would provide advisory and administrative services to mutations set forth in Regulation Y. Notificant also proposes tual funds that were not distributed by an independent that IAI provide the administrative services listed in third-party. Appendix B to mutual funds that are advised by IAI. The Board has long held that the distribution of mutual The Board previously has determined that mutual fund fund shares is an activity covered by the Glass-Steagall administrative services are closely related to banking Act.16 Although the specific services provided by mutual within the meaning of section 4(c)(8) of the BHC Act.10 fund distributors vary widely from fund to fund, a distributor generally enters into a distribution agreement with a Glass-Steagall Act fund to act as agent for the fund in selling shares to the public and to serve as the fund's "principal underwriter" Under the Glass-Steagall Act, a company that owns a for purposes of the 1940 Act. The distributor generally member bank may not control "through stock ownership fulfills its responsibility for selling the mutual fund shares or in any other manner" a company that engages princi- by entering into selling agreements with broker-dealers or pally in the distribution, underwriting, public sale, or issu- other financial intermediaries under which the intermediarance of securities.11 The Board has long held that the ies purchase fund shares from the distributor and sell those Glass-Steagall Act prohibits a bank holding company from shares to their customers. In this manner, the distributor sponsoring, organizing, or controlling a mutual fund, or controls the sales channels through which shares of the engaging in the underwriting, public sale, or distribution of fund are sold to the public. A mutual fund distributor also the shares of any investment company.12 The Board previ- typically promotes the fund through advertising and is ously has determined, however, that the Glass-Steagall Act responsible for filing advertisements with the National does not prohibit a bank holding company from providing Association of Securities Dealers ("NASD") or the SEC. advisory and administrative services to a mutual fund.13 The IAI Funds have not contracted with an independent Notificant's proposal differs from the proposals previ- broker-dealer to serve as the funds' distributor or principal ously approved by the Board in one material respect. underwriter for purposes of the 1940 Act. Instead, the IAI Unlike in previous cases, the IAI Funds do not have an Funds would enter directly into selling agreements with independent third party distributor that serves as the funds' various brokers and would rely on independent sources for principal underwriter for purposes of the 1940 Act. Notifi- advertising. The IAI Funds have hired an individual (who cant has stated that this structure allows the IAI Funds to will not also be an employee of Notificant) who would be lower their operating costs and thereby makes the funds responsible for initiating contact with broker-dealers and more appealing to cost-conscious investors.14 In addition, other financial intermediaries regarding the sale of Fund Notificant has stated that the IAI Funds do not engage in shares, and for negotiating any broker selling agreements general advertising and, therefore, do not need a distributor on behalf of the Funds. In addition, in the event the IAI to market their shares.15 The Board has not previously Funds determine to change strategies and begin advertising, this individual would be responsible for placing, reviewing, and filing with regulators, advertisements on be- 9. See 12 C.F.R. 225.28(b)(5), (6), (7)(i), and (7)(v). half of the Funds.17 10. See The Chase Manhattan Corporation, 81 Federal Reserve As the investment advisor and administrator, Notificant Bulletin 883 (1995); Mellon Bank Corporation, 79 Federal Reserve proposes to provide assistance to the Funds in these mat- Bulletin 626 (1993) ("Mellon"). The administrative services would ters. Notificant maintains that the services that it proposes include providing telephone services to shareholders through a tollfree 800 number. Notificant has stated that telephone service operators to provide to the IAI Funds are permissible for bank would not solicit callers to purchase shares in particular mutual funds or make outgoing calls to solicit investors. Upon the request of a caller, the service operators may provide historical performance information concerning a Fund or general information concerning a Fund's furthermore, that the development of mutual fund "supermarkets" investment objectives. provides the IAI Funds with readily available sales channels, thereby 11. 12 U.S.C. §§ 221a and 377. diminishing the need for the funds to hire a distributor to establish and 12. See 12 C.F.R. 225.125. maintain distribution channels for the funds. 13. See 12 C.F.R. 225.28(b)(6)(i); Mellon. The Board also has 16. See 12 C.F.R. 225.125. determined that the Glass-Steagall Act does not prohibit a bank 17. As noted above, the IAI Funds currently do not engage in holding company from controlling a closed-end investment company general advertising or marketing activities. However, IAI prepares a if that company is not frequently engaged in the issuance, sale, or quarterly newsletter and other sales material regarding the IAI Funds distribution of securities. See 12 C.F.R. 225.125. A closed-end invest- and maintains an "IAI Funds" home page on the internet. Notificant ment company that is controlled by a bank holding company must has stated that any sales materials prepared by IAI, including the conform its activities to the requirements of section 4 of the BHC Act. information posted on the internet site, will be reviewed by the Accordingly, if Notificant sponsors, organizes, or controls any closed- Marketing Officer of the IAI Funds for compliance with federal end fund, Notificant must limit such fund's investments to less than securities laws and will be filed by the Marketing Officer on behalf of 5 percent of the voting shares of any issuer. the funds with the NASD or SEC. The Board previously has permitted 14. The IAI Funds are pure "no-load" funds which do not impose a bank holding companies to prepare advertising and marketing materisales charge or a Rule 12b-1 distribution fee. als for funds that are advised and administered by the bank holding 15. Notificant has indicated that the IAI Funds rely on articles and company, provided that the funds' distributor remained responsible performance information regularly published by independent sources for placing all advertisements and filing the materials with the NASD to inform potential investors about the funds. Notificant has stated, or SEC. See CommerzbanL Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1998 holding companies and would not constitute the distribu- concludes that the proposed operational structure of the tion of the funds' shares. IAI Funds would be consistent with the Glass-Steagall Notificant has committed that IAI will not act as an Act.21 underwriter of shares of the IAI Funds for purposes of the Securities Act of 1933, or as the funds' principal under- Proper Incident to Banking Test writer for purposes of the 1940 Act. Notificant has committed that neither Notificant, IAI, nor any affiliate of Notifi- In order to approve the notice, the Board also must find cant will enter into a distribution agreement with the IAI that the performance of the proposed activities by Notifi- Funds, purchase shares of the funds as principal, or be cant "can reasonably be expected to produce benefits to the identified as the funds' distributor in Fund prospectuses or public . . . that outweigh possible adverse effects, such as sales material.18 In addition, Notificant has committed that undue concentration of resources, decreased or unfair comneither Notificant, nor IAI, nor any other affiliate will petition, conflicts of interests, or unsound banking pracengage in any activity that would cause it to be considered tices."22 As part of the Board's evaluation of these factors, a broker of shares of the IAI Funds under the Securities the Board considers the financial and managerial resources Exchange Act of 1934. Thus, neither Notificant nor IAI of the notificant and its subsidiaries and the effect the would receive any transaction-based compensation in con- transaction would have on such resources.23 The Board nection with the sale of shares of the IAI Funds, or enter notes that Notificant's capital ratios meet applicable riskinto any selling agreement with the funds.19 based capital standards under the Basle Accord and are Notificant has committed that the Marketing Officer will equivalent to the capital levels that would be required of a not be an employee, officer, or director of Notificant or any U.S. banking organization. Based on all the facts of record, of its affiliates. Furthermore, Notificant has committed that the Board concludes that financial and managerial considthe Marketing Officer will report directly to the boards of erations are consistent with approval. directors of the IAI Funds, which will be entirely indepen- The Board expects that consummation of the proposal dent from Notificant, and will not report to any officer that can reasonably be expected to provide added convenience is affiliated with Notificant. Notificant also has committed and services to Notificant's customers by offering them an that the independent boards of directors of the IAI Funds expanded range of investment products and management will have sole responsibility for all decisions regarding the expertise. The Board previously has determined that the employment, termination, and compensation of the Market- provision of administrative services to mutual funds within ing Officer and will approve each selling agreement negoti- the parameters established by the Board is not likely to ated by the Marketing Officer, both initially and annually result in the types of subtle hazards at which the Glassthereafter.20 Steagall Act is aimed or in any other adverse effects. In light of the foregoing, the commitments provided by Notificant also would be required to comply with the Notificant and the specific facts of this case, the Board Board's interpretive rule on Investment Adviser Activities, which was designed to mitigate potential conflicts of interests and the potential for customer confusion associated 18. The pension plan for IAI employees currently holds shares of with the proposed activities.24 There are numerous providthe IAI Funds, which are attributed to Notificant under section 2(g)(2) ers of the proposed nonbanking services, and there is no of the BHC Act. Notificant has committed that the IAI pension plan, together with Notificant and its affiliates, will not acquire more than 5 percent of the shares of any Fund, and that any such ownership interest in the Funds will not be used in any way in marketing or 21. The Board previously has stated that the Glass-Steagall Act also selling the Funds. See Mellon. prohibits a bank holding company from sponsoring or organizing a 19. Because the IAI Funds do not have a distributor, independent mutual fund. See 12 C.F.R. 225.125. Notificant has committed that it broker-dealers that wish to sell shares of the funds would enter into will not provide the seed money for any mutual funds established in selling agreements directly with, and would acquire shares directly the future. In addition, Notificant has committed that the completely from, the IAI Funds. Such activity could cause the broker-dealers to independent board of directors of the Funds will serve as the board of be considered "underwriters" of fund shares for purposes of the directors of any newly established fund that is advised and adminis- Securities Act of 1933. See 15 U.S.C. § 77b(ll). As noted above, tered by IAI and that is not distributed by an independent third party. Notificant has committed that it will not act as a broker of shares of 22. 12 U.S.C. § 1843(c)(8). the IAI Funds or enter into selling agreements with the funds. 23. See 12 C.F.R. 225.26; see also The Fuji Bank, Limited, 75 20. Notificant proposes that officers or employees of IAI serve as Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 president, treasurer, secretary, assistant treasurer, and assistant secre- Federal Reserve Bulletin 155 (1987). tary of the IAI Funds. Notwithstanding the fact that the IAI Funds 24. Under the interpretive rule on Investment Adviser Activities, a would not employ an independent third party distributor, this case is bank holding company and its bank and nonbank subsidiaries should consistent with prior Board decisions prohibiting bank holding com- not purchase in their sole discretion, in a fiduciary capacity securities pany control of mutual funds. Notificant does not propose to have any of any investment company for which the bank holding company acts director interlocks with the Funds, including the IAI Funds. The as investment adviser unless the purchase is specifically authorized by Board previously has found that a bank holding company may, consis- the terms of the instrument creating the fiduciary relationship, by court tent with the Glass-Steagall Act and the BHC Act, have certain officer order, or by the law of the jurisdiction under which the trust is and director interlocks with mutual funds that the bank holding administered. The interpretive rule also prohibits a bank holding company advises and administers. See Bankers Trust New York Corpo- company from acting as investment adviser to any investment comration, 83 Federal Reserve Bulletin 780 (1997); Commerzbank AG, 83 pany that has either the same name as the bank holding company or Federal Reserve Bulletin 678 (1997); The Governor and Company of any of its subsidiary banks, or a name that includes the word "bank." the Bank of Ireland, 82 Federal Reserve Bulletin 1129 (1996). See 12 C.F.R. 225.125. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 119 evidence in the record to indicate that consummation of (b) Providing the administrative services described in this proposal is likely to result in significantly adverse Appendix B to mutual funds, including mutual funds effects, such as undue concentration of resources, de- advised by IAI; creased or unfair competition, conflicts of interests, or (c) Providing securities brokerage services, pursuant to unsound banking practices, that would outweigh the public section 225.28(b)(7)(i) of Regulation Y (12 C.F.R. benefits of the proposal. Based on all the facts of record, 225.28(b)(7)(i)); and the Board finds that the public benefits of Notificant's (d) Providing to customers as agent transactional serproposed activities outweigh any adverse effects, and, vices with respect to foreign exchange transactions, purtherefore, that the activities are a proper incident to bank- suant to section 225.28(b)(7)(v) of Regulation Y ing for purposes of section 4(c)(8) of the BHC Act. (12 C.F.R. 225.28(b)(7)(v); Based on the foregoing and all the facts of record, 2. IAI Securities, Inc., Minneapolis, Minnesota, which including the commitments discussed in this order and all would engage in providing securities brokerage services, other commitments and representations made by Notificant pursuant to section 225.28(b)(7)(i) of Regulation Y in connection with this notice, and subject to the terms and (12 C.F.R. 225.28(b)(7)(i)); conditions set forth in this order, the Board has determined 3. IAI Ventures, Inc. and Itasca Ventures, LLC, both in that the notice should be, and hereby is, approved. The Minneapolis, Minnesota, which would engage in acting as Board's determination is subject to all the conditions set an investment or financial advisor, pursuant to section forth in Regulation Y, including those in sections 225.7 and 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), 4. IAI Trust Company, Minneapolis, Minnesota, which and to the Board's authority to require modification or would engage in performing functions or activities that termination of the activities of a bank holding company or may be performed by a trust company, pursuant to section any of its subsidiaries as the Board finds necessary to 225.28(b)(5) of Regulation Y (12 C.F.R. 225.28(b)(5)); and assure compliance with, and to prevent evasion of, the 5. IAI International Ltd., London, England, which would provisions of the BHC Act and the Board's regulations and engage in orders issued thereunder. The Board's decision is specifi- (a) Acting as an investment or financial advisor, includcally conditioned on Notificant's compliance with the com- ing serving as investment adviser to investment compamitments and representations made in connection with this nies registered under the Investment Company Act of notice, including the commitments and conditions dis- 1940, pursuant to section 225.28(b)(6) of Regulation Y cussed in this order. The commitments, representations, (12 C.F.R. 225.28(b)(6)); and and conditions relied on in reaching this decision shall be (b) Providing to customers as agent transactional serdeemed to be conditions imposed in writing by the Board vices with respect to foreign exchange transactions, purin connection with its findings and decision and may be suant to section 225.28(b)(7)(v) of Regulation Y enforced in proceedings under applicable law. (12 C.F.R. 225.28(b)(7)(v). This transaction shall not be consummated later than three months after the effective date of this order, unless Appendix B such period is extended for good cause by the Board or the Federal Reserve Bank of New York, acting pursuant to List of Administrative Services delegated authority. By order of the Board of Governors, effective Decem- (1) Maintaining and preserving the records of the funds, ber 18, 1997. including financial and corporate records; (2) Computing dividends, performance data and financial Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and information regarding the funds; Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not (3) Furnishing statistical and research data; voting: Governor Meyer. (4) Preparing and filing with the SEC and state securities regulators registration statements, notices, reports and other JENNIFER J. JOHNSON material required to be filed under applicable laws; Deputy Secretary of the Board (5) Preparing reports and other informational materials regarding the funds including proxies and other share- Appendix A holder communications and reviewing prospectuses; (6) Providing legal and regulatory advice to the fund in Nonbanking Subsidiaries and Activities connection with its other administrative functions; (7) Providing office facilities and clerical support for the 1. Investment Advisers, Inc. ("IAI"), Minneapolis, Minne- funds; sota, which would engage in: (8) Developing and implementing procedures for monitor- (a) Acting as an investment or financial advisor, includ- ing compliance with regulatory requirements and compliing serving as investment adviser to investment compa- ance with the funds' investment objectives, policies, and nies registered under the Investment Company Act of restrictions as established by the funds' boards; 1940, pursuant to section 225.28(b)(6) of Regulation Y (9) Providing routine fund accounting services and liaison (12 C.F.R. 225.28(b)(6)); with outside auditors; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1998 (10) Preparing and filing tax returns; Sanwa Bank California, San Francisco, California. In addi- (11) Reviewing and arranging for payment of fund ex- tion, Notificant operates branches in New York, New York; penses; Chicago, Illinois; and San Francisco and Los Angeles, (12) Providing communication and coordination services California; agencies in Atlanta, Georgia; and Dallas, Texas; with regard to the funds' investment adviser, transfer agent, and representative offices in Boston, Massachusetts; Clevecustodian, and other service organizations that render re- land, Ohio; and Houston, Texas. Notificant also engages in cordkeeping or shareholder communication services; a number of nonbanking activities in the United States. (13) Reviewing and providing advice to the distributor and The Board previously has determined by regulation that the funds regarding sales literature and marketing plans to financing and leasing activities are closely related to bankassure regulatory compliance; ing and permissible for bank holding companies under (14) Providing information concerning the funds' perfor- section 4(c)(8) of the BHC Act. Notificant has committed mance and administration to the broker-dealers that sell to conduct these activities subject to the limitations set shares of the funds to the public; forth in Regulation Y.2 In order to approve the proposal, (15) Participating in seminars, meetings, and conferences the Board also must find that the performance of the designed to present information to brokers and investment proposed activities by Notificant "can reasonably be excompanies, but not in connection with the sale of shares of pected to produce benefits to the public . . . that outweigh the funds to the public, concerning the operations of the possible adverse effects, such as undue concentration of funds, including administrative services provided by IAI to resources, decreased or unfair competition, conflicts the funds; of interests, or unsound banking practices." 12 U.S.C. (16) Assisting existing funds in the development of addi- § 1843(c)(8). tional portfolios; As part of its evaluation of these factors, the Board (17) Providing reports to the fund's board with regard to its considers the financial resources of the notificant and its activities; and subsidiaries and the effect of the transaction on those (18) Providing telephone shareholder services through a resources.3 Notificant has submitted a comprehensive busitoll-free number. ness plan demonstrating that the proposed transaction would not involve significant risk or a significant expansion of Notificant's operations in the United States, but The Sanwa Bank Limited rather a filling out of existing lines of business. The pro- Osaka, Japan posed financial investment would be relatively small and would be funded by an existing U.S. subsidiary that has a Order Approving Notice to Engage in Nonbanking track record of successfully and prudently managing simi- Activities lar activities. Accordingly, this acquisition would not require substantial funding from Notificant. The most re- The Sanwa Bank Limited, Osaka, Japan ("Notificant"), a cently reported capital ratios of Notificant meet the relevant bank holding company within the meaning of the Bank risk-based capital standards established under the Basle Holding Company Act ("BHC Act"), has requested the Accord, and the proposed transaction is not expected to Board's approval under section 4(c)(8) of the BHC Act have any significant effect on the capital of the consoli- (12 U.S.C. § 1843(c)(8)) and section 225.24(a) of the dated organization. The Board also has considered recent Board's Regulation Y (12 C.F.R. 225.24(a)) to acquire financial statements and other available information, inthrough its wholly owned subsidiary, Sanwa Business cluding pro forma financial statements and the condition of Credit Corporation, Chicago, Illinois, all the shares of the U.S. operations of Notificant. Based on these and other Morcroft Capital Corporation, Fairfield, New Jersey facts of record, including information regarding the risk ("Morcroft"), and thereby engage in providing financing management system of Sanwa Business Credit Corporaand leasing services pursuant to sections 225.28(b)(1) and tion, the Board has determined that financial considerations (b)(3) of Regulation Y (12 C.F.R. 225.28(b)(1) and (b)(3)). are consistent with approval of the proposal. In addition, Notice of the proposal, affording interested persons an based on relevant supervisory information, and considering opportunity to submit comments, has been published (62 the size of the acquisition and activities proposed, manage- Federal Register 52,339 (1997)). The time for filing com- rial considerations are consistent with approval. ments has expired, and the Board has considered the notice The Board also has carefully considered the competitive and all comments received in light of the factors set forth effects of the proposed acquisition of Morcroft. Sanwa in section 4(c)(8) of the BHC Act. currently engages in the activities conducted by Morcroft. Notificant, with total consolidated assets of approxi- The Board notes that the markets for lending and leasing mately $446.9 billion, is the fourth largest banking organi- services are unconcentrated and that there are numerous zation in Japan, and the sixth largest banking organization in the world.1 In the United States, Notificant controls 2. See 12 C.F.R. 225.28(b)(1) and (b)(3). 3. See 12 C.F.R. 225.26; The Fuji Bank, Limited, 75 Federal 1. Asset data are as March 31, 1997. Foreign ranking data are as of Reserve Bulletin 94 (1989); Bayerishe Vereinbank AG, 73 Federal December 31, 1996. Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 121 providers of the services. Consummation of the proposal Star Banc Corporation would have a de minimis effect on competition, and the Cincinnati, Ohio Board has determined that the proposal would not have a significantly adverse effect on competition in any relevant Order Approving the Acquisition of a Savings market. Association The Board expects that the proposed transaction would give Notificant an increased ability to serve the needs of its Star Banc Corporation ("Star"), a bank holding company customers and would allow Notificant to provide existing within the meaning of the Bank Holding Company Act and new customers with a broader range of products and ("BHC Act"), has requested the Board's approval under services at lower costs. The Board also expects that com- section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) bining the expertise of Notificant and Morcroft woufd and section 225.24 of the Board's Regulation Y (12 C.F.R. allow Notificant to be a more effective competitor. 225.24) to merge with Great Financial Corporation ("Great Based on the foregoing and all the other facts of record, Financial"), and thereby acquire its wholly owned subsidincluding the commitments made by Notificant, the Board iary savings association, Great Financial Bank, F.S.B. has determined that the performance of the proposed activ- ("Thrift"), Louisville, Kentucky.1 ities by Notificant can reasonably be expected to produce Notice of the proposal, affording interested persons an benefits to the public that would outweigh any possible opportunity to submit comments, has been published (62 adverse effects under the proper incident to banking stan- Federal Register 55,403 (1997)). The time for fifing comdard of section 4(c)(8) of the BHC Act. ments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 4 of the BHC Act. Star, with total consolidated assets of approximately Conclusion $10.8 billion, operates one subsidiary bank with branches in Ohio, Indiana, and Kentucky.2 Star is the 16th fargest depository institution in Kentucky, controlling deposits of Based on all the facts of record, including all the commitapproximately $597 million, representing 1.4 percent of ments and representations made by Notificant, and subject total deposits in depository institutions in the state ("state to all the terms and conditions set forth in this order, the deposits").3 Great Financial is the fifth largest depository Board has determined that the notice should be, and hereby institution in Kentucky, controlling deposits of approxiis, approved. This determination is subject to all the condimately $1.5 billion, representing 3.6 percent of state depostions set forth in the Board's Regulation Y, including those its. On consummation of the proposal, Star would become in sections 225.7 and 225.25(g) (12 C.F.R. 225.7 and the fourth largest depository institution in Kentucky, con- 225.25(g)), and to the Board's authority to require modifitrolling deposits of approximately $2.1 biilion, representcation or termination of the activities of a bank holding ing 5 percent of state deposits. Star is the 30th largest company or any of its subsidiaries as the Board finds depository institution in Indiana, controlling deposits of necessary to assure compliance with, or to prevent evasion approximately $429 million, representing less than 1 perof, the provisions and purposes of the BHC Act and the cent of state deposits. Great Financial is the 221st largest Board's regulations and orders issued thereunder. The depository institution in the state, controlling deposits of Board's decision is specifically conditioned on compliance approximately $6 million, representing less than 1 percent with all the commitments and representations made in the of state deposits. On consummation of the proposal, Star notice, including the commitments and conditions diswoufd remain the 30th largest depository institution in cussed in this order. The commitments, representations, Indiana, controlling less than 1 percent of state deposits. and conditions relied on in reaching this decision shall be The Board previously has determined by regulation that deemed to be conditions imposed in writing by the Board the operation of a savings association by a bank holding in connection with its findings and decision, and, as such, company is closely related to banking for purposes of the may be enforced in proceedings under applicable law. BHC Act.4 In making this determination, the Board re- This proposal shall not be consummated later than three quires that savings associations acquired by bank holding months after the effective date of this order, unless such companies conform their direct and indirect activities to period is extended for good cause by the Board or the those permissible for bank holding companies under sec- Federal Reserve Bank of San Francisco, acting pursuant to tion 4 of the BHC Act and Regulation Y. Star has commitdelegated authority. By order of the Board of Governors, effective December 1, 1997. 1. Star also has requested the Board's approval of an option to purchase up to 19.9 percent of the voting shares of Great Financial under certain circumstances. The option would expire on consumma- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and tion of the proposed merger with Great Financial. Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not 2. Asset data are as of June 30, 1997. Deposit data are as of June 30, voting: Governor Meyer. 1996. 3. In this context, depository institutions include commercial banks, WILLIAM w. WILES savings banks, and savings associations. Secretary of the Board 4. 12 C.F.R. 225.28(b)(4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1998 ted to conform all of Thrift's activities to those permissible as measured by the HHI is relatively small, and the prounder section 4(c)(8) of the BHC Act.5 posal would not exceed the DOJ Guidelines. In addition, five depository institutions, including Star, would continue Competitive Considerations to operate in the market, including two depository institutions with more than 25 percent of market deposits, one In order to approve the proposal, the Board also must depository institution with more than 10 percent of market determine that the performance of the proposed thrift activ- deposits, and one depository institution with more than ities is a proper incident to banking, that is, that the $1 billion of deposits. Based on these and all other facts of proposed transaction "can reasonably be expected to pro- record, the Board concludes that the consummation of the duce benefits to the public . . . that outweigh possible proposal would not result in any significantly adverse adverse effects, such as undue concentration of resources, effects on competition or on the concentration of banking decreased or unfair competition, conflicts of interests, or resources in the Marion County banking market or any unsound banking practices."6 As part of the Board's evalu- other relevant banking market. ation of these factors, the Board has carefully considered the competitive effects of the proposal in light of all the Other Considerations facts of record. Star and Great Financial compete directly in the Marion In connection with its review of the public interest factors County, Kentucky, banking market.7 On consummation of under section 4 of the BHC Act, the Board also has the proposal, Star would become the largest depository carefully reviewed the financial and managerial resources institution in the market, controlling deposits of approxi- of Star and Great Financial and their respective subsidiarmately $58.6 million, representing 30.8 percent of total ies and the effect the transaction would have on such deposits in depository institutions in the market ("market resources in light of all the facts-of record.10 The Board has deposits").8 Concentration in the Marion County banking reviewed, among other things, confidential reports of exmarket, as measured by the Herfindahl-Hirschman Index amination and other supervisory information received from ("HHI") under the Department of Justice Merger Guide- the primary federal supervisors of the organizations. Based lines ("DOJ Guidelines") would increase by 175 points to on all the facts of record, the Board concludes that the 2697.9 The effect of the proposal on market concentration financial and managerial resources of the organizations involved in the proposal are consistent with approval. 5. Thrift engages through a subsidiary in the sale of certain insur- Record of Performance under the Community ance products and annuities that are not permissible for a bank holding Reinvestment Act company under the BHC Act. Star has committed that it will conform the insurance and annuity activities of Thrift to the requirements of section 4 of the BHC Act within two years after consummation of the In acting on a proposal to acquire a savings association, the proposal and that Thrift will cease selling any new insurance policies Board has traditionally reviewed the records of perforor annuities immediately on consummation of the proposal. Star also mance under the Community Reinvestment Act (12 U.S.C. has committed to conform all real estate activities of Thrift to the requirements of section 4 of the BHC Act within two years after § 2901 et seq.) ("CRA") by the institutions involved in a consummation of the proposal. proposal.11 The Board has reviewed the records of perfor- 6. 12 U.S.C. § 1843(c)(8). mance of Star's subsidiary bank, Star Bank, N.A., Cincin- 7. The Marion County, Kentucky, banking market is defined as nati, Ohio ("Star Bank"), and Thrift in light of all the facts Marion County, Kentucky. 8. Market data are as of June 30, 1996. Market share data before of record, including comments regarding Star Bank's efconsummation are based on calculations in which the deposits of thrift forts to help meet the credit needs of local communities. institutions are included at 50 percent. The Board previously has The Board received two comments opposing the proposal, indicated that thrift institutions have become, or have the potential to and Star, as part of its response to the comments, submitted become, significant competitors of commercial banks. See WM Banletters from more than 70 organizations commending it for corp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of its CRA-related activities. Thrift would be acquired by a commercial banking organization under Organizations commending Star Bank's efforts under the the proposal, Thrift's deposits are included at 100 percent in the CRA included community organizations, government officalculation of the pro forma market share. See Norwest Corporation, cials, developers, educators, and local businesses.12 These 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal commenters noted the bank's leadership efforts in and Reserve Bulletin 669 (1990). 9. Under the revised Department of Justice Merger Guidelines (49 contributions to community development projects. They Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Department of Justice has informed the Board, however, that a bank merger or acquisition in a highly concentrated market 10. See 12 C.F.R. 225.26. generally will not be challenged (in the absence of other factors 11. See Banc One Corporation, 83 Federal Reserve Bulletin 602 indicating anticompetitive effects) unless the merger increases the (1997). HHI by more than 200 points. The Department of Justice has stated 12. These commenters included the City of Cleveland, Ohio, the that the higher than normal HHI thresholds for screening bank merg- Urban League of Greater Cincinnati, the Ohio Capital Corporation for ers for anticompetitive effects implicitly recognize the competitive Housing, the Ohio Tri-State Hispanic Chamber of Commerce, the effect of limited-purpose lenders and other non-depository financial City of Covington, Kentucky, and Catholic Social Services of Northentities. ern Kentucky. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 123 also praised Star Bank's lending activities, particularly in 1996 ("1996 Examination"). The 1996 Examination was the areas of community development lending and direct conducted under the revised CRA regulations for large lending to homeowners. In addition, several commenters depository institutions and large bank holding companies, noted favorably the bank's record of opening branches in and rated Star Bank's CRA performance record under low- and moderate-income ("LMI") areas. separate tests designed to measure lending, investments, Two commenters questioned Star Bank's record of CRA and services that assist in meeting the credit needs of the performance, particularly the bank's record of lending to communities served.17 Star Bank received "outstanding" LMI and minority borrowers in Ohio, on the basis of 1996 ratings under the lending and service tests and a "high data submitted under the Home Mortgage Disclosure Act satisfactory" rating under the investment test.18 (12 U.S.C. § 2801 et seq.) ("HMDA").13 One commenter The 1996 Examination also rated Star Bank's CRA also contended that Star Bank's participation in govern- performance record separately in Ohio, Kentucky, and ment sponsored lending programs and contributions to Indiana, and in a multistate Metropolitan Statistical Area community development organizations were inadequate.14 that includes Cincinnati and other portions of Ohio and The other commenter maintained that Star Bank should portions of Kentucky and Indiana ("Cincinnati MSA").19 improve its programs for community development and Star Bank's CRA performance record in Ohio20 and in the affordable housing loans in Kentucky.15 Cincinnati MSA was rated "outstanding."21 In Kentucky22 and Indiana,23 Star Bank received "satisfactory" CRA A. CRA Performance Examinations performance ratings. Thrift received a "satisfactory" rating from its primary federal supervisor, the Office of Thrift The Board has reviewed the examinations by the primary Supervision, at its most recent CRA examination as of federal supervisors of the CRA performance records of the September 1996. relevant institutions. An institution's most recent CRA The Board has carefully considered the CRA perforperformance evaluation is a particularly important consid- mance record of Star Bank in general, and, in particular, its eration in the applications process because it represents a records in Ohio and Kentucky, in light of the comments detailed on-site evaluation of the institution's overall received. This review included all aspects of Star Bank's record of performance under the CRA by its primary CRA-related activities, including its farm, affordable housfederal supervisor.16 ing, and small-business lending activities; its community Star Bank received an overall rating of "outstanding" investment and development programs; and its initiatives from its primary federal supervisor, the OCC, at its most recent evaluation for CRA performance, as of December 17. See 12 C.F.R. Part 25. The federal financial supervisory agencies jointly promulgated new regulations to implement the CRA in 13. These commenters are the Ohio Community Reinvestment 1995. See 60 Federal Register 22,156 (May 4, 1995). Although the Project, Columbus, Ohio, and the Metropolitan Housing Coalition, revised regulations did not become effective for large retail banks like Louisville, Kentucky. Star Bank until July 1, 1997, Star Bank requested that the 1996 14. This commenter also stated that the bank, compared to other Examination be conducted under the revised regulations. Star Bank depository institutions, paid less interest on accounts in which the also was rated "outstanding" for CRA performance at its two previinterest is used to fund legal services for the poor and charged higher ous examinations in 1992 and 1994. fees for basic banking services, which particularly affect LMI custom- 18. The ratings for performance under the lending, investment, and ers. Star maintains that its deposit products are competitive with those services tests are: "outstanding," "high satisfactory," "low satisfactooffered by other depository institutions and that it offers affordable ry," "needs to improve," and "substantial noncompliance." Under the deposit products and basic banking services. The Board also has revised CRA regulations, the lending test is weighted more heavily considered these comments in light of evaluations by examiners of the than the investment and service tests in determining a bank's overall bank's record of providing banking services to its communities and of CRA performance rating. complying with fair lending laws. 19. Section 110 of the Riegle-Neal Interstate Banking and Branch- 15. This commenter also alleged, in general, that affordable housing ing Efficiency Act of 1994 (Pub. L. No. 103-328, 108 Stat. 2338 loans diminish when a local depository institution is acquired by a (1994)) amended the CRA to require that the federal financial supervilarger out-of-state banking organization. As explained above, the sory agencies separately rate the CRA performance record in each Board has carefully reviewed Star Bank's record of assisting to meet state and in each multistate metropolitan area where an interstate the credit needs of the communities it serves, including in Kentucky. banking organization maintains a branch. 12 U.S.C. § 2906(d). The CRA requires that every bank operating in more than one state, 20. Star Bank designated 11 assessment areas in Ohio that include including such a bank owned by an out-of-state parent holding com- Cleveland, Columbus, Dayton, Highland County, and Preble County. pany, be regularly examined and rated on its performance in helping 21. Star Bank designated three assessment areas within its Cincinto meet the credit needs of its community on a state-by-state basis. nati service area. The first area is the Cincinnati region, which Star Bank's activities in Kentucky have been and would continue to includes Hamilton County and portions of Clermont and Warren be reviewed by its primary federal regulator, the Office of the Comp- Counties, all in Ohio. The second assessment area is the Indiana troller of the Currency ("OCC"), in its performance examinations and South-Eastern region, and the major city in the region is Lawrenceby the Board in future applications by Star to acquire a depository burg, Indiana. The remaining assessment area is the Kentuckyfacility under the BHC Act. Northern region, which contains the cities of Covington and Newport, 16. The Statement of the Federal Financial Supervisory Agencies Kentucky. Also included in the Cincinnati MSA is Pendleton County, Regarding the Community Reinvestment Act provides that a CRA Kentucky, which Star Bank included in its Central Kentucky region. examination is an important and often controlling factor in the consid- 22. The assessment area includes Carroll and Marion Counties, both eration of an institution's CRA record and that reports of these in Kentucky. examinations will be given great weight in the applications process. 23. The assessment area includes Fayette and Wayne Counties and a 54 Federal Register 13,742 and 13,745 (1989). portion of Randolph County, all in Indiana. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1998 to increase lending in LMI areas. The Board also has Small Business Administration ("SBA"),27 and particiconsidered that, excluding the Cincinnati MSA, Star pates in the State of Ohio 166 Loan Program.28 Bank's assessment areas in Ohio contain 168 of the total Ohio and Kentucky. Examiners rated Star Bank's lend- 258 branches operated by the bank and account for approx- ing performance in Ohio "outstanding." The 1996 Examiimately 59 percent of the bank's total deposits. In Ken- nation found that the geographic distribution of loans, tucky, excluding the Cincinnati MSA, the bank's sole including home mortgage, small business and small farm assessment area contains only three of the bank's branches, loans, reflected good penetration of its communities and serves a total population of 26,000, and accounts for ap- that the distribution of loans based on the income of the proximately 1 percent of the bank's total deposits.24 borrower was excellent. Examiners noted that the volume of mortgage loans in the bank's assessment areas to LMI B. Lending Performance Record of Star Bank households was good in relation to the percentage of LMI households in the assessment areas. Star Bank also origi- In General. The 1996 Examination concluded that Star nated 260 small business and small farm loans in 1995 and Bank demonstrated excellent responsiveness in serving the through the first six months of 1996, totaling $66 million, credit needs of its assessment areas, particularly in LMI and made 31 percent of these loans to small businesses and areas and to LMI borrowers. The geographic distribution small farms with less than $1 million in annual revenues of the bank's loans, including home mortgage, small busi- and 29 percent of these loans in LMI areas. In addition, ness, and small farm loans, showed good penetration within examiners favorably noted the bank's high level of commuits assessment areas. Examiners also considered the distri- nity development loans and extensive use of the SBA's 504 bution of these types of loans among borrowers of different and 7A loan programs. income levels to be excellent. HMDA data from July 1, In Kentucky, excluding the Cincinnati MSA, examiners 1994, through June 30, 1996, showed that 34 percent of the rated the bank's lending performance "high satisfactory." number of HMDA loans and 19 percent of the dollar Overall, Star Bank's lending demonstrated a good distribuamount of HMDA loans were made to LMI individuals. In tion to borrowers by income levels. The bank also made addition, Star Bank originated 2,092 small business loans ten small business loans, totaling $236,000 and representand 44 small farm loans, totaling approximately ing 40 percent of the total number of small business loans $814 million, between January 1995 and June 1996. Thirty made from January 1, 1995, through June 30, 1996, to percent of the small business loans and 93 percent of the organizations with less than $1 million in annual revenues. small farm loans were to organizations with revenues of In northern Kentucky within the Cincinnati MSA, the bank less than $1 million. Fifty-nine percent of the number of made six community development loans totaling approxismall business and small farm loans originated were for mately $3.9 million.29 loan amounts of less than $100,000 during this period. The Board also has considered Star Bank's lending Examiners also concluded that the bank originated a record, particularly in Ohio, in light of comments about the high level of community development loans. The 1996 bank's HMDA-reported lending in 1996. These data show Examination noted, for example, that Star Bank originated that in most of Star Bank's MSA assessment areas in Ohio 21 loans totaling approximately $70.7 million from 1994 to its percentages of loan originations to African Americans, July 31, 1996, in which other lenders purchased low- census tracts with predominantly minority and LMI resiincome housing tax credits for the purpose of rehabilitating dents, and LMI individuals generally exceed the average 1,848 rental units of affordable housing. The bank entered percentages reported by lenders in the aggregate. The data into an agreement with the City of Cleveland to provide also reflect some disparities in the rate of loan originations, $25 million in loans for LMI neighborhoods from 1994 to denials, and applications between minority and nonminor- 1998, and as of June 30, 1996, Star Bank had exceeded this ity borrowers. commitment by originating loans totaling $25.9 million.25 The Board is concerned when the record of an institution In addition, Star Bank is a participant in the Cincinnati indicates such disparities in lending, and believes that all Development Fund ("CDF"), and, as of June 30, 1996, banks are obligated to ensure that their lending practices had outstanding loans in the amount of $2.1 million out of are based on criteria that ensure not only safe and sound $5.4 million in loan commitments made through the CDF.26 Star Bank also offers two loan programs sponsored by the mont Counties in Ohio and Boone, Campbell, and Kenton Counties in Kentucky. 24. The Cincinnati MSA contains 74 of the bank's branches and 27. Star Bank originated 20 loans under the SBA 504 loan program accounts for 37 percent of the bank's deposits. Star Bank received in 1995, totaling $7.2 million, and 19 SBA 504 loans, totaling "outstanding" ratings under the lending and investment tests and a $4.6 million, through July 1996. In the SBA 7A loan program, Star "high satisfactory" rating under the investment test in the Cincinnati Bank originated 97 loans in 1995, totaling $17.8 million, and 36 SBA MSA. 7A loans, totaling $5.6 million through June 1996. 25. In two separate projects in Cleveland, the bank loaned 28. This program provides direct loans of less than $200,000 to $7.3 million to nonprofit developers to build and rehabilitate afford- businesses in Ohio that will create new jobs. able housing. 29. Star Bank's assessment area in Kentucky outside the Cincinnati 26. The CDF assists in financing affordable housing by originating MSA consists of whole counties, and the bank's CRA examiners below market-rate loans to nonprofit and for-profit developers in the determined that it did not arbitrarily exclude any LMI areas and Cincinnati area, which includes Hamilton, Warren, Butler, and Cler- conformed to the requirements of the CRA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 125 lending but also equal access to credit by creditworthy ceeded its goals for small business and community develapplicants regardless of race. The Board recognizes, how- opment lending. Total lending was approximately ever, that HMDA data alone provide an incomplete mea- $1.6 billion, and an additional $400 million of loans in sure of an institution's lending in its community because these categories were made during the first six months of these data cover only a few categories of housing-related 1997. Star intends to include the markets currently served lending. HMDA data, moreover, provide only limited infor- by Thrift under the program. mation about the covered loans.30 HMDA data, therefore, have limitations that make the data an inadequate basis, C. Investment and Service Performance Records of Star absent other information, for concluding that an institution Bank has not assisted in meeting the communities' credit needs or has engaged in illegal lending discrimination. Because of the limitations of HMDA data, the Board has In General. The 1996 Examination noted a significant levet carefully considered that data in light of other information. of qualified community development investments. Examin- Specifically, the Board has considered information on all of ers also considered the bank's responsiveness to commu- Star's lending and other CRA-related activities and infor- nity economic needs to be good and commended the bank mation in examination reports and other supervisory infor- for significant use of innovative and complex investments. mation that provide an on-site evaluation of compliance Since its prior CRA evaluation in 1994, Star Bank made with the fair lending laws by Star. As discussed above, this $2.5 million of qualified investments, including funding for information indicates that Star Bank assists in meeting the approximately $1.9 million of its $6.1 million commitment credit needs of all its communities, including LMI and to low-income housing tax credit projects. minority borrowers. The 1996 Examination, moreover, Examiners also found that the bank provided a readily found no violations of the substantive provisions of fair accessible system of full service branches that demonlending laws and determined that Star Bank's fair lending strated a good distribution of branches throughout the policies, procedures, training, and monitoring were effec- bank's communities, including LMI areas. The 1996 Extive. amination commended Star Bank for its extensive use of Star Bank also has taken steps to increase its lending to alternative systems for providing retail banking services, LMI individuals and in LMI areas. The bank's Home such as a 24-Hour Customer Service Center, enhanced Advantage Program ("HAP"), for example, provides loans automated teller machines, and alternative financing for for affordable housing with flexible underwriting criteria.31 borrowers who failed to qualify for conventional financing, In 1995, Star Bank originated 1,112 HAP loans totaling and praised its relatively high level of community develop- $56.4 million and representing 28 percent of all home ment services. purchase loans made by the bank that year. As of June 30, Ohio and Kentucky. The 1996 Examination rated Star 1996, Star Bank originated an additional 371 HAP loans Bank's performance in Ohio "high satisfactory" under the totaling $20 million. The bank also offers home improve- investment test and "outstanding" under the service test. ment loans with reduced interest rates to residents in LMI Examiners concluded that the bank had a reasonable areas through its Home Advantage Home Improvement amount of qualified investments in the state and exhibited Program. The bank made 601 loans totaling $4.9 million good responsiveness to the state's economic development under the program in 1995 and an additional 349 loans needs. Overall, Star Bank made approximately $937,000 in totaling $2.7 million during the first six months of f996. qualified investments, including funding approximately In June 1994, Star announced a comprehensive $880,000 of its $3.4 million commitment to projects quali- $1.5 billion commitment for home mortgage, home im- fying for low income housing tax credits. In addition, provement, small business, small farm, and community examiners found that the bank's full service branches and development lending over five years in 33 counties served alternative systems for providing retail banking services by the company. The program emphasizes loans in low- were accessible in all income areas, including LMI areas, income areas and loans to LMI and minority borrowers and and that the bank's record of opening and closing branches businesses owned by minorities and women. By the end of had improved the accessibility of banking services. Star t996, Star had achieved more than half its goals for home Bank also offered a relatively high level of community mortgage and home improvement lending and had ex- development services in Ohio. In Kentucky, Star Bank's performance under the investment and service tests was rated "low satisfactory" and 30. The data, for example, do not provide a basis for an independent "high satisfactory," respectively, in the 1996 Examination. assessment of whether an applicant who was denied credit was, in Examiners recognized that the bank's assessment area in fact, creditworthy. Credit history problems and excessive debt levels Kentucky offered very little opportunity for making qualirelative to income (reasons most frequently cited in a credit denial) are not available from HMDA data. fied investments. Star Bank's branches and alternative 31. Eligibility for the HAP loan program is based on income and the systems for providing retail banking services, however, number of household members. The program permits higher debt-to- were accessible in all income areas, including LMI areas. income ratios and a 3 percent minimum down payment that can be in The bank also provided a wide range of community develthe form of a gift from a relative or a grant from a nonprofit opment services, including credit counseling services in organization. The program also does not require private mortgage insurance. LMI areas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1998 D. Conclusion on CRA Performance the Board in reaching this decision shall be deemed to be conditions imposed in writing by the Board in connection The Board has carefully reviewed all the facts of record in with its findings and decisions, and, as such, may be considering the CRA performance record of Star Bank and enforced in proceedings under applicable law. Thrift, including all of the comments received, responses This proposal shall be consummated not later than three to the comments, and the CRA performance records of Star months after the effective date of this order, unless such Bank and Thrift, including the relevant reports of examina- period is extended for good cause by the Board or by the tion.32 Based on a review of the entire record and for the Federal Reserve Bank of Cleveland, acting pursuant to reasons discussed in the order, the Board concludes that delegated authority. considerations relating to the CRA performance records of By order of the Board of Governors, effective Decemthe institutions involved are consistent with approval of the ber 18, 1997. proposal. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Conclusion Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not voting: Governor Meyer. The Board also concludes that consummation of the pro- JENNIFER J. JOHNSON posal would result in benefits to consumers. The proposal Deputy Secretary of the Board would enable Star Bank to provide Thrift's customers with access to a broad range of services. Additionally, there are public benefits to be derived from permitting capital mar- SunTrust Banks, Inc. kets to operate so that bank holding companies may make Atlanta, Georgia potentially profitable investments in nonbanking companies when those investments are consistent; as in this case, Order Approving Notice to Engage in Nonbanking with the relevant considerations under the BHC Act, and Activities public benefits from permitting banking organizations to allocate their resources in the manner they believe is most SunTrust Banks, Inc., Atlanta, Georgia ("SunTrust"), a efficient. The Board also believes that the conduct of the bank holding company within the meaning of the Bank proposed activities within the framework established in Holding Company Act ("BHC Act"), has requested the Regulation Y is not likely to result in significantly adverse Board's approval under section 4(c)(8) of the BHC Act effects, such as undue concentration of resources, de- (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's creased or unfair competition, or unsound banking prac- Regulation Y (12 C.F.R. 225.24) to acquire all the voting tices, that would outweigh the public benefits of the prosecurities of Equitable Securities Corporation ("Compaposal, such as increased consumer convenience. ny") and its nonbanking subsidiaries, Equitable Trust Accordingly, the Board has determined that the balance of Company, and Equitable Asset Management, Inc. the factors considered under the proper incident to banking ("EAM"), all in Nashville, Tennessee, and thereby engage standard of section 4(c)(8) of the BHC Act is consistent in the following nonbanking activities: with approval. (1) Underwriting and dealing in, to a limited extent, all Based on the foregoing and all other facts of record, the types of debt and equity securities ("bank-ineligible Board has determined that the notice should be, and hereby securities") other than interests in open-end investment is, approved. The Board's approval of the notice is specifi- companies; cally conditioned on compliance by Star with commit- (2) Extending credit and servicing loans, pursuant to ments made in connection with the notice. The Board's section 225.28(b)(1) of Regulation Y (12 C.F.R. determination also is subject to all the conditions in Regu- 225.28(b)(1)); lation Y, including those in sections 225.7 and 225.25(c) (3) Arranging commercial real estate equity financing, (12 C.F.R. 225.7 and 225.25(c)), and to the Board's author- pursuant to section 225.28(b)(2)(ii) of Regulation Y ity to require such modification or termination of the (12 C.F.R. 225.28(b)(2)(ii)); activities of a holding company or any of its subsidiaries as (4) Providing leasing services, pursuant to section the Board finds necessary to assure compliance with, or to 225.28(b)(3) of Regulation Y (12 C.F.R. 225.28(b)(3)); prevent evasion of, the provisions and purposes of the (5) Performing functions or activities that may be per- BHC Act and the Board's regulations and orders issued formed by a trust company, pursuant to section thereunder. The commitments and conditions relied on by 225.28(b)(5) of Regulation Y (12 C.F.R. 225.28(b)(3)); (6) Providing financial and investment advisory services, pursuant to section 225.28(b)(6) of Regulation Y 32. Commenters criticized Star for failing to enter into a binding (12 C.F.R. 225.28(b)(6)); written agreement with their organizations. The Board has stated that, (7) Providing securities brokerage, riskless principal, although communications between depository institutions and com- private placement and other transactional services, purmunity groups are a valuable method of assessing the credit needs of suant to section 225.28(b)(7)(i), (ii), (iii) and (v) of the community, the CRA does not mandate a depository organization Regulation Y (12 C.F.R. 225.28(b)(7)(i), (ii), (iii) and to enter into an agreement with any organization. See Chemical Banking Corporation, 82 Federal Reserve Bulletin 239 (1996). (v)); and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 127 (8) Underwriting and dealing in government obligations of interests, unsound banking practices, or other adverse and money market instruments in which state member effects — that the proposed activities of underwriting and banks may underwrite and deal under 12 U.S.C. §§ 335 dealing in bank-ineligible securities are so closely related and 24(7) ("bank-eligible securities"), and engaging in to banking as to be a proper incident thereto within the investing and trading activities, pursuant to section meaning of section 4(c)(8) of the BHC Act.5 225.28(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. The Board also has determined that the conduct of the 225.28(b)(8)(i) and (ii)). proposed activities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. § 377), provided that the Notice of the proposal, affording interested persons an company engaged in underwriting and dealing activities opportunity to submit comments, has been published (62 derives no more than 25 percent of its gross revenues from Federal Register 60,713 (1997)). The time for filing com- underwriting and dealing in bank-ineligible securities over ments has expired, and the Board has considered the pro- a two-year period.6 SunTrust has committed that Company posal and all comments received in light of the factors set will conduct its bank-ineligible securities underwriting and forth in section 4(c)(8) of the BHC Act. dealing activities subject to the Board's 25 percent revenue SunTrust, with total consolidated assets of $55.4 billion, limit.7 As a condition of this order, SunTrust is required to is the 19th largest banking organization in the United conduct its bank-ineligible securities activities subject to States.1 SunTrust controls 28 subsidiary banks that operate the Operating Standards for section 20 subsidiaries ("Operin Georgia, Alabama, Florida, and Tennessee, and engages ating Standards").8 in a broad range of permissible nonbanking activities. Company, with consolidated assets of $52.6 million, en- Mutual Fund Activities gages directly and through its affiliates in a broad range of investment advisory, securities brokerage, securities under- Under the Glass-Steagall Act, a company that owns a writing, and other activities.2 member bank may not control "through stock ownership SunTrust proposes to merge Company with SunTrust or in any other manner" a company that engages princi- Capital Markets, Inc., Atlanta, Georgia ("STCM"), a sub- pally in distributing, underwriting, or issuing securities.9 sidiary of SunTrust engaged in securities-related activities, The Board has found that this provision prohibits affiliates including underwriting and dealing in, to a limited extent, of banks from sponsoring, organizing, or controlling a municipal revenue bonds, 1-4 family mortgage-related se- mutual fund. curities, consumer receivable-related securities, and com- Company currently provides advisory services to mutual mercial paper, with Company surviving the merger.3 Com- funds, including its proprietary family of mutual funds, the pany is, and will continue to be, a broker-dealer registered ESC Strategic Funds (the "Funds"). After consummation with the Securities and Exchange Commission ("SEC") of the proposal, Company would cease to act as distributor under the Securities and Exchange Act of 1934 ("1934 Act") (15 U.S.C. § 78a et seq.), an investment advisor 5. See J.P. Morgan & Co. Incorporated, et al., 75 Federal Reserve registered with the SEC under the Investment Advisers Act Bulletin 192 (1989), aff'd sub nom. Securities Industries Ass'n v. of 1940 ("1940 Act") (15 U.S.C. § 80b-l et seq.), and a Board of Governors of the Federal Reserve System, 900 F.2d 360 member of the National Association of Securities Dealers (D.C. Cir. 1990); Citicorp, et al, 73 Federal Reserve Bulletin 473 ("NASD").4 Accordingly, Company is, and will remain, (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, subject to the recordkeeping and reporting obligations, denied, 486 U.S. 1059 (1988); as modified by Review of Restrictions fiduciary standards, and other requirements of the 1934 on Director, Officer and Employee Interlocks, Cross-Marketing Activi- Act, the 1940 Act, the SEC, and the NASD. ties, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register Underwriting and Dealing Activities 57,679 (1996), and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997) (collectively, the "Section 20 Orders"). The Board has determined—subject to the framework of 6. Compliance with the revenue limitation shall be calculated in prudential limitations to address the potential for conflicts accordance with the method stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), and 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank 1. Asset and ranking data are as of September 30, 1997. Holding Companies Engaged in Underwriting and Dealing in Securi- 2. Company also currently engages in certain insurance activities ties, 61 Federal Register 48,953 (1996), and Revenue Limit on Bankand controls several limited partnerships that invest in debt and equity Ineligible Activities of Subsidiaries of Bank Holding Companies Ensecurities. SunTrust has committed to conform the activities, invest- gaged in Underwriting and Dealing in Securities, 61 Federal Register ments, and relationships of Company and its subsidiaries to those 68,750 (1996) (collectively, "Modification Orders"). permissible for bank holding companies under section 4 of the BHC 7. Company may provide services that are necessary incidents to the Act within two years of acquiring Company. SunTrust also has proposed underwriting and dealing activities. Unless Company recommitted that Company will cease, within two years of consumma- ceives specific approval under section 4(c)(8) of the BHC Act to tion of the proposal, the sale of variable annuities. conduct the activities independently, Company must treat any reve- 3. See SunTrust Banks, Inc., 80 Federal Reserve Bulletin 938 nues from the incidental activities as ineligible revenues subject to the (1994). Board's revenue limitation. 4. EAM also is an investment advisor registered with the SEC under 8. 12 C.F.R. 225.200. the 1940 Act. 9. See 12 U.S.C. §§ 221a and 377. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1998 for the Funds. Administrative services would be provided that outweigh possible adverse effects, such as undue to the Funds and the Funds would be distributed by a concentration of resources, decreased or unfair competidistributor that is independent of both SunTrust and Com- tion, conflicts of interests, or unsound banking practices."15 pany. This distributor would enter into contractual agree- As a part of its evaluation of these factors, the Board ments with the Funds to serve as "principal underwriter" considers the financial condition and managerial resources of the Funds.10 The independent distributor also would be of the notificant and its subsidiaries and the effect the responsible for supervising sales as the "principal" under- transaction would have on such resources.16 writer for purposes of the federal securities laws.11 In considering the financial resources of the notificant, SunTrust also proposes to have certain director and the Board has reviewed the capitalization of SunTrust and officer interlocks with the Funds. In particular, SunTrust STCM in accordance with the standards set forth in the proposes that an officer of Company serve as chairman of Section 20 Orders. The Board finds the capitalization of the Funds' four-member board of directors. SunTrust also each to be consistent with approval of the proposal. The proposes that an officer of Company serve as a junior-level Board's determination is based on all the facts of record, officer of the Funds.12 The Board previously has authorized including SunTrust's projections of the volume of Compaa bank holding company to have director and officer inter- ny's underwriting and dealing activities in bank-ineligible locks with mutual funds that the bank holding company securities. advises.13 The Board does not believe that the proposed The Board also has reviewed the managerial resources interlocks between Company and the Funds in this case of each of the entities involved in the proposal. The Board would compromise the independence of the board of direc- has reviewed these resources in light of relevant reports of tors of the Funds or result in the control of the Funds by examination, the results of a recent infrastructure review of SunTrust or Company. STCM and Company, and the Board's supervisory experience with SunTrust and STCM. The Board also has consid- Other Activities Approved by Regulation ered that SunTrust has established policies and procedures to ensure compliance with this order and the Section 20 The Board previously has determined by regulation that Orders, including computer, audit, and accounting systems, credit and credit-related activities; commercial real estate internal risk management controls, and the necessary operequity; leasing; trust company; financial and investment ational and managerial infrastructure. On the basis of these advisory; securities brokerage, riskless principal, private and all the facts of record, including the commitments placement, and other transactional activities; and bank- provided in this case and the proposed managerial structure eligible underwriting and dealing activities are closely and risk management systems of Company, the Board has related to banking within the meaning of section 4(c)(8) of concluded that financial and managerial considerations are the BHC Act.14 SunTrust has committed to conduct each of consistent with approval of the notice. these activities in accordance with Regulation Y and rele- The Board has carefully considered the competitive efvant Board interpretations and orders. fects of the proposed acquisition. The record reflects that there are few overlaps in the services provided by STCM Proper Incident to Banking Standard and Company: STCM specializes in corporate and municipal finance, while Company's business has been focused In order to approve the proposal, the Board also must primarily on equity research, underwriting, sales, and traddetermine that the proposed activities are a proper incident ing, particularly initial public offerings. To the extent that to banking, that is, that the proposed transaction "can STCM and Company offer different types of products, the reasonably be expected to produce benefits to the public ... proposed acquisition would result in no loss of competition. In those markets in which the product offerings of STCM and Company do overlap, there are numerous exist- 10. As defined under the 1940 Act, a principal underwriter is any ing and potential competitors. Consummation of the prounderwriter who, as a principal, purchases from a mutual fund any security for distribution, or who as agent for such fund sells or has the posal, therefore, would have a de minimis effect on comperight to sell the fund's securities to a dealer and/or to the public. tition in the markets for these services, and the Board has 15 U.S.C. § 80a-2(a)(29). concluded that the proposal would not result in any signifi- 11. An independent distributor, or intermediaries other than Suncantly adverse competitive effects in any relevant market. Trust or Company, would enter into any sales agreements with finan- The Board expects that the proposed acquisition would cial intermediaries to sell shares of the Funds. The independent distributor would be responsible for placing all advertisements and provide added convenience to customers of both SunTrust would have legal responsibility under the rules of NASD for the form and Company. The proposed acquisition would allow Sunand use of all advertising and sales literature prepared by SunTrust or Trust to expand the range of products and services avail- Company and also would be responsible for filing these materials with able to its customers and those of Company. In particular, the NASD or SEC. SunTrust believes that the proposed transaction would give 12. This officer would have no policy-making authority at the Funds and would not be responsible for policy-making functions. emerging and rapidly growing companies improved access 13. See Bankers Trust New York Corporation, 83 Federal Reserve Bulletin 780 (1997); Commerzbank AG, 83 Federal Reserve Bulletin 679 (1997). 14. See 12 C.F.R. 225.28(b)(1), (2)(i)(ii); (3), (5), (6), (7)(i), (7)(ii). 15. See 12 U.S.C. § 1843(c)(8). (7)(iii), (7)(v), (8)(i) and (8)(ii). 16. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 129 to capital and financing, thereby allowing them to expand such period is extended for good cause by the Board or by and create new jobs. the Federal Reserve Bank of Atlanta, acting pursuant to Under the framework and conditions established in this delegated authority. order and the Section 20 Orders, and based on all the facts By order of the Board of Governors, effective Decemof record, the Board concludes that Company's proposed ber 18, 1997. underwriting and dealing activities in bank-ineligible securities are not likely to result in significantly adverse effects Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and that would outweigh the public benefits. Similarly, the Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not Board finds no evidence that Company's proposed riskless voting: Governor Meyer. principal, private placement, and other nonbanking JENNIFER J. JOHNSON activities—conducted under the framework and conditions Deputy Secretary of the Board established in this order and Regulation Y—would likely result in any significantly adverse effects that would out- Orders Issued Under Sections 3 and 4 of the Bank weigh the public benefits of the proposal. Holding Company Act Based on all the facts of record, the Board has determined that consummation of the proposal by SunTrust can NationsBank Corporation reasonably be expected to produce public benefits that Charlotte, North Carolina outweigh any adverse effects of the proposal. Accordingly, the Board has determined that performance of the proposed NB Holdings Corporation activities by SunTrust is a proper incident to banking for Charlotte, North Carolina purposes of section 4(c)(8) of the BHC Act. Order Approving the Merger of Bank Holding Conclusion Companies On the basis of all the facts of record, the Board has NationsBank Corporation and NB Holdings Corporation determined that the notice should be, and hereby is, ap- (collectively, "NationsBank"), bank holding companies proved, subject to all the terms and conditions in this order within the meaning of the Bank Holding Company Act and the Section 20 Orders, as modified by the Modification ("BHC Act"), have requested the Board's approval under Orders. The Board's approval of the proposal extends only section 3 of the BHC Act (12 U.S.C. § 1842) to merge with to activities conducted within the limitations of those or- Barnett Banks, Inc., Jacksonville, Florida ("Barnett"), and ders and this order, including the Board's reservation of thereby acquire Barnett's subsidiary banks, Barnett Bank, authority to establish additional limitations to ensure that National Association, Jacksonville, Florida ("Barnett Company's activities are consistent with safety and sound- Bank"), and Community Bank of the Islands, Sanibel, ness, avoiding conflicts of interests, and other relevant Florida ("Community Bank").1 NationsBank also has reconsiderations under the BHC Act. Underwriting and dealquested the Board's approval under section 4(c)(8) of the ing in any manner other than as approved in this order and BHC Act and section 225.24 of the Board's Regulation Y the Section 20 Orders, as modified by the Modification to acquire the nonbanking subsidiaries of Barnett and Orders, is not within the scope of the Board's approval and thereby engage in the nonbanking activities listed in Apis not authorized for Company. pendix A.2 The Board's determination also is subject to all the terms Notice of the proposal, affording interested persons an and conditions set forth in Regulation Y, including those in opportunity to submit comments, has been published both sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and in the Federal Register (62 Federal Register 54,460 and 225.25(c)), and to the Board's authority to require modifi- 55,645 (1997)) and newspapers in accordance with the cation or termination of the activities of a bank holding Board's rules. The comment period provided interested company or any of its subsidiaries as the Board finds persons with approximately 39 days in which to submit necessary to assure compliance with and to prevent evatheir views on all aspects of the proposal, and approxision of the provisions of the BHC Act and the Board's mately 115 commenters provided written submissions. The regulations and orders issued thereunder. The Board's deci- Board has considered the application and notice and all sion specifically is conditioned on SunTrust's compliance with all the Operating Standards and commitments made in connection with this notice, including the commitments 1. Barnett would merge with and into NB Holdings Corporation discussed in this order and the conditions set forth in the with NB Holdings as the surviving corporation. NationsBank and Board regulations and orders noted above. The commit- Barnett also have requested the Board's approval to acquire certain ments and conditions shall be deemed to be conditions options to purchase up to 19.9 percent of the other's voting shares if imposed in writing by the Board in connection with its certain events occur. The options would expire on consummation of findings and decisions, and may be enforced in proceed- the merger of NationsBank with Barnett. 2. As discussed in the order, Barnett has entered into a binding ings under applicable law. contract to sell all the branches and deposits of First of America This transaction shall not be consummated later than Bank-Florida, FSB, Tampa, Florida ("FOA"), to SouthTrust Corporathree months after the effective date of this order unless tion, Birmingham, Alabama ("SouthTrust"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1998 comments received in light of the factors set forth in this case.6 In view of all the facts of record, the Board is sections 3 and 4 of the BHC Act. permitted to approve the proposal under section 3(d) of the NationsBank, with total consolidated assets of approxi- BHC Act. mately $240.4 billion, is the fifth largest commercial banking organization in the United States, controlling approxi- Competitive Considerations mately 5 percent of total banking assets of insured commercial banks in the nation ("total banking assets").3 The BHC Act prohibits the Board from approving an The subsidiary banks of NationsBank operate in North application under section 3 of the BHC Act if the proposal Carolina, Arkansas, Delaware, the District of Columbia, would result in a monopoly, or if the proposal would Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Mis- substantially lessen competition in any relevant banking souri, Maryland, New Mexico, Oklahoma, South Carolina, market and the Board has not found that the anticompeti- Tennessee, Texas, and Virginia. NationsBank also engages tive effects of the proposal are clearly outweighed in the through other subsidiaries in a number of permissible non- public interest by the probable effect of the proposal in banking activities. Barnett, with total consolidated assets meeting the convenience and needs of the community to be of approximately $44.7 billion, is the 23rd largest commer- served. cial banking organization in the United States, controlling The NationsBank/Barnett proposal would combine two less than 1 percent of total banking assets in the United banking organizations that compete in a large number of States. Barnett owns one subsidiary bank that operates in banking markets in Florida. These organizations are among Florida and Georgia and another that operates in Florida, the largest providers of banking services in these markets and engages through subsidiaries in a variety of permissi- and have a significant competitive effect in many markets. ble nonbanking activities. Accordingly, the Board has taken special care in analyzing On consummation of the proposal, and accounting for all the effect of this transaction on competition in the relevant proposed divestitures, NationsBank would become the markets and the comments submitted regarding the comthird largest commercial banking organization in the petitive effects of this transaction.7 While in several mar- United States, with total consolidated assets of approxi- kets this is a close case, as explained below and in the mately $285.1 billion, representing approximately 5.9 per- attached Appendices, the Board has taken particular accent of total banking assets in the United States. count of the fact that Florida and the markets affected by NationsBank also would control 29.6 percent and 18.4 this transaction are among the fastest growing and most percent of the total deposits held by insured depository attractive locations for entry by banking organizations in institutions ("total deposits") in Florida and Georgia, re- the United States. The attractiveness of many of the marspectively.4 State deposit and ranking data for NationsBank kets affected by this transaction has been demonstrated by and Barnett are discussed in Appendix B. recent de novo entry by banking organizations, including several large multi-state bank holding companies, as well as by entry through acquisition by banking organizations Interstate Analysis that include Florida and large multi-state bank holding companies. Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal Act"), allows the Board 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). to approve an application by a bank holding company to NationsBank is adequately capitalized and adequately managed as acquire control of a bank located in a state other than the defined in the Riegle-Neal Act, and Barnett's subsidiary banks have home state of such bank holding company, if certain condi- been in existence and operated for the minimum periods of time tions are met. For purposes of the BHC Act, the home state necessary to satisfy age requirements established by applicable state of NationsBank is North Carolina, and Barnett has opera- law. See Fla. Stat. Ch. 658.295 (1996) (3 years) and Ga. Code Ann. tions in Florida and Georgia.5 All of the conditions for an § 7-1-622 (1997) (5 years). One commenter stated that NationsBank would control a larger percentage of insured deposits in Florida than interstate acquisition enumerated in section 3(d) are met in permitted under federal and state law. Section 3(d) of the BHC Act, as amended by section 101 of the Riegle-Neal Act, prohibits the Board from approving a proposal if after consummation the applicant would control more than 10 percent of the total deposits of insured depository institutions in the United States or 30 percent of the total deposits of insured depository institutions in any state (unless another percent- 3. Asset and ranking data are as of June 30, 1997. Deposit and age is permitted under applicable state law). See 12 U.S.C. market data are as of June 30, 1996, adjusted for mergers and §§ 1842(d)(2)(A) and (B). Florida and Georgia law also each impose a acquisitions through November 25, 1997, and, as discussed in the 30 percent limitation on the amount of deposits in insured depository order, account for NationsBank's commitment to divest certain depos- institutions that a banking organization may control through acquisiits. tion. On consummation of the proposal, accounting for all proposed 4. In this context, depository institutions include commercial banks, divestitures, NationsBank would control less than 10 percent of the savings banks, and savings associations. total amount of deposits of insured depository institutions in the 5. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding United States, and less than 30 percent of the total amount of deposits company's home state is that state in which the operations of the bank of insured depository institutions in Florida and Georgia, respectively. holding company's banking subsidiaries were principally conducted 7. Commenters also contended that the anticompetitive effects of the on July 1, 1966, or the date on which the company became a bank proposal would result in a decrease in interest rates on deposits, an holding company, whichever is later. increase in fees, and a reduction in service for customers of Barnett. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 The Board and the courts consistently have recognized the characteristics of each market, the projected increase in that the appropriate product market for evaluating the the concentration of total deposits in depository institucompetitive effects of bank mergers and acquisitions is the tions12 in each market ("market deposits") as measured by cluster of products and services offered by banking institu- the HHI under the DOJ Guidelines, and the resulting tions.8 The Board and the courts also have found that the market share, that consummation of the proposal would not relevant geographic market for analyzing the competitive be likely to result in a significantly adverse effect on effect of a proposal must reflect commercial and banking competition. realities and should consist of the local area where the Consummation of the proposal in the remaining 17 banks involved offer their services and where local custom- banking markets would exceed the DOJ Guidelines as ers can practicably turn for alternatives.9 In making a measured by the HHI. The Board previously has indicated determination on the geographic markets in this case, the that HHI levels are only guidelines that are used by the Board has considered worker commuting patterns (as indi- Board, the DOJ, and other banking agencies to help idencated by census data), shopping patterns, and other indicia tify cases in which a more detailed competitive analysis is of economic integration and the transmission of competi- appropriate to assure that the proposal would not have a tive forces among depository institutions, and relevant significantly adverse effect on competition in any relevant banking data. In considering the competitive effects of the market. A proposal that fails to pass the HHI market screen NationsBank/Barnett proposal, the Board concludes, based may, nonetheless, be approved because other information on all the facts of record, that the appropriate product indicates that the proposal would not have a significantly market is the cluster of banking products and services, and adverse effect on competition.13 As discussed below and in that the appropriate geographic markets are as defined in Appendices D and E, the Board believes that a number of Appendix C. additional factors in these 17 banking markets mitigate the NationsBank and Barnett compete in a total of 28 bank- potential effect of the proposal on competition. ing markets: 25 in Florida and three in Georgia.10 Consum- (a) Banking Markets with No Proposed Divestitures. mation of the proposal, without divestitures, would be In the five banking markets of Naples, Orlando, Punta consistent with the Department of Justice Merger Guidelines ("DOJ Guidelines")11 and prior Board precedent in Gorda, Polk County, and Tallahassee, Florida, the change the nine banking markets in Florida and the two banking markets in Georgia identified in Appendix D. In these eleven markets, the Board has determined, in light of the 12. Market concentration calculations include deposits of thrift number of competitors that would remain in each market, institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corpo- 8. See United States v. Philadelphia National Bank, 374 U.S. 321, ration, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has 357 (1963) ("Philadelphia National"). Accord United States v. Con- regularly included thrift deposits in the calculation of market share on necticut National Bank, 418 U.S. 656 (1974); United States v. Phillips- a 50-percent weighted basis. See, e.g., First Hawaiian Inc., 77 Federal burg National Bank, 399 U.S. 350 (1969) ("Phillipsburg National"). Reserve Bulletin 52 (1991). Because FOA would be acquired by a See also Chemical Banking Corporation, 82 Federal Reserve Bulletin commercial banking organization, FOA's deposits are included at 239 (1996) ("Chemical Order"). 100 percent in the calculation of market share. See Norwest Corpora- 9. See, e.g., St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 tion, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 (1982); see Philadelphia National at 357; Phillipsburg National. Federal Reserve Bulletin 669, 670 n.9 (1990). 10. In evaluating the competitive effects of this transaction, the 13. A commenter proposed that the Board establish absolute limits Board has taken into account the fact that Barnett has entered into a on bank mergers and acquisitions. The commenter suggested imposbinding contract to sell all the branches and deposits of FOA to ing a 30 percent limitation on the amount of deposits that one bank SouthTrust. The Barnett/FOA acquisition was recently approved by may control in any local banking market. The commenter also prothe Board (order dated September 15, 1997), and FOA has been posed that the following limits be imposed on the market share of the operated separately and not been integrated into the Barnett organiza- largest bank in any local banking market: tion. Accordingly, market concentration calculations in this order (1) A ratio of 1.5 when compared with the market share of the attribute FOA's branches and deposits to SouthTrust, and the amount second largest bank in the market; and of divestitures discussed in this order that have been proposed by (2) A ratio of 1 when compared with the combined market share of NationsBank are in addition to the sale of FOA branches and deposits. the second and third largest banks in the market. The Department of Justice ("DOJ") also attributed the FOA branches The Board and the courts have recognized that the competitive and deposits to SouthTrust in conducting its competitive analysis of effects of a proposal are complex and are analyzed best by reviewing the proposal. and considering a variety of data and measures. The Board's approach 11. Under the DOJ Guidelines, 49 Federal Register 26,823 examines changes in and pro forma levels of the HHI in addition to a (June 29, 1984), a market in which the post-merger Herfindahl- number of other factors, including the number of competitors in the Hirschman Index ("HHI") is between 1000 and 1800 is considered market, the structure and characteristics of the market, and the relative moderately concentrated. The DOJ has informed the Board that a bank and absolute market shares of all depository institutions in the market merger or acquisition generally will not be challenged (in the absence as well as the three largest competitors. This approach takes into of other factors indicating anticompetitive effects) unless the post- account the commenter's principles while at the same time permitting merger HHI is at least 1800 and the merger or acquisition increases a consideration of a variety of other factors that may affect competithe HHI by at least 200 points. The DOJ has stated that the higher than tion in a particular banking market. Based on long-standing experinormal HHI thresholds for screening bank mergers or acquisitions for ence in conducting competitive analyses of bank acquisitions and anticompetitive effects implicitly recognize the competitive effect of mergers, the Board concludes that this approach provides a more limited-purpose lenders and other non-depository financial institu- complete economic analysis of the competitive effects in a local tions. banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1998 in market concentration as measured by the HHI would other Florida MSAs.15 Since 1994, two banks and one exceed the DOJ Guidelines. No divestitures have been thrift have entered de novo and two banks have entered by proposed in these markets. However, a number of factors acquisition. indicate that the proposal is not likely to have a signifi- Punta Gorda. NationsBank is the fifth largest of 12 cantly adverse effect on competition in any of these mar- depository institutions in the Punta Gorda banking market, kets. and controls deposits of $174.1 million, representing Naples. NationsBank is the third largest of 22 depository 10 percent of market deposits. Barnett is the third largest institutions in the Naples banking market, and controls depository institution in the market, and controls deposits deposits of $402.5 million, representing 12.3 percent of of $346.4 million, representing approximately 20 percent market deposits. Barnett is the largest depository institu- of market deposits. After consummation of the proposal, tion in the market, and controls deposits of $724.3 million, NationsBank would become the largest depository institurepresenting approximately 22.2 percent of market depos- tion in the market, controlling 30 percent of the market its. After consummation of the proposal, NationsBank deposits, and the HHI would increase 400 points to 2131. would become the largest depository institution in the Eleven depository institutions would remain in the Punta market, controlling 34.5 percent of the market deposits. Gorda banking market after consummation of the proposal, The HHI would increase 548 points to 1839. including four large multi-state banking organizations other Twenty-one depository institutions would remain in the than NationsBank. In addition to NationsBank, one of the Naples banking market after consummation of the pro- multi-state competitors would control 23.7 percent of marposal, including four large multi-state banking organiza- ket deposits and two other competitors would each control tions other than NationsBank. In addition to NationsBank, more than 15 percent of market deposits. The Punta Gorda two of the multi-state competitors would each control more banking market also has characteristics that make it attracthan 10 percent of market deposits. Naples is a Metropoli- tive for entry. The rate of growth in population and market tan Statistical Area ("MSA") that is attractive for entry to deposits in the Punta Gorda MSA exceeds, on average, that out-of-market competitors. The rate of growth in popula- of Florida MSAs and the state as a whole.16 Since 1991, tion and deposits exceeds, on average, that of other Florida three depository institutions have entered the banking mar- MSAs, and the average per capita income in the Naples ket de novo, and four depository institutions have entered banking market is substantially higher than the average per through acquisitions. capita income for other Florida MSAs.14 Since 1995, six Polk County and Tallahassee. As discussed in Appendepository institutions have entered the market de novo dix D, in the Polk County and Tallahassee banking marand three have entered by acquisition. In addition, two kets, at least 11 depository institution competitors would banking organizations have announced plans to make remain in the markets following consummation of the de novo entries. proposal. Each of these markets is also attractive for entry Orlando. NationsBank is the fourth largest of 36 deposi- and has experienced recent entry by new competitors. tory institutions in the Orlando banking market, and controls deposits of $1.3 billion, representing 10.6 percent of (b) Banking Markets with Proposed Divestitures. market deposits. Barnett is the second largest depository In order to mitigate the potential anticompetitive effects of institution in the market, and controls deposits of the proposal in the remaining 12 banking markets, $2.5 billion, representing approximately 21 percent of mar- NationsBank has committed to divest 67 branches in these ket deposits. After consummation of the proposal, markets.17 The branches proposed to be divested account NationsBank would become the largest depository institution in the market, controlling 31.6 percent of the market deposits, and the HHI would increase 445 points to 2063. 15. Between 1990 and 1996, the population of the Orlando MSA increased at a rate of 15.7 percent as compared to 10.8 percent for Thirty-five depository institutions would remain in the other Florida MSAs. The rate of growth of deposits in the MSA was Orlando banking market after consummation of the pro- 6.7 percent between 1991 and 1996 as compared to a decrease of posal, including six large multi-state banking organizations 2.8 percent for other Florida MSAs. In 1996, average per capita other than NationsBank. In addition to NationsBank, two income in the Orlando MSA was $18,900 as compared to $18,182 for of the multi-state competitors would each control more other Florida MSAs; and the average population per banking office was 4318 as compared to 3596 for other Florida MSAs. than 10 percent of market deposits. The Orlando banking 16. Between 1990 and 1996, the population of the Punta Gorda market also is attractive for entry. The rate of growth in MSA increased at a rate of 15.6 percent as compared to 10.8 percent population and market deposits, population per banking for other Florida MSAs. The rate of growth of deposits in the MSA office, and per capita income exceeds, on average, that of was 1 percent between 1991 and 1996 as compared to a decrease of 2.8 percent for other Florida MSAs. 17. With respect to each market in which NationsBank has committed to divest offices to mitigate the anticompetitive effects of the 14. Between 1990 and 1996, the population of the Naples MSA proposal, NationsBank has committed, prior to consummation of the increased at a rate of 23.6 percent as compared to 10.8 percent for acquisition of Barnett, to execute sales agreements with a purchaser other Florida MSAs. The rate of growth of deposits in the MSA was determined by the Board to be competitively suitable and to complete 9.7 percent between 1991 and 1996 as compared to a decrease of the divestitures within 180 days of consummation of the acquisition. 2.8 percent for other Florida MSAs. In 1996, the average per capita In addition, NationsBank has committed that, in the event it is income in the Naples MSA was $26,815 as compared to $18,182 for unsuccessful in completing any divestiture within 180 days of conother Florida MSAs. summation of the proposal, NationsBank will transfer the unsold Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 for approximately $3.1 billion in deposits and represent commercial banks have entered the market de novo and approximately 9 percent of the total deposits controlled by five commercial banks have entered by acquisition. Barnett.18 After accounting for the proposed divestitures, Fort Myers. NationsBank is the second largest of consummation of the proposal in five banking markets in 17 depository institutions in the Fort Myers banking mar- Florida—Columbia County, Key Largo, Key West, Mara- ket, and controls deposits of $1.1 billion, representing thon, and Suwanee County—would be consistent with the 20.8 percent of market deposits. Barnett is the third largest DOJ Guidelines and prior Board precedent. These markets depository institution in the market, and controls deposits are discussed in Appendix E. of $944.9 million, representing 18.5 percent of market Consummation of the proposal in the remaining seven deposits. NationsBank proposes to divest six branches in banking markets—Ocala, Ft. Myers, Daytona Beach, this market, with deposits of $300.7 million, to an out-of- Tampa Bay, Brevard County and Sarasota in Florida and market commercial banking organization. After consum- Brunswick County in Georgia—would exceed the DOJ mation of the proposal, NationsBank would become the Guidelines after accounting for the proposed divestitures. largest depository institution in the market, controlling 33.4 percent of the market deposits, and the HHI would Florida Banking Markets increase 377 points to 2035. The proposed divestiture of approximately 5.9 percent of Ocala. NationsBank is the fourth largest of 15 depository market deposits to a new commercial banking organization institutions in the Ocala banking market, and controls entrant would keep the number of depository institutions deposits of $316.1 million, representing 13.4 percent of unchanged at 17 and provide an effective new competitor market deposits. Barnett is the largest depository institu- in the banking market. Three large multi-state banking tion in the market, and controls deposits of $542 million, organizations other than NationsBank also would each representing 23 percent of market deposits. NationsBank control at least 8 percent of market deposits, and one of the proposes to divest two branches in this market, with depos- multi-state competitors would control 24.9 percent of marits of $42.6 million to a competitor suitable to the Board. In ket deposits. Since 1993, ten depository institutions have this market, a competitor suitable to the Board is an out-of- entered the Fort Myers banking market de novo and five market commercial banking organization or an in-market depository institutions have entered by acquisition, indicatcommercial banking organization that currently controls ing that the market is attractive for entry.20 less than 3 percent of market deposits. After consummation Daytona Beach. NationsBank is the fourth largest of 17 of the proposal, NationsBank would become the largest depository institutions in the Daytona Beach banking mardepository institution in the market, controlling 34.6 per- ket, and controls deposits of $440.1 million, representing cent of the market deposits, and the HHI would increase 10.8 percent of market deposits. Barnett is the second not more than 503 points or exceed a post-merger HHI of largest depository institution in the market, and controls 2067. deposits of $912.7 million, representing 22.5 percent of At least 14 depository institutions would remain in the market deposits. NationsBank proposes to divest four Ocala banking market after consummation of the proposal, branches in this market, with deposits of $77 million, to an including five large multi-state banking organizations other out-of-market commercial banking organization. After conthan NationsBank. In addition to NationsBank, two of the summation of the proposal, NationsBank would become multi-state competitors would each control more than the largest depository institution in the market, controlling 15 percent of market deposits. The proposed divestiture of 31.4 percent of the market deposits, and the HHI would approximately 1.8 percent of market deposits to a new increase 368 points to 2121. entrant or a smaller competitor would either add a new The number of depository institutions in the market competitor or would increase the competitive presence of a would remain unchanged at 17, and would include two smaller competitor. The Ocala banking market also has large multi-state banking organizations other than characteristics that make it attractive for entry. The rate of NationsBank that would each control more than 19 percent growth in population and market deposits exceeds, on of market deposits. Daytona Beach is also an MSA that is average, that of other Florida MS As.19 Since 1992, two attractive for entry.21 Four banking organizations and one savings association have entered the market de novo since 1996, and a banking organization has announced its intent to enter the market. branch(es) to an independent trustee that is acceptable to the Board and that will be instructed to sell the branches promptly. BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992); United New Mexico Financial Corporation, 11 Federal Reserve Bulletin 484 (1991). 18. All divestiture dollar amounts are based on June 30, 1996, 20. In addition, between 1990 and 1996, the population of the Fort summary of deposit data for the branches that NationsBank has Myers-Cape Coral MSA increased at a rate of 14.5 percent as comcommitted to divest. pared to 10.8 percent for other Florida MSAs. 19. Between 1990 and 1996, the population of the Ocala MSA 21. Between 1990 and 1996, the population of the Daytona Beach increased at a rate of 17.9 percent as compared to 10.8 percent for MSA increased at a rate of 12.4 percent as compared to 10.8 percent other Florida MSAs. The rate of growth of deposits in the MSA was for Florida MSAs. The rate of growth of deposits in the MSA was 3.9 percent between 1991 and 1996 as compared to a decrease of 7.5 percent between 1991 and 1996 as compared to a decrease of 2.8 percent for other Florida MSAs. 2.8 percent for other Florida MSAs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1998 Tampa Bay. NationsBank is the second largest of each control more than 12 percent of market deposits. The 58 depository institutions in the Tampa Bay banking mar- proposed divestiture of approximately 2.8 percent of market, and controls deposits of $4.6 billion, representing ket deposits would provide an effective new competitor in 18.2 percent of market deposits. Barnett is the largest the Brunswick banking market. The banking market also depository institution in the market, and controls deposits has features that make it attractive for entry by out-ofof $6.5 billion, representing 25.5 percent of market depos- market banking organizations. The rate of growth of marits. NationsBank proposes to divest 34 branches in this ket deposits, and average per capita income are higher for market, with deposits of $1.6 billion, to an out-of-market the Brunswick County banking market than for non-MSA commercial banking organization. After consummation of counties in Georgia.23 Two commercial banks entered the the proposal, NationsBank would become the largest de- market de novo in 1997. pository institution in the market, controlling 37.6 percent of the market deposits, and the HHI would increase 467 Conclusion Regarding Competitive Factors points to 1918. The number of depository institutions in the market The Board has sought comments from the United States would remain unchanged at 58, including six large multi- Attorney General ("Attorney General"), the Office of the state banking organizations other than NationsBank. In Comptroller of the Currency ("OCC"), and the Federal addition to NationsBank, three of the multi-state banking Deposit Insurance Corporation ("FDIC") on the competiorganizations would each control more than 8 percent of tive effects of this proposal. The Attorney General has market deposits. The new commercial banking organiza- conducted a detailed review of this proposal and has adtion entrant would acquire 6.1 percent of market deposits vised the Board that, subject to the proposed divestitures, and a substantial branch network that should enable the consummation of the proposal would not likely have a new entrant to be an effective competitor in the market. significantly adverse effect on competition in any relevant The Tampa Bay banking market also is a large MSA that market. The OCC and the FDIC also have not objected to has features that make it attractive for entry.22 Since 1992, consummation of the proposal. five depository institutions have entered the market For the reasons discussed in this order and the accompade novo and 15 have entered by acquisition. nying appendices, and after carefully considering public Brevard and Sarasota. As discussed in Appendix E, the comments on the competitive effects of the proposal, the proposed divestitures in the Brevard County and Sarasota Board concludes that consummation of the proposal would banking markets would either add a new commercial bank- not have a significantly adverse effect on competition or on ing organization competitor or would increase the compet- the concentration of banking resources in any relevant itive presence of a smaller commercial banking organiza- banking market. This finding is based on all the facts of tion competitor. Each of these markets is attractive for record and is conditioned on consummation of the proentry and has experienced recent entry by new competitors. posed divestitures discussed in this order and its Appendices. Georgia Banking Market This is a difficult case in many respects and highlights some of the complexities of analyzing the competitive Brunswick County. NationsBank is the largest of ten depos- effects of mergers that affect a large number of local itory institutions in the Brunswick County banking market, markets. As explained above, the proposal meets the criteand controls deposits of $216.1 million, representing ria that the Board have traditionally applied to bank acqui- 25.8 percent of market deposits. Barnett is the fourth sition cases. The Board's experience in analyzing these largest depository institution in the market, and controls cases, however, suggests that, in future cases, increased deposits of $99.9 million, representing 11.9 percent of importance should be placed on a number of factors where market deposits. NationsBank proposes to divest one the proposal involves a combination that exceeds the DOJ branch in this market, with deposits of $23.1 million, to a guidelines in a large number of local markets. In these competitor suitable to the Board. In this market, a compet- cases, the Board believes that it is important to give initor suitable to the Board is an out-of-market commercial creased attention to the size of the change in market banking organization. After consummation of the proposal, concentration as measured by the HHI in highly concen- NationsBank would remain the largest depository institu- trated markets, the resulting market share of the acquiror tion in the market, controlling 34.9 percent of the market and the pro forma HHIs in these markets, the strength and deposits, and the HHI would increase 421 points to 2025. nature of competitors that remain in the market, and the The number of depository institutions would remain strength of additional positive and negative factors that unchanged at ten, and would include two large multi-state may affect competition for financial services in each marbanking organizations other than NationsBank that would 23. Between 1991 and 1996, deposits in the Brunswick banking 22. The Tampa-St. Petersburg MSA ranks second in total deposits market increased at a rate of 25.6 percent between 1991 and 1996 as out of the 20 Florida MS As. In 1996, the average per capita income compared to an increase of 20.7 percent for other non-MSA counties for the MSA was $18,587 as compared to $18,182 for other Florida in Georgia. In 1996, the average per capita income in the Brunswick MSAs; and the average population per banking office for the MSA banking market was $17,085 as compared to $14,161 for other nonwas 3,703 as compared to 3,596 for other Florida MSAs. MSA Georgia counties. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 ket. The Board believes that this refined focus would better of the financial and managerial resources of NationsBank address the challenges of analyzing the complex competi- and Barnett, the Board has considered its supervisory expetive effects of combinations that affect multiple markets. rience with the two companies as well as that of other federal supervisory authorities, including assessments of Other Factors Under the BHC Act the organizations' efforts to ensure Year 2000 readiness. Based on these and other facts of record, the Board con- The BHC Act also requires the Board, in acting on an cludes that considerations relating to the financial and application, to consider the financial and managerial re- managerial resources and future prospects of NationsBank, sources and future prospects of the companies and banks Barnett, and their respective subsidiaries are consistent involved in a proposal, the convenience and needs of the with approval of the proposal, as are the other supervisory community to be served, and certain other supervisory factors that the Board must consider under section 3 of the factors. BHC Act. A. Financial, Managerial, and Other Supervisory B. Convenience and Needs Considerations Factors The Board has carefully considered the effect of the pro- The Board has carefully considered the financial and man- posed acquisition on the convenience and needs of the agerial resources and future prospects of NationsBank, community to be served in light of all the facts of record, Barnett, and their respective subsidiary banks, and other including comments on the effects the proposal would have supervisory factors in light of all the facts of record, on the communities to be served by the combined organizaincluding the public comments.24 The Board notes that the tion. Overall, the Board received approximately 25 combank holding companies and their subsidiary banks are ments in favor of the proposal and approximately 90 opcurrently well capitalized and are expected to remain so posed to the proposal.26 after consummation of the proposal. Most of the commenters supporting the proposal were The Board also has considered other aspects of the community-based organizations, and they commented fafinancial condition and resources of the two organizations, vorably on NationsBank's record of performance under the structure of the proposed transaction, and the manage- Community Reinvestment Act (12 U.S.C. § 2901 et seq.) rial resources of each of the entities and the combined ("CRA").27 These commenters generally commended the organization.25 In connection with the Board's assessment assistance NationsBank provided in community redevelopment activities and applauded NationsBank for reinvesting in various communities. These commenters expected that a combined NationsBank/Barnett organization would benefit 24. The comments received include comments contending that: (i) NationsBank has not performed a sufficient due diligence exam- the communities to be served. ination of Barnett; Approximately nine community-based organizations (ii) An unlicensed Barnett broker misappropriated a customer's criticized various aspects of the CRA performance record funds; of NationsBank, including its community development and (iii) Recent developments in Asian currency and other emerging markets would adversely affect NationsBank's financial resources; small business lending, and expressed concern that the (iv) Fluctuations in NationsBank's stock price and debt ratings proposed acquisition would adversely affect the communireflect concerns about the bank's managerial and financial re- ties served by Barnett, primarily in Florida.28 The remainsources; ing commenters opposing the proposal were individuals (v) NationsBank's safety and soundness would be threatened by the who primarily criticized NationsBank's banking products size of the proposed transaction; and (vi) Barnett has announced publicly a settlement of an alleged and services and, in some cases, praised the banking prodviolation of the Bank Secrecy Act. ucts and services provided by Barnett. In addition, some 25. Commenters cited, as indications of concern regarding manage- individual commenters and community-based organizarial resources, several pending or settled lawsuits, including actions tions raised concerns that the proposed acquisition would involving securities brokerage activities by NationsBank and Barnett, an administrative complaint filed by the Department of Labor alleging that NationsBank engaged in discriminatory hiring practices in Charlotte, North Carolina, in 1993, and civil actions alleging that NationsBank discriminated against minority borrowers. Some com- 26. One commenter suggested that the Board conduct surveys in the menters requested that the Board not act on the NationsBank/Barnett affected communities. As discussed in the order, the Board's public proposal until particular lawsuits were settled, and other commenters comment procedure gives any interested person an opportunity to contended the record of litigation and administrative actions raised provide any information on the effects of the proposal in the commuadverse considerations under the convenience and needs factor. The nity, and numerous comments were received in response to the invita- Board previously has reviewed and considered the lawsuits against tion for public comment. NationsBank in connection with approving other NationsBank acqui- 27. These commenters included the ACORN Housing Corporation, sitions. See NationsBank Corporation, 83 Federal Reserve Bulletin the Urban League of Greater Miami, the Tampa Bay Community 924 (1997); NationsBank Corporation, 83 Federal Reserve Bulletin Development Corporation, the Orlando Neighborhood Improvement 148 (1997). In addition, the Board notes that, as in the previous Corporation, and St. Petersburg Neighborhood Housing Services, Inc. applications, there has been no adjudication of wrongdoing by 28. These commenters included Vickers & Associates, Inner City NationsBank or Barnett, and that each proceeding is pending before a Press/Community on the Move, the Fair Housing Continuum, People forum that has the authority to provide the plaintiffs with adequate Acting for Community Together, and the North Carolina Fair Housing remedies if their allegations of wrongdoing can be sustained. Center. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1998 result in numerous branch closings that would adversely ida, N.A., Tampa, Florida ("NationsBank/Florida"), and affect low- and moderate-income ("LMI") neighborhoods its bank in Georgia, NationsBank of Georgia, N.A., and senior citizens, and would result in a reduction in Atlanta, Georgia ("NationsBank/Georgia"), each received community development and home mortgage lending.29 "outstanding" ratings from the OCC, at the most recent Several commenters also maintained that NationsBank's examinations of their CRA performance, as of July, 1995.31 record of CRA performance and compliance with the fair In addition, Barnett's lead bank, Barnett Bank received a lending laws was deficient in a number of areas, in part on "satisfactory" rating from the OCC on August 19, 1997, the basis of f 996 data submitted under the Home Mortgage and Community Bank received an "outstanding" rating Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA"). from the Federal Reserve System on January 27, 1997.32 In reviewing the convenience and needs of communities Examiners found no evidence of prohibited discriminato be served, the Board notes that NationsBank provides a tion or other illegal credit practices at the subsidiary banks full range of financial services through its bank and non- of NationsBank or Barnett. The examinations found that bank subsidiaries, including commercial and retail bank- the banks' delineations of their local communities were ing, trust and investment management, corporate and in- reasonable and did not arbitrarily exclude LMI communivestment banking, and international banking services. ties, and that the banks solicited and accepted credit appli- NationsBank has stated that the proposed acquisition would cations from all segments of their delineated communities. enhance and expand the banking services available to all of Examinations also determined that the banks effectively its and Barnett's customers, including LMI households. made loans throughout their respective service areas, in- The Board has given substantial consideration to the com- cluding in LMI areas and to LMI individuals. ments received in addition to the existing record of NationsBank of helping to serve the convenience and needs Lending Performance Record of NationsBank of all its communities, as reflected in NationsBank's CRA and supervisory examinations and in its current programs The Board has carefully considered the lending perforand policies. mance record of NationsBank in general, and in particular, the records of Lead Bank and its subsidiary banks in CRA Performance Examinations Florida and Georgia where the combined organization would operate after consummation of this proposal. The The Board has long held that consideration of the conve- Board has reviewed in detail all aspects of NationsBank's nience and needs factor includes a review of the records of CRA-related activities, including its farm, affordable housthe relevant depository institutions under the CRA. As ing, and small-business lending activities; its community provided in the CRA, the Board has evaluated the conve- investment and development programs; and its initiatives nience and needs factor in light of examinations by the to increase lending in LMI areas. primary federal supervisors of the CRA performance Lead Bank. According to its most recent CRA perforrecords of the relevant institutions. An institution's most mance examination, Lead Bank received credit applicarecent CRA performance evaluation is a particularly impor- tions from all segments of the communities it serves, tant consideration in the applications process because it including LMI areas, and had a good distribution of loans represents a detailed on-site evaluation of the institutions's throughout its communities, including LMI areas. Examinoverall record of performance under the CRA by its pri- ers noted that Lead Bank effectively identified potentially mary federal supervisor.30 underserved areas and targeted the areas for additional The majority of NationsBank's subsidiary banks, repre- resources. Examiners also noted that the bank offered a senting more than 96 percent of the total assets of banks variety of credit and depository products to help meet the and thrifts controlled by NationsBank, received "outstand- needs of its communities. Examiners found that Lead Bank ing" ratings at the most recent examinations of their CRA assisted in meeting housing-related credit needs in its comperformance, and all the NationsBank's subsidiary banks munities by originating loans with flexible terms and unreceived either "outstanding" or "satisfactory" ratings derwriting standards through NationsBanc Mortgage Corfrom their primary federal supervisor. NationsBank's lead poration ("NBMC"), a subsidiary of NationsBank's Lead bank, NationsBank, N.A., Charlotte, North Carolina ("Lead Bank"), its bank in Florida, NationsBank of Flor- 29. Several commenters presented complaints against NationsBank or Barnett based on individual customer transactions. These complaints have been referred to the appropriate federal supervisor of the NationsBank's subsidiary involved in the transaction for consideration. 31. After the examinations were conducted, Lead Bank, 30. The Statement of the Federal Financial Supervisory Agencies NationsBank/Florida, and NationsBank/Georgia were merged with Regarding the Community Reinvestment Act provides that a CRA and into a single bank named NationsBank, N.A., Charlotte, North examination is an important and often controlling factor in the consid- Carolina. eration of an institution's CRA record and that reports of these 32. Barnett's third subsidiary depository institution, FOA, received examinations will be given great weight in the applications process. a "satisfactory" rating for CRA performance from the Office of Thrift 54 Federal Register 13,742 and 13,745 (1989). Supervision as of April, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 Bank.33 Lead Bank also helped meet the needs of small The Board also has considered NationsBank's lending businesses in its communities, including LMI areas. record, particularly in Florida, in light of comments about Florida. NationsBank/Florida's lending activities re- NationsBank's HMDA data for its housing-related lending flected a reasonable geographic distribution of applications in 1996.34 The 1996 HMDA data generally show that received and loans made throughout its service communi- NationsBank has continued to provide a significant volume ties, according to the bank's most recent CRA performance of home mortgage credit in LMI census tracts and to examination. The OCC's examiners noted, for example, minority applicants and that NationsBank has increased the that NationsBank/Florida took an active role in addressing volume of its home mortgage lending to African-American the affordable housing, small business, and other credit and Hispanic applicants, in LMI census tracts and to LMI needs of its community, and that the bank originated a borrowers. The data also show increases in housing-related larger percentage of consumer real estate loans in LMI loans to African-American and Hispanic applicants, in areas than the average for other lenders. LMI census tracts and to LMI borrowers in Florida. The OCC's examiners also favorably commented on The data also reflect, however, some disparities in the other CRA-related activities by NationsBank/Florida, in- rate of loan originations, denials, and applications by racial cluding: group and income level. The Board is concerned when the (i) Active participation in government-insured and record of an institution indicates such disparities in lendguaranteed loan programs for housing and small busi- ing, and believes that all banks are obligated to ensure that nesses offered through the Federal Housing Authority their lending practices are based on criteria that ensure not ("FHA"), Veterans Administration ("VA"), and the only safe and sound lending but also equal access to credit Small Business Administration ("SBA"); by creditworthy applicants regardless of their race. The (ii) Marketing and outreach activities, which estab- Board recognizes, however, that HMDA data alone provide lished on-going, productive relationships with its ser- an incomplete measure of an institution's lending in its vice communities; and community because these data cover only a few categories (iii) Marketing program, which informed all segments of housing-related lending. HMDA data, moreover, proof its communities served about available banking vide only limited information about the covered loans.35 products and services, including LMI areas and areas HMDA data, therefore, have limitations that make the data with predominately minority populations. an inadequate basis, absent other information, for concluding that an institution has not assisted in meeting the communities' credit needs or has engaged in illegal lend- Examiners considered NationsBank/Florida's participaing discrimination. tion in local development and redevelopment projects, particularly within metropolitan markets, which was char- Because of the limitations of HMDA data, the Board has acterized as very active. Examiners also noted that the carefully considered those data in light of other informabank's participation through various national corporate and tion. Specifically, the Board has considered information local initiatives and partnerships often reflected a leader- about all of NationsBank's lending and other activities ship role. related to the CRA,36 and information in examination re- Georgia. Examiners found that the lending activities of ports and other supervisory information that provide an the bank effectively reached all segments of the commu- on-site evaluation of compliance within the fair lending nity, including LMI individuals and geographies, in the laws by NationsBank.37 The Board also has considered most recent examination for CRA performance for NationsBank/Georgia. According to the examination, the bank identified potentially underserved areas and targeted 34. A commenter contended that the 1996 HMDA data for them for priority attention and additional resources. The NationsBank show disparities by race in the rate of loan originations, denials, and applications in certain MSAs in Florida, Georgia, New examination also concluded that the bank had undertaken Mexico, North Carolina, Texas, and Virginia. significant efforts to meet the credit needs of its delineated 35. The data, for example, do not provide a basis for an independent community through the origination of loans for residential assessment of whether an applicant who was denied credit was, in mortgages, home improvement, small businesses, and fact, creditworthy. Credit history problems and excessive debt levels small farms. The bank participated in governmentally- relative to income (reasons most frequently cited for a credit denial) are not available from HMDA data. insured, guaranteed, or subsidized loan programs for hous- 36. Several commenters stated that NationsBank has declined to ing and small business. The bank also established contacts enter into agreements, make specific pledges regarding lending for with local authorities and low-income housing developers LMI communities, and enter into a commitment to lease space in a to maintain an awareness of community development shopping center. The Board has stated that, although communications between depository institutions and community groups are a valuable needs. method of assessing the credit needs of the community, the CRA does not mandate a depository organization to enter into an agreement with any organization. See Chemical Order at 246 n.44. 37. One commenter argued that multi-state bank holding companies 33. In 1994, Lead Bank originated more than 300 affordable mort- tend to make fewer loans to customers located outside their home state gage loans totalling $19 million in North Carolina, more than 450 than single-state institutions, which serve only their home state. As affordable mortgage loans totaling $27 million in South Carolina, and explained above, the Board has carefully reviewed NationsBank's more than 950 affordable mortgage loans totaling $90 million in record of assisting to meet the credit needs of the communities served Virginia, Maryland and Washington, D.C. by its subsidiary banks, including in Florida and Georgia. The CRA Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1998 NationsBank's lending activities generally and particularly nity development, and consumer loans in LMI areas in in Florida since the last CRA performance examinations. Florida. This amount of lending represented 40 percent of These activities indicate that NationsBank continues to the total amount of lending for NationsBank in Florida for assist in meeting the credit needs of all its communities, these types of loans, although only 23 percent of all Florida including the credit needs of LMI and minority borrowers. households are located in LMI neighborhoods. The bank NationsBank's 1996-97 Lending Activities. NationsBank also assisted several local community organizations in made more than 20,000 home mortgage and home im- providing more than 100 credit counseling seminars for provement loans totaling $941 million to LMI borrowers in first-time home buyers in Florida. 1996. NationsBank also increased from $500 million to In 1997, NationsBank introduced a pilot program in $750 million the funding for its first-time home buyers Florida to provide an alternative to SBA loans that offers program, which is administered by the Neighborhood less cumbersome application requirements. During the first Assistance Corporation of America and provides 100 per- ten months of the year, NationsBank closed 61 loans under cent financing and extensive credit and home ownership the program totaling $6 million. NationsBank's commucounseling. This partnership, which was piloted in four nity development corporation opened a new office in cities, is being expanded to seven new cities, including Tampa. NationsBank committed to fund the opening and Tampa, Florida. NationsBank also expanded its partnership operation of at least two Make-A-Difference child-care with ACORN Housing Corporation to provide home own- centers in Florida in 1998, among 25 such after-school ership counseling in four additional cities. centers serving children of LMI families that NationsBank During 1997, NBMC increased its commitment to fund has plans to open by the year 2000. home mortgages for LMI borrowers by reducing its inter- The Board also notes that NationsBank's record of CRA est rate and expanding the eligibility criteria to qualify for performance was recently reviewed in connection with the the mortgage funds. Outstanding loan volume increased Board's approval of NationsBank's acquisition of Boatwithin the first nine months of 1997 from $323 million for men's Bancshares, Inc., St. Louis, Missouri ("Boatmen's") approximately 4,600 families to $530 million for approxi- (order dated December 16, 1996).38 In the 1996 Order, the mately 7,400 families. Board considered the lending performance record of NationsBank also has increased its community develop- NationsBank generally and in specific states, which inment funding since the 1995 CRA performance examina- cluded Florida, Georgia, North Carolina, Texas, and Virtions. NationsBank doubled its $100 million commitment ginia. That review also included HMDA data for 1993, in Nations Housing Fund, which, in partnership with the 1994, and 1995 reported by NationsBank's bank subsidiar- Enterprise Social Investment Corporation, invests in ies and NBMC. The review indicated generally that Naprojects to construct and rehabilitate affordable housing. tionsBank had improved its record of home mortgage This program has helped to develop 83 multi-family lending in LMI census tracts and census tracts with preprojects in 42 communities in 13 states and the District of dominately minority residents. The Board concluded that Columbia, and has produced nearly 10,000 units of afford- NationsBank's record at that time was consistent with able housing. In 1996, NationsBank also made a approval of the application under the BHC Act. $100 million commitment to lending and investment for neighborhood development in St. Louis, Missouri, and Branch Closings NationsBank increased by $3.8 million its funding to its Community Development Financial Institutions Initiative, NationsBank has more than 380 branches in Florida and which invests in intermediary institutions that finance spe- has approximately 270 branches in Georgia. Barnett opercialized community development projects. ates more than 600 branches in Florida and has approxi- In 1996, NationsBank made more than 11,000 loans mately 10 branches in Georgia. totaling more than $1 billion to small and minority-owned A number of these branches serve the same communibusinesses located in LMI areas. For 1996, NationsBank ties. NationsBank has indicated that it has not developed was the leading volume lender for the SB A in Florida, final plans regarding branch closings after acquiring Bar- South Carolina, Tennessee, and the District of Columbia, nett. NationsBank has preliminarily and confidentially and it was the second largest SBA lender in Georgia, identified the number of branches by county that are under Texas, and Maryland. review, based on a geographic mapping of existing NationsBank's 1996-97 Lending Activities in Florida. In branches of NationsBank and Barnett that appear to service 1996, NationsBank made more than $5.2 billion of home the same community. NationsBank cannot, prior to acquirpurchase and refinance, small business and farm, commu- ing Barnett, consider or apply all the criteria or follow all the procedures set forth in its corporate branch closing policy for analyzing branches that may be affected by the acquisition of Barnett and, consequently, has indicated that requires that every bank, including a bank owned by an out-of-state parent holding company, be regularly examined and rated on a state- it has not reached a final decision on which branches may by-state basis on its performance in helping to meet the credit needs of be closed. its community. NationsBank's activities in Florida have been and will continue to be reviewed by the OCC in its performance examinations and by the Board in future applications by NationsBank to acquire a depository facility under the BHC Act. 38. 83 Federal Reserve Bulletin 148 (1997) ("1996 Order"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 The Board has considered the areas of geographic over- to operate in these states. Approximately eight of the lap in light of the total number of branches, the dispersion closed branches were in LMI communities. Accounting for of branches, and examination reports. Also, the Board has these closures and consolidations, the percentage of the considered the preliminary branch information from combined organization's banking centers located in LMI NationsBank in light of all comments received on branch areas, when compared to the combined organization's total closings.39 number of branches in all areas, did not decrease. In some The Board also has carefully reviewed the branch clos- states, including Arkansas, Iowa, and Illinois, the percent ing policy of NationsBank in light of the bank's record of of NationsBank's branches in LMI communities increased providing all segments of the communities served with as a percentage of its total branches in those states. reasonable access to banking services. NationsBank's cor- Before closing any of the eight branches in LMI commuporate Banking Center Opening and Closing Policy re- nities, NationsBank assessed whether the closing would quires that the appropriate Community Investment Pro- adversely affect the LMI community being served, as regram manager ("CIP manager"), who must approve all quired by its branch closing policy.41 In the case of three branch closings, consider whether: closings, competitors maintained branches in short walking (i) The closing would have an adverse impact on the or driving distance from the closed branch. Three other community served and what actions will be taken to LMI branches were closed because of deficiencies in the minimize that impact, and facilities—such as extensive termite damage, poor building (ii) Other financial institutions serve the area and the access that posed security concerns, or limited parking banking alternatives available to customers affected by facilities—that could not be economically remedied. Each the closure. of the three branches was located near other NationsBank branches that had better facilities, offered easier access, or The CIP manager may hold meetings with neighborhood were better situated to serve the community 42 In the case leaders to assess, and to solicit suggestions to minimize, of the remaining two branches closed in LMI areas, the impact of the closure if the manager approves the NationsBank followed its branch closing policy, which, as closure of a branch. noted, has been deemed by the OCC to be effective in The OCC also has reviewed NationsBank's branch clos- providing reasonable access to banking services. ing policy as part of the OCC's examination of the CRA In addition to these factors, the Board has considered performance record of the subsidiary banks of NationsBank that federal banking law provides a specific mechanism for and found the policy to be effective in enabling addressing branch closings. Federal law requires an in- NationsBank's subsidiary banks to provide reasonable ac- sured depository institution to provide notice to the public cess to banking services in their communities. As part of and to the appropriate regulatory agency at least 30 days the most recent CRA performance examinations of prior to closing a branch. The law does not authorize NationsBank's subsidiary banks, OCC examiners reviewed federal regulators to prevent the closing of any branch 43 branches closed pursuant to the policy and concluded that The Board expects that NationsBank will apply its cor- NationsBank subsidiary banks generally had good records porate branch closing policy in determining whether to of opening, closing and relocating their offices while pro- close any branches in connection with the Barnett transacviding all segments of the communities with reasonable tion. To permit the Board to assess the effectiveness of this access to bank services. policy, the Board has determined to require NationsBank to The Board also has taken account of NationsBank's report branch closures in Florida and Georgia to the Fedrecord of closing branches in other cases, in particular eral Reserve System during the two-year period following NationsBank's reports of branch closings submitted in consummation as part of NationsBank's next applications accordance with the 1996 Order.40 After consummation of the NationsBank/Boatmen's acquisition, NationsBank closed or designated for closure or consolidation approxi- 41. A commenter criticizes NationsBank's efforts as inadequate by mately 44 branches in the states in which Boatmen's had noting, for example, that before closing LMI branches in New Mexoperated. More than 500 NationsBank branches continue ico, NationsBank did not consult the New Mexico Alliance, an organization currently in litigation with NationsBank over the Boatmen's acquisition. 42. For example, in one case in which an LMI branch was closed 39. Several commenters argued that NationsBank should be re- because of limited parking and lack of drive-through lanes, another quired to disclose all branch closing information and to provide a NationsBank branch was located three blocks away, on the same branch closing plan for comment before the Board acts on the pro- public transportation line. The remaining branch had more teller posal. These contentions relate to information that is confidential or windows, improved customer accessibility, exterior ATM machines, that relates to decisions that NationsBank has indicated it is not in a and better security features. position to make finally before consummation of the proposal. Branch 43. Section 42 of the Federal Deposit Insurance Act (12 U.S.C. closings resulting from the proposal, and any information or analyses § 183 lr-1, as implemented by the Joint Policy Statement Regarding that commenters wish to provide on branches that are closed can be Branch Closings (see 58 Federal Register 49,083 (1993)), requires reviewed in the CRA examination process and in future applications that a bank provide the public with at least 30 days notice and the to acquire depository institutions. primary federal supervisor with at least 90 days notice before the date 40. Commenters raised concerns about the branches closed or to be of the proposed branch closing. The bank also is required to provide closed by NationsBank as a result of the NationsBank/Boatmen's reasons and other supporting data for the closure, consistent with the acquisition. institution's written policy for branch closings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1998 to the System to acquire a depository institution. For Conclusion on Convenience and Needs Considerations branches closed in LMI census tracts, NationsBank should indicate the proximity to the closest NationsBank branch The Board has carefully considered all the facts of record, and the steps NationsBank took to mitigate the impact of including all of the comments received, responses to the the branch closure. comments, and the CRA performance records of the subsidiary depository institutions of NationsBank and Barnett, NationsBank's Nonbank Subsidiaries including the relevant reports of examination and other supervisory information.47 Based on a review of the entire Several commenters contended that nonbank lending sub- record and for the reasons discussed above and in the 1996 sidiaries of NationsBank, including NationsCredit Corpora- Order, which are specifically incorporated by reference, the tion ("NationsCredit") and SunStar Acceptance Corpora- Board concludes that the convenience and needs considertion ("Sunstar"), have engaged in discriminatory lending ations are consistent with approval of the application and practices.44 In reviewing similar allegations in the 1996 notice.48 Order, the Board noted that the OCC's fair lending examination findings found no evidence of illegal discrimination Nonbanking Activities at the subsidiary banks of NationsBank or NBMC and the most recent examinations by the OCC favorably com- NationsBank also has filed notice under section 4(c)(8) of mented on NationsBank's fair lending policies and its the BHC Act to acquire the nonbanking subsidiaries of procedures to prevent illegal practices like pre-screening.45 Barnett listed in Appendix A and thereby engage in the The Board also noted that NationsCredit has a consumer described nonbanking activities. The Board previously has compliance program in place and that staff of Nations- determined by regulation that each of the activities de- Credit's compliance group work closely with the compli- scribed in Appendix A is closely related to banking within ance group responsible for overseeing the compliance pro- the meaning of section 4(c)(8) of the BHC Act, and gram for NationsBank's subsidiary banks 46 44. A few commenters provided copies of consumer complaints responsible for overseeing the compliance programs of the subsidiary filed in several states against NationsCredit, Sunstar, and NBMC. banks. In addition, commenters' request relies in large measure on These complaints have been filed with the appropriate state regulatory consumer complaints filed with state authorities that, as noted above, agencies and have been reviewed by the Board in light of all the facts do not raise fair lending law issues. In this light and based on all the of record, including supervisory evaluations and supervisory informa- facts of record, and for the reasons discussed above and in the 1996 tion. The Board notes that these complaints generally involve matters Order, the Board concludes that it should not conduct a special on-site of customer service, not fair lending laws, and that in most cases the examination of NationsBank's nonbank subsidiaries for fair lending complaints have been resolved. law compliance. Several commenters also raised concerns about NationsBank's 47. Many individual commenters argued that Barnett's banking 1-800-number call center for consumer complaints, including that products and services were superior to those of NationsBank, particucallers may not be adequately served and could in fact be misled into larly in terms of customer service, fees charged, and interest earned. thinking that they had filed a complaint with the appropriate federal Commenters expressed concern that the proposal would result in a supervisor. Commenters presented no facts to support their concerns. reduction in interest rates paid on accounts or certificates of deposit, The Board notes, moreover, that federal banking supervisors have loss of free banking services, increases in fees for banking services, sufficient authority to investigate and address complaints of improper and the general loss of convenient banking services. One commenter activities that are substantiated by facts. argued that multi-state banking institutions, such as NationsBank, 45. Commenters also raised a number of concerns regarding the tend to charge higher fees to customers located outside their home referral policies of NationsCredit, NBMC, and NationsBank's subsid- state than they charge to customers in their home state. iary banks. Commenters reiterated allegations, made at the time that As discussed in this order and in the 1996 Order, NationsBank NationsBank sought approval from the Board to acquire Boatmen's, provides a full range of services that assist in meeting the banking that loan applicants are illegally "steered" from NationsBank's sub- needs of its community, including special low-fee accounts for LMI sidiary banks to NationsCredit on a prohibited basis like race. The customers. NationsBank maintains that the combined NationsBank/ Board carefully considered these allegations in the 1996 Order, and Barnett organization will continue to offer competitive rates on deposcommenters have presented no new facts to support their allegations. its and to charge competitive fees on transaction accounts. Na- The Board also has reviewed referral practices from NationsCredit to tionsBank also represents that it will not raise consumer fees for NationsBank's banks in light of supervisory information provided by customers of the combined organization after the acquisition and the OCC in this application. Commenters' allegations regarding the continuing to August 1998. referral practices of NationsBank's banks also will be provided to the 48. Commenters also expressed concerns that significant job losses OCC, the primary supervisor of NationsBank, N.A. would result from the consolidation of NationsBank and Barnett. 46. Some commenters requested the Board to conduct an on-site fair NationsBank responded that NationsBank and Barnett have instituted lending law examination of NationsBank's nonbanking subsidiaries hiring freezes that should reduce materially the need for reducing the before acting on the proposal. The Board notes that primary authority number of employees. The Board notes, moreover, that the convefor enforcement of the fair lending laws for nonbanking companies nience and needs factor of the BHC Act has been consistently intersuch as NationsCredit and Sunstar is conferred by statute on the preted by the federal banking agencies, the courts, and Congress to Federal Trade Commission and the Department of Housing and Urban relate to the effect of a proposal on the availability and quality of Development. As discussed above and in the 1996 Order, banking services in the community. On this basis, the Board previ- NationsBank's subsidiary banks—which account for a substantial ously has concluded that the effect of a proposed acquisition on majority of NationsBank's total assets and total revenue—have satis- employment in a community is not among the factors included in the factory records of compliance with fair lending laws and the compli- BHC Act. See, e.g., Wells Fargo & Company, 82 Federal Reserve ance program for NationsCredit has been implemented by the group Bulletin 445, 457 (1996). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 NationsBank has committed to conduct these activities in incident to banking standard of section 4(c)(8) of the BHC accordance with Regulation Y.49 Act. In order to approve the proposal, the Board also must determine that the performance of the proposed activities Conclusion are a proper incident to banking, that is that the proposed transaction "can reasonably be expected to produce bene- Based on the foregoing and all the facts of record, the fits to the public . . . that outweigh possible adverse effects, Board has determined that this transaction should be, and such as undue concentration of resources, decreased or hereby is, approved.53 In reaching its conclusion, the Board unfair competition, conflicts of interests, or unsound bank- has considered all the issues raised in public comments ing practices."50 As part of the Board's evaluation of these filed in connection with this proposal in light of the factors factors, the Board considers the financial and managerial that the Board is required to consider under the BHC Act resources of the notificant and its subsidiaries, including and concludes that the comments do not warrant a delay or any company to be acquired, and the effect the transaction denial of the proposal.54 would have on such resources.51 As noted above, based on all the facts of record, the Board has concluded that finan- 53. Several commenters requested that the Board convene a public cial and managerial considerations are consistent with aphearing or meeting on the proposal. Section 3(b) of the BHC Act does proval of the notice. not require the Board to hold a public hearing on an application unless The Board also has carefully considered the competitive the appropriate supervisory authority for the bank to be acquired effects of the proposed acquisition of the nonbanking com- makes a timely written recommendation of denial. In this case, the panies and, in so doing, has considered the information and Board has not received such a recommendation from any state supervisory authority. The Board's rules provide for a hearing on notices views provided by commenters regarding the competitive under section 4 of the BHC Act if there are disputed issues of material effects of the proposed acquisition. Each of the markets for fact that cannot be resolved in some other manner. See 12 C.F.R. the nonbanking services affected by this proposal is uncon- 225.25(a)(2). Commenters have not identified any material facts relatcentrated, and there are numerous providers of each of ing this proposal that are in dispute. Under its rules, the Board also may, in its discretion, hold a public these services. As a result, consummation of this proposal hearing or meeting on an application to acquire a bank if a hearing is is expected to have a de minimis effect on competition for necessary or appropriate to clarify factual issues related to the applicathese services. tion and to provide an opportunity for testimony, if appropriate. The Board expects, moreover, that the acquisition of 12 C.F.R. 225.16(e). In making such a determination, the Board takes Barnett by NationsBank would provide added convenience into account what facts, if any, are in dispute and whether other considerations, such as the scope of the transaction, the degree of to Barnett customers, to NationsBank's customers, and to interest expressed in having a public hearing or meeting, and the CRA the public by increasing operating efficiencies and by im- performance records of the applicant and target, indicate that written proving convenience and expanding services available to submissions would be inadequate. In the Board's view, the commentcustomers of both NationsBank and Barnett.52 Addition- ers had ample opportunity to submit their views, and have submitted substantial written comments that have been carefully considered by ally, there are public benefits to be derived from permitting the Board in acting on the application. The commenters' requests fail capital markets to operate so that bank holding companies to demonstrate why their written presentations do not adequately may make potentially profitable investments in nonbanking present their evidence, allegations, and views. After a careful review companies when those investments are consistent, as in of all the facts of record, moreover, the Board has concluded that this case, with the relevant considerations under the BHC commenters dispute the weight that should be accorded to, and the conclusions that the Board should draw from, the facts of record, but Act, and from permitting banking organizations to allocate do not identify disputed issues of fact that are material to the Board's their resources in the manner they believe is most efficient. decision. For these reasons, and based on all the facts of record, the The Board also believes that the conduct of the proposed Board has determined that a public hearing or meeting is not required activities within the framework established in this order, or warranted in this case. Accordingly, the requests for a public hearing or meeting on the proposal are hereby denied. prior orders, and Regulation Y is not likely to result in 54. Several commenters requested that the Board delay action on significantly adverse effects, such as undue concentration this proposal or extend the public comment period for the proposal. of resources, decreased or unfair competition, or unsound Some commenters contended that NationsBank had not sufficiently banking practices, that would not be outweighed by the responded to requests for additional information or to the issues raised public benefits of the proposal, such as increased consumer by the Protestants. These commenters also maintained that the Board should not consider any divestiture commitments that are not subject convenience and gains in efficiency. Accordingly, based on to public comment. In addition, some commenters asserted that they all the facts of record, the Board has determined that the did not have sufficient time to review and comment on information proposal can reasonably be expected to produce public provided to them in the applications process. benefits that outweigh any adverse effects under the proper The requests for delay do not warrant postponement of the Board's consideration of the case. Though not required by the BHC Act, the Board provides a public comment period of at least 30 days in every case involving a bank acquisition in order to allow interested persons 49. See 12 C.F.R. 225.28(b)(1), (4), (11), and (12). an opportunity to provide information, analyses and arguments regard- 50. See 12 U.S.C. § 1843(c)(8). ing all aspects of the proposal, including the CRA performance record 51. See 12 C.F.R. 225.24. of an applicant and other relevant companies. In this case, interested 52. Commenters questioned whether there would be any public persons were provided a period of approximately 39 days to submit benefits from the merger and maintained, without providing any facts, their views and any relevant information and analyses regarding the that any public benefits from the proposal would accrue only to proposal. As noted above, the Board received and considered substansecurities customers and large corporate customers. tial information and views from a number of commenters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1998 The Board's approval of this proposal is specifically tion 225.28(b)(1) (12 C.F.R. 225.28(b)(1)) and credit life conditioned on compliance by NationsBank with all the insurance activities pursuant to section 225.28(b)(ll)(ii) of commitments made in connection with this proposal and Regulation Y (12 C.F.R. 225.28(b)(l l)(ii)); the conditions in this order. The Board's determination on (2) First of America Bank - Florida, FSB, Tampa, Florida, the proposed nonbanking activities also is subject to all the and thereby engage in operating a savings association, conditions set forth in Regulation Y, including those in pursuant to section 225.28(b)(4)(h) of Regulation Y sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. (12 C.F.R. 225.28(b)(4)(h)); 225.7 and 225.25(c)), and to the Board's authority to (3) Honor Technologies, Inc., Maitland, Florida, and require such modification or termination of the activities of thereby engage in operating an electronic funds transfer a bank holding company or any of its subsidiaries as the network and in data processing and management consult- Board finds necessary to ensure compliance with, and to ing activities, pursuant to sections 225.28(b)(9) and (b)(14), prevent evasion of, the provisions of the BHC Act and the respectively, of Regulation Y (12 C.F.R. 225.28(b)(9) and Board's regulations and orders issued thereunder. For pur- (b)(14)); and poses of this action, these commitments and conditions (4) Barnett Community Development Corporation, shall be deemed to be conditions imposed in writing by the Jacksonville, Florida, and thereby engage in community Board in connection with its findings and decision, and, as development activities pursuant to section 225.28(b)(12) of such, may be enforced in proceedings under applicable Regulation Y (12 C.F.R. 225.28(b)(12)). law. The acquisition of Barnett's subsidiary banks may not be consummated before the 15th calendar day after the effective date of this order, and this proposal may not be Appendix B consummated later than three months after the effective date of this order, unless such period is extended by the Board or by the Reserve Bank of Richmond, acting pursu- State Deposit and Ranking Data ant to delegated authority. By order of the Board of Governors, effective December 10, 1997. Florida Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. NationsBank is the third largest depository institution in Florida, controlling deposits of $21.8 billion, representing JENNIFER J. JOHNSON approximately 12.2 percent of all deposits in depository Deputy Secretary of the Board institutions in the state ("state deposits"). Barnett is the largest depository institution in Florida, controlling deposits of $34.2 billion, representing approximately 19.2 per- Appendix A cent of all state deposits. NationsBank proposes to divest approximately $3.1 billion in deposits in Florida. On con- Nonbank Subsidiaries of Barnett to be Acquired by Na- summation of the proposal, and accounting for all prodonsbank posed divestitures, NationsBank would become the largest depository institution in the state, controlling deposits of (1) EquiCredit Corporation, Jacksonville, Florida, and $52.9 billion, representing approximately 29.6 percent of thereby engage in making, acquiring, brokering, or servic- state deposits in Florida. ing loans or other extensions of credit pursuant to sec- Georgia The Board's rules permit an applicant a limited opportunity to comment on allegations and information submitted during the public NationsBank is the largest depository institution in Georcomment period. These rules do not guarantee commenters an opportunity to continue the process of submitting additional comments in gia, controlling deposits of $13.7 billion, representing aprebuttal to an applicant's response after the close of the public proximately 17.9 percent of all state deposits. Barnett is the comment period. These rules are designed to permit a meaningful 16th largest depository institution in Georgia, controlling opportunity for the public to comment on a proposal and for the deposits of $410.5 million, representing less than 1 percent applicant to provide a response to those comments within the time of all state deposits. NationsBank proposes to divest constraints of the BHC Act. In this case, comments and responses were submitted in accordance with the Board's rules. $23.1 million in deposits in Georgia. On consummation of For these reasons and based on a review of all the facts of record, the proposal, and accounting for all proposed divestitures, the Board concludes that the record in this case is sufficient to warrant NationsBank would remain the largest depository institu- Board consideration and action on this proposal at this time, and that tion in the state, controlling deposits of $14.2 billion, further delay of consideration of this proposal or denial of this proposal on the grounds discussed above or on the basis of informa- representing approximately 18.4 percent of state deposits tional insufficiency is not warranted. in Georgia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 Appendix C and Gasparilla Island (the town of Boac Grande) in Lee County. Banking Markets in which NationsBank and Barnett Com- Suwanee County: Suwanee County. pete1 Tallahassee: Leon County and the towns of Quincy and Havana in the eastern half of Gadsden County. Florida Banking Markets Tampa Bay: Hernando, Hillsborough, Pinellas, and Pasco Counties. Beverly Hills: Citrus County, excluding Citrus Springs. West Palm Beach: Palm Beach County east of Loxahatchee Brevard County: Brevard County. and the towns of Indiantown and Hobe Sound in Martin Columbia County: Columbia County. County. Daytona Beach: Flagler County, the towns of Allandale, Daytona Beach, Daytona Beach Shores, Edgewater, Holly Georgia Banking Markets Hill, New Smyrna Beach, Ormond Beach, Ormond-by-the- Sea, Pierson, Port Orange, and South Daytona in Volusia Brunswick: Brantley, Glynn, and Mcintosh Counties. County, and the town of Astor in Lake County. Thomas County: Thomas County. Fort Myers: Lee County excluding the towns located on Valdosta: Echols, Lanier, and Lowndes Counties. Gasparilla Island plus the town of Immokalee in Collier County. Fort Pierce: St. Lucie and Martin Counties, excluding Appendix D Indiantown and Hobe Sound in Martin County. Gainesville: Alachua, Gilchrist, and Levy Counties. Banking Markets with No Proposed Divestitures Highlands County: Highlands County. Indian River County: Indian River County. 1. Banking markets in which consummation of the pro- Jacksonville: Baker, Clay, Duval, and Nassau Counties, the posal would not exceed DOJ Guidelines: towns of Fruit Cove, Ponte Verde, and Ponte Verde Beach in St. Johns County, all in Florida, and the City of Folkston Florida Banking Markets in Charlton County, Georgia. Key Largo: The northern third of the Florida Keys in Beverly Hills: After consummation of the proposal, Monroe County, including Islamorada, Key Largo, Planta- NationsBank would control 23.4 percent of the market tion Key, and Tavernier. deposits and would become the largest of eight depository Key West: The cities of Key West, Sugarloaf, Summerland institutions in the market. The HHI would increase Key, and Big Pine Key in Monroe County. 91 points to 1783. Marathon: The towns of Marathon and Marathon Shores Fort Pierce: After consummation of the proposal, in Monroe County. NationsBank would control 18.9 percent of the market Miami-Fort Lauderdale: Broward and Dade Counties. deposits and would become the second largest of 15 depos- Naples: Collier County, excluding the town of Immokalee. itory institutions in the market. The HHI would increase Ocala: Marion County, plus the town of Citrus Springs in 84 points to 1494. Citrus County. Gainesville: After consummation of the proposal, Orlando: Orange, Osceola, and Seminole Counties, the NationsBank would control 27.5 percent of the market western half of Volusia County, and the towns of Clermont deposits and would become the largest of 16 depository and Groveland in Lake County. institutions in the market. The HHI would increase Pensacola: Escambia and Santa Rosa Counties. 127 points to 1663. Polk County: Polk County. Highlands County: After consummation of the proposal, Punta Gorda: That portion of Charlotte County east of NationsBank would control 35.4 percent of the market both the harbor and the Myakka River and that portion of deposits and would become the largest of seven depository Sarasota County both east of the Myakka River and south institutions in the market. The HHI would increase of Interstate 75 (currently the town of Northport). 176 points to 2442. Sarasota: Manatee and Sarasota Counties, excluding that Indian River: After consummation of the proposal, portion of Sarasota County both east of the Myakka River NationsBank would control 22.9 percent of the market and south of Interstate 75 (currently the town of North- deposits and would become the second largest of 13 deposport), plus that portion of Charlotte County west of both itory institutions in the market. The HHI would increase the harbor and the Myakka River (currently the towns of 205 points to 1584. Englewood, Englewood Beach, New Point Comfort, Grove Jacksonville: After consummation of the proposal, City, Cape Haze, Rotonda, Rotonda West, and Placida), NationsBank would control 24.8 percent of the market deposits and would become the second largest of 19 depository institutions in the market. The HHI would increase 64 points to 2634. Miami-Fort Lauderdale: After consummation of the pro- 1. All banking markets are entirely within Florida or Georgia unless otherwise noted. posal, NationsBank would control 33.5 percent of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1998 market deposits and would become the largest of 83 depos- other Florida MS As.1 There have been three de novo itory institutions in the market. The HHI would increase entries into the market since 1995. 560 points to 1636. Pensacola: After consummation of the proposal, Appendix E NationsBank would control 21.9 percent of the market deposits and would become the second largest of 15 depos- Banking Markets with Proposed Divestitures itory institutions in the market. The HHI would increase 52 points to 1325. 1. Consummation of the proposal in the following banking West Palm Beach: After consummation of the proposal, markets would not exceed DOJ Guidelines with divesti- NationsBank would control 31.6 percent of the market tures. In each of these markets, a competitor suitable to the deposits and would become the largest of 44 depository Board is an out-of-market commercial banking organizainstitutions in the market. The HHI would increase tion or an in-market commercial banking organization that 480 points to 1556. would not control more than 35 percent of total market deposits (including 50 percent of thrift deposits) or the divestiture would not result in an increase in the HHI of Georgia Banking Markets more than 200 points if the market has a post-merger HHI of at least 1800. Thomas County: After consummation of the proposal, Florida Banking Markets NationsBank would control 12.9 percent of the market deposits and would become the third largest of seven Columbia County: NationsBank proposes to divest one depository institutions in the market. The HHI would in- branch controlling deposits of $33.2 million to a competicrease 54 points to 2595. tor suitable to the Board. Valdosta: After consummation of the proposal, Key Largo: NationsBank proposes to divest one branch NationsBank would control 22.8 percent of the market controlling deposits of $25.5 million to a competitor suitdeposits and would become the largest of ten depository able to the Board. institutions in the market. The HHI would increase Key West: NationsBank proposes to divest one branch 57 points to 1453. controlling deposits of $89.2 million to a competitor suitable to the Board. 2. Banking markets in which consummation of the pro- Marathon: NationsBank proposes to divest one branch posal would exceed DOJ Guidelines, but other factors controlling deposits of $23.1 million to a competitor suitsubstantially mitigate the competitive effect of the in- able to the Board. creases in concentration as measured by the HHI: Suwanee County: NationsBank proposes to divest one branch controlling deposits of $27.8 million to a competitor suitable to the Board. Florida Banking Markets 2. Banking markets in which consummation of the proposal would exceed DOJ Guidelines with divestitures, but Polk County: After consummation of the proposal, other factors substantially mitigate the competitive effect NationsBank would control 32.6 percent of market depos- of the increases in concentration as measured by the HHI: its and would become the largest of 13 depository institutions in the market. The HHI would increase 383 points to Brevard County. NationsBank proposes to divest four 1906. Of the 12 remaining depository institutions, two branches controlling deposits of $153.1 million to a comlarge multi-state banking organizations other than petitor suitable to the Board. In this market, a competitor NationsBank would each control more than 17 percent or suitable to the Board is an out-of-market commercial bankmore of market deposits. Polk County is an MSA with ing organization or an in-market commercial banking orgarecent entry suggesting that it is attractive for entry. Two nization that currently controls less than 3.2 percent of banking organizations have entered de novo and two bank- market deposits. After consummation of the proposal, ing organizations have entered by acquisition since 1994. NationsBank would become the largest depository institu- Tallahassee: After consummation of the proposal, tion in the market, controlling 33.7 percent of the market NationsBank would control 27.9 percent of market depos- deposits, and the HHI would increase not more than 342 its and would become the largest of 14 depository institu- points or exceed a post-merger HHI of 1962. NationsBank tions in the market. The HHI would increase 254 points to would become the largest of 17 depository institutions in 1815. Of the 14 remaining depository institutions, two banking organizations other than NationsBank would control 25.4 percent and 13.9 percent, respectively, of market 1. Between 1990 and 1996, the population of the Tallahassee MSA deposits. In addition, the Tallahassee banking market has increased at a rate of 11.9 percent as compared to 10.8 percent for other Florida MSAs. The rate of growth of deposits in the MSA was features that make it attractive for entry. The rate of growth 9.5 percent between 1991 and 1996 as compared to a decrease of in population and deposits exceeds, on average, that of 2.8 percent for other Florida MSAs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 the market. Seventeen depository institutions would re- ture of 11 branches controlling deposits of $746.8 million main in the market and the divestiture of approximately 4.6 to an out-of-market commercial banking organization, percent of market deposits to an existing competitor would NationsBank would control 37 percent of market deposits strengthen that organization's competitive presence. Two and would become the largest of 33 depository institutions large multi-state banking organizations other than in the market. The HHI would increase 380 points to 1808. NationsBank would compete in the market and would each Thirty-three depository institutions would remain in the control 15 percent or more of market deposits. In addition, market and the divestiture of approximately 9 percent of the Brevard County banking market has features that make market deposits and a substantial branch network to an it attractive for entry. The rate of growth in population and out-of-market entrant should make that entrant an effective the average population per banking office for the competitor. The Sarasota-Bradenton MSA, which closely Melbourne-Titusville-Palm Bay MSA, which closely ap- approximates the Sarasota banking market, is a large MSA proximates the Brevard County banking market, exceeds, with recent entry suggesting that it is attractive for entry.2 on average, that of other Florida MSAs.1 There have been Six banking organizations have entered de novo and six three de novo entries into the market and two entries by banking organizations have entered by acquisition since acquisition by depository institutions since 1994. 1993. Sarasota: After consummation of the proposal, and divestiaverage population per banking office for the MSA was 4,025 as compared to 3,596 for other Florida MSAs. 2. The Sarasota-Bradenton MSA ranks sixth in total deposits out of 1. Between 1990 and 1996, the population of the Melbourne- the 20 Florida MSAs. In 1996, average per capita income for the Titusville-Palm Bay MSA increased at a rate of 14.1 percent as Sarasota-Bradenton MSA was $21,293 as compared to $18,182 for compared to 10.8 percent for other Florida MSAs. In 1996, the other Florida MSAs. 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., Fidelity Bank, National Association, December 18, 1997 Birmingham, Alabama University Park, Texas Compass Banks of Texas, Inc., Fidelity Resources Company, December 18, 1997 Birmingham, Alabama University Park, Texas Compass Bancorporation of Texas, Inc. Fidelity Resources Company of Delaware, Wilmington, Delaware Wilmington, Delaware Fidelity Bank, National Association, University Park, Texas Cullen/Frost Bankers, Inc., Harrisburg Bancshares, Inc., December 12, 1997 San Antonio, Texas Houston, Texas Harrisburg Bancshares (Nevada) Inc., Reno, Nevada Harrisburg Bank, Houston, Texas Mercantile Bancorporation Inc., Horizon Bancorp, Inc., December 24, 1997 St. Louis, Missouri Arkadelphia, Arkansas Ameribanc, Inc., Horizon Bank, St. Louis, Missouri Malvern, Arkansas Wachovia Corporation, Ameribank Bancshares, Inc., December 31, 1997 Windston-Salem, North Carolina Hollywood, Florida American Bank of Hollywood, Hollywood, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1998 Section 4 Applicant(s) Bank(s) Effective Date First Security Corporation, First Security Capital Markets, Inc., December 18, 1997 Salt Lake City, Utah Salt Lake City, Utah Sections 3 and 4 Applicant(s) Bank(s) Effective Date Citizens Bancshares Corporation, First Southern Bancshares, Inc., December 5, 1997 Atlanta, Georgia Lithonia, Georgia First Southern Bank, Lithonia, Georgia FSB Mortgage Services, Inc., Decatur, Georgia 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 American State Bank Holding American State Bank & Trust Company Minneapolis December 17, 1997 Company, Inc., of Williston, Williston, North Dakota Williston, North Dakota The Banc Ed Corp., Omni Financial Corporation, St. Louis December 3, 1997 Edwardsville, Illinois Pontoon Beach, Illinois Omni Bank, Pontoon Beach, Illinois Bank of Montreal, Harris Trust Company of Florida, Chicago December 4, 1997 Montreal, Canada West Palm Beach, Florida Bankmont Financial Corporation, Chicago, Illinois Harris Bankcorp, Inc., Chicago, Illinois BOR Bancshares, Inc., Bank of Rogers, St. Louis December 3, 1997 Rogers, Arkansas Rogers, Arkansas Capitol Bancorp Ltd., Kent Commerce Bank, Chicago December 4, 1997 Lansing, Michigan Kentwood, Michigan Citizens Bancshares, Inc., UniBank, Cleveland December 8, 1997 Salineville, Ohio Steubenville, Ohio The Citizens Banking Company, Salineville, Ohio The Colonial BancGroup, Inc., United American Holding Corporation, Atlanta December 11, 1997 Montgomery, Alabama Orlando, Florida United American Bank of Central Florida, Orlando, Florida Commercial BancShares, Gateway Bancshares, Inc., Richmond December 8, 1997 Incorporated, McMechen, West Virginia Parkersburg, West Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Commercial Guaranty Bancshares, Humboldt Bancshares, Inc., Kansas City December 4, 1997 Inc., Humboldt, Kansas Overland Park, Kansas CGB Acquisition Corporation, Overland Park, Kansas Community First Banking Company, Carrollton Federal Bank, FSB, Atlanta December 9, 1997 Carrollton, Georgia Carrollton, Georgia Community West Bancshares, Goleta National Bank, San Francisco December 16, 1997 Goleta, California Goleta, California Eastern Virginia Bankshares, Inc., Southside Bank, Richmond December 10, 1997 Tappahannock, Virginia Tappahannock, Virginia Bank of Northumberland, Inc., Heathsville, Virginia First Banks, Inc., Pacific Bay Bank, St. Louis December 22, 1997 Creve Coeur, Missouri San Pablo, California Sundowner Corporation, Reno, Nevada First Banks America, Inc., Clayton, Missouri The First National Bank of Artesia First Artesia Bancshares, Inc., Dallas December 8, 1997 Employee Stock Ownership Plan, Artesia, New Mexico Artesia, New Mexico First Western Bancshares Employee First Western Bancshares, Inc., St. Louis December 11, 1997 Stock Ownership Trust, Booneville, Arkansas Booneville, Arkansas F.N.B. Corporation, West Coast Bank, Cleveland November 20, 1997 Hermitage, Pennsylvania Sarasota, Florida GEBSCO, Inc., Firstmondovi, Inc., Minneapolis December 11, 1997 Cochrane, Wisconsin Mondovi, Wisconsin GNB Bankshares Corporation, Grundy National Bank, Richmond December 2, 1997 Grundy, Virginia Grundy, Virginia Hibernia Corporation, Northwest Bancshares of Louisiana, Atlanta November 26, 1997 New Orleans, Louisiana Inc., Mansfield, Louisiana First National Bank in Mansfield, Mansfield, Louisiana Highlands Independent Bancshares, Highlands Independent Bank, Atlanta December 22, 1997 Inc., Sebring, Florida Sebring, Florida Hometown Bancorp, Ltd., St. Cloud Bancshares, Inc., Chicago December 15, 1997 Fond du Lac, Wisconsin St. Cloud, Wisconsin State Bank of St. Cloud, St. Cloud, Wisconsin Horizon Bank of Florida Employee Horizon Bancshares, Inc., Atlanta December 3, 1997 Stock Ownership Plan, Pensacola, Florida Pensacola, Florida Horizon Bank of Florida, Pensacola, Florida Independent Southern Bancshares, Independent Southern Bancshares, Inc. St. Louis December 5, 1997 Inc. Employee Stock Ownership Brownsville, Tennessee Trust, Brownsville, Tennessee InterWest Bancorp, Inc., Puget Sound Bancorp, Inc., San Francisco December 18, 1997 Oak Harbor, Washington Port Orchard, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1998 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Koss-Winn Bancshares, Inc. Koss-Winn Bancshares, Inc., Chicago December 17, 1997 Employee Stock Ownership Plan Buffalo Center, Iowa with 401(k) Provision, Farmers Trust & Savings Bank, Buffalo Center, Iowa Buffalo Center, Iowa Light Bancshares Corporation, The Community Bank, Kansas City November 21, 1997 Liberal, Kansas Liberal, Kansas MNB Bancshares, Inc., Freedom Bancshares, Inc., Kansas City November 26, 1997 Manhattan, Kansas Osage City, Kansas Montana Security, Inc., Northeast Montana Bank Shares, Inc., Minneapolis December 18, 1997 Havre, Montana Poplar, Montana The Citizens State Bank of Scobey, Scobey, Montana Traders State Bank of Poplar Montana, Poplar, Montana Morgantown Bancshares, Inc., Citizens Bank of Morgantown, Inc., Richmond December 17, 1997 Morgantown, West Virginia Morgantown, West Virginia Mystic Financial, Inc., Medford Co-operative Bank, Boston December 11, 1997 Medford, Massachusetts Medford, Massachusetts NationsBank Corporation, Southern Bancshares Corporation, Richmond December 9, 1997 Charlotte, North Carolina St. Louis, Missouri NB Holdings Corporation, Charlotte, North Carolina New England Community Bancorp, Community Savings Bank, Boston December 8, 1997 Inc., Bristol, Connecticut Windsor, Connecticut North Shore Bancorp, North Shore Bank, a Co-operative Boston November 28, 1997 Peabody, Massachusetts Bank, Peabody, Massachusetts Norwest Corporation, Fidelity Bancshares, Inc., Minneapolis December 10, 1997 Minneapolis, Minnesota Fort Worth, Texas Fidelity Bancorporation, Inc., Dover, Delaware Fidelity Bank & Trust, N.A., Fort Worth, Texas Panhandle BancShares, Inc., Bank of the Panhandle, Kansas City November 21, 1997 Guymon, Oklahoma Guymon, Oklahoma Pedcor Bancorp, International City Bank, N.A., San Francisco December 10, 1997 Indianapolis, Indiana Long Beach, California Peoples Trust of 1987, Johnson County Bank, Kansas City December 3, 1997 Ottawa, Kansas Overland Park, Kansas Peoples, Inc., Ottawa, Kansas Premier Bancshares, Inc., Citizens Gwinnett Bankshares, Inc., Atlanta November 26, 1997 Atlanta, Georgia Duluth, Georgia Citizens Bank of Gwinnett, Duluth, Georgia Premier Financial Bancorp, Inc. Ohio River Bank, Cleveland December 22, 1997 Georgetown, Kentucky Ironton, Ohio Republic Bancshares, Inc., United National Bank of Natoma, Kansas City December 3, 1997 Natoma, Kansas Natoma, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Riverside Banking Company, Riverside Gulf Coast Banking Atlanta December 4, 1997 Fort Pierce, Florida Company, Cape Coral, Florida Riverside Bank of the Gulf Coast, Cape Coral, Florida Rockhold BanCorp., Bank of Kirksville, St. Louis December 17, 1997 Kirksville, Missouri Kirksville, Missouri RW Bancorp., Ltd., State Bank of Reeseville, Chicago December 19, 1997 Reeseville, Wisconsin Reeseville, Wisconsin South Branch Valley Bancorp, Inc., Capital State Bank, Inc., Richmond December 5, 1997 Moorefield, West Virginia Charleston, West Virginia Southern Missouri Bancshares, Inc., Southern Missouri Bank, St. Louis November 26, 1997 Marshfield, Missouri Marshfield, Missouri Strasburg Bancorp, Inc., Strasburg Savings, Cleveland December 1, 1997 Strasburg, Ohio Strasburg, Ohio Sundance Bankshares, Inc., Sundance State Bank, Kansas City December 22, 1997 Sundance, Wyoming Sundance, Wyoming Tennessee Central Bancshares, Inc., Premier Bank of Brentwood, St. Louis December 4, 1997 Adamsville, Tennessee Brentwood, Tennessee Timberland Bancorp, Inc., Timberland Savings Bank, SSB, San Francisco November 26, 1997 Hoquiam, Washington Hoquiam, Washington Union City Corporation, The Bank of Union, Kansas City December 10, 1997 Union City, Oklahoma Union City, Oklahoma Wills Point Financial Corporation, Citizens National Bank of Wills Point, Dallas November 25, 1997 Wills Point, Texas Wills Point, Texas Zions Bancorporation, Vectra Banking Corporation, San Francisco November 25, 1997 Salt Lake City, Utah Denver, Colorado Vectra Bank, Denver, Colorado Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date The Bank of Nova Scotia, Iron Mountain Depository Corporation, New York November 28, 1997 Toronto, Ontario, Canada New York, New York Central Bancshares, Inc., Central Bank, FSB, Cleveland November 24, 1997 Lexington, Kentucky Nicholasville, Kentucky Community National To engage de novo in extending credit Chicago December 3, 1997 Bancorporation, and servicing loans Waterloo, Iowa Concord EFS, Inc., Pay Systems of America, Inc., St. Louis December 5, 1997 Memphis, Tennessee Nashville, Tennessee Credit Commercial de France S.A., CCF International Finance Corporation, New York December 18, 1997 Paris, France New York, New York Farmers State Corporation, Schultz Insurers, Minneapolis December 16, 1997 Mountain Lake, Minnesota Jackson, Minnesota The Fifth Third Bank, General Electric Capital/Fifth Third Cleveland December 4, 1997 Cincinnati, Ohio Partnership #1, L.P., Wilmington, Delaware National Bank of Canada, NBC Levesque International, Ltd., New York December 1, 1997 Montreal, Quebec, Canada New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • February 1998 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date National Commerce Bancorporation, First Market Bank, FSB, St. Louis October 30, 1997 Memphis, Tennessee Memphis, Tennessee NSB Bancorp., Inc., Central Coast Processing, Inc., St. Louis November 26, 1997 Metropolis, Illinois San Luis Obispo, California Penseco Financial Services Penn Security Bank and Trust Philadelphia November 26, 1997 Corporation, Company, Scranton, Pennsylvania Scranton, Pennsylvania United Financial Holdings, Inc., United Trust Company, Atlanta December 10, 1997 St. Petersburg, Florida St. Petersburg, Florida Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Amerigroup, Inc., The Hershey State Bank, Kansas City December 8, 1997 Hershey, Nebraska Hershey, Nebraska Eggemeyer Advisory Corp., Regency Bancorp, San Francisco December 16, 1997 La Jolla, California Fresno, California Castle Creek Capital, L.L.C., Regency Bank, La Jolla, California Fresno, California Castle Creek Capital Partners Regency Investment Advisors, Inc., Fund I, L.P., Fresno, California La Jolla, California Mid America Mortgage Services, Mid America Banking Corporation, St. Louis November 24, 1997 Inc., Columbia, Missouri Columbia, Missouri Pulaski Bancshares, Inc., Dixon, Missouri State Bank of Dixon, Dixon, Missouri State Financial Services Richmond Bancorp, Inc., Chicago December 2, 1997 Corporation, Gurnee, Illinois Hales Corners, Wisconsin Richmond Bank, Richmond, Illinois Richmond Financial Services, Inc., Richmond, Illinois APPLICATIONS APPROVED UNDER BANK MERGER 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. Applicant(s) Bank(s) Effective Date Compass Bank, Fidelity Bank, National Association, December 18, 1997 Houston, Texas University Park, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 151 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 Atlanta Bank, First Union National Bank, Richmond December 5, 1997 Ocean City, Maryland Charlotte, North Carolina BancFirst, NationsBank, N.A., Kansas City December 2, 1997 Oklahoma City, Oklahoma Charlotte, North Carolina Bank of Greenville, Greenville Interim Bank, Richmond December 11, 1997 Greenville, West Virginia Greenville, West Virginia Colonial Bank, United American Bank of Central Atlanta December 11, 1997 Montgomery, Alabama Florida, Orlando, Florida The Farmers and Merchants Bank, Union Planters National Bank, St. Louis December 10, 1997 Stuttgart, Arkansas Memphis, Tennessee Farmers Bank of Maryland, First Union National Bank, Richmond December 5, 1997 Annapolis, Maryland Charlotte, North Carolina First State Bank and Trust Company NationsBank, N.A., Kansas City December 10, 1997 of Larned, Pratt, Kansas Larned, Kansas NationsBank, N.A., Iuka, Kansas First Virginia Bank of Tidewater, First Union National Bank, Richmond December 5, 1997 Norfolk, Virginia Charlotte, North Carolina Northern Neck State Bank, First Union National Bank, Richmond December 17, 1997 Warsaw, Virginia Charlotte, North Carolina The Sabina Bank, The Fifth Third Bank of Western Ohio, Cleveland November 26, 1997 Sabina, Ohio Dayton, Ohio PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Artis v. Greenspan, No. 97-5234 (D.C. Cir., filed Septem- Federal Reserve Banks in which the Board of Governors is not ber 19, 1997). Appeal of district court order dismissing named a party. employment discrimination action. Artis v. Greenspan, No. 97-5235 (D.C. Cir., filed September 19, 1997). Appeal of district court order dismissing Goldman v. Department of the Treasury, No. 1-97-CV-3798 class complaint alleging race discrimination in employ- (N.D. Ga„ filed December 23, 1997). Declaratory judgment ment. action challenging Federal Reserve notes as lawful money. Towe v. Board of Governors, No. 97-71143 (9th Cir., filed Kerr v. Department of the Treasury, No. CV-S-97-01877- September 15, 1997). Petition for review of a Board order DWH (S.D. Nev., filed December 22, 1997). Challenge to dated August 18, 1997, prohibiting Edward Towe and income taxation and Federal Reserve notes. Thomas E. Towe from further participation in the banking Patrick v. United States, No. 97-75564 (E.D. Mich., filed industry. November 7, 1997). Action for damages arising out of tax Branch v. Board of Governors, No. 97-5229 (D.C. Cir., filed dispute. September 12, 1997). Appeal of district court order denying Leuthe v. Office of Financial Institution Adjudication, No. motion to compel production of pre-decisional supervisory 97-1826 (3d Cir., filed October 22,1997). Appeal of district documents and testimony sought in connection with an court dismissal of action against the Board and other Fed- action by Bank of New England Corporation's trustee in eral banking agencies challenging the constitutionality of bankruptcy against the Federal Deposit Insurance Corporathe Office of Financial Institution Adjudication. tion. On November 10, 1997, the court denied appellant's request for expedited consideration of the appeal. Oral Patrick v. United States, No. 97-75017 (E.D. Mich., filed argument is scheduled for May 4, 1998. September 30, 1997). Action for damages arising out of tax dispute. Wilkins v. Reno, No. 97-2275 (4th Cir., filed September 12, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • February 1998 1997). Appeal of district court dismissal of complaint con- of appeals affirmed the district court's dismissal of the cerning customer dispute with bank. On December 9, 1997, action. the court of appeals affirmed the district court's dismissal. Jones v. Board of Governors, No. CV97-0198 (W.D. Louisi- Clarkson v. Greenspan, No. 97-CV-2035 (D.D.C., filed Sep- ana, filed January 30, 1997). Complaint alleging violations tember 5, 1997). Freedom of Information Act case. of the Fair Housing Act. On November 13, 1997, the Court Banking Consultants of America v. Board of Governors, No. granted the Board's motion to dismiss the action. 97-2791 (W.D. Tenn., filed September 2, 1997). Action to The New Mexico Alliance v. Board of Governors, No. 96-9552 enjoin investigation by the Board, the Office of the Comp- (10th Cir., filed December 24, 1996). Petition for review of troller of the Currency, and the Department of Labor. On a Board order dated December 16, 1996, approving the October 31, 1997, the Board filed a motion to dismiss. acquisition by NationsBank Corporation and NB Holdings Corporation, both of Charlotte, North Carolina, of Boat- Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. men's Bancshares, Inc., St. Louis, Missouri. Also on De- Tex., filed August 21, 1997). Privacy Act case. cember 24, 1996, petitioners moved for an emergency stay Wilkins v. Warren, No. 97-CV-590 (E.D. Va., filed August 4, of the Board's order. The motion for a stay was denied by 1997). Customer dispute with a bank. On October 31, 1997, the 10th Circuit on January 3, 1997; on January 6, 1997, the Board filed a motion to dismiss. petitioners' application for emergency stay was denied by Eliopulos v. Board of Governors, No. 97-1442 (D.C. Cir., filed the Supreme Court. On December 17, 1997, the court July 17, 1997). Petition for review of a Board order dated ordered the parties to show cause why the case should not June 23, 1997, approving the application of First Bank be transferred to the District of Columbia Circuit. System, Inc., Minneapolis, Minnesota, to acquire U.S. Ban- American Bankers Insurance Group, Inc. v. Board of Govercorp, Portland, Oregon, and thereby acquire U.S. Bancorp's nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, banking and nonbanking subsidiaries. On November 10, 1996). Action seeking declaratory and injunctive relief in- 1997, the Court granted the Board's motion to dismiss the validating a new regulation issued by the Board under the petition. Truth in Lending Act relating to treatment of fees for debt Greeffv. Board of Governors, No. 97-1976 (4th Cir., filed June cancellation agreements. On October 18, 1996, the district 17, 1997). Petition for review of a Board order dated May court denied plaintiffs' motion for a temporary restraining 19, 1997, approving the application of by Allied Irish order. On January 17, 1997, the parties filed cross-motions Banks, pic, Dublin, Ireland, and First Maryland Bancorp, for summary judgment. Baltimore, Maryland, to acquire Dauphin Deposit Corpora- Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New tion, Harrisburg, Pennsylvania, and thereby acquire Dau- York, filed September 17, 1991). Action to freeze assets of phin's banking and nonbanking subsidiaries. individual pending administrative adjudication of civil Inner City Press/Community on the Move v. Board of Govermoney penalty assessment by the Board. On September 17, nors, No. 97-1394 (D.C. Cir., filed June 12, 1997). Petition 1991, the court issued an order temporarily restraining the to review a Board order dated May 14, 1997, approving the transfer or disposition of the individual's assets. application of Banc One Corporation, Inc., Columbus, Ohio, to merge with First USA, Inc., Dallas, Texas. On June 16, 1997, petitioners moved for a stay pending appeal. The FINAL ENFORCEMENT DECISION ISSUED BY THE BOARD motion was denied on June 27, 1997. On December 12, OF GOVERNORS 1997, the Court granted the Board's motion to dismiss the petition. In the Matter of a Notice to Maunsell v. Greenspan, No. 97-6131 (2d Cir., filed May 22, 1997). Appeal of district court dismissal of action for com- Prohibit Further Participation Against pensatory and punitive damages for alleged violations of Massimiliano Locci civil rights by federal savings bank. Former Employee of Vickery v. Board of Governors, No. 97-1344 (D.C. Cir., filed Istituto Bancario San Paolo Di Torino May 9, 1997). Petition for review of a Board order dated New York, New York April 14, 1997, prohibiting Charles R. Vickery, Jr., from further participation in the banking industry. Oral argument Docket No. AA-EC-97-01 is scheduled for February 24, 1998. Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed Final Decision February 28, 1997). Petition for review of a Board order dated January 31, 1997, imposing civil money penalties and This is an administrative proceeding pursuant to the Fedan order of prohibition for violations of the Bank Holding eral Deposit Insurance Act ("FDI Act") in which the Company Act. Oral argument was held on December 8, Office of the Comptroller of the Currency of the United 1997. States of America ("OCC") seeks to prohibit the Respon- Research Triangle Institute v. Board of Governors, No. 97- dent Massimiliano Locci ("Locci") from further participa- 1282 (4th Cir., filed February 24, 1997). Appeal of district tion in the affairs of any financial institution because of his court's dismissal of contract claim. Oral argument was held conduct as an employee of the Federal branch of Istituto on October 30, 1997, and on December 29, 1997, the court Bancario San Paolo di Torino, New York, New York ("the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 153 Branch"). Under the FDI Act, the OCC may initiate a alleged that Locci engaged in unsafe and unsound banking prohibition proceeding against a former employee of a practices and breached his fiduciary duty during his tenure Federal branch of a foreign bank, but the Board must make as an employee of the Branch. The OCC alleged that the final determination whether to issue an order of prohibi- Locci, who traded foreign currency options for the Branch, tion. caused the Branch to sustain a loss of over $10 million in Upon review of the administrative record, the Board foreign exchange option trading in the Italian Lira over the issues this Final Decision adopting the ALJ's Default and period from January 18 through March 24, 1995. Over this Recommended Decision ("Default Decision") and orders period, Locci's trading exceed the Branch's written trading the issuance of the attached Order of Prohibition. policy limits and ignored the Branch's warnings about market instabilities in foreign currency options. Locci at- /. Statement of the Case tempted to hide his trading losses from the Branch by causing false entries to be made in the Branch's books that A. Statutory Framework provided inaccurate information to the Branch about its foreign exchange option exposure and its income and loss. The OCC's regulations governing administrative hearings As a result, the Branch was unaware that it had sustained specify that if a respondent does not file an answer within substantial trading losses. The OCC alleged that the con- 20 days of service of the notice, the respondent is deemed duct caused a financial loss to the Branch, and evidenced to have waived the right to appear and contest the allega- Locci's personal dishonesty and willful or continuing disretions in the notice. 12 C.F.R. 19.19(c)(1). Under the FDI gard for the Branch's safety or soundness. Act and the Board's regulations, the ALJ is responsible for The Notice expressly warned of the consequences of conducting an administrative hearing on a notice of default by the Respondent. The Notice stated that Locci charges. Following the hearing, the ALJ issues a recom- was required to file an answer to the charges within 20 mended decision that is referred to the deciding agency days of the service of the Notice, and that failure to file an together with any exceptions to those recommendations answer would constitute a waiver of his right to appear and filed by the parties. The Board makes the final findings of contest the allegations in a hearing. fact, conclusions of law, and determination whether to On April 23, 1997, the OCC send the Notice by Federal issue an order of prohibition in the case of a prohibition Express to Locci at two known addresses in Torino, Italy. order sought by the OCC. Locci signed for the Notice on April 30, 1997. When he The FDI Act sets forth the substantive basis upon which failed to respond, OCC Enforcement Counsel filed a Moa federal banking agency may issue against a bank official tion for Entry of An Order of Default with the ALJ on an order of prohibition from further participation in bank- June 11, 1997. On July 11, 1997, the ALJ issued an order ing. In order to issue such an order, the Board must make requiring that Locci respond to the OCC's Motion for each of three findings: Default by July 28, 1997, sending the order by Federal (1) That the respondent engaged in identified conduct, Express to Locci's known address in Torino, Italy. Locci including an unsafe or unsound practice or a breach of did not respond to the order. fiduciary duty; On August 15, 1997, the ALJ granted OCC Enforcement (2) That the conduct had a specified effect, including Counsel's Motion for Default, finding that Locci had failed financial loss to the institution; and to file a timely answer. Accordingly, the ALJ issued a (3) That the respondent's conduct involved either per- Default Decision that incorporated the findings and relief sonal dishonesty or a willful or continuing disregard for set out in the Notice, including the order of prohibition the safety or soundness of the institution. sought by the OCC.2 B. Procedural History II. Discussion The record before the Board reflects the following short The scope of the Board's review in a case where an procedural history in the administrative proceeding regard- uncontested finding of default has been made by an admining Locci.1 istrative law judge is limited to a determination that the On April 21, 1997, the OCC initiated a Notice of Re- record supports a finding of default and that the allegations moval, Notice of Assessment of Civil Money Penalty, and in the notice support the relief sought. In the circumstances Notice of Charges ("Notice") against Locci. The Notice here under review, the Board finds that the allegations contained in the OCC's Notice meet the statutory criteria for the issuance of an order of prohibition. Locci's conduct 1. The record before the Board was certified by the ALJ to constitute the entire record relating to Locci. It consists of: the Notice issued by the OCC on April 21, 1997; OCC Enforcement Counsel's Motion 2. The ALJ also entered a default as to Locci in regard to the civil for Entry of an Order of Default with supporting exhibits, dated money penalty and restitution elements of the OCC's Notice. On June 11, 1997; the ALJ's Order to Show Cause, issued on July 11, November 13, 1997, the OCC adopted the ALJ's recommendation 1997; and the ALJ's Default Decision, issued on August 15, 1997. imposing a $50,000 civil money penalty, but remanded the matter for Because the record contains no responsive pleadings or exceptions to further proceedings regarding the recommendation that Locci pay the Default Decision, the facts set forth are uncontested. $10,700,000 in restitution to the Branch. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • February 1998 alleged in the Notice breached his fiduciary duty to the (a) from participating in the conduct of the affairs of any Branch. He caused the Branch to sustain substantial losses bank holding company, any insured depository instituthrough foreign exchange option trading in Italian Lira that tion or any other institution specified in subsection exceeded the Branch's written trading policy limits and 8(e)(7)(A) of the Act (12 U.S.C. § 1818(e)(7)(A)); ignored the Branch's warnings about market instabilities in (b) from soliciting, procuring, transferring, attempting to foreign currency options. Locci attempted to hide these transfer, voting or attempting to vote any proxy, consent, trading losses from the Branch by causing false entries to or authorization with respect to any voting rights in any be made in the Branch's books. This conduct demonstrated institution described in subsection 8(e)(7)(A) of the Act personal dishonesty, as well as a willful disregard for the (12 U.S.C. § 1818(e)(7)(A)); safety or soundness of the Branch. Finally, the Branch lost (c) from violating any voting agreement previously apover $10 million as a result of Locci's actions. Moreover, proved by the appropriate Federal banking agency ; or the Board finds that the OCC has established the basis for a (d) from voting for a director, or from serving or acting default order of prohibition under the terms of the statute as an institution-affiliated party as defined in section 3(u) since Locci failed to respond either to the Notice or the of the Act, (12 U.S.C. § 1813(u)), such as an officer, Order to Show Cause despite service reasonably calculated director, or employee. to give him notice of the action. 2. This Order, and each provision hereof, is and shall remain fully effective and enforceable until expressly Conclusion stayed, modified, terminated or suspended in writing by the Board. For these reasons, the Board orders the issuance of the This Order shall become effective at the expiration of attached Order of Prohibition. thirty days after service is made. By Order of the Board of Governors, this 8th day of By Order of the Board of Governors, this 8th day of December, 1997. December, 1997. Board of Governors of the Board of Governors of the Federal Reserve System Federal Reserve System WILLIAM W. WILES WILLIAM W. WILES Secretary of the Board Secretary of the Board Order of Prohibition WHEREAS, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended (the "Act") (12 U.S.C. FINAL ENFORCEMENT ORDER ISSUED BY THE BOARD § 1818(e)), the Board of Governors of the Federal Reserve OF GOVERNORS System ("the Board") is of the opinion, for the reasons set forth in the accompanying Final Decision, that a final Patti Colbourn Order of Prohibition should issue against MASSIMIL- New York, New York IANO LOCCI ("Locci"); NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to section 8(e) of the Federal Deposit Insurance Act, The Federal Reserve Board announced on December 16, as amended, (12 U.S.C. § 1818(e)), that: 1997, the issuance of an Order to Cease and Desist against 1. In the absence of prior written approval by the Board, Patti Colbourn, a former managing director, trader and and by any other Federal financial institution regulatory institution-affiliated party of the Chemical Bank, New agency where necessary pursuant to section 8(e)(7)(B) York, New York, presently doing business as the Chase of the Act (12 U.S.C. § 1818(e)(7)(B)), Locci is hereby Manhattan Bank, that is a member of the Federal Reserve prohibited: System. 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—Continued All Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, liquid assets, and debt A29 U.S. government securities dealers— measures Positions and financing A5 Reserves of depository institutions and Reserve Bank A30 Federal and federally sponsored credit credit agencies—Debt outstanding A6 Reserves and borrowings—Depository institutions Securities Markets and Corporate Finance A31 New security issues—Tax-exempt state and local Policy Instruments governments and corporations A7 Federal Reserve Bank interest rates A32 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 A32 Domestic finance companies—Assets and Federal Reserve Banks liabilities A3 3 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables All Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A34 Mortgage markets—New homes A12 Aggregate reserves of depository institutions A35 Mortgage debt outstanding and monetary base A13 Money stock, liquid assets, and debt measures Consumer Credit A3 6 Total outstanding Commercial Banking Institutions— A3 6 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets A22 Commercial paper and bankers dollar DOMESTIC NONFINANCIAL STATISTICS acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A42 Nonfinancial business activity A23 Interest rates—money and capital markets A42 Labor force, employment, and unemployment A24 Stock market—Selected statistics A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income A27 Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • February 1998 INTERNATIONAL STATISTICS Securities Holdings and Transactions A60 Foreign transactions in securities Summary Statistics A61 Marketable U.S. Treasury bonds and A50 U.S. international transactions notes—Foreign transactions A51 U.S. foreign trade A51 U.S. reserve assets Interest and Exchange Rates A51 Foreign official assets held at Federal Reserve A61 Discount rates of foreign central banks Banks A61 Foreign short-term interest rates A52 Selected U.S. liabilities to foreign official A62 Foreign exchange rates institutions A63 GUIDE TO STATISTICAL RELEASES AND Reported by Banks in the United States SPECIAL TABLES A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners SPECIAL TABLES A55 Banks' own claims on foreigners A56 Banks' own and domestic customers' claims on A64 Assets and liabilities of commercial banks, foreigners September 30, 1997 A68 Terms of lending at commercial banks, A56 Banks' own claims on unaffiliated foreigners November 1997 A57 Claims on foreign countries— A72 Assets and liabilities of U.S. branches and agencies Combined domestic offices and foreign branches of foreign banks, September 30, 1997 Reported by Nonbanking Business A76 INDEX TO STATISTICAL TABLES Enterprises in the United States A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners 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 P Preliminary HUD Department of Housing and Urban r Revised (Notation appears on column heading Development when about half of the figures in that column IMF International Monetary Fund are changed.) 10 Interest only * Amounts insignificant in terms of the last decimal IPCs Individuals, partnerships, and corporations place shown in the table (for example, less than IRA Individual retirement account 500,000 when the smallest unit given is millions) MMDA Money market deposit account 0 Calculated to be zero MSA Metropolitan statistical area Cell not applicable NOW Negotiable order of withdrawal ATS Automatic transfer service OCD Other checkable deposit BIF Bank insurance fund OPEC Organization of Petroleum Exporting Countries CD Certificate of deposit OTS Office of Thrift Supervision CMO Collateralized mortgage obligation PO Principal only FFB Federal Financing Bank REIT Real estate investment trust FHA Federal Housing Administration REMIC Real estate mortgage investment conduit FHLBB Federal Home Loan Bank Board RP Repurchase agreement FHLMC Federal Home Loan Mortgage Corporation RTC Resolution Trust Corporation 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. Minus signs are used to indicate (1) a decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • February 1998 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1996 1997 1997 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Ql Q2 Q3 July Aug. Sept.r Oct.' Nov. Reserves of depository institutions2 1 Total -17.2 -8.3 -14.3 -1.8 -5.7 13.5 -18.9 -5.5 10.6 2 Required -18.5 -8.4 -15.0 -2.4 -3.8 12.6 -20.5 -8.3 5.1 3 Nonborrowed -16.2 -7.2 -16.0 -3.4 -6.8 8.8 -15.0 -1.2 13.7 4 Monetary base3 5.1 5.6 3.3 6.0 7.3 5.8 7.5 6.8 11.3 Concepts of money, liquid assets, and debt4 5 Ml -7.3 -.7 -5.5 .2 -1.1 8.5 -9.9 -3.8 7.5 6 M2 4.2 5.4 3.8r 5.1 3.4 10.8 5.9 4.8 6.9 7 M3 7.5 7.7 6.1' 8.4 10.3 12.1 9.5 8.1 11.0 8 L 6.2 6.2r 8.2 7.5 6.6 12.5 8.5 4.9 n.a. 9 Debt 4.7 4.2r 4.7 3.7 4.2 4.2 4.3 5.1 n.a. Nontransaction components 10 In M25 9.0 7.8r 7.4 6.9 5.0 11.7 11.8 7.9 6.7 11 In M3 only6 19.6 15.9 16.7 19.7 33.4r 16.1 21.0 18.5 23.8 Time and savings deposits Commercial banks 12 Savings, including MMDAs 17.0 14.0 10.7 8.6 6.7 14.4 19.2 16.0 11.9 13 Small time7 4.7 2.1' 5.5 9.0 12.9 3.5 6.4 4.9 5.4 14 Large time8,9 22.9 12.8 23.2 28.1 44.6 14.7 33.8 9.9 15.2 Thrift institutions 15 Savings, including MMDAs .8 2.7 5.8 -.1 -2.9 .6 -1.0 1.3 .0 16 Small time7 3.0 -.1 —2.6' -4.9 -12.0 -.7 -5.5 -.7 -9.0 17 Large time8 9.1 12.8 5.6 11.6 20.1 5.7 5.6 -4.2 7.0 Money market mutual funds 18 Retail 10.5 11.9 11.4 14.1 9.9 31.5 23.9 7.3 12.8 19 Institution-only 19.8 15.5 12.5 21.3 19.6 18.9 35.4 22.7 3.8 Repurchase agreements and Eurodollars 20 Repurchase agreements10 2.1' 10.7 4.2r 9.3 50.7r 8.7r -16.7 69.4 87.7 21 Eurodollars10 48.2 40.2 33.4 8.9 9.3r 33.3r 9.0 -25.0 13.7 Debt components4 22 Federal 3.4 1.8 .4 -.6 1.0r 1.6 1.1 .5 n.a. 23 Nonfederal 5.2 5.1 6.2r 5.3 5.3 5.1r 5.4 6.6 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. 22 Oct. 29 Nov. 5 Nov. 12 Nov. 19 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 453,689 460,674 453,992 455,317 453,526 457,778 459,369 460,816 U.S. government securities2 2 Bought outright—System account3 410,759 413,890 416,535 413,270 415,085 414,841 411,705 413,593 417,448 3 Held under repurchase agreements 8,724 5,321 8,910 6,152 5,986 3,683 10,222 9,594 7,573 Federal agency obligations 4 Bought outright 938 789 686 833 754 716 699 685 685 5 Held under repurchase agreements 1,1002 1,1507 1,6908 1,2506 9760 1,3103 1,3560 1,5020 1,3003 6 Acceptances 7 8 9 Lo A E S an e x d s a t j e s u t n o o s n d t m d a e l d e e p n c c o r t r e s e c i d d t r i o e i t t r d y i t institutions 37 7 2 1 0 22 3 50 3 1419 0 0 2320 20 3 8 4 0 19 1 00 0 1 1 3 40 2 3 1103 1 1713 0 0 10 Float 486 453 585 618 466 570 465 760 1,555 11 Other Federal Reserve assets 30,490 31,820 32,101 31,623 31,808 32,201 33,056 33,121 32,069 12 Gold stock 11,050 11,050 11,050 11,050 11,050 11,051 11,050 11,050 11,050 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 25,445 25,506 25,567 25,498 25,512 25,526 25,540 25,554 25,568 ABSORBING RESERVE FUNDS 15 Currency in circulation 458,540 460,741 466,911 461,751 461,486 460,573 462,544 465,694 467,164 16 Treasury cash holdings 260 244 244 242 240 239 239 248 247 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,303 5,386 5,126 5,110 5,527 5,868 5,225 5,338 5,059 18 Foreign 173 189 213 176 199 166 190 242 270 19 Service-related balances and adjustments . . 7,023 6,940 6,952 7,006 6,879 6,908 6,962 7,020 6,880 20 Other 360 377 364 382 375 383 343 362 346 21 Other Federal Reserve liabilities and capital . 16,072 16,016 16,140 15,842 16,101 16,051 16,274 16,243 16,191 22 Reserve balances with Federal Reserve Banks4 9,908 9,552 10,542 9,231 10,272 9,115 11,792 10,026 10,476 End-of-month figures Wednesday figures Sept. Oct. 29 Nov. 5 Nov. 12 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 458,404 455,998 465,928 457,014 463,621 453,829 463,648 461,872 460,564 U.S. government securities2 2 Bought outright—System account3 411,822 410,767 419,882 414,233 415,465 414,096 413,046 414,289 418,528 3 Held under repurchase agreements 12,696 9,862 10,416 7,040 12,514 4,475 12,815 10,750 7,352 Federal agency obligations 4 Bought outright 925 711 685 761 746 711 685 685 685 5 6 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 1,2202 1,7004 3,7820 9050 1,6202 1,8440 1,3709 1,5703 2,6001 7 Lo A an d s j u to st m de e p n o t s c it r o e r d y i t institutions 3 24 3 17 14 844 1 486 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 3100 1501 870 2210 2030 17 0 7 1201 1101 1006 10 Float -263 -114 75 1,537 706 -258 1,342 138 348 11 Other Federal Reserve assets 31,689 32,893 30,998 32,301 32,351 32,777 33,415 34,325 30,458 12 Gold stock 11,050 11,050 11,051 11,050 11,050 11,051 11,051 11,050 11,050 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 25,470 25,540 25,596 25,498 25,512 25,526 25,540 25,554 25,568 ABSORBING RESERVE FUNDS 15 Currency in circulation 458,270 461,551 471,224 462,806 461,559 462,108 464,517 467,620 467,721 16 Treasury cash holdings 255 237 234 240 239 237 248 248 246 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 7,692 4,616 5,127 5,174 5,585 5,091 5,180 5,508 4,126 18 Foreign 188 190 167 164 205 192 186 187 180 19 Service-related balances and adjustments .. 7,005 6,962 7,184 7,006 6,879 6,908 6,962 7,020 6,880 20 Other 386 337 509 381 365 437 352 349 342 21 Other Federal Reserve liabilities and capital . 16,536 16,328 15,559 15,599 15,922 15,771 16,085 15,736 15,926 22 Reserve balances with Federal Reserve Banks' 13,791 11,567 11,771 11,393 18,629 8,864 15,909 11,008 10,962 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effects of inflation on the principal of 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged inflation-indexed securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 4. Excludes required clearing balances and adjustments to compensate for float. under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • February 1998 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1994 1995 1996 1997 Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. 1 Reserve balances with Reserve Banks2 24,658 20,440 13,395 10,916 10,291 9,851 10,489 9,742 9,990 10,559 2 Total vault cash3 40,378 42,094 44,426 41,111 42,398 43,129 42,363 43,052 41,730 42,114 3 Applied vault cash4 36,682 37,460 37,848 35,081 36,319 36,529 36,156 36,314 35,631 35,892 4 Surplus vault cash5 3,696 4,634 6,578 6,030 6,079 6,600 6,208 6,738 6,100 6,222 5 Total reserves6 61,340 57,900 51,243 45,997 46,610 46,380 46,645 46,056 45,621 46,451 6 Required reserves 60,172 56,622 49,819 44,757 45,330 45,179 45,392 44,761r 44,225 44,834 7 Excess reserve balances at Reserve Banks7 1,168 1,278 1,424 1,240 1,280 1,201 1,253 1,295 1,396 1,617 8 Total borrowings at Reserve Banks8 209 257 155 243 367 409 598 438 270 153 9 Seasonal borrowings 100 40 68 173 243 330 385 368 227 115 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 1997 July 30 Aug. 13 Aug. 27 Sept. 10 Sept. 24 Oct. 8 Oct. 22 Nov. 5 Nov. 19 Dec. 3 1 Reserve balances with Reserve Banks2 9,003 10,226 10,754 10,417 9,201 9,883 9,756 10,451 10,234 11,021 2 Total vault cash3 43,703 43,250 41,480 42,573 43,588 42,603 41,098 41,940 42,129 42,175 3 Applied vault cash4 36,559 36,650 35,596 36,507 36,170 36,329 35,177 35,718 35,817 36,069 4 Surplus vault cash5 7,144 6,600 5,884 6,066 7,418 6,275 5,921 6,222 6,312 6,107 5 Total reserves6 45,562 46,876 46,350 46,924 45,371 46,211 44,932 46,168 46,051 47,090 6 Required reserves 44,561 45,562 45,153 45,679 44,101 44,772 43,731 44,507 44,540 45,358 7 Excess reserve balances at Reserve Banks7 1,001 1,314 1,197 1,245 1,269 1,439 1,201 1,661 1,510 1,732 8 Total borrowings at Reserve Banks8 484 426 785 503 427 356 241 238 149 119 9 Seasonal borrowings 363 371 396 392 377 308 220 167 112 95 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of' adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk On On On 1/9/98 Effective date Previous rate 1/9/98 Effective date Previous rate 1/9/98 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.60 1/2/98 5.65 6.10 1/2/98 6.15 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 5.60 1/2/98 5.65 6.10 1/2/98 6.15 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or level)—All of level)—All of level)—All F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks 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 A ... . 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 1979—July 20 10 10 Dec. 2 14 6 8.5 9 - 9 9 9 Nov. 16 ..... ... 4 4 .5 .5 -5 4 4 . . 5 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 Oct. 21 8 11 1 - 1 1 2 1 1 1 2 1984—Apr. 1 9 3 8.5 9 - 9 1992—July 12 ..... ... 3- 3 3 .5 3 3 10 12 12 Nov. 21 8.5-9 26 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 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 4^1.75 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 Nov. 17 12 12 July 11 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 . . .. 5.00 5.00 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Jan. 9, 1998 5.00 5.00 14 14 1987—Sept. 4 5.5-6 11 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 Nonfinancial Statistics • February 1998 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts2 1 $0 million-$47.8 million3 . 1/1/98 2 More than $47.8 million4 . 1/1/98 3 Nonpersonal time deposits; 12/27/90 4 Eurocurrency liabilities6. . . 12/27/90 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 1, 1998, for depository institutions that report weekly, include commercial banks, mutual savings banks, savings and loan associations, credit and with the period beginning January 15, 1998, for institutions that report quarterly, the unions, agencies and branches of foreign banks, and Edge Act corporations. exemption was raised from $4.4 million to $4.7 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 1 ]/i years was reduced from 3 percent to 1 l/i 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 V/2 as of June 30 of each year. Effective with the reserve maintenance period beginning January 1, years or more has been zero since Oct. 6, 1983. 1998, for depository institutions that report weekly, and with the period beginning January 15, 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero 1998, for institutions that report quarterly, the amount was decreased from $49.3 million to in the same manner and on the same dates as the reserve requirement on nonpersonal time $47.8 million. deposits with an original maturity of less than 1 '/> 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 1997 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,484 10,932 9,901 4,006 0 596 0 0 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 380,327 405,296 426,928 33,160 47,456 33,022 35,948R 35,666 28,328 39,313 4 For new bills 380,327 405,296 426,928 33,160 47,456 33,022 35,948R 42,727R 28,328 39,313 5 Redemptions 0 900 0 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 733 390 524 0 383 494 0 0 644 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 0 43,574 30,512 2,006 5,666 1,476 4,359 7,487 1,596 3,193 9 Exchanges -31,949 -35,407 -41,394 -2,100 -4,229 -2,250 -1,087 -2,780 -2,382 -1,267 10 Redemptions 2,337 1,776 2,015 376 0 0 598 0 0 416 One to five years 11 Gross purchases 9,916 5,366 3,898 1,924 1,102 2,797 0 0 2,697 0 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -6,004 -34,646 -25,022 -2,006 -4,685 -1,476 -4,359 -5,247 -1,596 -3,193 14 Exchanges 26,458 26,387 31,459 1,700 2,479 2,250 1,087 1,170 2,382 1,267 Five to ten years 15 Gross purchases 3,575 1,432 1,116 0 734 499 0 0 0 770 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -3,145 -3,093 -5,469 0 -981 0 0 -2,240 0 0 18 Exchanges 4,717 7,220 6,666 400 1,750 0 0 880 0 0 More than ten years 19 Gross purchases 3,606 2,529 1,655 0 988 906 0 0 0 648 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -918 -2,253 -20 0 0 0 0 0 0 0 22 Exchanges 775 1,800 3,270 0 0 0 0 730 0 0 All maturities 23 Gross purchases 35,314 20,649 17,094 5,930 3,206 5,292 0 0 3,341 1,418 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,337 2,676 2,015 376 0 0 598 0 0 416 Matched transactions 26 Gross purchases 1,700,836 2,197,736 3,092,399 303,056 287,229 293,506 307,101 317,008R 311,153 316,425 27 Gross sales 1,701,309 2,202,030 3,094,769 301,177 287,826 293,008 309,578 315,439R 312,083 318,485 Repurchase agreements 28 Gross purchases 309,276 331,694 457,568 102,578 46,552 60,286 44,503 54,561 77,109 107,287 29 Gross sales 311,898 328,497 450,359 62,685 89,477 47,070 53,217 27,204 49,923 65,461 30 Net change in U.S. Treasury securities 29,882 16,875 19,919 47,326 -40,316 19,006 -11,789 28,926 29,597 40,767 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 0 0 0 0 0 33 Redemptions 942 1,003 409 24 0 474 287 179 105 631 Repurchase agreements 34 Gross purchases 52,696 36,851 75,354 10,178 7,954 8,401 10,437 13,131 9,796 20,319 35 Gross sales 52,696 36,776 74,842 10,285 7,096 9,131 10,811 11,252 11,196 15,157 36 Net change in federal agency obligations -942 -928 103 -131 858 -1,204 -661 1,700 -1,505 4,531 37 Total net change in System Open Market Account... 28,940 15,948 20,021 47,195 -39,458 17,802 -12,450 30,626 28,092 45,298 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • February 1998 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1997 1997 Oct. 29 Nov. 5 Nov. 12 Nov. 19 Nov. 26 Sept. 30 Oct. 31 Nov. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,051 11,051 11,050 11,050 11,051 11,050 11.050 11.051 2 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 3 Coin 517 513 510 510 497 526 532 495 Loans 4 To depository institutions 185 966 112 592 102 313 175 90 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 711 685 685 685 685 925 711 685 8 Held under repurchase agreements 1,844 1,379 1,573 2,601 862 1,222 1,704 3,782 9 Total U.S. Treasury securities 418,571 425,861 425,039 425,880 432,439 424,518 420,629 430,298 10 Bought outright2 414,096 413,046 414,289 418,528 420,418 411,822 410,767 419,882 11 Bills 194.962 193,911 193,702 196,050 195,055 193,693 191,632 194,519 12 Notes 163.076 163,076 164,528 165,239 167,169 163,138 163,076 167,170 13 Bonds 56,059 56,059 56,059 57,239 58,193 54,991 56,059 58,193 14 Held under repurchase agreements 4,475 12,815 10,750 7,352 12,021 12,696 9,862 10,416 15 Total loans and securities 421,310 428,890 427,408 429,758 434,087 426,978 423,219 434,855 16 Items in process of collection 6,001 8,729 6,505 7,079 6,497 8,652 4,529 3,262 17 Bank premises 1,273 1,273 1,277 1,277 1,276 1,268 1,273 1,264 Other assets 18 Denominated in foreign currencies3 17,623 17,951 17,959 17,968 17,975 17,592 17,945 17,345 19 All other4 13,855 14,180 15,077 11,188 12,381 12,822 13,728 12,384 20 Total assets 480,831 491,787 488,988 488,029 492,964 488,088 481,475 489,856 LIABILITIES 21 Federal Reserve notes 437,336 439,738 442,824 442,909 446,622 433,581 436,780 446,357 22 Total deposits 22,105 28,935 24,494 22,759 24,029 30,057 23,852 25,073 23 Depository institutions 16,386 23,208 18,466 18,112 19,550 21,791 18,709 19,271 24 U.S. Treasury—General account 5,091 5.180 5,508 4,126 3,963 7,692 4,616 5,127 25 Foreign—Official accounts 192 186 187 180 192 188 190 167 26 Other 437 352 349 342 324 386 337 509 27 Deferred credit items 5.618 7,030 5,934 6,436 6,421 7,914 4,515 2,866 28 Other liabilities and accrued dividends5 4.825 4,826 4,743 4,931 4,853 4,947 4,936 4,908 29 Total liabilities 469,884 480,529 477,994 477,035 481,925 476,499 470,083 479,204 CAPITAL ACCOUNTS 30 Capital paid in 5,272 5,280 5,282 5,285 5,318 5,227 5,279 5,314 31 Surplus 4,389 4,389 4,389 4,389 4,389 4,496 4,389 4,348 32 Other capital accounts 1,286 1,590 1,323 1,321 1,332 1,866 1,724 990 33 Total liabilities and capital accounts 480,831 491,787 488,988 488,029 492,964 488,088 481,475 489,856 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 621,101 626,435 628,315 625,711 617,808 637,992 624,722 618,612 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 549.297 547,718 548,053 548,516 548,091 549,745 548,595 547,796 36 LESS: Held by Federal Reserve Banks 111,961 107,980 105,229 105,608 101,469 116,164 111,815 101,440 37 Federal Reserve notes, net 437.336 439,738 442,824 442,909 446,622 433,581 436,780 446,357 Collateral held against notes, net 38 Gold certificate account 11,051 11,051 11,050 11,050 11,051 11,050 11,050 11,051 39 Special drawing rights certificate account 9.200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 417,086 419,487 422,574 422,658 426,372 413,331 416,530 426,106 42 Total collateral 437,336 439,738 442,824 442,909 446,622 433,581 436,780 446,357 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 includes compensation that adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rates of foreign exchange commitments. bought back under matched sale-purchase transactions. 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 1997 1997 Oct. 29 Nov. 5 Nov. 12 Nov. 19 Nov. 26 Sept. 30 Oct. 31 Nov. 28 1 Total loans 185 966 112 592 102 313 176 90 i Within fifteen days' 168 878 11 576 94 174 96 35 3 Sixteen days to ninety days 16 87 101 15 8 139 79 55 4 Total U.S. Treasury securities2 418,571 425,861 425,039 425,880 432,439 420,473 420,629 431,903 Within fifteen days' 16,595 27,740 27,580 15,708 24.895 16,403 15,483 17,366 6 Sixteen days to ninety days 87,956 85,199 90,174 95,893 90,575 88,467 90,393 97,369 7 Ninety-one days to one year 138,846 138,813 133,174 137,439 137,254 141,248 140,643 137,454 8 One year to five years 91,357 90,291 90,292 90,894 92,328 91,956 90,291 92,328 9 Five years to ten years 38,429 38,430 38,430 39,756 40,292 37,658 38,429 40,292 10 More than ten years 45,389 45,389 45,389 46,190 47,094 44,741 45,389 47,094 11 Total federal agency obligations 2,555 2,064 2,258 3,286 1,547 1,929 2,415 1,547 12 Within fifteen days' 1,870 1,379 1,573 2,601 862 1,004 1,730 862 13 Sixteen days to ninety days n.a. 0 10 10 10 76 n.a. 10 14 Ninety-one days to one year 202 202 192 192 197 202 202 197 15 One year to five years 203 203 203 203 198 303 203 198 16 Five years to ten years 255 255 255 255 255 255 255 255 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 2. Includes compensation that adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • February 1998 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1997 IItteemm 1993 1994 1995 1996 Dec. Dec. Dec. Dec. Apr. May June July Aug. Sept. Oct. Nov. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 60.55 59.40 56.39 50.06 47.43 47.05 47.11 46.89 47.41 46.67 46.45 46.87 2 Nonborrowed reserves4 60.46 59.20 56.13 49.91 47.17 46.81 46.74 46.48 46.82 46.23 46.18 46.71 3 Nonborrowed reserves plus extended credit5 60.46 59.20 56.13 49.91 47.17 46.81 46.74 46.48 46.82 46.23 46.18 46.71 4 Required reserves 59.48 58.24 55.11 48.64 46.42 45.81 45.83 45.68 46.16 45.37r 45.06 45.25 5 Monetary base6 386.88 418.48 434.52 452.67 458.24 459.60 461.40 464.21 466.46 469.35r 472.02 476.48 Not seasonally adjusted 6 Total reserves7 62.37 61.13 58.02 51.52 48.09 46.26 46.93 46.76 47.09 46.55 46.16 47.05 7 Nonborrowed reserves 62.29 60.92 57.76 51.37 47.83 46.02 46.56 46.35 46.49 46.11 45.89 46.90 8 Nonborrowed reserves plus extended credit5 62.29 60.92 57.76 51.37 47.83 46.02 46.56 46.35 46.49 46.11 45.89 46.90 9 Required reserves8 61.31 59.96 56.74 50.10 47.08 45.02 45.65 45.56 45.83 45.25 44.77 45.44 10 Monetary base9 390.59 422.51 439.03 456.72 458.17 458.29 461.81 465.55 467.24R 468.63R 470.67 476.90 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 62.86 61.34 57.90 51.24 47.88 46.00 46.61 46.38 46.65 46.06 45.62 46.45 12 Nonborrowed reserves 62.78 61.13 57.64 51.09 47.62 45.75 46.24 45.97 46.05 45.62 45.35 46.30 13 Nonborrowed reserves plus extended credit5 62.78 61.13 57.64 51.09 47.62 45.75 46.24 45.97 46.05 45.62 45.35 46.30 14 Required reserves 61.80 60.17 56.62 49.82 46.87 44.76 45.33 45.18 45.39 44.76R 44.23 44.83 15 Monetary base12 397.62 427.25 444.45 463.49 465.06 465.22 468.78 472.58 474.01 475.32R 477.25 483.46 16 Excess reserves13 1.06 1.17 1.28 1.42 1.01 1.24 1.28 1.20 1.25 1.30 1.40 1.62 17 Borrowings from the Federal Reserve .08 .21 .26 .16 .26 .24 .37 .41 .60 .44 .27 .15 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (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 1997 IItteemm D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . D 19 e 9 c 6 . Aug. Sept. Oct.r Nov. Seasonally adjusted Measures2 1 Ml 1,129.8 1,150.7 1,129.0 1,081.1 1,069.6 1,060.8 1,057.4 1,064.0 2 M2 3,486.6 3,502.1 3,655.0 3,819.3 3,940.5 3,960.0 3,975.8 3,998.8 3 M3 4,254.4 4,327.3 4,592.5 4,918.0 5,168.9 5,209.9r 5,245.0 5,293.2 4 L 5,167.8 5,308.4 5,697.6 6,069.2r 6,380.8r 6,426.0r 6,452.5 n.a. 5 Debt 12,457.0r 13,072.0r 13,768.0r 14,483.0r 14,891.r 14,944.8r 15,007.8 n.a. Ml components 6 Currency3 322.2 354.4 372.6 395.2 412.1 415.4 418.0 421.9 7 Travelers checks4 7.9 8.5 8.9 8.6 8.3 8.1 8.1 8.2 8 Demand deposits5 385.2 384.1 391.1 402.6 402.0 390.6 386.4 391.0 9 Other checkable deposits6 414.5 403.8 356.5 274.8 247.2 246.7 244.8 243.0 Nontransaction components 10 In M27 2,356.8 2,351.4 2,526.0 2,738.2 2,871.0 2,899.3 2,918.4 2,934.8 11 In M3 only8 767.8 825.3 937.5 1,098.7 1,228.4 l,249.9r 1,269.2 1,294.4 Commercial banks 12 Savings deposits, including MMDAs 785.2 752.4 776.0 903.9 966.7 982.2 995.3 1,005.2 13 Small time deposits9 468.3 503.2 576.0 592.0 615.0 618.3 620.8 623.6 14 Large time deposits10' 11 271.9 298.4 344.7 412.3 472.0 485.3 489.3 495.5 Thrift institutions 15 Savings deposits, including MMDAs 434.0 397.2 361.1 367.1 374.8 374.5 374.9 374.9 16 Small time deposits9 314.3 314.3 357.7 353.7 347.5 345.9 345.7 343.1 17 Large time deposits10 61.5 64.7 75.1 79.2 85.2 85.6 85.3 85.8 Money market mutual funds 18 Retail 354.9 384.3 455.2 521.5 567.0 578.3 581.8 588.0 19 Institution-only 209.5 198.5 246.9 299.3 329.2 338.9 345.3 346.4 Repurchase agreements and Eurodollars 20 Repurchase agreements'2 158.6 182.9 182.1 194.1 220088..66rr 220055..77rr 217.6 233.5 21 Eurodollars12 66.4 80.8 88.7 113.9 133.4r 134.4r 131.6 133.1 Debt components 22 Federal debt 3,322.9 3,491.9 3,638.5 3,780.0 3,784.5 33,,778877..99rr 3,789.6 n.a. 23 Nonfederal debt 9,134.2r 9,580. lr 10,129.5r 10,703.0r 1 l,106.6r 1 l,156.9r 11,218.2 n.a. Not seasonally adjusted Measures2 24 Ml 1,153.7 1,174.4 1,152.8 1,103.1 1,067.5 1,057.7 1,054.6 1,068.9 25 M2 3,506.6 3,522.5 3,675.3 3,837.7 3,944.0 3,952.4 3,965.3 4,000.9 26 M3 4,274.8 4,347.4 4,612.0 4,935.0 5,170.8r 5,197. Ir 5,241.8 5,301.2 27 L 5,197.7 5,338.8 5,729.5 6,098.1 6,380.8r 6,407.4r 6,442.3 n.a. 28 Debt 12,459.4 13,073.9 13,768.6r 14,482.4r 14,846.2r 14,911.4r 14,971.8 n.a. Ml components 29 Currency3 324.8 357.5 376.2 397.9 413.4 414.2 417.3 422.4 30 Travelers checks4 7.6 8.1 8.5 8.3 8.8 8.4 8.2 8.0 31 Demand deposits5 401.8 400.3 407.3 418.9 400.6 389.6 386.5 396.0 32 Other checkable deposits6 419.4 408.6 360.8 278.0 244.8 245.5 242.6 242.5 Nontransaction components 33 In M27 2,352.9 2,348.1 2,522.6 2,734.6 2,876.5 2,894.7 2,910.7 2,932.0 34 In M3 only8 768.2 824.9 936.6 1,097.3 1,226.8 l,244.7r 1,276.5 1,300.3 Commercial banks 35 Savings deposits, including MMDAs 784.3 751.7 775.3 902.9 970.0 983.2 994.7 1,007.1 36 Small time deposits9 466.8 501.5 573.8 589.8 615.0 617.5 620.0 622.0 37 Large time deposits10, 11 272.0 298.9 345.7 413.7 470.7 484.4r 495.2 501.6 Thrift institutions 38 Savings deposits, including MMDAs 433.4 396.8 360.8 366.7 376.1 374.9 374.7 375.6 39 Small time deposits9 313.3 313.2 356.3 352.4 347.5 345.5 345.2 342.2 40 Large time deposits10 61.5 64.8 75.4 79.5 84.9 85.4 86.3 86.9 Money market mutual funds 41 Retail 355.0 385.0 456.3 522.9 568.0 573.7 576.1 585.0 42 Institution-only 210.6 199.8 248.2 300.5 328.3 333.1 341.2 346.8 Repurchase agreements and Eurodollars 43 Repurchase agreements'2 156.6 179.6 178.0 188.8 210.5r 220088..22rr 221.0 232.0 44 Eurodollars12 67.6 81.8 89.4 114.7 132.3r 133.5r 132.9 132.9 Debt components 45 Federal debt 3,329.5 3,499.0 3,645.9 3,787.9 3,774.4 3,780.4 3,774.4 n.a. 46 Nonfederal debt 9,130.0r 9,575.0r 10,122.7r 10,694.5r 11,071.8r 11,131.lr 11,197.5 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • February 1998 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 nonfinanciai 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, nonfinanciai 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 M1. 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

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Nov.r May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Seasonally adjusted Assets 1 Bank credit 3,742.4 3.901.9 3,922.1 3,957.4 3,971.0 3,996.0 4,031.0 4,075.7 4,059.6 4,071.2 4,061.5 4,098.6 2 Securities in bank credit 979.9 1.013.5 1,009.6 1,031.1 1,024.9 1,031.5 1,045.7 1,081.0 1,070.1 1,076.8 1,071.1 1,094.4 3 U.S. government securities 705.6 721.9 724.8 726.5 715.4 724.2 731.7 745.5 741.4 743.8 738.4 755.2 4 Other securities 274.3 291.6 284.8 304.5 309.5 307.3 314.0 335.5 328.6 333.0 332.8 339.2 5 Loans and leases in bank credit2 . . . 2,762.5 2.888.5 2,912.4 2,926.4 2,946.1 2,964.5 2,985.3 2,994.7 2,989.5 2,994.5 2,990.4 3,004.2 6 Commercial and industrial 773.9 808.4 813.8 817.0 825.6 837.7 844.5 847.2 841.4 844.2 846.4 852.5 7 Real estate 1,122.6 1.179.2 1,189.5 1,198.4 1,205.7 1,214.2 1,219.6 1,225.6 1,227.1 1,229.4 1,222.7 1,224.0 8 Revolving home equity 83.7 90.4 91.9 93.2 94.3 95.5 96.4 97.3 97.0 97.1 97.4 97.5 9 Other 1,038.8 1.088.8 1,097.6 1,105.3 1.111.4 1,118.7 1,123.2 1,128.3 1,130.2 1,132.3 1,125.3 1,126.5 10 Consumer 520.5 516.5 517.7 517.6 518.8 515.3 509.4 510.0 508.0 506.9 510.8 512.1 11 Security3 76.9 88.3 92.6 93.5 93.3 94.5 104.3 97.5 102.8 100.9 95.7 95.6 12 Other loans and leases 268.6 296.1 298.8 299.9 302.8 302.9 307.5 314.3 310.1 313.0 314.7 320.0 13 Interbank loans 211.7 217.6 190.3 184.6 191.5 199.6 201.4 206.0 194.8 207.0 191.1 222.2 14 Cash assets4 229.4 243.8 248.0 245.3 262.9 258.9 269.3 279.2 275.9 302.1 258.2 287.2 15 Other assets5 258.9 280.2 286.2 282.1 283.9 284.1 294.0 303.6 307.5 299.5 300.8 306.0 16 Total assets6 4385.8 4,587.2 4,589.9 4,612.6 4,6525 4,682.0 4,738.9 4,807.7 4,780.9 4,823.0 4,755.0 4,857.1 Liabilities 17 Deposits 2,829.4 2,933.8 2,969.0 3,005.2 3,029.8 3,045.7 3,059.6 3,103.1 3,089.8 3,127.0 3,061.9 3,127.2 18 Transaction 719.5 689.3 693.2 689.7 696.8 682.5 681.7 692.2 681.5 716.3 664.3 716.9 19 Nontransaction 2,109.9 2,244.5 2,275.8 2,315.5 2,333.0 2,363.2 2,377.9 2,410.9 2,408.3 2,410.7 2,397.6 2,410.3 20 Large time 501.4 560.8 577.1 597.5 603.1 618.2 616.2 635.6 625.0 632.5 633.7 640.8 21 Other 1,608.5 1,683.7 1,698.7 1,717.9 1.729.9 1,745.0 1,761.7 1,775.3 1,783.3 1,778.2 1,763.9 1,769.4 22 Borrowings 708.6 762.1 730.1 730.3 744.9 767.0 807.7 828.4 816.4 829.0 817.9 843.4 23 From banks in the U.S 299.1 301.9 270.2 266.1 277.8 285.4 295.2 306.2 297.8 300.6 302.6 315.2 24 From others 409.5 460.2 459.9 464.1 467.1 481.6 512.5 522.2 518.6 528.4 515.3 528.2 25 Net due to related foreign offices 237.9 234.1 229.6 216.6 210.5 212.0 192.8 193.6 195.8 190.7 199.7 189.9 26 Other liabilities 250.6 264.2 266.0 277.5 281.3 268.6 285.1 295.2 290.8 289.2 295.1 298.7 27 Total liabilities 4,026.5 4,194.2 4,194.7 4,229.6 4,266.4 4,2933 4345.2 4.4203 4392.8 4,435.9 4374.6 4,459.2 28 Residual (assets less liabilities)7 359.3 392.9 395.3 383.0 386.1 388.7 393.8 387.4 388.1 387.2 380.4 397.9 Not seasonally adjusted Assets 29 Bank credit 3,746.6 3,906.5 3,925.9 3,953.4 3,972.2 3,997.5 4,032.5 4,079.2 4,073.9 4,074.4 4,066.3 4,093.7 30 Securities in bank credit 978.6 1,022.5 1,016.3 1,028.5 1,030.0 1,031.7 1,045.6 1,079.5 1,074.4 1,076.9 1,071.2 1,087.4 31 U.S. government securities 706.0 724.3 724.8 722.6 718.0 725.4 732.4 746.0 744.2 744.9 738.3 753.0 32 Other securities 272.6 298.2 291.5 305.9 312.0 306.3 313.2 333.5 330.2 332.1 332.9 334.3 33 Loans and leases in bank credit2 . . . 2,768.1 2,884.0 2,909.7 2,924.9 2,942.2 2,965.8 2,986.9 2,999.7 2,999.5 2,997.5 2,995.2 3,006.3 34 Commercial and industrial 772.1 815.2 817.2 818.2 821.4 831.9 840.5 845.0 841.4 841.0 845.0 850.0 35 Real estate 1,126.8 1,174.8 1,187.8 1,198.5 1,207.4 1,217.5 1,223.0 1,230.1 1,231.4 1,234.4 1,226.4 1,228.3 36 Revolving home equity 84.2 90.2 91.9 93.2 94.6 96.2 97.0 97.8 97.5 97.6 98.0 98.0 37 Other 1,042.7 1.084.6 1,096.0 1,105.3 1,112.8 1,121.3 1,126.0 1,132.2 1,133.9 1,136.7 1,128.4 1,130.3 38 Consumer 520.9 514.4 514.9 515.2 519.2 517.5 509.5 510.4 508.1 506.8 510.9 512.9 39 Security3 78.2 88.7 92.2 92.0 91.4 93.6 104.1 99.5 105.4 101.6 98.4 97.9 40 Other loans and leases 270.0 291.0 297.5 300.9 302.8 305.4 309.9 314.8 313.3 313.7 314.5 317.2 41 Interbank loans 216.0 213.2 187.7 182.3 187.1 194.1 196.2 210.6 198.8 212.7 196.4 220.7 42 Cash assets4 236.3 241.6 244.7 241.7 249.3 255.6 270.3 287.3 273.2 313.0 269.5 292.9 43 Other assets5 257.6 282.5 286.4 284.3 287.3 286.7 290.8 302.0 308.3 300.4 296.8 301.4 44 Total assets6 4,399.9 4,5873 4,588.0 4,604.9 4,638.8 4,677.0 4,733.2 4,8223 4,797.4 4,843.7 4,772.2 4351.7 Liabilities 45 Deposits 2,846.5 2,925.1 2,964.2 2,996.5 3,019.7 3,045.9 3,067.2 3,121.0 3,110.8 3,151.1 3,080.7 3,127.8 46 Transaction 729.7 679.4 687.5 683.4 684.3 681.0 679.7 701.7 686.6 725.6 676.7 718.0 47 Nontransaction 2,116.8 2,245.7 2,276.7 2,313.1 2,335.5 2,364.8 2,387.6 2,419.3 2,424.1 2,425.5 2,404.0 2,409.7 48 Large time 504.6 565.6 576.9 593.2 602.2 613.5 623.6 640.1 633.9 639.2 636.7 643.7 49 Other 1,612.2 1,680.1 1,699.8 1,719.9 1,733.3 1,751.3 1,764.0 1,779.2 1,790.2 1,786.3 1,767.2 1,766.1 50 Borrowings 698.5 772.4 750.5 744.7 749.8 770.3 797.9 815.4 811.0 817.3 802.6 822.8 51 From banks in the U.S 293.0 310.5 283.9 274.9 282.6 286.7 287.5 299.5 293.1 298.4 293.3 304.3 52 From others 405.5 461.9 466.6 469.8 467.2 483.6 510.3 515.8 517.9 518.9 509.3 518.4 53 Net due to related foreign offices 234.9 236.5 219.9 212.9 206.2 204.3 193.4 188.2 184.6 186.6 187.5 198.6 54 Other liabilities 254.4 267.9 268.3 275.9 280.3 269.1 283.7 299.5 294.6 294.5 299.1 303.1 55 Total liabilities 4,0343 4,201.9 4,202.9 4,230.0 4,255.9 4,289.5 4342.2 4,424.0 4,401.0 4,449.5 4369.8 4,452.2 56 Residual (assets less liabilities)7 365.7 385.4 385.2 374.9 382.9 387.5 391.0 398.2 396.3 394.1 402.4 399.5 MEMO 57 Revaluation gains on otf-balance-sheet items8 65.6 81.4 76.0 84.2 86.1 78.3 77.7 83.1 81.1 84.7 83.7 80.9 58 Revaluation losses on off-balancesheet items8 60.5 85.2 79.9 87.5 89.2 81.3 81.0 85.2 82.9 86.5 85.2 83.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • February 1998 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 1996 1997r 1997 Nov. May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Seasonally adjusted Assets 1 Bank credit 3,247.9 3,367.9 3,388.5 3,421.6 3,438.8 3,459.0 3,487.3 3,523.5 3,502.4 3,524.1 3,518.4 3,538.5 2 Securities in bank credit 821.6 840.5 836.4 851.3 847.4 849.5 864.9 885.1 875.0 885.0 883.4 889.6 U.S. government securities 619.3r 633.8 635.1 636.2 629.6 636.4 645.4 659.4 654.4 658.6 658.8 662.8 4 Other securities 202.3r 206.7 201.2 215.1 217.8 213.1 219.6 225.7 220.6 226.4 224.6 226.7 5 Loans and leases in bank credit2 2,426.3 2,527.4 2,552.2 2,570.3 2,591.4 2,609.5 2,622.4 2,638.4 2,627.4 2,639.1 2,635.0 2,649.0 6 Commercial and industrial 565.6r 590.3 595.6 598.9 605.9 615.5 621.0 624.7 619.8 624.0 623.8 628.0 7 Real estate 1,090.1' 1,148.7 1,160.0 1,169.9 1,177.3 1,186.3 1,191.9 1,198.6 1,199.3 1,202.4 1,195.8 1,197.4 8 Revolving home equity 83.7r 90.4 91.9 93.2 94.3 95.5 96.4 97.3 97.0 97.1 97.4 97.5 y Other 1,006.4r 1,058.3 1,068.2 1,076.8 1,083.1 1,090.8 1,095.5 1,101.3 1,102.4 1,105.3 1,098.4 1,099.9 10 Consumer 520.5 516.5 517.7 517.6 518.8 515.3 509.4 510.0 508.0 506.9 510.8 512.1 ii Security3 41.9 45.5 47.8 50.0 51.0 51.5 57.7 56.3 56.0 57.5 56.3 57.4 12 Other loans and leases 208.2 226.4 231.0 233.9 238.4 240.8 242.5 248.7 244.2 248.3 248.2 253.9 13 Interbank loans 191.5 197.8 171.6 166.0 173.5 181.6 181.3 182.9 179.8 181.6 171.9 193.8 14 Cash assets4 198.6 210.3 212.9 211.7 228.5 223.3 234.5 243.0 239.1 265.0 221.5 252.4 15 Other assets5 223.1 241.7 245.6 239.6 241.4 242.1 252.7 259.1 264.0 255.2 256.2 260.0 16 Total assets6 3,804.6r 3,961.5 3,962.3 3,982.4 4,025.5 4,049.7 4,099.3 4,151.9 4,128.7 4,169.4 4,111.6 4,188.0 Liabilities 17 Deposits 2,625.4 2,684.9 2,715.6 2,740.6 2,766.4 2,780.2 2,798.7 2,831.0 2,825.6 2,856.8 2,791.7 2,850.6 18 Transaction 709.3 678.4 682.6 679.1 685.6 671.7 671.3 681.6 671.0 705.3 653.7 706.0 19 Nontransaction 1,916.1 2,006.4 2,033.0 2,061.5 2,080.8 2,108.4 2,127.4 2,149.5 2,154.6 2,151.5 2,138.1 2,144.5 20 Large time 310.0 325.3 336.9 346.2 353.4 365.9 368.1 376.6 373.7 375.6 376.6 377.6 21 Other 1,606.1 1,681.1 1,696.1 1,715.4 1,727.4 1,742.5 1,759.3 1,772.9 1,780.9 1,775.8 1,761.5 1,767.0 22 Borrowings 583.0r 620.2 591.7 595.2 607.4 623.7 645.9 663.3 641.4 661.9 662.2 675.5 23 From banks in the U.S 265.9r 269.0 239.8 235.9 246.6 249.5 257.6 275.7 258.6 268.8 276.6 286.4 24 From others 317.0r 351.1 351.8 359.4 360.8 374.1 388.3 387.6 382.8 393.2 385.6 389.2 25 Net due to related foreign offices 71.0 85.7 81.1 85.6 79.8 84.7 74.1 74.3 74.9 74.6 75.4 73.9 26 Other liabilities 171.0 175.7 177.1 182.6 185.7 174.9 192.1 198.5 197.0 194.8 197.4 200.3 27 Total liabilities 3,450.4r 3,566.4 3,565.5 3,604.1 3,639.4 3,663.5 3,710.8 3,767.1 3,738.8 3,788.2 3,726.8 3,800.3 28 Residual (assets less liabilities)7 354.3r 395.1 396.8 378.2 386.1 386.2 388.5 384.8 389.9 381.3 384.8 387.6 Not seasonally adjusted Assets 29 Bank credit 3,252.5 3,369.9 3,391.9 3,417.0 3,436.0 3,462.6 3,490.2 3,527.9 3,513.8 3,527.6 3,523.8 3,537.4 30 Securities in bank credit 820.6 844.7 842.3 849.8 849.0 851.4 864.9 884.3 877.2 884.6 883.4 886.0 31 U.S. government securities 619.81 635.7 636.3 634.9 630.8 638.7 646.8 660.4 656.8 659.3 659.4 662.2 32 Other securities 200.8r 208.9 205.9 214.9 218.2 212.7 218.1 223.9 220.4 225.3 224.0 223.8 33 Loans and leases in bank credit2 2,431.9r 2,525.2 2,549.7 2,567.2 2,587.1 2,611.2 2,625.3 2,643.6 2,636.5 2,643.0 2,640.4 2,651.4 34 Commercial and industrial 563.9r 596.8 598.3 599.0 601.5 611.2 618.2 622.6 619.4 621.5 622.4 625.5 35 Real estate l,094.0r 1,144.6 1,158.5 1,170.1 1,179.0 1,189.5 1,195.1 1,202.7 1,203.2 1,207.0 1,199.1 1,201.4 36 Revolving home equity 84.2r 90.2 91.9 93.2 94.6 96.2 97.0 97.8 97.5 97.6 98.0 98.0 37 Other l,009.8r 1,054.4 1,066.6 1,076.9 1,084.4 1,093.4 1,098.1 1,104.9 1.105.7 1,109.3 1,101.1 1,103.4 38 Consumer 520.9 514.4 514.9 515.2 519.2 517.5 509.5 510.4 508.1 506.8 510.9 512.9 39 Security3 43.2 46.0 47.4 48.5 49.1 50.6 57.5 58.3 58.6 58.2 59.1 59.7 40 Other loans and leases 210.0 223.5 230.6 234.4 238.2 242.4 245.0 249.6 247.3 249.5 248.9 251.9 41 Interbank loans 195.8 193.4 169.1 163.8 169.1 176.1 176.2 187.5 183.8 187.3 177.1 192.3 42 Cash assets4 205.2 208.0 208.8 207.9 215.0 220.9 235.1 250.8 236.5 275.5 232.3 257.7 43 Other assets5 221.6 243.0 245.9 242.5 243.9 244.3 249.9 257.2 264.6 255.9 252.4 254.9 44 Total assets6 3,818.7 3,958.0 3,959.3 3,974.7 4,007.2 4,047.2 4,095.0 4,166.8 4,142.1 4,189.8 4,129.0 4,185.5 Liabilities 45 Deposits 2,640.0 2,675.7 2,710.4 2,734.9 2,758.5 2,781.3 2,798.4 2,845.3 2,839.6 2,875.6 2,808.2 2,848.9 46 Transaction 719.5 669.1 677.0 672.8 673.4 669.8 669.2 691.0 676.2 714.7 666.1 707.1 47 Nontransaction 1,920.5 2,006.6 2,033.4 2,062.1 2,085.1 2,111.5 2,129.3 2,154.2 2,163.4 2,160.9 2,142.1 2,141.9 48 Large time 310.7 329.1 336.2 344.8 354.4 362.7 367.7 377.5 375.6 377.0 377.3 378.2 49 Other 1,609.8 1,677.5 1,697.3 1,717.4 1,730.8 1,748.9 1,761.5 1,776.7 1,787.8 1,783.9 1,764.8 1,763.6 50 Borrowings 576.3r 630.7 607.1 600.8 607.1 626.1 640.8 655.6 638.5 656.4 652.6 663.5 51 From banks in the U.S 259.7r 278.0 251.9 242.9 250.9 251.8 253.1 269.1 255.3 266.3 267.4 275.7 52 From others 316.5r 352.6 355.3 357.9 356.2 374.3 387.7 386.5 383.3 390.2 385.2 387.7 53 Net due to related foreign offices 68.4 92.3 79.6 83.2 77.4 80.1 75.7 70.6 71.4 69.9 69.1 75.1 54 Other liabilities 174.1 176.7 178.4 183.1 184.2 175.5 192.7 202.1 201.1 199.0 201.1 203.4 55 Total liabilities 3,458.7r 3,575.4 3,575.6 3,602.0 3,627.3 3,663.0 3,707.7 3,773.5 3,750.6 3,800.9 3,731.1 3,790.9 56 Residual (assets less liabilities)7 360.0r 382.7 383.7 372.7 379.9 384.1 387.4 393.3 391.5 388.9 397.9 394.6 MEMO 57 Revaluation gains on off-balance-sheet items8 33.1 42.0 38.5 44.3 45.1 37.5 38.2 41.5 39.8 43.3 42.0 40.0 58 Revaluation losses on off-balancesheet items8 28.9 43.4 40.2 45.9 46.5 40.0 41.3 43.6 41.9 45.2 43.6 42.4 59 Mortgage-backed securities' 238.4 248.8 250.4 254.3 256.0 258.6 263.4 272.1 271.5 271.3 270.3 273.6 Footnotes appear on p. 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 C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1996 1997r 1997 Nov.r May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Seasonally adjusted Assets 1 Bank credit 1,918.4 1,984.2 1,995.1 2,013.4 2,016.1 2,027.3 2,052.7 2,073.7 2,059.4 2,079.2 2,067.5 2,084.3 2 Securities in bank credit 426.8 434.4 430.3 442.6 437.8 440.5 456.3 473.6 465.4 474.7 470.7 477.2 3 US. government securities 304.2 310.7 311.7 310.7 302.9 309.7 319.2 332.4 328.5 332.2 331.1 335.4 4 Trading account 21.6 18.7 22.2 23.7 20.6 23.3 25.2 26.3 26.2 25.9 25.5 27.9 5 Investment account 282.6 292.0 289.5 287.0 282.3 286.4 294.0 306.0 302.3 306.3 305.6 307.4 6 Other securities 122.6 123.8 118.6 131.9 134.9 130.8 137.1 141.2 136.9 • 142.5 139.5 141.9 7 Trading account 57.8 58.4 51.8 64.2 63.7 59.6 65.4 68.8 65.9 71.4 67.3 67.9 8 Investment account 64.8 65.4 66.8 67.7 71.3 71.2 71.8 72.5 70.9 71.0 72.2 74.0 9 State and local government. . 20.2 21.1 21.7 22.1 22.3 22.0 22.0 21.8 22.0 21.9 21.8 21.7 10 Other 44.6 44.3 45.1 45.5 49.0 49.2 49.8 50.7 49.0 49.2 50.4 52.2 11 Loans and leases in bank credit2 . . . 1,491.6 1,549.8 1,564.8 1,570.9 1,578.3 1386.8 1,596.4 1,600.1 1,594.1 1,604.5 1,596.9 1,607.0 12 Commercial and industrial 397.7 414.2 417.7 418.7 423.5 431.4 435.9 437.4 433.5 437.4 436.6 440.0 13 Bankers acceptances 1.9 1.6 1.6 1.6 1.5 1.5 1.3 1.2 1.3 1.4 1.4 1.4 14 Other 395.8 412.6 416.1 417.1 422.0 429.9 434.6 436.2 432.3 436.1 435.4 438.8 15 Real estate 609.8 630.1 635.0 634.6 635.0 636.5 636.8 637.5 640.1 642.8 633.9 635.0 16 Revolving home equity 59.2 62.7 63.9 64.7 65.3 66.2 66.8 67.2 67.1 67.1 67.3 67.4 17 Other 550.6 567.4 571.1 569.9 569.8 570.3 570.0 570.2 573.0 575.6 566.7 567.6 18 Consumer 299.4 302.9 303.3 304.0 301.8 299.6 296.4 294.1 293.8 292.9 295.1 294.6 19 Security3 37.4 41.0 43.2 45.4 46.2 46.6 52.5 51.2 50.8 52.4 51.5 52.3 20 Federal funds sold to and repurchase agreements with broker-dealers 21.7 23.4 26.4 28.6 30.0 29.6 35.4 35.0 34.5 36.6 34.9 35.6 21 Other 15.7 17.6 16.8 16.9 16.3 16.9 17.1 16.2 16.3 15.8 16.6 16.6 22 State and local government 11.8 11.2 11.3 11.2 11.3 11.4 11.3 11.2 11.3 11.3 11.1 11.0 23 Agricultural 8.9 8.9 8.8 8.8 8.8 8.9 9.0 9.3 9.2 9.3 9.2 9.3 24 Federal funds sold to and repurchase agreements with others 6.0 5.8 6.5 7.4 6.3 6.6 8.9 10.7 7.4 8.6 12.6 14.3 25 All other loans 61.2 65.0 66.5 66.3 69.0 68.7 67.7 69.7 69.3 71.3 67.7 71.1 26 Lease-financing receivables 59.5 70.7 72.3 74.5 76.3 77.2 77.9 79.1 78.6 78.7 79.0 79.4 27 Interbank loans 146.8 150.0 121.8 115.5 121.5 128.0 124.5 127.0 123.2 125.5 120.1 136.5 28 Federal funds sold to and repurchase agreements with commercial banks 93.8 93.7 70.1 69.8 74.2 81.0 78.2 81.5 76.2 79.3 75.5 91.1 7.9 Other 53.0 56.3 51.7 45.7 47.3 47.0 46.3 45.4 47.0 46.2 44.6 45.4 30 Cash assets4 138.6 144.2 144.0 143.1 156.4 150.9 163.6 169.6 167.4 186.5 152.9 177.7 31 Other assets5 175.6 185.6 185.0 177.3 177.1 179.6 187.5 191.8 194.3 189.6 190.8 190.9 32 Total assets6 2342.0 2,427.4 2,409.1 2,412.6 2,4343 2,449.5 2,491.9 2325.7 2307.9 23443 2,495.2 2353.1 Liabilities 33 Deposits 1,461.7 1,471.5 1,487.4 1,482.1 1,496.2 1,504.0 1,512.5 1,532.7 1,527.7 1,553.3 1,506.4 1,545.6 34 Transaction 409.0 378.3 381.4 375.5 379.8 368.4 369.2 375.9 369.0 395.2 356.2 391.5 35 Nontransaction 1,052.7 1,093.2 1,106.0 1,106.5 1,116.3 1,135.7 1,143.3 1,156.8 1,158.7 1,158.1 1,150.2 1,154.1 36 Large time 162.2 170.6 178.8 183.5 189.0 199.1 200.4 206.7 204.2 206.6 206.9 207.3 37 Other 890.5 922.6 927.2 923.1 927.4 936.5 942.9 950.1 954.5 951.5 943.3 946.8 38 Borrowings 431.0 469.3 440.0 439.0 448.1 465.8 489.7 505.1 486.0 504.0 503.3 518.3 39 From banks in the U.S 178.9 183.2 159.3 158.7 168.7 175.5 182.8 200.7 186.0 194.6 200.4 211.3 40 From others 252.1 286.1 280.7 280.3 279.5 290.3 306.9 304.4 300.0 309.4 302.8 307.1 41 Net due to related foreign offices 68.8 81.5 77.3 80.8 75.3 79.9 69.0 69.3 69.4 69.2 70.9 68.9 42 Other liabilities 146.8 149.8 150.5 156.6 158.4 146.5 164.0 169.7 168.2 166.6 168.5 171.4 43 Total liabilities 2,1083 2,172.1 2,155.2 2,158.5 2,178.0 2,1963 2,235.1 2,276.7 2,2513 2,293.1 2,249.2 23043 44 Residual (assets less liabilities)7 233.7 255.3 253.9 254.1 256.5 253.2 256.7 249.0 256.5 251.3 246.0 248.8 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • February 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures AAAccccccooouuunnnttt 1996 1997r 1997 Nov/ May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Not seasonally adjusted Assets 45 Bank credit 1,921.4 1,986.4 1,997.6 2,008.4 2,013.6 2,027.0 2,052.8 2,076.5 2,068.7 2,080.9 2,071.9 2,080.8 46 Securities in bank credit 427.4 436.8 434.4 441.8 441.2 442.0 457.2 474.3 469.1 475.4 473.0 474.5 47 U.S. government securities 306.3 311.0 311.0 310.1 305.6 311.4 321.6 334.9 332.4 334.1 334.1 335.9 48 Trading account 22.9 18.9 20.8 22.6 21.3 23.4 26.1 27.8 27.8 27.3 28.1 28.0 49 Investment account 283.5 292.2 290.2 287.6 284.3 288.0 295.5 307.1 304.5 306.8 306.0 308.0 50 Mortgage-backed securities. 174.6 187.6 187.8 189.2 188.2 190.0 195.6 204.0 203.6 202.9 202.3 205.6 51 Other 108.9 104.6 102.4 98.3 96.1 98.0 99.9 103.0 101.0 103.9 103.7 102.4 52 One year or less 30.7 27.9 27.9 26.3 26.2 27.0 25.7 28.2 27.2 29.0 28.1 28.2 53 Between one and five years 62.7 57.8 55.3 51.3 48.9 48.7 51.6 52.6 52.5 53.3 52.2 51.4 54 More than five years .... 15.5 18.9 19.2 20.8 21.0 22.2 22.6 22.2 21.2 21.6 23.4 22.8 55 Other securities 121.0 125.7 123.4 131.7 135.6 130.7 135.6 139.4 136.8 141.4 138.9 138.6 56 Trading account 55.4 60.6 57.0 (A. 9 64.8 59.4 63.3 65.9 65.0 69.5 65.6 63.4 57 Investment account 65.6 65.1 66.4 66.8 70.8 71.2 72.3 73.5 71.8 71.8 73.4 75.2 58 State and local government . . 20.3 21.2 21.8 21.7 22.0 22.0 22.0 21.9 22.0 22.0 21.9 22.0 59 Other 45.4 43.9 44.6 45.0 48.8 49.2 50.3 51.6 49.8 49.9 51.4 53.2 60 Loans and leases in bank credit2 . . 1,494.0 1,549.6 1,563.2 1,566.6 1.572.4 1,585.0 1,595.6 1,602.1 1,599.6 1,605.4 1,598.9 1,606.3 61 Commercial and industrial 396.7 419.3 419.2 418.8 420.3 428.0 433.7 436.1 433.7 435.5 436.0 438.2 62 Bankers acceptances 2.1 1.5 1.6 1.5 1.5 1.5 1.4 1.4 1.3 1.4 1.4 1.4 63 Other 394.7 417.8 417.6 417.3 418.8 426.5 432.4 434.7 432.4 434.1 434.7 436.8 64 Real estate 611.4 627.4 633.6 634.3 635.5 637.6 637.7 639.2 641.9 645.2 635.1 636.2 65 Revolving home equity 59.5 62.6 63.9 64.7 65.5 66.6 67.2 67.7 67.5 67.5 67.7 67.8 66 Other 343.3 351.0 354.3 354.3 355.2 354.8 353.0 353.0 355.9 358.8 349.2 349.5 67 Commercial 208.6 213.8 215.4 215.3 214.8 216.1 217.4 218.5 218.5 218.9 218.1 218.9 68 Consumer 299.1 301.2 302.3 301.8 302.3 301.0 295.9 293.8 293.3 292.4 294.4 294.5 69 Security3 38.5 41.6 43.0 44.1 44.4 45.7 52.4 53.0 53.1 52.8 53.9 54.5 70 Federal funds sold to and repurchase agreements with broker-dealers 22.6 24.1 26.0 27.9 28.5 29.3 35.5 36.5 36.9 37.3 37.2 36.7 71 Other 15.9 17.5 17.0 16.2 15.9 16.4 16.9 16.5 16.2 15.5 16.7 17.8 72 State and local government 11.9 11.2 11.3 11.3 11.4 11.5 11.3 11.2 11.4 11.3 11.2 11.1 73 Agricultural 8.8 8.9 8.9 9.0 9.1 9.1 9.1 9.2 9.2 9.3 9.2 9.2 74 Federal funds sold to and repurchase agreements with others 5.1 5.9 6.6 7.6 6.2 7.2 8.7 8.7 6.7 7.3 9.9 10.6 75 All other loans 63.1 63.5 66.0 65.7 67.8 68.3 68.8 71.9 71.7 73.0 70.1 72.6 76 Lease-financing receivables .... 59.5 70.6 72.2 74.0 75.4 76.5 78.0 79.1 78.6 78.7 79.0 79.4 77 Interbank loans 146.3 149.0 122.1 115.9 118.1 124.2 119.1 126.6 120.8 125.7 120.1 133.2 78 Federal funds sold to and repurchase agreements with commercial banks 93.8 94,6 71.5 69.2 71.1 77.8 73.0 81.7 75.2 80.6 75.3 88.1 79 Other 52.5 54.4 50.6 46.7 47.0 46.4 46.1 45.0 45.6 45.0 44.8 45.1 80 Cash assets4 142.5 142.2 141.3 139.7 145.3 150.0 163.1 174.6 163.4 193.6 160.4 181.0 81 Other assets5 173.6 187.4 187.2 180.3 179.5 181.4 185.0 189.3 193.1 188.5 186.9 187.1 82 Total assets6 2,346.4 2,4283 2,411.4 2,407.5 2,419.7 2,445.9 2,483.7 2,530.6 2,509.6 2,552.3 2,503.0 2345.7 Liabilities 83 Deposits 1,468.5 1,464.9 1,484.1 1,479.8 1,490.9 1,502.9 1,510.0 1,539.2 1,532.4 1.562.6 1,515.9 1,542.2 84 Transaction 415.5 372.2 377.4 371.5 370.8 367.1 366.6 382.0 369.3 400.8 365.9 393.4 85 Nontransaction 1,053.0 1,092.6 1,106.7 1,108.3 1,120.1 1,135.8 1,143.3 1,157.2 1,163.1 1,161.8 1,149.9 1,148.8 86 Large time 162.5 173.6 178.6 182.9 190.3 196.2 199.7 207.2 205.3 207.1 207.3 207.6 87 Other 890.6 919.0 928.1 925.4 929.8 939.6 943.7 950.0 957.8 954.7 942.6 941.2 88 Borrowings 425.8 475.9 451.7 444.6 449.3 468.8 484.5 499.0 484.9 500.3 496.0 506.3 89 From banks in the U.S 174.5 189.7 168.3 164.2 173.0 177.1 178.9 195.9 184.0 193.1 194.0 202.3 90 From nonbanks in the U.S 251.3 286.1 283.5 280.4 276.3 291.7 305.6 303.1 300.9 307.2 301.9 304.0 91 Net due to related foreign offices .... 66.2 88.1 75.8 78.4 72.9 75.3 70.6 65.6 65.9 64.5 64.7 70.1 92 Other liabilities 150.0 151.1 152.4 156.9 156.7 147.5 164.6 173.4 172.4 170.8 172.3 174.7 93 Total liabilities 2,110.6 2,179.9 2,164.0 2,159.6 2,169.9 2,194.5 2,229.7 2,277.2 2,255.6 2,298.1 2,248.8 2333 94 Residual (assets less liabilities)7 235.8 248.3 247.4 247.9 249.8 251.4 254.1 253.4 254.0 254.2 254.1 252.3 MEMO 95 Revaluation gains on off-balancesheet items8 33.1 42.0 38.5 44.3 45.1 37.5 38.2 41.5 39.8 43.3 42.0 40.0 96 Revaluation losses on off-balancesheet items8 28.9 43.4 40.2 45.9 46.5 40.0 41.3 43.6 41.9 45.2 43.6 42.4 97 Mortgage-backed securities9 200.5 206.8 206.7 207.1 206.3 208.1 213.7 222.0 221.7 221.3 220.1 223.4 98 Pass-through securities 133.8 141.5 142.4 143.0 141.7 143.1 147.7 152.8 152.0 151.7 151.7 154.9 99 CMOs, REMICs, and other mortgage-backed securities . . . 66.7 65.3 64.3 64.1 64.6 64.9 66.0 69.2 69.7 69.7 68.4 68.5 100 Net unrealized gains (losses) on available-for-sale securities10 . . . 2.4 2.1 2.6 3.1 3.7 3.3 3.9 3.6 3.9 3.5 3.6 3.6 101 Offshore credit to U.S. residents" . . . 31.3 33.6 33.4 33.7 34.0 34.1 34.2 34.4 34.2 34.6 34.6 34.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Nov.r May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Seasonally adjusted Assets 1 Bank credit 1,329.5 1383.6 1,393.5 1,408.2 1,422.7 1,431.7 1,434.6 1,449.8 1,443.0 1,445.0 1,450.9 1,454.3 2 Securities in bank credit 394.8 406.1 406.1 408.7 409.6 409.0 408.6 411.5 409.7 410.4 412.7 412.3 3 U.S. government securities 315.1 323.2 323.5 325.6 326.7 326.7 326.2 327.1 325.9 326.4 327.6 327.5 4 Other securities 79.7 82.9 82.6 83.2 82.8 82.2 82.4 84.5 83.7 83.9 85.1 84.8 Loans and leases in bank credit2 934.7 977.5 987.4 999.4 1,013.2 1,022.7 1,026.0 1,038.3 1,033.3 1,034.6 1,038.1 1,041.9 6 Commercial and industrial 167.9 176.1 177.9 180.3 182.4 184.2 185.1 187.3 186.3 186.7 187.2 188.0 7 Real estate 480.4 518.6 525.0 535.4 542.3 549.8 555.1 561.2 559.2 559.6 561.8 562.4 8 Revolving home equity 24.6 27.7 27.9 28.5 29.0 29.2 29.6 30.1 29.9 30.0 30.2 30.1 9 Other 455.8 490.9 497.1 506.9 513.3 520.5 525.5 531.1 529.4 529.6 531.7 532.3 10 Consumer 221.1 213.6 214.4 213.6 217.0 215.7 213.0 216.0 214.2 214.1 215.7 217.5 11 Security3 4.5 4.6 4.6 4.6 4.8 5.0 5.2 5.1 5.2 5.1 4.8 5.2 12 Other loans and leases 60.9 64.7 65.5 65.6 66.7 68.1 67.6 68.8 68.4 69.2 68.5 68.8 13 Interbank loans 44.7 47.8 49.8 50.5 52.0 53.7 56.8 55.9 56.7 56.1 51.8 57.3 14 Cash assets4 60.0 66.1 68.9 68.6 72.1 72.5 70.9 73.4 71.7 78.6 68.6 74.7 15 Other assets5 47.5 56.1 60.6 62.3 64.3 62.5 65.2 67.3 69.7 65.6 65.4 69.1 16 Total assets6 1,462.6 1334.2 13533 1369.8 I39I.I 1,600.2 1,607.4 1,626.2 1,620.8 1,625.1 1,616.4 1,634.9 Liabilities 17 Deposits 1,163.7 1,213.4 1,228.3 1,258.5 1,270.2 1,276.1 1,286.2 1,298.3 1,297.9 1,303.5 1,285.3 1,305.0 18 Transaction 300.3 300.1 301.2 303.5 305.8 303.4 302.1 305.7 302.0 310.2 297.4 314.5 19 Nontransaction 863.4 913.2 927.0 955.0 964.4 972.8 984.1 992.7 995.9 993.3 987.9 990.5 20 Large time 147.8 154.7 158.1 162.7 164.4 166.8 167.7 169.9 169.5 169.0 169.7 170.2 21 Other 715.6 758.5 769.0 792.3 800.0 806.0 816.4 822.8 826.4 824.3 818.2 820.2 22 Borrowings 151.9 150.9 151.7 156.2 159.3 157.9 156.2 158.2 155.4 158.0 158.9 157.2 23 From banks in the U.S 87.1 85.8 80.6 77.2 78.0 74.0 74.8 75.0 72.5 74.2 76.2 75.1 24 From others 64.9 65.1 71.1 79.1 81.3 83.9 81.4 83.3 82.9 83.7 82.7 82.1 25 Net due to related foreign offices 2.2 4.2 3.8 4.8 4.5 4.8 5.2 5.0 5.5 5.4 4.4 5.0 26 Other liabilities 24.2 25.8 26.5 26.1 27.3 28.4 28.1 28.8 28.8 28.2 28.9 28.8 27 Total liabilities 1342.0 13943 1,4103 1,445.6 1,461.4 1,467.2 1,475.6 1,4903 1,4873 1,495.1 1,477.6 1,496.0 28 Residual (assets less liabilities)7 120.6 139.9 143.0 124.1 129.7 133.0 131.8 135.9 133.3 130.0 138.8 138.9 Not seasonally adjusted Assets 29 Bank credit 1,331.1 1.383.5 1,394.4 1,408.7 1,422.4 1,435.6 1,437.4 1,451.5 1,445.1 1,446.7 1,451.9 1,456.6 30 Securities in bank credit 393.2 407.9 407.9 408.0 407.8 409.4 407.6 410.0 408.1 409.2 410.4 411.5 31 U.S. government securities 313.4 324.7 325.3 324.8 325.2 327.3 325.2 325.4 324.4 325.3 325.3 326.3 32 Other securities 79.8 83.2 82.5 83.2 82.6 82.1 82.4 84.5 83.7 83.9 85.1 85.2 33 Loans and leases in bank credit2 937.9 975.6 986.5 1,000.7 1,014.7 1.026.2 1,029.7 1,041.5 1,037.0 1,037.6 1,041.5 1,045.1 34 Commercial and industrial 167.2 177.5 179.1 180.3 181.3 183.2 184.5 186.5 185.7 186.0 186.4 187.3 35 Real estate 482.6 517.1 524.9 535.8 543.5 552.0 557.4 563.5 561.3 561.8 564.0 565.2 36 Revolving home equity 24.7 27.6 27.9 28.5 29.1 29.6 29.8 30.2 30.1 30.1 30.3 30.2 37 Other 457.9 489.5 496.9 507.3 514.4 522.4 527.6 533.3 531.3 531.6 533.7 535.0 38 Consumer 221.8 213.1 212.6 213.4 216.9 216.5 213.6 216.6 214.8 214.5 216.5 218.4 39 Security3 4.7 4.4 4.4 4.5 4.7 4.9 5.2 5.4 5.5 5.4 5.1 5.3 40 Other loans and leases 61.6 63.4 65.5 66.8 68.3 69.7 69.0 69.5 69.6 69.9 69.4 69.0 41 Interbank loans 49.5 44.4 47.0 47.9 51.0 51.9 57.1 60.8 63.0 61.6 57.0 59.1 42 Cash assets4 62.7 65.9 67.5 68.1 69.7 70.9 72.0 76.2 73.1 82.0 71.9 76.7 43 Other assets5 48.0 55.6 58.6 62.3 64.3 62.9 64.9 68.0 71.5 67.4 65.5 67.8 44 Total assets6 1,4723 1329.8 1347.9 13672 13873 1,601.2 1,6113 1,636.2 1,6323 1,6373 1,626.0 1,639.9 Liabilities 45 Deposits 1,171.4 1,210.8 1,226.3 1,255.1 1,267.6 1,278.4 1,288.5 1,306.0 1,307.1 1,313.0 1,292.4 1,306.7 46 Transaction 304.0 296.8 299.6 301.3 302.6 302.7 302.6 309.0 306.8 313.9 300.2 313.7 47 Nontransaction 867.4 914.0 926.8 953.8 965.0 975.7 985.9 997.0 1,000.3 999.0 992.2 993.1 48 Large time 148.2 155.5 157.6 161.8 164.1 166.5 168.1 170.3 170.3 169.9 170.0 170.6 49 Other 719.3 758.5 769.2 792.0 800.9 809.3 817.8 826.7 830.0 829.1 822.1 822.5 50 Borrowings 150.4 154.8 155.4 156.2 157.8 157.2 156.3 156.6 153.6 156.2 156.7 157.2 51 From banks in the U.S 85.2 88.3 83.6 78.7 77.9 74.6 74.2 73.2 71.2 73.2 73.4 73.5 52 From others 65.2 66.5 71.8 77.5 79.9 82.6 82.1 83.4 82.4 83.0 83.2 83.7 53 Net due to related foreign offices 2.2 4.2 3.8 4.8 4.5 4.8 5.2 5.0 5.5 5.4 4.4 5.0 54 Other liabilities 24.1 25.6 26.0 26.3 27.5 28.0 28.1 28.6 28.7 28.2 28.8 28.6 55 Total liabilities 1348.1 1395.4 1,411.6 1,442.4 1,457.4 1,4683 1,478.0 1,4963 1,494.9 1302.8 1,4823 1,497.6 56 Residual (assets less liabilities)7 124.2 134.3 136.3 124.8 130.1 132.7 133.3 140.0 137.5 134.7 143.7 142.3 MEMO 57 Mortgage-backed securities9 38.0 42.0 43.7 47.2 49.7 50.5 49.7 50.1 49.8 50.0 50.2 50.2 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • February 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Nov. May June July Aug. Sept. Oct. Nov. Nov. 5 Nov. 12 Nov. 19 Nov. 26 Seasonally adjusted Assets 1 Bank credit 494.6 534.1 533.5 535.8 532.2 537.0 543.7 552.2 557.2 547.1 543.1 560.1 2 Securities in bank credit 158.3r 173.0 173.3 179.8 177.5 182.0 180.8 195.9 195.0 191.7 187.7 204.8 3 U.S. government securities 86.3r 88.0 89.7 90.3 85.8 87.8 86.4 86.1 87.0 85.2 79.6 92.3 4 Other securities 72.tf 84.9 83.6 89.5 91.7 94.2 94.4 109.8 108.0 106.6 108.1 112.5 5 Loans and leases in bank credit2 . . . 336.2 361.1 360.3 356.1 354.7 355.0 362.9 356.3 362.1 355.3 355.4 355.3 6 Commercial and industrial 208.4r 218.2 218.1 218.0 219.7 222.2 223.6 222.6 221.6 220.2 222.6 224.5 7 Real estate 32.4 30.5 29.5 28.5 28.3 27.9 27.7 27.0 27.8 27.1 26.9 26.6 8 Security3 35.0 42.7 44.8 43.5 42.2 43.0 46.6 41.1 46.8 43.4 39.3 38.2 9 Other loans and leases 60.4r 69.7 67.8 66.0 64.4 62.0 65.0 65.6 65.9 64.7 66.5 66.1 10 Interbank loans 20.2 19.8 18.6 18.5 18.0 18.0 20.0 23.1 15.0 25.4 19.2 28.4 11 Cash assets4 30.9 33.6 35.1 33.6 34.4 35.5 34.8 36.2 36.8 37.0 36.7 34.9 12 Other assets5 35.8r 38.5 40.6 42.5 42.6 42.0 41.3 44.5 43.5 44.3 44.6 46.0 13 Total assets6 581.2r 625.6 627.6 630.2 627.0 6323 639.6 655.8 6522 653.6 643.4 669.1 Liabilities 14 Deposits 204.0 248.9 253.3 264.6 263.4 265.6 260.9 272.1 264.2 270.2 270.2 276.6 15 Transaction 10.2 10.9 10.6 10.6 11.2 10.8 10.4 10.7 10.5 10.9 10.7 10.9 16 Nontransaction 193.8 238.0 242.8 253.9 252.2 254.8 250.5 261.4 253.7 259.3 259.6 265.7 17 Large time 191.4 235.5 240.2 251.4 249.7 252.3 248.1 259.0 251.3 256.9 257.1 263.3 18 Other 2.4 2.5 2.5 2.6 2.5 2.5 2.4 2.4 2.4 2.4 2.4 2.4 19 Borrowings 125.7r 142.0 138.4 135.0 137.4 143.3 161.8 165.1 175.0 167.0 155.7 167.9 20 From banks in the U.S 33.2r 32.9 30.4 30.3 31.2 35.9 37.7 30.5 39.2 31.8 26.0 28.8 21 From others 92.4 109.0 108.1 104.7 106.3 107.4 124.2 134.5 135.8 135.3 129.7 139.0 22 Net due to related foreign offices 166.9 148.4 148.5 130.9 130.6 127.3 118.6 119.4 120.9 116.1 124.3 115.9 23 Other liabilities 79.6 88.5 88.9 94.9 95.5 93.7 93.0 96.7 93.9 94.4 97.7 98.4 24 Total liabilities 576.2r 627.8 629.2 625.4 627.0 629.9 634.4 653.2 654.0 647.7 647.9 658.8 25 Residual (assets less liabilities)7 5 Xf -2.2 -1.6 4.8 0.0 2.5 5.2 2.6 -1.7 5.9 -4.4 10.3 Not seasonally adjusted Assets 26 Bank credit 494. lr 536.7 534.0 536.3 536.1 535.0 542.3 551.3 560.1 546.8 542.5 556.3 27 Securities in bank credit 158.ff 177.8 174.0 178.7 181.0 180.3 180.7 195.2 197.2 192.3 187.8 201.3 28 U.S. government securities 86.2r 88.5 88.4 87.7 87.3 86.7 85.6 85.7 87.4 85.5 79.0 90.8 29 Trading account 21.0r 18.0 17.8 17.0 18.3 17.2 15.1 17.6 18.0 16.2 13.4 21.9 30 Investment account 65.2 70.6 70.6 70.7 68.9 69.5 70.5 68.1 69.4 69.3 65.6 68.9 31 Other securities 71.8r 89.3 85.5 91.0 93.8 93.6 95.1 109.6 109.8 106.8 108.8 110.5 32 Trading account 49.9r 59.4 57.3 59.9 61.0 61.0 62.3 69.4 69.6 67.3 69.0 70.2 33 Investment account 21.9 29.9 28.2 31.1 32.8 32.6 32.8 40.1 40.2 39.5 39.8 40.3 34 Loans and leases in bank credit2 ... 336.1 358.8 360.0 357.6 355.1 354.6 361.6 356.1 362.9 354.5 354.8 355.0 35 Commercial and industrial 208.2 218.4 218.9 219.2 219.9 220.7 222.2 222.4 222.0 219.6 222.5 224.5 36 Real estate 32.9 30.2 29.3 28.4 28.4 28.0 27.9 27.4 28.2 27.4 27.3 26.9 37 Security3 35.0 42.7 44.8 43.5 42.2 43.0 46.6 41.1 46.8 43.4 39.3 38.2 38 Other loans and leases 60.0r 67.5 67.0 66.5 64.6 63.0 64.9 65.1 66.0 64.1 65.6 65.3 39 Interbank loans 20.2 19.8 18.6 18.5 18.0 18.0 20.0 23.1 15.0 25.4 19.2 28.4 40 Cash assets4 31.1 33.6 35.9 33.8 34.3 34.7 35.2 36.5 36.6 37.5 37.3 35.3 41 Other assets5 36.0 39.5 40.5 41.7 43.4 42.4 40.9 44.8 43.8 44.4 44.4 46.5 42 Total assets6 581.2 6293 628.7 630.2 631.7 629.8 638.2 655.5 6553 653.9 643.2 666.2 Liabilities 43 Deposits 206.6 249.4 253.8 261.6 261.2 264.6 268.8 275.7 271.2 275.5 272.4 278.8 44 Transaction 10.2 10.4 10.5 10.6 10.9 11.2 10.5 10.7 10.4 10.9 10.6 10.9 45 Nontransaction 196.4 239.0 243.3 251.0 250.3 253.3 258.3 265.0 260.7 264.6 261.9 267.9 46 Large time 193.9 236.5 240.7 248.5 247.8 250.9 255.9 262.6 258.3 262.2 259.4 265.4 47 Other 2.4 2.6 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.4 2.4 2.4 48 Borrowings 122.2r 141.8 143.3 143.9 142.6 144.2 157.1 159.8 172.5 160.9 149.9 159.3 49 From banks in the U.S 33.3r 32.5 32.0 31.9 31.7 34.9 34.5 30.5 37.8 32.1 25.8 28.6 50 From others 88.9 109.3 111.3 112.0 110.9 109.3 122.6 129.3 134.7 128.7 124.1 130.7 51 Net due to related foreign offices 166.5 144.2 140.3 129.7 128.7 124.1 117.6 117.6 113.3 116.7 118.4 123.5 52 Other liabilities 80.2 91.2 89.9 92.8 96.0 93.5 91.0 97.4 93.5 95.5 98.0 99.7 53 Total liabilities 5753r 626.5 6272 628.0 628.6 626.4 6343 6503 6503 648.7 638.7 6613 54 Residual (assets less liabilities)7 5.7r 2.7 1.5 2.2 3.0 3.4 3.7 4.9 4.8 5.2 4.5 4.9 MEMO 55 Revaluation gains on oif-balance-sheet items8 32.5 39.3 37.6 39.9 41.1 40.8 39.5 41.6 41.3 41.4 41.6 40.9 56 Revaluation losses on off-balancesheet items8 31.6 41.8 39.7 41.7 42.6 41.4 39.8 41.6 41.0 41.3 41.6 41.1 Footnotes appear on p. 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 group that contained the acquired bank and put into past data for the group containing the statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, ratio procedure is used to adjust past levels. "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks being published in the Bulletin. Instead, abbreviated balance sheets for both large and small in the United States, all of which are included in "Interbank loans." domestically chartered banks have been included in table 1.26, parts C and D. Data are both 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. securities. branches and agencies of foreign banks have been replaced by balance sheet estimates of all 4. Includes vault cash, cash items in process of collection, balances due from depository foreign-related institutions and are included in table 1.26, part E. These data are break- institutions, and balances due from Federal Reserve Banks. adjusted. 5. Excludes the due-from position with related foreign offices, which is included in "Net The not-seasonally-adjusted data for all tables now contain additional balance sheet items, due to related foreign offices." which were available as of October 2, 1996. 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for 1. Covers the following types of institutions in the fifty states and the District of transfer risk. Loans are reported gross of these items. Columbia: domestically chartered commercial banks that submit a weekly report of condition 7. This balancing item is not intended as a measure of equity capital for use in capital (large domestic); other domestically chartered commercial banks (small domestic); branches adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related seasonal patterns estimated for total assets and total liabilities. institutions). Excludes International Banking Facilities. Data are Wednesday values or pro 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and rata averages of Wednesday values. Large domestic banks constitute a universe; data for equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. small domestic banks and foreign-related institutions are estimates based on weekly samples 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications government-sponsored enterprises, and private entities. of assets and liabilities. 10. Difference between fair value and historical cost for securities classified as available- The data for large and small domestic banks presented on pp. A17-19 are adjusted to for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are remove the estimated effects of mergers between these two groups. The adjustment for restated to include an estimate of these tax effects. mergers changes past levels to make them comparable with current levels. Estimated 11. Mainly commercial and industrial loans but also includes an unknown amount of credit quantities of balance sheet items acquired in mergers are removed from past data for the bank extended to other than nonfinanciai businesses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • February 1998 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1997 IItteemm D 19 e 9 c 2 . D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . D 19 e 9 c 6 . May June July Aug. Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 545,619 555,075 595,382 674,904 775,371 855,178 864,758 889,494 885,601 908,640 921,769 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss'''' 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr2222,,,, ttttoooottttaaaallll 226,456 218,947 223.038 275,815 361,147 413,776 414,475 440,262 437,340 475,792 483,489 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr3333,,,, ttttoooottttaaaallll 171.605 180,389 207,701 210.829 229,662 252,856 256,165 253,971 253,934 235,030 237,544 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaaiiii ccccoooommmmppppaaaannnniiiieeeessss4444 147,558 155,739 164,643 188,260 184,563 188,546 194,119 195,260 194,327 197,818 200,736 Bankers dollar acceptances (not seasonally adjusted)5 5555 TTTToooottttaaaallll 38,194 32,348 29,835 29,242 25,754 BBBByyyy hhhhoooollllddddeeeerrrr 6666 AAAAcccccccceeeeppppttttiiiinnnngggg bbbbaaaannnnkkkkssss 10,555 12,421 11,783 7777 OOOOwwwwnnnn bbbbiiiillllllllssss 9,097 10,707 10,462 8888 BBBBiiiillllllllssss bbbboooouuuugggghhhhtttt ffffrrrroooommmm ooootttthhhheeeerrrr bbbbaaaannnnkkkkssss 1,458 1,714 1.321 FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee BBBBaaaannnnkkkkssss6666 9999 FFFFoooorrrreeeeiiiiggggnnnn ccccoooorrrrrrrreeeessssppppoooonnnnddddeeeennnnttttssss 1,276 725 410 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11110000 OOOOtttthhhheeeerrrrssss 26,364 19,202 17,642 BBBByyyy bbbbaaaassssiiiissss 11111111 IIIImmmmppppoooorrrrttttssss iiiinnnnttttoooo UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 12,209 10,217 10,062 11112222 EEEExxxxppppoooorrrrttttssss ffffrrrroooommmm UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 8,096 7,293 6.355 11113333 AAAAllllllll ooootttthhhheeeerrrr 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 Loans1 Percent per year Date of change Period Average Average rate rate 1995—Jan. 1 8.50 1995 8.83 1996—Jan. . 1997—Jan. . Feb. 1 9.00 1996 8.27 Feb. Feb. July 7 8.75 1997 8.44 Mar. Mar. Dec. 20 8.50 Apr. Apr. 1995—Jan. 8.50 May May 1996—Feb. 1. 8.25 Feb. 9.00 June June Mar. 9.00 July . July . 1997—Mar. 26 Apr. 9.00 Aug. Aug. May 9.00 Sept. Sept. June 9.00 Oct. . Oct. . July 8.80 Nov. Nov. Aug. 8.75 Dec. Dec. Sept. 8.75 Oct. 8.75 Nov. 8.75 Dec. 8.65 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 1997 1997, week ending IItteemm 11999944 11999955 11999966 Aug. Sept. Oct. Nov. Oct. 31 Nov. 7 Nov. 14 Nov. 21 Nov. 28 MONEY MARKET INSTRUMENTS 1 Federal funds1'2,3 4.21 5.83 5.30 5.54 5.54 5.50 5.52 5.50 5.60 5.50 5.51 5.49 2 Discount window borrowing2'4 3.60 5.21 5.02 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Commercial paper*'4'5'6 Nonfinancial 3 1-month n.a. n.a. n.a. n.a. 5.49 5.49 5.53 5.51 5.51 5.53 5.52 5.56 4 2-month n.a. n.a. n.a. n.a. 5.48 5.48 5.59 5.51 5.54 5.57 5.62 5.64 5 3-month n.a. n.a. n.a. n.a. 5.48 5.51 5.60 5.53 5.54 5.61 5.62 5.64 Financial 6 1-month n.a. n.a. n.a. n.a. 5.51 5.50 5.55 5.52 5.54 5.55 5.55 5.55 7 2-month n.a. n.a. n.a. n.a. 5.51 5.50 5.65 5.52 5.58 5.66 5.69 5.70 8 3-month n.a. n.a. n.a. n.a. 5.51 5.55 5.64 5.58 5.59 5.65 5.66 5.66 Commercial paper (historical)3"5"6"1 9 1-month 4.43 5.93 5.43 5.55 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 3-month 4.66 5.93 5.41 5.56 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 6-month 4.93 5.93 5.42 5.59 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historical)3'5'7,8 12 1-month 4.33 5.81 5.31 5.49 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 3-month 4.53 5.78 5.29 5.49 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month 4.56 5.68 5.21 5.50 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Bankers acceptances1"5"9 15 3-month 4.56 5.81 5.31 5.53 5.54 5.57 5.66 5.58 5.57 5.69 5.67 5.72 16 6-month 4.83 5.80 5.31 5.56 5.58 5.56 5.63 5.56 5.56 5.66 5.64 5.68 Certificates of deposit, secondary market3"10 17 1-month 4.38 5.87 5.35 5.54 5.56 5.55 5.61 5.56 5.58 5.60 5.62 5.64 18 3-month 4.63 5.92 5.39 5.60 5.60 5.65 5.74 5.67 5.68 5.76 5.76 5.78 19 6-month 4.96 5.98 5.47 5.71 5.71 5.72 5.78 5.71 5.72 5.80 5.82 5.81 20 Eurodollar deposits, 3-month3'" 4.63 5.93 5.38 5.58 5.59 5.63 5.71 5.63 5.63 5.72 5.75 5.76 U.S. Treasury bills Secondary market3'5 21 3-month 4.25 5.49 5.01 5.14 4.95 4.97 5.14 5.04 5.14 5.16 5.15 5.13 22 6-month 4.64 5.56 5.08 5.19 5.09 5.09 5.17 5.07 5.13 5.16 5.17 5.22 23 1-year 5.02 5.60 5.22 5.27 5.23 5.17 5.17 5.07 5.15 5.15 5.18 5.21 Auction average3,5'12 24 3-month 4.29 5.51 5.02 5.13 4.97 4.95 5.15 4.97 5.12 5.16 5.17 5.15 25 6-month 4.66 5.59 5.09 5.17 5.11 5.09 5.17 5.08 5.13 5.16 5.17 5.20 26 1-year 5.02 5.69 5.23 5.28 5.30 5.20 5.14 n.a. n.a. 5.14 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities13 27 1-year 5.32 5.94 5.52 5.56 5.52 5.46 5.46 5.35 5.44 5.44 5.46 5.50 28 2-year 5.94 6.15 5.84 5.94 5.88 5.77 5.71 5.65 5.71 5.71 5.70 5.73 29 3-year 6.27 6.25 5.99 6.06 5.98 5.84 5.76 5.73 5.77 5.76 5.73 5.77 30 5-year 6.69 6.38 6.18 6.16 6.11 5.93 5.80 5.78 5.81 5.81 5.79 5.82 31 7-year 6.91 6.50 6.34 6.29 6.20 6.05 5.90 5.93 5.95 5.92 5.86 5.88 32 10-year 7.09 6.57 6.44 6.30 6.21 6.03 5.88 5.90 5.92 5.88 5.84 5.86 33 20-year 7.49 6.95 6.83 6.65 6.56 6.38 6.20 6.27 6.27 6.22 6.15 6.15 34 30-year 7.37 6.88 6.71 6.58 6.50 6.33 6.11 6.22 6.20 6.12 6.05 6.06 Composite 35 More than 10 years (long-term) 7.41 6.93 6.80 6.64 6.54 6.37 6.18 6.25 6.25 6.20 6.14 6.14 STATE AND LOCAL NOTES AND BONDS Moody's series14 36 Aaa 5.77 5.80 5.52 5.25 5.19 5.19 5.19 5.17 5.19 5.19 5.17 5.19 37 BBaaaa 6.17 6.10 5.79 5.37 5.33 5.32 5.32 5.29 5.31 5.33 5.30 5.33 38 BBoonndd BBuuyyeerr sseerriieess1155 6.18 5.95 5.76 5.41 5.39 5.38 5.33 5.35 5.38 5.34 5.31 5.29 CORPORATE BONDS 39 Seasoned issues, all industries16 8.26 7.83 7.66 7.48 7.40 7.26 7.13 7.19 7.18 7.15 7.08 7.09 Rating group 40 Aaa 7.97 7.59 7.37 7.22 7.15 7.00 6.87 6.93 6.93 6.89 6.83 6.83 41 Aa 8.15 7.72 7.55 7.40 7.34 7.20 7.08 7.13 7.13 7.09 7.03 7.04 42 A 8.28 7.83 7.69 7.46 7.39 7.27 7.15 7.22 7.21 7.16 7.11 7.11 43 Baa 8.63 8.20 8.05 7.82 7.70 7.57 7.42 7.49 7.47 7.44 7.38 7.38 44 A-rated, recently offered utility bonds17 8.29 7.86 7.77 7.67 7.58 7.44 7.24 7.27 7.29 7.24 7.19 7.20 MEMO Dividend-price ratio18 45 Common stocks 2.82 2.56 2.19 1.65 1.65 1.61 1.65 1.68 1.64 1.70 1.63 1.63 1. The daily etfective federal funds rate is a weighted average of rates on trades through 13. 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 14. General obligation bonds based on Thursday figures; Moody's Investors Service. current week; monthly figures include each calendar day in the month. 15. 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. 16. 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. 17. Compilation of the Federal Reserve. This series is an estimate of the yield on recently 7. Series ended August 29, 1997. offered, A-rated utility bonds with a thirty-year maturity and five years of call protection. 8. An average of offering rates on paper directly placed by finance companies. Weekly data are based on Friday quotations. 9. Representative closing yields for acceptances of the highest-rated money center banks. 18. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in 10. An average of dealer offering rates on nationally traded certificates of deposit. the price index. 11. Bid rates for Eurodollar deposits at approximately 11:00 a.m. London time. Data are NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and for indication purposes only. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. 12. Auction date for daily data; weekly and monthly averages computed on an issue-date Digitized fobra sFis.R ASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic NonfinancialS tatistics • February 1998 1.36 STOCK MARKET Selected Statistics 1997 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 254.16 291.18 357.98 416.72 401.00 433.36 457.07 480.94 482.39 489.74 499.25 492.14 2 Industrial 315.32 367.40 453.57 523.08 506.69 549.65 578.57 610.42 609.54 617.94 625.22 615.65 3 Transportation 247.17 270.14 327.30 372.37 366.67 395.50 410.93 433.75 439.71 451.63 466.04 453.56 4 Utility 104.96 110.64 126.36 132.38 126.66 140.52 140.24 144.25 143.82 145.96 157.83 153.53 5 Finance 209.75 238.48 303.94 387.19 364.25 392.32 419.12 441.59 446.93 459.86 476.70 465.35 6 Standard & Poor's Corporation (1941-43 = 10)2 460.42 541.72 670.49 792.16 763.93 833.09 876.29 925.29 927.74 937.02 951.16 938.92 7 American Stock Exchange (Aug. 31, 1973 = 50)3 449.49 498.13 570.86 593.64 554.13 584.06 619.94 635.28 645.59 678.05 702.43 674.37 Volume of trading (thousands of shares) 8 New York Stock Exchange 290,652 345,729 409,740 495,994r 473,094 479,907 516,241 543,006 506,205 541,204 606,513 531,449 9 American Stock Exchange 17,951 20,387 22,567 19,232 19,122 19,634 23,277 25,562 24,095 28,252 32,873 27,741 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 61,160 76,680 97,400 100,160 98,870 106,010 113,440 116,190 119,810 126,050 128,190 130,690 Free credit balances at brokers5 11 Margin accounts6 14,095 16,250 22,540 22,930 22,700 22,050 23,860 24,290 23,375 23,630 26,950 26,760 12 Cash accounts 28,870 34,340 40,430 41,050 37,560 39,400 41,840 43,985 42,960 43,770 47,465 50,840 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 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. 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 (100 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 1997 11999944 11999955 11999966 June July Aug. Sept. Oct. Nov. U.S. budget1 1 Receipts, total 1,258,627 1,351,830 1,453,062 173,361 109,178 103,483 174,770 114,898 103,481 2 On-budget 923,601 1,000,751 1,085,570 135,922 79,599 70,902 138,847 87,083 73,690 3 Off-budget 335,026 351,079 367,492 37,439 29,579 32,581 35,923 27,815 29,791 4 Outlays, total 1,461,731 1,515,729 1,560,330 118,726 134,802 138,672 124,834 150,862 120,830 5 On-budget 1,181,469 1,227,065 1,259,872 105,267 107,049 109,810 91,404 123,863 91,327 6 Off-budget 279,372 288,664 300,458 13,459 27,753 28,862 33,429 26,999 29,504 7 Surplus or deficit (-), total -203,104 -163,899 -107,268 54,635 -25,624 -35,189 49,937 -35,964 -17,349 8 On-budget -258,758 -226,314 -174,302 30,655 -27,450 -38,908 47,443 -36,780 -17,637 9 Off-budget 55,654 62,415 67,034 23,980 1,826 3,719 2,494 816 287 Source of financing (total) 10 Borrowing from the public 185,344 171,288 129,712 -11,147 -1,408 30,348 -18,318 6,315 29,108 11 Operating cash (decrease, or increase (-)) 16,564 -2,007 -6,276 -34,387 23,748 15,435 -31,545 23,360 483 12 Other2 1,196 -5,382 -16,168 -9,101 3,284 -10,594 -74 6,289 -12,242 MEMO 13 Treasury operating balance (level, end of period) 35,942 37,949 44,225 51,259 27,511 12,076 43,621 20,261 19,778 14 Federal Reserve Banks 6,848 8,620 7,700 16,368 5,014 4,700 7,692 4,616 5,127 15 Tax and loan accounts 29,094 29,329 36,525 34,891 22,496 7,376 35,930 15,645 14,651 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 NonfinancialS tatistics • February 1998 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1995 1996 1997 1997 11999955 11999966 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS 1 All sources 1,351,830 1,453,062 656,865 767,099 707,551 845,552 174,770 114,898 103,481 2 Individual income taxes, net 590,244 656,417 292,393 347,285 323,884 400,435 78.199 60,680 46,596 3 Withheld 499.927 533,080 256,916 264,177 279,988 292,252 44,442 55.270 47,581 4 Nonwithheld 175,855 212,168 45,521 162,782 53,491 191,050 36.230 6,299 2,053 5 Refunds 85,538 88,897 10,058 79,735 9,604 82,926 2,474 889 3,040 Corporation income taxes 6 Gross receipts 174,422 189,055 88.302 96,480 95,364 106,451 39,133 6,357 4,900 7 Refunds 17.418 17,231 7,518 9,704 10,053 9,635 1,795 3,103 987 8 Social insurance taxes and contributions, net . . . 484,473 509,414 224,269 277,767 240,326 288,251 47,601 38,784 42,488 9 Employment taxes and contributions2 451,045 476,361 211,323 257,446 227,777 268,357 47,013 36,928 39,629 10 Unemployment insurance 28,878 28,584 10,702 18,068 10,302 17,709 247 1,443 2,526 11 Other net receipts3 4,550 4,469 2.247 2,254 2,245 2,184 342 414 334 12 Excise taxes 57,484 54.014 30,014 25,682 27,016 28,084 5,719 5,082 5,171 13 Customs deposits 19,301 18,670 9,849 8,731 9,294 8,619 1,590 1,802 1,354 14 Estate and gift taxes 14,763 17.189 7,718 8,775 8,835 10,477 1,849 2,198 1,510 15 Miscellaneous receipts4 28,561 25,534 11,839 12,087 12,888 12,866 2,474 3,097 2,450 OUTLAYS 16 All types 1,515,729 1,560,330 752,856 785,368 800,184 797,418r 124,834r 150,862r 120,830 17 National defense 272,066 265,748 132,887 132,599 138,702 131,500' 21,076 26,374 17,883 18 International affairs 16,434 13,496 6,908 8,076 8,596 5,779 1,270 724 955 19 General science, space, and technology 16,724 16,709 7.970 8,897 8.260 8,939 1,543 1,586 1,606 20 Energy 4,936 2,836 1,992 1,356 704 801 598 -163 -68 21 Natural resources and environment 22,078 21,614 11,392 10,254 10.310' 9,688 2,071 1,710 1,566 22 Agriculture 9,778 9,159 3,065 73 10,977 1,433 3,202 2,983 1,425 23 Commerce and housing credit -17,808 -10,646 -3,947 -6,885 -5,899 -7,575 917 -253' -714 24 Transportation 39,350 39,565 20.725 18,290 22,211 18,046 3,818 3,913 3,014 25 Community and regional development 10,641 10.685 5,569 5,245 5,497 5,699 1,116 1,014 916 26 Education, training, employment, and social services 54,263 52.001 26,212 25,979 27,549' 25,227 5,804 4,289 4,517 27 Health 115,418 119,378 57,128 59,989 61,595' 61,808 10,773 11,905 9,870 28 Social security and Medicare 495,701 523.901 251,388 264.647 269,412' 278,817 43,731 49,471 42,864 29 Income security 220,493 225.989 KM,847 121,186 107,602 123,874 13,735 20,292 14,694 30 Veterans benefits and services 37,890 36,985 18.678 18,140 21,109 17,697 1,833 5,234 1,864 31 Administration of justice 16,216 17.548 8,091 9,015 9,583' 10,643 1,467 1,584 1,747 32 General government 13,835 11,892 7,601 4,641 6,546' 6,574 1,440 1,460 713 33 Net interest5 232,169 241,090 119,348 120,576 122,572' 122,701 17,061 21,805 20,592 34 Undistributed offsetting receipts6 -44.455 -37,620 -26,995 -16,716 -25,142 -24,234 -6,630 -3,067 -2,613 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 1998; 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 1995 1996 1997 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 5,001 5,017 5,153 5,197 5,260 5,357 5,415 5,410 5,446 2 Public debt securities 4,974 4,989 5,118 5,161 5,225 5,323 5,381 5,376 5,413 3 Held by public 3,653 3,684 3,764 3,739 3,778 3,826 3,874 3,805 3,815 4 Held by agencies 1,321 1,305 1,354 1,422 1,447 1,497 1,507 1,572 1,599 5 Agency securities 27 28 36 36 35 34 34 34 33 6 Held by public 27 28 28 28 27 27 26 26 26 / Held bv agencies 0 0 8 8 8 8 8 7 7 8 Debt subject to statutory limit 4,885 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 9 Public debt securities 4,885 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,900 4,900 5,500 5,500 5,500 5,500 5,500 5,500 5.950 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF US. TREASURY Types and Ownership Billions of dollars, end of period 1996 1997 TTyyppee aanndd hhoollddeerr 11999933 11999944 11999955 11999966 Q4 Q1 Q2 Q3 1 Total gross public debt 4,535.7 4,800.2 4,988.7 5,323.2 5,323.2 5,380.9 5,376.2 5,413.2 By type 2 Interest-bearing 4,532.3 4,769.2 4,964.4 5,317.2 5,317.2 5,375.1 5,370.5 5,407.5 3 Marketable 2,989.5 3,126.0 3,307.2 3,459.7 3.459.7 3,504.4 3,433.1 3,439.6 4 Bills 714.6 733.8 760.7 777.4 777.4 785.6 704.1 701.9 5 Notes 1,764.0 1,867.0 2,010.3 2,112.3 2,112.3 2,131.0 2,132.6 2,122.2 6 Bonds 495.9 510.3 521.2 555.0 555.0 565.4 565.4 576.2 7 Inflation-indexed notes' n.a. n.a. n.a. n.a. n.a. 7.4 15.9 24.4 8 Nonmarketable2 1,542.9 1,643.1 1,657.2 1,857.5 1,857.5 1,870.8 1,937.4 1,967.9 9 State and local government series 149.5 132.6 104.5 101.3 101.3 104.8 107.9 111.9 10 Foreign issues3 43.5 42.5 40.8 37.4 37.4 36.8 35.4 34.9 11 Government 43.5 42.5 40.8 47.4 47.4 36.8 35.4 34.9 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 169.4 177.8 181.9 182.4 182.4 182.6 182.7 182.7 14 Government account series4 1,150.0 1,259.8 1,299.6 1,505.9 1,505.9 1,516.6 1,581.5 1,608.5 15 Non-interest-bearing 3.4 31.0 24.3 6.0 6.0 5.8 5.7 5.6 By holder5 16 U.S. Treasury and other federal agencies and trust funds 1,153.5 1,257.1 1,304.5 1,497.2 1,497.2 1,506.8 1,571.6 1,598.5 17 Federal Reserve Banks 334.2 374.1 391.0 410.9 410.9 405.6 426.4 436.5 18 Private investors 3,047.4 3,168.0 3,294.9 3,411.2 3,411.2 3,451.7 3,361.7r 3,388.9 19 Commercial banks 322.2 290.4 278.7 261.7r 261.7r 282.3 265.7r 260.0 20 Money market funds 80.8 67.6 71.5 91.6 91.6 84.0 77.4 76.4 21 Insurance companies 234.5 240.1 241.5 214.1r 214.1r 214.3r 203.4r 192.0 22 Other companies 213.0 224.5 228.8 258.5 258.5 262.5 261.0 266.5 23 State and local treasuries6'7 609.2 540.2 421.5 363.7r 363.7r 348.0r 337.4r 333.5 Individuals 24 Savings bonds 171.9 180.5 185.0 187.0 187.0 186.5 186.3 186.2 25 Other securities 137.9 150.7 162.7 169.6 169.6 168.9 169.1 168.6 26 Foreign and international8 623.0 688.6 862.2 1,131.8 1,131.8 l,215.4r l,246.9r 1,292.4 27 Other miscellaneous investors7'9 655.0 785.5 843.0 733.2r 733.2r 689.8r 614.5r 613.3 1. The U.S. Treasury first issued inflation-indexed notes during the first quarter of 1997. 8. Consists of investments of foreign balances and international accounts in the United 2. Includes (not shown separately) securities issued to the Rural Electrification Administra- States. tion, depository bonds, retirement plan bonds, and individual retirement bonds. 9. Includes savings and loan associations, nonprofit institutions, credit unions, mutual 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur- savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury rency held by foreigners. deposit accounts, and federally sponsored agencies. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual Public Debt of the United States; data by holder, Treasury Bulletin. holdings; data for other groups are Treasury estimates. 6. Includes state and local pension funds. 7. 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 1998 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1997 1997, week ending IItteemm Aug. Sept. Oct. Oct. 1 Oct. 8 Oct. 15 Oct. 22 Oct. 29 Nov. 5 Nov. 12 Nov. 19 Nov. 26 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 38,732 40,266 41,086 34,322 35,718 45,390 35,301 47,054 48,825 49,707 38,000 42,517 Coupon securities, by maturity 2 Five years or less 117,232 110,548 132,174 112,531 120,504 110,289 100,156 192,569 143,998 109,318 110,315 125,279 3 More than five years 67,685 59,117 76,423 64,437 81,120 63,199 54,719 104,578 80,999 67,150 71,891 61,156 4 Federal agency 42,563 40,258 43,579 43,654 40,472 46,661 44,925 41,962 45,826 43,208 57,668 44,605 5 Mortgage-backed 47,848 48,520 58,174 48,547 74,356 66,377 38,808 54,051 64,854 85,206 62,243 48,623 By type of counterparty With interdealer broker 6 U.S. Treasury 127,179 120,687 145,596 121,448 136,848 128,397 114,862 199,706 155,495 127,443 128,119 133,112 7 Federal agency 1,299 1,513 1,377 1,540 1,497 1,474 980 1,445 1,625 1,020 1,263 1,258 8 Mortgage-backed 15,481 15,920 18,087 16,147 19,651 22,976 12,567 17,529 20,562 21,777 21,433 14,180 With other 9 U.S. Treasury 96,471 89,244 104,088 89,842 100,494 90,480 75,315 144,494 118,328 98,732 92,088 95,841 10 Federal agency 41,264 38,745 42,202 42,114 38,974 45,187 43,945 40,517 44,201 42,188 56,405 43,347 11 Mortgage-backed 32,367 32,600 40,088 32,400 54,705 43,401 26,241 36,522 44,293 63,429 40,810 34,443 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 202 291 228 n.a. n.a. n.a. 73 316 398 378 235 90 Coupon securities, by maturity 13 Five years or less 2,220 2,393r 1,848 1,552 1,802 1,893 1,492 2,280 1,829 1,477 1,655 3,012 14 More than five years 18,859 16,903r 21,358 17,306 23,141 18,984 15,405 29,308 18,687 16,547 17,078 17,300 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 2,150 1,768 2.274 1,489 2,266 2,436 2,640 2,361r 1,239 1,753 1,815 1,673 19 More than five years 6,122 5,063 6,825 4,467 7,905 5,273 5,410 9,631 4,932 6,641 9,182 4,596 20 Federal agency 0 0 0 0 0 0 0 n.a. 0 0 0 0 21 Mortgage-backed 548 898 614 1,561 941 316 224 527 1,109 461 533 364 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 to be 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 1997 1997, week ending IItteemm Aug. Sept. Oct. Oct. 1 Oct. 8 Oct. 15 Oct. 22 Oct. 29 Nov. 5 Nov. 12 Nov. 19 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 4,548 1,089 6,161 -2,149 3,269 7,029 9,187 3,481 16,196 15,222 14,518 Coupon securities, by maturity 2 Five years or less -27,559 -35,923 -31,681 -43,213 -33,684 -40,931 -41,684 -15,028 -9,799 -20,398 -23,948 3 More than five years -16,447 -15,703 -21,634 -11,342 -14,619 -20,535 -25,981 -26,652 -22,406 -21,048 -16,801 4 Federal agency 31,886 32,961 34,843 35,281 37,509 35,318 34,486 33,917 28,125 26,904 28,932 5 Mortgage-backed 32,497 37,016 37,762 35,459 37,480 41,619 40,072 33,480 33,301 39,656 43,535 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -841 -626 -1,334 -642 -666 -992 -1,294 -1,951 -3,188 -3,239 -3,351 Coupon securities, by maturity 7 Five years or less 7,431 5,650 3,079 3,313 2,323 2,947 4,426 2,623 2,948 2,892 2,544 8 More than five years -16,452 -22,372 -22,760 -29,076 -29,699 -21,858 -19,609 -19,595 -20,579 -17,632 -21,998 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 US. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 12 Five years or less -433 2,024 2,573 2,371 2,829 2,265 2,925 2,187 2,995 2,516 2,611 13 More than five years 5,444 5,368 4,444 6,764 5,079 4,022 3,600 4,561 5,087 5,695 2,743 14 Federal agency 0 0 n.a. 0 0 0 0 n.a. 0 0 0 15 Mortgage-backed 1,000 361 369 1,2 00 168 474 260 434 442 3 -29 Financing5 Reverse repurchase agreements 16 Overnight and continuing 298,973 303,186 323,078 331,565 327,762 310,889 327,978 318,992 342,255 314,346 364,330 17 Term 622,314 619,579 713,746 626,544 670,973 691,697 728,492 763,286 759,225 791,196 604,595 Securities borrowed 18 Overnight and continuing 210,814 203,445 209,087 201,473 210,014 213,559 210,245 205,885 201,157 203,172 212,921 19 Term 93,092 92,992 96,609 95,694 97,084 96,843 96,604 96,348 95,513 98,066 93,321 Securities received as pledge 20 Overnight and continuing 7,865 6,934 7,407 6,726 7,429 7,695 7,896 6,895 6,741 6,296 6,020 21 Term 102 78 88 70 68 94 98 92 94 93 107 Repurchase agreements 22 Overnight and continuing 651,055 647,675 685,099 671,691 680,737 682,785 686,513 686,369 705,779 692,864 723,091 23 Term 569,029 540,310 642,512 543,715 596,159 614,047 659,224 700,376 692,756 712,372 548,386 Securities loaned 24 Overnight and continuing 8,020 6,673 7,546 6,824 7,281 7,839 7,685 7,429 7,726 7,338 8,283 25 Term 5,014 3,314 3,365 3,594 3,647 3,344 3,286 3,193 3,215 3,328 3,488 Securities pledged 26 Overnight and continuing 53,321 54,253 51,116 53,184 53,883 52,296 49,444 49,003 49,520 48,917 53,410 27 Term 2,332 5,818 4,190 6,193 4,334 4,147 4,166 4,022 3,509 3,470 1,964 Collateralized loans 28 Overnight and continuing 0 0 0 0 0 0 0 0 0 0 0 29 Term 0 0 0 0 0 0 0 0 0 0 0 30 Total 16,343 13,724 15,354 12,996 15,241 17,759 16,891 12,426 13,373 12,382 15,153 MEMO: Matched book6 Securities in 31 Overnight and continuing 281,860 276,476 303,512 295,019 308,483 295,768 306,061 301,705 314,872 289,275 324,363 32 Term 602,540 602,147 686,424 619,814 654,977 671,487 706,074 710,028 730,684 760,316 582,528 Securities out 33 Overnight and continuing 383,828 382,054 396,064 398,913 397,565 386,604 402,693 395,464 401,398 392,806 402,484 34 Term 483,264 462,807 552,735 471,605 518,013 535,353 573,882 581,174 602,116 628,303 475,738 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 1998 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1997 AAggeennccyy 11999933 11999944 11999955 11999966 May June July Aug. Sept. 1 Federal and federally sponsored agencies 570,711 738,928 844,611 925,823 974,331 972,731 977,877 980,501 983,599 2 Federal agencies 45,193 39,186 37,347 29,380 28,011 27,646 27,738 27,484 27,392 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2'3 5,315 3,455 2,050 1,447 1,357 1,357 1,326 1,326 1,326 5 Federal Housing Administration4 255 116 97 84 32 37 43 46 68 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 9,732 8,073 5,765 n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 29,885 27,536 29,429 27,853 28,005 27,640 27,732 27,478 27,386 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 523,452 699,742 807,264 896,443 946,320 945,085 950,139 953,017 956,207 II Federal Home Loan Banks 139,512 205,817 243,194 263,404 284,861 290,028 291,931 292,174 295,212 12 Federal Home Loan Mortgage Corporation 49,993 93.279 119,961 156,980 167,407 161,900 161,476 165,690 160,050 13 Federal National Mortgage Association 201,112 257,230 299,174 331,270 344,350 345,462 348,599 348,115 358,003 14 Farm Credit Banks8 53,123 53,175 57,379 60,053 61,384 62,075 61,874 61,091 61,612 15 Student Loan Marketing Association9 39,784 50.335 47,529 44,763 47,620 44,841 45,536 45,211 40,531 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 Corporation'2 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 128,187 103,817 78,681 58,172 51,866 50,962 50,119 48,625 49,944 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 5,309 3,449 2,044 1,431 1,357 1,357 1,326 1,326 1,326 21 Postal Service6 9,732 8,073 5,765 n.a. n.a. n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association 4,760 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 6,325 3,200 3,200 n.a. 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. n.a. n.a. Other lending14 Farmers Home Administration 38,619 33,719 21,015 18,325 16,505 15,455 18,700 14,300 13,895 26 Rural Electrification Administration 17,578 17,392 17,144 16,702 15,674 15,679 15,564 15,568 14,917 27 Other 45,864 37,984 29,513 21,714 18,330 18,471 14,529 17,431 19,716 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 Fanners 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 Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1997 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999944 11999955 11999966 oorr uussee Apr. May June July Aug.r Sept.r Oct. Nov. 1 All issues, new and refunding1 153,950 145,657 171,222 15,741 15,447 19,376 16,740 16,580 20,464 21,173 19,151 By type of issue 2 General obligation 54,404 56,980 60,409 6,224 5,741 6,145 7,679 5,062 3,590 7,837 5,713 3 Revenue 99,546 88,677 110,813 9,517 9,706 13,231 9,061 11,518 16,874 13,336 13,438 By type of issuer 4 State 19,186 14,665 13,651 1,126 1,219 1,197 1,984 1,352 1,278 2,392 509 5 Special district or statutory authority2 95,896 93,500 113,228 11,124 9,666 13,810 10,715 10,480 14,890 13,195 14,810 6 Municipality, county, or township 38,868 37,492 44,343 3,491 4,562 4,369 4,041 4,803 3,629 5,586 3,832 7 Issues for new capital 105,972 102,390 112,298 11,835 10,507 14,536 9,279 8,915 9,450 12,196 12,259 By use of proceeds 8 Education 21,267 23,964 26,851 3,264 2,844 3,498 2,701 2,781 1,943 2,647 2,973 9 Transportation 10,836 11,890 12,324 1,873 1,225 638 666 1,276 2,654 1,215 1,420 10 Utilities and conservation 10,192 9,618 9,791 425 1,608 1,615 1,182 576 907 1,402 1,217 11 Social welfare 20,289 19,566 24,583 1,929 1,291 4,438 1,789 1,481 2,305 2,341 4,090 12 Industrial aid 8,161 6,581 6,287 765 462 637 334 799 441 729 574 13 Other purposes 35,227 30,771 32,462 3,220 3,077 3,710 2,607 2,024 1,723 3,862 1,985 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1997 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999944 11999955 11999966 oorr iissssuueerr Mar. Apr. May June July Aug. Sept. Oct. 1 All issues1 583,240 673,779 n.a. 62,411 43,956 54,750 83,890R 67,305R 50,759R 80,834 58,251 2 Bonds2 498,039 573,206 n.a. 54,632 37,672 46,738 72,638R 57,886R 45,218R 70,999 46,243 By type of offering 3 Public, domestic 365,222 408,804 386,280 45,886 29,797 38,594 60,979r 46,415r 40,328r 56,059 3399,,881122 4 Private placement, domestic3 76,065 87,492 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 56,755 76,910 74,793 8,746 7,875 8,144 11,660r 11,47 R 4,890 14,941 6,431 By industry group 6 Manufacturing 43,423 61,070 41,959 3,060 2,276 2,355 3,748 8,480r 5,175 3,534 44,,665511 7 Commercial and miscellaneous 40,735 50,689 34,076 1,641 6,201 2,104 2,77 r 4,466r 3,354 5,765 3,607 8 Transportation 6,867 8,430 5,111 324 257 6,566 424 544 406 296 1,322 9 Public utility 13,322 13,751 8,161 1,185 47 653 1,377 3,674 1,407 1,357 1,664 10 Communication 13,340 22,999 13,320 2,802 500 300 576 1,304 278 1,831 342 11 Real estate and financial 380,352 416,269 358,446 45,619 28,391 34,761 63,743r 39,419r 34,599r 58,217 34,656 12 Stocks2 85,155 100,573 n.a. 7,779 6,284 8,012 11,252 9,419R 5,541R 9,835 12,008 By type of offering 13 Public preferred 12,570 10,917 33.208 2,740 1,952 2,055 3,846 678 645 1,878 11,,220044 14 Common 47,828 57,556 83,052 5,039 4,332 5,957 7,406 8,74 r 4,895r 7,957 10,804 15 Private placement3 24,800 32,100 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 17,798 21,545 n.a. 1,136 847 1,594 1,627 1,056 836 1,124 11,,997777 17 Commercial and miscellaneous 15,713 27,844 n.a. 1,923 1,181 1,912 2,938 2,804 1,673 3,714 3,103 18 Transportation 2,203 804 n.a. 0 0 35 272 563 139 472 197 19 Public utility 2,214 1,936 n.a. 841 570 200 1,046 483 48 405 623 20 Communication 494 1,077 n.a. 0 25 0 374 120 52 235 261 21 Real estate and financial 46,733 47,367 n.a. 3,879 3,661 4,219 5,384 3,875 2,371r 3,885 5,847 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 Domestic Nonfinancial Statistics • February 1998 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1997 IItteemm 11999955 11999966 Apr. May June July Aug.r Sept. Oct. Nov. 1 Sales of own shares2 871,415 1,149,918 110,721 103,470 112318 125,710 114358 116,021 126,824 111,463 2 Redemptions of own shares 699,497 853,460 100,188 76,337 86,759 90,095 84,366 86,449 98,109 76,138 3 Net sales3 171,918 296,458 10,532 27,133 25,559 35,615 29,992 29,572 28,715 35,325 4 Assets4 2,067337 2,637398 2,782,077 2,952,609 3,067,565 3,279,535 3,199334 3386347 3,300,248 3372,911 5 Cash5 142,572 139,396 177,979 182,004 180,552 182,122 180,152 180,159 181,314 188,363 6 Other 1,924,765 2,498,002 2,604,098 2,770,606 2,887,013 3,097,413 3,019,382 3,206,388 3,118,934 3,184,549 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 1995 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q4 Q1 Q2 Q3 Q4 Qi Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 570.5 650.0 735.9 685.7 717.7 738.5 739.6 747.8 779.6 795.1 827.3 2 Profits before taxes 535.1 622.6 676.6 634.1 664.9 682.2 679.1 680.0 708.4 719.8 753.4 3 Profits-tax liability 186.6 213.2 229.0 215.3 226.2 232.2 231.6 226.0 241.2 244.5 258.2 4 Profits after taxes 348.5 409.4 447.6 418.8 438.7 450.0 447.5 454.0 467.2 475.3 495.2 5 Dividends 216.2 264.4 304.8 274.4 300.7 303.7 305.7 309.1 326.8 333.0 339.1 6 Undistributed profits 132.3 145.0 142.8 144.5 138.0 146.4 141.8 144.9 140.3 142.3 156.1 7 Inventory valuation -16.1 -24.3 -2.5 .4 -5.1 -5.4 -2.7 3.3 3.5 5.9 3.6 8 Capital consumption adjustment 51.4 51.6 61.8 51.1 57.9 61.6 63.2 64.4 67.7 69.4 70.3 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Ql Q2 Q3 Q4 Ql Q2r Q3 ASSETS 1 Accounts receivable, gross2 543.7 607.0 637.1 613.7 626.7 628.1 637.1 647.2 650.7 656.8 2 Consumer 201.9 233.0 244.9 235.9 240.6 244.4 244.9 248.6 254.3 255.0 3 Business 274.9 301.6 309.5 303.5 305.7 301.4 309.5 315.2 311.7 313.1 4 Real estate 66.9 72.4 82.7 74.3 80.4 82.2 82.7 83.4 84.8 88.7 5 LESS: Reserves for unearned income 52.9 60.7 55.6 58.9 57.2 54.8 55.6 51.3 57.1 58.0 6 Reserves for losses 11.3 12.8 13.1 12.8 12.7 12.9 13.1 12.8 13.3 13.7 7 Accounts receivable, net 479.5 533.5 568.3 542.0 556.7 560.5 568.3 583.1 580.4 585.1 8 All other 216.8 250.9 290.0 255.0 258.7 268.7 290.0 289.9 307.1 310.5 9 Total assets 696.3 784.4 858.3 796.9 815.4 829.2 858.3 873.0 887.5 895.6 LIABILITIES AND CAPITAL 10 Bank loans 14.8 15.3 19.7 15.4 17.7 18.3 19.7 18.4 18.8 19.3 11 Commercial paper 171.6 168.6 177.6 168.2 169.6 173.1 177.6 185.3 193.7 190.2 Debt 12 Owed to parent 41.8 51.1 60.3 50.5 56.3 57.9 60.3 61.0 60.0 61.7 13 Not elsewhere classified 247.4 300.0 332.5 307.5 319.0 322.3 332.5 324.4 345.0 348.5 14 All other liabilities 146.2 163.6 174.7 165.6 163.2 164.8 174.7 189.1 171.3 177.2 15 Capital, surplus, and undivided profits 74.6 85.9 93.5 89.7 89.7 92.8 93.5 94.8 98.7 98.7 16 Total liabilities and capital 696.3 784.4 858.3 796.9 815.4 829.2 858.3 873.0 887.5 895.6 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables' Billions of dollars, amounts outstanding 1997 TTyyppee ooff ccrreeddiitt 11999944 11999955 11999966 May June Julyr Aug.r Sept.r Oct. Seasonally adjusted 1 Total 607.3 682.4 762.4 776.6r 783.7r 789.5 796.9 801.2 802.7 2 Consumer 244.4 281.9 306.6 319.3r 321.7r 323.3 322.7 322.6 324.3 3 Real estate 66.9 72.4 111.9 118.0 120.1 121.9 123.4 120.7 121.9 4 Business 295.9 328.1 343.8 339.3 342.0 344.3 350.8 358.0 356.4 Not seasonally adjusted 5 Total 613.5 689.5 769.7 778.5r 787.7r 783.7 791.4 797.5 800.8 6 Consumer 248.0 285.8 310.6 318.3r 321.8r 322.2 322.4 323.3 324.2 7 Motor vehicles loans 70.2 81.1 86.7 85.1 87.0 88.3 88.4 88.5 86.8 8 Motor vehicle leases 67.5 80.8 92.5 97.3 98.5 99.3 98.3 96.1 96.1 9 Revolving2 25.9 28.5 32.5 35.2r 34.9r 33.5 33.5 34.9 34.5 10 Other" 38.4 42.6 33.2 34.7 34.8 34.7 35.2 35.0 35.4 Securitized assets4 11 Motor vehicle loans 32.8 34.8 36.8 36.8 37.8 38.1 38.3 39.7 42.7 12 Motor vehicle leases 2.2 3.5 8.7 9.3 9.2 9.0 8.9 10.0 9.9 13 Revolving n.a. n.a. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14 Other 11.2 14.7 20.1 19.9 19.7 19.4 19.7 19.0 18.9 15 Real estate 66.9 72.4 111.9 118.0 120.1 121.9 123.4 120.7 121.9 16 One- to four-family n.a. n.a. 52.1 54.9 54.5 57.0 59.1 56.6 58.5 17 Other n.a. n.a. 30.5 30.3 30.3 30.1 30.1 29.8 29.7 Securitized real estate assets4 18 One- to four-family n.a. n.a. 28.9 32.5 35.0 34.4 33.9 34.0 33.5 19 Other n.a. n.a. 0.4 0.3 0.3 0.3 0.3 0.3 0.3 20 Business 298.6 331.2 347.2 342.2 345.9 339.6 345.6 353.6 354.7 21 Motor vehicles 62.0 66.5 67.1 70.4 70.7 63.6 65.2 67.4 61.1 7.?. Retail loans 18.5 21.8 25.1 24.4 25.2 24.4 25.4 26.0 26.4 23 Wholesale loans5 35.2 36.6 33.0 36.6 36.3 29.9 30.4 31.8 25.0 24 Leases 8.3 8.0 9.0 9.3 9.3 9.3 9.4 9.6 9.7 25 Equipment 8.3 8.0 9.0 188.0 188.8 191.3 194.9 199.0 197.5 26 Loans 8.3 8.0 9.0 52.3 52.6 51.7 51.3 51.9 50.1 27 Leases 8.3 8.0 9.0 135.6 136.2 139.6 143.6 147.1 147.4 28 Other business receivables6 8.3 8.0 9.0 50.3 52.2 51.8 53.0 54.5 54.7 Securitized assets4 29 Motor vehicles 8.3 8.0 9.0 21.1 21.3 19.9 19.8 19.6 28.4 30 Retail loans 8.3 8.0 9.0 2.6 2.5 2.4 2.3 2.2 2.1 31 Wholesale loans 8.3 8.0 9.0 18.5 18.7 17.4 17.5 17.4 26.3 32 Leases 8.3 8.0 9.0 0.0 0.0 0.0 0.0 0.0 0.0 33 Equipment 8.3 8.0 9.0 9.9 10.4 10.6 10.3 10.1 10.1 34 Loans 8.3 8.0 9.0 4.0 3.9 4.2 4.1 4.0 4.2 35 Leases 8.3 8.0 9.0 5.9 6.5 6.4 6.2 6.0 5.8 36 Other business receivables6 8.3 8.0 9.0 2.5 2.5 2.5 2.4 2.9 2.9 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4. Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • February 1998 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1997 IItteemm 11999944 11999955 11999966 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms] 1 Purchase price (thousands of dollars) 170.4 175.8 182.4 177.6 181.4 181.4 191.2 190.6 183.4 184.0 2 Amount of loan (thousands of dollars) 130.8 134.5 139.2 137.7 140.6 142.7 148.2 147.0 142.4 143.5 3 Loan-to-price ratio (percent) 78.8 78.6 78.2 80.0 79.9 81.2 79.8 79.3 80.1 80.8 4 5 M Fe a e t s u r a i n ty d ( c y h e a a r r g s e ) s (percent of loan amount)^ 2 1 7 .2 .5 9 2 1 7 .2 .7 1 2 1 7 .2 .2 1 2 1 8 .0 .2 0 2 1 8 .0 .0 4 2 1 8 .0 .7 5 2 1 8 .0 .2 6 2 1 8 .1 .3 2 0 2 . 8 9 .1 4 0 2 . 8 9 . 5 6 Yield (percent per year) 6 Contract rate1 7.26 7.65 7.56 7.85 7.79 7.62 7.42 7.43 7.39 7.26 7 Effective rate1'3 7.47 7.85 7.77 8.01 7.95 7.78 7.59 7.61 7.54 7.40 8 Contract rate (HUD series)4 8.58 8.05 8.03 8.08 7.82 7.62 7.67 7.51 7.48 7.38 SECONDARY MARKETS Yield (percent per xear) 9 FHA mortgages (Section 203)5 8.68 8.18 8.19 8.05 8.02 7.61 8.02 7.52 7.53 7.51 10 GNMA securities6 7.96 7.57 7.48 7.59 7.37 7.04 7.16 7.10 6.90 6.84 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 222,057 253,511 287,052 297,023 297,471 300,439 304,528 307,256 310,421 314,627 12 FHA/VA insured 27,558 28,762 30.592 31,437 31,198 31,065 31,193 31,847 32,080 31,878 13 Conventional 194,499 224,749 256,460 265,586 266,273 269,374 273.335 275,409 278,341 282,749 14 Mortgage transactions purchased (during period) 62,389 56,598 68.618 4,148 3,594 6,417 7,606 6,544 7,619 8,166 Mortgage commitments (during period) 15 Issued7 54,038 56,092 65,859 1,704 6,196 6,956 5,960 7,573 9,190 5,123 16 To sell8 1,820 360 130 23 115 75 219 215 300 139 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 72,693 107,424 137,755 148.698 149,250 151,582 155,169 157,165 159,801 160,974 18 FHA/VA insured 276 267 220 202r 198r 194r 190r 186r 183 180 19 Conventional 72,416 107,157 137,535 148,496r 149,052r 151,388r 154,979r 156,979r 159,618 160,794 Mortgage transactions (during period) 70 Purchases 124,697 98,470 128,566 8,195 8,884 8,374 9,917 10,496 12,648 11,836 21 117,110 85,877 119,702 7.596 8.321 7,757 9,187 9,727 11,713 10,832 22 Mortgage commitments contracted (during period)9 136,067 118,659 128,995 7,408 9,099 9,053' 9,914r 10,877 11,985 12,047 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 A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1996 1997 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999933 11999944 11999955 Q3 Q4 Q1 Q2 Q3P 1 All holders 4,261,163r 4,462,828r 4,691,824r 4,940,719r 5,022,464r 5,080,733r 5,168,350 5,259,875 By type of property 2 One- to four-family residences 3,225,399r 3,424,395r 3,616,807' 3,792,994' 3,851,163' 3,899,042' 3,960,438 4,027,379 3 Multifamily residences 270,005r 274,922r 287,238' 304,532' 312,418' 315,091' 321,145 327,203 4 Nonfarm, nonresidential 685,021 680,540 703,218 756,462 771,749 778,947' 798,089 815,534 5 Farm 80,739 82,971 84,561 86,732 87,134 87,653' 88,679 89,759 By type of holder 6 Major financial institutions 1,763,410 1,811,018 1,884,714 1,945,088 1,968,859 1,982,764' 2,023,400 2,055,789 7 Commercial banks2 940,603 1,003,923 1,080,483 1,112,914 1,135,133 1,149,854' 1,186,264 1,216,606 8 One- to four-family 556,660 611,092 663,715 678,565 692,180 702,616' 727,217 745,458 9 Multifamily 38,657 39,346 43,837 46,410 46,676 47,618' 48,752 49,231 10 Nonfarm, nonresidential 324,420 330,934 349,101 363,124 371,394 374,377' 384,234 395,116 11 Farm 20,866 22,551 23,830 24,815 24,883 25,242' 26,061 26,800 12 Savings institutions3 598,435 596,191 596,763 628,037 628,335 626,381' 629,059 629,757 13 One- to four-family 470,000 477,626 482,353 513,794 513,712 513,393' 516,713 518,409 14 Multifamily 67,366 64,343 61.987 61,308 61,570 60,645 60,102 60,370 15 Nonfarm, nonresidential 60,764 53,933 52,135 52,614 52,723 52,007 51,906 50,634 16 Farm 305 289 288 320 331 336 338 344 17 Life insurance companies 224,372 210,904 207,468 204,138 205,390 206,529 208,077 209,426 18 One- to four-family 8,593 7,018 7,316 6,190 6,772 6,799 6,842 7,080 19 Multifamily 25,376 23,902 23,435 23,155 23,197 23,320 23,499 23,615 20 Nonfarm, nonresidential 180,934 170,421 167,095 165,096 165,399 166,277 167,548 168,374 21 Farm 9,469 9,563 9,622 9,697 10,022 10,133 10,188 10,358 22 Federal and related agencies 326,040 315,580 306,774 302,793 300,935 295,203 292,966 290,786 23 Government National Mortgage Association 6 2 2 2 6 7 7 24 One- to four-family 15 6 2 2 2 6 7 7 25 Multifamily 7 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,386 41.781 41,791 41,575 41,596 41,485 41,400 41,332 27 One- to four-family 18,030 18,098 17,705 17,374 17,303 17,175 17,239 17,458 28 Multifamily 10,940 11,319 11,617 11,652 11,685 11,692 11,706 11,713 29 Nonfarm, nonresidential 5,406 5,670 6,248 6,681 6,841 6,969 7,135 7,246 30 Farm 7,012 6,694 6,221 5,869 5,768 5,649 5,321 4,916 31 Federal Housing and Veterans' Administrations 12,215 10,964 9,809 6,627 6,244 4,330 4,200 2,839 32 One- to four-family 5,364 4,753 5,180 3,190 3,524 2,335 2,299 843 33 Multifamily 6,851 6,211 4,629 3,438 2,719 1,995 1,900 1,996 34 Resolution Trust Corporation 17,284 10,428 1,864 0 0 0 0 0 35 One- to four-family 7,203 5,200 691 0 0 0 0 0 36 Multifamily 5,327 2,859 647 0 0 0 0 0 37 Nonfarm, nonresidential 4,754 2,369 525 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 14,112 7,821 4,303 4,025 2,431 2,217 1,816 1,476 40 One- to four-family 2,367 1,049 492 675 365 333 272 221 41 Multifamily 1,426 1,595 428 766 413 377 309 251 42 Nonfarm, nonresidential 10,319 5,177 3,383 2,584 1,653 1,508 1,235 1,004 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 165,668 174,312 176,824 175,472 174,556 172,829 170,386 168,457 45 One- to four-family 150,698r 158,766r 161,665' 161,072' 160,751' 159,634' 157,729 156,362 46 Multifamily 14.970' 15,546r 15,159' 14.400' 13,805' 13,195' 12,657 12,095 47 Federal Land Banks 28,460 28,555 28,428 29,579 29,602 29,668 29,963 30,346 48 One- to four-family 1,675 1,671 1.673 1,740 1,742 1,746 1,763 1,786 49 Farm 26,785 26,885 26,755 27,839 27,860 27,922 28,200 28,560 50 Federal Home Loan Mortgage Corporation 46.892 41,712 43,753 45,513 46,504 44,668 45,194 46,329 51 One- to four-family 44,345 38,882 39,901 41,149 41,758 39,640 40,092 40,953 52 Multifamily 2,547 2,830 3,852 4,364 4,746 5,028 5,102 5,376 53 Mortgage pools or trusts^ 1,570,691 1,726,365 1,861,489 2,008,356 2,056,276 2,099,504' 2,134,312 2,178,530 54 Government National Mortgage Association 414,066 450,934 472,283 497,018 506,340 513,471 520,938 529,867 55 One- to four-family 404,864 441,198 461.438 485,073 494,158 500,591 507,618 516,217 56 Multifamily 9,202 9,736 10.845 11,945 12,182 12,880 13,320 13,650 57 Federal Home Loan Mortgage Corporation 447,147 490,851 515,051 545,608 554,260 562,894 567,187 569,920 58 One- to four-family 442.612 487,725 512,238 543,341 551,513 560,369 564,445 567,340 59 Multifamily 4,535 3,126 2,813 2,267 2,747 2,525 2,742 2,580 60 Federal National Mortgage Association 495,525 530,343 582,959 636,362 650,780 663,668 673.931 690,919 61 One to four-family 486,804 520,763 569,724 619,869 633.210 645.324 654,826 670,677 62 Multifamily 8,721 9,580 13,235 16,493 17,570 18,344 19,105 20,242 63 Farmers Home Administration 28 19 11 7 3 3 2 2 64 One- to four-family 5 3 2 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 13 9 5 4 0 0 0 0 67 Farm 10 7 4 3 3 3 2 2 68 Private mortgage conduits 213,925 254,218 291,185 329,360 344,894 359,468' 372,253 387,822 69 One- to four-family6 179,755 202,519 222,526 244,884 247,740 256,834 259,950 267,000 70 Multifamily 8,701 14,925 21,279 28,141 33,689 35,607' 38,992 41,973 71 Nonfarm, nonresidential 25.469 36,774 47,380 56,336 63,464 67,027' 73,312 78,849 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 601,023r 609,865r 638,848' 684,481' 696,395' 703,262' 717,672 734,769 74 One- to four-family 446,408r 448,027' 470,187' 476,075' 486,433' 492,248' 503,426 517,568 75 Multifamily 65,380r 69,602' 73,474' 80,193' 81,419' 81,864' 82,959 84,111 76 Nonfarm, nonresidential 72.943 75,253 77,345 110,023 110,275 110,782' 112,720 114,312 77 Farm 16,292 16,983 17,841 18,190 18,268 18,368' 18,568 18,778 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 nonl'arm 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 1998 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1997r May June July Aug. Sept. Oct. Seasonally adjusted 1 Total 959,748r l,094,197r l,179,892r 1,209,533 1,211,741 1,215,606 1,221,742 1,222,404 1,233,097 2 Automobile 327,863r 364,23 lr 392,370' 397,452 399,808 402,588 401,860 403,730 407,949 3 Revolving 365,514r 442,994r 499,209r 514,345 516,156 520,168 523,607 526,154 529,692 4 Other2 266,37 lr 286,972r 288,313r 297,736 295,777 292,849 296,276 292,520 295,457 Not seasonally adjusted 5 Total 983,933r l,122,828r 1,211,590' 1,199,345 1,205,034 1,208,717 1,220,086 1,225,234 1,232,560 By major holder 6 Commercial banks 458,777r 501,963r 526,769r 511,604 510,681 514,482 516,176 507,528 507,247 7 Finance companies 134,421 152,123 152,391 154,933 156,657 156,435 157,152 158,428 156,639 8 Credit unions 119,594 131,939 144,148 146,691 147,640 148,973 149,791 150,669 151,372 9 Savings institutions 38,468 40,106 44,711 46,275 46,483 46,691 47,400 47,107 47,314 10 Nonfinancial business3 86,621 85,061 77,745 67,736 67,973 67,579 68,556 68,520 68,401 11 Pools of securitized assets4 146,052 211,636 265,826r 272,106 275,600 274,557 281,011 292,982 301,587 By major type of credit 12 Automobile 330,198r 367,069r 395,609r 393,779 399,637 403,043 404,438 407,300 412,440 13 Commercial banks 143,517r 15 l,437r 157,047r 155,207 155,960 157,784 158,516 157,234 158,327 14 Finance companies 70,157 81,073 86,690 85,106 86,979 88,323 88,428 88,545 86,805 15 Pools of securitized assets4 36,689 44,635 51,719r 50,809 53,024 52,672 52,427 55,432 60,113 16 Revolving 383,187 464,134 522.860 509,630 511,427 515,034 520,698 524,059 526,429 17 Commercial banks 182,021 210,298 228,615 212,796 213,318 218,992 217,466 209,269 208,937 18 Finance companies 25,880 28,460 32,493 35,167 34,863 33,461 33,543 34,925 34,466 19 Nonfinancial business3 56,790 53,525 44,901 37,078 37,283 36,791 37,578 37,685 37,479 20 Pools of securitized assets4 96,130 147,934 188,712 195,800 196,806 196,456 202,444 212,403 215,674 21 Other 270,548r 291,625r 293,121r 295,936 293,970 290,640 294,950 293,875 293,691 22 Commercial banks 133,239r 140,228r 141,107r 143,601 141,403 137,706 140,194 141,025 139,983 23 Finance companies 38,384 42,590 33,208 34,660 34,815 34,651 35,181 34,958 35,368 24 Nonfinancial business3 29,831 31,536 32,844 30,658 30,690 30,788 30,978 30,835 30,922 25 Pools of securitized assets4 13,233 19,067 25,395 25,497 25,770 25,429 26,140 25,147 25,800 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 1997 IItteemm 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks2 1 48-month new car 8.12 9.57 9.05 n.a. 9.20 n.a. n.a. 8.99 n.a. n.a. 2 24-month personal 13.19 13.94 13.54 n.a. 13.81 n.a. n.a. 13.84 n.a. n.a. Credit card plan 3 All accounts 15.69 16.02 15.63 n.a. 15.75 n.a. n.a. 15.78 n.a. n.a. 4 Accounts assessed interest 15.77 15.79 15.50 n.a. 15.72 n.a. n.a. 15.79 n.a. n.a. Auto finance companies 5 New car 9.79 11.19 9.84 8.56 7.80 7.64 6.71 5.93 6.12 7.27 6 Used car 13.49 14.48 13.53 13.29 13.48 13.55 13.51 13.38 13.29 13.22 OTHER TERMS3 Maturity (months) 7 New car 54.0 54.1 51.6 52.8 53.2 53.3 54.6 55.5 55.4 54.4 8 Used car 50.2 52.2 51.4 51.2 51.3 51.3 51.4 51.2 50.8 50.6 Loan-to-value ratio 9 New car 92 92 91 91 93 93 94 93 93 92 10 Used car 99 99 100 99 99 99 99 99 99 101 Amount financed (dollars) 11 New car 15,375 16,210 16,987 17,620 18,060 18,171 18,281 18,329 18,520 18,779 12 Used car 10,709 11,590 12,182 12,195 12,261 12,239 12,307 12,204 12,190 12,287 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 MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1996 1997' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q1 Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 539.9 619.6 594.0 698.2 714.2r 857.1r 695.7r 677.6r 626.3r 691.7 562.8 646.6 By sector and instrument 7 Federal government 304.0 256.1 155.9 144.4 145.0 227.3 62.7 163.2 126.9 81.2 -97.1 40.9 3 Treasury securities 303.8 248.3 155.7 142.9 146.6 229.6 60.5 166.3 130.2 82.6 -97.3 41.9 4 Budget agency securities and mortgages .2 7.8 .2 1.5 -1.6 -2.3 2.2 -3.1 -3.3 -1.4 .2 -.9 5 Nonfederal 235.9 363.4 438.1 553.7 569.2' 629.9r 633.0' 514.4' 499.4' 610.5 659.9 605.6 By instrument 6 Commercial paper 8.6 10.0 21.4 18.1 -.9 25.4r 9.2' -14.2 -24.1' 7.8 21.4 15.5 7 Municipal securities and loans 30.5 74.8 -35.9 -48.2 1.3 -4.1 30.2 -65.2 44.2 23.2 76.5 40.4 8 Corporate bonds 67.6 75.2 23.3 73.3 72.5 60.9 71.5 67.8 89.9 79.4 86.1 122.9 9 Bank loans n.e.c — 12.0r 6.4r 75.2' 102.0' 66.8r 47.5' 49.7' 136.2' 33.6' 147.6 105.4 25.8 10 Other loans and advances 5.7 -18.9 37.3 46.5 21.5r 20.4 33.9' 46.4' -14.5' 15.5 4.0 51.0 11 Mortgages 131.5 155.3 191.9 223.1 319.2 359.9 323.7 261.6 331.6 267.5 308.7 307.4 1? Home 189.1 184.1 199.0 192.4 268. r 316.9' 255.4 248.2' 251.6 242.0 217.8 223.1 n Multifamily residential -10.7 -6.0 1.7 10.4 17.7r 13.9' 18.4' 11.9' 26.8' 5.4 19.6 19.6 14 Commercial -47.4 -23.9 -11.0 18.8 30.9 27.5 45.1 -.6 51.5 18.1 67.2 60.4 15 Farm .5 1.0 2.2 1.6 2.6 1.6 4.9 2.2 1.6 2.1 4.1 4.3 16 Consumer credit 3.9r 60.7r 124.9r 138.9r 88.8r 119.9' 114.7' 81.9' 38.6' 69.6 57.8 42.7 By borrowing sector 17 Household 191. r 246.2r 343.7 354.9 362.9r 446.2' 378.1' 345.5' 281.6' 333.3 295.1 224455..99 18 Nonfinancial business 23.7r 54.9 140.8 241.8 193.7r 176.0' 216.9' 219.7 162.0' 242.3 280.6 308.4 19 Corporate 39.6 49.1 135.3 213.7 147.9r 131.7' 172.2' 193.0' 94.6' 190.0 205.4 240.8 20 Nonfarm noncorporate -16.4 3.2 2.2 26.6 43.4 44.2 38.5 29.2 61.5 48.1 67.6 63.2 21 Farm .5 2.6 3.3 1.5 2.4 .1 6.2 -2.5 6.0 4.2 7.6 4.4 22 State and local government 21.1 62.3 -46.4 -42.9 12.7 7.7 38.0 -50.8 55.8 35.0 84.2 51.3 7.3 Foreign net borrowing in United States 24. lr 69.8r — 14.0r 71.r 70.5r 52.3' 36.1' 105.7' 87.9' 26.2 56.3 82.2 24 Commercial paper 5.6r -9.6r -26.1r 13.5r 11.3r -6.3' 9.6' 37.5' 4.4' 15.4 10.3 -11.6 25 Bonds 16.8 82.9 12.2 49.7 49.4 47.7 11.2 60.2 78.5 11.0 34.3 89.2 7.6 Bank loans n.e.c 2.3 .7 1.4 8.5 9.1 8.7 15.1 4.7 7.8 -.7 11.5 7.3 27 Other loans and advances -.6 -4.2 -1.5 -.5 .8 2.3 .1 3.4 -2.7 .5 .2 -2.7 28 Total domestic plus foreign 564.0r 689.3r 579.9r 769.2r 784.7r 909.51" 731.9r 783.3r 714.2r 718.0 619.1 728.7 Financial sectors 29 Total net borrowing by financial sectors 240.2r 293.6r 464.3r 448.4r 536.3r 342.0r 721.7r 436.8r 644.8r 323.4 665.8 526.2 By instrument 10 Federal government-related 155.8 165.3 287.5 204.1 231.5 148.8 301.4 222.9 252.8 105.7 286.2 161.0 31 Government-sponsored enterprise securities 40.3 80.6 176.9 105.9 90.4 31.4 126.9 80.0 123.3 -8.9 198.1 46.4 32 Mortgage pool securities 115.6 84.7 115.4 98.2 141.1 117.4 174.5 142.9 129.6 114.6 88.1 114.6 33 Loans from U.S. government .0 .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 84.4r 128.3r 176.8r 244.3r 304.9r 193.2' 420.3' 213.9' 392.0' 217.7 379.7 365.2 35 Open market paper -i.r -5.5r 40.5r 42.7r 92.2r 17.r 105.4' 84.4' 162.0' 175.9 77.8 168.2 36 Corporate bonds 84.8r 122.2r 117.6r 188.2r 156.5r 150.5' 230.9' 80.7' 164.0' 38.9 215.0 129.9 37 Bank loans n.e.c .7 -14.4 -13.7 4.2 16.8 23.4 20.6 2.6 20.4 7.0 9.9 15.6 38 Other loans and advances -.6 22.4 22.6 3.4 27.9r -5.5 52.7' 33.3' 31.2' -20.1 63.0 37.5 39 Mortgages .6 3.6 9.8 5.9 11.4 7.7 10.8 12.9 14.3 16.0 14.0 14.0 By borrowing sector 40 Commercial banking 10.0 13.4 20.1 22.5 13.0r -34.2 44.5' 14.7 26.8' 13.7 81.7 3300..11 41 Savings institutions -7.0 11.3 12.8 2.6 25.5r 11.0 42.1 25.8' 23.0' -16.8 31.9 21.2 42 Credit unions .0 .2 .2 — .1 .1 -.1 -.2 .3 .3 -.2 .2 .2 43 Life insurance companies .0 .2 .3 -.1 1.1 2.5 .3 -.4 2.0 .8 ..11 .2 44 Government-sponsored enterprises 40.2 80.6 172.1 105.9 90.4 31.4 126.9 80.0 123.3 -8.9 119988..11 46.4 45 Federally related mortgage pools 115.6 84.7 115.4 98.2 141.1 117.4 174.5 142.9 129.6 114.6 88.1 114.6 46 Issuers of asset-backed securities (ABSs) 57.3 82.8 68.8 132.9 132.0r 138.9 162.5' 88.0' 138.6' 62.2 93.7 165.2 47 Finance companies -3.r — 1.4r 48.7r 50.2r 45.9r 41.4' 67.8' 30.7 43.8 6.4 124.6 .1 48 Mortgage companies 8.0 .0 -11.5 .4 12.4 20.0 16.0 1.7 12.1 5.9 10.0 2.6 49 Real estate investment trusts (REITs) .3 3.4 13.7 6.0 12.8 8.2 11.5 13.7 17.7 19.1 18.6 23.2 50 Brokers and dealers 2.7 12.0 .5 -5.0 -2.0 -31.8 13.2 5.7 4.9 -2.9 34.9 -6.9 51 Funding corporations 16.2r 6.3r 23.lr 34.9 64.lr 37.2' 62.7' 33.7' 123.0' 129.4 -16.1 129.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic NonfinancialS tatistics • February 1998 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1996 1997R TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 Ql Q2 Q3 Q4 QL Q2 Q3 All sectors 52 Total net borrowing, all sectors 804.2r 982.9r l,044.3r l,217.7r l,321.0r l,251.5r l,453.5r l,220.1r l,359.0r 1,041.4 1,284.9 1,255.0 53 Open market paper 13.1 -5.1 35.7 74.3 102.6 36.2R 124.2 107.7 142.3R 199.2 109.5 172.0 54 U.S. government securities 459.8 421.4 448.1 348.5 376.5 376.1 364.1 386.1 379.7 186.9 189.1 201.9 55 Municipal securities 30.5 74.8 -35.9 -48.2 1.3 -4.1 30.2 -65.2 44.2 23.2 76.5 40.4 56 Corporate and foreign bonds 169.1r 280.3R 153.2R 311.lr 278.4R 259. LR 313.6R 208.7R 332.4R 129.3 335.4 341.9 57 Bank loans n.e.c -8.9R -7.2R 62.9R 114.7R 92.6R 79.5R 85.5R 143.5R 61.8R 153.8 126.7 48.7 58 Other loans and advances 4.6 -.8 53.6 49.3 50.2R 17.2 86.7 83.0R 14.0R -4.1 67.2 85.9 59 Mortgages 132.1 158.9 201.7 229.0 330.6 367.6 334.5 274.5 345.9R 283.5 322.7 321.4 60 Consumer credit 3.9R 60.7R 124.9R 138.9R 88.8R 119.9R 114.7R 81.9r 38.6R 69.6 57.8 42.7 Funds raised through mutual funds and corporate equities 61 Total net issues 293.9 422.1 124.8 145.1 236.6r 319.1 386.6 78.4 162.2r 201.8 211.3 310.5 62 Corporate equities 103.4 130.1 24.1 -2.3 -1.0r 21.5 82.1 -93.5 -u.r -51.6 -49.7 13.5 63 Nonfinanciai corporations 27.0 21.3 -44.9 -58.3 -64.2 -73.6 .4 -127.6 -56.0 -78.8 -90.4 -60.4 64 Foreign shares purchased by U.S. residents 32.4 63.4 48.1 50.4 58.8 90.1 70.1 32.7 42.3 47.0 53.0 62.8 65 Financial corporations 44.0 45.4 20.9 5.6 4.4R 5.1 11.6 1.5 -,4R -19.8 -12.3 11.1 66 Mutual fund shares 190.5 292.0 100.6 147.4 237.6 297.6 304.5 171.9 176.3 253.4 261.0 297.0 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 9 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1997r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999922 11999933 11999944 11999955 11999966 Ql Q2 Q3 Q4 Ql Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 804.2r 982.9r l,044.3r l,217.7r l,321.0r l,251.5r l,453.5r l,220.1r l,359.0r 1,041.4 1,284.9 1,255.0 2 Domestic nonfederal nonfinancial sectors 117.9r 80.7r 258.2r -86.5 —7.5r —43.2r 321.9r - 184.6r -124.0'' -257.4 -101.5 -244.2 3 Household 88.6r 40.0r 295.0r -2.1 37.0r -81.3r 288.4r -21.9r -37.3r -226.7 -37.2 -259.0 4 Nonfinancial corporate business 27.8 9.1 17.7 -2.4 11.4r 31.7r 37.4r — 12.7r — 10.9r 71.0 -52.5 17.1 5 Nonfarm noncorporate business -.1 -1.1 .6 .3 .4 .4 .4 .4 .4 .5 .7 .8 6 State and local governments 1.7 32.6 -55.0 -82.4 -56.2 6.0 -4.4 -150.4 -76.2 -102.2 -12.5 -3.1 7 Federal government —11.9r -18.4r -24.2r -21.0r -19.8r -19.3r - 13.5r -23.9r —22.5r -12.9 -6.6 -8.5 8 Rest of the world 98.4 129.3 132.3 273.9 409.1 350.0 268.9 485.4 532.2 366.4 298.9 411.5 9 Financial sectors 599.8 791.3 677.9 1,051.3 939.2r 964.0r 876.3r 943.2r 973.3r 945.2 1,094.1 1,096.2 10 Monetary authority 27.9 36.2 31.5 12.7 12.3 17.5 11.7 11.5 8.4 37.4 47.2 14.3 11 Commercial banking 95.3 142.2 163.4 265.9 187.8 126.0 179.7 196.1 249.4 308.0 309.2 209.7 12 U.S.-chartered banks 69.5 149.6 148.1 186.5 119.6 78.3 121.9 119.5 158.9 195.9 301.1 209.5 13 Foreign banking offices in United States 16.5 -9.8 11.2 75.4 63.3 50.8 50.7 71.1 80.5 104.0 1.1 -.6 14 Bank holding companies 5.6 .0 .9 -.3 3.9 -5.1 5.4 4.8 10.5 2.2 5.1 -4.9 15 Banks in U.S.-affiliated areas 3.7 2.4 3.3 4.2 1.0 2.1 1.7 .7 -.6 6.0 1.8 5.7 16 Savings institutions —79.0 -23.3 6.7 -7.6 19.9 34.1 44.7 49.7 -48.8 -5.3 23.8 -47.6 17 Credit unions 17.7 21.7 28.1 16.2 25.5 23.6 33.0 21.1 24.3 18.5 25.7 15.7 18 Bank personal trusts and estates 8.0 9.5 7.1 -18.8 3.9 -3.5 4.2 7.8 7.2 8.2 8.9 9.4 19 Life insurance companies 79.5 100.9 66.7 99.2 72.5 47.6 .9 123.2 118.1 94.3 172.5 133.2 20 Other insurance companies 6.7 27.7 24.9 21.5 22.5r 17.6r 30.5 14.2 27.7 3.9 27.9 17.3 21 Private pension funds 37.5 49.5 47.7 63.1 46.6 69.5 45.4 41.9 29.5 57.5 57.8 68.1 22 State and local government retirement funds 5.9 21.1 30.7 22.7 34.5 54.9 47.9 19.0 16.1 38.7 39.2 39.2 23 Money market mutual funds 4.7 20.4 30.0 86.5 88.8 164.1 27.0 83.0 81.3 65.2 19.7 123.6 24 Mutual funds 126.2 159.5 -7.1 52.5 48.9 88.5 54.3 27.5 25.3 61.9 103.6 102.0 25 Closed-end funds 18.2 14.4 -3.3 13.3 9.3 10.9 9.8 9.0 7.5 6.7 5.3 4.3 26 Government-sponsored enterprises 68.8 87.8 117.8 84.7 92.0 33.9 114.7 81.4r 137.9r 45.1 119.2 55.5 27 Federally related mortgage pools 115.6 84.7 115.4 98.2 141.1 117.4 174.5 142.9 129.6 114.6 88.1 114.6 28 Asset-backed securities issuers (ABSs) 53.1 80.2 61.7 111.1 101.8r 119.7 135.7 62.0 89.6r 38.7 78.9 102.6 29 Finance companies .4 -20.9 48.3 49.9 18.4 30.3r 36.3 13.2r -6.2r 44.9 1.9 46.9 30 Mortgage companies .1 .0 -24.0 -3.4 8.2 51.8 -26.8 3.4 4.1 -3.4 6.5 5.9 31 Real estate investment trusts (REITs) 1.1 .6 4.7 2.2 3.0 3.4 3.4 3.4 2.0 2.0 3.4 3.4 32 Brokers and dealers -1.3 14.8 -44.2 90.1 — 15.7r -109.0 -72.0 35.5 82.7r -14.5 -22.7 36.9 33 Funding corporations 13.3 -35.6 -28.4 -8.6 18.0r 65.7r 21,2r -2.4 — 12.3r 22.8 -21.8 41.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 804.2r 982.9r l,044.3r l,217.7r l,321.0r l,251.5r l,453.5r l,220.1r l,359.0r 1,041.4 1,284.9 1,255.0 Other financial sources 35 Official foreign exchange -1.6 .8 -5.8 8.8 -6.3 -.9 1.6 -26.6 .7 -17.6 .4 2.4 36 Special drawing rights certificates -2.0 .0 .0 2.2 -.5 .0 .0 -1.8 .0 -2.1 .0 .0 37 Treasury currency .2 .4 .7 .6 .0 .0 .0 2.3 -2.3 .4 .2 1.3 38 Foreign deposits -3.4 -18.5 52.9 35.3 82.0 100.8 3.0 119.7 104.5 188.6 18.8 79.3 39 Net interbank transactions 49.4 50.5 89.8 9.9 -51.6r -76.1r -50.8r —91.2' 11.& -88.8 -43.8 -77.3 40 Checkable deposits and currency 113.5 117.3 -9.7 - 12.7r 15.8 6.8 3.9 105.9 -53.4 85.3 64.2 -49.4 41 Small time and savings deposits -57.3r -70.3 -39.9r 96.6r 97.1 207.7 -3.2 94.2r 89.6r 157.9 24.5 44.0 42 Large time deposits -73.2 -23.5 19.6 65.6 113.9 57.4 83.1 180.2r 134.8r 49.9 176.3 196.5 43 Money market fund shares 4.5 20.2 43.3 142.3 145.8 227.6 23.1 145.1 187.5 182.4 58.5 243.6 44 Security repurchase agreements 43.2r 71.3r 78.2r 110.5r 40.3r -4.8r 98.4r -15.9 83.3r 33.8 195.3 137.9 45 Corporate equities 103.4 130.1 24.1 -2.3 -1.0r 21.5 82.1 -93.5 -14.1r -51.6 -49.7 13.5 46 Mutual fund shares 190.5 292.0 100.6 147.4 237.6 297.6 304.5 171.9 176.3 253.4 261.0 297.0 47 Trade payables 46.6 52.0 93.7 105.2 68.8r 74. lr 116.9r -12.9r 97.0r 67.9 68.1 149.8 48 Security credit 4.6 61.4 -.1 26.7 52.4 114.0 -34.8 5.3 125.2r 117.1 137.4 46.7 49 Life insurance reserves 28.0 36.0 34.5 44.9 43.6 19.0 32.5 56.6 66.3 44.2 85.9 49.6 50 Pension fund reserves 230.3 254.7 253.2 241. lr 224.2r 224.7r 183.2r 215.8r 273.2r 260.5 313.6 313.1 51 Taxes payable 10.6r 11.4r 2.6r 4.6r 12.9r 19.4r 7.6r 7.8r 16.8r 28.6 1.1 9.5 52 Investment in bank personal trusts -7.1 .9 17.8 -49.7 12.5 -.6 11.8 19.2 19.8 23.5 26.3 28.9 53 Noncorporate proprietors' equity 35.4r 11.4r 43.4r 27.8r 8.5r 6.5r 5.4r 31.r -9.0r 6.6 4.2 7.1 54 Miscellaneous 261.6r 351.9r 268. r 477.9r 466.9r 477.6r 420.7r 393.lr 576.3r 518.4 667.2 569.2 55 Total financial sources l,781.2r 2,332.8r 2,111.2r 2,700.4r 2,883.9r 3,023.7r 2,742.4r 2,520.7r 3,249.1r 2,899.9 3,294.2 3,317.6 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.2 -.2 -.5 -1.0 -1.1 -1.0 1.3 -3.1 -.3 -.5 .5 57 Foreign deposits -2.7 -5.7 43.0 25.7 57. r 73.2 26.6 91.3 37.31 183.0 -.2 56.6 58 Net interbank liabilities -4.9 4.2 -2.7 -3.1 -3.3 9.3 -22.5 -4.4 4.2 26.9 -24.4 -51.5 59 Security repurchase agreements 4.8r 46.1 57.2r 55.0r 25.7r 27.6r 124.7r - 133.4r 83.9r -120.5 139.3 20.9 60 Taxes payable 12.8r 15.8r 16.6r 17.8r 15.2r ,3r 23.2r 15.6r 21.8r 10.4 27.5 -8.4 61 Miscellaneous —54.6r -186.4r — 153.4r -85.9r —98.3r -165.0r — 129.4r — 165.5r 66.5r -104.0 -318.9 -80.9 Floats not included in assets ( —) 62 Federal government checkable deposits .7 -1.5 -4.8 -6.0 .5 2.7 -6.6 27.1 -21.4 -9.4 16.1 2.1 63 Other checkable deposits 1.6 -1.3 -2.8 -3.8 -4.0 -2.8 -5.0 -4.7 -3.7 -2.6 -4.8 -3.4 64 Trade credit 11.4r -4.3r ,3r -29.T —34.8r 10.4r ,2r — 105.9r —44. lr 18.9 -70.1 -3.1 65 Total identified to sectors as assets l,812.4r 2,466.0r 2,157.9r 2,730.3r 2,927.0r 3,069.0r 2,732.0r 2,799.2r 3,107.6r 2,897.6 3,530.2 3,384.8 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. F.l and F.5. 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 1998 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1996 1997' Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinanciai sectors 1 Total credit market debt owed by domestic nonfinanciai sectors 12,486.9 13,087.1 13,785.3r 14,499.4r 13,981.0r 14,133.4r 14,307.6r 14,499.4r 14,656.7 14,770.4 14,937.7 By sector and instrument 2 Federal government 3,336.5 3,492.3 3,636.7 3,781.8 3,717.2 3,693.8 3,733.1 3,781.8 3,829.8 3,760.6 3,771.2 3 Treasury securities 3,309.9 3,465.6 3,608.5 3,755.1 3,689.6 3,665.5 3,705.7 3,755.1 3,803.5 3,734.3 3,745.1 4 Budget agency securities and mortgages 26.6 26.7 28.2 26.6 27.6 28.2 27.4 26.6 26.3 26.3 26.1 5 Nonfederal 9,150.4 9,594.8 10,148.5 10,717.7' 10,263.7 10,439.6' 10,574.5' 10,717.7' 10,826.9 11,009.8 11,166.5 By instrument 6 Commercial paper 117.8 139.2 157.4 156.4 174.2 181.7 173.0 156.4 168.7 179.3 176.6 1 Municipal securities and loans 1,377.5 1,341.7 1,293.5 1,294.8 1,290.3 1,296.1 1,279.8 1,294.8 1,298.8 1,315.5 1,324.9 8 Corporate bonds 1,229.7 1,253.0 1,326.3 1,398.8 1,341.5 1,359.4 1,376.4 1,398.8 1,418.7 1,440.2 1,470.9 9 Bank loans n.e.c 684.8r 759.9' 861.9r 928.6' 871.8' 889.3' 919.2' 928.6' 964.3 995.8 998.0 10 Other loans and advances 629.3 673.0 719.4 741.0' 728.8 736.4' 744.3' 741.0' 749.3 749.2 758.0 11 Mortgages 4,252.2 4,444.1 4,667.2 4,986.5' 4,744.0 4,832.2 4,908.3 4,986.5' 5,040.7 5,124.8 5,212.9 12 Home 3,225.4r 3,424.4r 3,616.8' 3,851.2' 3,682.8' 3,720.2' 3,793.0' 3,851.2' 3,899.0 3,960.4 4,027.4 13 Multifamily residential 267.0r 268.7r 279. lr 300.5' 282.6' 290.9' 293.8' 300.5' 301.9 306.8 311.7 14 Commercial 679.0 668.0 686.8 747.6 693.6 734.9 734.7 747.6 752.1 768.9 784.0 13 Farm 80.7 83.0 84.6 87.1 85.0 86.2 86.7 87.1 87.7 88.7 89.8 16 Consumer credit 859.0r 983.9r l,122.8r 1,211.6' 1,113.2' 1,144.5' 1,173.5' 1,211.6' 1,186.4 1,205.0 1,225.2 By borrowing sector 17 Household 4,203.9r 4,550.4r 4,910.5r 5,244.2' 4,970.0' 5,043.1' 5,148.3' 5,244.2' 5,273.8 5,361.0 5,441.4 18 Nonfinanciai business 3,784.7r 3,929.0r 4,165.5r 4,388.3' 4,220.6' 4,315.9' 4,358.3' 4,388.3' 4,460.1 4,537.5 4,601.6 19 Corporate 2,528.3' 2,667.1' 2,875.6' 3,052.6' 2,922.3' 3,003.1' 3,038.1' 3,052.6' 3,114.0 3,169.1 3,215.8 20 Nonfarm noncorporate 1,118.5 1,120.7 1,147.3 1,190.7 1,158.3 1,167.9 1,174.6 1,190.7 1,202.6 1,219.5 1,234.7 21 Farm 137.9 141.2 142.7 145.1 140.0 145.0 145.5 145.1 143.5 148.8 151.1 22 State and local government 1,161.8 1,115.4 1,072.5 1,085.1 1,073.1 1,080.6 1,068.0 1,085.1 1,093.0 1,111.3 1,123.5 23 Foreign credit market debt held in United States 385.8r 371.81" 442.9r 513.4r 453.6r 462.6r 490.2r S13.4r 517.8 531.6 547.3 24 Commercial paper 68.8r 42.7r 56.2' 67.5' 52.5' 54.5' 65.8' 67.5' 69.3 71.3 64.3 25 Bonds 230.1 242.3 291.9 341.3 303.8 306.7 321.7 341.3 344.1 352.7 374.9 26 Bank loans n.e.c 24.6 26.1 34.6 43.7 36.8 40.5 41.7 43.7 43.5 46.4 48.2 27 Other loans and advances 62.3 60.8 60.2 61.0 60.6 60.9 61.0 61.0 60.9 61.2 59.8 28 Total credit market debt owed by nonfinanciai sectors, domestic and foreign 12,872.7r 13,458.9r 14,228.2r 15,012.9r 14,434.6r 14,596.0r 14,797.8r 15,012.9r 15,174.5 15,301.9 15,485.0 Financial sectors 29 Total credit market debt owed by financial sectors 3,325.3r 3,797.3r 4,248.4r 4,784.7r 4,329.3r 4,511.9 4,624.1r 4,784.7r 4,860.7 5,030.0 5,131.7 By instrument 30 Federal government-related 1,885.2 2,172.7 2,376.8 2,608.3 2,414.0 2,489.4 2,545.1 2,608.3 2,634.7 2,706.2 2,746.5 31 Government-sponsored enterprise securities 523.7 700.6 806.5 896.9 814.4 846.1 866.1 896.9 894.7 944.2 955.8 32 Mortgage pool securities 1,356.8 1,472.1 1,570.3 1,711.4 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 33 Loans from U.S. government 4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,440.0r l,624.6r 1,871.5' 2,176.4' 1,915.3' 2,022.5 2,079.0' 2,176.4' 2,226.0 2,323.8 2,385.2 35 Open market paper 393.4r 441.6r 486.9' 579.1' 490.9' 517.3' 538.6' 579.1' 623.0 642.5 684.7 36 Corporate bonds 866.2r 983.9r 1,172.0' 1,328.5' 1,205.7' 1,265.2 1,288.8' 1,328.5' 1,333.8 1,390.1 1,392.9 3/ Bank loans n.e.c 62.6 48.9 53.1 69.8 58.6 63.9 64.2 69.8 71.3 74.1 77.5 38 Other loans and advances 108.9 131.6 135.0 162.9' 133.6 146.8' 155.1' 162.9' 157.9 173.7 183.0 39 Mortgages 8.9 18.7 24.6 36.0 26.5 29.2 32.4 36.0 40.0 43.5 47.0 By borrowing sector 40 Commercial banks 84.6 94.5 102.6 113.6' 100.5 104.6' 107.7' 113.6' 115.3 125.7 130.0 41 Bank holding companies 123.4 133.6 148.0 150.0 141.4 148.4 149.1 150.0 151.6 161.6 164.6 42 Savings institutions 99.6 112.4 115.0 140.5' 117.8 128.3 134.8' 140.5' 136.3 144.3 149.6 43 Credit unions .2 .5 .4 .4 .4 .3 .4 .4 .4 .4 .5 44 Life insurance companies .2 .6 .5 1.6 1.1 1.2 1.1 1.6 1.8 1.8 1.9 45 Government-sponsored enterprises 528.5 700.6 806.5 896.9 814.4 846.1 866.1 896.9 894.7 944.2 955.8 46 Federally related mortgage pools 1,356.8 1,472.1 1,570.3 1,711.4 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 47 Issuers of asset-backed securities (ABSs) 485.3 554.1 687.0 819.1' 717.3 756.6' 781.2' 819.1' 829.6 852.0 907.2 48 Brokers and dealers 33.7 34.3 29.3 27.3 21.4 24.6 26.1 27.3 26.6 35.3 33.6 49 Finance companies 385. r 433.7r 483.9' 529.8 491.1' 506.3 513.7 529.8 528.2 557.8 533.5 50 Mortgage companies 30.2 18.7 19.1 31.5 24.1 28.1 28.5 31.5 33.0 35.5 36.2 51 Real estate investment trusts (REITs) 17.4 31.1 37.1 49.9 39.1 42.0 45.4 49.9 54.6 59.3 65.1 52 Funding corporations 180.3 211.0r 248.6' 312.7' 261.3' 282.0' 291.0' 312.7' 348.6 350.0 363.1 All sectors 53 Total credit market debt, domestic and foreign.... 16,197.9r 17,256.2r 18,476.5r 19,797.6r 18,763.9r 19,107.8 19,421.9r 19,797.6r 20,035.2 20,332.0 20,616.7 54 Open market paper 580.0 623.5 700.4 803.0 717.6 753.6 777.4 803.0 861.1 893.1 925.7 55 U.S. government securities 5,216.9 5,665.0 6,013.6 6,390.0 6,131.2 6,183.1 6,278.2 6,390.0 6,464.5 6,466.8 6,517.7 56 Municipal securities 1,377.5 1,341.7 1,293.5 1,294.8 1,290.3 1,296.1 1,279.8 1,294.8 1,298.8 1,315.5 1,324.9 5/ Corporate and foreign bonds 2,326.0r 2,479. f 2,790.3' 3,068.7' 2,851.1' 2,931.3 2,986.8' 3,068.7' 3,096.6 3,182.9 3,238.8 58 Bank loans n.e.c 112.0' 834.9r 949.6' 1,042.1' 967.1' 993.8' 1,025.1' 1,042.1' 1,079.1 1,116.2 1,123.6 59 Other loans and advances 805.3 865.3 914.6 964.9' 923.0 944.1 960.4' 964.9' 968.1 984.1 1,000.9 60 Mortgages 4,261.2 4,462.8 4,691.8 5,022.5' 4,770.5 4,861.4 4,940.7 5,022.5' 5,080.7 5,168.4 5,259.9 bl Consumer credit 859.0r 983.9r 1,122.8' 1,211.6' 1,113.2' l,144.5r 1,173.5' 1,211.6' 1,186.4 1,205.0 1,225.2 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 1996 1997r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 Ql Q2 Q3 Q4 Ql Q2 Q3 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 16,197.9R 17,256.2R 18,476.5R 19,797.6R 18,763.9R 19,107.8 19,421.9R 19,797.6R 20,035.2 20,332.0 20,616.7 2 Domestic nonfederal nonfinancial sectors 2,796.9r 3,087.9r 2,966.3r 3,003.9r 2,929.4r 3,017. r 2,986.8r 3,003.9r 2,911.9 2,863.7 2,787.4 3 Household l,703.5r 2,031.3r l,994.0r 2,076. r 1,971.lr 2,044. lr 2,056.5r 2,076. r 2,017.7 1,977.9 1,899.2 4 Nonfinancial corporate business 271.5 289.2 286.8 298.2r 273.6 285.7 282.3r 298.2r 292.6 283.4 288.0 5 Nonfarm noncorporate business 37.0 37.6 37.9 38.3 38.0 38.1 38.2 38.3 38.5 38.6 38.8 6 State and local governments 784.9 729.9 647.5 591.3 646.8 649.1 609.9 591.3 563.3 563.7 561.4 7 Federal government 231,9r 207.8r 186.7r 166.9r 181.8r 178.5r 172.6r 166.9r 163.6 162.0 160.0 8 Rest of the world 1,147.8 1,254.8 1,563.1 1,953.5 1,656.5 1,722.0 1,844.6 1,953.5 2,050.8 2,123.9 2,228.1 9 Financial sectors 12,021.3 12,705.7 13,760.4 14,673.2r 13,996. lr 14,190.3r 14,417.8r 14,673.2r 14,908.9 15,182.4 15,441.2 10 Monetary authority 336.7 368.2 380.8 393.1 379.6 386.3 386.2 393.1 397.1 412.4 412.7 11 Commercial banking 3,090.8 3,254.3 3,520.1 3,707.9 3,541.6 3,590.8 3,643.3 3,707.9 3,776.0 3,857.1 3,913.1 12 U.S.-chartered banks 2,721.5 2,869.6 3,056.1 3,175.8 3,068.8 3,101.3 3,135.3 3,175.8 3,218.1 3,295.2 3,351.9 13 Foreign banking offices in United States 326.0 337.1 412.6 475.8 422.2 437.1 454.2 475.8 499.5 501.8 501.0 14 Bank holding companies 17.5 18.4 18.0 22.0 16.8 18.1 19.3 22.0 22.5 23.8 22.5 15 Banks in U.S.-affiliated areas 25.8 29.2 33.4 34.4 33.9 34.3 34.5 34.4 35.9 36.3 37.7 16 Savings institutions 914.1 920.8 913.3 933.2 921.8 933.0 945.4 933.2 931.9 937.8 925.9 17 Credit unions 218.7 246.8 263.0 288.5 267.0 276.9 282.6 288.5 291.2 299.2 303.6 18 Bank personal trusts and estates 240.9 248.0 229.2 233.1 228.3 229.4 231.3 233.1 235.2 237.4 239.7 19 Life insurance companies 1,416.0 1,482.6 1,581.8 1,654.3 1,596.2 1,596.7 1,627.0 1,654.3 1,680.2 1,723.5 1,756.3 20 Other insurance companies 422.7 446.4 468.7 491.2' 473. r 480.7' 484.2r 491.2r 492.2 499.1 503.5 21 Private pension funds 611.4 659.2 722.3 768.8 739.6 751.0 761.4 768.8 783.2 797.7 814.7 22 State and local government retirement funds 423.4 454.1 476.8 511.3 491.9 505.0 506.3 511.3 522.5 533.6 540.0 23 Money market mutual funds 429.0 459.0 545.5 634.3 595.6 594.7 606.6 634.3 659.0 656.5 678.7 24 Mutual funds 725.9 718.8 771.3 820.2 795.9 809.0 818.3 820.2 838.3 863.5 891.7 25 Closed-end funds 82.0 78.7 92.0 101.3 94.8 97.2 99.5 101.3 103.0 104.3 105.4 26 Government-sponsored enterprises 545.5 663.3 748.0 813.6 755.8 758.9 779.3 813.6 824.3 854.8 868.7 27 Federally related mortgage pools 1,356.8 1,472.1 1,570.3 1,711.4 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 28 Asset-backed securities issuers (ABSs) 455.1 516.8 627.9 729.7r 653.3 686.0 704.1 129.T 734.3 753.0 781.5 29 Finance companies 427.9 476.2 526.2 544.5 530.3 539.9 538.3 544.5 552.4 553.1 559.8 30 Mortgage companies 60.4 36.5 33.0 41.2 46.0 39.3 40.2 41.2 40.3 42.0 43.4 31 Real estate investment trusts (REITs) 8.6 13.3 15.5 18.5 16.3 17.2 18.0 18.5 19.0 19.9 20.7 32 Brokers and dealers 137.5 93.3 183.4 161.r 156.2 138.2 147.1 167.7r 164.1 158.4 167.7 33 Funding corporations 117.9 97.3 91.3 109.3r 113.2 116.8 119.8 109.3r 124.8 116.9 123.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 16,197.9R 17,256.2R 18,476.5R 19,797.6R 18,763.9R 19,107.8 19,421.9R 19,797.6R 20,035.2 20,332.0 20,616.7 Other liabilities 35 Official foreign exchange 53.4 53.2 63.7 53.7 62.1 61.4 54.3 53.7 46.3 46.7 46.1 36 Special drawing rights certificates 8.0 8.0 10.2 9.7 10.2 10.2 9.7 9.7 9.2 9.2 9.2 37 Treasury currency 17.0 17.6 18.2 18.2 18.2 18.2 18.8 18.2 18.3 18.3 18.7 38 Foreign deposits 271.8 324.6 359.2 438.1 384.4 385.2 415.1 438.1 485.2 489.9 509.7 39 Net interbank liabilities 189.3 280.1 290.7 240.8r 266.6r 250.0r 225.8r 240.8r 210.2 197.0 178.2 40 Checkable deposits and currency 1,251.7 1,242.0 1,229.3 1,245.1 1,183.3 1,212.3 1,220.8 1,245.1 1,220.0 1,265.3 1,234.1 41 Small time and savings deposits 2,223.lr 2,183.2r 2,279.7 2,376.8 2,342.4r 2,340.2r 2,357.9r 2,376.8 2,427.0 2,432.1 2,436.2 42 Large time deposits 391.7 411.2 476.9 590.7 493.6 511.1 551.2' 590.7 605.8 646.6 696.6 43 Money market fund shares 559.6 602.9 745.3 891.1 816.9 809.5 838.1 891.1 950.8 952.4 1,005.1 44 Security repurchase agreements 471.3r 549.5r 660.0r 700.3r 666.0r 692.0r 687.6 700.3' 713.6 765.8 798.6 45 Mutual fund shares 1,375.4 1,477.3 1,852.8 2,342.4 1,997.0 2,129.9 2,211.6 2,342.4 2,411.5 2,720.9 2,981.1 46 Security credit 279.0 279.0 305.7 358.1r 326.9 318.6 317.8 358.lr 380.0 414.8 423.9 47 Life insurance reserves 470.8 505.3 550.2 593.8 555.0 563.1 577.2 593.8 604.8 626.3 638.7 48 Pension fund reserves 4,663.3 4,871.8 5,597.3 6,310.8r 5,771.6r 5,898.9r 6,018.2r 6,310.8r 6,397.3 6,916.6 7,296.2 49 Trade payables 1,047.8 1,141.5 1,246.7 l,315.5r l,234.6r l,269.7r l,263.7r l,315.5r 1,301.6 1,324.4 1,357.9 50 Taxes payable 98.8r 101.4r 106.0r 118.9r 116.2r 113.4r 116.7r 118.9r 131.6 127.1 130.7 51 Investment in bank personal trusts 691.3 699.4 767.4 872.0 793.7 811.7 829.0 872.0 890.4 969.7 1,035.2 52 Miscellaneous 5,106.5r 5,377.4r 5,781.0' 6,128.0r 5,943.3r 5,933.2r 6,016.3r 6,128.0r 6,297.5 6,238.4 6,393.4 53 Total liabilities 35,367.7R 37,381.8R 40,816.7R 44,401.5R 41,745.8R 42,436.3R 43,157.7R 44,401.5R 45,136.4 46,493.6 47,806.5 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 20.1 21.1 22.1 21.4 22.1 22.0 21.2 21.4 20.9 21.1 21.0 55 Corporate equities 6,257.6 6,237.9 8,331.3 10,061.1 8,809.7 9,105.0 9,340.5 10,061.1 10,072.3 11,719.8 12,804.6 56 Household equity in noncorporate business 3,225.5r 3,423.9r 3,632.0r 3,856. lr 3,683.5r 3,744.3r 3,812.9r 3,856.1r 3,937.9 4,003.2 4,051.2 Liabilities not identified as assets (-) 57 Treasury currency -5.1 -5.4 -5.8 -6.8 -6.1 -6.3 -6.0 -6.8 -6.9 -7.0 -6.9 58 Foreign deposits 233.2 276.2 301.2 355.4r 319.5 326.1 348.9 355.4r 401.1 401.0 415.2 59 Net interbank transactions -4.7 -6.5 -9.0 -10.6 -2.6 -8.0 -11.6 -10.6 -1.6 -8.1 -22.1 60 Security repurchase agreements — 1.4r 55.8r 110.8r 136.6r 121.7 149. lr 126.4r 136.6r 107.7 140.3 155.5 61 Taxes payable 40.8r 48.8r 60.8r 72.1r 45.8r 61.0r 66.5r 72. r 69.1 70.8 75.5 62 Miscellaneous —892.5r -991.5r —1,083.9r —1,373.7r —1,104.2r -1,222.3r —1,265.3r — l,373.7r -1,315.8 -1,379.9 -1,334.3 Floats not included in assets (—) 63 Federal government checkable deposits 5.6 3.4 3.1 -1.6 .0 -3.4 -1.7 -1.6 -9.7 -6.8 -7.8 64 Other checkable deposits 40.7 38.0 34.2 30.1 29.6 31.8 23.1 30.1 25.6 27.9 19.5 65 Trade credit — 245.3r -245.8r -274.9r -309.7r -328.3r -338.5r -378.3r -309.1' -363.5 -388.4 -414.2 66 Total identified to sectors as assets 45,699.5R 47,891.6R 53,665.6R 59,448.4R 55,185.8R 56,318.1R 57,430.3R 59,448.4R 60,261.5 63,387.7 65,802.9 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.l and L.5. 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 1998 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1997 MMeeaassuurree 11999944 11999955 11999966 Mar. Apr. May June July' Aug.' Sept.' Oct. Nov. 1 Industrial production' 109.2r 114.5r 118.5r 122.5r 123.1r 123.3r 123.5r 124.5 125.2 125.7 126.4 127.3 Market groupings 2 Products, total 107.2r 110.6r 113.7' 116.9' 117.2' 117.7' 117.6' 118.1 119.2 119.2 119.9 120.8 3 Final, total 107.5r U1.3r 114.6' 117.9' 118.0' 118.6' 118.6' 119.2 120.5 120.4 121.1 122.1 4 Consumer goods 107.Ir 109.9' 111.8' 113.4' 113.4' 113.9' 113.5' 113.9 114.6 114.6 115.4 116.0 5 Equipment 108.lr 113.8r 119.6' 125.8' 126.0' 126.8' 127.7' 128.6 130.9 130.8 131.3 132.9 6 Intermediate 106.3r 108.3' 110.8' 114.1' 114.7' 114.9' 114.7' 114.6 115.3 115.4 116.1 116.7 7 Materials 112.3r 120.8' 126.2' 131.3' 132.5' 132.4' 133.0' 134.9 134.9 136.2 136.9 137.9 Industry groupings 8 Manufacturing 110.0r 116.0' 120.2' 124.9' 125.4' 125.7' 126.1' 126.9 127.9 128.2 129.0 130.2 9 Capacity utilization, manufacturing (percent)2. . 82.5r 82.8' 81.4' 81.6' 81.6' 81.4' 81.3' 81.5 81.8 81.7 81.8 82.3 10 Construction contracts3 117.7r 122.0' 130.6' 136.0' 141.0' 144.0' 143.0' 139.0 138.0 138.0 135.0 125.0 11 Nonagricultural employment, total4 112.0 115.0 117.3 119.0 119.3 119.5 119.7 120.1 120.1 120.4 120.7 121.1 12 Goods-producing, total 96.9 98.1 98.3 100.0 100.0 100.1 100.2 100.2 100.4 100.4 100.6 100.9 13 Manufacturing, total 96.4 97.2 96.2 97.3 97.4 97.4 97.5 97.5 97.7 97.7 97.9 98.1 14 Manufacturing, production workers 97.5 98.7 97.5 98.6 98.6 98.7 98.8 98.8 98.9 99.0 99.2 99.4 15 Service-producing 116.8 120.3 123.3 125.1 125.5 125.7 126.0 126.5 126.5 126.8 127.2 127.6 16 Personal income, total 148.9 158.2 167.0 174.6 174.9 175.5 176.5 176.7 177.8 178.3 179.4 180.7 17 Wages and salary disbursements 142.6 150.9 159.8 168.1 168.2 168.7 170.2 170.3 171.7 172.3 173.5 175.4 18 Manufacturing 124.9 130.4 135.7 140.5 140.7 140.9 141.0 141.1 142.1 142.8 144.4 145.5 19 Disposable personal income5 149.7 158.7 166.2 172.5 172.8 173.2 174.1 174.3 175.2 175.8 176.7 178.0 20 Retail sales5 144.6 151.2 158.6 165.6 163.7 163.3 164.5 166.5 167.2 166.7 166.4 166.7 Prices6 21 Consumer (1982-84=100) 148.2 152.4 156.9 160.0 160.2 160.1 160.3 160.5 160.8 161.2 161.6 161.5 22 Producer finished goods (1982=100) 125.5 127.9 131.3 132.1 131.6 131.6 131.6 131.3 131.7 131.8 132.4 131.8 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers the ordering address, see the inside front cover. The latest historical revision of the industrial employees only, excluding personnel in the armed forces. production index and the capacity utilization rates was released in December 1997. The recent 5. Based on data from U.S. Department of Commerce, Survey of Current Business. annual revision is described in an article in the February 1998 issue of the Bulletin. For a 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price description of the aggregation methods for industrial production and capacity utilization, see indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- Monthly Labor Review. ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. For details about the NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series construction of individual industrial production series, see "Industrial Production: 1989 mentioned in notes 3 and 6, can also be found in the Survey of Current Business. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. Figures for industrial production for the latest month are preliminary, and many figures for 187-204. the three months preceding the latest month have been revised. See "Recent Developments in 2. Ratio of index of production to index of capacity. Based on data from the Federal Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. 411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987," 3. Index of dollar value of total construction contracts, including residential, nonresiden- Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. tial, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge Division. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1997 CCaatteeggoorryy 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. Nov. HOUSEHOLD SURVEY DATA1 131,056 132,304 133,943 136,098 136,173 136,200 136,290 136,480 136,467 136,361 136,814 1 Civilian labor force2 Employment 119,651 121,460 123,264 125,887 126,209 125,973 126,226 126,421 126,265 126,591 127,184 2 Nonagricultural industries3 3,409 3,440 3,443 3,497 3,430 3,391 3,482 3,383 3,450 3,303 3,381 3 Agriculture Unemployment 7,996 7,404 7,236 6,714 6,534 6,836 6,583 6,677 6,752 6,467 6,249 4 Number 6.1 5.6 5.4 4.9 4.8 5.0 4.8 4.9 4.9 4.7 4.6 5 Rate (percent of civilian labor force) ESTABLISHMENT SURVEY DATA 114,172 117,203 119,549 121,671 121,834 122,056 122,440 122,492 112222,,779922 112233,,007799 112233,,448833 6 Nonagricultural payroll employment4 18,321 18,468 18,282 18,495 18,498 18,518 18,514 18,555 18,553 18,591 18,635 7 Manufacturing 601 580 570 573 576 574 574 573 576 574 573 8 Mining 4,986 5,158 5,405 5,599 5,628 5,622 5,625 5,637 5,642 5,650 5,679 9 Contract construction 5,993 6,165 6,318 6,421 6,431 6,434 6,443 6,289 6,473 6,500 6,509 10 Transportation and public utilities 26,670 27,585 28,178 28,651 28,656 28,713 28,823 28,864 28,902 28,958 29,087 11 Trade 6,896 6,830 6,977 7.019 7,029 7,034 7,058 7,068 7,082 7,106 7,125 12 Finance 31,579 33,107 34,360 35.334 35,451 35,522 35,684 35,702 35,850 35,956 36,136 13 Service 19,128 19,310 19,459 19,579 19,565 19,639 19,719 19,804 19,714 19,744 19,739 14 Government 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 1996r 1997r 1996r 1997r 1996'' 1997r SSeerriieess Q4 Qi Q2 Q3 Q4 Qi Q2 Q3 Q4 Ql Q2 Q3 Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 120.4 121.9 123.3 125.2 146.1 147.8 149.6 151.3 82.4 82.5 82.4 82.7 2 Manufacturing 122.4 124.2 125.7 127.6 150.4 152.3 154.3 156.3 81.4 81.6 81.5 81.7 3 Primary processing3 115.7 116.7 117.7 118.5 134.7 135.8 136.9 138.0 85.9 85.9 86.0 85.8 4 Advanced processing4 125.7 128.0 129.7 132.2 158.3 160.6 163.2 165.7 79.4 79.7 79.5 79.8 5 Durable goods 134.5 137.5 140.2 143.8 167.2 170.4 173.8 177.2 80.4 80.7 80.7 81.1 6 Lumber and products 112.3 113.5 116.4 115.0 135.8 137.3 138.6 140.0 82.7 82.7 84.0 82.2 7 Primary metals 121.0 120.9 123.8 125.4 133.4 134.7 136.0 137.2 90.7 89.8 91.0 91.4 8 Iron and steel 119.7 119.4 122.6 122.8 132.7 134.1 135.4 136.6 90.2 89.1 90.6 89.9 9 Nonferrous 122.7 122.7 125.3 128.5 134.0 135.2 136.4 137.7 91.5 90.8 91.8 93.3 10 Industrial machinery and equipment 159.6 163.9 168.2 174.1 188.1 193.3 199.0 204.4 84.9 84.8 84.5 85.2 11 Electrical machinery 207.7 216.4 226.6 236.9 253.1 264.4 276.7 289.1 82.0 81.9 81.9 82.0 12 Motor vehicles and parts 128.7 133.6 130.5 136.7 178.6 180.6 182.6 184.7 72.1 74.0 71.4 74.0 13 Aerospace and miscellaneous transportation equipment 87.5 89.9 92.8 95.6 122.5 122.7 123.4 124.1 71.5 73.3 75.2 77.0 14 Nondurable goods 109.7 110.3 110.7 111.1 132.9 133.6 134.3 135.0 82.5 82.6 82.4 82.3 15 Textile mill products 107.2 107.3 108.5 111.0 129.9 130.5 131.1 131.7 82.5 82.3 82.8 84.3 16 Paper and products 110.1 111.7 112.2 114.1 124.4 124.9 125.5 126.0 88.5 89.4 89.4 90.5 17 Chemicals and products 113.9 114.5 114.8 114.6 142.8 143.9 145.1 146.3 79.7 79.5 79.1 78.4 18 Plastics materials 125.6 126.8 127.6 130.6 134.3 136.3 138.1 140.0 93.5 93.0 92.4 93.3 19 Petroleum products 107.5 107.7 111.0 109.5 113.8 114.1 114.7 115.2 94.4 94.4 96.8 95.1 20 Mining 103.6 105.4 106.0 106.4 117.4 117.6 117.9 118.1 88.3 89.6 89.9 90.2 21 Utilities 112.8 110.8 111.7 113.9 125.4 125.8 126.3 126.7 90.0 88.1 88.5 89.9 22 Electric 112.5 111.5 111.3 114.2 123.7 124.2 124.6 125.0 90.9 89.8 89.3 91.4 1973 1975 Previous cycle5 Latest cycle6 1996 1997 High Low High Low High Low Nov. Juner July1" Aug.r Sept.r Oct. Nov.p Capacity utilization rate (percent)* 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 82.5 82.3 82.6 82.8 82.8 82.9 83.2 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.5 81.3 81.5 81.8 81.7 81.8 82.3 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 86.0 85.8 86.0 85.8 85.8 85.7 86.0 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 79.5 79.4 79.6 80.0 79.8 80.1 80.6 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.2 80.7 80.7 80.8 81.4 81.1 81.1 81.7 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 84.8 84.2 83.2 82.5 80.9 80.8 82.1 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 90.6 91.6 91.5 91.4 91.2 92.3 92.9 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 89.9 90.3 89.7 89.1 90.9 92.1 92.7 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 91.6 93.3 93.8 94.3 91.8 92.8 93.2 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 85.0 84.0 85.0 86.1 84.4 84.6 84.7 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 82.1 81.7 82.7 81.9 81.3 81.1 81.2 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 73.2 72.3 70.7 75.2 76.2 75.2 78.3 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 71.4 75.9 76.4 76.9 77.8 78.2 78.7 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.5 82.1 82.3 82.2 82.3 82.7 82.8 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 83.2 83.1 84.2 84.1 84.5 83.8 84.2 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 88.5 88.9 90.8 90.8 90.1 90.2 91.2 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.5 78.8 78.4 78.3 7S.4 78.5 78.7 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 92.8 92.0 94.4 92.0 93.6 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 94.2 96.9 94.7 95.2 95.4 96.0 93.6 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 88.3 89.6 90.3 90.0 90.2 89.5 89.3 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 90.6 87.7 89.9 89.2 90.7 91.1 90.2 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 91.1 88.7 91.2 90.5 92.5 92.7 91.9 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 December 1997. The recent primary metals; and fabricated metals. annual revision is described in an article in the February 1998 issue of the Bulletin. For a 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing description of the aggregation methods for industrial production and capacity utilization, see and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- and products; machinery; transportation equipment; instruments; and miscellaneous manufacments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. For details about the tures. construction of individual industrial production series, see "Industrial Production: 1989 5. Monthly highs, 1978-80; monthly lows, 1982. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 6. Monthly highs, 1988-89; monthly lows, 1990-91. 187-204. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted index of industrial production to the corresponding index of capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinanciai Statistics • February 1998 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1996r 1997 „ roup pro- 1996 por- avg. tion Nov. Dec. Jan.r Feb.r Mar.r Apr.r Mayr Juner July' Aug.r Sept/ Oct. Nov.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 118.5 120.6 120.9 121.3 122.1 122.5 123.1 123.3 123.5 124.5 125.2 125.7 126.4 127.3 2 Products 60.5 113.7 115.7 115.9 116.0 116.5 116.9 117.2 117.7 117.6 118.1 119.2 119.2 119.9 120.8 3 Final products 46.3 114.6 116.3 116.8 116.8 117.2 117.9 118.0 118.6 118.6 119.2 120.5 120.4 121.1 122.1 4 Consumer goods, total 29.1 111.8 113.1 113.6 113.2 113.1 113.4 113.4 113.9 113.5 113.9 114.6 114.6 115.4 116.0 5 Durable consumer goods 6.1 125.8 126.9 128.4 128.0 129.4 130.7 127.4 128.8 129.8 128.1 132.1 132.0 131.1 134.3 6 Automotive products 2.6 123.9 124.5 125.9 127.4 128.5 129.0 122.3 124.6 126.7 120.3 131.6 132.8 131.2 136.7 V Autos and trucks 1.7 129.7 129.7 133.2 134.8 135.1 135.6 124.4 127.6 130.3 120.2 137.6 140.9 139.7 147.7 8 Autos, consumer .9 116.1 117.0 112.3 114.5 116.5 117.6 110.7 112.4 110.8 113.0 118.6 119.9 115.2 120.3 y Trucks, consumer .7 145.0 147.5 159.1 160.0 158.6 158.5 142.7 147.3 154.2 131.9 161.2 166.5 168.6 179.7 10 Auto parts and allied goods .9 114.7 116.0 114.3 115.5 117.9 118.4 118.2 119.1 120.3 119.3 121.8 120.1 118.0 119.7 N Other 3.5 127.3 128.8 130.4 128.5 130.1 132.0 131.4 132.1 132.3 134.4 132.5 131.3 131.0 113322..44 12 Appliances, televisions, and air conditioners 1.0 159.2 162.2 165.9 157.3 164.1 166.9 164.2 166.5 165.4 174.8 169.8 166.3 166.8 171.8 13 Carpeting and furniture .8 114.5 117.3 114.5 114.1 114.3 116.7 116.7 117.7 119.0 116.4 117.7 116.5 116.4 118.1 14 Miscellaneous home goods 16 115.8 115.8 118.8 119.0 119.1 120.3 120.3 120.2 120.3 122.1 119.8 119.3 118.6 118.5 15 Nondurable consumer goods 23.0 108.3 109.7 109.9 109.4 109.0 109.1 109.9 110.1 109.4 110.3 110.3 110.3 111.4 111.5 16 Foods and tobacco 10.3 107.6 108.2 109.5 109.1 109.2 110.0 109.1 108.9 108.1 109.6 108.9 109.3 110.0 110.8 17 Clothing 2.4 97.9 97.3 95.9 96.5 95.6 96.1 96.5 95.8 95.4 95.8 96.0 96.1 96.6 96.2 18 Chemical products 4.5 113.7 117.4 118.1 118.0 117.3 115.9 118.4 119.3 119.1 117.3 119.4 118.1 120.1 121.0 19 Paper products 2.9 106.4 108.0 108.0 106.5 107.1 107.8 108.2 108.9 109.8 110.8 109.8 110.1 111.6 111.2 20 Energy 2.9 112.1 113.7 112.0 110.5 108.3 107.3 111.9 112.8 109.7 112.4 112.8 112.7 114.0 111.6 21 Fuels .8 106.8 107.5 106.3 105.7 106.6 108.2 109.6 111.3 111.5 108.8 111.0 110.8 112.0 107.1 22 Residential utilities 2.1 114.3 116.5 114.5 112.5 108.7 106.4 112.6 113.0 108.3 113.7 113.2 113.3 114.5 113.4 23 Equipment 17.2 119.6 121.8 122.4 123.1 124.6 125.8 126.0 126.8 127.7 128.6 130.9 130.8 131.3 132.9 24 Business equipment 13.2 129.7 133.0 134.0 134.9 136.5 137.5 137.9 139.0 140.2 141.6 144.6 144.5 145.3 147.5 25 Information processing and related 5.4 151.0 155.8 157.1 157.8 160.9 161.0 163.0 164.4 166.8 169.3 171.1 173.4 174.3 176.2 2 1 b 1 Computer and office equipment 1.1 287.0 319.6 325.4 333.8 341.5 348.8 358.4 365.3 375.8 391.6 407.1 419.0 427.2 434.9 Industrial 4.0 129.0 129.7 129.3 130.0 129.8 130.6 131.6 131.5 131.7 133.7 135.8 133.8 135.0 135.8 28 Transit 2.5 96.5 101.3 102.0 103.3 105.2 107.7 104.6 106.7 107.3 106.9 113.3 114.0 113.5 118.3 2y Autos and trucks 1.2 115.4 115.4 114.9 116.4 118.2 121.4 112.5 114.6 113.6 111.5 120.3 120.2 118.1 125.4 30 Other 1.3 121.1 123.6 129.0 129.7 130.8 132.6 134.4 135.2 136.3 136.3 137.9 135.2 137.1 137.8 31 Defense and space equipment 3.3 76.9 76.5 76.2 75.5 75.6 75.7 75.4 75.6 76.0 74.9 75.0 74.7 74.8 75.1 32 Oil and gas well drilling .6 138.0 136.0 134.7 138.4 143.5 154.8 151.4 150.7 150.9 152.1 153.2 153.1 149.7 150.3 33 Manufactured homes .2 142.3 140.2 128.0 137.7 140.7 139.4 142.9 141.9 139.1 143.5 139.5 137.2 141.3 34 Intermediate products, total 14.2 110.8 113.7 113.0 113.5 114.1 114.1 114.7 114.9 114.7 114.6 115.3 115.4 116.1 116.7 35 Construction supplies 5.3 117.4 122.3 118.7 119.1 121.7 122.3 121.8 122.2 122.2 121.2 122.7 120.9 121.9 122.9 3b Business supplies 8.9 106.9 108.7 109.6 110.2 109.6 109.2 110.6 110.6 110.2 110.6 111.0 112.1 112.6 113.0 37 Materials 39.5 126.2 128.4 129.0 129.7 131.0 131.3 132.5 132.4 133.0 134.9 134.9 136.2 136.9 137.9 3388 Durable goods materials 20.8 144.7 148.4 149.3 150.2 152.2 153.0 155.1 155.4 156.9 159.3 160.3 161.6 163.1 165.3 3399 Durable consumer parts 4.0 134.7 135.5 134.3 136.2 136.3 135.9 137.1 134.7 136.2 139.2 140.3 141.8 142.5 145.0 40 Equipment parts 7.6 185.4 195.3 198.4 201.1 206.1 210.0 213.4 216.7 220.0 224.6 227.6 229.9 233.7 237.3 41 Other 9.2 121.1 122.5 122.9 122.6 123.5 123.2 124.7 124.5 125.0 125.9 126.0 126.6 127.3 128.5 42 Basic metal materials 3.1 115.3 117.4 117.8 116.7 118.3 118.2 118.8 119.9 121.2 121.1 121.8 121.7 122.2 123.2 43 Nondurable goods materials 8.9 108.3 110.4 111.4 111.6 112.6 112.5 113.0 111.8 111.9 113.5 112.3 113.1 113.2 113.7 44 Textile materials 1.1 106.6 108.2 106.1 107.0 108.0 106.3 109.4 106.1 108.1 112.3 108.4 111.4 110.7 111.2 43 Paper materials 1.8 106.8 109.3 110.8 110.4 112.0 112.5 112.6 112.6 110.9 113.8 114.3 112.7 114.6 115.3 46 Chemical materials 3.9 109.6 112.1 114.0 114.9 115.0 114.8 115.4 113.8 113.8 115.1 113.9 115.3 115.2 115.1 4/ Other 2.1 107.6 108.6 109.0 107.7 110.1 110.4 109.7 109.5 110.8 110.1 108.6 109.6 108.7 110.2 4488 Energy materials 9.7 103.5 103.0 102.7 103.6 103.8 103.4 103.7 103.7 103.2 104.6 103.9 105.4 105.2 104.7 4499 Primary energy 6.3 102.1 100.3 100.4 101.2 102.5 101.9 101.7 102.1 101.0 102.3 102.4 102.2 101.7 101.3 50 Converted fuel materials 3.3 106.2 108.2 107.0 108.0 106.2 106.2 107.6 106.8 107.3 109.0 106.8 111.6 112.0 111.3 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 118.4 120.5 120.8 121.1 121.9 122.3 123.2 123.4 123.6 124.8 125.1 125.5 126.3 127.0 52 Total excluding motor vehicles and parts 95.1 117.9 120.1 120.5 120.7 121.5 121.9 122.7 123.0 123.1 124.3 124.6 124.9 125.7 112266..44 53 Total excluding computer and office equipment 98.2 116.6 118.5 118.8 119.1 119.8 120.2 120.7 120.9 121.1 122.0 122.6 123.0 123.6 124.5 54 Consumer goods excluding autos and trucks . 27.4 110.8 112.2 112.5 112.0 111.8 112.1 112.8 113.1 112.5 113.5 113.4 113.2 114.0 114.3 55 Consumer goods excluding energy 26.2 111.7 113.0 113.9 113.5 113.7 114.2 113.6 114.0 114.0 114.1 114.9 114.8 115.5 116.6 56 Business equipment excluding autos and trucks 12.0 131.4 135.1 136.3 137.1 138.6 139.5 141.0 141.9 143.4 145.2 147.5 147.4 148.6 150.1 57 Business equipment excluding computer and office equipment 12.1 120.3 122.4 123.2 123.8 125.1 126.0 126.0 126.9 127.7 128.6 131.2 130.9 131.4 133.3 58 Materials excluding energy 29.8 133.2 136.3 137.3 137.9 139.6 140.1 141.6 141.4 142.5 144.6 144.8 145.9 147.0 148.6 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 sie 1 p 9 ro 9 - 2 1996 1996r Group code por- avg. Feb.r Mar.r Apr/ May' Juner Julyr Aug/ Sept/ Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 118.5 120.6 120.9 121.3 122.1 122.5 123.1 123.3 123.5 124.5 125.2 125.7 126.4 127.3 60 Manufacturing 85.4 120.2 122.5 123.1 123.5 124.4 124.9 125.4 125.7 126.1 126.9 127.9 128.2 129.0 130.2 61 Primary processing 26.5 113.8 115.8 115.8 115.8 116.9 117.2 117.7 117.7 117.7 118.3 118.5 118.7 119.0 119.8 62 Advanced processing 58.9 123.3 125.9 126.7 127.2 128.1 128.6 129.2 129.6 130.2 131.2 132.5 132.9 133.9 135.5 63 Durable goods 45.0 131.7 134.9 135.3 136.1 137.8 138.7 139.5 140.1 141.2 142.4 144.3 144.6 145.5 147.6 64 Lumber and products "24 2.0 111.8 115.2 110.2 111.4 114.2 114.9 115.9 116.4 117.0 116.1 115.4 113.6 113.8 116.1 65 Furniture and fixtures 25 1.4 116.0 119.7 119.7 119.7 120.6 120.7 123.5 123.3 123.5 124.2 121.1 122.2 122.7 123.9 66 Stone, clay, and glass products 32 2.1 114.6 117.3 116.4 119.2 118.9 119.5 121.1 119.4 120.0 120.9 120.5 121.2 120.9 121.6 67 Primary metals 33 3.1 118.9 120.8 120.5 119.4 121.6 121.8 122.3 124.2 124.9 125.2 125.5 125.5 127.4 128.6 68 Iron and steel 331,2 1.7 117.6 119.3 118.0 118.8 119.9 119.6 121.2 123.9 122.6 122.2 121.8 124.5 126.5 127.8 69 Raw steel 331PT .1 112.2 109.6 112.4 111.9 112.4 114.0 115.1 115.4 114.9 115.5 116.1 119.2 117.7 120.1 70 Nonferrous 333-6,9 1.4 120.4 122.7 123.5 120.0 123.5 124.5 123.5 124.6 127.7 128.8 129.9 126.8 128.5 129.5 71 Fabricated metal products... 34 5.0 119.6 120.9 120.6 120.6 121.7 122.1 122.5 122.7 121.9 122.4 122.8 123.5 124.1 125.0 72 Industrial machinery and equipment 35 8.0 155.3 159.9 161.3 162.8 164.0 165.1 167.8 168.0 168.8 172.2 175.9 174.1 176.1 177.8 73 Computer and office equipment 357 1.8 281.6 313.8 319.9 328.6 336.6 344.2 354.1 361.4 372.3 388.5 403.9 415.7 423.9 431.6 74 Electrical machinery 36 7.3 199.3 207.7 210.5 211.1 217.4 220.8 223.7 226.3 229.7 235.5 236.8 238.4 241.1 245.2 75 Transportation equipment... 37 9.5 106.5 108.8 109.1 110.9 111.4 112.3 110.7 110.8 113.0 112.2 117.0 118.7 118.5 122.0 76 Motor vehicles and parts . 371 4.9 130.2 130.7 130.1 133.4 133.3 134.0 129.7 129.2 132.5 130.0 138.9 141.2 139.9 146.2 77 Autos and light trucks . 371PT 2.6 123.2 123.1 125.0 126.7 127.2 127.8 117.8 120.6 122.4 115.0 129.5 132.3 130.4 137.6 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 83.4 87.5 88.4 88.9 89.9 91.0 92.0 92.7 93.8 94.6 95.5 96.7 97.4 98.3 79 Instruments 38 5.4 105.1 105.9 106.3 105.9 107.2 106.5 106.6 107.6 107.9 108.0 109.2 109.1 109.6 110.9 80 Miscellaneous 39 1.3 118.8 120.7 123.4 124.0 125.0 124.7 125.1 125.5 126.0 127.0 126.7 126.1 126.3 125.7 81 Nondurable goods 40.4 108.0 109.6 110.3 110.2 110.4 110.5 110.8 110.7 110.5 110.9 111.0 111.3 112.0 112.4 82 Foods "20 9.4 107.3 108.2 109.0 109.3 109.4 110.0 109.2 109.2 108.8 110.0 108.9 109.4 110.3 111.2 83 Tobacco products 21 1.6 113.4 112.5 116.3 112.0 113.0 114.2 113.0 111.5 109.0 110.5 112.5 112.0 113.6 111.6 84 Textile mill products 22 1.8 106.7 108.0 105.9 107.0 107.0 108.0 109.2 107.2 109.1 110.7 110.7 111.4 110.7 111.4 85 Apparel products 23 2.2 102.2 101.2 100.0 100.5 99.5 100.1 99.8 99.8 99.6 99.7 99.1 99.1 99.7 99.6 86 Paper and products 26 3.6 107.9 110.1 111.7 110.8 111.9 112.4 112.4 112.6 111.7 114.2 114.4 113.7 114.0 115.6 87 Printing and publishing 27 6.7 101.5 103.1 103.2 103.2 103.3 103.6 104.4 104.5 104.1 104.1 104.4 105.1 106.4 106.4 88 Chemicals and products .... 28 9.9 110.5 113.5 114.9 115.2 114.6 113.6 115.2 114.5 114.6 114.3 114.5 115.0 115.5 116.1 89 Petroleum products 29 1.4 106.5 107.2 106.8 107.0 108.0 108.0 110.1 111.4 111.3 108.9 109.7 110.1 111.0 108.3 90 Rubber and plastic products . 30 3.5 122.5 123.6 124.7 123.3 125.0 125.5 124.4 125.4 125.6 126.0 127.9 127.6 127.4 128.8 91 Leather and products 31 .3 78.3 76.5 77.7 76.5 76.0 76.6 75.9 75.3 74.0 74.0 71.2 70.9 72.1 72.7 92 Mining 6.9 103.9 103.6 102.9 103.7 106.0 106.7 105.5 106.7 105.7 106.5 106.3 106.5 105.8 105.6 93 Metal 10 .5 102.9 105.6 107.2 105.5 106.2 106.4 105.3 105.9 109.9 105.2 106.0 105.4 107.8 107.5 94 Coal 12 1.0 106.7 107.9 108.2 107.4 110.4 107.0 105.4 115.9 107.4 112.1 107.7 109.5 109.6 106.9 95 Oil and gas extraction 13 4.8 101.8 100.3 99.7 101.1 102.8 104.3 103.8 103.4 102.9 103.9 104.1 104.4 103.1 103.5 96 Stone and earth minerals 14 .6 115.6 120.1 115.6 115.0 123.5 123.6 116.8 118.2 120.9 117.8 119.9 117.8 117.6 117.0 97 Utilities 7.7 112.5 113.6 112.7 112.5 110.3 109.6 112.5 111.8 110.9 113.8 113.0 115.0 115.7 114.7 98 Electric 491.493PT 6.2 112.6 112.7 112.5 112.9 111.0 110.6 112.7 110.4 110.7 113.8 113.1 115.7 116.1 115.2 99 Gas 492.493PT 1.6 112.3 116.7 113.6 111.2 107.9 105.4 111.5 117.1 111.9 113.5 112.5 111.9 114.0 112.7 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 119.6 122.1 122.7 122.9 123.9 124.3 125.2 125.5 125.7 126.7 127.2 127.4 128.3 129.3 101 Manufacturing excluding office and computing machines ... 83.6 118.0 120.1 120.6 120.9 121.8 122.2 122.7 122.9 123.2 123.9 124.8 125.0 125.8 112277..00 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,001.9 2,288.5 2,326.3 2327.3 2,332.0 2,344.1 2,355.4 2,353.4 2,365.8 2,365.3 2,368.4 2,402.0 2,399.4 2,411.4 2,431.6 103 Final 1,552.1 1,786.7 1,810.2 1,815.8 1,818.2 1,827.3 1,838.7 1,832.9 1,844.4 1,844.6 1,849.1 1,879.3 1,877.7 1,887.0 1,903.4 104 Consumer goods 1,049.6 1,174.6 1,185.5 1,188.6 1,185.8 1,187.6 1,191.4 1,187.7 1,194.1 1,190.2 1,191.0 1,205.2 1,204.7 1,211.9 1,217.4 105 Equipment 502.5 611.4 624.0 626.5 631.8 639.2 646.8 644.8 649.8 654.1 657.8 674.0 672.9 675.0 686.2 106 Intermediate 449.9 502.3 516.1 511.9 514.2 517.0 517.2 520.6 521.7 521.0 519.9 523.7 522.8 525.3 529.2 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. For details about the the ordering address, see the inside front cover. The latest historical revision of the industrial construction of individual industrial production series, see "Industrial Production: 1989 production index and the capacity utilization rates was released in December 1997. The recent Developments and Historical Revision," Federal Reserve Bulletin, vol. 76, (April 1990), pp. annual revision is described in an article in the February 1998 issue of the Bulletin. For a 187-204. description of the aggregation methods for industrial production and capacity utilization, see 2. Standard industrial classification. "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1998 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1997 IItteemm 11999944 11999955 11999966 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,372 1,333 1,426 1,395 1,438 1,457 1,442 1,432 1,402 1,414 1,397 1,460 1,487 2 One-family 1,069 997 1,070 1,052 1,069 1,034 1,060 1,053 1,049 1,030 1,027 1,065 1,087 3 Two-family or more 303 335 356 343 369 423 382 379 353 384 370 395 400 4 Started 1,457 1,354 1.477 1,375 1,554 1,479 1,483 1,402 1,503 1,465 1,395 1,507 1,519 5 One-family 1,198 1,076 1,161 1,125 1,237 1,142 1,133 1,098 1,134 1,149 1,091 1,181 1,138 6 Two-family or more 259 278 316 250 317 337 350 304 369 316 304 326 381 7 Under construction at end of period1 755 775 819 818 821 814 812 815 829 837 836 843 853 8 One-family 584 554 584 573 574 566 563 564 566 571 569 572 578 9 Two-family or more 171 221 235 245 247 248 249 251 263 266 267 271 275 10 Completed 1,346 1,319 1,407 1,362 1,572 1,471 1,460 1,388 1,318 1,320 1,325 1,431 1,391 11 One-family 1,161 1,073 1,124 1,109 1,267 1,156 1,158 1,101 1,096 1,069 1,053 1,141 1,056 12 Two-family or more 185 246 283 253 305 315 302 287 222 251 272 290 335 13 Mobile homes shipped 305 341 362 339 353 353 372 356 356 358 357 354 348 Merchant builder activity in one-family units 14 Number sold 670 667 757 822 826 825 765 764 802r 812 791 811 797 15 Number for sale at end of period1 340 374 326 308 300 287 291 288 288r 288 286 287 290 Price of units sold (thousands of dollars)2 16 Median 130.0 133.9 140.0 145.0 143.0 148.0 150.0 141.0 145.0r 145.9 143.9 144.9 141.5 17 Average 154.5 158.7 166.4 171.9 171.1 172.7 179.5 170.7 179.4r 175.5 168.6 175.6 173.5 EXISTING UNITS (one-family) 18 Number sold 3,967 3,812 4,087 3,910 4,230 4,160 4,060 4,250 4,150 4,180 4,310 4,310 4,390 Price of units sold (thousands of dollars)2 19 Median 109.9 113.1 118.2 120.6 117.5 120.0 120.7 123.1 127.2 126.5 127.5 125.8 124.4 20 Average 136.8 139.1 145.5 149.6 144.7 147.5 150.4 153.1 158.4 157.6 159.1 155.4 154.7 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 518,644 534,463 567,179 577,116 592,365 593,908 596,907 595,763 594,195 602,322 602,289 604,837 605,520 22 Private 398,646 407,370 435,929 444,391 452,037 452,728 457,604 459,882 456,927 463,510 463,694 466,553 466,445 23 Residential 238,423 231,230 246,659 246,661 251,402 253,974 259,917 259,662 257,277 258,843 259,976 263,730 265,635 24 Nonresidential 160,223 176,140 189,271 197,730 200,635 198,754 197,687 200,220 199,650 204,667 203,718 202,823 200,810 25 Industrial buildings 28,893 32,505 31,997 31,871 32,161 30,520 29,331 30,501 31,046 31,952 31,511 31,215 29,649 26 Commercial buildings 59,480 68,223 74,593 81,979 83,107 81,015 76,545 78,670 79,009 82,536 81,421 79,064 79,657 27 Other buildings 26,988 27,089 30,525 34,257 35,561 36,012 38,229 37,738 35,775 36,673 37,338 38,506 37,900 28 Public utilities and other. . . 44,862 48,323 52,156 49.623 49.806 51,207 53,582 53,311 53,820 53,506 53,448 54,038 53,604 29 Public 119,998 127,092 131,250 132,725 140,328 141,180 139,304 135,882 137,268 138,813 138,595 138,284 139,075 30 Military 2,310 2,983 2,541 2,542 2,564 2,232 2,408 2,548 2,580 2,743 2,778 2,444 3,092 31 Highway 36,933 36,319 37,898 37,869 41.060 41,473 42,356 40,694 41,531 41,056 41,458 40,467 39,359 32 Conservation and development 6,459 6,391 5,807 5,807 5,727 6,114 5,134 5,242 4,952 4,989 5,576 6,000 4,175 33 Other 74,297 81,399 85,005 86,507 90,977 91,361 89,406 87,398 88,205 90,025 88,783 89,373 92,449 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) Index level, Item 1996 1997 1997 Nov. 1996 1997 1997 1 Nov. Nov. Dec. Mar. June Sept. July Aug. Sept. Oct. Nov. CONSUMER PRICES2 (1982-84=100) 3.3 1.8 3.3 1.8 1.0 2.5 .2 .2 .2 .2 .1 161.5 2 Food 44..44 1.7 3.4 .3 1.5 3.4 .3 .4 .1 .2 .2 158.5 88..11 -.4 16.2 -2.8 -14.7 11.9 -.1 1.7 1.3 .1 -.2 110.7 2.6 2.2 2.4 22..44 2.4 1.7 .2 .1 .2 .2 .1 170.8 1.1 .4 .9 11..11 .6 -.6 -.1 -.3 .2 .1 .0 142.8 33..22 22..99 3.1 2.7 3.5 2.4 .3 .2 .2 .3 .1 186.7 PRODUCER PRICES (1982=100) 3.0 -.6 4.3 -3.3 -3.6 2.8 -.1 .3 .5 .1 -.2 131.8 3.8 -1.2 2.4 -2.0 -3.2 .3 -.2 ,2r .1 .4 -.1 134.5 1122..99 -3.4 26.2 -16.9 -15.1 12.4 ,2r 1.2r 1.5 .1 -.8 82.0 ..88 .6 .6 .6 -.6 11..77 -,2r .1 .5 .1 -.1 145.7 ..33 --..22 --..66 ..00 --..99 ..66 -.1 .0 .3 -.1 -.1 138.4 Intermediate materials .3 -.1 2.2 -1.9 -1.9 1.0 -,lr ,R .2 .1 .1 125.6 --11..33 ..55 --..33 ..66 .3 ..33 .R ,OR .0 .1 .1 134.4 Crude materials 3.1 -6.4 -28.5 -2.8 -11.1 .7 ,5r ,OR -.3 .0 -.3 110.2 34.6 3.8 235.2 -75.5 11.3 15.5 -.R L.R 2.6 10.7 5.0 95.4 16 Other --66..55 11..66 -1.3 15.7 -4.9 -1.5 -1.0r 1.6r -1.0 .3 -.7 154.1 1. Not seasonally adjusted. SOURCE. US. 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 1998 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q3 Q4 Ql Q2 Q3 GROSS DOMESTIC PRODUCT 1 Total 6,947.0 7,265.4 7,636.0 7,676.0 7,792.9 7,933.6 8,034.3 8,124.3 By source 2 Personal consumption expenditures 4,717.0 4,957.7 5,207.6 5,227.4 5,308.1 5,405.7 5,432.1 5,527.4 3 Durable goods 579.5 608.5 634.5 634.5 638.2 658.4 644.5 667.3 4 Nondurable goods 1,428.4 1,475.8 1,534.7 1,538.3 1,560.1 1,587.4 1,578.9 1,600.8 Services 2,709.1 2,873.4 3,038.4 3,054.6 3,109.8 3,159.9 3,208.7 3,259.3 6 Gross private domestic investment 1,007.9 1,038.2 1,116.5 1,149.2 1,151.1 1,193.6 1,242.0 1,250.2 7 Fixed investment 946.6 1,008.1 1,090.7 1,112.0 1,119.2 1,127.5 1,160.8 1,201.3 8 Nonresidential 660.6 723.0 781.4 798.6 807.2 811.3 836.3 872.0 y Structures 184.5 200.6 215.2 217.7 227.0 227.4 226.8 232.9 10 Producers' durable equipment 476.1 522.4 566.2 580.9 580.2 583.9 609.5 639.1 n Residential structures 286.0 285.1 309.2 313.5 312.0 316.2 324.6 329.3 12 Change in business inventories 61.2 30.1 25.9 37.1 31.9 66.1 81.1 48.9 13 Nonfarm 50.5 38.1 23.0 31.3 28.7 62.2 74.9 40.9 14 Net exports of goods and services -90.9 -86.0 -94.8 -114.0 -88.6 -98.8 -88.7 -111.3 15 Exports 721.2 818.4 870.9 863.7 904.6 922.2 960.3 965.8 16 Imports 812.1 904.5 965.7 977.6 993.2 1,021.0 1,049.0 1,077.1 17 Government consumption expenditures and gross investment 1,313.0 1,355.5 1,406.7 1,413.5 1,422.3 1,433.1 1,449.0 1,457.9 18 Federal 510.2 509.6 520.0 521.6 517.6 516.1 526.1 525.7 iy State and local 802.8 846.0 886.7 891.9 904.7 917.0 923.0 932.3 By major type of product 20 Final sales, total 6,885.7 7,235.3 7,610.2 7,638.9 7,761.0 7,867.4 7,953.2 8,075.3 21 Goods 2,520.2 2,637.9 2,759.3 2,760.7 2,795.0 2,838.4 2,854.9 2,903.2 22 Durable 1,072.5 1,133.9 1,212.0 1,216.3 1,233.5 1,248.0 1,275.3 1,305.3 23 Nondurable 1,447.6 1,503.9 1,547.3 1,544.4 1,561.5 1,590.4 1,579.6 1,597.9 24 Services 3,772.4 3,980.7 4,187.3 4,208.1 4,282.7 4,338.2 4,400.1 4,462.3 23 Structures 593.2 616.8 663.6 670.1 683.3 690.8 698.2 709.8 26 Change in business inventories 61.2 30.1 25.9 37.1 31.9 66.1 81.1 48.9 27 Durable goods 33.6 29.1 16.9 33.3 -1.1 31.8 46.8 18.6 28 Nondurable goods 27.7 1.1 9.0 3.9 33.0 34.3 34.4 30.3 MEMO 29 Total GDP in chained 1992 dollars 6,610.7 6,742.1 6,928.4 6,943.8 7,017.4 7,101.6 7,159.6 7,214.0 NATIONAL INCOME 30 Total 5,590.7 5,912.3 6,254.5 6,303.3 6,376.5 6,510.0 6,599.0 6,699.6 31 Compensation of employees 4,012.0 4,215.4 4,426.9 4,461.0 4,520.7 4,606.3 4,663.4 4,725.2 32 Wages and salaries 3,254.0 3,442.6 3,633.6 3,664.0 3,718.0 3,792.7 3,842.7 3,897.3 33 Government and government enterprises 602.2 623.0 642.6 645.5 648.9 657.8 662.0 667.7 34 Other 2,651.8 2,819.6 2,991.0 3,018.4 3,069.0 3,134.9 3,180.8 3,229.6 35 Supplement to wages and salaries 758.0 772.9 793.3 797.0 802.7 813.6 820.7 827.9 36 Employer contributions for social insurance 353.0 366.0 385.7 388.6 393.6 401.3 405.6 410.2 37 Other labor income 405.0 406.8 407.6 408.4 409.1 412.3 415.1 417.7 3 39 8 Pro B p u r s ie in to es rs s ' a i n n d c o p m ro e f 1 essional1 4 43 7 4 1 . . 7 6 4 46 8 5 9 . . 5 0 4 5 8 2 3 0 . . 1 3 4 5 8 2 3 3 . .8 7 4 5 8 28 7 . . 3 9 4 5 9 34 4 . . 6 4 5 5 4 0 3 0 . . 6 0 5 5 4 0 7 6 . . 2 3 40 Farm1 36.9 23.4 37.2 40.1 40.4 40.2 43.6 40.9 41 Rental income of persons2 124.4 132.8 146.3 148.0 149.2 149.0 148.7 148.0 42 Corporate profits' 570.5 650.0 735.9 739.6 747.8 779.6 795.1 827.3 43 Profits before tax3 535.1 622.6 676.6 679.1 680.0 708.4 719.8 753.4 44 Inventory valuation adjustment -16.1 -24.3 -2.5 -2.7 3.3 3.5 5.9 3.6 45 Capital consumption adjustment 51.4 51.6 61.8 63.2 64.4 67.7 69.4 70.3 46 Net interest 412.3 425.1 425.1 430.9 430.6 440.5 448.1 451.8 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 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q3 Q4 Ql Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 5,791.8 6,150.8 6,495.2 6,541.9 6,618.4 6,746.2 6,829.1 6,906.9 2 Wage and salary disbursements 3,240.7 3,429.5 3,632.5 3,662.8 3,716.9 3,791.5 3,841.6 3,896.1 3 Commodity-producing industries 824.4 864.4 909.1 917.2 927.8 942.9 952.8 961.4 4 Manufacturing 620.8 648.4 674.7 680.1 685.6 694.1 700.3 706.0 5 Distributive industries 741.4 783.1 823.3 829.0 840.6 856.8 867.0 880.8 6 Service industries 1,072.7 1,159.0 1,257.5 1,271.1 1,299.5 1,334.1 1,359.8 1,386.3 7 Government and government enterprises 602.2 623.0 642.6 645.5 648.9 657.8 662.0 667.7 8 Other labor income 405.0 406.8 407.6 408.4 409.1 412.3 415.1 417.7 9 Proprietors' income' 471.6 489.0 520.3 523.8 528.3 534.6 543.6 547.2 10 Business and professional 434.7 465.5 483.1 483.7 487.9 494.4 500.0 506.3 11 Farm1 36.9 23.4 37.2 40.1 40.4 40.2 43.6 40.9 12 Rental income of persons 124.4 132.8 146.3 148.0 149.2 149.0 148.7 148.0 13 Dividends 204.8 251.9 291.2 292.0 295.2 312.5 318.3 324.5 14 Personal interest income 668.1 718.9 735.7 742.7 749.8 757.2 766.1 772.6 15 Transfer payments 954.7 1,015.0 1,068.0 1,072.4 1,081.5 1,107.2 1,117.0 1,125.7 16 Old-age survivors, disability, and health insurance benefits 473.0 507.8 537.6 540.0 545.6 558.9 564.4 569.4 17 LESS: Personal contributions for social insurance 277.5 293.1 306.3 308.2 311.5 318.2 321.3 324.8 18 EQUALS: Personal income 5,791.8 6,150.8 6,495.2 6,541.9 6,618.4 6,746.2 6,829.1 6,906.9 19 LESS: Personal tax and nontax payments 739.1 795.1 886.9 897.3 922.6 955.7 979.2 998.0 20 EQUALS: Disposable personal income 5,052.7 5,355.7 5,608.3 5,644.6 5,695.8 5,790.5 5,849.9 5,908.9 21 LESS: Personal outlays 4,842.1 5,101.1 5,368.8 5,390.6 5,475.4 5,574.6 5,602.8 5,700.8 22 EQUALS: Personal saving 210.6 254.6 239.6 254.0 220.4 215.9 247.0 208.2 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 25,357.0 25,615.9 26,085.8 26,114.4 26,331.6 26,597.8 26,765.0 26,897.9 24 Personal consumption expenditures 17,207.2 17,459.3 17,748.9 17,744.2 17,847.8 18,045.2 18,053.9 18,255.7 25 Disposable personal income 18,431.0 18,861.0 19,116.0 19,161.0 19,152.0 19,331.0 19,439.0 19,518.0 26 Saving rate (percent) 4.2 4.8 4.3 4.5 3.9 3.7 4.2 3.5 GROSS SAVING 27 Gross saving 1,079.2 1,165.5 1,267.8 1,295.9 1,303.0 1,332.9 1,396.9 1,411.6 28 Gross private saving 1,030.2 1,093.1 1,125.5 1,145.1 1,131.4 1,134.0 1,178.1 1,159.6 29 Personal saving 210.6 254.6 239.6 254.0 220.4 215.9 247.0 208.2 30 Undistributed corporate profits' 167.6 172.4 202.1 202.3 212.6 211.5 217.6 230.0 31 Corporate inventory valuation adjustment -16.1 -24.3 -2.5 -2.7 3.3 3.5 5.9 3.6 Capital consumption allowances 32 Corporate 412.3 428.9 452.3 455.5 462.0 467.4 472.6 478.0 33 Noncorporate 226.3 224.1 230.5 232.2 235.2 238.0 239.7 242.4 34 Gross government saving 49.0 72.4 142.3 150.8 171.6 198.9 218.8 251.9 35 Federal -117.2 -103.6 -39.3 -28.3 -5.9 15.9 34.7 60.8 36 Consumption of fixed capital 69.5 70.9 71.2 71.2 71.3 71.4 71.5 71.6 37 Current surplus or deficit ( —), national accounts -186.7 -174.4 -110.5 -99.5 -77.1 -55.5 -36.8 -10.8 38 State and local 166.2 176.0 181.5 179.1 177.5 182.9 184.1 191.1 39 Consumption of fixed capital 69.4 72.9 76.2 76.5 77.2 78.2 79.2 79.7 40 Current surplus or deficit (—), national accounts 96.8 103.1 105.3 102.6 100.4 104.7 104.9 111.4 41 Gross investment 1,093.8 1,137.2 1,207.9 1,216.4 1,243.5 1,268.6 1,323.4 1,308.4 42 Gross private domestic investment 1,007.9 1,038.2 1,116.5 1,149.2 1,151.1 1,193.6 1,242.0 1,250.2 43 Gross government investment 206.0 213.4 224.3 223.6 225.3 223.3 227.4 227.1 44 Net foreign investment -120.0 -114.4 -132.9 -156.4 -132.9 -148.4 -146.0 -168.9 45 Statistical discrepancy 14.6 -28.2 -59.9 -79.5 -59.5 -64.3 -73.5 -103.2 1. With inventory valuation and capital consumption adjustments. SOURCE. US. 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 1998 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1996 1997 IItteemm ccrreeddiittss oorr ddeebbiittss 11999944 11999955 11999966 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -133,538 -129,095 -148,184 -42,833 -36,874 -39,972 -37,852 -42,156 2 Merchandise trade balance" -166,192 -173,560 -191,170 -52,493 -48,190 -49,787 -47,134 -51,549 3 Merchandise exports 502.398 575,871 612,069 150,764 157,846 162,527 171,411 170,579 4 Merchandise imports -668,590 -749,431 -803,239 -203,257 -206,036 -212,314 -218,545 -222,128 5 Military transactions, net 1,874 3,866 3,786 792 1,295 437 1,048 1,040 6 Other service transactions, net 59.902 67,837 76,344 19,185 20,697 20,050 20,441 20,878 / Investment income, net 9,723 6,808 2,824 -1,370 1,250 -1,990 -3,247 -3.321 8 U.S. government grants -15,671 -11,096 -14,933 -2,690 -5,499 -2,109 -2,245 -2,252 y U.S. government pensions and other transfers -4,544 -3.420 -4,331 -1,064 -1,050 -1,083 -1,128 -1,099 10 Private remittances and other transfers -18.630 -19,530 -20,704 -5,193 -5,377 -5,490 -5,587 -5,853 n Change in U.S. government assets other than official reserve assets, net (increase, —) -352 -549 -690 162 -284 -21 -268 482 12 Change in U.S. official reserve assets (increase, -) 5,346 -9,742 6,668 7,489 -315 4,480 -236 -730 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -441 -808 370 848 -146 72 -133 -139 1.1 Reserve position in International Monetary Fund 494 -2.466 -1,280 -183 -28 1,055 54 -463 16 Foreign currencies 5.293 -6,468 7,578 6,824 -141 3,353 -157 -128 17 Change in U.S. private assets abroad (increase, —) -165.510 -296,916 -358,422 -85,193 -153,837 -132,428 -90,431 -101,316 18 Bank-reported claims3 -4,200 -75,108 -98,186 -33,589 -66,657 -62,026 -27,947 --2222,,776600 19 Nonbank-reported claims -31,739 -34,997 -64,234 -17,294 -26,115 -29,466 -3,984 20 U.S. purchases of foreign securities, net -60,309 -100,074 -108,189 -23,206 -30,200 -14,510 -21,841 -37,995 21 U.S. direct investments abroad, net -69.262 -86,737 -87,813 -11,104 -30,865 -26,426 -36,659 -24,661 22 Change in foreign official assets in United States (increase, +) 40,385 110,729 122,354 24,089 33,097 28,891 -5,374 22,498 23 U.S. Treasury securities 30,750 68,977 111,253 25,472 33,564 23,289 -12,108 6,485 2 2 4 5 O O t t h h e e r r U U . . S S . . g g o o v v e e r r n n m m e e n n t t o li b a l b i i g l a it t i i e o s n 4 s 6 2 , , 0 3 7 6 7 6 3, 7 7 4 3 4 5 4,3 7 8 2 1 0 1, 9 2 0 1 7 7 1,8 1 5 6 4 0 4 6 7 5 8 1 6 6 4 5 4 4 2,66 1 3 6 2 2 7 6 O Ot t h h e e r r U fo . r S e . i g li n a b o i f l f it i i c e i s a l r a e s p s o e r t t s e 5 d by U.S. banks3 -2 3 , , 4 6 7 6 3 5 3 3 4 , , 2 0 6 0 5 8 4 1 , , 7 2 2 7 2 8 - - 1 1 , , 5 9 8 2 5 2 -4 1 ,2 ,7 7 8 0 9 -3 7 , , 2 6 2 9 5 8 4, 9 5 0 3 0 6 12, 6 7 2 0 9 5 28 Change in foreign private assets in United States (increase, +) 256.952 340,505 425,201 134,540 161,482 153,347 148,389 147,042 2y U.S. bank-reported liabilities3 104,338 30,176 9,784 2.040 38,960 17,387 28,100 1144,,110022 30 U.S. nonbank-reported liabilities -7,710 34.588 31,786 20,610 -2,912 15,210 -7,916 31 Foreign private purchases of U.S. Treasury securities, net 57,674 111,848 172,878 50,798 75,326 51,289 49,915 43,494 32 Foreign purchases of other U.S. securities, net 56,971 96,367 133,798 35,115 32,447 38,820 51,682 60,770 33 Foreign direct investments in United States, net 45,679 67,526 76,955 25,977 17,661 30,641 26,608 21,076 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -3.283 -14,931 --4466,,992277 -38,254 -3.269 -14,297 -14,228 -25,820 36 Due to seasonal adjustment -7,830 2,669 7,059 -1,713 -8,560 3/ Before seasonal adjustment -3,284 -14,931 -46,926 -30,424 -5,938 -21,356 -12,515 -17,260 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) 5,346 -9.742 66,,666688 77,,448899 -315 44,,448800 --223366 --773300 3y Foreign official assets in United States, excluding line 25 (increase, +) 38.019 109,985 121,634 23,182 32,937 28,413 -6,028 22,482 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -1,529 4.239 12,278 5,263 3,315 9,272 2,287 3,170 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-^10. 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 1997 IItteemm 11999944 11999955 11999966 Apr. Mayr Juner Julyr Aug.' Sept. Oct.? 1 Goods and services, balance -104,416 -101,857 -111,040 -8,119 -9,189 -8,337 -9,744 -9,055 -11,228 -9,691 2 Merchandise -166,192 -173,560 -191,170 -15,527 -16,363 -15,244 -16,848 -16,559 -18.538 -17,083 3 Services 61,776 71,703 80,130 7,408 7,174 6,907 7,104 7,504 7,310 7,392 4 Goods and services, exports 699,646 794,610 848,833 78,385 77,989 78,365 77,845 78,890 78,116 79,992 5 Merchandise 502,398 575,871 612,069 57,162 56,871 57.378 56,745 57,326 56,370 57,964 6 Services 197,248 218,739 236,764 21,223 21,118 20,987 21,100 21,564 21,746 22,028 7 Goods and services, imports -804,062 -896,467 -959,873 -86,504 -87,178 -86,702 -87,589 -87,945 -89,344 -89,683 8 Merchandise -668,590 -749,431 -803,239 -72,689 -73.234 -72,622 -73,593 -73,885 -74,908 -75,047 9 Services -135,472 -147,036 -156,634 -13,815 -13,944 -14,080 -13,996 -14,060 -14,436 -14,636 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 1997 AAsssseett 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. Nov.p 1 Total 74,335 85,832 75,090 65,873 68,054 67,813 66,120 66,640 67,148 68,036 67,112 2 Gold stock, including Exchange Stabilization Fund' 11,051 11,050 11,049 11,051 11,051 11,050 11,051 11,050 11,050 11,050 11.050 3 Special drawing rights2,3 10,039 11,037 10,312 9,726 10,050 10,023 9,810 9,985 9,997 10,132 10,120 4 Reserve position in International Monetary Fund2 12,030 14,649 15,435 13,660 13,805 13,805 13,677 13,959 14,042 14,243 14,571 5 Foreign currencies4 41,215 49,096 38,294 31,436 32,935 32,935 31,582 31,646 32,059 32,611 31,371 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 1997 AAsssseett 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. Nov.p 1 Deposits 250 386 167 169 176 178 175 169 188 190 167 Held in custody 2 U.S. Treasury securities2 441,866 522,170 638,049 668,536 662,747 652,077 653,157 660,461 655,406 638,100 635,092 3 Earmarked gold3 12,033 11,702 11,197 10,944 10,868 10,794 10,793 10,793 10,793 10,793 10,793 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 1998 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1995r 1996r Apr.r Mayr Juner Julyr Aug/ Sept. Oct.p 1 Total1 412,624 482,915 520,934 517,414 527,575 543,452 553,101 560,834 580,469 By type 2 3 L U i . a S b . i T lit r i e e a s s u r r e y p o b r i t l e l d s a b n y d b c a e n r k ti s f i i c n a t t e h s e 3 United States 1 5 0 4 4 , , 9 5 6 9 7 6 1 6 5 9 1 , , 7 1 2 0 1 0 1 7 3 3 9 , , 3 57 8 1 6 1 7 3 4 3 , , 4 0 9 1 5 4 1 8 3 0 4 , , 5 3 9 4 0 1 1 8 4 4 1 , , 3 7 8 1 1 6 1 8 4 6 6 , , 0 41 4 7 2 1 8 5 5 4 , , 3 5 0 7 2 5 1 9 5 1 4 , , 8 5 9 1 1 7 U.S. Treasury bonds and notes 5 4 M No a n rk m e a ta rk b e le t able4 21 4 0 , , 5 9 3 3 2 1 21 5 2 , , 6 23 5 7 2 25 6 4 , ,0 1 5 0 9 9 25 6 5 , ,8 1 8 3 8 7 25 6 7 , , 0 99 9 8 5 26 6 2 , , 1 0 3 2 5 0 26 6 5 , , 1 1 7 7 4 8 26 6 3, , 4 2 7 0 1 9 27 6 4 , , 2 3 4 4 5 2 6 U.S. securities other than U.S. Treasury securities^ 37,598 44,205 47,809 47,880 48,551 49,200 49,290 51,277 53,474 By area 7 Europe1 189,230 207,034 215,374 212,376 213,876 218,902 217,071 217,999 223,925 8 Canada 13,700 15,285 17,235 18,041 18,655 19,268 19,248 19,631 19,549 9 Latin America and Caribbean 37,973 55,898 41,492 37,368 42,565 40,014 42,653 45,011 50,573 10 Asia 164,690 197,702 236,824 240,019 244,550 256,845 266,089 270,519 278,767 11 Africa 3,723 4,052 4,180 4,335 4,066 4,583 4,200 4,281 4,427 12 Other countries 3,306 2,942 5,827 5,273 3,861 3,838 3,838 3,391 3,226 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 bonrowings 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 1996 1997 IItteemm 11999933 11999944 11999955 Dec. Mar. June Sept. 1 Banks' liabilities 78,259 89,258 109,713 103,383 109,238 109,433 118,492 2 Banks' claims 62,017 60,711 74,016 66,018 72,589 84,665 89,568 3 Deposits 20,993 19,661 22,696 22,467 24,542 26,503 28,961 4 Other claims 41,024 41,050 51,320 43,551 48,047 58,162 60,607 5 Claims of banks' domestic customers2 12,854 10,878 6,145 10,978 9,357 11,292 10,210 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

Nonbank-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 1997 IItteemm 11999944 11999955 11999966 Apr. May June July Aug/ Sept. Oct.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,014,996 1,099,549 1,161,993 1,181,419 1,193,134 1,183,736 1,199,601 1,191,966 1,198,125 1,222,865 2 Banks' own liabilities 718,591 753,461 758,998 796,344 812,513 801,237 806,686 788,435 797,042 821,486 3 Demand deposits 23,386 24,448 27,034 29,252 26,204 29,548 27,658 27,090 28,316 33,542 4 Time deposits2 186,512 192,558 187,956 183,860 184,347 187,766 190,144 191,335 188,263 193,930 5 Other3 113,215 140,165 142,464 161,607 162,470 165,333 176,087 161,000 169,923 192,433 6 Own foreign offices4 395,478 396,290 401,544 421,625 439,492 418,590 412,797 409,010 410,540 401,581 7 Banks' custodial liabilities5 296,405 346,088 402,995 385,075 380,621 382,499 392,915 403,531 401,083 401,379 8 U.S. Treasury bills and certificates6 162,938 197,355 236,874 221,387 207,894 205,792 202,630 209,121 205,946 200,215 9 Other negotiable and readily transferable instruments7 42,539 52,200 72,011 67,074 72,716 75,235 88,057 89,096 90,686 95,662 10 Other 90,928 96,533 94,110 96,614 100,011 101,472 102,228 105,314 104,451 105,502 11 Nonmonetary international and regional organizations8 . .. 8,606 11,039 13,972 13,059 12,547 13,952 11,796 10,569 11,806 13,674 12 Banks' own liabilities 8,176 10,347 13,355 12,787 12,332 13,496 11,384 10,068 11,524 13,269 13 Demand deposits 29 21 29 30 16 775 86 217 771 36 14 Time deposits2 3,298 4,656 5,784 5,238 4,857 6,669 4,726 4,879 6,017 5,031 15 Other3 4,849 5,670 7,542 7,519 7,459 6,052 6,572 4,972 4,736 8,202 16 Banks' custodial liabilities5 430 692 617 272 215 456 412 501 282 405 17 U.S. Treasury bills and certificates6 281 350 352 174 122 65 47 166 53 148 18 Other negotiable and readily transferable instruments7 149 341 265 98 88 383 365 314 229 257 19 Other 0 1 0 0 5 8 0 21 0 0 20 Official institutions9 212,957 275,928 312,019 305,270 305,439 289,080 290,658 293,910 299,974 306,974 21 Banks' own liabilities 59,935 83,447 79,406 86,808 92,845 97,025 101,957 98,940 105,542 118,041 22 Demand deposits 1,564 2,098 1,511 2,341 1,855 1,482 1,711 2,181 1,745 2,034 23 Time deposits2 23,511 30,717 33,336 33,428 36,627 39,694 41,936 40,147 40,073 41,660 24 Other3 34,860 50,632 44,559 51,039 54,363 55,849 58,310 56,612 63,724 74,347 25 Banks' custodial liabilities5 153,022 192,481 232,613 218,462 212,594 192,055 188,701 194,970 194,432 188,933 26 U.S. Treasury bills and certificates6 113399,,557711 168,534 198,921 186,432 178,366 163,950 161,270 165,453 161,610 153,283 27 Other negotiable and readily transferable instruments7 13,245 23,603 33,266 31,883 33,976 27,676 26,878 29,349 32,315 35,236 28 Other 206 344 426 147 252 429 553 168 507 414 29 Banks10 678,532 691,412 694,835 710,231 718,282 727,606 734,444 730,323 722,765 730,800 30 Banks' own liabilities 563,617 567,834 562,898 579,775 591,027 575,768 573,804 566,367 561,981 566,181 31 Unaffiliated foreign banks 168,139 171,544 161,354 158,150 151,535 157,178 161,007 157,357 151,441 164,600 32 Demand deposits 10,633 11,758 13,692 14,451 12,686 14,800 13,700 13,323 13,851 18,351 33 Time deposits2 111,171 103,471 90,811 83,542 81,587 80,291 81,126 82,915 77,116 83,960 34 Other3 46,335 56,315 56,851 60,157 57,262 62,087 66,181 61,119 60,474 62,289 35 Own foreign offices4 395,478 396,290 401,544 421,625 439,492 418,590 412,797 409,010 410,540 401,581 36 Banks' custodial liabilities5 114,915 123,578 131,937 130,456 127,255 151,838 160,640 163,956 160,784 164,619 37 U.S. Treasury bills and certificates6 1111,,226644 1155,,887722 23,106 19,567 14,127 27,115 28,642 30,629 30,012 33,085 38 Other negotiable and readily transferable instruments7 14,506 13,035 17,027 16,693 18,918 28,866 35,522 33,960 32,886 32,527 39 Other 89,145 94,671 91,804 94,196 94,210 95,857 96,476 99,367 97,886 99,007 40 Other foreigners 114,901 121,170 141,167 152,859 156,866 153,098 162,703 157,164 163,580 171,417 41 Banks' own liabilities 86,863 91,833 103,339 116,974 116,309 114,948 119,541 113,060 117,995 123,995 42 Demand deposits 11,160 10,571 11,802 12,430 11,647 12,491 12,161 11,369 11,949 13,121 43 Time deposits2 48,532 53,714 58,025 61,652 61,276 61,112 62,356 63,394 65,057 63,279 44 Other3 27,171 27,548 33,512 42,892 43,386 41,345 45,024 38,297 40,989 47,595 45 Banks' custodial liabilities5 28,038 29,337 37,828 35,885 40,557 38,150 43,162 44,104 45,585 47,422 46 U.S. Treasury bills and certificates6 11,822 12,599 14,495 15,214 15,279 14,662 12,671 12,873 14,271 13,699 47 Other negotiable and readily transferable instruments7 14,639 15,221 21,453 18,400 19,734 18,310 25,292 25,473 25,256 27,642 48 Other 1,577 1,517 1,880 2,271 5,544 5,178 5,199 5,758 6,058 6,081 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,895 9,103 14,573 15,130 15,030 15,771 16,453 16,040 15,872 15,485 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 1998 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued Apr. May June July Aug. Sept, AREA 50 Total, all foreigners 1,014,996 1,099,549 1,161,993 1,181,419 1,193,134 1,183,736 1,199,601 L,191,966R 1,198,125 1,222,865 51 Foreign countries 1,006,390 1,088,510 1,148,021 1,168,360 1,180,587 1,169,784 1,187,805 L,181,397R 1,186,319 1,209,191 52 Europe 390,869 362,819 376,590 380,617 382,253 395,718 411,680 407,700 401,813 418,558 53 Austria 3,588 3,537 5,128 3,003 3,231 3,252 3,257 3,404 2,691 2,679 54 Belgium and Luxembourg 21,877 24,792 24,084 19,243 21,256 41,286 45,291 46,063 43,436 45,992 55 Denmark 2,884 2,921 2,565 1,782 2,112 2,098 2,289 1,736 2,867 2,359 56 Finland 1,436 2,831 1,958 3,149 1,868 1,851 1,814 1,751 2,163 1.997 57 France 44,365 39,218 35,078 40,702 38,742 41,211 43,464 41,213 43,065 45,057 58 Germany 27,109 24,035 24,660 25,793 26,081 26,086 24,978 22,626 25,201 22,117 59 Greece 1,400 2,014 1,835 1,740 2,296 1,701 1,726 1,592 2,086 2,075 60 Italy 10,885 10,868 10,946 9,499 9,691 10,191 9,490 9,179 9,852 11,449 61 Netherlands 16,033 13,745 11,110 11,758 8,702 8,292 8,440 7,823 8,388 8,119 62 Norway 2,338 1,394 1,288 1,357 1,121 841 846 604 1,321 982 63 Portugal 2,846 2,761 3,562 3,010 2,712 2,582 2,075 1,931 1,958 1,888 64 Russia 2,726 7,948 7,623 7,863 9,582 12,302 13,604 13,216 12,784 11,722 65 Spain 14,675 10,011 17,707 17,697 15,027 16,274 15,158 15,203 17,796 21,934 66 Sweden 3,094 3,246 1,623 2,216 1,658 1,514 1,925 2,317 2,024 1,348 67 Switzerland 40,724 43,625 44,538 42,128 44,028 39,124 44,283 41,076 36,862 31,465 68 Turkey 3,341 4,124 6,738 6,585 6,757 6,545 6,594 5,933 4,736 10,261 69 United Kingdom 163,733 139,183 153,420 158,258 163,227 156,127 161,672 167,914 158,599 145,336 7 7 0 1 Y O u th g e o r s l E av u i r a o " p e and other former U.S.S.R.12 27,7 2 7 4 0 5 26,3 1 8 7 9 7 22,5 2 2 0 1 6 24,5 2 6 6 8 6 23,8 3 3 2 8 4 24,2 2 1 2 3 8 24,5 2 0 6 7 7 23,8 2 7 4 5 4 25,7 2 4 4 1 3 3 1 1 9 , , 9 7 9 8 7 1 72 Canada 24,768 30,468 38,920 40,331 38,441 37,970 30,444 27,628 29,592 30,281 73 Latin America and Caribbean 423,847 440,213 467,374 479,595 494,607 495,710 500,309 496,336 502,629 499,759 74 Argentina 17,203 12,235 13,877 14,224 16,486 18,229 17,100 18,033 16,643 17,557 75 Bahamas 104,014 94,991 88,895 105,465 100,935 90,166 92,136 86,271 86,914 87,669 76 Bermuda 8,424 4,897 5,527 7,450 6,358 5,358 5,919 7,786 6,084 6,209 77 Brazil 9,145 23,797 27,701 23,408 25,452 26,058 28,340 31,567 33,575 31,675 78 British West Indies 229,599 239,083 251,310 251,752 268,284 272,142 264,986 268,180 273,580 269,783 79 Chile 3,127 2,826 2,915 3,117 3,239 3,371 3,440 3,353 3,327 3,679 80 Colombia 4,615 3,659 3,256 3,165 2,776 2,836 2,652 2,587 2,657 3,395 81 Cuba 13 8 21 52 54 55 54 60 55 71 82 Ecuador 875 1,314 1,767 1,469 1,608 1,466 1,640 1,512 1,508 1,671 83 Guatemala 1,121 1,276 1,282 1,514 1,457 1,497 1,455 1,389 1,449 1,399 84 Jamaica 529 481 628 525 472 465 532 534 523 481 85 Mexico 12,227 24,560 31,240 27,855 28,223 32,611 34,579 30,804 32,640 32,748 86 Netherlands Antilles 5,217 4,673 6,099 5,486 3,755 6,134 10,986 8,286 7,566 6,059 87 Panama 4,551 4,264 4,099 3,711 4,026 3,976 4,424 3,805 3,835 4,107 88 Peru 900 974 834 881 1,117 919 958 1,006 904 917 89 Uruguay 1,597 1,836 1,890 1,753 2,062 2,153 2,392 2,070 1,997 2,184 90 Venezuela 13,986 11,808 17,363 18,968 18,899 19,187 19,114 20,159 20,570 20,619 91 Other 6,704 7,531 8,670 8,800 9,404 9,087 9,602 8,934 8,802 9,536 92 Asia 154,346 240,595 249,083 250,070 249,131 222,698 227,555 230,863r 234,392 241,911 China 93 Mainland 10,066 33,750 30,438 28,575 29,429 7,283 9,480 10,450 12,652 16,232 94 Taiwan 9,844 11,714 15,995 14,664 12,442 12,363 13,464 11,803 13,331 15,067 95 Hong Kong 17,104 20,197 18,789 18,941 19,397 20,236 18,737 17,647 18,528 19,686 96 India 2,338 3,373 3,930 4,755 4,367 4,241 4,555 4,474 4,451 5,131 97 Indonesia 1,587 2,708 2,298 2,430 2,770 2,531 2,817 3,737 2,810 4,568 98 Israel 5,157 4,041 6,051 6,097 6,416 5,751 5,180 5,202 4,534 4,200 99 Japan 62,981 109.193 117,316 122,194 118,921 118,413 118,410 119,581r 118,536 116,852 100 Korea (South) 5,124 5,749 5,949 7,158 7,866 7,657 8,928 9,646 9,327 8,663 101 Philippines 2,714 3,092 3,378 2,340 2,387 2,469 2,908 2,541 2,409 2,505 102 Thailand 6,466 12,279 10,912 10,361 7,808 6,159 5,262 4,956 6,545 7,009 103 Middle Eastern oil-exporting countries13 15,494 15,582 16,285 14,214 14,425 12,946 14,112 15,201r 14,277 14,417 104 Other 15,471 18,917 17,742 18,341 22,903 22,649 23,702 25,625 26,992 27,581 105 Africa 6,524 7,641 8,116 8,986 9,821 9,970 9,734 9,731 10,379 10,306 106 Egypt 1,879 2,136 2,012 2,056 2,257 1,986 1,921 1,973 2,050 1,742 107 Morocco 97 104 112 130 91 65 112 94 99 105 108 South Africa 433 739 458 780 1,985 1,758 1,697 1,694 2,046 2,027 109 Zaire 9 10 10 4 9 17 8 7 14 3 110 Oil-exporting countries14 1,343 1,797 2,626 3,344 2,731 3,153 2,981 3,211 3,280 3,194 111 Other 2,763 2,855 2,898 2,672 2,748 2,991 3,015 2,752 2,890 3,235 112 Other 6.036 6,774 7,938 8,761 6,334 7,718 8,083 9,139 7,514 8,376 113 Australia 5,142 5,647 6,479 7,546 4,991 6,433 6,782 7,917 6,391 7,284 114 Other 894 1,127 1,459 1,215 1,343 1,285 1,301 1,222 1,123 1,092 115 Nonmonetary international and regional organizations. . . 8,606 11,039 13,972 13,059 12,547 13,952 11,796 10,569r 11,806 13,674 116 International15 7,537 9,300 12,099 11,691 10,873 12,297 10,341 9,434r 10,634 11,703 117 Latin American regional16 613 893 1,339 1,050 1,435 1,071 794 579 708 1,277 118 Other regional17 456 846 534 318 239 584 661 556 464 694 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, Qat^r, 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

Nonbank-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 1997 AArreeaa oorr ccoouunnttrryy 11999944 11999955 11999966 Apr. May June July Aug.r Sept. Oct.p 1 Total, all foreigners 485,432 532,444 599,685 640,974 632,547 651,435 646,597 650,427 656,658 682,647 2 Foreign countries 480,841 530,513 597,081 638,686 630,215 649,505 645,444 648,010 654,615 681,197 3 Europe 124,124 132,150 165,555 183,035 196,157 192,392 186,365 189,760 199,261 213,886 4 Austria 692 565 1,662 1,541 1,440 1,394 1,690 1,739 1,371 1,963 5 Belgium and Luxembourg 6,923 7,624 6,727 8,054 8,017 8,159 8,089 8,117 7,840 8,297 6 Denmark 1,129 403 492 888 924 981 806 811 1,082 896 7 Finland 512 1,055 971 1,194 1,121 1,414 1,247 1,773 1,889 1,808 8 France 12,149 15,033 15,246 14,933 17,296 16,764 18,694 16,239 17,538 17,043 9 Germany 7,623 9,263 8,472 9,532 9,054 10,024 8,351 8,685 11,724 11,617 10 Greece 604 469 568 453 477 630 461 481 499 463 11 Italy 6,044 5,370 6,457 6,166 6,478 7,865 7,443 8,015 7,670 7,134 12 Netherlands 2,960 5,346 7,080 8,866 8,190 10,687 12,050 11,083 11,548 11,504 13 Norway 504 665 808 846 1,199 750 745 849 1,713 1,419 14 Portugal 938 888 418 326 306 468 439 732 563 615 15 Russia 973 660 1,669 1,799 1,881 2,020 2,098 2,192 1,927 2,054 16 Spain 3,536 2,166 3,211 6,301 5,854 6,811 6,496 6,176 5,431 6,624 17 Sweden 4,098 2,080 1,739 1,942 1,870 2,539 1,740 1,639 1,659 1,851 18 Switzerland 55,,774477 7,474 19,798 21,301 24,574 22,523 24,883 24,338 25,393 29,967 19 Turkey 887788 803 1,109 1,216 1,306 1,392 1,362 1,305 1,410 1,424 20 United Kingdom 66,863 67,784 85,057 91,217 101,629 94,070 84,162 90,226 93,825 102,405 21 Yugoslavia2 265 147 115 78 79 75 75 76 75 75 22 Other Europe and other former U.S.S.R.3 1,686 4,355 3,956 6,382 4,462 3,826 5,534 5,284 6,104 6,727 23 Canada 18,490 20,874 26,436 33,727 31,613 35,916 26,289 24,441 23,513 22,814 24 Latin America and Caribbean 224,229 256,944 274,127 282,478 264,378 281,253 300,449 298,781 302,523 305,208 25 Argentina 5,854 6,439 7,400 6,884 7,251 7,293 7,088 7,277 7,243 8,139 26 Bahamas 66,410 58,818 71,871 68,219 65,546 66,804 69,819 70,031 66,074 73,839 27 Bermuda 8,533 5,741 4,103 8,132 6,603 7,112 8,252 9,829 9,336 8,089 28 Brazil 9,583 13,297 17,259 17,590 18,588 18,757 18,882 19,251 19,431 20,178 29 British West Indies 96,373 124,037 105,510 111,276 106,898 122,088 134,435 128,370 133,775 134,554 30 Chile 3,820 4,864 5,136 5,636 5,745 5,599 5,801 5,919 6,235 7,215 31 Colombia 4,004 4,550 6,247 6,026 6,041 6,324 6,419 6,609 6,543 6,862 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 682 825 1,031 995 1,092 1,132 1,165 1,199 1,218 1,307 34 Guatemala 366 457 620 633 619 651 679 690 764 760 35 Jamaica 258 323 345 325 328 336 359 375 374 364 36 Mexico 17,749 18,024 18,425 20,292 19,168 19,201 19,585 18,680 18,770 18,719 37 Netherlands Antilles 1,404 9,229 25,209 25,235 14,759 14,016 15,759 18,399 20,325 12,139 38 Panama 2,198 3,008 2,786 3,243 3,347 3,183 3,272 3,482 3,566 3,968 39 Peru 997 1,829 2,720 2,473 2,580 2,597 2,697 2,851 3,060 3,188 40 Uruguay 503 466 589 682 735 705 778 702 728 709 41 Venezuela 1,832 1,661 1,702 1,561 1,710 1,801 1,734 1,750 1,716 1,636 42 Other 3,663 3,376 3,174 3,276 3,368 3,654 3,725 3,367 3,365 3,542 43 107,800 115,336 122,478 129,326 128,708 129,744 122,500 124,907 120,795 129,579 China 44 Mainland 836 1,023 1,401 2,201 2,168 2,023 2,370 2,588 2,786 2,338 45 Taiwan 1,448 1,713 1,894 1,532 1,500 1,851 1,523 1,521 1,250 1,271 46 Hong Kong 9,222 12,821 12,802 13,389 14,969 16,014 12,247 13,188 13,573 15,343 47 India 994 1,846 1,946 2,147 2,257 2,342 2,184 2,110 2,086 2,360 48 Indonesia 11,,447722 1,696 1,762 2,206 2,435 2,536 2,521 2,576 2,710 2,695 49 Israel 668888 739 633 586 909 631 855 749 907 1,539 50 Japan 59,569 61,468 59,967 58,872 56,484 59,679 55,592 54,427 52,480 59,462 51 Korea (South) 10,286 13,975 18,901 20,802 20,864 20,606 21,274 21,690 19,979 19,897 52 Philippines 663 1,318 1,697 1,746 1,937 2,119 1,723 1,834 1,670 1,455 53 Thailand 2,902 2,612 2,679 3,233 3,069 3,187 2,825 2,641 2,479 2,317 54 Middle Eastern oil-exporting countries4 13,982 9,639 10,424 11,315 10,590 9,115 9,750 9,470 7,987 8,490 55 Other 5,738 6,486 8,372 11,297 11,526 9,641 9,636 12,113 12,888 12,412 56 Africa 3,053 2,742 2,776 3,282 2,847 3,273 3,125 3,280 3,463 3,342 57 Egypt 225 210 247 231 270 312 267 288 251 245 58 Morocco 429 514 524 478 463 465 463 554 547 599 59 South Africa 674 465 584 452 569 602 493 489 655 557 60 Zaire 2 1 0 1 0 0 0 0 0 0 61 Oil-exporting countries5 856 552 420 1,177 679 1,129 1,134 1,178 1,123 1,111 62 Other 867 1,000 1,001 943 866 765 768 771 887 830 63 Other 3,145 2,467 5,709 6,838 6,512 6,927 6,716 6,841 5,060 6,368 64 Australia 2,192 1,622 4,577 4,918 4,088 5,042 4,934 5,266 4,314 5,296 65 Other 953 845 1,132 1,920 2,424 1,885 1,782 1,575 746 1,072 66 Nonmonetary international and regional organizations6 . .. 4,591 1,931 2,604 2,288 2,332 1,930 1,153 2,417 2,043 1,450 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 1998 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 1997 TTyyppee ooff ccllaaiimm 11999944 11999955 11999966 Apr. May June July Aug.r Sept. Oct.p 1 Total 601,814 655,211 743,700 813,672 826,651 2 Banks' claims 485,432 532,444 599,685 640,974 632,547 651,435 646,597 650,427 656,658 682,647 3 Foreign public borrowers 23,416 22,518 22,241 29,176 27,264 29,394 26,918 28,258 30,282 29,485 4 Own foreign offices2 283,015 307,427 341,574 362,790 367,977 379,425 370,505 370,593 374,442 401,476 5 Unaffiliated foreign banks 110,410 101,595 113,505 116,071 113,013 119,527 117,674 115,329 104,737 115,340 6 Deposits 59,368 37,771 33,826 34,592 34,581 35,789 36,001 35,436 29,509 30,358 7 Other 51,042 63,824 79,679 81,479 78,432 83,738 81,673 79,893 75,228 84,982 8 All other foreigners 68,591 100,904 122,365 132,937 124,293 123,089 131,500 136,247 147,197 136,346 9 Claims of banks' domestic customers3 116,382 122,767 144,015 162,237 169,993 10 Deposits 6644,,882299 58,519 77,673 94,591 101,683 11 Negotiable and readily transferable instruments4 3366,,111111 44,161 51,207 50,301 50,291 12 Outstanding collections and other claims 15,442 20,087 15,135 17,345 18,019 MEMO 13 Customer liability on acceptances 8,427 8,410 10,372 ll,437r 10,854 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 32,796 30,717 42,679 42,719 44,870 38,358 38,213 45,342 38,165 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1996 1997 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999933 11999944 11999955 Dec. Mar. June Sept.p 1 Total 202,566 202,282 224,932 257,866 275,945 271,863 282,171 By borrower 2 Maturity of one year or less 172,662 170,411 178,857 211,682 223,686 211,121 219,290 3 Foreign public borrowers 17,828 15,435 14,995 15,411 19,876 17,974 21,494 4 All other foreigners 154,834 154,976 163,862 196,271 203,810 193,147 197,796 5 Maturity of more than one year 29,904 31,871 46,075 46,184 52,259 60,742 62,881 6 Foreign public borrowers 10,874 7,838 7,522 6,815 8,861 11,220 8,752 7 All other foreigners 19,030 24,033 38,553 39,369 43,398 49,522 54,129 By area Maturity of one year or less 8 Europe 57,413 56,381 55,622 55,513 74,886 69,233 69,213 9 Canada 7,727 6,690 6,751 8,339 10,404 10,320 8,460 10 Latin America and Caribbean 60,490 59,583 72,504 103,254 96,891 87,056 99,897 11 41,418 40,567 40,296 38,078 36,465 38,418 35,982 12 Africa 1,820 1,379 1,295 1,316 1,451 1,899 2,157 13 All other3 3,794 5,811 2,389 5,182 3,589 4,195 3,581 Maturity of more than one year 14 Europe 5,310 4,358 4,995 6,928 9,474 11,835 11,198 15 Canada 2,581 3,505 2,751 2,645 2,953 3,154 3,822 16 Latin America and Caribbean 14,025 15,717 27,681 24,917 26,771 30,999 34,873 17 5,606 5,323 7,941 9,392 10,773 12,510 10,394 18 Africa 1,935 1,583 1,421 1,361 1,204 1,264 1,236 19 All other3 447 1,385 1,286 941 1,084 980 1,358 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 1995 1996 1997 AArreeaa oorr ccoouunnttrryy 11999933 11999944 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept.p 1 Total 409.5 499.5 535.3 551.9 574.6 614.9r 587.6r 646.7r 649.2r 680.4r 712.0 2 G-10 countries and Switzerland 161.9 191.2 203.0 206.0 203.4 229.0r 221.6r 229.7r 233.0r 251.8r 249.4 3 Belgium and Luxembourg 7.4 7.2 11.0 13.6 11.0 11.4 11.3 11.7 14.1 9.3 11.3 4 France 12.0 19.1 18.0 19.4 17.9 18.0 17.4 16.6 19.7r 17.9 20.1 5 Germany 12.6 24.7 27.5 27.3 31.5 33.5r 35.5r 31.4r 33.7r 35.8r 36.1 6 Italy 7.7 11.8 12.6 11.5 13.2 14.9 15.2 16.0 14.4 20.2 19.3 7 Netherlands 4.7 3.6 4.5 3.7 3.0 4.7 5.9 3.9 4.5 6.4 7.2 8 Sweden 2.7 2.7 2.9 2.7 3.3 2.7 3.0 2.6 3.4 3.6 4.1 9 Switzerland 5.9 5.1 6.6 6.7 5.2 6.3 6.3 5.3 6.0 5.4 4.8 10 United Kingdom 84.4 85.8 80.4 82.4 84.7 101.6 90.5 104.6 99.2 110.6r 108.8 11 Canada 6.9 10.0 12.9 10.3 10.8 12.2 14.8 14.0 16.3 15.7r 15.0 12 Japan 17.6 21.1 26.6 28.5 22.7 23.6 21.7 23.7r 21.7 26.8r 22.6 13 Other industrialized countries 26.5 45.7 50.5 50.2 61.3 55.5 62.1 65.7 66.4 71.7r 73.8 14 Austria .7 1.1 1.2 .9 1.3 1.2 1.0 1.1 1.9 1.5 1.7 15 Denmark 1.0 1.3 1.8 2.6 3.4 3.3 1.7 1.5 1.7 2.8 3.7 16 Finland .4 .9 .7 .8 .7 .6 .6 .8 .7 1.4 1.9 17 Greece 3.2 4.5 5.1 5.7 5.6 5.6 6.1 6.7 6.3 6.1 6.2 18 Norway 1.7 2.0 2.3 3.2 2.1 2.3 3.0 8.0 5.3 4.7 4.6 19 Portugal .8 1.2 1.9 1.3 1.6 1.6 1.4 .9 1.0 1.1 1.4 20 Spain 9.9 13.6 13.3 11.6 17.5 13.6 16.1 13.2 14.4 15.4 13.9 21 Turkey 2.1 1.6 2.0 1.9 2.0 2.3 2.8 2.7 2.8r 3.4r 4.4 22 Other Western Europe 3.2 3.2 3.3 4.7 3.8 3.4 4.8 4.7 6.3 5.5 6.1 23 South Africa 1.1 1.0 1.3 1.2 1.7 2.0 1.7 2.0 1.9 1.9 1.9 24 Australia 2.3 15.4 17.4 16.4 21.7 19.6 22.8 24.0 24.4 27.8 28.1 25 OPEC2 17.6 24.1 22.7 22.1 21.2 20.1 19.2 19.7 21.8 22.2 22.1 26 Ecuador .5 .5 .7 .7 .8 .9 .9 1.1 1.1 .9 1.2 27 Venezuela 5.1 3.7 3.0 2.7 2.9 2.3 2.3 2.4 1.9 2.1 2.2 28 Indonesia 3.3 3.8 4.4 4.8 4.7 4.9 5.4 5.2 4.9 5.6 6.5 29 Middle East countries 7.6 15.3 13.9 13.3 12.3 11.5 10.2r 10.7r 13.2 12.4 11.1 30 African countries 1.2 .9 .6 .6 .6 .5 .4 .4 .7 1.2 1.1 31 Non-OPEC developing countries 83.2 96.0 104.1 112.6 118.6 126.5r 124.2r 130.3r 128.1 140.5r 136.1 Latin America 32 Argentina 7.7 11.2 10.9 12.9 12.7 14.1 15.0 14.3 14.3 16.4 17.0 33 Brazil 12.0 8.4 13.6 13.7 18.3 21.7 17.8 20.7 22.0 27.3r 25.9 34 Chile 4.7 6.1 6.4 6.8 6.4 6.7 6.6 7.0 6.8 7.6 7.9 35 Colombia 2.1 2.6 2.9 2.9 2.9 2.8 3.1 4.1 3.7 3.3 3.4 36 Mexico 17.9 18.4 16.3 17.3 16.1 15.4 16.1 16.2 17.2 16.6 16.1 37 Peru .4 .5 .7 .8 .9 1.2 1.3 1.6 1.6 1.4 1.8 38 Other 3.1 2.7 2.6 2.8 3.1 3.0 3.0 3.3 3.4 3.4 3.6 Asia China 39 Mainland 2.0 1.1 1.7 1.8 3.3 2.9 2.6 2.5 2.7 3.6 4.3 40 Taiwan 7.3 9.2 9.0 9.4 9.7 9.8 10.4r 10.3r 10.5 10.6 9.7 41 India 3.2 4.2 4.4 4.4 4.7 4.2 3.8 4.3 4.9 5.3 4.9 42 Israel .5 .4 .5 .5 .5 .6 .5 .5 .6 .8 1.0 43 Korea (South) 6.7 16.2 18.0 19.1 19.3 21.7 21.9 21.5 14.6 16.3 16.2 44 Malaysia 4.4 3.1 4.3 4.4 5.2 5.3 5.5 6.0r 6.5 6.4r 5.6 45 Philippines 3.1 3.3 3.3 4.1 3.9 4.7 5.4 5.8 6.0 7.0 5.7 46 Thailand 3.1 2.1 3.9 4.9 5.2 5.4 4.8 5.7 6.8 7.3 6.2 47 Other Asia 3.1 4.7 3.7 4.5 4.3 4.8 4.1 4.1 4.3 4.7 4.5 Africa 48 Egypt .4 .3 .4 .4 .5 .5 .6 .7 .9 1.1 .9 49 Morocco .7 .6 .9 .7 .7 .8 .7 .7 .6 .6 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .1 .0 .0 .0 51 Other Africa3 .8 .8 .8 .9 .8 .8 1.0 .9 .9 .9 .9 52 Eastern Europe 3.2 2.7 3.4 4.2 6.3 5.1 5.3 6.9 8.9 7.1 9.6 53 Russia4 1.6 .8 .6 1.0 1.4 1.0 1.8 3.7 3.5 4.2 4.9 54 Other 1.6 1.9 2.8 3.2 4.9 4.1 3.5 3.2 5.4 2.9 4.7 55 Offshore banking centers 73.5 72.9 87.5 99.2 101.3 106.1r 105.2r 134.7r 131.3 129.6r 140.8 56 Bahamas 10.9 10.2 12.6 11.0 13.9 17.3 14.2 20.3 20.9 16.1r 19.8 57 Bermuda 8.9 8.4 6.1 6.3 5.3 4.1 4.0 4.5 6.7 7.9r 9.8 58 Cayman Islands and other British West Indies 18.4 21.4 25.1 32.4 28.8 26.1 32.0 37.2 32.8 35.1r 45.7 59 Netherlands Antilles 2.8 1.6 5.7 10.3 11.1 13.2 11.7 26.1 19.9 15.8 21.7 60 Panama5 2.4 1.3 1.3 1.4 1.6 1.7 1.7 2.0 2.0 2.6 2.6 61 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 62 Hong Kong, China 18.8 20.0 23.7 25.0 25.3 27.6r 26.0r 27.9r 30.8 35.2r 27.2 63 Singapore 11.2 10.1 13.3 13.1 15.4 15.9 15.5r 16.7 17.9 16.7r 14.1 64 Other® .1 .1 .1 .1 .1 .1 .1 .1 .1 .3 .1 65 Miscellaneous and unallocated7 43.6 66.9 64.2 57.6 62.6 72.7 50.0 59.6r 59.6 51.& 80.2 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. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand, Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks 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 1998 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1996 1997 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Mar. June Sept. Dec. Mar. Junep 1 Total 50,597 54,309 46,448 49,907 48,990 51,651 54,822 54,616 52,699 2 Payable in dollars 38,728 38,298 33,903 36,273 35,385 36,421 39,003 39,361 37,842 3 Payable in foreign currencies 11,869 16,011 12,545 13,634 13,605 15,230 15,819 15,255 14,857 By type 4 Financial liabilities 29,226 32,954 24,241 26,570 24,844 25,492 26,089 25,499 24,379 5 Payable in dollars 18,545 18,818 12,903 13,831 12,212 11,319 11,374 11,264 10,551 6 Payable in foreign currencies 10,681 14,136 11,338 12,739 12,632 14,173 14,715 14,235 13,828 7 Commercial liabilities 21,371 21,355 22,207 23,337 24,146 26,159 28,733 29,117 28,320 8 Trade payables 8,802 10,005 11,013 10,815 11,081 11,791 12,720 11,515 11,122 y Advance receipts and other liabilities 12,569 11,350 11,194 12,522 13,065 14,368 16,013 17,602 17,198 10 Payable in dollars 20,183 19,480 21,000 22,442 23,173 25,102 27,629 28,097 27,291 it Payable in foreign currencies 1,188 1,875 1,207 895 973 1,057 1,104 1,020 1,029 By area or country Financial liabilities 12 Europe 18,810 21,703 15,622 16,950 16,434 16,133 16,242 15,970 16,099 13 Belgium and Luxembourg 175 495 369 483 498 547 632 769 238 14 France 2,539 1,727 999 1,679 1,011 1,220 1,091 1,205 1,280 lb Germany 975 1,961 1,974 2,161 1,850 2,276 1,834 1,589 1,765 16 Netherlands 534 552 466 479 444 519 556 507 466 17 Switzerland 634 688 895 1,260 1,156 830 699 694 591 18 United Kingdom 13,332 15,543 10,138 10,246 10,790 9,884 10,224 9,752 10,537 19 Canada 859 629 632 1,166 951 973 1,401 602 456 20 Latin America and Caribbean 3,359 2,034 1,783 1,876 969 1,169 1,668 1,876 1,279 21 Bahamas 1,148 101 59 78 31 50 236 293 124 22 Bermuda 0 80 147 126 28 25 50 27 55 23 Brazil 18 207 57 57 8 52 78 75 97 24 British West Indies 1,533 998 866 946 826 764 1,030 965 769 25 Mexico 17 0 12 16 11 13 17 16 15 26 Venezuela 5 5 2 2 1 1 1 1 1 27 Asia 5,956 8,403 5,988 6,390 6,351 6,969 6,400 6,347 5,961 28 Japan 4,887 7,314 5,436 5,980 6,051 6,602 5,846 5,771 5,412 29 Middle Eastern oil-exporting countries' 23 35 27 26 26 25 25 72 39 30 Africa 133 135 150 131 72 153 38 29 29 31 Oil-exporting countries2 123 123 122 122 61 121 0 0 0 32 All other3 109 50 66 57 67 95 340 675 555 Commercial liabilities 33 Europe 6,827 6,773 7,700 8,425 7,916 8,680 9,767 9,551 8,711 34 Belgium and Luxembourg 239 241 331 370 326 427 479 643 738 35 France 655 728 481 648 678 657 680 680 709 36 Germany 684 604 767 867 839 949 1,002 1.047 852 3/ Netherlands 688 722 500 659 617 668 766 553 290 38 Switzerland 375 327 413 428 516 405 624 481 430 39 United Kingdom 2,039 2,444 3,568 3,525 3,266 3,663 4,303 4,165 3,827 40 Canada 879 1,037 1,040 959 998 1,144 1,090 1,068 1,136 41 Latin America and Caribbean 1,658 1,857 1,740 2,110 2,301 2,386 2,574 2,563 2,501 42 Bahamas 21 19 1 28 35 33 63 43 33 43 Bermuda 350 345 205 570 509 355 297 479 397 44 Brazil 214 161 98 128 119 198 196 201 225 45 British West Indies 27 23 56 10 10 15 14 14 26 46 Mexico 481 574 416 468 475 446 665 633 594 47 Venezuela 123 276 221 243 283 341 328 318 304 48 Asia 10,980 10,741 10,421 10,474 11,389 12,227 13,422 13,968 13,926 49 Japan 4,314 4,555 3,315 3,725 3,943 4,149 4,614 4,502 4,440 50 Middle Eastern oil-exporting countries' 1,534 1,576 1,912 1,747 1,784 1,951 2,168 2,495 2,420 51 Africa 453 428 619 708 924 1,020 1,040 1,037 941 52 Oil-exporting countries2 167 256 254 254 462 490 532 479 423 53 Other3 574 519 687 661 618 702 840 930 1,105 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 1996 1997 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Mar. June Sept. Dec. Mar. June 1 Total 49,159 57,888 52,509 55,406 60,195 59,092 63,642 64,343 65,540 2 Payable in dollars 45,161 53,805 48,711 51,007 55,350 55,014 58,630 60,177 60,815 3 Payable in foreign currencies 3,998 4,083 3,798 4,399 4,845 4,078 5,012 4,166 4,725 By type 4 Financial claims 27,771 33,897 27,398 30,772 35,251 34,200 35,268 36,788 38.006 5 Deposits 15,717 18,507 15,133 17,595 19.507 19,877 21,404 19,628 22,385 6 Payable in dollars 15,182 18,026 14,654 17,044 19,069 19,182 20,631 18,548 21,474 7 Payable in foreign currencies 535 481 479 551 438 695 773 1,080 911 8 Other financial claims 12,054 15,390 12,265 13,177 15,744 14,323 13,864 17,160 15,621 9 Payable in dollars 10,862 14,306 10,976 11,290 13,347 12,234 12.069 15,383 13,243 10 Payable in foreign currencies 1,192 1,084 1,289 1,887 2,397 2,089 1,795 1,777 2,378 11 Commercial claims 21,388 23,991 25,111 24,634 24,944 24,892 28,374 27,555 27,534 12 Trade receivables 18,425 21,158 22,998 22,123 22,353 22,454 25,751 24,801 24,851 13 Advance payments and other claims 2,963 2,833 2,113 2,511 2,591 2,438 2,623 2.754 2,683 14 Payable in dollars 19,117 21,473 23,081 22,673 22,934 23,598 25,930 26,246 26,098 15 Payable in foreign currencies 2,271 2,518 2,030 1,961 2,010 1,294 2.444 1,309 1,436 By area or country Financial claims 16 Europe 7,299 7,936 7,609 8,929 10,498 9,777 9,282 9,317 10,189 17 Belgium and Luxembourg 134 86 193 159 151 126 185 119 203 18 France 826 800 803 1,015 679 733 694 761 681 19 Germany 526 540 436 320 296 272 276 324 281 20 Netherlands 502 429 517 486 488 520 493 567 519 21 Switzerland 530 523 498 470 461 432 474 570 447 22 United Kingdom 3,585 4,649 4,303 5,568 7,426 6,603 6,119 6,075 7,112 23 Canada 2,032 3,581 2,851 5,269 4,773 4,502 3,445 4,917 6,422 24 Latin America and Caribbean 16,224 19,536 14,500 13,827 17,644 17,241 19,577 19,742 18,725 25 Bahamas 1,336 2,424 1,965 1,538 2,168 1,746 1.452 1,894 2,064 26 Bermuda 125 27 81 77 84 113 140 157 188 27 Brazil 654 520 830 1,019 1,242 1,438 1,468 1,404 1,617 28 British West Indies 12,699 15,228 10,393 10,100 13,024 12,809 15,182 15,166 13,442 29 Mexico 872 723 554 461 392 413 457 517 498 30 Venezuela 161 35 32 40 23 20 31 22 21 31 Asia 1,657 1,871 1,579 1,890 1,571 1.834 2,221 2,068 1,938 32 Japan 892 953 871 1,171 852 1,001 1,035 831 770 33 Middle Eastern oil-exporting countries1 3 141 3 13 9 13 22 12 20 34 Africa 99 373 276 277 197 177 174 182 179 35 Oil-exporting countries2 1 0 5 5 13 14 14 15 36 All other3 460 600 583 580 568 669 569 562 553 Commercial claims 37 Europe 9,105 9,540 9,824 9,776 9,842 9,288 10,443 9,863 9,595 38 Belgium and Luxembourg 184 213 231 247 239 213 226 364 327 39 France 1,947 1,881 1,830 1,803 1,659 1,532 1,644 1,514 1,377 40 Germany 1,018 1,027 1,070 1,410 1,335 1,250 1,337 1,364 1,229 41 Netherlands 423 311 452 442 481 424 562 582 613 42 Switzerland 432 557 520 579 602 594 642 418 385 43 United Kingdom 2,377 2,556 2,656 2,607 2,658 2,516 2,946 2,626 2,836 44 Canada 1,781 1,988 1,951 2,045 2,074 2,083 2,165 2,381 2,464 45 Latin America and Caribbean 3,274 4,117 4,364 4,151 4,347 4,409 5,276 5,067 5,230 46 Bahamas 11 9 30 30 28 14 35 40 28 47 Bermuda 182 234 272 273 264 290 275 159 197 48 Brazil 460 612 898 809 838 968 1,303 1,216 1,134 49 British West Indies 71 83 79 106 103 119 190 127 97 50 Mexico 990 1,243 993 870 1,021 936 1,128 1,102 1,138 51 Venezuela 293 348 285 308 313 316 357 330 450 52 Asia 6,014 6,982 7,312 7,100 6,939 7,289 8,376 8,348 8,460 53 Japan 2,275 2,655 1,870 2,010 1,877 1,919 2,003 2,065 2,060 54 Middle Eastern oil-exporting countries1 704 708 974 1,024 903 945 971 1,078 1,014 55 Africa 493 454 654 667 688 731 746 718 618 56 Oil-exporting countries2 72 67 87 107 83 142 166 100 81 57 Other3 721 910 1,006 895 1,054 1,092 1,368 1,178 1,167 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 1998 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1997 1997 Transaction, and area or country 1995 1996 Ja O n c .— t. Apr. May June July Aug.r Sept. Oct.p U.S. corporate securities STOCKS 2 1 F F o o r r e e i i g g n n p sa u l r e c s h ases 4 4 6 5 2 1 , , 9 7 5 1 0 0 6 61 2 1 3 , , 8 7 3 6 2 0 8 76 1 0 7 , , 0 1 5 1 2 6 7 6 0 4 , , 2 4 6 5 7 4 7 8 5 2 , , 6 6 7 0 4 4 7 8 6 7 , , 8 0 2 6 6 0 7 8 8 9 , ,2 4 7 3 1 5 7 8 6 4 , , 8 95 2 3 0 7 8 8 3 , , 0 0 8 8 7 0 1 1 0 0 5 2 , , 2 2 8 5 9 0 3 Net purchases, or sales (—) 11,240 11,928 57,064 5,813 6,930 10,234 10,836 8,133 4,993 3,039 4 Foreign countries 11,445 12,002 57,162 5,833 6,949 10,245 10,825 8,176 4,998 3,057 5 61 Eu G F ro r e a p r n e m c a e ny - -1 1 4 , , , 0 8 9 9 3 1 9 7 2 -2 5 1 , , , 3 0 1 5 4 0 4 6 4 47 7 2 , , , 2 4 7 1 7 7 5 4 6 6, 6 6 6 4 7 8 8 9 6 2, 2 6 4 0 3 4 1 8 0 5 -6 ,5 8 0 7 5 2 1 7 6 11 1 , ,, , 1 00 1 2 88 8 1 00 8 4, 4 3 5 6 9 8 1 1 4 5, 3 2 2 4 7 9 1 4 6 5, - 5 8 8 2 7 0 7 2 8 Netherlands 3,507 1,389 2,793 378 382 126 8800 -118 820 759 1 1 1 1 1 1 1 3 4 9 0 1 2 6 3 C A M O La a t f i J h U S t r n d i a i e w n a d c n p r d a l i a i e A t a t A n e z m d E s e i r a a e l K s a r t i i n 1 c n d a g d a o n m d Caribbean - - - 2 2 1 2 8 5 - , , , , 3 , , 7 2 5 5 0 8 3 2 1 8 0 6 1 7 5 7 3 3 6 4 2 -1 4 2 2 - 5 , , 3 , , - , 5 9 1 2 7 5 8 7 9 0 1 2 1 6 1 2 8 6 9 1 0 3 1 5 3 - 9 8 , , 6 , , 4 5 3 0 7 1 1 0 9 1 4 1 8 8 5 0 9 9 5 8 8 3 2 -1 3 1 , , , 9 2 8 2 7 2 1 - 8 7 1 1 7 9 0 4 7 3 0 4 4 3 1 2 - 1 1 2 , , , 2 9 5 7 1 4 1 4 2 1 6 8 6 8 1 7 2 3 4 4 2 2 2 1 1 , , , , , 5 2 1 3 0 1 2 6 4 3 8 3 8 6 1 5 5 1 6 6 0 4 4 - 1 , 4 - , 9 6 8 3 1 5 8 8 2 4 9 6 8 1 2 4 0 9 9 3 0 2 - 2 11 , 2 , - ,, 5 88 1 4 55 6 8 5 88 7 5 44 4 6 7 88 0 55 6 2 - - 3 - - 3 5 4 , 6 7 5 1 0 1 2 9 4 5 3 3 5 9 1 4 9 9 2 -2 2 - - , 4 , 5 1 2 4 8 0 1 2 2 4 4 7 8 8 9 1 9 6 4 9 0 17 Other countries 68 -55 566 84 271 -232 91 132 -33 74 18 Nonmonetary international and regional organizations -205 -74 -98 -20 -19 -11 11 -43 -5 -18 BONDS2 2 1 0 9 F F o o r r e e i i g g n n s p a u l r e c s h ases 2 2 0 9 6 3 , , 9 5 5 3 1 3 4 2 2 9 3 4 , ,6 1 3 4 6 9 4 5 0 2 8 2 , ,4 2 4 6 1 0 4 3 2 1, , 7 6 4 6 1 3 4 3 4 6 , ,3 7 5 4 8 9 5 4 8 7 , , 9 6 0 7 4 3 4 6 6 3 , , 7 8 7 1 1 4 4 6 8 2 , , 4 8 9 3 2 6 4 5 1 0 , , 3 02 0 8 2 4 5 4 7 , , 2 7 5 8 9 7 21 Net purchases, or sales (—) 86,582 128,513 114,181 10,922 8,391 11,231 17,043 14,344 8,726 13,528 22 Foreign countries 87,036 128,342 113,512 10,926 8,483 11,099 17,029 14,276 8,725 13,001 2 2 2 3 3 4 Eu G F ro r e a p r n e m c a e ny 70 5 1 , , , 3 9 1 3 1 4 8 8 3 76 5 5 , , , 7 1 1 6 6 2 7 4 4 65 2 3 , , , 5 1 7 1 9 6 1 4 8 5, 6 3 0 6 3 2 0 2 5,6 1 - 0 4 4 1 5 - 7 2 ,1 5 9 1 0 0 7 10 1 , , 5 2 8 2 4 4 0 1 2 - 7 1 , 7 6 2 4 2 3 5 7 5, 6 2 3 1 0 7 0 0 6 3, 3 2 1 8 6 1 4 7 1 2B Netherlands 1,463 2,470 2,685 67 978 154 -140 702 -12 369 2 2 7 8 U Sw ni i t t e z d e rl K an in d g dom 57,5 4 9 9 1 4 58 1 , , 5 0 9 6 5 3 - 5 1 1 , , 6 8 6 2 0 3 4,2 1 9 8 8 9 3, - 8 5 8 4 8 6,522 4 6 - , 3 9 7 8 8 5 - 6 4 ,2 1 9 7 8 - 3 6 ,9 6 6 9 2 - 1 1 ,6 8 2 6 1 29 Canada 2,569 4,197 5,044 512 446 -98 313 557 624 866 3 3 D 1 L M a i t d in d le A m Ea e s r t i 1 c a and Caribbean 6 1 , , 1 8 4 6 1 9 22 1 , , 9 6 0 3 1 7 16 1 , , 8 2 8 6 7 7 2,55 1 0 6 - 1 1 ,5 7 6 9 9 1,96 1 4 6 3,5 -9 7 9 2, - 1 4 1 4 2 1.2 -1 6 5 3 -1 ,7 8 2 3 0 3 3 3 2 3 4 O A t f h J r a i e c p r a a A n sia 5 2, , 2 2 6 3 5 5 4 0 9 2 1 2 3 , . 6 5 4 0 7 9 0 0 9 2 1 3 5 , , 9 3 6 2 6 7 1 7 6 2 1 , , 1 2 1 8 2 9 5 9 0 3 8 4 9 7 4 9 4 1 1, , 6 8 6 1 0 1 8 0 2 1 , , 6 8 1 9 8 0 9 4 4 3 2 , , 8 9 1 9 7 0 5 5 3 - 1 7 ,4 8 1 5 9 8 5 5, , 0 4 1 3 3 1 8 2 35 Other countries 246 -330 832 111 128 239 102 26 134 -139 36 Nonmonetary international and regional organizations -454 171 669 -4 -92 132 14 68 1 527 Foreign securities 3 3 8 7 Sto F c o k r s e , i g n n e t p p u u rc rc h h a a s s e e s s , or sales (-) - 3 5 4 0 5 , , 2 5 9 4 1 0 - 4 5 5 7 6 , , 1 8 2 2 2 6 - 5 4 8 2 7 , , 5 3 5 5 6 9 - 4 4 9 , , 0 7 8 2 9 5 - 5 3 7 , , 6 6 8 4 4 7 - 6 5 4 , , 5 3 2 8 9 8 - 6 7 9 , , 5 6 7 7 6 7 - 6 7 0 , , 5 7 8 4 2 0 60,09 2 2 4 - 8 2 0 , , 2 0 9 8 4 7 4 3 0 9 Bo F n o d r s e , ig n n et s p a u le r s c hases, or sales (-) - 3 4 9 8 5 , , 4 8 0 3 5 1 - 5 4 1 8 3 , , 7 9 9 4 3 8 - 6 3 2 8 9 , , 2 9 3 1 7 5 5 5 3 , , 7 8 2 1 0 4 - 6 1 1 , , 3 3 2 3 8 1 -1 6 3 9 , , 0 9 0 1 6 7 -1 7 1 7 , , 2 2 4 5 5 3 - 6 4 8 , , 5 3 1 2 0 2 - 6 7 0 , , 7 0 5 6 3 8 8 - 2 8 ,3 0 8 1 1 41 Foreign purchases 889,541 1,118,678 1,267,834 117,761 127,985 123,406 139,887 123,375 122,266 161,623 42 Foreign sales 937,946 1,167,471 1,306,071 112,041 129,313 136,412 151,132 127,885 130,019 162,424 43 Net purchases, or sales (—), of stocks and bonds .... -98,696 -105,915 -80,793 1,631 -5,012 —18,535 -18,821 -12,092 -7,729 -3,095 44 Foreign countries -97,891 -105,044 -80,871 1,617 -5,069 — 18,551 -18,858 -12,021 -7,723 -2,930 45 Europe -48,125 -55,948 -27,365 5,732 377 -2,001 -10,423 -4,624 -5,321 -6,811 4 4 7 6 L C a a t n in a d A a merica and Caribbean - - 7 7 , , 6 8 3 1 4 2 - - 9 6 , , 5 2 0 7 3 9 -1 - 7 4 , , 9 4 0 6 1 7 -1 - , 2 2 3 4 9 0 -1 - , 8 2 4 8 1 6 - - 8 1 , , 4 3 7 5 3 6 - - 2 1 , , 3 8 7 1 4 6 -1,4 4 5 7 1 3 -1,06 1 0 9 2,23 2 5 6 48 -34,056 -27,745 -26,331 -3,650 -3,549 -5,865 -3,925 -4,791 -707 2,787 4499 Japan -25,072 -5,888 -13,913 -2.349 -2,878 -4,945 -2,350 105 -183 1,962 55 5 00 1 A Ot f h ri e c r a countries -32 6 7 3 - -4 1 , , 0 5 4 2 0 9 - -2 2 , , 1 6 4 6 1 6 - 1 1 ,1 2 3 1 5 21 1 5 5 - - 5 2 8 6 8 8 -2 -7 4 4 6 - - 7 9 0 2 4 4 - - 3 2 8 7 1 3 - -2 8 9 7 3 4 52 Nonmonetary international and regional organizations -805 -871 78 14 57 16 37 -71 -6 -165 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 1997 1997 AArreeaa oorr ccoouunnttrryy 11999955 11999966 Jan.- Apr. May June July Aug.r Sept. Oct.p Oct. 1 Total estimated 134,115 244,010 191,679 25,307 7,752 24,795 4,622 24,263 15,882 15,424 2 Foreign countries 133,676 245,852 189,938 24,847 7,909 23,845 4,251 24,458 15,496 15,630 3 Europe 49,976 118,345 138,702 10,625 9,688 10,393 11,721 19,308 19,898 23,076 4 Belgium and Luxembourg 591 1,486 2,889 944 309 -37 298 92 138 357 5 Germany 6,136 17,647 14,907 -1,480 721 1,417 6,433 4,050 2,714 4,847 6 Netherlands 1,891 -582 2,958 1,412 194 -408 368 882 -3 295 7 Sweden 358 2,343 -134 -86 90 141 2 583 16 302 8 Switzerland -All 327 2,091 1,029 -223 329 141 12 109 892 9 United Kingdom 34,754 65,381 96,273 6,482 6,951 4,922 2,723 13,130 13,874 18,590 10 Other Europe and former U.S.S.R 6,718 31,743 19,718 2,324 1,646 4,029 1,756 559 3,050 -2,207 11 Canada 252 2,389 327 17 348 1,278 717 -839 -414 -728 12 Latin America and Caribbean 48,609 24,664 -7,263 1,101 -9,494 1,266 -3,555 1,063 -769 -2,848 13 Venezuela -2 -69 198 -8 93 635 57 25 -691 11 14 Other Latin America and Caribbean 25,152 12,311 4,122 -2,937 2,005 2,787 527 -3,245 -2,880 -3,764 15 Netherlands Antilles 23,459 12,422 -11,583 4,046 -11,592 -2,156 -4,139 4,283 2,802 905 16 Asia 32,467 98,001 55,703 13,200 7,536 8,406 -3,266 4,867 -4,653 -5,424 17 Japan 16,979 41,390 33,102 6,604 7,657 5,972 2,612 -3,458 -2,782 4,160 18 Africa 1,464 1,085 1,332 -16 27 340 193 218 461 45 19 Other 908 1,368 1,137 -80 -196 2,162 -1,559 -159 973 1,509 20 Nonmonetary international and regional organizations 439 -1,842 1,741 460 -157 950 371 -195 386 -206 21 International 9 -1,390 1,219 467 -172 1,068 117 -190 341 -74 22 Latin American regional 261 -779 328 24 -2 -145 70 -117 -21 78 MEMO 23 Foreign countries 133,676 245,852 189,938 24,847 7,909 23,845 4,251 24,458 15,496 15,630 24 Official institutions 39,631 86,161 41,523 7,102 3,377 10,055 -2,499 8,214 2,928 -12,844 25 Other foreign 94,045 159,691 148,415 17,745 4,532 13,790 6,750 16,244 12,568 28,474 Oil-exporting countries 26 Middle East2 3,075 10,227 5,508 2,879 541 -1,735 -2,251 3,455 52 -3,877 27 Africa3 2 1 -13 1 -6 0 0 -7 0 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, 1997 Rate on Dec. 31, 1997 Country Country Month effective Austria. . 2.5 Apr. 1996 Germany . . . 2.5 Belgium. 2.75 Oct. 1997 Italy 5.5 Canada.. 4.5 Dec. 1997 Japan .5 Denmark 3.5 Oct. 1997 Netherlands . 2.5 France2 . 3.3 Oct. 1997 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 1997 TTyyppee oorr ccoouunnttrryy 11999955 11999966 11999977 June July Aug. Sept. Oct. Nov. Dec. 1 Eurodollars 5.93 5.38 5.61 5.66 5.61 5.58 5.59 5.63 5.71 5.79 2 United Kingdom 6.63 5.99 6.81 6.63 6.93 7.12 7.19 7.24 7.52 7.60 3 Canada 7.14 4.49 3.59 3.30 3.57 3.67 3.66 3.83 4.02 4.61 4 Germany 4.43 3.21 3.24 3.05 3.06 3.19 3.24 3.51 3.68 3.67 5 Switzerland 2.94 1.92 1.58 1.25 1.43 1.39 1.36 1.73 1.91 1.56 6 Netherlands 4.30 2.91 3.25 3.14 3.17 3.33 3.35 3.50 3.65 3.61 7 France 6.43 3.81 3.35 3.30 3.27 3.31 3.29 3.47 3.57 3.57 8 Italy 10.43 8.79 6.86 6.85 6.87 6.85 6.65 6.63 6.49 6.07 9 Belgium 4.73 3.19 3.40 3.23 3.39 3.55 3.55 3.76 3.72 3.61 10 Japan 1.20 .58 .58 .60 .67 .58 .55 .52 .53 .78 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 1998 3.28 FOREIGN EXCHANGE RATES' Currency units per dollar except as noted 1997 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999955 11999966 11999977 July Aug. Sept. Oct. Nov. Dec. 1 Australia/dollar2 74.073 78.283 74.368 74.199 74.036 72.310 71.971 69.526 66.187 2 Austria/schilling 10.076 10.589 12.206 12.620 12.946 12.568 12.360 12.182 12.510 3 Belgium/franc 29.472 30.970 35.807 37.040 38.011 36.876 36.266 35.737 36.748 4 Canada/dollar 1.3725 1.3638 1.3849 1.3775 1.3905 1.3872 1.3869 1.4128 1.4271 5 China, P.R./yuan 8.3700 8.3389 8.3193 8.3162 8.3187 8.3171 8.3135 8.3109 8.3099 6 Denmark/krone 5.5999 5.8003 6.6092 6.8317 7.0109 6.8001 6.6922 6.5937 6.7752 7 Finland/markka 4.3763 4.5948 5.1956 5.3164 5.5046 5.3455 5.2674 5.2217 5.3789 8 France/franc 4.9864 5.1158 5.8393 6.0511 6.2010 6.0031 5.8954 5.8001 5.9542 9 Germany/deutsche mark 1.4321 1.5049 1.7348 1.7939 1.8400 1.7862 1.7575 1.7323 1.7788 10 Greece/drachma 231.68 240.82 273.28 281.43 288.41 281.69 276.84 271.87 279.93 11 Hong Kong/dollar 7.7357 7.7345 7.7431 7.7454 7.7436 7.7440 7.7373 7.7314 7.7456 12 India/rupee 32.418 35.506 36.365 35.747 36.009 36.476 36.302 37.289 39.400 13 Ireland/pound2 160.35 159.95 151.63 149.45 145.34 148.06 146.92 150.30 145.33 14 Italy/lira 1,629.45 1,542.76 1,703.81 1,745.91 1,797.12 1,743.22 1,721.09 1,697.08 1,743.86 15 Japan/yen 93.96 108.78 121.06 115.38 117.93 120.89 121.06 125.38 129.73 16 Malaysia/ringgit 2.5073 2.5154 2.8173 2.5815 2.7589 3.0254 3.2972 3.3791 3.7907 17 Netherlands/guilder 1.6044 1.6863 1.9525 2.0201 2.0709 2.0116 1.9800 1.9524 2.0051 18 New Zealand/dollar2 65.625 68.765 66.247 66.097 64.211 63.604 63.556 62.420 59.137 19 Norway/krone 6.3355 6.4594 7.0857 7.4545 7.6224 7.3008 7.0807 7.0588 7.2630 20 Portugal/escudo 149.88 154.28 175.44 181.20 186.50 181.49 179.07 176.84 181.91 21 Singapore/dollar 1.4171 1.4100 1.4857 1.4521 1.4977 1.5164 1.5597 1.5820 1.6518 22 South Africa/rand 3.6284 4.3011 4.6072 4.5611 4.6856 4.6890 4.7145 4.8394 4.8706 23 South Korea/won 772.69 805.00 950.77 893.09 898.71 912.50 929.42 1,035.22 1,494.04 24 Spain/peseta 124.64 126.68 146.53 151.33 155.51 150.75 148.32 146.30 150.46 25 Sri Lanka/rupee 51.047 55.289 59.026 58.732 59.189 59.713 59.723 60.132 61.591 26 Sweden/krona 7.1406 6.7082 7.6446 7.8188 7.9886 7.6887 7.5765 7.5589 7.7977 27 Switzerland/franc 1.1812 1.2361 1.4514 1.4824 1.5128 1.4702 1.4516 1.4069 1.4393 28 Taiwan/dollar 26.495 27.468 28.775 28.032 28.824 28.731 29.696 31.794 32.502 29 Thailand/baht 24.921 25.359 31.072 30.274 32.399 35.256 37.543 39.092 44.309 30 United Kingdom/pound2 157.85 156.07 163.76 166.94 160.35 160.13 163.30 168.89 165.97 MEMO 31 United States/dollar3 84.25 87.34 96.38 97.48 99.96 98.29 97.07 96.37 98.82 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 1997 All SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1996 May 1997 A64 March 31, 1997 September 1997 A64 June 30, 1997 November 1997 A64 September 30, 1997 February 1998 A64 Terms of lending at commercial banks February 1997 May 1997 A68 May 1997 October 1997 A64 August 1997 November 1997 A68 November 1997 February 1998 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1996 May 1997 A72 March 31, 1997 August 1997 A64 June 30, 1997 November 1997 A72 September 30, 1997 February 1998 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1996 January 1997 A64 March 31, 1997 July 1997 A64 June 30, 1997 October 1997 A68 September 30, 1997 January 1998 A64 Residential lending reported under the Home Mortgage Disclosure Act 1994 September 1995 A68 1995 September 1996 A68 1996 September 1997 A68 Disposition of applications for private mortgage insurance 1996 September 1997 A76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • February 1998 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, September 30, 1997 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 4,835,458 3,175,102 830,896 2,461,696 1,356,155 304,201 2 Cash and balances due from depository institutions 315,926 237,794 75,333 162,461 63,450 14,682 3 Cash items in process of collection, unposted debits, and currency and coin 110,945 2,744 108,202 34,283 f 4 Cash items in process of collection and unposted debits n.a. n.a. 83,248 22,466 T 5 Currency and coin n.a. n.a. 24,953 11,817 1 6 Balances due from depository institutions in the United States 41,531 10,553 30,978 18,927 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. 70,568 61,915 8,653 2,402 I 8 Balances due from Federal Reserve Banks 1144,,774499 121 14,628 7,838 1 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. 10,777 14,549 5,686 10 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 824,613 424,688 53,749 370,939 316,686 83,239 11 U.S. Treasury securities 153,810 70,165 3,250 66,916 63,612 20,033 12 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 137,403 35,636 86 35,550 71,177 30,590 13 Issued by U.S. government agencies 5,512 2,649 n.a. n.a. 2,003 859 14 Issued by U.S. government-sponsored agencies 131,892 32,987 n.a. n.a. 69,173 29,731 15 Securities issued by states and political subdivisions in the United States 75,433 22,612 201 22,411 38,890 13,931 16 General obligations 56,530 16,269 n.a. n.a. 30,087 10,174 17 Revenue obligations 18,230 5,972 n.a. n.a. 8,549 3,709 18 Industrial development and similar obligations 673 371 n.a. n.a. 254 48 19 Mortgage-backed securities (MBS) 357,001 214,947 6,199 208,747 126,106 15,948 20 Pass-through securities 241,920 152,396 4,616 147,780 79,639 9,886 21 Guaranteed by GNMA 77,331 53,721 n.a. n.a. 20,500 3,109 22 Issued by FNMA and FHLMC 162,473 97,223 n.a. n.a. 58,507 6,743 23 Privately issued 2,117 1,451 8 1,443 632 34 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 115,080 62,551 1,584 60,968 46,467 6,062 25 Issued or guaranteed by FNMA, FHLMC or GNMA 93,576 50,165 1,445 48,719 37,677 5,734 26 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 2,065 684 n.a. n.a. 1,187 195 27 All other mortgage-backed securities 19,439 11,703 n.a. n.a. 7,603 133 28 Other debt securities 76,616 66,621 42,703 23,918 8,662 1,333 29 Other domestic debt securities n.a. 15,767 1,056 14,711 8,442 n.a. 30 Foreign debt securities n.a. 50,854 41,648 9,207 220 n.a. 31 Equity securities 24,350 14,706 1,309 13,397 8,239 1,405 32 Investments in mutual funds and other equity securities with readily determinable fair value 5,552 5,575 640 4,935 2,568 409 33 All other equity securities 15,797 9,131 669 8,462 5,671 996 34 Federal funds sold and securities purchased under agreements to resell 264,678 211,548 85,295 126,254 39,396 13,733 35 Total loans and lease-financing receivables, gross 2,887,863 1,818,520 276,936 1,541,585 885,835 183,508 36 LESS: Unearned income on loans 4,254 1,779 837 942 1,766 709 37 Total loans and leases (net of unearned income) 2,883,609 1,816,741 276,099 1,540,642 884,068 182,799 38 LESS: Allowance for loan and lease losses 54,523 34,362 n.a. n.a. 17,519 2,642 39 LESS: Allocated transfer risk reserves 39 39 n.a. n.a. 0 0 40 EQUALS: Total loans and leases, net 2,829,047 1,782,341 n.a. n.a. 866,549 180,157 Total loans and leases, gross, by category 41 Loans secured by real estate 1,218,585 654,884 29,601 625,283 460,589 110033,,111111 42 Construction and land development F F F 39,171 38,398 7,912 43 Farmland T T T 3,701 11,604 11,494 44 One- to four-family residential properties 1 1 1 400,084 249,684 53,264 45 Revolving, open-end loans, extended under lines of credit n.a. n.a. n.a. 64,761 28,622 2,658 46 All other loans 1 1 1 335,323 221,062 50,606 4 4 7 8 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 e o n r t m ial o r p e r ) o r p e e s r i t d ie e s n tial properties T 1 •1 T 1 1 2 6 0 1 , , 6 6 7 4 8 9 14 1 4 6 , , 0 86 4 1 3 2 2 8 , , 2 1 6 8 0 0 49 Loans to depository institutions 82,436 78,498 23,979 54,519 3,793 145 50 Commercial banks in the United States n.a. 43,310 2,008 41,302 3,178 n.a. 51 Other depository institutions in the United States n.a. 8,339 132 8,206 383 n.a. 52 Banks in foreign countries n.a. 26,850 21,838 5,011 232 n.a. 53 Loans to finance agricultural production and other loans to farmers 44,837 9,463 5 8,529 15,821 19,553 54 Commercial and industrial loans 760,900 588,293 149,491 438,801 142,195 30,412 55 U.S. addressees (domicile) n.a. 462,230 28,322 433,908 141,595 n.a. 56 Non-U.S. addressees (domicile) n.a. 126,063 121,170 4,893 600 n.a. 57 Acceptances of other banks 1,954 1,690 1,073 617 203 61 58 U.S. banks n.a. 307 9 297 n.a. n.a. 59 Foreign banks n.a. 1,384 1,064 320 n.a. n.a. 60 Loans to individuals for household, family, and other personal expenditures (includes 548,246 282,305 35,240 247,065 238,182 27,758 61 Credit cards and related plans 219,450 99,011 n.a. n.a. 118,111 2,328 62 Other (includes single payment and installment) 328,796 183,295 n.a. n.a. 120,071 25,430 63 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 19,007 11,374 5 11,369 6,742 890 117,493 108,613 33,433 75,180 7,991 888 65 Loans to foreign governments and official institutions n.a. 8,000 7,241 760 24 n.a. 66 Other loans n.a. 100,612 26,193 74,420 7,967 n.a. 67 Loans for purchasing and carrying securities n.a. n.a. n.a. 18,659 1,574 n.a. 68 All other loans (excludes consumer loans) n.a. n.a. n.a. 55,760 6,393 n.a. 69 Lease-financing receivables 94,405 83,399 3,178 80,221 10,317 688 70 Assets held in trading accounts 294,537 293,548 • • 953 1 71 Premises and fixed assets (including capitalized leases) 65,622 39,430 T 1 20,583 5,609 72 Other real estate owned 4,772 2,767 n.a. 1,566 439 73 Investments in unconsolidated subsidiaries and associated companies 5,392 4,994 1 I 360 38 74 Customers' liability on acceptances outstanding 18,877 18,654 n.a. 1 215 8 75 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. 1 36,313 n.a. n.a. 76 Intangible assets 58,643 45,441 1 n.a. 12,460 742 77 Other assets 153,352 113,897 1 n.a. 33,937 5,517 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, 1997 Millions of dollars except as noted Banks with domestic Banks with foreign offices' offices only2 IItteemm TToottaall Total Foreign Domestic Over 10C Under 100 78 Total liabilities, limited-life preferred stock, and equity capital 4,835,458 3,175,102 n.a. n.a. 1,356,155 304,201 79 Total liabilities 4,422,658 2,925,005 830,896 2,211,599 1,226,034 271,619 80 Total deposits 3,283,293 2,018.090 506,898 1,511,192 1,005,010 260,193 81 Individuals, partnerships, and corporations 2,918,244 1,751,416 334.948 1,416,468 930,826 236,002 82 U.S. government n.a. n a. n a. 3,639 934 193 8 8 3 4 S C t o a m te m s e a r n c d i a p l o b li a t n ic k a s l i s n u b th d e i v U is n io it n e s d i S n ta th te e s United States Mn.a , . 9 02 5 n 5 .a , . 6 59 2 n 9 . , a 3 . 4 6 4 2 6 6 , ,3 1 1 6 4 0 5 8 4 , , 2 2 0 1 8 0 19 1 , , 9 0 8 3 2 5 85 Other depository institutions in the United States n. a. n a. n.a. 2,915 1,072 1,275 86 Banks in foreign countries n.a. 97,955 91,973 5,982 356 n.a. 87 Foreign governments and official institutions n.a. 42,722 41,337 1,385 29 n.a. 88 Certified and official checks 17,187 9,161 1,038 8,123 6,334 1,691 89 Residual4 282,961 61,175 8,255 n.a. n.a. 15 90 Total transaction accounts 397,143 245,141 74,100 91 Individuals, partnerships, and corporations 339,915 214,367 64,806 92 U.S. government 1,245 664 98 93 States and political subdivisions in the United States 17,196 16,473 6,972 94 Commercial banks in the United States 21,795 6,012 421 95 Other depository institutions in the United States 2,158 928 98 96 Banks in foreign countries 5,982 356 n.a. 97 Foreign governments and official institutions 727 5 n.a. 98 Certified and official checks 8,123 6,334 1.691 99 Residual4 n.a. n.a. 13 100 Demand deposits (included in total transaction accounts) 348,579 164,922 38,528 101 Individuals, partnerships, and corporations 298,732 145,421 34,746 102 US. government 1,203 620 88 103 States and political subdivisions in the United States 9,861 5,288 1,474 104 Commercial banks in the United States 21,795 6,011 420 105 Other depository institutions in the United States 2,156 916 95 106 Banks in foreign countries n.a. n.a. n.a. 5,982 327 n.a. 107 Foreign governments and official institutions 726 5 n.a. 108 Certified and official checks 8,123 6,334 1,691 109 Residual4 n.a. n.a. 13 110 Total nontransaction accounts 1,114,050 759,869 186,093 111 Individuals, partnerships, and corporations 1,076,552 716,459 171,196 112 U.S. government 2,395 269 95 113 States and political subdivisions in the United States 28,964 37,737 13,010 114 Commercial banks in the United States 4,519 2,195 614 115 U.S. branches and agencies of foreign banks 0 0 n.a. 116 Other commercial banks in the United States 0 0 n.a. 117 Other depository institutions in the United States 757 2,185 1,177 118 Banks in foreign countries 205 1,001 n.a. 119 Foreign branches of other U.S. banks 0 0 n.a. 120 Other banks in foreign countries 0 0 n.a. 121 Foreign governments and official institutions 658 24 n.a. 122 Residual n.a. n.a. 2 123 Federal funds purchased and securities sold under agreements to repurchase 406,882 326,041 65,331 260,710 77,345 3,496 124 Demand notes issued to the U.S. Treasury 31,504 26,520 0 26,520 4,770 214 125 Trading liabilities 191,425 191,319 n a. n.a. 106 0 126 Other borrowed money 315,949 198,279 39,289 158,990 112,919 4,751 127 Banks' liability on acceptances executed and outstanding 18,898 18,675 4,128 14,547 215 8 128 Notes and debentures subordinated to deposits 54,887 50,803 n.a. n.a. 4,061 23 129 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n a. n.a. n.a. 81,177 n.a. n.a. 130 All other liabilities 119,820 95,277 n.a. n.a. 21,610 2,934 131 Total equity capital 412,800 250,097 n.a. n.a. 130,121 32,582 MEMO 132 Total individual retirement (IRA) and Keogh plan accounts 80,498 61,130 14,266 133 Total brokered deposits 31,811 22,651 1,508 134 Fully insured brokered deposits 24,175 20,201 1,368 135 Issued in denominations of less than $100,000 44,,885533 33,,339944 11,,006600 136 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. 19,322 16,806 308 137 Money market deposit accounts (MMDAs) 419,453 173,011 26,732 138 Other savings deposits (excluding MMDAs) 179,879 128,683 26,332 139 Total time deposits of less than $100,000 313,198 324,359 100,115 140 Total time deposits of $100,000 or more 201,519 133,817 32.914 141 All negotiable order of withdrawal (NOW) accounts 47,964 78,687 34,728 142 Number of banks 9,199 171 n.a. 2,802 6,226 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 1998 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, September 30, 1997 Millions of dollars except as noted Members NNoonn-- IItteemm mmeemmbbeerrss Total National State 1 4,122,053 3,261,484 2,428,512 832,971 860,569 2 Cash and balances due from depository institutions 240,594 201,764 159,440 42,323 38,830 3 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 399,925 215,601 162,423 53,178 184,324 4 U.S. Treasury securities 83,645 43,222 29,973 13,249 40,423 5 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 101,767 49,071 37,728 11,342 52,696 6 Securities issued by states and political subdivisions in the United States 52,821 27,630 20,075 7,555 25,191 7 Mortgage-backed securities (MBS) 142,054 84,768 66,050 18,717 57,286 8 Pass-through securities 89,525 55.198 43,274 11,924 34,326 9 Issued or guaranteed by FNMA, FHLMC, or GNMA 88,859 54,694 42,930 11,764 34,165 10 Other pass-through securities 666 504 344 160 161 11 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 52,529 29,569 22,776 6,793 22,960 12 Issued or guaranteed by FNMA, FHLMC, or GNMA 43,412 26,437 20,667 5,770 16,975 13 All other mortgage-backed securities 9,118 3,132 2,109 1,023 5,985 14 Other debt securities 9,995 5,258 4,148 1,110 4,737 15 Equity securities 9,644 5,653 4,448 1,205 3,991 16 Investments in mutual funds and other equity securities with readily determinable fair values 2,977 1,337 1,062 275 1,640 17 All other equity securities 6,666 4,315 3,386 930 2.351 18 Federal funds sold and securities purchased under agreements to resell 179,384 150,342 93,647 56,695 29,041 19 Total loans and lease-financing receivables, gross 2,610,927 2,055,927 1,600,341 455,586 555,000 20 LESS: Unearned income on loans 3,417 1,863 1,464 399 1,554 21 Total loans and leases (net of unearned income) 2,607,510 2,054,064 1,598,877 455,187 553,446 Total loans and leases, gross, by category 22 Loans secured by real estate 1,188,984 890,677 687,709 202,967 298,307 23 Construction and land development 85,481 58,958 45,961 12,997 26,523 24 26,800 13,112 10,141 2,971 13,688 25 One- to four-family residential properties 703,032 550,212 421,757 128,455 152,820 26 Revolving, open-end loans, extended under lines of credit 96,041 80,615 65,301 15,314 15,426 27 All other loans 606,991 469,597 356,456 113,141 137,394 28 Multifamily (five or more) residential properties 39,799 28,564 22,451 6,112 11,235 29 Nonfarm nonresidential properties 333,872 239,831 187,399 52,433 94,040 30 Loans to depository institutions 58,457 57,283 51,564 5,718 1,174 31 Loans to finance agricultural production and other loans to farmers 43,903 23,411 19,071 4,340 20,492 32 Commercial and industrial loans 611,409 513,571 391,805 121,766 97,838 33 Acceptances of other banks 881 584 263 321 298 34 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 513,006 392,693 327,449 65,244 120,313 35 Obligations (other than securities) of states and political subdivisions in the United States 19,002 15,837 12,366 3,471 3,165 36 All other loans 84,059 78,465 47,665 30,800 5,594 37 Lease-financing receivables 91,226 83,407 62,449 20,958 7,819 38 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs 36,313 34,539 10,646 23,893 1,774 39 Remaining assets 658,327 605,174 403,479 201,695 53,153 40 Total liabilities 3,709,252 2,933,504 2,185,562 747,942 775,748 41 Total deposits 2,776,395 2,124,614 1,610,599 514,016 651,781 42 Individuals, partnerships, and corporations 2,583,296 1,981,074 1,503,714 477,360 602,222 43 U.S. government 4,766 4,276 3,968 308 490 44 States and political subdivisions in the United States 120,351 83,242 59,847 23,395 37,109 45 Commercial banks in the United States 35,556 31,700 25,971 5,729 3,856 46 Other depository institutions in the United States 5,262 3,518 2,684 834 1,744 47 Certified and official checks 16,149 12,019 8,951 3,069 4,129 48 Banks in foreign countries, foreign governments, and foreign official institutions 8,974 7,529 4,349 3,180 1,445 49 Total transaction accounts 716,383 552,573 421,875 130,698 163,810 50 Individuals, partnerships, and corporations 619,089 474,570 362,996 111,574 144,518 51 2,007 1,729 1,476 253 278 52 States and political subdivisions in the United States 40,641 28,811 21,878 6,933 11,830 53 Commercial banks in the United States 28,229 26,290 21,185 5,105 1,939 54 Other depository institutions in the United States 3,184 2,583 1,954 629 602 55 Certified and official checks 16.149 12,019 8,951 3,069 4,129 56 Banks in foreign countries, foreign governments, and foreign official institutions 7,085 6,570 3,435 3,135 514 57 Demand deposits (included in total transaction accounts) 552,028 449,489 342,807 106,682 102,539 58 Individuals, partnerships, and corporations 478,899 386,883 295,350 91,533 92,016 59 U.S. government 1,911 1,671 1,429 242 240 60 States and political subdivisions in the United States 16,623 13,478 10,508 2.970 3,145 61 Commercial banks in the United States 28,225 26,289 21,184 5,105 1,937 62 Other depository institutions in the United States 3,167 2,581 1,952 629 587 63 Certified and official checks 16,149 12,019 8,951 3,069 4,129 64 Banks in foreign countries, foreign governments, and foreign official institutions 7,054 6,569 3,434 3,135 485 65 Total nontransaction accounts 2,060,012 1,572,041 1,188,724 383.318 487,971 66 Individuals, partnerships, and corporations 1,964,207 1,506,503 1,140,717 365,786 457,703 67 2.759 2,547 2,492 55 212 68 States and political subdivisions in the United States 79,710 54,431 37,969 16,462 25,279 69 Commercial banks in the United States 7.327 5,410 4,786 624 1,917 70 Other depository institutions in the United States 4,119 2,191 1,845 346 1,928 71 Banks in foreign countries, foreign governments, and foreign official institutions 1,889 959 914 45 930 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, 1997 Millions of dollars except as noted Members IItteemm TToottaall mmee NN mm oo bb nn ee -- rrss Total National State 72 Federal funds purchased and securities sold under agreements to repurchase 341,551 300,427 213,430 86,997 41,124 73 Demand notes issued to the U.S. Treasury 31,504 29,045 16,862 12,183 2,459 74 Other borrowed money 276,660 222,444 174,716 47,728 54,215 75 Banks liability on acceptances executed and outstanding 14,770 14,488 9,736 4,752 282 76 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs 81,177 70,581 50,819 19,762 10,596 77 Remaining liabilities 187,195 171,904 109,399 62,505 15,291 MEMO 78 Trading assets at large banks5 79,949 79,642 38,660 40,983 306 79 U.S. Treasury securities (domestic offices) 12,507 12,453 7,379 5,075 53 80 U.S. government agency corporation obligations 2,355 2,284 1,939 345 71 81 Securities issued by states and political subdivisions in the United States 1,402 1,391 11,,113399 252 11 82 Mortgage-backed securities 6,487 6,478 883388 5,639 10 83 Other debt securities 10,184 10,183 6,426 3,757 1 84 Certificates of deposit 1,869 1,869 592 1,277 0 85 Commercial paper 475 376 376 0 100 86 Bankers acceptances 1,348 1,308 753 555 40 87 Other trading assets 7,372 7,362 3,017 4,345 9 88 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 35,948 35,937 16,200 19,737 11 89 Total individual retirement (IRA) and Keogh plan accounts 155,894 114,938 89,676 25,262 40,955 90 Total brokered deposits 55,969 38,797 25,903 12,894 17,172 91 Fully insured brokered deposits 45,744 31,915 22,588 9,327 13,829 92 Issued in denominations of less than $100,000 99,,330077 6,707 33,,335566 3,351 22,,660000 93 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 36,437 25,209 19,232 5,977 11,228 94 Money market deposit accounts (MMDAs) 619,196 519,568 408,349 111,219 99,628 95 Other savings deposits 334,895 264,201 191,723 72,479 70,694 96 Total time deposits of less than $100,000 737,671 517,738 403,539 114,199 219,933 97 Total time deposits of $100,000 or more 368,249 270,534 185,113 85,421 97,716 98 All negotiable order of withdrawal (NOW) accounts 161,380 101,353 77,878 23,475 60,027 99 Number of banks 9,199 3,624 2,628 996 5,575 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 1998 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 3-7, 1997 A. Commercial and industrial loans made by all commercial banks' Weighted- Amount of loans (percent) AAmmoouunntt ooff AAvveerraaggee llooaann MMoosstt IItteemm loans size maturity3 common (percent)2 o ( f m d il o l l i l o a n r s s ) (tho d u o s l a la n r d s s ) of DDaayyss S c e o c l u l r a e te d r a b l y Callable p S re u p p b e a n je y a c m l t t y e t n o t cc . oo .. mm mmiittmm . ee nntt base r a p t r e i 4 c ing LOAN RISK5 1 All consumer and industrial loans 6.85 134,783 787 321 33.4 22.7 33.2 75.7 Fed funds 2 Minimal risk 6.29 11,232 1,669 97 17.8 39.0 57.0 74.1 Fed funds Low risk 6.27 37,479 1,806 204 25.7 11.5 36.8 64.3 Fed funds 4 Moderate risk 6.88 51,898 759 352 34.3 33.4 36.5 83.8 Foreign Acceptable risk 7.79 18,455 539 588 49.6 12.6 17.8 95.9 Foreign By maturity/repricing interval6 6 Zero interval 8.26 20,806 280 530 49.8 19.0 11.4 80.2 Prime V Minimal risk 8.33 176 91 355 37.0 33.0 28.1 77.5 Prime y8 Low risk 7.02 3,534 615 426 26.1 10.1 13.2 92.6 Foreign Moderate risk 8.26 8,029 237 569 54.1 25.5 8.2 93.7 Prime 10 Acceptable risk 8.98 4,536 209 711 65.7 19.7 9.0 97.2 Prime ii Daily 6.22 59,874 3,141 53 19.5 33.5 41.7 67.5 Fed funds 12 Minimal risk 6.08 8,258 22,077 21 9.8 47.6 61.7 70.2 Fed funds 13 Low risk 6.06 20,367 7,648 35 22.5 14.8 37.7 51.1 Fed funds 14 Moderate risk 6.24 21,714 4,005 66 20.5 55.8 53.3 82.4 Fed funds 13 Acceptable risk 6.73 3,926 1,761 115 21.2 8.1 4.6 98.0 Fed funds 16 2 to 30 days 6.82 31,888 1,167 371 38.7 11.6 34.3 85.1 Foreign 17 Minimal risk 6.69 2,277 2,981 305 35.5 14.7 48.3 89.7 Foreign 2 i1 0 y8 L A M o c o w c d e e p r r i t a s a t k b e l e r is r k is k 6 6 7 . . . 3 7 5 1 4 9 1 5 8 2 , , , 0 8 5 3 5 5 5 4 5 3 1 1 , , , 1 3 0 0 0 8 6 0 2 2 3 61 2 4 5 2 4 5 2 3 4 8 5 . . . 4 8 8 1 1 4 5 1 . . . 8 6 0 4 3 2 2 7 2 . . . 1 2 3 7 9 8 5 6 7 . . . 6 0 9 F F F o o o r r r e e e i i i g g g n n n 21 31 to 365 days 6.95 17,399 499 546 44.0 13.0 32.1 86.4 Foreign 22 Minimal risk 7.16 490 159 250 60.5 8.4 32.1 68.8 Foreign 23 Low risk 6.44 3,945 567 485 28.6 7.8 41.2 83.0 Foreign 24 Moderate risk 6.90 6,982 522 550 42.6 14.3 30.7 83.1 Foreign 23 Acceptable risk 7.54 4,110 1,064 651 51.0 10.6 28.4 95.2 Foreign Months 26 More than 365 days 8.44 4,213 327 57 60.7 4.3 22.2 52.8 Prime 27 Minimal risk 8.64 22 42 35 90.5 13.4 * 25.1 Other 228y Low risk 7.44 622 284 66 70.1 5.6 43.0 40.2 Other Moderate risk 8.56 2,495 486 53 57.2 4.4 20.3 45.0 Prime 30 Acceptable risk 8.84 717 640 63 56.0 3.3 21.4 83.0 Prime Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN 31 1-99 9.66 2,865 3.1 145 83.0 36.3 5.0 78.2 Prime 32 100-999 8.76 11,169 3.2 99 71.8 25.5 14.9 87.9 Prime 33 1,000-9,999 7.25 34,516 3.0 62 40.8 15.1 31.1 83.6 Foreign 34 10,000+ 6.35 86,232 2.5 65 23.8 25.0 37.4 70.9 Fed funds Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 9.07 21,499 3.2 173 68.5 22.8 10.1 77.8 193 36 Fed funds 6.09 43,980 2.4 6 12.9 37.1 42.0 55.5 10,876 37 Other domestic 6.17 12,759 2.5 23 10.1 33.0 31.2 79.0 2,703 38 Foreign 6.66 40,286 2.7 62 44.1 9.6 47.1 93.4 3,784 39 Other 6.97 16,260 2.8 156 33.9 9.1 7.6 81.1 401 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 3-7, 1997 B. Commercial and industrial loans made by large domestic banks1 Weighted- Amount of loans (percent) W e a f e v f i e e g r c h a t t g i e v e d e - Am l o o u an n s t of Aver s a i g z e e loan m a a v t e u r r a i g ty e 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s) s of Days S c e o c l u la re te d r a b l y p S re p u p e b a n je y a c m lt t y e t n o t c M om ad m e it u m nd e e n r t LOAN RISK3 1 All consumer and industrial loans 7.09 60,462 952 33.9 19.6 9.1 72.7 2 Minimal risk 6.30 1,964 2,580 392 27.6 14.7 45.2 92.5 3 Low risk 6.12 14,018 3,927 247 22.9 26.2 12.1 74.5 4 Moderate risk 7.14 24,527 994 568 35.2 23.9 6.9 77.7 5 Acceptable risk 8.29 8,670 524 817 55.9 9.4 7.8 95.4 By maturity/repricing interval6 6 Zero interval 8.18 13,803 430 513 45.1 15.4 9.2 73.9 7 Minimal risk 7.96 102 356 523 28.6 12.2 43.5 91.3 8 Low risk 6.79 2,028 1,444 449 21.8 11.6 10.9 91.1 9 Moderate risk 8.03 5,360 384 529 51.4 22.8 8.5 95.2 10 Acceptable risk 8.92 2,845 251 734 58.4 13.4 7.4 98.4 11 Daily 6.43 19,871 1,959 147 22.6 34.4 6.2 56.8 12 Minimal risk 6.00 637 3,550 242 2.4 .1 59.6 83.9 13 Low risk 6.06 6,492 7,812 117 26.1 45.0 8.3 56.8 14 Moderate risk 6.58 6,826 2,190 213 25.5 47.0 2.0 63.1 15 Acceptable risk 7.73 933 659 347 55.6 17.4 95.6 16 2 to 30 days 6.86 17,125 1,151 437 35.8 12.1 10.0 17 Minimal risk 6.27 1,036 6,080 456 41.7 25.9 36.5 99.8 18 Low risk 6.01 3,961 6,138 250 22.5 9.2 15.5 87.4 19 Moderate risk 6.79 7,130 1,668 455 30.0 13.2 6.0 86.2 20 Acceptable risk 7.70 2.959 1,240 787 55.6 5.2 6.8 96.0 21 31 to 365 days 6.77 6,307 1,766 30.6 10.0 11.0 89.9 22 Minimal risk 6.55 181 1,961 34.1 46.9 82.6 23 Low risk 5.53 1,282 2,565 11.3 7.8 23.9 94.3 24 Moderate risk 6.68 2.960 1,533 28.3 12.5 6.3 85.6 25 Acceptable risk 8.41 1,291 2,161 48.3 5.4 7.5 92.4 26 More than 365 days 8.38 3,107 27 Minimal risk . . . 28 Low risk 6.98 200 2,683 14.2 4.4 90.7 29 Moderate risk .. 2,182 3,100 51.3 2.0 22.9 41.1 30 Acceptable risk. . 586 1,367 61.5 .0 14.1 84.0 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN 3 3 1 2 1 1 0 -9 0 9 -9 99 9 8. . 7 4 9 0 6 1 , , 0 1 1 27 0 3 3 . . 3 4 4 3 2 8 8 6 3 8 . . 6 6 4 2 0 1. . 6 4 58..71 9 9 3 0 . . 0 3 33 1,000-9,999 7.50 17,498 3.0 76 39.5 13.6 11.4 78.4 34 10,000+ 6.53 35,826 2.7 115 23.8 21.5 8.3 66.3 BASE RATE OF LOAN4 35 Prime7 8.87 14,419 3.3 229 63.9 15.2 7.9 73.3 36 Fed funds 6.19 9,309 2.3 12 27.2 33.2 1.5 31.9 37 Other domestic 6.13 9,268 2.4 17 11.2 35.3 17.9 72.3 38 Foreign 6.80 13,673 2.9 103 30.2 18.8 11.7 89.5 39 Other 6.76 13,794 2.8 54 26.0 6.4 6.5 83.2 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 1998 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 3-7, 1997 C. Commercial and industrial loans made by small domestic banks1 Weighted- Weighted- Amount of loans (percent) e a f v f e e r c a t g iv e e Am l o o u an n s t of Avera si g z e e loan m a a v t e u r r a i g ty e 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s l a la n r d s s ) of Days S c e o c l u la re te d r a b l y p S re p u p e b a n je y a c m l t t y e t n o t c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All consumer and industrial loans 8.02 12,594 130 483 57.5 26.7 26.6 69.0 2 Minimal risk 8.53 546 96 244 70.8 27.9 11.2 55.7 3 Low risk 7.13 3,536 240 263 33.0 10.9 35.8 52.9 4 Moderate risk 8.25 4,292 108 572 57.4 28.2 34.3 64.7 5 Acceptable risk 8.60 2,318 156 591 91.3 30.9 18.8 93.9 By maturity/repricing interval6 6 Zero interval 3,949 100 628 81.6 39.6 8.4 87.2 7 Minimal risk 72 44 130 48.6 63.9 7.2 57.1 8 Low risk 8.72 557 141 613 76.1 19.4 3.4 86.7 9 Moderate risk 9.26 1,642 87 773 74.4 39.0 6.9 85.0 10 Acceptable risk 9.19 1,175 123 604 93.7 39.1 16.0 93.0 11 Daily 6.49 2,996 432 73 13.4 7.0 67.9 26.8 12 Minimal risk 6.77 35 477 42 24.8 59.4 37.2 62.7 13 Low risk 6.20 1,610 1,541 17 5.1 1.3 69.8 25.0 14 Moderate risk 6.36 999 582 67 9.1 5.7 89.3 6.7 15 Acceptable risk 7.41 257 274 70.7 5.5 4.4 80.2 16 2 to 30 days 7.89 2,010 212 301 58.0 27.3 26.9 83.2 17 Minimal risk 8.79 242 473 299 76.2 24.4 6.9 63.4 18 Low risk 7.27 373 269 405 48.5 4.9 25.3 67.3 19 Moderate risk 7.99 711 169 319 57.9 35.2 47.0 87.1 20 Acceptable risk 8.36 355 221 339 85.0 39.5 18.7 96.4 21 31 to 365 days 7.74 2,629 92 462 61.7 27.5 15.3 78.7 22 Minimal risk 8.37 175 59 158 79.2 13.2 14.9 46.7 23 Low risk 7.49 733 122 221 43.8 15.2 2.0 80.0 24 Moderate risk 8.30 581 57 416 68.9 27.6 22.1 73.4 25 Acceptable risk 7.58 553 228 97.4 6.3 31.4 97.1 26 More than 365 days 9.31 780 69 92.0 17.5 61.9 27 Minimal risk . . . 8.63 22 42 90.4 13.5 25.3 28 Low risk 9.26 167 79 91.2 20.9 2.0 35.6 29 Moderate risk . . 9.53 311 70 99.0 21.7 1.6 71.7 30 Acceptable risk. . 9.28 63 101 64.8 36.5 4.4 85.0 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN 31 1-99 9.90 1,668 2.9 218 33.9 3.4 67.5 32 100-999 9.19 3,530 2.9 231 33.7 10.8 80.3 33 1,000-9,999 7.62 3,811 2.8 53.7 29.3 19.2 34 10,000+ 6.41 3,585 2.7 22.1 13.7 60.4 BASE RATE OF LOAN4 35 Prime7 9.54 4,869 3.0 71 82.3 40.7 6.9 81.5 36 Fed funds 6.13 2,505 2.5 15 6.1 6.3 90.2 8.0 37 Other domestic 6.77 570 1.7 186 33.9 69.4 85.8 38 Foreign 6.92 2,525 2.9 92 49.9 10.2 27.5 95.1 39 Other 8.39 2,124 2.8 487 76.4 27.0 3.4 76.7 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 3-7, 1997 D. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Amount of loans (percent) W ( l e p a o f e e v a f i r e e n g c c r h e a t r t i n g a e v t t e d e e ) - ' A o ( f m m l d o o il o a u l l i n n l o a s t n r s o s ) f ( A th v o d e u r o a s s l i g l a z a n e e r d s l s ) o a o n f m a a v D t e u a r r y a i s g t y e 3 S c e o c l u la re te d r a b l y p S re p u p e b a n je y a c m l t t y e t n o t c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All consumer and industrial loans 6.38 61,728 5,815 167 27.9 24.9 57.6 80.1 2 Minimal risk 6.15 8,722 33,479 20 12.3 45.1 62.6 71.1 3 Low risk 6.23 19,925 8,064 169 26.4 1.2 54.3 59.1 4 Moderate risk 6.34 23,079 5,823 101 28.9 44.5 68.4 93.8 5 Acceptable risk 6.96 7,467 2,600 328 29.3 10.6 29.1 97.1 By maturity/repricing interval6 6 Zero interval 1,148* 7 Minimal risk 8 Low risk 6.51 949 2,479 273 5.9 1.5 23.8 9 Moderate risk 7.88 1,027 1,019 466 36.3 18.3 8.9 10 Acceptable risk 8.83 517 590 916 42.2 10.4 1.7 100.0 1 1 2 1 Da M ily in imal risk 6 6 . . 0 0 9 9 37 7 , , 0 5 0 8 7 6 6 1 2 8 , , 6 6 2 6 3 7 91 1 1 8 0 . . 3 3 3 51 5 . . 5 2 5 6 7 2 . . 8 0 7 69 6 . . 1 5 13 Low risk 6.04 12,265 15,589 7 22.8 .6 49.1 51.5 14 Moderate risk 6.06 13,890 23,540 7 18.9 63.8 76.0 97.3 15 Acceptable risk 6.38 2,895 6,674 45 8.5 5.2 3.3 99.3 16 2 to 30 days 6.61 12,753 4,308 296 39.6 8.4 67.8 83.0 17 Minimal risk 6.63 998 12,165 149 19.3 .8 70.6 85.5 18 Low risk 6.51 4,520 5,517 183 32.7 .9 66.8 66.8 19 Moderate risk 6.46 4,714 4,021 184 41.2 16.2 69.9 90.7 20 Acceptable risk 7.24 1,721 2,591 395 46.0 15.2 94.8 64.1 2 2 1 2 31 M to i n 3 im 65 a l d r a i y s s k 8,464 3,115* 52.6 23 Low risk 6.65 1,930 4,174 734 34.4 5.0 76.6 24 Moderate risk 6.85 3,441 2,942 292 50.4 13.6 5637..25 82.4 25 Acceptable risk 7.03 2,266 2,710 544 41.2 14.5 39.6 96.3 26 More than 365 days 27 Minimal risk . . . 28 Low risk 29 Moderate risk . . 30 Acceptable risk. . 1.081 Weighted- Weightedaverage risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN 31 1-99 8.23 71 3.1 51.6 26.2 31.0 95.6 32 100-999 7.71 1,629 3.1 55.2 21.9 48.9 95.3 33 1,000-9,999 6.83 13,207 3.0 38.7 • 13.0 60.4 89.7 34 10,000+ 6.20 46,821 2.4 23.9 28.4 57.2 76.8 BASE RATE OF LOAN4 35 Prime7 9.29 2,211 3.4 67.7 33.1 31.4 99.3 3 3 6 7 O Fe t d h e f r u d n o d m s estic 6 6. . 1 0 9 6 32 2 , ,9 1 2 6 1 6 2 2 . . 4 9 92..21 4 1 0 8 . . 5 7 4 7 8 9 . . 5 3 6 9 6 9 . .1 0 38 Foreign 6.55 24,088 2.6 51.4 4.4 69.3 95.5 39 Other NOTE. This table has been revised to reflect several changes in the E.2 statistical release. 5. A complete description of these risk categories is available from the Banking and First, business loan pricing information is now disaggregated by risk categories for most Money Market Statistics Section, Mail Stop 81, Board of Governors of the Federal Reserve loans. Second, the previous disaggregation of loans by maturity categories has been replaced System, Washington, DC 20551. The category "Moderate risk" includes the average loan, by a "maturity/repricing interval," which measures the period from the day the loan is made under average economic conditions, at the typical lender. The category "Acceptable risk" may until it is next scheduled to reprice (for loans that reprice), or the period from the day the loan include a small volume of special mention or classified loans. The weighted-average risk is made until it is scheduled to mature (for loans that do not reprice). Third, information on ratings published for loans in rows 31-39 are calculated by assigning a value of "1" to whether loans are callable or subject to prepayment penalties is now being collected and minimal risk loans; "2" to low risk loans; "3" to moderate risk loans, "4" to acceptable risk published. In addition to these new loan characteristics, the survey now includes gross loans; and "5" to special mention and classified loans. These values are weighted by loan business loan extensions of U.S. branches and agencies of foreign banks. amount and exclude loans with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26, 1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion. and 31-39 are not rated for risk. Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches 6. The maturity/repricing interval measures the period from the date the loan is made until it and agencies averaged 1.3 billion. first may reprice or it matures. For floating-rate loans that are subject to repricing at any 2. Effective (compounded) annual interest rates are calculated from the stated rate and time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate other terms of the loans and weighted by loan amount. The standard error of the loan rate for loans that have a scheduled repricing interval, the maturity/repricing interval measures the number all commercial and industrial loans in the current survey (line 1, column 1) is 0.15 percentage of days between the date the loan is made and the date on which it is next scheduled to reprice. For points. The chances are about two out of three that the average rate shown would differ by less loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing than this amount from the average rate that would be found by a complete survey of the interval measures the number of days between the date the loan is made and the date on which it universe of all banks. matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing 3. Average maturities are weighted by loan amount and exclude loans with no stated to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day; maturities. such loans are not included in the "2 to 30 day" category. 4. The most common base pricing rate is that used to price the largest dollar volume of 7. For the current survey, the average reported prime rate, weighted by the amount of loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or loans priced relative to a prime base rate, was 8.53 percent for all banks; 8.50 percent for "reference" rate); the federal funds rate; domestic money market rates other than the prime large domestic banks, 8.61 percent for small domestic banks; and 8.50 percent for U.S. Digitized forr aFteR anAd SthEe fRed eral funds rate; foreign money market rates; and other base rates not included branches and agencies of foreign banks. in the foregoing classifications. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • February 1998 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19971 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 F t d a s i l n g I o B n F ly s 1 Total assets4 884,755 275,217 714,201 235,677 58,798 17,345 66,903 10,645 2 Claims on nonrelated parties 751,683 132,191 595,066 113,879 54,833 7,172 64,826 3,055 3 Cash and balances due from depository institutions 102,788 68,732 95,424 63,860 3,095 2,384 2,562 1,599 4 Cash items in process of collection and unposted debits 3,618 0 3,472 0 25 0 62 0 5 Currency and coin (U.S. and foreign) 21 n.a. 13 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States 59,232 32,710 5544,,775566 3300,,225500 11,,884499 11,,221122 11,,887722 11,,003300 7 U.S. branches and agencies of other foreign banks (including IBFs) 54,574 31,855 50,646 29,415 1,608 1,212 1,763 1,020 8 Other depository institutions in United States (including IBFs).... 4,658 855 44,,111100 835 241 0 109 1100 y Balances with banks in foreign countries and with foreign central banks 39,449 36,022 36,814 33,610 1,183 1,172 617 569 10 Foreign branches of U.S. banks 874 675 817 633 0 0 23 23 11 Other banks in foreign countries and foreign central banks 38,575 35,348 35,997 32,977 1,183 1,172 594 546 12 Balances with Federal Reserve Banks 468 n.a. 370 n.a. 36 n.a. 10 n.a. 13 Total securities and loans 477,704 51,633 346,621 38,793 48,207 4,593 49,114 1,397 14 Total securities, book value 119,613 7,393 110,864 6,351 2,841 661 5,235 334 15 U.S. Treasury 31,948 n.a. 30,565 n.a. 595 n.a. 670 n.a. 16 Obligations of U.S. government agencies and corporations 40,749 n.a. 3399,,886622 n.a. 324 n.a. 371 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 46,916 7,393 40,437 6,351 1,922 661 4,194 334 18 Securities of foreign governmental units 15,955 3,657 15,006 3,251 472 192 412 191 iy All Other 30,961 3,736 25,431 3,100 1,450 469 3,782 143 20 Federal funds sold and securities purchased under agreements to resell 59,039 8,804 53,165 8,501 556 69 4,450 0 21 U.S. branches and agencies of other foreign banks 13,192 5,104 11,937 5,028 357 69 617 0 22 Commercial banks in United States 9,300 85 8,220 85 135 0 594 0 23 Other 36,548 3,615 33,009 3,389 64 0 3,239 0 24 Total loans, gross 358,331 44,270 235,913 32,465 4455,,441144 3,933 43,884 1,063 25 LESS: Unearned income on loans 241 30 156 23 4488 2 5 0 26 EQUALS: Loans, net 358,090 44,240 235,757 32,442 45,366 3,931 43,879 1,063 Total loans, gross, by category 27 Real estate loans 27,009 327 18,071 88 6,746 238 1,071 0 28 Loans to depository institutions 37,397 26,596 25,692 18,280 3,963 2,496 1,124 694 29 Commercial banks in United States (including IBFs) 10,381 6,050 6,464 3,936 3,016 1,682 254 120 30 U.S. branches and agencies of other foreign banks 8,800 5,832 5,178 3,725 2,798 11,,667744 185 120 31 Other commercial banks in United States 1,580 219 1,286 211 218 88 69 0 32 Other depository institutions in United States (including IBFs) 18 0 18 0 0 0 0 0 33 Banks in foreign countries 26,999 20,545 19,210 14,344 946 814 870 575 34 Foreign branches of U.S. banks 1,147 911 965 741 0 0 0 0 35 Other banks in foreign countries 25,852 19,634 18,244 13,603 946 814 870 575 36 Loans to other financial institutions 42,712 612 35,763 415 3,008 35 3,300 60 37 Commercial and industrial loans 228,118 14,640 136,712 11,735 30,473 1,133 37,146 306 38 U.S. addressees (domicile) 192,667 135 110,328 116 27,662 17 35,383 0 39 Non-U.S. addressees (domicile) 35,451 14,505 26,384 11,619 2,811 1,117 1,763 306 40 Acceptances of other banks 458 31 281 31 53 0 109 0 41 U.S. banks 44 0 35 0 2 0 0 0 42 Foreign banks 415 30 246 30 51 0 109 0 43 Loans to foreign governments and official institutions (including foreign central banks) 3,322 1,867 2,780 1,740 254 30 138 3 44 Loans for purchasing or carrying securities (secured and unsecured) ... 13,294 81 12,351 81 373 0 77 0 45 All other loans 5,540 117 3,973 95 545 0 728 0 46 Lease financing receivables (net of unearned income) 481 0 290 0 0 0 191 0 47 U.S. addressees (domicile) 477 0 286 0 0 0 191 0 48 Non-U.S. addressees (domicile) 4 0 4 0 0 0 0 0 49 Trading assets 78,479 515 71,484 513 153 0 6,837 2 50 All other assets 33,674 2,506 28,371 2,212 2,822 125 1,863 57 51 Customers' liabilities on acceptances outstanding 8,698 n.a. 5,877 n.a. 1,946 n.a. 706 52 U.S. addressees (domicile) 6,331 n.a. 4,119 n.a. 1,767 362 53 Non-U.S. addressees (domicile) 2,367 n.a. 1,758 n.a. 180 344 54 Other assets including other claims on nonrelated parties 24,976 2,506 22,494 2,212 876 125 1,158 57 55 Net due from related depository institutions5 133,072 143,027 119,135 121,798 3,965 10,174 2,077 7,591 56 Net due from head office and other related depository institutions5... 133,072 n.a. 111199,,113355 n.a. 33,,996655 nn..aa.. 22,,007777 nn..aa.. 57 Net due from establishing entity, head office, and other related depository institutions5 n.a. 143,027 n.a. 121,798 n.a. 10,174 n.a. 7,591 58 Total liabilities4 884,755 275,217 714,201 235,677 58,798 17,345 66,903 10,645 59 Liabilities to nonrelated parties 745,953 249,818 651,708 214,404 32,294 16,984 40,410 10,215 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, 1997'—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 267,367 189,186 237,161 173,341 5,966 3,314 14,074 6,296 61 Individuals, partnerships, and corporations 206,382 13,572 180,082 8 829 4,449 655 12,461 105 67, U.S. addressees (domicile) 188,945 477 169,710 449 2,185 0 11, 886 25 63 Non-U.S. addressees (domicile) 17,436 13,094 10,372 8,380 2,265 655 575 80 64 Commercial banks in United States (including IBFs) 29,932 35,655 27,822 33,896 578 794 1,153 903 65 U.S. branches and agencies of other foreign banks 18,328 32,708 16,999 31,270 287 658 745 742 66 Other commercial banks in United States 11,604 2,947 10,823 2,626 291 136 408 161 67 Banks in foreign countries 10,280 97,328 9,029 91,604 700 1,218 400 3,470 68 Foreign branches of U.S. banks 2,901 3,738 2,359 3,255 516 134 25 233 69 Other banks in foreign countries 7,379 93,589 6,670 88,349 184 1,084 375 3,237 70 Foreign governments and official institutions (including foreign central banks) 6,729 42,411 6,287 38,802 214 638 1111 1,817 71 All other deposits and credit balances 13,763 221 13,695 209 11 10 43 1 72 Certified and official checks 281 245 14 5 73 Transaction accounts and credit balances (excluding IBFs) 9,666 7,961 408 314 74 Individuals, partnerships, and corporations 7,833 6,434 357 295 75 U.S. addressees (domicile) 5,523 4,928 213 292 76 Non-U.S. addressees (domicile) 2,311 1,506 144 2 77 Commercial banks in United States (including IBFs) 160 154 2 0 78 U.S. branches and agencies of other foreign banks 89 88 0 0 79 Other commercial banks in United States 71 66 2 0 80 Banks in foreign countries 761 615 22 2 81 Foreign branches of U.S. banks 3 2 0 0 82 Other banks in foreign countries 758 613 22 2 83 Foreign governments and official institutions (including foreign central banks) 411 313 2 11 84 All other deposits and credit balances 220 200 11 1 85 Certified and official checks 281 245 14 5 86 Demand deposits (included in transaction accounts and credit balances) 9,167 7,757 306 303 87 Individuals, partnerships, and corporations 7,413 6,291 267 283 88 U.S. addressees (domicile) 5,402 4,860 186 281 89 Non-U.S. addressees (domicile) 2,011 1,432 82 2 90 Commercial banks in United States (including IBFs) 152 n.a. 148 n.a. 0 n.a. 0 n a. 91 U.S. branches and agencies of other foreign banks 84 83 0 0 92 Other commercial banks in United States 68 65 0 0 93 Banks in foreign countries 737 592 20 2 94 Foreign branches of U.S. banks 3 2 0 0 95 Other banks in foreign countries 734 590 20 2 96 Foreign governments and official institutions (including foreign central banks) 402 309 1 11 97 All other deposits and credit balances 182 171 2 1 98 Certified and official checks 281 245 14 5 99 Nontransaction accounts (including MMDAs, excluding IBFs) 257,701 229,200 5,558 13,760 100 Individuals, partnerships, and corporations 198,548 173,648 4,092 12,167 101 U.S. addressees (domicile) 183,423 164,782 1,971 11,594 102 Non-U.S. addressees (domicile) 15,126 8 866 2,121 573 103 Commercial banks in United States (including IBFs) 29,772 27,668 576 1,153 104 U.S. branches and agencies of other foreign banks 18,239 16,911 287 745 105 Other commercial banks in United States 11,533 10,757 289 408 106 Banks in foreign countries 9,519 8,414 678 398 107 Foreign branches of U.S. banks 2,898 2,357 516 25 108 Other banks in foreign countries 6,621 6,057 162 373 109 Foreign governments and official institutions (including foreign central banks) 6 319 5,974 212 0 110 All other deposits and credit balances 13,544 13,496 0 42 111 IBF deposit liabilities 189,186 173,341 3,314 6,296 112 Individuals, partnerships, and corporations 13,572 8,829 655 105 113 U.S. addressees (domicile) 477 449 0 25 114 Non-U.S. addressees (domicile) 13,094 8,380 655 80 115 Commercial banks in United States (including IBFs) 35,655 33,896 794 903 116 U.S. branches and agencies of other foreign banks 32,708 31,270 658 742 117 Other commercial banks in United States n.a. 2,947 n.a. 2,626 n.a. 136 n.a. 161 118 Banks in foreign countries 97,328 91,604 1,218 3,470 119 Foreign branches of U.S. banks 3,738 3,255 134 233 120 Other banks in foreign countries 93,589 88,349 1,084 3,237 121 Foreign governments and official institutions (including foreign central banks) 42,411 38,802 638 1,817 122 All other deposits and credit balances 221 209 10 1 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • February 1998 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1997'—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 m Federal funds purchased and securities sold under agreements to repurchase 100,896 19,485 91,612 16,359 3,641 1,971 5,029 939 124 U.S. branches and agencies of other foreign banks 13,295 3,885 10,353 2,228 2,019 1,465 683 102 175 Other commercial banks in United States 11,182 187 9,284 84 937 86 915 16 1?6 Other 76,419 15.413 71,976 14,046 686 420 3,431 821 127 Other borrowed money 99,356 38,242 68,438 22,050 16,735 11,575 10,105 2,910 178 Owed to nonrelated commercial banks in United States (including IBFs) 20,094 8,499 11,425 3,694 6,161 3,701 1,122 607 129 Owed to U.S. offices of nonrelated U.S. banks 8,054 1,197 5,325 320 2,093 785 216 65 no Owed to U.S. branches and agencies of nonrelated foreign banks 12,040 7,302 6,100 3,374 4,068 2,916 906 542 ni Owed to nonrelated banks in foreign countries 28,092 24,397 17,419 14,004 7,449 7,318 2,192 2,186 m Owed to foreign branches of nonrelated U.S. banks 1,460 1,314 488 364 751 739 186 186 m Owed to foreign offices of nonrelated foreign banks 26,633 23,083 16,932 13,640 6,698 6,579 2,007 2,000 134 Owed to others 51,169 5,346 39,594 4,352 3,125 557 6,791 116 135 All other liabilities 89,148 2,904 81,155 2,655 2,637 124 4,906 71 136 Branch or agency liability on acceptances executed and 88,,996611 n.a. 66,,334488 n.a. 11,,994488 n a. 448844 n a. 137 Trading liabilities 57,744 96 53,997 95 145 0 3,597 1 138 Other liabilities to nonrelated parties 22,443 2, 508 20,810 2,560 544 124 824 70 139 Net due to related depository institutions5 138,802 25,400 62,493 21,273 26,504 361 26,494 431 140 Net due to head office and other related depository institutions5 .... 138,802 n. a. 62,493 n. a. 26,504 n a. 26,494 n.a. 141 Net due to establishing entity, head office, and other related depository institutions5 n.a. 25,400 n.a. 21,273 n.a. 361 n.a. 431 MEMO 142 Non-interest-bearing balances with commercial banks in United States 1,237 1 1,006 0 114 0 63 0 143 Holdi i n n g d u o s f tr i o a w l n lo a a c n c s eptances included in commercial and 4,360 • 2,887 • 1,197 174 144 Commercial and industrial loans with remaining maturity of one year or less (excluding those in nonaccrual status) 126,880 73,605 17,170 24,038 145 Predetermined interest rates 76,247 n.a. 43,707 n a. 8,215 n.a. 19,118 n.a. 146 Floating interest rates 50.633 29,898 8,956 4,920 147 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccrual status) 100,283 62,641 13,093 12,863 148 Predetermined interest rates 22,774 15,708 2,335 3,669 149 Floating interest rates 77,509 46,934 10,757 9,193 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, 1997'—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 111155550000 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, eeeexxxxcccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 254,721 n.a. 228,523 n.a. 3,569 n.a. 13,901 n.a. 111155551111 TTTTiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 248,435 n.a. 223,546 n.a. 3,471 n.a. 13,361 n.a. 111155552222 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 6,286 n.a. 4,977 n.a. 98 n.a. 540 n.a. All states2 New York California Illinois 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 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 111155553333 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 45,953 n.a. 29,381 n.a. 10,835 n.a. 3,219 n.a. 111155554444 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 470 0 239 0 101 0 36 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.ll monthly statistical release, the G.l 1 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.l 1 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) FARM mortgage loans, 35 Assets and liabilities (See also Foreigners) Federal agency obligations, 5, 9, 10, 11, 28, 29 Commercial banks, 15-21, 64-67 Federal credit agencies, 30 Domestic finance companies, 32, 33 Federal finance Federal Reserve Banks, 10 Debt subject to statutory limitation, and types and ownership Foreign banks, U.S. branches and agencies, 72-75 of gross debt, 27 Foreign-related institutions, 20 Receipts and outlays, 25, 26 Automobiles Treasury financing of surplus, or deficit, 25 Consumer credit, 36 Treasury operating balance, 25 Production, 44, 45 Federal Financing Bank, 30 Federal funds, 23, 25 BANKERS acceptances, 5, 10, 22, 23 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 Bankers balances, 15-21, 72-75. (See also Foreigners) Federal Housing Administration, 30, 34, 35 Bonds (See also U.S. government securities) Federal Land Banks, 35 New issues, 31 Rates, 23 Federal National Mortgage Association, 30, 34, 35 Business activity, nonfinancial, 42 Federal Reserve Banks Business loans (See Commercial and industrial loans) Condition statement, 10 Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 CAPACITY utilization, 43 Federal Reserve credit, 5, 6, 10, 12 Capital accounts Federal Reserve notes, 10 Commercial banks, 15-21, 64-67 Federally sponsored credit agencies, 30 Federal Reserve Banks, 10 Finance companies Central banks, discount rates, 61 Assets and liabilities, 32 Certificates of deposit, 23 Business credit, 33 Commercial and industrial loans Loans, 36 Commercial banks, 15-21, 64-67, 68-71 Paper, 22, 23 Weekly reporting banks, 17,18 Float, 5 Commercial banks Flow of funds, 37-41 Assets and liabilities, 15-21, 64-67 Foreign banks, U.S. branches and agencies, 71, 72-75 Commercial and industrial loans, 15-21, 64-67, 68-71 Foreign currency operations, 10 Consumer loans held, by type and terms, 36, 68-71 Foreign deposits in US. banks, 5 Number, by classes, 64-67 Foreign exchange rates, 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions, 20 Terms of lending, 68-71 Time and savings deposits, 4 Foreign trade, 51 Foreigners Commercial paper, 22, 23, 32 Claims on, 52, 55, 56, 57, 59 Condition statements (See Assets and liabilities) Liabilities to, 51, 52, 53, 58, 60, 61 Construction, 42, 46 Consumer credit, 36 Consumer prices, 42 GOLD Consumption expenditures, 48, 49 Certificate account, 10 Corporations Stock, 5, 51 Profits and their distribution, 32 Government National Mortgage Association, 30, 34, 35 Security issues, 31, 61 Gross domestic product, 48, 49 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5, 13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 DEBT (See specific types of debt or securities) Insurance companies, 27, 35 Demand deposits, 15-21 Interest rates Depository institutions Bonds, 23 Reserve requirements, 8 Commercial banks, 68-71 Reserves and related items, 4, 5, 6, 12, 64-67 Consumer credit, 36 Deposits (See also specific types) Federal Reserve Banks, 7 Commercial banks, 4, 15-21, 64-67 Foreign banks, U.S. branches and agencies, 71 Federal Reserve Banks, 5, 10 Foreign central banks and foreign countries, 61 Discount rates at Reserve Banks and at foreign central banks and Money and capital markets, 23 foreign countries (See Interest rates) Mortgages, 34 Discounts and advances by Reserve Banks (See Loans) Prime rate, 22 Dividends, corporate, 32 International capital transactions of United States, 50-61 International organizations, 52, 53, 55, 58, 59 EMPLOYMENT, 42 Inventories, 48 Eurodollars, 23, 61 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investments (See also specific types) SAVING Commercial banks, 4, 15-21, 64-67 Flow of funds, 37-41 Federal Reserve Banks, 10, 11 National income accounts, 48 Financial institutions, 35 Savings institutions, 35, 36, 37-41 Savings deposits (See Time and savings deposits) LABOR force, 42 Securities (See also specific types) Life insurance companies (See Insurance companies) Federal and federally sponsored credit agencies, 30 Loans (See also specific types) Foreign transactions, 60 Commercial banks, 15-21, 64-67, 68-71 New issues, 31 Federal Reserve Banks, 5, 6, 7, 10, 11 Prices, 24 Financial institutions, 35 Special drawing rights, 5, 10, 50, 51 Foreign banks, U.S. branches and agencies, 71 State and local governments Insured or guaranteed by United States, 34, 35 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 Reserve requirements, 8 Mining production, 45 Student Loan Marketing Association, 30 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 Money and capital market rates, 23 TAX receipts, federal, 26 Money stock measures and components, 4, 13 Thrift institutions, 4. (See also Credit unions and Savings Mortgages (See Real estate loans) institutions) Mutual funds, 13, 32 Time and savings deposits, 4, 13, 15-21, 64-67 Mutual savings banks (See Thrift institutions) Trade, foreign, 51 Treasury cash, Treasury currency, 5 NATIONAL defense outlays, 26 Treasury deposits, 5, 10, 25 National income, 48 Treasury operating balance, 25 UNEMPLOYMENT, 42 OPEN market transactions, 9 U.S. government balances Commercial bank holdings, 15-21 PERSONAL income, 49 Treasury deposits at Reserve Banks, 5, 10, 25 Prices U.S. government securities Consumer and producer, 42, 47 Bank holdings, 15-21, 27 Stock market, 24 Dealer transactions, positions, and financing, 29 Prime rate, 22 Federal Reserve Bank holdings, 5, 10, 11, 27 Producer prices, 42, 47 Foreign and international holdings and Production, 42, 44 transactions, 10, 27, 61 Profits, corporate, 32 Open market transactions, 9 Outstanding, by type and holder, 27, 28 REAL estate loans Rates, 23 Banks, 15-21, 35 U.S. international transactions, 50-62 Terms, yields, and activity, 34 Utilities, production, 45 Type of holder and property mortgaged, 35 Reserve requirements, 8 Reserves VETERANS Administration, 34, 35 Commercial banks, 15-21 Depository institutions, 4, 5, 6, 12 WEEKLY reporting banks, 17, 18 Federal Reserve Banks, 10 Wholesale (producer) prices, 42, 47 U.S. reserve assets, 51 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 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 SUSAN M. PHILLIPS 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 Adviser THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Adviser Reserve System Affairs LEWIS S. ALEXANDER, Associate Director LYNN S. Fox, Deputy Congressional Liaison DALE W. HENDERSON, Associate Director WINTHROP P. HAMBLEY, Special Assistant to the Board PETER HOOPER III, Associate Director BOB STAHLY MOORE, Special Assistant to the Board KAREN H. JOHNSON, Associate Director DIANE E. WERNEKE, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser DONALD B. ADAMS, Assistant Director THOMAS A. CONNORS, Assistant Director LEGAL DIVISION J. VIRGIL MATTINGLY, JR., General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel DAVID J. STOCKTON, Deputy Director KATHLEEN M. O'DAY, Associate General Counsel MARTHA BETHEA, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel WILLIAM R. JONES, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel MYRON L. KWAST, Associate Director PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary MARTHA S. SCANLON, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary and Ombudsman DAVID S. JONES, Assistant Director STEPHEN D. OLINER, Assistant Director DIVISION OF BANKING STEPHEN A. RHOADES, Assistant Director JANICE SHACK-MARQUEZ, Assistant Director SUPERVISION AND REGULATION CHARLES S. STRUCKMEYER, Assistant Director RICHARD SPILLENKOTHEN, Director ALICE PATRICIA WHITE, Assistant Director STEPHEN C. SCHEMERING, Deputy Director JOYCE K. ZICKLER, Assistant Director HERBERT A. BIERN, Associate Director GLENN B. CANNER, Senior Adviser ROGER T. COLE, Associate Director JOHN J. MINGO, Senior Adviser WILLIAM A. RYBACK, Associate Director GERALD A. EDWARDS, JR., Deputy Associate Director DIVISION OF MONETARY AFFAIRS STEPHEN M. HOFFMAN, JR., Deputy Associate Director JAMES V. HOUPT, Deputy Associate Director DONALD L. KOHN, Director JACK P. JENNINGS, Deputy Associate Director DAVID E. LINDSEY, Deputy Director MICHAEL G. MARTINSON, Deputy Associate Director BRIAN F. MADIGAN, Associate Director SIDNEY M. SUSSAN, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director MOLLY S. WASSOM, Deputy Associate Director VINCENT R. REINHART, Assistant Director HOWARD A. AMER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board NORAH M. BARGER, Assistant Director DIVISION OF CONSUMER BETSY CROSS, Assistant Director RICHARD A. SMALL, Assistant Director AND COMMUNITY AFFAIRS WILLIAM SCHNEIDER, Project Director, GRIFFITH L. GARWOOD, Director National Information Center GLENN E. LONEY, Associate Director DOLORES S. SMITH, Associate Director MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 LAURENCE H. MEYER EDWARD M. GRAMLICH ROGER W. FERGUSON, JR. OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director GEORGE E. LIVINGSTON, Senior Adviser to the Board DAVID L. ROBINSON, Deputy Director (Finance and Control) DAVID L. SHANNON, Senior Adviser to the Board LOUISE L. ROSEMAN, Associate Director FRED HOROWITZ, Adviser PAUL W. BETTGE, Assistant Director JOHN R. WEIS, Adviser JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director MANAGEMENT DIVISION JOSEPH H. HAYES, JR., Assistant Director S. DAVID FROST, Director JEFFREY C. MARQUARDT, Assistant Director SHEILA CLARK, EEO Programs Director FLORENCE M. YOUNG, Assistant Director STEPHEN J. CLARK, Associate Director, Finance Function DARRELL R. PAULEY, Associate Director, Human Resources OFFICE OF THE INSPECTOR GENERAL Function BRENT L. BOWEN, Inspector General DONALD L. ROBINSON, Assistant Inspector General DIVISION OF SUPPORT SERVICES BARRY R. SNYDER, Assistant Inspector General 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. RADEBAUGH, 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

80 Federal Reserve Bulletin • February 1998 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman ROGER W. FERGUSON, JR. JERRY L. JORDAN CATHY E. MINEHAN EDWARD M. GRAMLICH EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS THOMAS M. HOENIG LAURENCE H. MEYER ALICE M. RIVLIN ALTERNATE MEMBERS EDWARD G. BOEHNE MICHAEL H. MOSKOW GARY H. STERN ROBERT D. MCTEER, JR. ERNEST T. PATRIKIS 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 STEPHEN G. CECCHETTI, 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 NORMAN R. BOBINS, Seventh District DOUGLAS A. WARNER III, Second District THOMAS H. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD A. ZONA, Ninth District ROBERT W. GILLESPIE, Fourth District C. Q. CHANDLER, Tenth District KENNETH D. LEWIS, Fifth District CHARLES T. DOYLE, Eleventh District STEPHEN A. HANSEL, Sixth District DAVID A. COULTER, 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 WILLIAM N. LUND, Augusta, Maine, Chairman YVONNE S. SPARKS, St. Louis, Missouri, Vice Chairman RICHARD S. AMADOR, Los Angeles, California MARTHA W. MILLER, Greensboro, North Carolina WALTER J. BOYER, Garland, Texas DANIEL W. MORTON, Columbus, Ohio WAYNE-KENT A. BRADSHAW, Los Angeles, California CHARLOTTE NEWTON, Springfield, Virginia JEREMY EISLER, Ocean Springs, Mississippi CAROL PARRY, New York, New York ROBERT F. ELLIOT, Prospect Heights, Illinois PHILIP PRICE, JR., Philadelphia, Pennsylvania HERIBERTO FLORES, Springfield, Massachusetts DAVID L. RAMP, Minneapolis, Minnesota DWIGHT GOLANN, Boston, Massachusetts MARILYN ROSS, Omaha, Nebraska MARVA H. HARRIS, Pittsburgh, Pennsylvania MARGOT SAUNDERS, Washington, D.C. KARLA IRVINE, Cincinnati, Ohio ROBERT G. SCHWEMM, Lexington, Kentucky FRANCINE C. JUSTA, New York, New York DAVID J. SHIRK, Eugene, Oregon JANET C. KOEHLER, Jacksonville, Florida GAIL SMALL, Lame Deer, Montana GWENN KYZER, Allen, Texas GREGORY D. SQUIRES, Milwaukee, Wisconsin JOHN C. LAMB, Sacramento, California GEORGE P. SURGEON, Chicago, Illinois ERROL T. LOUIS, Brooklyn, New York THEODORE J. WYSOCKI, JR., Chicago, Illinois THRIFT INSTITUTIONS ADVISORY COUNCIL CHARLES R. RINEHART, Irwindale, California, President WILLIAM A. FITZGERALD, Omaha, Nebraska, Vice President GAROLD R. BASE, Piano, Texas F. WELLER MEYER, Falls Church, Virginia DAVID A. BOCHNOWSKI, Munster, Indiana EDWARD J. MOLNAR, Harleysville, Pennsylvania DAVID E. A. CARSON, Bridgeport, Connecticut GUY C. PINKERTON, Seattle, Washington RICHARD P. COUGHLIN, Stoneham, Massachusetts TERRY R. WEST, Jacksonville, Florida STEPHEN D. HAILER, Akron, Ohio 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, Federal Reserve Regulatory Service. Four vols. (Contains all MS-127, Board of Governors of the Federal Reserve System, four Handbooks plus substantial additional material.) $200.00 Washington, DC 20551, or telephone (202) 452-3244, or FAX per year. (202) 728-5886. You may also use the publications order Rates for subscribers outside the United States are as follows form available on the Board's World Wide Web site and include additional air mail costs: (http://www.bog.frb.fed.us). When a charge is indicated, payment Federal Reserve Regulatory Service, $250.00 per year. should accompany request and be made payable to the Board of Each Handbook, $90.00 per year. Governors of the Federal Reserve System or may be ordered via FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL Mastercard or Visa. Payment from foreign residents should be COMPUTERS. Diskettes; updated monthly. drawn on a U.S. bank. Standalone PC. $300 per year. Network, maximum 1 concurrent user. $300 per year. Network, maximum 10 concurrent users. $750 per year. BOOKS AND MISCELLANEOUS PUBLICATIONS Network, maximum 50 concurrent users. $2,000 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Network, maximum 100 concurrent users. $3,000 per year. 1994. 157 pp. Subscribers outside the United States should add $50 to cover ANNUAL REPORT, 1996. additional airmail costs. ANNUAL REPORT: BUDGET REVIEW, 1995-96. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and INDUSTRIAL PRODUCTION —1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A 1984 October 1985 254 pp. $12.50 JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996. 1985 October 1986 231 pp. $15.00 578 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 1980-89 March 1991 712 pp. $25.00 EDUCATION PAMPHLETS 1990 November 1991 185 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1991 November 1992 215 pp. $25.00 available without charge. 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 1994 December 1995 190 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1990-95 November 1996 404 pp. $25.00 Consumer Handbook to Credit Protection Laws A Guide to Business Credit for Women, Minorities, and Small Businesses SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF Series on the Structure of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United The Board of Governors of the Federal Reserve System States, its possessions, Canada, and Mexico. Elsewhere, The Federal Open Market Committee $35.00 per year or $.80 each. Federal Reserve Bank Board of Directors REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Federal Reserve Banks RESERVE SYSTEM. A Consumer's Guide to Mortgage Lock-Ins ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Settlement Costs Regulation Z) Vol. 1 (Regular Transactions). 1969. 100 pp. A Consumer's Guide to Mortgage Refinancings Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Home Mortgages: Understanding the Process and Your Right $5.00. to Fair Lending GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. How to File a Consumer Complaint FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated Making Deposits: When Will Your Money Be Available? monthly. (Requests must be prepaid.) Making Sense of Savings Consumer and Community Affairs Handbook. $75.00 per year. SHOP: The Card You Pick Can Save You Money Monetary Policy and Reserve Requirements Handbook. $75.00 Welcome to the Federal Reserve per year. When Your Home is on the Line: What You Should Know Securities Credit Transactions Handbook. $75.00 per year. About Home Equity Lines of Credit The Payment System Handbook. $75.00 per year. Keys to Vehicle Leasing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 STAFF STUDIES: Only Summaries Printed in the 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF BULLETIN MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 1993. 18 pp. to be added to the mailing list for the series may be sent to 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Publications Services. January 1994. Ill pp. 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- Staff Studies 1-157 are out of print. ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- by Stephen A. Rhoades. July 1994. 37 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- Dietrich Earnhart. September 1989. 23 pp. ber 1995. 69 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and by Stephen A. Rhoades. February 1996. 29 pp. Donald Savage. February 1990. 12 pp. 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- LATIONS: AN ANALYIS OF EXPERIENCE WITH THE TRUTH IN VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by SAVINGS ACT, by Gregory Elliehausen and Barbara R. Gregory E. Elliehausen and John D. Wolken. September Lowery, December 1997. 17 pp. 1990. 35 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. 21 pp. REPRINTS OF SELECTED Bulletin ARTICLES 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- Some Bulletin articles are reprinted. The articles listed below are GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. those for which reprints are available. Beginning with the Janu- Rhoades. February 1992. 11 pp. ary 1997 issue, articles are available on the Board's World Wide 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- Web site (http://www.bog.frb.fed.us) under Publications, Federal KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Reserve Bulletin articles. Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Ann Taylor. March 1992. 37 pp. Limit of ten copies 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by James T. Fergus and John L. Goodman, Jr. July 1993. FAMILY FINANCES IN THE U.S.: RECENT EVIDENCE FROM THE 20 pp. SURVEY OF CONSUMER FINANCES. January 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Maps of the Federal Reserve System ADELPHIA 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 i 2-B 3-C 4-D 5-E ,. D Pittsburgh *jT WV Baltimore MD •PP- Buffalo DE VMTcinnati » wv T / NY f ^ ^ RI BOSTON PHILADELPHIA CLEVELAND NEW YORK 6-F 7-G 8-H RICHMOND KY Birmingham^ •w •^^Hf ^Memphis New Orleans ATL> VNTA CHICAGO ST. LOUIS MINNEAPOLIS 10-J ^ ^^ 1122--LL m ••if KA NSAS CITY AALLAASSKKAA ^^BBFFIIJJ .. 11-K . DALLAS Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis HHAAWWAAIIII ^^ SSAANN FFRRAANNCCIISSCCOO ^^ ^^ HH ^^ ^^HH

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 William O. Taylor 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 Joan Carter Edward G. Boehne Charisse R. Lillie William H. Stone, Jr. CLEVELAND* 44101 G. Watts Humphrey, Jr. Jerry L. Jordan David H. Hoag Sandra Pianalto Cincinnati 45201 George C. Juilfs Charles A. Cerino1 Pittsburgh 15230 John T. Ryan III Robert B. Schaub RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 Daniel R. Baker William J. Tignanelli1 Charlotte 28230 Dennis D. Lowery Dan M. Bechter1 ATLANTA 30303 David R. Jones Jack Guynn John F. Wieland Patrick K. Barron James M. Mckee Birmingham 35283 Patricia B. Compton Fred R. Herr1 Jacksonville 32231 Judy R. Jones James D. Hawkins1 Miami 33152 R. Kirk Landon James T. Curry III Nashville 37203 Frances F. Marcum Melvyn K. Purcell New Orleans 70161 Lucimarian Roberts Robert J. Musso CHICAGO* 60690 Lester H. McKeever, Jr. Michael H. Moskow Arthur C. Martinez William C. Conrad Detroit 48231 Florine Mark David R. Allardice1 ST. LOUIS 63166 John F. McDonnell Temporarily vacant Susan S. Elliott W. LeGrande Rives Little Rock 72203 Betta M. Carney Robert A. Hopkins Louisville 40232 Roger Reynolds Thomas A. Boone Memphis 38101 Carol G. Crawley Martha L. Perine MINNEAPOLIS 55480 David A. Koch Gary H. Stern James J. Howard Colleen K. Strand Helena 59601 William P. Underriner John D. Johnson KANSAS CITY 64198 Jo Marie Dancik Thomas M. Hoenig Terrence P. Dunn Richard K. Rasdall Denver 80217 Peter I. Wold Carl M. Gambs1 Oklahoma City 73125 Barry L. Eller Kelly J. Dubbert Omaha 68102 Arthur L. Shoener Bradley C. Cloverdyke DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. James A. Martin 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 Gary G. Michael Robert T. Parry Cynthia A. Parker John F. Moore Los Angeles 90051 Anne L. Evans Mark L. Mullinix1 Portland 97208 Carol A. Whipple Raymond H. Laurence1 Salt Lake City 84125 Richard E. Davis Andrea P. Wolcott Seattle 98124 Richard R. Sonstelie Gordon R. G. Werkema2 *Additional offices of these Banks are located at Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; 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